HIGH COURT, SEKONDI
Date: 3 DECEMBER 1973
CHARLES CRABBE J
CASES REFERRED TO
(1) Mosi v. Bagyina [1963] 1 G.L.R. 337, S.C.
(2) In Re Perkins Beach Lead Mining Co. (1877) 7 Ch.D. 371; 37 L.T. 604; 26 W.R. 164.
(3) Re Great Ship Co., Ltd.; Re Parry’s Case (1863) 4 De G.J. & Sm. 63; 3 New Rep. 181; 33 L.J.Ch. 245; 9 L.T. 432; 10 Jur. (N.S.) 3; 12 W.R. 139; 46 E.R. 839.
(4) Venner’s Electrical Cooking and Heating Appliances Ltd. v. Thorpe [1915] 2 Ch. 404; 84 L.J.Ch. 925; 113 L.T. 1137; 60 S.J. 27, C.A.
(5) Re Briton Medical and General Life Assurance Association (1886) 32 Ch.D. 503; 55 L.J.Ch. 416; 54 L.T. 152; 34 W.R. 390; 2 T.L.R. 344.
(6) Re Artistic Colour Printing Co. (1880) 14 Ch.D. 502; 49 L.J.Ch. 526; 42 L.T. 802; 28 W.R. 943.
(7) Re Exhall Mining Co., Ltd. (1864) 4 De G.J. & S. 377; 4 New Rep. 127; 33 L.J.Ch. 569n; 10 Jur. (N.S.) 576.
(8) Re Lancashire Cotton Spinning Co.; Ex parte Carnelley (1887) 35 Ch.D. 656; 56 L.J.Ch. 761; 57 L.T. 511; 36 W.R. 305, C.A.
(9) Re Higginshaw Mills and Spinning Co. [1896] 2 Ch. 544; 65 L.J.Ch. 771; 75 L.T. 5; 45 W.R. 56, C.A.
(10) In Re Laxon & Co. [1892] 3 Ch. 31; 62 L.J.Ch. 79; 67 L.T. 584; 40 W.R. 614; 2 R. 7, C.A.
(11) Eastern Holdings Establishment of Vaduz v. Singer & Friedlander; Able Securities (In Liquidation) and Sempah (Holdings) (Claimants) [1967] 1 W.L.R. 1017; [1967] 2 All E.R. 1192.
NATURE OF PROCEEDINGS
APPLICATION by defendant company to have a judgment that was obtained by the plaintiff set aside. The facts are sufficiently set out in the judgment.
COUNSEL
K. E. Amua-Sekyi for the plaintiff.
Dr. Twum for Onimpa Akuoko & Co. for the defendants.
JUDGMENT OF CHARLES CRABBE J
The plaintiff-respondent (hereinafter referred to as the plaintiff) sued the defendant-applicants (hereinafter referred to as the defendants) on an originating summons for a declaration that by virtue of a provision in a certain deed of assignment the defendants became tenants of a certain property, for the sum of 012,000.00 being arrears of rent, and for vacant possession. Judgment was entered against the defendants.
The court is now being moved for an order to set aside the judgment obtained. In his affidavit supporting this application a director of the defendant company deposed, inter alia:
“(2) That on 3 July 1973, I attended this court and announced to the court that the company was in liquidation.
(3) That his lordship the judge ruled that in those circumstances the plaintiff should consult his lawyer who would know what to do.
(4) That no new date was fixed for hearing the case.
(5) That no hearing notice was served on the Registrar-General or the defendant-judgment-debtors.
(6) That to my surprise I have learned that judgment has been entered against the company …”
To this the plaintiff deposed to an affidavit in which he stated, inter alia, that:
“(3) The affidavit [of the defendant-company] wholly misrepresents what took place in court on 3 July 1973.
(4) I was present in court on that day, as was Michael Erawoc the deponent.
(5) When the case was called I told his lordship Mr. Justice Enoch Edusei that Mr. Erskine, my counsel, was ill and therefore could not attend court.
(6) His lordship told me that he was adjourning the case to 23 July 1973, for hearing and that I should tell my counsel that if he was unable to attend court on that date he should arrange for another counsel to appear for me.
(7) I deny that on 3 July 1973, or on any other date Michael Erawoc, the deponent herein, told the court that the defendant company was in liquidation or that the court ruled that I should consult my lawyer about it.
(8) To the best of my knowledge, information and belief no application has ever been made or was made on 3 July 1973 to any court for any civil proceedings against the defendant company to be stayed.
(9) To the best of my knowledge, information and belief it is untrue that the defendant company was in liquidation on 3 July 1973.
(10) Further Onimpa Akuoko & Co., solicitors from Accra, would have no authority to appear on behalf of the defendant company save on the instructions of the liquidator.”
For the defendants, counsel submitted that the defendant company was registered in Ghana doing business in Takoradi. There was an agreement between the plaintiff and the defendants evidenced by a deed of assignment. The defendants’ copy of the agreement is dated 2 October 1971. It had been registered and stamped in accordance with law. The company was indebted to a number of creditors and thus decided to go into liquidation. On 18 June 1973, a resolution was passed for the official liquidation of the company. The Registrar of Companies was notified who published Gazette notice No. 39 of Friday 29 June 1973, to that effect.
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The plaintiff took out an originating summons for the determination of a number of issues arising out of the deed of assignment. In the course of the hearing of the case there was an announcement to the court that the company was in liquidation. There was an adjournment; but the motion came on again and the issues were determined. Counsel for the defendants contended that the judiciary should take notice of matters published in the Gazette. The Gazette was brought to court which showed that on 3 July 1973, the company was in liquidation, therefore all civil proceedings should be stayed: see the Bodies Corporate (Official Liquidations) Act, 1963 (Act 180), s. 6.
The company passed the winding up resolution on 18 June 1973. Under section 13 of the Act the winding up commenced from 18 June 1973. Action should have been stayed from that date and the Registrar-General should have been informed. Therefore the judgment entered was per incuriam without regard to the Gazette notice. It was essential that the plaintiff should prove his claims like all other creditors: see Mosi v. Bagyina [1963] 1 G.L.R. 337 at p. 347, S.C.
Counsel for the plaintiff was of the view that three questions called for determination, namely:
(a) whether the judgment was void;
(b) whether Mr. Erawoc and his solicitors have authority to file the motion; and
(c) whether the application has any merit at all.
On the first question he agreed with counsel for the defendants that if the judgment was void, then even if no application had been made to the court, the court of its own motion could set the judgment aside. The argument that they were not served with the hearing notice was not supported by documentary evidence since that has been denied. The more serious argument was one based on subsection (1) of section 6 of Act 180, but that subsection did not apply in this case, because there were no winding up proceedings against the company. There should be a liquidation against the company where there was a petition to the registrar or to the court to wind up the company. And under section 17 the plaintiff was not a secured creditor. Whoever comes under section 17 must show that he has authority. In his view it must be answered whether Erawoc and his solicitors had authority to act as they did. Referring to Act 180, s. 14, counsel argued that the original affidavit of Erawoc did not disclose authority; he claimed to be the director of the company when winding up proceedings had begun. Therefore he should have sworn to an affidavit disclosing authority or he ought to have produced a letter of authority. The affidavit of 10 September 1973 should be viewed with suspicion. And the Registrar-General had never appeared in this suit. Counsel therefore urged that on the merits the application should be dismissed. He said, “if the application had been moved would the judge have refused?” He referred to In re Perkins Beach Lead Mining (1877) 7 Ch.D. 371 at p. 372; Re Great Ship Co., Ltd.; Re Parry’s Case (1863) 4 De G.J. & Sm.
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63 at p. 70; and Venner’s Electrical Cooking and Heating Appliances Ltd. v. Thorpe [1915] Ch. 404 at pp. 407-408, C.A.
Counsel for the defendants submitted in reply, firstly, that the cases cited against him dealt with the situation where an action had been taken before the commencement of winding up proceedings, whereas in this case the winding up had commenced and some action, that is, a continuation of some proceedings had taken place. Secondly, there was a distinction between the English law and the present law of Ghana on this issue. Section 80 of the Companies Act, 1862 (25 & 26 Vict., c. 89), now section 226 of the Companies Act, 1948 (11 & 12 Geo. 6, c. 38), conferred a discretion on the court. In Ghana the question of discretion did not arise since the statutory provision required that proceedings should be stayed. Since the proceedings went on after the passing of the resolution for winding up those proceedings were a nullity. Thirdly, under section 6 of the Bodies Corporate (Official Liquidations) Act, 1963 (Act 180), the question was whether proceedings under section 6 could only be taken against the company. In his view no restrictions were required under section 17 where the words “proceedings against” do not appear. The word “against” was a mere procedural word and therefore a broader interpretation of the word should be used. In any case, if section 6 did not apply, then he would argue that section 17 did apply.
To this counsel for the plaintiff contended that the cases he had referred to were cases under section 87 of the 1862 English Act which provided for a statutory stay as was the position in Ghana. That was the section under which Perkins’ case (supra) would fall. The situation here was this, that the plaintiff said he is the landlord of a house which may well be the subject of the liquidation and the defendants would say the house was theirs. If the court had a discretion then the question of authority would arise, that is, whether the defendants and their solicitors had the authority of the liquidator to intervene. Under section 6 of Act 180 the court had no discretion, under section 17 the court had a discretion.
Counsel for the defendants then tried to draw a distinction between the requirement regarding authority under section 17 of Act 180 being a requirement at that stage of the proceedings before judgment was given, and whether as regards the present application the question of authority did arise at all. He thought that that stage had been passed and the present application was one to have the judgment set aside. Based on the Documentary Evidence Act, 1868 (31 & 32 Vict., c. 37), ss. 2 and 5, the courts in this country notice the official Gazette on mere production. Normally, the Gazette is evidence of Acts of State. It is not evidence of acts of public officials which acts do not bear on the affairs of the government. It is as such necessary to give some evidence that a party to an action has probably read the Gazette in order to tie him down to a knowledge of the contents of the document.
Thus the plaintiff may well be right when he says in paragraph (9) of his affidavit that the defendants were not in liquidation on 3 July 1973. The question here is whether, indeed, the Gazette publication was
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brought to the attention of the judge. In his affidavit, paragraph (2), the deponent on behalf of the defendants stated that he attended court on 3 July 1973, “and announced to the court that the company was in liquidation.” He did not depose that a copy of the Gazette was produced in court for the benefit of the judge. If, as counsel for the defendants asserted in court, the Gazette was brought to court and the judge was informed about it, it seems to me that the representative of the defendants in his affidavit of 9 August 1973, would, most probably, have so deposed. A copy of the day’s proceedings has not been exhibited to any of the affidavits sworn to for the purposes of the present application. In the circumstances, I do not accept the contention of counsel for the defendants that the Gazette was brought to court. He himself was not in court that day.
In his supplementary affidavit of 10 September 1973, the same representative of the defendants referred to the authorisation “by the liquidator to attend court on 3 July and inform it of the company’s liquidation.” Again he does not depose that he so did and brought the Gazette notice to the attention of the judge. This supplementary affidavit is intended to supply the missing link regarding the authority of that representative or of the solicitors of the defendants to deal with the matter then before the court since the company was, at that material time, in liquidation and the liquidator had been informed. This stems from the provisions of section 14 of the Bodies Corporate (Official Liquidations) Act, 1963 (Act 180). Under that section all the functions of the directors vest in the liquidator 64 “save in so far as the liquidator sanctions the continuance thereof.” The evidence before this court is that, in the words of the deponent in answer to the supplementary affidavit of 10 September 1973, “I was authorised to attend court on 3 July and inform it of the company’s liquidation.” I do not think this can be taken to mean that the liquidator had sanctioned the continuance of the functions of the directors. If anything, it is a specific request to attend court simpliciter. This is a far cry from an authority to act on behalf of the liquidator in proceedings involving the company in liquidation. And since the authority of a director of the company to so act is being called in question, it is desirable that to put the matter beyond any doubt there should be an affidavit from the liquidator to show that he has given his authority to the directors to perform any or all of the functions which vest in the liquidator by virtue of the provisions of section 14 of the Bodies Corporate (Official Liquidations) Act, 1963. An authority for a specific act is quite distinct from a sanction such as the provisions of section 14 of the Act required.
The winding up of a company comes under the provisions of sections 246 to 261 of the Companies Code, 1963 (Act 179), much of which deal with private liquidations. For the purposes of this application, the power for the liquidation is the Bodies Corporate (Official Liquidations) Act, 1963. By section 6 of that Act, a civil proceeding against a company in an official winding up “shall be stayed.” The word “against” in subsection (1) of this section 6 is important. Its importance can be realised
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when one reads section 6 (2) of Act 180 which provides that: [His lordship here read section 6 (2) as set out in the headnote and continued:]
This provision does not mention the special resolution winding up and the conversion winding up. It mentions in effect petitions addressed to the registrar and to the court. As regards a petition to the registrar a creditor of the company or a member or a contributory of the company could petition. With regard to a petition to the court, the registrar and the Attorney-General are added as creditors of the company. The registrar would thus be a party to a petition for the official winding up of a company in a petition to the court, but not in a petition to him. Why then is the registrar specifically mentioned in subsection (2) of section 6? 1 do not think it is intended to draw a distinction between him and the others for the purposes of the word “against” in subsection (1) I believe, however, that it does give him additional powers to act in his discretion since under section 17 of Act 180 “proceedings by a secured creditor for the realization of this security” could be proceeded with or commenced. Under such circumstances the registrar could set in and exercise any of his powers regarding liquidation where there are facts which make such exercise possible, for example, that “the company is unable to pay its debts.” So if it is accepted that a winding up by virtue of the provisions of paragraph (a) of subsection (1) of section 1 of Act 180 does not fall within the ambit of section 6 of that Act, what happens between the passing of the resolution for the winding up and the sending of a copy of the resolution to the registrar? Could the company dispose of its property or transfer shares? I think not. For under sections 13 and 14 of Act 180, on the passing of the resolution for the winding up of the company the directors cease to exercise any of their functions unless the liquidator authorises, that is, sanctions the directors to continue to exercise such functions. And the functions of the directors, no doubt, include the power to sue on behalf of the company, and to represent the company when it is sued.
Equally in subsection (2) of section 6 appears also the word “by.” For that purpose the expression “stay any proceedings by or against the company or in respect of its property” contains three elements, that is to
say,
(a) any proceedings by the company;
(b) any proceedings against the company; and
(c) any proceedings in respect of the property of the company.
It would not, therefore, be wrong, to base an argument on the word “against,” within the context of section 17 of Act 180.
Moreover, subsection (2) also contains the words “any disposition of the property of the company, including things in action and any transfer of shares shall, unless the Court otherwise directs, be void.” To dispose of a chose in action involves the determination of an issue or issues in proceedings before a court. And it cannot be gainsaid that an interest in a deed of assignment involving a lease falls under the broad definition of a personal chattel. My view is that under subsection (2) of section 6 of the
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Act, proceedings taken or commenced by the company, as well as against the company, could be stayed.
Another consideration also is the nature of the proceedings as a result of which the judgment now sought to be set aside was obtained. The originating summons disclose three matters for determination:
(a) a declaration that the defendants had become tenants by virtue of certain provisions in the deed of assignment;
(b) payment of the sum of 012,000.00 being arrears of rent; and
(c) an order for vacant possession.
Each of these matters or all of these matters involve the determination of certain rights and liabilities of the defendant company. Can it really be said that the originating summons and the proceedings consequent upon the issue of the originating summons are not, cannot, and do not constitute proceedings against the defendant company? In my view they are proceedings against the company.
Two types of proceedings are referred to in subsection (1) of section 6 of Act 180, this is to say, (a) winding up proceedings against the company; (b) all civil proceedings against the company. The staying of the latter set of proceedings depends upon the proceedings in the former set of proceedings being winding up proceedings.
The question which thus needs serious consideration is whether when the directors of a company pass a special resolution for the official winding up of a company, they have commenced proceedings against the company. They have, it is true, started proceedings which would bring to an end the existence of the company. It could be argued that it is in the best interests of a company that it should be wound up on a special resolution of the company. That argument would not take account of the natural meaning of the word “against.”
As a preposition the word “against” means in opposition, as when a man says “I am against all these measures.” The word can also be used to express a contrast as in the expression “the photograph was taken against a blue background”; it can be used in an anticipatory sense such as in the expression “against a rainy day.” In a preparatory sense the word can be used as when a person says, “I warned him against his coming.” It can also be used to express a collision with or opposite to an object. Its use as a conjunction is now considered archaic. Now this is what section 17 of Act 180 says: [His lordship here read section 17 as set out in the headnote and continued:] Reading this section 17 and section 6 of Act 180, I am of the opinion that the word “against” cannot and should not be interpreted in isolation. It must be construed with the word “proceedings.” A proceeding is an action. It could mean a step in an action much depending upon the wording in general in the statutory context in which it is used. But under section 85 of the Companies Act, 1862 (25 & 25 Vict., c. 89), proceedings for recovering penalties for neglecting to publish a statement, or annual list of members or to make a yearly statement of revenue fell under the words “any action, suit or
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proceeding.” Re Briton Medical and General Life Assurance Association (1886) 32 Ch.D. 503.
The case of Re Perkins Beach Lead Mining Co. (supra) is authority for the proposition that going to sale under a writ of fi. fa. executed by seizure is a proceeding within the meaning of section 35 of the 1862 Act. This is supported by Re Artistic Colour Printing Co. (1880) 14 Ch.D. 502. Equally distress for rent is a proceeding: see Re Exhall Mining Co., Ltd. (1864) 4 De G.J. & Sm. 377, Re Lancashire Cotton Spinning Co.; Ex parte Carnelley (1887) 35 Ch.D. 656, C.A. and Re Higginshaw Mills & Spinning Co. [1896] 2 Ch. 544, C.A.
In the case of Re Laxon & Co. [1892] 3 Ch. 31, it was held that a company’s winding up petition, even before any order was made thereon, is a proceeding within the meaning of section 3 of the Companies (Winding Up) Act, 1890 (53 & 54 Vict., c. 53). And in Eastern Holdings Establishment of Vaduz v. Singer and Friedlander; Able Securities (In Liquidation) and Sempah (Holdings) (Claimants) [1967] 1 W.L.R. 1017, it was held that an interpleader summons to which a company in liquidation was made a respondent is a proceeding against the company.
Reading section 6 of the Bodies Corporate (Official Liquidations) Act, 1963 (Act 180), as a whole I am inclined to the view that the expression “proceedings against the company” as used in that section, means proceedings taken by an entity other than the company itself. All the authorities I have just cited would bear this out. And I believe that the provisions of subsection (2) of section 6 of Act 180 also bear this out: they speak in terms of “the interval between the presentation of a petition for an official winding up and the commencement of the winding up.” A special resolution for the winding up of a company is not a petition for the winding up of any company. Nor is a conversion from private liquidation a petition for the winding up of a company.
Two other types of petitions are referred to under section 1 of Act 180; one a petition addressed to the registrar; the other a petition addressed to the court. Where a company passes a special resolution for an official winding up of the company, the directors cease automatically to perform any of their functions as directors. They can only do so if the liquidator sanctions a continuance. From that moment the company is in liquidation. I hold therefore that a special resolution for the winding up of a company is not a proceeding against the company within the meaning of section 6 of Act 180. Section 17 speaks only of “commencement of a winding up.” It does not use the expression “winding up proceedings” as the expression is used in section 6. Sections 13 and 14 also use the expression “commencement of a winding up” without the addition of the word “proceedings.” There is thus a distinction between the provisions in section 6 and those in section 17 of Act 180. To call the provisions of section 6 in aid would require that there are winding up proceedings against the company. To rely on the provisions of section 17 only requires
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the commencement of a winding up. Sections 15 and 18 both use the expression “commencement of a winding up” without the word “proceedings.” There is also this difference that in the case of a special winding up resolution, the commencement of the winding up is the date of the passing of the special resolution. In the case of a petition the commencement of the winding up is the date of the winding up order. The petition starts the chain reaction which leads to the winding up order. In the other case, the resolution commences the winding up. Under section 17 of Act 180 no action or civil proceedings, except an action by a secured creditor, “shall be proceeded with or commenced.” When the directors in the present case passed the special resolution on 18 June 1973, the winding up of the company had commenced. Section 17 of Act 180 became applicable.
But how can a court order the stay of proceedings before it when it is not in possession of the facts upon which it could exercise its powers and comply, as in this case, with the provisions of section 17 of Act 180? The application before me is one to set aside a judgment, on the ground that it was entered per incuriam without regard to the Gazette notice. I am here faced with three situations: did the court act without regard to the Gazette notice; was there authority; and should the judgment be set aside as being a void judgment in view of section 17 of Act 180. As regards the first situation, I have already held that I do not accept the contention of counsel for the defendants that the Gazette was brought to court and the judge’s attention drawn to it. As I have tried to show a Gazette notice is not the same thing as an Act of Parliament. Equally the law requires proof of the contents of subsidiary legislation. Proof is therefore required to show that a party to an action has probably read a Gazette notice so as to tie him down to a knowledge of its contents. I am not satisfied in this case that the judge’s attention was drawn to the contents of the Gazette notice in question.
I have also already alluded to the fact that a copy of the day’s proceedings has not been exhibited to inform this court as to what really did happen, in view of the conflicting facts deposed to in the relevant affidavits. I hold therefore that on that aspect of the matter the defendants have failed to satisfy this court that the judgment was arrived at per incuriam on the ground that the court disregarded the Gazette notice.
By virtue of section 14 of Act 180, as from 18 June 1973, the functions of the company became vested in the liquidator. The proper person then to appear in court to deal with the matter when the copy of the special resolution was sent to the registrar is the liquidator. He has not appeared in this case so far. But it is contended that he has sanctioned the acts of the directors as far as the present action is concerned. The affidavit of 8 August 1973, supporting the application to have the judgment set aside does not state that it was being deposed to on behalf of the liquidator or by his sanction. The deponent says, “ . . I am the deponent herein and was the director of the defendant/judgment/debtor
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company before this liquidation.” Nowhere in the whole of that affidavit does it show that the deponent was acting under the sanction of the liquidator. In his supplementary affidavit sworn to on 10 September 1973, the same deponent does not state that he was acting under the sanction of the liquidator to “make oath and say . . .” though in the body of the affidavit itself he says he “was authorised by the liquidator to attend court on 3 July and inform it of the company’s liquidation.” He added significantly, “that I have the authority of the liquidator to prosecute this motion on my own behalf as a shareholder and a creditor.” But then he was deposing to this affidavit of 10 September 1973, as a “further affidavit to provide the missing information.” What is the missing information which the second affidavit seeks to provide? It is to show as “the director [of the company] before its liquidation” he has the authority to act on behalf of the liquidator. Yet in his own words he is now acting not as the person, a director, whose action the liquidator has sanctioned but he is acting on his “own behalf as a shareholder and creditor.” The two affidavits are thus conflicting. They do not contain the truth on this question of authority. And I reject them as such. The defendants thus fail again on the question of authority.
On these two grounds, I would be prepared to dismiss the application. There is, however, the further question whether the judgment is void. The provisions of section 17 of Act 180 are mandatory provisions. The relevant facts, in my view, were not placed before the judge concerned. He therefore was not put in a position where he would act under the provisions of section 17, and stay the proceedings against the company or grant leave. I have not the slightest doubt in my mind that had the Gazette notice been brought to his attention the provisions of section 17 would equally have been drawn to his attention and he would not have proceeded to judgment without granting leave and he would, most probably, have made an order for a stay of the proceedings.
The issue before me is not whether there were winding up proceedings against the company. The issue is whether on the commencement of the winding up of the company, the proceedings against it by the plaintiff in this application should have continued without leave or should have been stayed. On that issue I am satisfied that the provisions of section 17 of Act 180 have not been complied with. The judgment is thus void. And I do hereby set it aside. I make no order as to costs.
DECISION
Application granted.
S. O.
