Export Company Vrs Nivia Green Company Ltd. & Anor. [2022] GHACC 113 (16 November 2022)

IN THE CIRCUIT COURT “A”, TEMA, HELD ON WEDNESDAY, THE 16TH DAY OF NOVEMBER, 2022, BEFORE HER HONOUR AGNES OPOKU-BARNIEH, CIRCUIT COURT JUDGE SUIT NO. C11/163/22 THE EXPORT COMPANY ---- PLAINTIFF/RESPONDENT VRS. NIVIAGREEN COMPANY LTD. ---- 1ST DEFENDANT NICHOLAS OSEI AFARI ------ 2ND DEFENDANT/APPLICANT PARTIES PRESENT CHRISTIAN LEBRECHT MALM-HESSE, ESQ. FOR PLAINTIFF/ RESPONDENT PRESENT JULIUS NKETSIAH, ESQ. FOR DEFENDANTS/APPLICANT PRESENT RULING FACTS This is a ruling on a Motion on Notice filed pursuant to Order 4 Rule 5(2) of the High Court (Civil Procedure) Rules, 2004(C. I. 47) by Counsel for the 22nd Defendant/Applicant (hereinafter referred to as the “the Applicant”) praying this court for disjoining the Applicant as a party to the suit. The background to this instant application is that on 4th July 2022, the Respondent caused a writ of summons to issue against the Applicants for the following reliefs; a. A declaration that the 1st Defendant breached its contract with the Plaintiff. b. A Declaration that the 2nd Defendant made fraudulent misrepresentations to the Plaintiff as far as the supply, nature and payment of the said goods are concerned. c. An order directed at the 1st and 2nd Defendant as being jointly and severally liable to pay Plaintiff the outstanding amount of USD 34,377.62 for goods supplied. d. An order for the General damages for breach of contract against the 1st and 2nd Defendant. e. Interest on relief (iii) from July 2021 to the date of final payment. f. Punitive damages against the 1st and 2nd Defendant. g. Any other relief(s) as the Court deems fit. h. Cost. The Applicant entered appearance and filed a defence on 2nd September, 2022. Subsequent to that, Counsel for the Applicant filed the instant application seeking to disjoin the 2nd defendant, a managing director of the 1st defendant company since his presence in the suit is not necessary for the final determination of the suit. In the affidavit in support of the motion paper, the applicant denies the allegation of fraud leveled against him and maintains that he acted in his capacity as the managing director of the 1st defendant company in his dealings with the respondent and as such should not be held liable. The applicant further deposed that the respondent’s claim as endorsed on the writ of summons is premised on a contract it entered into with the 1st defendant and not with him personally. Thus, he finds it curious and disturbing that the respondent has personally made him a defendant in this suit knowing well that at all material times, every communication made with it was done in his capacity as an officer of the Company. The Applicant further states that nowhere in the respondent’s pleadings do it allege that he personally used the 1st defendant as a front or cover to perpetuate fraud on it. Consequently, he has been improperly joined to the suit. The respondent vehemently opposed the application and contends in his copious affidavit in Opposition that the Applicant is the alter ego of the 1st defendant and he made several fraudulent misrepresentations, which forms the basis of the 2nd defendant being joined to the suit. The respondent further avers that the physical office of the 1st defendant is not known to it except that the goods in question were kept at a Cold Store in Tema. The respondent further deposed that the current feature of the 1st defendant Company makes it imperative for the 2nd Defendant/Applicant to be joined to this suit as it will be unjust to allow the 2nd Defendant/Applicant to hide behind the corporate veil of the 1st defendant to escape liability. The respondent maintains that where the 2nd Defendant/Applicant in this suit is cited for fraudulent misrepresentations to the Plaintiff/Respondent, which has caused contractual loss, or damages to the Plaintiff/Respondent, the 2nd Defendant ought to be joined to the suit and not be allowed to hide behind the curtain of corporate veil. LEGAL ISSUE Whether or not the Applicant has been improperly or unnecessarily made a party to the suit. ANALYSIS I have determined this application based on the motion paper, the supporting affidavit, the annexures, oral submissions by both lawyers and all processes so far filed in the suit. Order 4 rule 5(2) (a) of the High Court (Civil Procedure) Rules, 2004(C.1. 47) which deals with the Misjoinder of parties provides that: “at any stage of proceedings the Court may on such terms as it thinks just either of its own motion or on application order any person who has been improperly or unnecessarily made a party or who for any reason is no longer a party or a necessary party, to cease to be a party” The gravamen of the contention of Counsel for the applicant is that the applicant is the managing Director of the 1st defendant company. It is a principle of law that companies being artificial persons must act through its officers and as such the 2nd defendant having dealt with the respondent in his capacity as the managing director, it is improper to join him to the suit. Here, the parties are ad idem on the separate legal personality principle enjoyed by companies. However, Counsel for the respondent maintains that under certain circumstances the court will pierce the veil of incorporation and make officers of the company personally liable and the case at bar falls squarely within the exceptions to the general principle. In the case of Morkor V. Kuma (East Coast Fisheries Case) [1998 - 99] SCGLR 620, in which the Supreme Court had the occasion to determine the issue of whether or not the second defendant, who was the chief executive officer and main shareholder and director of the 1st defendant company, who had negotiated and executed an agreement with the plaintiff for the supply of fish could properly be sued jointly with the company to recover the outstanding price. The Supreme Court held in its holding 3 on the issue of piercing the corporate veil that: "(3) Since the appellant had been jointly sued with the first defendant, a limited liability company, for the only reason that she was the chief executive, main shareholder and a director or the company, she would be a proper party to the suit only if a specific personal liability were established against her or the veil of incorporation could be lifted to make her acts synonymous with those of the defendant company or vice versa. It was impossible to formulate an exhaustive list of the circumstances that would justify the lifting of the corporate veil". However, where it is shown that the company had been established to further fraudulent activities or to avoid contractual liability, the veil would be lifted. Therefore. Whether or not a circumstance was one justifying the lifting of veil would be dependent on the particular factors driving each particular case.” The Court further stated per curiam "Were there any other proven factors driving the case, such as fraud, improper business conduct, deliberate attempts at evasion of legal obligations, or other devices or willful misdeeds on the part of the appellant, which could have justified the lifting of the veil in order to reach the appellant for redress............." In the instant case, the respondent has made serious allegation personally against the second defendant and gone further to particularise the allegation of fraud. In the reliefs endorsed on the writ of summons, the respondent is seeking a declaration that the 2nd defendant made fraudulent misrepresentations to the Plaintiff as far as the supply, nature and payment of the said goods are concerned. The respondent is further seeking an order directed at the 1st and 2nd Defendant as being jointly and severally liable to pay the standing amount of USD$ 34,377.62. In my considered opinion, the respondent having pleaded and particularized fraud against the 2nd defendant personally, it will be premature to disjoin him as a party to the suit without a full trial. Also, once the Respondent has endorsed on the writ of summons specific reliefs against the Applicant, it will be improper to disjoin him without going into the merit of the respective cases of the parties. In my view, it is only when evidence has been led at the trial that the court will be better placed to finally determine if there are circumstances warranting the lifting of the corporate veil to make the Applicant personally liable. Accordingly, the application to disjoin the 2nd defendant/Applicant as a party to the suit is dismissed since his presence in the suit is necessary for the final determination of the issues before the court. I award costs of GH₵1,000 against the Applicant in favour of the respondent. The suit shall take its normal course. H/H AGNES OPOKU-BARNIEH (CIRCUIT COURT JUDGE) 6