District-Court Case

Wedzi v Hotel Majorie 'Y' Ltd

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CASE NO:  B8/47/2015






7TH MAY 2014


AMOS  WEDZI                                   PLAINTIFF/RESPONDENT








The facts leading to this appeal are fairly simple and uncontroverted.  When the appellant company was formed the initial share holding structure was as follows; 60% to the 2nd Defendant Richard Yao Wedzi, 20% to plaintiff/respondent Amos Wedzi and 20% to Welbeck Wedzi (now deceased).  These three persons were also the first Directors of the company, For some reasons which are not necessary for the resolution of this appeal, the 2nd defendant and Welbeck Wedzi purported toforfeit the 20% shares of the plaintiff and sold same together with the 20% shares of Welbeck Wedzi for $350,000 to the 3rd def/resp/resp, Michael Yao Monyo. The plaintiff was also removed as a director of the company and the 3rd defendant was made a Director in his stead

Aggrieved by the forfeiture of his shares and removal as director, Amos Wedzi  hereafter the plaintiff, brought an action before the High court challenging the procedure for the forfeiture and sale of his 20% shares. After a lengthy trial, the court found the forfeiture of the shares and the removal of the plaintiff as director as wrongful same having been done in breach of the company regulations. The court held as follows;

“The evidence shows that the 2nd defendant sold 40% shares in the 1st defendant company to the 3rd defendant.  This sale was evidenced by an agreement dated 2nd May 1997 between the 2nddefendant and the 3rd defendant and which was tendered by the plaintiff as Exhibit ‘D’.  Subsequent to the acquisition of the shares the 3rd defendant was also appointed a director of the company.  The 3rd defendant was later issued with a share certificate which was tendered by the 3rd defendant in evidence as Exhibit ‘1B’.  Thus by the said sale and transfer of shares the 3rd defendant became a 40% shareholder whilst the 2nd defendant became a 60% shareholder.  The 20% shares held by the plaintiff and their father Welbeck Kwesi Wedzi thus ceased to exist.  I have earlier on in this judgment held that the purported forfeiture of the plaintiff’s share was illegal and void and that the plaintiff is still a member and shareholder of the company.  I should say in passing that Welbeck Kwesi Wedzi (the father of the plaintiff and 2nd defendant) was also a 20% shareholder whose shares were affected by the said sale agreement.  He is said to be deceased.  The evidence shows that he died in 2004. The evidence shows that at the time of the execution of Exhibit ‘D’, Welbeck Kwesi Wedzi was present.  He indeed appended his signature to Exhibit ‘D’ as a witness for the 2nddefendant.  That probably explains why he did not in his lifetime challenge the forfeiture of his shares.  In any event the forfeiture of his shares is not an issue before me.”

Since I have held that the plaintiff is a 20% shareholder and the sale of his shares to the 3rd defendant is void, I hereby order the sale and transfer of the plaintiff’s 20% share to the 3rd defendant be and is hereby set aside.  Thus 3rd defendant will no more be a 40% shareholder; he will be left with 20%.”

The 3rd defendant bought the 40% shares for $300,000.  I will therefore declare that the 3rd defendant is a 20% shareholder and that he is a creditor of the company in respect of the sum of $150,000 representing the value of the 20% shares of the plaintiff wrongfully sold to him.

It is also obvious that the appointment of the 3rd defendant as a director to fill the vacancy left by the wrongful removal of the plaintiff was also in violation of section 181 and 272 of the code.  I hold that the appointment of the 3rd defendant as a director was illegal and therefore void.  I hold therefore that the 3rddefendant is not a validly appointed director of the 1st defendant.”

The summary of the judgment of the trial court was that

1The sale of the plaintiff’s 20% share was wrongful and therefore reversed

2Welbeck Wedzi had not challenged the sale of of his 20% shares in his lifetime. In fact, unlike the first defendant who was deemed not to have had proper notification of the forfeiture and sale of his shares, Welbeck Wedzi was a signatory of the sale agreement that divested himself of his 20% shares. And in any case, as the trial judge remarked, the issue of the forfeiture of the shares of Welbeck Wedzi was not before him.

3 Since the sale of the plaintiffs 20% shares had been reversed, the 3rd defendant respondent was entitled to only 20% shares, ostensibly, those shares belonging to Welbeck Wedzi, which was not being challenged. He then became a creditor to the Company in the amount of $150,000.

4 3rd def/resp appointment as Director of the company was also declared null and void.

Feeling aggrieved by this judgment the 1st and 2nd defendants appealed to the court of appeal on the following grounds

A)The learned Trial judge erred in law in his interpretation of S.155 and S262 of Act 179 in respect of the service of the notice of call on the plaintiff by the appellants and subsequently holding that the notice of call was not served on the plaintiff

b) The learned trial judge erred in law by holding that the plaintiff was still a member of the 1stdefendant company

c) Judgment is against the weight of evidence

d) Further grounds will be added on receipt of the records.

Without seeking leave the Appellant filed an additional ground of appeal and proceeded to argue same in his statement of case. The fresh ground of appeal in his statement of case was couched as follows;

“The learned trial judge erred in law by declaring the 3rd defendant respondent to be a 20% shareholder of the 1st defendant company when at all material times there had not been a valid call and forfeiture of the shares of Welbeck Kwesi Wedzi as prescribed by both the companies Act, 1963(Act 179) and the regulations of the 1st defendant company.

The learned justices of the Court of Appeal took issue with the procedure adopted by the appellant in filing and arguing the additional ground of appeal without the leave of the court. After a lengthy discourse on rule 8(8) of the court of appeal rule CI 19. Their lordships concluded as follows

“But in the present case, as noted above, counsel for the first defendant has filed an additional ground of appeal and has argued the same in his written submission without leave of the court, This in my view is in breach of rule 8(8) of CI 19 and the said additional ground and the submissions of 3rd Defendant’s counsel thereon, will therefore not be considered in this appeal.”

Their Lordships thereafter considered the other main ground of appeal and dismissed the appeal in the following terms;

“In the light of the evidence on record, I think the trial court was a right in holding that there had been proper service of the documents in issue on the plaintiff within the meaning  of Act 179, It follows that the trial court’s determination that no valid calls had been made on the shares of the plaintiff before they were purportedly forfeited, and further that the plaintiff was not given an opportunity to state his case before he was purportedly removed as a director of the 1st Defendant company, cannot be assailed, To my mind, therefore, the forfeiture of the plaintiffs shares and his removal as a director of the 1st defendant company were properly annulled by the trial Court.

It follows that this appeal fails and I accordingly dismiss the same. The judgment of the trial court is affirmed.”

Dissatisfied with the judgment of the Court of Appeal the1st defendant has appealed to this court on the following grounds

(a) The learned Justices of the Court of Appeal erred in law in failingto consider and determine the additional ground of appeal filed and argued by the appellant without leave of the court.

Particulars of Error of Law

(i)The learned Justices of the Court of Appeal limited themselves to only Rule 8(7) of the Court of Appeal Rules ( CI 19) even though Rule 8(8) overrides the said Rule8(7) and the respondent had contested the additional ground by filing his written submission.

(b) The learned Justices of the Court of Appeal erred in failing to declare the remaining 20% shares purportedly acquired by the 3rd defendant/respondent to be a nullity and of no effect.

(c)Additional grounds of appeal will be filed on receipt of the records.

Before us no additional grounds has been filed or argued.