MAA ZOO CO. LTD VRS MAXMOTECH SOLUTIONS CO. LTD @ 2 ORS. (civil case of 2022) [2022] GHACC 351 (6 October 2022)

IN THE CIRCUIT COURT HELD IN ACCRA ON 6TH DAY OF OCTOBER,2022 BEFORE HIS HONOUR SAMUEL BRIGHT ACQUAH, CIRCUIT COURT JUDGE ================================================================= MAA ZOOYA CO. LTD PLOT NO 613 ADJACENT MECHANIC SHOP WASHINGTON, MADINA PLAINTIFF VRS 1. MAXMOTECH SOLUTION CO. LTD 2. MOSES MICHAEL ADUKU 3. MAXWELL DELALI KOFI KUDOLO ALL OF HOUSE NO 81ST RINGWAY ESTATE OSU, ACCRA. DEFENDANTS COUNSEL FOR THE PLAINTIFF: MICHAEL YOURI COUNSEL FOR THE 1ST AND 2ND DEFENDANTS: GYEBI NTEM MENSAH. ============================================================ FINAL JUDGMENT ============================================================= The plaintiff a limited liability incorporated under the laws of the republic brought an action against the defendants herein for the following reliefs; 1. 2. 3. Recovery of the amount of eight thousand, eight hundred and Sixty-Four Cedis(GHS8,864) being amount paid for nonfunctioning equipment and expenses incurred Interest on the above amount Cost including solicitors’ fees PLAINTIFF’S CASE Plaintiffs case is that it had an agreement with the 1st defendant under a sub contract to install CCTV cameras at the naval base in Takoradi in the Western Region. The directors of the defendant personally guaranteed and committed to undertake the project according to the specifications defined in the bills of quantities. Plaintiff company then pre financed the project by advancing to the defendants an amount of Thirty-Five Thousand Cedis, Seven Hundred and Thirty-Four Ghana Cedis (35,734) which was duly received by the 1st defendant for execution of the project. The plaintiff contends that after the 1st defendant received the money, rather than purchasing the items for the project he went ahead to purchase a car and undertook other profligate expenditures not related to the project. Plaintiff alleges that defendants then went to credit substandard items not of prescribed quality for the execution of the project as a result the CCTV cameras were malfunctioning. Plaintiff’s company then instructed its lawyer to write to the defendants to undertake all the remedial measures to salvage the contract as he plaintiff is yet to be paid by its principals. Defendant failed to return to the site and the plaintiff had to engage the services of another subcontractor to do the remedial work at a cost of six Thousand, Four Hundred and Sixty-Four Ghana Cedis (GHS6,464). Plaintiff indicated that an additional cost of One Thousand, Five Hundred cedis (GHS1500) for workmanship and Nine Hundred Cedis (GHS 900) for transportation was incurred. 1st and 2nd DEFENDANTS’ CASE It is the 1st and 2nd defendants case that they executed the contract which the plaintiff has failed to conclude its part by settling the defendants outstanding sum, six clear months which stands at GHS 29,066.40. ISSUES FOR TRIAL a) Whether or not the defendants undertook the contract according to the specifications given by the plaintiff b) Whether or not the plaintiff incurred expenses in carrying out remedial work at the site c)Whether or not the defendants breached agreement between themselves and the plaintiffs. APPLICABLE LAW The term contract is often used to refer to an agreement, consisting of the exchange of promises, which is recognized by law as giving rise to enforceable rights and obligations. This definition emphasizes the fact that a contract consists essentially either of an exchange of promises between two or more parties or a promise given in exchange for the performance for an act. For a contract to be valid and enforceable there must be an unqualified offer by one party and an unqualified acceptance by the other party, there must be an intention to create legal relations, the parties must have the capacity to contract and also there should be a consideration for the performance of the act. In every case involving a contract the courts are concerned with three basic issues: 1.what exactly is the promise or promises that have been made by the parties? It helps to determine the terms of the contract which define the scope of the contractual liabilities undertaken by the parties or contract. 2. Does the promise or do the promises create any legal duty? This involves a determination of whether the essentials of the formation of contract have been complied with such as to make the parties promises legally enforceable. This inquiry often involves the determination of issues relating to the existence of consideration, capacity, vitiating factors or the legality of the object of the contract. 3. Upon determination of (a) and(b) the final issue is what kind of remedy should be given to the aggrieved party in the event of a breach or failure of the other party to perform the contractual duty. OFFER AND ACCEPTANCE An offer may be defined as a statement or conduct indicating a willingness to contract on terms stated or on terms which can reasonably be inferred from conduct, and made with the intention that it will become binding as soon as it is accepted. Also in the case of NTHC Ltd v. Antwi [2009] SCGLR 117, an offer was defined as an indication in words or by conduct by an offeror that he or she is prepared to be bound by a contract in the terms expressed in the offer, if the offeree communicates to the offeror his or her acceptance of those terms. An offer should be made with the intention that once accepted it will become binding. To constitute a contract, an offer as defined must have been accepted by the party to whom it is made. An acceptance has been defined as the final and unqualified expression of assent to the terms of an offer. Acceptance may be by words, conduct in writing. INTENTION TO CREATE LEGAL RELATIONS Parties must have clearly evinced or manifested an intention that their agreement, or exchange of promise was intended to have legal consequences or to be legally enforceable. In commercial transactions the court presumes that there is an intention to create a legal obligation unless the parties or the party alleging otherwise can prove the contrary. In the case of Edwards v. Skyways Ltd(1964) 1 All E. R.494, the defendant, an airline company, agreed with the British Airline Pilots Association to pay certain `ex gratia`` payments to a number of pilots who has been made redundant. The plaintiff, a redundant pilot, brought the action to recover the amount. The company refused to pay, arguing that the agreement was not intended to create legal relations because of the use of the often term ‘ex gratia’ to describe the payments. The court held that the subject matter of the agreement related to business matters and, therefore, the onus of establishing that there was no intention to create legal obligation was on the defendant. The defendant company had not discharged this burden. The use of the words`` ex gratia`` simply referred to the fact that the company had no pre-existing duty to make payments, but the use of those words did not mean that the offer made, when accepted would not create any legal relations. CAPACITY TO CONTRACT Again, it must be established that the parties have capacity or power in law to create contractual relations between them. Issues of capacity arise where the ability of one or both parties to assume contractual obligations is limited by the law to ensure their protection for policy reasons. Such special categories of persons whose capacity to contract is limited by statute or under the common law include infants, mentally incompetent persons and drunkards. CONSIDERATION Pollock defines consideration as an act or forbearance of one party, or a promise thereof, the price for which the promise of the other is bought, and the promise thus given for the value of the enforceable. A promise is said to be part of a bargain if it is given for consideration. A promise is given for consideration when the promisor asks for something in return for his promise and gets what he asks for. Thus a promise is generally not binding unless something of value such as a return promise or an act has been given in exchange for that promise. It is a common law principle that an agreement is not enforceable by the courts unless it is made for a consideration. In the case of Marfo & Others v. Adusei [1964] G. L. R. 365, the first appellant under the terms of mortgage agreement, attempted to sell a farm of the respondent. The parties agreed to postpone the sale for one year. However, the first appellant sold the farm three months later. The trial court accepted the respondents evidence that the first appellant had agreed to postpone the sale for a year and held that the sale which was made earlier than agreed was unlawful. On appeal it was held, inter alia, that the trial courts finding that there was an agreement to postpone the sale could not be interpreted as an agreement enforceable at law because there was no evidence upon which he would be justified in law in holding that there was a contract between the first appellant and the respondent, the performance of which could be enforced against the first appellant in a court of law. There was no agreement by deed, and there was no consideration moving from the respondent to the appellant. CONTRACTUAL TERMS The terms of a contract define the scope and the extent of the obligations undertaken by the parties to the contract. The parties during negotiations may make a number of statements. These statements may or may not form part of the contract. If a statement forms an integral part of contract it is said to be term of the contract such that when it is breached, the innocent party is entitled to sue for damages for breach of contract. A statement made in the negotiations leading up to the making of a contract which does not qualify as a contractual term is said to be a mere representation and this does not amount to a breach of contractual terms. FUNDAMENTAL BREACH A fundamental term of contract is one which underlies the whole contract such that where it is not compiled with the performance becomes totally different from that which the contract contemplated. In this sense it has been said that a fundamental term is one which is more fundamental to the contract than a condition. In simple terms, if a party delivers something totally different from what he contracted to deliver, it is not simply a breach of a condition of the contract, but it amounts to total non-performance and he is deemed to be guilty of a fundamental breach of the contract. According to the doctrine of fundamental breach he cannot rely on any exclusion clause to exclude his liability for such a fundamental breach of the contract. In Nichol v. Godts (1854)lOExch.191, a seller contracted to sell to a buyer foreign refined oil, warranted only equal to sample. The oil delivered corresponded with the sample, but was not to be foreign refined oil at all. The court held that the seller was not protected by the exclusion clause he had inserted. Pollock C. B remarked that if a man contracts to buy a thing, he ought not to have something else delivered to him. Also in Kersales (Harrow) ltd v. Wallis (1956) 2 ER 866, Lord Denning stated that, it is now settled that exemption clauses of this kind, no matter how widely they are expressed, only avail the party when he is carrying out his contract in its essential respects. The party cannot rely on an exemption clause when he delivers something different in kind from that contracted for or has broken a fundamental term or contractual obligation of the contract. The general principle is that a breach which goes to the root of the contract, that is a fundamental breach of the contract disentitles the party from relying on the exemption clause. DISCHARGE OF CONTRACT There are various ways in which a contract may be discharged. These include by an agreement, performance, breach, or frustration. Here our concern is where a contract is said to be discharged after performance by the parties. Generally, a party must perform all his obligations under a contract completely and exactly in order to be discharged from further performance or in order to be entitled to sue to enforce the other party’s performance. For a party to be discharged from further performance and be entitled to sue to enforce the performance of the other party, his own performance must be precise and exact i.e. the performance tendered must be strictly in accordance with the terms of the contract and must leave nothing else to be done. Thus, as a general rule, where one party tenders defective or incomplete performance of an entire contract, the other party is discharged from his liability to perform his side of the contract and the performing party cannot sue to recover payment for partial or defective work done. In Cutter v. Powell (1795) 6 T. L. R. 320; the defendant agreed to pay Cutter 30 guineas if he performed his duties as a second mate on a ship sailing from Jamaica to Liverpool. Cutter proceeded acted as mate on the ship, but died 19 days before the ship arrived at Liverpool. Cutters widow brought an action to recover a portion of the agreed sum. The action failed because by the terms of the contract, Cutter was obliged to perform a given duty that is to serve as mate on the ship till it arrived at Liverpool, in exchange for sum agreed upon. Since he had not been able to fully perform his obligations under the contract, he could not compel the performance of the defendant. Also in Sumpter v Hedges (1898) 1 QB 673, the plaintiff had agreed to erect two houses stables for a fixed sum on defendants land. Plaintiff did part of the work and abandoned the contract and the defendant had to complete the buildings himself. The plaintiff-sued to recover the value of the work he had done. It was held that the plaintiff could not recover the value of the work done. He had failed to perform completely and, therefore, was not entitled to payment. The above cases illustrate that where a party to a contract fails to fully perform his contractual duties he is not entitled to any remedy. This is however unfair and some principles have been developed to deal with such situations, and this includes the doctrine of substantial performance. DOCTRINE OF SUBSTANTIAL PERFORMANCE The doctrine of substantial performance is premised on the fact that there are degrees of defectiveness or incompleteness in performance, the defect may be trivial, minor, substantial or total. The principle of substantial performance states that if the performance tendered falls short of the required performance only in some relatively trivial respect, the party not at fault is not completely discharged from performance. He must pay the price agreed upon for work done or services rendered, but may counterclaim for the loss he has suffered by reason of the incomplete or defective performance. This means there will be a deduction for the partial non-performance or the trivial defect in performance. What constitutes substantial performance of a contract depends on the nature of the contract and all the circumstances. The courts look at the nature of the defects in performance and the proportion between the cost of rectifying the defects and the total contract price. Generally, where the cost of rectifying the defects in performance is a relatively small proportion of the total contract price, the courts are likely to consider the contract as substantially performed. In Hoenig v. Isaac [1952] 1 T. L. R. 1360, the parties entered into a contract for the decoration of a one-room flat. The plaintiff, also the decorator, had completed the work but there were certain defects, which would cost 56 Euros to repair. The total contract price was 750 Euros. The court held that looking at all the relevant circumstances, the contract price, subject to a counterclaim by the defendant for the damages for the cost of repairing or rectifying the work done. REMEDIES FOR BREACH OF CONTRACT Where there is a breach of contract the injured party is entitled to recover damages for the loss he has suffered. Remedies for breach of contract may be in the form of specific performance or an injunction, which remedies, generally granted at the discretion of the court. Damages are awarded by the courts in order to place the injured party or the innocent party, as far as money can do it, in the position he would have been in if the breach had not occurred, that is if the contract had been performed. In Royal Dutch Airlines (KLM) v. Farmex Ltd [1989-90] 2 G. L. R. 623, the defendants entered into an air carriage contracts with the plaintiffs to ship a consignment of mangoes to, eventually, London. The defendants failed to deliver the consignment on schedule and when the consignment eventually reached London the mangoes were declared unwholesome. The plaintiffs sued the defendants jointly and severally claiming, inter alia, damages. The trial judge and the Court of Appeal held for the plaintiffs. On a further appeal to the Supreme Court it was held that with regard to the measure of damages for breach of contract, the principle adopted by the Courts was restitution in integrum, that is if the plaintiff has suffered damage, not too remote he must, as far as money could do so, be restored to the position he would have been in had that particular damage not occurred. What was required to put the plaintiffs in the positions they would have been in was sufficient money to compensate them for what they had lost. However, the courts have applied certain principles to limit the extent of damages that can be recoverable where there is a breach of contractual terms and these are remoteness of damages and mitigation of damages. A victim of a breach of contract is entitled to compensation for any loss not remote or one which the plaintiff could have avoided by taking steps in mitigation. ANALYSIS ISSUE 1 Whether or not the defendants undertook the contract according to specifications given by the plaintiff. The plaintiff alleged that the defendants did not do the work according to the specifications and also indicated that the materials used for the work were substandard items. In support of the claim the plaintiff exhibited exhibit C, the contract of agreement and Exhibit D and D1, proforma invoice. The plaintiff also indicated that it made to the defendant an initial payment of Thirty-Five Thousand, Seven Hundred and Thirty-Four Ghana Cedis. The defendant however used inferior materials for the work as a result, the fixed cameras were faulty and some remedial work needed to be done. Several attempts to get the defendant to the site failed even after the plaintiff served them with a demand notice, Exhibit E. The 1st and 2nd defendants admitted receiving the letter and same was exhibited by the defendants as exhibit 7. However, the defendants stated that Exhibit D attached by the plaintiff is a proforma invoice dated 19/07/2019 addressed to the client, Mr. Thomas Adowa Maha which is rather a replication of exhibit D1 which emanates from 1st defendants company stating the items to be used for the installation of the CCTV cameras at the naval base and therefore the plaintiffs allegation cannot be correct since the prescribed items came from the defendant. From the above contentions, it is a contractual principle that parties are to be bound by the contractual terms they agree to especially where the terms of the agreement were written. As a general rule, where the agreement is wholly reduced into writing, extrinsic evidence will not be admitted to add to, vary or contradict the terms of the written agreement, this principle is known as the parole evidence rule. In WILSON V BROBBERY [1974] 1 GLR 250, the main issue was how far the defendant could be allowed to lead parole evidence to contradict the terms of the invoice. It was held, dismissing the appeal, that where parties had embodied the terms of their contract in a written document, extrinsic or oral evidence would not be allowed to add to, vary, subtract from or contradict the terms of that instrument. However, this principle is subject to certain exceptions and these are, 1. Parole evidence may be admissible to establish or prove the existence of a collateral contract. 2. Parole evidence may be admissible to establish or prove the existence of a vitiating factor such as mistake, misrepresentation, duress, undue influence, fraud etc. 3. Parole evidence may be admissible to establish the plea of non est factum (this is not my deed). 4. Parole evidence may be admissible to prove the existence of a custom or trade usage, which should apply to the contract. 5. Parole evidence may also be admissible to show that the operation of the entire contract had been suspended until the occurrence of some event. 6. Where a word or phrase in a written document is ambiguous parole evidence is admissible to explain such word or phrase. 7. If it can be shown that the written document is incomplete in that it was not intended to contain all the terms of the contract, then extrinsic evidence may be admitted to fill the gap. 8. Where it is shown that a written document which was extended to a previous oral agreement does not accurately reflect the contents of the oral agreement, extrinsic evidence will be admissible to ``rectify ‘or the written document prior to its enforcement. From the facts of the case, both parties exhibited the proforma invoice in their submissions. And this proforma invoice was prepared by the 1st defendant and sent to the plaintiff. The plaintiff had no contention with the items stated in the proforma invoice and went ahead to give money to the defendant to install the CCTV cameras. Therefore, the plaintiff cannot later come and claim that the items used were substandard and unfortunately the plaintiff does not fall under any of the exceptions stated above therefore he is bound by the contract. ISSUE TWO Whether or not the plaintiff incurred remedial expenses in carrying out remedial work at the site. The plaintiff contended that he exhibited receipts for the remedial work and this was not challenged and went ahead to state that the defendants admitted during cross examination that the work they did was substandard and that some remedial work needed to be done. The defendants on the other hand alleged that the figures stated for the remedial work were mere after thoughts which was put together by the plaintiff and the third defendant who has fallen out with the other defendants. The defendants also stated that exhibit C of the plaintiff’s witness statement which is the contract agreement has certain hand written notes which 3rd defendant admitted in court to be lies. Same document was exhibited by 1st and 2nd defendants and marked as exhibit 5 which has no written notes. And this points to an orchestrated attempt to cause unnecessary financial loss to the 1st and 2nd defendants. The defendants also stated that all complaints made by the plaintiff was a result of power works of the solar system installation executed by TK Dasco Global Ltd the principal contractor and not as a result of the defective equipment. The defendant also stated that the plaintiff together with the third defendant, denied the defendant the opportunity to visit the project site saying that it is a security zone. The plaintiff has no evidence to show that he contracted another person to do the remedial work on the site. ISSUE 3 Whether or not the defendants breached the agreement between themselves and the plaintiff. The plaintiff alleged that the defendants breached the contract and therefore the plaintiff is entitled to damages and he cited the case of SUMPTER V HEDGES 1898 CA 390 to support this claim. The plaintiff also stated that during cross examination the defendant stated that he installed all 11 CCTV cameras and afterwards handed over the project to the main contractor who was on site at the naval base. The plaintiff stated that this is outrageous and this cannot even stand true. The plaintiff also sited the case of KOGLEX V KATEFIELD (1998-99) SCGLR 451 that the nature of the contract will imply a reasonable where time was not agreed upon, since a contract is expected to run ad infinitum. To state that time is not of the will not make good sense. Therefore, the failure of the defendants to return to site compelled the plaintiff to find the other technicians and incurred expenses for which they are in court. The defendants on the other hand admitted that upon completion of the project it was handed over to Mr. Thomas Maha, the project manager and the main contractor, TK Dasco Global Ltd on site. After which the manuals indicating completion of the work were both given to the contractor and the Ghana Navy who expressed satisfaction of the work done. And therefore since there was no complaint from these parties the defendant cannot be said to have done a defective job. Therefore, plaintiffs claim is a tactic to avoid payment on the amount of GHS 29,006.40 owed by the plaintiff. Also defendants stated that plaintiff through its officers visited the Naval Base and confirmed all 11 cameras were up and running and therefore plaintiff has no point to prove that there was a breach of the contractual agreement and all the plaintiff complaints about falls within the maintenance stage. Plaintiff only mentioned to the court that the defendants used inferior materials to execute the job, an assertion which was denied by the defendants, defendants also saying the malfunctioning of the CCTV cameras were due to insufficient power to run the cameras. When an allegation is made and it is denied, everything is put in issue. The one making the allegations is to prove same. One can’t just say an inferior material were used to execute the job and leave it there. Bring samples of the materials used to court and go further to prove that those materials are inferior and state the reason why you say they are of inferior quality. Also the people who carried out the remedial job, what kind of job did they do, is it due to inferior materials used to carry out the job and therefore they came in to change those materials for a better ones or they came to boost up the energy shortages as claimed by the defendants or those items mentioned they changed was a result of insufficient power. Those people should have been in court to tell the court what kind of remedial job carried out at the Naval base in relation to the installed cameras. This the plaintiff failed woefully to prove to the court that inferior materials were used to carry out the contract, hence defendants did the job as the contract expected of them. He who alleges must prove, and when plaintiff was called upon to prove his case, he failed to do that. CONCLUSION Section 10(1) and (2) of the Evidence act provides that; (1) For the purpose of this Act, the burden of persuasion means the obligation of a party to establish a requisite degree of believe concerning a fact in the mind of the tribunal of fact or court. (2) The burden of persuasion may require a party. (a) To raise reasonable doubt concerning the existence or non- existence of a fact (b) To establish the existence or non-existence of a fact by preponderance of probabilities or by proof beyond reasonable doubt. Section 11 of the same act also defines burden of producing evidence in subsection (1) and (4) (3) For the purposes of this act the burden of producing evidence means the obligation of one party to introduce sufficient evidence to avoid ruling against that party. (4) In other circumstances the burden of producing evidence requires a party to produce sufficient evidence which on the totality of the evidence, leads to reasonable mind to conclude the existence of the fact was more probable than not. Also section 12(10) provides that in a civil action the standard of proof in a civil action is by preponderance of probabilities. Based on the above what is required is to create a degree of certainty in the minds of the tribunal so as to convince on the facts or evidence the existence of a fact is more probable than its non-existence so that where the court is satisfied that the balance tilts in favour of one party then the court must rule in favour of that party. From the above it can be clearly seen that parties entered into a valid contract. There was an offer by the plaintiff to the defendant of which the defendants accepted. Both parties entered into a commercial agreement so therefore they had the intention to create a legal relation and where there is a breach it will be enforceable by the courts. Also both parties had the capacity to contract and there was a specified consideration for the contract to be executed. From the above submissions by both parties and the evidence on the record, it is clear that all 11 CCTV cameras the defendant accepted to install at the naval base were installed. The court therefore rules that plaintiffs failed to prove his claim that the contract was not performed to expectations, the action initiated by the plaintiff in this court is dismissed. All obligations owed to the defendants by the plaintiff under the contract must be discharged fully. No order as to cost. DECISION: ACTION DISMISSED. (SGD) H/H. SAMUEL BRIGHT ACQUAH CIRCUIT COURT JUDGE 12