BELLVIEW AIRLINES LIMITED v. SOUTH AFRICAN AIRWAYS (PROPIETARY) LIMITED
(2019)LCN/13310(CA)
In The Court of Appeal of Nigeria
On Tuesday, the 21st day of May, 2019
CA/L/460/2017
JUSTICES
MOHAMMED LAWAL GARBA Justice of The Court of Appeal of Nigeria
JOSEPH SHAGBAOR IKYEGH Justice of The Court of Appeal of Nigeria
ABIMBOLA OSARUGUE OBASEKI-ADEJUMO Justice of The Court of Appeal of Nigeria
Between
BELLVIEW AIRLINES LIMITED Appellant(s)
AND
SOUTH AFRICAN AIRWAYS (PROPIETARY) LTD Respondent(s)
RATIO
THE POWER OF A CREDITOR TO FILE A PETITION FOR THE WINDING-UP OF A COMPANY INDEBTED TO A CREDITOR
Sections 408(d) and 410(1)(b) of the CAMA empower a creditor to file petition for the winding-up of a company indebted to the creditor where the company is unable to pay the debt that is more than N2,000 upon service of a written demand for payment and the company failed to comply with the written demand within 3 weeks thereof. A company is said to be commercially insolvent where it has no viable assets to meet its current liabilities and thus may be wound up although the company may have assets which if realized would be sufficient to pay its debts vide Vertner Tandy v. Harmony House Furniture Co. Ltd. (1964) All NLR 26. PER IKYEGH, J.C.A.
WHETHER OR NOT ONCE DEBT IS NOT DISPUTED ON SUBSTANTIAL GROUNDS BUT ON THE EXACT AMOUNT OWED, IT WOULD BE UNJUST TO REFUSE THE FILING OF A WINDING-UP PETITION BY A PETITIONER
It is my considered opinion that once the debt is not disputed on substantial grounds but on the exact amount owed, it would be unjust to refuse the filing of a winding-up petition by a petitioner who is admittedly owed money because there is a dispute as to the precise amount owed, as it would be wrong to require a petitioner to quantify the precise amount which is owed in other proceedings before filing a petition for winding-up vide Unifam Industries Ltd. v. Oceanic Bank International Ltd. (2005) 3 NWLR (pt. 911) 83 read with the case of Nationwide Development Co. Ltd. v. U.B.A. Plc (1996) 3 NWLR (pt.437) 435 following the English case of Re Borough of Portsmonth Tramways Co. (1982) 2 Ch. 362 at 366 ? 367 per Stirling, J. PER IKYEGH, J.C.A.
JOSEPH SHAGBAOR IKYEGH, J.C.A. (Delivering the Leading Judgment): The appeal is against the decision of the Federal High Court sitting in Lagos (the Court below) by which it dismissed the appellant?s preliminary objection to the granting of the respondent?s motion seeking for an order of Court for winding-up of the appellant.
Put briefly, the appellant and the respondent entered into a written agreement effective from 01.07.09 to 30.06.10 to reciprocate the uplift of passenger and cargo on each other?s behalf for a fixed dollar rate charge, as agreed in the prorate agreement to be cleared through the International Air Transport Association (IATA) Clearing House. The arrangement ceased upon the suspension of the IATA Clearing House on 14.10.09 forcing the respondent to present the outstanding sum of $449,533.51 directly to the appellant for settlement; but the appellant resisted the claim on the ground that it was not supported with document, coupons or copies of the appellant?s passengers tickets it alleged it carried.
?However, the appellant, without prejudice, offered $280,984.42 payable in 20 equally monthly
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instalments to the respondent in full and final satisfaction of the claim; the appellant did not respond to the move towards amicable settlement but rather demanded the sum of $557,145.85 as the outstanding sum upon which the respondent served the appellant with a petition to wind-up the appellant for alleged inability to pay its debts as well as a motion on notice to advertise the said petition.
The appellant filed a preliminary objection to the petition setting out ?cogent and overriding reasons? why the petition should not be granted and/or advertised. The Court below heard and dismissed the preliminary objection. The appellant was dissatisfied with the decision of the Court below and challenged it by filing a notice of appeal with several grounds upon which the appellant formulated 3 issues for determination in its brief based on the grounds of appeal captured by its brief of argument filed on 06.11.18.
?
It was argued in the appellant?s brief that the petition was presented on behalf of the respondent by a ?certain? solicitor to the respondent who deposed to verifying affidavit in page 6 of the record of appeal (the
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record) contrary to Rule 18(1) of the Companies Winding-up Rules 2001 which requires that in the case of a petition presented by a company, such as the respondent, the verifying affidavit shall be made by some director, secretary or other principal officer.
It was also argued that in the absence of evidence that the respondent donated Power of Attorney by writing under seal to the solicitor to act for it to execute deeds under Section 76(1) of the Companies and Allied Matters Act (CAMA), the non-compliance with Section 18(1) of the Companies Winding-up Rules 2001 violated the position that where a statute provides for a particular method of doing something or performing a duty which is regulated by the statute no other method should be adopted, as to do so would be non-fulfillment of the condition precedent which would rob the Court of the jurisdiction to entertain the action citing in support the cases of C.R.U. Tech v. Obetan (2011) 15 NWLR (pt.522) 550, Madukolu v. Nkemdilim (1962) 2 SCNLR 341, Ubwa v. Bashi (2008) 4 NWLR (pt.1077) 303.
?
It was argued that a close look at page 34 of the record indicated that the appellant disputed the debt bona
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fide showing the debt was not shown objectively as due or acknowledged by the appellant, therefore the debt having been disputed on substantial grounds, the Court below should have pronounced on the appellant?s contention that the debt upon which the winding-up petition is based is genuinely disputed and that the appropriate course of action, if any, was to sue on the disputed debt, not by way of winding-up petition citing in support the cases of Ado Ibrahim & Co. Ltd. V. B.C.C. Ltd. (2007) 15 NWLR (pt.1058) 546, Union Bank of Nigeria Ltd. V. Tropical Foods Ltd. (1992) 3 NWLR (pt.228) 231, Hansa Int. Const. Ltd. V. Mobil Prod. Nig. (1994) 9 NWLR (pt.366) 78.
The appellant argued that the letters of demand or demand notices did not contain the essential ingredients of a statutory demand letter which should contain the amount owed and the letter must be signed by the creditor and the letter must give the debtor a 21 day notice, therefore the demand letters should be declared incompetent as not forming the fulcrum of the petition citing in support Section 409(a) of the CAMA and the cases of Tate Ind. Plc v. Devcom M.B. Ltd. (2004) 17 NWLR (pt.991)
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190 and Owunmi v. Memil Guaranty (1994) FHCLR 134; on account of which the appellant urged that the appeal should be allowed and the ruling of the Court below delivered on 18.09.14 be set aside.
The respondent filed its brief of argument on 14.12.18. The respondent observed in part of its brief that the appellant?s notice of preliminary objection argued at the Court below on 10.09.16 is dated 18.10.14 vide page 381 of the record, not the appellant?s notice of preliminary objection dated 13.02.13, which was withdrawn by the appellant on 02.11.15 vide pages 376 ? 377 of the record.
The respondent contended in the brief that the acting head of the legal department of the respondent is a principal officer of the respondent company whose verifying affidavit showing donation of the Power of Attorney to its solicitor complied with Rule 18(1) of the Companies Winding-up Petition Rules 2001 read with Section 76(1) of the CAMA and thus made its solicitor an agent of the respondent to do all things the respondent can lawfully do, therefore the petition was competently instituted citing in support the cases of Vulcan Gases Ltd. V. Gasellschaft
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Fur Ind. Gasverwentung (2001) 9 NWLR (pt.719) 610 at 663, Nasr and Anor. V. Rossek (1973) 8 NSCC 389, Chime v. Chime (2001) 3 NWLR (pt.701) 52, Ude v. Nwara (1993) 2 NWLR (pt.278) 638 at 665, Laah v. Opaluwa (2004) NWLR (pt.878) 558 at 572, Melwani v. Five Star Industry Ltd. (2002) 3 NWLR (pt.753) 217 at 236 ? 237, Daewoo Nig. Ltd. V. Uzo (2008) All FWLR (pt.399) 456.
The respondent also contended in the brief that it served the appellant the requisite written notices and after the statutory period of 3 weeks was spent without response by the appellant, it filed the petition and that the pronouncement of the Court below relying on the case of Ado Ibrahim and Co. Ltd. v. B.C.C. Ltd. (supra) to the effect that a dispute to the exact amount owed will not obstruct the petition as the benchmark is that it is the amount owed and/or admitted which is in excess of N2,000 that would determine the validity of the petition, therefore the Court below was right in dismissing the preliminary objection citing in support Sections 408 and 409(a) of the CAMA read with the cases of Ado Ibrahim and Co. Ltd. v. B.C.C. Ltd. (supra) at 572, Tar and Ors. V. Ministry of
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Commerce and Industries and Ors. (2018) LPELR ? 43680 (CA) at 54, Xpress Partners Ltd. v. BGL Securities Ltd. (2018) LPELR ? 45323 at 33 ? 34; upon which the respondent advocated that the appeal should be dismissed in its entirety as it is a ploy to stall the progress of the action as well as a means of depriving the respondent of the amount legally due to it.
Sections 408(d) and 410(1)(b) of the CAMA empower a creditor to file petition for the winding-up of a company indebted to the creditor where the company is unable to pay the debt that is more than N2,000 upon service of a written demand for payment and the company failed to comply with the written demand within 3 weeks thereof. A company is said to be commercially insolvent where it has no viable assets to meet its current liabilities and thus may be wound up although the company may have assets which if realized would be sufficient to pay its debts vide Vertner Tandy v. Harmony House Furniture Co. Ltd. (1964) All NLR 26.
It is my considered opinion that once the debt is not disputed on substantial grounds but on the exact amount owed, it would be unjust to refuse the filing
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of a winding-up petition by a petitioner who is admittedly owed money because there is a dispute as to the precise amount owed, as it would be wrong to require a petitioner to quantify the precise amount which is owed in other proceedings before filing a petition for winding-up vide Unifam Industries Ltd. v. Oceanic Bank International Ltd. (2005) 3 NWLR (pt. 911) 83 read with the case of Nationwide Development Co. Ltd. v. U.B.A. Plc (1996) 3 NWLR (pt.437) 435 following the English case of Re Borough of Portsmonth Tramways Co. (1982) 2 Ch. 362 at 366 ? 367 per Stirling, J.
In the present case, the dispute was on the precise amount owed, not a dispute based on good faith or bona fide, showing the respondent satisfied one of the conditions for filing the winding-up petition.
The acting head of the legal department of the respondent which is the equivalent of acting company secretary signed the Power of Attorney donating the authority to the solicitor to file the petition. The Power of Attorney therefore came from the respondent through its acting head of legal department, a principal officer of the respondent and following the case of First
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Guarantee Pension Ltd. v. National Pension Commission and Anor. (2016) 10 NWLR (pt.1519) 39 at 50 which relied on the case of Trenco Nig. Ltd. v. African Real Estate and Investment Co. Ltd. (1978) 4 S.C. 9, a company secretary or acting head of legal department of a company such as the respondent can, when authorized, as in this case, act on behalf of the company and it is only the respondent that can challenge the exercise of such authority. The solicitor as agent of the respondent through the Power of Attorney was therefore right in filing the petition on behalf of the respondent.
The letter of demand dated 02.08.10 is in page 33 of the record. For ease of reference, it reads ?
?2nd August, 2010
The Managing Director
BELLVIEW AIRLINES LIMITED
Bellview Plaza
66b Opebi Road
Ikeja
Lagos
Nigeria.
Dear Sir,
RE: BELLVIEW AIRLINES LTD/SAA ? DEBT OF (USD) $557,145.85 (FIVE HUNDRED AND FIFTY SEVEN THOUSAND ONE HUNDRED AND FORTY FIVE UNITED STATES DOLLARS AND EIGHTY FIVE CENTS)
We received a Circular letter 073/09, dated 14th October, 2009, from IATA (International Airline Transport
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Association) relating to the suspension of Bellview from the Clearing House Membership. Consequently, we are forced to pursue you directly for due settlement of all outstanding invoices.
We have sent you several letters of demand for the settlement of your debt now standing at USD $ 557,145.85. However you have failed to respond positively or settle any of the outstanding amounts requested.
We therefore demand immediate payment of the outstanding sum of USD$557,145.85 otherwise we will be forced to proceed against you by the appropriate legal means.
Yours sincerely,
Acting Head Legal
Nambita Mazwi
South African Airways.”The letter of demand (supra) therefore satisfied the requirements of Section 409 of the CAMA as it was signed by the acting head legal of the respondent who is one of its principal officers and contained the sum due exceeding N2,000 as the indebtedness of the appellant to the respondent vide the case of Xpress Partners v. BGL Securities Ltd. (supra) per the lead judgment prepared by Obaseki-Adejumo, J.C.A., relying on the case of Air Via Ltd. v. Oriental Airlines (2004) 9 NWLR (pt.878) 298 cited by the respondent.
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In the result, I find no merit in the appeal and hereby affirm the decision of the Court below.
MOHAMMED LAWAL GARBA, J.C.A.: I have read a draft of the lead judgement written by my learned brother Joseph Shagbaor Ikeyegh JCA, and I agree that for the reasons set out therein, the appeal is devoid of merit.
It is dismissed by me too in terms of the lead judgment.
ABIMBOLA OSARUGUE OBASEKI-ADEJUMO, J.C.A.: I have been afforded the opportunity of reading in draft the judgment of my learned brother, JOSEPH SHAGBAOR IKYEGH, JCA in this appeal. I agree with the succinctly delivered reasoning and conclusion thereat.
I also hold that the appeal is incompetent and it is accordingly struck out.
In effect, the judgment of the lower Court in this case subsists.
?I abide by the order as to costs in the lead judgment.
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Appearances:
Mr. M. Kuti with him, K. Umar Esq.For Appellant(s)
W. A. Essan, Esq.For Respondent(s)
Appearances
Mr. M. Kuti with him, K. Umar Esq.For Appellant
AND
W. A. Essan, Esq.For Respondent
