ERNEST KOJO BONSU v. HGS LIMITED & OTHERS
2015
COURT OF APPEAL
GHANA
CORAM
- KUSI-APPIAH, JA (PRESIDING)
- ACQUAYE, JA
- AGYEMANG, (MRS.) JA
Areas of Law
- Corporate Law
2015
COURT OF APPEAL
GHANA
CORAM
AI Generated Summary
In this interlocutory appeal, the appellant sought to overturn a lower court ruling that declined a forensic audit of the first respondent company by Ernst and Young. The initial application was brought under Section 218 of the Companies Act, 1963, claiming oppression of a minority shareholder. The lower court had ruled that the first respondent could not afford the forensic audit expenses and suggested seeking out a more affordable accounting firm. The appellate court found that the trial judge had erred in relying solely on audited accounts that failed to present a full financial picture by excluding the company's subsidiary. Therefore, the appeal was allowed, and the matter was remanded to the lower court for a retrial on the question of affordability. The appellate court emphasized the importance of complete financial disclosure and a careful application of judicial discretion.
AGYEMANG, JA:
In this interlocutory appeal, the appellant herein seeks to have the ruling of the court below set aside, and for this court to make an order for a forensic audit of the first defendant / respondent company to be carried out by Ernst and Young, a firm of Chartered Accountants. This was said to be in accordance with the agreement of the parties reached earlier, aimed at determining the value of the first defendant / respondent (referred to hereafter as the first respondent).
The determination of the value of the first respondent company was contained in the ruling of the court below of 20th December 2013. The purpose was to inform the buying out of the ten percent share of the appellant herein in the first respondent, by the other respondents. The order followed an application brought by the respondents herein under S.218 of the Companies’ Act 1963 Act 179 as remedy for alleged oppression of the appellant by the second and third respondents.
The application was brought after the close of pleadings and before the taking out of an application for directions. It followed the plea of the respondents contained in an application for security for costs that an order for a share purchase by the respondents of the appellant’s shares would be a desirable course to resolve the dispute between the parties. In that application it was said among others that this was because the relationship of the parties was so irretrievably damaged that they could not be expected to continue therein as members/officers of the company.
The learned trial judge appeared to be of the same view and ruled that a share purchase order was the course to take. He however held that for the order to be made, the court had to be apprised of the value of the company, hence the need to have an audit and valuation of the company. Thus did he order that the said audit/valuation be carried out by Ernst and Young, a company chosen by agreement of the parties.
Following the order which was served on Ernst and Young, that company set to work and reported back that it would not be able to undertake a valuation of the company without carrying out a forensic audit. The opinion of another firm of auditors: Price Waterhouse was sought regarding the conduct of a forensic audit and valuation. In his consideration of which company to appoint to undertake the audit/valuation, Price Waterhouse was dropped as, per the learned trial judge in his ruling, that company in giving a quotation, had concer