• IN THE SUPERIOR COURT OF JUDICATURE
  IN THE COURT OF APPEAL (CIVIL DIVISION)
  ACCRA - A.D 2018
  

T. CHANDIRAM & COMPANY LTD AND 3 OTHERS - (Defendants / Appellants)

vs.

FAUSTINA TETTEH - (Plaintiff / Respondent)

JUDGMENT

---

A. M. DORDZIE, J.A.:

The plaintiff who is now the respondent in this appeal is an employee of the 1^st and 2^nddefendantappellant companies since 1985. She became one of the directors of the companies when one of the directors died. The 3^rd and 4^th defendants are directors and shareholders of the said companies. The plaintiff alleged that the 3^rd defendant subjected her to sexual harassment throughout her period of employment with the companies. According to plaintiff, relationship between her and the 3^rd defendant who is the Managing director of the 1^stdefendant company became unpleasant in 2010 when she turned down his proposals to spend time with him on holiday in the USA.

 

She was removed as a director of the companies, her work schedules were taken from her, she was denied payment of some allowances she was entitled to and she was generally discriminated against in the work place.

 

She therefore instituted an action at the High Court against the defendants jointly and severally praying for the following reliefs as per the amended writ of summons filed on the 14^th of November 2014

 

A declaration that the purported “Termination of appointment as Director” of the 1^st Defendant Company is void.

 

Declaration that the purported “Termination of appointment as Director” of the 2^nd Defendant Company is void.

 

An order that the plaintiffs’ monthly allowance of GH¢500 as Director in the two defendant companies be paid.

 

The sum of GH¢3,500 being the unpaid amount due to plaintiff as director’s allowance for the months of June, July and August in the year 2010 and for the months of September, October, November and December, 2011.

 

The sum of USD$400,000.

 

The plaintiffs’ monthly allowance equivalent to the Sales Manager’s monthly commission on sales from December 2010 to date.

 

Refund of all payments of medical bills and monies paid for repairs and maintenance of vehicle used by plaintiff for official duties.

 

7a. an order directed at the defendants to pay to the plaintiff all other entitlement found due to the plaintiff.

 

Compensation for sexual harassment and victimization by the 3^rd defendant and also discrimination against the plaintiff by the defendants contrary to the provisions of the 1992 Constitution.

 

An order of injunction to restrain the 3^rd defendant from further sexual harassment of plaintiff.

 

10. An injunction to restrain the defendants from victimizing and discriminating against the plaintiff.

 

Interest on all sums found due and owing from the defendants to the plaintiff at the prevailing commercial bank lending rate from the date when those monies became due to date of payment.

 

 Costs.

 

The respondents denied these claims and counter claimed for the following:

Order of perpetual injunction restraining plaintiff from using the defendants’ official business address for her private and personal business;

Order restraining plaintiff from using and privately benefitting from defendants’ trade secrets and valuable commercial information;

Order restraining plaintiff from perpetrating further unlawful acts against the defendant companies;

Damages for breach of trust and confidence;

General damages; and

Cost. 

 

The record has it that the defendants did not pursue their decision to terminate plaintiff’s position as a director in the 1^st and 2^nd defendant companies when they received legal advice. The issue in respect of plaintiff’s reliefs 1-3 became moot; the said reliefs were therefore dismissed by the trial court. The rest of the reliefs of the plaintiff except reliefs (8) and (9) were granted holding the 3^rd and 4^th defendants jointly and severally liable for the acts of the 1^st and 2^nd defendant companies

 

The defendants’ counter claim was dismissed 

 

The defendants aggrieved, brought this appeal on the following grounds:

a. The High Court erred in not considering the effect of statutes, namely, Limitation Act, 1972 (NRCD 54), the Companies Act, 1963 (Act 179) and the Foreign Exchange Act 2006 (Act 723) in the determination of the case.

 

PARTICULARS

i. Disregarding Section 4(1)(b) and (c) of Limitation Act, 1972 (NRCD 54);

ii. Contravening Section 194(1) of the Companies Act, 1963 (Act 179) by granting the Respondent remuneration without an ordinary resolution;

iii. Contravening the Foreign Exchange Act, 2006 (Act 723) by enforcing transactions in foreign exchange by two resident Ghanaians contrary to the Bank of Ghana Regulations.

 

The High Court erred in disregarding material evidence adduced by the Appellants in support of their counterclaim.

 

The High court erred in believing the Respondent’s uncorroborated oral testimony against the effect of Statute.

 

The judgment was against the weight of evidence adduced by the Appellants at the trial.

 

Further grounds of appeal will be made upon receipt of record of proceedings.

 

No further grounds were filed

 

The appellants are praying this court to set aside the decision of the High Court in respect of the reliefs granted the plaintiff in the said judgment and grant the appellants’ counter claim. 

 

SUBMISSIONS

The respondent raised issues on differences in the grounds of appeal as contained in the notice of appeal and the grounds of appeal as stated in the written submission of the appellants. It is the submission of counsel for the respondent that the grounds of appeal as filed by the appellants offend Rule 8 (5) & (6) of the Court of Appeal Rules 1997, C. I 19. Apart from that the appellant failed to argue the grounds of appeal; that amounts to abandoning the grounds of appeal, the appeal should therefore be dismissed.

 

It is a fact that there is a slight difference in the wording of the grounds of appeal as stated in the written submission. Ground one in the notice of appeal has the particulars of the statutes the High Court is accused of not considering, while those particulars are missing in the written submission. In the same way the other grounds of appeal have slight wording differences as pointed out by counsel for the respondent; however the changes in the wordings have not changed the meaning of the grounds of appeal as contained in the notice of appeal. The notice of appeal is the originating process of this appeal, the court is therefore bound to work with the grounds as contained in the notice of appeal, and that is what I will do.

 

It is further argued by counsel for the respondent that apart from ground (d) which is that the judgment is against the weight of evidence adduced at the trial all the other grounds are vague and general.

 

Rule 8 (5) and (6) which counsel for the respondent argue had been breached by the grounds of appeal read:

(5) “The grounds of appeal shall set out concisely and under distinct heads the grounds on which the appellant intends to rely at the hearing of the appeal without an argument or a narrative and shall be numbered consecutively.

(6) A ground which is vague or general in terms or which does not disclose a reasonable ground of appeal is not permitted, except the general ground that the judgment is against the weight of the evidence.”

 

The grounds of appeal in the notice of appeal have complied with the requirement in Rule 8 (5) in form, the grounds are not argumentative or narrative either. I do not find the grounds vague or general and they do disclose reasonable grounds of appeal.

 

There are four grounds of appeal; ground (a) is precise and unambiguous, the error the trial court is accused ofin ground (a) is particularized as required by Rule 8 (4). Grounds (b) & (c) are complains of how evidence before the trial court was handled in the judgment; these are matters that fall under ground (d) that is the omnibus ground that the judgment is not supported by the evidence on record and therefore can be considered under this ground. I therefore do not find learned counsel for the respondent’s argument that the grounds offend Rule 8 sub rules (5) & (6) sustainable.

 

Counsel further argued that the submissions of counsel for the appellants as contained in the written submission do not support the grounds of appeal.

 

It would be observed from the appellant’s written submission that the style counsel for the appellant adopted in presenting his submissions is a bit haphazard, however the substance of the submissions do support the grounds of appeal. In his reply to the respondent’s submissions counsel for the appellants rectified the challenge hisstyle of presentation posed by marrying the various paragraphs of his arguments to the particular grounds of appeal those arguments support. In the circumstances I do not find any of the technical objections to the grounds of appeal sustainable.

 

This court owes the duty to do justice to the parties that come before it, we will be failing that duty if we emphasize the technical omissions counsel for the appellant made in writing his submissions and dismiss all the grounds of appeal.In substance the grounds of appeal have been sufficiently argued. I will therefore go ahead to determine the appeal on merit.

 

As already stated above grounds (b) and (c) can be considered together with ground (d) because issues raised by these two grounds are issues that obviously form part of the issues to be considered under the omnibus ground.The grounds of appeal therefore, are basically two, grounds (a) and (d).

 

Counsel for the appellant’s argument in support of the appeal are as follows: The plaintiff in her pleadings and evidence did not establish the circumstances known by law where the veil of incorporation could be lifted to hold the 3^rd and 4^th defendants liable for the acts of the 1^st and 2^nd defendant companies. They are shareholders and directors of the company. The defendant companies are separate entities and are responsible for their own acts. The plaintiff having failed to make any averments and having failed to lead any evidence to support the position of holding the 3^rd and 4^thdefendants liable for acts of the company, the court erred in holding the 3^rd and 4^th defendants liable for the acts of the company.

 

The 4^th defendant, counsel argued was joined to the suit solely because he is a shareholder and director of the 1^st and 2^nd defendant companies. From the available evidence the plaintiff cannot sustain any of her claims against the person of the 4^th defendant. In respect of the 3^rd defendant however he could be held liable for claims in reliefs 8 and 9 if the plaintiff succeeded in proving the allegation of sexual harassment.

 

On the award of USD 400,000 to the plaintiff, counsel argued, plaintiff did not discharge the burden of proof expected of her on the said claim. She only repeated her averments in her pleadings in the witness box that the 3^rd and 4^th defendants gave her a promise to pay her $50,000 yearly from the profits of the companies.With the defendants fierce denial that they ever made any such promise to her, the plaintiff bears the burden of leading evidence to establish that such a promise was made, and such a claim is legitimate. The court therefore erred in granting the claim of USD 400,000.

 

Apart from lack of evidence to support the claim, the trial court’s decision to award the USD400,000 claim is in breach of S. 194 of the Companies Code, it is unlawful and not enforceable. A further argument of counsel for the appellants on the claim for USD 400,000is that it is statute barred. Plaintiff alleged the promise was made in 2004 the action was instituted 8 years thereafter. Action for this claim is barred by S. 4 of the Limitation Act, 1972 Act 54. The claim is in further breach of the Foreign Exchange Act, 2006 Act 723.

 

On the Court’s grant of plaintiff’s claim of refund of medical bills and monies paid for repairs and maintenance of official vehicles, counsel argued that these claims are not enforceable because plaintiff failed to put these claims to any specific figure in her pleadings and did not lead any evidence to specify the amount she is entitled to. The order of the court in the judgment is indeterminate and ambulatory and therefore not enforceable.

 

Counsel further argued that the defendant’s evidence on the circumstances under which payment of commission was made to the plaintiff is confirmed by the documents tendered by the plaintiff as D, D1 – D12. And the Court aught not have granted the claim.

 

Counsel for the respondent after raising the technical arguments on the grounds of appeal, unfortunately, did not make any submissions in reply to the arguments presented by the appellants in support of the appeal.

 

Apart from the legal position spelt out in Rule 8 (1) of C. I. 19 that an appeal to this court shall be by way of rehearing; ground (d), which is that the judgment is not supported by the evidence on record places, further duty on this court to analyses the entire record and take into consideration the totality of the evidence adduced at the trial in order to come to a just decision. See Tuakwa v Bosom [2001-2002] SCGLR 61. For the purpose of effective consideration of the evidence on record I will recount the salient points of the evidence of the parties and their witnesses.

 

Plaintiff’s Evidence

According to plaintiff she was appointed as secretary typist to the 1^st Defendant Company and assigned to the managing director, Mr. Lai Malkani who is now deceased. She tendered her appointment letter dated 27^th September 1985 to support this.

 

 Plaintiff said her duties include overall administrative work and other duties the managing director assigned to her. At a point in time she became the personal assistant to the managing director. At the time of instituting this suit she was a senior staff. The 1^st and 2^nd defendant companies later came under one management team headed by her boss, Mr. Malkani,her work load increased as a result. She therefore approached management and requested that her remuneration be increased. Management agreed that the same amount that was paid the sales manager in addition to his salary at the end of every month be paid to her too as her allowance. She tendered Exhibit D, D1-D12 to support this and said payments to her started in 2000but the documents only show payments made from 2003. In 2004 Mr. Malkani died and she was appointed a director of the two companies.

 

Plaintiff further testified that there was a meeting she was called to and informed orally that because of her contribution to the growth of the company she will be given $50,000 per year from the companies’ profit. She will additionally be given air ticket for her vacation like the expatriate staff.

 

In 2006 she went on vacation to Canada the company paid for her ticket in fulfillment of the promise.

 

The $50,000 yearly payment was never fulfilled.

 

In 2010 she put in a request for payment for her air ticket to go on vacation but she was asked to pay for the ticket herself.

 

According to plaintiff at the death of Mr. Malkani, the 3^rd defendant became the head of the management team of the companies and she had to work directly under him.

 

The 3^rddefendant had made sexual advances to her throughout her employment but she had rejected him. This affected her relationship with the 3^rd defendant. The situation worsened when she rejected his proposal to spend time with him on vacation to the USA.

 

She was taken off most of her work schedule. From December 2010 she was no longer paid the sales commission. When she came back from her annual leave in August 2010 the car she used for official duties was withdrawn and sold out.

 

Plaintiff stated that in 2004 the company gave her a car as a gift. When the official car was taken, she started using the gift which is a Honda Accord for official duties. Maintenance of the car and fuelling was taken care of by the company but she was denied that also from August 2010 when she returned from leave. Other directors presented receipts of fuel they had purchased and were given a refund. She was given GH¢250 as fuel allowance.

 

Plaintiff maintained that since the year 2011 the defendants refused to pay the bills for the maintenance of the car she used. She tendered invoices and receipts of bills she personally paid for the maintenance of her car as exhibits G, G1-G6.

 

The defendants, according to the plaintiff have also refused to pay her medical bills though she is entitled to that as a senior staff.

 

Exhibits K, K1-K3 are evidence of plaintiff’s medical bills she maintained she personally paid.

 

 Evidence of the Defendants:

The 4^th defendant in his evidence denied that they ever made any promise to pay the plaintiff $50,000 yearly from the company’s profits. He emphasized that the companies at the time did not declare any dividends to shareholder because they owed banks and their foreign suppliers; it is therefore not possible to give such a promise to the plaintiff.

 

He admitted he deals with the travel agent who takes care of their foreign travels and he arranged the ticket for the plaintiff to travel in 2006 and paid for it personally as a help because the plaintiff had surgery and she was travelling to Canada for further recuperation. He emphasized that it is not the case that the company had given her a promise to buy her ticket every year to go on vacation. He denied that the plaintiff was subjected to discrimination; according to him he had known the plaintiff since he was a child and plaintiff’s relationship with them is more like a family relationship, therefore they could not subject her to any ill treatment.

 

According to 4^th defendant all allowances due to the plaintiff had been paid therefore she is not entitled to any such claims.

 

The 3^rd defendant’s evidence to the court is that he has been the managing director of the 1^st defendant company since 1976. The company itself was established in 1932. The 2^nd defendant company was registered in 1976. The late Malkani was the managing director of the 2^nd defendant company and now the said position is taken over by the 4^th defendant his son. Both companies were running successfully before the plaintiff was employed as typist in 1985 and assigned to work with Mr. Malkani. There was nothing she did that made her an indispensable employee of the company. She performed her secretarial duties and any other duties assigned to her. He is not aware that she became Mr. Malkani’s personal secretary.

 

By the evidence of both the 3^rd and 4^th defendants the commission paid to plaintiff was not as a result of any agreement to pay her an enhanced remuneration. The commission is paid based on sales done by anybody. Those members of staff who receive such commissions are the sales manager, the store keepers and store assistances and anybody who brings a customer. In some cases the commission is paid to the customers who approached the company directly without coming through a 3^rd person.

 

 In the case of the plaintiff, she benefited from the commission payment because of a female customer who came from Burkina Faso. The said customer died and payment to her ceased.

 

The 3^rd defendant denied that they made any promises to the plaintiff to pay her $50,000 yearly.

 

According to the 3^rd defendant the companies are indebted to their suppliers and local banks. They have given an undertaking to the local banks in Ghana not to declare any dividends until the debts are discharged. It is not therefore possible to make any such promise to the plaintiff.

 

3^rd defendant denied that the plaintiff’s director’s allowance from June, July and August of 2010 and September, October, November and December of 2011 were withheld. According to him the allowances of all directors have been paid and all that the plaintiff is entitled to have been paid to her.

 

On refusal to pay the plaintiff’s medical bills, 3^rd defendant denied this claim. According to him the plaintiff has been paid as much as GH¢7, 300 in terms of medical bills. According to the 3^rd defendant the plaintiff once brought a voucher for GH¢150 which had no doctor’s prescription attached. She signed and had collected the money. He confronted her about this and she took offence, she shouted and gave the money back to the cashier and took back the voucher.

 

He tendered Exhibit 4 to confirm that from 2004 – 2007 a total of 73,479, 000 old cedis was paid to the plaintiff in terms of medical bills.

 

On the plaintiff’s claim that the company refused to pay bills on maintenance of the car she uses and that her car and official driver were withdrawn, 3^rd defendant said the plaintiff had the use of two official cars. The one she claims to be a gift to her is not so. That car was registered in the name of the Free Zone Board and the 2^nd defendant company. No custom duty was paid on it; it cannot be transferred to her, or gifted to her. The car therefore was not a gift to her, it was an official car she used. The normal procedure for maintenance of the company’s cars being used personally by a staff is to report the fault, there is an in-house mechanic who attends to official cars of the company. On the other hand they have a particular garage they send their cars to for repairs and maintenance. The plaintiff had not made any request for the maintenance of the car she uses since she started litigating with the company that is, since 2012. She is not entitled to any claims for car maintenance.

 

Though the plaintiff is entitled to one car but she had use of two. She was requested several times to return the second one. When she finally did, the car was found to be faulty so the company decided to sell it off. It is therefore not a case that the plaintiff was being discriminated against.The plaintiff was given the first option to purchase it and she turned it down.

 

Dw1 who said he was given the responsibility to sell the car confirmed these facts about the car that was sold. In cross examination he added that when he was asked to sell the car he enquired from the plaintiff why the car was withdrawn from her and was to be sold and plaintiff told him the car was withdrawn by the company because it was faulty, it was consuming too much fuel and the running cost had become too high. Contrary to plaintiff’s evidence that the car was taken from her on a Friday and by Monday it was sold, DW1 said the car was parked at the premises of the company for about a week, it was sold after the plaintiff turned down the offer to buy it.

 

On the allegation that as part of the acts of discrimination against her, her official driver was withdrawn, 3^rd defendant responded that the company did not withdraw the plaintiff’s official driver. She unilaterally dismissed the driver when she was going on her annual leave. The company has many drivers in the system that could be assigned to her but she would not accept any, rather she wants to engage her own driver. The company has refused to give her permission to do that.

 

Mr.Kamlesh Jha the financial controller of the defendant companies testified on behalf of the defendants. He tendered receipts marked exhibits 10-18 as evidence of fuel allowance of GH¢250 and director’s allowance of GH¢500 per month paid to the plaintiff.

 

These exhibits though tendered as exhibits 10 to 18 during the proceedings, they are marked D10 – D18, this marking is obviously an error on the part of the court clerk who marked the exhibits. The record already has a set of exhibits tendered by the plaintiff marked as ‘D’ series.

 

In proof of their counter claim that plaintiff as director of the defendant companies is involved in a business which is indirect conflict with the defendant companies’ and that this amounts to breach of trust, the defendants called DW4 Jabez Etouah Mensah who said he is a freight forwarder and has been responsible for clearing goods for the defendant companies. He said he did clearing of goods for the plaintiff’s company ‘Buynow’ at the same time. The plaintiff was importing the same goods the 1^st defendant company was importing.

 

Plaintiff admitted she through her private company, Buynow, traded in the same goods as the 1^st defendant company but Mr. Malkani permitted her to do so and her trading activities through the defendant company was well known to Mr.Malkani.

 

In considering the appellant’s omnibus ground of appeal that the judgment is not supported by the evidence on record, I will analyze the reasoning of the trial court on the various issues placed before it to determine the extent to which the evidence placed before the court at the trial supports or does not supportthe conclusions the judge came to in the judgment.

 

The issues determined by the trial court are:

Whether the plaintiff is entitled to the amount of USD 400,000 claimed from the defendants?

Whether the plaintiff is entitled to be paid the arrears of the monthly allowance equivalent to the monthly commission on sales paid to the Sales Manager from December 2010 to date?

Whether the plaintiff is entitled to the refund of all outstanding medical bills and amounts paid for the repair of the plaintiff’s vehicle used for official duties.

Whether the plaintiff has been subjected to sexual harassment by the 3^rd defendant?

Whether the plaintiff has been victimized and discriminated against by the defendants?

Whether the plaintiff is entitled to the reliefs indorsed on the writ of summons?

Whether the defendants are entitled to their counterclaim?

Any other issue arising from the pleadings.

 

It is trite learning that in a civil trial the probative burden lies on the plaintiff who has invoked the aid of the law tofirst prove his/her case to the requisite standard of proof.The pleadings at the beginning of any action, culminating in the issues set down for trial determines the burden of proof, and this burden does not shift; in other words no burden is placed on the defendant to disprove the claims of a plaintiff. See Barima Gyamfi v Ama Badu [1963] 2 GLR 96 SC.

 

The English Courts explained this principle in the case of Pickup v Thames Insurance Co. 3 Q.D.B in the following words: “If, when all the evidence, by whosoever introduced, is in, the party who has this burden (persuasive or probative burden - this inclusion mine) has not discharged it, the decision must be against him.”

 

The same principle is spelt out in section 11 of our Evidence Act, 1975 NRCD323. Section 11 (4) reads:

“the burden of producing evidence requires a party to produce sufficient evidence which on the totality of the evidence, leads a reasonable mind to conclude that the existence of the fact was more probable than its non-existence.”

 

Thus the standard of proof in a civil suit is placed on the ‘balance of probabilities.’Section 12 (2) of the Evidence Act defines it as follows: “Preponderance of the probabilities” means that degree of certainty of belief in the mind of the tribunal of fact or the Court by which it is convinced that the existence of a fact is more probable than its non-existence.”

 

In the case of Rhesa Shipping Co. SA v Edmunds [1985]2 All E. R 712 Lord Brandon cautioned members of the bench in the application of the concept of proof of a case on the balance of probabilities and said: “….the legal concept of proof of a case on a balance of probabilities must be applied with common sense. It requires a judge of first instance, before he finds that a particular event occurred, to be satisfied on the evidence that it is more likely to have occurred than not. If a judge concludes, on whole series of cogent grounds, that the occurrence of such an event is extremely improbable, a finding by him that it is nevertheless more likely to have occurred than not, does not accord common sense. This is especially so when it is open to the judge to say simply that the evidence leads him to doubt whether the event occurred or not, and that the party on whom the burden of proving that the event occurred lies has therefore failed to discharge such burden.”

 

The trial judge in this case I believe fell in to this error when in some circumstances, the evidence on some of the issues shows that the plaintiff failed to discharge the burden of proof and yet plaintiff was given judgment in respect of those claims.

 

The first of the issues considered in the judgment is whether the plaintiff was entitled to an amount of USD400, 000 from the defendant or not.The only evidence produced by the plaintiff on this claim is that, it was a promise given her because of her hard work in the company. In her evidence in chief, she recalled the occasion on which the promise was made to her as follows: she was called into a meeting and was given the promise by the 3^rd and 4^th defendants. In her answerto questions in cross examinationthe narration of events leading to the promise changed; she said she walked into her boss’s office in the morning to say good morning as her custom was and the promise was given her.

 

 The 3^rd and 4^thdefendants in their denial of making any such promise gave two reasons why plaintiff’s allegations that they promised her such an amount is not possible. Firstly,it is against the law. Secondly the company at thattime was not declaring dividends because of its indebtedness to its suppliers and banks. The companies therefore were not in a position financially to pay such an amount to the plaintiff let alone make a promise to pay her that amount.

 

Section 194 of the Companies Act, 1963 Act 179 regulates payment of remunerations to directors.

 

Section 194 (1) to (5) read:

194. (1) “Subject to this section, the fees and other remuneration payable to the directors in whatever capacity, shall be determined from time to time by ordinary resolution of the company, and not by a provision in the Regulations or in an agreement, which provision or agreement is void.

(2) The fees payable to the directors as directors shall be determined from time to time by ordinary resolution of the company and not in any other way.

(3) Where the Regulations of an existing company contain a provision fixing the fees payable to the directors that provision shall continue in operation and have effect until the date of the first annual general meeting of the company held next after the commencement of this Act.14 (15)

(4) Unless otherwise resolved, the fees payable to directors shall be deemed to accrue from day to day and the directors are also entitled to be paid the travelling and other expenses properly incurred by them in attending and returning from meetings of the directors or a committee of the directors or general meeting of the company or otherwise in connection with the business of the company.

(5) Where a director holds any other office or place of profit under the company in accordance with section 192 or 193, the terms of the appointment may provide for the remuneration in respect of the appointment but that director is not entitled to a remuneration additional to the fees to which that person is entitled as director unless and until the terms of the appointment to that office have been approved by ordinary resolution of the company.

 

Subsection one of section 194 of the Companies Act clearly prohibits determination of remuneration of a shareholder by any other means except by ordinary resolution by the company. 

 

If the trial judge in whose bosom the law lies had considered the evidence of the defendants on this issue she would have realized the plaintiff’s claim for USD 400,000 is not permitted by law. Apart from that, the bare assertion by the plaintiff that she was promised such an amount, and not being consistent in her evidence in narrating the circumstance in which the promise was made clearly shows she failed to discharge the evidential burden required of her. The defendants on the other hand gave a more reasonable reason why such a promise could not have been made to her 

 

The trial court clearly erred in awarding this claim. The claim by the plaintiff for USD 400,000 is illegal and unenforceable. The courts would not condone with illegality.

 

The claim for Gh3, 500 as director’s fees

Plaintiff did not adduce any evidence at all to prove this claim. On the other hand the defendants through the financial controller tendered various payment receipts which are exhibits 10 to 17 to demonstrate that plaintiff was paid all her director’s fees and fuel allowances for the months she has indicated in the 4^th relief indorsed on the writThese receipts except exhibits 17 and 18 were challenged in cross examination that they do not bare the signature of the recipient, that is the Plaintiff, therefore she did not receive payments. This argument cannot hold in view of other evidence on record which shows the contrary. Firstly the plaintiff herself has admitted that she has received fuel allowances of GH¢250. Each particular receipt for each month represents payment of GH¢250 for petrol allowance and GH¢500 for director’s fee. She cannot therefore accept receipt of the fuel allowance and deny the receipt of the director’s fee when the same document covers payment of both. Secondly the exhibit D series tendered by plaintiff to support payments she said she received from the defendants as commission have the recipient portion not signed just like the exhibits 10 to 16. It is reasonable therefore to conclude that theunsigned signature portions on the receipts are not certain proof that plaintiff did not receive those payments. For these reasons coupled with the fact that the plaintiff never gave any evidence to support this claim of no specific amount, I consider this claim not proved and should not have been granted by the trial court.

 

The claim for monthly allowance equivalent to the monthly commission on sales paid to the Sales Manager from December 2010 to date

Plaintiff‘s position on this claim is that her workload in the office increased she therefore approached management, that is her employers for an increase in her remuneration. Her employers agreed that she would be paid equivalent of what was paid the sales manager as commission in addition to his salary every month. According to plaintiff she started receiving the said commission from 2000 until 2010 when she was not paid any more. She tendered exhibits D1-D12 to demonstrate that she had received payment ofcommission. Though she said payment started in 2000 the exhibits showed payments from 2003. The Defendants admit that plaintiff was paid some commission but it was not an agreed payment of an enhanced salary or allowance on monthly basis. The evidence of the defendants further explained that the company pays commission to a) store keepers, b)store assistants, c) the sales manager e) anybody who brings a customer to make purchases from the company. To those customers who make purchases from the company without anyone introducing them they pay the commission to them directly. They paid plaintiff commissions as shown by the exhibits because there was a female customer from Burkina Faso whom plaintiff relates with very well, they paid commissions due this customer to plaintiff. The lady customer died and they ceased the payment.

 

A close look at the exhibits plaintiff tendered to support this claim shows that the payments were not a consistent monthly payment. The documents do not show any payment made to her between the year 2000 when she alleged the agreement was reached and 2003. Exhibit D is dated 25^th February 2010; the exhibits D1 to D8 are dated 13^th February 2009,13^th March 2009, 14^th April 2009, 13^th May 2009, 11^th July 2009and 17^th May 2009; D9 to D12 have the following dates: 3^rd February 2003, 11^th March 2003, 10^th April 2003 and 19^th May 2003.What happened to the alleged payments between 2000 and 2008 was never disclosed, leaving a lot of doubts on the plaintiff’s assertions. If in deed she received regular monthly payments of what was paid the sales manager monthly from 2000, then the exhibits she placed before the court in support of that assertion should demonstrate so. The doubt deepened further when she did not plead the specific figure she is claiming under this head. Her alleged woes with the company started in August 2010, the missing link in the alleged payments from 2000 to July 2010 as demonstrated by the dates of the exhibits D, D1 to D12 cast doubt on the veracity of plaintiff’s evidence on this claim.

 

Exhibit A is part of the documentary evidence plaintiff placed before the court.Exhibit A is the Collective Agreement that regulates the condition of service between the 2^nd defendant company and Ghanaian Senior staff of the company of which plaintiff is one. Article 7 of the agreement specifies the procedure the company follows in the award of increment of salary to staff. If the plaintiff alleges that aside the provisions of the collective agreement, she was treated differently in the award of increment in salary,she ought to provide adequate evidence in proof of that.The contents of the exhibit D series rather support the defendants’ assertion and rather makes the defendant’s story a more probable situation. She has woefully failed to prove this claim and not entitled to judgment on this claim.

 

The reason the trial judge gave in granting such a claim is worth quoting: “I am of the view that in the absence of evidence to the effect that the plaintiff did secure a sale to someone in Burkina Faso, it would be well-nigh impossible for the court to accept this version of events. I have seenthe various descriptions of payment made per exhibit D series. In some instances they are described as ‘commission’ and in others as ‘differences.’ Since it was the defendants who were making a positive assertion that the payments were meant to be a commission on sales to a Burkinabe customer they ought to have been able to prove same by some evidence.” This reasoning is erroneous for two reasons. 

 

Firstly it is not a correct statement of the factsas disclosed in the record that the plaintiff secured a sale to someone in Burkina Faso. The evidence on record is that plaintiff was friendly with a lady customer who came from Burkina Faso. Commissions due that lady customer were given to plaintiff because plaintiff was friendly with the said customer.Secondly the view of the trial judge quoted above suggests the shifting of the burden of proof to the defendant to disprove the plaintiff’s bear assertions that she was paid an unspecified amount from the year 2000 and arrears are due her up to 2010. If the plaintiff’s evidence is that the enhanced remuneration she was receiving from 2000 is an equivalent of what the sales manager received as commission, none of the ‘D’ series exhibits gives a clue of how much the sales manager received.

 

The plaintiff failed to produce sufficient evidence to discharge the burden required of her. In fact the explanation the defendants gave for the existence of the exhibit D series is a more probable situation. The trial judge therefore erred in granting this relief and it ought to be set aside.

 

Medical bills

The defendants did not challenge the fact that plaintiff is entitled to refund of medical expenses from the approved hospitals. The defendants exhibited refunds of medical bills the company had made to plaintiff amounting to over GH¢7, 000. Their case is that plaintiff presented bills from drug stores without any doctor’s prescription, it is against the company’s policy to pay such refunds. The defendant’s position is confirmed by article 14 of the Collective Agreement exhibit A, tendered by the plaintiff. Article 14 of the Collective Agreement reads: “The company shall provide or defray the cost of medical attention (including all prescribed drugs only) for all officers at the company’s clinic or any recognized medical establishment specified by the employer. Officers may also attend recognized herbal clinic on the recommendation of a recognized medical practitioner.” (Emphasis mine)

 

Exhibit K tendered by plaintiff has two receipts from First International Clinic plaintiff has not provided any evidence to establish that this clinic is one of the recognized clinics of which her employers are obliged to pay refunds. Exhibits K1, K2 and K3 are receipts from various pharmacy shops, i) Healthcare Company, ii) Matell Chemist, iii) Jinlet Pharmacy and iv) GMG Pharmacy. These receipts do not have any attached prescription from a medical practitioner. Presenting receipts from pharmacy shops without doctor’s prescription does not meet the requirement under Article 14 of the collective agreement that governs the plaintiff’s condition of employment. This is the position the3rd defendant explained to the court for refusing to refund such expenditure on the part of plaintiff.The plaintiff in such a circumstance is not entitled to this heading of her claims. The trial court in its judgment granting this reliefheld as follows: “It would appear from the testimony of the 3^rd defendant that he refused to approve the refund of the receipts of the drugs which he said were without prescriptions. The plaintiff says however, that the receipts emanate from a clinic already approved by the defendants. In going through the evidence I see nothing to the contrary. ……… I hold that the plaintiff would be entitled to a refund of the cost of medical treatment at the clinic approved by the company, as well as the cost of drugs which were purchased with prescriptions from the said approved medical facility.”

 

This holding of the trial court failed to resolve the primary facts on the issue of medical bill refund. That First International Clinic is a clinic approved by the defendant company has not been resolved, that the plaintiff said so without any proof and that the court did not see anything on the contrary in the evidence does not resolve the issue. Exhibits K1, K2 and K3 are receipts from pharmacy shops and have no prescriptions attached, so they do not satisfy the condition for refund. The conclusions the trial judge came to in the above quoted holding does not flow from the facts as presented on the issue.In other words the reasoning that led to this conclusion is missing. Such a holding cannot stand. A judgment that fails to resolve the primary facts in one way or the other which in effect leads to a sound finding of fact and a sound conclusion is a bad judgment which will not survive a test on appeal. The Supreme Court as far back as 1961 established this basic principle in judgment writing when it held per van Lare JSC in the case of Quaye v Mariamu [1961] GLR 93 at page 95 that “It is a trial judge’s duty to make up his mind one way or the other on the primary facts and when he has made up his mind he should state his findings and then proceed to apply the law.”

 

The trial judge failed this duty and therefore the holding on this issue cannot stand.

 

Vehicle maintenance

 

Another grant made in favour of the plaintiff without resolving the primary facts on the issue is the plaintiff’s claim for expenditure on vehicle maintenance.

 

Plaintiff did not specify any amount as her expenditure in maintaining the official vehicle she used. She however tendered very many invoices and payment receipts froma company calledThe Honda Place as her expenditure on the official vehicle she used. The defendants’ on the other hand have maintained that the defendant company repairs its official cars at specific garages and pays for the maintenance; a staff using a company car that needs maintenance puts in a request and the company takes the necessary action. The defendants’ position is that since 2012 when plaintiff decided to come to court, she refused to make request for the maintenance of the official car she used.The defendants further gave evidence which is supported by receipts that plaintiff receives GH¢250 as fuel allowance. The defendants strongly resisted the allegation that other members of staff receive refunds of any amount of fuel they consume upon producing the receipt and in paragraph 37 of the statement of defence maintain that the company cannot afford that kind of policy, it would be an irresponsible corporate policy. The plaintiff therefore has to strictly prove what she alleged on this issue.Plaintiff however did not produce any evidence to back her bare assertion that other members of staff are treated differently in terms of fuel allowance.

 

The invoices from the Honda place plaintiff tendered are indeed all dated 2012. Plaintiff still works with the defendants. The court did not give any consideration to the evidence of the defendants as stated above but granted the relief without stating how much the plaintiff is entitled to under this heading. In fact for the claim of commission, medical bills and the vehicle maintenance plaintiff never specified the amount she is claiming not in her pleadings nor evidence. If the court decided to award these claims, it should have specified the specific amounts it found the plaintiff to be entitled to, based on the receipts she tendered. The entry of judgment filed by the plaintiff upon getting judgment from the court below is part of the record, the failure of this duty on the part of the trial court has resulted in the plaintiff awarding herself various sums of money under the various headings and even introducing new reliefs that the court never granted. We frown on the entry of judgment forming part of the record before us.

 

Plaintiff’s claims for refund of medical bills and vehicle maintenance are claims in the nature of special damages which ought to be pleaded and particularly proved.

 

See the case of Delmas Agency v Food Distributor Int. [2007-2008] 2SCGLR 748 where the Supreme Court in holding 3 of the report page 749 held thus: ….. “Where the plaintiff has suffered a properly quantifiable loss, he must plead specifically his loss and prove it strictly. If he does not, he is not entitled to anything unless general damages are also appropriate.”

 

The plaintifffailed to plead these claims let alone adduced sufficient evidence to prove that she is entitled to them, she is not entitled to anything on these claims.

Victimization and discrimination

 

Plaintiff’s claim for compensation for victimization and discrimination came under relief 9 of her indorsement on the writ of summons this relief was dismissed in the judgment of the trial court. Irrespective of that, relief 10 which is “an injunction to restrain the defendants from victimizing and discriminating against the plaintiff” was granted. The finding of the court in concluding that she was discriminated against and victimized is based on her allegations that she was not paid medical expenses, her official car was withdrawn and sold, commission payments equivalent to the sales manager’s commission were stopped, payment of fuel allowance to her was limited while other senior staff were paid unlimited amounts and that her work schedule was withdrawn. In this judgment we have found that the allegation that she was unjustifiably denied the various benefits numerated above except the withdrawal of work schedule have not been proved. The evidence on record do not support the conclusion the trial judge came to. The evidence on record in respect of the said claims rather tilts the scale of justice in favour of the defendants. In the circumstance plaintiff’s relief 10 granted by the trial court ought to be set aside.

 

In respect of the plaintiff’s complaint that she was taken off certain work schedule, the defendant’s evidence has it that plaintiff has access to sensitive information of the company. That the company should keep her on the schedule that give her such access depends on the working relationship she has with her employers and the degree of trust her employers have in her. What jobs she is assigned to is purely administrative and the court cannot without justifiable cause interfere in how the defendant companies are run.

 

Holding the defendants jointly and severally liable for plaintiff’s claims.

It is the appellants’ position that the plaintiff failed to plead any situation that allows the court to go behind the corporate veil and hold the officers of the company liable for the company’s acts. Plaintiff further failed to adduce any evidence in proof of such a situation. The trial court therefore erred in holding the officers of the company liable for the claims in this suit.

 

The indorsement on plaintiff’s original writ of summons and the amended writ of summons begin as follows: “The plaintiff’s claim jointly and severally against the defendants is for: ...……” the claims were them numerated.

 

In Paragraph 5 of the statement of claim plaintiff averred as follows: “The 1^st and 2^nd defendants are limited liability companies registered under the laws of Ghana, while the 3^rd and 4^th defendants, who are foreigners, are the managing directors of the 1^st and 2^nd defendant companies.”

 

In Paragraph 42 of the statement of defence, the 4^th defendant denied any personal liability to the plaintiff’s claims. The averment of the 4^th defendant in the said paragraph reads: “In his general defence of the suit 4^th defendant contends that he has never maintained or related with the plaintiff at the personal level and maintains only professional and work relations with her and that all interactions he had had with plaintiff has been done for and on behalf of the 2^nd defendant company of which he is the managing director and denies any personal liability to plaintiff as averred in the statement of claim and endorsed on the writ of summons.” Plaintiff in paragraph 13 of her reply deny the above quoted averment by the 4^th defendant. Issues were therefore joined between the parties on the liability of the 3^rd and 4^th defendants for the acts of the defendant companies. It is therefore required of the plaintiff to adduce evidence to establish that the 3^rd and 4^th defendants are personally liable for all her claims. The sexual harassment claims are personal acts of the 3^rddefendant and he could be held liable personally for that. However all other claims of plaintiff’s are related to her relationship with the 1^st and 2^nd defendant companies as her employers.

 

 It is trite learning, and it is basic to company law that a company is a legal entity separate from its officer, it can sue and be sued. See the case of Solomon v Solomon [1897] AC 22. Section 24 of our Companies Act, 1963 Act 176 gives the statutory position of the capacity of a company. It is only in some specific circumstance that the court may go behind the corporate veil to hold the officers liable. The Supreme Court in the case of Morkor v Kuma (N0 1) [1999-2000] 1 GLR 721 SC. Emphasized this principle and discussed some of the circumstances in which the court may pierce the corporate veil and hold officers of a company liable for the company’s acts. The Supreme Court per Sophia Akuffo JSC (The Honourable Chief Justice presently) held 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 this capacity a company is a corporate being, which, within the bounds of the Companies Code, 1961 (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 a capacity separate, independent and distinct from the persons constituting it or employed by it. From the time the House of Lords clarified this cardinal principle, more than a century ago, in the celebrated case of Salomon v Salomon &Co [1897] AC 22, HL it has, subject to certain exceptions, remained the same in all common law countries and is the foundation on which our Act 179 is grounded.”

 

The Morkor v Kumah case numerated some of the circumstance in which the corporate veil may be lifted as: i) where it is shown that the company was established to perpetuate fraud. See the case of Re Darby, Ex Parte Brougham [1911]1 KB 95. ii) The veil may also be lifted to prevent deliberate evasion of contractual obligation.

 

The case of Jones v Lipman [1962] 1 All ER 442 illustrates this. The defendant contracted to sell a piece of land to the plaintiff; he then formed a company for the purpose of conveying the land to the company to put the land beyond an order of specific performance. Plaintiff sued for specific performance and the court granted the order against the defendant and his newly formed company.

 

Though this action is brought jointly and severally the plaintiff failed to demonstrate, neither in the pleadings nor in the evidence that any of the circumstances allowing the lifting of the veil exists and therefore the court should ignore the corporate veil and hold the 3^rd and 4^th defendants, officers of the defendant companies jointly and severally liable for plaintiff’s claims.

 

Irrespective of the absence of any such evidence the trial court decided to lift the corporate veil and declared the 3^rd and 4^th defendant jointly and severally liable for the claims of the plaintiff which are based on the acts of the company in the course of plaintiff’s employment with the company.

 

The trial judge clearly misapplied the law on lifting of corporate veil. The records do not disclose any circumstance that warrant the lifting of the veil to hold the 3^rd and 4^th defendants liable for the defendant companies’ acts.

 

Counter Claim

 

The trial court dismissed the defendants’ counter claim in its totality. In this appeal the appellants are praying that, that decision be overturned and the reliefs in their counterclaim granted.

 

In respect of reliefs 3, 4, and 5 of the counter claim, which are: anorder restraining plaintiff from perpetrating further unlawful acts against the defendant companies, Damages for breach of trust and confidence and, general damages,I do not find sufficient evidence in proof of breach of trust and confidence by the plaintiff; the defendant therefore cannot succeed on their prayer for damages. Similarly there is no proof that the plaintiff has perpetrated any unlawful acts against the defendant companies. The 3^rd, 4^th and 5^th reliefs of the counter claim are hereby dismissed.

 

Reliefs 1 and 2 are prayers for an order of perpetual injunction torestrain plaintiff from using the defendants’ official business address for her private and personal business; using and privately benefiting from defendants’ trade secrets and valuable commercial information.

 

The plaintiff had admitted that she formed a company, Buynow and was trading in the same goods the 1^st defendant company trades in. She was getting her supplies from the 1^st defendant company’s supplier as well.Mr.Jabez Mensah’s evidence on behalf of the defendants confirmed this. He added that he is a freight forwarder and he took care of clearing goods imported by the defendant companies and the plaintiff’s company Buynow. He testified further that payment for duties and other bills for services in the harbor for the defendant companies and Buynow were treated together and settled by Mr. Malkani (deceased). He confirmed plaintiff’s evidence that whatever business Buynow carried out through the defendant companies was known to Mr. Malkani.

 

Mr. Malkani is deceased and it is obvious from the evidence and the defendant’s counter claim that the present management of the defendant companies is not ready to accord the plaintiff the favours Malkani gave her by allowing her to trade through the defendant companies.

 

It is just in the circumstances to grant reliefs 1 &2 of the counter claim and order that the plaintiff be restrained perpetually from using the defendants’ official business address for her private and personal business and to cease to benefit privately from defendants’ trade secrets and valuable commercial information and we do so hereby order.

 

For the above stated reasons we deem it fit to uphold the appeal.

 

The appeal succeeds, all reliefs / awards granted in favour of the plaintiff respondent by the High Court are hereby set aside.

 

Cost of GH¢10, 000 is hereby awarded in favour of the defendants / appellants.

 

SGD

 

AGNES M. A. DORDZIE, (MRS)

 

(JUSTICE OF APPEAL)

 

 

 

SGD

 

 

 

GYAESAYOR, J.A.        I agree                      P. K. GYAESAYOR

 

(JUSTICE OF APPEAL)

 

 

 

TANKO AMADU J.A:

I am in full agreement with the reasoning and conclusions arrived at by my Learned Senior sister in this judgment that this appeal must succeed and the judgment of the Court below set aside as ordered in the lead judgment.

 

I however, wish to add further reasons in support of the lead judgment with respect to the Respondent’s claim for Director’s allowance and for and the claim of (U$D 400,000.00) both of which the Court below granted.

 

In paragraph 2 of the Plaintiff/Respondent’s statement of claim (page 4 of the record), the Respondent averred that she is “Secretary and Director of each of the Defendant Companies”.

 

At page 696 of the record, the Court below in setting out the reliefs sought by the Respondent stated the claim for directors fees in “the sum of Gh₡3,000.00, being unpaid amount due to the Plaintiff as directors allowance for the months of June, July, and August in the year 2010 and for the months of September, October, November and December 2011”.

 

At page 354 of the record, the Respondent had claimed in relief (3) of the amended writ for “an order that the Plaintiff’s monthly allowance of Gh₡500.00 as Director for the two Defendant Companies be paid” and in relief (4) she claimed:

“The sum of Gh₡3,500.00 being the unpaid amount due to Plaintiff as director’s allowance for the months of June, July and August in the year 2010 and for the months of September, October, November and December 2011”.

 

The Respondent further claimed the sum of Four Hundred Thousand United States Dollars (U$D 400,000.00) which per paragraphs 19 and 24 of the Plaintiff’s statement of claim is the result of a claim for (U$D 50,000.00) per year from 2004. Significantly nowhere in the Respondent’s pleading nor the evidence adduced at the trial was there any indication that the provision in Section 194(1) of the Companies Act 1963 (Act 179) was complied with in the commitment by the Appellant companies to pay the Respondent allowances as a director and the sum of U$D50,000.00 compensation per year as awarded by the Trial Court. 

 

In the judgment appealed from, the Court below held as follows:

“I will conclude in granting all the reliefs sought by the Plaintiff except reliefs, 1, 2, 3, 8 and 9”.

 

By inference therefore, the Trial Court granted relief 4 as per the endorsement of reliefs in the writ which was adopted per paragraph 39 of the Respondent’s statement of claim (page 9 of the record).

 

 The award by the Court below of director’s allowance to the Respondent as well as the award of the total sum of (U$D400,000.00) based on a purported oral agreement between the Appellants and Respondent are clearly in violation of the statutory provisions of the Companies Act 1963, Act 179 and I shall demonstrate why.

It is provided under Section 194 of the Companies Act 1963 (Act 179) as follows:-

 

“SECTION 194 - REMUNERATION OF DIRECTORS:

(1) Subject as hereinafter provided in this section, the fees and other remuneration payable to the directors in whatsoever capacity, shall be determined from time to time by ordinary resolution of the company, and not by any provision in the Regulations or in any agreement, which provision shall be null and void.

(2) The fees payable to the directors as such shall be determined from time to time by ordinary resolution of the company and not in any other way.”

 

 The Supreme Court has interpreted the above provision judicially by holding that the payment of remuneration in violation of Section 194 (1) and (2) of Act 179 is unlawful. In the case of QUARCOOPOME VS. SANYO ELECTRIC TRADING CO. LTD & ANOTHER [2009] SCGLR 213, the issue on appeal before the Supreme Court was whether the Plaintiff’s claim for the payment of his unpaid remuneration was maintainable and if so, whether it was to be considered on quantum meruit or in accordance with section 194(1) and (2) of the Companies Act, 1963 (Act 179).

 

The Supreme Court held that under the provisions of section 194(1) and (2) of the Companies Act, 1963 (Act 179), the fees or other remuneration payable to directors of a company were to be determined by ordinary resolution of the company and not by any provision in the company’s regulations or in any other agreement. Any such provision therefore would be null and void. In the instant appeal, there being no evidence from the record that an ordinary resolution was ever passed by the two Appellant Companies, the Trial Judge erred in deciding to order payment to the Respondent for services purportedly rendered to the Appellant Companies. The said award is in violation of the provisions of Sections 194(1) and (2) of the Companies Act 1963 (Act 179) and is tantamount to an usurpation of the functions of members of the second Defendant company which is a requirement of statute and is binding on the Trial Court and this court.

 

In the instant appeal, it is evident that the Trial Judge failed to apply the effect of the said statutory provisions in evaluating the Respondent’s entitlement to director’s allowance and the purported promise of (US$50,000) annually which resulted in the award of (U$D400,000.00) per relief 5 of the amended writ of summons. I have thoroughly examined the record particularly the evidence adduced at the trial and I find no proof that there was an ordinary resolution allocating Five Hundred Ghana Cedis (GH¢500.00) monthly as directors’ allowance and a further Fifty Thousand US Dollars (US$50,000.00) as bonus payable yearly to the Respondent. I have no doubt that these reliefs granted by the Trial court are in clear breach of the mandatory provisions of Sections 194(1) and (2) of the Companies Act 1963 and they ought to be set aside.

 

Granted that the evidence of the Respondent to the effect that the Appellants made an unequivocal promise to pay her a bonus of Fifty Thousand US Dollars (US$50,000.00) or that she had in the course of her dealing with the Appellants received payment of Five Hundred Ghana Cedis (GH¢500.00) as director’s allowance, the position of the law is that the Respondent ought not be entitled to the said payments at all since the arrangements between the parties were in violation of the mandatory statutory provisions of the law. To that extent the provision of Section 26 of the Evidence Act 1975 NRCD 323 is not applicable. In the case of ZAGLOUL REAL ESTATES CO. LTD (NO.2) VS. BRITISH AIRWAYS [1998-99] 2 GLR 428Acquah JSC (as he then was) had this to say at pages 446 and 447 about contracts made in violation of statute:

“To permit the defendants to be paid the present cedi equivalent of ¢40 million will amount to legitimizing the dishonest device contrived by the defendants in the deed of indemnity to defeat the mandatory provisions of PNDCL 150. The argument that equity will not allow the plaintiffs who had the ¢40 million since 1986 to refund only that sum is misconceived, as equity cannot be invoked in aid of an illegal transaction, and will indeed refuse to grant specific performance of such an illegality: See EWING VS. OSBALDISTON (1837) 40 ER 561; & HOPE VS. HOPE (1857) 44 ER 572.Equity certainly abhors illegal transaction like the dishonest device contrived in the deed of indemnity, and will therefore not condone the granting of any relief in the form of a payment of the present cedi equivalent of the ¢40 million in 1986, to the defendants, the architects of the said device. It is clear therefore that the order of the Court of Appeal directing the issue about the refund of the ¢40 million to be retried at the High Court would in effect be legalizing this illegal device. And a court of law cannot lend its aid to such a device. For the deed being illegal, the maxim, ex turpicontractuactio non oritur (no cause of action arises from an illegal contract) applies. Obviously, if the Court of Appeal had reflected on the illegal nature of the deed of indemnity, no order of retrial in respect of the ¢40 million would have been made.”

 

 The purported arrangement to pay the Respondent Fifty Thousand US Dollars (US$50,000.00) annually even if such an arrangement was reached between the Appellants and the Respondent at all, would have been done in contravention of the mandatory provisions of the Companies Act and this Court will certainly not endorse such an illegal transaction. Consequently, the Court below fell in error by failing to apply the mandatory provisions of the Companies Act 1963 (Act 179) which the courts are otherwise bound by.

 

In the unanimous decision of the Supreme Court in the case of REPUBLIC VS. HIGH COURT (FAST TRACK DIVISION) ACCRA, EX-PARTE NATIONAL LOTTERY AUTHORITY, (GHANA LOTTO OPERATORS ASSOCIATION & OTHERS INTERESTED PARTIES [2009] & OTHERS SC GLR 190 the court speaking through Date-Bah JSC held at page 402 of the report inter alia that “No Judge has authority to grant immunity to a party from the consequently of breaching an Act of parliament” while Atuguba JSC who delivered the lead judgment of the court held inter alia on the rubric “The courts and legislation” that “it is communis opinio among lawyers that the courts are servants of the legislature, consequently, any act of a court that is contrary to a statute such as Act 722 Section 722 Section 58(1)(3) is, unless otherwise expressly or impliedly provided a nullity…………….”

 

The award of the director’s fees and the total sum of (U$D400,000.00) to the Respondent the latter being sum allegedly founded on an oral arrangement between the Respondent and Appellants having been made in contravention of the provisions of Sections 194 (1) and (2) of the Companies Act 1963 (Act 179) are null and void and consequently set aside.

 

For this and the fuller reasons already read by my learned sister, I agree that this appeal must succeed and the judgment of the Court below set aside as ordered in the lead judgment.

 

 

SGD

 

I. O. TANKO AMADU

 

(JUSTICE OF APPEAL)