OILFIELD SUPPLY CENTRE LTD (APPELLANT)
JOSEPH LLOYD JOHNSON (RESPONDENT)
(1987) All N.L.R. 446
Division: Supreme Court of Nigeria
Date of Judgment: 22nd May, 1987
Case Number: (SC.119/1986)
Before: Eso, Aniagolu, Kazeem, Kawu Oputa JJ.S.C..
The Respondent Joseph Lloyd Johnson, an Australian and the Managing Director of the Oilfield Supply Ltd, a Company incorporated in 1974 under the Companies Act 1968, petitioned for the winding up of the company in the Federal High Court. There were five Shareholders in the Company, Consisting of the Respondent, Chief Stephen Idugboe, Aret Roz, Evan Enwerem and Solomon Asemot. The respondent was in fact the brain behind the founding of the Company, which developed some swamp area into a port complex. Idugboe was the Chairman of the Company.
In November 1976, the Government Compulsorily acquired the port Complex for public purposes and in February 1980 paid compensation of
N8,416.850.00 for the acquisition, by which time, the Respondent had left, Nigeria, Solomon Asemota had resigned and the other Shareholders shared the compensation funds. Before the advent of the compensation Chief Idugboe had taken the other members to Court for winding up of the Company. But changed his attitude on payment of compensation subsequently the three Directors shared the money leaving the Respondent. The Respondent on returning to Nigeria instituted a winding up proceedings. Chief Idugboe filed an application, seeking an order for the striking out of the proceeds, on the grounds that the Respondent was not a member of the Company consequently it would be incompetent for him to seek the winding up of the Company.
The Federal High Court held that the Respondent is a Share-holder, member and contributory of the Applicants and as such he is a person competent to bring a petition for the winding up of the Applicants under Section 211 of the Companies Act.
The appellants appealed to the Court of Appeal and the Court of Appeal split in their judgment. The majority held that there is no evidence whatsoever to suggest that the respondent breached section 3(1) of Immigration Act because from the minutes of the meeting held by the Company, the Respondent paid fully for his shares, and it was the duty of the company to apply for quota to cover the Respondent, and failure to obtain the consent makes the formation of the Company a nullity a fortiori and the minority held that the respondent had not established in law that he acquired and has shares which are registered in his name to enable him present a petition for winding up the applicants by the Court.
On further appeal to the Supreme Court
1. The Respondent was undoubtedly legally entitled to bring his petition as Shareholder, member and contributory of the Company in view of the overwhelming evidence in favour of the claim of the Respondent, that shares were allotted to him and the shares were paid from Salaries accruing to him.
2. Proviso (a) to Section 211(1) of the Companies Act 1968 must be understood as providing for alternatives. It is not conjunctive. The word "either" is to be read before the Roman (i) not subsequently, still, the meaning is clear enough. Both conditions need not be present together before a contributory can bring a winding up petition. If condition (i) is absent but condition (ii) is present as in this case, a contributory can petition.
3. The purport of Section 8(1) Immigration Act is to protect certain businesses from exploitation by non-Nigerians and make sure that Nigerians are not at any disadvantage section 8 imposes not penalty for failure to apply, apart from deportation. The petitioner has not been deported. It is only when a penalty is imposed that the whole transaction will be void.
4. It is the Appellant who should have applied for a permit for him and failed to, before he helped them found Company that now intends to meet him with illegality perpetrated by the same Company. Certainly Equity will not permit an "action" that is a complaint by the Appellants, based on their own default to arise.
Per Eso JSC.-
5. Here was a stranger in our land used his brains and expertise to establish a port-complex; when the going was rough, Chief Idugboe fell out with the others and took them to Court i.e. things fell apart. Idugboe was no longer at ease. It was the Respondent that Championed the cause of the Company. He stood firm, for he believed in what he created. The Government stepped in, acquired the complex over Eight Million Naira rolled in, and the sight of money brought the combatants together. Meanwhile, the Respondent was in Australia. It was easy for these shareholders to exclude him from the booty. They have benefited from his brain but he was not good enough to participate in the sharing of the wind-fall. It is turpid and it stinks.
Appeal dismissed in its entirety.
Cases Referred to
1. Ebba v. Ogodo (1984)1 SCNLR 372
2. George v Royal Exchange Assurance Corp. (1900) 2 QB 214 at 220
3. Okafor v. Idigo (1984) 6 SC1, 36
4. Sodipo v. Lemminkain (1985) 2 NWLR 547
5. Solanke v Abed & Anor (1962) NNLR 92
1. Companies Act, 1968
2. Immigration Act, 1963
Eso JSC. In 1974, the Oilfied Supply Ltd. was incorporated under the Companies Act 1968. Joseph Lloyd Johnson, an Australian who petitioned for the winding up the company in the Federal High Court, it is the respondent to this appeal and he was appointed the Managing Director. He was in fact the brain behind the founding of the company, which developed-some swamp area into a Port Complex. There were five shareholders in all, consisting of the Respondent, Chief Stephen Idugboe, Aref Roz, Evan Enwerem and Solomon Asemota. Though Idugboe wa the Chairman of the Company, its problems started with this Chairman making allegations, some criminal in nature. Against the other shareholder. The Chairman also took some abortive civil actions against the other shareholders. The Chairman also took some abortive civil actions against the Company and the other shareholders.
However, in November 1976 the Government compulsorily acquired the port complex for public purposes. Compensation of
N8,416,850.00 was paid for this acquisition but not until February 1980, by which time, the Respondent had left this country for Australia. Solomon Asemota had resigned, and the three other shareholders came to an agreement as to how the compensation funds should be shared.
It is the sharing of this money that brought about the present trouble in the Company, for though, before the advent of the compensation, Chief Idugboe had taken the other members to Court for a winding up of the Company, the payment of the money changed Idugboe's attitude. Things might have fallen apart when there was no money, but things became solidified after the payment of over eight million Naira, and this, the three Directors shared, leaving the present Respondent out of the show.
The Respondent then returned to Nigeria, and he instituted the winding up Proceedings. Chief Idugboe filed an application, seeking an order for the striking out of the proceedings, on the ground that the Respondent, Johnson, was not a member of the Company, in which case it would be incompetent of him to seek the winding up of the Company.
The matter came before Ayinde J., who, in a considered judgment dismissed the application brought against the Respondent. Ayinde J. said-
"It would appear the Applicants, being a Company registered under the Companies Act, 1968 did not only start wrongly at the time of incorporation, by not complying with Immigration Act, the Company was also operated without the slightest regard for the provisions of the Companies Act. This, however, is by the way. I have already found that, by and large, The Respondent is a shareholder, member and contributory of the Applicants and as such he is a person competent to bring a petition for the winding up of the Applicants under Section 211 of the Companies Act."
The appellants appealed to the Court of Appeal coram Omo-Eboh, Belgore and Mustapher, JJ.C.A. The Court of Appeal split in their judgment. The majority judgment was delivered by Belgore J.C.A., as he then was, Mustapher J.C.A. concurred, while Omo-Eboh J.C.A., who presided over the Court dissented. I would like to set herein the views expressed by both the majority and minority. Mustapher J.C.A., who concurred with Belgore J.C.A.'s judgment, also set out in full the facts of the case and highlighted the participation of the Respondent in the Company. He identified the issues before the Court as follows-
"(1) Whether in view of the provisions of Section 8(1) and Section 33 of the Immigration Act 1963, the respondent can validly acquire shares and take employment with the appellant company as from April 1974 when the business permit and the expatriate quota were granted only on 8th of July 1975. Or were the appointment and the allotment of shares void or voidable? And if only voidable did the permission granted by the issuing authority rectify and make valid, the appointment and the issue of the shares?
(2) If the allotment of the shares was valid or was later validated, had the respondent paid for the shares and if he had not paid for the shares, could he under the circumstances of this case qualify as a contributory to bring the petition? Or would he qualify as a Creditor?
(3) Having regards (sic) to Suit No. FRC/W/17M/76 in which the respondent successfully resisted a petition to wind up the company on alleged identical grounds as in the instant petition was the petitioner not estopped from presenting the petition to wind up the company?"
On the first issue the learned Justice of the Court of Appeal held-
"Having regards (sic) to the facts of the case as disclosed by the affidavits and oral evidence, as is especially not disputed that the respondent came to Nigeria under a contract service with UNDAMAC GROUP (Nigeria) LTD. as a base Manager since 1973 to a build a Port Complex, could it be said that the respondent had breached sec. 3(1) of Immigration Act? There is no evidence whatever to suggest that, the respondent had not as at 1973 entered or accepted employment nor that UNDUMAC GROUP (Nigeria) LTD. had not complied with the provisions of the Immigration Act of 1963, considering the circumstances of the case it would appear to me that the appellants merely took over the operations of UNDUMAC GROUP (Nigeria) LTD and absorbed as it were, the already employed initiator of the operations."
As regards the second issue it was the view of the learned Justice of the Court of Appeal that-
"The contention that the respondent had not paid for his shares is another matter and indeed it is an assertion made by the appellants and it is there duty to prove the same, this is having regards to the facts that the appellants hold the register of members which would prima facie show who the members of the company were."
while he held on the third issue that-
"Once a petitioner has a statutory right under the company's Decree to present a petition and it could not be shown to be an abuse of process of the Court he should be allowed to proceed."
Earlier, Belgore J.C.A., who read the lead judgment had set out in detail the facts of the case. He considered the minutes of meetings held by the Company and he was able to show therein that the Respondent paid for his shares from his salary relying for this finding on the resolution of the meetings held by the Company on 16th May 1975 and 8th October 1975 respectively. He also referred to Asemota's evidence that the Respondent's shares were fully paid. Asemota indeed regarded the Respondent as the brain behind the Company.
In regard to the Company's case that there was no quota to accommodate the Respondent, Belogre J.C.A. held-
"In this case there had been a firm and unambiguous application for consent to Federal Commissioner for Internal Affairs which was being querried. Mr Asemota as a lawyer and then co-director pursued the matter on behalf of the Company. The consent was finally granted in 1975 long before compulsory acquisition. The company was still doing business of taking off rather than making money as it was still indebted to many persons. It was the duty of the company to apply for quota to cover the petitioner/respondent and if failure to obtain the consent makes the formation of the company a nullity, a fortiori the act of other directors between April 1974 and sometimes a last quarter of 1975 was nullity. All would be in parti delicto. Certainly, a party to a bargain, who has benefited from it, cannot avoid his responsibility to the other party because he failed to apply for necessary legal consent in respect of the bargain and thus prevent the other party from enjoying the fruit of the bargain.
Now, as I have said earlier, Omo-Eboh J.C.A. dissented from the majority. He identified the main question raised by the parties as follows-
"I have carefully read over and over again the Briefs filed for the applicants and the respondent as well as all the documents filed by both parties in the matter of this petition and it appears that the main question raised thereby is whether or not the respondent has shown satisfactorily that he is a shareholder of the applicants (the Oilfield Supply Centre Ltd.)"
He came to the conclusion that it was-
"...interesting that the respondent claims such a huge amount as his salaries which were used to pay the value of 100,000 or 115,000 shares in the applicants and the same time, he still claims more than thrice that huge amount as "accrued salary unpaid" to him by the same applicants and for "Promotional Goodwill." One, in the circumstances of the above, may just wonder what rate of pay or remuneration per hour or per day did the respondent unilaterally fix in favour of himself and to be paid to him by the applicants-perhaps without their knowledge and/or consent.
He went on-
"Further to the above, all the above claims by the respondent to have acquired a number of shares of the applicants and to be entitled to be paid huge sums of money by the applicants are mere assertions and carry little or no weight in the absence of definite admissions to the same effect by the applicants or of contracts and/or agreements binding upon both parties whereby the applicants are legally obliged to credit the respondent with certain specified number or numbers of shares a already paid up shares. Nor are the applicants legally bound or obliged to pay liquidated or unliquidated sums of money to the respondent for one cause or reason not known to and agreed upon by both parties."
And concluded on the point-
"In a case of this nature, owning shares in a company is not a matter which can be proved by mere assertion or verbal claim alone. Ownership of such shares can only be conclusively proved by necessary documentary evidence to be provided by receipts showing payment effected on the allotted shares; registration of the shares (and their numbers) in the name of the shareholder as entered in the Register of Shareholder of the Company; and/or share certificate issued in the name of the shareholder bearing the shares (and their numbers) as acquired by the said shareholder. In the absence of the proof any and/or all the above by means of documentary evidence then the person concerned cannot be said to have conclusively proved that he has or holds shares (either paid-up in full or partly paid-up) of that company."
He did not accept the story of the Respondent that he acquired
N115,000.00 shares in the Company and that his salaries which he never drawn throughout the period he worked for the applicants were utilised as payment for the shares. He did accept that the Respondent was a force in the company. He said-
"To avoid my being misunderstood, I have to say that there is no doubt that the respondent and Chief S. Idugboe promoted the formation of the applicants and that the respondent utilised his expertise to build up the port complex and develop the business of the applicants at the material time. These notwithstanding and sentiments and moral consideration apart, the respondent in my opinion has so far not establish in law that he acquired and has shares in the applicants which are registered in his name to enable him present a petition for winding up the applicants by the court."
I must say that the dissenting judgment was rather long and well researched and this necessitated my dealing so exhaustively with it especially as the appellants have based their appeal in the main on this judgment.
The Appellants have appealed to this Court on some five grounds of appeal. I do not intend to set these grounds out in this judgment, as I will deal with their briefs in the Court.
Chief B.E.E. Idugboe learned Counsel for the appellant set out the issues arising on the appeal as-
1. ISSUES ARISING IN THE APPEAL
(I) Was it conclusively established in this case that the Petitioner/Respondent is a shareholder, a member and/or a contributor of the appellant?
(II) Can a contributory present a petition to wind up a company under section 211 of the companies at when:
(a) The number of members is not reduced below two;
(b) The shares in respect of which he is a contributor are not shown to have been registered in his name?
(III) (a) On whom rests the onus of proving that the Petitioner/Respondent paid for the shares allotted to him?
(b) If the onus is on the Applicant/Appellant did it shift on the Petitioner/Respondent or not after the applicant has established by means of Exhibit A (minutes of 27/3/76), Exhibit K (auditors report showing that he did not pay for the shares) and evidence of the auditor to the effect that the Petitioner/Respondent made withdrawals over and above his salaries for the period?
(IV) Were the justices of the Court of Appeal right in equating secs. 8(1) and 33 Immigration Act 1963 with section 11 Lands and native Rights Act?
(V) Were the justices of the Court of Appeal justified in failing to hold that the petition was an abuse of the process of court since it was presented with a view to achieving a collateral advantage by bringing pressure to bear on the company to pay him
N1,172,530.04 which he was claiming in suit No. FHC/24/80?"
He regarded the main issue arising however as "whether or not it has been proved conclusively that the Petitioner/Respondent paid for the shares allotted to him."
Chief Idugboe argued in his Brief that the Respondent's case was a mere assertion without proof. He made the following points-
(1) that the Respondent never paid for the shares as he himself had admitted that the shares were to be paid for with salaries earned by him.
(2) that when the Respondent issued foreign cheques towards payment of shares the cheques were dishonoured.
(3) that no share certificates were tendered nor did the Respondent show that shares were registered in his name.
(4) that Respondent neither produced receipts nor a memorandum signed or sealed by the Appellants to prove that he paid for his shares.
(5) that Respondent showed no contract of service.
(6) that the Court of Appeal did not consider the evidence of Anthony Aneno and that of Mr Enwaem nor was the evidence given by these witnesses evaluated.
In his oral submissions to this Court on this issue, Chief Idugboe in answer to a question put to him by the Court admitted that the Respondent had equitable interest. To quote his words, he said-
"I now say that the Respondent had equitable interest up to
N50,000.00 but he was not a shareholder."
But this was after he had first conceded to the Court that in view of the passage shown by the court, the Respondent had shares up to
N50,000.00. Indeed, Chief Idugboe was confronted with the Minutes of the Meeting of the Directors held on 2nd July 1974 wherein it was recorded.
"Fresh Allotment of Shares:
1. Chief Stephen Idugboe 125,000 Ord. Shares
2. Mr A. Roz 125,000 Ord. Shares
3. Evan Enweren 100,000 Ord. Shares
4. Mr S. Asemota 75,000 Ord. Shares
5. Mr J.L. Johnson 50,000 Ord. Shares
6. Chief C.F. Bekederomo 25,000 Ord. Shares
Total Shares allotted 500,000 of N1 each
It was unanimously Resolved to cancel all the previous allotment of shars and the position of the Share holding in the Company should be as follows-
It was also Resolved that the previous Share Certificates issued in respect of the previous allotments be and are hereby cancelled.
It was agreed that Certificates should be according to the above allotment.
Share Certificates But Shares not fully paid will be debted to the individual Current Account of the Members concerned."
Learned counsel contended however that that Resolution must be shown to have been carried out. All that had been shown was that the shares were allotted to him.
Mr Scott-Emuakpor, learned Counsel for the Respondent, in his own brief, contended that it was proved that the Respondent was a shareholder. Chief Idugboe himself, learned Counsel pointed out, admitted this much in his verifying affidavit. As at 5th April, 1974, when the share certificates, formerly issued were cancelled, the Respondent in accordance with the Resolution of the Company had a vested right to a share certificate for
N50,000 ordinary shares of one Naira each. Mr Scott-Emuakpor further submitted that the Respondent had capitalised his technical know how and services as the brain behind the Company.
In regard to membership register, learned Counsel contended that every company is presumed to have a membership register. When it came to oral submissions, Mr Scott-Emuakpor simply relied upon his Brief. I think he was in a good position to do this as learned Counsel had presented this Court with a very comprehensive and well an noted Brief, the type that should be recommended to other counsel.
This being the main issue in the case, I intend to deal with it at this stage. I have earlier said that the issue rests mainly on facts, for it is a matter of fact whether the Respondent had shown or not that he was a shareholder of the Appellant Company.
To the motion filed by the Appellant on 19th March, 1981, seeking an order to strike out the petition of the Respondent, which motion led to the Ruling now on appeal before this Court, was attached an Exhibit showing an earlier petition by Chief Idugboe against the Company. Chief Stephen Idugboe, the principal dramatis persona of the Appellant Company, had said in that petition-
"(3) The nominal capital of the company is
N1,000.000 divided into 1,000,000 shares of N1 each. The amount of capital paid up or credited as paid up is N504,500 made up as follows-
"(i) Chief Stephen Idugboe
(ii) Mr Evans Enwerem 150,000.00
(iii) Mr Aref Rox 118,000.00
(iv) Mr S.A. Asemota 34,000.00
(v) Mr J.L. Johnson NIL
This indicates that though the Respondent was allocated shares, he had not paid anything towards his shareholding for in the same affidavit, Chief Idugboe referred to the five people listed above as Directors. He said
"The five shareholders mentioned in paragraph 3 above are also the directors of the company. The petitioner is the Chairman of the board of Directors while J.L. Johnson is the Managing Director."
Thus Chief Idugboe, on oath acknowledged the Respondent as the Managing Director of the Company.
The application by the Appellant was also supported by another Exhibit "A1", and this Exhibit, brought as evidence by the Appellant, was the counter-affidavit sworn to by the present Respondent in the case brought by Chief Idugboe against the Company. The Respondent (Johnson) had said (and this was evidence now relied upon by the appellants in their present application to strike our Mr Johnson's Petition)-
"Contrary to paragraph 3 of the affidavit the nominal share capital of the Company is now
N1,5000,000 of N1 each the increase by N1/2 million was made at an extra-ordinary general meeting held on the 9th August 1976 at the Company's Office in Ogunu, at which the Petitioner, and Messrs J.L. Johnson, Evans Enwerem and Aref Roz were present. The amount of capital paid up or credited as paid up is N1,040,000.00 made up as follows-
1. Chief Stephen Idugboe
2. Mr Evans Enwerem 300,000.00
3. Mr Aref Roz 375,000.00
4. Mr S.A. Asemota 112,500.00
5. Mr J.L. Johnson 50,000.00
Mr J.L. Johnson originally paid up
N100,000 of this amount, N50,000 was paid from his accrued salary and the other N50,000 was paid by two cheques of N25,000 each drawn on his foreign accounts in the U.S.A. and Australia. Both cheques were returned. That of U.S.A. was due to insufficient fund at the time of presentation, but that of Australia was due to the stringent foreign exchange regulations of that country which were not complied with. As a result Mr J.L. Johnson suffered a forfeiture of N50,000 shares in accordance with a standing Board decision."
The first meeting of the Board of Directors of the Company was held on 5th April 1974 and those present at this meeting of the Directors were Idugboe, Johnson (Respondent), Asemota and Roz. Appointment of Directors were as herein indicated-
"It was unanimously resolved that Chief Stephen Idugboe be and is hereby appointed Chairman of the board of Directors while Mr J.L. Johnson be appointed Managing Director to the Company. Messrs S. Asemota, A. Roz and H. Safieddine were also appointed Directors to the Company."
and in regard to allotment of shares, the following was contained in the minutes-
"Allotment of Shares
1. Chief S. Idugboe 25%
2. Mr J.L. Johnson 20%
3. Mr S. Asemota 15%
4. Mr A. Roz 20%
5. Mr H. Safieddine 20%
it was agreed that the Company' share Capital be held as follows-
Thus Johnson, the Respondent was allotted 20% of the shareholding of the company. Only Idugboe, who was allotted 25% had a larger shareholding than Johnson.
On 2nd July 1974, another meeting of the Board of Directors was held. I have already set out supra, what happened at that meeting with regard to Fresh allotment of Shares.
It is interesting to note that at the meeting of 22nd August, 1974, at which all the Directors, including Johnson, were present he, Johnson, as Director, was to join in signing a joint and several guarantee for a loan. The minutes read-
It was resolved by the Directors to make a loan application of
N500,000 to the Standard Bank, details of which were submitted to the Standard Bank. Also that a joint and several guarantee be signed by the Directors present at this meeting which will be backed up by individual property security."
Significantly, at the meeting of the Board of Directors held on 16th May 1975, it was decided to apply Johnson's remuneration for a whole year towards that payment of his shares-The minutes read-
"MANAGING DIRECTOR'S REMUNERATION
After careful consideration the board approved that the Managing Director's Salary be fixed at
N2,000 per month, tax free with effect from 1st April, 1974 and thereafter his tax free pay should be N3,000 per month. The Board also agreed that the Managing Director's pay for the period 1/4/74 to 31/3/75 be applied against the unpaid portion of his shares.
It was further RESOLVED that a formal contract of service would be drawn up in respect of the Managing Directors appointment and the Company's Solicitor would be requested to produce a draft for the consideration of the Board."
Actually, from the affidavit filed by Chief Idugboe, he was not denying that shares were allotted to the Respondent his contention in the affidavits was that those shares were forfeited.
Apart from affidavit evidence, oral evidence was given at the trial. The administrative Officer of the company, who claimed to be the last person to leave the Company in April, 1977, when it ceased operation, said, on oath, that no salaries were ever prepared for the Respondent Johnson though he took advances from time to time. Witness however deposed, in cross examination, that they were no salary advances. Solomon Asemota, one of the Directors and Shareholders of the company, said the Respondent was "the brain and moving spirit behind the formation of the Company." This witness said further-
"...I was present at a Board Meeting when it was resolved that the salaries of Mr Johnson for period of time should be used in paying the shares allotted to him. I am also aware that he was issued with certificate of shares of
N50,000 fully paid. As far as I can remember shares in the company were paid in cash and kind communication of services to shares."
"The sum of
N50,000 was credited to Mr Johnson as fully paid shares in recognition of the services he rendered towards the formation of the Company and also his services after the company was incorporated."
He ended up saying-
"I can positively say that at that time, it was, No Johnson no Oil Field Company"
Under cross examination Mr Asemota disclosed that Respondent's salary in 1978 was over
N200,000.00 It must be remembered that Respondent's salary was to be applied towards payment of his shares.
Johnson himself said in his own evidence that he paid his shares of
N50,000 from his salaries and new share certificates were issued.
When cross examined, he explained the position by saying that the SHARES were fully paid in December 1975. The further allotment of shares made in 1976 were actually paid from his salaries by December 1978.
In his Ruling, as I have already said, Ayinde J. examined all the points in detail and decided as I have already indicated supra. However what is important at this stage was his resolution of the facts before him. He said, in regard to payment for the shares-
"The Respondent even endeavoured to prove that he did not receive his salaries apart from salaries for two months, May and June, 1976, for the whole period he served the Applicants. 1st Witness of the Respondent said in his evidence that he joined the applicants on 1/4/74 as Administrative Officer and he left in August, 1977 when the company ceased operation following its acquisition by the Federal Government. He said that the Chief Accountant of the Applicants, one Mr William Osague joined the Company six months after its incorporation. During the period he (the witness) was responsible for paying the salaries of staff, Senior and Junior in addition to his administrative duties. He said that he did not pay any salaries to the Respondent during the period. When the Chief Accountant was appointed he took over payment of the salaries of the Senior staff but he (the witness) was responsible for routine checking of the vouchers, receipts and other documents in respect of payments made by the company.
In the course of his routine checking he did not come across any documents showing that the Respondent received any salaries. The above strong evidence of the witness was not controverted by the Applicants.
More-over, the salary of the Respondent from 1/4/74 was fixed in the Board's meeting of 16/5/75 and Chief Idugboe, 1st witness of the Applicants said in his evidence that the Respondent received his salaries from 1/4/74. The question that arises, what was the salary paid to him from 1/4/74 to 16/5/75 when the salary was fixed which salary Chief Idugboe said he received? The truth is that no salary was fixed or approved by the Board of Directors of the Applicants for the Respondents prior to 16/5/75. Therefore, if the Respondent received any salaries from 1/4/74 as alleged by the Applicants, the onus is on them to prove the salaries paid to him and how he was receiving them. This, the Applicants have woefully failed to do."
Was this finding perverse having regard to all the evidence I have already assembled for this must be the question a Court of Appeal must answer. It is not for a Court of Appeal to set out to make findings as if it was a Court of first instance. That is why there is a Court of Trial and Trial nisi prius See Ebba v. ogodo 1984 1 SCN.L.R. 372; George Okafor v. Eze Idigo/1984/6 S.C. 1, 36. So, the question must be, how did the Court of Appeal deal with this? Belgore J.C.A. as he then was dealt with this issue in the following manner-
"The documents of the Company, since petitioner left for Australia are with Chief Idugboe or the company. The petitioner led evidence that it was only in May and June 1976 that he received salary. The rest went into payment for his shares. The learned Judge in his ruling believed this."
Earlier on, the learned Justice of the Court of Appeal had observed-
"The totality of respondent's (petitioner's) assertion in rebuttal to the motion is that he held 23% of the shares of the company and it was agreed that they be paid for from his salary as Chief Executive; Chief Idugboe was to hold 30% by means of accrued rent from the property on which the company's port complex was to be built, Aref Roz was to hold 20% while Solomon Asemota was to hold 27%. Subsequently the share capital was increased to
N500,000.00 and the holdings became thus-Roz N125,000; Idugboe -N125,000.00; Enwerem N100,000.00; Asemota N75,000.00 and respondent N50,000.00 of the increase. There were subsequent increases in the share capital but there was no proper evidence of call up but the minutes of the company on various dates did show that the petitioner the prime mover and motivator of the incorporation of the company was at no time regarded as an outsider but a member, a shareholder and Managing Director of the company. During all the turbulent period of various litigations against the company and other directors by Chief Idugboe the petitioner was to all intent and purposes regarded as a shareholder and Managing Director and he it was that defended all the actions."
He also observed-
"The petitioner said he paid for shares from his salary and this is a strong evidence in view of the resolution of the meeting of 16th May 1975 and that of 8th October 1975 which reads inter alia-
"It was also resolved that the
N55,000 shares being part of those (shares) allotted to Mr S. Asemota be forfeited if payment be not received within 21 days of the date of the meeting as he had been previously reminded of the call on shares against which he had paid for N20,000 out of the 75,000 shares allotted to him."
I have earlier set out the relevant portions of Mustaphar J.C.A.'s judgment.
In view of the overwhelming evidence in favour of the claim of the Respondent, that shares were allotted to him, and the shares were paid for from salaries accruing to him, I find this conclusion of the learned trial Judge, as confirmed by the majority of the Court of Appeal, very reasonable and could, with utmost respect, not agree with Omo-Eboh J.C.A.'s view that the claims were "mere assertions". I do not subscribe to the learned Justice's view that there must be "definite admission" by the Appellants. I fail to understand what the learned Justice of the Court of Appeal referred to as "contracts and for agreements binding upon both parties" after the proof supplied by the minutes of the various meetings of the Directors. There was agreement, as set out in the minutes, and the agreement was given effect to by the proof that the Respondent's salary was not paid.
While I agree with Omo-Eboh J.C.A. that mere allotment of shares to a person by a company does not make that person a shareholder of that company, it is my view that there was sufficient evidence in proof of the acquisition of shares, evidence accepted by the learned trial Judge, evidence that cannot result in the finding thereupon to be perverse. All the grounds of appeal on the issue of the shareholding of the Respondent in the company fail.
The second issue raised in the Brief of Chief Idugboe was as regards s.211 of the Companies Act 1968, No. 51. Learned counsel's question as to whether a contributor could present a petition to wind up a company under the section when
(a) the number of members is not reduced below two;
(b) the shares in respect of which is a contributory are not shown to have been registered in his name.
was pursued in his oral submission. I need not do anything further than reproduce Mr Scott-Emuakpor's submission in his own brief as a complete and lucid answer to Chief Idugboe's query. That portion of Scott-Emuakpor's Brief reads-
"ISSUE 2 (GROUND 2 OF APPEAL)
Proviso (a) to Section 211(1) of the Companies Act 1968, must be understood as providing for alternatives. It is not conjunctive. The word "either" is to be read before the Roman (i) not subsequently. Still, the meaning is clear enough. Both conditions need not be present together before a contributory can bring a winding up petition. If condition (1) is absent but condition (ii) is present, as in this case, a contributor can petition.
The only outstanding issue is whether or not the Court of Appeal was right in equating sections 8(1) and 33 of the Immigration Act 1963 with section 11 of the Lands and Native Rights Act?
Firstly, what did the Court say on this issue? Belgore J.C.A. (as he then was), said that section 8(1) of the Immigration Act should not be construed strictly to destroy the petitioner it is deemed to preserve. He said further-
"The purport of s.8 (1) immigration Act is protect certain businesses from exploitation by non-Nigerians and make sure that Nigerians are not at any disadvantage. Section 8 imposes no penalty for failure to apply, apart from deportation. The petitioner has not been deported. It is only when a penalty is imposed that the whole transaction will be void."
He then referred to Solanke v. Abed & Anor. 1962 N.N.L.R. 92.
Mustapher J.C.A. also relied on Ayo Solanke v. Abed (supra) to hold that the appointment of the respondent as the Managing Director was not void.
The argument of Chief Idugboe was that those contracts and transactions entered into by the Respondent before permit/consent was given by the Minister are illegal and completely void by virtue of s.8(1) of the Immigration Act.
Now s.8 (1) of the Immigration Act provides-
"No person other than a citizen of Nigeria...shall on his own account or in partnership with any other person...practise a profession or establish or take over any company with limited liabilities for any purpose without consent in writing of the Minister for Internal Affairs."
Asemota's testimony was that he applied for expatriate quota on 19th May 1975 on behalf of the Appellant company. In other words there was no expatriate quota granted to the Appellant Company to have employed the Respondent as its Managing Director or benefit from the establishment of the Appellant Company if, as the evidence went, the Respondent seeks a petition to wind up the Company. The real question is, could the Company meet this case by saying that their own foundation was illegally procured and the benefit that has accrued to the Company, that is the over eight million Naira, procured from Illegal basis? What would happen then to the dictum Ex turpi causa oritur non actio? It seems to me that the Appellant intends to set up its own illegality for purpose of benefit to itself. No, it cannot do this. The Appellant has relied upon the decision of this Court in Sodipo v. Lemminkainen Oy 1985 2 N.W.L.R. 547. There, my learned brother Aniagolu J.S.C. (p.557) had said-
"No court, it has been said by Kennedy J. in Gedge v. Royal Exchange Assurance Corporation 1900 20B 214 el 220 ought to enforce obligations alleged to arise out of a contract or transaction which is illegal, if the illegality is duly brought to the notice of the Court, and if the person invoking the aid of the Court is himself implicated in illegality...
With respect, this does not apply to the Appellant in this case. He is not asking for the Court to enforce obligations arising out of an illegal contract. He is asking for the winding up of a company of which he claims to be a shareholder. It is the Appellant who should have applied for a permit for him and failed to, before he helped them found the Company, that now intends to meet him with illegality perpetrated by the same Company. Certainly equity will not permit the Company to benefit from their own illegality.
With respect, this does not apply to the Appellant in this case. He is not asking for the Court to enforce obligations arising out of an illegal contract. He is asking for the winding up of a company of which he claims to be a shareholder. It is the appellant who should have applied for a permit for him and failed to, before he helped them found the Company, that now intends to meet him with illegality perpetrated by the same Company. Certainly equity will not permit the Company to benefit from their own illegality.
And though these include the issues raised in the appeal; I cannot conclude this judgment without showing my alarm at the callousness and dishonesty of all the other shareholders, except Asemota who showed himself to be a man of honour. Here was a stranger in our land, who used his brains and expertise to establish a port-complex; when the going was rough, Chief Idugboe fell out with the others and took them to court. As the literature author put it-Things fell apart. Idugboe was no longer at ease-It was the Respondent that championed the cause of the Company. He stood firm, for he believed in what he created. The Government stepped in, acquired the complex, over Eight Million Naira rolled in, and the sight of money brought the combatants together. Meanwhile, the Respondent was in Australia. It was easy for these other shareholders to exclude him from the booty. They have benefited from his brain but he was not good enough to participate in the sharing of the windfall. To say the least, it is turpid! And it stinks!!
The Appellants rely on equity claiming that the Respondent's presence in the Company was illegal. Equity takes pity but only on the clean. If you seek equity, the search must be with clean hands. Equity therefore does not, because it exists on taking pity, exist to be taken for a ride. It is a pity that does contain fire in it. The greatest English Band of them all said-
"As fire drives out fire, So pity, pities."
That is the stuff with which the "pity" is equity is make of, and that is why "Ex turpi cause", which is the non action of the Appellants to obtain expatriate quota, equity will not permit an "actio", that is, a complaint by the Appellants, based on their own default, to arise.
The appeal is therefore dismissed in its entirety. The majority judgment and all the orders made by the Court of Appeal are hereby affirmed. Appellants shall pay Costs assessed at
N300.00 to Respondent. One can only hope that the Respondent would ever get money due to him in this transaction.
Aniagolu JSC. The judgment just delivered by my learned brother Kayode Eso, J.S.C., was made available to me in draft. I am in complete agreement with his reasoning and conclusion.
Upon all the facts adduced in evidence in this case, the Respondent was undoubtedly legally entitled to bring his petition as a shareholder, member and contributory of the Company. My learned brother, Kayode Eso, has adequately dealt with all the legal arguments advanced to the contrary.
The facts of this case on appeal cry to Heaven for vengeance. It is a matter for utmost regret that some citizens of our country would scrupple at nothing in their bid to acquire money no matter how reprehensible their methods for such acquisition may be. They throw honour and decency to the winds and in so doing give our country a very bad name, both at home and abroad.
The activities of the shareholders of this company (Oilfield) Supply Centre Limited-headed by Chief S. Idugboe), barring Mr Solomon Asemota whose conduct had all the way been honourable, present the picture of hungry poultry in a ravaged farm, each eager to make its pick, of the scattered grains, before the day is out, not minding, in the scramble, which chicken is hurt. Such is unworthy of gentlemen.
In the result I would uphold, and hereby uphold, the majority judgment of the Court of Appeal and dismiss this appeal with
N300.00 costs to the Respondent.
Kazeem, JSC. I have had the privilege of reading in draft the judgment just delivered by my learned brother Kayode Eso, J.S.C. He has carefully considered this matter which is mainly one of facts, and the submissions made before us. He had then arrived at certain conclusions and given reasons therefore with which I am in complete agreement. I only wish to emphasize a few points.
As it was pointed out in the judgment, the main contention between the parties was whether or not the respondent was a shareholder of the applicant company. There is abundant evidence in support of the fact that at the inception of the company when the going was good, the respondent was recognized by other members not only as a shareholder, but also as a Managing-Director of the Company. He was then regarded as a co-founder of the company who had used his expertise for the development of the Port complex. It was that expertise and his invaluable services to the company that was partly rewarded by allotment of shares which was to be paid for from the accrued salaries due to the respondent. That was no doubt borne out by several resolutions of the Board of Directors. There was also evidence which was believed by the learned trial Judge, Ayinde J., that shares were paid for by the respondent from his accrued salaries; and in arriving at that findings, he had considered and rejected the evidence of both Anthony Anene, the Auditor of the company and Evan Enwerem, that the respondent did not pay for his shares. And those were the two witnesses whose evidence Omo-Ebo J.C.A. said in his dissenting judgment were not considered.
What was therefore surprising was that as soon as the Port Complex was acquired and a large sum of over Eight Million Naira was paid for it as compensation, the other members of the company except Solomon Asemota, no longer recognized him as a shareholder: he was thereafter called different namex-a servant, an employee, or a General Manager of the company and no more. And yet their contention could not be supported with any document, let alone the Register of membership of the company which was in their possession and they failed to produce. This seems to me to be one of the vagaries of human life. One is regarded as a friend today, but an enemy tomorrow? Will that be justice? The answer is obviously negative.
For these reasons and those already set out in the lead judgment, I will also dismiss the appeal with costs as assessed by my learned brother Kayode Eso, J.S.C.
Kawu, JSC. I have had the advantage of reading, in draft, the judgment just delivered by my learned brother, Kayode Eso, J.S.C. and I agree that for the reasons given in the said judgment, the appeal should be, and is hereby, dismissed with
N300.00 costs to the respondent.
Oputa, JSC. I have had the privilege of a preview in draft of the lead judgment just delivered by my learned brother Eso, J.S.C. and I am in complete agreement with him that this appeal should be dismissed in its entirety. The main issue in controversy appears to be-
"Whether it was conclusively established that the Petitioner/Respondent is a Shareholder, a member and/or a contributor of the Appellant/Company."
If he is, he can bring his petition for the winding up of the Company. If he is not, he will be meddling in other people's affairs and he will have neither the locus nor the capacity to intervene or interfere. It is on this vital and fundamental issue that I will like to comment further to merely emphasise the points so ably made and taken in the lead judgment.
Whether the Petitioner/Respondent was or was not a shareholder in the Appellant/Company is in the main a question of fact to be resolved by and on the evidence. Secondly it is the trial Court that has the primary and initial duty and responsibility to make that resolution. Thirdly an appellate Court will be very reluctant to interfere with the finding of fact of the trial Court on that issue of fact unless there was no evidence to support that particularly relevant and essential finding in which case the finding will be perverse. Chief Idugboe for the Appellant Company took the view that there was no such evidence. He conceded however that some shares were allotted to the Respondent but he argued that there was no evidence to show that he ever paid for those shares and he therefore cannot legally describe himself as a Shareholder. It was further contended that no Share Certificate was tendered nor were any receipts or memoranda signed and sealed by the company evidencing the Company's acknowledgment of the payment for Shares by the Respondent tendered.
On this vital question the trial Court per Ayinde, J. found that-
"The Respondent is a Shareholder, member and contributor of the Applicants and as such he is a person competent to bring a petition for the winding up of the Applicants under Section 211 of the Companies Act."
The Court of Appeal per Belgore, J.C.A. (as he then was) in a lead judgment was satisfied that the evidence before the trail Court viz Minutes of Meetings held by the Company, Resolutions passed in those meetings especially those of 16th May 1975 and 8th October 1975 respectively as well as Asemota's evidence-all these were sufficient proof that the Respondent J.L. Johnson was a Shareholder in the Oilfield Supply Centre Ltd. Mustapher, J.C.A. concurred.
Omo-Eboh, J.C.A. who presided dissented. He was of the view that the Respondent "has not satisfactorily shown that he is a shareholder of the applicants, (the Oilfield Supply Centre Ltd.)." He further held-
"In a case of this nature, owning shares in a Company is not a matter which can be proved by mere assertion or verbal claim alone. Ownership of such shares can only be conclusively proved by necessary documentary evidence to be provided by receipts showing payment effected on the allotted shares; registration of the shares (and their members) in the name of the shareholder as entered in the Register of Shareholder of the Company; and/or Share Certificates issued in the name of the shareholder bearing the shares (and their numbers) as acquired by the said shareholder. In the absence of proof of any and/or all the above by means of documentary evidence then the person concerned cannot be said to have conclusively proved that he has nor holds shares (either paid up in full or partially paid up) of that Company" (the Italics are mine).
One cannot but agree with Omo-Eboh, J.C.A. that assertion is not proof. Also it cannot be disputed that documentary evidence of shareholding e.g. Share Register, Share Certificate-is about the best evidence. But the important question is-Is it then the only evidence? Is there any statutory requirement in the Companies Act No.51 of 1968 limiting proof of shareholding solely and only to documentary evidence? if the answer is-No as it is bound to be, then one will with the greatest respect, say that the "legal position" assertion by Omo-Eboh, J.C.A. that "in the absence of proof by documentary evidence-the person concerned cannot be said to have conclusively proved that he is a shareholder" was a bit too narrowly stated. In fact by s.83 of the Companies Act No.51 of 1968 a Share Certificate is merely "prima facie evidence." It is not conclusive evidence. Evidence can be documentary or oral. It can also be by admission by the opposite party. In fact it is a fundamental part of our procedural law that what is admitted (say in the pleadings) by the opposite party is deemed to have been established at the hearing and no further proof need be proffered. If a Company admits directly or consequentially that a person is a shareholder of that Company, I do not think it is again imperative to offer in addition to that admission, documentary evidence of his shareholding. The issue will be concluded by the Company's admission. Was there such an admission in this case? A look at the record now becomes necessary.
1. Chief S. Idugboe 25%
2. Mr J.L. Johnson (The Respondent) 20%
3. Mr S. Asemota 15%
4. Mr A. Roz 20%
5. Mr H. Safieddine 20%
This meeting followed by another meeting of 2nd July 1974 where-
"It was unanimously Resolved to cancel all previous allotment of shares and the position of shareholding in the Company should be as follows-
1. Chief Stephen Idugboe 125,000 Ord. Shares
2. Mr A. Roz 125,000 Ord. Shares
3. Evan Enweren 100,000 Ord. Shares
4. Mr S. Asemota 75,000 Ord. Shares
5. Mr J.L. Johnson 50,000 Ord. Shares
6. Chief C.F. Bekederemo 25,000 Ord. Shares
In that meeting-"It was also Resolved that the previous Shares Certificates issued in respect of the previous allotments be and are hereby cancelled" and that new Shares Certificates should be according to the new allotments. viz 50,000 Ordinary Shares of
N1 each to the Respondent. The question is-Was that resolution of 2nd July 1974 carried out?
Mr Scott Emuakpor graphically put it that the Respondent "had capitalised his technical know-how and services as the brain behind the Company." At the Board of Directors Meeting of 16th May 1975, it was agreed inter alia "that the Managing Director's pay for the period 1/4/74 to 31/3/75 be applied against the unpaid portion of his shares." Mr Solomon Asemota, one of the Directors of the Company under cross-examination was positive that in 19784 the Respondent's salary was over
N2000,000. Mr Johnson himself in his own evidence said that he paid his share of N50,000 from his salary and that new Shares Certificates were issued to him. He was not challenged to produce these Certificates. Rather Mr Asemota, one of the Directors testified that-"I am also aware that he (Johnson) was issued with Certificate of Shares of N50,000 fully paid."
There is another important piece of evidence from Solomon Asemota-"that Shares in the Company were paid in cash and kind." There was also evidence that the Respondent was the motivator and the animating spirit of the Company-"it was no Johnson no Oilfield Company." If then services were to be commuted into Shares how would one then explain the failure of the Respondent to commute his own services? The only issue that would then arise will be how to quantify his goodwill, the expertise, the initiative of the Respondent who even Omo-Eboh, J.C.A. himself admitted "promoted the formation of the company and who utilised his expertise to build up the port complex and develop the business of the Company at the material time." It would be a mark of rank and gross ingratitude to suggest that such a Managing Director as the Respondent in this case had no Shares at all in this Company. If nothing at all he could have easily capitalised his technical know-how, his services in building the port complex which was acquired for over 8 million Naira into Shares. The argument then will not be whether or not he was a Shareholder but the extent and magnitude of his shareholding. I am quite satisfied that on the evidence before him the learned trial Judge, Ayinde, J. was well within his right and was also right in holding that the Respondent was a Shareholder in appellant Company. The Court of Appeal (the majority judgment) was also right in upholding the finding of the trial Judge on this issue as that finding cannot, by any stretch of the imagination, be described as perverse.
I said earlier on that I read in draft the lead judgment just delivered. I agree with all the reasoning and conclusions and I hereby now adopt these as mine. For all the reasons given above I, too, will dismiss this appeal. I also abide by all the consequential orders made in the lead judgment of my learned brother Eso, J.S.C.
Chief B.B.E. Idugboe for the Appellants with him Mr E.C. Weekes.
C.O. Scott-Emuakpor Esq., for the Respondent with him I.A. Scott-Emuakpor.