J U D G M E N T
DR. DATE-BAH, J.S.C:
The material facts of this case,
as established by the learned
trial judge, were as follows:
the first plaintiff played a
leading role in shaping the
course of a successful
implementation of the second
defendant’s dream of
establishing a viable and
profitable oxygen-manufacturing
plant in Ghana. The first
plaintiff and the two other
plaintiffs made contributions
towards the setting up of the
defendants’ oxygen production
business upon an understanding,
reached with the second
defendant, that forty percent of
the shares in the first
defendant company would be
allocated to the plaintiffs.
The second defendant admitted in
his pleadings that he was the
Managing-Director, Governor and
Financial Controller of the
first defendant. The defendants
had, however, failed to honour
the agreement concluded with the
plaintiffs.
The learned trial judge
concluded that:
“It is my opinion therefore that
there was a valid agreement
between the plaintiffs and the
defendants whereby the
plaintiffs rendered services and
provided monies towards the
setting up of the oxygen
manufacturing plant in
expectation of allocation to
them of forty per cent shares in
the first defendant company.
Failure by the second defendant
to allocate forty per cent
shares to the plaintiffs would
therefore amount to breach of
the agreement for which the
plaintiffs would be entitled to
compensation in the form of
damages.”
This conclusion of the learned
trial judge, Aryeetey JA,
sitting as an additional High
Court judge, was vigorously
challenged by the defendants on
appeal to the Court of Appeal.
When their appeal there was
dismissed, they brought the
current appeal before this
Court.
The defendants, in response to
the plaintiffs’ Writ and
Statement of Claim,
counterclaimed, seeking relief
in relation to the plaintiffs’
behaviour in stopping production
at the plant (by defusing it),
in the course of the dispute
between the parties. The
counterclaim was in the
following terms:
“Damages for loss of use of
production to be calculated from
the date removing power to the
date restoring power to Oxyair
factory at C1,000,000 (ONE
MILLION CEDIS) per day.
Perpetual injunction to restrain
the Plaintiffs their servant
Agents workers from visiting
where the Machine is installed.
An order stopping the Plaintiffs
from harassing the defendants.
An order asking the Plaintiffs
and electricity Corporation to
restore power to the defendants
Oxyair Factory immediately at
Agbogba.
Mesne Profit.”
However, when the defendants
moved the plant from Agbogba in
Accra, where, according to
evidence accepted by the trial
judge, the factory had been
established on the plaintiffs’
land, instead of on second
defendant’s land at Awutu, as
originally proposed by the
second defendant, the
counterclaim lost its sting.
The learned trial judge
dismissed the defendants’
counterclaim for damages,
because of the defendants’
failure to lead any evidence to
substantiate it, and considered
that the other reliefs did not
need to be addressed because of
the removal of the factory from
Agbogba to a new location.
The grounds of appeal filed for
the appeal to this Court were as
follows:
a)
“The judgment is against the
weight of evidence.
(b)
Their Lordships erred when they
held there was an enforceable
contract to give a private
limited liability company 40%
shares to the Plaintiffs. And
that there was a breach of that
contract.
(c)
Their Lordships erred when they
held that the rule in Royal
British Bank v Turquand
(1855) 5 E & B 248 is applicable
in this case, having regard to
evidence on records.”
The defendants, in their
Statement of Case before this
Court, argued that the onus lay
on the plaintiffs to prove that
the parties had entered into a
binding agreement. That is
trite law. They also argued
that the first plaintiff, who
gave evidence on behalf of all
three plaintiffs, had failed to
discharge this burden of proof.
They contended that the
conflicting evidence of the
first plaintiff and the second
defendant was reducible to a
situation of oath against oath.
In such a situation, the
defendants urge that the
decision of the court may safely
be based on the trial court’s
impression of the credibility of
the parties and their
witnesses. In support of this
proposition, the defendants
cited Praka v Ketewa
[1964] GLR 423, where Ollennu
JSC, delivering the judgment of
the Supreme Court of the First
Republic, said:
“It is true that an appeal is by
way of rehearing, and therefore
the appellate court is entitled
to make up its own mind on the
facts and to draw inferences
from them to the same extent as
the trial court could; but where
the decision on the facts
depends upon credibility of
witnesses, the appeal court
ought not to interfere with
findings of fact except where
they are clearly shown to be
wrong, or where those facts were
wrong inferences drawn from
admitted facts or from the facts
found by the trial court.
Therefore if in the exercise of
its powers, an appeal court
feels itself obliged to reverse
findings of fact made by the
trial court, it is incumbent
upon it to show clearly in its
judgment where it thinks the
trial court went wrong. It goes
without saying that if an appeal
court sets aside the findings of
a trial court without good
ground, or upon grounds which do
not warrant such interference
with the findings made by the
trial court, a higher court will
set that judgment aside.”
This is Ollennu JSC’s
restatement of a well-known
principle which has served
appellate courts well over the
years. It is indeed trite law.
After citing this authority, the
Defendants conclude as follows,
in their Statement of Case:
“Surprisingly the Court of
Appeal rejected this principle
of oath against oath and
accepted the evidence of the 1st
plaintiff alone and failed to
consider the evidence adduced by
the parties and affirmed the
judgment of the trial court.”
At first sight, Praka v
Ketewa seems to be an
authority adverse to the
defendants’ case. For, in a
case of oath against oath, the
trial court’s determination of
facts is much more difficult for
an appellate court to overturn,
since the appellate court would
not have had the benefit of
directly observing the witnesses
and forming a judgment as to
their credibility. It is,
however, the duty of the trial
court, or for that matter any
court, to consider all the
evidence adduced and if the
defendants can justify their
allegation that the Court of
Appeal failed to consider the
evidence of the defendants, then
that would be a matter for this
Court’s consideration. I will
proceed next to review the
evidence adduced at the trial to
see whether this is a case in
which an appellate court should
disturb the findings of fact of
the trial court.
The defendants, in their address
filed with the trial court,
maintained that the first
plaintiff had merely repeated on
oath his averments and that this
was not proof. An examination
of the record, however, reveals
circumstantial evidence in
support of the plaintiffs’
contention that an oral
agreement had been entered into
with the defendants for the
allocation of forty per cent
equity in the first defendant.
This circumstantial evidence may
be highlighted as follows. The
first plaintiff gave evidence
that the third plaintiff paid a
deposit of one million cedis for
his shares and that he was given
a receipt for this deposit,
which was put in evidence as
Exhibit A. Exhibit A was
handwritten by the second
defendant on the headed letter
paper of the first defendant and
acknowledged that he, Kwabena
Darko, the executive director of
Oxyair Ltd. had received one
million cedis from Mr G A Ackah
as deposit for shares in the
company. The second defendant
sought to rebut this
corroborative evidence in his
evidence-in-chief as follows
(at p. 235 of the Record):
“The 3rd plaintiff
came in for a share for which he
paid a deposit of c 1 million
leaving a balance of c 9 million
to be paid. After persistent
demand on him he could not pay
the. As such the company
treated it as a loan. We have
refunded about c600,000 to him.
We never discussed shares with
the 1st and 2nd
plaintiffs. We did not promise
to give any shares to him.”
The learned trial judge had this
contrary evidence before him but
was not persuaded by it. Given
the conflicting evidence, he was
entitled to form a judgment as
to what version of the events
was more credible and this Court
cannot fault him on his
decision, so long as it was
based on evidence on record.
Secondly, if no shares were
promised to the first and second
plaintiffs, what is the
explanation for the services
they rendered, according to the
evidence of the first plaintiff,
to the defendants? The fact of
the rendering of these services
would be circumstantial evidence
in support of the plaintiffs’
claim. Accordingly, the second
defendant, in his evidence,
sought to deny that the
plaintiffs had rendered any
services to the defendants.
This evidence was not found
credible by the learned trial
judge and there was sufficient
evidence on record for the
learned judge to reach the
conclusion that he did. The
trial judge had this to say on
the evidence on this issue (See
p. 271 of the Record):
“According to paragraph 8 of
amended pleading of the
defendants, “the plaintiffs
never acted in any technical
capacity to the company, the
feasibility report was made and
issued by the Bank of Ghana, the
type of machine suitable for the
company was recommended by the
Crown Agents. And the plaintiff
never advised or contributed to
the purchase in procurement of
any machine”. It is not clear
how it came about that the Bank
of Ghana, on its own, prepared a
feasibility study report for the
second defendant in aid of his
application for a loan from a
foreign source, which the Bank
of Ghana was obliged to take
charge of. In any case the
defendants did not lead any
credible evidence to
substantiate their averment
relating to the involvement of
the Bank of Ghana in the
preparation of the feasibility
report, which formed a
substantial basis for the grant
of the loan required for the
setting up of the oxygen
manufacturing plant.
On the other hand even though
the defendants challenge the
evidence of the first plaintiff
relating to the preparation of
feasibility study report by him,
they do not offer any evidence
of the existence of any other
feasibility report, which aided
the favourable response that the
application for loan to finance
the oxygen-manufacturing project
received. I am therefore of the
view that the available evidence
tends to show that right from
the onset the first plaintiff
did play a leading role in
shaping the course of a
successful implementation of the
second defendant’s dream of
establishing a viable and
profitable oxygen-manufacturing
plant.”
This passage shows that the
learned trial judge was
persuaded by credible evidence
on record to accept that the
plaintiffs had rendered the
services averred by the
plaintiffs. Thus, this was not
a case of a bare affirmation on
oath of the averments made by
the plaintiffs. I do not
consider that, as an appellate
court, this Court is entitled to
upset this well-reasoned finding
of fact made by the learned
trial judge. Neither am I of
the view that the learned trial
judge did not consider the
evidence of the defendants. He
did consider that evidence, but
did not believe it, which he was
fully entitled not to.
Similarly, the Court of Appeal,
when it affirmed the decision of
the trial court, did not ignore
the evidence of the defendants.
A perusal of the judgment of
Quaye JA shows copious
references to the evidence of
the defendants. In sum, I do
not think that the judgment of
the trial court was against the
weight of evidence. I am
fortified in this view by the
fact that the Court of Appeal
similarly found no reason to
disturb the trial judge’s
findings of fact. Where there
are concurrent findings of fact
by two lower courts, an
appellate court is usually
reluctant to reverse that
finding of fact, unless there
are compelling reasons so to
do. (See, for instance, Lord
Russell’s judgment in the Privy
Council decision of Bassayin
and Achah v Bendentu II
(1937) 5 W.A.C.A. 1, especially
at pp. 2-3. In the more recent
case of Achoro & Anor v
Akanfela & Anor [1996-97]
SCGLR 209, Acquah JSC, as he
then was, had this to say, at p.
214, delivering the judgment of
the Supreme Court:
“Now in an appeal against
findings of facts to a second
appellate court like this court,
where the lower appellate court
had concurred in the findings of
the trial court, especially in a
dispute, the subject-matter of
which is peculiarly within the
bosom of the two lower courts or
tribunals, this court will not
interfere with the concurrent
findings of the lower courts
unless it is established with
absolute clearness that some
blunder or error resulting in a
miscarriage of justice, is
apparent in the way in which the
lower tribunals dealt with the
facts.”
The decision of the Review Panel
of the Supreme Court in
Koglex Ltd (No. 2) v Field
[2000] SCGLR 175 is to a
similar effect.)
Furthermore, it is settled law
that an appellate court will
presume the findings of fact of
a trial judge to be right,
unless this presumption is
displaced by the appellant. The
Privy Council so held in the
Gold Coast case of Kissiedu
& Ors v Dompreh & Ors (1937)
2WACA 281. Lord Russell there
said (at p. 286):
“Their Lordships find it
impossible to say that the Court
of Appeal could, on the
materials before them, properly
be satisfied that this finding
of fact by the trial judge must
be erroneous. No doubt an
appeal in a case tried by a
judge alone, is not governed by
the same rules which apply to an
appeal after a trial and verdict
by a jury. It is a rehearing.
Nevertheless before an Appellate
Court can properly reverse a
finding of fact by a trial
judge, who has seen and heard
the witnesses and can best judge
not merely of their intention
and desire to speak the truth,
but of their accuracy in fact,
it must come to an affirmative
conclusion that the finding is
wrong. There is a presumption
in favour of its correctness
which must be displaced. As
Lord Esher M.R. said in
Colonial Securities Trust Co.
v Massey ([1896] 1 Q.B. 38)
“Where a case tried by a judge
without a jury comes to the
Court of Appeal, the presumption
is that the decision of the
Court below on the facts was
right, and that presumption must
be displaced by the appellant.”
Their Lordships must, they
think, apply the same test, and
ask themselves whether in their
opinion the presumption in
favour of the findings of the
trial judge had been
displaced;…”
Applying this test to the facts
of the present case, I feel
obliged to conclude that the
presumption has not been
displaced. I ought to mention
that this test was approved by
Korsah CJ, sitting in the
Supreme Court of the First
Republic, when he cited the
Colonial Securities Trust Co.
v Massey case (supra) with
approval in Reindorf and Ors
v Amadu & Ors [1962] 1 GLR
508 at p. 514. Thus I do not
find any merit in either ground
(a) or (b) of the grounds of
appeal filed by the defendants
before this Court.
That leaves for my consideration
only ground (c) of the grounds
of appeal. This claimed that
the rule in Turquand’s Case
had been wrongly invoked on the
facts of this case. This rule
was formulated in Royal
British Bank v Turquand
(1856) 6 E & B 327 and has been
codified and amended in sections
139 to 143 of our Companies Code
1963. The part of this
codification which is relevant
to the facts of this case is
section 139, which is in the
following terms:
“Any act of the members in
general meeting, the board of
directors, or a managing
director while carrying on in
the usual way the business of
the company shall be treated as
the act of the company itself
and the company shall be
criminally and civilly liable
therefor to the same extent as
if it were a natural person:
Provided that
(a)
the company shall not incur
civil liability to any person if
that person had actual knowledge
at the time of the transaction
in question that the general
meeting, board of directors, or
managing director, as the case
may be, had no power to act in
the matter or had acted in an
irregular manner or if, having
regard to his position with or
relationship to the company, he
ought to have known of the
absence of power or of the
irregularity,
(b)
if in fact a business is being
carried on by the company, the
company shall not escape
liability for acts undertaken in
connection therewith merely
because the business in question
was not among the businesses
authorised by the company’s
Regulations.”
On the facts of this case, the
second defendant admitted that
he was the managing-director of
the first defendant.
Accordingly he was, in law, one
of the organs of the company,
able to bind the company in
terms of the provision set out
above. The plaintiffs’ case was
that, by the second defendant’s
act of offering them 40% equity
in the first defendant, he had
bound the first defendant as
well as himself. The following
passage from the first
plaintiff’s cross-examination
illustrates the plaintiffs’
case. (See p. 212 of the
Record).
“Q. You therefore have no
contract with 1st
defendant?
A.
I worked for the 1st
defendant because I installed
the factory equipment.
Q.
You never entered into an
agreement written or oral with
the company?
A.
I worked for the company which
was represented by 2nd
Defendant.
Q.
You therefore had a contract
with the 2nd
defendant?
A With both 1st
and 2nd defendants.”
There was evidence on record
which the trial judge could
reasonably choose to believe
which would support his
conclusion that the second
defendant acted both on his own
behalf and on behalf of the
company of which he was
managing-director. In terms of
section 139 of the Companies
Code 1963, unless the defendants
were able to establish that the
plaintiffs had actual knowledge,
before the conclusion of the
oral contract, of any defect in
the second defendant’s authority
to bind his company or that he
had acted in an irregular
manner, then the company was
bound.
In this connection, it should be
noted that section 141 of the
Companies Code 1963 effects a
change in the pre-existing
common law rule. The common law
rule was that a party dealing
with a company was deemed to
have constructive notice of the
contents of all the companies’
public documents filed at the
Companies Registry. Section 141
abolishes this rule. It
provides as follows:
“Except as mentioned in section
118 of this Code, regarding
particulars in the register of
particulars of charges, a person
shall not be deemed to have
knowledge of any particulars,
documents, or the contents of
documents merely because such
particulars or documents are
registered by the Registrar or
referred to in any particulars
or documents so registered.”
This provision implies that at
the time that the plaintiffs
entered into their parol
contract with the defendants
they had no constructive notice
of the contents of the
Regulations of the company.
Accordingly, any restrictions on
the authority of the
managing-director contained in
the Regulations do not affect
the validity of the contract
entered into by him, unless the
plaintiffs’ actual knowledge of
such restriction is proved.
Furthermore, section 142(a)
restates the effect of the rule
in Turquand’s Case by
affirming that:
“Any person having dealings with
a company or with someone
deriving title under the company
shall be entitled to make the
following assumptions and the
company and those deriving title
under it shall be stopped from
denying their truth: -
(a) That the company’s
Regulations have been duly
complied with.”
Thus, an outsider, such as the
plaintiffs were when they
entered into the oral agreement
with the second defendant, is
entitled to assume that all the
internal rules of the company
have been complied with. This
is what is referred to in the
marginal note of section 142 as
the presumption of regularity.
The rule in Turquand’s Case
was invoked by the Court of
Appeal in this case because the
defendants argued before that
court that, assuming that the
second defendant had entered
into the agreement alleged, he
had not complied with the first
defendant company’s Regulations,
in entering into the said
agreement. As Quaye JA put the
argument, at p. 434 of the
Record: “The contention of the
appellants was that the 2nd
defendant and or the plaintiffs
acted ultra vires the
regulations of the company.” He
accordingly countered the
argument by invoking the rule in
Turquand’s Case thus (at
p. 435 of the Record):
“I have earlier on in this
judgment hinted that the 2nd
defendant was deemed to have
acted legally. The conduct of
the 2nd defendant vis
a vis the plaintiffs and the 1st
defendant falls squarely into
the rules and can be illustrated
by the case of Royal British
Bank vrs Turquand…”
I am satisfied that the rule was
correctly invoked on the facts
of this case.
Regarding the form of the
contract on which the plaintiffs
are suing, it is pertinent to
point out that section 144 of
the Companies Code 1963 provides
as follows:
“Contracts on behalf of any
company may be made, varied or
discharged as follows:
…
(c)
A contract which, if made
between individuals would be
valid although made by parol
only and not reduced to writing
or which could be varied or
discharged by parol, may be
made, varied or discharged, as
the case may be, by parol on
behalf of the company.”
A parol contract is thus
perfectly enforceable against a
company in the same way as it
would be enforceable against a
natural person. The argument
made by the defendants in their
Statement of Case before this
Court that an allotment of
shares and an offer of shares
should be in writing is not
sound in law. No requirement as
to form impeded the valid
formation of the contract sued
on.
Given the legal principles
outlined above, I have no
hesitation in supporting the
Court of Appeal’s application of
the rule in Turquand’s Case
to the present case. Quaye JA
was right in holding (at p.436
of the Record) that:
“The evidence in the instant
case falls short of establishing
that the 2nd
defendant was not managing
director of the company or that
his promise of shares or
representation to the plaintiffs
upon which the plaintiffs acted
and set up the company,
practically brought it into
being, and otherwise lifted it
from a mere intention supported
by a certificate of
incorporation, was different
from or contrary to, what a
managing director of a private
company limited by share would
ordinarily do.”
I would thus dismiss ground (c)
of the defendants’ grounds of
appeal, as well.
In the result, I would affirm
the Court of Appeal’s judgment
affirming the trial court’s
judgment. There is no
justification for disturbing the
decision reached by the learned
trial judge.
DR. S. K. DATE-BAH
JUSTICE OF THE SUPREME COURT
AKUFFO (MS), J.S.C.
I agree.
S.A.B. AKUFFO (MISS)
JUSTICE OF THE SUPREME COURT
WOOD (MRS), J.S.C.
I agree. G.
T. WOOD (MRS)
JUSTICE OF THE SUPREME COURT
JUSTICE OF THE SUPREME COURT
I also dismiss the appeal.
However, my reading of the facts
as well as my theory of relief
are significantly different from
the opinion read on behalf of
the majority by my learned
brother Justice Dr. Date-Bah.
This is an appeal from a
decision of the Court of Appeal
delivered on 24th
July 2003 by Justice Quaye, J.A.
The relevant facts for the
purpose of this appeal may be
presented as follows. The second
defendant spearheaded the
registration of a limited
liability company, Oxyair, whose
main business was the production
of compressed oxygen. It was
claimed by the Respondents that
the second defendant gave them
the impression that he was the
100% owner of the stock of the
company. However, it is evident
from the filed Regulations of
the company that he was only one
of three shareholders or
members, all of whom were also
named as directors of the
company. [See pp. 382 &391 of
the Record of Appeal]. Out of
the 100,000 shares of no par
value with which the company was
registered, the second defendant
was allocated 3,000, while the
other two subscribers had 1,000
each. Thus, at the time of the
suit, the second defendant was
apparently the majority
shareholder holding 60% interest
in the company.
The second defendant procured
various forms of assistance from
the Plaintiffs/ Respondents,
particularly the first
respondent, in the execution of
the objectives of the company
and its administration. These
included technical advice on the
required voltage for running an
Oxygen plant; transfer of some
money to the second defendant by
the third respondent, ostensibly
as deposit for an investment
relationship with the company;
self-financed foreign travel by
the1stplaintiff/Respondent
to conduct pre-shipment
inspection of the plant; and
assistance in the construction
of the factory building and the
installation and test running of
the machinery. It was also
claimed by the Respondents that
the factory was at one point
located on a plot of land at
Agbogba belonging to the 1st
and 2nd
plaintiff/respondents. However,
there appeared to be no proof of
such ownership in the Record;
nor did the Appellant also offer
proof of title or lease of the
plot nearby which he contended
he had acquired from some other
source as location for the
factory. The plaintiffs were
also said to have “attended”
several board meeting of Oxyair,
though they did not state in
what capacity they did
so—whether as members of the
board, or simply as persons
invited by the board to assist
them in their deliberations.
It was alleged that earlier in
the course of his dealings with
the Respondents, 2nd
Defendant had promised to offer
40% of the equity in the Company
to the 1st
Plaintiff/Respondent, and then
subsequently offered the same
40% to all three Respondents.
It was further alleged that the
2nd Appellant then
reneged on his promise to give
out the shares when so
requested.
For his part, the 2nd
Respondent denied ever making
such a promise; and insisted
that he had no legal authority
to make any such promise.
Further, he stated that he had
adequately compensated the
Respondents through cheque
payments on record for whatever
assistance they had rendered to
him in running the company. As
to the transfer of one million
cedis made by 3rd
Respondent to the 2nd
Appellant to be used to further
the business of the company, the
explanation offered by the
latter was that it was part
payment of a loan, and was not
meant as payment for shares in
the company.
Plaintiff/Respondents eventually
brought a suit against the
company and 2nd
Respondent claiming general
damages for breach of a contract
to transfer a portion of shares
in the company; and compensation
for the plaintiffs/Respondents’
financial and manpower
investment in the company,
including their expertise. The
High Court, in a judgment
delivered on 21st February 2002,
found a breach of contract and
ordered general damages as well
as costs against
Defendants/Appellants. The
Court of Appeal upheld the
finding as well as the awards.
This appeal from the decision of
the Court of Appeal is based
essentially on three grounds,
namely, that
“a. The judgment is against the
weight of evidence
b. Their Lordships erred when
they held there was an
enforceable contract to give a
private liability company 40%
shares to the Plaintiff. And
that there was a breach of that
contract.
c. Their Lordships erred when
they held that the rule in
Royal British Banks vrs.
Turquand (1855) 5 E & B 248
is applicable in this case,
having regard to evidence on
record.”
MAIN ISSUES
The main issues in the case
before us are:
-
Whether there was a valid
and enforceable contract
between the
plaintiffs/respondents and
the defendants/appellants,
to sell shares in Oxyair
Company to the former;
-
Whether there was a breach
of such contract, as the
Court of Appeal found;
-
If so, whether the damages
for such breach as awarded
by the Court of Appeal was
just and appropriate.
The finding by the High Court
(as well as the Court of Appeal)
that there was a valid contract
between the parties does not
bind this court because the
existence or otherwise of a
valid agreement is more a
question of law that one of
fact. Even findings on pure
questions of fact may be
rejected by an appellate court
if, in the words of Ollennu
JSC., “ [those facts] are
clearly shown to be wrong, or
where those facts were wrong
inferences drawn from admitted
facts or from facts found by the
trial court”. See Praka v.
Ketewa [(1964) GLR 423.
It is therefore our right and
indeed our responsibility to
consider whether the parties
entered into a contract to buy
and sell shares of Oxyair.
We accept Professor Gower’s
assertion that no particular
form is required for there to be
a valid agreement for purchase
of shares. The agreement may be
either oral or implied from
conduct. [Principles of
Modern Law 4th Ed.
(1979), Stevens & Sons, p. 428]
What one requires is a proper
offer followed by acceptance.
Indeed, under the Companies
Code, 1963 (Act 179) [herein
referred to as the Code], no
particular form of agreement is
prescribed when a private
company seeks to enter into an
agreement to issue its shares to
non-subscribing parties under
s.30 (2) of the Companies Code,
even though such parties cannot
become members or shareholders
until their names are entered in
the company’s register of
members. Hence, an oral
agreement between a company and
such parties would fall under s.
144(c) and would not be invalid
by virtue of its oral nature.
Nonetheless, the predicate
question is whether there was a
proper offer and acceptance,
backed by proper consideration.
If there was indeed an offer
from the 2nd
Appellant to sell a portion of
the shares in Oxyair to the
Respondents, the terms of that
offer were rather intriguing. In
the first place, it was said
that the offer of 40% was first
offered to the 1st
Respondent alone. Then, not long
thereafter, the same 40% was
offered to all three
Respondents. So which of the
offers was meant for acceptance?
Using the second- in-time rule
of precedence, we could
generously assume that it was
the second offer that ultimately
prevailed. Even so, were the
shares going to be issued in
their joint names, without any
regard to the proportion each of
them would have in them, when it
was so clear that it was the 1st
Respondent that had made a
disproportionate contribution to
the company? Perhaps one could
say that that was their
business, not ours; but it does
raise a question as to the
extent to which the offer might
be said to be sufficiently
definite and ready for
acceptance.
If the offer was made in a
flippant manner, what
constituted consideration and
acceptance was also problematic.
The Appellate Court was of the
opinion that the respondents
accepted the offer for the sale
of shares “by offering their
services and placing their
professional technical and
administrative expertise on the
doorstep of the defendant
company and even investing money
to ensure the successful
establishment.” But does the
point at which these services
were rendered make a difference
to the validity of the
consideration, and hence the
validity of the acceptance by
the Respondents? Did the
services, or at least some of
them, precede the so-called
offer? To qualify as acceptance
of the offer, one would normally
expect an extant offer and a
prior explicit agreement to use
such services as a form of
consideration for the shares.
Alternatively, this mode of
payment, although not originally
contemplated or agreed upon by
the parties, could have been
subsequently negotiated and
agreed upon by the parties. In
either case, if the services in
question preceded the alleged
offer to sell, could there be a
doctrinal issue as to whether
they might properly be viewed as
acceptance of an offer to sell.
It appears from the record that
while some of these services
were performed before the said
offer, most were carried out
subsequent thereto. Very early
in the business interaction
between the parties to the suit,
the 1st Respondent
had prepared a petition to
support the company’s
application for financial
assistance, even though nothing
came out of it. He had also
offered professional advice on
the proper siting of the
factory, leading to its
relocation from Awutu to
Agbogba.
It was allegedly at this point
that the 2nd
Appellant offered to sell 40% of
the equity in the company to 1st
Respondent. More assistance from
the latter followed. The
assistance or contribution of
the 2nd and 3rd
Respondents allegedly came after
the offer to allot 40% of the
shares had been made to all
three Respondents. Thus it is
established that the
consideration mostly followed
the presumed offer.
Therefore the theoretical
problem of the value of past
consideration becomes
insignificant. At any rate,
under the Code, past
consideration appears to be
acceptable, for the language of
s.45 refers to situations where
“shares are issued to a person
who has sold or agreed to sell
property or rendered or
agreed to render services to
the company…”. In other words,
both past and future services
are contemplated under the Code
provisions on payment for
shares.
However, there is a more basic
problem with the validity of the
acceptance. Under s. 42(1), for
consideration to count as
valuable consideration for the
issue of shares other than a
capitalisation issue, it must be
in cash unless otherwise agreed
between the company and the
offeree. In other words,
valuable consideration, for the
purposes of acceptance, is
presumed to be in the form of
cash, not services. On the
evidence, can one point to any
such agreement, unless one
insists that the 2nd
Appellant, in making the
original offer to sell shares to
the Respondents as an agent of
the company, simultaneously
offered them the option of
payment through services?
However, as I argue below, the
authority of the 2nd
Appellant to have made even the
initial, basic offer on behalf
of the company is itself very
much in question.
There is no doubt that s. 142 of
the Code protects third parties
dealing with a company from
unauthorised acts of its
directors and officers by
establishing a presumption of
regularity, including the
assumption in 142(a) that the
Company’s Regulations have been
duly complied with.
But, my Lords, s. 30(2) (on
agreement to become a member of
a company), 144(c) (on the
validity of oral contracts) and
s.142(on the presumption of
regularity) should all be read
in tandem with ss. 139 and 140,
which deal with “acts of the
company” and “acts of officers
or agents”. These latter
provisions represent the
statutory rendition of agency
law in the corporate setting, as
well as the protection of third
parties handed down to us, with
modifications, by the historic
Rule in Turquand’s case:
Royal British Bank v. Turquand
[(1856) 6 E & B 327]
The provisions of s. 30(2),
144(c) and 142 are not of much
help to a beleaguered third
party until we resolve a
threshold question whether the
actions at issue are ‘acts of
the company’. Did the company
known as Oxyair enter into an
oral agreement with one or more
of the three RESPONDENTS to
issue shares to them?
There is no question that the
corporation as an incorporeal
body, can, in the words of
Professor Lewis Solomon, “act
only through the agency of flesh
and blood human beings.”[Solomon
et.al. Corporations Law and
Policy 4th ed. p.
349 West Publishing, 1998].
Professor Gower has also
remarked that “a company as an
artificial legal entity must of
necessity act through the medium
of its human officers or
agents…” “But,” he adds, “not
every act by them will
necessarily bind the company
even though they may be regarded
as its organs.” [Gower,
Modern Company Law, 4th
Edition, 1979, p. 181].
Indeed, the real risk that
errant and fast-talking officers
and directors of a company pose
for their principals have long
been recognised and dealt with
in general agency and corporate
law for centuries, and in our
own Code. Thus, Gower goes on to
emphasize that “…the mere fact
that someone purporting to act
on behalf of the company might
have been given authority to do
so cannot impose liability on
the company---the soi-disant
agent may be a complete
impostor…” [Gower, supra
p.184 ] {the French term
soi-disant roughly translated as
self-proclaimed agent}.
I need to develop this point
further. No amount of deceitful
talk, or loose and boastful
promises on the possible
transfer of shares by a
so-called “Governor” of a
private company could, by
itself, constitute an act of the
company for the purposes of
establishing corporate civil
liability. In terms of ss.
137(1) and 139 of the Code, the
alleged promise to sell shares
to the three Respondents in the
case before us was certainly not
made by or on the instructions
of the board of directors listed
in the Company Regulations.
My Lords, we should pay close
attention to the two separate
and cardinal phrases in the
formulation of s. 139 of the
Code, first, “carrying on in the
usual manner”, and then “the
business of the company”. It is
not every action of an officer
or part owner of a business
association in respect of that
business that constitutes
“carrying on the business of
that association” in terms of
s.139; and even when that action
involves the business of the
association, it does not
necessarily mean that it was
carried out in the usual manner.
I will illustrate the peculiar
use of these phrases in business
law with a statute and some
cases from the field of
partnership, where the
application of agency law is
even more entrenched than in
corporate law, if only because
every partner is viewed as an
agent of the partnership and can
therefore more readily commit
the association than an officer
or single director of a
corporation. Drawing on
partnership law is not out of
place, for the courts have
frequently pointed to the
closeness between close
corporations or private
companies and partnerships. In
Donahue v. Rodd Electrotype
Co. of New England, Inc. 367
Mass 578, 585, 328 N. E. 2d 505,
511 (1975), the court
pointed out that “the close
corporation bears striking
resemblance to a partnership.
Commentators and the courts have
noted that the close corporation
is often little more than an
‘incorporated’ or ‘chartered’
partnership.”
Now, consider the language of
s.9(1) of the Uniform
Partnership Act in the United
States, which has been adopted
by most state legislatures of
the Union. That section uses
almost exactly the same language
as s. 139 of our Code in its
relevant aspect: “Every
partner is an agent of the
partnership for the purpose of
its business, and the act of
every partner, including the
execution in the partnership
name of any instrument, for
apparently carrying on in the
usual way the business of the
partnership binds the
partnership, unless the partner
so acting has in fact no
authority to act for the partner
in the particular matter, and
the person with whom he is
dealing has knowledge of the
fact that he has no such
authority.” S.9(2) then picks up
as follows: “An act of a partner
which is not apparently for the
carrying on of the business of
the partnership in the usual way
does not bind the partnership
unless authorized by the other
partners”.
In Ellis v. Mihelis [ 60
Cal.2nd 206, 32 Cal.
Rptr 415, 384 P2d 7, the
Supreme Court of California had
occasion to interpret the first
leg of these provisions. The
plaintiffs brought action
against two brothers, Pericles
Mihelis and Elias Mihelis to
compel them to specifically
perform a contract for the sale
of real property and for damages
resulting from their failure to
convey the property to him. The
brothers owned two ranches, both
operated in the usual manner as
ranch or farming property.
Initially they both decided to
sell one of the ranches and also
agreed that Pericles should
handle negotiations for the sale
and submit any prospective deals
to Elias. The latter later
developed cold feet on the
prospective sale. Pericles went
ahead to sign the sales contract
with the plaintiff, who found
out only later that Elias indeed
had an interest in the property.
The trial court found, among
other things, that Pericles and
Elias operated the ranch as
partners, and that the ranch was
an asset of the partnership. The
main issue, then, was whether
Pericles’ action bound the
partnership.
The California Supreme Court, in
applying s. 9, wrote as follows
: “ The distinction made by
subsections(1) and (2) between
acts which are apparently in the
usual course of business and
those which are not, is in
accord with the cases in other
jurisdictions which have held,
without mention of statutory
requirement for written
authority of an agent, that a
contract executed by one partner
alone to sell partnership real
estate is binding on the other
partners provided the
partnership is in the business
of buying or selling real estate
and the property covered by the
contract is part of the stock
held for sale… Since it does not
appear that the sale of the
ranch was in the usual course of
the partnership business, a
contract to sell it would come
within subdivision (2), not
subdivision (1), even if the
ranch were a partnership asset
as found by the trial court…”.
Even when that action involves
the business of the association,
s.9(1) still requires us to show
that it was carried out in the
usual manner. In Burns v.
Gonzales [ 439 S.W. 2d 128,
131-132( Tex.Civ. App. 1969)], a
Texas Court explained this
phrase in the following words:
“…an act of a partner binds the
firm, absent an express
limitation of authority known to
the party dealing with such
partner, if such act is for the
purpose of ‘apparently carrying
on’ the business of the
partnership in the way in which
other firms engaged in the same
business in the same locality
usually transact business, or in
the way in which the particular
partnership usually transacts
its business. In this case,
there is no evidence relating to
the manner in which firms
engaged in the sale of
advertising time on radio
stations usually transact
business…It becomes apparent,
therefore, to determine the
location of the burden of proof
concerning the ‘usual way’ of
transacting business by
advertising agencies. We
conclude that, under a
reasonable interpretation of the
language of sec. 9(1)…the burden
of proving the “usual way” in
which advertising agencies
transact business was upon
Burns” [i.e. the plaintiff].
Now, given the direct linkage
between shareholding and the
power structure in a private
company, and the well-known
formalities attendant upon the
allotment and issuance of shares
in companies in general, it is
very doubtful that an officer’s
alleged offer to sell shares to
an ever-changing list of
offerees could, without more, be
reasonably described as
“carrying on, in the usual way,
the business of the company.”
Put in a more forthright manner,
the habit of promising shares to
third parties in a company which
is not in the securities market
can hardly be described as
carrying on, in the usual way,
the business of the company.
In the field of corporate law
itself, phrases similar in
concept to those deployed in s.
9 of the Uniform Partnership Act
have been used in the analysis
of the extent of authority of
the president, managing
director, or the holder of
similar titles. The analysis has
proceeded along the so-called
“ordinary course of business”
rule. In Lee v. Jenkins
Brothers [268 F 2d 357
(2d Cir. 1959) cert. denied 361
US 913,80 S.Ct. 257 (1959)],
Judge Medina noted “the rule
most widely cited is that the
president only has authority to
bind his company by acts arising
in the usual and regular course
of business but not for
contracts of an ‘extraordinary’
nature. The substance of such a
rule lies in the content of the
term ‘extraordinary’, which is
subject to a broad range of
interpretation”. In this case,
the court was faced with the
question whether the president
of a corporation, who also
happened to be board chairman,
substantial shareholder, and
trustee of the estate of the
majority stockholder, had
authority to promise an
experienced local executive a
life pension which would
commence in 30 years when the
offeree turned 60, even if he
was not then working for the
corporation, while the maximum
liability to him under such a
pension was only $1500 per year.
In Joseph Greenspon’s Sons
Iron & Steel Co. v. Pecos Valley
Gas Co. [34 Del. 567, 156 A.
350(1931)] the president of
a gas company signed a contract
to purchase 45 miles of gas pipe
for $145,000 without having
obtained express authority from
the gas company’s board of
directors. The court charged the
jury that while the president
had implied authority to enter
into contracts in the usual
course of the corporation’s
business, it was for the jury to
decide whether the pipe order
was such a contract. If a
contract did not fall into the
ordinary course of business,
then, noted the court, the
president could enter into it
only “as a consequence of (1)
some provision of statutory law,
(2) the articles of
incorporation, (3) a bylaw of
the company, (4) a resolution of
the board of directors, or (5)
evidence that the corporation
had allowed the president to act
in similar matters and had
recognised, approved and
ratified the president’s
actions.”
The upshot of all the major
cases on this subject is that
while a president, managing
director, chief executive
officer (or CEO) of a
corporation has authority to
bind the corporation in
transactions entered into in the
ordinary course of business,
that authority does not extend
to extraordinary transactions,
which must be approved by the
board of directors.[See
Eisenberg, Corporations And
Other Business Organisations (8th
Ed. Foundation Press, 2000)
p.210] This rule does not
deny the fact that the term
‘extraordinary’ itself is
subject to a range of
interpretations.
My Lords, I have my doubts
whether a reasonable person
would consider the manner in
which shares were allegedly
offered by the 2nd
appellant as the way in which
other firms will usually
transact business in the
allotment of shares. The
allotment of shares from the
balance of authorised shares is
serious business, and not one
that a so-called Governor of a
private company would ordinarily
initiate action, including the
making of offers, without the
prior authority of the board of
directors or of members in a
general meeting. This is so even
if the officer concerned calls
himself a Governor—a rather
strange term in our law of
private companies, which, in my
view, should have put all third
parties dealing with him on
their guard.
My Lords, I am aware that on the
organic theory of corporate
structure, certain human
agencies of the company might be
viewed not merely as agents, but
as the company itself. These are
situations, largely in the area
of corporate criminal
responsibility, where ordinary
principles of agency and
vicarious liability have been
considered inadequate to deal
with the potential liabilities
of a company as an artificial
legal person. Thus Gower has
noted that “in relation to the
internal operations of a
company, the general meeting,
the board of directors and even
a managing director have, in
effect, come to be treated as
organs of the company rather
than as merely its agents.’’
However, even the adherents of
this theory have acknowledged
that limitations exist on the
ambit of the doctrine. Thus it
has been stated that it is not
the act or knowledge of every
agent or servant of the company
which will be attributed to the
company, but “only of those whom
the company has made its
‘responsible officers’ for the
action in question”. [See Gower,
supra, p. 209]. In Tesco
Supermarkets Ltd. V. Nattrass
[1972 A.C. 153, H.L.] Lord Reid
said in the House of Lords that
“…A board of directors can
delegate part of their functions
of management so as to make
their delegate an embodiment of
the company within the sphere of
delegation. But here the board
never delegated any part of
their functions….” The
limitation placed on the organic
theory of corporate
responsibility makes immense
sense, for otherwise the
financial fortunes of any
company would always be at the
mercy of brash and footloose
managing directors
My Lords, we as a court have to
take cognisance of the fact that
Oxyair had three shareholders on
the books, and that the rights
of the shareholders other than
the 2nd Appellant
would be affected in
significant ways if the latter
were allowed to dish out shares
on his own to outsiders. In this
connection, we speak of equity
dilution as well as economic
dilution, especially in the
context of closely-held
corporations or private
companies. As Professor Solomon
explains, a shareholder may, in
the first place, be legitimately
concerned that if additional
shares are sold to other
investors, her interest in the
corporation will be diminished
or diluted; in the second place,
she may be concerned about the
possibility that sales of
additional shares, particularly
to controlling shareholders,
will reduce the value of the
shares she holds.[Solomon et. al.:
Corporations Law and Policy (4th
Edition) West Publishing, 1998]
As regards the status of those
two gentlemen whose names appear
in Oxyair’s Regulations, nothing
of legal interest is gained by
referring to them as nominal
shareholders. Shareholders
remain shareholders until they
divest themselves or are removed
in the manner prescribed by law.
In a recent decision of the
Supreme Court, Peter Osei
Assibey v. Adehyeman Gardens
Ltd, Kumasi, & Kwaku Asare
[unreported case #J4/24/2004,]
Justice Sophia Akuffo, JSC,
delivering the unanimous opinion
of the court, commented on s. 30
of our Code as follows:
“…nowhere in the Code…is there
created any class of members
known as ‘allotee’ or ‘nominal’
shareholders”. She continued:
“...since the Respondent is a
subscriber to the Regulations of
the Company…he, pursuant to
section 30(1), became a member
of the company right from the
date of its incorporation…As a
member, he also became a
shareholder, pursuant to s.
30(4), and as such, his
membership of the company may
cease only upon the occurrence
of one of the eventualities
stipulated in section 30(5).” We
held in that case that until all
of his or her shares are
forfeited for non-payment of a
validly made call (or until the
occurrences of any of the other
eventualities mentioned in s.
30(5), a subscriber remains a
fully-fledged member and
shareholder of the company.
shareholders. Nothing on record
in the present case indicates
that the named shareholders, who
were also the directors, had
either resigned or been fired
from their directorship, nor
given up their 40% ownership.
I now return to s. 139 of our
Companies Code. Basing myself on
the analogy with the
interpretations given to the
Uniform Partnership Act in the
US, and on the “ordinary course
of business” rule in corporate
law, I apply a two-step analysis
to the conception of agency
embodied in the Code. First,
under s. 139, the party seeking
to enforce the acts of an
individual director, the entire
board of directors, or the
managing director as acts of the
company must prove that those
actors were carrying on in the
usual way the business of the
company. If this is proved, that
ends the inquiry on corporate
responsibility, unless the other
party to the transaction had
actual knowledge of lack of
authority, or he ought to have
known of such absence of
authority in view of his
relationship to the Company.
Second, when the plaintiff’s
case does not fit under s. 139,
we move to s. 140(1), which
requires the proof of an
express, implied, or apparent
authority. If none of these
forms of authority can be
proved, the acts in question are
not deemed to be act of the
company. The only other basis
upon which the company can be
held accountable would be the
organic theory of corporate
structures, which, as already
indicated, does have severe
limitations.
Furthermore, neither s. 139 of
the Code(on acts of the
company), s. 140(on acts of
officers or agents), s.141(on
constructive notice of
registered documents) nor
s.142(on presumption of
regularity), can be read as
providing an impenetrable
shelter for the conveniently
blind or deaf, or for the one
who sees no evil and hears no
evil. Under proviso (a) of s.
142, a third party is denied the
protection of this section if,
having regard to his position
with, or relationship to, the
company, he ought to have known
of the absence of power of the
officer/agent or of the
irregularity of the purported
act. S. 141 merely disallows
constructive notice of
registered documents by
reason only of the fact that
such documents are registered by
the Registrar General. In the
particular case before us, did
the Respondents not claim that
they had attended several board
meetings and that they were,
right from the beginning, the
“movers and shakers” of Oxyair’s
business? Given all that regular
involvement with the business of
the company, wasn’t it
reasonable to expect that they
would inquire, as a matter of
practical business sense,
whether persons other than the 2nd
defendant had any stake in the
company?
Indeed, it appears strange to
me that the Respondents were
said (on p. 480 of the Record)
to have attended “several board
meetings of the 1st
defendant company, initially at
weekly intervals…”, ostensibly
in the capacity of directors,
without any shareholder
instrument appointing them as
directors in an already
registered company. Further,
given the extent of their
claimed intimacy with the
company, their cursory look at
the Regulations of the Company
would have revealed that it had
been registered with three
directors who also held 40% of
the subscribed shares. Nothing
on record indicated that the
named directors had either
resigned or been fired from
their directorship, nor given up
their 40% ownership.
According to the Regulations of
the Company, the second
Appellant had 60% of the issued
and outstanding shares of the
entity up to the time the
respondents began their business
relationship with the 2nd
Appellant and the company. There
are two sources from which the
Respondents might have acquired
shares in this private company:
out of the 2nd
Appellant’s already acquired
portion; or directly from the
company out of the unissued
balance of the authorised
shares. Either way, the
percentage of equity holding for
the 2nd Appellant, as
for the other original
shareholders, would have been
altered. If indeed the 2nd
Respondent promised to offer
shares in the company out of his
own portfolio, this could only
be done in compliance with the
share transfer restrictions
provisions of the regulations.
It would not raise an ultra
vires issue, but rather a case
of conditional sale. If, on the
other hand, the shares were to
come directly from the company,
the formalities for the
allotment of shares had to be
complied with, including
approval by the board of
directors on record and action
by the company secretary.
There could very well have been
an agreement between the
RESPONDENTS and the 2nd
Appellant to sell them 40%
of his own initial 60%
shareholding, subject to the
sort of share transfer
restrictions envisaged in
s.9(3)(a) of the Code. But that
is not what the Respondents are
seeking to establish. In their
Statement of Claim, they contend
that “the defendants are in
breach of their promise to
allocate to the plaintiffs at
least 40% equity in the 1st
defendant company”. If the 2nd
Appellant were to give them 40%
of his own shares, the end
product would be 24% of the
total equity holding in the
company, far less than what they
were rooting for. Moreover,
since the case was not tried on
the theory that the 2nd
Appellant promised to transfer
his own shares to the
Respondent, I will give no
further consideration to the
validity of this other potential
agreement.
Any purported offer by the 2nd
Appellant alone would have been
insufficient as a basis to
effect such an allotment. At
best, it would be a case of an
agent of the company making
offers under inherent or implied
authority that failed to gain
ratification by the company. At
worst, it would simply be a case
of an important shareholder
making hollow statements aimed
at inducing technical and
financial assistance from third
parties, with no intention of
facilitating the acquisition of
shares in the company by the
latter. There is nothing in the
records to indicate that there
was an unsuccessful effort on
the part of the 2nd
Appellant to obtain corporate
ratification of an allotment
offer. Thus the second
possibility is the most likely
explanation for what happened.
Under either scenario, the
second Appellant on his own
could not have contracted an
allotment of shares in Oxyair to
the Respondents.
I therefore hold that the
alleged offer of 40% shares in
Oxyair by 2nd
Appellant was not an act of the
company. I hold further that he
had neither express, implied,
nor apparent authority to offer
such shares to the Respondents.
Hence, there was no enforceable
contract between the Respondents
and Oxyair to sell them any
portion of the shares of the
company.
This is not to say that there is
no relief in law available to
the Respondents for any
detriment they might have
suffered in their business
relations with the Company.
Whatever the 2nd
Appellant might or might not
have represented to the
Respondents in their business
interactions, the fact of the
matter is that the company has
benefited from the labour of the
Respondents, in addition to some
financial outflow. A case can
be made in law for
quasi-contract in respect of
services. With regards to the
money paid by the 3rd
Respondent, it can also be
treated as a loan to the
company, which will have to be
paid back with interest. On the
matter of quasi-contract, it is
trite agency law that if a
principal has received the
benefits of an unauthorised
contract, there arises an
immediate threat of unjust
enrichment if such receipt is
allowed to stand without redress
to the third party.
The Supreme Court of Minnesota
has explained the problem very
succinctly. In Seifert v.
Union Brass &Metal Mfg. Co.[ 191
Minn. 362, 254 N.W 273, 274 1934],
the Court opined: “…[W]ithout
such recovery, there would be
such unconscionable enrichment
of the party who gets money,
property, or services from
another in exchange for an
apparently binding contractual
promise, which is not binding in
fact and successfully repudiated
by the promisor. In such cases
there is an obviously unlawful
and unconscionable acquisition,
attended by the obligation to
disgorge the proceeds. That is
the obligation enforced as it
would be if bottomed on contract
(which it is not), and hence
called for convenience a
quasi-contract….”
The trial court in the case
before us made the following
findings in respect of the
services and other contributions
made to the company by the three
Respondents:
The 1st Respondent
prepared a petition to support
the company’s application for
financial assistance, even
though that particular
assistance did not materialise.
He offered professional advice
on the sitting of the factory,
leading to its relocation from
Awutu to Agbogba.
He travelled to US at his own
expense to carry out
pre-shipment inspection of the
Oxygen plant (air tickets,
presumably visa fees, expenses
on accommodation and meals),
attend a training programme on
the installation, operation and
maintenance of the plant. He
cleared the plant from the
harbour upon arrival, and
participated in the construction
of the factory building,
installation and test running of
the machinery.
The 2nd
Respondent participated in the
construction of the factory
building, installation and test
running of the machinery. The
3rd Respondent
paid one million to the 2nd
Appellant on or around 16th
July 1991 allegedly as deposit
for shares in the company.
Payment was acknowledged in
writing by 2nd
respondent; however, I have
rejected the finding that this
payment was in furtherance of an
act of the company, i.e. a
decision of the company to sell
shares to one or more of the
Respondents. The 3rd
Respondent also participated in
the construction of the factory
building, installation and test
running of the machinery.
In the Plaintiffs/Respondents’
Statement of Claim, most of
these contributions are captured
in Paragraph 26, along with a
price tag of C372, 647. To
this we will have to add the
amount of I million cedis that
the 3rd Respondent
parted with, the cost of the
travel to the US, and the value
of the other services noted in
the above paragraph but not
mentioned in Paragraph 26 of the
afore-mentioned Statement of
Claim. I would award the total
value of these services and
financial outlays as
compensation to the Respondents,
payable from 1993, with interest
calculated at the rates
prevailing in 1993.
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