IN THE SUPERIOR COURT OF JUDICATURE
IN THE HIGH COURT
ACCRA - A.D 2019
EDEM AFFRAM & ANOTHER - (Plaintiffs)
BERNARD YAW OWUSU-TWUMASI & 3 OTHERS - (Defendants)
DATE: 21ST JANUARY, 2019
SUIT NO: AC/44/15
JUDGES: ERIC K. BAFFOUR ESQ. J
1st Plaintiffs claim against the Defendants in an amended writ of summons the following reliefs:
a. A declaration that 1st Plaintiff is a shareholders of 2nd Defendant company
b. A declaration that 1st Plaintiff holds 43% shares in 2nd Defendant company
c. A declaration that any purported change in the shareholding structure of 2nd Defendant company is void and of no legal effect
d. A declaration that 1st Defendant’s action of altering the shareholding structure of 2nd Defendant company without following due process was fraudulent.
e. A further declaration that the transfer of the shares and assets of 2nd Defendant company to Oak House Group Ltd, the 3rd Defendant company, by 1st Defendant is void and of no effect
f. An order of accounts into the books and finances of 2nd Defendant company from incorporation until date of judgment.
g. An order directed at 1st Defendant to render accounts for the said lands acquired for their common use.
h. Cost including solicitors fees
i. Any other reliefs that the court may deem fit.
With the joinder of the 2nd Plaintiff to the action there was a further amendment to the writ for the 2nd Plaintiff to also ask the following:
j. A declaration that 2nd Plaintiff is a shareholder in 2nd Defendant company with shareholding of 25% shares.
k. An order for account of the affairs of 2nd Defendant company
l. An order that 2nd Plaintiff should be paid for his services as a promoter and director of 2nd Defendant company on quantum meruit basis
1ST PLAINTIFF’S CASE
In its amended writ and statement of claim filed on the 5th of May, 2016, 1st Plaintiff claim to a director and majority shareholder of 2nd Defendant company but ordinarily resident outside the jurisdiction with 1st Defendant being also a shareholder and a directing mind of 2nd Defendant. That 1st Defendant being a longtime friend, both incorporated 2nd Defendant in 2004 with 43% of shares to Plaintiff, 25% to 1st Defendant, 25% to 2nd Plaintiff and 7% shares to Kimathi Kuenyehia. To 1st Plaintiff he was most of time not in Ghana and relied on 1st Defendant for the running of the business whilst he provided support in terms of money and logistics for the running of the company. That his absence from Ghana was exploited by 1st Defendant who denied him critical information and data on 2nd Defendant and eventually alienated him from the business.
1st Plaintiff avers that with the development of a confrontational attitude by 1st Defendant towards him, no dividend had been paid him nor ever received any notice of any meeting of the company notwithstanding his injection of significant resources into 2nd Defendant from its promotion to date.1st Plaintiff states that he only discovered that 1st Defendant had caused a re-registration of 2nd Defendant company and succeeded in changing the shareholding structure of the company and accuse 1st Defendant of fraud in that respect. That with the new structure, 1st Plaintiff claim that he is no longer a director or a shareholder of the 2nd Defendant Company with 1st Defendant deliberately avoiding him to discuss his fraudulent conduct of the change of the structure of directorship and shares of 2nd Defendant.
1st Plaintiff contend that 1st Defendant has incorporated the 3rd Defendant Company and transferred all of the shares in 2nd Defendant company to 3rd Defendant company. He advances that the transaction between the 2nd and 3rd Defendant is void and any assets held by 3rd Defendant Company is only held in trust for the 2nd Defendant as he had never consented to any transfer of his shares. 1st Plaintiff finally accuse 1st Defendant of having sold ten plots of land he paid for their acquisition at Adjirigano and hence the various claims he seeks per the writ filed.
2ND PLAINTIFF’S CASE
2nd Plaintiff claim to be a retired Commissioner of Police and contend to be a director of 2nd Defendant with 25% shares. That 1st Defendant as the managing director of 2nd Defendant has deprived him of his shares in the 2nd Defendant company.
THE CASE OF THE DEFENDANTS
Defendants have denied the essential averments contained in the claims of the Plaintiffs. 1st Defendant concede that he incorporated 2nd Defendant with 1st Plaintiff and due to their long friendship matters between them had not adhered to formal requirements nor by any written agreements as they acted on good faith. He concede that at incorporation of 2nd Defendant, 1st Plaintiff was allotted 43% shares, 2nd Plaintiff 25%, 7% shares to Kimathi Kuenyehia and 25% shares to himself.
That at the time of incorporation 1st Plaintiff was in the United Kingdom and he had to sign 1st Plaintiff’s column of signature of the registration documents on his behalf for which 1st Plaintiff fully concurred. To 1st Defendant he formed several companies with 1st Plaintiff including Cedem Travel Services, Cedem Construction and Supply Ltd, Business Express Ltd and also Concorde Security in the United Kingdom with the shares of Concorde Security having been held in trust for 1st Plaintiff and 1st Defendant by one Ruby Amoh.
1st Defendant further avers in the pleadings of the Defendants that it was the funds from the Cedem Travels Services, that was divested to buy the lands for real estate with some also used to incorporate Concorde Security in the UK with the shares having been entrusted to Ruby Amoh. And with the success of Concorde Security it encouraged them to set up 2nd Defendant Company to go into private investigations. That 2nd Defendant faced initial challenges and at the suggestion of 1st Plaintiff, the shares in Concorde Security was transferred to 1st Plaintiff’s wife to hold in trust for the two of them even though he protested and demanded a trust deed all to no avail.
Eventually it was agreed that 1st Plaintiff takes full charge of Concorde Security with 1st Defendant also fully owning 2nd Defendant Company in Ghana and that all these were agreed by word of mouth. And it was out of this arrangement that he fully became owner of all the shares of 2nd Defendant for which he also wrote to the Board of Directors to refund the capital of 2nd Plaintiff to him. And that is how come 1st Plaintiff did not show any interest at all in the running of 2nd Defendant Company. That whatever re-registration of 2nd Defendant Company was done was as a result of government directive and deny any allegation of fraud in the re-registration as everything was done in accordance with law.
1st Defendant again contend that it was eight and not ten plots that were acquired and out of the eight plots of land acquired using the proceeds from Cedem Travel Services, as a result of litigation on the lands, four of the lands were sold and 1st Plaintiff told 1st Defendant to use the money to roof the latter’s house with the 1st Plaintiff giving some to one his employees in UK to develop whiles the rest were embroiled in litigation.
In responding to the allegations of 2nd Plaintiff, 1st Defendant claim that 2nd Plaintiff on his own accord wrote to request for a refund of his capital in 2nd Defendant and also resigned as a director for which he was fully paid an amount of Gh¢3,000.00 that 2nd Plaintiff also executed a deed of transfer of shares and has also accordingly ceased to be a shareholder of 2nd Defendant company and call for the dismissal of the claims of the Plaintiffs.
ISUES FOR TRIAL
With the pre-trial conference unable to amicably resolve the matter the following five issues were agreed as the issues for trial:
1. Whether or not the Plaintiff is a shareholder of 2nd Defendant’s company
2. Whether or Plaintiff owns 43% shares in 2nd Defendant company
3. Whether or not Plaintiff at various stages remitted money to 2nd Defendant through 1st Defendant for the running of the 2nd Defendant
4. Whether or not the 1st Defendant can unilaterally divest Plaintiff of his shareholding in the 2nd Defendant without following due process
5. Whether or not 1st Defendant can on his own volition and without the strict procedure under the Company’s Act, Act 179 alter the shareholding of the 2nd Defendant.
6. Whether or not 1st Defendant committed fraud when he altered the shareholding structure of the 2nd Defendant to affect the shareholding of Plaintiff without due process
7. Whether or not the removal of Plaintiff as a director of 2nd Defendant by 1st Defendant is valid in law.
8. Whether or not any asset held and controlled by the said Oak House Group Ltd is being held in constructive trust for the 2nd Defendant.
9. Whether or not 1st Defendant used £10,000 which Plaintiff remitted to 1st Defendant to purchase ten plots of land, for the common use of 1st Plaintiff and 1st Defendant.
10. Whether or not 1st Defendant has used part of the land and sold the remainder for his personal use and without giving any of the parcels of the land to the Plaintiff.
Plaintiffs testified in persons. One Edward Opata was called as Pw1. Pw2 was subpoed witness from the Registrar of Companies in the person of Vincent Darko. The last prosecution witness was in the person of Kimathi Kuenyehia. In all Plaintiffs tendered Exhibits ‘A’ to ‘J’ with the salient ones being, the Regulations of 2nd Defendant at its incorporation as Ex ‘A’, an email exchange between 1st Plaintiff and his lawyer as Ex ‘B’, Registrar General’s documents as Ex ‘D’. A deed of transfer of the shares of 2nd Defendant to 3rd Defendant effected by 1st Defendant as Ex ‘G’. A valuation report on lands at Agyiragano as Ex ‘J’.
Defendants on the other hand testified through 1st Defendant, Joseph Boye Clottey and Henry Myles Mills as DW1 and Dw2 respectively. Even though witness statements had been filed on behalf of William Panford Bray and former Inspector General of Police, Peter Nanfuri and same had been admitted during case management conference, as the said witnesses were not made available to swear an oath and testify and be cross examined, same is expunged from the records.
In all the Defendants tendered as much as seventeen Exhibits with the principal ones being a letter of resignation of 2nd Plaintiff from 2nd Defendant as Ex ‘8’, a notarized affidavit of the returns of Concorde Security as Ex ‘11’, a deed of transfer as Ex ‘12’, a writ and statement about the lands in Adjirigano as Ex 14 and 15.
THE EVIDENCE AND THE LAW
From the issues set down at the directions issues 1, 2, and 3 can conveniently be resolved together. The essence of the claim of 1st Plaintiff is that he is a 43% shareholder of 2nd Defendant Company having contributed in cash and kind to the incorporation of 2nd Defendant, even though he was living in the UK at the time. In paragraphs 13, 14, 15, 16 and 17 of the evidence in chief of the 1st Plaintiff, which was given in the form of Witness Statement, he detailed the level of his contribution towards the incorporation and the running of the daily affairs of 2nd Defendant. And these includes £30,000 that he claim to have cumulatively remitted, 10 brand new dell computers, sending of krypto security phones worth £6,000 and remittances for two brand new Renault clio vehicles. Ex ‘A’ being the Regulations of 2nd Defendant at the time of its incorporation on the 18th of November, 2004 shows 1st Plaintiff as the holder of 43% shares as well as being a director of the company. 2nd Plaintiff appears as owning 25% shares, 1st Defendant also with 25% and the remaining 7% to then secretary, Kimathi Kuenyehia.
1st Defendant does not dispute the ownership of 43% of 2nd Defendant at incorporation by 1st Plaintiff but only claim that the said 43% ownership emanated out of his own gratis and favour to 1st Plaintiff due to their long standing friendship. As by section 36 of the Company’s Act, Act 179 the register of members shall be prima evidence of the matters stated therein and Ex ‘A’ at the time of incorporation notes that 1st Plaintiff had been issued 43,000,000 shares and with section 42 and 45 of Act 179 requiring that shares shall be paid for by a member in cash, I proceed on the presumption of omnia praesumuntur rite esse acta solemnitur rule under section 37 of the Evidence Act, NRCD 323, that there is presumption of regularity as far as the performance and compliance with the requirements of the Act 179 was concerned and that 1st Plaintiff fully paid for his shares but not an act of grace from 1st Defendant that was extended to 1st Plaintiff. That the Registrar General would not have issued Ex ‘A’ if he was not satisfied that the requirement for payment of shares in cash under Act 179 had not been complied with.
Again I find umbrage under section 162 of the same Evidence Act which states as follows:
“A copy of a writing is presumed to be genuine if it purports to be a copy of a writing which is authorised by law to be recorded or filed and has in fact been recorded or filed in an office of a public entity or which is a public record, report, statement or data compilation if—
(a) an original or an original record is in an office of a public entity where items of that nature are regularly kept; and
(b) the copy is certified to be correct by the custodian or other person authorised to make the certification, provided that the certification must be authenticated”.
And therefore, if that presumption is to be displaced, then the onus is on 1st Defendant that is asserting the contrary to prove that 1st Plaintiff did not pay for his shares in cash as required by the Company’s Act but was rather ad gratis to him and Ex ‘A’ that officially recorded same is not in fact what it is. 1st Defendant made this assertion without any evidence to back same. On the other hand, the evidence of then Secretary, Kimathi Kuenyehia, Pw3 was very instructive in demonstrating the level of contribution of 1st Plaintiff to the set up and running of 2nd Defendant company. For the following were his answers when he was questioned:
“Q: Can you tell this honourable court, the contributions that Mr. Edem Afram made towards the incorporation of Oak House Co Ltd.
A. My Lord, to the best of my knowledge, Edem sent a lot of money, to be frank. At the time we were in a unique position. I was a student, and I did not have any money to contribute to the business. Edem had been running a very successful company in the UK, he was the guy with the money.
Q. These monies that you talk about, were they sent to you?
Q. So as far as you are concerned these monies were sent to who?
A: They were sent to 1st Defendant
Q: And what was the purpose of these remittances
A. It was to fund the business
Q. What business
A: Oak House, the 2nd Defendant.
The above piece of evidence from a former Secretary was not controverted at all when he was cross examined by Sorbordjor Esq. The evidence of Kimathi Kuenyehia appeared to be more credible as there was further corroboration found in the evidence of Pw1, Edward Opata that 1st Defendant used to tell him of the remittances made by 1st Plaintiff towards the running of the business. See page 4 of the cross examination of Edward Opata on the 10th of April, 2018.
On the other hand the witnesses called by 1st Defendant, being Joseph Boye Clottey, Dw1 and Henry Myles Mills, DW2 all claimed that they only heard of the name of 1st Plaintiff but had never seen him before. In other words, they had no personal knowledge of the remittances and contribution of 1st Plaintiff. It is trite that a witness testify to matters within his personal knowledge, information and belief and that appears to be the prime qualification for a witness. See section 60 of the Evidence Act, NRCD 323.
I find as a fact that the overwhelming evidence on record shows that Edem Affram contributed immensely in both cash and kind towards the incorporation of 2nd Defendant company and was the colossus financier of 2nd Defendant. I find that he legitimately acquired 43% shares and paid for same and that his acquisition of the shares in 2nd Defendant was not an act of kindness or favour from 1st Defendant at all.
THE ACT OF REMOVAL OF 1ST DEFENDANT AS DIRECTOR AND SHAREHOLDER OF 2ND DEFENDANT
I move to the resolution of issues 4, 5, 6 and 7 which are all in respect of the conduct of 1st Defendant in the removal of 1st Plaintiff as a director and a 43% shareholder of 2nd Defendant and the act of transferring 93% shares of 2nd Defendant to 3rd Defendant. With this 1st Plaintiff has accused 1st Defendant of fraud as he claim that he had no knowledge that he had been divested of his shares in in 2nd Defendant company and as far as he is concerned he is still a shareholder. He also deny having instructed 1st Defendant or any other person to transfer his shares in Oak House Ltd.
Per section 30 (5) of the Company’s Act, Act 179 which states as follows:
“Membership of a company with shares shall continue until a valid transfer of all the shares held by the member is registered by the company, or until all such shares are transmitted by operation of law to another person or forfeited for non-payment of calls under a provision in the Regulations, or until the member dies”.
As far as the law is concerned for a person’s membership of a company can only be terminated by one, a valid transfer of shares which is registered by the company, two by operation of law, three by forfeiture of shares for non-payment and last by death. 1st Plaintiff is alive and transfer by operation of death will does not apply. It has not been contended that 1st Plaintiff has forfeited his shares for non-payment when the evidence as found supra is that he was the financier and the guy with the big pocket for the running of 2nd Defendant. There has not been operation of law to divest 1st Plaintiff of his shares. By operation of law is meant an act of nationalisation of the company when a receiver or trustee in bankruptcy assumes carriage of the shares of a shareholder. See section 99 of the Company’s Act, Act 179.
So I ask has there been a valid transfer of shares of 1st Plaintiff to 1st Defendant. But first it may be very instructive to posit the response of the 1st Defendant to this serious claims made against him in person. According to 1st Defendant in his pleadings and in his evidence in chief he claim that he established a number of companies with 1st Plaintiff. Some being Concorde Security in the UK, Cedem Travel and Tours among many others. He further claim that the resources and monies realised from Cedem Travel and Tours was used to establish Concorde Security in UK.
1st Defendant then contend that the shares in the said UK company was registered in the name of one Ruby Amoh being a relative of 1st Plaintiff as the latter was an illegal immigrant in UK despite his vehement protest against such registration. All this came about due to the informal manner they had handled matters as close friends and at a point in time 1st Plaintiff had intended for the shares in Concorde Security to be transferred to 1st Plaintiff’s wife which he protested. That eventually it was mutually agreed between them that 1st Plaintiff will take the Concorde Security in UK whilst he also assume ownership of 2nd Defendant company in Ghana. And that is the explanation provided by 1st Defendant as to how 1st Plaintiff became divested of his shares in 2nd Defendant.
1st Plaintiff has denied all these as contrived by 1st Defendant and as it is the rule that a party cannot prove a negative, 1st Plaintiff cannot be expected to prove an assertion being made by an opponent which he has in any way denied. As it was been held in the decision of the Supreme Court in the case of Supreme Court in KLAH v PHOENIX INSURANCE CO LTD.  2 SCGLR 139 @ holding 2 that:
“The pleadings of a party would constitute allegation and not evidence. Thus where an averment in a statement of claim has been positively denied, it would be incumbent upon the party asserting those averment to substantiate them by leading evidence in compliance with the cardinal rule of pleadings under Rule 7(1) of Order 11 of the HCCPR, 2004, CI 47, namely that the material facts relied upon by a party for his claim but not the evidence by which those facts were to be proved should be contained in the statement of claim”
How did 1st Defendant who made these claims in his amended statement of defence prove them? In analysing the claims made, I will be taking them gradatim ad seriatim (that is step by step). First no evidence of the financial viability of Cedem Travel and Tours was filed to show the extent of its financial success. No evidence in the form of declaration of dividend by Cedem Travels and Tours was filed. No evidence of a resolution that any dividend realised from Cedem was to be used to fund Concorde Security. The claim of the funding of Concorde Security emanating from Cedem Travels remained a wild allegation with no substance to back it and I dismiss that as totally untrue.
Second, is the claim that 1st Defendant in furtherance of 1st Plaintiff taking over Concorde Security for him to take over Oak House Ltd he instructed the drawing up of a shareholder’s agreement which 1st Plaintiff agreed to. Pw3, Kimathi Kuenyehia, was the one mentioned as having been given that instructions. The discussions for such agreement is captured in Ex ‘18’. In Ex ‘18’, Pw3 only referred to the instructions given by 1st Defendant and demanded for further details about Edem Affram and Concorde Security. There is no evidence that the information requested by Pw3 ever came. And when Pw3 testified on the 26th of October, 2018, he stated that he knew that Concorde Security belonged to 1st Plaintiff and one Patrick.
Regarding Ex ‘18’ and any discussions on Concorde Security this is what transpired:
Q: So based on what you will recall, these discussions about an agreement was about what?
A. Actually it was Bernard [1st Defendant] who informed me that he had reached some agreement with Edem that Edem would take the UK part of the business and Bernard would take the Ghana part of the business.
Q. But you never had any discussion with Edem about this?
A. No I did not”.
If there had to be any credible shareholder agreement regarding any claim of a person’s interest in a company, it needed not to have been an ex parte communication as Kimathi Kuenyehia, Pw3 confirmed he had with 1st Defendant only, but not 1st Plaintiff and the claim of having had such ex parte discussions initiated by 1st Defendant alone with Kimathi Kuenyehia without 1st Plaintiff not having been put on the known, I find to have deliberately been contrived by 1st Defendant in furtherance of his intention to appropriate all the shares of 1st Plaintiff in 2nd Defendant to himself. This finding will not stand alone but find other corroborative and credible holdings in the other analysis infra.
In support of the claim that he 1st Defendant is in fact and truly a member of Concorde Security UK he produced Ex ‘11’ which was procured for him by a private investigator. Exhibit ‘11’ which is Annual Returns shows that at incorporation and contrary to the claim that 1st Defendant made that one Ruby Amoh held the shares and Edem Affram and 1st Defendant did not feature, 1st Plaintiff appear as a director of Concorde Security with Ruby Amoh whilst Edem Affram was company secretary. If by the logic of 1st Defendant, 1st Plaintiff as an illegal immigrant needed to protect himself against British immigration authorities, then by that same logic Edem Affram’a name should not have featured at all. And if 1st Plaintiff’s name appeared, there was nothing that prevented the appearance of the name of 1st Defendant’s name, at least as a director just like 1st Plaintiff. In any case the Returns filed in 2005 shows Edem Affram as a former shareholder of Concorde Security which was incorporated in 2004, meaning that at incorporation 1st Plaintiff owned shares in Concorde Security and this defeats the claim of 1st Defendant about the immigration status of 1st Plaintiff and the need to hide the ownership of shares of Concorde Security in the name of Ruby Amoh.
I hold and find that the holding and relinquishing of shares in a company and as matter of fact in a British company is not by word of mouth but by documentations duly filed. Ex ‘11’ rather attest against the stand of 1st Defendant. The basis of this finding is rooted under section 40 of the Evidence Act where a presumption is created that the law of a foreign state is presumed to be the same as that of Ghana.
Again 1st Defendant claim that upon incorporation of Concorde Security in the UK, its success led to the incorporation of 2nd Defendant in Ghana by both of them and this was to support 1st Defendant’s assertion that he being part of the success story of Concorde Security had relinquished his claim in favour of Oak House Ltd. Concorde Security was incorporated in October, 2004 whilst Oak House was incorporated on 18th November, 2004, just a month separating them. What kind of success could have been recorded by a company established by a foreigner in UK within one month of operation to have been so financially successful to have inspired the incorporation of 2nd Defendant company?
This claim made by 1st Defendant I find not to hold water, unproved, not supported by any shred of evidence and with the greatest of respect, a classic cock and bull story.
There has been produced before the court Ex ‘D’ being a registration of Oak House Ltd wherein the directorship seems to have changed from what it was in Ex ‘A’. 1st and 2nd Plaintiffs names do not appear as directors. Instead Henry Myles Mills, William Panford Bray, Joseph Boye Clottey and 1st
Defendant appear as directors. And for the shareholders, 1st Defendant appear as holding the entire 100,000 shares in Oak House Ltd. The essence of what necessitated Ex ‘D’ should not be lost on us. Vincent Darko, Pw2, the Chief Executive Officer attached to the Registrar General’s Records Unit, gave the reason that in 2011, the government in collaboration with Registrar General’s Department, intended for companies to come and update their records in terms of current location, objects, resignation of directors etc. And therefore if prior to the re-registration the directorship or the shareholding structure had not changed, the re-registration was not supposed to be used as a Trojan horse to effect changes in the directorship and shareholding structure overnight which did not exist in accordance with Act 179.
1st Defendant claim that in furtherance of Ex ‘D’ a share transfer agreement was produced to the Registrar of Companies before he became the owner of the shares. This came to light when 1st Defendant came under cross examination on the 9th of November, 2018 in the following:
Q. Mr. Owusu Twumasi, is Edem Affram as far as you are concerned, a shareholder at Oak House Ltd.
A. No My Lord. Edem Affram transferred his shares to me.
Q. So I am assuming there was a share transfer document that was executed, transferring the shares of Edem Affram to you.
A. Yes My Lord, a share transfer document was executed. A share transfer certificate was executed and duly stamped.
Q: Who prepared the transfer agreement?
A: My Lord, it was the Company Secretary, Henry Myles Mills.
Q. I am assuming that you … had instructed him to prepare the said share transfer agreement.
A. That is entirely correct.
Q: When was it prepared.
A: It was either in the latter part of 2006 or early part of 2007.
Q. So the 1st Plaintiff Edem Affram did not give any instructions to Mr Myles Mills to prepare this share transfer agreement that you speak to.
A: That is Correct. And My Lord that has been the practice then between myself and Edem Afram”.
A copy of this alleged share transfer agreement between 1st Plaintiff and 1st Defendant was never tendered in court even though they claim to have filed same at the Registrar General’s Department. And 1st Defendant claim that Registrar General could not locate this document. An incredible story!
Henry Myles Mills claim to have witnessed 1st Defendant sign the share transfer agreement as a transferor and a transferee but also claim he cannot locate it as Company Secretary. There is Ex ’12’ and also Ex ‘G’ all purporting to be share transfer deeds, which I will comment on later for which Defendants could produce before the court but not their claim of a share transfer between 1st Plaintiff and 1st Defendant. Dw2 who is a lawyer failed to impress the court in the box. His voice was shaking and his frame was jittery. He sounded incoherent and when he had been in the box for less than thirty minutes he pleaded to be released on a spurious claim that he had to appear before another High Court. He wanted an escape route when the questions were too hot for him and was fumbling because of the untruths he was on the box to peddle.
And in any case, I thought that the story of 1st Defendant had all along been that all matters between him and 1st Plaintiff had been by a gentleman’s agreement without any paper trail as he noted Edem Affram was to take Concorde Security and he was to take Oak House. So what is this claim of a share transfer agreement? Simply because he wrote the name of 1st Plaintiff on Ex ‘A’ 1st, Defendant thought he could similarly appropriate the shares of 1st Defendant. 1st Defendant cannot transfer the shares of a shareholder to himself and sign on behalf of that shareholder and himself as transferor and transferee in the face of strong claim by 1st Plaintiff that he never gave such instructions. It is for 1st Defendant to prove that 1st Plaintiff gave him such instructions.
Even 1st Defendant cast doubt on his ownership of 100% shares as not being correct and impugn Ex ‘D’ that gives him all the shares in 2nd Defendant. 1st Defendant’s explanation is that it was a paralegal that gave him all the 100% shares and he also signed without reading it making him effectively having appropriated the shares of Kimathi Kuenyehia as well. How could 1st Defendant now attribute appropriation of all the shares to the mistake of a paralegal?
It is in this respect that 1st Plaintiff has indicted 1st Defendant with fraudulent act of Transfer of the shares of 2nd Defendant to 3rd Defendant as seen in Ex 12. The particulars of fraud have been provided in paragraph 13 of the amended statement of claim filed on the 5th of May, 2016 to include the following:
a. Unknown to Plaintiff 1st Defendant without following due process fraudulently removed Plaintiff as director of 2nd Defendant company
b. 1st Defendant has fraudulently altered the shareholding structure, of the company to remove Plaintiff as a shareholder without following due process.
c. That according to the shareholding structure, Plaintiff is mysteriously no longer a director or a shareholder
d. That 1st Defendant fraudulently transferred Plaintiff’s shares to 1st Defendant without his consent and or due process.
In the case of REDDAWAY v BOWHAM  AC 199 @ 221 Lord McNaughton noted on fraud as follows and which was quoted with approval in the case of FOFIE v ZANYO  2 GLR 475 that:
“fraud is infinite in variety; sometimes it is audacious and unblushing; sometimes it pays a sort of homage to virtue, and then it is modest and retiring; it would be modesty itself if it could only afford it. But fraud is fraud all the same, and it is fraud and not the manner of it, which calls for the interposition of the court”
Dr. Twum JSC in the case of BROWN v QUARSHIGAH [2003-2004] 2 SCGLR 930 and at 946 stated as follows:
‘at common law a charge of fraud is such a terrible thing to bring against a man that it cannot be maintained in any court unless it is shown that he had a wicked mind… in short fraud is dishonesty’
The standard of proof of fraud even in a civil case is one of proof beyond reasonable doubt. Section 13 (1) of the Evidence Act states that:
‘In any civil or criminal action the burden of persuasion as to the commission by a party of a crime which is directly in issue requires proof beyond a reasonable doubt’.
I have found supra that 1st Plaintiff never gave any instructions for 1st Defendant to appropriate his shares in 2nd Defendant. And 1st Defendant having done so is a dishonest appropriation, which is fraudulent. I have also found that the act of removal of 1st Plaintiff as a director of 2nd Defendant was also without any basis and done on the blind side of 1st Plaintiff. A director of a company cannot be removed by an alleged word of mouth agreement. Where is the evidence that section 185 of Act 179 was duly complied with. Where is the evidence of the ordinary resolution that was passed by 2nd Defendant at a general meeting to remove 1st Plaintiff as a director? Where is the notice to remove 1st Plaintiff as director of the meeting of the 2nd Defendant? Where is the evidence that section 185(4) was complied with by 1st Plaintiff being notified of the intention of the 2nd Defendant to remove him as a director at its general meeting? That act is also an act of fraud perpetuated by 1st Defendant, I so find and hold and 1st Plaintiff again succeeds in his claim of fraud against 1st Defendant in the removal of the former’s name as a director and 43% shareholder of 2nd Defendant.
ASSETS AND SHARES HELD IN 3RD DEFENDANT COMPANY
As a corollary to the above issues that have been resolved by the court, it has been stated as one of the issues for determination as to whether the assets of 3rd Defendant company is being held in constructive trust for the 2nd Defendant company. Ex ‘12’ is a purported deed of transfer from 1st Defendant to 3rd Defendant. Oak House Group Ltd wherein 1st Defendant claim to own 9,300 shares in 2nd Defendant company and transfers all those shares to 3rd Defendant. This 9,300 shares represent 93% shares in 2nd Defendant Company.
I have found that whatever appropriation of the shares of 1st Plaintiff by 1st Defendant was an act of fraud that no court of justice will allow it to stand. For fraud vitiates agreements, contracts and unpack what has been wrapped. Having appropriated shares beyond his original 25% from 2nd Defendant, it stands to reason that 1st Defendant had no locus to transfer what does not belong to him. This is the nemo dat quod non habet principle. 1st Defendant did not own 93% in 2nd Defendant and could not have transferred same. I think instead of holding that 1st Defendant is holding those shares transferred which does not belong to him in trust, the act being fraudulent nothing can be founded on it. I rather cancel that deed of transfer and order transfer of those shares not being the shares of 1st Defendant back to 2nd Defendant.
How could this be done? 1st Plaintiff has asked for accounts into the books of 2nd Defendant. By the provisions of sections 124, 125 and 126 of Act 179, a company is supposed to prepare annual financial statement showing its profit and loss account. Has this ever been done? There is no evidence before me that 1st Defendant has run 2nd Defendant as a company but his personal property. I will order an account to be taken of 2nd Defendant Company as well as 3rd Defendant company of all its financial dealings since incorporation. Stock must also be taken of all the assets including those that have been dissipated and for a total valuation of the 2nd and 3rd Defendants to be known. It is when this is done that that the true financial position and the value of both companies will be known for the shares of 1st Plaintiff that was honestly appropriated from 2nd Defendant company to 3rd Defendant company can be reverted as nothing can stand on fraud and not fall.
It is when this has been done that the future shareholding structure and management may be clarified as to whether the 1st Plaintiff’s shares may be bought or not due to the current irreconcilable differences between the 1st Plaintiff and the 1st Defendant. This approach finds support in a number of cases such as UNION MORTGAGE BANK v SERBEY-YIADOM [1997-98] 1 GLR 1025, a judgment of Vida Akoto Bamfo J (as she then was); GOLDEN GATE SERVICES LTD v GHANA PORTS AND HARBOURS AUTHORITY, Suit No MISC/4/09 dated 17th March, 2009 – Amadu tanko J. (as he then was).
EVIDENCE RECEIVED REGARDING THE WIFE OF 1ST PLAINTIFF
Before dealing with the issues of the acquisition of lands and the claim of 2nd Plaintiff, I cannot rest the above issues without commenting on the nature of the pleadings and evidence of 1st Defendant.
1st Defendant accused the wife of 1st Plaintiff of fraud and tendered the particulars of the page of the passport of the woman as Ex ‘2’, as well as an alleged marriage certificate as Ex ‘3’ and spilled a great deal of ink in his amended statement of defence and witness statement dwelling on that.
The alleged conduct of the wife of 1st Plaintiff was not an issue at all before me and I think the sole purpose for throwing in such matters was to blackmail the 1st Plaintiff as if to say, “well if you want to pursue me in court for what is legitimately yours, then I will dirty you”. That is a conduct unseemly of 1st Defendant who claim to be a lawyer and is symptomatic of a desperate man being drowned and prepared to hold on to a straw.
Exhibits ‘2’ and ‘3’ had no bearing at all in this case and should not have been admitted. At the request of a party or the court on its own motion, has the discretion to exclude the admission of evidence that should not by the rules of evidence have been admitted. See the case of JAXON-SMITH v KLM [2005-2006] SCGLR 438. In this case the court excluded some documents that were admitted during trial even on appeal as inadmissible. I exercise my discretion and exclude Exhibits ‘2’ and ‘3’ as admissible for being scandalous and irrelevant. Those will be remarked as Exhibits ‘R2’ and ‘R3’. I will also order 1st Defendant to return the passport of the wife of 1st Plaintiff in his custody within five days after the expiration of the seven days following the delivery of this judgment and upon filing of entry of judgment.
ACQUISITION OF LANDS FOR COMMON USE
1st Plaintiff seeks an order for account of ten lands purchased for their common use at Adjirigano to be taken. 1st Plaintiff claim that he took a loan of £10,000 from a Bank for the purchase of the lands. That 1st Defendant had not accounted for the lands to him having sold some of the lands for his personal use. 1st Defendant tells a different story by claiming that eight plots of lands were acquired using the resources from Cedem Travel Services but agree that he held the plots in trust for himself and 1st Plaintiff. Though Plaintiff did not show any statement of a loan taken or a remittance made to the 1st Defendant, I am more likely to disbelieve the funds coming from Cedem Travel Services as the evidence as found is that 1st Plaintiff was the financier and the guy with the money. The claim of Cedem Travel Company having done so well to have financed Concorde Security and others have been found not to be correct.
In any case 1st Defendant admit of having purchased eight and not ten plots of land. That some of the lands fell into double sale and only managed to gain four plots for which he stated in his pleadings and evidence in chief that he sold them to roof his house. For this is what took place:
Q: And you told this court that you sold four plots of the said eight plots, for your exclusive use.
A. That is incorrect. My Lord the plots were for the two of us and so were all the companies that we had in Ghana and UK and the instruction that we all gave to ourselves was that, if we left the plots alone we were eventually going to lose them. So it was better to sell same.
Q. So you are telling this court that you sold the plots of land that you bought for the joint use of yourself and Edem Affram.
A. My Lord I sold them and used the money on my building. This was because 1st Plaintiff was supposed to have transferred some monies to me from Concorde Security because of the difficulties we had with keeping the lands. In fact he was the one who suggested that it was better to sell the same and use the proceeds thereof”.
I have demolished this fairy tale of 1st Defendant ownership of Concorde Security. It is not correct and no shares of 1st Defendant ever existed in Concorde Security. Therefore any claim of selling land to put into a personal building based on an expectation that monies was due him from Concorde Security can only be false.
1st Defendant tendered Ex ‘16’ being a receipt for the purchase of 10.5 plots of land from one Margaret Abbey. There is also Ex ‘17’ being another receipt for purchase of land at Adjirigano. I have taken a critical look at Ex ‘14’ and ‘15’ being exhibit of an entry of judgment filed against Ms Margaret Abbey for recovery of ¢16,000 together with interest. This amount paid for which 1st Defendant went to court to procure judgment was in respect of three plots lands paid at Adjirigano and different from the 10 and half plots paid. For Ex ’16’ reads:
“I, Miss Margaret Abbey, have received an amount of ¢280,000 [old] cedis, the said amount haven [sic] been paid over a period of time in respect of ten and half plots.
I have also received an amount of ¢165,000.000, one hundred and sixty five million cedis, the said amount haven [sic] been paid over a period of time in respect of three and half plots ...”
There is also payment in respect of one and half plots. By Exhibit ‘16’ I will find that the litigation over the land that 1st Defendant engaged in was not in respect of the ten and half plots but over three and half plots for which 1st Defendant sought a court order to recover that money. Having admitted brazenly of selling four of the plots to roof his house and finding that 1st Defendant had no just cause of expecting any money from Concorde Security and guided by the valuation report being Ex ‘J’ of the value of an average land at Adjirigano, I will order 1st Plaintiff to recover from 1st Defendant the value of five plots of land from 1st Defendant as per the valuation report.
THE CASE OF THE 2ND PLAINTIFF
2nd Plaintiff seeks a declaration that he is still a shareholder of 1st Defendant Company having been a member of the company since its inception with 25% shares. However, 1st Defendant has stoutly resisted this claim of 2nd Plaintiff being a shareholder. That at incorporation he was with 25% but wrote to relinquish his shares in 2nd Defendant. There is Exhibit ‘4’ being a letter written by 2nd Plaintiff on the 28th September, 2007 demanding a refund for his capital. Ex ‘5’ is a cheque issued to 2nd Plaintiff by 2nd Defendant Company
2nd Plaintiff has contended when he came under cross examination that he was forced to resign from 2nd Defendant as a result of incessant threats and pressure. If true this will amount to duress and will vitiate the request. Duress under common law consist of actual or threatened violence to a person, threats of imprisonment or prosecution or threats of violence to a person. Lord Scarman sums up the effect of duress in the case of PAO ON & OTHERS v LAU YIU LONG  A.C 614 that:
“Duress, whatever form it takes, is a coercion of will so as to vitiate consent… There must be present some factor which could in law be regarded as a coercion of his will so as to vitiate his consent. In determining whether there was coercion of will such that there was no true consent, it is material to inquire whether the person alleged to have been coerced did or did not protest, whether at the time he was allegedly coerced into making the contract, he did or did not have an alternative course open to him such as an adequate legal remedy, whether there he was independently advised, and whether after entering into the contract he took steps to avoid it. All these matters are relevant in determining whether he acted voluntarily or not”.
2nd Defendant was an Assistant Commissioner of Police before his retirement and if he was threatened he knew what to do more than an ordinary man. There is no evidence that he protested or reported 1st Defendant for threat of death or harm and this claim of Ex ‘4’ having been procured by threats is rejected by the court as unproved.
Nonetheless, I must still consider whether there could have been a valid transfer of the shares of 2nd Plaintiff. The monies paid 2nd Plaintiff from the face of Ex ‘5’ was a cheque of 2nd Defendant company. That means no one bought the shares of 2nd Defendant but 2nd Defendant paid for it. There is also no evidence that a share certificate has been issued in compliance with section 53 of Act 179 to anyone. Section 56 (d) of Act 179 prohibits this kind of transaction when it states that:
“1) Except as hereinafter mentioned a company shall not,
(d) acquire, by way of purchase or otherwise, any of its issued shares or any shares of its holding company”.
The exceptions made under the law are one when the company limited by shares converts to a company limited by guarantee. Two where under section 59, there is issuance of preference shares, three where there is voluntary transfer to it or nominees of it, may purchase its shares where there is a credit balance on the share deals account. Indeed the law void such transactions.
There is no evidence on record of a meeting held where the 2nd Defendant by paying 2nd Plaintiff its capital reduced its stated shares. For if one was held minutes are supposed to be kept in compliance with section 177 of Act 179. There is also no evidence that 1st Defendant was the one who purchased the shares because the money did not come from his personal account. In the end I am bound by section 56 of Act 179 and declare any purported transfer or sale of the shares of 2nd Plaintiff void as not having complied with the law even though he wrote for a refund of his capital. Having so found, I will order 2nd Plaintiff to pay any amount he received together with interest back to the company after account has been taken of the 2nd Defendant since its inception to date to know how the affairs including the finances of 2nd Defendant had been managed over the years.
In conclusion, Plaintiffs succeeds in their claims save for the order 1st Plaintiff sought for the shares of 3rd Defendant to be held in constructive trust which has been varied. I have also further ordered 1st Defendant to return the passport of the wife of 1st Plaintiff in his custody which he has been using to blackmail 1st Plaintiff.
Guided by Order 74 of the High Court (Civil Procedure) rules, C. I. 47 on the award of cost which include to compensate a successful party and remunerate the lawyer. I am mindful of the complexity of this case, the court fees paid, travel expenses incurred and the manner in which 1st Defendant and his witness Henry Myles Mills conducted themselves not to tell the truth and in the exercise of my discretion, award an amount of Gh¢40,000.00 as cost in favour of 1st Plaintiff against 1st Defendant. I make no order as to cost in favour of 2nd Plaintiff as his claim was basically against 2nd Defendant.