NEU-KOM MICROFINANCE BANK LTD & ORS v. NKANGA
(2022)LCN/17201(CA)
In The Court Of Appeal
(ABUJA JUDICIAL DIVISION)
On Tuesday, July 05, 2022
CA/ABJ/CV/551/2020
Before Our Lordships:
Stephen Jonah Adah Justice of the Court of Appeal
Biobele Abraham Georgewill Justice of the Court of Appeal
Bature Isah Gafai Justice of the Court of Appeal
Between
1. NEU-KOM MICROFINANCE BANK LIMITED 2. ALH. KABIRU SHUAIBU 3. MR. EMMANUEL OBASI 4. HON.NNANNA UZOR KALU 5. MASCOT USOR KALU 6. DR. ILEDIAGU CHIBUZOR 7. AKINNIYE BABATUNDE 8. TONY HADCHITY APPELANT(S)
And
MRS. MOSUNSOLA OLUWAFUNMILOLA INDONGESIT NKANGA RESPONDENT(S)
RATIO
THE POSITION OF LAW ON ISSUES FOR DETERMINATION IN AN APPEAL
In appellate practice, it is trite that issues for determination must be clearly related to and be founded on the specific findings or ratio decidendi in the judgment on appeal. In other words, the issues for determination must be distilled from the Grounds of Appeal which in turn must also be predicated upon the ratio(s) decidendi of the particular decision complained against. See Archinga vs. Attorney General of Akwa Ibom State (2015) 6 NWLR (Pt. 1454) 1, Shipcare Nig. Ltd Owners of the M/T African Hyathinth vs. The Owner or the M/V Fortuno (2011) 7 NWLR (Pt. 1246) 205, Shettima & Anor vs. Goni & Ors (2011) LPELR – 417 (SC); Musaconi Ltd vs. Aspinall (2013) LPELR – 20745 (SC); Nze vs. Aribe (2016) LPELR – 40617 (CA). PER GAFAI, J.C.A.
THE DOCTRINE OF CORPORATE PERSONALITY
It is by the undaunting force of the law at the bottom of its creation, and protected through its growth or promotion to a functional juristic personality that it exists differently from, though not in isolation of its human components which reside mainly in its directors. That is the postulate in the doctrine of corporate personality which appears to have originated and gained persistent legitimacy for one hundred and twenty-five years now from the English decision in Salomon vs Salomon (1897) 2 AC 22. It applies in Nigeria as well. See Section 42 of the Companies and Allied Matters Act 2020. In Adamu Muhammad Gbedu & Ors vs. Joseph I. Itie (Liquidator) (2020) 3 NWLR (Pt. 1710), 104 at 124 para C – D, the Supreme Court held that:
“Company law derives from Common Law and that includes the Companies and Allied Matters Act, CAMA, applicable in Nigeria.”
Its application in Nigeria has been consistently upheld by both the Apex Court and this Court. See Marina Nominees Ltd vs. FBIR (1986) LPELR – 1839 (SC), Ramanchandani vs. Ekpenyong Trenco (Nig) Ltd vs. African Real Estate & Investment Co. Ltd & Anor (1978) LPELR 33264 (SC), United Cement Co. Ltd vs Libend Group Ltd & Anor (S016) LPELR – 42038 (SC). PER GAFAI, J.C.A.
THE POSITION OF LAW ON THE QUESTIONS TO BE ANSWERED BEFORE ARRIVING AT WHETHER OR NOT A PARTY IS A NECESSARY PARTY
Strangely, the learned counsel avoided any argument or – even comment on the Respondent’s reliance on the provisions of Section 316 of CAMA which the Respondent argued made the Appellant’s parties on the facts in the suit. Firstly, the Appellants are parties in the suit by operation of law under Section 316 of CAMA (supra). Secondly, the two previous decisions of this Court referred by the learned counsel for the Appellants were not based on the provisions of Section 316 of CAMA. Thirdly, the Appellants are on the facts necessary parties without who the entire suit would be meaningless. As laid down in several decisions by this Court and the Apex Court, from which I referred to the Apex Court’s decision in Azubuike vs. PDP (supra) the questions to be answered before arriving at whether a party is a necessary party in a suit are:
(a) Is the cause or matter liable to be defeated by the non-joinder?
(b) Is it possible to adjudicate on the cause or matter unless the 3rd party is added as a defendant?
(c) Is the 3rd party a person who should have been joined in the first instance?
(d) Is the 3rd party a person whose presence before the Court as a defendant will be necessary in order to enable the Court to effectually and completely adjudicate or settle all the questions involved in the cause or matter? PER GAFAI, J.C.A.
BATURE ISAH GAFAI, J.C.A.(Delivering the Leading Judgment): This is an appeal against the judgment of the High Court of the Federal Capital Territory Abuja delivered on the 13th of September, 2019 in Suit No. FCT/HC/CV/1854/2019 in which an order for recovery of the sum of N285,053,354 from the Appellants was entered by the Court in favour of the Respondent.
As gleaned from the Record of Appeal, the Respondent had approached the lower Court by a suit under the Undefended List disclosing altogether but stated in brief here that sometime in December 2016 he placed the sum of N200,600,000.00 (Two Hundred Million, Six Hundred Thousand Naira) in a fixed deposit account with the 1st Appellant a microfinance bank for a period of 180 days at an agreed interest rate of 20% which however the 1st Appellant reneged entirely by refusing to pay the Respondent both the deposit and interest sum from the maturity date, despite several failed assurances by the 1st Appellant till date. The Appellants responded to the suit by causing to be filed a Notice of Conditional Appearance, a Notice of Preliminary Objection and a Notice of Intention to Defend the suit.
In its judgment, the lower Court considered the arguments of the parties on the Appellants’ Preliminary Objection which was premised on the ground that the 2nd to 8th Appellants being Directors of the 1st Appellant cannot in law be personally liable for the 1st Appellant’s contract with the Respondent which therefore renders the suit as one with no cognizable cause of action against them, the effect of which is that the lower Court lacked jurisdiction to entertain the suit against them. The lower Court found no merit in the Preliminary Objection and thus discountenanced same. Proceeding into main suit, it further found the Appellants’ facts in the affidavit in support of their Notice of Intention to Defend the suit as, in its words, “…incoherent, evasive, scandalous and thoroughly unconscionable…”. In consequence, the lower Court discountenanced the Appellants’ Notice of Intention to Defend the suit, considered the Respondent’s suit on its merit and entered judgment in part only against the Appellants in the sum of N285,053,345.00 (Two Hundred and Eighty-Five Million, Fifty-Three Thousand, Three Hundred and Forty-Five Naira) and a consequential order on the Respondent to prepare to prove his claim for interest for the period covering February 2018 to April 30, 2019 which the Respondent claimed to have accrued in the sum of N66,572,447.00 (Sixty Six Million, Five Hundred and Seventy-Two Thousand, Four Hundred and Forty-Seven Naira).
Dissatisfied with the judgment, the Appellants lodged this Appeal vide a Notice of Appeal filed on the 25th of October, 2019 which was however by leave of this Court granted on the 20th of October, 2021 amended by substituting the name of the Respondent Mr. Idongesit Okon Nkanga (who passed away in the course of this appeal) with the name of the deceased’s wife “MRS MOSUNSOLA OLUWAFUNMILOLA IDONGESIT OKON NKANGA” as the Respondent. The Amended Notice of Appeal was filed on the 8th of November, 2021 in which the Appellant complained against the Judgment on four grounds as follows:
“GROUND 1
The Learned trial Judge erred in law when he lifted the Veil of Incorporation of the 1st Respondent on the grounds that its Directors had been fraudulent, and thereby occasioned a grave miscarriage of justice.
GROUND 2
The learned trial Judge erred in law when he dismissed the Preliminary Objection dated 11th June, 2019 brought by the Appellants as Defendants/Applicants which objection was premised on the ground that the 2nd – 8th Appellants were not necessary parties to the action, which occasioned a grave miscarriage of justice.
GROUND 3
The learned trial Judge erred in law when it entered judgment for the Respondent in the sum of N285,053,345.00 against the Appellants jointly and severally.
GROUND 4
The judgment entered by the trial Court was given against the weight of evidence.”
The respective particulars enumerated under these grounds are noted. See pages 79 – 83 of the Additional Record of Appeal.
It is from these grounds that the Appellants’ learned counsel Ikem G. Ogugua Esq. formulated two issues for determination as shown in their Brief of Argument filed on the 14th of January 2022 on:
“a. Whether there was allegation of fraud submitted before the trial Court by the Respondent.
[Distilled from Ground 1 of the Notice and Grounds of Appeal]
b. Whether the 2nd – 8th Appellants who are agents of the 1st Appellant are necessary party to the suit and Jointly liable to the Respondent. [Distilled from Grounds 2 and 3 of the Grounds and Notice of Appeal]”
For the Respondent, her learned counsel Isaac Okpanachi Esq., did not find a need to formulate any other in the Respondent’s brief and thus adopted and argued on the Appellants’ issues too in line with the Respondent’s case.
Traversing the Appellants’ arguments under their first issue as canvassed at pages 3 to 11 of their brief, it is, to say the least, surprising that their learned counsel did not deem it necessary or even desirable to refer to any particular page or portion of the lower Court’s judgment containing specific finding or decision which the Appellants seek to challenge. It is even more disturbing as the Judgment is fairly lengthy containing many related findings and holdings on or in relation to the Appellants’ first issue for determination (supra). It is thus difficult to discern precisely or differentiate which among those findings or holdings the Appellants are challenging. Neither the Grounds of Appeal nor their particulars have been helpful too. In appellate practice, it is trite that issues for determination must be clearly related to and be founded on the specific findings or ratio decidendi in the judgment on appeal. In other words, the issues for determination must be distilled from the Grounds of Appeal which in turn must also be predicated upon the ratio(s) decidendi of the particular decision complained against. See Archinga vs. Attorney General of Akwa Ibom State (2015) 6 NWLR (Pt. 1454) 1, Shipcare Nig. Ltd Owners of the M/T African Hyathinth vs. The Owner or the M/V Fortuno (2011) 7 NWLR (Pt. 1246) 205, Shettima & Anor vs. Goni & Ors (2011) LPELR – 417 (SC); Musaconi Ltd vs. Aspinall (2013) LPELR – 20745 (SC); Nze vs. Aribe (2016) LPELR – 40617 (CA).
Ordinarily, the observed apparent defect in the Appellants’ first issue would have ended it all at that point. However, in order to attain substantial justice on the Appellants’ complaints in the appeal, I have strived to identify from the judgment some particular portions(s) which seem to fit into the Appellants’ arguments without jeopardizing the Respondent’s position who in any case also adopted the Appellants’ blunder as well because their learned counsel too never referred to or mentioned any specific finding or holding of the lower Court that the Respondent is seeking to support by the arguments under the issue.
It should not be forgotten that the Appellants’ first issue essentially challenges the lower Court’s finding(s) that as Directors of the 1st Appellant, the 2nd to 8th Appellants had been fraudulent in the dealings between the 1st Appellant and the Respondent which the Court found as sufficient reason to lift the 1st Appellant’s veil of incorporation and held them liable in that capacity. It is argued for the Appellants that neither was the allegation of fraud submitted to the lower Court to warrant its findings on the fraudulent dealings it ascribed to the 2nd to 8th Appellants nor could they in any case be validly held liable for the acts of the 1st Appellant particularly in its contract with the Respondent. That is the substrum of the Appellants’ arguments under this issue. I note yet another line of disjointed argument under this issue in relation to the joinder of the 2nd to 8th Appellants as proper parties in the trial. Let me say straight away that this argument is one that is neither hinted in the Appellants’ first Ground of Appeal (supra) from which the Issue is distilled nor deducible from the Particulars clumsily listed thereunder as numbers “(d), (b), (c), (d)”. Having not been rooted in or linked to the Ground(s), it is said to have been distilled from, that line of argument is discountenanced. The same fate also befalls the other line of argument under the same Issue by which the Appellants introduced and canvassed arguments questioning the lower Court’s decision on their Notice of Preliminary Objection being one that is completely unconnected to their said first Ground of Appeal. See Thompson vs. Akingbehin (2021) 16 NWLR (Pt. 1803), 285 at 312 to 313 paras H – E.
What I can only add from the Appellants’ arguments on this issue, even if for emphasis only, is the Appellants’ insistence that the lower Court wrongly found the 2nd to 8th Appellants fraudulent in the circumstances and without affording them an opportunity to be heard on it. Reliance is placed on the decisions of this Court in FDB Financial Services Ltd vs. Adesola (2000) 8 NWLR (Pt. 668), 170, Alarapon & Ors vs. PRP & Ors (2019) LPELR – 47052 (CA) among others in support of the argument under this issue.
For the Respondent, it is argued that by virtue of Sections 308, 309 and 316 of the Companies and Allied/Matters Act 2020, if a company, the 1st Appellant in this case, with intent to defraud fails to apply the money or other property for the purpose it was received, every director of the company who is in default is personally liable, without diminishing the liability of the company itself; placing reliance on the decisions by this Court in Public Securities Ltd vs. JEFIA (supra), Eboni Finance & Securities Ltd vs. Wole-Ojo Tech. Services Ltd (1996) 7 NWLR (Pt. 46£), 464 at 478 para A – D and the Apex Court’s decision in Trenco Nig Ltd vs. ACB & Anor (1978) NSCC 220 at 250. Learned counsel submitted that it is unjust for a party such as the Appellants to rely on the doctrine of corporate liability in the facts and circumstances as in the Respondent’s case. It is further argued that the Appellants who in their own affidavit presented contradictory, dishonest facts cannot now turn around to claim denial of hearing, more particularly as the fraud by the Appellants is so manifest for example by inter alia issuing postdated checques on two different occasions to the Respondent knowing that they had no money in their bank account which in itself is easily an offence under the provisions of Section 1 of the Dishonoured Cheques Offences Act 1977 and Section 311 of the Penal Code.
As can be seen, the entire arguments for the parties on this Issue revolve around the real or imagined protection or liability of the 2nd to 8th Appellants for the acts of the 1st Appellant, the former being the latter’s Directors. Undeniably, the 1st Appellant is a corporate entity, a juristic person in law, different from its members, subscribers or shareholders. For good reasons, the law has conferred upon it enormous immunity and privilege owing to its basic gullible feature of living a life without a mind or brain, without hands or legs, without a body or physical form. It is by the undaunting force of the law at the bottom of its creation, and protected through its growth or promotion to a functional juristic personality that it exists differently from, though not in isolation of its human components which reside mainly in its directors. That is the postulate in the doctrine of corporate personality which appears to have originated and gained persistent legitimacy for one hundred and twenty-five years now from the English decision in Salomon vs Salomon (1897) 2 AC 22. It applies in Nigeria as well. See Section 42 of the Companies and Allied Matters Act 2020. In Adamu Muhammad Gbedu & Ors vs. Joseph I. Itie (Liquidator) (2020) 3 NWLR (Pt. 1710), 104 at 124 para C – D, the Supreme Court held that:
“Company law derives from Common Law and that includes the Companies and Allied Matters Act, CAMA, applicable in Nigeria.”
Its application in Nigeria has been consistently upheld by both the Apex Court and this Court. See Marina Nominees Ltd vs. FBIR (1986) LPELR – 1839 (SC), Ramanchandani vs. Ekpenyong Trenco (Nig) Ltd vs. African Real Estate & Investment Co. Ltd & Anor (1978) LPELR 33264 (SC), United Cement Co. Ltd vs Libend Group Ltd & Anor (S016) LPELR – 42038 (SC).
As in every rule however, there are recognized exceptions, premised on the legal reality that a company though an artificial person in the eyes of the law is however composed of and piloted by its human component, i.e. its Directors and Managers who act as the directing mind of the company by their action and inaction for the company. When there occurs infractions against the company, it is the Directors who rise to the occasion in its defence, in the same way that they bear the responsibility and liability in defence of the excesses or infractions by the company. Such is the inextricable, generally harmonious relationship between a company and its Directors. By the very nature of this relationship, there developed necessary legal mechanisms as recognized exceptions to the doctrine of the separate legal personality of a company particularly in ostensible acts of the company but which in reality are acts of its Directors to lift the veil of the company’s incorporation in order to see those behind the excesses or inactions of the company that are put to question. The exceptions are enshrined in law and in equity and applied in our Courts.
As referred by the learned counsel for the Respondent, Section 316 of CAMA 2020 provides that:
“Where a company –
(a) receives money by way of loan for specific purpose;
(b) receives money or other property by way of advance payment for the execution of a contract or project; or
(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 is 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 and nothing in this section affects the liability of the company itself.”
The Appellants’ complaint here is that the lower Court was wrong when it lifted the 1st Appellant’s veil of incorporation on the ground that its Directors i.e. the 2nd to 8th Appellants had been fraudulent.
To begin with, as clearly enshrined in these provisions, fraud is certainly a ground on which the 1st Appellant’s veil may be lawfully lifted in order to hold its Directors personally liable to the party from whom the money was received. In my humble view, it is not only good law but good sense to treat a company and its Directors in line with the provisions of Section 316 of CAMA (supra) firstly because they are the actors in the company’s dealings and secondly to protect the company from the excesses of its unscrupulous, fraudulent Directors. It is in this premise that the lower Court lifted the veil of the 1st Appellant’s incorporation in accordance with the provisions of Section 316 of CAMA 2020.
More importantly, I have been unable to find any misapplication of the law and the facts considered by the lower Court in arriving at the finding that the 2nd to 8th Appellants were indeed fraudulent in their dealing with the Respondent from day one. This view can be better appreciated through the findings in the Judgment of the lower Court as follows:
“The Claimant’s case is that up till the time of presenting the 1st Defendant was yet to pay him a dime despite the above assurances. However, in a curious and evasive twist the Defendants at paragraph 10 of the affidavit in support of notice of intention to defendant stated as follows:
’’That paragraph 3 (o) of the affidavit in support of the Writ of summons is admitted only to the extent that the sum of N285, 053, 345.00 (Two Hundred and Eighty-Five Million, Fifty-Three Thousand and Forty-Five Naira) only together with the accrued interest since 15th March, 2018 till date only being claimed as the 1st defendant’s indebtedness to the claim is arbitrary and does not represent the actual state of the 1st Defendant’s indebtedness as same cannot be claimed under the agreement between the parties same being outside the tenor of the agreement.”
This line of defence is to my mind incoherent, evasive, scandalous and thoroughly unconscionable especially when the 1st Defendant had earlier written to admit liability in the sum of N285,053,345.00 (Two Hundred and Eighty-Five Million, Fifty-Three Thousand, Three Hundred and Forty-Five Naira). I need to remind the Defendants that it was not the Claimant that carne up with the figure. It was indeed the 1st Defendant that put the figure forward as the total sum due to the Claimant as at 28th February, 2018. It is therefore unacceptable for the said Defendants to now attempt to discredit what it authored in the first place. No Court or Tribunal will welcome such line of defence. What I am saying in essence is that the Defendant, cannot approbate and reprobate at the same time. They are bound by Exhibits ON5 which is their i.e. the Defendants’ own document.
It is worthy of note that cheques were presented to the Claimant at different times but he got no value for any of them. Interestingly the Defendants did not put anything forward by way of their bank statements to show that funds moved from any of their accounts to the Claimant. From the correspondence with the Claimant the Defendants’ line of defence is that they have invested the Claimant’s fund and waiting to be paid by the Federal Government of Nigeria. Paragraph 12 of their affidavit speaks to this point. It is hereby reproduced:
“That further to the above paragraph 12 (sic), the 1st Defendant maintains that she in her discretion invested several sums of money in a business venture which yielded so much profit but which stun owed the 1st Defendant by the Federal Government of Nigeria has remained unpaid up till this day which fact was duly disclosed to the Claimant’s counsel and which has necessitated the institution of SUIT NO FCT/HC/ZOO1/ZO19 BETWEEN: KOLAWOLE OLOWOOKERE VS ATTORNEY GENERAL OF THE FEDERATION AND MINISTER OF JUSTICE B ANOR by the 1st Defendant’s counsel. A certified true copy of the said writ of summons and other processes duly filed are hereby attached and marked Exhibit NCMF X.”
It is however curious that the Defendants who chimed that the Federal Government of Nigeria is indebted to them exhibited a very strange document christened as Exhibit NCMF 1 to prove that point. I have carefully perused the exhibit and it is clear to me that it has nothing to do with the relationship between the Claimant and the Defendants. In fact, the Exhibit is 3 suit for recovery of professional fee instituted by Mr. Kayode Olowookere Esq or counsel for the Defendants. What that means is that the Defendants are simply playing pranks with the Court as it has no defence to this action. Whichever way Exhibit NCMF 1 is viewed it is not relevant to the proceedings and cannot Be used by the Defendants to justify their failure to repay the Claimant’s investment with the accrued interest.”
See pages 74 to 76 of the Additional Record.
Furthermore, it seems to me that the vehement insistence of the 2nd to 8th Appellants on pushing the entire liability on the 1st Appellant is clearly because the 1st Appellant, as contended by the Respondent’s counsel, has since become moribund; a contention the Appellants have found impossible to deny. With respects to the Appellants’ learned counsel, that line of defence only reinforces the lower Court’s finding that the Appellants have been fraudulent because its ultimate effect is to evade the repayment of the debt permanently as the 1st Appellant on whom they seek to push the debt liability is to their full knowledge no longer functional; in effect crushing the Respondent to Ground Zero under the cover of Salomon vs. Salomon (supra), as it were, contrary to the provisions of Section 316 of CAMA (supra) and the demands of equity. The findings and decision of the lower Court in lifting the veil of the 1st Appellant in the circumstances are unassailable.
With respects, I wish the learned counsel for the Appellants has had time to read the decisions in the three cases referred by his learned friend for the Respondent; namely Public Finance Securities Ltd vs. JEFIA (supra), Eboni Finance GT Securities Ltd vs. Wole-Ojo Tech. Service Ltd (supra) and Trenco Nig. Ltd vs. ACE (supra) as that would have saved him the stress of attempting to distinguish them from this appeal as he sought to do in the Appellants’ Reply Brief because they are in all fours with the cases of the parties herein. To drive this point home, I will reproduce the portion referred by the Respondent’s counsel from the JEFIA case (supra) here thus:
“It is patently clear that Section 290 of the Companies and Allied Matters Act 1990 is wide enough to cover the situation herein whereas borne by the record, the 2nd appellant, as the Chairman and Managing Director of the 1st appellant Company had recklessly refused to attend Court to explain or defend the failed investment of the respondent, but instead fabricated a sham defence “that the 1st defendant in common with other Ranks and Investment Companies, suffered a decline in Business fortunes due to political crises and orchestrated blackmail by some fraudulent staffers.
The learned trial Judge, at page 39 lines 2 to 11 of the record said:-
“The money invested by the plaintiff represents a loan to the 1st defendant for the sole purpose of yielding interest. The Company is not willing to pay and says that it is in some distress and has resorted to all sorts of subterfuge in order to avoid payment of the sum appearing on the Bond Certificates. I have already shown that this is only but a sham and fraudulent defence that is put forward. The question is what did they do with the money? It is fraud in my view to establish a Financial Institution that collects money from the general public by way of investments and turn around to disappoint their legitimate expectation under the guise of having a general decline in business.”
The above quoted passage from the judgment of the trial Court cannot be faulted as it is supported by both the affidavit and oral evidence contained in the record of proceedings, I agree with him. I also agree with him that this is a proper case to invoke the provisions of Section 290 of the Companies and Allied Matters Decree 1990 to protect the respondent and hold the 1990 appellant liable jointly and severally with the 1st appellant for debt owed the respondent.”
I had earlier hinted that the Appellants are in equity also bound to repay the 1st Appellant’s debt. This is what preoccupied the mind of this Court also in the Eboni case (supra) referred by the Respondent’s learned counsel, where this Court reasoned and held thus:
“Another point in this case is this: as the 1st and 2nd respondents have received the money, might equity not come to the rescue for unjust enrichment. I think the principle of unjust enrichment which unfortunately is not well developed in English law as both in U.S., and Scotland should, of necessity be nurtured to growth in a new and complex society like ours where people can easily at a whiff of breath resort to law to ward off debt or other enrichments they have had, at the expense of the other. This is a specie of constructive trust which is an instrument which the Court of equity may employ to prevent undue enrichment. I believe that when a person is holding tight that which is subject of equity he should not be allowed to hold it firmly. Therefore, where a party unjustly enriches himself at the expense of the plaintiff he must be made to disgorge it. Our legal system should at this instance lean more to U.S. law on this principle than in England where the principle is yet to assume a wider dimension. Thus Lord Porter in Reading v. A.G. (1951) A.C 5014 said My Lords – the exact status of the law of unjust enrichment is not yet assured. It holds a predominant place in the law of Scotland and I think of the United States”. The premise behind the doctrine of restituting an unjust enrichment is that justice be done. That being the case, it seems to me that we ought to lean overly to U.S. legal practice to effectuate justice. Therefore, in consonance with the principles enshrined in the restitution a remedy shall be available whenever the defendant is unjustly enriched at the expense of the plaintiff. In this case, the respondents must be made to vomit out what they have taken (unjustly).”
In addition, the Apex Court’s decision in the Trenco case (supra) referred also by the Respondent’s counsel is no less relevant and binding on this Court as it is similarly in all fours with the present Appeal; more particularly on the line of failed exculpatory argument of the 2nd to 8th Appellants that the lower Court wrongly held them liable for the 1st Appellant’s debt.
In my humble view, this Issue can only be and is resolved against the Appellants.
In their second issue, the Appellants have argued strenuously that the lower Court was wrong to have maintained the suit with the 2nd to 8th Appellants as parties although they were agents of a disclosed principal namely the 1st Appellant. It is argued further that the Respondent did not make any case against the 2nd to 8th Appellants to warrant their joinder as parties in the suit. Learned counsel referred to the decision of this Court in Global Soap & Detergent Industries Ltd & Ors vs. Bello & Anor (2011) LPELR – 9029 (CA) and Ramon vs Adeleke & Ors (2019) LPELR – 50175 (CA) where this Court held that where an agent acted on behalf of a disclosed principal, he cannot be personally liable, unless it can be proved otherwise. Those are the main arguments under the Issue.
For the Respondent however, it is argued that although it is the correct position of the law that an agent of a disclosed principal cannot generally be sued or held personally liable, there have been long settled exceptions to that rule which include situations where statutory provisions make such agent liable e.g. under Sections 308, 309 and 316 of CAMA and Section 1 of the Dishonoured Cheques Act and secondly where the Court from the circumstances of a case makes the agent liable though the principal is named. Learned counsel referred to the decisions of the Supreme Court in National Film Video Censor Board & Or Vs. Adegboyega & 2 Ors (2019) 4 NWLR (Pt. £662), 285 at 507 and COTECNA International Ltd vs. Church Gate Nig. Ltd (2010) 18 NWLR (Pt. 1225), 546 where the Supreme Court upheld the joinder of an employee and of an agent respectively although of named principals; to buttress his submission on recognized exceptions to the rule that an agent of a disclosed principal can neither be sued nor held liable. Learned counsel further argued that the 2nd to 8th Appellants are necessary parties without who the suit cannot be judiciously decided placing reliance on the Supreme Court’s decisions in Azubuike vs PDP (2014) 7 NWLR (Pt. 1406), 292 a 313 and Mbanefo vs. Molokwu (2014) 6 NWLR (Pt. 1406) 377 at 410 – 411.
In his Reply Brief, the Appellants’ counsel sought to distinguish the Supreme Court’s decision in the Censors Board case (supra) for the reason that the party joined in that appeal was wrongfully collecting money from people whereas the Appellants in this Appeal were merely acting within the instructions of the 1st Appellant. Needless to say but for emphasis, this reasoning is unacceptable in view of the earlier resolution of that argument in the contrary under the first Issue.
Strangely, the learned counsel avoided any argument or – even comment on the Respondent’s reliance on the provisions of Section 316 of CAMA which the Respondent argued made the Appellant’s parties on the facts in the suit. Firstly, the Appellants are parties in the suit by operation of law under Section 316 of CAMA (supra). Secondly, the two previous decisions of this Court referred by the learned counsel for the Appellants were not based on the provisions of Section 316 of CAMA. Thirdly, the Appellants are on the facts necessary parties without who the entire suit would be meaningless. As laid down in several decisions by this Court and the Apex Court, from which I referred to the Apex Court’s decision in Azubuike vs. PDP (supra) the questions to be answered before arriving at whether a party is a necessary party in a suit are:
(a) Is the cause or matter liable to be defeated by the non-joinder?
(b) Is it possible to adjudicate on the cause or matter unless the 3rd party is added as a defendant?
(c) Is the 3rd party a person who should have been joined in the first instance?
(d) Is the 3rd party a person whose presence before the Court as a defendant will be necessary in order to enable the Court to effectually and completely adjudicate or settle all the questions involved in the cause or matter?
From the facts detailed in the Respondent’s affidavit and its annexures in support of the Originating Summons found at pages 3 to 18 of the Additional Record which the Appellants’ evasive facts in their Notice of Intention to defend the suit found at pages 32 to 35 failed to controvert effectively, more particularly on their roles as directors of the 1st Appellant, the lower Court was right in refusing to strike out their names from the Suit as they sought by their Notice of Preliminary Objection, because all the above questions are, upon the credible evidence before the lower Court, easily answerable in the affirmative against the Appellants. See also Biyu vs. Ibrahim (2006) 8 NWLR (Pt. 981), 1 at 35, Adefarasin vs. Dayekh (2007) 11 NWLR (Pt. 1044), 89 at 116 – 117, Jadesimi vs. Okotie-Eboh (1989) 4 NWLR (Pt. 113), 113 at 126. This issue is also resolved against the Appellants.
In consequence, the Appellants’ two issues for determination as adopted and argued also by the Respondent, having been resolved against the Appellants, the appeal ends as one lacking in any merit and is accordingly dismissed. The judgment of the lower Court is affirmed. I award cost of Two Hundred Thousand Naira against the 2nd to 8th Appellants jointly.
STEPHEN JONAH ADAH, J.C.A.: I have had the privilege of reading in draft, the judgment just delivered by my learned brother, Isa Bature Gafai, JCA.
I am in agreement with the reasoning and conclusion which I adopt as mine. I therefore, agree that the appeal lacks merit and I hereby dismiss it. I abide by the consequential orders inclusive of the order as to costs as made in the lead judgment.
BIOBELE ABRAHAM GEORGEWILL, J.C.A.: I was privileged to read in advance a draft copy of the leading judgment just delivered by my noble lord, Isah Bature Gafai, JCA, and I am in complete agreement with the impeccable reasoning as marshalled out therein as well as the inescapable conclusion reached to the effect that the appeal lacks merit and is liable to be dismissed.
My Lords, proceedings under the undefended list procedure, as was commenced by the Respondent against the Appellants in the instant appeal before the lower Court to recover the total sum of N285, 053, 345. 00 by reason of the refusal of the 1st Appellant, of which the 2nd – 8th Appellants are the Directors, to pay over to the Respondent the sum of N200, 600, 000. 00 placed in a fixed deposit with the 1st Appellant for a period of 180 days at an agreed interest rate of 20%, is a strict one geared towards the expeditious dispensation of justice, devoid of unnecessary delays and undue technicalities, in cases where the Defendant really has no defence to the claim of the Claimant. In Arcadia Petroleum Nig. Ltd & Anor V. Northside Apartment Ltd & Anor (2022) LPELR – 57506(CA), this Court per Sir Biobele Abraham Georgewill JCA had stated inter alia thus:
“Under the Undefended List Procedure, going by the several judicial authorities on the essence of this procedure geared towards the attainment of speedy but substantial justice in cases in which a Defendant really has no defense to the claim of the Claimant against him and for judgment to be entered if there be nothing worth being further investigated by the Court on the affidavit evidence of the parties. It is to be noted here, and very pertinently too, that once the Claimant’s Suit is filed and or placed under the Undefended Cause List, the very straightforward, and if I dare say very simple uncomplicated procedure on the date fixed for hearing of the Suit filed or placed under the Undefended List, is that the Court would after hearing the parties or their counsel ascertain if on the facts as placed before it the Defendant had made out any triable issue or defense on the merit. In arriving at such a finding, the Court would critically securitize and examine the affidavits and documentary Exhibits, if any, of the parties to determine at that stage if the Defendant has disclosed any defense on the merit or raised at least triable issue that would need to be further investigated into by the Court by way of a full hearing. However, where the Court finds that the Defendant has not disclose any defense on the merit or raised any triable issue, it is under a duty to proceed to enter judgment in favor of the Claimant against the Defendant, no more no less. But, where the affidavit of the Defendant in support of the Notice of Intention to Defend discloses either a defense on the merit or triable issues or if there are substantial conflicts as to the facts of the case on the affidavits of the parties, it would be sufficient for the Court to hold that the Defendant has raised a triable issue as would require further enquiry and thus a transfer of the matter to the General Cause List should be the appropriate. The Claimant’s claim would then be heard at plenary trial in which the contending rights of the parties would be enquired into and settled on the merit on the evidence as would be put forward by them at the trial.”
See also United Bank for Africa Plc V. E. I. Natama International Complex Ltd (2020) LPELR-51981(CA) per Sir Biobele Abraham Georgewill. JCA.
In the leading judgment, the numerous legal questions raised by the parties under the cover of just two, seemingly simple but apparently, overloaded, issues have been considered admirably and resolved against the Appellants in favour of the Respondent. I shall only, by way of my humble contribution, say a word or two on some of these very crucial issues as canvassed by the parties in their respective appellate briefs in this appeal.
I have no doubts in my mind based on the affidavit evidence of the parties as in the Record of Appeal that the 2nd – 8th Appellants, who are Directors of the 1st Appellant, are the directing minds and alter ego of the 1st Appellant. In law, they therefore, come within the context of agents of the 1st Appellant. This is so because agency can be created in about four to five ways, namely: (1) By express appointment, whether orally or by letter of appointment or, indeed by Power of Attorney; (2) By Ratification of the Agent’s acts by the Principal; (3) By virtue of the Doctrine of Estoppel; (4) By implication of law in the case of agency of necessity, and (5) By presumption of law in the ease of cohabitation. See Salbodi Group Ltd & Anor V. Doyin Investment Nigeria Limited & Ors (2022) LPELR – 57458 (CA) per Sir Biobele Abraham Gcorgewill JCA. See also Vulcan Gases Ltd. V. GF.IND. AG. (2001) 9 NWLR (Pt. 719) 610 AT Pp. 637 – 638, per Iguh JSC.
Indeed, agency relation can in law even be implied as is referred to as the implied authority or apparent or ostensible authority of an agent acting within the scope of the authority vested on him by the principal. In law, implied authority is also referred to as apparent or ostensible authority. It is the authority of an agent as it appears to other. Under the doctrine of apparent authority, the principal may be bound to third parties because the agent appeared to have authority, though as between principal and agent there was in fact no such authority granted and normal circumstances of such authority did not arise. See Salbodi Group Ltd & Anor V. Doyin Investment Nigeria Limited & Ors (2022) LPELR – 57458 (CA) per Sir Biobele Abraham Georgewill JCA. See also UBN (Nig) Plc V. Otagbe Farms Ltd (2002) 14 NWLR (Pt. 787) 242 AT pp. 249 – 250, per Akaahs JCA, (as he then was but later JSC).
Thus, in law, a principal cannot generally be liable for the fraud of his agent unless it is proved that the agents, as in the instant appeal, the 2nd – 8th Appellants, had a guilty mind in respect of the fraudulent acts of the 1st Appellant in its dealings and relationship with the Respondent, had indeed participated in it. See Sections 308, 309 and 316 of the Company and Allied Matters Act 2020. See also Salbodi Group Ltd & Anor V. Doyin Investment Nigeria Limited & Ors (2022) LPELR – 57458 (CA) per Sir Biobele Abraham Gcorgewill JCA, Nirchandani V. Pinherio (2001) FWLR (Pt. 48) 1323, Fitton V. IGP (1958) 3 FSC 20.
The question then simply is this: Did the Respondent, by the copious affidavit evidence, which were left generally unchallenged and therefore, uncontroverted, show that the 2nd – 8th Appellants as Directors, and therefore, the directing mind and alter ego of the 1st Appellant, acted in the relationship between the Respondent and the 1st Appellant, being the agents of the 1st Appellant, within or outside the scope of their authorities for which either the 1st Appellant alone, being a corporate legal entity, should bear responsibility to the Respondent or for which the corporation veil can be lifted and the 2nd – 8th Respondents also held accountable and liable for the acts of the 1st Appellant carried out under their supervision and direction as the directing minds of the 1st Appellant?
My Lord, it must be pointed out at once that in law the mere fact a person, such as the 2nd – 8th Appellants, is an Agent of a Principal, such as the 1st Appellant, and known to be so does not of itself necessarily prevent his incurring personal liability, and whether he does so or not is to be determined by the nature and terms of the contract and the surrounding circumstances. See Salbodi Group Ltd & Anor V. Doyin Investment Nigeria Limited & Ors (2022) LPELR – 57458 (CA) per Sir Biobele Abraham Georgewill JCA. See also FCDA V. Ezinkwo (2007) All FWLR (Pt. 393) 115, Asafa Foods Factory V. Alaine Nig Ltd (2002) FWLR (Pt. 125) 756.
Now, I had earlier posed the question, whether the facts of this ease as in the Record of Appeal would or could justify and or warrant the lifting of the corporate veil of the 1st Appellant as was apparently done by the lower Court? I certainly think it does! The lower Court was, in my finding, perfectly in order to have lifted the corporate veil of the 1st Appellant, to see the 2nd – 8th Appellants, as the main actors and directing minds of the activities, acts and actions of the 1st Appellant, in its relationship with the Respondent in the proved facts and circumstances of this case.
My Lords, it is true that a limited liability Company, such as the 1st Appellant, company upon its incorporation acquires a legal personality of its own that makes it distinct from its Shareholders ad or Directors. Yet, in law there are some exceptional but very limited circumstances in which a Court may lift the veil of incorporation so as hold the Shareholders and or Directors personally liable for the debts and or liabilities of the company. This would include eases of grave and proved allegations of fraud, as in the instant appeal or illegality or sham that would in fairness and in justice warrant the lifting of the veil of the corporate entity of a company duly incorporated in law. See Willbros West Africa, Inc. & Ors V. Mcdonnel Contract Mining Limited (2021) LPELR – 54544 (CA) per Sir Biobele Abraham Georgewill JCA. See also Prof Ajibayo Akinkugbe V. Ewulum Holdings Nigeria Ltd & Anor (2008)12 NWLR (Pt. 375) 1, Okoli V. Morecab Finance (Nig.) Ltd (2007) 14 NWLR (PT. 1053) 37 AT p. 57, Vibelko (Nig.) Ltd V. NDIC (2006) 12 NWLR (Pt. 994) 280 AT pp. 293 – 294, Alhaji Mohammed Abacha V. AG. Federation (2013) LPELR – 21749.
It is for the above few words of mine, by way of contribution to the fuller reasoning marshalled out in the leading judgment, that I too dismiss this appeal for lacking in merit. I shall abide by the consequential orders made in the leading judgment, including the order as to cost.
Appearances:
…For Appellant(s)
…For Respondent(s)
