ABIOTEX INTERNATIONAL LIMITED v. FIDELITY BANK PLC
(2016)LCN/8231(CA)
In The Court of Appeal of Nigeria
On Thursday, the 3rd day of March, 2016
CA/B/45/2014
RATIO
COMPANY LAW: THE PRINCIPLE OF LAW IN FOSS VS. HARBOTTLE ON LOCUS STANDI
It is a settled principle of law that:
In the realm of company/corporate law, the principle of law enunciated in the case of Foss Vs. Harbotte (1843) 2 Hare 461, in relation to locus standi, is that subject to certain exception, the proper plaintiff in an action in respect of a wrong alleged to be done to a company …….. is the company. See Yalaju-Amaye Vs. AREC Ltd (1990) 6 SC 157; Omosade Vs. Mande (1987) 2 NWLR (Pt. 55) 155 at 170; Erebor Vs. Major (2001) 5 NWLR (pt. 706) 300 at 308 – 309; Onwukwusi Vs. R.T.C.M.Z.C (2011) 6 NWLR (Pt. 1243) 341 at 361 – 362. Gombe Vs. PW (Nig) Ltd (1995) 6 NWLR (Pt. 402) 402; Enterprise Bank Ltd Vs. M.N.I (2015) All FWLR (Pt. 773) 1995 at 2027; Nidocco Limited Vs. Mrs I.A. Gbajabiamila (2013) 14 NWLR (Pt. 1374) 350 J & J Techno (Nig) Ltd Vs. Y.H.Q.S Ltd (2015) 8 NWLR (Pt. 1460) 1 at 25 – 26. per. HAMMA AKAWU BARKA, J.C.A.
PRACTICE AND PROCEDURE: PARTIES TO LAW SUITS; WHO IS CAPABLE OF BEING PROPER PARTIES TO LAW SUITS BEFORE COURTS OF LAW
The position of the law remains that suits are for the determination of legal rights and obligation in any given situation. Therefore only such natural and juristic persons in whom the rights and obligation can be vested are capable of being proper parties to law suits before courts of law. See Registered Trustees of Airline Operators of Nigeria Vs. Nigeria Airspace Management Agency (2014) 8 NWLR (Pt. 1408) 1; J & J Techno (Nig) Ltd Vs. Y.H.Q.S Ltd (supra) page 23 per Orji-Abadua JCA.
It goes without saying that a party to an action is the person whose name is designated as plaintiff or defendant as the term party refers to that person(s) by or against whom the legal suit is brought. In the instant case, the plaintiff on record is Abiotex International Limited, the company itself, in its registered name and indeed the exact name as registered under the Companies and Allied Matters Act, 1990. See Njemanze Vs. Shell B.P Port Harcourt (1966) 1 SCNLR 9; Elufrioye & Ors. Vs. Halilu & Ors. (1993) NWLR (Pt. 301) 570. per. HAMMA AKAWU BARKA, J.C.A.
COMPANY LAW: WHETHER THE COMPANY IS REQUIRED TO COMPLY WITH THE PROVISIONS OF SECTION 63(1) (3) AND (5) BEFORE IT CAN CUE FOR INFRINGEMENT OF ITS RIGHTS
The Respondent in the instant case, just like the learned counsel for the Respondent in the case of Nidocco Ltd Vs. Gbajabiamila (supra), raised the issue of lack of authority through a board resolution to commence the action as stipulated by Section 63(1) (3) & (5) of the Companies and Allied Matters Act, 1990.
The apex court stated therein that there is a presumption of regularity in favour of the parties to the action, and the onus is on the objector to show that there is that lack of authority for the company to commence the suit. Reiterating its position in the earlier case of Sotuminu Vs. Ocean Steamship (Nig) Ltd (1987) 4 NWLR (Pt. 66) 691, the apex court stated that:
A solicitor to a company is competent to institute an action in the name of the company without first being formally authorised to do so by the company, if it appears to him that the company’s interest, property or rights are in immediate jeopardy. If the solicitors authority is challenged, the action will not be struck out by the court if it appears to it that the grievance is one in respect of which the company is competent and would normally institute an action to protect its interest, property or rights. In such circumstance, the court would take steps to ascertain the stand of the company in the matter. It is when it has become evident that the company has dissociated itself from the action of the solicitors, that the suit will be struck out.
In the case at hand, it is not the company per se that is challenging the institution of the action, but rather it’s the Respondent. In fact the Respondent herein is predicating his challenge on the non compliance by the Appellant to section 63(1) (3) and 5 of Companies and Allied Matters Act, which the Appellant as plaintiff is not obligated. A clear appreciation of the Appellant’s statement of claim would show that the grievance the Appellant’s seek to articulate is the grievance of the company against the Respondents. It is my view that the company does not require to comply with the provisions of Section 63(1) (3) and (5) before it can sue for the infringement of its rights. per. HAMMA AKAWU BARKA, J.C.A.
JUSTICES:
JIMI OLUKAYODE BADA Justice of The Court of Appeal of Nigeria
PHILOMENA MBUA EKPE Justice of The Court of Appeal of Nigeria
HAMMA AKAWU BARKA Justice of The Court of Appeal of Nigeria
Between
ABIOTEX INTERNATIONAL LIMITED – Appellant(s)
AND
FIDELITY BANK PLC – Respondent(s)
HAMMA AKAWU BARKA, J.C.A. (Delivering the Leading Judgment):
The instant appeal is against the Ruling of the Delta State High Court sitting at Effurun in Suit No. EHC/13/2013, between Abiotex International Limited vs. Fidelity Bank Plc delivered on the 2nd of December, 2013.
The brief facts generating this appeal are not in contest. The Appellant herein, as plaintiff at the court below on the 10th of April, 2013 took out a writ of summons against the Respondent wherein appellant claimed as follows:
(i) The sum of N500,000,000 (five hundred million naira) being damages in negligence in that sometimes in January, 2012 to date, the defendant without due care operated the claimant’s account number 4010389994 and 5080047748 maintained at the Effurun, Warri branch of the defendant in clear violation and utter disregard for the mandate of its operation.
(ii) An order of this honourable court directing the defendant to furnish the claimant an accurate statement of the said claimant’s accounts for the period of December 2011 to date.
(iii) An order of injunction restraining the defendant, whether by itself, its servants, agents and or privies howsoever from any further operation of the said accounts without complying with the mandate for its operation.
The defendants now Respondents upon being served the statement of claim, filed a motion on notice pursuant to Section 251(I)(N) of the Constitution of the Federal Republic of Nigeria, 1999, as amended, and Order 22 Rule 2 of the Delta State High Court (Civil Procedure) Rules 2009, praying for the order of court striking out the suit as being incompetent, in that it was not initiated in due compliance with due process of law.
The trial court listened to the addresses of the learned counsel on the issue, and on the 2nd of December, 2013 delivered the vexed ruling dismissing the suit.
Aggrieved by the Ruling of the court dismissing the suit filed in limine, Appellant on the 16//12/2013 filed a notice of appeal containing two grounds. The two grounds and their particulars are reproduced hereunder:
(a) The learned trial judge erred in law in ignoring the submission of counsel that the Defendant/Respondent’s preliminary objection was not filed within the time allowed by the Delta State High Court (Civil Procedure) Rules 2009.
PARTICULARS
(i) Order 5 Rule 2(1) of the Delta State High Court (Civil Procedure) Rules, 2009 provides, that any application to set aside for irregularity in any proceedings, any step in any proceedings or any document, judgment or order therein shall not be allowed unless it is made within 14 days from the date of service of the originating process and before the party applying has taken any fresh step after becoming aware of the irregularity.
(ii) The Rules of court must be obeyed.
(iii) The Claimant’s claim was filed on 10th April, 2013 and served on the Defendant on the 15th April, 2013.
(iv) The Defendant filed its preliminary objection against the Claimant’s claim on the 27th June, 2013.
(b) The learned trial judge erred in law when she relied on the affidavit of a non shareholder and director of the Company to hold that the company could only initiate the pending civil suit with a resolution for the Board of Directors.
PARTICULARS
(i) The claimant is a corporate entity with inherent powers to sue and be sued.
(ii) Mrs. Mary Jane Otubu not being a shareholder and/or director of the claimant cannot challenge the competence of Ogbemudia Otubu as secretary of the company.
(iii) The claimant instituted the pending action as a legal entity.
(iv) Ogbemudia Otubu as company secretary is distinct from the claimant.
(v) No counter affidavit was deposed to by Patience Otubu.
It is evident from the records that the records of appeal were compiled and transmitted to this court on the 30/01/14. In tune with the rules of court, appellant filed in his brief of argument dated the 14/2/14 on the same 14/2/16. The Respondent upon being served, filed the Respondent’s brief of argument dated the 11/3/14 on the same date. On the 4/2/16 being the scheduled hearing date, parties adopted their respective briefs.
In the Appellant’s brief settled by Chief Charles Adogah (SAN) two issues were crafted for resolution. The two issues are as follows:
(a) Whether the preliminary objection of the Respondent complied with Order 5 Rule 2 (1) of the Delta State High Court (Civil Procedure) Rules 2009.
(b) Whether the civil action was properly initiated by the Appellant.
On his part, and for the Respondent, Ogaga Ovrawah of learned counsel for the Respondent adopted the issues formulated by the appellants.
On the first issue, the learned senior counsel submits, that by Order 5 Rule 2(1) of the Delta State High Court (Civil Procedure) Rules 2009 which demands that any application to set aside for irregularity in any proceeding or any document, judgment or order shall not be allowed unless made within 14 days from the date of service, was complied by the Respondents in breach.
He states that the Respondent was served with the writ of summons on the 15th April, 2003 and the Respondent did not raise any objection to the suit until the 27th of June, 2013, over two months after service. He submits that by the use of the word shall in the language of the statute within fourteen days, the learned trial Judge had no option but to demand full compliance with the operative word. He further submits on the authority of Erimwingbovo Vs. Amayo (1994) 3 NWLR (Pt. 332) 365 at 373, that any failure to comply with the mandatory word shall is detrimental to the case of the Respondent. It is his further submission that courts are urged to frown at and to sanction non-compliance with the rules of court. On this proposition, learned counsel cited the case of Arabella Vs. NAIC (2008) 162 LRCN 197 at 218 – 219.
On the second issue distilled by him, the learned senior counsel, submitted that without doubt the action was commenced in the name of the Appellant a limited liability company, as shown by the incorporation documents. Responding to the question whether the company can maintain an action against the Respondent in court to seek legal redress against the irregularity, the learned senior counsel referred to Section 299 of the Companies and Allied Matters Act, 1990, and further drew the court’s attention to the decisions of the Supreme Court on the issue, particularly the case of Omisade Vs. Mande (1987) 2 NWLR (Pt. 55) 155 at 170 per Bello CJN, and Erebor Vs. Major (2001) 5 NWLR (Pt. 706) 300 at 308 -309.
Based on the foregoing counsel finally urged the court to allow the appeal and to remit the Appellant’s case to the Delta State High Court for trial before another Judge.
Responding to the first issue canvassed, the learned counsel for the Respondent submits that the Appellant misunderstood the thrust of the preliminary objection at the Lower Court. It is his contention that Order 5, Rule 2(1) only applies to irregularities arising from non-compliance with the rules of the court in the commencement of the action. He argues that the preliminary objection was not anchored on non-compliance with the rules of court, which mostly are procedural irregularities, but rather premised on non-compliance with the provisions of the substantive law, i.e under Companies and Allied Matters Act which impacted on the court’s jurisdiction and must be determined first in time.
Counsel opines that jurisdiction can be raised at any time or even on appeal for the first time. It can be raised by the parties or even suo motu; and there is no time limit in raising same, as it is not time bound. The cases of Madukolu Vs. Nkemdilim (1962) 2 SCNLR 341; Braithwaite Vs. Skye Bank Plc. (2013) 5 NWLR (Pt. 1346) 1 at 18; Nasir Vs. CSC, Kano State (2007) 5 NWLR (Pt. 1190) 253 at 276 were cited in support.
On the second issue raised, whether the civil action was properly initiated by the Appellant, it is the submission of learned counsel that all parties are agreed that the Appellant is a limited liability company with a legal personality of its own, distinct from its members and directors as enunciated in the case of Solomon Vs. Solomon & Co. Ltd (1897) AC 22. He submits, that as an artificial person, a company acts, through its general meeting or Board of Directors or by an authority derived therefrom. He referred to Section 63(1) of the Companies and Allied Matters Act, 1990 to the effect that a company shall act through its members in general meetings or its Board of Directors or through officers or agents appointed by or under authority deprived from members in a general meeting.
Counsel further referred to Section 63(3) of the Companies and Allied Matters Act, and drew the court’s attention to the writ of summons, arguing that where examined, there is no where stated that the Appellant commenced the suit with the requisite authorization of either the board or its members. He also drew the court’s attention to the Lower Court’s holding at page 67 of the records to the effect that Mr. Ogbemudia Otubu is not the secretary of the company or even a shareholder or a director, and further that the counter affidavit failed to show when and how a resolution was made granting the right to sue. Learned counsel contends that where an action is instituted on behalf of a company without the authorization of the company in the form of a resolution, that suit will be incompetent. He anchored his submission on the case of Sotuminu Vs. Ocean Steamship (Nig) Ltd (1987) 4 NWLR (Pt. 66) 691 at 707.
Learned counsel further argued that the suit was instituted by Ogbemudia Otubu who is neither a director nor member of the Appellant. He commended the case of Ladejobi Vs. Odutola Holdings Ltd. (2002) 3 NWLR (Pt. 753) 121 as to the interpretation of Section 63(3) and (5) of Companies and Allied Matters Act, and submits that the suit is incompetent having been instituted in utter disregard of the provisions of the Companies and Allied Matters Act.
He opines that where a statute provides for a particular method of performing a duty regulated by statute, that method and no other must have to be adopted as provided in the case of Commerce Bank Nig. Ltd Vs. A.G Anambra State (1992) 8 NWLR (pt. 261) 528 at 556. It is the view of the learned Respondent’s counsel that since the institution of the suit was not the decision of the members in a general meeting or the board, the action was incompetent.
Conclusively, it is the contention of learned counsel that the appeal ought to be dismissed as same was incompetent.
On the contention whether the suit initiated at the Lower Court was competent, the court below considered the submissions made on the issue and relied on the authority of Heston Nig. Ltd Vs. ACB Plc (2002) 12 NWLR (Pt. 782) 623 and held that the suit was incompetent before it, and therefore struck it out.
I have therefore given the submissions of learned counsel an intimate consideration, having perused the records of appeal, and my humble and respectful view is that the appeal revolves round one narrow issue; i.e whether the action was initiated at the court below in compliance with due process. As indicated earlier in this judgment, the view of the Lower Court was that the action was not so initiated and therefore incompetent. It is common ground that the Appellant Abiotex International Ltd, by its Certificate of Incorporation by the Corporate Affairs Commission exhibited in this case, is a limited liability company. I equally agree that a company duly incorporated has a legal personality distinct from its members as expounded in the age old case of Solomon Vs. Solomon & Co. Ltd (1897) AC 22 which has been incorporated in the Nigeria jurisprudence by virtue of Section 299 of the Companies and Allied Matters Act 1990. It is a settled principle of law that:
In the realm of company/corporate law, the principle of law enunciated in the case of Foss Vs. Harbotte (1843) 2 Hare 461, in relation to locus standi, is that subject to certain exception, the proper plaintiff in an action in respect of a wrong alleged to be done to a company …….. is the company. See Yalaju-Amaye Vs. AREC Ltd (1990) 6 SC 157; Omosade Vs. Mande (1987) 2 NWLR (Pt. 55) 155 at 170; Erebor Vs. Major (2001) 5 NWLR (pt. 706) 300 at 308 – 309; Onwukwusi Vs. R.T.C.M.Z.C (2011) 6 NWLR (Pt. 1243) 341 at 361 – 362. Gombe Vs. PW (Nig) Ltd (1995) 6 NWLR (Pt. 402) 402; Enterprise Bank Ltd Vs. M.N.I (2015) All FWLR (Pt. 773) 1995 at 2027; Nidocco Limited Vs. Mrs I.A. Gbajabiamila (2013) 14 NWLR (Pt. 1374) 350 J & J Techno (Nig) Ltd Vs. Y.H.Q.S Ltd (2015) 8 NWLR (Pt. 1460) 1 at 25 – 26.
The position of the law remains that suits are for the determination of legal rights and obligation in any given situation. Therefore only such natural and juristic persons in whom the rights and obligation can be vested are capable of being proper parties to law suits before courts of law. See Registered Trustees of Airline Operators of Nigeria Vs. Nigeria Airspace Management Agency (2014) 8 NWLR (Pt. 1408) 1; J & J Techno (Nig) Ltd Vs. Y.H.Q.S Ltd (supra) page 23 per Orji-Abadua JCA.
It goes without saying that a party to an action is the person whose name is designated as plaintiff or defendant as the term party refers to that person(s) by or against whom the legal suit is brought. In the instant case, the plaintiff on record is Abiotex International Limited, the company itself, in its registered name and indeed the exact name as registered under the Companies and Allied Matters Act, 1990. See Njemanze Vs. Shell B.P Port Harcourt (1966) 1 SCNLR 9; Elufrioye & Ors. Vs. Halilu & Ors. (1993) NWLR (Pt. 301) 570.
The Respondent in the instant case, just like the learned counsel for the Respondent in the case of Nidocco Ltd Vs. Gbajabiamila (supra), raised the issue of lack of authority through a board resolution to commence the action as stipulated by Section 63(1) (3) & (5) of the Companies and Allied Matters Act, 1990.
The apex court stated therein that there is a presumption of regularity in favour of the parties to the action, and the onus is on the objector to show that there is that lack of authority for the company to commence the suit. Reiterating its position in the earlier case of Sotuminu Vs. Ocean Steamship (Nig) Ltd (1987) 4 NWLR (Pt. 66) 691, the apex court stated that:
A solicitor to a company is competent to institute an action in the name of the company without first being formally authorised to do so by the company, if it appears to him that the company’s interest, property or rights are in immediate jeopardy. If the solicitors authority is challenged, the action will not be struck out by the court if it appears to it that the grievance is one in respect of which the company is competent and would normally institute an action to protect its interest, property or rights. In such circumstance, the court would take steps to ascertain the stand of the company in the matter. It is when it has become evident that the company has dissociated itself from the action of the solicitors, that the suit will be struck out.
In the case at hand, it is not the company per se that is challenging the institution of the action, but rather it’s the Respondent. In fact the Respondent herein is predicating his challenge on the non compliance by the Appellant to section 63(1) (3) and 5 of Companies and Allied Matters Act, which the Appellant as plaintiff is not obligated. A clear appreciation of the Appellant’s statement of claim would show that the grievance the Appellant’s seek to articulate is the grievance of the company against the Respondents. It is my view that the company does not require to comply with the provisions of Section 63(1) (3) and (5) before it can sue for the infringement of its rights.
The Lower Court predicated its decision upon the case of Heston Nig. Ltd Vs. A.C.B Plc (2002) 12 NWLR (Pt. 782) 623. Evidently, the case of Heston Nig. Ltd Vs. A.C.B. (supra) is clearly distinguishable from the case at hand. The apex court therein resolved that no person can institute an action in the name of a company, unless it is so instituted on the authorisation of the company, upon the resolution of the Board of Directors or the resolution of the share-holders. In such a situation and where the capacity of the plaintiff is challenged, the plaintiff, not being the company, but an individual suing on behalf of the company, must comply with the provisions of Section 63(1) (3) and (5) of the Companies and Allied Matters Act aforesaid.
Indeed it is the law that where a statute makes provisions for a particular method of doing things, or the performance of a duty, that method and no other must be adopted, as stipulated in Commerce Bank Nig. Ltd. Vs. A.G. Anambra State (1992) 8 NWLR (Pt. 261) 528 at 556. In the case at hand however, I hold the view, that the action having been initiated by the company itself in its corporate name, does not require the backing of Section 63 of the Act, and all submissions and authorities on the issue are inapplicable.
Without any hesitation therefore I am of the firm view that the action at the Lower Court was competent and the Lower Court was wrong to have held otherwise.
On the other leg of the submission relating to the interpretation of Order 5 Rule 2(1) of the Delta State High Court (Civil Procedure) Rules 2009, which provides:
Any application to set aside for irregularity in any proceedings or any document, judgment or order therein shall not be allowed unless it is made within 14 days of the originating process and before the party applying has taken any step after becoming aware of the irregularity.
It seems clear to me that the proviso given its clear and literal meaning enjoins any application to set aside any proceedings, document or judgment for irregularity must be within 14 days from the doing of the act complained of.
The argument of the learned counsel for the Respondent is to the effect that his application touches upon the competence of the action and by implication the jurisdiction of the court. The fundamental nature of an originating process cannot be over emphasised. This is as argued where the originating process is found to be defective, it affects the jurisdiction of the court rendering any process or proceedings thereon a nullity. This informs the wisdom of entertaining any jurisdictional challenge at the earliest of opportunities. See Ikuepeniyean Vs. The State (2015) 9 NWLR (Pt. 1465) 518 at 552.
Having determined that the action was competent before the court the challenge other than as to jurisdiction cannot be entertained by virtue of Order 5 Rule 2(1) of the Delta State High Court (Civil Procedure) Rules 2009, it being evident that the challenge came clearly over 2 months. I therefore resolve the two issues canvassed in favour of the Appellant.
From all I have said thus far, it is beyond equivocation that the action filed before the Lower Court was competent, the appeal succeeds and ought to and is hereby allowed. I consequently agree with the Appellant that this action be remitted to the Delta State High Court to be determined upon its merit.
The Appellant is entitled to costs which I assess at N50,000 against the Respondent.
JIMI OLUKAYODE BADA, J.C.A.:
I read before now the draft of the lead judgment just delivered by my learned brother HAMMA AKAWU BARKA, JCA and I agree with my Lord’s reasoning and conclusion.
It is also my view that there is merit in the appeal and it is allowed by me.
I abide by the consequential orders made in the said lead judgment.
PHILOMENA MBUA EKPA, J.C.A.:
I had read in advance the draft judgment delivered by my learned brother H. A. BARKA (JCA). I abide by the reasoning and conclusion reached that the action was competent before the court. The challenge other than as to jurisdiction cannot be entertained by virtue of Order 5 Rule 2(1) of the Delta State High Court Civil Procedure Rules 2009.
Consequently therefore the appeal succeeds and is hereby allowed. I too, agree that this action be remitted to the Delta State High Court to be determined on its merit.
I also award cost of N50,000 to the Appellant against the Respondent.
Appearances
James Ogboriefor Esq,. For Appellant
AND
O. Ovrawah Esq., with him, O. Adeshina (Miss) For Respondent
