Vascumi Investment Nigeria Limited & Ors V. Muktar Ladan (2016)
LawGlobal-Hub Lead Judgment Report
JOSEPH EYO EKANEM, J.C.A.
By a petition numbered as FHC/ABJ/PET/8/2010, the respondent (as 2nd Petitioner) along with another person sought the following reliefs.
“1. That the purported meeting of the Board of Directors held on the 19th June, 2010 and the so called minutes of the said meeting held without proper notice be declared Null and Void and of no effect whatsoever.
2. That all decisions taken therein at the said meeting of the 19th June, 2010 be set aside and declared null and void.
3. An order directing that a legal meeting of the company is held to formularize all the activities of the company in accordance with companies and Allied Matters Act {CAMA}.”
The Petition was filled at the Federal High Court Abuja, Judicial Division (the trial Court).
Upon being served with the petition, the appellants (as respondents) filed a notice of preliminary objection for the petition to dismissed in limine on the following grounds.
?1. There is no personal service on the Respondents as required by law, Order 6 Rule 2 of the Federal High Court (Civil Procedure) Rules,
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2009.
2. The 2nd “Petitioner” has no locus standi to bring this “Petition” against the Respondents.
3.The ?Petition” dated 30th June, 2010 constitutes an abuse of the processes of this Honourable Court as the grounds of the said “Petition” does not constitute such that can be brought by way of “Petition” under the Companies and Allied Matters ACA CAP C20, Laws of the Federation of Nigeria, 2004, or the Companies Proceedings Rules, 1992.”
The preliminary objection was supported by an affidavit and a written address. The respondent filed a written address in opposition to the preliminary objection.
After hearing counsel on both sides the trial Court upheld the preliminary objection in part, striking out the name of the 1st Petitioner. The Court however dismissed ground 3 of the objection and directed the respondent to file an amended petition to reflect the striking out of the name of the 1st Petitioner.
Aggrieved by the ruling, the appellants appealed to this Court by way of a notice of appeal which was amended by the order of this Court made on 14/5/2014. The amended notice of appeal bears 4 grounds of appeal.
?At the hearing
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of the appeal on 4/4/2016, Josiah Daniel – Ebune, Esq; of counsel for the appellants identified, adopted and relied on the appellants’ brief of argument filed on 15/5/2014. He urged the Court to allow the appeal. Counsel for the respondent, Mrs P. E. Ossai identified, adopted and relied on the respondent’s brief filed on 30/5/2014. She urged the Court to dismiss the appeal
In the appellants brief of argument, two issues are formulated for the determination of the appeal. The issues are:
1. Whether the Respondent’s Petition was properly commenced and/ or initiated by due process of law to enable the Court below assume jurisdiction therein? (Grounds 2 and 4 of the Amended Notice of Appeal).
2. Assuming (Without conceding) that the Petition was properly commenced by due process of law, whether the proper parties were before the Court and whether having regard to the setting of the petition the Respondent in this case has the requisite locus standi to maintain the action and/or there is any reasonable cause of action disclosed against the Appellants on the face of the petition? (Grounds 1 and 3 of the Amended Notice of Appeal).
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Respondents counsel in her brief of argument filed on 30/5/2014 adopted the two issues formulated by appellants counsel.
I shall therefore adopt the two issues formulated by appellants’ counsel in determining this appeal but with slight modifications.
1. Whether the respondents’ petition was properly commenced and/or initiated by due process of law to enable the Court below assume jurisdiction.
Appellants’ counsel submitted that the trial Court erred in ruling that the suit was properly initiated as its decision was contrary to the judgment of this Court in UNIPETROL (NIG) PLC V. AGIP (NIG) PLC (2002) 14 NWLR (PT.787) 312, 317 which he said was upheld in Re S. C. Ezendu & 9 Ors (2010) S.C (PT.11) 98, 172 – 173. He referred to Order 3 Rule 1 of the Federal High Court (Civil procedure) Rules, 2009 which, he stated, qualifies the manner of commencement of proceedings by Petition. It was his further submission that the Companies Proceedings Rules, 1992, were meant to specialty regulate all proceedings before the Federal High Court in matters arising from the operation of the Companies and Allied Matters Act (CAMA). He referred to the
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case of SCHROEDER V. MAJOR (1989) 2 NWLR (PT.101) 121 on the rule that where these are two provisions, one special and the other general, covering a subject matter, a case falling within the words of the special provision must be governed thereby and not by the terms of the general provision.
Counsel referred to Rule 2 (2) of the Companies Proceedings Rules 1992 and submitted that the proceedings commenced not by originating summons were incurably defective and the trial Court should have declined jurisdiction. It was his further contention that in holding that the failure of the respondent to answer the point on the commencement of the suit was an oversight the trial Court denied the appellants fair hearing and that it was speculative. He finally expressed his dismay at the trial Court suo motu granting the respondent an amendment of his petition.
For the respondent, it was submitted that the suit was duty commenced. Counsel distinguished the case of UNIPETROL NIG. PLC v. AGIP NIG PLC supra. from the instant case as, according to him, the former was on issuance and service of writ of summons outside jurisdiction and it was a derivative action. It
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was added that the trial Court was fight in holding that the facts pleaded in the petition might not likely be such as would call for mere Interpretation or construction of a written enactment to make it amenable to originating summons. It was his view that the trail Court rightly referred to Order 3 Rules 1, 6, 7, 8, and 9 of the Federal High Court Civil Procedure Rules and held the said Rules to be the principal legislation.
The action of the appellants was, as earlier staled, commenced by way of a petition. The respondent contended that it should have been commenced by way of an originating summons being that it was not instituted to wind up the 1st appellant. The respondent retied on Rule 2(2) of the Companies Proceedings Rules,?1992. The trial Court held that the action was properly commenced by way of a Petition because it was such as it could not be conveniently initiated by way of an originating summons in view of the facts in the petition and because the Federal High Court (Civil Procedure) Rules, 2009 are superior to the Companies Proceedings Rules 1992 and is the principal legislation which regulates civil actions at the Federal High Court. See
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pages 253, 254 and 255 of the record.
Section 254 of the Constitution of Nigeria, 1999 (as amended) provides that:
“Subject to the provisions of any Act of the National Assembly the Chief Judge of the Federal High Court may make rules for regulating the practice and procedure of the Federal High Court.”
The Chief Judge of the Federal High Court has made Rules governing the practice and procedure of the Federal High Court. Such rules prescribe the modes or methods of commencing suits before the Court. Where rules prescribed a method of commencement of an action, the method must be employed in initiating such action. In the case of LAHAN V. ATTORNEY-GENERAL (WEST) (1963) 1 ALL NLR 219, 224 (Reprint), the Supreme Court held that where a statutory provision is made for making a claim, that ought to be pursued in making it. See also KANO STATE OIL AND ALLIED PRODUCTS LIMITED V. KOFA TRADING COMPANY LIMITED (1996) 2 SCNJ 325, 334 (also reported in (1996) 6 NWLR (PT.436) 244.
?Where there is a special procedure for the enforcement of a particular right or remedy non-compliance therewith or departure therefrom has been held to be incurably fatal to
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the enforcement of the right or remedy. See ECONOMIC AND FINANCIAL CRIMES COMMISSION V. EKEOCHA (2008) 14 NWLR (PT.1106) 161, 177 – 178.
The action of the respondent is founded on Section 300 of the Companies and Allied Matters Act (CAMA) which makes provision for the protection of a minority in a company by injunction or declaration to restrain the company from conducts specified in Sub-section (a) – (f) thereof. It provides exceptions to the majority rule propounded in FOSS v. HARBOTTLE (1843) 2 KB 46.
The rule is codified in Section 299 of the CAMA which provides that
“Subject to the provisions of this Act, where an irregularity has been committed in the course of a company’s affairs or any wrong has been done to the company, only the company can sue to remedy the wrong and only the company can ratify the irregular conduct,”
Section 635 (1) of the CAMA provides,
?The Chief Judge of the Federal High Court may make Rules of Court for carrying into effect the objects of this Act so far as they relate to the winding – up of Companies or generally in respect of other applications to a Court under this Act.?
?Pursuant
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thereto and even more fundamentally pursuant to Section 254 of the Constitution of Nigeria, 1999 (as amended) the Honorable Chief Judge of the Federal High Court made the Companies Proceedings Rules 2(1) thereof provides as follows;
“Except in the case of the application mentioned in Rules 5 and 6 of these rules and applications made in proceedings relating to the winding up of companies, every application under the Act shall be made by originating summons.”
Since the action of the respondent was an application under the CAMA but is not a winding-up proceeding, it ought to have been initiated by originating summons and not by way of a petition as was done in this case. The reason is that the use of the word “shall’ in Rule 2 (1) of the Companies Proceedings Rules, 1992 makes the provision mandatory. In the case of UNIPETROL NIGERIA PLC V. AGIP (NIG) PLC & 15 ORS, In Re: S.C. EZENDU (2002) 14 NWLR (PT 787) 312, 337, ADEREMI, JCA (as he then was) stated as follows;
“The aforementioned respondents have argued forcefully… that though the provisions of Rule 2 (1) was breached such a breach was a mere irregularity which could be waived … The rule referred to (supra) touches on fair hearing. The non-compliance with the above rules which amounts to a denial
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of fair hearing is a justification for pronouncing the process a nullity.”
I agree with respondents’ counsel that the Re: S.C. Ezendu’s case supra dealt with a derivative action (and not a minority shareholder’s action as in this instance) yet the dictum quoted above stated the position of the law regarding initiation of actions under the CAMA other than winding up of Companies and applications under Rules 5 and 6.
In the case of AGIP (NIG) LTD V. AGIP PETROL INTERNATIONAL IN Re: Chief Ezendu (2010) 1 SC (II) 98, 172 ? 173 (also reported in (2010) 15 NWLR (PT.1187) 348, the Supreme Court in affirming the decision of the Court of Appeal In Re: S.C. Ezendu supra. stated, per Adekeye, JSC, that
“The cross-appellant wrongly argued that the provisions of the Companies Proceedings Rules particularly Rule 2 (1) is merely directory and not mandatory. I disagree with this view because of the word “shall” in the provision. The word “shall” in the ordinary meaning is a word of command which is normally given a compulsory meaning
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because it is intended to denote obligation. When the word “shall” is used in a statute it is not permissive it is mandatory, it imports a thing that must be done.”
The case of UNIPETROL NIG PLC V. AGIP (NIG) PLC. IN RE: SC EZENDU supra, decided by this Court was cited to the trial Court but it was not referred to in its judgment. The trial Court ought to have held itself bound by that decision on account of the doctrine of judicial precedent and ought not to have ignored it.
The trial Court held that the action was properly initiated by means of a petition in the light of Order 3 Rules 1, 6, 7, 8 and 9 of the Federal High Court (Civil Procedure) Rules, 2009, which Rules His Lordship held to be a superior legislation to the Companies proceedings Rules, 1992, and is the principal legislation which regulates civil actions in the Federal High Court. It must be stated that the Companies Proceedings Rules 1992 are a specific subsidiary legislation governing applications made under the CAMA while the Federal High Court (Civil Procedure) Rules, 2009, are a general subsidiary legislation generally governing proceedings before the Federal High Court.
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The maxim that generally applies to such a situation is Generalia specialibus non-derogant,” id est general things do not derogate from specific things. Thus the general provisions for initiation of suits in the Federal High Court (Civil Procedure) Rules, 2009 do not derogate from the specific provisions in the Companies Proceedings Rules 1992 which govern applications under the CAMA.
In the case of SCHROEDER & CO V. MAJOR (1989) 2 NWLR (PT 101) l, 21 Agbaje, JSC, quoted with approval the dictum of Bairamian J (as he then was) in BAMGBOYE V. ADMINISTRATOR GENERAL 14 WACA 616, 619 as follows:-
“It is an accepted canon of construction that where there are two provisions, one special and the other general, covering the same subject matter, a case falling within the words of the special provision must be governed thereby and not by the terms of the general provision. The reason behind this rule is that the legislature in making the special provision is considering the particular case and expressing its will in regard to that case; hence the special provision forms an exception importing the negative; in other words, the special case provided for in
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it is excepted and taken out of the general provision and its ambit; the general provision does not apply. In the words of LORD SELBORNE, C, in SEWARD v. “VERA CRUZ” (i), ?Now if anything is certain it is this, that where there are general words in a later Act capable of reasonable and sensible application without extending them to subjects specially dealt with by earlier legislation, you are not to hold the earlier and special legislation indirectly repealed, altered or derogated from by words of such general words, without any indication of a particular intention to do so…?
The Companies proceedings Rules, 1992 were earlier in time than the High Court (Civil procedure) Rules, 2009. The law as can be gleaned from the above dictum is that general words in a later legislation do not repeal, derogate or whittle down an earlier statutory provision dealing with a special subject matter see also Black’s Law Dictionary 8th Ed. P.705.
I do not agree with the trial Court that the Federal High Court (Civil Procedure) Rules, 2009 are superior to the Companies Proceedings Rules, 1992. The two instruments are subsidiary legislations made by the Honourable
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Chief Judge of the Federal High court pursuant to Section 254 of the Constitution of Nigeria, 1999 as amended and the Federal High Court Act (in respect of the former) and CAMA (in respect of the latter). They rank equally in the hierarchy of legislation in this country.
It was misleading for the trial Court to have considered if the respondent s action, having regard to the pleaded facts and the reliefs sought could conveniently be brought by way of originating summons in the con of the provisions of the Federal High Court (Civil procedure) Rules, 2009. This is because the said Rules have no relevance to the action of the respondent. This is the more so as the Companies Proceedings Rules, 1992 have made express provisions concerning commencement of action under the Companies and Allied Matters Act.
The trial Court at page 260 of the record held that it ought not to,
“Succumb to austere issue of technicality as objection that border on the mode of commencement of an action and to summarily strike out such action where the Court, ex facie has jurisdiction to entertain the claims of the plaintiff…”
The above dictum as commendable as it
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may be does not apply in a situation, as in this case, where there is a special procedure for the enforcement of a particular right or remedy. In ECONOMIC AND FINANCIAL CRIMES COMMISSION V. EKEOCHA supra. OMOLOYE, JCA, stated that. “It is a well- settled legal Principle that, where special procedure is prescribed for the enforcement of a particular right or remedy non – compliance with or departure from such a procedure is incurably fatal to the enforcement of the remedy or right.”
Furthermore, as earlier set out in this judgment, this Court and the Supreme Court In Re: S.C. Ezendu supra held that Rule 2 (1) of the Companies Proceedings Rules is mandatory and this Court further held that the rule touches on fair hearing and so its breach cannot be remedied.
Even in cases where wrong commencement of a suit is considered a merely irregularity which does not affect the jurisdiction of the Court, the lapse gives the defendant the right to insist that the defendant adopts the proper procedure in approaching the Court provided that the objection is raised timeously. See UDO V. THE REGISTERED TRUSTEES OF THE BROTHERHOOD OF THE CROSS AND STAR (2013) 4
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NWLR (PT.1375) 48S, 502. In this case, even if it could be held as the trial Court did, that the wrong commencement of the action was a mere irregularity and the objection an austere issue of technicality (to quote His Lordship’s words) since the appellants acted timeousely in raising the objection, the Court ought to have struck out the suit.
Before I round up on this issue I must state that the argument by appellants’ counsel on the order for the amendment of the petition made by the trial Court, is not only academic in view of my discourse on issue 1 but is also beyond the scope of the issue. I therefore discountenance it.
In the light of all that I have stated so far, I enter a negative answer to issue 1 and resolve it in favour of the appellants.
Since this Court is an intermediate appellate Court, I shall proceed to consider issue 2 on the authority of ADAH V. NATIONAL YOUTH SERVICE CORPS (2004) 13 NWLR (891) 639, 649
ISSUE 2
Whether the proper parties were brought before the Court and whether having regard to the nature of the Petition the respondent has the requisite locus standi to maintain the action and/or there is any
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reasonable cause of action disclosed against the appellants.
Appellants’ counsel quoted in extenso a portion of the ruling of the trial Court and inferred the following therefrom; (a) the presented an inconsistent case as regards notice of meeting was that of the 1st appellant (c) the only option available to the respondent was to institute a minority shareholders action, which he said the action was not and (d) the proper respondent were not before the Court. It was his assertion that it was the trial Court who converted the action to a ?minority shareholders” action when the requisite leave was not obtained.
?Continuing, it was submitted that the respondent did not show how the giving of inadequate or no notice affected his personal rights. It was his view that the sole ground of the petition, viz; absence of notice and/or inadequate notice were mutually exclusive and so failed to disclose a cause of action. In the former case, he submitted, the respondent would be entitled to all the reliefs sought while in the later the 1st appellant can give a shorter notice of meeting without incurring the risk of nullification of proceeding of the
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resultant meeting, it was the further view of counsel that the gravamen of the petition enures to the benefit of the 1st appellant and the respondent as minority, cannot sue to remedy an alleged wrong done to the Company. Thus, he concluded, the respondent had no locus standi to sue. For the respondent, it was submitted that Section 300 of the CAMA provides an exception in which a minority action is commenced and that the action of the respondent falls within Section 300 (c) of the CAMA. It was his further submission that the decision reached at the meeting affected the personal rights of the respondent and he needed no leave to commence the action which disclosed a cause of action. He referred to Section 266 (2) of the CAMA for period of notice of meeting and submitted that Section 217 (2) of the CAMA and Articles 14, 15, 18, 37 and 38 of the Memorandum of Association of the Company are inapplicable.
?It should be staled from the outset that the action of the respondent was a minority shareholders action pursuant to Section 300 of the CAMA. It is not a derivative action under Section 303 of the CAMA. A derivative action is a law suit brought by a
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shareholder on behalf of a company against a third party, often the third party being an insider of the company such as the directors or executive officers. See AGIP (NIG) LTD V. AGIP PETROLEUM INTERNATIONAL IN RE: EZENDU supra 392.
The complaint of the respondent before the trial Court was about the holding of a meeting of the Board of Directors of the company without giving him notice or adequate notice of the meeting. The right to be given notice of meeting or adequate notice of meeting is an individual right over which a member can sue to protect. It was not an action on behalf of the company but a minority member?s action pursuant to Section 300 of CAMA. It was not a derivative action under Section 303 of the CAMA. Section 300 of the CAMA provides in part that “without prejudice to the rights of members under Sections 303 to 308 and Section 310 – 312 of the Act, the Court, on the application of any member, may by injunction or declaration restrain the company…? Thus the CAMA makes clear the distinction between a minority members’ suit to protect his individual right and a derivative action which is brought by the minority to protect the
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interest of the company. The respondent did not therefore need leave to sue as suggested by appellants’ counsel. Being a minority shareholder’s action, the respondent had locus standi pursuant to Section 300 (c) of the CAMA. The proper respondents (now appellants) were before the Court.
The fundamental complaint of the respondent was that he was not given notice or sufficient notice of the meeting at which grave decisions were taken, some against him. This discloses a reasonable cause of action Appellants’ counsel contended that the petition was vague, and contradictory particularly as the respondent averred non-service of notice at the meeting and inadequate notice of the same time. It was his submission that in respect of the former (lack of notice) the respondent would be entitled to all the reliefs sought but in respect of the latter (inadequate notice) he would not be so entitled as Section 217 (2) (b) of CAMA and Articles 14, 15, 18, 37 and 38 of the Articles of Association of the company provide for shorter notice.
The perceived weakness of a case does not affect the existence of a cause of action See DUNU V. OLADEJO (2004) 17 NWLR (903)
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621. The matters raised by appellants immediately above are matters determinable at the judgment stage, that is assuming that the case was competently initiated.
I therefore resolve issue 2 in the affirmative and in favour of the respondent.
Before I draw the curtains on this judgment, I feel obliged to comment on the quality of the language used by appellants, counsel against the learned judge of the trial Court in his brief of argument. I shall select and set out a few of it hereunder;
(i) Page 12 par. 5.0.1 … “Issue No. 2… deals with the role of an interested arbiter played by the learned trial judge…”
(ii) Page 14 Par. 5.0.3…. “The learned trial Judge was the one who converted the action to “Minority Shareholder’s” action for the Respondent”
I must say that accusing a judge of bias is a very grave matter and it should not be done frivolously or recklessly as was done by appellants’ counsel in his brief of argument. To compound the situation, the force of the language used by counsel was, to put it mildly, unfortunate and unfair. It is the duty of counsel to show respect to the Court
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both in words and in conduct. I shall restrain myself from saying any more on this except to set forth the admonition of NGWUTA, JSC, In AMAECHI V. OMEHIA (2013) 16 NWLR (PT.1381) 417, 434 that;
“… I should remind learned counsel of their duty to maintain an unreserved respect for the Court. Counsel should not make remarks that could lower the integrity of the Court…”
I should perhaps re-state the remarks of JUMBO-OFO, JCA, in IKUMONIHAN v. STATE (2014) 2 NWLR (PT.1392) 564, 594 that:
“This profession is one profession that abhors disrespect to the Court under any guise.”
In view of my resolution of issue 1, the appeal succeeds and is allowed. The ruling of the trial Court is hereby set aside. In its place, it is hereby ordered that the Petition of the respondent at the trial Court be and is hereby struck out for not having been properly commenced by due process of law.
The parties shall bear their costs.
Other Citations: (2016)LCN/8614(CA)
