SUPREME COURT, ACCRA
APALOO CJ., ADADE AND TAYLOR JJ.S.C., FRANCOIS
AND EDWARD WIREDU JJ.A
Apaloo C.J. I agree with the judgment to be read by my brother Taylor J.S.C. that the appeal should be allowed and have nothing to add.
Taylor J.S.C By his writ, the plaintiff-appellant instituted an action on 30 April 1976 at the High Court against the first and second defendants-respondents jointly and severally for:
“(a) ¢11,717 being the cost of work he claimed to have completed under a building contract dated 8 November 1974 and 3 May 1975 as varied by the second defendant, the owner of the building.
(b) ¢12,173 being extra work constructed outside the contracts at the request of the first defendant.
(ii) Wages for day and night watchman at ¢150 per month from 1 October 1975 to 30 June 1977 and ¢250 per month from 1 July 1977 to date of judgment.
(c) Damages for breach of contract.”
The second defendant set up in defence a counterclaim of ¢2,366 and at the High Court, the plaintiff’s claims against the defendants were dismissed and judgment was given against him in favour of the second defendant for his counterclaim of ¢2,366: see Sowah v. Bank for Housing and Tete  G.L.R. 144.
The plaintiff’s appeal to the Court of Appeal was equally dismissed although an adjustment was made in regard to the counterclaim which was then reduced to ¢151 and judgment was entered in favour of the second defendant for this sum.
In order to appreciate the plaintiff’s claims and decide the matters in controversy between all the parties to this appeal, it is necessary to examine the nature of the relevant contractual obligations which all the parties undertook towards each other, the manner in which each party fulfilled or failed to fulfil his part of the bargain and the legal consequences which must of necessity follow from the course of conduct pursued by each party.
The plaintiff, Mr. Sowah, hereinafter referred to in this judgment as the contract or, entered into a contract under seal on 8 November 1974 with the second defendant, Mr. Nai Tete, as owner to put up a building for him at a cost of ¢12,400. The terms of the contract, very germane in this appeal, are clauses 1(a), 1(b) and the default provisions in clauses 3 and 4. Under 1(a) the owner, Nai Tete, granted the contractor the right to enter his land “for the purpose of constructing thereon the aforesaid building together with the drainage and including fence according to the specification approved in the plan attached hereto.” Under clause 1(b):
“ . . . the contractor shall provide all necessary building materials, labour and supervision and shall proceed with all due diligence to build and complete the said dwelling house together with the drainage and shall apply for and obtain the relevant certificate of fitness for human habitation (which certificate for the purpose of this deed shall be conclusive and binding upon the parties hereto.”
(The emphasis is mine.)
The payments by Mr. Nai Tete or his agent as is spelled out in clause 2 of the contract were to be in six stages:
“First stage: Upon signing the agreement, the contractor shall begin building operations on the site by stages as arranged hereunder to complete the building and its extension of the platform filled with any approved material, ram and concrete same for damp proof coarse, then the owner or his agent, the Bank for Housing and Construction, will pay to the contractor the sum of one thousand eight hundred cedis (¢1,800).
Second stage: On receiving the above amount from the owner or his agent the contractor shall continue to build all walls up to wall-plate level including reinforced concrete works and fix all doors and window frames into the building then the owner or his agent aforesaid will pay to the contractor the sum of two thousand eight hundred cedis (¢2,800).
Third stage: On receiving the second amount from the owner or his agent the contractor shall continue to roof, ceil, electric wiring in conduit and plaster all walls inside and outside them and the owner or his agent will pay to the contractor the sum of two thousand eight hundred cedis (¢2,800).
Fourth stage: On receiving the third amount from the owner or his agent the contractor shall plumb and provide water closet, wash-basin, kitchen sink, start operations on the septic tank and complete all fixtures including glass louvres, flush doors and locks then the owner or his agent will pay to the contractor the sum of three thousand cedis (¢3,000).
Fifth stage: On receiving the fourth amount from the owner or his agent the contractor shall continue to complete all works on the building together with the septic tank including painting and decoration as to be fit for human habitation then the owner or his agent will pay to the contractor the sum of one thousand cedis (¢1,000), and the contractor will quietly hand over the keys to the owner or his agent. The contractor shall complete the above works within a period of six months from the date of first payment stage. Also it is
important to note that electricity and water connections are to be made by the owner so that the bills for the house should bear his name.
Sixth stage: Upon handing over the keys of the house to the owner or his agent the contractor shall concentrate on external works by re-erecting fence wall on the one side of the whole plot and make good all existing broken fence walls for a lump sum of one thousand cedis (¢1,000).”
(The emphasis is mine.)
The said payments were to be made by Mr. Nai Tete or his agent, the Bank for Housing and Construction, the first respondent (hereinafter referred to in these proceedings as the bank) who though named as his agent in the 1974 contract was not a party to the said contract.
Under both clauses 3 and 4 without prejudice to any other rights which the owner or contractor may have, on breach of the contract, the owner was under an obligation to pay to the contractor the value of work actually and properly executed and not paid for at the time of the breach. Clauses 3 and 4 are as follows:
“3. DETERMINATION BY THE OWNER
If the contractor shall make default and—
(i) fail to begin work within one month from date hereof, or
(ii) without reasonable cause wholly suspend the works before completion, or
(iii) fail to proceed with the work with reasonable diligence, or
(iv) refuse or persistently neglect to make good defective work after notice in writing properly given by the owner then if such default shall continue for 10 days after notice by post specifying the default has been given to him by the owner, the owner may without prejudice to any other rights or remedies, thereupon by notice in writing determine the employment of the contractor under this agreement. In the case of the employment of the contractor being determined under this clause then the owner shall only be liable for the value of work actually and properly executed and not paid for at the date of such determination.
- DETERMINATION BY THE CONTRACTOR
If the owner shall at any time fail to make payment in accordance with clause 2 above the contractor may without prejudice to any other rights or remedies thereupon by notice in writing determine his engagement under this agreement upon
which determination then without prejudice to the accrued rights of either party the respective rights and liabilities of the parties shall be as follows:
(a) The contractor shall with all reasonable care and dispatch remove from the site all his tools and machinery.
(b) The value of work completed at the date of such determination shall be assessed and paid for by the owner.
(c) Any loss or damage caused to the contractor by such determination and removal shall be made good by the owner.”
(The emphasis is mine.)
The contractor after signing this contract on 8 November 1974, commenced building operations some time in December 1974 in an attempt to secure stage one payment; and on his completion on 14 February 1975 in accordance with the terms of stage one, the bank paid to him ¢1,800 being the sum as the bank indicated in its schedule of payments, exhibit 1(1), for “work completed to date.”
The circumstance under which the bank came to be interested in this project as agent of the owner to the extent of paying the contractor although there was at the time of the payment no agreement between the contractor and the bank deserves looking into. About 7 October 1974, an application for a mortgage loan was made to the bank by the owner, Mr. Nai Tete. It would seem that it was when the loan was approved in principle that Mr. Nai Tete entered into agreement with the contractor for the construction of the house and that explains why the bank was named as his agent in the said contract he entered into on 8 November 1974 and as agent the said bank paid ¢1,800 in accordance with the terms of the 1974 agreement. When the contractor completed the second and third stages of the 1974 agreement the bank as agent once again paid. Under the 1974 agreement work on the second and third stages amounted to ¢5,600. At the time of payment the contractor had materials on the site worth ¢2,338, thus the total sum due was ¢7,938. From this, the sum of ¢1,800 given before commencement of work on stage one was for unspecified reasons treated apparently as an advance and was deducted and the balance of ¢6,138 was paid to the contractor on the 2 May 1978. After this payment by the bank which was quite clearly made under the 1974 contract, the bank the next day entered into an agreement with the contractor and the owner, Mr. Nai Tete. This tripartite agreement entered into on 3 May 1975 (hereinafter referred to as the 1975 agreement), was entered into in order clearly to enable the bank to have a legal basis for financing the project as from that date. At the time the
agreement was signed the building had already been roofed in accordance with the stage three requirement of the 1974 agreement.
The 1975 agreement entered into at the roofing level stage, was based on the contract drawing and the specification contained in the 1974 agreement. It contained a number of clauses, firstly, some were clearly redundant; secondly, others although new would have been implied in any event even if they were not specifically spelled out in the agreement; and thirdly, other clauses raised new obligations and finally others were in conflict with the 1974 agreement. It seems to me that before dealing with the provisions of the 1975 agreement in its relationship with the 1974 agreement, it is necessary to appreciate their respective legal significance in view of the fact that there was some confusion in both the High Court and the Court of Appeal as to the relationship of the 1974 agreement to the 1975 agreement. The trial judge held and the Court of Appeal would seem to have acquiesced in, that the 1975 agreement superseded the 1974 agreement. This cannot be right. The contractor had worked under the 1974 agreement until the building was roofed and payments had been made to him in circumstances that clearly indicated that the parties to the agreement were satisfied with the progress of the work; the 1975 agreement would seem to have been entered into in order to enable the bank to have a legal basis for further payments and to exercise some control on the contractor in order to protect its money, which it was expending on behalf of the owner of the project. In the circumstance, I think the 1975 agreement did not abrogate the 1974 agreement both of which bound the parties who signed them. This is so because assuming the owner were to give verbal instructions to the contractor contrary to the terms of the 1975 agreement, the bank would be free to consider that a breach of contract if the contractor complied, and could refuse to make any further payments under the 1975 contract; the owner, however, cannot refuse and must still honour his obligations at least under the 1974 agreement or the new parol agreement. I shall give due consideration to this aspect of the matter later on in this judgment. As I have indicated, some of the terms of the 1975 agreement were clearly otiose. For instance, under clause 1(a) of the 1975 agreement the contractor agreed to build the house “according to the contract drawings and specifications signed by the parties . . . and subject to the direction or approval by the bank.” Under clause 1(b) it was provided, inter alia,”. . . the matters in respect of which the bank shall give directions and approval shall include excavation, foundation, concreting, ground floor slabs, columns, corner pillars, first floor slabs and beams, roof tie beams and roof members.”
Quite obviously, since at the date of signing the 1975 contract the building had been roofed, clause (1)(b) is substantially useless and irrelevant. The important provisions of the 1975 agreement germane to this case are, inter alia, contained in clauses 3,6,8,10,13,14,16, and 22 as follows:
“3. The client shall give the contractor vacant possession of the site on or before the execution of this agreement and the contractor shall complete the said messuages so as to befit for occupation and remove all surplus materials, plant and rubbish from the premises not later than five (5) calendar months from the date of this agreement . . .
6. All plant and materials brought on to the site by the contractor shall be deemed to be the property of the client and the bank who shall be under no liability for loss thereof or damage thereto arising from any cause whatsoever . . .
7. The client shall obtain from the said local authority all approvals permission and permits for the plans for the said messuages and shall pay all charges and assessment payable in respect of such approvals permission or permits . . .
8. If the client with the written approval of the bank shall require any deviation from the contract drawings and specifications or any additional or other work according to such requirement and do the additional or other work in a substantial and workmanlike manner within the time prescribed by and to the satisfaction of the client and the bank who shall estimate the value of the same or in the absence of such estimate at a fair and reasonable value and the bank at the written request of the client, shall on the final completion of the works pay to the contractor the amount of such valuation. If the client shall not require part of the work contained in the specification to be done the contractor will make such deduction from the price mentioned in clause 13 hereof as the bank shall certify in writing to be fair and reasonable . . .
9. The contract sum of sixteen thousand five hundred and seventy-five cedis (¢16,575) shall be paid by the bank at the written request of the client to the contractor in the manner following that is to say:
(i) the sum of one thousand eight hundred cedis (¢1,800), on the execution of this agreement;
(ii) after the bank shall have certified that work to the value of the said sum of one thousand eight hundred cedis (¢1,800) shall have been done by the contractor
the contractor may at the end of each calendar month until final completion of the works submit to the client a claim for payment and upon the client confirming to the bank that the claim is fair and reasonable and requesting the bank to pay the same, the bank, after inspecting the works and satisfying itself that the claim is fair and reasonable and that the work is in accordance with the contract drawings and specifications, shall with the written consent of the client, issue a certificate stating the amount due to the contractor from the client and pay to the contractor the amount stated in such certificate within fourteen days from the issue of that certificate . . .
(b) after the bank shall have certified that work to the value of the said sum of... shall have been done by the contractor, the bank at the written request of the client shall pay the contractor by instalments a total sum of . . . such instalments to be paid according to the stages reached from time to time as specified in the schedule hereto until final completion of the works;
(iii) upon final completion of the works one half of the residue (if any) of the contract sum amounting to . . . cedis shall be released by the bank at the written request of the contractor and the remaining half of the said residue (if any) amounting to... cedis shall be retained by the bank with the written consent of the client for a period of six months after the date of the last mentioned certificate of the bank and shall be applied in making good any cracks, settlement or any other defect in the works which shall become apparent in the course of such period of six months and shall in the opinion of the bank and the client be due to defective work or materials and subject thereto the said half of the said residue of... shall be paid by the bank with the written consent of the client to the contractor at the expiration of such period of six months.
- The contract sum shall be deemed to have been calculated in the manner set out below and shall be subject to adjustment in the events specified hereunder:
(i) the prices contained in the specification of the materials and goods specified in the list attached thereto are based on the market prices including
purchase tax, sales tax and excise duty (if any) current at the date of tender (hereinafter referred to as “the basic prices”) and the contractor shall state on the said list the basic prices of such materials and goods;
(ii) if during the progress of the works the market price including purchase tax, sales tax and excise duty (if any) of any of the materials or goods specified as aforesaid varies from the basic price thereof then subject to the provisions of paragraph (iii) of this clause the difference between the basic price and the market price payable by the contractor and current when any such goods or materials are bought shall, as the case may be, be paid to or allowed by the contractor;
(iii) if the contractor wishes to be paid a difference between the basic price and the market price of materials and goods specified in the list attached to the specifications as aforesaid he shall submit to the client a claim to that effect which claim the client shall forward to the bank. The bank may in its discretion undertake a valuation of the works at the stage reached and reappraise the same. The bank reserves the right to approve or disallow, as the case may be, the claim for payment of the said difference to the contractor. Any amount payable to or allowable by the contractor by virtue of this clause shall, as the case may be, be added to or subtracted from the contract sum.
16. Should the contractor fail in the due performance of the works or any part thereof or fail to proceed with the same as specified to the satisfaction of the client and the bank, the client and the bank may by notice in writing determine this agreement so far as regards the performance or completion of the same by the contractor but without thereby affecting in other respect the obligations and liabilities of the contractor. On such determination of the agreement the further use by the contractor of the materials then upon the ground shall cease and the client, with the written consent of the bank, may employ other contractors or workmen on a cost plus basis or by day work to perform and complete the works or with the like consent himself complete and perform the same and the cost, charges and expenses of such completion shall be paid to the bank on behalf of the client by the contractor or may be deducted by the bank with the written consent of the client from any moneys due to or to become due to the
contractor and the certificates of the bank shall be final and binding with respect to the sum or sums or balance of money to be paid by or to the contractor.
- In case any dispute or difference shall arise between the parties hereto touching or relating either to the said building or works or to any other matter or thing arising under this contract the same shall be referred to an architect to be nominated by the President or in his absence the Vice-President for the time being of the Ghana Institute of Architects whose award shall be final and binding upon the said parties. Such reference shall be deemed to be an arbitration pursuant to the Arbitration Act, 1961 (Act 38), or any statutory modification thereof.”
I have already drawn attention to some provisions in the 1975 agreement which were redundant. There was an entirely new obligation to go to arbitration in case of dispute. Then there were some conflicting provisions: Under the 1974 agreement electricity and water connection were “to be made by the owner so that the bills for the house should bear his name.” Under the 1975 agreement the obligation was shifted on to the contractor. Under the 1974 contract, the building was to be completed within six months from the date of the first payment, i.e. from 14 February 1975 making the completion date about 14 August 1975.
Under the 1975 contract, completion date was five months from 3 May 1975 making completion date to be 3 October 1975.
The contractor, however, having commenced the building under the 1974 agreement was genuinely of the opinion that the completion date on the 1974 agreement was what bound him and in view of the extra work ordered and the delay in obtaining amendment to the contract drawing on 8 August 1975 he asked for two months’ extension of the time. The letter to the bank reads:
“P. O. Box 1092
8 August 1975
Mr. Al Hassan,
Bank for Housing and Construction,
c/o Mr. Nai Tete,
EXTENSION OF TIME ON CONTRACT
We beg to apply for two months’ extension of time in connection with Mr. Nai Tete’s building at Labadi, on the following grounds:
(a) we need extra time to complete extra work ordered by the owner which is simultaneous with the original contract;
(b) amendment plan covering the extra works is now being processed by the City Engineer and Town Planning Authorities; it will take some time.;
(c) certificate of completion for habitation as required by the contract agreement between us cannot be granted now without the approval of the amendment;
(d) last interim payment before completion has not yet been complied with.
On the whole, the original contract together with the extras, is substantially completed and will be handed over as soon as the amendment is approved.
O. Sowah & Company
(Sgd.) C. O. Sowah
Surveyors and Contractors.”
As can be seen from clause 16 of the 1975 contract, provision was made for breach of contract by the contractor although no provision was made for breach by the bank or the owner. The provisions, however, conceded that on breach there may be sums due to the contractor which the bank and the owner would be obliged to pay to him. I think with regard to the clauses of the 1975 contract that conflicted with the 1974 agreement on breach of the said clauses; the bank can disclaim liability to pay, but as long as the contractor kept to the terms of the 1974 agreement, the owner cannot disclaim liability under the 1974 agreement. The two contracts would seem to operate pari passu.
With the salient features of the two contracts in view it is necessary to examine the conduct of the parties from the date the first contract was signed until the contractor sued the bank and the owner at the High Court.
I have already indicated that the first contract was signed on 8 November 1974; before this date the owner had applied to the bank some time on or before 7 October 1974 for a mortgage loan and on 17 December 1974 the bank inspected the premises and found work in progress as damp proof coarse was then in the process of being laid and the construction had reached d.p.c. level. Clearly, the contractor commenced construction work on the building some time in December 1974 in accordance with the 1974 agreement.
In the meantime, before his application to the bank, the owner had obtained building permit on 2 September 1974 and after signing the contract he obtained development permit on 27 November 1974.
The contractor, however, continued with the work and as I have already indicated, on 14 February 1975, the bank paid to him as an agent of the owner the sum of ¢1,800 in accordance with the terms of the 1974 contract. In the same month of February 1975, the owner requested certain extra works to be incorporated in the building. These were two porches for ¢2,890, a burglar proofing on all windows for ¢528, one stand pipe with sanitary fittings for ¢557 and nine electric plugs and switches for ¢225, all to the total value of ¢4,200. Clearly, this is a collateral parol contract in addition to the 1974 contract reminiscent of the rule adverted to, by Rolfe B. in the English case of Lamprell v. Billericay Union (1849) 3 Exch. 383 to be discussed later in this judgment. Since the 1974 contract price was ¢12,400, this brought the total price under the deed and parol agreements to ¢16,600. By this date in February 1975, there is no evidence that the bank was aware of the parol agreement.
By 2 May 1975 the contractor had completed stages two and three of the 1974 contract and once again the bank as the owner’s agent paid him, as I have already indicated. It was at this stage that on the following day on 3 May 1975 the bank entered into the tripartite agreement of 1975 with the owner and the contractor. Before entering into the contract the bank officials inspected the progress of the work and found that the building had been roofed and that the porches under the parol agreement were being constructed. It seems, therefore, that before the signing of the contract on 3 May 1975 the bank was aware of the amendment to the plans meant to contain the porches called for in the parol agreement. On 16 June 1975 the contractor submitted a claim for ¢8,690. This included the cost of the two porches. The letter submitting the claim admitted in evidence as exhibit G is so important that it is reproduced hereunder:
“P. O. Box 1092
16 June 1975
Bank for Housing and Construction,
c/o Nai Tete,
3RD INTERIM PAYMENT ON NAI TETE’S BUILDING
We beg to apply for interim payment of eight thousand six hundred and ninety cedis (¢8,690) for work done after the last payment. This will enable us to complete the whole work in order to obtain certificate for habitation. The details for the claim are as follows:
Contract stage 3 completed ¢2,800
Contract stage 4 completed ¢3,000
Extra materials and structure on site. ¢2,890
- In view of price increase recently on building materials and extra works ordered by the owner under clause 10 of the tripartite agreement signed with the bank, we respectfully invite you to revalue the whole contract at the end of this current month or thereafter in order to assess the extra cost on the original loan.
O. Sowah & Company
(Sgd.) C. O. Sowah
Surveyors and Contractors
The above is approved and I recommend payment.
(Sgd.) Nai Tete.”
The owner had ordered the construction of the porches, he was also aware as almost all Ghanaians were of the sharp increases in the cost of building materials following the inflationary trend which has plagued Ghana for well over a decade now, and he agreed and approved the claim of the contractor that in view of the said price increases and the work which he had ordered, the whole project needed to be revalued so that any extra cost on the loan granted to him could be ascertained. In the meantime, he recommended payment
of the contractor’s claim. It seems to me that the conduct of the contractor was unexceptionable and commendable and was in accordance with the terms of the 1975 agreement. The bank, however, refused to pay because its approval had not been obtained in accordance with clause 10 of the 1975 contract before the extra work ordered on the parol agreement of February 1975 was executed.
I think the bank was being unrealistic and unfair and rather unduly technical. This was work ordered to the knowledge of the bank on a parol contract long before the bank entered into agreement with the parties and I should think the extras under the parol agreement were extras to the 1974 contract and consequently they could not possibly be the extras contemplated by clause 10 of the 1975 agreement.
Before entering into the 1975 agreement, the bank saw work on the extras proceeding but made no comments or criticism. I shall discuss this further in this judgment. The bank in entering into agreement with its client, Nai Tete, ought to be diligent enough to obtain full briefing as to the contractual obligations which the said client had already undertaken in view of the extra work they saw.
Admittedly, the extras were not contained in the contract drawing and the specification and so it became necessary for amendments to the building plans and drawings to be made. It was, however, a collateral contract supplementary to the 1974 contract and when the contractor submitted his bill for the extras on 16 June 1975, the owner, as he rightly conceded, was bound to pay or to prevail on his bankers who were his agents under the 1974 contract to pay. His failure to pay was clearly a breach of contract, and the bank’s refusal is also not justified having regard to the circumstances. Granted, however, that the bank need not pay for the extras surely the owner cannot resile after he had requested the extras and approved of the cost.
Furthermore, under clause 14 of the 1975 agreement provision was made for price fluctuation. In my view this may very well be a provision out of abundance of caution. If A for a consideration of ¢200 entered into a contract to buy a particular car for B costing ¢1,000, the prevailing price in the open market, and when A goes to buy it, the price has been increased by market forces to ¢20,000; I think it would be unreasonable to expect A to supplement B’s ¢1,000 with his personal ¢19,000. I would think that in such circumstance unless A is willing to pay an extra ¢19,000 the contract must be considered to be frustrated and B must be considered to be entitled to keep so much of the ¢200 as can satisfy the quantum meruit principle.
Inflationary trends in this country have been so notorious in the last decade or so, that I do not propose to play the ostrich and pretend that economic and commercial conditions are so stable that variation in the price of goods and materials in an upward direction is deviant
and abnormal. Aware as I am of the subtle and depressing economic forces ubiquitously operating in our system. I propose to take judicial notice of the unprecedented spiral of inflation so obvious as to be discernible even by children - I almost said suckling babes.
Whatever the position may be in other jurisdictions, I am satisfied that in a building contract in Ghana whether price fluctuations are adverted to or not in such a written contract, nonetheless, due to the unprecedented inflationary forces in our system, natural justice and fairness demand that an owner of a house under construction, should reimburse a contractor if the unpredictable and uncontrollable market forces push the agreed prices up in the usual distressing way they have been doing for the past disastrous years, unless such an implication is specifically repudiated in the contract.
And whenever the contract is silent on this matter good business sense, commonsense and economic and social considerations necessitate that this should be an implied term of the contract otherwise a contractor would be totally ruined by his inability to forecast price trends which are so unstable and uncontrollable that no state or other institutions are insulated from their pernicious effect. Explaining what an implied term in a contract is Lord Reid in the English case of Sterling Engineering Co., Ltd. v. Patchett  A.C. 534 at p. 547, H.L. said:
“ . . . an implied term is something which . . . the law may read into the contract if the parties are silent and it would be reasonable to do so: it is something over and above the ordinary incidents of the particular type of contract . . . But the phrase `implied term’ can be used to denote a term inherent in the nature of the contract which the law will imply in every case unless the parties agree to vary or exclude it.”
I think implied in the 1974 agreement is a term that price fluctuations will necessitate variation in the contract price. A provision specifically spelled out in the 1975 agreement, and one that is invariably accepted in the building trade. In this case, the bank not only refused to pay, it completely took no notice of the request for revaluation which had become necessary because of the price increases. The owner also following the example of his agent equally ignored the request which he had earlier approved. Before this incident the work was proceeding satisfactorily and no one had any complaints, but this incident triggered bad blood and ultimately led to this litigation. Under clause 14 (ii) of the 1975 agreement the contractor was absolutely entitled to payment for the increase in prices brought about by price fluctuation although under clause 14 (iii) the bank had a discretion to pay or not to pay. I can quite understand the stand of the bank and the reason for its retaining a discretion to pay or refuse to
pay. It had agreed to give a specified sum as loan to the owner. If due to fluctuation the price exceeds the amount agreed upon, it expects to enter into a new agreement in regard to the extra cost. Without such agreement it would be bad business to finance the project into a figure not already agreed upon. In fact, on 7 January 1976 the bank decided to invite the owner for discussion on how the extra work he had ordered would be financed and, in view of the fact that the contractor had claimed and he had agreed that the price of the building materials had increased, one would expect that at the said meeting requested by the bank, these matters would be thrashed out. But apparently this was not to be. The bank standing on its supposed rights under clause 14(iii) refused to pay. Clearly under clause 14(iii) the bank had a discretion to undertake a valuation of the work, it also had a reserved right to approve or disallow the price increases. It neither exercised its discretion nor its right to approve or disallow. I should have thought that if a person has a discretion, it involves a duty to be fair and candid and implies that the discretion shall not be exercised in an arbitrary, capricious or biased way or in a manner as to deliberately create injustice. The bank failed to exercise its discretion in any matter whatsoever and refrained from approving or disallowing in accordance with its obligations. I think the bank also committed a breach in the circumstance. If it had exercised its undoubted discretion not to pay, then the primary liability to pay would continue to rest on the owner of the house. Indeed on 7 January 1976 the bank as agent of the owner asked for the details of the breakdown of the contractor’s claim based on price increases and on 28 January 1976 the bank was supplied with a comprehensive breakdown showing the rise in prices from December 1974 when the contractor commenced work until July 1975 when the last items for the project were bought.
Clearly, the bank was acting on its own behalf under the 1975 agreement and also as an agent of the owner under the 1974 contract in asking for this breakdown and the fact that it was no party to the 1974 agreement is irrelevant to its status as agent. In Harlley v. Ejura Farms (Ghana) Ltd.  2 G.L.R. 179 at p. 196 Azu Crabbe C.J. delivering the judgment of the full bench of the Court of Appeal said:
“Where two parties had entered into a contract, it is possible for a third party to intervene and take the place of one of the original parties if he can establish that that party was acting throughout as his agent, even though the other party was ignorant of this fact at the inception of the contract.”
On this principle, I should think if a party is ignorant that he has been named as an agent of a party in a contract, but he, nevertheless, acts as an agent for that party, he will be estopped from disclaiming
the status and the party will be bound by his acts. The act of calling for the breakdown of the contractor’s claim is on this analogy the act of the owner. The contractor was right to comply with the request. The bank and its client completely ignored this and would seem to have completely repudiated it by mere silence without offering any reasons whatsoever, instead of doing what is fair and right and in accordance with their contractual obligation, by asking for arbitration or a revaluation from an independent source. It seems to me that on or about 15 June 1975 when the owner neglected to pay or to prevail on his bankers to pay he committed a breach of contract under both the 1974 and 1975 agreements and when the bank ignored its obligation under clause 14(iii) it also committed a breach of contract.
A very careful and close scrutiny of the claim of the contractor in respect of price increases shows quite clearly that the claim in the prevailing economic conditions of the period was reasonable and should not have been treated in the nonchalant manner in which it was. I am firmly of the view that the contractor was unfairly treated and was denied both at the High Court and the Court of Appeal his just entitlements under the 1974 and 1975 agreements. These entitlements are ¢4,200 representing respectively the extra work ordered under the collateral parol agreement of February 1975 and ¢6,153 representing reasonable extra costs paid by the contractor on behalf of the owner as a result of necessary price increases.
In this respect it should be remembered that under clause 6 of the 1975 agreement all materials brought to the site were deemed to be the joint property of the bank and the client, and I do not understand upon what principle the bank and the owner can claim to own such materials without any obligation to pay the actual cost of the said materials. Now, assuming the contractor did complete the work in accordance with the agreement between him and the owner, the amount due to him would be ¢12,400 under the 1974 agreement and the two sums of ¢4,200 and ¢6,153 respectively making a total sum of ¢22,753. The owner is giving evidence under cross-examination said as follows:
“I agree that in exhibit B the contract price is ¢12,400. I agree that in exhibit D the contract price is ¢16,757. It is correct that after signing exhibit D the plaintiff and I agreed to some extra work being done by the plaintiff for me. I agree that the cost of the extra work was ¢4,200. I agree that the ¢4,200 is not included in this amount shown in exhibit D.”
The purpose of this disgraceful evidence is to show that the extra work was ordered after 3 May 1975 and it was contrary to the terms of clause 10 of the 1975 agreement and that therefore presumably the defendant are both not liable since the 1975 agreement is alleged to
have superseded the 1974 agreement. Even if this is so, it is only the bank that can escape liability. But this is clearly perjured evidence. As a result of the collateral agreement, it became necessary to amend the building plans. Before the representative of the bank recommended the second payment on 2 May 1975 he paid a visit to the site and said this in his evidence:
“At the time the first payment was made, the floor slab had been cast. The walls were put on before we paid the second. At that time I saw that there was a change in the construction of the walls to conform with the amended plan. I agree that the extra work must be paid for but not by the first defendant . . . It is correct that the plaintiff asked us to pay for the extra work authorised by the second defendant. It is correct that the second defendant... authorised payment of the extra work. We refused to pay on the ground that we did not authorise the extra work. It is correct that the time exhibit D was signed the extra work had been done.”
This evidence was never challenged by the house owner. In fact, in his evidence-in-chief he agreed he varied the contract after signing the 1974 agreement. It is obvious that the evidence of the contractor that the collateral agreement was entered into before the 1975 agreement was made is true and the evidence of the owner that it was made after the 1975 agreement had been signed is false. But even if his perjured evidence is accepted, then clearly by his own testimony the owner was conceding that he entered into a collateral parol agreement which was additional to the 1975 agreement. In such a case the rule of law is that although it does not bind the bank it binds him as the owner of the project. The rule is very clearly illustrated by a hypothetical case adverted to by Rolfe B., in the English case of Lamprell v. Billericay Union (supra) at pp. 306-307 where he said:
“Suppose, for instance, a contract under seal, whereby a builder contracts to build a house, and the owner of the land covenants to pay 1,000 pounds as the price of the work, and also to pay for any extra work authorised in writing by the architect. During the progress of the works the architect authorises extra work to the amount of 500 pounds, which the builder completes in a proper manner, and to the satisfaction of the owner of the land, but without any authority in writing. We will suppose that the owner of the land pays the builder from time to time 1,200 pounds, on account generally, and that, more than 6 years after the whole has been completed, the builder brings an action of covenant against the owner for non-payment of the balance, and the owner pleads payment. In such a case the argument of the plaintiff here might
prevail; but it would rest wholly on the ground, that under the circumstances the owner of the land must be taken to have entered into a new parol contract to pay for the extras, independently of his liability under the deed. There would, in such a case, be two debts due from the owner of the land, one a debt arising by deed, the other a debt on simple contract...”
The trial judge did not seem to recognise and advert to the principle that in spite of a deed parties can enter into a parol contract supplementary to a contract under seal. Although the contractor and the owner agreed that the contract was to be varied by parol agreement under which two porches and other works valued at ¢4,200 were ordered by the owner and executed by the contractor, the High Court judge, nevertheless, held:
“In exhibit B the contract sum was ¢12,400. It contained no provision for variation. If, therefore, Tete varied exhibit B one would expect to find a fresh contract would be entered into in respect of the extra works. Apart from exhibit D no such contract was produced.”
This view of the law not only cuts across the well-known general principle of contract as is enunciated by Rolfe B. in the case already cited, but it clearly contradicts the provisions of section 11 of the Contracts Act, 1960 (Act 25), under which it is enacted:
“11. Subject to the provisions of any enactment, and to the provisions of this Act, no contract whether made before or after the commencement of this Act, shall be void or unenforceable by reason only that it is not in writing or that there is no memorandum or note thereof in writing.”
Under the rule as is explained by Rolfe B., if the evidence of the land owner, Nai Tete, were to be accepted then under the 1975 agreement, he was liable to pay ¢16,575, by his parol agreement he must pay an additional ¢4,200 and for price increases caused by price fluctuations ¢6,153 making a total liability under the project of ¢26,928. This is the sum which the contractor could have upon the defendant’s own evidence, claimed if he had fraudulent intentions. He, however, claims only ¢22,753 and concedes in transparent honesty that the extras were ordered before the 1975 contract was entered into and were understood by him, contrary to the evidence of the bank and the owner, to be included in the 1975 contract price with the owner undertaking to pay ¢2,500 to make up the total sum of ¢16,600 representing the 1974 contract sum and the cost of the extras. This must be so because when the collateral agreement was entered into in February 1975, the 1975 agreement had not then materialised. As against this
honest conduct, the owner was not only dishonest regarding the date of the collateral agreement, hoping by such conduct to escape liability and be unjustly enriched but he also made a clearly fraudulent counterclaim of ¢2,366 as the value of materials he supplied and endeavoured to prevail on his counsel to pursue this fraud by seeking to suppress a letter he had written in October 1975 stating that the materials he supplied were as the contractor honestly admitted, worth not ¢2,366 but ¢1,322 on his own showing.
Furthermore, at the trial, although he entered into the 1974 agreement with C. O. Sowah & Co., and has had a house built for him by the said company of which the plaintiff is the sole proprietor, he attempted to prove that the company was a non-existent company and so presumably he was not liable and should be permitted to be unjustly enriched. In my view our courts should frown on this specie of dishonest conduct and must be ever vigilant to frustrate and withhold its aid from this fraudulent breed of litigants.
It seems to me that the bank too had also not acted fairly and honestly in this transaction. The first two payments made by the bank to the contractor were clearly made before the tripartite agreement and were made under the last payment of ¢3,098 supposed to be made under the tripartite agreement but, in fact, in its certificate of payment, the bank deliberately chose to make this payment also under the original contract probably to escape liability under the 1975 agreement and yet at the trial it maintained and succeeded in persuading the court to agree that the tripartite agreement had superseded the original agreement and the said tripartite agreement was to be looked at for breach. This point would seem to have escaped both the High Court and the Court of Appeal, but it was clearly a deliberate act of the bank for at the meeting of 7 January 1976 it was decided, in spite of the 1975 contract, “That the property be inspected and certificate prepared on the original contract sum.”
The certificate, exhibit 1(3), was accordingly prepared under the 1974 contract and the contract sum stated therein is ¢12,400. As far as the contractor is concerned this unworthy conduct makes no difference to the sum payable to him, since it is his case that the original contract sum of ¢12,400 was varied in February 1975 by the parol agreement which pushed the sum to ¢16,600. The bank, however, was clearly adopting this strategy to escape from its obligations under the 1975 agreement and its conduct after this payment justified this view! On 7 January 1976 the bank acting as an agent of the owner asked for and was on or about 28 January 1976 given a breakdown of the claim of the contractor for price fluctuations.
The bank thus became obliged in accordance with clause 14(iii) of the 1975 agreement to exercise its reserved right to approve or disallow the claim. It did neither and
in my view its conduct, consistent with the posture it adopted in paying the contractor the third payment in 1976 under the 1974 contract instead of on the 1975 contract, shows that it was attempting to resile from its obligations under the 1975 agreement; but I think it cannot so easily retreat from its commitment under the 1975 contract, and its conduct clearly amounted to a breach of contract under the 1975 agreement. The High Court did not consider this at all in its judgment and the sum of ¢6,153 which is the increase due to fluctuations and contained in the sum of ¢11,717 claimed by the contractor in his writ was completely ignored in the said judgment.
The Court of Appeal, however, considered the matter and said:
“Clause 14 of the tripartite agreement (exhibit D) made provisions for adjustment due to fluctuations and how these should be effected. Exhibit G seeking revaluation in view of price increase was not presented in accordance with the terms of exhibit D - the tripartite agreement and was accordingly rejected by the first respondent.”
This is quite clearly not borne out by the evidence. The bank led no evidence that it refused to pay the price increases because exhibit G, presented to the bank some time in June 1975, was not presented in accordance with the terms of exhibit D. They refused to pay simply because exhibit G asked for payment, inter alia, of extra work ordered by the owner and the evidence the bank led was as already stated clear:
“We refused to pay on the ground that we did not authorise the extra work.” This was extra work ordered, as I have already pointed out, before they entered into the tripartite agreement, and how they expect to have authorised such work before entering into the contract, is difficult to understand. It is clear that there is no evidence whatsoever that the price increases claimed by the owner were rejected in June 1975 on the grounds adverted to by the Court of Appeal. Indeed, the price increases were neither rejected nor accepted - they were just ignored in clear breach of clause 14. The bank, it must be remembered, refused to pay some time in June 1975. If indeed it had rejected the claim on that date, it would not call for a breakdown in January 1976 in order to decide whether to pay or to refuse to pay. In my view, as I have already pointed out, when the bank refused to consider the price increases it committed a breach of contract. Exhibit G was presented to the bank strictly in accordance with the terms of exhibit D and ignoring it into is contrary to the terms of the agreement.
The bank did pay on behalf of the contractor the total sum of ¢11,036. The sums due to the contractor under the original contract are: ¢12,400, the original contract sum, plus ¢4,200, the cost of the extras ordered on the parol agreement and ¢6,153, the cost of the price
increases as was provided for in the 1975 contract making a total sum of ¢22,735 and since ¢11,036 was paid the sum still due to the contractor is ¢11,717. This is the sum that has been consistently claimed by the plaintiff as claim (a) in the writ as the sum due under the original contract as varied by the owner. In my view, he is clearly entitled to this sum and his claim should have been upheld. In my judgment he is definitely entitled to this sum from the owner of the house, and I so hold.
Since the bank merely committed itself to a sum of ¢16,575 and has, in fact, paid ¢11,036 of this commitment it is jointly and severally liable with the owner for the outstanding sum of ¢5,539, which is part of the ¢11,717 claimed by the contractor leaving the owner solely liable for the sum of ¢6,178. This sum with the ¢5,539 makes a total indebtedness to the contractor of the sum ¢11,717 claimed in the writ.
The Court of Appeal appreciated the indebtedness of ¢5,539 but rejected it for the following reasons stated by the president of the court:
“The bank, the first respondent, on 9 February 1976 wrote exhibit O requesting the appellant to carry out certain outstanding works on the house, which were itemised in the said exhibit O. The concluding paragraph of exhibit O states `We hope you will comply with the above to enable us prepare a final certificate on the contract.’ The appellant did not comply with the contents of exhibit O and therefore no final certificate has been issued and this is a condition precedent to payment by the bank.
The trial judge so found on admission of the contractor that the works listed in exhibit O had not been done, and therefore the bank’s refusal to issue the certificate was fully justifiable. The contractor therefore is not entitled to the balance of ¢5,539.”
The evidence of the contractor is that the work in exhibit O was not included in the contract and so he needed a variation order. It was not shown by the defendants that the work was included in the contract.
This evidence on the matter is as follows: “When I received exhibit O, I started to do the work called for. I then applied to the defendants in paragraphs 1-3 of exhibit N for variation orders. I did not get the variation order.” In the light of this, to say that the contractor’s admission that he had not done the work justified the bank’s refusal to issue the certificate is, with respect, to simplify unduly and to misunderstand the contention of the contractor. The trial judge’s reasons for rejecting the claim of ¢5,539 is differently stated in his judgment (supra) at p. 149 as follows:
“In exhibit B the contract sum was ¢12,400. It contained no provision for variation. If, therefore, Tete varied exhibit B one
would have expected to find that a fresh contract would be entered into in respect of the extra works. Apart from exhibit D no such contract has been produced. Further since the plaintiff cannot deny that he received ¢11,036 from the bank on Tete’s account, the balance as per exhibit B would be ¢1,364. But, as I have said, exhibit B was superseded by exhibit D under which the balance due to the plaintiff, upon completion of the work to the satisfaction of the bank is ¢5,539. For the bank to be liable for any variation it must be proved that they gave their written consent as laid down by clause 10 of exhibit D. This it certainly have not done...”
Obviously the amount of ¢5,539 included the sum of ¢4,200 which is the cost of the variation clearly admitted by the owner as having ordered and which was actually carried out by the contractor. The contract documents in the 1974 agreement, i.e. plans and specifications were the same as in the 1975 agreement, yet the trial judge rejected the claim for ¢4,200 and was able to say (supra) at p. 149: “On the evidence before me, I am not satisfied that Nai Tete requested the plaintiff to make variations from the original contract other than such as are reflected in exhibit D.”
This is clearly an erroneous conclusion in no way borne out by the evidence of the parties. Indeed, the evidence of the parties contradicts this finding. There is no doubt whatsoever that variations were admittedly made to the original contract at the request of the owner. The High Court had no justifiable reasons for rejecting the claim. For instance, in examination-in-chief the owner said: “After the signing of exhibit B, I made amendments to the existing plan of the building.”
The next claim of the contractor is for a total sum of ¢12,173 being, inter alia, extra work ordered by the owner and the bank outside the 1975 contract. In the 1975 contract screeding was left out of the contract and this was admitted by all the parties. The contractor, gave evidence that at the meeting of 7 January 1976 he was asked to do screeding which he did although the bank which made the request apparently on its own behalf and also as agent o the owner, did not give him variation order. It seems to me that this is clearly another collateral parol agreement supplementary to the 1975 agreement. It binds the bank and the owner because originally screeding had not been included in the contract and the owner had intended to do terrazzo in place of screeding, the doors were raised to make allowance for the terrazzo. When the terrazzo idea was abandoned for ordinary screeding, the doors so raised became too short for the rooms and the contractor as requested removed all the doors so fixed at a cost of ¢75 and provided and fixed new ones at a cost of ¢475. Since the bank made the request on 17 January the contractor asked for
variation order and kept and paid his workers for the months of January, February and March but the bank would not give him the variation order. He claims ¢5,400 being the three months’ extra wages for labour while awaiting the variation order because the parol agreement called for two porches, their construction necessitated two months’ extension of time for completion and for this the contractor claims ¢2,300, two months’ extra wages for labourers on the extension of time. After removing the doors it became necessary to repair the cracks and plaster the walls around the frames at a cost of ¢637 and to put the door frames into walls at a cost of ¢857. Materials brought on the site for the work cost ¢1,260. The total cost of this work done under the 1976 parol agreement including ¢2,300 which is the amount of the two months’ extra wages for labour on the extension of time came to ¢12,173 and this is the sum claimed jointly and severally in the writ as item b(i). I would break this sum into two: ¢2,300 being the two months’ labour cost and the balance of ¢9,873 I would allocate as cost attributable to the screeding. I would hold that (1) the bank and the house owner are jointly and severally liable to the contractor for the sum of ¢9,873 being the amount due under the parol agreement they entered into on 7 January 1976 calling for screeding; and (2) the house owner is primarily liable to pay the sum of ¢2,300 being the amount necessitated by the extra time spent on his request for porches under the parol agreement of February 1975, long before the bank entered into the 1975 agreement.
The further claim of the contractor designated b(ii) in the writ is for “wages for day and night watchmen at ¢150 per month from 1 October 1975 to 30 June 1977 and ¢250 per month from 1 July 1977 to date of judgment,” i.e. 26 April 1978. The house was during this period in the possession of the contractor and it was conceded by the owner that he expected that the contractor would take reasonable precautions to protect his property. Under cross-examination this is his evidence: “I agree that having given my property to the plaintiff I expect him to protect it . . . I agree that the plaintiff was expected to do everything reasonable to protect my property.”
In my view, once the house is completed the owner is expected to pay the contractor and take over possession. As he failed to do so, the contractor must take reasonable steps to protect the property pending the take over and all reasonable expenses so made must be refunded by the owner. Counsel for the owner conceded that point and would seem to have left the matter to the discretion of this court. The matter, however, was ignored by the lower courts because they came to the conclusion, erroneous in my view, that the contractor had committed a breach of contract. Since it is the owner and the bank, and particularly the owner, who are in breach, I think the contractor is entitled to
an award under this claim. He led evidence which was not challenged by contrary evidence substantiating his claim that from 1 October 1975 to 30 June 1977 he paid ¢100 and ¢50 respectively to a day time security officer and night watchman. The further evidence led on his behalf is that when the government raised the minimum wage to ¢4 a day, the day time security officer and the night watchman had wage increases from 1 July 1977 until April 1978 and were accordingly paid ¢130 and ¢120 respectively. I think the claim under this head is clearly very reasonable and I would hold therefore that the second respondent is under a legal obligation to meet this claim. This works out at ¢150 for 21 months making a total of ¢3,150 and ¢250 for ten months totalling ¢2,500 giving a grand total of ¢5,650. In my judgment the contractor is entitled to this sum and it is the owner’s responsibility to pay it.
I have already indicated that the bank and the house owner committed breaches of the contracts they entered into. Since, however, the contracts are two it is worthwhile to show by examining the conduct of the parties and some other clauses of the contracts so breached. Clause 22 of the 1975 agreement as can be seen provided for arbitration in case of dispute. The High Court completely ignored this provision in its judgment in spite of evidence led by the parties touching on its breach. The Court of Appeal, however dealt with the matter thus:
“Counsel for the appellant however had to admit that there was no evidence that the president or vice-president of the institute ever invited the first and second respondents to any arbitration. The fact that the appellant wrote to the institute and received no reply cannot support the claim that the first and second respondents refused to attend an arbitration. The submission on the breach of contract is ill-founded and must be rejected.”
This clearly, with respect, misconceives the case of the appellant, i.e. the contractor. He called for arbitration in paragraph 3 of his letter of 15 March 1976 tendered in evidence and exhibit B and he caused his solicitor to write to the bank and the house owner on 24 March 1976 intimating his desire for arbitration. This was accepted in evidence as exhibit Q1 and in paragraph 3 thereof the call for arbitration under clause 22 was restated by the contractor as follows:
“In order to fulfil the condition under clause 22 of the tripartite agreement, I forward herewith a copy of intended call for arbitration in the hope that you will indorse it, for the President of the Ghana Institute of Architects if you strongly feel that my client’s claims are still disputed or that you cannot for any reason pay the ¢11,717 within seven days of the date hereon.”
(The emphasis is mine)
The bank admitted that the contractor made efforts at settlement by arbitration. Its reaction to these efforts is spelled out in the evidence given on its behalf by its representative and not challenged by the house owner and it is as follows:
“An effort was made to settle the dispute between the plaintiff and the second defendant by arbitration. Exhibit Q1 is a letter requesting arbitration. In it we were asked to submit certain papers for the arbitration. We did not submit them. I cannot assign any reason for our failure to do so.”
Accepting as I do, that the bank acted on its behalf and also as an agent of the house owner in these transactions, I am unable to imagine any reason why this evidence can be said to have fallen short of evidence which demonstrates that the contractor wanted arbitration and the bank and the house owner were not interested in having one but rather rejected or ignored the offer for arbitration. It seems to me quite clear that the Court of Appeal was, with respect, wrong in its finding to the effect that the bank and the house owner were not guilty of breach of contract under clause 22 of the tripartite agreement. In my view, the bank and the house owner clearly committed a breach by failing to forward the necessary documents to the President or Vice-President of the Institute of Architects to show that they were willing to submit to arbitration in order to found his jurisdiction and to enable the said president or vice-president to invite them for the said arbitration.
Under the 1974 agreement, it will be recalled, the contractor was the person empowered under clause 1(b) to “apply for and obtain the relevant certificate of fitness for human habitation (which certificate for the purpose of this deed shall be conclusive and binding upon the parties hereto).”
The contractor did obtain the said certificate certified on 25 September 1975 that the building “has been completed in accordance with the Accra Building Regulations, 1944 and building permit No. 639 dated 2 September 1974.” The said certificate was accepted without any objection as exhibit H. The owner and particularly the bank attempted to lead documentary evidence that the certificate had been withdrawn, they were however challenged; the evidence was legally rejected by the court as it was clearly hearsay. Instead of calling the maker of the document to prove that there had been a genuine withdrawal, they just abandoned the attempt and the only admissible evidence accepted by the court was the evidence of the contractor that he legally obtained a certificate of habitation.
Apparently, after obtaining the said certificate of fitness for habitation the contractor wrote to the owner inviting him to collect the
keys to the house after settling the amount due to him. The owner replied to this by a letter exhibit R on 1 October 1975 refusing in effect to collect the keys or settle any outstanding sum. As from 1 October 1975 therefore the plaintiff was obliged to continue possession of the house to protect his interest. I think the refusal to take possession and pay what was then due to the contractor is certainly a breach of contract having regard to the certificate of habitation. It is remarkable that when the contractor sued the bank and the owner, none of them counterclaimed for breach of contract although allegations of unproven breaches said to have been caused by the contractor’s negligence were the reasons for the refusal to pay the contractor, although the owner and the bank had their remedy in clause 16 of the 1975 agreement which they significantly did not see fit to invoke.
In dismissing the contractor’s claim against the bank and the house owner the High Court proceeded on the ground that the 1975 agreement superseded the 1974 agreement and since clause 13 of the 1975 agreement specified a certificate by the bank as a condition precedent before payment is made the absence of such a certificate justified the bank and the owner in refusing payment. And the High Court relied for this decision on the dictum of the Earl of Reading C.J. in dealing with a similar clause in the English case of Eaglesham v. McMaster  2 K.B. 169 at p. 175 where he said:
“It is not the Court which says that the plaintiff shall not come before it . . .; the parties themselves have so agreed. The object of the clauses is to leave these matters to a person who has expert knowledge of building work and has the confidence of both parties, and the plaintiff was content to enter into the contract upon that footing.”
(The emphasis is mine.)
Even if this dictum is accepted, I cannot see how it can protect the house owner from liability to pay for work which he actually ordered and which was on his own admission, in fact, executed at a cost of ¢4,200, nor do I see how it can be a justification for the bank to refuse to pay for the screeding, and its consequential work costing ¢12,173 which they ordered on 7 January 1976 in accordance with clause 1(a) of the 1975 agreement which made the contract or to be “subject to the direction of the bank” and under which direction they would seem to have entered into a parol agreement for the screeding: see Lamprell v. Billericay Union (supra). To pray in aid the certificate under clause 13 of the tripartite agreement in such circumstances is clearly to perpetrate a fraud on the contractor.
In any case, it is my view that the 1974 agreement was not superseded by the 1975 agreement. It cannot be, because as I have
demonstrated in this judgment, the building had, in fact, been roofed when the 1975 agreement was signed. Clause 1(b) therefore binds the owner and the contractor. If for the statement I have emphasised in Lord Reading C.J.’s dictum is substituted the words “certificates of fitness for human habitation shall be conclusive and binding upon the parties,” the dictum will apply very well to the facts of this case in relation to the certificate under clause 1(b) of the 1974 agreement. In my opinion, the owner was not justified in questioning the certificate lawfully and genuinely obtained by the contractor. It seems to me that in refusing to accept the certificate the owner committed a breach of clause 1(b) of the 1974 contract.
It is not necessary to consider further breaches, it is only sufficient to note as I have already pointed out that under the agreements, even assuming the contractor was in breach, both contracts recognised the obligation to pay him for work actually done. To insist that the contractor after obtaining certificate of habitation is guilty of breach and yet decline to proceed under clause 3 of the 1974 contract or clause 1(b) of the 1975 contract by terminating his continued employment and paying him what is due to him is clearly invidious and contravenes the provisions of the two contracts. As it is, the contractor’s capital has been tied up for eight years and with inflation and the decrease in the value or buying power of the cedi, the loss to him, difficult to calculate, must be enormous.
Before, however, calculating his loss in present day money’s worth, it is necessary to consider the owner’s counterclaim. I have already indicated that it was a fraudulent claim which the High Court inadvertently upheld, no doubt, because the fraud escaped its vigilance. The claim put forward was ¢2,366 but documentary evidence in possession of the contractor showed that it was in fact ¢1,322. The evidence of the contractor which was not challenged, showed that as far back as 7 January 1976, this matter of the counterclaim had been thrashed out at a meeting and the contention of the contractor which he put forward at the trial was not impugned on that occasion or thereafter. The contention is that there were three plans for the job. The first was the original plan. The other two were plans rendered necessary because the owner called for additional work. The cost of the first amended plan was ¢3,000 which was paid by the contractor although under clause 8 of the 1975 agreement it was the responsibility of the owner to pay. Clearly, he was entitled to be reimbursed. In his evidence, the contractor said that under this plan the owner supplied materials worth ¢1,322. There were existing work already carried out by the owner and the contractor gave him a rebate of ¢825 on this. The owner asked for wooden jalousies instead of glass louvres and he was allowed ¢624 on this. He also supplied sanitary fittings at a cost of ¢230. The total outlay covered by these allowances was ¢3,001.
This amount was set off against the contractor’s entitlement of ¢3,000. This evidence led by the contractor was not challenged in cross-examination by the bank or the owner. In Browne v. Dunn (1893) 6 R. 67, H.L. Lord Herschell L.C. and Lords Morris and Halsbury deprecated this practice of rejecting evidence which has not been challenged in cross-examination. Lord Herschell L.C. said in that case:
“ . . . It will not do to impeach the credibility of a witness upon a matter on which he has not had any opportunity of giving an explanation by reason of there having been no suggestion whatever in the course of the case that his story is not accepted.”
How in the light of this, judgment was given in favour of the owner on his counterclaim is very difficult to understand. This evidence of the contractor was completely ignored by the High Court, the court stated baldly that the claim of ¢2,366 was admitted by the contractor when there was no iota of evidence sustaining this finding as to admission. This is clearly a dishonest claim, but which was fraudulently persisted in by the owner in spite of documentary evidence emanating from him and contradicting his claim. The Court of Appeal, however, did detect the fraud and substituted for the judgment of ¢2,366 on the counterclaim the sum of ¢1,322 which is the cost of the materials supplied for work ordered and which sum is part of the ¢3,000, which the contractor allowed to the owner as a set-off against his claim of ¢3,000. Presumably, the Court of Appeal was correcting the amount on the High Court reasoning that the contractor admitted the lesser sum. This with respect, ignores the circumstances surrounding the admission, namely that the amount was part of a larger sum which was set off against an unchallenged claim. I can see no reason at all for ignoring the contractor’s unchallenged claim. Since the evidence led in support of the claim was not questioned at the trial and had never been questioned since the contractor submitted it to the owner and the bank on 7 January 1976, it seems to me that it is now too late to disallow it.
I think the counterclaim ought to have been dismissed. I would allow the appeal and enter judgment for the plaintiff on all his claims and dismiss the counterclaim. I cannot help remarking that there is something rather unfortunate about this case, for the contractor felt obliged because of the seeming complexity of his claims to represent himself instead of instructing counsel. The result is that his apparent lack of learning in the intricacies of the law of contract made it almost impossible for him to highlight before us the essential features of his case which demonstrate quite clearly his absolute entitlement in law to the substantive claim he put forward in the action before the High
Court and which he pursued in his appeal in the Court of Appeal. He was also unable to expose the glaring fraud which the owner, abetted by the bank, attempted to perpetrate in order to frustrate his claim and enable the owner to be unjustly enriched. In this appeal as I have just indicated, the contractor represented himself although the bank and the owner were each represented by counsel. I have in the circumstance considered that I have a duty to ensure that he suffers no injustice by this apparent handicap.
I now come to deal with the problem of quantum of damages which should be awarded the contractor for the breach of contract by the bank and the owner. I do not think the rule laid down by Alderson B. in Hadley v. Baxendale (1858) 9 Exch. 341 can be of any help because in this case the breach complained of is failure to pay quantified sums of money at the times the said sums were said to be due and the only question relevant for a decision touching the measure of the damages is what damage in money’s worth has the claimant suffered by the failure to pay at the proper time.
He gave evidence that as the sums were not forthcoming, he borrowed ¢15,000 from his bankers at 12 1/2 per cent interest rate in order to fulfil his part of the bargain under the contracts. This evidence was not challenged. By the judgment the sums of money he was entitled to from the house owner are as set out in his statement of claim:
“(a) ¢11,717, which should have been paid to him on 1 October 1975, the date the owner refused to pay.
(b) ¢12,173 covering the screeding and related works ordered on the owner’s behalf by the bank and which the bank or the owner should have paid by 1 April 1976 which the works were apparently completed.
(c) ¢5,650 which the owner should have paid at least by the end of April 1978 when he took over the house.”
Of these sums the bank is jointly and severally liable for (1) ¢5,539 which is part of the claim of ¢11,717 under (a) above as well as (ii) ¢12,173 which is the claim under (b) above. In the result, the house owner Nai Tete is adjudged liable to pay to the contractor a total sum of ¢29,540 and of this sum the bank is jointly and severally liable to pay a total sum of ¢17,712.
Now how does one calculate the sum that should be awarded for the failure to pay at the due dates and what is the formula that can be used to arrive at the proper figure? My initial inclination in assessing the damages is to consider the interest that a bank charges on loans assuming the claimant had taken a loan, or the interest payment on deposits as a fair item of loss which the claimant has suffered. I have, however, had considerable difficulty with the problem because in
seeking persuasive guidance from English practice 1 discovered that some time in 1807 in De Havilland Bowerbank (1807) 1 Camp. 50, Lord Ellenborough laid down some propositions which gave rise to a rule that under the common law interest as damages is not payable for a breach of contract to pay money.
The rule so laid down even went further than I have formulated it for not only was interest not payable as damages but that only nominal sums are recoverable as damages for the said failure to pay money. This Ellenborough rule was applied in Gordon v. Swam (1810) 12 East 419; Higgins v. Sargent (1823) 2 B. & 348; Page v. Newman (1829) 9 B. & C. 378; Foster v. Weston (1830) 6 Bing 709 and in many cases and finally in London, Chatham and Dover Railway Co. v. South Eastern Railway Co.  A.C. 429 the House of Lords gave its imprimatur to the rule holding that only an Act of Parliament could dislodge it from the English common law as so developed. What is remarkable about this rule is that before Lord Ellenborough launched it, there were many authorities which supported a contrary rule of recovery of interest as damages, thus the old case of Blaney v. Hendrick (1771) 3 Wils. 205 contradicted the rule and in Charlie v. Duke of York (1806) 6 Esp. 45 and Mountford v. Willes (1800) 2 B. & P. 377 interests were awarded on the unpaid price of goods sold. And interest was also awarded in Shipley v. Hammond (1804) 5 Esp. 114 and in many other cases.
In fact, in many nineteenth century cases decided before 1893 there are definite dicta which state that interest is recoverable as damages for non-payment of money. Typical of which is the dictum of Willes J. in Fletcher v. Tayleur (1855) 17 C.B. 21 at p. 29; of Bovil C.J. in British Columbia Saw Mill Co. v. Nettleship (1868) L.R. 3 C.P. 499 at p. 507 and of Baron Pigott in Prehn v. Royal Bank of Liverpool (1870) L.R. 5 Ex. 92 at p. 100. Indeed after Lord Ellenborough had so initiated the rule and before the House of Lords affirmed it, it was decided in many cases that interest could properly be awarded as an item of loss in assessing damages: see Hill v. South Staffordshire Railways (1874) L.R. 18 Eq. 154; Dreyfus v. Peruvian Guano Co. (1889) 42 Ch.D. 66 affirmed 43 Ch.D. 316; Gas Light and Coke Co. v. South Metropolitan Gas Co. (1890) 7 T.L.R. 105. Even after the House of Lords had confirmed the Ellenborough rule, the old rule was applied in The Marpessa (1906) 75 L.J.P. 18 and in some other cases.
Of course it has always been the rule at common law that money retained by fraud can be recovered with interest as is exemplified by such cases as Borthwick v. Elderslie S.S. Co., Ltd. (No.2)  2 K.B. 516 at p. 520, C.A. and Johnson v. R.  A.C. 817, P.C. I take it that the interest so recovered must be taken as the measure of damages for the retention. The rule that only nominal damages were recoverable for failure to pay money in accordance with a
contractual undertaking was incisively criticised by one of the great masters of the common law Jessel M.R. in Wallis v. Smith (1882) 21 Ch.D. 243 at p. 257. Since 1952 pronouncements and decisions in the court in England would seem to show that the rule has lost its vigour; for instance in Trans Trust S.P.R.L. v. Danubian Trading Co. Ltd.  2 Q.B. 297 at 307, C.A. Romer L.J. said that he was not,”... as at present advised, prepared to subscribe to the view that in no case can damages be recovered for non-payment of money.” And in Kemp v. Tolland  2 Lloyds’ Rep. 681 Devlin J., in awarding interest as damages in a case where the defendant had committed a breach of contract by his failure to pay the price of goods sold and delivered to him by the plaintiff, said that he was awarding the interest: “on the simple commercial basis that if the money had been paid at the appropriate commercial time, the other side would have had the use of it.”
I propose to be guided by my initial inclination, for I am persuaded by the apparent modern approach of the English courts to the view that since the money was due at one point in time and it is now being paid at a subsequent point in time, the interest which the money attracts during the period assuming that it is a loan is, inter alia, a fair yardstick by which to measure to some extent the damages so suffered by the appellant, i.e. the contractor. On this basis, I would calculate the loss on ¢11,717 at 12 1/2 per cent simple interest for seven years eight months from 1 October 1975 to 31 May 1983. This works out as ¢11,128.78. By the same process I would estimate the loss to the contractor on the ¢12,173, under claim (b) (i) as ¢10,904.93 calculated for seven years, two months from 1 April 1976 to 31 May 1983 and that under claim (b) (ii) on ¢5,650 as ¢3,590 calculated for five years one month from 1 May 1978 to 31 May 1983. The total on this calculation will be ¢25,623.81 of which the bank will be severally and jointly liable in the sum of ¢16,212.14. Because I have for convenience sake avoided a calculation founded on compound interest; and having regard to the inflationary trends in our economy and the decline in the purchasing power of the cedi with the consequence that what ¢29,540 would have purchased in 1975 will be worth by far more than what ¢29,540 could now buy, and taking account of the fact that if the money had been paid at the time it was due, the contractor could have cushioned himself against inflation by appropriate investment, I would round the figure to ¢36,000 as the measure of damages for the breach and hold the bank liable jointly and severally for ¢24,000 of this sum.
In arriving at these figures I have had in mind the remarks of Lord Wright in Mechanical and General Inventions Co., Ltd. v. Austin Motor Co., Ltd.  A.C. 346 at p. 377, H.L. where he said: “In
contract the damages are generally capable of more or less precise ascertainment, though it sometimes happens — as here — that they must be matter of conjecture.” I have also not lost sight of a subsequent remark by the same judge in Davis v. Powell Duffryn Associated Collieries Ltd. (No 2)  A.C. 601 at p. 616 H.L. to the effect that: “[T]here is generally so much room for individual choice so that the assessment of damages is more like an exercise of discretion than an ordinary act of decision.”
I would in all the circumstances, give judgment in favour of the contractor in accordance with the claim as indorsed on his writ and award him damages for breach of contract on the terms spelled out in this judgment. I am not unaware of the fact that this judgment has been unduly long. However, it is because this is a final appellate court and by my conclusions, I would be setting aside the unanimous reasoning of the High Court and the Court of Appeal, that I have taken the liberty to indulge in elaborate and detailed explanations of the legal and factual reasons why the said judgments cannot, with respect be allowed to stand.
The appeal is accordingly allowed with costs which I would assess at ¢3,000 jointly and severally against the respondents.
Francois J.A. I also agree with the judgment read by my brother Taylor J.S.C.
Edward Wiredu J.A. By his amended claim filed in the High Court, Accra, on 15 February 1978 pursuant to the court’s order of 25 January 1978 the plaintiff-appellant who for purpose of easy reference will hereafter be referred to simply as the plaintiff claimed as follows:
(a) ¢11,717 being cost of work completed under the original contract dated 8 November 1974 as varied by the second defendant.
(b) (i) Cost of screeding floors .. .. .. .. .. .. ¢1,171
Cost of removing five doors and frames .. .. .. .. .. 73
Cost of fixing and providing five new doors and frames .. .. .. 475
Two months’ extra wages for labour on extension of time .. .. .. 2,300
Cost of repairing cracks and plastering walls around frames .. . 637
Repainting ceiling with emulsion and all walls with limewash and painting fresh doors and frames .. .. .. .. .. .. 1,260
Three months’ extra wages for labour awaiting variation order ................................................................................................... ¢5,400
(ii) Wages for day and night watchmen at ¢150 per month from 1 October 1975 to 30 June 1977, ¢250 per month from 1 July 1977 to date of judgment.
(c) Damages for breach of contract.
The facts of this case which have provoked the present appeal before this court have been fully set out in the judgments of both the High Court and the Court of Appeal from which this appeal had been brought and it will not be necessary to repeat them here.
The plaintiff’s action against the defendants-respondents which arose as a result of a building contract agreements was provoked by the rejection of a claim submitted to the defendants, hereafter also referred to simply as the first defendants and the second defendant respectively, for the sum of ¢14,815 being the balance the plaintiff claimed was due him from the defendants on the agreements (exhibits B and D). This claim was contained in a letter exhibit K. According to the evidence of the plaintiff, this demand resulted in a meeting of the parties dated 7 January 1976 at which the first defendant agreed to pay the said amount by instalments. According to the plaintiff, the defendants subsequently made a part-payment of ¢3,546 on 9 February 1976 thus leaving a balance of ¢11,717 which formed his claim (a) as indorsed on his writ. The other claims indorsed on the plaintiff’s amended writ are explanatory.
In order to appreciate and to determine the fate of the present appeal, I shall examine the evidence brought in support and against each of the claims along with the judgments appealed from to see how far the conclusions arrived at by the High Court and the Court of Appeal can be supported. [His lordship after briefly reviewing the evidence, concluded.] It is unfortunate that both the High Court and the Court of Appeal judgments, in my respectful view, took a very simple view of the plaintiff’s case.
I would conclude by also allowing the appeal.
Adade J.S.C. This case presents so many facets for comment that it is not easy to decide where to begin. Each of the three parties tries to present himself as an innocent victim of fraud, deceit, dishonesty, high-handedness, callousness and what have you. Yet upon a close examination, the record of proceedings cannot seriously acquit any of them completely of one or other of these charges.
This is a claim in respect of a building contract. Two agreements have been exhibited. The first agreement (exhibit B) is dated 8 November 1974 and is made between the second defendant (the owner of the building) and the plaintiff (the building contractor). The second agreement is dated 3 May 1975 (exhibit D) and is made between the first defendant (the Bank for Housing and Construction,
the financiers), the second defendant and the plaintiff. It will be noticed that the first defendant, Bank for Housing and Construction, is not a party to exhibit B. It is nevertheless mentioned in exhibit B by name, and there described as the agent of the second defendant, liable to discharge the stage payments contracted by the second defendant. Under normal circumstances, it is easy, as the High Court did, in fact say in Sowah v. Bank for Housing and Construction and Tete  G.L.R. 144 at p. 146 that “... the bank not being a party to exhibit B is not bound by it, and no action could have been brought against it for non-payment of any sums alleged to be due under the contract.”
The circumstances here appear to me to be different. The bank was aware that it was being held up by the second defendant to the plaintiff as agent of the second defendant. It, so to speak, placed its credit and prestige behind the second defendant and in all probability induced the plaintiff to enter into the agreement with the second defendant. I find support for this statement in exhibit 2, the valuation report. The said exhibit shows that by an internal memorandum No. 69/43 dated 7 October 1974 the P.F.O. (probably the principal finance officer) of the bank requested the bank’s senior estate officer to value “an uncompleted single store building situate at West Labadi - Accra” owned by Nai Tete, the second defendant. The purpose of the valuation was, inter alia, to advise on: “(v) the amount required to complete the development.” The inspection was, in fact, carried out on 17 December 1974 and the report (exhibit 2) was prepared on 19 December 1974. Exhibit B was signed on 8 November 1974. It is most unlikely that the plaintiff was unaware that the bank was preparing to finance the project, and indeed had agreed to do so. Nor in the circumstances of this case, is it reasonable to assume that the bank did not know that it had been named in exhibit B as the agent and financier of the second defendant?
This is not all. After the agreement had been signed, the bank proceeded to discharge the obligations of the second defendant under it. It paid the first instalment of ¢1,800 on 14 February 1975 and then paid the second instalment of ¢6,138 on 2 May 1975 when exhibit D had not yet been signed. Notice that the second and third stage payments under exhibit B amounted to ¢5,600. So that as at 2 May 1975 the bank had paid the first three instalments due under exhibit B. The bank’s representative, Alhassan, head of the Engineering Services Department of the bank, agrees that the bank made payments to the plaintiff before exhibit D was signed, and that “we inspected the project before we paid. We were bound to do so by our own regulations. The first payment was made in accordance with exhibit B . . .
“In theory this statement is quite correct. Viewed realistically, it is grossly misleading. For although by the 14 February 1975 and 2 May
1975 when the first two payments were made, exhibit D had not been signed (it was signed on 3 May 1985), the payment certificate exhibits 1(1) and 1(2) prepared by the bank itself show the “contract sum” against which payments were being made, as ¢16,575 (the figure which subsequently appeared in exhibit D), not ¢12,400, the contract sum in exhibit B, implying that as early as February 1975 the contract sum in exhibit B as varied had already been agreed upon by the parties including the bank. It is interesting to observe that the valuation report (exhibit 2) recommended that “(iv) the amount required to complete the development is ¢16,575.” By paying against this figure, to the knowledge of the plaintiff, the bank must be taken to have bound itself to the plaintiff to finance the property to the tune of ¢16,575 long before exhibit D was formally signed. All of which goes to show (and this is the important consideration for the present), that before the bank made the first payment, it was fully au fait with exhibit B and all that it meant and stood for, and that the bank was prepared to bind itself to the plaintiff to discharge the obligations thereunder imposed on the second defendant.
In these circumstances, does it lie in its mouth to say that the bank cannot be fixed with responsibility for further obligations under the same agreement? Can the plaintiff not lawfully contend that the bank, although not theoretically a party to exhibit B, had, nonetheless, by conduct adopted it and had therefore become liable thereunder? In my opinion, contrary to what the High Court found, the bank is liable, with Tete, the second defendant, under exhibit B, as both are under exhibit D. This is only partially so. For from the assessment I have made above, it is clear to me that both exhibits B and D were to co-exist for the duration of the contract. In this, I agree with the plaintiff that Exhibit D did not supersede exhibit B. It was to run parallel with exhibit D. Implying in my view that as exhibit D was later in time to exhibit B wherever the two conflicted, exhibit D prevailed, as from the time of its coming into existence, i.e. 3 May 1975. Otherwise the terms in both B and D are enforceable for or against all the parties.
By 1 March 1978 when the evidence closed, the plaintiff’s claim, as amended a few times, stood as follows:
“(a) ¢11,717 being cost of work completed under the original contract dated 8 November 1974 as varied by the second defendant.
(b) (i) Cost of screeding floors ........................................ ¢1,171
Cost of removing 5 doors and frames............................... 73
Cost of fixing and providing 5 new doors and frames ...... 475
Two months extra wages for labour on extension of time... ...........................................................................................2,300
Cost of repairing cracks and plastering walls around frames........ 637
Repainting ceiling with emulsion and all wall with limewash and painting fresh doors and frame ..................................................... 857
Materials brought on site: cement, tools, and scaffold ............... 1,260
Three months’ extra wages for labour awaiting variation order................................................................................. 5,400
(ii) Wages for day and night watchman at ¢150 per month from 1 October 1975 to 30 June 1977 and ¢250 per month from 1 July 1977 to date of judgment.”
The claim has been sufficiently itemised and, as it were, presented in the nature of liquidated special damages. I hold the view that if the plaintiff is to succeed, he must prove each item strictly. Bearing in mind that it is the plaintiff’s duty to prove his case, I propose to take these heads of claim item by item, and examine them in the light of the evidence as a whole. I prefer this approach as it aids clear thinking, and helps to save me from getting lost in the mass of detail, often presented in a disorganised and confused manner, with which the record abounds.
The figure ¢11,717 being asked for in claim (a) is the difference between ¢22,753 and ¢11,036. The latter figure represents the sum of three instalment payments (¢1,800, 14 February 1975; ¢6,138, 2 May 1975; and ¢3,098, 9 February 1976, made to the plaintiff by the first defendant in respect of the contract works, and evidenced by exhibits 1(1), 1(2) and 1(3). The other figure ¢22,753 is constituted by the plaintiff as follows:
“(a) Original contract price ............................................ ¢12,400
(b) Cost of extra works approved ..................................... 4,200
(c) Increases in price of building materials as approved by the second defendant’s letter dated 16 June 1975 and accepted by the first defendant for third interim payment...... ..............6,153
The first two components of this amount, i.e. ¢12,400 and ¢4,200 are not in dispute. The ¢12,400 is the original contract price of the work as per exhibit B. ¢4,200 is the cost of the extra works which, together with the ¢12,400, made up the revised cost of the works as inserted in exhibit D, “less ¢25” as indicated at page 86, line 7 of the appeal record.
The only item in controversy, in so far as claim (a) is concerned is the ¢6,153 which the plaintiff says represents increases in prices “approved by the second defendant’s letter dated 16 June 1975 and accepted by the first defendant for the third interim payment.” I do not see on the record any letter by the second defendant dated 16 June 1975. Rather I see a letter dated 16 June 1975 by the plaintiff himself to the first defendant, apparently routed through the second defendant for his comments. The letter asked for an interim payment of ¢8,690. Paragraph 2 reads:
“2. In view of price increase recently on building materials and extra works ordered by the owner under clause 10 of the tripartite agreement signed with the bank, we respectfully invite you to revalue the whole contract at the end of this current month or thereafter in order to assess the extra cost on the original loan.”
At the foot of the letter is a minute by the second defendant, “Sir, the above is approved and I recommend payment (Sgd.) Nai Tete.” This letter was tendered by the plaintiff as exhibit G. Does this letter prove that the defendants approved and accepted a figure ¢6,153 for payment? I am afraid it does not. But there is exhibit P (price increase on materials as from 8 November 1974 to August 1975), by which the plaintiff, taking advantage of the price fluctuations clause in exhibit D, i.e. clause 14, claims an amount of ¢6,153 as the sum total of difference in prices of building materials used by him on the contract, between the period 8 November 1974 and August 1975. There is no such fluctuation clause in exhibit B. My brother Taylor J.S.C. is of the opinion that, if not expressly included, a price fluctuation clause must be implied in all contracts made in Ghana, so that whenever market prices push up agreed prices, a contractor can be reimbursed. This, he says, is necessitated by “good business sense, commonsense, and economic and social considerations . . .” I am afraid this is, with the greatest respect, too wide a statement to which I cannot lend my support. I concede that in certain situations, it will be fair and legitimate to imply a price fluctuation clause. This will depend, inter alia, on the nature, size and value of the particular contract, the performance period agreed upon or otherwise reasonably allowed, and the standing, including the level of sophistication of the parties.
In exhibit B the plaintiff agreed “for a total consideration of ¢12,400” to construct a “building together with the drainage and including fence according to the specifications approved in the plan attached [thereto] . . .” and to “complete the above works within a period of six months from the date of first payment in stage (sic).” The plaintiff had been a registered building contractor and surveyor
since 1954, and by the date of exhibit B, had had at least twenty years experience in the building industry.
By correspondence and other material on record, plaintiff impresses me as a shrewd businessman. No wonder, during the hearing of this appeal, he decided on the last day to take over from his counsel and argue the appeal himself. On the contrary, the second defendant is a dental technician, in normal circumstances hardly tutored in the intricacies of building operations. In agreeing to the total sum of ¢12,400 for a contract to be completed in six months, the plaintiff must be understood to have regarded the operations as a small contract, wherein price swings, if any, would not, given the time span, be so substantial as to require to be claimed for. In any case, I do not see how the second defendant could have successfully paid the plaintiff less than ¢12,400 on completion of the works within the scheduled time, on the basis that the plaintiff obtained some items at prices lower than he, the second defendant expected. In other words, given the size of the instant contract and the period of six months for completion, and the business experience of the contractor, it is, in my opinion, unreasonable to imply a price fluctuation clause in exhibit B in favour of the plaintiff. If anything is to be implied, it ought to be that a price fluctuation clause was deliberately excluded. I hold therefore that under exhibit B neither the plaintiff nor the second defendant is entitled to claim for differences in prices, upwards or downwards.
The position, however, did not remain the same. For in May 1975 the two parties and the first defendant, Bank for Housing and Construction, signed another contract, exhibit D. As its name goes, the first defendant is a bank established primarily to finance “housing and construction” works. A study of exhibit D shows that the document is a common form contract, designed to cater for all terms and conditions desirable in building contracts generally. Hence gaps in clauses 13(b) and (iii) were not filled in because they were not intended to apply to this contract, and the wording of clause 1(b) clearly shows that that clause was not designed specifically for this contract. This building is not a two-storey building with a ground floor and a first floor, and did not require any excavations, on which the bank could “give directions.” Nor, as implied in clause 14(i), was this contract put on tender. But these clauses, including in particular, clause 14 “Fluctuations”, were not cancelled either, and remained part of the contract as concluded. In my view, therefore, fluctuations are claimable under exhibit D, but certainly not under exhibit B. As far as this item is concerned, exhibit D supersedes exhibit B. Clause 14(i) of exhibit D required the plaintiff to prepare a schedule of materials and goods with their “basic prices.” These prices were to be used as the yardstick to prepare price differentials. It does not appear that the plaintiff
prepared this schedule. At its meeting with the plaintiff on 7 January 1976 (exhibit M1), the bank by calling for a “breakdown of [the plaintiffs] claim in increases in prices of building materials” seems to have conceded that the plaintiff was entitled to some increases. Accordingly, I could allow the plaintiff’s claim in exhibit P (price increases) as from May 1975, but disallow it for the period before exhibit D, i.e. November 1974 - April 1975 inclusive. This means that the plaintiff will have the sums ¢1,309.70 and ¢1,136.60 in exhibit P, a total of ¢2,446.30. Therefore in place of the figure ¢22,753 appearing in paragraph 4 of the plaintiff’s reply above referred to, I accept, for accounting purposes, the figure ¢19,100 as follows:
(a) Original contract price ..... ¢12,400.00
(b) Extra works ..................... ¢4,200.00
(c) Increases in prices, etc….. ¢2,446.30
This figure is to be rounded up to ¢19,100. In the result, the outstanding balance to which the plaintiff is entitled under claim (a) of his writ of summons will be the difference between ¢19,100 and ¢11,036, which is 8,064. I shall substitute this figure for the ¢5,539 which the defendants admitted in their pleadings as outstanding (see paragraph 6 of the first defendant’s statement of defence) and found for the plaintiff by both the High Court and the Court of Appeal. I, however, agree with the Court of Appeal that the amount is not payable, until the plaintiff proves that he has fully completed the building, more particularly the outstanding works detailed in exhibit O.
In exhibit 1 the plaintiff himself sets out “works required for completion.” Cross-examined on this, he admitted: “I have not built the fence mentioned in exhibit I. I have not done the gravelling mentioned in exhibit I.” In spite of this he denied that the building is not complete. The fence wall 75’ x 88’ mentioned by the plaintiff in exhibit I appears as item (b) in the “outstanding works” (exhibit O) to which the plaintiff’s attention was drawn by the bank in February 1976. And the gravelling and ramming in exhibit I is item (c) in exhibit O. It is plain, to me, as it was to the two courts below, that the building is not completed and the plaintiff is not entitled to the outstanding balance, as found by me, of ¢8,064. Alternatively, the plaintiff may decide to forgo the amount and have nothing more to do with the building. On the other hand, the defendants may undertake the works themselves and retain the amount, on the basis that the defendants are accepting the plaintiff’s breach of contract and keeping the amount as the pecuniary damages for the said breach.
Claim (b) is in two parts. The first part contains eight items, which, for ease of reference, I number as follows:
- Cost of screeding floor .....................................................¢1,171
- Cost of removing five doors and frames ........................... 73
- Cost of fixing and providing five new doors and frames ...........................................................................................475
- Two months’ extra wages for labour on extension of time................................................................................... 2,300
- Cost of repairing cracks and plastering walls around frames............................................................................... 637
- Repainting ceiling with emulsion and all walls with limewash andpainting fresh doors and frames ................................. 857
- Materials brought on site: cement, tools and scaffold..............................................................................1,260
- Three months’ extra wages for labour awaiting variation order.................................................................................. 5,400
I proceed to deal with these seriatim.
Screeding: The plaintiff alleges that the rendering of the floors (either with cement screed or with terrazzo) did not form part of the works to be undertaken by him under the contract. It does not appear in the schedule of works in either exhibit B or D. This was because the second defendant had, at the time, not made up his mind which alternative he preferred. It was therefore the understanding of all parties that the floor works, if commissioned by the defendants and undertaken by the plaintiff, would constitute additional works for which the plaintiff would be entitled to charge separately. The plaintiff says:
“The works as set out in exhibit B did not include screeding or floor terrazzo. This was because the second defendant was uncertain as to which type of flooring to have. I expected that when asked to do one or the other the second defendant would pay for it. Up to now the second defendant has not asked me to do either terrazzo or screeding...”
The plaintiff gave evidence on 30 November 1977. Although the plaintiff says that the second defendant has not shown his preference for terrazzo or screeding, the plaintiff seems to have “screeded” the floors, apparently on his own initiative. The second defendant could have repudiated those works and refused to pay for them. However, there is evidence to show that he did not do so. On the contrary, he accepted screeding. On the principle of unjust enrichment the second defendant must pay for the screeding. The plaintiff estimates the cost, unilaterally, at ¢1,171. The defendants do not challenge this figure,
perhaps because they took the stand that they do not have to pay for it.
The defendants, however, say that workmanship on the building as a whole is poor and substandard. As late as 23 September 1977, on the orders of the High Court (Charles Crabbe J. (as he then was)), the Chief Engineer, Accra City Council, inspected the house and reported to the court. The inspection report was filed with the court, and appears at page 77 of the record. The engineer confirmed that the screeding “needs improvement.” He did not, however, set a money value on the improvement required to be done.
Perhaps this is because the engineer was not called as a witness by either party. In fairness to the defendants, the amount asked for by the plaintiff for the screeding should properly be reduced by the value of improvements needed to bring the works to standard, at prices prevailing at the time the plaintiff costed the screeding. The defendants should have led evidence on this score; they failed to do that, and in my view they must take the consequences of their default. I hold therefore that the plaintiff is entitled to the ¢1,171 being the cost of screeding the floors, which were additional works. The Court of Appeal came to the same conclusion, and I agree with them.
Doors and door frames: I propose to deal with sub-heads (2), (3), (5) and (6) together. These relate to the removal and replacement of five doors and consequential works. The amount claimed in respect of them is ¢1,407 [i.e. ¢75 plus ¢475 plus ¢857]. The plaintiff says that he was kept in suspense for some time as to whether the second defendant would prefer floor terrazzo or screeding. However, at some stage the “second defendant asked for an estimate of the cost of terrazzo flooring.” The record then reads:
“Q. Did you believe he would do terrazzo as a result of his request for an estimate?
- I did believe.
- As a result of that belief did you do anything?
- I raised the frames by about 2 1/2 inches to enable terrazzo to be done.”
It turned out that the floors were not terrazzoed; they were screeded. This necessitated adjustments to the doors and frames, already fixed in anticipation of terrazzo works. The claim of ¢1,407 (for doors and frames, etc.) is the cost of these adjustments.
Was the plaintiff entitled to assume, from the mere request for estimates for terrazzo works, that the second defendant would be installing terrazzo floors, and then proceed, without checking with the second defendant, to fix doors and frames on that assumption? I think not. The plaintiff himself says that the second defendant was
uncertain whether to screed or to terrazzo the floors. The request for estimates was no doubt to assist him make up his mind one way or the other, especially as the floor works were outside the contract, and would be paid for separately, probably by himself. In these circumstances it was unreasonable for the plaintiff, an astute and experienced businessman that he is, to assume from the mere request for estimates that the second defendant had decided on terrazzo. He gambled and lost and must take the consequences. Exhibit B required the plaintiff to proceed with reasonable diligence, but did not oblige him to take uncalculated risks. The work of repairing faulty works done on the basis of this false assumption must therefore fall on the plaintiff. In the last analysis it means that he did a poor job, and had to correct it. In my opinion, the plaintiff is not entitled to the cost of the corrective works described under sub-heads (2), (3) and (6).
Sub-head (4) for ¢2,300 represents in the plaintiff’s words, “cost of extra labour due to extension of time to submit permit.” This is all the plaintiff says in proof of this head of claim (see p. 89, line 36 of the record). Since the plaintiff’s claim as a whole is denied by the defendants, I do not consider this scanty statement sufficient to prove the claim for ¢2,300. I would dismiss that claim. My brother Taylor J.S.C. whose opinion I have been privileged to read, allows this claim on the basis that a parol agreement added extra works (porches, etc, amounting to ¢4,200), and that their construction necessitated two months’ extension of time for completion, and this cost the plaintiff ¢2,300 in wages for labourers on the extension of time. I am afraid such a conclusion can only stem from a faulty appreciation of the evidence and other material on record. From the plaintiff’s own evidence and from exhibit D, it is plain that the works valuing ¢4,200 (porches, etc.) were no extra works at all. They were extra only in relation to exhibit B, but not to exhibit D. Construction time under exhibit D was five months from May 1975, i.e. up to October 1975. The works did not need any extension of time for construction. Indeed, by May when exhibit D was signed, these so-called extra works had already, or at least, substantially been done. See, e.g. paragraph 2 of the plaintiff’s reply to the first defendant’s statement of defence where the plaintiff says that “the varied work had almost been completed before the first defendant entered into the tripartite agreement and ratified same by conduct . . .” That is why the plaintiff himself was prepared to yield the keys to the house in September 1975, one month ahead of schedule. So where is the justification for the extra wages for an alleged two months’ extension of time. I find the conclusion that the second defendant is primarily liable to pay the sum of ¢2,300 being the amount necessitated by the extra time spent on his request for porches under the parol agreement of February 1975
long before the bank entered into the 1975 agreement completely indefensible and unwarranted.
I would also dismiss the claim for ¢1,260 under sub-head (7), for insufficiency of evidence. To prove this claim the plaintiff says (at p. 90, line 4 of the record): “I also brought cement, tools, scaffolding to the site costing me ¢1,260.”
The contract required the plaintiff to erect the building with his own materials: see clause 1(b) of exhibit B providing that”... the contractor shall provide all the necessary building materials, labour and supervision...”; and clause 1(a) exhibit D, that the contractor shall erect the building”... at his own proper cost and charges..”; and clause 4 exhibit D that”... the contractor shall provide all materials and all scaffolding, plant, tools and tackle for the purpose of completing the said messuages.” Because of these arrangements, materials belonging to the second defendant which the plaintiff met on the site were sold to the plaintiff. It is safe therefore to assume in the absence of evidence to the contrary that the cement which the plaintiff says he brought to the site was brought there on his own account for use in connection with the contract, and ought not to be charged and paid for separately from the cost of the building. And as for the tools and scaffolding, the plaintiff must show that he left them for, or were otherwise brought over by the second defendant. There is no such evidence. Perhaps the plaintiff considers himself entitled to the “cement, tools and scaffolding” by virtue of clause 6 of exhibit D providing that:
“All plant and materials brought on to the site by the contractor shall be deemed to be the property of the client and the bank who shall be under no liability for loss thereof or damage thereto arising from any cause whatsoever.”
If all plant and materials are deemed to belong to the defendants, then there is no reason why the plaintiff should claim for them from the “owners.” It may well be that this clause is simply acknowledging the fact that the cost of materials and plant and tools were taken into account in arriving at the cost of the contract.
Afterall, the plaintiff was required under clause 3 of exhibit D, on completion and before handing over the building, to “remove all surplus materials, plant and rubbish from the premises . . .” Tools and scaffolding were, notwithstanding the terms of clause 6, not expected to be kept on the site for the second defendant. I do think that clause 6 by itself sufficiently justifies a claim by the plaintiff for the cost of “cement, tools and scaffolding” brought to the site.
Now to sub-item (8), whereby the plaintiff claims ¢5,400, as “three months’ extra wages for labour awaiting variation order.” His
evidence is that he “employed workmen for three months while waiting for variation order from the bank.
This was during January, February and March 1976. Cost was ¢5.400 at ¢1,800.” This claim was rejected by the High Court. It was not allowed either by the Court of Appeal. I must confess I do not quite appreciate the plaintiff’s position here, founded as it is on a “variation order from the bank.” As I understand it, the plaintiff will be looking for a “variation order from the bank” in respect of amendments to the plan which the plaintiff will want the bank to bind itself to pay for, on the footing that unless the bank has, by the variation order, formally requested the variations, it cannot be held liable for their cost.
On the plaintiff’s evidence, the variations evidenced by exhibit F (the ¢4,200) were worked into exhibit D, and therefore were no variations at all. As indicated earlier, they formed part of the works expected to be executed by the plaintiff under exhibit D, as shown by paragraph 9 of the plaintiff’s affidavit (exhibit L). In his letter exhibit J, dated 8 August 1975 asking for extension of time, the plaintiff said he needed this extra time, inter alia, “to complete extra works ordered by the owner which is simultaneous with the original contract.” And in paragraph 2 of the plaintiff’s reply to the first defendant’s statement of defence, already quoted, the plaintiff says that “the varied work had almost been completed before the first defendant entered into the tripartite agreement and ratified same by conduct...” This was raised by the plaintiff as the first issue in the summons for directions filed on 24 June 1976, i.e. “whether or not the second defendant’s variation of the original contract was almost completed by the plaintiff at the time of the tripartite agreement dated 3 May 1975.” Therefore as far as the ¢4,200 is concerned, there was no need for a variation order.
The plaintiff himself does not appear to appreciate what he wanted under a so-called variation order. Or is it that he was being deliberately hazy about this in the belief that he could take advantage of the defendants and of the court? Re-examined by his counsel to justify his entitlement to a variation order, and his suggestion that the defendants had defaulted and were in breach, the plaintiff contended:
“ . . . if there is anything in exhibit D which is not in exhibit B I shall get my money by a variation order... I have not been given any variation order to do the work in exhibit 1 . . . I would do the connection of electricity mentioned in exhibit D under a variation order. For insuring as mentioned in exhibit D a variation order would have to be issued. If there is any work I have not done, it is because they have failed or refused to give a variation order . . .”
These claims are patently false, and given the business experience of the plaintiff, could not have been made in good faith. Exhibit D was a building contract in its own right, requiring certain works to be done.
The contract price was increased over exhibit B to allow for the additional jobs included. Is it not almost fraudulent to ask for variation orders in respect of the very work contracted to be done? The plaintiff was not justified in keeping workmen “while waiting for variation order from the bank” (if he indeed kept such workmen), because the bank was under no obligation to issue such an order. The bank was party to and signed exhibit D. So the bank became liable to pay for whatever work done under exhibit D. There was no need for a variation order, to make the bank liable. Yet the plaintiff stuck to this order, like a leach. In his letter dated 24 March 1976 (exhibit Q1) the plaintiff’s counsel complained that his:
“. . . clients have not been paid the ¢11.717 due on the earlier contract of 8 April 1974, nor have they been supplied with the variation order for the additional work and requirements under the tripartite agreement dated 3 May 1975 for which estimate of ¢12,000 has been presented by my clients to your bank and Mr. Nai Tete.”
What are these works additional to those under exhibit D? The only extra works carried out by the plaintiff not included in exhibit B or D will be the floor screeding. Did the variation order sought relate to this? If it did not, then the contention based on the variation order must fail. If it did, then two questions arise: (a) was a request for an order submitted and when? and (b) since the claim is for labour for January, February and March 1976, is there evidence to show that a variation order was given thereafter? In other words, why these particular months? On the evidence I do not see that the plaintiff submitted a request to the bank for a variation order in relation to the screeding at any time prior to January 1976 or at all.
Besides, where is the evidence that the workmen for whom the plaintiff is claiming were engaged solely for the screeding? And at the time of the waiting, had this screeding been done, or they were standing by to undertake the works after the variation order had been received? The plaintiff himself says that he did the screeding ahead of any decision by the second defendant. Therefore there could not have been any waiting in this. And what category of workmen were these? These are some of the matters on which the plaintiff should satisfy the court as a condition to succeeding under this head of claim.
The plaintiff’s evidence would seem to indicate that by January 1976, the screeding had been done and completed. The house was being handed over in September 1975. When the second defendant in October 1975 (exhibit R) queried the plaintiff for non-completion the floor was not one of the matters he complained of, nor did the bank either in exhibit O, except the second defendant said that the floor was poorly cemented. The variation order the plaintiff could be waiting for would be merely to enable him to claim the cost from the bank. If so, what would be the need to retain the “screeding workmen”? The plaintiff alleges (see p.89 line 34 of the record) that the screeding was “ordered by the meeting of 7 January 1976 [between the plaintiff and the bank].” The minutes of the said meeting were tendered as exhibit L. Nowhere in that exhibit was there an order for screeding. If anything the minutes would appear to indicate that at this meeting the plaintiff claimed for the screeding, already done, on the footing that it was additional work, and was not included in the original contract. After a careful analysis, I am satisfied that the plaintiff has not sufficiently established this item of claim, and he must fail here too.
The second part of claim (b) asks for wages for day and night watchmen at ¢150 per month from 1 October 1975 to 30 June 1977 and ¢250 per month from 1 July 1977 to date of judgment.” The plaintiff sought to create the impression that this claim became necessary because of the delay on the part of the defendants to take over the building. He claims that he completed the building in September 1975 (exhibit K). Immediately upon receiving exhibit K, the second defendant wrote on 1 October 1975 (exhibit R) pointing out to the plaintiff that the house was far from complete. And as late as February 1976, the bank was able to prove to the plaintiff (exhibit O) that the work had not been completed. Outstanding works included:
“(a) (i) Internal decoration of property with emulsion paint.
(ii) External painting with snowcem.
(iii) Paint all wooden structures with oil paint.
(b) Construct new fence 75’ x 88’ within the existing one.
(c) Filling of yard with laterite, grading and ramming.
(d) Make good all cracks in the house.
(e) Replace all doors patched with timber at top and bottom.”
These jobs were not extra ones; they were part of the original contract, not done at all or improperly executed. The plaintiff himself says that when he received exhibit O he “started to act in conformity with it.” In other words, he agreed the works had to be done by him before the building could be considered completed. We do not know when the plaintiff finished these remedial works. Exhibit O is dated 9 February 1976. It is improbable that the plaintiff completed the works therein detailed before the end of march 1976. In any case, the plaintiff does not indicate when he completed them. Whatever indication we have is to the effect that these works have not been done. They will only be
done if a variation order is issued by the bank! And for all we know, no such order has been issued. As I have indicated above, the plaintiff is not entitled to one. In these circumstances, the wages for watchmen claimed by him under (b) (ii) of his writ of summons ought to be to his account, and not to the account of the defendants. The defendants are entitled to hold the plaintiff to the contract and to ask him to finish it in accordance with the specifications. So long as the work remains unfinished, and therefore under the charge of the plaintiff, he must bear the cost of labour.
Under paragraph (c) of the claim the plaintiff asks for general damages for breach of contract. I do not find that on the whole of the evidence the plaintiff has succeeded in proving that the defendants or either of them was in breach of the contract. The plaintiff does not show which aspect of this contract has been broken and to what extent. I would dismiss this head of claim too.
I would have wished to rest this matter at that, were it not for my awareness that notions are held in certain quarters, which create the impression that there is some substance in this claim. For instance, it is said that the defendants were in breach of the arbitration clause in exhibit D. i.e. clause 22. What does clause 22 says?
“22. In case any dispute or difference shall arise between the parties hereto touching or relating either to the said building or works or to any other matter or thing arising under this contract the same shall be referred to an architect to be nominated by the President or in his absence the Vice-President for the time being of the Ghana Institute of Architects whose award shall be final and binding upon both the said parties. Such reference shall be deemed to be an arbitration pursuant to the Arbitration Act, 1961 (Act 38), or any statutory modification thereof.”
So I ask myself a number of questions: (1) Was this dispute ever referred to “an architect . . . nominated by the President or in his absence the Vice-President for the time being of the Ghana Institute of Architects?” (2) Who was this architect? (3) Did he (if so, when) invite the defendants to attend the arbitral proceedings which the defendants refused to? (4) What were the observations of this arbitrator?
From the record, I am afraid I find nothing to help me answer any of these questions in favour of the plaintiff. The record shows that on 24 March 1976 (exhibit Q) the plaintiff, by counsel, wrote to the President of the Ghana Institute of Architects as follows:
ARBITRATION RE: CLAIMS AGAINST BANK AND NAI TETE
I attach, herewith, a copy of letter addressed to the manager of Bank for Housing and Construction.
- You will realise that by paragraph 3 of the said letter you are to allow (sic) further instructions from the Bank for Housing and Construction on or before the 31 March 1976 to take necessary steps on my letter No. EC/76/13-2 dated 22 March 1976 addressed to you.
- My client shall otherwise advise himself in accordance with paragraph 4 of the attached letter.
(Sgd.) J. N. Okine
For C. O. Sowah & Co.”
Notice that this letter was asking the president to take further instructions from the bank by 31 March 1976 to enable him take necessary steps on his letter of 22 March 1976. That letter is not exhibited, and we do not know what it contains. But the copy letter mentioned was tendered as exhibit Q1, and reads as follows:
“J. N. Okine LL.B.,
P. O. Box 1200,
24 March 1976.
Bank for Housing and Construction,
P. O. Box M.1,
RE CONTRACT FOR CONSTRUCTION OF BUILDING FOR NAI TETE STATUTORY NOTICE OF LEGAL PROCEEDINGS
I write for and on behalf of my clients C. O. Sowah & Co. contractors under the Contract Agreements dated 8 November 1974 and 3 May 1975 respectively.
- I am instructed that in spite of my clients’ claim for work done and the frank discussions at the meeting with Mr. Okai as chairman my clients have not been paid the ¢11,717 due on the earlier contract of 8 November 1974 nor have they been supplied with the variation order for the additional work and requirements under the tripartite agreement dated 3 May 1975 for which an estimate of ¢12,000 has been presented by my clients to your bank and Mr. Nai Tete.
- This creates difficulties and it appears that my clients shall have to abandon the additional work on or before the 31 March 1976 in mitigation of loss to my clients and resort to legal action for the ¢11,717 due. In order to fulfil the condition under clause 22 of the tripartite agreement I forward herewith a copy of intended call for arbitration in the hope that you will indorse it for the president of the Ghana Institute of Architects if you strongly feel that my clients’ claim are still disputed or that you cannot for any reason pay the ¢11,717 within seven days of the date hereof.
- I am to warn you and you are hereby warned that unless my clients’ claims and demands are satisfied within seven days of the date hereof I have instructions to institute legal proceedings against your bank and Nai Tete for redress and I shall be compelled to do so in the circumstances without further notice to you or to Nai Tete.
- If so required, this serves as statutory notice to you and your bank.
(Sgd.) J. N. Okine
For C. O. Sowah & Co.”
Cc. The Legal Officer,
Bank for Housing and Construction, Accra.
- Mr. Nai Tete,
(The emphasis is mine.)
Paragraphs 3 and 4 of this letter are significant. By paragraph 3 the plaintiff was informing the first defendant of his intended call for arbitration, and hoped that the defendants would indorse the call. Then the plaintiff proceeds in paragraph 4 to completely undo his intentions in paragraph 3 by threatening legal action unless the plaintiff’s “claims and demands are satisfied within seven days of the date
hereof.” These claims and demands are as recited in paragraph 2 viz. the ¢11,717 for work done and a so-called ¢12,000 for variations. These two documents by themselves do not constitute a reference to arbitration, as we do not even know if the intended arbitrator agreed to act, nor whether he took any steps in furtherance of the plaintiff’s request. Pressed on this in the Court of Appeal, the plaintiff’s counsel had to concede: see p. 245 line 4 of the record. “It is correct we have no evidence that the president or vice-president of the institute invited the first or second defendants to come for arbitration.” The plaintiff says in evidence that he tried to have the matter resolved by arbitration but the defendants refused to submit to it. There is no evidence of such refusal. The second defendant was not asked about arbitration at all. The first defendant’s representative was Mr. Al-Hassan, head of the Engineering Services Department of the first defendant. He knew about the plaintiff’s attempt to go to arbitration, and on exhibit Q1 he said the bank was by exhibit Q1 asked to “submit certain papers for the arbitration,” but it did not. We are not told what these papers are. This evidence is construed in some quarters as proof that the first defendant refused to go to arbitration. I do not see the justification for this view. Exhibit Q1 itself is in evidence, and negatives such an interpretation.
But even if the defendants refused to submit to arbitration, is the plaintiff’s remedy a suit in damages for such refusal? For all I know, in such circumstances, the plaintiff may proceed to court action on the matters in dispute without being obliged to go to arbitration first. In other words, the offending party disables himself from setting up a claim in pecuniary damages for the so-called breach of the arbitration clause as such. His liability in damages will depend on how he fares on the matters that were to have gone to the arbitrator. To construe the alleged refusal as a breach of contract and use it as a basis for awarding pecuniary damages, is in my opinion, erroneous. Afterall the arbitration is not one of the purposes of the contract; it is a mere machinery for settling disputes, and cannot be on the same footing as the other “purpose” clauses: see, e.g. Woolf v. Collis Removal Services  2 All E.R. 260.
It is next contended for the plaintiff that the defendants committed a breach of contract, this time of clause 1(b) of the 1974 agreement. The said clause requires the plaintiff to:
“proceed with all diligence to build and complete the said dwelling-house together with the drainage and . . . apply for and obtain the relevant certificate of fitness for human habitation (which certificate for the purpose of this deed, shall be conclusive and binding upon the parties hereto).”
The argument on this score is that upon the production by the plaintiff of the certificate of habitation (exhibit H), the defendants became liable to pay to him whatever balance remained unpaid on the contract, because the certificate was conclusive proof that the plaintiff has fully performed his part of the contract. Assuming that the certificate in question is a performance certificate (which it is not - and of this more presently) the argument above ignores the evidence on record, coming from the plaintiff himself, to the effect that he had not fully performed the contract. In such circumstances, to insist on the mere wording of the agreement is to do “paper justice” as distinct from substantial justice which should be the concern of these courts.
Besides, it will be to encourage contractors to be fraudulent, for it means that no matter what the stage of performance, once a contractor manages to obtain such a certificate the contractee becomes defenceless. Shall we not be hiding our heads in the sand afterall? In exhibit I the plaintiff conceded that he was to: “... plaster [the] walls inside and outside, plumb, wire and make electrical connections before internal decoration with emulsion and oil paints and external decoration with Besham or Snowcem.”
Cross-examined on this before the High Court he said he had painted the house. When further pressed, he confessed: “I painted the walls with lime, but I painted the ceiling with emulsion. I have also painted the doors and windows in oil...” I think that this court can, and indeed ought to take judicial notice of the characteristics and qualitative differences between lime, Besham and Snowcem and emulsion paint.
The plaintiff knew, as shown by exhibit I, prepared by himself, that he was required to decorate the interior with emulsion paint, and the exterior with Besham or Snowcem. He did not. He rather used lime, a far inferior material. The defendants did not accept this breach, but insisted on his using the correct material, as shown in exhibit Q, item (a) (i) and (ii). Apart from the decoration, there were the fence wall 75’ x 88’ the yard, the doors, etc. all of which appear in exhibits I and O. This means that at the stage when the plaintiff claimed he had finished the house, he indeed had not. The defendants were entitled to refuse to take over the house in that unfinished state, thus indicating to the plaintiff that they were holding him to his contract. They elected not to accept the breach and sue for damages. They were perfectly within their rights to take this course rather than the other. In these circumstances, is it just for the court to say that the plaintiff must nonetheless be discharged and paid fully because he had managed to produce the certificate? Having regard to the plaintiff’s own exhibit I, I am of the view that he had not completed the contract and was not entitled to full payment. In refusing to pay him, the defendants did not commit any breach.
It would seem that both the parties and the courts have tended to view the certificate of habitation in clause 1(b) of the 1974 agreement as a performance certificate, and have raised arguments on that basis
The certificate in 1(b) is one “of fitness for human habitation” which need not be one of completion of the contract. There is clear internal evidence in exhibit B to show this distinction. For under the fifth stage of the contract, on the contractor making the building “fit for human habitation... the owner or his agent will pay to the contractor ¢1,000, and the contractor will quietly hand over the keys of the completed house to the owner or his agent.” This is the stage, up to which the contractor is expected to spend six months.
Stage 6 then says that:
“Upon handing over the keys to the house to the owner or his agent the Contractor shall concentrate on external works by re-erecting fence wall on the one side of the whole plot and make good all existing broken fence walls for a lump sum of ¢1,000.”
The work required to be done under stage 6 is part of the contract, for which the total sum of ¢12,400 was charged. Therefore at the time when the plaintiff claimed the balance of the contract price, not only had he not done the stage 6 work, he had also not done part of the stage 5 work - the decoration. He had not performed the contract, and he could not charge the defendants with breach. The production of the certificate of habitation was of no assistance whatever to the plaintiff, whether the certificate was lawfully and genuinely obtained or not. Both the High Court and the Court of Appeal found that the defendants did not commit any breach of contract. I would agree with them.
The second defendant counterclaimed against the plaintiff for ¢365 alleged to be materials supplied by him to the plaintiff. These materials were set out in exhibit R and valued at ¢1,322. Faced with exhibit R in the Court of Appeal, the second defendant’s counsel abandoned his original counterclaim, which he scaled down to ¢1,322. The plaintiff’s answer to the counterclaim is that it was set off against certain moneys which would otherwise have been due to him from the second defendant. I am afraid the plaintiff’s evidence on this score is tenuous and rather inconclusive. At page 91 of the record, he created the impression that this sum together with others amounting to ¢3,001 was set off against a ¢3,000 due to him under exhibit G. There is a figure ¢3,000 in exhibit G described as: “Contract stage 4 completed . . . ¢3,000.”
I do not, however, see the connection between the two sums ¢3,001 and ¢3,000, nor whether indeed, the ¢3,000 in exhibit G was ever forgone, and if so, when? Having regard to the contract price and
the total amount paid to the plaintiff, leaving the balance of ¢5,539, or as found by me, ¢8,064, it does not appear that an amount of ¢3,000 has at any time been credited by the plaintiff to the second defendant, in alleged satisfaction of the ¢3,001. Exhibit L, throws a blanket of suspicion on the plaintiff’s contention. In paragraph 4 of the said exhibit L, the plaintiff says that the Accra City Council charged “about ¢3,000” for approving the “first amended building plan,” implying that he must have paid for this expenditure with the materials he supplied, the cost of existing works carried out by the second defendant, and the price differential between glass louvres and wooden louvres: see paragraphs 5 and 6 of exhibit L. Paragraph 7 then says that, “In consideration of all these offers in paragraphs 5 and 6, I in turn did not claim extra money for the first amendment.” Therefore according to exhibit L, the plaintiff set off the materials, etc., against the cost of the first amendment. In his evidence, however, the ¢3,000 was set off against ¢3,000 due under stage 4 of the contract whereby the plaintiff was to be paid for plumbing and installing water closet, wash-basin, kitchen sink, etc: see p. 161 of the record. Against these conflicting positions taken by the plaintiff on the materials supplied, the second defendant states categorically in exhibit R that the balance of the contract sum due to the plaintiff excluded “the cost of the materials supplied to you by me.” Exhibit R is dated 1 October 1975 and is in reply to the plaintiff’s letter dated 23 September 1975 (exhibit K), informing the second defendant that the building had been completed. I agree with the view taken by the courts below on this issue, and I agree that the plaintiff has not sufficiently shown that he has paid for the materials, valued at ¢1,322.
In the result, I share the opinion of the Court of Appeal per Jiagge J.A. that the plaintiff is entitled to the cost of screeding (¢1,171); that the second defendant in his turn is entitled, on his counterclaim, to the value of materials supplied by him - ¢1,322. The plaintiff is not entitled to be paid the balance of the contract price found by me to be ¢8,064 without proof that he had fully discharged his portion of the contract.
I would dismiss the appeal, and affirm the ruling of the Court of Appeal, as slightly varied.