Hazel Mayers & Dennis Mayers v. Akira Rancha Ltd. Civil App. E. A. C. A. 18 of 1971; 15/10/71; Duffus P., Law Ag. V. P. and Mustafa J. A.

Hazel Mayers & Dennis Mayers v. Akira Rancha Ltd. Civil App. E. A. C. A. 18 of 1971; 15/10/71; Duffus P., Law Ag. V. P. and Mustafa J. A.

The appellants applied, by way of originating notice of motion, for the rectification of the register of members of he respondent company. They alleged that their names had been properly entered on the register of members as the holders of one share each in the respondent company, and that subsequently their names had been deleted from the said register without their knowledge or consent. The order they sought was one for re-instating their names as holders of one share each. The respondent company, in reply, filed a notice of preliminary objection asking for the motion to be struck out. The notice of preliminary objection referred to Civil Case No. 1353 of 1969, pending in the High Court. The facts of that case which were adverted to were that the appellants had obtained their shares from one C. H. Mayers who prior tot eh execution of the transfers to them had agreed to sell his shares to A. C. L. I. Company Ltd., a co-plaintiff in Civil Case 11353 of 1969. In other words, the /implication was, that C. H. Mayers had no title in the shares to transfer to the appellants. The trial judge held that he was unable to regard the question of the re-instatement of the appellants’ names as entirely distinct from the right of C. H. Mayers to his share, which was the subject of the other case which was pending. He therefore ordered an adjournment of the motion “until the hearing of civil Case 1351 of 1969”.

Held: (Mustafa J. A. ): (1) “I do not think that the learned judge was justified in staying the hearing of the motion to rectify until the decision in High Court Civil Case No. 1353 of 1969. The issues in that case bear little direct relevance to the matter of rectification of the register of members. It is true that the learned judge had exercised his discretion in making the order for adjournment and I would not lightly interfere with such an exercise of discretion. I am, however of the view that the learned judge had seriously misdirected himself in doing so. He should have confined himself to the application for rectification before him which concerned a narrow and distinct issue, instead of taking into account matters in another case which did not arise directly out of the application to rectify. The learned judge should have proceeded to hear the application on its merits instead of adjourning it. I think the learned judge had exercised his discretion wrongly: see Mbogo and another v. Shah [1968] E. A. 93”. (2) “The learned judge had ruled that “there may well be circumstances where the removal of a name entered in error is justifiable.” He relied on the case of Derham and Allen Limited (1946) Ch. 31 at 36 for that proposition. Apart from the fact that I do no think that the decision in the Derham case supports such a proposition, it is somewhat difficult to understand how the learned judge could have said so as there was no evidence of any kind before him that the name was removed because it was first entered in the register in error.” (3) “Mr. Khanna [for the appellants] submitted

That should he be successful in his appeal, this Court should order the respondent company to rectify the register of members by re-instating the names of the appellants as holders of the one share each. He submitted that were was a hearing of the motion on merits. I am not prepared to go that far. As I have pointed out earlier, in answer to the motion to rectify, the respondent company merely filed a notice of preliminary objection, without answering or traversing the allegations contained in the said notice of motion. I appreciate that facts alleged in an affidavit and not reversed are normally accepted as admitted. However I believe that the respondent company was in effect taking a preliminary objection on a point of law and was not at that stage concerned with facts as such. I also appreciate that the learned judge has stated that “the facts very briefly are as follows” and went on to enumerate them in terms of the allegations in the notice of motion to rectify. However reading the record as a whole I am satisfied that the respondent company had not entered on the stage of challenging the allegations as it was only taking a preliminary legal objection to the notice of motion. I do not think there was in fact any hearing on the merits, and the respondent company should be given an opportunity, should it wish to do so, to traverse or admit the facts alleged.” (4) Appeal allowed, order for adjournment set aside, matter remitted to the High Court for hearing.