IN THE SUPERIOR COURT OF JUDICATURE
IN THE HIGH COURT (COMMERCIAL DIVISION)
KUMASI - A.D 2018
MRS. CHARITY TUFFOUR - (Plaintiff)
PERINA TWUM & ORS - (Defendants)
DATE: 6 TH FEBRUARY, 2018
SUIT NO: OCC/172/15
JUDGES: ANGELINA MENSAH-HOMIAH (MRS.) JUSTICE OF THE HIGH COURT
SULLEY SAMBIAN FOR PLAINTIFF
SAMUEL A. AGYEI FOR DEFENDANTS
This court has been called upon to determine whether the 1st and 2nd Defendants are proper parties to the instant suit. The Plaintiff has alleged in his amended statement of claim filed on 16/02/17 that these Defendants who are a teacher and banker respectively, advised her to invest money in their Micro Finance Business. She did so, and was given an investment certificate bearing the name of the 3rd Defendant Company, but upon maturity, they were unable to re-pay the money. In her statement of defence, the 1st Defendant alleged that the Plaintiff invested her money in Uni-Gold Microfinance Company Limited of which she is the Manageress.
The 2nd Defendant also averred that she informally told the Plaintiff who is her neighbor about the 1st Defendant’s business where she could invest her money. In effect, the 1st and 2nd Defendants are saying that the Plaintiff dealt with a limited Liability Company, now the 3rd Defendant herein, and there was no dealing in their individual capacities. The lawyers for the parties were ordered to file their submissions on this preliminary legal point. Counsel for the Defendants filed his submissions on 04/01/18; the Plaintiff’s lawyer was granted an extension of time within which to file his submissions, but as at 9am on 05/02/18, he had not filed the same. In the written submissions of counsel for the Defendants, reference was made to the investment certificate issued to the Plaintiff and the certificate of incorporation of the 3rd Defendant, copies of these documents were annexed and marked as exhibits ‘1’ and ‘2’.
It must be emphasized that the practice of attaching documents to written submissions amounts to adducing evidence through the back door which is improper and procedurally wrong. Therefore, this court will not consider exhibits ‘1’ and ‘2’, in determining the preliminary issue. It was submitted on behalf of the 1st and 2nd Defendants, that upon incorporation, the 3rd Defendant assumed a separate and legal personality distinct from the people who formed it, or the people who are behind it. Therefore, the officers of the company cannot be personally liable for the acts of the company. Morkor v Kuma (1998-99) SCGLR 620; Salomon v Salomon (1897) AC 22, HL cited. Sections 24 and 137(1) of the Companies Act, 1963, Act 179 also referred to. Counsel for the Defendants has rightly stated the principle of separate legal existence of incorporated companies. T
his cardinal principle which dates back to the celebrated case of Salomon v Salomon, referred to supra, was applied in Soonboon Seo v. Gateway Worship Centre (2009) SCGLR 278. In holding (4) thereof, the court stated:
It is clear from the record of appeal, that the Second-Plaintiff church is a company limited by guarantee and incorporated under the Companies Act, 1963 (Act 179). As a result, pursuant to section 24 of the Companies Act, 1963, it has all the powers of a natural person of full capacity. As such, it is a fully- fledged legal entity, with a personality separate from the natural persons forming it, and with capacity to sue and be sued in its own name. In law, members of a company have no direct proprietary rights over its assets, the company being the sole owner of its assets. Since it is patent from the record that the subject matter of the action was being claimed as the church’s asset rather than the joint property of the church and the first Plaintiff, there was no reason why the first Plaintiff should have been included as a co-claimant. From the record, the first Plaintiff really has no business in the suit, since he does not make any claim of interest in the subject-matter of the suit. The second plaintiff church is capable of handling its own litigation and the first Plaintiff is an unnecessary party. Consequently, the first plaintiff would be struck out as a party …”
Similarly, in the Morkor v Kumah case, referred to, supra, the court explained that a member, director or even a chief executive cannot be sued except where personal liability is established against that person or the veil of incorporation is lifted. In holding (3) thereof, this was what the court stated:
Since the appellant had been jointly sued with the first Defendant, a Limited Liability Company, for the only reason that she was the chief executive, main shareholder and a director of the company, she would be a proper party to the suit only if a specific personal liability were established against her or the veil of incorporation could be lifted to make her acts synonymous with those of the Defendant company and vice versa. It was impossible to formulate an exhaustive list of the circumstances that would justify the lifting of the corporate veil. However, where it was shown that the company had been established to further fraudulent activities or to avoid contractual liability, the veil would be lifted. Therefore, whether or not a circumstance was one justifying the lifting of the veil would be dependent on the peculiar factors driving each peculiar case.
The Plaintiff herein pleaded in paragraphs 6 and 7 of her amended statement of claim thus:
6. The Plaintiff was issued with a receipt in the form of a Certificate which bears the name Uni-Gold Microfinance Limited.
7. The Plaintiff says that Uni-Gold Microfinance Limited is the 3rd defendant herein.
From the foregoing, the Plaintiff knew, or ought to have known that she was dealing with a Limited Liability Company which is accountable for its own actions, except where there are circumstances meriting the piercing of the corporate veil, no such circumstance has been alleged per the Plaintiff’s pleadings. So, the manageress of the 3rd Defendant who officially transacted with the plaintiff cannot be held personally liable for the acts of the 3rd defendant company and she is not a necessary party to this suit. With respect to the 2nd Defendant, the Plaintiff has not said that she is, or was an officer or agent of the 3rd Defendant Company.
Apart from her allegation that she merely gave a friendly advice to the Plaintiff as a neighbour in respect of the activities of the 1st Defendant, there is no link between her and the 3rd Defendant Company. More importantly, it has not been demonstrated that the 2nd Defendant is even an investment banker or has any similar investment background, and could give professional advice. By the Plaintiff’s own showing, the 2nd Defendant is a teacher. The Plaintiff acted on the friendly information received from the 2nd Defendant as a matter of choice, and she is to bear the consequences of her own informed decision. Hence, the 2nd Defendant is also not a necessary party to the suit.
Accordingly, the 1st and 2nd Defendants are struck out as Defendants. The case will proceed against the 3rd Defendant. No order as to cost.