Universal Trust Bank & Ors. V. Chief Oludotun Olajide Koleoso (2006)
LawGlobal-Hub Lead Judgment Report
AGBO, J.C.A.
The respondent in this appeal filed suit No. FHC/L/CS/772/2002 at the Federal High Court Lagos division against the appellant as defendants for themselves and on behalf of all shareholders of Universal Trust Bank except the plaintiff. The respondent in paragraph 16 of his statement of claim claimed of the appellants as follows:
“1. A declaration that the 5% of the issued share capital of the 1st defendant held in various proportions by the 2nd and 3rd defendants is held in constructive trust for the plaintiff.
2. An Order mandatory injunction compelling the 1st defendant to immediately transfer 5% of its issued share capital from the 2nd and 3rd defendants to the plaintiff by obtaining a contribution of shares on a pro rata basis from each of its shareholders in the proportion of the number of shares held by each shareholder vis-‘a -vis the entire issued share capital of the 1st defendant.
3. An order directing the 1st defendant to immediately amend its register of members to reflect the plaintiff as proprietor of 5% of the issued share capital of the 1st defendant.
4. An order directing the 1st defendant to immediately pay to the plaintiff 5% of all declared dividends of the 1st defendant from the inception of the 1st defendant till the date of Judgment and all subsequent dividends which may be declared by the 1st defendant in future.
5. An order of perpetual mandatory injunction directing the 1st defendant to accord to the plaintiff all rights of membership in the 1st defendant including rights to receive notices of and to attend Annual General and Extraordinary General Meetings of the 1st defendant, rights to offer of or issuance of bonus and other shares proportionate to the share holding of the plaintiff in the 1st defendant and all other rights of membership of the 1st defendant”
By a notice of preliminary objection dated 12th November 2002 and filed on the same date the appellants prayed the court as follows.:-
Notice of Preliminary Objection
“Take notice that this Honourable Court will be moved at the resumed hearing of this action or so soon thereafter as counsel may be heard on behalf of the defendants when a preliminary objection will be raised to the suit herein as against the 2nd and 3rd defendants as follows:-
“That this suit be struck out against the 2nd and 3rd defendants/applicants in their representative capacity”.
The respondent had on 2/10/2002 filed a motion paper seeking (a) an order granting leave to the plaintiff to sue 2nd and 3rd defendants in a representative capacity and (b) an order of substituted service of the court processes on 2nd and 3rd defendants. The court below granted these prayers on 13/12/02.
On 22/1/2003 the parties argued the preliminary objection at the court below. In arguing the application the appellant withdraw the 1st ground supporting the prayer sought as the order to sue in a representative capacity had already been granted by the court. After hearing both parties, the court below, on 24/2/03 in a considered ruling adjudged as follows:-
“I therefore hold that no (sic) compliance with the provisions of order 9 rule 11 renders this application incompetent For the reasons given and the authorities cited above, this application is incompetent and is hereby dismissed for lack of merit”.
It is against this ruling that the appellants have appealed. The grounds of appeal are as follows:-
Grounds of appeal
“1. The learned trial Judge erred in law when she held that it is presumable that the 2nd and 3rd appellants as Chairman and Managing Director respectively of the 1st appellant possess representative capacity and can act on behalf of the shareholders of the 1st appellant/bank.
2. The learned trial Judge erred in law when she held that leave to bring an action in a representative capacity would only be denied when it is shown that there is substantial opposition by members of the group sought to be represented.
3. The learned trial Judge erred in law when she held that the appellant did not apply to vary or set aside the order made on the 13th day of December, 2002 as provided for by the rules and held that non-compliance with the provisions of Order 9 rule 11 of the Federal High Court (Civil Procedure) Rules renders the application incompetent.
4. The learned trial Judge erred in law when she held that the said affidavit of Mr. Biobaku is therefore defective and hereby struck out.
5. The Learned trial Judge erred in law when she held that noncompliance with order 12 rule 8 docs not affect the props the foundation and the fundamentals of this case.
6. The learned trial Judge erred in law in failing to consider the common law position as it relates to Company Law and in particular the law as laid down for suing in a representative capacity.”
From these grounds of appeal the appellant distilled five issues for determination to wit:-
1. Whether the 2nd and 3rd appellants need the authority and consent of the shareholders of the 1st appellant to represent them and the effect failure to obtain such consent and authority.
2. Whether opposition to the representative action ought to have come from those supposedly represented.
3. Whether the appellants’ affidavit offends S.86 of the Evidence Act and the effect of unchallenged affidavit evidence
4. Whether it is presumable that the 2nd and 3rd appellants have authority to represent all the Shareholders of the 1st appellant bank.
5. Whether the 2nd and 3rd appellants ought to have applied to have the earlier order set aside.
The respondent on the other hand distilled from the grounds of appeal only one issue for determination to wit;
“Whether the learned trial Judge was right in dismissing the appellant’s preliminary objection dated 12/11/2003”
The appellant’s issues for determination are more comprehensive and shall guide this court in the determination of this appeal.
During the oral argument of the appeal, the appellant’s counsel tried the appellants ground 1 and 6 to appellants issue 1, ground 2 to issue 2, Ground 4 to issue 3, Ground 5 to 4 and Ground 3 to issue 5. In determination this appeal, I shall first of all deal with appellant’s issue 3, then issue 5 and finally issues 1, 2 and 4.
Issue 3 is whether the appellants’ affidavit offends S.86 of the Evidence Act and the effect of unchallenged affidavit evidence. To appreciate this issue, it is most helpful that the very short affidavit in support of the preliminary object is reproduced it reads:
Affidavit in Support
I, ORANMIYAN BIOBAKU, Male, Nigeria Citizen, Legal Practitioner of St. Nicholas House (5th Floor), 28A, Catholic Mission Street Lagos do hereby make oath and state as follows:-
“1 That I am a Legal Practitioner in the Chambers of Messrs, Fani-Kayode & Sowemimo, Legal Practitioner having the conduct of this case on behalf of the defendants/applicants and by virtue of this I am conversant with the facts of this case.
2. That I have the authority of the defendants/applicants to depose to this affidavit.
3. That I am aware that the 2nd and 3rd defendants who are purportedly sued herein for themselves and on behalf of all the consent of any of the shareholders of Universal Trust Bank Plc to represent them in this action.
4. That the 2nd and 3rd defendants have never agreed to represent all or any of the Shareholders of Universal trust bank Plc in this action.
5. That I depose of this affidavit in good faith and in accordance with the Oaths Laws”
This affidavit is very important because the application before the court is fact based and the applicants had not filed their statement of defence and the only facts upon which the application is founded are those deposed to in this affidavit. This is what the court below made of the affidavit.
“Mr. Biobaku is not shareholder and did not have first hand information of the facts concerning the subject matter for which he made his deposition. The facts deposed to in the said affidavit are insufficient to persuade me to lean in favour of the applicants.
I am also persuaded to agree with the plaintiff/respondent’s counsel that the affidavit offends S.86 of the Evidence Act. The said affidavit of Mr. Biobaku is therefore defective and is hereby struck out”.
The relevant provisions of the Evidence Act are set down hereunder-
“86 Every affidavit used in the court shall contain only a statement of facts and circumstances to which the witness deposes, either of his own personal knowledge or from information which he believes to be true”
“88 When a person to his belief in any matter of fact, and his belief is derived from any source other than his own personal knowledge, he shall set forth explicitly the facts and circumstance forming the ground of his belief”.
Appellant’s counsel had argued, relying on Bamaiyi v. The State (2001) 8 NWLR (Pt.715) 270 at 291 that Mr. Biobaku, being counsel conversant with the facts of the case has not run foul of S.86 of the evidence Act. However, a critical look at the affidavit in question shows that Mr. Biobaku could not have had personal knowledge of the facts deposed to in the affidavit. The facts contained therein are facts that could only have been availed him by the applicants. Even if Bamaiyi v. The State supra is applied in his favour as it relates to the source of his information, he must expressly set out his belief in the truth of the information in order to conform with S.86 of the Evidence Act. This Mr. Biobaku did not do. The court below was therefore right in striking out Mr. Biobaku affidavit for nonconformity with S.86 at the Evidence Act. With the striking out of this affidavit, there were no facts before the court below founding any prayer.
Issue 5 is whether the 2nd and 3rd appellants ought to have applied to have the earlier order set aside. Under this issue, the appellants have argued that they in their preliminary objection had challenge the jurisdiction of the court below to entertain the suit when the persons the appellants were purported to be representing did not authorize the representation. They argued that for a plaintiff to sue a defendant in a representative capacity, he must (1) obtain leave of court to sue in a representative capacity and (2) The representative must have the authority of those to be represented. But these are beside the point. As accepted by the appellants, there is a subsisting order of the court below obtained ex-parte authorizing the respondent to maintain the suit against the appellants in a representative capacity. The appellants are not defending on their own volition. There is a peremptory order of the court below forcing them to represent the shareholders of the 1st respondent as defendant in the suit. That order is still subsisting. There is no application pending anywhere to avoid that order the motion argued at the court below was not an application to avoid that order. That order must be ordered until it is discharged. It is immaterial that the person affected by the order believes to be irregular or ever void – see Ndayako v. Dantoro (2004) 13 NWLR (pt.889) 187 at 222. The only mode under the Federal High Court Rules 2000 for the discharged of that order was order 9 rule 11 which reads:-
“11 Where an order is made on a motion exparte, any party affected by it may, within seven days after service of it, or within such further time as the court shall allow apply, to the court by motion to vary or discharge it; and the court may, on notice to the party obtaining the order, either refuse to vary or discharge it, or may vary or discharge it with or without imposing term as to costs or security, or otherwise, as seems just”
The only proper steps that availed the appellant once the order for representation was made was to seek an order for the discharge of the order.
This the appellants did not do. It is immaterial that at the time the order for representation made, the application to avoid the representation was already subsisting. This issue is resolved in favour of the respondents.
It is to be noted at this point that issues 3 and 5 having been resolved in favour of the respondent, issues 1, 2 and 4th are strictu sense academic. However for the completeness of this judgment I shall touch on these issues.
On issues 1 and 2 the appellant had argued strenuously that taking together the provisions of order 12 rule 8 of the Federal High Court Rules 2000 and the English Common Law as it relates to representative actions, the 2nd and 3rd appellants need the authority and consent of the shareholders of the 1st appellant to represent them in a suit and that the 2nd and 3rd appellants are entitled to protest the absence of the required authorization. It has become trite law that statutory provisions supercede common law or customary law. Where there a statute has provided for certain actions, common law provisions relating to such actions cease to apply. Order 12 Rule 8 of the Federal High Court Rules 2000 make provision for filing representative suits. The English Common Law Rules relating thereto are therefore inapplicable at the Federal High Court Order 12 rule 8 reads as follows:.
“Where more persons that one have the same interest in one suit, one or more of them may, with the approval of the court, be authorized by the other persons interested to sue or to defend the suit for the benefit of or on behalf of all parties so interested”.
This rule envisages the following situations
(a) A plaintiff suing, on behalf of other plaintiffs
(b) A plaintiff suing a defendant and seeking that the defendant represents other defendants
(c) A sued defendant seeking to bring in and represent other defendants.
The plaintiff has no obligation to seek the leave of the mass of defendants to sue them in a representative capacity and it will be strange indeed for a court to avoid an action because a hostile defendant says he, the defendant sued, has failed to obtain the leave of other defendants to defend in a representative capacity. The plaintiff is not expected to call a meeting of his adversaries to enable them regularize his suit. Any of the represented defendants who feel an aversion to the representation can apply to be joined directly. As rightly stated by the court below, rules of court relating to representative suits are rules of convenience that cannot be allowed to frustrate proceedings in any suit- see Busari v. Oseni (1992) 4 NWLR (pt 237) 557. In the instant case, the non obtaining of the leave of other defendants by the defendants on record to defend the suit in a representative capacity does not in any way affect the competence of the suit filed. It is certainly not a threshold matter as suggested by the appellants and it is not required of the respondent to force the persons represented to avail the appellants of the authority they contend is a condition precedent for proper representation. Any argument in that regard can only be an argument among
the defendants and not between the appellants and the respondent. Issues 1 and 2 are resolved in favour of the respondent.
Issue number 4 is whether it is presumable that the 2nd and 3rd appellants have authority to represent all the share holders of the 1st appellant Bank. This issue has its origin at page 31 of the record of proceedings where as part of his ruling the trial judge had said.
“It is presumable that the 2nd and 3rd respondents as Chairman and Managing Director respectively of the 1st respondent possess representative capacity and can act on behalf on the shareholders of the company”
The appellant has taken umbrage against such a conclusion especially as their affidavit in support has stated that there is no such authority. But what the learned Judge of the court below said is trite. The Chairman of the Board of Directors of a limited liability company and its Chief Executive Officer in the person of the Managing Director are the leading officers in the management of a company, its leading agents especially in the company’s relationship with the large public. It is for the appellants to establish any deviation from the norm through the Memorandum and Articles of Association of the 1st appellant. This agency is even more so in relation to the shareholders of a public limited company. This is because such a company is listed in the stock exchanges and the shareholding is always in a flux and daily exchanging hands in the stock market. In any case, the court below ruled the objection incompetent. The statement is therefore a mere obiter dictum that docs not in any way affect the substance of the ruling.
All in all, I find no merit in this appeal which is hereby dismissed with N10,00.00 costs to the respondent
Other Citations: (2006)LCN/2034(CA)
