Securities Solutions Limited & Ors V. Mrs Biodun Idowu Adamu-oladiran & Ors (2016)

LawGlobal-Hub Lead Judgment Report – COURT OF APPEAL

YARGATA BYENCHIT NIMPAR, J.C.A. : (Delivering the Leading Judgment)

This appeal is against the Judgment of the Investment & Securities Tribunal sitting in Lagos and delivered on 26th November, 2013. The tribunal granted the reliefs of the 1st and 2nd Respondents and specifically ordered as follows;1. That the 1st €“ 3rd Respondents are jointly and severally liable 2. That the 1st €“ 3rd Respondents should immediately buy back the 42,000 units Nestle Plc shares and all other dividends and bonuses belonging to the Applicants from the date sales took place to date;3.

Cost of N500,000.00 is hereby awarded in favour of the Applicants Dissatisfied with the said Judgment the Appellants filed a Notice of Appeal on the 3rd day of December, 2013 setting out 3 grounds of appeal from which two issues were distilled for determination in this appeal.The brief fact of this Appeal is that the 1st and 2nd Respondents owned 42,000 Nestle Plc shares and the 1st Appellant was the firm of stock Brokers managing the shares of the 1st and 2nd Respondents. The 2nd and 3rd Appellants are directors of the 1st Appellant. The said shares belonging to

the 1st and the 2nd Respondents were sold by the 1st Appellant without authorization and upon becoming aware of the sale, the 1st and 2nd Respondents complained and sought a reversal of the said sale but it was not effected. Thus the claim at the Investments Tribunal which states as follows:1. A DECLARATION that the unauthorized sales by the 1st, 2nd and 3rd Respondent and their agents of a total of 42,000 (forty two thousand) units of NESTLE PLC shares belonging to the Applicants is unlawful.

2. A DECLARATION that the 4th Respondent has failed inits statutory duty to protect investors including the Applicants from trade malpractices by a capital market operator.

3. An order of the Honourable Tribunal compelling the 1st, 2nd and 3rd Respondents to return or repurchase the Applicants shares (including all bonuses and dividends accruing from the dates of the unauthorized files till the conclusion of this case.4. In the alternative, A DECLARATION that the Applicants are entitled to claim from the Investors Protection Fund established under the Investments and Securities Act for the repurchase/return of their shares illegally sold by the 1st to 3rd Respondents;5. An

order of the Honourable Tribunal compelling the 4th Respondents to repurchase the Applicants shares illegally converted by the 1st, 2nd and 3rd respondents from the Investors Protection fund pursuant to the Investment and Securities Act, 2007.The cost of this action estimated to gulp N3, 000,000 (Three million naira).The Appellants brief settled by Lawrence Fubara Anga leading a team of 3 others was dated 20th day of March, 2014 and filed on the same day. It distilled two issues for determination as follows:1. Whether by the evidence made available to the tribunal and the provisions of the applicable law, the 2nd and 3rd Appellants were rightly held to jointly liable for the illegal sale of the 1st and 2nd Respondents shares.

2. Whether the Tribunal was right to find the 2nd and 3rd Respondents liable to pay costs of N500,000.00.The 1st and 2nd Respondents’ brief settled by Rowland Uzoechi leading Omonigbo Uzoechi dated on the 29th day of April, 2014 filed on the same day raised a preliminary objection to the Appellants grounds of appeal and issues for determination. The preliminary objection presented a sole issue for determination as follows;”Whether grounds

1, 2 & 3 of the Notice of Appeal and issues 1 & 2 for determination in the Appellants’ brief ought not be struck out and appeal dismissed in limine.”The 1st and 2nd Respondents in response to the main appeal set out 3issues for determination thus:1. Whether the evidence on record before the tribunal below justifies the conclusions reached by the tribunal2. Whether considering the evidence before it and the entire circumstances of this case the learned tribunal below was justified in law when it held the Appellants jointly and severally liable to the claims of the 1st and 2nd Respondents.3. Whether the tribunal below properly exercised its discretion in the award of the costs in this matter.Before delving into the main appeal, it will be appropriate to determine the Preliminary Objection. The resolution will set the stage for determination of the main appeal.It is the contention of the 1st and 2nd Respondents that Ground 1 of the Appellants’ Notice of Appeal is incompetent as particulars 1, 2, 3 and 4 of the said ground alleges misdirection and some other particulars alleges error in law. They therefore submitted that where a ground alleges both error

of law and misdirection on the facts, such ground is incompetent and must be struck out. They referred to the following cases; ELENDU V. EKWOABA (1995) 3 NWLR (PT 386) PG 704, INCAR (NIG) PLC V. BOLEX ENT (NIG) LTD (1996) 6 NWLR (PT 454) PG 318, ODUAH V. FEDERAL REPUBLIC OF NIGERIA (2012) 11 NWLR (PT 1310) PG 76. They further submitted that Grounds 1 of the Notice of Appeal does not flow from the decision of the lower tribunal and same does not complain against any of the ratio decidendi of the Judgment appealed against. That contrary to the allegation of the Appellants, the liability of the 2nd and 3rd Appellant never rested on the sale of the 1st and 2nd Respondents shares by the former managing director of the 1st Appellant and that a ground of appeal that does not complain against the ratio of the judgment is incompetent, relied on IHEANACHO V. EJIOGU (1995) 4 NWLR (PT 389) 324, BABALOLA V. STATE (1989) 4 NWLR (PT 115) 264, OGUNBIYI V. ISHOLA (1996) 6 NWLR (PT 452) 12, DAKAR V. DAPAL (1998) 10 NWLR (PT 571) 573, SARAKI V. KOTOYE (1992) 9 NWLR (PT 264) 156, APAPA V INEC (2012) 8 NWLR (PT 1303) 409.Furthermore, the 1st and 2nd Respondents argued that Issue 1

in the Appellants brief of argument is also incompetent as it is formulated from ground 1 which is also incompetent. They contend that the said Issue 1 ought to be struck out irrespective of the fact that it is from another competent ground, i.e. Ground 3, in addition to the incompetent Ground 1, referred this court to BELLO V. GOVERNOR, KOGI STATE (1997) 9 NWLR (PT 521) 496, SEHINDEMI V. GOV, LAGOS STATE (2006) 10 NWLR (PT 987) 1. In addition, 1st and 2nd Respondents submitted that the legal consequence of the incompetence of the Appellants Issue 1 is that Ground 3 in the Notice of Appeal is abandoned and liable to be struck out, MOHAMMED V. BABALOLA (2012) 5 NWLR (PT 1293) 395, MICROSOFT CORPORATION v. FRANIKE ASSOCIATES LTD (2012) 3 NWLR (PT 1287) 301.The 1st and 2nd Respondents submitted that Ground 2 does not flow from the decision appealed against and does not complain against the ratio decidendi of the decision on cost, relied on SARAKI & ORS V. KOTOYE (SUPRA), APAPA V. INEC (supra). They further submitted that in view of the fact that Ground 1 and 3 are incompetent, ground 2 in the Notice of Appeal as to cost stands alone and prior leave of the

court ought to have been sought and obtained. That in view of the fact that such leave is not obtained, the ground is incompetent referred to S. 241 (2) (c) of the Constitution of the Federal Republic of Nigeria 1999, ACB LTD V. AJUGWO (2012) 6 NWLR (pt. 1295) 97, ANYASO V. ANYASO (1998) 9 NWLR (PT 564) 150 and that issue 2 formulated therefrom is also incompetent.In response to the preliminary objection raised by the Respondent, the Appellants vide their reply brief submitted that the said ground 1 in their Notice of Appeal does not allege error of law and misdirection at the same time but is one of law as it is particularly on the tribunal’s misconstruction of S. 305 of the Investment and Securities Act (ISA) and the decision of the Supreme Court in OLAWEPO V. SEC (2011) 16 NWLR (Pt. 1272) 222. They further submitted that no part of the grounds or particulars made reference to the lower tribunal’s statement of a party’s case for it to be a misdirection. The Appellants also argued that ground 1 flows from the ratio decidendi in the judgment of the lower tribunal and they quoted excerpts from the judgment of the tribunal in proof of same. The AppellantsCourts & Judiciary

therefore submitted that consequently, Issue 1 is competent and as such Ground 3 from which issue 1 flows from is also competent. With respect to Ground 2, the Appellants argued that the said ground is competent as it is predicated on the decision of the lower tribunal awarding costs of N500,000.00 in favour of the 1st and 2nd Respondents. They further submitted that contrary to the argument of the Respondents, ground 2 of the Notice of Appeal is against the final decision of the lower tribunal thus, making an appeal against it, as of right in line with S. 241 (1) (a) of the 1999 Constitution.The grounds of appeal filed by the Appellants state thus:”GROUND ONE:The Investments and securities tribunal erred in law when it found the 1st, 2nd and the 3rd Appellants jointly liable for an unauthorized and illegal sale of the 1st and 2nd Respondents’ shares by the former managing Director of the 1st Respondent.PARTICULARS OF ERROR1. There is no evidence presented to the Investment and Securities tribunal by the 1st and 2nd respondents which shows that the 2nd and 3rd Appellants consented, connived or authorized the illegal sale of the 1st and 2nd respondents’

shares.2. There is sufficient and indisputable evidence that the act of defalcation was carried out by Mr. Joel Okafor, the former Managing Director of the 1st Appellant without the knowledge, consent and authorization of the 1st, 2nd and 3rd Appellants.3. The crux of the 1st and 2nd respondents claim is the illegal sale of their shares which is an issue of securities under the Investment and Securities Act, 2007.4. The Investment and Securities tribunal failed to consider the provisions of section 305(1) and (2) of the Investments and Securities Act, 2007 as well as the decision of this Honourable Court in OUWOPE V. SEC (2011) 16 NWLR (pt. 1272) 122 which held inter alia that “It is not automatic under the provision under section 305(1) that once a person is a director he is liable, once the company is found to have committed the offence. The director must be shown to be responsible to the company for the conduct of the business of the company. The director must be involved in taking decisions in the company€.5. The Investment and Securities Tribunal disregarded the binding decision of the Honourable Court in the case in OLAWOPE v. SEC (supra) where