REPUBLIC vs. HIGH COURT, ACCRA; EX PARTE APPIAH AND OTHERS [1999-2000] 2 GLR 420

CASES REFERRED TO:

(1) Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147; [1969] 2 WLR 163; [1969] 1 All ER 208, HL.

(2) R v Northumberland Compensation Appeal Tribunal; Ex parte Shaw [1952] 1 KB 338; [1952] 1 All ER 122; 116 JP 54, CA.

(3) Salomon v Salmon & Co [1897] AC 22; 66 LJCh 35; 75 LT 426, HL.

[p.422] of [1999-2000] 2 GLR 420

APPLICATION for an order of certiorari to quash the orders of the High Court, Accra given on 20 July 1999. The facts are sufficiently stated in the unanimous ruling of the court delivered by Ampiah JSC.

Prince F N A Neequaye (with him G Heward-Mills and Arthur Mensah) for the applicant.

Owusu Yeboa (with him Kojo Ackah and E Asamoah) for the interested parties.

Ampiah JSC. Delivered the ruling of the court. In this application, the applicants seek an order of certiorari to have brought to this court for the purpose of having it quashed, a ruling of the High Court, Accra wherein the court had made the following orders:

“(a) An order appointing a chief registrar of this court manager and receiver in respect of house No D 767/4 Beach Avenue, Okaishie who shall among others investigate and submit a provisional report on all physical assets in the said property and terms of all tenancies or leases or occupancy of shop rooms in the property.

(b) An order that the second defendant cease commercial activity forthwith and that the director thereof invite the auditors to take stock of the company’s assets and liabilities and that the resultant report be presented to the court, through the registrar of the court.

(c) An order restoring the maintenance of the plaintiffs specified in paragraph (9) of the plaintiffs’ statement of claim.

(d) An order restraining the defendants whether acting by themselves or by their agents, associates and servants from appropriating or disposing of any property or assets of the said estate save by prior leave of the court.”

These orders had been made on an application for interim injunction brought by the plaintiff, respondents in this application in Civil Suit No 2088/98 entitled:

“Mrs Grace Safo and Others … Plaintiff.

v

1 Elvis Appiah Defendants … Defendants 2 Lims Co Ltd

[p.423] of [1999-2000] 2 GLR 420

And

Mavis Safo and four others … Co-defendants.”

The brief facts of this case are that one Kofi Safo, whose estate is the subject-matter of the action, had died on 22 April 1998 and his wife Mrs Grace Safo, the first plaintiff in the action, and the first defendant, Elvis Appiah, a brother of the deceased, had been granted letters of administration on 12 August 1998 to administer the estate of the deceased. The inventory filed of the estate had included house No D767/4, Beach Avenue which the defendants claimed belonged to the second defendant-company. Though no papers or documents have been exhibited in this application showing material particulars such as the share capital or the shareholding, the directors (including the managing director), the secretary, the auditor/accountants, the balance sheet showing the assets and liabilities etc of the second defendant company, it appears that the company indisputably had been incorporated solely by the deceased as a limited liability company with a share capital. The plaintiffs claim that the late Kofi Boye Safo owned 100 per cent of the shares. This is however disputed by the defendants who claim that they have interest in the shares and that the deceased held the shares in trust for them. These are issues to be resolved by evidence, but it is not disputed by the parties that the company is a limited liability company.

With this disagreement between the parties concerning the contents of the estate, there was bound to be problems and an impasse in the administration of the estate. It was therefore not surprising that on 10 December 1998, the plaintiffs issued out a writ of summons claiming:

“(a) An order requiring the first defendant to account for all monies received in respect of the estate of the deceased since April 1998.

(b) An order requiring he second defendant-company to file a statement of account representing the current financial position of the company.

(c) An order requiring the first defendant to join the first plaintiff in distributing the said estate to the beneficiaries thereof in accordance with the law.

(d) Further order or orders”

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Pleadings were filed and summons for directions taken, but before a date could be fixed for hearing of the substantive action, the plaintiffs applied for an order of interim injunction. What they sought was what was included in the order of the court referred to earlier and which the applicants herein seek to have set aside.

An order of certiorari would be made where the order sought to be quashed has been made, inter alia, without jurisdiction either because the court has exceeded its jurisdiction or lacks jurisdiction. It is also said that a court having jurisdiction may lose that jurisdiction if its decision is made in bad faith, if it has failed in the course of the inquiry to comply with the requirements of natural justice; or if it had refused to take into account something which it was required to take into account or it might have based its decision on a matter it has no right to take into account. See Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147 at 171, HL. The list cannot be said to be exhaustive. However where the court has jurisdiction to entertain the action, its judgment or ruling cannot be impeached on the mere ground that its decision is wrong. Under those circumstances the proper thing to do is to appeal against that decision. Where however upon the face of the proceedings themselves it appears that the decision of the court is wrong in law, certiorari to quash it will be granted. See R v Northumberland Compensation Appeal Tribunal; Ex parte Shaw [1952] 1 KB 338.

In the instant case, the orders made seem to involve an incorporated body. By the deceased’s presumed 100 percent shareholding, Lims Co Ltd, the second defendant, seems to have been included in the estate of the deceased. The presumption being that since he owned 100 per cent of the shares, he and the company are one and that the company is owned by the deceased as his personal property. That may factually be so, but the legal position is that an incorporated company has a legal personality of its own different from those who form it. It could sue and be sued as a legal entity. There is no dearth of authority on this issue: see Salomon v Salomon Co [1897] AC 22, HL. Consequently, though the late Kofi Boye Safo could be the owner of the 100 per cent shares in the company, he is not the company so as to make the company his personal property. As a legal entity the company is governed by rules and regulations of the company. Its management is vested in the board of directors whose managing director is directly involved in the day to day activities of the company and

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who is responsible to the board and the shareholders. Upon the death of a shareholder, his shares, unless otherwise directed by the deceased himself, are vested in his legal representatives, executors or administrators who would later distribute them to the beneficiaries who then would have their name entered in the register of the company as members.

Consequently, the first plaintiff and the first defendant having been appointed the administrators of the estate, hold whatever interest the deceased had in the company in trust for the beneficiaries. The ownership of the 100 per cent shares is however an issue for trial, but the administration of the company itself as a legal entity remains with the directors of the company. It would appear therefore that the direction of the court that the company’s affairs be conducted by persons other than the directors, as if the company belongs to the deceased and has become part of his estate was given without recourse to the law.

Perhaps it is no longer necessary to go into details of this issue for the applicants, subsequent to this application, applied and had it varied the order sought to be quashed. The variation order was attached to the plaintiffs respondents’ affidavit in opposition to this application. There has been no appeal against the variation order. It would seem therefore that the parties are now satisfied. The issues posed in my opinion seem to have been disposed of. The directors have been vested with authority to manage the company with the registrar as the supervisor to protect the interest of the estate. What is left is for the action to be disposed of expeditiously to enable administration of the estate to proceed.

The order of 20 July 1999 no longer being in existence, I do not think the applicants should have pursued this application. I would accordingly dismiss the application.

Application dismissed.

LSNA