Josiah Cornelius Limited & Ors V. Chief Cornelius Okeke Ezenwa (2002)

LAWGLOBAL HUB Lead Judgment Report

A. KALGO, J.S.C. 

This case has had a chequered history. It originated in the Federal High Court Lagos where the respondent filed 4 separate petitions for winding up of the appellants in April, 1991. The respondents separately filed replies to the petitions together with verifying affidavits sometimes in May, 1992. The Federal High Court heard the petitions and in a considered judgment delivered by Jinadu, J., (as he then was) on the 12th of August, 1992, he said:

“I therefore refuse the prayer to wind up the respondents but will make other orders under section 312 aforesaid. But deciding what power to invoke under the provisions of section 312 aforementioned, I must by law invite learned counsel on both sides to address this court.”

Reference to section 312 here means section 312 of the Companies and Allied Matters Act. Therefore the case suffered a lot of adjournments but subsequently counsel were heard and on the 30th of July, 1993, the learned trial Judge finally ordered:

“1. That the petitions are accordingly hereby struck out with N2,000.00 costs in favour of the respondents.

2. That the majority shareholder Mr. Nnoruka shall buy the shares of the minority shareholder Mr. Ezenwa at a fair value to be assessed by Mr. Tajudeen Odofin of Dapo Odofin & Company, Chartered Accountants of 15, St. Agnes Street, Off Birell Avenue, Sabo, Yaba, who is hereby specifically appointed to assess the fair value of the shares of the minority shareholder in the four companies and his assessment shall form part of the order of this court.
3. That the majority shareholder is hereby ordered to pay to the minority shareholder any sums assessed by the appointed chartered accountants as a fair value for the shares of the minority shareholder in the four companies.
4. That the names of the four companies should be changed by substituting new names for the said companies in compliance with the provision of clause II of the joint ventures agreement dated 9th day of July, 1989.
5. The receiver/manager is hereby granted a period of 3 (three) months ending 30th October, 1993 to finalise the affairs of the four companies with a view to handing over to the majority shareholder who will also pay for the shares of the minority as assessed by Mr. Odofin and who will also effect the change of names of the companies within a period of 3 months from 30th July, 1993.”

The respondent appealed to the Court of Appeal against this decision and his appeal was allowed and the orders were set aside. The appellants were dissatisfied and they appealed to this court. The appeal was successful and decision of the Court of Appeal was set aside and that of the trial court was restored. The matter still returned to the Federal High Court Lagos and on the 2nd of July, 1997 the amount of N116,708,678.80 was adjudged by that court of being the fair value in monetary terms of the shares of the minority shareholder in the four (4) companies. And by an application dated 17th September, 1997 the respondent prayed the trial court to direct the appellants to prepare and execute instrument of transfer of his shares and direct the time within which the agreed amount of N116,708,678.80 shall be paid to him by the appellants. And on the 18th September, 1997, the appellant filed an application praying the court for enlargement of time within which to pay the respondent the sum of N116,708,678.80 by instalments according to the schedule attached to the application. He also prayed the court to order the respondent to surrender to him all the title documents relating to the assets of the 4 companies involved prior to the payment mentioned above. The trial court heard arguments of counsel on the two applications and on 7th November, 1997 ruled:

“1. That the majority shareholder shall pay to the minority shareholder on or about the 31st day of January, 1998 the sum of N30,708,678.80 and thereafter liquidate the balance of N86 million by equal annual instalments of N8.6 million effective from 31st day of January, 1999 to end on the 31st day of January, 2008 when the last instalment shall be paid. There will be 2% interest on the sums remaining unpaid. All payments shall be made through the chief registrar of this court. Simultaneously upon the payment of the sum of N30,708678.80 on the 31st of January, 1998, through the chief registrar, the minority shareholder shall through the chief registrar hand over all the title documents of all the properties of the four (4) companies to the majority shareholder who becomes the owner of all the properties. To achieve this, the majority shareholder shall prepare all title documents for execution by the minority shareholder on or before the 31st day of January, 1998.

2. That upon any default in the payment of the yearly instalments of N8.6 million all the outstanding balance shall become due and payable.
3. That the payment of the fees of all professionals shall be made in the proportion of 60% by the majority shareholder and 40% by the minority shareholder on or before the 31st day of January, 1998.
4. That the receiver/manager shall register the new names of the four (4) companies for handing over to the majority shareholder on or before the 31st day of January, 1998, to this end the two parties shall make available to the receiver/manager all documents necessary to facilitate the said exercise.”

Dissatisfied with this order, the respondent again appealed to the Court of Appeal which after hearing the appeal made the following orders per Oguntade, JCA: .

“1. The majority shareholder is to pay to the appellant the minority shareholder the sum of N116,708,678.80 being the value in monetary terms of the shares of the appellant in the four respondents/companies on or before 30th April, 2002.

2. The appellant shall release to the receiver/manager all the documents of title to the shares in respondents/companies upon his being paid the full sum of N116,708,678.80 and the receiver/manager shall release the documents of title to the majority shareholder Chief J. O. Nnoruka.
3. I do not see any need to make any order as to payment of interest in view of the short time I have allowed for payment of the judgment debt.
4. If the majority shareholder had complied with the order to pay N30,708,678.80 to the chief registrar of the lower court, the said chief registrar shall forthwith pay the said sum to the appellant such that the balance to be paid by the majority shareholder shall correspondingly be reduced to N86 million.
5. I make no order as to cost.”

In this court, learned counsel for the parties filed and exchanged their respective briefs in this matter. The appellants identified two issues for the determination of this court to wit:

1. Whether the court below was right in holding that the reasons given by the trial court for arriving at the orders which it made were in law irrelevant and untenable and therefore insufficient to sustain the orders which it made.
2. Whether the lower court {sic} was not in error in law to have interfered with the trial court’s exercise of its discretion in ordering an instalmental payment by the majority shareholder of the total value of the shares of the minority shareholder.”

The respondent on the other hand formulated only one issue for determination and that is: “Whether the Court of Appeal was right in holding that the reasons given by the trial court for arriving at the orders which it made were in law irrelevant and untenable and therefore incapable of sustaining the orders which it made.”

Looking at the issues raised by the parties counsel in their respective briefs appears to me that issue No. 1 of the appellants is very much identical to the only issue of the respondent. I will therefore adopt and consider the two issues identified by the appellant in this appeal having regard to the grounds of appeal earlier filed.

The two issues of the appellants taken together deal with whether the reasons given by the learned trial Judge before making the orders in his ruling under appeal were irrelevant and untenable in law, and insufficient in sustaining the exercise of the discretion to make the orders. I therefore intend to consider them together.

It is common ground that the person who was ordered by the trial court to pay the fair value of the respondent’s shares in the 4 companies concerned nay Mr. Josiah Samuel Okechukwu Nnoruka, is a close friend of the respondent and both of them together in the spirit of friendliness incorporated the 4 companies in the share proportion of 60% to Mr. Nnoruka and 40% to the respondent. It is also common ground that this order was later confirmed by the Supreme Court in its judgment delivered on 16th April, 1996. It is also clear and undisputed that after the trial court settled the question of fair value of the shares of the respondent in the 4 companies at N116,708,678.80 on the 2nd of July, 1997 none of the parties challenged it. On the 17th September, 1997 the respondent brought an application in the trial court praying for orders: