O. Afolabi & Ors V. Western Steel Works Limited & Ors (2002)
LawGlobal-Hub Lead Judgment Report
A. OGUNTADE, J.C.A.
The appellants were the plaintiffs before the Lagos State High Court in Suit No. LD/1285/82 and respondents the defendants. The issues to be decided in this appeal fall within a very narrow compass. The relevant facts are these:
The plaintiffs were employees of the 1st defendant. The 1st defendant declared them redundant. Prior to the declaration, the 1st defendant had entered into in agreement with the plaintiffs to pay them some benefits in consequence of the redundancy declared. The 1st defendant failed and or neglected to pay the benefits. The plaintiffs sued the 1st defendant before the lower Court claiming damages. The plaintiffs amended there pleadings and added several other plaintiffs. The 3rd defendant who is now appellant was joined to the suit. In the pleading it was alleged that the appellant had acquired the assets and liability of the 1st defendant by purchase. The appellant denied that it acquired the liabilities of the 1st defendant. It however admitted that it bought some of the assets of the 1st defendant from a third party. The object of the plaintiffs pleading that the appellant had acquired the assets and liabilities of the 1st defendant was to make the appellant also liable to pay the terminal benefits due to the plaintiffs for which they brought their claim.
At the trial, the plaintiffs called five witnesses. The defendants called none. The trial judge, Famakinwa J. in his judgment held that the plaintiffs had not called sufficient evidence to show that the appellant had acquired the liabilities of the 1st defendant. He therefore dismissed plaintiffs’ suit against the appellant. Dissatisfied, the plaintiffs have brought this appeal. In the appellant’s brief, the issue for determination was formulated thus:
“Whether the learned trial judge was right in refusing to make the 3rd defendant/respondent jointly liable with 1st defendant to satisfy reliefs 1 (a) and (c) of the appellants’ claims.”
The respondent’s issues for determination are these:
“1. Having in its pleadings averred that the 3rd defendant has either merged or acquired Western Steel Works Limited and that it has taken over the assets and liabilities of Western Steel Workers Limited while the 3rd defendant in its pleadings denied being merged with or having acquired the 1st defendant’s assets or liabilities and further stated categorically that it purchased “certain assets, plants and machinery’ through a third party, on whom did the burden to prove that the 3rd defendant acquired the liabilities of the 1st defendant’s lie?
Or put in another way from the pleadings filed in this suit, on who did the burden of proof on the issue of transfer of the liabilities of the 1st defendant lie?
- Has the burden been discharged by the party on whom it lies.”
A comparison of the issues formulated by the two parties easily reveals that the issues are in substance the same. It is whether or not the plaintiffs (now appellants) called sufficient evidence in support of their case to warrant the lower court give judgment in their favour.
The lower court in a passage of its judgment had said concerning the 3rd defendant:
“From this point we could move on to the 3rd defendant involvement in the case. From the line of evidence given it is disclosed that 3rd defendant had bought over the 1st defendant Company. On the 17th September, 1990, the 3rd defendant was joined in the action filed about 8 years to date.
The evidence revealed that the main reason why the action is instituted is because the companies had changed hand. In his testimony 1st P.W. testified that:
“The 1st defendant company has been transferred to Eurks Metals Ltd.”
So in effect a change has occurred and if anyone is aggrieved by reason of the change he ought to lay his complaint before the Federal High Court and not State High Court. However the question of change in the company is not the cause of action before this court. There is nothing anyone can do about the change in the company. The evidence in the case remains far short to connect or involve 3rd defendant in the action. There isn’t legal evidence to establish the fact that the company has taken over the assets and liabilities of the 1st defendant. A transaction of this nature could only be effectively carried out by written documents and not just made by means of oral evidence. Plaintiffs claim in my respectful view could only succeed against the 3rd defendant, if it could be shown by credible evidence that it had taken over the assets and liabilities of the 1st defendant. None of the witnesses called by the plaintiffs ever go (sic) near even to state that they had taken the assets and liabilities of the 1st defendants.
In the foregoing circumstances, the plaintiffs claim against the 3rd defendant would fail and it is accordingly dismissed.”
Having so clearly held that there was no satisfactory evidence to show that the 1st defendant company had been sold to the 3rd defendant, the lower court strangely went on later to held:
“This apart, the evidence clearly shows that the 1st defendant company had sold their interest in the company to the 3rd defendant.”
There was clearly a conflict revealed between the earlier and later findings made by the lower court. This seems to have been the major point about which the plaintiffs (appellants) have complained in their brief.
It was argued that the evidence called by the plaintiffs in support of the company was sold to the appellant fact that the 1st defendant/which said evidence was not challenged by the defendants, was sufficient to prove that indeed the 1st defendant company had been sold to the 3rd defendant. It was further argued that the lower court ought in the circumstances to have given judgment in favour of the plaintiffs.
The respondent in its brief submitted that the legal burden of proof was on the plaintiff: Dickinson v. Minister of Pensions (1953) 1 Q.B 228 at 232 and Section 135(1) of the Evidence Act. They also relied on Elemo v. Omolade (1965) N.M.L.R 359 and Abrash v. Northern Western Railway (1883)11 Q.B. 440 at 457. It was further submitted that the plaintiffs failed to discharge the burden of proof which duty lay on them:
Adegbile v. Ogunfaolu (1990) 4 N.W.L.R (Pt. 146) 578; Olorunfemi v. Asho (2000) 1 SC 15 at 29 and Ehindimhen v. Musa (2000) 4 SC (Pt. 2) 166 at 184.
Now in paragraph 34(a) and (b) of their Further Amended Statement of Claim, the plaintiffs averred:
“(a) The plaintiffs aver that Eureka Metals Limited the 3rd defendant has either merged with or acquired Western Steel Works Limited.
(b) The plaintiffs state that Eureka Metals Limited has taken over the assets and liabilities of Western Works Limited.”
The appellant joined issues with the plaintiffs on the averment in paragraph 34 above when in paragraphs 3 and 4 of the statement of defence it averred thus:
- The defendant purchased certain asserts, plant and machinery through ALI STEELS AFRICAN LTD of 79 Murtala Muhammed Way, Yaba, Lagos who had purchased same at an auction sale conducted by the Deputy Sheriff of the High Court of Lagos State on the 5th of September, 1982 pursuant to writ of attachment issued in suit No. LD/493/82 ……………. Palana V. Western Steel Works Ltd.
- The defendant has not merged with or acquired 1st defendant not taken over the assets and liabilities.”
The parties having joined issues in their pleadings as to whether or not, the appellant had taken over the assets and liabilities of the 1st defendant, the onus was on the plaintiffs to lead satisfactory evidence in support of the fact pleaded that the appellant had taken over the assets and liabilities of the 1st defendant. See Section 135(1) of the Evidence Act which provides.
- Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist?”
The position of the law is clear on the point. As it was the plaintiffs who asserted that the appellant had taken over the assets and liabilities of the 1st defendant, and further as it was the plaintiffs who would fail if no evidence was led on the point, the plaintiffs bore the burden of proving that which they asserted and upon which the success of their case so much depended.
At the trial, P.W. 1 gave evidence on the said take-over of 1st defendant by appellant. At page 607 under his evidence-in-chief he said:
“The reason why we filed this action is because the companies had changed hand.”
Under cross-examination P.W.1 said:
“The 1st defendant company has been transferred to Eurka Metals (3rd defendant). We were sitting in front of the factory when the 1st defendant was replaced with Eurka Metals.”
This was all the plaintiffs said in order to prove that the appellant had bought over the assets and liabilities of the appellant. The acquisition of shares in companies and take – over of one company by another are matters regulated by Companies and Allied Matters Act. The transfer of shares or allotment of shares in a limited liability company must be registered and appropriate papers filed. It is not just a question of removing one company’s signboard on premises and replacing it with another.
It was therefore to be expected that documents from the Corporate Affairs Commission would be placed before the lower court to enable it determine whether or not the 1st defendant company had been acquired by the appellant.
It is my firm view that the trial judge was right to dismiss plaintiffs/appellants’ case as against the respondent.
This appeal fails. It is dismissed with N5,000.00 costs in favour of the respondent.
Other Citations: 2002)LCN/1198(CA)
