ATLANTIC DAWN LIMITED & ORS v. G-NET COMMUNICATION
(2019)LCN/13263(CA)
In The Court of Appeal of Nigeria
On Thursday, the 16th day of May, 2019
CA/A/722/2016
RATIO
COMPANY LAW: A COMPANY UPON REGISTRATION BECOMES A LEGAL PERSON
It is trite that a company upon registration, becomes a legal person distinct and separate from its members. This principle has been emphasised in the case of SALOMON V. SALOMON (SUPRA). See also TSOKWA OIL &MKT V. U.T.C (NIG) PLC (2002) 12 NWLR (PT. 782) 468; S.T.B PLC V. OLUSOLA (2008) 1 NWLR (PT 1069) 561.PER ABUBAKAR DATTI YAHAYA, J.C.A.
COMPANY LAW: SECTION 37 OF THE COMPANIES AND ALLIED MATTERS ACT
The Companies and Allied Matters Act has also given effect to the same principle in Section 37.
Section 37 provides:
As from the date of incorporation mentioned in the certificate of incorporation, the subscriber of the memorandum together with such other persons as may; from time to time, become members of the company, shall be a body corporate by the name contained in the memorandum, capable forthwith of exercising all the powers and functions of an incorporated company including the power to hold land, and having perpetual succession and a common seal, but with such liability on the part of the members to contribute to the assets of the company in the event of its being wound up as is mentioned in the Act.PER ABUBAKAR DATTI YAHAYA, J.C.A.
COMPANY LAW: AN INCORPORATED COMPANY IS DIFFERENT FROM ITS HUMAN AGENTS
It therefore follows that an incorporated company is an entirely different and distinct entity from its managing director or human agents who act for it. See AFRIBANK (NIG) LTD V. M. ENT (2008) 12 NWLR (PT 1098) 223; OKATTA V. REGISTERED TRUSTEES, O.S.C (2008) 13 NWLR (PT 1105) 632.PER ABUBAKAR DATTI YAHAYA, J.C.A.
COMPANY LAW: THE DOCTRINE OF LIFTING THE VEIL
Although the separate legal entity of a company is sacrosanct, there are occasions when the law will allow lifting the veil of corporate entity and these occasions are set out under CAMA. Section 290 of CAMA provides:
290. Where a company-
(a) receives money by way of loan for a specific purpose; or
(b) receives money or other property by way of an advanced payment for the execution of a contract or project; and
(c) with intent to defraud, fails to apply the money or other property for the purpose for which it was received, every director or other officer of the company who is in default shall be personally liable to the party for whom the money or property was received for a refund of the money or property so received and not applied for the purpose for which it was received. Provided that nothing in this section shall affect the liability of the company itself.
See also C. B LTD V. INTERCITY BANK PLC (2009) 15 NWLR(PT 1165) 445.PER ABUBAKAR DATTI YAHAYA, J.C.A.
COMPANY LAW: DOCTRINE OF LIFTING THE VEIL: INSTANCES OF FRAUD
From the above, one occasion where the Courts will look under the cloak of corporate identity is when the founders are perpetrating fraud. The consequence of recognising the separate legal personality of a company is to draw a veil of incorporation over the company. However, since a statute will not be allowed to be used as an excuse to justify illegality or fraud, it is a quest to avoid the normal consequences of the statute which may result in grave injustice that the Court, as occasion demands, have to look behind or pierce the veil of incorporation.- ALADE V. ALIC (NIG) LTD (2010) 19 NWLR (PT 1226); FDB FINANCIAL SERVICES V. ADESOLA (2000) 8 NWLR (PT 668) 170; ADEYEMI V. LAN & BAKER (NIG) LTD. (2000) 7 NWLR (PT 663) 33; MEZU V. C.& C. B. (NIG) PLC (2013) 3 NWLR (PT 1340) 188.PER ABUBAKAR DATTI YAHAYA, J.C.A.
COMPANY LAW: WHETHER THE COMPANY WILL BE LIABLE FOR A CONTRACT ENTERED INTO BY A DIRECTOR ON ITS BEHALF
It follows therefore that if a director of a company entered into a contract on behalf of the company or purporting to bind the company as in this case, it is the company, the principal, which is liable on it, and not the director. – OKOLO V. U.B.N LTD (2004) 3 NWLR (PT 859) 87; YESUFU V. KUPPER INTERNATIONAL N.V. (1996) 5 NWLR (PT 446) 17; SALOMON V. SALOMON (SUPRA).PER ABUBAKAR DATTI YAHAYA, J.C.A.
JUSTICES
ABUBAKAR DATTI YAHAYA Justice of The Court of Appeal of Nigeria
ADAMU JAURO Justice of The Court of Appeal of Nigeria
STEPHEN JONAH ADAH Justice of The Court of Appeal of Nigeria
Between
1. ATLANTIC DAWN LTD
a.k.a Winasbet
2. YEMI ADEGITE
3. EYITAYO AYOKU Appellant(s)
AND
G-NET COMMUNICATION Respondent(s)
ABUBAKAR DATTI YAHAYA, J.C.A. (Delivering the Leading Judgment): This appeal arose from the judgement of the High Court of the Federal Capital Territory Abuja; delivered on the 7th day of October, 2016 in suit No: FCT/HC/CV/1803/16.
The respondent herein was the plaintiff at the trial Court. The appellants herein were the 1st, 2nd and 3rd defendants at the trial Court.
The case of the respondent as plaintiff is that it (the plaintiff) is a company that provided Internet services and facilities to the 1st defendant (now 1st appellant) company having entered into a contract in October 2011. Business was running smoothly until October 2014 when payments to the plaintiff stopped. Upon complaint by the plaintiff, he was assured that payments will resume which made the plaintiff continue rendering services till the end of August 2015. At this point, the defendant had not paid from November, 2014 to August, 2015.
A detailed invoice reflecting services and facilities rendered over a period of nine(9) months totalling the sum of N31, 145, 924,.60 (Thirty One Million, One Hundred and Forty Five Thousand, Nine Hundred and Twenty Four
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Naira, Sixty Kobo) was sent to the 2nd defendant (now 2nd appellant) out of which N500, 000 (Five Hundred Thousand Naira Only) was paid to the plaintiff’s account leaving the sum of N30, 645, 924.60 (Thirty Million, Six Hundred and Forty Five Thousand Nine Hundred and Twenty Four Naira, Sixty Kobo) outstanding.
When the appellants failed to pay the outstanding debt owed, the respondent instituted an action under the Undefended List claiming:
1. An order of the Court against the defendants jointly and severally to pay the sum of N30, 645, 924.60 (Thirty Million, Six Hundred and Forty Five Thousand Nine Hundred and Twenty Four Naira, Sixty Kobo) being unpaid debt of Internet subscription for the period of nine months from (November, 2014 to August, 2015).
2. An order to pay 20 percent interest from the date of judgement till liquidation.
3. An order to pay 5, 000, 000 (Five Million Naira only) as cost of the suit.
The appellants were served the originating processes by means of substituted service as ordered by the Court. The appellants did not appear in Court and also failed to file a Notice of Intention to Defend.
After the trial,
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the Court entered judgement in favour of the respondent and granted the 1st relief sought by the respondent. The 2nd relief was granted but was reduced to 10 percent interest from the date of judgment till liquidation and the 3rd claim did not succeed. Hence this appeal.
The appellants also filed a motion for stay of execution of the judgement on the 16th December, 2017. The motion for stay was granted on the 6th of April, 2017 on the condition that the Judgement Debtors deposit with the Court, the entire judgement debt and all accruing sums thereof in custody of the Chief Registrar of the FCT High Court; which sum is to be placed in an interest yielding account pending the determination of this appeal.
In the appellants’ brief settled by Mr. Udoka Oguekwe, filed on the 26th January, 2017, the following three issues were distilled:
1. Whether the trial judge erred in law in assuming jurisdiction to hear this matter wherein the plaintiff is not a legal person.
2. Whether the trial judge erred in law by assuming jurisdiction in this matter where the 1st defendant (now 1st Appellant) was not served with the originating process.
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3. Whether the learned trial judge erred in law in granting prayer 1 in the plaintiff’s writs/originating summons when he stated that “suffice to say that the 1st and 2nd claims of the plaintiff succeeds save the 3rd claim for cost. Judgement is accordingly entered in favour of the plaintiff.”
The respondent filed a brief of argument on the 20th of July, 2017. The brief was settled by Mr. Adekunle Oladapo Otitoju wherein he distilled one issue for determination viz:
1. Whether the appellants have been able to prove from evidence available to this Court and via their brief of argument that they do not know the respondent or/ not indebted to the respondent at all to warrant the Court of appeal to set aside the judgement of the lower Court.
The respondent has filed a Notice of Preliminary Objection to the hearing of the appeal on the 6th of July, 2017 and argued same at pages 1 – 3 of his brief.
The grounds of the Preliminary Objection of the respondent contending the appeal is incompetent are:
1. That the notice of appeal filed by the appellants contained 3 grounds of appeal;
2. That the appellants formulated 3 issues for determination
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in their brief of argument;
3. That the appellants failed to tie the three issues raised in their brief of argument to any of the grounds of appeal raised in the appeal;
4. Issues 1 and 2 contained in the brief of argument did not emanate from the lower Court;
5. Issues 1, 2 and 3 formulated by the appellant are incompetent and liable to be struck out;
6. Grounds 1, 2 and 3 did not arise from the judgement of the lower Court and there was no leave obtained by the appellant to argue these grounds of appeal;
7. The appellants have not formulated any issues from the 3 grounds of the appeal hence it is deemed abandoned;
I shall treat the Preliminary Objection first.
The patent issues raised in the Preliminary Objection filed by the respondent are two viz:
1. That the grounds of appeal did not emanate from the judgment of the lower Court and the appellant did not seek the leave of this honourable Court to argue these grounds.
2. Whether or not issues 1, 2, and 3 of the appellant’s brief of argument emanated from the grounds of appeal.
I shall take them seriatim.
1. That the grounds of appeal did not emanate from
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the judgement of the lower Court and the appellant did not seek the leave of this honourable Court to argue these grounds.
This covers grounds one and six of the Preliminary Objection. Learned counsel to the respondent submitted that the grounds of appeal in the notice of appeal contained 3 grounds of appeal which did not emanate from the judgement of the lower Court as there was no argument at the lower Court in respect of whether or not the Court should assume jurisdiction of the matter and there was no argument before the lower Court that the plaintiff is not a legal person.
Counsel to the respondent submitted that an appeal is by way of rehearing the matter and by Order 7 Rule 2(1) and (2) Court of Appeal Rules the appellant has fallen short of this provision. Counsel cited the case of ANADI V. OKOLI (1977) SC 57 AND AKINLOYE V. ADELAKUN (2000) 5 NWLR (PT. 657) 530 where it was held that a valid notice of appeal is a sine qua non to the competence of an appeal. Counsel further argued that where a notice of appeal suffers from any defect, the appeal itself becomes defective.
Learned counsel stated that Order 7 Rule 2 of the Court of Appeal Rules
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states that where a ground of appeal alleges misdirection or error in the particulars, the nature of the misdirection or error shall be clearly stated. And that the grounds of appeal as filed by the appellants did not state any error or misdirection that is evidenced from the judgment for this honourable Court to adjudicate upon. He added that where the notice of appeal is defective, the appeal itself becomes defective and subject to be struck out as incompetent. – BILAM DAMBAM V. ARDO LELE (2000) 11 NWLR (PT 678) 413.
Counsel urged this Court to strike out the notice of appeal for failing to seek the requisite leave to argue grounds 1, 2, and 3 which are fresh issues as they never arose from the lower Court and must fail.
On his part, learned counsel to the appellants submitted that the grounds of appeal raised in the appellants’ notice of appeal are complaints touching substantially on substantive and procedural laws and the issues for determination arise from the said grounds of appeal in the notice of appeal. Counsel to the appellants went on to state that ground one of the notice of appeal clearly emanates from the decision of the lower
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Court wherein they claim that the trial judge erred in law for granting the prayers of the plaintiff/respondent. While grounds 2 and 3 are predominantly jurisdictional issues which can be raised at any time; and that when the issue of jurisdiction is raised, the challenge touches on the competence and legality of the trial Court to try the case.
Grounds of appeal are supposed to represent an appellant’s complaint of a decision he is not satisfied with and which he has a grouse against and wants an appellate Court to correct and remedy. For an appeal to be valid, the grounds of appeal set forth must be in compliance with Order 6 Rule 2 (1) of the Court of Appeal Rules. It provides:
2. (1) All appeals shall be by way of rehearing and shall be brought by notice (hereinafter called “the notice of appeal”) to be filed in the registry of the Court below which shall set forth the grounds of appeal, stating whether the whole or part only of the decision of the Court below is complained of (in the latter case specifying such part) and shall state also the exact nature of the relief sought and the names and addresses of all parties directly affected by the
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appeal, which shall be accompanied by a sufficient number of copies for service on all such parties; and it shall also have endorsed on it an address for service.
Failure to comply with the above will render the notice of appeal incompetent. See AFRIBANK (NIG) PLC V. EDDY MOTORS LTD (2002) 13 NWLR (PT. 785) 639.
I have taken a closer look at the decision of the lower Court, the grounds of appeal and their particulars. Ground one in the notice of appeal at page 41 of the record reads:
Ground One:
Error of Law
The learned trial judge erred in law in granting prayer 1 in the plaintiff’s writ/originating summons when he stated that “suffice to say that the 1st and 2nd claims of the plaintiffs succeeds save the 3rd claim for cost. Judgement is therefore accordingly entered in favour of the plaintiff.”
From the above, it is clear to me and I am satisfied that ground one arose from the decision of the lower Court. Here, the appellants are complaining on the decision reached by the trial judge. It relates to the granting of the prayers or reliefs sought by the plaintiff at the trial Court.
Grounds two and three of the
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notice of appeal at pages 42 and 43 of the record raise jurisdictional issues which do not require the leave of Court to be raised. Indeed in a plethora of cases, the issue of jurisdiction is said to be one that can be raised at any part of the proceedings, even at the Supreme Court for the first time. This is so, as the issue of jurisdiction is one that goes to the foundation of any matter, the absence of which will render the most eloquent of decisions a nullity. The question of jurisdiction of Court is a radical and crucial question of competence because if a Court has no jurisdiction to hear and determine a case, the proceedings are and remain a nullity because a defect in competence cannot be remedied.-
DAPIANLONG V. DARIYE (2007) 8 NWLR (PT 1036) 332; UMANAH V. ATTAH (2006) 17 NWLR (PT. 1009) 503.
See also the cases of NDIC V. OKEM ENTERPRISES LTD (2004) 10 NWLR (PT. 880) 107; U.B.A PLC V. B.T.L. IND. LTD (2007) ALL FWLR (PT. 352) 1615.
An appellant is allowed to raise the question of jurisdiction on appeal without the leave of Court, whereas ordinarily, a fresh issue can only be raised on appeal with the leave of Court sought and obtained.
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Otherwise, the issue will be incompetent and liable to be struck out. In other words, the appellant does not require leave to raise the issue of jurisdiction, as it can be raised at any stage of the proceedings in any manner.
OSHATOBA V. OLUJITAN (2000) 5 NWLR (PT. 655) 159; A.G. OYO STATE V. FAIRLAKES HOTEL LTD (1988) 5 NWLR (PT. 92) 1; F.G.N. V. ZEBRA ENERGY LTD (2002) 3 NWLR (PT. 754) 471
The issue of jurisdiction being radically fundamental to adjudication under the Nigerian legal system must be properly raised before the Court can entertain the point. Where the question involves a substantial point of law, substantive or procedural and it is apparent that it will not be necessary to open up further evidence which would affect the decision, the Court has a duty to allow the question to be raised and point taken as to prevent an obvious miscarriage of justice.-AGBITI V. NIGERIAN NAVY (2011) 4 NWLR (PT. 1236) 190.
As such, where an appellant in his issues for determination raised questions of jurisdiction, they are unequivocally questions of law and an appellant can raise such issues afresh in this Court. Such questions are not only deemed
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competent, but in the interest of justice, this Court will entertain the questions.
Having stated that the issue of jurisdiction can be raised without leave and the grounds of appeal have arisen from the judgment of the lower Court, grounds 1 and 6 of the Preliminary Objection are hereby struck out.
2. Whether or not issues 1, 2, and 3 of the appellant’s brief of argument emanated from the grounds of appeal.
This covers grounds 2, 3, 4, 5, and 7 of the Preliminary Objection. Counsel to the respondent submitted that issue 1, 2 and 3 contained in the brief of argument did not emanate from the judgement of the lower Court. There were no arguments on these issues which would have required the findings of the lower Court for this Court to see whether there was indeed an error in law or facts on any of the grounds filed by the appellants. Counsel to the respondent urged us to strike out this appeal for being incompetent.
Counsel to the respondent argued further that the appellants raised three issues for determination and failed to tie those issues to any of the grounds of appeal. Counsel went on to state that it is not the duty of the Court to
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tie the issues formulated to the grounds of appeal as this Court cannot embark on a voyage of discovery to determine the grounds each of the issues emanated from.
Counsel urged us to strike out all issues raised for not having a foundation upon which they are brought. Counsel referred to the case of NGIGE V. OBI (2006) 14 NWLR (PT 999) 1 AT 165.
Counsel to the respondent submitted that since no issue was formulated from the three incompetent grounds of appeal, all grounds should therefore be deemed abandoned and struck out. Counsel urged this Court to sustain the Preliminary Objection and strike out the entire appeal.
In response, counsel to the appellants submitted that the issues for determination in the appellants’ brief of argument were all gleaned from the grounds of appeal. Counsel to the appellants further argued that grounds 2 and 3 of the notice of appeal borders on the jurisdiction or competence of the trial Court to entertain the suit as the plaintiff/respondent is not a juristic person, lacking the requisite locus standi to bring an action and the trial judge erred when he found the plaintiff/respondent to be a company. This counsel
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argued robbed the Court of the jurisdiction to entertain the suit and the issue of jurisdiction is one that can be raised at any stage of proceedings, even for the first time on appeal. Counsel cited the cases of MANAGEMENT ENTERPRISES LTD. V. OTUSANYA (1987) 2 NWLR 179 and INEC ANAMBRA STATE & ANOR V. IFEANYICHUKWU OKONKWO (2008) LPELR – 4315(CA) in buttressing that when the issue of jurisdiction arises the leave of Court is not required to raise it.
Counsel to the appellants urged this Court to discountenance the prayers of the respondent in this Preliminary Objection in the interest of justice and uphold this appeal.
The crux of the issues found in grounds 2, 3, 4, 5 and 7 of the Preliminary Objection is whether or not issues 1, 2, and 3 of the appellant’s brief of argument emanated from the grounds of appeal. Whereas, grounds of appeal must relate to and challenge the validity of the decision appealed against, the issues for determination in the appeal must arise from the said grounds of appeal. For issues formulated to result in setting aside the judgement appealed, they must be based on grounds of
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appeal that attack the ratio decidendi in the judgement on appeal. – ADELEKAN V. ECU-LINE NV (2006) 12 NWLR (PT.993) 33. Where the issues do not arise from the grounds of appeal, they will be deemed defective. However, this will not lead to the appeal being struck out. The defective issues alone will be struck out.
The appellants in this case have formulated three issues for determination. They are:
1. Whether the trial judge erred in law in assuming jurisdiction to hear this matter wherein the plaintiff is not a legal person.
2. Whether the trial judge erred in law by assuming jurisdiction in this matter where the 1st defendant (now 1st Appellant) was not served with the originating process.
3. Whether the learned trial judge erred in law in granting prayer 1 in the plaintiff’s writs/originating summons when he stated that “suffice to say that the 1st and 2nd claims of the plaintiff succeeds save the 3rd claim for cost. Judgement is accordingly entered in favour of the plaintiff.”
The three issues reproduced above have all arisen from the grounds of appeal raised by the appellant. Issue one and two above are clearly jurisdictional
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issues. Jurisdictional issues are a question of law; one which I have said earlier can be raised at any time, even at the Supreme Court for the first time without the need to seek leave to do so. The issue of jurisdiction can thus be raised with or without the leave of Court. – COMPANGNIE GENERALE DE GEOPHYSIQUE (CGG) NIG. LTD V. MOSES AMINU (2015) 7 NWLR (PT 1459) 577.
I agree with counsel to the appellants that the issues stem from the grounds of appeal as formulated by the appellant. In fact the issues are almost, if not identical to the grounds of appeal.
Counsel has also argued that the appellants failed to tie the issues distilled in the brief of argument to the grounds of appeal as raised in the notice of appeal. Although it is desirable to tie issues for determination to the grounds, it is not compulsory. This defect is not one that would affect the competence/substance of the appeal, nor its outcome. The ultimate consideration of the Court is to do substantial justice and not focus on technicalities. The fact that a brief is poorly written will not discharge the Court from its duty of doing substantial justice
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WEMA BANK LTD. V. INTERNATIONAL FISHING CO LTD (1998) 6 NWLR (PT. 555) 557; AKPAN V. STATE (1992)6 NWLR (PT. 248) 439.
Ground 2, 3, 4, 5, and 7 of the preliminary objection have no merit and are hereby discountenanced.
The result is that this Preliminary Objection has failed and is unsustainable. This appeal shall therefore be considered on the merit.
I shall utilise the issues raised by the appellants in resolving this appeal.
ISSUE ONE
1. Whether the trial judge erred in law in assuming jurisdiction to hear this matter wherein the plaintiff is not a legal person.
Counsel to the appellant submitted that it is trite that only legal persons possess legal rights and privileges; and have the right to sue and be sued. Relying on the case of IYKE MED MERCHANDISE V. PFIZER INC. (2001) 10 NWLR (PT 722) 540 and Order 10 Rule 10 of the FCT Abuja High Court (Civil Procedure) Rules 2004 counsel added that the rule also applies to any person carrying on business in a name or style as if it were firm’s name. However, such a person can only be sued in that name but he cannot sue in his trade name.
Counsel to the
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appellants argued that the plaintiff/respondent is not an artificial person registered under paragraph A of the Companies and Allied Matters Act and sued under the name ‘G net Communication’ which does not show corporate personality of the plaintiff/respondent. Counsel relied on Order 10 Rule 27 of the High Court of FCT Abuja (Civil Procedure) Rules 2004 in stating that the plaintiff/respondent cannot sue in its business name but can only be sued in its business name.
Counsel to the appellants while urging us to resolve this issue in their favour concluded by stating that the lower Court was wrong to have found the plaintiff/respondent to be a company and as such lacked the jurisdiction to entertain the matter since the plaintiff is not a legal person.
In response, counsel to the respondent argued that there was no such argument before the lower Court as to whether or not the respondent was a legal entity or has legal personality to give the lower Court an opportunity to make a finding on whether the plaintiff/respondent was a juristic person or not. Counsel further submitted that the respondent is a legal personality
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incorporated under the Companies and Allied Matters Act and has the capacity to sue and be sued.
Counsel to the respondent referred us to paragraph 2 of the affidavit in support of the writ of summons deposed to, where it was stated that the company is registered under the Companies and Allied Matters Act, 1990. Counsel to the respondent also noted that there is no affidavit sworn to by the appellants before this honourable Court, to disprove this averment by the respondent, and since counsel cannot testify from the bar, evidence unchallenged is deemed admitted. The Court was therefore bound to act on such unchallenged evidence.- NAL BANK PLC V. AFRI MPEX ENTERPRISES LTD (2007) ALL FWLR (PT 389) 767. Counsel added that the lack of evidence to the contrary cannot be substituted by address of counsel. He referred to the cases of NIGER CONSTRUCTION LTD V. OKUGBENI (1987) 4 NWLR (PT. 67) 787; AKONO V. THE NIGERIAN ARMY (2000) 5 NWLR (PT 687) 318 AND OBASUYI V. BUSINESS VENTURES LTD (2000)5 NWLR (PT. 658) 668.
By virtue of Section 37 of the Companies and Allied Matters Act (CAMA), it is only when an entity is registered or incorporated,
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that it becomes a body corporate by the name contained in the memorandum, capable of exercising all the powers and functions of an incorporated company, which can amongst other things, have the power to sue and be sued. Where the legal personality of an incorporated body is called into question, and issue joined thereon, the certificate of incorporation should be produced as it is only by that certificate that its legal personality can be proved in such circumstances.- A.C.B. PLC V. EMOS TRADE LTD (2002) 8 NWLR (PT. 770) 517; TRUSTEES, P.A.W INC. V. TRUSTEES, A.A.C.C. (2002) 15 NWLR (PT 790) 446; JUKOK INTL LTD V. DIAMOND BANK PLC (2016) 6 NWLR (PT.1507) 55; EKWEOZOR V. REG. TRUSTESS, S.A.C.N. (2014) 16 NWLRR (PT. 1434) 433
The Companies and Allied Matters Act has made provision for circumstances where the legal personality of a company is challenged and what should be done to prove such legal personality. This is covered by Section 36(6) of Companies and Allied Matters Act (CAMA).
Section 36(6) of CAMA provides:<br< p=””
</br<
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“The certificate of incorporation is prima facie evidence that all the requirements of this Act in respect of registration and of matters precedent and incidental to it have been complied with and that the association is a company authorised to be registered and duly registered under this Act.”
The duty to prove that the company is registered falls on the challenged party to prove that it is indeed an incorporated entity. See NNPC V. LUTIN (2006) LPELR-2024 (SC); REPTICO S.A GENEVA V. AFRIBANK (NIG) PLC (2013) 14 NWLR (PT. 1373) 209.
There was no argument on the issue of the respondent not being a legal person capable of suing or being sued at the lower Court. This is more so, as the appellants failed to file a notice of intention to defend, and to defend the action in any manner. This would have afforded the appellants the opportunity to challenge the legal personality of the respondent that it lacks the requisite legal personality to sustain an action. Unfortunately, this was not done.
The only evidence before this Court as regards the legal personality of the respondent is at paragraph 2 of the affidavit in support of the writ of summons
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deposed to by one Chika Sylvester Gabriel at page 2 of the records. The appellant could not even rely on Order 4 Rule 2 of the Court of Appeal Rules 2016, to adduce further evidence since he could have filed an affidavit at the trial Court, to challenge the juristic personality of the respondent.
Order 4 Rule 2 of the Court of Appeal Rules 2016 provides:
“The Court shall have power to receive further evidence on questions of fact, either by oral examination in Court, by affidavit, or by deposition taken before an examiner or commissioner as the Court may direct, but, in the case of an appeal from a judgment after trial or hearing of any cause or matter on the merits, no such further evidence (other than evidence as to matters which have occurred after the date of the trial or hearing) shall be admitted except on special grounds.”
Generally, this Court will not allow an appellant to improve or reshape his case by bringing forth further evidence which he could have reasonably produced at the trial except on special grounds.- OKPANUM V. S.G.E (NIG) LTD (1998) 7 NWLR (PT. 559) 537; ODELEYE V. ORELUSI(1991) 7 NWLR (PT. 202) 247<br< p=””.
</br<
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It is my opinion that the issue of jurisdiction is sacrosanct and the juristic personality or lack thereof, robbing the Court of its jurisdiction, falls within the contemplation of special grounds in the Rules. And in this case, the evidence if adduced may have an important effect on the case.
From the above, it is clear that in challenge of the incorporation of the respondent, the appellants should have applied to this Court to produce further evidence. They have not done so. We cannot grant a prayer he has not sought for.
A non-juristic person cannot sue or be sued.- F.B.N V. SHOBU (NIG) LTD (2014) 4 NWLR (PT 1396) 45; SLB CONSORTIUM LTD V. NNPC (2011) 9 NWLR (PT 1252) 317.
There was no challenge whatsoever at the trial Court, by way of an affidavit that G-Net Communication is not a juristic person. In fact, the contrary is the fact before this Court i.e. there is an affidavit which has not been countered, that this is not a juristic person. There is also no proper challenge of its juristic nature in this Court as the address of counsel cannot take the place of evidence. It is only when there is a proper challenge, a counter
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affidavit, that the respondent would have been put on notice, for it to produce its certificate of incorporation in line with Section 36(6) of the Companies and Allied Matters Act. Without that challenge, the trial Court was well within its bounds to give effect to the affidavit of the respondent that it is a juristic personality.
From the finding of the trial Court, the appellants enjoyed the service rendered by the respondent, but yet failed to honour their obligation by paying for the services. At what stage did they realise that the respondent is not a juristic personality? They refused to defend the suit when it was instituted and only waited by subterfuge, to avoid meeting their obligation and engage in a ‘fencing game’. Litigation is not a fencing game and any litigant who comes to the Court with soiled and smeared hands, would not find solace in equity. In the absence of any tangible and appropriate challenge at the trial Court, and in this Court, we find the issue to be very wooly and an attempt to circumvent the judgement of the trial Court. It cannot stand.
?
It is my view therefore, the learned trial judge was right to have held that the
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respondent is a company with juristic personality in the absence of any challenge to the incorporation of the respondent at the lower Court.
The issue is therefore resolved against the appellants.
ISSUE TWO
WHETHER THE TRIAL JUDGE ERRED IN LAW BY ASSUMING JURISDICTION IN THIS MATTER WHERE THE 1ST DEFENDANT (NOW 1ST APPELLANT) WAS NOT SERVED WITH THE ORIGINATING PROCESS
Learned counsel to the appellant submitted that the rule of natural justice ensures that equal opportunity and protection is afforded the competing interests and rights of the parties in a suit. And as such, a party commencing a suit has an obligation to ensure that all processes filed by him in the suit, gets to the attention of the defendant by proper service. The failure of which is enough to rob the Court of jurisdiction to hear and determine the matter and thereby renders null and void all proceedings taken without service. – UWAH PRINTERS (NIG) LTD V. EMMANUEL UMOREN (2000) 15 NWLR (PT. 689) 78.
Counsel to the appellants submitted that the appellants were served with the originating processes by means of substituted service as ordered by the lower Court on the
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16th of June, 2016 at the Golden Gate Hotel, plot 1994 Mombasa Street, Wuse Zone 5, Abuja. Counsel relying on Section 78 of the Companies and Allied Matters Act CAP C20 LFN 2004, argued that it is trite that a company limited by liability cannot be served by substituted means. He also relied on Order 11 Rule 8 of the High Court of the Federal Capital Territory Abuja (Civil Procedure) Rules 2004 and the case of N.B.C. PLC V. UBANI (2014) NWLR (PT. 1398) 421 where the Court interpreted Section 78 of CAMA by holding:
“The confirmation is the use of the word ‘giving’ which signifies personal service…”
Counsel argued that in the instant case, the 1st appellant, a company with limited liability cannot be served by substituted service in whatever guise. Thus, the lower Court was wrong to have ordered that the defendants (appellants) be served by substituted means. He added that non service is a fundamental ground for the issue of jurisdiction to be raised at any time in legal proceedings.
Learned counsel to the appellants concluded that the Court lacked the jurisdiction to entertain the matter since the appellants
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were not served properly and urged us to resolve this issue in their favour.
On his part, counsel to the respondent submitted that the appellants were duly served with the originating processes, including hearing notice. That proof of this can be found in the record of appeal at pages 16 and 33B respectively. Counsel argued that before the order of substituted service on the appellants, the bailiff had visited the company to serve the appellants but service was evaded by the appellants. This necessitated the ex parte application for substituted service on the 2nd and 3rd appellant to make the pasting on the door as leaving it at the corporate office of the 1st appellant.
Counsel to the respondent argued further that the Companies and Allied Matters Act provides that service on a company shall be in a manner provided by the rules of various Courts. He further submitted that Order 11 Rule 8 of the High Court of the Federal Capital Territory Abuja (Civil Procedure) Rules 2004 provides the means by which companies are to be served.
Counsel further submitted that the directors in this case were also sued jointly and severally as such, the order of
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substituted service of processes on the directors are good service on them as well as the 1st appellant company, by leaving it at the door of the company by pasting it. Counsel cited the cases of NBC V. UBANI (2014) 4 NWLR (PT 1398) 421 in buttressing the point that leaving processes at the office is good service. Counsel added that the respondent as plaintiff at the lower Court complied with the requirements of the Rules of Court and the case of MARK V. EKE (2004) 5 NWLR (PT 856) 54. He urged us to dismiss the argument of the appellants and this appeal.
Service of mandatory process is fundamental to the jurisdiction of the Court. When there is a specific provision that a party is to be served in a particular manner, that has to be observed otherwise, the jurisdiction of the Court against that party would not have been invoked. – WEMA BANK PLC V. BRASTEM-STERR (NIG) LTD (2011) 6 NWLR (PT. 1242) 67. The essence of service of process is to put a party on notice. Section 85 of the Sheriffs and Civil Processes Act, CAP 470 LFN, 1990 stipulates that service shall be in accordance with the directive of the Court. In the instant case, the trial Court
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directed that substituted service be effected on the appellants.
The mode of service on a limited company is different from service of process on a natural person. The Companies and Allied Matters Act by Section 78, makes provision on how to serve documents generally on any company registered under it.
Section 78 provides:
A Court process shall be served on a company in the manner provided by the Rules of Court and any other document may be served on a company by leaving it at, or sending it by post to, the registered office or head office of the company.
By this, the company is served in the manner provided by the rules of Court. In this case, such processes can only be served under the relevant rules of Court, i.e Order 11 Rule 8 of the High Court of Federal Capital Territory, Abuja (Civil Procedure) Rules 2004 which provides:
When the suit is against a corporation or a company authorised to sue and be sued in its name or in the name of an officer or trustee, the writ or other documents may be served, subject to the enactment establishing that corporation or company or under which it is registered as the case may be by giving the
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writ or document to any director secretary or other principal officer or by leaving it at the office, of the corporation or company.
From a joint reading of the provisions of CAMA and Order 11 Rule 8 of the Federal Capital Territory, Abuja Civil Procedure) Rules, 2004, a writ of summons or processes or any other document meant for service on a registered company under CAMA, can be served or effected on the company in the following ways:
a. By giving the Court processes or document to any of the directors, secretary, or a principal officer of the company
b. By leaving the Court process or other document at the office of the company.
In the instant case, the appellants were served via substituted means. This was done by pasting the notice on the gate of the appellants’ hotel. Now, it is general law, that substituted service is not employed on a company. This is because the need for substituted service arises because personal service cannot be effected. However, there is an exception to the general rule. Where the plaintiff/respondent was unable to effect service on the defendants/appellants, then an order for substituted service is
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warranted. The purpose of an application to serve process by substituted means is to ensure that the party who is being sued, is served with the process to enable it appear and defend the action. Failure to serve a party sued where service of Court processes are required, is a crucial and fundamental omission, which renders subsequent proceedings void. This is so because the Court will have no jurisdiction to entertain the suit. NEN LTD V. ASIOGU (2008) 14 NWLR (PT 1108) 587.
I have read the affidavit in support of the ex parte application and I am convinced that it was only by substituted service that the appellants sued at the trial Court could be effectively served. The facts brought before the trial Court showed that the appellants could not be served personally as they were evading service. – RFG LTD V. SKYE BANK PLC (SUPRA). After all, pasting the processes on the door at the corporate office of the 1st appellant, amounts to “serving the Court process at the office of the company” as required by Section 78 of CAMA, and Order 11 Rule 8 of the FCT Abuja High Court (Civil Procedure) Rules 2004. Such an evasive party cannot be allowed to hold its
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creditors and the Court to ransom. It is precisely because of parties like the appellants, that the Rules were made, so that helplessness cannot be foisted on the Court and injustice meted out to genuine litigants. The evasion of same by the appellants has not and cannot be allowed to render Courts spineless.
I am satisfied that in the circumstances, service could not be effected on the appellants except vide substituted means. The learned trial judge was therefore right to have granted the prayer for substituted service to be effected on the appellants as defendants at the trial Court. It is thus good service on the appellants.
I resolve this issue against the appellants.
ISSUE THREE
WHETHER THE LEARNED TRIAL JUDGE ERRED IN LAW IN GRANTING PRAYER 1 IN THE PLAINTIFF’S WRIT/ORIGINATING SUMMONS WHEN HE STATED THAT “SUFFICE TO SAY THAT THE 1ST AND 2ND CLAIMS OF THE PLAINTIFFS SUCCEED SAVE THE 3RD CLAIM FOR COST. JUDGEMENT IS THEREFORE ACCORDINGLY ENTERED IN FAVOUR OF THE PLAINTIFF.”
Learned counsel to the appellants reproduced prayer 1 of the writ of summons adding that the plaintiff is a company that deals with internet facilities while
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the 1st defendant is a customer to the plaintiff and the 2nd and 3rd defendants are directors of the 1st defendant. A company is distinct from its directors and is held liable for its actions. The 1st defendant enjoys the same status. Counsel cited the case of SALOMON V. SALOMON & CO LTD (1896) UKHL 1.
Counsel further noted that the contract of agreement was between the plaintiff and the 1st defendant, i.e. the respondent and 1st appellant respectively. And that as such, the 2nd and 3rd appellants were not proper parties as 2nd and 3rd defendants at the lower Court and were wrongly joined as defendants to the suit. More so, counsel added, the 2nd and 3rd defendants cannot be held jointly and severally liable for actions of the 1st appellant; in this instance, a contract entered into by a company. Thus, the lower Court was wrong in law to have granted prayer 1 against persons who were not parties to the contract in question.
Counsel concluded by urging this honourable Court to resolve this issue in favour of the appellants and uphold this appeal in the interest of justice.
?
In response, counsel to the respondents argued that from the affidavit
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in support of the writ of summons issued by the respondent at the lower Court, the 2nd appellant is the managing director of the 1st appellant while the 3rd appellant is a director of the 1st appellant company and that both the 2nd and 3rd appellants had promised to pay the respondent on several occasions but failed to do so. Counsel argued further that the fact that the appellants had enjoyed the services of the respondent, and that since the 1st appellant is a private company managed by the 2nd and 3rd appellants then they must be held liable to pay their debts.
Counsel to the respondent submitted that since the appellants failed to file a notice of intention to defend as required under Order 21 of the Rules of the High Court Civil Procedure Rules, they cannot now complain of being wrongly joined to the suit. He added that the case of SALOMON V. SALOMON (SUPRA) even though good law cannot avail the appellants in this case as it is distinguishable from the present facts.
On this issue, counsel to the appellant while urging this honourable Court to dismiss the submission of the appellants, concluded that the lower Court was right to have given
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judgement in favour of the respondent against the appellants jointly and severally.
Counsel to the respondent finally submitted that the appellants have neither denied their indebtedness to the respondent nor the contractual agreement entered into with the respondent. Counsel urged this Court to hold that the respondent is entitled to recover her debt and not allow technicalities to pervert the course of justice.
It is trite that a company upon registration, becomes a legal person distinct and separate from its members. This principle has been emphasised in the case of SALOMON V. SALOMON (SUPRA). See also TSOKWA OIL &MKT V. U.T.C (NIG) PLC (2002) 12 NWLR (PT. 782) 468; S.T.B PLC V. OLUSOLA (2008) 1 NWLR (PT 1069) 561. The Companies and Allied Matters Act has also given effect to the same principle in Section 37.
Section 37 provides:
As from the date of incorporation mentioned in the certificate of incorporation, the subscriber of the memorandum together with such other persons as may; from time to time, become members of the company, shall be a body corporate by the name contained in the memorandum, capable forthwith of exercising all
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the powers and functions of an incorporated company including the power to hold land, and having perpetual succession and a common seal, but with such liability on the part of the members to contribute to the assets of the company in the event of its being wound up as is mentioned in the Act.
It therefore follows that an incorporated company is an entirely different and distinct entity from its managing director or human agents who act for it. See AFRIBANK (NIG) LTD V. M. ENT (2008) 12 NWLR (PT 1098) 223; OKATTA V. REGISTERED TRUSTEES, O.S.C (2008) 13 NWLR (PT 1105) 632.
I have looked at the facts of this case and the arguments brought forth by the parties herein and it is not in dispute that the appellants are indebted to the respondent in the sum of N30, 645, 924.60 (Thirty Million, Six Hundred and Forty Five Thousand Nine Hundred and Twenty Four Naira, Sixty Kobo).
Although the separate legal entity of a company is sacrosanct, there are occasions when the law will allow lifting the veil of corporate entity and these occasions are set out under CAMA. Section 290 of CAMA provides:
290. Where a
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company-
(a) receives money by way of loan for a specific purpose; or
(b) receives money or other property by way of an advanced payment for the execution of a contract or project; and
(c) with intent to defraud, fails to apply the money or other property for the purpose for which it was received, every director or other officer of the company who is in default shall be personally liable to the party for whom the money or property was received for a refund of the money or property so received and not applied for the purpose for which it was received. Provided that nothing in this section shall affect the liability of the company itself.
See also C. B LTD V. INTERCITY BANK PLC (2009) 15 NWLR(PT 1165) 445.
From the above, one occasion where the Courts will look under the cloak of corporate identity is when the founders are perpetrating fraud. The consequence of recognising the separate legal personality of a company is to draw a veil of incorporation over the company. However, since a statute will not be allowed to be used as an excuse to justify illegality or fraud, it is a quest to avoid the normal consequences of the statute which may
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result in grave injustice that the Court, as occasion demands, have to look behind or pierce the veil of incorporation.- ALADE V. ALIC (NIG) LTD (2010) 19 NWLR (PT 1226); FDB FINANCIAL SERVICES V. ADESOLA (2000) 8 NWLR (PT 668) 170; ADEYEMI V. LAN & BAKER (NIG) LTD. (2000) 7 NWLR (PT 663) 33; MEZU V. C.& C. B. (NIG) PLC (2013) 3 NWLR (PT 1340) 188. In the instant case, the 2nd and 3rd appellants acted in their capacity as director and managing director of the company. The contract between the respondent and the 1st appellant was signed by the manager i.e. 2nd appellant, of the company acting on behalf of the company. This is more so, as the company cannot act on its own and need human assistance for it to function. It is the tradition that human beings act on behalf of the company. They negotiate and execute agreements for and on behalf of the company. And where such an agreement is so executed by a person vested with the authority to do same, the company is liable or deemed to be liable for the acts of the company.
A company is in law, a person distinct from its promoters and directors. A director of a company, is in the eyes of the law, an agent
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of the company for which he acts and the general principle of the law of principal and agent will apply. It follows therefore that if a director of a company entered into a contract on behalf of the company or purporting to bind the company as in this case, it is the company, the principal, which is liable on it, and not the director. – OKOLO V. U.B.N LTD (2004) 3 NWLR (PT 859) 87; YESUFU V. KUPPER INTERNATIONAL N.V. (1996) 5 NWLR (PT 446) 17; SALOMON V. SALOMON (SUPRA).
The Courts are entitled to ignore the separate legal status of a limited liability company and their incorporator which was held in SALOMON V. SALOMON (SUPRA) must normally receive the full effect in relation between the company and the persons dealing with it.
Indeed the 2nd and 3rd appellants being the Director and managing director of the 1st appellant come within the category of employees or members of a company whose acts are binding on a company. The veil cannot just be lifted for this reason. There must be a clear evidence of illegality or fraud for the veil to be lifted. The question now is, is there evidence of fraud being perpetrated by the 2nd and 3rd
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appellants in this case? I do not find evidence of this. As I have stated before, the appellants have not denied the fact that the sum of N30,645,924.60 (Thirty Million, Six Hundred and Forty Five Thousand Nine Hundred and Twenty Four Naira, Sixty Kobo) is owed to the respondent. Indeed it is the argument of the respondent that the appellants have failed to pay the money even though they keep assuring him that they will make the payment. Although meagre to the sum owed, the payment of N500, 000 by the appellants out of the amount owed, does not connote fraud.
It was not necessary that the 2nd and 3rd appellants be joined as the 2nd and 3rd defendants at the lower Court. This is because, a company acts through its agents. And since the principal was already in the suit as the 1st defendant, the circumstances did not impose that the 2nd and 3rd appellants be joined. I accordingly make an order striking out the names of the 2nd and 3rd appellants from the Suit.
The trial Court was right in granting the prayers of the respondent, in the amount owed by the appellants, save that the 2nd and 3rd appellants, who were not supposed to be joined, and cannot
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be jointly liable.
Issue No 3 thus succeeds partially.
In sum, this appeal has no merit and it is dismissed. N100,000 costs to the respondent.
ADAMU JAURO, J.C.A.: I have had the opportunity of reading in advance the judgment just delivered by my learned brother, Abubakar Datti Yahaya, JCA. I am in complete agreement with the reasoning and conclusion contained therein to the effect that the appeal is lacking in merit and ought to be dismissed.
I adopt the said judgment as mine and join my brother in dismissing the appeal. I abide by all consequential orders made, including that on costs.
STEPHEN JONAH ADAH, J.C.A.: I had the privilege of reading in advance the draft of the judgment just delivered by my learned brother Abubakar Datti Yahaya, JCA.
My learned brother has adequately resolved all the issues generated in this appeal. I am in agreement with his reasoning and conclusion that this appeal has no merit and should be dismissed.
I too find the appeal lacking in merit and I accordingly dismiss it. I abide by the consequential
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orders inclusive of the order as to Cost as made in the lead judgment therein.
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Appearances:
U.D Oguekwe with him, C.A Oyali, A. D Oguekwe and Ajile UkoriFor Appellant(s)
A.O Otitaju with him, Abimbola DairiFor Respondent(s)
Appearances
U.D Oguekwe with him, C.A Oyali, A. D Oguekwe and Ajile UkoriFor Appellant
AND
A.O Otitaju with him, Abimbola DairiFor Respondent
