M. A. Omisade & Ors V. Harry Akande (1987)

LawGlobal-Hub Lead Judgment Report

BELLO, C.J.N.

The suit culminating in this appeal was tried by the High Court of Lagos State. The first important issue for determination in the appeal is whether, having regard to the fact that the suit primarily involved a dispute between the directors of a company in connection with the affairs of their company, the matter was within the exclusive jurisdiction of the former Federal Revenue Court and the High Court of Lagos State had no jurisdiction to adjudicate on it. The issue was neither raised in the High Court, nor in the Court of Appeal. It has been taken for the first time in this Court.

It is relevant to point out that the writ of summons in the suit was dated 22nd October 1976. The appeal must therefore be determined in accordance with the law relating to the jurisdictions of the Federal Revenue Court and the State High Court as it was in 1976 and not on the law as it is today.

The salient facts giving rise to the case may now be stated. The present Respondent, hereinafter referred to as the Plaintiff, instituted the suit against the present Appellants, hereinafter referred to as the Defendants. The Plaintiff and the 1st Defendant are the only shareholders and directors of the 4th Defendant, a limited liability company incorporated under the Companies Act 1968, in which both hold equal shares.

On 23rd January 1976 the 4th Defendant entered into an agency agreement with the 3rd Defendant which is an American corporation based in Oakland, United States of America. Under the agreement, the 3rd Defendant appointed the 4th Defendant as its sole and exclusive agent in Nigeria for any Nigerian Pilgrims Hajj Movement in 1976 on commission basis. The 4th Defendant would represent the 3rd defendant in any negotiation in that respect with the Nigerian Pilgrims Board. It appears that since the execution of the agreement the working relationship between the Plaintiff and the 1st Defendant began to deteriorate and culminated in a final break down by the middle of the year. On that account as averred in paragraph 7 of his Statement of Defence, the 1st Defendant incorporated together with other person the 2nd Defendant company “for the purpose of retrieving and salvaging his good name in the 4th Defendant company, which company was being manoeuvred and manipulated by the plaintiff for acts and purposes acutely embarrassing to the 1st Defendant. ”

After the 1st Defendant had incorporated the 2nd Defendant, he went to Oakland in July 1976 whereat in his capacity as the chairman of the 4th Defendant company, he informed one Mr O’Brien, a director of the 3rd Defendant company, that the 4th Defendant company was being dissolved and also some legal problems had rendered the agency agreement between the 3rd Defendant company and the 4th Defendant company unenforceable. He requested the 3rd Defendant company to switch its agency agreement to his newly formed company, the 2nd Defendant. As a result of these representations, the 3rd Defendant entered into a new agency agreement with the 2nd Defendant company in identical terms with the agreement between the 3rd Defendant company and the 4th Defendant company.

In consequence of the foregoing, the Plaintiff instituted the suit against the Defendants claiming for:

“(1) A declaration that all sums of money payable by the 3rd Defendants to the 2nd Defendants under any commission agreement between the said Defendants are for the benefit of the New Africa Technical and Electrical Company Limited:

(2) An Order of Court:

(a) Restraining the 2nd Defendants from being paid any portion of such sums and

(b) Directing the 3rd Defendants to pay all such sums of money (or whatever portion thereof as remains payable) to the 4th Defendant.

(3) (if the 2nd Defendants have received the said sums or any portion thereof) an order of Court directing the said 2nd Defendants to pay over to the 4th Defendants any sum which it may have received;and

(4) N200, 000.00 damages against the 3rd Defendants for breach of the Agreement referred to in paragraph 4 of the Statement of Claim annexed herewith.”

I think it is germane to the jurisdiction issue to point out that in the trial court learned counsel for the 1st and 2nd Defendants relying on the rule in Foss v. Harbottle challenged the standing of the Plaintiff to institute the suit on the ground that, since the wrong complained of was alleged to have been done to the 4th Defendant company, only the latter could sue. The trial judge rejected that submission and accepted the submission of Chief Williams for the Plaintiff that the Plaintiff properly instituted the action as a minority shareholder in these terms: