MECHANICAL LLOYD LTD. vs. CROFT AND ANOTHER [1973] 1 GLR 268

CASES REFERRED TO

(1) Brody v. Safe Way N. Blvd. Inc. 19 App. Div. 2nd 714, 242 N.Y.S. 2nd 422 (1963).

(2) Alper v. Las Vegas Motel Ass. 74 Ner. 135, 325 Pnd. 767 (1958).

[p.269] of [1973] 1 GLR 268 (3) Donoghue v. Stevenson [1932] A.C. 562; [1932] All E.R. Rep. 1; 101 L.J.P.C. 119; 147 L.T. 281;

48 T.L.R. 494; 76 S.J. 396; 37 Com.Cas. 350, H.L.

(4) Lumley v. Gye (1853) 2 E. & B. 216; 118 E.R. 749.

(5) Hedley Byrne & Co. v. Heller &Partners [1964] A.C. 465; [1963] 3 W.L.R. 101; 107 S.J. 454;

[1963] 2 All E.R. 575; [1963] 1 Lloyd’s Rep. 485; 234 L.T. 381, H.L.

NATURE OF PROCEEDINGS

PRELIMINARY RULING on whether a party can seek an injunction to restrain breaches of a statute. The facts are stated in the ruling.

COUNSEL

K. Ohene-Ampofo for the plaintiffs.

R. Bannerman for the defendants.

JUDGMENT OF HAYFRON-BENJAMIN J.

In this case the plaintiffs claim in tort against the defendants jointly and severally damages for defamation. Nothing need be said at this stage about this claim. The plaintiffs have however added claims to other reliefs which seem to me not to be warranted by the pleadings, and also not to be reliefs which the court can be called upon to grant. The reliefs sought are:

“(b) an order by the court ordering the defendants to disclose their foreign investment as capital at the time of registering their company in Ghana;

(c) an order by the court ordering the defendants to declare the total amount as profits transferred out of Ghana as foreign exchange since the date of registration and amounts still being held awaiting foreign cover for transfer;

(d) an order by the court compelling the defendants to declare whether they are holding the agency franchises direct with the manufacturers or through another agent Unimeck of London, or other agents and who receives the agency franchise commission and what percentage and where the commission is paid;

(e) an order by the court compelling the defendants to declare whether these manufacturers’ commissions have all been repatriated to Ghana.”

There is an allegation in the preceding pleading that the defendants and the plaintiffs both hold agency agreements with Massey-Furgusson, and that they are competitors in business. Trading and especially the business of manufacturer’s representatives, agency for foreign firms and import-export are governed by several statutory enactments including the Ghanaian Business Promotion Act, 1970 (Act 334), the Exchange Control Act, 1961 (Act 71), and the regulations made thereunder. The objectives of these statutes vary, for example, the Ghanaian Business Promotion Act, 1970, is meant to ensure that a sector of the

[p.270] of [1973] 1 GLR 268 economy is reserved to Ghanaian entrepreneurs; other statutes such as the Exchange Control Act, 1961, are meant to regulate the flow of foreign currency and others are meant to ensure that competition in trade is fair. All are however designed to secure and protect the national interest. Most of these statutes provide penal sanctions for their breach. The question is whether quite apart from these penal sanctions a person can claim relief from any one alleged to be in breach of the statutes. Clearly to succeed in an action for damages, the person should at least prove some interference to himself or to his propriety trade or business. The plaintiffs in this case are not seeking damages for the breach of any statute, and they therefore have not alleged any interference with their business.

Can a party seek other reliefs for example, an injunction to restrain breaches of statute? Where a statute is enacted for the protection of a class of persons, every member of that class has an interest in its enforcement and can claim to restrain its breach, for example, where a statute sets up or regulates the membership of a professional association, the practice of that profession by a non-member or an unqualified person can be enjoined at the instance of any member. It may very well be (I do not decide the point) that a non-Ghanaian or any alien may be enjoined at the instance of any Ghanaian businessman or trader in a civil suit from contravening the provisions of the Ghanaian Business Promotion Act, 1970, on the ground that the Act is primarily meant to protect Ghanaian businessmen. I do not decide the point because there are several other issues to be considered before a sensible decision can be arrived at, for example, ought the court to enjoin an alien bread baker at the instance of a Ghanaian printer? In other words should the parties be in the same line of business as to invest the Ghanaian with the necessary interest to maintain the claim? And if so what is meant by being in the same line of business?

The position is however clear where the statutes are designed to suppress public nuisances, any party who can claim to have suffered a special injury not suffered by the general public can maintain a civil suit for damages. Where the statutes are regulatory of trade or business generally, the English practice has been to rely on the criminal law to punish breaches. A trade competitor has generally been denied the right to sue to restrain another tradesman from acting in breach of a statute. This attitude must be due to the efficiency of the British police, and the promptness with which breaches of statutes are detected and suppressed. In America where police in early days were not very efficient, greater latitude is shown to claims by business competitors to enforce statutes designed to protect or regulate trade and industry. The Ghana police however honest they may be, have not got the necessary machinery and resources to ensure prompt and decisive suppression of breaches of intricate legislation like the Exchange Control Act, 1961,

[p.271] of [1973] 1 GLR 268 and other statutes designed to protect the public interest in trade, industry and commerce. It may be that the citizen’s duty is to report such breaches to the police. What is a party who is in competition with such a person in breach to do, if no action is taken on his report? Is he to sit down and see his business diverted to the persons trading in contravention of the statutory regulations? To answer this question I shall seek guidance and inspiration from the American experience. There are statutes in several of the states of America prohibiting the opening of business houses on Sundays. The courts have generally granted standing to a competitor to bring action against another who acts in violation of these statutes by doing business on Sunday. The basis for the courts attitude is that such violation allows the defendant to offer the public something, for example, the convenience of Sunday business or trade service, which the plaintiff can duplicate only by himself violating the law. The courts have granted standing in several other cases dealing with other statutes. In Brody v. Safe Way N. Blvd. Inc. 19 App. Div. 2nd 714, 242 N.Y.S. 2nd 422 (1963), for example a statute made it illegal to maintain misleading bill boards advertising gasoline price. The purpose of the statute was found to be to prevent frauds on the public and not to protect competitors. The court nevertheless enjoined at the instance of a nearby competitor, a gas station from maintaining such a misleading bill board, on the ground that the plaintiff’s predicament merited relief. The predicament was that either the law enforcement officers took action (which the plaintiff could not compel them to do) to stop the defendant from displaying the fraudulent prices or the plaintiff’s customers will be diverted to the defendant as the public may not detect the fraud.

Again in Alper v. Las Vegas Motel Ass. 74 Ner. 135, 325, Pnd. 767 (1958) a statute prescribed a maximum height for signs on motels and made it an offence to exceed that height. The statute was found to be primarily aimed at reducing the size of aesthetically unattractive and potentially dangerous signs. The court nevertheless enjoined the defendant in a private suit at the instance of the plaintiff from maintaining a sign on his motel higher than that allowed by law. The reason for this attitude was that the bigger or higher sign was likely to attract more customers from competitors with smaller signs, and the plaintiff can only compete (where the authorities are tardy in enforcing the law) by himself breaking it.

The American position has been well stated in the Havard Law Review, Vol. 77, p. 890 at pp. 975-976 where the learned author writes:

“Where a competitor’s violation allows him to offer something attractive to the public which the plaintiff cannot match without himself violating the law, the plaintiff is put to an unjustifiable choice; if he cannot persuade the authorities to act with reasonable promptness he must either violate the law himself or see his

[p.272] of [1973] 1 GLR 268 customers diverted to the defendant. A clear showing of actual or highly probable loss should be required; and perhaps no action should be permitted to enforce regulations such as revenue provisions, for which official enforcement is likely to be forthcoming and effective. Within these limits, however, the plaintiff’s dilemma constitutes a strong reason for permitting him to sue, even if the statute evidences no concern for the competitive position of his class and no ‘public nuisance is involved’.”

Neither the Exchange Control Act, 1961, nor the Ghanaian Business Promotion Act, 1970, are revenue statutes, and it may well be that where the plaintiff can allege and prove any damage or likelihood of damage to his trade or business a claim can be entertained for appropriate relief. The fact that no such claim has ever been entertained by the court is irrelevant. Novelty is no answer to a well founded claim. The cases of Donoghue v. Stevenson [1932] A.C. 562, H.L.; Lumley v. Gye (1853) 2 E. & B. 216; Hedley Byrne & Co. v. Heller & Partners [1964] A.C. 465, H.L.⎯all great landmarks in the law of tort are noted for their novelty. In this case however no allegation of damage or its likelihood has been made in the pleadings.

The pleadings as they stand cannot therefore support the reliefs claimed. They do not disclose any reasonable cause of action. I would have considered the possibility of granting leave to the plaintiffs to amend the statement of claim but, I do not think that these claims, even if the statement of claim is appropriately amended, can conveniently be tried and disposed of with a claim in slander.

I shall therefore strike out as vexatious and irrelevant claims (b) to (e) of the statement of claim.

Costs to the respondents assessed at ¢150.00.

DECISION

Claims (b)-(e) struck out.

S. E. K.