CORAM

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Amina Audi Wambai Justice of the Court of Appeal

Ademola Samuel Bola Justice of the Court of Appeal

Ntong Festus Ntong Justice of the Court of Appeal

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PARTIES

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BAYELSA STATE GOVERNMENT

APPELLANTS 

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PROF JOHN OFFEM

RESPONDENTS 

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AREA(S) OF LAW

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CONSTITUTIONAL LAW, BANKING LAW, COMPANY LAW, CIVIL PROCEDURE, JURISDICTION, APPEAL, PRACTICE AND PROCEDURE, EVIDENCE, LIQUIDATION, MORTGAGE BANKING, PRELIMINARY OBJECTIONS, REPRESENTATION, LOCUS STANDI, FEDERAL HIGH COURT JURISDICTION, STATE HIGH COURT JURISDICTION

 

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SUMMARY OF FACTS

Prof John Offem, suing for himself and representing some depositors of housing loan in Transatlantic Mortgage Ltd Calabar branch, instituted an action at the High Court of Cross Rivers State against Transatlantic Mortgage Ltd (1st Defendant) and Bayelsa State Government (2nd Defendant/Appellant) by undefended list procedure. The Respondent and 24 other persons had undertaken a housing loan scheme with Transatlantic Mortgage Ltd and made several payments totaling N22,779,060 into their mortgage accounts. Despite complying with the stipulated requirements, no mortgage facility was provided to them.

The 1st Defendant informed the Respondent that the 2nd Defendant was meeting recapitalization requirements issued by the Central Bank of Nigeria (CBN) and would start distributing housing loans thereafter. However, demands for refund yielded no positive results. The Respondent sought refund of equity contributions and deposits totaling N22,779,060, 30% interest from date of demand until judgment, 30% post-judgment interest, and N20,000,000 costs.

The Defendants filed a Joint Notice to Defend and challenged the jurisdiction of the lower court, arguing that the Federal High Court had jurisdiction since the 1st Defendant’s banking license had been revoked by CBN on 30th October 2018, the company was liquidated, and assets were auctioned by Rhea Maria & Co between 22nd-25th May 2019. The NDIC had been appointed as liquidator.

The lower court held that it had jurisdiction and entered judgment for N17,857,505.00 in favor of 12 depositors who had established their claims with exactitude through bank statements and deposit slips. The Appellant appealed, arguing among other things that it was not a necessary party, that the Federal High Court had jurisdiction over the liquidated company, and that the Respondent lacked authority to represent other depositors.

The Court of Appeal found that the Notice of Appeal was defective as it omitted Transatlantic Mortgage Ltd (1st Defendant at the lower court) as a party, making the appeal incompetent. Nevertheless, the court proceeded to determine the substantive issues and found that the lower court lacked jurisdiction since the matter involved a company under liquidation, which falls under Federal High Court jurisdiction.

 

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HELD

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1. The appeal was dismissed for being incompetent due to defective Notice of Appeal, but the court proceeded to determine the substantive issues.

2. The Court held that the Notice of Appeal was defective and incompetent because it failed to include Transatlantic Mortgage Ltd (1st Defendant at the lower court) as a party, despite that company being directly affected by the judgment under appeal.

3. The Court found that the lower court lacked jurisdiction to entertain the matter since Transatlantic Mortgage Ltd was under liquidation with NDIC as liquidator, making it a matter for the Federal High Court under Section 251(1)(e) of the Constitution.

4. The Court held that the Appellant (Bayelsa State Government) was wrongly held liable as it was merely a shareholder of Transatlantic Mortgage Ltd and not a director, and companies have separate legal personality from their shareholders.

5. The substantive suit was struck out for want of jurisdiction.

 

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ISSUES

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1. Whether the Court had the powers to try a matter and award judgment against a party who was not a necessary party?

2. Whether the lower Court can exercise jurisdiction over a matter covered by Section 251(1)(C) of the Constitution of the Federal Republic of Nigeria, 1999 (as amended) when it pertains to a company under liquidation?

3. Whether the Court can rely on Exhibits C and D of the Claimant (Now Respondent) in reaching a decision when the documents offend the position of the law?

4. Whether the Court could go ahead and try a matter when there is no proof of authority for representation particularly depositors money?

 

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RATIONES DECIDENDI

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PRELIMINARY OBJECTION IN BRIEF OF ARGUMENT – COMPETENCE OF INCORPORATING OBJECTION IN RESPONDENT’S BRIEF

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The current position of the law is that a Preliminary Objection can be competently raised and argued in the Respondent’s brief of argument and where properly raised, it is competent and would be entertained by the Court in so far as it is moved at the hearing of the appeal prior to the adoption of the parties’ brief of argument. The Respondent’s brief incorporating the preliminary objection was duly served on the Appellant well before 3 days to the hearing of the appeal as required by law.– Per NTONG FESTUS NTONG, J.C.A.

 

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COMPETENT NOTICE OF APPEAL – FOUNDATION OF VALID APPEAL

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Indeed, it is only a competent Notice of Appeal that can give rise to a competent appeal. Being the foundation of any appeal, a Notice of Appeal must conform to the provisions of the law for it to be competent and where there is a material defect in a Notice of Appeal or where such notice contravenes any provision of a statute or a mandatory provision of the Rules of the Court, such notice cannot validly invoke the jurisdiction of this Court.– Per NTONG FESTUS NTONG, J.C.A.

 

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APPEAL AS CONTINUATION OF LOWER COURT CASE – REQUIREMENT TO MAINTAIN SAME PARTIES

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It has been reiterated in a plethora of decisions of this Court and the Supreme Court that an appeal is not an independent suit but a continuation of the case at the lower Court and that it is required that an appeal contains the names of the parties in respect of whom the judgment of the lower Court was entered. – Per NTONG FESTUS NTONG, J.C.A.

 

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OMISSION OF NECESSARY PARTY – EFFECT ON APPEAL COMPETENCE

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The omission of the name of a party affected by a judgment or order in a notice of appeal, filed against the concerned judgment or order, is a matter of incompetence of the appeal, arising from the defect in the composition the appeal, resulting in lack of jurisdiction of the appellate Court to hear and determine the appeal. – Per NTONG FESTUS NTONG, J.C.A.

 

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UNILATERAL ALTERATION OF PARTIES – LACK OF JURISDICTION TO ALTER PARTY COMPOSITION

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In my view, omitting the name of some parties at the lower Court in this appeal would mean that the Appellant unilaterally made a decision as to whom a necessary party or a party directly affected by this appeal is and that is not a determination which the Appellant had the jurisdiction to make on its own.– Per NTONG FESTUS NTONG, J.C.A.

 

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JURISDICTION AS CREATURE OF STATUTE – CANNOT BE CONFERRED BY PARTIES

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In our jurisprudence, a Court can only be clothed with jurisdiction by statute, not by the parties or by the argument of Counsel. That is to say, irrespective of the fact that the jurisdiction of a Court can be determined by the claim of the Plaintiff, the matter of whether or not a Court has jurisdiction to determine those claims is an issue which is enshrined by Statute, so that neither the parties by their claim nor the Court suo motu can attribute jurisdiction to a Court when the Court has none.– Per NTONG FESTUS NTONG, J.C.A.

 

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FEDERAL HIGH COURT JURISDICTION OVER COMPANIES UNDER LIQUIDATION

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In my view, the fact that there is evidence that a liquidator had been appointed for the 1st Defendant at the lower Court was a feature that divested the lower Court to entertain the claims of the Respondent as constituted and thus brought the suit of the Respondent within the parameters of the jurisdiction of the Federal High Court. – Per NTONG FESTUS NTONG, J.C.A.

 

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REQUIREMENT FOR LEAVE OF COURT TO SUE COMPANY UNDER LIQUIDATION

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If a winding-up order is made or a provisional liquidator is appointed, no action or proceeding shall proceed with or commence against the company except by leave of the Court given on such terms as the Court may impose. In the instant case, the NDIC is deemed the provisional liquidator for the 1st Defendant, pursuant to Section 40 of the NDIC Act, as seen in Exhibits MOJ 1 and MOJ 2 and as such, the Respondent ought to have obtained the leave of Court to institute this matter. – Per NTONG FESTUS NTONG, J.C.A.

 

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SEPARATE LEGAL PERSONALITY – DISTINCTION BETWEEN COMPANY AND SHAREHOLDERS

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It is settled law that a company is a legal personality distinct from its shareholders, promoters and directors. Contrary to the stance of the lower Court, the fact that the correspondences between the Respondent and the Appellant and the Appellant and the Central Bank of Nigeria as shown in Exhibits C and D of the Respondent’s affidavit does not shift the legal personality of Trans-Atlantic Mortgages Limited to the Appellant, the fact that the Appellant was a majority shareholder notwithstanding.” – Per NTONG FESTUS NTONG, J.C.A.

 

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SHAREHOLDERS NOT LIABLE FOR COMPANY DEBTS – MAINTENANCE OF CORPORATE VEIL

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It is not our law that shareholders bear responsibility for the actions of the company, more so that it is not the evidence before the Court that the Appellant is a director of the company who can be held liable for the actions of the company in some regard. – Per NTONG FESTUS NTONG, J.C.A.

 

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NECESSARY PARTIES IN APPEAL – DEFINITION AND REQUIREMENT

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Necessary parties are those who are not only interested in the subject matter of the proceedings but also who in their absence, the proceedings could not be fairly dealt with. In other words, the question to be settled in the action between the existing parties must be a question which cannot be properly settled unless they are parties to the action instituted by the plaintiff. – Per AMINA AUDI WAMBAI, J.C.A.

 

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APPEAL AS REHEARING – CONSISTENCY IN PARTY REPRESENTATION

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An appeal being a continuation of trial, and not a new trial, parties must willy nilly be consistent in presenting their case on appeal as they were presented at trial or before the lower Court. A party cannot like a chameleon change the colour of his case on appeal different from the case at trial.– Per AMINA AUDI WAMBAI, J.C.A.

 

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PROPER NOTICE OF APPEAL – REFLECTION OF LOWER COURT TITLE

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that Notices of Appeal, applications for leave to appeal, Briefs of Arguments and all other documents whatsoever prepared in pursuance of the appellate jurisdiction of the Court for filing in accordance with the provisions of the Rules shall reflect the same title as that which obtained in the Court of trial. In other words, a proper Notice of Appeal or an application to appeal and all processes relating to or connected with an appeal or application to appeal must of necessity reflect the title of the case as it was in the proceedings leading to the appeal or the application in question. – Per AMINA AUDI WAMBAI, J.C.A.

 

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CASES CITED

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STATUTES REFERRED TO

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1. Constitution of the Federal Republic of Nigeria 1999 (as amended)

2. Companies and Allied Matters Act 2020

3. Companies and Allied Matters Act 1990

4. Banks and Other Financial Institutions Act, 2004

5. Nigerian Deposit Insurance Company Act, 2006 (NDIC Act)

6. Evidence Act 2011

7. Court of Appeal Rules 2021

8. High Court of Cross River State (Civil Procedure) Rules, 2008

 

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