CORAM

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Uchechukwu Onyemenam Justice of the Court of Appeal

Balkisu Bello Aliyu Justice of the Court of Appeal

Hadiza Rabiu Shagari Justice of the Court of Appeal

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PARTIES

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1. AGATHA GARDENS HOTELS AND INVESTMENT LIMITED

2. DR. DOMINIC IGNATIUS UKPONG

3. PASTOR AUGUSTINE OBOT

APPELLANTS 

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1. ADMINISTRATOR-GENERAL AND PUBLIC TRUSTEE, AKWA IBOM STATE (EXECUTOR AND TRUSTEE OF THE WILL OF LATE PROFESSOR IGNATIUS ISC UKPONG)

2. MRS ELIZABETH IGNATIUS UKPONG

3. EMEM IGNATIUS UKPONG

4. ANTHONY IGNATIUS UKPONG

RESPONDENTS 

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AREA(S) OF LAW

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COMPANY LAW, CIVIL PROCEDURE, LOCUS STANDI, MINORITY SHAREHOLDERS’ RIGHTS, DERIVATIVE ACTIONS

 

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SUMMARY OF FACTS

The 2nd and 3rd Appellants instituted an action in the name of Agatha Gardens Hotels and Investment Ltd (1st Appellant) against the Respondents seeking declaratory reliefs regarding company decisions. The Respondents challenged the locus standi of the 2nd and 3rd Appellants to institute the action without proper authorization from the company or leave of court. The trial court upheld the preliminary objection, leading to this appeal.

 

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HELD

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1. The appeal was dismissed

2. The trial court’s ruling was affirmed

3. The Appellants lacked locus standi to institute the action

4. No costs were awarded

5. Parties to bear their respective costs

 

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ISSUES

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1. Whether Order 29 Rule 4(b) of Federal High Court Rules 2009 was applicable to the preliminary objection?

2. Whether the trial judge erred in determining the 2nd Defendant’s directorship status?

3. Whether the 1st Plaintiff company could ratify the institution of the suit subsequently?

 

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RATIONES DECIDENDI

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PRELIMINARY OBJECTION – ISSUE OF LAW:

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“The law is well settled that a preliminary objection can be filed without necessarily attaching affidavit in support more importantly where it involves issue of law and issue of locus standi is an issue of law.”- Per Hadiza Rabiu Shagari, J.C.A.

 

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LOCUS STANDI – DETERMINATION FROM PLEADINGS:

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“In determining whether a Plaintiff in an action has locus standi to institute an action it is the statement of claim of the Plaintiff that is to be considered. i.e. the averments in the statement of claim and Writ of Summon are the only material to be considered.”- Per Hadiza Rabiu Shagari, J.C.A.

 

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DERIVATIVE ACTION – CONDITIONS PRECEDENT:

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“Where a derivative action can be brought by a shareholder of a company, the Court must be satisfied with the following condition precedents namely that (a) the wrong doers and the directors who are in control and will not take necessary action; (b) the Applicant was given reasonable notice to the directors of the Company of his intention to apply to the Court…” – Per Hadiza Rabiu Shagari, J.C.A.

 

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LOCUS STANDI – EFFECT ON JURISDICTION:

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“Where the lower Court has no jurisdiction to entertain a suit, the Appellate Court will also lack the jurisdiction to hear the appeal.”- Per Hadiza Rabiu Shagari, J.C.A.

 

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COMPANY’S RIGHT TO SUE – FOSS V HARBOTTLE RULE:

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“To reduce a wrong done to a company or to enforce the right of a company the proper plaintiff is the company itself and the Court will not entertain an action brought on behalf of a company by a shareholder.”- Per Hadiza Rabiu Shagari, J.C.A.

 

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TRIAL COURT’S JURISDICTION – SCOPE OF PRELIMINARY OBJECTION:

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“The duty of the Court in that situation is to ensure that he did not in the determination of the application determine the same issue that could arise for determination in the substantive action.”- Per Hadiza Rabiu Shagari, J.C.A.

 

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BINDING PRECEDENT – APPLICATION OF PRINCIPLES:

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“The law is trite, that the doctrine of judicial precedence makes the decision of a superior Court binding on all Courts below it.

This applies even if the decision was wrongly reached, as long as it has not been set aside by a Court of competent jurisdiction.”- Per Hadiza Rabiu Shagari, J.C.A.

 

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MINORITY SHAREHOLDERS – REQUIREMENT FOR LEAVE:

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“For a person or a minority to commence an action on behalf of a company, the leave of the Court must first be sought and obtained.”- Per Uchechukwu Onyemenam, J.C.A.

 

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COMPETENT ACTION – REQUIREMENTS:

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“For an action to be properly constituted and competent in law so as to vest jurisdiction on a Court, there must be a competent Claimant and at least a competent Defendant.”- Per Uchechukwu Onyemenam, J.C.A.

 

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LOCUS STANDI – RELATIONSHIP WITH JURISDICTION:

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“A plaintiff’s locus standi is inextricably linked with the jurisdiction of the Court. Once plaintiff lacks locus, the Court is also bereft of jurisdiction.”- Per Uchechukwu Onyemenam, J.C.A.

 

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COMPANY’S SEPARATE PERSONALITY – EFFECT ON RIGHTS:

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“The Separate personality posture which a company acquires on its incorporation means that whatever wrong is done or is alleged to have been done to the company, only the company is harmed by the wrongful act; consequently, only the company can sue to remedy it.” – Per Uchechukwu Onyemenam, J.C.A.

 

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LOCUS STANDI – DETERMINATION:

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“In determining whether a Plaintiff has locus standi, chances of success of an action is not relevant, it is the cause of action that has to be examined, All the Court is concerned with is whether the plaintiff disclosed sufficient interest to protect.” – Per Uchechukwu Onyemenam, J.C.A.

 

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STANDING TO SUE – UNLAWFUL ACTIONS:

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No matter how manifestly unlawful an action is, it is the person with the locus standi to sue who can challenge it in a Court of law.”- Per Uchechukwu Onyemenam, J.C.A.

 

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CASES CITED

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STATUTES REFERRED TO

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1. Companies and Allied Matters Act 2004, Sections 221(1), 299

2. Federal High Court (Civil Procedure) Rules 2009, Order 29 Rule 4(b)

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