The Shell Petroleum Development Company Of Nigeria Ltd. & Ors. V. E.N.nwawka (2003)

LAWGLOBAL HUB Lead Judgment Report

O. AYOOLA, J.S.C. 

The respondent in this appeal, Mr. E. N. Nwawka, claimed against the six appellants by a writ issued in the High Court of Rivers State several reliefs, some only of which are now relevant and will be quoted later in this judgment.

By a motion on notice dated 14th February, 2000 the appellants prayed the High Court:

1. That the action be struck out or dismissed for lack of jurisdiction to entertain the claim set out to the statement of claim.
2. That claims 1 – 5 be struck out on the ground that each of them falls outside the scope of the judicial powers exercisable by the court of law in Nigeria.

Further and in the alternative:

3. That claims 6, 7, 9, 10 and 11 be struck out on the ground that each of them disclosed no reasonable cause of action and is frivolous, vexatious and an abuse of judicial process.

The trial Judge held that the procedure adopted by the appellants was not in compliance with Or 4, r. 2 of the High Court (Civil Procedure) Rules, 1987 in that the appellants should have raised the points of law by their statement of defence. Nevertheless, he considered the application on its merit and struck out claims 4 and 9 as disclosing no cause of action. In regard to the rest of the claims, he dismissed the application.

On the appellants’ appeal to the Court of Appeal, that court rejected the trial Judge’s conclusion on the irregularity of the proceedings. Pats-Acholonu, JCA, who delivered the leading judgment of the court below, held that: “Non-compliance does not vitiate a preliminary objection based on lack of jurisdiction alone”. On the merits of the application the court below held that in addition to claim nos. 4 and 9 already struck out by the High Court claim nos. 1,2,8 and 10 should be struck out.

The appellants appealed and the respondents cross-appealed. The issues raised by the appellants’ appeal are:

(2) As regards claims 3 and 5, whether (a) the respondent had locus standi to sue for the reliefs claimed, and (b) only the Federal High Court has exclusive jurisdiction over these claims and whether they raise justiciable issues; and,

(3) As regards claims 6, 7 and 11, whether they are not frivolous and vexatious and in abuse of judicial process.

The appellants raised an issue whether Or 24, r 2 was applicable to the proceedings, but that issue is not now of any practical significance in view of the ruling by the court below in favour of the appellants on the issue from which the respondent had not cross-appealed. Arising from the respondent’s cross-appeal are the questions whether claims 8 and 10 were properly struck out. This appeal and the cross appeal are, therefore, now related to claims 3, 5, 6, 7, 8, 10, 11, which are as follows:

“3. A declaration that the plaintiff is not a redundant employee of the 1st defendant by virtue of his length of service, job performance, job availability and his status.

5. A declaration that the 1st, 2nd and 3rd defendants are engaged in dubious expatriate Staff Quota manipulation and are not entitled to deploy the gains of such unpatriotic exercise to render the plaintiff redundant.
6. A declaration that the purported contract of employment dated 12th April, 1997 surreptitiously crafted and forced on Nigerian employees of the 1st defendant by the 1st defendant is null, void and of no effect.
7. A declaration that the only valid contract of employment between the 1st defendant and the plaintiff is the one pre-existing before 30/4/97 (and regulations by the 7th defendant in that behalf).
8. A declaration that the 1st to 4th defendants cannot disengage or declare the plaintiff redundant (Plaintiff being one of the 5 highest-ranking Nigerian citizens in the 1st defendant’s Organization) without a formal permission of the 7th defendant.
9. An order restraining the 1st to 4th defendants from terminating, treating, or in any manner interfering with the employment salaries, emoluments benefits accruing to the plaintiff as an employee of the 1st defendant save and except as the 7th defendant and the National Assembly may sooner or later so approve.
10. An Order setting aside the purported contract dated 12/4/97 unilaterally foisted on the plaintiff by the 1st defendant as the same is not a contract at all.”

The Shell Petroleum Development Company of Nigeria Ltd., (the 1st appellant) is a private limited liability company incorporated in Nigeria and carrying on the business of crude hydrocarbon oil and gas prospecting, development and exploitation in Nigeria. The 2nd and 3rd appellants were, respectively, the Managing Director and Deputy Managing Director of the 1st appellant while 4th appellant was the General Manager of the 1st appellant with whom the respondent worked as Deputy General Manager up to sometime in April, 1999. The 5th and 6th appellants were expatriate employees of the 1st appellants. The respondent was an employee of the 1st appellant. He claimed to be the 5th highest ranking Nigerian in the 1st appellant’s employment and one of the most qualified technocrats in the oil industry in the 1st appellant’s company.

On 19th December, 1999 the respondent was by a letter signed by the 4th appellant on behalf of the 1st appellant “released from the company” as his services were no longer required. Attached to the letter was a cheque being payment in lieu of notice in accordance with the terms of his contract of employment. On 12th January, 2000, the respondent commenced this action claiming several reliefs some of which are quoted above and are the subject of this appeal.

The respondent’s case by his statement of claim was that the 1st appellant by wrongful manipulation of the expatriate quota system brought foreign nationals to work in the company under false descriptions thereby making them to fill posts which could be held by Nigerian nationals and, in particular depriving the respondent through such manipulation opportunity of occupying a higher post for which he was qualified in the 1st appellant’s establishment. He alleged a design to ease Nigerians out of the 1st appellant’s establishment and alleged several expatriate quota malpractices by the 1st appellant which he claimed were detrimental to the Nigerian employees of the company. Of direct relevance to his employment he alleged that on 19th December, 1999 the 4th appellant wrote a letter to him at the behest of the 3rd appellant urging him to leave the 1st appellant’s employment on voluntary severance with what he described as a “financial bait” of about N30 million if he should sign an acceptance that day or his employment would be terminated automatically with three months pay in lieu of notice. The respondent rejected the offer. The respondent alleged that he could not have been redundant, as the 1st appellant had declared him, upon a reorganization of the 1st appellant because of his qualification and his performance as a deputy general manager development.

Chief Williams, SAN, learned counsel for the appellants argued that the respondent had no locus standi to sue for reliefs claimed in 3 and 5 because his complaint was about illegality or irregularity in the conduct of the affairs of the 1st appellant. He relied on the rule in Foss v. Harbottle (1843) 2 KB 461 and section 299 of the Companies and Allied Matters Act (“the Companies Act”). Mr. Nwosu, learned counsel for the respondent, argued that the respondent’s action was not based on any provisions of the Companies Act or any law regulating the management or operation of a company incorporated under the said law. The action, he argued, was based on a master/servant relationship and not one to which the rule in Foss v. Harbottle applied.

The rule in Foss v.Harbottle relates to internal management of a company and is based on the futility of the court setting aside or interfering with an irregular act of the company at the suit of a minority of members when such act can be ratified by a majority who have the power to do so. Whether a company’s directors or management has power or not to enter into a contract may be a matter of internal management of the company. However, performance of a contract validly entered into with a third party is not. A breach of a contract of employment, like any other contract of the company, cannot be ratified and justified merely by an act of a majority of members of a company so as to deprive the aggrieved party of a right of action. Learned counsel for the respondent was right in his submission that neither Foss v. Harbottle nor section 299 of the Companies Act applied.

By the same reasoning by which that submission is upheld the question whether or not the Federal High Court has exclusive jurisdiction in such matters as this must be resolved against the appellants. Although section 7(1)(b) of the Federal High Court Act(as amended of Decree No. 1991 No. 60) gave exclusive original jurisdiction to the Federal High Court to try civil cases and matters connected with provision pertaining to the operation of the Companies Act, Federal enactment and any other common law action regulating the operation of companies or the promotion of Nigerian enterprise, an action founded on a contractual employment relationship between a company and its employee is not a matter connected with or pertaining to the operation of the companies or the regulation of the operation of a company incorporated under the Companies Act. Claims 3 and 5 cannot be struck out on the basis of the rule in Foss v. Harbottle or on the ground that the High Court of River State had no jurisdiction to entertain them.

However, learned counsel for the appellants contended further that claims 3 and 5 did not raise justiciable issues within the judicial powers conferred on courts of law by section 6 of the Constitution of the Federal Republic of Nigeria. The substance of the appellants’ counsel’s argument is that the respondent’s claims 3 and 5 did not concern any rights of the respondent whatsoever. Cox v. Green (1966) Ch 216 was cited in support.

For his part counsel for the respondent adopted the opinion of the Court of Appeal and urged this court to uphold it. The Court of Appeal (per Pats-Acholonu, J.C.A.) said:

“If a company is being run by (sic) in such a way that an employee, a senior employee for that matter, conceives that his contract of employment may be affected adversely due to some irregular or illegal conducts demonstrated by the employee company he may complain by going to Court to protect his employment”.

Then, further:

“I believe that if a highly placed employee is aware that an irregular manner of recruitment in a company of which he works will affect him directly and adversely, he could go to court to ask for a relief”.

In particular regard to claim 5 he said:

“______I believe the matter cannot be left with the company to right a wrong it is committing”.

For these views the learned justice of the Court of Appeal drew strength from the case of Adesanya v. The President (1981) 12 NSSC 146,159-160 where Fatai-Williams C.J.N. said:

“Any person whether he is a citizen of Nigeria or not who is a resident in Nigeria or who is subject to the law in force in Nigeria has an obligation to see to it that he is governed by a law which is consistent with the provisions of the Nigerian Constitution. Indeed, it is his civil right to see that this is so”.

While the question whether claims 3 and 5 in the over-all con of the facts averred in the statement of claim raised any dispute that the court should pronounce upon is straight forward, I, for my part, will hesitate to have recourse to section 6 of the Constitution of the Federation of Nigeria for an answer to that question. Section 6(6)(b) of the Constitution provides that the judicial powers of the courts:

“Shall extend to all matters between persons, or between government or authority and to any person in Nigeria and to all actions and proceedings relating thereto, for the determination of any question as to the civil rights and obligations of that person”.

It is, in my opinion, misleading to invoke section 6(6)(b) to defeat an action at the threshold. A person who claims a civil right is entitled to invoke the jurisdiction of the court. The jurisdiction of the court to decide whether such right exists or, if it does, whether facts have been averred to show an infringement of such rights or, whether the plaintiff is the person entitled to invoke the jurisdiction of the court in regard thereto is itself an exercise of such judicial power as is envisaged in section 6(6)(b) of the Constitution.

Notwithstanding that recourse to section 6(6)(b) of the Constitution is not apt, the question whether the respondent’s claims 3 and 5 relate to any right of the respondent remains to be considered. Reliance on the decision of this court in Adesanya v. The President (supra) offers no help. That was a case in public law where an expanded view of standing to sue may be appropriate. Even where the action is in public law distinction between applicable rule of standing where an infringement of an individual right is the cause of action and one where such is not the case is often recognised. In Adesanya v. The President of Nigeria (supra), Fatai-Williams, CJN, said at p.100:

“Admittedly, in cases where a plaintiff seeks to establish a ‘private right’ or ‘special damages’, either under the common law or administrative law, in non-constitutional litigation, by way of an application for certiorari, prohibition, or mandamus, or for a declaratory and injunctive relief, the law is now well settled that the plaintiff will have locus standi in the matter only if he has a special legal right or alternatively, if he has sufficient or special interest in the performance of the duty sought to be enforced, or where his interest is adversely affected”.

In private law, the jurisdiction of the court to grant declaration of right is predicated on the existence of a right. Legal right in private law, generally, attaches to property, and to the person. A third broad category is the right that arises by and from the agreement of the parties. When parties make a contract they make their own law to which they are subject and which creates the rights and obligation which bind them to which the general law only gives recognition and force. The common law we practice recognizes the freedom of contract. It is in the light of the categories of rights that Plowman J. in Cox v. Green (1966) Ch 216 defined justifiable disputes in terms of issues which concern rights of property and right of contract when he said:

“In my judgment the issue between the plaintiff and the defendant are not justiciable disputes at all. The issue between them does not concern any right of property; it does not concern any right of contract; it does not concern any legal rights”.

In this case the claim that the respondent was not a redundant employee of the 1st appellant by virtue of his length of service, job performance, job availability and his status must be dependent not on any matter of public law but on his contract of employment. An employee has no general right not to be declared redundant beyond what his contract or a collective agreement provides usually but not invariably, the conditions on which an employee may be declared redundant are found not in terms and conditions of service but in the collective agreement between the employer and its employees. In this case, the respondent has not pleaded the terms of any contract as foundation for the declaration he sought in claim 3. Besides, the respondent has failed to satisfy the need to specify which contractual rights were breached by his being made redundant for whatever reason.

In regard to claim 5 the substance of the declarations sought is that the 1st, 2nd and 3rd appellants were engaged in dubious expatriate staff quota manipulation and that therefore they were not entitled to deploy the gains of such exercise to render the respondent redundant. Were the court to indulge in entertaining such declarations, the whole system of civil justice will collapse under the weight of officious litigants who believe they are rendering public service by being sentinels of conduct of companies. This is not to diminish the civil duty of a citizen to expose wrong doing. However, it is not a duty which ripens into a right which the citizen can protect by private litigation. The propositions quoted from the leading judgment of the court below on which the respondent’s counsel relied, indeed, boggle the mind. The propositions failed to distinguish between a performance of civic duty and the enforcement of private rights. Be that as it may, it is not law that where an employee conceives that his contract of employment may be affected adversely due to irregular or illegal conduct of the employer or irregular manner of recruitment which may directly or indirectly affect him, he has a cause of action regardless of whether the terms of his contract of employment, including a term as to termination of the contract, have not been breached.

As pleaded by the respondent, the 2nd appellant wrote to the respondent that the company could not find a job for him in his company following the re-organisation of the company. If, of course, the contract of employment stipulates that an employee should be found a job after re-organisation, the court will enforce such contractual term. But where there is no such term, an employee whose appointment had been terminated is left with a remedy for wrongful termination should such termination be in breach of the contract of employment. For the court to assume jurisdiction to review the decision of a company to re-deploy an employee within its organisation in the absence of a contractual term to guide it, will not only be an unwarranted interference with the freedom of contract and in the affairs of the company but also an exercise for which the court is ill-suited. I hold that the court below should have held that in regard to claims 3 and 5, no justified issue had been raised and that those claims should have been struck out.

Before I turn to a consideration of the rest of the issues in this appeal, it is right to observe that a party whose claim is based on contractual rights should plead the contract, the term which gave the right or created the obligation and what constituted the breach. A significant deficiency in the respondent’s pleadings is his failure to make any averments in regard to such things.

Claims 6, 7 and 11 related to the contract of employment. The respondent averred that there was a contract which “pre-existed” before 30 April, 1997 and that that contract was unilaterally and retrospectively cancelled on 5th April, 1997. He alleged that the cancellation was “a grand design to short circuit the Ministerial Directives” of the Ministry of Petroleum Resources. In this action brought by the respondent in his personal capacity and not as representing “Nigerian Employees of the 1st defendant” the respondent sought in claim 6 a declaration that the contract of 12th April, 1997 was “surreptitiously crafted and forced on Nigerian Employees of the 1st defendant”. Nowhere did he aver that it was forced on him and how. The respondent also averred that Directors of Petroleum Ministry of Petroleum Resources “the 7th defendants have in place a standing regulation to the effect that before the employment of any Nigerian personnel of a certain status and above in an oil company…… is terminated, retired or declared redundant, a prior approval of the 7th defendants’ Ministry must be sought and obtained”. However, there was nothing to show that the sanction for breach of any such regulation was the annulment of whatever was done in its breach.

Learned counsel for the appellants was ready to concede that “when the 1st defendant “cancelled” the then existing contract of employment with effect from 30-4-97, it most certainly committed a breach of that earlier contract”. He argued, however that the cancellation was effective to put an end to the contract. For this reason, it was argued, the respondent’s claim could not stand. Learned counsel for the appellants further argued that (1) the contract cannot be set aside on the ground of duress because it had been voluntarily acted upon by the respondent; (ii) there was no averment capable of supporting a finding that the agreement was signed under duress; (iii) as regards the claim that the only valid contract of employment was the one pre-existing before 30 April, 1997, nowhere in the statement of claim was there an averment of any such contract.

Learned counsel for the respondent on the other hand argued that the statement of claim disclosed a reasonable cause of action. He drew the court’s attention to paragraphs 1, 5(c), 5(d), 6, 7, 8(a), 10,18,20,21,25,34,35 and 36 and reliefs 6, 7, 8,10 and 11 of the statement of claim. The averment of facts in the paragraphs referred to by the respondent’s counsel are those already adverted to earlier in this judgment. They related to the claimed expertise of the respondent, the 1st appellant’s alleged abuse of the expatriate quota system and alleged cancellation of a prior contract of employment. It is evident that facts do not by themselves constitute a cause of action. Counsel for the respondent rightly referred to the case of Ibrahim v. Osim (1988) 3 NWLR (Pt. 82) 257, 271-272 where Obaseki, J.S.C., said:

“… for a statement of claim to disclose a reasonable cause of action, it must set out the legal rights of the plaintiff and the obligations of the defendant. It must then go on to set out facts constituting infraction of plaintiff’s legal right or failure of the defendant to fulfill his obligations in such a way that if there is no proper defence, the plaintiff will succeed in the relief or remedy he seeks”.

However, he did not follow up with a demonstration of how his pleadings had complied with this guideline.

Learned counsel for the appellants had put the respondent’s case at the highest when he approached the matter on the footing that a cancellation of a previous contract of employment was a breach of contract. However, it is not in every case where a fresh contract is substituted for an existing one that a breach of the prior one would be referred. The fact must be disclosed that the new one was without the agreement of the parties. In that regard, learned counsel for the appellants put the respondent’s case at the highest when he considered the case on the footing that were duress alleged and proved it would have vitiated any consent. However, as rightly submitted by counsel for the appellants, there was no duress alleged. It is not difficult to agree with learned counsel for the appellants. It does appear that when the respondent’s statement of claim was settled by his counsel, his counsel was not at all thinking of duress, otherwise his pleadings would have contained the necessary averments. First, it would have shown consent, secondly, the nature of the threat or pressure that is claimed amounted to duress would have been pleaded and, thirdly, the fact that consent was obtained under such pressure and by compulsion would have been averred in the statement of claim. None of these was pleaded. In Halsbury’s Laws of England, 4th Ed. (Vol. 9(1)) the law was put thus:

“In so far as the basis of duress rests on pressure rather than an absence of consent, it is the nature of the pressure which becomes crucial. As some sorts of pressure are legitimate, a distinction has to be drawn between legitimate and illegitimate pressure. Further as such illegitimate pressure merely renders a contract voidable, the contract may be ratified …”

I agree with the submission of learned counsel for the appellants that since a contract entered into under duress may be voidable by a party who entered into it under duress, on the facts pleaded by the respondents, to use the appellants’ counsel’s words, “it is hopeless for the plaintiff to seek to contend that he wants to set aside the contract”. By his own pleadings the new contract had been in existence since April, 1997, his employment was not terminated until December, 1999. From April, 1997 to December, 1999, he must have agreed that the new contract was the one that bound the parties and taken benefits under it. He did not allege a breach of the old one nor did he refuse to be bound by the new one. In the circumstances his suit to set aside the new agreement is utterly frivolous.

I find that claims 3 and 5 raised issues which the court cannot adjudicate on, that claims 6 and 7 are frivolous and vexatious and an abuse of process and that in regard to claims 6, 7 and 11 the statement of claim disclosed no reasonable cause of action. For these reasons the court below should have struck out those claims. I would allow the appellants’ appeal.

I now turn to the cross-appeal. In regard thereto counsel for the respondent contended that the court below was in error in striking out claims 8 and 10 by which the respondent sought a declaration that the 1st to 4th appellants cannot disengage or declare the respondent redundant without a formal permission of the 7th defendant, that is, the Ministry of Petroleum Resources, and consequential injunction. The court below relied on the case of Chukwuma v. Shell Petroleum Development of Nigeria Ltd. (1993) 4 NWLR (Pt. 289) 512 to hold that the directive of the 7th defendant could not affect the contractual relationship of the parties. The respondent argued in the cross-appeal that the court below was in error. In Chukwuma’s case this court refused to rely on an extraneous agreement and policy statement not part of the contract between the parties and not incorporated into the contract as basis of the plaintiff’s action.

I do not see the need for the issue made of the relevance or otherwise of Chukwuma’s case to this case. Quite apart from the fact that it has not been shown in the statement of claim how any ministerial directive deprived the 1st appellant of its freedom of contract, to such claimed extent that the 1st appellant could not determine it without the approval of a third party, there was no averment anywhere in the statement of claim that there was no such prior approval sought or obtained. Where the plaintiff’s case is based on absence of an essential prior approval such must be pleaded by him, else there would be no cause of action disclosed. There is really no substance in the cross-appeal and I would dismiss it.

The respondent was indeed misguided or ill-advised not to have accepted the offer of severance pay made to him by the 1st appellant. He misconceived the role of the National Assembly in thinking that it was set up to interfere in private contracts between persons. He confused his duty to expose wrong-doing with his contractual rights and paid scant regard to the limits of his contractual rights. For all these, he deserves some sympathy but not judgment in his favour. The action was misconceived in its entirety. In the result, I allow the appellants’ appeal and set aside the judgment of the court below concerning claims 3, 5, 6, 7 and 11. I strike out those claims. I dismiss the respondent’s cross-appeal. The appellants are entitled to N10,000 costs, being costs of the appeal and cross-appeal.

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SC.285/2000