Chief Bola Adedipe V. Sameindir Frameinendur (2011)

LawGlobal-Hub Lead Judgment Report – COURT OF APPEAL

HELEN MORONKEJI OGUNWUMIJU, J.C.A. (Delivering the Leading Judgment)

This is an appeal against the decision of the Federal High Court, Lagos Division delivered by Honourable Justice M. L. Shuaibu on 29th November 2006 in respect of the petition for declaration pursuant to S. 506 (1) of the Companies and Aliied Matters Act 1990 hereinafter referred to as (CAMA). The Court found the Appellant personally liable without limitation for the sum of N=21,989,362.87 (Twenty One Million, Nine Hundred and Eighty Nine Thousand, Three Hundred and Sixty Two Naira, Eighty Seven Kobo)

The said sum was the judgment debt with accrued interests as at 14th November 1998 in suit No. LD/149/89 between the Respondent herein as Plaintiff and five Defendants, namely Bol-Bol & Co. Ltd; Mrs. Hylan Beany; Mr. Habib Beany; Mr. Eli Adi and First Bank of Nigeria Limited, in which by a consent judgment, Bol-Bol and Company limited (then the 1st Respondent in the Lagos State High Court and the lower court) agreed to pay the present Respondent on appeal the total sum of N=7,233.040 (Seven Million, Two Hundred and Thirty Three Thousand and Forty Naira).

The facts that led to this appeal are as follows:

The Respondent filed a petition dated 11th December 1998 on the same day. In the petition, the Respondent in paragraphs 7-17 stated as follows:

7. The 3rd Respondent is a company registered under the Companies Act CAP 59 (formerly the companies Decree 1968) and carries on business as bankers at No. 35 Marina, Lagos and other places in Nigeria.
8. Pursuant to an agreement made between the Petitioner and the 1st Respondent on the 6th day of March 1987 for the sale of 35,334 bales of stockfish by the Petitioner to the 1st Respondent for a total sum of N=18,500,000.00, the 1st Respondent opened Account No. 01307718 with the 3rd Respondent bank to which the 2nd Respondent, as Chairman of the 1st Respondent company, one Mr. Peter Beany, the 1st Respondent’s then Managing Director (now deceased) and the Petitioner’s solicitor were signatories. All proceeds of the sale of the said consignment of stockfish were to be paid into this account.
9. However, unknown to the Petitioner and contrary to the spirit of the agreement between the parties, the 2nd Respondent, along with late Mr. Beany opened another account (Account No. 01307750) for the 1st Respondent company with the 3rd Respondent bank; which account was exclusively under the control and management of the 2nd Respondent and the said Mr. Beany (deceased). Proceeds of sale of the stockfish intended for Account No. 01307718 were diverted into Account No. 01307750 to which the 2nd Respondent and the deceased Mr. Beany were joint signatories. The Petitioner shall found upon the statements of the two accounts.
10. By this means a total sum of N=7,636,040.00 was fraudulently diverted and removed by the 2nd Respondent and Mr. Beany, for their private use.
11. In 1989 the Petitioner instituted an action at the High Court of Lagos State in suit No. LD/149/89 against the 1st and 3rd Respondents the Manager of the Company and representatives of the estate of late Mr. Beany claiming the said sum of N=7,233,040.00 with interest at 15% from the 1st day of August 1987 until judgment and at 6% from judgment till payment.
12. On the 14th day of December 1993 a consent judgment was entered against the 1st Respondent herein, the manager and 2 members of Mr. Beany’s family jointly and severally for the sums claimed as stated in paragraph 11 herein. The Petitioner shall found upon Certified True Copies of the judgment and terms of settlement. The case against the 3rd Respondent was discontinued and struck out.
13. Since the judgment, the company and the other judgment debtors have failed, inspite of demands, to settle the judgment debt.
14. In 1993 the Petitioner took out a writ of attachment but could not execute same because the 1st Respondent had no asset whatever to attach and the other judgment debtors who are aliens had left Nigeria and could not be traced. The Petitioner shall found upon the writ of execution which was returned unsatisfied in whole.
15. In 1993, upon information that 2nd Respondent was involved in the fraud, the Petitioner’s then solicitors, G. N. Uwechue & Co., wrote to the 2nd Respondent demanding payment. But by a letter dated 13th September 1993 the 2nd respondent denied any involvement with any fraud. The Petitioner shall found upon the said letters.
16. The Petitioner verily believes in the involvement of the 2nd Respondent who was a signatory to the said account and collaborated with Mr. Beany to perpetrate the fraud and used part of the money to set up Nation Wide Merchant Bank Limited.
17. The company is now indebted to your Petitioner in the sum of N=21,989,362.87 being the said judgment debt with accrued interests as at 14th November 1998, in suit No. LD/149/89.”

Affidavit with exhibits were filed with the petition. Thereafter, the Appellant as 2nd Respondent filed an application dated 19th October 1999 asking that the name of the 2nd Respondent be struck out being not a party to the consent judgment and for stay of proceedings. In a considered ruling delivered on 13th September 2000, the court refused the application to strike out the 2nd Respondent’s name and dismissed same. The second prayer for stay of proceedings was struck out having being withdrawn by the 1st and 2nd Respondents to the petition.

In pursuance of the petition, the Petitioner filed an application dated 23rd July 1999 on 29th July 1999 for lifting the veil of incorporation and declaration under S. 506 (1) of CAMA in the following terms:

“1. An order declaring that the 2nd and 3rd Respondents, who were knowingly parties to the carrying on the 1st Respondent’s business of paying in the proceeds of the stockfish sales into account No. 01307718 recklessly by their opening the second account No 01307750 with the 3rd Respondent with intent to defraud the petitioner and for a fraudulent purpose, are personally liable without limitation for the sum of N=21,989,362.87 being the judgment debt with accrued interests as at 14th November 1998 in suit No. LD/149/89 for which the 1st Respondent is being wound-up.

2. An order that the above sum be paid to the Petitioner by the 2nd and 3rd Respondents forthwith else execution be levied immediately against the 2nd and 3rd Respondents.”

Both parties filed copious processes in support or against the application. The learned trial judge Honourable Justice M. L. SHUAIBU in a considered ruling delivered on 29th November granted the application and declarations sought above. The Appellant as 2nd Respondent at the lower court has now appealed.

Please note that before the application was heard, Petitioner had discontinued against First Bank and its name was struck out on 28th March 2001. There was no appeal against the decision of 13th September 2000 by the 2nd Respondent.

The Appellant filed his notice of appeal on 1st February 2007 and issues were joined by the parties. The Appellant’s brief dated 28th march 2008 was filed same day. The Appellant’s reply brief was also dated 31st July 2008 and filed on 5th August and was deemed filed on 8th April 2009 with the list of additional authorities filed on 14th April 2010. The Respondent filed the Respondent’s brief dated 22nd May 2008 on same day. The Appellant identified four issues for determination set out below:

“(i) Whether the lower court ought not to have struck out paragraphs 5, 6 and 7 of the Respondent’s Affidavit dated 23rd July 1999 in support of the application of the same date brought pursuant to section 506 of CAMA as contravening sections 86 and 87 of the Evidence Act.

(ii) Whether the lower court ought to have made a finding of fraud on the conflicting affidavit evidence without calling for oral evidence to resolve the conflict.

(iii) Whether the earlier ruling of the lower court in the suit dated 13th September 2000 on the question whether or nor the Appellant was a party to or a judgment debtor in suit No. LD/149/89 in the Lagos State High Court constitutes an issue estoppel against the Appellant herein.