KINTEK LIMITED VRS THE HOLY CROSS (E2/19/2018) [2023] GHAHC 471 (15 December 2023)

IN THE SUPERIOR COURT OF JUDICATURE IN THE HIGH COURT OF JUSTICE HELD IN CAPE COAST ON 15TH DECEMBER, 2023 BEFORE HIS LORDSHIP JUSTICE EMMANUEL A. LODOH, J. E2/19/2018 PLAINTIFF DEFENDANT KINTEK LIMITED NO. 19 FIRST CLOSE TESANO-ACCRA VRS TRUSTEES OF THE CONGREGATION OF THE HOLY CROSS CAPE COAST, CENTRAL REGION JUDGMENT The plaintiff on 8th February, 2018 took out the instant writ of summons against the Defendant, in what to all intent and purposes is a dispute arising out of a contractual relationship with the defendant. The nature of the contract between the Plaintiff and the Defendant given the nature of the pleadings can be adequately described as a construction contract. The record will show that this matter remained unprosecuted for a lot time and was struck out pursuant to Order 37 Rule 4 of the High Court (Civil Procedure) Rules, 2004 (CI 47). On 10th December, 2021, following the grant of an application by counsel Plaintiff, the matter was relisted for prosecution. The plaintiff per the said writ of summons is seeking the following reliefs against the Defendant: 1 of 38 1. A liquidated amount of USD$339,991.93 being the total amount due, owing and payable to the Plaintiff by the Defendant under work carried out and discharged under the contract. 2. 3. General damages for wrongful breach and termination of contract. Interest of 1.5% on USD$339,991.93 under the terms of the contract from March, 2017 until the issue of the Writ. 4. Interest on the liquidated sum at the prevailing commercial rate from the issue of this Writ until date of final payment. Cost Any other reliefs that the Honourable Court deems fit. 5. 6. Synopsis of Plaintiffs’ Case The case of the Plaintiff is succinctly pleaded in a 15 paragraph Statement of Claim filed on 8th February, 2018. According to the Plaintiff, in or about January, 2015, the Defendant “contracted and engaged” it to develop and construct a secondary school called “the Brother Andrè High School” at Opeikuma in the Central Region of Ghana. The Plaintiff described the scope of the contract in paragraph 4 of their pleadings as follows: 4. The Construction per their request, was a school complex comprising of a single storey residential facility, a four-storey dormitory block and a three-storey classroom block (hereinafter referred to as “the Project). The plaintiff averred further that following the approach by the Defendant, it subsequently submitted a proposal and bill of quantities for the project to the Defendant in the amount of GH¢11, 588, 472.00. Now even though in paragraph 5 of the pleading plaintiff stated that it only submitted a proposal, they continued by adding in the same paragraph that “Under the terms of their contract entered into, it was always 2 of 38 understood between the parties that the contract would be subject to variations and adjustments as to cost as and when justified”. In order for the case of the Plaintiff as pleaded to be more clearly understood, I find it necessary to reproduce paragraphs 5, 6 and 7 of their pleadings in extenso as follows: 5. Pursuant to several meeting had between the Plaintiff and the Defendant, the plaintiff submitted a proposal and a bill of quantities for the project which stood at a total sum amount of GH¢11, 588, 472. Under the terms of their contract entered into, it was always understood between the parties that the contract would be subject to variations and adjustments as to cost as and when justified. 6. Due to what is called cash flow challenges, the Defendant requested from the Plaintiff, the project to be carried out and paid for by them in phases with Phase I being the building to completion of the ground floors of the dormitory, the classroom blocks and the residential facility only at the cost of US$1, 500,000.00. 7. On 13th Apri1, 2015, Plaintiff negotiated with the Defendant for the completion of Phase 1 at the adjusted cost of USD$1, 599, 100.00 exclusive of any variation cost. Plaintiff will say further that in reliance upon the Defendant’s assurances that it will pay, Plaintiff went ahead to incur full expenses to complete Phase 1 to its financial detriment and to the full knowledge of the Defendant, who acquiesced to the said facts without any cavil or objection. The Plaintiff alleged further that it concluded the Phase 1 of the project in January, 2017. He then set out some incidents that took place during the execution of the contract and costs associated thereof in paragraphs 8 and 9 of their pleadings as follows: 3 of 38 8. The Plaintiff avers also that it had to engage the services of surveyors, geotechnical engineers, structural engineers and new designs respectively and also cater for changes made by the Defendant to specification of the project from time to time. The Plaintiff says that it simultaneously engaged the services of other sub-contractors including artisans to execute the project. 9. The Plaintiff will show that as a result of the above the number of variation in the contract and the remedial work carried out and discharged which the Defendant failed to make payment for amounted to the total sum of US$304, 780.56. The total amount outstanding which includes retention cost is USD$339, 991.93 Regarding the origins of their claim for damages, the plaintiff contends in paragraphs 13 and 14 of his Statement of Claim as follows: 13. The Plaintiff repeats paragraph 12 and 11 above and says further that rather, Defendant has gone ahead and directly engaged the services of Plaintiff’s sub- contractors and commissioned them to take over the development of the next phase as direct employees of the Defendant, to the loss of the Plaintiff. 14. The Plaintiff repeats paragraph 13 above and says that by virtue of the matters aforesaid therein, it has suffered loss and damage. The continuation of the remaining two floors of the Classroom block would have cost US$826, 895.00 and for the remaining 3 floors of Dormitory would have cost US$ 672, 872.00. The Plaintiff says further to the above that its Management Fees is 10% of the cost of Construction of the two buildings. Case of the Defendant The case of the Defendant is pleaded in his Statement of Defence filed on 8th August, 2018. They contended that the Plaintiff was contracted to undertake contractual work 4 of 38 for only phase one of its school project work and did not imply or express that they would be awarded any additional contracts. They particularised phase one of the project as the construction of a Single ground floor residence, a ground floor school dormitory and a ground floor classroom block. The Defendant further averred that the phase one contract awarded to the Plaintiff was a fixed sum contract in the amount of USD$1,500,000.00 and further that the Defendant on the onset of the agreement never agreed to any variation or adjustment of the contract sum. The Defendant says that subsequently on 27th February, 2015 the parties renegotiated the phase one of the project to US$1,599,100.00 which was also a fixed sum contract. The Defendant vehemently denied the plaintiff’s claims in respect of the variations and contended that it has fully paid the Plaintiff the contracted sum of US$1,599,100.00. Issues for Trial On 14th January, 2022, the court set down the issues listed in the Application for Directions filed on 22nd January, 2019 and the Notice of Additional Issues filed on 15th February, 2019 as the issues for trial. The issues were: Application for Directions 1. Whether or not the Defendant Organisation contracted the Plaintiff Company to develop and construct for it a school complex comprising of a single storey residential facility, a four-storey dormitory block and a three-storey classroom block. 2. Whether or not the contract entered into between the parties was a fixed sum contract or a Guaranteed Maximum Price Contract subject to variations and adjustments and consequential costs. 3. Whether or not the Defendant Organisation requested for the project to be completed in phases commencing with phase 1. 5 of 38 4. Whether or not the parties, after renegotiating Phase 1 of the project at a cost of US$1,599, 100.00 agreed to make payment for variations when they occurred. 5. Whether or not the Plaintiff engaged and paid for the services of sub- contractors to cater to the Defendant’s building specifications. 6. Whether or not the Plaintiff carried out variations and remedial work with the approval of the Defendant organisation amounting to US$399, 991.93. 7. Whether or not the Plaintiff suffered any losses due to the depreciation of the local currency. 8. Whether or not the Defendant organisation has fulfilled at all its financial obligations towards the Plaintiff Company. 9. Whether or not the Plaintiff acted in good faith at all material times during the pendency of the project. Additional Issues 1. Whether or not the Plaintiff acted dishonestly in the performance of its contractual obligations with the defendant. 2. Whether or not the Defendant had the right to terminate the contract with the Plaintiff after completion of Phase I of the Project. The Trial The Plaintiff Company testified during trial. It testified through its representative Aida Daniel who is the Managing Director of the Plaintiff entity. Plaintiff invited two witnesses to testify in support of their case. These were Carl Richards (PW1), an Executive Director with Plaintiff Company and Michael Jumo (PW2) an Architect. The Defendant’s representative Brother Michael Amakyi testified. They did not however call any witness to their aid. 6 of 38 Issue 1 Whether or not the Defendant Organisation contracted the Plaintiff Company to develop and construct for it a school complex comprising of a single storey residential facility, a four-storey dormitory block and a three-storey classroom block. The first issue to be determined is whether or not the Defendant Organisation contracted the Plaintiff Company to develop and construct for it a school complex comprising a single storey residential facility, a four-storey dormitory block and a three- storey classroom block. Firstly, this issue is an invitation to the court to determine the scope of the contract between the Plaintiff and the Defendant. Secondly, since it is the plaintiff who alleged in paragraph 4 of their Statement of Claim that they were contracted by the Defendant to construct a school complex comprising of a “single storey residential facility, a four- storey dormitory block and a three-storey classroom block”, my considered opinion is that they bore the legal burden to put before this court, admissible and credible evidence to establish same. This is particularly against the backdrop that their claim that they were contracted by the Defendant to construct a single storey residential facility, a four-storey dormitory block and a three-storey classroom block was denied by the Defendants in paragraph 5 of the Statement of Defence. Indeed the denial by the Defendant was to the extent that they rather contracted the Plaintiff to construct of a single ground floor residence, a ground floor school dormitory and a ground floor classroom block representing a phase 1 of an entire project comprising single storey residential facility, a four-storey dormitory block and a three- storey classroom block. 7 of 38 As indicated earlier, the antecedents of this case is founded on contract and the general principle is that the terms of the contract ought to be extracted from the contract. As stated in the case of Mireku & Tetteh (Decd), In Re Mireku v Tetteh [2011] 1 SCGLR 520 “it is not the duty of the Courts to make a new contract for the parties on terms they have not mutually agreed upon”. Again in the case of Inusah v D. H. L Worldwide Express [1992] 1 GLR 267 the court held as follows on the question: “The general rule was that when a document containing contractual terms was signed, then in the absence of fraud or misrepresentation, a party of full age and understanding was bound to the contract to which he appended his signature. In such a case it would be immaterial whether he read the document or not”. The placement of the legal burden on the Plaintiff is consistent with sections 10(1) (2) (b), 11(1) (4), 14 and 17 of the Evidence Act, 1975, NRCD 323 and the principles set down in the case of Okudzeto Ablakwa (No. 2) vs. Attorney General & Another [2012] 2 SCGLR 845 at 867. In this case the court explained the law governing proof when it stated 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.” Again in the case of Takoradi Flour Mills vs. Samir Faris [2005-2006] SCGLR 882, the court explained the burden cast by law on a plaintiff as follows: 7. “It is sufficient to state that this being a civil suit, the rules of evidence require that the plaintiff produces sufficient evidence to make out his claim on a preponderance of probabilities, as defined in section 12(2) of the Evidence Decree, 8 of 38 1975 (NRCD 323). In assessing the balance of probabilities, all the party in whose favour the balance tilts is the person whose case is the more probable of the rival versions and is deserving of a favourable verdict” Finally the nature of the evidential burden is discussed in the case of Ackah v Pergah Transport Ltd [2010] SCGLR 728 as follows: “It is a basic principle of the law on evidence that a party who bears the burden of proof is to produce the required evidence of the facts in issue that has the quality of credibility short of which his claim may fail. The method of producing evidence is varied and it includes the testimonies of the party and material witnesses, admissible hearsay, documentary and things (often described as real evidence), without which the party might not succeed to establish the requisite degree of credibility concerning a fact in the mind of the court or tribunal of fact such as a jury. It is trite law that matters that are capable of proof must be proved by producing sufficient evidence so that on all the evidence a reasonable mind could conclude that the existence of the fact is more reasonable than its non-existence. This is a requirement of the law on evidence under sections 10(1) and (2) and (11(2) and (4) of the Evidence Act, 1975, (NRCD 323)”. The evidence of Aida Daniels, the Plaintiff’s representative and a director of the plaintiff entity is that even though the plaintiff initially contracted them to put up three building, subsequently at a meeting held at the Defendant office the contract was agreed to be divided in phases, phase 1 being the construction of the residence plus the ground floors of the dormitory and the classroom. That the phase I of the project was valued USD$1, 599,100.00. I find from the evidence of the plaintiff and the pleading of the defendant that there no issues arises regarding the scope of the original contract, however the vexed question is whether or not after the project was broken down into three phases, it was further 9 of 38 agreed that Plaintiff entity will be the entity to execute all the three phases beginning from phase 1 of the project. This question forms the premise of the next issue. Issue 2 Whether or not the Defendant Organisation requested for the project to be completed in phases commencing with phase 1. It is not in dispute that the original project was subsequently divided into three phases. It is also not in dispute the Defendant engaged the plaintiff to execute phase 1 of the project. However, the evidence of the plaintiff during the trial is that the Defendant had prevented them from continuing with the other phases of the project upon completion of phase 1 of the project. Her evidence at paragraph 17 of her witness statement filed on 6th May, 2022 is as follows: 17. In addition to the Defendant’s indebtedness to the Plaintiff, Defendant unilaterally terminated the contract disabling the Plaintiff from continuing the second and third phases of the contract which caused the Plaintiff considerable loss of income and of profit from the non-completion of the later phases. The Plaintiff loss an amount of USD$148, 976.00 on the commission that it would have earned on the project sum if the contract was not terminated. Per the Guaranteed Maximum price contract terms, the Plaintiffs commission is 10% of the contract sum of USD1,499,761. As indicated earlier, parties are generally governed by the terms the contract entered between the parties. The question therefore is whether or not the Plaintiff exhibited any contract with the Defendant which provided that they had been contracted by the Defendant to execute phase 1, 2 and 3 of the project. 10 of 38 The Plaintiff at paragraph 5 of witness statement stated as follows: 5. Per a letter dated 13/04/2015 the Defendant accepted Plaintiff offer to construct Phase I at a renegotiated sum of US$1,599,100 (copies of the Plaintiff’s offer letter for the phase 1 of Opeikuma project and the Defendant’s acceptance letter are attached hereto and marked as EXH B series) A further examination of the entire witness statement of the Plaintiff and her witnesses will also reveal that no other written contract was exhibited by the Plaintiff to evince the agreement in respect of the other phases. This was confirmed by Carl Richards (PW1), an Executive Director of the Plaintiff Company during his cross-examination as follows: Q. Kindly point to the court the contract executed between the plaintiff and the defendant in relation to the project A. Exhibit “B” Q. Is this the only contract exhibited by the parties? A. Yes this was for the Brother Andre High School The evidence of PW1 was also that no other contracts were executed by the parties, to my mind means that the only executed contract between the parties as claimed by the plaintiff was Exhibit “B”. When the same question regarding the existence of other contracts was earlier put to the Plaintiff’s representative Aida Daniels during cross-examination, she testified as follows: 11 of 38 Q. Tell the court the value of the contract as agreed between the parties? A. The value of the contract was one million five hundred and ninety-nine one hundred United States dollars Q. Is this the only contract the parties executed? A. No. This is not the only contract the parties executed Q. Can you tell the court which other contract the parties executed? A. Apart from what we signed for the one point five million, ninety-nine one hundred out of the scope of that work varied, increased and that is what gave us different variations. Those were variations to the contract sum of one point five million, ninety-nine one hundred contract In the above responses by the Plaintiff’s representative, I find that even though she said other contracts existed between the parties, her responses were rather to the effect that the contract was in respect of the variations and not in respect of the other phases. Be that as it may, subsequently when counsel for the Defendant repeated the same question to her during further cross-examination. The response of the Plaintiff’s representative was more categorical and forthright. She testified as follows: Q. You agree with me that the contract executed between the parties was in respect of only phase 1. A. It was for phase 1. I will now deal with how phase 1 of the project was conceived. In this regard I will further lean on Plaintiff’s Exhibit “B” which provides the spring board to this issue. Exhibit “B” is a letter dated 27th February, 2015 and authored by Aida C. Daniel (the 12 of 38 Plaintiff’s representative”). Exhibit “B” also has the unique ingredient of the contents having been accepted by the Defendant in the same letter. The introduction of the letter to my mind sets out the parameters for the contract. It states as follows: “Following our conversation of February 11, 2015, we are pleased to provide pre-construction and construction management services to initialise and construct phase 1 of the Bro. Andre High School. We hereby submit for the schools use and benefit a Guaranteed Maximum Price (GMP) for this project in the amount of: One million five hundred ninety nine thousand & Construction Managers Fee. US$1, 599, 100.00… We understand Phase I of BAH to be the construction of the Brothers residence (or convent), in its entirety plus the construction of the foundations and ground floors of one of the classroom blocks and one of the dormitory building, both fit for occupancy and purposeful use by July, 2016…” In construing the proper meaning to the above text, it is imperative that the document is read as a whole. Accordingly in reading the document as a whole, the understanding extracted from the letter is that the parties had an earlier meeting, which meeting was reduced into writing as an offer and acceptance letter. Secondly, the agreed terms of the meeting also found expression in Exhibit “B”. The Plaintiff in paragraph 5 of her witness statement further stated that the plaintiff on 13th April, 2015 accepted the Plaintiff’s offer to Construct Phase 1 at the renegotiated sum of USD$1, 599,100. I have in earlier paragraphs stated that the defendant in their Statement of Defence did not deny this. But for purposes of this issue it is essential that 13 of 38 I reproduce the contents of the said letter (Exhibit “B”) for the factual basis in determining whether or not the parties had agreed that the scope of the construction contract extended beyond phase 1. The said letter authored by Bro. Michael Amakyi, C. S. C of the Defendant entity to Mr. Carl Richards of the Plaintiff entity states as follows: “ Dear Carl Richards, COMMENCEMENT OF CONSTRUCTION OF PHASE 1 OF BRO. ANDRE HIGH SCHOOL, OPEIKUMA I am writing this letter on behalf of the Congregation of Holy Cross authorising you to begin construction of phase 1 of Bro. Andre High School, Opeikuma. I understand that the total cost is one million five hundred ninety nine thousand and one hundred dollars (US$ 1, 599, 100.00) and that this amount includes the cost of the work defined and the Construction Manager’s fees. I look forward to working with you towards the realisation of our education project.” My unequivocal deduction from my reading of these two letters is that the parties had agreed to execute phase one of the project as described in Exhibit “B” as “…the construction of the Brothers residence (or convent), in its entirety plus the construction of the foundations and ground floors of one of the classroom blocks and one of the dormitory buildings…” 14 of 38 I further find that the Plaintiffs did not put before this court any further written communication indicating that the parties had agreed that the Plaintiff after the completion of the phase 1, will continue with phase 2 and phase 3. This is because in their responses given to question posed by counsel for the defendant during cross- examination, they admitted that only one contract in respect of the phase 1 project had been executed. S. A. Brobbey in his book “Essentials of The Ghana Law of Evidence” 2014 at page 112-113 comments on the importance of admissions as follows: “The importance of admissions lies in the fact that the court can act on them without proof of the facts constituting the admissions. Admissions therefore constitute the second category of matters which require no proof. The rationale for this rule is obvious. If a person admits or concedes to facts which are against his interest, there is no need to proceed further to prove those facts before he would be bound by the terms of those facts. Counsel for the Plaintiff also referred the court to the case of Agyakoma v Opuni and Others [1987-88] 1 GLR 47 which I accept as applicable in this instance. In this case the Supreme Court opined on the legal effects of admissions as follows: “It is settled law that where essential issues in controversy are admitted by witnesses called by the opposite party, the resolution of the matter must be in favour of the party who is thus supported by his adversary’s witnesses” In conclusion, I find that the plaintiff have failed to put before this court evidence to proof their claim that they were contracted by the Defendant to construct phase 2 and phase 3 of the project. 15 of 38 Before I conclude this matter it is important to state that the only contract I find existing between the parties in respect of the construction work is that which has been tended as Exhibit “B”. The same contract was tendered by the Defendant as Exhibit “5” [previously numbered as Exhibit “1” in the witness statement. This is how the Defendant introduced Exhibit “5” in paragraph 11 of his witness statement filed on 5th July, 2022. 11. The contract for the execution of Phase one of the building project was entered into in or about 27th February, 2015. This contract is the only agreement that governed the relationship between the plaintiff and the Defendant. (copy of contract attached and proposed to be marked as “Exhibit 1”). Counsel for the Defendant at page 12 of his written submission posed a question invited the court to discount Exhibit “C”, which is an unsigned draft agreement tendered by the Plaintiff’s representative. Indeed I agree with counsel for the Defendant when he argues at page 12 of his written closing submissions as follows: “My Lord, the legal effect of an unsigned agreement is trite. A trial court, the defendant submits, is not to attach any probative value to an unsigned, undated agreement. In the absence of extrinsic evidence to prove that all the parties signified their intention to be bound by the terms of the unsigned agreement, it is clear that the parties did not assent to the terms of this self-serving, unsigned, and undated agreement.” Counsel for the Plaintiff in his written submissions however relied extensively on Exhibit “C” and argued that the Defendant accepted to be bound by the draft Exhibit “C”. 16 of 38 My understanding of counsel for Plaintiff’s submission is that of an acceptance that Exhibit “C” was only binding to the extent that the Defendant engaged in conduct admitting of an acceptance to be bound by Exhibit “C”. It is therefore my considered view that Exhibit “C” in and of itself cannot be binding on the Defendant, unless the Plaintiff’s evidence on record supports a finding that the Defendant had engaged in conduct which demonstrates that he had agreed to be bound by the draft agreement (Exhibit “C”). A further reading of the evidence of the Plaintiff and their witnesses will support a finding that they only testified extensively about the variations of the contract. I however find no shred of evidence regarding the conduct of the defendant which supported a finding that they had agreed engage the Plaintiff in respect of the 2nd and 3rd phases of the contract. In conclusion I find that the plaintiff has filed to put before the court evidence to support a finding that they were engaged by the defendants to execute the 2nd and 3rd phases of the contract. As a consequence of this finding, it is my respectful view that the issue whether or not the Defendant had a right to terminate the contract with the Plaintiff after completion of phase 1 of the project does not arise. Issue 3 Whether or not the contract entered into between the parties was a fixed sum contract or a Guaranteed Maximum Price Contract subject to variations and adjustments and consequential costs. I will now deal with whether or not the contract between the parties was a fixed sum contract or a Guaranteed Maximum Price (GMP) contract. According to the Plaintiff the 17 of 38 contract was GMP whereas the Defendant in his pleadings stated that it was a fixed sum contract. The Plaintiff however denied this in their reply filed on 8th March, 2018. The denial by the Defendant was couched in paragraph 6 and 9 of the Statement of Defence as follows. 6. The Defendant vehemently denies paragraph 5 of the Statement of Claim and says in response that it was agreed between the parties in January 2015 that the contract sum of the Phase one Project which it was awarding to the Plaintiff was a fixed sum contract in the amount of One million and five hundred thousand US dollars (US$1, 500,000.00) and the defendant from the onset of the Agreement never agreed to any variation or adjustment of the contract sum.[emphasise mine]. 9. The Defendant admits that on 27th February, the parties renegotiated the contract for the phase one project in the amount of US$1, 599,100.00 (one million, five hundred and ninety thousand dollars only, which again was a fixed sum contract. [emphasis mine]. This issue will be the easiest and quickest to resolve, this is because the processes for arriving at a determination one way or the other whether or not the contract was for a GMP contract or a fixed sum contract will not involve digging any trenches. I say so because, notwithstanding the vehemently presented allegation that the contract was a fixed sum contract, Defendant in paragraph 11 of his witness statement filed on 5th July, 2022 admitted that the contract was guaranteed maximum price. He stated as follows: 11. The contract was for a guaranteed maximum price of One million five hundred and ninety-nine thousand and one hundred United States dollars (US$1,599, 100.00). 18 of 38 Again I find from the Plaintiff’s Exhibit “B” which is the same as the Defendant’s Exhibit “5” copious references to the effect that the contract was a GMP. The first paragraph of Exhibit “B” reads: “Following our conversation of February 11, 2015, we are pleased to provide pre- construction and construction management services to initialise and construct phase 1 of the Bro. Andre High School. We hereby submit for the schools use and benefit a Guaranteed Maximum Price (GMP) for this project…” Again, the last paragraph of the Exhibit “B” reads: “In the absence of any other conditions of contract or scope of work, we propose the contract format based on the “Cost plus fee with a Guaranteed Maximum Price”. This GMP has been quoted in US dollars to provide some stability in the expected cost but may be payable in cedis at commercially viable exchange rates.” As stated in earlier paragraphs these proposals were accepted by the defendant when Mr. Michael Amakyi (who testified on for the defendant) signed the said letter on behalf of the Defendant. Counsel for the Plaintiff at paragraph 4.1 of his legal submissions urged the court on the question as follows: “My Lord, the only agreement executed between the parties was Exhibit B, the Plaintiff's offer dated 27/02/2015. Per the content of Exhibit B, the parties agreed that the contract was a Guaranteed Maximum Price (GMP) contract for an 19 of 38 amount of One Million Five Hundred ninety-nine Thousand and One Hundred Dollars (USD1,599,100.00) for Phase 1 of the project. Phase 1 of the project consisted of constructing the Brother's residence and constructing the ground floors of one of the classroom blocks and one of the dormitory blocks”. I agree with counsel for the Plaintiff when he submits that fundamentally the contract was a GMP contract. I do not however accept the submissions by counsel for the Defendant at page 13 of his written submissions that “on page 2 of Exhibit B, the contract between the parties, it is provided that the contract format is based on “Cost plus Fee with a Guaranteed Maximum Price”. The court disagrees with him because the preamble to the said provision was that the parties agreed that “In the absence of any other conditions of contract or scope of work, we propose the contract format based on the “Cost plus fee with a Guaranteed Maximum Price””. A reading of the entire Exhibit “B” will show that the specific area where the GMP will be applied had been specifically stated. A further reading of Exhibit “B” will show that no other conditions of the contract or scope of work on the face of Exhibit “B” where the pricing model was not stated as GMP. Accordingly, I find that the contract entered between the parties was on GMP basis and not a fixed sum contract or for that matter Cost Plus Fee. Issue 4 1. Whether or not the parties, after renegotiating Phase 1 of the project at a cost of US$1,599, 100.00 agreed to make payment for variations when they occurred. 2. Whether or not the Plaintiff carried out variations and remedial work with the approval of the Defendant organisation amounting to US$399, 991.93. 20 of 38 I will now determine whether or not the parties, after renegotiating Phase 1 of the project at a cost of US$1,599, 100.00 agreed to make payment for variations when they occurred. I will couple the determination of this issue with Whether or not the Plaintiff carried out variations and remedial work with the approval of the Defendant organisation amounting to US$399, 991.93. My understanding of the issues is an allegation that notwithstanding the non-existence of a signed contract detailing variations, the parties agreed that variation must be paid for once made. Indeed the evidence of the Plaintiff’s representative reflected this understanding as follows: 5. Per a letter dated 13/04/2015 the Defendant accepted Plaintiff’s offer to construct Phase 1 at a negotiated sum of USD$1, 500.100 (copies of the Plaintiff’s offer letter for the phase 1 of Opeikuma project and the Defendant’s acceptance letter are attached hereto and marked as Exh. B series). 6. The contract was a Guaranteed Maximum price contract and not a fixed sum contract as stated in paragraph 6 of the defendant’s Statement of Claim. Indeed we submitted a draft Guaranteed Maximum Price Contract for the Defendant to study and sign. Various clauses in the draft contract document indicate clearly that there are situations under which variations could occur. Even though the Defendant failed to sign the contract, there was an implied term for variations in Plaintiff’s offer dated 27/02/2015. It was always understood that if there were changes in the project design, scope and systems, the project would be subject to variations and adjustments. (I attach a copy of the draft agreement and mark the same as “EXH “C”). 21 of 38 I agree with counsel for the defendant when he says in his written legal submission that Exhibit “C” is not enforceable against the Defendant since same had not been signed by the defendant and because it is a draft. The question however is whether beyond the contract the parties had agreed on variations and variation payments. In arriving at a determination I will lean on the decision of Comet Construction Co. Ltd v Ghana Commercial Bank [1976] 2 GLR 220 @ 230 where it was held as follows: “if a person by his words or conduct makes to another a promise or assurance which is intended to affect the legal relations between them and to be acted on accordingly, then once the other party takes him at his word and acts on it, the person who has made the promise or assurance is not entitled and will not be permitted by a court of justice to revert to the previous legal relations as if no such promise or assurance has been made by him” So what evidence did the Plaintiff’s put before the court that the Defendants agreed to pay for variations. In paragraph 10 and 11 of the witness statement of Aida Daniels stated as follows: 10. Almost all the variations work done on the project were because the building had to be redesigned. The professionals engaged on the project recommended that certain facilities and some additional works needed to be done to improve the functionality of the building to ensure that the project complied with building regulations. All variations works were done based on the recommendation of the Professionals and with the consent and approval of Brother Daniel Dordoe (Application submitted by the Plaintiff on variation works done on the project due to changes in 22 of 38 drawings and recommendation of professionals is attached hereto and same is exhibited and marked G). 11. It is surprising that the Defendant stated in paragraph 6 of the Statement of Defence that it never agreed to any variation works. Indeed the Defendant paid for some variations works done on the project and was also aware that variations works were billed separately from work done under the contract. In an email dated 15/06/2016, Brother Michael Amakyi confirmed that the Defendant agreed to pay the Plaintiff for variation works done as a result of the redesign of the buildings (An email from the Defendant confirming that it had paid the plaintiff for some variation works done on the project are attached hereto and same marked H). Exhibit “H” is an email written by Aida Daniels to Bro. Amakyi, the Defendant’s representative herein. The email reads: “Dear Aida, I have received your mail and would like to clarify the contents of my earlier mail. I had indicated that we are not in the position to admit any changes to the estimates. The variation due to our failure to do due diligence on the topography is understandable and this has been taken care of. I ask therefore that you stay with the original estimates for all other works. Thank you.” 23 of 38 Elaborating further on Exhibit “H”, the defendant testified as follows during cross- examination by counsel for the Plaintiff: Q. Let me refer you to email correspondence you were engage in with Aida Daniels (Exhibit “H”) you remember writing the first email Exhibit “H” dated 15th 2016@ 7.05pm? A. Yes, I do. I was asked to write the email. I said yes but there is a context to the last paragraph of my email which I stated “I ask therefore that you stay with the original estimate of all other works” Q. When you say in your email (Exhibit “H”) that “the variation due to our failure to do due diligence on the topology is undesirable”. What you meant was that additional cost outside the original estimates incurred as a result of variation arising from the 2nd topographical survey has been paid already by you, not so, yes or no? A. Yes we paid. Q. Look at Exhibit “B1” of the witness statement of Aida Daniels written to Carl Richards. You remember writing this letter? A. Yes Q. And the figure stated in paragraph 2 of Exhibit “B1” is the total amount you call original estimates, not so? A. Yes. That is the guaranteed maximum price Q. And that original estimate as you call it is what was arrived at from the prices assigned to your unpriced bill of quantities, correct? A. That is correct 24 of 38 Q. And it is the price bill of quantities submitted by the plaintiff which arrived at this figure, correct? A. No. there is a correction. The figure US 1,599,100.00 is the sum total of the bill of quantities which we term a) construction cost, b) contingencies, c) general conditions and d) construction manager’s profit. So, this figure is a + b + c + d = guaranteed maximum price Q. And it is that figure which the plaintiff put in the contract you signed with it as the guaranteed maximum price, correct? A. Not entirely correct. The contract is cost plus contract with guaranteed maximum price and because it is cost plus contract the fee for the actual construction work is isolated and the others are added to it because the guaranteed maximum price referred to is not to exceed priced contract. Q. In otherwise, when you look at “Exhibit B” of the witness statement of Aida Daniel all the elements that you have described to this court are broken down in the documents, your construction. Not so? A. Yes Q. I want you to concentrate on item 1 of Exhibit B, you agreed to that? A. Yes Q. Work defined did not include additional cost incurred from additional work done arising from the recommendation made subsequent in the professional report. Not so? A. Yes, work defined did not include any other work outside the GMP proposal 25 of 38 Q. And additional work done and additional cost incurred as a result of variations recommended under the professional report made in 2nd quarter 2015 are outside the GMP proposal, not so? A. No, I disagree. The bills were based on bills of quantity for the work. Any variations in the design will call for a change in the bills of quantities. My Lord, we used one bill of quantity throughout the construction. Q. When you say in Exhibit H “the variation due to our failure to do due diligence is undistinguishable and thus has been taken care of”. Don’t you mean that the payment you made for the variation is outside the GMP? A. No My understanding of Exhibit “H” vis a vis paragraphs 10 and 11 of the witness statement of Aida Daniels is that the variation was as a result of the change of topography and this led to the redesign of the building. That this fact was brought to the attention of the Defendant. I further find that Exhibit “H” was the response given to them by the Defendant. I again understand the response given by the defendant in Exhibit “H” to mean that all the variations had been already allowed or provided for in Exhibit “B”, which was a Guaranteed Maximum Price. In construction contracts, a Guaranteed Maximum Price (GMP) is generally understood to operate as a pre-agreed maximum amount that an employer is required to pay to the contractor for the works done under the contract. This provides a client with comfort that if there are cost overruns then the client's maximum exposure is the GMP with the contractor taking the risk of cost overrun. At page 14 of his written submission counsel for the Defendant referred to the relevant authorities to explain what GMP means as follows: 26 of 38 “The building Contract Dictionary, 3rd edition (Blackwell Science 2001) defines a guaranteed maximum price contract as “generic term used to describe contracts aimed at placing the onus on the contractor to seek cost saving solutions and encourage a value engineering approach to the construction process.” It is also defined in the Dictionary of Architecture and construction 4th edition (Mcgraw Hill 2006) as “an amount established in an agreement between owner and contractor as the maximum cost of performing specified work on the basis of cost of labour and material plus overhead expense and profit.” During cross-examination of Aida Daniels by counsel for the Defendant, below is what transpired: Q. What is your understanding of the “guaranteed maximum price”? A. For a guaranteed maximum price you are supplied information you require to give your price. In this case it was set of drawings and bills of quantities Q. Do you agree with me that a guaranteed maximum price is the highest threshold the value of a construction project would be? A. In theory, that is so. As it applies to this contract the drawings and bills of quantities we received and worked on gave us a certain amount. This is before the guaranteed maximum price option arose. I will like to clarify. The tender document was for three buildings. A one story residential facility, a three story classroom block and a four story dormitory block. I clarify further. The tender for the three classroom block came to eleven million plus Ghana cedis. We won the tender but we were told that due to financial constraints at the time there were sufficient funds to do the following; complete the residential facility, build the ground floor of the 27 of 38 classroom block and the ground floor of the dormitory block. So, the guaranteed maximum price was supposed to do three building. Per the bill of quantities we had it was determined that the contract price we signed for would be reasonable price to complete that phase of the project work. Clearly, Madam Aida Daniels understands the implications of a Guaranteed Maximum price contract, save that she purports to water down the strict application of same to the instant contract with reasons I am unable to wrap my head around. This is particular so because she concluded her testimony with “Per the bill of quantities we had, it was determined that the contract price we signed for would be reasonable price to complete that phase of the project work.” I don’t find this understanding expressed anywhere in the exhibits filed. So the question is whether or not as stated by the Defendant in Exhibit “H”, the variations were anticipated in the contract and therefore provided for. In paragraph 12 and 13 of the witness statement of Michael Amakye for the Defendant, he stated as follows: 12. It was the understanding of the parties as expressed in the contract that the Plaintiff would be paid or reimbursed for actual costs incurred in the construction, overheard costs (general conditions), as well as the construction manager’s fees. An additional contingency cost was included in the contract price. 13. This contingency cost included in the breakdown of the contract price was to cater for all unforeseen costs arising out of the project. 28 of 38 An examination of Exhibit “B” will show that provision in the amount of US$174, 296.00 was made for contingencies. When asked during cross-examination, the purpose of the contingency, Aida Daniels responded as follows: Q. What do you understand by contingencies? A. Contingencies are to cater for unforeseen occurrences Q. Contingencies were provided for in the contract between the plaintiff and the defendant. Is that correct? A. That is correct Q. Unforeseen occurrences as you defined would include variations. Is that correct? A. It can include variations. Given the admission by Aida Daniels that the contingency funds can include variations, and having failed to put before this court evidence to show that the Defendant specifically approved the variations I find that the variations made as a result of the change in the topography was provided for under the contract under the contingency theme. My finding finds support in Aida Daniels paragraph 12 and 13 of her witness statement which flows from paragraph 10 and 11 as follows: 12. The project was further delayed because of the time spent engaging the aforementioned professionals to correct the mistakes in the design to allow the construction to begin. (A copy of email outlining the reasons for the delay in commencing the project is attached hereto and same is marked as J). 29 of 38 13. The contingencies in the contract were not to exceed USD174, 296.00 from this amount the Plaintiff billed the Defendants and amount of USD158, 091.97 for contingency. The outstanding balance of USD18, 204.03 cannot pay for the exchange rate fluctuations and the variations works executed on the project. Firstly, I find a subtle attempt by the Aida Daniels to distinguish between contingencies and variations as a result of “mistakes” in paragraph 12 and 13 of her witness statement. They failed however to show the court the exclusive activities they conducted which they described as contingencies, accordingly I will construe the variations as the contingencies. I find that the Plaintiff was also unilaterally determining how the contract sum was paid. She testified to its unilateral conduct as follows: Q. I put it to you that although the parties agreed to a certain rate to be applied in respects of the project, the plaintiff by itself proceeded to apply its own rates to the project A. That is so. At the time we put in the guaranteed maximum price proposal that price was generated from certain market prices. On engaging the subcontractors prices had changed to market conditions which mean that when there was a variation it was against the subcontractor’s price submitted to us. In conclusion I find that the plaintiff has failed to put before the court evidence to support a finding that after renegotiating Phase 1 of the project at a cost of US$1,599, 100.00 the defendant agreed to make payment for variations when they occurred. 30 of 38 Notwithstanding the fact that the intendment of a guaranteed maximum price contract is to put a ceiling on cost, it is not unusual in certain circumstances that a guaranteed maximum price contract may deviate from its original specifications or scope. My readings on construction law is that before this is done, there must exist a change or variation order. A change order or variation order is said to be an agreement between a contractor or subcontractor and a consumer that makes modifications to an existing construction contract. These changes can consist of additions, omissions, or substitution for the work, schedule, price, or other aspect of the contract. Indeed I find from the record of evidence that Mr. Carl Richards during his cross- examination by counsel for the Defendants supported this view. His responses to questions asked by counsel for the defendant is reproduced as follows: Q. But you will agree that unless the scope of works and design change you are not entitled to any cost overruns. You will agree overrun mean beyond the maximum price A. I agree It is not in dispute that the scope of work as contained in Exhibit “B” was that which circumscribed Phase 1 of the project. It is also not in dispute that the plaintiff carried out same. It is also not in dispute that the Defendant paid an amount of US$1, 599,100.00 to the plaintiff, representing payment in respect of the scope of work outlined in Exhibit “B”. 31 of 38 The question therefore is whether or not the Plaintiff carried out additional works beyond that which has been detailed as the scope of work in Exhibit “B”. Madam Aida Daniels testified in paragraphs 7, 8, and 10 of her witness statement as follows: 7. The Plaintiff was unable to commence the construction the project because the Architect engaged by the Defendant had designed the building proposed project based on the assumption that the topography of the site was flat. Contrary to his assumption, the land was undulated. (A copy of Plaintiff findings submitted to the Defendant is attached hereto and same is marked EXH D). 8. The Plaintiff informed the Defendant of the nature the site. The Plaintiff recommended to the Defendant that it had to engage the services of an Architect, Surveyor, Geotechnical Engineer and Structural Engineers to prepare new drawings and make changes to the old designs where possible to enable Plaintiff's sub-contractors to commence construction. The Defendant initially did not want to approve the Plaintiff's recommendation to engage these professionals. The Defendant only agreed to it after it realized that the nature of the site would not be suitable to construct the buildings based onthe previous designs. Aside from that, the project did not the have a Geotechnical Investigation Report which was required to enable the assembly to issue a building permit to enable the Plaintiff to commence the project. The Geotechnical report required various aforementioned professionals. (A copy of a report on variations and the reason for the variations is attached hereto and marked EXH E). 32 of 38 10. Almost all the variation works done on the project were because the building had to be redesigned. The professionals engaged on the project recommended that certain facilities and some additional works needed done to improve the functionality of the building to ensure that the project complied with building regulations. All variations works were done with the based on the recommendation of the Professionals and consent and approval Dardoe of Brother Daniel (Applications submitted by the Plaintiff drawings variation works done on the project due to changes in recommendation of Professionals is attached here to and same is exhibited and marked G). Exhibit “E” is a report is titled “Additional Construction Work Done David Walter”. It states that the alleged additional works were carried out by the Plaintiff. An examination of the report will show that same contains the description of the nature of work done and the values attached to same. So the question is whether or not the Plaintiff carried out all the works listed in Exhibit “E” in the amount of US$339, 991.93. Carl Richards testified for the Plaintiff. He submitted in paragraph 11 and 12 of his witness statement on the issue of variations. He stated as follows: 11. Even though the parties agreed that the contract sum was USD1, 599,100 the parties were always aware that they could make variation to the agreement. A material change in the scope of work would undoubtedly necessitate a contract variation. The need for variation work was also a term in the contract and the Plaintiff’s offer letter…. 12. The invoices submitted to the Defendant contained separate invoices for the main contract, and the variation works done on the project. The defendant paid separately for the work done on the main contract and for 33 of 38 the variation works. The Defendant failed to appreciate this and therefore could not distinguish the bill for the main contract from the bill for the variation works done. 14. The first application for payment Exhibit P1 that the Plaintiff presented included variation works for 75% of the fees for engaging both the Architect and the Structural Engineer. It also had full payment for the Geological Engineer. In the first application payment, the plaintiff informed Defendant that it did not include variation for contract work during the period. The Defendant fully paid for the first invoice in two instalments payments. 15. Aside from this, as already stated above, the Plaintiff presented invoices for variation works done separately to the Defendant. In total Plaintiff presented three invoices for variation work done. The plaintiff carried out these variation works with the concurrence of the late Brother Daniel Dordoe, the Defendant clerk of works. The Project team took decisions during technical meeting attended by the late Brother Danial Dordoe. These technical meeting were held with Plaintiff and he professionals engaged by it. All variations invoices forward to the Defendant by the Plaintiff had attached to them report that stated the reasons for the variation works. Carl Richard then in 18, 20 and 22 of his witness statement then describes the nature of the variations and concluded in paragraph 23 as follows: 23. The defendant made payment of GH¢1, 88,688.41 on the first work variation the dollar equivalent of USD$312, 049.04. There is an 34 of 38 outstanding amount of USD$ 67, 490.44 on that bill. The Defendant has refused to pay for the 2nd and 3rd work variation, which remain due to date. Firstly, from the evidence it is undisputed that the construction work did not commence before the drawings were revised as a result of the realisation that the topography was not right. Now if it is to be understood that the phase 1 contract was executed before the redesign of the building, it will be reasonably expected tht the scope of the phase 1 contract including the bill of quantities will change significantly to capture the new variation. The vexed question is that if these conclusions are supposed to be the case, how is it that the parties not agree to re-engineer the phase I contract to admit the changed scope of the contract as a result of the re-design. As stated earlier, the evidence of the Defendant was that the phase 1 contract envisaged this exigency and made provision for same in the Exhibit “B” and therefore the defendant never authorised the Plaintiff to change the scope of the contract beyond that which was expressed in Exhibit “B” to include variations as a result of design change. The plaintiff case however is that variations were agreed to by Brother Daniel Dordoe. I also understand the evidence of Carl Richards to mean that the scope of the contract was changed without per an agreement which was not captured in writing. That the only evidence they have that the variation was agreed to by the Defendant, in the absence of Brother Daniel Dordoe, is that the variations were paid for by the Defendant. Now unfortunately, Brother Daniel Dordoe is deceased. The court have held that accepting the evidence against the dead should be with caution. In the case of Mondial Veneer (GH) Ltd v. Amuah Gyebu IV (2011) 1 SCGLR 466 it was stated as follows: 35 of 38 “We have firmly established the principle that real danger lies in accepting without questioning or close scrutiny, claims against a dead person. The caution that such claims must be weighed carefully is based on plain good sense and has consistently been applied in a number of cases”. The second case of reference is the case of Moses and others v Anane [1989-90] 2 GLR 694. In this case the Court of Appeal held as follows: “A claim against a deceased’s estate (as in the instant case) must be scrutinised with the utmost suspicion. Proof must be strict and utterly convincing as one of the protagonists was dead and could not assert his claim. There was no attempt by the court below to comply with that injunction. If the High Court had discharged that duty with any degree of fidelity, the hollowness of the plaintiff’s claim would have been apparent.” Firstly, I find that the plaintiff failed to tender evidence in respect of the technical meetings in which the Defendants representative Brother Daniel Dordoe attended. He failed to call any of the other professional who attended the meetings. He also failed to tender a record of the meetings. Exhibit “W” is a letter written by Carl Richard on 5th July, 2016 which he introduces in paragraph 25 and 26 of his witness statement as follows: 25. The Defendant failed to adhere to the payment timelines. Even through parties agreed that payments would be made within 10 days after the submission of invoices, the defendant never followed that. After the 36 of 38 advance payment was received on 26/05/2015, the following payment was received almost a year later on February, 24, 2016. 26. The Plaintiff had no choice but to write a memo on 5/07/2016 to the project sponsor, Brother Chester, in the United States to bring the matter to his attention (A copy of the email memo is attached hereto and same marked as Exh W.) An examination of Exhibit “W” will show that it purports to narrate the chronology of events, I find that no mention was made regarding the variations and the concomitant enhanced costs as a result. To my mind this is clearly an indication that no variation resulting in increased figures were approved by the Defendant or for that matter brought to the attention of Bro. Chester Freel, the sponsor of the Project. Again I find that there is no dispute that the only sum paid to the plaintiff so far is the contract sum of US$1,599,100.00 and no more. This to my mind means that all the initial payments thought by the Plaintiff to be payment made in respect of variation is not the case and not a separate amount in respect of variations as allegedly agreed by the defendant. Accordingly, I find that Exhibit “B” provided for contingencies which was to be applied to any variations including the design changes. Conclusion In conclusion I find that the Plaintiffs have failed to but before the court evidence in support of the reliefs they are seeking. Same is accordingly dismissed. Cost of Twenty Thousand Ghana Cedis (GH¢20,000.00) awarded in favour of the Defendants against the Plaintiffs. 37 of 38 EMMANUEL ATSU LODOH, J (JUSTICE OF THE HIGH COURT) Lawyers 1. Charles William Zwennes, Esq. for the Plaintiff 2. Shadrack Arhin, Esq. for the Defendant 38 of 38