Aleruchi Etcheson Nsirim V Onuma Construction Company (Nigeria Ltd.) (2001)

LAWGLOBAL HUB Lead Judgment Report

BELGORE, J.S.C.

The respondent was the plaintiff at the trial High Court of Rivers State. The appellant was the defendant. At the Court of Appeal holden at Port Harcourt the present appellant was appellant cross-respondent while the present respondent was the Cross-appellant. The appellant was, at the material time to the suit leading to this appeal, a director of the respondent. According to its statement of claim, in paragraph 3 thereof, four directors of the Company met sometime in March 1980 and resolved to set up a block making industry. The four directors, namely Chief Omunakwe Nyeche Nsirim, Aleruchi Etcheson Nsirim and Nyeche Nsirim, agreed to set up a concrete block making industry and that the appellant should manage it. Apparently the four directors of the respondent were acting not only as directors but to an extent as a family involved in business. They resolved as follows as per the plaintiff’s statement of claim:

“(a) That as a Construction Company, the Company should go into the Business of Block Making Industry which is capable of being conveniently carried on in connection with the objects of the Company and which may render more profitable any of the Company’s Business to wit:

Building of Houses, Offices and Road Construction.

…………..

(b) That the defendant should be put in charge of the Business.

(c) That the Company should purchase Block Making Machine from Wiedemann & Walters (Nig.) Limited.

(d) That the Company should also purchase and/or make available for use one of the generating plants of the plaintiff’s company to supply Electricity since there is no Electricity supply in the area where the business is to be carried out.

(e) That the business should be located at Mile 4, Chief Omunakwe Nsirim Road, Port Harcourt.

(f) That the defendant should pay into the plaintiff’s account or any other account opened for the said business all monies received from the said Business.

(g) That the defendant should keep proper Account Books and receipts of all sales and/or purchases from the business.”

Also that respondent, being a Construction Company, would benefit from the block making business both in its own contracts and from sales to the public. The whole of the resolution was said to be oral and it seems that they never expected any deviation from this agreement. On 17th day of April, 1980, in furtherance of the purported resolution, a cheque for N49,000.00 was issued in favour of Weidemann & Walters (Nigeria) Ltd. as part deposit for the purchase of concrete making machine of ZENITH make. On the 1st day of June 1980, another cheque for N49,000.00 was issued in favour of the same Weidemann & Walters (Nigeria) Ltd., to complete the purchase price of the block-making machine. The two cheques aforementioned were handed over to the appellant as manager of the block-making business for onward transmission to Wieidemann and Walters (Nig.) Ltd. The cheques were duly paid to the Company and the machines involved were duly supplied to the appellant who set up the factory. It is to be pointed out, that in furtherance of the agreement, the respondent company released to the appellant an electricity generating plant for the block-making factory. While the factory was being set up, the managing director of the respondent, Chief Onumakwe Nyeche Nsirim, was out of the country on business trip when the two cheques aforementioned were issued by the respondent company. Also made available for the concrete (block) industry by the respondent is a piece of land lying and being along Onumakwe Nsirim Road, Mile 4 Port Harcourt.

The appellant, in accordance with the resolution, put the block-making industry into operation and among its customers was the respondent. The equipment purchased from Wieidemann and Walters (Nig.) Ltd., apart from Zenith block-making machine, were Teva Mixer and Concrete Loader. However, by February, 1982 the auditors to the respondents saw the stumps of the two cheques issued to Wieidemann and Walters Ltd and demanded the receipts for them. The appellant refused to hand over the receipts. The drawee, i.e. Wieidemann & Walters Ltd., then on inquiry, indicated the receipts were not issued in the respondent’s name but in the name of Etches on & Sons, a trade name of the appellant; copies of the receipt were then given to the respondent company. This development led the respondent to demand full account from the defendant on the operation of the block-making industry. It was discovered that all monies accruing to the block making industry were being paid into personal account of the appellant. Thus this suit by respondent as plaintiff claiming from appellant as defendant the following reliefs:

“And the plaintiffs claims are as follows:-