ZAGLOUL REAL ESTATES LTD vs. BRITISH AIRWAYS LTD [1997-1998] 2 GLR 428

CASES REFERRED TO:

(1) Doe (Decd); Murray v Bridges (1831) 1 B & Ad 847.

(2) Lonrho Ltd v Shell Petroleum Co Ltd [1982] AC 173.

(3) Barraclough v Brown [1897] AC 615; 66LJQB 672; 76 LT 797; HL.

(4) Cutler v Wandsworth Stadium Ltd [1949] 1 All ER 544; [1949] AC 398; 93 SJ 163, HL. (5) Zagloul Real Estates Co Ltd (No 1) v British Airways [1998-99] SCGLR 310.

(6) Elliot v Richardson (1870) LR 5 CP 744; 39 LJCP 340; 22 LT 858.

(7) Battersby v Smith (1818) 3 Madd 110.

(8) Chettiar v Chettiar [1962]AC 294; [1962] 2 WLR 548.

(9) Holman v Johnson (1775) 1 Coup 341; [1775-1802] All ER R98.

(10) Ewing v Osbaldiston (1834) 6 Sim 608; (1837) 40 ER 561.

(11) Hope v Hope (1857) 8 De GM&G 731 (1857) 44 ER 572;, 26 LJCh 417.

(12) Spencer’s Case (1583)5 Co Rep 16a.

(13) Curragh Investments Ltd v Cook [1974]1 WLR 1559;, 118 SJ 737;, [1974] 2 All ER 658. [p.431] of [1997-1998] 2 GLR 428 (14) Schandorf v Zeini [1976] 12 GLR 418, CA.

(15) Napier v National Business Agency Ltd [1951] 2 All ER 264; [1951] WN 392; 95 SJ 528; CA. (16) Snell v Unity Finance Co Ltd [1964] 2 QB 203; [1963] 3 WLR 559; [1963] 3 All ER 50, CA. (17) Brown Jenkinson & Co Ltd v Percy Dalton (London) Ltd [1957] 2 All ER 844; [1975] 3 WLR 403, CA.

APPEAL by plaintiff from judgment of Court of Appeal allowing in part the defendants’ appeal from a judgment of the High Court wherein the Court of Appeal remitted the issue in respect of the refund of ¢40 million paid by the defendants as rent pursuant to an illegal lease and deed of indemnity back to the High Court for retriiral. The facts are sufficiently set out in the judgment of Acquah JSC.

Peter Ala Adjetey (with him William Addo) for the appellants.

Aduama Osei (led by J Quarshie-Idun, with him Mrs Amegatcher) for the respondents.

Bamford-Addo JSC. I have had the privilege of reading in advance the comprehensive judgement of my brother Acquah JSC which sets out the full facts of this case. I agree with him and my reasons are as follows: The plaintiff-appellants (hereinafter called the plaintiffs) took action at the High Court against the defendant- respondents (hereinafter called the defendants). The plaintiffs’ claim indorsed on their amended writ of summons was for:

“(a) A declaration that under the provisions of the External Companies and Diplomatic Mission (Acquisition or Rental of Immovable Property) Law 1986 (PNDCL 150) the defendants are under a statutory obligation to pay the rent reserved under the lease executed between the plaintiffs and defendants and dated 14 October 1986, or as determined or varied by the Implementation Committee under PNDCL 150, in convertible currency through the Secretary, now the Minister, for Foreign Affairs by cheque drawn in favour of the Bank of Ghana to the credit of the plaintiffs, notwithstanding anything to the contrary in the said lease with effect from the date of coming into effect of the said lease, namely 1 October 1986.

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(b) A declaration that upon the payment in convertible currency by cheque drawn in favour of the Bank of Ghana through the Minister for Foreign Affairs to the credit of the plaintiffs of any such rent from the date of coming into force of the said lease, the plaintiffs shall be obliged to pay to the defendants the sum of ¢40 million only by way of a refund of the rent for 25 years under the said lease paid in advance by the defendants to the plaintiffs and no more.

(c) An order directing the defendants to comply with the provisions of PNDCL 150 in all respects so far as the same affect the lease entered into between the plaintiffs and the defendants aforesaid.”

The plaintiffs, a limited liability company incorporated under the laws of Ghana in 1986, leased property by a lease agreement to the erstwhile British Caledonian Airways Ltd (BCAL) for 25 years and by virtue of the lease agreement, BCAL paid a total sum of ¢40 million rent to the plaintiffs. Later, with the consent of the plaintiffs, British Caledonian assigned the remainder of its lease to British Airways Ltd, another external company.

The lessee of the property, being an external company, was under the obligation provided by the External Companies and Diplomatic Missions (Acquisition or Rental of Immovable Property) Law, 1986 (PNDCL1 50) to comply with that Law, particularly section 3 and 4 thereof which mandates an external company to pay rent in respect of the leased property in convertible currency. Sections 3 and 4 of PNDCL150O provide that:

“3. (1) Subject to the provisions of section 7 of this law:

(a) the rent payable in respect of any movable property situated in Ghana under any lease or tenancy agreement granted by any person to a diplomatic mission, consulate, international organisation, an external company or an official thereof, shall be determined and paid in convertible currency.”

(2) Any such rent, premium or purchase determined by the landlord or owner shall be subject to approval or variation by the Committee.

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4 Subject to section 7 of this Law, any diplomatic mission, consulate, international organisation, external company or an official thereof being a lessee or tenant under any lease or tenancy agreement in respect of any immovable property situated in Ghana, or an assignee or purchaser ofi any such property shall pay rent, premium or purchase price in respect of such property in convertible currency notwithstanding any agreement to the contrary.”

(The emphasis is mine.) It is clear that the parties in agreeing thati rent in the circumstances of this case should be paid in cedis, namely ¢40 million, breached the said mandatory provisions ofl PNDCL 150. The result is that the agreement was illegal and void. The defendants did not dispute the plaintiffs statement of claimrn and after hearing arguments of law from both sides, the Highi] Court granted all the reliefs claimed by the plaintiffs and ordered that defendants should comply with the provisions of PNDCL 1 50C in all respects in so far as that statute affects the agreement of thec lease. In granting all the reliefs including relief (b) concerning thec payment of ¢40 million to the defendants, the trial court obviously rejected the claim of the defendants that they were entitled toc receive by way of a refund, the sum of ¢113 million since thec Bank of Ghana had calculated that ¢40 million paid in 1986 was equivalent to ¢113 million in 1992 which was stated in paragraph, (a) of the defendants statement of defence.

In my opinion there was no basis for that claim when thec defendants had not put in a counpterclaim. The defendants appealed against the judgment of the High Court to the Court of Appeal which allowed the appeal in part and dismissed it in part. Thati court affirmed the ruling of the High Court in so far as it upheld the finding that the defendants had to comply with PNDCL 150, but it also held that on the question of the refund of ¢40 million, the proper amount to be refunded was an issue of fact which should be remitted to the trial court for a retrial. It is against thec latter part of the Court of Appeal’s judgment that the plaintiffis have brought the present appeal to the Supreme Court.

The grounds of appeal are:

“(1) On the pleadings in the case it is clear that the agreement for a lease dated 18 June 1986, the lease itself dated 14 October 1986 and the indemnity also dated 14 October 1986 between the parties to this case were void as

[p.434] of [1997-1998] 2 GLR 428 violating the unequivocal provisions of the External Companies and Diplomatic Missions (Acquisition or Rental of Immovable Property) Law 1986 PNDCL 150 and the learned judges of the Court of Appeal ought to have so held.

(2) Having found that the learned judge of the High Court from whose judgment the appeal to the Court of Appeal was brought was right in holding that the defendant appellant-respondents, that is to say British Airways, had failed to comply with the provisions of PNDCL150 ‘and that the lease between the parties was executed in violation of the said PNDCL 150, the Court of Appeal should have declared both the lease and the indemnity between the parties to be void and should thereupon have dismissed the appeal in its entirety and not only in part.

(3) Since the said agreement for a lease, the lease itself and the indemnity were all void as violating PNDCL 150 there was no basis for referring any matter to the High Court for a retrial and the learned judges of the Court of Appeal should have dismissed the appeal and simply affirmed the order of the trial court that the British Airways should comply with PNDCL 150 in all respects.”

The High Court in granting all the reliefs sought by the plaintiffs stated:

“The plaintiffs are accordingly entitled to the declarations sought by them. Furthermore for the reasons given herein, the plaintiffs are entitled also to the order sought by them. Accordingly, those declarations are hereby made. Also the defendants for the benefit of the plaintiffs, their landlord, shall comply with the provision of PNDCL 150 in all respects in so far as that statute affects the agreement forth a lease . . .”

In other words, the High Court granted all the reliefs claimed by the plaintiffs on the indorsementsendorsements on the wriwrit, namely:

“(a) a declaration that under the provisions of PNDCL 150 the defendants are under an obligation to pay rent in convertible currency, notwithstanding anything to the contrary in the lease;.

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(b) a declaration that upon the payment in convertible currency to the credit of the plaintiffs’ rent from the date of the coming into force of the lease, the plaintiffs shall be obliged to pay the defendants the sum of ¢40 million by way of a refund of the rent for 25 years under the said lease; and

(c) an order directing the defendants to comply with the provisions of PNDCL 150 in all respects.”

In granting relief (b) concerning the refund of ¢40 million to the defendants, the trial judge rightly rejected the claim of the defendants for the amount of ¢113 million, and no appeal was lodged on that issue. Further, both the agreement and indemnity were executed in violation of the law under PNDCL 150 and, being illegal and void, could not be enforced. Therefore the issue of whether they were entitled to ¢40 million or ¢113 million was not an issue of fact which the trial court had to decide by evidence and for this reason there was no basis for the order of the Court of Appeal that the matter should be referred to the High Court for a retrial of that issue. The case was decided on legal arguments by the trial court which ruled on the questions of law involved and in granting relief (b) must be deemed to have dismissed the claim contained in their pleadings for ¢113 million by the defendants who did not even counterclaim for this amount. Nor was a counterclaim an option open to defendants, since such a claim required a resolution by reference to the void indemnity on which no action could be founded. That issue could have been resolved by the Court of Appeal without remitting the case to the trial Court for retrial and resolution on the facts.

For these reasons, I am of the opinion that the trial court was right in granting all the reliefs sought by the plaintiffs and that judgment should have been affirmed in its entirety by the Court of Appeal. Consequently the Court of Appeal erred in remin remitting to the trial court the question as to what amount of money in cedis the defendant were entitled to receive from the plaintiffs by way of a refund.

The appeal is allowed in respect of the part of the judgment of the Court of Appeal dated 20 February 1997, where the court remitted the question of the refund of ¢40 million to the trial court for a retrial and that order is set aside. The judgment of the trial High Court is affirmed.

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JUDGMENT OF Charles Hayfron-Benjamin JSC.

I have had the privilege of reading the able opinion furnished as his contribution to the appeal by my learned and respected brother Acquah JSC and I am in full agreement with the arguments advanced by him and with his conclusion that the appeal be allowed.

This was an unusual appeal by the victorious plaintiffs from part of the decision of the Court of Appeal, which remitted the issue of fact relating to the ¢40 million to the trial court for retrial. At first blush, it seemed a perfectly innocuous transaction from which the plaintiffs wanted to be relieved by paying back the amount to the defendants. The defendants, claiming to be an external company, had stated in their amended statement of defence that:

“(8) . . . the defendants deny that the rent for 25 years from 1 October 1986 paid in advance to the plaintiff is refundable, and will contend further that if the said rent is refundable, which is categorically denied, the sum to be refunded should be the cedi equivalent (at the date of refund) of the foreign exchange (US dollars)represented by ¢40 million simpliciter as claimed.”

The defendants in their amended statement of defence continue in paragraph (10) thereof that:

“(10) The defendants will also contend that any in event at the date of the agreement for the lease, ie 1 October 1986, a “fetish” was made of foreign exchange, which is now freely and openly bought and sold in all forex bureaux.”

The defendants contended that the Bank of Ghana had calcu lated that in respect of this litigation the ¢40 million paid to the defendants was worth ¢113 million, which inferentially was what the defendants would accept by way of refund. By what means the Bank of Ghana arrived at that amount they did not say. But it will suffice here to say that if the Bank of Ghana said so, they were wrong. The External Companies and Diplomatic Mission (Acqui sition or Rental of Immovable Property) Law, 1986 (PNDCL 150) was passed to stem a specific mischief and provide a remedy which would enure to the best interests of the country’s economy at a time when, in spite of the exchange control laws, transactions were clandestinely being conducted in external currencies. It will

[p.437] of [1997-1998] 2 GLR 428 be noted that PNDCL 150 was a clear and definite legislation completely unrelated to the Exchange Control Act, 1961 (Act 71). Consequently the repeal of PNDCL 150 by the Statute Law Revision Act, 1996 (Act 516) leaves untouched the provisions of the Exchange Control (Amendment) Law, 1986 (PNDCL 149) which remains in force and affects, inter alia, rents paid by external companies and institutions.

In my view, to contend that the cedi vis-à-vis other currencies may, within our municipality, change in face value is to ignore the fact that the cedi is the only legal tender in this country. The cedis is the only valid legal tender in this country and all other currencies are subject to the exchange control laws of the country. It is therefore wrong for any transaction or provision of services in Ghana to be stated in any other currency whether directly or in directly without the permission granted under tthe exchange control laws. A claim therefore predicated on the cedi converting itself to another value of the same cedi at various times is not only illegal but also void.

In the present appeal, the defendants and their solicitors actively conspired to prepare an indemnity for the sole purpose of committing an illegality and defeating the public revenue. Any such document would be unenforceable. The defendant having spurned the offer to repay the ¢40 million, I do not think there is any obligation on the plaintiffs to be bound by their pleadings.

The defendants claimed to be an external company and pretended to treat our exchange control laws with levity by contending that a “fetish” was being made of foreign exchange when the same was freely available in the forex bureaux. By this, I believe defendants meant that the plaintiff could go on to the forex bureaux and buy them their refund in foreign exchange. I think here too the defendants were wrong. An external company is only a company registered abroad which carries on business within the country. It is not absolved from obeying the municipal laws nor from recognising the cedi as the only legal tender in this country.

JUDGMENT OF Ampiah JSC.

I agree that the appeal be allowed.

Acquah JSC. On 18 June 1986, Zagloul Real Estate Company Ltd, a limited liability company in Ghana, agreed in writing to lease out part of its premises to the erstwhile British Caledonian Airways Ltd (BCAL) for a perinod of 25 years, commencing from

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1 October 1986. The lease document was later prepared by the solicitors of BCAL, Lynes Quashie Idun & Co, and executed on 14 October 1986. The rent originally agreed upon was ¢1,200,000 per annum. But the agreement for the lease provided for an increased rent in case there was devaluation of the cedi within a period of three months from the execution of the agreement or before the payment of the second instalment of the rent which, it was agreed upon, would be fully paid in advance for the whole of the 25 years. The cedi in fact suffered a devaluation within the stipulated period in consequence of which the rent was raised to ¢1,600,000 a year. The result was that instead of BCAL paying the total sum of ¢30 million, they eventually paid ¢40 million for the period.

Now throughout the period of these negotiations, the External Companies and Diplomatic Missions (Acquisition or Rental of Immovable Property) Law, 1986 (PNDCL 150) had been enacted and was in full force and effect. Indeed the Law was made on 13 May 1986 and gazetted on 13 June 1986. The Law provided, inter alia, for:

“(i) the consent in writing of a committee established in section 1 thereof, to any lease or tenancy in respect of any immovable property to an external company;

(ii) the approval of the said committee to the rent determined by the landlord or owner for such a lease or tenancy; and (iii) The payment of the said rent in convertible currency notwithstanding any agreement to the contrary.”

To circumvent the mandatory provisions of PNDCL 150, BCAL’s solicitors drew up a deed of indemnity by which if BCAL were obliged to pay rent to Zagloul Real Estates Company Ltd in convertible currnency, as BCAL was an external company, then Zagloul Real Estates Company Ltd would give an indemnity to BCAL “to the full extent of the total sum of ¢40 million paid by the lessee and will on demand repay to the lessee the said sum of ¢40 million.”

Now, when the operations of BCAL ceased in Ghana, it assigned the remainder of its lease to the British Airways Ltd, another external company. Later, the Ministry of Foreign Affairs requested the rent to be paid in convertible currency. The Implementation Committee established under PNDCL 150 assessed the approprinate rent for the premises to be US$1,900 per

[p.439] of [1997-1998] 2 GLR 428 month, and wrote to the British Airways to demand payment of this rent through the Bank of Ghana. Zagloul Real Estates Co Ltd thereupon tendered the ¢40 million back to the defendant, but the latter refused to accept it contending that their payment of ¢40 million in advance discharged them from obligations to obey the provisions of PNDCL 150. Zagloul Real Estates Co Ltd therefore issued the instant writ at the High Court, claiming as per its amended reliefs:

“(a) A declaration that under the provisions of the External Companies and Diplomatic Missions (Acquisition or Rental of Immovable Property) Law, 1986 (PNDCL 150) the defendants are under a statutory obligation to pay the rent reserved under the lease executed between the plaintiffs and the defendants and dated the 14 October 1986 or as determined or varied by the Implementation Committee under PNDCL 150 in convertible currency through the Secretary, now the Minister, for Foreign Affairs by cheque drawn in favour of the Bank of Ghana to the credit of the plaintiffs notwithstanding anything to the contrary in the said lease with effect from the date of coming into effect of the said lease, namely, the 1 October, 1986.

(b) A declaration that upon the payment in convertible currency by cheque drawn in favour of the Bank of Ghana through the Minister for Foreign Affairs to the credit of the plaintiffs of any such rent from the date of coming into force of the said lease, the plaintiffs shall be obliged to pay to the defendants the sum of ¢40,000,000 only by way of a refund of the rent for 25 years ‘under the said lease paid in advance by the defendant to the plaintiffs and no more.

(c) An order directing the defendants to comply with the provisions of PN DCL 150 in all respect so far as the same affect the lease entered into between the plaintiffs and the defendants aforesaid.”

In their accompanying statement of claim, the plaintiffs repeated the facts as set out above and contended that: (i) at the time of execution of the lease, the plaintiffs and the defendants were under a statutory obligation to comply with the terms of PNDCL 150;, and (ii) the lease should have been executed with the

[p.440] of [1997-1998] 2 GLR 428 prior consent or concurrence of the Implementation Committee set up under PNDCL 150, but this was not done. Accordingly notwithstanding anything to the contrary in the lease and the deed of indemnity, the plaintiffs concluded, the defendants were not entitled to any exemption from the provisions of PNDCL 150 and was accordingly liable to pay rent in convertible currency.

In their statement of defence, the British Airways Ltd made such categorical and unequivocal admission of the facts set out above in such a way as to give the impression that they were the original lessees of the premises. For they did not even plead that they took over the remainder of the lease from the British Caledonian Airways Ltd. Thus, after admitting the material averments, the British Airways pleaded further that the refund of the ¢40 million was to be on demand by them and that no such demand had been made. They then concluded that the orders sought could not properly be made in this suit, and that the claim was grossly misconceived.

A number of issues were set down in the summons for directions. Thereafter, the defendants raised under Order 25, r 2 of the High Court (Civil Procedure) Rules, 1954 (LN 140A) the following preliminary points of law for arguments:

“(1) Whether the plaintiffs have a right of action against the defendants;

(2) whether the court had jurisdiction to entertain tthe suit and to make the orders which the plaintiffs are seeking; and (3) whether the court can grant the equitable reliefs which the plaintiffs are seeking assuming, which is denied, that the plaintiffs have a cause of action against the defendants.”

When counsel for the defendants stood up to argue these points, hec began by saying: “For the purpose of the application, all the facts as set out in the plaintiffs’ claim or amended statement of claim are not disputed.” Of course, even without such a statement from the defence counsel, it is clear from the pleadings that all thec material facts were not disputed by the defendants. What they disputed was whether the ¢40 million simpliciter or the presenit value of that ¢40 million paid in 1986, was what should bec refunded. And further, whether the claims of the plaintiffs could competently be entertained and granted by the court.

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In their arguments, the defendants contended that PNDCL 150 created its own obligations, set up its own committee to see to the implementation of these obligations, and provided its own means of securing compliance with these obligations through criminal prosecution under section 9 thereof. A landlord, like the plaintiffs, was not given any right to take civil action to enforce obedience to its provisions. Neither was the High Court given jurisdiction to entertain any such civil action. Relying on Tentenden CJ’s dictum in Doe (Decd); Murray v Bridges (1831) 1 B & Ad 847 at 859, they submitted that where a statute specifically provides a means of enforcement, that means or remedy is intended to be the only one. Consequently, the plaintiffs had no cause of action against the defendants. And the High Court, not being a criminal court of summary jurisdiction, had also no jurisdiction to entertain the suit. Other cases relied on by the defendants are: Lonrho Ltd v Shell Petroleum Co Ltd [1982] AC 173 at 185; Barraclough v Brown [1897] AC 615; and Cutler v Wandtsworth Stadium [1949] 1 All E R 544. Finally the defendants contended that if the plaintiffs were to be made to refund the ¢40 million, it would not be equitable for them to refund only the ¢40 million when they had had the use of this money for about seven years. If anything they should be made to refund the present value of that money.

In his reply, Mr ‘Peter Ala Adjetey, counsel for the plaintiffs, began by tendering without objection, the lease and the deed of indemnity as exhibits A and B, respectively. After referring to the reliefs sought, he contended that all that the plaintiffs were seeking was compliance with PNDCL 150 in respect of which both were obliged to comply with, but had not done. He pointed out that the defendants who were represented during the negotiations by their solicitors were more to be blamed for the violations of PNDCL 150 as vividly borne out by the deed of indemnity. He said that once the defendants were external companies, they were obliged to comply with PNDCL 150. He pointed out that there was nothing in PNDCL 150 which prevented the plaintiffs from seeking their reliefs. And that none of the authorities cited was applicable. On the refund of the ¢40 million, he contended that the plaintiffs were obliged to refund nothing more than the ¢40 million.

In his ruling, the trial High Court judge examined the authorities cited and held that the action was properly before him. He also held that he had jurisdiction to entertain and grant the

[p.442] of [1997-1998] 2 GLR 428 orders sought. And that notwithstanding the lease and the deed of indemnity, the defendants were obliged to comply with the provisions of PNDCL 150. He therefore ordered them to comply with that PNDC 150 in so far as that statute affected the agreement for the lease and the lease itself. He further held that it was certainly against public policy for the defendant to sign with the plaintiffs exhibit A which they, the defendants, by their lawyers knew was patently contrary to law. He also held that in the eyes of the law, the ¢40 million was no rent at all, and the plaintiffs were bound to refund that money to the defendants without any demand. Since the averments in the plaintiffs’ statement of claim were taken as undisputed by the defendants at the beginning of their arguments, and since the objections of the defendants were all overruled, the trial judge entered judgment for the plaintiffs for the declarations and orders sought.

Dissatisfied with the High Court’s ruling, the defendants went on appeal to the Court of Appeal on the grounds:

“(a) That the ruling of the learned trial judge was perverse, as he failed to appreciate the submissions made for and on behalf of the defendants.

(b) The learned trial judge misconceived the nature of the application before him.”

In its judgment, the Court of Appeal allowed the appeal in part by remitting to the trial court for retrial the issue to the refund of the ¢40 million having regard to the terms of the deed of indemnity. The court, however, affirmed the High Court’s decision which directed the defendants to comply with the provisions of PNDCL 150.

Aggrieved by the Court of Appeal’s remission of the issue of ¢40 million to the trial court for retrial, the plaintiffs filed the instant appeal to this court against that part of the Court of Appeal’s decision. Thus in paragraph (2) of its notice of appeal, the plaintiff stated that their appeal is only in respect of: “that part of the decision of the Court of Appeal which remitted the issue of fact relating to the ¢40 million to the trial court for a retrial.” And in paragraph (4) of the said notice of appeal, they sought from this court: “An order of the Supreme Court dismissing entirely the arn,ppeal filed by British Airways on 29 September 1993 against

[p.443] of [1997-1998] 2 GLR 428 the ruling and judgment of Kwadu-Amponsem J dated 23 September 1993, affirming the order of Kwadu-Amponsem J that British Airways should comply with PNDCL 150 and setting aside the order of the Court of Appeal remitting the issue of fact relating to the ¢40 million to the trial court for a retrial.”

The defendants, on the other hand, later filed a cross-appeal against the Court of Appeal’s decision affirming the High Court’s judgment. But this cross-appeal was dismissed by this court on 25 November 1997. Thus the only appeal pending in respect of the Court of Appeal’s decision is that of the plaintiffs which disputes that part of the Court of Appeal’s decision remitting the issue of the ¢40 million to the trial court for retrial. The grounds of appeal filed against this part of the decision are:

“(1) On the pleading in this case it was clear that the agreement for a lease dated 18 June 1986, the lease itself dated 14 October 1986, and the indemnity also dated the 14 October 1986 between the parties in this case were void as violating the unequivocal provisions of the External Companies and Diplomatic Missions (Acquisitions or Rental of Immovable Property) Law, 1986 (PNDCL 150) and the learned judges of the Court of Appeal ought to have so held.

(2) Having found that the learned judge of the High Court from whose judgment the appeal to the Court of Appeal was brought was right in holding that the defendant- appellant-respondents, that is to say, British Airways, had failed to comply with the provisions of PNDCL 150 and that the lease between the parties was executed in violation of the said PNDCL 150, the Court of Appeal should have declared both the lease and the Indemnity between the parties void and should thereupon have dismissed the appeal in its entirety and not only in part.

(3) Since the said agreement for a lease, the lease itself and indemnity were all void as violating PNDCL 150, there was no basis for referring any matter to the High Court for a retrial and the learned judges of the Court of Appeal should have dismissed the appeal and simply affirmed the order of the trial court that British Airways should comply with PNDCL 150 in all respects.”

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In their written submissions, the plaintiffs contended that the relationship between the parties is governed by the agreement for a lease, the lease itself and the deed of indemnity; and that both the High Court and the Court of Appeal rightly held that by these documents the parties did not comply with the provisions of PNDCL 150 as the said documents violated sections 2, 3 and 5 thereof. The legal effect of non-compliance with these provisions of PNDCL 150 is that the transaction they entered into was void. Therefore the Court of Appeal, having found that the High Court was right in holding that the defendant did not comply with PNDCL 150, should have declared the lease and the deed of Indemnity void, and dismissed the defendants’ appeal completely and not in part. Furthermore since the ¢40 million, in respect of which the Court of Appeal remitted it to the High Court for retrial, was a product of the lease and the deed of indemnity, and since these two documents are void, there is nothing in respect of which the trial court can take evidence. Therefore the Court of Appeal ought to have dismissed the defendants’ entire appeal and simply ordered them, as the High Court did, to comply with PNDCL 150 rather than remitting the ¢40 million matter to the High Court for retrial.

The defendants, on the other hand, contended that there were indeed triable issues for a retrial, and that it was the plaintiffs who did not allow evidence to be led but rather tendered in evidence the lease and the deed of indemnity as exhibits A and B respectively. They argued that the defendants were only assignees of the remainder of the lease, and there was nothing connecting them with the British Caledonian Airways. They were therefore not the proper person to be sued since they took the assignment with the consent of the plaintiffs and under the full understanding that the rent had already been paid in full. They referred to section 2 of PNDCL 150 and contended that the violations of PNDCL 150 were committed by the plaintiffs who failed to obtain the relevant consent and approval. They argued that if the lease and the deed of indemnity are void, then the defendants have no obligations to comply with same and the High Court ought properly to have dismissed the plaintiffs’ action.

Now, the defendants’ complaint that it was the plaintiffs who prevented evidence to be led is not borne out by the record of proceedings. For it is clear that it was the defendants who at the beginning of their arguments at the High Court conceded that all

[p.445] of [1997-1998] 2 GLR 428 the averments in the plaintiffs’ statement of claim were undisputed. Quite apart from this, the defendants indeed admitted all the material facts about the negotiations, the execution of the agreement for the lease, the lease and the deed of indemnity. Of course, triable issues were raised with respect to how much should be refunded in connection with the ¢40 million paid in 1986. For whereas the plaintiffs pleaded that they ought to refund nothing more than the ¢40 million in terms of the deed of indemnity, the defendants contended that if the refund was to be made, then, the plaintiffs should refund the present cedi equivalence of the ¢40 million paid in 1986. And for this, they pleaded in paragraph (9) of their statement of defence thus:

“(9) the Bank of Ghana had calculated the value of ¢40 million in October 1986 as equivalent to ¢113,000,000 in June 1992 having regard to the various devaluations which have taken place during the period. The defendants aver that if the rent paid in advance is refundable, which is denied, the amount to be refunded should be the present cedi value of what ¢40 million represented in October 1986.”

But then, the real import of Mr Peter Ala Adjetey’s submission is not that there was no such triable issue. His contention is that the whole issue on the refund of the ¢40 million arises from the deed of indemnity which deed is void for its violation of the provisions of PNDCL 150. And once it is void, no relief can lawfully be granted from it. The retrial would thus be nothing but an exercise in futility. Is this valid?

As stated earlier on, this appeal is against oqnly the Court of Appeal’s decision remitting the issue of refund of the ¢40 million to the trial court for retrial. The High Court’s decision as affirmed by the Court of Appeal, to the effect that the defendant should comply with the provisions of PNDCL 150 is not on appeal. And, indeed, from the facts of the case and the provisions of PNDCL 150, that decision cannot be faulted as the transaction between the parties violated sections 2, 3, 4 and 5 of the said PNDC 150. Section 4 of PNDCL 150 in particular required any external company lessee to pay the rent in convertible currency. But the defendants having in violation of this section paid the rent in cedis, sought to indemnify themselves by the deed of indemnity, clauses 6 and 7 of which provided:

[p.446] of [1997-1998] 2 GLR 428

“(6) It is provided under the provisions of the External Comrn panies and Diplomatic Missions (Acquisitions or Rental of Immovable Property) Law, 1986 (PNDCL 150), inter alia, that the rent payable in respect of any immovable property situated in Ghana under any lease or tenancy agreement granted by any person to an external comrn pany shall be determined and paid in convertible currency.

(7) In the event that the lessee, as an external company, may at any time be obliged to pay to the credit of the lessor the agreed rent or any other rent determined in respect of the premises in convertible currency in accordance with the provisions of PNDCL 150, the lessor, hereby agrees to give to the lessee such indemnity as is hereinafter contained.

Now this Deed witnesseth that pursuant to the said agreement and in consideration of the premises and of the rent the lessee may be obliged to pay under and by virtue of the provisions of PNDCL 150, the lessor will at all times hereafter indemnify and keep indemnified the lessee against and to the full extent of the total sum of ¢40 million paid by the lessee and will on demand repay to the lessee the said sum of ¢40 million.”

It is quite clear from the contents of the above clauses that the object of the indemnity is to enable the defendants who had paid rent in cedis, contrary to the provisions of PNDCL 150, to be indemnified should they be called upon to comply with the mandatory provisions of the Law. It was a deed to legalise their violation of the provisions of PNDCL 150 and at the same time enable them to avoid any loss from such violation. It is in short, an agreement by dishonest device to defeat the clear intentions of sections 3 and 4 of PNDCL 150. Such an agreement is illegal and consequently unenforceable. In Chitty on Contract (General Prin ciples), Vol. 1, p 378, at para 813, it is stated: “An agreement by dishonest devices to defeat the clear intention of an Act of Parli hament is an indictable conspiracy and therefore unenforceable.” See also, Elliott v Richardson (1870) LR 5 CP 744; Battersby v Smith (1818) Madd 110; and Chettiar v Chettiar [1962] AC 294. And section 9 of PNDCL 150 itself makes it an offence for any person to contravene any of the provisions of that PNDC 150.

[p.447] of [1997-1998] 2 GLR 428

Now, it is from this dishonest device as spelt out in clauses 6 and 7 of the deed of indemnity that the defendants had the effrontery to demand that they should be paid the present cedi equivalent of the ¢40 million they paid in 1986. Is it open to the defendants to make this demand in court–—a demand founded on illegal deed of Indemnity? In Holman v Johnson [1775-1802] All ER Rep 98 at 99, Lord Mansfield said: “No court will lend its aid to a man who founds his cause of action upon an immoral or illegal act.” To permit the defendants to be paid the present cedi equivalent of ¢40 million will amount to legitimizing the dishonest device contrived by the defendants in the deed of indemnity to defeat the mandatory provisions of PNDCL 150. The argument that equity will not allow the plaintiffs who had the ¢40 million since 1986 to refund only that sum is misconceived, as equity cannot be invoked in aid of an illegal transaction, and will indeed refuse to grant specific performance of such an illegality: see Ewing v Osbaldiston (1837) 40 ER 561; and Hope v Hope (1857) 44 ER 572. Equity certainly abhors illegal transaction like the dishonest device contrived in the deed of indemnity, and will therefore not condone the granting of any relief in the form of a payment of the present cedi equivalence of the ¢40 million in 1986, to the defendants, the architects of the said device.

It is clear therefore that the order of the Court of Appeal directing the issue about the refund of the ¢40 million to be retried at the High Court would in effect be legalizing this illegal device. And a court of law cannot lend its aid to such a device. For the deed being illegal, the maxim, ex turpi contractu actio non oritur (no cause of action arises from an illegal contract) applies. Obviously, if the Court of Appeal had reflected on the illegal nature of the deed of indemnity, no order of retrial in respect of the ¢40 million would have been made.

Finally, the argument of the British Airways Ltd that because they are the assignees of the lease and the deed of indemnity they have no responsibility to the plaintiffs, is totally untenable. For, as assignees for value, the British Airways are entitled to the benefit, and subject to the burden, of all covenants and conditions touching and concerning the property leased, because there is a privity ofl estate: see Spencer’s Case (1583) 5 Co Rep 1 6a. They cannot therefore say that they have no responsibility to the plaintiffs in terms of the rent payable under the lease since the covenant to pay rent is one of the covenants which touch and concern the premises.

[p.448] of [1997-1998] 2 GLR 428

Thus if the lease containing the covenant for the payment of rent is void, as in the instant case, then the payment of the rent in a manner inconsistent with the provisions of PNDCL 150 is equally void, and an assignee of the lease like the British Airways can only take a void lease and would be faced with the consequences of rent having been paid illegally, as they hereby face.

In conclusion, it is evident that although issues were raised with respect to the refund of the ¢40 million, it was not a legitimate issue to be remitted for retrial having regard to the fact that the deed of indemnity from which that issue arises, is void and cannot therefore be enforced. The Court of Appeal therefore ought to have appreciated this point and dismissed the entire appeal of the defendants. The instant appeal will accordingly be allowed and the Court of Appeal’s order remitting the issue of ¢40 million for retrial, set aside. The judgment of the High Court is hereby affirmed, and the defendants are ordered to comply with the provisions of PNDCL 150.

Atuguba JSC. I would also allow this appeal. It was laid down by Megarry J in Curragh Investments Ltd v Cook [1974] 1 WLR 1559 at 1560 as per the headnote:

“that for a contract to be illegal as being made in contravention of some statutory provision there had to be a sufficient nexus between the statutory requirement and the contract; that where statutory requirements were not linked sufficiently, or at all, to the contract no question of its illegality arose.”

In this case the direct contravention of the External Companies and Diplomatic Missions (Acquisition or Rental of Immovable Property) Law, l986 (PNDCL 150) is the fons et origo of the indemnity agreement between these unrepentant feuding parties. None of them therefore ought to have the assistance of the courts.

As Lord Mansfield CJ (a judge whose greatness transcends the barriers of time) said in Holman v Johnson [1775-1802] 1 All ER 98 at 99:

“The objection that a contract is immoral or illegal as between plaintiff and defendant, sounds at all times very ill in the mouth of the defendant. It is not for his sake, however, that the objection is ever allowed; but it is founded in general principles of policy which the defendant has the advantage of,

[p.449] of [1997-1998] 2 GLR 428 contrary to the real justice, as between him and the plaintiff, by accident; if I may so say. The principle of public policy is this: Ex dolo malo non oritur actio. No court will lend its aid to a man who founds his cause of action on an immoral or an illegal act. If, from the plaintiffs own stating or otherwise, the cause of action appears to arise ex turpi causa, or the transgression of a positive law of this country, there the cowlurt says he has no right to be assisted. It is on that ground the court goes; not for the sake of the defendant, but because they will not lend their aid to such a plaintiff.”

Several subtle distinctions and exceptions have however deve loped around the applicability of the rule of illegality, as masterly analysed by Amissah JA in Schandorf v Zeini [1976] 2 GLR 418 at 429-43 7, CA. But on the facts of this case the said distinctions do not pose a problem. The fact of illegality of the transaction is rincontestibleincontestable. It is well settled that even where there is evidence of illegality but the parties do not rely on it, the court suo motu must nonetheless take up the issue of illegality. See the striking case of Napier v National Business Agency Ltd [1951] 2 All ER 264, CA and Snell v Unity Finance Co Ltd [1963] 3 WLR 50, CA.

In Brown Jenkinson & Co Ltd v Percy Dalton [London] Ltd [1957] 3 WLR 403, CA, shipownersship-owners were persuaded to ship the defendants’ cargo of a quantity of orange juice, though the barrels containing it were leaking and therefore a claused bill of lading was required for their carriage. The defendants gave an indemnity to the plaintiffs against all losses that might result from their issuing a clean bill of lading in favour of the defendants’ goods. In a pursuant action upon the said indemnity, the defendants reneged and successfully pleaded illegality of the same, contending that the said indemnity had as its object the making by the shipownersship-owners of a fraudulent misrepresentation. It was said by the great Francis Bacon that: “consequence does not draw consequence, but the extension should stop within the next cases otherwise there will be gradual lapse into dissimilar cases, and sharpness of wit will have greater authority than law.”

On that note, I would allow this appeal since the order of the Court of Appeal in the circumstances of this case is illusory.

Appeal allowed.

SA