UNION MARITIME ET COMMERCIALE vs. RABENSTEINER AND ANOTHER [1968] GLR 504

CASE REFERRED TO

Jacques v. Harrison (1884) 12 Q.B.D. 165; 53 L.J.Q.B. 137; 50 L.T. 246; 32 W.R. 274, C.A.

NATURE OF PROCEEDINGS

APPLICATION on behalf of Tropical Woods Ltd. to set aside default judgment obtained against its liquidators. The facts are sufficiently set out in the ruling of Amissah J.A. sitting as an additional judge of the High Court.

COUNSEL

Nii Odoi Annan for the applicant.

N. K. Kudjawu for the respondent.

JUDGMENT OF AMISSAH J.A.

On 10 April 1968, judgment in default of appearance was given in this case for the plaintiffs. The defendants were sued in their capacity as liquidators acting for and on behalf of Tropical Woods Ltd., a company in voluntary liquidation. Both defendants were at the time of the issue of the writ out of the jurisdiction. But leave had been granted for service of the notice of the writ on them at their addresses in Italy. And they were accordingly served. Now this motion is brought by a person described as Tropical Woods Ltd. to have the ex parte judgment set aside. I say that the person bringing the motion was so described because as will presently appear the agent or agents through whom the company acted cannot be properly identified. The ground for the application is that the defendants were not the proper persons to be sued. The action should have been brought against the applicant, Tropical Woods Ltd., acting through its ordinary directors. The applicant said that it was not aware that the writ had been issued. By the time it knew of it, judgment had been taken. Hence this application.

It was not disputed that a person not a party to an action could bring a motion to set the judgment in that action aside. There is authority that Order 27, r. 16 of the Supreme [High] Court (Civil Procedure) Rules, 1954 (L.N. 140A), enables a judgment by default to be set aside on the application of a third party. But it must be remembered that the rule is designed to enable judgments by default to be set aside by those who have, or can acquire, a locus standi. It does not give a locus standi to those who have none: see Jacques v. Harrison (1884) 12 Q.B.D. 165, C.A. What is the position in this case? At the time when the writ was issued Tropical Woods Ltd. was in liquidation. The two persons named as defendants were its liquidators and

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they were sued in that capacity. Section 254 of the Companies Code, 1963 (Act 179), says that on the appointment of a liquidator for the purposes of a private liquidation, which this indeed was, all the powers of the board of directors shall vest in the liquidator and the powers and authority of every director shall cease. The only saving in the directors’ powers is in so far as the company in general meeting or the liquidator sanctions their continuance. They could also exercise powers so far as is necessary to prepare statements and accounts of the company. According to section 255 (1) of the Code, the liquidator in a private liquidation may exercise all the powers of the liquidator in an official winding up under the Bodies Corporate (Official Liquidations) Act, 1963 (Act 180). Under section 9 (1) of Act 180, the liquidator in an official winding up under the Act has power to bring or defend any action or other legal proceedings in the name and on behalf of the company. Thus the liquidator in a private liquidation has the same power. The liquidators in this case were therefore the proper persons against whom the action should have been brought. While the action was pending, the liquidators informed the Registrar of Companies that they had completed their winding up. This of course, could not have been correct because at that time there was this action outstanding against them. The registrar, exercising his powers under section 260 (1) of the Code struck the name of the company, Tropical Woods Ltd., off the register of companies. He could only do that if he was satisfied that the winding up was in fact complete. And I am sure had he been aware that this action against the liquidators of the company was still pending, he would not have exercised his powers under the subsection. Section 260 (2) takes care of such situations. For it enables the name of the company to be put back on the register in certain circumstances. Where the company has been dissolved the court may, at any time within two years after the date of the dissolution, on an application being made by the registrar or the liquidator of the company or other specified persons, make an order, upon such terms as the court thinks fit, declaring the dissolution to have been void and ordering the name of the company to be restored to the register. An application was made under this subsection and the name of the company was restored. The court’s order was made on 13 February this year and the company found its name back on the register on 28 March. As I said at the beginning, judgment was given against the liquidators on 10 April.

The question for consideration is the effect of the restoration. Mr. Annan for the applicant has Argued that it meant only one thing, that the company was restored with full powers back into the hands of its directors. The liquidators became functus officio when they informed the registrar that they had completed the winding up. Their

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powers did not revive with the restoration of the company. But I think the argument is wrong. Had the registrar not struck off the company’s name for a start, the liquidators would have been the persons in control of it. Thus where the dissolution is taken to be void the company should be put back where it was immediately before the abortive dissolution. This is borne out by section 260 (3) which provides that where the name of the company is restored to the registrar “the company shall be deemed to have continued in existence as if it had not been dissolved except that for the purposes of any period of limitation time shall not be deemed to run during the period between dissolution and restoration.” In effect the company picks up the threads of its existence from the time immediately before it was dissolved. As regards the final provision in subsection (4) that “The Court may by the order give such directions and make such provisions as seem just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had never been struck off,” I am unable to accept Mr. Annan’s argument that it compels the court to give directions on the placing of persons in the same position as before in each case. Since section 27 of the Interpretation Act, 1960 (C.A. 4), the expression “may” has never imported such compulsion. It has merely granted a discretionary power. Thus it all depends on the circumstances. The court may in certain cases be asked and may agree to the ordinary directors of the company being put back in control of the company. In such cases no doubt it would make the appropriate orders. But it need not in every case make an order directing who should be in control of the company. Where it makes no such order, either because it is not asked for, or the circumstances do not justify its making, the position must be, as I have said, that the company is put back in the same place as it was immediately before the void dissolution. Liquidators who were in control immediately before the company was supposed to have ceased to exist resume their control. To continue to describe them as functus officio is quite incorrect because the law says that what terminated their office is deemed never to have taken place.

The applicant, from the submissions, does not have authority from the liquidators to bring this motion. The affidavit in support of the motion does not disclose who is taking this action on behalf of the company or what his authority is. Furthermore the applicant comes asking that the judgment which had been taken against the liquidators be set aside because the liquidators were not the proper persons to be sued. But the liquidators were the proper persons to be sued and at the time of the judgment the only persons with power to act for the company. The applicant can now act through the liquidators and here the liquidators are clearly not lending their hand to the

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applicant’s motion. The applicant cannot, therefore, succeed on this ground.

There is one other point which I drew to the attention of the applicant. It is made in Bowen L.J.’s judgment in Jacques v. Harrison (supra). I reproduce the passage because it succinctly states the procedure which should have been followed by the applicant. Starting by saying that the only two methods of intervention by a stranger to an action are firstly to obtain the leave of the defendant to use the defendant’s name in applying to have the judgment set aside or secondly to take out a summons served on both the defendant and the plaintiff, asking for the judgment to be set aside and for liberty to defend, Bowen L.J. continues as follows at p. 168:

“By one or other of these two modes all that justice requires in any case can be done. But it is of the essence of the intervention of the third person, if he adopts the latter course, that the defendant should be made a party to the application. This is not a mere form, but an essential requirement of justice. The defendant has thought it more consistent with his own interest to submit at once to the plaintiff’s claim instead of contesting it further. If at the instance of a stranger to the action the litigation is sought to be revived, the defendant has a right, in the first place, to dispute the title of the applicant to interfere. He has no opportunity of doing so unless he is made a party to the summons. In the second place, he has a right to be heard upon the question whether, if a litigation is to be prolonged against himself in invitum which he desired to have closed by his submission, he should not be indemnified against any risks or costs to which he may be otherwise exposed by its prolongation. Until the applicant has made the defendant a party to the application by service upon him of the summons, the applicant remains a mere stranger to the action.”

The applicant in this case, although choosing to come before the court without asking the defendants to lend it their names did not serve the defendants to enable them to make what representations they should wish as the justice of the case demands.

The application must be dismissed.

DECISION

Application dismissed.

S. K. T.