AYODELE & ORS v. EKOCORP PLC & ORS (2021)

AYODELE & ORS v. EKOCORP PLC & ORS

(2021)LCN/15146(CA)

In The Court Of Appeal

(LAGOS JUDICIAL DIVISION)

On Thursday, March 04, 2021

CA/L/837/15

Before Our Lordships:

Ignatius Igwe Agube Justice of the Court of Appeal

Saidu Tanko Hussaini Justice of the Court of Appeal

Balkisu Bello Aliyu Justice of the Court of Appeal

Between

KUDAISI AYODELE 2. SOARES PETER AKINOLA 3. ANYANWU LEONARD 4. AJAO ADELAKIN (FOR THEMSELVES AND AS REPRESENTATIVES OF ALL THE SHAREHOLDERS OF THE 1ST RESPONDENT EXCEPTING THOSE OPPOSED TO THE ACTION) APPELANT(S)

And

1. EKOCORP PLC 2. GEOFF OHEN LIMITED 3. SECURITY AND EXCHANGE COMMISSION RESPONDENT(S)

RATIO

DEFINITION OF CAUSE OF ACTION AND WHAT WILL BE CONSIDERED IN DETERMINING THE CAUSE OF ACTION OF A SUIT

… cause of action is an entire set of circumstances giving rise to an enforceable claim. Any act on the part of the defendant that gives to the plaintiff his cause of complaint is a cause of action. And in order to discern a cause of action in a suit, it is the entire circumstances of the case as disclosed by the pleadings and evidence (where called) are critically examined. See A. G. FED. VS. A. G. ABIA STATE (2001) LPELR-64862 (SC), BELLO V. A.G. OF OYO STATE (1986) 5 NWLR (PT. 45) 828 at 876, OPIA VS. INEC & ANOR. (2014) LPELR-22185 (SC) and SEAGULL OIL LTD & ORS. VS. MONI PULO LTD & ORS. (2011) LPELR-4935 (CA). PER BALKISU BELLO ALIYU, J.C.A.

RIGHT OF A MEMBER OF A COMPANY TO ATTEND AND VOTE AT THE AGM

In the case of SUN INSURANCE NIG. PLC & ANOR. VS. LMB STOCK BROKERS LTD & 3 ORS. (2005) 12 NWLR (PT. 940) 608 at 631 paragraphs C-H, this Court (per Onnoghen, J.C.A. (as he then was) held inter alia that: It is trite that a member of a company or a shareholder thereof has right statutorily prescribed by virtue of the shareholding which right include attendance and voting at the AGM. PER BALKISU BELLO ALIYU, J.C.A.

DUTY OF THE COURT TO RESIST ANY ATTEMPT TO DENY A CITIZEN THE ENJOYMENT OF A STATUTORY RIGHT

In the case of LONGE VS. F.B.N. PLC (2010) LPELR-1793 (SC), OGUNTADE, J.S.C. held for the Apex Court that: Let me say with all necessary force and emphasis that when the law vests a right on a citizen, a Court of law will resolutely resist any attempt and by whatever method to deny the citizen the enjoyment of the right conferred by law. PER BALKISU BELLO ALIYU, J.C.A.

LEGAL EFFECT OF A VOID ACT

In Benjamin Mcfoy vs. United African Co. Ltd. (1961) 3 WLR 1405; Lord Denning held as follows: “If an act is void, then it is in law a nullity, it is not only bad, but incurably bad. There is no need for an order of the Court to set it aside. It is automatically null and void without more ado, though it is sometimes converment to have the Court declare it to be so. And every proceeding which is founded on it is also bad, incurably bad. You cannot put something on nothing and expect it to stay there. It will collapse. So, will this judgment collapse if the statement of claim was a nullity.” See also Skenconsult Ltd. vs. Ukey (1981) 1 SC 6 and Craig vs. Kanssen (1943) KB 256 at 263. PER IGNATIUS IGWE AGUBE, J.C.A.

BALKISU BELLO ALIYU, J.C.A. (Delivering the Leading Judgment): This appeal is against the judgment of the Investment and Security Tribunal sitting in Lagos delivered on the 18th June 2015 in respect of Suit NO: IST/LA/OA/O8/14. The Appellants filed the said suit vide an application praying the tribunal for the following reliefs:
1. A DECLARATION that the purported purchase of 110, 000, 000 (One hundred and ten million) ordinary shares of Ekocorp Plc. by Geoff Ohen Limited through private placement is contrary to applicable regulations of the Security and Exchange Commission and therefore null and void and of no effect.
2. AN ORDER directing the 3rd Respondent (the Commission to within 48 hours of the order send a directive to the 1st Respondent (Ekocorp Plc) to stage a meeting within three months of the directive and with all the prerequisite notices thereof in accordance with the applicable rules to consider the proposal to sell 110, 000, 000 ordinary shares of Ekocorp Plc to Geof Ohen Limited with a view to either approving or rejecting the same.
3. AN ORDER directing Ekocorp Plc to follow due process as prescribed by the relevant laws.

AN ORDER setting aside the offer and purported purchase of 110, 000, 000 (One Hundred and Ten Million) ordinaray shares of Ekocorp Plc made and entered into between the Geiff Ohen Limited and Ekocorp Plc.
5. AN ORDER setting aside any purported approval of the Commission for the said shares purchase.
6. AN ORDER setting aside as false any purported shareholders resolution on which the Commission based its purported approval
7. AN ORDER directing Ekocorp Plc to stage a general meeting within three months of the order and with all the prerequisite notices thereof in accordance with applicable rules to consider the proposal to sell 110,000,000 ordinary shares of Ekocorp Plc to Geoff Ohen Limited with a view to either approving or rejecting the same should the 3rd Respondent fail to send the directive as contained in prayer 2 above.

The facts that gave rise to the above prayers are contained in the Appellants’ Amended Originating Application and the Applicants‘ Reasons contained in pages 177 to 180 of the record of appeal. The Appellants are the shareholders of the 1st Respondent Ekocorp Plc., a public liability company

registered under the Laws of Nigeria with its registered/head office located at No. 31 Mobolaji Bank Anthony Way, Ikeja Lagos. The Appellants stated the genesis of this case in paragraphs 8 to 18 of their particulars of claim reproduced below:
8. The Appellants aver that recently it came to their notice that Ekocorp Plc. had purported to have sold 110, 000, 000 (One hundred and ten million) ordinary shares to Geoff Ohen Limited through private placement.
9. The Applicants also aver that there was no authorization for the special placement by the general meeting of the company or by a special resolution of the company.
10. There was no notice of the proposal to pass any such resolution in any notice of any general meeting of the company.
11. No such notice was published in any two National daily newspapers.
12. The Applicants aver that the purported purchase of the 110, 000, 000 (One hundred and ten million) ordinary shares of Ekocorp Plc. in a private placement was in breach of the Applicable rules made by the 3rd Respondent and the Applicants’ rights as shareholders of Ekocorp Plc.
13. The Applicants through their

solicitor, Chucks Nwachukwu of Indemnity Partners, 46 Marina Lagos, wrote the 3rd Respondent a letter dated 22nd July 2013, informing the Commission of the illegality surrounding Ekocorp Plc’s Private Placement in favour of the 2nd Respondent (Geoff Ohen Limited). The Applicants shall be relying on the Applicants’ letter to the 3rd Respondent dated 22nd July 2013 at the hearing of this suit.
14. Meanwhile the applicants have learnt that the 2nd Respondent has been boasting that it has an approval of the Commission (3rd Respondent) for the said share purchase given in breach of aforesaid regulations.
15. Despite their letter to the 3rd Respondent, the Commission has neglected, refused or failed to carry out its statutory duty of directing the 1st Respondent to comply with the applicable resolutions.
16. The applicants therefore wrote to the 3rd defendant by the hand of the same solicitor a letter dated 14th May 2014 giving notice of the intention to institute this action.
17. The 3rd defendant persists in its indifference to the performance of its statutory duty.
18. The 1st Respondent has not held any Annual General

Meeting or other General Meeting since 2007.

It was the Appellants’ case before the tribunal that the Chairman of the 1st Respondent was misled to append his signature on a contrived special resolution when in fact no such resolution was passed at any general meeting of the company; and no minutes of the general meeting to show the purported resolution. Again, the managing director of the 2nd Respondent to which the shares were purportedly sold to, was also a director of the 1st Respondent whose shares were issued at the time of the contrivance. That the shareholders of the 1st Respondent did not know of this contrivance until the filing of this suit, when they heard the 2nd Respondent boasting that he had secured the approval of the 3rd Respondent for the transaction.

The 1st Respondent supported the claims of the Appellants in its response to the Application filed on the 21st November 2014 copied in pages 11 to 14 of the record of appeal. It presented some facts, which in its view may help the tribunal in reaching the just determination of the matter. It averred that indeed its Board agreed to a special placement of 110, 000, 000 of its

shares of 50k each to the 2nd Respondent at N4 per share because it was heavily indebted to its three founding directors. It also stated in paragraph 7 of its pleading that having originated and approved the special placement scheme and the founding directors’ debt equity swap at the board level, it should have approached the shareholders in a general meeting for the ratification of the board’s decisions. Instead, no notice of the special placement of the 110million shares of the 1st Respondent was given nor was it presented before the shareholders in the general meeting of the company held on the 31st October 2014.

The 1st Respondent said that it relied on the omnibus special resolution on the increase in the authorization share capital of the company that specify that the “newly created shares shall be issued to person and to group of persons on such terms and at such time or times as the Directors may deem fit” as the shareholders authorization for the special placement and the debt equity swap. However, the attempt by the Registrar of the offer for the special placement, Zenith Capital Ltd, to formalize or register the same

without a special resolution of the shareholders was denied by the 3rd Respondent. But the Zenith Capital Ltd still proceeded to attempt to conclude the registration of the shares for the special placement, using the special resolution prepared and signed without authorization of the general meeting and without notice to the 3rd Respondent of the illegality of that action. This attempt to register the private placement and equity swap was however scuttled by the 3rd Respondent upon a petition written by the 2nd Respondent.

The 1st Respondent asserted in paragraph 16 of its Response/pleading that the proper procedure the 3rd Respondent should have adopted on noticing the absence of specific special resolution passed by the shareholders in the AGM of 31st October 2014 to back the special replacement and the debt equity swap, was to call for an Emergency General Meeting to attend to that issue as a matter of urgency. It therefore urged the tribunal to order another AGM of the shareholders of the 1st Respondent to consider the special placement and the debt equity swap using the old shareholding of the shareholders.

On its part, the 2nd Respondent’s response to the Appellants’ claim was filed on the 14th November 2014 contained in pages 67 to 70 of the record of appeal. It raised an objection to the suit on the ground that the suit was statute barred. It further averred that it (2nd Respondent) was also an old shareholder of the 1st Respondent, and that the private placement for the sale of the 110million ordinary shares of the 1st Respondent was made on the 25th June 2008 and the result of it published in Vanguard and The Punch newspapers of 6th August 2008. It insisted that contrary to the assertion of the Appellants, there was a special resolution of the 1st Respondent for that transaction as shown on the extract of the special resolution duly signed by the Chairman and Secretary of the 1st Respondent.

That pursuant to the agreement for the purchase of shares entered into between the 1st and 2nd Respondents, the 2nd Respondent paid the 1st Respondent the sum of N440million for the 110million ordinary shares of the 1st Respondent through Zenith Bank Cheques issued to the 1st Respondent. At the conclusion of the said private placement transaction, the 2nd Respondent was

issued with share certificate NO. 2778229 for 110million units of shares in the 1st Respondent dated 30th July 2008. The said shares were also registered in favor of the 2nd Respondent in the register of members of the 1st Respondent on 30th July 2008, and the 3rd Respondent officially approved the private placement transaction vide its letters dated 2nd June 2008 and 30th June 2008 respectively.

The 2nd Respondent further contended that this suit is statute barred having been commenced after six years of the accrual of the cause of action in view of the fact that the private placement was published on 6th August 2008 and the suit was filed on the 16th September 2014. It posited that a cancellation of a private placement that was concluded in 2008 will cause great injustice to the 2nd Respondent, more so having paid the sum of N440million to the 1st Respondent which utilized same for its expansion, settlement of debts and its trading. The 2nd Respondent urged the tribunal to dismiss the case or in the alternative order the 1st Respondent to refund to it the sum of N440million with interest at 21% per annum from the date of the placement to the date judgment.

The 3rd Respondent’s response to the Appellants’ case is contained in pages 122 to 128 of the record of appeal. It stated that sometimes in November 2007, the 1st Respondent filed an application to it for a special placement of 110million ordinary shares to the 2nd Respondent at N4 per share totaling N440million. The offer was to a single strategic investor who was also an existing shareholder of the 1st Respondent, Geoff Ohen Nigeria Ltd. The purpose for the private placement was to upgrade Ikeja and Surulere Hospitals, acquire medical equipment and improve working capital of the 1st Respondent.

The 3rd Respondent asserted that it reviewed all the documents forwarded to it and it specifically requested for a copy of the shareholders resolution authorizing the private placement and the 1st Respondent forwarded to it a copy of the 1st Respondent’s shareholders resolution duly signed by its Director and Secretary authorizing the private placement. It therefore approved the transaction based on the documents submitted to it by the 1st Respondent. It therefore denied any liability to the Appellants and urged the tribunal to

dismiss the case.

During the trial, the tribunal heard witnesses from all the parties, after which written final addresses were also filed by all the parties and issues were raised and argued including in support and in opposition of the objection based on statute of limitation of Lagos State. In its judgment delivered on the 18th May 2015, the Tribunal only considered the issue of limitation of time and held that:
The 2nd Defendant was clearly in the right in asserting that the case is caught by Section 8(1) of the Limitation Law of Lagos State. It is needless considering other issues in this case. On the whole we hold that this case lacks merit and being statute barred, it is hereby dismissed with N50, 000 cost to each of the 2nd Defendant and 3rd Defendant.

The Appellants were dissatisfied with the judgment of the Tribunal and filed notice of appeal on the 18th June 2015 (pages 312 to 322 of the record), relying on 10 grounds of appeal to pray that the judgment of the Tribunal be set aside and this Court to enter judgment in their favour in terms of their claims before the Tribunal.

The Appellants’ brief of argument settled by

Chuks Nwachukwu Esq. of Indemnity Partners was filed on the 23rd September 2015 and he proposed the following five issues for the determination of the appeal:
1. Was the Honourable Tribunal correct to have applied Section 8(1) of the Limitation Law of Lagos State to the action?
2. Was the Honourable Tribunal correct to have based its decision that the action was time barred on the same transaction of special placement of shares which action sought to have the Tribunal declare null and void for reason of lack of a true special resolution of the members of the 1st Respondent authorizing it, and therefore lacks of a valid supporting approval of the Security and Exchange Commission (SEC), without deciding whether or not the transaction was indeed void ab initio as claimed and without regard to the evidence, particularly the admission of the 1st Respondent company, proving conclusively that the special resolution which SEC relied on to approve the transaction was false.
3. Having regards to the evidence before the Tribunal, which it claimed to have considered, particularly the admission of the 1st Respondent company to have submitted a false special

resolution to the 3rd Respondent, on the basis of which the 3rd Respondent was misled into giving its approval to the transaction of special placement shares was the decision of the tribunal to strike out the correct?
4. The effect of the judgment of the Honourable Tribunal is that the passage of time could bar any question of compliance with the registration of SEC governing the special or private placement of shares of a public or private placement of shares of a public company (or any other regulation of the Commission) including the requirement of special resolution of the issuing company or other subject party of the duty to comply with such regulations: is this a correct statement of law?
5. Having regard to the 1st Respondent’s admission of liability to the action and the 3rd Respondent not pleading any statute bar, was there any legal issue of time bar or limitation of action?

In opposing the appeal, the 2nd Respondent filed its brief of argument settled by Chief Sunday Chukwudi Obi, on the 10th February 2017 deemed properly filed on the 9th December 2020. It adopted the Appellant’s issues 1 and 5 and added the following

three issue for the determination of the appeal:
1. Whether the Tribunal/lower Court was right in its decision that the action was statute barred on the same transaction of special placement of shares which action was brought to be declared null and void having regards to the Securities and Exchange Commission Rules and Regulations? (Distilled from grounds 1, 2 & 3 of Notice of Appeal).
2. Whether the Honourable Tribunal was correct to have applied Section 8(1) of the Limitation Law of Lagos State to the action? (Distilled from grounds 7 & 8 of Notice of Appeal).
3. Whether having regards to the 1st Respondent’s admission of liability to the action and the 3rd Respondent not pleading any statute bar was there any legal issue of time bar or limitation in the action. (Distilled from ground10 of Notice of Appeal).

On the 9th December 2020, the appeal came up for hearing and counsel of the Appellants adopted their brief in urging the Court to allow the Appeal and set aside the judgment of Tribunal while the counsel of the 2nd Respondent also adopted its brief and prayed that the Court dismiss the appeal and affirm the judgment of

the tribunal. The 1st Respondent supports the appeal and aligned itself with the Appellants, and the 3rd Respondent did not file a brief either.

APPELLANTS’ SUBMISSIONS
The learned Appellants’ counsel argued issues 1 and 5 together submitting that the cause action in this suit is not founded on contract but on the right of shareholders of the 1st Respondent to vote at its general meeting and to pass resolution to offer shares to the public or to the 2nd Respondent as a special placement. It is also about the failure of the 3rd Respondent to review and reverse its approval of the said special placement, which was given without the said special resolution of shareholders of the 1st Respondent. The right of the shareholders to vote and pass resolution at the 1st Respondent’s general meeting is granted by Companies and Allied Matters Act (CAMA). There was no claim of existence of any contract entered between the Appellants as shareholders of the 1st Respondent and the 2nd Respondent as such the tribunal misapprehended the suit in holding that the cause of action was founded on contract to which the provisions of Limitation Law of

Lagos State apply. He submitted that in any event the mere fact that there was a contract cannot give rise to a cause of action unless there is breach of same. He relied on the case of A. G. BAYELSA STATE VS. A. G. RIVERS (2006) LPELR-615, where the Supreme Court held that it is never the law that a cause of action in contract accrues upon the signing of a contract by the parties.

Further submitted that there is a world of difference between a contract of purchase of shares simplicita and the statutory processes for its validity including the special resolution to be passed by the Appellants for its validity and the approval of the 3rd Respondent. He drew the Court’s attention to the fact that even the 2nd Respondent (at the tribunal), which raised the issue of limitation of action did not identify contract as being the foundation of the action. Rather, it urged the tribunal to hold that the Appellants’ complaint was on the wrongful approval given for the private placement of shares in 2008. He also referred to the finding of the tribunal in page 21 of its judgment where the Tribunal also identified the cause of action as the wrongful approval

given by the 3rd Respondent as the regulatory authority as being the foundation of the suit. It was therefore wrong and a misconception of the law for the tribunal to hold that a complaint against an official act of a regulatory authority, which falls within administrative/public law to be a contract, which falls within the real of private law. The Appellants insisted, relying on paragraphs 1 to 5 of their pleading before the tribunal that the cause of action is against the 3rd Respondent for its refusal to review its approval, upon their petition of the special placement transaction and to direct the 1st Respondent to comply with the regulations by calling general meeting in respect of the private placement of its shares. The Court was urged to note that the 3rd Respondent did not claim that the action was time barred, rather, that it was still investigating the Appellants’ petition which it was forced to terminate at the institution of this suit.

It was further argued by the Appellants that the Limitation Law of Lagos State cannot operate to limit a right granted by Companies and Allied Matters Act (CAMA) and the Investment and Securities Act

(ISA) both being Federal Legislations. He submitted that the tribunal in rejecting this argument confused the situation with that of a federal body claiming not to be subject to a state limitation law where the Federal body engages in a transaction that is governed by that state law. This is the scenario that the case of TULIP (NIG.) LTD VS. N.T.M.S.A.S (2011) 4 NWLR (PT. 1237) 254 at 284 dealt with, and it is quite different from a situation where a right of action is created by a federal law as in this case. He submitted that the consistent opinion of the Courts over the years is that it would be contrary to the provisions of the Constitution for a state limitation law to operate to limit a right granted by a federal law as was held by this Court in the case of SHELL PETROLEUM DEV. CO. VS. FARAH (1995) 3 NWLR (PT. 382) 148.

It was finally submitted on these issues that the tribunal was wrong to have to subject the federal laws (CAMA and ISA) to the Lagos State Limitation law and to modify or limit the operation of the federal laws by a state law contrary to Sections 4(5) of the Constitution. This Court was urged to resolve issues 1 and 5 in favour of

the Appellants.

The Appellants argued their issues 2 and 3 together under which they submitted that the transaction of the private placement of the 1st Respondent’s shares without a valid special resolution passed by the shareholders was null and void ab initio. They relied on Rules 89(i) and 90(i) and (iii) of the Rules and Regulations of the Securities and Exchange Commission, made pursuant to Sections 218(1) and (3) and 219(1)(a) of CAMA which require that special placement of shares by a public company must be authorized by its members, and the resolution authorizing same must be by special meeting, which notice was duly given to all members and the terms of same published in two daily newspapers with evidence of such being sent to the 3rd Respondent before it could approve such placement.

It was further submitted that the failure to give notice to each members of the 1st Respondent of the general meeting of 31st October 2007, at which the special resolution authorizing the special placement of its shares was purported to have been passed and the failure to state the terms of the resolution in the notice published in the newspapers

absolutely vitiated the purported special resolution even if same was passed during the meeting. He relied on the case of LONGE VS. FBN (2010) 2 CLRN 21, in support. Further submitted that the provisions of Section 218(5) relied upon by the 2nd Respondent before the tribunal to contend that the failure to give notice did not vitiate the resolution rather, it was an irregularity, which can be corrected before or during the meeting is different from the sub-section (1) of Section 218. This is because sub-section (5) deals with general business of a company, which can be transacted by ordinary resolution but sub-section (1) deals with the business that can only be transacted by special resolution, thus the distinction between the ordinary resolution and special resolution of a company. We were referred to the case of BAILLIE VS. ORIENTAL TELEPHONE CO. LTD (1015) 1 Ch. 503 AND MAC CONNELL VS. PRILL & CO. (1916) 2Ch. 57 in support. It follows that the special resolution, which the 1st Respondent sent to the 3rd Respondent as authorizing the special placement of its shares in favour of the 2nd Respondent and purportedly passed on the 31st October 2007 must in

any event be declared null and void.

On the contention of the 2nd Respondent that since the 1st Respondent has received the value for the shares in the sum of N440million and utilized it, it will work great injustice for the transaction to be set aside and the 1st Respondent to walk away having led the 2nd Respondent to believe it to be the owners of those shares for six years; the Appellants argued that this stand of the 2nd Respondent is tantamount to positing that the absence of special resolution of the 1st Respondent is an irregularity which only made the transaction voidable instead of void. They submitted that flowing from the nature of special resolution, a company is incapable of ratifying and therefore being bound by an act which is not authorized by such resolution where such is required by law. This is because a company ratifies an act by a simple majority, whereas it requires 75% of its members, that is a majority, to pass a special resolution. Further submitted that the effect of any decision permitting an act which the law states the company may do only by special resolution to stand, where such resolution was not actually passed, is to permit

a company to do by ordinary resolution that which it can only do by special resolution, i.e. to act ultra vires its ordinary powers. This is the reason that the rule in FOSS VS. HARBOTTLE (1843) 2 K.B. 461 (codified in Section 299 of CAMA) does not apply to acts that a company can only validly do by special resolution. Such action would be null and void and any member of the company may take steps to set such action aside formally. The Court was referred to the book “Orojo, Company Law and Practice in Nigeria” (3rd Edition) pages 351 to 352 in support.

Upon the above contention, the Appellants submitted that the transaction of the purchase of shares by private placement must be declared null and void irrespective of how long it has endured and how unjust that might otherwise seem. Further submitted that the 2nd Respondent was not an innocent party in this episode because its managing director and chief executive officer was also a director of the 1st Respondent at the time the 1st Respondent sent the false special resolution to the 3rd Respondent to back its application for approval of the purchase of its shares through private placement to

the 2nd Respondent. The Appellants submitted that this is in point of fact, an insider deal and the 2nd Respondent through its managing director who testified before the tribunal on its behalf, must share in the blame for the deception and failure to comply with the law. We were referred to pages 432 and 437 of the record of appeal for support on this contention.

Conclusively on the Appellants’ issues 2 and 3, it was submitted that the decision of the tribunal was perverse because it ignored the evidence and the law in arriving at same. That, the Tribunal ought to have upheld the argument of the Appellants to the effect that in as much as their claim was that the transaction was null and void, the issue of time bar could not have arisen; and that the tribunal must in any event, determine whether the transaction was truly void or voidable. That, the approach which the tribunal adopted meant that it in effect decided that the transaction was only voidable without examining the evidence and contrary to its own reasoning that such transaction could not be valid without the approval of the 3rd Respondent, which in turn could not grant such approval in

the absence of a special resolution. The Court was therefore urged to set aside the decision of the tribunal and enter judgment granting all the claims of the Appellant as all issues in the suit have resolved by evidence.

On their issue 4, the Appellants submitted that time does not run on void acts and that non-compliance with statutory provisions governing a process, the effect of which is to render void anything resulting from that process, can always be questioned without regards to how long such act has endured. Relied on the case of BELLINGER VS. BELLINGER (2003) UKHL 23 AND MACFOY VS. U.A.C. (1963) 152 in support. Therefore, since the Appellants’ claim before the tribunal was that the 3rd Respondent failed to observe its own Rules that mandated it not to approve any transaction of special or private placement of shares, which not backed by a special resolution of the company placing the shares. As such, even after the omission was brought to the attention of the 3rd Respondent by the Appellants’ petition, it still persisted in its failure or continued in the wrong. The Appellants therefore sought for an order of the Tribunal directing

the 1st and 3rd Respondents to comply with the provisions of the law. They submitted that in this circumstance, the tribunal judgment is to the effect that if a party can persist long enough in disregarding a statutory process or law, the law would cease to have effect or would be overridden by the disregard and the disregard would then be the new order to be protected by the Court, rather than the law the Court was set up to uphold. It was submitted that the twin principles of null and void actions and continuing injury form a bar against such absurdity and the Court was urged to so hold and allow this appeal.

2ND RESPONDENT’S SUBMISSIONS
On issue one, the 2nd Respondent’s learned counsel submitted that the perusal of the reliefs sought by the Appellants disclosed that their case rested on the validity or otherwise of the special placement transaction for the sale and purchase of 110million ordinary shares of the 1st Respondent to the 2nd Respondent. This transaction was conducted in August 2008 and it was approved by the 3rd Respondent on the 31st July 2008. It was their (Appellants’) case before the Tribunal that the purchase

of the shares was done in breach of the applicable Rules made by the 3rd Respondent and in breach of their rights as shareholders of the 1st Respondent. On the other hand, the 2nd Respondent’s case was that since the 2008 private placement transaction for the purchase of the shares was a contract and the Appellants complained of its breach, the action was statute barred having been filed over six years after the cause of action accrued.

He further submitted that the issue of time bar is a jurisdictional issue and the tribunal was therefore right to determine it first, as enunciated in the case of OWNERS OF M/V. ‘ARABELLA’ VS. N.A.I.C. (2008) 11 NWLR (PT. 1097) 182. That the Appellants misconceived the rationale of statute of limitation when they argued that where the issue of non-compliance with statutory regulations or process arises alongside the issue of time bar, the correct approach for the Court, based upon reason, is to determine first whether the alleged non-compliance would render the act void ab initio or merely voidable at the instance of the aggrieved party. The 2nd Respondent is of the view that it would amount to waste of

time to determine that issue first because for an aggrieved party challenging an act alleged to be void ab initio, presupposes that the act predated the legal action challenging its validity. When the scenario involves limitation of action, it means that an aggrieved party must commence the action within the time allocated by the law otherwise he loses the right of action, right of enforcement and right of judicial relief. In this case, failure of the Appellants to institute this action within the time limited by Limitation Law of Lagos State has taken away their right of action and/or enforcement.

It was contended that even assuming the tribunal ought to have determine the validity of the special private placement of the 1st Respondent’s shares, the Appellants failed to disclose the particulars of illegality of the contract to warrant the setting aside of the transaction. Further argued that the 3rd Respondent’s Rules 89 and 90 have not provided any penalty for non-compliance therewith, which means in the view of the learned counsel, that noncompliance makes the transaction voidable and not illegal. He submitted that even if the tribunal has

determined the issue of non-compliance with the 3rd Respondent’s Rules, it would not have come with a decision to set aside the transaction in view of the fact that consideration has been paid and received and the 3rd Respondent had given its approval for the transaction since 2008. The Court was referred to the cases of FASEL SERVICES LTD VS. N.P.A. (2009) 9 NWLR (PT. 1146) 400 AT 416 and MACFOY VS. U.A.C. (supra) in support of the submissions.

It was also argued that if the tribunal were to determine the action on all issues, it would have to determine the question whether the Appellants are indeed shareholders of the 1st Respondent because that issue was joined between the parties, but there was no finding on it by the tribunal rightly (in the opinion of the 2nd Respondent), because of its finding that the action was statute barred. It was further argued that the Appellants only relied on the computer generated copy of CSCS Stock account (pages 184-186 of the record) as evidence of their membership of the 1st Respondent and in the 2nd Respondent’s view, the said document was inadmissible in evidence for failure to comply with

Section 84(1) of the Evidence Act, 2011. It therefore submitted that since the Appellants failed to show that they are shareholders of the 1st Respondent at the time the special placement of its shares took place; they cannot invoke the jurisdiction of the tribunal pursuant to Section 79 of CAMA and S. 284(1) of the Investment and Securities Act 2007 to declare the transaction void. The Court was urged to answer issue one in the affirmative.

On the 2nd Respondent’s proposed issue 2, its learned counsel insisted that the claim of the Appellants before the tribunal was founded on contract because they derive their rights as shareholders of the 1st Respondent from its Memorandum and Article of Association that bind them to the company and vice versa. The Court was referred to the case of N.I.B. INVESTMENT (W/A) VS. OMISORE (2006) 4 NWLR (PT. 969) 172 AT 200, to the effect that it is the right and obligation created under the Articles between the members of a company that can be enforced vide Section 6(6) of the Constitution, 1999 (as amended), which hereby recognizes and gives effect to the right created under the contract made by the parties in their Article

and Memorandum of Association and the right of the members recognized under CAMA. The tribunal was therefore right to apply the Limitation Law of Lagos State to the suit that was founded on contract.

It was further contended by the 2nd Respondent that with the exception of Sections 128 and 385 of CAMA, no other provisions for limitation of action can be found in ISA 2007 or any other relevant laws, and the tribunal was right to apply the Lagos State Limitation law to this case. The Court was urged to answer issue two in the affirmative.

With regards to its issue 3, on the admission of liability of the 3rd Respondent and it not raising a defence of statute of limitation, it was submitted that there was no finding on the evidence of 1st Respondent’s witness (page 395 to 397 of the record) as amounting to an admission of liability. That, even if the 1st Respondent admitted liability to the claim of the Appellants, the doctrine of estoppel will apply to stop the 1st Respondent from changing the position it presented to the 3rd Respondent upon which the 3rd Respondent approved the transaction. It relied on the cases of

A.G. NASARAWA VS. A. G. PLATEAU STATE (2012) 10 NWLR (PT. 1309) 419 AT 449 and ESTATE ABACHA VS. EKE-SPIFF (2009) 7 NWLR (PT. 1139) 97 at 132, to the effect that no one should be allowed to benefit from its own wrong or to blow hot and cold at the same time.

It was finally submitted on this issue that notwithstanding any alleged admission of liability to the action by the 1st Respondent or the 3rd Respondent’s failure to raise defence of statute of limitation; there was a legal issue of time bar in the action and being a jurisdictional issue, it can be raised by any party or by the Court suo motu. The Court was urged to answer the question raised in issue 3 in the affirmative.

With regards to issue 4 formulated by the Appellants, the 2nd Respondent argued that it was hypothetical and incompetent not having been based on any ratio of the judgment and it was difficult to determine from which ground of appeal it was raised. Learned 2nd Respondent’s counsel also submitted that the grounds of appeal and issues raised therefrom are proliferated, and in particular, the Appellant’s issue 4 should be discountenanced because the trial Court did not make any

finding in respect thereof. He submitted that the said issue 4 is incompetent and should be discountenanced, relying for support on the case of UZUDA VS. EBIGAH (2009) 15 NWLR (PT. 1163) 1 at 22.

RESOLUTION
I have given ample consideration to the grounds of appeal and the issues couched therefrom by the parties. The 2nd Respondent agreed with the Appellants’ issues 1 and 5 but raised three other issues of its own. It is observed that the 2nd Respondent’s issue 1 can be conveniently subsumed in the Appellants’ issues 1 and 5, and its issue 2 is exactly the same as Appellants’ issue 1. Further, the Appellants’ issues 3 and 4 are captured in the 2nd Respondent’s issue 3. In the circumstance, for the sake of brevity, I adopt the Appellants issues for determination but issues 2, 4 and 5 are collapsed into issue one (1) and their issue 3 stands as issue 2 with slight modification. It means that all the Appellants issues are compressed into two issues for the determination of this appeal thus:
1. Was the Tribunal correct to have applied Section 8(1) of the Limitation Law of Lagos State to the Appellant’s

action.
2. Whether having regards to the evidence before the Tribunal, particularly the admission of the 1st Respondent Company to have submitted a false special resolution to the 3rd Respondent, on the basis of which the 3rd Respondent was misled into giving its approval to the transaction of placement of shares, the tribunal was correct in deciding to strike out the action.

ISSUE ONE
My starting point to the resolution of this issue is to examine the Appellants’ claim laid before the Tribunal in order to determine what was really the cause of this action. Our law reports are relate with decisions on the definition of a cause of action and how to discover a cause of action in a suit. In a nutshell, cause of action is an entire set of circumstances giving rise to an enforceable claim. Any act on the part of the defendant that gives to the plaintiff his cause of complaint is a cause of action. And in order to discern a cause of action in a suit, it is the entire circumstances of the case as disclosed by the pleadings and evidence (where called) are critically examined. See A. G. FED. VS. A. G. ABIA STATE (2001) LPELR-64862 (SC),

BELLO V. A.G. OF OYO STATE (1986) 5 NWLR (PT. 45) 828 at 876, OPIA VS. INEC & ANOR. (2014) LPELR-22185 (SC) and SEAGULL OIL LTD & ORS. VS. MONI PULO LTD & ORS. (2011) LPELR-4935 (CA).

I have, at the beginning of this judgment set out the reliefs the Appellants sought contained in paragraphs 8 to 18 of their amended application and reasons of claim contained in pages 177 to 180 of the record of appeal. They also averred in paragraph 2 that they are shareholders of the 1st Respondent Ekocorp ltd, a public limited liability company, and the 1st Respondent admitted this fact in paragraph 2 of its Response to the Application (pages 11 to 14 of the record). On its part, the 2nd Respondent in paragraph 4 of its Response (page 67 of the record), made a general denial of this fact. However, since the 1st Respondent is in the best position to know its members/shareholders, and it admitted clearly that the Appellants are its shareholders, then this fact admitted needed no proof and especially the general denial of the 2nd Respondent is of no moment in the circumstance. I therefore accept this claim as having been proved to the effect that the Appellants are

indeed shareholders of the company.

It is in their capacity as shareholders of the 1st Respondent Company that they filed this suit claiming that 110 million ordinary shares of their company were sold to the 2nd Respondent in private placement without a meeting of the company called to place the issue before them and others as shareholders for them to exercise their right to vote on it. Thus, by their relief one, they sought a declaration for that transaction to be set aside having been made in contravention of the regulations of the 3rd Respondent. They also sought orders directing the 1st Respondent to call the meeting of the shareholders/members of the company to decide the issue of the placement of the company’s shares by resolution.

Now, the right of shareholders of a company includes the right to receive notices of meetings of the company and to vote therein on resolutions presented before the general meeting and that right is statutorily protected by the Companies and Allied Matters Act (CAMA). In the case of A. G. LAGOS STATE VS. EKO HOTELS LTD & ANOR. (2006) LPELR- 3161 (SC), ONNOGHEN, J.S.C. (later CJN) interpreted the provisions

of Section 151 of CAMA and held inter alia that:
From the provisions of Section 151 (1) it is very clear that the question of the validity or otherwise of a transfer of shares by sale as in the instant case is within the operation of the Act.
The Appellants in their pleadings asserted that there was no authorization for the special placement of the shares by the general meeting of the 1st Respondent; because there was no proposal to pass any such resolution in any general meeting and indeed no notice of such meeting was ever issued or published in two daily newspapers by the 1st Respondent as required by 3rd Respondent’s Rules 89 and 90. See also Section 81 of the CAMA, which provides that:
Every member shall, notwithstanding any provisions in the Articles, have a right to attend any general meeting of the company and to speak and vote on any resolution before the meeting.
And Section 219 (1)(a) of the CAMA also provides that every member of the company shall be entitled to receive notice of a general meeting of the company and by the provisions of Section 221(2) of the Act, the failure to give notice to a person entitled to receive

such notice, i.e. a member of the company, shall invalidate the meeting unless such omission is an accidental omission on the part of the person giving the notice. This is also stated in Rule 90(iv) of the 3rd Respondent’s Rules and Regulations. In the case of SUN INSURANCE NIG. PLC & ANOR. VS. LMB STOCK BROKERS LTD & 3 ORS. (2005) 12 NWLR (PT. 940) 608 at 631 paragraphs C-H, this Court (per Onnoghen, J.C.A. (as he then was) held inter alia that:
It is trite that a member of a company or a shareholder thereof has right statutorily prescribed by virtue of the shareholding which right include attendance and voting at the AGM.
Upon the above provisions of CAMA and the 3rd Respondent’s Rules made pursuant thereto, it is well within the right of the Appellants as shareholders of the 1st Respondent to bring a complaint in respect of the private placement of their Company’s shares where they feel aggrieved to protect their personal right statutorily granted. All I am laboring to state here is that as far as I can see from the pleadings and the circumstances of this case, the cause of action in this case is the right of the

Appellants as shareholders to have a say in the transfer and/or sale of the shares of their company, the 1st Respondent.
I must emphasize also that the reliefs claimed by the Appellants before the Tribunal as stated supra was not questioning the contract of sale of the shares between their company and the 2nd Respondent rather, their right to have a say before the placement and the selling of the shares and the failure of the 1st Respondent to comply with the law and the procedure to validate the transaction. In other words, the right of the members of the 1st Respondent to vote on whether or not to sell the shares of their company and by what method, whether public or private placement. It is for this reason that I am of the firm view that the Tribunal got it wrong to hold that the cause of this action was based on the contract of the sale of the shares between the 1st and 2nd Respondents.
I am therefore in total agreement with the Appellants’ learned counsel’s submissions that the mere fact of the existence of a contract per se cannot give rise to a cause of action unless there is a breach of the contract. Therefore the provisions of

Section 8 of the Limitation Law of Lagos State are not applicable to the cause of this action and the tribunal was wrong to so decide. Even the 2nd Respondent’s counsel in paragraph 4.1.1 page 4 of the 2nd Respondent’s brief conceded that the Appellants’ case was not based on contract, when he submitted for the 2nd Respondent that;
A perusal of the reliefs in the Amended originating Application of the Appellants discloses that the Appellants case rest on the validity or otherwise of the special placement transaction for the sale and purchase of 110, 000, 000 ordinary shares of the 1st Respondent to the 2nd Respondent in August 2008 which 3rd Respondent had on the 31st July 2008 given approval of. It was the Appellants case that the purchase of 110, 000, 000 ordinary shares of the 1st Respondent in special (private) placement was in breach of the applicable rules made by the 3rd Respondent and the Appellants rights as shareholders of 1st Respondent company….

Consequently, the preliminary objection of the 2nd Respondent had no merit and the tribunal ought to have dismissed it. I therefore resolve issue one in favour of the

Appellants.

ISSUE TWO
This issue is “whether having regards to the evidence before the Tribunal, particularly the admission of the 1st Respondent Company to have submitted a false special resolution to the 3rd Respondent, on the basis of which the 3rd Respondent was misled into giving its approval to the transaction of placement of shares, the tribunal was correct in deciding to strike out the action”.
It is necessary to state here that even though the Tribunal heard evidence from both sides and indeed ordered that the 2nd Respondent’s preliminary objection should be included in its pleading, and written addresses were exchanged regarding the substantive suit, the Tribunal still did not determine the merit of the case. It simply determined the preliminary objection in favour of the 2nd Respondent and stopped there.
Therefore, since issues were joined and evidence was led by the parties, I will invoke the powers vested in me by Section 15 of the Court of Appeal Act to determine the case on the merits as the tribunal ought to have done. The case having been in the Court system since 2014, it will not be in the interest

of justice, which I am only concerned with as a judex, to send it back to the Tribunal to determine it on the merits, as it should have done. SeeOBI VS. INEC & ORS. (2007) LPELR-2166 (SC).

As a reminder, the 1st Respondent Company actually supports the appeal and its counsel stated that it aligned with the Appellants during the hearing of the Appeal. It had done this even during the trial before the tribunal in its response to the Appellants’ application, copied in pages 11 to 14 of the record of appeal as well as during the trial, represented by its company secretary and through its witness statement on oath. I have summarized the facts averred by the 1st Respondent in the said response supra, but I find it necessary to reproduce paragraphs 7, 8, 13 and 14 where the company (1st defendant at the lower Court) stated thus:
7. The 1st defendant avers that having originated and approved the special placement scheme and the founding directors’ debt equity swap at the board level, it should have approached the shareholders in a general meeting for the ratification of the board’s decision on them.
8. That opportunity was lost

when the 1st Defendant in its subsequent general meeting held on the 31st October 2007, failed to present and pass any special resolution to approve the special placement, and the debt equity swap, as it was apparent from the notice of the meeting published in two national newspapers that no notice for such specific special resolutions on the special placement and the debt equity swap were published. The 1st Defendant shall rely on the Guardian Newspaper of 9th October 2007 during the trial.
13. The exigencies of the moment and pressure from the 2nd Defendant led the erstwhile company secretary of the 1st Defendant Mr. Ayinla now deceased, to convince the chairman of the 1st defendant to endorse a special resolution as if same were passed at the preceding AGM.
14. Pursuant to paragraph 12 of this Respondent, the 1st defendant avers that with the special resolution prepared and signed without authorization of the preceding general meeting, Zenith Capital Ltd concluded the registration of the shares from the special placement scheme without notice to the 3rd defendant of the illegality of the act.

Thus, the 1st Respondent admitted the fact that

the board resolution was not authorized by its shareholders including the Appellants. That indeed the 3rd Respondent was deceived with the unauthorized resolution presented to it upon which it based its approval of the transaction. It is therefore to be inferred that had the 3rd Respondent been aware of this fact, it would not have given its approval to the transaction that was clearly in violation of its Rules. The Appellants are justified in their grievance against the company to institute this action to enforce not only their proprietary right to the shares of their company but also their statutorily protected right to vote in AGM on the issue.
To support this position, the 1st Respondent admitted that the special resolution signed by its chairman and secretary was not authorized by the shareholders because no notice of it was given for the AGM of the 31st October 2007 and it was therefore an illegal action, and in breach of the rights of the Appellants granted by CAMA as determined under issue one supra. In the case of LONGE VS. F.B.N. PLC (2010) LPELR-1793 (SC), OGUNTADE, J.S.C. held for the Apex Court that:
Let me say with all necessary force

and emphasis that when the law vests a right on a citizen, a Court of law will resolutely resist any attempt and by whatever method to deny the citizen the enjoyment of the right conferred by law.
We will also not allow the 1st Respondent to deny the Appellants their right to determine vide a resolution for the selling of their company’s shares.

It has been argued by the 2nd Respondent that even if the tribunal had decided that there was non-compliance with the regulations of the 3rd Respondent and by implication the requirement of CAMA, it would still not set aside the transaction in view of the fact that consideration has been paid and utilized by the 1st Respondent. The Court was referred to the case of Fasel Services Ltd & Anor. Vs. N.P.A. and Anor (supra) where the Supreme Court held that if a provision of the law requires certain formalities to be performed as condition precedent to the validity of a transaction, the result of failure to comply with the formalities merely renders the transaction void and not illegal. But if a penalty is imposed, the transaction is not only void but also illegal. The 1st Respondent’s argument

that since the Rules of 3rd Respondent did not impose a penalty for non-compliance with its Rules 89 and 90, the transaction will not be set aside. I think this argument is a misrepresentation of the holding of the Apex Court in the case cited. The transaction of the placement of the shares in contravention of the Regulations of the 3rd Respondent made pursuant to CAMA is void regardless of the fact that no penalty is imposed for the noncompliance with the Rules. What made it void is the breach of the right of the Appellants to have a say in it being the owners of the company. I must follow the law and not sentiment of the circumstances. I therefore resolve issue two (2) in favour of the Appellants.

Consequent to the resolution of the two issues for determination in favour of the Appellants, the appeal has merit and it is allowed by me. The judgment of the Industrial and Security Tribunal delivered on the 18th June 2015 in respect of Suit No: IST/LA/OA/08/14 is hereby set aside. In its place, all the reliefs sought by the Appellants before the tribunal are granted as prayed. Cost of N100, 000:00 (One hundred thousand Naira) awarded to the Appellants

against the Respondents.

IGNATIUS IGWE AGUBE, J.C.A.: I had the advantage of reading the draft of the Leading Judgment of my Noble Lord. HON. JUSTICE BALKISU BELLO ALIYU, J.C.A. and I am in total agreement with her reasoning and conclusions that this Appeal is meritorious and hereby succeeded. Where from the facts of this case, the 1st Respondent admitted that the Board’s Resolution was not authorized by the Shareholders including the Appellants and that the 3rd Respondent (The Security and Exchange Commission) was deceived into approving the purchase of a whopping 110,000,000.00 (One Hundred and Ten Million) Ordinary Shares of EkoCorp Plc by the 2nd Respondent Geoff Ohen Limited, contrary to the applicable Regulations of the 3rd Respondent, the transaction was tainted with deceit if not fraud.

Again, with the admission by the 1st Respondent that the Special Resolution signed by the Chairman and Secretary of the 1st Respondent was also unauthorized by the Shareholders in that no Notice of it was given of its Annual General Meeting of 31st October, 2007, the transaction leading to the case now on Appeal was illegal and therefore null and void as you

cannot put something on nothing and expect it to stand. In Benjamin Mcfoy vs. United African Co. Ltd. (1961) 3 WLR 1405; Lord Denning held as follows:
“If an act is void, then it is in law a nullity, it is not only bad, but incurably bad. There is no need for an order of the Court to set it aside. It is automatically null and void without more ado, though it is sometimes converment to have the Court declare it to be so. And every proceeding which is founded on it is also bad, incurably bad. You cannot put something on nothing and expect it to stay there. It will collapse. So, will this judgment collapse if the statement of claim was a nullity.”
See also Skenconsult Ltd. vs. Ukey (1981) 1 SC 6 and Craig vs. Kanssen (1943) KB 256 at 263.

On the whole, there is no doubt that the Judgment of the Lower Tribunal delivered on 18th June, 2015 in the Suit now on Appeal cannot stand and I am equally in tandem with my Lord’s Lead Judgment that the Appellants’ Appeal is meritorious and hereby succeeds. I also set aside the said Judgment and grant the Appellants all the Reliefs sought before the Tribunal. I abide by the Order as to

costs.

SAIDU TANKO HUSSAINI, J.C.A.: I agree.

Appearances:

CHUCKS NWACHUKWU, ESQ. WITH HIM, FEMI ADEKOYA,ESQ .For Appellant(s)

UMUDJORO,ESQ. – FOR 1ST RESPONDENT
S. C. OBI,ESQ. – FOR 2ND RESPONDENT
ADEREMI O. ADEBAYO,ESQ. HOLDING BRIEF OF ABBA MAMMAN ALI,ESQ. – FOR 3RD RESPONDENT For Respondent(s)

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