IN THE SUPERIOR COURT OF JUDICATURE
IN THE COURT OF APPEAL
KUMASI - A.D 2018
ISAAC BUABENG AND OFORI ATTA AND 162 OTHERS ALL OF EHWIAA
DATE: 28 th NOV 2018
SUIT NO: H1/21/2018
JUDGES: MARIAMA OWUSU J.A (PRESIDING), HENRY A. KWOFIE J.A, AMMA GAISIE J.A
HENRY KWOFIE J.A
This appeal is taken against the ruling of the High Court sitting in Kumasi. In his ruling dated the 3rd of March 2016, the trial judge held that the plaintiffs/appellants do not have a cause of action against the respondent because the respondent has never at any point in time employed the appellants and moreover, there is no employment contract between the appellants and the respondent to be enforced.
By their amended writ of Summons filed on 23rd June 2015, the plaintiffs/appellants claimed against the defendant/respondent the following reliefs:
a) An order for the payment of two years (2) salaries of the workers of Ehwiaa Wood Products Ltd.
b) Interest on the said amount from June 2008 till date of final payment.
c) Three months salary in lieu of notice of redundancy
d) Interest on the said amount from June 2010 up to date of final payment.
e) An order for the payment of normal severance awards to the workers less whatever has been paid to each person.
f) Interest on the said amount from June 2010 to date of final payment.
g) General damages.
At the application for Directions stage, the defendant filed one additional issue that is whether or not the defendant is the proper entity to be sued regarding all the reliefs which plaintiffs are seeking. The trial judge took the view that the additional issue raised by the defendant, if successful, would make a full trial in the case unnecessary and therefore set the issue down for preliminary legal arguments and ordered both counsel to file written submissions. In a ruling delivered on 3rd March 2016, the trial judge held that the defendant is not the proper entity to be sued regarding all the reliefs the plaintiffs are seeking and accordingly dismissed the writ against the defendant. The plaintiffs dissatisfied with the said ruling filed the instant appeal on the following grounds:
1. The ruling is against the weight of evidence
2. His Lordship erred in holding that the defendant is not the proper party to be sued when by the defendant’s own conduct, the defendant and Ehwiaa Wood Products are the same.
3. His Lordship erred in law when he held that the plaintiffs have no cause of action against the defendant when by the conduct of the defendant, it can be said that Ehwiaa Wood Products Ltd was the agent of the defendant.
4. Alternatively, His Lordship erred in failing to hold that by the dominated (sic) subsidiary, Ehwiaa Wood Product is the agent or partner of the defendant Company.
The reliefs sought from this Court are:
i) An order allowing the appeal
ii) An order setting aside the ruling of the High Court Kumasi dated the 3rd March 2016
iii) The respondent pays the appellants cost of the appeal and of the proceedings below.
The short ruling appealed from is found at pages 101 to 103 of the Record of Appeal and the amended notice of appeal is found at page 106 of the same record. Having read the record of appeal generally and particularly the pleadings, exhibits filed by the parties and the written submissions, I am of the view that the trial judge was right in setting down the issue of whether the defendant was the proper party to be sued for legal arguments.
The plaintiffs had pleaded in their statement of claim as follows:
1) The plaintiffs are Senior Staff and workers of Ehwiaa Wood Products Ltd which is situate at Ehwiaa in Kumasi.
2) The defendant is the Forestry Commission which is the owner of Ehwiaa Wood Product Ltd and whose head office is in Accra with a branch office in Kumasi.
3) In 2008, the workers were informed of the debt owed by the Company to Merchant Bank and which the assets of the Company were ordered to be sold by auction by the Court following the closure of the factory.
5) The workers were promised their salaries and severance awards in case of any eventual redundancy.
7) The properties of the Company were auctioned eventually and the Company was finally closed.
8) The workers were however not paid their salaries from June 2008 to June 2010 when most of the Company’s assets were sold by auction.
9) The severance awards of the staff and workers of the Company as stipulated in the conditions of service of the Company were also not paid.
10) The workers wrote petitions upon petitions and the Forestory Commission finally agreed to negotiate a package for workers through the Timber and Woodworkers Union (TWU) of the TUC.
11) A delegation of the Forestry Commission (on one hand) met with TWU and a delegation of the workers on 14th September 2010 at the Forestry Commission Conference Room in Accra to negotiate the promised package.
12) The two parties could not reach an agreement and the Forestry Commission delegate asked for time to contact its Board on the workers proposals so that it could revert before the year (2010) ended.
13) Several calls to both the Forestry Commission delegate and the TWU leadership by the workers on the matter proved futile.
16) The settlement ended up with the workers being paid paltry sums and which sums some of the workers refused to collect their part of the money.
19) Consequently, the workers through their lawyer served the defendant with notice of intention to issue a writ on 6th November 2014 but have received no response.
20) That the defendant will not pay the workers their due if not ordered by the honourable Court.
In their statement of defence, the defendant pleaded therein as follows:
“3 Save admitting that the defendant is the Forestry Commission, the defendant vehemently denies the most of the averments contained in paragraph 2 of plaintiffs claim. In further answer thereto, the defendant states that the Ehwiaa Wood Product Ltd is a Limited Liability Company which has distinct legal personality from the defendant
8) Whereas defendant is not in any position to admit or deny paragraphs 8 and 9 of the claims, defendant shall contend that it has never been responsible for the payment of the salaries of the workers of Ehwiaa Wood Products Ltd since its incorporation and thus cannot be held responsible for such similar payments after the Company has gone into distress
20) Defendant states that the Ehwiaa Wood Products Ltd was incorporated by the government of Ghana and was allocated timber concessions for effective operation by the government through the defendant organisation.
21) Defendant states that the timber concessions allocated to the Company only conferred felling rights on the Company and nothing else.
22) The defendant states that Ehwiaa Wood Product having been declared bankrupt and having lost the ability financially to manage the allocated timber concession efficiently, the sector Minister on the recommendation of the defendant has withdrawn the timber concessions from the company as stipulated by law.
23) Defendant shall contend that it is not bound by any law to pay the salaries and severance awards package and that whatever monies it has paid so far to the workers as severance package was done on moral grounds which cannot be impeached.
In his ruling the trial judge stated at page 102 and 103 of the ROA and follows:
“……but the issue whether the plaintiffs who admittedly were employees of Ehwiaa Wood Product Ltd can sue the Forestry Commission for the reliefs they are claiming is a purely legal issue. The plaintiffs have gone to great lengths and detail to show that the defendant is now the owner of Ehwiaa Wood Products Ltd. The defendant has however exhibited documents to show that Ehwiaa Wood Product Ltd is a limited liability Company. As a limited liability Co. it can sue and be sued in its own name. And it is trite learning that its liability will be distinct from that of its owners/members or shareholders. Surprisingly the plaintiffs maintain the Ehwiaa Wood Products Ltd has not been wound up. If that is so then they can proceed against it or cause it to be wound up and then proceed against the official liquidator ………. It is therefore my view that the plaintiffs have no cause of action against the defendant. The defendant has never at any point in time employed the plaintiffs and there is no contract of employment between the plaintiffs and the defendant to be enforced. Accordingly, I hold that the defendant is not the proper entity to be sued regarding all the reliefs the plaintiffs seek. Accordingly, the writ against the defendant is misconstrued and is accordingly dismissed”
In the introductory part of his written submissions, counsel for the plaintiffs/appellant submitted as follows:
“The plaintiffs/appellants were at all material times employees of a Company called Ehwiaa Wood Product Ltd. For present purposes it is common ground that Ehwiaa Wood Products Ltd was a limited liability Company (Appeal Record page 38). However, the defendant/respondent played various roles in the affairs of the Company (Ehwiaa Wood Products Ltd) and at some point, received a dividend payment. The assets of Ehwiaa Wood Products were eventually auctioned off when it was unable to meet its debt obligation to Merchant Bank (Gh) Ltd and other debtors.
The plaintiffs/appellants as employees were never paid their salaries and their redundancy packages”.
Further on counsel for the appellant stated:
“from the records of incorporation there is no doubt that Ehwiaa Wood Product Ltd was a separate legal entity (See page 38 of ROA) Therefore on the first appearance in law it can be sued and be sued on its own unless other facts are established to link the defendant/respondent to Ehwiaa Wood Products Ltd” Counsel then refers to the case of Ashieku Tei Ventures Ltd Vs Adat Car Accessories Enterprise and Another (2016) 97 GMJ 37 and then submitted that the defendant/respondent has consistently maintained that it was the owner of Ehwiaa Wood Products Ltd and has intentionally and deliberately caused or permitted the plaintiffs to believe that it is the owner of Ehwiaa Wood Products.
On the other hand, counsel for the defendant/respondent submitted that the defendant/respondent never at any point in time employed the plaintiffs and there is no contract of employment between the plaintiffs and the defendant.
As admitted by the plaintiff/appellants in their pleadings and written submissions, the plaintiffs at all material times were employees of Ehwiaa Wood Products Ltd. The plaintiffs also admit that Ehwiaa Wood Company Ltd, their employer was a limited liability Company. It is also clear from the pleadings and the written submissions of Counsel for both parties that the plaintiffs have never been employed by the defendant. The statement of claim of the plaintiffs does not make any averment that prima facie attaches any liability to the defendant jointly with the Ehwiaa Wood Company Ltd.
Indeed, what is even strange and baffling is that the plaintiffs did not join their employer Ehwiaa Wood Sawmill Ltd a limited liability Co. to the action.
In the case of Morkor Vs. Kuma (East Coast Fisheries Case) (1998-98) SCGLR 620 it was held at page 632 as follows:
“Save as otherwise restricted by its regulations, a company, after its registration, has all the powers of a natural person of full capacity to pursue its authorised business. In that capacity, a company is a corporate being which, within the bounds of the Companies Code 1963(Act 179) and the regulations of the Company, may do everything that a natural person might do. In its own name, it can sue and be sued and it can owe and be owed legal liabilities.
A company is thus, a legal entity, with separate, independent and distinct from the persons constituting it or employed by it. The corporate barrier between a Company and the persons who constitute or run it may be breached only under certain circumstances. These circumstances may be generally characterised as those situations where in the light of the evidence, the dictates of justice, public policy or the Companies Code itself so requires………….”
Indeed, as Lord Macnaughten put it in the celebrated case of Salomon Vs Salomon & Co. (1897) AC 22
HL at page 51:
“The company is at law a different person altogether from the subscribers…………..; and though it may be that after incorporation the business is precisely the same as it was before, and the same persons are managers, and the same hands receive the profits, the Company is not in law the agent of the subscribers or trustee for them. Nor are the subscribers, as members, liable in any shape or form, except to the extent and in the manner provided by the Act”
In this instant case contrary to the averment by the plaintiffs that the defendant is the owner of Ehwiaa Wood Company Ltd, the record shows otherwise.
An official search conducted by defendant at the Registrar Generals Dept shows at page 38 of the Record of Appeal that Ehwiaa Wood Product Ltd was incorporated in the year 2000 with the Government of Ghana as the sole shareholder with 160,000 shares. The record also shows that the 1st plaintiff/appellant Isaac Ezekiel Buabeng is the Company Secretary. The board of Directors of the Company consisted of Professor Frederick Adjetey Abloh, Frederick William Addo-Ashong and Theodore Kwasi Atsutsey. The defendant was not even remotely connected with Ehwiaa Wood Company Ltd.
But as already indicated even if the defendant held any shares in Ehwiaa Wood Products or was the owner of the Company that would not make the defendant liable for any liabilities owed by the Company.
Counsel for the plaintiffs/appellants has in his written submissions called on this Court to lift the veil of incorporation. That is an expression applicable in several different contexts such as where the corporate personality is in the words of Lord Keith in Woolfson Vs. Straithclyde Regional Council (1978) SLT 150 at 161 “used as a mere facade concealing the true facts” or where one person (individual or corporate) uses a Company in an unconscionable attempt to evade existing obligations or to perpetrate fraud. See also Morkor Vs Kuma (East Coast Fisheries case) Supra at page 632 where the Supreme Court held that:
“The corporate barrier between a company and the persons who constitute or run it may be breached only under certain circumstances. These circumstances may be generally characterised as those situations where, in the light of the evidence, the dictates of justice, public policy or the Companies Code itself so requires. It is impossible to formulate an exhaustive list of the circumstances that would justify the lifting of the corporate veil. However, the authorities indicate that such circumstances include where it is shown that the company was established to further fraudulent activities or to avoid contractual liability”.
In my view it would be most improper for the veil of incorporation to be lifted in this case as the plaintiffs/appellants did not plead any circumstance warranting the lifting of the veil of incorporation especially having regard to the fact that Ehwiaa Wood Company Ltd was not established by the defendant. Having perused the record of appeal, I find no basis whatsoever for the plaintiff to have instituted the action against the defendant.
Accordingly, the appeal has no merit whatsoever and same is dismissed.
HENRY A. KWOFIE
(JUSTICE OF THE COURT OF APPEAL)