JSC INVESTMENT LTD. v. ACTIVITY VENTURER FINANCE CO. LTD.
June 17, 2010
COURT OF APPEAL
GHANA
CORAM
- HENRIETTA ABBAN JA, PRESIDING
- MARFUL-SAU JA
- ADUAMA-OSEI JA
Areas of Law
- Contract Law
- Evidence Law
- Commercial Law
June 17, 2010
COURT OF APPEAL
GHANA
CORAM
AI Generated Summary
The Court of Appeal, per Justice Marful-Sau JA, reviewed a dispute arising from a 2006 Fund Management Agreement governing a US$10 million committed capital, with a 2.5% annual management fee (US$250,000). The Company terminated the Fund Manager without cause on June 12, 2008. Under clause 14.1.2, the Fund Manager sought US$180,000: a quarterly fee (US$62,000, later paid) and US$118,000 as the balance of annual operating expenses. The trial court accepted the Fund Manager’s evidence of a practice of paying fees without annual budgets and awarded US$118,000, relying in part on testimony from the Company’s investment accountant, Sampson Asumadu. On appeal, Justice Marful-Sau held that operating expenses required proof of an approved annual budget; no budget was tendered, and DW1’s testimony indicated expenses were payable only upon Board-approved budgets. Applying burden-of-proof principles (including Evidence Act, NRCD 323, ss. 11, 14), the Court set aside the US$118,000 award and affirmed dismissal of the Company’s counterclaim; testimony was taken from Patricia Sarfo for the Fund Manager.
JUDGMENT
MARFUL-SAU JA:
This appeal is taken from the judgment of the High Court (Commercial Division) dated the 8th of June, 2010. By a writ of summons filed on the 7th of October, 2008, the Plaintiff claimed the following against the Defendant:
‘’a. $180,000 being entitlements due to the Plaintiff under the Agreement.
b. Interest on the said amount due to the plaintiff from the 12th of June 2008 date of termination till date of final payment.’’
In this appeal the Plaintiff will be referred to as the Respondent while the Defendant will be known as the Appellant. The facts of the case are quite simple. The parties herein entered into a contract on the 1st November 2006, by which the Respondent was engaged to manage investment fund provided by the Appellant. Under the Fund Management Agreement which regulated the rights and obligations of the parties, the Respondent was to be paid 2.5% of the committed capital as management fee per annum. From the record of appeal the committed capital was US $10,000,000.00 and therefore the Respondent’s management fee was to be US$250,000.00 per annum. The appointment of the Respondent as the Fund Manager was terminated by the Appellant on the 12th of June 2008. The Respondent therefore claimed the amount of US$180,000.00 which by paragraph 8 of the statement of claim is made up as follows:-
i) US$62,000.00 being the Respondent’s quarterly fee for the immediate preceding quarter before the termination.
ii) US$ 118,000.00 being the balance of the Respondent’s Annual Operating Expenses from 12th June 2008 to December 2008.
It is clear from the record of appeal that Respondent based its claims on clause 14. 1.2. of the Fund Management Agreement which will be referred simply as the Agreement. The said clause provides as follows:-
‘’ The company may terminate the appointment of the Fund Manager by written notice taking immediate or subsequent effect, attaching a certified copy of a resolution of the Board deciding upon such termination, at any time. Provided always that where the company terminates with cause, it shall pay the Fund Manager a termination fee equal to the Fund Manager’s fee for the immediately preceding quarter plus another quarterly fee of equal amount for the quarter following the notice of termination. Where the company terminates without cause, it shall pay to the Fund Manager: (i) the Fund Manager’s quarterly fee for the immediate preceding quarter and (ii) balance of the Fund Manager’s Operating Ex