NEW RESOURCES INT’L LTD. & ANOR v. EJIKE ORANUSI, ESQ. (2010)

NEW RESOURCES INT’L LTD. & ANOR v. EJIKE ORANUSI, ESQ.

(2010)LCN/4149(CA)

In The Court of Appeal of Nigeria

On Wednesday, the 15th day of December, 2010

CA/L/461/08

RATIO

ISSUE FOR DETERMINATION: WHETHER FOR AN ISSUE FOR DETERMINATION TO BE COMPETENT, IT MUST HAVE BEEN DERIVED FROM THE GROUNDS OF APPEAL

It is trite that for an issue to be competent, it must derive or flow from a ground of appeal. Any issue that does not have its root from any ground of appeal is incompetent and ought to be struck out. See Ikweki v. Ebele (2005) 11 N.W.L.R. (pt.936) 397; I.F.A. International Ltd. v. L.M.B. Plc (2005) 9 N.W.L.R. (pt.930) 274; Abubakar v. Joseph (2008) 13 N.W.L.R. (pt.1104) 307. Also, any argument based on an incompetent issue does not avail any party at all. It is of no use other than to be discountenanced and struck out. See Gege v. Nande (2006) 10 N.W.L.R. (pt.988) 256; Unity Bank Plc V. Bouari (2008) 7 N.W.L.R. (pt.1086) 372; Odedo V. INEC (2008) 17 N.W.L.R. (pt.1117). PER JOHN INYANG OKORO, J.C.A

FRESH POINTS: EFFECT OF THE FAILURE OF A PARTY SEEKING TO RAISE A FRESH ISSUE ON APPEAL TO HAVE SOUGHT AND OBTAINED THE LEAVE OF COURT BEFORE RAISING SUCH AN ISSUE

Quite apart from that, the issue is new or fresh and by the practice in this court, the party raising a fresh issue must first seek and obtain the leave of court before such an issue can be considered by the court. Failure to seek and obtain leave as in the instant case renders such an issue incompetent and liable to be struck out. PER JOHN INYANG OKORO, J.C.A

DUTY OF COURT: CONSEQUENCE OF THE FAILURE OF A COURT TO CONSIDER THE CASE OF A PARTY BEFORE IT

Generally, courts are set up to settle disputes between parties who submit themselves to it and it is expected that whenever parties so submit to the Jurisdiction of any court, such court must be impartial by considering the case of both parties equally and with fairness. Failure to consider the case of a party before the court amounts to a breach of the principles of fair hearing enshrined in section 36(1) of the 1999 constitution of the Federal Republic of Nigeria. As was held in the case of Adebayo V. Shogo (Supra) by the Apex Court, failure to consider the case of a party to the proceedings leads to injustice and the entire proceedings before the court must be set aside. I dare to add that no matter how stupid the case of a party may be, it must be thoroughly considered and pronounced upon. A court cannot just refuse to consider the case of a party merely because the Judge believes that the case would not succeed. Let the case be considered on its merit and let the party losing the case know the reasons given by the court in dismissing his claim. To do otherwise is a clear case of injustice and unfair trial and this court will not hesitate to strike down such a trial no matter the beautiful result it has produced. PER JOHN INYANG OKORO, J.C.A

CORPORATE PERSONALITY: WHAT THE CONCEPT OF CORPORATE PERSONALITY ENTAILS

Since the decision of the House of Lords in 1897 in the much celebrated case of Salomon v. Salomon and Company Ltd (1897) AC 22, it established firmly the concept of corporate personality which means that once a company is incorporated under the relevant laws, it becomes a separate person from the individuals who are its members. It has capacity to enjoy legal rights and is subjected to legal duties which do not coincide with that of its members. Such a company is said to have legal personality and is always referred to as an “artificial person”. This being the case, it can sue and be sued in its own name. It may own property in its own right and its assets, liabilities, rights and obligations are distinct from that of its members. It follows that a registered company has perpetual succession. Thus, a change in membership or death of a member does not affect the existence of the company. It acquires its capital from its members through the sale of shares and invariably distributes the profits in form of dividends made from the utilization of the capital to its members. See Modern Nigerian Company Law (2nd Edition) by M. O. Sofowora Esq. PER JOHN INYANG OKORO, J.C.A

DECISIONS OF A COMPANY: WHETHER NO MEMBER OF A COMPANY HAS A RIGHT TO UNILATERALLY COMMIT THE COMPANY ON ANY MATTER WITHOUT ITS CONSENT AND APPROVAL

Generally, companies speak or express their decisions through resolutions, which must be validly passed. No member of a company has a right to unilaterally commit the company on any matter without its consent and approval. Let me emphatically say that no member of a company is allowed to wake up one morning and sell off the company. PER JOHN INYANG OKORO, J.C.A

PRIVITY OF CONTRACT: WHETHER A CONTRACT ONLY AFFECTS THE PARTIES TO IT, AND CANNOT BE ENFORCED BY OR AGAINST A PERSON WHO IS NOT A PARTY TO IT

It is trite that a contract affects the parties to it, and cannot be enforced by or against a person who is not a party even if the contract is made for his benefit and purports to give him the right to sue or to make him liable upon it. See A-G Federation v. A.I.C. Ltd. (2000) 10 N.W.L.R. (pt.675) 293, Negbenebor v. Negbenebor (1971) 1 All N.L.R. 270. PER JOHN INYANG OKORO, J.C.A

JUSTICES

ADZIRA GANA MSHELIA Justice of The Court of Appeal of Nigeria

JOHN INYANG OKORO Justice of The Court of Appeal of Nigeria

MOHAMMED AMBI-USI DANJUMA Justice of The Court of Appeal of Nigeria

Between

1. NEW RESOURCES INT’L LTD.
2. LOFTY INVESTMENT NIG. LTD. Appellant(s)

AND

EJIKE ORANUSI, ESQ. Respondent(s)

JOHN INYANG OKORO, J.C.A (Delivering the Leading Judgment): The Respondent, Ejike Oranusi Esq., who was the Petitioner at the Federal High Court, Lagos, together with his brother, late Chief Ikechukwu Oranusi, was the only Directors and Shareholders of New Resources International Limited, the 1st Appellant herein. The company’s issued share capital was 10,000,000 ordinary shares which were held thus, 4,000,000 by the Respondent and 6,000,000 by late Ikechukwu Oranusi who was the Managing Director of the company. Sometime in July, 2005, the 2nd Appellant approached the late Chief Ikechukwu Oranusi for the purchase of the entire shares and business of the 1st Appellant Company. After subsequent negotiations, the parties agreed for the sum of N3,800,000.00 (three million, eight hundred thousand naira only) as purchase price which the 2nd Appellant paid for the acquisition of all shares and business of the company. One Mr. J. A. Agwuncha, said to be company secretary and Legal Adviser of the 1st Appellant prepared the agreement of the sale of the 1st Appellant. He however refused and/or neglected to perfect the transfer of the ownership of the company in favour of the 2nd Appellant after collecting the sum of N451,800.00 (four hundred and fifty one thousand, eight hundred naira) for that purpose.
After the death of Chief Ikechukwu Oranusi, the Respondent became aware of the sale of the 1st Appellant Company and all the shares therein by his late brother to the 2nd Appellant. Included in the sale were the four million shares of the Respondent and the Bureau De Change Licence of the 1st Appellant Company. Upon so becoming aware of the said transaction, the Respondent filed an action at the Federal High Court to set aside the sale. The agreement which was the vehicle for this transaction was exhibited to the petition and is undated. The Appellants on their part filed an answer and “cross petition” dated 6th February, 2007 and exhibited a copy of the agreement dated 1st August, 2005.
The court, on 29th June, 2007 considered the case and ruled in favour of the Respondent, granting all the prayers sought in the petition, hence this appeal.
The Appellants filed Notice of Appeal dated 6/8/07 on the same date containing four grounds of appeal out of which three issues have been formulated for the determination of this appeal. The Issues are:
“1. Whether the trial court was not wrong in failing to consider the Appellant’s cross-petition and determine same in its ruling appealed against. (Ground 1)
2. Whether the trial court was not wrong in holding that there was no valid sale of the 1st Appellant’s shares to the 2nd Appellant, and also holding that the transaction was a takeover of the 1st Appellant. (Ground 2 & 4)
3. Whether there was no valid sale of the shares of the late Ikechukwu Oranusi (the former majority shareholder) in the 1st Appellant. (Ground 3)
In the brief prepared by B. C. Igwilo Esq., counsel for the Respondent, Issues 2 & 3 of the Appellant are adopted while issue one is couched thus:
“Whether there was a valid cross-petition by the Appellants before the Honourable trial court and if the answer is yes, whether the Hon. Trial Judge failed to consider and determine the same in the ruling of 24th April, 2007.”
As has been rightly pointed out by the learned counsel for the Appellant in his reply brief, issue one as couched by the Respondent does not derive from any ground of appeal contained in the Notice of Appeal, particularly, the first arm of the issue. No ground of appeal has challenged the competence of the cross-petition and that issue does not arise from the Judgment of the lower court, In fact. The competence or otherwise of the cross-petition was never canvassed before the court below. Two issues arise here. The first is that the Respondent’s issue one, does not derive from any ground of appeal and there is no cross-appeal. Secondly, the issue of competency of the cross-petition is a new issue raised for the first time in this court.

It is trite that for an issue to be competent, it must derive or flow from a ground of appeal. Any issue that does not have its root from any ground of appeal is incompetent and ought to be struck out. See Ikweki v. Ebele (2005) 11 N.W.L.R. (pt.936) 397; I.F.A. International Ltd. v. L.M.B. Plc (2005) 9 N.W.L.R. (pt.930) 274; Abubakar v. Joseph (2008) 13 N.W.L.R. (pt.1104) 307.
Also, any argument based on an incompetent issue does not avail any party at all. It is of no use other than to be discountenanced and struck out. See Gege v. Nande (2006) 10 N.W.L.R. (pt.988) 256; Unity Bank Plc V. Bouari (2008) 7 N.W.L.R. (pt.1086) 372; Odedo V. INEC (2008) 17 N.W.L.R. (pt.1117).

So, from whichever angle the Respondent’s first issue is looked at, it is untenable and is hereby struck out.
I also agree with the learned counsel for the Appellant that the 2nd arm of the issue cannot save the issue at all as the court will not be in a position to pick and choose from the incompetent issue. See West African Examination Council V. Akinkunmi (2008) 9 N.W.L.R. (pt.1091) 151 at 166 paras G-H.
Having determined this issue to be incompetent, all the arguments made by the Respondent on pages 4-6 of the Appellant’s brief in respect thereof, are hereby discountenanced. I shall therefore determine this appeal based on the three issues as distilled by the Appellant. Issue one shall be determined separately while Issues 2 and 3 shall be determined together even as they are argued in the briefs of both parties.
On the 1st Issue, the learned counsel for the Appellants submitted that although the trial Judge set out the Appellant’s cross-petition in extenso in his Judgment, he faired to advert to it and did not consider it in his Judgment. That even though the result of the Judgment might not have been different, the breach of the Appellant’s right to fair hearing was so fundamental and that it went to the root of the essence of adjudication, such that the consideration of what the result would have been is irrelevant to the consideration of the breach, relying on the case of Idakwo V. Ejiga (2002) 13 N.W.L.R. (pt.793) 156 at 165.
It was his further contention that the learned trial Judge misapprehended the Appellant’s case by refusing to decide on the cross-petition and urged this court to set aside the Judgment of the court below citing the case of Adejugbe V. Ologunja (2004) 6 N.W.L.R. (pt.868) 46 at 70 in support.
In conclusion, he urged this court to set aside the Judgment of the court below for failure to consider the cross-petition of the Appellants.
It is rather unfortunate that this court does not have the benefit of the argument of the Respondent on this issue, his argument having been struck out for being argued under an incompetent issue. Be that as it may, we shall be guided by the general principles of law on the matter.

In the instant case, the facts leading to the petition and the cross-petition are the same but the reliefs sought by either party are in opposite direction. For ease of reference, I shall set out the reliefs of each of the parties hereunder. Paragraph 24 of the petition states:-
“24. WHEREOF the Petitioner prays as follows:
(i) A Declaration that the purported sale agreement between late Chief Ikechukwu Oranusi and the 2nd Respondent wherein the 2nd Respondent was purported to have bought the 1st Respondent company is wrongful, illegal, null and void and of no effect whatsoever.
(ii) A Declaration that by virtue of the Companies and Allied Matters Act and the principle of right of pre-emption, the purported sale of all the shares of the 1st Respondent company to the 2nd Respondent company is ultra vires, void and of no effect.
(iii) A Declaration that the 1st Respondent is not a shareholder of the 1st Respondent Company.
(iv) A Declaration that on the basis of nemo dat quod non habet Chief Ikechukwu Oranusi lack power, right and or authority to sell or alienate the Petitioner’s 4,000,000 shares in the capital of the 2nd Respondent company or at all.
(v) An order setting aside the Agreement purportedly selling the 1st Respondent Company to the 2nd Respondent for being contrary to Law and Articles of Association and Memorandum of Association of the 1st Respondent Company.
(vi) An account of moneys and profits earned by the Defendant, since the agreement, including but not limited to the use of the 1st Respondent Company’s Bureau De Change licence in the weekly Central Bank of Nigeria foreign exchange biddings.
(vii) An order for delivering up by the 2nd Respondent to the petitioner and Respondent all 1st Respondent all memorandum, invoices, receipts, schedules and or documents relating to the 2nd Respondent’s dealings in the said weekly Central Bank of Nigeria forex biddings.
(viii) An order of perpetual injunction restraining the 2nd Respondent, agents, and or privies whether by themselves or otherwise howsoever from trading and or continuing to trade with the 1st Respondent’s Bureau De Change Licence No. 000140.
(ix) An order of injunction retraining the 2nd Respondent from managing and or continuing to manage the affairs of the 1st Respondent and further from trading in the name of the 1st Respondent any manner whatsoever.
(x) An order of perpetual injunction restraining the Defendant, its agents and or privies from parading themselves as owners of the 1st Respondent’s company and from acting or taking any step in the management of the 1st Respondent’s company.
(xi) Damages.
(xii) Further or other relief, including all further necessary or appropriate accounts, inquiries and directions”.
Similarly, the Appellants (then Respondents) in paragraph 19 of their “Respondents” Answer and Cross-Petition” prayed for the following reliefs:-
“1. A Declaration that the sale and/or transfer of the shares of the 1st Respondent to the 2nd Respondent pursuant to the agreement dated 1st August, 2005 between Chief Ikechukwu Oranusi and the 2nd Respondent is valid and subsisting.
2(a) An order directing the Petitioner to release his shares in the 1st Respondent to the 2nd Respondent for purchase by and transfer to the 2nd Respondent.
ALTERNATIVELY
(b) An order declaring the 2nd Respondent and the Petitioner joint owners of the 1st Respondent in the ratio of 60% shareholding in favour of the Respondent and 40% in favour of the Petitioner respectively.
3. An order of injunction restraining the Petitioner from interfering or further interfering with the management and control of the 1st Respondent by the 2nd Respondent in any manner whatsoever and however”.
Basically, the two set of reliefs by the Respondent and Appellants respectively are the opposite of the other though anchored on the same set of facts, the grant of one will of necessity make the further consideration of the other an academic exercise. It is instructive to note that the Appellants in their brief, particularly paragraph 4.4 on page 4, agrees that the learned trial Judge did in fact set out their cross-petition in extenso in the Judgment but that he failed to consider it thereafter. So, it is not a situation where the court below ignored the said cross-petition. The question is whether the court below considered the said cross-petition in his Judgment. As can be found in the record of appeal, the Judgment of the court below starts from page 70 of the said record and on page 81 thereof, the court brought to the fore the said cross-petition thus:
“The Respondent counsel filed a cross petition on the 6/2/07. He submitted that the issues for declaration are: –
(1) Whether there is a valid sale of the 1st Respondent to the 2nd Respondent.
(2) Whether the petitioner is entitled to the reliefs claimed in the petition …”
The learned trial Judge went on and on up to page 83 when he said: –
“He finally urged the court to dismiss the petition and grant the cross-petition”.
In the circumstance of this case, I think it would be unfair to the court below to say that it failed to consider the cross-petition because thereafter, it took time to consider the issues raised by both parties in the case. It has to be noted that both the petition and the cross-petition are tied to the same facts and the reliefs sought by each of them are the same. Whereas the Respondent in the petition was asking the court to hold that the sale of the 1st Appellant to the 2nd Appellant including his 4,000,000 shares was unlawful, the Appellants urged the court below to hold that the sale was lawful. That is all. If the court determines that the sale was lawful, then the other party’s case collapses without formally doing anything to make it collapse. What I am saying is that, the learned trial Judge, having held that the sale was unlawful, there was nothing left to be considered in the cross petition which the court had set out clearly in the Judgment.
It is my well considered opinion that the issues considered and determined in the main petition were sufficient to dispose of the cross-petition. This is much more so since the facts of both petitions are the same and the reliefs sought by each party are such that when one is granted, the consideration of the other becomes academic. The Apex court in Aderounmi V. Olowu (2000) 2SCNJ, 180 at 193 stated clearly the position of the matter when it held that:-
“Where common questions determinative of a claim and a counter-claim arise in a case, the trial court are not expected to consider the same questions separately in relation to the counterclaim. In this case once the right of the respondent to the statutory right of occupancy he claimed was found to be established and he was found to be in possession of the land at the time of the trespass complained of, the counter-claim fell to the ground. The trial court was right in so holding. The contention that the trial court did not adequately consider the counter-claim being without substance, the court below was quite right in dismissing the appeal in its entirety”.
I quite agree and of course I am bound by the same authority. Having held that the sale of the shares of the Respondent was unlawful, the court below had no business further considering whether the sale was lawful as the Appellant would have loved the court to do. The final analyses of all I have endeavoured to say is that there is no merit on issue one and same is accordingly resolved against the appellants.
I shall now consider issues 2 & 3 together. It was the submission of Oluwole Kehinde Esq., learned counsel for the Appellants that although the law prescribes a formal procedure for the transfer of shares of a company, the law is settled that those formal requirements need not be fully complied with for there to be a valid transfer of shares, where the intentions of the parties could be deduced from the circumstances to hold that there is transfer of shares, citing and relying on the case of Faloughi V. Faloughi (1995) 3 N.W.L.R. (pt.384) 434 at 448-449. It was his further submission that since the 2nd Appellant had paid the sum of N3.8 million to the late Ikechukwu Oranusi, the majority share holder of the 1st Appellant and a sale agreement made to that effect, and subject to giving effect to other requirements of the Companies and Allied Matters Act, the 2nd Appellant had acquired the shares of the late Ikechukwu in the 1st Appellant, even if the agreement dated 1st August 2005 did not amount to a sale of the 1st Appellant itself. Furthermore, it was his contention that at least the 2nd Appellant had acquired an equitable interest in the 1st Appellant. He refers to the cases of Gadzama V. Rinis Merchant Bank Ltd. (1997) 4 N.W.L.R. (pt. 498) 234 and Seedorf v. Archbode Eng. Ltd. (1996) 1 N.W.L.R. (pt.423) 223 at 229 para 4.
Learned counsel contended further that since it is the fault of the Company Secretary of the 1st Respondent who refused to give effect thereto but turned round to collude with the Respondent to challenge the sale, the 2nd Appellant should not be made to suffer the wrong of the said J. A. Agwuncha Esq. relying on the case of Inyang v. Ebong (2002) 2 N.W.L.R. (pt.757) 284 at 332-333 paras A-H.
Finally, he opined that the transaction evidenced in the sale agreement dated 1st August 2005 was a sale of the 1st Appellant and not a takeover. That it was for the Appellants to subsequently take steps to allot the shares of the 1st Appellant and also appoint new directors for the 1st Appellant but that the process was truncated by failure of the erstwhile company Secretary to perfect the sale of the 1st Appellant in favour of the 2nd Appellant. He urged the court to resolve the two issues in favour of the Appellants.
On his part, the learned counsel for the Respondent submitted that on the face of the 1st August Agreement, it cannot be said that the 1st Appellant was a party to it, nor did it resolve or agree to be sold by one shareholder. That being a limited liability company, the 1st Appellant speaks or expresses its decisions through resolutions, which must be validly passed. That the 1st Appellant never entered into the said 1st August Agreement. Also that being a limited liability company, it has its own personality recognized by law, referring to the case of Salomon V. Salomon (1897) A.C. 22.
Finally, on the sale of the 1st Appellant, he submitted that to the extent that the 1st Appellant Company was not privy to the 1st August Agreement, that agreement cannot bind it to be obligated as sold to the 2nd Appellant. And what more, the landed properties of the 1st Appellant namely, No. 3 Mba Street, Surulere, Lagos also known as plot 2203 with land certificate No. MO4666 at Ikeja Land Registry, and Plot of land at Nnewi, Anambra State registered as 29/29 in volume 1272 at the Lands Registry Enugu, were hived off and rendered ownerless or rex nulus. He urged the court to hold that the transaction was not for the benefit of the 1st Appellant.
On the sale of the Respondent’s shares in the transaction, learned counsel submitted that a non owner of shares in a company lacks the capacity to alienate such shares on the basic principle of nemo dat quod non nabet. Moreover, he made it clear that there is no evidence that the Respondent colluded with anybody in the said transaction and that he only became aware of the alleged sale via an undated agreement. He then urged this court to hold that late Ikechukwu Oranusi had no power to alienate the shares of another without the authority of the said shareholder who is the Respondent herein.
Referring to clause 5 of the Articles of Association of the 1st Appellant, learned counsel submitted that although the 1st August Agreement may qualify as an instrument of transfer of 60% of the shares of late Chief Ikechukwu Oranusi held in the 1st Appellant company, such a transfer is subject to the lawful restrictions and terms and conditions imposed by statute and the articles of the 1st Appellant company. That the noncompliance with article 5 of the 1st Appellants Articles vitiated the transaction for transfer of late Ikechukwu Oranusi’s shares.
It was his further contention that if a person makes a valid agreement to transfer his shares in a company and he died before the shares are registered in the name of the beneficiary, then such transfer can only be effectively carried out if it can be shown that the transferor, the deceased, did all that was required of him to divest himself and vest them on the beneficiary. Where it is not done, the beneficiary will get nothing and the shares fall back on the Personal representatives of the transferor by operation of law relying on the case of Faloughi V. Faloughi (1995) 3 N.W.L.R (pt.384) p.475, Okoya v. Santile (1990) 2 N.W.L.R. (pt.131). It was the final submission of learned counsel that being a family business comprising of family members and friends, to effect any transfer of a private company, the co-operation of the shareholders is required by law citing the case of Associated Registered Engineering contractors Ltd. V. S.D.Y. Amaye (1990) 4 N.W.L.R. (pt.145) 422 and Phipps V. Boardman (1965) 7 All E.R. 849 at 852.
Learned counsel then urged this court to hold that the Respondent as a shareholder of 4,000,000 shares in the 1st Appellant Company has rights conferred on him by virtue of membership of the company. That the alleged sale of the 1st Appellant together with all its shares constitute an infringement of his individual right and membership of the 1st Appellant company. He urged the court to resolve issues 2 & 3 in favour of the Respondent.

Since the decision of the House of Lords in 1897 in the much celebrated case of Salomon v. Salomon and Company Ltd (1897) AC 22, it established firmly the concept of corporate personality which means that once a company is incorporated under the relevant laws, it becomes a separate person from the individuals who are its members. It has capacity to enjoy legal rights and is subjected to legal duties which do not coincide with that of its members. Such a company is said to have legal personality and is always referred to as an “artificial person”. This being the case, it can sue and be sued in its own name. It may own property in its own right and its assets, liabilities, rights and obligations are distinct from that of its members.
It follows that a registered company has perpetual succession. Thus, a change in membership or death of a member does not affect the existence of the company. It acquires its capital from its members through the sale of shares and invariably distributes the profits in form of dividends made from the utilization of the capital to its members. See Modern Nigerian Company Law (2nd Edition) by M. O. Sofowora Esq.

In the instant case, looking at the agreement made on 1st August, 2005 between the late Ikechukwu Oranusi and the 2nd Respondent, there is nothing to show that the 1st Appellant was party to it. In other words, the late Ikechukwu decided on his own and sold off the 1st Appellant in this case. The question is, did the 1st Appellant accept to be stripped of all its assets enumerated in paragraph 3 of the 1st August agreement? Was there any resolution of the company to that effect? If yes, where is it? There is no doubt that the 1st Appellant Company was no privy to the 1st August agreement which purportedly sold off the 1st Appellant.
It is trite that a contract affects the parties to it, and cannot be enforced by or against a person who is not a party even if the contract is made for his benefit and purports to give him the right to sue or to make him liable upon it. See A-G Federation v. A.I.C. Ltd. (2000) 10 N.W.L.R. (pt.675) 293, Negbenebor v. Negbenebor (1971) 1 All N.L.R. 270.
I agree with the learned trial Judge that the late Ikechukwu had no power whatsoever to sell off the 1st Appellant without its consent. I think the sale of the 1st Appellant, if at all was not in its interest. Come to think of it, what about its landed properties excluded from the sale? Who would own them? Those properties, as rightly pointed out by the learned counsel for the Respondent would become rex nulus and not belonging to anybody. I do not think that would be the wish of the company. I need to emphasise here that directors of a company are not entitled to sacrifice the interest of their company for personal selfish gains. All the cheques issued by the 2nd Appellant as found on page 40-43 of the Record of Appeal were all issued to late chief Ikechukwu Oranusi. None was issued in favour of the 1st Appellant. I hold that since the 1st Appellant was not party to the 1st August agreement, it cannot be bound by it.
The other issue relates to the sale of the Respondent’s shares by the said late Ikechukwu. There is undisputed evidence that the Respondent owned 40% of the issued share capital of the 1st Appellant Company while his late senior brother owned 60%. There is also evidence that the said late Ikechukwu, not only sold the 1st Appellant to the 2nd Appellant but also unilaterally sold the Respondent’s 4,000,000 shares in the company.

It is trite that members in a company have the right to transfer shares belonging to them therein and this right is unfettered unless there are express restrictions to that effect in the articles or constitution of the company. Where a company is private and made up of close family members, it is not always easy to transfer such shares to bring in outsiders without the consent of the other family members of the company. Let me say here that a party who does not own shares in the company cannot or lacks the capacity to sell or alienate same. The basic legal principle is as observed by the learned counsel for the Respondent: “Nemo dat quod non habet”.

The obvious outcome of this transaction is that late Ikechukwu Oranusi lacked the capacity to sell his brother’s 4,000,000 shares in the 1st Appellant Company.
As regards the 6,000,000 shares of the late Ikechukwu, one would ordinarily hold that there was intention to alienate his shares to the 2nd Appellant as the agreement dated 1st August 2005 indicates. Clearly, there was intention to transfer his shares to the 2nd Appellant Company by the said Ikechukwu. But did he do all that is required of him by law to effect a valid transfer? The case of Faloughi V. Faloughi (1995) 3 N.W.L.R. (pt.384) 434 was cited to strengthen the Appellant’s contention that though the late Ikechukwu may not have complied with the form of transferring shares to the 2nd Appellant, the 1st August agreement was enough document of transfer.
Therein, Kalgo JCA (as he then was) held, inter alia:
“I therefore agree with the learned trial Judge when on p.142 of record, he said:-.
“The conclusion I come to from the review of the authorities is that precedent as to form of transfer is a good guide but the mere fact that a transfer form was not on precedent printed form or contained all that precedent form contained does not necessarily make incomplete a transfer of shares once such form contains all the essential legal ingredients of transfer. The precedent form might be advisable to be followed but is not mandatory”.
But that is not all. By section 22(2) of companies and Allied Matters Act, every private company shall by its articles, restrict the transfer of its shares.

As I stated earlier in this Judgment, shares are in the nature of personal estate and freely transferable but subject to statutory restrictions and the articles of the company. See Section 115 of CAMA and the case of Okoya V. Santili (1990) 2 N.W.L.R. (pt.131) pg.172.

Paragraph 5 of the Articles of Association of the 1st Appellant company states inter alia:-
“… The Directors may refuse to register any instrument of transfer, unless:-
(a) A fee not exceeding twenty-five kobo is paid to the company in respect thereof; and
(b) The instrument of transfer is accompanied by the certificate of the shares to which it relates and such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer and if the directors refuse to register a transfer of any shares, they shall within two months after the date on which the transfer was lodged with the company send to the transferee notice of refusal”.
There is no indication that the above provision of the Articles of Association of the 1st Appellant Company was ever complied with in the alleged transfer of the 6,000,000 shares of late Chief Ikechukwu. It does not also appear that the late Chief handed over to the 2nd Respondent the said Share Certificate as it is not listed among the documents handed over in paragraph 3(a) – (b) of the 1st August 2005 agreement. But this is one most important document which ought to have been handed over to the 2nd Respondent in order to make the transfer authentic.
Again it appears to me that apart from the agreement of 1st August 2005, no other thing was done until the demise of Chief Ikechukwu since it has been alleged that one J. A. Agwuncha Esq. failed and or neglected to perfect the said transfer with the Corporate Affairs Commission. As it stands, no attempt has so far been made to regularize the said transfer.
Faced with a similar situation, this court in the case of Faloughi V. Faloughi (Supra), after going through the cases of Weale V. Ollive (1853) 51 E.R. 1030, Milroy v. Lord (1873) All E.R.783, Re Fry & Ors. (1946) 2 All E.R. 106 and Re Rose (1949) Ch.78; (1952) 1 All E.R. 1217, had this to say per Kalgo JCA (as he then was):-
“I have carefully read through the above cited authorities, and what I understand them to be saying is this: if a person makes a valid agreement to transfer the shares in a company to another person during his lifetime, and he died before the shares were registered in the name of the beneficiary, then such transfer can only be effectively carried out if it can be shown that the transferor, the deceased did all what is required of him to do to divest himself of the shares and to vest them in the beneficiary before his death. Such things, included handing over the share certificate of the shares concerned to the beneficiary, completing all necessary forms or documents for the purpose and particularly obtaining all necessary approvals or consents which are required to be done as a condition precedent to such transfer. If the transferor fails to do this before his death, even where he applied for approval and he died before the approval was obtained, the beneficiary will get nothing and the shares fall back on the personal representatives of the transfer or by operation of law and they cannot be forced to perfect the imperfect gift to the beneficiary”.
In the instant appeal, as I said earlier, there is no evidence that the Share Certificate in respect of the transferred shares was handed over to the 2nd Respondent by the late Ikechukwu. There is also no evidence of certification in respect of same. There is no gain saying that the same virus which infected Faloughi’s case is clearly evident in the instant appeal. I quite agree with the court below that the shares of the late Chief Ikechukwu Oranusi were not properly transferred to the 2nd Appellant.
One more thing and I shall be done. I wish to comment on the attitude of one J. A. Agwuncha Esq., said to be the counsel who prepared the 1st August 2005 agreement but later refused to perfect the transfer after collecting professional fees in that regard. Let me believe that this allegation is not true especially as he is not a party to this proceeding and does not have the right to reply herein. However, should this allegation be true, it is condemnable and the relevant agencies should act accordingly to save the profession from further embarrassment?
On the whole, I find no merit in this appeal. Accordingly, this appeal fails and is hereby dismissed. I award cost of N30,000.00 in favour of the Respondent, against the Appellants.

ADZIRA GANA MSHELIA, J.C.A: I read before now the judgment of my learned brother Okoro, J.C.A. just delivered. I entirely agree with his reasoning and conclusion arrived at that the appeal is devoid of merit. I only wish to add few words of mine for the purpose of emphasis.

The concept of fair hearing is enshrined under S.36 (1) of the 1999 Constitution of the Federal Republic of Nigeria. A hearing can only be fair when all parties to the dispute are given a hearing or an opportunity of a hearing. If one of the parties is refused a hearing or not given an opportunity to be heard, the hearing cannot qualify as fair hearing.

In the instant case the complaint of the appellant that the learned trial judge did not consider the cross petition is unfounded. The facts of both the petition and cross-petition are the same and the reliefs sought by each party are such that when one is granted, the consideration of the other becomes academic. See: Aderounni v. Olowu (2000) 2 SCNJ, 180 at 193. The learned trial judge, having held that the sale was unlawful there was nothing left to be considered in the cross petition and this was clearly set out in the judgment.
It is for these reasons and the more detailed reasons given in the lead judgment, I too see no merit in the appeal. The appeal therefore fails and is also dismissed by me. I abide by the order of costs made in the lead judgment.

HON. JUSTICE MOHAMMED A. DANJUMA, J.C.A: I have read before now the Judgment just delivered by my Lord Okoro JCA and I agree entirely with the Judgment which has so incisively and meticulously considered all the issues raised. I agree that the appeal has no merit as the Learned trial Judge had granted the Appellant the right of fair hearing by considering his cross – petition at the trial, The cross – petition was in fact the opposite of the petition which was also considered and held to be meritorious thus rendering a specific finding in respect of the cross – petition an academic exercise. An academic exercise is not the function of a Court of law.
I also agree that there was no valid sale and transfer of the shares of the Late Ikechukwu Oranusi, (the former majority share holder) in the 1st Appellant as the sale was unlawful for not been done by the corporate entity, the 1st Appellant company itself to the 2nd Appellant. Whatever transactions that took place were not only inchoate, but lacked any legal efficacy.
For the more detailed reasons of Okoro JCA which I adopt intoto, I agree that this appeal has no merit and should fail. I dismiss same and abide by the order made as to costs by my Lord in the Lead Judgment.

Appearances

Oluwole Kehinde Esq. with R. Aneke (Miss)For Appellant

AND

B. C. Igwilo Esq.For Respondent