Star Paints Industries Limited & Anor V. Mr. Olu Ogunlela & Ors (1999)

LawGlobal-Hub Lead Judgment Report

OGUNTADE, J.C.A.

On 11/3/09, the plaintiffs/appellants/applicants filed an application wherein six prayers were made. We were able to deal peremptorily with the first three of the prayers on 17/6/99. The more contentious prayers subsisted and were argued on … I am in this ruling reacting to prayers 4 and 5 of the prayers on the said motion filed on 11th March, 1999 which read:

4. An order for stay of Execution and/or otherwise for the suspension of the operation of enforcement, howsoever, founded upon the order of dismissal of the suit made on 13th November, 1998 by the lower court pending the determination of the appeal filed herein.
5. An order of injunction maintaining the status quo ante, immediately prior to the ruling given on 13th November, 1998 concerning the continued sequestration with the 2nd defendant of the N17 Million in dispute pending the determination of the appeal filed herein and/or an order for the continued lodging and sequestration of the N17 Million in dispute with the 2nd defendant Bank in an interest yielding account at prime marked rate pending the final determination of the appeal filed herein.”

The 3rd respondent in the application filed on 11th March, 1999 on 30th April, 1999 brought another application praying for.

1. “An order directing the 2nd defendant/respondent to release forthwith to the 3rd defendant/respondent the sum of N17 Million together with the accrued interest which is/was the subject of an Ex-parte Order of the Federal High Court Lagos Nigeria made in suit No. FHC/L/CS/794/98 between Star Paints and Anor. v. Mr. Olu Ogunlela & 3 others on 23rd July, 1998 and which order was on 13th day of November, 1998 vacated.

CONSEQUENTLY

2. An order directing the 3rd defendant/applicant to simultaneously, upon receipt of the said sum of N17 Million, deliver to the Chief Registrar of this Honourahle Court a C.U.T.B) Bank guarantee in favour of the Chief Registrar of this Honourable Court in the sum of N17 Million and in the terms of Exhibit J attached to the affidavit in support of this application.”

The brief facts relevant to both application may be stated thus: The 2nd plaintiff/appellant and the 3rd defendant/respondent were both directors and shareholders in the 1st plaintiff/appellant company. A dispute arose between them as to the manner in which the 3rd defendant/respondent managed the 1st plaintiff/appellant. The competence and integrity of the 3rd defendant/respondent were in issue. The two of them and their solicitors held a meeting on 24/2/98 with a view to resolving the differences. At the end of it each had the option to buy the other out. The 3rd defendant/respondent opted to relinquish his 50% shareholding in the 1st plaintiff/appellant. He was to be paid N17 Million for the shares. It was however determined that auditors or accountants would be called in to determine the extent of the financial liability in 3rd defendant/respondent’s administration of the 1st plaintiff/appellant. Such amount as was ascertained to be the result of the 3rd respondent’s mismanagement was to be deducted from the N17 Million Naira. The N17 Million Naira was paid over to the Embassy of Lebanon (i.e. 4th respondent) which in turn deposited the money with the 2nd defendant/respondent whilst the report of the auditor/accountant was being expected. Two accountants, one of them the 1st defendant/respondent examined the accounts of the 1st plaintiff/appellant in succession. Their findings however, were conflicting to some extent. The first of them ABASS JIMOH & CO., was claiming to the 3rd defendant/respondent. The other by the 1st defendant/respondent would appear exculpatory to some extent. The position resulting was that the N17 Million which could have gone to the 3rd respondent could not be paid to him since his putative liability, if any, remained unascertained.

It was in these circumstances that the two plaintiffs/appellants on 22/7/98 issued their writ of summons in suit No. FHC/L/CS/794/98 seeking the following reliefs:

1. “A declaration that the Draft report and recommendation on audit and investigation dated 5th June, 1998 by the 1st defendant (Messrs Muyiwa Bunmi Ogunlela & Co. Chartered Accountants) is ultra vires the Terms of Reference and mandate of the said 1st defendant.
2. A declaration that the draft report and recommendation on audit and investigation dated 5th June, 1998 by the 1st defendant (Messrs Muyiwa Bunmi Ogunlela & Co. Chartered Accountants) is ultra vires the Terms of Reference and mandate of the said 1st defendant.
3. A declaration that the draft report and recommendation on audit and investigations dated 5th June, 1998 by the 1st defendant is ultra vires the enabling Resolutions of the meeting and minutes thereof of Tuesday 24th February, 1998.
4. A declaration that on the face of the information facts and evidence presented and/or available to the said 1st defendant the said draft report and recommendation on audit and investigation dated 5th June, 1998 by the 1st defendant is not a correct, true or fair statement of the matters or affairs of the subject and focus of its Terms of Reference and mandate and cannot be used or relied upon howsoever.
5. An order directing the 2nd defendant to trace, identify, locate and sequestrate in an interest yielding account, the proceeds of the total sum of N17 Million paid on 24th March, 1998 by the 2nd plaintiff’s Bank Draft No. 54681 dated 20/3/98 for N8.5 Million and Bank Draft 12140 dated 20/3/98 for N8.5 Million both drawn on Zenith International Bank Limited as evidenced by the 4th defendant’s receipt dated 23/3/98 pending the determination of this suit.
6. An order of injunction restraining all (4) defendants, their agents, privies, servants or howsoever from taking any steps or further steps interfering or dealing with and/or otherwise all steps concerning the disbursement of the sum of N17 Million or any other lesser sum of any person party, company or institution whatsoever pending the determination of this suit.
7. An order of Injunction Quia-timet restraining all (4) defendants, their agents, privies, servants or howsoever from taking steps or further steps howsoever with regard to the use or further use reliance upon or dealing, howsoever with or implementation of the findings and/or recommendations contained in the said Draft Report and Recommendations on audit and investigation dated 5th June, 1998 by the said 1st defendant pending the determination of this suit.
8. An order for the immediate appointment of a firm of reputable chartered accountants to reconcile the conflicting investigative audit reports of Abass Jimoh & Co. and of Muyiwa Bunmi Ogunlela & Co. so as to issue with Fairness and finality a totally independent and object report hereon.”

The parties subsequently filed several applications before the lower court. The application relevant to the matter now before me is the one filed by the 3rd defendant on 21/10/98 asking for:

“1. an order dismissing and/or striking out the suit or in the alternative an order striking out the reliefs as contained in the plaintiff’s statement of claim to wit I, II, III, VII and IX so far as it relates to the 4th defendant.”

The grounds for bringing the application were set out thus:

“(a) That the Honourable Court has no jurisdiction to entertain the said claims in so far as it relates to the 4th defendant by virtue of the Diplomatic Immunities and Privileges Act Cap. 97 Laws of the Federation of Nigeria, 1999.

(b) That the agreement leading to payment of N17 Million to the 4th defendant in this suit was realised at the Embassy of Lebanon outside the jurisdiction of this court.

(c) That the condition precedent to the payment of the said N17 Million – “the res” in this case was issued in favour of the Embassy of the jurisdiction of Lebanon. An asset which is outside the jurisdiction of this Honourable Court.

(d) That the condition precedent to the payment of the said N17 Million was a discretion to be undertaken by His Excellency the Ambassador of Lebanon within his Diplomatic powers.

That in the premise, this Honourable (Court) lacks jurisdiction to determine this suit.”