CHIEF BOLA ADEDIPE v. SAMEINDIR FRAMEINENDUR (2011)

CHIEF BOLA ADEDIPE v. SAMEINDIR FRAMEINENDUR

(2011)LCN/4974(CA)

In The Court of Appeal of Nigeria

On Friday, the 9th day of December, 2011

CA/L/128/08

RATIO

MATERIAL CONTRADICTION IN AFFIDAVIT: HOW MATERIAL CONTRADICTIONS IN AFFIDAVIT EVIDENCE ARE RESOLVED

where there are material contradictions in affidavit evidence, the court cannot pick and choose which one to believe and the courts have held that oral evidence must be utilized to aid in determining the veracity of the evidence because the witnesses would then be subjected to cross examination. See GRENG DANONE V. VOLTIC NIG LTD (2008) 7 NWLR Pt. 1087 Pg. 637; D.P.C.C. LTD V. B.P.C LTD (2008) 4 NWLR Pt. 1077 Pg. 376. PER HELEN MORONKEJI OGUNWUMIJU, J.C.A.

STANDARD OF PROOF: WHETHER THE STANDARD OF PROOF REQUIRED TO PROVE THE LIABILITY OF DIRECTORS FOR FRAUD WHEN A COMPANY IS BEING WOUND UP IS THAT OF CIVIL MATTERS

I have to agree with the Appellant’s counsel that the standard of proof of allegation of a crime in a civil case is proof beyond reasonable doubt as provided by section 138 (1) of the Evidence Act. However, it is my humble view that in this instance section 138 of the Evidence Act is inapplicable. This is because section 506 (1) envisages the civil liability of the Directors when a company is being wound up but not while in liquidation. Obviously section 506 (3) was enacted for the purposes of criminal liability applicable after liquidation while section 506 (1) was in respect of civil liability while in the process of winding up. All the applicant under section 506 (1) need prove is actual dishonesty. Involving according to the current notions of fair trading among commercial men, real moral blame. That was the guide provided in RE PATICK AND LYON LTD (1993) CH 786 At 790 -791. Nigerian Judges have not attempted to define fraud in civil liability claims under CAMA but have tried to give us its implications and a practical guide on the evidence required. The attitude of the British Courts is exemplified in RE WILLIAMS C. LEITCH BROS LTD (1932) 2 CH. 71 At 77 where Maugham J – held that: “If a company continues to carry on business and to incur debts at a time when there is, to the knowledge of the directors, no reasonable prospects of the creditors ever receiving payment of those debts, it is, in general, a proper inference that the company is carrying on business with intention to defraud.” There is no doubt that the law requires strict proof of particulars of fraud or allegations of similar ilk. See OLUFUNMISE V. FALANA (1990) 3 NWLR Pt. 136 Pg. 1. In MICHAEL AROWOLO V. CHIEF TITUS IFABIYI (2002) 4 NWLR Pt. 757 Pg. 356 at Pg. 380 Iguh JSC held as follows: “Without doubt the preponderance of evidence or the balance of probabilities constitute sufficient ground for a verdict in civil cases. This general rule is however subject to the statutory provision in section 137 (1) now section 138 (1) of the Evidence Act to the effect that if the commission of a crime by a party to any proceeding is directly in issue in any proceeding, civil or criminal, it must be proved beyond reasonable doubt.” In fact the circumstances of this case under review is quite similar though not on all fours with AROWOLO V. IFABIYI supra. In AROWOLO V. IFABIYI, the Plaintiff had alleged that the Defendant fraudulently used his title documents to secure a loan from the Bank. The Supreme Court affirming the concurrent findings of fact by the High Court and Court of Appeal held that even though what the Defendant did was underhanded and morally wrong, the commission of a crime was not directly in issue and the plaintiff need only prove his claims on a balance of probabilities. The claim was for a return of the title documents and a declaration in respect of the mortgaged property. None of the claims need proof of commission of a crime to succeed. Likewise, in this case, I do not think that the claims as contained in the petition of the Respondent are such that it must prove actual commission of the criminal offence of fraud to succeed. It had to lay out the facts to show that the Appellant engaged in acts deliberately inimical to its interest in the conduct of its business to prove its case. Thus as opined by Iguh JSC is AROWOLO V. IFABIYI supra at Pg 380 of NWLR. “I need perhaps add in the above regard that where a strong language is employed to describe one’s conduct or motive in a transaction as was done in the present case by the use of the word ‘fraudulently’, that does not ipso facto convert the basis of a claim to a crime.” His Lordship also cited GODWIN NWANKWERE V. JOSEPH ADEWUNMI (1967) NMLR 45 Afortiori, in this case, the Respondent’s claim is that the evidence shows that the Appellant was in control of the company who received goods which proceeds disappeared into thin air by virtue of the fact that the said proceeds were not paid into the designated account but paid into another account. The Appellant in control of the money cannot explain the failure of the company to produce the money. That in my humble view does not call into play the application of section 138 (1) of the Evidence Act and whether or not the crime of fraud was committed by the Appellant is not directly in issue even though the Respondent used such strong words as “fraudulently” etc to articulate its claims. See also dicta of GALADIMA JSC in ALADE V ALIC NIG. LTD. (2010) 19 NWLR Pt. 1226 pg. 111 at pg. 130 paragraph C – E. PER HELEN MORONKEJI OGUNWUMIJU, J.C.A.

INTERPRETATION OF STATUTE: INTERPRETATION OF SECTIONS 506 AND 290 OF THE COMPANIES AND ALLIED MATTERS ACT

The relevant sections of CAMA under consideration are section 506 and 290. They are set out below: “Section 506 (1) If, in the course of the winding up of a company, it appears that any business of the company has been carried on in a reckless manner or with intent to defraud creditors of the company or creditors of any other person for any fraudulent purpose, the court, on the application of the official receiver, or the liquidator or any creditor or contributory of the company, may, if it thinks proper so to do, declare that any persons who were knowingly parties to the carrying on of the business in manner aforesaid shall be personally responsible, without any limitation of liability for all or any of the debts or other liabilities of the company as the court may direct. (2) Where the court makes a declaration as to responsibility for debts or liabilities under subsection (1) of this section, it may give any direction it thinks proper for the purpose of giving effect to that declaration, and in particular the court may make provision for making the liability of any such person under the declaration a charge on any debt or obligation due from the company to him, or on any mortgage or charge or any interest in any mortgage or charge or any assets of the company held by or vested in him, or any company or person on his behalf, or any person claiming as assignee from or through the person liable or any company or person acting on his behalf, and may from time to time make any further order necessary for enforcing any charge imposed under this subsection. (3) Where any business of a company is carried on with such intent or for such purpose as is mentioned in subsection (1) of this section (other than recklessly), every person who was knowingly a party to the carrying on the business in manner aforesaid, shall be guilty of an offence, and liable on conviction to a fine of N=2,500 or to imprisonment for a term of two years, or to both. (4) In its operation, this section shall have effect, so however that – a) A declaration may be made notwithstanding that the person concerned may be criminally liable in respect of matters which are grounds for the declaration and a declaration, if made, shall be deemed to be a final judgment of the court; b) The official receiver or the liquidator, as the case may be, on the hearing of an application to the court, may himself give evidence or call witnesses; c) There shall be included in the expression “assignee” any person to whom or in whose favour by the direction of the person liable the debt, obligation, mortgage, or charge was created, issued or transferred, or the interest created, other than any person being an assignee for valuable consideration given in good faith and without notice of any of the matters on the ground of which the declaration is made. Section 290 (1) Where a company – a) Receives money by way of loan for specific purpose; or b) Receives money or other property by way of advance 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 from 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.” The crucial elements for an application under section 506 are as follows: “(a) A company must be in the process of being wound up (b) The relevant person must have been carrying on the business of the company. (c) The relevant person must have acted recklessly or with intent to defraud creditors.” PER HELEN MORONKEJI OGUNWUMIJU, J.C.A.

WINDING UP PROCEEDINGS: WHAT A WINDING UP PROCEEDINGS OF A COMPANY ENTAILS

Thus winding up proceedings of a company is a special form of civil proceeding which has at its main objective the termination of the existence of a company. These proceedings are conducted in accordance with CAMA and the rules of practice which includes the mode of winding up and the extent of liability of past and present Directors of the company. Section 310 of the 1968 Companies Act of Nigeria whose precursors in the English Acts were under consideration in the above cases is of similar effect as the sister section 309. Both sections, that is section 309 in the British Act and section 506 are invariably procedural not substantive in nature as they create no new rights except as channels for enforcement of rights. PER HELEN MORONKEJI OGUNWUMIJU, J.C.A.

LIFTING THE VEIL OF INCORPORATION: CIRCUMSTANCES WHEN THE VEIL OF INCORPORATION CAN BE LIFTED BY THE COURTS

JUSTICES:

HELEN MORONKEJI OGUNWUMIJU Justice of The Court of Appeal of Nigeria

IBRAHIM MOHAMMED MUSA SAULAWA Justice of The Court of Appeal of Nigeria

SIDI DAUDA BAGE Justice of The Court of Appeal of Nigeria

Between

CHIEF BOLA ADEDIPE – Appellant(s)

AND

SAMEINDIR FRAMEINENDUR – Respondent(s)

HELEN MORONKEJI OGUNWUMIJU, J.C.A. (Delivering the Leading Judgment): This is an appeal against the decision of the Federal High Court, Lagos Division delivered by Honourable Justice M. L. Shuaibu on 29th November 2006 in respect of the petition for declaration pursuant to S. 506 (1) of the Companies and Aliied Matters Act 1990 hereinafter referred to as (CAMA). The Court found the Appellant personally liable without limitation for the sum of N=21,989,362.87 (Twenty One Million, Nine Hundred and Eighty Nine Thousand, Three Hundred and Sixty Two Naira, Eighty Seven Kobo)
The said sum was the judgment debt with accrued interests as at 14th November 1998 in suit No. LD/149/89 between the Respondent herein as Plaintiff and five Defendants, namely Bol-Bol & Co. Ltd; Mrs. Hylan Beany; Mr. Habib Beany; Mr. Eli Adi and First Bank of Nigeria Limited, in which by a consent judgment, Bol-Bol and Company limited (then the 1st Respondent in the Lagos State High Court and the lower court) agreed to pay the present Respondent on appeal the total sum of N=7,233.040 (Seven Million, Two Hundred and Thirty Three Thousand and Forty Naira).
The facts that led to this appeal are as follows:
The Respondent filed a petition dated 11th December 1998 on the same day. In the petition, the Respondent in paragraphs 7-17 stated as follows:
7. The 3rd Respondent is a company registered under the Companies Act CAP 59 (formerly the companies Decree 1968) and carries on business as bankers at No. 35 Marina, Lagos and other places in Nigeria.
8. Pursuant to an agreement made between the Petitioner and the 1st Respondent on the 6th day of March 1987 for the sale of 35,334 bales of stockfish by the Petitioner to the 1st Respondent for a total sum of N=18,500,000.00, the 1st Respondent opened Account No. 01307718 with the 3rd Respondent bank to which the 2nd Respondent, as Chairman of the 1st Respondent company, one Mr. Peter Beany, the 1st Respondent’s then Managing Director (now deceased) and the Petitioner’s solicitor were signatories. All proceeds of the sale of the said consignment of stockfish were to be paid into this account.
9. However, unknown to the Petitioner and contrary to the spirit of the agreement between the parties, the 2nd Respondent, along with late Mr. Beany opened another account (Account No. 01307750) for the 1st Respondent company with the 3rd Respondent bank; which account was exclusively under the control and management of the 2nd Respondent and the said Mr. Beany (deceased). Proceeds of sale of the stockfish intended for Account No. 01307718 were diverted into Account No. 01307750 to which the 2nd Respondent and the deceased Mr. Beany were joint signatories. The Petitioner shall found upon the statements of the two accounts.
10. By this means a total sum of N=7,636,040.00 was fraudulently diverted and removed by the 2nd Respondent and Mr. Beany, for their private use.
11. In 1989 the Petitioner instituted an action at the High Court of Lagos State in suit No. LD/149/89 against the 1st and 3rd Respondents the Manager of the Company and representatives of the estate of late Mr. Beany claiming the said sum of N=7,233,040.00 with interest at 15% from the 1st day of August 1987 until judgment and at 6% from judgment till payment.
12. On the 14th day of December 1993 a consent judgment was entered against the 1st Respondent herein, the manager and 2 members of Mr. Beany’s family jointly and severally for the sums claimed as stated in paragraph 11 herein. The Petitioner shall found upon Certified True Copies of the judgment and terms of settlement. The case against the 3rd Respondent was discontinued and struck out.
13. Since the judgment, the company and the other judgment debtors have failed, inspite of demands, to settle the judgment debt.
14. In 1993 the Petitioner took out a writ of attachment but could not execute same because the 1st Respondent had no asset whatever to attach and the other judgment debtors who are aliens had left Nigeria and could not be traced. The Petitioner shall found upon the writ of execution which was returned unsatisfied in whole.
15. In 1993, upon information that 2nd Respondent was involved in the fraud, the Petitioner’s then solicitors, G. N. Uwechue & Co., wrote to the 2nd Respondent demanding payment. But by a letter dated 13th September 1993 the 2nd respondent denied any involvement with any fraud. The Petitioner shall found upon the said letters.
16. The Petitioner verily believes in the involvement of the 2nd Respondent who was a signatory to the said account and collaborated with Mr. Beany to perpetrate the fraud and used part of the money to set up Nation Wide Merchant Bank Limited.
17. The company is now indebted to your Petitioner in the sum of N=21,989,362.87 being the said judgment debt with accrued interests as at 14th November 1998, in suit No. LD/149/89.”
Affidavit with exhibits were filed with the petition. Thereafter, the Appellant as 2nd Respondent filed an application dated 19th October 1999 asking that the name of the 2nd Respondent be struck out being not a party to the consent judgment and for stay of proceedings. In a considered ruling delivered on 13th September 2000, the court refused the application to strike out the 2nd Respondent’s name and dismissed same. The second prayer for stay of proceedings was struck out having being withdrawn by the 1st and 2nd Respondents to the petition.
In pursuance of the petition, the Petitioner filed an application dated 23rd July 1999 on 29th July 1999 for lifting the veil of incorporation and declaration under S. 506 (1) of CAMA in the following terms:
“1. An order declaring that the 2nd and 3rd Respondents, who were knowingly parties to the carrying on the 1st Respondent’s business of paying in the proceeds of the stockfish sales into account No. 01307718 recklessly by their opening the second account No 01307750 with the 3rd Respondent with intent to defraud the petitioner and for a fraudulent purpose, are personally liable without limitation for the sum of N=21,989,362.87 being the judgment debt with accrued interests as at 14th November 1998 in suit No. LD/149/89 for which the 1st Respondent is being wound-up.
2. An order that the above sum be paid to the Petitioner by the 2nd and 3rd Respondents forthwith else execution be levied immediately against the 2nd and 3rd Respondents.”
Both parties filed copious processes in support or against the application. The learned trial judge Honourable Justice M. L. SHUAIBU in a considered ruling delivered on 29th November granted the application and declarations sought above. The Appellant as 2nd Respondent at the lower court has now appealed.
Please note that before the application was heard, Petitioner had discontinued against First Bank and its name was struck out on 28th March 2001. There was no appeal against the decision of 13th September 2000 by the 2nd Respondent.
The Appellant filed his notice of appeal on 1st February 2007 and issues were joined by the parties. The Appellant’s brief dated 28th march 2008 was filed same day. The Appellant’s reply brief was also dated 31st July 2008 and filed on 5th August and was deemed filed on 8th April 2009 with the list of additional authorities filed on 14th April 2010. The Respondent filed the Respondent’s brief dated 22nd May 2008 on same day. The Appellant identified four issues for determination set out below:
“(i) Whether the lower court ought not to have struck out paragraphs 5, 6 and 7 of the Respondent’s Affidavit dated 23rd July 1999 in support of the application of the same date brought pursuant to section 506 of CAMA as contravening sections 86 and 87 of the Evidence Act.
(ii) Whether the lower court ought to have made a finding of fraud on the conflicting affidavit evidence without calling for oral evidence to resolve the conflict.
(iii) Whether the earlier ruling of the lower court in the suit dated 13th September 2000 on the question whether or nor the Appellant was a party to or a judgment debtor in suit No. LD/149/89 in the Lagos State High Court constitutes an issue estoppel against the Appellant herein.
(iv) Whether Section 290 of CAMA can be used as a legal basis to impose personal liability in an application brought pursuant to section 506 of CAMA in a situation in which the Appellant has not been shown to have violated the provisions of section 506 of CAMA.”
I have looked at the issues identified by the Respondent’s counsel and they seem to me unnecessarily verbose and do not go directly to the complaints raised by the Appellant in his notice of appeal. I therefore adopt for the determination of this appeal, the issues crystallized by Appellant’s counsel.
ISSUE ONE
In the brief settled by Dr. Wale Olawoyin, learned Appellant’s counsel drew our attention to the fact that the trial court arrived at its decision by relying on paragraphs 5, 6 and 7 of the Respondent’s 8 paragraph affidavit in support of its application for declaration pursuant to S. 506 (1) of CAMA. Learned counsel argued that the trial court had erroneously held that the said paragraphs did not contravene the provisions of S. 86 and 87 of Evidence Act. Counsel submitted that the lower court failed to apply the test necessary for determining whether or not the depositions in the affidavit were indeed facts and/or circumstances. Counsel argued that the contents of paragraphs 5, 6 and 7 of the affidavit were based on the opinions of a lawyer as to why a second account was opened with First Bank of Nigeria Plc; how the business was being run (i.e. negligently and fraudulently) without any tangible evidence to prove such allegations by a person who would not have been permitted to make such depositions as a witness of fact. Learned counsel asserted that it is instructive to note that the source of the information of the deponent was G. N. Uwechue, SAN, who was counsel for the Respondent in the Lagos State High Court and he also would have been precluded from giving such opinions as a witness of fact and that there is no evidence in the Record where any court of law had made any finding in respect of the allegations which were essentially opinion of counsel. Counsel argued that there is no evidence that accounts were opened, how the accounts were opened and the circumstances surrounding the opening of any alleged accounts.
Learned counsel submitted that the fate of such defective paragraphs is to have them struck out or the court must refrain from relying on such paragraphs in arriving at its decision. He cited NIG. LNG LTD. V. AFRICAN DEVELOPMENT INSURANCE CO. LTD (1995) 8 NWLR Pt. 416 Pg. 677 at 699-700; BAMAIYI V. THE STATE (2001) 8 NWLR Pt. 715 Pg. 270 at 288; A. G. ANAMBRA STATE V. A.G. FEDERATION (2007) 12 NWLR Pt. 1047 Pg. 1 at Pg 44; paras A -C; and A.G. ADAMAWA STATE V. A.G. FEDERATION (2005) 18 NWLR Pt. 958 Pg. 581 at Pg. 625, Pg. 648 and Pg. 657.
Learned Respondent’s counsel Mr. Emeka C. Nwosu conceded that indeed the legal position under section 86 & 87 of the Evidence Act is that every affidavit used in court must contain only facts and circumstances to which the deponent swears either of his own personal knowledge or from information from some other person who he must name and must not contain extraneous matters. – He cited BAMAIYI V. STATE (2001) 4SC Part. 1 Pg. 18 at 27-35.
He submitted that a look at paragraphs 5 to 7 of the affidavit shows that they are based on information given to the deponent by G. N. Uwechue SAN in chambers and he believed him. They did not contain any conclusions, arguments or extraneous matters. These paragraphs, it is submitted complied with sections 86 and 87 of the Evidence Act. He cited MAJA V. SAMOURIS (2002) 8 M.J.S.C. 103 at 121 G. They are in the same category with paragraphs 2, 3 and 4 of the same affidavit yet unattacked, unchallenged and uncontradicted by the Appellant in the proceedings at the lower court.
Counsel further submitted that the Appellant did not allege that the failure of the trial court to strike out or that its reliance on these paragraphs 5, 6 and 7 of the respondent’s affidavit of 29th July 1999 and/or other affidavits dated 7th December 2001, 21st July 2003 and 8th October 2003 read collegially by the court to decide the application against him on 29th November 2006 led to a miscarriage of Justice. Counsel submitted that the lower court’s lifting of the veil was right since there was no miscarriage of justice. Counsel argued that apart from the original affidavit, several other affidavits were sworn to by the parties before the application was heard. There is no attack by the Appellant on these other affidavit and they do not violate section 86, 87 and 89 of the Evidence Act.
Learned Respondent’s counsel further argued that the Respondent had also on 16th June 1999 filed with a motion for advertisement a 2 paragraph affidavit in which the activities of the Appellant over the sales proceeds were stated. Counsel asserted that there were no categorical challenges to the averments in the Respondents affidavits filed on
a) 29/7/99 – by Kamoru Adekola dated 23/7/99
b) 7/12/01 – by Emeka Nwosu, Esq
c) 21/7/03 – by Emeka Nwosu, Esq
d) 8/10/03 – by Emeka Nwosu, Esq
All the above go to show that paragraphs 5, 6 and 7 were not opinions of G. N. Uwechue SAN since there was evidence that accounts were opened, who opened them and when they were opened. He argued that all the authorities cited by learned Appellant’s counsel were not relevant in the circumstances.
Let me start by reminding us of Sections 86 and 87 of the Evidence Act. They are stated below:
“86. Every affidavit used in the court shall contain only a statement of facts and circumstances to which the witness deposes, either of his own personal knowledge or from information which he believes to be true.
87. An affidavit shall not contain extraneous matter, by way of objection, or prayer, or legal argument or conclusion.”
In GENERAL & AVIATIONS SERVICES LTD V. THAHAL (2004) 10 NWLR Pt. 880 Pg 50 at Pg. 73 the Supreme Court laid down the test for determining whether or not the depositions in an affidavit are facts and circumstances. It was emphasized in that case that it is for the court to examine each of the paragraphs deposed to in the affidavit. If it is such that the witness may be entitled to adduce them in his testimony on oath and are legally admissible as evidence to prove or disprove a fact in issue or dispute, then they qualify as statements of facts or of circumstances
The relevant allegedly offensive paragraphs in the affidavit sworn to on 29th July 1999 by Kamaru Adekola dated 23rd July 1999 on Pg. 54-55 of the record are stated below:
5. “That G. N. Uwechue, SAN informed me in chambers and I believed him that the 2nd and 3rd Respondents opening of the second account was with intent to defraud the Petitioner and for their fraudulent purposes and it enabled them to carry on the 1st Respondent’s business of paying the stockfish sales proceeds into Account No. 01307719 in a fraudulent manner by diverting same to account No. 01307750 from which 2nd Respondent with 3rd Respondent’s connivance established Nationwide Merchant Bank Limited.
6. That G. N. Uwechue, SAN informed me and I verily believed him that the 2nd and 3rd Respondents carried on the 1st Respondent’s business of paying in of the stockfish proceeds into account No. 01307718 in a reckless manner with intent to defaud the Petitioner of the proceeds.
7. That G. N. Uwechue, SAN informed me in chambers and I believed him that the 2nd and 3rd Respondents were very negligent towards the Petitioner over Account No 01307750 to siphon away the proceeds of the stockfish sales enabling the petitioner to incur the loss of sales prosceeds”.
Section 86 provides that an affidavit shall contain only statements of facts and circumstances. Section 87 states that no extraneous matters such as objection, prayer, legal argument or conclusion can be included in an affidavit. By Section 86 the law requires that sometimes bare facts may not be enough to tell the story but circumstances of the evolution of the facts may have to be set out in the affidavit. However, Paragraphs 5, 6 and 7 of the affidavit contain the phrases “intend to defraud” “fraudulent purposes” “fraudulent manner” “reckless manner” “very negligent” which the learned Appellant’s counsel says are conclusions not based on facts before the court. I think I agree with the learned Appellant’s counsel on this point. The three paragraphs are replete with phrases which indicates the conclusions drawn by the deponent from the circumstances of the facts of this case. Indeed Uwaifo JCA (as he then was) in NIG LNG LTD V. AFRICAN DEV. INSURANCE CO. LTD (1995) 8 NWLR Pt. 416 Pg 677 at 699-700 put the issue concisely and very clearly as follows:
“It is, in my opinion, a restricted and wrong interpretation of section 87 to regard the word “conclusion” as used therein to mean “legal conclusion”. I think the word “conclusion” there means any conclusion based on fact or law which is a process of reasoning to reach an opinion, or drawn (sic) an inference or make a deduction. Apart from where opinion evidence is admissible, no witness is permitted to engage in such process when giving evidence as to facts. Similarly, it will not be allowed in an affidavit used in court. This is so even where what is relied on is the opinion of a lawyer who is familiar with the facts. If the lawyer himself cannot be permitted to make the deposition, the person to whom he passes that opinion cannot, a fortiori, be allowed to depose to it…”
I am of the view that the learned trial judge ought to have struck out these offending paragraphs. The phrases used were conclusions as to the mental state of the Appellant while resulted in the actions of the Appellant. By the use of the phrases “fraudulent manner” “reckless manner”, “fraudulent purposes” – the Respondent had made deductions from the actions of the Respondent to arrive at the conclusions indicated by the phrases used. It was a matter in which the bare facts need be told to the court and the court would now be at liberty to draw these conclusions. I therefore strike out paragraphs 5, 6 and 7 of the Petitioner/Respondent’s affidavit dated 23rd July 1999 filed on 29th July 1999.
However, the matter does not end there. In the same affidavit sworn to by one Kamoru Adekola on 29th July 1999, the Petitioner now Respondent deposed in paragraphs 2, 3 and 4 as follows:
2. “That Petitioner and 2nd Respondent with late Peter Beany the Managing Director of 1st Respondent opened Account No. 01307718 in March 1987, with 3rd respondent into which proceeds of the sale of N=18,500,000 worth of stockfish should be paid.
3. That G. N. Uwechue, SAN informed me in chambers and I believe him that behind the Petitioner the 2nd and 3rd Respondents connived and opened a second account No. 01307750 to which only the 2nd Respondent and late Peter Beany were signatories into which the proceeds of the stockfish sales were diverted and sucked out for their use to the knowledge of 3rd Respondent.
4. That the 1st and 3rd Respondents were sued by the Petitioner in suit No. LD/149/89 and got judgment but the judgment debt of N=21,989,362.87 as at 14th November 1998 has not been paid by the Respondents inspite of demands therefor.”
The above depositions in the affidavit are quite relevant and were not contested by the Appellant. They state the bare facts and do not include any conclusions as to the fraudulent intention of the Appellant. They are in themselves sufficient particulars to enable the learned trial judge come to a just conclusion in the circumstances of this case. I agree with the learned Respondent’s counsel as submitted in paragraph 4.03 of the respondent’s brief that on a whole reading of the various affidavit evidence before the trial court, the trial court’s lifting of the corporate veil to reveal the 2nd Appellant as the person behind the 1st appellant at the lower court was right. Even if the offending paragraph were struck out, the learned trial judge had sufficient material before him to arrive at the conclusion he did.
The attitude of the Appellate courts has been that an error in a judgment will result in an appeal being allowed ONLY when it has occasioned miscarriage of justice. See JOHN OWHONDA V. ALPHONSO CHUKWUEMEKA EKPECHI (2003) 9 SCNJ 1; ENG. EMMANUEL OSOLU V. ENG UZODINMA OSOLU & ORS (2003) 6 SCNJ 162; S. O. ADOLE V. BONIFACE B. GWAR (2008) 4 SCNJ 1; SABURI ADEBAYO V. A. G. OGUN STATE (2008) 2 SCNJ 352. I have to agree with the learned Respondent’s counsel that no miscarriage of justice has been occasioned by the learned trial judge’s erroneous consideration of these paragraphs in the affidavit among other paragraphs. Thus, there is no sufficient reason to set aside the findings of the learned trial judge based partly on his consideration of these paragraphs. Even though I have resolved the stark point in favour of the Appellant, the principles of the administration of substantial justice mandates me to resolve this issue in favour of the Respondent having decided that there has been no miscarriage of justice.
ISSUE TWO
The 2nd issue for determination is whether the trial court ought to have made a finding of fraud on the conflicting affidavit evidence without calling for oral evidence to resolve the conflict.
Learned Appellant’s counsel submitted that even if the offending paragraphs are considered, the inconsistency in the affidavits could not justify the findings of allegations of fraud which must by law be proved beyond reasonable doubt. Counsel argued that the trial court should have called for oral evidence to resolve the conflicting facts in the various affidavits. This is particularly evident from the contents of the exhibits attached to the said counter affidavit of 6th December 2001 at pages 122 – 128 of the Record and the appellant’s Reply affidavit of 18th January 2002 at pages 132 – 133 of the record. Also the Respondent’s Reply of 7th December 2001 at pages 129 – 130 of the records. These are all material denials which go to the root of the fraud allegation. He cited FSB INTERNATIONAL BANK V. IMANO NIG LTD (2000) 11 NWLR Pt. 679 Pg. 620 at 635 – 636.
Counsel argued that the only evidence placed before the court was affidavit evidence and no document was placed before the court to substantiate the allegation of fraud. He cited FBN PLC V. MAY MEDICAL CLINICS & DIAGNOSTIC CENTRE LTD (2001) 9 NWLR Pt. 717 Pg. 28 at 38.
Counsel further submitted that the lower court by not calling for oral evidence decided to pick and choose which evidence to believe and thus reached an erroneous decision and that the conflict in the affidavits were so material that the lower court was duty bound to call oral evidence even where the parties did not apply that such oral evidence be taken. He cited OLATUNBOSUN ISHIAQ V. SERGEANT FREDERICK EHITOR & 2 ORS (2003) 10 NWLR Pt. 828 Pg 221 at Pg.240 -1 B-G; MOMAH V. VAB PETROLEUM INC. (2000) 4 NWLR Pt. 654 Pg 534.
Learned Respondent’s counsel opposing argued that the facts here are such that the affidavit and documents attached will reveal that there were no serious contradictions by the Appellant to warrant the trial court calling oral evidence to resolve. He argued that the depositions of the parties on the live issues did not reveal any conflict material enough for the court to insist on a resolution by oral evidence. He argued that the alleged conflicts cited by the Appellant were intangible and immaterial and thus peripheral, cosmetic, and mere fences orchestrated by the Appellant to shield himself from the truth of his being the only Director of Bol-Bol & Co who obtained the stockfish, sold and directed sales and payment of proceeds into another account, procured Beany and others for his own dishonest purposes hiding under the veil of incorporation and Legal Practice. The Respondent alleged fraud and through its affidavits gave all the particulars of the fraud while attaching documents. Without any material denial and contradiction of these there cannot be said to be any serious contradictions to warrant oral evidence as required by law.
I share the view that there is no doubt that where there are material contradictions in affidavit evidence, the court cannot pick and choose which one to believe and the courts have held that oral evidence must be utilized to aid in determining the veracity of the evidence because the witnesses would then be subjected to cross examination. See GRENG DANONE V. VOLTIC NIG LTD (2008) 7 NWLR Pt. 1087 Pg. 637; D.P.C.C. LTD V. B.P.C LTD (2008) 4 NWLR Pt. 1077 Pg. 376.
The uncontroverted facts which I can glean from the records are as follows:
On 6th March 1998 the Appellant signed stockfish purchase/sales contract with the Respondent for 35,334 bales and took custody of these bales for his company Bol-Bol after procuring one Mr. Beany as their Guarantor on the basis that the proceeds of sale of the fish shall be paid into account No. 01307718 opened on 13th March 1987 with him, Mr. Beany and G. N. Uwechue, SAN as signatories. On 24th April 1987 the Appellant with Mr. Beany opened another account No. 01307750 in the same First Bank of Nigeria and never kept the sales agreement for which the Company, Mr. Beany and others were sued. The Appellant as counsel defended the company and Mr. Beany and others in suit LD/149/89. In 1992 the Respondent obtained a consent judgment in LD/149/89 but could not execute by fife because of lack of assets of Bol-Bol & Co. Ltd. The Respondent in 1998 sought to liquidate the judgment debtor Bol-Bol and in 1999 applied to lift the veil of incorporation against the Appellant rooted on the fact that he was the Director/Chairman of the company who transacted the stockfish purchase/sales business for the company. These facts of participating in the initial transaction, being a director/chairman and opening of accounts are contained in the affidavits and documents marked exhibits “ROA” in the affidavit of one Apalara of 8th June 1999 pp. 25-45 of the Records, Exhibits Q, S, T and V in the affidavit of one Nwosu at at pp 150 -191 of the records, Exhibits BA1 and BA2 in Appellant’s affidavit of 6th December 2001 at pp 122 to 128 of the Records.
The defence of the Appellant is that he was never a party personally to the consent judgment. That argument has been over taken by the ruling of the trial court delivered on 13th September 2000 making the Appellant a proper party to this application. It is apparent to me that the only area in which there appears to be contradiction is the defence of the Appellant that he never had anything to do with the business of the stock fish importation, sales and disposition of the proceeds whereas the respondent claimed to the contrary. I have read all the counter-affidavit of the Appellant. There is no denial of specifics in any of the counter affidavit. Paragraphs 4 and 6 of the petition dated 11th December 1998 states as follows:
“4. The subscribers to the Memorandum and Articles of Association of the company at the time of incorporation were:
1. Chief Bola Adedipe
2. Badru Atanda Olaogun
6. The 2nd Respondent is and at all material times has been a subscriber and contributory to and the Chairman of the 1st Respondent company with executive powers, including the power to sign cheques and manage the company’s bank accounts and in particular account Nos. 01307718 and 01307750 with the 3rd in Respondent bank’s N.I.J. building branch at Adeyemo Alakija Street, Victoria Island, Lagos
The Appellant has consistently maintained the position contained in his counter affidavit to the petition which he swore to on 6th December 2001. The relevant portions are as follows in paragraphs 6-9 of said counter affidavit on page 123 of the record.
“6. While it is true that I have always been the non-executive chairman of the 1st Respondent company sought to be wound up by the Petitioner, I was not involved in the running of the business which gave rise to the suit No. LD/149/89 in the Lagos High Court and the consequent judgment in the said suit.
7. Further to paragraph 6 hereof, I was not a party to suit No. LD/149/89 and the judgment obtained in the said suit was not against me.
8. The consent judgment obtained by the present Petitioner in suit No. LD/149/89 on 14th December 1992 made no reference to me whatsoever.
9. An earlier attempt by Chief George Uwechue SAN, the Petition’s counsel in suit No. LD/149/89 to ascribe personal liability to me in respect of the consent judgment of 14th December 1992 (vide his letter of 3rd September 1993 a photocopy of which is attached hereto and marled as “Exhibit BA1″) was repudiated by me in my letter reference B.84/9/BAA/ME/93 of 13th September 1993. Attached hereto and marked as Exhibit BA2 is a photocopy of my letter of 13th September 1993 to Chief George Uwechue SAN.”
There is no direct or unequivocal denial of the fact that the Appellant was chairman and a director in the company Bol-Bol Nig Ltd. There was no denial of the fact that all parties agreed to pay proceeds of sale of the stock fish into account No. 01307718 at First Bank wherein he was a signatory. There was no denial that another account No. 01307750 into which the proceeds were actually paid was opened wherein he was the signatory. There was no denial that consent judgment was obtained against the company in suit LD/149/89 but the company had no asset to attach. These are the facts in controversy.
As I said earlier, I am in agreement with the argument of learned Respondent counsel that none of the salient averments in the respondent’s affidavit were specifically traversed by the Appellant in the counter affidavit and Reply affidavit. When an averment is not frontally denied, it is deemed admitted. See ABUBAKAR V. WAZIRI (2008) 14 NWLR Pt. 1108 Pg 507; ALH. MUJAHID DOKUBO-ASARI V. FRN (2007) 6 SCNJ 192. Tobi JSC in the case of LSDPC V. ADOLD STAMM INTERNATIONAL (NIG) LTD (2005) 2 NWLR Pt. 910 Pg. 630 stated that
“For conflict in an affidavit to receive attention of the court, the conflict must really affect the live issues involved in the case. The conflict must be tangible, not intangible, it must be material and not immaterial and it must be substantial and fundamental to the live issues in the case. Where conflicts are peripheral, cosmetic, inarticulate or a mere fence orchestrated by the party, a court of law will not order that oral evidence be led to resolve or reconcile the “conflicts”.
I am of the view that the argument of learned Appellant’s counsel on this issue is an attempt to brew a storm in a tea port. It is mere filibuster and shadow boxing. There are no material evidence in controversy to warrant the calling of oral evidence to resolve. If the Appellant had stated categorically that he was not a signatory to the company’s accounts as claimed by the Respondent we would need oral evidence to explain and reconcile the evidence.
I am of the view that the second issue be resolved in favour of the Respondent.
ISSUE 3
Whether the earlier ruling of the lower court in the suit dated 13th September 2000 on the question whether or not the Appellant was a party to or a judgment debtor in suit No. LD/149/89 in the Lagos State High Court constitutes issue estoppel against the Appellant herein.
Learned Appellant’s counsel argued that the issue is germaine because the court below refused to consider the fact of whether the Appellant was indeed a party to the suit before the Lagos State High Court wherein the company Bol-Bol Co. Ltd was found liable to pay the judgment sum with interest. Counsel further argued that if the lower court had considered that issue of fact, a finding of fraud or assumption of personal liability would have been extremely difficult if not impossible in the circumstances. The Appellant consistently denied that he was a party to the Lagos State action a fact which is self evident from the record at page 66 or that he ever assumed personal liability for the debt as alleged by earlier counsel G. N. Uwechue SAN.
Counsel submitted that the judgment in suit No. LD/149/89 did not constitute issue estoppel since the lower court did not consider it necessary in the ruling of 13th September 2000 to answer the question of whether the 2nd Respondent was a party to the consent judgment. Counsel argued that since there was no distinct decision on that issue by the trial court in that ruling, the Respondent cannot raise issue estoppel. He cited RANKING UDO & ORS V. MBIAM OBOT & ORS (1989) 1 NWLR Pt 95 Pg 72 at 79. Appellant’s counsel further posited that the failure of the lower court in its ruling to consider the question whether the Appellant was a party to the Lagos State High Court action was among the factors that led to erroneous decision imposing personal liability on the Appellant.
In essence, learned Appellant’s counsel is urging us to accept the view that he was not a party to suit No. LD/149/89 and that only Beany and the company were found liable to pay the sum of N=7,233,040 to the Respondent. Being not a party therefore, the trial court should not have found him personally liable to the Respondent inspite of the fact that his earlier application in the winding up proceedings to have his name struck out was refused.
On the other hand learned Respondent’s counsel argued on this issue that the Appellant being the only Director/Chairman of Bol-Bol who transacted the stock fish business and procured non-Nigerians to aid him contrary to the Nigerian Enterprises Promotion Act, is privy in interest to the parties who were sued since he knew fully well the consequences of watching and using others he defended in court to fight his battle for him without applying under section 64 (1) of CAMA 1990 to be relieved nor could he bring himself within section 67 (1) and (2) of the Act. Counsel further argued that in FHC/L/CS/98 there is a serious question between the parties for trial in that the Appellant was accused of being the real debtor by virtue of his being the Director/Chairman/Officer of bol-Bol who connived with others he procured to swallow the stock fish proceeds and so liable under the CAMA 1990. He had notice of the earlier suit when he acted for his “clients” for who he consented to the judgment in that suit. Counsel cited Order 36 Rule 11 of the Lagos High Court Civil Procedure Rules and ORIARE V. WESTERN NIGERIA (1971) ANLR. Counsel insisted that the Appellant is privy in interest with Bol Bol, Beany and others being the Director who signed for the stock fish business, procured Beany for sureteeship and called him and Adi for the illegal business of fish sales/distribution in Nigeria and defended them in court when sued with Bol-Bol for the proceeds. Counsel argued that as their lawyer the Appellant must be taken to have acquiesced because he knew of the suit and defended it amounting to active participation in the suit. He cited OKE V. ATOLOYE (1986) ANLR 100; BALAGUN V. ADEJOBI (1995) 2 NWLR Pt 376 Pg 131 at 159, 160E; MAR BELL V. AKWEY 14 WACA 143 at 145, AJAKA V. EYIMOSAN (1961) WNLR 230; NDIRIBE V. OGBOGU (1989) 5 NWLR Pt 123 Pg. 599 at Pg 602; FADIORA V. GBADEBO (1978) 1 LRN 97 at 101.
Learned Respondent’s counsel submitted that the judgment of courts of competent jurisdiction are valid, subsisting and binding on litigants and must be obeyed by both parties and their privies such as Bol-Bol, Beany, Adi, the Appellant and others. He cited ARCON V. FASSASSI No. 3 (1987) 3 NWLR Pt. 59 Pg. 134. The judgment of the Lagos High Court in LD/149/89 he asserted therefore constitutes issue estoppels against the Appellant as a privy and is a relevant fact in suit No. FHC/L/CS/98. He cited ODJE VWEDGE V. ECHENOKPE (1987) 1 NWLR Pt. 52 Pg. 633.
Counsel argued that the failure of the Appellant to appeal against the dismissal of his motion for his name to be struck out is material since it means that the Appellant remains bound by the decision which acts as issue estoppel against him forever until that ruling is set aside.
In my humble view, the question to be decided on this issue is whether there is a previous decision by any court which is binding on the Appellant and thus estops him from raising any objection to the application by the Respondent to make him personally liable for the debt owed by the company to the Respondent. In UDO V. OBOT supra, Karibi-Whyte JSC said at Pg. 79 of the NWLR.
“The doctrine of estoppel per rem judicatum is the product of our adversary system of litigation. The essence of the system is that unless an issue litigated as between opposed parties is distinctly decided upon by a properly constituted court it remains open to be litigated in the future if it becomes an issue. But once distinctly and actually raised and decided it should be regarded as forever decided.”
There is no doubt that on the face of the processes and the consent judgment in suit No. LD/149/99, the Appellant as an individual was not a party. Earlier on, at the trial court when the ruling dated 13th September 2000 was delivered, at page 98-100 of the record, the trial court recognized that the question in controversy was whether the Appellant who was then 2nd respondent should be joined as a party in the petition for winding up. The Appellant had filed a motion under Order 8 Rules 1 and 2 of the Federal High Court Rules to have his name struck out as a party to the winding up proceedings. His application was based on his position that being not a party to the case in suit No. LD/149/89 in which consent judgment was given against the company, the Beanys etc and as his name was not on any the process, he cannot be a party to the winding up proceedings. The trial court in deciding that issue held that it was immaterial whether or not the Appellant was a party to the consent judgment and went on to hold that in the circumstances of this case it was essential that the Appellant be joined as a party in the winding up proceedings.
Let me say that the purport of that ruling of 13th September 2000 was to make the Appellant a necessary party to the petition for winding up and all the other attendant applications in the prosecution of that petition. To me the most viable argument is that no appeal was lodged against that ruling by the Appellant. All the arguments proferred by both sides on this issue would have been relevant and germaine if we were considering an appeal against that ruling. Incidentally we are not. The issue of whether or not the Appellant is a necessary party in my view had been settled when the learned trial judge in suit LD/149/99 held at page 109-110 of the record in the ruling of 13th September 2000 as follows:
“I have said earlier, what makes a person a necessary party to a suit depends on the nature of the reliefs sought.
On the issue of the consent judgment in the High Court of Lagos State in suit No. LD/149/89 it is not material whether or not the 2nd Respondent was a party. Section 506 of the CAMA is very clear. In the course of a company being wound up. If it appears that any business of the company has been carried on in a reckless manner or with intent to defraud creditors of the company for a fraudulent purpose, the court may on the application of a creditor of the company declare any person so involved personally liable without limitation.
Learned counsel for the Applicant contends that it is premature to join the 2nd Respondent at this stage. I do not agree with him since winding up process does not begin from the order but upon presentation of the petition.
I also reject the submission of the 2nd respondent/Applicant’s counsel that the provisions of section 506 of the Act is irrelevant to the winding up proceedings and the application for joinder.
That section, in my opinion, is very relevant to the present proceeding there is no better situation for invoking the section than in a winding up process.
In my view nothing stops the Petitioner from joining the 2nd Respondent or Respondent’s company in accordance with section 506 of the Act. However, the onus of satisfying the court to make a declaration in accordance with section 506 of the Act is on the creditor/Applicant.”
It is trite law that a party is precluded from arguing the contrary of any precise point which has been distinctly put in issue and with certainty determined. See OMNIA NIG LTD V. DYKRADE LTD (2007) FWLR Pt. 394 Pg 201 at 239.
I could not have put this issue to rest better than the learned trial judge when he held at page 251 of the record as follows:
“In the instant case the 2nd Respondent cannot be heard to complain against the decision of this court delivered on 13th September 2000 on facts directly in issue that is; the question whether or not he was a party to suit No.LD/149/89. This is against the backdrop of the fact that the said decision has not been challenged by way of appeal. In the circumstances, I could not but agree with Mr. Nwosu that the 2nd Respondent is stopped from raising the issue of being a party or not in respect of suit No. LD/149/89.”
Learned Appellant had brought the issue of whether he is a necessary party to the winding up proceedings and the matter had been decided against him unequivocally on 13th December 2000. He cannot raise that issue again.
In my humble view, I agree with the Respondent’s counsel that the Appellant is therefore bound by both the consent judgment in LD/149/89 and the ruling in FHC/L/CS/1442/98 which decision both act as estoppel against him in all the circumstances unless he successfully appealed against them.
This issue is resolved in favour of the Respondent.
ISSUE FOUR
This issue as couched by Appellant’s counsel is whether section 290 of CAMA can be used as a legal basis to impose personal liability in an application brought pursuant to section 506 of CAMA in a situation in which the Appellant has not been shown to have violated the provisions of section 506 of CAMA.
I have to explain that the couching of this issue presupposes that the trial court made a finding that the Appellant did not violate the provisions of section 506 of CAMA. I do not think that is the correct factual position. Indeed the correct position is that the learned trial judge having considered all the affidavit evidence before the court, concluded as follows at page 255 of the record.
“On the strength of the above and considering the earlier finding of this court which tied down the Petitioner/Applicant’s case to the previous suit No. LD/149/89 and the extent of the 2nd Respondent’s involvement in carrying on the business of the 1st Respondent with respect to the stock fish sales proceeds; the 2nd Respondent is no doubt liable to pay the said debt; pursuant to section 506 (1) of the Company and Allied Matters Act.”
Grounds 1, 2, 3, of the notice of appeal were although couched as grounds of law in essence complaints against the parameters used by the learned trial judge to arrive at his findings of fact to the effect that the personal liability of the Appellant in this case was established by the Respondent. Issues 1 and 2 derived from these grounds have already been decided earlier on in this judgment. What remains to be decided really is whether section 290 of CAMA can be used as a legal basis to impose personal liability in an application brought pursuant to section 506 of CAMA.
Both counsel proferred arguments on this point while they were arguing the second issue for determination. I deliberately refrained from setting out their arguments and giving an opinion on same because the arguments are relevant in respect of this issue and not relevant for issue two which had to do with resolution of conflicting affidavit evidence. I will hereunder set out the arguments on both sides.
Learned Appellant’s counsel argued vociferously that there was no concrete evidence before the lower court of the incidents of fraud in the opening of the two accounts. He opined that the finding of the learned trial judge was wrong and contrary to section 138 of the Evidence Act which provides that where the commission of a crime is in issue, it must be proved beyond reasonable doubt. He cited FBN PLC V. MAINA SARA (2005) 2 NWLR Pt. 909 Pg 42 at 62; IBADAN LGPC V. OKUNADE (2005) 3 NWLR Pt 911 Pg 45 at 57. He argued that the basis of section 506 application under CAMA is fraudulent trading which has the implication of criminality and the standard of proof is beyond reasonable doubt. He cited UTC NIG PLC V. MAOBISON INTERLINK & ASSOCIATES LTD (2003) 13 NWLR Pt. 837 Pg 271 at 304; LSDPC V. ADOLD STAMM INTERNATIONAL NIG LTD (2005) 5 NWLR Pt. 910 Pg 630. Learned Appellant’s counsel submitted that where the imposition of civil liability is premised on an allegation of criminality which is fraud, it must be proved beyond reasonable doubt. Counsel argued that the Appellant in this present appeal categorically stated in his affidavits that he was never involved in the running of the company and it is on record that Mr. Beany, the guarantor of the contract, confessed and admitted to misappropriating the moneys of the company. Accordingly counsel submitted, there is no basis in law to justify the Respondent’s attempt to apply the case of PUBLIC FINANCE SECURITIES LTD V. JEFIA (1989) 3 NWLR Pt. 543 Pg. 602 to the appellant’s situation.
Learned Respondent’s counsel had submitted in opposition that the standard of proof required of the Respondent in lifting the veil proceedings is not proof beyond reasonable doubt as required in criminal proceeding but on a balance of probability in view of the relevance and credibility of the evidence proferred. He cited FASEHUN V. PHARCO (1965) NMLR 441 at 444; MOGAJI V. ODOFIN (1978) 4 S.C. 91 at 94-95. He submitted that section 138 of the Evidence Act is inapplicable while moving an application under section 506 (1) which deals with the civil liabilities of the company being wound up. He cited DPP (R) V. SCHILDKAMP (1971) AC 1; RE WILLIAMS C. LEITCH BROS LTD (1932) 2 CH 71 At 77, RE PATRICK & LYON LTD (1993) CH 786 At 790 – 791 to buttress the point that where there is proof of actual dishonesty, the provisions of section 506 (1) would apply. He argued that the Appellant alone as a Director and Chairman of his company did the stockfish business by himself and those he procured and defended as “clients” knowing fully well that the company could not pay back. He submitted that this singular transaction not only amounts to “carrying on business by the company” but also “with intent to defraud” known to the Appellant. He cited RE SARFLASE LTD (1979) ALL F.R. 529.
He cited and distinguished this case from RE MAIDSTONE BP LTD (1971) 1 WLR Pg 1085. He urged on us the decision in PUBLIC FINANCE SECURITIES LTD V. JEFIA supra and LASR V. BERINI (1968) ALL NLR Pg 269, ADIMORA V. AJUFO (1988) 3 NWLR Pt 80 Pg 1; ODIBA V. MUEMUE (1999) 6 SC Pt 1 Pg 157 At 160, 167. He submitted that UTC V. MAOBISON supra is inapplicable to this case. He submitted that the facts reveal that the Appellant is the alter ego of the company which is the 1st Respondent at the lower court and there is no implication of criminality but rather dishonesty and fraud in a loose sense which is the basis of a prayer under section 506 of CAMA.
I have to agree with the Appellant’s counsel that the standard of proof of allegation of a crime in a civil case is proof beyond reasonable doubt as provided by section 138 (1) of the Evidence Act. However, it is my humble view that in this instance section 138 of the Evidence Act is inapplicable. This is because section 506 (1) envisages the civil liability of the Directors when a company is being wound up but not while in liquidation. Obviously section 506 (3) was enacted for the purposes of criminal liability applicable after liquidation while section 506 (1) was in respect of civil liability while in the process of winding up. All the applicant under section 506 (1) need prove is actual dishonesty. Involving according to the current notions of fair trading among commercial men, real moral blame. That was the guide provided in RE PATICK AND LYON LTD (1993) CH 786 At 790 -791.
Nigerian Judges have not attempted to define fraud in civil liability claims under CAMA but have tried to give us its implications and a practical guide on the evidence required. The attitude of the British Courts is exemplified in RE WILLIAMS C. LEITCH BROS LTD (1932) 2 CH. 71 At 77 where Maugham J – held that:
“If a company continues to carry on business and to incur debts at a time when there is, to the knowledge of the directors, no reasonable prospects of the creditors ever receiving payment of those debts, it is, in general, a proper inference that the company is carrying on business with intention to defraud.”
There is no doubt that the law requires strict proof of particulars of fraud or allegations of similar ilk.See OLUFUNMISE V. FALANA (1990) 3 NWLR Pt. 136 Pg. 1.
In MICHAEL AROWOLO V. CHIEF TITUS IFABIYI (2002) 4 NWLR Pt. 757 Pg. 356 at Pg. 380 Iguh JSC held as follows:
“Without doubt the preponderance of evidence or the balance of probabilities constitute sufficient ground for a verdict in civil cases. This general rule is however subject to the statutory provision in section 137 (1) now section 138 (1) of the Evidence Act to the effect that if the commission of a crime by a party to any proceeding is directly in issue in any proceeding, civil or criminal, it must be proved beyond reasonable doubt.”
In fact the circumstances of this case under review is quite similar though not on all fours with AROWOLO V. IFABIYI supra. In AROWOLO V. IFABIYI, the Plaintiff had alleged that the Defendant fraudulently used his title documents to secure a loan from the Bank. The Supreme Court affirming the concurrent findings of fact by the High Court and Court of Appeal held that even though what the Defendant did was underhanded and morally wrong, the commission of a crime was not directly in issue and the plaintiff need only prove his claims on a balance of probabilities. The claim was for a return of the title documents and a declaration in respect of the mortgaged property. None of the claims need proof of commission of a crime to succeed. Likewise, in this case, I do not think that the claims as contained in the petition of the Respondent are such that it must prove actual commission of the criminal offence of fraud to succeed. It had to lay out the facts to show that the Appellant engaged in acts deliberately inimical to its interest in the conduct of its business to prove its case. Thus as opined by Iguh JSC is AROWOLO V. IFABIYI supra at Pg 380 of NWLR.
“I need perhaps add in the above regard that where a strong language is employed to describe one’s conduct or motive in a transaction as was done in the present case by the use of the word ‘fraudulently’, that does not ipso facto convert the basis of a claim to a crime.”
His Lordship also cited GODWIN NWANKWERE V. JOSEPH ADEWUNMI (1967) NMLR 45
Afortiori, in this case, the Respondent’s claim is that the evidence shows that the Appellant was in control of the company who received goods which proceeds disappeared into thin air by virtue of the fact that the said proceeds were not paid into the designated account but paid into another account. The Appellant in control of the money cannot explain the failure of the company to produce the money. That in my humble view does not call into play the application of section 138 (1) of the Evidence Act and whether or not the crime of fraud was committed by the Appellant is not directly in issue even though the Respondent used such strong words as “fraudulently” etc to articulate its claims. See also dicta of GALADIMA JSC in ALADE V ALIC NIG. LTD. (2010) 19 NWLR Pt. 1226 pg. 111 at pg. 130 paragraph C – E.
The Appellant’s counsel had argued that the reliance by the Respondent on NASR V. BERINI cannot be justified because the Respondent failed to show how the Appellant profited by keeping the respondent’s funds. Also the Appellant in his affidavit and counter affidavit claimed that he never retained any profit made in the course of the business by means of his office in respect of the transaction between the Respondent, Bol-Bol Ltd and Mr. Beany.
There are two legs to this issue. The question of whether the learned trial judge was right on the evidence to have found the Appellant personally liable for the debt of the company is the first leg. The second leg is whether the learned trial judge was right to deploy the combination of section 290 and 506 of CAMA to ground the personal liability of the Appellant.
In arguing the second leg of issue four, learned Appellant’s counsel urged the view that since the application before the court was premised on section 506 of CAMA, which is clear, unambiguous and of a penal nature, it does not need section 290 in its application to determine its nature and scope. He argued that section 506 does not need any extraneous consideration in imposing personal liability on a director of a company. Counsel further argued that the application brought pursuant to section 506 relates exclusively to the winding up of a company and the responsibility to be apportioned to “any persons who were knowingly parties to the carrying on of the business in a reckless manner or with intent to defraud creditors or … for any fraudulent purpose,” section 290 of CAMA, on the other hand, deals with the personal liabilities of directors and officers of a company in the aforsaid circumstances.
Learned Appellant’s counsel posited that the facts of this case do not come within the purview of the application of section 290 of CAMA. There was no loan granted to the company. In the same vein, the company did not receive money as advance payment for the execution of a contract or project or that money received for a particular purpose was not so applied because of an intent to defraud. Counsel further submitted that section 290 of CAMA cannot be justifiably applied to find an officer of a company personally liable for the debts of a company being wound up because an application under section 506 applies strictly to a company that has gone into liquidation as is evident in the opening line of section 506 (1) to wit, “if, in the course of the winding up of a company…”
Counsel relied on DPP V. SCHILDKAMP (1969) 3 ALL ER 1640
He further submitted that even though the Respondent hinged the liability of the Appellant under section 506 on the commission of fraud, the Respondent never proved it. The mere fact of paying the proceeds of sales money to another account cannot be evidence of fraud beyond reasonable doubt when the court did not call on the Appellant to give oral testimony as to why this was done. He cited RE PATRICK & LYON LTD (1933) CH 786 wherein Maugham J. held that in determining what amounts to defraud and fraudulent purposes what the court is bound to consider is whether the director whose conduct has been attached is guilty of a dishonest fraud. He also cited the following cases: BERNASCONI & ANOR V. MICHOLAS BENNETH & CO. (A FIRM & ANOR) All England Offical Transcripts Chancery Division delivered on 2nd November 1999 at Pt 3; RE MAIDSTONE BUILDINGS PROVISIONS LTD (1971) 3 ALL ER 363 to buttress his argument that the Respondent failed to discharge the burden of proof that the Appellant acted dishonestly or was a party to the company’s business. He submitted that the circumstances of this case, does not come within the scope of section 290 of CAMA.
Learned Respondent’s counsel argued this question under issue (c). He argued that section 506 of the 1990 CAMA Act being a re-enactment of the 1968 Companies Act of Nigeria remains a procedural not a substantive provision for the enforcement of rights in company Law and practice against directors in the winding proceedings. He cited RE B. JOHNSON & CO (B) LTD (1955) CH. 634; RE CITY EQUITABLE FIRE INS. CO (1925) CH. 407, COVENTRY & DIXON’S CASE (1880) 14 CH.D. 660, CAVENDISHBENTINCK V. FENN (1887) 12 APP CAS 652.
Learned Respondent’s counsel in paragraphs 4:18 of his brief referred to paragraphs 4.31 to 4.38 of the Appellant’s brief which he claimed are complete misconceptions of the facts and law on this issue. Learned Respondent’s counsel then in the same paragraph 4.18 referred us to the plethora of affidavit evidence adduced by the Respondent on the fact of the liability of the Appellant. They are to wit:
1) Appellant’s own counter-affidavit of 6th December 2001 paragraphs 4,6,9,10 & 11 thereof. It is on page 122-128 of the Record
2) Appellant’s affidavit dated 8th January 2002 paragraphs 5,6,7 and 12 thereof. These can be found on pages 132- 133 of the record.
3) The Petition dated 1st December 1998 on page 5-8 of the Record
4) Affidavit for the advertisement of Petition dated 16th September 1999 paragraph 5-12 thereof at Page 47-49 of the records.
5) Paragraphs 2 (a) in the reply affidavit of Emeka Nwosu dated 7th December 2001.
6) Further affidavit of 21st July 2003 paragraohs 2-8 thereof with Exhibits Q,S,Z,T & V attached.
7) Further additional affidavit of Emeka C. Nwosu of 8th October 2003 wherein exhibits ECN1, E.CN 2, ECN 3 and ECN4 were attached. These are on page 129-130, 150-191, 193-198 of the records respectively.
Learned Respondent’s counsel argued that the Appellant refused/failed to account for the sales proceeds nor did he keep or produce records/books or any audited account of the stockfish sales in spite of the subpoena nor did he offer categorical contrary evidence to the fact that he alone was the alter ego of the company he claimed to be its non-executive chairman/director.
Learned Respondent’s counsel drew the attention of the court to the fact that the Appellant’s fellow director Chief B.A. Olaogun informed the Respondent without any denial of the truth of it by the Appellant that the Appellant alone remained the director of the company. Respondent’s counsel had sworn that Chief Olaogun told him that he had resigned as director meaning that the Appellant was the only Director remaining – page 150 of the records.
Learned Respondent counsel urged this court to consider the fact that the Appellant filed no further-counter affidavit to contradict or controvert paragraphs 2 (a) – (h) of the Respondent’s affidavits of 7th December 2001 and paragraphs 2-7 (a) – (R) of 21st August 2003 and paragraph 2 of 8th October 2003. He urged the court to give full weight and value to the unchallenged averments in these affidavits. He cited SOY AGENCY V. METALUM (1991) 3 NWLR Pt. 177 Pg. 42.
Learned Respondent’s counsel drew our attention to the fact that the court is bound to use the documents tendered in determining the case of the parties and that the pieces of documentary evidence against the Appellant were unrebutted. The Respondent exhibited pieces of documents ECN 1, ECN 2, ECN 3 ECN 4, Q, S, T, V and Z in proof of the personal liability of the Appellant for the stockfish proceeds. This court is urged to hold that the evidence were unrebutted and so remain unchallenged. He cited AG FEDERATION V. AG ABIA. No 2 6 NWLR Pt. 764 Pg. 542 at Pg. 677.
He urged the court to hold that the failure of the Appellant to produce documents requested by subpoena raised a presumption of adversity against him under section 149 (d) of the Evidence Act.
Counsel cited the following cases to support the above view O. POLO V. THE STATE (1977) All NLR 312 or (1977) 11-12 SC 1; ORMOHA V. THE STATE (1989) 2 NWLR Pt. 101 Pg 23 At Pg 32-35; SOY AGENCY V. METTALUM (1991) 3 NWLR Pt. 177 Pg 42; AJOMALE V. YADUAT (1991) 5 NWLR Pt. 191 Pg 266 At 282-283; A.G. FEDERAL V. A.G. ABIA (2002) 4 SC Pt 1 Pg 1 At Pg 124; OLUYINDE V. ADEAGBO (1980) 2 NWLR Pt. 75 Pg 238 At Pg 253; SHONOWO V. ADEBAYO (1969) All NLR Pg 1, In Re FOREST OF DEAN COAL MINING CO. (1878) 10 CH 450 At 452 and NASIR V. BERINI BANK (1968) ALL NLR 269.
He also cited learned books and authors viz Orojo on Company Law and Practice in Nigeria 3rd Edition page 315; Status and Duties of Directors by Professor G. A. Olawoyin at Pg. 314 and Halbury’s Laws of England 4th Edition Vol. 7 paragraph 138 3 footnote 4.
Let me first reemphasize the issue of the standard of proof required for the Respondent in lifting the veil of incorporation of the company Bol-Bol Ltd. Proof required to lift the veil is not proof beyond reasonable doubt. I agree with the argument of learned Respondent’s counsel that section 138 of the Evidence Act is not applicable to the circumstances of this case to warrant the requirements of proof beyond reasonable doubt. I have given copious reasons for this view earlier on in this judgment.
The relevant sections of CAMA under consideration are section 506 and 290. They are set out below:
“Section 506 (1) If, in the course of the winding up of a company, it appears that any business of the company has been carried on in a reckless manner or with intent to defraud creditors of the company or creditors of any other person for any fraudulent purpose, the court, on the application of the official receiver, or the liquidator or any creditor or contributory of the company, may, if it thinks proper so to do, declare that any persons who were knowingly parties to the carrying on of the business in manner aforesaid shall be personally responsible, without any limitation of liability for all or any of the debts or other liabilities of the company as the court may direct.
(2) Where the court makes a declaration as to responsibility for debts or liabilities under subsection (1) of this section, it may give any direction it thinks proper for the purpose of giving effect to that declaration, and in particular the court may make provision for making the liability of any such person under the declaration a charge on any debt or obligation due from the company to him, or on any mortgage or charge or any interest in any mortgage or charge or any assets of the company held by or vested in him, or any company or person on his behalf, or any person claiming as assignee from or through the person liable or any company or person acting on his behalf, and may from time to time make any further order necessary for enforcing any charge imposed under this subsection.
(3) Where any business of a company is carried on with such intent or for such purpose as is mentioned in subsection (1) of this section (other than recklessly), every person who was knowingly a party to the carrying on the business in manner aforesaid, shall be guilty of an offence, and liable on conviction to a fine of N=2,500 or to imprisonment for a term of two years, or to both.
(4) In its operation, this section shall have effect, so however that –
a) A declaration may be made notwithstanding that the person concerned may be criminally liable in respect of matters which are grounds for the declaration and a declaration, if made, shall be deemed to be a final judgment of the court;
b) The official receiver or the liquidator, as the case may be, on the hearing of an application to the court, may himself give evidence or call witnesses;
c) There shall be included in the expression “assignee” any person to whom or in whose favour by the direction of the person liable the debt, obligation, mortgage, or charge was created, issued or transferred, or the interest created, other than any person being an assignee for valuable consideration given in good faith and without notice of any of the matters on the ground of which the declaration is made.
Section 290 (1) Where a company –
a) Receives money by way of loan for specific purpose; or
b) Receives money or other property by way of advance 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 from 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.”
The crucial elements for an application under section 506 are as follows:
“(a) A company must be in the process of being wound up
(b) The relevant person must have been carrying on the business of the company.
(c) The relevant person must have acted recklessly or with intent to defraud creditors.
There is no doubt that the petition giving rise to this application is the initiation to wind up the company. On whether the Appellant was the person carrying on the business of the company, apart from the issue of the ruling of 13th September 2000 which essentially made that finding, I agree with the learned Respondent’s counsel that the records is replete with sufficient evidence to show the connection of the Appellant with the company and the business of the stock fish. There is proof from the affidavit and various further affidavit evidence filed that the Appellant as the Director of his company Bol-Bol with Mr. Beany whom he procured as his surety alone obtained 35334 bales of stock fish for sale and payment of the proceeds was to be paid into account No. 01307718 with First Bank jointly opened by the parties to the transaction. However, the Appellant failed/refused to keep this agreement by opening almost at the same time another account No. 01307750 with the same Bank to which the sales of the stock fish was diverted. The affidavit evidence shows that the Appellant is the only active authoritative Director, alter ego and chairman of Bol-Bol on record in CAC Abuja to date without Mr. and Mrs Beany and Eli Adi’s names filed as anything in the company.
Page 123 of the record shows that Mr. Emeka C. Nwosu filed a further affidavit of 9 paragraphs on 21st July 2003. Paragraph 2 of which states that the other Director with whom the company was incorporated – one Chief Badru Atanda Olaogun had confessed that his only involvement with the company stopped at its incorporation and he had since officially resigned that position immediately after the due incorporation of the company. Paragraph 3 and 4 of the further affidavit is particularly germaine. They state as follows:
“3. That I conducted a search at the Company Affairs Commission (CAC) Abuja and obtained the certified copies of the Memorandum and Articles of Association and Form 007 of the 1st Respondent with receipt therefor marked Exhibits “Q” “S” and “Z”.
4. That the Respondents never had or filed any Audited Annual Statements of Account or any Annual Returns or any balance Sheets with the CAC Abuja or any change of directors or any other document at that apart from the initial incorporation documents nor did they file the names and particulars of late Beany who the 2nd Respondent flew home to his home country for burial he attended and Eli Adi alleged by the 2nd Respondent to be officers and members of the 1st Respondent”
I have combed through the records, and there is no counter affidavit nay direct traverse of the above averments. The Appellant denial in paragraphs 4, 6, 9, 10 and 11 of his counter-affidavit of 6th December 2001 and paragraphs 5, 6, 7 and 12 of his counter-affidavit of 18th January 2003 are not categorical denial of the facts in issue. Paragraph 6 the most relevant did not deny that he opened the two accounts and was the sole director of the company. He merely asserted that he was a non executive chairman of the company and was not involved in the running of the business. In the face of the various exhibits attached to the affidavit of the Respondent which showed that he was the sole director who opened two accounts at First Bank and to which the Appellant has nothing to rebut, which rebuttal he is bound to proffer by virtue of section 139 of the Evidence Act, then his mere feeble assertion that he had no hand in the stock fish business cannot induce belief. Moreover, he was served with two subpoena signed on 6th June 2003 but he did not produce the required documents. Thus section 139 of the Evidence Act to the effect that the non production of the material would be a presumption of adversity against him can and must be used against him. If he was able to produce the audited account of the company or able to produce documentation in respect of the First Bank Accounts to show that he was not a signatory to the accounts, the finding would have been different.
On the 2nd leg of the issue regarding the combined effects of section 290 and section 506 (1) of CAMA, I have held that on the affidavit evidence before the trial court, I agree and believe that the Appellant indeed had control of the proceeds of the stock fish business and he was obliged to make an accounting of same. Having said that, is the procedure adopted by the Respondent to make him personally liable correct?
The argument of the Appellant is that the method adopted does not come under the provisions of section 290 to be enforced in the company’s winding up proceedings using the procedure provided by section 506 (1) of CAMA. The learned trial judge had held at page 254 of the record that the Appellant was liable and relied on PUBLIC FINANCE V. JEFIA SUPRA. The trial court held that section 290 (1) (c) of CAMA is applicable because of the admitted indebtedness and dishonesty of the company and its Directors.
I have read D.P.P. V. SCHILDKAMP supra where the House of Lords held that only civil liability attaches when the company is being wound up. However, after liquidation order has been made, then criminal liability can be visited on the erring directors. In RE PATRICK & LYON supra the court held that intent to defraud and fraudulent purpose connote actual dishonesty and that in that particular case the business of the company had not been carried on by the Respondent for a fraudulent purpose or to defraud creditors.
Let me humbly restate the position of the law in relation to the circumstances of this case. The Respondent presented a petition for winding up pursuant to CAMA. According to Halsbury’s Laws of England 4th Edition Vol. 7 at Pg 597, an application for winding up of a company by the court is by petition which may be presented by the company itself, or by any creditor or creditors, including any contingent or prospective creditor, or creditors, or by any contributory or contributories including a minor, or by all or any of those parties, together or separately, or by the official receiver in certain cases or by the Dept of Trade where it is entitled to present a petition, or in the case of a company which is a charity, by the Attorney General. Petitioning to wind up a company for not satisfying a judgment debt is not enforcing the judgment but is another mode of receiving the debt. That is what the Respondent sought to do at the trial court.
If in the course of the winding up of a company it appears that any business of the company had been carried on with intent to defraud its creditors or creditors of any other person or for any fraudulent purpose the court on an application of the creditor may declare that any persons who were knowingly parties to the carrying on of the business in that manner may be held personally liable without any limitation. In RE MAIDSTONE BUILDING PROVISIONS supra, the court held that fraud cannot be imputed to a financial adviser who failed to give appropriate advice. Thus mere inertia by the Director or officer of the company is not enough, some positive step must be proved. A declaration under this provision may be made notwithstanding that the person concerned may be criminally liable in respect of the matters on the ground of which it is made. Thus winding up proceedings of a company is a special form of civil proceeding which has at its main objective the termination of the existence of a company. These proceedings are conducted in accordance with CAMA and the rules of practice which includes the mode of winding up and the extent of liability of past and present Directors of the company.
Section 310 of the 1968 Companies Act of Nigeria whose precursors in the English Acts were under consideration in the above cases is of similar effect as the sister section 309.Â Â Both sections, that is section 309 in the British Act and section 506 are invariably procedural not substantive in nature as they create no new rights except as channels for enforcement of rights.

In PUBLIC FINANCE SECURITIES LTD V. JEFIA supra, this court per Rowland JCA held that the doctrine of the legal personality of a company which imposes a veil under which the Directors can hide, can be lifted by the courts to enable it see who is behind the company. His Lordship held that section 290 of CAMA is wide enough to cover the situation where a sham defence had been put up to excuse failure to pay up funds by investors.
In AKNWUNMI O. ALADE V. ALIC NIG. LTD. & ANOR, (2010) 19 NWLR Pt. 1226 Pg. 111 the Supreme Court Per Galadima JSC held that one of the occasions when the veil of incorporation will be lifted is when the Company is liable for fraudulent or reckless conduct. Thus the consequences of recognizing the separate personality of a Company and to protect its directors is to draw a metaphorical veil to shield the directors from liability. The law is that this veil should not be lifted unless under special circumstances. However this veil can be pierced because a statute or rule of law will not be allowed to be used as an excuse to justify illegality or fraud where the application of the law will result in grave injustice. In such a case the courts would be required to tear off the corporate veil and reveal the persons behind the unsavoury activities of the Company. See F.D.B FINANCIAL SERVICES LTD. V. ADESOLA (2002) 8 NWLR Pt. 668 Pg. 170 at 173; ADEYEMI V. LAN & BAKER NIG. LTD. (2007) 7 NWLR Pt. 663 Pg. 33 at 51.
Let us look at the law and the justice of this case. There is no doubt that the CAMA provides for the type of situation where the judgment debt incurred by the company was due to some form of inappropriate conduct of the directors which is loosely called fraudulent conduct. The Appellant’s company contracted with the Respondent to help sell their stockfish and to pay the proceeds into a designated account of which he was a signatory. He now caused another account to be opened of which he was also a signatory and into which the proceeds of the stock fish was diverted. The Respondent original investors who imported the stockfish did not get a kobo of the money. A situation of this nature amounts to constructive fraud. By virtue of section 290 of CAMA where a company receives money and fails to apply it for the purpose for which it was received, the Directors must be held personally liable. There is no doubt that the persons behind the company are not phantoms, they are flesh and blood who have been unmasked. I believe what was done by the company and the Appellant amounted to fraudulent and improper conduct. The Appellant cannot use the veil of legal entity to defeat public convenience, justify wrong and perpetuate and protect fraudulent activities. He cannot be allowed to benefit from his own wrong. The Respondent has been deprived of its money since 1987 -about 24 years ago. The court armed with the law must like a knight in shining armour ride to the rescue to ensure that justice is done. I am reinforced in this stand by ALADE V. ALIC NIG. LTD Supra the facts of which are almost on all fours with the facts herein.
I cannot end this judgment without acknowledging the industry exhibited in the briefs filed by both counsel. They were of great assistance to this court in the determination of the appeal.
In the circumstances, I affirm the decision of the learned trial Judge to the effect that the Appellant is personally liable for the indebtedness of the company. The appeal is dismissed for lacking in merit. N50,000.00 to the Respondent against the Appellant.

IBRAHIM MOHAMMED MUSA SAULAWA, J.C.A.: I was privileged to have read, before now, the lead judgment prepared and delivered by my learned brother, Ogunwumiju, JCA. Having considered the submissions of the learned counsel contained in the respective briefs thereof vis-Ã -vis the record of appeal, as a whole, I concur with the reasoning and conclusion reached in the lead judgment in question, to the effect that the instant appeal lacks any substantial merit.
Hence, I adopt the said reasoning as mine, and accordingly dismiss the appeal for lacking in merits. The decision of the Federal High Court, Lagos Division, dated November 29, 2006 is hereby affirmed by me.

SIDI DAUDA BAGE, J.C.A.: I had the great honour of reading in draft the lead judgment of my learned brother, Ogunwumiju JCA, which I am in complete agreement with. I will like however to add a few words of my own on the powers of the court to lift the veil of incorporation of any company to find out who was behind the fraudulent or improper conduct.
In the case of Littlewoods Stores Ltd v. I.B.C (1969) 1 W.L.R 1241 Lord Denning M. R. had this to say:-
“The doctrine laid down in Solomon’s case has to be watched very carefully. It has been supposed to cast a veil over the personality of a limited liability company through which the court cannot see. But that is not true. The court can, and often do draw aside the veil. They can and often do pull down the mask. They took to see what really lies behind”.
Also this court in the case of Public Finance Securities Ltd v. Jegia (1998) 3 NWLR (Pt.543) 602 at 614 per Rowland JCA (as he then was) stated:-
“I must say that it is trite law that the court will lift the veil incorporation of any company to find out who was behind the fraudulent and improper conduct. This would be necessary where the canopy of legal entity is used to defeat public – evidence, justify wrong, perpetuate and protect fraud and crime”.
Also see:- International Offshore Construction Ltd & Ors. v. Shoreline Liftboats Nig. Ltd (2003) 16 NWLR (Pt.846) 157; Habib Nigeria Bank Limited v. Benson Ochete Gomba Nwolu (2001) FWLR (Pt.54) 384; Crown Dilmun & Anor. v. Sutton & Anor. (2004) All ER (D) 222 (JAN); Amalgamated Investment & Property Co. Ltd (in liqundation) v. Texas Commerce International Bank Ltd (1981) 3 All ER 577.
I do agree with the reasoning in the lead judgment that the Appellant in the instant appeal cannot use the veil of legal entity to defeat public convenience, justify wrong and perpetuate and protect fraudulent activities.
For the detail reasons contained in the lead judgment I also affirm the decision of the learned trial judge to the effect that the Appellant is personally liable for the indebtedness of the company. The appeal is also dismissed by me for lacking in merit.

Appearances

Dr. A. A. Olawoyin with him J. O. Omisade Esq For Appellant

AND

Emeka C. Nwosu For Respondent