Timiniya Tuma Company Limited Vrs Sakara & Another [2023] GHADC 510 (31 May 2023)

IN THE DISTRICT COURT 2, TAMALE HELD ON TUESDAY 31ST MAY, 2023 BEFORE HIS WORSHIP D. ANNAN ESQ. BETWEEN TIMINIYA TUMA COMPANY LIMITED AND 1. DR. ABU SAKARA DEFENDANTS 2. ERIC APPIAH SUIT NO. A2/78/23 PLAINTIFF - - JUDGMENT INTRODUCTION 1. This judgment relates to contract, recovery of money. 2. The plaintiff is a limited liability company registered under the laws of Ghana with its principal place of business in Tamale. The 1st defendant is described as a businessman who resides in Accra but does business in Tamale. The 2nd defendant is also described as an employee of Savannah Agricultural Research Institute (SARI) - 1 - which deals in rice seeds. What links these parties is the sale of rice seeds to which plaintiff contends that it is owed GHS27,080.00 by the defendants. 3. This case started with a writ against the 1st defendant. However, on 7th November, 2022 when this case was called, 1st defendant pleaded not liable to plaintiff’s claim. 2nd defendant who was yet to be joined to the suit had written to the court and elected to pay the amount claimed by the plaintiff company. Parties were, therefore, encouraged to settle. But they returned that they were unable to settle. 4. Per its amended Writ of Summons filed on 20th December, 2022 the plaintiff company now seeks against the defendants, jointly and severally, for the following reliefs: a. Recovery of GHS27,080.00 being the balance outstanding on the principal sum of GHS121,000.00 defendants owe to plaintiff for the supply of rice seeds; b. Interest on the said sum from 16th August, 2019 till date of final payment; c. Damages for breach of contract; and d. Any other relief(s) the Honourable Court may deem fit and just. 5. Defendants, on 20th January, 2023, filed their amended Statement of Defence to plaintiff’s claim. The court, thereafter, ordered parties to file their respective witness statements. The case of either party is detailed below. PLAINTIFF’S CASE 6. Pastor Musah Imoro (PW1) a director of the plaintiff company and Mr. Michael Mawunya (PW2) a research scientist with Savannah Agricultural Research (SARI) of the Council for Scientific and Industrial Research (CSIR) testified on behalf the plaintiff. - 2 - 7. According to plaintiff witnesses, sometime in April 2019, the 1st defendant entered into a contract with plaintiff company, (plaintiff company acting through PW2), for the supply of certified rice seeds. PW2 explained that 1st defendant was supplied with a total of 3,124 mini bags of 40kg certified rice seeds at the cost of GHS374,880.00. Out of the total seeds supplied, 1009 mini bags (40kg) of certified rice seeds at a total cost of GHS121,080.00 belonged to the plaintiff company. PW2 stated that the other seeds were from staff of Ministry of Food and Agriculture (MoFA), other seed growers and himself. PW2 explained that he supplied 1st defendant through Mr. Fred Ntumi and Mr. Abdul Rahman Sakara (aka Dramini). PW1 and PW2 contended that 1st defendant was to pay the cost of the seeds within three months, thus by 16th August, 2019. However, 1st defendant failed to pay as agreed. PW2 averred that in 2020 1st defendant paid GHS44,000.00 to be shared among the suppliers. With this amount, the plaintiff company was to receive GHS8,000.00 but plaintiff company rejected it. PW2 stated that he kept this GHS8,000.00 in satisfaction to what is owed him and that when a larger sum is received he would give that to plaintiff company. 2nd defendant then informed him that 1st defendant had also made some payments to be shared among the other seed growers. Hence, he (PW2) and 2nd defendant executed a document, page 10 of Exhibit D, spelling out the quantities each group supplied, the payment received as well as the outstanding. PW1 explained that plaintiff company not satisfied with the payment strategy of 1st defendant, then engaged the services of a lawyer, Jonathan S. Lari and as a result 1st defendant made some payments. PW1 stated further that as at 24th February, 2022 the 1st defendant had paid GHS94,000.oo leaving a balance of GHS27,080.00. PW1 and PW2 argued that at all material times, plaintiff company dealt with 1st defendant in his personal capacity and the payments received were made in the personal capacity or representative of 1st defendant. They argued further that the 2nd defendant electing to pay the balance owed the plaintiff - 3 - company is an afterthought intended that 1st defendant will escape liability. Moreso, when 2nd defendant had elected to pay the balance since 31st October, 2022 no payment has been made, hence this present action. 8. In support of its case, the following exhibits were tendered: Exhibits A, A1 and A2 - A copy of plaintiff’s Certificate of Incorporation, Certificate Commence Business and Particulars of Company Registration, respectively. Exhibits B, B1 and B2– Copies of ADB and ABSA Deposit slips of the part payment. Exhibit C – Copy of WhatsApp Chat between PW1 and 2nd Defendant Exhibit D and D1 – Copy of WhatsApp Chat between PW2 and 1st Defendant and invoice to 1st Defendant. DEFENDANTS’ CASE 9. Mr. Abdul-Rahaman Sakara (DW1), a brother of the 1st defendant, gave testimony in support of the defendants’ case. 2nd defendant testified in person. 10. According to 2nd defendant and DW1, 1st defendant owns a limited liability company known as SAKFOS Farms Company Limited (hereinafter referred to as SAKFOS Farms) to which 1st defendant is the Executive Chairman. They averred SAKFOS Farms through its seed distribution manager, Mr. Fred Ntumi, entered into an agreement with 2nd defendant for the supply of rice seeds. They maintained that 1st defendant is not a proper party to this case since the rice seeds were supplied to SAKFOS Farms and not 1st defendant personally. 2nd defendant added that at all material times, he was dealing with SAKFOS Farms and PW2, but never with the plaintiff company. 2nd defendant explained that he approached PW2 to supply him - 4 - with seeds to enable him meet the quantity of seeds requested by SAKFOS Farms. 2nd Defendant and DW1 argued that while SAKFOS Farms owed money to the 2nd defendant for seeds supplied, the 2nd defendant owed PW2, and PW2 in turn owed the plaintiff company because they believe PW2 took some of the rice seeds from the plaintiff company. They argued further that due to demands by lawyer for the plaintiff company, 1st defendant (through SAKFOS Farms) was compelled to pay GHS93,000.00 of plaintiff’s entitlement, thereby leaving a balance of GHS27,080.00. To them, the total debt was GHS120,080.00. According to 2nd defendant, the payment of the GHS93,000.00 will deducted by 1st defendant in his subsequent payments. 2nd defendant and DW1 also stated that upon further demands by plaintiff company, 1st defendant through its company, SAKFOS Farms, offered to pay the outstanding debt provided that was agreeable to 2nd defendant and the other suppliers as full and final payment. Hence, on 31st October, 2022 2nd defendant accepted 1st defendant’s offer and the said sum was paid to him. 2nd defendant stated that he paid the GHS27,080.00 to his lawyer because neither the plaintiff nor PW2 was willing to accept the money as full and final payment. Also, he argued that there was no agreement with regards to interest to be paid for delayed payments. 11. Defendants also tendered in evidence the following exhibits: Exhibit 1 – Copy of SAKFOS Farm letter acknowledging debt to 2nd defendant Exhibit 2 – Copy of acceptance letter by 2nd defendant accepting Exhibit 1, dated 31/10/22. Exhibit 3 – Copy of receipt evidencing payment of GHS27,080.00 to counsel of defendants ISSUES FOR DETERMINATION 12. The issues borne out of the facts are: - 5 - a. Whether or not the 1st defendant is a proper party to this suit? b. Whether or not the defendants are jointly and severally liable? BURDEN OF PROOF 13. It is essential to note that in civil cases, the general rule is that the party who in his pleadings or his writ raises issues essential to the success of his case assumes the onus of proof on the balance of probabilities. See the cases of Faibi v State Hotels Corporation [1968] GLR 471, In re Ashalley Botwe Lands; Adjetey Agbosu & Ors. v. Kotey & Ors. [2003-2004] SCGLR 420 and Sakordie v FKA Company Limited [2009] SCGLR 65. The Evidence Act, 1975 (NRCD 323) uses the expression “burden of persuasion” and in section 14 that expression has been defined as relating to, “…each fact the existence or non-existence of which is essential to the claim or defence he is asserting.” See also ss. 11(4) and 12(1) & (2) of NRCD 323. 14. It is when the claimant has established an assertion on the preponderance of probabilities that the burden shifts onto the other party, failing which an unfavourable ruling will be made against him, see s. 14 of NRCD 323 and the case of Ababio v Akwasi III [1995-1996] GBR 774. ANALYSIS OF THE ISSUES 15. Before I proceed to analyse the issues identified above, it important to mention that there is no doubt that the outstanding debt to be paid is GHS27,080.00. The issue has been who is liable? Issue a 16. Issue a, whether or not the 1st defendant is a proper party to this suit? The law is clear that a company is a separate legal entity. It can sue and be sued, see Salomon v Salomon - 6 - (1897) AC 22. Thus, a company although clothed with the capacity to act, it acts through its officers/members. The law recognises these officers/members as directing the mind and will of the company. Justice Torkornoo JA (as she then was) in Suit No. H1/170/14: Robert Ashie Kotie Ventures Ltd v Sadat Car Accessories Enterprise & Anor. dated 11/6/15, CA (unreported) puts it simply as, “The state of mind of these managers is the state of mind of the company”. However, there are instances where an officer of a company can be held personally liable. This is known as the ‘lifting the veil’ doctrine. In Morkor v Kuma (No. 1) [1999-2000] 1 GLR 721, Sophia Akuffo JSC (as she then was) established three broad bases on which this doctrine applies, i.e. (a) dictates of justice, (b) public policy or (c) under statute. The court held, “…in the absence of these factors driving the case such as fraud, improper conduct, deliberate attempts at evasion of legal obligations, or other devises or willful misdeeds on the part of the appellant, …the majority of the Court of Appeal erred in lifting the veil of incorporation upon those allegations and finding the appellant personally liable for the 1st defendant’s debts and a proper person to be sued with the 1st defendant for the recovery of the debt owed the respondent by the 1st defendant”. 17. It is also trite law that he who asserts must prove. In the case Okudzeto Ablakwa (No. 2) v. Attorney-General & Obetsebi-Lamptey (No. 2) [2012] 2 SCGLR 845, the Supreme Court in dealing with the onus of proof of an allegation held at page 867 as follows: “... What this rule literally means is that if a person goes to Court to make an allegation, the onus is on him to lead evidence to prove that allegation, unless the allegation is admitted. If he fails to do that, the ruling on that allegation will go against him. Stated more explicitly, a party cannot win a case in Court if the case is based on an allegation which he fails to prove or establish.” See also the often cited case of Majolagbe v. Larbi [1959] GLR 190 per Ollennu J (as he then was) where the court held that, “[w]here a party makes an averment capable of proof in some positive way, - 7 - e.g. by producing documents, description of things, reference to other facts, instances, or circumstances, and his averment is denied, he does not prove it by merely going into the witness box and repeating that averment on oath, or having it repeated on oath by his witness. He proves it by producing other evidence of facts and circumstances, from which the Court can be satisfied that what he avers is true”. 18. From the above, the onus is therefore on the plaintiff company to establish that the 1st defendant is a proper party to this suit and for that matter to be held personally liable. Should it fail, then an unfavourable ruling shall be entered against him, see Ababio v Akwasi III (supra). 19. In the instant suit, plaintiff company relied heavily on the evidence of PW2 in establishing that 1st defendant is a proper party to this suit. According to the plaintiff company, in April 2019, the 1st defendant entered into a contract with plaintiff company, (plaintiff company acting through PW2), for the supply of certified rice seeds. PW2 explained that 1st defendant was supplied with a total of 3,124 mini bags of 40kg certified rice seeds at the cost of GHS374,880.00. Out of the total seeds supplied, 1009 mini bags (40kg) of certified rice seeds at a total cost of GHS121,080.00 belonged to the plaintiff company. PW2 stated that the other seeds were supplied by staff of Ministry of Food and Agriculture (MoFA), other seed growers and himself. PW2 explained that he supplied 1st defendant through Mr. Fred Ntumi and Mr. Abdul Rahman Sakara (aka Dramini). PW2 tendered in evidence Exhibit D1, the invoice for the supplied seeds as the main agreement between plaintiff company and 1st defendant. More so, PW1 explained that when plaintiff company was not satisfied with the payment strategy of 1st defendant, plaintiff company engaged the services of a lawyer, Jonathan S. Lari and as a result 1st defendant made some payments. Plaintiff company argued that at all material times, it dealt with 1st defendant in his personal - 8 - capacity and that the payments received were made in the personal capacity or representative of 1st defendant, but not SAKFOS Farms. Plaintiff company argued further that 1st defendant’s letter, Exhibit 1, to 2nd defendant for which 2nd defendant has elected to pay the balance owed the plaintiff company is an afterthought intended that 1st defendant will escape liability. 20. On his part, counsel for defendants argued that plaintiff company did not deal directly with 1st defendant. Defendants, however, admitted that 1st defendant’s company dealt with 2nd defendant who in turn dealt with PW2. 2nd They argued, however, that although the 1st defendant was paying for what plaintiff company was entitled per the supplies made, it did not give rise to an action against 1st defendant personally. Rather, the 2nd defendant is the proper party to be sued. 21. From the evidence, I find that although the plaintiff company indicated in its writ and same stated in evidence of PW1 that in April, 2019 it has signed a contract with 1st defendant for the supply of the certified rice seeds, no such agreement or contract was tendered to substantiate this claim. Rather plaintiff company relied on the averment of PW2 as the one who facilitated the contract with 1st defendant. Surprisingly, PW1 stated that PW2 is not an officer/agent of the plaintiff company. PW2 admitted same. If so, how then can PW2 cause a contract to be binding on plaintiff company and 1st defendant? Certainly, this cannot be. 22. From the case, Robert Ashie Kotie Ventures Ltd v Sadat Car Accessories Enterprise (supra) the actions of a company’s officers/agents are therefore binding on the company, unless otherwise established. Hence, where PW2 is not an agent/officer of the plaintiff company, he cannot seek to bind plaintiff company into any contract. An officer/agent of a principal is, however, distinguished from an independent contractor. The Black’s Law Dictionary (9th Edition) defined an independent - 9 - contractor as, “One who is entrusted to undertake a specific project but who is left free to do the assigned work and to choose the method for accomplishing it. It does not matter whether the work is done for pay or gratuitously. Unlike an employee, an independent contractor who commits a wrong while carrying out the work usually does not create liability for the one who did the hiring”. See paragraphs 7-20 of PW2’s witness statement, clearly detailing that he acted as an independent contractor and not as an agent/officer of plaintiff company. 23. Now, Exhibit D1 the invoice was addressed to 1st defendant in person. It is not dated. Also, it is not clear who owns Azaria Enterprise. The signature on Exhibit D1 is not similar to that on page 10 of Exhibit D by PW2 and 2nd defendant. The quantity stated thereon and the total amount is different from what was supplied. Exhibit D1 states 3134 mini bags at a total cost of GHS376,000.00. Meanwhile, PW2 stated at paragraph 13 of his witness statement that he supplied 3124 mini bags at cost of GHS374,880. The said Exhibit D1 is not countersigned by the 1st defendant or his representative, for it to be binding on him. In my opinion, an invoice per se cannot constitute a contract between two parties. At best it indicates what a party intends to buy, but not a purchase. PW2 in his WhatsApp chat with 1st defendant stated at page 6 of Exhibit D that, “The greater part of the seed rice was supplied to your company by [A]zaria Enterpise…”. Further, PW2 stated that at the time of supplying the rice seeds to 1st defendant through 1st defendant’s representatives (Mr. Fred Ntumi and Mr. Dramini), he did not disclose same to plaintiff company or that plaintiff company was aware. PW2, then, received from Mr. Dramini and another an amount of GHS44,000.00 to be shared between himself and the other suppliers. With 1st defendant admitting that his company received the supplies, I find that SAKFOS Farms dealt with PW2 as an independent contractor. 1st defendant only assumed to pay plaintiff company’s entitlement when Lawyer Lari was involved. Plaintiff company failed to tender any - 10 - evidence or admissions on the part of 1st defendant as personally liable. Plaintiff company assumed that 1st defendant paying the debt directly to it made 1st defendant personally liable. This, I totally disagree. The said payment, Exhibit B series, were cash deposits which require the person paying to state his name. That does not make such person, personally liable. Hence, I find that the actions of PW2 did not bind plaintiff company and 1st defendant to which 1st defendant is to be held personally liable. In effect, plaintiff company was unable to prove that 1st defendant is a proper party to this suit. At best, plaintiff company should have sued PW2 for selling it goods and payment not received. PW2 may in turn sue or join SAKFOS Farms. Issue b 24. Having dealt with the issue a, issue b is, whether or not the defendants are jointly and severally liable? Or. 9 rule 4 of the District Court (Civil Procedure) Rules, 2009 provides that: “(1) Where a person has a joint and several demand against a number of persons either as principals or sureties, that person may proceed against anyone or more of that number of persons severally, or jointly or jointly and severally. (2) Where a defendant claims contribution, indemnity, or other remedy or relief against another person, the defendant may apply for that person to be made a party to the suit.” 25. From the evidence, it is not in doubt that the outstanding debt to be paid is GHS27,080.00. The issue here is who is to be held liable? It appears to me that plaintiff company involved itself in the matter when the 1st defendant had failed to pay for the supplies, by 16th August 2019. Having failed to pay, the plaintiff company engaged the services of a lawyer to demand payment from 1st defendant, i.e. to pay its - 11 - entitlement from the total. This also stems from the fact that the earlier payment that was to be shared by plaintiff company and the other suppliers, plaintiff company rejected theirs. This further explains why PW2 and 2nd defendant executed page 10 of Exhibit D. The said table, i.e. page 10 of Exhibit D, omitted the name ‘Azaria Enterprise’ and it also failed to mention the name of plaintiff company. Page 10 of Exhibit D now detailed what 1st defendant’s company owed 2nd defendant and PW2. Thus, 2nd defendant and PW2 acting for and on behalf of themselves and the other seed suppliers. Hence, 2nd defendant per Exhibit 2 cannot claim that the debt stated at page 10 of Exhibit D is owed to him alone, and I so hold. 26. Now the 2nd defendant per Exhibit 2 has elected to pay all debts of the 1st defendant. He, therefore, puts himself in a position to indemnify PW2 who in turn must pay plaintiff company in this specific claim. From the facts, and this is interesting, 2nd defendant on receipt of what is entitled plaintiff company, he paid the money to his lawyer. He failed to give same to plaintiff company. According to him, when he offered it to plaintiff company, plaintiff company rejected it. The evidence on record, however, showed otherwise. This is what ensued when 2nd defendant was under cross-examination: “Q: You know that I am the lawyer for plaintiff? A: Yes. Q: You have not offered me any money in satisfaction of the amount being claimed? A: Yes. - 12 - Q: I am suggesting to you that it is not true that you offered GHS27,080.00 to the plaintiff in satisfaction of the amount being claimed from the defendants? A: Yes.” 27. Another interesting episode that ensued was when PW2 as under cross-examination: “Q: The 1st defendant had offered to pay the outstanding balance of GHS27,080.00 to the plaintiff on behalf of the 2nd defendant as full and final settlement of 1st defendant debt to 2nd defendant, are you aware? A: Yes. The 2nd defendant came to me that he had some money to be paid to the plaintiff company and because I did not directly supply the goods through him, I rejected it.” 28. I do recall in the course of the trial where I advised counsel for defendant to pay the money into court, even if plaintiff company or its lawyer was rejecting same. Thus referring him to Or. 17 of CI 59. Well, he did not and the money is still sitting in his account since 11/1/23. It appears to me that the parties, together with their lawyers, are simply litigious. The simple question is, you are asking for something and another person has offered to pay, yet you reject it and pursue the same person in court? Is PW2 not the same person seen in Exhibit D continuously demanding money from 1st defendant for plaintiff company and the other suppliers, and yet when he was offered money he rejected it? His reaction, in my opinion, can be gleaned from the unprintable words both parties used in Exhibit D. 2nd defendant, on his part, did not offer the money to plaintiff company but stated in his witness statement that he did, only for that to turn out differently under cross-examination. - 13 - 29. On the totality of the evidence, I therefore come to the conclusion that the plaintiff company was unable to prove that it had a contract with 1st defendant. This should have concluded the matter. However, 1st defendant’s company has acknowledged the debt and caused 2nd defendant to accept the amount claimed by the plaintiff company. Exhibits 1 and 2, in my opinion, were drafted in such a way to avoid some form of liability since at the time they were written, defendants were well aware of plaintiff’s suit. SAKFOS Farms is seen hiding behind 2nd defendant and 2nd defendant is acknowledging it. As earlier pointed out, 2nd defendant per page 10 of Exhibit D could not claim that he alone supplied the rice seeds. 2nd defendant, per Exhibit 1, was required to consult with the other suppliers before writing his response. There is no evidence that he indeed consulted any of the other suppliers. Also, 2nd defendant has not submitted any document evincing that he alone entered into a contract with 1st defendant’s company. Yet, he goes ahead to accept the debt. Hence, since 1st defendant’s company is not a party to this case but 2nd defendant has elected to satisfy the debt, I shall hold him liable, see Or. 9 rule 4 of CI 59. 30. Regarding interest, justice requires that interest should be paid to preserve the value of the money claimed, even if interest is not expressly stated/claimed, see Butt v Chapel Hill Properties [2003-2004] 1 SCGLR 626 . In the case Royal Dutch Airlines (KLM) v. Farmex [1989-90] 2 GLR 623 the Supreme Court said at page 636 that: “When a defendant keeps a plaintiff out of the use of his money, the plaintiffs are entitled to call upon the defendant to account to them for the use of this money, which is another way of saying that the plaintiffs are entitled to interest on the said money beyond the date of judgment to date of payment...” - 14 - 31. The power of the Courts in Ghana to award such interest has been re-enacted in rule 1 of CI 52 of the Court (Award of Interest and Post Judgment Interest) Rules, 2005. The language of CI 52 is very clear in its direction for courts to award only simple interest unless specific circumstances exist. To reiterate this point, CI 52 provides first for the application of prevailing bank rates at simple interest as the only manner in which a court can award interest on a judgment debt. It reads in Rule 1: “Rule 1 - Order for payment of interest 1. If the court in a civil cause or matter decides to make an order for the payment of interest on a sum of money due to a party in the action, that interest shall be calculated a. at the bank rate prevailing at the time the order is made and b. at simple interest.” 32. From the evidence, since there was no agreement between the parties on nature of interest, period of application of the particular type of interest or quantum of interest, I shall apply interest at the prevailing bank rate in simple interest mode. Further, I hold that the interest rate chargeable on the debt GHS27,080.00 shall be calculated at the prevailing bank rate effective 16th August, 2019 till date of final payment. 33. I will, however, not award damages since plaintiff failed to prove its case against 1st defendant. Also, it will amount to unfair hardship together with the interest awarded. Moreover, the parties and their lawyers came to this equity court in with “unclean hands”. They preferred to be too litigious and failed to take necessary steps to mitigate their losses. Lastly, I shall not award costs. Either party is to bear his or her own costs. CONCLUSION 34. I hereby enter judgment on behalf of the plaintiff to recover against the 2nd defendant: - 15 - a. The amount of GHS27,080.00 being the balance outstanding owed to it. b. Interest on the said sum from 16th August, 2019 till date of final payment. H/W D. ANNAN ESQ. [MAGISTRATE] ISAAC BORRIDOR ESQ. FOR THE PLAINTIFF PAUL K. CHINATRA ESQ. FOR THE DEFENDANTS References: 1. ss. 11(4) 12(1) & (2) and 14 of NRCD 323. 2. Faibi v State Hotels Corporation [1968] GLR 471 3. In re Ashalley Botwe Lands; Adjetey Agbosu & Ors. v. Kotey & Ors. [2003-2004] SCGLR 420 Sakordie v FKA Company Limited [2009] SCGLR 65 4. Salomon v Salomon (1897) AC 22 5. Suit No. H1/170/14: Robert Ashie Kotie Ventures Ltd v Sadat Car Accessories Enterprise & Anor. dated 11/6/15, CA (unreported) 6. Morkor v Kuma (No. 1) [1999-2000] 1 GLR 721 7. Okudzeto Ablakwa (No. 2) v. Attorney-General & Obetsebi-Lamptey (No. 2) [2012] 2 SCGLR 845 8. Butt v Chapel Hill Properties [2003-2004] 1 SCGLR 626 9. Royal Dutch Airlines (KLM) v. Farmex [1989-90] 2 GLR 623 10. Or. 9 rule 4 of the District Court (Civil Procedure) Rules, 2009 11. Black’s Law Dictionary (9th Edition) 12. Rule 1 of CI 52 of the Court (Award of Interest and Post Judgment Interest) Rules, 2005. - 16 - - 17 -