BEDSTUY LIMITED VS PHOENIX POWER & MR TAREK NASSER
  • IN THE SUPERIOR COURT OF JUDICATURE
    IN THE HIGH COURT(GENERAL JURISDICTION DIVISION)
    ACCRA - A.D 2019
BEDSTUY LIMITED - (Plaintiff/Respondent)
PHOENIX POWER - (Defendant/Respondent)
MR. TAREK NASSER - (2nd Defendant/Applicant)

DATE:  18TH APRIL, 2019
SUIT NO:  GJ/872/2016
JUDGES:  HIS LORDSHIP JUSTICE KWEKU T. ACKAAH-BOAFO
LAWYERS:  NANA AGYEI BAFFOUR AWUAH FOR THE PLAINTIFF/ APPLICANT
MR. OSMAN GYAN FOR THE 2ND DEFENDANT/ APPLICANT
RULING

 

Introduction:

(1) The facts of this case are free from complexity. On May 3, 2018 this Court granted the Plaintiff/Applicant’s application for Amendment and in doing so joined Mr. Tarek Nasser as the 2nd Defendant. Shortly thereafter on July 3, 2018 Mr. Bobby Banson of Smith & Adelaide Law filed a “Motion on Notice to Strike out Name of 2nd Defendant”. The record shows that on Friday, 27 July 2018 Ms. Ama Asare Korang holding the brief of Bobby Banson moved the application for misjoinder of the 2nd Defendant. The record further shows that the Court informed Counsel that there are two main problems with the application. First, there was no proof of service of the joinder of the 2nd Defendant after the amendment ruling for him to be officially joined. Secondly, the Court informed Counsel that the reasons given for the misjoinder are the same reasons/arguments advanced against the grant of the application for amendment. The Court stated that the application was therefore not appropriate. The Court however did not strike out the application but gave Counsel the opportunity to confer with Mr. Bobby Banson. That application therefore remains on the docket.

 

(2) The Court further notes that the 2nd Defendant was later served with the Amended Writ of Summons. After the service Mr. Osman Gyan of Messrs Agyeman & Associates entered Conditional Appearance on January 29, 2019 and filed the instant application to strike out the 2nd Defendant as a party on February 21, 2019.

 

(3) The 2nd Defendant/Applicant is by this application praying this court to strike out the name of the 2nd Defendant/Applicant, Mr. Tarek Nasser as a party to the instant suit under Order 4 rule 5 (2) (a) of the High Court Civil Procedure Rules C.I. 47 and the inherent jurisdiction of the court.

 

(4) Order 4 rule 5 (2)(a) of the High Court Civil Procedure Rules C.I. 47 provides that, “at any stage of proceedings the Court may on such terms as it thinks just either of its own motion or on application order any person who has been improperly or unnecessarily made a party or who for any reason is no longer a party or a necessary party to cease, to be a party.”

The issue before the court is whether or not the 2nd Defendant, Mr. Tarek Nasser is a necessary Party to this suit?

 

(5) On 23rd June 2016 the Plaintiff/Respondent caused a writ of summons and statement of claim to be issued against the 1st Defendant for the reliefs endorsed on the writ of summons. According to the Plaintiff following a search conducted at the Registrar General’s Department it was discovered that Phoenix Power is a business name registered under the Registration of Business Names Act, 1962 (Act 151) with one Mr. Tarek Nasser as the Proprietor and not a limited liability company as initially stated on the writ of summons and statement of claim. Subsequently, the Plaintiff/Respondent applied to this court for leave to amend the writ of summons and statement of claim and same was granted by the Court and it was ordered that the 2nd Defendant/Applicant be added as a necessary party to the suit.

 

(6) The title of the suit was amended accordingly and Mr. Tarek Nasser was served. It is the joinder decision that has prompted the instant application. It is the contention of the 2nd Defendant/Applicant that he is not a proper party to be joined to this suit. The 2nd Defendant/Applicant averred in his affidavit in support of the application, that the Plaintiff’s cause of action is founded on the alleged breach of contract between the Plaintiff and the 1st Defendant, which said contract he was neither personally privy to nor from which he derived any personal benefit.

 

The Applicant’s Case:

(7) Mr. Tarek Nasser further deposed, that the 1st Defendant, Phoenix Power is a registered business name wholly owned by ABA Group Ltd and the 1st Defendant has been described as a “Subsidiary of ABA Group Ltd” in the business registration documents of the said Phoenix Power. A copy of the Business Registration Documents of the said Phoenix Power was attached and marked as Exhibit TN 1.

 

(8) He also stated that ABA Group Ltd is a company limited by liability duly incorporated under the laws of the Republic of Ghana and thus accrues liability in its own right, independent of its shareholders and/or officers for which reason it can sue and be sued in its own capacity. Copies of the Certificate of Incorporation, Certificate to Commence Business and Particulars of Incorporation of the said ABA Group Ltd are attached and marked as Exhibit TN 2 Series. Based on the deposition the 2nd Defendant says he is not and has never been registered as the Proprietor of the 1st Defendant.

 

(9) Speaking to the motion learned Counsel for the Applicant rehashed the depositions in the affidavit and submitted that the 1st Defendant is a subsidiary of ABA Group, which is incorporated under the laws of Ghana. He also referred to Section 1 of Act 151 and submitted that by Section 1 (d), the proprietor can be sued. In this case Counsel submitted that the ABA Group own the 1st Defendant and not Mr. Tarek Nasser and therefore he has been wrongly joined to the suit. Counsel cited and relied on the case of APPENTENG v. BANK OF WEST AFRICA (1961) GLR 81,

 

(10) Learned Counsel further submitted that the subject matter does not affect the 2nd Defendant and therefore he is not a necessary party. Counsel relied on the Court of Appeal case STAR LOTTO LTD & OTHERS v. KEMEVOR & OTHERS [2013-2015] 2 GLR 436. The further argument of Counsel was also that it is never stated that the 2nd Defendant benefited from the agreement between the Plaintiff and the 1st Defendant. To that extent, Counsel submitted that the 2nd Defendant is not a necessary party.

 

(11) With regards to the documents submitted by the parties, Counsel for the Applicant submitted that the Applicant’s documents attached is an extract from the registration pursuant to Section 13 of Act 151 while that of the Respondent is only a letter from the Registrar General and does not conform with Section 13 of Act 151. Counsel cited the Supreme Court case of JONAH v KULENDI & KULENDI (2013-2014) 1 SCGLR 272.

 

(12) Finally, Counsel submitted that there is no basis for the contention that the 2nd Defendant is an alter ego of the 1st Defendant because the contention is not backed by any evidence. Counsel cited the case of MARFO v. EDUSEI [1963] 1 GLR 225.

 

The Respondent’s Case:

(13) The Plaintiff/Respondent is opposed to the application. According to learned Counsel the application is incompetent. Counsel submitted that on a true and proper interpretation of Section 2 of the 1st Schedule of Act 179, Section 17 of Act 151 and Section 162 of the Evidence Act, the so-called Phoenix Power’s existence is doubtful and so Tarek Nasser is a proper party. Counsel further submitted that based on the history of the case, had learned Counsel adverted his mind to how the 2nd Defendant was joined as a party it would not have filed the instant application.

 

(14) Nana Agyei Baffour Awuah further submitted there was an earlier misjoinder application and that application is still on the docket and therefore the statement by present Counsel Mr. Gyan that the earlier application was not at the instance of his client is scandalous and should not be entertained. Counsel submitted that Order 5 Rule 4 does not contemplate a party joined based on the orders of the Court and therefore the whole basis of the application is wrong. Based on all of the submissions made and the depositions in the affidavit in opposition Counsel prayed the Court to dismiss the suit.

 

The Court’s Opinion & Analysis

(15) The test for determining whether a person should be joined to an action or not was laid down by Denning MR, in the case of GURTNER v. CIRCUIT AND ANOTHER (1968) 2 QB 587 at 595. In that case he opined: “when two parties are in dispute in an action at law and the determination of the dispute will directly affect a third person in his legal rights or in his pockets, in that he will be bound to foot the bill, then the court in its discretion may allow him to be added as a party on such terms as it thinks fit. By so doing, the court achieves the object of the rule. It enables all matters in dispute to be effectually and completely determined and adjudicated upon between all those directly concerned in the outcome.”

 

(16) The Supreme Court of Ghana applied this test in SAM (No.1) v. ATTORNEY GENERAL [2000] SCGLR 104 and APRATWUM MANUFACTRING CO. LTD. v DIVESTITURE IMPLEMENTATION COMMITTEE [2009] SCGLR 692 the Supreme Court stated that anyone whose presence before the Court is necessary to ensure that the dispute is effectively and completely determined and adjudicated upon ought to be added as a party. Speaking through Ampiah JSC in the SAM No. 1 CASE, the Court pronounced that: “generally speaking, the court will make all such changes in respect of parties as may be necessary to enable an effectual adjudication to be made concerning all matters in dispute. In other words, the court may add all persons whose presence before the court is necessary in order to enable it effectually and completely adjudicate upon and settle all the questions involved in the cause or matter before it. The purpose of the joinder, therefore, is to enable all matters in controversy to be completely and effectually determined once and for all. But this would depend on the issue before the court, i.e. the nature of the claim.”

 

(17) The Companies Act, 1963 (Act 179) regulates incorporated companies in Ghana. The word company is defined in the First Schedule of the Companies Act, 1963 (Act 179) as “a body formed and registered under this Act or an existing company.” Section 9 (1) of the Companies Act, 1963 (Act 179) also provides that an incorporated company may be a company limited by shares, a company limited by guarantee and an unlimited company. Based on the facts of this case I shall limit myself to a company limited by shares. Section 9(1)(a) provides, “a company limited by shares, that is a company having its liability of its members limited to the amount, unpaid on the shares respectively held by them.”

 

(18) The Black’s Law Dictionary Tenth Edition defines a company as “a corporation, partnership, association, joint-stock company, trust, fund, or organized group of persons, whether incorporated or not, and (in an official capacity) any receiver, trustee in bankruptcy, or similar official, or liquidation agent, for any of the foregoing.” Thus a company may be incorporated or unincorporated.

An incorporated company has a separate existence from its members. This is provided for in Section 24 of the Companies Act, 1963 (Act 179) which states;

“except to the extent that a company’s Regulations otherwise provide, a company registered after the commencement of the Act and an existing company which, pursuant to section 19, adopts the Regulations in lieu of its memorandum and articles of association shall have, for the furtherance of its objects and of a business carried on by it and authorized in its Regulations, all the powers of a natural person of full capacity.”

The implication of the above is that a company upon incorporation attains a separate legal personality. This was established in the seminal decision in SALOMON v SALOMON (1895-9) All ER Rep 33. Locally, the principle was applied in the Ghanaian case of BANK OF WEST AFRICA v APPENTENG (1972) 1 GLR 153-179 where the Court held that a company upon incorporation attains a legal personality separate from its members and it can sue and be sued.

 

(19) An unincorporated company on the other hand has no existence separate from the person operating the firm or business. An example of such a company is a sole proprietorship. In BAIDOO v SAM (1987-88) 2 GLR 666, the court asserted that in a sole proprietorship, one typically registers a business and carries on business as the owner, bearing all of the liabilities and debts, if any of the business venture. The applicable legislation is the Registration of Business Names Act, 1962 (Act 151).

 

(20) Section 1 of the Registration of Business Names Act, 1962 (Act 151) titled – Persons to be registered provides:

(1) Subject to the provisions of subsection (2) of this section, there shall be registered in accordance with the provisions of this Act the following persons, that is to say,

a.    every individual having a place of business in Ghana who,

i.              carries on business under a business name which does not consist of his true surname without any addition other than his true first names or the initials thereof; or

ii.             has either before or after the commencement of this Act changed his name, except in the case of a woman in consequence of marriage;

b.    every company carrying on business in Ghana under a business name which does not consist of its corporate name without any addition.

The word company is also defined in Section 17 of the Registration of Business Names Act, 1962 (Act 151). It states: “a company includes any company or corporation incorporated in Ghana or elsewhere and a company carrying on business in partnership with any other person.”

 

(21) This Court can only reiterate and cite the case of BARCLAYS BANK GHANA LIMITED V. LARTEY & OTHERS [1978] GLR 282-289 because it dealt with the implication of registration under Act 151. The Court per Edward Wiredu J, (as he then was) held that:

 

Unlike Act 179, the Registration of Business Names Act, 1962 (Act 151), was not intended to confer any distinct legal personality on any business name registered under it. The provisions of the Act are a clear pointer to this. Whilst the provisions of Act 179 refer to the company, those of Act 151 refer to the individuals registering their business names. The fact that registration under Act 151 does not confer perpetual succession on business names registered under it is borne out by section 10 (1) of the Act. Act 151 protects the exclusive use and right of the person registering the business name. It is also clear from the provisions of Act 151 that the registrar deals solely with the person registering the business name, and this is understandable because it is only the "business name" which is registered and someone must be responsible for such registration.

 

(22) The Court therefore held that “in my ruling that Scarts as registered under Act 151 did not acquire any legal personality distinct from the person of Emmanuel Kotoku Lartey who carried on business under that name. I also reject as untenable the submission that Scarts enjoyed a perpetual succession under Act 151.”

 

(23) Applying the law stated supra to the facts before me, I am of the opinion that, the registration of Phoenix Power under Act 151 subjects it to the application of laws governing sole proprietorships. Thus, the company is unincorporated, does not have a separate legal personality and its liabilities are that of its of proprietor. The registration of a business under that Act is just a mere registration of a business name.

 

(24) The results of the search carried out by the Plaintiff/Respondent revealed that, Phoenix Power is registered under Act 151 as a subsidiary business name with Tarek Nasser named as the proprietor and this is buttressed by a copy of the business registration document of Phoenix Power provided by the 2nd Defendant/Applicant marked as Exhibit TN1. This rebuts the position of Tarek Nasser in Paragraph 9 of his affidavit in support of the motion to strike out his name as a Defendant in the instant case. Thus, Tarek Nasser named, as the proprietor of Phoenix Power is liable for all the liabilities of the business based on the ruling in Barclays Bank v Lartey.

 

(25) In any case, there is no law, which prevents a parent company from registering a subsidiary company under either Act 179 or Act 151. The decision is purely one of preference by the company. To that extent this Court is of the opinion that, once you elect to register your subsidiary name under Act 151, you are deemed to have voluntarily submitted yourself to all the dictates of this law.

 

(26) From the foregoing, and having considered affidavit evidence and the submission of both Counsel it is evident that, Mr. Tarek Nasser, the second Defendant/Applicant passes the test laid down in the above referenced cases and therefore he is a necessary party to a suit. Therefore, the Court’s earlier decision to join 2nd Defendant/Applicant to the suit was proper. Rather, this application is incompetent as the Court has struggled to understand same because it is not a review under Order 42 of C.I. 47 but basically a repetition of the arguments made when the application for amendment which resulted in the Court joining the 2nd Defendant was made.

 

(27) Accordingly, the present application is Dismissed with costs of Gh¢ 3,000 against the 2nd Defendant/Applicant.

 

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