E.C.C.L. v. B.H.C. [1992] 2 GLR 227.

EKUONA CONSTRUCTION CO. LTD. v. BANK FOR HOUSING AND CONSTRUCTION [1992] 2 GLR 227

HIGH COURT, ACCRA

AMPIAH J.A.

STATUTORY REF.
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Ampiah J.A. The plaintiff is a road and building construction company incorporated as a limited liability company under the laws of Ghana. The defendant is a bank incorporated under the laws of Ghana. By a series of international agreements between the Government of the Republic of Ghana and the World Bank—it is not clear on the evidence whether it is the International Bank for Reconstruction and Development or the World Bank itself—the Government of Ghana obtained a credit loan from the World Bank for the purpose of financing Ghana’s roads maintenance projects. For our purpose, it is not necessary to know the intricacies of these agreements. It suffices to know however that this loan facility was, by an agreement, to be implemented by the Bank for Housing and Construction (B.H.C.), the defendant herein and the Ghana Highway Authority (G.H.A.).

Under one of the projects dubbed “the Second Highway Project”, the B.H.C. was to procure creditable Ghanaian road contractors to carry out road maintenance works to be awarded by G.H.A. The loans were to be given to these contractors by way of provision of equipment, plant and machinery which were to be paid for by these contractors together with interest from payment vouchers to be issued by G.H.A. to them, for work done under the various contract works awarded them.

The plaintiff-company whose business included road construction and maintenance applied for and was accepted for the Second Highway Project. I should say here that the plaintiff-company was not a stranger to these projects. It took part in the First Highway Project which from the evidence it performed creditably. It could therefore be reasonably inferred that it was in appreciation of its performance in the First Highway Project that it was considered in the Second Highway Project.

For the purpose of the Second Highway Project also, a series of agreements were entered into between the plaintiff-company and B.H.C. whereby certain equipment referred to in the statement of claim were released to the plaintiff-company for work on contracts awarded it by G.H.A. The plaintiff-company worked on the project for about three years when B.H.C. claiming that the plaintiff-company had breached the terms of the agreement terminated the contract and seized the equipment. The plaintiff-company contended persistently that it had not breached the contract and that the seizure of the equipment was wrongful and unlawful. This action was therefore brought by the plaintiff-company, against B.H.C., claiming:

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“(1) A declaration that the impoundage by the defendant of the equipment, plant and machinery specified in the accompanying statement of claim is wrongful and unlawful.

(2) An order for their return by the defendant to the plaintiff.

(3) An order for perpetual injunction restraining the defendant, its servants and agents from disposing of the said plant and machinery to the prejudice of the plaintiff or interfering with the plaintiff’s interest therein.

(4) Damages for the wrongful impoundage of the said plant and machinery.”

B.H.C. denies the plaintiff’s claim.

At the close of pleadings and on the evidence the main issues which arise for determination, to my mind, are:

(1) What was the nature of the transaction between the plaintiff-company and B.H.C.?

(2) Was there a breach of any of the terms of the contract?

(3) Was B.H.C. entitled to seize the equipment?; and

(4) Is the plaintiff-company entitled to the reliefs sought?

In considering the nature of the transaction between the parties, counsel for B.H.C. has urged on the court to consider other related contracts in order to appreciate the issue. In particular I was referred to exhibits 18, 19, A, A1, 3 and 11. I have carefully studied these documents and I have come to the conclusion that the introduction of non- related documents to the issue before the court is bound to create confusion.

Exhibit 18 is a project agreement between the International Bank for Reconstruction and B.H.C. Exhibit 19 is a loan agreement between the same parties aforesaid. These agreements were entered into on 23 December 1975. Though these agreements were to benefit contractors in general, no contractor was a party to it. These agreements sought to establish a project by which a loan to implement it was to be made. The contractors were to help in the implementation of the project and they were to be helped financially. As stated earlier in this judgment, they were not to concern themselves with the intricacies of these agreements. I believe it was because of this that the contractors were required to sign separate agreements with B.H.C. Similarly, since the granting of the loan to the contractors was dependent upon them securing a contract with G.H.A., it was necessary that G.H.A. should have its own contract of work with the individual contractors.

Thus in pursuance of exhibit 3, an offer by G.H.A. to the plaintiff-

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company dated 9 November 1978, G.H.A. formally entered into a contract with the plaintiff-company to give work to the plaintiff-company. This agreement was dated 1 February 1979 and it was tendered in evidence as exhibit 11. The agreement which was signed by both G.H.A. and the plaintiff-company is binding on the parties to the agreement. I shall return to this exhibit presently, but suffice it to say at this juncture that, B.H.C. cannot confuse its contractual relations with the plaintiff-company by referring to these other agreements. Admittedly, all these agencies have one objective, namely the implementation of the project, but each had its own separate agreement to govern its relationship with the others. In so far as the relationship between the plaintiff-company and B.H.C. is concerned, the only documents relevant to their transaction are exhibits A and Al.

As stated before, the plaintiff-company is not a stranger to these projects. But each project called for different and separate agreements between the parties. The plaintiff-company sometime before April 1979 applied for financial assistance under the World Bank loan 1182—Ghana (Second Highway Project). By a letter dated 2 April 1979 (tendered as exhibit 1 in these proceedings) B.H.C. accepted the offer and granted a loan of ¢628,986 to the plaintiff-company. This loan was to be used in procuring certain equipment for the work. Subsequent to this, a supplemental loan of ¢106,044 was given to the plaintiff-company to purchase further equipment for the work.

Even though the plaintiff-company was to procure the equipment from the loan given, it was B.H.C. which negotiated and purchased the equipment for the plaintiff-company. And the equipment was to be released to the plaintiff-company only after a contract for work had been offered to the plaintiff-company. The equipment was also to be used as security for the payment of the loan apart from the personal guarantee given by all the directors of the plaintiff-company. It was in pursuance of this requirement that the plaintiff-company had to secure a contract (exhibit 11) with G.H.A. The equipment consisted of: (1) a crawler dozer; (2) a motor grader; (3) a crawler loader; (4) a road roller; (5) a tipper truck; and (6) a bitumen sprayer. The evidence shows that the motor grader which was subjected to occasional repairs eventually got burnt. For purposes of the seizure therefore there are only five items of equipment.

The contract for the loan and release of the equipment is contained in the documents tendered in evidence as exhibits A and Al. Exhibit A covers the contract for the supplemental loan given to the plaintiff-

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company. This contract assumed the terms of the first contract contained in exhibit Al. The second agreement was consolidated with the first agreement:

“into one aggregate principal sum of ¢968,301.69 and that interest should be payable on the said aggregate principal sum at the rate of eighteen and a half per cent ... and shall be repaid ... within three years including three months moratorium . . .”

Thus, by this agreement, it was decided that the payment of ¢968,301.69 with interest should be repaid within three months after 14 November 1980.

The right of B.H.C. to seize the equipment is contained in clause 3 of the first agreement (exhibit Al).

This clause provides:

“3 The Bank further agrees with the assignor as follows:

(1) The Bank will not seize or take possession of the said equipment, plant or machinery for any other than the following causes:

(a) If the assignor makes default in repayment of the said loan together with interest thereon or any part thereof;

(b) If the assignor does or omits to do any act whereby the whole of the balance together with the interest thereon of the said loan outstanding at the time of such act or commission becomes due and payable forthwith.”

On 2 July 1982, by a letter of that date, B.H.C. purported to have added further terms to the contract. In paragraph (1) of the letter, it is stated:

“(1) Further to the terms contained in the Bank’s hire-purchase agreement, any beneficiary under the project may have his piece of equipment seized if he refused or failed to service the debt as follows:

1.1 If a contractor defaults in his debt servicing for a period of three consecutive months, the Bank will write a reminder once only to that contractor;

1.2 If within a period of one month after the due date the bank does not get the reaction of the contractor the bank reserves the right to seize 

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the equipment;

(2) A contractor may also have his equipment seized if the bank and the G.H.A. jointly agree to that effect as a result of his refusal or failure to perform the contracts awarded under the Project . . .”

The decision to include these further terms was taken at a joint B.H.C./G.H.A. consultative meeting on defaulters. Even though as stated earlier in this judgment the plaintiff-company had entered into separate agreements with these two bodies, namely B.H.C. and G.H.A., it would appear that the decision to add these terms was taken without reference to the plaintiff-company. Be that as it may, from exhibits A and A1 and the letter, exhibit C, it is agreed that B.H.C. would have a right to seize the equipment if:

1 There is a failure on the part of the plaintiff-company to repay the loan together with interest thereon.

2 There is a failure to perform the contract for which the equipment was released.

This latter condition would arise if the contract was terminated by G.H.A.

B.H.C. admits seizing the equipment and removing the plaintiff-company from the project but contends that this was a lawful exercise of B.H.C’s right under the agreement, namely that the plaintiff-company had failed to settle its financial commitments under the agreement and also that the contract of the plaintiff-company with G.H.A. had been terminated. In paragraph (11) of the statement of defence,

B.H.C. averred:

“(11) The defendants further state that such seizure was lawful in accordance with the terms of the agreement between the parties and the conditions of the project and was on account of the poor technical and financial performance of the plaintiffs.”

The plaintiff-company denies there was any breach of the terms of the agreement.

An issue has been raised as to the nature of the agreement, whether it was a loan transaction simpliciter or a hire-purchase agreement. B.H.C. itself, from the evidence, is not quite clear as to whether or not the agreement is a hire-purchase or a loan transaction simpliciter. The relevance of this issue would arise where the right to seize is exercised on the plaintiff-company’s failure to settle its financial commitments. Since the right to seize was also exercised on the termination of the 

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plaintiff-company’s contract with G.H.A., I intend to deal with that issue first.

At a G.H.A./B.H.C. sub-committee meeting held on 11 January 1984 it was decided that the equipment of the plaintiff-company, together with those of some three other contractors, should be seized. On 12 January 1984 and 18 January 1984 the five pieces of equipment referred to above were seized by B.H.C.: see exhibits S, S1-S4. On 19 March 1984 however, G.H.A. wrote to the plaintiff-company the following letter (exhibit T):

“M/S Ekuona Supply & Construction

P. O. Box 26661

Accra

Dear Sir,

TERMINATION OF CONTRACT ON RESEALING

WINNEBA-SWEDRU ROAD

You have virtually abandoned work on resealing Winneba-Swedru road and all efforts to get you to continue work have proved futile.

Steps are being taken to terminate your contract forthwith. You are invited for a final inspection of work you have done to date for final certification not later than Monday 9 April 1984.

Please treat as urgent in your own interest.

Yours faithfully,

(Sgd.) A. K. Hammond

AG. CHIEF HIGHWAY ENGINEER/C.R.”

It is quite clear from this letter that as at 19 March 1984 G.H.A. had not in fact terminated the contract with the plaintiff-company, steps were then being taken to terminate the contract. Though it is true to say that the release of the equipment to the plaintiff-company was dependent upon its obtaining a contract with G.H.A., the right to terminate the contract depended upon the terms and conditions of the contract entered into between the plaintiff-company and G.H.A. By a letter dated 9 November 1978 G.H.A. awarded the plaintiff-company a contract for the regravelling/resealing of roads for a total length of 40 x 25 kilometres in 

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the Central Region at an estimated cost of ¢1 million to be completed in 30 months. The plaintiff-company accepted the award and this culminated in the agreement which was tendered in evidence as exhibit 11. This was an agreement between the plaintiff-company and G.H.A. B.H.C. itself was not a party to this agreement though the award to the plaintiff-company was a condition precedent to B.H.C. releasing the equipment to the plaintiff-company.

In this agreement there are provisions for variations, delays, extension of time and termination of the contract. It is provided under clause 49(4) of this agreement that:

“(4) If the contractor shall fail to do any work as aforesaid required by the engineer, the employer shall be entitled to carry out such work by his own workmen or by other contractors and if such work is work which the contractor should have carried out at the contractor’s own cost the employer shall be entitled to recover from the contractor the cost thereof or may deduct the same from any moneys due or that becomes due to the contractor.”

And, clause 65(1) provided that:

“ . . . if the engineer shall certify in writing to the employer that the contractor:—

(a) has abandoned the contract; or

(b) without reasonable excuse has failed to commence the works after receiving from the engineer written notice to proceed or has allowed the progress of the works to be substantially suspended for fourteen days; or

(c) has failed to proceed with the works with due diligence or has failed within fourteen days of the engineer’s order to remove materials from the site or to proceed to substitute proper and suitable materials or to proceed with the removal and proper re-execution of works as may have been ordered by the engineer under these conditions of contract., or

(d) is not executing the works in accordance with the contract or is persistently or flagrantly neglecting to carry out his obligations under the contract; or

(e) has to the detriment of good workmanship or in defiance of the engineer’s instructions to the contrary sub-let any 

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part of the contract; or

(f) has failed to comply with his obligations to observe the ordinances or the laws referred to in sub-clause(3), (4) and (5) of clause 34 thereof (each of the above heads (a)-(f) being regarded as separate and self-contained) then the employer may after giving fourteen days’ notice in writing to the contractor enter upon the site and the works and expel the contractor therefrom without thereby avoiding the contract or releasing the contractor from any of his obligations or liabilities under the contract or affecting the rights and powers conferred on the employer or the engineer by the contract and may himself complete the works . . .”

G.H.A. could only terminate the contract in terms of this agreement (exhibit 11). Both the evidence and the various exhibits tendered show the difficulties the plaintiff-company found itself in with regard to the equipment, the variations in the contract, the delays, etc. B.H.C’.s representative joined the bank in May 1984 after the seizure. What he told the court was obviously what he had been told or what he had found from the records. Be that as it may, the final decision to terminate the agreement lay with G.H.A. and it was enjoined by law that the termination be in accordance with the agreement. It had power to extend the period of completion; this it did. It had power to vary the contract; this it did. All these situations have been catered for in the agreement. G.H.A. and the plaintiff-company only have a right if it is provided for under the agreement.

Perhaps it was upon legal advice that G.H.A. decided to write exhibit T even though a decision had been taken to terminate the contract of the plaintiff-company by the joint meeting of G.H.A. and B.H.C. on 11 January 1984. It stated that “steps were being taken to terminate your contract forthwith.” What further steps are taken before the termination depended upon the terms of the contract. Any termination of the contract outside the terms of the agreement would be unlawful. When B.H.C. in its agreement stated that it was entitled to seize the equipment on the termination of the contract of work, it meant it could do so by a lawful termination of the contract. To have seized the equipment on the condition that the contract had been terminated, was a premature conduct. Since at the date of the said seizure G.H.A. had not taken the proper steps to terminate the contract, the seizure was wrongful. This conduct prevented the plaintiff-company from further carrying on with 

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the contract if it was in a position to do so before the inspection. G.H.A. may not terminate the contract. It was entitled to take over the work and complete it by its engineer. What B.H.C. did was wrongful.

But B.H.C. was under exhibits A and A1 (the agreements with the plaintiff-company) entitled to seize the equipment if the assignor, i.e. the plaintiff-company, defaulted in repayment of the loan together with the interest thereon or any part thereof. It is necessary to know therefore how much principal and interest are involved. B.H.C. had referred to the agreement as a hire-purchase one. No hire-purchase written agreement was tendered in evidence. The evidence also shows that even though the equipment to be purchased with the loan were supposed to belong to the plaintiff-company, it was one of the terms of the agreement (exhibit 1) that:

“. . . until final liquidation of the loan, all payments due to the company through interim certificates issued on contracts executed by the company should be made in the joint names of the B.H.C. and your company as follows, B.H.C./Ekuona Supply Construction Co. Ltd.”

Also, the plaintiff-company was under exhibit 1 required during the continuance of the security at all times to:

“ . . . keep the assigned machinery and equipment licensed and fully insured against loss or damage by fire, burglary or any act of God to the full value thereof in the joint names of ourselves and the Bank. ..”

The loan amount was not paid to the plaintiff-company. Neither did the plaintiff-company take part in the purchase of the equipment, though it was contacted on the question of preference. There is thus no contract for the purchase of these pieces of equipment between the plaintiff-company and the suppliers. It should be noted that the equipment was only assigned to the bank as security. In its letter dated 15 April 1980 (exhibit B) sent to the plaintiff-company, B.H.C. did not make any secret of its intention to recognise the transaction as a hire-purchase one. Whereupon the plaintiff-company’s indebtedness was transferred to the hire-purchase account.

The transaction, on the evidence, is more than a mere loan transaction where money is given to a borrower to purchase equipment himself on the loan and it is secured with the equipment purchased and other securities. In this case, the lender provides the money, and uses it

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itself to procure equipment which does not become the property of the borrower until full payment for the property. It is apt to refer to a similar situation which arose in the case of Yeoman Credit Ltd. v. Apps [1962] 2 Q.B. 508, C.A. In that case, Lord Justice Harman observed at 522:

“The difficulty and the artificiality about hire-purchase cases arises, I think from the fact that the member of the public involved imagines himself to be buying the article by instalments from the dealer, whereas he is in fact the hirer of the article from a finance company with whom he has been brought willy nilly into contact, of whom he knows nothing, and which on its part has never seen the goods which are the subject-matter of the hire.”

In Bridge v. Campbell Discount Co. Ltd. [1962] A.C. 600 at 627, H.L. Lord Denning translated the facts into legal forms or fictions. He stated that:

“If you were able to strip off the legal trappings in which [the present transaction] has been dressed and see it in its native simplicity, you would discover that Bridge agreed to buy a car from a dealer for £405 but he could only find £105 towards it. So he borrowed the other £300 from a finance house and got them to pay it to the dealer, and he gave the finance house a charge on the car as security for repayment. But if you tried to express the transaction in those simple terms, you would soon fall into troubles of all sorts under the Bills of Sale Acts, the Sale of Goods Act, and the Moneylenders Acts. In order to avoid these legal obstacles, the finance house has to discard the role of a lender of money on security and it has to become an owner of goods who lets them out to hire ... So it buys the goods from the dealer and lets them out to hire to Bridge. Bridge has to discard the role of a man who has agreed to buy goods and he has to become a man who takes them on hire with only an option to purchase ... And when these new roles have been assumed, the finance house is not a moneylender but a hire-purchase company free of the trammels of the Moneylenders Acts ...”

One may perhaps gather some guidance from the above statement to help resolve the issue in this case. The dominant party in this transaction is B.H.C.; the plaintiff-company being in a comparatively weaker position. Perhaps it is such situations that compelled the British Parliament to pass the Hire-Purchase Act, 1938 and which compelled our legislators to pass

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the Hire-Purchase Decree, 1974 (N.R.C.D. 292) and related Acts. Section 24(1) of N.R.C.D. 292 defines a hire-purchase agreement thus:

“24. (1) ‘hire-purchase agreement’ means an agreement for the bailment of goods under which the bailee may buy the goods or under which the property in the goods will or may pass to the bailee; and where by virtue of two or more agreements, none of which by itself constitutes a hire-purchase agreement there is a bailment of goods and either the bailee may buy the goods or the property in them will or may pass to the bailee the agreements shall be treated for the purpose of this Decree as a single hire-purchase agreement made at the time when the last of the agreements was made.”

In this transaction, what B.H.C. gave the plaintiff-company was not money but equipment to be paid for through interim payment certificates issued in the joint names of both the plaintiff-company and B.H.C. for work done by the plaintiff-company for G.H.A. Even though the plaintiff-company was to have possession of this equipment, the property in it only passed to the plaintiff-company after full payment for the equipment. These facts clearly fit into a case of hire-purchase agreement as defined. This situation is similar to the one described by Lord Donning in Bridge v. Campbell (supra). If we are able to strip off the legal trappings in which the instant transaction has been dressed, we shall see that B.H.C. is not a moneylender but a finance house and the plaintiff-company, “a man who has agreed to take the goods on hire with only an option of purchase.”

To qualify as a hire-purchase transaction, it is required that the agreement shall contain as provided in section 3(1) of N.R.C.D. 292:

“3. (1) (a) a statement of the cash price and the hire-purchase price or total purchase price, as the case may be, of the goods;

(b) the amount of each instalment by which the price is to be paid and the date or the mode of determining the date upon which each instalment is payable;

(c) a description or list of the goods to which the agreement relates sufficient to identify them;

(d) a notice, which is at least as prominent as the rest of the contents of the agreement, in the terms set out in the First or Second Schedule to this Decree.”

Exhibits A and A1 set down the description of the equipment; the value

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of these properties (equivalent to the amount supposed to have been lent); how much is to he paid as the purchase price (this includes the interest to be charged); and the manner of payment for this equipment.

Even if the requirements of section 3(1) of N.R.C.D. 292 have not been strictly adhered to, the court has power to dispense with conditions (b) and (c) of section 3(1) of N.R.C.D. 292. As it would appear from the evidence, B.H.C. was the dominant party in the transaction. In exhibit B, B.H.C. clearly sets down all the requirements save the plaintiff-company’s rights under the agreement. I am satisfied on the evidence that the transaction between the parties satisfied the provisions of N.R.C.D. 292 and that the parties by their conduct intended their transaction to be governed by the provisions of N.R.C.D. 292. I think this is a proper case to dispense with the requirements contained in paragraphs (b) and (c) of section 3(1) and (2) of N.R.C.D. 292 since, even if the requirements have not been complied with, such omission has not prejudiced the plaintiff-company and that it is just and equitable to dispense with the requirement. Consequently, I hold that the right to seize the equipment depended upon the provisions in N.R.C.D. 292.

Section 17 contains the necessary condition for the termination of an agreement by the owner of the goods, and section 8(1) of N.R.C.D. 292 provides that:

“8. (1) The owner or seller shall not enforce any right to recover possession of protected goods from the hirer or buyer otherwise than by action.”

By the provisions of section 8(4) of N.R.C.D. 292:

“(4) ‘Protected goods’ are goods in relation to which the following conditions are fulfilled—

(a) that the goods have been let under a hire-purchase agreement or sold under a conditional sale agreement;

(b) that one-half of the hire-purchase price or total purchase price has been paid (whether in pursuance of a judgment or otherwise) or tendered by or on behalf of the hirer or buyer or a guarantor; and

(c) that the hirer or buyer has not terminated the hire- purchase agreement or conditional sale agreement, or (in the case of a hire-purchase agreement) the bailment, by virtue of any right vested in him.”

As stated before, there cannot be any dispute that the equipment had been

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let to the plaintiff-company until such time that full and final payment was made. The plaintiff-company was required within a certain period to pay to B.H.C., an amount which included the purchase price of the equipment and interest accruing on the price within that period. As at November 1980 when exhibit A was signed, the plaintiff-company owed a total of ¢968,301.69. This included whatever interest had accrued on the principal sum. As at 31 March 1980 when exhibit B was written the plaintiff-company’s indebtedness stood at ¢784,205.54. It should be noted that the debt is to be serviced from interim payment vouchers to be issued by G.H.A. though from the evidence a contractor could pay off the loan from elsewhere: see exhibit 16B clause 2.1 where it is stated, inter alia, “Since Konadu Construction Works have fully paid their loan, their equipment cannot be seized.”

According to the representative of B.H.C. who testified—I have already said that this man was not in office at the material time—the balance at the time of seizure of the equipment was £2,078,963.73.

According to him the plaintiff-company should have completed payment for the equipment by 30 November 1982. These two statements were palpably false. If the agreement in exhibit A was consolidated with that in exhibit A1 then the period was to start from 14 November 1980 for three years with a moratorium of three months. Exhibit LL shows that the balance at the time of seizure was ¢1,675,607. Under re-examination, B.H.C’s representative admitted that the balance was ¢1,493,846.92.

And exhibit 24, the banks’ statement of account on the plaintiff-company’s indebtedness, shows that as at 31 January 1984 the balance was ¢1,493,846.92.

The agreement required that the plaintiff-company should make a twenty per cent deposit of the purchase price before the release of the equipment. B.H.C. would have the court believe that these deposits which were made on the two agreements (exhibit A1 and A) were not to be taken into account in deciding what percentage has been paid by the plaintiff-company so far. I do not accept that. There is no ambiguity about this issue in the agreement. In exhibit B where the total value of the equipment was found to be ¢786,233, twenty per cent of the value was deducted to bring the figure to ¢628,986 before other charges and interests were added. This shows that twenty per cent of the value of the equipment was paid by the plaintiff-company. Therefore in calculating what percentage has been paid of the total amount, these twenty per cent deposits on the two sets of equipment should have been taken into account. It was therefore wrong to say that the plaintiff-company had

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paid only 29 per cent of the amount at the time of seizure.

Sometime after the seizure of the equipment a cheque for ¢733,563.40 due to the plaintiff-company from G.H.A. was issued on behalf of the plaintiff-company to B.H.C. The evidence of B.H.C. is that since it did not know for what purpose the amount was being paid, the amount was deposited in a suspense account. G.H.A. had suspended payment on the erroneous belief that since there was litigation between the parties the amount should not be paid. However, after reconsidering the situation, the legal department of G.H.A. advised payment. Even though this was at a later date, there is no doubt that the amount was due on work performed by the plaintiff-company before the seizure. Since G.H.A. was in consultation all the time with B.H.C. the latter should have known that this was payment to off-set the indebtedness of the plaintiff- company with the bank. If this had been done, B.H.C. would have realised that this was money to reduce the plaintiff-company’s indebtedness. The decision to terminate the agreement was therefore premature. In any case if this amount had been accepted as payment towards the indebtedness rather than money to be put in a suspense account indefinitely, B.H.C. would have known that the plaintiff-company’s indebtedness to the bank was almost settled. That would have been more than 50 per cent in which situation, the equipment became “protected goods” which could not have been seized without an action in court. It is quite clear from the evidence as a whole that B.H.C. did not know how much exactly was owing to them at the time the equipment was seized. B.H.C’.s action was consequently premature and unlawful, it violated the provisions of N.R.C.D. 292.

Assuming however that the agreement was a simple agreement and not a hire-purchase one, it could not be said that the plaintiff-company had failed to honour its financial obligations. There were compelling and convincing matters which made the termination of the plaintiff- company’s contract with G.H.A. impracticable. It was left to G.H.A. to terminate the agreement in terms of the agreement entered into between it and the plaintiff-company. In so far as the plaintiff-company’s financial obligations were concerned, even though the plaintiff-company found it difficult to pay regularly into the account in view of the difficulties which faced it in operating its work, which difficulties G.H.A. realised and agreed to extend the time of completion, the plaintiff-company could only service the debt from interim payment vouchers. I find that the seizure of the equipment was premature and unlawful as at that time the due period had not expired taking into consideration the

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moratorium period.

The evidence shows that the decision to seize the equipment was also based on the erroneous assumption that the plaintiff-company’s contract with G.H.A. had been terminated. Even though B.H.C. had written occasionally to the plaintiff-company demanding payment of the debt, there is no evidence that it decided to seize the equipment because the plaintiff-company had failed to meet its financial obligations. If that had been the case, I am sure the plaintiff-company would have found money as was done by other contractors to settle the debt to prevent any such seizure. And, since this was a first seizure, B.H.C. would have been enjoined under the agreement to release the equipment on full payment, if in fact it had been seized, no matter from what source. Paragraph (10) of the statement of defence states:

“(10) The defendants admit seizing the equipment and say that such seizure was pursuant to the decision taken on 17 January 1984 by the full joint steering committee of the administering authorities to recover them from the programme, and that the plaintiffs were informed accordingly.”

The decision to remove the plaintiff-company from the programme was on the basis of the alleged poor performance and not for financial reasons. As stated before the termination could only have been done in accordance with the terms in exhibit 11. B.H.C. never waited for this to be done. Apart from exhibit 8 (letter impounding the bitumen sprayer) all the other letters of seizure were written on 12 January 1984. If the decision to seize the equipment was taken on 17 January 1984 those equipment could not have been seized in pursuance of that decision.

On the evidence, I am not satisfied that the equipment was seized lawfully under the agreement. I hold therefore that the impoundage of the equipment was unlawful and I so declare. Accordingly, I order that the equipment so seized should be returned to the plaintiff-company. I also restrain B.H.C., its agents and servants from in any way interfering with the plaintiff-company’s interest in the properties.

By the said unlawful seizure the plaintiff-company was deprived of their use and was prevented from making efforts to complete its contract with G.H.A. Also, by the seizure of the equipment, G.H.A. was encouraged to terminate its agreement with the plaintiff-company which has lost all that it would have obtained under the agreement. I award the plaintiff- company ¢1 million damages. There will be costs of ¢30,000 to the

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plaintiff-company against B.H.C.

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