B.O.D. Of Orthodox Sec. Sch. Of Peki v. Tawlma-Abels [1974] 1 GLR 419 @P.427, C.A.

B.O.D OF ORTHODOX SEC. SCH. OF PEKI V. TAWLMA-ABELS [1974] 1 G.L.R. 419 @ 427 PER ANIN J.A. COURT OF APPEAL, HO ANIN, HAYFRON-BENJAMIN AND FRANCOIS JJ.A.
Ref.: Bills of Exchange Act, SS. 7(1), 9(2), 83(1) and 89(1)
JUDGMENT OF ANIN J.A.

The action was commenced on 14 April 1970, in the Ho Circuit Court by a specially endorsed writ of summons containing the following endorsement:

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“STATEMENT OF CLAIM

(1) The plaintiff’s claim against the defendant is for the sum of N¢3,321.64 being an amount due and

owing from the defendant to the plaintiffs as far back as 23 March 1968 (as per promissory note a

copy of which is attached) and which said sum still remains unpaid despite repeated demands.

(2) Plaintiffs also claim eleven per cent interest up to the date of judgment.”

The alleged promissory note was in the following terms:

“I accept responsibility for the deficit of N¢3,321.64 NP three thousand three hundred and twenty one new cedis and sixty four new pesewas, being fees collected to 1st term 1967/68 and promised [sic] to pay by monthly instalment [sic] as the Board may determine.

(Sgd.) S. R. Tawlma-Abels

Headmaster

23/3/68

The Chairman,

Board of Governors,

Orthodox Sec. School,

Peki, V.R.”

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In their statement of claim the plaintiffs-appellants (hereafter referred to as the plaintiffs) averred simply that during the defendant’s tenure of office as headmaster of the Orthodox Secondary School, the accounts of the school were checked and a deficit of N¢3,321.64 was discovered; and that the alleged promissory note was subsequently made and delivered to them by the defendant after accepting responsibility for the deficit, which was at the date of the action still outstanding.

In his statement of defence, the defendant-respondent (hereafter referred to as the defendant) denied that the school accounts had either been checked or audited. He also denied that the alleged deficit of N¢3,321.64 had been discovered against him. He maintained that during his tenure as headmaster, the joint bursars of the school were one Mr. D. Y. Bank as and the Rev. Carey Harold Jones who collected various amounts of fees but failed either to render any accounts or even to keep account books. Turning to the alleged promissory note, he denied the plaintiffs’ claim, and explained that at a meeting of some members of the school’s board held on 23 March 1968, an allegation of a deficit was made and that he was thereupon “coerced and forced, he being a non-native, to execute the said note and that he did so against his free will and accord and that he will plea non est factum.”

The agreed issues for trial accepted by the court were: (a) whether the defendant was coerced into signing the promissory note as alleged; (b) whether the plaintiffs are entitled to judgment for the sum claimed; and (c) any other issues as raised by the pleadings.

The learned circuit judge in his judgment dismissed the plaintiffs’ claim on two main grounds. Firstly, he held that the evidence adduced did not establish either a proper checking or any accounting system in vogue at the school. There had been no auditing of the school’s accounts which could have resulted in the discovery of the deficit of ¢3,321.64 claimed. The defendant had abundantly rebutted the accounts which had been pieced together at an ad hoc school board meeting on 23 March 1968 by a professional accountant from data supplied to him by the bursar (exhibits B—B6 and C—C19). These exhibits, purporting to be a record of short payments of school fees collected by the defendant, had neither been counter-signed nor otherwise acknowledged by him as accurate. They were one-sided and arbitrary and inherently unsatisfactory, being full of cancellations and alterations. They could therefore not be held to be binding on the defendant. There has been no criticism of this part of the judgment appealed from. Nor indeed could it be contended that accounts have been taken. The evidence disclosed a deplorable lack of any register of students, or cash or ledger books, or any account books. The tendered receipts (exhibits C—Cl9 and 4—4W) were scribbled on pieces of paper. No wonder the plaintiffs did not contest the issue of the due taking of accounts.

Secondly, the learned circuit judge held that the plea of non est factum availed the defendant because, “exhibit A (the promissory note) was extorted from him by terror or violence; the coercion described by the defendant shows that his will was overborne in making exhibit A and that will be sufficient ground to avoid it.”

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At the hearing of this appeal, the court ruled that it was unnecessary for learned counsel for the plaintiffs to expatiate on his first ground of appeal that “the trial judge erred in holding that the doctrine of non est factum had been proved and was applicable to the instant case.” For it is quite obvious that that plea had not been made out. Assuming that the defendant was on the evidence coerced or pressurised into executing exhibit A — and I hasten to add that the evidence did not in fact establish such coercion or actual pressure — yet the said coercion or pressure could not in law support the plea of non est factum.

With respect, the learned circuit judge, having made a correct quotation of the law of non est factum from Chitty on Contracts (23rd ed.), Vol. 1, para. 220, failed to apply the same to the facts before him. It is stated in Chitty (supra) at p. 108 that:

“The general rule, is that a man is estopped by his deed, and although there is no such estoppel in the case of ordinary signed documents, a party of full age and understanding is normally bound by his signature to a document, whether he reads or understands it or not. If, howerver, a party has been misled into executing a deed or signing a document of a class and character different from that which he intended to execute or sign, he can plead non est factum in an action against him.”

In the recent leading case of Gallie v. Lee [1971] A.C. 1004, H.L. on the plea of non est factum, Lord Reid stressed at pp. 1016-1017 that “the plea of [non est factum] cannot be available to anyone who signed without taking the trouble to find out at least the general effect of the document.” Nor could it be available to “a person whose mistake was really a mistake as to the legal effect of the document. There must ... be a radical [or fundamental] difference between what he signed and what he thought he was signing.” Lord Wilberforce observed at p. 1026, that “a document should be held to be void only when the element of consent to it is totally lacking, i.e. when the transaction which the document purports to effect is essentially different in substance or in kind from the transaction intended.”

Reference may also be made to this court’s unreported, judgment in Idun v. Agyeman III, Court of Appeal, 29 July 1970, where the plea of non est factum and the relevant authorities were discussed.

With this plea of non est factum, which is as a general rule limited in its application to a mistake as to the essential nature or character of a document signed, should be contrasted the restricted common law defence of duress and equitable defence of undue influence, neither of which had been pleaded nor canvassed in this case. It is not every type of duress or coercion which suffices at common law to nullify the consent of a party to a contract and thereby nullify the contract. It is only actual or threatened physical violence to, or unlawful constraint of, the person of the contracting party which will suffice for the purpose; and even then, what is threatened must be unlawful. See Biffin v. Bignell (1862) 7 H. & N. 877 and Latter v. Braddell (1881) 50 L.J.C.P. 166, C.A. where a house-maid was ordered by

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her mistress to submit to a medical examination on a suspicion of pregnancy which turned out to be unfounded. She cried and protested but submitted. Her claim for damages for assault failed as she had Consented to the examination; and it was also held that duress had not been proved since physical violence had neither been threatened nor inflicted. Furthermore a threat of a criminal prosecution for which there is sufficient ground is not such duress as will vitiate a contract made in consequence thereof, provided there is adequate valuable consideration, for the contract, and that there is no agreement to stifle the prosecution.

In Barnes v. Richards (1902) 71 L.J.K.B. 341, to which the instant case bears some factual resemblance, it was held that duress had not been established despite an express finding of undue pressure. In that case, the plaintiff was engaged by the defendants as a manager of a music hall. He was responsible for the working accounts, and at a meeting of the directors was called upon to explain certain items in them as to which irregularities had occurred. He was unable to give a satisfactory explanation and an arrangement was come to, which was embodied in a deed of release, that he should resign and accept a sum of money in respect of his claim for salary and should execute the deed of release. Subsequent to the execution of the deed, the plaintiff brought an action against the defendants for a balance of salary alleged to be due to him. The jury found that he had been induced to enter into the agreement by undue pressure exercised upon him by the defendants. It was nevertheless held that the plaintiff was bound by the arrangement embodied in the deed of release and was not entitled to maintain the action.

Applying the ratio in Latter v. Braddell (supra) and Barnes v. Richards (supra) to the facts of this case, it is clear that the defence of duress could not have availed the defendant even if it had been pleaded; since, in the defendant’s own words, “constructive force” only had been exerted over him. There was neither actual nor threatened physical violence to, nor unlawful constraint of, his person.

With respect, the learned circuit judge erred in law and on the facts by upholding the defendant’s misconceived and legally untenable plea of non est factum. He misdirected himself further by equating the plea of non est factum with the defence of duress, which was not even an issue before him. Incidentally, it may be pointed out that the equitable defence of undue influence or pressure also did not avail him on the facts disclosed. Neither was it pleaded nor relied upon.

Having successfully impugned the judgment on the ground of the learned judge’s erroneous finding on the issue of non est factum, learned counsel for the plaintiff next urged us to allow the appeal and enter judgment in his client’s favour in view of the alleged promissory note (exhibit A), which had been set out verbatim and appended to the specially endorsed writ. Be contended that the amount of deficit acknowledged by the defendant was liquidated and was expressly stated therein to be N¢3,321.64. It was only the mode of payment and the quantum of monthly instalments which had still to be determined by his clients at their discretion. In answer to a question by the court, learned counsel conceded that if

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the defendant were to default in paying the instalments when fixed, only the first monthly instalment could be recovered in an action, in the absence of the usual default clause.

At the date of the filing of the writ and even on the date of the judgment of the court below, no monthly instalment had been fixed by the school board in exercise of the power reserved to them in exhibit A. Admittedly, the defendant did not plead the non-performance of any condition precedent, under Order 19, r. 15 of the Supreme [High] Court (Civil Procedure) Rules, 1954 (L.N. 140A). Neither did he canvas the insufficiency in law of exhibit A as a promissory note. None of the defences mentioned in Order 21, r. 2 to an action on a promissory note was raised, with the sole exception of the plea of non est factum raised in paragraph (3) of the defence which is tantamount to a defence of the non-making of the said note. However, one important issue set down for trial was whether or not the plaintiffs were entitled to judgment for the sum claimed. Another was the omnibus issue: “any other issues raised by the pleadings.” In my considered view, the plaintiffs’ entitlement to judgment on their claim depends largely on the preliminary but fundamental issue whether or not exhibit A is a promissory note in law. The plaintiffs in their pleadings tacitly assume the positive answer; while the defendant denies the claim in its entirety.

Our attention has been drawn by learned counsel for the appellants to such well-known authorities as Dam v. Addo [1962] 2 G.L.R 200, S.C., Seraphim v. Amua-Sekyi [1971] 2 G.L.R. 132, C.A. and Esso Petroleum Co., Ltd. v. Southport Corporation [1955] 3 All E.R. 864, H.L. which lay down the rule that it is fundamentally wrong for a judge proprio motu to substitute a claim or defence for the claim or defence pleaded and to base his judgment, not on the original pleadings, but on the new claim or defence substituted for the parties. A court must not substitute a case proprio motu, nor accept a case contrary to, or inconsistent with, that which the parties have put forward. These principles are, in my opinion, sound and unobjectionable. But it is equally clear that they are in no way infringed where the court does no more than construes the legal meaning and effect of a document, such as exhibit A herein, which has been fully set out as an appendix to the specially endorsed writ of summons and is expressly relied upon by the plaintiffs in their pleading and evidence as constituting a promissory note. In this latter case, the court does not, and cannot be said to, substitute a fresh claim or defence for the parties. The court merely discharges its proper function of construing an instrument which has in fact been pleaded and set out in full, and decides whether ex facie the instrument has the legal effect claimed for it by the pleader (here the plaintiffs) who alleged it to be a promissory note. The court thereby decides the preliminary question whether the pleaded document, ex facie, is a promissory note at law; before resolving the main issue: whether the plaintiffs are entitled to judgment for the sum claimed in reliance upon the said instrument. Whether an instrument is a promissory note or notis, in my view, a question of law for the court to determine.

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Besides, I cannot see any hardship caused to the parties if the court should construe and interpret such a pleaded instrument and give to it its true legal meaning and effect. There is no element of surprise; and certainly the plaintiffs who have pleaded it and relied on it to found their claim cannot be heard to complain that they have been taken by surprise.

Furthermore, it should not be forgotten that the Bills of Exchange Act, 1961 (Act 55), s. 83 (1) has given a comprehensive statutory definition of a promissory note, and that other sections of the same Act, e.g. section 9 (2), clearly defines what instrument is, or is not, a bill. The courts take judicial notice of, and apply, the “existing law.” Under article 126 (1) (d) of the suspended Constitution, 1969, the existing law is a component part of the laws of Ghana. And article 126 (4) defines the “existing law” to include inter alia, “the written and unwritten laws of Ghana as they existed immediately before the coming into force of this Constitution.” Despite the suspension of this 1969 Constitution the National Redemption Council (Establishment) Proclamation, 1972, s. 3 (2) provides that “any enactment . . . in force in Ghana immediately before the 13th day of January, 1972 shall continue in force.” The Bills of Exchange Act, 1961 (Act 55), is an example of such a pre-existing enactment which has been preserved and continued in force.

In Bullen and Leake’s Precedents of Pleadings (11th ed.), p. 123, it is stated that where a document is set out verbatim (as in this case) the pleader leaves the construction of it to the court except that the meaning is often necessarily assumed in alleging the breach. If the court below failed to construe the meaning of the instrument (exhibit A) alleged in the pleadings to be a promissory note, that is no reason why this appellate court should fail to advert its mind to the legal meaning and effect of the said instrument which was set out verbatim in an appendix to the writ of summons and was expressly relied upon by the plaintiffs.

Finally, rule 32 of the Supreme Court [Court of Appeal] Rules, 1962 (L.I. 218), has given this court
ample powers to give any judgment and make any order that ought to have been made by the trial court.
If I may quote rule 32 in full:

“The Court shall have power to give any judgment and make any order that ought to have been made, and to make such further or other order as the case may require including any order as to costs. These powers may be exercised by the Court, notwithstanding that the appellant may have asked that part only of a decision may be reversed or varied, and may also be exercised in favour of all or any of the respondents or parties, although such respondents or parties may not have appealed from or complained of the decision.”

What, then, is a promissory note? Section 83 (1) of the Bills of Exchange Act, 1961 (Act 55), provides the following legal definition:

“A promissory note is an unconditional promise in writing made by one person to another signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a sum certain in money, to, or to the order of, a specified person or to bearer.”

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Besides, I cannot see any hardship caused to the parties if the court should construe and interpret such a pleaded instrument and give to it its true legal meaning and effect. There is no element of surprise; and certainly the plaintiffs who have pleaded it and relied on it to found their claim cannot be heard to complain that they have been taken by surprise.

Furthermore, it should not be forgotten that the Bills of Exchange Act, 1961 (Act 55), s. 83 (1) has given a comprehensive statutory definition of a promissory note, and that other sections of the same Act, e.g. section 9 (2), clearly defines what instrument is, or is not, a bill. The courts take judicial notice of, and apply, the “existing law.” Under article 126 (1) (d) of the suspended Constitution, 1969, the existing law is a component part of the laws of Ghana. And article 126 (4) defines the “existing law” to include inter alia, “the written and unwritten laws of Ghana as they existed immediately before the coming into force of this Constitution.” Despite the suspension of this 1969 Constitution the National Redemption Council (Establishment) Proclamation, 1972, s. 3 (2) provides that “any enactment . . . in force in Ghana immediately before the 13th day of January, 1972 shall continue in force.” The Bills of Exchange Act, 1961 (Act 55), is an example of such a pre-existing enactment which has been preserved and continued in force.

In Bullen and Leake’s Precedents of Pleadings (11th ed.), p. 123, it is stated that where a document is set out verbatim (as in this case) the pleader leaves the construction of it to the court except that the meaning is often necessarily assumed in alleging the breach. If the court below failed to construe the meaning of the instrument (exhibit A) alleged in the pleadings to be a promissory note, that is no reason why this appellate court should fail to advert its mind to the legal meaning and effect of the said instrument which was set out verbatim in an appendix to the writ of summons and was expressly relied upon by the plaintiffs.

Finally, rule 32 of the Supreme Court [Court of Appeal] Rules, 1962 (L.I. 218), has given this court

ample powers to give any judgment and make any order that ought to have been made by the trial court.

If I may quote rule 32 in full:

“The Court shall have power to give any judgment and make any order that ought to have been made, and to make such further or other order as the case may require including any order as to costs. These powers may be exercised by the Court, notwithstanding that the appellant may have asked that part only of a decision may be reversed or varied, and may also be exercised in favour of all or any of the respondents or parties, although such respondents or parties may not have appealed from or complained of the decision.”

What, then, is a promissory note? Section 83 (1) of the Bills of Exchange Act, 1961 (Act 55), provides the following legal definition:

“A promissory note is an unconditional promise in writing made by one person to another signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a sum certain in money, to, or to the order of, a specified person or to bearer.”

Sections 89 (1), 9 (2) and 7 (1) of Act 55 are also relevant for our purpose, and they are accordingly reproduced seriatim:

“89. (1) Subject to the provisions in this Part, and excepts by this section provided, the provisions of this Act relating to bills of exchange apply, with the necessary modifications, to promissory notes.”

“9. (2) An instrument expressed to be payable on a contingency is not a bill, and the happening of the event does not cure the defect.”

“7. (1) The sum payable by a bill is a sum certain within the meaning of this Act, although it is required to be paid —

(a) with interest;

(b) by stated instalments;

(c) by stated instalments, with a provision, that upon default in payment of any instalment the whole shall become due; …”

Our local Bills of Exchange Act, 1961 (Act 55), was modelled on the English Bills of Exchange Acts; and section 83 (1) (defining a promissory note) is a verbatim re reduction of section 83 (1) of the English Bills of Exchange Act, 1882 (45 & 46 Vict., c. 61), which codified the earlier case and statute laws on the subject. Likewise our local section 9 (2) finds its English counterpart in section 11 (2) of the 1882 Act; while the local section 7 (1) is taken word for word from section 9 (1) of the said English Act; and section 89 of both Acts are the same.

Turning to the instrument under consideration—set out above—it will be noticed that it consists of two parts, the first part accepting responsibility for a deficit of N¢3,321.64, and the second part being a promise (expressed curiously in the past tense) to the Chairman of the Board of Governors of the School “ to pay by monthly instalment [sic] as the Board may determine.” The words emphasised clearly create an uncertainty and a contingency in the time and mode of payment contrary to the provisions of section 9 (2) of Act 55. If the monthly instalments payable by the promissory had been stated, the instrument would have satisfied the test of certainty under section 7 (1) of Act 55. But neither the commencement date for the monthly instalments, nor the quantum of the monthly instalments has been fixed. Both are left to the discretion of the board. The question what certain sum of monthly instalment the defendant has undertaken by the instrument to pay to the promise is left unanswered. Neither is any indication given therein when the board was to decide the time and quantum of monthly instalments payable. Applying the test of section 7 (1) and 83 (1) of Act 55, the defendant in this case has not “engaged to pay any certain sum either on demand or at a fixed or determinable future time.” At best, he has made only a promise to pay the stated deficit by such monthly instalments as may be determined later. The promise is dependent on a contingency; and the happening of the event, i.e. the board’s decision, does not cure the defect—see section 9 (2) of Act 55. The instrument is therefore neither a bill under section 9 (2),

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nor a promissory note under section 83 (1); since the promissory has engaged to pay uncertain sums at an

indeterminable future time.

In the case of Williamson v. Rider [1962] 2 All E.R. 268, C.A. the majority of the English Court of

Appeal held that a document in which the person signing it agreed unconditionally to pay a sum certain in money to another “on or before December 31, 1956,” was not a promissory note within the meaning of the Bills of Exchange Act, 1882, s. 83 (1) because the option to pay at an earlier date creates an

uncertainty or contingency in the time of payment, contrary to the provisions of section 11 of the 1882 Act. And in the earlier case of Moffat v. Edwards (1841) Car. & M. 16, where the document stated “I, R.J.M. owe Mrs. E. the sum of £6, which is to be paid by instalments for rent. (Signed) R.J.M.,” it was held that the document was not a promissory note since no time was stipulated for the payment of the instalment.

Reference may also be made to the Privy Council case of Akbar Khan v. Attar Sing [1936] 2 All E.R. 545, P.C. where the plaintiff deposited the sum of Rs. 43,900 with the defendants, and received a deposit receipt in the following form as set out in the headnote: “This receipt is hereby executed by [defendants] for Rs. 43,900 ... received from [a firm] for and on behalf of [the plaintiff]. This amount to be payable after two years. Interest at the rate of Rs. 5-4-0 per cent. per year to be charged.” This document having been duly stamped as a receipt, it was held by the Board that the document was a deposit receipt and not a promissory note. It evidenced the deposit of the sum mentioned and that it was to be repayable on demand after the expiration of two years from its date. The Board’s decision actually turned on the finding that the document in question contained no undertaking to pay and that an implied promise to pay is not sufficient to make a document a promissory note. In delivering the Board’s opinion, Lord Atkin at pp. 549—550 made the following pertinent observation:

“It is indeed doubtful whether a document can properly be styled a promissory note which does not contain an undertaking to pay, not merely an undertaking which has to be inferred from the words used. It is plain that the implied promise to pay arising from an acknowledgement of a debt will not suffice, for the third illustration [i.e. ‘Mr BIOU Rs 1,000’] indicates that an IOU is not a promissory note, though of the implied promise to pay there can be no doubt. Receipts and agreements generally are not intended to be negotiable, and serious embarrassment would be caused in commerce if the negotiable net were cast too wide. This document plainly is a receipt for money containing the terms on which it is to be repaid ... Being primarily a receipt even if coupled with a promise to pay it is not a promissory note.”

For the above reasons, and having regard to Act 55, and the above mentioned persuasive English authorities, I am compelled to the conclusion that the instrument sued upon by a specially endorsed writ is not a promissory note in law—vide section 83 (1), 9 (2), 7 (1) and 89 (1) of the Bills of

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Exchange Act, 1961 (Act 55). Not only does it sin against section 9 (2) by expressing the sum to be payable upon a contingency, but it also fails to pass the legal test of a promissory note under section 83(1) by making a promise to pay unspecified monthly instalments at an indeterminable future. In the circumstances, I would dismiss the plaintiffs’ appeal and dismiss their claim on the simple ground that the instrument sued upon (exhibit A) is not a promissory note within the meaning of the Bills of Exchange Act, 1961 (Act 55). As there has been no appearance for or by the defendant, I make no order as to costs.

HAYFRON-BENJAMIN J.A.                        I agree.

FRANCOSI J.A.                                 I also agree.

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