C.F.C.C.C.L. v G.N.C.C & Ano. [1964] GLR 627.

C.F.C. CONSTRUCTION COMPANY LTD. V. GHANA NATIONAL CONSTRUCTION CORPORATION & ANO [1964] G.L.R.627.

HIGH COURT, ACCRA 

APALOO J.S.C.

STATUTORY REF.
Page 630

Apaloo J.S.C. In this action, the plaintiff company are claiming from the defendant corporation the sum of £G10,227 which the plaintiffs say is due to Ghana Presec Limited from the defendants and which sum the plaintiffs claim has been validly assigned to them by Presec Limited.

Before dealing with the extensive and somewhat difficult points of law canvassed in this case, it is, I think necessary, to relate the facts which are substantially not in dispute. A company known as the Ghana Presec Limited was on 12 May 1960 awarded a contract by the Division of Public Construction to execute and complete the construction of 85 houses and ancillary works for the government at Osu. The contract documents were tendered in evidence and as is often the case with government contracts, are very voluminous indeed. The contract sum according to the contract documents is £G202,809 16s. 9d. Although there is no direct evidence of it, an affidavit sworn to by a Mr. Eric John Elliot of the Division of Public Construction, in opposition to an application by the plaintiffs for the attachment of debts due to Presec Limited from the Division of Public Construction, shows that the contract sum was increased to £G277,187 as a result of subsequent variations in the original contract.

Although it was a lump sum contract, provision was made for interim payments. No money was to become payable to the contractor except on the engineer’s certificate in writing and the certificates were, according to the appendix, to be issued at intervals of thirty days. The engineer was to certify from time to time the amount due to the contractor and the latter shall be entitled to payment therefore within a period of thirty days. Provision was, however, made for retention moneys. The amount to be certified by the engineer on his monthly certificates as due to the contractor, was to be at the rate of 90 per cent. of the value of all works properly executed and materials and goods delivered upon the site. According to the conditions of the contract, the retention money became payable to the contractor upon the expiry of the defects liability period which in this case was a period of six months from the practical completion of the works, or upon completion of making good defects which shall appear within the defects liability period whichever is the later.

The evidence shows that the defects liability period expired on 23 March 1962. That would seem to indicate that the works were practically completed the previous September. It appears from a letter which the assistant manager of Ghana Presec Limited wrote to the plaintiffs and dated 21 May 1962 that even by that date the defects on some part of the

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works had not been made good. The assistant manager said in that letter that they were in the process of putting the defects right and promised that they would be done to the satisfaction of the Division of Public Construction at an early date. The defects were eventually put right by the Ghana Housing Corporation on a date which I have not been told. Mr. Abban, the defendants’ senior quantity surveyor gave evidence that all of the 85 bungalows, which form the subject of the contract, have since been occupied. The defects must have been made good at a date prior to 4 October 1962, because on that date, a substantial part of the retention money was paid to the liquidator of Ghana Presec Limited by the defendant corporation. As the defects liability period expired and as the defects have all been made good, the defendants’ engineer was obliged by the conditions of the contract to issue a final certificate which shall, subject to certain exceptions which are immaterial to this case, be conclusive evidence as to the sufficiency of the works and materials. On the issue of such certificate, the contractor shall be entitled to be paid the retention money or such part of it as is still unpaid. Mr. Abban testified that to date, no such final certificate has been issued. That fact gives me no trouble and in the events which have happened, seems to me to be of no moment.

The conditions of the contract further forbid the Ghana Presec Limited from assigning the contract or subletting any portion of the works without the written consent of the engineer. The evidence led in this case satisfies me that Ghana Presec Limited gave the plaintiffs a subcontract of the joinery work and this work they executed with the full knowledge and indeed the blessings of the Division of Public Construction. I infer therefore that such consent must have been given. Indeed the defendants who are the successors in title of the Division of Public Construction make no issue of that. On the conclusion of the subcontract, Ghana Presec Limited owed the plaintiffs the sum of £G11,247 4s. 5d. As the latter were unwilling or unable to pay the said debt, the plaintiffs caused to be issued against them a specially endorsed writ for that sum. This was in September 1961. The Ghana Presec Limited did not contest that action and on 10 October 1961, this court entered judgment in favour of the plaintiffs for the amount endorsed on the writ with costs. Presec Limited, by a letter dated 30 September 1961, offered to pay the judgment debt by monthly instalments of £G1,000. The plaintiffs agreed. They made three payments and then defaulted. Accordingly, the plaintiffs sought, by garnishee proceedings, to attach the retention moneys which were due to Presec Limited from the Division of Public Construction. Two such attempts were made. In each case, they were resisted by the Division of Public Construction and in the result, successfully.

As the plaintiffs pressed Ghana Presec Limited for the payment of the debt, the latter offered to assign to them the retention money due from the defendants. This offer was accepted. It appears that notice of this assignment was given to the defendants orally on 16 May 1962, by the assistant manager of Presec Limited. He confirmed this by a letter on that

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same date addressed to the Assistant Engineer-In-Chief, Department of Public Construction, Accra. A copy of that letter with a covering letter was forwarded to the plaintiffs. Later in this judgment, I shall have to refer to the terms of this notice, the receipt of which is not disputed.

The evidence shows that Presec’s financial difficulties increased with the passage of time, and it would seem that on the petition of their unpaid workmen, this court on 19 September 1962, appointed Mr. J. K. Rockson, chartered accountant of Accra, provisional liquidator to wind up its affairs. This was followed on 8 October 1962, by a final order compulsorily winding up that company and Mr. Rockson was appointed its substantive liquidator. In the meantime, on 4 October 1962, the defendants paid to him the sum of £G6,627 which was part of the retention money due to Presec Limited. This payment to the liquidator of Presec Limited, is, so to speak, the casus belli of this litigation. The plaintiffs claim and I think with justice, that the right to that money was validly assigned to them and that they are entitled to payment of that sum as against the liquidator.

The defendants dispute this and filed in this court two defences on 20 October 1962, and 16 January 1963, respectively. The earlier of these defences which appears to have been signed by the Solicitor-General himself, in essence, merely denied that there had been a valid assignment. The later defence, apart from making some immaterial averments, re-iterated the contention that there was no valid assignment of the debt to the plaintiffs.

The trial of this case first opened before Akainyah J. on 10 April, 1963. After hearing either the whole or part of the evidence of the plaintiffs’ general manager, Mr. Thomas, the learned judge considered that the liquidator of Ghana Presec Limited should be a party to this action and accordingly, he made an order on his own motion joining the said liquidator as co-defendant and directed that the writ, pleadings and other relevant documents be served on him. This order was obeyed and upon being served with the said papers, the liquidator entered an appearance and filed a defence in which, like the defendant corporation, he disputed the validity of the assignment and averred that the transaction was at best, a mere promise to assign. The defence then set out a lot of other immaterial matters and in the penultimate paragraph raised the only other point of law, namely that the purported assignment was a fraudulent preference of creditors. When the trial of this case commenced before me on 30 October last, the liquidator appeared in court and was represented by counsel who made a very brief cross-examination of the plaintiffs only witness, Mr. Thomas. Thereafter, counsel for the liquidator told me that he had reconsidered his position and did not wish to offer any evidence. He also declined to address the court although he remained in court throughout and appeared to have adopted the contentions put forward on behalf of the defendant corporation, at least in spirit.

As I have said, there is no controversy on the facts which I would have had to resolve. Accordingly, the determination of this case turns mainly on the view I have formed of the various matters with which I have

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been pressed by counsel for the defendants and with these I now deal. Counsel read the letter which notified the Division of Public Construction of the assignment and submitted that it was replete with unfulfilled conditions. He accordingly submitted that it was, if anything, a conditional assignment and fell outside the ambit of section 7 (2)(a) of the Contracts Act, 1960 (Act 25). I entirely disagree. That letter, in so far as material, reads as follows:

“We confirm our conversation of this day re the payment of an amount of £G10,277 being our retention money for the above contract to C.F.C. Accra.

We hereby ask you to issue the cheque for this amount when it will become payable in the name of C.F.C.”

The succeeding paragraphs spoke about defects on which the Presec Limited said they were working and also requested the Division of Public Construction to signify their agreement to pay over this sum to the plaintiffs as requested. In my judgment, that letter is a clear notice to the Division of Public Construction that the Presec Limited had made over their right to the retention money to the plaintiffs. This letter is not couched in what I might call legalistic jargon but is, I should have thought, in plain English understandable by a man in the street and is such that no man of business could mistake. In Brice v. Bannister (1878) 3 Q.B.D. 569, C.A., and Buck v. Robson (1878) 3 Q.B.D. 686, language less precise was held to amount to an unconditional assignment within the meaning of section 25(6) of the Supreme Court of Judicature Act, 1873, 36 & 37 Vic., c. 66.

It was next pointed out that the Division of Public Construction did not signify their agreement as requested by the last paragraph of the letter. Although counsel shrank from contending that consent by the Division of Public Construction to pay that sum to the plaintiffs as requested was indispensable to the validity of the assignment, he clearly implied it. A similar submission was roundly rejected by the House of Lords in Brandt’s (William) Sons & Co. v. Dunlop Rubber Co.[1905] A.C. 454, H.L., and is not worthy of further consideration by me.

Counsel for the defendant corporation next referred me to the conditions of contract and to the evidence of Mr. Abban to the effect that no final certificate has to date been issued by the engineer. Accordingly it was said no sum certain was assigned or could have been assigned, this being determinable only after the issue of the engineer’s final certificate. I have already found that all the defects were made good at a date prior to 4 October 1962, and that the engineer was under a contractual obligation to issue a final certificate. If in breach of the conditions of contract he failed or neglected to issue such a certificate, it is a wrong of which the defendant corporation who employed him can take no advantage. A submission such as this, can claim no ground of principle and is one

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which I must reject. As to the contention that no sum certain was assigned, one has only to look at the notice of the assignment to dismiss it. The whole of the retention money was earned in May 1962, it was a debitum in praesenti although it was solvendum in futuro and was, on the authorities alienable. The whole of that money was assigned. The fact that that sum might be diminished by a valid counterclaim or set-off does not make the sum any the less certain. The cases of Re Davis & Co.; Ex parte Rawlings (1888) 22 Q.B.D. 193, C.A., Ex parte Moss; In re Toward (1884) 14 Q.B.D. 310, and the more recent one of G & T. Earle, Ltd. v. Hemsworth R.D.C (1928) 44 T.L.R. 605. Decided that vested rights such as those acquired under retention moneys are assignable and counsel’s argument to the contrary is untenable.

Mr. Tagoe, who was wholly undaunted and who said everything that could possibly be said on behalf of the defendants, then referred to subsection (3) of section 7 of the Contracts Act, 1960, and put forward some further contentions which I do not completely follow. He submitted that that subsection takes charge of what in English law would be equitable assignments. He argued, so I understand him, that while an assignee in English law takes subject to equities, in Ghana, an assignment of a conditional right operates by the force of subsection (3) of section 7 of the Contracts Acts, 1960, as a promise to assign. Accordingly, he submitted that the purported assignment to the plaintiffs of a conditional right operates as a promise to assign. The only remedy available to the plaintiffs, according to Mr. Tagoe, is an action against the liquidator to compel him to fulfil his promise.

I find it difficult to do justice to Mr. Tagoe’s argument because as I said, I do not completely follow it. If by this contention, Mr. Tagoe meant that the law of assignment in this country as enacted by section 7 of the Contracts Acts, 1960, is entirely different and is uninspired by the law of England, I will at once join issue with him. Subsection (2) of section 7 of Act 25 which enacts the requisites of a valid legal assignment is no more than a reproduction in slightly altered language of subsection (1) of section 136 of the English Law of Property Act, 1925, 36 & 37 Vict., c. 66. That Act also merely re-enacted subsection (6) of section 25 of the Supreme Court of Judicature Act, 1873,10 its statutory predecessor. Counsel seems to imply by his argument that under Act 25, an assignee of a chose in action does not take subject to all existing equities. This term, as I understand it, means that an assignee takes subject to all defences available against his assignor including equitable set-offs. This principle is clearly preserved by subsection (6) of section 7 of the Ghana Act. Assignments which for any reason do not qualify as good legal or statutory assignments, may nevertheless be valid equitable assignments in English law. That position has been statutorily preserved by subsection (4) of the Ghana Act. Again,

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the English law principle that priority of successive assignments is determined by the date of notice to the debtor, is enacted by subsection (5) of our Act. It follows that not only did the Ghana Act almost wholly adopt and enact the English statute law of assignment, but it also codified the main principles of the non-statute law of that country. Far from attempting a break away from English law, the Parliament of Ghana, tried by the Ghana statutory law of assignment, to preserve a homogeneity with the law of England.

The only provision which seems to have the semblance of originality in our statutory law of assignment, is subsection (3) which enacts that, “A purported assignment of a conditional right operates as a promise to assign the right if and when the condition occurs.” If the view I take of the true construction of that section is right, I should suspect strongly that the defendants’ legal advisers took an erroneous view of that section and thus provoked the present litigation. I think it is established by the authorities that a vested legal right might take one of two forms, namely that the right may be vested in possession when the owner of the right is entitled to present possession or it may be vested in interest, when there is a present unqualified right of taking possession as soon as it becomes vacant. Preston has shown in his book on Estates, Vol. 1, p. 65 that an estate or right vested in interest is always a present right in the sense that the owner is clothed with an immediate power of alienation, though it is not always present in the sense that he is entitled to actual enjoyment at the moment. Professor Cheshire has also shown in his book on Modern Law of Real Property (9th ed.), pp. 210-211 that a right vested in interest is in no sense conditional since there is nothing which must happen before the owner can establish his title. According to him, the test is, is the owner absolutely entitled at the present moment to assume possession whenever it may fall vacant? If so, he owns a vested interest. On the other hand, an estate or right is conditional or contingent if the accrual of the owner’s title depends upon the occurrence of some event.

I think I am entitled to assume that the legislature of Ghana is well aware of the distinction in law between a vested legal right and a conditional right when she uses both words in contradistinction to each other in subsections (2) and (3) of section 7 in Act 25. It seems to me plain that the right which Presec Limited acquired under the retention moneys is vested in interest. The moneys were in fact earned and were due to be paid at a future date. There is nothing conditional about the right because Presec Limited had nothing more to do before their title to the retention moneys accrued. The fact that that money might be diminished by valid set-offs or counterclaims does not alter the legal nature of that right. In my opinion therefore, the right of Presec Limited to the retention moneys was a vested legal right within the meaning of subsection (2) and is capable of assignment under the statute if the conditions laid down in paragraphs (a), (b) and (c) of subsection (2) of section 7 are complied with. In my judgment, subsection (3) of section 7 has no application to the facts

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of this case and was erroneously invoked by counsel for the defendants. The view I have formed of this matter is reinforced by the Rawlings case (supra), the Moss case (supra) and the Earle case (supra). I have said, and I hope without offence, that the only provision in our statute law of assignment which can lay claim to originality is subsection (3) of section 7. But even that provision seems to me to have been inspired by such English decisions as Wilmot v. Alton [1897 1 Q.B. 17, C.A.], and Ex parte Nichols (1883) 22 Ch.D. 782 at p. 787, C.A., with which it seeks to conform. The principle deducible from those decisions is that where the right purported to be assigned is truly contingent or conditional and is not vested in interest, then the purported assignment amounts to no more than a promise to assign. Accordingly, it was held in those cases that an assignment of future debts not earned before the bankruptcy of an individual did not avail the assignee as against the trustee in bankruptcy. Indeed in the Nichols case (supra) Lindley L.J. used language very similar to the ipsissima verba of subsection (3) of section 7 of the Ghana Act. He said:

“ . . . I think it would be in substance the same thing if it had been an assignment of moneys due and to become due from the railway company under the prior arrangement. It is an agreement to assign to Younger & Co., not property of Jones & Barber, but money which would become due to them under the arrangement between them and the railway company. Is that an equitable assignment which can prevail against the title of the trustee in the bankruptcy? It is a mere agreement, for the breach of which no doubt an action would lie, but which cannot prevail against the title of the trustee so far as regards    payments received by the railway company under it after his      title accrued.”

The same view of the matter is expressed by the learned editors of Hudson’s Building Contracts (8th ed.). When dealing with assignment the following appears (at p. 413): “An assignment may relate only to a future contractual right, e.g. a builder may assign rights under any contracts to be undertaken by him in the future—which, however expressed, can only operate as an agreement to assign.” In my judgment, subsection (3) of section 7 of our Act is designed to take care of strictly conditional rights such as these.

On 16 May 1962, when Ghana Presec Limited assigned the retention money to the plaintiffs, that money was owed to them by the Division of Public Construction and the right to it was vested and was assignable under section 2 (2) of the Act. I have already held that such assignment was not conditional but was absolute. It was in writing and was signed by the Assistant Manager of Ghana Presec Limited. I am satisfied that notice of this assignment was given to the Division of Public Construction. It follows therefore that that assignment conforms with the letter of subsection (2) of section 7 and was a valid statutory assignment. I hold therefore that the right title and interest of the Ghana Presec Limited to the

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retention money was, on 16 May 1962, extinguished in favour of the plaintiffs.

Mr. Tagoe finally submitted that the defects in the buildings were not in fact made good by the Ghana Presec Limited. I have already found that the defects were finally put right by the Ghana Housing Corporation. This was, I am satisfied, at the behest of the defendants. They are there entitled to invoke clauses 18 and 20 of the conditions of contract and claim damages against the plaintiffs or set-off against the retention money, such sums they might have spent in putting right the defects. They have not thought fit to do so. Accordingly, in my judgment, the plaintiffs are entitled to the full retention money undiminished by one farthing. They have not sought to obtain judgment or indeed any relief against the liquidator and on the facts of this case, have no valid claim against him. He is accordingly dismissed from the suit. In all the circumstances, he must bear his own costs. But in view of the conclusions I have reached on the various matters urged on behalf of the defendants, the plaintiffs succeed in this action and are entitled to the sum which they claim. Accordingly, I give judgment for them against the Ghana National Construction Corporation for the sum of £G10,227 with interest at the rate of eight per cent. from 4 October 1962, to this day. I assess costs in the inclusive sum of 250 guineas.

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