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OCCUPYGHANA v. ATTORNEY-GENERAL – JUDGMENT

Saturday, July 8th, 2017

OCCUPYGHANA V. ATTORNEY-GENERAL
(Unrepoprted, Supreme Court, Writ No. J1/19/2016, 14th June 2017)

Coram: Akuffo, Adinyira, Dotse, Yeboah, Baffoe-Bonnie, Gbadegbe, Bennin JJSC

JUDGMENT (Dotse, JSC read the unanimous judgment of the Court):

Article 187(7)(b)(i), (ii) and (iii) of the Constitution 1992, provides as follows:-

In the performance of his functions under this Constitution or any other law the Auditor-General… (b) may disallow any item of expenditure which is contrary to law and
(i) surcharge the amount of any expenditure disallowed upon the person responsible for incurring or authorizing the expenditure; or
(ii) any sum which has not been duly brought into account, upon the person by whom the sum ought to have been brought into account;
or
(iii) the amount of any loss or deficiency, upon any person by whose negligence or misconduct the loss or deficiency has been incurred.

Based on the above constitutional provisions referred to supra, the Plaintiffs claim the following reliefs against the Defendants before this court:

(1) That upon a true and proper interpretation of Article 187(7)(b)(i) of the Constitution, the Auditor-General is bound to issue a disallowance or surcharge where there has been any item of expenditure on behalf of the Government that is contrary to law, so that the amount unlawfully expended is recovered from the person who was responsible for, or authorised, the expenditure disallowed.

(2) That upon a true and proper interpretation of Article 187(7)(b)(ii) of the Constitution, the Auditor-General is bound to issue a disallowance and surcharge where any person fails to bring any sum into the Government’s account, so that that amount is recovered from the person by whom the amount should have been brought into account.

(3) That upon a true and proper interpretation of Article 187(7)(b)(iii) of the Constitution, the Auditor-General is bound to issue a disallowance and surcharge where the Government suffers or incurs a loss or deficiency through the negligence or misconduct of any person, so that the value of the loss or deficiency is recovered from that person (whether or not a public servant).

(4) That the failure, refusal or neglect by the Auditor-General to ever issue any disallowances and surcharges in respect of (i) unlawful items of expenditure, (ii) amounts not brought into account, and (iii) losses and deficiencies incurred through negligence and misconduct, as set out in successive Reports of the Auditor-General issued since the coming into force of the Constitution, are violations by the Auditor-General of his/her obligations under the Constitution and

(5) That the Auditor-General be ordered to issue disallowances and surcharges to and in respect of all persons and entities found in successive Reports of the Auditor-General to have been responsible for or to have authorised unlawful items of expenditure, not bringing sums into account, or having caused loss or deficiency through negligence or misconduct, in accordance with Article 187(7)(b) of the Constitution.

FACTS RELIED UPON BY PLAINTIFFS

The facts relied upon by the Plaintiffs who are a pressure and advocacy group, incorporated under the laws of Ghana can briefly be summarised as follows:-

That the Auditor-General pursuant to article 187(2) of the Constitution, has been given the constitutional responsibility to audit and issue a report therein in respect of the public accounts of Ghana and of all public offices which in this instance includes the courts, the central and local government administrations, of the Universities and public institutions of like nature, of any public corporation or other body or organisations established by an Act of Parliament.

The Plaintiffs further draw attention to article 187(5) of the Constitution which enjoins the Auditor-General to carry out the audit of the public accounts within 6 months of the preceding financial year and submit a report, and “shall in that report draw attention to any irregularities in the accounts audited and to any other matter which in his opinion ought to be brought to the notice of Parliament.”

In this respect, the Plaintiffs referred to sections 20(1) and (2) of the Audit Service Act, 2000 (Act 584) and section 2 thereof in particular which provides and states in material particulars what this report to Parliament by the Auditor-General is required to draw attention to in cases in which he has observed the following:-

(a) an officer or employee of Government has willfully or negligently omitted to collect or receive any public money due to the Government;
(b) any public money was not duly accounted for and paid into the Consolidated Fund or other designated public account;
(c) an appropriation was exceeded or was applied for a purpose or in a manner not authorized by law;
(d) an expenditure was not authorized or properly vouched for or certified;
(e) there has been a deficiency through fraud, default or mistake of any person;
(f) applicable internal control and management measures are inefficient or ineffective;
(g) the use or custody of property, money, stamps, securities, equipment, stores, trust money, trust property or other assets has accrued in a manner detrimental to the state;
(h) resources have not been used with due regard to economy, efficiency and effectiveness in relation to the results attained;
(i) in the public interest, the matter should be brought to the notice of Parliament.

It has to be noted that, the above provisions of the Audit Service Act, have taken their authority from Article 187(7)(b) of the Constitution already referred to supra, which empowers the Auditor-General to disallow any item of expenditure which is contrary to law, and having done so to:

(i) surcharge the amount of any expenditure so disallowed upon the person responsible for incurring or authorizing the expenditure, or
(ii) direct that, any sum which has not been duly brought into account, be brought into account upon the person by whom the sum ought to have been brought into account, or
(iii) direct that the amount of any loss or deficiency, be brought upon any person by whose negligence or misconduct the loss or deficiency has been incurred.

In other words, the person by whose conduct of negligence or misconduct the loss or deficiency occurred must be held liable.

The Plaintiffs further asseverate that since the inception of the 4th Republican Constitution on 7th January 1993, the Auditor-General has failed, neglected and or refused to carry out his mandate in fulfillment of the constitutional obligations referred to supra, which would have entitled him to retrieve the amounts, losses and or deficiencies from the offending persons for the benefit of the good people of the Republic of Ghana. This conduct of the Auditor-General according to the Plaintiffs is a violation of his constitutional mandate and obligations under Article 187(7)(b) of the Constitution.

In pursuance of their resolve to ensure that the Auditor-General complies with the above constitutional obligations referred to supra, the Plaintiffs on 12th November 2014 addressed a letter exhibited to these proceedings as Exhibit OG3 entitled “Request for the Exercise of Auditor-General’s Powers of Disallowance and Surcharge, and Notice of Action.”

In that letter, the Plaintiffs state in part as follows:-

We have studied the Auditor-General’s Audit Reports to Parliament for the eleven (11) years between the year ended 31st December 2002 and the year ended 31st December 2012. In that period, the Auditor-General has identified a wide range of stolen and/or misappropriated funds which are due to the public purse. Nevertheless, and quite without explanation, although the Auditor-General is known to have made “recommendations”, OccupyGhana and most Ghanaians are not aware of a single instance in which a Disallowance and Surcharge has been made by the Auditor-General or any of his offices.

The Plaintiffs then requested the Auditor-General to either comply with the constitutional obligations therein stated or face a legal challenge after the expiration of 30 days from the date of the letter.

The Auditor-General responded to the said letter on 9th December, 2014 and attached written comments therein, and this is marked as Exhibit OG4 in these proceedings.

We deem it appropriate at this stage to quote in extenso the relevant portions of this Exhibit OG4 as follows:-

14. On the matter of procedural precedence under the laws of Ghana, there is an issue of timing of the exercise of discretionary power given to the Auditor-General under Article 187(7)(b) of the Constitution. Article 187(5) of the Constitution requires the Auditor-General to send this report on all irregularities (disallowance items included) to Parliament for consideration. Under section 23 of the Audit Service Act, the reports of the Auditor-General become public documents as soon as they have been presented to the Speaker to be laid before Parliament.
15. The question is, should the Auditor-General exercise his discretionary power of surcharge and start to disclose his findings through the courts for public consumption before submitting his report to Parliament or after submission to Parliament.

It would appear that, the Auditor-General clearly perceives this power of disallowance and surcharge granted him under Article 187(7)(b) of the Constitution as discretionary and this therefore meant he is not bound to apply or enforce those provisions.

In conclusion, the Auditor-General reiterated the fact that his office has since July 2013 collaborated with the office of the Attorney-General through the formation of a joint committee to enquire into cases cited in the Auditor-General’s reports spanning 2006-2011.

According to the Auditor-General as per the response in OG4 which we again refer to in extenso, “the mandate of the Committee was to review all cases in the Auditor-General’s report covering this period for further action. The result of the Committee’s work after several sittings since 2013 indicate that about 85% of the cases in the Auditor-General’s Report for the period covered, only required administrative actions by the institutions concerned because they derive from non-compliance with applicable laws, policies and procedure”

Feeling dissatisfied with the above explanations, the Plaintiffs instituted the instant action against the Attorney-General who is the nominal Defendant for and on behalf of the Auditor-General.

We must commend legal counsel for the Parties for well prepared statements of case in which they argued inter alia the following:-

(1) Whether the original jurisdiction of the court was properly invoked
(2) The powers and constitutional obligations of the Auditor-General of disallowance and surcharge under article 187 (7) of the Constitution.
(3) The Auditor-General’s narrow interpretation of his obligations under the said articles referred to supra which the Plaintiff’s consider as wrong, and
(4) The closing arguments of the Plaintiffs and Defendants in their statement of case.

CLOSING ARGUMENTS OF PLAINTIFF

The Plaintiffs concluded their arguments in the statement of case as follows:-

Your Lordships, we have attempted in these submissions to answer the further issues set out joint (sic) by the parties. We will have humbly contended that the Auditor-General does not fully meet his obligations under Article 187(7)(b) when he conducts audits and prepares reports that show financial irregularities. Those constitutional obligations to disallow and surcharge are only discharged when, upon discovering financial irregularities, the Auditor-General takes (sic) follows the deliberate statutory steps to disallow them and then surcharge the persons responsible for causing them with any amounts lost to the State. We have also respectfully argued that the Auditor-General’s obligations do not even terminate when he issues a certificate of the Disallowances and Surcharges. The law has created a bifurcated enforcement responsibility, first on the public entity with respect to which the irregularity occurred to receive payment within 60 days. When the amount surcharged is not paid, the head of that public entity has to institute civil action to recover same. However, if the person surcharged files an appeal against the Disallowance and Surcharge, the Auditor-General is made the statutory respondent to that appeal. However, even this bifurcated enforcement responsibility cannot commence or arise unless and until the Auditor-General has first performed his Disallowance and Surcharge obligations.

THE DEFENDANTS CASE

The Defendants on their part contended through learned Solicitor-General, Mrs. Helen Ziwu that the Auditor-General has not failed to carry out the constitutional mandate he bears by virtue of Article 187(7)(b) of the Constitution as is contended by the Plaintiffs. The Defendants further argued that the powers of discharge and disallowance vested in the Auditor-General are set out in section 17 of the Audit Service Act, 2000 (Act 584). We therefore deem it appropriate at this stage to set out in detail the provisions of this section 17 of Act 584.

17. Disallowance and surcharge by Auditor-General
(1) The Auditor-General shall specify to the appropriate head of department or institution the amount due from a person on whom a surcharge or disallowance has been made and the reasons for the surcharge or disallowance.
(2) A sum of money specified by the Auditor-General to be due from a person shall be paid by that person to the department or institution within sixty days after it has been so specified.
(3) A person aggrieved by a disallowance or surcharge made by the Auditor-General may appeal to the High Court not later than the expiration of sixty days prescribed in subsection (2).
(4) In accordance with article 187(10), the Rules of Court Committee may, by constitutional instrument, make Rules of Court for the purposes of subsection (3) of this section.
(5) A sum of money which is lawfully due under this section is recoverable, on civil proceedings taken by the head of department in a Court as a civil debt and where the person surcharged is in receipt of remuneration from the Government or an institution, the remuneration shall be attached to the extent of the sum lawfully due.

In other words the roadmap which the Auditor-General is expected to follow whenever he exercises his powers of surcharge or disallowance pursuant to Article 187(7)(b) and section 17 of Act 584 supra are the following:-

(i) The Auditor-General shall indicate to the appropriate head of department or institution the amount due from the person on whom the surcharge or disallowance has been raised and the reasons for it.
(ii) The sum of money indicated by the Auditor-General to be due from a person shall be paid by that person to the department or institution within 60 days after it has been indicated
(iii) An aggrieved person has 60 days from the date of the indication in subsection 2 supra to appeal against the discharge or surcharge made by the Auditor-General.
(iv) The Rules of Court Committee have been mandated under Article 187(10) of the Constitution to make Rules of Court for the actualization of subsection 3 of section 17 of Act 584.
(v) Any sum of money due under this section 17 is recoverable, by civil proceedings taken by the head of department in a court as a civil debt and where the person surcharged is on Government payroll, his salary or entitlements shall be attached to the extent of the sums lawfully due.

The above road map indicates quite clearly that the powers of the Auditor-General in respect of this Surcharge and Disallowance are really extensive and are intended to ensure that any monies that are lost through any of the processes mentioned in Article 187(7)(b)(i), (ii) and (iii) are recovered to the state.

CLOSING ARGUMENTS OF DEFENDANTS

The Defendants summarised their closing arguments very briefly as follows and we wish to quote them accordingly thus:

My Lords, we respectfully submit, in conclusion that the Auditor General’s obligations end when he carries out his statutory mandate as set out in section 17(1) of Act 584 and section 84 of Act 921 and in this regard, it is respectfully contended on behalf of the Defendants that the Auditor-General has from the inception of the 1992 Constitution carried out his statutory mandate of disallowance and surcharge.

DEFENDANTS RAISE JURISDICTIONAL ISSUE

The Defendants raised a jurisdictional point against the Plaintiffs writ thus:

The Plaintiff has not made out a proper case which will require this honourable court to make any declarations within the meaning of Article 2(1)(b) of the 1992 Constitution, and it is respectfully urged on this court to dismiss this action.

MEMORANDUM OF ISSUES

At the close of pleadings, the following issues were set down in the joint memorandum of issues agreed upon by the parties:

(1) Whether or not the Auditor-General fully discharges his constitutional obligation simply by auditing and pointing out financial irregularities in the accounts of a public entity.
(2) Whether or not the Auditor-General has an obligation to ensure that his powers of disallowance and surcharge duly exercised are complied with by the public entity or official directly affected by the Auditor-General’s exercise of his power of disallowance and discharge.

After the setting down of the above issues, this court by an order dated 31st January 2017 requested the parties and/or their counsel to file legal arguments in respect of the said two issues.

We observe that the parties have complied with the said orders.

On the 7th of March 2017 this court again directed that further arguments of law be filed by the parties and or counsel in respect of the issue of whether the Plaintiffs have properly invoked this court’s jurisdiction.

We observe that, this order has been complied with only by learned Counsel for the Plaintiffs, Thaddeus Sory. We will therefore proceed to deal with these issues, and since jurisdiction is primary, we will deal with that first.

HAVE THE PLAINTIFFS PROPERLY INVOKED THE ORIGINAL JURISDICTION OF THE COURT?

It is to be noted that Articles 2(1)(a) and (b) and 130 of the Constitution deals with the original jurisdiction of the Supreme Court. Thus the Plaintiffs action in the instant case must be measured in terms of the said provisions of the Constitution.

Out of abundance of caution, these provisions provide as follows:-

2. (1) A person who alleges that
(a) an enactment or anything contained in or done under the authority of that or any other enactment; or
(b) any act or omission of any person
is inconsistent with, or is in contravention of a provision of this Constitution, may bring an action in the Supreme Court for a declaration to that effect.

130. (1) Subject to the jurisdiction of the High Court in the enforcement of the Fundamental Human Rights and Freedoms as provided in article 33 of this Constitution, the Supreme Court shall have exclusive original jurisdiction in
(a) all matters relating to the enforcement or interpretation of this Constitution; and
(b) all matters arising as to whether an enactment was made in excess of the powers conferred on Parliament or any other authority or person by law or under this Constitution.

In their closing arguments, learned counsel for the Defendants submitted that the Plaintiffs have not made a proper case to require this court exercise it’s jurisdiction in their favour, and urged the Court to dismiss the action.

Predictably, the Plaintiffs anticipated this type of jurisdictional objection and stated as follows in their original statement of case:-

From the facts so far recounted, the Plaintiff’s case falls squarely within the first ambit of the court’s original jurisdiction as classified by the court in the Edusei Case [1998-99] SCGLR 753 at pages 771-772.

What then are the principles in Edusei (No. 2) v Attorney-General referred to supra?

In that case, it was noted by Kpegah JSC that “in determining the scope or extent of this court’s original jurisdiction,” we must read together articles 2 (1) and 130 (1) of the Constitution. And in reading the two articles together, “the courts exclusive original jurisdiction can be said to be in respect of the following situations:
(1) enforcement of all provisions of the Constitution, except those provisions contained in Chapter 5 dealing with Fundamental Human Rights, or
(2) the interpretation of any provision of the Constitution; or
(3) an issue whether an enactment is inconsistent with any provision of the Constitution.”

The Plaintiffs have also filed a response in compliance with this court’s order dated 7th March 2017, on this jurisdictional issue.

The facts of the instant case, which have been extensively stated, fall into categories (i) and (ii) supra. This is because the Plaintiff’s are indeed asking this court to interprete Article 187(7)(b) of the Constitution in a certain direction such that when enforced it will have the desired results that they wish. But the Defendants contend otherwise. Meaning there are rival contentions.

In clear terms, the Plaintiffs are indeed requesting of this court to interprete the mandate given to the Auditor-General in the discharge of his constitutional duties or obligations. Thus, if this court accedes to that request and interpretation, then it will have to follow it with enforcement which will then lead to the Auditor-General issuing a disallowance and surcharge in all the three scenarios mentioned in Articles 187(7)(b)(i), (ii) and (iii) respectively of the Constitution.

We also observe that, the Plaintiffs, anchored their reliefs basically on the constitutional provisions and where necessary provided flesh by reference to the Audit Service Act, 2000 (Act 584) and Public Financial Management Act, 2016 (Act 921). The Defendants on the other hand have relied basically on the said statutory provisions and argued that this court has no jurisdiction.

We have on our part, considered in detail, the facts of this case which admit of no controversies whatsoever.

We have also considered the law and a plethora of decided cases on the subject, such as the following:-

(1) Republic v Special Tribunal, Ex-parte Akosah [1980] GLR 592 which is the locus classicus on the subject-matter
(2) National Media Commission v Attorney-General [2000] SCGLR 1
(3) Aduamoa II v Twum [2000] SCGLR 165
(4) Tuffuor v Attorney-General [1980] GLR 637 SC
(5) Bimpong Buta v General Legal Council [2003-2004] SCGLR 1200
(6) Republic v High Court (Fast Track Division) Ex-parte CHRAJ, (Richard Anane: Interested party) [2007-2008] SCGLR 213
(7) Osei Boateng v National Media Commission [2012] 2 SCGLR 1038, just to mention a few.

We deem it necessary to refer to the observation by our respected Sister, Adinyira JSC in the case of Okudzeto Ablakwa & Another v Attorney-General & Obetsebi Lamptey [2011] 2 SCGLR 986 wherein she stated as follows:-

Article 2(1) of the 1992 Constitution imposes on the Supreme Court the duty to measure the actions of both the legislature and the executive against the provision of the Constitution. This includes the duty to ensure that no public officer conduct himself in such a manner as to be in clear breach of the provisions of the Constitution. It is by actions of this nature that gives reality to enforcing the constitution by compelling its observance and ensuring probity, accountability and good governance.

The matter was recently put to rest by the unanimous decision of the Supreme Court in the unreported judgment of the Court in Emmanuel Noble Kor v Attorney-General and Another, Suit No. JI/16/2015 dated 10th March 2016 in which it was made explicitly clear as follows:-

It will be seen that article 2 of the Constitution is headed ‘Enforcement of the Constitution’ and the ensuing provisions are meant to attain the enforcement of the Constitution. There is therefore express authority in the Constitution itself for the view that the enforcement jurisdiction of this court is a conspicuously independent item of jurisdiction of this court. Indeed, though it will be erroneous to say that a declaratory action cannot be brought within article 2 towards the enforcement of an ambiguous provision of the Constitution, it appears that while the enforcement purpose of that article is clear on the face of its provisions, its interpretative purpose is comparatively latent.

Based on the above decisions and the principles of law decided therein, we have no doubts whatsoever in our minds that the plaintiffs have properly invoked the original jurisdiction of this court, and this court must therefore give them a hearing in line with the principles of law stated therein.

The objection on grounds of jurisdiction is thus dismissed.

This then requires us to consider the two issues set out in the memorandum of issues.

WHETHER OR NOT THE AUDITOR-GENERAL FULLY DISCHARGES HIS CONSTITUTIONAL OBLIGATION SIMPLY BY AUDITING AND POINTING OUT FINANCIAL IRREGULARITIES IN THE ACCOUNTS OF A PUBLIC ENTITY

The Constitutional and Statutory mandate of the Auditor-General in respect of the public accounts of Ghana as defined in article 187(2) of the Constitution are well stated not only in the Constitution, but also in the Audit Service Act, 2000 (Act 584) and the Public Financial Management Act, 2016 (Act 921) respectively.

For example, the constitutional obligations of the Auditor-General include the following:-

(1) to audit and report on the public accounts of Ghana and of all public offices. – Article 187(2)
(2) to within six months after the end of the financial year prepare a report of his audit and lay same before Parliament drawing attention to any irregularities in the accounts audited and to any other matter which in his opinion ought to be brought to the notice of Parliament reference. – Article 187(5).
(3) to audit any public office upon the request of the President acting with the advice of the council of State reference. – Article 187(8).
(4) to exercise his Disallowance and Surcharge obligations in respect of irregularities he discovers in the performance of his functions under the Constitution or any other law. – Article 187(7)(b).

It is to be noted that, these constitutional obligations even though exist separately, some can only be triggered by the performance of others. For example the Auditor-General must conduct an audit into the public accounts of Ghana before he can prepare a report to Parliament. Similarly, there must also be an audit by the Auditor-General into the public accounts before there can be any Disallowance and or Surcharge.

However, it is possible for the Auditor-General to perform the audit into the public accounts of Ghana, prepare a report and lay same before Parliament without any irregularities detected. But it is not automatic that there must be a Disallowance and Surcharge arising from every such report. These are only triggered when the report discloses irregularities in the public accounts audited.

Thus, the constitutional obligation in Article 187(7) on the Auditor-General to exercise his mandate of Disallowance and Surcharge in the manner stated are only invoked against those persons responsible for incurring the liabilities which have led to the occurrence of the events listed in Articles 187(7)(b)(i), (ii) and (iii) supra of the constitution.

Furthermore, if we consider the statutory interventions in Acts 584 and 921, then it becomes very clear that the Auditor-General’s constitutional mandate in auditing the public accounts of Ghana far exceeds the task of auditing and pointing out the irregularities in the accounts of a public entity.

When one considers in detail, the effect of section 20(2) of Act 584 referred to, elsewhere in this rendition, then it becomes crystal clear that the Auditor-General, quite apart from conducting an audit into the public accounts of Ghana and preparing a report for Parliament and drawing attention to irregularities, and the matters stated therein, must definitely trigger his powers of Disallowance and Surcharge obligations, whenever these irregularities exist.

We are therefore of the considered view that the statement by the learned Counsel for the Defendants that, section 17 of Act 584 only mandates the Auditor-General to issue management letters as indicated in exhibits AG1 to AG4 is untenable.

This is because, a careful reading of section 17 of Act 584 referred to supra, gives very clear indications that the provisions therein stated are to be procedural steps that the Auditor-General is mandated to pursue in his quest to fulfill the Discharge and Surcharge obligations imposed upon him under the Constitution.

What is worthy of note is that, the 4th Republican Constitution has been anchored on the principles of Freedom, Justice, Probity and Accountability and the recognition that the powers of government spring from the sovereign will of the people based on the concept of universal adult suffrage and rooted on the principle of Rule of Law, the protection and preservation of fundamental human rights among others as stated in the preamble to the Constitution.

When we juxtapose these principles against the powers of the Auditor-General in Article 187(7)(b) and Acts 584 and 921 respectively, it becomes very clear that adequate measures have been put in place to afford any person against whom the Attorney-General has exercised his powers of surcharge and disallowance to avail himself of the due processes in the High Court to vindicate himself, whilst at the same time ensuring that the public accounts of the state are duly protected.

That fundamental right in section 17(3)p of Act 584 which enables an aggrieved person against whom a Disallowance and Surcharge had been made by the Auditor-General to within 60 days appeal to the High Court is in itself a recognition of the fact that, failure by an aggrieved person to take those steps can lead to the disallowance and surcharge being enforced without more. This enforcement can lead to the attainment of the principles of probity and accountability enshrined in the Constitution.

We are further emboldened by the views we have expressed in this judgment when we refer to the views of the then Auditor-General in Exhibit OG2, attached to these proceedings which are the proposals of the Auditor-General for amendment of the Constitutional provisions of the office of the Auditor-General.

For example on page 16 of the proposals, under the heading Issues and Comments are the following:-

The provisions of Article 187(7)(a) & (b) should be maintained and enforced.

The independence of the Auditor-General from the direction or control of any person or authority is a key requirement under INTOSAI’s Auditing standards. The office of the Auditor-General has received adverse comments from Development Partners who have invested in the national budget and also from Parliament for not actively introducing measures to implement the provisions on surcharge and disallowance.

From the above, it is clear that the Auditor-General has recognized the need to maintain and enforce the provisions in Article 187(7)(a) & (b) supra and also implement and enforce the provisions on surcharge and disallowance.

There is also a tacit recognition by the Auditor-General that the provisions on disallowance and surcharge must be maintained. The problem if any is the erroneous impression in the mind of the then Auditor-General that the said powers are discretionary in nature and that perhaps that he needed more legislation to carry out this disallowance and surcharge mandate. If this be it, then it is untenable.

The memorandum to the Interpretation Act, 2009 (Act 792) states in part as follows:-

In essence the Constitution must be construed or interpreted in a manner
(a) that promotes the rule of law and the values of good governance,
(b) that advances human rights and fundamental freedoms
that permits the creative development of the provisions of the Constitution and the Laws of Ghana, and
(c) that avoids technicalities which defeat the purpose of the Constitution and of the ordinary law of the land.

The Chambers, 21st Century Dictionary, Revised Edition, defines “disallow” on page 379 as follows:-

verb – to formally refuse to allow or accept something (2) to judge something to be invalid – disallowance – noun.

The same dictionary on page 142 defines “surcharge” as follows:-

an extra charge, often as a penalty for late payment of a bill.

When we consider the meanings ascribed to these words in the context in which they have been used in article 187(7)(b) of the Constitution then there seems to be no doubt whatsoever that, what the words actually mean is that, the Auditor-General will formally refuse to accept or allow any item of expenditure that is contrary to law etc.

Having refused to accept or allow the expenditure as being contrary to law, the Auditor-General now proceeds to impose an extra charge as penalty for the retrieval of the amount or expenditure that he has refused to allow or accept, because it was contrary to law.

Furthermore, Article 34(1) which deals with the Directive Principles of State Policy provide thus:-

The Directive Principles of State Policy contained in this chapter, shall guide all citizens, Parliament, the President, the Judiciary the Council of State, the Cabinet, political parties and other bodies and persons in applying or interpreting this Constitution or any other law and in taking or implementing any policy decisions, for the establishment of a just and free society.

The above provisions are a clear injunction on the Judiciary to bear the above in mind when interpreting the Constitution. There is thus no room for us as a Judiciary to be pedantic in dealing with issues of constitutional interpretation. This is especially so when in Article 37(1) of the Constitution, (which also includes the provisions on the Directive Principles of State Policy). It is directed that, “the state shall endeavour to secure and protect a social order founded on the ideals and principles of freedom, equality, justice, probity and accountability as enshrined in chapter 5 of this Constitution.”

All constitutional interpretations must therefore bear the above provisions in mind. This is especially so when we consider provisions requiring compliance with upholding of the tenets of probity and accountability vis-à-vis the work of the Auditor-General in protecting the public purse for the public good.

On the basis of the above, the nature of the Constitution as the basic law of the land and therefore requiring pride of place has been recognized in Article 11(1) of the Constitution.

At this stage, it is useful to refer and remind ourselves of the fact that the Constitution itself in Article 11(1)(a) has given pride of place to the Constitution as the Grundnorm, that is to say it is at the apex, of the laws of Ghana. This therefore means that the constitutional provisions in Article 187(7)(b) take precedence over any other laws, and must therefore be regarded in that position.

In our opinion therefore, the mandate of the Auditor-General in exercising his constitutional obligations in Article 187(7) of the Constitution does not end simply by the performance of same and issuing a report on the irregularities in the accounts of a public entity, but goes beyond it to include the powers of Disallowance and Surcharge which we will consider next.

WHETHER OR NOT THE AUDITOR-GENERAL HAS AN OBLIGATION TO ENSURE THAT HIS POWERS OF DISALLOWANCE AND SURCHARGE DULY EXERCISED ARE COMPLIED WITH BY PUBLIC ENTITY OR OFFICIALS DIRECTLY AFFECTED BY THE AUDITOR-GENERAL’S EXERCISE OF HIS POWER OF DISALLOWANCE AND DISCHARGE

We have been persuaded by the submissions of both learned counsel for the parties herein that, apart from the constitutional provisions in Article 187(7)(b) supra, which is applicable to the circumstances of this case, the other relevant statutes are sections 17(1) of Act 584 supra and sections 85(1) and 88(1) respectively of the Public Financial Management Act, 2016 (Act 921) which provides as follows:-

85. (1) A Principal Spending Officer shall, on an annual basis, submit the following to the Minister and Auditor-General:
(a) a report on the status of implementation of recommendations made by the Auditor-General in respect of that covered entity; and
(b) a report on the status of implementation of recommendations made by Parliament in respect of that covered entity.
(2) The Attorney-General shall, on an annual basis, submit a report on the status of any action commenced on behalf of the Government to the Minister, Auditor-General and Parliament following findings of the Auditor-General and recommendations of the Public Accounts Committee of Parliament.

88. (1) An Audit Committee shall ensure that the head of a covered entity, to which the Audit Committee relates,
(a) pursues the implementation of any recommendation contained in
(i) an internal audit report;
(ii) Parliament’s decision on the Auditor-General’s report;
(iii) Auditor-General’s Management Letter; and
(iv) the report of an internal monitoring unit in the covered entity concerned particularly, in relation to financial matters raised; and
(b) prepares an annual statement showing the status of implementation of any recommendation contained in
(i) an internal audit report;
(ii) Parliament’s decision on the Auditor-General’s report;
(iii) Auditor-General’s Management letter;
(iv) the report on financial matters raised in an internal monitoring unit of a covered entity; and
(v) any other related directive of Parliament.
(2) An annual statement required under subsection (1) (b) shall
(a) indicate the remedial action taken or proposed to be taken to avoid or minimise the recurrence of an undesirable feature in the accounts and operations of a covered entity;
(b) indicate the period for the completion of the remedial action; and
(c) be endorsed by the relevant sector Minister and forwarded to the Minister, Parliament, Office of the President and the Auditor-General within six months after the end of each financial year.

A perusal of the Constitutional provisions in Article 187(7)(b) and statutory provisions referred to supra, makes it quite clear that the bifurcated or two-pronged enforcement regime argument put up by the Plaintiffs in their statement of case is not only borne out by the relevant provisions referred to supra, but also prudent, designed to the encouragement of probity and accountability in the management of public accounts.

In the first procedure, the public entity against whom the irregularity has been made is required to take steps to collect or retrieve the amount from the person who incurred the liability and has been surcharged.

The second stage is where the person surcharged does not pay the amount and the provisions in section 17 of Act 584 supra are triggered.

As already stated supra, section 17(1) of Act 584 stipulates that it is to the head of the public entity that the Auditor-General shall specify the requirement to collect any amount due from the person on whom a surcharge or disallowance has been made and the reasons therein contained.

As stated supra, the roadmap that is envisaged by the section 17(1) provision of Act 584 has been indicated. This roadmap has recently been given a further boost by the enactment of the High Court (Civil Procedure) (Amendment) No. 2 Rules, 2016 (C. I. 102) which are Rules of procedure enacted by the Rules of Court Committee to further amend the High Court (Civil Procedure) Rules, 2004 (C. I. 47) by the insertion after Order 54 of the following new Order on “Disallowance and Surcharge Appeals).” The enactment of C. I. 102 makes it quite certain that the powers of the Auditor-General under Article 187(7) of the Constitution are to retrieve from persons who have caused loss of public funds in their management of same which is contrary to law. The law speaks for itself and there can be no turning back on this.

However, where the person surcharged files an appeal, Order 54A rule 2(7) and (8) of C. I. 47 constitutes the Auditor-General into the respondent to the appeal, as follows:-

For the purposes of the appeal, the Auditor-General is the respondent.

This makes it quite apparent that, following the Auditor-General’s exercise of the Disallowance and Surcharge, the bifurcated approach is triggered. It should also be noted that, there can be no such bifurcated approach to retrieve the sums of money so specified unless and until there has been a disallowance and surcharge.

Furthermore, section 88(1) and (2) of Act 921 puts the matter beyond doubt by stipulating the various steps that the head of the entity covered is expected to take in order to ensure the implementation of the Auditor-General’s recommendations as contained in his management reports and final report on financial matters.

Section 85(1)(a) and (b) on the other hand directs the Principal spending officer to submit on an annual basis, the following:-

(1) A report on the status of the implementation of the Auditor-General’s report.
(2) A report on the status of the implementation of the report of the Auditor-General made by Parliament in respect of the entity covered.

In our considered opinion, in interpreting the constitutional provisions referred to in Article 187(7)(b)(i), (ii) and (iii) supra, we also have a duty to look at all the subordinate legislations which have been enacted to practicalise the harmonious effect of the constitutional provisions. These include the following:-

(1) Audit Service Act, 2000 (Act 584)
(2) Audit Service Regulations, 2011 (C.I. 70)
(3) Public Financial Management Act, 2016 (Act 921)
(4) High Court (Civil Procedure) (Amendment) No. 2 Rules, 2016 (C.I. 102)

Perusal of the relevant sections of Act 584 and 921 supra, and the overriding philosophical underpinnings of the 4th Republican Constitution in its preamble, make it quite clear that the said constitutional provision on the powers of Disallowance and Surcharge of the Attorney-General must be enforced.

We reckon the fact that, the stipulations in articles 187(2), (3), (4), (5) and (6) of the Constitution has the operative word “shall”, and this is mandatory.

However, when it comes to the vexed issue of the Disallowance and Surcharge, provisions as used in Article 187(7)(b) the operative word is “may”.

Taking a cue from the importance of the work that is attached to the office of the Auditor-General and the fact that it is the custodian and protector of the public purse, any derogation of the functions therein specified will defeat the lofty aims and objectives stated in the Preamble to the Constitution and the role and objectives of the work of the Auditor-General.

It is to be noted that, the general rules for construction or interpretation that we have become so familiar with were formulated by Judges and crystalised into rules and principles of interpretation.

See for example the mischief rule which was enunciated in Heydon’s case [1584] 3 Co. Rep 7a76 E.R. 637, the Literal Rule which was propounded in the Sussex Peerage case [1844] 11 Co. & E 85, 8 E.R. 1034, the Golden Rule enunciated in the Grey v Pearson [1857] 6. H.L.C 61, 10 E.R. 1216.

The courts in the commonwealth then moved to the now in vogue Purposive Approach. Judges in Ghana and elsewhere in the Commonwealth, have where it is considered appropriate abandoned the strict constructionist view of interpretation in favour of the purposive approach to interpretation which per Atuguba JSC in his opinion in Re Presidential Election Petition, Akufo-Addo & 2 others (No. 4) v Mahama & 2 Others (No. 4) 2013 SCGLR (Special Edition) 73 at page 111 where he stated that

the purposive approach has been enthroned in the Supreme Court as the dominant rule for the construction of the Constitution.

See also the Supreme Court case of Agyei Twum v Attorney-General & Akwetey [2005-2006] SCGLR 732 at 757 where the court adopted the purposive approach to interpretation of the Constitution.

See also Ransford France No. 3 v Electoral Commission & Attorney-General [2012] 1 SCGLR 705 at 718 where the court rejected a literal interpretation that was urged upon it in favour of a purposive approach claiming that a literal interpretation would lead to grave injustice.

It is in this respect that we feel the entire provisions of Articles 187 to 189 on the Auditor-General and the Audit Service must be read as a whole. If that is done, then the intended effect of the work of the Auditor-General which is to ensure that public funds or accounts are handled by safe hands, and that whenever losses of any kind contemplated in Article 187(7)(b) occur, those responsible are identified and duly punished. This must be measured against the background of the fact that the practicalisation of the work of the Auditor-General will ensure that there is probity and accountability in the management of state funds. This will no doubt prevent the wanton dissipation of state resources that are meant for specific projects and activities under the Government’s fiscal policies.

This therefore means that there should be no loss to the state or public in the management of state resources.

At this moment, we think judicial notice can be taken of the fact that corruption, abuse of position and embezzlement of public funds among others has become the bane of our governance structures. Reference is made to the various Auditor-General’s Reports attached to these proceedings. It is our opinion that, notice must be taken of the rampant carelessness that is often times employed by those in charge of public funds in most entities.

We believe that the time has come when it is necessary to strengthen the relevant constitutional bodies set up under the Constitution such as the Auditor-General to protect the public purse from persons who intend to embark upon personal economic recovery programmes with the public funds.

We are also of the view that, the Auditor-General is expected to name the persons who commit irregularities etc, under Article 187(7)(b) and section 17 of Act 584 respectively, recover the amounts from them and thereafter those persons be made to face appropriate punishment. That should be the way forward.

We therefore have a duty to ensure that the reports of the Auditor-General into the public accounts of Ghana wherein findings are made in respect of persons who act in authorizing expenditure contrary to law, or have withheld sums of money from the public account or by whose negligence or misconduct losses or deficiencies to public funds has resulted, must be treated in accordance with the Constitution and laws of Ghana, and have an immediate impact.

“To be or not to be, that is the question,” reference Shakespeare in Hamlet, Prince of Denmark.

Should this court hold and rule that, because the word “may” has been used in Article 187(7)(b) of the Constitution 1992, the Auditor-General’s powers of surcharge and disallowance are not mandatory and can be exercised at the whims and caprices of the Auditor-General? Are these constitutional obligations discretionary then?

We have been privileged to have been given access to the training materials used by the Auditor-General on March 23rd 2006 in a presentation by the then Auditor-General Mr. Edward Dua Agyemang, at a seminar on public accounts management, among others, on the topic “Public Expenditure Monitoring and Tracking – The Role of the Auditor-General” attached to these proceedings as Exhibit OG1.

We find these materials quite appropriate, and revealing. Since they also conflict with the stance of the Defendants in these proceedings, we deem it appropriate to refer to some of them as per Exhibit OG1.

Powers of surcharge and approval of systems

In the course of monitoring public expenditure, the Auditor-General has been given a unique power of surcharge by the Constitution and the Audit Service Act. Article 187(7)(b) of the Constitution requires that the Auditor-General may disallow any item of expenditure, which is contrary to law and surcharge.

Any person against whom a surcharge has been raised by the Auditor-General has the power of appeal against the surcharge in the High Court.

So far this power has not been invoked against public officials because they are given the opportunity to rectify financial lapses resulting in delayed accountability.

However, because of the escalation in cash irregularities by 99.5% in 2004 involving presented payments vouchers and unacquitted payments, the Auditor-General will invoke his powers of surcharge against responsible officers for such serious compliance violations in 2006. This robust sanction will hasten and deepen accountability in the country.

The combined effect of the above is that, as at March 2006, the office of the Auditor-General recognized the fact that the way to protect the public funds of Ghana, and prevent looting of the public purse, avoid corruption and dictatorship is to practicalise the constitutional provisions on the powers of surcharge and disallowance, granted the Auditor-General under the Constitution 1992.

However, this resolve to exercise this power from 2006 has not only been breached, but there has been stoic silence from the office of the Auditor-General to date.

We do not substitute the views of the Auditor-General in those presentations for our constitutional mandate in interpreting and enforcing the constitutional provisions in Article 187(7)(b) as we are required to do. We have only done the references in order to let it be known that, this was the thinking of the Auditor-General in 2006 on these vexed issues.

We also wish to refer to the locus classicus case of Tuffour v Attorney-General [1980] GLR 637. Even though the facts of this case are well known, suffice it to be stated briefly as follows:-

The Plaintiff therein, filed a writ against the Speaker and Attorney General under Section 3 of the first Schedule to the Constitution 1979 for a declaration as follows:-

(1) On the coming into force of the Constitution the Hon. Mr. Justice Apaloo was deemed to have been appointed as Chief Justice and also as President and member of the Supreme Court.
(2) The application of the procedure in article 127(1) to him and his purported vetting and rejection by Parliament were in contravention of the Constitution.
(3) That Justice Apaloo remained Chief Justice and President of the Supreme Court.

Sowah JSC (as he then was) in delivering the judgment of the court, made some pronounced and notable statements regarding the nature of a written constitution such as this 4th Republican Constitution and how it also mirrors the history of the people of Ghana. Out of abundance of caution, we wish to refer to the relevant portions of that judgment.

This has been done with a view to illustrating how Constitutional provisions can be interpreted to achieve the special architecture designed to ensure a proper equilibrium in the governance structure aimed at probity, accountability and transparency. Without these values, all is vanity in our quest for a control mechanism of our public funds or accounts. He states:-

A written Constitution such as ours is not an ordinary Act of Parliament. It embodies the will of a people. It also mirrors their history. Account, therefore, needs to be taken of it as a landmark in a people’s search for progress. It contains within it their aspirations and their hopes for a better and fuller life.

The Constitution has its letter of the law. Equally, the Constitution has its spirit. It is the fountain-head for the authority which each of the three arms of government possesses and exercises. It is a source of strength. It is a source of power. The executive, the legislature and the judiciary are created by the Constitution. Their authority is derived from the Constitution. Their sustenance is derived from the Constitution. Its methods of alteration are specified. In our peculiar circumstances, these methods require the involvement of the whole body politic of Ghana. Its language, therefore, must be considered as if it were a living organism capable of growth and development. Indeed, it is a living organism capable of growth and development, as the body politic of Ghana itself is capable of growth and development. A broad and liberal spirit is required for its interpretation. It does not admit of a narrow interpretation. A doctrinaire approach to interpretation would not do. We must take account of its principles and bring that consideration to bear, in bringing it into conformity with the needs of the time. And so we must take cognisance of the age-old fundamental principle of constitutional construction which gives effect to the intent of the framers of this organic law. Every word has an effect. Every part must be given effect. Perhaps it would not be out of place to remember the injunction of St. Paul contained in his First Epistle to the Corinthians, Chapter 12, verses 14-20 (King James Version):

‘For the body is not one member, but many. If the foot shall say, Because I am not the hand, I am not of the body; is it therefore not of the body? And if the ear shall say, Because I am not the eye, I am not of the body; is it therefore not of the body? If the whole body were an eye, where were the hearing ? If the whole were hearing, where were the smelling…? But now are they many members, yet but one body.’

And so a construction should be avoided which leads to absurdity. And when a particular interpretation leads to two, shall we say “inconsistent” results, the spirit of the Constitution would demand that the more reasonable of the two should be adhered to. We must have recourse to the Constitution as a whole.

When we put all the learning in the above quotation together, the “may” in Article 187(7)(b) of the Constitution 1992, becomes a mandatory may, and no longer permissive. This is to afford us the opportunity to enforce the provisions of Article 187(7)(b) which will deepen probity and accountability.

It is to be noted that the times we are in as a nation require that we deepen and institutionalize principles which will uphold proper and decent management and protection of public accounts. The tendency where public accounts are considered as a fattened cow to be milked by all and sundry must stop. Our laws on financial management must therefore be made to work to prevent absurdity in our enforcement regimes of same.

We reckon that, it is in the pursuance of these noble objectives that the Rules of Court Committee has enacted C. I. 70 and also C.I. 102 both referred to supra.

The rationale for the above is to give teeth to the constitutional and statutory mandate of the Auditor-General’s powers on Disallowance and Surcharge to bite.

In their respective submissions, learned counsel have variously referred to and relied on Audit observations and management letters.

In essence, whilst the Defendants concede that the Auditor-General has this constitutional power or mandate of surcharge and disallowance, they argue that, the duty of the Auditor-General ends with the submission of his report. They contend further that, action on the Auditor-General’s reports are to be implemented by other statutory bodies. These are the Audit Committee’s established under the Public Financial Management Act, 2016 (Act 921), section 85 (1) of which deals with the report and recommendations of the Auditor-General by the principal spending officer of that entity in relation to his dealings with the Auditor-General and Parliament respectively.

On the other hand, sections 86 to 88 of Act 921 deals with the Establishment of Audit Committees by various entities, the composition of the membership of such committee’s and the functions of the said Audit Committees respectively.

Section 88(1) of Act 921 has already been referred to supra. The crux of the provisions therein contained indicate that, in all cases;
(1) The Audit Committees are to pursue the implementation of any recommendation contained inter alia, in the Auditor-Generals report, as decided upon by Parliament, and the Auditor-General’s management letter and
(2) To prepare an annual statement showing the status of implementation of any recommendation contained in the Auditor-General’s report on
(a) Parliament’s decision on the Auditor-General’s report and
(b) Auditor-General’s management letter, among others.

What is to be noted is that, all the above requirements and procedures are statutory, based on Acts 584 and 921 respectively as well as the Audit Service Regulations, 2011 respectively. However, the Auditor-General’s powers of surcharge and disallowance are constitutional and therefore have to be on a higher pedestal and given pride of place.

When we consider the combined effect of Regulations 34, 35, and 57 respectively of the Audit Service Regulations, 2011 (C I. 70), which deals with Audit observations and reporting, consequences of not responding to an audit observation and issue of management letters after completion of an audit assignment respectively, it becomes very clear that these roles and functions are different in scope and magnitude from the Auditor-General’s report envisaged and stipulated in Articles 187(2) and (5) respectively of the constitution.

Whilst management letters are issued by Branch and sectoral heads within two weeks of an audit assignment, containing their findings, recommendations and conclusions of their assignment to the management of the entity and copied to the officials and the organisations, that of the Auditor-General is wider in scope as it is submitted to Parliament and has far reaching effects and consequences as is stipulated in Articles 187(7)(b) of the Constitution.

Audit observations per Regulation 34(1) of C.I. 70 on the other hand are formal audit observations issued at an audit location in the course of the audit. In this respect, the audit team is enjoined under Regulation 34(2)(a) & (b) of C.I. 70 to take steps to discuss with the audited organization the findings and recommendations arising from the audit and also obtain written responses from the audited organization. Thus these activities occur at a lower level and earlier stage of the process which culminated in the Auditor-General’s report submitted to Parliament.

It is thus therefore quite clear that Audit observations, and Management letters are different in context, scope and magnitude from the Auditor-Generals’ report as stipulated in Article 187 referred to supra.

From the above discussions, it is quite apparent that the Auditor-General has an obligation to ensure that his powers of disallowance and surcharge duly exercised by him under Article 187(7)(b) of the Constitution are complied with by the public entity or officials directly affected by the exercise of his powers of surcharge and disallowance.

CONCLUSION

In the premises, it is our considered view that using the principles of interpretation so eloquently and powerfully explained in the decision in the case of Tuffour v Attorney-General, supra and the purposive approach to interpretation generally, this court will interprete Article 187(7)(b) as having a mandatory effect in so far as the Auditor-General’s report is final.

In the premises, the Plaintiffs succeed in their claims against the Defendants in respect of reliefs 1, 2, and 3 as follows:-

(1) That upon a true and proper interpretation of Article 187(7)(b)(i) of the Constitution, the Auditor-General is bound to issue a disallowance or surcharge where there has been any item of expenditure on behalf of the Government that is contrary to law.
(2) That upon a true and proper interpretation of Article 187(7)(b)(ii) of the Constitution, the Auditor-General is bound to issue a disallowance and surcharge where any person fails to bring any sum into the Government’s account.
(3) That upon a true and proper interpretation of Article 187(7)(b)(iii) of the Constitution, the Auditor-General is bound to issue a disallowance and surcharge where the Government suffers or incurs a loss or deficiency through the negligence or misconduct of any person.

Reliefs 4 and 5 are granted in their entirety against the Defendants.

CONSEQUENTIAL ORDERS

As a sequel to our judgment just delivered, we further direct that, henceforth, the Auditor-General shall take steps to recover the amount unlawfully expended from the person or persons who incurred and or authorised the disallowed expenditure.

Secondly, the Auditor-General shall also take steps to recover the amount from the person or persons by whom the amount ought to have been brought into account.

Thirdly, the Auditor-General shall also take steps to recover the value of the loss or deficiency from the person or persons by whose negligence or misconduct the losses or deficiencies were incurred, (whether or not the person is a public servant).

Finally, the Attorney-General is hereby ordered to take all necessary steps to enforce the decisions or steps taken by the Auditor-General supra to ensure compliance including in some cases criminal prosecutions.

We have had to issue out the above consequential orders even though we are happily aware that the current Auditor-General Mr. Daniel Yao Domelevo has taken steps to train his staff under C. I. 102 to prepare them adequately for the hearings in respect of the surcharge and disallowance appeals anticipated under article 187 (7) of the Constitution.

EPILOGUE

Quoting again from the presentation by the then Auditor-General, Mr. Edward Dua Agyemang, attached to these proceedings by the Plaintiffs as exhibit OG1, which we have already referred to supra, the Auditor-General concluded that presentation as follows:-

Let me conclude by saying that whenever people get a choice between privacy and accountability, they tend to choose privacy for themselves and accountability for everyone else. But accountability and good governance are inextricably interrelated with each other. Take away accountability from good governance and you will be left with dictatorship and corruption.

For accountability to thrive there is the need to have effective monitoring and tracking of public expenditure by the Auditor-General. The success in this endeavor depends on strong political will to adequately resource the Auditor-General to be able to hire and maintain properly trained staff and professionals; acquire the needed equipment and other resources.

The growing interest of the public in the work of the Auditor-General has demonstrated the important contribution the Auditor-General makes in helping our nation spend wisely through expenditure surveillance. The Auditor-General provides assurances to the people of Ghana through Parliament that public money is spent properly and that there is accountability.

From the above, what is apparent is that, there is an urgent need to adequately resource not only the office of the Auditor-General, but also that of the other constitutional bodies like the Judiciary, CHRAJ and Attorney-General, just to mention a few, who are the front runners in our fight against corruption. This will ensure that the impact of these constitutional bodies in our quest to ensure probity and accountability thereby enhancing proper management and control of public funds is put on a higher pedestal.

We believe that as a nation, we have reached a critical stage in our governance systems where we must not shy away from spending wisely in order to superintend the public purse. This is the only sure way to ensure that the good governance principles enshrined in the Constitution such as Article 187(7)(b) are not lost.

There is an old adage which states as follows “penny wise, pound foolish”. We therefore must adequately fund these constitutional bodies including the Auditor-General to ensure maximum protection of the public funds.

Save as is stated supra, the Plaintiffs succeed substantially on their claims against the Defendants.

V. J. M. DOTSE
(JUSTICE OF THE SUPREME COURT)

S. A. B. AKUFFO (MS)
(JUSTICE OF THE SUPREME COURT)

S. O. A. ADINYIRA (MRS)
(JUSTICE OF THE SUPREME COURT)

ANIN YEBOAH
(JUSTICE OF THE SUPREME COURT)

P. BAFFOE-BONNIE
(JUSTICE OF THE SUPREME COURT)

N. S. GBADEGBE
(JUSTICE OF THE SUPREME COURT)

A. A. BENIN
(JUSTICE OF THE SUPREME COURT)

INTERCEPTION OF CORRESPONDENCE OR COMMUNICATION – A DUBIOUS SOLUTION TO A CONTRIVED PROBLEM

Wednesday, March 2nd, 2016

By Ace Anan Ankomah & Susan-Barbara Adjorkor Kumapley

INTRODUCTION
Parliament intends to pass the Interception of Postal Packets & Telecommunications Bill (“Bill”) into law. The conception of this Bill is just another evidence of the fact that several democracies are struggling to maintain a delicate balance between the prevention of crime on the one hand, and the protection of the privacy of correspondence and communications on the other. Although every government would desire to have unfettered access to private communications, the concept of Rule of Law demands that they pit that desire against the fundamental right of the individual to privacy.

We agree that it is important to have a law that regulates the interception of private correspondence or communication, which balances the right to privacy against the need for interception of communications. This Bill is significant to the extent that for the first time, at least, there is an attempt to consolidate Ghana’s laws on interception. As at now, one has to look at about six statutes to ascertain the nature and scope of the power to intercept. To that extent, and that extent alone, the Bill is welcome.

CONSTITUTIONAL GUARANTEES OF PRIVACY
Our Constitution demands this balance between respecting the right to privacy and lawful interception. In the preamble, “We The People” solemnly declare and affirm our commitment to the “Rule of Law,” which simply means that we agree to restrict the arbitrary exercise of power by subordinating it to well-defined and established laws. Article 18(2) specifically prohibits interference with the privacy of “correspondence or communication except in accordance with law and as may be necessary in a free and democratic society for public safety or the economic wellbeing of the country, for the protection of health or morals, for the prevention of disorder or crime or for the protection of the rights or freedoms of others” [Emphases ours.] Thus the right to privacy, like most other human rights, is not absolute but is subject to constitutionally circumscribed limits, and only those.

Our Article 18(2) is not novel. It is a near-verbatim reproduction of Article 8(2) of the European Convention on Human Rights, which provides that “There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others” [Emphases ours.]

In the 1984 case of Malone v. The United Kingdom, the European Court on Human Rights applied Article 8(2) of the European Convention in examining the lawfulness of the tapping of Mr. Malone’s telephone calls. It found that although the tapping had been ordered following a warrant issued by the Home Secretary on suspicion that Mr. Malone was involved in some criminal activity, and such warrant had been issued in accordance with UK law, the law in question did not contain adequate safeguards. The Court held that the phrase “in accordance with law” looked not only to having law but the quality of the law: it must be compatible with the rule of law, and must contain protection against arbitrary interferences. The Court held that it was contrary to the rule of law if the discretion granted was expressed in terms of an unfettered power. Consequently the law must indicate, with sufficient clarity, the scope and manner of exercise of the discretion, “having regard to the legitimate aim of the measure in question, to give the individual adequate protection against arbitrary interference.” Interference, the court held, could only be regarded as “necessary in a democratic society” if the particular system of secret surveillance adopted contained adequate guarantees against abuse.

Soon after this decision, the UK passed the 1985 Interception of Communications Act, and in 2000, passed the Regulation of Investigatory Powers Act in response to rapid changes in telecommunications. In 2009, the UK also passed into law, a 2006 EC Directive whereby communications service providers were required to retain communications data for a year; but the European Court of Justice declared the 2006 Directive invalid in April 2014. In response to the resulting uncertainty, the UK introduced the 2014 Data Retention and Investigatory Powers Act. A 2012 draft Communications Data Bill did not survive pre-legislative scrutiny and criticism. Derisorily called the “Snooper’s Charter,” it was opposed by the Liberal Democrats and was not taken forward in the 2012-13 session.

What is apparent is that even European democracies are still struggling to attain a balance between interception and the right to privacy. Also, we know that governments push to have fewer restrictions to interception, but the courts have stepped in to protect and uphold the right to privacy. The reasoning of the Court in Malone v. The United Kingdom remains pristine and unassailable. And for Ghana, one thing stands clear: any law that gives to any public authority even a shred of unfettered discretion to intercept for any period, should not stand the Article 18(2) test.

EXISTING LAW
Currently, in Ghana, interception is prohibited and criminal unless permitted expressly by law. However, interception is permitted under various provisions of the Security and Intelligence Agencies Act, EOCO Act, Narcotics Control Act, Electronic Communications Act (ECA), the Mutual Legal Assistance Act, and to some extent, the Electronic Transactions Act. All of these Acts are unanimous: there should be no interception without a court order/warrant. Additionally, and under the ECA, the President may authorise or demand interceptions but only through the deliberate process of issuing an Executive Instrument (EI). And, the phone companies may intercept, but for strictly specified industry purposes, which do not include disclosure to third persons. All of these circumstances, in our view, are apt, and fit into the constitutional exceptions to the right to privacy by providing necessary safeguards against abuse, namely, (i) securing a court order/warrant, (ii) passing an EI or (iii) complying with strict legislative controls.

It might be recalled that when the government proposed to install some mechanism to ostensibly monitor incoming international phone traffic and generate revenue, the government was compelled by a public outcry to pass an amendment to the ECA that ensured that the equipment installed “shall not have the capability to actively or passively record, monitor or tap into the content of any incoming or outgoing electronic communication traffic, including voice, video and data existing discretely or on a converged platform whether local or international.” That was right and in sync with Article 18(2).

THE NEW BILL
Thus the Bill is significant in four main ways:

1. It changes the current position where a court order/warrant is required before interception, so that in cases of “urgency” the National Security Coordinator may orally authorize interception and has 48 hours to go to court (See clause 4(3) and (4));

2. It repeals the power of the President to order interception through EI’s;

3. There appears to be an indirect amendment of the other laws that have interception provisions so that now, a public officer who wants an interception warrant even from a Justice of the High Court has to first apply to the National Security Coordinator for an authorisation to obtain the warrant, and may get that for 48 hours before applying to the court (See clause 5(1)); and

4. Telecommunication network operators will now have an obligation to ensure that their networks have interception capability (see clauses 14 and 15), and are required to bear the cost of that capability (see clause 17).

The relevant questions then are as follows: what is broken with the existing legal situation that needs to be fixed by the new Bill? Is there a problem with seeking a court order/warrant before interfering with our right to privacy? Why is the requirement that the President needs an EI to authorise interceptions being removed? These questions, to us, have not been answered and cannot be answered. Simply put, it appears that the main aim of this Bill is to overreach the requirements for a court order/warrant or an EI, as the case may be, by giving the National Security Coordinator the power to authorise interception for 48 hours without any of these fetters.

What this means is that the National Security Coordinator, a person appointed by the President and who reports to the President, can intercept your correspondence/communication, listen to your phone calls, and read your letters and text messages, for 48 hours without any independent checks and balances, or guarantees against abuse; and he can simply avoid going to court by terminating the interception before the 48 hours is over. Then he can, arguably, resume the interception for another 48-hour cycle. There is no one to check to see what he is going to use that for because the Bill removes the legislative check captured in the EI requirement, and defers (potentially indefinitely) the judicial check in seeking a court order/warrant.

COMMENTS & RECOMMENDATIONS
It is our considered view that this effectively unchecked and definitely arbitrary use of executive power, whether or not backed by law, is dangerous and should not be countenanced. No public official should have or be trusted with unfettered access to private communication, even for a minute.

Parliament should look at the existing acts, particularly the EOCO, Mutual Legal Assistance, and Security and Intelligence Agencies Acts, and the conditions for interception that Parliament itself has enacted in those laws, and what the interceptor has to show to the court to obtain the order/warrant. Further, these laws properly provide for an arbiter (especially because the person to be monitored will not – and should not – know what is happening), the judge, who will vet the grounds to see that they have sufficient bases, and if satisfied, grant the order/warrant on whichever terms that the judge would deem proper, including time limits. This should be retained.

The law as it exists, in our view, is adequate and has the key quality (the role or intervention of the judge), which makes it compatible with the rule of law and an allowable qualification to the right to privacy. There is nothing wrong with maintaining this quality and we are yet to hear any arguments that state that our judges are not competent to vet any attempt to intercept, before it happens. Relegating the role of the judge to a lower status that could be easily circumvented by simply never showing up in court is wrong and clearly unconstitutional.

CONCLUSIONS
It is hoped that the sponsors of this Bill will bear these matters in mind and take steps to amend it so as to reinstate the primary, critical and ab initio role of the courts. If they do not, we hope that our parliamentarians will be brave enough to amend it or vote it down. If Parliament fails and passes it in its current state, then we have to hope for a constitutional challenge before the Supreme Court. Hopefully, the apex court will not fail the people of Ghana.

Some have asked, “Why bother, when you have nothing to hide?” Our response is to quote the famous saying attributed to Benjamin Franklin, one of America’s founding fathers and whose head adorns the $100 bill: “Justice will not be served until those who are unaffected [by injustice] are as outraged as those who are.”

Why Ghana, unlike the UK and US, does not need a Right to Information Act

Friday, February 19th, 2016

The U.K. does not have a written constitution. The right to information is therefore guaranteed by and in statutes passed by Parliament such as the Freedom of Information Act, 2000.

In the US, its Supreme Court has held in Houchins v. KQED, 438 U.S. 1 (1978) that neither the First nor the Fourteenth amendments “mandates a right of access to government information or sources of information within the government’s control,” nor do they grant the media a right of access that is greater than the public’s right of access, and that although there were Supreme Court cases that upheld First Amendment rights to communicate information, those cases did not construe the First Amendment as providing a right to obtain information from the government.

And as recently as 2013, the Supreme Court stated in McBurney v. Young, 133 S.Ct.1709, 1718 (2013) that it “has repeatedly made clear that there is no constitutional right to obtain all the information provided by FOI[Act] laws.”

But Ghana beats a different path and sings a different (more melodious) tune. Article 21(1)(f) of the Constitution provides specifically as follows: “All persons shall have the right to… information, subject to such qualifications and laws as are necessary in a democratic society.”

In the recent case of In Re Presidential Election Petition; Akufo-Addo & 2 Others v. Mahama & 2 Others (No. 3) [2013] SCGLR (Special Edition) 61, the Supreme Court, speaking by Sophia Adinyira JSC stated emphatically that all persons have a right to information, from which is inferred a right to be given access to public documents. Her Ladyship stated specifically as follows: “This Court affirms the right of all persons to information, as expressed in Article 21(1)(f) of the Constitution, 1992. This right to information implies a right to access public documents.”

In the more recent case of Justice Paul Uuter Dery v. Tiger Eye PI & 2 Ors. [4/2/2016] Writ No. J1/29/2016, the court was called upon to comment on the right of the people to information, vis-à-vis the constitutional right of a judge to the confidentiality of proceedings to remove him from office under Article 146(8) of the Constitution. The Supreme Court, speaking by Bennin JSC, held that although the confidentiality provisions operated as a “constitutional injunction” on the right of the public to information, it only applied from when a removal petition is submitted to the President to when the work of the investigation committee was concluded. Thereafter, the right of the people to information must be upheld and respected. His Lordship explained as follows: “Once the Committee’s work is concluded and it has submitted its report, the constitutional injunction no longer applies… The public is not completely denied the right to know, but not before a prima facie case has been made by the Chief Justice or the committee has completed its work and submitted its report, whichever of these terminates the proceedings. The rights of the people were merely postponed for a time…”

In the earlier case of New Patriotic Party v. Ghana Broadcasting Corporation [1993-94] 2 GLR 354, Francois JSC described an attempt by a public body (in that case, a media agency, but the principle applies to all public bodies) to withhold information from the public as “reprehensible” and a “wilful violation of the Constitution.” He said: “It would seem therefore that where a media created as a public agency, to secure for the citizens of this country information, rather withholds it, contrary to the abjuration in Articles 163 and 21(1)(f) of the Constitution, 1992, it is wilfully violating the Constitution.”

It is therefore clear that all the ink, time and money that has been spent by government and NGOs on the so-called Right to Information Bill has been a waste of time, energy and resources and probably a subtle effort by the governors to deny the governed a constitutionally guaranteed right to information under the guise of passing a Bill to that effect. Surely, if the governor had good intentions to pass this Bill (superfluous as it may be), it would not take nearly a quarter of a century, since the Constitution was passed, to enact the Act.

This is my view:

Absent any strict constitutionally or legally permitted limitation, qualification or derogation, the right of the citizen to public information is absolute and must be respected.

THE PROCEDURE FOR REMOVING DIRECTORS – A BALANCING ACT?

Tuesday, December 2nd, 2014

By ACE ANAN ANKOMAH·

 If a case should arise of injury to a company, for which no adequate remedy remained, … claims of justice would be found superior to any difficulties arising out of technical rules. However, it must not be without reasons of a very urgent character that established rules of law and practice are to be departed from, rules which are founded on general principles of justice and convenience.[1]

 

I. Introduction

It is recorded that the first person to call a group of persons by the name “persona ficta”, was Sinbald Fieschi who in 1243 became Pope Innocent IV. The earliest development in the establishment of rules on incorporated persons was through associations in which the property of the church was vested and through which its activities were exercised. The church was at the time a large property owner, which property it owned in a corporate capacity. These entities needed to be embodied in some tangible form so as to live and flourish, and Pope Innocent IV’s theory of the personae fictae provided them with the reality they required.

This became the accepted theory of canon law and inevitably affected the common law. Soon, the ‘artificial persons’ were frequently encountered in the common law courts and the theory was applied to other groups such as universities and their colleges, boroughs and indeed to any corporate body or group to which the conception could be profitably applied.

Section 24 of Ghana’s Companies Code, 1963 (Act 179) (the “Code”) gives primary recognition to the effect of incorporation, providing that upon incorporation a company has “all the powers of a natural person of full capacity.” The natural person is known to the law, which makes rules to govern him. However, not all legal rules applicable to natural men are applicable to companies, for the simple reason that the latter is an artificial person. “A corporate body can only act by agents”, proclaimed Lord Cranworth L.C., a 19th Century English Judge.[2] Usually, the natural persons by whom companies act and by whom the business of the company is carried on or superintended are called “directors”. According to section 179 of the Code directors are persons who are tasked with the primary responsibility to “direct” and “administer” the business of companies.

While the Code leaves the members of a company free to determine how and by whom the business of the company should be ‘directed’ and ‘administered’, it regulates the procedure by which a company’s directors may be removed. Section 185 of the Code provides that a simple majority of votes of the company in general meeting is all that is required to remove a director of the company. However, that section provides safeguards to ensure the observance of the audi alteram partem principle, so that the affected director cannot be removed without him being afforded the full opportunity to defend himself. But, can the members of a company remove a director without recourse to the provisions of section 185?

The Code further provides, under section 7, that the rules of equity and common law are applicable to Ghana’s company law, subject to their being consistent with the provisions of the Code. Also, section 216 provides as follows:

The rights, duties and liabilities of officers and agents of companies shall continue to be governed by the rules of the common law and equity relating to principal and agent and master and servant save in so far as such rules are inconsistent with the express provisions of this Code.

The renowned Professor L.C.B. Gower, who drafted Ghana’s Companies Code, justifies the incorporation of the rules of common law and equity into Ghana’s company law on the ground that no statute could hope to be completely all embracing. According to him, section 7 therefore aims at making it clear that the courts could “fill the gaps on the basis of the existing legal doctrines”.[3] In respect of section 216, Professor Gower argues that although the Code contains provisions that deal expressly with rules peculiar to directors and officers of companies, it does not attempt to codify the whole law of principal and agent or master and servant in its relation to companies. Thus, “the normal rules continue to prevail except in so far as they are expressly modified”.[4] But, can a company remove a director, particularly by way of a summary dismissal[5], relying on the rules of common law or the principles of equity instead of the procedure provided under section 185 of the Code?

The Code also forbids the appointment of persons as directors on grounds of incompetence. Section 182 specifically bars five classes of persons from being appointed as directors of companies, and provides that the Regulations of a company may also contain provisions declaring other classes of persons as incompetent to hold directorships in the company. Under what instances can the court be called upon to remove such “incompetent” persons as directors?

Further, the Code provides under section 218 (2) that where a case of “oppression”[6] or “unfair prejudice”[7] has been made out, the High Court (the “Court”)[8] may make any orders as it thinks fit, “with a view to bringing to an end or remedying the matters complained of”. Does this include the power to remove a director?

In this work I will seek to examine the rules in the Code on the removal of the directors of companies from that office, address the questions posed above, and contend as follows:

  • the procedure under section 185 of the Code for the removal of directors by the company in general meeting is mandatory;
  • the Court may, subject to the Court of Appeal’s caveat in the exercise of such powers carefully and judiciously[9], remove a director from office on the following grounds:
  • lack of competence under section 182 (1),
  • enforcement of any provisions in the Regulations under sections 182 (4) and 184 (2),
  • failure to secure share qualification where that is required under section 183,
  • disqualification of a sitting director under section 186,
  • in the exercise of the Court’s broad powers under section 218 (2), and
  • enforcement of any contractual agreements for the removal of a director; and
  • the rules of common law and equity are redundant in respect to the removal of directors from office as directors by the shareholders, and it is only where a matter has arisen that is not covered by the Code, which is unlikely, that the recourse may be had to the rules of common law and equity.

 

II. Separation of Powers between Directors and Shareholders

Before tackling the rules on the removal of directors, it is important to discuss the status of directors within the corporate structure and the dichotomy of the power arrangements between them (as the managers of the company) and the members (as the investors in the company).

As noted above, under section 179 of the Code, a director is any person who is appointed to direct and administer the business of a company, irrespective of whatever name that person is called. That section also makes so-called ‘de facto’ directors[10], or ‘shadow’ directors[11] subject to the same duties and liabilities as if they have been duly appointed as directors.

Under section 137 of the Code, a company acts primarily through either its members in general meeting or its directors. The Code expects the Regulations of a company to lay down rules on the separation of powers between the members and the directors. Except as provided in the Regulations, the directors manage the business of the company and exercise all powers that are not, under the Code or the Regulations, required to be exercised by the members in general meeting. It is my contention that by this provision, the directors of a company constitute the supreme and original authority in matters of its business management. They are the chief administrators, and the Code delegates to them the power and duty to manage and superintend the business of the company, subject to the provisions of the Regulations. When acting within the scope of this authority, the directors are not bound to obey the instructions or directions of the members in general meeting.[12]

I fully endorse the opinion expressed in the New York Court of Appeals, that:

all powers directly conferred by statute, or impliedly granted, of necessity, must be exercised by the directors who are constituted by law as the agency for the doing of corporate acts. … Within the chartered authority they have the fullest power to regulate the concerns of the [company], according to their best judgment…[13]

 I also find instructive, the following parallel view of the English Court of Appeal:

If powers of management are vested in the directors, they, and they alone, can exercise these powers. The only way in which the general body of the shareholders can control the exercise of the powers vested by the articles in the directors is by altering the articles, or … by refusing to re-elect the directors of whose actions they disapprove. They cannot themselves usurp the powers which by the [Regulations] are vested in the directors any more than the directors can usurp the powers vested by the articles in the general body of the shareholders.[14]

 An Ohio court has supported this position by stating that:

 The individual directors are in no sense the personal representatives of the [shareholders] by whose suffrage they hold office. However much they might be influenced by the wisdom and wishes of the [shareholders], it remains their duty to exercise their own judgment in all final corporate action. If the action of the board of directors does not express the will and wish of the majority of the majority of the shares of stock, the majority has its remedy by retiring the [directors] …[15]

Commenting on section 303 of the 1985 English Companies Act (which section is in pari materia with our section 185), Palmer says that:

 While the shareholders have no power, apart from that given them by statute or articles (which, in practice, does not amount to much) to intervene in the management of the company’s affairs, this section was designed to enable them to control the directors by removing them. In English company law, the balance of power is normally with the directors who by the articles are usually authorised to exercise the general powers of the company, and interference with the managerial activities of the directors is not encouraged by statute or articles. But this section enables the shareholders to assert themselves against the directors, if need be, and makes it clear that the ultimate control is in the hands of the proprietors of the company.[16]

 It is my opinion, in the light of the above, that subject to the terms under which they are appointed, directors are not servants to obey directions and orders given to them by the shareholders. If the shareholders of a company disapprove of the actions of the directors, they can, in the words of Palmer, “assert themselves against the directors” by the exercise their power of “ultimate control” over the affairs of the company, i.e. remove the directors under section 185 of the Code.[17] Indeed, according to Hayfron-Benjamin J., as he then was, “[t]his section seems to vest in the general meeting of the shareholders the absolute right of determining who should manage the affairs of the company despite any agreement to the contrary.”[18]

I must point out, however, that the Code recognises that directors may represent specific shareholders. A director in such a position may willingly obey directions given by the appointing shareholder or may be removed by that shareholder, based on the terms upon which he was appointed as director. Further, in Ghana, it is common practice to find that the shareholders and directors are the same people. In such cases, the problems associated with the separation of powers between the directors and shareholders are not likely to arise.

It is to a discussion of the rules governing the removal of directors by the company in general meeting that I now turn.

 

III. Procedure for Removing Directors

Under section 185 (1), a director may be removed from office by an ordinary resolution of the members at a general meeting, notwithstanding any provision to the contrary in the Regulations or any agreement. If the members desire to remove a director, that action can only take place at a general meeting, and so under section 174, a director cannot be removed by written resolution.[19]

The company must circulate notices of the proposed resolution to all the members and the directors concerned, at least 35 days before the meeting, at the same time and in the same manner as the company gives notices for meetings. Where it is “not practicable” to give the 35-day notice, the company may give 21 days’ notice before the meeting. The Code does not define the phrase “not practicable”. I however endorse the definition of the synonymous word “impracticable” (as used under section 162 of the Code) to mean “incapable of being done”.[20]

The proviso to section 185 (2) provides that if a meeting is called after the notice, but prior to the date fixed for the meeting, that notice shall be deemed to have been properly given, and thus the matters contained therein can be discussed and acted upon at that meeting. This prevents attempts by the directors to pre-empt or forestall the meeting called after the notice for the intended removal of the director, by convening a meeting immediately the notice is received.

The director affected shall be heard on the resolution at the meeting and if he so desires, he can send a written statement to the company for circulation to all persons entitled to notice. This gives the affected director an opportunity to make representations to the members before he is removed from office. However, the company need not circulate the statement if:

(i)   the statement is received less that 7 days before the meeting, or

(ii)  the court makes an order, on an application by the company or any aggrieved person, that the statement is too long or contains defamatory matters.

Whether or not the affected director’s statement is circulated, he has a right, at the meeting, either to be heard orally or (in the absence of the court order) to read a written statement.

The courts in Ghana have had the opportunity to pronounce on the removal of directors, and it is to a discussion of these cases that I now turn.

 

IV. Re West Coast Dyeing Industry Ltd.; Adams & Another v. Tandoh[21] (the “Adams Case”)

 

In the Adams Case, Adams (the “Appellant”) was the managing director of Solid Construction Co. Ltd. (“SCC”), a subsidiary of West Coast Group of Companies (“WCGC”), and a director of all the other subsidiaries. Tandoh (the “Respondent”) was the executive chairman of the board of directors and the majority shareholder of WCGC. At an extraordinary general meeting of WCGC, the shareholders passed a resolution summarily dismissing the Appellant as the managing director of SCC and from his directorships in the other companies. The relevant portion of the minutes in question reads as follows:

Removal of Mr. O S Adams as Director:

The shareholders resolved, in view of the very serious and fraudulent nature of Mr. O S Adams’ actions against the company… that Mr. Adams be removed as a director of Solid Construction Co Ltd. and the other companies within the West Coast Group.

 The Appellant brought an action under the Code on the ground, inter alia, that the summary dismissal was unlawful because section 185 of the Code had not been complied with. The Respondent argued that the Appellant was guilty of certain fraudulent practices and embezzlement of large funds belonging to SCC, and that it was as a result of these matters that the Appellant was summarily dismissed.

At the trial, there was evidence that the Appellant had been endorsing cheques drawn in favour of SCC and then cashing them for his personal use. The trial judge found that the Appellant was guilty of a criminal offence and fraudulent breach of his duties as a director towards WCGC. The court held that the summary dismissal of the Appellant, in the circumstances of the case, was justified under section 216 of the Code.

The matter went on appeal before the Court of Appeal. In the leading judgment, Abban J.A., as he then was, held that the Appellant, as the managing director of SCC and a director of the other three companies, was an officer of the companies. Accordingly, his relationship with those companies continued to be governed by the common law rules of master and servant, irrespective of section 185 of the code. The learned judge also held that the provisions of section 185 are not in conflict with the common law rules. The company was therefore under no obligation to resort to the procedure under section 185 before the Appellant could be dismissed from his office as a director or as a managing director. The company, in the view of the learned judge, could choose either to adopt the procedure under section 185 or proceed in accordance with the principles of common law and equity as provided by section 216, depending on the circumstances of each case.

His Lordship relied on a statement attributed to Professor Gower, as follows:

It is, however, of considerable importance in the case of other officials of the company and of directors who hold some other office such as that of managing director. So far as their offices are concerned it is clear that, notwithstanding that they may hold long‑term agreements, they can be dismissed immediately if guilty of misconduct. Any breach of their fiduciary duties clearly suffices.[22]

His Lordship also relied on the decision in the case of Boston Deep Sea Fishing and Ice Co v. Ansell.[23] In that case, the defendant, who was the managing director of the plaintiff‑company, contracted on behalf of the company for the construction of certain fishing‑smacks. Without making a disclosure to the company, he took a commission from the shipbuilders. The defendant was also a shareholder in other companies, which paid bonuses to shareholders who, as owners of fishing‑smacks brought business to those companies. The defendant employed these companies for the plaintiff’s smacks but received the bonuses for himself. It was held that the receipt of the commission from the shipbuilding company was a good ground for the dismissal of the defendant from office and that he had to account to the plaintiff‑company for the bonuses received from the ice and fish carrying companies. In the course of his judgment, Bowen L.J. said:

 There can be no question that an agent employed by a principal or master to do business with another, who, unknown to that principal or master, takes from that other person a profit arising out of the business which he is employed to transact, is doing a wrongful act inconsistent with his duty towards his master, and the continuance of confidence between them. He does the wrongful act whether such profit be given to him in return for services which he actually performs for the third party, or whether it be given to him for his supposed influence, or whether it be given to him on any other ground at all.[24]

 Abban J. A., as he then was, also relied on the dictum of Lord Esher M.R. in Pearce v. Foster[25] thus:

But the question is, whether the breach of duty is a good ground for dismissal. I have never hitherto had any doubt that that is the true proposition of law … Innumerable circumstances have actually occurred which fall within that proposition, and innumerable other circumstances which never have yet occurred, will occur, which also will fall within the proposition. But if a servant is guilty of such a crime outside his service as to make it unsafe for a master to keep him in his employ, the servant may be dismissed by his master; and if the servant’s conduct is so grossly immoral that all reasonable men would say that he cannot be trusted, the master may dismiss him.[26]

 His Lordship further referred to the statement by Lopes L.J. in the same case thus:

 If a servant conducts himself in a way inconsistent with the faithful discharge of his duty in the service, it is misconduct which justifies immediate dismissal. That misconduct, according to my view, need not be misconduct in the carrying on of the service or the business. It is sufficient if it is conduct which is prejudicial or is likely to be prejudicial to the interests or to the reputation of the master, and the master will be justified, not only if he discovers it at the time, but also if he discovers it afterwards, in dismissing servant.[27]

In the Adams Case, the Court of Appeal concluded that the Appellant, as found by the learned trial judge, had not only breached his fiduciary obligation towards the company as required by section 203 of the Code, but had also committed acts of serious fraud and criminal misconduct in his dealings with the company. The Appellant, in the view of the court, was guilty of immoral and untrustworthy conduct, and that it would have been highly prejudicial to the interests of the company to keep him. Prompt and swift action was therefore required to safeguard the interests of the companies, and immediate summary dismissal was the right answer and that was justified under the common law.

 

Applying Rules of Common Law and Equity

I respectfully disagree with the decision of Court of Appeal, in respect of the applicability or otherwise of section 185 in such matters. It is my view that notwithstanding any existing rules of common law and equity the power of the company in general meeting to remove a director cannot be lawfully exercised without recourse to section 185.

My contention is that both sections 7 and 216 of the Code state clearly that the rules of common law and equity are applicable only to the extent that they are not “inconsistent with” the provisions of the Code. The Code is silent on how the ‘inconsistency’ is to be determined; but the dictionary definition of the word “inconsistent” is “contrary, the one to the other, so that both cannot stand by the acceptance or establishment of the one implies the abrogation or abandonment of the other”.[28]

There is no question about the mandatory and binding nature of the provisions of the Code. Where such provisions differ or depart from existing rules of common law or equity, latter rules are, in my opinion, rendered redundant in Ghana. Accordingly, the rules of common law and equity, under sections 7 and 216, apply only where the Code is silent on a particular matter. As long as different provisions have expressly been made under the Code on a matter, the rules of common law and equity are redundant.

For instance, there are other provisions in the Code, such as the rules on pre-incorporation contracts,[29] ultra vires transactions[30] and the variation of class rights,[31] which differ from the rules under common law and equity. It is my opinion that a court faced with a decision on any of the above matters cannot ignore the express provisions of the Code, and then apply the pre-existing rules of common law and equity, relying on section 7 of the Code. Those rules of common law and equity are equally redundant.

The same applies to the provisions of section 185 of the Code. I contend that even if common law and equity allow the company in general meeting to summarily dismiss of officers of a company, section 185 is clear that in respect of directors qua directors, the company in general meeting must follow the laid down procedure. To the extent that the section 185 differs from any procedure for the dismissal of a company’s officers under common law and equity, there is an inconsistency; and to the extent of that inconsistency, section 185 must prevail over the rules of common law and equity.

The shareholders in the Adams Case could not rely on rules of common law and equity to effect the removal of a director. They were bound to follow the mandatory procedure under section 185. It is therefore my respectful opinion that the Court of Appeal and the High Court erred upholding the error of the shareholders in that case.

 

Shareholders’ Resolution

My contention here is that in the absence of provisions in the Regulations or a service agreement that expressly vests power in the company in general meeting to remove a director by any other means, the members are bound to follow the section 185 procedures. It is only where such other provisions exist in the Regulations or relevant service agreement, that the company in general meeting has an option whether to follow the section 185 procedures, on the one hand, or some other provisions of the Regulations or service agreement, on the other hand.

Section 185 (1) of the Code provides as follows:

Subject to the provisions of section 300 of this Code and to the following subsections, a company may by ordinary resolution at any general meeting remove from office all or any of the directors notwithstanding anything in its Regulations or in any agreement with any director. [Emphasis added].

 Under section 27 of the Interpretation Act, 1960 (CA 5) the word “may” is generally to be interpreted as “permissive and empowering, and therefore discretionary”, unless where a contrary intention appears in the enactment in question. What this means that the use of the word “may” in a statute only has that general meaning, if it accords with the context of the entire enactment in question. In Sasu v. Amua-Sekyi[32] the general interpretation of the word “may” as “permissive and empowering and therefore discretionary” was held to be a “prima facie presumption,” which could be contradicted; in other words that interpretation is a rebuttable presumption – an inference of law which holds good only to the extent that it is not invalidated by proof or a stronger presumption.[33]

It is my opinion that the very wording of section 185 (1) lends itself to the conclusion that the use of the word “may” was intended by the framers of the Code not to vest in the company a discretion as to procedure, but a discretion as to whether or not to remove a director. What the subsection therefore does is to permit or empower the members in general meeting, or vest in them the discretion, to remove a director (in accordance with the section 185 procedure), in spite of any provision in the Regulations or any agreement with the affected director. However, when the members in general meeting seek to exercise that power, they are bound to proceed in accordance with the section 185 procedures.

I must further point out that section 185 (1) is expressly made “subject to the provisions of section 300[34] and to the [other] subsections” of section 185. The effect of these words is to subsume section 185 (1) to those other subsections.[35] Section 185 (1), therefore, cannot be interpreted on its own without a reference to the whole of section 185, as well as the entire Code. As I have already noted there is in the Code, clear indications that the word “may”, as used in section 185 (1), is not intended to be “permissive” in respect of the procedure, but only empowers the company in general meeting to remove a director notwithstanding any provisions to the contrary in the Regulations or service agreement.

From a close reading of section 185 (2) “a resolution to remove any director shall not be moved at any general meeting”, [Emphasis added] unless (i) the required notices have been given, and (ii) section 185 as a whole has been followed. According to the Interpretation Decree, the word “shall” in any enactment is construed as imperative. The wording of section 185 (1) and (2) therefore have the effect of subjecting the power given by section 185 (1) to the company in general meeting to remove a director, to the section 185 procedures. Therefore whilst section 185 (1) empowers or permits the company in general meeting, or vests in that body the discretion, to remove a director by an ordinary resolution, that power, permission or discretion cannot be exercised to pass that resolution unless the section 185 procedures have been complied with.

From the facts of the Adams Case, the shareholders passed a resolution removing the Appellant as director. Under section 185 (2), such a resolution “shall not be moved”, and should not have been passed at that meeting, without the company complying with the requirements of the entire section 185.

Section 153 of the Code further supports the view that the procedure under section 185 is mandatory where the company in general meeting is seeking to remove a director. Under that section, where a notice of an annual general meeting contains a statement that the purpose of the meeting is to transact “the ordinary business” of an annual general meeting, that notice shall be deemed to be a sufficient specification that the business is to declare dividends, consider directors’ and auditors’ reports and accounts, elect directors, fix the remuneration of auditors, and “if the requirements of [section] … 185 are duly complied with, the removal… of directors.” Section 153 therefore buttresses the point that the company in general meeting unless the section 185 procedures have been followed cannot remove a director.

Section 272 of the Code provides more support for this position by providing that the removal of directors of private companies shall be regulated by the company’s Regulations, subject to section 180 to 185 of the Code, and that absent any contrary provisions in the Regulations, “each of the existing directors shall continue to hold office until he vacates office under section 184 of this Code, or is removed under section 185” [Emphasis Added]. This section shows further that there is no room under the Code for the summary removal of a director under section 216.

The summary removal of the director by way of a shareholders’ resolution in the Adams Case could have been justifiable under section 272 if there were provisions for same in the Regulations or any service agreement with the affected director. Then the company could have had Abban J.A.’s “option” of either following the section 185 procedures or summarily removing the director. The company in the Adams Case could also have relied on ‘deemed termination’ provisions in its Regulations, i.e. where a director is deemed to have been removed from office upon the happening of a certain event. Such provisions would have been valid and could have been applied under section 272 without section 185 necessarily coming into play. However, there was no evidence that any such provisions existed or were applied. The bare facts of the case show that Adams was removed on the authority of a shareholders’ resolution, which the shareholders are entitled to pass under section 185 “notwithstanding anything in [the company’s] Regulations or in any agreement with any director.” But in deciding to remove the director on the authority of a shareholders’ resolution, the shareholders were bound by section 272; and they indeed triggered the provisions of section 185, which meant that that resolution could “not be moved” unless the requirements under that section had been followed. My respectful opinion is that the court erred upholding this mistake of the shareholders.

 

Misreading of Professor Gower

I further humbly submit that Abban J.A., as he then was, may have been misled in arriving at that conclusion by misreading a statement made by Professor Gower. In arriving at his decision, Abban J.A., as he then was, felt fortified by the following statement made by Professor Gower:

It is, however, of considerable importance in the case of other officials of the company and of directors who hold some other office such as that of managing director. So far as their offices are concerned it is clear that, notwithstanding that they may hold long‑term agreements, they can be dismissed immediately if guilty of misconduct. Any breach of their fiduciary duties clearly suffices.[36] [Emphasis Added]

 With due respect to His Lordship he misread this statement and then applied it completely out of context, which, unfortunately, led to a flawed decision. A careful reading of the statement in question reveals that although Professor Gower stated that “other officials of the company” could be summarily dismissed on grounds of misconduct, he clearly qualified the application of such a procedure to directors by saying that it only applied to “directors who hold some other office in the company” i.e. executive directors.[37] Thus all Professor Gower says in that statement is that an executive director (such as a managing director) may be summarily dismissed from his executive position if he is found guilty of misconduct.

Indeed, in the immediately preceding sentences, the learned Professor had clearly argued that this right of a master to dismiss a servant summarily, has no application to a director as such, who may only be

 dismissed from his directorship by ordinary resolution subject to compliance with the provisions of section 184. The provisions of this section are mandatory and clearly cannot be dispensed with because it is alleged that the director has been guilty of misconduct.[38] [Emphasis Added]

 It was after taking this definite and categorical position that Professor Gower made the statement that the Court of Appeal quoted and relied on. The learned Professor therefore made a clear distinction between directorships per se and the holding of other offices in the company by a director, such as the office of a managing director. He argued that so far as those other offices are concerned, directors could be dismissed immediately if guilty of misconduct. Thus, even in the view of the learned Professor, summary dismissal may only be carried out in respect of the executive positions that such directors may hold, and not in respect of the office of a director. Accordingly, although a company may summarily dismiss a director as managing director or some other executive position, he cannot be summarily removed as director without recourse to the provisions of section 185, which provisions, in Professor Gower’s own words, are “mandatory”.

 

Power to Dismiss a Managing Director

It is important as this point to clarify the issue of the dismissal of managing directors of companies. Schedule 1, Subject 4 of the Code defines the term “Managing Director” to mean, “a director to whom has been delegated some of the powers of the board of directors to direct and administer the business of the company.” [Emphasis Added]. It is my opinion that generally, the company in general meeting has no power to dismiss a managing director as a manager; that power belongs to the directors.

On the basis of section 137 of the Code, directors exercise, not only the powers expressly vested in them under the Code and the company’s Regulations, but also all powers that are not, under the Code or the Regulations, required to be exercised by the company in general meeting. This is especially the case in respect of matters relating to the company’s business management. The Code does not give shareholders the power to remove the managing director from that office, but in section 193, expressly vests in the directors, the power to appoint and remove a managing director, subject to any provisions to the contrary in the Regulations. The directors, as part of the power to appoint a managing director, confer on the appointee any of their powers on such terms as they deem fit. Subject to the terms of any service agreement, it is the directors who may revoke (summarily or otherwise) the powers granted to the managing director. Indeed under section 12 (1) of the Interpretation Act, it is the person who, under an enactment, has the power to appoint to an office, who has the power to remove the appointee.

Shareholders have no such direct power, and a shareholders’ resolution purporting to remove a managing director as manager, in my opinion, will be either a nullity,[39] or, at best, only a recommendation to the directors under section 137 (4). It is my view that there are, however, four instances in which the shareholders may effect the removal of a managing director. These are where:

(i)   the Regulations expressly vest such a power in the shareholders,

(ii)  the directors are disqualified from acting,[40]

(iii) there is a deadlock on the board,[41] or

(iv) the shareholders remove the managing director as a director.

Except in any of the above instances, shareholders do not have the power to remove a managing director from that office. For the shareholders in the Adams Case, option (iv) above would have been the proper procedure to adopt (subject to compliance with section 185), because under section 193 (b) of the Code, the appointment as managing director would terminate automatically if the appointee ceases to be a director.

 

Separate Existence of Parent and Subsidiary Companies

There is yet another intriguing point worth noting, which arises from the Adams Case and raises further questions about the procedure followed by the shareholders in that case. The resolution in question was passed by the shareholders of WCGC who purported to remove the Appellant “as a director of Solid Construction Co. Ltd. and the other companies within the West Coast Group.” There was no evidence that “the other companies in the West Coast Group” also passed respective resolutions to the same effect or had authorised WCGC to perform any such functions in the name of the subsidiaries. It would therefore appear that the shareholders of the parent company, WCGC, took it upon themselves to remove the Appellant as a director of the subsidiary companies at a general meeting of WCGC’s shareholders.

It is my respectful view this step was also flawed. Section 24 of the Code provides that upon incorporation, a company has all the powers of a natural person of full capacity. A company becomes a legal entity, which is separate and distinct from the legal personality of its members. It has its own rights and duties, and it is recognised by law as an entity in its own right.[42] Accordingly, a parent company cannot unilaterally purport to act on behalf of its subsidiaries, unless an express power is given to it to act as such.

All the shareholders of WCGC in general meeting had power to do was to remove the Appellant as a director of WCGC. They had no power to pass a resolution removing him as a director in the subsidiary companies, even if the same persons were the shareholders of all the companies in the group. On this ground as well, the Court of Appeal erred in not striking down that removal from office as being illegal and improper.

 

Applying the rule in Foss v. Harbottle?

It is arguable that the Court of Appeal could still have upheld the actions of the company in the Adams Case, not on the basis that compliance with section 185 was neither required nor mandatory, but by applying the so-called rule in Foss v. Harbottle[43] to the effect that the courts will not interfere in the internal management of a company because “whilst the court may be declaring the acts complained of to be void… the governing body of proprietors may defeat the decree by lawfully resolving upon the confirmation of the very acts which are the subject of the suit.”[44]

Mellish L.J. expounded this rule in MacDougall v. Gardiner[45] thus:

 If the thing complained of is a thing which in substance the majority of the company are entitled to do, or if something has been done irregularly which the majority of the company are entitled to do regularly, or if something has been done illegally which the majority of the company are entitled to do legally, there can be no use in having a litigation about it, the ultimate end of which is only that a meeting has to be called and then ultimately the majority gets its wishes.[46]

 This rule has also been upheld in Ghana, in the case of Pinamang v. Abrokwa[47], per Lamptey J. A., as he then was, thus:

… the rule in Foss v. Harbottle … must be observed by the trial court and it must not inquire into matters of internal management or, at the instance of a shareholder, interfere with transactions which though prima facie irregular and detrimental to the company, are capable of being rectified by an ordinary resolution of the company in a general meeting.[48]

 In Bentley-Stevens v. Jones[49] the plaintiff had been removed from his directorship by an ordinary resolution passed at an allegedly irregularly convened general meeting. The court refused his application for an injunction, holding that the irregularities were inevitably curable. Indeed, even where a company has been previously restrained on the ground that a director has been improperly removed from office, the court will discharge the injunction and decline to assist the affected director any further by injunction, if, after the grant of the injunction, the shareholders, by resolution declare that they do not wish the particular director to act any longer.[50]

In the Adams case, the Court of Appeal, in my opinion, should have held that the procedure adopted by the shareholders was irregular. Then the Court, on the authority of Foss v. Harbottle, could arguably have rejected Adams’ application on the ground that it was an invitation to the court to regulate the internal matters of the company, and that since his removal was something that the majority was entitled to do (even though it had been done irregularly), the majority would still have its way by simply calling a meeting to regularise the irregularity. Such a holding, in my view, would have been a more acceptable application of the principles of company law as enshrined in the Code and the rules of common law and equity under section 7.

However, the difficulty with this position is that section 217 of the Code contains clear exceptions to the rule in Foss v. Harbottle, as the section seeks to prevent illegality, acts ultra vires the company, infringement of the company’s Regulations and acts that are based on improperly passed resolutions, i.e. resolutions that are not in accordance with this Code and the company’s Regulations. However, this should have presented no difficulty in the Adams Case because it is only members of the company who can only bring an application under section 217; and the court had found that Adams was not a member. He was therefore not competent to make an application under section 217.

In sum, it is my opinion that the decision in the Adams Case on the removal of directors by companies was wrong in law. The company should have complied with the section 185 procedures. It did not. What the Court could arguably have done to uphold the decision of the company was to apply the rule in Foss v. Harbottle to regularise the irregularly passed resolution of the company. It was, respectfully, wrong in law for the Court of Appeal to hold that a company could choose to ignore section 185 in removing a director, in favour of the rules of common law and equity.

 

 

  1. Other Grounds for the Removal of Directors

A director who has validly been appointed by the company, but who is subsequently affected by sections 182 and 186 of the Code can be removed from office. Under the combined effect of those sections the following classes of persons are statutorily barred from being appointed as directors:

  • infants,[51]
  • bodies corporate,[52]
  • persons certified as being of unsound mind by any competent court in or outside Ghana,
  • adjudicated bankrupts,
  • persons who have been involved in either offences involving fraud, dishonesty, breach of duties in relation to bodies corporate, or offences in connection with the promotion, formation or management of bodies corporate, and
  • persons classified as incompetent by the Regulations of the relevant Company.

It is my view that although the court may be called upon to declare as void the purported appointment of any such person as a director, this would not amount to the removal of a director per se since the purported appointment itself was void ab initio. What is of particular relevance for the purpose of this discussion is how to remove from office a person who may have been validly appointed as a director but who subsequently falls foul of the above ‘competency’ rules. This obviously has no application to (i) and (ii) above.

Section 184 (1) of the Code provides that the office of director “shall be vacated” if the director becomes ‘incompetent’ to act as director by virtue of the provisions in section 182. It is unclear whether this provision should be read as that the office ‘shall be deemed to have been vacated’ or that ‘the affected director shall vacate’ the office. I would opt for the latter interpretation so that an affected director would be expected by law to vacate that office voluntarily, and of his own accord cease to direct or administer the affairs of the company. However, if he fails to do so, the company may remove him by resorting to the section 185 procedures or applying to the court for the enforcement of the terms of the resolution passed.

 

Certified Lunatics

If a person who has been duly appointed as director of a company subsequently suffers from mental illness and is certified by court of competent jurisdiction to be of unsound mind, does not, or cannot, voluntarily vacate the office as is required under section 184 (1), the company, in my view, would have the option of either removing him by recourse to the section 185 procedures or applying to the court for the enforcement of the terms of the resolution passed.

 

Adjudicated Bankrupts

The disqualification of “adjudicated bankrupts” raises very interesting questions vis-à-vis the fact that this provision was inserted with the obvious expectation that the Insolvency Act, 1962 (Act 153) would be brought into force.[53] That has never happened, for some inexplicable reason. In what circumstances, would the courts remove an adjudicated bankrupt as directors? The Supreme Court had to grapple with this question in the case of Republic v. High Court, Accra; Ex Parte Ploetner[54] where it was urged on the court that only persons adjudicated bankrupts in Ghana and not foreign bankrupts are contemplated by section 182 (1) (e) of the Code. The argument was made, further, that the section 182 (1) (e) of the Code is a dormant legislative provision since Ghana does not have insolvency legislation, and that was that until such legislation was passed in Ghana there could be no bankrupts in Ghana and no question of either restraining bankrupts or removing them as directors would arise.

In the lead judgment of Taylor JSC, the court rejected this argument as being “clearly non sequitur” and “unacceptable” on two grounds. First, although the judiciary has not had bankruptcy jurisdiction reposed in it, a number of cases dealt with by the courts in the decade following the establishment of the Supreme Court in 1876 demonstrated clearly that bankruptcy as a status with its incidents was recognised by Ghana law. The argument therefore ignored the fact that the status of a bankrupt is not unknown to Ghana’s legal system notwithstanding the absence of legislation vesting jurisdiction in bankruptcy in the courts.

Second, section 182 (1) (e) has to be read together with section 186 (1) (b) which gave the High Court jurisdiction inter alia, when “a person is adjudicated bankrupt whether in Ghana or elsewhere” to suo motu restrain him from acting as director without the leave of the court. In the view of the court, the combined effect of these two provisions gave jurisdiction to the court in appropriate circumstances to restrain persons adjudged bankrupt whether in Ghana or outside the jurisdiction of the courts from managing companies in Ghana as directors. Accordingly a person who is adjudged bankrupt outside Ghana is incompetent to act as director of a company in Ghana without the leave of the court. In the instant case, the court held that had the proceedings been regular and had admissible evidence been adduced whether by affidavit or otherwise to establish that Mr. Ploetner was adjudged bankrupt in Germany, he would have been disqualified as a director of the company although no court in Ghana had so adjudged him bankrupt. In the view of the court, a contrary view of this matter would have “the pernicious effect of unleashing foreign bankrupts on Ghana.”

It is my view, from the foregoing, that a duly appointed director who is subsequently adjudged to be bankrupt may be removed in any of three ways:

(i)   by the shareholders resorting to the section 185 procedures,

(ii)  by the court under section 186, on the application of the Registrar, the Official Trustee, the trustee in bankruptcy or the liquidator of the company, or

(iii) by the court on its own motion in respect of any proceedings before it. The director may nevertheless seek and obtain the leave of the court to continue as a director.[55]

I note that neither company nor the shareholders has/have the capacity to make an application to the court for the removal of an adjudicated bankrupt under section 186. Such a company may have to, first, notify the Registrar of Companies to make the relevant application in court. However, in my view, the company is not limited to this option. I would suggest that a company faced with such a situation should require the affected director to voluntarily vacate his office under section 184 (1) or remove him from office in accordance with section 185. If he refuses to comply with the terms of the resolution, then the company may apply to the court for the enforcement of the terms of the resolution passed.

 

Fraudulent Persons

Section 186 (1) provides for the disqualification of directors who are guilty of certain offences or misconduct. Under section 186 (1) (a), a disqualification order may be made as a result of a conviction on indictment of any office involving fraud or dishonesty (not necessarily one relating to a company). Any court (whether inside or outside Ghana) may make the conviction that forms the basis of a disqualification order. However, only High Court in Ghana can make the actual disqualification order, and if the person is convicted by the High Court, the court, in making the conviction, can also make the disqualification order.[56] By virtue of section 186 (1) (b) the disqualification order may also be made in respect of misconduct in relation to bodies corporate, and this can be invoked whether or not there has been a conviction.

The court in the Adams Case, on its own motion, invoked the provisions of section 186 of the Code and made a disqualification order against the Appellant, restraining him from having anything to do with the management of any company incorporated in Ghana, for four years, except with the leave of the court. The court took the opportunity to explain that the object of section 186 is to safeguard the interests of persons who invest in or give credit to companies, and to ensure that the assets and investments were managed only by honest persons as directors and not by frauds or persons with criminal propensity. Thus, irrespective of the type of proceedings before the court, the court had the discretion to resort to section 186, and in a fitting case, make an order on its own motion preventing criminals and fraudulent persons from managing companies.

The court further established that section 186 (1) (c) does not require conclusive proof of a criminal offence, and the person concerned need not be convicted of the offence. All that is required is that it should appear to the court that the conduct of the person or the matters complained of amounted to a criminal offence and like the breach of duty or fraud, the crime should have been committed in relation to a body corporate.

I agree with this aspect of the decision in the Adams Case, which, in my view, was a flawless application of section 186 of the Code by the Court. I would however repeat that in a proper case, and particularly because the company does not have capacity to initiate such proceedings on its own, the company may require such a director to voluntarily vacate his office under section 184 (1) or remove him via the section 185 procedures, and where necessary, obtain a court order upholding the relevant resolution.

 

Failure of obtain share qualification

Section 183 provides that a director who is required by the Regulations to hold a specified share qualification must obtain that within two (2) months of his appointment or other shorter period fixed in the Regulations. The office of a defaulting director “shall be vacated” and the director shall be incapable of being re-appointed unless he obtains the qualification. Similarly, if the company amends its Regulations so as to introduce or increase directors’ share qualification, every existing director will have two (2) months within which to obtain his qualification and shall vacate his office if he fails to meet the qualification.

I would repeat my view that the law expects such a director to vacate that office voluntarily under section 184 (1). If he fails to do so, the company may remove him by resorting to the section 185 procedures and/or apply to the court for the enforcement of the provisions of the Regulations and the Code.

 

Removal under the Regulations

Section 184 (2) of the Code provides that the Regulations of a company may lawfully provide additional grounds for the termination of office of directors. Accordingly, the Regulations may empower the directors to remove some of their number.[57] Regulations may also contain provisions for the ‘deemed termination’ of office where other directors request a director’s resignation,[58] retirement of directors by rotation, or the directorship being contingent on the nomination of a particular shareholder or the director holding some other office. The removal of a director under any of such provisions in the company’s Regulations is legal, valid and enforceable under section 184, and accordingly does not require the application of the section 185 procedures.

 

VI. Pinamang v. Abrokwa (the “Pinamang Case”)

Yet another provision of the Code with a bearing on the removal of directors is section 218. Under section 218, a member or debentureholder of a company, or the Registrar may apply to the court for an order that (i) the affairs of the company or the powers of the directors are being exercised in a manner that is oppressive to a member or debentureholder, or in disregard of his proper interest as a member, shareholder, officer or debentureholder, or (ii) some act of the company has been done or threatened, or some resolution passed or proposed that unfairly discriminates against or is unfairly prejudicial to a member or debentureholder.

If the Court makes a finding of oppressive or unfairly prejudicial conduct, section 218 (2) gives it a very wide discretion to make any orders as it thinks fit, “with a view to bringing to an end to or remedying the matters complained of”. However, is it within the ambit of this provision for a court could remove a director on the grounds that that would bring to and end or remedy the matters complained of?

The Pinamang Case provided an opportunity for the Court of Appeal to pronounce on this issue. The applicants brought an action under section 218, claiming that as shareholders, the defendant was conducting the affairs of the company in a manner oppressive of them and in disregard of their interests. One of the consequential reliefs sought by the applicants was formulated as follows:

 an order that the current chairman of the board of directors of the company be removed from the board.

 The Court of Appeal unanimously rejected the application. In the words of Lamptey, J. A., as he then was:

 The first observation I wish to make is that Act 179 specifically provided for the procedure and the mode for the removal of a director of a limited liability company under section 185. Prima facie, to remove a director of a company from the office of a director, the procedure spelt out under section 185 of Act 179 must be followed by the company. It seems to me that the applicants must satisfy the court that resort to section 218 of Act 179 had become necessary as a final and last resort. In other words, the affidavits of the applicants must on the face of it show that the applicants resorted to section 185 without avail and without success. That as a last resort, the almighty power of the court must of necessity be called in aid of the applicants. There was no evidence to show that the applicants had unsuccessfully attempted to remove the named director chairman pursuant to section 185 of Act 179. It is only after this unsuccessful exercise pursuant to section 185 of Act 179 that resort to section 218 of Act 179 could be justified. The lower court, in my opinion, had no jurisdiction to hear and determine the relief sought under head (b) of the reliefs. The complaint made under head (b) is not one envisaged by section 218 of Act 179 and should have been refused and dismissed in limine by the learned trial judge.

 The effect of this statement is that once the Code had made specific provision for the procedure for the removal of a director under section 185, it is the view of the court that prima facie, that procedure spelt must be followed by the company, to remove a director of a company from the office of a director. The applicant had to satisfy the court that resort to section 218 had become required only as a final and last resort, having resorted to section 185 without success. Thus until an applicant has exhausted the section 185 procedures, the court would have no jurisdiction to hear and determine the relief sought.

 

Comments

The decision of the Court of Appeal in the Pinamang Case would appear to contradict the earlier decision of the High Court in Vambaris v. Altuna,[59] where the court considered whether it could make an order setting aside the improper appointment of a director on an application made under section 218. In that case, two foreign businessmen, Vambaris and Altuna, had sought professional advice from two lawyers, Kuma and Okudjeto, leading to the formation of a company, with the businessmen and Kuma as shareholders and directors, and Okudjeto as a paid Secretary-Solicitor. Subsequently, Kuma suggested that Okudjeto be made a director, which was done. Vambaris later applied to the court under section 218 of the Code, complaining, inter alia, that the manner in which Okudjeto was made a director was oppressive.

Hayfron-Benjamin J., as he then was, held that by virtue of the relationship between solicitors and clients being a fiduciary one, it imposed special obligations on the solicitor. In his dealings with his client, a solicitor was to exercise the utmost good faith, and transactions between him and his client should not be upheld unless it could be established that they were effected by the exercise of the client’s will without influence on the part of the solicitor. Since Okudjeto’s appointment was on the advice of a solicitor who was also a director of the company, the advice could not be independent legal advice given without influence. In the circumstances His Lordship held that the appointment was improper and constituted oppressive conduct. His Lordship then stated as follows:

 

The only question remaining is whether this court can make an order setting aside an improper appointment as a director … on an application made under section 218 of the Companies Code … The section gives the court wide judicial discretion to make such order as it thinks fit with a view to bringing to an end the matters complained of. Pennycuick J. in In re Jermyn Street Turkish Baths Ltd. [1970] 1 W.L.R. 1194 at p. 1208 said the judicial discretion given in a similar section under the English Companies Act, 1948 (11 & 12 Geo. 6, c. 38), is unlimited. Our Code definitely gives power to the court to direct or prohibit any act or cancel or vary any transaction or resolution: see section 218 (2).[60]

 

The court further held that being the solicitor to the parties and to the company, Mr. Okudjeto should not have become a director in the circumstances since it was his own senior partner in law practice who suggested him for the directorship. Consequently, the court ordered Mr. Okudjeto to file an account of all sums he has received as a director of the company, and sums found to have been obtained by him as a result of his directorship was to be paid by him to the company.

It would appear that the effect of this decision by the High Court was that the court, under section 218, could remove a person as a director if his appointment is found to be improper and oppressive. I however think that from a close reading of the case, taking into consideration the consequential orders made by the court, the holding of the court was, rather, that Mr. Okudjeto’s appointment was improper and should not have been made in the first place. So that Mr. Okudjeto was, technically, not being removed from office. The legal validity of the appointment itself was being disputed; and it has been established that provisions such as section 185 do not apply where the appointment of a person as a director is itself being disputed.[61] What the court did in Vambaris v. Altuna was to set aside the ‘appointment’ to the extent possible, by for instance, ordering Mr. Okudjeto to account for and refund any financial gain that he may have made. That, respectfully, is different from a situation where the director who has been duly and properly appointed under section 179 is being removed from office.

It is in respect of the latter position that the Court of Appeal in Pinamang has set important boundaries on the power of the court to remove directors, within and outside the scope of its powers under section 218, and from which I have drawn the following significant conclusions:

  • primarily, the court has the power to remove a director from office but will exercise this “almighty power of the court” with extreme caution; and
  • recourse to the section 185 procedures is mandatory in seeking to remove a director from office, and is a condition precedent to any application to remove a duly appointed director.

The latter conclusion also directly contradicts the decision of the same court (albeit differently constituted) in the Adams Case. It is interesting to note that although the Court of Appeal in the Pinamang Case made reference to the Adams Case, the court did not comment on the application of section 185 in the Adams Case and the views of Abban J. A., as he then was, in that case that the procedure under section 185 was not mandatory. Rather, what the Court did was to subtly express a different view that section 185 “must be followed” by the company if it seeks to remove a director from the office. I cannot argue that Abban J.A.’s views on section 185 in the Adams Case have been overruled in the Pinamang Case. However it is my view that the decision in the Pinamang Case is a proper and obviously a more cautious application of section 185, which ought to be followed by our courts, and not the decision in Adams Case, which in my view, is flawed for all the reasons already stated.

I concede that in provisions such as section 218 the Court is called upon to exercise its discretionary powers, and must consider each case on its own merits. Nevertheless, the Court of Appeal’s caveat in Pinamang is a welcome guide, and it is desirable that any court that is faced with an application that has the effect of seeking the removal of a director, must exercise its discretion with much caution, especially where the applicant has not complied with section 185. Directors, to all intents and purposes, hold office at the pleasure of the majority of the shareholders. If the majority is unwilling to remove a person as a director, the Court ought to be very circumspect in overturning its wishes. As was also stated in the Pinamang Case, the Court ought to ensure that the application is being made with the genuine object of obtaining the relief claimed and not for exerting pressure in order to achieve the collateral purpose of removing a director.

In as much as I agree with this decision of the Court of Appeal in the Pinamang Case, it is my contention that the court’s pronouncement on the mandatory nature of the section 185 procedures should be limited to what it was intended to be, i.e. to govern the removal of directors by the company in general meeting. My concern is that section 185 is not a condition precedent to each and every removal of a director from office. As has been pointed out above, the Regulations and service agreements with directors may contain provisions, which would effectively remove a director from office, although these do not preclude a recourse to section 185 by the company in general meeting. If an application were made to the court for the enforcement of any such provision in the relevant service agreement or Regulations, which would also mean effectively removing the affected director, recourse to section 185 would not be a condition precedent.

Further, a court may also enforce section 183 of the Code, and remove a director who fails to obtain share qualification (where that is required), notwithstanding the fact that the shareholders may not have taken steps to remove the director through the section 185 procedures.

It is arguable, although largely unforeseeable and remote, that a court may even order the removal of a director on grounds of equity, where a wrong has been committed that calls for his removal, and which is not covered by any of the provisions of the Code. This is because “equity will not suffer a wrong to be without a remedy”, and the scope of this maxim is that no wrong should be allowed to go un-redressed if it is capable of being remedied by courts of justice. The effect of such orders by the Court would be to remove a director from office. It is my view that an applicant in such matters will not have to show that he has exhausted the section 185 procedures before making an application to enforce these provisions of the Code.

However, it is important that the courts do not encourage persons who may seek the removal of directors, but are unwilling to comply with the democratic procedure in section 185. Applications by such persons to the court must be rejected as an abuse of the powers of the court.

 

VII. Conclusions

It is not my intention to insist on a strict doctrinaire application of technical rules even in the face of obvious injustice. If a director commits a wrong to a company, there are adequate provisions in the Code to remedy the situation. The rules on the removal of directors in accordance with the provisions of the Code have obvious foundations in general principles of justice and convenience. It should therefore be for only very urgent and vital reasons that the Court must depart from the established rules under the Code, because, after all “equity follows the law”; so that where a statute is direct and governs the case with all its circumstances or the particular point, a court of equity is bound to follow it. It is only where there is some important matter disregarded by the statute that equity would interfere.[62] It is my respectful opinion that there was nothing in the Adams Case both to support a departure from the rules under the Code and to ground a reliance on equity.

Thus, on the application of section 185, the Adams Case was wrongly decided. As noted, the procedure laid down by the Code for the removal of directors by shareholders was not shown in that case to be inadequate to deal with the matter facing the company. It appears from the case that all the shareholders were in agreement that the offending director should be removed. There was therefore no justification for the company avoiding section 185, which maintains a balance between the right of the majority to remove a director and affording the director an opportunity to be heard in his defence, even if he fails to take advantage of that opportunity.

In conclusion, if a company in general meeting seeks to remove a director from that office, it must follow the procedure under section 185 of the Code. It cannot effect the removal by way of a summary dismissal, in a purported reliance on the rules common law and equity, under section 216, and completely disregard section 185. The rules of common law and equity are applicable under section 216 only to fill the gaps, where the Code is silent on a matter. Thus, it is only in situations that are not covered by the Code, that the court may rely on the rules of equity and do that which it considers to be just and equitable under the circumstances, including the removal of the director.

Further, and in respect of the power of the Court to remove directors, I would recommend that the power of the Court to remove a director, where such a power exists, should be exercised with much caution. Admittedly, equity frees the Court from the fetters of strictly applying technical legal considerations and confers on the Court power to do what appears to be ‘just and equitable’. Where a statute vests a matter within the discretion of the court, it calls into play the good sense and judgment of the court. However, in exercising that discretion, the court would have to be guided by law. The discretion, therefore, means sound discretion guided by law, not vague, arbitrary and fanciful action.[63] The individual judge cannot just disregard existing rules and do whatever he happens to think fair.

It would be appropriate to end this discussion with the statement of Warner J. in Re J.E. Cade & Son Ltd. [1992] B.C.L.C. 213 at 217 that a court may have a very wide discretion, “but it does not sit under a palm tree.”

 The ‘just and equitable’ provision does not … entitle one party to disregard the obligation he assumes by entering a company, nor the court to dispense him from it. It does, as equity always does, enable the court to subject the exercise of legal rights to equitable considerations; considerations … which may make it unjust, or inequitable to insist on legal rights, or to exercise them in a particular way.[64]

  • Senior Lecturer, Ghana School of Law, Accra; Partner, Bentsi-Enchill, Letsa & Ankomah, Legal Practitioners, Accra; Former Lecturer, University of Ghana, Legon. This was originally presented as a paper at the Ghana Bar Association Continuing Legal Education programme on 22nd April 2004. I am very grateful to my friends and colleagues, Kojo Bentsi-Enchill, Janet Kabiru, Hannah Opoku and Kwakyewaa Cantamantu-Koomson, for reading over and commenting on the original script. I am responsible for any errors in this work.

[1] Foss v. Harbottle (1843) 67 E.R. 189, 2 Hare 461.

[2] Aberdeen Rail Co. v. Blaikie Brothers [1843-60] All E.R. 249 at 252.

[3] Final Report of the Commission of Enquiry into the Working and Administration of the present Company Law of Ghana (“Gower’s Report”), p. 25.

[4] id., p. 159.

[5] A person is summarily removed from an office, where he is removed “without ceremony or delay”. See Black’s Law Dictionary, (4th ed.) (West Publishing Co., St Paul Minn., 1951), p. 1604.

[6] This term is defined as “burdensome, harsh and wrongful”; see Re H.R. Harmer Ltd. [1958] 3 All E.R. 689 and per Fred Apaloo, J.A., as he then was, delivering the judgment of the Court of Appeal in the case of Mahama v. Soli [1977] 1 G.L.R. 215.

[7] See Re A Company [1983] 2 All E. R. 36 and O’Neill v. Phillips [1999] 2 All E.R. 961.

[8] The High Court has the jurisdiction to deal with matters arising under the Code. See Schedule 1, clause 2 of the Code and Dolphyne (No. 3) v. Speedline Stevedoring Co., Ltd. [1996-97] SCGLR 514 at 519, per Hayfron-Benjamin, J.S.C.

[9] Pinamang v. Abrokwa [1991] 2 G.L.R. 384, per Lamptey J.A., as he then was.

[10] These are persons who have not been duly appointed as directors but who hold themselves out or knowingly allow themselves to be held out as directors. See Commodore v. Fruit Supply (Ghana) Limited [1977] 1 G.L.R. 241, per Lassey, Jiagge and Kingsley-Nyinah JJ.A.

[11] These are persons who have not been duly appointed as directors but on whose instructions or directions the duly appointed directors are accustomed to act. See Australian Securities Commission v. AS Nominees Ltd (1995) 133 A.L.R. 1 at 52-53.

[12] See Automatic Self-Cleansing Filter Syndicate Co. v. Cuninghame [1906] 2 Ch. 34, and Quin & Axtens v. Salmon [1909] 1 Ch. 311.

[13] Beveridge v. New York El. R. CO., 112 N.Y. 1, 19 N.E. 489.

[14] Per Greer, L.J. in Shaw & Sons (Salford) Ltd. v. Shaw [1935] 2 K.B. 113 at 134.

[15] Lamb v. Lehmann 110 Ohio St. 59, 143 N.E. 276.

[16] Palmer’s Company Law, Vol. 2 (Sweet & Maxwell, London), paragraph 8.302, at p. 8030.

[17] Gower, Principles of Modern Company Law (5th ed.) (Sweet & Maxwell, London, 1992), p. 153.

[18] Okudjeto v. Irani Brothers [1974] 1 G.L.R. 374 at 385.

[19] This is a resolution in writing, and signed by all the members entitled to exercise so-called ‘section 31 powers’, i.e. the power to attend, speak and vote at a general meeting. This mode of passing resolutions appears to have evolved from the so-called ‘doctrine of unanimous consent’ which provides that if all the members who could have attended and voted on any resolution in some way indicate their consent to the proposal, all procedural requirements under the statute would be deemed to have been complied with. A written resolution, however, cannot be used to remove a director or an auditor, since the absence of a meeting will deny the affected party the full opportunity of being heard, in breach of the procedures set out under sections 185 and 135 respectively.

[20] Per Richard Apaloo J. in Adryx Mining and Metals Limited v. Ashanti Goldfields Company Limited (Unreported, Suit No. Misc. 32/2000, 9th February 2000).

[21] [1984‑86] 2 G.L.R. 561.

[22] Gower, Principles of Modern Company Law (3rd ed.) (Stevens & Sons, London, 1969), p. 557.

[23] (1888) 39 Ch.D. 339.

[24] id., pp. 363-364.

[25] (1886) 17 Q.B.D. 536.

[26] id., pp. 539-540.

[27] id., p. 542.

[28] Black’s Law Dictionary (supra. note 5), at p. 907.

[29] Compare section 13 of the Code with e.g. Kelner v. Baxter [1866] LR 2 CP 174 and Newborne v. Sensolid [1954] 1 Q.B. 45.

[30] Compare sections 24 and 25 of the Code with e.g. Re Jon Beaufort (London) Ltd. [1953] Ch. 131 and Ashbury Railway Carriage and Iron Co. v. Riche 33 L.T. 450.

[31] Compare section 47 of the Code with e.g. Greenhalgh v. Ardenne Cinemas Ltd. [1946] 1 All E.R. 512, White v. Bristol [1953] Ch. 65, and Re Mackenzie & Co. [1916] 2 Ch. 450.

[32] [1987-88] 2 G.L.R. 307 at 310.

[33] Black’s Law Dictionary (supra. note 5), at p. 1349.

[34] Section 300 generally provides the procedure for the cumulative voting of directors of a public company, and makes provision to prevent a simple majority from removing directors appointed by the minority. Section 185 (1) is inapplicable in such a case.

[35] See Adryx Metal and Mining Limited v. Ashanti Goldfields Limited, (supra. note 20.)

[36] Gower, Principles of Modern Company Law (supra. note 22), at p. 557.

[37] Section 192 of the Code provides the legal basis for the appointment of so-called ‘Executive Directors’, i.e. directors who are appointed to executive posts in the company.

[38] id. Section 184 of the 1948 English Companies Act, re-enacted as section 303 of the 1985 English Companies Act, is the equivalent of section 185 of the Code.

[39] See Scott v. Scott [1943] 1 All E.R. 582.

[40] See Foster v. Foster [1916] 1 Ch. 532 and Irvine v. Union Bank of Australia (1877) 2 App. Cas. 366.

[41] See Barron v. Potter [1914] 1 Ch. 895.

[42] See the discussion and application of this principle in the cases of Salomon v. Salomon & Co. [1897] A.C. 22, Lee v. Lee’s Air Farming Ltd. [1960] 3 All E.R. 420, Owusu v. R. N. Thorne Ltd. [1966] G.L.R. 90 (per Boison J.) and Barclays Bank v. Lartey [1978] G.L.R. 282 (per Edward Wiredu J., as he then was).

[43] supra., note 1.

[44] id., at pp. 203-204.

[45] (1875) 1 Ch.D. 13.

[46] id., at 25.

[47] supra., note 9.

[48] id., at 388.

[49] [1974] 1 W.L.R. 638.

[50] See the cases of Bainbridge v. Smith (1889) 41 Ch.D. 462 at 456, and Read v. Astoria [1952] Ch. 637.

[51] Under Clause 4 of Schedule 1 to the Code, the term infant applies “any natural person under the age of twenty-one years or such other age as may from time to time be declared by any enactment to be full age for legal purposes.” According to Professor Gower, he found “general agreement for the view that it was objectionable that infants should act as directors” of companies in Ghana (See Gower’s Report, p. 130. See also section 32 of the Interpretation Act and section 1 of the Children’s Act, 1998 (Act 560), which support the view that “on the whole, the age of majority [in Ghana] differs from statute to statute, depending on the purpose for which it is stipulated.” See Dowuona-Hammond, C., “Towards a Uniform Age of Majority in Ghana: Rethinking the Contractual Capacity of Minors”, (1996-99) XX University of Ghana Law Journal 62 at 64.

[52] Professor Gower argues that this is because corporate bodies cannot be entrusted with any tasks involving personal duties of good faith and discretion. (See Gower’s Report, p. 131) Thus, while it is usual for directors to be appointed by bodies corporate with interest in or control over a company, technically, such persons serve in their personal capacities. However, on account of the statutory liability imposed on ‘shadow directors’ under section 179 (2) (b) of the Code, it may not be possible for such corporate bodies to escape liability by hiding behind their appointees to the Board, especially on the basis of the level of influence and control that that corporate body exercises over its appointees to the Board.

[53] Gower’s Report, p. 131.

[54] [1984-86] 2 G.L.R. 107.

[55] See Re Barings plc & Others (No. 3); Secretary of State for Trade and Industry v. Baker & Others [1999] 1 All E.R. 1017, where the applicant who had been disqualified from acting as a director for a period of four (4) years, applied for leave to continue as director of three companies, under section 17 of the English Company Directors Disqualification Act of 1986. In granting the application, the court held that when considering whether or not to grant leave under the Act, a court has to balance the importance of protecting the public from the conduct that led to the disqualification order in the first place, with the need that the applicant should be able to act as a director of a particular company. The court should, in particular, pay attention to the nature of the matters that led to the disqualification order and ask itself whether, if leave were granted, a situation might arise in which there would be a recurrence of those matters.

[56] Gower’s Report, p. 134.

[57] In Bersel Manufacturing Co. Ltd. v. Berry [1968] 2 All E.R. 552, the English House of Lords upheld a provision in the articles of association of a company that its permanent life directors “shall have power to terminate forthwith the directorship of any of the ordinary directors by notice in writing.”

[58] See Samuel Tak Lee v. Chou Wen Hsien [1984] 1 W.L.R. 1202.

[59] [1973] 2 G.L.R. 41.

[60] id., pp. 46-47.

[61] See Currie v. Cowdenbeath Football Club Ltd. [1992] B.C.L.C. 1029

[62] Story on Equity (3rd Ed., 1920), p. 34.

[63] See Achiampong v. Achiampong [1982-83] G. L. R. 1072.

[64] Per Lord Wilberforce in Re Westbourne Galleries Ltd. [1973] A.C. 360 at 379.

CAN AN INFORMATION TECHNOLOGY COMPANY ENTER INTO A CONTRACT TO IMPORT AND SUPPLY MOTORBIKES?

Saturday, May 24th, 2014

When I used to teach Company Law, I would often tell the students that there is one answer to almost every legal question: “IT DEPENDS.” I however stopped saying that when one student answered an exam question by quoting my flippant “IT DEPENDS.”

But in this situation, that answer applies, and I want to take you through the law that regulates the businesses that companies are authorised or not authorised to engage in.

The common law has evolved doctrine called “The Ultra Vires Doctrine.” Generally, it applies to acts beyond the scope of one’s defined powers. The term has a broad application and includes not only acts expressly prohibited but acts that are foreign to or in excess of powers granted, although not expressly prohibited. The term applies to either when an entity/person has no power to do an act, or where the entity/person has the power but exercises it irregularly.

Section 16(2) of the Companies Act mandatorily requires that the regulations of a company must state the nature of the business or objects which the company is formed to carry on. Normally referred to as “authorised object or businesses,” at common law the powers of a company is dependent on and governed by the objects/businesses as defined in the objects/businesses clause.

Section 25 of the Companies Act is emphatic that a company shall not carry on any business not authorised by the Regulations. This is a prohibition of ultra vires objects/businesses, and it is necessary to protect members and creditors, and to limit the nature of the business activities that the company can undertake to those that are expressly stated in its Regulations. By this enactment of the ultra vires doctrine, a contract made by a company beyond the scope of its objects/businesses and corporate powers is unlawful.

To that extent, it is, at least on the face of it, ultra vires for a company that is incorporated to engage in information technology, to be engaged in the import of motorbikes for another person.

However, that is not the full story. This is because section 24 of the Companies Act provides that in furtherance of its authorised objects/businesses prescribed in the Regulations, a company has all the powers of a natural person of full capacity. When sections 16 and 25 are read together with section 24, they mean that in addition to the company having power to engage in its authorised businesses, it may do such other things that are reasonably incidental or conducive to the carrying on of its business and/or attainment of its objects, except where they are expressly excluded in the Regulations.

Thus in determining whether a company has acted ultra vires its powers, the two-fold test is:

(1) Is the act an expressly authorised object or business?
(2) If not, is it reasonably incidental?

If the answers to both questions are in the negative, then the act is ultra vires.

However, section 25(3) states an act of the company is not invalid, merely because the act is ultra vires. Thus in Ghana, ultra vires acts, although wrong, are binding on the company, and the company cannot seek to escape its obligations under a contract simply because the contract is ultra vires. By this provision, Ghana law seeks to maintain whatever protection to members that the strict ultra vires rule offers, as well as prevent hardship to third parties.

This is further buttressed by proviso (b) to section 139, which states that a company cannot escape liability for acts undertaken concerning an unauthorised business, if in fact that business in being carried on by the company. Without this provision, the protection afforded to third parties under section 25 would be useless if having escaped the peril of the company’s incapacity, a third party is caught because the specific business to be undertaken by the company under the contract, is not mentioned in the company’s authorised businesses.

Section 139 is a codification of the so-called Rule in Turquand’s Case (Royal British Bank v. Turquand (1856) 6 E & B 327) which is to the effect that for business cannot be carried on if everybody who had dealings with a company had meticulously to examine its internal machinery in order to ensure that the officials with whom he dealt had actual authority.

Further, under section 141, the mere fact of the registration of any particulars or documents (e.g. the Regulations and the authorised businesses clause in it) with the Registrar of Companies, does not constitute notice to the whole world. Thus no one is under a legal obligation to ascertain whether a company has power under its Regulations to undertake a certain business before entering into a transaction with the company.

Section 142 provides that any person dealing with a company is entitled to assume, unless the contrary is known (actual notice) or ought to have been known (constructive notice), that the Regulations (including the provision on authorised businesses) have been complied with.

In Boohene Foods Ltd. v. National Savings and Credit Bank [1992] 1 GLR 175, the court recognised that it was a well-established presumption in the common law that an outsider dealing with a company was entitled to presume that its internal regulations had been complied with. Section 142, according to the court, has given that presumption a statutory backing. However, that presumption was rebutted by proof of express or constructive notice.

The question therefore, is whether a third party with actual or constructive notice that a company is not authorised to enter into a stated business, can come under the statutory protection of third parties. This question is answered, in part, in the case of Chellaram & Sons (Ghana) Ltd. v. Halabi [1963] 1 GLR 214, where the Supreme Court upheld an important exception to the rule, that a person who deals with a company and who has notice of an irregularity in its internal management in connection with the subject-matter of his dealings cannot take shelter behind the rule.

However, what the law does not say is that a person who enters into a transaction with a company with full knowledge that the transaction is ultra vires the company, can decide to abrogate or resile from the contract on that ground. The contract is valid and binding.

But that is not the full story. The authorised businesses of a company relate directly to the capacity of that company to undertake a stated venture. Thus a procurement entity or procurement authority (appointed by law to protect the public purse) that is required by law to investigate the capacity of a company, must definitely ask to see a company’s regulations and see what it says about the company’s authorised businesses. That is a clear indication of whether the company is able to deliver on the contract. If the company has put in a bid for a business outside its authorised business, that should put the procurement entity and procurement authority on notice with respect to the company’s track record in that line of business, or lack of it.

It would appear then that the only statutory remedy to preventing ultra vires transactions is an Injunction under section 25(4)&(5) of the Companies Act. An injunction is a judicial process requiring a person to whom it is directed to do or refrain from doing a particular thing, i.e. a court order commanding or preventing an action. Under the Act, any member or holder of a debenture secured by a floating charge over property (or his trustee) may apply to the court for an injunction prohibiting any ultra vires act. If the contract is yet to be made or performed, the court has the discretion to set aside and prohibit the making or performance of the contract. It may however award the company or the other party to the contract compensation for any loss or damage sustained by reason of the order of the court. However, compensation cannot be awarded in respect of loss of profits anticipated to be derived from the performance of the contract.

An applicant seeking an injunction to prevent a company acting outside it capacity, will have to bear the following in mind:

(i) It becomes the task of the court to determine, on a true construction of the objects clause, whether the proposed activity would be ultra vires;
(ii) If the act sought to be prohibited has already been performed, the remedy will not be granted;
(iii) Injunction is a discretionary remedy and will be granted only where the court thinks it equitable so to do; and
(iv) All parties to the ultra vires act should be made parties to the action because an injunction, if granted, will only be binding on parties to the action.

In conclusion, it is a wrong for a company that is incorporated as an IT company to engage in the importation of motorbikes, unless it can be shown that the importation of the motorbikes is reasonably incidental to its IT business. However, even though it is wrong, the law protects the other party who entered into the transaction, so that the company cannot escape liability simply because the transaction was ultra vires. And, the only people who can stop the transaction, are members or creditors of the company, but then only by way of an injunction.

So, you see, IT DEPENDS!

SHOULD OFFICIALS WHO ENTERED INTO CONTRACTS WITHOUT PARLIAMENTARY APPROVAL BE MADE TO BEAR THE COST OF BREAKING THE LAW?

Monday, April 21st, 2014

My friend Professor J. Atsu Amegashie said to me, on a listserve that we write on that:

“If parliamentary approval was not obtained [for those transactions in respect of which arbitral awards have been issued against Ghana], then those who failed to do so broke the law. In any well-governed country, it is these governments officials, not the contractors, who will bear the cost of breaking the law (fines, jail terms, etc). Straightforward and simple. But in Ghana, we like doing things in a convoluted manner. This perpetuates a system of perverse incentives.”

MY RESPONSE:

Atsu, maybe. BUT:

There is a problem with holding officials responsible for not obtaining parliamentary approval, and it is a VERY LONG story.

The ‘problem’ of article 181(5)
You see, article 181(5) didn’t say that “all international contracts to which the government is a party must be submitted to parliament for prior approval.” If it had, then there would be a case for sanction for officials who failed or refused to seek and obtain the approval.

But this is what 181(5) says:

This article shall, with the necessary modifications by Parliament, apply to an international business or economic transaction to which the Government is a party as it applies to a loan.

WHAT THE HECK DOES THAT MEAN? Now, the first sub-articles of article 181 basically state that the government cannot take or grant loans without parliamentary approval, and then lays down a procedure for obtaining the approval for giving a loan and a different procedure for granting a loan.

Thus, the questions after 1992 were: what was the exact meaning of “shall, with the necessary modifications by Parliament, apply…”? Does it mean that parliament is given the power to amend the constitution by making mutatis mutandis “modifications”? And, does the article apply at all, if parliament has failed to make the “necessary modifications”? Are those “modifications” conditions precedent to the application of the article? And how far can the “modifications” go? Can parliament, for example, say that some agreements do not require its approval at all? Would that be a modification? Indeed can parliament “modify” this article to say that its approval isn’t required at all?

Other questions: What is the meaning of “international?” What is a “business… transaction”, and what is an “economic transaction”? What is a “transaction”? Is it synonymous with a contract or agreement or does it involve more. Is a contract a series of transactions or vice versa? What is the meaning of “Government” and when is the government a party to a transaction? etc. etc.

I remember at least one seminar organised by the IEA to try to understand this provision. And I have read a couple of papers where some academic suggested that we should remove article 181(5) from the constitution. Note that this provision did not appear in any of our previous constitutions and so we didn’t have the benefit of any previous application if it or guidelines for it. What is worse, the 1992 Constitutional Experts Commission itself said very little about this new provision to shed any light on how it is to be interpreted. We were left groping in the dark.

The result was that both the Executive and Legislature simply ignored article 181(5). Yes, some Mining Agreements and Petroleum Agreements were sent to parliament, but those were because of specific constitutional and statutory provisions to that effect. But generally no one bothered with contracts. Yes, loans went to Parliament under the 1970 Loans Act, but Parliament itself only has a terse provision on international contracts in its new Standing Orders, which provided no guidance on the matter at all.

[CAVEAT: At this point, let me make a personal disclosure: I acted for Balkan and Bankswitch and I am still acting for them. I was also the lawyer for one of the Defendants in the Klomega Case. I ‘lost’ Balkan in the SC – and you will see why I use ‘lost’ very soon. Apaak’s case against Bankswitch is still pending in the SC. AND SO ANY AND EVERY ONE IS ALLOWED TO TAKE WHAT I AM WRITING WITH THE APPROPRIATE DOSE OF SALT]

Faroe Atlantic
Finally in 2005 (13 years after article 181(5) was enacted), the SC had the opportunity to interpret it in the Faroe Atlantic Case. After all the song and dance, the SC held, in substance that:

1. article 181(5) meant that parliamentary approval was required for international business and economic transactions that the government is party to; and without it, the transaction is void, and

2. The transaction in question was “international” because the other party to the transaction was a foreign company.

THIS is where the decision ended. There was no attempt to answer any of the other questions that I had raised above.

Balkan
It was based on the Faroe Atlantic decision that AG Joe Ghartey issued his opinions in Balkan. Indeed he cited Faroe Atlantic in one opinion, stating that once the contractor in the Balkan PPA was a company incorporated in Ghana, then on the strength of Faroe Atlantic, the contract was not international. It is on the basis of this opinion that the government at the time decided not to take the Balkan PPA to parliament for approval, and so Ghartey wrote a second opinion to the effect that all necessary and required approvals for the PPA had been obtained.

When the change in government occurred, the new government dealt with Balkan until Balkan alleged a breach. Government triggered the arbitration clause in the PPA and asked Balkan to go for arbitration. Balkan filed the notice of arbitration. (Days later, its American manager of the Barge was arrested at Effasu for allegedly stealing parts on the barge and detained, in the words of the arbitral tribunal “in his underwear” at BNI in Accra – note: the arbitral tribunal ordered Ghana to pay damages of $50,000 for that arrest!!). Ghana participated in the preliminary ADR (mediation, I think) at The Hague, and then returned to Ghana to file an action in the High Court stating that the arbitral proceedings were wrong, and making allegations against Balkan. Indeed a High Court judge issued an ex parte injunction restraining Balkan from proceeding with the international arbitration that had already commenced! (Some of our judges forget that their orders are limited to the 4 corners of our physical boundaries.)

Our attempts to stay proceedings in Ghana for the arbitration to continue failed. The government then applied to the court to say that the case raised constitutional questions and so the High Court should refer the matter of interpretation to the SC. At the same time the government applied to the arbitral tribunal for an interim award to challenge the jurisdiction of the arbitral tribunal. It failed in both applications. The arbitral tribunal asserted its jurisdiction and the HC in Accra (differently constituted) refused its referral application, on the ground that article 181(5) had already been interpreted in Faroe Atlantic and so all the HC had to do was to apply that interpretation.

Of course there was no further recourse with respect to the arbitral tribunals interim award against Ghana, But dissatisfied with the HC ruling, Ghana then applied for a judicial review of the HC ruling, in the SC. It was successful and the SC ruled that the Balkan matter raised issues that it didn’t address in Faroe Atlantic and so there was a case for interpretation. When the substantive case for interpretation came up, the SC made the following interesting decisions:

1. The word “international” did not only apply where the other party is foreign. One should look at the substance of the agreements themselves so that even if the other party is a Ghanaian, where the contract contains terms that are usually found in international contracts, that contract was “international” and would require parliamentary approval.

2. Parliament should get its act together and pass the Act required under article 181(5). Until Parliament passes the Act, a certification by the AG (although it wouldn’t be binding on the SC), should be sought.

3. A new word, the qualifier “major,” should be read into article 181(5) so that it would only apply to “major international… transactions”, else Parliament would be saddled with approving all kinds of minor transactions. [I had argued that the President required parliamentary approval to buy a British Airways ticket to travel, and that every single purchase of a vehicle by government would also require parliamentary approval since we don’t manufacture any cars in Ghana. Yes, in response, the SC rewrote the constitution!!]

4. That an arbitration agreement is not an “economic or business transaction” and that parliamentary approval was not required for it. But in a rather shocking paragraph, the SC seemed to argue against the principle of separability, which holds that an arbitration clause in an agreement is treated as a distinct and separate agreement from the ‘mother’ agreement. What was worse, this ‘hallowed’ principle had only just been enacted in Ghana in the 2010 ADR Act (Act 798), but the SC appeared to argue against it. Yet the simply raised a question, did not answer it, but held that the arbitration agreement did not require parliamentary approval since it didn’t amount to a transaction anyway. [THAT is why I said ‘lost’ because that was all I needed to go back to the arbitration].

6. The court DID NOT declare the Balkan PPA void. It directed the parties to return to the HC for the continuation of the trial, on the bases of the decisions/interpretations that the SC had done.

However both Ghana and Balkan ignored the HC and went straight back to international arbitration. We now know the result – Ghana has to pay $12m.

Bankswitch
Note that the Balkan and Bankswitch arbitrations were going on at the same time. As soon as the SC decision in Balkan was delivered, Ghana, which had largely not really participated in the Bankswitch arbitration, suddenly woke up and filed its main defence (raised only after submissions had virtually been completed): that there was no parliamentary approval of the Bankswitch contract, and that on the basis of the SC decision in Balkan, the contract was void. But Ghana seemed not to know or had forgotten that AG Betty Mould-Iddrisu, just like AG Ghartey before her, had issued an opinion that it was a valid contract. Both AG Ghartey and AG Mould-Iddrisu issued their respective opinion with full knowledge of the decision in Faroe Atlantic. Thus in both Balkan and Bankswitch awards, Ghana was clobbered with the AG opinions as to the validity of the contracts, even though there was no parliamentary approval. We know the result in Bankswitch – Ghana has to pay almost $80m.

Klomega
In Klomega, the Plaintiff’s case was that article 181(5) applied to GPHA, and so the contracts signed with Meridian to manage the ports, were void. Note, Klomega’s lawyer when he sued, is the current Deputy AG. Although he didn’t appear again after his appointment, his firm continued with the case. We were successful in convincing the SC that the term “government” in article 181(5) did not apply to statutory corporations such as GPHA. But even with that the court held that if the government is seen to be using such corporations as a facade to enter into contracts and to avoid parliamentary approval (in what the court described as a local application of the alter ego principle), then the SC would hold the contracts void without parliamentary approval. But the other interesting part of Klomega was that the government filed two contradicting submissions: one supporting Klomega (filed by Martin Amidu before he was fired) and another against Klomega (filed by Marietta Brew when she was appointed AG). Ei, things dey happen for this our Ghana oo!!

Waterville and Isofoton
I guess these two ‘Martin Amidu’ cases are sufficiently well known, as a further application of the SC decision in Balkan. But note that in Isofoton, the rather activist SC issued a straight warning to the government that it was monitoring developments in the Chinese $3b loan matter, and that even though parliamentary approval had been obtained for the loan, all subsequent transactions involving Chinese entities would require parliamentary approval.

Government’s Quandry
Yes, it was government that went to the SC for the Balkan decision. The government supported Klomega and later withdrew its support for his case. One isn’t too clear on what the government’s stance was in Waterville and Isofoton. But the net effect of all these decisions is that international business is wary of Ghana. Now they demand parliamentary approval for every whiff of a contract, or no deal. Some are demanding ‘political risk insurance’ with very high premiums to protect themselves from our “coup mentality” when every change of government comes with attacks on contracts entered into by the previous government.

I can say that many major transactions have been stalled on that account. EXACTLY what is Ghana’s position on article 181(5)? We have blown hot, cold and lukewarm at the same time. We have spoken with a forked tongue and from both sides of our mouths. Some contracts, especially PPAs, that existed before the decisions have been quietly sent to parliament for belated approval. I laugh, because the approval required, according to the SC is supposed to be “prior” to the contracts. But here we have “ex post facto” approvals of existing contracts. Indeed, in one instance, the original agreement wasn’t sent to parliament – what parliament approved was the amendment!! Apparently parliamentary approval can now raise the dead. We are in Easter!

And so right now, questions are being asked whether the Gas deals require parliamentary approval. Yes, the deal is between GNPC (or was it the Ghana Gas Company?) and the Chinese. But the question now is that since the money utilised for the Gas project was from the loan that the government had obtained (remember the SC’s warning in Isofoton?), isn’t the government caught by the Klomega alter ego principle, so that the entire transaction would be void? MATTER DEY COME!!

So the AG has a problem. So what have they done? The AG and Finance Minister have gone back to parliament with proposals for the urgent enactment of the article 181(5) “necessary modifications” Act, so that there would be a blanket approval of previous deals, and deals like Ghana Gas, and that all deals flowing from previously approved loans and transactions would not require approval. In short, Ghana is asking parliament to allow it to roll back the effect of the decisions in Balkan (which Ghana took to court), water down the warning in Isofoton, and to kinda neutralise the alter ego part of the decision in Klomega!!

Parliament set up a committee to work on the matter. I am aware of only one meeting where they criticised themselves for not acting on article 181(5). Has the committee been meeting? I don’t know. I suspect it has promptly gone to sleep because I received an informal, verbal ‘invitation’ to appear. No formal letter received, and somehow, parliament is simply not dealing with this issue. Maybe, as Bagbin suggests, they committee needs some “T&T” to facilitate its work.

So, can we really hold government officials responsible for not obtaining parliamentary approval? I dunno, really, I dunno.

a.

PS. I beg it is still dawn and I have been typing for a little over an hour, Pardon my typos.

AMIDU V. ATTORNEY-GENERAL & 2 OTHERS (THE WATERVILLE CASE)

Saturday, June 22nd, 2013

IN THE SUPERIOR COURT OF JUDICATURE
IN THE SUPREME COURT
ACCRA
AD 2013

BETWEEN

MARTIN ALAMISI AMIDU

AND

THE ATTORNEY-GENERAL
WATERVILLE HOLDINGS (BVI) LIMITED
ALFRED AGBESI WOYOME

WRIT NO . J1/15/2012
14 JUNE 2012

CORAM: DR. DATE-BAH JSC (PRESIDING), ANSAH, ADINYIRA, OWUSU, DOTSE, ANIN YEBOAH, BAFFOE-BONNIE, GBADEGBE & AKOTO-BAMFO JJSC.

DR DATE-BAH JSC: JUDGMENT
The facts

To the joy of the many lovers of soccer in Ghana, Ghana won, in July 2004, the right to host the 2008 African Cup of Nations football tournament, popularly known as CAN 2008. This case is about one of the consequences of Ghana’s successful bid to host CAN 2008. As a result of winning the right to host CAN 2008, the Government of Ghana became obliged to rehabilitate football stadia and other sporting facilities in Ghana. In order to fulfil this obligation, it set in motion in January 2005 a procurement process for the award of appropriate contracts in accordance with the Public Procurement Act, 2003 (Act 663).
Vamed Engineering Gmbh & CO KG (referred to subsequently as ‘Vamed’) was one of the companies which submitted a tender for the award of a contract to rehabilitate the stadia specified by the Government of Ghana. Vamed became one of two companies which were shortlisted by the Government’s evaluation committee. Meanwhile, by a letter dated 1st July 2005, Vamed purported to assign all its rights and obligations in the CAN 2008 stadia tender and another specified project to the second defendant. The second defendant, by an undated letter from Andrea Orlandi, a director of the company, to Vamed accepted this purported assignment.

The relevant Entity Tender Committee recommended Vamed/Waterville to the Central Tender Review Board for the award of the contract because its tender was in their view the most competitive. The Central Tender Review Board on 5th August 2005 gave “concurrent approval for the award of the contract to Messrs VAMED Engineering.” However, by a letter dated 22nd August 2005 addressed to the Managing-Director of Vamed, the Minister for Education, Youth and Sports purported to terminate the procurement process “due to the high commitments implied in the submissions, the inconclusive and the non-assuring nature of the financial submissions”. The second defendant made several protests to Government in respect of this purported abrogation. It entered into negotiation with Government regarding the purported abrogation which resulted in a Memorandum of Understanding between them on 30th November 2005. The MOU stated that the Government would award the Ohene Djan and El Wak stadia project on a turnkey basis to the second defendant.

On 26th April, 2006 the Government of Ghana signed two separate but similar agreements with the second defendant for the rehabilitation of the Ohene Djan and El Wak stadia in Accra and the Baba Yara stadium in Kumasi, respectively. These two agreements both expressly specified conditions precedent to their coming into force. Clause 17 of the agreements stated as follows:

“17.1 This contract shall become effective at the date of the fulfilment of all of the following conditions:
17.1.1 Signing of the Contract by all Parties
Signing of the Loan Agreement relating to the Contract by the Minister for Finance and Economic Planning.
Rendering of a Legal Opinion by the Ministry of Finance and Approval of the Contract by the Cabinet and Parliament of the Republic of Ghana.
17.1.2 Confirmation by the bank holding the Escrow Account to the Contractor that the Escrow Account is established and credited with the total amount of the Contract Price according to Clause 5.
17.1.3 Effectiveness of the tripartite agreement to be concluded as per Clause 6.
17.1.4 Receipt by the Contractor of the advance payment referred to in Clause 6.1.
17.1.5 Receipt of the necessary approvals from Multilateral Investment Guarantee Agency (MIGA), Ex-Im Bank, USA and the Lender.”

In spite of the fact that the agreements were thus not yet in force, the Government, on 6th February 2006, even before the formal signing of the agreements on 26th April, 2006, authorised the second defendant’s access to the sites of the stadia. The Deputy Minister of Education and Sports, by a letter dated 6th February 2006, informed the Managing-Director of Waterville, that is, the 2nd Defendant, that his Minister had “no objection to your moving to the construction sites to commence evacuation and demolition exercises for the rehabilitation and upgrading of the Accra, Kumasi and El-Wak stadia. By this notice, we are informing the authorities of the stadia and El-Wak to grant access to the construction teams for the agreed initial exercise.” Thus, the second defendant commenced works involving the demolition of structures and the excavation and clearing of the sites. Subsequently, on 1st August 2006, the Government terminated the agreements with the second defendant, by a letter of that date written by the Attorney-General. That letter referred to clause 17 of the Agreements (quoted above) and indicated that the second defendant was being given notice that “since the contracts did not receive approval from Cabinet in accordance with Clause 17 of the Contracts, the Contracts have never become effective.”

By this letter, the Government of Ghana in effect walked away from the two agreements it had signed. It then entered into negotiations with the sub-contractors of the 2nd defendant, Micheletti and Co Ltd and Consar Ltd, to continue with the rehabilitation and refurbishment of the Ohene Djan, Baba Yara and El Wak stadia. The agreement reached with them was that Government would pay the sub-contractors the value of the work already executed by the 2nd defendant before the date of takeover by the sub–contractors of the work. The sub-contractors would then pay the 2nd defendant the value of the work it had undertaken. In his Statement of Case, the 1st defendant states as follows on this matter (in para 27):

“As a result GoG instructed the Consultants for the Project, Building Industry Consultants Ltd. (BIC) to value the work done by the 2nd Defendant from the time of entry onto the date of the takeover by the sub-contractors. It was agreed that GoG will remit to the sub-contractors all the entitlements due the 2nd Defendant as certified by BIC for collection by the 2nd Defendant.”

The value of the work previously undertaken by the 2nd defendant was thus duly certified by the consultants for the project, Building Industry Consultants Ltd (hereafter referred to as “BIC”). The Government of Ghana subsequently paid for all the work certified by BIC, totalling some Euro22,365,624.40. This payment was problematic since it appears to have used a restitutionary route to bypass the legal consequences of an inchoate international business transaction to which the Government was a party, which had not yet been approved by Parliament in terms of article 181(5).

In spite of this, on 9th March, 2009, the 2nd defendant wrote relying on a clause in the 26th April 2006 contracts to claim fees and pre-financing costs for the initial construction works from the Government, instead of from their subcontractors, as agreed. The 1st defendant therefore embarked on discussions with the 2nd defendant on its claim. On 18th August 2009, the 3rd defendant wrote to the Government, asserting that the 2nd defendant’s claim was grossly exaggerated and giving his opinion as to what was due from Government to the 2nd defendant. This letter is reproduced below because of its instructive contents. The letter is attached as Exh AG16 to the 1st defendant’s Statement of Case.

Stanley-Marbell Plaza
Behind Hotel President
Adabraka
P.M.B.100, G.P.O

18/08/2009
The Hon. Minster
Ministry of Youth and Sports
Accra

CLAIM: CAN2008 STADIA CONSTRUCTION

It has come to my attention that the company Waterville BVI has taken the Government of Ghana to court for the payment of an aggregate sum of Euro 33 million and the Attorney General Department has withdrawn the case for settlement.

M-Powapak Ltd, Austro Invest Ltd. and Myself are interested parties and wish to state that the demand by Waterville BVI is grossly exaggerated.

I was the one who engineered the whole CAN 2008 concept, pursued it through with three (3) consecutive Ministers of the Sport Ministry/Department over the period.

I engineered the finances, which covered the construction of Stadia Hospitals, and Youth and Skills Training Centres to be built countrywide.

The Government at that time decided that the whole process should not be Supply Contract but should go into tender; and the consortium won the bid through painful processes. We subsequently had a concurrent approval from the National Procurement Authority.

Waterville BVI was leading the Consortium that won the contract and demolished part of the Accra Sports Stadium upon a written instruction to Waterville BVI from the then Minister of Education and Sports.

The Government later abruptly cancelled the bid illegally through a cabinet decision citing high cost which decision I challenged, by writing to all stakeholders including the National Procurement Authority.

Waterville BVI through my help then formed Micheletti Company Ltd. to handle the construction of the Accra Sports Stadium.

All along, the Government of Ghana’s Consultants to the project was Building Industries Consultant (BIC).

Waterville BVI received some compensation from Micheletti and Co. and from Consar Ltd. (the main contractor for the Kumasi stadium). Austro Invest also received some form of compensation from Waterville BVI.

The claim by Waterville BVI should have been a joint claim by M-Powapak, Alfred Woyome, and Austro Invest. The quantum of Waterville BVI demand is far above what should have been the legitimate claim.

M-Powapak, Austro Invest, Alexandra Van-Cleef (Austro Invest Representative in the United States) and Alfred Woyome legitimate claim under this circumstance is Euro 6 million while Waterville claim should have been about Euro 5 million without interest, charges and damages.

It turned out that the Chinese who built the Essipong and Tamale Stadia were able to do so by using more than twice the approved bid price. They also used local commercial loans instead of the arranged soft loan from Bank Austria with the approval of the Paris Club, the World Bank, Multilateral Guarantee Agency of Washington DC, and the IMF, an arrangement I facilitated.

In conclusion, I ask that the negotiation between the Attorney General Department and Waterville BVI is ceased while I put forward the chronological evidence, carefully documented for your information and necessary action.

I use this opportunity to formally demand on my own behalf and on behalf of Austro Invest, M-Powapak, and Alexandra Van Cleef; the sum of Euro 6 million in lieu of the CAN 2008 stadia construction bid that was cancelled by the cabinet of the Government of Ghana illegally when it was clear that my consortium has won and has started actual construction of some of the project and also fully in the middle of full mobilization to move to other sites.

Alfred Agbesi Woyome

Cc: Secretary to the President
Attorney General and Minister of Justice
Minister of Finance and Economic Planning”.

From this letter, it emerges that the 3rd defendant had become a claimant against the Government of Ghana, although he was not a party to any of the agreements already mentioned in this account of the facts of this case. The legal basis, if any, for this claim is relevant to the jurisdiction of this Court in this matter, as will be explained below.
The solicitor of the 2nd defendant, Tetteh & Co, contradicted the 3rd defendant’s claim by a letter dated 20th November 2009, attached to the 1st defendant’s Statement of Case as Exh AG17. The text of that letter is also instructive and deserves to be reproduced. The letter addressed to the Honourable Attorney-General states as follows:

“Dear Madam

SETTLEMENT OF CLAIMS OF WATERVILLE HOLDINGS (BVI) FOR REHABILITATION OF OHENE DJAN, EL WAK AND BABA YARA STADIA

We write in response to your letter drawing attention to the claim of Mr. Woyome of M-Powapak (“Powapak”) dated 28th August 2009, against the claims of Waterville Holdings BVI (“Waterville”) being discussed for settlement.

Waterville did engage M-Powapak to provide Waterville with financial engineering services but the relationship was terminated by a Termination Agreement dated 25th November 2006, (“the Agreement”). Powapak’s claims against Waterville were fully settled and acknowledged in the Agreement. Therefore neither Powapak nor Woyome has any claim against Waterville. A copy of the settlement agreement with Powapak is annexed.

We must add that the stadia contracts were contracted between Waterville and the Government of Ghana (“GoG”); neither Powapak nor Woyome was a party. It is therefore wrongful for Mr. Woyome or Powapak to make a claim in a contract of which neither is a party.

Mr. Woyome’s allegation that Waterville’s claim is illegitimate clearly betrays his limited knowledge and involvement in the construction works, and importantly, his motive to discredit the legitimate claim of Waterville to payment of pre-financed works. It is on record that work done by Waterville was certified by the Consultant. The certificates were issued pursuant to settlement negotiations initiated at the Castle, Osu a couple of years ago, and Waterville has been pressing its claims on GoG ever since. Mr. Woyome’s emergence in the matter is belated and with no locus standi. The purported discredit of Waterville’s claim betrays a motive to settle scores for matters unconcerned withthe current  negotiation.

Please find enclosed our response to Mr. Woyome’s claim.”

When the 3rd defendant’s claim against the Government was not satisfied, he commenced an action against the Republic on 19th April 2010 intituled Alfred Agbesi Woyome v Attorney-General & Anor (Suit No. RPC/152/10) in the High Court (Commercial Division), Accra. The original writ was twice amended. The endorsement on its final form, filed on 6th May 2010, was in the following terms:

“ An order for payment of the sum of E44,259,009.48 or its cedi equivalent at the current forex bureau exchange rate representing cost of services rendered by Plaintiff for the Government of Ghana for procurement of facility in the sum of E1,106,470,587.00 for the construction of sports stadia, medical facilities, irradiation plant and tissue culture facilities between 2001 and 2006.

An order for payment of the sum of E11,600,289.44 being accrued interest on the sum of E44,259,009 from September 2006 up to April , 2010, at the rate of Eurobor 1 year plus three points.

Interest on the sum of E44,259,009.48 or its cedi equivalent at the current forex bureau at the rate Eurobor 1 year plus three points from May 1, 2010, up to and inclusive of date of final payment.

Costs, including Lawyers’ fees.”

Whilst negotiating with representatives of the Republic, the 3rd defendant obtained judgment in default of defence against the 1st defendant on this writ. Negotiations continued between the 1st defendant and the 3rd defendant which resulted in Terms of Settlement which were filed with the High Court on 4th June 2010. The Terms of Settlement were as follows:

“WHEREAS:

By a writ of summons and statement of claim filed at the Registry of the High Court, Commercial Division, Accra, on 19th April, 2010, the Plaintiff sought against the Defendants the following reliefs:

An order for the immediate payment of the sum of E41,811,480.59 being financial engineering cost owed Plaintiff by the Government of Ghana.

An order for payment of interest on the said sum from September 2006 till date of final payment.

General damages for inconvenience suffered by Plaintiff as a result of the long delay in paying him his fees.

Costs including solicitor’s fees and filing fees.

By amended writ of summons filed on 4th and 6th May, 2010, the Plaintiff claimed against the Defendants as follows:

An order for the payment of the sum of E44,259,009.48 or its cedi equivalent at the exchange rate representing cost of services rendered by Plaintiff for the Government of Ghana for procurement of facility in the sum of E106,470,587.00 for the construction of sports stadia facility, irradiation plant and tissue culture facilities between 2001 and 2006.

An order for payment of the sum of E11,600,289.44 being accrued interest on the sum of E44,259,009.48 from September 2006 up to April 2010 at the rate of Eurobor 1 year plus three points from May 2010 up to and inclusive of date of final payment.

Interest on the sum of E44,259,009.48 or its cedi equivalent at the current forex bureau at the Eurobor 1 year plus three points from May 2010 up and inclusive of date of final payment.

Costs, including lawyers fees.

On 24th May, 2010, the High Court, Commercial Division, presided over by His Lordship Justice Tanko Amadu, entered final judgment against the Defendant for a total sum of GHc105,565,548.24. The details of the judgment are as follows:

Judgement Debt E44,259,009.48 converted at GHc1.8894 to E1.00 – GHc83,622,961.38
Interest at the rate of Eurobor 1 year plus three points from September 2006 to April 2010 E11,600,289.44 converted at GHc1.8894 to E1.00 – GHc21,917,586.86

Costs – GHc25,000.00

Total judgement debt inclusive of interest and costs– GHc105,565,548.24

Following negotiations of the judgment debt by the parties, the parties have agreed as follows:

The Defendant shall pay to the Plaintiff the sum of GHc 51,283,480.59 representing the negotiated judgment debt as follows:

Judgment debt – 41,811,480.59

Interest – 9,447,000.00

Costs – 25,000.00

The Defendant shall pay to the Plaintiff the sum of GHc51,283,480.59 by three (3) equal monthly instalments in the sum of GHc17,094,493.53 beginning June, 2010 and ending August 31, 2010 in full and final settlement of the judgment debt.

The terms of settlement shall be entered as Consent Judgment subject to the usual default clause.

DATED AT PEASAH-BOADU & CO, 3RD FLOOR, GULF HOUSE, AIRPORT WEST, ACCRA THIS 3RD DAY OF JUNE, 2010.”

These terms of settlement were signed by both parties to the action in the presence of their counsel.

Subsequently, 1st defendant filed an application in the High Court to set aside these terms of settlement. The application was dismissed and the Court in the same ruling, in the view of the 1st defendant, “in an unprecedented ‘indecent’ haste” adopted the terms of settlement as a Consent Judgment, on the 9th of June, 2010.

The 1st defendant subsequently, on 28th July 2010, issued a writ seeking to set aside the consent judgment on the ground, inter alia, that it was procured by a mistake due to fraudulent misrepresentation by the 3rd defendant. The proceedings began by this writ are still in process.

Against the backdrop of the facts set out above, the Plaintiff has sued the defendants in this action invoking the original jurisdiction of this Court. The Plaintiff is a former Attorney-General who has declared that he seeks the public interest through this suit. His writ, originally issued on 22nd June 2012, was amended pursuant to an order of this Court made on 11th April 2013. It seeks the following reliefs:

“A declaration that the Agreement entitled “Contract for the Rehabilitation (Design, Construction, Fixtures, Fittings and Equipment) of a 40,000 seating Capacity Baba Yara Sports Stadium in Kumasi, Ghana” entered into on 26th April 2006 between the Republic of Ghana and Waterville Holdings (BVI) Limited of P. O. Box 3444 Road Town Tortola, British Virgin Islands is an international business or economic transaction under Article 181 (5) of the 1992 Constitution that could only have become operative and binding on the Government of Ghana after being laid before and approved by Parliament.

A declaration that the Agreement entitled “Contract for the Rehabilitation (Design, Construction, Fixtures, Fittings and Equipment) of a 40,000 Seating Capacity Ohene Djan Sports Stadium and the Upgrading of the El Wak Stadium in Accra, Ghana” entered into on 26th April 2006 between the Republic of Ghana and Waterville Holdings (BVI) Limited of P. O. Box 3444 Road Town, Tortola, British Virgin Islands is an international business or economic transaction under Article 181 (5) of the 1992 Constitution that could only have become operative and binding on the Government of Ghana after being laid before and approved by Parliament.

A declaration that the two Agreements each dated 26th April 2006 as stated in reliefs (1) and (2) herein not having being laid before and approved by Parliament pursuant to Article 181 (5) of the 1992 Constitution is each inconsistent with and in contravention of the said Article 181 (5) of the Constitution and consequently null, void and without operative effect whatsoever.

A declaration that a bridge financing agreement arising between the Republic of Ghana and the 2nd defendant, (Waterville Holding (BVI) Limited), pursuant to the two Agreements each dated 26th April 2006 is each a loan transaction within the meaning of Article 181 (3), (4) and (6) of the 1992 Constitution whose terms and conditions had to be further laid before Parliament and approved by a resolution of Parliament to be operative and binding on the Republic of Ghana.

A declaration that the conduct of the 1st Defendant in paying sums of money in Euros to the 2nd Defendant in purported pursuance of claims by the 2nd Defendant arising out of the said two Agreements each dated 26th April 2006 as stated in reliefs (1) and (2) herein is inconsistent with and in contravention of the letter and spirit of the 1992 Constitution, particularly Article 181 (5) thereof and is each accordingly null, void, and without effect whatsoever.

A declaration that all transactions and claims by the 3rd Defendant a Ghanaian citizen with one Austro-Invest Management of CH-6302 ZUG Untermuhli 6, Switzerland, (a foreign registered and wholly owned company liquidated on 26th July 2011) premised upon the said two Agreements between the Republic of Ghana and the 2nd Defendant, Waterville Holdings (BVI) Limited, constitute international business transactions within the meaning of Article 181(5) of the 1992 Constitution to be laid before and approved by Parliament to become operative and binding on the Republic of Ghana.

A declaration that the transactions or any purported transaction between the 2nd Defendant, Waterville Holding (BVI) Limited, (a foreign registered and resident company), 3rd Defendant, a Ghanaian citizen, with Austro-Invest Management Limited (also a foreign registered and wholly owned company now liquidated), and the Government of Ghana to syndicate foreign loans and other financial assistances from foreign financial institutions and sources that financially encumbers the Republic of Ghana for the stadia projects, the subject matter of the two Agreements each dated 26th April 2006 aforementioned constitute an international business or economic transaction within the meaning of Article 181 (5) of the 1992 Constitution for the purposed the operability of the transactions.

A declaration that on a true and proper interpretation of Articles 181 (3), (4), (5), and (6) and the spirit of the 1992 Constitution the Republic of Ghana cannot incur liability for any foreign or international loan or expenses incidental to such foreign or international loan transactions without parliamentary approval of the transaction for it to be operative and binding on the Republic of Ghana.

A declaration that conduct of the 1st Defendant in paying or ordering the payment by the Republic of Ghana of claims raised by the 3rd Defendant with the said Austro-Invest premised upon a purported foreign or international financial engineering agreement arising out of the said aforementioned two Agreements of 26th April 2006 and/or any other international business Agreement with the Government of Ghana which were never laid before or approved by Parliament is inconsistent with and in contravention of the letter and spirit of the Constitution, particularly Articles 181 (3), (4), (5), and (6) of the 1992 constitution thereof and are according null, void and without effect whatsoever.

A declaration that the High Court which purported to and assumed jurisdiction in an action commenced by the 3rd Defendant (as Plaintiff) on 19th April 2010 in Suit No. RPC/152/10 against the 1st Defendant claiming damages for breach of contract in an international business transaction contrary to Article 181 of the 1992 Constitution and entered judgment in default of defence against the 1st Defendant acted without jurisdiction: consequently those proceedings and others consequent thereupon of the said High Court are null, void, and without effect whatsoever.

A declaration that the conduct of the President of the Republic of Ghana in stating to the nation in an interview with Radio Gold on 23rd December 2011 that the two international business Agreements of 26th April 2006 and others incidental to it created liabilities for the Republic of Ghana for which the Government of Ghana had to pay to the 2nd Defendant, and 3rd Defendant with the said Austro-Invest as judgment debts are inconsistent with and in contravention of Article 181 of the 1992 Constitution and undermine efforts to defend the Constitution.

A declaration that the conduct of the 2nd Defendant in making a claim for and securing payment through mediation on an alleged breach of contract of the said two Agreements between the 2nd Defendant, (a wholly owned foreign registered and resident company) and the Government of Ghana dated 26th April 2006 when the 2nd Defendant knew that the said two Agreements were international business or economic transaction with loan components that had not been laid before and approved by Parliament under article 181 of the 1992 Constitution to become operative and enforceable is inconsistent with and in contravention of the Constitution.

A declaration that the conduct of the 3rd Defendant jointly with Austro Invest Management Ltd (a foreign registered and resident company subsequently liquidated abroad on 26th July 2011) in making claims upon and including the issuance of a Writ of Summons and Statement of Claim in Suit No. RPC/152/10 dated 19th April 2010 against the Government of Ghana with the written support of the 2nd Defendant and receiving payments thereto premised upon alleged breaches of the said two Agreements dated 26th April 2006 between the 2nd Defendant and the Government of Ghana when the 3rd Defendant with the said Austro Invest Management Ltd, and the 2nd Defendant knew that the said two Agreement were international business or economic transactions which had not been laid before and approved by Parliament to become operative and enforceable is inconsistent with and in contravention of article 181 of the 1992 Constitution.

An order directed at the 2nd and 3rd Defendants to refund to the Repubic of Ghana all sums of money paid to them severally or jointly upon or as a result of the unconstitutional conduct of the 1st Defendant in purported pursuance of the two inoperative Agreements dated 26th April 2006 or any other unconstitutional Agreement as having been made and received by them in violation of Article 181 of the Constitution.

And for such further orders or directions that this Honourable Court may deem appropriate to give full effect or to enable effect to be given to the spirit and letter of the Constitution in this matter generally and particularly Articles 2 and 181 of the Constitution.”

On the facts narrated above, it is the 1st defendant’s contention that he/she did not have any contract with the 3rd defendant. However, the 3rd defendant in his letter of 18th February, 2010 (supra) claimed to have executed financial engineering in respect of the stadia projects with Austro-Invest, originally the 3rd defendant in this suit, which was later struck out, because it had been liquidated. The 1st defendant has pleaded that it never engaged the 3rd defendant contractually. It asserts that in spite of the 3rd defendant’s claim to have played a central role in the activities that led to Ghana hosting CAN 2008, the 3rd defendant worked, not for the Government of Ghana, but exclusively as an agent of Vamed.

Matters relating to the enforcement or interpretation of the Constitution
Introduction: The Supreme Court’s Original Jurisdiction

On the facts set out above, the initial issue which has to be determined by this Court is whether it has jurisdiction to entertain the plaintiff’s suit, alongside the suit already launched by the 1st defendant against the 3rd defendant in the High Court. In this determination, the words of Acquah JSC, as he then was, delivering the ruling of the Supreme Court in Adumoa II v Adu Twum II [2000] SCGLR 165 are helpful. He there said (at p. 167):

“My Lords, the original jurisdiction vested in the Supreme Court under articles 2(1) and 130(1) of the 1992 Constitution to interpret and enforce the provisions of the Constitution is a special jurisdiction meant to be invoked in suits raising genuine or real issues of interpretation of a provision of the Constitution; or enforcement of a provision of the Constitution; or a question whether an enactment was made ultra vires Parliament or any other authority or person by law or under the Constitution: see Gbedemah v Awoonor-Williams (1969) 2 G & G 438; Tait v Ghana Airways Corporation (1970) 2 G & G 527; Yiadom I v Amaniampong [1981] GLR 3, SC; Edusei v Attorney-General [1996-97] SCGLR 1, on review Edusei v Attorney-General (No.2), CM 21/96, 22 April 1998, reported in [1998-99] SCGLR 753 AND Republic v Special Tribunal; Ex parte Akosah [1980] GLR 592, CA.

This special jurisdiction is not meant to usurp or to be resorted to in place of any of the jurisdictions of a lower court. In other words, where our said jurisdiction has been invoked in an action which properly falls within a particular cause of action at a lower court, this court shall refuse to assume jurisdiction in that action, notwithstanding the fact that it has been presented as an interpretation or enforcement suit or both. For, a large number of actions which fall within specific causes can be presented in the form of interpretation or enforcement actions or both. For example, if someone goes to farm or commences building on another person’s land, the latter can file a suit at the Supreme Court invoking its original jurisdiction for a declaration that the said entry unto his land constitutes an invasion of his right to his property under article 18 of the 1992 Constitution, damages for such violation, and an order to recover his property. But it is quite undisputed that such a suit is really a land suit falling within the jurisdiction of the lower court with the authority to handle claims of the value of the land in dispute.”

In this context, an issue that emerges strikingly for constitutional interpretation is the extent to which the nullity of international business or economic transactions in consequence of their non-compliance with article 181(5) of the 1992 Constitution affects restitutionary rights under the common law. To put the issue another way: if an agreement to perform certain acts comes within article 181(5), but has not yet been submitted to Parliament for its approval, is it lawful for the Executive to bypass the obligation of article 181(5) by requesting the acts contemplated under the contract to be performed by its partner anyway and then make payment to the partner under claims for restitution? In principle, it would appear to be clearly against public policy to allow such evasion by the Executive of its constitutional duty. Article 181(5) thus needs to be construed purposively to invalidate claims to restitution in such situations.

This dimension of this case is what brings it within the exclusive jurisdiction of this court under article 130 of the 1992 Constitution. The 2nd and 3rd defendants argue in their Statements of Case that since this Court has already interpreted article 181(5) of the 1992 Constitution in The Attorney-General v Faroe Atlantic Co. Ltd. [2005-2006] SCGLR 271 and The Attorney-General v Balkan Energy Ghana Ltd. 2 ors. Unreported, 16th May, 2012, it is unnecessary for it to assume jurisdiction in this case. They contend therefore that the right forum for this case is the High Court for it to apply the interpretation already put on the provision by the Supreme Court. However, it is clear from the facts set out above that the 3rd defendant does not admit to relying on any contractual provision in the two terminated contracts. So Faroe Atlantic and Balkan Energy are not directly in point. What is in issue is whether there is a penumbra effect of article 181(5) such that rights and obligations which are devised to enable an evasion of the provision’s duty can equally be nullified. This is a task of constitutional interpretation for this court and not for the High Court.

Beyond interpreting whether there is a penumbra effect of article 181(5), this Court needs also to decide whether on the facts of this case the second and third defendants’ rights come within the extended scope of article 181(5), if any.

The Basis for the 2nd and 3rd Defendants’ claims against Government and the relevance, if any, of Article 181(5) to them.

The basis of the alleged liability of Government to the 3rd defendant is quite opaque, given the nature of the action he initiated in the High Court. By the 3rd defendant’s writ, filed by him as plaintiff on 6th May 2010, he claimed the following reliefs (repeated for convenience, although previously set out):

“An order for payment of the sum of E44,259,009.48 or its cedi equivalent at the current forex bureau exchange rate representing cost of services rendered by Plaintiff for the Government of Ghana for procurement of facility in the sum of E1.106,470,587.00 for the construction of sports stadia, medical facilities, irradiation plant and tissue culture facilities between 2001 and 2006.
An order for payment of the sum of E11,600,289.44 being accrued interest on the sum of E44,259,009 from September 2006 up to April , 2010, at the rate of Eurobor 1 year plus three points.
Interest on the sum of E44,259,009.48 or its cedi equivalent at the current forex bureau at the rate Eurobor 1 year plus three points from May 1, 2010, up to and inclusive of date of final payment.
Costs, including Lawyers’ fees.”

The reference in relief “a” to “the construction of sports stadia” suggests a relationship to the 2 terminated CAN 2008 stadia agreements. Given that clearly those agreements never became operative, the basis of the 3rd defendant’s suit as plaintiff would have to be construed as one in restitution, unless he is relying on a different contract of which he has failed to provide the particulars. If he is relying on a different contract, then, of course, this Court would have no jurisdiction in this matter because there would be no issue of constitutional interpretation. The task would fall to the High Court to determine the existence or otherwise of the contract under which he is making his claim. If, however, the 3rd defendant is relying on a restitutionary claim related to the ineffective CAN 2008 stadia agreements, an issue arises as to the impact on such claim of article 181(5) of the 1992 Constitution which vests jurisdiction in this Court to interpret the provision in order to determine its scope.

The right to restitution may arise in relation to a “situation where the defendant has acquired a benefit from or by the act of the plaintiff”. (See Goff & Jones, The Law of Restitution (6th ed., 2002) p. 175. “The plaintiff’s ground of recovery may be that he was mistaken, that he was compelled to do what he did, that he acted out of necessity, that the consideration for his payment had wholly failed, or that the defendant had freely accepted the services which he had rendered or the goods which he had delivered.” (Ibid.) The last but one situation in this list of situations is what is relevant on the facts of this case. In other words, has the State (i.e. the 1st defendant) freely accepted services rendered by the 3rd defendant? If so, does the Constitution permit the State to make payment for those services?

In his own Statement of Case, the 3rd defendant indicates clearly that he is not relying on the two terminated CAN 2008 agreements, but neither does he furnish sufficient evidence of an independent contract on which he relies. Assuming, without admitting, that the 3rd defendant’s stance is supported by the facts upon which the litigation in the High Court is founded, there is thus a twilight area of contested liability which could be construed as either based on restitution, but linked to the ineffective rights under the terminated CAN 2008, or based on non-existent or fraudulent rights and therefore flawed. This twilight area of liability, to the extent that it relies on restitution, calls for constitutional interpretation to clarify the scope of article 181(5) of the 1992 Constitution in relation to rights which are not contractual but related to the contract rights nullified under that provision. To the extent that it is based on non-existent or fraudulent rights, it would be subject to the jurisdiction of the High Court, since it would not come within the exclusive original jurisdiction of this Court, which has been invoked by the Plaintiff’s writ. If, contrary to the 3rd defendant’s assertion in his Statement of Case, he is in fact relying on the ineffective agreements of 26th April, then again this would be a matter within the jurisdiction of the High Court, since it would not require further constitutional interpretation than the existing case law has already provided.

A careful analysis of the facts of this case is therefore necessary to determine this issue of jurisdiction. It has been shown before this Court that there is litigation, initiated by the 1st defendant, in the High Court relating to whether the 3rd defendant has any contract rights against the 1st defendant and whether he is guilty of fraudulent misrepresentation. That is where that litigation belongs and it should not be replicated in this forum. This present action relates to the effect of article 181(5) of the 1992 Constitution and whether it has any applicability to the facts of this case. Also in issue is what consequential orders this Court may make, if it finds that article 181(5) has been infringed. This is the broad brush analytical framework for this case. Against that backdrop, let us now examine the case put forward by the Plaintiff.

The kernel of the Plaintiff’s case is presented in an overview of his case contained in his Statement of Legal Arguments, filed on 8th April 2013. This is what it says:

“The Plaintiff will demonstrate on the pleadings and exhibits that the 2nd and 3rd Defendants colluded and collaborated in a common cause after 20th April 2010 to unlawfully expropriate resources from the Government of Ghana under the guise of claims pursuant to the two Agreements dated 26th April 2006. After the 3rd Defendant’s letters of 18th August 2009 and 18th February 2010 challenging the 2nd Defendant’s petition to the 1st Defendant for further payments to the 2nd Defendant for breach of the two Agreements 26th April 2006 (sic), the 3rd Defendant wrote a letter dated 19th April 2010 to the 2nd Defendant to confirm to the 1st Defendant that the financial structuring aspect which the 3rd Defendant was claiming in the 3rd Defendant’s expanded petition of 18th February 2010 was part of the project for the consortium (sic) and rehabilitation of the stadia. It may be recalled that Tetteh & Co had on behalf of the 2nd Defendant disputed the claims and rights of the 3rd Defendant under the 26th April 2006 Agreements in a letter dated 20th November 2009. On 20th April 2010 the 2nd Defendant wrote directly to the 1st Defendant referring to the letter of the 3rd Defendant: “… dated 19th April 2010 by which he requested confirmation to your office about the financial structuring aspect as part of the project for the consortium (sic) and rehabilitation of stadia in Ghana for CAN 2008.” The 2nd Defendant as if under blackmail, then confirmed the demand of the 3rd Defendant to the 1st Defendant. (See exhibit “MAA annexed to the Statement of Case of the Plaintiff for the 2nd Defendants letter of 20th April 2010) (sic). The 2nd Defendant and 3rd Defendant from then on made common cause by colluding, collaborating and starting to use Kofi Peasah-Boadu of Peasah-Boadu & Co. as their common lawyer in the mediation, and in the Writ and Statement of Claim filed in the High Court on 19th April 2010 against the Government of Ghana. The 1st Defendant personified by Hon. Mrs Betty Mould-Iddrisu with full knowledge as a statutory Member of the General Legal Council and leader of the Bar of Ghana that the conduct of the 2nd and 3rd Defendants and their Solicitor, Kofi Peasah-Boadu of Peasah-Boadu & Co, offended the Legal Profession (Professional Conduct and Etiquettes Rules), 1975 (L.I. 613) engaged them in unconstitutionally mediating and settling their claims against the Government contrary to Article 181 of the Constitution. The plaintiff will conclude by urging this Court in making consequential orders pursuant to Article 2(2) of this action to find that the conduct of the Defendants was each inconsistent with and in contravention of the Constitution and also to admonish the conduct of the Solicitors herein and refer same to the General Legal Council for abuse of the process and deceit of this Court.

The Plaintiff’s Statement of Legal Arguments seeks to establish that the 3rd Defendant’s claim for fees and interest embodied in his amended writ of 6th May 2010 in fact arises from the two terminated agreements of 26th April 2006. Since those agreements never became legally enforceable contracts, it has to be inferred that, on his arguments, the obligations in issue come within the twilight zone earlier referred to which require constitutional interpretation to determine whether the penumbra effect of article 181 makes them also unconstitutional. This Court has jurisdiction to determine whether restitutionary rights claimed in relation to the two terminated agreements are valid, in the light of article 181. In this connection, we think that a distinction should be made between the effect, on the one hand, of illegality of contract and, on the other hand, of unconstitutionality of contract on restitutionary rights.

In City & Country Waste Ltd. v Accra Metropolitan Assembly [2007-2008] 1 SCGLR 409 (hereafter referred to as the CCWL case) this Court explained the common law approach to restitution in relation to illegal contracts as follows (at p. 435):

“There is a long-standing approach in the English common law, dating back to the eighteenth and nineteenth centuries, according to which where a contract is found to be illegal, the benefits conferred under it are not recoverable. The decided cases have tended to deal with the recovery of money paid or property transferred under an illegal contract. But even this traditional English approach was subject to exceptions. The two main exceptions to the English general rule that a party cannot recover a benefit conferred on the other party under an illegal contract are: first, where the parties are not in pari delicto; and, second, where a party to an executory contract repents before performance.”

In the CCWL case, the Supreme Court injected some flexibility into the received English common law rules. This is what the Court said (at p.436-7):

“The next issue arising therefore is whether the Plaintiff is not in pari delicto with the Defendant according to the orthodox English authorities on the issue. A review of the English case law reveals that, in assessing the fault of the parties, the law adopts a rather technical approach, according to which recovery is allowed only where a Plaintiff can demonstrate that he or she was induced to enter into the illegal contract by the fraud, duress or oppression of the other party; or that he or she was ignorant of a fact that rendered the contract illegal; or that he or she belonged to a vulnerable class protected by statute. By way of illustrating the last category, the words of Lord Mansfield in Browning v Morris (1778) 2 Cowp. 790 at 792, may be quoted:

“Where contracts or transactions are prohibited by positive statutes, for the sake of protecting one set of men from another set of men; the one, from their situation and condition being liable to be oppressed and imposed upon by the other; there, the parties are not in pari delicto and in furtherance of these statutes, the person injured after the transaction is finished and completed, may bring his action and defeat the contract.”

We do not think that we ought in this Court to be constrained excessively by the weight of the English case law in finding a just outcome in this case. Rather, we are encouraged to develop Ghanaian law in this area by some of the ideas contained in the English Law Commission’s Consultation Paper No. 154 on Illegal Transactions: The Effect of Illegality on Contracts and Trusts. This Consultative Paper, after an extensive and erudite review of the complex English law in the area, concludes as follows (at p. 91):

“We have said that we believe that there is a continued need for some doctrine of illegality in relation to illegal contracts and that, in certain circumstances, it is right that the law should deny the plaintiff his or her standard rights and remedies. However, we have also explained how, in some situations, we believe that the plaintiff is being unduly penalised by the present rules. This injustice would seem to be the inevitable result of the application of a strict set of rules to a wide variety of circumstances, including cases where the illegality involved may be minor, may be wholly or largely the fault of the defendant, or may be merely incidental to the contract in question. We consider that the best means of overcoming this injustice is to replace the present strict rules with a discretionary approach under which the courts would be able to take into account such relevant issues as the seriousness of the illegality involved, whether the plaintiff was aware of the illegality, and the purpose of the rule which renders the contract illegal. The adoption of some type of discretionary approach has the support of the vast majority of academic commentators in this area; and it is the approach which has been followed in those jurisdictions where legislation has been implemented. Moreover, we have not been able to devise a new enlightened regime of “rules” that would provide satisfactory answers to all disputes involving illegal contracts. In our view, a balancing of various factors is required so that, put quite simply, the law on illegal contracts does not lend itself to a regime of rules.”

We have decided to adopt this structured discretionary approach to the resolution of issues arising from illegality of contracts. The approach is to be fleshed out on a case by case basis. On the facts of the present case, balancing the need to deny enforceability to the contract sued on by the Plaintiff against the need to prevent the unjust enrichment of the Defendant, and, considering that in relation to the Defendant’s non-compliance with the statutory provisions binding on it, the Plaintiff was not in pari delicto in a broad sense, we have come to the conclusion that the Plaintiff must be paid reasonable compensation for the services it rendered to the Defendant.”

Thus, even assuming that the 2nd and 3rd defendants are not in pari delicto with the 1st defendant in the breach of article 181, the fact that the norm breached is a constitutional provision, in contradistinction to breach of an ordinary statute, is a relevant consideration. Clearly there should be less room to award a restitutionary remedy where the breach is of a constitutional provision. A contract which breaches article 181(5) of the Constitution is null and void and therefore creates no rights. (See The Attorney-General v Faroe Atlantic Co. Ltd. [2005-2006] SCGLR 271 and The Attorney-General v Balkan Energy Ghana Ltd. 2 ors. Unreported, 16th May, 2012.) It should not be legitimate to evade this nullity by the grant of a restitutionary remedy. Although one accepts the cogency of the argument that there is need to avoid unjust enrichment to the State through its receipt of benefits it has not paid for, there is the higher order countervailing argument that the enforcement of the Constitution should not be undermined by allowing the State and its partners an avenue or opportunity for doing indirectly what it is constitutionally prohibited from doing directly. The supremacy of the Constitution in the hierarchy of legal norms in the legal system has to be preserved and jealously guarded. Thus the flexibility that the Supreme Court introduces in the CCWL case is to be exercised sparingly in the case of breaches of the Constitution. The requirement that international business contracts to which the Government is a party should be approved by Parliament has a purpose and it should be made clear to Government and its partners that non-compliance with the requirement, directly or indirectly, will have consequences. We are accordingly inclined to the view that, where article 181(5) has been breached, a restitutionary remedy would be in conflict with the Constitution and therefore not available.

Having interpreted article 181(5) to cover restitutionary claims connected to contracts or agreements within the ambit of the provision, what this Court needs to do next is to analyse the facts of this case to establish whether the 2nd or 3rd defendant is the beneficiary of any such restitution. The invalidity of any such restitution would imply a duty to pay back whatever has been received pursuant to such restitution. On the other hand, if payments have been made to the 2nd or 3rd defendants under agreements other than the two dated 26th April 2006, which were terminated, issues relating to those payments would have to be determined in a forum other than this Court and in a different action, since they do not come within the issue of constitutional interpretation raised by the Plaintiff’s writ.

Also submissions based on the assertion that the 3rd defendant had no contract with the Government of Ghana and therefore had no valid claims against the Government should be heard and determined by the High Court, and not by this Court, since they do not involve, according to the relevant case law, the interpretation or enforcement of the Constitution and do not therefore fall within the ambit of this Court’s original exclusive jurisdiction under article 130(1) of the 1992 Constitution. For instance, the Plaintiff states in his Statement of Case at para 27 that:

“The Plaintiff maintains that throughout the subsistence of the transactions between the 2nd Defendant, (Waterville Holdings (BVI) Limited), and the Government of Ghana, the 3rd and 4th Defendants were merely the agents of the 2nd Defendant and were not privy to the two contracts dated 26th April 2006 or any other contract.”

This is a matter which should be heard and determined by the High Court and not this Court.

Factual Analysis and Its Impact on the Result of the Case

2nd Defendant

The Government’s action in paying the 2nd defendant for the work it did prior to the conclusion of the terminated 26th April agreements was unconstitutional, according to the analysis already set out above. According to the plaintiff’s averment in his Statement of Case, verified by affidavit:

“22. The Plaintiff says in addition that facts available to the Plaintiff indicate that consequent upon the abrogation of the two Agreements dated 26th April 2006, two Ghanaian companies who were sub-contractors of the 2nd Defendant, (Consar Limited, for the Kumasi projects, and Micheletti (Ghana) Limited, for the Accra stadia project) were awarded by the Government of Ghana the right to adopt, continue, and execute the works started by the 2nd Defendant and to reimburse the 2nd Defendant directly for expenses incurred for works already executed by the 2nd Defendant in anticipation of approval of the Agreements by Parliament.”

 

This reimbursement, as already indicated above in the narration of the facts of this case, was with funds provided by the Government of Ghana. The value of the work already executed was to be ascertained by the consultant to the project, BIC. The attitude of the Government of Ghana towards the restitutionary claim of the 2nd Defendant is made clear by the following passage from a report dated 16th December 2011 which was submitted to the President by the Deputy Attorney-General:

“The Waterville Holdings Mediation

On 26th April 2006, the Government of Ghana entered into two separate but similar agreements with Waterville Holdings for the rehabilation of the Accra, El Wak and Kumasi Sports Stadia for the MTN Africa Cup of Nations (Ghana 2008) football tournament.

Waterville was the main contractor in both agreements with Micheletti and Consar acting as sub-contractors for Waterville. On 6th February 2006, before the formal signing of the agreements on 26th April 2006, the sites were handed over to Waterville, which commenced works involving demolition, excavation and clearing of the project.
On 1st August 2006, however, the NPP administration unilaterally terminated the agreements and re-awarded them to the sub-contractors. At the time of the termination, Waterville had mobilised for work in all three stadia. Government then requested the consultants to the projects, Building Industry Consultants (BIC) Limited to value the work done by Waterville before the termination.

BIC prepared the valuations and issued its certificate on 23rd August 2006. The total value of the certificate amounted to:
Accra Stadium E9,061,359.53
El Wak Stadium E1,842,192.79
Kumasi Stadium E9,587,691.05
Total E20,491,448.37

The certificates also included certain amounts designated as Project Engineering Fees which amounted to:
Accra Stadium E1,663,722.01
El Wak E 133,673.93
Kumasi Stadium E3,348,070.20
Total E3,348,070.20

Subsequent to this, Waterville received payments of only E8,980,522.28 through Micheltti and Consar for its work on the three stadia. In a letter to Government dated 23rd December 2006, the Solicitors for Waterville indicated that it had been paying interest on the pre-finance loan for the work done and also interest accruing on account of the delay in payment. The NPP administration refused to negotiate or pay any compensation to Waterville after the Project Consultant had completed its valuation.

Numerous interventions and petitions by Waterville to the NPP government were ignored. In 2009, its Solicitors approached the Attorney General for the payment of what was due it since 2006. On the basis of the valuation conducted by BIC Limited, the AG concluded that there was no dispute regarding the certified claims by Waterville against the State and that certain monies were really owed Waterville.

Waterville also indicated that the one-year liability period had lapsed and accordingly the 5% retention fee amounting to E504,626.16 for defect liability in respect of the three stadia should be paid to them.

These amounts, when added to the bills certified by BIC Ltd amounted to E21,569,946.71 less earlier payments made to Waterville. Accordingly, the amount due Waterville after all the deductions was E9.634,240.15. Waterville, however, made claims for sums due for loss of profit, mobilisation and demobilisation, interest since 2006 and damages.

Despite the undisputed and independently certified amount owed to Waterville the AG held a series of meetings with Waterville to negotiate the amount downward but no conclusions were reached. On 14 June 2010, the Solicitors for Waterville indicated that negotiations had failed and invoked the mediation provisions of the abrogated contract.

The claim for Waterville before the Mediator included the following:

A declaration that the purported termination of the contract by the NPP administration was unlawful

An order for the payment of E9,634,240.15 being balance due on works certified by BIC Limited

Payment for the sum of E3,123,754.56 being accrued interest at the rate of eurobor plus 3 points as at June 2010

Interest on the sum of E 9,634,240.15 at eurobor plus 3 points from 16 June 2006 till date of payment

Payment of the sum of E13,426,261.28 being loss of profits occasioned by the termination
Interest on the sum of E13,426,261.28 at eurobor plus 3 points from 16 June 2006 till date of payment

Legal fees of E1,200,000.00

General damages of E20,000,000.00 for breach of contract.

This was subsequently revised to a figure of E36,684,255.99. Following a series of mediation sessions, Waterville indicated that it was prepared to accept a sum of E32 million in full and final settlement of all claims against the GOG.

In October 2010, the Mediator recommended and it was accepted by both parties that the GOG pay a mediated sum of E25 million in full and final settlement of all claims by Waterville against the State. The NDC Government has since paid the E25 million to Waterville.”

This is an extraordinary account of the State’s view of its liability to the 2nd defendant. In our view, it was fundamentally erroneous in ignoring the effect of article 181(5) of the 1992 Constitution on the transaction. From the analysis earlier made of the penumbra effect of article 181(5), we would reaffirm that there is no liability of the State to the 2nd defendant. The 2nd defendant is thus obliged to return all monies paid to it pursuant to the transaction. The settlement, pursuant to which the monies were paid, was founded on an unconstitutional act and should be treated as null and void. It is obvious that the agreements of 26th April never became operative and even if they had become effective they would have been null and void if not approved by Parliament. Equally, any restitutionary claims intended to achieve results similar to those contemplated by the provisions in the inoperative agreements of 26th April would be invalid. The Supreme Court has jurisdiction under article 2(2) of the 1992 Constitution to make a consequential order compelling the 2nd defendant to refund all monies paid to it in relation to the work that it did on the stadia.

The 2nd defendant, however, does not consider that it is under any such liability. Its case is that its Consortium won the international invitation for bidding and that it was awarded the contract. It argues that under the Public Procurement Act, 2003 (Act 663), the tendering process was completed and an application made to the Central Tender Review Board which gave concurrent approval by a letter dated 5th August, 2005. It is further the 2nd defendant’s case that following this approval by the Central Tender Review Board, there was a continuing legally binding obligation on the Government, under section 65 of the Public Procurement Act, which provides an irrevocable procedure leading to a formal written procurement contract. The 2nd defendant further contends that neither the Minister of Education and Sports nor the Attorney-General had authority to cancel the tendering process. Accordingly, the assertion of administrative action in the letter of 22nd August 2005 was ultra vires and without legal effect. It asserts that the Minister with authority to terminate the process was the minister responsible for finance. The 2nd defendant makes the following further arguments in its Statement of Case:

“It is further submitted that it was the Government of Ghana which was required to obtain cabinet approval and also having submitted the contract to CTRB for concurrent approval, it sounds ill in the mouth of the Government of Ghana to say it was unable to obtain cabinet approval for the award of the contract.

Besides, the Government of Ghana had authorised 2nd Defendant to prepare designs and also to take physical possession of the stadia, demolish structures and reconstruct the stadia when it well knew it had not obtained cabinet approval.

It is further submitted that 2nd Defendant could arrange the bridge financing only after the contract had been signed and therefore there cannot be any documentation as yet on the bridge financing.

The 2nd Defendant’s finance was concessional and also contained a 15% pure grant. It was guaranteed by the World Bank, MIGA. The funding was coming from A+++through Bank Austria.

It is clear from the above that the 2nd Defendant does not emphatically accept the contents of the letter dated 22nd August, 2005, on the basis that it was not lawful under the Procurement Act, Act 663, or at all and also violates protocol signed between Ghana and its development partners like IMF, World Bank, World Trade Office and donor partners.”

It is obvious that the 2nd defendant is in error as to the legal effect of the inchoate contracts embodied in the two stadia agreements. Without the satisfaction of their conditions precedent, they could not become enforceable contracts. That is trite law. Nothing in the Public Procurement Act, 2003 (Act 663) changes this basic common law position. In spite of this the Government and the 2nd defendant entered into a mediation process, based on the inchoate contracts, treating them as if they were in force. The result of that process was, as indicated in the Deputy Attorney-General’s report quoted above, a settlement which resulted in the payment of 25 million Euros in full and final settlement of the 2nd defendant’s claim in October 2011.

The 2nd defendant justifies its claim on the basis that it was not based on the terminated contracts, but on quantum meruit. The following paragraphs from the 2nd defendant’s Statement of Case are instructive:

“My Lords, the 2nd Defendant’s claim was not based on enforcement of the two Agreements dated 26th April 2005. Neither did the Government of Ghana pay 2nd Defendant the sum of E 25 million pursuant to enforcement of the two Agreements aforesaid.

The Government of Ghana by a letter dated 6th February, 2006, authorised 2nd Defendant to execute certain works in connection with the three stadia.

In the course of execution of the works the Government, on August 1, 2006, terminated the two Agreements.

The 2nd Defendant applied to be paid the value of works executed up to the point of termination together with incidental expenses. The 2nd Defendant’s claim was based on quantum meruit.”

Later, the 2nd defendant restates this argument in paragraph 72 of its Statement of Case as follows:

“2nd Defendant’s claim derives its validity from work done and not in pursuance of the Agreements dated April 26, 2006.”

As already explained earlier at considerable length, this quantum meruit claim falls within the penumbra of the obligation provided for in article 181(5) and is therefore invalid.

A further argument that the 2nd defendant puts forward to defeat the Plaintiff’s action is to challenge his capacity to institute this action. It maintains that by Article 88(1) and (5) of the 1992 Constitution, the Plaintiff has no capacity to bring the present action. The steps in his argument are as follows: the Attorney-General, the first defendant herein, is the person clothed with authority under Article 88(5) to conduct all civil cases on behalf of the State.

He has indeed brought action in the High Court against the 2nd and 3rd defendants, as already earlier narrated. The framers of the 1992 Constitution never intended that where the Attorney-General has initiated a civil action on behalf of the Republic at a court of competent jurisdiction, any citizen can maintain an action in respect of the same or substantially the same matter at the Supreme Court. The 2nd defendant accordingly submits that the Plaintiff’s action is an abuse of the process of the Supreme Court. He further submits that the Plaintiff is seeking to usurp the authority of the Attorney-General.

The 2nd defendant’s submissions on this issue of the Plaintiff’s capacity are, with respect, ill-founded. The fact that the Attorney-General has brought a civil action on a particular issue cannot derogate from a citizen’s right under Article 2(1) of the 1992 Constitution to seek a declaration and consequential orders from the Supreme Court in relation to the same issue if it involves any act or omission which the citizen alleges to be inconsistent with, or in contravention of, a provision in the Constitution. What is necessary for the citizen to do is to establish that he or she comes within the parameters laid down in Articles 2(1) and 130(1). If he or she does this, the mere fact that the Attorney-General is conducting litigation in the High Court which is linked to the subject-matter of his or her action will not ordinarily be a bar to the action.

3rd Defendant
The 3rd defendant, in his letter of 18th August 2009 which is quoted in full (supra), in effect admitted that he was not a party to the 26th April agreements. He wrote that: “The claim by Waterville BVI should have been a joint claim by M-Powapak, Alfred Woyome, and Austro Invest.” A reasonable interpretation of this sentence is that the 3rd defendant’s claim was merely to share in the rights of the 2nd defendant, who was the party to the agreements, although he had earlier claimed that:

“I was the one who engineered the whole CAN 2008 concept, pursued it through with three (3) consecutive Ministers of the Sport Ministry/Department over the period.
I engineered the finances, which covered the construction of Stadia Hospitals, and Youth and Skills Training Centres to be built countrywide.”

The absence of evidence that the 3rd defendant was a party to the 26 April agreements has a significance for the jurisdiction of this Court over him in this case. It makes it difficult to accept the Plaintiff’s contention that this Court should assume jurisdiction to interpret article 181(5) of the 1992 Constitution in relation to him also. The declarations sought by the Plaintiff relate to those agreements. Accordingly, since the 3rd defendant is not a party to the agreements, he would not be a proper subject of the jurisdiction of this court, unless he is the beneficiary of restitution that is within the penumbra effect of article 181(5) of the 1992 Constitution.

It has already been pointed out that the endorsement on the 3rd defendant’s writ of summons against the 1st defendant, which resulted ultimately in the consent judgment against the State, is not explicit about the contractual or other legal basis pursuant to which it was brought. In response to this fact, the plaintiff has made extended submissions aimed at establishing that the High Court should have declined jurisdiction over the writ on the ground that it lacked jurisdiction because of the failure of the 3rd defendant to endorse a cause of action on his writ. While this is an interesting argument, it is not one that this Court is obliged to consider under its original jurisdiction. In other words, it does not call for constitutional interpretation or enforcement, as this phrase has been interpreted in the case law.

It is the High Court which should determine the issues raised by the Plaintiff’s Statement of Legal Arguments in relation to the 3rd defendant. Those issues relate to whether there was any privity of contract between the 3rd defendant and the Government of Ghana; whether the 1st defendant’s writ of 19th April 2010 in the High Court was based on the two terminated agreements or an independent financial engineering agreement; whether the 3rd defendant’s writ against the 1st defendant was endorsed with any enforceable cause of action; etc. From the exhibits in this case, it is clear that those issues are already in controversy in the High Court, at the suit of the 1st defendant. The clarification and interpretation that we have made in this case about the scope of article 181(5) of the 1992 Constitution, together with the earlier interpretations made by this Court in The Attorney-General v Faroe Atlantic Co. Ltd. [2005-2006] SCGLR 271 and The Attorney-General v Balkan Energy Ghana Ltd. 2 ors. Unreported, 16th May, 2012, should assist the High Court in determining the matters which do not come within the ambit of the exclusive original jurisdiction of this Court under article 130(1) of the 1992 Constitution. There is no fresh issue for interpretation or enforcement that requires the invocation of this Court’s original jurisdiction. It should be stressed that it is not optional for this Court to decide whether issues of constitutional interpretation already settled by stare decisis or issues relating to privity of contract etc. should be dealt with by the High Court or by this Court. This is a jurisdictional issue and therefore unless the plaintiff is able to demonstrate that particular issues come within the exclusive original jurisdiction of this Court, this Court is obliged to decline jurisdiction. This Court’s refusal of jurisdiction is, however, without prejudice to the merits of the plaintiff’s case when it is put forward in the appropriate forum.

Our preferred locus classicus on the original jurisdiction of this Court, buttressing the position adopted above, remains the words of Anin JA, in Republic v Special Tribunal; Ex parte Akosah [1980] GLR 592 at 605, where he said of a previous provision in pari materia with the current provisions that:

“From the foregoing dicta, we would conclude that an issue of enforcement or interpretation of a provision of the Constitution under article 118(1)(a) arises in any of the following eventualities:

where the words of the provision are imprecise or unclear or ambiguous. Put in another way, it arises if one party invites the court to declare that the words of the article have a double-meaning or are obscure or else mean something different from or more than what they say;

where the rival meanings have been placed by the litigants on the words of any provision of the Constitution;

where there is a conflict in the meaning and effect of two or more articles of the Constitution, and the question is raised as to which provision should prevail;

where on the face of the provisions, there is a conflict between the operation of particular institutions set up under the Constitution, and thereby raising problems of enforcement and of interpretation.

On the other hand, there is no case of “enforcement or interpretation” where the language of the article of the Constitution is clear, precise and unambiguous. In such an eventuality, the aggrieved party may appeal in the usual way to a higher court against what he may consider to be an erroneous construction of those words; and he should certainly not invoke the Supreme Court’s original jurisdiction under article 118. Again, where the submission made relates to no more than a proper application of the provisions of the Constitution to the facts in issue, this is a matter for the trial court to deal with; and no case for interpretation arises.”

We think that, in this case, what is called for is an application by the High Court of the provisions of the Constitution to the facts relating to the 3rd defendant.

The 1st Defendant

The plaintiff’s case against the 1st defendant is that the Attorney-General’s conduct in handling the dispute with the 3rd defendant was inconsistent with and in contravention of Article 2(1)(b) of the 1992 Constitution. In his Statement of Legal Arguments, he makes the following argument in support of this contention:

“The subsequent conduct of the 1st Defendant in failing or refusing to defend the Government of the Republic of Ghana against the unconstitutional settlement she reached with the 3rd Defendant when the 3rd Defendant commenced the unconstitutional action against the Government of Ghana on 19th April 2010 based solely upon that settlement and her letters to the Minister of Finance and Economic Planning dated 11th March 2010, 11th April 2010 and 29th April 2010 is conduct inconsistent with and in contravention of article 181 of the 1992 Constitution. That the 1st Defendant’s conduct to contravene the Article 181 of 1992 Constitution in favour of the 3rd Defendant was purposeful and deliberate is demonstrated by the subsequent affidavit deposed to by Nerquaye-Tetteh, Chief State Attorney, for and on behalf of the 1st Defendant Hon. Mrs. Mould-Iddrisu with her authority that there was indeed no contract between the 3rd Defendant and the Government of Ghana to warrant any settlement between the 1st Defendant on behalf of the Government of Ghana and the 3rd Defendant. In the ruling of the High Court dated 9th July 2010 refusing the 1st Defendant, then personified by Hon. Mrs Mould-Iddrisu’s application to set aside the terms of her own unconstitutional settlement and adopting the terms of the settlement as the consent judgment of the parties in that suit, Justice I.O. Tanko Amadu quoted the supporting affidavit of the 1st Defendant deposed to by Samuel Nerquaye-Tetteh, Chief State Attorney, on behalf of the then Attorney General at paragraph 10 of the ruling as follows:

“That the failure of the Applicants to file a defence was not deliberate or in disrespect of the court but was due to an earlier position taken on the matter by the Applicants.
That the Applicants then were of the mistaken belief that there was no defence to the claim and therefore did not file a statement of defence.

That it has now come to the knowledge of the Applicants that there is a defence to the action.

Furthermore the terms of settlement stated an amount of GHc51,283,480.59 instead of an amount of GHc41,811,480.59.

That in the circumstances, it is the prayer of the Applicant that they are granted leave to file their defence out of time to enable them defend the claim on the merits of the case.”

In paragraph 29 of the ruling the learned High Court judge had this to say in respect of the Deputy Minister for Finance and Economic Planning’s letter of 4th May 2005 exhibited to Samuel Nerquaye-Tetteh’s affidavit deposed to on behalf of the Attorney General Hon. Mrs. Mould-Iddrisu as Exhibit ‘AG’:

“29. I have no doubt in my mind that Exhibit ‘AG 1’ referred to in the affidavit of Samuel Nerquaye-Tetteh which is said to form the basis of the Defendant’s new found defence to the Plaintiff’s claim was in actual or constructive possession of the Defendant/Applicant before the terms of settlement was executed and before Exhibit ‘AW1’ attached to the Plaintiff/Respondent’s affidavit was authorized. The Defendant/Applicant did not find Exhibit ‘AG1’ sufficiently weighty to constitute a defence to the action and cannot purport to seek to do so now as same will result in permitting piecemeal litigation…”

This Court may wish to take judicial notice of the fact that Exhibit ‘AW1’ referred to in the judgment is the 1st Defendant’s own authorizing the Minister of Finance and Economic Planning to pay the 3rd Defendant which formed the basis of the 3rd Defendant’s action of 19th April 2010 in the High Court. The Plaintiff submits that the determination of the 1st Defendant to disregard the decision of this Court in Attorney General v Faroe Atlantic Co. Ltd. [2005-2006] SCGLR 271 and the legitimate and constitutional opinion of her predecessor Hon. Joe Ghartey to abrogate the contract for failure to meet conditions precedent to present the Agreements to Parliament for approval showed her resolve to act in a manner inconsistent with and in contravention of the Constitution.”

The Plaintiff’s “charge” against the 1st defendant has far-reaching implications. What the Plaintiff is seeking to assert is that faulty judgment or negligence in the exercise of discretion by a Minister or public servant may be interpreted as unconstitutional conduct. Our view on this issue is not needed for the resolution of the case before us. This is because we do not find that any issue of interpretation or enforcement of article 181 of the Constitution arises in relation to the conduct of the 1st defendant which this Court needs to address under its original jurisdiction. The provisions of article 181 are clear enough, as interpreted by the cases decided by this Court. What is called for is for the clear provisions of the Constitution to be applied to the facts as they relate to the 1st Defendant. This aspect of the present case is a classic illustration of what Acquah JSC, as he then was, urged this Court not to do in Adumuah II v Adu Twum II (supra) in relation to this Court’s special jurisdiction under article 130:

“This special jurisdiction is not meant to usurp or to be resorted to in place of any of the jurisdictions of a lower court. In other words, where our said jurisdiction has been invoked in an action which properly falls within a particular cause of action at a lower court, this court shall refuse to assume jurisdiction in that action, notwithstanding the fact that it has been presented as an interpretation or enforcement suit or both. For, a large number of actions which fall within specific causes can be presented in the form of interpretation or enforcement actions or both.”

The Plaintiff’s charge, accordingly, needs to be decided on by the High Court. Thus the jurisdictional analysis made above in relation to the 3rd defendant is equally applicable to the 1st Defendant.

Reliefs
In the result, we are unanimously of the view that this Court should grant the plaintiff some, but not all, of the reliefs he seeks. The reliefs to which he is entitled, in the light of the analysis of the law and facts set out above, are as follows: Reliefs 1, 2 and 3 endorsed on the writ are hereby granted. It is not necessary to grant Relief 4, since it is subsumed in the first 3 reliefs. Relief 12 is also granted. Relief 14 is granted to the extent that the order is directed at the 2nd defendant, requiring it to refund to the Republic of Ghana all sums of money paid to it in connection with the two inoperative Agreements dated 26th April 2006 and the work done on the stadia. Orders against the 3rd defendant, if any, will have to await determinations made in the High Court. Any other reliefs endorsed on the plaintiff’s writ which are not specified above as having been granted are hereby denied, on jurisdictional grounds, without prejudice to any reliefs that the High Court may grant in the future.

The Plaintiff’s Complaint about Named Lawyers
In the penultimate paragraph of the Plaintiff’s Statement of Legal Arguments, he makes the following submission:

“The Plaintiff submits and urges this Court to determine that on the balance of probabilities the unconstitutional conduct of the Defendants and the Solicitor for the 2nd and 3rd Defendants, Kofi Peasah-Boadu of Peasah-Boadu & Co. were collusive, collaborate and a fraudulent misrepresentation that enable them to expropriate the resources of the sovereign people of Ghana contrary to Article 181 of the 1992 Constitution. The Plaintiff has also submitted and urges this Court to find that the conduct of the Solicitors for the 2nd and 3rd Defendant in this action in seeking Kofi Peasah-Boadu of Peasah-Boadu & Co. and O. Osafo Buabeng of Oseawuo Chambers & Co to suppress the fact that the 2nd Defendant received payment Micheletti & Co. Ltd. (sic) and Consar for works that they took over from the 2nd Defendant constitute an abuse of the process of this Court as an officer of the Court. The Plaintiff additionally submits and urges this Court to find that the Solicitors for the 3rd Defendant in this action, O. Osafo Buabeng of Oseawuo Chambers & Co, in seeking to suppress the fact that Bank Austria Creditanstalt A.G. withdrew from the loan and bridge financing transaction without making any resources available to the Government of Ghana under Article 181(3) and (4) of the Constitution was abusing the process of this Court as an officer of the Court. The Plaintiff submits that this Court has the power under Article 2(2) of the 1992 Constitution to make such orders as would address the unprofessional conduct of lawyers who plead and advocate cases before it and urges this Court to exercise its discretion in such a way as will prevent the future abuse of its process by legal practitioners contrary to the Legal Profession (Professional Conduct and Etiquette Rules), 1975 (L.I. 663).”

This complaint by the Plaintiff is hereby referred to the General Legal Council for consideration by its Disciplinary Committee. That Committee offers a preferable forum for the resolution of issues relating to the professional conduct of lawyers. The Plaintiff may accordingly pursue his complaint in that forum. The Registrar of this Court is hereby ordered to serve a copy of this judgment on the General Legal Council.

Conclusion

 

CONCURRING OPINION

DOTSE JSC Even though I fully agree with the entire judgment delivered by my most respected brother Date-Bah JSC, and the conclusions reached in this epoch making decision, I feel constrained to add the following words of my own.

This is because I am of the considered opinion that the time has indeed come for both practitioners of the Law, and my brethren in the lower courts to always take into consideration some pre-commencement of legal proceeding requirements and rules of procedure in the law courts much more seriously than they had been doing.
As the facts of this case have already been masterfully stated, it is pointless for me to do so.

ROLE OF COUNSEL IN CONDUCTING CASES IN THE LAW COURTS
Even though the role of Counsel in representing his client is mainly to ensure that his client gets the best of legal representation within the scope of his instructions, there is a corresponding duty on counsel to ensure that his conduct is within the framework of standards of professional etiquette and conduct for Lawyers as stipulated in Rules made for that purpose as contained in section 23 of the Legal Profession Act, (1960) Act 32.
In this case for example, if learned counsel for all the Defendants had applied themselves diligently to the facts of this case, as has been beautifully narrated in the lead judgment, and also adverted themselves to certain critical exhibits, perhaps, just perhaps, they might have taken a different stance and given different professional legal advice.

For example, the letter written by the 3rd Defendant to the 1st Defendant, attached to these proceedings as Exhibit AG16 – (1st Defendants Statement of Case) and also the letter of Tetteh & Co, then Solicitor for the 2nd Defendants which is attached to 1st Defendants statement of case as Exhibit AG17 are really instructive.

From the above, it would have become very clear to whoever was in charge of directing affairs at the 1st Defendants office, that the claims of the 2nd and 3rd Defendants against the Government of Ghana cannot hold water.

It is in this respect that I am of the considered opinion that, even though Lawyers owe a duty to their clients, they also in a wider sense owe a general duty to the country Ghana and to their consciences as well as to their professional Rules of etiquette and standard.
This is because from available documents and correspondence, there is a lot of documentary material to the effect that the 3rd Defendant in particular had no business or contract with the Government of Ghana. Indeed, counsel for the 3rd Defendant would have done himself a lot of good if he, whilst acting for the 3rd Defendant at the material time had interrogated the issues thoroughly, he would have realised that his client was not entitled to what they claimed in the High Court and obtained judgment for.

No doubt, learned counsel for the 3rd Defendant in the now infamous “Woyome Payment Scandal” in the trial High court, cleverly avoided acting for the 3rd Defendant in this court, but chose rather to act for the 2nd Defendant, whose claims against the Government of Ghana were denied at the material time by the 3rd Defendant.

A perusal of exhibits AG 16 and AG 17 already referred to supra indicate quite clearly that the 2nd and 3rd Defendants after their initial disagreements about their entitlements, later entered into an alliance to create, loot and share the resources of this country as if a brigade had been set up for such an enterprise.

It is my respectful opinion that, no matter what the monetary attractions are, every counsel owes a duty to the ethics of the Legal Profession and to his own conscience to ensure that whatever claims are pursued on behalf of his client, are not only legitimate, lawful, just and legal, but reasonable under the circumstances of the case.

It is in this respect that I consider it worthwhile to refer to the unanimous decision of this court in the unreported consolidated case suit number J5/14/2013 -Republic v High Court, Kumasi, Ex-parte Bank of Ghana, Mr. Kwesi Ammisah-Arthur & Franklin Belnye – Applicants, Rev. Rocher De-Graft Sefa and Ernest Kwasi Nyame Asiedu – Interested Parties and suit number J5/15/2013 – Republic v High Court, Kumasi, Ex parte Bank of Ghana, Mr. Kwesi Ammisah-Arthur & Franklin Belnye – Applicants, Samuel Gyamfi & 693 Ors – Interested Parties Coram: Wood (Mrs) C. J. Presiding, Dotse, Yeboah, Benin and Akamba JJSC, where the court expressed similar sentiments about the conduct of Lawyers of the Applicants (therein) Bank of Ghana which led to default judgment being granted against them

In view of the seriousness which this court attaches to this phenomenon which has crept into our legal practice, I would quote in extenso from the said Ruling as follows:

“Due to the gargantuan nature of the claims against the Applicants, one would have expected a much more diligent and fast approach towards the handling of the suit. We would be very much surprised, if the external Solicitors of the 1st Applicants is a one man chambers such that with his incapacitation, work in his office automatically came to a halt. Even if that is the situation, we expect the legal department of the applicants to have entered appearance in the meantime to ensure that the timelines provided under therules of procedure are complied with.

We have taken time to delve into this matter because we are of the considered opinion that the time has indeed come for this court to comment on the manner in which legal representation of state and para-statal interests are handled in our law courts. The quality of legal representation of these institutions leaves much to be desired.

Professionals of whatever type engaged by those to whom their services are required, need to offer dedicated, committed and competent services to those who engage them. There is a saying that ‘to whom much is given, much is expected.’ To have the privilege of being appointed as external Solicitors of the 1st Applicants is no mean responsibility but one that has to be discharged with diligence and competence.

Whilst we have not been happy with the quality of legal service that was rendered the 1st Applicants in the High Court which unfortunately led to the default judgment being granted against them, we note with appreciation the sentiments which were expressed by the Court of Appeal in the case of Agyeman v Ghana Railway and Ports Authority, Takoradi, (1969) CC 60, where the court in expressing its disgust in the conduct of a Solicitor in the Public Service whose conduct led to the grant of default judgment against a public entity, commented thus:

“We would like to make the point that lawyers engaged in the Public Service and who are called upon to represent public institutions in law suits have the responsibility to ensure that public funds are not improperly expended through their default, and that they must exhibit the same degree of diligence as is required of a private practitioner. There cannot be one standard of professional conduct for the lawyer in the public service and another for the lawyer in private practice.”

Under the circumstances of this case, there was absolutely no sound legal basis for the pursuit of the claims by the 2nd and 3rd Defendants against the Government of Ghana.
However, since I fully agree with the decision of my brother Date-Bah JSC not to grant the reliefs against the 3rd Defendant, basically because of jurisdictional reasons, I will echo his sentiments that once the matter is currently pending before other courts namely the Financial Division of the High Court and the Commercial Court, it is the expectation of this court that the principal actors in those cases would put up their best in the prosecution of those cases.

ROLE OF TRIAL COURTS IN ADJUDICATION OF CASES BEFORE THEM
The facts of this case disclose that, because of inaction on the part of the state’s Lawyers, default judgment was entered in favour of the 3rd Defendant against the 1st Defendant and this later metamorphosed into a consent judgment.

The duty of a trial court Judge or Magistrate is to ensure that cases brought up before them are not only legitimate, but based on sound principles of law.

In other words a trial court must ensure that claims brought before them are legal, constitutional, and based on pleadings.

A trial Judge or Magistrate, is not to accept, hook, line or sinker claims brought before it on the basis that the defendants have not put up a defence.

For example, if a company should institute a claim against the Government of Ghana for failing to pay for 100 three-bedroom houses in Dansoman which they were contracted to build for the Government, if indeed, this writ has been served on the relevant state Agencies and yet no defence has been filed, it will be illogical and unreasonable for the trial court to proceed to grant judgment to the plaintiff company purely on account of its pleadings alone.

In circumstances like this, it will be perfectly legitimate for the trial court, to interrogate the issues such as examining the contracts if any, evidence of the 100 three unit bedrooms houses being built and the fact of the houses having been built to specification etc.
There should be no indecent haste on the part of a trial court to rush to deliver judgment on account of default of pleadings. This is because, this court has had occasion to comment on apparent collusion that sometimes exists between plaintiffs and defendants. See unreported Supreme Court decision in Civil Appeal J4/23/2012 dated 6/6/2012 intitutled African Automobile – Appellant v The Attorney-General – Respondent where the President of this Court, Date-Bah JSC, in a unanimous decision of the court accepted and applauded the learned trial judge who despite attempts by the respondents therein to accept that there was a binding contract concluded that no contract had been formed on the basis of Exhibit A – (that was the contract documents in that case) and both the Supreme Court and the Court of Appeal affirmed the decision of the trial Judge, Torkonoo J (Mrs) as she then was.

It is therefore important that, trial courts must be on the alert, to prevent cases where collusion can occur and ensure that they act as watchdogs not only of the public purse but also protective of the rights of any person who appears before them. The courts of law established under the constitution 1992 must not be used by anybody or group of persons to unlawfully or illegally enrich himself or themselves to the disadvantage of any person or the state.

Trial Courts must as a control measure always ensure that claims or endorsements in actions brought before them especially where default applications for judgment arise are scrutinised thoroughly to prevent collusion and or abuse of the judicial system.
In this regard, even an ex-parte application, though one sided ought to be scrutinised by the court and must be granted only if it satisfies the conditions lawfully and legally required to be proven or established.

ROLE OF PLAINTIFF
The role of the Plaintiff, a distinguished former Attorney-General of this country needs to be highly commended as was done in the lead judgment.

I will only add that, there is indeed the need for civil society organisations or groups to come to the assistance of such a plaintiff. This is because from the plethora of documents filed in this case, I reckon that the plaintiff has been put to a lot of expense in all attempt to protect the interests of the state.

It is really sad, that during the conduct of this case, not a single civil society group or lawyers came to the assistance of the plaintiff. On the contrary because of personal attractions, it is not difficult to know where the attention of those who ought to be interested lay.

The plaintiff in my opinion must be highly commended for his vigilante role in protecting the wanton dissipation of the public purse.

Save for the above brief comments I fully agree with the judgment just delivered by my distinguished brother Date-Dah JSC.

ONE RESERVATION ABOUT THE JUDGMENT IN AMIDU V. AG & 2 OTHERS – A whole new ‘Yentua’?

Friday, June 14th, 2013
Having applauded Martin Amidu for his courage in prosecuting his actions and claims, I must however express reservations about one aspect of today’s decision by the Supreme Court.
I note the firm policy decision by the Supreme Court that every international business transaction to which the government is a party requires parliamentary approval, in accordance with Article 181(5). In today’s decision, the court in its most forthrightly manner since the CCWL Case, considered claims in restitution that may be made by a party to such a transaction, where the government has taken the benefit of a contract that is executed without obtaining parliament’s approval. The question is whether if Ghana has completely benefitted from a transaction, it can escape liability by simply hiding behind article 181(5) and not pay; and that even when it has paid under the contract, it can hide behind a potential decision by the Supreme Court that the other party should refund what Ghana has paid?
Today’s decision follows the previous decisions in AG v. Faroe Atlantic and AG v. Balkan.
But the key difference in today’s judgment is that the court considered the role of restitution in such matters. Dr. Date-Bah JSC, reading the unanimous decision of the court, was emphatic that claims in restitution would not be tolerated to by-pass constitutional breaches. He then created an extremely narrow, almost impassable window for such claims, a window too narrow for any comfort. That narrow window is captured in his use of the word “sparingly” to describe where the court would be prepared to order restitutionary reliefs in favour of a party to such a contract.
The net result is that anyone who has a contract with the government, for which parliamentary approval would have been required, has been put on notice that although it is not for that party to take the contract to parliament, the Supreme Court says “you have precious little or no room at all to recover anything, even if you have fully performed, even if you have fully discharged your side of the contract, and even if the government has fully benefitted from the contract. In fact, even if the government has paid you, the court may order you to refund all the monies paid.”
It calls into question the current situation where there is, in truth, quite a number of such transactions already in existence since the 1992 Constitution came into force. Some of those agreements have been concluded long ago. The effect of such decisions is that the government can simply to to the Supreme Court and roll those contracts back.
Other such agreements have gone to court and/or are at international arbitration. Others have been taken to parliament belatedly for ‘ex post facto’ parliamentary approval. Indeed some of those taken to parliament belatedly, were not even the original agreements, but amendments and/or restatements of those agreements. Can parliamentary approval raise ‘the dead’? If those transactions are nullities, would taking a null agreement to parliament “dis-nullify” it? Can something be built on nothing? And, by the way, when does the agreement become a nullity, since all Article 181(5) says is that the transaction “shall not come into effect” until the parliamentary approval has been obtained?
It is important to understand that the effect of such decisions might be that our government will be open to expensive, international legal and arbitral proceedings with respect to such agreements, especially those that the government has taken the benefit of.
The other risk is that entities with which the government enters into transactions would start demanding the choice of other laws, and not Ghana law.
Yet another risk is that they would also demand sovereign risk insurance from the government. That is a particularly expensive insurance policy and would make the cost of Ghana doing business worldwide super-expensive, because the cost of the premiums would be the government’s transactional cost. But that policy would take care of instances where the courts of Ghana or the government of Ghana decide that those contracts required parliamentary approval, and no claims of restitution would apply. Then, those parties would simply fall on the insurance policies, collect their monies, and have international insurance sharks or vulture funds pursuing Ghana’s assets all over the world. Ghana has only recently been caught up in the dilemma over the Argentine naval vessel, and I am certain that we do not want to be caught up in such drama directly.
In other words, international business would say “let the courts in Ghana say what they want. International judicial and arbitral bodies will demand something else.”
Since we are not an “island” and require business relations with international bodies, it is clearly criminal for the government to enter into transactions and yet fail, refuse or neglect to even apply for parliamentary approval, and be the first to run to the Supreme Court for protection from its solemn obligations, especially when it has benefitted from such transactions.
It is also a crying shame that 21 years into the life of the 1992 Constitution, no effort has been made to pass the legislation required under Article 181(5) to regulate the applicability of article 181 to international business and economic transactions. I cannot fathom why Parliament has neglected this constitutional obligation, and I believe that it is time that pressure is brought to bear on the legislature to be up and doing about this important matter.
It is my view, that the real loser in the long run in this battle over article 181(5), will be the Republic of Ghana.

MY TRIBUTE TO MARTIN AMIDU: HOW TO WIN SOME AND LOSE SOME, BUT WIN, ULTIMATELY

Friday, June 14th, 2013

The NDC government’s dismissal of Martin Amidu was Ghana’s gain. When the government thought that it had gotten rid of the irritating pain in its backside by firing Martin as Attorney-General, it only gave to Ghana, a reluctant hero and champion.

I do not agree with all of Martin’s positions, which is natural. But I must applaud his dogged, fighting spirit. In the face of the blatant stealing of this nations’ monies by a cabal with obvious official participation and complicity, the shameful and reprehensible cheering and defence of the stealing (notably by persons working in the office of the then President, at least one of whom has now been rewarded with a Ministerial appointment), the appalling and inexcusable ‘interim’ non-investigation by EOCO, and the shocking and scandalous lack of interest in prosecuting the civil recovery and the crime (until recently, and I must commend the current AG for this), many of us could only speak and write. NOTE: To date, the government had taken absolutely no step to recover the monies paid to Waterville!!

But Martin would not take all of that that rubbish lying down. He took it a step further. He went to court against Waterville, Woyome and the Attorney-General, at his own expense. Today, I sat in court when the judgment was delivered. I left in awe of the man. Some of his claims were upheld and others were dismissed. Yet the court, without any equivocation or prevarication, was unanimous and undivided in its high praise and commendation of Martin and his vigilante role.

I now turn to my summary of what I heard the court say.

The Unanimous Decision (9-0), by Dr. Date-Bah JSC

Waterville: the contracts entered into between the Government and Waterville, were unconstitutional since parliamentary approval was not obtained, in breach of article 181(5) of the Constitution for the international business transaction to which the Republic was a party. All payments made to Waterville (both after the consultants’ appraisal and after the alleged mediation) were therefore unconstitutional. They did not fall properly under the sparing circumstances under which a person whose contract is declared void for being in breach of the Constitution would be entitled to restitution. Waterville was ordered to refund all monies paid to if by the government, including the Euro 25 million paid to it by the government after mediation.

Woyome: the court dismissed the claims/reliefs sought against him on the ground that they did not raise any constitutional interpretation/enforcement issues under article 181(5), which would have properly trigger its exclusive and special jurisdiction. The key question affecting Woyome, is whether or not there was a contract between the Government and Woyome at all. Indeed, in Woyome’s own Statement of Claim in his action at the High Court, he does not show any contractual basis for his claim. Thus a determination as to whether or not there was a contract or a cause of action at all, is one that should be determined by the High Court, as it did not involve any constitutional issue for interpretation or enforcement.

Attorney-General: The court took note of the claims against the state’s legal representatives for their actions in the matter and stated that those claims, also, did not involve any constitutional issue for interpretation or enforcement, and as such dismissed them and advised the Plaintiff to pursue those claims before a High Court.

Conduct of named lawyers (particularly for Waterville and Woyome): The court referred Martin’s claims against the lawyers in the matter to the Disciplinary Committee of the General Legal Council and stated that the Plaintiff may continue his complaint in that forum. It ordered the SC Registry to serve a copy of its judgment on the GLC for further action.

Obiter, by Jones Dotse JSC:
This was the more dramatic and striking opinion. He concurred with the unanimous decision, but decided to read what he termed a “commentary.”

His Lordship pulled no punches, barred no holds and took no prisoners when he excoriated the lawyers who acted in the matter, particularly for Waterville and Woyome. He stated that there was sufficient evidence (particularly the now famous Tetteh & Co. letter) that there was no contract to be enforced, but that Waterville and Woyome had an “alliance to create, loot and share” Ghana’s resources. He noted how Waterville and Woyome (using different lawyers) were first opposed to each other, then started acting together using the same lawyer (Waterville’s lawyer) to recover the monies they received, and then before the Supreme Court, that same lawyer now only appeared as Waterville’s lawyer. He stated that there was no sound legal basis for their claims, and that the lawyers should have known this and advised their clients, instead of leading them in the matter.

Both Dr. Date-Bah and Dotse JJSC highly recommended Martin Amidu for his work. Dotse JSC pointed out that that Martin has had to fight alone without any help, especially from civil society.

My Conclusion: Martin has won; not for himself, but for Ghana. In the process, he has put us all to shame.

THE ART OF RE-EXAMINATION: THE DYING THIRD WHEEL OF TESTIMONY

Tuesday, May 21st, 2013

By definition, a Re-Examination is an examination of a witness after a cross-examination, by the lawyer who called him as a witness, upon matters arising out of such cross-examination.

I have come to believe that trial courts, judges and lawyers in Ghana are or have become so extremely intolerant of re-examination that re-examination is literally dying in our courts. The reality is that often, at the end of the cross-examination, the judges and lawyers and witness are all very tired. Everyone is in a hurry to either leave the court room or call the next case. Therefore there is very little interest in subjecting the witness to further time in the witness box. Often, the lawyer who called him as a witness and led him in the examination-in-chief is probably feeling too lazy to go back and go through the cross-examination to see whether there are any matters on which a re-examination would be required. It is also likely that that lawyer has spent the entire period of the cross-examination raising pointless objections over matters which he properly should be re-examining the witness on.

Thus in the vast majority of trials that I have witnessed, the words of counsel whose witness has just undergone cross-examination are “there will be no re-examination, My Lord.” And in almost every re-examination that I have seen, the counsel who just completed his cross-examination has objected to virtually every question asked in re-examination on the grounds that “there is no ambiguity with respect to the matter.” Mea culpa, I would admit. But I believe that the time has come for lawyers to begin to do a neater and cleaner job for clients at the re-examination stage.

The law that regulates what can or cannot be done in re-examination is captured quite cryptically in section 73 of the Evidence Act, 1975 (NRCD 323), with the side-note “Scope of re-examination,” and in the following words:

(1) Subject to the discretion of the Court, re-examination shall be directed to the explanation of matters referred to in cross-examination. (2) A witness cannot be re-examined or otherwise further examined as to the same matter raised by the examining party on a previous examination without the leave of the Court, but the witness may be re-examined or otherwise further examined as to a new matter upon which the witness has been examined by another party to the action.

In subsection (1), we are told that re-examination should aim at explaining matters that came up during cross-examination. Subsection (2) bars the lawyer re-examining from examining on matter that he had raised in his examination-in-chief, and states that any re-examination or further examination is limited to new matters that the witness has been cross-examined on. The rather well-researched and well-written official commentary explains that the law does not allow infinite rounds of questioning, and that the opportunity afforded by Re-examination “is essentially limited to new matters raised on cross-examination.”

In OKUDZETO v. COMMISSIONER OF POLICE [1964] GLR 588, the Supreme Court stated that the object of re-examination is to explain evidence given under cross-examination, and that it is not to be used to get a witness to deny or cancel evidence already given under cross-examination. That is why where a witness’s evidence under cross-examination is subsequently contradicted by him in re-examination, the whole evidence of the witness should be discredited by the trial court.

And in SEATEC LTD. v. PENTON HOOK FARMS LTD. & ANOTHER [1984-86] 1 GLR 605, the Court of Appeal held that where a question had been properly objected to and rightly upheld during examination-in-chief, it would be improper for counsel to attempt to ask the same question in re-examination. What was more, if the witness was not cross-examined on a matter he could not be re-examined on that matter, because it did not arise out of the cross-examination.

It is in the light of the above that a lawyer re-examining is not permitted to ask any question that does not arise out of the cross-examination. He also has no right to ask his own witness leading questions at this stage. He will not be allowed to waste time by asking over again questions already put in chief.

The above limitations do not detract from the general position of the law re-examination affords the witness an opportunity of explaining any seeming inconsistency in his answers in cross examination. The witness is allowed to state the whole truth as to any matter which was touched on, but not fully dealt with in cross-examination. Human memory is not perfect. And the pressure of undergoing cross-examination can lead to slips, faulty perception and erroneous memory. The purpose of re-examination is to fix these, because after all, the court is more concerned with doing justice than scoring points in cross-examination. It is therefore a very important tool that counsel who call witnesses must not treat, and must stop treating, as trifling.