IN THE SUPERIOR COURT OF JUDICATURE
IN THE COURT OF APPEAL
KUMASI - A.D 2017
F. N. OPPONG & COMPANY LTD. - (Plaintiff/Appellant)
SETHI MANUFACTURING COMPANY LTD., NANA ADU MENSAH ASARE AND THE LANDS COMMISSION - (Defendants/Respondents)
DATE: 30TH NOVEMBER, 2017
SUIT NO: H1/06/2017
JUDGES: AYEBI J.A. (PRESIDING), TORKORNOO (MRS) J. A., DOMAKYAAREH (MRS) J. A.
SEAN POKU COUNSEL FOR PLAINTIFF /APPELLANT
GODWIN ADJEI GYAMFI COUNSEL FOR DEFENDANTS /RESPONDENTS
TORKORNOO (MRS), J.A.
On 8th January 2015, the Appellant Company commenced this action against three
Defendants for the following claims:
1. A declaration that there is no binding contract between the Plaintiff and the 1st Defendant from the sale of Plot Nos. 16 and 20 Block A’ Asokwa Industrial Area, Kumasi.
2. Further or in the alternative a declaration that the Plaintiff was and is entitled to withdraw from the transaction to sell the said plots of land to the 1st Defendant.
3. A declaration that the 2nd Defendant has no right to demand and/or collect money from the Plaintiff as it is the office of the Administrator of Stool Lands which has the right under the constitution to do so, and that any such act is null and void and of no effect.
4. An order for the return of the GH¢1,200,000.00 to the 1st Defendant.
5. An order for recovery of possession.
6. An injunction to restrain the 1st Defendant whether by itself, its servants or agents or otherwise, howsoever from entering or remaining on or continuing in occupation of the said land.
7. An injunction to restrain the Defendants whether by themselves, their agents, or other-wise, howsoever from interfering with the quiet enjoyment of the Plaintiff’s said land.
9. Interest on the amount of such damages that this honourable court will award against the 1st Defendant.
In the Statement of Claim, it alleged that the 1st Defendant/Respondent (hereinafter referred to as Respondent) had shown an intention to buy its plots numbers 16 and 20 Block A Asokwa Industrial Area in Kumasi (the land). The Respondent had brought a search report from the 3rd Defendant which indicated that the lease on the property had expired, which was not true because the lease was actually due to expire on 31st May 2060.
The Appellant said that acting on the faith of this representation about the expiration of the lease, some of the Appellant’s shareholders signed a document prepared by the Respondent for the renewal of the lease. Gh¢1 million was to be paid to the 2nd Defendant and GH¢200,000 to the Respondent’s lawyer to effect the purported renewal of the lease
The case of the Appellant is that the search document was negligently prepared by the 3rd Defendant, and the content of alleged expiry of the lease was false, untrue, inaccurate and misleading.
After consultation between the Managing Director of the Appellant, and its lawyers, the Appellant took steps to demand that the money paid out for the renewal of the lease be returned to the Respondent. The complaint of the Appellant is that though there was no contract of sale yet over the property, the Respondent took steps to forcibly enter the premises and start developing the property, including causing some damage to the existing property. This is what precipitated the action and claims listed above.
It was the case of the Appellant that the alleged document of transfer was a Memorandum of Understanding signed by its shareholders and it cannot bind the company because it was not executed by the directors of the company. Further, the signature of one of the shareholders who was outside Ghana at the time of signing was not notarized. Third, the 2nd Defendant has no right as a Chief to collect money from the Appellant to renew a lease. Fourth, even if the lease had expired, which was denied, it is the office of the Administrator of Stool Lands which is mandated under the Constitution to take monies for such a purpose and to distribute same in certain proportion to the Chief, Traditional Authorities, and District Assembly. Thus any receipt of money by a Chief is void.
After this Statement of Claim, the Appellant applied to the court for an injunction to restrain the Respondent from entering or remaining on the land in dispute. The court granted the injunction on 12th January 2015 for a limited period of ten days.
While the limited injunction was still in effect, Appellant’s counsel filed an application for contempt against one C S Sethi and Arvinder Singh on 16th January 2015. The essence of the application for contempt was that they had flouted the orders of the court by moving containers and equipment on to the property.
Before this application for contempt was heard and after entering conditional appearance by a counsel, Respondent applied through its counsel on the same 16th January 2015 to set aside the writ as incompetent and incapable of invoking the jurisdiction of the court, on the ground that the action violates the mandatory provisions of the Companies Act 1963 Act 179. He also sought to restrain the Appellant counsel by himself or through his chambers from taking any further step on behalf of the Appellant except in defence of the application.
Two affidavits were filed on 16th January 2015 at 11.50 am in support of this application. The first affidavit was sworn to by the Managing Director of the Respondent company called Arvinder Singh. As against the competency of the Writ, the affidavit alleged that in the Statement of Claim supporting the action, the Appellant had averred that the Managing Director of the Appellant company was outside the country, and had been outside the country when the transaction it sought to set aside was purportedly entered into by shareholders. The Respondent urged in paragraph 7 of the affidavit that ‘in the circumstances aforesaid, any claim in respect of the rights and interest of the company arising from the contract as per the said ‘Managing Director’ is not enforceable by action or any legal proceeding.’
The affidavit went on to claim in paragraph 8 that the deponent was advised that this disability to enforce the transaction could only be removed by a court ‘on stated conditions upon an application by the company,’ and that the company did not seek to remove this disability before commencing the action and so the writ is incompetent. He concluded his depositions on this matter by saying that he was advised that since this disability sins against a statute, the jurisdiction of the court cannot be invoked, hence the incompetence of the action.
As against the Appellant counsel, the deponent urged in paragraph 12 that ‘there is an affidavit sworn to by one Nigel Egyir-Yaw a shareholder and director of the Plaintiff company to the effect that the ‘Managing Director’ referred to by the writ of summons has been outside of Ghana for period of over two years continuously and that in his absence, the other directors appointed Mr. Egyir-Yaw to manage the Plaintiff company’.
He went on to say that in this affidavit, Mr. Egyir-Yaw is saying that he never instructed the Appellant counsel to institute this action and that the other directors and shareholders had not taken any decision at any meeting to instruct Appellant counsel to institute the action on behalf of the company.
Again this affidavit had stated that neither this Mr. Egyir-Yaw in his capacity as Managing Director nor any director of the Respondent had met to appoint one Donovan Addai who swore to the affidavit in support of the application for injunction which the court had granted.
The paragraph 16 said ‘in the circumstances, it is clear that E.N. Poku Esq. appears not to have the authority of the Plaintiff company to institute this action in the first place’.
He concluded by saying that he had been advised and believed same to be true that in the circumstances, the court can restrain E.N. Poku from purporting to act on behalf of the Plaintiff company until he satisfies the court that he indeed has the authority of the Plaintiff company to so act for it.
The second affidavit was sworn to by Nigel Egyir-Yaw. He deposed to the averment that he is the Managing Director of the Appellant company and became Managing Director when the Managing Director called Osei Kwame Addai left Ghana to reside in the United States of America for a period of more than 6 months in the year 2012. He said that as a result of this, the debts and liabilities of the Company were being visited on the other directors of the Plaintiff company. He alleged that the said Osei Kwame Addai had remained outside Ghana for a continuous period of over two and half years. He set out several debts and situations he had had to deal with in his capacity as Managing Director of the Appellant company. He said that it was in his position as Managing Director that he looked for the Respondent who was minded to acquire the Plaintiff’s premises and that in his capacity as Managing Director, he had not instructed E N Poku to institute the present action on behalf of the company. He also deposed to a fact that there had not been any meeting of directors and shareholders at which a decision had been taken to instruct E. N. Poku to institute the action as Donovan Addai had claimed in his affidavit supporting the injunction application.
On 27th January 2015, one Akosua Acheampomaa Addai also filed an affidavit swearing that she is a director and shareholder of the Appellant company. She said she had been shown a copy of Nigel Egyir Yaw’s affidavit and that he is not the Managing Director of the Appellant Company. She claimed that he had never been appointed Managing Director ‘by us’ and neither had Osei Kwame Addai been removed or dismissed as Managing Director of the company. She attached copies of minutes of the company in support of her averment that Osei Kwame Addai had been Managing Director since 2006. Then she made the following statements in paragraph 5 to 9 of the affidavit which I find significant so I will set out in extensor here;
‘5. That Mr Osei Kwame Addai has not moved to the US to reside there. He left to the US after the operations of the Company have been stopped, and the workers have been laid off. He went there for medical check-up, and to visit his family.
6. We decided to sell the property, the subject matter in dispute, so as to pay off all the Plaintiff’s indebtedness, and to relocate to a smaller place to reduce our running cost.
7. That lawyer E.N. Poku of Poku Nyamaa & Associates has been the company’s lawyer since 1995 when my brother Dr K Appiah Poku was the Managing Director and he is still the company’s lawyer.
8. That he has been instructed to handle this matter including the court case and has been informing us accordingly.
9. That I am indeed surprised and overwhelmed that Nigel Egyir Yaw (a shareholder) of the Plaintiff company should connive with the 1st Defendant to cheat on the owners of the company’.
On the same 27th January 2015, Donovan Addai also waded into the matter on hand with an affidavit in opposition. He swore in paragraph 3 that the application is incompetent, unmeritorious, an abuse of the court process and brought in bad faith and same ought to be dismissed with heavy costs.
He claimed that the Respondent is aware that the Appellant company has instructed the company’s solicitors Poku Nyamaa & Associates to deal with the matter. He set out meetings that officers and representatives of the Appellant and Respondent had been having on the transaction of selling the company’s property and said the meetings were in the office of E.N. Poku. Further, the meetings were attended by the Respondent represented by Singh, and its lawyer, and the Appellant was represented by himself, Nigel Egyir Yaw and their lawyer E.N. Poku. He claimed that they reported the results of these meetings to the Appellant’s Managing Director Osei Kwame Addai. He claimed that it was when the negotiations broke down that ‘our lawyer’ commenced this action. He claimed that Nigel Egyir Yaw was removed as Managing Director in 2000 when he ran the business down and that he does not constitute part of the management of the company. He went on to depose to facts about Osei Kwame Addai being majority shareholder with 45% of the company, his having travelled to the US for health check-up, his having stopped operations of the company and laying off workers before he left for the US.
Edwin Poku also filed an affidavit confirming his being a lawyer of the company since 1995 and supporting the averments of Akosua Akyeampong Addai and Donovan Addai. He attached several documents.
Now on 4th February 2015, the application for contempt was heard by the High Court. Respondent’s counsel raised a preliminary objection to E.N. Poku being heard on the application for contempt because of the application to restrain him from acting as counsel for Appellant filed on 16th January 2015. The court upheld the preliminary objection with these words ‘In my opinion it will be necessary for the motion to restrain the current lawyer for the Applicant Mr E N Poku and his law firm from representing the Applicant to be heard and disposed off before the contempt application now before this court is heard. Case is adjourned sine die’. This is how the application for contempt was held in abeyance.
On 9th February 2015, the application to strike out the writ was heard. After extensive arguments which were copiously repeated in the ruling, the ruling of the trial judge on the first point of striking out the Writ went thus:
First he set out Sections 189 (3) and (4) of the Companies Act 1963 Act 179, and then asked himself the question ‘The question is did the Plaintiff comply with this provision before instituting the instant action’. He went on to answer with these words:
‘There is evidence before me that as at the time the contract the Plaintiff is seeking to set aside was entered into, the Managing Director of the Plaintiff Company was resident and still resident in the United States of America. This clearly depicts that before the Plaintiff could seek a relief under the contract they are obliged to go to court and demonstrate to the satisfaction of the court that they have a good reason to institute the action. The court if so satisfied would then grant them leave to institute the action. There is no evidence before me that the Plaintiff complied with section 189 (3) and (4) a stated supra before instituting the instant action’
He cited some cases and arguments then went on to say:
‘Critically examining the components of Section 189 (3) and (4) (a) of Act 179, it is my considered view that looking at the circumstances of this case where this court was for instance not even told the exact number of directors the Plaintiff company has, I hold that the Plaintiff should have first come to court and demonstrated to the satisfaction of the court that they have a just cause to seek for redress against the 1st Defendant/applicant and not go to court as of right. In the circumstances, I hold that the Plaintiff failed to comply with Section 189 (3) and (5) a stated supra as required of them…..On this ground and as earlier discussed by this court I hereby set aside the writ of summons per the reason that same is null and void’. He added that the principle in the case of Mosi v Bagyina 1963 1 GLR 337 applies in this case.
Concerning Mr. Poku being restrained as counsel for not having authority to act for the Appellant, he started his evaluation by quoting Order 4 rule 1 (2) (not Order 4 rule 2) of CI 47 which reads:
‘A body corporate shall not begin or carry on proceedings except by a lawyer, unless permitted to do so by an express provision of any enactment’.
Again, the trial judge went on to ask himself ‘the question is, is E.N. Poku Esq clothed with the requisite authority to represent the Plaintiff in this suit’
He said that ‘it is the case of counsel that he derives his authority from Osei Kwame per Exhibit ENP3 to represent the Plaintiff in this suit. He continued that Exhibit D1 also authorises Dovan (sic) Addae to represent and prosecute the Plaintiff’s case in court’.
He then went on to analyse the said exhibit ENP3 and said that after critically analysing it, he found the components clear, concise and specific in the term that it only authorises learned counsel to represent the interest of Osei Kwame Addai as Managing Director of the company in relation to the sale of the Plaintiff company. It never authorised him to represent the company in the instant suit.
Regarding exhibit D1, he said it was commissioned on 20th January 2015 and the writ was issued on 8th January 2015. He then went on to refer to the earlier application for injunction which was different from the application he was being called to rule on and said ‘Per the affidavit attached to the application for Interim Injunction, Dovan Addae positively swore that he was the one who authorised E.N. Poku Esq to institute the instant action on behalf of the Plaintiff.’
He concluded by saying that ‘I hold that per Exhibit D1, Dovan Addae had no legal authority to have instructed Counsel to institute the said action since Exhibit D1 became legally effective on the day of the commissioning which was 20th January 2015.
He went on to point at a Power of Attorney dated 2nd January 2015 (found on page 71 of the Record of Appeal) and said it seeks to authorise E.N. Poku to institute the instant action on behalf of the Appellant and that counsel also relies on this Power of Attorney. After remarking that it is not marked for easy reference, he said that this power of attorney seeks to restrain Nigel Egyir Yaw from acting as Managing Director of Appellant counsel.
According to the trial judge, the affidavit of Nigel Egyir Yaw in which he seeks to say he is the Managing Director is dated 16th January 2015 while this unmarked power of attorney which seeks to restrain him from acting as Managing Director is dated 2nd January 2015. He went on to say that while Donovan Addai swore he was the one who appointed Learned Counsel to represent the Appellant, counsel also contends he was appointed per a Power of Attorney by Osei Kwame Addai. He concluded that the said Power of Attorney seeks to appoint E.N. Poku as an attorney and counsel for the Appellant at the same time. It was his opinion that ‘As counsel for the Applicant put it, the said Power of Attorney was back dated to clothe E.N. Poku with authority to represent Plaintiff in this case and it was not genuinely procured. In the circumstances, I hold that learned counsel E.N. Poku esq. has no authority to represent the Plaintiff in this case and accordingly restrain him from doing so per the reason that he cannot be an attorney and counsel for the Plaintiff company at the same time.’
It is this ruling that has been appealed on the following grounds.
Grounds of appeal
a. The learned trial judge did not properly construe section 189 of the Companies Act 1963, Act 179 in the context of the whole statute, that is Act 179.
b. The learned trial judge did not exercise his discretion judiciously when he refused Plaintiff’s application to put a certain Nigel Egyir Yaw in the witness box for cross-examination having regard to the compelling evidence that Osei Kwame Addai is the Managing Director of the Plaintiff Company and not the said Nigel Egyir Yaw.
c. That the learned trial judge did not exercise his discretion judiciously when he restrained the Plaintiff’s lawyer from acting for the Plaintiff company when no evidence was taken to determine his authority.
d. The learned trial judge erred by declaring that the power of attorney executed by the Managing Director of the Plaintiff Company, and notarised in the United States of America was backdated taking evidence on that.
e. The trial judge decision granting the 1st Defendant application for setting aside Plaintiff’s writ, and restraining lawyer E.N. Poku from acting for the Plaintiff is against the weight of evidence.
In his arguments supporting the first ground of appeal, learned counsel pointed out that the Appellant’s action was not to enforce rights to a contract but for a declaration that there was no contract of sale between the Plaintiff and Respondent. Thus Section 189 (4) of Act 179, which deals with enforcing rights to a contract, was not applicable to the case before the court. Second, he submitted that the construction put on Section 189 (3) and (4) by the trial judge was wrong and it would lead to manifest absurdity and reduce the legislation to futility in that a company with large members would be unable to execute any contract if even one director was outside the jurisdiction at the time of entering into contract.
Not unexpectedly, counsel for Respondent supported the reasoning of the court and reiterated the argument that under Section 189, the Appellant was under a prior duty to obtain leave of court by application before commencing any action to enforce rights to a contract entered into when one director is out of the jurisdiction. He cited Oppong v Attorney-General & Others 1999 – 2000 2 GLR 402 on the submission that if the rules of court require a preliminary authorisation before commencement of an action, failure to do so rendered the writ and processes issued thereafter null and void.
He also cited Heward Mills v Heward-Mills 1992 1 GLR 153 on the position that ‘where a statutory condition must be complied with before a court could have jurisdiction to make an order, failure to comply with such a condition would leave the court with no discretion to make an order in the matter’
We must first say, that with respect to whether there was a valid and binding contract arising out of the Memorandum of Understanding or there was no contract, this issue is the cause of action before the high court and so can only be determined by the court that resolves the substantive dispute. We will therefore side step any submission that seeks to draw us into pronouncing on the efficacy of the transaction such as whether a company’s asset can be sold without a board resolution – as can be found in paragraph 6.12 and 6.13 of Appellant counsel’s submissions. What is before us is whether the ruling setting aside the writ as incompetent and restraining Appellant counsel from representing it should be upheld or reversed.
And in that regard, we agree fully with Appellant counsel on both of his submissions stated above and disagree strongly with counsel for Respondent that any reading of Section 189 of Act 179 should lead to the interpretation placed on it by Respondent, its counsel and the court below. First, since the action was seeking for a declaration that there was no binding contract arising out of the Memorandum of Understanding to sell the property in issue, and not an enforcement of rights to any contract, section 189 of Act 179 that was relied on by the court to non-suit the Appellant, was not by any stretch of imagination applicable to the suit.
As a function of rehearing, we must also say with all respect to the trial judge, that this is a very troubling ruling that totally misconstrued the clear import of Section 189 of Act 179 and used it to truncate an action in a manner that can only disturb the peaceful resolution of the dispute between the parties. We say this because by the very facts presented to the court in the pleadings, affidavits and exhibits, the judge should not have found any justification for giving a favourable hearing to the application.
Section 189 (1) (2) (3) and (4) read:
189. Presence of directors in Ghana
(1) At least one director of the company shall at all times be present in Ghana.
(2) In the event of any wilful breach of this section the company and every director of the company who is in default shall be liable to a fine not exceeding five pounds (twenty five penalty units) for every day during which the default continues.
(3) The rights of the company concerned under or arising out of a contract made during the time that a director of the company is not present in Ghana is not enforceable by action or other legal proceedings.
(4) For the purpose of subsection (3).
(a)The company may apply to the court for relief against the disability imposed by subsection (3) and the court, on being satisfied that it is just and equitable to grant relief, may grant the relief generally or as respects a particular contract and on the conditions that the court may impose’
Now from the very beginning of Section 189, the section makes clear that the law demands the presence of at least, one director in Ghana at all times. No mention is made of a Managing Director. Subsection (3) is unequivocally speaking about transactions entered into when there is not this least number of one – a director - in the country at the time the transaction was entered into.
When applied to the present suit, the affidavits copiously showed that the company had several directors in Ghana at the time of the disputed transaction. Nigel Egyir Yaw, a strong voice behind this application allegedly premised on Section 189 and whose affidavit provided material for the affidavit of Singh, claimed that he was a director and the Managing Director who presided over the transaction in issue. So if he was a director and the Managing Director who presided over the transaction, how was there not a director in Ghana at the time of the transaction? Beyond this contradiction, one Akosua Akyeampomaa Addai swore an affidavit to the effect that she was a director in Ghana and was involved in the transaction in issue. Her averments were not denied. As pointed out by Appellant counsel, a list of directors found in Exhibit AAA1 on page 61 of the ROA indicated several other persons as directors of the company, including one Afua Abrafi. Regarding the numbers and presence of directors, the Judge himself said in his ruling that ‘…looking at the circumstances of this case where this court was for instance not even told the exact number of directors the Plaintiff company has…’
The court had no reason to consider an application alleging breach of the statute to have one director in Ghana. It would seem that with this glaring array of directors in Ghana and a contested Managing Director staring at him, the ruling placed the square peg of the unavoidable presence of multiple directors within a round hole in order to make the situation fit into a Section 189 situation. And this round hole was that Section 189 required that the Managing Director of a company ought to be resident in Ghana. So the Judge said on page 9 of his ruling that ‘The question is did the Plaintiff comply with this provision before instituting the instant action. There is evidence before me that as at the time the contract the Plaintiff is seeking to set aside was entered into, the Managing Director of the Plaintiff was resident and still resident in the United States of America. This clearly depicts that before the company could seek a relief under the said contract, they are obliged to go to court and demonstrate to the satisfaction of the court that they have a good reason to institute the action’
But after this holding, the court had to contend with the fact that he also accepted that Nigel Egyir Yaw was Managing Director when he used information from his affidavit in the second part of the application on who ought to have instructed the counsel who commenced the action – a matter we will deal with shortly. Suffice it to be said that the obvious inapplicability of Section 189 as a reason to truncate this suit introduced much incoherence into the application and ruling.
On page 142 of the Record of Appeal, it is indicated that Respondent counsel argued regarding Section 189 (3) and (4) that ‘These sections state that where a Ghanaian company enters into a contract at the time one of its directors is outside the country, before that company could sue or take any legal action, that company must first go to court and demonstrate to the court why the contract the company entered into should be set aside’ (emphasis mine). This is in marked contradiction to the text of Singh’s affidavit relying on the averments in Egyir Yaw’s affidavit which referred to himself as Managing Director.
Both Respondent counsel’s argument and the court’s eventual reasoning are patently erroneous because at no time was the Appellant seeking the enforcement of rights under a contract to make Section 189 applicable. In fact they were seeking the avoidance of a declaration of contract within the circumstances they found themselves in.
Secondly, the ruling was exorbitantly counter to the plain reading of Section 189 (1) which directs the need for just one director to be present in Ghana at all times. Third, the ruling run counter to the essence of the whole regime of company law that allows a company to act by a range of human officers and agents. The provisions of Part O of the Companies Act headed ‘Acts by or on Behalf of the Company’ provide part of this regime. From Section 137 (1) to 148, the Part O of the Companies Act sets out how acts of persons authorised by the company are to be given legal weight and validated. As submitted by Appellant counsel, the interpretation put on Section 189 would lead to manifest absurdity because immediately one director of a company is outside Ghana, the contracts entered into carry the mark of illegality and attract a fine for the company whenever it transacts business – as per Section 189 (2). This is not the law, and it could not be the purpose or intention of the law. The purpose and intention of the law is to have one Director present in Ghana, and not to vilify the absence of even one Director. The first ground of appeal is upheld.
As a function of rehearing we must also add that the invitation to set aside the Writ as incompetent seemed to ignore a very important aspect of this case. This is the angle regarding the 3rd Defendant, Lands Commission, who is not a party to this appeal. This is a party who had entered appearance and filed a defence that can be found on page 101 of the Record of Appeal. It had denied in this pleading that the Appellant is the owner of the land in issue, and stated that the lease in issue had actually expired in May 2011. This pleading was filed before the ruling. If this was the case, there was a cause of action for the court to settle as between the Appellant and this state institution, set up to hold the records of citizens regarding their registered interests in land, on whether or not the
Appellant was entitled to quiet enjoyment of the land in issue – as claimed in its 7th endorsement – or that it had lost its interest in the land on expiry of the lease – as claimed by the Lands Commission.
And the court should have noted that this question has nothing to do with the alleged ‘contract’ that the court found as the basis for the action with Respondent. It had to do with the settlement of the Appellant’s fundamental interest in the land it was laying claim to. And the Appellant had gone to the trouble of presenting to the court a lease that indicated an interest up to 2060, while the 3rd Defendant had asserted in its pleading that the Appellant’s interest ended in 2011. These contradictory positions should inform any court that there were serious questions of fact to be tried between the Appellant and the Lands Commission, whether or not the sale transaction in dispute had even occurred.
With the striking out of the writ on the alleged back of a transaction that shut the doors of the court, what the court did was ignore the serious question to be tried between Appellant and the Lands Commission regarding the true interest of the Appellant in the lease in issue. This act of the court cut deep against the very first direction of High Court (Civil Procedure) Rules 2004 of CI 47 – Order 1 Rule 1(2) which reads:
2. These rules shall be interpreted and applied so as to achieve speedy and effective justice, avoid delays and unnecessary expense, and ensure that as far as possible, all matters in dispute between parties may be completely, effectively and finally determined and multiplicity of proceedings concerning any of such matters avoided’.
Because of the throwing out of the suit as not properly grounded as between the Appellant and Respondent, when the case against the 3rd Defendant also stood on the same writ and had no relationship to the validity of the transaction between the first two parties, but pertained to the Appellant’s interest in the land in issue - the court disabled himself from administering justice between the Appellant and 3rd Defendant. This is another strong reason to reverse the ruling brought on appeal and grounds our granting of the first part of ground (v) of the appeal – that the trial judge’s decision granting the application for setting aside the writ is against the weight of the evidence.
Ground (ii) of the appeal was not argued. And as pointed out by Respondent counsel, it should be and is deemed to be abandoned
Appellant counsel next argued the ground (iii) of the appeal. Appellant counsel submitted that this court should overturn the decision to restrain him from acting for the Appellant because the court failed to exercise his discretion in that decision judiciously. Citing various cases, he submitted that the grounds for reversing such exercise of discretion includes when the decision will result in injustice as decided in Lamptey v Hammond 1987 – 88 1 GLR 327. Or that the discretion was exercised on wrong or inadequate materials, or the court acted under a misapprehension of fact, in that it gave weight to irrelevant or unproved facts or omitted to take relevant matters into account as decided in K Bram Larbi v The Registrar & 2 Others 2010 28 MLRG 148 at 151. We agree with all of the above submissions as proper statements of the principles for overturning a decision based on the exercise of discretion. We also add that this was a decision where the court seemed to ground the decision on a mixture of findings of facts and law and he was wrong on both. We refer to the extensive earlier review of how the court arrived at his decision.
Whether or not a lawyer has been properly appointed to represent a company has nothing to do with Order 4 Rule 1 (2). That rule of court only requires that in the commencement of litigation, a body corporate is represented by a lawyer, unless a statute allows otherwise. Immediately a body corporate is represented by a lawyer, the presumption of regularity kicks in. Second, whether or not a lawyer was properly appointed by a company is resolved by the presumption of regularity if the corporate body he represents says so. Any other dispute of that regularity requires the quality of evidence that can dislodge a conclusive presumption.
Section 142 (1) (b) of the Companies Act provides 142.
Presumption of regularity
(1) A person having dealings with a company or with someone deriving title under the company is entitled to assume
“b. that a person described in the particulars filed with the Registrar pursuant to sections 27 and 197 as a director, managing director or secretary of the company, or represented by the company, acting through its members in general meeting, board of directors, or managing director, as an officer or agent of the company, has been duly appointed and has authority to exercise the powers and perform the functions customarily exercised or performed by a director, managing director, or secretary of a company carrying on business of the type carried on by the company or customarily exercised or performed by an officer or agent of the type concerned.”
With this provision of statute, the court is compelled to assume the regularity of the appointment of counsel for the Appellant. And to the extent that the company is the one asserting the due appointment of its counsel, as against the Respondent who is an outsider to the company, the burden the Respondent had was to overturn the positive assertions of the company itself about its agents. This was not a burden of persuasion that could be easily discharged at the preliminary stage of a suit through the examination of powers of attorney, and emails as the court purported to do. This is because lawyers are not appointed by powers of attorney. A power of attorney enables the donee to stand in the shoes of the donor to do certain acts. A lawyer’s standing is that of an agent sent to perform a function, and not a personal representative. A lawyer’s appointment may even be done orally. Appellant counsel submits that the trial judge exercised his discretion on wrong material because contrary to the finding of the judge, the powers of attorney were not the source of his authority to commence the action.
We agree with him. A lawyer who commences an action for a corporate body should be presumed to be an agent of the company as provided for by Sections 137 (1) and 140 of the Companies Act.
Section 137 (1) reads
(1) A company shall act through its members in general meeting or its board of directors or through officers or agents, appointed by, or under authority derived from the members in general meeting or the board of directors.
Section 140 Acts of officers or agents
(1) Except as provided in section 139, the acts of an officer or agent of a company are not the acts of the company, unless
(a) the company, acting through its members in general meeting, board of directors, or managing director, has expressly or impliedly authorised that officer or agent to act in the matter; or
b. the company, acting under paragraph (a) has represented the officer or agent as having its authority to act in the matter, in which event the company shall be civilly liable to a person who has entered into the transaction in reliance on that representation, unless that person had actual knowledge that the officer or agent did not have authority or unless, having regard to the position with, or relationship to, the company, that person ought to have known of the absence of authority
2. the authority of an officer or agent of the company may be conferred prior to action by that officer or agent or by subsequent ratification; and knowledge of action by that officer or agent and acquiescence in that action by the members for the time being entitled to attend general meetings of the company or by the directors for the time being or by the managing director for the time being, shall be equivalent to ratification by the members in general meeting, board of directors, or managing director.
Thus the question of whether E.N. Poku had the proper authorisation of the company to act for the company or not, is a matter of fact that must be determined from what could be a sophisticated range of factors including post-appointment ratification. And considering that all the Defendants are outsiders to the company, while documentation abounded alleging that Poku had the requisite authority to act for the company regarding this property in dispute, and in fact had been the lawyer of the company for decades, the court should not have been tempted to try and determine this question by relying on affidavit evidence. And this is especially so where the court could not even determine at that preliminary stage, who the directors and Managing Director of the company are.
Before I close this evaluation I must also refer to the Judge’s ruling that he restrained E.N. Poku from acting as Appellant’s counsel because on the Exhibit ENP3, he was attorney for Osei Kwame Addai and ‘he cannot be an attorney and counsel for the Plaintiff company at the same time’. The judge provided no basis in law for this statement and we find none to uphold it. The entire ruling restraining Mr. E.N. Poku from acting for the Appellant is reversed.
In Koglex Ltd. (No 2) v Field (2000) SCGLR 175, the Supreme Court reviewed extensively the range of situations where an appellate court would be justified in interfering with the findings of a trial court. They include where the said findings are clearly unsupported by evidence on record: or where the reasons in support of the findings are unsatisfactory, or where the trial court has failed to draw an irresistible conclusion from the evidence, or where the findings are based on a wrong proposition of law, such that if that proposition is corrected, the finding disappears. In the present case, the court seemed to imply that the Appellant had a duty as a preliminary measure under Order 4 rule 1 (2) to prove that it had authorised its counsel to act for it. Our holding is that this is a wrong proposition of law. All these Koglex factors apply to the case before us.
Ground (iii) of the appeal is upheld. Respondent counsel submitted that the Appellant counsel should be deemed to have abandoned and or not be heard on the remaining grounds of appeal because he failed to provide the particulars of error of law that they constituted. As much as I agree with him, I find that their determination has no bearing on the decisions already arrived at and or the success of this appeal.
The ruling is reversed in its entirety and the writ is restored, all processes and applications pending on the docket are restored and the parties are restored to the status quo ante they had before the ruling of 27th February 2015. The application to strike out the writ and restrain E.N. Poku from acting for the Appellant is dismissed as being without any basis in law or fact.
Costs of Forty Thousand Ghana cedis (GH¢40,000) against the Defendants/ Respondents in favour of the Plaintiff/Appellant.