BUSHIE ENTERPRISE v. THE PROJECT MANAGER, NORELEC GHANA _ NORLEC GHANA
2004
COURT OF APPEAL
GHANA
CORAM
- ARYEETEY, J.A. (PRESIDING)
- AKOTO-BAMFOR, J.A.
- ASARE-KORANG, J.A
Areas of Law
- Contract Law
- Civil Procedure
2004
COURT OF APPEAL
GHANA
CORAM
AI Generated Summary
Bushie Enterprise, a subcontractor, sued Norolec Ghana after Norolec reduced the scope of a project to erect steel transmission towers on a 34.5 kV line between Kumbungu and Daboya. Bushie alleged unilateral reduction to 42 towers and wrongful termination without the eight‑day notice stipulated in Clause 1.7 of their subcontract (exhibit A), and claimed underpayments including ¢13,360,762.28 for completing 40 towers and ¢10,530,000 for additional tower and survey work. Norolec maintained it lawfully varied the scope under Clause 2.1 and later executed a final settlement (exhibit 2) on 12 October 1998, where both parties agreed not to return for any money. On appeal, Justice Aryeetey held the trial judge improperly confined analysis to Clause 1.7 and failed to read the contract as a whole. The Court of Appeal found Norolec’s reduction was a permitted variation under Clause 2.1, and exhibit 2 barred further claims. The appeal was allowed; the trial judgment was set aside, and Bushie’s cross‑appeal was dismissed.
ARYEETEY, J.A.
A background to this appeal is as follows: The plaintiff/respondent, as Sub-Contractor, entered into an agreement, exhibit A, with the second defendant/appellant-company, as Contractor, on 15th June 1998 for the excavation of foundations and erection of 221 steel towers for electricity transmission of 34.5 KV line between Kumbungu and Daboya in the Northern Region. The contract price payable to the respondent is stated in the agreement. It is the case of the respondent that the appellants unilaterally reduced the number of towers to be erected to 42 without any justification, which was in violation of clause 1.7 of exhibit A. The respondent contends further that while he was making excavations in respect of Towers Numbers 1-42 the appellants stopped him without giving him the notice required under Clause 1.7 of exhibit A. According to the respondent the termination of the contract by the appellants was also contrary to Clauses 2.1, 3.1. and 3.2. of exhibit in that when the appellants terminated the contract they failed to pay moneys due to him as well as the cost of materials.
Since the respondent referred to Clause 3.1 and Clause 3.2 as having been violated by the respondents I would reproduce them in full for a better appreciation of the nature of his claim. They area as follows:
“3.1 Contractor may, at its option, terminate Sub-Contract at any time in whole or in part by written notice hereof to Sub-Contractor whether or not Sub-Contractor is in default and whether or not Main Contract is subject to termination. Upon receipt of any such notice, Sub-Contractor shall, unless the notice directs otherwise, immediately discontinue works on the date and to the extent specified in the notice, place not further orders or Sub-Contracts for materials, equipment, services or facilities except as may be necessary for completion of such portion of the works as is not discontinued, promptly make every reasonable effort to proceed with cancellation upon terms satisfactory to Contractor of all orders. Sub-Contracts and rental agreements to the extent they relate to the performance of works discontinued and shall thereafter do only such work as may be necessary to preserve to protect works already in progress and to protect materials, plant and equipment at the project site or in transit thereto.
3.2 Upon such termination, Sub-Contractor shall be entitled to be paid the value, calculated on the basis of the payment provisions of the Sub-Contract, of a