BEACHLAND CONSTRUCTION & DEVELOPMENT LIMITED v. PARAMO DEVT. VENTURES LIMITED & ORS
(2013)LCN/6541(CA)
In The Court of Appeal of Nigeria
On Thursday, the 28th day of November, 2013
CA/L/681/2007
JUSTICES
SIDI DAUDA BAGE Justice of The Court of Appeal of Nigeria
CHINWE EUGENIA IYIZOBA Justice of The Court of Appeal of Nigeria
SAMUEL CHUKWUDUMEBI OSEJI Justice of The Court of Appeal of Nigeria
Between
BEACHLAND CONSTRUCTION & DEVT. LTD (2ND DEFENDNAT/APPELLANT) Appellant(s)
AND
1. PARAMO DEVT. VENTURES LTD – (CLAIMANT/RESPONDENT)
2. WEMABOD ESTATE LTD – (1ST DEFENDANT/RESPONDENT)
3. HON. (ARC) ROTIMI BIDMUS (3RD DEFENDANT/RESPONDENT)
4. MRS. O. M. LALEYE (4TH DEFENDANT/RESPONDENT) Respondent(s)
RATIO
JURISDICTION OF THE STATE HIGH COURT
The Constitution of the Federal Republic of Nigeria, 1999 CAP C23 Laws of the Federation of Nigeria 2004 which established the state High courts provides in section 251 as follows:
“(1) Notwithstanding anything to the contrary contained in this Constitution and in addition to such other jurisdiction as may be conferred upon it by an Act of the National Assembly, the Federal High Court shall have and exercise jurisdiction to the exclusion of any other Court in civil cause and matters-
(e) arising from the operation of the Companies and Allied Matters Act or any other enactment replacing that Act or regulating the operation of companies incorporated under the companies and Allied Matters Act”
Learned Counsel conceded that the courts have interpreted the above provision to mean that exclusive jurisdiction vests in the Federal High Court where a suit involves:
(a) regulating, running or management or control of companies;
(b) formation, winding up of a company;
(c) the consideration in some detail of the Memorandum and Articles of Association, shares and holding;
(d) the appointment, removal alteration or change of Directors; and
(e) appointment of Receiver and his various obligations and claims arising from the conduct of a Receiver.
See Bi Zee Hotels Ltd. v. Allied Bank (Nig) Ltd. (1996) 8 NWLR (Pt.465) 176; Minister of Works v Tomas (Nig) Ltd (2002) 2 NWLR (Pt.752) 740 at 776-777; Tanarewa (Nig) Ltd v Plastifarm Ltd. (2003) 14 NWLR (Pt.840) 355 at 375-376 and Fagbola v Kogi Chambers of Commerce, Industry, Mines and Agriculture (2006) 6 NWLR (Pt.977) 433. PER IYIZOBA, J.C.A.
WHETHER OR NOT A STATEMENT OF CLAIM CAN DETERMINE WHETHER A SUIT HAS DISCLOSED A REASONABLE CAUSE OF ACTION
It is elementary that it is to the statement of claim alone that a court must have recourse in determining whether or not a suit disclosed a reasonable cause of action and the court is enjoined to carefully scrutinize the averments therein only – See Egbe vs. Adefarasin (1987) 1 NWLR (Pt.47) 1, Ibrahim vs. Osim (1988) 3 NWLR (Pt. 82) 257 and Alade vs. Morohundiya (2002) 16 NWLR (Pt.792) 81. It must be emphasized that the duty of the court at this stage is not to ascertain whether the claims of the Claimant would succeed at the trial – see Dantata vs. Mohammed (2000) 10 NWLR (Pt.664) 176. But whether the Claimant has by the facts averred in the statement of claim presented a case which if not defended would entitle it to the relief claimed. In Henry Stephens Engineering Co. Ltd vs. S. A. Yakubu (Nig) Ltd (2003) 10 NWLR (Pt. 829) 505 the Court of Appeal, speaking on when a court should exercise its power to strike out a suit as disclosing no cause of action, stated thus at page 522:
“The jurisdiction of the court to peremptorily strike out a case on the ground that the plaintiff’s statement of claim discloses no cause of action must be cautiously and slowly exercised, because it has the potential of denying the plaintiff the right to be heard. Thus, the court will not at a preliminary stage decline to hear a plaintiff’s suit without considering his right to be heard except in cases where the cause of action is obviously and almost incontestably bad. Where the situation is uncertain and equivocal…….the court will not act in exercise of the jurisdiction.”
I have read the cases referred to above and the very rare instances when the court would strike out a suit on the ground that it does not disclose a reasonable cause of action. This case on appeal does not fall within any of those rare instances. The averments in the amended statement of claim contain allegations of fact against the second defendant/Appellant which if not defended would entitle the Claimant/Respondent to the reliefs sought. The pleadings indeed raise questions fit to be examined by the court. Peoples Voice Communications Ltd v. Alhaji Mohammed Lawal (2005) 3 NWLR (Pt 911) 121. PER IYIZOBA, J.C.A.
DEFINITION OF A CAUSE OF ACTION
The Supreme Court in the case of ALH. WADA KUSADA VS. SOKOTO NATIVE AUTHORITY (1968) 1 All NLR 377 at pages 381-382 stated as follows:
“A cause of action is defined in strond’s judicial Dictionary as the entire set of circumstances giving rise to an enforceable claim. To our mind, it is, in effect the fact or combination of facts which give rise to a right to sue and it consists of two elements, the wrongful act of the Defendant which gives the Plaintiff his cause of complaint and the consequent damage. As Lord Esher said in COOKE VS. GILL (1873) LR8 C.P.107 and later in READ VS BROWN (1988) 22 Q.B.D. 128 (CA) it is every fact that it would be necessary for the Plaintiff to prove, if traversed, in order to support his right to the judgment of the court.”
See also C. A. SAVAGE & ORS vs. M. O. UWAECHIE (1972) 3. SC 214 at 221 (also reported in (1972) 1 All NLR (Pt.1) 251; LASISI FADARE & ORS VS. ATT. GEN. OF OYO STATE (1982) 4 S.C. 1 at Pages 6-7. PER BAGE, J.C.A.
CHINWE EUGENIA IYIZOBA, J.C.A. (Delivering The Leading Judgment): This is an appeal against the ruling of Abiru J. of the High Court of Lagos State delivered on the 20th day of September 2006 in Suit No.LD/2121/2003 in which it was held that the High Court as opposed to the Federal High Court had jurisdiction to entertain the suit filed by the claimant/Respondent. By its Writ of Summons and Statement of Claim both dated 8/10/2003, the Respondent herein as Claimant filed an action at the High Court of Lagos State against the Appellant and three others – the 1st, 3rd and 4th Defendants/Respondents herein for certain declaratory reliefs, an order of specific performance and injunction. The Appellant filed a motion challenging the jurisdiction of the Lagos High Court to entertain the Respondent’s claim. In consequence the Respondent on 3/5/04 filed an Amended Statement of Claim seeking, as the main claim, the same reliefs sought in its statement of claim filed on 8/10/12003, and in the alternative, claims for damages against the Appellant and the 1st Defendant/Respondent. The Appellant on 30/5/06 filed a fresh motion dated 26/5/2006, the earlier motion having been struck out praying for:
“1. An order striking out this suit on the grounds that this Honourable Court lacks jurisdiction.
2. Alternatively, an order striking out the suit against the 2nd Defendant/Applicant for non disclosure of a reasonable cause of action and for being frivolous and vexatious.”
The parties filed and adopted their written briefs. On 20/9/06, the learned trial judge delivered a ruling dismissing the motion. The Appellant being dissatisfied with the ruling appealed to this Court on five grounds. The Appellant’s brief dated 24/12/07 was filed on 28/12/07 but deemed properly filed and served on 17/6/09. The Respondent throughout the period filed no brief. By the order of the court granted on 7/6/10, the appeal was set down for hearing on the Appellant’s brief alone. During the hearing of the appeal on 4/11/13, learned counsel for the Appellant, S. Mbadiwe Esq. adopted the Appellant’s brief and urged the court to allow the appeal, set aside the ruling of Abiru J and strike out the suit for want of jurisdiction.
Out of the five grounds of appeal, counsel formulated the following issues for determination:
1. Whether, having regard to the fact that the principal question to be decided in Suit No. LD/2121/2003 is whether the 1st Defendant/Respondent (having contravened its own Board of Directors Resolution No.244 of 5/8/2003) acted ultra vires its powers in granting the Appellant a lease over the 1st Defendant/Respondent’s property at Ikoyi, Lagos, the learned trial judge was right in holding that the High Court of Lagos State has jurisdiction to adjudicate over the Respondent’s suit.
2. Whether considering the fact that the High Court of Lagos State had only a partial jurisdiction over the Claimant/Respondent’s suit, and whereas the Federal High Court has full jurisdiction over the entire suit, the learned trial judge was right when he assumed full jurisdiction over the Claimant/Respondent’s suit.
3. Whether the learned trial judge was right in holding that Respondent’s suit disclosed a reasonable cause of action against the Appellant.
On issue 1, learned counsel submitted relying on Lufthansa German Airlines v. Odiese (2006) 7 NWLR (Pt.978) 34 @ 73 para B that it is beyond dispute that a court must confine itself to the reliefs sought on the writ of summons and statement of claim in order to determine whether or not it has jurisdiction over a suit. After setting out the reliefs claimed and relevant averments in the statement of claim in support, counsel submitted that the question that arises is whether the case, as presented by the Claimant/Respondent at the court below is one which falls within the jurisdiction of the High Court of Lagos State as held by the learned trial judge. Counsel further argued that the main claims of the Respondent at the court below were, essentially, a declaration to give force and effect to the 1st Defendant’s Board of Directors’ Resolution No.244 dated 5th August 2003, and a further declaration that any act of the 1st Defendant or its officers in contravention of the said resolution is ultra vires the 1st Defendant, invalid, null and void. Counsel submitted that in the circumstances the crucial question which ought to have agitated the mind of the learned trial judge is – does the High Court of Lagos State have the power to proceed upon an inquiry and make a declaration that an act of the 1st Defendant (an incorporated company), which violated its board of directors resolution, is ultra vires the 1st Defendant? Learned counsel submitted that the answers is “No “, and urged the court to so hold.
On issue 2, learned counsel submitted that no doubt, in the absence of the main claims, the learned trial judge would have the jurisdiction to adjudicate over the alternative claims contained in paragraphs 28 (e) and (f) of the amended Statement of Claim. Counsel contended that a court can only consider an alternative claim where the main claim fails. He referred to the case of Ibekendu v. Ike (1993) 7 SCNJ 50 and submitted that in any suit jurisdiction over the main claim is a sine qua non for assumption of jurisdiction over an alternative claim; and in this case the mere fact that the High Court of Lagos State could entertain the alternative claims of the Respondent did not vest it with jurisdiction over the suit. Learned counsel cited the case of DALFAM NIGERIA LTD V OKAKU INTERNATIONAL LIMITED & ANOR (2001) 15 N.W.L.R. PART 735 P. 203 AT PAGE 240 paras. C.-D where the court of appeal held:
“Where a court lacks jurisdiction to entertain part of the claims before it, the fact that it can entertain other parts as in the instant case will not be sufficient.”
On issue 3, whether the Claimant/Respondent’s suit disclosed a reasonable cause of action against the 2nd Defendant/Appellant, learned counsel submitted that assuming without conceding, that this Court has jurisdiction to entertain this suit and that the 1st Defendant/Respondent Wemabod acted ultra vires its powers in granting a lease of its property to the 2nd Defendant/Appellant, that the Claimant/Respondent, not being a member or secured creditor of the 1st Defendant/Respondent, is a mere busy body and cannot challenge the acts of the 1st Defendant/Respondent as being ultra vires. Counsel contended that the right of a litigant to challenge an ultra vires act of a company is derived from statute; in this case, section 39 of the Companies and Allied Matters Act, 1990. However, Section 39 (4) of that Act limits the category of persons who can apply to the court for relief on the grounds that an act of a company is ultra vires to (a) any member of the company and (b) the holders of any debentures secured by floating charge on the company’s properties or a trustee of such debenture holder. It was argued that even if the 1st Defendant/Respondent and its officers acted ultra vires their powers in granting a lease of 1st Defendant’s property to the 2nd Defendant, the Claimant has no right to challenge the 1st Defendant for such action. Learned counsel submitted that the 1st Defendant/ Respondent’s resolution No.244 of 5/8/2003 created no enforceable contract in favour of the Claimant and that consequently, the Claimant had no right to enforce 1st Defendant’s Board of Directors’ Resolution of 5/8/2003, which was passed pursuant to the Memorandum and Articles of Association of the 1st Defendant. Counsel submitted that rules and regulations contained in the Memorandum and Articles of Association of a company do not apply to outsiders. The Law is that the Memorandum and Articles when registered shall have the effect of a contract between the company and its officers and between the company and its shareholders and between the officers and shareholders inter se. Section 41 of the Companies and Allied Matters Act, 1990. Counsel argued that the Claimant is neither a member nor an officer of the 1st Defendant and is therefore a stranger to any contract arising from the Memorandum and Articles of the 1st Defendant and the resolutions passed pursuant thereto. The law is that only parties to a contract can enforce same. A person who is not a party to a contract cannot enforce it even if it was made for his benefit and purport to give him the right to sue upon it. K.S.O. & Allied Products Limited v Kofa Trading Company Limited (1996) 3 NWLR (pt 436) p.244 at 263 paragraph B-C.
Therefore, even if the resolution of 5/8/03 was a contract made between the 1st Defendant and its directors for the benefit of the Claimant, the Claimant was not a party to that contract and cannot bring an action to enforce it. Learned counsel submitted that these arguments were put before the learned trial Judge of the lower court but his lordship failed to resolve the issue of the locus standi of the Claimant/Respondent but instead held that the case of the claimant/Respondent disclosed a reasonable cause of action. Learned counsel submitted that once the issue of the locus standi of the Claimant/Respondent was raised the learned trial judge was obliged to consider it first before any other issue because the issue of locus standi touches on the competence of the action and the jurisdiction of the court. He cited Ogunyombo v. Ookoya (2002) 16 NWLR (Pt.793) p.224 at P.247 para B-C. Counsel urged the court to resolve the issue of the Claimant/Respondent’s locus standi under the powers conferred by section 15 of the Court of Appeal Act CAP C 36 Laws of the Federation of Nigeria 2004, and to hold that the Claimant/Respondent lacked the locus standi to seek the reliefs set out in paragraphs 28 (a) to (d) of the Amended Statement of Claim.
Starting with issue 1, it is necessary to set out the provisions of the Constitution on the jurisdiction of these courts. The Constitution of the Federal Republic of Nigeria, 1999 CAP C23 Laws of the Federation of Nigeria 2004 which established the state High courts provides in section 251 as follows:
“(1) Notwithstanding anything to the contrary contained in this Constitution and in addition to such other jurisdiction as may be conferred upon it by an Act of the National Assembly, the Federal High Court shall have and exercise jurisdiction to the exclusion of any other Court in civil cause and matters-
(e) arising from the operation of the Companies and Allied Matters Act or any other enactment replacing that Act or regulating the operation of companies incorporated under the companies and Allied Matters Act”
Learned Counsel conceded that the courts have interpreted the above provision to mean that exclusive jurisdiction vests in the Federal High Court where a suit involves:
(a) regulating, running or management or control of companies;
(b) formation, winding up of a company;
(c) the consideration in some detail of the Memorandum and Articles of Association, shares and holding;
(d) the appointment, removal alteration or change of Directors; and
(e) appointment of Receiver and his various obligations and claims arising from the conduct of a Receiver.
See Bi Zee Hotels Ltd. v. Allied Bank (Nig) Ltd. (1996) 8 NWLR (Pt.465) 176; Minister of Works v Tomas (Nig) Ltd (2002) 2 NWLR (Pt.752) 740 at 776-777; Tanarewa (Nig) Ltd v Plastifarm Ltd. (2003) 14 NWLR (Pt.840) 355 at 375-376 and Fagbola v Kogi Chambers of Commerce, Industry, Mines and Agriculture (2006) 6 NWLR (Pt.977) 433.
The contention of the appellant is that the Lower Court lacked the jurisdiction to determine whether or not the 1st Defendant (an incorporated company) acted ultra vires its powers in granting a lease of its property to the 2nd Defendant? In making this submission counsel relied heavily on Section 39 of the Companies and Allied Matters Act. It is necessary for better comprehension of the issues to set out the provision in full:
Section 39
1. A company shall not carry on any business not authorized by its memorandum and shall not exceed the powers conferred upon it by its memorandum or this Act.
2. A breach of subsection (1) of this section, may be asserted in any proceedings under section 300 to 313 of this Act or under subsection (4) of this section.
3. Notwithstanding the provisions of subsection (1) of this section, no act of a company and no conveyance or transfer of property to or by a company shall be invalid by reason of the fact that such act, conveyance or transfer was not done or made for the furtherance of any of the authorised business of the company or that the company was otherwise exceeding its objects or powers.
4. On the application of-.
a. Any member of the company; or
b. the holder of any debenture secured by a floating charge over all or any of the company’s property or by the trustee of the holders of any such debentures’
the court may prohibit by injunction, the doing of any act or the conveyance or transfer of any property in breach of subsection (1) of the section.
5. If the transaction sought to be prohibited in any proceeding under subsection (a) of this section are being, or are to be performed or made pursuant to any contract to which the company is a party, the court may if it deems the same to be equitable and if all the parties to the contract are parties to the proceedings, set aside and prohibit the performance of such contract, and may allow to the company or to the other parties to the contract compensation for any loss or damage sustained by them by reason of the setting aside or prohibition of the performance of such contract but no compensation shall be allowed for loss of anticipated profits to be derived from the performance of such contract.
By Section 39(4) above only members and secured creditors of the 1st Defendant/Respondent have the right to question the validity of the acts within the internal organisation of the company. The Claimant/Respondent, PARAMO DEVT VENTURES LTD sued the Appellant and the 1st, 3rd and 4th Respondents claiming as follows:
(a) Declaration that the Plaintiff is entitled to the extended Seven Working Days within which it (sic) pay the premium price of Seventy Million Naira to the 1st Defendant for 40 years lease and redevelopment of 2/4 Mosley Road Ikoyi, Lagos as demanded by the 1st Defendant board of directors resolution No.244 dated the 5th day of August 2003.
(b) A Declaration that the purported grant of lease and redevelopment of the property lying and situate at 2/4 Mosley Road Ikoyi Lagos by the 1st Defendant to the 2nd Defendant pursuant to the letter of offer authored by the 4th Defendant in violation of the 1st Defendant Board of Director resolution No.244 dated 5th August 2003 is ultra vires the 1st Defendant and in excess of the 4th Defendant authority and as such invalid, null and void,
(c) AN ORDER OF SPECIFIC PERFORMANCE compelling the 1st Defendant herein to extend by seven working days the period within which to accept from the Plaintiff the bank draft in the sum of Seventy Million Naira earlier rejected by the 1st Defendant in respect of the lease of the 1st defendant properly lying and situate at 2/4 Mosley Road Ikoyi Lagos.
(d) AN ORDER OF PERPETUAL INJUNCTION restraining the 2nd Defendants (sic) from carrying out any act of reconstruction and or redevelopment of the 1st Defendant property lying and situate at 2/4 Mosley Road, Ikoyi, Lagos in violation of the existing right of the Plaintiff to the property.
(e) IN THE ALTERNATIVE TO PARAGRAPH 28 a – d Plaintiff claim from the 1st & 2nd Defendants jointly and severally special damages in the sum of Sixteen Million, Eight Hundred And Fifteen Thousand Naira (16,815,000,00) only being the cost expended by the Plaintiff on account of the intended lease-hold redevelopment of 2/4 Mosley Road Ikoyi Lagos following the breach of the 1st Defendant obligation to the Plaintiff as induced by the 2nd Defendant.
(f) General damages in the sum of one Hundred Million Naira (N100,000,000.00) only against the 1st & 2nd Defendants jointly and severally.”
The Claimant is not a member of the company, Wemabod Estates Ltd and has no business with the issue of the validity or otherwise of the 4th Defendant’s alleged act of violation of the 1st Defendant Board of Directors’ resolution No.244 dated 5th August 2003. It is clearly an internal matter of the company and it is only members of the company that can complain as stated in section 39(4) of the Companies and Allied Matters Act. The learned trial Judge in determining whether or not it had jurisdiction to entertain the suit assessed the situation thus:
The case of the Claimant on the Amended Statement of Claim dated the 3rd of May, 2004 was that sometime in January 2003, the first defendant invited it along with some other construction companies to submit a bid for the lease and redevelopment of the property at No 2/4 Mosley Road, Ikoyi. It was its case that it submitted a bid which had technical and financial components such as architectural drawings, estimates of costs and period of construction etc and that it was invited to make an oral presentation of the bid and that it was requested to attend two interviews held on the 23rd of January 2003 and 28th of February, 2003. It was its case that at the end of the sessions, its bid for a premium payment of N55 million for a forty year lease and an annual ground rent in the sum equal to the rental incomes due on five units of the twenty-four unit apartment to be constructed was second only to the bid of a company called Adold Engineering Co. Ltd who offered a premium of N70 million and that the bid of the second Defendant of a premium of N10 million was rejected outright.
It was its case that when Adold Engineering Co. Ltd, the preferred bidder was unable to meet its obligation of paying the premium of N70 million, the first Defendant by a letter dated the 25th of June, 2003 offered the lease and redevelopment to it as the reserved bidder at the premium of N55 million. It was its case that the letter of offer was not accompanied by a copy of the title documents of the property in question so as to enable it conduct a search in accordance with the trade convention and practice within the property and real estate development industries and whereupon it met with the fourth Defendant on the issue on the 27th of June, 2003 and the fourth Defendant promised to make the document available by the 3rd of June, 2003. It was its case that the whole arrangement was aborted by a nationwide strike called by the Nigerian Labour Congress and after the calling off of the strike, it received a fresh letter of offer for the lease and redevelopment of the property dated the 9th of July, 2003 and wherein the premium payable was unilaterally increased by the first Defendant to N70 million. It was its case that on the 14h of July, it wrote to accept the offer and that by a letter dated the 15th of July, 2003, it requested for the copy of the title documents of the property and that on the 17th of July, 2003, the fourth Defendant wrote to the Registrar of Titles to furnish the claimant with a certified true copy of the title document.
It was its case that despite the above stated facts, the first Defendant wrote a letter dated the 18th of July, 2003 to it withdrawing the offer of the lease and redevelopment on the ground that the offer lapsed on the
18th of July, 2003 and that on the 21st of July, 2003 it wrote a letter of protest to the first Defendant and made several representations to the management of the first Defendant and by reasons of which the Board of Directors of the first Defendant met and resolved at a board meeting of 5th August 2003 to give it an extension of seven working days to meet the offer. It was its case that the fourth Defendant deliberately refused to communicate this resolution of the Board of Directors to it but that it got to know of the resolution and it procured a bank draft in the sum of N70 million which it presented to the first Defendant on the 15th of August, 2003 and that the draft was rejected by the first Defendant. It was its case that on enquiries it discovered that the rejection of its bank draft of N70 million by the first Defendant was induced by the second Defendant with a view to benefitting from the rejection and that in fact the unilateral increase of the premium sum from N55 million to N70 million by the first Defendant was instigated by the second Defendant who surreptitiously went behind to make a fresh offer of N70 million and further that prior to an after the Board Meeting of the first Defendant of 5th August, 2003, the second Defendant colluded and connived with officers of the first Defendant to be issued with a letter of offer for the lease and redevelopment of the property which offer the second Defendant purportedly accepted three day later.
This was the case of the Claimant in its pleadings. It is obvious that the case of the Claimant is not in any way about regulating , running or management or control of the first or second Defendant nor is it about the formulation or winding up of the affairs of the first or second Defendant or the consideration in some detail of the memorandum and Articles of Association, shares and share holding of the first or second Defendant or the appointment, removal, alteration or change of Directors of the first or second Defendant or the appointment of a Receiver and the various obligations and claims arising from the conduct of a Receiver. The facts of this case do not concern the interpretation and application of the provisions of the Companies and Allied Matters Act in any manner. The case is about the propriety of the act of the first Defendant in offering the lease and redevelopment of the propriety at No. 2/4 Mosley Road, Ikoyi to the second Defendant in the circumstances and of the second Defendant in accepting same. This is about the routine business of the first Defendant. The provisions of section 251(1) (e) of the Constitution are inapplicable. It is the High Court that possesses jurisdiction over this matter”
Looking at the case of the Claimant/Respondent as summarized above, the 1st Defendant/Respondent’s board of directors resolution No.244 dated the 5th day of August 2003 is peripheral to the issues at hand. The main concern of the Claimant is whether it is entitled to the extended Seven Working Days within which it can pay the premium price of Seventy Million Naira to the 1st Defendant for 40 years lease and redevelopment of 2/4 Mosley Road Ikoyi, Lagos in accordance with the board resolution etc. In deciding whether or not it has jurisdiction in a case, the court must consider only the reliefs in the writ of summons and the averments in the statement of claim. It is the statement of claim that determines the jurisdiction of the Court to entertain and determine the action. Luthansa German Airlines v. Odiese (2006) 7 NWLR (Pt.978) 34. The lower court is consequently right that the case is primarily about the propriety of the act of the first Defendant in offering the lease and redevelopment of the property at No. 2/4 Mosley Road, Ikoyi to the second Defendant/Appellant in the circumstances and of the second Defendant/Appellant accepting same. This is about the routine business of the first Defendant. The Claimant/Respondent is not as it were querying the propriety or otherwise of the Board of Directors’ Resolution of the 1st Defendant/Respondent as it has no authority to do so and the existence of the Resolution is not in dispute. Issue one is resolved in favour of the Claimant/Respondent and against the Appellant.
On issue 2, whether considering the fact that the High Court of Lagos State had only a partial jurisdiction over the Claimant/Respondent’s suit, and whereas the Federal High Court has full jurisdiction over the entire suit, the learned trial judge was right when he assumed full jurisdiction over the Claimant/Respondent’s suit. In view of the conclusion of this court on issue one that the High Court of Lagos State was right in assuming full jurisdiction over the suit, issue no 2 is now of no consequence.
Issue three is whether the Claimant/Respondent’s suit disclosed a reasonable cause of action against the 2nd Defendant/Appellant. At page 64 of the Records, the learned trial Judge had this to say:
“A cause of action is defined as every fact that would be necessary for the plaintiff to prove, if traversed, in order to support his right to judgment of the court. It is the bundle or aggregate of facts which the law will recognize as giving the plaintiff a substantive right to make a claim of the nature of the relief or remedy being sought…….. Once a statement of claim sets out the legal rights of the plaintiff and the obligations of the defendant and then sets out the constituting infraction of the plaintiff’s legal right or failure of the defendant in such a way that if there is no proper defence the plaintiff would succeed in the relief he seeks, the statement of claim will be held to disclose a reasonable cause of action – see Shell Petroleum Development Co. Nig Ltd Vs. Nwawka (2003) 6 NWLR (Pt 815) 184. The weakness of the plaintiff’s case is not a relevant consideration when the question is whether or not the statement of claim has disclosed a reasonable cause of action – see Mobil Producing (Nig.) Unlimited v. LASEPA (2002) 18 NWLR (Pt.798) 1.
It is elementary that it is to the statement of claim alone that a court must have recourse in determining whether or not a suit disclosed a reasonable cause of action and the court is enjoined to carefully scrutinize the averments therein only – See Egbe vs. Adefarasin (1987) 1 NWLR (Pt.47) 1, Ibrahim vs. Osim (1988) 3 NWLR (Pt. 82) 257 and Alade vs. Morohundiya (2002) 16 NWLR (Pt.792) 81. It must be emphasized that the duty of the court at this stage is not to ascertain whether the claims of the Claimant would succeed at the trial – see Dantata vs. Mohammed (2000) 10 NWLR (Pt.664) 176. But whether the Claimant has by the facts averred in the statement of claim presented a case which if not defended would entitle it to the relief claimed. In Henry Stephens Engineering Co. Ltd vs. S. A. Yakubu (Nig) Ltd (2003) 10 NWLR (Pt. 829) 505 the Court of Appeal, speaking on when a court should exercise its power to strike out a suit as disclosing no cause of action, stated thus at page 522:
“The jurisdiction of the court to peremptorily strike out a case on the ground that the plaintiff’s statement of claim discloses no cause of action must be cautiously and slowly exercised, because it has the potential of denying the plaintiff the right to be heard. Thus, the court will not at a preliminary stage decline to hear a plaintiff’s suit without considering his right to be heard except in cases where the cause of action is obviously and almost incontestably bad. Where the situation is uncertain and equivocal…….the court will not act in exercise of the jurisdiction.”
I have read the cases referred to above and the very rare instances when the court would strike out a suit on the ground that it does not disclose a reasonable cause of action. This case on appeal does not fall within any of those rare instances. The averments in the amended statement of claim contain allegations of fact against the second defendant/Appellant which if not defended would entitle the Claimant/Respondent to the reliefs sought. The pleadings indeed raise questions fit to be examined by the court. Peoples Voice Communications Ltd v. Alhaji Mohammed Lawal (2005) 3 NWLR (Pt 911) 121.
Learned counsel for the Appellant had submitted that since the Claimant/Respondent is neither an officer, member nor secured creditor of the 1st Defendant/Respondent the combined effect of the provisions of section 39 (4) and (41) of the Companies and Allied Matters Act, 1990 would have the effect of depriving the Claimant/Respondent of the locus standi to seek the reliefs set out in paragraphs 28 (a) to (d) of the Amended Statement of Claim. I have earlier stated that the Board Resolution of the 1st Defendant/Respondent is not the main focus of this suit. It is peripheral to the issues. The amended statement of claim spelt out in clear terms the grouse of the Claimant/Respondent. It was led by the 1st Defendant/Respondent on a merry-go-round and was induced to believe that it would clinch the contract until at the last minute, the 2nd Defendant/Appellant swooped down and swept the carpet off its feet. It is certainly not arguable from the averments that the Claimant/Respondent has the locus standi to institute the suit. The suit also discloses a reasonable cause of action. Whether it would succeed or not is a different matter. It is better to hear the Appellant and decide issues at the appropriate time.
Learned counsel had also argued that the totality of the averments in the amended statement of claim neither disclosed that a contract was formed at any time between the Claimant/Respondent and the 1st Defendant/Respondent nor that the Claimant/Respondent had acquired any interest over the property of the 1st Defendant/Respondent at 2/4 Mosley Road, Ikoyi Lagos, and which was capable of being protected by the court and that this flaw was fatal to the Claimant/Respondent’s case. With all due respect to learned counsel, all the scenarios painted are not necessary for there to be a reasonable cause of action.
The Claimant’s case is that ordinarily the contract with the 1st Defendant/Respondent would have been concluded but for the wrongful acts of the Defendants/Respondents. His suit is in respect of these wrongful acts. I think the Claimant deserves to be heard. The issues which the Appellant perceived as the weaknesses in the Claimant/Respondent’s case are not matters for consideration at this point. See Mobil Producing (Nig) Unlimited vs. LASEPA (2002) 18 NWLR (PT.798) 1, On the face of his amended statement of claim, he has a reasonable cause of action. Further, as pointed out by the lower court, if it is decided that there is no reasonable cause of action against the 2nd Defendant/Appellant at this stage, the effect would be that the 2nd Defendant/Respondent would be struck out as a party in the suit. From the averments in the amended statement of claim, there are questions which cannot be effectively and completely settled in the absence of the 2nd Defendant/Appellant. The lower court is right that in the event that the Claimant succeeds in the suit, the presence of the 2nd Defendant/Appellant is necessary so it would be bound by the judgment of the court. Issue three is resolved against the Appellant and in favour of the claimant/Respondent.
In the final result, I hold that this appeal lacks merit. It is hereby dismissed. The Ruling of Abiru J. of the High Court of Lagos State delivered on the 20th day of September 2006 in Suit No LD/2121/2003 is affirmed. I make no order as to costs.
SIDI DAUDA BAGE, J.C.A.: I read before now, the judgment just delivered by my learned brother, C. E. Iyizoba JCA, I am in complete agreement with. I wish however, to add a voice on what constitutes a cause of action before the court. The Supreme Court in the case of ALH. WADA KUSADA VS. SOKOTO NATIVE AUTHORITY (1968) 1 All NLR 377 at pages 381-382 stated as follows:
“A cause of action is defined in strond’s judicial Dictionary as the entire set of circumstances giving rise to an enforceable claim. To our mind, it is, in effect the fact or combination of facts which give rise to a right to sue and it consists of two elements, the wrongful act of the Defendant which gives the Plaintiff his cause of complaint and the consequent damage. As Lord Esher said in COOKE VS. GILL (1873) LR8 C.P.107 and later in READ VS BROWN (1988) 22 Q.B.D. 128 (CA) it is every fact that it would be necessary for the Plaintiff to prove, if traversed, in order to support his right to the judgment of the court.”
See also C. A. SAVAGE & ORS vs. M. O. UWAECHIE (1972) 3. SC 214 at 221 (also reported in (1972) 1 All NLR (Pt.1) 251; LASISI FADARE & ORS VS. ATT. GEN. OF OYO STATE (1982) 4 S.C. 1 at Pages 6-7.
I am in complete agreement with the decision in the leading judgment affirming the position of the lower court that there are questions which cannot be effectively and completely settled in the absence of 2nd Defendant/Appellant. The lower court, I agree is right that, in the event that the Claimant succeeds in the suit the presence of the 2nd Defendant/Appellant is necessary so that it would be bound by the judgment of the court.
For all the detail reasoning contained in the leading judgment, I also hold that this appeal lacks merit, and it is also dismissed by me. I abide by the order as to costs contained in the leading judgment.
SAMUEL CHUKWUDUMEBI OSEJI, J.C.A.: I have the benefit of reading in draft the lead judgment of my learned brother, Chinwe Eugenia Iyizoba, JCA, just delivered.
I agree with the reasoning and conclusion that this appeal lacks merit and should be dismissed.
I need add that the claim as presented by the Claimant/Respondent in it’s writ of summons and amended statement of claim are very clear and direct. They have no bearing at all or in anyway connected with the workings of the Companies and Allied Matters Act as alleged by the appellant. It cannot by any stretch of imagination be successfully agreed that the claims aforesaid, is challenging the resolution of the Board of Directors of the 1st Defendant/Respondent company. To my mind, the appellant is merely seeking to make a mountain out of a mole hill by raising the issue of jurisdiction as between the Federal High Court and the High Court of Lagos State.
The learned trial judge gave an intelligent analysis of the whole transaction as well as the claim in issue and came to a commendable and impeccable conclusion part of which read thus:
“It is obvious that the case of the Claimant is not in any way about regulating, running or management or control of the first or second Defendant nor is it about the formulation or winding up of the affairs of the first or second Defendant or the consideration in some detail of the memorandum and Articles of Association, shares and share holding of the first and second Defendant or the appointment removal, alteration or change of Directors of the first or second Defendant or the appointment of a Receiver and the various obligations and claims arising from the conduct of a Receiver. The facts of this case do not concern the interpretation and application of the provisions of the Companies and Allied Matters Act in any manner. The case is about the propriety of the act of the first Defendant in offering the lease and redevelopment of the propriety at No. 2/4 Mosley Road, Ikoyi to the second Defendant in the circumstances and of the second Defendant in accepting same. This is about the routine business of the first Defendant. The provisions of section 257 (1) (e) of the Constitution are inapplicable. It is the High Court that possesses jurisdiction over this matter”
I agree entirely with the above reasoning of the learned trial judge and it stands on a solid ground.
I am however constrained to admonish that counsel should make haste slowly in rushing to Appeal against every ruling they do not agree with when there is opportunity of doing so at the conclusion of the substantive case. The Ruling appealed against was delivered since 2006 and I believe that but for this appeal the substantive matter would have been determine some years back. The practice of slowing the wheel of justice through incessant and most times unnecessary appeals should be discouraged as it engenders frustration on litigants and makes the common man to lose faith in our judicial system.
On this note I too hold that this appeal lacks merit and it is hereby dismissed. I abide by the consequential orders made in the lead judgment including that of cost.
Appearances
Kazeem L. O. Esq. for the 2nd Defendant/AppellantFor Appellant
AND
Claimant/Respondent not represented.
1st, 3rd & 4th Defendants/Respondents not representedFor Respondent
