NATIONAL COUNCIL ON PRIVATIZATION & ORS v. MAGI JOHNSON & ORS
(2014)LCN/7249(CA)
In The Court of Appeal of Nigeria
On Friday, the 30th day of May, 2014
CA/K/307/2005
JUSTICES
ABDU ABOKI Justice of The Court of Appeal of Nigeria
THERESA NGOLIKA ORJI-ABADUA Justice of The Court of Appeal of Nigeria
ITA GEORGE MBABA Justice of The Court of Appeal of Nigeria
Between
1. NATIONAL COUNCIL ON PRIVATIZATION
2. BUREAU OF PUBLIC ENTERPRISE
3. DURBAR HOTEL PLC Appellant(s)
AND
1. MAGI JOHNSON & ORS
2. NASIMATUME INVESTMENT LTD
3. ATTORNEY GENERAL OF THE FEDERATION Respondent(s)
RATIO
DEFINITION OF PRIVATIZATION
It is said that privatization is the process of transferring ownership of a business, enterprise agency public service or public property from the public sector (a government) to the private sector. By purchasing the company, i.e., Dubar Hotel Plc, Kaduna by Kabo Holdings Ltd, Dubar Hotel Plc, was then converted to a company privately owned by Kabo Holdings Ltd, without. PER ORJI-ABADUA, J.C.A.
B THERESA NGOLIKA ORJI-ABADUA, J.C.A. (Delivering the Leading Judgment): The 1st – 70th Plaintiffs, now the 1st – 70th Respondents claimed against the Appellants and 71st Respondent jointly and severally as follows:-
1. A declaration that any and or the purported offer to sell and or sale of the 4th defendant is illegal, arbitrary and unconstitutional.
2. A declaration that the plaintiffs are Bona-fide holders and owners of the shares allotted against their respective names in form CO2 registered at the Corporate Affairs Commission, Abuja.
3. A Mandatory Order of Interlocutory Injunction restraining the defendants, their agents, privies and or representatives from dealing with the 4th defendant in whatever manner and setting aside all steps and procedures so far taking relating to the sale of 4th defendant.
4. An order of perpetual injunction restraining the defendants either by themselves, their agents, privies and or representatives from offering to sell and or selling the 4th defendant to members of the public, persons and group of persons.
5. And any other consequential order and or orders as the Honourable Court may deem fit to make in the circumstances of the suit.”
The 71st Respondent, i.e., Nasitume Investment Limited sought from all the Defendants jointly and severally as follows:-
1. A declaration that Durbar Hotel Plc was sold to Kabo and/or Kabo Holdings Limited, and the said purchaser had in turn sold all their interests in Durbar Plc to Nasitume Investment Limited.
2. A declaration that the Defendants have no interest (judicial or otherwise) in Durbar Hotel Plc and cannot claim any.
Learned Counsel for the Appellant Tochi Nwogu Esq,raised three issues for determination thus:
“1. Whether there was preponderance of evidence before the trial Judge that offer and allotment of shares to the Plaintiffs were made in breach of the Share Purchase Agreement between the parties and the relevant laws thereto and if so whether the learned trial Judge properly evaluated the evidence placed before it before coming to a decision.
2. Whether the 71st Respondent discharged the onus of the evidential burden of proving that Kabo Holdings Ltd sold/transferred the 60% equity shares of the 3rd Appellant to the 71st Respondent in view of the Exhibits tendered and evidence given and if not whether the learned trial Judge rightly placed the evidential burden of proof on the Appellants.
3. Whether Exhibit T is an admissible evidence and if not whether the learned trial Judge can on the basis of Exhibit T determine whether there was mutual rescission of the contract of sale between the Appellants and Kabo Holdings Ltd.
He relied on the cases of A.G Kwara State vs. Alao (2000) Part 84; Iwuoha vs. NIPOST Ltd (2003) 8 NWLR Part 822 PAGE 308 and so many other cases.
Counsel for the 71st Respondent distilled three issues for determination of this Court they are:
“1. Whether the 1st and 2nd Appellants were completety divested of all interest in the 3rd Appellant when they executed Exhibit M with Kabo Holdings Ltd., and if yes, whether the Appellants in that instance can challenge the allotment of 60% stock and shares to the 71st Respondent by Kabo Holdings Ltd.
2. Whether the 71st Respondent discharged the legal burden of proving the allotment of 60% stock and shares in the 3rd Appellant by Kabo Holdings Ltd., to the 71st Respondent, and if yes, whether the Appellant discharged the corresponding evidential burden placed on them to prove that there was no valid allotment of stock and shares to the 71st Respondent by Kabo Holdings Ltd.
3. Whether the basis upon which the learned trial judge determined the question of whether there was mutual rescission of the contract of sale between 1st and 2nd Appellant and Kabo Holdings Ltd was Exhibit ‘M’.”
He submitted the cases of Gadzama vs. RIM Merchant Bank Ltd (1999) 4 NWLR Part 498 page 234 at 236; Total (Nig) Plc vs. Akinpelu (2004) 17 NWLR Part 903 page 509; Nangibo vs. Okafor (2003) FWLR Part 171 page 1529; Ibama vs. Shell Petroleum Dev. Co. Ltd (2005) All FWLR Part 287 page 822; Lion Bank of Nig Plc vs. Siyak Ind. Ltd (2007) ALL FWLR Part 344 page 106; Onyenge vs. Ebere (2004) ALL FWLR Part 219 page 981 at 995; Archibong vs. Ita (2004) ALL FWLR Part 197 page 930 at 951; Ejuetami vs. Olaiya (2001) 18 NWLR part 746 page 572 SC; Dagaci of Dere vs. Dagaci of Ebwa (2001) 7 NWLR Part 712 page 365; Okoro vs. State (1998) 14 NWLR part 584 page 181; Oguonzee vs. State (1997) 8 NWLR Part 718 page 286 at 297 paragraphs A-B and Abuul vs. Bensu (2003) 10 NWLR (supra).
It is glaring in the facts placed before the Lower Court and as are contained in the record of appeal before this Court that the 1st and 2nd Appellant’s sometime by an agreement dated the 4th March, 1993 sold the 3rd Appellant to Kabo Holdings Limited under the Privatization Policy of the Federal Government of Nigeria. The focal point is that the 3rd Appellant was indeed sold to the said Kabo Holdings Ltd, although on the conditions articulated by the Appellants both in their pleadings and the evidence proffered before the Court as contained in Exhibit M tendered before the Lower Court. Exhibit M distinctly established that the 3rd Appellant was originally owned by the Federal Government of Nigeria as beneficial owner. By that agreement, the vendor representing the Federal Government sold the said Kabo Holdings Ltd purchased free from all encumbrances, the assets and stock of the Company, i.e., Durbar Hotel Plc, Kaduna. The consideration for all sales by the vendor of all the shares, stocks, and assets of Durbar Hotel Plc was N90 million. Clause 2.2 of the said Agreement indicated that the purchaser, i.e. Kabo Holdings Ltd, had prior to the execution of the said Agreement paid the entire purchase price of N90 million to the vendor the receipt of which the vendor acknowledged. There were covenants entered into by the parties but one of the hurting ones entered into by the purchaser at clause 6.3 is that it will ensure that 40% of the shares of the Company will be offered to the Nigeria Public including employees of the company within five years of the effective date. It was executed on the 4th March,1993.
It is clear by Exhibit M that all the Federal Government interest/shares in Dubar Hotel Plc., Kaduna were purchased by Kabo Holdings Ltd for the sum of N90 million on 4/3/93. If the 3rd Appellant had been privatized by that Agreement, Exhibit M, it follows that the ownership of the 3rd Appellant had completely changed from the Federal Government of Nigeria to Kabo Holdings Ltd.
It is said that privatization is the process of transferring ownership of a business, enterprise agency public service or public property from the public sector (a government) to the private sector. By purchasing the company, i.e., Dubar Hotel Plc, Kaduna by Kabo Holdings Ltd, Dubar Hotel Plc, was then converted to a company privately owned by Kabo Holdings Ltd, without.
It is apparent in the record that it was after acquisition of the entire clauses of the Federal Government of Nigeria that the said Kabo Holdings Ltd allegedly sold 40% of its shares to the 1st – 70th Respondents and 60% shares to the 71st Respondents. The 1st and 2nd Appellants were never part of the contract of Sale of shares between the 1st – 71st Respondents respectively and the said Kabo Holdings Ltd, therefore, it was not privy to that contract.
It is instructive to note that Kabo Holdings Ltd which was at the centre of the confusion and tussle between the Appellants and the 1st – 71st Respondents respectively was not made or joined as a party to the suit.
It was the said Kabo Holdings Ltd that allegedly sold its shares to the Respondents yet it was not joined as a party to clarify the major issues articulated by the parties. It does not behove the 1st and 2nd Appellants to speak on behalf of the said Kabo Holdings Ltd that executed a different sets of contracts, with the 1st -70th Respondents on the one hand and the 71st Respondent on the other hand. It does not lie in their mouth to question the validity of the transaction entered into by the said Kabo Holdings Ltd and the 1st – 71st Respondents respectively. At beat of the 1st and 2nd Appellants were hopelessly against by the manner in which the shares were sold by the said Kabo Holdings Ltd to the Respondents, they should commence an action against the said Kabo rather than alterably to re-privatise the company it had already sold off the Federal Government shares and interests to the private Company. Kabo Holdings Ltd is not a party to the suit and had not been heard to. Dispute or derogate from its agreement with the 1st – 71st Respondents respectively Exhibits R dated 18/5/2001 and dated 4/7/2003 were tendered by which the Claims of the 2nd Appellant,Kabo Holdings Ltd of its breaches of Exhibit M. Exhibit R. S. dated 4/7/2001- was also admitted in evidence.
D.W.1 mentioned that by a Kabo Holdings Ltd agreed to return to the 3rd Appellant to the 2nd Appellant for re-privatisation. The fact that Kabo Holdings Ltd had no objection to re-privatise the 3rd Apellant was not pleaded, and D.W.’s confirmed that the original letter could not be traced. At that point the proceedings, the Appellants’ Counsel withdrew the application that they took over Durbar Hotel and advertised it for sale. D.W.1 Musa Bello working with the 2nd Appellant as an Assistant Director was employed by the 1st and 2nd Appellants in the year 2000, whereas the Agreement executed between Kabo Holdings Ltd and the 1st and 2nd Appellant was executed in March, 1993.
The same did not go through SEC to Kabo Holdings. He stated that all titled documents after sale were handed over to Kabo Holdings Ltd. After Kabo Holdings Ltd had taken over the 3rd Appellant, the 1st and 2nd Appellants did not refund the purchase price.
The document dated 19/3/2000 was admitted as Exhibit T. D.W.1 confirmed there is no formal letter terminating the sale agreement. He also acknowledged that Clause 6(3) of Exhibit M did not specify the mode by which the 40% shares to the Public shall be done. He also admitted that as at 19th March, 2000, Kabo Holdings Ltd was in possession of the Hotel. He also admitted that Exhibit M did not include the power to monitor. He also admitted that 60% of the shares was vested in Kabo absolutely.
D.W.2 -Deputy Director of the 2nd Appellant tendered a letter from Kabo Holdings Ltd addressed by the Director General of the 2nd Appellant dated 28/4/2001 as Exhibit U. He said he was not aware that the person has been formalized and payment to Kabo has become necessary.
D.W.3 – apparent who mistook the Plaintiff for Kabo Holdings Ltd stated that the Plaintiff did not see approval before issuing out the shares for sale or subscription to the public.
D.W.4 – tendered Exhibits V, W, X, and Y as returns filed by Durbar Hotel in 1992. He explained that failure to file annual returns shall only attract financial penalties.
D.W.5. – Identified Exhibit y, i.e. Firm TO7A. He said he was not aware of the sale of shares to the 1st – 71st Respondents respectively. Under cross-examination, D.W.5 Ndasule Sherriff a Legal Practitioner with the Chambers of Mohammed Mohammed & Co admitted that as a Solicitor in the said Chambers, on 18/1/1999 together with Mohammed Adamu later wrote opinion to the DG, of the 2nd Appellant giving a Legal opinion on the Status of Durbar Hotel that Durbar Hotel was sold to Kabo Holdings Ltd. He said he still maintained that position they were acting as Solicitors to the 2nd Appellant when they wrote the opinion.
The learned trial Judge had 3 extensive findings on the issues placed before him. The Lower Court remarked at pages 716 -717 of the record containing some pages of the judgment that; ‘the sales of Durbar Hotel to Kabo Holdings Ltd was a completed contract in which the Technical Committee on Privatisation and Commercialisation the receipt of N90,000,000.00 but in return, in compliance with the covenants in Exhibit M, surrendered to the Kabo Holdings Ltd all the necessary documents of title to Durbar Hotel, it also, delivered the physical Hotel. This was after the Board of the 4th Defendant passed a resolution dissolving itself in favour of the new Board that was constituted by Kabo Holdings Ltd. At the time the TCPC had handed over the 4th Defendant to the Plaintiff, it had totally and effectively divested itself of all interest in the 4th Defendants by the contract it entered, by which it must board itself, no longer could act inconsistent with the right of ownership, enjoyment and control by Kabo Holding and/or its successor in title or assigns.”
More detailed findings of the Lower Court on the issues of breach of contract by Kabo Holdings Ltd and repudiation of the Contract by the 1st and 2nd Appellant, were made. The Lower Court also noted that there is nothing in Exhibit M which entitled the 2nd and 3rd Defendants to repudiate the contract and recover the shares and take over the assets of the 4th Defendant. The learned trial Judge also considered the provisions of clauses 7 and 9 of Exhibit M and observed that there were nothing in Exhibits S, U, T and R establishing compliance with the said Clause 7 which contains the pre-condition for the repudiation or unilateral rescission of the Contract, and then Clause 9 which provides the procedure for modification, amendment, waiver or discharge of the contract. I also noted the Lower Court’s findings at pages 724 – 729 of the record and I completely agree with the lower in its award of judgment in favour of the Plaintiffs.
It seems from the activities of the Appellants that they were threading on a dangerous soil by interfering with the interests and ownership of Kabo Holdings Ltd after the Federal Government had sold all its shares and holdings in Dubai Hotel Ltd to Kabo Holdings Ltd coupled with a consideration of N90,000,000.00, and which said interests Kabo Holdings Ltd had sold and transferred to the 1st – 71st Respondents respectively.
As observed by the Lower Court there is nothing in Exhibit M that converted the Appellants or transformed them into watchdog of Kabo Holdings Ltd. Also as stated by the Lower Court there is no provision in Exhibit that empowered the Appellants to re-possess the 3rd Appellant and re-advertise it for re-privatisation after the Kabo Holdings Ltd paid its purchase price of N90 million. The 1st and 2nd Appellants seem to be busybodies who have no regards for set down rules and who believe can trash or repudiate any contract they entered would private investors any time they deem fit. If they have any problem it should be with Kabo Holdings Ltd and not the 1st – 71st Respondents who never entered into any contract with it and extensively evaluated the evidence adduced by the parties and the documentary evidence tendered by them. There is no cogent reasons that the well conferred judgment of the Lower Court should be set aside or upturned. In consequence thereto, all issues presented by the Applicants are hereby resolved in favour of the Respondents. Furthermore the first issue raised by the 71st Respondent is hereby answered in the affirmative. There is no merit in this appeal and in view of that, this appeal is hereby dismissed. The judgment of the Lower Court is hereby affirmed. There will be costs to the 1st -71st Respondents which I assess and fix at N150,00.000.
ABDU ABOKI, J.C.A.: I had the privilege of reading the lead judgment of my learned brother T. N. Orji-Abadua, J.C.A, and I agree with her conclusion that this appeal lacks merit and ought to be dismissed. I accordingly dismiss same and abide by the consequential orders as to costs in the lead judgment.
ITA G. MBABA, J.C.A.: I agree with the reasoning and conclusions of my learned brother T. N. ORJI-ABADUA J.C.A, that the appeal lacks merit and should be dismissed.
I too dismiss the appeal and abide by the consequential orders in the lead judgment.
Appearances
Tochi Nwogu Esq; Ndubuisi Okonta Esq.For Appellant
AND
Dr. R. O. Atabo; J. S. Agada Esq; Enegban Unekwu Esq; For the 1st – 70th Respondents
Abudullahi Haruna Esq; Mrs. Bunmi Adebayo; Ngolika Orji-Abadua, for the 71st Respondent.For Respondent
