DATABANK ASSET MANAGEMENT SERVICE LTD v. ACORN PROPERTIES LTD
2022
HIGH COURT
GHANA
CORAM
- HIS LORDSHIP JUSTICE JUSTIN KOFI DORGU
Areas of Law
- Contract Law
- Equity and Trusts
- Civil Procedure
- Commercial Law
2022
HIGH COURT
GHANA
CORAM
AI Generated Summary
Justice Justin Kofi Dorgu of the High Court, sitting in the Commercial Court, ruled on an application to dismiss a suit arising from an equity-based investment in a real estate development. The real estate developer advertised services priced in US dollars and an investing party contributed funds between 9 July 2010 and 30 September 2011, with the value of the investment dependent on the company’s performance and without interest. The applicant argued the arrangement contravened Section 3(4)(b) of the Foreign Exchange Act, 2006 (Act 723), which addresses receipt or payment of foreign currency. Distinguishing the contract’s nature from inherently illegal activities and emphasizing equitable principles, the court rejected the in pari delicto stance, refused to let the developer profit from its own wrong, and noted recovery can be ordered in Ghana cedis equivalent. The court highlighted the Commercial Court’s ADR framework and dismissed the motion.
RULING:
To me, the contract engaged in by both Parties is to deal in real estate development
and market. This is not illegal activities as strongly submitted by Counsel for the
Defendant/Applicant. This type of contract ought to be distinguished from contracts
founded on illegal acts such as drug supply, prostitution, smuggling, cybercrime or
any other crime. It may well be true that the Parties have contravened Section 3 of the
Foreign Exchange Act, 2006 (Act 723) particularly Section 3 (4) (b) which deals with
the “receipt or payment of foreign currency”. But as stated earlier on, the contract was
not the selling or buying of foreign exchange. The statement of defence of the
Defendant who is the Applicant herein throws more light on the nature of the
transactions per their paragraphs 4 and 5 thus;-
“4. In answer to paragraphs 3 to 5 of the Statement of Claim whilst admitting
paragraph 4 of the Statement, the Defendant says that the investments by the
Plaintiff were for a period of 9th July, 2010 t0 30th September, 2011 and were
equity investments and consequently were not subject to interest neither were
they time limited for 5 years as averred at all
5. Further, the value of the investments was varied, dependent upon the
performance of the Defendant financially; which was, inter alia, subject to
property market forces”.
What this means to me is that the contract was basically about shares or investment
instruments geared towards the capitalization of the Defendant’s estate project. This
in itself cannot and is not an illegal contract. Perhaps, the illegality is about the
currency of the transaction which is the dollar. There is no doubt that the US Dollar
and for that matter any other foreign currency is not the legal tender in the country.
The fact remains however that it is an open secret that transactions are carried out in
the country in the full glare of the Bank of Ghana in especially U.S dollars without
question.
To me it is about time that we as a country wake up to the realities of our situation
and stop burying our heads in the sand like the proverbial ostrich.
This is a Court of Law as well equity. One need not recount the evolution of the Rules
of Equity and what necessitated them. It is essentially to ameliorate the harshness of
the strict application of law that was often occasioning injustice and hardship on
Parties. And this is a crystal clear example of such situations. How is a Defendant who
advertised