An Accra High Court Commercial Division has dismissed a GH¢39.7 million claim made by Magnate Technology and Services against the Ghana Revenue Authority for breach of agreement.
The amount, the company said, would have been revenue or fees that would have accrued to it over the remaining period or unexpired term of the Addendum based on the average of the historically verifiable figures between the parties.
The court, in its ruling, held that it was unable to grant the reliefs being sought as there was not enough evidence from Plaintiff (Magnate Technology and Services) for it to accept the claim that was based on an illegal contract.
It said there was no evidence before the court showing the investment made over the period, revenue recouped over the course of performance and the deficit suffered.
“I am inclined to make an order for the Plaintiff to recoup its investment but as l have stated above, the paucity of evidence does not offer any guidance.There is not sufficient evidence on record for me to know the exact investment made by the Plaintif,” HIS Lordship Justice Constant K. Hometowu, said in his ruling.
“Simply stating in letters that over USD7million dollars has been invested is not sufficient under the circumstances,” the court said.
“The grant of this relief would be an enforcement of the contract I have established to be illegal. If I were to grant such relief, I would be condoning the statutory breach and granting immunity to the parties.
“I am unable to make an order for the Plaintiff to recoup its investment because there is nothing to assist me determine the deficit (if any) based on the reconciliation of investment made and revenue so far made,” the court said.
Consequently, Justice Hometowu declared in his ruling that the action is dismissed in its entirety, with no order as to costs.
In its writ of summons, Magnate Technology and Services sought various reliefs, including a true interpretation of the Agreement, restoration to its previous position, a claim for breach of contract, special damages amounting to GHS39.7 million (representing the minimum revenue it would have earned if the Agreement were not wrongfully terminated), interest from June 1, 2020, to the date of payment, and legal costs of GHS3 million.
The case originated from an Agreement entered into in September 2007 between Magnate Technology and Services and the Ghana Revenue Authority following an international bidding process. The Agreement, which involved providing a system for securing all bonded warehouses in the country, was initially set for a 10-year period. However, actual operations commenced in August 2010, three years after the Agreement’s execution, primarily due to administrative delays on the part of the beneficiary agency, the then Ghana Customs Excise and Preventive Service.
Structured as a long-term public-private partnership, the Agreement placed the onus of funding exclusively on Magnate Technology and Services, granting the company exclusive rights to provide services in Ghana to recoup its investments.
During the 10-year period, the fee structure was agreed upon as 95% for Magnate Technology and 5% for the GRA. Following claimed heavy investments exceeding USD 7 million by Magnate Technology, the GRA acknowledged the need for a revised fee structure. Consequently, an Addendum was executed for a further six-year term, with a new fee structure of 97% for Magnate Technology and 3% for the GRA.
In its defence, the GRA contended that the Addendum did not constitute a renewal but rather a new contract, requiring approval from the Public Procurement Authority and the Ministry of Finance. The GRA asserted that the Addendum, executed after the Agreement’s purported expiration in August 2017, lacked legal basis, as the date of execution could not be ascertained. The GRA also emphasized that correspondence between the parties occurred after the Agreement’s expiration, and based on the original 10-year term, it expected Magnate Technology to have recouped its investment and made a reasonable profit.
The GRA asserted that “the Addendum executed to the original Agreement is invalid and ill procured on the basis that the amendment or variation was not made during the subsistence of the initial Agreement.”
The GRA asserted that the parties could not have executed an addendum to the expired contract, contending that the Addendum lacked crucial statutory approval, rendering it illegally procured and, therefore, void and unenforceable.
In its ruling, the court emphasized that the uncontested evidence on record supported the existence of a Main Agreement executed by the parties in September 2007. However, the court determined that the execution of the Addendum violated ACT 663 as amended and ACT 921, both designed to safeguard the public purse by ensuring the prudent use of state resources. The court underscored the necessity for strict compliance with these statutes.
Interestingly, despite the original Agreement being executed by the Ministry of Finance, the Addendum conspicuously lacked the signature of any representative from the Ministry of Finance. Neither party provided an explanation for the absence of the Ministry of Finance, a pivotal party to the original Agreement.