KAGUIN ENTERPRISES LTD vs. UMARCO (GHANA) LTD [1999-2000] 1 GLR 155

CASES REFERRED TO

(1) CILEV v Black Star Line Ltd [1968] GLR 480.

(2) Arnhold Karberg & Co v Blythe, Green, Jourdain & Co [1915] 2 KB 379.

NATURE OF PROCEEDINGS

APPEAL by the appellant company against the decision of the High Court, Accra, declaring the respondent company the consignee or owner and ordering the appellant to account to the respondent for a consignment of imported rice which the appellant had received as warehouseman on behalf of the vendor. The facts are fully stated in the judgment of Forster JA.

COUNSEL

E K Mensah (with Tagoe) for the appellant.

W A N Adumua-Bossman (holding brief for James Ahenkorah) for the respondent.

JUDGMENT OF FORSTER JA.

Kaguin Enterprises Ltd and Umarco are both companies incorporated under the laws of Ghana. In or about July 1989, Kaguin (hereinafter called the respondents) imported some 4,659.014 metric tonnes of rice from Cargill International, a company registered in

[p.157] of [1999-2000] 1 GLR 155

Antigua. When the rice arrived in Ghana the whole lot was received by Umarco (hereinafter referred to as the appellants) and stored in the custom bonded warehouse at Tema. There was evidence that Umarco group of companies worked with Cargill International worldwide.

The appellants subsequently released only 700 metric tonnes (14,000 bags) of the rice to the respondents. The respondents therefore sued out a writ against the appellants at the High Court, Accra. They claimed the following reliefs:

“(1) A declaration that the plaintiff is the owner consignee of 4,659.014 metric tonnes of rice imported from Cargill International, SA Antigua in or about July 1989.

(2) An order upon the defendant to account to the plaintiff for the 4,659.014 metric tonnes of rice or any portion of the said consignment disposed of by the defendants.

(3) Another order upon the defendants to pay general damages for conversion.

The appellants denied by their statement of defence that they were liable to the respondents for any of the reliefs sought. On 24 October 1997, the court presided over by Sapong JA (sitting as an additional High Court judge) gave judgment for the respondents for all the reliefs claimed. An appeal to this court by the appellants was lodged on 28 October 1997. Meanwhile on 27 October 1997 the respondents had filled a motion for review of the judgment. Then on 14 October 1997 Sapong JA heard and granted the respondents’ motion for review of the very judgment against which an appeal had been filed by the appellants. It might not be necessary to revisit this issue.

The issues raised in the grounds of appeal were fully treated by both counsel in their respective written submissions. In this judgment, I shall thus confine myself to the issues as argued in the written submissions. The first and probably the pivotal issue was whether the respondents were the owners or consignees for the 4.659,014 metric tonnes of rice. In his judgment the trial judge, having considered the import of a bill of lading (exhibit 14) covering the rice, found that the respondents were not described therein as consignees, but “notify address.” I think he should have been more elaborate. In the column for particulars of the consignees, the

[p.158] of [1999-2000] 1 GLR 155 respondents name did not appear. What did appear on exhibit 14 and other copies, was “To Order.” The respondents were therefore not named or described in the space as consignees. It was rather in the space for “notify address” that the respondents’ name and address appeared.

What then is the import of these: “To Order” and “Notify address”? The trial judge in any case concluded:

“In the instant case the “notify address” being the plaintiff company it was perfectly all right in law for the plaintiff to go and collect the goods. The plaintiff went forward and did just that. The defendant company then entering into an agreement with Cargill to do otherwise to deprive the plaintiff company of the rice is clearly illegal, for the plaintiff company was not made a party to this agreement. This agreement therefore does not speak with the voice of law.”

A lot of energy must have been exhausted by counsel on this issue—whether the conclusion of the trial judge was in conformity with the law and the evidence tendered by the parties at the trial. The trial judge purported to rely on CILEV v Black Star Line Ltd [1968] GLR 481. But in that case, Amissah JA (as he then was) said at 485-486:

“Where the person unto whom it is stated in this part that the good shipped differs from the one given in the notify address, I cannot conceive the name given in that notify address being by any stretch of imagination described as the consignee. It is simple common sense that the consignee of goods is the person to whom the goods are sent and not necessarily the address to be notified of the arrival of the goods at the predestined poor.”

Thus, in the instant case the notify address cannot be comprehended as the consignee, for if indeed the shipper Cargill had intended the respondents as the “consignee” their name would have been inserted in the space reserved for that designation and not “notify address”. In the bill of lading, the rice was consigned “To Order” That means delivery to any particular person as may be determined or ordered by the shipper. In the Black Star Line Ltd case

[p.159] of [1999-2000] 1 GLR 155

(supra) at 487-488 Amissah JA, having considered some English cases, observed:

“. . . I do not think that these authorities support the proposition that where goods are shipped under a bill of lading which expressly says that the carriers must deliver to the order of the shippers, just because on previous occasions the shipper had ordered that the goods be delivered to a particular person, so the carrier must deliver to that same person even though this time the shipper orders that they be delivered to another… I do not therefore agree that the course of business entitles the defendants, as carriers, to pre-determine the consignees of goods which according to the, bill of lading are to be delivered unto order and more.”

Although in the above passage it was the carrier whose act of delivering the goods to the person who had not been named as a consignee that was in issue, it seems to me nonetheless, that the above extract of Amissah JA’s judgment is equally applicable here. In the instant case, the trial judge ignored the purport of “To order” of the shipper and sought to equate the person named in the “notify address” with the consignee. It was entirely for Cargill, the shippers, to have specified the consignee but they opted to reserve to themselves their right to order the delivery of the rice to any person whom they might name.

In Arnhold Karberg & Co v Blythe, Green, Jourdain & Co [1915] 2 KB 379 at 387, Scrutton J (as he then was) stated the principle as follows.

“ . . Where the seller by taking the bills of lading in his name or to his own order has reserved the jus disponendi or power of dealing with the goods, the property does not pass on shipment, but is vested in the vendor until he receives payment from the buyer in exchange for the documents of title. If the seller has taken the bill of lading in the purchaser’s name, but retains it as security for the price, the property appears to vest on the buyer’s tendering the price.”

It is borne out by the evidence that the bills of lading were delivered to the appellants and not to the respondents. This fact was evident

[p.160] of [1999-2000] 1 GLR 155 from the conduct of the respondents themselves. On 27 July 1989, by which time the consignment had been landed at the port, the respondents sent a fax to Cargill, confirming that they had received the SGS quality certificate and copies of phytosanitary certificate. They then asked or queried: “What about the bill of lading.” Except for the six bills of lading indorsed later to the respondents for the release of the 700 metric tonnes of rice to them, any assertion that the bill of lading were received by them must therefore be false.

Cargill’s failure to send any bills of lading to the respondents and their substitution of “to order” in place of a named consignee, were of course deliberate, as the evidence showed. Antedating the sending of the bills of lading to the respondents, Cargill International, desirous of protecting its financial interest, was concerned that the respondents pay for the rice before delivery. Accordingly, Cargill entered into an agreement with the appellants appointing the latter as their warehouseman for purposes in connection with the rice Cargill had shipped to Ghana. Exhibit 11 is the translated version of the original which was in French. First, the introductory part or preamble gives meaning and appreciation to the designation “To order” in the bill of lading. It states:

“Whereas, (1) Cargill is desirous of starting the sale of rice on the Ghanaian local market and/or in the neighbouring countries.

(2) Umarco has warehouses at Tema over which it exercises management control which confers the benefits and rights of the ‘franc zone’ monetary system on it.”

It is obvious then than Cargill had never entered the Ghanaian market and that this first shipping of the rice which is the subject matter of this action was exploratory; to test or sample the potentials of the Ghanaian market. Caution and prudence are the hallmarks of any astute businessman and I do not therefore think that the precautionary measures employed to safeguard their interests are in any sense offensive to the law. A few extracts from exhibit 11 become immensely relevant in determining the respective positions

[p.161] of [1999-2000] 1 GLR 155 of both parties concerning the consignment of the rice and they are as follows:

“(4) Cargill shall notify Umarco at Tema of its shipping schedule and hallsic(1) as soon as possible communicate details of merchandise shipped to Umarco.

(5) Cargill shall send to Umarco, Tema a copy of its temporary trade invoice drawn on Kaguin, Ghana, covering the cost, insurance, freight value—Tema of the merchandise shipped. This is to enable Umarco to undertake the non-bonded warehouse system formalities on behalf of Cargill/Kaguin on the arrival of the ship at Tema.

(6) Cargill shall forward to Umarco:

3/3 original bill of lading duly addressed and with a blank endorsement: Notify Kaguin Enterprises, Ghana Ltd, P O Box 01176, Osu, Accra.

All Commercial documents required by Umarco for customs formalities.”

(The emphasis is mine.) Then in paragraphs (13) and (14) it was provided that:

(13) The merchandise stocked under the responsibility of Umarco shall remain fully and wholly the property of Cargill until its resale by the latter or by a duly designated authorised agent.

(14) Umarco who is not the owner of the merchandise and only holds it on behalf of Cargill shall release same on the sole formal instructions of Cargill.”

(The emphasis is mine.) And the following provisions are particularly relevant to the release of the rice to Kaguin:

“(18B) Umarco shall release the rice to Kaguin by consignments of a maximum of 700 metric tonnes.

However, before releasing a second consignment Umarco shall obtain the following proofs:

(1) Documentary evidence attesting to the fact that custom duties have been paid according to the

[p.162] of [1999-2000] 1 GLR 155 current authorised schedules/rates and regulations applicable as at the time of exit of the merchandise.

(2) Documentary evidence from a bank confirming the entry in their account books, of the value of the merchandise in cedis and an irrevocable commitment of the bank to transfer its equivalent in US dollars to the credit of Cargill.

(19) The agreement hereby made is valid for the first consignment of rice by Cargill. Another instrument shall be prepared at the sight of the said first consignment for a term to be determined later.”

(The emphasis is mine.) It would seem therefore that this agreement was made in anticipation of the arrival of the rice shipped by Cargill and was to regulate the release of the rice to the respondents and unless the respondents produced another agreement between them and Cargill which did not conform to or was different from the terms of exhibit 11, then the provisions of the agreement solely regulated the disposition of the rice.

The provisions of paragraph (18B) must therefore be held to have governed the release and payment for the rice and unless it was shown by the respondents that different terms or conditions were meant between Cargill and them to apply, they were bound by exhibit 11. Indeed, the representative of the respondents put the matter beyond doubt. He admitted that the respondents did not pay for the rice and not even for the 700 tonnes released to them as provided by paragraph (18B) of exhibit 11.

It is equally clear that the failure of Cargill to designate the respondents as consignees must have been in contemplation of the provisions of paragraphs (14) and (16) which read together reserved ownership of the rice to Cargill and upon whose instructions only could the appellants release the rice to the respondents and on the payment conditions stipulated in paragraph (18B) of the agreement being fulfilled.

A very relevant issue was whether at any stage before the action was instituted the existence of exhibit 11 was known to the respondents. At the trial, the first defendant witness, a lawyer by

[p.163] of [1999-2000] 1 GLR 155 profession, and for some time the solicitor for the respondents’ company, gave evidence for the appellants. On this issue he testified:

“I saw the agreement and I read it. I have in my hand copies of the agreement —French version and English translation there of. The originals I saw were signed. I was aware of this agreement before I went to NIC. Mr Amarkai Amarteifio represented Mr Kwaku Diawusie at the NIC and I represented Sane and the plaintiff company.”

The witness was a solicitor of the company and must have seen exhibit 11 in that capacity.

I think that the evidence of the first defendant witness of the respondents’ knowledge of the existence of the agreement, exhibit 11, is also circumstantially confirmed by the conduct of the respondents. They claimed that they were the owners of the whole consignment of the rice; that the appellants were their agent and that they instructed the appellants to warehouse the rice. Yet, when the appellants released only the 700 metric tonnes of the rice to them, there were no questions asked, no protests nor query, why the magical figure 700 and no more. They obviously must be taken to have known of the terms of exhibit 11—particularly that 700 tonnes were being released to them and that any subsequent release must first be paid for. Again, it must be noted that at the time these matters occurred, Diawusie who was testifying in 1996 as the respondents’ representative, had ceased to be involved in the company’s business. He had since 23 May 1989 voluntarily transferred his 3 million shares in the company to Sane, and had thereafter ceased to be actively or at all involved in the respondent company’s business: see exhibit 8.

Further, on 28 September 1998 Diawusie wrote exhibit 10 to “Sane, Kaguin Enterprise Ltd. P.O. Box 01176, Accra Diawusie’s address in the letter was “2nd Floor, Bank of Credit and Commerce, Graphic Road, P O Box 6268, Accra-North.” In that letter, he complained, inter alia, about the fact that he had been ignored in the running of the business and stated expressly that:

“Since 23 May 1989, I have not been informed of activities of the company as to its operations. What I know is that the company have handed 5,000 metric tons of rice in Ghana

[p.164] of [1999-2000] 1 GLR 155 which is being sold to the public at ¢11,000 per bag have not been informed.”

(The emphasis is mine.) Exhibit 10, therefore is an admission by Diawusie in that from May 1989, he had ceased to be involved in the affairs and management of the company. It was not until Diawusie issued a summons against “Edward Henry Joseph Sane as first defendant” that the High Court, in a default judgment dated 16 December 1991, held that the transfer of his shares to Sane on 23 May 1989 was a nullity; that Sane should sell his 84 per cent shares to Diawusie, and finally, that Diawusie was a director of the company. Thus, Sane was judicially kicked out of the respondents’ company. It was in consequence of his restored position in the company in 1991 that Diawusie referred to himself or was described by his solicitors as:

(a) “Managing director and sole shareholder of Kaguin Enterprise (Ghana) Ltd; see exhibit L of 26 October 1993.”

(b) “The sole shareholder” in his affidavit of 27 July 1994.

(c) “Director and shareholder” in Kaguin Enterprise and the plaintiff’s “representative” (while testifying on 27 October 1995 at the trial.

In the circumstances and having regard to the withdrawal of his business interests from the company, the transfer of all his shares to Sane on 23 May 1989 until the High Court restored him to his former position on 15 December 1991, Diawusie could not have had any personal knowledge of the business activities of the company, particularly, with reference to the period when the rice was landed in July 1989 to 16 December 1991, when the court restored him to his present position as the “sole shareholder and managing director of the company.” I think therefore that the evidence of the first defendant witness, that the existence of exhibit 11, the agreement between Cargill and Umarco, the appellants, was known to the respondents must be credible and true. And of course, for the above reasons any claim by Diawusie to personal knowledge of any relevant facts or developments between 23 May 1989 and 16 December 1991 must indeed be completely false. Not surprisingly, the evidence of the first defendant witness was not challenged. And indeed it could not have been controverted because Diawusie the

[p.165] of [1999-2000] 1 GLR 155 respondents’ representative, could not have had personal knowledge of the agreement. For between 3 May 1989 and 16 December 1991, the relevant period, he was for all purposes a stranger to developments in the company.

The respondents tendered documents in support of their claim that they were the consignees. These were: invoice from Cargill (exhibit B); phytosanitary certificate (exhibit C) and SGS clean report of findings (exhibit D). The documents do not prove the respondents’ title to the goods. They are no substitutes for a title document. They advance the claim no further from where it has been left marooned by the available evidence.

In this appeal, it was also contended that the intervention of the National Investigations Committee in investigating and making findings which it purported to execute were without jurisdiction. The National Investigations Committee was established by the National Investigations Committee Law, 1982 (PNDCL 2). Among the several terms of reference was the following:

“3. The Committee shall investigate . . .

(e) any other acts or omissions which may be shown to be detrimental to the economy of Ghana or to the welfare of the sovereign people of Ghana or in any other way to the national interest.”

A close study of certain aspects of this case shows that the National Investigations Committee had jurisdiction in terms of section 3(e) of PNDCL 2. The prelude to the intervention of the National Investigations Committee is amply disclosed by the evidence on record. In the report of the National Investigations Committee (exhibit 21) the “informant” was Kwaku Diawusie, the very person who gave evidence as the respondents’ representative and a director and shareholder of the respondent company. The circumstances that evoked the intervention of the National Investigation Committee at necessary for the clear appreciation of this issue.

It is on record that by his letter exhibit 8 dated 23 May 1989, Diawusie declared: “I, Kwaku Diawusie have this 23 May 1989 transferred all my 3 million shares in Enterprises Ghana to Edward Henry Joseph Sane.” The affidavit of Mr da Rocha, a prominent legal practitioner, dated 15 February 1990 confirmed that he prepared

[p.166] of [1999-2000] 1 GLR 155 exhibit 8 on the instructions of Diawusie who came to his chambers with Sane. He had earlier been professionally consulted by Sane in 1988. It was Sane who brought and introduced Diawusie to the lawyer. He deposed that he felt there had been some differences between them and Diawusie told him he did not want to have anything to do with the company anymore.

Then on 28 September 1989 Diawusie wrote a letter to Sane of Kaguin Enterprises. The letter is exhibit 10. It was captioned: “Illegal And Unauthorised Acts Committed with Intent To Sabotage The Ghana Company Code, 1963 (Act 179), the Investment Code, 1985 (PNDCL 116). And the Immigration Regulations of Ghana.” This caption adequately reflected the main contents of the letter. In the letter itself, he recounted differences that had arisen between Sane and himself over the management of the company since 23 May 1998. Then among other matters, Diawusie demanded certain payments due to him as a deputy managing director since November 1988, totalling 441,100,000. In the penultimate paragraph, he warned that unless Sane convened an extraordinary meeting to resolve the differences he would “report to the appropriate authorities for the activities of the company to be probed.” Sane was given seven days to advise himself. It is significant to note that all the illegal acts allegedly committed by Sane was to the knowledge and in collaboration with Diawusie. It seems to me therefore that the letter was nothing less than an attempt at blackmail. And finally on 9 November 1989 Diawusie reported the alleged illegal acts by Sane to the National Investigations Committee for investigation.

The third defendant witness, Mr Lamptey, then chairman of the committee, in his evidence before the trial court tendered the report of the committee in which it was stated that it was Diawusie, an “informant”, who reported the matter to the committee for investigation. Therefore, in terms of section 3 (e) of PNDCL 2, the committee had jurisdiction, since the allegations of the illegal acts of Sane, an Ivorian national, amounted to “acts or omissions which are detrimental to the economy of Ghana or to the national interest.”

The objection to the jurisdiction of the National Investigations Committee was expressed by the judge as follows:

“I do say here also that the third defendant witness, the chairman of the National Investigations Committee, admitting that

[p.167] of [1999-2000] 1 GLR 155 he delved into matters that did not form the subject matter of the complaint for investigation did sin against the law. What the National Investigation Committee did was clearly ultra vires and thus a nullity.”

This observation of the trial judge appears to have been bottomed on the following answer of the third defendant witness in cross-examination: “Yes, I agree that exhibit 21 (the committee’s report) should be confined to the fact that a foreign national was carrying on business in this country.” First, the business then being carried on by the foreigner, Sane, and which violated the provisions of the investment Code, 1985 (PNDCL 116) was the importation the rice to be sold on the Ghanaian market, and the proceeds used as equity capital in fulfilment of the requirements of the investment law. The Ghana Investment Centre, by their letter dated 26 March 1990, withdrew their recognition of the respondents’ project on the grounds that the respondents had failed to satisfy the requirement of the minimum foreign shareholder’s equity capital.

It is manifestly clear that investigation into the alleged violation of the investment law of Ghana by Sane, must necessarily extend to the importation of the rice by the respondents. Indeed, in the letter from the Bank of Ghana to the Ghana Investment Centre (exhibit 3) and copied to the respondents, the bank recommended the withdrawal and cancellation of their previous letter confirming the fulfilment of the requirements by the respondents: “Because of doubts raised by the documents about the ownership of the consignment of the rice.” Therefore, there could have been no proper investigation into the alleged illegal acts of Sane without dealing with the importation of the rice.

Further, in terms of section 11 of PNDCL 2:

“11. Where the Committee is satisfied from its investigations that there exists evidence which may be put before a court, Public Tribunal or other judicial body, it shall refer such evidence to the Attorney-General, Public Prosecutor or to any other appropriate body for further steps, including a trial, to be taken in the matter.”

There was no evidence that any action had been taken by any of the entities mentioned in the section. The report of the committee in

[p.168] of [1999-2000] 1 GLR 155 itself therefore had no legal effect and none of the findings were binding or conclusive, and the contents thereof were irrelevant as evidence in this case.

As to the alleged National Investigation Committee’s involvement in the sale of the remaining rice, the trial judge said:

“Relying on this agreement between Cargill and the appellants, exhibit 11, the National Investigation Committee directed the defendant to dispose of the rice and which the defendant disposed of through a third party. This said direction was not the basis of the complaint.”

(The emphasis is mine.)

With all due respect to the judge, his finding was not borne out by the evidence. From the documents tended in evidence the following facts emerge:

(i) On 29 May 1990, Cargill’s representative, having become aware that in view of the company’s failure to comply with the investment law it would be impossible for the respondents to further operate on the Ghanaian market, informed the National Investigations Committee of Cargill’s decision to authorise the sale of the remaining rice through Fabin Ltd, so as to avoid quality deterioration and also to save further costs Cargill naturally wanted to know the reaction of the National Investigations Committee to the proposed sale, since the commission was in charge of the investigations; see exhibit 20.

(ii) On 30 May 1990, the National Investigations Committee informed Cargill that they “had no objection to Cargill International authorising the release of the rice to Fabin Ltd for sale on the Ghanaian markets provided customs and other laws on the subject are complied with.”

(The emphasis is mine.) It is quite clear then that the sale of the rice was not at the instance or on the instructions of the National Investigations Committee as the trial judge purported to have found. The National Investigation Committee responded sensibly and lawfully to the decision of Cargill to sell the rice, and no more, and it is most unfortunate that the judge misconstrued the rather clear contents of the letters, [p.169] of [1999-2000] 1 GLR 155 In my considered opinion, the rice imported and stored by the appellants in their warehouse was owned by Cargill and not the respondents. I also find that the release and sale of the rice was upon the instructions of Cargill, who had not received a pesewa from the respondents, and not even in respect of the 700 metric tonnes which was released to them by the appellants on the instruction of Cargill: see exhibit 22.

For the reasons given would allow the appeal and set aside the judgment of the High Court dated 24 October 1997.

JUDGMENT OF OFORI-BOATENG J.A.

I agree.

JUDGMENT OF ESSILFIE-BONDZIE J.A.

I also agree.

DECISION Appeal allowed.

LSNA

Endnotes

1 (Popup – Footnote) sic same in original. (shall)