BOUR AND OTHERS v. KOJO AND OTHERS
[SUPREME COURT, ACCRA]
DATE: 10TH JULY, 1962
COUNSEL
J. Reindorf for the appellants.
N.Y. B. Adade for the respondents.
JUDGMENT OF ADUMUA-BOSSMAN J.S.C.
Adumua-Bossman J.S.C. delivered the judgment of the court. This appeal is against a judgment
dated the 4th February, 1961, of the High Court, Kumasi, (Crabbe, J. as he then was) whereby the
plaintiffs’ claim for the sum of £G4,033 5s. 2d. as amount due and payable under a contract of
indemnity between the parties, was upheld.
The events leading to the institution of the action are briefly these. Both parties, plaintiffs as well as
defendants, were at the material times, members of a limited liability company (which will be referred
to shortly henceforth as the company) incorporated under the Companies Ordinance1(1), in force in
1957, with a share capital of £G250,000, and with the primary object as set out in the memorandum
exhibit C:
“To represent the interests of the whole of the producers of cocoa and other raw materials of Ghana, and
on their behalf to assemble and sell or otherwise deal with the whole of the cocoa-crop of Ghana, and for
that purpose carry on the business of a Central Selling Agency and, if possible, of a Central Purchasing
Society, and the business of Buyers of cocoa and other cultivated and naturally produced products of
West Africa, and of Sellers, Dealers, Shippers and Manufacturers therein.”
By the articles of association (hereinafter shortly called the articles) the company was organised on a
regional basis and this case arose out of the activities of some of the members of the Ashanti regional
division having its offices in Kumasi. The four plaintiffs together with
[p.32] of [1962] 2 GLR 30
three others, namely Mr. B. D. Addai, Opanin Kwaku Tano, and Mr. Owusu Nyantekyi were directors
of the company in Kumasi, and all the directors together with the defendants constituted the
management committee of the said regional division. It is not clear on what date in 1957 after the
signing of the memorandum and articles on the 26th September, 1957, certificate of incorporation was
issued to the company before it commenced its business operations; but by the 8th July, 1957, a few
months before the incorporation of the company, the agreement on which the claim in the action is
based, was entered into and reduced into writing and signed by the parties (see exhibit D). For the
present it is only necessary to note that its general effect was that the plaintiffs undertook to provide
mortgages and other securities and guarantees to the Bank of West Africa, Kumasi Branch
(hereinafter referred to shortly as the bank) at the request of their three fellow directors together with
the defendants, for the bank to make cash advances to the company, no doubt when it shall have been
incorporated and come into being, for purposes of its business operations; the defendants in their turn
undertook and bound themselves to indemnify the plaintiffs in respect of any sums which they shall
have been called upon to pay to the bank for moneys advanced to the company but unpaid by the
company. In conformity with the terms of the agreement, the plaintiffs provided securities by way of
mortgages of their personal properties and gave written guarantee, whereupon the bank made cash
advances to the company. By the 30th September, 1958, the company was indebted to the bank in the
sum of £G4,033 5s. 2d. representing balance of unpaid advances together with interest and charges
thereon, and this amount the plaintiffs were called upon to settle. They arranged and paid by
instalments and by the 8th September, 1959, completed settlement, and they thereafter instituted the
action resulting in this appeal claiming to be indemnified in that amount in accordance with the
defendants’ undertaking contained in the agreement exhibit D.
At the trial the defendants could not, and did not, deny that advances were made to the company by
the bank which the company were unable to repay, and that the plaintiffs paid the amount claimed in
the writ to the bank in satisfaction of the outstanding balance due from the company to the bank.
The defendants however by their statement of defence raised what was purely a legal defence to the
effect that the agreement, exhibit D should be read subject to the memorandum and articles of the
company (exhibit C) in which event, (a) the agreement was null and void because the memorandum
and articles did not empower the parties to the agreement, exhibit D to arrange a loan for the
company; (b) the loans having been arranged on behalf of and given to the company the plaintiffs’
remedy, if any, lay against the company; (c) the company not having gone into liquidation for assets
and liabilities to be computed, the action was premature; and (d) the articles having laid down a
procedure for settling disputes between members in relation to the company’s business and the
plaintiffs not having resorted to that procedure, the action should be struck out. These contentions
counsel for the defendants argued and pressed before the learned trial judge, who however rejected all
of them and allowed the plaintiffs’ claim. On the main contention on behalf of the defendants, he said:
“I am of the opinion that exhibit D is an original and independent transaction; I do not think that the
terms of that agreement are anyway affected by the clauses of the memorandum and articles, exhibit C.”
[p.33] of [1962] 2 GLR 30
There can be no doubt that the question whether or not the agreement, exhibit D, should be read as
subject to the memorandum and articles is the substantial question for determination in the case, and it
is significant that counsel for the defendants-appellants in his final reply conceded that the prevalence
of almost all his contentions depended entirely on his view of that question being held to be correct.
Was the learned trial judge therefore wrong in his decision above set out, and counsel’s contention or
view to the contrary that the agreement, exhibit D ought, as a matter of legal compulsion, to be read as
subject to or incorporating the memorandum and articles, exhibit C, well-founded? I think not. It is to
be observed that the agreement of indemnity contained in exhibit D is subject to the Statute of Frauds
2(2) by section 4 of which “any special promise to answer for the debt, default, or miscarriage of
another person” must be in writing in order to be enforceable. (See Sutton & Co. v. Grey.3(3)) In
respect of such contracts subject to the Statute of Frauds, the principle is clearly established by the
case of Boydell v. Drummond 4(4) that separate documents could not be joined together to make a
memorandum in writing to satisfy the requirements of the statute, unless there was a sufficient
reference from one writing to another contained in the documents themselves to show that they were
intended to be read jointly with the memorandum, without the necessity of recourse to parol evidence
to show such intention. So in that case, in the course of his judgment for the court, Ellenborough, C.J.
said5(5):
“On conference with my brothers, finding that we are all of opinion that the action is not maintainable on
one of the grounds of objection taken to it … I cannot connect the subscription of the plaintiffs’ name in
the book with the prospectus; nor does the defendant’s letter refer to the prospectus produced at the trial
… If there had been a plain reference to the particular prospectus, that might have helped the plaintiff;
but there is nothing of the kind.”
In the much later case of Franco-British Ship Stores Co. Ltd. v. Compagnie des Chargeurs
Francaise6(6) Sankey, J. (afterwards Lord Chancellor) explained the same principle in these words:
“The rule is that the connexion between several documents must appear on the face of the documents
themselves. (Smith’s Leading Cases 12th ed. Vol. 1, P. 345). See too Ridgway v. Wharton (6 H.L.C
238.). The statute is not complied with unless the whole contract is embodied either in some writing
signed by the party or in some paper referred to in a signed document and capable of being identified by
means of the description of it contained in the signed paper.”
Upon the most careful examination of the written agreements, exhibits D and C, no “internal
reference” to each other, or “intrinsic connection” between them will be found to exist, as required by
the principle of the above authorities, and many others on the same point, and I am satisfied therefore that the learned trial judge was right when he described exhibit D as “an independent transaction —
the terms of which agreement are not in any way affected by the clauses of the memorandum and
articles of association, exhibit C.”
[p.34] of [1962] 2 GLR 30
Having regard to that view which I am impelled to take of the substantial question for determination
in the appeal, all the other subsidiary contentions either cease to have any force or fail altogether and
with them the appeal, which I would accordingly dismiss with costs in favour of the
plaintiffs-respondents.
DECISION
Appeal dismissed.
J. D.
