NICHOLAS BERNARD ASARE vs. DUPAUL WOOD TREATMENT (GHANA) CO LTD DR. KWAME DUFOUR [2006]DLSC2427

Date	2006-06-07
Suit No.	CIVIL APPEAL NO.J4/25/2005
Citation No.	[2006]DLSC2427

MISS AKUFFO J.S.C.(PRESIDING)

MRS. WOOD J.S.C

DR. DATE-BAH J.S.C

ANINAKWAH J.S.C

ASIAMAH J.S.C.

MR. EBOW QUARSHIE FOR APPELLANT

MR. KWAME GYAN FOR RESPONDENT.

[2006]DLSC2427
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													<main id="main" class="content" style="min-height: 60rem" >NICHOLAS BERNARD ASARE<o:p></o:p>vs.<o:p></o:p>DUPAUL WOOD TREATMENT (GHANA) CO LTD DR. KWAME DUFOUR<o:p></o:p>[SUPREME
COURT]<o:p></o:p>CIVIL
APPEAL NO.J4/25/2005<o:p></o:p><div style="mso-element:para-border-div;border:none;border-bottom:solid windowtext 1.5pt;
padding:0in 0in 1.0pt 0in">

DATET: 7TH JUNE, 2006.<o:p></o:p>

MR.
KWAME GYAN FOR RESPONDENT.<o:p></o:p>

</div>CORAM:<o:p></o:p><div style="mso-element:para-border-div;border:none;border-bottom:solid windowtext 1.5pt;
padding:0in 0in 1.0pt 0in">

MISS
AKUFFO, J.S.C.(PRESIDING), MRS. WOOD, J.S.C., DR. DATE-BAH, J.S.C., ANINAKWAH,
J.S.C., ASIAMAH, J.S.C.<o:p></o:p>

</div><o:p>&nbsp;</o:p>J&nbsp; U D G M E N T<o:p></o:p>&nbsp;DR. DATE-BAH, J.S.C.:&nbsp;&nbsp;&nbsp;&nbsp; Two business partners related by blood
fell out.&nbsp; In the wake of this falling
out, the courts have had the responsibility thrust upon them to determine the
partners’ respective rights and obligations under the Companies Code 1963 (Act
179).<o:p></o:p>&nbsp;In August 1978, Dr. Kwame Dufour and Mr.
Nicholas Bernard Asare subscribed the Regulations of the first defendant/respondent/appellant,
which will subsequently be referred to as the first appellant or the appellant
company, and incorporated it by registration at the companies’ registry.&nbsp; By that act, they both became shareholders and
members of the appellant company.&nbsp;&nbsp; (See
Adehyeman Gardens Ltd. v Assibey [2003-2004] SCGLR 1016). This much is in
effect admitted by the appellants’ decision to abandon Ground One in their
Notice of Appeal, which had read as follows:<o:p></o:p>&nbsp;“The Court of Appeal erred by its holding that
the Respondent was a member of the Company when at the same time, it accepted
the fact that all that the Respondent did amounted to pre incorporation actions
which did not bind the Appellants or the Company.”<o:p></o:p>&nbsp;What remains in issue with regard to the
shareholding in the appellant company is the extent of shareholding by the
plaintiff/appellant/respondent, who is hereafter referred to in this judgment
as the respondent.&nbsp; Did the respondent
remain the 50% shareholder he was as a subscriber or did subsequent acts of the
company and/or its members dilute his shareholding?&nbsp; This was an issue that had to be determined
in order to decide whether to grant the first of the declarations sought by
respondent in this case which he had initiated with an originating motion under
the Companies Act 1963 for the following declarations:<o:p></o:p>&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
“That the Applicant is a shareholder and member of the first Respondent
Company and holds 50% of its issued share capital.<o:p></o:p>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
That the systematic reduction by the Second Respondent in the number of
shares held by the Applicant was an unjustified expropriation of the
Applicant’s shareholding and a fraud on him.<o:p></o:p>3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
That the purported removal of the Applicant as a director of the First
Respondent Company by the Second Respondent was unlawful and so void as the
same was contrary to Section 185(2) of the Companies Code 1963 (Act 179).<o:p></o:p>4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
That the affairs of the First Respondent Company are being conducted and
the powers of the directors are being exercised in a manner oppressive to the
Applicant or in disregard of his legitimate interests as a Shareholder of the
Company.”<o:p></o:p>&nbsp;The learned trial judge, Ansah J., as he then
was, decided that the respondent’s original shareholding had been lawfully
diluted through the action of the members of the company.&nbsp; On this issue, he said (at p. 194 of the
Record):<o:p></o:p>&nbsp;“The complaint that the applicant’s shares in
the company have been reduced is borne out by the evidence.&nbsp; From the original 50% as per exhibit NBA 1,
he now has 10% as per KD3.&nbsp; But one thing
which must be noted is that until recently the respondent had never protested
against that.&nbsp; In fact as per exhibit
KD3, the allocation of 10% “A” shares to him was done as far back as on 1 May
1980 and he subscribed to it and he never protested.&nbsp; The fact of the matter is that in an undated
letter ( I do not know how else to describe it), Exhibit KD 32, the applicant
wrote to say that:<o:p></o:p>&nbsp;“Due to circumstances beyond my control, and
because of family ties, I reluctantly accepted the current 10% share that I
hold.”<o:p></o:p>&nbsp;From the tone of that letter, the applicant
complains that whereas the Second Respondent kept on increasing the numbers of
shares he held, his were reduced will(sic) he got the 10% he was allotted.&nbsp; In the last paragraph of the letter, Exhibit
KD 32, he applied for another shares review to avert crisis in their
relationship.&nbsp; Note is to be taken of the
threats in that paragraph.<o:p></o:p>&nbsp;The point I am driving at is that ever since
the special resolution was passed on 1 May 1980, the applicant has known and
accepted the situation that he was allotted 10% shares in the company and he
never protested at that.”<o:p></o:p>&nbsp;Predictably, the learned trial judge went on
to deny the respondent the first declaration he sought, namely, that he was a
shareholder and member of the appellant company and held 50% of its shares.<o:p></o:p>&nbsp;In the Court of Appeal, Twumasi JA, who
delivered the judgment of the Court, reversed the learned trial judge and held
that on the evidence before the trial court it was clear that the respondent
was a shareholder and member of the appellant company in terms of section 30(1)
of the Companies Code and that he was therefore entitled to have his name
entered in the register of the company.&nbsp;
He held that the learned trial judge was in error in refusing to make </main>