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Home » Nigerian Cases » Supreme Court » Agip (Nigeria) Ltd. V Agip Petroleum International & 7 Ors (2010) LLJR-SC

Agip (Nigeria) Ltd. V Agip Petroleum International & 7 Ors (2010) LLJR-SC

Agip (Nigeria) Ltd. V Agip Petroleum International & 7 Ors (2010)

LAWGLOBAL HUB Lead Judgment Report

O. ADEKEYE, J.S.C

The appeal and cross-appeal, are against the ruling of the Lagos Division of the Court of Appeal delivered on the 22nd of July, 2002. at the court of trial, the Federal High Court Lagos, the minority share holders of the appellant sued the respondents on behalf of the company, in a derivative action and the cassus belli was meant to restrain the sale of 60% (sixty percent) shareholding in the 1st respondent company, Agip Petrol International B.V., to the 2nd respondent Unipetrol Nigeria Plc. to the endorsement on the writ filed by plaintiffs against the defendants jointly and severally, the claim read as follows:-

(1) A declaration that the purported sale of the 1st defendants’ 225,902,969 (Two Hundred and Twenty-Five Million, Nine Hundred and Two Thousand, Nine Hundred and Sixty Nine) shares in the plaintiffs at the instance of the Directors who are in control and the other defendants in this suit in favour of the 2nd defendants is illegally, unlawful and constitute a fraud on the plaintiffs and its members and other persons having interest therein.

(2) An order nullifying and/or invalidating such purported sale, alienation and./or transfer of the said shares from the 1st defendant to the 2nd defendant.

(3) An order restraining the defendants whether by themselves and/or their agents, privies, representatives or any person acting for and or through them or on their behalf from dealing in the 1st defendants’ shares of the plaintiffs.

(4) An order that the plaintiffs bear the cost of the legal representatives in this suit.

The plaintiffs brought two exparte applications on the 11th of February, 2002 and the 18th of February, 2002 respectively.

The application filed on the 18th of February prayed the trial court for the under-mentioned orders:-

(1) An order of the interlocutory injunction restraining the defendant by themselves, agents, privies, representatives whomsoever acting for them and or on their behalf from selling, alienating, disposing, transferring and/or

(2) An order to serve the 1st, 3rd – 15th defendants by substituted means through the company Secretary of the plaintiffs and such services be deemed as proper.

(3) An order of interim injunction restraining the defendants whether by themselves, agents, privies, representatives and whomsoever acting for and on their behalf from selling, alienating, disposing, transferring and/or parting possession with the shares held by the 1st defendant in the plaintiff company pending the hearing and determination of the motion on notice.

In the application filed on the 18th of February, 2002, the plaintiff prayed the court for:-

“An order pursuant to section 303 of the Companies and Allied Matters Act (CAMA) Cap 59 Laws of the Federation 1990 granting leave to the applicant to bring this action in the name and or on behalf of the plaintiffs i.e. Agip Nigeria Plc.”

In view of the foregoing applications; the trial court on the 27th of February, 2002 in its considered ruling held that:-

“I have carefully read through the entire processes filed with respect to the applications. I have taken a very hard look at the various paragraphs of the affidavits in support of these applications and the copious exhibits attached thereto while looking and reading through the paragraphs of the affidavit I am satisfied that the applications are entitled to be granted leave to bring this action on behalf of and in the name of the plaintiff. I am equally satisfied that the applicants have prima facie shown that they have a legal right which could appropriately be protected by an injunction. It also evident that there is real urgency in the matter as the applicants may not be adequately compensated by an award of damages. I have taken particular recognition to the averments in paragraph 17, 18, 19, 20, 21, 22, 23, 24, 25, 27, 28, 29, 30, 37, 38, 39, 41, 42, 43, 45, 48 and 49 of the affidavit of Akintunde Asalu the 10th Applicant, which affidavit is dated 11/2/02. In consequence of the foregoing. I hereby order that the 1st defendant be served at its registered office in Amsterdam while I grant the prayer for 3rd – 13th defendants to be served by substituted means through the company secretary of the plaintiff, the 3rd relief on the motion papers is granted in terms. The defendants are restrained by themselves.

Being dissatisfied with the Ruling, the 2nd defendant before the trial court appealed to the Court of Appeal Lagos. Parties identified three issues for determination as follows:-

(1) Whether the court can exercise jurisdiction in the action having regard to the manner in which it was commenced.

(2) Whether the applicants had disclosed sufficient grounds to justify the order for substituted service made by the lower court.

(3) Whether the applicants had disclosed sufficient case of urgency to justify the ex-parte order of interim injunction granted by the lower court.

In the considered judgment, the lower court held that the writ of summons was incurably bad and therefore a nullity. All orders and judgment made in pursuance of a void writ are themselves void. All the issues raised in the applicants’ brief are answered in the negative as every proceeding, order or judgment founded on a void writ is itself void. The relief and prayer contained in the Respondents’ Notice cannot find any favour in law. The appeal was allowed as being meritorious while the issuance and service of the writ was declared null and void.

An appeal was filed against the decision of the Court of Appeal Lagos to this court. The appellant in this appeal filed a notice of withdrawal appeal dated the 5th of September, 203 against some of the respondents. The parties against whom the appeal is pending are as reflected in the 1st, 4th and 5th Respondents’ brief filed on the 7th of July, 2006. The appeal was withdrawn against the 9th, 10th, 11th, 12th and 13th respondents during the proceedings of the 9th February, 2004. At the hearing of the appeal on the 27th of October, 2009, sole issue for determination reads:-

in setting aside the writ of summons, the issuance and service thereof.”

Mr. Akinwande who appeared for the appellant adopted and relied on the appellants brief filed on 27/11/06 and the reply brief filed on 1/4/09.

Mr. Olumide Aju adopted and relied on the 2nd respondent’s brief filed on 24/2/-6, the Notice of Preliminary Objection filed on 8/7/09. The sole issued raised for determination in the appeal is- “Whether the Court of Appeal was right in the circumstance of this case to have nullified the Writ of Summons and the orders made by the learned trial judge.”

Mr. Adegbonmire adopted and relied on the brief of the 1st, 4th and 5th respondents in the main appeal filed on 7/7/06. The issue for determination formulated in the brief reads:-

“Whether the Court of Appeal was right in setting aside the writ of summons, the issuance and service thereof.”

Mr. Odubela adopted and relied on the brief of the 9th – 10th respondent’s filed on 27/11/06. The issue formulated therein for determination reads:-

“Whether the learned justices of the Court of Appeal were right in holding that the Writ of Summons, the issuance and service of same are null and void.”

Mr. Sofowora adopted and relied on the brief of the 11th respondent filed on 1/12/08. The only issue raised in this application is:-

“Whether the learned justices of the Court of Appeal were wrong in declaring that the issuance and service of the Writ of Summons in this case are null and void.”

It is pertinent to emphasize that this appeal is against the unanimous decision of the Court of Appeal Lagos delivered on the 22nd of July, 2002. The appellant Agip (Nigeria) Plc withdrew its appeal against some of the respondents in the appeal thus reflecting the correct position of the parties in main appeal as stated in the appellants’ brief filed on 7/7/2006, and the affidavit of compliance of the 1st, 4th and 5th respondents filed on 28/11/06. The parties in the main appeal are Agip Nigeria Plc. and twelve other.

The first germane question for consideration in the main appeal is whether failure to apply for leave before issuance and service on the 1st respondent at its registered office in Amsterdam is out of jurisdiction of the court. By way of factors background of the cause of action below the Federal High Court, ten individuals reflected as member of the Nigerian Shareholders solidarity Association instituted an action on behalf of the appellant, in the main appeal, Agip (Nigeria) Plc. in prevent Agip Petrol International the 1st Respondent from transferring or selling the 60% shares it owned in the appellant to Unipetrol Nigeria Ltd., the 2nd respondent through purchase. There was an International Bid involving other companies in the transfer. The plaintiffs now respondents filed a writ of summons before the Federal High Court and two exparte applications, the cumulative purpose was to prevent the alienation of the shares, to put parties on notice by substituted means and to bring the action on behalf of the plaintiff Agip (Nigeria) Plc. pursuant to Section 303 of Companies and Allied Matters Act, (CAMA) Cap. 59 Laws of the Federation 1990. On the 27th February, 2002 the Federal High Court gave orders as follows:-

(1) An order granting leave to the applicant to bring the action in the name and/or on behalf of Agip Nigeria Plc i.e. the plaintiffs.

(2) An order to serve the 1st defendant as its registered office in Amsterdam and substituted service on the 3rd – 13th defendants through the Company Secretary of the plaintiff.

(3) An exparte injunction restraining the defendant by themselves, agents, privies, representative, whomsoever acting for them and on their behalf from selling, alienating, disposing, transferring and/or parting with the shares held in the plaintiff by the 1st defendant pending the determination of the motion on notice.

The foregoing brought reactions from the respondents, whereupon the 1st respondent, Agip Petroli (International), Unipetrol (Nig.) Plc. 7th – 10th and 12th respondents appealed to the Court of Appeal by the Notices of the 3rd respondent, Otunba Adekunle Ojora filed a respondent’s notice to vary the decision of the learned trial judge. The two appeals were thereafter consolidated. The lower court heard and determined the appeals. The lower court nullified the Writ of Summons by which the action was commenced. This lead to a spate of reaction by the parties filling appeals and cross/appeals to this court.

The Court of Appeal held that:-

(a) Leave of court was not obtained before the issuance of the writ of summons but that this error was an irregularity which could only lead to setting aside of the summons and its service thereof.

(b) The application for leave to commence a derivative action should have been brought by Originating Summon on Notice to the defendants and that this omission made the writ of summons intrinsically bad for non compliance with the provisions of the Companies Protecting Rules, 1992. Vide pages 499 – 493 of the Record.

In the main appeal before this court, the major issue for determination raised by the appellant reads:-

“Whether in the circumstance of this case and in the light of the materials before the court, the Writ of Summons the issuance and the service of same are null and void.”

The appellant argued that leave of court was obtained before the issuance and service of the writ relying on the cases of

Ndoma-Egba v. Government of Cross River State (1991) 4 NWLR Pt. 188 pg. 723.

Caribbean Trading Fidelity Corporation v. N.N.P.C. (2002) 14 NWLR Pt. 786 pg. 123.

The appellant cited the provisions of Order 6 Rule 12 of the Federal High Court Procedure Rules 2000 and its Order 3 Rule 1 and the case of ACB Plc. v. Haston (1997) 7 NWLR Pt. 515 pg. 17 and urged this court to hold that the writ could not have been rendered nullity simply because no application was sought to issue and serve the writ of summons out of summons. The Writ of Summons was served on all parties – it can only at its best amount to an irregularity. The appellant made reference to the provision of Section 23 of the Interpretation Act 1964 Cap. 192 of the Laws of the Federation 1990 and that using a writ to commence an action instead of an originating summons was not done with an intention to mislead enough to declare the whole process a nullity. The courts have now moved away form using technical justice to defeat substantial justice. The rules of court are merely used to guide. Commencing an action by Originating Summons instead of Writ of summons does not by itself occasion a miscarriage of justice and the process was saved and sustained.

The learned counsel cited cases like

Ekput v. Okom 2002 5 NWLR Pt. 760 pg. 445

NBN v. Alakija 1978 (2) LRN pg. 78.

The objection could only be raised at the Federal High Court as opposed to the Court of Appeal. The appellant urged this court to allow the appeal upon the consideration of the above.

The 2nd respondent raised a preliminary objection that the sole ground of appeal contained in the notice of appeal dated 23rd of July, 2002 be struck out as it raises issues of mixed law and fact. The appeal cannot be entertained unless leave of the appellate court or the leave court is first sought and obtained. In ascertaining whether a ground of appeal is of mixed fact the particulars of the ground of appeal has to be examined thoroughly. After examination of the particulars in the sole ground of appeal it came to the conclusion that the issues are of mixed law and fact and it is imperative that leave of court must be sought and obtained hence the appeal is incompetent. The appellant referred to the use of Metal Construction West Africa Limited v. Migliore 1990 1 NWLR Pt. 126 pg. 299.

The 2nd respondent argued in the main appeal that the judgment of the court of appeal – established that the appellant did not obtain leave of court before the Writ of Summons was issued, which error amounts so on, irregularity and the effect is to set aside the writ and its service thereof. The respondent relied on the case of.

Caribbean Trading Fidelity Corporation v. N.N.P.C. (2007) 14 NWLR Pt. 786 pg. 133.

Secondly that a shareholder who decides to sue in order to remedy a wrong done to the company may do so by bringing a derivative action where the wrong doers are in control and prevent the company from suing. By virtue of section 303 of the Companies and Allied Matters Act, 1990, leave to commence a derivative action ought to have been by originating summons instead of a Writ of Summons. What was its contention was the question of how a derivative action is commenced.

The 2nd respondent concluded that the lower court was therefore right in declaring that the Writ of Summons was invariably bad for non-compliance with the proper procedure for commencing a derivative action. The procedure to be adopted is as specified in the Companies Proceeding Rules 1992. The appellant failed to comply with the procedure by commencing a derivative action by way of motion exparte which process excluded an inter-party hearing. The court is urged to dismiss the appeal of the appellant as it failed to commence derivative action by Originating Summons so as to afford the Company and the wrong doers a hearing.

The 1st, 4th and 5th respondents in their joint brief raised a sole issue for determination in this appeal which is:

“Whether the Court of Appeal was right in setting aside the Writ of Summons, the issuance and service thereof.”

The submission of those respondents confirm that of the 2nd respondents as expressed above to the extent that;-

(1) The issuance and service of the writ of summons before the Federal High Court has to be set aside as the court cannot exercise jurisdiction in the action because of the fundamental conditions precedent to its jurisdiction have not been observed.

(2) The derivative action brought by the applicants was done without due compliance with the provisions of Section 303 of the Companies and Allied Matters Act which rendered the proceeding related to it null and void.

(3) By Rule 2(1) of the Company Proceedings Rules 1992 every application for a derivative action shall be made by Originating Summons.

(4) Leave granted upon an exparte motion on the 27th of February, 2002 is fundamentally flawed as leave to commence a derivative action can only be granted after an inter partes on the company Agip Nig. Plc. prior to obtaining the leave. There is an apparent breach of the 1st respondent’s right to fair hearing.

(5) There was lack of proper service on the 1st respondent being a foreign Company with no evidence of incorporation or a place of business in Nigeria going by Section 54(1) of the Company and Allied Matters Act.

The Respondents urged the court to dismiss the appeal.

A single issue for determination formulated by the 6th and 7th respondents is:-

“Whether the learned justices of the Court of Appeal were right in holding that the Writ of Summons, the issuance and service are null and void.”

In the argument in support, the 9th and 10th respondents submitted that the plaintiff/appellant averred that the 1st respondent resides and has its office outside the jurisdiction of the court of 449 via Laurentina in Rome, Italy. Order 6 Rule 12(1) of the Federal High Court Civil Procedure Rules 2000 provides that.

“No Writ or Notice of which, is to be served out of jurisdiction shall be issued without leave of court.”

The requirement of obtaining leave by the plaintiff/appellant to issue and serve its Writ of Summons outside the jurisdiction on the 1st defendant/respondent is a condition precedent without which the court would not be conferred with jurisdiction over the subject-matter in dispute.

The appellant admitted that leave was not sought but that the court granted such suo motu. It is trite that a court must not grant a party a relief which he has not sought. The respondents urged the court to dismiss this appeal as it has now become and academic. The respondents cited judicial authorities.

A.C. Anambra State v. A.G. Federation (1993) 6 NWLR Pt. 302 pg. 692 at 737.

Ekpenyong & Ors. v. Nyong & Ors. (1978) NSCC Pg. 28 at Pg. 29.

Fasikun U. v. Oluronke II. (1999) 2 NWLR Pt. 589 pg. 1 at Pg. 28.

Global Trans Oceanico S.A. v. Free Ent. (Nig.) Ltd. (2001) 5 NWLR Pt. 706 Pg. 426 at 440.

Nwabueze v. Okoye (1988) 4 NWLR Pt. 9 Pg. 664 at 667 – 668.

Odua Investment Co. Ltd. v. Talabi (1997) 10 NWLR Pt. 523 Pg. 1 at pg. 21.

The 8th Respondent through its counsel Mr. O.O. Sofowora like the other respondents settled one issue for determination, which reads:-

“Whether the learned justices of the Court of Appeal were wrong in declaring that the issuance and service of the Writ of Summons in this case are null and void.”

The 8th respondent made similar submissions to that of the other respondents based on the residence and place of office of the 1st respondent outside jurisdiction at 449 via Laurentina Rome, Italy and the effect of Order 6 Rule 12(1) of the Federal High Court Civil Procedure Rules 2000 and Section 54(1) of the Company and Allied Matters Act.

Section 303 of the same law in relation to Derivative Actions, and Rules 2(1) and (2) of the Company Proceedings Rules 1992 in respect of the mode of commencement of a derivative action. The respondent came to the occlusion that the decision of the Court of Appeal cannot be faulted, and consequently urged this court to dismiss the appeal.

The judicial authorities cited by the 8th respondent include:-

Nwabueze v. Okoye (1988) 4 NWLR Pt. 9, 1 at 34.

Ndoma-Egba v. Government of Cross-Rivers State (1991) 4 NWLR Pt. 188 pg. 723.

Nigerian Arab Bank Ltd. v. Barn Engineering (1995) 8 NWLR.

The foregoing is the resume of the submission of parties in the main appeal, by the appellant Agip (Nigeria) Plc and the eight respondents indicated as parties in the Affidavit of compliance filed by the 1st, 4th and 5th respondents on 28/11/06.

At the hearing of the appeal, the 2nd respondent raised a preliminary objection to the sole ground of appeal contained in the Notice of Appeal. The sole issue of the appellant is “whether in the circumstance of this case and in the light of the materials before the court, the writ of summons the issuance and service of same are null and void.

On the analysis of the particulars of the ground of appeal, the 2nd respondent submitted that it borders on issues of mixed law and fact and the leave of this court or the lower court is necessary before filing such a ground. Since no such leave was sought or obtained the appeal is incompetent. The court is urged to strike out the appeal as the sole ground of appeal is incompetent. The 2nd respondent cited the case.

Metal Construction (West Africa) Limited v. Migliore 1990 1 NWLR Pt. 126 pg. 299.

The appellant in this reply brief submitted that the sole issue raised in his appeal is on issue of law for which no leave is required. The question whether the appellants should have applied for leave of court before the issuance of the writ of summons is solely a question of law. The issue whether the appellants should have sought leave to commence a derivative action by originating summons on notice to the defendants is also issue of law. This court is urged to dismiss the preliminary objection.

In my candid view after gleaning through the particulars of the ground of appeal the central issues involved are:-

(a) Obtaining leave of court before the issuance and service

(b) That the application for leave to commence a derivative action should have been brought by originating summons on Notice to the defendants.

Both these issues are condition precedent to be fulfilled before a court can exercise jurisdiction in this suit. There are consequently threshold issues – issues of jurisdiction – which in turn is a radical and cruxial question of competence.

Madukolu v. Nkemdilim (1962) 2 SCNLR Pg. 341 at Pg. 348.

The sole ground of appeal being an issue touching upon jurisdiction is purely on issue of law. The objection of the 2nd respondent is hereby overruled. The universal issue raised by all the parties – both appellant and the eight respondents is the germane poser for consideration by this court in this appeal. This is whether in the prevailing circumstance the Court of Appeal was right or erred in declaring that the issuance and service of the writ of summons in this case are null and void.

The decision of the lower court was the outcome of the appeal on the order of the trial court sequel two ex-parte applications filed before it by Agip Nigeria Plc. on the 11th and the 18th of February, 2002 respectively. The parties in the appeal before the Court of Appeal were the plaintiff/appellant – Agip Nig. Plc. and the 2nd, 7th, 10th and 12th respondents. The trial court gave order to the parties as follows:-

(i) That the 1st respondent Agip Petroli international B.V. should be served outside jurisdiction at its registered office in Amsterdam.

(ii) All the other Directors be served by substituted means through the company secretary of the plaintiff.

(iii) The defendants are restrained by themselves, their agents, privies or howsoever from selling, alienating, disposing, transferring and/or parting with the shares held in the plaintiff by the 1st defendant pending the hearing and determination of the motion on Notice.

In order to cut a clearer picture on the foundation of the applications, I need to explain that there was a move by the 2nd respondent, Unipetrol Nigeria Plc. to acquire the 60% of the shares held by the 1st respondent in the total share capital of the appellant – Agip (Nigeria) Plc. There was an international bid to this effect, and the sale was to the knowledge and with the connivance of the Directors of the appellant. The remaining 40% of the share of Agip (Nigeria) Plc. are owned by Nigerians. The 60% proportions are 255,902,769 shares in number. The ordinary shareholders regard the move as a fraud on them and other people having interest in the company. They thereby sought to abort the sale by legal means on the processes before the court and the pleadings, it is apparent that some of the parties in the suit reside outside the jurisdiction of the court. According to the Statement of Claim – the residence of the principal parties in this suit, are as follows-

(1) The plaintiffs are a Public Liability company with sixty percent (60%) of its shares owned by the 1st defendant and 40% owned by Nigerians with its registered office at Engineering Close, Victoria Island and are in the business so providing ad distributing fuel and lubricants all over Nigeria.

(2) The 1st defendants are the 60% owners of the shares of the plaintiff company with its office of 449 via Laurentina, Rome, Italy.

(3) The 2nd defendants are a public liability company in Nigeria with its office at Station \House, 2 Ajose Adeogun Street, Victoria Island, Lagos and are in the business of providing and distributing fuels, LPG and lubricants all over Nigeria.

See also  The State V. Ibrahim Yahaya (2019) LLJR-SC

(4) The 2nd-13th defendants are directors of the plaintiff.

The order of the Federal High Court was made sequel to two exparte applications and it was meant to put the parties on notice pending the hearing of a motion on notice and fulfillment of the condition precedent to the hearing in the substantive claim.

The court ordered that the 1st respondent be served at its registered office in Amsterdam, while paragraphs two of the statement of claim records the business address as 449 via Laurentina Rome, Italy. The foregoing confirms that the 1st resident foreign company with its business office out of jurisdiction of the Federal High Court. Issue of service of process is an essential aspect of our procedural law as it a jurisdictional issue. It is a condition precedent to the competency of court in assuming jurisdiction, and adjudicating over the legal rights of litigants. Any matter or proceedings affected by lapse in the service of process suffers a fundamental flaw. It is therefore a radical and threshold issue. It is the door to the inner chambers of adjudication. Hence, it is the conclusion in numerous judicial authorities that it is the fulfillment of such condition precedent like service of process which clothes the courts with competency. It equally gives the party served the opportunity of being heard, present his case and call witnesses.

Obimonure v. Erinosho (1996) 1 All NLR Pg. 250

Okafor v. A.G. Anambra State (1991) 6 NWLR Pt. 200 Pg. 659

Olubusola Stores v. Standard Bank (1975) 1 All NLR Pg. 125

Wema Bank Ltd. v. Odulaja (2000) 7 NWLR Pt. 663 Pg. 1.

It is therefore imperative that some of the processes of court be effected on particularly the 1st respondent – Agip Petrol International Ltd. being an indispensable and necessary party in this suit.

The issue of service of process under the Nigeria Legal System is basically statutory. It is aptly covered by our Rules of Court both at State and Federal level. The Rules of Court are part of the machinery of justice evoked by the courts to regulate their proceedings. These Rules are like statutes subject to the interpretation of the courts. They are designed to obtain justices with case, certainly and dispatch. The courts and parties must strictly adhere to the Rules and they must be understood as made to be consistent with the fundamental principles of justice.

In the judgment of the Court of Appeal, the lower court placed heavy reliance on the Rules of court and relevant statutes to declare the writ, its issuance and service of all processes and orders thereon null and void. Vide pages 477 – 494 of the Record of Appeal. On pages 489 (last paragraph) and 490 (first paragraph) the lower court has this to say-

“Having not been placed in a position where it could be said to have its office within the jurisdiction of this court, seeking and obtaining the leave of court is a condition precedent to the issuance and service of the writ of summons on the 2nd respondent. Evidently there was no such leave applied nor was one granted. That defect, as was said in Madukolu v. Nkemdilim (1962) 1 All NLR pg. 587 was fatal.”

On the application of the Writ of Summons to the proceedings in the Federal High Court under Order 6 of the Federal High Court Civil Procedure Rules, 2000.

Order 6 rules 12(1) stipulates that:-

“No writ which, or notice of which, is to be served out of the jurisdiction shall be issued without leave of the court.”

One of the exparte applications made before the Federal High Court was for an order to serve the 1st, 3rd and 15th, defendants by substituted means through the Company Secretary of the plaintiff. But the learned trial judge gave the order suo motu obviously influenced by the averment in the pleadings and relevant facts before the court that the 1st respondent be served at its registered office Amsterdam out of the jurisdiction of the court. The appellant thereby concluded that the leave of the court was in fact obtained before the issuance and service of the Writ of Summons on the 1st respondent. I regard this as a glowing misconception by the appellant as the directive of court in the circumstance of this case does not tantamount to leave being granted. It is proper that for the appellant to comply with this order and the relevant provisions of Order 6 Rule 12(1) of the Federal High Court Rules the proper step is to apply for the requisite leave before the issuance Black’s Law Dictionary 6th Edition at pg. 591 defines leave of court as

“Permission obtained from a court to take some action.”

The appellant failed to obtain this permission in the prevailing circumstances which is an initiating process. The case of Caribbean Trading Fidelity Corporation v. NNPC (2002) 14 NLWR Pt. 786 Pg. 133 where the court regarded a similar lapse as an irregularity which can be cured in the exercise of the courts discretion is not applicable in this appeal for reasons to be revealed seriatim.

Going by the evidence on Record, there is nothing to show that the 1st respondent, Agip Petrol International Ltd. was ever incorporated in Nigeria for the purpose of carrying on business in Nigeria and that its office is within the jurisdiction of the court and in that situation, it still remains a foreign Company. Section 54(1) of the Companies and Allied Matters Act provides that:-

“Subject to Sections 56 to 59 of this Act, every foreign Company which, before or after the commencement of this Act, was incorporated outside Nigeria, shall take all steps necessary to obtain incorporation as a separate entity in Nigeria for that purpose, but until so incorporated, the foreign Company shall not carry on his business in Nigeria or exercise any of the powers of a registered company and shall not have a place of business or an address for service of documents or processes in Nigeria for any purpose other than the receipt of notices and other documents, as matters preliminary to incorporation under this Act.”

Furthermore, the appellant filed two exparte applications before the trial court. In the exparte application filed on 18th of February, 2002, the appellants prayed the trial court for relief as follows-

“An order pursuant to Section 303 of the Companies and Allied Matters Acts (CAMA) Cap 59, Laws of the Federation 1990, granting leave to the applicants to bring this action in the name and or on behalf of the plaintiff i.e. Agip Nigeria Plc.”

Vide pages 206-209 of the Record.

The trial court granted this order. The mode of commencement of the action brought in the name of the plaintiff became a bone of contention. The Court of Appeal upon relying on the provisions of the applicable statutes held:-

“It is clear from Rule 2(1) that the applicants ought to have brought the application for leave to sue in derivative form on an originating summons instead of a writ of summons that would have afforded the other sides the right to be heard in the matter. The rule referred to supra touches on fair hearing the non-compliance with the above rules which amounts to a denial of the principle of fair hearing is a justification for pronouncing the process of nullity. See the decisions in

(1) Okoye v. Nigeria Construction Furniture Co. Ltd. (1991) 6 NWLR Pt. 199 Pg. 501 at 539 and

(2) Okafor v. A.G. Anambra State (1991) 6 NWLR Pt. 200 659 at 678 to 679. The writ is incurably bad, it is a nullity.”

I wish to examine the controversy here form two perspectives-

(1) Leave of Court prayed for by the applicants to bring a derivative action on behalf of the plaintiff i.e. Agip Nigeria Plc on an exparte application.

(2) Mode of commencement of a Derivative Action.

A derivative action also known as a shareholder derivative suit is a law suit brought by a shareholder on behalf of a company against a third party. Often the third party is an insider of the corporation such as the directors or executive officers. For over 150 years the rule in Foss v. Harbottle (1843) 2 Hare 461 has been a familiar part of the company landscape. The rule prevents claims by shareholders for reflective losses and provides that if a wrong is done to a company then the company is usually the proper claimant in respect of that wrong. Derivative suits are unique because under the traditional corporate law management is responsible for bringing and defending the corporation against suit. The two basic requirements at common law for a derivative action are:-

(1) That the alleged wrong or breach of duty is one that is incapable of being ratified by a simple majority.

(2) That the alleged wrong doers are in control of the Company, so that the Company which is the claimant cannot claim by itself.

A derivative action may only be brought where the wrong complained of-

(a) Amounts to a fraud on the minority and the wrong doers are in control of the company.

(b) Activities by the directors, officers and employees causing harm to the company, breach of duty etc that cannot be ratified by ordinary resolution or

(c) Is outside the company’s objects and so cannot be ratified under any event.

As the very nature of these suits vary the traditional roles of management and shareholders, many jurisdictions have implemented various procedural requirements to derivative suits. A derivative action is recognized in our company law in Nigeria. The Rule in Foss v. Harbottle is now part of our law and embodied in the Company and Allied Matters Act, 1990, particularly sections 299-303.

By virtue of section 303 of CAMA – derivative Actions are recognized and the Act stipulates that:-

(1) Subject to the provisions of subsection (2) of this section, an applicant may apply to the court for leave to bring an action in the name or on behalf of a company or to intervene in an action to which the company is a party, for the purpose of presenting, defending or discontinuing the action on behalf of the company.

(2) No action may be brought and no intervention may be made under subsection (1) of this section, unless the court is satisfied that.

(a) The wrong doers are the directors of who are in control and will not take necessary action.

(b) The applicant has given reasonable notice to the directors of the company of his intention to apply to the Court under subsection (1) of this action if the directors of the company do not diligently prosecute or defend or discontinue the action.

(c) The applicant is acting in good faith and

(d) It appears to be in the best interest of the Company that the action be brought. Prosecuted, defended or discontinued.

The procedure for obtaining the requisite leave is not embodied in the ordinary Rules of Court of the Federal High Court 2000, but can be found in the Companies Proceedings Rules 1992.

Rule 2 of the Companies Proceedings Rule states:-

2(1) Except in the case of the application mentioned in Rules 5 and 6 of these Rules and application made in proceedings relating to the winding up of companies, every application under the Act, shall be made by Originating Summons.

(3) An Originating Summons under these rules shall be in form 1 specified in the Schedule to the Rules.

It is consequently imperative that a minority shareholder who intends to bring a derivative action in the name of the company must first and foremost apply for leave of court by way of originating summons on notice to the Company. The Shareholders will require the courts consent to sue. The derivative action must be commenced with the claim form referred to in Rule 2(2) of the Company Proceedings Rules 1992 and an application by the shareholder for the courts permission or leave to continue the claim. The company must be made a defendant to the claim for the technical requirement of ensuring that the company is bound by any judgment given. The hearing of the shareholders application will thereafter proceed in the manner of an ordinary interim application with both sides being afforded the opportunity to submit evidence and submission. The company must be given notice of such hearing so that the company or the director may be able to appear to present their view of the shareholder’s case. This renders impeccable the position of the conclusion of the judgment of the Court of Appeal which reads;-

“It is clear from Rule 2(1) that the applicants ought to have brought the application for leave to sue in a derivative form on an originating summons instead of a writ of summons. The non-compliance with the above rules which amounts to denial of principles of fair hearing is a justification for pronouncing the process a nullity

The submission of the appellant that the action commenced by a writ of summons instead of an originating summons is an irregularity at best, is misconstruing the relevant provision of CAMA and as regards derivative action and the Company proceedings Rules. The courts abhor misconstruing the provision of a statute so as to confer jurisdiction on them.

African Newspapers of Nigeria v. Federal Republic of Nigeria, (1995) 2 NWLR Pt. 6 pg. 137.

Ogunmokun v. Mil. Administrator Osun State (1999) 3 NWLR Pt. 594 pg 261.

A line of distinction though very faint has always been drawn between procedural irregularity and a nullity. A judgment may be set aside for irregularity where the irregularity consists of non-compliance with the Rules. Where the non-compliance is however, fundamental, it vitiates the proceedings thereafter resulting in a nullity. A nullity is a void act with no legal consequence – so also is proceeding which has been declared a nullity is void and without any legal effect.

Dawodu v. Ologundudu (1986) Pg. 659 4 NWLR Pt. 33 Pg. 104;

Okafor v. A.G. Anambra State (1991) 6 NWLR Pt. 200.

In this case accessing the court by an originating summons is the due process of law and condition precedent required to be satisfied by the applicant in a derivative action before a court can exercise jurisdiction in respect of the suit. Where by a rule of court, the doing of an act or taking a procedural step is a condition precedent to the hearing of a case such rule must be strictly followed and obeyed. Non-compliance with a condition precedent is not a mere technical rule of procedure it goes to the root of the case.

In the outcome, the court will not treat it as an irregularity but as nullifying the entire proceedings. This court has no reason to deviate from this well established practice.

By the community reading of sections 303 of the Companies and Allied Matters Act and Rules 2(1) and (2) of the Companies proceedings Rules proceedings in an application for leave to prosecute a derivative action is to be commenced by an originating summons but not otherwise. Where any proceedings are begun other than as provided by the Rules, such proceedings are incompetent. Once there is a defect in competence, it is fatal and the proceedings are a nullity.

Ajao v. Alao (1986) 5 NWLR Pt. 45 Pg. 802

Asore v. Lemanu (1994) 7 NWLR Pt. 356 Pg. 284

Udene v. Ugwu (1997) 3 NWLR Pt. 491 pg. 57.

Finally, in the process of effecting service on a party out of jurisdiction through compliance with the rules is imperative, non compliance denies the other party the opportunity to be heard and present his case. Under the Nigeria Legal System – fair hearing is not only a common law right but also a fundamental constitutional right. By virtue of Section 36(1) of the Constitution of the Federal Republic of Nigeria a breach of it particularly in trials vitiates such proceedings rendering same null and void.

Okafor v. A.G. Anambra State (1991) 3 NWLR Pt. 200, 59

Muhammed v. Kano Native Authority (1968) 1 All NLR Pg. 424

Bamgboye v. University of Ilorin (1999) 10 NWLR Pt. 622 pg. 290

Deduwa v. Okorodudu (1976) 9 – 10 sc 329

Military Governor Imo State v. Nwona (1997) 2 NWLR Pt. 490 Pg. 675.

This being a derivative action, an exparte application is inapplicable – as the Rule in Foss v. Harbottle raises an issue of locus standi of the plaintiff in a derivate action which should be decided at a pre-hearing stage before the substantive trial of the action. The lower court has rightly exercised its discretion in pronouncing that the entire process adopted by the applicants before the trial court was a nullity for non-compliance with the process prescribed by the Statute an Rules of Court. This appeal is hereby dismissed for being unmeritorious, the judgment of the Court of Appeal.

This cross-appeal was filed by the 3rd respondent in the main appeal, Otunba Adekunle Ojora against the appellant, Agip Nig. Plc. in his capacity of Chairman of the Board of Directors of the appellant Company. The cross-appeal is against the 1st, 2nd, 7th 8th 9th 10th 12th, 14th 15th and 16th respondents. The cross-appeal is against the judgment of the Court of Appeal, Lagos delivered on the 22nd of July, 2002. The bedrock of the course of action are on similar set of facts as in the main appeal. I shall refrain from restating them for the avoidance of tautology in the entire judgment.

However, for the sake of emphasis I will repeat that the derivative action which was filed by a group of shareholders of Agip (Nigeria) Plc in the name of company on 12/2/02 was designed to challenge the sale by the 1st respondent in the main appeal, Agip Petroli International B.V. of its 255,902,769 ordinary shares of 50k each held the plaintiff company. The sale was made to the 2nd respondent under a sale and purchase Agreement dated the 5th December, 2001. The action was instituted at the Federal High Court, Lagos by a Writ of Summons and Statement of Claim. The plaintiff/appellant filed simultaneously an exparte motion seeking injunction reliefs and an order of substituted service of processes on the 1st respondent and other Directors of the appellant through the Company Secretary of the plaintiff. The application was accompanied by an affidavit of urgency. Another exparte application was filed on the 18th of February, 2003 to bring a derivative action in the name of and on behalf of the appellant pursuant to the provisions of Section 303 of the companies and Allied Maters Act. (CAMA). The Federal High |court, as the court of trial gave orders that:-

(1) The 1st Respondent – Agip Petroli International – be served at its Registered Office out of jurisdiction in Amsterdam.

(2) The other Directors to be served through the Appellant’s Company Secretary.

(3) The Respondents-Directors were restrained from parting with the shares of the 1st Respondent held in the Appellant pending the hearing and determination of the Motion on Notice.

The 1st and 2nd Respondents filed separate Appeals against the foregoing orders.

The 3rd respondent, how cross-appellant, then filed a Respondent Notice that the decision of the trial court be varied in the event of the appeal being allowed. In the judgment delivered on the 22nd of July 2002, the Court of Appeal refused the reliefs sought by the 3rd respondent in the Respondents’ Notice. Being aggrieved by this decision, the 3rd respondent in that appeal filed a cross-appeal on the Notice of Cross-Appeal deemed filed on the 24th of January, 2007.

At the hearing of this appeal, the learned senior counsel for the appellant, Mr. Tayo Oyetibo adopted and relied on the cross-appellant’s brief filed on 28/11/08 and the cross-appellant’s Reply Brief filed on 26/10/09.

The 3rd respondent/cross-appellant raised issues for determination in the cross/appeal as follows:

(1) “Whether the court below was right in setting aside the exparte of injunction granted by the Federal Court whereby the 1st, 3rd and 16th respondents were restrained from selling the shares of the 3rd respondent held in the 2nd respondent to the 1st respondent when the transaction was shown to be tainted with illegality.

(2) Whether the Court of Appeal was right in view in declaring the issuance and service of the Writ of Summons in this case null and void to failure to obtain leave to issue same for service outside jurisdiction when the writ of summons was originally intended by the plaintiffs for service within jurisdiction and it was the trial judge who suo motu ordered that the writ be served on the 1st respondent outside jurisdiction.

(3)Whether the Court of Appeal was right in declaring the Writ of Summons issued in this case void and the ground that the action was not properly constituted as a derivative action.

(4) Whether the refusal by the court below of the 3rd respondent/cross-appellants, respondents Notice was not wrong in the circumstances.

Mr. Adegbomire adopted and relied on the brief of the 1st, 4th and 5th respondent/cross-respondents filed on 7/10/09. The Respondents adopted the same issues for determination as formulated by their 2nd respondents in the brief which are:-

(a) Whether on the materials placed before the lower court an ex-facie case of illegality was made out as to prevent the lower court from setting aside the ex-parte order of injunction granted by the trial court.

(b) Whether the Court of Appeal was right in law to have nullified the issuance and service of the writ of summons.

(c) Whether the Court of Appeal was right in holding that the action was not properly instituted as a derivative action and therefore declaring the writ a nullity.

(d) Whether the Court of Appeal was right in refusing the reliefs contained in the Respondents Notice.

The 2nd Respondent/Cross-Respondent’s brief was deemed filed on 14/7/09. The brief filed is in respect of the 3rd Respondents Notice of cross-appeal dated 6th of April, 2004. This cross-respondent filed a preliminary objection contending that grounds 1, 2 and 4 of the Notice of cross-appeal be struck out for being incompetent for the following reasons:-

(a) Ground one does not arise from the judgment.

(b) Ground 2 is not a ground of mixed law and fact.

(c) Ground 4 is unclear and ambiguous.

Thereafter, the 2nd respondents formulated the same issues as the 1st, 4th and 5the respondents in the cross/respondents brief. The 10th and 11th cross-respondents brief was filed on 18/2/09. In the brief the 10th and 11th cross-respondents adopted the four issues for determination formulated therein and relief on them for the purpose of the cross/appeal.

The 12th cross-respondent filed the cross-respondents brief on 5/8/09. The 12th Cross-Respondent adopted and relied on the same four Issues settled for determination by the other Cross-Respondents in the Cross-Appeal.

Issue No. 1

Whether the court below as right in setting aside the exparte order of injunction granted by the Federal High Court where by the 1st, 3rd – 6th respondents were restrained from selling the shares of the 3rd respondent held in the 2nd respondent to the 1st respondent when the transaction was tainted with illegality.”

The cross-appellant submitted in support of this issue that the learned trial court gave an injunctive order to forestall facts averred in his pleadings at pages 68 – 75 of the Record in respect of the sale of the 60% shares of Agip Nig. Plc. to the 2nd Respondent. The merger or take-over of Agip by the 2nd respondent, Unipetrol (Nig.) Ltd. was regarded as a fraud on the minority shareholders. The proper statutory preconditions had not been complied with in accordance with Section 105, 109 and 122(1)(a) of the Securities and Exchange Act. In view of the illegality attached to the transaction, the lower court ought not to set aside the interim injunction, as it is trite law that a court will not lead us aid to the perpetrators of any illegality. The courts must protect transaction conducted in contravention of statutory requirement on grounds of public policy. The cross-appellants cited cases like

Thirwel v. Oyewunmi (1990) 4 NWLR Pt. 144 pg. 384 at 400

Ekwunife v. Wayne (WA) Ltd. (1989) 5 NWLR Pt. 122 Pg. 422 at 450

Sodipo v. Lemminkainen Oy (1986) 1 NWLR Pt. 15

U.B.N. Ltd. v. Odusote Bookstores Ltd. (1995) 9 NWLR Pt. 421 Pg. 558 at Pg. 595.

Anderson Ltd. v. Daniel (1924) 1 KB 138 at 147.

The 1st, 4th and 5th cross/respondents replied by drawing attention to the pleadings of the appellant where the illegality was not averred in compliance with the provisions of Order 26 Rule 5 and 6 of the Federal High Court (Civil Procedure) Rules 2002. Whereas Order 26 Rules 5 and 6 of the Federal High Court (Civil Procedure) Rules 2002 make it mandatory for a plaintiff who alleges illegality to specifically plead same.

If the cross-appellant did not make it an issue before the trial court he cannot now turn round to make same an issue at an appellate level. It was only describe din paragraph 14 of the supporting affidavit to the appellant’s exparte application as-

Parag. 14 “the proposed sale is fraudulent.”

In effect, there was no material placed before the lower court which related to any act of illegality. The lower court was therefore legally right to have set aide the exparte order of injunction granted to the appellant by the trial court. The cross-appellant relied on cases to buttress the foregoing submission like-

Okoli v. Morecab Finance (Nigeria) Limited (2007) 14 NWLR Pt. 1053 pg. 33 at pages 61.

Ekwunife v. Wayne (WA) Ltd. 1989 5 NWLR Pt. 122 pg. 422.

Ibrahim v. Osim (1988) 3 NWLR Pt. 83 pt. 257 at Pg. 272.

Belvoir Finance Company Limited v. Harold Cole & Co. (1969)

See also  M. N. Uttah V. Independence Brewery Ltd (1974) LLJR-SC

2 All E.R. 904.

The 2nd respondent/cross-respondent filed notice of preliminary Objection against the cross-appeal wherein it was contended that Grounds 1, 2 and 4 of the Notice of Cross-Appeal be struck out as being incompetent in law. Ground 1 of the Notice of Cross-Appeal when read together with the particulars complained against the decision of the lower court for setting aside the order of injunction made by the trial court and the ex facie illegality disclosed on the Statement of Claim and affidavit evidence. Issue 1 raised therefrom also argued the question of illegality. The cross-appellant submitted that the issue was not pressed before the trial court and cannot now become an issue at the appellate level. The cross-appellant portrayed illegality as an error arising from the judgment. A ground of appeal which does not raise from the judgment must be struck out.

Ground 2 of the ground of appeal, when read together with the particulars, particularly parag. 2(b) the court needs to investigate the fact.

The 2nd cross-appellant submitted that Ground 4 of the Notice of Cross/Appeal is equally incompetent being vague, inchoate and unambiguous. Pursuant to the law, all grounds of appeal must be separate, distinct, not vague or imprecise. A ground of appeal must be understood without reference to another ground. The ground in unclear, vague and imprecise and cannot stand without reading it together with some other ground of appeal in the Notice. Cases were cited in support of his submission –

Central Bank of Nigeria & Anor. v. Aite Okojie & 5 ors. (2002) 8 NWLR Pt. 768 pg. 48.

The 2nd cross-respondent urged the court to upheld the objection and strike out the cross-appeal as incompetent.

On the first issue for determination, the 2nd cross-respondent submitted that on the materials placed before the court no issue of illegality was disclosed to prevent the lower court from setting aside the exparte order of injunction. The averment in the pleadings before the court on the acquisition of 60% shareholding in the 1st respondent company will amount at best to mere speculations. The transaction of the approval of Securities and Exchange Commission and Nigeria Stock Exchange and does not also offend any Nigerian law. The court is urged to resolve issue 1 in favour of the respondent and discountenance the cases cited as being irrelevant.

The 10th and 11th cross-respondents were of the impression that if the Court of Appeal had upheld the interim orders of injunction as granted by the trial court on the strength of the illegality disclosed in the affidavit in support of the exparte motion, it would have amounted to a determination of the substantive suit and consequently a dissipation of the Res in the suit. The courts should refrain from determining issues or taking far reaching pronouncements on issues on which the ultimate determination of the substantive matters depends. Cases referred include-

Egbe v. Onogun (1973) 386 Pg. 90

A.G. Fed. v. A.G. Abia State (2001) 11 NWLR Pt. 725 Pg. 689 at 742

Oduntan v. General Oil Ltd. (1995) 4 NWLR Pt. 387 pg. 1 at Pg. 13

University Press Ltd. v. I.K. Martins (Nig. ) Ltd. (2000) 4 NWLR Pt. 654 pg. 584 at 595.

The 12th cross-respondent submitted that at that stage the fundamental issue before the court was that of issuance and service of the writ of summons. The cause of action on the other hand, may have arisen from the illegality of transaction leading to the issuance of the writ. The trial court simply expressed that the applicants have legal rights which could appropriately be protected by injunction. Any pronouncement on the issue of the purported illegal transfer of the shares would certainly have amounted to deciding the substantive issue at an interlocutory stage. Once a writ is set aside, anything done thereafter amounts to a nullity. The lower court was right to have declared the issuance and service of the writ null and void. The cross/appellants cited the case of Kida v. Ogunmola (2006) 13 NWLR Pt. 997 377 at 394. The court is urged to resolve issue one in favour of the respondents.

Issue No. 2.

Whether the Court of Appeal was right in law in declaring the issuance and service of the Writ of Summons in the case null and void for future to obtain leave to issue same for service outside jurisdiction when the writ of summons was originally intended by the plaintiff for service within jurisdiction and it was the trial judge who suo motu ordered that the writ be served on the 1st respondent outside jurisdiction.

The cross-appellant referred to the order of the trial court that the writ of summons be served on the 1st defendant-respondent at its registered office in Amsterdam, while on the 3rd – 13th defendants respondents by substituted means through the Company Secretary the plaintiff.

The cross-appellant submitted that the lower court was wrong in law in making such order. The reason being that when the writ was issued on 11th of February, 2002, it was not meant to be served out of the jurisdiction so as to require leave of court. The writ contemplated in Order 6 rule 12(1) is a writ endorsed for service outside jurisdiction. The cross-appellant quoted form the dictum of Ogbuagu JSC in the Supreme Court of Owners of the M.V. “Arabella” v. Nigeria Agricultural Insurance Corporation (2008) 11 NWLR Pt. 1087 Pg. 182 at 206.

The cross-appellant contended that the order of the trial court for service at the 1st respondent’s office in Amsterdam constituted the leave. What the lower court should have concerned itself with was the leave for service outside jurisdiction of a writ issued for service within jurisdiction. The lower court used its inherent power to allow the writ to be served outside jurisdiction. The lower court should not have declared the writ void but should have allowed it to remain as it was issued for service within jurisdiction and directed that service be made by substituted means, in accordance with Order 13 Rules 5(b) of the Rules of the Federal High Court 2002. The lower court should have set aside service of the writ and leave the appellants with the discretion to take convenient steps in respect of same. The court was wrong to have declared the writ void when it was validly issued. The court is urged to decide the issue in favour of the cross-appellant.

The 1st, 4th and 5th cross-respondents in their reply considered the provisions of Order 6 Rules (1) and (2) of the Rules of the trial court as to the procedure for the issuance of Writ and the format. The plaintiff appellant must ensure that the name and place of abode and the registered office of the defendants/respondents must be reflected on the writ. Regardless of the fact that the appellants leaded the correct address of the 1st service as

c/o the Company Secretary

Agip (Nig.) Plc.

Plot 43 Engineering Close,

Victoria Island.

The foregoing is flagrantly in breach of the Rules of Court.

The cross-respondents further submitted that the essence of the provisions of Order 6 rules 1 and 2 of the rules of the trial court is to ensure that the constitutional rights of the Respondents to fair hearing in line with section 36(1) of the 1992 Constitution are complied with. Furthermore, failure of the appellant to endorse the writ with a proper address is an abuse of the process of court, as he deliberately failed to comply with the Rules of court. The leave required relates particularly to the issuance of the writ provision of Order 13 Rule 5(b) of the Rules which relate to substituted service does not avail the appellant in view of Order 6 Rules 1 and 2. The appellant cannot rely on the wrong address of the 1st respondent to seek an order for substituted service. The address endorsed on the original writ of the 1st respondent is a substitute address. The court is urged to find this issue in favour of the 1st, 4the and 5teh respondents.

The 2nd cross-respondent drew attention to the submission of the cross-appellant that the writ was valid as it was meant for service within jurisdiction. The evidence on record did not support this as no address was stated on the Writ of Summons filed to commence the suit. The cross-appellant gave an address outside jurisdiction. The evidence on record did not support this as no address was stated on the Writ of summons filed on commence that suit. The cross-appellant gave an address outside jurisdiction – 449 via Laurentina, Rome Italy. It was indicated that the 1st respondent would be served through an address in Nigeria. The obligation to serve anybody outside jurisdiction cannot be discharged through service within jurisdiction – and leave must be sought to the effect. In this case though leave was granted to serve outside jurisdiction leave of its issuance was not been granted and Order 6 Rule 12 all the defendants in the action, the appellant is also required to have issued a concurrent writ on the defendants that are outside jurisdiction. The order of the lower court nullifying the issuance and service of the writ was rightly made. The 2nd cross-respondent cited cases

Madukolu v. Nkemdilim (1961) 1 All NLR 587

Nwabueze v. Okoye (1988) 4 NWLR Pt. 91 Pg. 664

The 10th and 11th cross-respondents replied on this issue trial the appellant’s writ which was to be served on the 1st defendant outside jurisdiction, to be valid, must have obtained the leave of the court to issue and serve same on the 1st respondent. The appellant did not obtain any leave to issue and service the Writ of Summons outside jurisdiction on the 1st respondent and this robbed the trial court of jurisdiction to entertain the suit. Order 13 Rule 5(b) of the Federal High Court Procedure Rules (2000) apply to service of process within the Federal High Court jurisdiction Procedure for obtaining this leave to service outside jurisdiction is as stated in Order 13 rule 13(g) of the Rules of the trial court. The appellant did not comply with the procedure for obtaining the leave as stipulated in Order 13 Rule 14(1) of the Rules of Court before the trial court. There is no paragraph in the supporting affidavit of the motion – exparte stating the place or country the defendant is or may be found. The cross-appellants submitted that this appeal has become an academic question or exercise as the complaint of the appellant in the court of first instance which has been determined by the judgment of the court is not longer feasible. The 10th and 11th cross-appellants cited cases-

Odu’a Investment Co. Ltd. v. Talabi (1997) 10 NWLR Pt. 523, 1 at pg. 21

A.G. Anambra State v. A.G. Federation (1993) Pg. 302 pg. 692 at 737.

Nwabueze v. Okoye (1988) 4 NWLR Pt. 91 pg. 664 at 667 – 668.

NEPA v. Oniah (1997) 1 NWLR 484 Pg. 680 at 694

Afribank (Nig.) Plc. v. Akwara (2006) 5 NWLR Pt. 974 Pg. 619 at 656.

The 12th cross-respondent submitted that the Court of Appeal was right in declaring that the issuance and service of the writ of summons in this case were null and void in view of Order 6 rule 12(1) of the Federal High Court (Civil Procedure) Rules 2000. The 1st respondent whose 60% shares became subject of litigation has its office at 449 via Laurentina Rome, Italy, outside the jurisdiction of the Federal High Court. The appellant should have sought leave of court before the issuance and service of the Writ of Summons on the 1st respondent. It is condition precedent specifically and down by the Rules and failure to comply bereft the court of jurisdiction to entertain the case. By virtue of Section 54(1) of the Company and Allied Matters Act, the 2nd Respondent remains a foreign company. The 12th cross-respondent cited cases.

Madukolu v. Nkemdilim (1962) 1 All NWLR pg. 587

Nwabueze v. Okoye (1988) 4 NWLR Pt. 91 pg. 664 at Pg. 685

Ndoma-Egbe v. Government of Cross-River State (1991) 4 NWLR Pt. 188 pg. 773.

Issue 3

Whether the Court of Appeal was right in declaring the writ of summons issued in this case void on the ground that the action was not properly constituted as a derivative action.

The cross-appellant submitted that the provision of Rule 2(1) of the Companies Proceedings Rules 1992 that an application for a derivative action shall be made by Originating Summons except otherwise provided is directory and not mandatory. By virtue of Section 303(1) of CAMA leave of court must first be sought to bring the action in question. The leave sought by the appellant by exparte application did not violate the respondents’ right to a fair hearing. Rule k of the Companies Proceedings Rules makes the use of a writ of summons later than originating summons to commence the action procedural irregularity. The lower court ought not process a nullity. The court below ought to have allowed the action to be maintained as a personal action in the names of the ten applications named on the Writ of Summons rather striking same out. The court is urged to resolve the issue in favour of the cross/appellant. On issue 3, the cross-appellants cited cases.

Essang. v. Bank of North (2001) 6 NWLR Pt. 10 pg. 384 at Pg. 397.

Provisional Liquidator of Tapp Ind. Ltd. v. Tapp Ind. Ltd. (1995) 5 NWLR Pt. 393 pg. 9 at 36.

7-Up Bottling Co. Ltd. & Ors. v. Abiola & Sons Nig. Ltd. (1995)

3 NWLR Pt. 384 Pg. 257 Pg. 276

National Bank of Nigeria v. Alakija (1978) 2 LRN at Pg. 90

Otapo v. Sunmonu (1987) 2 NWLR Pt. 58 Pg. 587.

The 1st, 4th and 5th cross-respondents replied under this issue that the cross-appellant misconstrued the provision of Rule 2(1) of the Companies Proceedings Rules 1992 Sections 303(1) and 304 of CAMA as to the commencement of derivative action. Rule 2(1) of Companies Proceedings Rules does not provide for the making of an exparte originating summons. The nature of the powers to be exercised by bringing a derivative action pursuant to the provisions of section 304, makes it mandatory for the company to be put on notice of the intention of its shareholders to commence an action in its name. As the company did not authorize the bringing of the action through its proper organ, but it shall be bound by its outcome. The respondents concluded that the Court of Appeal was therefore right to have declared the writ a nullity for reason of failure of the appellant to put the respondents on notice when it sought leave to institute a derivative action.

The 2nd cross-respondents argued that the writ of summons is bad in law because the conditions precedent to suing the name of the company in litigation were not complied with. The cross-respondent stated the steps to be followed by a minority share holder who intends to bring a derivative action in the name of the company. There must first be an application for leave of court by originating summons on notice to the company and alleged wrong doers. This will be followed by a preliminary application after the applicant would have satisfied the conditions laid down in section 303(2) of CAMA. Where the court is satisfied it would grant leave to commence the action in the name of the company and make ancillary orders. The applicant would then file their writ of summons and other court processes. Under the circumstance of inter-party hearing, the procurement of leave by way of ex parte proceedings denies the persons whose right is affected of fair hearing. The lapse cannot be treated as an irregularity under Rule 18 of the companies Proceedings Rule as it is breach of condition precedent to instituting an action. The 2nd cross-appellant submitted further that a personal action cannot be predicated on an improperly commenced suit. The court is urged to uphold the decision of the Court of Appeal.

The 10th and 11th cross-respondents urged the court to disregard the cases cited by the cross-appellant as arguments canvassed therein that non-compliance with the rules would only amount to an irregularity. Where an action is brought on behalf of the Section 2(1) of the Companies Proceedings rules of 1992 provide that it must be commenced by an originating summons, failure to comply with the rule is not a mere irregularity but renders the proceedings a nullity. The respondents cited the cases of: Okolo v. Union Bank of Nigeria Ltd. (2004) 1 SC pt. 1 Pg. 1 at Pg. 30 Lahan v. A.G. Western Region (1963) 1 All NLR Pg. 226 Obajini v. A.G. Western Nigeria (1967) 1 All NLR Pg. 33;

This court is urged to resolve this issue in favour of the 10th and 11th respondents.

The 12th cross-respondent referred to the arguments of the cross/appellant that-

(a) The provisions of the Companies Rules 1992 particularly Rule 2(1) thereof is directory and no mandatory

(b) The commencement of the suit by a writ of summons instead of an originating summons is a mere irregularity.

(c) The cross-appellant argued that the breach of the rules of fair hearing normally renders the proceedings a nullity and as such it was wrong for the Court of Appeal to have declared the Writ of Summons process a nullity. The word “shall” in its ordinary meaning is a word of command which is normally given a compulsory meaning because it is intended to denote obligation.

The 12th respondent disagreed with the above arguments and held that the use of word “shall” in Rule 2(1) and (2) makes compliance with the rule mandatory. The cross-respondent cited the cases.

Ugwu v. Ararume (2007) 12 NWLR Pt. 1048 pg. 767 at Pgs. 441 – 442

Col. Kaliel (Rtd) v. Alhaji Akera (1999) 4 NWLR Pt. 597 Pg. 139.

On the second point raised, the 12th cross respondent replied that where a statute or rule of court provides for a procedure for the commencement of an action, failure to follow that procedure renders any suit commenced incompetent. The defect complained about in this appeal was very fundamental to the competence or jurisdiction of the trial court so as to render the writ and the subsequent proceedings null and void. The cross-respondent cited cases in support.

Obasanjo v. Yusuf (2004) 9 NWLR Pt. 877 Pg. 144 at Pg. 221

Obajinni v. A.G. Western State (1968) NMLR Pg. 96

Odofin v. Agu (1992) 3 NWLR Pt. 229 Pg. 350 at Pg. 309

Odu’a Investment Co. Ltd. v. Talabi (1997) 10 NWLR Pt. 523 Pg. 1 at Pgs. 21-22.

The cross-respondents argued on the breach of fair hearing, the appellant did not comply with the procedure envisaged for the commencement of a derivative action by the filing of a derivative action on notice to the Directors of the appellant who were in control and will not take necessary action. The applicants filed a motion exparte which is not within the contemplation of CAMA and the Rules. Such non-compliance with the procedure laid down by law amounts to a breach of company’s right to fair hearing as guaranteed by Section 36 of the 1999 Constitution. This nullifies the entire proceedings. The Court is urged to hold that the Court of Appeal was right in declaring the Writ of Summons issued in this case void as the action was not properly constituted as a derivative action.

Issue No. 4

Whether the refusal by the court below of the 3rd Respondent/Cross-Appellants/Respondents’ Notice was not wrong in the circumstance.

The cross-appellant argued that the court below ought in the alternative to have granted the relief contained in the Respondents Notice by which relief is sought to restrict the order of injunction granted by the trial court to the 2nd respondent, Unipetrol Nigeria Plc. There was no complaint against the order of injunction on the merit. This court is urged to invoke Section 22 of the Supreme Court Act and grant the relief. The cross/appellant urged this court to set aside the judgment of the court below and restore the order of the Federal High Court or at least grant the relief in the respondents’ notice.

The 1st, 4th and 5the cross-appellants submitted on this issue that the order prayed for by the 3rd respondent in its respondents’ notice could only have been lawfully made if an action was still alive at the trial court. The resultant effect of the striking out of the writ by the lower court was that there was no longer a substantive action upon which the order prayed for by the 3rd respondent could rest. The order of injunction can only be made if there is a substantive cause of action – an order contained in the 3rd respondent’s notice would have amounted to an order in nullity since the writ on which it was predicated had been declared a nullity by the lower court. The cross-appellants concluded that the Court of Appeal was right to have refused to grant the prayers contained in the 3rd respondent/cross-appellant’s notice.

The 2nd cross-respondent submitted that the lower court rightly found that the issuance of the writ and the service was faulty; hence the entire suit was incurably based. In the circumstances the respondent’s notice seeking to vary the injunctive reliefs was properly refused by the lower court. The lower court also considered the competence of the court to assume jurisdiction in the matter having regard to the manner by which the derivative action was commenced. This court is urged to resolve this issue in favour of the 2nd cross-respondent.

The 10th and 11the cross-respondents contended that since the lower court declared the writ o summons a nullity, it was right to have refused the cross-appellant respondent’s notice. When an action has been held to be a nullity, any subsequent proceedings in the matter would be a nullity. The cross-respondent cited cases.:

Matsy v. UCA (1961) 3 All ER 1169 at 1172

Leedo Presidetial Motel v. B.O.N. Ltd. (1998) 10 NWLR Pt. 520 Pg. 353.

A.G. Anambra State v. Okafor (1991) 6 NWLR Pt. 200 pg. 659.

The 12th cross-respondent submitted that the cross-appellant by the respondents’ notice requested that the order of injunction made by the trial court be restricted to the 2nd respondent alone – Unipetrol (Nigeria) Plc. Since the Court of Appeal declared the issuance and service of the writ null and void, there is nothing upon which the relief sought can be placed. The writ of summons has been nullified therefore the action founded upon it has been extinguished. The Court of Appeal rightly refused the cross-appellants respondent’s notice in the circumstance of the case. The 12th cross-respondent urged this court to dismiss the 3rd respondent/cross-respondent’s cross-appeal.

I have carefully considered the arguments and submission of all parties for and against all the issues raised for determination in this cross-appeal. The 2nd cross-respondent filed notice of preliminary objection on 8/7/09 which was argued in his brief deemed filed on the 14th of July 2009. This court intends to determine this preliminary objection which affects grounds 1, 2, and 4 of the grounds of appeal and the issues formulated thereupon. The 2nd cross-respondent argued that ground one of the ground of appeal and issue one\ raised therefrom is solely on the question of illegality which did not arise from the judgment of the lower court. Interestingly enough the 2nd cross-respondent in the argument on this objection said that:-

“The 3rd respondent concedes that the cross-appellant at the lower court canvassed some arguments about illegality during the hearing of the appeal. However, the lower court never considered this point in its judgment. At best the proper complain before this court should only be a complaint on the failure to determine the issue of illegality raised before the court. What the cross-appellant did in ground 1 i.e. to touch the issue of illegality as in error arising from the judgment.”

Vide paragraph 4.02 at page 4 of the 2nd cross/respondent’s brief.

In my view, the germane argument of the cross-appellant is that in the face of illegality disclosed by the affidavit in support of the motion ex-parte in the Federal High Court, the court below ought in law not to have set aside the order of interim injunction. The cross-appealing argued further that illegality once brought to the attention of the court overrides all other questions and the court would not close its eyes against such illegality. Vide paragraphs 4.4 and 4.5 at pg. 9 of the cross-appellant’s brief. The submission of the cross-appellant tallies with contention of the 2nd cross-respondent on this issue.

There is also the objection that ground 2 of the Notice of cross-appeal is also incompetent because it is at its best a ground of mixed law and fact and no leave was obtained for it to be filed and argued. The 2nd cross-respondent further submitted that the cross-appellant made an application on the 31st of May, 2005 for leave to appeal on questions of mixed law and fact, leave of court was granted in respect of grounds 1 and 3. It is my view that if ground 3 was also a ground of mixed law and fact, the court in doing substantial justice would have extended such leave to ground 2. Ground 2 of the ground of appeal is a complaint against the issuance and service of a writ of summons which in my view and in conformity with decided cases is purely a ground of law which does not require or call for an investigation as to whether the writ of summons issued was for service within or outside the jurisdiction of court. It is a question of the format of the writ issued in the Registry. The question raised by ground 2 of the cross-appeal and the issue for determination distilled from same is whether the lower court had jurisdiction to declarer null and void the writ of summons issued in this case meant for service within jurisdiction. This to my mind is an issue of law as determination of same is based on the writ of summons and statement of claim of the appellant before the court.

See also  Chief Peter Amadi Nwankwo & Anor V. Ecumenical Development Co-operative Society (Edcs) U.A (2007) LLJR-SC

Nwadike v. Ibekwe (1987) 4 NWLR Pt. 67 Pg. 718 at Pg. 744 paragraphs C – F where it was held inter alia that:-

“Several issues that can be raised on legal interpretation of deeds, documents, terms of art, words or phrases and inferences drawn thereof are grounds of law.”

Nigerian National Supply Co. Ltd. v. Establishment Sima of Vaduz (1990) 7 NWLR Pt. 154 pg. 526 at 529

MPDI v. Okonkwo (2001) 3 SC 76 at Pg. 87.

The 2nd cross-respondent occluded that ground 4 of the ground of cross-appeal and the issue distilled therefrom is vague, inchoate and ambiguous. The cross-appellant further argued that each ground of appeal is separate and distinct from one another and must not be vague or imprecise. I agree with the pronouncement of this court in the case Central Bank of Nigeria & Anor. v. Aile Okojie & 3 Ors. (2002) 8 NWLR Pt. 768 SC 48 that:

“vagueness of a ground of appeal may arise where it is couched in a manner which odes not provide any explicit standard for its being understood or when it is not susceptible of being understood.”

The cross-respondent held that the ground cannot stand on its own and recourse will have to be heard to some other ground of appeal in the Notice of Appeal to make any meaning.

I cannot pinpoint any ambiguity in either ground of appeal and the particulars or the issue raised from it. The issue formulated from the ground was properly and clearly argued by all the parties. I regard this preliminary objection as time wasting and lacking in merit and I consequently dismiss same in its entirety. This renders the coast clear to consider the issue raised in the cross-appeal. I have reviewed the argument and submission of all parties earlier on.

Issue One

In respect of issue one, the vital submission of the cross-appellant is that the issue of the illegality of the transaction was brought to the attention of the lower court which failed to consider same in its judgment. The cross-appellant at page 443,444 and 478 (b) of the Record of Appeal drew attention of the court below to the facts giving rise to the issue of illegality in the transaction between 1st and 2nd cross-respondents in this case. The court below in the circumstance ought not to have set aside the order of interim injunction. I agree that the cross-appellants adequately pleaded the issue of the illegality in the transaction between the 1st and 2nd respondents in this case in its statement of claim in their substantive action, and also in the affidavit in support of the motion ex-parte dated the 11th of February 2002.

The lower court obviously and rightly did not make any pronouncement on same because it would at that stage of the proceeding be clearly premature. It will amount to the court pronouncing or deciding at an interlocutory stage on the matter it is supposed to determine in the substantive suit of the case. it is a long standing principle of court pronounced in numerous decided case that – A court must be cautious in its judgment at an interlocutory stage not to make pronouncements or observations on the facts which might appear to procedure mine the main issue or issues in the proceedings yet to be concluded by the court.

Ojukwu v. Governor of Lagos (1986) 2 NWLR Pt.26 pg. 39

Iweka v. SCOA (Nig.) Ltd. (2000) 7 NWLR Pt.664 pg.325

NDIL v. SBN Plc (2003) 4 NWLR Pt.41 pg.311.

Egbe v. Omogun (1972)2 SC pg. 90 at pg. 93

NDIC v. CBN (2002) 4 MSC pg. 66 at pg. 81

Shanu v. Afribank(Nig) Plc (2002) 17 NWLR pt. 795 pg. 185 at pg. 230 -231

A-G Federation v. A-G Abia State (2001) 11 NWLR pt. 725 pg. 689 at pg. 742,

Oduntan v. General Oil Ltd. (1995) 4 NWLR pt. 387 pg. 1 at pg. 13

University Press Ltd. v. I. K. Martins (nig) Ltd. (2000) 4 NWLR pg. 654. pg. 595. A.C.B. v. Losade (Nig) Ltd 91995) 7 NWLR pt. 405 pg. 26

Ogbonna v. President of Nig. (1990) 4 NWLR pt. 142 pg. 143

Akintunde v. Ojo (2002) 4 NWLR pt. 757 pg. 284

Ezenfor v. Okeke (2000) 7 NWLR pt. 665 pg. 363

It is also settled and the principle is still evergreen that illegality once brought to the attention of court overrides all other questions and the court would not close its eyes against such illegality. Neither will the court lend its aid to the perpetrators of any illegality.

Belvoir Finance Co. Ltd. v. Harold Cole & CO. (1969) 2 All E.R. at 908

Thirwell v. Oyewunmi (1990) 4 NWLR pt. 144 pg. 384 at pg. 400

Ekwunife v. Wayne West Africa Ltd. (1989) 5 NWLR pt. (122) pg. 422 at pg. 450

ACB v. Alao (1994) 7 NWLR pt. 358 pg. 614 at pg. 631

Jethwani v. Nigeria Wire Ind. Plc. (1999) 5 NWLR pt. 602 pg. 326 at pg. 335.

It is worthy of note that the court in going through the Record of Appeal might have noticed that the contract for the sale or shares is not ex facie illegal. As paragraph 17 of the Counter affidavit before the trial court sworn to on the 24th of September 2002 by the 3rd respondent at page 73 or the Supplementary Record reads, that:

“Contrary to paragraph 25 of the affidavit, the transaction is not illegal, and is not a merger or acquisition but a mere transfer of shares from one person to another which had been approved by the 15th and 16th respondent in capacity as regulatory agencies.”

The Securities Exchange Commission, the 12th respondent and the Nigerian Stock Exchange, the 11th respondent in the cross ,appeal 6th of February ,2002 and 20th of February, 2002 both issued approval to the transaction and, confirmed that it did not offend any Nigerian law at that time. In effect the issue of illegality canvassed might turn out to bemusedly speculative.

It is trite principle also that a court should not decide a case on mere conjecture or speculation, Courts of laws are courts of facts and laws. They decide issues on facts established before them and on laws. They must avoid speculation.

Orhue v. NEPA (1998) 5 NWLR pt. 557 pg. 187

Oguonze v. State (1998) 7 NWLR pt. 551 pg. 521

Anyashaun v. UCH (1996) 10 NWLR pt. 476 pg.65

Adefulu v. Okulaja (1996 )9 NWLR pt. 475 pg. 668

Overseas Construction Co. Ltd. v. Greek Enterprises (Nig) Ltd. (1985) 3 NWLR pt. 13 pg. 407.

Agbir v. Ogbeh (2006) 11 NWLR pt. 900 pg. 65

The lower court cannot therefore entertain the issue of illegality in setting aside the ex-parte injunction when it was based on mere speculation and not considered on merit by the trial court.

I resolve Issue One in favour of the cross-respondents,

Issues Two

Issue Two is on the essence of and failure to obtain leave for the issuance – and service of writ of. summons out of jurisdiction, The cure issue, for consideration was whether the Court of Appeal was right in law to have nullified the issuance and service of the Writ of Summons in this particular case in hand. I have considered this issue extensively in the main appeal. I will only specify the proper laws in support of my contention, which will serve the same purpose and adequately dispose of this issue.

All parties agreed that obligation can only be discharged by obtaining the requisite leave, The cross-appellant argued that according to the Ruling and Order of the lower court, the 1st defendant had to be served in Amsterdam and that order amounts to giving the requisite leave. I disagree that:-

“(i) The respondent Agip Petroli International B.V should be served outside jurisdiction at its registered office in Amsterdam

(ii) All other Directors be served by substituted means through the Company Secretary of the plaintiff.”

The foregoing order of court was made in the face of the error of the cross-appellant to issue any Writ of Summons for services on the 2nd respondent and 1st cross-respondent at its business office outside the jurisdiction of court. All writs issued by the appellant was for service within jurisdiction including the Writ Summons meant for service on the Agip Petroli International B.V. which in the eyes of the Company and Allied Matters Act is a foreign company with no know address in Nigeria. Any writ of summons issues for service on it within jurisdiction can never be applicable. The appellant ought to have issued a concurrent writ for service outside the jurisdiction of the Federal High Court as by the appellant’s pleadings the address was indicated as 449 Via Laurentina, Rome Italy.

The appellant wrongly issued writ for service on the 1st defendant/respondent and 3rd- 13th defendant-respondents, which writ of summons now imbibe all the cross-respondent for service on them at the address stated as:

c/o The Company Secretary

Agip (Nig:) Plc

Plot 23, Engineering Close

Victoria Island, Lagos

The order of court cannot constitute the leave for the purpose of serving, outside jurisdiction as the affected writ was issued for service within jurisdiction only. It was an order made by the trial Judge exercising his inherent powers to correct the mistake of a party in the issuance of a writ and to bring it in line with the address pleaded in the statement of claim. Hence as observed in the case of Erisi v. Idika 1989) 4 NWLR pt. 66 pg. 503 at pg. 512 the court clarified the air as to the inherent power of court that:-

“Inherent power enure to a superior court of record enabling it to make such orders or take such actions as will protect or enhance the dignity of the court or promote the speedy or fair dispensation of justice.”

The cross/appellant also argued that the lower court should have invoked Order 12 Rule 5 (b) of the Federal High Court Rules 2000 to permit substituted service of the Writ on the 1st, 3rd – 15th dependants-respondents including the cross-respondents through the Company Secretary of the plaintiffs. The reasons given were embodied in paragraphs 40 -41 of the affidavit in support of the ex parte application (vide page 74 of the Record). Paragraph 40 “The 1st Defendants are residing outside Nigeria.”

Paragraph 41 “The Company Secretary of the plaintiff is in close contact with the 1st Defendants and service of court processes on the Company Secretary of the plaintiffs will come to the knowledge of the 1st defendant.”

The format of the Writ of Summons issued for service within and outside jurisdiction will not permit the foregoing.

Order 6 Rule (5) provides that: –

“For the purpose of writ of summon or for any other process relating to an action in the court, the whole Federation is within the jurisdiction of the court.”

The relevant provisions to issuance and service of Writ in the Federal High

Court Rules2000 arc as follows: –

Order 6 Rules(1) (2) and 2 (a) and (b).

Order 6 Rule 1 “A writ of summons shall be issued by Register or other officer of the court empowered issue summons on application.

(2) The application ordinarily be made in writing by the plaintiff’s solicitor by contemplating Form 1 in Appendix 6 to those Rules, but the Registrar or other Officer empowered to do so may where the applicant for a writ of summons is illiterate, or has no solicitor, dispense with a written application and instead himself record full particular of an oral application made and on that record a writ of summons may be prepared, signed and issued.

Order 6 Rule 2. The Writ of Summons shall-

(a) Contain the name and place of abode of the plaintiff and defendant so far as they can be ascertained and

(b) State briefly and clearly

(i) The subject matter of the claim and the relief sought, and

(ii) The date of the writ and place (called the return place) of hearing

Order 6 Rule 9 (2)

“Before A writ is issued in an action brought by a plaintiff who is bringing it i.e. acting by order or on behalf of an person resident outside of jurisdiction, it shall be endorsed with a statement of that fact and with the address of the person so resident.”

Order 6 Rule 13

“Issue of a writ takes place upon its being signed by a judge in Chambers.”

Order 6 Rule 12 (1)

“No writ which should or notice of which is to be served out of the jurisdiction shall be issued without leave of the court”

Order 13 Rule 13 (g)

“Service out of jurisdiction of a writ of summons on notice or a writ of summons may be allowed by the Court or judge in Chambers whenever:-

(g) Any person out of jurisdiction is a necessary or proper party to an action properly brought against some other party within the jurisdiction.”

Order 13 Rule 14 (1) provides

“Every application for leave to serve a writ or notice on a defendant out of jurisdiction shall be supported by affidavit or other evidence stating that in belief of the deponent the plaintiff has a good cause of action and showing in what place or country the defendant is or probably may be found and the grounds upon which application is made.”

As agreed by the parties – such leave as defined in Black’s Law Dictionary 6th Edition means “permission obtained from the court to take some action. Such permission must be obtained before taking the requisite step.”

Ndoma-Egba v. Government of Cross, River State (1991) 4 NWLR pt.188 pg.773

It is a well established principle that issuance of a writ and service of same are distinct legal process in civil litigation though they are both invoked in the process of putting the other party on notice. Going by the foregoing Ruling of the Federal High court 2000, it is crystal clear that issuance and service of the Writ by the appellant were not in compliance with the Rules. The Writ was not regularly issued as a writ meant for service out of jurisdiction. The lower court was in order to have declared the issuance and service of the Writ of Summons null and void. This court has held in numerous decisions that rules of a court must be obeyed by litigants – and they are binding on all the parties before the court. Rules of court are not mere rules, but one by nature akin to subsidiary legislations by virtue of section 18(1) of the Interpretation Act and therefore have the force of law.

Oba Aromolaran & Anor v. Oladele & 2 Ors (1990) 7 NWLR pt. 162 pg. 359

Bango v. Chado (1988) 9 NWLR Pt.564 pg.139

Duke v. Akpabuyo Local Government (2005) 19 NWLR Pt.959 pg. 130 at pgs 148-157

Owners of the M. V. Arablla v. Nigerian Agricultural Insurance Corporation (2008) 11 NWLR Pt.1097 pg. 182 at pgs. 205 – 206

Issue two is resolved in favour of the Cross-Appellants

Issue Three

The live question for determination is whether the court of Appeal was right in declaring the summons issued in the case void on the ground that the action was not properly constituted as a derivative action.

For the purpose of a derivative action, the Company and Allied Matters Act, Cap C20 Laws of the Federation 2004 and Rule 2(1) Company Proceedings Rules 1992 expect the defendants = who are the Directors of the Company or the alleged wrong doers to be affected by the outcome of the suit to be properly put on notice, as non-compliance with the law amounts to a breach of the right to a fair hearing as guaranteed by Section 36(1) of the 1999 Constitution.

Parties are at one that the action before the Federal High Court was a derivate action. There is a procedure laid down by law for the commencement of a derivative action. Such procedure as laid down by statute or Rule of Court for the commencement of a suit becomes a condition precedent, and failure to invoke and follow it renders the suit commenced incompetent and any proceedings based on such null and void.

At page 493 of the Record the lower court held that:-

“The non-compliance with the above rules which amounts to a denial of principles of fair hearing is a justification for pronouncing the process a nullity.”

Section 303 of the Company and Allied Matters Act stipulates that:-

“Subject to the provisions of section (2) of this section, an applicant may apply to the court for leave to bring an action in the name or an behalf of a company or to intervene in an action to which the company is a party, for the purpose of prosecuting, defending or discontinuing the action on behalf of the company.

(2) No action may be brought and no intervention may be made under sub-section (1) of this section, unless the court is satisfied that:-

(a) The wrongdoers are the directors who are in control and will not take necessary action.

(b) The applicant has given reasonable notice to the directors of the company of his intention to apply to the court under subsection (1) of this section if the directors of the company do not bring, diligently prosecute or defend or discontinue the action.

(c) The applicant is acting in good faith and

(d) It appears to be in the interest of the company that the action be brought, prosecuted, defended or discontinued

Section 304 provides that:-

(1) “In connection with an action brought or intervened under section 303 of this Act, the court may at any time make any such order or orders as it thinks fit.

(2) Without prejudice to the generality of subsection (1) of this section, the court may make one or more of the following orders, that is an order –

(a) authorizing the applicant or any other person to control the conduct of the action by given directions for the conduct of the action

(b) Giving directors for the conduct of the action.

(c) Directign that any amount adjudged payable by a defendant in the action shall be paid in whole or in part directly to former or present security holders of the company instead of the company

(d) Requiring the company to pay reasonable legal fees incurred by the applicant in connection with the proceedings.”

Rule 2 (1) of the Companies Proceedings Rule 1992 provides that:-

“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.”

(2) An originating summons under these Rules shall be in Form I specified in the schedule to these Rules.

With the community reading of the provisions of section 303 (1) of CAMA and Rule 2 (1) of the Companies Proceedings Rule 1992. the application must be commenced with an originating summons on notice, and not an ex-parte application engaged by the appellant. I have to explain at this juncture that this issue relates to an interparty hearing. A preliminary stage in a derivative action where it is determined whether there is substance in the main action. The effect of the provision of section 301(1) is to deprive the Directors of the Company the power as duly authorized organ of the company, to authorize the bringing of an action in the name of the company. The action is that brought by the minority shareholder in the name of the company. An order which has the effect of stripping the Directors of their statutory right must be one in respect of which they should be given the right to be heard before it is made as their civil rights and obligations would be affect. Consequently, it is right to give them fair hearing as enshrined in section 36(1) of the 1999 Constitution. The leave to be granted in the application referred to in Rule 2(1) of the Companies Proceedings Rule relates to the rights of the company whose name shall be employed in the capacity of the plaintiff. The case of provisional liquidator of Tapp. Industries Limited v. Tapp Industries (1995)5 NWLR pt.393 PG. 9 at pg. 36, a minority shareholders petition and not a derivative action is not applicable in the circumstance of this case.

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 the4 word SHALL in the provision. The word shall in the ordinary meaning is a word of command which is normally given a compulsory meaning 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 that a thing must be done.

Nigerian LNG Ltd. v. African Development Insurance Co. Ltd. (1005) 8 NWLR pt.416 pg. 677

Col. Kaliel (Rtd.) v. Alhaji Aliero (1999) 4 NWLR pt.597 pg. 139

More important is that where a statute or Rule of court provides for a procedure for the commencement of an action, failure to follow that procedure renders any suit commenced otherwise incompetent. In the case of Obasanjo v. Yusuf (2004) 9 NWLR pt.877 pg. 144 at page 221, the Court decided that:-

“It is elementary law that a plaintiff in the commencement of and action must comply strictly with the provisions of the enabling law. He cannot go outside the enabling law for redress”

In effect, to commence a suit by a writ of summons instead or originating summons as enacted in a statute cannot be overlooked as a mere irregularity by virtue of Rule 18 of the Companies Procedure Rules 1992 as argued by the cross-appellant.

Lawani v. Oladokun (2003) 2 NWLR (p.804) pg. 271 at pg.287

Obajinmi v. A-G. Western State (1968) NMLR pg.96

Odofin v. Agu (1992) 3 NWLR pg. 229 pg. 350 at pg.369

Odu’a Investment Co. Ltd. v. Talabi (1997) 10 NWLR Pt.523 pg.1 at pgs. 21-22

Harkness v. Bell Asbestos & Engineering Ltd (1967) 2 QB 729 at pg. 735

Okolo v. Union Bank of Nigeria (2004) 1 SC pt.1 pg. 1 at pg.30

Lahan v. A-G. Western Nigeria (1963) 1 All NLR pg. 226.

Another argument of the cross-appellant is that what is affected by the breach of fair hearing is the proceeding and not the process. The reply here is that by non-compliance with the condition precedent to institute derive action, both the process and proceedings emanating therefore are endered null and void.

Madukolu v. Nkemdilim (1962) 1 All NLR pg. 587

Finally, the lower court could not in interest of justice covert the action a personal suo motu, when there was no application by party to that effect. Moreever it would not have served any useful purpose when the suit was improperly commenced. I affirm the finding of the lower court that the writ of summons was a nullity because the condition precedent to using the name of the company in litigation was not complied with. I resolved the third issue in favour of the Respondent.

Issue Four

The question to be resolved under this issue is

Whether the Court of Appeal was right in refusing the relief contained in the Respondents’ Notice.

This court need not belabour this issue as the answer is simple and straightforward. The respondents notice sought to vary the injunctive reliefs granted by the trial court. The reliefs in the Respondents’ Notice was predicated on the Writ of Summons being validly issued and that the suit itself, was properly commenced as a derivative action. In issue two, the trial court and the lower court found that the issuance and serviced of the writ was a nullity being a writ meant for serviced outside the jurisdiction of the Federal High Court.

Under Issue 3, this court and the lower court found that the suit was improperly commenced as a derivative action. When an action has been held to be a nullity any subsequent proceedings in the matter would be a nullity. The court below could not in the alternative have granted the relief contained in the Respondents’ Notice as maintained by the cross-appellant.

A-G Anambra State v. Okafor (1991) 6 NWLR pt.200 pg. 659, Macfoy v. UAC (1961) 3 All England Reports pg. 1169 at pg. 1172

The lower court was right in refusing the cross-appellants/respondents notice in the circumstance. This issue is resolved in favour of the Cross-Respondents.

The 3rd Respondents/Cross-Appeal lacks merit. It is accordingly dismissed. In the final analysis, both the main appeal and cross-appeal are dismissed. The judgment of the lower court is affirmed. N50,000.00 costs of the appeal and N50,000.00 costs of the cross-appeal are to be paid to the Respondents/Cross-Respondents.

The 3rd Respondents/Cross-Appeal lacks merit. It is accordingly dismissed. In the final analysis, both the Main/Appeal and Cross-Appeal are dismissed. The jdugment of the lower court is affirmed. N50,000.00 costs of the Appeal and N50,000.00 cost of the Cross-Appeal are to be paid to the Respondent/Cross-respondents.


SC.351/2002

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