SOCIÉTÉ GÉNÉRALE DE COMPENSATION v. MOSHIE ACKERMAN [1972] 1 GLR 413
COURT OF APPEAL
Date: 24 JANUARY 1972
Before: KOI-LARBI AND ANIN JJ.S.C. AND LASSEY J.A.
CASES REFERRED TO
(1) Bonython v. Commonwealth of Australia [1951] A.C. 201; 66 T.L.R. (Pt. 2) 969, P.C.
(2) In re United Railways of Havana and Regla Warehouses Ltd. [1961] A.C. 1007; [1960] 2 W.L.R.
969; [1960] 2 All E.R. 332 H.L. (3) Miller & Partner Ltd. v. Whitworth Street Estates (Manchester) Ltd [1970] A.C. 583; [1970] 2 W.L.R. 728; [1970] 1 All E.R 796, H.L.
(4) Compagnie d’Armament Maritime S.A. v. Compagnie Tunisienne de Navigation S.A [1970] 3
W.L.R. 389; [1970] 3 All E.R. 71, H.L.
(5) The Assunzione [1954] P. 150; [1954] 2 W.L.R. 234; [1954] 1 All E.R. 278, C.A.
(6) Jacobs v. Credit Lyonnais (1884) 12 Q.B.D. 589; 53 L.J.Q.B. 156; 50 L.T. 194; 32 W.R. 761, C.A.
(7) Mount Albert Borough Council v. Australasian Temperance & General Mutual Life Assurance
Society, Ltd. [1938] A.C. 224; [1934] 4 All E.R. 206; 107 L.J.P.C. 5; 157 L.T. 522; 54 T.L.R.
5,P.C.
(8) R.v. International Trustee for Protection of Bondholders [1937] A.C. 500; [1937] 2 All E.R. 164 ;
106 L.J.K.B. 236; 156 L.T. 352; 53 T.L.R. 507; 81 S.J. 316, H.L.
(9) Sayers v. International Drilling Co. N.V. [1971] 1 W.L.R. 1176; [1971] 3 All E.R. 163, C.A.
(10) In re Chesterman’s Trust [1923] 2 Ch. 466; 93 L.J.Ch.263; 130 L.T. 109, C.A.
(11) McClelland v. North Ireland Health Services Board [1957] 1 W.L.R. 594; [1957] 2 All E.R. 129;
101 S.J. 355; [1957] N.I. 100, H.L.
(12) Zik’s Press Ltd. v. Ikoku (1951) 13 W.A.C.A. 188.
(13) Oduro v. Davis (1952) 14 W.A.C.A. 46.
(14) Zacca v. C.F.A.O. Court of Appeal, 15 August 1969, unreported; digested in (1969) C.C. 156.
(15) Flint v. Lovell [1935] 1 K.B. 354; 104 L.J.K.B. 199 L.T. 231; 51 T.L.R. 127; 78 S.J. 860, C.A.
(16) Owen v. Sykes [1936] 1 K.B. 192; 105 L.J.K.B. 32; 154 L.T. 82; 80 S.J. 15, C.A.
(17) Payzu, Ltd v. Saunders [1919] 2 K.B. 581; 89 L.J.K.B. 17; 121 L.T. 563; 35 T.L.R. 657, C.A.
(18) Roper v. Johnson (1873) L.R. 8 C.P. 167; 42 L.J.C.P 65; 28 L.T. 296: 21 W.R. 384.
[p.417] of [1972] 1 GLR 413
(19) Yetton v. Eastwoods Froy, Ltd. [1967] 1 W.L.R. 104; [1966] 3 All E.R. 353; 1 K.I.R. 469.
(20) Levinstein v. Frukogold Ltd., High Court, Accra 11 December 1967, unreported; reversed in part
by Court of Appeal, sub nom. Frukogold v. Levinstein, 16 June 1969, unreported.
(21) Di Ferdinando v. Simon, Smits & Co. [1920] 3 K.B. 409; 89 L.J. K.B. 1039; 124 L.T. 117; 36
T.L.R. 797; 25 Com. Cas 37, C.A.
(22) S.S. Celia v. S.S. Volturno [1921] 2 A.C. 544; 90 L.J.P. 385; 126 L.T. 1; 37 T.L.R. 969; 15 Asp.
M.L.C. 374; 27 Com. Cas 46, H.L.
(23) Vionnet (Madeleine) et Cie. v. Wills [1940] 1 K.B. 72; 1939 4 All E.R. 136; 109 L.J.K.B. 22; 161
L.T. 311; 56 T.L.R. 15; 83 S.J. 849, C.A.
(24) Re Taltal Chile Nitrate Co., Ltd. (1895) 73 L.T. 422, C.A.
(25) Manners v. Pearson & Son [1898] 1 Ch. 581; 67 L.J. Ch.D. 304; 78 L.T. 432; 46 W.R. 498; 14
T.L.R. 312; 42 S.J. 413, C.A.
NATURE OF PROCEEDINGS APPEAL from a judgment of the High Court, Accra, in which it was adjudged that the respondent had been wrongfully dismissed by the appellants. The facts are sufficiently set out in the judgment of Anin
J.S.C.
COUNSEL
E. K. Mensah for the appellants.
J. K. Agyemang for the respondent.
JUDGMENT OF ANIN J.S.C.
This appeal from a judgment of the High Court, Accra, highlights the important doctrine of the proper law of a contract in the field of conflict of laws or private international law. The basic facts for the ascertainment of the proper law were on the whole not in issue in this case. The real bone of controversy between the parties to this appeal was the application of the principles and rules of law to the facts of the case. Learned counsel for both parties invoked rival rules and presumptions in support of their opposing submissions on behalf of their clients.
Under a written agreement dated 4 April 1966 (exhibit A) and a supplementary agreement dated 13 June 1966 (exhibit B2), the plaintiff-respondent (hereinafter called the plaintiff) was employed as works supervisor by the defendants-appellants (hereinafter referred to as the defendants) at their building site at Tema. Both agreements are hereby reproduced in full:
“SOCIETE GENERALE DE COMPENSATION
55-57, AVENUE KLEBER Accra, 4th of April, 1966. PARIS (16) Translation Mr. Ackerman, P.O. Box 44, Accra (Ghana) Sir, Following our conversation we beg to confirm the following:
(1) We hire you in quality of a works supervisor for the site opened by our company at Tema (Ghana).
[p.418] of [1972] 1 GLR 413
(2) The duration of your contract is fixed to 3 years.
(3) The starting date of the contract is fixed to the 1st of April 1966.
(4) Your salary is fixed as follows: yearly: 48,000-French francs payable in 13 monthly instalments of 3,692.50 French francs. (5) This contract is subject, as far as its final effectiveness is concerned to a probation period of 3 months (three months) starting on the 1st of April 1966. Should for a professional or disciplinary reason, during the said period, your contract be terminated, such termination will not desire any notice and no compensation shall be payable to you; the case will be the same if you decide to leave our company.
(6) You will have the benefit, of a total of 4 months vacation to be taken in two times thus 4 weeks after 18 months and the balance at the end of the contract. (7) You will have the benefit, for your intermediary vacation, of one air ticket of a value equal to a travel Accra/Paris, economic class, round trip. (Accra/Tel Aviv direct). At the end of the contract an air ticket of same definition will be given.(8) You will be under the authority of our management and its representative in Tema, at whose disposal you are to remain according to his orders. You undertake, as customary in the matter, to respect in a precise way orders and instructions that may be given to you and to execute scrupulously the planning which will be assigned to you. (9) In a general way your salary will always be paid to you in francs, to an account to be indicated by you, under deductions of advances for expenses that would be made to you in Tema in cedis and pesewas, of which the rate of exchange will be the one officially defined (at this date 1 cedis-5.725 francs). (10) It remains understood that if, at the end of the probation period of 3 months, the contract has not been denounced by either party, this period of three months will be incorporated to the total duration of the contract which should be considered as having taken effect then at the 1st of April 1966. (11) Naturally you undertake to have made all compulsory vaccinations and you declare not suffering from any infectious disease of such a nature as to prevent you from fulfilling your activity. (12) You have declared having made various stays in West Africa and consequently you keep our company harmless of whatever responsibility in case you would catch on the territory sicknesses existing at a latent or epidemic state, being observed that this exoneration of responsibility does not concern work accidents. [p.419] of [1972] 1 GLR 413
(13) You will benefit of arrangements taken for our expatriate personnel concerning medical assistance details of which will be given to you by our local representative. (14) Concerning your housing and a service car, this question is settled by complimentary letter annexed to the present contract.
We kindly request you to make your acceptance on the second copy of this letter.
Yours faithfully,
SOCIETE GENERALE DE COMPENSATION
(Signed) G. Arrault.
Read and approved.
(Sgd.) M. Ackerman.”
“SOCIETE GENERALE DE COMPENSATION
55-57 AVENUE KLEBER, Tema, 13th June, 1966. PARIS (16) GM/JM No. 355 Translation Mr. Ackerman, P.O. Box 2215, Accra-(Ghana). Sir,
Following our conversation of today we beg to confirm that by mutual agreement the duration of your probation period is extended to four months this in order to respect the terms of your contract, that link us with you, for site work while you have been employed so far in our factory of Tema.
Consequently the effective date of your probation period is fixed to the 31st July, 1966 as the starting day of your contract was 1st of April 1966. Chapters 7 and 13 of your above-mentioned contract are therefore modified consequently and your contract is definitely considered having as starting date the 1st of April, 1966 for a duration of three years with a probation period equal to four months.
You would kindly acknowledge your agreement on the original of the present to be annexed to your contract of which it becomes an integral part.
Yours faithfully,
P. SOCIETE GENERALE DE COMPENSATION
(Signed) G. Maillard.
Mr. Ackerman.
Received and approved.
Traduction certifee sincere et veritable, Le Consul de France” [p.420] of [1972] 1 GLR 413
Reading both agreements together as one, find that the plaintiff contracted to serve as the defendants’ works supervisor at their Tema building site for a fixed period of three years inclusive of a four-month probation period from 1 April to 31 July 1966. Either party was entitled to terminate the contract of service during this probation period without either notice or compensation to the other party provided that the defendants’ right to terminate the plaintiff’s contract during the probation period was under clause 5 of exhibit A expressly limited to either “a professional or disciplinary reason.”
On the 6 July 1966 i.e. during the currency of the probation period, the defendants terminated the
plaintiff’s contract summarily giving two reasons in the letter of dismissal in support of their action: first, that they had “received new instructions from their registered office” in Paris and secondly, that they “were effecting a re-organisation of staff.” It would be noticed that neither stated reason amounted to “a professional or disciplinary reason.”
The plaintiff promptly instituted this action for damages for wrongful dismissal. In a reserved judgment, the learned trial judge upheld the plaintiff’s claim and rejected as untrue the defendants’ allegations in their amended statement of defence that the plaintiff’s work in the factor was unsatisfactory and that his conduct was unsavoury. He held further that even if the plaintiff’s work was unsatisfactory, the defendants had condoned it by continuing to employ him in their services after full knowledge of the unsatisfactory work complained of. He also found as a fact that the plaintiff’s work at the building site (for which work he had actually been engaged) was without blemish. Indeed the defendants’ own local manager had exonerated him in his evidence under examination-in chief saying, “I did not receive any report on the plaintiff when he went to the building site.” The learned judge found that the alleged inefficiency had not been established and that on the evidence before him, his dismissal was wrongful. He accordingly awarded him damages totalling ¢19,792.70. half of which was ordered to be paid in French francs in France. I am satisfied that the facts as found by the trial judge were sound, reasonable and supported by the evidence; and I accordingly reject as unjustified, learned counsel for the defendants’ criticisms of the facts found and of the judgment as being against the weight of evidence.
The main ground of appeal relied upon by Mr. Mensah, learned counsel for the defendants, was that the learned trial judge erred in holding that the proper law of the plaintiff’s contract of service is Ghana law and not French civil law. Mr Mensah drew our attention to a host of legal authorities on the issue of the proper law of a contract and endeavoured, through an analysis of the salient features and factors connecting the plaintiff’s contract to France, to demonstrate that its proper law was French rather than Ghana Law. Mr Agyemang, learned counsel for the plaintiff, likewise did not spare himself in his citation of the relevant legal authorities and his elucidation of the Ghanaian connecting factors in the contract; and he dutifully invited us to uphold the ruling of the learned
[p.421] of [1972] 1 GLR 413 trial judge in favour of Ghana law. It is only proper at this juncture to express my own appreciation and gratitude to both learned counsel for their industry, ability and intriguing partisanship which helped considerably to lighten the court’s burden.
What, then, is the proper law of a contract and how is it judicially determined? Simply defined, the proper law of a contract means the system of law which the contracting parties either expressly intended or must be presumed to have intended to govern their contractual obligations wherever performed. Three board propositions may here be formulated on the concept of the proper law of a contract:
(1) The modern judicial test for determining the proper law is that propounded by Lord Simonds when delivering the opinion of the Judicial Committee of the Privy Council in Bonython v.
Commonwealth of Australia [1951] A.C. 201 at pp. 219-221, P.C. where he observed that:
“the proper law of the contract [is] the system of law by reference to which the contract was made or
that with which the transaction has its closest and most real connexion… On the assumption that
express reference is made to none, the question becomes a matter of implication to be derived from all the circumstances.” This test has been approved and adopted by the House of Lords in subsequent cases e.g. In re United Railways of Havana and Regla Warehouses Ltd. [1960] 2 All E.R. 322 H.L., per Lord Denning and Lord Morris at pp. 356 and 364 respectively and Miller & Partners Ltd. v. Whitworth Street Estates (Manchester) Ltd.[1970] 1 All E.R. 796, H.L. per Lord Reid and Lord Hodson at pp.
799 and 801 respectively and Compagnie d’Armament Maritime S.A. v. Compagnie Tunisienne de
Navigation S.A. [1970] 3 All E.R. 71, H.L. per Lord Morris and Lord Diplock at pp. 77 and 96
respectively. The Simonds’ test has been adopted in Volume 1 of the 1971 supplement to
Halsbury’s Law’s of England, at para. 137 of the supplement to Volume 7, and also in Dicey and
Morris’ Conflict of Laws (8th ed.) where rule 127 states that:
“The system of law by which the parties intended the contract to be governed, or where their intention is neither expressed nor to be inferred from the circumstances, the system of law with which the transaction has its closest and most real connection.” (2) The mode of judicial ascertainment of the proper law is, in the absence of an express choice of a system of law, the objective and pragmatic one of applying the external standard of the reasonable man of business and then considering what the parties ought to have intended had they considered the question of proper law at the time of formation of the contract. Thus in the Miller case (supra), the House of Lords held that in construing a contract, e.g. for the purposes of ascertaining any intention of the parties thereto as to the proper law, it was not proper to have regard to the conduct of the parties after the contract had been made. “Otherwise,” as Lord Reid observed at p.798, “one might have the result that a contract meant one [p.422] of [1972] 1 GLR 413 thing the day it was signed, but by reason of subsequent events meant something different a month or a year later.” The locus classicus for my second proposition will be found in the judgment of Singleton L.J. in The Assunzione [1954] 1 All E.R. 278 at pp. 289 and 292, C.A.: “`Then the court has . . . to determine for the parties what is the proper law which, as just and reasonable persons, they ought to . . . have intended if they had thought about the question when they made the contract.’ That, I believe, is the duty on us, and in seeking to determine the question we must have regard to the terms of the contract, the situation of the parties, and generally all the surrounding facts . . . One must look at all the circumstances, and one must seek to find what just and reasonable persons ought to have intended if they had thought about the matter at the time they made the contract. If they had thought that they were likely to have a dispute, I hope it may be said that just and reasonable persons would like the dispute determined in the most convenient way and in a way in accordance with business efficacy.” (3) The court is also assisted by certain well-known presumptions of varying persuasive force, e.g. the lex loci contractus; lex loci solutionis; the lex situs in the case of immovables; the law of the flag in contracts of affreightment and the presumption in favour of the matrimonial domicile in the case of marriage settlements. However, in view of the disproportionate reliance placed on some of these presumptions by learned counsel in the present case, it is essential to sound a note of caution on the probative value of these presumptions. There are ample judicial dicta to the effect that these presumptions are neither irrebuttable nor arbitrary criteria. The presumptions are merely prima facie inferences which may be rebutted in a particular case by counter-indications suggesting the connection of the contract with a different legal system. Thus as Bowen L.J. observed in Jacobs v Credit Lyonnais (1884) 50 L.T. 194 at p. 196:
“Certain presumptions or rules… have been laid down by judicial writers of different countries and
accepted by the courts, based upon commonsense, upon business convenience, and upon the comity
of nations, but these are only presumptions or prima facie rules that are capable of being displaced
wherever the clear intention of the parties can be gathered from the document itself and from the
nature of the transaction.” Compare this with Lord Wright’s dictum in Mount Albert Borough Council v. Australasian Temperance & General Mutual Life Assurance Society, Ltd. [1938] A.C. 224 at p. 240, P.C.:
“The proper law of the contract means that law which the English or other Court is to apply in determining the obligations under the contract. English law in deciding these matters has refused to treat as conclusive, rigid or arbitrary, criteria such as lex loci contractus or lex loci solutionis, and has treated the matter as depending on the [p.423] of [1972] 1 GLR 413 intention of the parties to be ascertained in each case on a consideration of the terms of the contract, the situation of the parties, and generally on all the surrounding facts . . . No doubt there are certain prima facie rules to which a Court in deciding on any particular contract, may turn for assistance, but they are not conclusive. In this branch of law the particular rules can only be stated as prima facie presumptions.”
And see also Lord Atkins’ observation to the same effect in R. v. International Trustee for Protection of Bondholders [1937] A.C. 500 at p. 529, H.L.
Bearing these three principles in mind, my task is to discover the system of law by reference to which the parties to this appeal made the contract herein or the system of law with which the contract has its closest and most real connection. I have to examine objectively the connecting ties of the contract to Ghana and France in turn; and paying due regard to the nature and type of contract entered into i.e. a service contract, the terms of the service contract; the situation and conduct of the parties at the time of the formation to the contract; and generally all the surrounding circumstances, we have to discover which of the two rival legal systems, Ghanaian or French, or the parties must be deemed to have intended to govern their contract had they thought about the matter. On the facts before me, no other legal system, apart from Ghanaian and French, deserves to be considered. The choice is a straight one between Ghanaian and French law.
It is not in dispute between the parties herein that the contract in question disclosed the following points of contract or connection with Ghana:
(1) Both the main and supplementary agreements, exhibits A and B2, were entered into between the
plaintiff and the defendants, represented by their local general manger in Ghana; in Accra and
Tema respectively on 4 April 1966 (when exhibit A was prepared) and on 13 June 1966 (the date of
issue of exhibit B2). The plaintiff indicated his approval of the terms of both documents on the face
of each.
(2) Exhibit A was the sequel to the conversation previously held between the parties in the
Ambassador Hotel, Accra, and its clauses represent the terms of their previous verbal agreement. It
was for the purpose of confirming this earlier verbal agreement that exhibit A was prepared by the
defendants’ general manager in the first instance, and given by him to the plaintiff to read and
approve. The plaintiff duly approved of the same and signified his acceptance thereof by signing
the second copy of exhibit A (as he had been requested to do). He likewise signified his consent to
the terms of exhibit B2 in the manner required of him. Exhibit B2 was regarded by both parties as
“an integral part” of the plaintiff’s contract (exhibit A): See the last sentence in exhibit B2. It is
therefore incontrovertible that both parties [p.424] of [1972] 1 GLR 413 are bound by these contractual documents, exhibits A and B2 which were made and executed by them in Ghana.
(3) The nature and type of the plaintiff’s contractual obligations were clearly spelt out in clauses (1)
and (8), inter alia, of exhibit A and paragraph (1) of exhibit B2. He was engaged to perform the
duties of a works supervisor for the defendants site “at Tema (Ghana),… under the authority of [the
defendants] management and [their] representative in Tema, at whose disposal you are to remain
according to his orders. You undertake… to respect in precise way orders and instructions that may
be given to you and to execute scrupulously the planning which will be assigned to you.” His
contract according to exhibit B2 was intended to link him with the defendants for site work while
he had as a matter of fact been employed until 13 June 1966 (the date of exhibit B2) in the
defendants’ factory at Tema. Whether he was actually working temporarily at the factory in Tema
or in his regular job at the site at Tema the plaintiff had to perform his contractual duties wholly in
Tema (Ghana), under the control and supervision of the defendants’ Tema representative. Nor
should sight be lost of the nature of the defendants’ business operations in Tema. From an affidavit
sworn to by their general manager on 17 August 1967, I glean that the defendants were under
contract with the Tema Development Corporation to build and maintain fifteen blocks of flats at
Tema for the corporation. From another affidavit sworn to on 3 September 1966, I discover that the
defendants, own plant and machinery at Tema worth ¢600,000.00. It was in connection with this
contractual work that the plaintiff was engaged to perform the duties of a works supervisor at the
Tema site. Obviously the place of performance of the plaintiff’s contract with the defendants was at
Tema (Ghana).
(4) Even though the defendants were an external company incorporated in France with a registered
office in Paris, yet they were engaged in Ghana on the construction of fifteen blocks of flats at
Tema. They owned a factory there. They can therefore be said to have had at all material times, “an
established place of business” in Ghana within section 302 (2) and (3) of the Companies Code,
1963 (Act 179). (5) Under clause (8) of exhibit A, the company was contractually bound to maintain a local representative at Tema to control and manage the plaintiff’s work there. It also undertook to
provide through this representative, medical care, housing and transport facilities at Tema for the
plaintiff who was also allowed his living expenses in local currency under clauses (13), (14) and
(9) of exhibit A.
To sum up the Ghanaian connection of the contract, the plaintiff entered into contract of service with the defendants and undertook to [p.425] of [1972] 1 GLR 413 perform his duties as a servant in Tema (Ghana), under the control of the defendants’ Tema representative. The place of contracting was Ghana, i.e. Accra and Tema; the place of performance of the plaintiff’s obligations in their entirety was Ghana, while the defendants qua master had to discharge their principal obligations towards the plaintiff in Ghana save in the important respect of payment of his salary, less the deductions in local currency for his living expenses, which was made payable in France and save for the provision of what may be termed as “fringe benefits,” i.e. a free holiday air ticket and end-of-contract free air ticket.
By contrast, there were the following points of contact with France, on which both parties to this appeal are agreed:
(1) The negotiations of the contract were conducted in the French language between the plaintiff, an
Israeli national who speaks both French and English, and the defendants’ general manager a
Frenchman who speaks a little or no English.
(2) The originals of both exhibits A and B2 were written in French (Agreed English translation of both documents were in fact tendered in evidence and marked A and B2).
(3) The plaintiff’s salary under clause (4) of exhibit A was expressed in French francs.
(4) The plaintiff’s salary less deductions of advance in cedis for local living expenses was made
payable to the plaintiff in France under clause (9) of exhibit A.
(5) The plaintiff was during his intermediate vacation, given the benefit of one free air ticket of a value “equal to a travel Accra/Paris economic class, round trip’ or equal to “Accra/Tel Aviv direct.” He was also given under clause (7) of exhibit A the same entitlement to a free air ticket of similar
value at the end of his contract.
(6) Finally, the defendants were an external company incorporated in France, where they had their
registered office. Their letterheads bore the address of the French headquarters in Paris.
Comparing the Ghanaian connections under the contract with the French connections, I have no doubts in my mind that the Ghanaian connections are closer, more real, more substantial and more weighty than the French connections. In my opinion this contract of service belongs more intimately to Ghana than to France. Its natural seat or centre of gravity is Ghana; and its more important connecting factors and obligations are localised in Ghana. I consider the French connections enumerated above as marginal, slight and not real enough, save perhaps the factor of salary expressed in francs and made substantially payable there. But, salary expressed in francs and made substantially payable there. But, in my opinion, the mere fact of the salary being expressed in French francs and made payable to the plaintiff in Francs does not, without more evince a common intention of the parties to govern this contract of service by French law. I regard it as a mutually beneficial and convenient arrangement in that for the Paris-based defendants, it obviated the necessity [p.426] of [1972] 1 GLR 413 of periodic transfers of foreign currency into Ghana for the payment of the plaintiff’s salary; and for the plaintiff, a foreigner working in Ghana, it obviated the need to apply for permission from the Ghanaian exchange control authorities to remit abroad his personal remittance quota.
A similar method of approach and conclusion were adopted by the majority of the English Court of
Appeal in the recent case of Sayers v. International Drilling Co. N.V. [1971] 3 All E.R. 163, C.A., in
which a preliminary issue decided was the proper law of a contract of employment entered into in
England between a Dutch company engaged in offshore oil drilling in Nigeria territorial waters and an Englishman whose contractual duties were to be performed wholly outside the United Kingdom. The contract was written in English on a printed form used for employing European personnel from different countries. The salary of the English employee was made payable in sterling. The majority of the court (Salmon and Stamp L.JJ., Denning M.R. dissenting) held that: (a) the proper law of the contract was Dutch law and not English law because, inter alia, it had its closest and most real connection with the Dutch system of law; and it was on the face of it a form of contract drawn up by a Dutch company for the purpose of employing European personnel of any nationality; and (b) the facts that the contract was in the English language and payment under it was to be in sterling were merely matters of convenience. As Stamp L.J. put it at p.171, “There are obvious inconveniences in making monthly payments of salary to a man working on a rig in Nigeria or in many other parts of the world, and on the facts of this case I regard the arrangements for payments of salary as matters of convenience and of no significance for present purposes.”
Mr. Mensah referred us to the cases of The Assunzione [1954] 1 All E.R. 278, C.A and a dictum in Re
Chesterman’s Trust [1923] 2 Ch. 466 at p. 483, and sought to extract therefrom a principle of law that where the form of payment of the money of account is expressed in a foreign currency, then the
presumption arises that the law of that foreign country represents the proper law of the contract. The point has already been made about the rebuttable and inconclusive nature of the so-called presumptions, and it has already been emphasized that the facts of each case may cancel or displace these prima facie inferences and provide counter-indications of the proper law intended by the parties.
The majority decision in Sayer’s case (supra) and the decision in the Mount Albert case (supra) suffice to disprove the existence of any so-called presumption that where the money of account is expressed in the currency of one country, then that country’s law represents the proper law of the contract. The true principle established by the decided cases is that the proper law is, in the absence of express choice of a particular system of law by the parties, that system of law with which the contract has its closest and most real connection.
The case of The Assunzione (supra) which involved a contract of affreightment is distinguishable from the facts of this case involving a [p.427] of [1972] 1 GLR 413 contract of service. In that case, an Italian-owned ship, The Assunzione was chartered by French shippers to convey a cargo from France to Italy. The charter-party was made in France in English form. Payment was to be made in Italy in Italian currency. The French charterers sued the Italian owners of the ship for short delivery and damage to the cargo. The extent of liability depended on whether French or Italian law was the proper law. After considering all the facts and circumstances of the case, both the trial court and
the English Court of Appeal upheld Italian law as the proper law. Singleton L.J. who gave the leading
judgment in the Court of Appeal, held as follows at p. 291: “Though I believe it to be impossible to state any rule of general application, I feel that matters of very considerable importance are the form of, and place of, payment. In this case payment had to be made in Italian lire and in Italy. In the circumstances of this case I regard it as a very important feature, coupled as it is with the facts that the ship was an Italian ship and that the destination was an Italian port.”
The emphasis is mine. While the general principles enunciated in that case for the ascertainment of the proper law already quoted are useful and of valid application, the decision itself rested on the court’s assessment of the parties’ presumed intention in the light of their contract of affreightment and all the circumstances of the case. The English court certainly did not lay down universal rules about the immutable or conclusive nature of such presumptions as the law of the flag and lex loci contractus which came up for examination in their judgments. On the contrary, Willmer J. (in the court below) and Singleton, Birkett and Hodson L.JJ. in the appeal court, drew attention to the rebuttable nature of these presumptions: See the judgments of Singleton L.J. at pp. 279-292; of Birkett L.J. at pp. 292-295 and of Hodson L.J. (as he then was) whose remarks at p. 300 are apposite and bear quotation in this context:
“In my judgment, the position is that the rule or presumption must, indeed, often be of little importance in the decision of cases, because the court addresses itself, and always must, to the presumed intention of the parties to the contract, and will act on the evidence before it and will naturally be loath to depend on presumptions which necessarily vary in weight, some being more easily overcome than others. This is not, however, to say that a particular rule or particular presumption has ceased to exist, and in, my opinion, the presumption contended for by the shipowners is available to them, if only as a last resort, when the evidence is so evenly balanced that the court cannot otherwise reach a fair and just conclusion.”
The emphasis is mine. Applying, with respect, these wise dicta of Hodson L.J. in The Assunzione to the facts of this case, I am of the firm view that the facts in this case point overwhelmingly and conclusively in favour of Ghana law and there is consequently no need to turn as a last resort to the presumption invoked by Mr. Mensah in order to decide the proper [p.428] of [1972] 1 GLR 413
law. I regard the expression of the plaintiff’s salary in French francs and the stipulation requiring its
payment—less local living expenses in cedis—in France as isolated features which do not detract from the localization of the main features of the plaintiff’s contract of service in Ghana. I also regard as natural and immaterial the fortuitous fact that two persons with good command of the French language at their meeting at the Ambassador Hotel in Accra conversed in French. They could hardly have conversed in English, unless through an interpreter, since the defendants’ representative does not speak English. In the court below the latter gave evidence in French.
The further connecting features of the defendants’ French nationality and principal place of residence are, in my opinion, insignificant since the defendants had, in any event, an established place of business at Tema, where they owned a factory and machinery and plant valued at ¢600,000.00 and were engaged in the construction of fifteen blocks of flats, and where they were represented by a general manager empowered to control the plaintiff in the mode and manner of the performance of his contractual duties.
Finally, I regard the free air-tickets as fringe benefits conferred on an expatriate servant who was
otherwise obliged under his contract of service with defendants to perform his duties as works supervisor wholly at their site in Tema, Ghana. From a perusal of the nature of this contract, its terms, the situation of the parties and all the surrounding circumstances, I am satisfied that the learned trial judge was correct in his ruling that the proper law was Ghanaian law even though he did not analyse the connecting factors to the two rival systems of law. Consequently, Ghanaian law is the law by which the essential validity of the plaintiff’s contract of service is governed; and it is the law which governs its terms, interpretation and effect. The next ground of appeal was to the effect that the learned judge ought to have rejected the plaintiff’s claim, since “he was dismissed during his probationary period when the contract of service had not become fully effective”; and since, as was contended, a probationer may generally be dismissed with impunity during his probationary period. The gist of the argument in support of this ground was that the plaintiff was in fact dismissed on 6 July 1966 before the end of his probationary period on 31 July 1966;
that a probationer, by definition, is a person under trial whose contract has not been confirmed. Therefore until and unless his appointment is in fact confirmed at the end of his probation, he cannot claim legal rights under the substantive contract; and he cannot in particular, claim damages for wrongful dismissal.
Mr. Mensah was unable to cite any decided case in support of these submissions, but he merely contented himself with ample citation from the definition of “probation” and “probationer” contained in such dictionaries as Jowitt, Wharton and Chambers, and Shorter Oxford Dictionary, and also from an obiter dictum of Lord Goddard C.J. in McClelland v. North Ireland General
[p.429] of [1972] 1 GLR 413 Health Services Board [1957] 2 All E.R. 129 at p. 133, where reference is made to a “probationary period “as follows:
“The probationary period, ended in February, 1949, and her appointment was then confirmed. Until it was confirmed it would have been in my opinion, permissible for the board to have terminated the employment at any rate on one month’s notice. The object of a probationary period is to ascertain if the candidate was likely to prove efficient and, as will be seen below, a month’s notice can be given for inefficiency.’”
The facts of this case, in particular the contract terms, are wholly different from those in McClelland’s case. The decision in that English case turned on the effect of a particular clause which governed the appellant’s contract of service after she was confirmed in her post, long after the completion of her probationary period. No general rule of law was therein stated about the legal rights of a probationer.
Chambers’ Twentieth Century Dictionary (Rev. ed.), p. 872, defines probationary period as “testing:
proof; a preliminary time or condition appointed to allow fitness or unfitness to appear: Wharton’s Law Lexicon at p. 805 (14th ed.) defines “probation” as “Suspension of a final appointment to an office until a person temporarily appointed (who is called a probationer) has by his conduct proved himself to be fit to fill it.” See also Jowitt, The Dictionary of English Law, p. 1416 and the Shorter Oxford Dictionary (3rd ed.) Vol 2, p. 1589, for similar definitions of “probation,” i.e. “The testing or trial of a person’s conduct, character or qualifications; a proceeding designed to ascertain these: especially in reference to the period or state of trial.” As Mr. Agyemang correctly pointed out, these dictionary definitions do not settle the question in issue whether or not the plaintiff qua probationer has legally enforceable rights. In my opinion, this question must be determined by a proper construction of the terms of the contract in exhibits A and B2.
It will be recalled that the original probationary period of three months under clause (5) of exhibit A was extended on 13 June 1966 to four months commencing retrospectively on 1 April 1966 and ending on 31 July 1966: See exhibit B2, which should be read as one with exhibit A. Paragraph (2) of exhibit B2, refers to 1 April “as the starting day of your contract.” Compare clause (3) of exhibit A which is identical. And in paragraph (3) of exhibit B2, it is stated that “your contract is definitely considered having as starting date the 1 April 1966 for a duration of three years with a probation period equal to four months.” The plaintiff’s salary under clause (4) of exhibit A was expressed as a composite annual figure payable in thirteen equal monthly instalments.
Reading clauses (2), (3), (4) and (5) of exhibit A and exhibit B2 together, I hold that the meaning and
effect of the contractual provisions regulating the plaintiff’s probation are as follows: (1) The plaintiff’s contract was for a fixed term of three years, from 1 April 1966 to 31 March 1969
inclusive of a probation period of four months, i.e. from 1 April 1966 to 31 July 1966.
[p.430] of [1972] 1 GLR 413 (2) During the said probationary period, either party to the contract was entitled to terminate the contract, the plaintiff by quitting his job, and the defendants by terminating the plaintiff’s contract for either “a professional or disciplinary reason.” In either eventuality, the party terminating the contract could do so without notice or payment of compensation to the other party.
(3) Viewed from the plaintiff’s standpoint, the contract conferred on him a right to work and to be paid his stated salary as works supervisor at the defendants’ site at Tema, subject to a contingency for a fixed period of three years, the contingency being that during the four-month probation period (i.e. from 1 April to 31 July 1966), he could be dismissed summarily by the company for “either a
professional or disciplinary reason,” and if he was so dismissed, he would not be entitled to either
notice or compensation.
(4) On the other hand, if as is the case, the said contingency did not materialise, he was entitled to
work and be paid his stated salary for a fixed period of three years, starting from 1 April 1966 in
thirteen equal monthly instalments.
It is unnecessary to decide, for the purpose of this case, the rights of a probationer generally, since each must depend on its own facts; and since the question of the rights of the plaintiff qua probationer must accordingly be determined from a proper construction of the relevant clauses of both written agreements herein. In this case, the defendants have been rightly adjudged to be in breach of contract for wrongful termination of the probation and the contract as a whole. I would only content myself with stating, purely obiter, that in my opinion, a probationer, generally speaking, is not without a vestige of a legal right during the period of his probation. He has a duty to undergo the prescribed test, and a correlative right to receive any contractual remuneration or benefits or both accruing therefrom or incidental thereto. Beyond that, he may reasonably expect to be confirmed in his post upon the satisfactory completion of his probation or trial period.
Mr. Mensah next complained about the quantum of damages awarded against his clients. In his
submission, damages awarded ought to have been confined to the end of the probation period and not stretched to cover the residue of the three-year contract period. He cited in support of his submission, part of a sentence in Mayne and McGregor on Damages, (12th ed.), p. 524, para. 610:
“If a defendant has a right to terminate the contract before the end of the term fixed, damages should be limited to the end of the earliest period at which the defendant could have terminated the contract.” [p.431] of [1972] 1 GLR 413 The full sentence reads as follows:
“Where the defendant has right to terminate the contract before the end of the term, damages should only be awarded to the end of the earliest period at which defendant could have so terminated; conversely, where the plaintiff has an option to extend the contract the probability of his exercising this option and the value thereof may be taken into account.”
The emphasis is mine. He further submitted that the learned trial judge should have ascertained whether the plaintiff was gainfully employed at the date of judgment, and for how long he has been in such gainful employment and then have reduced damages accordingly, since the plaintiff was in duty bound to mitigate his losses. Damages should be awarded for compensation and not for gain. The learned judge should, in his submission, have depreciated the damages by considering the fact that the plaintiff had in the meantime floated a company and must therefore be presumed to have been in gainful employment.
Mr. Agyemang countered that the learned judge applied the correct principle of law that damages are to be measured by the amount of wages which the servant has been prevented from earning by reason of his wrongly dismissal including the value of any other benefit to which he is entitled by virtue of his contract and of which he is deprived in consequence of its breach. The judge, he submitted, had considered the evidence before him on the issue of steps taken by the plaintiff to mitigate his loss, and had held as a fact that the plaintiff at the time he gave evidence, was unemployed and his efforts (as evidenced by exhibit E) to get employment have not been successful,” and accordingly awarded him N¢19,792.70 being the salary he had lost for the residue of 33 months out of the contract term plus N¢520.70, being his air passage entitlement under the contract.
An appellate court will generally only interfere with damages awarded if either wrong principles of law were applied or correct principles of law were applied wrongly or it can be shown that the assessment was so extremely high or so low as to make it, in the opinion of this court, an entirely erroneous estimate of the damage to which the plaintiff is entitled. The appellate court will not intervene because it might feel disinclined to agree with the amount awarded as an amount which it might itself have assessed. There is a presumption of correctness in favour of the lower court’s order and this must be displaced by the appellants: See Zik’s Press Ltd. v. Ikoku (1951) 13 W.A.C.A. 188; Oduro v. Davis (1952) 14 W.A.C.A 46; Zacca v. C.F.A.O., Court of Appeal, 15 August 1969, unreported; digested in (1969) C.C. 156; Flint v. Lovell [1935] 1 K.B. 354, H.L., per Greer L.J. at p. 360 and Owen v. Sykes [1936] 1 K.B. 192, C.A., per Slesser L.J. at pp. 199-200.
I am satisfied that the learned trial judge applied the correct principles of law in quantifying damages in this case. The measure of damages for wrongful dismissal is the loss thereby incurred, and this will, subject to [p.432] of [1972] 1 GLR 413 the duty of the plaintiff to mitigate his loss by taking other employment which is both suitable and available, normally be the wages due and payable for the agreed period of service together with the value of any other benefit to which he is entitled by virtue of his contract and of which he is deprived in consequence of its breach. See Halsbury’s Laws of England (3rd ed.), Vol. 25, p. 523, para. 995.
The plaintiff’s contract, on its proper construction, was not for two separate periods, a probation period of four months to be followed by a term of two years eight months; but it was for a fixed term of three years incorporating a four-month probation period. The defendants were not entitled to terminate the contract summarily before the end of the fixed term of three years. They had a limited right to terminate it summarily during the probation period on the happening of any one of two stated contingencies, which did not, however, materialise. The trial court was right in assessing damages for the unexpired portion of the contract term, i.e. 33 months. The first part of the rule cited by Mr. Mensah from Mayne and McGregor on Damages is inapplicable to the facts of this case since the defendants had no unfettered right to terminate the contract before the end of the three-year fixed term.
On the issue of mitigation, the learned trial judge was satisfied that the plaintiff took all reasonable steps to mitigate his loss. What steps a plaintiff in an action for breach of contract should take towards mitigating the damage is a question of fact and not of law and the burden of proof is on the defendant: See Payzu Ltd. v. Saunders [1919] 2 K.B. 581, C.A. per Bankes L.J. at p. 588 and Roper v. Johnson (1873) L.R. 8 C.P. 167, per Brett J. at pp. 181-182. The defendants were unable to challenge the plaintiff’s evidence on this score and his evidence therefore stands uncontradicted. He was refused employment as a clerk of works by a firm of architectural and quantity survey consultants (see exhibit E of 30 October 1966). He was likewise turned down by Messrs. Taylor Woodrow Ltd. and A. Lang Ltd. He floated a company, Tradimpex Ltd., which however was still awaiting a ministry of trade permit to enable it to commence operations. But the mere incorporation of Tradimpex Ltd., without more, does not establish the fact that the plaintiff was in receipt of any income. The defendants failed accordingly to discharge the burden of proof incumbent on them to establish that the damages claimed by the plaintiff were due to his neglect in not mitigating the loss caused by their breach of contract. It should not be forgotten that a senior executive (like the plaintiff) who is wrongfully dismissed is under no legal obligation to accept an alternative appointment involving a considerable reduction in status: See Yetton v. Eastwoods Froy Ltd. [1966] 3 All E.R. 353.
For the above reasons, there is no merit in the defendants’ ground of appeal complaining about the
alleged punitive nature of the damages awarded.
It now remains to consider the question whether the learned trial judge was competent to award part of the damages in a foreign currency, [p.433] of [1972] 1 GLR 413 i.e. French francs. He relied on the authority of the judgment of Akufo-Addo C.J. in the case of
Levinstein v. Frukogold Ltd., High Court, Accra, 11 December 1967, unreported, where part of damages for unlawful dismissal was made payable in sterling overseas. This court, however, allowed the appellant’s appeal from that judgment in the case of Frukogold v. Levinstein, 16 June 1969, unreported and set aside that part of the judgment which awarded damages against the defendant-appellant, albeit on the ground that there was no privity of contract between the appellant and the respondent-company and it could not therefore be condemned in damages.
This court is not bound by the High Court decision. In spite of clause (9) of exhibit A enabling part of the plaintiff’s salary to be drawn in French francs in France, it is, in my opinion, procedurally wrong for a Ghanaian court to award damages in foreign currency. The relevant English conflict of law rule is as stated in Dicey’s Conflict of Laws, (7th ed.), r. 177 at pp. 914-915:
“(1) An English Court cannot give judgment for the payment of an amount in foreign currency. A debt which is expressed and damages which are calculated in a foreign currency must be converted into sterling for the purpose of litigation in England, irrespective of the place at which they are payable and irrespective of the law governing the substance of the obligation. (2) For the purpose of litigation in England . . . (b) damages for breach of contract must be converted into sterling with reference to the rate of exchange prevailing on the day when the contract was broken.”
The leading English case on the point is Di Ferdinando v. Simon, Smits & Co. [1920] 3 K.B. 409, C.A., where a company contracted to carry goods for the plaintiff from England to Italy and to deliver them there on 10 February 1919. The company did not carry out their contract, but converted the goods and was then sued in England for damages for breach of contract. It was held that damages should be assessed, and the rate of exchange for their conversion into sterling should be fixed, as at 10 February 1919 and not as at the date of judgment. See also S.S. Celia v. S.S. Volturno [1921] 2 A.C. 544, H.L.; Vionnet v. Wills [1940] 1 K.B. 72, C.A. and Re Taltal Chile Nitrate Co., Ltd. (1895) 73 L.T. 422, C.A. In the last-mentioned case the facts were as follows: By an agreement entered into in England between the manager of a company carrying on business in Chile and the company, it was provided that he should be paid an annual salary at the rate of 1,000 pounds sterling by monthly payments, “at such place or places and in such manner as he may direct.” The manager, while the company was carrying on business, drew bills upon them from time to time for the payments of his monthly salary payable in Chile in Chilean dollars, in an amount of dollars that would be equivalent to the amount of his sterling claim. These drafts were not paid by the company, which later [p.434] of [1972] 1 GLR 413 went into liquidation. The manager then claimed to prove in the liquidation for the amounts of the unpaid instalments calculated in pounds sterling, the rate of exchange having fallen since the dates when the bills were drawn.
It was held that the company not having paid the manager in the manner in which he “directed” by
drawing the bills, his position was that of a person whose salary at the rate of £1,000 per annum was
unpaid, and he was entitled to move for his unpaid salary at the sterling rate. In his seventh edition of Dicey’s Conflict of Laws, Professor Kahn-Freund has explained that rule 177:
“embodies established principles of the English law of procedure which apply to litigation in an English Court as part of the lex fori irrespective of the lex causae, whether it be the proper law of a contract . . . A judgment by which an English court orders a person to pay a sum of money must be expressed in sterling.”
One practical reason for this rule that damages for breach of contract must be converted into sterling by the English court is that, if the rule were otherwise, the court’s order could not be enforced by the
ordinary writs of execution.
“Speaking generally, the Courts of this country have no jurisdiction to order payment of money except in the currency of this country. Whatever sum is ordered to be paid, whether for principal, interest or damages, must be expressed in English money, or such order cannot be enforced by the ordinary writs of execution.”
See per Lindley M.R. in Manners v. Pearson & Son [1898] 1 Ch. 581 at p.587, C.A. In this connection I may add that the general principle is that the court cannot stultify itself by making an order which it cannot enforce. Another reason is that the plaintiff’s object in pursuing his claim for breach of damages in an English Court is that his right to damages, once established by the proper law, shall be converted by the English court into a right to receive a definite sum of money. He is entitled to be paid in full for the injury sustained and he takes advantage of the English process and machinery in order to exact this payment.
Order 74 of the Supreme [High] Court (Civil Procedure) Rules, 1954 (L.N. No. 140A), provides that,
“Where no provision is made by these Rules the procedure, practice and forms in force for the time being in the High Court of Justice in England shall, so far as they can be conveniently applied, be in force in the Supreme Court of Ghana.” It has already been demonstrated that the said rule 177 embodies established principles of the English law of procedure which apply to litigation in the English court as part of the lex fori. Our procedure rules are silent on the issue. Mutatis mutandis, the above-quoted rule is applicable to the damages awarded in this case; and for the purpose of litigation in a Ghanaian court, damages for breach of contract must be converted into the local currency with reference to the rate of exchange prevailing on the day when the contract was broken—in this case, on 6 July 1966. [p.435] of [1972] 1 GLR 413 In the result, I would vary the judgment appealed from by awarding the sum of ¢19,792.70 as damages and giving judgment for the said amount in favour of the plaintiff against the defendants. Save for this variation of the judgment of the court below, I would dismiss the appeal with costs assessed at ¢129.25.
JUDGMENT OF KOI LARBI J.S.C.
I agree and have nothing to add.
JUDGMENT OF LASSEY J.A.
I also agree.
DECISION
Appeal dismissed.
Award of damages varied.
