3PL – BANK OF BARODA V. IYALABANI LIMITED
POLICY, PRACTICE AND PUBLISHING, LAW REPORTS 3PLR
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BANK OF BARODA
V.
IYALABANI LIMITED
COURT OF APPEAL (LAGOS DIVISION)
CA/L/80M/88
MONDAY, 15TH DECEMBER, 1997
3PLR/1997/21 (CA)
OTHER CITATIONS
13 NWLR (Pt.785)551
BEFORE THEIR LORDSHIPS
EMMANUEL OLAYINKA AYOOLA;
MORONKEJI OMOTAYO ONALAJA,
IGNATIUS CHUKWUDI PATS-ACHOLONU
REPRESENTATION
MAIN ISSUES
COMPANY LAW – Juristic personality of a Company – Duty on company to reflect in the writ and pleadings – Where company fails to add “limited” to its name – Whether robs it of legal personality – Section 29 Companies and Allied Matters Act considered.
INTERPRETATION OF STATUTES -Order 22 rules 2 and 4 of the High Court of Lagos State (Civil Procedure) Rules, 1972 -Construction of; Preliminary objection
PRACTICE AND PROCEDURE -Commencement of action – Legal personality to commence an action – Importance and nature of – Where legal personality lacking – Effect on locus standi.
Issues:
- Whether the High Court was correct in considering the question whether or not the appellant is a juristic person in the absence of affidavit or other evidence.
- Whether the issue of the status of the appellant as a juristic person is open for debate.
- Whether the High Court was right in refusing the appellant’s application to amend the statement of claim.
Facts:
The appellant was the plaintiff at the High Court where it sued the respondent for breach of contract for wrongfully dishonouring Bills of Exchange by non payment.
The respondent filed its pleading where it denied the claim. It was also stated therein that the appellant is not a limited liability company. Subsequently, the respondent moved the trial court under Order 22 of the High Court of Lagos State (Civil Procedure) Rules, 1972 to strike out the action for disclosing no cause of action and that the appellant had no locus standi to initiate the action.
Two days after the respondent’s motion was filed but before it was moved, the appellant sought to amend its pleadings by indicating that it was an indorsee of the Bills of Exchange sued upon. In its ruling on the motion, the trial court held that the appellant, going by its name which is silent as to its capacity, had failed to show that it has its own distinct legal personality; and consequently that it lacked the necessary locus to initiate the suit. It therefore struck out die pleadings and dismissed the suit.
The appellant was aggrieved and it appealed to the Court of Appeal which in its consideration of the appeal referred to and construed the following statutory provisions:
Section 29 of the Companies and Allied Matters Act, 1990, which states as
“29(1) The name of a private Company limited by shares shall end with the word “Limited.”
(2) The name of a public Company limited by shares shall end with the word “Public Limited Company.”
(3) The name of a company limited by guarantee shall end with the words “Limited by Guarantee”
(4) The name of an unlimited Company shall end with the word “Unlimited.”
(5) A Company may use the abbreviations “Ltd.” “PLC”,”(Ltd/Gte)” and “Utd” for the words “Limited”, “Public Limited Company”, “(Limited by Guarantee)” and
“Unlimited” respectively, in the name of the Company”
Section 355 of the Companies Act, 1968 which provides thus-
“If under the provisions of the part of the Decree a Company is registered with Limited liability, the word “Limited”. shall form and be registered as part of its name; but nothing in this section shall be construed so as to preclude die operation of Section 20 of this Decree.”
Order 22 rule 4 of the High Court of Lagos State (Civil Procedure ) Rules,1972 which reads:
“The Court or a Judge in Chambers, may order any pleading to be struck out, on the ground that it discloses no reasonable cause of action or answer, and in any such case or in case of the action or defence being shown by the pleadings to be frivolous or vexatious, Court or a Judge in chambers may order the action to be stayed or dismissed, or judgment to be entered accordingly, as may be just.”
MAIN JUDGEMENT
Held:
- No action can be maintained by or against any person other than a natural person or persons unless such a party has been given by statute, expressly or impliedly or by common law either:
(a) a legal personality, under the name by which it may sue or be sued; or
(b) a right to sue or be sued by that name for example partnerships, trade unions, friendly societies and foreign institutions authorised by their law to sue or be sued. [Carlen (Nig) Ltd v. Unijos (1994) 1 NW1,1Z (Pt. 323) 631; Fawehinmi v. N.BA (No.2) (1989) 2 NWLR (PL105) 558; Abia State University v. Anyaibe (1996) 3 NWLR (Pt. 439) 646 at 662; Kano State Oil & Allied Products Ltd v. Kafa Trading Co. Ltd. (1996) 3 NWLR (Pt. 436) 244; Klifco Ltd. v. Philipp Holzmann A.G. (1996) 3 NWLR (Pt. 436) 276; Aka-Bashorun v. Governor of Gongola State (1991) 1 NWLR (Pt. 168) 512
- It is the law in force at the time of the commencement of a suit that is applicable to the suit. In this case, since the action was commenced before 1990 the applicable company law and practice which regulates its court proceedings will be the Companies Act of 1968.
- Both the defendant in an action and the court suo motu can impeach the locus standi or a plaintiff. [ Thomas v. Olufosoye (1986) 1 NWLR (Pt. 18) 669; Oredoyin v.Arowolo (1989)4NWLR (Pt. 114) 172 referred to]
- The issue of the legal personality of a plaintiff is fundamental because where in a situation a plaintiff is not a juristic person he lacks the locus standi to institute the action and the defendant can challenged this.
- A plaintiff should frame his pleading in a precise and succinct manner with distinctive character of clarity so as to enable the court and the other party know who is suing and what is the cause of action. In respect ofa company it must show that it is a juristic person and that it has a cause of action. [Njemanze v. Shell (P.11)(1966) 1 All NLR 8 referred to]
- By virtue of section 29 of the Companies and Allied Matters Act, 1990, it is the usual accepted practice for a Company to institute an action in its full name including an indication as to whether the company is a limited (Ltd) or unlimited (Ulted) or it is a Public Limited Company (Plc) or a company limited by guarantee (Ltd/ Gte). It follows that no company that fails to reflect its true name or states only half of its name in an action ca ii be regarded as being serious in maintaining such an action. In the instant case, the failure of the appellant to state in its writ and pleadings the capacity in which it sued shows that it is not a legal person.
- Where a party approaches the court by reference to or citation of a wrong law, the court should do substantial justice by deciding the case on the merit. [Ojah v. Ogboni (1996) 6 NWLR (Pt. 454) 272; Ikeni v. Efamo (1997) 4 NWLR (Pt. 499) 318 referred to]
- Order 22, rule 4 of the High Court of Lagos State (Civil Procedure) Rules, 1972 which provides thus:
“The Court or a Judge in Chambers, may order any pleading to be struck out, on the ground that it discloses no reasonable cause of action or answer, and in any such case or in case of the action or defence being shown by tile pleadings to be frivolous or vexatious, Court or a Judge in chambers may order the action to be stayed or dismissed, or judgment to be entered accordingly, as may be just.”
rests on a premise that even if the averments as contained in the pleadings are accepted still there is something wanting to give the action a solid ground. Ill other words, the action as conceived is empty of substance to make the court adjudicate on it. The inference is that such a suit will only succeed if the action is sustainable.
DISSENTING OPINION OF EMMANUEL OLAYINKA AYOOLA
- Order 22 rule 4 of the Lagos State High Court (Civil Procedure) Rules deals only with cases ill which the pleading discloses no reasonable cause of action. An application under tile rule is based on the footing that all the averments in the statement of claim or defence are true and thus will not involve an enquiry as to facts. Thus, where enquires as to facts are essential it will not be proper to proceed under Order 22 rule 2 or Order 22 rule 4 of the aforesaid rules.
- Per AYOOLA:
“Where a plaintiff has sued in what appeared to be its corporate name and has described itself simply as “the plaintiff’s” in the statement of claim it cannot be said that the writ or statement of’ claim shows a lack of legal personality on the face of’ it even though it is open to the defendant to challenge the juristic personality of the plaintiff. Where that is done, an issue to he tried would have arisen. That issue should not he determined on the basis of mere speculation or assumptions. It was not until the enactment Of the Companies and Allied Matters Act 1990 that the law stipulated that the name of an unlimited company should end with the word “Unlimited”. Under the Companies Act 1968 which was in operation at the time when this action was instituted (in 1986) and determined (in 1987) there was no requirement that an unlimited company’s name should end with “unlimited”. (See sections 2, 3and 4 of the Companies Act 1968). An unlimited company could be registered prior to 1990 without the addition of the word “unlimited” to its name. It goes without saying, that such company would certainly not have the word “limited” at the end of its name. Where the name on which a plaintiff sues before 1990 appears to be a corporate name but did not include that word “limited” at the end thereof’, an assumption that such plaintiff is not a corporate body would be erroneous. While it may be open to a defendant to challenge the legal capacity of a plaintiff to sue, the plaintiff should not be deprived, on the basis of’ a mere assumption, of the opportunity of proving his or its capacity to sue. The law has been aptly put in Aguda Practice & Procedure etc 1980 Edition at para 10-04 as follows:
“A plaintiff to an action must be competent to institute such an action, and if his competency is challenged then the onus of proving that he has legal capacity to institute the action lies on him” (emphasis mine)
It is only where it is obvious that a party is not a legal person that the matter can be dealt with without much ado and the non juristic party struck out or the action struck out if such a “party” is the Plaintiff”. Such was the case of Agbomagbe Bank Ltd v. General Manager, G.B.O. Ollivant Ltd anor. (1961) 1 All NLR 116 in which it was obvious that “General Manager” had no juristic personality. The present case is different. Nothing on the face of the writ or the statement of claim shows that Bank of Baroda is not a juristic person. The mere fact that its name did not end with “limited” does not raise any reasonable presumption that it was not a juristic person nor is it evidence of that fact. Upon a challenge to the plaintiff’s legal capacity to sue, the learned, Judge should have tried that issue and given the plaintiff the opportunity of proving its legal personality. The judge was wrong in the view he held that: “Going by the name, it is not a natural person, it is a bank For this reason it does not have the necessary locus standi to bring an action.”
