GH - JCS INVESTMENT LTD v. ACTIVITY VENTURE FINANCE CO. LTD

DR. DATE-BAH JSC:

The plaintiff, whose business is the provision of private investment fund management, brought action on 7th October 2008 against the defendant on a fund management agreement between them which the plaintiff claimed the defendant had breached. Under the agreement, the plaintiff was to manage and invest such of the defendant’s investment funds as were allocated to the plaintiff. The defendant, by a letter to the plaintiff dated 12th June 2008, purported to terminate this agreement without cause, citing clause 14.1.2 of the Agreement.

The plaintiff claimed that in the event of a termination of the agreement between the parties, the clause cited above provided for payment of the following:

“the Fund Manager’s quarterly fee for the immediate preceding quarter; and

Balance of the Fund Manager’s Annual Operating Expenses for the year of termination as approved in the Fund Manager’s Annual Budget…”

Relying on this provision, the plaintiff claimed, through the endorsement on its writ of summons: $180,000, together with interest on the amount from 12th June 2008 till date of final payment. Its statement of case indicated that the amount claimed was made up of the following:

“US$62,000 being the Plaintiff’s quarterly fee for the immediate preceding quarter before the termination and

US$118,000 being the balance of the Plaintiff’s Annual Operating Expenses from 12th June 2008 to December 2008.”

The defendant insisted that, on a true and proper interpretation of clause 14.1.2, the plaintiff was only entitled to the fund manager’s fee of US $62,000 for the immediately preceding quarter. It resisted the claim for $118,000 by pleading that as at the date of the termination of the agreement, there was no balance of the Fund Manager’s Annual Operating Expenses since the Plaintiff had not prepared and submitted the Fund Manager’s Annual budget for approval.

The main issue in this case is thus whether the plaintiff is entitled to the claim of $118,000 which is contested by the defendant. During the trial, the plaintiff failed to lead evidence to prove an approval of an annual budget for its operating expenses. Because of this failure of the plaintiff’s to prove with credible evidence the approval of an annual budget for its operating expenses, the Court of Appeal held that it was not entitled to the $118,000 that it had claimed. Marful-Sau JA said, on this issue (at p. 350 of the Record):

“As things stand now from the record of appeal, there was no