Deprecated: mysql_connect(): The mysql extension is deprecated and will be removed in the future: use mysqli or PDO instead in /home/ghanalegal/domains/ghanalegal.com/public_html/engine/Drivers/mysql.php on line 101 ADDO v. GHANA CO-OPERATIVE MARKETING ASSOCIATION LTD | GhanaLegal - Resources for the legal brains

ADDO v. GHANA CO-OPERATIVE MARKETING ASSOCIATION LTD


  • New
  • 1962-05-31
  • HIGH COURT
  • 1 GLR 418-425
  • Print

OLLENNU J.


Summary

Land law?-Two forms of contract for sale of land in Ghana.Contract?-Whether receipt for payment is a sufficient "note or memorandum in writing" within section 4 of the Statute of Frauds, 1677 (29 Cha. 2, c. 3).Contract?-President and sole director of co-operative society contracts with society?-Whether contract valid.Contract?-Specific performance?-Principles on which granted.

Headnotes

The plaintiff was the president and sole director of the Ghana Co-operative Marketing Association Ltd., the defendants herein. The association bought six plots of land at Kotobabi, Accra, for G160 13s. 4d. each. It built on two of the plots. At a committee meeting held at Bekwai, Ashanti, on the 24th August 1960, it was decided to sell the remaining four plots. The plaintiff offered to buy two at G50 each. He paid the price and was issued with a receipt. In 1961 one Mr. Obese Hayford, the new president of the association, wrote to the plaintiff to rescind the contract of sale, alleging that it was improperly procured. The plaintiff sued for specific performance of the said contract.The defendants argued inter alia that (a) the contract offended section 4 of the Statute of Frauds, 1677 (29 Cha. 2, c. (3) and was therefore unenforceable because there was no note or memorandum of it in writing, nor was there any evidence of part performance; and (b) the plaintiff, then a sole director of the defendant-association was in a fiduciary position and he could not properly enter into a contract with the association.

Judgement

ACTION for specific performance of a contract for the sale of land.

In this suit the plaintiff claims an order for specific performance of a contract entered into between him and the defendants for the sale to him of a piece of land situate at Kotobabi, Accra. The defendants admit that the contract as pleaded by the plaintiff was entered into, but contend that the said contract is not one of which the court should grant specific performance.

It would be appropriate at this stage to deal with the facts very briefly to form the foundation for the many points of law which have been raised and argued.

The defendant society is a co-operative society with limited liability registered under the Co-operative Societies Ordinance. 1 The plaintiff was at all material times the president and sole director of the society. The association was composed of unions from Ashanti, Brong-Ahafo and Southern Ghana. The committee of the society used to meet once in two months; one of its said meetings is held immediately prior to an annual general meeting usually held in August or September each year.

In 1960, the Ashanti/Brong-Ahafo unions decided to secede from the association and gave notice thereof to the association for permission to do so. By the rules of the society the notice of intention to secede could not take effect until after the expiration of six months. Meanwhile the said Ashanti/Brong-Ahafo unions had themselves registered on the 27th July, 1960, as a separate society under the name of Vacica.

The society owned six plots of land of which the two plots, the subject-matter of this suit, form a part. They built a house on two of the said plots for the occupation of the president.

The committee of the association decided to hold the annual general meeting for the year 1960 on the 27th August, and a committee meeting on the 24th August, 1960. At that time the Government was contemplating certain changes in the co-operative movement. The Government, therefore, advised the society through the Registrar of the Co-operative Societies to postpone the annual general meeting.

The meeting of the committee was held at Bekwai on the 24th August, 1960, as scheduled, so also was the general meeting fixed for the 27th August, 1960. It was at the meeting of the committee that a decision was taken to sell the land, two plots to the plaintiff and one plot each to two other members of the committee, i.e. the treasurer and [p.420] the secretary. That decision to sell the land to the plaintiff and the plaintiff 's agreement to buy constituted the contract upon which the plaintiff has sued.

The subject, i.e. the question of the sale of the land, was not on the agenda for the meeting as circulated to members. It was dealt with under "Any other business". Under bye-law No. 27 of the association a subject which was not on the agenda could not be dealt with unless three-fourths of the members agreed that it should be taken.

The society had purchased the land at G160 6s. 8d. but offered it for sale to the plaintiff and the other officers at G50 a plot. The plaintiff paid for the land on the 30th September, 1960, and obtained the society's official receipt for it.

On the 16th June, 1961, one Mr. Obese Hayford, the treasurer of the society to whom one of the plots of land had been offered, wrote, then as president of the Southern Ghana society, to rescind the sale of the land to the plaintiff on the grounds that the sale had been improperly made. He therefore forwarded a cheque for G100 to the plaintiff as a refund of the purchase price which the plaintiff had paid for the land. The plaintiff did not agree that the sale was irregular, he therefore returned the cheque to the society. The society has refused to execute a deed of conveyance on the land for the plaintiff. Later the plaintiff noticed that some building operations had begun on the land.

It was submitted for the defence that specific performance cannot be ordered in respect of this contract, firstly because there is no memorandum in writing signed by the defendants and in any event the land, subject-matter of the contract, has not been specified in the contract.

There are two forms of contract for the sale of land in Ghana. They are a contract under the common law, and a contract under customary law. The nature of the agreement between the parties coupled with the fact that the defendants by virtue of their being registered under the Co-operative Societies Ordinance are a body corporate with perpetual succession and a common seat as provided by section 9 of the Ordinance, a legal personality unknown to customary law, show clearly that the contract in question must be deemed to be one under the common law, as laid down in rule 2 of section 66, subsection (1) of the Courts Act, 1960 2 and the determination of the rights of the parties under it must be based upon the principles of the common law. Therefore to be enforceable the contract must be shown to possess all the essentials of a contract of sale of land by common law. It does not, however, mean that the title or tenure which would be conveyed upon performance of the contract would be other than title or tenure under the customary law.

In my opinion the minutes of the meeting of the committee held on the 24th August, 1960, exhibit A, and the official receipt of the association, exhibit E, dated the 30th September, 1960, given to the plaintiff for the purchase price paid by him, together constitute sufficient memorandum to satisfy the requirements of section 4 of the Statute of Frauds, 16773 which, by virtue of subsection (3) of section 17 of the Interpretation Act, 1960,4 remains part of our common law. Furthermore, [p.421]

I consider the tender by the plaintiff of the price of the land to the association and the acceptance thereof by the association as sufficient part performance which operates to make the contract enforceable in the absence of a note or memorandum in writing as required by the statute.

As to the identity of the land, it is true that there is no specific description of the land either in the minutes of the meeting or in the receipt, from which the land can be identified. But the evidence being that the society had just four plots of land at Kotobabi, the remainder of the six plots of land they owned in that locality, there could be no mistake whatever that the minds of the parties are ad idem as to the two plots the subject-matter of their contract and their identity. In the circumstances I hold that there is sufficient identification of the land such that if the court were to make an order for specific performance of the contract, it could be effectively carried out.

It was also submitted for the defendant that the committee meeting which decided to sell the land was not properly constituted because the Ashanti/Brong-Ahafo unions had given notice of their intention to secede, and had in fact already been registered as an autonomous society, therefore the committee could not be properly constituted with the Ashanti members thereof, because the unions they represented were no longer members of the main body. It is a logical inference from that submission that without the Ashanti members the committee could not be regarded as a committee of the association under the regulations.

In my opinion, since by the constitution of the association, notice of secession given by a member union cannot take effect until after the expiration of six months, the Ashanti/Brong-Ahafo unions remained legally part of the society until the date when their notice could take effect, and since the meeting in question was held within six months of their notice the attendance of their representatives at the committee meeting was valid. Consequently the proceedings of that committee meeting were not invalidated in any way by their presence.

Next it was submitted for the defence that since it is not shown on the minutes that votes were taken which showed that a majority of three fourths of the member of the committee were agreeable that the subject of the sale of the land should be discussed even though it was not on the agenda, the whole of that part of the proceedings of the committee which dealt with the sale of the land down to the contract to sell, is null and void.

Now the provision that three-fourths majority agreement is necessary for discussing a subject which is not on the agenda, does not necessarily require a vote to be taken to ensure that majority. If all the members present indicated their consent that the matter be discussed that would be sufficient compliance with the regulation, for then all are agreed. It is only where some members showed unwillingness to agree to the item being taken that a vote should be taken to ascertain whether the required majority is agreeable. In fact the minutes exhibit B show that three other subjects which were not on the agenda were dealt with in the same manner without objection from any member.

Another procedural point raised is that the plaintiff, the treasurer D.W.2, and the secretary P.W.2, had taken part in the discussions which ended in the decision to sell the land while they were persons interested in the purchase of the land. There are two principles involved in this [p.422] question of the decision to sell. The first is the principle whether or not the land should be sold, the second is the question to whom must it be sold. The first is the more important of the two, it is a policy decision. That policy decision whether or not the four plots left over after the erection of the president's residence should be sold, is not one which any member of the committee could have a personal interest in, at any rate not a direct interest. It was a matter which concerned the society as a whole. Therefore it was not necessary that any member should be excluded from the discussions on the grounds of interest. That those two questions were kept separate and distinct is made quite clear by the evidence of D.W.2 Obese Hayford. He said that the decision to sell the four plots of land was taken by the whole committee and it was after that decision had been taken that the question of prospective purchasers really arose. This is what he said in his evidence in chief:

"We were down-hearted that Government would take our properties free and not consider us, so we all agreed to sell. P.W.1 thereafter said that they the four Ashanti members were not interested in land in Accra so whoever was interested should buy it. The plaintiff then asked the committee how much they would sell a plot of the land for. The four Ashanti members said G100. The plaintiff replied that it was too much. The committee asked him to give an offer. Thereupon the plaintiff called me and Mr. Oteng P.W.2 into consultation outside, away from the meeting. At the consultation the plaintiff suggested G25 a plot, Mr. Oteng and I said it was too low, as we paid G160 for a plot. The plaintiff then suggested G50 a plot. I was confused; but afterwards I said that if land could be got for little or nothing like that, then I too must have a share, so Mr. Oteng and I agreed to have a plot each. I said I would take one plot and Mr. Oteng too said he would take one plot. We returned to the committee I then put our offer before them and they agreed. The decision to accept our offer was taken by the Ashantis in our presence."

I interprete that evidence to mean that the whole committee took the policy decision, i.e. to dispose of the four plots of land. The four Ashantis then offered the said plots to the plaintiff and any other person who would be interested in buying them. At this point the plaintiff was the only person interested, he was asked to make an offer for the consideration of the other members of the committee, i.e. Obese Hayford and the four Ashanti members, Oteng P.W.2 as secretary was not a member of the committee, he was in attendance only. The plaintiff thereupon sought the advice of Obese Hayford and Oteng outside the meeting. During the consultation outside the meeting, P.W.2 Mr. Oteng and D.W.2 Mr. Obese Hayford decided that they too would buy a plot each. They returned to the committee meeting and made an offer; the committee accepted that offer. It follows that the plaintiff and the other two purchasers did not take part in the decision on the subject whether or not the offer made by the plaintiff to buy should be accepted, i.e. whether or not the land should be sold to plaintiff, and if so, at what price. The objection on this point cannot therefore be upheld.

Counsel for the defence next submitted, that even if the contract is valid, the court ought not to enforce it, because the plaintiff, as president and sole director of the association was trustee of the association and a contract made between him and the association cannot in the circumstances be specifically enforced by the court against the association. For the plaintiff it was submitted that a director of a co-operative society registered under the Co-operative Societies Ordinance does not stand in the same fiduciary relationship to the society as a director of an ordinary limited liability company, because in the case of a registered co-operative society the management of the society is vested in the committee of the society and not in the director, and therefore the director of a society is [p.423] nothing more than a member of the committee, and any personal transaction he enters into with the society he enters into it as a stranger dealing with the committee, nothing more. Counsel referred to Halsbury?'s Laws of England (3rd ed.) Vol. 9, page 82, para. 165 to support the proposition.

I agree with the proposition that when the management of any business, society or organisation is vested entirely in a group of persons, e.g. a committee, any member of that committee who enters into a transaction with the committee or body of management can be regarded as a stranger. But I do not agree that that proposition applies to a sole director of a society registered under the Co-operative Societies Ordinance.5 "Committee" under the Co-operative Societies Ordinance is defined in section 2 as "the governing body of a registered society to whom the management of its affairs is entrusted."

Regulations 13 and 15 of the regulations6 made under section 66 of the Ordinance (see page 469 of Volume IX of the Laws of Ghana) provide that:

"13. a registered society shall elect annually a committee composed of a president, such number of vice-presidents as may be prescribed by the bye-laws, a treasurer and if deemed necessary an assistant treasurer, and such number of other members as may be prescribed by the bye-laws."

"15. the powers and duties of the officers and committee shall be prescribed in the bye-laws of the society."

The bye-laws of the defendant society are exhibit D in this case. Bye-law 25 (1) and (8) made in pursuance of regulation 15 referred to above state those powers of the committee as follows:

"25. Subject always to the decision of the general meeting the specific duties of the committee shall include:

(1) to ensure that the order, the regulations and the bye-laws are complied with, and that the business of the society is properly conducted, and the resolutions of the general meeting are carried out and ...

(8) to represent the association in all transactions, to institute compromise and defend suits on its behalf and generally to take all other measures necessary for carrying on the business of the association.?"

Bye-law 34 lays down the powers of the director as follows:

34 (a) The director will be responsible for the general day-to-day administration and control of the association and its branches. Administration involves routine procedure as laid down in the schedule of duties, the control of expenditure and the supervision of staff.

(b) He will submit a report and statement of account of the association regularly at each committee meeting."

It will be seen from these that the position of a committee of a society registered under the Co-operative Societies Ordinance, is comparable to that of a board of directors of a limited liability company incorporated under the Company's Ordinance 7 and that the position, of the president and sole director corresponds to that of a managing director of such company. The position of these two bodies in a limited liability company is described at pages 17 and 18 of Gower's Modern Company Law (2nd ed.). Of the board of directors the learned author, at page 17, said:

"But although it would be constitutionally possible for the company in general meeting to exercise all the powers of the company, it clearly would not be practicable (except in the case of a one or two-man company) for day-to-day [p.424] administration to be undertaken by such a cumbersome piece of machinery. Hence the statute, charter, or articles will provide for a board of directors, corresponding to the executive government of the State, and will say what powers are to be performed by the board and how it is to be appointed and changed. Like the Government, the directors will be answerable to the 'Parliament' constituted by the general meeting, but in practice (again like the Government) they will exercise as much control over the Parliament as that exercises over them. And the modern practice is to confer on the directors the right to exercise all the company's powers except such as the general law expressly provides must be exercised in general meeting."

Of the managing director he said, at page 18:

"This wide delegation of the company's powers is, however, to the directors acting as board, not to the individual directors. But, here again, it will obviously be impractical in the case of large companies for day-to-day administration to take place at formal board meetings which will probably be held not more than once a fortnight. In the meantime other officers of the company will have to ensure that the decisions of the board are implemented and its policy carried out; under the board and directly or indirectly responsible to and appointed by the board will be found the management and secretariat. In all probability some, at least, of the managers and perhaps the secretary will also be directors, for the normal practice today is to provide that directors may be appointed to other paid offices in the company. And, in practice, these officers will do much more than merely carry out the decisions and policy of the board; they will themselves make decisions and decide on policy. In fact, many, and perhaps most, of the company's powers which have been primarily delegated to the board will be subdelegated by them to the managing director or directors."

In my opinion the plaintiff's position vis-a-vis the association is exactly the same as that of a managing director to a company.

Now specific performance is a discretionary remedy, see Halsbury's Laws of England (3rd ed.), Vol. 36, page 263. There are certain cases where the court will refuse to grant it, e.g. when owing to intervening circumstances it would be impossible to carry the order into execution, or where the contract is tainted with fraud or where there is unfairness about the transaction, even though the unfairness might be unintentional: (see Fry on Specific Performance, (3rd ed.) pages 186-7), or where the contract is unbusiness-like: (Fry, op. cit, page 192) or where a person in a fiduciary position like a director, enters into a contract which brings his interest into conflict with his duties as such director or trustee. For a full discussion on the subject see Halsbury, op. cit., pages 291, 298, 299 and 300. At page 478 of Gower's Modern Company Law (2nd ed.) the principle is stated as follows:

"As fiduciaries, directors must not place themselves in a position in which there is a conflict between their duties to the company and their personal interests. Good faith must not only be done but must manifestly be seen to be done, and the law will not allow a fiduciary to place himself in a situation in which his judgment is likely to be biased and then to escape liability by denying that in fact it was biased."

That I think is the principle which I must apply in this case. As the president and sole director, the plaintiff was in receipt of salaries and bonuses. The members of the committee were also in receipt of allowances and bonuses.

Land which was purchased by the association at G160 13s. 4d. a plot, is sold by the committee of the association at G50 a plot, i.e., at less than one-third of what it cost the society. The attitude of the Ashanti members of the committee in this respect was one of great indifference, they could not care less what the property was sold for, and the Southern Ghana members appeared to have taken unfair advantage of the situation. It does not appear to me that the committee showed [p.425] much sense or responsibility about the time of this contract. The same applies to the Association as a whole, they gave a comparatively new vehicle purchased for not less than G800 to Obese Hayford D.W.2 free of charge, and another vehicle for next to nothing, and Obese Hayford took both of them without a prick of conscience.

The contract no doubt is valid, but the circumstances of it are such that I do not consider that it would be a proper exercise of the judicial discretion of the court to make an order for the specific performance of it; it is a case in which the court should stay its hands.

The plaintiff's claim should, therefore, be dismissed. The plaintiff's claim is dismissed with nominal costs fixed at 25 guineas.

Decision

Action dismissed.

Plaintiff / Appellant

G. Koranteng-Addow

Defendant / Respondent

P. Adjetey

Referals

Warning: fopen(/home/ghanalegal/domains/ghanalegal.com/public_html/cases/public/cache/5b1319e067cb9b7a6b690e0918d3e24e): failed to open stream: Permission denied in /home/ghanalegal/domains/ghanalegal.com/public_html/cases/apps/modules/render/models/cache.php on line 44 Warning: fwrite() expects parameter 1 to be resource, boolean given in /home/ghanalegal/domains/ghanalegal.com/public_html/cases/apps/modules/render/models/cache.php on line 46 Warning: fclose() expects parameter 1 to be resource, boolean given in /home/ghanalegal/domains/ghanalegal.com/public_html/cases/apps/modules/render/models/cache.php on line 48