First Alstate Securities Limited & Anor V. Adesoye Holdings Limited (2013)

LawGlobal-Hub Lead Judgment Report – COURT OF APPEAL

CHINWE EUGENIA IYIZOBA, J.C.A. (Delivering the Leading Judgment)

This appeal is against the judgment of the Investment and Securities Tribunal, Lagos Zonal Office delivered on the 3rd day of May 2011 granting most of the claims of the Respondent.

The facts leading to the institution of this suit at the Tribunal are as follows: The Applicant on the 20th day of March 2008 lodged with the Respondent Stockbrokers a portfolio of 31,886,200 units of IPWA shares represented in Certificate No. 1887765 which shares were subsequently verified and lodged with Central Securities Clearing System (CSCS) by the Respondents on the applicant’s instructions. On the instruction of the Applicant, the Respondent sold 10,219,533 units of the shares leaving a balance of 21,666,667 units.

On 15/5/08, the Applicant further mandated the Respondent to sell 8,333,333 units of the said shares. On 5/1/2009, the applicant discovered that its CSCS Account showed zero balance. The Applicant immediately wrote the Respondents seeking a correction of the anomaly. Following the refusal of the Respondents to restore the shares sold without authorization, the Applicant wrote a letter of complaint to Union Registrars Ltd who later informed the Applicant of its inability to sanction the 2nd Respondent. Following several letters written by the applicant’s solicitors to the Respondent the 2nd Respondent on 23/9/09 wrote to the Applicant admitting selling the shares but asked for time to restore the shares.

The Respondent later proposed a repayment plan for the shares and a gentleman’s agreement was subsequently reached. By the terms of the agreement, the Respondent would pay to the Applicant the sum of N201,669,251.00 and also restore to it 4,333.333 units of the shares. The Respondents did not comply but later wrote a letter asking for extension of time to fulfill their obligations under the gentleman’s agreement. The Respondent still failed to honour the agreement. The Applicant’s solicitors finally lodged a complaint with the Securities and Exchange Commission (SEC). The Respondents in an effort to settle the matter made available to the Applicant’s Solicitors the title documents to its property House 1, Palm Drive at Anchorage Estate to sell at the reserved price of N50 million and to apply the proceeds to off-set the Respondents’ indebtedness to the Applicant.

Due to a lien by a bank on the property, the Applicants solicitors were unable to sell it. As a result of several meetings between the Applicant’s solicitors, representatives of the Respondents and officials of SEC, it was agreed that the matter be resolved amicably. This gave rise to Terms of Settlement which shall form the decision of Administrative Proceedings Committee of SEC. A copy of the Terms of Settlement duly executed by the parties was forwarded to SEC. The suspension placed on the 1st Respondent was lifted to enable the Respondents go back to operations in order to be able to meet their obligations to the Applicant. Despite all these concessions, the Respondents failed to honour the terms of the settlement. The Applicant then commenced this suit by originating application claiming the following reliefs:

a) “the sum of N196,669,251 (one hundred and ninety six million, six hundred and sixty nine thousand, two hundred and fifty one naira only) being part of the amount admitted by the respondents as outstanding indebtedness to the applicant in accordance with the Terms of Settlement;

b) Order directing the respondents to restore immediately upon the judgment of this honourable Tribunal a total of 4,333,333 (four million, three hundred and thirty three thousand, three hundred and thirty three hundred) units of IPWA shares to the applicant’s portfolio account in accordance with the Terms of Settlement;

c) To foreclose the interest of the 1st respondents in the Dwelling House otherwise known as House 1, Palm Drive at Anchorage Estate in Amuwo Odofin Local Government council of Lagos state and ordering same forfeited to the applicant in part fulfillment of the respondent’s indebtedness to the applicant.

d) An order of garnishee to all or any bank or financial institutions whereby the respondents’ money or monetary interest (s) is/are being kept towards applying any amount standing to the credit of the respondents to the applicant.

e) N5,000.000 as general damages;

f) N2,000.000 as cost of the suit.”

By the order of the Court, the Respondents were duly served by publication in two national daily newspapers. On the adjourned date of hearing, 31/3/11, the parties were represented by their respective counsel but the Respondents had up to then not filed any response to the application. By the Rules of the Tribunal they were to file their response within 21 days. On the oral application of counsel for the Respondents, they were granted extension of time to file their response and the case was adjourned to 13/4/11. (See Pages 111-125 of the record).

At the resumed hearing on 13th April 2011, the parties were again represented by their respective counsel. The Respondents’ counsel had again failed to file a response to the application and there was no written application for further extension of time within which to file their response. Counsel again orally applied for adjournment. The oral application was opposed by Applicants’ counsel. The lower court thereupon refused the applicants’ oral application for adjournment and called on the Applicant to open its case. The Applicant called its sole witness, Mr. Oluwagbemiga Babatunde Adesoye, who testified in support of the application. The Applicant closed its case and final written address was ordered to be filed by the lower Tribunal. The matter was then adjourned to 3rd May 2011 for judgment. (See Pages 116-128 of the records).