Odutola Holdings Limited & Ors V. Mr. Kunle Ladejobi & Ors (2006)

LAWGLOBAL HUB Lead Judgment Report

A.O. EJIWUNMI, JSC

This appeal is the culmination of the action commenced at the Federal High Court by the appellants when they instituted this action against the respondents for the following reliefs as depicted in paragraph 32 of their Statement of Claim dated 9th October, 2000 thus:- “32. WHEREOF the plaintiffs claim as follows:

(i) A DECLARATION that the purported meeting of shareholders of the 1st plaintiff company held on 12th September, 2000 is illegal, null and void having been convened contrary to the provisions of the Articles of Association of the 1st plaintiff company and the provisions of the Companies and Allied Matters Act, 1990 concerning the convening of general meetings.

(ii) A DECLARATION that the purported removal of the 2nd to7th plaintiffs as directors of the 1st plaintiff company and the purported appointment of the 1st to 10th defendants as directors of the 1st plaintiff company by a resolution allegedly passed at the purported meeting of shareholders of the 1st plaintiff company held on 12th September 2000 is illegal, null and void being contrary to the provisions of Article 36 of the Articles of Association of the 1st plaintiff company.

(iii) A DECLARATION that the purported removal of the 2nd to 7th plaintiffs as directors of the 1st plaintiff company and the purported appointment of the 1st to 10th defendants as directors of the 1st plaintiff company by a resolution allegedly passed at the purported meeting of shareholders of the 1st plaintiff company held on 12th September, 2000 is illegal, null and void being contrary to the provisions of section 262 of the Companies and Allied Matters Act, 1990.

(iv) A DECLARATION that the 4th defendant is not a shareholder of the 1st plaintiff company.

(v) AN ORDER OF INTERLOCU-TORY INJUNCTION to restrain the 1st to 10th defendants whether by themselves, their servants and agents or otherwise howsoever from acting as directors of the 1st plaintiff company and to restrain all the defendants whether by themselves, their servants and agents or otherwise howsoever from holding the 1st to 10th defendants out as directors of this 1st plaintiff company pending the final determination of this suit.

(vi) AN ORDER OF MANDATORY INJUNCTION directing the 16th defendant to remove or cancel from the 1st plaintiff company’s file held at the Corporate Affairs Comm-ission in Abuja, all documents reflecting the purported removal of the 2nd to 7th plaintiff as directors of the 1st plaintiff company and the purported appointment of the 1st to 10th defendants as directors of the 1st plaintiff company.” Following the service of the writ of summons and the Statement of Claim, the defendants, now respondents brought an application before the trial Court wherein they sought for the orders framed in the alternative thus:-

“(i) An order striking out the name of the 1st plaintiff herein as a party to the action. PAGE| 2 ALTERNATIVELY (ii) An order staying proceedings in this action and ordering a meeting of the shareholders of the Odutola Holdings Ltd, with a view to determining whether their directions or instructions “as to whether the 1st plaintiff company should continue as a party to this suit.” In support of this application, Kunle Ladejobi, a Chartered Accountant as the 1st defendant swore to a 14 paragraph affidavit on behalf of himself and for the 2nd – 6th, 8th – 11th and 13th – 15th defendants which read thus:- “1. KUNLE LADEJOBI, Nigerian Chartered Accountant of 58 Ogunlana Drive, Surulere, Lagos, make oath and say as follows:- 1. That I am the 1st defendant/applicant and I have the authority of the 2nd – 6th, 8th-11th and 13th – 15th defendants (hereinafter referred to as the Applicants) to swear to this affidavit in support of the motion herein. 2. That I am the personal represen-tative of Chief T.A. Odutola, deceased, the majority shareholder and the last Chairman of the 1st plaintiff herein having been appointed as the Administrator Pedente Lite of his estate by Order of the High Court of Ogun State (Coram Delano CJ) made in Suit No.AB/13W96 on the 1st day of August, 1997. A certified true copy of the order of court aforesaid is now produced and shown to me marked Exhibit ‘KL1’ 2 (a) That on two different occasions in Appeal No.CA/M. 150/99 the Ibadan Division of the Court of Appeal, approved my appointment as the administrator pending suit in respect of the Estate of Chief T.A. Odutola deceased. Certified true copies of the order and the ruling of the Court of Appeal aforesaid are now produced and shown to me marked Exhibits ‘KL2’ and ‘KL3’. 3. That the 1st plaintiff is a Private Limited Liability Company No.RC23492 incorporated on the 6th day of February, 1978 with an initial share capital of N1,000,000 divided into N1,000,000 ordinary shares of N1 each. A certified true copy of the Memorandum and Articles of Association of the 1st plaintiff issued at incorporation is now produced and shown to me marked Exhibit ‘KL4’. 4. Sometime in April, 1987, the Memorandum and Articles of Association of the 1st plaintiff was amended and the share capital was increased to N5,000,000 divided into N5,000,000 ordinary shares of N1.00 each. A copy of the amended version signed jointly by Chief T.A. Odutola deceased and the 2nd plaintiff (for Mrs. T.A. Odele) was filed at the Corporate Affairs Commission. A certified true copy of the Amended Memorandum and Articles of Association of the 1st plaintiff aforesaid is now produced and shown to me marked Exhibit ‘KL5’. 5. That I have been served with the plaintiffs’ motion on notice dated 9th October, 2000 for an interlocutory injunctive relief against me and the other 14th defendants herein, wherein Exhibit 002 attached to the motion aforesaid is alleged by the 2nd plaintiff to be the Memorandum and Articles of Association of the 1st plaintiff. PAGE| 3 6. That on many occasions since my appointment as the Administrator Pendente Lite of the estate of Chief T.A. Odutola deceased, by the Ogun State High Court. I have conducted searches at the Corporate Affairs Commission Abuja so as to determine the quantum of shares held by the deceased in different companies including the 1st plaintiff. 7. That during my searches aforesaid, I have come to know that, Exhibit 002 attached to the motion of interlocutory relief filed by the plaintiffs does not exist at the Corporate Affairs Commission and it is therefore not an authentic Memorandum and Articles of Association of the 1st plaintiff. 8. That the 2nd – 5th plaintiffs and the 2nd – 5th defendant are children of late Chief T.A. Odutola and are also shareholders of the 1st plaintiff while the 6th and 7th plaintiffs are wives of the late Chief T.A. Odutola, but not shareholders of the 1st plaintiff. 9. That since my appointment on the 1st day of August 1997 as the Administrator Pendente Lite of the estate of Chief T.A. Odutola, deceased whose estate is alleged by the 2nd plaintiff to hold 39.5% of the shares of the 1st plaintiff, I have not received any notice of any meetings of the 1st plaintiff from any of the 2nd – 7th plaintiffs. 10. That I have consulted the 2nd – 15th defendants herein except the 7th and the 12th defendants and they told me and I verily believe them that the 2nd plaintiff and or the other plaintiffs do not have authority to sue in the name of the 1st plaintiff in this action and Chief B.A. Aiku, SAN, has no authority of the shareholders to commence the action herein in the name of the 1st plaintiff. 11. That I verily believe that the action of the plaintiffs herein could be determined one way or the other if this Honourable Court could adjourn this suit and with an order that a meeting of the 1st plaintiff be held to decide on the authority of the plaintiffs in commencing this suit 12. That the present action is a further attempt by the 2nd – 7th plaintiffs to waste the assets of the 1st plaintiff in unnecessary litigation. 13. That at a meeting of the shareholders of the 1st plaintiff held on the 12th day of September 2000, the 2nd – 7th plaintiffs were removed as directors of the 1st plaintiff. 14. That from the records available to me, and from information given to me by the 2nd – 6th – 8th – 11th and 13th – 5th defendants which I verily belief (sic) I am aware that the 2nd plaintiff was never| appointed as the Chairman of the 1st plaintiff and could not have been so appointed in view of Article 36 of Exhibits KL4 and KL5.” The plaintiffs upon being served also filed a 21 paragraphed counter affidavit. As the depositions reveal graphically the plaintiffs’ version of the continuing conflict between the parties, it is desirable to set them down in this judgment. They read thus:- PAGE| 4 “I PROFESSOR (MRS.) OYIN-ADE ODUTOLA-OLURIN, female, Christian, Nigerian, retired University Professor now Consultant Ophthalmologist of Vision house, Mokola, Ibadan do hereby make oath and say as follows:- 1. That I am the Chairman of the 1st plaintiff company and a shareholder thereof. 2. That I am familiar with the facts of this case by virtue of my position. 3. That the 2nd – 7th plaintiffs are directors of the 1st plaintiff company. 4. That I have the authority of the Board of Directors of the 1st plaintiff company to swear to this counter affidavit. 5. That I have read the affidavit in support of the defendants’ motion dated 27/10/2000 deposed to by the 1st defendant 6. That paragraphs 2, 2(a), 4, 6, 7, 9, 10, 11, 12, 13 and 14 of the affidavit are not true. 7. That there is now pending before the Ogun State High Court, Suit No. AB/148/99: Mabogunje & Ors. V. Adewumi Odutola & Ors seeking inter alia, an order to set aside the appointment, of the 1st defendant as administrator pendente lite of the estate of late Chief T.A. Odutola together with an application for an order of injunction to restrain him from performing in the office of such administrator. A copy of the statement of claim and motion are attached herewith marked exhibits A and B. 8. That there is also now pending in Suit No.FHC/L/CS/697/2000 before this Honourable Court a motion seeking to restrain the 1st defendant from holding himself out as being entitled to hold 55% of the shares in the capital of the 1st plaintiff company. 9. That the 1st defendant has not obtained any grant of letters of Administration of the estate of late Chief T.A. Odutola since his purported appointment as admini-strator pendente lite. 10. That the 1st defendant has no lawful authority to deal with the estate of late Chief T.A. Odutola or to perform the office of administrator pendente lite in respect hereof and is not entitled to any notice of any meetings of the 1st plaintiff company. 11. That exhibit KL5 attached to the 1st defendant’s affidavit is not the current memorandum and articles of association of the 1st plaintiff. 12. That contrary to paragraph 4 of the affidavit, the capital of the 1st plaintiff was increased from N1,000,000 to N2,000,000 in 1980 and from N2,000,000 to N5,000,000 in 1982. A copy each of the resolutions effecting the alterations in capital are attached hereto marked Exhibits C and D. 13. That in April 1987, the articles of association of the 1st plaintiff company was altered by a resolution dated 3rd April, 1987 which was duly filed together with the then existing memorandum and articles of association at the Companies Registry, Federal Ministry of Commerce on 6th April,1987. It is the certified copy of the said existing memorandum and articles of association that is attached to the 1st defendant’s affidavit as exhibit KL5. A copy each of the resolution and the receipt issued for filing are attached hereto marked exhibits E and F. 14. That subsequently, the said memo-randum and articles of association were reprinted to incorporate the amendments made by the said resolution dated 3rd April, 1987 duly filed on 6th April, 1987, an uncertified copy of which was attached to the plaintiffs’ motion on notice dated 9th October, 2000. A certified true copy thereof reflecting all the foregoing alterations, obtained from the Corporate Affairs Commission is attached hereto marked Exhibit G. 15. That the 2nd – 5th plaintiffs and 2nd – 5th defendants referred to in paragraph 8 of the affidavit are some of the children of late Chief T.A. Odutola and shareholders of the 1st plaintiff company. 16. That the Board of Directors of the 1st plaintiff company duly authorised the commencement of this action in the name of the company by the company Solicitors. A copy of the resolution in respect thereof is attached hereto marked Exhibit H. 17. That Chief Bandele A. Aiku, SAN of Bandele A. Aiku & Co. is one of the Solicitors to the 1st plaintiff company and he was duly authorised by the Board of Directors to commence this action in the name of the company. 18. That I did not receive notice of the purported meeting allegedly held on 12th September, 2000 and I am informed by the 3rd to 7th plaintiff and I verily believe them that the did not receive any notice of any meeting either. 19. That the late Chief T.A. Odutola by his will expressed the wish that I should always be the chairman of the 1st plaintiff. A copy of the 1987 will is attached herewith marked Exhibit 1. 20.That I was at a meeting of the Board of Directors of the 1st plaintiff held on 6 July, 1995 regularly and duly; appointed chairman of the company; as successor to late Chief T.A. Odutola in accordance with the Company’s Articles of Association, and the expressed wishes of the deceased. A copy of the minutes of the meeting is attached hereto marked Exhibit J. 21. That I swear to this counter affidavit in good faith believing the facts stated therein to be true and in accordance with the Oaths Act.” Learned counsel for the parties, then addressed the trial court upon the meaning and legal effect of the various depositions made in the affidavit and counter-affidavit which have been set out above. The learned trial judge who delivered a well considered ruling decided that the questions raised in the application could be resolved by the consideration of the following two issues:- “(1) Whether the present action can be maintained in the name of the 1st plaintiff herein a limited liability company without the authority of the company. PAGE| 6 (2) Whether the 1st – 16th defendants/applicants herein are competent to challenge the authority of the 1st plaintiff to institute this action.” The learned trial judge considered the 2nd issue first and that is whether 1st – 16th defendants/appellants are compe-tent to challenge the authority of the 1st plaintiff to institute this action. That question was resolved in two parts. First, the learned trial judge determined that the onus lies on the defendants to establish lack of authority in the 1st plaintiff to institute the action. And having so held, he held that as no evidence either documentary or affidavit was led by the 2nd – 16th defendants to prove their capacity or; status to challenge the authority of the 1st plaintiff to institute the action, the learned trial judge therefore resolved that question against them. However with regard to the 1st defendant/applicant, the learned trial judge formed the view that he has the competence to challenge the institution of the action by the 1st plaintiff by virtue of his appointment as administrator pendente lite of the Estate of Chief T.A. Odutola. However, the trial Court further observed that as the alleged wrong complained of is against a company, the 1st defendant/applicant can only bring an action in the name of the company and not as an individual. The 2nd issue was therefore also resolved against the 1st defendant/applicant. With regard to the first issue raised by the learned trial judge as to whether the plaintiffs had any authority to commence the action in the name of the 1st plaintiff/company to resolve this question, the learned trial judge felt that its determination depends on the meaning and effect of the provisions of Section 63 of the Companies and Allied Matters Act, 1990 which vests in the directors of a company the power to exercise such powers of the company which are not by the Act or its Articles of Association required to be exercised by the members at a general meeting. The learned trial judge therefore formed the view that there is authority in the form of a Board Resolution (Ex. H) in the present proceeding for the institution of this action by the 1st plaintiff. The learned trial judge therefore resolved this 2nd issue in favour of the plaintiffs. It is patent from the above views held by the learned trial judge that the trial Court determined the application solely on the basis that the action was properly commenced by the 1st plaintiff and the other plaintiffs. In effect the learned trial judge did not make any pronouncement and did not consider the alternative prayer of the defendants/applicants. In any event, as the defendants were dissatisfied with the ruling of the learned trial judge, they appealed to the Court below. Now, in view of the decision of the Court below in respect of the issues raised before that Court that led to this appeal, I consider it desirable to reproduce the issues raised particularly by the defendants. They are:- “(1) Whether the learned trial judge in the light of the application and the evidence before him was right in formulating question 2 at page 234 of the Records in respect of which he proffered an answer in the ruling appealed against. (2) Whether the action before the Court below was properly brought in the name of the 1st Plaintiff/Respondent in the sense that it was authorised on behalf of the 1st plaintiff. PAGE| 7 (3) Whether in the circumstance of the dispute as to who are the authentic directors of the 1st plaintiff/respondent should the court below have refused to order a meeting of all the shareholders so as to decide whether the 1st Plaintiff/Respondent should continue as a party to the action.” The plaintiffs/respondents also filed a cross-appeal as they were not satisfied with that portion of the judgment where the trial Court held that all the personal estate of Late Chief T.A. Odutola including his shares in the 1st plaintiff/company had become vested in the 1st defendant from the date of the order of the Court below appointing him as an administrator pendente lite by the single act of that appointment and that, without the 1st defendant obtaining Letters of Administration. Consequently, the trial Court held that the 1st defendant was competent to challenge the institution of this action in the name of the 1st plaintiff. Pursuant thereto, the plaintiffs filed a four ground notice of cross-appeal and whereon they raised three issues for the determination of their cross-appeal. The issues raised are:- “(1) Whether in view of the state of the law, the learned trial judge was right in making a finding that all the personal estate of Late Chief T.A. Odutola became vested in the 1st defendant from the date of his appointment as Administrator pendente lite by the single act of that appointment by the Court without obtaining letters of administration. (2) Whether it was proper in law for the learned trial judge at the interlocutory stage to make pronouncements that touches (sic) on the merits of the substantive case. (3) Whether on the unchallenged affidavit evidence before him, the learned trial judge did not err in finding that the 1st defendant has the locus and competence to challenge the authority for the commencement of this action in the name of the 1st plaintiff.” After the Court below was addressed by the learned counsel for the parties, that Court by its judgment held that the appeal has merit, and therefore set aside the decision of the trial Court dismissing the application. Also the Court below declined to strike out the name of the 1st defendant as to do that would pre-empt the outcome of the meeting of the shareholders. That Court further ordered that a meeting of the shareholders of the 1st plaintiff/ company be held to determine whether or not the 1st plaintiff should continue as a party in the suit. The trial Court was also ordered to give necessary directives as to the conduct of the shareholders’ meeting. Apart from holding that there is merit in the contention of the cross-appellant that the trial Court was wrong to have, in the interlocutory proceedings, made pronouncements that touch on the merits of the substantive case, the cross-appeal was dismissed as it found it unmeritorious. The plaintiffs who were dissatisfied appealed against the decision of the Court of Appeal to this Court. From henceforth, I will refer to the plaintiffs as appellants and the defendants, respondents. In consonance with the rules of this court, briefs were filed and exchanged. For the appellants, the following are the six issues for the determination of the appeal: (1) Whether the Court of Appeal did not err when it made pronoun-cements or decisions at an interlocutory stage on issues in the substantive case as to whether the 1st defendant has the competence to deal with the estate of late Chief T.A. Odutola without first obtaining the grant of letters of administration and when it placed reliance on the dispute Form C07 filed by the PAGE| 8 defendants at the Corporate Affairs Commission, Abuja, as evidence of the competence or locus of the 2nd – 3rd defendants. (2) Whether the institution of this action in the name of the 1st plaintiff company was authorized by the company. (3) Whether the Court of Appeal did not misinterpret and misapply the provisions of section 63 of the Companies and Allied Matters Act, 1990 when it decided that subsection 63 (5)(5) gives the general meeting exclusive control over the issue – whether to institute legal proceedings in the name of the company. (4) Whether the Court of Appeal did not err when it found that the 1st – 13th defendants had the locus to challenge the commencement of this action in the name of the 1st plaintiff company. (5) Whether the Court of Appeal did not err when it granted without qualification, the alternative relief sought by the respondents by ordering that a general meeting of the 1st plaintiff be held for the purpose of determining its directions or instructions as to whether the 1st plaintiff company should continue as party to the suit. (6) Whether the Court of Appeal was right in failing to strike out the only issue identified by the defendants/cross respondents which does not arise from the grounds of appeal formulated by the plaintiffs/cross-appellants?” In the brief filed on behalf of the 1st to 13th respondents, two issues were identified for the determination of the appeal. They are:- “(i) Whether the lower court was right in holding that the substantive suit in the trial Court was improperly commenced in the name of the 1st respondent company and therefore, a meeting of the shareholders of the 1st respondent company should be held to decide whether the 1st respondent company should continue as a party to the substantive suit. This issue relates to Grounds 1, 2, 3, 4, 5, 6, 8 and 9. (ii) Whether the lower Court made any pronouncements which touch on the substantive issues before the trial Court and therefore warrant a setting aside of the judgment of the Court of Appeal. This issue relates to Grounds 7 and 10.” Before considering any or all of the issues raised on behalf of the parties by their respective counsel, it is desirable to make the following observations. First, it is not in dispute that the appellants took out a writ of summons in the Federal High Court, Lagos, in Suit No.FHC/L/CS/992/2000 against 16 respondents including the Corporate Affairs Commission wherein they sought for seven reliefs. As these reliefs and the Statement of Claim filed pursuant to the writ have been set out earlier in this judgment, I do not need to set them down here. However, rather than join issues with the appellants on the Statement of Claim filed against them, the 1st – 6th, 8th – 11th and 13th – 15th respondents by their learned counsel filed an application for two prayers which were clearly framed in the alternative. Though they have been quoted above, I think it is pertinent to restate them: PAGE| 9 “(i) An Order striking out the name of the 1st plaintiff herein as a party tothis action. ALTERNATIVELY (ii) An Order staying proceedings in this action and ordering a meeting of shareholders of the Odutola Holdings Limited with a view to determining their directions or instructions as to whether the 1st plaintiff/company should continue as a party to this suit.” As aforesaid, the trial Court refused to strike out the name of the 1st appellant for reasons given in the judgment of the Court. The Court below overturned that ruling of the trial Court and went on to make an order in respect of the alternative prayers. Against the reversal of this decision, the appellants have raised several issues which I have reiterated above already. But in my humble view, not all the issues raised are necessary for the determi-nation of the appeal. This is because several of the issues raised by the appellants and which the Court below made pronouncements upon did not flow from the ruling given by the trial Court in respect of the application brought before it by the respondents. After a careful perusal of the judgment of the Court below, the grounds of appeal filed against that decision and the subject matter of the application that led to the ruling of the trial Court, it is my respectful view that the only issues that are germane to this appeal are the 1st and 5th issues filed by the appellants. As the issues raised by the respondents are not dissimilar, they will be considered in the light of the arguments advanced in the consideration of the merits of the appeal. I begin with Issue 1. The question raised under this issue is, whether the Court below did not err when it made pronouncements or decision at an interlocutory stage on issues in the substantive case as to whether the 1st defendant has the competence to deal with the estate of late Chief T.A. Odutola without first obtaining a grant of administration. Also, the Court below as part of its decision placed reliance on the disputed Form CO7 filed by the defendants at the Corporate Affairs Commission, Abuja as evidence of the competence or locus of the 2nd – 13th defendants. Now, the contention made for the appellants is that the Court below erred in making such pronouncements as they duly identified in their brief. And that the pronouncements so made are prejudicial to the just determination of the outstanding questions that are pending in the Courts between the parties. On the other hand, learned counsel for the respondent has argued to the contrary in the respondents’ brief. In other words he wants tins Court to hold that the Court below did not make any pronouncement capable of being prejudicial to the just determination of the substantive suit. In the circumstances, it would be helpful for the proper resolution of this question to refer to some of the pronouncements made by the Court below in this regard. PAGE| 10 And in this context, it is desirable to refer to the 4th relief endorsed in the Statement of Claim which is for: “A declaration that the 1st defendant has no locus or authority to exercise any power as an administrator pendente lite over the shares which form part of the estate of late Chief T.A. Odutola without first obtaining a grant of administration from the Ogun State High Court pursuant to the order appointing him.” It is clear from the relief quoted above that the appellants were raising a dispute between the parties with regard to the status of the 1st respondent and his right to administer the estate of the late Chief T.A. Odutola. I have already noted that the respondents filed an affidavit in support of the application before the High Court which is the subject of the ruling and that a counter-affidavit was also filed by the appellants. The respondents were still to file a defence to the claim of the appellants but the trial Court went on to say in the course of its ruling as follows: “Although these averments are denied by the 1st plaintiff company in the counter affidavit caused to be deposed to and filed on his behalf. Nevertheless, I believe his is an issue of law and in this regard this Court is not in a position to query the appointment of the 1st Defendant Applicant as an administrator pendente lite of the Estate of Chief T.A. Odutola (Deceased) pursuant to the power conferred on the Ogun State High Court under the provision of Section 27 of the Administration of Estate Law Cap. 1 Laws of Ogun State as the personal representative of Chief T.A. Odutola (Deceased). On the contrary this Court is entitled to take judicial notice of same and to hold that as at today, the 1st Defendant remains the personal representative of the Deceased and that all the personal Estate of Chief T,A. Odutola (Deceased) including his shares in the 1st Plaintiff Company became vested in the 1st Defendant from the date of the Order of Court appointing him as an administrator pendente lite, by the single act of that appointment by the Court without obtaining Letters of Administration. He is therefore in my view competent to challenge the authority of the 1st Plaintiff in instituting this action by virtue of his office as administrator pendent lite of the Estate of Chief T.A. Odutola in whom all the personal Estates of the Deceased including the shares in the 1st Plaintiff Company became vested on appointment by the said Order of Ogun State High Court.” After a careful perusal of the above quoted passage from the ruling of the trial Court, it seems to me that the learned counsel for the appellants was right in his submission. There can be no doubt that the pronouncement of the learned trial judge went beyond what is required of him to rule on the application before him.

SC. 263/2001