S.H.O. Williams (Junior) & Anor V. J. Olabode Williams (1995)

LAWGLOBAL HUB Lead Judgment Report

IGUH, J.S.C

On the 19th of January, 1987, J. Olabode Williams (therein referred to as the petitioner) filed a petition at the Federal High Court, Ibadan against S.H.O. Williams (Junior)and Western Laundry and Co. Limited (therein referred to as the respondents) in which he averred as follows:-

“PETITION BY MINORITY SHAREHOLDERS

The humble petition of J. Olabode Williams of 18 Dejo Oyelese Road, Bodija, Ibadan, Oyo State of Nigeria a minority shareholder in Western Laundry & Co. Ltd. shows as follows:

1. That the Western Laundry & Co. Ltd. (hereinafter referred to as “the Company” was in the year 1965 incorporated under the Companies Ordinance, Cap. 37, 1958 (now Companies Decree 1968) as a private Company Limited by shares.
2. That the registered office and place of business of the Company is situate at 343, Ekotedo, Ibadan Oyo State of Nigeria.
3. That the nominal share capital of the Company is N20,000.00 divided into 10,000, ordinary shares of N2 each. The amount of the capital paid up to date is N 13,620.00 made up of 6,810 ordinary shares of N2 each.
4. The main object for which the Company was established is: “To carry on the business of launderers, cleaners, dyers, dry-cleaners and carpet beaters and to carry on the business of repairing all articles sent for cleaning and beating.”
5. That “the Company commenced business immediately after incorporation and has since been in operation.
6. That the first Respondent, Mr. S.M.O. Williams, is one of the 23 shareholders of the Company; while your humble petitioner is also one and holds 250 shares of N2 each covered by share Certificate No. Five issued on the 27th day of June, 1967.
7. That since the incorporation of the Company in -1965 the first Respondent, Mr. S.M.O. Williams (Junior) was appointed as the Managing Director of the Company and has since been in control of the management of the Company.
8. That since the incorporation of the Company in 1965 your humble petitioner has not been put in a position to know how the Company is being run as the first Respondent has refused/neglected to arrange for the Annual General Meetings of the shareholders of the Company.
9. That your humble petitioner persistently requests through the first Respondent for the holding of the Annual General Meetings of the Company to enable the shareholders to be properly and adequately briefed of the situation of things in the Company; to declare dividends where distributable profits have been made and so that the shareholders will from time to time be acquainted with the progress or otherwise being made by their Company.
10. That when your humble petitioner persistently complained about the irregularities in the management and conduct of the Company the first respondent attempted to buy over the shares held by your petitioner. Your petitioner shall rely on the various correspondence that passed between himself and the first respondent in 1981.
11. That since the incorporation of the Company your petitioner has not received any notice of the Annual General Meeting; any copy of the Accounts of the Company or any dividend on his shareholding when in fact the Company has continuously operated at full capacity.”

The petition was concluded with the following prayers –

“Your Petitioner therefore humbly prays for the following:

1. That this Honourable Court to appoint an independent investigator knowledgeable in Law and Accountancy to investigate the affairs and finances of the Company, and, in particular to:

(a) find out how the revenues accruing to the Company, and all other funds available to he Company, at various times since incorporation, were utilised.

(b) find out if, and how much of, the company’s funds have been misappropriated by the Managing Director and/or and of the persons engaged/employed by him.

(c) determine the role of the Managing Director and/or members of the Company in the general management of the Company.

2. That this Honourable Court do after such investigation direct:

(a) that the Managing Director or member of staff of the Company found to have mis-appropriated the funds of the Company shall repay to the Company, within a period that this Honourable Court shall think fit, any such money found to have been misappropriated by such Managing Director or member of staff with interest thereon at such rate and for such period as the Honourable Court shall think fit.

(b) that any such person so found to have misappropriated the funds of the Company shall not hold office either as the Managing Director or in any other capacity in the Company for such period as the honourable Court shall think fit.

3. That this honourable Court shall declare that the petitioner is a shareholder of the Company and is entitled to be acquainted with the progress, or otherwise, being made by the Company since its incorporation up to date.
4. An order that the petitioner be paid all dividends that have accrued on his shareholding since the incorporation of the Company up to date.
5. An order that the first and second respondents must strictly comply with the provisions of the Company’s Articles of Association, in particular, holding of annual general meetings, declaration and payments of dividends.
6. Or that such other order or orders may be made in the premises as shall be just.”

The petition was duly verified by an affidavit sworn to by one Leonard Okpara who described himself as a Law Clerk in the chambers of the petitioner’s solicitors.

Before further proceedings were gone into, the respondents by a motion on notice dated the 8th April, 1987 sought to dismiss the petition on the ground that it did not disclose any grounds for reliefs under the Companies Act, 1968. The court was addressed on this application at great length but the learned trial Judge, without doing justice to the various issues raised in learned counsel’s addresses, brevi manu struck out the motion and indicated his preparedness to go on with the proceedings. He ruled as follows:-

“If this petition had been brought appropriately, under Section 201 of the Companies, Decree seeking a winding up Order. I would have had no hesitation in dismissing it as requested by the learned counsel for the respondents but, as the petitioner has not sought, and is not seeking, a winding up Order. I find no substance in the application of learned counsel for the respondents and it is accordingly struck out.”

The respondents, being dissatisfied with this ruling lodged an appeal to the Court of appeal, Ibadan Division. The said court in a unanimous decision dismissed the appeal, holding that although the learned trial Judge advanced a wrong reason for declining to dismiss the petition, the respondents’ complaints were nonetheless misplaced and lacking in substance. It is against this decision of the Court of Appeal that the respondents have further appealed to this court. I shall hereinafter refer to the petitioner and the respondents in this judgment as the respondent and the appellants respectively.

The one ground of appeal filed by the appellants complains as follows:”

The learned justices of the Court of Appeal erred in law in failing to allow the appellants’ appeal before them and in failing to dismiss the petition filed by the respondent before the Federal High Court, Ibadan.

Particulars of Error

The petition, as presented, fails to disclose all of the grounds necessary to enable the grant of the reliefs claimed therein.”

The parties acting pursuant to the rules of court filed and exchanged their written briefs of argument. The two issues identified on behalf of the appellants which this court has been called upon to determine are –

1. Whether the petition as filed in the Federal High Court can succeed upon the assumption that all the allegations contained therein are true.
2. Whether or not the failure of the petition to allege that to wind up the second appellant company would unfairly prejudice the oppressed petitioner is a matter that permits the dismissal of the petition inlimine upon a demurrer.

The respondent on the other hand, submitted one issue as arising in this appeal for determination. This goes as follows:-

1. Whether or not the Court of Appeal was correct in refusing to allow the appeal for the reasons given by it.

I have closely examined these questions set out by learned counsel in their respective briefs and it seems to me that the issue formulated by the respondent is sufficiently encompassed by the two issues identified by the appellants. Besides, the questions raised by the appellants are clearly more consistent with the issue raised in their grounds of appeal. I will accordingly adopt the appellants’ issues for my consideration of this appeal.

At the hearing of the appeal, learned counsel for the appellants, A. Williams (Mrs.) proferred additional arguments in further elucidation of the submissions contained in her written brief. Both the respondent and his learned counsel, Babatunde Oni Esq, who settled the respondent’s brief of argument were absent in court at the hearing although they were duly served with hearing notice in respect of the hearing of the appeal. Accordingly the court proceeded with the hearing of the appeal ex parte pursuant to the provisions of

Order 2 Rule 11 (1) and Order 6 Rule 8(6) of the Rules of this court on the briefs already filed by both parties.

The main thrust of the appellants’ complaint is that the petition before the Federal High Court seeks reliefs available under the provisions of section 201 of the Companies Act, 1968, that is to say, the alternative remedy to winding up in cases of oppression of minority shareholders. They therefore submitted that for the petition to succeed, four basic requirements ought to be established. These, according to their learned counsel, are as follows:-

(i) That the affairs of the company are being conducted in a manner oppressive to some of the members of the company including the petitioner:

(ii) That it is just and equitable that the company should be wound up; and in order to establish fact (ii);

(iii) That the petitioner would have a tangible interest in the company upon its being wound up; and

(iv) That to wind up the company would unfairly prejudice the oppressed members.

She stressed that the appellants’ application before the Federal High Court for the dismissal of the petition was by way of demurrer. The appellants therefore, conceded without necessarily admitting the truth of all the facts contained in the petition but went further to submit the petition disclosed insufficient grounds in law to warrant the making of the orders sought under section 201 of the Companies Act. She contended that the court below would appear to have accepted the view that a cause of action under section 201 of the Companies Act would not arise unless the four requirements are alleged in the petition and established at the trial. The court, however, went on to hold that failure by the respondent to alleged that to wind up the 2nd appellant company, hereinafter referred to as “the company”, would unfairly prejudice the oppressed shareholders was insufficient to warrant the dismissal of the petition

inlimine…

Learned appellants’ counsel next dealt with the treatment by the Court of Appeal of the issue of onus on the respondent to allege and establish the solvency of the company as a condition precedent to the making of an order by the court under section 201. She described the court’s castigation of learned appellants’ counsel and the dismissal of his submissions on the issue as uncharitable. She stressed that all that learned counsel tried to do was to place the various judicial pronouncements pertaining to the matter before the court. This was in an apparent bid to assist the court in arriving at its own decision on the issue in which there was paucity of authority to rely on. She dismissed as unsound and untenable the view of the court below that an amendment in the course of the proceedings could be granted if necessary to save the petition by pleading unfair prejudice to the oppressed members if the company is wound up. She contended that since no such amendment was sought before the trial court, the court below ought to have allowed the appeal and dismissed the petition since it failed to disclose all the basic facts necessary to entitle relief under section 201 of the Companies Act, 1968. She urged the court to allow this appeal, set aside the decisions of the Court of Appeal and the trial court and to substitute therefore an order dismissing or striking out the petition on the grounds she canvassed.

Learned counsel for the respondent in his own brief conceded that the reliefs sought in the petition were under section 201 of the Companies Act. He however submitted that if, as contended by the appellants, the solvency of the company was a condition precedent to the granting of reliefs under the said section 201 of the Companies Act, then, as a result of pleading, it was for the appellants to raise the issue of insolvency in their answer to the petition. By so doing, solvency would automatically become an issue in the proceedings. The learned trial Judge considered the argument and decided in favour of the respondent but on a ground different from those urged before him. For that reason, learned counsel stated that he could not support the decision of the learned trial Judge. He however invited the court below to affirm the decision of the trial court on a different ground, namely, that the application was misconceived. This, the Court of Appeal did, holding that the requirement to aver the solvency of the company does not apply to a petition wherein one of the complaints is the respondent’s failure to let the petitioner have information relating to the accounts of the company.

Learned counsel submitted that the Court of Appeal was right in holding that the facts averred in the petition showed sufficient allegations of oppression. He contended that since one of the complaints was that the accounts of the company were kept away from the respondent and that no annual general meetings were held at which such accounts of the company were laid before the shareholders, the requirement to allege solvency would not apply. He submitted in the alternative that although solvency is a condition precedent for the granting of a relief at the instance of a member of a company under section 201 of the Complaints Act, it need not be pleaded by the petitioner. In his view, solvency must be presumed in favour of a petitioner pursuant to the maxim omnia praesumuntur rite esse acta. According to the respondent’s counsel, it is for the appellants as respondents to the petition to raise the issue in their answer by averring that the company was insolvent.

I should, perhaps, observe that the respondent in his brief failed to advance any answer whatsoever in reply to the appellants’ submission that failure of the petition to allege that to wind up the company would unfairly prejudice the oppressed petitioner is a matter that permits the dismissal of the petition inlimine upon a demurrer. This submission was however rejected by the court below which held that an amendment of the petition might, if necessary, be made and granted to plead that fact and save the petition. I will now deal with the two issues raised by the appellants together.

The first observation that must be made is that the appellants’ application for the dismissal of the petition in issue was filed by way of demurrer. A preliminary point was taken on the petition to the effect that it is demurrable. The point being made was that even if all allegations contained in the respondent’s petition were successfully established. the petition would nonetheless fail.

It is trite law that whenever a demurrer is raised before trial, a defendant shall be taken as having admitted all the allegations of fact contained in the plaintiff’s claim, and accordingly, no evidence respecting matters of fact shall be allowed. Where a plaintiffs statement of claim or indeed a petition does not ex facie disclose a cause of action so that even if all the allegations of fact therein averred are established such a plaintiff or petitioner would still not be entitled to the relief sought, the defendant will be perfectly entitled to move the court to have the case dismissed without any answer on questions of fact from the defendant or respondent. This procedure it must however be emphasized, is only available where from the facts before the court, there is a good legal or equitable defence to the action. See Chief (Mrs.) Akintola & Another v. Mrs. C.F.A.D. Solano (1986) 2 NWLR (Part 24) 589 at 623. Where, therefore, it is obvious from the facts before the court that no further proceedings would help a case, there is inherent jurisdiction in the court to dismiss or strike out the claim as the case may be on submission made to it in the absence of any amendment of the proceedings. See too Joseph Enwezor v. Joseph Onyejekwe (1964) 1 All NLR 14.

Turning now to the petition in issue there can be no doubt that it was brought pursuant to section 201 of the Companies Act, 1968. Both counsel for the parties expressly accepted this view in their respective briefs of argument and I am in full agreement with them on the point.

It has always been the law that if a majority acts in oppression of the minority, the latter may petition the court to wind up the company on the ground that it is just and equitable to do so. In this con “oppressive” has been taken to mean burdensome, harsh and wrongful. See Scottish Co-operative Wholesale Society Ltd. v. Meyer (1958) 3 All E.R. 66 at 71 H.L. But it does not include an isolated act of oppression. There must be a continuing cause of oppressive conduct for such a petition to succeed. See Re Westbourne Galleries Ltd (1970) 3 All E.R. 374 at 385 and Ebrahami v. Westbourne Galleries Ltd. (1972) 2 All E.R. 492 H.L. The conduct must also be such as to be oppressive to the petitioner in his capacity as a member of the company.

In many cases, however, it is not in the interest of the oppressive minority to have the company wound up. It is in this regard that the law gives the oppressed minority shareholder an alternative remedy to a petition for compulsory winding up of the company altogether under the “just and equitable” clause pursuant to section 201 of the Companies Act, 1968. I will now examine this provision of our law.

Section 201 (1) and (2) of the Companies Act, 1968 provides as follows:

“201 (1) Any member of a company who complains that the affairs of the company are being conducted in a manner oppressive to some part of the members (including himself) or, in a case falling within section 161(3) of this Decree the Registrar, may make an application to the court by petition for an order under this section.

(2) If on any such petition the court is of opinion –

(a) that the company’s affairs are being conducted as aforesaid; and

(b) that to wind up the company would unfairly prejudice that part of the members, but otherwise the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up:

the court may, with a view to bringing to an end the matters complained of, make such order as it thinks fit, whether for regulating the conduct of the company’s affairs in future, or for the purchase of the shares of any members of the company by both members of the company or by the company and, in the case of a purchase by the company, for the reduction accordingly of the company’s capital, or otherwise,”

Under the said section, any member of a company who complains that the affairs of the company are being conducted in a manner oppressive to some part of the members, including himself, may petition the court which, if satisfied that the facts would justify the making of a winding-up order on the ground that it was just and equitable but that this would unfairly prejudice that part of the members, may make such an order as it thinks fit. The relief, afforded by this section is clearly an alternative remedy to the winding up of a company and has the enormous advantage over winding up that it is less drastic and more flexible. Instead of “killing” the company outright, it confers jurisdiction on the court to impose whatever solution it considers just and equitable. See Re Jermyn Street Turkish Baths Ltd. (1970) 1 WLR 1194 at 1210 and Re HR Harmer Ltd. (1959) 1 WLR 62 CA. I should, perhaps, point out that section 201 of the Companies Act, 1968 is indisputably in pari materia with the provisions of section 210 of the English Companies Act, 1948.

A close study of the provisions of section 201 of the Companies Act, 1968 does disclose that three conditions or requirements must be established by a petitioner as conditions precedent to a successful grant of any remedies or reliefs’ claimed under the section of the law. This, in effect means that the alternative remedy provided under section 201 of the Companies Act is available upon three conditions. These conditions are as follows:-

(i) That the affairs of the Company are being conducted in a manner oppressive to some part of the members of the company including the petitioner; and

(ii) That the facts relied upon would justify the making of a winding up order on the “just and equitable” ground; but

(iii) That such winding up of the company would unfairly prejudice the oppressed members of the company including the petitioner.

Upon the presentation of such petition by any member of the oppressed minority,with the said three conditions duly established, the court may make such order as it thinks fit for ending the matters complained of. It has to be emphasized however that section 201 does not give the courts unlimited jurisdiction to intervene in the affairs of the company. The courts can exercise their jurisdiction only if the requirements of the section are satisfied. I will now consider to what extent the petition in issue was able to satisfy the three conditions pursuant to which the reliefs therein claimed under section 201 may be successfully considered by the court.

The first requirement to be satisfied by a petitioner under section 201 of the Companies Act, 1968 is that at the time of the presentation of the petition, the affairs of the company were being conducted in a manner oppressive to some part of the members including the petitioner himself. This requirement has been held to involve an invasion of one’s legal rights displaying lack of probity or fair dealing on the part of those conducting the company’s affairs and affecting the petitioner in his capacity as a shareholder or member of the company. See Re Jermyn Street Turkish Baths Ltd. (1971) 1 WLR 1042 CA and Elder v. Elder and Watson (1952) SC 49.

It needs be emphasized that the trial court in the present case is a superior court of record and not a court of summary jurisdiction. It is also a court of pleadings and matters not pleaded go to no issue and any evidence regarding them are in law not admissible; and if erroneously admitted should be discountenanced. See George v. Dominion Flour Mills Ltd. (1963) 1 All NLR 71 (1963) 1 SCNLR 117; Njoku & Others v. Eme and others (1973) 5 SC 293, Emegokwue v. Okadigbo (1973) 4 S.C. 113 etc. Unless, therefore a petition alleges facts which are capable of establishing that the company’s affairs were at the time of its presentation being conducted in the manner aforesaid, the petition would have disclosed no ground for the grant of any relief under section 201 and will be dismissed inlimine on a proper application made in this regard. See In Re Five Minute Car Wash Service Ltd. (1965) 1 WLR 745 at 751.

From a close study of the averments in the respondent’s petition, there are copious facts in support of the first requirement to the effect that at the time of the presentation of his petition, the affairs of the company were being conducted in a manner oppressive of himself as a shareholder in and member of the company. This is amply demonstrated in paragraphs 6 to 11 of the petition set out earlier on in this judgment. Indeed learned counsel for the appellants quite rightly in my view, conceded the point and did not hesitate to accept that the respondent did infact aver sufficient facts in his petition to establish alleged acts of oppression by the appellants against him.

I think it ought to be observed that the same concession was made in the court below by the appellants’ learned counsel, following which that court, per Sulu Gambari, J.C..A observed as follows:-

“On the first hurdle, the learned counsel for the appellants conceded that the petitioner has alleged sufficient facts in his petition to show acts of oppression against him.”

A little later in their judgment, the Court of Appeal further stated-

“He (respondent’s counsel) pointed out quite rightly as well that the appellants having conceded that the petition has alleged sufficient facts in his petition to show acts of oppression against him. the only point remaining for consideration, according to him, was whether as contended by the appellants, the petitioner needed to alleged in his petition that the Company is not insolvent.”

(Words in brackets supplied).

I am in agreement with the court below that sufficient facts are pleaded in the petition to establish prima facie acts of oppression by the appellants against the respondent.

Turning now to the second requirement, it is the law that for a petition to succeed under section 201 of the Companies Act, the facts relied upon should justify the making of a winding up order on the ground that it is just and equitable that the company should be wound up. This requirement has been held to mean that the circumstances of the case should be such as to justify the making of a winding up order at the suit of the petitioner. See Re Bellador Silk Ltd. (1965) 1 All E.R. 667. Where, therefore, the circumstances of a case do not admit of a winding up order, relief under section 201 of the Companies Act, 1968 may not be available to a petitioner.

I think I should mention that both learned counsel for the parties were in agreement that solvency is a condition precedent for the grant of a relief under section 201 of the Act. They were also ad idem that failure to disclose on the face of the petition that there would be a surplus of assets upon winding up might disentitle a petitioner to a reIief under section 201 of the Act. The exception to this rule, they submitted is where the petition is based on failure to supply accounts and information in respect of the company with the result that the petitioner is not in a position to tell whether or not there will be surplus assets available for the contributories. Learned counsel for the respondent additionally submitted in the alternative that the issue of solvency being a condition precedent for the bringing of a petition of this nature needs not be pleaded by a petitioner. He argued that it is the duty of the respondent to raise it in his defence.

All I need say in this regard is that it cannot be the law that where a petition is based on a failure to supply accounts and information, the petitioner is bound in such a situation to aver that the company has surplus assets when he is clearly not in any position to make that assertion. It is also not the law that the petitioner is bound in such a situation to make vague statements in respect of the company’s accounts which he knows nothing about. See Re Newman and Howard Ltd (1961) 2 All E.R. 495 at 497 and 498 and In Re SA. Hawken Ltd. (1950) 66 TLR (Part 2) 138 at 141. My view is that learned counsel for the appellants is perfectly right when she conceded both in the court below and before us that it would not be necessary for the respondent to aver tangible interest or the issue of solvency in this case in which he claimed he was not afforded any information whatsoever about the running of the company nor was he furnished with accounts necessary to establish the solvency or otherwise of the company.

Dealing with this issue, the Court of appeal observed as follows:-

“The complaint of the appellants is apparently narrowed down seriously. Firstly, he conceded that the petitioner has already sufficient facts in his petition to show acts of oppression against him. Secondly, he submitted that he must also allege and show at least by prima facie case that if the company is wound up, there would be surplus giving him a tangible interest in a liquidation. Thirdly, he himself provided the answer to that point by producing an authority which says that the petitioner would not be in a position to provide a prima facie case that there is a surplus assets

or that he has tangible interest in a liquidation where his petition is founded upon a complaint based on a refusal by those in control of the company to furnish him with accounts and information from which it can be discovered whether or not a surplus did exist.

By this argument, the learned counsel for the appellants has posed some questions and has answered them positively in favour of the respondent. The only point which is left and upon which he hangs his appeal appears to me to be very thin; and this is that the petition must go on to allege that an order of winding up would unfairly prejudice the oppressed members.”

I need only add that I agree entirely that the well established principle that where a contributory presents a winding up petition, he ought, to succeed, allege and prove, at least, to the extent of a prima facie case, the existence of assets which would give him a tangible interest in the winding up cannot apply to a petition of this nature which is based on failure by the appellants to supply accounts and information to the respondent. In my view, there is no way the respondent in this class of petition can plead the fact of solvency in the face of his averment that he knows nothing about the running of the company.

On the respondent’s argument that the onus is on the appellants as respondents to the petition to plead insolvency to raise legal issue of the matter, it is my opinion that the same is now entirely academic and of no consequence in this appeal. This is in view of the concession by both learned counsel to the effect that the issue of insolvency does not apply to the present petition.

Before I leave this issue of solvency, I think I ought to point out that it does not seem to me completely settled that solvency is a definite condition precedent to the grant of each and every relief under section 201 of the Companies Act, 1968. I make this observation with profound respect to both learned counsel who argued the appeal on the basis that solvency is a recognised and settled requirement of the law for the grant of reliefs under section 201 of the Act unless a petition, like in the present case, is based on a failure to supply accounts and information to a petitioner. It appears to me that this further requirement that a petitioner must establish that the company is solvent at the time of the presentation of this petition before he may successfully claim a relief under section 210 of the English Companies Act seemed to have been introduced by Plowman, J. in the case of Re Bellador Silk Ltd. (1965) 1 All E.R. 667. This was based upon the corresponding requirement where a contributory petitions for a winding-up order. In such a situation, the court, as a general rule, will not make a winding up order on the petition of a contributory whose shares are fully paid unless he shows. on the face of his petition, a prima facie probability that the company is solvent and that there will be a substantial surplus of assets available for distribution among the shareholders. Since he will then have no tangible interest in the winding up of the company. See Re Rica Gold Co. (1879) 11 Ch. D 36, Re Kaslo-Slocan etc. Corporation Ltd. (1910) WN 13, Re SA. Hawken Ltd. (1950) 2 All E.R. 408. Re Expanded Plugs Ltd. (1966) 1 WLR 514 etc, etc. But in a petition for the alternative remedy under section 201 of the Companies Act, 1968,no distribution of the assets is generally contemplated and the petitioner invariably has a concrete interest in the order which the court will make. Indeed the learned authors of Palmer’s Company Law, 21st Edition at page 515 did respectfully submit that the reputed requirement as to solvency in petitions under the alternative remedy in section 210 of the English Companies Act which as have already indicated is in pari materia with section 201 of our Companies Act, 1968 cannot be the correct position of the law.

I should perhaps add that this proposition found favour with Lords Keith and Denning in the decision of the House of Lords in Scottish Co-operative Wholesale Society Ltd. V. Meyer (1951) AC 324 at 364 and 368 – 369.

Said Lord Keith of Avonholm –

“It was said that appeal could not be made to section 210 unless the company had a continuing life ahead of it and here it was clear that the company would have to be wound up. But that means that if oppression is carried to the extent of destruction of the business of the company no recourse can be had to the remedies of the section. This would be to defeat the whole purpose of the section. The present position is due to the oppression and but for the oppression it must be assumed that the company would be an active and presumably flourishing concern. The section is, in my opinion, very apt to meet the situation which has arisen”

Lord Denning in his own contribution put the matter as follows –

“Now, I quite agree that the words of the section do suggest that the legislature had in mind some remedy whereby the company, instead of being wound up, might continue to operate. But it would be wrong to infer therefrom that the remedy under section 210 is limited to cases where the company is still in active business. The object of the remedy is to bring “to an end the matters complained of’ that is, the oppression, and this can be done even though the business of the company has been brought to a standstill. If a remedy is available when the oppression is so moderate that it only inflicts wounds on the company, whilst leaving it active, so also it should be available when the oppression is so great as to put the company out of action altogether. Even though the oppressor by his oppression brings down the whole edifice – destroying the value of his own shares with those of everyone else – the injured shareholders have. I think a remedy under section 210.”

The matter, however, has not arisen for consideration in this appeal as both parties are in agreement that the issue of solvency is inapplicable to the facts of this petition. In the circumstance. I will decline to decide the point in this present appeal. I will now consider the third and the last requirement that a petitioner must establish before reliefs claimed under section 201 of the Companies Act, 1968 may be available to him.

As was rightly observed by the Court of Appeal, the last requirement now left and upon which the appellants hang this appeal is that the petition to succeed must go to allege and prove that a winding up order would unfairly prejudice the oppressed members of the company including the petitioner. Said the court –

“As I have said earlier, the singular issue now before this court is whether, all other conditions having been fulfilled, failure of the petitioner to allege that an order of winding up would unfairly prejudice the oppressed members will render the petition demurrable or would entitle the respondent to an order of dismissal on the ground that the petition discloses no ground for relief under the Companies Decree, 1968.

The first point that must be made here is that an order under section 201 of the Companies Act. 1968 cannot be made unless the court is of the opinion “that to wind up the company would unfairly prejudice the oppressed members including the petitioner. See Re Westbourne Galleries Ltd (1970) 3 All E.R. 374. Secondly, it seems to me crystal clear that a petitioner under section 201 of the Law must ex facie disclose facts upon which the Court could rely in coming to the conclusion that to wind up the company would unfairly prejudice the oppressed members. Thirdly, it is apparent from the petition itself that there was not a single averment therein suggesting, no matter how remotely, that to wind up the company would unfairly prejudice the oppressed members. The next question must be how the court below resolved the issue on failure by the petitioner to aver in the petition that to wind up the company would unfairly prejudice the oppressed members.

The Court of appeal proceeded to consider this third requirement and came to the conclusion that failure to allege in the petition itself that to wind up the company would unfairly prejudice the oppressed members is insufficient to warrant the dismissal thereof upon a demurrer. The Court of Appeal per the lead judgment of Sulu-Gambari, J.C.A. went on:-

“I am not inclined to regard the non-averment in the petition of the facts that to wind up the company would unfairly prejudice the oppressed shareholders as a matter that will render the petition to be dismissed in limine. In the course of the proceedings, an amendment may be granted to plead that fact if necessary. I think the case ought to be gone into and at the end of which the court may decide whether it is of the opinion that to wind up the company would unfairly prejudice the oppressed shareholders.”

With very great respect. I am unable to agree that it was proper for the court below in deciding the appeal before it to consider the possibility of an application before the trial court for an amendment to the petition since, at all material times, no such application had either been made or granted. In my view, where from the pleadings or averments in a claim, no triable issue in law is disclosed, mere speculation as to the possibility of an application for the amendment of the proceedings cannot save such an action.

In the present case, a material averment which ought to have been pleaded and established at the trial as one of the conditions precedent to the grant of any reliefs under section 201 of the Companies Act,1968 was not so pleaded. This resulted in an application by way of demurrer to dismiss the petition on the ground that it did not disclose all the necessary grounds for relief under the said section 201 of the law. No amendment of the petition was made or applied for up to the time a decision on the application was made. All the necessary material facts for reaching a decision having been placed before the trial court in the petition. The question was whether or not such pleaded facts entitled the petitioner to the reliefs sought and not whether there existed the possibility of an amendment of the petition. If they did not. the plain duty of the trial court was to strike out or dismiss the petition. See Chief Mrs. F. Akintola & Another v. Mrs. C. SoIano (1986) 2 NWLR (Pt. 24) 59R at 623. There, this court, per Oputa J.S.C. observed as follows:-

“It is high time our trial courts (and counsel for the plaintiff especially) begin looking critically at the pleadings and where appropriate giving judgment on the pleadings if no triable issue of fact has been raised. There the plaintiff’s case should be considered on his pleadings and the applicable law. Where the plaintiff’s Statement of Claim does not disclose a cause of action – that is where, even if all the allegations of fact therein averred are established yet still the plaintiff would not be entitled to the relief sought, there instead of filing a Statement of Defence, the defendant should move the court to have the case dismissed.”

I must respectfully endorse the above observations of Oputa, J.S.C. The position in the present case is that the petition failed to disclose all the necessary requirements for success under section 201 of the Companies Act, 1968. For this reason alone, it is my view that this claim under section 201 of the Act must fail.

I therefore think that Mrs. Williams is entirely right in her contention that the petition must disclose all the material facts upon which the court would rely in coming to the conclusion that a case under section 201 was made out by the respondent.

In the present case, the petition in its present form does not disclose sufficient cause to justify the granting of the prayers sought under section 201 of the Companies Act since there is no averment of the effect that to wind up the company would unfairly prejudice the oppressed members. For this reason, I am of the opinion that, assuming all the allegations contained in the present petition are capable of proof and would be substantiated by evidence, the petition discloses no ground for relief under section 201, and is accordingly demurrable.

In the final result, this appeal succeeds and it is hereby allowed. The judgment of the court below which affirmed the ruling of the learned trial court on a different ground is hereby set aside. In its place is substituted an order striking out the petition. There will be costs to the appellants against the respondent which I assess and fix at N1,000.00.

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Other Citation: (1995) LCN/2678(SC)