PRIVATE NETWORKS NIGERIA LIMITED v. VISA INVESTMENT AND SECURITIES LIMITED (2011)

PRIVATE NETWORKS NIGERIA LIMITED v. VISA INVESTMENT AND SECURITIES LIMITED

(2011)LCN/4357(CA)

In The Court of Appeal of Nigeria

On Friday, the 21st day of October, 2016

CA/L/477/2013

RATIO

WINDING-UP: POSITION OF THE LAW ON THE CATEGORIES OF PERSONS THAT CAN PRESENT A PETITION FOR WINDING-UP

The categories of persons who can present a petition for winding-up are stated in Section 410(i) of CAMA thus “(a) The company; (b) A creditor, including a contingent or prospective creditor of the company; (c) The Official receiver;(d) A contributory; (e) A trustee in bankruptcy, or a personal representative of a creditor or contributory; (f) The Commission under Section 323 of this Act; (g) A receiver if authorized by the instrument under which he was appointed; or (h) By all or any of those parties, together or separately”. PER JOSEPH SHAGBAOR IKYEGH, J.C.A.

WHETHER A CLAIMANT CAN BE COMPELLED BY THE COURT TO PROCEED AGAINST ANY PERSON OR PERSONS WHO HE HAS NO DESIRE AND NO INTENTION TO SUE

It has to be stressed that a claimant can proceed only against those he has justiciable grievance. He has the right to choose whom to sue. See Olawoye v. Jimoh and Ors. (2013) 13 NWLR (pt. 1371) 362 at 383 “it has been held that a plaintiff who conceives that he has a cause of action against a particular defendant is entitled to pursue the remedy against the defendant only but should not be compelled by the Court to proceed against any other person or persons who he has no desire and no intention to sue.” See also the persuasive foreign cases of MG Cheane v. Gyles (No. 2) 1 Ch.D 911 at 917, Dolltus Mieg et Compagnie S.A. v. Bank of England (1950) 2 ALL ER 605 at 608. PER JOSEPH SHAGBAOR IKYEGH, J.C.A.

JUSTICE

SIDI DAUDA BAGEJustice of The Court of Appeal of Nigeria

JOSEPH SHAGBAOR IKYEGHJustice of The Court of Appeal of Nigeria

ABIMBOLA OSARUGUE OBASEKI-ADEJUMOJustice of The Court of Appeal of Nigeria

Between

PRIVATE NETWORKS NIGERIA LIMITED – Appellant(s)

AND

VISA INVESTMENT AND SECURITIES LTD – Respondent(s)

JOSEPH SHAGBAOR IKYEGH, J.C.A. (Delivering the Leading Judgment): The appeal is from a decision of the Federal High Court sitting in Lagos (the Court below) by which it dismissed the appellant’s preliminary objection to the winding up petition brought by the respondent against the appellant.

The respondent had obtained judgment in the sum of N294,652,054.81 against a company called Private Network Value Added Services Limited. The respondent upon motion ex parte at the Federal High Court, obtained an order of the Court lifting the veil of the Private Network Value Added Services Limited for the purpose of identifying her directors. Pursuant to the order lifting the corporate veil of Private Network Value Added Services Limited, the respondent discovered the appellant as the only incorporated company director of the judgment debtor. She filed a winding up petition against the appellant for the indebtedness of Private Networks Value Added Services Nigeria Limited. The appellant’s preliminary objection that she is not a proper party to the winding up petition and that the Court below does not have jurisdiction over the case was heard and dismissed by the

Court below.

Not satisfied with the decision, the appellant filed a notice of appeal with two grounds of appeal vide pages 141 – 142 of the record of appeal (the record).

The respondent took preliminary objection to the appeal which was argued in pages 4 – 11 of the respondent’s brief of argument filed on 03-04-14, but deemed as properly filed on 05-10-15.

It was argued that the decision of the Court below that it had jurisdiction over the case was interlocutory vide page 124 – 140 of the record and the grounds of appeal being of mixed law and fact the leave of the Court was required to file the appeal and, not having obtained the requisite leave the appeal is incompetent and should be struck out vide Section 242 of the Constitution of the Federal Republic of Nigeria 1999 (1999 Constitution), Gomez and Anor. V. C and S Society and Ors. (2009) 4- 5 SC (Pt.1) 156 AT 166 – 174, 179 – 180, Owoh v. Asuk (2008) SC (pt.1) 155 at 165 – 166, Order 7 rule 2 of the Court of Appeal Rules 2011 (the Rules of the Court) and Order 6 rule 3 and G thereof.

It was also argued that the application called for the exercise of the discretion of the

Court which is an issue of mixed law and fact requiring the leave of the Court to appeal against it vide Ogunleye v. Military Administrator of Ondo State (1996) 9 NWLR (pt.471) 179 at 185, Anoghalu v. Oraelosi (1999) 10 – 12 S.C. 1, Ogbechie v. Onochie (1986) 3 SC (Reprint) 32 at 35, Bello v. INEC (2010) 2 – 3 SC (pt.11) 128 at 196, Dantata v. Mohammed (2000) 5 S.C. 1, Abubakar V. Waziri (2008) 6 -7 S.C. (Pt.11) 82 at 104 – 105, therefore the appeal should be struck out on the ground of incompetence vide Section 242(1) of the 1999 Constitution and Iroegbu v. Okwadu (1990) 10 SGNJ 87 at 103, Amadagun v. Ume (2007) 13 NWLR (pt.1051) 219, Union Bank Nig. Plc v. Sogunro and Ors. (2006) 7 S.C. (pt.111) 119 at 125 – 126, First Bank of Nigeria v. T.S.A. (2010) 15 NWLR (pt.1216) 247 at 279 274, Okwuagbala v. Ikwueme (2010) 19 NWLR (pt.1226) 62 at 70 and Anadi v. Okoli (1977) 3 S.C. (Reprint) 110 at 116.

It was submitted by the appellant in the reply brief that the grounds of appeal involve the questions of law alone and did not require the leave of the Court vide Abdul v. C.P.C. (2013) 5 – 7 MJSC (Pt.11) 27 – 29, Njemanze v. Njemanze (2013) 2 – 3 MJSC

(pt.11) 30 at 46 – 49, Opuiyo v. Omoniwari (2007) 6 SC (pt.1) 35, consequently, the appellant urged that the preliminary objection should be overruled.

Pages 141 – 142 of record disclose the grounds of appeal thus –

“GROUNDS OF APPEAL

Ground 1
The learned trial judge erred in law when he overruled the Preliminary Objection of the Appellant and held that the Petition before the Court is within the purview of the matter which the Court has jurisdiction to determine when the proper party was not before the trial Court.

Particulars

i. The Respondent Petition was based on the lifting of veil of incorporation of private Networks Value Added Services Limited for the purpose of identifying its directors to pay its debt

ii. By virtue of Section 257(D) of the Companies and Allied Matters Acts Caps 20 Laws of the Federation of Nigeria 2004, a Corporation is disqualified from being a director of any company.

iii. The appellant being a corporate legal entity is disqualified from being a director of any company.

Ground 2
The Honourable trial Court erred in law when the Court failed to resolve the

issue submitted by the Appellant on whether or not the Appellant is a proper party before the Court.

Particulars

i. It is the duty of the trial Court to give adequate consideration to all the issues formulated in the case before it.

ii. The learned trial Court did not give adequate consideration to the issue of whether or not the appellant is a proper party in the case before it.

iii. The determination of the issue of proper party before the Court is a condition precedent to the exercise of the trial Court jurisdiction.”

Ground 1 of the notice of appeal (supra) is on jurisdiction. A decision by the Court whether it has jurisdiction or not is final and is a ground of law – See Lovleen Industries Ltd. v. Komolafe (2012) 14 NWLR (pt.1375) 542 at 266 where it was held that jurisdiction is a question of law.
Ground 2 of the notice of appeal (supra) of is on denial of fair hearing which is also a ground of law alone vide Loveleen Industries Ltd. v. Komolafe (supra) at 566 where a complaint of denial of fair hearing was treated as a ground of law, not requiring the leave of the Court to file it. The appeal

is, accordingly, competent vide Section 241 (1)(a) of the 1999 Constitution. The preliminary objection therefore has not substance and is hereby dismissed.

The appellant’s brief of argument dated and filed on 04-09-13, but deemed properly filed on 20-03-14, raised these issues for determination

“3.1 Whether the appellant herein is a proper party in a Winding Up petition filed by the respondent on the alleged claim that the appellant is a director of Private Networks Value Added Services Limited, a separate legal entity which was indebted to the respondent”.

3.2 whether the trial Court resolve (?) the issue as to whether or not the appellant is a proper party in a petition for winding up filed by the respondent.”

In arguing the first issue (supra) the appellant alluded to the fact that the judgment debt in issue was entered against Private Networks Value Added Services Limited; Mrs. Victoria Suleiman; and Mr. Victor Suleiman. The appellant contended that being a corporate body she cannot be a director of another corporate body, which is an issue of law and cannot be held responsible for the judgment debt of Private

Networks Value Added Services Limited, therefore by virtue of Section 257 of the Companies and Allied Matters Act (CAMA) the appellant is not a proper party to be sued in the winding up petition and the petition against her should be struck out for want of jurisdiction citing in support S.P.D.C. (Nig.) Ltd. v. Sirpi-Alusteel Construction Ltd. (2008) 1 NWLR (pt.1067) 128 at 158, N.N.S.C. V. Sabana (1988) NWLR (pt.74) 23, Bello v. Jallo (1999) 4 NWLR (pt.598) 9, Cooperative Bank Ltd. v. Obakhare (1996) 8 NWLR (pt.468) 579 at 587, Sections 244 and 257(d) of CAMA.

The appellant argued on the second issue (supra) that the issue of law as to whether the appellant is a proper party in a winding up petition raised by both parties in pages 57 – 59, 65 – 70 of the record was not resolved by the Court below; consequently it was urged that the failure of the Court below to give adequate consideration to the said issue denied the appellant the right to fair hearing citing in support Opuiyo v. Omoniwari (2007) 6 SC (pt.1) 35 at 47, Uzuda v. Kamalu (2006) All FWLR (pt.297) 978, Wilson v. Oshin (2000) 9 NWLR (pt.673) 442; upon which the appellant solicited for the appeal

to be allowed.

The respondent’s brief identified two issues for determination –
4.1 Whether upon lifting the veil of incorporation of a company, a director therein is a proper party for the purpose of levying execution viz Winding Up proceedings.

4.2 Whether in the circumstances of the case, the Honourable Judge at the lower Court was right in overruling the preliminary objection.”

It was argued that when the entire words of Section 257(d) of CAMA are read together and given ordinary meaning as should be the case vide Mobil v. IAL 36 INC (2000) FWLR (pt.10) 1632, C.G.C. Limited v. Assagbara (2000) FWLR (pt.17) 110 at 122, Chigbu v. Tonimas Nig. Ltd. (2006) 4 S.C.(pt.11) 186 at 191, Ya’u v. City Security (2003) FWLR (pt.165) 498, Mobil v. IAL 36 INC (supra), BBC English Dictionary, Oxford Advanced Learner’s Dictionary 6th Edition, Black’s Law Dictionary First Edition, a representative within the con of Section 257(d) of CAMA is an exception to the disqualification of a corporation being a director of another corporation; or that the only instance a corporation may be a director of another corporation is if it is acting

through a representative vide pages 12, 76 and 78 of the record where the appellant was represented by one Andrew Nwankwo of which the incorporation documents say so.

It was also submitted that following the presumption of the regularity of official acts the Corporate Affairs Commission that incorporated the Private Networks Value Added Services Limited did so whilst knowing that the appellant is her director vide Section 7 of CAMA read with Section 168(1) of the Evidence Act 2011 (Evidence Act) and Oyakire v. State (2006) 7 SC (Pt.11) 69, Onochie v. Odogwu (2006) 2 S.C. (pt.11) 154 at 166.

It was also submitted that assuming without conceding that the appellant is disqualified from being the director of Private Networks Value Added Services Limited, he is estopped from relying on Section 157(d) of CAMA vide Section 169 of the Evidence Act and the principle of allowing no one to benefit from his own wrong vide Chukwuma v. Ifeloye (2008) 12 S.C. (pt.11) 291 at 325, Executors of the Estate of Late Abacha v. Eke- Spiff and Ors. (2009) 2 S.C. (pt.11) 93 at 188, oil Supply Centre Limited V. Joseph Lyold Johnson (1986) 2 NWLR (pt.25) 681, Solanke v.

Abed and Anor. (1962) 1All NLR 230, Brosette Manufacturing Nig. Ltd. v. Ilemobola Ltd. and Ors. (2007) 5 S.C. 121 at 128; and that by Section 260 of CAMA, the appellant can perform valid acts as director, regardless of his qualification status.

The respondent argued on the second issue that misjoinder or non joinder of a party may not defeat an action vide Green v. Green (1987) 3 NWLR (pt.61) 480, Amon and Anor. v. Raphael Tuck and Sons Ltd. (1956) 1 QBD 357, Bello v. INEC (supra) at 196; that all that is needed is for the plaintiff to have the right to initiate the action against the respondent which is not the case here as the appellant is a proper party to the action citing in support Bello v. INEC (supra) at 196.

It was also argued that the general rule is that the legal personality of a company is distinct from those of its member vide Section 37 of CAMA, Salomon v. Salomon and Co. Ltd. (1987) (?) AC 22, Dada’s Principles of Nigerian Company Law 2nd edition 89 – 90, Aderemi v. Lan and Baker Nigeria Ltd. (2000) 7 NWLR (pt.663) 33 at 51, Company Law and Practice in Nigeria by Orojo at 288; and that under Sections 246, 336 – 338 and 345 of

CAMA the corporate veil can be lifted and it was when the corporate veil was lifted in this case that it was discovered only the appellant was found to be the incorporated body out of the three directors of Private Networks Value Added Services Limited, so in law only the appellant is the sole viable director of Private Networks Value Added Services Limited.

The respondent argued that the letterhead of the appellant used in procuring the loan together with its head office and the office of Private Networks Value Added Services Limited are the same, and both have one Mr. Abdulrahman Abiola Odunowo acting as Chief Executive Officer which was also stated on the account opening form of Private Networks Value Added Services Limited, so the two companies have one and the same management and the same Chief Executive Officer (C.E.O.).

It was also argued that the appellant had used Private Networks Value Added Services Limited as an engine of fraud vide paras 13 – 26 of the petition, therefore the circumstances under which corporate veil may be lifted under Section 290,316, 548(1)(c) and (a) of CAMA were met. More so Paragraphs 3 – 10 of the petition

alleged that the appellant is indebted to the respondent to the tune of N294,652,052.81 and under Sections 407 and 409 of CAMA the essential elements for the Court to wind up a company for its inability to pay its debts were met in the petition vide Yinka Falowiyo and Sons Ltd. v. Hammond Projects Ltd. (1977) FRCR 143, therefore the first issue should be resolved in favour of the respondent.

It was argued on the second issue that the paragraphs of the affidavit showing the appellant is not a proper party were struck out for offending some provisions of the Evidence Act vide pages 53 – 54 of the record, consequently there was no basis to grant the application citing Bamaiyi v. State and Ors. 6 NSCQR 156 at 172, Federal Military Government v. Sani (1989) 4 NWLR (pt.117) 611 at 638, Nahman v. Wolowicz (1993) 3 NWLR (pt.282) 443 at 457, Osian v. Flour Mills Nig. Ltd. (1986) 2 All NLR 13, Ceelar Stationery Products Ltd. v. International Bank for West Africa Ltd. (2000) 15 NWLR (Pt.690) 338 at 350, Osho Motors Ltd. v. Foreign Finance Corporation (1991) 4 NWLR (pt.184) 157; and that based on the facts that the Court below has the statutory jurisdiction to

entertain the petition, it rightly overruled the objection citing in support Inah v. Ukoi (2003) FWLR (pt.143) 382, A. – G., Federation and Ors. v. Abubakar and Ors. (supra) at 214, Nika Fishing Go. Ltd. v. Laviama Corp. (2008) 6 7 S.C. (pt.11) 212, Section 251(1)(a) of the 1999 Constitution, Section 693 of CAMA and Section 184 of the Companies Winding Up Rules 2001 (interpretation section dealing with the phrase “Court”); upon which the respondent advocated for the appeal to be dismissed.

The reply brief ended by emphasizing that words in a statute must be given their ordinary meaning and counsel should not substitute his views with evidence and viewed dispassionately the respondent misconstrued Section 357(1) of CAMA and the issue of estoppels as well her failure to deliver letter of demand vide Sections 77 and 409(a) of CAMA so the case must be determined on its peculiar circumstances citing in support of the submissions above the cases of Awolowo v. Shagari (1979) 6 – 9 S.C. 51, A. – G., Nasarawa State v. A. – G., Plateau State (2012) 3 S.C. (pt.11) 1 at 67, Ajayi v. Total Nigeria Plc (2013) 6 – 7 MJSC (pt.1) 143 at 163, Tate Industries Plc v.

Devcon Merchant Bank (2004) 17 NWLR (pt.901) 182 and Company Law and Practice in Nigeria Fifth Edition by Dr. Orojo at 452, 453, Osho Motor Ltd. v. Foreign Finance Corporation (1991) 4 NWLR (pt.184) 157, The Executor of the Estate of General Sanni Abacha (deceased) v. Eke-Spiff and Ors. (2009) 2 3 S.C. (pt.11) 97 at 135, Group Danone v. Voltic Nigeria Ltd. (2008) 7 NWLR (Pt.1087) 637.

The categories of persons who can present a petition for winding-up are stated in Section 410(i) of CAMA thus

“(a) The company;

(b) A creditor, including a contingent or prospective creditor of the company;

(d) A contributory;

(e) A trustee in bankruptcy, or a personal representative of a creditor or contributory;

(f) The Commission under Section 323 of this Act;

(g) A receiver if authorized by the instrument under which he was appointed; or

(h) By all or any of those parties, together or separately”.

Going back to Section 408(b), a company could be wound up if it is unable to pay its debts. The alleged indebtedness and the inability of the respondent to

pay upon several written demands served on it by the petitioner proved futile as contained in Paragraphs 3 – 35 of the petition in pages 3 – 5 of the record. The petition which serves as the statement of claim, therefore discloses the sufficient interest of the petitioner and how she acquired such interest and how such interest has arisen in the subject matter of the action vide Disu and Ors. v. Ajilowura (2006) 14 NWLR (Pt.1000) 783.

The respondent’s alleged indebtedness arose from the judgment debt in favour of the petitioner awarded by the High Court, against Private Networks Value Added Services Limited, of which the respondent is a director and subsidiary; and that the respondent was at all material times her alter ego, engine, or brainbox as gathered from the petition where the reliefs sought in paragraphs 34 – 36 of the petition also state –

“That the indebtedness which gave rise to this petitioner (?) has not been liquidated by the Respondent and therefore the debt is still subsisting and there is no dispute as to its existence.

35. In the circumstance, it is just and equitable that the Respondent be wound up.

36. The

petitioner therefore humbly prays as follows:
1. That PRIVATE NETWORKS LTD, the Respondent be wound up by the Honourable Court under the provisions of the Companies and Allied Matters Act Cap C20 Laws of the Federation 2004.
2. And for such further Order or Orders as this Honourable Court may deem fit to make in the circumstances.”

There is thus, at a glance, an arguable claim against the respondent in the petition (supra). The attempt of the respondent to ward off the petition fell to grief with the striking out of her affidavit evidence denying she is a necessary party in the Petition.

What is left is the petition which shows in bold relief that the respondent is a necessary, essential or indispensable party to it, whose absence would make the petition an empty shell of litigation and/or whose absence in the petition cannot properly and finally settle the dispute between the parties which will be binding on them.

“it has been held that a plaintiff who conceives that he has a cause of action against a particular defendant is entitled to pursue the remedy against the defendant only but should not be compelled by the Court to proceed against any other person or persons who he has no desire and no intention to sue.”
See also the persuasive foreign cases of MG Cheane v. Gyles (No. 2) 1 Ch.D 911 at 917, Dolltus Mieg et Compagnie S.A. v. Bank of England (1950) 2 ALL ER 605 at 608.

Accordingly, the Court below was right in holding in pages 134 135 of the record that it has the jurisdiction to entertain the petition and that the respondent at the Court below is the proper or necessary party that bears the liability for the enforcement of the judgment debt hanging on Private Network Valued Added Services Limited entered by the High Court in favour of the petitioner.

In the final analysis, I see no merit in the appeal and hereby dismiss it and affirm the decision of the Court below that it has the jurisdiction to entertain the petition brought by the petitioner who has disclosed his requisite standing in the petition to

present the petition.

Parties to bear their costs.

SIDI DAUDA BAGE, J.C.A.: I was privileged of reading in draft the copy of the lead judgment just delivered by my learned brother, JOSEPH SHAGBAOR IKYEGH, JCA, which I cannot but agree completely with the reasoning and conclusion reached in the said judgment, to the effect that the appeal is lacking in merits. It’s my privilege to adopt the reasoning and conclusion in the judgment as mine. I accordingly hold that the appeal is lacking in merits, and it’s hereby dismissed by me.

I abide by the consequential order in affirming the decision of the Court below that it has the jurisdiction to entertain the petition brought by the petitioner who has disclosed his requisite standing in the petition to present the petition.
Parties to bear their costs.

ABIMBOLA OSARUGUE OBESEKI-ADEJUMO, J.C.A.: My learned brother, IKYEGH, JCA obliged me with an advance copy of the judgment which he just delivered. I agree with his reasoning and conclusion reached therein. In the same terms as the leading judgment, I find the appeal of the Appellant to be unmeritorious and same is hereby

dismissed. I abide by the order as to cost made therein.

Appearances

MR. M. A. OLAREWAJUFor Appellant

AND

MR. J. I. IBEFor Respondent