Legalpedia Citation: (2023-03) Legalpedia 81394 (CA)

In the Court of Appeal

Holden at Lagos

Fri Mar 31, 2023

Suit Number: CA/L/555/2017

CORAM

MONICA .B. DONGBAN-MENSEM JUSTICE, COURT OF APPEAL

PARTIES

1. TOPHER ZHANG INVESTMENT LTD
   2. MR. CHRISTOPHER AJAYI

APPELLANTS

MASTERS ENERGY OIL AND GAS LTD

RESPONDENTS

AREA(S) OF LAW

ALTERNATIVE DISPUTE RESOLUTION MECHANISM, CIVIL PROCEDURAL LAW, ADJUDICATION, CORPORATE LAW, JURISDICTION, MARITIME LAW, CRIMINAL PROCEDURAL LAW, RULES OF STATUTORY INTERPRETATION, PRACTICE AND PROCEDURE.

SUMMARY OF FACTS

This appeal interrogates the correctness of the decision (ruling) of the Federal High Court, Lagos Division (trial court). The first appellant, an incorporated company, is engaged in business of repair of marine vessels.  In 2012, there was a service contact agreement between the parties whereby the first appellant obligated itself to repair and refurbish the respondent’s four accidented aluminum boats, at an agreed consideration, within a period of sixteen weeks. The respondent paid the agreed consideration, including the variations, to the appellants in tranches/installments.  However, the appellants were in breach of the service contract agreement by failing to repair and refurbish the four boats despite the sums of money paid to them. Sequel to that, the respondent besieged the lower court, via a writ of summons and tabled declarations and reliefs against the appellants. In reaction, the appellant, filed a notice of preliminary objection which prayed the lower court for orders striking out the action. In response, the respondent filed the necessary processes in opposition to the preliminary objection. The preliminary objection was, duly, heard by the trial court and subsequently dismissed the preliminary objection. The appellants were aggrieved by the decision and has lodged an appeal to this court.

HELD

Appeal dismissed.

ISSUES

1) Whether this suit ought to be referred to arbitration having regard to clause 18 of the Service Contract Agreement.

2) Whether the Honourable lower Court erred by refusing to stay proceedings pending reference to arbitration on the ground that the plaintiff/respondent in its amended statement of claim, had made allegations of fraud against the defendants/appellants and supplied the particulars of the fraud.

3) Whether the Federal High Court has jurisdiction over the suit in light of the nature of the claims made by the plaintiff.

RATIONES DECIDENDI

MOTION ON NOTICE – WHEN IS A MOTION ON NOTICE FILED

It is now settled law, beyond any peradventure of doubt, that a motion on notice is filed where a party intends to challenge the incompetence of one or two grounds in the presence of an existing valid ground(s) in an appeal. Where a party, in such a circumstance, files a preliminary objection, which cannot abrogate the entire appeal, such an objection is rendered incompetent and liable to be struck out. Garba v. Mohammed (2012) NWLR (Pt. 1537) 114; Kente v. Ishaku (2017) 15 NWLR (Pt. 1587) 96; PDP v. Sheriff (2017) 15 NWLR (Pt. 1588) 219; NNPC v. Famfa Oil Ltd. (2012) LPELR – 7812 (SC)/(2012) 17 NWLR (Pt. 1328) 148; Cocacola (Nig.) Ltd. v. Akinsanya (2017) 17 NWLR (Pt. 17 NWLR (Pt. 1593) 74; Ezenwaji v. UNN (2017) 18 NWLR (Pt. 1598) 45; Petgas Resources Ltd. v. Mbanefo (2018) 1 NWLR (Pt. 1601) 442; KLM Royal Dueth Airlines v. Aloma (2018) 1 NWLR (Pt. 1601) 473; Isah v. INEC (2016) 18 NWLR (Pt. 1544) 175; FRN v. Atuche (2019) 8 NWLR (Pt. 1674) 338; Lolapo v. COP (2019) 16 NWLR (1699) 476. Opeyemi v. State (2019) 17 NWLR (Pt. 1702) 403; Trade Bank Plc v. Pharmatek Ind. P. Ltd. (2020) 8 NWLR (Pt. 1725) 124; Sani v. K.S.H.A. (2021) 6 NWLR (Pt. 1773) 422; APC v. ESIEC (2021) 16 NWLR (Pt. 1801) 1; Ajuwon v. Gov., Oyo State (2021) 16 NWLR (Pt. 1803) 485.  At once, it is improper to file a preliminary objection on issues when there exists a valid one upon which an appeal can be argued, see Oboh v. N.F.I. Ltd. (2022) 5 NWLR (Pt. 1823) 283 at 312. –PER – OBANDE FESTUS OGBUINYA, JCA

JURISDICTION – ISSUE OF JURISDICTION IS NUMERO UNO IN ADJUDICATION

Issue of jurisdiction is numero uno in adjudication. The law compels the courts to handle issue of jurisdiction first when raised in any proceedings, see Okwu v. Umeh (2016) NWLR (Pt. 1501) 120; Brittania-U (Nig.) Ltd. v. Seplat Pet. Co. Dev. Ltd. (2016) 4 NWLR (Pt. 1503) 541; Oni v. Cadbury Nig. Plc. (2016) 9 NWLR (Pt. 1516) 80; Diamond Bank Ltd. v. Ugochukwu (2016) 9 NWLR (Pt. 1517) 193; PDP v. Umeh (2017) 12 NWLR (Pt. 1579); APC v. Ndual (2018) 2 NWLR (Pt. 1602) 1; Adama v. Maigari (2019) 3 NWLR (Pt. 1658) 26; APC v. Lere (2020) 1 NWLR (Pt. 1705) 254. I will obey this legal commandment so as not to insult the law. –PER – OBANDE FESTUS OGBUINYA, JCA

JURISDICTION – MEANING OF

Jurisdiction, a mantra in adjudication, connotes the authority/power of a court to determine a dispute submitted to it by contending parties in any proceeding, see Ajamole v. Yaduat (No. 1) (1991) 5 SCNJ 172; Mobil Pro. Co. Untltd. v. LASEPA (2002) 18 NWLR (Pt. 798) 1; Ndaeyo v. Ogunnaya (1977) 1 IM SLR 300; Ebhodagbe v. Okoye (2004) 18 NWLR (Pt. 905) 472; Garba v. Mohammed (2016) 16 NWLR (Pt. 1537) 144; A.-G., Kwara State v. Adeyemo (2017)1 NWLR (Pt. 1546) 210; Isah v. INEC (2016) 18 NWLR (Pt. 1544) 175; Angadi v. PDP (2018) 15 NWLR (Pt. 1641) 1; Nduul v. Wayo (2018) 16 NWLR (Pt. 1646) 548. PER – OBANDE FESTUS OGBUINYA, JCA

JURISDICTION – WHEN IS THE COURT VESTED WITH JURISDICTION

A court of law is invested with jurisdiction to hear a matter when: “1. it is properly constituted as regards numbers and qualifications of members of the bench, and no member is disqualified for one reason or another; and 2. the subject matter of the case is within its jurisdiction, and there is no feature in the case which prevents the court from exercising its jurisdiction; and 3. the case comes before the court initiated by due process of law, and upon fulfillment of any condition precedent to the exercise of jurisdiction”, see Modukolu v. Nkemdilim (2006) 2 LC 2081961) NSCC (vol. 2) 374 at 379, per Bairamian F. J., Tukur v. Taraba State (1997) 6 SCNJ 81; Daro v. UBN (2007) 16 NWLR (Pt. 1029) 164; Okereke v. Yar’Adua (2008) 12 NWLR (Pt. 1100); Saraki v. FRN (2016) 3 NWLR (Pt. 1500) 531; Oni v. Cadbury Nig. Plc. (2016) 9 NWLR (Pt. 1516) 80; Diamond Bank Ltd. v. Ugochukwu (2016) 9 NWLR (Pt. 1517) 193; Okpe v. Fan Milk Plc. (2017) 2 NWLR (Pt. 1549) 282; Bello v. Damisa (2017) 2 NWLR (Pt. 1550) 455; Osi v. Accord Party (2017) 3 NWLR (Pt. 1553) 387; Nworka v. Ononeze-Madu (2019) 7 NWLR (Pt. 1672) 422; Adeleke v. Oyetola (2020) 6 NWLR (Pt. 1721) 440. The three ingredients must co-exist in order to infuse jurisdiction into a court. –PER – OBANDE FESTUS OGBUINYA, JCA

STATEMENT OF CLAIM – A YARD STICK FOR MEASURING THE PRESENCE OR ABSENCE OF JURISDICTION

Remarkably, the case-law has endorsed in toto a statement of claim as the major yardstick to be used by the court to measure the presence or absence of its jurisdiction, see Akine v. Edjerode (2001) 18 NWLR (Pt. 745) 446; A.D.H. Ltd. v. A.T. Ltd. (2006) NWLR (Pt. 989) 635; Oni v. Cadbury (2016) 9 NWLR (Pt. 1516) 80; Ladoja v. Ajimobi (2016) 10 NWLR (Pt. 1519) 87; B.B. Apugo & Sons Ltd. v. O.H.M.B. (2016) 13 NWLR (Pt. 1529) 206; Yar’adua v. Yandoma (2015) 4 NWLR (Pt. 1466) 213; Akpamgbo-Okadigbo v. Chidi (No. 2) (2015) 10 NWLR (Pt. 1466) 124; Isah v. INEC (supra); Lau v. PDP (supra); Azubuogu v. Oranezi (supra); Agi v. PDP (2017) 17 NWLR (Pt. 1595) 386; A.-G, Fed. v. A.-G., Anambra State (2018) 6 NWLR (Pt. 1615) 314; Roe Ltd. v. UNN (2018) 6 NWLR (Pt. 1616) 420; F.U.T., Minna v. Olutayo (2018) 7 NWLR (Pt. 1617) 176; A.-G., Lagos State v. Eko Hotels (2018) 7 NWLR (Pt. 1619) 518. In an action commenced by dint of originating summons/motion, the affidavit in support serves as the statement of claim, see Uwazuruonye v. Gov., Imo State (2013) 8 NWLR (Pt. 1355) 28; PDP v. Ezeonwuka (2018) 3 NWLR (Pt. 1606) 187; Lau v. PDP (2018) 4 NWLR (Pt. 1608) 60; Owuru v. Adigwu (2018) 1 NWLR (Pt. 1599) 1; CBN v. Aribo (2018) 4 NWLR (Pt. 1608) 130.  –PER – OBANDE FESTUS OGBUINYA, JCA

JURISDICTION – WHAT A COURT CONSIDERS IN DETERMINING JURISDICTION

Indisputably, in determining the jurisdiction of the lower court, a court considers the parties and subject-matter of an action, see Obiuweubi v. CBN (2011) 7 NWLR (Pt. 1247) 465; N.E.P.A. v. Edegbero (2002) 18 NWLR (Pt. 798) 79; Oloruntoba-Oju v. Abdul-Raheem (2009) 13 NWLR (Pt. 1157) 83; NNPC v. Orhiowasele (supra); NURTW v. RTEAN (2012) 10 NWLR (Pt. 1307) 170; Agbule v. W.R.P. Co. Ltd. (2013) 6 NWLR (Pt. 1350) 318; Enterprises Bank Ltd. v. Aroso (2014) 3 NWLR (Pt. 1394) 256; ABIEC v. Kanu (2013) 13 NWLR (Pt. 1370) 69; Wema Sec. & Fin. Plc v. NAIC (2015) 16 NWLR (Pt. 1484) 93. Here, the appellants quarrel with the subject matter, and not the party, jurisdiction of the lower court. –PER – OBANDE FESTUS OGBUINYA, JCA

SIMPLE CONTRACT – WHETHER OR NOT THE FEDERAL HIGH COURT IS VESTED WITH JURISDICTION TO ENTERTAIN SIMPLE CONTRACT MATTERS

It is trite law that once an action is rooted in a simple contract, the lower court will be divested of the jurisdiction to entertain it. The reason is not far-fetched. The expansive provision of section 251 (1) of the Constitution, as amended, does not host simple contract as one of the items in the civil jurisdiction of the lower court. In such a case, it is the High Court that will be equipped with the requisite jurisdiction over the matter, see I.T.P.P. Ltd. v. UBN Plc (2006) 12 NWLR (Pt. 995) 483 at 504, per Ogbuagu, JSC, Adelekan v. ECU-Line NV (2006) 12 NWLR (Pt. 993) 33; A.D.H Ltd. v. A.T. Ltd. (2006) 10 NWLR (Pt. 989) 635; Osun State Government v. Dalami (2007) 9 NWLR (Pt. 1038) 66; Onuorah v. K.R.P.C. Ltd. (2005) 6 NWLR (Pt. 921) 393; Wema Sec. Fin. Plc v. NAIC (2015) 16 NWLR (Pt. 1484) 93. P & C.H.S. Co. Ltd. v. Migfo (Nig.) Ltd. (2013) 3 NWLR (Pt. 1333) 555; Essi v. Nigeria Ports Plc (2018) 2 NWLR (Pt. 1604) 361; Ogbebor v. INEC (2018) 6 NWLR (Pt. 1614) 1; ROE Ltd. v. UNN (2018) 6 NWLR (Pt. 1616) 420; TSKJ (Nig.) Ltd. v. Otochem (Nig.) Ltd. (2018) 11 NWLR (Pt. 1630) 330; Ikpekpe v. W.R. & P. Co. Ltd. (2018) 17 NWLR (Pt. 1648) 280; Socio-Political Research Dev. v. Min., FCT (2019) 1 NWLR (Pt. 1653) 313; Rahman Brothers Ltd. v. NPA (2019) 6 NWLR (Pt. 1667) 126; O.& G.E.F.Z.A v. Osanakpo (2019) 6 NWLR (Pt. 1668) 224; Dec Oil & Gas Ltd. v. Shell (Nig.) Gas Ltd. (2019) 14 NWLR (Pt. 1692) 273; Statoil Nigeria Ltd. v. Inducon Nigeria Ltd. (2021) 7 NWLR (Pt. 1774) 1. –PER – OBANDE FESTUS OGBUINYA, JCA

ADMIRALTY – MEANING OF ADMIRALTY

Admiralty, which is coterminous with maritime law – law of the sea, connotes “the law of marine commerce and marine navigation. It entails transportation at sea of persons and property and marine affairs in general”, see I.T.P.P. Ltd. v. UBN Plc (2006) 12 NWLR (Pt. 995) 483 at 507, per Tobi, JSC. –PER – OBANDE FESTUS OGBUINYA, JCA

ARBITRATION – MEANING OF ARBITRATION

By way of prefatory remarks, an arbitration is the reference of a dispute or difference between not less than two parties for determination, after hearing both sides in a judicial manner, by a person or persons other than court of competent jurisdiction. The referee is the arbitrator.  An umpire is a referee who determines the dispute arising from a disagreement between two arbitrators, see K.S.U.D.B. v. Fanz Const. Ltd. (1990) 4 NWLR (Pt. 142) 1. The Scott v. Avery Clause traces its paternity to the English Case of Scott v. Avery (1856 5 H.L Cas. 811. The Clause has been, firmly, planted and assimilated in our jurisprudence, see A.I.D.C. v. Nigeria L.N.G. Ltd. (2000) 4 NWLR (Pt. 653) 494.  In the Obembe v. Wemabod Estates Ltd. (1977) 11 NSCC 264 at 271, the locus classicus on it, Fatai-Williams, JSC (later CJN), graphically, paraphrased the classes of the Scott v. Avery Clause in these illuminating words:

As the learned counsel for the plaintiff/appellant has rightly pointed out, arbitration clauses, speaking generally, fall into two classes.  One class is where the provision for arbitration is a mere matter of procedure for ascertaining the rights of the parties with nothing in it to exclude a right of action on the contract itself, but leaving it to the party against whom an action may be brought to apply to the discretionary power of the court to stay proceedings in the action in order that the parties may resort to that procedure to which they have agreed. The other class is where arbitration followed by an award is a condition precedent to any other proceedings being taken, any further proceedings then being, strictly speaking, not upon the original contract but upon the award made under the arbitration clause.  Such provisions in an agreement are sometimes termed “Scott v. Avery” clauses, so named after the decision in Scott v. Avery (1856) 5 H.L. Cas. 811. –PER – OBANDE FESTUS OGBUINYA, JCA

 

CONDITION PRECEDENT – MEANING OF CONDITION PRECEDENT

In the eyes of the law, a condition precedent is: “the one that delays the vesting of a right until the happening of an event”, see Atalegbe v. Awuni (1997) 9 NWLR (Pt. 525) 537 at 562, per Uwais, CJN; Niger Care Dev. Co. Ltd. v. ASWB (2008) 9 NWLR (Pt. 1093) 493; A.-G., Kwara State v. Adeyemo (2017) 1 NWLR (Pt. 1546) 210; Jumbo United Co. Ltd. v. Leadway Ass. Co. Ltd. (2016) 15 NWLR (Pt.1536) 439. PER – OBANDE FESTUS OGBUINYA, JCA

DOCUMENT – THE LATITUDE OF THE COURT TO READ A DOCUMENT HOLISTICALLY

Interestingly, the law grants to the courts considerable latitude to read a document holistically so as to reach and garner harmonious results of its content, see Ojokolobo v. Aremu (1987) 3 NWLR (Pt. 61) 377/(1987) SCNJ 98; Unilife Dev. Co. Ltd. v. Adeshigbin (2001) 4 NWLR (Pt. 707) 482; ACB v. Apubo (2001) 5 NWLR (Pt. 707) 482; Mbani v. Bosi (2006) 11 NWLR (Pt. 991) 400; Bunge v. Gov. Rivers State (2006) 12 NWLR (Pt. 995) 573; Agbareh v. Minra (2008) 2 NWLR (Pt. 1071) 378; Nigerian Army v. Aminu-Kano (2010) 5 NWLR (Pt, 1188) 429; BFI Group v. BPE (2012) 18 NWLR (Pt. 1332) 209; Julius Berger Nig. PLC. v. T.R.C.B. Ltd. (2019) 5 NWLR (Pt. 1665) 219. PER – OBANDE FESTUS OGBUINYA, JCA

CANON OF INTERPRETATION – WHAT CANON OF INTERPRETATION IS THE COURT ENJOINED BY LAW TO APPLY IN INTERPRETING DOCUMENT

In addition, in construing a document, the court is enjoined by law to apply the literal rule as a canon of interpretation, id est, to accord the words employed therein their ordinary grammatical meaning without any embellishments, see UBN v. Ozigi (1994) 3 NWLR (Pt. 333) 385, UBN Ltd. v. Sax (Nig.) Ltd. (1994) 8 NWLR (Pt. 361) 150; Enilolobo v. N.P.D.C. Ltd. (2019) 18 NWLR (Pt. 1703) 168. I will pay due obeisance to these legal commandments, on canons of interpretation of document, in order not to annoy the law. PER – OBANDE FESTUS OGBUINYA, JCA

DISCRETION – THE POSITION OF THE LAW ON DISCRETION

To start with, discretion signifies: the right or power of a Judex to act according to the dictates of his personal judgment and conscience uninfluenced by the judgment or conscience of other persons, see Suleiman v. C.O.P., Plateau State (2008) 8 NWLR (Pt. 1089) 298, Ajuwa v. S.P.D.C.N. Ltd. (2011) 18 NWLR (Pt. 1279) 797; NJC v. Dakwang (2019) 7 NWLR (Pt. 1672) 532; Nzekwe v. Anaekwenegbu (2019) 8 NWLR (Pt. 1674) 235; Adeniyi v. Tina Goerge Ind. Ltd (2019) 16 NWLR (Pt.1699) 560. A Judge, in exercise of discretion, must act judicially and judiciously. To act judicially denotes “…discretion bounded by the rules and principles of law, and not arbitrary, capricious, or unrestrained. It is not the indulgence of a judicial whim, but the exercise of judicial judgment, based on facts and guided by law, or the equitable decision of what is just and proper under the circumstances”, see Babatunde v. P.A.S. & T.A. Ltd. (2007) 13 NWLR (Pt. 1050) 113, at 149 and 150, Per Muhammad, JSC. On the other hand, “Acting judiciously … is said to import the consideration of the interest of both sides and weighing them in order to arrive at a just or fair decision”, see Babatunde v. P.A.S. & T.A. Ltd (supra), at 164, Per Ogbuagu, JSC. PER – OBANDE FESTUS OGBUINYA, JCA

FRAUD – THE POSUTION OF THE LAW ON FRAUD

Thus, fraud, based on its criminal elements, is obviously not a justiciable issue that is amenable to civil trial/adjudication. It is only relationships of commercial nature, which are itemised in section 57(1) of the ACA, that are arbitrable and obedient to commercial arbitration.  Fraud is a heinous criminal offence in both civil and criminal matters. As a matter of law, in the realm of criminal jurisprudence, a criminal wrong, such as fraud, must be tried by a duly constituted competent court of law and not by an administrative body, nay, arbitration panel. The court enjoys a monopoly of this prerogative right of trial of criminal wrongs to the exclusion of any other body, see APC v. PDP (2015) 15 NWLR (Pt. 1481) 1; CBN v. Dinneh (2021) 15 NWLR (Pt. 1798) 91 PER – OBANDE FESTUS OGBUINYA, JCA

PARTY – WHO IS A PARTY?

A party is a person by or against whom a legal action is sought and whose name is designated on the record as plaintiff or defendant, see Green v. Green (2001) FWLR (Pt. 76) 795; Fawehinmi v. NBA (No. 1) (1989) 2 NWLR (Pt. 105) 494; BelIo v. INEC (2010) 8 NWLR (Pt.1196) 342; Odedo v. Oguebego (2015) 13 NWLR (Pt. 1476) 229. PER – OBANDE FESTUS OGBUINYA, JCA

PARTY – WHO IS A NECESSARY PARTY?

A necessary party is one who has interest in the dispute and whose presence is essential for the holistic determination of the controversy in a case, see Green v. Green (supra); APC v. PDP (2015) 15 NWLR (Pt. 1481) 1. PER – OBANDE FESTUS OGBUINYA, JCA

CORPORATE PERSONALITY – THE CONCEPT OF CORPORATE PERSONALITY

The concept of corporate personality owes its descent to the ancient English case of Salomon v. Salomon & Co. Ltd (1897) AC 22. An incorporated limited liability company is a persona ficta that enjoys a separate juristic personality. A company has its own separate legal personality that is distinct from the legal entity of its parent company, promoters, shareholders or officers and their acts/conducts cannot be attributed to nor inherited by the company, see Union Beverages Ltd. v. Pepsi Cola International Ltd. (1994) 3 NWLR (Pt. 330) 1; Balet Int’l (Nig.) Ltd. V. Olaniyi (2017) 17 NWLR (Pt. 1594) 260; FBN PLC v. A-G., Fed. (2018) 7 NWLR (Pt. 1617) 121; I.T.B. Plc v. Okoye (2021) 11 NWLR (Pt. 1786) 163. PER – OBANDE FESTUS OGBUINYA, JCA

VEIL OF INCORPORATION – THE CONCEPT OF LIFTING THE VEIL OF INCORPORATION

Nevertheless, the doctrine of separate juristic personality of a company is a flexible one. Its elasticity is found in the concept of lifting the veil of incorporation.  The concept of lifting the veil of incorporation denotes the judicial act of imposing personal liability on otherwise immune corporate officers, directors or shareholders for the corporation’s wrongful acts. One of the legally recognised instances for lifting the veil of incorporation is when a company is accused or liable for fraud, see FDB Financial Services Ltd. v. Adesola (2002) 8 NWLR (Pt. 668) 170; Alade v. Alic (Nig.) Ltd. (2010) 19 NWLR (Pt. 1226) 111; Mezu v. C & C. B. (Nig.) Plc (2013) 3 NWLR (Pt. 1340) 188; Oyebanji v. State (2015) 14 NWLR (Pt. 1479) 270; Oboh v. N.F.L. Ltd. (2022) 5 NWLR (Pt. 1823) 283. PER – OBANDE FESTUS OGBUINYA, JCA

CASES CITED

STATUTES REFERRED TO

CLICK HERE TO READ FULL JUDGMENT