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ARYEETEY, J.A.
A background to this appeal is
as follows: On 7th May, 1997, in
a civil case number Misc.768/97,
J. K. Dolphyne v. S. E. A.
Brenya and Gladys Dede Adjetey,
the High Court made orders for
Interim Injunction and for the
appointment of Receiver and
Manager. After the High Court
had given final judgment in the
case it ordered the two
Receivers and Managers to hand
over their stewardship to two
others. The order as drawn and
signed by the trial judge and
the registrar of the court. It
reads:—
“ORDER FOR HANDING OVER
WHEREAS the above-named case is
pending before this Honourable
Court for hearing and
determination:
AND WHEREAS at the trial held on
the 19th day of January, 2001 it
was ordered that an Order to
HAND OVER be made:
AND UPON HEARING DR. DANIELS
Esq.,
Counsel for and on behalf of the
2nd defendant and the Company
herein: AND DR. TWUM Esq.,
Counsel for and on behalf of the
2nd defendant and the Company
herein:
NOW THEREFORE IT IS HEREBY
ORDERED that MR. ANTONIO CASTRO
BARCON and MR. J. K. DOLPHYNE
should take over the management
of the Company from the
RECEIVERS AND MANAGERS. The
Receivers and Managers will
however, continue to sign the
company’s cheques, and notify
the two named persons up to the
end of January, 2001. With
effect from 1/2/2001, these two
persons Dolphyne and Antonio
will be the signatories to the
Company’s cheques. This order is
to be drawn up by the Registrar
and signed by the judge himself
and copies sent to all the
appropriate agencies including
the banks with which the company
does business. Ordered
accordingly.
GIVEN UNDER MY HAND AND SEAL
OF THE HIGH COURT OF JUSTICE
ACCRA THIS 19TH DAY OF
JANUARY, 2001.
CHIEF REGISTRAR”
Upon Certiorari application to
the Supreme Court the concluding
part of its ruling reads: “For a
High Court can appoint receivers
and managers to manage the
affairs of the company but the
Court cannot, after revoking
their appointment, purport to
appoint directors and determine
which particular directors
should sign the cheques of the
company. The Code does not give
the High Court such
jurisdiction. Hence, our
unanimous decision quashing the
judgment and orders of the High
Court dated 12th May 2000 and
19th January 2001”. The next
step taken against the two
receivers and managers was the
issue of writ against them for
the following reliefs: “1. The
sum of ¢2,617,408,000 being
monies belonging to the
plaintiff, which was
misappropriated by defendants in
the course of their duty as
Receivers and Managers of the
plaintiff company. 2. A
declaration that 6% commission
ordered by the High Court Accra
to be paid to the defendants as
Receivers and Managers of the
plaintiff company from 1st
November 1997 to 31st January
2001 is payable net of all
deductions and not gross. 3.
Interest on the said sum form
31st January 2001 to date of
final judgment. 4. Costs.”
Before hearing commenced counsel
for the second defendant was
allowed by the court to argue
his preliminary objection based
on a point of issue raised in
the summons for Directions
namely: “Whether or not the
plaintiff company does not have
the capacity to bring the
present action”. Before the High
Court counsel for the second
defendant argued that the lack
of capacity of the plaintiff
company is derived from the
provision of section 239 of the
Companies Code, 1963 (Act 179),
which reads: “A receiver or
manager of any property or
undertaking of a company
appointed by the Court shall be
deemed to be an officer of the
Court and not of the company and
shall act in accordance with the
directions and instruction of
the Court.” The court below
overruled his objection to the
capacity of the plaintiff
company in bringing the action
as frivolous and completely
without merit. The court was of
the opinion that: “There is
nothing in section 239 of Act
179 or in law generally which
exempts the Receiver and Manager
appointed by the Court from
action for alleged misconduct in
respect of the Company’s
property”. The second defendant
appealed against the High
Court’s ruling. His only ground
of appeal before this Court is
that “The learned trial judge
erred in law in dismissing the
second defendant’s legal
objection that on a true and
proper interpretation of section
239 of the Companies Code, Act
179 the plaintiff had no
capacity to sue the second
defendant and that he was not an
agent of the plaintiff”.
As can be seen from the ground
of appeal, the focus of this
appeal is that by virtue of
section 239 of the Companies
Code the plaintiff company does
not have the capacity to bring
the action against the second
defendant/appellant and the
first defendant. Therefore we
would do well to explore the
scope of section 239 of the
Companies Code. In his ruling,
Afreh, J.S.C. explained the
effect of the appointment of
Receiver and Manager as follows:
“The effect of appointment of a
Receiver and Manager by the
court is that the court assumes
control of the property
affected, and from that time the
parties to the action retain
possession only as custodians of
the court: See Halsbury’s Laws
of England, 3rd Edition Vol. 32,
paragraph 674 page 415. The
court in effect takes the
custody of the property into its
own hands — for the receiver is
an officer of the court — and
thus assumes the protection and
safekeeping of it: See Palmer’s
Company Law 20th Edition page
417. The appointment of a
Receiver and Manager by the
court under s. 293 of Act 179
does not in any way affect the
existence or separate
personality of the Company. The
Court does not replace or ‘take
over’ the company.
The Company does not lose its
right to bring action to
vindicate or protect its rights
when it regains full control
over its assets”
The import of section 239 of the
Companies Code is that the
receivers and managers appointed
by the Court fulfil their
obligation so long as they act
in accordance with the
directives and instructions of
the Court and not otherwise.
That means they are answerable
only to the Court so far as the
Court’s mandate is concerned. I
do not think that the position
remains the same if they go
beyond the mandate and their
conduct infringes the rights of
others. In real terms, upon
their appointment as receivers
and managers, management of the
company is ceded to the court,
which acts through the receivers
and managers. As officers and
indeed agents of the court,
receivers and managers take
directions and instructions from
the court and are answerable
only to the court throughout the
entire period of their
stewardship. It means in the
course of their appointment as
receivers and managers, any
person outside the court who
seeks to question the conduct of
their stewardship or in any way
call upon them to account, for
obvious reasons, must seek leave
of the court to do so. It is
only in this context that we
ought to look at the case of
L.P. Arthur (Insurance Ltd.) v.
Sisson and Others [1966] 2 All
E. R. 1003, referred to by
counsel for the appellant as
authority for his proposition
that leave of the court ought to
be sought for prior to any
action against a receiver and
manager. In that case the
conduct of the receiver
complained of occurred between
October 1963 when the receiver
was appointed andsic March 1964,
when the company went into
liquidation and the application
for leave came on before the
receivership came to an end.
It is worthy of note that the
alleged malfeasance occurred
during the receivership, and the
application for leave came
before taking of receiver’s
accounts and not after it, as in
the instant case. In the instant
case the appointment as managers
and receivers had come to an
end. The action against the two
defendants did not stem from any
perceived breach of duties by
them as agents of the company
and that was made quite clear by
the ruling of the court below.
At page 37 of the record of
appeal the learned judge makes
the following observation:
“It appears from the contentions
of the 2nd defendant’s counsel
in his Statement of Defence and
before me that he thinks that
the plaintiff company has sued
the defendants for breach of
their duties as agents of the
company. The plaintiff has not
done that. Its claim is for the
specified sum of four billion,
five hundred and forty-seven
million, three hundred and
ninety-four thousand cedis
(¢4,547,394,000) being monies
belonging to the plaintiff’s
company, which was
misappropriated by the
defendants in the course of
their duty as Receivers and
Managers of the company. It is
in effect a claim in tort for
conversion.”
The claim against the defendants
is independent of their
appointment as receivers and
managers as well as their duties
as officers of the court, which
in any case had come to an end.
It is not a claim for their
accountability as receivers and
managers simply because they
have already rendered accounts
to the court and they have
handed over in the manner
prescribed by the court. It
comes at the end of their
stewardship and not in the
course of it. I agree with the
observation of the court below
in its ruling that “there is
nothing in section 239 of Act
179 or in Law generally that
exempts Receiver and Manager
appointed by the court from
action for alleged misconduct in
respect of the company’s
property.”
In the instant appeal after the
two defendants had discharged
their functions as officers of
the court and indeed their
appointment as Receivers and
Managers had been brought to an
end by the order of the court,
which I have already quoted
above, the plaintiff company,
having gained control over its
own affairs investigated the
management of its assets under
the defendants’ control. Being
satisfied that the two receivers
and managers did mismanage the
company’s assets and
misappropriated some funds
belonging to the company the
plaintiff company filed a writ
against them for the recovery of
its lost assets. In spite of the
intervening appointment of
receiver and manager, who as
officers of the court took over
the management and control of
the assets of the company, the
constitutional right of the
shareholders of the plaintiff
company to take court action for
the recovery of their perceived
loss of a substantial part of
their assets remains intact. As
expressed earlier in this
judgment there is nothing in
section 239 of the Companies
Code, which takes away the
shareholders’ right to pursue
their claim against the
defendants. The objection of the
second defendant/appellant on
grounds of lack of capacity of
the plaintiff company to sue the
defendants is without legal
basis. The appeal is therefore
dismissed.
B. T. ARYEETEY
JUSTICE OF APPEAL
E. K. PIESARE
JUSTICE OF APPEAL
COUNSEL
MR. AMPOSAH DADZIE FOR 2ND
DEFENDANT/APPELLANT
MAANAA APPEAH FOR
PLAINTIFFS/RESPONDENTS. |
