IN THE NATIONAL INDUSTRIAL COURT OF NIGERIA
IN THE LAGOS JUDICIAL DIVISION
HOLDEN AT LAGOS
BEFORE HIS LORDSHIP HON. JUSTICE B. B. KANYIP, PHD
DATE: MARCH 13, 2018
SUIT NO. NICN/LA/29/2016
BETWEEN
Mr Ezeh Joseph Onyebuchi
Claimant
AND
Arik Air Limited
Defendant
REPRESENTATION
Evans Ufeli, for the claimant.
G. A. Okoro, for the defendant.
JUDGMENT
1. The claimant is a former employee of the defendant. He was employed by the defendant on probation as a Cargo Manager and was subsequently confirmed. While on employment, he opened a retirement savings account with Leadway Pensions in line with the provision of the Pensions Act. To the claimant, a deduction of N18,281.25 was made each month from his salary as pension fund contributions. However, that the defendant failed to remit all the monthly contributions (totaling N1,608,750.00 for the 44 months he was in the employment of the defendant) from his salary to his Pension Funds Managers. The claimant went on that by a mutual agreement, he resigned from the defendant; but when he tried to access his pension fund, he met nothing in his account as the defendant had not been remitting anything into the said account. That after repeated demands for the payment of or remittance of his contributory pension fund to his pension fund manager, the defendant refused to pay or remit the said sum, hence this suit filed vide a complaint filed on 21st January 2016.
2. By the statement of facts, the claimant is praying for:
(1) “The sum of N1,608,750 (One Million, Six Hundred and Eight Thousand, seven and Fifty Naira) being the unremitted pension funds deducted from the Claimant’s salary between the 2nd of August 2010 to the 31st of March 2014”.
(2) The sum of N32,175.00 (Thirty-Two Thousand, One Hundred and Seventy-Five Naira) being 2% penalty for non-compliance in remittance of the aforementioned pension funds.
(3) The sum of N3,900,000.00 (Three Million, Nine Hundred Thousand Naira only) as general damages.
(4) The sum of N500,000.00 (Five Hundred Thousand Naira) as special damages.
(5) The sum of N500,000.00 (Five Hundred Thousand Naira) as cost of litigation.
3. The particulars of the claimant’s claim are:
(a) Claimant’s monthly salary = N325,000.00
(b) Claimant’s monthly pension contribution = N18,281,26.00
(c) Employer’s monthly pension contribution = N18,281,26.00
(d) Total pension contribution on monthly basis
i.e. employee’s contribution + employer’s contribution = N36,562.00
(e) Total sum due to be remitted: 44 months x N36,562.2 = N1,608,750
(f) Penalty for non-remittance of pension funds 2% of N1,608,750 = N32,175
Total entitlement payable to the claimant = N1,608,750 + N32,175 = N1,640,925.00
4. The defendant did not file any defence process up to when the matter went to trial. At the trial, the claimant testified on his own behalf as CW. The opportunities given to the defendant to cross-examine CW or enter its defence or even to file its written address on the merit of the case were all not taken up by the defendant. Instead, all the defendant did was to file on 9th October 2017 a preliminary objection with a supporting affidavit and written address praying that this suit be dismissed for want of jurisdiction on the ground that section 417 of the Companies and Allied Matters Act (CAMA) was not complied with. Meanwhile, the claimant had on 23rd June 2017 filed his final written address when it became evident that the defendant is not defending this action. Upon the filing of the preliminary objection of the defendant, the claimant on 31st October 2017 filed a counter-affidavit and a written address in opposition to the objection.
5. In arguing its preliminary objection, the defendant first indicated in its written address that on 8th February 2017 Oluseye Opasanya SAN was appointed a Receiver Manager by an order of the Federal High Court per Idris J. That consequent upon this appointment, the management of the defendant was taken over by the receiver manager. It is this said appointment of a receiver that led the defendant to object to this suit arguing that thereby and the failure of the claimant to meet the conditions stipulated in section 417 of CAMA, in which case this Court no longer has jurisdiction over the matter. Section 417 of CAMA provides thus:
If a winding up order is made or a provisional liquidator is appointed, no action or proceeding shall be proceeded with or commenced against the company except by leave of the Court given on such terms as the Court may impose.
That in the instant case, a receiver has been appointed over the affairs of the defendant since 8th February 2017; and the claimant needs to obtain leave of “the Court” to continue in prosecution of this suit against the defendant now in receivership. That no such leave has been applied for and/or obtained. In the circumstance, that pursuant to section 417 of CAMA, this Court has lost the jurisdiction to continue to entertain this suit, citing Agro-Allied Development Ent. Ltd v. MV Northern Reefer & ors [2009] 12 NWLR (Pt. 1155) 255 SC. The defendant concluded by urging the Court to dismiss this suit for want of requisite jurisdiction to proceed with the hearing of the same.
6. In reaction, the claimant submitted that this Court has the jurisdiction to hear this suit. To the claimant, section 417 of CAMA was misconceived by the defendant. That there is no evidence before the Court to the effect that the defendant has been taken over by a receiver; and the Court cannot believe facts not before it. That if the defendant is sure that of what it wishes to tell the Court, it ought to have attached to the objection evidence of the petition to the Federal High Court and not approach this Court with slumbering claims that stifle the prescient structures of judicial processes. The claimant went on that section 417 of CAMA rests the action for discontinuance of a proceeding in the discretion of the Court where petition for winding up of a company has been made to the Federal High Court. That it is not automatic that a case be stalled based on a mere petition made to the Federal High Court for a winding up proceeding or the appointment of a receiver. That it is not the law that the defendant gets away with the claimant’s pension fund; for this will amount to injustice. That the defendant’s objection was brought in bad faith and should be dismissed.
7. In any event, that section 417 of CAMA deals with provisional liquidator, not receiver. That these two words represent different entities under the law. That a receiver is any natural person appointed to mange the affairs of a company until the realization of the security; whereas, a provisional liquidator in a winding up process is an officer of the Court appointed for that purpose but this is not the case for a receiver appointed by the Court, citing Parson v. Sovereign Bank of Canada [1913] AC 160. That since the case of the defendant is that a receiver was appointed, section 417 of CAMA is inapplicable. The claimant accordingly urged the Court to hold that it has jurisdiction to hear this suit.
8. The defendant did not react on points of law except to additionally rely on section 48(7) of the AMCON (Amendment) Act 2015 arguing that the instant suit does not come within any of the exceptions laid out in the said section 48(7) of the AMCON Act.
9. In terms of the substantive suit, the claimant submitted two issues for determination, namely:
(1) Whether or not the claimant is entitled to his pension fund after the same has been deducted by the defendant without remittances to the claimant’s pension mangers.
(2) Whether or not the claimant can pray this Honourable Court to award damages against the defendant for default in remittance of the pension funds deducted form the claimant’s salary for 44 months.
10. On issue (1), it is the submission of the claimant that it is settled law that an employer who deducts funds from an employee’s monthly salary for the purposes of contributory pension is duty bound to remit the said fund to the pension managers of the employee, citing section 5(2) of the Labour Act Cap L1 LFN 2004. However, that in the instant case, the defendant made the deductions but not the remittances. That this default of the defendant, which is for the 44 months the claimant was in the defendant’s employment, is a breach of section 11(3)(b) of the Pension Reform Act, which impose a 7-day period within which the remittance must be made. That the penalty for the breach by the defendant is provided for in section 11(6) and (7) of the Pension Reform Act. The claimant concluded by urging the Court to grant his reliefs (1) and (2).
11. In terms of issue (2), relying on section 19(d) of the National Industrial Court (NIC) Act 2006 and Obazuaye v. First Bank of Nigeria Plc [2013] 38 NLLR (Pt. 116) 28 at 88, the claimant submitted that he is entitled to damages in the sum of N3,900,000.00 given the willful and unlawful withholding of the claimant’s pension funds by the defendant. On the issue of cost, that though cost is at the discretion of the Court, it is based on the need to compensate, not to punish a party, citing University of Lagos v. M. I. Aigoro [1985] 1 NWLR (Pt. 1) 143 and Olokunlade v. Samuel [2011] 17 NWLR (Pt. 1276) 290 at 300. The claimant concluded by urging the Cort to grant all his prayers.
COURT’S DECISION
12. I have carefully considered the processes filed and the submissions of counsel. I need to resolve the preliminary objection raised by the defendant. Here, I must point out that the submission by the defendant in paragraph 1.1 of its written address to the effect that Oluseye Opasanya SAN was appointed a Receiver Manager by an order of the Federal High Court per Idris J, and that consequent upon this appointment, the management of the defendant was taken over by the receiver manager, is unsubstantiated (the said order of the Federal High Court was not made available to this Court, nor is the suit number where the order was made even revealed). Paragraph 4 of the affidavit is support of the objection simply states that the Board of Directors of the defendant has been dissolved and the defendant’s affairs have been taken over by a Receiver Mr Oluseye Opasanya (SAN) of the law firm of Olaniwum Ajayi LP. Nothing to substantiate this averment is before the Court. Even when paragraph 3 of the affidavit in support averred that on 8th February 2017 the Asset Management Corporation of Nigeria (AMCON) took over the management of Arik Air Ltd (the defendant), the instrument of the takeover has not been put forward before the Court.
13. More fundamentally, the depositions in the affidavit in support were made by Azubike Okaro, Legal Practitioner and counsel in the Chambers of Azubike Okaro & Co. solicitors to the defendant. In paragraph 1 of the affidavit, the said deponent averred that he is conversant with the facts of this case, by which I take him to mean the instant suit (NICN/LA/29/2016). The issue in the instant suit has nothing to do with the receivership of the defendant. So how can the deponent (counsel in the instant suit) be in a position to know of the receivership of the defendant as to make the depositions he made in the affidavit in support since he did not indicate in the affidavit that he was informed of the facts he deposed to? The deponent averred to the affidavit in his own right, not as one who was informed and he verily believed. He merely stated in paragraph 2 of the affidavit that he has the consent and authority of both the defendant and the chambers to depose to the affidavit in support. His chambers is not the chambers that was appointed receiver; paragraph 4 of the affidavit in support says it is the law firm of Olaniwum Ajayi LP. So how did the deponent come by the information he is deposing to? In open court I asked counsel for the defendant whether the affidavit in support of the preliminary objection is competent given section 115 of the Evidence Act 2011. All that counsel answered was that the affidavit is uncontroverted; as such it is competent. In Incorporated Trustees of Nigeria Association of General Practice Pharmacists Employers v. PCN [2011] LPELR-4308(CA), Nwodo, JCA held that “…every affidavit is required to contain only a statement of fact and circumstances derived from the personal knowledge of the deponent or from information which he believes to be true”. And by Josien Holdings Ltd v. Lornamead Ltd [1995] LPELR-1634(SC); [1995] 1 NWLR (Pt.371) 254; [1995] 1 SCNJ 133, any paragraph of an affidavit which offends against the relevant provisions of the Evidence Act (section 115 in our case) may be struck out by the Court, but if it is not struck out, then the Court should not attach any weight to it. The defendant had submitted its affidavit is uncontroverted. However, by Bob v. Akpan & ors [2009] LPELR-8519(CA), relying on Dr N. E. Okoye & anor v. Centre Point Marchant Bank Ltd [2008] All FWLR (Pt. 441) 810 at 834, affidavit evidence is not sacrosanct, in that it is not above evaluation by the Court. That like oral evidence, a Court is entitled to evaluate affidavit evidence in order to ensure its veracity and or authenticity. Thus the Court cannot be blinded to lies even in uncontradicted affidavit evidence. As it is, I find and hold that the affidavit in support offends section 115 of the Evidence Act 2011, and the information deposed to in the affidavit are not substantiated; as such, the affidavit is incompetent. Given the incompetence of the affidavit in support, the implication is that the preliminary objection of the defendant is unsupported in terms of the facts upon which it relies. This being so, the objection itself is incompetent. I so find and hold. It accordingly fails and so is stuck out.
14. Assuming. however, that the preliminary objection is competent, I now turn to its merit. The objection of the defendant to the instant suit is based on the point that a receiver was appointed for the defendant and that the claimant did not obtain the leave of “the Court” under section 417 of CAMA to enable him continue with this suit. In answer, the claimant submitted that section 417 talks of provisional liquidator, not receiver; as such section 417 is inapplicable to the instant suit. By the New Oxford American Dictionary, ‘liquidator’ means “a person appointed to wind up the affairs of a company or firm”; and ‘receiver’ means “a person or company appointed by a court to manage the financial affairs of a business or person that has gone bankrupt: the company is in the hands of the receivers”. Case law authorities abound in determining the meaning of ‘liquidator’ and ‘receiver’. In NDIC v. Financial Merchant Bank Ltd [1997] LPELR-2001(SC); [1997] 4 NWLR (Pt. 501) 519;[1997] All NLR 125, it was held that on the appointment of a liquidator (whether provisional or substantive) under section 422(9) of the Companies and Allied Matters Act, the subject company’s Board of Directors is automatically supplanted by the liquidator. Thus, that from the moment of the liquidator’s appointment, all powers of the Board of the company are vested in the liquidator and the Board of Directors thus becomes functus officio. NDIC v. UBN Plc & anor [2015] LPELR-24316(CA) on its part held that “…the primary purpose of having a provisional liquidator is to preserve the company’s assets and prevent the Directors from dissipating such assets before a winding up order can be made”. And by Federal Mortgage Bank of Nigeria v. NDIC [1999] LPELR-1270(SC), relying on Abekhe v. Nigeria Deposit Insurance Corporation [1995] 7 NWLR (Pt. 406) 228 at 242 – 243, the true position is that once a provisional liquidator is appointed for a company, no action or proceeding shall be proceeded with or commenced against the company except by leave of the court given on such terms as the court may impose, referring to section 417 of CAMA. The court meant then is the Federal High Court. That if therefore such action was intended to be proceeded with or commenced against the company in a State High Court, it cannot be done without obtaining the leave of the Federal High Court. From these authorities, there is no problem where the question involves a liquidator. Leave of the Federal High Court must be sought for.
15. But is this case where it is a receiver that is appointed? In Magbagbeola v. Sanni [2005] LPELR-1815(SC); [2005] 11 NWLR (Pt. 936) 239; [2005] 4 SC 78, it was held that ‘receiver’ in law is a person appointed by a court to administer or hold in trust property in bankruptcy or in a law suit. To Uwakwe v. Odogwu [1989] LPELR-3446(SC); [1989] NWLR (Pt. 123) 562, by the nature of the office, a receiver is an impartial person appointed by the court to manage, collect and receive pending the proceedings, rents, issues and profits of land or personal estate which it does not seem reasonable to the court that either party should collect or receive or for the same to be distributed among the persons entitled. See also Adetona & ors v. Zenith Int’l Bank Ltd [2007] LPELR-8896(CA) and Brewtech Nig Ltd v. Akinnawo & anor [2016] LPELR-40094(CA). Solar Energe Advanced Power System Ltd v. Mr Albert Oluwatoyin Ogunnaike & anor [2008] LPELR-8470(CA) on its part held that the appointment of a receiver as agent of company enables him to sue or defend action in the name of the company or debenture holders entitled to the goods under the debenture, referring to Intercontractors Nigeria Ltd v. UAC Nigeria Ltd [1988] 1 NSCC 737 at 751 where Supreme Court per Karibi-Whyte, JSC stated that although the right to institute or defend actions in the name of the company is covered under the general authority to collect and take possession of the assets in the debenture, the legal effect of his appointment which paralysis the company in respect of dealing with the assets and the Receiver Manager not having any legal estate in the goods, and company retaining its title and legal personality renders it essential for the Receiver/Manager to seek leave of the court where he intends to bring or defend actions in the name of the company with respect to goods involved in his Receivership. What I discern from these authorities, therefore, is that a receiver is different from a liquidator; in fact the receiver can be appointed by debenture holders, not necessarily by the Court. And from Solar Energe Advanced Power System Ltd v. Mr Albert Oluwatoyin Ogunnaike & anor and Intercontractors Nigeria Ltd v. UAC Nigeria Ltd, what I further gather is that for a receiver, it is the receiver that is advised to seek leave of Court if he intends to defend an action in the name of the company. The question of a litigant suing the company seeking the leave of court in order to continue with the case does not arise at all in the case of a receiver; and I so hold. I, therefore, agree with the claimant that section 417 of CAMA in dealing with liquidators is inapplicable to the instant case.
16. The defendant relied on section 48(7) of the AMCON Act 2015, which provides thus:
Subject to section 48(9) of this Act and on the publication of the notice referred to in section 48(4) thereof all judgments, claims, debt enforcement procedures existing or being pursued before the publication of the notice shall stand automatically suspended and be unenforceable against the debtor company for the shorter of a period of 1 year from the date of the publication of the notice or the period that the receiver continues to manage the affairs of the debtor company:
Provided that claims relating to wages and other entitlements of existing staff of the debtor company or debtor entity and professional advisers shall not be so suspended.
Subsection (4) on its part provides that:
Where a receiver under this section elects to manage the affairs of a debtor company or other debtor entity under section 48(2)(c), it shall give notice of its election by publication in at least two newspapers with nationwide circulation.
And by subsection (9), “where a receiver acting under section 48(2)(c) fails to comply with the provisions of section 48(8), the provisions of section 48(7) shall cease to apply”. As can be seen, the application of section 48(7) is not even automatic; it relies on the publication of a notice as enjoined under subsection (4) and the compliance with subsection (8), which provides that “a receiver acting under section 48(2)(c) shall within 30 days of the publication of the notice referred to in section 48(4) cause to be prepared a detailed and comprehensive plan for the rehabilitation of the debtor-company or debtor entity”. All of these pre-conditions have not been shown to have been satisfied. In any event, the proviso to section 48(7) would seem to have saved employee entitlements. Accepted that the claimant in the instant suit is claiming as one ex-employee, but his claim relates to entitlements that inured to him when he was in the employment of the defendant. More importantly, given section 48(1), section 48(7) deals with a receiver appointed by AMCON itself. The very argument of the defendant is that the receiver in issue was appointed by the Court. In all, I do not see how section 48(7) is applicable to the instant case. The argument of the defendant in that regard fails and is hereby discountenanced. What all of this means is that the preliminary objection of the defendant fails on merit and so is hereby dismissed.
17. Having dismissed the preliminary objection of the claimant, I now turn to the merit of the claimant’s case, which is actually undefended; but this does not absolve the claimant of the burden of proving his case since what he claims for approximates to a claim for special damages. See NNPC v. Clifco Nigeria Ltd [2011] LPELR-2022(SC). Relief (4) indeed is a claim for special damages in the sum of N500,000. And by Honika Sawmill (Nig.) Ltd v. Holf [1992] 4 NWLR (Pt. 238) 673 CA, as between an employer and an employee, the onus is on the employee to prove that the employer employed him on a stipulated salary and that he worked for the employer during the relevant period. It is for the employer to prove not only that he paid the employee his salary for work done by the employee in the relevant period but also how much the salary that he paid the employee was. Exhibit C1 dated 23rd July 2010 is the letter of appointment wherein the claimant was employed by the defendant with effect from 2nd August 2010. By Exhibit C1, the annual gross salary of the claimant was put as N3,900,000.00. Exhibit C2 is the acceptance of the resignation of the claimant from the defendant’s employment with effect from 31st March 2014. In the second paragraph of Exhibit C2, the defendant indicated that it will make payment of any outstanding entitlement to the claimant by cheque. There is nothing in Exhibit C2 to indicate that the claimant was indebted to the defendant. Exhibit C3 is the claimant’s Retirement Savings Account Statement (No. PEN100662268718) for the period 1st November 2015 to 30th November 2015 with Leadway Pensure. It indicates that the first contribution into the account was on 27th May 2014; and that the contribution was from inception N14,401.23. Total withdrawal is shown to be nil; and reversals is also shown to be nil. Gains from inception is shown to be N1,487.35, bringing the value of the contribution (as at 30th November 2015) to N14,888.58. The current value as at 3rd December 2015 was put at N15,892.73. What I found from all of this is that nothing was remitted into this account since the initial contribution of N14,401.23 was made to open the account. Exhibit C6 is the claimant’s pay-slip dated 28/02/2013. It puts the monthly gross earning of the claimant at N325,000.00; and the total pension (NPS) deduction is put at N36,562.50. This is the amount that was not remitted by the defendant; and which if multiplied by 44 months gives us a total unremitted sum of N1,608,750.00, as claimed by the claimant.
18. However, the claimant’s employment by Exhibit C1 was with effect from 2nd August 2010, and the resignation by Exhibit C2 was with effect from 31st March 2014. What this means is that the clamant worked for 4 months in 2010 (August to December) and 12 months each for years 2011, 2012 and 2013, and 3 months in 2014 (January to March) bringing the total months he worked to 43. N36,562.50 multiplied by 43 months gives us N1,572,187.50. This is the sum (N1,572,187.50) that the defendant must remit to the claimant’s pension managers, Leadway Pensure; and I so find and hold. Relief (1) is accordingly grantable but only to this extent.
19. The claimant in relief (2) is praying for N32,175.00 being 2% penalty for non-compliance in remittance of the pension funds deducted by the defendant, relying on section 11(6) and (7) of the Pension Reform Act, which provides thus:
(6) an employer who fails to deduct or remit the contributions within the time stipulated in subsection (3)(b) of this section shall, in addition to making the remittance already due, be liable to a penalty to be stipulated by the Commission.
(7) the penalty referred to in subsection (6) of this section shall not be less than 2 per cent of the total contribution that remains unpaid for each month or part of each month the default continues and the amount of the penalty shall be recoverable as a debt owed to the employee’s retirement savings account, as the case may be.
The penalty imposed under section 11(6) and (7) is a penalty to be stipulated by the National Pension Commission (NPC). Subsection (7) talks of the penalty not being less than 2%.; and by subsection (6), the duty to fix the percentage is the NPC’s. Subsection (7) did not say the penalty is 2%. So how come the claimant is claiming 2%? When did the NPC stipulate that the penalty is 2%? In what instrument did the NPC stipulate the percentage of the penalty? Is it for the claimant to claim the penalty or the NPC? These are questions that the claimant provided no answers to. As it is then, the claim for relief (2) cannot be granted as the claimant has not proved it. It accordingly fails and so is dismissed.
20. Relief (3) is for general damages in the sum of N3,900,000.00 only for malicious, willful and unlawful withholding of the claimant’s pension funds. Beyond these words and the reliance on section 19(d) of the NIC Act 2006 and Obazuaye v. First Bank of Nigeria Plc [2013] 38 NLLR (Pt. 116) 28 at 88, there is nothing else in proof of this claim. Unfortunately for the claimant, Oak Pensions Ltd & ors v. Olayinka [2017] LPELR-43207(CA) has cautioned against the reliance on section 19(d) of the NIC Act 2006 for the award of compensation and damages. As it is, therefore, relief (3) must fail. It is accordingly dismissed.
21. Relief (4) is for special damages in the sum of N500,000.00; and relief (5) is for cost in the same sum. There is nothing in proof of these claims before the Court. They fail and are also dismissed.
22. In all, the claimant’s case succeeds in part and only in terms of relief (1) as already indicated. For the avoidance of doubt, therefore, the claimant’s claim succeeds in the terms of the following orders:
(1) Within 30 days of this judgment, the defendant shall remit to Leadway Pensure the sum of N1,572,187.50 being the total of pension contributions of the claimant deducted by the defendant but not remitted, which sum is to be credited into the claimant’s Retirement Savings Account Statement (No. PEN100662268718).
(2) Failing this, the said sum shall attract 10% interest per annum until fully paid.
23. Judgment is entered accordingly. I make no order as to cost.
……………………………………
Hon. Justice B. B. Kanyip, PhD
