Ghana Revenue Authority wins GH¢39.7m suit
The High Court in Accra, 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.
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The amount, the company said, would have been revenue or fees that would have accrued to it from June 1, 2020 to date of payment and a legal cost of GH¢3 million.
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) for it to accept the claim and that it 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 Plaintiff," Justice Constant K. Hometowu said in his ruling.
"Simply stating in letters that over $7 million has been invested is not sufficient under the circumstances," the court said.
Magnate Technology in its writ of summons sought, among other relief, a true interpretation of the agreement and a restoration to its previous position, breach of contract, special damages of GH¢39.7 million being the minimum revenue it would have earned if the agreement was not wrongfully terminated and interest from June 1, 2020 to date of payment and a legal cost of GH¢3 million.
Fact of case
The facts of the case were that Magnate Technology in September 2007 entered into an agreement with the GRA after it won an international bidding process to provide a system for securing all bonded warehouses in the country for a 10-year period.
Although the agreement was made on September 26, 2007 for an initial period of ten years, the actual operations began three years later in August 2010, largely due to administrative delays on the part of the beneficiary agency, the then Ghana Customs Excise and Preventive Service.
The agreement was structured as a long term public-private partnership in recognition of its capital intensive nature.
The project was to be funded exclusively by Magnate Technology.
Magnate Technology was to have the exclusive right to provide the services in Ghana with the deliberate view to allow the company to recoup its investments.
During the 10-year period, the parties agreed to a fee structure of 95 per cent of net revenue for Magnate Technology and five per cent for the GRA.
Magnate claimed it made heavy investment for the project (in excess of $7 million) and this was acknowledged by the GRA.
However, due to the inadequacy of fee structure to enable the Plaintiff to recoup its investment and make reasonable profit, the GRA agreed to renew the agreement for a further term of six years with a new fee structure to reflect 97 per cent for Magnate Technology and three per cent for the GRA.
GRA’s defence
In its defence, the GRA argued that the addendum was not a renewal of the Agreement, which had expired as of August 2017.
It said the addendum must be considered as a fresh contract which required approval by the Board of the Public Procurement Authority and the Ministry of Finance in the same manner that the two bodies sanctioned the earlier agreement.
It said the parties could not have made an addendum to the expired contract and that the addendum lacked the crucial statutory approval and it was illegally procured and same was void and unenforceable.
