SHERWOOD EXPORT HOLDINGS vs. PHARMADEX (GH) LTD [2001-2002] 2 GLR 235

CASES REFERRED TO

(1) R v Victoria Insurance Co Ltd [1896] AC 250, PC.

(2) Esso Petroleum Co Ltd v Hall Russell & Co Ltd [1989] AC 643, HL.

(3) Castellain v Preston (1883) 11 QBD 380, CA.

(4) Morris v Ford Motor Co Ltd [1973] 1 QB 792, CA.

(5) Manu v Yeboah [1982-83] GLR 34, CA.

APPLICATION by the defendant-applicant for setting aside execution of a judgment by the plaintiff-respondent on the grounds that (1) the plaintiff-respondent had assigned his rights under the judgment to a thirty party; and (2) its immovable property had been attached without first attaching the movable property. The facts are sufficiently set out in the ruling.

Kizito for the plaintiff-respondent.

Kwame Akuffo for the defendant-applicant.

Ofoe J. The defendant-applicant is seeking the assistance of this court to set aside execution that had been levied on its properties by the plaintiff-respondent (hereinafter referred to as the respondent). By his affidavit filed on 8 May 2001 in support of his motion paper

[p.237] of [2001-2002] 2 GLR 235 the applicant averred that:

“(3) pursuant to a writ of summons and statement of claim filed by the plaintiff, the defendant consented to judgment on 9 February 1996 in respect of the principal amount claimed and on 26 February 1996 in respect of the interest on the principal amount;

(4) subsequently, the plaintiff assigned its rights under the said judgment of Credit Guarantee Insurance Co Africa Ltd. On the basis of the assignment the defendant entered into an agreement with the said Credit Guarantee Insurance Co in which it undertook to pay the judgment debt to the said insurance company. Attached and marked as exhibit A is a copy of the said agreement;

(5) notwithstanding the agreement and the assignment of its rights, the plaintiff has purportedly levied execution on the defendant’s movable and immovable properties;

(6) I am advised and verily believe same to be true that having assigned its rights in the judgment the plaintiff has no legal right to go into execution against the defendant . . .”

Tersely put the applicant is not disputing that there is a valid judgment against it in favour of the respondent. What it is disputing is the capacity of the respondent to go into execution against it, when the respondent had earlier assigned its rights under the judgment to Credit Guarantee Insurance Co African Ltd (CGIC). If I understood their case properly, they are contending that it is not the respondent who should seek to enforce the judgment, having assigned such right to Credit Guarantee Insurance Co. In a supplementary affidavit the applicant contends further that it is unlawful for the respondent to go into execution of its immovable properly when it has in its possession movables which it had not sought for reserve price to sell. In any case to them, attempting to sell an immovable property at a 1996 reserved price is unfair considering the present economic conditions.

The Respondent’s affidavit opposing the application was full of lamentation. It has had judgment on 26 February 1996. Since this date the applicant has in one way or the other frustrated execution

[p.238] of [2001-2002] 2 GLR 235 of the judgment. The applicant issued a cheque of ¢183 million on 13 August 1997 to honour the judgment debt. A day before the maturity of the cheque, the applicant wrote to the effect that the cheque can be honoured by 27 August 1997. On 21 August 1997 some six days to the maturity date of the cheque, the applicant wrote again asking for an extension once more to 29 August 1997. There were also court room frustrations initiated by the applicant. On 17 December 1998 the applicant’s request before the High Court to pay the judgment debt by instalments of $5,000 was refused. The respondents were granted the liberty to go into execution. The matter got to the Court of Appeal which declined the applicants their request because the Court of Appeal found it had no jurisdiction in the matter. In the Supreme Court on 7 December 1999 the court said:

“We do not call upon counsel for the respondent. The application is baseless, frivolous and vexatious; it has been used only to frustrate the judgment creditor in going into execution. The application is accordingly dismissed with costs of ¢2,500,000 to the plaintiff-respondent.”

Again in the Supreme Court, on 3 April 2001, I believe on a review the court stated: “We refer to CM/1O/99. We think the applicant’s letter is only an attempt to frustrate execution. The application is dismissed with costs of ¢5m to the respondent. The respondent is at liberty to go into execution.

I think the applicant has really journeyed with the respondent extensively. No doubt the respondent is now full of lamentation why the journey should continue and is now in this court. The Respondent’s supplementary affidavit did not deny going into execution of the movables of the applicant but stated that it had to release some of these movables when a third party claimed ownership. To the respondent the movables are not sufficient to be able to satisfy the cedis equivalent of a debt of $476,692 plus interest, a debt which as at 3 April 2001 has run in excess of ¢1.6 billion. The respondent avers further that the court has on the 27 August 1998 on the agreement of the parties granted a reserved price of ¢3 billion for the applicant’s immovable property. The applicants having consented to this reserved price, has admitted the insufficiency of its movable.

[p.239] of [2001-2002] 2 GLR 235

From the affidavits filed by the parties issues germane for my consideration are:

“(1) whether the plaintiff-respondent Sherwood having assigned its rights under the judgment has the capacity to proceed in execution of this judgment debt; and (2) whether there was sufficient movable which the respondent could have proceeded against in satisfaction of the judgment debt, and if there was whether the respondent proceeding to attach the applicant’s immovable property was not in breach of the law such that the execution should be declared a nullity.”

Andrews Burrows in his book, The Law of Restitution at p76 says, subrogation is the name given to the technique by which one party (P) steps into the shoes of another party (X) so as to have the benefit of X’s right and remedies against another party D. Even though Andrews Burrows sees assignment as an analogy to subrogation he distinguishes the two that unlike assignment, subrogation can occur without any agreement between the parties P and X. He finds various types of subrogation rights:

“(a) Indemnity insures subrogation rights.

(b) Sureties subrogation rights.

(c) Subrogation rights of business creditors dealing with trustees.

(d) Lenders subrogation rights and bankers subrogation rights.”

Underlying all these subrogation rights is the principle that one person steps into the shoes of another so as to have the benefits of that person’s rights against another.

There appears to be no doubt that there was a form of agreement annexed as exhibit A to the applicant’s motion to set aside execution filed on 11 May 2001 in which Credit Guarantee Insurance Co Africa Ltd (CGIC) are described as assignees by subrogation and were to enter into the said agreement exhibit A on behalf of the respondent Sherwood Export Holdings CC, Johannesburg. In the agreement it is provided amongst others:

“WITNESS THAT WHEREAS:

[p.240] of [2001-2002] 2 GLR 235

A. PHARMADEX is duly indebted to Sherwood for the. . . referred to hereinafter.

B. The rights of Sherwood have been duly assigned by subrogation to Credit Guarantee Insurance Co.

4.1. Payment of the entire settlement sum shall be full and final settlement of the action instituted by Sherwood against Pharmadex in the High Court of Ghana under case No 866/96.

Consequently, the parties hereto agree that the aforesaid action under case No 866/96 shall be discontinued by Credit Guarantee Insurance Co upon receipt of the settlement sum; pending full payment of the settlement sum, aforesaid action under case number 866/96 shall remain extant . . .”

From the foregoing extracts from the agreement exhibit A there is no doubt that the respondent assigned by subrogation is right to the debt against the applicant Pharmadex to Credit Guarantee Insurance Co. The complaint of the applicant is whether Sherwood has any right to enforce a judgment against it under the debt? Under the principle governing relations between the insurer and the insured the authorities are settled that where there is no formal agreement to assign the right of action, the insurer cannot take action in its own name against a third party. They must bring the action in the name of the assured. In the case of R v Victoria Insurance Co Ltd [1896] AC 250 at 256, PC Lord Hobhouse stated:

“It is true that subrogation by act of law would not give the insurer a right to sue in a court of law in his own name. But that difficulty is got over by force of the express assignment of the bank’s claim, and of the Judicature Act, as the parties must have intended that it should be when they stipulated that nothing in the assignment should authorize the use of the bank’s name.”

(The emphasis is mine.) The case of Esso Petroleum Co Ltd v Hall Russell & Co Ltd [1989] AC 643, HL th also makes the same point. In Halsbury’s Laws of England (4 ed), Vol 25, para 527 at p281 where it is similarly provided that:

“In the absence of a formal assignment of the right of action, the insurers cannot sue the third party in their own names;

[p.241] of [2001-2002] 2 GLR 235 they must bring the action in the name of the assured. On receiving a proper indemnity against costs, it is his duty to permit his name to be used in such action.”

(The emphasis is mine.) No doubt these authorities concern insurers’ subrogation rights, where the insurer had settled with the insured and therefore proceeds against the tortfeasor for the claim which the insured is entitled to against the tortfeasor. But it appears to me that under the general principle of subrogation, subrogation rights may be the subject of express or implied agreement between the parties. Where they are not, they are best regarded as arising by operation of law: refer to the cases of Castellain v Preston (1883) 11 QBD 380, CA and Morris v Ford Motor Co Ltd [1973] QB 792, CA. By the agreement between the applicant and Credit Guarantee Insurance Co, exhibit A, the rights of the respondent, Sherwood were duly assigned by subrogation to Credit Guarantee Insurance Co. This rights should include the right to proceed in execution of the debt against the applicant. Having assigned its rights can Sherwood again take over proceedings in execution of the judgment? I think not. There is no challenge that Sherwood did assign by subrogating its rights under the judgment to Credit Guarantee Insurance Co. In fact exhibit A even gave Credit Guarantee Insurance Co acting per CIC to discontinue the action on settlement of the agreed term by the applicant. Definitely there were some reasons that impelled Sherwood to assign its rights under the judgment without any reservation. Offensive though this objection to capacity raised by the applicant may be, particularly when they have not honoured the debt in the terms of exhibit A, it is an objection I am of the opinion should not be ignored.

I have mentioned that the applicant had taken the respondent through the courts’ hierarchy up to the Supreme Court and it was the respondent as Sherwood Export Holding Ltd that the applicant acknowledged as the fit party in all those proceedings. When it had exhausted and climbed all the court hierarchy without questioning the capacity of the Sherwood Export Holding Ltd and all the courts made orders recognising the respondent as the fit judgment creditor, should the applicant now be allowed to raise anew an issue of the capacity of Sherwood in going into execution for this debt? I am of the opinion that in the circumstances of the case the applicant should not be so allowed as that would amount to permitting the

[p.242] of [2001-2002] 2 GLR 235 applicant to seek his reliefs by piecemeal. Throughout all the court proceedings it was not Credit Guarantee Insurance Co who were the plaintiffs. Can they now take over enforcement of the judgment?

Now, to the other leg of the applicant’s complaint. The applicant will want the court to believe that just because the respondent had gone into execution of his immovable property and not the movable first, it is entitled to its application that the execution should be set aside. Its complaint is stated as follows: “That I am advised and verily believe same to be true that even if plaintiff has capacity to go into execution it is unlawful to bypass the defendant’s glaring movable for immovable properties.” The applicant did not provide any material for me to examine whether he has sufficient movable to satisfy the judgement debt and for which reason I should set aside the execution. In the case of Manu v Yeboah [1982-83] GLR 34 at 39-40, CA Francois JA (as he then was) had this to say:

“It seems to me that the policy rationale behind the rule is to avoid any high-handed arbitrariness or even perversiveness in the sheriff’s conduct of a public duty which deprives a person of his property. It is to obviate the situation where out of sheer mischief or malice, a sheriff capriciously sells immovable property when the debtor’s personal property is glaringly sufficient to satisfy the debt. It seems to me, further, that the rule lays a burden on the judgment debtor who seeks to impugn the sheriff’s instructions, to prove that movable property sufficient to satisfy the debt in the judicial division had been ignored. It is only common sense that unless the personal property is clearly visible, it is only the owner with his peculiar knowledge of his assets who can best assert and identify his possessions.”

(The emphasis is mine.) This view of his lordship, I am of the opinion, should be commendable and I find it so enchanting I would whole heartedly adopt it. In the case before me the applicant did nothing to show what properties he had which can satisfy the judgment debt, for which he is being pursued. In fact, he himself annexed to his supplementary affidavit list of items he alleges the respondent had attached. They are:

“(1) electronic desk calculator.

[p.243] of [2001-2002] 2 GLR 235

(2) Pipe Unicorn PV 8600 spectro photometer.

(3) Hyundai bus No GR 1862 G.

(4) Two air compressors.

(5) One FC Wilson generating plant.”

If these are all that the respondent laid hands on and which properties the respondent averred a third party is even claiming ownership of, wherein lies any sufficient proof that the applicant has sufficient movables to satisfy a debt which is running into billions of cedis. The applicant cannot have favour in this court on these grounds and I cannot therefore set aside the execution on the grounds that he has sufficient movables which the respondent has ignored.

From the foregoing I will refuse the applicant’s application that I should set aside the execution entered into by the respondent judgment creditor. I will award plaintiff costs of ¢2.5 million against the applicant.

Application dismissed.

E K D-O