Frank Norman Spencer Thirwell V Oye Oyewumi & Anor (1990)

LawGlobal-Hub Lead Judgment Report

AKANBI, J.C.A.

 In the final and  twentieth paragraph of their statement of claim filed in the Federal High  Court Ibadan on 25th May 1981, the plaintiffs in this action averred as follows:- ‘the plaintiffs are entitled to recover the said sum of N256,000 from the defendants and the plaintiffs claim against the defendants jointly, severally or in the alternative the said sum of N 256,000.’

The 1st defendant filed a statement of defence denying liability. So also did the 3rd defendant who filed a separate and distinct statement of defence. It did not however appear that second defendant filed any statement of defence. In fact he was not represented at the trial throughout and did not take part in the proceedings.

Equally so, no defence was filed on behalf of the 4th defendant even though Counsel for the 1st defendant also announced appearance for this defendant. However no statement of defence was filed on its behalf. It thus appeared that the contest right from the outset was to be fought out between the plaintiffs and the 1st defendant. And indeed as it turned out, at the end of the trial, the judgment went against only the first defendant.

In a considered judgment of some considerable length the learned trial Judge held that there was no evidence to show that either the 2nd or 3rd defendant ‘was involved in the actions of the 1st defendant who has so very freely used other peoples name and offices to facilitate the fraud which he set out to perpetrate. ‘ He concluded that both 2nd and 3rd defendants were in the circumstances not liable.

He also found, inter alia, that the 4th defendant company only existed in the imagination of the 1st defendant and  that having regard to the entire circumstances of the case and the accepted evidence, the 4th defendant, if it existed at all, could not be held liable on the claim. As regards the claim against the 1st defendant the learned trial Judge held – ‘The plaintiffs are clearly entitled to recover the money paid by them to the 1st defendant..’ . Accordingly, he entered Judgment for the plaintiffs against the 1st defendant in the sum of N 256,400 (Two hundred and fifty thousand four hundred naira) plus interest thereon at 5% per annum up to the date of judgment The 1st defendant being dissatisfied with the decision of the trial court  has appealed to this court on a number of grounds. All in all fourteen (14)  grounds of appeal were filed and argued; and fourteen (14) issues were also A identified in the brief of argument filed on behalf of the 1st defendant. I shall only set out the identified issues not only because as it appears to me, each of them is an abridgment of the copious and lengthy grounds of appeal filed in this case but also because Counsels arguments were predicated on them. The issues read thus –

‘STATEMENT OF LEGAL ISSUES FOR  DETERMINATION 3.1  Whether learned trial Judge was right in entertaining a claim based on a void contract. 3.2  Was the learned trial Judge right in holding that neither the 1st defendant nor the 4th defendant owned shares in Comazzi Limited and that there was no purchase consideration. 3.3 Was the learned trial Judge right in holding that the retrospective effect of the N.E.P.B. Decree took away the rights of the 4th defendant to the shares they purchased in 1976 by accepting exhibit C as conclusive. 4.4 Was the trial Judge right in holding that the representation made by the 1st defendant about the ownership of the ‘if shares was false and calculated to deceive the plaintiffs. 4.5  Whether the learned trial Judge was right in ordering the 1st defendant to refund to the plaintiffs the sum of N 256,400.00 being the price paid by the defendants for the shares they bought. 4.6  Whether the learned trial Judge was right in holding that there was no legal relationship between the plaintiffs and the defendants.

4.7  Whether the learned trial Judge was right in holding that the proxy ‘Exhibit V’ was issued to the plaintiff to give appearance that the plaintiffs had taken advantage of the sale. 4.8  Was the learned trial Judge right in holding that there was no approval for the sale of the shares. 4.9  Whether the interpretation and application of S.10 Nigeria Enterprises Promotion Decree in this case by the learned trial Judge was right. 4.10 Whether the learned trial Judge was right in finding the appellant liable for fraudulent representation and deceit. 4.11  Whether the judgment is against the weight of evidence.

4.12 Whether the learned trial Judge was right in giving judgment for 5% interest; a relief not asked for by the plaintiff. 4.13 Was the trial Judge right in rejecting some admissible evidence. 4.14 Whether reliance on the pleadings by the Judge instead of adduced evidence by the parties led to miscarriage of justice.’ But before dealing with the issues raised and the arguments canvassed in support, it will be necessary for a proper understanding of the events that gave rise to the action in the first place, to give a short resume or a historical account of the case.

According to the plaintiffs, at a point in time, the first defendant who claimed to be a director of the 4th defendant a foreign company, represented to the plaintiffs that the 4th defendant was the owner of some 246,000 shares i.e. 50% of the equity capital in Comazzi Limited, a company incorporated in Nigeria and that in his capacity as such director, he had power to operate the business of the 4th defendant in Nigeria. Consequent upon the representation, the plaintiff entered into negotiation with the 1st defendant to buy the said 246,000 shares in Comazzi Limited. Some agreement was reached and the plaintiffs were informed that the necessary approval of the Nigerian Enterprises Promotion Board had been obtained to transfer some of the shares in Comazzi Limited.

On the strength of this information and after some exchanges of correspondence mainly between the plaintiffs and the 1st defendant, the plaintiffs paid to the 1st defendant a total sum of N 256,400 as ‘purchase consideration’ for the 246,000 shares in  Comazzi Ltd. In the course of time, it became evident to the plaintiffs that the approval of the Nigerian Enterprises Promotion Board, required for a valid, .ff transfer of the shares, had not been obtained. So they demanded a refund of the sum of N 256,400 they had turned over to the 1st defendant.

No refund was made and so, the present action was instituted. For a clear understanding of the defence put forward by the 1st defendant it will be apt to set out some of the relevant paragraphs of his statement of defence. ‘3. The 1st defendant admits paragraph 5 of the statement of claim only to the extent that he was at the material time a director of the 4th defendant resident in Ibadan. The 4th defendant was only involved in the negotiation of sale of 60% of the share capital in Comazzi Ltd., only. And that in that regard, it was made quite clear to the plaintiff that the 20% of those shares still in the hands of Miss P. Comazzi had just to be acquired.

The plaintiff knew that at all material times Miss P. Comazzi was in Italy. The 1st defendant further avers that the plaintiffs knew that the process of completion of transfer of those shares would have to await the clear approval of the Nigerian Enterprises Board. The aforesaid arrangement was clearly spelt out to the plaintiffs and they were agreeable to them. 4.  The 1st defendant will therefore contend at the hearing of this suit that the 3rd plaintiff at all material times understood that the contract for the purchase by them of the 246,000 shares then held by the 4th defendant could not be finalised until the Nigerian Enterprises Promotion Board has issued its certificate of compliance.

6. The 1st defendant avers that in the interval and in order to fully fix the plaintiffs with full ‘ownership’ of the shares sold to them two powers of Attorney were executed in favour of the 2nd plaintiff. The first dated 17th February, 1978 expired on 31st December 1979 and the second dated 31st December which is irrevocable. The 1st defendant will tender original copies of these documents at the trial of this action. The 1st defendant will contend that the plaintiffs are estopped from denying that the shares sold to them by the 4th defendant had not been/or are being transferred to them.