OWUSU v. R. N. THORNE LTD. AND ANOTHER [1966] GLR 90

Division: HIGH COURT, KUMASI

Date: 25 JANUARY 1966

Before: BOISON J.

Practice and procedure—Absconding defendant—Security for appearance—Action against limited liability company—Whether director can be ordered to furnish security personally— Supreme [High] Court (Civil Procedure) Rules, 1954 (L.N. 140A), Order 35, r. 2.

Company law—Corporate personality—Limited liability company—Whether company has separate existence from its directors and members—Whether action against limited liability company action against directors and members personally.

HEADNOTES

The plaintiff-applicant sued the first defendant, a limited liability company and the second defendant, its agent. By an ex parte application he obtained an absconding warrant against one R.N.T. who, together with his wife were the only directors of the first defendant company, on the grounds that they had closed the company offices and sold their property and that R.N.T. was going on leave and was not likely to return to Ghana. He therefore prayed for an order that R.N.T. be ordered to furnish personally bail for appearance under Order 35, r. 2.

Held: the company existed apart from the directors and members. R.N.T. was not sued personally and he was therefore not a defendant within the meaning of Order 35, r. 2 for the court to go into the question of security.

NATURE OF PROCEEDINGS

APPLICATION by the plaintiff-applicant praying for an order that one R.N.T. be ordered to furnish security personally for appearance to answer such judgment and costs that might be given against the first defendants, a limited liability company of which he was a director. The facts are fully set out in the ruling.

COUNSEL

J. Owusu Yaw for the plaintiff-applicant.

G. Davey for the first respondent.

JUDGMENT OF BOISON J.

The plaintiff sued the defendants, R. N. Thorne Ltd. and J.K. Anane. The plaintiff, by an ex parte motion, obtained an [p.91] of [1966] GLR 90 absconding warrant against Mr. R. N. Thorne, one of the directors of the first defendant company. The present proceedings are to determine if there is probable cause for believing that the defendant is about to leave the jurisdiction: see the Supreme [High] Court (Civil Procedure) Rules, 1954,1 Order 35, r. 2. It was argued on behalf of the first defendant that the plaintiff sued R. N. Thorne Ltd. as the first defendant as distinct from R. N. Thorne personally. Counsel submitted that as the first defendant is a limited liability company with a separate personality from the directors, and as Mr. Thorne has not personally contributed to or personally caused the injury, he cannot be held personally liable for the torts of the limited liability company, and that Order 35 on the whole cannot be evoked against a limited liability company. Counsel further submitted that the action in this case does not fall or come within the limited exceptions where the directors of a company are held personally responsible.

On behalf of the plaintiff it was argued that the first defendant acts through human beings and the human beings are therefore responsible for the acts of the company; that, as in this case Mr. R. N. Thorne and his wife are the only directors, the two therefore comprise the first defendant company. They have sold some of their property, closed their office and Mr. R. N. Thorne is going on leave and is not likely to return to Ghana and it was submitted he must therefore give security for his appearance.

What the court has to determine in this motion is whether R. N. Thorne personally or the company is the first defendant in this case. The theory of legal personality of corporations has its own practical problems but it is clear that a limited company or corporation has legal existence apart from the directors and members, and it is in a few recognised exceptions that the law lifts the “corporate veil,” as it has been put, and looks to the directors and members personally. On the plaintiff’s own pleadings he sued R. N. Thorne Ltd. the first defendant and one other as the second defendant— the first defendant was the master of the second defendant. It may well be and undoubtedly is true that R. N. Thorne and his wife are the only directors of the company but the company exists apart from the directors and the members. To hold that the directors are personally the first defendant in this case will be defeating the doctrine of the separate existence of a limited liability company. The action is not against R. N. Thorne personally. I am not determining the liability of the first defendants as a company. The question here is: Is R. N. Thorne personally sued as the first defendant so that he is a “defendant” within Order 35? The answer is no. As far as

[p.92] of [1966] GLR 90 the court is aware the company is not in the process of being wound up and even if that were so, it would not make R. N. Thorne personally the first defendant in this case. In the absence of R. N. Thorne from Ghana, another director has been appointed. The company as far as the court can gather is still in existence and R. N. Thorne is not and cannot be personally the first defendant herein so as to go into the question of his security. Costs of ¢5.00 for the defendants against the plaintiff.

DECISION

Application dismissed.

S. K. T.