ASSET RESOURCE MANAGEMENT COMPANY LIMITED v. ELIZADE NIGERIA LIMITED & ANOR (2019)

ASSET RESOURCE MANAGEMENT COMPANY LIMITED v. ELIZADE NIGERIA LIMITED & ANOR

(2019)LCN/12956(CA)

In The Court of Appeal of Nigeria

On Friday, the 29th day of March, 2019

CA/L/885/2016

 

JUSTICES

MOHAMMED LAWAL GARBA Justice of The Court of Appeal of Nigeria

ABIMBOLA OSARUGUE OBASEKI-ADEJUMO Justice of The Court of Appeal of Nigeria

GABRIEL OMONIYI KOLAWOLE Justice of The Court of Appeal of Nigeria

Between

ASSET RESOURCE MANAGEMENT COMPANY LIMITED Appellant(s)

AND

1. ELIZADE NIGERIA LIMITED
2. CHIEF MICHEAL ADE OJO Respondent(s)

MOHAMMED LAWAL GARBA, J.C.A. (Delivering the Leading Judgment): Being dissatisfied with the decision of the Lagos State High Court delivered on the 20th June, 2016 in the Respondents? Suit No. LD/2110/2011 in their favour, the Appellant brought this appeal on seven (7) grounds contained on the Notice of Appeal filed on the 14th July, 2016. In the Appellant?s brief filed on 22nd August, 2016, five (5) issues are said to arise for decision by the Court as follows:-
i. Whether the lower Court was seized of the requisite jurisdiction to entertain the claims of the Respondent having regard to the subject matter of the case.
ii. Whether the learned trial judge was right in her findings that completion of the contract had not yet taken place after having held that all the elements of a valid contract were present in the transaction.
iii. Whether the learned trial judge correctly evaluated the totality of evidence adduced when she found that failure of the Appellant to disclose to the Respondents the encumbrance open the shares, prevented the Respondents from making an informed decision thereby entitling them to a rescission

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of the contract.
iv. Whether the learned trial judge erred in law when she relied on an unsigned document to hold that the Respondents could rescind the contract.
v. Whether the Learned trial judge was right to award interest in favour of the Respondents in addition to their principal claim for the refund of the money paid for the acquisition of the purchased shares.?

As may be observed, although the last issue is numbered (iv), it is the fifth (5th) issue since there are two (2) issues (iii), the later of which should be issue (iv).

The Respondents? brief filed on the 4th December, 2017 adopted the Appellant?s issues for determination in the appeal.

A calm look at the two (2) issues (iii) would show that they bear the same substance of whether the High Court was right to have held that the Respondents were entitled to rescind the contract for the sale of shares between them and the Appellant. I would in that regard, consider arguments on the two (2) issues together.

The Appellant?s Case:
The arguments of the Appellant on issue 1 are that the pleadings of the Respondents show that their claim was

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based on the sale/acquisition of shares of a private company, which on the authority of A.G. Lagos State v. Eko Hotels Limited (2006) 18 NWLR (1011) 378, African Continental Seaways Limited v. Nigeria Dredging Roads & General Works Limited (1977) 5 SC, 235 @ 244 and Section 251(1) (e) of the 1999 Constitution as well as Section 7(c) of the Federal High Court Act, is triable exclusively, by the Federal High Court. Tukur v. Governor of Gongola State (1989) 4 NWLR (117) 517 and OHMB v. Garba (2002) 14 NWLR (788) 538 on the law that it is the plaintiff?s claim that determines jurisdiction of a Court over it and Adetona v. I.G. Enterprises Limited (2011) 7 NWLR (1247) 535 @ 562 and Shitta-Bey v. A.G Federation (1998) 10 NWLR (570) 392 @ 414 on the law that issue of jurisdiction can be raised for the first time in the appeal, were cited and it is contended that the High Court lacks the requisite jurisdiction to adjudicate over the Respondent?s claim which arose from the operation of the Companies and Allied Matters Act (CAMA) since the fact of sale of shares is governed by the provisions of Sections 151-157 of CAMA.

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Paragraphs 4-12, 15-16 and 19 of the Respondents? Statement of Claim were set out and it is maintained that the Federal High Court has exclusive jurisdiction over the claim therein. The Court is urged to resolve the issue in Appellant?s favour.

On issue 2, it is submitted that since the High Court had found that all the essential elements of a valid contract were met by the offer, acceptance and consideration between the parties, it was wrong to say that completion of a binding contract had not taken place on the ground that a draft agreement for the transfer of the shares in question was not signed by the parties. It is argued that once on offer is accepted and consideration passed, then on the authority of among other cases, Yaro v. Arewa Construction Limited (2007) 17 NWLR (1063) 333 @ 377-8, the parties are said to be ad idem and to have entered into a binding contract between them which is enforceable. Reference to the offer for the sale of the shares made by the Appellant to the Respondents which is said to be specific, certain and clear and was accepted by them unconditionally and they paid for them thereby creating a valid contract. It is submitted that the High Court

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erred to hold that the parties were not ad idem on the sale on the ground that the draft share transfer agreement was not signed by the parties since a contract for the sale of the shares could be made orally or in writing. Also, that there was no evidence that the transaction between the parties was provisional or subject to a subsequent formal contract and so it was consummated by the parties when the offer was accepted followed by consideration. African Continental Seaways Limited v. Nigeria Dredging Roads & General Works Limited (supra) and Gadzama v. Rims Merchant Bank Limited (1997) 4 NWLR (498) 234 @ 241 were cited and it is further argued that there is a distinction between the nature of a contract for the sale of shares and the form/mode or procedure for the transfer of the shares to the buyer. According to the learned Senior Counsel who settled the Appellant?s brief, the contract came into existence at the point the Respondents, after negotiations, accepted the Appellant?s offer to sell a specific number of shares at the agreed price and proceeded, to pay for same, thereby acquiring equitable title to the shares and becoming

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beneficial owners thereof, on the authority of the African Continental Seaways Limited v. Nigeria Dredging Road & General Works Limited (supra) and Stevenson v. Wilson (1907) SC 445. That the fact that the procedure for the transfer of the shares was left for a future date or event did not derogate from the fact that an agreement or contract for the sale was already in place. It is the case of the Appellant that the unsigned share purchase agreement is not evidence that could be relied on, as was done by the High Court, to say that the contract was in choate and not consummated or that the parties were not ad idem to the contract for the sale of the shares.
The Court is urged to resolve the issue in Appellant?s favour.
?
On issues 3 and 4 (iii) and (ii), it is submitted that the High Court did not properly evaluate the evidence placed before it properly when it held that the Appellant failed to make full disclosure of a material fact to enable the Respondents to make an informed decision on whether to pay for the shares in question, or not. Furthermore, that Respondents? sole witness, from the evidence before the High Court, was fully

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aware before the transaction that some shares of the Appellant were encumbered to Guaranteed Trust Bank Plc (GTB) as borne out in Exhibits D1, DW2 and DW3 which should be the hanger on which the oral evidence on the point should be assessed. In the alternative, it is contended that the obligation of disclosure in a contract for the sale of shares or securities of a public company set out in Sections 67 and 68 of the Investment and Securities Act, 2007 (ISA) do not apply to the Appellant as a private company. On the authority of Amadi v. Orisakwe (2005) 1 SC (Pt. 1) 40, the Court is urged to interfere with the finding of fact by the High Court based on wrong conclusion drawn from admitted evidence and the case of Omega Bank Nigeria Plc. v. O.B.C. Limited (2005) 8 NWLR (928) 547 on the value of an unsigned document was referred to.

The case of Asaa v. Ojah (2015) LPELR-24278 (CA) on the duty of a Court to evaluate and act on only credible evidence was cited and the Court is urged to resolve the issues in Appellant?s favour.

On issue 5, citing Bendel Feed & Flour Mill Limited v. N.I.M.B. Limited (2000) 5 NWLR (655) 29 @ 35., it is submitted that

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the Respondents did not plead and prove their entitlement to interest or the rate thereof and so the High Court erred to have awarded them interest even though the transaction between the parties was commercial. Abuja Trans National Market v. Abdu (2007) ALLFWLR (376) 657 @ 587-8 and Midas Bank, Plc v. Commerce Progetti Nigeria Limited (2009) LPELR-8263 (CA) were cited on the conditions for the award of pre-judgement interest and it is argued that the award of interest by the High Court was gratuitous, without any factual or legal basis.
The Court is urged to resolve the issue in Appellant?s favour.

In conclusion, the Court is prayed to allow the appeal; hold that the High Court lacks the jurisdiction to adjudicate over the Respondents? claim or set aside the decision by that Court on the ground that it was wrong in law.

Respondents? case:
It is submitted for the Respondents on issue 1 that although an issue of jurisdiction can be raised for the first time on appeal, the Appellant had misconceived the nature of the Respondents? claim before the High Court which was simply for the determination of whether there was

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a valid and binding contract for the sale and purchase of shares between the parties. Paragraph 23(a) ? (c) of the statement of claim was referred to and it is contended that the Respondents, after discussions on the Appellant?s offer for the sale of the shares expressed interest by depositing the price in anticipation of a binding agreement setting out the terms and conditions of the sale to be duly negotiated and executed. That after receiving a draft of the definitive sale agreement for execution, the Respondents discovered new terms which were not within their contemplation and so refused to complete the transaction and demanded for a refund of the sum paid for the shares.
?
According to learned Counsel, the case before the High Court was therefore for it to determine whether the Appellant was entitled to withhold the sum paid since there was a total failure of consideration and not whether there was a valid sale and transfer of shares between the parties to clothe the Federal High Court with exclusive jurisdiction over the claim under Section 251(1) (e) of the Constitution. He said the first stage is to establish the existence of a valid

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contract while the 2nd stage deals with the legal transfer of the shares from the vendor to the purchaser. Relying on FBN, Plc v. Jimiko Farms Limited (1997) 5 NWLR (6030) (sic) 81, it is argued further that the Respondents? cause of action and claim do not in any way, arise from the operation of CAMA, but was on total failure of consideration to purchase shares of a company in respect of which there was no consensus ad idem between the parties for a valid contract to exist on the authority of Lawal v. UBN, Plc (1995) LPELR-1762 (SC).

Then, FBN, Plc v. Ben-Segba Technical Services Limited (2015) LPELR-25737 (CA), Wema Securities & Finance Plc. v. Nigeria Agric Insurance Corporation (2015) LPELR-24833 (SC), among other cases, were cited on when the Federal High Court enjoys exclusive jurisdiction under Section 251 (1)(e) of the Constitution and Ports & Cargo Handling Services Company Limited v. Migfo Nigeria Limited (2012) 18 NWLR (1333) 585 @ 591 on the law that the Federal High Court lacks jurisdiction over matters of simple contract, such as the Respondents? claim before the High Court.

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The facts of the case of Attorney General Lagos State v. Eko Hotels (supra) relied on by the Appellant are said to be different in that it arose from a concluded sale of shares by the execution of the sale agreement by the parties and the issue was whether a Tribunal of inquiry had the power to probe acquisition of shares. The case of African Continental Seaways Limited v. Nigeria Dredging Roads & General Works Limited (supra) also relied on by the Appellant, is said to be irrelevant as it was decided before the 1999 Constitution and no issue of jurisdiction was raised therein. The Court is urged to discountenance the case and resolve the issue in favour of the Respondents.
?
On issue 2, it is contended that the general elements of a contract are to be applied to facts of a case and that the Respondents? case was that there was no unconditional acceptance of the Appellant?s offer until the execution of a share sale and purchase agreement to be prepared by the Appellant, relying on Best Nigeria Limited v. Blackwood Hodge Nigeria Limited (2011) LPELR-776 (SC), Bilante International Limited v. N.D.I.C. (2011) LPELR-781 (SC) and Odutola v. Papersack Nigeria Limited (2006) 18 NWLR

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(1012) 470. In further argument, it is said the mere presence of offer, acceptance and consideration does not form a binding and enforceable contract, simpliciter, reliance was place on Yaro v. Arewa Construction Limited (supra).

The High Court was said to be right in holding that although the elements of a contract existed in the transaction, completion had not taken place as the draft sale agreement was not executed by the parties for varying the terms and conditions negotiated and failure on the part of the Appellant to reveal a material fact which could influence the Respondents? decision on the transaction. That there was evidence that the agreement was subject to the execution of a formal and definitive written contract containing the terms and conditions of the sale.
?
Learned Counsel submitted that the draft agreement was relevant to the transaction between the parties which was prepared by the Appellant and the High Court was right to have accorded evidential value to it and in its evaluation of the totality of the evidence since the burden of proof in civil cases is on the balance of probability or preponderance of evidence.

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The Court is urged to resolve the issue in Respondents? favour.
On issues 3 and 4, it is submitted that the evaluation of evidence adduced at the trial was the primary duty of the High Court and that its findings on facts are not to ordinarily be interfered with by an appellate Court on the authority of Ecodrill Nigeria Limited v. Akwa Ibom Board of Internal Revenue (2014) LPELR-23502 and Okwejiminor v. Gbakeji (2008) LPELR-2537 (SC) pt 28-9. Learned Counsel said that the Appellant did not demonstrate that any situation in or reasons for which an appellate Court could interfere with evaluation of evidence or findings of facts by a trial Court as it failed to show that it disclosed in its offer for the sale of the shares that 64% of them were encumbered since the minutes of the Board Meeting of Moorehouse Company Limited in 2004; Exhibit D1-D3, are of no probative value in proof of a fact in 2008. Further, that the High Court was right to have stated that whether or not the Respondents were supposed to have known of the encumbrance, it was incumbent on the Appellant to reiterate the fact to remind them and reference was made to Neka BBB Manufacturing

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Company Limited v. African Continental Bank Limited (2004) LPELR-1982 (SC). It is said that Sections 67 and 79 of ISA relate to public offer and sale of securities while the case of the Respondents was whether the Appellant?s offer contained full and frank disclose of the terms and conditions of the side.

The draft sale agreement, Exhibit 10A is said to be relevant and admissible in evidence in proof of the fact that the parties intended that the terms and conditions of the sale would be negotiated and signed and so the High Court was right to rely on it. The Court is urged to resolve the issues in favour of the Respondents.

On the last issue 5, it is submitted that the High Court was right to award interest on the money withheld by the Appellant since 2009, occasioning loss to the Respondents. In the alternative, it is submitted that the Respondents has put in evidence/documents to show that Appellant made a misrepresentation on the basis of which the Respondents paid money to it and was deprived of its use to be entitled to interest on the authority of N.G.S. Company Limited v. NPA (1990) 1 NWLR (129) 741 and Diamond Bank Limited v.

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Partnership Investment Company Limited (2009) LPELR-939 (SC), among other cases. Then Berliet Nigeria Limited v. Kachalla (1995) LPELR-775 (SC) was cited in support of the award of post judgement interest provided for in Order 35, Rule 4 of the High Court?s Rules, 2012 and the Court is urged to resolve the issue in Respondent?s favour and hold that they are entitled to the award of interest.

In conclusion, the Court is prayed to dismiss the appeal and affirm the judgement by the High Court.

In the Appellant?s Reply brief, further arguments on issue 1 were made with more judicial authorities to support argument that the Respondents? claim falls within the exclusive jurisdiction of the Federal High Court. In fact, the Reply brief contains substantively further arguments on all the issues canvassed in the Appellant?s brief in the guise of reacting to every point made in the Respondents? brief which was in response to the Appellant?s argument in the Appellant?s brief. As a reminder, under the provisions of Order 19, Rule 5(1) of the Court of Appeal Rules, 2016, an Appellant?s Reply brief ?which

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shall deal with all new points arising from the Respondent?s brief? may be filed after service of the Respondent?s brief. The purpose, I dare say the only one, for which a Reply brief may be filed by an Appellant in relation to a Respondent?s brief in an appeal, is to answer or respond to new points raised or arising from the said Respondent?s brief and nothing else. For a Reply brief to be necessary, the new points raised or arising from the Respondent?s brief must be of such a nature in law, that an answer is required and necessary in order to give the Appellant an opportunity to address the point/s. An Appellant?s Reply brief is not for and cannot be used to react or respond to every point/s made in the Respondent?s brief in answer to the arguments on the points contained in the Appellants brief or to be used for further arguments in support of points or issues already canvassed in the Appellants brief, as was done in the Appellant?s Reply in this appeal. See Oshoboja v. Amida (2009) 18 NWLR (1172) 18, Mini Lodge Limited v. Ngei (2009) 18 NWLR (1173) 254, Longe v. FBN, Plc (2010) 6 NWLR (1189) (2010)

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203, 61, Cameroon Airlines v. Otutuizu (2011) 4 NWLR 512, Agwasim v. Ejivumerwerhaye (2001) 9 NWLR (718) 395. On the authority of these cases and Basinco Motors Limited v. Woemann Line (2009) 13 NWLR (1157) 149, the Appellant?s Reply brief is liable to be discountenanced.

Resolution:-
In the lead of Onnoghen, JSC in the case of Attorney General, Lagos State v. Eko Hotels Limited (supra) which dealt, primarily, with the powers of a Tribunal of inquiry set up by the Lagos State Government to require into the sale of shares of the State Government he had stated, inter alia that:-
?When one looks at the provisions of the Companies and Allied Matters Act particularly Sections 151 to 157 thereof which deals with and makes provisions for transfer and transmissions of shares of company and how much such transfers can be entered in the register of transfer, it becomes very clear that Legal Notice No. 10 of 1999 deals with matters ?arising from the operation? of the Companies and Allied Matters Act and as such only the Federal High Court has exclusive jurisdiction to entertain the suit. The sections of the Act referred to supra

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provide for what is to be done for a transfer of shares of a company to be effective ?notwithstanding in the Articles of a company.? I hold the view that one of the ways a transfer of shares of a company can be affected is by sale and since the Tribunal of Inquuiry was constituted to investigate among others the sale of shares it fails within the operation of the Companies and Allied Matters Act, contrary to the submission of learned counsel for the appellant.? (Underlined supplied).
The discernable principle of law stated by the learned law Lord in the above statement is that it is the CAMA, in Sections 151-157, that deal with and provide for ?transfer and transmission of shares of company and how such transfers can be entered in the register of transfer. That: –
?I hold the view that one of the ways a transfer of shares of a company can be affected is by sale and that the sale of shares falls within the operation of the CAMA.?
?
Now, the established principle of law, as restated by learned counsel for the parties, is that in order to determine the question or issue of the jurisdiction of a court to

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entertain and adjudicate over a case, it is the plaintiff?s/claimant?s claims, as set out on the writ and in the statement of claim that should be looked at and closely considered. Put another way, it is the claim of a plaintiff as set out on writ and in the statement of claim that determines whether a Court possesses the requisite judicial power and authority or jurisdiction to adjudicate over the case. ABIEC v. Kanu (2013) 13 NWLR (1370) 69, Wambai v. Donatus (2014) 14 NWLR (1427) 223, John Shoy International Limited v. F.H.A. (2016) 14 NWLR (1533) 427, in addition to the authorities cited by the learned Counsel for the parties on the principle.

In the case before the High Court, it is the nature of the claim as disclosed by the facts set out in the Respondent?s Statement of Claim that would reveal and so determine whether the case arose out of a purely simple contract transaction between the parties or a transaction involving the sale and transfer of shares by a company registered under CAMA and which is regulated and governed by the provisions of the Act.

?The Respondents? claims as indorsed on the writ of summons and set

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out at paragraph 23 of the Statement of Claim, both dated 19th November, 2011 are as follows: –
?(a) A DECLARATION that there is no validly concluded contract between the Claimants and the Defendant in respect of the acquisition of 55,850,008 shares of the Company, the subject matter of this suit.
(b) A DECLARATION that there is total failure of consideration for the N712,087,602.00 (Seven Hundred and Twelve Million, Eighty Seven Thousand, Six Hundred and Two Naira) paid by the Claimants to the Defendant, and that the Defendant is unjustly enriched by same.
(c) AN ORDER compelling the Defendant to refund to the Claimants the sum of N712,087,602.00 (Seven Hundred and Twelve Million, Eighty Seven Thousand, Six Hundred and Two Naira).
(d) INTEREST on the sum stated in (c) above that the rate of 21% per annum from April 2011 until judgment is given in this suit and thereafter at the rate of 10% per annum until final liquidation of the judgement sum.?

These claims were premised on the facts averred in paragraphs 4 to 12 of the statement of claim, which, in brief, are to the effect that the Appellant, by offer letters dated 27th

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March, 2008 and 27th May, 2008, offered to sell some of its shares to the Respondents who, on the understanding that formal agreement was to be executed for the transaction later and in order to secure the transaction, paid for the shares offered at the negotiated prices. That no agreement was executed for the transaction and so by a letter dated 15th May, 2009, the Respondents expressed their intention to discontinue the transaction and demanded for a refund of the money paid for the shares.

Undoubtedly, by the facts giving rise the claims by the Respondents as set out in the aforenamed paragraphs of the pleadings, the transaction between the parties was one which directly involved the sale and purchase of the shares of a company; the Appellant a limited liability company incorporated under CAMA as stated in paragraph 3 of the statement of claim.

This position is a affirmed by the learned SAN for the Respondents at paragraph 4.3(a) on page 4 of the Respondents? brief where he stated that:
?(a) The Respondents? cause of action and claims was for the lower Court to determine whether there was a valid and binding contract of sale

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and purchase of shares between the Appellant and Respondents. We respectfully refer your lordships to paragraphs 4 through to 23(a)-(e) of the Statement of Claim on pages 3 to 9 of the Record of Appeal.?

Now, the sale and purchase of shares of a company incorporated under CAMA, whether it is a public or private company under Sections 24 or 22, respectively, or a limited or unlimited liability under Section 21 of CAMA, is provided for under Section 125 of CAMA. The section provides that: –
?Without prejudice to the provisions of Sections 566 to 574 of this Act, the following provisions shall apply in respect of an application for an allotment of issued shares of a company-
(a) In the case of a private company or a public company where the issue of shares is not public, there shall be submitted to company a written application signed by the person wishing to purchase shares and indicating the number of shares required.
(b) In the case of a public company, subject to any condition imposed by the Securities and Exchange Commission where the issue of shares is public, there shall be returned to the company a form of application as

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prescribed in the company?s articles, duly completed and signed by the person wishing to purchase shares.
(c) Upon the receipt of an application, a company shall, where it wholly or partially accepts the application, make an allotment to the applicant and within forty-two days after the allotment notify the applicant of the fact of allotment and the number of shares allotted to him,
(d) An applicant under this section shall have the right at any time before allotment, to withdraw his application by written notice to the company.?
It is clear from these provisions, that any transaction, or negotiation, agreement or contract for the sale and purchase of shares of a company incorporated under CAMA, would be one which involves and arises from the operations of the company, governed and regulated by the CAMA.
A transaction for the sale and purchase of shares of a company incorporated under CAMA is not the same and must not be confused with the ordinarily transaction by a company in the course of its business or conduct of its routine affairs which would not involve the operation of the company. Such ordinary transaction by a company

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which may involve agreement, negotiations or contract between the company and other parties for the provisions of services or sale and purchase of goods by or for the company, would be governed and regulated by the general and ordinary law of commercial contracts, which is not specifically provided for by CAMA.
This class of transactions or agreements are what the Courts have held to be ordinary or simple contracts that do not involve the operation of a company and over which the Federal High Court does not have exclusive jurisdiction to adjudicate over. That is the position espoused and enunciated in the case of FBN, Plc v. Ben-Segba Technical Services Limited (supra) cited in the Respondents? brief and several other decisions of both the Court and the apex Court which include John Shoy International Limited v. F.H.A. (2016) 14 NWLR (1533) 427, Babington-Ashaye v. F.M.A.G. Enterprise Nigeria Limited (2011) 10 NWLR (1256) 479, P&C.H.S. Company Limited v. Migfo Nigeria Limited (2012) 18 NWLR (1333) 555, Nigeria Unity Line, Plc v. Usman (2014) 6 NWLR (1404) 546.
Where as in the claims of the Respondents, a dispute arises from a transaction,

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negotiation or contract for the sale and purchase of shares of a company incorporated under CAMA, it transcends a dispute arising from ordinary or simple contract or transaction over which a state High Court is vested with the requisite jurisdiction to adjudicate over, to be one which arises from the operation of the CAMA over which the Federal High Court possesses the exclusive jurisdiction to adjudicate by virtue of the provisions of Section 251(1)(e) of the Constitution.
The learned SAN for the Respondents has argued that the case of Attorney General, Lagos State v. Eko Hotels Limited (supra) and African Continental Seaways Limited v. Nigeria Dredging Roads & General Works Limited (supra) are not applicable on the ground that there was a concluded contract and transfer of shares in the former and that the latter case was decided before the 1999 Constitution and that no issue of jurisdiction was dealt with in the case.
However, the principle of law established in the two (2) cases is that a contract for the sale and purchase of shares of a company incorporated under the CAMA and Companies Act, 1968, respectively, is/was regulated and governed

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by the Acts such that it was the Federal High Court and not the State High Court that is vested with and possesses the jurisdiction to adjudicate over any dispute arising therefrom between the parties.
In the lead judgement of Onnoghen, JSC in the case of Attorney General, Lagos State v. Eko Hotels Limited, he had stated, as set out earlier at page 429 of the Report that:-
?I hold the view that one of the ways a transfer of shares of a company can be effected is by sale …?
The High Court had stated in its judgement, at page 400 of the Record of Appeal that: –
?I find that there was indeed an initial agreement between the parties for the acquisition of 55,850,008 shares of the Company subject matter of that suit.?
There is no appeal against this finding and so the dispute giving rise to the claims by the Respondents against the Appellant arose from the agreement between them for the sale and purchase of shares of a company registered or incorporated under CAMA. In my view, the principle stated in the case of Attorney General, Lagos State v. Eko Hotels Limited and African Continental Seaways Limited v.

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Nigeria Dredging Roads and General Works Limitedis applicable to the case of the Respondents and thereby deprive the State High Court of the requisite jurisdiction to adjudicate over it. Perhaps, I should point out that an agreement for the sale and purchase of shares of a company is the transaction and contract which gives rise to the transfer of the shares from the seller to the purchaser by the procedure provided for in the provisions of Section 151 of CAMA. Without an agreement or contract entered into by the parties for the sale and purchase of shares, there could not be the question of transfer of the shares in question from the offeror to the offeree and so the sale and purchase of shares leading to the transfer are both regulated by CAMA. STB, Plc v. Olusola (2008) 1 NWLR (1069) 561, Inyang v. Ebong (2002) 21 WLR (757) 284, Gadzama v. Rims Merchant Bank Limited (1997) 4 NWLR (498) 234.
In the above premises, I resolve the issue 1 in favour of the Appellant and find that the Federal High Court possesses the exclusive jurisdiction to adjudicate over the claims of the Respondents arising from an agreement for the sale, purchase and transfer of

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shares of the Appellant; a company incorporated under CAMA. Consequently, the Lower Court lacked the requisite jurisdiction to entertain and adjudicate, over the claims.

The want of jurisdiction on the part of the Lower Court, ordinarily, would have the contiguous effect of depriving this Court with the necessary jurisdiction to adjudicate over the appeal, as an appellate Court. In the case of Ehuwa v. Ondo State I.E.C. (2006) 11-12 SC, 102 (2006) 10 NWLR (1012) 544, it was stated that:-
? — It is settled law that an appellate Court cannot exercise jurisdiction in a matter once the lower Court or the Court below is without jurisdiction. An appellate Court can only exercise its appellate jurisdiction to correct the errors of the lower Court or Court below. Thus or consequently, once an appellate Court has decided that the lower Court or Court below had no jurisdiction, it has no appellate jurisdiction of its own to exercise.?
The case of Akinbobola v. Plisson Fisko Nigeria Limited (1991) 1 NWLR (167) 270 @ 285, (1991) 1 SCNJ 129 was referred to by the apex Court for the position.

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However, in the later decisions by the apex Court such as D.P. & C. Limited v. BP & C. Limited (2008) 11 MJSC, 183, F & F. Farms Nigeria Limited v. NNPC (2009) 12 NWLR (1155) 387, Ovunwo v. Woko (2011) 6 MJSC (Pt. III) 83, Iwunze v. FRN (2015) ALL FWLR (788) 844 @ 852, this Court is required to consider and make pronouncement on other issues in an appeal even where it finds that a Lower Court lacks jurisdiction to adjudicate over a case from which the appeal emanated.
In addition, in the very recent decisions of the final Court in Ikpeazu v. Otti (2016) 8 NWLR (1513) 38, Dasuki v. FRN (2018) 10 NWLR (1627) 320 @ 343, Osareren v FRN (2018) 10 NWLR (1627) 221 @ 234, PDP v. INEC (2018) 12 NWLR (1634) 533 @ 556, it was stated and re-stated that this Court must consider all issues raised and formulated by the parties in an appeal and that failure to do so would result in the breach of the right to fair hearing.
In the light of the authoritative exhortation which imposes a binding obligation, and in order to avoid the very grievous judicial consequence of the breach of the right to fair hearing in the appeal, I would dutifully proceed to consider the other issues raised by the parties in the appeal.

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In respect of issue 2, I would restate the law that for a valid and binding contract to come into being between parties in any transaction, the following essential and material elements must be shown to co-exist: –
(a) An offer from one party;
(b) An unqualified acceptance of the offer by the other party;
(c) There must be consideration for the offer;
(d) The parties must have the legal capacity to enter into a valid and binding contract and,
(e) There must be the intention by the parties to create a valid and binding legal relationship between themselves.
All these elements are autonomous and equal in the sense that each and every one of them put together must be present in order for a valid and binding contract to come into existence. See Orient Bank Nigeria Limited v. Bilante International Limited (1997) 8 NWLR (515) 37, B.F.I.G. v. B.P.E. (2008) ALLFWLR (416) 1915, Metibaiye v. Narelli International Limited (2009) 16 NWLR (1167) 326, Abba v. SPDCN (2013) 11 NWLR (1364) 86, S.I.H. Limited v. NITEL Trustees Limited (2015) 16 NWLR (1486) 454, Inua v. FRN, Plc (2016) 2 NWLR (1495) 89, Akinyemi v. Odu’a Investment Company Limited (2012) 17 NWLR (1329) 209.

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The law is also known that parties can make their contract either orally or in writing as long as all the essential elements can be ascertained and shown to exist. The law does not require or insist that an agreement or contract between parties should or shall be in any particular form or according to any particular formality and so it is sufficient that an agreement or contract was factually entered into by the parties in any definite form. Omega Bank Nigeria Plc v. O.B.C. Limited (2005) 16 NWLR (928) 483, J.E. Oshevire Limited v. Tripoli Motors (1997) 5 NWLR (503) 1, Trade Bank Plc. v. Dele Morenikeji Nigeria Limited (2005) 6 NWLR (921) 309.

After a consideration of the offer, acceptance, consideration and correspondence between the parties in this appeal, the Lower Court stated in its judgement at page 391 of the Record of Appeal that: –
?We can see clearly from the above there was an offer (Exhibit C1) There was Acceptance of the after vide the cheques issued and letters written (Exhibits C2, C3, C5, C6 and C7). There was consideration (Exhibits C2, C3 and C5). There appeared to be an

31

intention to create a legal relationship between the parties. There also appeared to be capacity to contract.?
Then, at page 392 of the Record of Appeal, it concluded that:-
?There is no doubt to my mind that as at the time the Claimants paid for the shares; there was an agreement between the parties. As stated earlier there was an offer. Acceptance of that offer evidenced by the payment in full for the shares, there was consideration. There appeared to be an intention to create a legal relationship between the parties and capacity to contract. Execution of share transfer forms would have been consummation and formalization of the contract between the parties.?

?I have read the offer made by the Appellant to the Respondents for the sale of the shares in question and the unqualified acceptance by each of the Respondents to purchase the shares at the agreed negotiated prices and in the terms and conditions set out in the offers. I have also noted the separate payments made by the Respondents to the Appellant for the shares offered and unconditionally accepted by each of them and agree completely with the Lower Court that all

32

the essential elements listed above for the existence of a valid and binding agreement and contract have been shown to exist and established in the transaction between the parties. I also say, like the Lower Court that ?There is no doubt in my mind that as at the time the claimants paid for the shares, these was an agreement between the parties.? A contract, is simply put, a mutual and legally binding agreement entered into or reached between two (2) or more parties by which rights are acquired by one party in return for acts or forebearance on the part of other party. It is a bilateral affair which is based on free and voluntary consensus or meeting of the minds or consensus ad idem, in latin, by and between the parties on the terms and conditions they choose. See: Orient Bank Nigeria Plc v. Bilante International Limited (supra), S.G.B.N. Limited v. Safa Steel & Chemical Manufacturing Limited (1998) 5 NWLR (548), 168, Unity Bank, Plc v. Owei (2011) 5 NWLR (1240) 273. In Bilante International Limited v. NDIC (2011) 15 NWLR (1270) 407, Fabiyi, JCA stated that:-
?An offer is the expression by a party of readiness to contract on the

33

terms specified by him which if accepted by the offers gives rise to a binding contract.
The offer matures to contract where the offeree signifies a clear and unequivocal intention to accept the offer. See Okugbule & Anor. V. Oyagbola & Ors (1990) 4 NWLR (Pt. 147) 723. It should be reiterated that in order to establish that parties have formed a contract, there must be evidence of consensus ad idem between them.?

Now, since there was in fact an agreement or contract between the parties for the sale and purchase of the shares in question, the question that arises is whether one of the parties, here the Respondents, could rescind or back out of the binding agreement or contract entered into and demand for refund of the consideration paid for the shares. In the case of Star Finance & Property Limited v. NDIC (2012) 10 NWLR (1309) 522, it was held that: –
?The law is settled that a party who has paid money to another person for a consideration that has totally failed under a contract is entitled to claim the money back from the other party.?
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In Dantata v. Mohammed (2000) 5 SC, 1 @ 11 it was held that:-
?A complete failure of consideration in a contract occurs where one of the contracting parties fails to receive the benefits. Where there is a claim, of total failure of consideration, the innocent party is entitled to restitution.?
See also Haido v. Usman (2004) 3 NWLR (859) 65, citing Okupe v. Laja (1961) ALL NLR 75; Agbachi v. Azubuike (2010) LPELR-3646(CA).
The claims by the Respondents before the Lower Court for the refund of the sums paid for the shares were based on total failure of consideration on the ground that by the draft Shares Sale and Purchase Agreement, they discovered that more than half of the shares involved in the transaction, were encumbered by a pledge to the Guarantee Trust Bank, Plc (GTB), an information that was not disclosed to them in the offers for the sale and before they paid the prices.

The first offer for the sale of the shares made by the Appellant to the 2nd vide the letter dated the 27th March 2008; which was admitted in evidence at the trial as Exhibits C1 and D4, was in the following: –
?Chief Michael Ade Ojo
Elizade Nigeria Limited
322A Ikorodu Road
Lagos.

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27 March, 2008
Dear Sir,
OFFER FOR SALE
We wish to offer for sale a portion of our interest in The Moorhouse Company Limited. Consequently, we are now offering for sale 37,997,920 units of The Moorhouse Company Limited ordinary shares at a price of ?18.50 to you either in your personal capacity or on behalf of Classic Motors Ltd. We are making this offer to you in line with the stipulations of the subsisting Memorandum and Article of Association of the company, which mandates that a right of first refusal be given to existing shareholders.
As you are aware, The Moorhouse Company Limited has been a profitable undertaking for all stakeholders and the future prospects remain very bright. We trust that our fellow shareholders would consider the shares to be an attractive investment opportunity at the current offer price which has been made in consideration of the existing cordial business relationship between our good selves.
Expressions of interest may be in part or for the whole bloc of shares offered for sale. Kindly confirm interest in these shares on or before close of work on, Friday, April 4, 2008. Please note that a similar offer

36

has been made to Moorhouse Properties Limited and that some of the shares on offer are held on behalf of our clients who we owe a fiduciary duty to see?s the best pricing.
You may contact either of the undersigned for additional information or clarification in this regard.
Yours faithfully.?

The 2nd Respondents responded to the offers by a letter dated 27th April, 2008 which, I also invite to speak for itself. Here it is:-
?7th April, 2008
The Managing Director,
ARM Investment Managers,
1, Mekunwen Road,
Off Oyinkan Abayomi Drive,
Ikoyi, Lagos.
Attention: Mr. Emeka Emenike
Dear Mr. Emenike,
RE: OFFER FOR SALE
Your letter of 23rd April, 2008 in respect of the offer for sale of the Moorhouse Company Limited shares refers.
We accept to take up all the 55,850,008 units of shares offered us but at a price of N10.00 per share which we believe is a fair value for the shares. We are prepared to pay for this immediately if acceptable to you and your client.
?Kindly get back to us as soon as possible on this transaction can be concluded.
?Yours sincerely.?

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Thereafter the parties met over the transaction, negotiated and agreed and reached a consensus on the terms and conditions for the purchase of the shares in question, there is record of copies of two (2) Bank cheques both dated 26th May, 2008 paid by the Respondents in favour of the Appellant for the shares offered, at the negotiated prices and acknowledged by the Appellant vide the letter dated 7th July, 2008. By the Respondents? paragraph 9 of the statement claim, the Appellant also offered to sell additional shares to the 2nd Respondent vide the letter dated 27th May, 2008, which were paid for, like in the first offer, by the cheque forwarded in the letter dated 5th July, 2008 from the 2nd Respondent, without any expressed acceptance by way of a letter. I note that the payments for the shares by the Respondents were made after negotiations of the terms and conditions of the initial offer made by the Appellant and there was no indication, howsoever, that during the negotiations between the parties that their agreement and consensus ad idem on the sale and purchase of the shares was to be subject to any condition except for the

38

unqualified acceptance of the negotiated offers and payment for the shares by the Respondents, as agreed during the negotiations. With the negotiations completed and the payments made by the Respondents as mutually, freely and voluntarily agreed by the parties, a valid and legally binding contract in law, with all the essential elements present, was concluded and brought into existence by the parties. In support of this position and performance of the contract, the letter dated 7th July, 2008 was written to the 2nd Respondent by the Appellant to ?confirm the specific apportionment of the shares to Classic Motors and/or your good self to enable us advise the company secretary appropriately with regard to the shares transfer?. This letter shows that the transaction between the parties by way of the agreement or contract for the sale and purchase of shares was indeed a done deal and what remained was only the transfer of the shares to the Respondent, in the manner or way to be specified by the 2nd Respondent. The 2nd Respondent did not respond to the letter dated 7th July 2008, but wrote the letter dated 15th May, 2009 to say that he was not in a

39

position to execute the sale and purchase agreement sent to him, primarily as stated earlier, on the ground that more than half of the shares were encumbered, unknown to him.
?
However, the case put forward by the Appellant in paragraphs 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 29 and 31 of the Further Amended Statement of Defence dated 14th April, 2015 and the Statements on Oath dated 4th March, 2013 and 25th May 2015, which was not effectively controverted by the facts deposed to in paragraphs 6, 7 and 17 of the Respondents? Reply to the Statement of Defence dated 15th March, 2012, was that the 2nd Respondent to who the offers were made, who unconditionally accepted the offers and paid for the shares, was at all material times to the transaction, aware that some of the shares of the Appellant were pledged to GTB for a loan to the Moore House company Ltd (TMC), approved by the Board which was chaired by the 2nd Respondent. Minutes of the meetings of the Board of the TMC, chaired by the 2nd Respondent, at which the issue of the pledge of the Appellant?s shares, along with others, was discussed and agreed, were put in evidence to which the

40

Respondents had no answer. In fact, the Respondents did not deny the facts in paragraphs 7, 8, 9 and 10 of the Appellant?s pleadings in their Reply to the Statement of Defence or the contents of the minutes of the Board Meetings of TMC presided over by the 2nd Respondent which show that he in fact encouraged all shareholders; including the Appellant, to pledge their shares for the loan from GTB and indeed was aware that the shares of the Appellant were among those pledged to GTB. This position was recognized and accepted by the Lower Court in its judgement, but stated, citing the draft sale and purchased agreement, that:-
?The Defendant, thus argues, that the Claimants knew or ought to have known that some of the shares were pledged to GTB and therefore could not rely on this ground to rescind from the contract, which the Defendant believes had been concluded.
Whether or not the Claimants are supposed to have known, to my mind, it was incumbent upon the Defendant to reiterate that fact, state it clearly to remind them at the earliest possible opportunity that 64% of the share had been pledged to GTB. It seems a bit below the belt for it

41

to come out 6 months after the first purchase price was paid that about 64% of the shares being sold were pledged to GTB, which means that those shares were not available for the immediate use of the Purchaser. There is nothing in the extract of all the minutes above showing exactly how many shares each shareholder pledged. All we know is that the total shares to be pledged by all shareholders were to represent 51% of the voting rights of the shareholders. What percentage was taken from each shareholder?s shares is not disclosed on the face of any of the minutes. To that extent, Exhibits D1-D3 do not help the position of the Defendant and I so hold.?

It would appear, with respect to the Lower Court, it was making up excuses for the lack of knowledge of the undenied fact that the 2nd Respondent, as Chairman of TMC was not only aware, but also actively encouraged all shareholders of TMC to pledge their shares in the company to GTB for the loan in question and that the Appellant pledged its shares, along with other shareholders, including the 2nd Respondent. If the loan from the GTB was paid back and the shares of TMC pledged for it were released

42

from the pledge, the 2nd Respondent as Chairman of TMC, who presided over the Board Meetings at which both the loan and the pledge were discussed and approved, should and must know at the time the offers were made to him by the Appellant for the sale of its shares in TMC. He, as the offeree, had the duty to study the offers carefully and make diligent inquiries from TMC over which he presided, about the state of the shares offered for sale to him by the offeror, before he unconditionally accepted the offers and proceeded not only to negotiate them, but paid fully for the shares offered at the negotiated prices. The Appellant did not owe any legal obligation or duty as a shareholder of TMC who was among the shareholders whose shares were pledged by the company to GTB to the knowledge and on the approval of the 2nd Respondent as Chairman, to tell the 2nd Respondent of the pledge of some of its shares.
?
It was therefore an error on the part of the Lower Court to have held that there was nondisclosure of vital information by the Appellant to the 2nd Respondent in the offers made to him or that the 2nd Respondent accepted the offers conditionally on the basis

43

of such nondisclosure. From the conduct and action of the 2nd Respondent from the time he received the offers, his initial response to them, the negotiations and agreements thereat as well as the full payments made for the shares offered, no doubt exists or should exists, that prima facie, the acceptance by him was totally unconditional and absolutely unqualified, aware of the pledge of some of the Appellant?s shares to GTB, like shares of other shareholders of TMC. If the 2nd Respondent needed further information about the shares offered to him by the appellant, business and commercial diligence should have required him to have sought and asked for it at the negotiations or before he fully paid for them. Whatever statement was made in the offers by the Appellant to the 2nd Respondent on the position of TMC, was known or at least presumed to be so, to the 2nd Respondent as a shareholder and Chairman of the Company Board which ran its affairs.
?
In addition, the 2nd Respondent who rejected the draft sale and purchase agreement cannot be heard to rely on it or any term or condition set out there in order to rescind the concluded agreement or contract

44

transaction between him and the Appellant and ask for refund of the money paid on ground of total failure of consideration. The 2nd Respondent must remember that it was he who was responsible for the non transfer of the shares he purchased and paid for in the transaction with the Appellant. There was no failure of consideration arising or traceable to the Appellant who, up to the stage and time the 2nd Respondent asked for refund of the money paid for the shares, had expressed readiness to transfer the shares to the 2nd Respondent in performance of the agreement and contract entered into by the parties.

In the result, the Lower Court, once more, was wrong in law to have found that there was non-disclose of critical information by the Appellant to the Respondents in the transaction which led to the conclusion of the agreement or contract between them for the sale and purchase of the shares in question for the 2nd Respondent to rescind the contract and ask for a refund of the money paid.
The issue is resolved in favour of the Appellant.
?
The Issue 3 of the Appellant has been effectually decided above under Issue 2 with the finding that the

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Appellant owed no legal obligation or duty to tell the 2nd Respondent of the pledge of some of its shares in TMC to GTB, who as a shareholder and Chairman of TMC, who as a shareholder and Chairman of TMC, was aware of the pledge at the time of the offers made to him.

Apparently, the finding by the Lower Court on non-disclose of vital information by the Appellant to the 2nd Respondent resulted from the improper appraisal of the peculiar admitted and established facts as well as assessment or evaluation of the unchallenged evidence placed before it. Where a trial Court, whose primary duty it is to properly and fully appraise the facts and evaluate the material evidence placed before it by the parties in a case due to its vintage position as a first instance Court which physically sees and hears witnesses give evidence, fails to utilize the opportunity by its failure to do so, the appellate Court would not only be entitled to but, has a duty to interfere with the evaluation and findings by that Court. Ojokolobo v. Alamu (1998) 9 NWLR (565) 226; Sha v. Kwan (2000) 5 SC, 178; Adebayo v. Adusei (2004) 4 NWLR (862) 44; Fagbenro v. Arobadi (2006) 7 NWLR (978) 174.

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I have shown how the Lower Court erred in its evaluation of the evidence under Issue 2 and so find that the Lower Court did not properly evaluate the material evidence before it.

Issue 4 is also one which I have treated under Issue 2 and would restate that the parties had already concluded a valid and binding contract and what remained to be done at the time the draft share sale and purchase agreement was prepared, was formalization of the transfer of the shares sold and purchased in the transaction between the parties. The terms and conditions contained in the offers for the sale and the acceptance thereof by the 2nd Respondent, were unconditionally and unqualifiedly negotiated and mutually agreed to by the parties and the contract effectively concluded with the fully payments for the shares by the 2nd Respondent. Consequently, the draft agreement was to enable the formal transfer of the shares to be effected from the Appellant to the Respondents and not to re-open negotiations on the concluded transaction and contract.
?
In addition, the draft agreement was a mere proposal for the transfer formality, which was to be finalized and signed by

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the parties. It remained a draft and unsigned and so irrelevant in the determination of existence of a valid and binding contract for the sale and purchase of shares between the parties or of non-disclosure of vital information by the Appellant to justify the recession of the contract by the 2nd Respondent. The fact that the unsigned draft agreement was admitted in evidence does not automatically mean that it deserves probative value in the determination of the case before the Lower Court. As a reminder, the weight to be ascribed to any piece of evidence; parole or documentary, is determined by recognized factors which include: –
(a) admissibility in law,
(b) relevance,
(c) credibility,
(d) probability and
(e) conclusiveness.
See Mogaji v. Odofin (1978) 4 SC, 91, (1978) NSCC, 275; Onwuka v. Ediala (1989) 1 NWLR (96) 182; Akad Ind. Ltd. v. Olubode (2004) 4 NWLR (862) 1; Nwokidu v. Okanu (2010) 3 NWLR (1181) 368.
The law remains that admissibility and the weight to be ascribed to any piece of evidence are two (2) different things such that the fact that a document is admitted in evidence does not entitled it to ascription of

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probative value in the cause of evaluation on the ground that it was admitted.Nwafor Pharm. Chem. & Gen. Ent. Ltd v. Roche Nig. Ltd. (2006) ALL FWLR (322) 1542; Nwokidu v. Okanu (supra)    ACN v. Lamido (2012) 1-2 MJSC, 156. The draft agreement for above reasons could not be used as a basis for any finding by the Lower Court on the bindingness of the contract entered into by the parties or the right of the Respondents to renege from, opt out or rescind the contract with the Appellant.
I resolve the issue in Appellant?s favour.

Issue 5 of the Appellant on the interest awarded by the Lower Court on the sums claimed by the Respondents has been over taken by the resolution of the Issues 2 and 3 above in favour of the Appellant, which has the legal consequence that the Lower Court was wrong in law to have entered judgement in favour of the Respondents on the claims they made against the Appellant and so the interest awarded thereon, was also wrong in law. It is resolved in favour of the Appellant accordingly.
?
In the final result, I would allow the appeal on the merit, set aside the judgement by the Lower Court and dismiss the

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Respondents? claims.

However, based on my initial finding on Issue 1, the Respondents claims are struck out on the ground that the Lower Court lacked the requisite jurisdiction to adjudicate over them having arisen from the sale and purchase of shares of a company incorporated under Companies and Allied Matters Act, a transaction regulated and governed by the provisions of the Act.

There shall be costs assessed at One Million Naira (?1,000,000.00) awarded in favour of the Appellant to be paid by the Respondents for the prosecution of the Appeal.

ABIMBOLA OSARUGUE OBASEKI-ADEJUMO, J.C.A.: I have had the advantage of reading in draft the judgment delivered by my learned brother, MOHAMMED LAWAL GARBA, JCA in this appeal.

I agree that the appeal is meritorious and it is accordingly allowed. I have nothing more to add.
I also abide by the order as to costs.

GABRIEL OMONIYI KOLAWOLE, J.C.A.: I had the privilege to read the draft of the leading judgment just delivered by my learned brother, MOHAMMED LAWAL GARBA, JCA.
?I agree that the appeal should be allowed, and I also agree with the order as to costs.

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Appearances:

Victor OgudeFor Appellant(s)

Dr. Wale Olawoyin, SAN with him, O. Kehinde and J. EyitayoFor Respondent(s)

 

Appearances

Victor OgudeFor Appellant

 

AND

Dr. Wale Olawoyin, SAN with him, O. Kehinde and J. EyitayoFor Respondent

 

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