Chief R. A. Okoya & Ors V. S. Santilli & Ors. (1990)

LawGlobal-Hub Lead Judgment Report

AGBAJE, J.S.C. 

The background material to this appeal is as follows. The plaintiffs, Chief R.A. Okoya, Mrs. K. Okoya and Albion Construction Ltd . sued the defendants, S. Santilli, A. Davanzo and Prince D.A. Ademiluyi in a Federal High Court Lagos Division, claiming against them the following reliefs:-

1. A declaration that the document, copies of which were lodged with the registrar of Companies and the Federal Inland Revenue Department, to which the 1st and 2nd plaintiffs were subscribers, is the only true memorandum and articles of association of the Albion Construction Co. Ltd.
2. An injunction restraining the 1st, 2nd and 3rd defendants and/or any person acting with or on their direction or authority from conducting the affairs of the Albion Construction Co. Ltd. and in particular from operating the account of the said company in any bank whatsoever on the basis of any memorandum and articles of association other than that mentioned in paragraph (3) hereof.
3. A declaration that the 1st and 2nd plaintiffs are the only lawful directors of the Albion Construction Co. Ltd.
4. A declaration that the purported appointment of the 1st and 2nd defendants as directors of the Albion Construction Co. Ltd. whether pursuant to the memorandum and articles of association of the said company or at the meeting of the board of directors of the company held on 7.2.80 is illegal and null and void and of no effect.
5. A declaration that the claim of the 1st and 2nd defendant to be owners of 40,000 shares each in the Albion Construction Co. Ltd. whether as subscribers to the memorandum and articles of association or pursuant to resolutions allegedly passed at a meeting of the company’s board of directors held on 5/5/81 is unlawful and not maintainable in law or in fact.
6. A declaration that all shares held by the 3rd defendant in the Albion Construction Co. Ltd. were held by him in trust for the 1st plaintiff and an order directing the said defendant to execute a transfer of the said shares to the 1st plaintiff.
7. An injunction restraining the 1st and 2nd defendants from holding themselves out as director of the 1st plaintiff company or from giving directions concerning the management and control of the said company unless and until duly appointed as directors of the said company.

After hearing the parties and their witnesses the learned trial Judge, Odunowo, J., gave his judgment in the case on 15th December, 1988 where he held as follows:-

I am satisfied that the following decision must be made:

(1) The document described as memorandum and articles of association of Albion Construction Company Limited dated 16/9/76 and admitted in evidence in this action as exhibit A and to which the first and second plaintiffs were subscribers is the only true memorandum and articles of association of the third plaintiff company.

(2) The nominal share capital of the third plaintiff company is N200,000.00 divided into 200,000 shares of N1.00 each, and not 500,000 as alleged by the defendants.

(3) All the parties to this action are shareholders of the third plaintiff company: namely

(1) Chief R.A. Okoya – 50% or 100,000 shares;

(2) Mrs. K. Okoya-1% or 2,000 shares;

(3) Mr. S. Santilli – 20% or 40,000 shares;

(4) Mr. A. Davanzo – 20% or 40,000 shares; and

(5) Prince D. A. Ademiluyi – 9% or 18,000 shares.

(4) The third defendant is hereby directed to execute an instrument of transfer in respect of 51% or 102,000 shares, which he holds in trust, in favour of the first plaintiff.

(5) The first, second and the third defendants and/or any other person or persons acting with or on their direction or authority are hereby restrained from conducting the affairs of the third plaintiff company and in particular from operating the account of the said company in any bank whatsoever on the basis of any memorandum and articles of association other than that mentioned in paragraph (1) above.

By a notice of appeal dated 22/12/88, the defendants appealed against the whole of the decision of Odunowo, J., to the Court of Appeal, Lagos Division. For reasons hereinafter appearing in this judgment I will reproduce below the grounds of appeal in the notice of appeal without their particulars.

They are as follows:-

1. That the learned trial Judge erred in law and on the evaluation of the facts before the court in awarding 51% percent of the adjudged N200,000 authorized share capital to the 1st and 2nd plaintiffs and in directing the 3rd defendant to execute an instrument of transfer of the said 51% shares to the 1st plaintiff which the learned trial Judge adjudged the 3rd defendant held in trust for the 1st plaintiff.
2. The learned trial Judge erred in law by adjudging that the 1st and 2nd plaintiffs are members of the 3rd plaintiff company.
3. The learned trial Judge erred in law in holding that the 3rd defendant’s shareholding in the 3rd plaintiff is 9% instead of the 21% which the defendants had canvassed in their alternative position.
4. The learned trial Judge erred in his evaluation of the facts and the application of law to those facts in holding and accepting the contention of the 1st and 2nd plaintiffs that the paid up share capital of the 3rd plaintiff as at 31/5/81 stood at 200,000. That the learned trial Judge erred in law and in the evaluation of the facts placed before the court by failing to make a finding on the uncontradicted evidence that the Worker Trust held 10% of the authorised share capital of the 3rd plaintiff.
5. The learned trial Judge erred in his evaluation of the facts before the court and in his application of law to those facts in holding that the presumption of regularity of the disputed minutes in the minutes book, exhibit HH had not been displaced.
6. The learned trial Judge erred in accepting the authenticity of the balance sheets of the 3rd plaintiff company by which the paid up share capital were supposedly made by the 1st plaintiff, as at 31/5/81.
7. That the judgment is against the weight of evidence.

There is a cross appeal by the plaintiffs. As far as the present appeal is concerned, I need not say anything more about the plaintiffs’ appeal.

Pursuant to an application by the defendants, for leave to appeal against the Judgment of Odunowo, J., of 15/12/88 and for a stay of execution of the judgment, parties by their counsel appeared before Odunowo, J., on 22/12/88. For reasons hereinafter appearing in this judgment, it is necessary to set down some of the record of proceedings of that day, which is:-

Chief F.R.A. Williams: When we came here this morning, we felt that there were two major defects in this application. But we felt we can nevertheless usefully spend this morning in resolving the anxieties of my learned friend…If you look at the judgment, I submit that there is nothing to stay as such. It would have been more realistic to ask for an order that pending the determination of the appeal, the 1st & 2nd plaintiffs shall be restrained from exercising the right attached to the shares which the court has declared to be owned by them. But your Lordship will have to balance any such application by a consideration of our own interest, having regard to the principle that a successful party should not be deprived from enjoying the fruits of judgment. Bearing those principles in mind and having regard to all the circumstances of this case, we respectfully submit that there are 2 alternatives open to this court. These alternatives are to last until the determination of the appeal. In the alternative, if your Lordship feels you want to hear fuller arguments, then they should rest until the determination of this motion on notice or until further order:

(1) That the 3rd plaintiff company be managed by a board of receivers comprising:

(i) Mr. Santilli who shall be responsible for the functions at present performed by the M.D.

(ii) Mr. Davanzo who shall be responsible for the functions at present performed by the director technical.

(iii) Prince Ademiluyi who shall be an adviser, without executive responsibilities, to the board of receivers.

(iv) Three (3) nominees of the 1st & 2nd plaintiffs one of whom shall have executive responsibilities for the finances of the company:

(2) The second condition is as follows: The business of the 3rd plaintiff company should be run by a board of receivers and managers comprising six (6) persons as in proposal one. The chairman of the board shall be an independent person with experience in business or commercial accounting to be appointed by the court. Such chairman not to have an original vote but shall have a casting vote. These suggestions, I assume (sic) the court from the bar, are my own suggestions and they have been made in a genuine effort to see that the subject matter of litigation is preserved without injustice to either side. We have won the case substantially in the sense that we have a majority vote CHIEF BENSON. It will be very difficult for me to accept or refuse the offers. My Lord, I was briefed only yesterday in this matter and I am yet to have full consultations with my clients. My learned friend has made a number of remarks about their having a majority as a result of the judgment. Which judgment is being challenged on appeal One is bound to look at the offer, without commitment or prejudice to my clients, on the face of it.

CHIEF WILLIAMS: I will with respect withdraw my proposals because there is no reasonable response from Chief Benson. He makes his offer and if he withdraws it goodluck. The application was then adjourned till 2/2/89 for hearing.

Giving his ruling on the application on 1- 3-89 the learned trial Judge Odunowo J. held as follows:

first: Just before the motion was moved, Chief Williams, S.A.N., conceded that the order directing the 3rd defendant to execute an instrument of transfer in respect of 51% or 102,000 shares which he holds on trust for the plaintiff could be stayed without prejudice to the operation of all the remaining declarations granted by the court, including the declaration as to the number of shares owned by the 1st and 2nd defendants in the company.

Second: Finally, as was pointed out by Eso, J.S.C. …a stay of execution is never to be used as a substitute for obtaining the judgment which the trial court has denied a party… (See Okafor v. Nnaife (1987) 4 N.W.L.R. (Pt. 64) at page 138). The conclusion I have reached after deep reflection does not persuade me that there is any equitable basis for the present application which must be and is hereby dismissed accordingly, subject to the concession granted by the plaintiffs in respect of declaration (4) above.

By an application dated 2nd March, 1989 the defendants applied to the Court of Appeal for the following reliefs:-

1. An order of this Hounourable Court staying further proceedings on the declarations as contained in the judgment of Hon. Justice T.A. Odunowo of the Federal High Court, Lagos;
2. An order staying execution of the orders contained in the same judgment given on the 15th day of December, 1988 pending the determination of the appeal lodged by the defendants/appellants/applicants to this court;
3. And for such further order or other orders as this Honourable Court may deem fit to make in the circumstances.

There was an objection by the counsel for the plaintiffs by way of a notice of preliminary objection dated 20/3/89 to this application in the following terms:-

NOTICE OF PRELIMINARY OBJECTION

TAKE NOTICE that at the hearing of the motion on notice herein dated the 2nd day of March 1989, the above named plaintiffs intend to raise the following preliminary objections:-

(i) The prayer for staying further proceedings on the declarations as contained in the judgment is not a relief known to the law

(ii) No such prayer was ever moved in the court below and so it cannot be moved in this court.

(iii) The prayer for staying execution of the orders contained in the judgment is incompetent and untenable as there is nothing left to stay.

Dated this 20th day of March, 1989.

Ruling on the preliminary objection on 27/4/89 the Court of Appeal, coram Akpata, Babalakin and Kalgo JJ.C.A., as per the lead ruling of Akpata, J.C.A. in which the others concurred held as follows:-

I agree with Chief Williams that the application for an order staying further proceedings on the declarations as contained in the judgment of Hon. Justice T.A. Odunowo of the Federal High Court, Lagos was not made in the court below. Besides, the nature of further proceedings is not clear… No such special circumstances have been shown to exist. The first prayer is therefore incompetent. It is struck out. The objection against the application for an order staying the execution of the orders contained in the judgment of Odunowo, J., delivered on 1st day of December, 1988 fails. It is dismissed.

The effect of this ruling is that what was left of the defendants application of 2/3/89 was the second leg of the application namely an order staying execution of the orders contained in the judgment of Odunowo, J., of the Federal High Court, Lagos Division of 15/12/88 pending the determination of defendants appeal against the judgment.

The application was then heard by the Court of Appeal differently constituted; coram Ademola, Akpata and Kalgo JJ.C.A.

The ruling on it was given on 30/5/89. In his lead ruling which is short, Ademola, J .C.A. held as follows:-

At the end of this case in the court below, Odunowo, J., made the following declarations:

1. The document described as memorandum and articles of association of Albion Construction Company Limited dated 16/9/76 and admitted in evidence in this action as exhibit A and to which the first and second plaintiffs were subscribers is the only true memorandum and articles of association of the third plaintiff company.
2. The nominal share capital of the third plaintiff company is N200,000.00 divided into 200,000 shares of N1.00 each and not 500,000 as alleged by the defendants.
3. All the parties to this action are shareholders of the third plaintiff company: namely

(i) Chief R.A. Okoya-50% or 100,000 shares;

(2) Mrs. K. Okoya-1% or 2,000 shares;

(3) Mrs. S. Santilli – 20% or 40,000 shares; and

(5) Prince D.A. A Demiluyi – 9% or 18,000 shares.

The applicants who were defendants in the court below have appealed here. They have also brought a motion for stay of execution upon the judgment of the court below. This ruling is in respect of the application for stay of execution.

Amidst the clashes of argument by counsel at the hearing of the application, the affidavit in support of the motion and the counter-affidavit in opposition to the motion, there is discernable in my opinion, a desire on the part of the warring parties to make the company to which they all belong a going concern until the appeal is heard. This is an understandable desire in view of an outstanding contract of over 100 million naira the company still has to execute.

There can be no doubt that there are some arguable grounds in the appeal lodged by the appellants in respect of the apportionment of the shareholding in the company to the 1st and 2nd respondents made by the learned trial Judge. Nevertheless, some measure of damage would result if some of the proposals contained in the judgment were to be implemented now.

Bearing these two factors in mind, it appears that some form of stay of execution of the judgment must take place. It is therefore very refreshing and commendable to see some form of proposal in the counter-affidavit of the respondent. During the course of argument before the court, Chief Benson showed some accommodation to the proposal outlined by Chief Rotimi-Williams, learned counsel for the respondent in this matter.

There would, therefore, be a stay of execution on the following conditions:-

(1) There would be a board of receivers and managers for this company pending the determination of the appeal.

(a) The board would be headed by Chief Folorunsho Oke, chartered accountant of Messrs. Copper & Lybrand Ltd., Igbosere Road, Lagos who shall be chairman.

(b) Messrs. Santilli and Davanzo, 1st and 2nd appellants to carry on their respective duties as managing director and technical director respectively and shall be on the board.

(c) Prince D.A. Ademiluyi shall be on the board.

(d) Chief R.A. Okoya and Mrs. Okoya and Mr. S.O.A. Folami shall be on the board. The said Mr. Folami a chartered accountant shall he in control of the finances of the company pending this appeal. In the alternative, Chief & Mrs. Okoya should nominate two persons whose names shall be communicated to registrar to serve as their nominees on the board.

(2) The order asking the 3rd defendant now appellant, Prince Ademiluyi to execute instrument of transfer in respect of 51% or 102,000 shares which he holds in trust in favour of the 1st plaintiff now respondent is now stayed.

(a) The order restraining the 1st, 2nd and 3rd defendant and other person or persons acting on their behalf or their direction or authority, restraining them from conducting the affairs of the company and in particular from operating the account of the said company in any bank whatsoever is hereby stayed.

(3) The order of interim injunction granted by this court in respect of a bank account of the company is hereby lifted.

(4) The board of receivers and managers shall conduct the affairs of the company during the pendency of the appeal in the best possible manner having regard to the fact that their broad mandate is to make the company a going concern until the determination of this appeal.

(5) The board of receivers and managers shall hold meetings and direct and run the affairs of the company in the best possible manner during the pendency of this appeal.

(6) The chairman, Chief Folorunsho Oke is at liberty to seek the direction of the court on any matter regarding the administration of the company during the pendency of the appeal in this court.

The stay is granted accordingly on these conditions. There shall be no order as to cost.

Akpata, J.C.A., in his ruling said inter alia as follows:-

A company and its majority members who have dragged minority members to court should not be heard to say to the defendants, Foss v. Harbottle prevents you from appealing because we are in the majority. Even if you can appeal you cannot stop us from destroying the res before the appeal is heard. The courts will not permit that theory. Sections 220 and 221 of the 1979 constitution make it clear that an aggrieved person may appeal with leave of court in others (sic) from decisions of a High Court. Foss v. Harbottle does not possess the legal elasticity to have it stretched so as to deprive an aggrieved party the right of appeal conferred on him by the constitution.

In effect, therefore, if an action is well constituted by meeting the requirements of Foss v. Harbottle and it goes to trial, any of the parties aggrieved by the decision of the court may appeal whether or not they are minority members of the company. They are competent to apply that the judgment be stayed or suspended so that the res may not be destroyed. The dictum of Foss v. Harbottle terminates with the determination of the action in the trial court.

By order 1 rule 20(8) of the Court of Appeal Rules 1981, the court shall have powers to make orders by way of appointment of a receiver or such other necessary orders for the protection of property or person pending the determination of an appeal to it even though no application for such an order was made in the court below.

I agree with my learned brother Ademola, J .C.A., that in the circumstances of this case it is desirable to appoint a body of receiver/manager from both sides for the protection of the company pending the determination of the appeal.

Kalgo, J .C.A., said in his ruling:-

I have before now read in draft form, the ruling just delivered. I agree with it. The most important consideration in this matter, in my view, is that the company concerned, Albion Construction Limited, should be allowed to run as a going concern while all actions in court are going on. Both learned counsel in this application have conceded that this is very essential and are prepared to accept a compromise which would produce the desired result. In my view, the conditions for the set out (sic) in the ruling just delivered, would in the circumstances be just and fair to both parties pending the determination of the appeal. It is against this ruling that the plaintiffs have now appealed with leave of the lower court on 16 grounds of appeal which I need not reproduce since all of them have been subsumed under one or other of the issues said in the briefs of arguments in this appeal to arise for determination.

According to the brief of arguments for the plaintiffs, the appellants, the issues arising for determination in this appeal are as follows:-

(i) Whether a defendant who has filed an appeal against purely declaratory orders made against him is entitled to apply for stay of execution of those orders pending the hearing and determination of the appeal;

(ii) Whether the Court of Appeal had jurisdiction to make the orders contained in its decision dated 30.5.89 having regard to the rule in Foss v. Harbottle and, in particular, the rule that the court ought not to interfere in matters relating to the internal management of the affairs of a corporation or association save at the instance of the corporation itself or at the instance of a majority of its members.

(iii) Whether it was proper for the court below to make the appointment of receivers and managers-

(a) In the absence of a specific application in that behalf by either party;

(b) Without fixing the amount of security which the persons so appointed ought to give;

(c) Without inviting the parties to address it on the desirability of marking the appointments, including the suitability of the appointees.

According to the brief of arguments for the defendants, it is said that the issues arising for determination in this appeal are as follows:-

1. Whether or not items 4 and 5 of the pronouncements of Odunowo, J., are declaration or orders.
2. If the said items 4 and 5 are orders, could order for stay of execution be made pending appeal thereupon
3. If the said items 4 and 5 could be stayed, has the Court of Appeal discretion to make such order of stay on condition
4. Do the circumstances of this matter fall within principles enunciated in rule in Foss v. Harbottle (1843) 2 Hare 461
5. If item 4 is an order that could be stayed, will such stay affect the declaration stated in item 3 or not, particularly the shareholdings of the plaintiffs i.e.

(1) Chief R.A. Okoya-50% or 100,000 shares

(2) Mrs. K. Okoya -1% or 2,000 Shares.

6. If item 4 is also an order/injunction, that could be stayed, will such stay not also affect the declaration stated in item 1 which relates to whether or not exhibit A is the proper memo and articles of association
7. Was the appointment of receivers and managers by the Court of Appeal a reasonable and judicious exercise of its discretion to impose conditions I must pause here to comment on some of the issues said by the defendant to arise for determination in this appeal, that is, issues 1, 2, 3, 5, and 6 above.

The orders in question i.e. orders 4 & 5, for ease of reference are as follows:-

4) The third defendant is hereby directed to execute an instrument of transfer in respect of 51% or 102,000 shares, which he holds on trust, in favour of the first plaintiff.

(5) The first, second and the third defendants and/or any other person or persons acting with or on their direction or authority are hereby restrained from conducting the affairs of the third plaintiff company and in particular from operating the account of the said company in any bank whatsoever on the basis of any memorandum and articles of association other than that mentioned in paragraph (1) above.

As regards order 4 we have to remind ourselves that the order which is undoubtedly an executory order capable of enforcement and of being stayed, as I will show presently in this judgment, has been stayed in the ruling of Odunowo, J., of 1/3/89 on an application to him by the defendants for a stay of execution of his judgment to which I have earlier on in this judgment referred. So a stay of execution of that order could no longer be a live issue in the court below in a fresh application to it by the defendants for a stay of execution of the judgments of Odunowo, J., pending the determination of the defendants appeal against it. The same thing goes for an appeal to this court against the decision of the Court of Appeal on the defendant’s fresh application in that court for a stay of execution.

As regards order 5, a perusal of the grounds of appeal of the defendants against the judgment of Odunowo, J., which have reproduced earlier on in this judgment shows that nowhere therein is any complaint made about this order. It is to be noted that the restrictive order which Odunowo J. made is tied to the first declaratory judgment, namely:-

(1) The document described as memorandum and articles of association of Albion Construction Company Limited dated 16/9/76 and admitted in evidence in this action as exhibit A and to which the first and second plaintiffs were subscribers is the only true memorandum and articles of association of the third plaintiff company.

It is equally note worthy that the defendants in their grounds of appeal no where complained about this order either. If there had been a complaint about order 1, one might have said, inferentially of course, that the defendants are thereby complaining about order 5 to which order 1 is tied. For purposes of completeness I should mention the reliefs the defendants were seeking in their appeal in the lower court. They were as follows:-

To set aside the judgment and orders of the Federal High Court relating to the shareholding of the 1st and 2nd plaintiffs and the 3rd defendant in the 3rd plaintiff and to substitute it with the following:

(a) A declaration that the 1st and 2nd plaintiffs are not members of the 3rd plaintiff and do not hold 51% of the shares of the 3rd plaintiff.

(b) A declaration that the 3rd defendant is entitled to and holds 21% of the authorised share capital of the 3rd plaintiff.

(c) A declaration that as at 31/5/81 the paid up share capital of the 3rd plaintiff was N2. (sic).

(d) A declaration that the workers of the 3rd plaintiff are entitled to and hold 10% of the authorised share capital of the 3rd plaintiff.

(e) To adjudge that the disputed minutes contained in the minutes book of the 3rd plaintiff are irregular and were never held.

It therefore appears clear to me that the defendants are satisfied with the order or the decision of Odunowo, J., as to the authentic memorandum and articles of association of the 3rd plaintiff/company. It follows too that they see nothing wrong with order 5 of Odunowo, J., restraining them from conducting the affairs of the 3rd defendant company and in particular the operation of its bank accounts otherwise than on the basis of that authentic memorandum and articles of association.

Having made the above comments on the issues said by the defendants, the respondents to this appeal, to arise for determination, I will now go on to consider the issues arising for determination in this appeal as identified by the plaintiffs, the appellants. I will take issue one first, namely:-

(i) Whether a defendant who has filed an appeal against purely declaratory orders made against him is entitled to apply for “stay of execution” of those orders pending the hearing and determination of the appeal.

Counsel for the plaintiff in the latter brief of argument, has drawn our attention to the opinions of academic writers in their respective works on declaratory judgments vis-a-vis stay of execution. The writers and their works he referred to are as follows:

1. C.M. BORCHARD: Declaratory judgments:
2. Zamir: The declaratory judgment;
3. P.W. Young: Declaratory orders:
4. Salmond on Jurisprudence; and
5. Prof. S.A. de Smith Judicial Review of Administrative Act.

There is no doubt at all that there is the following consensus among them as regard executory judgment, declaratory judgment, and stay of execution of either or both of them:-

First:

(i) Executory judgment declares the respective rights of the parties and then proceeds to order the defendant to act in a particular way. e.g. to pay damages or refrain from interfering with the plaintiffs’ rights, such order being enforceable by execution if disobeyed. Declaratory judgments, on the other hand, merely proclaim the existence of a legal relationship and do not contain any order which may be enforced against the defendant.

Second: A declaratory judgment may be the ground of subsequent proceedings in which the right, having been violated, receives enforcement but in the meantime there is no enforcement or any claim to it.

Counsel for the plaintiffs then referred in the brief of arguments for the plaintiffs to judicial decisions in order to show that they are along the same lines I have just indicated. In this regard he referred:-

(1) To pages 318 – 319 of Zamir: The Declaratory judgment:-

What is the position where a defendant disregards a declaration which is not expressly followed by liberty to apply It is possible that such liberty will nevertheless be implied in the declaration. In an Indian case, which came on appeal to the Privy Council, Lord Macnaghten, speaking of declaratory judgments said:

It is highly improbable that any officer of the government would set the court at defiance … But the remedy in such a case, if it did occur, would be simple enough. Every order such as that which the appellant asks for carries with it liberty to apply. On a proper application on proper notice being given, it would be found that the arm of the court would be long enough to reach the offender, whatever his position might be. If so, then liberty to apply is nothing more than a more precise warning to the defendant to so conduct himself as not to make the application necessary.

(2) Williams v. Majekodunmi (No.3) (1962) 1 All N.L.R. 413 at 430;

(3) Webster v. Southwark London Borough Council (1983) Q.B.D. 698; and

(4) Government of Gongola State v. Tukur (1989) 4 N.W.L.R. (Pt.117) 592.

As recently as 5/9/89 this court has said, as per the lead judgment of Obaseki, J.S.C., in Government of Gongola State v. Tukur (supra), in which the other justices in the appeal concurred, as follows:

It should be noted that many judgments and orders do not require to be enforced as the judgment and order itself is all that the party obtaining it requires. See para. 565 Vol. 26 Halsbury Laws of England 4th Edition, page 288. The judgment of the Court of Appeal in question is one such judgment.

A declaratory judgment is complete in itself since the relief is the declaration. See Vol. 1 Halbury Laws, 4th Ed., para. 185 187; Akunnia v. Attorney General of Anambra State (1977) 5 S.C. (161 at 177). Judgments and orders are usually determinations of rights in the actual circumstances of which the court has cognizance, and give some particular relief capable of being enforced.

When therefore a court declares that it has no jurisdiction, besides the declaration of its incompetence which it has jurisdiction to make, no determination of rights or entitlement thereto which can be enforced by the beneficiary is made. The Court of Appeal made no determination of the rights of the parties requiring enforcement.

A stay of execution only prevents the plaintiffs or beneficiary of the judgment or order from putting into operation the machinery of the law, the legal process of warrants of execution and so forth. An order for stay pending appeal therefore can only be granted in respect of executory judgment or order. But the judgment of the Court of Appeal is not an executory order.

The Court of Appeal cannot go outside the terms of the motion however misconceived it is. It is bound by the terms or prayers in the motion filed. (Commissioner for Work Benue State v. Devcon Construction Co. Ltd. (1988) 3 N.W.L.R. (Pt.83) 407 at 420). Since there was nothing to stay, the Court of Appeal was in error to have made the order prayed for.

In Webster v. Southerwark London Borough Council (supra) Forbes, J., said first at page 706:-

Without going into the authorities and Mr. Turner Samuels was good enough to remind me of several. I readily accept the proposition that where a court makes only a declaratory order it is not contempt for the party affected by the order to refuse to abide by it. If he does so refuse no doubt the other party can go back to the court and seek an injunction to enforce the order but mere refusal of one party to an action to abide by a declaratory order is not, as I understand it, contempt of court.

Second at page 708:-

The argument that there is no contempt here succeeds only because the form of the order made was a declaratory one. There are two aspects of the form of the order made here which I should mention. The first is that there is a practice of courts to make declaratory orders rather than to grant injunctions or other coercive relief where because the defendant is a responsible authority, it is thought inconceivable that a declaratory order would not result in the plaintiff obtaining his rights. It was against that background that I made the original order here. It is now plain that I was mistaken. The local authority has, in consequence of the manner in which it has treated this order, forfeited all right to be regarded as a responsible authority so far as the courts are concerned, and it remains to be seen whether the courts should, in general, continue to adopt this practice which is now shown to be open to abuse in this fashion. Counsel for the defendants in their brief of argument seizes on the following passages in Webster’s case above namely:…The first is that there is a practice of courts to make declaratory orders rather than to grant injunction or other coercive relief where, because the defendant is a responsible authority, it is thought inconceivable that a declaratory order would not result in the plaintiff obtaining his right and submits.

it is my humble submission that such responsible authority could seek a slay so as not to open itself to the castigation of being said to have forfeited all right to be regarded as a responsible authority if it does not want to abuse the practice. And because a declaratory judgment sometimes carries with it, as in the Indian case in the Privy Council referred to by Zamir in his work “The Declaratory Judgment”, the expression liberty to apply, it is the further submission of counsel for the defendants in the latter’s brief of argument that some declaratory judgments could be stayed that is those where the expression liberty to apply is expressly stated or can be implied as having been attached to the order. In Williams v. Majekodunmi (supra), the order carries with it the expression liberty to apply for an injunction to restrain violation of the declaratory orders therein.

The above submissions of counsel for the defendants are the mainstay of the contention for the defendants by their counsel, Chief Benson, S.A.N. that declaratory judgments can sometimes be stayed having accepted, as I understand him to have done, that, generally speaking, declaratory judgments cannot be stayed. So it behooves me to address myself to these submissions. It appears to me that the starting point in this regard is the consensus not only among academic centers but in judicial decisions that a declaratory judgment may be the ground of subsequent proceedings in which the right having been violated receives enforcement but in the meantime there is no enforcement nor any claim to it. So, until subsequent proceedings have been taken on a declaratory judgment following its violation or threatened violation and the right, declared in the judgment, receives enforcement or is given legal sanction for its violation, there cannot be, on the clear authorities I have referred to above, a stay of execution of the declaratory judgment, because prior to the subsequent proceedings, it merely proclaims the existence of a legal relationship and it does not contain any order which may be enforced against the defendant. The expression with liberty to apply when a declaratory judgment carries it or when it is implied in the judgment, is no more in my judgment than a clear warning to a defendant against whom a declaratory order is made that the order is a ground of a subsequent proceeding in which the right declared by the judgment if violated will receive enforcement. The expression in my judgment will not and cannot convert a declaratory judgment into an executory judgment capable of enforcement and a proper subject for a stay of execution.

I now turn to the passage from the judgment of Forbes, J., in Webster v. Southwark London Borough Council (supra) upon which counsel for the defendants/respondents bases his submission that a responsible authority could seek a stay of execution of a declaratory judgment so as not to render itself liable, if it violates a declaratory judgment, to be treated by courts as having forfeited all rights to be regarded as a responsible authority. In the passage in question, Forbes, J., was dealing with the practice which he described there thus:-

The first is that there is a practice of courts to make declaratory orders rather than to grant injunctions or other coercive relief where, because the defendant is a responsible authority, it is thought inconceivable that a declaratory order would not result in the plaintiff obtaining his rights. In other words, Forbes, J., was talking there about declaratory order in contradistinction to coercive orders, and the practice of the courts to grant the former and not the latter against a responsible authority in the hope that the declaratory judgment will be obeyed. Because of the abuse of this practice, as it was in the case before him, he was then expressing doubts about the desirability of the continuity of the practice. That passage from the judgment of Forbes, J., is certainly, in my judgment, not an authority for saying an application for a stay of execution of a declaratory judgment can be made in order to forestall any consequences of its violation which in any event cannot include resort to its execution.

The conclusion I reach is that there cannot be a stay of execution of declaratory judgments. The glosses which counsel for the defendants/respondents seeks to put on this general proposition have in my judgment no validity in law.

It follows in my judgment that a defendant who has filed an appeal against a declaratory judgment or order is not entitled to apply for a stay of execution of that judgment or order. Such an application in the circumstance will be misconceived.

It now remains for me to relate this legal conclusion I have just reached to the situation in the case in hand.

I have stated earlier on in this judgment that the judgment of Odunowo, J., appealed from by the defendants is the subject matter of the defendant’s application for a stay of execution in the lower court with which the present appeal is concerned. For ease of reference I reproduce it again below:

I am satisfied that the following declarations must be made:

(1) The document described as memorandum and articles of association of Albion Construction Company Limited dated 16/9/76 and admitted in evidence in this action as exhibit A and to which the first and second plaintiffs were subscribers is the only true memorandum and articles of association of the third plaintiff company.

(2) The nominal share capital of the third plaintiff company is N200,000.00 divided into 200,000 shares of N1.00 each, and not 500,000 as alleged by the defendants.

(3) All the parties to this action are shareholders of the third plaintiff company namely:

(1) Chief R.A. Okoya – 50% or 100,000 shares;

(2) Mrs. K. Okoya – 1% or 2,000 shares;

(.3) Mrs. S. Santilli – 20% or 40,000 shares;

(4) Mr. A. Davanzo – 20% or 40,000 shares and

(5) Prince D.A. Ademiluyi – 9% or 18,000 shares.

(4) The third defendant is hereby directed to execute an instrument of transfer in respect of 51% or 102,000 shares, which he holds on trust, in favour of the first plaintiff.

(5) The first, second and third defendants and/or any other person or persons acting with or on their direction or authority are hereby restrained from conducting the affairs of the third plaintiff company and in particular from operating the account of the said company in any bank whatsoever on the basis of any memorandum and articles of association other than that mentioned in paragraph (1) above.

In my judgment orders 1 – 3 in the judgment are evidently declaratory judgment or orders in that they each of them merely proclaim or declare legal situations or primary rights ante litem vis-a-vis the first and the second plaintiffs on the one hand and the defendants on the other hand with respect to the 3rd plaintiff. In other words, they merely make certain declarations as to

(1) the authentic memorandum and articles of association of the 3rd plaintiff company see order 1;

(2) the share capital of the same company see order 1; 2, and

(3) the shareholdings of the parties to this action in the said company see order 3.

None of these three orders contain any order which may be enforced against any of the defendants. They, none of them, pronounce any sanction directed against any of the defendants in the event of defiance of the orders by the defendants.

Because of what I have just said above, I am satisfied on the authorities that an application for a stay of execution will not lie in respect of any of the three orders. So in my judgment the defendant’s application in the lower court in its form as one for a stay of execution of these three orders is misconceived. This however is not the end of the matter having regard to the orders which the lower court made on this application for a stay of execution which include one appointing receivers and managers for the 3rd plaintiff company and another staying the order restraining the 1st, 2nd and 3rd defendants and other persons or persons acting on their behalf or their direction or authority from conducting the affairs of the 3rd plaintiff company and in particular from operating the account of the said company in any bank whatsoever. I will deal with this aspect of the present appeal later on in my judgment.

In the meantime, I shall continue to examine the nature of the orders made by Odunowo, J., in his judgment by now taking a look at orders 4 and 5. They are, in my judgment, evidently executory judgments orders in that-

(a) Order 4 makes a certain declaration as regards the respective rights of the 1st plaintiff and the 3rd defendant and proceeds to order the 3rd defendant to act in a particular way in respect of that declaration;

(b) Order 5 imposes an injunction or injunctions on the 1st, 2nd and 3rd defendants restraining them from acting in a particular way or rather enjoining them to act in a particular way as regards the conduct of the affairs of 3rd plaintiff company.

I have no doubt that these two orders I have just spoken about can be a subject matter of an application for a stay of execution, as it is the case in the application now before us on appeal. However in my comments above on issue 5 identified in the defendant’s brief of arguments I have shown that that part of order 4 which directs the 3rd defendants to transfer the shares he holds on trust for the 1st plaintiffs to the latter has been stayed whilst the declaration as to the trust remains touched. So the order of the lower court staying execution of the transfer in respect of the shares is in fact otiose.

What I feel I should consider at this stage is issue 5 in the defendants brief of arguments which says: If item 4 is an order that could be stayed, will such stay affect the declaration stated in item 3 or not, particularly the shareholdings of the plaintiffs i.e.

1. Chief R.A. Okoya-50% or 100,000 shares
2. Mrs. K. Okoya-1% or 2,000 Shares.”

I may add that the transfer order has been stayed. But the trust declaration remains and being a declaratory order, it by itself alone cannot be stayed. In my judgment. the trust declaration in order 4 must be read along with the declaration as to shareholdings in order 3. When this is done, the result will be that the 102,000 shares in the 3rd plaintiff/company said in order 3 to belong to the 1st and the 2nd plaintiffs are held by the 3rd defendant in trust for them in the company. The registered owner of the shares in register of shares of the company is the 3rd defendant. The only effect which I can conceive a stay of execution of the transfer order of the shares will have on order 3 is that the rights and obligations of a trustee and cestui que trust will continue to operate in respect of the shares. In this regard, Romer, J., said as follows in Kirby v. Wilkins (1929) 2 Ch. 444 at 454 a case to which Chief F.R.A. Williams, S.A.N., was good enough to draw our attention:-

“It is then said, however, that in any case the defendant ought not to have exercised his voting power in respect of the shares without the direction of the company. I do not think that that contention is sound. Where a shareholder holds shares as a bare trustee for a third person, he is no doubt obliged to exercise his voting power in the way that the cestui que trust desires, but unless and until the cestui que trust has indicated his wish as to the way in which the voting power should be exercised, there is no reason why the nominee should not exercise the voting vested in him as a trustee, He holds that voting power upon trust, but, unless and until the cestui que trust intervenes, he must exercise it according to his discretion in the best interests of his cestui que trust”.

From what I have said earlier on in this judgment on some of the issues identified by the defendants for determination, it is clear that there is no complaint by the defendants in their grounds of appeal about orders 1 and 5 in the judgment of Odunowo, J. And as I have also said earlier the defendants appear to be satisfied with them. So the question of the two orders being disturbed on the determination of the defendants appeal does not arise. It follows in my judgment that issue 6 in the defendant’s brief of arguments which says:

“If item 4 is also an order/injunction, which could be stayed, will such stay not also affect the declaration stated in item 1 which relates to whether or not exhibit A is the proper memo and articles of association” does not arise for consideration at all. Equally the lower court was, in my judgment; in error to have made as per the lead judgment of Ademola J.C.A. orders 2(a) and 3 which I have copied earlier on in this judgment and which have to do with order 5 of Odunowo, J. As I have said earlier, order 5 was not a live issue in the defendants appeal in the Court of Appeal. In the circumstances, that court ought not to have said anything about that order in the defendant’s application to it for a stay of execution pending the determination of their appeal.

I will now proceed to consider issue 2 in the plaintiff’s brief of arguments which is as follows:”

(ii) Whether the Court of Appeal had jurisdiction to make the orders contained in its decision dated 30.5.89 having regard to the rule in Foss v. Harbottle and, in particular the rule that the court ought not to interfere in matters relating to the internal management of the affairs of a corporation or association save at the instance of the corporation itself or at the instance of a majority of its members”.

The rule in Foss v. Harbottle (supra) has been stated thus in Burland v. Earle (1902), A.C. 83 at 93 cited to us by counsel for the plaintiff, Chief F.R.A. Williams, S.A.N.:

“In that case, the courts allow the shareholders complaining to bring an action in their own names. This, however, is mere matter of procedure in order to give a remedy for a wrong which could otherwise escape redress, and it is obvious that in such an action the plaintiffs cannot have a larger right to relief than the company itself would have if it were plaintiff, and cannot complain of acts which are valid if done with the approval of the majority of the shareholders, or are capable of being confirmed by the majority. The cases in which the minority can maintain such an action are, therefore, confined to those in which the acts complained of are of a fraudulent character or beyond the powers of company”.

It is clear that in the case in hand nobody is seeking any relief in the writ of summons

(1) to interfere with the internal management of a company or

(2) to redress a wrong done to the company or

(3) to recover moneys or damages alleged to be due to the company.

The disputes in the action are essentially as to the shareholdings of shareholders in a company and consequential reliefs in respect thereof. There are also reliefs seeking

(1) to have declared the authentic memorandum and articles of association and

(2) an injunction to restrain the conduct of the affairs of the company other than on the basis of the authentic memorandum and articles of Association.

It goes without saying that for a company to conduct its affairs otherwise than on the basis of its true memorandum and articles of association will be ultra vires the company. In view of my analysis of the claims in the action in the matter now before us on appeal, I cannot see any room for the application of the rule in Foss v. Harbottle (supra) in the action.

The decision in the action will certainly decide who as between the 1st and 2nd plaintiffs on the one hand and 1st, 2nd and 3rd defendants on the other hand, are the majority shareholders in the 3rd plaintiff/company and who are thereby entitled to control the affairs of the company. But in the meantime as a result of the present wrangle between the 1st and 2nd plaintiffs on the one hand and the three defendants on the other hand as to which of them have the controlling interest in the company the conduct of the affairs of the company may suffer.

It is clear law that if owing to disputes among the directors they are unable to act and the affairs of the company cannot be carried on the court will interfere by an injunction or by the appointment of a receiver or manager of the undertaking and assets of the company until the management of the company is restored to a proper footing. See Featherstone v. Cooke (1873) L.R. 16 Ex 298; Trade Auxiliary Co. v. Vicker L.R. 76 Ex 303; and Standfied v. Gebbon (1925) W.N. 11 1925.

The above principles will apply in my view in a situation where owing to disputes as to shareholdings the conduct of the affairs of a company will suffer or will be in jeopardy.

In my judgment, the appointment of a receiver or manager of the undertaking and assets of a company in the situations I have just described above will not and cannot offend against the rule of Foss v. Harbottle (supra). In such a situation there is paralysis or imminent paralysis of the conduct of the affairs of the company, which the court by its intervention has to avert by the appointment of a receiver or manager for the company.

This, I believe, was what was operating on the mind of Ademola, J.C.A., when he said in his lead Ruling:-

Amidst the clashes of argument by counsel at the hearing of the application, the affidavit in support of the motion and the counter affidavit in opposition to the motion, there is discernable in my opinion a desire on the part of the warring parties to make the company to which they all belong a going concern until the appeal is heard. This is an understandable desire in view of an outstanding contract of over 100 million naira, the company still has to execute. I believe too Chief F.R.A. Williams, S.A.N., had this in mind when he made the following proposals to the trial court at the hearing of an application for a stay of execution there:-

“Chief F.R.A. Williams: But we felt we can nevertheless usefully spend this morning in resolving the anxieties of my learned friend.

It would have been more realistic to ask for an order that pending the determination of the appeal, the 1st & 2nd plaintiffs shall be restrained from exercising the right attached to the shares which the court has declared to be owned by them. But your Lordship will have to balance any such application by a consideration of our own interest, having regard to the principle that a successful party should not be deprived from enjoying the fruits of judgment. Bearing those principles in mind and having regard to all the circumstances of this case, we respectfully submit that there are 2 alternatives open to this court. These alternatives are to last until the determination of the appeal.

That the 3rd plaintiff company be managed by a board of receivers

(2) the second condition is as follows: The business of the 3rd plaintiff company should be run by a board of receivers and managers.

In my judgment, I cannot see, as I have just said, any violation of the rule in Foss v. Harbottle by the order of the Court of Appeal appointing receivers and managers for the 3rd plaintiff company if the orders were rightly made on the material time before that court. The question now is: was the order rightly made

This now takes me to the consideration of issue 3 in the plaintiff’s brief of arguments which is to the effect whether or not it was proper for the court below to have made the appointment of receivers and managers for the 3rd plaintiff/company.

It is the submissions of counsel for the plaintiff, both in the plaintiff’s brief of arguments and in his oral address to us that it was wrong of the court below to have made the order. First he submitted that on an application for a stay of execution like the one the subject of this appeal, a court cannot grant a relief in the form of appointment of a receiver and a manager. He referred to the following propositions in Kigo v. Holman (1980) 5 S.C. at page 70 the court from which an appeal lies as well as the court to which an appeal lies have a duty to preserve the res for the purpose of ensuring that the appeal, if successful, is not nugatory. He further submitted that an application to preserve the pending the determination of an appeal may take any one of the following forms:

(i) stay of execution

(ii) stay of proceedings

(iii) injunction

(iv) appointment of a receiver or receiver and manager; and

(v) payment of damages into court or into a bank in the name of a stakeholder.

But, counsel continued, in an application in one form the court cannot grant a relief in another form.

I think that as a general proposition of law counsel for the plaintiffs is correct.

In fact this court said in Government of Gongola State v. Tukur (supra) inter alia, as per the lead judgment of Obaseki, J.S.C.:-

The Court of Appeal cannot go outside the terms of the motion however misconceived it is. It is bound by the terms or prayers in the motion filed. (Commissioner for Works Benue State v. Devon Construction Co. Ltd. (1988) 3 N.W.L.R. (Pt.83) 407 at 420). Since there was nothing to stay, the Court of Appeal was in error to have made the order prayed for. In that case, there was an appeal against the decision of a Federal High Court, to the Jos Division of the Court of Appeal that it had jurisdiction to hear the case. The Court of Appeal held that the trial court had jurisdiction to hear part of the claims in the case, but no jurisdiction as to the rest of the claims. As regards the latter decision, pursuant to an application for a stay of execution of its judgment pending appeal, the Court of Appeal granted a stay simpliciter. There was an appeal against the order for stay of execution. It was in these circumstances that this court said, as per Obaseki, J.S.C., that since there was nothing to stay the Court of Appeal was wrong to have made the order prayed for. There was no question as to whether the Court of Appeal could make such further order or orders as it might deem fit to make in the circumstances of the case before it.

We must therefore not forget that the matter, the subject matter of the appeal before us relates to an action in a Federal High Court.

And in section 11 of the law creating that court Federal Revenue Court Decree, Decree No. 13 of 1973, it is provided as follows:-

The Federal Revenue Court in the exercise of the jurisdiction vested in it by or under this decree shall, in every cause or matter have power to grant, either absolutely or on such terms and conditions as the court thinks just, all such remedies whatsoever as any of the parties thereto may appear to be entitled to in respect of any legal or equitable claim properly brought forward by them in the cause or matter so that, as far as possible, all matters in controversy between the parties may be completely and finally determined and all multiplicity of legal proceedings concerning any of those matters avoided. In this regard too I refer to the following passage in the judgment of the Privy Council in Beigh v. Shaw 5 W.A.C.A. 16 at 22:-

The Court of Appeal held that this decision could not be supported because no claim had ever been made against the executor on the basis of wilful default. Undoubtedly, the original writ was framed only for relief on the basis of a common administration order. and if the action had been brought in England the beneficiary would not have been permit to allege a breach of trust or wilful default without amending his claim and probably also his writ.

But the procedure in West Africa is more informal. By the rules of the Supreme Court of the Colony of Gambia (1928) 0.23 r.1, suits are ordinarily to be heard and determined in a summary manner without pleadings, and by O. 16 r. 2, the plaintiff may obtain any such equitable relief as the facts stated and proved entitle him to, though not specifically asked. The fact therefore that in a case like the present where no pleadings were ordered the writ makes no mention of wilful default, is not fatal to a decree based on such a claim. Had there been pleadings they could have been amended in a proper case if amendment had been applied for. Where, however, there are no pleadings, no amendment is possible, but there is no reason why the plaintiffs case should not be treated as it if had been formally stated on a pleading and formally amended by a plea of wilful default. Their Lordships agree nevertheless that unless such a claim was plainly made, submitted to and dealt with at the hearing, it would not be proper to grant any relief based upon a finding of willful default.

(Italics mine)

By virtue of section 16 of the Court of Appeal Act, the lower court has all the powers of the trial court, i.e., the powers the Federal High Court has in the matter before it which is now before us on appeal.

So, in my view, the lower court, in order to settle completely and finally the matters in controversy between the parties to this appeal in the matter before the lower court and in order to avoid multiplicity of legal proceedings concerning any of those matters, can grant all such remedies as any of the parties may appear to be entitled to. However, in my judgment a party will appear to be entitled to such a remedy only after a claim to it has been plainly made out though not formally claimed and dealt with according to the relevant principles governing such a claim if it had been formally made.

In the application now before us on appeal there is prayer 3 which says:

And for such further order or other orders as this Honourable Court may deem fit to make in the circumstances.

It can be said in my judgment that there is a statutory backing for this type of prayer in the Federal High Court in section 11 of the Federal Revenue Court Decree to which I have referred to above. There is statutory jurisdiction in the trial court under section 13 of the Federal High Court to grant an injunction or appoint a receiver by an interlocutory order in all cases in which it appears to it to be just and convenient to do so. I am satisfied that the lower court has the same power in the matter now on appeal.

So, in my judgment, because of what I have hitherto been saying, the lower court has the power to appoint a receiver and manager in the present application for a stay of execution. In doing so however it must appear just and convenient to it to do so. In the latter regard I refer to Halsbury’s Law of England, Vol. 21, page 348 para.

“370.Meaning of just or convenient.

The words just or convenient in the statutory provision (k) must be read just, as well as convenient (1). They do not mean that the court can grant an injunction simply because the court thinks it convenient, but mean that the court should grant an injunction for protection of rights or the prevention of injury according to legal principles (m). They confer no arbitrary nor unregulated discretion on the court, and do not authorise it to invent new modes of enforcing judgment in substitution for the ordinary modes (o).”

(italics mine)

As I have said earlier on in this judgment, a manager for the preservation of the business or property of a company can be appointed pending civil litigation or appeal, as to rights of the parties. See also Shepherd v. Oxenford 855 K & J 491.

Having satisfied myself that the lower court had jurisdiction to make the appointment I have to refer to the law as to the proper exercise of the power. In this regard, I refer to Halsbury’s Laws of England, Third Edition, Volume 32 At. Page 393

First:. “633.The court in exercise of its statutory power (x) appoints a receiver in many cases

(a). in which the old Court of Chancery would not, as a matter of practice, have intervened

(b). In some cases, as in proceedings to enforce an equitable charge

(c). the appointment is made as a matter of course as soon as the applicant right is established. In most cases, however, the appointment is discretionary, and in cases where the Court of Chancery had previously no jurisdiction to appoint a receiver the court does not exercise the statutory power conferred on it

(d). Apart from appointments by way of equitable execution

(e). or to enforce a charge

(f). the general ground on which the court appoints a receiver is ultimately in every case the protection or preservation of property for the benefit of persons who have an interest in it (g).(Italics mine)

Second: At. 664 Page 411: Duty of receiver.

Before the appointment by the court of a receiver is completed, he must, unless the order otherwise directs, give security duly to account for this receipts and to pay the same as the court or Judge shall direct (i). If time for giving security is fixed by the order the appointment lapses unless the security is completed within that time or an extension of time is obtained; otherwise a new order of appointment must be obtained (k).

Third: At. 670 Page 413: When security is dispensed with. In certain cases a receiver appointed by the court is not required to provide sureties (r). If all the parties interested in the property are sui juris and themselves nominate the receiver, security may be dispensed with at their request (s); but if the nomination is made by the court on a reference to chambers, security is usually required, even though all parties are sui juris and are willing to dispense with it (t). Let us now see how the lower court exercised this discretionary power.

There is no indication in the ruling of Ademola, J .C.A., of 30/5/85 appealed against that the conduct of the business of the 3rd defendant/company would suffer or was in jeopardy as a result of the dispute between the parties to this appeal as to their rights in it. The impression one gets from the ruling is that the learned Justice of Appeal made a consent order as regards the order for the appointment of receivers and managers. Vide the following passages in the judgment:-

During the course of argument before the court, Chief Benson now showed some accommodation to the proposal outlined by Chief Rotimi Williams, learned counsel for the respondent in this matter.

There would, therefore, be a stay of execution on the following conditions:-

(1) There would be a board of receivers and managers for this company pending the determination of the appeal.

(Italics mine)

The ruling of Kalgo, J .C.A., bears out the point I have just made clearly:-

I have before now read in draft form, the ruling just delivered. I agree with it. The most important consideration in this matter, in my view, is that the company concerned, Albion Construction Limited, should be allowed to run as a going concern while all actions in court are going on. Both learned counsel in this application have conceded that this is very essential and are prepared to accept a compromise which would produce the desired result. In my view, the conditions for the (sic) set out in the ruling just delivered, would in the circumstances be just and fair to both parties pending the determination of the appeal.(Italics mine)

If there had been such an agreement between the parties and having regard to the adversary system in civil litigation in our court that consent order would have been rightly made.

In the instant case, Chief Williams, S.A.N., for the plaintiffs has submitted to us that there was no such agreement in the lower court. Chief Benson, S.A.N., for the defendants agreed to this. The truth of the matter is that as I have shown earlier on in this judgment, Chief Williams, S.A.N., at the hearing of the application for a stay of execution at the trial court made some proposals for the appointment of receivers and managers for the 3rd plaintiff/company. But following the non-acceptance of the proposal by Chief Benson, S.A.N., counsel for the defendants, Chief Williams, S.A.N., withdrew them in that court. The proposals were repeated by Chief Williams, S.A.N., in the lower court. So the proposals were not before the lower court. For the lower court to have grounded its appointment of receivers and managers for the 3rd plaintiff/company on a non existent accord between the parties to the appeal before it amounts in my judgment to the exercise of its statutory power in this regard on wrong considerations. In effect, the lower court has not properly decided that it was just and convenient to appoint receivers and managers for the 3rd plaintiff/company. This being so I am satisfied that I am entitled to interfere with the appointment. And seeing that the respondent to this appeal, the defendants have not filed any notice of intention to contend that the decision of the court below should be affirmed on grounds other than those relied on by that court, under order 8 rule 3(2) of the rules of this court, I have no choice but to set aside the order appointing the receivers and managers for the 3rd plaintiff/company.

In the instant case, the lower court has not directed the receiver’s appointment by it to give security duly to account for their receipts and to pay the same as court shall direct. The law on this point as shown earlier on in this judgment is that before the appointment by the court of a receiver is completed, he must unless the court otherwise directs, give such a security. If this were the only defect in the appointment by the lower court of receivers and managers for the 3rd plaintiff/company. I am of the view that there is sufficient power in this court under section 22 of the Supreme Court Act, 1961, to remedy this lapse on the part of the Court of Appeal, by ordering the receivers and managers to give the necessary security before beginning to act such. In other words I would not because of this lapse alone have set aside the appointment.

In the result, the appeal of the plaintiffs/appellants is allowed by me. The order of the lower court granting a stay of execution in the matter now on appeal together with the whole of the conditions attached to the stay of execution including the appointment of a board of receivers and managers for the 3rd defendant/appellant is hereby set aside by me.

The order of Odunowo, J., at the trial court on the stay of execution of the order directing the third defendant to execute an instrument of transfer in respect of 51% or 102,000 shares which, according to the declaratory judgment, he holds in trust for the 1st plaintiff is restored without prejudice to any of the declaratory judgments granted by the court.

The plaintiffs/appellants are entitled to their costs in this court and in the court below which I assess at N500.00 and N300.00 respectively.

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SC.206/1989