Acquah v. O.G.T.H.L. [1984-86] 1 GLR 157.
COURT OF APPEAL, ACCRA
APALOO C.J., FRANCOIS AND ABBAN JJ.A.
Evidence Act, 1975 (N.R.C.D. 323), s.125(1); Rent Act, 1963 (Act 220), s.17(g)
Apaloo CJ. The appellant is the managing director of a limited liability company, called Pampas. He is the owner of a residential premises at MacCarthy Hill, off the Winneba Road, Accra. It is No 45. By an agreement dated 10 March 1978, he granted a lease of that premises to the respondent, also a limited liability company, with its registered office at North Labone, Accra. I shall hereafter refer to it as the company. The lease was for a period of two years certain from 30 October 1977. There was an option to renew on specified condition. The rent reserved by the lease was ¢24,000 per annum.
It is common ground that the company did not exercise the option to renew. Accordingly, the lease determined by effluxion of time on 30 October 1979. Before the term came to an end, the appellant by a letter dated 3 August 1979 reminded the company that as they had not exercised the option to renew, the contractual tenancy would come to an end on 30 October 1979 and he would resume possession of the premises on that day. He did not say in that letter what use he intended to make of the premises if he regained possession. As it turned out, he was minded of entering into occupation himself and using it as a dwelling-house for himself and family. The company did not yield up possession at the end of the lease.
They held over and refused to leave. They then became statutory tenants under section 36 of the Rent Act, 1963 (Act 220). The appellant was thus disabled from recovering possession of his premises without the aid of the court.
On 20 May 1981 he issued out of the High Court, a writ in which he sought an order for possession. As the contractual term had expired nearly two years earlier, no rents were exigible under the lease. But, as however, the company held over and remained in possession nevertheless, the appellant also sought against them an order for the payment of mesne profits from 1 November 1979 to the date of judgment.
In so far as it is possible to make out from the company’s prolix statement of defence, they resisted the order for possession because they say the appellant, by his conduct, led them to believe that he would sell the demised premises to them and in reliance on this conduct as well as other assurances, expended the sum of ¢352,000 in making improvements to the premises. While not counterclaiming for specific performance of the said promise to sell, they counterclaimed for the said sum of ¢352,000. The other legal answer they gave in their pleadings to the appellant’s plea for possession, was anything but clear. In so far as paragraph 6 of the statement of defence can be said to be their additional answer to that claim, the company say they “refused to vacate the premises because they have done nothing in contravention of the tenancy agreement which gives the plaintiff any right to eject them . . .” In a case where the lease has expired and no further term has
been granted, that seems a curious reply to a landlord’s claim for repossession of the demised premises. In reply to the appellant’s claim for mesne profits, the company answered that they had been ready and willing to pay but that the fault lay with the appellant because, to quote from paragraph 10 of the statement of defence, “the plaintiff has refused to collect the said rent or make himself available for the payment to him of the said rent.”
Although in the appellant’s letter of 3 August 1979, in which he notified the company of the impending expiration of the lease, he did not say to what use he would put the premises if he regained possession, he said so in his statement of claim. He pleaded that “he requires the premises for his own use.” The evidence shows that the premises was constructed as a dwelling-house. In their statement of defence, the company questioned the bona fides of that claim. They say “the plaintiff is comfortably housed elsewhere and does not reasonably need the premises for his own use.” The company were not content with questioning the bona fides of the appellant, they, in fact, accused him of bad faith.
The appellant for his part, in answer to the company’s counterclaim, says he never at any time consented in writing or otherwise to the company’s spending several thousand cedis to improve the premises. It is to be noted that in the executed lease (exhibit A) the company covenanted in paragraph 2 (c) “Not to make or permit to be made any alterations or additions to the premises without the previous consent in writing of the landlord . . .” The appellant also denied in his pleadings that he at any time offered to sell the demised premises to the company. He said he could not have done so as that was the only house he owned.
In view of the position taken up by the parties, the issues joined on the pleadings which the learned judge was invited to decide were: (1) whether, in fact, and in the events which have happened, the lease of the premises granted by the appellant to the company expired on 30 October 1979; and if it did, (2) whether the appellant reasonably required that premises for his own use as a dwelling-house; (3) whether the appellant by conduct led the company to believe that he would sell the premises to them; and (4) whether the company spent ¢352,000 in improvements on the premises in circumstances which entitled them to recover this sum from the appellant.
The learned trial judge (Anterkyi J.) decided all these issues against the appellant. On the question whether the tenancy expired, the judge seems to have held, by necessary implication, that it had not. As I shall note presently, he himself granted an extension of the term for about fifteen years. He did not accept that the appellant reasonably required the premises for his own use. He founded that conclusion on a process
of reasoning which I am soon to examine. He held, accepting the company’s case, that the appellant indeed promised to sell the premises to the company. He found proved, the whole counterclaim but diminished it by ¢12,600 being the money spent on insuring the premises inasmuch as the obligation to insure at their own expense was cast on the company by the provisions of the lease.
As to the claim for mesne profits which the judge called “rents”, he again found against the appellant because, as he put it, “there is no evidence that the rents were not paid at the time the action was brought nor was there evidence that during the pendency of the action rents were due and owing.” So thoroughly enamoured did the judge appear with the intrinsic merit of the company’s case that in a trial that was estimated in the summons for directions to take two days and in which only three witnesses were called and two comparatively uncomplicated exhibits were tendered, the judge awarded to the company the unheard of costs in the sum of ¢36,000 which he bisected, ¢8,000 for the company’s successful resistance of the appellant’s claim, and ¢28,000 for their own success on the counterclaim. The judgment is in many respects extraordinary not least by the fact that in a case where a landlord seeks immediate possession of his own house for his personal occupation, the judge was able to find ground not only to decline him that relief, but to extend, on his own motion, the duration of the lease which had clearly expired. The judge performed this feat by the judicially novel method of adding the costs he awarded to the pecuniary claim, and using it as rent in advance for a further term of years which he did not specify.
The process of reasoning by which the learned judge reached his conclusions both on the claim and counterclaim was so extraodinary that it does not surprise me that within weeks of his announcing his conclusion, the appellant sought to have that judgment vacated by this appeal.
In all, sixteen grounds of appeal were filed—taking the original and supplementary grounds together.
These questioned the judge’s conclusions on various holdings by him and his faulty application and appreciation of relevant legal principles. Counsel for the appellant drew our attention to various pieces of evidence from which he submitted that that the judge cannot but be wrong in his final conclusion and invited us to reverse it in the appellant’s favour. The judgment was equally stoutly defended by the company’s counsel who was no less thorough in drawing our attention to the parts of the evidence and factors in the suit which, in his contention, justified the trial judge’s conclusion. Counsel repeatedly reminded us that the judgment was, in the main, a conclusion of fact which we should be slow to disturb.
It is, of course, true that the case before the judge below turned mainly on facts. No complicated issues of law were thrown up for consideration. Such was it that in a twenty-page judgment, the trial judge did not find the need to refer to any decided authority. Counsel for both parties must have felt the same because like the judge, neither counsel drew our attention to any statute or case law helpful to his case.
So in the end, whether the judgment appealed against was right or wrong, depends upon (1) our own assessment and evaluation of the evidence placed before the court below; (2) our own understanding of the relevant law of landlord and tenant; and (3) the incidence of the onus of proof in a suit where both parties in one case assume the status of plaintiff and at another that of defendant. This is because in the claim for possession, the appellant was the plaintiff while the company were the defendants, on the latter’s counterclaim, the parties switched roles with corresponding burdens of proof. I think we also have to bear in mind that where a question turned on the credibility of witnesses, we have to defer to the trial judge’s view of the witnesses. Granted all that, rule 8 (1) of the Court of Appeal Rules, 1962 (L.I. 218), imposes an obligation on us to make up our minds on the various issues. It says, “All appeals shall be by way of rehearing . . .” and rule 32 empowers us “. . . to give any judgment and make any order that ought to have been made . . .”
With those principles as my guide, I now proceed to a consideration of the case. I think I will take the counterclaim first, because it is in that the learned judged performed his most daring judicial “feat.” That claim as pleaded in paragraph 20 of the counterclaim reads:
“. . . The defendant [meaning the company] claims from the plaintiff the payment to them of the sum of ¢352,000 being the expenditure incurred on the premises in dispute . . . and which expenditure was made with the approval, consent and participation of the plaintiff.”
The appellant’s stated position was that he did not know of or authorised the alterations which the company called improvements. The rights and liabilities of the parties were governed by a written document which the parties freely executed. That a tenant may desire to make alterations to a demised premises, is commonplace and is a subject which parties to a lease usually forsee and about which they normally specifically provide. In clause 2 (c) of the lease (exhibit A), the company covenanted as follows:
“Not to make or permit to be made any alterations in or additions to the premises without the previous
consent in writing of the landlord . . .” It is not in dispute that the company did not seek and the appellant did not consent in writing to the making of the so-called alterations to the demised premises. Mr Sasu, the general manager of the company, was pressed to say in cross-examination with regard to this covenant that:
“In respect of clause 2 (c) of the lease, I have not seen any written consent in respect of the items in the counterclaim. I do not remember the defendants [meaning the company] writing to the plaintiff for consent—we have not written to the plaintiff for consent. I do not remember the defendants writing to the plaintiff informing him about these additions.”
The position therefore is that if in truth the company made the alterations or “improvements” which they allege, they were in breach of their covenant in clause 2 (c) of the lease. Under clause 4 (a) of that document, that breach can be visited by the appellant forfeiting the residue of the term and re-entering the demised premises. Yet, the company who were in default, sought to use their own breach of covenant as the foundation of their claim against the blameless appellant. On principle, that claim ought to have been rejected. Nobody should be allowed to take advantage of his own wrong. In sustaining the counterclaim and in condemning the appellant to pay to the company the not inconsiderable sum of ¢352,000, the learned judge must must have been unmindful of the fact that the company were using their own breach of covenant as the foundation of their right to damages against the appellant. In my opinion, the counterclaim ought to have been dismissed on that ground.
Aside of the policy-oriented rule which forbids a person from taking avdantage of his own wrong, it is plain to me that not one item of the counterclaim as belatedly particularised in an amended statement of defence was proved. Unless the company’s object was to litigate a counterclaim, win or lose, it is impossible to believe that a company which is said to keep books of account and which is indeed, obliged by law to do so, anyway, can come to court and stake a claim to a large sum of money and when liability for this is disputed, to invite the court to hold their claim proved by the mere oral assertions of their general manager. One is entitled to assume that if the sums itemised in the counterclaim were not conjured from the evanescent memory of the general manager, they must have been obtained from books kept by the company. Ordinarily, such entries would be hearsay documentary evidence and inadmissible at common law. But the law takes account of business realities and Order 37, r. 60 of the High Court (Civil Procedure) Rules, 1954 (LN 140A) makes such evidence admissible in certain cases. Section 125 (1) of the Evidence Decree, 1975 (NRCD
323) also exempts the exclusionary hearsay rule from applying to business records. That section enacts that:
“125. (1) Evidence of a hearsay statement contained in a writing made as a record of an act, event, condition, opinion or diagnosis is not made inadmissible . . . if—
(a) the writing was made in the regular course of a business;
(b) the writing was made at or near the time the act or event occurred, the condition existed, the opinion was formed, or the diagnosis was made; and
(c) the sources of the information and the method and time of preparation were such as to indicate that the statement contained in the writing is reasonably trustworthy.”
Mr. Sasu, the company’s manager, said in evidence that “The defendants are a limited liability company and payments made should reflect in the books of the company.” The fact that the company’s books which show the huge expenses allegedly incurred by them in making the so-called improvements were not produced, suggests that either the expenses were not truly made or if made, were not recorded in the official books of the company. If they were not recorded, then the figures provided in the amended statement of defence must have been dreamt of by some functionary of the company to bolster up an otherwise unprovable claim. What happened in this case, illustrates the wisdom underlying the rule in the oft-cited case of Majolagbe v. Larbi [1959] G.L.R. 190 that where a matter is capable of proof in a positive way, it should be so proved and the court ought not, in such a case, accept as proof, mere sworn assertions which were controverted in the pleadings.
The issue of proof aside, the company’s own conduct shows that even if these improvements were made, they were only intended for the comfort and convenience of the company. There could have been no intention to hold them for the landlord’s account. Had that been the intention, the company would have, in accordance with normal business practice, sent particulars of these expenditures together with the supporting documents to the appellant and have followed it up with a bill or demand for payment. The company at no time made a demand on their landlord to pay any bills for improvements or alterations.
They made no entry of it in their books. Even when the appellant wrote to them on 3 August 1979 informing them of the impending expiry of the lease and asserting his right to resume possession of the house, they did not bring this large debit against him to his notice.
Commonsense suggests that if the company at that time believed that their landlord owed them the large sum of ¢352,000, a demand for its payment would have sprung from their lips unasked. The company’s conduct is reasonable only if they considered that the expenses they incurred on “improvements” was to be for their own account. As the evidence shows, the first time they ever breathed a word about the counterclaim was when they felt obliged in court to resist the appellant’s claim for repossession of the demised premises.
In my opinion, whether the counterclaim is looked at from the view point of public policy which disables a person from taking advantage of his own wrong, or the evidence law rule that he who asserts must prove it or is based on an examination of the probabilities, bearing in mind the company’s conduct in relation to this claim, only one conclusion is warranted, namely that the counterclaim ought to be denied. In my opinion, the judge’s uncritical acceptance of it reflects the superficiality which attended his consideration of this case.
Clearly the counterclaim must go and with it, the implied lease which the judge granted to the company.
The judge did not, in terms, say he was granting the company any extension of the lease. Not even the boldest judge would claim a right to do so. But that is the real effect of the order he made. Having sustained an unsustainable counterclaim in the sum of ¢339,400, he enhanced it by ¢36,000 to make a total pecuniary award of ¢367,400. The ¢36,000 represents costs he awarded in favour of the company.
He then ordered that this sum should be set-off against future rents. He pegged that rent at ¢24,000 per annum.
If my arithmetic is right, the company will have a “judicially granted” lease of fifteen years. It seems odd that the judge should, on his own motion, make this wholly indefensible order, especially as it is plain on the evidence that the contractual term had come to an end. In this court, the company’s counsel sought to suggest that the order can be defended as the exercise of the judge’s equitable discretion. I am certain the judge had no jurisdiction to make such an order. Whatever equitable jurisdiction he may have to make orders unsought by the parties, it is a most deplorable exercise of judicial discretion to order the grant of a lease when the company by its pleadings sought an order for specific performance of an alleged contract of sale of the premises, which relief the company felt constrained to abandon.
Having disposed of the counterclaim, it is necessary to consider the appellant’s claim. The appellant as plaintiff, claims possession of the premises in question. He said both in his statement of claim and evidence that he requires the premises for his own occupation. He is the managing director of a wood processing company called Pampas Ltd. He said he lives on the top of the factory. Below his residential
accommodation is the workshop which contains factory machines, saws and planing machines. They are in an open shed. His four children play in the quadrangle of the factory. The evidence carried the clearest implication that the children are exposed to danger of injury from exposed machines. He said this is the only building he has.
The company, whose lease expired and who failed to exercise an option to renew, dispute the landlord’s right to occupy his own premises. They took two somewhat inconsistent positions. In paragraph 9 of their statement of defence, they said they made “luxurious and admirable additions” to the premises and they say that is the reason why the appellant was “desirous of occupying it for his own comfort.” In the next paragraph, i.e. 10, they say “the plaintiff is comfortably housed elsewhere and does not reasonably need the premises for his own use.” As to the first objection, it is difficult to see why a landlord should be deprived of his right to live in his own premises after a lease he granted to a tenant had expired because the tenant chose, for his own comfort, to make “luxurious additions.” The company say they did this because the landlord promised to sell the premises to them. The latter firmly denies this. It is common ground that this promise was not reduced into writing as required by the mandatory provisions of section 2 of the Conveyancing Decree, 1973 (NRCD 175). So it would not be enforceable by action. But that section itself is subject to the rules of equity and the doctrine of part performance. That doctrine would have enabled the company to obtain the court’s aid in enforcing the agreement. They, in fact, amended their counterclaim to claim this relief but they denied the court an opportunity of pronouncing on it because they abandoned that claim. How genuine could they have been about the complaint that they laid out money on the faith of this promise? It is hard to think they were.
As to the ground that the appellant was comfortably housed elsewhere, the company led no evidence of this. They did not even suggest where he was housed and why they think it was comfortable. The only evidence produced about the appellant’s habitation and the facilities available to him for normal family life, was his evidence. It would be an abuse of language to say on that evidence that he was comfortably housed.
The company also called into question his bona fides when he said his object in seeking the order was to occupy the premises himself. They say it cannot be true because he did not say so in his letter of 3 August 1979 to them. I do not see why he should be obliged to disclose to them what he will do with his own premises after the tenancy had expired. What he said in that letter recorded the position accurately. The lease had determined and the company failed to avail themselves of an option to renew it. In those circumstances, the appellant was entitled
to assume that faith would be kept and the company would honourably give up possession of the premises. There was no reason then for thinking that the company would refuse to honour their obligation to surrender the premises upon the determination of the tenancy and thus oblige the appellant to commence needless litigation to repossess his premises.
The appellant built this house in 1968 when he was in the Armed Forces. He then rented it to number of persons and institutions for short periods—on the average two years each. When queried why he chose to rent the premises when he said he now wished to occupy it himself, he is reported to have replied that this was because he was unable to get vacant possession of the house in dispute.
The appellant gave evidence in April 1983. He had been entitled to vacant possession of the premises since October 1979. If he said he had not been able to secure his own house to live in, he could only have been referring to the period between October 1979 and April 1983 when the company held over. At some point of time in 1974, the house was vacant and so it was between January-October 1977 when the last tenant before the company left. On account of this, counsel for the company submitted that the appellant could not be bona fide when he swore that he required the premises for his own occupation. That conclusion does not necessarily follow as a matter of logic. The fact that a landlord felt he could not afford to forgo the income he was receiving from letting his house in 1974 and 1977, does not mean that he could not afford to forgo in in 1979. His financial circumstances may have become better then. The learned judge also drew from this fact, an equally inadmissible inference. He asked the rhetorical question, “why did the plaintiff himself not take occupation of the premises but allow the house to remain vacant from January 1977 to February 1978—a period of twelve months?” The judge got the facts wrong.
According to the evidence, the appellant and the company were in negotiation for the lease for some time.
It appears that before the actual contract was signed in March 1978, the company had already taken possession. They must have done so in October 1977 because that was the operative date of the lease. So it is a misstatement of the facts to say that the premises was vacant between January 1977 to February 1978.
The judge also queried why the appellant did not move into the premises during the period that it was vacant in 1974 if the appellant felt that his factory accommodation was not convenient. From this, the judge drew the inference that it was because the appellant “wanted to sell the house or let it at a higher rent.” The appellant may have decided that notwithstanding the inconvenience he was suffering at the factory premises, he needed the income from the rents all the same. But
it is not a legitimate inference to conclude that his object in not moving into his house then was to let it at an enhanced rent or sell it. It would follow from this that the judge’s rejection of the bona fides of the appellant was based alike upon misappreciation of the evidence and faulty reasoning. Counsel for the company invited us not to disturb the judge’s conclusion on this question because it was a finding of fact.
It was not. It was the drawing of an impermissible inference from facts and it cannot be gainsaid that this court is as competent as the judge below to draw inference from proved or admitted facts.
In my opinion, the appellant has led evidence to show that he reasonably required the premises for the occupation of himself and family. The only statutory caveat provided by section 17 (g) of Act 220 is that the court should decline to make an order for possession if:
“having regard to all the circumstances . . . including any alternative accommodation available for the person for whose occupation the premises are so required or for the tenant, that greater hardship would be caused by granting the order than by refusing it.”
It is plain to me that greater hardship would be caused in refusing the order for possession than in granting it. It is not the case of a landlord who tries to push out a needy tenant who may be hard put to it to secure alternative accommodation. It is a company which claims that it has no problem with money and on its own showing, spent a fortune in making what they call “luxurious additions” to the premises. Apart from the factory accommodation, the appellant was not shown to be possessed of any other house. Money does not appear to be a problem with the company. It should therefore not be difficult for them to obtain another luxurious accommodation or one they could fit out in luxury. Their counsel told us, in the course of argument, that they are a respectable company. They may well be. But one would normally expect a reputable company whose lease has expired and who failed to avail themselves of an opportunity of exercising an option to renew, to keep faith with their landlord and peacefully yield possession of the demised premises and not oblige him to commence needless litigation to recover what is justly due to him. I think the justice of this case is wholly on the side of the appellant. In my opinion, he was entitled, on the evidence, to an order for recovery of possession of the premises in dispute and the judge was in error in denying him that remedy. I would, for my part, make an order for possession of the demised premises in his favour.
As I said, the appellant also claimed mesne profits which the judge erroneously called rents. As the contractual tenancy determined, the
appellant cannot properly claim rent which is a matter of agreement. But the company are obliged to pay reasonable periodic sums for their use and occupation of the premises. They cannot be better off financially because they chose to hold over. The quantum of the mesne profits is normally the rent reserved in the lease. From 1 November 1979 to 31 October 1984, the company were liable to pay mesne profits at the rate of ¢24,000 per annum for five years. That works out at ¢120,000.
The evidence shows that this suit was originally commenced in the circuit court. It was withdrawn and commenced afresh in the High Court. While the matter was before the former court, the company paid into court the sum of ¢48,000 as mesne profit. On 4 November 1981, when the suit had gone before the High Court on a summons for directions, the appellant sought an order to have that sum paid out to himself. A further sum of ¢48,000 was paid into the High Court on 12 February 1982 for the same purpose. There is no evidence whether these sums were paid out to the appellant. If they were, he would be owed mesne profits as at 31 October 1984, the sum of ¢24,000. For that sum, the appellant is entitled to judgment.
The appellant also complained, with justice on his side, that the costs awarded in favour of the company was excessive. As far as landlord and tenant suits go, this action is commonplace. It did not involve any complex issues of law. It could not have involved any time-consuming research, and actual hearing in court took four days. It would have been much shorter but for the company’s oft-repeated amendments.
The parties attended court on five days to listen to judgment. Yet the costs awarded, which must be taken to reflect the judge’s assessment of the industry put in this case as well as the reasonable expense to which the company must have been put, is the unprecedented sum of ¢36,000.
True, under Order 65, r. 1 of L.N. 140A the costs are in the discretion of the judge. But like all judicial discretions, it must be exercised judicially. The costs awarded are so manifestly excessive that they cannot be other than a most arbitrary exercise of judicial discretion. In the view that I take of this case, it is the appellant who should have been awarded costs. The costs awarded by the judge will go. But that costs of this size which is wholly out of proportion to any reasonable expenses that the company could have been put has been awarded is one of the unsatisfactory features of this case. We have listed to a competent and exhaustive canvassing of this case for two days but the view I formed on a first blush of the record has survived, namely that the respondent company’s case has no merit whatsoever.
I would allow the appeal and set aside the judgment appealed from. I would dismiss the defendant-company’s counterclaim. In lieu of the
order of the court below, I would make an order for recovery of possession of the premises in dispute in favour of the plaintiff-appellant.
With regard to the effective date of granting possession to the appellant, I think it should not be postponed much longer. The company behaved dishonourably towards their landlord. They were not entitled to remain in the premises since 1 November 1979, and by wrongfully holding over, have occupied these premises at the same rent for five years and were protected, without merit, by Act 220. I consider therefore that they should quit and give vacant possession of the premises to the appellant with effect from today.
The appellant is entitled to costs on the claim and counterclaim. I would assess it at ¢3,000 in the court below and ¢2,000 in this court. Any costs paid pursuant to the judgment of the court below should be refunded to the appellant.
Francois J.A. I agree.
Abban J.A. I also agree.