Proper Parties: Effect on the Court’s Jurisdiction

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In the Supreme Court of Nigeria Holden at Abuja On Friday, the 13th day of March, 2020

Before Their Lordships
Olabode Rhodes-Vivour
Mary Ukaego Peter-Odili
Chima Centus Nweze
Amina Adamu Augie
Ejembi Eko
Justices, Supreme Court
SC.713/2016

Between

U.O.O. NIGERIA PLC APPELLANT

And

MR MARIBE OKAFOR & 13 ORS RESPONDENTS
(For themselves and on behalf of all Shareholders
of U.O.O. Nigeria Plc, excluding Edozie Okafor,
Abalunnye Okafor, Igboabiamagba Okafor,
Nwokedike Okafor, Mrs.Mgborie Okafor, Nsobundu
Okafor, Nwaorah Okafor, Otoh Okafor
Chukwudinka Okafor, Ukaegbu Okafor
Nzekunie Nduaguba, Ugwunnwa Okafor,
Anosike Okafor and any other Shareholder
who supports them)

(Lead Judgement delivered by Honourable Amina Adamu Augie, JSC)

Facts

The Respondents are Shareholders in the Appellant company. A certain Edozie Uche Okafor was the Chairman/Managing Director/Chief Executive Officer, appointed pursuant to a resolution made at the Appellant’s general meeting which held on 6th August, 2004.

Sometime in February 2005, some of the Directors and Shareholders expressed their desire to disinvest from the Appellant, and at an Extra-Ordinary General Meeting of the Appellant which held on 9th February, 2005, an Asset Valuation Committee was set up to value the assets of the Appellant. The Committee came up with a valuation of the unit price for each share of the Appellant, and after negotiations the parties agreed to the value of N2.65 per share. At the subsequent Annual General Meeting (AGM) of the Appellant which held on 9th March, 2007, while the said Edozie Uche Okafor was addressing the AGM on the unit to be adopted per share, a commotion ensued and he left the venue of the meeting. Upon his departure, the 1st Respondent moved a motion for his removal as Chairman of the Appellant company. Thereafter, the Directors and Shareholders who were present voted to remove him as Chairman, and the 1st Respondent was appointed the new Chairman.

Further to this, Edozie Uche Okafor instituted an action against the Respondents, at the Federal High Court in the name of the Appellant. Thereafter, on 13th July, 2007, he purported to convene a Board Meeting, for the purpose of a Board resolution to ratify his action and same was achieved. The Appellant’s Statement of Claim was later amended, and by the said amendment, the Appellant sought inter alia, a declaration that the purported removal of the Edozie Uche Okafor as Chairman of the Appellant company was unlawful and void and that the offices of the Chairman and other members of the Board prior to the AGM of 9th March, 2007 are still subsisting.

The Respondents, in their Amended Statement of Defence and Counter-Claim, counter-claimed for a Declaration that they have the right, as shareholders of the Appellant, to disinvest in the Appellant and take away whatever belongs to them. They also sought inter alia, an order compelling the Appellant to settle and pay them the total cash value of their shareholdings and investments in the Appellant company, as well as an order of injunction restraining the Appellant, its former Chairman and Directors from disposing of the assets of the Appellants until the full settlement of the Respondents.

In its judgement, the trial court dismissed the claims of the Appellant and granted the Respondents’ Counter-claim. Aggrieved, the Appellant appealed to the Court of Appeal. The Court of Appeal delivered its judgement wherein it held, on the issue of competence, that it was dysfunctional for any meeting of the Board of Directors after the Annual General Meeting of 9th March, 2007 of the Appellant company where Edozie Uche Okafor was removed as Chairman, to be chaired by the same Edozie Uche Okafor, and as there was no injury suffered by the Appellant company, it was unconscionable for him to institute a suit in the name of the Appellant company, to seek redress for his own personal and private interest. The Court of Appeal dismissed the appeal and upheld the finding of the trial court. The Appellant filed a further appeal at the Supreme Court.

Issue
The Appellant submitted five issues for determination. In its determination of the appeal, the Apex Court considered the following sole issue as being germane, and taking centre stage in the determination of the appeal.

Whether the action filed at the trial court in the name of the Appellant company was competent.

Arguments

It was the case of counsel for the Appellant that Edozie Uche Okafor had the locus standi to chair the meeting of the Board of Directors wherein the decision to institute the action that culminated into the appeal, had been taken. He submitted that the purported removal of the said Edozie Uche Okafor by the Respondents, without giving him an opportunity to defend himself, was a violation of the Appellant company’s Memorandum and Articles of Association, and it was the Appellant company that was wronged. He argued that the action filed at the trial court in the name of the Appellant company, was thus, competent, as it was to remedy the wrong committed against the Appellant company.

Counsel for the Respondents argued to the contrary, that Edozie Uche Okafor lacked the locus standi to preside over the meeting where the decision to ratify the action filed in the name of the Appellant company was taken. He argued that the decision to remove Edozie Uche Okafor at the AGM was the decision of the Appellant company, and an individual cannot use its name to sue the shareholders for taking such decision; as such action would be unsustainable in law. Counsel for the Respondents submitted that initiating a personal action against the Appellant company was the only remedy open to Edozie Uche Okafor, and if his argument that he was not given fair hear hearing was anything to go by, then he is the proper Plaintiff and not the Appellant which allegedly denied him fair hearing through the Shareholders.

Court’s Judgement and Rationale

The court held that the question of proper parties is an important issue which would affect the jurisdiction of the court, since it goes to the foundation of the suit in limine. In effect, where the proper parties are not before the court, then the court lacks the jurisdiction to entertain the suit.

Relying on its decision in UTTIH v ONOYIVWE (1991) 1 NWLR (Pt. 166) 166 SC, the Supreme Court held that before a court can validly exercise jurisdiction to hear and determine an action on its merits, the parties must be shown to be the proper parties to whom rights and obligations arising from the cause of action can attach. To determine whether a Plaintiff is the proper party or not, all that the court is required to do, is to examine his claim(s), which gives him a right to initiate the action for the Defendant’s alleged wrongful act. The court relied on BELLO v INEC (2010) 8 NWLR (Pt. 1196) 342. The court held that, the factual situation on which the Plaintiff relied to support his claim must be recognised in law as giving rise to a substantive right capable of enforcement.

Their Lordships held further that, the first relief sought in the Amended Statement of Claim filed at the trial court shows that the actual person aggrieved by what the Respondents did is Edozie Uche Okafor and not the Appellant company; and that the Appellant company had no cause of complaint as it did not suffer any injury when Edozie Uche Okafor was removed as its Chairman by its Shareholders. What was involved in the action filed at the trial court was not directly about the assets of the Appellant company, but the self-serving interests of the Edozie Uche Okafor; hence, the action was wrongly instituted at the trial court in the Appellant company’s name, and was therefore, incompetent. The Appellant was not the proper party to take out the suit which had no other purpose than to promote the private and personal legal interest of the said Edozie Uche Okafor, and the trial court had no jurisdiction to entertain the suit.

Appeal Dismissed.

Representation
Emeke Ngige, SAN with Onyeka Obiajulu, Esq., for the Appellant.
Dickson Anieh, Esq., for the Respondents.

Reported by Optimum Publishers Limited, Publishers of the Nigerian Monthly Law Report (NMLR)(An Affiliate of Babalakin & Co.)