RICHARD GAVOR VS MATERIAL LOANS COMPANY LIMITED & ANOTHER

The Court has heard arguments from both Counsel for and against an application to strike out 2nd Defendant as part of the suit. The Court has also read the affidavits in support and in opposition. Order 4 Rule 5 (2) is the law behind the application and it allows such an application to be brought at any stage of the proceedings and it also gives the Court the discretion to grant or refuse such an application as it deems fit as per Rule 2 (A) (B). All the arguments made by Counsel for the Plaintiff as to time and stage of the case is not well founded under the Rules of Order 5 of C.I. 47.

Now, it is trite that a limited liability company under the Companies Act is a legal person with capacity to sue and be sued. It is also trite that the officers of the company, Managing Director when they work in their capacity as officers, agents or servants of the company cannot be held liable for any wrongdoing of the company except when personal liability can be impugned on their activities and that is where the law allows the corporate veil to be lifted so that those officers can be held personally liable for those actions. Therefore all the cases that counsel for the Defendant has quoted are on point which is Salomon v Salomon and Morkor v Kuma supra. When it comes to proving the legal identity of a company, a party therefore has to show that a company has been set up to further fraudulent activities as well as the infringement of other public policy matters. Indeed, Morkor v Kuma list a number of issues that can fall within the preview of lifting the corporate veil of the company.

It is the case of the Plaintiff that, as the alter ego of the 1st Defendant company, the 2nd Defendant was not only responsible for all the decisions of the company but knew at the material time that they were selling the property to the Plaintiff and that the said property was under various forms of litigation and there were many other people making claims to the said property. The Court therefore holds that to the extent that the 2nd Defendant is being impugned with the personal act of misrepresentation leading to the Plaintiff’s loss, even though the 2nd Defendant is not the same as the 1st Defendant, it behooves on this Court to keep the 2nd Defendant in this matter as a necessary party for him to help the Court unravel the truth or otherwise in this matter. In the circumstances, the application for misjoinder is refused. Costs of GHC3,000.00 is awarded in favour of the Plaintiff/Res