HIGH COURT, KUMASI
DATE: 21ST MARCH, 1961
BEFORE: DJABANOR, J.
CASE REFERRED TO
Jonesco v. Beard [1930] A.C. 298, H.L.
NATURE OF PROCEEDINGS
APPLICATION for an order to set aside a judgment of the High Court, Sekondi, on the grounds of fraud and illegality.
COUNSEL
N. Y. B. Adade for the plaintiff.
G. Davey for the defendant.
JUDGMENT OF DJABANOR J.
[His lordship read the writ of summons set out in the headnote and continued:] It is stated at p. 790 of Halsbury (3rd ed.), Vol. 22 that an action to set aside a judgment for fraud is possible. But on the course of such an action, this famous dicta by James L.J. cited by Lord Buckmaster in Jonesco v. Beard1(1) must be borne in mind. He said of review for fraud: “That must be done by a proceeding putting in issue that fraud and that fraud only. You cannot go to your adversary and say, ‘You obtained judgment by fraud and I will have a rehearing of the whole case’ until that fraud is established. The thing must be tried as a distinct and positive issue.”
In this case where the judgment is being attacked for fraud, it is my duty to avoid having the original issue retried at this stage, if that is not needed to prove the fraud. I will direct my attention to the fraud alleged and if I find that the evidence in support of it is strong enough, I would hold that the judgment be set aside on that ground, leaving it to the former judgment-holder to re-establish his claim inanother action if he sees fit.
[p.188] of [1962] 1 GLR 186
What are the allegations of fraud against the defendant? [His lordship set out the facts reproduced in the headnote above and continued:] There have been only three witnesses in all, but the evidence has been voluminous, covering and in fact re-litigating the whole case again. As I have indicated all I am interested in at this stage and in this case is to rule whether the fraud alleged is established or not, not whether the defendants (plaintiffs in the former case) could have established their claim. What I have to decide is whether the defendants and Edward Ramia acted in collusion to keep away from, or misrepresent to, the plaintiff what the sum claimed in the former action really stood for and whether by virtue of that misrepresentation plaintiff was put in the position where he found it useless to defend the action.
In respect of his allegation that the true facts were concealed from him, the plaintiff said as follows: “Sometime in June 1960, my attention was drawn to a suit by the defendant company against the partnership. I was served with a writ of summons. I have the writ. [Tendered, not objected to, accepted as exhibit B]. That writ purported to claim from us £G21,074 odd by way of an amount we were alleged to have overdrawn. Before the action was brought I was in Takoradi when I saw a letter from the defendant threatening to sue us. I was very surprised because according to the partnership records the bank had given us a loan — which it had transferred to North of France — for the purchase of spares for the motor vessel. The bank was also aware that those spares had not arrived. I was therefore surprised that they should threaten to take the action. I went to the bank to see the manager in Kumasi — Mr. Craig. The gist of our discussion was that — ‘You know that we depend upon the spares to run our business in order to pay you — why take action against us when the spares had not arrived.’ Mr. Craig told me that since the amount was advanced we had paid nothing in to reduce the amount and that as other creditors were taking action against us, the bank had to protect its interest by also taking action. Having been assured that this was money we genuinely owed to the bank, I realised that there was no point in defending the action. I did not therefore defend the action. After my interview with the manager and after the service of the writ upon me I went to the bank again to see the manager but Mr. Craig was absent and I saw his assistant. By this time the Seagull Fisheries had been transferred into a limited company. Anxious to see that the bank does not lose this money I suggested to the assistant manager that I was prepared to make debentures in favour of the bank covering all the assets of Seagull Fisheries Ltd.
All this I did in order that the bank may give us time for the spares to be delivered and we do business and pay them off. When I was told that the amount claimed on the writ was for overdraft — I accepted it as true — I had no reason to doubt — knowing that the spares for the four vessels would cost us about £G20,000. By that date I did not know that there had been any transfer of the debit account of Edward Ramia Ltd. to the account of the Seagull Fisheries. When I saw the bank manager and discussed this claim he did not tell me that he had been instructed to transfer the debit balance of Edward Ramia Ltd. to the Seagull Fisheries account. He told me that they were not concerned with when the order for spares was delivered. The copy of writ of summons — exhibit B was served on Edward Ramia himself. As I said, I saw the bank manager twice — both before and after the writ was served. I instructed Mr. Sotomey who entered appearance on behalf of all the partners. I discussed the claim with Ramia and he told me substantially what the bank manager had told me — that other creditors may forestall the bank if
they did not take action against us quickly. At the time Ghana Cold Stores had taken action against us at Sekondi through the same solicitors, Giles Hunt of Sekondi. At that stage Ramia did not tell me that he had caused to be transferred the debit balance of Ramia Ltd. to our company. In due course the defendant-company signed judgment against us for the amount claimed and costs. This is the certified copy of the judgment. [Tendered, not objected to, accepted as exhibit C.] After this judgment I went to Abidjan and brought two gentlemen who were prepared to buy two of the boats for £G23,000. I introduced them to Mr. Ramia to negotiate the sale and pay off the bank. I went to U.K. On my return Ramia had not sold the boats. He said the gentlemen offered £G17,000. I pushed Ramia to repeat my request for debentures to the bank and the defendants said they would consider it but
[p.189] of [1962] 1 GLR 186
nothing came out of it. I therefore told Ramia that we should instruct the manufacturers of the spares to stop the transaction and return the money so that we give same back to the bank. I requested Ramia to send me the address of the manufacturers so that I could fly to France and persuade them to return the money. Ramia began to act suspiciously. I had a friend by name Hutchison who said he might be able to get the address of the manufacturers from the bank. All along I was under the impression that the debt was a genuine overdraft. Mr. Hutchison came to tell me that in fact no money had been transferred to the manufacturers on our behalf, and that rather some amount of debit balance had been transferred from Edward Ramia Ltd. to our account. This was at the end of March, 1961. I sent a threatening message to Ramia. Later I wrote a letter to the bank. I tender the copy of that letter. [Not objected to, accepted as exhibit D.] The defendant bank sent a reply dated the 19th April, 1961. [Tendered, not objected to, accepted as exhibit E.] Subsequent to the receipt of this exhibit E I wrote to enquire about the exact amount transferred. I tender a photostat copy of the letter. [Not objected to, accepted as exhibit F.] I had no reply to this letter. On the 13th May, 1961 I wrote again to the defendant bank. I tender a photostat copy of that letter. [Not objected to, accepted as exhibit G.] On the 17th May, 1961 the defendant bank
replied by this letter. [Tendered, not objected to, accepted as exhibit H.]
By the 30th December, 1958 the Seagull Fisheries account with the defendant bank was only about twenty days old. On 30th December, 1958 the bank manager knew that Edward Ramia Ltd. had sold all their assets — they were not worth one penny. From the bank’s letter exhibit H I knew that the amount that was transferred was £G21,863 18s. 6d. and from the writ — exhibit B. I was sued for £G21,074 5s. 9d. If this amount had not been transferred we would not have owed the defendant bank. We would have been in credit.”
[His lordship then rehearsed the evidence of the defendant and continued:] Edward Ramia the defendant’s witness who was the partner of the plaintiff in the partnership and the defendant in the former case that went undefended, stated inter alia, “I remember that in February 1959 the plaintiff confronted me with a bank statement with this heavy debit balance and I told him that it was an overdraft granted us to pay for spare parts ordered. Even at that time I did not tell plaintiff that I had caused to be transferred this heavy amount from E. Ramia Ltd. to the partnership account. The bank statement he showed to me did not indicate that the debit balance was a transfer from E. Ramia Ltd.’s account. After the bank had written letters threatening to sue in 1960
the plaintiff came to see me and I asked him to go and see the bank manager. I think he went. He came to tell me that he asked the bank manager about the spare parts and that the bank manager told him he was not concerned about that. He (plaintiff) therefore came to ask me if they had been ordered and I said yes.
I remember now that Mr. Heward-Mills told me that the bank manager told him that the money £G20,000 had been transferred to France. The bank manager and I arranged that if the question of the large debit balance was raised we should both say that that was the overdraft for spares. [Court ascertains from witness if he understands. He admits.] In June, 1960 the bank sued the company. I was served and I entered appearance. I did not defend the action. Judgment was entered against the Seagull Fisheries Co.
Property of the Seagull Fisheries had been attached and sold. Everything went wrong with E. Ramia Ltd. so I could not get the money to pay back to Seagull Fisheries or the bank.”
In my view there is no material conflict between the evidence of any of these three gentlemen, on this point, namely that the plaintiff was not told exactly what the sum claimed in the writ of summons represented. He was made to understand, erroneously in my opinion, that a transfer of an equivalent amount had been made to France for the purchase of spare parts for their vessels. He was not told that the sum represented a debit balance of Edward Ramia Ltd. transferred to the partnership account. In fact, it appears that E. Ramia and the bank manager agreed not only not to put the plaintiff into the true picture, but to mislead him by telling the plaintiff that the amount had been transferred to purchase spares. As I said there has not been any material conflict in this evidence
[p.190] of [1962] 1 GLR 186
and I accept it as correct. I furthermore have to accept the plaintiff’s evidence that but for this misrepresentation and collusion on the part of E. Ramia and the bank manager he would have defended the action.
Having found as I have done I do not think any useful purpose will be served in considering any further points or allegations of fraud. What I have so far found is sufficient to entitle me to set aside the judgment of this court sitting at Sekondi on the 25th July, 1960. If I did more I would be opening and hearing the former claim again, which as I have ruled is not my province now.
In the result I find that there was collusion between defendants’ manager and one of the parties in the former case, i.e. a party who ought to have protected the interest of the partnership, but who did not do so on the advice of the defendant’s manager.
An action will also lie to rescind a judgment on the ground of the discovery of new evidence which would have had a material effect upon the decision of the court. See Halsbury (3rd ed.), Vol. 22, p. 791. In this case there is evidence, which I believe, that after the judgment complained of the plaintiff discovered that the large sum of money (£G21,863 18s. 6d.) had been transferred from the debit account of E. Ramia Ltd. to the account of the partnership without his knowledge. When the plaintiff discovered this he disputed both the legality and the genuineness of that note authorising the said transfer. Upon these facts any court would have given the plaintiff leave to contest the claim. Upon this ground too the plaintiff is entitled to have the judgment set aside.
I therefore find that plaintiff has made out his claim to my satisfaction and he must succeed. There will therefore be judgment for the plaintiff for the declaration he seeks, and also I order that the defendant do credit the account of Messrs. Seagull Fisheries Company with the amount of £G21,863 18s. 6d. (as amended) together with interest at the rate of 91⁄2 per cent from the date of the said transfer, i.e. 30th December, 1958 to date.
The plaintiff will have his costs assessed at 100 guineas inclusive.
DECISION
Judgment for the plaintiff.
