ECOBANK v. FRN (2021)

ECOBANK v. FRN

(2021)LCN/15025(CA)

In The Court Of Appeal

(CALABAR JUDICIAL DIVISION)

On Friday, February 12, 2021

CA/C/131C/2019

RATIO

COMPANY LAW: WINDING UP OF A COMPANY BY COURT ORDER

The provision of Section 454 (1) of CAMA is to the effect that if the affairs of a company have been fully wound up and the liquidator makes an application in that behalf, the Court shall order the dissolution of the company. Thus, once the Court grants such order the company stand dissolved as from the date of such order. PER MUHAMMED LAWAL SHUAIBU, J.C.A

COMPANY LAW: MEANING OF A MERGER UNDER SECTION 119 (1) OF THE INVESTMENT AND SECURITIES ACT

A merger in the context of Section 119 (1) of the Investment and Securities Act, means any amalgamation of the undertakings or any part of the undertakings or interest of two or more companies or the undertakings of one or more companies and one or more bodies corporate. PER MUHAMMED LAWAL SHUAIBU, J.C.A

COMPANY LAW: GENERAL PRINCIPLES ON CRIMINAL LIABILITY OF AN INCORPORATED COMPANY

The general principles as enunciated in the case of D.P.P. V. KENT & SUSSEX CONTRACTORS LTD (1944) KB 146, which followed the earlier case of LENNARD’S CARRYING CO V. ASIATIC PETROLEUM CO. (1915) CA 705 is that criminal liability of an incorporated company which can only have knowledge and form an intention through its human agents, will be liable if the circumstances are such that the knowledge and intention of the agent must be imputed to the corporation. The Directors or officers of the company represent the directing will of the company. If proof of mens rea is required, then the guilty mind of the directors or officers of the company translate to be the guilty mind of the company itself. Thus, the act of any officer or agent of a company shall be deemed to be the act of the company where the company acting through its members in general meeting Board of Directors or Managing Directors, has expressly or impliedly authorized the action. PER MUHAMMED LAWAL SHUAIBU, J.C.A
COMPANY LAW: PRINCIPLE OF VICARIOUS LIABILITY OF A COMPANY

The principle of vicarious liability of a company for acts of its staff while acting in course of their employment has also been articulated in plethora of judicial decisions. The authorities have established that in order to be able to hold a company vicariously liable, it must be established that the acts complained about were firstly committed by the officers of the company and secondly, that such acts were carried out in the course of the employment of the company. In IFEANYI CHUKWU (OSONDU) CO LTD V. SOLEH BONEH (NIG) LTD (2000) FWLR (prt 27) 2046, the Supreme Court per Ogundare, JSC stated:
“The general principle of law which has its roots in the earliest years of common law is that the master is liable for any wrong even if it is a criminal offence or a tortuous act committed by his servant while acting in the course of his employment. The liability of the master is dependent on the plaintiff being able to establish the servant’s liability for the tort and also that he servant was not only the master’s servant but that he also acted in the course of employment.”
This doctrine was explained by Denning (M.R) in H. L. BOLTON (ENGINEERING) CO LTD V. J. J. GRAHAM & SONS LTD (1956)3 All E. R. at page 630 that:-
“A company may in many ways be likened to a human body. They have a brain and a nerve centre which controls what they do. They also have hands which holds the tools and act in accordance with directions from the centre. Some of the people in the company are mere servants and agents who are nothing more than hands to do the work and cannot be said to represent the mind and will of the company and is treated by the law as such. So you will find in cases where the law requires personal fault as a condition of liability in tort the fault of the manager will be the personal fault of the company.”
In any event, cogent evidence is required to establish the liability of the company or personal liability of the directors, particular officers and employees. In TIJJANI V. STATE (2017) LPELR – 43298 (CA) it was held that an employee of a company cannot be liable for a crime committed by the company except there is a proof that he personally committed or knowingly abetted the commission of the crime. PER MUHAMMED LAWAL SHUAIBU, J.C.A

Before Our Lordships:

Mojeed Adekunle Owoade Justice of the Court of Appeal

James Shehu Abiriyi Justice of the Court of Appeal

Muhammed Lawal Shuaibu Justice of the Court of Appeal

Between

ECOBANK NIGERIA LIMITED APPELANT(S)

And

FEDERAL REPUBLIC OF NIGERIA RESPONDENT(S)

MUHAMMED LAWAL SHUAIBU, J.C.A. (Delivering the Leading Judgment): This appeal is against the judgment of the Federal High Court sitting in Uyo, delivered on 26/3/2018, whereby the appellant was convicted for stealing and failure to require proof of identity and update of customer and thus sentenced to a fine of N5,000.000 and a restitution order of N56,781,682.55k.

The appellant along with five others were arraigned before the lower Court on sundry offences. Specifically, the appellant and four others were charged in counts 16,17 and 20 of the charge for conspiracy to steal and stealing under Section 1 (1) (d) of the Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act Cap. 33 Laws of the Federation of Nigeria. for failure to require proof of the identity and update of customer under Sections 15 (2) (b) (ii) and 18 (1) of the Money Laundering (Prohibition) Act, 2004.

The appellant pleaded not guilty to all the three counts of charge and the case proceeded to trial in which the prosecution called oral and documentary evidence. The 5th accused person who was the erstwhile manager of Oceanic Bank International Plc. testified in his

own defence and on behalf of the appellant, charged as 6th accused. In addition, a dissolution order of Oceanic Bank International in Suit No. FHC/L/CS/1438 was tendered and admitted as Exhibit W.

At the conclusion of the trial and in a reserved and considered judgment of the lower Court delivered on 26/3/2018, appellant was found guilty on counts 16, 17 and 20 of the charge and was convicted and sentenced accordingly.

Appellant was dissatisfied and appealed to this Court through a notice of appeal, filed on 29/3/2018 containing an omnibus ground of appeal. On 7/5/2020, appellant was granted leave to amend its grounds of appeal. The appellant’s amended notice of appeal filed on 24/6/2020 but deemed properly filed on that date contains nine (9) grounds of appeal.

Briefs of argument including appellant’s reply brief were filed and exchanged by the parties in accordance with the rules of this Court. The appellant formulated four issues for the determination of this appeal while the respondent adopts the four issues formulated by the appellant. The four issues are as follows:-

Whether the trial Court was right when it held that the appellant acquire the criminal liability of Oceanic Bank International Limited.
2. Whether the trial Court was right to convict the appellant for the offence of stealing.
3. Whether the trial Court was right to convict the appellant of failing to require proof of the identity and update of customer when the prosecution did not adduce any evidence in proof of the offence.
4. Whether on the state of the law and circumstances of the case the order of restitution made by the trial Court was proper.

At the oral hearing of the appeal on 20/1/2021 both learned counsel for the parties adopted their respective briefs of argument and proffered additional submissions in amplification thereof.

Proffering argument on issue No.1, learned appellant’s counsel submitted that in corporate companies such as the dissolved Oceanic Bank International Plc. and the appellant have the attributes of a natural person, thus a corporation or company like a natural person can suffer death. He referred to Section 454 (1) of the Companies & Allied Matters Act and the case of NZOM V. JINADU (1987) 1 NWLR (prt 51) 535 at 539 to contend that the dissolution of legal person is analogous to the death of an ordinary human person.

Still in argument, counsel submitted that just as criminal proceedings cannot be pursued against a dead natural person, so also it cannot be pursued against a company that has died by an order of dissolution of the company. Thus, upon the dissolution order in Exhibit W, Oceanic Bank International Plc ceased to exist and its criminal liability in this matter died with it.

Counsel submitted further that like a person can by written instrument transfer his physical assets and liability, he cannot do so with criminal liability as criminal liability is fixed by statutory law by virtue of Section 36 (12) of the Constitution of the Federal Republic of Nigeria 1999 as amended, not by contract.

The respondent on its part contended that it is not in all cases that criminal liability are not transferrable from one person to another and each case has to be determined by its peculiar facts and circumstances. Learned counsel for the respondent submitted that upon the appellant acquiring Oceanic Bank International Plc. on dissolution, it inherits all the assets and liabilities

in line with Section 100 (1) (3) (a), (c), (d), (4) (5) and (7) (b) of the Investment and Securities Act, 2004. Counsel contended that liabilities in the context of Section 100 (7) (b) above includes all rights, powers and duties of every description and that the Court order in Exhibit W without more does not render the Bank dead also relying on Sections 454 (1) & (2), 478 (4) of the Companies and Allied Matters Act as well the case of ABAKHE V. NDIC (1995) 7 NWLR (prt 406) 228 at 240.

The key issue here is whether the appellant herein is vicariously liable for the criminal offences allegedly committed by the dissolved Oceanic Bank International Plc. It is beyond any argument that Oceanic Bank International was dissolved vide Exhibit W, an order of the Federal High Court in Suit No. FHC/L/CS/1438/2011. The provision of Section 454 (1) of CAMA is to the effect that if the affairs of a company have been fully wound up and the liquidator makes an application in that behalf, the Court shall order the dissolution of the company. Thus, once the Court grants such order the company stand dissolved as from the date of such order.

Counsel on both sides, dissipated a lot of energy on the transfer of assets and liabilities by the defunct Oceanic Bank International Plc, to the appellant which to me is not in contention. Be that as it may, an acquisition is when one company purchases most or all of another company’s shares or gain control of that company. A merger in the context of Section 119 (1) of the Investment and Securities Act, means any amalgamation of the undertakings or any part of the undertakings or interest of two or more companies or the undertakings of one or more companies and one or more bodies corporate. The issue is not on the acquisition or merger of Oceanic Bank International with Ecobank Nigeria Ltd as Exhibit W only shows that Oceanic Bank International Plc was dissolved and no more. Counts 16, 17 and 20 of the charge at pages 9 – 12 of the record of appeal read as follows:
“16. That you Chrystanctus B. Etteh “M”, Patrick E. Ente “M”, Umana E. Umana “M”, Francis B. Ekpenyong “M” and Oceanic Bank International Plc. (Now Eco Bank Nig. Ltd) between 30th November, 2007 and 14th September, 2009 at Uyo within the

jurisdiction of this honourable Court did conspire between one another to commit felony to wit: stealing and thereby committed an offence punishable under Section 516 of the Criminal Code Act Cap. C 38 Revised Edition (Laws of the Federation of Nigeria) 2007 read together with Section 1(1) (d) of Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act Cap. B3 Revised Edition (Laws of the Federation of Nigeria) 2007.
17. That you Chrystanctus B. Etteh “M”, Patrick E. Ente “M”, Umana E. Umana “M”, Francis B. Ekpenayong “M” and Oceanic Bank International Plc. (Now Eco Bank Nig. Ltd) on or about 14th September, 2009 at Uyo within the jurisdiction of this honourable Court did steal the sum of N56,781,682.55 (Fifty Six Million Seven Hundred and Eighty One Thousand Six Hundred and Eighty Two Naira Fifty Five Kobo) only property of Okopedi Community contrary to Section 383 (2) (c) of the Criminal Code Act Cap. C38 Revised Edition (Laws of the Federation of Nigeria) 2007 and punishable under Section 390 (8) (b) of the same Act read together with

Section 1(1) (d) of the Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act Cap. B3 Revised Edition (Laws of the Federation of Nigeria) 2007.
20. That you, Oceanic Bank International Plc. (Now Eco Bank Nig Ltd,) on or about the 11th day of December, 2007 at Uyo, within the jurisdiction of this honourable Court, failed to require proof of the identity and update all relevant information on the customer with new Account Number: 0018997858 and (old Account Number: 0241301010304), a customer of Oceanic Bank International Plc. (Now Eco Bank Plc.), by presenting to Oceanic Bank International Plc (now Eco Bank Plc) the originals of receipts issued within the previous three months by public utilities, official documents as well as the power of attorney granted or the Resolution appointing the signatories of the account and thereby committed an offence contrary to Sections 3(2) (b) & 15 (1) (f) read along with Section 18 (1) of the Money Laundering (Prohibition) Act, 2004 and punishable under Sections 15 (2) (b) (ii) read together with Section 18 (1) of the same Act.

It is clear from the above that the alleged offence were committed by Oceanic Bank International which took over its affairs by Ecobank Nigeria Ltd and this presupposes that the alleged offences formed an integral part of whatever assets and liabilities, the appellant acquired from the defunct bank. Before determining the vicarious criminal liability (if any) of the appellant, let me state in unmistakable terms that the cases of NZOM V. JINADU (supra) relied upon by learned appellant’s counsel which reaffirmed the common law principle that the cause of action arising when both the plaintiff and the defendant are alive, and does not apply where the cause of action arose after the death of the plaintiff or the defendant, is not on all fours with the facts in the present case. The same applies to the case of ABAKHE V- NDIC (supra) relied by the respondent. While the two cases cited and relied upon were purely civil matters, the present case deals with criminal liability. Furthermore, the present case is not about the revival of the dissolved company by the Court within two years on the application of the liquidator. Simply put the present case is whether the appellant is vicariously liable by the criminal infractions of its acquired predecessor.

The general principles as enunciated in the case of D.P.P. V. KENT & SUSSEX CONTRACTORS LTD (1944) KB 146, which followed the earlier case of LENNARD’S CARRYING CO V. ASIATIC PETROLEUM CO. (1915) CA 705 is that criminal liability of an incorporated company which can only have knowledge and form an intention through its human agents, will be liable if the circumstances are such that the knowledge and intention of the agent must be imputed to the corporation. The Directors or officers of the company represent the directing will of the company. If proof of mens rea is required, then the guilty mind of the directors or officers of the company translate to be the guilty mind of the company itself. Thus, the act of any officer or agent of a company shall be deemed to be the act of the company where the company acting through its members in general meeting Board of Directors or Managing Directors, has expressly or impliedly authorized the action.
The principle of vicarious liability of a company for acts of its staff while acting in course of their employment has also been articulated in plethora of judicial decisions. The authorities have established that in

order to be able to hold a company vicariously liable, it must be established that the acts complained about were firstly committed by the officers of the company and secondly, that such acts were carried out in the course of the employment of the company. In IFEANYI CHUKWU (OSONDU) CO LTD V. SOLEH BONEH (NIG) LTD (2000) FWLR (prt 27) 2046, the Supreme Court per Ogundare, JSC stated:
“The general principle of law which has its roots in the earliest years of common law is that the master is liable for any wrong even if it is a criminal offence or a tortuous act committed by his servant while acting in the course of his employment. The liability of the master is dependent on the plaintiff being able to establish the servant’s liability for the tort and also that he servant was not only the master’s servant but that he also acted in the course of employment.”
This doctrine was explained by Denning (M.R) in H. L. BOLTON (ENGINEERING) CO LTD V. J. J. GRAHAM & SONS LTD (1956)3 All E. R. at page 630 that:-
“A company may in many ways be likened to a human body. They have a brain and a nerve centre which controls what

they do. They also have hands which holds the tools and act in accordance with directions from the centre. Some of the people in the company are mere servants and agents who are nothing more than hands to do the work and cannot be said to represent the mind and will of the company and is treated by the law as such. So you will find in cases where the law requires personal fault as a condition of liability in tort the fault of the manager will be the personal fault of the company.”
In any event, cogent evidence is required to establish the liability of the company or personal liability of the directors, particular officers and employees. In TIJJANI V. STATE (2017) LPELR – 43298 (CA) it was held that an employee of a company cannot be liable for a crime committed by the company except there is a proof that he personally committed or knowingly abetted the commission of the crime.
As stated earlier that the issue at stake is not about the acts or omission of the directing mind of juristic person(s) but the acquisition of criminal liability of the company acquired by another company. At page 570 of the record of appeal, learned trial judge found as follows:

“Now, like observed by learned counsel at the time of the takeover, Ecobank acquired both the assets and liability of Oceanic Bank. That is the law. The only way the acquiring bank can escape liability is where there is a written agreement that only assets of the company is acquired under the agreement. To establish that truism, the asserting party must tender the instrument where the parties agree such escape from liability. There is none before the Court.”
He continued:
“The Court of United States of America also held that a successor corporation as well may be liable for the criminal acts of its predecessor. It explained that an existing corporation cannot escape criminal liability for past acts simply by discarding its offending element by transfer of assets.”
He concluded at page 571 of the record of appeal thus:-
“The test of liability is whether the officer or agent in doing the acts complained of was escaped in exercising corporate powers for the benefit of the corporation while acting in the scope of his employment.”

From the above, learned trial judge seems to have missed the vital point that the appellant was not tried for offences committed by its officers or agent but by presumably by agents or officers of an entity that was dissolved and ceased to function. It is my humble view that even though a company may under certain circumstances be liable for crime committed by its agents or officers but a company such as the appellant cannot in law be vicariously liable for the crimes committed by its predecessor company its acquisition notwithstanding.
The insistence of an agreement by the trial Court to exempt the appellant from criminal liability arising from the merger is to say the least an innovation outside the Nigerian Criminal jurisprudence. Issue No.1 is therefore resolved in favour of the appellant.

Having resolved that the appellant is not vicariously liable for the crimes of the defunct Oceanic bank International Plc, the resolution of the remaining issues bordering on the appellant’s culpability including the propriety of the order of restitution became an academic exercise with no utilitarian value to serve.
In the result, the appeal is allowed and the appellant is hereby discharged and acquitted.

MOJEED ADEKUNLE OWOADE, J.C.A.: I read in advance the judgment just delivered by my learned brother M. L. Shuaibu, JCA.

I agree with the reasoning and conclusion reached in the lead judgment. I also agree that the appeal is meritorious and ought to be allowed.

The rather narrow compass of the case is whether the Appellant who acquired the assets and liabilities of Oceanic Bank Limited after the latter has been wound up and dissolved by an order of Court could be criminally liable for the alleged infractions of the staff of Oceanic Bank Ltd.
I join my learned brother who wrote the lead judgment to say that the Appellant could not be fixed with mens rea of offence(s) allegedly committed by staff of Oceanic Bank Limited.
As a general rule, there is no vicarious liability in criminal law, the facts of this case do not create an exception to the said rule.
Appeal is accordingly allowed by me.

JAMES SHEHU ABIRIYI, J.C.A.: I read in advance in draft the judgment just delivered by my learned brother M. L. Shuaibu, JCA. I agree that the appeal be allowed and the Appellant acquitted and discharged. The Appellant cannot be

vicariously liable for crimes committed by its predecessor company.
For the reasons more elaborately stated in the lead judgment, I too allow the appeal.
Appellant is acquitted and discharged.

Appearances:

C. UGWU For Appellant(s)

RAMIAH O. IKHANADE (DCLO, EFCC) For Respondent(s)