Fenton Keynes Finance Ltd & Anor V. Transply Nigeria Limited (2010)

LawGlobal-Hub Lead Judgment Report – COURT OF APPEAL

HUSSEIN MUKHTAR, J.C.A (Delivering the Leading Judgment)

This is an appeal against the judgment of the High Court of Lagos State (the court below) delivered by I. O. Kusali, J on the 5th of October, 2005.

The suit in the court below was instituted by the respondent (plaintiff) against the appellants (defendants) in 1996 claiming jointly and severally or in the alternative the sum of N8,505,574.00 being the aggregate sums and interest due to the plaintiff/respondent as at 30th September, 1996 under Fund Management Contract Notes issued by the defendants/appellants to the plaintiff/respondent from 28th May, 1993 with interest at the rate of 21% per annum until final amortization of the loan subject to any variation thereon by any fiscal legislation.

The court below delivered judgment In favour of the plaintiff/respondent granting all the reliefs sought for. The defendants/appellants were aggrieved by the said judgment and thus appealed against it. The Notice of Appeal was dated 3rd December 2004 and filed on the 14th December, 2004, premised on the following nine grounds less the particulars thereof:

1.”The learned trial Judge erred in law in holding that the 2nd defendant is liable as guarantor of Fund Management Contract No. 443 dated 28th May, 1993 (exh P2) to tune of N1,000,000.00 when no evidence was adduced to support the averment in paragraph 4 of the Statement of Claim.

2. The learned trial Judge erred in law when he entered judgment against the 1st and 2nd defendants jointly and severally in the sum of N7,570,574.00 plus interest at the rate of 21% per annum from October 1st 1996 until this day and thereafter at the rate of 6% per annum until the whole debt is liquidated.
3. The learned trial Judge erred in law when he gave judgment against the 2nd defendant twice in that the N1 million of the placements which the learned trial judge held was guaranteed by the 2nd defendant was included and was part of the N7,505,574.00 adjudged against the 1st and 2nd defendants jointly and severally in favour of the claimant.
4. The learned trial Judge erred in law and has no jurisdiction to give judgment on matter not claimed in either the writ of summon or statement of claim when he ordered the claimant to return the defendants’ mercedez benz (jeep) that is in his premises as the document in respect of the landed property to the defendants, a claim which was not before him.
5. The learned trial Judge erred in law when he held that resting of defendants’ case on the claimants’ case is only available for criminal matters.
6. The learned trial Judge erred in law in failing to hold that the 2nd defendant is a separate and distinct person from the 1st defendant, a limited liability company and that a Director cannot be jointly and severally liable for the debt of the company.
7. The learned trial Judge erred in law in failing to apply the decision in Bello Akanbi & Ors vs Mamadu Alao & Anr (1989) 3 NWLR (pt 108) pg 118 at 140 paras A-B.
8. The learned trial Judge erred in law when he gave judgment in a lump sum comprising principal and interests.
9. The learned trial Judge erred in law when in giving his judgment he relied on letters purportedly assigning debts Exhibit p9 and p 11 to the claimant.”

From these nine grounds the appellants distilled six issues for determination as follows:

1. “Whether the 2nd appellant can be held liable for the debt, if any, of the 1st appellant;
2. Whether 2nd appellant guaranteed the Funds Management Contract Note 443 Exhibit P2;
3. Whether the respondent proved its case against the 1st and 2nd appellant in the sum of N8,570,574.00.
4. Whether the respondent was entitled to judgment at the lower court just because the appellant elected not to call evidence.
5. Whether the lower court has jurisdiction to grant a relief not claimed by the respondent.
6. Whether particulars of interest claimed by the respondent must be specifically pleaded and strictly proved.”

The respondent inturn raised four similar issues skipping the appellants’ issue 4 and marrying issues 5 and 6 as follows:

1.”Whether, aside the Funds Management Contract Note No. 443 which the 2nd appellant specifically guaranteed, he could be held further liable for the other transactions of the 1st appellants.

2. Whether the respondents proved their claims for which judgment was entered in their favour in accordance with the pleadings.
3. Whether, on the finding that the appellants had not proved the allegation in their pleadings that they had discharged their indebtedness by barter of a Mercedes benz and land, these items ought to have been returned to the appellants as ordered by the lower court.
4. Whether the award of interest on the vanous transactions pleaded by the respondents met the yardsticks required by judicial authorities on the subject.”

The issues raised by the appellant are broader and more comprehensive and will therefore, be adopted for the determination of this appeal. The 1st and 2nd issues are inter related and will be treated together.

The learned counsel for the appellants argued that the 2nd appellant cannot be liable for the 1st appellant’s debts. The 2nd appellant, he said, is a separate and distinct person from the 1st appellant which is a limited liability company and cannot be jointly and severally liable for the debt of a company. See University of Calabar v. Ephraim (1993) 1 NWLR (pt. 271) 551. He further submitted that where the principal of an agent is disclosed, the correct party to sue for anything done or omitted to be done by the agent is the principal. The appellant being a director of the 1st appellant acted only as an agent and cannot incur liability jointly or severally on transactions done on the 1st appellant’s behalf. Section 65 of the Companies and Allied Matters Act (CAMA) was also relied upon. It provides thus:

“Any act of the members in general meeting, the board of directors, or of managing director while carrying on in the usual way the business of the company shall be treated as the act of the company itself and the company shall be criminally and civilly liable therefore to the same extent as if it were a natural person.”

The learned counsel for the respondent also made a similar submission in respect of all the Funds Management Contract Notes other than No. 443 (Exhibit P.2) to the tune of N1,000,000.00 which was personally guaranteed by the 2nd appellant. It was argued that although the 2nd appellant cannot be liable for executing other Funds Contracts Notes in his capacity as a director of the 1st appellant, the Funds Contract Note number 443 was personally guaranteed by the 2nd appellant and the two appellants are therefore jointly and severally liable for the Fund Management Contract Note No 443 for the sum of N1,000,000.00 including interest at the rate of 21% per annum. For the avoidance of doubt the said guarantee Exhibit P 27 (p. 85 of the record) is reproduced hereunder less the signatures, hand writing and stamps thereon:

“PERSONAL GUARANTEE

IN CONSIDERATION OF JOINT KOMPUTER LIMITED, A COMPANY registered in Nigeria and having its principal place of business at Fadeyi, Lagos (hereinafter called ‘the Investor’ which expression shall where the con so admits include its assigns and successors-in-title) granting credit facility of one million Naira only on terms and conditions contained in the investor’s offer letter dated 15th January, 1993 to Fenton Keynes Finance Ltd (hereinafter called ‘the beneficiary’) which expression shall where the con so admits include her personal representative and assigns.