ROGERS VRS. MCNEAL AND ANOTHER (C1/09/2024) [2024] GHAHC 495 (24 July 2024)

IN THE SUPERIOR COURT OF JUDICATURE IN THE HIGH COURT OF JUSTICE HELD IN SOMANYA ON WEDNESDAY THE 24TH DAY OF JULY, 2024, BEFORE HIS LORDSHIP JUSTICE FREDERICK A.W.K. NAWURAH SUIT NO. C1/09/2024 BRANDON SCOTT ROGERS v. 1. ERIC MCNEAL 2. MIGRATING CULTURE LTD. CO. JUDGMENT The appellant brought an application before this Court under sections 218, 219, 175, 176 and 177 of the Companies Act, 2019 (Act 992), praying for certain reliefs against the 1st Respondent in respect of the 2nd Respondent, a company known as Migrating Culture Limited. The substance of the complaint alleged, inter alia, that the 1st Respondent, who is the Chief Executive Officer and the majority shareholder of the said company, has conducted the company’s business in a manner oppressive of the minority. The Applicant also alleges that the 1st Respondent is disqualified from being a director of the 2nd Respondent Company by reason of his previous criminal conviction for fraud and also for being an undischarged bankrupt contrary to the provisions of the Companies Act, 2019. A number of instances of the 1st Respondent’s alleged conduct were particularised by the Applicant in his affidavit in support of the application. The Applicant attached to his application exhibits marked A to Q. Exhibits K and M contained copies of the 1st 1 Respondent’s criminal records information and his bankruptcy documents, respectively. On this basis, the Applicant prays the Court for the following reliefs: a) An order declaring that the 1st Respondent is not fit as director of the 2nd Respondent company; b) An order that the 2nd Respondent has committed acts of oppression against the Applicant herein; c) An order for the 1st Respondent to account for his stewardship of the 2nd Respondent; d) Any other order the honorable court may deem fit for the promotion of good governance of the 2nd Respondent company. The 1st Respondent is opposed the instant application and, by an affidavit consisting of several paragraphs, he denies all the allegations of impropriety levelled against him by the Applicant. In those paragraphs, the 1st Respondent set out in detail the history of how the company was incorporated from very small beginnings; and how, without any financial assistance from the Applicant, the 1st Respondent managed to bring the company to its present status. Learned Counsel for the Respondents filed his written address in which he generally repeated the averments of the 1st Respondent. Before ending his address, however, Learned Counsel for the 1st Respondent raised a number of preliminary legal objections. The most relevant of the legal objections raised by Learned Counsel in the particular circumstances of this case is the fact that the Applicant failed to comply with the requirement of giving a minimum of twenty-eight days written notice of his intention to restrain the 1st Respondent from managing the 2nd Respondent company to the 1st Respondent prior to his instituting this action. It is the case of Learned Counsel for the 1st Respondent that the Applicant was mandatorily required to comply with section 2 177(7) of the Companies Act, 2019 as a condition precedent before bringing the instant application under the section of the Act. Learned Counsel maintains that the said procedural requirement cannot be waived. Learned Counsel for the Respondents referred the Court to the case of Republic v. High Court (Fast Track Division) Accra; Ex Parte Ghana Lotto Operators Association (National Lottery Authority Interested Party) 2009 SCGLR 372, where the Supreme Court stated that that no Judge or Court has jurisdiction to grant immunity to a party from the effect of breaching an Act of Parliament. He concluded that the Court cannot condone a breach of statute by a Party and, therefore, the Applicant's invitation to the Court to restrain the 1st Respondent from holding himself as a Director to the 2nd Respondent Company must fail for the breach of mandatory procedural rule. With respect to the issue of non-compliance with section 177(7) of the Companies Act, 2019, it is significant to note that the 1st Respondent’s objection relates to the failure of the Applicant to comply with a statutory rule under the Companies Act, 2019, and not a procedural requirement under the High Court (Civil Procedure) Rules, 2004 (C.I. 47). An infraction of a statutory provision which is a pre-condition for the institution of an action is a jurisdictional matter and cannot be waived by the Courts. Section 177(7) of the Companies Act is a clear ouster clause whose infraction is fatal to the case of a party who fails to comply with it. In the case of Nartey v. Gati [2010] SCGLR 745 the Supreme Court discussed section 30(1) of the Legal Profession Act 1960 (Act 32) which provides a condition precedent for lawyers to serve notice when they intend to commence an action against a client for recovery of fees for the business done by a lawyer. The Supreme Court held that service of notice on the client was a pre-condition for the institution of the action and failure to comply with it rendered the proceedings incompetent. The law is that where an enactment prescribes a special procedure by which something is to be done, it is that procedure alone that must be followed. A plethora of cases like Tularley v. Abaidoo (1962) 1 GLR 411 and Boyefio v. NTHC Properties Ltd. [1996-97] 3 SCGLR 531 are all to the effect that where an enactment or statute provides a special procedure or ouster clause or provides a condition precedent for the institution of an action, that procedure alone must be used. However, where a statute provides that non- compliance with a statute is not fatal, then effect could be given to it. Section 177(7) of the Companies Act, 2019 provides as follows: “(7) A person who intends to apply for an. order under this section shall give not less than twenty-eight days written notice of that intention to the person against whom the order is sought, and to the Registrar.” Section 177(8) of the Act goes further to provide for the Applicant as well as the person the person challenged and even the Registrar of Companies to appear in court and testify with witnesses if they so wish. The section provides thus: “(8) On the hearing of an application under this section, the applicant, the person against whom the order is sought, the Registrar and the Official Trustee may appear, and give evidence and call witnesses.” Section 177 of the Companies Act is aimed at restraining fraudulent persons from managing companies on the basis of fraud, dishonesty, bankruptcy and criminal conviction. Thus, the standard of proof where the fact of conviction in respect of such criminal offence is not readily available, is akin to that in a criminal case. The proceedings would obviously be civil in nature, however, since the facts must establish culpability for the commission of a crime, section 13(1) of the Evidence Act, 1975 (NRCD 323) shall be applicable and the standard of proof would have to be proof beyond reasonable doubt. See: Derick Adu-Gyamfi v. The Attorney-General (2023) JELR 111597 (SC), per Pwamang JSC. Sub-sections (7) and (8) of section 177 of the Companies Act, 2019 therefore contain elaborate provisions for the Applicant, the person challenged and the Registrar of Companies to testify and call witnesses in proof or disproof of the criminal culpability and fitness or unfitness of the person challenged. 4 It is for the above reason that section 177(7) of the Companies Act, 2019 provides that an Applicant shall give not less than twenty-eight days written notice of his intention to commence an impeachment or restraining action against a director or manager of a company to both the said director and the Registrar of Companies. This subsection is a condition precedent for the institution of an action to restrain a person from managing a company on grounds of being fraudulent, and failure to comply with it would make the action incompetent. From the record, the Applicant’s action was filed without service of the statutory minimum twenty-eight days’ notice on the 1st Respondent and the Registrar of Companies. This fact of non-compliance was clearly raised and fully traversed by Counsel for the 1st Respondent in preliminary objection made as part of his written address filed on 28th June, 2024 but Learned Counsel for the Applicant did not see it fit to respond to same in his written address filed on the 8th of July, 2024, or to seek the leave of Court to effect due compliance with the said statutory provision. The undeniable fact therefore remains that the Applicant has failed to comply with the provisions in section 177(7) of the Companies Act, 2019 which is a pre-condition for the institution of an action to restrain a person from managing a company on grounds of being fraudulent, such as this present case, and that makes his action incompetent. The preliminary legal objection therefore succeeds on this ground. The Applicant’s action is incompetent and same is hereby set aside. I award costs of ten thousand Ghana Cedis (GH₵10,000.00) to the 1st Respondent against the Applicant. (SGD.) H/L JUSTICE FREDERICK A.W.K. NAWURAH. (JUSTICE OF THE HIGH COURT) 5 COUNSEL: ▪ Suleman Musa Esq., for Applicant ▪ Ras Lincoln Tei Esq., for Respondents 6