ADOMAKO vs. APPENTENG [1993-94] 1 GLR 81

CASES REFERRED TO:

(1) Dam v Addo [1962] 2 GLR 200, SC.

(2) Ababio v The State [1966] GLR 422, SC.

(3) Bisi v Tabiri alias Asare [1984-86] 2 GLR 282, CA.

NATURE OF PROCEEDINGS

APPEAL by the defendant-appellant against the decision of the High Court, Accra dismissing his preliminary objection to an action by the plaintiff-respondent for the recovery of, inter alia, trust moneys he alleged the defendant had converted to his use. The facts are fully stated in the judgment of Brobbey JA.

COUNSEL

E D Kom for the defendant-appellant.

Kojo Afram Asiedu (for G K A Ofosu-Amaah) for the plaintiff-respondent.

JUDGMENT OF BROBBEY JA

The plaintiff averred that he set up a company by name Vacuum Salt Products Ltd. Following some discussion with the defendant, the plaintiff allotted 100,000 shares in that company to the defendant on the express understanding that the defendant would hold the shares in trust for the plaintiff. That was in 1975. The plaintiff stated further in his affidavit filed on 12 November 1992 that when dividends

[p.83] of [1993-94] 1 GLR 81. were declared in 1981 he authorised the defendant to hold the cash paid in trust for him, the plaintiff. The defendant refused later to pay the 1981 dividends back to the plaintiff. The plaintiff therefore stopped payment of the 1983 dividends to the defendant. Consequent upon certain government actions taken in connection with the company in 1989, the plaintiff further stopped attempts to pay dividends to the defendant. He also attempted to end the trust by a letter dated 28 April 1992.

When the dividends were not refunded to the plaintiff, he instituted action against the defendant claiming three reliefs, namely:

“(1) a declaration that the appellant held the 100,000 shares of the company in trust for him;

(2) an order for the defendant to transfer the shares to him; and (3) accounts of all dividends and profits arising from the shares.”

Before the action could proceed to hearing, the defendant’s counsel filed a motion under Order 12, r 12 of the High Court (Civil Procedure) Rules, 1954 (LN 140A) to set aside the writ of summons on the sole ground that the action was statute-barred. While arguing the motion in the High Court, counsel for the defendant contended further that the writ disclosed no cause of action. The trial judge dismissed the motion. It was against that dismissal that the defendant appealed to this court.

In this court, too, counsel for the appellant argued the same two points he canvassed before the trial court on want of cause of action and the statutory limitation on the plaintiff’s section.

Throughout the pleadings and the proceedings before the High Court and this court, the appellant has never denied that a trust was created by the plaintiff with himself as the settlor and sole beneficiary and the appellant as the trustee. Mr Kom who appeared for the appellant argued that 1975 was when the cause of action arose. That could not be correct. 1975 was when the trust was created. Dividends were not declared until 1981. The bone of contention however revolves around the person who should be paid the dividends.

The respondent alleged that he had agreed with the appellant for the latter to keep the dividends as additional allowance in his capacity as chairman of that company. That too has not been denied by the appellant. Apparently, that was the state of affairs until dividends were actually paid to the appellant in 1991 as evidenced by a letter marked exhibit D1. To my mind that seems to explain why the respondent did nothing about the dividends with the appellant but revived the issue on the payment of dividends in 1991 when the appellant was actually paid the dividends and he declined to repay same to the respondent.

[p.84] of [1993-94] 1 GLR 81.

Since the appellant conceded that a trust was created, making him only a trustee, he knew that he only had legal title to the dividends and the respondent, as the sole beneficiary and holder of the equitable interest, was entitled to be paid the moneys. The continued retention of the dividends by the appellant clearly amounted to conversion of those dividends.

Counsel for the appellant based his arguments substantially on the provisions of the Limitation Decree, 1972 (NRCD 54) under which he submitted that the respondent’s action was statute-barred since the dividends were declared in 1981 and 1983. Section 15(1) of NRCD 54 limits an action to recover trust money to six years. It provides that:

“15. (1) Subject to subsection (4) of this section, an action to recover money or other property or in respect of any breach of trust, not being an action for which a period of limitation is fixed by any other provision of this Decree, shall not be brought against a trustee or any person claiming through him after the expiration of six years from the date on which the right of action accrued.”

The issue raised by the respondent’s writ concerned payment of the dividends—not the mere declaration of them. Dividends were declared in 1981 and 1983 by were not paid until 1991. The writ was filed in September 1992. It could not therefore be caught by the six-year statute bar.

In my view, the most contentions issue relates to section 15 of NRCD 54. Counsel for the appellant contended that the parties based their respective cases on section 15(1) of NRCD 54: the trial judge however invoked section 15(4) of NRCD 54, applied it, and, wrongly in his view, dismissed the appellant’s objection to the suit. Relying on the case of Dam v Addo [1962] 2 GLR 200, SC counsel for the appellant submitted that, in so far trial judge invoked section 15(4) of NRCD 54 which was not the basis of the case of either party, the judge erred and so his order on the preliminary objection should be set aside.

It will be observed that section 15(1) of NRCD 54 is made expressly subject to the provisions of section 15(4) of NRCD 54. (The emphasis is mine.) Section 15(4) of NRCD 54 also provides that:

“15. (4) No period of limitation fixed by this Decree shall apply to an action against a trustee or any person claiming through him where— (a) the claim is founded on any fraud or fraudulent breach of trust to which the trustee was party or privy, or (b) the claim is to cover trust property or the proceeds

[p.85] of [1993-94] 1 GLR 81. thereof still retained by the trustee and converted to his own use.”

Reading the two subsections together it is apparent that the provision of section 15(1) of NRCD 54 will be inapplicable whenever the requirements in section 15(4) of NRCD 54 are satisfied.

The ruling of the trial judge was based on the retention of dividends held on trust, which dividends had been converted by the appellant to his own use instead of paying same to the respondent. That was the case of the respondent as appearing in paragraphs (5), (6), (9) and (14) of the respondent’s affidavit in opposition filed on 12 November 1992. In fact, it appears that the appellant did not controvert the fact that that was the respondent’s case. The memorandum to NRCD 54 explained the section, inter alia, thus: “No period of limitation fixed by the Decree will apply to an action against a trustee or any person claiming through him where the claim is founded on any fraud or fraudulent breach of trust to which the trustee was a party or privy, or is recover trust property or the proceeds thereof still retained by the trustee and converted to his own use.”

My view is that even if none of the parties based his case or argument on section 15(4) of NRCD 54, that subsection was rightly invoked and applied by the trial judge. There are two reasons for this view. The first is that the facts of the case logically led to the invocation and application of section 15(4) of NRCD 54 because of the issue of conversion of the dividends being proceeds from the trust. The second is that even if the parties based their case and arguments on section 15(1) of NRCD 54, that subsection was expressly made subject to section 15(4) of NRCD 54. That means that, between the two subsections, section 15(4) of NRCD 54 prevails over section 15(1) of NRCD 54, the trial judge acted properly by applying section 15(4) of NRCD 54 to which section 15(1) of NRCD 54 was made subject.

An important issue raised in the appeal is whether or not a trial judge is entitled to invoke and apply the law even if none of the parties before him invokes or relies on that law. In this country, the principle of stare decisis mandates lower courts to follow decisions of higher courts. If a high court’s decision binding on a trial judge is known to the judge but none of the parties before him nor any of the lawyers relies on that decision, the trial judge will have to apply the mandatory decision unless

[p.86] of [1993-94] 1 GLR 81. he can distinguish it from the case before him. Similarly, where a statute of the land is known to a trial judge but none of the parties applies it, it will be wrong for the trial judge to ignore that statute where the facts of the case before him warrant the application of that statute. However correct the conclusions of the trial judge may be, to ignore such binding decided case or statute may render the court’s decision faulty on the grounds of being per incuriam. One case which illustrates his point is Ababio v The State [1966] GLR 422, SC in which it was held that a trial court is entitled to examine the law to satisfy itself as to a particular law applicable to the facts before it. The Supreme Court added in that case at 432 that: “Without attempting to lay down any absolute rule on this matter, we think that by a prudent exercise of common sense, judges should be willing to waive proof by oral evidence of fundamental matters where such is manifestly unnecessary, as for instance, on points of law on which easy reference could be made in the relevant books. Where the judge feels he is entitled or qualified to look through the enanctments or Ordinance or statutes or law reports as they are not in evidence before him, and would not know which of the Ordinances or statutes were still in force at the time of trial, he should be allowed to do so.”

The principle was admittedly enunciated in a criminal case, but I think it is equally applicable to civil cases like the instant one. One would have thought that this principle is quite basic, but the fact that the Supreme Court had occasion to elaborate on it in a decided case underlines its significance in the decision-making process.

Counsel for the appellant relied heavily on Dam v Addo (supra). That case decided that a court must not substitute for a party a case contrary to and inconsistent with that which the party himself has put forward in his pleadings and evidence. On the basis of that authority counsel submitted that the trial judge erred by applying section 15(4) of NRCD 54 because neither the appellant nor the respondent based his case on section 15(4) of NRCD 54.

This court had occasion to consider the connotations of that principle in the case of Bisi v Tabiri alias Asare [1984-86] 2 GLR 282, CA which were stated in the headnote as follows at 284:

“(4) The principle enunciated in Dam v Addo [1962] 2 GLR 200 at 203, SC to the effect that a court must not substitute for a party a case contrary to, and inconsistent with, that which the party

[p.87] of [1993-94] 1 GLR 81. himself had put forward by his pleadings and evidence was clear and unexceptionable. The general principles guiding the application of that principle deducible from the cases were that: (a) the new case was not pleaded either expressly or by necessary implication; (b) the new case was raised after obvious difficulties with, or failure of the old case, the party clearly turning a complete somersault; (c) sufficient notice of the new case was not given; it was not contested. It was raised either at the address stage or on appeal or by the court itself; (d) the new case was irrelevant to the resolution of the issues on hand; and (e) the new case was not just a matter of interpreting and giving effect to a document relevant to the issue, and properly tendered in evidence. However, the court’s duties to make findings of fact, and then decide the legal consequences flowing therefrom must be distinguished from cases coming properly within Dam v Addo and must not be confused with them.”

(The emphasis is mine.)

To these I would add that the principle in Dam v Addo (supra) will be inapplicable where the new case is based on the invocation and application of a pure point of law taken from a statute or binding decide case. Unless this were so, it would stultify the basic principle enunciated in Ababio v The State (supra) that a trial judge is entitled to look for and apply the law if he is qualified and competent to do so. What is deducible from Bisi v Tabiri alias Asare (supra) and Ababio v The State (supra) and the instant case is that it is not every case where a trial judge determines a case on points raised not by the parties which will warrant the application of the principle in Dam v Addo (supra) to fault that determination. There are exceptions to the principle in that case. One such exception was made in Bisi v Tabiri alias Asare (supra) itself where on a submission that a case had been substituted for a party inconsistent with the case put forward in his statement of claim, it was held, as further stated in the headnote, holding (4) that: “The remedy sought by the plaintiff was a declaration that the building was family property and not the private property of the testator. And given the specific findings of fact made by the trial judge to the effect that the plaintiff had nothing to do with procuring the land; that he was the sole supplier of money and materials, but that he contributed substantially in these, the court was entitled to draw the necessary inference of law that the house was family property. The facts in the case could not therefore by any stretch of

[p.88] of [1993-94] 1 GLR 81. argument square with genuine cases of substitution and the principle deducible from them. Tawiah-Yesereh v CFAO [1966] GLR 357, SC; Appiah v Akers Trading Co [1972] 1 GLR 28 at 33-34; Board of Directors of Orthodox Secondary School of Peki v Tawlma-Abels [1974] 1 GLR 419, CA; Benneh v The Republic [1974] 2 GLR 47, CA (full bench); Atta v Amoasi [1976] 2 GLR 201, CA; University of Cape Coast v Anthony [1977] 2 GLR 21, CA and Allotey v Quarcoo [1981] GLR 208, CA considered.”

In the instant case, the trial judge was of the view that the respondent was “claiming back what he alleges to be moneys and shares which the defendant holds in trust for him and which he had converted to his own use.” That “conversion” was clearly covered by section 15(4) of NRCD 54 but not section 15(1) of NRCD 54. The trial judge was therefore right in applying section 15(4) of NRCD 54 to resolve the issue before him even if none of the parties relied on it and in ruling in favour of the plaintiff on the issue of statute bar because section 15(4) of NRCD 54 rendered inapplicable the six-year period of limitation where trust money has been converted.

The second ground of appeal that the writ disclosed no cause of action is unmeritorious. I have already stated that the existence of the trust is not denied by the appellant. Indeed, when in 1992 the respondent wrote exhibit P1 to terminate the trust, the appellant’s reply per his counsel in exhibit P2 merely advised the respondent to comply with Act 179. The record shows that when counsel for the appellant replied to the arguments of the respondent’s counsel, the appellant’s counsel conceded that a beneficiary can put an end to a trust. The plaintiff’s first relief was for a declaration putting an end to the trust. Such a declaratory action cannot be said to be unknown to the law to support a proposition that it discloses no cause of action.

Secondly, the appellant was the one who filed exhibit D1 which shows that he was paid dividends in 1991. So long as he conceded that he was a mere trustee holding shares and the respondent was the beneficiary and settlor of the trust with equitable interest, a suit claiming the money which the respondent alleged was properly due to him created a cause of action.

The third relief was for a declaratory order for accounts. It is undisputed that some moneys which the respondent alleged he should be paid went to the appellant. If the holder of the equitable interest in those moneys applied for a court order to know how much the moneys involved. I seriously cannot see how it can be argued that such an application disclosed no cause of action.

[p.89] of [1993-94] 1 GLR 81.

In my view, the appeal is without substance or merit and should be dismissed. JUDGMENT OF ESSIEM JA.

I agree JUDGMENT OF ADJABENG JA.

I also agree.

DECISION Appeal dismissed.

JNNO.