HIGH COURT, ACCRA
DATE: 13 DECEMBER 1967
BEFORE: AMISSAH J.A.
CASES REFERRED TO
(1) Holman v. Johnson (1775) 1 Cowp. 341; 98 E.R. 1120.
(2) North Western Salt Co., Ltd. v. Electrolytic Alkali Co., Ltd.[1914] A.C. 461; 83 L.J.K.B. 530; 110
L.T. 852; 30 T.L.R. 313; 58 S.J. 338, H.L.
NATURE OF PROCEEDINGS
APPLICATION for an order to set aside a summary judgment on the ground of illegality. The facts are
set out in the ruling.
COUNSEL
Heward-Mills for the plaintiffs.
G. Djabanor for the defendants.
[p.739] of [1967] GLR 737
JUDGMENT OF AMISSAH J.A.
The plaintiff brought this action against the defendants claiming the sum of N¢134,000.00 plus interest as money received by the defendants for the plaintiff’s use. According to the plaintiff’s statement of claim, he paid to the defendants at the request of the first defendant the sum of N¢150,000.00 against the supply of goods to be imported into Ghana in the name of the second defendant company. The defendants supplied no goods except some paints to the tune of N¢10,000.00 which were unsaleable in Ghana. It is not clear from the pleadings whether account is taken by the plaintiff of this supply of paint. What is clear though is that the plaintiff’s claim is for the N¢150,000.00 alleged to have been given less an amount of N¢16,000.00 which is described as “amount received.” Whether the receipt was in cash or kind is left unsaid.
The defendants entered an appearance to the plaintiff’s writ. Thereafter the plaintiff applied to the court for final judgment under Order 14 of the Supreme [High] Court (Civil Procedure) Rules, 1954 (LN 140A). The first defendant filed an affidavit in opposition. In this he made no denial of the plaintiff’s basic claim that they had been paid money for goods the bulk of which had not been delivered. He claimed on his own behalf and on behalf of the second defendant company of which he was the localmanager, to have a valid defence to the action. But from what I can gather from the affidavit this defence is founded on an account which the first defendant said the second defendant had with the plaintiff. The first defendant himself disclaimed personal liability on the ground that he contracted with the plaintiff in his capacity as the local manager of the second defendants. The transaction between the parties, the first defendant said, mainly took place in Modena in Italy where all the account books relating to the transaction were. He had, since the writ was served on him, cabled for them to enable him to file his defence.
At the hearing of the summons for judgment, learned counsel for the defendants said that he was not in the position to oppose part of the plaintiff’s claim which amounted to N¢58,000.00. Judgment was given to the plaintiff for that sum. As to the remainder of the claim, both counsel were agreed that the amount to be paid depended upon the interpretation of a document which, then being in the Italian language, required translation. The question as to that portion of the claim was therefore adjourned pending transaction of and argument on the document.
Now Mr. Djabanor for the defendants has asked that the judgment of the court for the agreed sum of N¢58,000.00 be set aside on the ground of illegality. The illegality, it is said, lies in the fact that the original contract for the sale of goods was set aside by the parties and a new contract, subject to Italian law, made when the
[p.740] of [1967] GLR 737
plaintiff agreed to accept cheques from the defendants in Italy in discharge of the debt to him. And that this new contract is unenforceable in Ghana as it infringes the provisions of the Exchange Control Act, 1961 (Act 71). Apparently after the plaintiff had waited in vain for his goods in Ghana, he pursued the first defendant to Italy where the latter had then gone and demanded his money, whereupon the first defendant gave him a number of cheques drawn on Italian banks. These cheques however, were dishonoured upon presentation.
There is no doubt that the courts will decline to aid a plaintiff to an illegal contract. And that this will be done even if the defendants are equally in the wrong. The principle was stated with great clarity as farBback as the eighteenth century by Lord Mansfield in Holman v. Johnson (1775) 1 Cowp. 341 at p. 343 when he said:
“The objection, that a contract is immoral or illegal as between plaintiff and defendant, sounds at all times very ill in the mouth of the defendant. It is not for his sake, however, that the objection is ever allowed; but it is founded in general principles of policy, which the defendant has the advantage of, contrary to the real justice, as between him and the plaintiff, by accident, if I may so say. The principle of public policy is this; ex dolo malo non oritur actio. No court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act. If, from the plaintiff’s own stating or otherwise, the cause of action appears to arise ex turpi causa, or the transgression of a positive law of this country, then the Court says he has no right to be assisted. It is upon that ground that the court goes; not for the sake of the defendant, but because they will not lend their aid to such a plaintiff. So if the plaintiff and defendant were to change sides, and the defendant was to bring this action against the plaintiff, the latter would then have advantage of it; for where both areBequally in fault, potior est conditio defendentis.”
It is this principle that the defendants want to take advantage of. Counsel, however, asks for the court’sbassistance in this respect in unusual circumstances and at an unusual time. It must be remembered that the judgment of the court has already been given for the plaintiff and that by the time it was given no issue of illegality had been raised. The plaintiff has since been taking what measures he can to execute this judgment. In practical terms, therefore, the court has given its aid already to this presumably undeserving plaintiff. It must be remembered further that this judgment was given with the consent of the defendants.
The cause of the alleged illegality must have been known to the defendants all the time. It is therefore[p.741] of [1967] GLR 737 open to serious question whether the agreement sued upon is actually tainted by illegality or whether the allegation is a belated gamble in the hope that it might succeed in reversing the defendants’ fortunes. The defendants in answer to this question argue that as long as the plaintiff had not relied on an illegal contract, and he had not relied on any by the time he obtained his judgment, they could not ask the court to reject his claim. They make the request now as the plaintiff is relying upon a document which discloses the illegal arrangement. I am surprised at this submission. Normally the defendant who wants to raise the issue of illegality arising out of a statute should plead it: see North Western Salt Co., Ltd., v. Electrolytic Alkali Co., Ltd. [1914] A.C. 461, H.L. The court will itself take notice of any illegality upon which the plaintiff is suing if it appears on the face of the contract or from evidence adduced by either party, but nothing debars the defendant from raising it in his pleadings and before the plaintiff has given any hint of it. On the contrary it is in his interest that he should plead it otherwise he might find himself prevented from raising it later. Lord Haldane L.C. in the North Western Salt Co., Ltd. case at p. 469 dealt with the matter in this way: “My Lords, it is no doubt true that where on the plaintiff’s case it appears to the Court that the claim is illegal, and that it would be contrary to public policy to entertain it, the Court may and ought to refuse to do so. But this must only be when either agreement sued on is on the face to it illegal, or where, if facts relating to such an agreement are relied on, the plaintiff’s case has been completely presented. If the point has not been raised on the pleadings so as to warn the plaintiff to produce evidence which he may be able to bring forward rebutting any presumption of illegality which might be based on some isolated fact, then the Court ought not to take a course which may easily lead to a miscarriage of justice. On the other hand, if the action really rests on a contract which on the face of it ought not to be enforced, then, as I have already said, the Court ought to dismiss the claim, irrespective of whether the pleadings of the defendant raise the question of illegality.”
A defendant who goes by the belief that he may raise the question of illegality only if the plaintiff makes the first move, runs the risk of having a judgment on an illegal contract given against him when he could, even though undeservingly, have warded it off at little cost to himself.
What then is the illegality by which this contract is tainted? It is significant that Mr. Djabanor was not himself clear on the
[p.742] of [1967] GLR 737
section of the Exchange Control Act, 1961 (Act 71), from which he drew his strength. Somewhere hidden within the complexities of sections 5, 6 and 7 there has to be some provision which strikes at any arrangement by which one person pays another money in this country so that money may be paid to him in another. Section 5 is certainly of no assistance to him. It deals with payments in Ghana to or for the credit of, or by order or on behalf of an external resident and the burden of counsel’s submission was that re-payment was attempted in Italy to a Ghana resident of an amount received in Ghana. In the course of his submissions Mr. Djabanor tried to apply different standards to the plaintiff and the first defendant to determine whether the plaintiff was not an external resident. But it was clear that by the same test either both he and the first defendant were Ghana residents or they were not and that the circumstances favoured their being residents. Section 6 which deals with payments outside Ghana is also inapposite. It proscribes payments by Ghana resident outside Ghana to or for the credit of external residents. Section 7 which deals with compensation deals, at first blush, looks like providing the defendants with the haven they seek. It provides as follows:
“7. Except in such circumstances as may be prescribed, no person shall in Ghana, and no Ghana residentshall outside Ghana, make any payment to or for the credit of Ghana resident as consideration for or in association with—
(a) the receipt by any person [and this presumably will include the person who makes the original payment] of a payment made outside Ghana, or the acquisition by any person of property which is outside Ghana, or
(b) the transfer to any person, or the creation in favour of any person, of a right (whether present or future, and whether vested or contingent) to receive a payment outside Ghana or to acquire property which is outside Ghana.” It is indeed under the provisions of section 7 (a) that arrangements to pay money in Ghana in consideration of receiving money outside Ghana are made illegal. Had the plaintiff, a Ghana resident, paid money in Ghana to the first defendant in consideration for or in connection with the plaintiff receiving payment outside Ghana, the transaction would have been caught by the section. But the question which has to be answered is whether there was any such arrangement in the instant case. The plaintiff says he paid his
[p.743] of [1967] GLR 737
money in Ghana for the importation of goods to Ghana. This is not controverted by the defendants. How can they now claim that there was an arrangement whereby they received money here in consideration for or in association with their paying money to the plaintiff in Italy? There was according to the pleadings of the plaintiff no such arrangement. The document now alleged to disclose the illegality does not say that there was any such arrangement. It seems to me that the defendants upon a sudden inspiration are clutching at some vague belief that the Exchange Control Act casts an umbrella of invalidity on all financial transactions between Ghanaian residents and others abroad as the shield that would save them from liability. Of course, if they are entitled to the protection of the law in the course that they advocate then this court would be bound, however regretfully, to accord it to them. But for any person to receive money in this country on a contract which on the face of it is legal, then runs away from his obligation toBanother country and when pursued and put under pressure there, to give dud cheques in order presumably to gain time, then finally to turn round and ask our courts to protect him from the consequences of hisbbreach of the original contract on the ground that that contract has been replaced by the acceptance of his dud cheques is, to say the least, the height of impudence. I do not accept that the Exchange Control Act is designed, or in terms even attempts, to improve the position of the debtor with the ability to escape from our territory, as compared with his creditor without that ability. For the logical result of the defendants’ argument is that if the debtor manages to escape from this to some other country then the creditor cannot pursue him there to get his redress from him. The Act would protect him from meeting his liabilities.
Even the payment of a debt secured by a judgment in that other country would according to the argument advanced be an infringement of the Act. A conclusion which no doubt will immediately be condemned as absurd.
That I think disposes of the defendants’ application. I may perhaps add that even if the acceptance of the cheques in Italy was illegal I do not think it would be an illegality which would render the agreement between the parties unenforceable. If I understand the claim which is as I have said undisputed at this stage, it is a claim for money given for a legal consideration which has failed. I am unable to accept that this agreement was replaced by the acceptance of the cheques. If one sells goods and accepts a cheque therefor is he confined to suing on the cheque alone if it is not honoured? I think his cause of action on the original contract remains. It is on the original contract that this plaintiff is suing and that contract
[p.744] of [1967] GLR 737does not appear to be founded on an illegality. Nor was there any illegality in the suggested mode of its performance. The application is therefore dismissed.
DECISION
Application dismissed.
K.S.N.D.
