Case Of The Week: Daniel Sackey Quarcoopome v. Sanyo Electric Trading Co. Ltd & Anor

Supreme Court of Ghana | Civil Appeal No. J4/3/2008 |Judgment delivered on 12 November 2008

Introduction:

Can a person who served for many years as a company director recover payment for that service on the basis of quantum meruit (payment for work done), even where the Companies Code prescribes a specific procedure for determining directors’ remuneration?

In this appeal, the Supreme Court was called upon to decide whether equity could be invoked to override the statutory regime governing directors’ fees.

Facts:

The Plaintiff, Daniel Sackey Quarcoopome, served on the Board of Directors of the 2nd Defendant, Ghana Sanyo Company Ltd, from 1974 until 2001. The 1st Defendant, Sanyo Electric Trading Co. Ltd (Japan), was a shareholder in the 2nd Defendant company.

The Plaintiff claimed that prior to his appointment in 1974, he reached an oral agreement with a representative of the 1st Defendant that he would earn remuneration comparable to that representative. He relied on a letter dated 4 October 1974 as evidence of this arrangement.

Throughout his tenure, the Plaintiff participated in board decisions, including periods when the Board resolved not to pay directors’ remuneration due to financial constraints. Upon his removal in 2001, he claimed he had never been paid reasonable directors’ fees for his long service.

He therefore sued the Defendants jointly and severally for damages for breach of contract or, in the alternative, compensation for services rendered on the basis of quantum meruit.

The High Court dismissed the contractual claim but awarded ¢350,000,000 to the Plaintiff in quantum meruit. The Court of Appeal set aside that award, holding that it violated section 194 of the Companies Code, 1963 (Act 179). The Plaintiff then appealed to the Supreme Court.

Issues for Determination:

1. Whether the Plaintiff was entitled to remuneration for services rendered as a director where no ordinary resolution approving such remuneration existed.
2. Whether the doctrine of quantum meruit could apply to the remuneration of a director governed by the Companies Code.
3. Whether the Court of Appeal was right in setting aside the High Court’s award.

The Court’s Holding:

The Supreme Court unanimously dismissed the appeal and held that:

i. Even if the Plaintiff had rendered valuable services and could be regarded as a de facto director, his remuneration was strictly regulated by statute.

ii. Section 194 of the Companies Code (as it were then, and now Section 185 of the Companies Act, 2019 (Act 992)  provides that directors’ fees and remuneration must be determined by ordinary resolution of the company, and in no other way.

iii. The equitable doctrine of quantum meruit cannot be invoked to defeat or circumvent clear statutory provisions. Where Parliament has laid down a specific procedure, courts are bound to enforce it.

iv. The High Court acted per incuriam by awarding quantum meruit without considering the Companies Code, thereby usurping the powers reserved to company members.

Accordingly, the Court of Appeal was right to set aside the award, and its judgment was affirmed.

Implication of the Decision:

This decision firmly settles the law that directors’ remuneration in Ghana is a matter of statute, not equity. No matter how long or valuable a director’s service may be, payment cannot be implied or imposed by the court unless it is sanctioned by the company through the procedure prescribed by law.

The case also clarifies that quantum meruit does not apply where statutory provisions fully caters for the issue.

Significant Quote:

“ ….the consequential award to the plaintiff in quantum meruit [by the  trial judge]  offended the clear provisions of section 194 of the Companies Code [now Section 185 of the Companies Act, 2019 (Act 992) for it amounted to usurping the functions of members of the 2nd defendant company. There being no evidence that such a resolution has ever been passed by the company, the trial judge erred in deciding to remunerate the plaintiff for services rendered to the second defendant in his capacity as a director.”

Commentary and Insight:

The Supreme Court’s decision reinforces corporate discipline and statutory compliance in company management. It draws a sharp distinction between moral fairness and legal entitlement, emphasising that courts cannot rewrite corporate governance rules on grounds of sympathy or fairness.

For directors, the message is clear: remuneration must be properly authorised. For companies, the case underscores the importance of passing formal resolutions to avoid uncertainty and litigation.

Ultimately, the judgment affirms that equity has no room to operate where the law has spoken clearly.