Continental Industrial Gases Ltd. & Ors V. Onatolu Onafeko (2002)

LawGlobal-Hub Lead Judgment Report

R.D. MUHAMMAD, J.C.A.

By paragraph 59 of his further amended statement of claim, the plaintiff (who is now the respondent) claimed against the defendants (now the appellants) as follows:-

“59. Whereof the plaintiff claims as follows:-

a) The sum of N370,000 being the total sum owed by the 1st, 2nd and 3rd defendants for equipment, etc, and services provided as well as loan and for compound interest thereon from September, 1998 and upon which interest is now payable at the rate of 15% per annum from 1/10/88 until final payment.

b)(i) The sum of $38,000 being the plaintiff’s share of the total commission of $114,000 paid to the plaintiff, 2nd and 3rd defendants, through the 1st defendant as agents of Japan Engineering Consultant and Exports Inc. sellers of plants and machinery, but which the 1st defendant refused to pay to the plaintiff despite his repeated demands or in the alternative the sum of N836,000 the exchange value of $38,000 at the official exchange rate of N22.00 to a dollar.

(ii) The sum of $37,500 being the plaintiff’s share of the total commission of $112,000 paid to the plaintiff, 2nd and 3rd defendants, through the 1st defendant, as agents of Messrs Brodrene Eeholm A – A of Denmark, the sellers to the 1st defendant of generators, chemicals and other materials, but which share of the plaintiff was not paid to him by 1st, 2nd and 3rd defendants despite repeated demands or alternatively the sum of N825,000, the exchange value of $37,500 at the official exchange value of N22.00 to a dollar.

(iii) Plaintiff is entitled to interest on items b(i) and (ii) at the rate of 15% per annum from 1/4/85, until judgment and thereafter, at the rate of 6% per annum until final judgment.

(c) The sum of N900.000 being for special damages for loss of director’s fees earning as an Executive Director and loss of anticipated profits/dividends as a shareholder of the company as well as for loss of privileges.

(d) The sum of N29,312 being balance of the total sum of N103,630 expended by the plaintiff for the 1st defendant/ company at its request and upon which, the plaintiff is entitled to compound interest at the rate of 15% per annum from 11/9/82, when the said sum of N74,318 was paid until judgment and thereafter at the rate of 6% per annum compound interest.

(e) The sum of N100,000 being for general damages.”

In a reserved judgment, the learned trial Judge held that the plaintiff had by credible evidence proved his claim. He then awarded the plaintiff virtually all the reliefs claimed in the amended statement of claim. The defendants were dissatisfied with the decision.

They appealed to this court. The amended notice of appeal contained ten grounds of appeal. Without their particulars, the grounds of appeal read:-

“1. The learned trial Judge erred in law, in failing to take into consideration the provision of the 1st defendant’s articles and memorandum of association governing the parties relationship and upon which the defendant’s defence was predicated.

2. Learned trial Judge erred in law, in holding that the 2nd and 3rd defendants were personally and jointly liable in damage for the executive acts of the company, without any proof of any negligence or fraud on their part.
3. The learned trial Judge erred in law, in holding that the defendant was still a Director and member of the 1st defendant company when;
4. The learned trial Judge erred in law, in holding that “the plaintiff has not only proved the head of claim in paragraph 32 of the further amended statement of claim, but has shown that 2nd and 3rd defendants are terrible liars and ingrates.”
5. The learned trial court erred in law, in awarding the sum of N90,000 in favour of the plaintiff for services rendered to the 1st defendant.
6. The learned trial court erred in law, in coming to a conclusion that the plaintiff is entitled to the sum of $38,500 dollars and $37,500 dollars being his share of commission for plant, machinery, and purchase of generators, chemicals and other materials.”
7. The learned trial court erred in law, in awarding the plaintiff the sum of N15,000 for 10 years, in respect of paragraph 58 (ii) (b) and N37,000 in respect of paragraph 32 (g).
8. The learned court erred in law, in coming to the conclusion that the plaintiff was entitled to N29,312 as arrears of rent and interest thereon when.
9. The learned trial court erred in law, in awarding interest on all heads of claims in favour of the plaintiff.
10. The learned trial court erred in law, in entertaining the suit when it had no jurisdiction to do so.”

Briefs of argument were filed and exchanged. The appellants, in their amended brief of argument identified five issues for the determination of this appeal. The respondent in his brief adopted the issues

formulated by the appellants. The said issues for determination are:-

“1. Whether based on the reliefs before the lower court it was right for the court to assume jurisdiction as it did Ground 10.

2. Whether the trial court was right to have held that the plaintiff was still a Director and member of the 1st defendant company when it was not a claim before it. Grounds 1 and 3.
3. Whether from the evidence before the trial court, the plaintiff could be said to have proved his case beyond preponderance of probabilities 4, 5, 6, 7 and 8.
4. Whether it was right for the trial court to hold the defendants jointly and severally liable for the plaintiff’s claims.- Ground 2.
5. Whether it was proper for the trial court to award interest on all heads of claim of the plaintiff. Ground 9.”

It was submitted in the appellant’s brief that the reliefs sought were based on simple contract and cannot fall within the purview of the trial court’s jurisdiction as set out in S. 249 (c) (i) of the 1979 Constitution as well as section 7 of the Federal High Court Act, Cap 134 Laws of the Federation of Nigeria 1990. It was also submitted that it is the claim placed before the court that determines whether or not the court has jurisdiction to try the matter and that the claim before the court must be looked at to ascertain whether it comes within the jurisdiction conferred on the court. In support of this submission, the case of Tukur v. Government of Gongola State (1989) 4 NWLR (Pt.117) 524 was cited. It was contended that the claim before the trial court was for liquidated money demand and damages which does not fall within the jurisdiction conferred on the trial court by either S. 249 of the 1979 Constitution or S. 7 of the Federal High Court Act. It was submitted that the claim could not come under the Companies and Allied Matters Act or the Companies Act, 1968. It was then submitted that the proceedings and judgment was a nullity. In support of this submission, the following cases were relied upon:- Emmanuel Onyema & Ors v. Umaeze Oputa (1987) 3 NWLR (Pt. 60) 259 and Akinbobola v. Plisson Fisko Nig. Lid. (1988) 4 NWLR (Pt. 88) 335. The court was therefore, urged to allow the appeal and set-aside the judgment of the trial Court.

The respondent on the other hand submitted in his brief that the trial court was correct in assuming jurisdiction to entertain the case. It was further submitted that appellants were relying on two different sets of laws to say that the lower court had no jurisdiction, but the two different sets of laws do not have the same effect in law in determining whether or not the trial court correctly assumed jurisdiction to entertain the suit.

It was contended that on the one hand, the appellants were relying on the 1979 Constitution as amended- S 249(i) where the Companies and Allied Matters Act and the Federal High Court Act Cap 134 Laws of the Federation, 1990 were mentioned. It was submitted that the laws came into being after the cause of action arose or long after the commencement of the suit in 1988. On the other hand, the appellants were at the same time saying that the Federal High Court Act, 1973 and the Companies Act, 1968, would apply to oust the jurisdiction of the lower court. It was submitted that it was settled that a law that comes into being after a cause of action arose or after the commencement of a suit is inapplicable to the suit as held in Nzeribe V. Dave Eng Co. Ltd. (1994) 8 NWLR (Pt. 361) 124.

It was further submitted that since the two different sets of laws do not produce the same effect in law in determining the jurisdiction of the Federal High Court to entertain the suit, the appellants by seeking to rely on both sets of laws at the same time are cleverly foisting, on this court, the duty of making a case for them by picking and choosing for them which of the two different sets of laws, this court would construe to determine the issue of jurisdiction. It was submitted that, on the authorities of Shell BP Petroleum Development Company of Nigeria Ltd. v. Tiebo (1996) 4 NWLR (Pt.445) and Onubogu v. The State (1974) 9 SC 1, this court cannot pick and choose for them which of the two different sets to construe.

It was the respondent’s submission that all the appellant’s submission based on the Federal High Court Act, 1973 and the Companies Act, 1968, were incompetent and should be discountenanced. The court is also urged to hold that the Constitution as amended as well as the Companies and Allied Matters Act, 1990, as well as the Federal High Court Act Cap 134, 1990, are inapplicable for the purpose of determining the jurisdiction of the trial court: see: Mustapha v. Government of Lagos State (1987) 2 NWLR (Pt. 58) 539 and Ekezhi v. Military Governor of Bendel State (1992) 3 NWLR (Pt. 227) 39.

It was submitted in the alternative that the assertion of the appellants that the reliefs sought by the respondent did not fall within the jurisdiction of the Federal High Court was totally misconceived as the issues for determination by the lower court related to the operation of a company, because the issues involved the determination of matters relating to the membership, shareholding, profits and dividends, pre-incorporation expenses and loans, investments and directorship of the company. It was contended that all the questions to be resolved involved the operations of the company and therefore that the Federal High Court had jurisdiction to hear them. The court is urged to dismiss this ground of appeal and to hold that the lower court correctly assumed jurisdiction to try the case.

The arguments canvassed by the respondent, in his brief, is ingenious but misconceived. We are dealing with the issue of jurisdiction. Jurisdiction is so vital to the competence of a court to adjudicate over a matter. Any proceeding conducted without jurisdiction is a nullity. It therefore follows, when the issue of jurisdiction is properly raised before a court, it cannot be swept aside. It has to be determined one way or the other, because a court either has or has no jurisdiction. There is no two way about it. The fact that a party relies on the wrong law or relies on two different sets of laws in challenging a court’s jurisdiction, will not in my opinion stop this court from determining whether or not the lower court has jurisdiction. Reliance on two different sets of laws or on the wrong law will neither confer on nor deprive a court of jurisdiction. It is the statute that creates the court that prescribes the extent of its jurisdiction.

This court cannot refuse to resolve the issue of jurisdiction, where it is properly raised, simply because the wrong law is relied upon. I will now consider the facts to determine whether or not the Federal High Court has jurisdiction to entertain the matter.

The law that is applicable to a cause of action is the one in force when the cause of action arose and not at the time when the jurisdiction of the court was invoked. See: Mustapha v. Governor of Lagos State (1987) 5 SC 114, (1987) 2 NWLR (Pt.58) 539 where Nnamani JSC stated at page 136:-

“It seems settled, and indeed it was not a matter seriously in dispute between the parties, that the law applicable to these proceedings was the law at the time, the cause of action arose and not at the time the jurisdiction of the court was invoked.” See also Uwaifo v. A.-G., Bendel State (1982) 4 NCLR 1; Alao v. Akano (1988) 1 NWLR (Pt.71) 431 and Ekezhi v. the Military Governor, Bendel State (1992) 3 NWLR (Pt. 227) 39.

Even though, the writ of summons was issued on 8th June, 1988, from the statement of claim filed, the cause of action arose from 1978 to 1988. The applicable law to the suit is therefore, the law as it existed in 1978. The law applicable when this cause of action arose was the Federal Revenue Act, 1973, which established the Federal Revenue Court. The Federal Revenue Court was restyled and became the present Federal High Court by the 1979 Constitution. The jurisdiction conferred on the Federal High Court is set out in section 7 of the Federal High Court Act, 1973, which provides as follows:”

7(i) The Federal Revenue Court shall have and exercise jurisdiction in civil causes and matters –

(a) relating to the revenue of the government of the Federation in which the said Government or any organ thereof or a person suing or being sued on behalf of the said Government is a party;

(b) connected with or pertaining to:-

(i) the taxation of companies and of the other bodies established or carrying on business in Nigeria and all other persons subject to Federal taxation;

(ii) custom and excise duties;

(iii) Banking, foreign exchange currency or other fiscal measures;

(c) arising from

(i) the operation of the Companies Decree 1968 or any other enactment regulating the operation of companies incorporated under the Companies Decree 1968;

(ii) any enactment relating to copyright, patents, designs, trade marks and merchandise marks;

(d) of Admiralty jurisdiction.

2. The Federal Revenue Court shall also have and exercise jurisdiction and powers in respect of criminal causes and matters arising out of or connected with any of the matters in respect of which jurisdiction is conferred by subsection (1) of this section.”

The jurisdiction of the Federal High Court as prescribed by S.7 has been interpreted by the Supreme Court in many cases. See for instance Jammal Steel Structures Co. Ltd. v. Africa Continental Bank (1973) 1 All NLR (Pt. 2) 208; American International Insurance Co. v. Ceekay Traders Ltd. (1981) All NLR (Pt. 1) 58; Bronik Motors Ltd. v. Wema Bank Ltd. (1983) 1 SCNLR 296; African Newspapers of Nigeria Ltd. v. Fed. Rep. of Nigeria (1985) 2 NWLR (Pt. 6) 137 and Savannah Bank of Nigeria Ltd. v. Pan Atlantic Shipping & Transport Ltd. (1987) 1 NWLR (Pt. 49) 212.

It is trite the jurisdiction of a court is determined by plaintiff’s claim. See: Tukur v. Government of Gongola State (1989) 4 NWLR (Pt. 117) 517 where the Supreme Court stated at page 549 that:-

“It is a fundamental principle that jurisdiction is determined by the plaintiff’s claim (Izenkwe v.Nnadozie 14 WACA 361 at 363 per Coussey, J.A; Adeyemi v.Opeyori (1976) 9-10 SC 31 at 51). In other words, it is the claim before the court that has to be looked at or examined to ascertain whether it comes within the jurisdiction conferred on the court. [See Western Steel Works v. Iron and Steel Workers (1987) 1 NWLR (pt.49) 284]. Judges have no duty and indeed no power to expand the jurisdiction conferred on them but they have a duty and indeed jurisdiction to expound the jurisdiction conferred on them. [See The African Newspapers of Nigeria Ltd. and Ors v. The Federal Republic of Nigeria (1985) 1 All NLR 50 at 75; (1985) 2 NWLR (Pt. 6) 137 at 165]. In the process of expounding the jurisdiction conferred on them the courts have always emphasised the need to decline jurisdiction where its exercise will determine issues it has no jurisdiction to hear and determine. I will, in this regard, refer to two authorities (both of them decisions of this court) which settled the law long before the 1979 Constitutional provisions. They are Lasisi Ajibola Odunsi v. Aminu Ojora (1961) All NLR 283 and Aronold Nwafia v. Ububa (1966) NMLR 219.”

I will now consider the respondent’s claim (who was the plaintiff at the lower court) to determine whether or not the claims fall within the jurisdiction of the Federal High Court. I have set out in full the claim at the beginning of this judgment.

The alternative argument proffered by the respondent in his brief was that the reliefs sought by the respondent related to the operation of a company, because the issues involved the determination of matters relating to the membership, shareholding, profits and dividends, pre-incorporation expenses and loans, investments and directorship of the company. The appellants on the hand argued that the issue between the parties was purely a commercial one which has nothing to do with matters arising from the operation of the Companies Act, 1968.

Looking at the claims it could be seen that in 59 (a) the respondent is claiming “N370,000 being the total sum owed”. This is a claim for a debt simpliciter; 59 (b) (i) and (ii) are for various sums of money in US dollars which are said to be “plaintiff’s share of the total commission… paid to the plaintiff.” These two heads of claim are, in my opinion, simple debt which has nothing to do with the operation of the Companies Act, 1968. 59 (iii) is a claim for interest on 59 (b) (i) and (ii). This is an ancillary claim. It stands or falls with b(i) and (ii). 59 (c) is a claim “for special damages for loss of directors fees, earnings as an executive director and loss of anticipated profits/dividends as a shareholder of the company as well as for loss of privileges.” This claim in my opinion is for remuneration as a director of a company, I don’t think this head of claim falls within the operation of the Companies Act, 1968. 59 (d) is a claim said to be “balance of the total sum… expended by the plaintiff for the 1st defendant/company at its request.” This in my view is a loan to the company and has nothing to do with the operation of the Companies Act, 1968. 59 (e) is a claim for general damages. Needless to say, this claim is outside the operation of the Companies Decree, 1968.

It could therefore, be seen that none of the heads of claim fall within the operation of the Companies Act, 1968. This being so, the Federal High Court has not jurisdiction to entertain the matter. My answer to issue No.1 is therefore, in the negative. Based on the reliefs sought before the court, the lower court has no jurisdiction to entertain the matter.

Having arrived at this decision, this has effectively disposed of the appeal. Since the Court has no jurisdiction, the proceedings before the lower court was a nullity. There is, therefore, no need to consider the remaining issues.

In the circumstance, the appeal has merit and is allowed by me. The decision of Egbo-Egbo, J is set aside. In its stead, I make an order striking out the suit for want of jurisdiction. I make no order as to costs.

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Other Citations: (2002)LCN/1249(CA)