Leaders & Company Limited V. Christlieb Plc & Ors (2016)
LawGlobal-Hub Lead Judgment Report
SIDI DAUDA BAGE, J.C.A.
This is an appeal against the judgment of the Honourable Justice J.E. Shakarho of the Federal High Court sitting at Lagos in suit No. FHC.L.CS.540/2004, delivered on the 13th of December, 2010. The Plaintiff (now 1st Respondent) at paragraph 34 of the amended statement of claim, claimed against the Defendants jointly and severally as follows:
i. A declaration that the 1st and 2nd Defendants have no right, power, mandates or jurisdiction to act for the Plaintiff or manage its affairs as Managing Director and Company Secretary respectively, particularly to the extent of dissipating, selling off, transferring or assigning to the 3rd Defendant the assets and, or immovable property of the Plaintiff and the appurtenances thereon situate, lying and being at No. 35 Creek Road, Apapa, Lagos.
ii. A declaration that the purported sale, transfer, disposition, alienation or assignment of the Plaintiffs landed property and the appurtenances thereon situate, lying and being at No. 35 Creek Road, Apapa, Lagos by the 1st and 2nd Defendants the 3rd Defendant is in violation of the
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Memorandum and Articles of Association of the Plaintiff, the Companies and Allied Matters Act, ultra vires the powers and jurisdiction of the 1st and 2nd Defendants and therefore, null and void and of no effect whatsoever.
iii. A declaration that the sale, transfer or assignment of the Plaintiffs landed property appurtenances thereon situate, lying and being at No. 35 Creek Road, Apapa, Lagos by the 1st and 2nd Defendants while purportedly managing the affairs of the Plaintiff to the 3rd Defendant without the authority of both the Board of Directors of Plaintiff and its annual General meeting is ultra vires the powers and jurisdiction of the 1st and 2nd Defendants and therefore null and void and of no effect whatsoever.
iv. A declaration that the purported sale or assignment of the Plaintiffs landed property and the appurtenances thereon situate, lying and being at No. 35 Creek Road, Apapa Lagos by the 1st and 2nd Defendants while purported managing the affairs of the Plaintiff to the 3rd Defendant a sum of N18,000,000.00 (Eighteen Million Naira Only) evidenced by a Deed of Assignment dated 6th June, 2002 registered with THE 7TH Defendant is vitiated
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by patent fra and therefore, illegal, null and void and of no effect whatsoever.
v. A declaration that the 3rd Defendant having fraudulent acquired the Landed property of the Plaintiff situate, lying and being at No. 35 Creek Road, Apapa, cannot legally and legitimately mortgage same to any or either of the …… AND 5TH Defendants to secure banking facilities and that any purported mortgage of the said property by the Defendant to either or both of the 4th and 5th Defendants illegal, null and void and of no effect Whatsoever.
vi. A declaration that the purported sale and/or assignment of the Plaintiffs property and the appurtenances thereon situate, lying and being at No. 35 Creek Road, Apapa Lagos by the 1st and 2nd Defendants while purported managing the affairs of the Plaintiff to the 3rd Defendant for a paltry sum of N18,000,000.00 (Eighteen Million Naira) ridiculous, questionable, fraudulent, unconscionable immoral sordid and in utmost bad faith.
vii. An order setting aside the purported sale, transfer assignment of the Plaintiffs landed property and the appurtenances thereon situate, lying and being at No. 35 Creek Road, Apapa, Lagos by the
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1st and 2nd Defendant while purportedly managing the affairs of the Plaintiff to the 3rd Defendant.
viii. An order setting aside the Deed of Assignment dated 6th June, 2002 assigning the Plaintiffs property situate, lying and being at No 35 Creek Road, Apapa, Lagos to the 4th and 5th Defendants for a ridiculous and paltry sum of N18,000,000.00 (Eighteen Million Naira Only).
ix. An order setting aside the Deed of Legal Mortgage dated 10th May, 2004 between the 3rd and 4th Defendants (as Mortgage respectively) on the Plaintiffs property situate, lying and being at No. 35 Creek road, Apapa, Lagos.
x. An order setting aside any lease agreement between the 3rd Defendant on one part and each of the 4th and 5th Defendants on the other part on the Plaintiffs property situate, lying and being at No. 35 Creek Road, Apapa, Lagos.
xi. An order commanding each of the 4th and 5th Defendants to pay rents (commensurate with what obtains in the neighborhood) to the Plaintiff, commencing from the time they took occupation of parts of the plaintiffs property situate, lying and being at No. 35 Creek Road, Apapa, up to the time of judgment or until the Court
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directs otherwise.
xii. In the alternative to (xi) supra, an order directing the 3rd Defendant to return forthwith to the Plaintiff all rents collected from 4th and 5th Defendants on the plaintiff’s property situate, lying and being at No. 35 Creek Road, Apapa, Lagos.
xiii. An order of perpetual injunction restraining any or all of the 3rd, 4th and 5th Defendants either by themselves, agents, privies, servants or through any person or persons howsoever from entering or further entering, taking over or further taking over, trespassing or further trespassing on, exercising right of ownership or possession on the Plaintiffs property and the appurtenances thereon situate, lying and being at No. 35 Creek Road, Apapa, Lagos.
xiv. An order of perpetual injunction restraining either or any of the 4th and 5th Defendant as mortgagees from selling, alienating or transferring or exercising any power of a mortgagee on the Plaintiffs property situate, lying and being at No. 35 Creek Road, Apapa, Lagos further to the Deed of Legal Mortgage dated 10th May, 2000 or any other Deed howsoever.
xv. An order of perpetual injunction restraining the 7th Defendant
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either by himself, agents, servant, privies or acting through any persons howsoever from permitting or allowing or registering any further transaction by any of the 3rd, 4th and 5th Defendants (either by way of mortgage, transfer, sale or assignment of the Plaintiff’s property and all appurtenances thereon situate, lying and being at No. 35 Creek Road, Apapa, Lagos.
The brief summary of this case is as follows:
In November 1999, the 1st Respondent sold its property, 35 Creek Road to the Appellant when the 2nd and 3rd Respondents were the 1st Respondent’s Managing director and Company Secretary respectively. The entire purchase price paid out by the Appellant to the 1st Respondent was NGN105,000,000 (One Hundred and Five Million Naira) as shown on Exhibits G1 and H4. Exhibit G1 is the purchase receipt dated 18th November, 1999, while Exhibit H4 is the covering letter forwarding it. See pages 6 & 8 of the record.
Prior to sale, the property was subject of legal mortgage created in favour of Union Bank Plc by the 1st Respondent. The 1st Respondent was in default and Union Bank wanted to sell the property. The 1st Respondent decided to sell to
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the Appellant in order to liquidate its indebtedness. As a result, Payment for the property was structured as follows:
a. The Appellant remitted to Union Bank Plc (legal Mortgage of the Property) the sum of NGN87,000,000 (Eighty Seven Million Naira) in full liquidation of the loan owed by the 1st Respondent to the legal mortgagee;
b. The balance of N18,000,000 (Eighteen Million Naira) was paid to the 1st Respondent as endorsed on the Deed of Assignment.
c. However, as a form of protection, the 1st Respondent and the Appellant signed a Deed of Indemnity to the effect that should there be any defect in title, the 1st Respondent shall indemnify the Appellant the total sum of N105,000,000 (One Hundred and Five Million Naira).
Consequent upon the sale, the Appellant took possession and has been exercising ownership and possessory rights in and over the property from 1999 till date without any let or hindrance. However, 5 years after the sale, precisely in 2004, Ademola Majekodunmi commenced the suit from which this appeal arose in the name of the 1st Respondent seeking declaration of title to the property and reversion of title to the 1st
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Respondent on the ground that the 2nd and 3rd Respondents were not properly appointed to act as the managing Director and Company Secretary at the time of sale.
The Appellant filed a preliminary objection to challenge the jurisdiction of the Court to entertain the matter because it relates to alienation of rights to land. The lower Court in its judgment, upheld the claim of the Plaintiff (now the 1st Respondent) and dismissed the preliminary objection and the Appellant’s defence. The Appellant being dissatisfied with the judgment, has now appealed to this Honourable Court on grounds contained in the amended notice of appeal dated 25th March, 2015, but deemed properly filed and served on 13th April, 2015.
ISSUES FOR DETERMINATION
It is the respectful submission of the Appellant that this appeal raises 8 (eight) issues for determination and the issues are as set out hereunder:
i. Whether the trial Court has jurisdiction over the subject matter of this suit? Relates to grounds 1, 2 and 3 of the notice of appeal
ii. Whether from the totality of evidence adduced at trial (especially Exhibits A6, G1, G2, G3, G4 and H4), it can be said that
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the sale of the property is caught by the Doctrine of Lis pendens and that the 2nd and 3rd Respondents are in disobedience of Court order? Relates to grounds 4 & 5 of the notice of appeal
iii. Whether on a proper evaluation of all the evidence adduced at trial, the Appellant could be adjudged to have notice of the defect in the appointment or capacity of the 2nd and 3rd Respondents to dispose of 1st Respondent’s property as at the time of sale? Relates to ground 6 of the notice of appeal.
iv. Whether by virtue of Sections 244 (2), 260 and 542 of the Companies and Allied Matters Act and the undisputed fact that the 2nd and 3rd Respondents acted as Managing Director and Company Secretary of the 1st Respondent at the time of sale of the property by the 1st Respondent to the Appellant, the sale transaction could be annulled on ground that 2nd and 3rd Respondents lack “locus standi”? relates to grounds 8 & 9 of the notice of appeal.
v. Whether there was a two-man interim management committee appointed over the affairs of the 1st Respondent in November, 1999, when the property was sold? Relates to ground 7 of the notice of appeal.
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vi. Whether the trial Court can go outside the pleadings of the parties, to rely on the address of the 1st Respondent’s counsel, to set aside the sale of the property to the 3rd Defendant/Appellant on the ground that the sum of NGN18,000,000 (Eighteen Million Naira) shown on Exhibit A7 amounts to fraud on the Government of Lagos State? Relates to ground 13 of the notice of appeal.
vii. Whether considering suit No. FHC/L/CS/1206/2002 and the purport of the ruling of 5th March, 2003 (Exhibit C) made therein, the 2 man committee is not the proper persons to authorize the institution and commencement of the suit, if yes, whether the suit is not an abuse of Court process? Relates to grounds 10 & 11 of the notice of appeal.
viii. Whether the 1st Respondent proved its case against the Appellant and was entitled to judgment? Relates to grounds 12 & 14 of the notice of appeal.
On the other hand, the learned counsel to the 1st Respondent, Rotimi Jacobs, SAN, formulated the following eight (8) issues for the determination of this appeal as follows:
1. Whether the Federal High Court has no jurisdiction to entertain the case of the Plaintiff/1st
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Respondent as contained in its processes filed before it. (see grounds 1, 2 and 3 of the amended notice of appeal.)
2. Whether the lower Court was not right in holding that the 1st and 2nd Defendants were not properly appointed as the Managing Director and Company Secretary of the Plaintiff/1st Respondent’s company and thereby lacked the authority to sell the property of the Plaintiff to the 3rd Defendant/Appellant. (See grounds 8 and 9).
3. Whether the 3rd Defendant/Appellant had no notice of the defect in the appointment or capacity of the 1st and 2nd Defendants to dispose of the Plaintiff/1st Respondent’s property. (see ground 6).
4. Whether the lower Court was not right in holding that the Plaintiff/1st Respondent’s suit does not constitute an abuse of process of Court. (see grounds 10 and 11)
5. Whether the lower Court misapplied the doctrine of lis pendens to the facts presented by parties before it. (See grounds 4 and 5).
6. Whether the lower Court held wrongly that action of the 1st and 2nd Defendants in selling property at 35, Creek Road, Apapa, Lagos was ultra vires in that they failed to seek or obtain the consent and/or
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authority of the two man interim management committee appointed or constituted by the Court. (See ground 7).
7. Whether the lower Court was not right in holding that the sum of N18 million shown in Exhibit A7 amounted to fraud as same was intended to defraud the Government of its revenue. (see ground 13).
8. Whether the Plaintiff/1st Respondent did not prove its case against the Appellant to be entitled to the judgment of the lower Court.
This Court on examination of the two sets of issues, eight [8] on either side, found no difficulty, in arriving at the fact that, they are similar, but couched differently. In that regard therefore, this Court is persuaded to consider the appeal, based on those issues as proposed by the Appellant.
ISSUE ONE [1]
Whether the trial Court has jurisdiction over the subject matter of this suit? [Relates to grounds 1, 2 & 3 of the notice of appeal.]
Learned counsel to the Appellant in his argument to this issue contended that, the trial Court was wrong to have assumed jurisdiction to entertain the suit because the 1st Respondent’s claim borders on land. It is evident from the claims of the 1st
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Respondent and the facts of this case that, the real issue in controversy centres on the validity of transfer, assignment or sale of its interest in and over land, No. 35 Creek Road, Apapa, Lagos State, to the Appellant. The 1st Respondent seeks the nullification of the sale of its land and reversion of title to it. The claims have nothing to do with operation or regulation of company under the Companies and Allied Matters Act (CAMA), hence Section 251 (1) (e) of the 1999 Constitution (as amended) does not apply. (See the specific declaratory reliefs sought by the 1st Respondent), at pages 32 – 34 of the record. The jurisdiction of a Court is determined by the reliefs sought by the Plaintiff in the statement of claim. See TUKUR VS GOVERNMENT OF GONGOLA STATE (1989) 4 NWLR (Pt. 117) 517 at 549 para B; ADEYEMI VS OPEYERO (1976) 9-10 S.C. 31 AT 51. WHAT THE 1st Respondent sought before the lower Court was the invalidation of the sale, transfer or assignment of its property through the 2nd and 3rd Respondents to the Appellant, cancelation of the Governor’s consent obtained years after the sale transaction, cancellation of the registered title in favour of the
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Appellant from the 7th Respondent’s register of title, and that, it be put back in possession. See pages 32 to 34 of the record. The 1st Respondent witness (PW1) under cross-examination admitted the purport of the 1st Respondent’s claim is to nullify the sale and revert the title to the 1st Respondent.
Learned counsel submitted further that, assuming without conceding that, the 1st Respondent is challenging the powers of the 2nd and 3rd Respondents to act on its behalf such challenge falls within the purview of the internal wrangling of a company. The law is settled that, the Federal High Court has no jurisdiction over internal wrangling of companies, as it does not come within the ambit of Section 251 (1) (e) of the 1999 Constitution (as amended), see GODWIN VS OKWEY (2010) 16 NWLR (Pt. 1219) 309. On the status of the State High Court, it has the exclusive jurisdiction to hear and determine land matters. Section 39 (1) (a) of Land Use Act clearly stipulates it. See ERHUNMWUNSE Vs EHANIRE (2003) 13 NWLR (Pt. 837) 353 at 369 para A.
Learned counsel further submitted that, in the most unlikely event that, this Court holds that, the claims are within
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the ambit of the adjudicatory powers of the Federal High Court, all actions commenced pursuant to the CAMA must be headed as follows “in the matter of the Companies and Allied Matters Act.” Further, unless otherwise stated in Company Procedure Rules or the enabling law, such actions shall be commenced by originating summons.
See Rules 1 and 2 of the Company Proceedings Rules 1992. The 1st Respondent commenced the suit by writ of summons, contrary to the provisions of the Company Proceedings Rules and failed to head the action as prescribed. This action becomes incurably bad and a nullity. The law is that statutory provisions cannot be waived, See MENAKAYA VS MENAKAYA (2001) 16 NWLR (pt.738) 203; (2001) 9 SCNJ 1 at 9. This fundamental breach of the provision of the Company Proceedings Rules has been held not to be a mere irregularity but a fundamental defect that voids the entire process. See UNIPETROL NIGERIA PLC VS AGIP (NIG) PLC (2002) 14 NWLR (pt. 787) 312 at 333 paras A-H. We urge the Court to resolve this issue in favour of the Appellant.
In their response to the above submission, the learned counsel to the 1st Respondent contended that, Appellant
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had submitted that, the Respondent’s claim before the Court, centred around the validity of the transfer, assignment or sale of its interest in the landed property known as 35, Creek Road, Apapa, Lagos and that, the claim has nothing to do with the operation or regulation of company under the Companies and Allied Matters Act, and therefore, Section 251 (1) (e) of the Constitution of the Federal Republic of Nigeria 1999 (as amended) does not apply. This submission is totally misconceived as the Appellant failed to consider the claim before the lower Court however, appreciated the nature of the claim before it, see pages 709 – 710 of the records. In view of the averments in the statement of claim and the reliefs sought in the lower Court, the lower Court correctly looked at the pleadings, particularly, the statement of claim filed by the Plaintiff to decide that, the Federal High Court had jurisdiction to entertain the suit. See TUKUR VS GOVERNMENT OF GONGOLA STATE (1989) 4 NWLR (Pt. 117) 517 at 549.
It is the claim before the Court that has to be looked at or examined to ascertain whether the Court has jurisdiction or not. The reference to evidence of
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PW1 in paragraphs 3.5 – 3.7 of the Appellant’s brief of argument is totally misconceived as the Appellant is looking at what the witness said to determine the jurisdiction of the lower Court. It is not what the witness said, but rather the claim formulated before the Court. The case of GODWIN VS OKWE (supra) was inappropriately cited by the Appellant as the Plaintiff’s claim (1st Respondent) does not border on internal wrangling of an incorporated trustee like church, as was the case in Godwin’s case. The matters bordering on appointment of Managing Director or Secretary of a Company Incorporated under CAMA and also the powers and authority conferred on such Managing Director and Secretary as in the instant case are matters prescribed and defined by CAMA. They are not matters of internal wrangling in an incorporated association like church as in the case of Godwin (supra), see YALAJU-AMAYE VS A.R.E.C LTD (1990) 4 NWLR (Pt. 145) 422 at 441. Also, the claim of the 1st Respondent does not border on declaration of title. The case of ERHUNMWUNSE VS EHANIRE (supra) was quoted out of con. The claim of the 1st Respondent is that, the act of the Appellant and the
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1st – 6th Defendants violated the Memorandum and Article of Association of the 1st Respondent’s Company and the provisions of the Companies and Allied Matters Act. The issue of head the suit “in the matter of Company and Allied Matters Act,” Appellant cannot raise such technical issue on appeal bordering on form without first obtaining the leave of this Court to do so. The issue of title or no title does not relate to grounds 1, 2 and 3 under which issue No. 1 was formulated. The Appellant is therefore not permitted to smuggle in an issue upon which there is no appeal or an issue that was never decided by the lower Court. The authorities of MENAKAYA VS MENAKAYA (supra), UNIPETROL NIG PLC VS AGIP (NIG) PLC, are all in applicable in this case. We urge this Court to resolve issue 1 in favour of the 1st Respondent.
The Appellant in his reply brief filed on 7th October, 2015, contended that, by the suit of the 1st Respondent, it challenges the sale of land to the Appellant on the ground that, the property was sold by persons who lack capacity and are not authorized to sell by the 1st Respondent. Apparently, the 1st Respondent is saying in effect, declare me the
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owner of the property because the 2nd and 3rd Respondents were not properly appointed to carry out the sale on my behalf. This has nothing to do with operation of CAMA. Obviously, the Respondent was not challenging the appointment of the 2nd and 3rd Respondents, but using their alleged improper appointment as a sword for recovery of title.
Learned counsel further contended that, a new issue may be allowed by the Court of Appeal for the first time, if it borders on jurisdiction, competence of the suit, or if it involves a substantial point of law, substantive or procedural. See ATTORNEY GENERAL OF OYO STATE VS FAIRLAKES HOTELS (1998) 5 NWLR (Pt. 92) 1. In fact, in several other cases, the Courts have decided that leave of Court is not necessary in order to raise a fresh point bordering on jurisdiction on appeal. See OMOKHAFE VS MILITARY ADMINISTRATOR EDO STATE (2005) ALL FWLR (pt. 243) 629 at 646, MORO LOCAL GOVT KWARA STATE VS OYEBIYI (2006) 10 NWLR (pt. 906) 326 at 333. The suit was commenced at the lower Court, not to challenge the 2nd and 3rd Respondents’ appointment. If it were, the suit would have been instituted in line with Rules 1 and 2 of the
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CPR. The writ of summons and the statement of claim did not challenge the appointment of the 2nd and 3rd Respondents. The issue of non-compliance with the Rules, since it is a jurisdictional matter can be raised before this Court without leave. The authority of OMOKHAFE (supra) and MORO LOCAL GOVERNMENT, KWARA STATE (supra) have both established that fact.
On the part of the Court, the submissions made are carefully examined. On whether the lower Court (the Federal High Court) had jurisdiction to adjudicate over the subject matter of this action in view of the claim originally placed before the lower Court. The parameters of the jurisdiction of the Federal High Court to adjudicate on certain matters is conferred by Section 251 (1), (2) and (3) of the 1999 Constitution of the Federal Republic of Nigeria. It is trite law that, the issue of jurisdiction is fundamental in the adjudication of any matter and the meaning and connotation of jurisdiction was defined by the Supreme Court in the case of: THE MISCELLANEOUS OFFENCES TRIBUNAL & ANOR VS OKOROAFOR & ANOR (2000) 18 NWLR (Pt. 956) 326 – 327 as follows:
“The word “jurisdiction” means the
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authority which a Court has to decide matters before it or take cognizance of matters presented before it for its decision.”
Also in determining whether a Court is competent to hear a matter or not will depend on the three judicial requirements, which must co-exist conjunctively before the adjudicatory powers of the Court may be exercised.
This requirements are that:
a) A Court is competent when it is properly constituted as regards members of the bench and no member is disqualified for any reason or another.
b) The subject matter of the case is within its jurisdiction and there is no feature in the case, which prevents the Court from exercising jurisdiction and
c) The case came up before the Court is instituted by due process of law and upon fulfillment of any condition precedent to the exercise of jurisdiction. See MADUKOLU VS NKEMDILIM (1962) 2 SCNLR 341.
Furthermore, the Supreme Court in the case of the ATTORNEY GENERAL OF THE FEDERATION VS GUARDIAN NEWSPAPERS LIMITED & ORS (2001) FWLR 32 at 140 held that:
“It is the claim of the plaintiff which determines the jurisdiction of the Court. This is because it is the
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Plaintiff who invokes the constitutional right for a determination of his rights, and accordingly, the exercise of the judicial powers of the Constitution vested in the Court.”
The claims of the 1st Respondent before the lower Court, listed above 1-15, Oscillates or gravitates on the Act of the Appellant and the 1st6th Defendants violated the Memorandum and Article of Association of the 1st Respondent’s company and the provisions of the Companies and Allied Matters Act. Perhaps, the position becomes clearer when the provision of Section 39 of the Land Use Act is examined. The Section provides as follows:
(1) The High Court shall have exclusive original jurisdiction in respect of the following proceedings.
(a) Proceeding in respect of any land the subject of statutory right of occupancy granted by the Governor or deemed to be granted by him under this Act and for the purpose of this paragraph for a declaration to a statutory right of occupancy.”
Also by virtue of Section 51 (1) of the Land Use Act, High Court means the High Court of the State concerned.
The combined effect of Section 39 (1a) and Section 51(1) of the Land Use
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Act, the appropriate Court with jurisdiction to determine interest in land, is the Court of the State and not Federal High Court, in the case of OMOTESHO VS ABDULLAHI (2008) 2 NWLR (pt. 1072) 526 at 550, this Court held as follows:
“By virtue of Section 39 (1) (a) of the Land Use Act, the High Court has exclusive jurisdiction over proceedings in respect of any land, the subject of a statutory right of occupancy granted by him under the Act and for the purpose of the paragraph proceedings includes proceedings for a declaration of title to a statutory right of occupancy. This, the Federal High Court is not empowered with jurisdiction to entertain actions over land matters. In other words, the Federal High Court is not one of the Court vested with jurisdiction by virtue of Sections 39 and 44 of the Land Use Act to entertain actions over land matters not being a State High Court or an Area or Customary Court or Court of equivalent cadre.”
From the above therefore, and upon the examination of the claims of the 1st respondent at the lower Court listed earlier 1- 15, there is no where a claim as to the statutory right of occupancy granted by the Government or deemed
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to be granted by him, is made a subject. Also, there is nothing as to a proceeding for a declaration to a statutory right of occupancy, to make the claim, a claim for the anticipation of the Land Use Act. It is therefore not a matter for the State High Court. The claim clearly seeks for the intervention of the Court on the Act of the Appellant, and the 1st – 6 Defendants alleged to have violated the Memorandum and Article of Association of the 1st Respondent’s company, which is captured under the provisions of Companies and Allied Matters Act, which by law is clearly a jurisdictional reserve of the Federal High Court. This Court thus, declare that, the Federal High Court had jurisdiction to try this case. Issue No. 1 resolved against the Appellant.
ISSUE 2
Whether from the totality of evidence adduced at trial (especially Exhibits A6, G1, G2, G3, G4 and H4), it can be said that the sale of the property is caught by the Doctrine of Lis pendens and that the 2nd and 3rd Respondents are in disobedience of Court order?
Learned counsel for the Appellant contended that, the property in dispute was sold over 3 years before the action in suit No.
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FHC/L/CS/1206/02 SAMMY O. OLAGBAJU VS CHRISTLIEB PLC & 4 ORS was commenced. At the time of sale of the property in November, 1999, the action in suit No. FHC/L/CS/1206/02 had neither been commenced nor any order made in relation thereof to necessitate application of doctrine of Lis pendens. A careful perusal of the pleadings and evidence adduced at trial, all the Exhibits A6, G1, G2, H4, G3 and G4, show clearly that, the property was sold in November 1999. These pieces of evidence were neither challenged nor controverted at all by the 1st Respondent. The failure of the lower Court to consider those Exhibits resulted in the perverse decision reached and occasioned grave miscarriage of Justice to the Appellant. There was no suit in existence, let alone subsisting order(s) of Court relating to or connected with the property as at 18th November, 1999. The law is settled, that, evidence of the actual date a deed was executed prevails in case of variance, over the apparent date, see Halsbury’s Law of English, 4th Edition, at paragraph 1486; AWOJUGBAGBE LIGHT IND LTD VS CHINUKWE (1995) LPELR – 650; (1995) 5 NWLR (Pt. 390) 409. The lower Court missed this point,
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and relied solely on the date (6th June 2002) apparent on Exhibit A7, the Registered Deed of Assignment in disregard to Exhibits A6, G1, G2, G3 G4 and H4. It is also a notorious fact which the Court has taken judicial notice that in property transaction that Deed of Assignment need not be dated until the assignee is prepared to perfect its title. See ANUKU VS STANDARD BANK LTD (1972) 2 UILR 106. The stage of assignment or transfer of title in a property, is not synonymous with the period of perfection of the interest acquired. These are different stages in law and on facts. We urge the Court to resolve this issue in favour of the Appellant.
In reply to the submissions above, learned counsel to the 1st Respondent answer in their issue No. 5. The learned counsel contended that, the lower Court considered the issue of lis pendens and made crucial findings on same.
See pages 726 – 729 of the records. The judgment of the lower Court borders on documents that were made or generated or executed between 2002 to 2004 relating to the property in dispute and these documents include:
a) The Deed of Assignment purportedly made between the 1st Respondent and
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the Appellant. Exhibit A7 see pages 43-46 of the record. The said Deed of Assignment signed by the 1st and 2nd Defendants as Director and Secretary is dated 6th June, 2002.
b) The legal Mortgage executed between the 5th Defendant and the Appellant dated 10th May, 2004 (see pages 50 – 60 of the record).
c) Lease agreement between the Appellant and 5th Defendant made in 2004 (see Exhibit reproduced at pages 476 – 480 of the record)
d) The Deed of Assignment made in 2004 between the Appellant and the 5th Defendant and tendered as Exhibit H3.
The position of the lower Court is, that all the afore listed agreements were executed when proceedings were already pending, and two other cases pending before Honourable Justice Olomojobi of the same Federal high Court. Exhibit C which is the ruling of Ukeje CJ was given on 5th March, 2002. By Exhibit A7, the Deed of Assignment purportedly transferring 35, Creek Road, Apapa, Lagos was executed and deemed executed on 6th June, 2002. No doubt, the doctrine of Lis pendens will operate against the Appellant and other Defendants in this matter. Similarly, the other three documents referred to earlier will
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also be caught by the doctrine of Lis pendens. See BUA VS DAUDA (2003) 13 NWLR (Pt. 838) 657; ENEKWE VS I.M.B. NIG LTD (2006) 19 NWLR (Pt. 1013) 146; BARCLAYS BANK OF NIG LTD VS ASHIRU & ORS (1978) NSCC Vol. 11 page 251 at 283; AWOJUGBAGBE LIGHT IND. LTD VS CHINUKWE (1995) 4 NWLR (Pt. 390) 379 at 409. We urge this Court to resolve this issue in favour of the 1st Respondent.
This Court has examined the submissions above carefully. Before delving into the arguments of the parties, for better appreciation, Lis pendens, its meaning and applicability is to be considered first. The Supreme Court in the case of MATTHEW OKECHUKWU ENEKWE VS INTERNATIONAL MERCHANT BANK & 2 ORS (2006) 11 – 12 S.C. 3 stated as follows:
“Lis Pendens” the expression is made up of two Latin words. The first is Lis. The second is Pendens. The word Lis means a piece of litigation, a controversy. The word pendens conveys the connotation of pending. The two words put and read together generally mean a pending law suit. The expression is a useful Latinism that has given its name to a notice required in some jurisdiction to warn all persons that, certain property is the subject
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matter of litigation, and that, any interests acquired during the pendency of the suit must be subject to the outcome of the litigation.
Traditionally, this notice was called the notice of Lis pendens, but 20th century American Lawyers have shortened the phrase to merely Lis Pendens. See BRYAN GARNER, A DICTIONARY OF MODERN LEGAL USAGE, SECOND EDITION, PAGE 330. This reflects and confirms the traditional racing colloquial language of the Americas and the Americans. The doctrine which is embedded in the common law gives notice to persons by way of warning that, a particular property is the res of a litigation and that a person who acquires any interest in it, must know well ahead that, the interest will be subject to the decision of the Court on the property.”
With the meaning of Lis pendens now at the fore hand, the question is, when was the Deed of Assignment Exhibit A7 executed to bring it to the fact of whether it is caught by the Doctrine of Lis Pendens or not. It is the argument of the Appellant that, the lower Court regrettably missed the point to rely solely on the date (6th June, 2002) apparent on Exhibit A7, the Registered Deed of
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Assignment in blatant disregard to Exhibits A6, G1, G2, G3, G4 and H4 which clearly show when the property was assigned and ownership thereof passed to the Appellant.
In response, the learned counsel to the 1st Respondent had maintained that, there is no extrinsic evidence led by the Appellant to show that, Exhibit A7 was not executed on 6th June, 2002. The Appellant did not elicit any evidence from the 1st and 2nd Defendants who signed as Directors and Secretary for Christlieb Plc as to the date of execution neither did the Appellant call its own director and secretary that signed for it, as to the date of actual execution. This failure to call the party who signed is fatal to the case of the Appellant. The Appellant rather relied on Exhibits A6, G1, G2, G3, G4 and H4 to show the date of execution.
On the part of the Court let me mention quickly, that, the Appellant’s view that, the Court of trial was under a duty to examine, scrutinize and assessed those Exhibits tendered by them, that is, Exhibits A6, G1, G2, G3, G4 and H4, and that, the lower Court could not look at Exhibit A7 alone to ascertain the date of the execution of the Deed of
30
Assignment. The challenged posed by the 1st Respondent being the Appellant, was under a duty to elicit evidence from the 1st and 2nd Defendants who signed those exhibits as Directors and Secretary for Christlieb Plc as to the date of execution or call its own Director and Secretary that, signed it as to the actual date of execution.
Reliance on those exhibits alone cannot meet the requirement of the law. I agree with submissions of the learned counsel to the 1st Respondent as it represents the correct position of the law. It is just not enough that, documents have been received as evidence, the basis for receiving any document as evidence, where there is due compliance with relevant provisions of the law, is that, the document is relevant to the determination or resolution of the matters in dispute between the parties. Where documents are received as evidence, even though, they may speak for themselves, the Court is however, not entitled as was held in SAVANNAH VENTURES LIMITED VS W.A.B. LTD (1997) 10 NWLR (pt. 524) 254 (S.C.):
“To rely on its observations from an examination of the document to decide matters which have not emerged from the actual
31
evidence given before the Court without first putting the points to witnesses or inviting counsel to comment on them if they wished.”
This Court in following the decision of the Supreme Court above in TERAB VS LAWAN (1992) 3 NWLR (Pt. 241) 569, while sitting on appeal over the 1991 Gubernatorial Elections as the Court of final jurisdiction held at page 590 as follows:
“I agree that, the correct view of the law is that a party relying on documents in proof of his case must specifically relate each of such document to that part of his case in respect of which the document is being tendered. The Court cannot assume the duty of tying each of a bundle of documentary exhibits to specific aspect of the case of a party when he has not himself done so. The foundation of the principle is that, it is an infraction of fair hearing for the Court to do in the recess of its chambers, what a party has not himself done in advancement of his case in the open Court.”
Earlier, Bates J, sitting in Jos in 1961 on appeal from the decision of the Magistrate Court against the conviction of the Appellant had held in DURIMINYA VS C.O.P. (1961) N.N.L.R. 70 at 73-74 that:<br< p=””>
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“It was not part of his duty to do cloistered Justice by making an inquiry into the case outside Court, not even by the examination of documents which were in evidence, when the documents had not been examined, in Court and the Magistrates examination disclosed things that, at least must have been noticed in Court.”
From the above therefore, it was duty of the Appellant to show from Exhibits A6, G1, G2 G3, G4 and H4 the date of the actual execution of the Deed of Assignment and not for the trial Court to do that for him. The Appellant did not show before this Court, the existence of extrinsic evidence, as to the date of execution of Exhibit A7. It is his duty to that, where the Appellant has failed to do that. Exhibit A7 must be deemed executed on 6th, June, 2002. And if executed on the 6th June, 2002, it was caught by the doctrine of Lis pendens.
This is in line with the Apex Court’s decision on AWOJUGBAGBE LIGHT IND. LTD VS CHINUKWE (1995) 4 NWLR (pt. 390) 379, “that a deed takes effect from delivery”. The extrinsic evidence to prove date in the case above cannot mean dumping the exhibits before the Court,
33
without any extrinsic evidence as to the actual date of execution. The Appellant was caught by the doctrine of Lis pendens. The lower Court did not misapply the doctrine of Lis pendens to the facts presented by parties before it. The issue No. 2 is resolved against the Appellant. Issues 3, 4, 5, 6, 7 and 8 of the Appellant’s brief resolved together.
All the six (6) issues resile on one fact, whether the 1st and 2nd Defendants as managing Director and Company Secretary respectively, had defect in their appointments to that capacity, or were never appointed at all to the respective
capacities which can vitiate any action taken on behalf of the company. The key elements of the case for the Appellant in this appeal are:
a) Whether the subject matter of this suit being the vitiation of the sale of land is a subject outside the jurisdiction of the Federal High Court. This element had been dealt with as issue No. 1 in this appeal, and resolved in favour of the 1st Respondent, that the Federal High Court was competent and had by law the competence to entertain this suit.
b) By virtue of Exhibits F-F2, the 2nd Respondent
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was validly appointed as Managing Director of the 1st Respondent. The 3rd respondent is not incapacitated because his appointment as Company Secretary was not rectified in an Annual General Meeting.
c) The defect (if any) in the appointment of the 2nd and 3rd Respondent does not vitiate the sale.
d) The property was validly sold to the Appellant as all the elements or conditions required for a valid sale of land existed inclusive of a board resolution to sell the property, Exhibit F5.
e) The 1st Respondent has not proved its case to be entitled to judgment as all evidence adduced by it, has been completely discredited at the trial of the matter.
f) The judgment of the lower Court is a miscarriage of Justice as the trial Court did not properly evaluate the evidence adduced in the matter.
The 1st Respondent only added that, the lower Court did not misapply the doctrine of Lis pendens to the facts presented by parties before it. This element is already dealt with by this Court in the resolution to issue No. 2.
This Court resolved that, the Appellant is caught up by the doctrine of Lis pendens, and that, the trial Court did not
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misapply the doctrine.
On the defect in the appointment of the 2nd and 3rd Respondents, whether or not it has vitiated the sale of the property (the 1st Respondent), the learned trial judge in his judgment on page 715 of the records stated as follows:
“It is obvious that, from the content of Article 93 of the Memorandum and Article of Association i.e. Exhibit ‘A’ the condition precedent before a Director can function as a Managing Director is that a person must be appointed as Director by:
a) The Annual General Meeting of the Plaintiff
OR
b) At any Extra Ordinary General Meeting after a notice has been duly given.
The Plaintiff contends that, there was neither an Annual General Meeting nor any Extra Ordinary General Meeting.
The question is, at which of the above meetings was the 1st Defendant appointed a Director of the Plaintiff? None of the exhibits tendered showed that an Annual General Meeting or an Extra Ordinary General Meeting was held. The exhibits tendered through the 1st Defendant who testified as DW1 were ordinary board meetings and there was no board meeting where the 1st Defendant was selected as the
36
Managing Director even if it was to be conceded that the 1st Defendant was properly in the first place appointed as a Director, the learned counsel for the Plaintiff has argued that, since the 1st and 2nd Defendants could not show that, the 1st Defendant was validly appointed, the evidence and the pleadings on this issue are deemed unchallenged. I cannot but agree that, the 1st and 2nd Defendants were not properly appointed as Managing Director and Company Secretary respectively. This is so because the onus of establishing a valid appointment rests squarely on the 1st and 2nd Defendants. In YALAJU AMAYE VS A. R. E. C. LTD (1990) 4 NWLR (Pt. 145) 443 cited by learned counsel for 1st and 2nd Defendants. The Supreme Court held that, the Memorandum and Articles of association of a company is binding on the company and the Managing Director if, therefore, there was no Annual General Meeting or Extra Ordinary General meeting held as stated by the PW1 which has been unchallenged, then any purported appointment as a Director and subsequently, as a Managing Director or Company Secretary is void, same not having complied strictly with the Memorandum and Article of
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Association of the Plaintiff. The basis for accepting Exhibits F and F1 has not been established. I hold therefore that, the 1st and 2nd Defendants were not properly appointed as Managing Director and Company Secretary respectively.”
The above represents the findings of fact made by the trial Court, what the findings of the learned trial Court has clearly brought out is that, there was no time the 2nd and the 3rd Respondents were ever appointed as Managing Director, and Company Secretary to the 1st Respondent. This is clearly different from a case of defect found with an appointment where the action of such an officer can bind the company. I agree with the submission of the learned counsel for the 1st Respondent that the provisions of Section 244 (2), 260, 63, and 65 of CAMA cannot inure in their favour. Also that Section 542 of CAMA should override Articles 93, 104, and 108 of the 1st Respondent’s Articles of Association. To succumb to that temptation, will be tantamount to this Court, not looking at the merit of the case, but to same technical point, to defect the end of Justice. The Supreme Court, in the case of, the NATIONAL INLAND WATER WAYS
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AUTHORITY VS S.P.D.C. NIG LTD (2008) 5-6 S.C. (Pt. 1) 172 stated as follows:
“Merit of a case is the substantive consideration to be taken into account in making a decision in contrast to extraneous or technical points especially of procedure, See GAMER, A DICTIONARY OF MODERN LEGAL USAGE, 2ND EDITION, page 557. Merit, as a legal term refers to the strict legal rights of the parties, it is the substance, element. or ground of a cause of action or defence. See BLACK’S LAW DICTIONARY, 6TH EDITION, PAGES 989 and 990. In other words, merit is the real or substantial ground of an action or defence in contradistinction to some technical or collateral matter raised in the course of the case. It is in practice a matter of substance as distinguished from a matter of form. A matter of adjectival or procedural nature is generally not on merits.”
There is no doubt therefore, the appointments of the 2nd and 3rd Respondents as Managing Director, and Company Secretary must first and foremost be governed by Articles 93, 104 and 108 of the 1st Respondent’s Article of Association. This is the merit of this case. By those provisions of the Article of Association, I
39
agree with the decision of the trial Court that, the 2nd and 3rd Respondents were never appointed as Managing Director and Company Secretary respectively.
Another issue is the locus standi of the 1st Respondent (Christlieb Plc) to have instituted this action at the lower Court for the first time. The law is settled on what the Plaintiff must show to have locus standi, and it is the view of this Court that, the 1st Respondent has clearly demonstrated that, it has sufficient interest in the suit. The Supreme Court in the case of PAM & ANOR VS MOHAMMED & ANOR (2008) 5-6 S.C. (Pt. 1) 83, stated as follows:
“It is the law that, to have locus standi to sue, the Plaintiff must show sufficient interest in the suit or matter. One criterion of sufficient interest is whether the party could have been joined as a party in the suit. Another criterion is, whether the party seeking redress or remedy will suffer some injury or hardship arising from the litigation. If the judge is satisfied that, he will so suffer, then he must be heard and is entitled to be heard. A party who is in imminent danger of any conduct of the adverse party has the locus standi to
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commence action.”
The position of the 1st Respondent is that, he fits into all the criterion listed above, by the Supreme Court. On locus standi, also see OWODUNNI VS REGISTERED TRUSTEES OF C.C.C. (2000) 6 S.C. (Pt. 111) 60; ADESOKAN Vs ADEGOROLU (1997) 3 NWLR (Pt. 493) 261; INAKOJU & 77 ORS VS ADELEKE & 3 ORS (2007) 1 S.C. (Pt. 1) 1; OLORIODE VS OYEBI (1984) 5 S.C. 1. The 2nd and 3rd Respondents having been found by this Court, not to have been appointed Managing Director and Company Secretary in accordance with the memorandum and Articles of Association of the 1st Respondent lacked the locus standi to act on its behalf, and the sale or transaction done by the two on behalf of the 1st Respondent, must be annulled, and it is hereby annulled for lack of locus standi.
As to the issue of suit No. FHC/L/CS/1206/2002 and the ruling of 5th March, 2003 (Exhibit C) is the 2nd man committee the proper persons to authorize the commencement of this suit, if yes, whether this suit is not an abuse of Court process. First of all, we have to consider what constitutes an abuse of Court process. The Supreme Court in the case of OJO & 3 ORS VS OLAWORE & 5 ORS (2008)
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6-7 S.C. (Pt. 11) 54) stated as follows:
“The law is settled that, it is an abuse of the process of Court for a Plaintiff to litigate again over an identical question which had already been decided against him. Also an abuse of process of the Court may occur when a party improperly uses the judicial process to the harassment, irritation and annoyance of his opponent and/or interfere with the administration of Justice, such as where two similar processes are issued against the same party in respect of the exercise of the same right and subject matter. Abuse of Court process therefore generally, means that a party in a litigation takes a most irregular and unusual action in the judicial process for the sake of action avoided by the party without causing harm to the dispute or the Court’s process is used mala fide to over reach the adversary to the annoyance of the Court.”
Looking at what constitute an abuse of Court process, there is no conflict in any given respect with Exhibit ‘C’ suit No. FHC/L/CS/1206/2002, and the present suit. This Court had already adjudged that, the 1st Respondent (Christlieb Plc) had the locus standi to file this suit in the
42
first place. The 1st Respondent is a corporate body which can sue and be sued in its own name. See Section 299 of CAMA. The suspension of the 2nd and 3rd Respondents in the ruling, made (Exhibit C) and the appointment of the two man committee by the Court, to not have nexus with the corporate personality of the 1st Respondent. The driving force for such an action by the 1st Respondent, may not be relevant for the moment, except where there is an action to lift the corporate veil. It is not the law that, it must be the two man committee appointed by the Court, that must give authorization to the 1st Respondent to sue in its corporate name. This suit filed at the lower Court, by the 1st Respondent, has not constituted an abuse of Court process. On the whole, the 1st Respondent successfully established its case against the Appellant and others, both at the lower Court, and on this appeal. I resolve issues, 3, 4, 5, 6, 7 and 8 of the appeal against the Appellant.
Having resolved all the eight (8) issues in the appeal against the Appellant, and in favour of the 1st Respondent, the appeal is devoid of merit, and it is hereby dismissed.
The judgment of
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Honourable Justice J. E. Shakarho of the Federal High Court in suit no. FHC/L/CS/540/2004, delivered on the 13th day of December, 2010 is hereby affirmed by this Court.
Parties to bear their own costs.
Other Citations: (2016)LCN/8769(CA)
