Home » Nigerian Cases » Court of Appeal » Star Paints Industries Limited & Anor V. Mr. Olu Ogunlela & Ors (1999) LLJR-CA

Star Paints Industries Limited & Anor V. Mr. Olu Ogunlela & Ors (1999) LLJR-CA

Star Paints Industries Limited & Anor V. Mr. Olu Ogunlela & Ors (1999)

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OGUNTADE, J.C.A.

On 11/3/09, the plaintiffs/appellants/applicants filed an application wherein six prayers were made. We were able to deal peremptorily with the first three of the prayers on 17/6/99. The more contentious prayers subsisted and were argued on … I am in this ruling reacting to prayers 4 and 5 of the prayers on the said motion filed on 11th March, 1999 which read:

  1. An order for stay of Execution and/or otherwise for the suspension of the operation of enforcement, howsoever, founded upon the order of dismissal of the suit made on 13th November, 1998 by the lower court pending the determination of the appeal filed herein.
  2. An order of injunction maintaining the status quo ante, immediately prior to the ruling given on 13th November, 1998 concerning the continued sequestration with the 2nd defendant of the N17 Million in dispute pending the determination of the appeal filed herein and/or an order for the continued lodging and sequestration of the N17 Million in dispute with the 2nd defendant Bank in an interest yielding account at prime marked rate pending the final determination of the appeal filed herein.”

The 3rd respondent in the application filed on 11th March, 1999 on 30th April, 1999 brought another application praying for.

  1. “An order directing the 2nd defendant/respondent to release forthwith to the 3rd defendant/respondent the sum of N17 Million together with the accrued interest which is/was the subject of an Ex-parte Order of the Federal High Court Lagos Nigeria made in suit No. FHC/L/CS/794/98 between Star Paints and Anor. v. Mr. Olu Ogunlela & 3 others on 23rd July, 1998 and which order was on 13th day of November, 1998 vacated.

CONSEQUENTLY

  1. An order directing the 3rd defendant/applicant to simultaneously, upon receipt of the said sum of N17 Million, deliver to the Chief Registrar of this Honourahle Court a C.U.T.B) Bank guarantee in favour of the Chief Registrar of this Honourable Court in the sum of N17 Million and in the terms of Exhibit J attached to the affidavit in support of this application.”

The brief facts relevant to both application may be stated thus: The 2nd plaintiff/appellant and the 3rd defendant/respondent were both directors and shareholders in the 1st plaintiff/appellant company. A dispute arose between them as to the manner in which the 3rd defendant/respondent managed the 1st plaintiff/appellant. The competence and integrity of the 3rd defendant/respondent were in issue. The two of them and their solicitors held a meeting on 24/2/98 with a view to resolving the differences. At the end of it each had the option to buy the other out. The 3rd defendant/respondent opted to relinquish his 50% shareholding in the 1st plaintiff/appellant. He was to be paid N17 Million for the shares. It was however determined that auditors or accountants would be called in to determine the extent of the financial liability in 3rd defendant/respondent’s administration of the 1st plaintiff/appellant. Such amount as was ascertained to be the result of the 3rd respondent’s mismanagement was to be deducted from the N17 Million Naira. The N17 Million Naira was paid over to the Embassy of Lebanon (i.e. 4th respondent) which in turn deposited the money with the 2nd defendant/respondent whilst the report of the auditor/accountant was being expected. Two accountants, one of them the 1st defendant/respondent examined the accounts of the 1st plaintiff/appellant in succession. Their findings however, were conflicting to some extent. The first of them ABASS JIMOH & CO., was claiming to the 3rd defendant/respondent. The other by the 1st defendant/respondent would appear exculpatory to some extent. The position resulting was that the N17 Million which could have gone to the 3rd respondent could not be paid to him since his putative liability, if any, remained unascertained.

It was in these circumstances that the two plaintiffs/appellants on 22/7/98 issued their writ of summons in suit No. FHC/L/CS/794/98 seeking the following reliefs:

  1. “A declaration that the Draft report and recommendation on audit and investigation dated 5th June, 1998 by the 1st defendant (Messrs Muyiwa Bunmi Ogunlela & Co. Chartered Accountants) is ultra vires the Terms of Reference and mandate of the said 1st defendant.
  2. A declaration that the draft report and recommendation on audit and investigation dated 5th June, 1998 by the 1st defendant (Messrs Muyiwa Bunmi Ogunlela & Co. Chartered Accountants) is ultra vires the Terms of Reference and mandate of the said 1st defendant.
  3. A declaration that the draft report and recommendation on audit and investigations dated 5th June, 1998 by the 1st defendant is ultra vires the enabling Resolutions of the meeting and minutes thereof of Tuesday 24th February, 1998.
  4. A declaration that on the face of the information facts and evidence presented and/or available to the said 1st defendant the said draft report and recommendation on audit and investigation dated 5th June, 1998 by the 1st defendant is not a correct, true or fair statement of the matters or affairs of the subject and focus of its Terms of Reference and mandate and cannot be used or relied upon howsoever.
  5. An order directing the 2nd defendant to trace, identify, locate and sequestrate in an interest yielding account, the proceeds of the total sum of N17 Million paid on 24th March, 1998 by the 2nd plaintiff’s Bank Draft No. 54681 dated 20/3/98 for N8.5 Million and Bank Draft 12140 dated 20/3/98 for N8.5 Million both drawn on Zenith International Bank Limited as evidenced by the 4th defendant’s receipt dated 23/3/98 pending the determination of this suit.
  6. An order of injunction restraining all (4) defendants, their agents, privies, servants or howsoever from taking any steps or further steps interfering or dealing with and/or otherwise all steps concerning the disbursement of the sum of N17 Million or any other lesser sum of any person party, company or institution whatsoever pending the determination of this suit.
  7. An order of Injunction Quia-timet restraining all (4) defendants, their agents, privies, servants or howsoever from taking steps or further steps howsoever with regard to the use or further use reliance upon or dealing, howsoever with or implementation of the findings and/or recommendations contained in the said Draft Report and Recommendations on audit and investigation dated 5th June, 1998 by the said 1st defendant pending the determination of this suit.
  8. An order for the immediate appointment of a firm of reputable chartered accountants to reconcile the conflicting investigative audit reports of Abass Jimoh & Co. and of Muyiwa Bunmi Ogunlela & Co. so as to issue with Fairness and finality a totally independent and object report hereon.”
See also  Mr. P. K. Ojo V. Engineer Felix Ogbe & Anor. (2007) LLJR-CA

The parties subsequently filed several applications before the lower court. The application relevant to the matter now before me is the one filed by the 3rd defendant on 21/10/98 asking for:

“1. an order dismissing and/or striking out the suit or in the alternative an order striking out the reliefs as contained in the plaintiff’s statement of claim to wit I, II, III, VII and IX so far as it relates to the 4th defendant.”

The grounds for bringing the application were set out thus:

“(a) That the Honourable Court has no jurisdiction to entertain the said claims in so far as it relates to the 4th defendant by virtue of the Diplomatic Immunities and Privileges Act Cap. 97 Laws of the Federation of Nigeria, 1999.

(b) That the agreement leading to payment of N17 Million to the 4th defendant in this suit was realised at the Embassy of Lebanon outside the jurisdiction of this court.

(c) That the condition precedent to the payment of the said N17 Million – “the res” in this case was issued in favour of the Embassy of the jurisdiction of Lebanon. An asset which is outside the jurisdiction of this Honourable Court.

(d) That the condition precedent to the payment of the said N17 Million was a discretion to be undertaken by His Excellency the Ambassador of Lebanon within his Diplomatic powers.

That in the premise, this Honourable (Court) lacks jurisdiction to determine this suit.”

The lower court on 13/11/98 made its ruling on the application by the 3rd respondent challenging its jurisdiction. It concluded the ruling with these words:

“On the 23rd July, 1998 this court made interim orders of injunction, at the time of making the order the court was unaware that it lacks jurisdiction in the matter, it has now come to knowledge of the court that it has no jurisdiction in the matter therefore the order of this court made on the 23/7/98 is a nullity as it was made without jurisdiction, the said order is hereby set aside and discharged. On the whole this application succeeds. I hold that this court lack(s) jurisdiction to entertain this action.

I hereby order as follows:-

  1. That the interim order of injunction issued by this court on the 23rd July, 1998 is hereby discharged forthwith.
  2. That no writ or process instituted or any summons taken out against the Embassy of Lebanon or the Ambassador of Lebanon in Nigeria shall be accepted for filing in the Registry of this court.
See also  Alhaja Abibat Arike & Anor V. Ariyibi Olowopapa & Anor (2002) LLJR-CA

The action is accordingly dismissed, a cost of N20,000.00 is awarded against the 1st and 2nd plaintiffs to the 3rd defendant.”

The 1st and 2nd plaintiffs before the lower court have appealed against the above ruling of the lower court and have brought before us prayers for stay of execution as earlier set out.

At the hearing of the application Mr. E.E. Ogbodu, learned counsel for the 4th respondent took the point hat the application for stay of execution by the plaintiffs/appellants was an abuse of the process of the court as counsel had not previously applied for stay of execution before the lower court.

Mr. S.T. Chia for the plaintiffs/appellants in reply directed our attention to page 374 of the record of proceedings where the lower court specifically ordered no process against the Embassy of Lebanon shall be accepted by the registry of the court below. Order 3 rule 3(4) of the Court of Appeal Rule 1981 provides:

  1. “Where under these Rules an application may be made either to the court below or to the court it shall not be made in the first instance to the court except where there are special circumstances which make it impossible or impracticable to apply to the court below.” It seems to me that since the lower court had by its order in the ruling appealed against barred the registry staff from accepting other processes for filing in the matter, the plaintiffs/appellants were thus enabled to approach this court directly as there were circumstances which made it impossible or impracticable to apply to the court below as provided under Order 3 rule 3(4) of the Court of Appeal Rules above.

Now to the merits of the application. The plaintiffs/appellants are praying for an order staying the execution of the judgment. But the truth is that the lower court never made any order against them in respect of which any execution is in prospect. In other words, no executory order was made by the lower court. The court had merely dismissed the claim. Approached from that angle, one gets the impression that the prayers of the plaintiffs/appellants are inappropriate.

However, it has always been recognized that a court of trial and indeed the appellate court has the jurisdiction which is inherent to ensure that the res in dispute is preserved so that the judgment that may be given by the appellate court is not rendered nugatory. See Kigo (Nig.) Ltd. v. Holman Bros. (Nig.) Ltd (1980) 507 SC 60. This jurisdiction exists even where the court of trial had dismissed the case of the plaintiff.

In Shodeinde & ors. v. The Registered Trustees of the Ahmadiyya Movement in Islam (1980) ? SC. 163 at pp. 174 – 175 the Supreme Court in considering the basis of the jurisdiction referred to the views of Jessel M.R. in Polini v. Gray (1879) 12 Ch. D 438 at page 443.

“The question before us is this: An action is brought to determine the rights of claimants to a fund. The plaintiffs fail in the court of first instance and in the court of second instance, but are about, bona fide, to prosecute an appeal to the court of ultimate resort.’ The plaintiffs allege that the appeal will be nugatory if the fund is paid out to the defendants, and that if the plaintiffs should ultimately succeed to the House of Lords, that success will be useless to them unless an interim order is made for preserving the fund….assuming that contention to be correct in fact, the question is, whether this court has jurisdiction to prevent such a consequence. It appears to me on principle that the court ought to possess that jurisdiction because the principle which underlies all orders for the preservation of property pending litigation is this… that the ultimately successful party is to reap the fruits of that litigation, and not obtain merely a barren success. That principle, as it appears to me, applies as much to the court of first instance and to the Court of Appeal before the second trial as to the court of last instance before the hearing of the final appeal..:”

It seems to me that it matters not how the prayer is framed whether it is one for stay of execution, or stay of proceeding or injunction etc. The important thing is that arguments be directed to the court along the true situation on the ground so that the court may be placed to appreciate what is to be done in the interest of justice.

See also  David Ogba Onuoha V. National Bank of Nigeria Ltd & Anor (1999) LLJR-CA

In the instant case, the plaintiffs/appellants are in effect saying we should order that the N17 Million be retained by the second defendant/respondent (i.e. the Citi-Bank) pending the determination of the appeal and that the same be not paid over to the 3rd defendant/respondent. The 3rd defendant/respondent on the other hand wants us to order the release of the funds to him in exchange for a Bank Guarantee from U.T.B.

I have reflected very anxiously about the positions of the two parties concerned here. The position of the 3rd defendant/respondent is unenviable and difficult. He had relinquished his shares in the 1st plaintiff/appellant company in the hope that would be paid the value of N17 Million for the shares. As the situation is, he is not in possession of the shares nor the money value for it. The plaintiffs/appellants on the other hand have made the point that if we allow the 3rd defendant/respondent to collect the money, we would have determined one leg of the substantive claims i.e. leg 7 of the claims which asks for an injunction restraining all the defendants particularly the 2nd and 4th from releasing or parting with the N17 Million or any lesser sum in its possession.

It seems to me that I ought not to make an order which may in its effect confront the lower court with a fait accompli in the event I hold in the appeal that the lower court ought not to have dismissed the plaintiffs/appellant’s claims. It is correct that the appeal before us is only to decide whether the lower court was right or not to have declined jurisdiction in the matter. But inferentially the entitlement to the N17 Million is also a Res because if I allowed the N17 Million to be paid out to the 3rd defendant/respondent/applicant I would have determined the 7th of the substantive claims.

The argument of the learned counsel for the 3rd defendant/respondent was of course plausible. He argued that the plaintiffs/appellants stood to lose nothing by the payment of the N17 Million to the 3rd defendant/respondent since there was to be provided a Bank Guarantee for the said sum of N17 Million. That argument is alluring. But the question I ask is; if a Bank Guarantee for N17 is the same as the cash of N17 Million why is it necessary to substitute one for the other? Further, it seems to me that it is not wise at this stage to make any order which in its effect may amount to a decree of specific performance of the agreement between the parties as to acceptance by the 3rd defendant/respondent of N17 Million in exchange for the 50% shares in the 1st plaintiff/appellant company. This is the more so when a fundamental aspect of the amount due to the 3rd defendant/respondent – the ascertainment of the amount to be deducted from the N17 Million which was to be the result of the work of audit and inspection of financial records of the 1st plaintiff/appellant company is mired in so much controversy and uncertainty.

In the final result, it seems right and equitable in my view to hold the parties to the same position they were at the commencement of the litigation which is that the 2nd defendant/respondent continues to keep the N17 Million pending the determination of the appeal. The motion by the plaintiffs/appellants succeeds. The motion by the 3rd defendant/respondent fails and is dismissed.

When these motions by the parties were being argued, we suggested to the parties the necessity to proceed expeditiously with the hearing of the appeal in lieu of this application. Counsel did not seem to have seen the wisdom in our suggestion. That offer is still open and we are willing to hear the appeal speedily if counsel show inclination for an abridgment of their periods of filling briefs.


Other Citations: (1999)LCN/0525(CA)

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