STANBIC/IBTC CHARTERED BANK PLC & ANOR V. MRS. NKEM M. J. CHIGBO
(2013)LCN/6284(CA)
In The Court of Appeal of Nigeria
On Monday, the 10th day of June, 2013
CA/A/335/10
JUSTICES
ABUBAKAR DATTI YAHAYA Justice of The Court of Appeal of Nigeria
MOORE A. A. ADUMEIN Justice of The Court of Appeal of Nigeria
TINUADE AKOMOLAFE-WILSON Justice of The Court of Appeal of Nigeria
Between
1. STANBIC/IBTC CHARTERED BANK PLC
2. STANBIC/IBTC ASSET MANAGEMENT LTD Appellant(s)
AND
MRS. NKEM M. J. CHIGBO
(Suing for herself and on behalf of Miss Nneoma A. Chigbo)
Administratrix of the Estate of Late Chief Frank Chigbo Respondent(s)
RATIO
DEFINITION OF A COLLECTIVE INVESTMENT SCHEME
Section 315 of the Investment and Securities Tribunal Act defines what a collective investment scheme is. It states –
“A scheme in whatever form, including an open – ended investment company in pursuit of which members of the public are invited or permitted to invest money or other assets in a portfolio, and in terms of which: –
(a) two or more investors contribute money or other assets to hold a participatory interest in a portfolio of the scheme through shares units or any other participatory interest;
(b) the investors share the risk and the benefit of investment in proportion to their participatory interest in a portfolio of the scheme or on any other basis determined in the deed, but not a collective investment scheme authorized by any other Act.” PER YAHAYA, J.C.A.
ABUBAKAR DATTI YAHAYA, J.C.A.(Delivering the Leading Judgment): This is an appeal against the Ruling of the trial High Court of the FCT, Abuja, delivered on the 23rd of March 2009, dismissing the Preliminary Objection to the Jurisdiction of the court, filed on the 2nd of July 2009. The respondent herein, was the plaintiff at the lower court and took out the Writ of Summons on the 12/3/09. In the Statement of Claim, she claimed against the defendants, now appellants, jointly and severally, as follows: –
(i) The sum of N10,000.00 being the sum Chief Frank Chigbo invested in the Investment Margin Facility he entered into with the defendants, which sum was still intact as at September 21, 2007 when he died.
(ii) The sum of N3,154,000.00 (less the defendants’ charges on the out standings), being the proceeds accruing to the late Chief Frank Chigbo on the investment as at February 2008 when the letters of administration were presented to the defendants,which proceeds are calculated as follows: –
Guaranty Trust Bank 200,000 shares at N36.02k
per share = N7,240,000.0
Union Bank 240,000 shares at N44.00k
per share = N8000,000.00
Diamond Bank 150,000 shares at N21.52k
per share = N2,228.000.00
Zenith Bank 100,000 shares at N49.38k
per share = N4,938,000.00
First Bank 150,000 shares at N54.86k
per share = N8,229,000.00
Dangote Flour Mills 70,000 shares at N21.07k
per share = N1,519,000.00
Grand Total = N33,154,000.00
less the N10,000,000 investment of Chief Chigbo and N20,000,000.00 overdraft facility granted him by the defendants, leaving a proceed of N3,154,000.00 accruing to the estate of the late Chief Chigbo, less the defendants’ deductions as outstandings.
(iii) Interest at the rate of 21 percent on the said sum of N10,000,000.00 from September 21, 2007 until judgment is given and thereafter at 18 percent until liquidated.
Being dissatisfied with the Ruling, the appellants filed this appeal on two grounds of appeal. Two issues have been identified by the appellants, in their brief, settled by their counsel, Dr. S.S. Ameh SAN, filed on the 27/9/10. They are –
(1) Whether from the facts disclosed in the statement of claim, it is the Investment and Securities Tribunal and not the High Court that has jurisdiction, to try the plaintiff’s dispute?
(2) Whether the learned trial judge has demonstrated any basis for his Ruling as to qualify as an exercise of judicial act?
The respondent’s brief was settled by the learned counsel Okechukwu Opara and was filed on the 20th of April, 2012. In it, only one Issue was identified. It is –
Whether from the facts disclosed in the statement of claim, the learned trial judge was right in holding that it is the High Court and not the Investment and Securities Tribunal that has jurisdiction to try the plaintiff’s dispute.
Going by the two grounds of appeal filed, the issues raised by the appellants are in order. They will be utilised in resolving this appeal.
ISSUE NO. 1
Whether from the facts disclosed in the statement of claim, it is the Investment and Securities Tribunal and not the High Court that has the jurisdiction to try the plaintiff’s dispute?
Learned senior counsel for the appellant referred to paragraphs 7, 12, 13, 14 and 15 of the statement of claim and argued that the respondent and the 1st appellant entered into a “Margin Facility Agreement”, because the respondent had provided N10 million and agreed with the 1st appellant to “add” N20 million. The respondent authorized the 2nd appellant to manage his facility accounts and gave instructions for the purchase of shares in quoted companies, on his behalf. Learned counsel submitted that when a Bank and its customer contribute money together and invest same in the purchase and sale of shares and stocks, as in this instant, a “collective investment scheme” is constituted, because the respondent and the 1st appellant contributed money for the purpose of investment – buying of shares and stocks – to be managed on their behalf by the 2nd appellant. If there is any dispute, it is the Investment and Securities Tribunal by sections 284(1)(f) and 294 of Act No. 29 of 2007, that has jurisdiction to resolve it , he argued. He then urged us to resolve this Issue in favour of the appellant.
In his reaction, learned counsel for the respondent Mr. Opara, referred to section 284(1)(f) of the Act and the definition of “collective investment scheme” in Section 315 of the Act. Counsel then drew the attention of this Court to paragraph 6 of the statement of claim and argued that there was no joint contribution by the deceased Frank Chigbo and the appellants, as he only secured an overdraft facility, to operate an investment margin facility. The overdraft was only a loan for which he was to pay interest to the 1st appellant.
Learned counsel also cited paragraphs 13, 14, 15, 19, 20, 24 and 26 of the statement of claim, to submit that all the shares purchased under the investment margin facility, belonged to the deceased Frank Chigbo and was the sole person who gave the mandates in their respect. There was therefore no joint interest of the parties, in the shares and stocks purchased, he argued.
On whether there was a joint share in the risks between the parties, counsel referred to paragraph 32 of the statement of claim, and submitted that it was only the late Frank Chigbo who bore risks. He was to pay interest on the overdraft, and was not to go below a certain margin in the agreement, otherwise he would lose all the investment. The appellants would lose nothing.
The statement of claim and the front-loaded documents are the germane materials which would show the type of transaction that existed between the deceased Frank Chigbo and the appellants.
Paragraph 6 of the statement of claim avers that: –
On July 19, 2007 Chief Frank Chigbo (now deceased) applied to IBTC Chartered Bank Plc…… for an overdraft of N20,000,000 (twenty million naira) only to operate an investment margin facility and deposited the sum of N10,000,000.00
Paragraph 7 of the statement of claim avers –
Plaintiff avers that on August 2, 2007 IBTC Chartered Bank Plc entered into a Margin Facility Agreement with the late Chief Frank Chigbo.
Paragraph 6 of the statement of claim is supported by the application letter, which can be found at page 19 of the Record of Appeal and which partially reads –
“APPLICATION FOR INVESTMENT MARGIN FACILITY
I hereby apply for Investment Margin facility of N20,000,000.00 (Twenty Million Naira only) from IBTC Chartered Bank Plc for one year. The entire facility will be used for equity trading in the Nigerian Stock Exchange and repayment to be made from proceed thereof……”
The agreement between the parties is to be found at page 27 – 31 of the record of appeal. It is specifically stated therein that it is a “MARGIN FACILITY AGREEMENT” made on the 2/8/07 between the parties. It states in parts that –
“WHEREAS
(a) the Borrower wishes to obtain the requisite finance to either fund a project he is undertaking OR acquire shares and other securities quoted on the Nigerian Stock Exchange…..
(b) The Borrower has applied to IBTC for a banking facility to finance in whole or in part his project or the proposed acquisition of the aforementioned shares and the securities…..
(c) The Borrower has indicated that in consideration of the grant of a banking facility to the Borrower he is prepared to place a charge over various shares held in his name….”
From the averments in the statement of claim and the documents highlighted above, it is crystal clear that the deceased Frank Chigbo entered into an Agreement, with the appellants, which is a Margin Facility Agreement. There was no reference by any of the parties, that it was a “collective investment scheme” as suggested by counsel for the appellants.
By section 284(1)(f) of the Investment and Securities Act, No. 29 of 2007,
“The Tribunal shall to the exclusion of any other court of law or body in Nigeria, exercise jurisdiction to hear and determine any question of law or dispute involving disputes arising from the administration, management and operation of collective investment schemes.”
What then, is this collective investment scheme?
Learned counsel for the appellants stated at page 7 of the appellants’ brief thus –
“If is submitted that when a Bank and its customer contribute money together and invest such money in the purchase and sale of shares and stocks, such an arrangement constitutes a “collective investment scheme” because the 1st appellant and the Respondent contributed money for the purposes of investment….”
Section 315 of the Investment and Securities Tribunal Act defines what a collective investment scheme is. It states –
“A scheme in whatever form, including an open – ended investment company in pursuit of which members of the public are invited or permitted to invest money or other assets in a portfolio, and in terms of which: –
(a) two or more investors contribute money or other assets to hold a participatory interest in a portfolio of the scheme through shares units or any other participatory interest;
(b) the investors share the risk and the benefit of investment in proportion to their participatory interest in a portfolio of the scheme or on any other basis determined in the deed, but not a collective investment scheme authorized by any other Act.”
The first requirement in my view, to determine whether a scheme or arrangement is a collective investment scheme or not, is to see whether two or more persons or investors, have contributed money or other assets. Counsel for the appellants has submitted that “both the 1st appellant and the respondent contributed money for the purpose of investment: to wit in buying and selling of stocks and shares to be managed in their behalf by the 2nd appellant….” This submission is not borne by the record at all. As seen earlier, paragraphs 6 and 7 of the statement of claim show that the late Frank Chigbo, only secured an overdraft facility of N20 million from the 1st appellant to enable him operate an investment margin facility. His application and the agreement reached all pointed towards this facility. There was never any suggestion, talk less of an agreement reached between the parties, that the N20 million overdraft was a contribution by the 1st appellant, to the N10 million paid by the late Frank Chigbo. It was late Frank Chigbo who paid or deposited the N30 million for the purchase of the shares and stocks and the 1st appellant did not contribute anything, money or assets, towards the purchase of the shares and stocks. The late Frank Chigbo was to pay interest on the N20 million loan he secured. The first vital requirement for the formation of a collective investment scheme was therefore totally absent.
The second requirement for an arrangement to amount to a collective investment scheme, is for the investors, to hold a “participatory interest in a portfolio of the scheme.” Paragraph 12 of the statement of claim avers that after completion of preliminary condition for the margin facility,
“stock braking Account…..and Investment Margin Account……were opened for Chief Frank Chigbo by IBTC Chartered Bank Plc and IBTC Assets Management Limited.”
The Accounts were opened only for late Chief Frank Chigbo, not for the late Chief Frank Chigbo and the 1st appellant, as would have been the case, if it was a participatory interest in a portfolio of the scheme.
Furthermore, by paragraph 13 of the statement of claim, late Frank Chief Chigbo, by virtue of a stock broking mandate on the 22/8/07,
authorized IBTC Assets Management Limited to purchase the following stocks on his behalf, at their market prices
Guaranty Trust Bank 200,000
Union Bank 240,000
Diamond Bank 150,000
Zenith Bank 100,000
First Bank 150,000
and by paragraph 14, the IBTC Assets Management Limited “executed this mandate.” Similar mandate was authorized by him for 70,000 shares to be purchased “on his behalf”, for Dangote Flour Mills stocks. See paragraph 15 of the statement of claim.
All the said shares and stocks were purchased on behalf of late Frank Chigbo in pursuance of his specific authorizations. The stocks and shares were not bought or purchased on behalf of the late Franck Chigbo and the 1st appellant, as they would have been, if the two were in a participatory scheme. Certainly the authorization to purchase the shares would also have been issued by both parties, not only the late Frank Chigbo. Clearly therefore, the two parties were not joint investors and did not hold a participatory interest in a portfolio of the scheme through the shares purchased.
The third requirement is that the investors must share the risks and the benefits of the investment in proportion to their participatory interest in a portfolio of the scheme. Since the late Frank Chigbo and the 1st appellant were not co-investors and did not hold a participatory interest in the scheme, the issue of sharing the benefits and the risks does not at all arise. It was late Frank Chigbo who borrowed the N20 million from the 1st appellant and had to pay interest on it. The shares were bought for him and in his name and if their pricies or worth should tumble from the amount purchased, he bore the risks alone. He had to deposit in the CDA all shares purchased using the proceeds of the facility, to ensure that the total volume of the shares in the CDA is at all times “equal to or in excess of the amount that is 140% above the outstandings…” IBTC had a lien over the totality of the shares that have been deposited by late Frank Chigbo. The interest and benefits of the 1st appellant were thus completely secured at the expense of late Frank Chigbo. It is akin to saying head you lose, tail, you lose. The 1st appellant had no risk to suffer as they were all loaded on the head of late Frank Chigbo. This condition is therefore absent also. In sum therefore, the agreement reached between the late Frank Chigbo and the appellants was definitely not a collective investment scheme, but a Margin Facility Agreement. Since the jurisdiction of the Investment and Securities Tribunal is to determine any question of law or dispute involving
“disputes arising from the administration, management and operation of collective investment schemes”,
it has no jurisdiction to determine disputes involving the administration management and operation of Margin Facility Agreement, since the jurisdiction of the High Courts are not ousted thereby. Issue No. 1 is resolved in favour of the respondent and against the appellants.
ISSUE NO. 2
Whether the learned trial judge has demonstrated any basis for his Ruling as to qualify as an exercise of judicial act?
Learned counsel for the appellant has submitted that the Ruling of the trial judge was generalized because it was not clear which part of the claim was considered, which “various submission” of counsel were considered and how were they considered and resolved? He placed reliance on MICHIKA VS. N.P.C. (1998) 11 NWLR (Pt. 573) 207 and TSALIBAWA VS. HABIBA (1991) 2 NWLR Pt. 174) 461.
Counsel for the respondent submitted that the trial judge had comprehensively considered the claim and the law and had rendered an unimpeachable Ruling.
The Ruling of the learned trial judge runs from page 74 to page 79 of the Record of Appeal, and to submit as the counsel for the appellants had done, that the learned trial judge “simply stated he has considered the Statement of Claim and the submissions of counsel and brevi manu dismissed the objection”, is unfair to the learned trial judge. He set out the grounds of the Preliminary Objection and the salient points contained in the written addresses of the counsel, which give a very good impression of the fact that he knew and understood the issues raised and which needed to be resolved in the Preliminary Objection. He referred to the relevant paragraphs of the statement of claim, reproduced them and applied the law correctly. He held the view that paragraph 24 of the statement of claim is about “management and administration of the investment facility” but that since it “was not of a collective nature as prescribed by Section 284(1)(f) of the Investment and Securities Act No. 7, the jurisdiction of this court is not ousted.” He had done all these before he stated that he had equally “considered the statement of claim and the various submission of counsel…” He had indeed done so earlier and a total reading of the Ruling, would have shown this was so. The cases cited and relied upon by the appellants are totally irrelevant here, since the judge had clearly given reasons for his Ruling after a thorough consideration of the averments in the statement of claim, the written addresses of counsel and the law applicable. It was a good case of a judicial act and the submission to the contrary has been a serious misconception. Issue No. 2 is thus resolved against the appellants and in favour of the respondent. As the issue in the trial court was clear, the impression given is that the appeal was just to delay matters.
This appeal is totally lacking in merit and it is dismissed, with N30,000 costs to the respondent against the appellants.
MOORE A. A. ADUMEIN, J.C.A.: I read in draft of the judgment just delivered by my learned brother, Abubakar Datti Yahaya, JCA. I completely agree with my learned brother that this appeal is devoid of merit.
The definition of the term “collective investment scheme” given in section 315 of the Investment and Securities Tribunal Act is quite straightforward and, having regard to the averments in the respondent’s statement of claim, the lower court was right in not declining jurisdiction to entertain the respondent’s claim. In determining whether a court has jurisdiction in a civil matter, such as the present case, the claims as endorsed in the writ of summons and the statement of claim are the primary processes to be examined. See Utih v. Onoyivwe (1991) 4 SCNJ 25. The lower court rightly looked at the respondent’s claims and was equally right in holding that the case did not fall within the exclusive jurisdiction of the Investment and securities Tribunal as the financial arrangement between the appellants and late Frank Chigbo did not qualify as a collective investment scheme known to the Investment and securities Tribunal Act, 2007.
For the fuller reasons given by my learned brother, I also dismiss this appeal with N30,000.00 costs in favour of the respondent against the appellants.
TINUADE AKOMOLAFE-WILSON, J.C.A.: I have read in draft, the judgment just delivered by my learned brother, Yahaya, JCA. I am in full agreement with his reasoning and conclusion in dismissing the appeal. I endorse the orders as to costs.
Appearances
Dr. S.S. Ameh SAN with O.S Olaiya)For Appellant
AND
Festus AwkaFor Respondent