Mthembuka v ZTE (Malawi) Limited (357 of 2014) [2016] MWHC 498 (28 April 2016);

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IN THE HIGH COURT OF MALAWI PRINCIPAL REGISTRY

CIVIL CAUSE NO. 357 OF 2014

 

BETWEEN

SAFARI MTHEMBUKA                                          PLAINTIFF

AND

ZTE (MALAWI) LIMITED                                        DEFENDANT

 

CORAM:

HON. JUSTICE R. MBVUNDULA

Warne, Counsel, for the Plaintiff

Kalanda, Counsel for the Defendant

Mithi, Official Interpreter

JUDGMENT

The plaintiff asserts that at all material times he was a director of the defendant company and that the company irregularly removed him from the position contrary to the provisions of section 146 of the Companies Act, without a resolution to that effect being passed, and that it will be in the interest of justice and equity to have the following declarations and reliefs granted in his favour:

1. That on a true construction of section 146 of the Act the plaintiff could not be removed without due compliance with the Act;

2. That his removal as a director was illegal and he should continue to be recognised as such;

3. In the alternative, that in the event that the defendant does not accept the plaintiff as a director, the plaintiff be compensated in damages to be assessed by the Registrar;

4. That an order for specific performance be made compelling the defendant to execute instruments for the re-appointment of the plaintiff as a director;

5. That an order be made as shall appear to the court to be just and proper in the circumstances of the case.

There is also the usual prayer for costs.

The plaintiff draws the conclusion that he was dismissed as a director from the fact that whilst he served as a director, and concurrently being employed as the defendant's driver, he was dismissed, in November 2013, from the latter position and told never to set foot at the defendant's premises. He states that since that event he has never been involved in the affairs of the company in his capacity as a director, nor has he had any communication from the company in that capacity. He concludes that on account of these facts that he was constructively removed as a director.

The defendant denies removing the plaintiff from his position as a director, insisting that the plaintiff is still its director. The defendant believes that the plaintiff is confusing his dismissal as a driver with being removed as a director. The defendant asserts that it is aware of the statutory procedure for the removal of directors, and that it has not done so in respect of the plaintiff. The defendant submits that the plaintiff's action is misconceived and should be dismissed with costs.

The notion or concept of constructive removal from directorship is not backed by any legal authority. I am therefore disinclined to accept that it applies to the facts of this case, notwithstanding that the plaintiff has been kept out of the activities of the company's board of directors for the period referred to. Further I am unable to accept that the plaintiff was actually removed as a director of the company as there is no evidence of any resolution of the company to that effect, and also in view of the defendant's insistence that the plaintiff was not removed from that position, the company still regarding him as its director. What the facts clearly establish, however, is that the plaintiff has, for the material period, been excluded from acting as a director of the company.

At law, the act of excluding one from acting as a director of a company is not regarded an act of the company, albeit that directors have, under the articles, the powers of the company. An order of the court requiring that a director be not excluded from his office issues not against the company but against the other directors so excluding him. Much as it is a wrong, in that the director is deprived of his legal rights as a director, including the right to remuneration for his services, it is a wrong for which the other directors are personally and individually liable: Pullbrook v Richmond Consolidated Mining Co. (1878) 9 Ch. D. 610 at 612, Hayes v Bristol Plant Hire Ltd [1957] 1 W.L.R 499; Palmer's Company Law (1982 edition) Vol I par. 61-32 page 816. In the premises the declarations and reliefs the plaintiff seeks against the company are unattainable. The action is dismissed with costs.

Made in chambers at Blantyre this 28th day of April 2016.

 

R. Mbvundula

JUDGE