Barbus & Company Nigeria Limited & Anor V. Mrs. Gladys Oyiboka Okafor-udeji (2018)

LAWGLOBAL HUB Lead Judgment Report

JOHN INYANG OKORO, J.S.C.

The Respondent herein, who was applicant at the trial Court, commenced an action at the Federal High Court, Lagos, by notice of an Originating Motion dated 30th August, 2004 and sought the following reliefs:-

“1. An order for the rectification of the Register of members of the 1st Respondent company by the entry of the name of the Application, Mr. Azuka Joseph Okafor-Udeji therein as the bonafide holder of 50% (one half) of the total shareholdings in the 1st Respondent company.

2. A Declaration that the 1st Respondent company was floated to take over the partnership business trading under the name and style of Barbus & Co., equally owned by both the Applicant and the 2nd Respondent, and did so take the same over since incorporation.
3. An order restraining the 2nd Respondent from parading himself and members of his immediate family or further parading himself and members of his immediate family as the owners, members and/or shareholders of the 1st Respondent Company to the exclusion of the applicant herein.

AND for such further and other orders as this

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Honourable Court may deem fit to make in the circumstance.

The grounds of the application were stated by the applicant/Respondent.

The Respondent (as applicant) also filed a motion on notice for interlocutory injunction on same date being 30th August, 2004 praying for certain reliefs as contained at page 56 of the record. Both applications were supported respectively by 22 and 24 paragraph affidavit and Exhibits marked Ajo 1 – Ajo 16. The Appellants herein, who were respondents at the trial Court, on 19th November, 2004, filed a notice of preliminary objection to the originating motion on notice and counter affidavit to the motion on notice for interlocutory injunction. The 22 paragraph affidavit/counter affidavit had two exhibits marked PC – 1 and PC -2 annexed thereto. In reply, the respondent filed a further and better affidavit and counter affidavit both dated 15th December, 2004.

The Notice of Preliminary objection dated 19th November, 2004 sought to dismiss the suit on the following grounds:-

(a) That there was no reasonable cause of action.

(b) That the Respondent herein lacked the locus standi to institute the action.

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(c) That the suit was not properly constituted.

(d) That the action is incompetent.

With the consent of counsel for both parties, the trial Court heard both the originating motion and the preliminary objection together.

In a considered Ruling delivered on the 24th day of June, 2005, the learned trial Judge, Abdu Kafarati, J., on page 179 of the record held as follows:-

“In the absence of any such evidence, I will agree with Mr. Chinedu Moore for the Respondents that the Plaintiff has no standing to institute this action, Where a party is held to have no locus standi to institute an action, the proper order to be made is that of striking out. It has been argued on behalf of the Respondents that the Applicant not having shown that he contributed to the formation of the 1st Respondent or subscribed to the memorandum and Articles of Association, he (the Applicant) cannot be said to have any cause of action against the Respondents. This I also agree with the learned counsel, I also find for the Respondents that the Applicant herein has not disclosed any reasonable cause of action against the Respondent’s for the reliefs he is

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claiming. That being so, it is my considered view that the plaintiffs originating motion has no merit and deserves to be dismissed. It is accordingly dismissed with N5,000 cost to Respondents.

Dissatisfied with the above decision of the learned trial Judge, the Respondent herein appealed to the Court of Appeal and in its judgment delivered on the 16th day of July, 2009, the lower Court allowed the appeal, set aside the judgment of the trial Federal High Court and remitted the case back to the Chief Judge of the Federal High Court for assignment to another Judge to determine the matter on merit.

The appellants herein were also dissatisfied with the judgment of the Court of Appeal and filed Notice of Appeal on 31st August, 2009 which contains seven grounds of appeal. Parties filed and exchanged briefs. On 20th February 2018 when this appeal was heard, the learned counsel for the Appellants, Chief Chinedu Moore, identified and adopted the appellants’ brief he filed on 26th June, 2012. In it, four issues are distilled for the determination of this appeal as follows:-

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Whether the learned Justices of the Court of Appeal were right in overruling the decision of the trial Court that the suit discloses no reasonable cause of action.

2. Whether the learned Justices of the lower Court were right in overruling the decision of the trial Court that the Respondent has no locus standi to institute this action.
3. Whether the suit is competent and whether the lower Court did not err in law by failing to advert to the competence of the suit in their ruling.
4. Whether in the circumstance of the matter, the learned Justices of the Court of Appeal were right in remitting the matter back to the Federal High Court instead of invoking Section 15 of the Court of Appeal Act to determine the matter on the merit.Also, in the Respondents’ brief filed on 4th July, 2012 by I. O. Amakor Esq., and adopted at the hearing of this appeal, three issues are formulated as follows:-
5. Whether given the undisputed facts on record and the applicable legal principles, the Applicant, as substituted for with the Respondent herein, is not entitled to institute this action, and the grant of the Reliefs prayed for.
6. Whether the learned Justices of the Court of Appeal

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were not right in setting aside the decision of the trial Federal High Court inclusive of the findings therein, for being Perverse.

3. Whether this is not a proper case for the Court of Appeal to have invoked its powers under Section 15 of the Court of Appeal Act, Cap C 36, LFN 2004, and to determine the Applicant (sic), as substituted for with by (sic) the Respondents’ suit and the claims therein in their entirety.

Before going ahead to determine this appeal, there are some housekeeping issues to be sorted out. At the hearing of this appeal, the appellants abandoned issue No. 5 in their brief of argument and it was accordingly struck out. However, on pages 21 – 28 of the Appellant’s brief of argument, issue 4 and abandoned issue 5 were argued together and in the process two new issues were distilled on page 22 of the said brief. Arguments were proffered on these two new issues together with issues 4 and 5. As was properly alluded to by the Respondent in his brief on page 8 thereof, the two issues on page 22 of Appellants’ brief were distilled from non existent grounds of appeal, and are therefore incompetent.

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It follows that argument on issues 4, 5 (abandoned), and the two new issues made together is incompetent. The point is fairly settled in quite a number of decisions of this Court that arguments or submissions on incompetent issues and/or grounds of appeal cannot be lumped together with those of competent issues for determination. Where this is done as in this case, it will not be the business of the Court to sift the chaff from the grains, an exercise that would clearly involve arguments in respect of the valid issues from the invalid ones. As was held by this Court in Ikpeazu v Otti & Ors (2016) LPELR-40055 (SC), such an exercise may involve the Court descending into the arena of dispute which will often becloud the judgment of the Court. See also Korede v Adedokun (2001) 1 NWLR (pt 736) 483 at 499, CPC & Anor v Ombugadu & Anor (2013) LPELR-21007 (SC), Khali v Yar’Adua (2003) 16 NWLR (Pt. 847) 446 at 481, James Afolabi v The State (2016) LPELR-40300 (SC), Geo-source Nig. Ltd v Biaragbara (1997) 5 NWLR (Pt. 506) 607.

As it turns out, issue 4 which is argued with abandoned issue 5 and incompetent two new issues on page 22 of the Appellants brief, together with all the arguments made

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thereto, are all struck out, being incompetent. I shall therefore determine this appeal based on issues 1, 2 and 3 as distilled by the Appellants’ Appellant filed a reply brief on 13/8/12. I shall refer to the said reply brief in the course of this judgment should the need arises. The Respondent herein has a cross appeal which shall, as usual be determined after the main appeal is sorted out.

ISSUE ONE

In his argument on the first issue, the learned counsel for the appellant submitted that the lower Court went into error when it held that there is reasonable cause of action merely because the Respondent averred to some serious issue which he alleged was a fraud on him without considering the legal effect of these averments vis–vis the reliefs sought in the suit. As to what constitutes a cause of action, the appellant cited the following cases:- Union Bank of Nigeria Plc v Romanns C. Umeoduagu (2004) 11 MJSC 127, P.N. Udoh Trading company Ltd v Abere (2001) 11 NWLR (Pt.723) 114 at 115.

Learned counsel stressed that for there to be a reasonable cause of action, there must be pleaded in the writ of summons and statement of claim (or in the affidavit

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in support of Originating Motion) facts and circumstances that are capable of supporting a grant of the relief sought. That it is such fact or facts that the plaintiff will be required to prove if challenged or denied by the defendant, to be entitled to judgment.

According to him, the facts as averred in the affidavit in support of the Originating Motion as serious as they seem, are not capable of grounding the claims or entitle the Respondent to the relief sought in the suit and as such do not constitute reasonable cause of action in the circumstance.

Referring to a learned Author, Fidelis Nwadialo (SAN) in his book Civil Procedure in Nigeria, 2nd Edition at page 23, learned counsel submitted that the lower Court fell into error when it considered a mere cause for complaint as a reasonable cause of action without relating those complaints or facts specifically to the relief sought or considering whether those complaints or facts, even if they are proved, will be sufficient to entitle the respondent to the relief sought or any of them. He urged the Court to resolve this issue in favour of the appellant.

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In response, the learned counsel for the Respondent submitted that in determining whether a party’s action, such as the present Respondent’s discloses any cause of action, or indeed, a reasonable cause of action, recourse should be had only to the plaintiffs pleadings, or as in the instant case, the Applicant’s Originating Motion and the Affidavit in support. Learned counsel also cited the cases ofP. N. Udoh Trading Company Ltd v Abere (supra) and UBN v Umeoduagu (supra) as to the meaning of reasonable cause of action. He opined that in the affidavit in support, the applicant deposed to the facts of his association with the 2nd Appellant, their joint partnership business, the mode of operations of the said partnership business, the agreement to incorporate the 1st Appellant Company to take over the said partnership business which was so taken over by the Appellant company whilst the 2nd Appellant designated himself as the Chairman and the Applicant as Director of the 1st Appellant company, and that the business continued to be carried on between himself and the 2nd Appellant as previously done.

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He stressed that Exhibits AJO 1 – AJO 15 annexed by the Respondent to his supporting affidavit clearly shows that the Respondent has a reasonable cause of action against the appellants.

Learned counsel submitted that the Respondent’s cause of action is that he is entitled to 50% of the total shareholding in the 1st Appellant company; that his name and interest as aforesaid were wrongly and/or fraudulently omitted to be entered as such by the 2nd Appellant, and that the register of members of the 1st Appellant company ought therefore, to be rectified accordingly. He queried what more was the appellant expected to show and/or establish as his interest other than the evidence as evinced in the exhibits annexed. He contended that the exhibits attest to the existence of the said partnership business and assets owned between the Applicant and the 2nd Appellant which were subsequently transferred to the 1st Appellant company upon its incorporation. He urged the Court to resolve this issue in favour of the Respondent.

Although parties in their brief of argument have tried to delve into the substantive matter which is yet to be determined by the trial Court, I shall as much as possible, limit my

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resolution of this issue to determining whether the Court below was right to hold that the suit of the Respondent before the trial Court disclosed reasonable cause of action.

The question may be asked, what is reasonable cause of action Tobi, JSC (of blessed memory), in Rinco Construction Company Ltd v Veepee Industries Ltd & Anor (2005) LPELR-2949 (SC) at page 14 paragraphs E – G defined reasonable cause of action as follows:-

“Reasonable cause of action means a cause of action with some chances of success. For a statement of claim to disclose a reasonable cause of action, it must set out the legal rights of the Plaintiff and the obligations of the defendant. It must then go on to set out the facts constituting infraction of the Plaintiffs legal right or failure of the defendant to fulfil his obligation in such a way that if there is no proper defence, the Plaintiff will succeed in the relief or remedy he seeks.

Also reported in (2005) 9 NWLR (pt. 929) 85 and (2005) 3 – 4 SC page 1. See also Ibrahim v Osim (1988) 3 NWLR (Pt. 82) 257, Oshoboja v Amuda & Ors (1992) 6 NWLR (pt. 250) 690, SPDC Nig Ltd & Anor v X.M. Federal Ltd & Anor (2006) 16 NWLR (Pt.1004)) 189.

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The law is trite that whenever issue of reasonable cause of action is raised, it is the statement of claim or, as in this case the averments in the affidavit in support of an Originating Summons or Motion that ought to be considered. So long as the statement of claim or the affidavit in support of the Originating Motion discloses some cause of action, or raises some question which can be decided by a Judge, there is reasonable cause of action. The mere fact that the case is weak, and not likely to succeed, is no ground for striking it out or dismissing it. See Yusuf & Ors v Akindipe & Ors (2000) 8 NWLR (pt. 669) 376.

Corollary, it is only where the statement of claim discloses no cause of action and if the Court is satisfied that no amendment, however unserious will cure the defect that the statement of claim will be struck out and the action dismissed. Where no question as to the civil rights and obligations of the Plaintiff is raised in the statement of claim for determination, the statement of claim will be struck out and the action dismissed.

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See Thomas v Olufosoye (1986) 1 NWLR (Pt. 18) 669; Dantata v Mohammed (2007) 7 NWLR (pt. 664) 176, Uwazuruonye v The Governor of Imo State & Ors (2013) 8 NWLR (Pt. 1355) 28.

In the instant case, a recourse to the affidavit in support of the Originating Motion shows that the Applicant/Respondent deposed to the facts of his association with the 2nd Appellant, their joint partnership business, the mode of operation of the said partnership business, the agreement to incorporate the 1st Appellant company to take over the said partnership business which was so taken over by the Appellant company whilst the 2nd Appellant designated himself as the Chairman and the Appellant/Respondent as Director and that the business continued to be carried on between himself and the 2nd appellant as before.

My Lords, as I can deduce from the averments in the supporting affidavit, the Applicant/Respondent has disclosed unquestionable and reasonable cause of action worthy to be given a hearing. The Court below said this much on page 259 of the record when it held thus:-

It is clear from the facts deposed to in the paragraphs of the affidavit reproduced (supra) that appellant and 2nd

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respondent had joint partnership business. The main complaint of the appellant is the failure of the 2nd respondent to include his name among the shareholders of the 1st Respondent Company. That he was entitled to 50% of the total shareholders of the 1st Respondent Company since the existing partnership business and assets were taken over or transferred to the 1st respondent Company. By paragraph 15 of the affidavit in support appellant complained that the conduct of the 2nd respondent having regard to the entire circumstances giving rise to an enforceable right. After a careful assessment of the facts deposed to in the affidavit in support of the originating motion on notice, I am of the firm view that the cumulative effect of the material facts showed that ex – facie there is a cause of action.”

As I stated earlier, I entirely agree with the conclusion of the Court below on this issue. The cause of action is so manifest and glaring, whether it will succeed or not is not the issue at this stage. The respondent herein, based on the averments in his supporting affidavit deserves a hearing by the trial Court.

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It was therefore wrong for the trial Court to rely on extraneous matters to deny him a hearing. The Court below captured the law as it is, based on the facts deposed to in the affidavit in support. By way of a final statement on this issue, I say emphatically that the suit of the applicant, now respondent discloses a reasonable cause of action. This issue is accordingly resolved against the appellants.

ISSUE TWO:-

The main plank of the appellants’ complaint in this issue is that the Court below was wrong to have held that the Respondent has locus standi to institute this suit at the trial Court. Learned counsel for the appellant contended that to have the locus standi to seek the rectification of the register of members of the 1st Appellant company, the Respondent must show that he has sufficient interest in the company by averring that he is a member or otherwise is legally entitled to be a member thereof, referring to Inakoju & Ors v Adeleke & Ors (2007) 1 SC (pt 1) 1 at 86; Emezi v Osuagwu (2005) 2 SC (pt. 11) 128 at 141.

The learned counsel contended that the lower Court failed to consider whether based on those facts averred, rectification of the register of the 1st Appellant could be ordered.

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He reasoned that the question the lower Court should have gone further to ask is: assuming it is admitted that the Respondent and 2nd Appellant ran an informal trading partnership in an unregistered business name which they agreed should be incorporated and the 2nd Appellant subsequently incorporated a limited liability company in that name and continued in the same business without including the Respondent as a member of the company, whether the Court can on the basis of those facts order rectification of the register of the company to include the respondent as a member thereof despite the clear provisions of the Companies and Allied Matters Act as to when and in what circumstances such an order may be made.

Learned counsel contended that the respondent, not being a member of the 1st appellant and his relief not being capable of being granted, he lacked the locus standi to institute the action. He urged this Court to resolve this issue in favour of the appellants.

In response, the learned counsel for the Respondent submitted that the present action fully satisfies that the action is justiciable and that there is dispute between the

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parties. Re-echoing his argument in the first issue as regards the facts leading to the filing of this suit at the trial Court, he submitted that, notwithstanding that the 1st Appellant company was formed to take over the said existing partnership business, and did so take over the same, the capital of the 1st Appellant company was wrongly and/or fraudulently subscribed to by the transfer of the assets and businesses of the partnership to the company in return for shares only to the 2nd appellant and his family members to the exclusion of the Respondent and his fifty per cent (50%) interest in the said partnership business.

According to learned counsel, the respondent has demonstrated clearly that his right to be made co – owner of the 1st Appellant has been beached and as such he has the locus standi to sue in the circumstance. He urged the Court to resolve this issue against the appellants.

The expression “Locus standi”, denotes legal capacity to institute proceedings in a Court of law. It is used interchangeably with terms like “standing or title to sue.

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A person has locus standi to sue in an action if he is able to show to the satisfaction of the Court that his civil rights and obligations have been or are in danger of being infringed. There are two tests for determining if a person has locus standi. They are:-

1. The action must be justiciable.
2. There must be a dispute between the parties. There ought to be a liberal approach in applying the test.

See Ojukwu v Ojukwu & Anor (2008) 12 SC (pt. 111) page 1, (2008) 18 NWLR (pt. 1119) 439, Attorney General Kaduna State v Hassan (1985) 2 NWLR (PT. 8) 483, Adesanya v President of the Federal Republic of Nigeria & Anor (1981) 550 page 112, (1981) LPELR – 147 (sc), Thomas & Ors v Olufosoye (1986) 1 NWLR (pt 18) 669, Emezi v Osuagwu & Ors (2005) 12 NWLR (pt 939) 340.

From the definition of locus standi, it is clear that for a person to have the legal capacity to sue over a matter, he must show sufficient interest in the subject matter of litigation and that will give him the access to institute proceedings in a Court of law. As was the case in relation to ascertaining reasonable cause of action, the pleadings of the party seeking to sue must disclose a cause of action vested

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in the plaintiff and the rights and obligations or interest of the plaintiff which have been violated before he can be vested with locus standi to sue.

It is crystal clear from the paragraphs of the affidavit in support of the Originating Motion of the Applicant/Respondent that the Respondent has disclosed sufficient interest in the subject matter of litigation and has shown that his right and interest in the affairs of the 1st Appellant Company has been violently violated by the 2nd appellant herein. In its judgment, the Court below made the following findings at pages 260-261 of the record of appeal;

In the instant case as averred in paragraph 13 of the appellant affidavit in support, the cause of action arose when appellant discovered the wrongful or fraudulent exclusion of his name and interest in the formation of the 1st Respondent Company. Appellant averred in paragraph 16 of the affidavit in support of Originating Motion on notice that the assets and business of the 1st Respondent Company remain only those taken over from the partnership business aforesaid and the consequent growth and returns therefrom.

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All what appellant is saying is that since the existing partnership business and assets exclusively carried on and/or owned by both himself and the 2nd respondent has been taken over by 1st respondent company, he was entitled to a commensurate share holding in return representing the value of his share in the business and to an order for the rectification of the register of members. Appellant in my view has shown sufficient interest to entitle him to seek redress.”

The above summation by the Court below captures, without doubt, the justice of this case. The respondent herein has shown more than sufficient interest in the matter which inures him with legal capacity to sue and be heard in a Court of law. He was therefore imbued with locus standi to file his suit at the trial Court. This issue is accordingly resolved against the appellant.

ISSUE THREE:-

The third and last issue is whether the suit is competent and whether the lower Court did not err in law by failing to advert to the competence of the suit in its judgment. In paragraph 4.3.2 of the Appellants’ brief of argument the learned counsel for the Appellants states as follows:-

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The lower Court failed to advert at all to the competence of the suit in its ruling.

I have also perused the judgment of the Court below and I have not seen where issue of competence or otherwise of the suit was discussed and/or ruled or decided upon. At best, this is a new issue which the leave of this Court ought to have been sought and obtained. Failure to obtain leave to argue this issue makes it incompetent. See Niger Progress Ltd v North East Line Corporation (1989) 3 NWLR (Pt. 107) 68, Chukwuemeka N. Ojiogu v Leonard Ojiogu & Anor (2010) 9 NWLR (Pt. 1198) P 1. Thus, as the Court below did not discuss the issue of the competence of the suit nor rule on it and there being no leave sought and obtained to argue the issue in this Court, it is hereby discountenanced and struck out.

Having thus agreed with the Court below that the suit of the Respondent discloses reasonable cause of action and that he has locus standi to ventilate the matter at the trial Court, the two issues having been resolved against the appellants, it only remains to pronounce that this appeal is devoid of merit and is accordingly dismissed.

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I affirm the judgment of the Court of Appeal which ordered the matter to be remitted to the Chief Judge of the Federal High Court for assignment to another Judge to determine the matter on merit. I award costs of N500,000 against the Appellants in favour of the Respondent.

Appeal Dismissed.

CROSS APPEAL:-

Having decided the main appeal in favour of the Respondent/Cross-Appellant and having ordered the matter to be heard on the merit at the trial Federal High Court, this cross appeal becomes academic and spent. It is accordingly dismissed.

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SC.103/2010