SECURITIES SOLUTIONS LIMITED
IKE E. OKEKE
MRS BIODUN IDOWU ADAMU-OLADIRAN
MRS BIODUN IDOWU ADAMU-OLADIRAN
DR. OLADAPO MATHEW OLADIRAN
SECURITIES AND EXCHANGE COMMISSION
(Delivered By YARGATA BYENCHIT NIMPAR, JCA)
This appeal is against the Judgment of the Investment & Securities Tribunal sitting in Lagos and delivered on 26th November, 2013. The tribunal granted the reliefs of the 1st and 2nd Respondents and specifically ordered as follows;
1. That the 1st 3rd Respondents are jointly and severally liable
2. That the 1st -3rd Respondents should immediately buy back the 42,000 units Nestle Plc shares and all other dividends and bonuses belonging to the Applicants from the date sales took place to date;
3. Cost of N500,000.00 is hereby awarded in favour of the Applicants
Dissatisfied with the said Judgment the Appellants filed a Notice of Appeal on the 3rd day of December,2013 setting out 3 grounds of appeal from which two issues were distilled for determination in this appeal.
The brief fact of this Appeal is that the 1st and 2nd Respondents owned 42,000 Nestle Plc shares and the 1st Appellant was the firm of stock Brokers managing the shares of the 1st and 2nd Respondents. The 2nd and 3rd Appellants are directors of the 1st Appellant. The said shares belonging to the 1st and the 2nd Respondents were sold by the 1st Appellant without authorization and upon becoming aware of the sale, the 1st and 2nd Respondents complained and sought a reversal of the said sale but it was not effected. Thus the claim at the Investments Tribunal which states as follows:
1. A DECLARATION that the unauthorized sales by the 1st, 2nd and 3rd Respondent and their agents of a total of 42,000 (forty two thousand) units of NESTLE PLC shares belonging to the Applicants is unlawful.
2. A DECLARATION that the 4th Respondent has failed inits statutory duty to protect investors including the Applicants from trade malpractices by a capital market operator.
3. An order of the Honourable Tribunal compelling the 1st, 2nd and 3rd Respondents to return or repurchase the Applicants shares (including all bonuses and dividends accruing from the dates of the unauthorized sales till the conclusion of this case.
4. In the alternative, A DECLARATION that the Applicants are entitled to claim from the Investors Protection Fund established under the Investments and Securities Act for the repurchase/ return of their shares illegally sold by the 1st to 3rd Respondents;
5. An order of the Honourable Tribunal compelling the 4th Respondents to repurchase the Applicants shares illegally converted by the 1st, 2nd and 3rd respondents from the Investors Protection fund pursuant to the Investment and Securities Act, 2007.
6. The cost of this action estimated to gulp N3, 000,000 (Three million naira).
The Appellants brief settled by Lawrence Fubara Anga leading a team of 3 others, was dated 20th day of March, 2014 and filed on the same day. It distilled two issues for determination as follows:
1. Whether by the evidence made available to the tribunal and the provisions of the applicable law, the 2nd and 3rd Appellants were rightly held to jointly liable for the illegal sale of the 1st and 2nd Respondents shares.
2. Whether the Tribunal was right to find the 2nd and 3rd Respondents liable to pay costs of N500,000.00.
The 1st and 2nd Respondents brief settled by Rowland Uzoechi leading Omonigbo Uzoechi dated on the 29th day of April, 2014 filed on the same day raised a preliminary objection to the Appellants grounds of appeal and issues for determination. The preliminary objection presented a sole issue for determination as follows;
Whether grounds 1, 2 &3 of the Notice of Appeal and issues 1 &2 for determination in the Appellants brief ought not be struck out and appeal dismissed in limine.
The 1st and 2ndRespondents in response to the main appeal set out 3issues for determination thus:
1. Whether the evidence on record before the tribunal below justifies the conclusions reached by the tribunal
2. Whether considering the evidence before it and the entire circumstances of this case the learned tribunal below was justified in law when it held the Appellants jointly and severally liable to the claims of the 1st and 2nd Respondents.
3. Whether the tribunal below properly exercised its discretion in the award of the costs in this matter.
Before delving into the main appeal, it will be appropriate to determine the Preliminary Objection. The resolution will set the stage for determination of the main appeal.
It is the contention of the 1st and 2nd Respondents that Ground 1 of the Appellants Notice of Appeal is incompetent as particulars 1, 2, 3 and 4 of the said ground alleges misdirection and some other particulars alleges error in law. They therefore submitted that where a ground alleges both error of law and misdirection on the facts, such ground is incompetent and must be struck out. They referred to the following cases; ELENDU V EKWOABA (1995) 3 NWLR (PT 386) PG 704, INCAR (NIG) PLC V BOLEX ENT (NIG) LTD (1996) 6 NWLR (PT 454) PG 318, ODUAH V FEDERAL REPUBLIC OF NIGERIA (2012) 11 NWLR (PT 1310) PG 76. They further submitted that Grounds 1 of the Notice of Appeal does not flow from the decision of the lower tribunal and same does not complain against any of the ratio decidendi of the Judgment appealed against. That contrary to the allegation of the Appellants, the liability of the 2nd and 3rd Appellant never rested on the sale of the 1st and 2nd Respondents shares by the former managing director of the 1st Appellant and that a ground of appeal that does not complain against the ratio of the judgment is incompetent, relied on IHEANACHO V EJIOGU (1995) 4 NWLR (PT 389) 324, BABALOLA V STATE (1989) 4 NWLR (PT 115) 264, OGUNBIYI V ISHOLA (1996) 6 NWLR (PT 452) 12, DAKAR V DAPAL (1998) 10 NWLR (PT 571) 573, SARAKI V KOTOYE (1992) 9 NWLR (PT 264) 156, APAPA V INEC (2012) 8 NWLR (PT 1303) 409.
Furthermore, the 1st and 2nd Respondents argued that Issue 1 in the Appellants brief of argument is also incompetent as it is formulated from ground 1 which is also incompetent. They contend that the said Issue 1 ought to be struck out irrespective of the fact that it is from another competent ground, i.e. Ground 3, in addition to the incompetent Ground 1, referred this court to BELLO V GOVERNOR, KOGI STATE (1997) 9 NWLR (PT 521) 496, SEHINDEMI V GOV, LAGOS STATE (2006) 10 NWLR (PT 987) 1.In addition, 1st and 2nd Respondents submitted that the legal consequence of the incompetence of the Appellants Issue 1 is that Ground 3 in the Notice of Appeal is abandoned and liable to be struck out, MOHAMMED V BABALOLA (2012) 5 NWLR (PT 1293) 395, MICROSOFT CORPORATION V FRANIKE ASSOCIATES LTD (2012) 3 NWLR (PT 1287) 301.
The 1st and 2nd Respondents submitted that Ground 2 does not flow from the decision appealed against and does not complain against the ratio decidendi of the decision on cost, relied on SARAKI &ORS V KOTOYE (SUPRA), APAPA V INEC (supra). They further submitted that in view of the fact that Ground 1 and 3 are incompetent, ground 2 in the Notice of Appeal as to cost stands alone and prior leave of the court ought to have been sought and obtained. That in view of the fact that such leave is not obtained, the ground is incompetent, referred to S. 241 (2) (c) of the Constitution of the Federal Republic of Nigeria 1999, ACB LTD V AJUGWO (2012) 6 NWLR (PT 1295) 97, ANYASO V ANYASO (1998) 9 NWLR (PT 564) 150 and that issue 2 formulated therefrom is also incompetent.
In response to the preliminary objection raised by the Respondent, the Appellants vide their reply brief submitted that the said ground 1 in their Notice of Appeal does not allege error of law and misdirection at the same time but is one of law as it is particularly on the tribunals misconstruction of S. 305 of the Investment and Securities Act (ISA) and the decision of the Supreme Court in OLAWEPO V SEC (2011) 16 NWLR (Pt. 1272) 122. They further submitted that no part of the grounds or particulars made reference to the lower tribunals statement of a partys case for it to be a misdirection. The Appellants also argued that ground 1 flows from the ratio decidendi in the judgment of the lower tribunal and they quoted excerpts from the judgment of the tribunal in proof of same. The Appellants therefore submitted that consequently, Issue 1 is competent and as such Ground 3 from which issue 1 flows from is also competent. With respect to Ground 2, the Appellants argued that the said ground is competent as it is predicated on the decision of the lower tribunal awarding costs of N500,000.00 in favour of the 1st and 2nd Respondents. They further submitted that contrary to the argument of the Respondents, ground 2 of the Notice of Appeal is against the final decision of the lower tribunal thus, making an appeal against it, as of right in line with S. 241 (1) (a) of the 1999 Constitution.
The grounds of appeal filed by the Appellants state thus:
The Investments and securities tribunal erred in law when it found the 1st,2ndand the 3rd Appellants jointly liable for an unauthorized and illegal sale of the 1st and 2nd Respondents shares by the former managing Director of the 1st Respondent.
PARTICULARS OF ERROR
1. There is no evidence presented to the Investment and Securities tribunal by the 1st and 2nd respondents which shows that the 2nd and 3rd Appellants consented, connived or authorized the illegal sale of the 1st and 2nd respondents shares.
2. There is sufficient and indisputable evidence that the act of defalcation was carried out by Mr. Joel Okafor, the former Managing Director of the 1stAppellant without the knowledge, consent and authorization of the 1st,2nd and 3rd Appellants.
3. The crux of the 1st and 2nd respondents claim is the illegal sale of their shares which is an issue of securities under the Investment and Securities Act, 2007.
4. The Investment and Securities tribunal failed to consider the provisions of section 305(1) and (2) of the Investments and Securities Act, 2007 as well as the decision of this Honourable Court in OLAWOPE V SEC (2011) 16 NWLR (Pt. 1272) 122 which held inter alia that It is not automatic under the provision under section 305(1) that once a person is a director he is liable, once the company is found to have committed the offence. The director must be shown to be responsible to the company for the conduct of the business of the company. The director must be involved in taking decisions in the company.
5. The Investment and Securities Tribunal disregarded the binding decision of the Honourable Court in the case in OLAWOPE v SEC (supra) where this court held that: It is trite that where there is specific provision to cover certain specific circumstances, there will be no need to import another legislation to support that statute. Section 305(1) does not impose strict liability. Section 305(2) provides that once the offence is committed by the company, it must be proved that the offence was committed with the consent or connivance or neglect of any director or manager and until this is proved the director shall not be deemed to be guilty. Therefore, section 305(1) and (2) does not impose strict liability.
6. Had the lower tribunal considered the provision of section 305(1) and (2) of the Investment and Securities Act, 2003 as well as the decision of OLAWOPE v SEC (supra) it would not have found the 2nd and 3rd Appellants liable to the 1st and 2nd respondent for the unauthorized sale of the shares.
The investments and securities tribunal erred in law when it granted costs in the sum of N500, 000.00 against the Appellants.
PARTICULARS OF ERROR
1. The 1st and 2nd respondents failed to prove the connivance of the 2nd and 3rd Appellant in the illegal sale of the 1st and 2nd Respondents share.
2. The 1st and 2nd respondents knew the Economic and Financial Crimes Commission had exculpatedthe 2nd and 3rd Appellants of culpability before they instituted the action before the Investments and securities Tribunal.
3. The 1st and 2nd respondents failed to mitigate their losses.
The judgment is against the weight of evidence.
The challenge of the 1st and 2nd Respondents is firstly that ground one and issue one are incompetent in that the ground alleged both misdirection of law and fact and does not arise from the judgment of the tribunal. This appeal is from a final judgment of the Securities and Investments tribunal. Section 295 of the Investment and Securities Act provides for appeals to this court from decisions of the tribunal, it states thus:
(1) Any person dissatisfied with a decision of the tribunal may appeal against such decision to the Court of Appeal if:
a. The decision was taken in the exercise of its appellate jurisdiction, on points of law; or
b. The decision was taken in the exercise of its original jurisdiction, on points of law or mixed law and fact; or
c. It is an interlocutory decision of the tribunal. On points of law only.
(2) Without prejudice to the power of the tribunal to review its own decision, only persons who participated in the proceedings of the tribunal may appeal against the decision of the tribunal.
It is clear therefore that there is a right of appeal from final decisions of the tribunal to this court on points of law or mixed law and fact.
The meaning of a ground of appeal given by the Supreme Court in the case of EHINLAWO V OKE (2008) LPELR 1054 (SC) states thus:
It should be noted that a ground of appeal is the totality of the reasons why the decision complained of is considered wrong by the party appealing or the appellant or the aggrieved party.
It has been settled by case law that for a ground of appeal to be valid and competent it must relate to the decision being appealed against and should constitute a challenge to the ratio of the decision on appeal. It is still good law that where a good ground of appeal as formulated does not arise from the judgment and purports to raise and attack an issue not decided by the judgment appealed against, it is incompetent and liable to be struck out.
The purpose of a ground of appeal is to isolate and accentuate for attack the basis for the reasoning of the decision challenged. It must be fixed and circumscribed within a particular issue in controversy otherwise it is incompetent. The ground and particulars are supposed to show the faulty rationale which led to the decision or judgment by the lower court, see AMORI V IYANDA (2008) 3 NWLR (PT 1074) 250 AT 272-273.
Particulars in support of a ground of appeal is a further elucidation or elaboration of the grounds of appeal and to give the Respondent the gist of the issues involved in the appeal. Particulars serve to state reasons for the complaint of the Appellant in each ground, see the case of CHIEF RUFUSOMOTOSHO & ORS V IFE NORTH LOCAL GOVERNMENT AREA (2010) ALL FWLR (PT 544) 22 AND OLORUNTOBA OJU V ABDUL- RAHEEM (2009) ALL FWLR 1.
Once that purpose is achieved, a ground of appeal cannot be defective. It has, however, been held that lack of particulars or defective particulars would not affect the ground of appeal. The Supreme Court held in the case of ABE V. UNIVERSITY OF ILORIN & ANOR(2013) LPELR-20643(SC)as follows:
Learned counsel must be reminded that the grounds of appeal may stand on their own once they represent an appellants complaint against the decision he is not satisfied with and in respect of which grouse he seeks the appellate courts intervention. Lack of or defective particulars in a ground of appeal would not necessarily render the ground itself incompetent, see PRINCE (DR) B. A. ONAFOWOKAN & 2 ORS V WEMA BANK PLC& 2 OTHERS NSCQLR VOLUME 45 and BEST (NIGERIA) LTD V BLACK WOOD HODGE (NIGERIA) LTD & 2ORS NSCQLR VOLUME 45.
See also the case of PROFESSOR E. A. ABE V UNIVERSITY OF ILORIN & ANOR (2013) LPELR 20643 (SC).
From the above description of a ground of appeal and the purpose particulars serve, the grounds of appeal formulated by the Appellants can stand with or without particulars. I do agree with the Respondents that the particulars to the grounds of appeal tend to give the grounds a slant of mixed law and fact. Furthermore, I also agree with the Respondents that any issue distilled from an incompetent ground cannot stand. However, when the grounds are considered without the particulars they are good grounds. Since defect in particulars has no damaging effect on the grounds of appeal, the objection is misplaced and is hereby dismissed. The grounds are competent and issues distilled therefrom are also competent for consideration in the determination of this appeal. Now to the main appeal. The issues for determination distilled by the Appellant are adopted for determination in this appeal.
Whether by the evidence made available to the tribunal and the provisions of the applicable law, the 2nd and 3rd Appellants were rightly held to jointly liable for the illegal sale of the 1st and 2nd Respondents shares.
On the first issue, Appellant submitted that the Tribunal was wrong to have held the 2nd and 3rd Appellants liable for the illegal and unauthorized sale of the 1st and 2nd Respondents shares. They submitted that the inconsistencies in the testimonies of the Respondents goes to prove that the Respondents never met the 2nd and 3rd Appellants to lay a complaint and that the Tribunal failed to properly evaluate the evidence before it, ABUBAKAR V ANOBIH & ANOR (2013) LPELR-20856 (CA), AFRO CONTINENTAL (NIG) LTD & ANOR V CO-OP ASSOC. OF PROF INC. (2003) LPELR-217 (SC), BIEZAN EXCLUSIVE GUEST OUSE LTD &ORS V UNION HOMMES SAVINGS & LOANS LTD (2010) LPELR- 3876 (CA). The Appellants also submitted that aside from merely alleging that the 2nd and 3rd Appellants are culpable only because of their directorship of the 1st Appellant, the 1st and 2nd Respondents did not show proof of their culpability in the illegal sale of the shares. That a party who alleges the existence of a particular fact has the onus of proving that fact, referred to CPC V INEC & ORS (2011) LPELR-8257 (SC), and failure to furnish evidence implicating the 2nd and 3rd Appellants in the illegal sale of their shares renders their claims unsustainable, CHIME V CHIME (1995) 6 NWLR (PT 404) 734. Appellant Counsel submitted that the Tribunal had failed to properly evaluate the evidence at its disposal and urged this court to re-evaluate the evidence by examining the case as a whole, relied on OSUN STATE INDEPENDENT ELECTORAL COMMISSION V A.C. (2010) 12 SC (PT IV) 108, HAMZA V KURE (2010) 3 S.C (PT II) 138. Further, Appellant Counsel submitted that being an allegation for illegal or fraudulent sale of shares, mens rea of the convicted persons must be established and the Tribunal ought not to have held the 2nd and 3rd Appellants vicariously liable for the criminal offence of another in the absence of proof of connivance, ACB V OKONKWO (1997) 1 NWLR (PT 480) 194, MIRCHANDANI V PINHEIRO (2001) 3 NWLR (PT 701) 557. Appellant counsel further submitted that there is evidence to show that the 1st, 2nd and 3rd Appellants upon discovering the illegal sale, made reports to the Economic and Financial Crimes Commission (EFCC) and other regulatory bodies for investigation and that based on the petition of the Respondents to the EFCC prior to instituting this action, the EFCC had exonerated the 2nd and 3rd Appellants from complicity in the illegal sale. Appellant counsel submitted that it was wrong of the Tribunal to have relied onS. 282 of the Companies and Allied Matters Act (CAMA) to hold the 2nd and 3rd Appellants liable without having regard to S. 305 of the Investment and Securities Act (ISA) and the decision of OLAWEPO V SEC (2011) 16 NWLR (PT 1272) 122. They submitted that it was shown that the former Managing Director of the 1st Appellant, Mr. Joel Okafor, had conducted the business of the 1stAppellant at the material time and that the 2nd and 3rd Appellants, being non- executive directors of the company, were not responsible for the conduct of the business of the company, at the material time and as such should not be held liable for the offence of the company, OLAWEPO V SEC (SUPRA).
In response, it was the submission of the 1st and 2nd Respondents that in the case of ABUBAKAR V ANOBIH (SUPRA) relied upon by the Appellants, the Appellants did not show how the learned tribunal below failed to follow any of the laid down conditions which a judge ought to consider when determining a case before it. They further submitted that the Appellants have not shown the court how the findings of the tribunal below were perverse as to warrant a re-evaluation of the evidence presented by the parties, referred to NWACHUKWU V STATE (1986) 2 NWLR (PT 25) 765. According to them, the findings and conclusion of the tribunal were not perverse as they had adduced sufficient credible and unchallenged evidence in proof of their case. They further argued that the Appellants did not contradict the evidence of the 1st and 2nd Respondent witness and failure to challenge any material allegation of fact stated by the adverse party is an admission of the fact alleged by the other.
Although the Appellants filed a statement of defence, the 1st and 2nd Respondents allege that the Appellants did not in their statement of defence, offer any defence on the merits. Instead, the 1st and 2nd Respondents submitted that all the Appellants did in their statement of defence was to raise two questions to wit, whether the originating application was misconceived and also whether the 2nd and 3rd Appellants were wrongly joined in the matter. That the tribunal rightly held that there was the existence of positive, consistent and unrefuted evidence in proof of the 1st and 2nd Respondents claim as well as several admissions adverse to the Appellants case such that even the Appellants sole witness corroborated the evidence of the 1st and 2nd Respondents. The 1st and 2nd Respondents further contended that having waived their rights to cross examine the 1st and 2nd Respondents witnesses, the Appellants cannot be permitted to try to impugn the testimony of the 1st and 2nd Respondents through counsels address, referred to GARBA V ZARIA (2005) 17 NWLR (PT 953) 55, KEZIE V IWUOHA (1998) 8 NWLR (PT 563) 554, ALAO V ACB LTD (1998) 3 NWLR (PT 542) 339. The 1st and 2nd Respondents submitted that the 2nd and 3rd Appellants were not held liable on account of their directorship of the 1st Appellant but on account of the credible and unchallenged evidence of the 1st and 2nd Respondents witness. They further argued that since there is no ground of appeal alleging that the 2nd and 3rd Appellants were held liable on account of their directorship of the 1st Appellants, all arguments founded on it are incompetent, urging this court to resolve this issue in their favour.
The 1st and 2nd Respondents further submitted that there exist sufficient factors showing that the Tribunal applied the law correctly to the facts of the case. According to them, the proceedings leading to the present appeal was not a criminal proceeding but is purely civil in nature. That there is no single allegation of crime in the originating application to warrant the application of S. 305 of the Investment and Securities Act in this case. The 1st and 2nd Respondents further submitted that was direct and positive evidence leading the 2nd and 3rd Appellants with the management and control of the 1st Appellant and in addition, there was enough evidence to draw an inference of negligence against the 2nd and 3rd Appellants in the management of the 1st Appellant as they had failed to investigate the affairs of the company for three years, within which havoc was done on their customers investments. They further held that there is proof that the 2nd and 3rd Appellants were not in fact in charge of the management of the 1st Appellant and that even if they were not in charge of the management, they can be held liable as non-executive directors, relied on AKINWUNMI O. ALADE V ALIC (NIG) LTD (2010) 19 NWLR (PT 1226) 111. The 1st and 2nd Respondents sought to distinguish the case of OLAWEPO V SEC relied on by the Appellants from this present case, stating that it is not applicable to this case and therefore submitted that the case should not be regarded, referred to ADEGOKE MOTORS LTD V ADESANYA (1989) 3 NWLR (PT 109) 250, EMEKA V OKADIGBO (2012) 18 NWLR (PT 1331) 55.
In response, the Appellants in their reply brief submitted that 1st and 2nd Respondents failed in their responsibility to prove that the 2nd and 3rd Appellants are personally liable by carrying out the sale or conniving in the sale, yet the lower tribunal held that they were personally liable and that this decision calls for re-evaluation by this court. The Appellants also submitted that contrary to the assertions of the 1st and 2nd Respondents, the Appellants put a response to the claims of the 1st and 2nd Respondents by filing a reply accompanied with the statement on oath and documents in compliance with the provisions of Rule 14 of the Investments and Securities Tribunal. The Appellants submitted that the 1st and 2nd Respondents have the duty to prove their claims which are declaratory in nature and that the 1st and 2nd Respondents could only succeed on the strength of their own case and not on the weakness of the defence, relied on FAYEMI V ONI (2009) 7 NWLR (PT 1140) 223, ABDULLAHI V MILITARY ADMINISTRATOR (2003) LPELR-7194, EMENIKE V PDP (2012) LPELR-7802.
The Appellants further submitted that the action at the lower tribunal was instituted pursuant to the provisions of the Investment and Securities Act and the same Act provides for personal criminal liability of directors under S. 305 of the Act. That the allegations against the Appellants amount to criminal allegations under ISA and has been judicially determined in OLAWEPO V SEC. Also relied on YAKUBU V. JAUROYEL (2014) LPELR-22732. They submitted that the 1st and 2nd Respondents argument that the Appellants failed to take steps to investigate the affairs of the company for 3 years was not led in evidence and argument should not be allowed to take the place of concrete evidence, relied on CALABAR CENTRAL COPERATIVE THRIFT & SOCIETY LTD V BASSEY EBONG EKPO (2008) LPELR-825. Appellants further submitted that the case of ALADE V ALIC (SUPRA) relied on by the 1st and 2nd Respondents is not relevant in this case.
It is trite that proof in civil cases is on the preponderance of evidence and it is known that it fluctuates between the parties as trial progresses; see the case of AYORINDE & ORS V. SOGUNRO & ORS (2012) LPELR-7808(SC). It is also trite that courts are established to do justice between parties devoid of sentiments but based on established facts. The Appellants here are challenging the decision of the trial tribunal in finding the Appellants liable despite the fact that the Appellants were exonerated by EFCC. The question to ask at this stage is whether the Respondents have the constitutional or statutory power to take the Appellants to court on the same matter? The EFCC is a statutory body created for economic crimes. There is a difference between the trial tribunal and EFCC. I opine that the Appellants misconceived the claim of the Respondents against the Appellants. The Respondents are empowered by law to seek for the reliefs named in the originating summons before the tribunal which is also statutorily empowered to hear the claim. If the Appellants felt the tribunal had no power to hear the claim they should have raised the issue of jurisdiction.The claim before the trial tribunal states thus:
1. A DECLARATION that the unauthorized sales by the 1st, 2nd, and 3rd Respondents and their agents of a total of 42,000 units of nestle Plc shares belonging to the Applicants is unlawful.
2. A DECLARATION that the 4th Respondent has failed in its statutory duty to protect investors, including the Applicants from trade malpractices by a capital market operator.
3. AN ORDER of the Honourable Tribunal compelling the 1st, 2nd, and 3rd Respondents to return or repurchase the Applicants shares (including all bonuses and dividends accruing from the dates of unauthorized sales till the conclusion of the case.
In the alternative:
A Declaration that the Applicants are entitled to claim from the investors Protection Fund established under the Investment and Securities Act for a repurchase/ return of their shares illegally sold by the 1st 3rd Respondents.
4. AN ORDER of the Honourable Tribunal compelling the 4th Respondent to repurchase the Applicants shares illegally converted by the 1st, 2nd and 3rd Respondents from the Investors Protection Fund established pursuant to the Investment and Securities Act 2007.
5. The cost of this action estimated to gulf N3,000,000 (Three Million Naira).
As can be gleaned from the reliefs reproduced above, there is no single allegation of crime in the reliefs sought in the originating application. It is purely civil in nature. The exoneration by EFCC is in respect of a criminal complaint while this is a civil claim. The fact that EFCC exonerated the Appellants does not excuse them of liability in a civil claim if proved. Besides, it is trite that both the criminal action and civil claim can be pursued simultaneously and a criminal allegation can also be pleaded in a civil case, MR. AUDU OTUKPO V. APA JOHN & ANOR (2012) LPELR-20619(SC).
It is also clear from the record that it was the 2nd Appellant that made the report to EFCC and not the Respondents and the 2nd Appellant also wrote letters of complaint about happenings at the 1st Appellants office to the EFCC and to SEC. If the argument of the Appellants is to be taken as correct, the question that arises is, on what basis would the 2ndAppellant be the one to make all the reports about fraudulent activities of the 1st Appellants office? Did the Respondents have the chance to make a complaint to the Appellants personally? Page 320 of the record is instructive, it is the introductory part of the 3rd Appellants testimony in defence, the record says thus:
Do you know the applicants in this matter, Mrs. Biodun Idowu Adamu- Oladiran and Dr. Oladapo Mathew Oladiran?
-3rd RW: I just know the first name you mentioned. I got to know her when she came to my office to make a complaint.
The 3rdAppellant went on to tell the tribunal the relationship between the 2nd and 3rd Respondents and the 1st Appellant. He also tendered letters the 2nd Appellant wrote on behalf of the 1st Appellant. How then could the 2nd and 3rd Appellants want to distance themselves from activities of the 1st Appellant. Could the actions taken by the 2nd Appellant indicate actions of a non - executive director? The 1st Respondent reported to the 3rd Appellant, she met him in the office and he, knowing he had no responsibility, received the complaint. What does that amount to? He cannot claim to be a non executive, unaware of the happenings of the 1st Appellant and yet go ahead receiving visitors on behalf of the 1st Appellant.
The former managing director, Mr. Joel Okafor may have acted as agent of the 1st Appellant while carrying out the illegal sales making the 1st Appellant liable on it, see OKOLO V. U.B.N. LTD (2004) 3 NWLR (PT. 859) 87, however, the court is also conscious that the 1st Appellant operates through its directors and officers and could lift the veil of incorporation when the need arises. In the case of ADEYEMI V. LAN & BAKER (NIG.) LTD. (2000) 7 NWLR (PT.663) 33 AT 51 the court PER MUNTAKA-COOMASSIE held:
"It must be stated unequivocally that this court, as the last court of the land, will not allow a party to use his company as a cover to dupe, cheat and or defraud an innocent citizen who entered into a lawful contract with the company only to be confronted with the defence of the company's legal entity as distinct from its directors."
The Court also held in the case of BEN ELECTRONIC CO. NIG. LTD V. ATS & SONS & ORS (2013) LPELR-20870(CA) as follows:
" a company must be accorded its corporate status of a separate entity from the biological persons that run it, the consequence of which is to draw a veil of incorporation over it and one is not ordinarily entitled to go behind to lift the veil. However, there are many circumstances under which the veil of incorporation can be pierced or lifted in order ascertain the motives, or opinions of persons working for and inside the separate personality. One of the circumstances under which the corporate veil can lifted is where for instance there is a complaint of improper or fraudulent conduct of the company such that the canopy of the legal entity is used to defeat public interest or convenience or justify a wrong or to engage in reckless trading and such activities that are tainted with illegality.
The inconsistency alleged in the evidence of the Respondents isminor because the 3rd Appellant himself admitted meeting with the 1st Respondent when she went to the office to complain. The 2nd and 3rd Appellant cannot now turn around and deny that neither of them met with the 1st Respondent when she laid her complaint. The evidence required in proof of a declaration is still the quality expected in a civil trial and not that of a criminal trial. It is simply proof on preponderance of evidence and that also means one side outweighs the other, see the case of OLISERV LTD V L. A. I. & CO (NIG) LTD (2008) 2 NWLR PT. 1083 where the court per RHODES VIVOUR (JCA) as he then was held thus:
Preponderance means that the evidence of a party on whom lies the onus of proof is more likely to be true than that of the adverse party. It is used interchangeably with balance of probabilities. See ODOFIN V MOGAJI (1978) 4 S.C. 91; OMORHIRH V ENATEVWERE (1988) 1 NWLR (Pt. 73) 746.
It simply means one sides position outweighs the other when all admissible evidence before the court is placed on an imaginary scale.
I agree with the Appellants that a declaration is not made on admission by the other side but on established facts and upon cogent evidence before the court.
The duty of evaluating evidence is primarily that of the trial tribunal. An appellate court can only intervene where the trial judge fails to evaluate the evidence properly, see MR. AUDU OTUKPO v. APA JOHN & ANOR (2012) LPELR 20619 (SC). The contention of the Appellants is that Section 305(1) the Investment and Securities Act was discountenanced by the Tribunal. The provision states as follows:
Where an offence under this Act has been committed by a company, every person who at the time of the offence was committed, was in charge, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to proceeded against.
The Appellants had further argued that the 2nd and 3rd Appellants did not sit in a board meeting to agree to the sale of the shares and relied on the case of OLAWEPO V SEC (2011) 16 NWLR (Pt. 1272) 122 at 146. The argument is that the 2nd and 3rd Appellants are not executive directors of the 1st Appellant. The provisions of Section 305(1) the Investment and Securities Act must be read in conjunction with S. 282 of the Companies and Allied Matters Act (CAMA) which states as follows:
S. 282(1) Every director of a company shall exercise the powers and discharge the duties of his office honestly, in good faith and in the best interests of the company, and shall exercise that degree of care, diligence and skill which a reasonably prudent director would exercise in comparable circumstances.
(2) Failure to take reasonable care in accordance with the provisions of section 282 of this Act shall ground an action for negligence and breach of duty.
(3) Each director shall be individually responsible for the actions of the board in which he participated, and the absence from the board's deliberations, unless justified, shall not relieve a director of such responsibility.
(4) The same standard of care in relation to the director's duties to the company shall be required for both executive and non-executive directors:
Provided that additional liability and benefit may arise under the master and servant law in the case of an executive director if there is an express or implied contract to that effect.
As I had earlier stated, the 2nd and 3rd Appellants cannot distance themselves from activities of the 1st Appellant. Even if they were not responsible for the day to day running of the 1st Appellant, they had failed to exercise that degree of care and diligence which a prudent director ought to have exercised in the circumstances, hence, they have breached the duty of care owed the Respondents.
In their statement on oath before the tribunal, the 2nd and 3rd Respondents stated that investigations into the companys activities arose only after a customers complaint, and it was then that they realized that the said former managing director, Mr. Joel Okafor had engaged in illegal fund management of their customers investment and shares for over three years. In the statement on oath and even during trial the 2nd and 3rd Appellants never showed the court how they had in fact been diligent as directors to have prevented the illegal sales. They also failed to challenge the evidence of the 1st and 2nd Respondents witness. The position of the law with respect to unchallenged evidence is clear. The Supreme Court in the case of AMAYO V. ERINMWINGBOVO (2006) 11 NWLR (PT.992) 699 held as follows:
"The position of the law as regards unchallenged evidence is as stated above, for any such evidence that is neither attacked nor discredited, and is relevant to the issues joined ought to be relied upon by a Judge.
The next question to ask is where were the 2nd and 3rd Appellants throughout the entire period when the investments of their customers were being looted. Why will it be until a complaint comes before they investigate and realize that some illegal activities had been going on in the company? Did the company not carry out its annual general meetings? If the company directors were diligent, they ought to have insisted on being kept abreast of the activities of the company. They cannot just sit back doing nothing only to deny responsibility of running the companys affairs when things go wrong. The duty of care enures on the 1st and 2nd Respondents, and the claim of 2nd & 3rd Appellants being non executive directors was never proven before the lower court making it irrelevant. The 2nd and 3rd Appellants have been caught by the provisions of S. 282 CAMA.
In the circumstances, I find that the court properly evaluated the facts before it and I do not see a need to upturn its findings. In the case of MR. AUDU OTUKPO V. APA JOHN & ANOR (supra), the court held as follows:
Where there is no clear evidence of error in law or fact which may lead to or occasion a miscarriage of justice, this court will not interfere with the concurrent findings of facts. For this court to so interfere, it must be satisfied by the appellants that there exists substantial error apparent on the face of the record of proceedings showing that the said findings are perverse, which has not been satisfactorily demonstrated in this case.
See also the case of AFOLAYAN V. ARIYO & ANOR (2014) LPELR-22775(CA).
Section 305(1) of the Investment and Securities Act applies in situations where an offence has been committed by a company under the Act. The Appellants were not tried for breach of any specific provision of the Act. The Respondents merely sought declaratory reliefs, refund of their shares and costs for general damages. Besides, the section relates to situations where offences have been committed and there is no single allegation of crime in the originating application to warrant the application of S. 305 of Investment and Securities Act in this case. The allegation of fraud was alleged only in the 1st and 2nd Respondent letter to EFCC, Exhibit AWG. Thus, the 2nd and 3rd Appellants cannot hide under the provisions of said section. In any case, assuming the above S. 305 (1) ISA applies, one must not be quick to forget the provisions of S. 305 (2) which provides:
Notwithstanding anything contained in subsection (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of the offence and shall be liable to be proceeded against.
In essence, this court having earlier held that the 2nd and 3rd Appellants had failed/neglected their duties as directors of the company to monitor the activities of the company, the 2nd and 3rd Appellants are liable. This issue is resolved against the 2nd and 3rd Appellants.
Whether the Tribunal was right to find the 2nd and 3rd Respondents liable to pay costs of N500,000.00.
Appellant Counsel submitted that since they have shown that the 2nd and 3rd Appellants were not liable for the unauthorized sale of the 1st and 2nd Respondents shares, then the 1st and 2nd Respondents are not entitled to costs from the 2nd and 3rd Appellants. That the 1st and 2nd Respondents by virtue of S. 213 (2) of the Investments and Securities Act, ought to have claimed their loss of shares against the Investor Protection Fund thereby mitigating their loss, relied on ORDIA V PIEDMONT NIG LTD (1995) 2 NWLR (PT 379) 516, UDEAGU V BENUE CEMENT CO PLC  2 NWLR (PT 965) 600.
On the other hand, the 1st and 2nd Respondents submitted that there is no connection between ground 2 of the notice of appeal and the particulars thereof and as such ought to be struck out. They further contend that the said ground 2 does not also question the rational for the exercise of the Tribunals discretion and that the ground and the argument of Appellant counsel has nothing to do with the reason for the decision. According to them, the Appellants did not allege that the tribunal exercised its discretion arbitrarily or excessively and that this court does not have a duty to reduce costs once it is found that the court below awarded costs on correct principles of law.
In response, the Appellants submitted that where a court awards costs in spite of failure of party to prove, the ground of appeal could be characterized as a ground of law and that exercise of a courts discretion in awarding costs should not be arbitrary, ABIA V CRSPS Ltd (2007) Vol. 28 WRN 150, ABAYOMI BABATUNDE V PAN ATLANTIC SHIPPING AND TRANSPORT AGENCIES LTD (2007) 12 NWLR (PT. 1050) 113, EMENIKE V PDP (SUPRA).
Being that the first issue has been resolved against the 2nd and 3rd Appellants, there is no need to belabor this issue as to cost. Costs follow the events and the cost awarded by the tribunal is compensatory and not punitive. The tribunal awarded costs reasonably and in accordance with the law and the court will not tamper with such discretion, see LAYINKA V. MAKINDE (2002) 10 NWLR (PT.775) 358. This issue is resolved in favour of the Respondents.
On the whole therefore, this appeal lacks merit and is hereby dismissed. The judgment of SANDA AUDU YELWA delivered on the 26th November, 2013 is hereby affirmed. The appeal is dismissed.
No order as to cost.
SIDI DAUDA BAGE: I have had a preview of the judgment prepared and just delivered by His Lordship Y. B. NIMPARE, JCA, having equally read the briefs of argument of the respective learned counsel vis-a-via the record of appeal, I have no hesitation in concurring with the reasoning and conclusion reached in the judgment, to the effect that the instant appeal lacks merit. Hence, the appeal is equally dismissed by me.
Consequently, the judgment of the SANDA AUDU YELWA delivered on the 26th November, 2013 is hereby affirmed. The appeal us also herby dismissed. No order as to cost
SAMUEL CHUKWUDUMEBI OSEJI: I have had the opportunity of reading the draft of the judgment just delivered by my learned brother Y.B. NIMPAR JCA
all the issues in contention have adequately dealt with and I agree with the reasonings and conclusion reached therein.
A also dismiss the appeal and affirm the judgment of the tribunal delivered in the 26th November, 2013
I abide by the order as to cost.
L. F. ANGA FOR APPELLATS
R. O. UZOECHI
I. F. ARIRIHUSIM FOR RESPONDENTS
P. E. OGIEGOR
E. K. ABU (MRS)