NBM Bank Limited V. Oasis Group Limited (2004)
LawGlobal-Hub Lead Judgment Report
OGEBE, J.C.A.
The respondent sued the appellant in the Federal High Court by a writ of summons filed on the 23rd of October 2002 claiming the following reliefs:
“(i) A declaration that the valuation of the defendant’s share carried out by KPMG Audit is not fair value of the defendant’s shares.
(ii) A declaration that the reliance by the defendant on valuation carried out by KPMG Audit is in contravention of the defendant’s Articles of Association.
(iii) A declaration that the decision of the defendant as manifested by the resolution of its Board on 18th defendant and consequently a nullity.
(iv) An order setting aside the valuation report of KMPG Audit on the ground that it does not conform with the requirements of the defendant’s Articles of Association.
(v) An order setting aside the decision of the defendant made through its Board of Directors on 18th October, 2002 as it relates to the disposal of the plaintiff’s shares in the defendant, as constituting a breach of the Articles of Association of the defendant.
(vi) An order of perpetual injunction restraining the defendant, whether itself, its servant, agents, privies and/or representatives from taking any further step(s) whatsoever, in disposing of, perfecting the transfer of, parting with title in or otherwise in anyway further dealing with the plaintiff’s shares in the defendant other than on the basis of a fair value as required by the defendant’s Articles of Association.”
The parties exchanged pleadings. In a motion filed on the 23rd of October, 2002, the respondent sought the following reliefs from the trial court:
“1. An order of interlocutory injunction restraining the defendant whether by itself, its servants, agents, privies and/or representatives from taking any further step(s) whatsoever in disposing of, perfecting the transfer of, parting with title in, or otherwise in anyway further dealing with plaintiff’s shares in the defendant or issuing and/or delivering new share certificates covering or in respect of the plaintiff’s shares to any person whatsoever or reflecting the transfer of the said shares against the names of the transferees in the register of members of the defendant or to remove or expunge the name of the plaintiff from the register of members of the defendant pending the determination of this suit.
- An order of interlocutory injunction restraining the defendant whether by itself, its servants, agents, privies and/or representatives from preventing the plaintiff from exercising its proprietary right over the 400,000,000 50k shares held by it in the defendant bank pending the determination of this suit.
- An order of interlocutory injunction restraining the defendant whether by itself, its servants, agents, privies and/or representatives, and anyone claiming any rights in respect of the 400,000,000 50k shares held by the plaintiff in the defendant bank (which are the subject matter of this suit) from exercising same proprietary rights whatsoever on the said 400,00,000 50k shares in the defendant bank pending the determination of this suit.”
The appellant filed a counter-affidavit in opposition to the motion. The learned senior counsel for both parties strenuously argued the motion before the High Court which granted the order of injunction sought by the respondent. Dissatisfied with that ruling, the appellant has appealed to this court and the learned senior counsel for it filed a brief of argument and identified one issue for determination as follows:
“Whether having regard to the factors determining the grant of injunction, it can be said that the plaintiff has satisfied the conditions which may warrant the grant of its application?.”
The learned senior counsel for the respondent also filed a brief and identified one issue for determination thus:
“Whether in the light of the affidavit evidence including the vital exhibits placed before it, the lower court was justified in granting the interlocutory reliefs designed to protect the proprietary interest of the respondent during the pendency of this suit?.”
From the fact of the case, the dispute between the parties arose from the sale of the respondent’s 400,000,000 shares in the appellant company. The respondent had demanded the price of N1.00 per 50k share while the appellant claimed to have disposed of the shares at 25k each.
The respondent considered the sale of the shares at such a price unfair and brought this interlocutory application to forestall transfer of the shares to the buyers.
The appellant’s position was that the shares had already been disposed of even before the respondent went to court and so interlocutory injunction could not lie against the completed action.
The learned senior counsel for the appellant summarized his argument in its brief as follows:
“(i) The respondent’s application and evidence before the court did not show or prove the factors or considerations that may warrant the grant of an order of injunction.
(ii) The act sought to be restrained by the respondent being the 400,000,000 shares have to the knowledge of the plaintiff/respondent been transferred to third parties before the institution of the plaintiff/respondent’s case and the hearing of application for injunction.
(iii) The learned trial Chief Judge did not rely and made use of the appellant’s uncontroverted depositions in the counter-affidavit that raised new vital facts decisive of the factors determining the grant of an order of injunction.
(iv) The lower court erroneously equated triable issue with establishment of legal right of being protected and solely based its decision had cause a miscarriage of justice.
(v) The learned trial Chief Judge has acted without or in excess of his jurisdiction when he granted a restraining order an act on which it is common ground that it has been done, completed or finished before the filing of the suit and the filing of application for injunction.
(vi) The tenor of order of the learned trial Judge was in form of a mandatory injunction which relief the plaintiff/respondent neither prayed for nor placed enough materials before the court to warrant the grant of same.
(vii) The respondent’s case is a monetary matter and no provision was made by the respondent in form of undertaking to indemnify the appellant for the disadvantages occasioned by the order of injunction being a going concern in banking business.
(viii) The plaintiff/respondent did not demonstrate its strength or ability to meet the damages, which might arise in the event of the order of the injunction turning out to be wrongful.
(ix) Third party interest had crept in to swing the pendulum or balance of convenience away from the side of the plaintiff/respondent but the learned Chief Judge ignored this and
(x) The learned trial judge has acted without jurisdiction and ultra vires of the repository of the discretion because of the non-existence of a state of affairs upon which the validity of the exercise of discretion depends.”
He relied particularly on the case of Agba v. B.H.I Holdings Ltd. (1998) NWLR (Pt. 535) 696.
For his part, the learned senior counsel for the respondent summarized his arguments as follows:
“(1) the respondent has a legal right upon which it could seek the injunctive relief of the court if the said right is invaded or threatened to be invaded.
(ii) The facts and circumstances of the case clearly show that the respondent’s legal right has been invaded by the appellant.
(iii) The present case is a classic illustration of facts and circumstances which give rise to serious and fundamental issues which call for determination by the court in the trial of the case.
(iv) The balance of convenience/justice is clearly in favour of the respondent whose proprietary interest would be irredeemably jeopardized if the injunctive reliefs are not granted.
(v) The reliefs granted by the lower court were targeted on reliance by the appellant on the purported actions taken by it to assail the proprietary interest of the respondent.
(vi) The injunctive reliefs granted by the lower court are grantable in cases of this type and such reliefs granted in similar circumstances have in fact been upheld by this Honourable court as clearly evidenced by the decision of this court in Central Bank of Nigeria v. Industrial Bank Ltd. (Merchant Bankers) supra and the other cases referred to in paragraphs 10.03 to 10.05 herein.”
He relied heavily on the case of Central bank of Nigeria v. Industrial Bank Ltd. (Merchant Bankers) (1997) 9 NWLR (Pt. 522) 712 and urged the court to dismiss the appeal.
It is settled in law that for an order of injunction to be granted, the following circumstances must be established:
(i) Whether there exists an established legal right capable of being protected?.
(ii) Whether the act sought to be restrained has not been completed?.
(iii) Whether there is a delay which may hamper the grant of injunction?.
(iv) Whether damages would be adequate compensation?.
(v) Conduct of the parties.
(vi) Applicant’s undertaking as to damages and
(vii) Whether balance of convenience is in favour of the applicant?.
See the case of Effiom v. Ironbar (2000) 3 NWLR (Pt.650) 545.
Both counsel agreed on the principles for the grant of an interlocutory injunction. They only refer as to whether the principles are supported by the facts of this case.
There is no dispute whatsoever that the respondent instructed the appellant to dispose of its 400,000,000 shares. It was however not satisfied with the price offered so the dispute therefore before the lower court is essentially as to the fair value of the shares. In paragraph 2 of the appellant’s counter-affidavit, it was deposed as follows:
“That the defendant bank has an authorized and fully paid up capital of N1,000,000,000.00 (One Billion Naira) and also has assets worth more than N800 million.”
This paragraph shows clearly that the appellant is in a position to pay adequate compensation to the respondent if the respondent wins its case before the lower court. The trial court at page 224 of the record summarized the facts of the case and the argument thereon as follows:
“There is ample evidence before the court from the plaintiffs 27 para affidavit in support and 7-para affidavit of urgency, as well as the 8 documentary exhibits of share certificate minutes of the defendant’s Board, and in the 42-paras of the counter-affidavit and supporting share certificates seeking to show that the defendant has purportedly completely alienated the plaintiff’s 400,000,000 shares in the defendant bank. There is clear evidence on the part of the defendant to regard the issue of the alienation of the plaintiffs shares as foreclosed. This is even evidenced by the spirited fight of the defendant, through its learned senior advocate counsel to put forward that position. I therefore, am of the firm view that the plaintiff has established that there is a serious issue of law to be tried during the substantive trial. In that regard, I would wish to advert to the very strong contention of Fagbemi, learned senior advocate for the defendant, that the plaintiff has not proved that it has a case worthy to attract an interlocutory injunction.”
The trial court failed to resolve the uncontroverted assertion in the counter-affidavit and the argument of the learned counsel for the appellant in the court below that the disputed shares had already been sold and therefore an order of injunction cannot lie as sought in the motion. This to my mind was a very serious omission. From the facts before the trial court, it was clear that the main dispute between the parties was the adequacy of the price of the shares and such a dispute is capable of monetary compensation. Apart from that, a court of law cannot grant an injunction to restrain a completed action. See Central Bank of Nigeria v. Industrial Bank LTD. (Merchant Bankers). (1997) 9 NWLR (Pt. 522) 712, Agba v. B.H.I. Holdings LTD. (1998) 1 NWLR (Pt. 535) 696.
I am, therefore, of the view that there is merit in the appeal and I hereby allow it and set aside the ruling of the trial court. In its place, I dismiss the respondent’s motion before that court. The case is remitted to the lower court for trial before another Judge other than Ukeje CJ. The respondent shall pay costs of N7,500.00 to the appellant.
Other Citations: (2004)LCN/1605(CA)