CITEC INTL ESTATES LTD & ORS v. JOSIAH OLUWOLE FRANCIS & ORS - Legalpedia | The Complete Lawyer - Research | Productivity | Health


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(2021) Legalpedia (SC) 55219

In the Supreme Court of Nigeria


Thursday, January 14, 2021

Suite Number: SC.720/2017















The 1st Appellant, CITEC International Estates Ltd. is a Limited Liability Company under the provisions of the Companies and Allied Matters Act (CAMA), with a share capital of 2 million ordinary shares. The 1st – 4th Respondents owned 95% of the share capital while the 2nd Appellant, Bello Saka Oludare, owned the balance of 5%. The 1st, 2nd and 4th Respondents as well as the 2nd Appellant were the original directors of the company. By an ordinary resolution passed on 1st April 2002, the share capital of the company was increased to 10 million. It was alleged that the company held board meetings on the 9th and 10th of March 2006 whereby the 1st Respondent was removed as Chairman and his official residence and vehicle withdrawn, without following due process in his removal. Another board meeting took place on 4th April 2006, and the 1st – 4th Respondents were not given notice of the meeting; and while the members present were unable to form a quorum, crucial decisions affecting the allotment and otherwise of the shares of the Company were taken by the 2nd Appellant. At another board meeting held on 6th October 2006, the names of the 1st – 4th Respondents were removed as signatories to the Company’s accounts. The houses allocated to the 1st and 4th Respondents were put up for sale. The 1st – 4th Respondents were suspended and their salaries stopped, been deprived of their rights as shareholders, directors and management staff of the company without notice to them and without being given the opportunity of being heard. Hence, they instituted an action before the Federal High Court, Abuja seeking the declaratory and injunctive reliefs, aimed at restoring them to their original positions within the Company and restoring their rights and entitlements. The Appellants, upon being served with the Writ of Summons, filed a motion on notice challenging the jurisdiction of the Court to entertain the suit. The trial Court in its judgment granted the application of the Appellants, dismissing the Respondents’ action. On appeal to the Court of Appeal, Abuja Division, the judgment of the trial Court was set aside, holding that the Respondents had locus standi to sue the Appellants for infringement on their legal rights. Dissatisfied, the Appellants have appealed to the Supreme Court vide their Notice of Appeal containing six Grounds of Appeal.


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Appeal Dismissed


Whether or not the lower Court was right when it held that the 1st – 4th respondents possess the locus standi to institute this action? Whether or not the Court below was right when it held that it was not necessary for the 1st – 4th respondents to seek and obtain leave of Court to institute the action, as same was not a derivative action?



“Both learned counsel are correct in their submission that a ground of appeal must find its anchor in the ratio decidendi of the decision appealed against. It is also settled law that an issue for determination can only be distilled from a competent ground or competent grounds of appeal. As observed earlier, in a situation where an issue for determination is derived from both competent and incompetent grounds, the issue is liable to be struck out for incompetence. See: Jev Vs lyortyom (supra).


“An obiter dictum is an expression of opinion made by a Judge in passing in the course of delivering judgment, but which does not decide the live issues in the matter. See: Oshodi Vs Eyifunmi (2000) 7 SC (Pt. II) 145; Babarinde Vs The State (2014) 3 NWLR (Pt. 1395) 568; N.D.P. V. INEC (2013) 6 NWLR (Pt. 1350) 392. The ratio decidendi on the other hand, is the principle of law upon which a particular case is decided. It has the binding force of precedent. All lower Courts are bound by the ratio decidendi of the decision of a higher Court. The ratio decidendi has also been defined as “the reason for deciding.” See: Amobi v. Nzegwu (2013) 12 SC (Pt. 1) 142; UTC (Nig.) Ltd v. Pamotei (1989) 2 NWLR (Pt. 103) 244. –


“Locus standi connotes the legal capacity to institute an action in a Court of law. It is a threshold issue that affects the jurisdiction of the Court to look into the complaint. Where the claimant lacks the legal capacity to institute the action, the Court, in turn will lack the capacity to adjudicate. See: Daniel Vs INEC (2015) LPELR – 24566 (SC) @ 47 A – D; Thomas Vs. Olufosoye (1986) 1 NWLR (Pt. 18) 669; Opobiyi& Anor. Vs. Muniru (2011) 18 NWLR (Pt. 1278) 387 @ 403 D – F; Nyesom Vs. Peterside (2016) LPELR – 40036 (SC) @ 39 – 40 C – A. In order to have locus standi, the claimant must have sufficient interest in the suit. For instance, it must be evident that the claimant would suffer some injury or hardship or would gain some personal benefit from the litigation. See: Inakoju Vs Adeleke (2007) 4 NWLR (Pt. 1025) 423 @ 601 – 602 H – B; Thomas Vs Olufosoye (supra); B.B. Apugo & Sons Ltd. Vs O.H.M.B. (2016) 13 MWLR (Pt 1529) 206. –


“In determining whether the claimant has the necessary locus standi to institute the action, it is his pleadings that would be considered by the Court. Standing to sue does not depend on the merit of the claim but on the interest of the claimant in the subject matter of the suit. See: Basinco Motors Ltd. Vs Woermann – Lines & Anor (2009) 13 NWLR (Pt. 1157) 149; Fawehinmi Vs Akilu (1987) 12 SC 36; Musical Copyright Society of Nig. Ltd/Gte Vs Compact Disc Technology Ltd &Ors (2018) LPELR – 46353 (SC) @ 27 – 28 F – F. –


“It is necessary at this stage to consider Section 41 of CAMA, which provides for the effect of the Memorandum and Articles of Association of a company as follows: “41(1) Subject to the provisions of this Act, the Memorandum and Articles of Association, when registered, shall have the effect of a contract under seal between the company and its members and officers and between the members and officers themselves whereby they agree to observe and perform the provisions of the memorandum and articles, as altered from time to time in so far as they relate to the company, members or officers as such. ?If this provision is juxtaposed with the paragraphs of the Statement of Claim reproduced above, it is clear that the suit is complaining about a breach of the obligations owed to the plaintiffs under the Memorandum and Articles of Association as individual members and officers of the company. This brings me to the rule in Foss Vs Harbottle. In the case of Yalaju-Amaye Vs A.R.E.C. Ltd &Ors (1990) 4 NWLR (Pt 145) 422 @ 446 A . His Lordship Karibi Whyte, JSC reiterated the dictum of Jenkins, L.J. in Edwards Vs Halliwell (1950) 2 ALL ER 1084 @ 1066, where His Lordship held inter alia; “The rule in Foss Vs Harbottle, as I understand it, comes to no more than this. First, the proper plaintiff in an action in respect of a wrong alleged to be done to a company or association of persons is prima facie the company or the association of persons itself. Secondly, where the alleged wrong is a transaction which might be made binding on the company or association and or all its members by a simple majority of the members, no individual member of the company is allowed to maintain an action in respect of that matter for the simple reason that if a mere majority of the company or association is in favour of what has been done, then caditquaestio. Thus, the company or association is the proper plaintiff in all actions in respect of injuries done to it. No individual will be allowed to bring actions in respect of acts done to the company which could be ratified by a simple majority of its members. Hence the rule does not apply where the act complained of was ultra vires the company, or illegal or constituted a fraud on the minority and the wrongdoers are in the majority and in control of the company… And finally, where a resolution has been passed by a simple majority, see Edwards Vs Halliwell (supra). These last mentioned circumstances are the generally recognized exceptions to the rule in Foss Vs Harbottle (supra).” His Lordship Nnaemeka – Agu, JSC in the same case of Yalaju-Amaye Vs A.R.E.C. Ltd (supra) @ 465 D – H, held inter alia, that, notwithstanding the rule in Foss Vs Harbottle, it is permissible for a shareholder to maintain an action when it is clear that to deny him relief would be tantamount to allowing the rule to be converted into an engine of fraud or oppression. His Lordship stated further: “…Apart from actions enforcing personal rights of an oppressed plaintiff shareholder, the Courts have always allowed actions, in spite of the rule, where the act in question is ultra vires the company or such that it cannot be sanctioned by a simple majority but by special resolution or is based on fraud.” At page 466 B – C (supra), His Lordship further held: “Although it is recognized that the word “fraud” is a term of so wide an import that it is idle to attempt to define it, it at least appears clear that any act which may amount to an infraction of fair dealing, or abuse of confidence, or unconscionable conduct or abuse of power as between a trustee and his shareholders in the management of a company is fraud, which may take the case out of the rule in Foss Vs Harbottle (supra).” I agree with learned senior counsel for the 1st – 4th respondents that the rule in Foss Vs Harbottle (supra) is inapplicable in the present circumstances. The complaints are not complaints of wrongs done to the company. Their grievance is that they have been denied their rights to notice of meetings where decisions affecting their individual rights were taken. They also contend that the allotment of 8 million unallotted ordinary shares of the 1st Appellant by the 2nd Appellant to members and non-members of the 1st Appellant without regard to their right of first refusal is ultra vires, illegal, unlawful and accordingly null and void. Another complaint is in relation to the intended sale of their official quarters, their suspension and the stoppage of their salaries. See: A.G. Lagos State Vs. Eko Hotels Ltd. (2006) 18 NWLR (Pt. 1011) 378 @ 419 D – G. Section 300 (C) of CAMA provides: “300. Without prejudice to the rights of members under Sections 303 to 308 and Sections 310 to 312 of this Act or any other provisions of this Act, the Court, on the application of any member, may by injunction or declaration, restrain the company from the following – (c) any act or omission affecting the applicant’s individual rights as a member.” The provisions are clear and unambiguous. Learned counsel for the appellant misconstrued the provision when he argued that it is only applicable to restrain a company from taking steps which are illegal or ultra vires and will not apply to completed acts. With respect to learned counsel, the provisions relate not only to injunctive reliefs but also to declaratory reliefs relating to any act or omission affecting the applicant’s individual rights. I am of the considered view that the 1st – 4th respondents’ suit falls squarely within Section 300 of CAMA as well as the exceptions to the rule in Foss Vs Harbottle to confer them with the necessary locus to institute their action. –


The short answer is that in so far as the company’s Memorandum and Articles of Association make provision for the giving of notice for meetings to shareholders, it follows that those entitled to be given notice of such meetings are entitled to participate in and contribute at such meetings and to be part of whatever resolution might be reached thereat. See also Sections 262(2) and 266(1), (2) and (3) of CAMA. It is settled law that even the proceedings of a non-judicial or administrative body must be conducted in accordance with the principles of natural justice. See: Adeniyi Vs Governing Council of Yabatech (1993) 6 NWLR (Pt. 300) 426; Denloye Vs Medical & Dental Practitioner Disciplinary Committee (1968) 1 ALL NWLR 306. –


Section 303 (1) of CAMA provides: “303 (1) Subject to the provisions of subsection (2) of this Section, a applicant may apply to the Court for leave to an action in the name or on behalf of a company, or to intervene in an action to which company is a party, for the purpose of prosecuting or defending or discontinuing the action on behalf of the company. (2) No action may be brought and no intervention may be made under Subsection (1) of this Section unless the Court is satisfied that – (a) the wrongdoers are the directors who are in control and will not take necessary action; (b) the applicant has given reasonable notice to the director of the company of his intention to apply to the Court under subsection (1) of this section if the directors of the company do not bring, diligently prosecute or defend or discontinue the action. (c) it appears to be in the interest of the company that the action be brought, prosecuted, defended or discontinued.” In Unipetrol (Nig.) Plc Vs. Agip (Nig) Plc (2002) 14 NWLR (Pt. 787) 312 @ G – N, the Court of Appeal per Aderemi, JCA (as he then was), in interpreting the above provisions, held, inter alia. “It has now become accepted as settled in law that a derivative action is an action brought by a shareholder in the name of himself and all other shareholders to enforce the company’s rights. The company must be joined as a defendant to the action so that it becomes a party to the action and judgment can be given in its favour so that it will be bound by the Court’s judgment.” This position was affirmed by this Court in Agip (Nig) Ltd Vs. Agip Petrol International (2010) All FWLR (Pt. 520) 1198 @ 1230 – 1231 D – F. –


Learned counsel for the appellant dwelt on the question of locus standi in dealing with issue One. My Lords, I had the opportunity of addressing this issue at length in Centre For Oil Pollution Watch v NNPC (2018) LPELR – 50830 (SC). I shall adopt my views in that case as part of my reasoning in this Contribution. For their bearing on the question in this appeal, I shall set out my views in extenso. On the position of the law on this question, I stated thus: … the expression locus standi, Latin expression used, interchangeably, for ‘a place to stand,’ or standing to sue ‘is a rule of ancient vintage and it arose during an era when private law dominated the legal scene and public law had not yet been born,’ per Bhagawati, J in Gupta v President of India and Ors, 1982 2 SCR 365 [italics supplied for emphasis]. Like most of English law of the time, the rules as to standing could not be found in any statute for they were made by Judges of the Realm, per Lord Diplock in Rev v I. R. C., Ex p. Fed. of Self-Employed [1982] A. C. [H. L. (E.)] 617, 641. Indeed, the said locus standi rules would appear to have been more, popularly, enunciated in Ex parte Sidebotham (1880) 14 Ch. D 458. ?According to James, L.J. a ‘person aggrieved’ must be a man ‘who has suffered a legal grievance, a man against whom a decision has been pronounced which has wrongfully deprived him of something or wrongfully refused him something or wrongfully affected his title to something, Ex parte Sidebotham (supra). This Jamesonian definition was approvingly, adopted in In Re Reed Bowen and Co (1887) 19 QBD 174. The learned Master of the Rolls, Lord Esher, emphasized that ‘when James, L. J. said that a person aggrieved must be a man against whom a decision has been pronounced which has wrongfully refused him of something, he obviously meant that the person aggrieved must be a man who has been refused something which he had a right to demand, per Bhagawati, J in Gupta v President of India and Ors, (supra). In simple terms, therefore, this narrow and rigid conception of locus standi means that it is only a person who has suffered a specific legal injury by reason of actual or threatened violation of his legal right or legally-protected interest who can bring an action for judicial redress. In effect, ‘this rule with regard to locus standi thus postulates a right-duty pattern which is commonly to be found in private law litigation, Gupta v President of India and Ors, (supra). Subsequent English decisions clung to this ‘right-duty pattern:’ a common feature of private law. Nigeria’s inheritance of the common law determinant of locus standi Nigerian Courts, as legatees of the English common law heritage, embraced this concept of Locus standi. In doing so, however, they would appear to have merged the narrow and restrictive concept of private law (cause of action test) with the requirements of public law. Thus, although Olawoyin v AG, Federation [1961] 1 SCNLR 2, which would appear to be the first Nigerian case on the point, was ‘a case in the realm of public law, [Owodunni v Registered Trustees, CCC (supra) 340], yet the Court invoked the ‘interest’ and ‘injury’ test. Subsequent decisions towed that line, Gamioba and Ors v Esezi (1961) ANLR 608, 613; Attorney General Eastern Nigeria v Attorney General of the Federation (1964) ANLR 224; Odeneye v. Efunuga [1990] 7 NWLR (pt 164) 618; Thomas v. Olufosoye [1986] 1 NWLR (pt18) 669; AmusaMomoh v. JimohOlotu (1970) 1 All NLR 117; (1970) ANLR 121; Moradesa v. The Military Governor of Oyo State and Ors [1986] 3 NWLR 125; Olawoyin v. Attorney-General of Northern Nigeria [1961] 2 SCNLR 5; [1961] 2 NSCC 165; Senator Adesanya v. President of the Fed. Republic of Nigeria and Anor.[1981] 12 NSCC 146; (1981) ANLR 1; [1981] SC 1112 and so on. Did Adesanya v President FRN (supra) extend locus standi. In Owodunni v Registered Trustees, CCC [2000] 10 NWLR (pt 675) 315, 331, Ogundare, JSC, introduced the leading judgement as follows this ‘…appeal raises once again the vexed question of locus standi which, in spite of a plethora of decided cases on it, still remains a Gordian Knot. A number of judicial pronouncements have been made and academic papers written. Rather than the problem being solved, it has become more intractable as the case now on hand demonstrates. His Lordship continued in ‘Oloriode v. Oyebi [1984] 1 SCNLR 390, 400, Irikefe JSC … (as he then was) declared that ‘[a] party prosecuting an action would have locus standi where the reliefs claimed would confer some benefit on such a party.’ According to His Lordship: This is clearly the position in private law…. The position appears to be that in private law, the question of locus standi is merged in the issue of cause of action, for instance, a plaintiff who has no privity of contract with the defendant will fail to establish a cause of action for breach of the contract as he will simply not have a locus standi to sue the defendant on the contract. Our laws reports are replete with authorities that show that in chieftaincy cases, all a plaintiff is required to do is to show in his statement of claim his interest and his entitlement to the chieftaincy title. I may add that the same principle applies to similar cases such as the one presently on hand. The erudite jurist maintained that ‘Thomas v. Olufosoye (supra) falls into this category as well. Olawoyin v. Attorney-General of Nigeria (supra) is a case in the realm of public law… The Court applied the ‘interest’ ‘injury’ test in denying [Olawoyin] of locus standi in the case. The same test was applied by the Court in Gamioba and Ors. v. Esezi II and Ors. (1961) ANLR 608, 613. Almost all counsel, including the amici curiae, would seem to entertain the view that the decision in Fawehinmi v Akilu [1987] 4 NWLR (pt 67) 707 expanded the scope of locus standi. With respect, this cannot be correct, see, T. E. Ogowewo, Wrecking the Law: Now Article 111 of the Constitution of the United States led to the Discovery of a Law of Standing to Sue in Nigeria, 26 Brook. J. Inti L. (2017) 528, ? where the erudite scholar debunked such views. [perNweze, JSC in Centre for Oil Pollution Watch v NNPC (supra) 39 – 44; C- C.] On the question whether Section 6 (6) (b) of the 1999 Constitution is the provenance of locus standi, I continued thus: In Owodunni v Registered Trustees, CCC (supra), Ogundare, JSC, answered this question thus: It appears that the general belief is that this Court laid it down in that case [that is, Adesanya v President, FRN that the law on locus standi is now derived from Section 6(6) (b) of the Constitution of the Federal Republic of Nigeria, 1979 (re-enacted in Section 6(6) (b) of the 1999 Constitution) which provided: 6 (6) The judicial powers vested in accordance with the foregoing provisions of the section (b) shall extend to all matters between persons, or between government or authority and any person in Nigeria, and to all actions and proceedings relating thereto, for the determination of any question as to the civil rights and obligations of that person. I am not sure that this general belief represents the correct position. Of the seven Justices that sat on that case [that is, Adesanya v President, FRN] only 2 (Bello and Nnamani JJ.SC) expressed views to that effect. Bello JSC, (as he then was), put the law on locus standi or standing in the realm of public law in these words: Finally, I would like to make the following observations: A careful perusal of the problem would reveal that there is no jurisdiction within the common law countries where a general licence or a blank cheque – if I may use that expression without any string or restriction, is given to private individual to question the validity of legislative or executive action in a Court of law. It is a common ground in all the jurisdictions of the common law countries that the claimant must have some justiciable interest which may be affected by the action or that he will suffer injury or damage as a result of the action. In most cases the area of dispute, and sometime, of conflicting decisions has been whether or not on particular facts and situation the claimant has sufficient interest or injury to accord him a hearing. In the final analysis, whether a claimant has sufficient justiciable interest or sufferance of injury or damage depends on the facts and circumstances of each case, Bengal Immunity Co. v. State of Bihar (1955) 2 S.C.R. 602; Forthingham v. Mellon (1925) 262 U.S. 447; for India and America, respectively. Even in the Canadian case of Torson v. Attorney-General of Canada (1974) 1 N.R. 2254, and the Australian case of Mckinlay v. Commonwealth (1975) 135 C.L.R … in which liberal views on standing were expressed, the issue of sufficiency of interest was the foundation upon which the decisions in both cases were reached. –


“Idigbe, JSC, also quoted Section 6(6) (b) of the Constitution and went on to say: The expression ‘judicial power’ in the above quotation is the power of the Court to decide and pronounce a judgment and carry it into effect between persons and parties who bring a case before it for decision’ (see Justice Miller: The Constitution (p. 314). Judicial Power is therefore invested in the Court for the purpose of determining cases and controversies before it; the cases or controversies, however, must be ‘justiciable’. That being so, it is necessary to know in what circumstances a Court can, in the exercise of its judicial power pronounce on the constitutional validity of an ‘Act’ (i.e. legislation) of the Legislature or, an ‘act’ (i.e. action) of the National Assembly. In attempting to answer this question, I would gratefully adopt the views of Marshall C.J. in Marbury v. Madison (1803) 1 Cranch 137, which, in a summary, are that the right of the Court to declare unconstitutional an act of Congress can only be exercised by it when a proper case between opposing parties has been submitted to it for judicial determination… On what is a “proper case” that would justify the invocation of the judicial power of the Court, the learned Justice of the Supreme Court observed: The type of case or controversy which will justify the exercise by the Court of its judicial power must be justiciable and based on bona fide assertion of right by the litigants (or one of them) before it…. I take the view that the circumstances in which the judicial power under Section 6(6) (b) of the 1979 Constitution can be exercised by the Court for the purpose of pronouncing on the constitutional validity of an act for the National Assembly or, more particularly, any legislation must be limited to those occasions in which it has become necessary for it (i.e. the Court) in the determination of a justiciable controversy or case based on bona fide assertion of rights by the adverse litigants (or anyone of them) before it to make such a pronouncement. The Court does not, in my view possess a general veto power over legislation by, or acts of, the National Assembly; its powers properly construed, are supervisory, and the supervisory power, in circumstances to which I have referred above. –


In my respective view, I think Ayoola JCA, (as he then was), correctly set out the scope of Section 6 subsection (6) (b) of the Constitution when in N.N.P.C. v. Fawehinmi and Ors. (1998) 7 NWLR (pt 559) 598, 612 he said: In most written constitutions, there is a delimitation of the power of the three independent organs of government, namely the executive, the legislature and the judiciary, Section 6 of the Constitution which vests judicial powers of the Federation and the States in the Courts and defines the nature and extent of such judicial powers does not directly deal with the right of access of the individual to the Court. The main objective of Section 6 is to leave no doubt as to the definition and delimitation of the boundaries of the separation of powers between the judiciary on the one hand and the other organs of government on the other, in order to obviate any claim of the other organs of government, or even attempt by them, to share judicial powers with the Courts. Section 6 (6) (b) of the Constitution is primarily and basically designed to describe the nature and extent of judicial powers vested in the Courts. It is not intended to be a catch-all, all-purpose provision to be pressed into service for determination of questions ranging from locus standi to the most uncontroversial questions of jurisdiction. [pages 338 et seq; italics supplied for emphasis] My Lords, I have deliberately, embarked on this tour d’horizon to demonstrate how this Court, in Owodunni v Registered Trustees, CCC (supra), gallantly, endeavoured to state the correct position that “…it is obvious that the Supreme Court in Adesanya did not decide that Section 6 (6) (b) contains a requirement of standing…” [T. I. Ogowewo, Wrecking the Law: How Article 111 of the Constitution of the United States Led to the Discovery of a Law of Standing to Sue in Nigeria, 26 Brook. J. Int’l L (2017) 528, 559 [per Nweze, JSC in Centre for Oil Pollution Watch v NNPC (supra) 44- 55; C- D. –


Companies and Allied Matters Act,|Constitution of the Federal Republic of Nigeria, 1999 (as amended)|


A.M. Kayode, Esq. with him C.I.A. Ofoegbunam, Esq, and A.F. Obiwumma, Esq.For Appellant(s)|Kehinde Ogunwumiju, SAN, with him Olumide Adekunle, Esq. Saadu Lukman, Esq. and Funmilayo Longe, Esq. – for 1st-4th Respondents.|Olayinka Abedeji, Esq. – for 5th Respondent|O.O. Olowolafe, Esq. with him O.O. Owonla, Esq. – for 6th Respondent.|


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