HIGH COURT, KUMASI
DATE: 21ST FEBRUARY, 1962
BEFORE: DJABANOR, J.
CASES REFERRED TO
(1) Salomon v. Salomon & Co. Ltd. [1897] A.C. 22
(2) Smith v. Keal (1882) 9 Q.B.D. 340
(3) Morris v. Salberg (1889) 22 Q.B.D. 614
NATURE OF PROCEEDINGS
ACTION for damages for wrongful attachment.
COUNSEL
J. N. Heward-Mills and J. Prempeh for the plaintiffs.
H. W. Kofi-Sackey for G. Davey for the defendants.
Djabanor, J. On the 30th August, 1960, the plaintiffs’ solicitor wrote to the defendants informing them that: “Fattal & Majdoub & Company have dissolved partnership, and that Majdoub & Company Limited [plaintiffs] since registered, have agreed to pay all the just liabilities due by Fattal & Majdoub Company to your company at Kumasi. My clients will in due course apply to the courts for a substitution of their name for that of Fattal and Majdoub Company in respect of any pending actions in any such courts.”
JUDGMENT OF DJABANOR, J.
In fact, in April, 1960, action had been taken in this court by the defendants against the firm Fattal & Majdoub & Company, claiming the sum of £G1,350. Judgment was entered in November, 1960, after the dissolution of Fattal & Majdoub, for this amount with costs. If either the defendants or the plaintiffs had accordingly substituted the plaintiffs for the firm of Fattal & Majdoub there would have been no trouble. But there was trouble, and it arose in this way. When judgment was entered for the defendants against the firm of Fattal & Majdoub the defendants applied for a writ of fi. fa. against that firm in execution of their judgment. According to the deputy sheriff the writ was endorsed for the attachment of: All and singular goods, counters and shelves in the store of the execution debtors, Messrs. Fattal & Majdoub in the premises situate and known as Plot No. 604 O.T.B. district of Kumasi.”
It was dated the 3rd December, 1960 and signed by J. J. Peele & Company as solicitors for the judgment-creditors. By this time Fattal & Majdoub Company had dissolved their partnership and the plaintiffs were doing business in the premises situate and known as Plot No. 604 O.T.B., Kumasi. The goods in this store were seized and the store closed for a number of days from about the 28th December, 1960, till the 4th January, 1961. The plaintiffs complaining that their store has been wrongly attached for the debts of Fattal & Majdoub Company, brought this action against the defendants, the judgment-creditors of Fattal & Majdoub, claiming according to their writ:
“(a) A declaration that the attachment by fi. fa. on the defendants’ instructions, of the property of the plaintiffs in their store in the building situate on Plot No. O.T.B. 604, Kumasi is wrongful and unlawful.
(b) An order of this court upon the defendants stopping the sale of the properties of the plaintiffs in the said store and for the immediate release of the said store from the said attachment.
(c) £G10,000 general damages from the defendants for the loss of reputation occasioned to plaintiffs by wrongfully and unlawfully causing the attachment of the plaintiffs’ said property.
(d) £G100 special damages per day for loss of profit suffered by the plaintiffs as a result of the said unlawful attachment to be computed from the 28th December, 1960, up to date of judgment.”
The store was released from attachment on the 4th January, 1961, and so there is no necessity for this court to make the order stopping the sale as demanded. The plaintiffs are also now not claiming profits up to date of judgment. They claim only up to the 4th January, 1961. Application for injunction against the defendants was granted on the 6th January, 1961, when because of the release on the 4th January, 1961 this became unnecessary.
In their statement of defence, the defendants denied that the attachment of the plaintiffs’ store was unlawful and denied further that the plaintiffs have suffered any damage to their reputation. The defendants, however, admitted paragraph (5) of the plaintiffs’ statement of claim save that they contended that the attachment was on the 28th December, 1958 and not the 29th December, and also paragraph (7) of the statement of claim. These are in the following terms:
“5. On or about the 28th day of December, 1960, a bailiff of the High Court, Kumasi went to the plaintiff-company’s store, with instructions to attach the properties of Messrs. Fattal & Majdoub Company, but seeing the letters in front of the store, namely Majdoub & Company Limited, the bailiff did not execute the writ of fi. fa.”
“7. The keys of the plaintiff-company’s store remained with the said representative of the defendants until the morning of the 29th December, 1960 when the said representative came to the plaintiff-company’s store with the bailiff who then attached the plaintiff-company’s store on the specific instructions of the said representative.”
The plaintiffs contended that the defendants knew even before the judgment was entered against Fattal & Majdoub that that firm had been dissolved and that Majdoub & Company Limited had been formed, and therefore the defendants should never have attached the property at all since at that time it was the property of Majdoub & Company Limited and not of the dissolved partnership. The defendants of course must have taken the attitude that Majdoub & Co. Ltd. was Fattal & Majdoub in disguise, and that since the plaintiffs did not file a contract in accordance with section 31 of the Companies Ordinance1(1) they were entitled to assume that Mr. A. R. Majdoub had put up cash for his shares and that the assets of the former partnership still remained vested in the partnership, and that therefore the judgment-creditors were entitled to follow the property in execution of their
judgment. With respect I find it difficult to understand that attitude. A limited liability company is an artificially created body by statute and I think the law is entitled to recognise that artificial existence.
In any case it seems to me that by that date there was no partnership for the assets to remain in. Lord Halsbury L.C. in the Privy Council case of Salomon v. Salomon & Co. Ltd.2(2) said: “…..it seems to me impossible to dispute that once the company is legally incorporated it must be treated like any other independent person with its rights and liabilities appropriate to itself, and that the motives of those who took part in the promotion of the company are absolutely irrelevant in discussing what those rights and liabilities are.”
For my part as soon as I accept the evidence that Majdoub & Company Ltd. bought the assets of the old Fattal & Majdoub, which I do, I must necessarily hold that the defendants cannot attach their property in execution of a judgment-debt of Fattal & Majdoub because the two firms are quite separate, different, and distinct legal persons.
The next question is whether the defendants are liable for attaching the plaintiffs’ goods in execution of the writ of fi. fa. directed against Fattal & Majdoub. By the writ of fi. fa. the defendants directed the attachment of the goods, etc., in the store of the execution-debtors, Fattal & Majdoub, in the premises No. O.T.B. 604, Kumasi. Those premises were formerly the store of Fattal & Majdoub and were at the time of the attachment the store of the plaintiff-company. I believe that the name Majdoub & Co. Ltd. was written in front of the store and I do not believe Baffour who said he did not notice it. I am sure his attention was drawn to it.
I will now turn to the law on this point, and I will first refer to the case of Smith v. Keal.3(3) The defendant in that case issued execution against one Law, and delivered the writ to the sheriff, whose officer doubting about the goods, requested and obtained an interview with the managing clerk of the defendants’ solicitors. The latter informed the officer that he believed Law had a share in a brewery, which was the address endorsed on the writ, and that the officer had better seize those shares. He did so and took goods belonging to the plaintiff, who brought an action against the defendant, the judgment-creditor, for trespass. The plaintiff was non-suited on the ground that the managing clerk had no implied authority to give those instructions, and therefore that what he had done did not bind the defendant.
In this case it has been admitted by Mr. Bedford that Baffour had his authority, and that the bailiff attached with the specific instructions of the defendants’ representative was admitted in the pleadings.
There is yet another case, that of Morris v. Salberg.4(4) In that case the defendants, having recovered judgment in an action against one G.M.M., his solicitor endorsed on a writ of fi. fa. directing the sheriff to levy the amount of the judgment upon the goods of G.M.M., a statement that the execution-debtor resided at a certain address, which however, was not the address of such execution-debtor, but that of his father G.M.
The sheriff seized the goods of the father G.M. In an action brought by G.M. against the defendant, the execution-creditor, in respect of such seizure, the jury found that the sheriff seized the goods of the plaintiff instead of those of G.M.M. the son, because he was misled by the direction he received from the solicitor of the defendant. Upon that finding it was held that the defendant was liable in respect of the wrongful seizure. In this instant case the defendants knew that Fattal & Majdoub Company had been dissolved as far back as August. It was admitted in evidence that the defendant’s manger knew that the plaintiffs were doing business in the store of the erstwhile Fattal & Majdoub.
Clearly they misled the bailiff in directing him to attach this store. Acting upon the combined effect of these two authorities, and on the facts I find that the defendants wrongfully attached the store of the plaintiffs and I will allow the claim in that behalf.
The plaintiffs claimed £G10,000 general damages and £G100 per day for loss of profits. They have admitted that their profit could not have been more than £G15 to £G20 per day. I make it that the attachment was from the 28th December till the 4th January, 1961, a period of five working days. The profit lost could therefore not be more than £G100. Since the defendants allowed it at £G20 per day I will award £G100 as special damages.
When I come to general damages I find myself in some difficulty. The plaintiffs are claiming £G10,000 for loss of reputation occasioned by the wrongful attachment. Evidence has been led to show that the reputation of Fattal & Majdoub, and particularly of A. R. Majdoub was very low. A. R. Majdoub is the managing director of Majdoub & Company Limited. He admitted it in his affidavit praying for the release of the attachment. It was also admitted in evidence. I am satisfied that his reputation was very low at the time of the dissolution of the partnership. But what was at stake at the time material to this case was the reputation of his infant limited liability company. I have a vague suspicion of the reasons that prompted the partners of Fattal & Majdoub to dissolve that partnership and put up the plaintiff-company, but may be that should not influence my mind in this regard. However, it appears from their letter of August, 1960, that they were willing to meet the just debts of the former Fattal & Majdoub Company. It appears too that the plaintiffs did manage to obtain credit and other facilities from B.W.A. Ltd., Messrs. Tarzan Transport, and even S.C.O.A. These facilities were withdrawn as soon as the news of the attachment of the plaintiffs’ store got around. I cannot say that they have a big reputation. But I think any reputation that the plaintiffs would have been entitled to as a new company would be coloured by that of A. R. Majdoub, their managing director. After all he it was who dealt with the big firms and the public as managing director both of Fattal & Majdoub and of the plaintiff-company. But he did have sufficient reputation left which enabled him to obtain these credits for the new company. It may be that the new company had started with a new reputation and were entitled at least to be given another chance. Such reputation as the new company did have
was by the attachment impaired.
In assessing damages I have to take into consideration many circumstances, for example, that the plaintiffs have at their own request at the time of the attachment placed themselves in a position of debtor to the defendants to the extent of nearly £G2,000; that on the other hand the defendants’ manager on his own showing should have been more careful in directing the fi. fa. or even should have made the demand envisaged in the August letter first. In any case Baffour’s attitude did not improve matters.
I think that in all the circumstances I will award the plaintiffs general damages of £G1,200.
There will therefore be judgment for the plaintiffs against the defendants for £G1,200 general and £G100 special damages. I assess costs, in view of the claim and award, at 50 guineas.
DECISION
Judgment for the plaintiffs.
