Securities & Exchange Commission V. Prof. A. B. Kasunmu, San & Anor (2008)

LawGlobal-Hub Lead Judgment Report

PAUL ADAMU GALINJE, J.C.A.

This appeal is against the judgment of Mustapha, J. (as he then was) of the Federal High Court sitting in Lagos, which was delivered on the 15th day of January 2003.

The facts of the case that gave rise to this appeal are straight forward and simple, The 1st Respondent has ably set same out in his brief of argument. I will therefore do no more than to recount them briefly in this judgment.

The 1st Respondent is a senior counsel and has been an external solicitor of Chartered Bank Plc, (Henceforth to be referred to as “the bank”) from its incorporation to date.

In 2001 the bank sent an application to the Appellant, in which he sought for permission to raise funds from the Capital Market. Prior to this application the bank’s secretary and the legal adviser wrote and informed the 1st Respondent that he will act as solicitor to the bank in respect of the public issue, an offer, which the 1st Respondent accepted. While the application to raise funds from the Capital Market was pending, the Appellant informed the bank that only a solicitor duly accredited and registered with the Appellant can act as solicitor to the public issue. In furtherance of that information, the Appellant sent a list of solicitors so accredited and registered with it for the bank to choose from among the solicitors so listed. This information was accordingly passed on to the 1st Respondent who by a letter dated 11th July 2001 informed the bank that the Appellant has no statutory power to ask that the 1st Respondent be registered with it before he could act as solicitor to the public issue. In addition the 1st Respondent wrote a letter dated 5th October 2001 to the Appellant in which he protested against its regulation and the directive to the bank and warned that in the event that his Chambers was sidelined based on the Appellant’s directive and regulation, he would sue for damages for fees the Chambers would have earned.

After these correspondences, the public issue by the bank was eventually approved by the Appellant without the 1st Respondent’s name being approved as solicitor to the public issue. It was on the basis of the foregoing that the 1st Respondent, by an originating summons dated 21st day of January 2002 and filed on the 22nd January 2002 sought for the following reliefs: –

1. A declaration that until the Federal Government acting through the Federal Minister of Finance has duly constituted and put in place the chairman and members of the Securities Tribunal as provided for under section 224 of Decree No. 45 of 1999 the plaintiff is entitled to seek redress in court in respect of decisions and/or actions of the 1st Defendant affecting the rights and obligations of the plaintiff.
2. The alternative to claim [1] above, a declaration that until the setting up by the 2nd Defendant of the Securities Tribunal the regulation made by the 1st Defendant pursuant to the powers derived from the provisions of decree 45 of 1999 cannot become operative for to hold otherwise will deprive the plaintiff of his constitutional right to challenge decision of the 1st Defendant in respect of actions taken by it on such regulations that may affect the plaintiff’s rights and obligations.
3. A Declaration that the 1st Defendant has no rights or powers under the provision of Decree No. 45 of 1999 or under any other law to demand, direct and/or insist that the plaintiff must be accredited and/or registered with the 1st Defendant before the plaintiff can act or be appointed as a solicitor to any Capital Market transaction and more particularly before the plaintiff can act as a solicitor to a company in a public issue,
4. A Declaration that any regulation made by the 1st Defendant requiring a solicitor to be accredited and registered with the 1st Defendant before the solicitor can act in a capital market transaction is illegal and ultra vires and inconsistent with the provision of Decree No. 45 of 1999.
5. Damages in the sum of Six hundred Thousand Naira (N600,00.00) against the 1st Defendant being the fees the Plaintiff would have earned if he had acted as solicitor to Chartered Bank Plc in its just concluded Public Issue.
6. Cost of this action as may be assessed by this Honourable Court.

The originating summons was duly supported by a 25 paragraphs affidavit deposed to by one Miss. Omotola Modupe Adebanjo, a counsel in the Chambers of Professor A. B. Kasunmu.

Several exhibits were annexed thereto. The Appellant, who was the 1st Defendant at the lower Court filed a memorandum of appearance dated 12th March 2001 and thereafter filed a notice of preliminary objection in which it urged the lower Court to dismiss the originating summons on the ground that it lacked the requisite jurisdiction and that the Appellant had no locus standi to institute the action against it.

In addition the Appellant filed four paragraphs counter affidavit dated 16th April 2002.

Issues having been joined, parties were directed to submit written addresses incorporating therein the preliminary objection raised by the Appellant. The 1st Respondent and the Appellant complied with the order of the Court by filing their respective addresses. In a reserved and considered judgment which was delivered on the 15th day of January 2003, the lower Court granted reliefs 1-4 and dismissed the 5th relief on the ground that same was not specially proved.

It is against the judgment aforesaid that the Appellant has appealed to this Court. Its notice of appeal which is dated 28th February 2003 and filed on the 10th March 2003 contains five grounds of appeal. These grounds without their particulars read thus: –

“A. The learned trial Judge erred in law in holding that legal practitioners and accountants are not included in the intendment of the words “such other intermediaries” in Section 29 (1) ISA as well as the definition of Capital market operator in sections 8 and 30 and because the definition of investment adviser in section 264 specifically exempted the legal practitioner or accountant where his advise is merely incidental to the practice of his profession as Barrister & Solicitor or accountant

B. The learned trial Judge erred in law in refusing to apply the ejusdem genens rule m the interpretation of the words “such other intermediaries” used in the Section 29 (1) of TSA 1999 as well as the definition of Capital Market Operator in Section 30 of ISA when the persons listed in those sections arc parties to a typical public offer of shares and not necessarily those involved only in buying and selling of shares, but includes those otherwise dealing with those securities.

C. The learned trial Judge erred in law in holding that Rule 39 of the SEC Rules requiring registration of solicitors is invalid because there is no enabling power to regulate solicitors under the substantive provisions of section 29 of the ISA 1999.