Oilfield Supply Centre Ltd. V. Joseph Lloyd Johnson (1987)

LawGlobal-Hub Lead Judgment Report

ESO, J.S.C.

In 1974, the Oilfield Supply Ltd was incorporated under the Companies Act 1968. Joseph Lloyd Johnson, an Australian who petitioned for the winding up of the Company in the Federal High Court, is the Respondent to this appeal and he was appointed the Managing Director.

He was in fact the brain behind the founding of the Company, which developed some swamp area into a port complex. There were five shareholders in all, consisting of the Respondent. Chief Stephen Idugboe, Aref Roz, Evan Enwerem and Solomon Asemota. Though Idugboe was the Chairman of the Company, its problems started with this Chairman making allegations, some criminal in nature, against the other shareholders. The Chairman also took some abortive civil actions against the Company and the other shareholders.

However, in November, 1976, the Government compulsorily acquired the port complex for public purposes. Compensation of N8,416.850.00 was paid for this acquisition but not until February 1980, by which time, the Respondent had left this country for Australia. Solomon Asemota had resigned, and the three other shareholders came to an agreement as to how the compensation funds should be shared.

It is the sharing of this money that brought about the present trouble in the Company, for though, before the advent of the compensation, Chief Idugboe had taken the other members to Court for a winding up of the Company, the payment of the money changed Idugboe’s attitude. Things might have fallen apart when there was no money, but things became solidified after the payment of over Eight Million Naira, and this, the three Directors shared, leaving the present Respondent out of the show.

The Respondent then returned to Nigeria, and he instituted the winding up Proceedings. Chief Idugboe filed an application, seeking an order for the striking out of the proceedings, on the ground that the Respondent. Johnson, was not a member of the Company, in which case it would be incompetent of him to seek the winding up of the Company.

The matter came before Ayinde J., who, in a considered judgment dismissed the application brought against the Respondent. Ayinde J. said –

“It would appear the Applicants, being a Company registered under the Companies Act, 1968 did not only start wrongly at the time of incorporation, by not complying with Immigration Act, the Company was also operated without the slightest regard for the provisions of the Companies Act. This, however, is by the way. I have already found that, by and large, the Respondent is a shareholder, member and contributory of the Applicants and as such he is a person competent to bring a petition for the winding up of the Applicants under section 211 of the Companies Act.”

The appellants appealed to the Court of Appeal Coram Omo-Eboh, Belgore and Musdapher. J.J.CA. The Court of Appeal split in their judgment. The majority judgment was delivered by Belgore J.CA, as he then was, Musdapher J.C.A. concurred, while Omo-Eboh J.CA., who presided over the Court dissented. I would like to set herein the views expressed by both the majority and the minority. Musdapher J.C.A. who concurred with Belgore J.C.A.’s judgment also set out in full the facts of the case and highlighted the participation of the Respondent in the Company. He identified the issues before the Court as follows:-

“(1) Whether in view of the provisions of section 8(1) and section 33 of the Immigration Act 1963, the respondent can validly acquire shares and take employment with the appellant company as from April, 1974 when the business permit and the expatriate quota were granted only on 8th of July, 1975. Or were the appointment and the allotment of shares void or voidable And if only voidable did the permission granted by the issuing authority rectify and make valid, the appointment and the issue of the shares

(2) If the allotment of the shares was valid or was later validated, had the respondent paid for the shares and if he had not paid for the shares, could he under the circumstances of this case qualify as a contributory to bring the petition Or would he qualify as a Creditor

(3) Having regards (sic) to Suit No. FRC/W/17M/76 in which the respondent successfully resisted a petition to wind up the company on alleged identical grounds as in the instant petition was the petitioner not estopped from presenting the petition to wind up the company

On the first issue the learned Justice of the Court of Appeal held –

Having regards (sic) to the facts of the case as disclosed by the affidavits and oral evidence, as is especially not disputed that the respondent came to Nigeria under a contract service with UNDUMAC GROUP (Nigeria) LTD. as a base Manager since 1973 to build a Port complex, could it be said that the respondent had breached section 3(1) of Immigration Act There is no evidence whatever to suggest that, the respondent had not as at 1973 entered or accepted employment nor that UNDUMAC GROUP (Nigeria) LTD. had not complied with the provisions of the Immigration Act of 1963, considering the circumstances of the case it would appear to me that the appellants merely took over the operations of UNDUMAC GROUP (Nigeria) LTD. and absorbed as it were, the already employed initiator of the operations.”