STC to pay £607, 740 to a transport company

Wednesday, May 13, 2009 (Back Page Lead)

THE Commercial Court in Accra yesterday ordered Intercity STC Coaches Limited (STC) to pay £607, 740.00 or its cedi equivalent, being money owed a transport company, which supplied the STC with 13 luxurious buses and accessories.
The court also indicted the Managing Director (MD) of the STC, Mr Kwame Adjei-Sefah, for using the Eicher buses supplied from India to generate revenue for the STC for more than a year, only to reject them and claim, after the company had been sued, that the Board of Directors of the STC did not approve of the purchase of the buses.
Delivering its judgement in a suit brought against the STC by Svani Limited for non-payment of the buses, the Presiding Judge, Ms Justice Margaret Insaidoo, said Mr Adjei-Sefah, could not lay his "lapses" on Svani Limited.
The court held that there was overwhelming evidence to prove that STC acted in bad faith and it, therefore, accordingly, ordered STC to pay interest on the £607, 740.00 from December 2007 to the date of final payment.
It also awarded £60,000 costs against the STC in favour of Svani Limited, who had, in its statement of claim, stated that it had taken a loan from Fidelity Bank to purchase the buses for the STC and was currently suffering losses, due to STC's recalcitrance.
It further held that Mr Adjei-Sefah's claim that the buses were to be used for work to raise money to pay for the clearance of the buses and return buses to the plaintiff was "surely not a credible position".
According to the court, there was evidence that the buses embarked on more than 200 trips a month and "it, therefore, feels ill in the mouth for the defendant to reject the buses after depreciating them."
Citing authorities to buttress its decision, the court said from the evidence adduced, it had come to the conclusion that the conduct of the defendant was rather unfortunate and must be condemned in no uncertain terms.
It also ruled that Mr Ajdei-Sefah could not let Svani Limited suffer losses due to his failure to seek approval from the Board of Directors of the company before purchasing the coaches.
According to the court, it was clear that there was a contract binding STC and Svani Limited, and it was, therefore, unacceptable for the MD of the STC to claim that the agreement was based on alliance. In other words, on a "work-and-pay" basis and not a contract.
It held that the plaintiff was able to prove with documents that there was no alliance proposal between it (Svani Limited) and STC, adding that "it is on record that the plaintiff rejected the alliance proposal, but the defendant could not prove otherwise."
It said it would be unfair and unjustifiable to allow STC to go scot-free with its actions, adding that it was too late for the defendant to hide behind the explanation that the Board of Directors of the company, per its Chairman, Mr Stephen Sekyere-Abankwa, did not approve of the purchase.
"From the evidence adduced, there was a sale and purchase agreement. The defendant (STC) entered into agreement accepted the buses, utilised it for over a year and generated considerable income," the court held.
It added that "there was a binding contract for sale and purchase of the buses. The defendant is estopped from rejecting the buses after one year of use”.
The court upheld submissions from counsel for the plaintiff, Mr Barimah Manu, which stated, among others, that following several meetings and negotiations with Mr Adjei-Sefah and some officials of Fidelity Bank, the buses were supplied to the STC at competitive prices.
The plaintiff proposed that if the defendant was to order more than 10 buses, it stood to gain, because its mechanics would receive training in India, while special tools would be supplied to the STC at no additional cost. It also proposed to the supply of spare parts at discounted rates to the STC.
Plaintiff relied on its agreement with STC to borrow funds from the Fidelity Bank Limited and proceeded to order the buses on behalf of defendant at the price agreed by parties as well as the specifications provided by the defendant which included other extras such as the provision of DVDs, TV sets, curtains, among others.
The court upheld further submissions from the plaintiff that the defendant took delivery of the buses and other accessories that came with them and appropriated same to itself by taking all decisions relating to the buses unilaterally, and this included entering into contracts with MTN to advertise their products on the buses and keep the proceeds, and thus generated considerable revenue during the CAN 2008.
To date, the defendant paid only US$40,000 as part payment of the purchase price.