Wema Bank Plc. & Ors V. Prince (Dr.) B.a. Onafowokan & Ors (2004)

LawGlobal-Hub Lead Judgment Report

JAMES OGENYI OGEBE, J.C.A. 

The three appellants sued the respondents in the Federal High Court, Lagos, seeking a number of declaratory and injunctive reliefs in respect of the receivership of the 2nd appellant company.

The respondents brought a notice of preliminary objection before the High Court, seeking an order of the court to strike out the suit on the ground of incompetence. The trial court upheld the objection and struck out the action for incompetence, especially as the 1st and 3rd appellants instituted the action in the name of the 2nd appellant without the leave of court.

The 1st appellant was dissatisfied with the ruling of the lower court and appealed to this court. The learned Counsel for it filed an amended brief of argument which raised only one issue for determination as follows:

“Whether a person appointed as a receiver of a company pursuant to S.393(3) of the Companies and Allied Matters Act, 1990, must have such appointment confirmed by the court and/or obtain leave of court to institute an action in the name or on behalf of the company.”

The respondents filed a brief of arguments in response to the 1st appellant’s brief and filed one issue for determination as follows:

“Whether the 1st and 3rd appellants who filed a joint statement of claim and who did not plead the material facts in section 393(3) can seek to take advantage of the benefits provided for, in that section to circumvent the need for the leave of court to bring or defend an action in the name of the 2nd plaintiff (company).”

The 2nd and 3rd appellants were also dissatisfied with the ruling of the lower court and appealed to this court against it. The learned Counsel for them filed a brief of argument and identified 4 issues for determination as follows:

“i) Whether the 3rd plaintiff/appellant as receiver of the property of the 2nd plaintiff/appellant must obtain leave of court to institute or defend an action in the name of the 2nd plaintiff/appellant having regard to section 393(3) and clause 5 of Schedule 11 of the Companies and Allied Matters Act, Cap. 59, Laws of the Federation of Nigeria, 1990 (Grounds 1 & 2 of the notice of appeal).

ii) Whether there is any law in Nigeria, which stipulates that the plaintiffs must come to court for the confirmation of the appointment of the 3rd plaintiff/appellant as a receiver (Ground 3 of the notice of appeal).

iii) Whether the learned trial Judge was right in holding that the 2nd plaintiff’s name was improperly used in the suit at the lower court (Ground 4 of the notice of appeal).

iv) Whether the learned trial Judge exercised his discretion judicially and judiciously when he awarded the sum of N10,000.00 as cost against the appellants (Ground 5 of the notice of appeal).”

The respondents filed a brief of argument in response to the and and 3rd appellants’ brief and gave a notice of preliminary objection within the brief and argued that the 2nd appellant and 3rd appellant have no locus to pursue this appeal against the respondents who are the chairman and directors of the 2nd appellant company because only one asset was mortgaged to the 1st appellant and other lender and the 2nd appellant is not under receivership.

I find this objection totally misconceived. The 2nd and 3rd appellants were parties to the suit in the court below and they have the right to appeal to this court against a ruling which did not favour them. What the respondents’ preliminary objection is trying to do is to make this court a court of first instance to determine issues that will require evidence and should be handled by a trial court; this court will not fall into that trap. The preliminary objection is overruled.