HIGH COURT, ACCRA
Date: 21 JULY 1975
ABBAN J
CASES REFERRED TO
(1) Shoe Machinery Co. v. Cutlan [1896] 1 Ch. 667; 65 L.J.Ch. 314; 74 L.T. 166; 40 S.J. 336; 13 R.P.C. 141.
(2) Fidelitas Shipping Co., Ltd. v. V/O Exportchleb [1966] 1 Q.B. 630; [1965] 2 W.L.R. 1059; [1965] 2 All E.R.4; 109 S.J. 191; 1 Lloyd’s Rep. 223, C.A.
(3) Donkor v. Nkrumah [1964] G.L.R. 739, S.C.
(4) Union Trading Co., Ltd. v. Karam [1975] 1 G.L.R. 212.
NATURE OF PROCEEDINGS
APPEAL from the judgment of her worship Mrs. Liverpool sitting at the District Court Grade I, Accra, in which recovery of possession of business premises was granted to the plaintiffs. The facts are fully stated in the judgment.
COUNSEL
Miss A.A. Ayisi for the second and fifth appellants.
Yeboa-Amoa for the third appellants.
Hammond-Laing for the respondents.
JUDGMENT OF ABBAN J.
The appeal is from the District Court Grade I, Accra, presided over by Mrs. Liverpool. At the trial five suits were consolidated as the
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plaintiffs in each of the five suits were the same, and even though the defendants were not the same, they were all tenants of the said plaintiffs and were occupying various stores in the same business premises, the subject-matter of dispute.
The plaintiffs, as the landlords of business premises, numbered D.897, Selwyn Market, Accra, sued the defendants for: (a) the recovery of the stores in the premises, (b) arrears of rent, and (c) mesne profits. The learned magistrate gave judgment against all the defendants, but only three of them, namely, Rawanji Brothers (second defendant), M. Captan (third defendant), and Starco (Ghana) Ltd. (fifth defendant) appealed.
It should be noted that before the present action was instituted, the plaintiffs had, in 1968, sued the defendants-appellants and some other tenants in another district court grade 1, constituted by Mr. S. E. Asamoah, in respect of the same stores. In that previous action which may hereinafter be referred to as the first action, the plaintiffs contended that they had properly terminated the oral tenancy agreements between them and the defendants by giving each of the defendants a month’s written notice, because the defendants, under the said tenancy agreements, were monthly tenants. The defendants having stayed over, the plaintiffs gave them six months’ written notice to quit under section 17 (1) (h) of the Rent Act, 1963 (Act 220), as the plaintiffs wanted the premises for their own business.
Some of the defendants in that suit contended that they were yearly tenants, others contended that they were quarterly tenants. They based their contentions on the ground that they had been paying their rents yearly and quarterly. If the defendants were right then it meant that the one month’s notice which the plaintiffs gave was not adequate to terminate the oral tenancy agreements and the defendants never became statutory tenants within the meaning of section 36 of the Rent Act, 1963 (Act 220); and the tenancy agreements were still subsisting and they could not therefore be ejected under any of the provisions of section 17 of the said Act.
The learned magistrate, Mr. Asamoah, held that all the defendants were monthly tenants. But he found that the notice which the plaintiffs gave in each case to terminate the tenancy was far less than one month and was therefore inadequate and could not, in the circumstances, properly terminate the said monthly tenancy. He further held that even if the notice had been adequate to terminate the tenancies, and the defendants could be said to have become statutory tenants when they stayed over and that they had been given six months’ written notice as required by section 17 (1) (h) of the Rent Act, 1963 (Act 220), the plaintiffs had still failed to comply with the provisions of the Rent Regulations, 1964 (L.I. 369), by not furnishing the “appropriate rent officer with a declaration, as required in Form 14 of the First Schedule,” before instituting those proceedings. Consequently, the plaintiffs’ said action for the recovery of possession of the premises was dismissed by Mr. Asamoah. Neither the plaintiffs nor the defendants appealed against that judgment which was tendered in the present proceedings as exhibit A.
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About five months after that judgment, exhibit A, the plaintiffs gave each of the defendants one month’s written notice to terminate the oral tenancy agreements. The notices were served on the defendants on or about 26 March 1969 and they were to expire on 30 April 1969. The plaintiffs gave each of the defendants a further six months’ written notice from 30 April 1969 of their intention to ask for recovery of possession, through the court, in case the defendants failed to quit after six months from the said 30 April. The plaintiffs’ main reason was that they required the premises for their own business. This time the plaintiffs took the necessary precaution and saw to it that the declaration was lodged with the rent officer in terms of regulation 18 of the Rent Regulations, 1964 (L.I. 369).
The defendants, however, refused to vacate the premises after the termination of their tenancy agreements and continued to occupy the premises. They therefore became statutory tenants within the provisions of section 36 of the Rent Act, 1963 (Act 220); and the six months’ written notices became operative as from 30 April 1969. Six months after 30 April 1969 the defendants were still holding on to the premises without the slightest intention of moving out or finding alternative accommodation. In the circumstances, the plaintiffs brought the present action to recover possession, as I have stated, under section 17 (1) (h) of the Rent Act, 1963 (Act 220). The learned trial magistrate, in a considered judgment, held that the plaintiffs reasonably required the premises for their own business and granted them the recovery of possession. It is against that judgment that the defendants have appealed.
Several grounds of appeal were filed. Later supplementary grounds were also filed and the same were argued together with the original grounds. One counsel appeared for the second and fifth defendants-appellants, while a different counsel appeared for third defendant-appellant. The same grounds of appeal were practically argued for all the defendants-appellants (hereafter called the defendants) and indeed counsel for the third defendant adopted a greater part of the submissions of learned counsel for the second and fifth defendants. I will therefore consider the arguments of both counsel together.
The grounds of appeal may be grouped in the manner as follows:
(1) The judgment was against the weight of evidence.
(2) That the learned district magistrate erred in holding that the tenancy period was res judicata.
(3) That it was wrong for the learned magistrate to hold that Tema Thread Ltd., and Associated Industries (Ghana) Ltd. were the plaintiffs’ subsidiaries.
(4) That she erred in holding that the need of a subsidiary company for the premises, even if proved, could be the basis of an ejectment suit by a holding company under section 17 (1) (h) of the Rent Act, 1963 (Act 220).
(5) That she unreasonably tilted the weight of the equities against the defendants by failing to consider the defendants’ hardship and the issue of the plaintiffs’ bad faith.
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The first and second grounds will be dealt with together. On those grounds it was submitted that the one month’s written notice given by the plaintiffs to terminate the oral tenancy agreements was not valid. Because the defendants were not tenants from month to month and so they were entitled to more than one month’s notice; and that it was wrong for the learned magistrate to rely on the judgment of Mr. Asamoah, exhibit A, as establishing estoppel per rem judicatam as regards the period of tenancy. Learned counsel argued that the ratio decidendi in the judgment of Mr. Asamoah, was that the court had no jurisdiction to entertain the action. But the finding as to the nature of the tenancies of the defendants in the said judgment was only incidental; and so that finding could not finally determine the nature of the defendants’ tenancies and it therefore followed that the said judgment could not estop the defendants from contending in the present action that they were not monthly tenants.
As I have already stated, the defendants herein were the defendants in the previous or first action, and the stores in dispute in that action are the same as those in the present proceeding. The tenancies in dispute in the present action were in dispute in the first action. In the first action the defendants disputed that they were monthly tenants and this was clearly stated by the learned magistrate, Mr. Asamoah, in his judgment, exhibit A, where he said, “At the trial, all the six tenants stoutly denied being monthly tenants.” So that whether or not the defendants were monthly tenants was an important issue in the first action and this was well appreciated by the learned magistrate, Mr. Asamoah, who in the course of his judgment stated:
“Furthermore, pleadings were ordered in this case, and in paragraph (2) of the plaintiffs’ statement of claim, they averred that each defendant is a monthly tenant. Each defendant was at pains to deny every paragraph of the statement of claim except this paragraph (2), on which each statement of defence was significantly silent.”
(The emphasis is mine.) The learned magistrate then referred to the rules about pleadings and then continued:
“The nature of periodicity of the tenancy is a very material fact in this case because the validity of the notice to quit will depend on the nature of the tenancy, whether it is monthly, quarterly, or otherwise. Since the defendants failed to traverse the plaintiffs’ statement that each defendant is a monthly tenant, I take it to be established that each defendant is a monthly tenant. I agree with the plaintiffs that the tenancy of each defendant is a monthly tenancy.”
(The emphasis is mine.)
It seems to me that the issue as to whether or not the defendants were monthly tenants raised in that earlier or first action was fundamental to the decision in that case, and the learned district magistrate, Mr. Asamoah, having clearly decided the said issue in favour of the plaintiffs, the defendants were estopped from re-opening that issue. Where an issue has, in
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substance, been fundamental to the decision in an earlier proceedings between the same parties, each of the parties to the earlier proceedings will be estopped from re-litigating that issue in any subsequent action between the same parties. In Shoe Machinery Co. v. Cutlan [1896] 1 Ch. 667 the facts, as appearing in the headnote, were that there was an action by a patentee, claiming damages for an infringement and an injunction. The defendant denied the infringement and also the validity of the patent. The court upheld the validity of the patent, but refused to grant the injunction and the damages on the ground that the evidence as to the alleged infringement was, under the circumstances, not admissible. In a second action between the same parties in respect of the same patent, the defendant again denied the validity of the patent. It was held that “the validity of the patent was res judicata, and that the judgment in the first action estopped the defendant from again denying the validity of the patent.” In the course of his judgment, Romer J. at pp. 669-670 said:
“In my opinion the question of the validity of the patent which is the subject of the present action is res judicata between these parties. In the former action, dealing with it only so far as it concerns this patent, the present plaintiffs alleged two things— (1.) that the patent was valid, and (2.) that there had been an infringement. The present defendants in that action challenged both points. They denied the validity of the patent on various grounds which they set forth. The issues were, therefore, bound to come before the Court for its determination; and, as a matter of fact, both the issues were fought out and determined. It is not as if the Court had refrained from determining either issue. It was in the opinion of the Court necessary, in order to do justice between the parties, that both issues should be determined—and they were determined . . . It was a deliberate finding on the question of validity—a question fairly raised for the decision of the Court as between these two parties and fairly fought out before it; and I cannot see why the decision given by the Court then on that issue is not to bind the parties to it.”
(The emphasis is mine.) The principle has recently been clearly stated by Diplock L.J. (as he then was) in the case of Fidelitas Shipping Co., Ltd. v. V/O Exportchleb [1965] 2 All E.R. 4, C.A. The learned lord justice at pp. 9-10 of the report said:
“It is concerned with facts only in so far as they give rise to legal consequences. The final resolution of a dispute between parties as to their respective legal rights or duties may involve the determination of a number of different ‘issues’, that is to say, a number of decisions as to the legal consequences of particular facts, each of which decisions constitutes a necessary step in determining what are the legal rights and duties of the parties resulting from the totality of the facts . . .
In the case of litigation the fact that a suit may involve a number of different issues is recognised by the Rules of the Supreme Court which contain provision enabling one or more questions (whether of fact or law) in an action to be tried before others. Where the issue
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separately determined is not decisive of the suit, the judgment on that issue is an interlocutory judgment and the suit continues. Yet I take it to be too clear to need citation of authority that the parties to the suit are bound by the determination of the issue. They cannot subsequently in the same suit advance argument or adduce further evidence directed to show that the issue was wrongly determined. Their only remedy is by way of appeal from the interlocutory judgment …
This is but an example of a specific application of the general rule of public policy nemo debet bis vexari pro una et eadem causa. The determination of the issue between the parties gives rise to what I ventured to call in Thoday v. Thoday ([1964] 1 All E.R. 341 at p. 352) an ‘issue estoppel’. It operates in subsequent suits between the same parties in which the same issue arises.”
(The emphasis is mine.)
It should be observed, as stated in the judgment, exhibit A, that the defendants did not, in their statement of defence in the first action, deny the plaintiffs’ assertion that the defendants were monthly tenants. In other words, the defendants in their statement of defence in that first suit failed to traverse the plaintiffs’ averment that the defendants were monthly tenants; and that failure to traverse, in my view, should also estop the defendants from contending in the present action that they were not tenants from month to month: see Donkoh v Nkrumah [1964] G.L.R. 739, S.C. In that case, Ollennu J.S.C. (as he then was) reading the judgment of the court at p. 744 said:
“Where a party has had opportunity in one suit to traverse an issue and he failed to traverse it, he would be estopped from re-litigating the identical issue in a subsequent suit. Thus in Hoystead v. Commissioner of Taxation ([1926] A.C. 155 at p. 166, P.C.) Lord Shaw, delivering the judgment of the Privy Council, said: ‘the same principle—namely, that of setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant, has not been traversed. In that case also a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken. The same principle of setting parties’ rights to rest applies and estoppel occurs’.”
(The emphasis is mine.) The learned magistrate was therefore right when she said, “the question regarding the nature of tenancy was unequivocally decided by the previous judgment” of Mr. S. E. Asamoah “and the parties are so bound by that decision.”
Since the defendants were tenants from month to month their tenancies could be terminated after giving them one month’s notice. I therefore hold that the written notices, exhibits B, C1 and C3, which the plaintiffs sent to the defendants were proper, and that the tenancies of the defendants were validly terminated on 30 April 1969. After the said 30 April, the defendants
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became statutory tenants and having been given six months’ written notice that the plaintiffs required the promises for their own use, and having filed the necessary declaration with the rent officer, the plaintiffs could institute an action to recover possession of the stores under section 17 (1) (h) of the Rent Act, 1963 (Act 220).
In respect of the third and fourth grounds it was contended that it was wrong for the learned trial magistrate to hold that the two companies, Tema Thread Ltd. and the Associated Industries (Ghana) Ltd., were subsidiaries of the plaintiffs’. Learned counsel for the defendants argued that there was no nexus between those two companies and the plaintiffs. Counsel further contended that even if it was accepted that the two companies were the plaintiffs’ subsidiaries, the needs of those subsidiary companies could not be used as the basis by the holding company, (the plaintiffs) for asking for an order of ejectment under section 17 (1) (h) of the Rent Act, 1963.
With due respect to both counsel, there is no merit in either contention. There was overwhelming evidence on record to show that the two subsidiary companies were wholly owned by the plaintiffs and the learned trial magistrate accepted that evidence. In fact, apart from the third appellant—M. Captan—and apart from cross-examining the witnesses of the plaintiffs, the defendants themselves did not lead evidence either to support the averments in their statement of defence or to rebut the evidence of the plaintiffs’ witnesses. They relied on their cross-examination and on the addresses of their counsel. However, my understanding of the plaintiffs’ evidence, which was rightly accepted by the learned trial magistrate, is that the plaintiffs have now expanded their business by establishing local industries, and that the expanded business is being carried on by the two subsidiary companies of which the plaintiffs are the only shareholders; and the plaintiffs, in addition to whatever business they had been doing, have now become the main distributors and sellers of the goods manufactured by those two subsidiary companies.
The learned trial magistrate found that the plaintiffs, as a matter of fact, “sell the greater bulk of the products manufactured by the two companies.” It is true that those two subsidiary companies also needed a place to store the manufactured goods, and because they had no storage facilities, the goods were being packed in a place where they were exposed to the weather; and the plaintiffs, being the main customers of the said two companies, were being pressed by the two companies to take delivery of the goods. But the fact still remained that it was the plaintiffs, and not the two subsidiary companies, who would be making actual use of the stores if the recovery of possession was granted. That is to say, the plaintiffs having become the main sellers and distributors of the goods manufactured by the two companies required the stores where they could carry on this additional business of selling and distributing the said manufactured goods.
In my view, the effect of the plaintiffs’ evidence was that the plaintiffs really and reasonably required the premises not for the two subsidiary companies but for the plaintiffs themselves, and that the plaintiffs brought the present action because of their own needs.
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I will now consider the fifth or the last ground of appeal. Learned counsel for the defendants further attacked the judgment on the ground that the order ejecting the defendants from the premises with immediate effect was harsh, unreasonable and unconscionable, because the defendants have alternative accommodation and because they have established goodwill in that area. It was also contended that the learned trial magistrate failed to consider the question of bad faith on the part of the plaintiffs. Counsel argued that the area, where the stores in dispute are, is lined on both sides of the street, by stores which deal only in textiles. Yet the plaintiffs wanted the stores where they could sell refrigerators and other merchandise which were not textiles. So that the plaintiffs’ request for possession, submitted counsel, could not be reasonable. Learned counsel also submitted that the plaintiffs’ request for the premises could not be genuine, and could not have been made in good faith because the plaintiffs have other premises where they could conveniently carry on that expanded business of theirs; and in any case, the plaintiffs did not need all the stores in the premises for their expanded business.
In the first place, there was sufficient evidence to support the learned magistrate’s finding that the plaintiffs reasonably and genuinely require all the stores for their expanded business; and it would be wrong on my part to upset that finding. I therefore reject the contention that the requirement of the premises by the plaintiffs was not genuine or not bona fide. What the defendants did not seem to appreciate was that they were only tenants of those stores and they could not therefore dictate to the plaintiffs, the owners of the stores, as to the type of goods the plaintiffs should sell in those stores. There was no evidence that the stores were constructed for the sale of textiles only. Neither was there any law which prohibited the sale of refrigerators in the stores around Selwyn Market area. That being so, whether what the plaintiffs intended to sell in the stores were refrigerators or not, should not be the look out or the concern of the defendants. The defendants were carrying on the business of buying and selling textiles in those stores; and if the plaintiffs also wanted to engage in the business of buying and selling refrigerators in the said stores, what was wrong with that? Secondly, it is clear to me that the plaintiffs, in any case, intended to sell different types of goods in the stores. These included “pharmaceutical equipment, sewing threads and yarns.” Are the defendants seriously contending that only textiles have been destined to be sold in all the stores in Selwyn Market Street?
The defendants complained also of hardship and of the goodwill they had built up in the area. But it is quite plain from the record that the defendants never even made any effort to find alternative stores in the same Selwyn Market Street after their tenancy agreements had been terminated and they had been given the statutory six months’ notice to quit. The representative, who gave evidence for M. Captan, stated as follows:
“Q. Since you got notice to quit, have you made any attempt to look for another store?
A. No.
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Q. Since 1 August, you know many shopkeepers have left the area?
A. Yes.
Q. Did you make any attempt to secure one of the vacant shops?
A. No, we did not.”
Is this not eloquent proof that M. Captan had all the time made up his mind to hold on to the plaintiffs’ premises whether the plaintiffs reasonably and genuinely needed them or not? If that was not the case then what were his reasons for not making efforts to secure some of the stores which became vacant and available in that area? M. Captan’s conduct was not only unreasonable but was also unconscionable. As for the other defendants, they never offered any evidence as to whether or not they ever searched for alternative stores in the same area or elsewhere.
It is even absurd for the defendants, especially M. Captan, to talk of hardship, bona fide, equity and good conscience. In the judgment in the previous action, exhibit A, very pertinent findings were made by Mr. Asamoah, and they are as follows:
“One of the defendants M. Captan owns a building in Selwyn Market/Pagan Road opposite former A. G. Leventis but M. Captan has hired that building to Barclays Bank instead of occupying it and using it for his trade in textiles.”
In the present action there was no evidence that M. Captan ever attempted to get his said premises from his tenants, Barclays Bank, for his own occupation. Is this the conduct of a person who ought to be given equitable consideration and who should be allowed to complain of hardship?
However, under the provisions of section 17 (1) (h) of Act 220 questions of hardship on the tenant and the goodwill which the tenant has built up over the years in the locality where the business premises are situated are of no relevant consideration. What is necessary is that the court must be satisfied that the landlord reasonably needs the premises for his own business and that the requisite statutory written notice was given to the tenant and that regulation 18 of the Rent Regulations, 1964 (L.I. 369), was complied with: see Union Trading Co., Ltd. v. Karam [1975] 1 G.L.R. 212.
I am of the view that on the evidence as a whole, the learned trial magistrate came to the right decision. Accordingly, all the grounds of appeal must fail. In the circumstances, the appeal will be and is hereby dismissed.
The plaintiffs are awarded costs of 0210.00, inclusive of counsel’s fee of 150.00. The costs must be paid by the appellants, jointly and severally.
DECISION
Appeal dismissed.
D. R. K. S.
