Securities & Exchange Commission V. Prof. A. B. Kasunmu, San & Anor (2008)
LawGlobal-Hub Lead Judgment Report
PAUL ADAMU GALINJE, J.C.A.
This appeal is against the judgment of Mustapha, J. (as he then was) of the Federal High Court sitting in Lagos, which was delivered on the 15th day of January 2003.
The facts of the case that gave rise to this appeal are straight forward and simple, The 1st Respondent has ably set same out in his brief of argument. I will therefore do no more than to recount them briefly in this judgment.
The 1st Respondent is a senior counsel and has been an external solicitor of Chartered Bank Plc, (Henceforth to be referred to as “the bank”) from its incorporation to date.
In 2001 the bank sent an application to the Appellant, in which he sought for permission to raise funds from the Capital Market. Prior to this application the bank’s secretary and the legal adviser wrote and informed the 1st Respondent that he will act as solicitor to the bank in respect of the public issue, an offer, which the 1st Respondent accepted. While the application to raise funds from the Capital Market was pending, the Appellant informed the bank that only a solicitor duly accredited and registered with the Appellant can act as solicitor to the public issue. In furtherance of that information, the Appellant sent a list of solicitors so accredited and registered with it for the bank to choose from among the solicitors so listed. This information was accordingly passed on to the 1st Respondent who by a letter dated 11th July 2001 informed the bank that the Appellant has no statutory power to ask that the 1st Respondent be registered with it before he could act as solicitor to the public issue. In addition the 1st Respondent wrote a letter dated 5th October 2001 to the Appellant in which he protested against its regulation and the directive to the bank and warned that in the event that his Chambers was sidelined based on the Appellant’s directive and regulation, he would sue for damages for fees the Chambers would have earned.
After these correspondences, the public issue by the bank was eventually approved by the Appellant without the 1st Respondent’s name being approved as solicitor to the public issue. It was on the basis of the foregoing that the 1st Respondent, by an originating summons dated 21st day of January 2002 and filed on the 22nd January 2002 sought for the following reliefs: –
- A declaration that until the Federal Government acting through the Federal Minister of Finance has duly constituted and put in place the chairman and members of the Securities Tribunal as provided for under section 224 of Decree No. 45 of 1999 the plaintiff is entitled to seek redress in court in respect of decisions and/or actions of the 1st Defendant affecting the rights and obligations of the plaintiff.
- The alternative to claim [1] above, a declaration that until the setting up by the 2nd Defendant of the Securities Tribunal the regulation made by the 1st Defendant pursuant to the powers derived from the provisions of decree 45 of 1999 cannot become operative for to hold otherwise will deprive the plaintiff of his constitutional right to challenge decision of the 1st Defendant in respect of actions taken by it on such regulations that may affect the plaintiff’s rights and obligations.
- A Declaration that the 1st Defendant has no rights or powers under the provision of Decree No. 45 of 1999 or under any other law to demand, direct and/or insist that the plaintiff must be accredited and/or registered with the 1st Defendant before the plaintiff can act or be appointed as a solicitor to any Capital Market transaction and more particularly before the plaintiff can act as a solicitor to a company in a public issue,
- A Declaration that any regulation made by the 1st Defendant requiring a solicitor to be accredited and registered with the 1st Defendant before the solicitor can act in a capital market transaction is illegal and ultra vires and inconsistent with the provision of Decree No. 45 of 1999.
- Damages in the sum of Six hundred Thousand Naira (N600,00.00) against the 1st Defendant being the fees the Plaintiff would have earned if he had acted as solicitor to Chartered Bank Plc in its just concluded Public Issue.
- Cost of this action as may be assessed by this Honourable Court.
The originating summons was duly supported by a 25 paragraphs affidavit deposed to by one Miss. Omotola Modupe Adebanjo, a counsel in the Chambers of Professor A. B. Kasunmu.
Several exhibits were annexed thereto. The Appellant, who was the 1st Defendant at the lower Court filed a memorandum of appearance dated 12th March 2001 and thereafter filed a notice of preliminary objection in which it urged the lower Court to dismiss the originating summons on the ground that it lacked the requisite jurisdiction and that the Appellant had no locus standi to institute the action against it.
In addition the Appellant filed four paragraphs counter affidavit dated 16th April 2002.
Issues having been joined, parties were directed to submit written addresses incorporating therein the preliminary objection raised by the Appellant. The 1st Respondent and the Appellant complied with the order of the Court by filing their respective addresses. In a reserved and considered judgment which was delivered on the 15th day of January 2003, the lower Court granted reliefs 1-4 and dismissed the 5th relief on the ground that same was not specially proved.
It is against the judgment aforesaid that the Appellant has appealed to this Court. Its notice of appeal which is dated 28th February 2003 and filed on the 10th March 2003 contains five grounds of appeal. These grounds without their particulars read thus: –
“A. The learned trial Judge erred in law in holding that legal practitioners and accountants are not included in the intendment of the words “such other intermediaries” in Section 29 (1) ISA as well as the definition of Capital market operator in sections 8 and 30 and because the definition of investment adviser in section 264 specifically exempted the legal practitioner or accountant where his advise is merely incidental to the practice of his profession as Barrister & Solicitor or accountant
B. The learned trial Judge erred in law in refusing to apply the ejusdem genens rule m the interpretation of the words “such other intermediaries” used in the Section 29 (1) of TSA 1999 as well as the definition of Capital Market Operator in Section 30 of ISA when the persons listed in those sections arc parties to a typical public offer of shares and not necessarily those involved only in buying and selling of shares, but includes those otherwise dealing with those securities.
C. The learned trial Judge erred in law in holding that Rule 39 of the SEC Rules requiring registration of solicitors is invalid because there is no enabling power to regulate solicitors under the substantive provisions of section 29 of the ISA 1999.
D. The learned trial Judge having found that the Investment and Securities Tribunal was properly established under the ISA 1999 though not a superior court of record erred in law in proceeding with the case on the basis that no such tribunal has been set up.
E. The learned trial Judge erred in law in failing to consider the submission of the 2nd Defendant’s counsel to the effect that a legal practitioner required registration if he is to participate or lend his name to the offer documents in a sale effort to the public in the Capital Market.”
In line with relevant rules of this Court the Appellant and the 1st Respondent filed their respective briefs of argument. The Appellant Formulated five issues for the determination of the appeal. These issues are reproduced hereunder as follows:-
“1. Whether the learned trial Judge was right in holding that the 1st Respondent is not included in the intendment of the words “such other capital Market intermediaries as may be licensed by the Commission in accordance with the Regulations made under this Act.” As contained in Section 30 of the Investment and Securities Act 1999.
- Whether the learned trial Judge was right in refusing to apply the ejusdem generis rule in the interpretation of the words ” such other intermediaries” and “deal in securities” used in section 29 (1) of ISA 1999 as well as the definition of Capital Market Operator in Section 30 of ISA 1999 so as to include legal practitioners and other intermediaries involved in capital market transactions or deals within the contemplation of those words.
- Whether by virtue of Sections 258 (1) and 262 (1) of the Investments and Securities Act 1999 the Appellant docs not have power to make regulation, that is Rule 39 of the SEC (Rules and Regulations).
- Whether by virtue of Section 564 of the ISA 1999 the 1st Respondent does not require registration as an expert if he is to participate or lend his name to the offer documents in a sale effort to the public in the Capital Market.
- Whether the Federal High Court has jurisdiction to determine the matter having regard to Section 251 (1) (P) and (s) of the 1999 Constitution read together with the provisions of the Investment and Securities Act 1999 setting up the Investment and Securities Tribunal to decide dispute arising from Capital issues under the Exclusive Legislative List Act of the 1999 Constitution and superceding provisions of the Companies and Allied Matters Act 1990 on Capital issues and securities dealings of companies.”
The 1st Respondent on his part formulated 4 issues to wit:-
“1. Whether the trial Judge was right in holding that the Appellant has no right or power under Decree No. 45 of 1999 to compel or insist on the accreditation or registration of the 1st Respondent before acting as solicitor to a company in a public issue.
- Whether the 1st Respondent is a Capital Market Operator and falls within the category of personal to be registered pursuant to Section 29 (1) of the Investment and Securities Act 1999.
- Whether the trial Judge was right in holding that the Federal High Court had jurisdiction to entertain the 1st Respondent’s originating summons in the absence of a duly constituted Securities and Investment Tribunal.
Whether ground 3 (e) of the Appellant’s Notice of appeal is competent “and if answered in the affirmative”, whether Section 54 ISA 1999 requires the registration of a legal practitioner as a Capital Market Operator.”
Before I consider the issues formulated by the parties on the merit, I wish to state clearly that issues formulated by parties for consideration of their respective case must related to or be distilled from the grounds of appeal. Any issues not related to the grounds of appeal are incompetent and are liable to be struck out. See Amadi v. N. N. P. C (2000) 10 NWLR (Pt.674) 76; (2000) 6 SCJ 1; Archbishop of Jatau v. Alhaji Ahmed & 4 ors (2003) SCNJ 382 at 388; Falola v. Union Bank of Nig. Plc (2005) 2 SC (Pt.11) 62; Shittu v. Fashawe (2005) 7 SC (Pt. 11) 107.
A Respondent who did not file a cross appeal cannot formulate issues that are not based on and correlate with the grounds of appeal filed by the Appellant. See Animashaun v. University College Hospital (1996) 10 NWLR (Pt. 476) 65; Arowolo v. Akapo (2003) 8 NWLR (Pt. 823) 451; Padaw v. Jatau (2003) FWLR (Pt.164) 228.
In the instant appeal, the Respondent’s 4th issue partially complains about the incompetency of ground 3 (e) and whether Section 54 ISA 1999 requires the registration of a legal practitioner as a Capital Market Operator. While the second part of the issue is related to ground C of the grounds of appeal, the first part certainly is not related to any of the grounds of appeal. As it is, it is difficult to separate this issue without doing harm to the adversary system, which this Court operates. To this extent therefore, I find the Respondent’s 4th issue incompetent and same is accordingly struck out.
I will now consider the five issues formulated by the Appellant in this appeal since they seem to have adequately covered the three issues formulated by the Respondent. In doing so I will like to treat the 5th issue first, as it questions the jurisdiction of the lower Court. This is so because the issue of jurisdiction is fundamental to the question of the competence of the Court adjudicating. It is therefore crucial for this Court to determine whether the lower Court had the requisite jurisdiction to entertain the matter which gave rise to this appeal first.
On the issue of jurisdiction the learned trial Judge at page 387 of the record of appeal, in his judgment said:
“It is pertinent to say that the Federal High Court is a creature of the Constitution, Section 249 of the constitution of the Federal Republic of Nigeria 1999 established this Court. The scope and extent of the court’s jurisdiction and powers are spelt out in Section 251 and 252 of the same constitution. It is therefore the same constitution that can oust or limit its jurisdiction and curtail its powers………….. It is my view that section 242 of the Act which is now deemed to be Act of the National Assembly and not a constitutional provision and in so far as it has provided that no civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the tribunal constituted under the Decree is empowered to determine is inconsistent with the provision of section 6 (6) (b) of the aforesaid constitution which provision has conferred on this Court judicial powers on all matters between persons, or between government or authority and to any person in Nigeria and to all actions and proceedings relating thereto, for the determination of any question as to civil rights and obligations of that person. That section to the extent that it purports to oust the jurisdiction of this court is invalid.”
I totally agree with the learned trial Judge that any Act of parliament that is inconsistent with the provisions of the Constitution is void to the extent of such inconsistency. This is so because the Constitution of this country is the grundnorm. It is the Supreme Law of the land and all other legislation must queue behind it. The supremacy clause is provided for in Section 1 (1) of the Constitution of the Federal Republic of Nigeria 1999 in the following words: –
“This Constitution is supreme and its provisions shall have binding force on all authorities and persons throughout the Federal Republic of Nigeria.”
In Attorney-General, Abia State v. Attorney-General, Federation (2006) 16 NWLR (Pt. 1005) 265 at 381 paragraphs E, while commenting on the supremacy of the constitution, My Lord, Tobi, JSC said: –
“The Constitution of a nation is the fons et origo, not only of the jurisprudence but also of the legal system of the nation. It is the beginning and the end of the legal system. In Greek language, it is the alpha and the omega. It is the barometer with which all statues are measured. In line with this kingly position of the Constitution, all the three arms of Government are slaves of the Constitution, not in the sense of undergoing servitude or bondage, but in the sense of total obeisance and loyalty to it.
This is in recognition of the supremacy of the Constitution over and above every statute, be it an Act of the National Assembly or a law of the House of Assembly of a State.”
The Securities and Exchange Commission was established by Section 1 of the Investments and Securities Act, Cap 124 laws of the Federation of Nigeria 1999. It is an Act of Parliament. Section 242 of the Act provides for the establishment of a Tribunal with exclusive jurisdiction to entertain any suit or proceeding in respect of any matter which it is empowered under the Act to determine and no injunction shall be granted by any Court against any action taken by the Tribunal. For avoidance of doubt, I hereby reproduce Section 242 of the Investments and Securities Act as follows:-
“Save as provided elsewhere in this Act, no civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Tribunal constituted under this Act is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred on the Tribunal by or under this Act.”
The question now is, can the Federal High court’s jurisdiction, constitutionally guaranteed be ousted by an Act of Parliament? Clearly the answer is no. In the instant case, is the Federal High Court seized with the jurisdiction to determine the claims of the Respondent at the lower Court? I have set out elsewhere in this judgment, the claims of the Respondent. To determine whether the Federal High Court has the jurisdiction to determine same, recourse has to be made to the provisions of the constitution. Section 251 of the Constitution of the Federal Republic of Nigeria 1999 gives limited, but exclusive jurisdiction to the Federal High Court to hear and detemine all those items contained therein. The relevant provision concerning this case is Section 251 (1) (r) of the Constitution which says: –
“Notwithstanding anything to the contrary contained in this Constitution and in addition to such other jurisdiction as may be conferred upon it by an Act of the National Assembly, the Federal High Court shall have and exercise jurisdiction to the exclusion of any other Court in civil causes and matters any action or proceeding for a declaration or injunction affecting the validity of any executive or administrative action or decision by the Federal Government or any of its agencies”.
The Securities and Exchange Commission is without doubt a Federal agency. The Respondent’s claims at the lower Court sought for declarations affecting the validity of its decision which sought to compel the Respondent to register with it before he can act or be appointed a solicitor to a company in a public issue of its shares. Clearly the Respondent’s claims fall within the ambit of Section 251 (1) (r) of the Constitution. Although the Courts have no duty and indeed power to expand the jurisdiction conferred upon them, they are however enjoined to guard their jurisdiction zealously and jealously. They have a duty and indeed jurisdiction to expound the jurisdiction conferred on them. See The African Newspapers of Nigeria & ors v. The Federal Republic of Nigeria (1985) 1 All NLR 50, (1985)2 NWLR (Pt. 6) 137.
Where a Constitution has clearly conferred jurisdiction on the Court in any matter, it will be native for such a Court to abdicate from its responsibility of doing justice in the matter on the ground that such jurisdiction has been taken away by an inferior legislation. From the foregoing even if the Tribunal were in place, it would have not made any difference as the Investment and Securities Act is incapable of ousting the jurisdiction of the Federal High Court. I therefore agree with the learned trial Judge that the Federal High Court rightly assumed jurisdiction over the Respondents’ claims. The Appellant’s issue 5 is therefore resolved in favour of the Respondents and the ground of appeal upon which it is formulated is hereby dismissed.
I will now treat issues 1 and 2 together as the Appellant has so treated them in its brief of argument. Issues 3 and 4 will be treated separately. Issues one and two are formulated from grounds A and B of the grounds of appeal respectively. The Appellant’s quarrel here is against the interpretation of Sections 29 (1) and 30 of the Investment and Securities Act of 1999 by the lower Court. According to Mr. Anthony I. Idigbe, learned senior counsel for the Appellant, the learned trial Judge was wrong in holding that the 1st Respondent is not included in the intendment or the words “such other capital market intermediaries as may be licensed by the commission in accordance with the regulations made under this Act” as contained in Section 30 of the Investment and Securities Act 1999. According to the learned senior counsel the learned trial Judge should have applied the ejusdem generic rule in the interpretation of the words, “such other intermediaries” and “deal in securities” used in section 29 (1) of Investment and Securities Act 1999 as well as the definition of Capital Market operator in Section 30 of the Investment and Securities Act 1999 so as to include legal practitioners and other intermediaries involved in capital market transactions or deals within the contemplation of those words. To buttress his contention, learned senior counsel cited in aid the authority of Texaco Nig. Plc v. Lukoro (1997) 6 NWLR (Pt.510) 651 at 664 paragraphs C-D where ejusdem generis rule of construction was defined by Akintan, JCA as he then was.
In order to appreciate the parties’ argument, it is pertinent to set out the provisions of the relevant sections of the Investment and Securities Act.
Section 29 (1) of the Act provides as follows:-
“Subject to the provisions of subsection (2) of this section, no securities dealer, share transfer agent, banker to an issue, Market trustee of a trust deed, register to an issue, merchant banker, issuing houses, under writer, operators portfolio manager, investment adviser and such other intermediaries associated with the securities industry shall buy, sell or deal in securities except under and in accordance with the conditions of a certificate of registration obtained from the commission in accordance witl1the conditions of a certificate of registration obtained from the commission in accordance with the regulations made under this Act.”
Subsection 2 of section 29 of the Act provides thus:-
“A market operator who, immediately before the commencement of this Act is associated with the securities industry for which no registration certificate was necessary prior to this Act, may continue to operate as such for a maximum period of three months from the commencement of this Act or if he has applied for registration under this Act he shall continue to operate within that period till the disposal of the application and thereafter in accordance with the regulations made for registration under this Act.”
Section 30 of the Act also provides as follows:-
“Capital Market Operator’ includes a securities dealer, a stock broker, sub-broker, jobber, share transfer agent, banker to an issue, trustee of a trust deed, register to an issue, merchant banker issuing houses, underwriter, portfolio manager, investment adviser and such other Capital Market intermediaries as may be licensed by the commission in accordance with the regulations made under this Act.”
In consideration of the sections of the Act which I have set out above, the learned trial Judge came to the following conclusion, at page 248 of the record of appeal thus: –
“A legal practitioner is not specifically mentioned in section 29 (1) or section 30 of the Act. Now, beside the fact that a legal practitioner is not specifically mentioned in sections 29 (1) and 30 of the Act, section 264 of the same Act goes on to expressly enact that an Investment Adviser does not include a Solicitor and Advocate or Accountant in practice whose carrying out of the business is solely incidental to the practice of his profession. It is therefore my view and this I hold that it is not the necessary intendment of the Act to include legal practitioner amongst those to be registered by the Securities and Exchange Commission.”
After a careful perusal of Sections 29 (1) and 30 of the Investment and Securities Act, I am of the firm view that the 1st Respondent is not included in the intendment of the words “such other capital market intermediaries” as may be licensed by the commission in accordance with the Regulations made under the Act. I am also of the firm view that the learned trial Judge was right in refusing to apply the ejusden generis rule in the interpretation of the words “such other intermediaries” and “deal in securities”,
The learned trial Judge has stated in his judgment, that there is nowhere in the two sections of the Act where it is provided that solicitors are among the persons to be registered with the commission. In a construction of a statutory provision, where a statute mentions specific things or persons, the intention is that those not mentioned are not intended to be included. This principle is based on the latin phrase, “expressio unus est exclusion alterius,” that is the expression of one thing is the exclusion of another. In other words, the express mention of one thing in a statutory provision automatically excludes any other which otherwise would have applied by implication with regard to the same Issue. However in the instant appeal, the sections under scrutiny seem to extend its frontier by the use of the words “such other intermediaries”. However in order to interpret an Act or section of an Act, it is necessary to read the entire provisions of the Act together in order to discover the intention of the legislator in enacting the said provisions of the Act or Section of it. See Odutola Holdings Ltd v. Ladejobi (2006) 12 NWLR (Pt. 994) 321 at 350 paragraphs C-D.
In the instant appeal, if the learned senior counsel for the Appellant had taken the pains to read the entire provision of the Act, he could have easily come to the simple conclusion that a solicitor and advocate is not included in the phrase “such other capital market intermediaries…” This is so because under the definition of “Investment adviser” as provided for in section 264 of the Act, it is clearly stated that an Investment Adviser does not include a solicitor and advocate or Accountant in practice whose carrying out of their business is solely incidental to the practice of their profession.
In Unipetrol Nig. Plc v. E.S.B.I.R. (2006) 8 NWLR (Pt.983) 624 at 641 paragraphs F-H, Oguntade, JSC said:-
“I am in agreement with Appellant’s counsel that in the interpretation of a statute, the words used must be given their ordinary and plain meaning. It is equally important however, that a statute should always be looked at as a whole. In the instant case the Appellant’s counsel fell into the error of construing section 4 (2) of Cap. 71 in isolation from the other provisions in the law. When section 4 (2) is read along with section 51 (1), the argument of Appellant’s counsel becomes unsustainable.”
See Awolowo v. Shagari (1979) 6-9 SC 51; Bronik Motors v. Wema Bank (1983) 1 SCNLR 296.
Clearly the failure of the Appellant to read sections 29 (1) and 30 of the Act along with Section 264 of the same Act has beclouded its vision and has led it into unsustainable argument on this score.
On the issue of ejusdem generis rule, I say without fear of contradiction that a solicitor acting in cause of his profession can never be included in the phrase ‘such other intermediaries’ in section 29 (1) of the Act nor “such other capital market intermediaries as may be licensed by the Commission” in section 30 of the Act, and so I hold. For a solicitor who acts for a party in a dispute does not become an interested party in such dispute. For if this were to be so several counsel who appear for persons convicted for robbery would have ended up behind bars themselves.
For the reasons I have set out hereinabove, issues I and 2 are resolved in favour of the Respondents and the grounds upon which they are distilled are hereby dismissed.
Issue 3 asks whether the Commission does not have power to make a regulation as provided for under its sections 258 (1) and 262 (1).
Section 258 (1) of the Act provides as follows:-
“(1) The commission may make regulations-
(a) providing for anything requiring to be prescribed under this Act; and
(b) generally for carrying out the principles and objectives of this Act.
Section 262 (1) provides for areas in which the commission can make rules and regulations for the purpose of giving effect to the provisions of the Act, It is therefore very clear from the provisions of the two sections above, that the commission can only make rules and regulations that can give effect to the provisions of the Act Where the Act fails to make provisions for a particular area, any rules made in that regard is invalid as such rules are not made to give effect to the provisions of the Act. I have stated elsewhere in this judgment that a combined reading of sections 29 (1), 30 and 264 shows clearly that a solicitor is not one of those to be registered with the Commission. Rule 39 of the Rules and Regulations made by the Securities and Exchange Commission which provides that legal practitioners and other professionals whose opinion directly impact on capital market transactions are also subject to registration by the commission is not made for the purpose of giving effect to the Act, as it is inconsistent with the express provisions of Sections 29 (1), 30 and 264 of the Act.
In Gov. Oyo State v. Folayan (1995) 8 NWLR (Pt 413) 292, which was cited and relied upon by Anthony Idigbe, learned counsel for the Appellant, it was held that a subsidiary legislation derives its authority and validity from a substantive law and it does not have the capacity to extend such authority. In the present case, Section 39 of the Rules and Regulations made by the Securities and Exchange Commission does not have the authority to extend the scope of the Act to rope in legal practitioners as one of those to be registered with the Commission, when the substantive Act clearly exclude legal practitioners from such registration. Therefore agree with the trial Court that even though the Commission established by the Act has the power to make rules and regulations, such rules must be made for the purpose of giving effect to the provisions of the Principal Act. Any rules so made that arc inconsistent with the provisions of the principal Act, is invalid to the extent of such inconsistency. In the present appeal rule 39 of the Rules and Regulations as it affects legal practitioners is invalid, and so I hold.
Issue three is therefore resolved in favour of the Respondent and the ground of appeal from which it is formulated is hereby dismissed.
Issue 4 has received so much attention in my handling of issues 1 and 2. I have clearly stated therein that, the 1st Respondent does not require registration as an expert as he is not a participant in the buying and selling of stocks in the capital market.
Any further comments here will only amount to repetition. I therefore resolve this issue in favour of the Respondent.
On the whole therefore this appeal is devoid of any merit and same shall be and it is hereby dismissed.
The Appellant shall pay Thirty Thousand Naira (N30,000.00) to the Respondent as cost of prosecuting this appeal.
Other Citations: (2008)LCN/2945(CA)
