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IN THE SUPREME COURT OF NIGERIA
FRIDAY, 4TH APRIL,2003
2 NWLR (Pt.696)184
BEFORE THEIR LORDSHIPS
SALIHU MODIBBO ALFA BELGORE, J.S.C. (Presided)
SYLVESTER UMARU ONU, J.S.C.
UMARU ATU KALGO, J.S.C.
SAMSON ODEMWINGIE UWAIFO, J.S.C. (Read the Leading Judgment)
AKINTOLA OLUFEMI EJIWUNMI, J.S.C.
Chief T.A.O. Ogundeyin – For the Appellants
Chief Chris Uche with him, C.A. Chuks-Nnadi, ESQ. – for the 1st – 3rd Respondents
S.B. Monokpo, ESQ. – For the 4th – 7th Respondents
COMPANY LAW – Minority shareholders – Limits of powers thereof – Rule in FOSS V HARBOTTLE (1843) 2 Hare 461. – Basis of -Scope of application of
PRACTICE AND PROCEDURE – ACTION – ‘Locus standi’ to institute action – How to ascertain whether plaintiff has locus standi -Nature of interest required – How to show same.
PRACTICE AND PROCEDURE – ACTION -‘Locus standi’ to institute action – What it denotes.
PRACTICE AND PROCEDURE – APPEAL – Hearing of appeal – Respondent wishing to attack judgment appealed against – What he needs do.
PRACTICE AND PROCEDURE – COURT – Interlocutory matters – Court dealing therewith – Duty thereon to refrain from making order that will affect substantive issues or reliefs
PRACTICE AND PROCEDURE – COURT – Orders of court – Order against non-party to suit -Whether binding – Duty on court not to make.
PRACTICE AND PROCEDURE – EVIDENCE – Affidavit evidence – Affidavit in support of application for interlocutory injunction – What it must disclose.
PRACTICE AND PROCEDURE – EVIDENCE – Interlocutory injunction – Affidavit in support of application thereof-What it must disclose.
PRACTICE AND PROCEDURE – INJUNCTION – Interlocutory injunction – Affidavit in support of application thereof-What it must disclose.
PRACTICE AND PROCEDURE – INJUNCTION – Interlocutory injunction – Duty on plaintiff seeking order of – What he must show – How he must show it.
PRACTICE AND PROCEDURE – INJUNCTION – Interlocutory injunction – Principle guiding grant of
JUDGMENT AND ORDER – Orders of court – Order against non-party to suit – Whether binding – Duty on court not to make.
PRACTICE AND PROCEDURE – LOCUS STANDI – Minority shareholders – Limits of powers thereof – Rule in Foss v. Harbottle (1843) 2 Hare 461- Basis of-Scope of application of
PRACTICE AND PROCEDURE – LOCUS STANDI – ‘Locus standi’ to institute action – How to ascertain whether plaintiff has locus standi – Nature of interest required – How to show same.
UWAIFO, J.S.C. (Delivering the Leading Judgment):
The appellants as plaintiffs seek six reliefs in the suit No. ID/2853/98 filed in the High Court of Lagos State, sitting at Ikeja. The first relief upon which, it would appear, the other five could be seen to depend, but not necessarily sustainable simply because of that dependence, asks for –
“( a) A declaration that the tenure of the 1 st – 3rd defendants as President, Vice President and Treasurer respectively of the 8th defendant expired by effluxion of time on 26th June, 1998.”
Apart from the issue of locus standi that was raised later in the course of proceedings, the focus must be the implication of the relief recited above. It seems to represent the cause of action relied on by the plaintiffs. That is to say, the expiration of the 1st – 3rd defendants’ tenure of office by effluxion of time. As a result of that, the plaintiffs want them to cease to exercise the authority of their offices.
The five reliefs that follow may be abbreviated thus: (b) A declaration that the 1st – 3rd defendants cannot continue in their respective offices. (c) An order of perpetual injunction to restrain them from further parading themselves as representing the 8th defendant.
(d) An order declaring any further acts done by them in the respective of offices as void. (e) An order for them to render account. (f) A declaration that the tenure of the council members of the 8th defendant has ended and an order appointing a seven member interim caretaker of the 8th defendant to conduct an Annual General Meeting to constitute a new Council.
The parties exchanged pleadings. I shall confine myself at this stage to paras. 2, 3 and 4 of the statement of claim and paras. 2 and 3 as well as part of para. 4 of the statement of defence of the Ist- 3rd and 8th defendants. The said paragraphs of the statement of claim read:
“2. The 8th defendant has a Council which is the highest body and the main decision making organ of the 8th defendant and is constituted every three years nomination at the Annual General Meeting. (sic)
“2. The defendants admit the status of Council of the 8th defendant but deny that the Council is constituted every three years as neither the Law and Regulations governing the 8th defendant stipulates the tenure of Council, and will at the trial put the plaintiffs to the strictest proof of the said averments contained in paragraph 2 of the statement of claim.
The plaintiffs brought a motion on notice on 15 December, 1998, the very day they filed statement of claim, praying the court for seven orders. They were virtually in the same nature as the reliefs sought in the substantive action but in one or two aspects they even went beyond. The first of the orders sought was:
“1. An order of interlocutory injunction restraining the 1st – 3rd defendants from acting as and/or parading themselves as President, Vice President and Treasurer respectively of the 8th defendant pending the determination of this suit.”
Then followed the remaining six which I have paraphrased thus: –
“4. That the Council of the 8th defendant (the Council) is the highest body and the main decision making organ of the 8th defendant and is constituted every three years by nomination at every third Annual General Meeting.
“6. The paragraph 4 of the affidavit in support of motion is a half truth in that by Regulations 40 and 41, even though Council were constituted on 20/1/94, 18 of its members one third who have served in office retire but 12 members are eligible for re-election at the Annual General Meeting of the 8th defendant/respondent, a meeting which the plaintiffs/applicants goaded by the 4th, 5th, 6th and 7th defendants/respondents have made impracticable by spates of court actions in Abuja and now Ikeja respectively. (sic).
“1. I make an order of interlocutory injunction restraining the 1st – 3rd defendants from acting as and/or parading themselves as President, Vice President and Treasurer respectively of the 8th defendant pending the determination of this suit.
The said nine members shall appoint one of themselves to chair or head the caretaker committee.
(1) Was the trial Judge right to have granted the reliefs sought on the principles of law of interlocutory injunction;
(2) Was the trial Judge right to have granted a relief unrelated to the claims in the statement of claim;
(3) Was the trial Judge right to have granted a relief sought in the substantive suit;
(4) Was the trial Judge right to have granted a relief against a body which was not a party to the suit or the application for the said orders. On 24 January, 2000, the Court of Appeal substantially resolved the issues in the negative, allowed the appeal and set aside all the orders made by the trial court.
The plaintiffs have appealed to this court upon eleven grounds of appeal, some of which are of rather inordinate lengths, while in some of them matters not canvassed at any stage were introduced, such as alleged stealing and embezzlement of the 8th defendant’s funds by the 1st – 3rd defendants; and disobedience of court orders. The following four issues for determination were set down in the plaintiffs/appellants’ brief of argument:
“2.01 Whether having regard to the peculiar facts of this case the trial Judge acted judicially and judiciously in granting all the reliefs sought in the substantive action by the plaintiffs/appellants at the interlocutory stage more so when the dispute had to do with mismanagement and embezzlement of the funds of the 8th defendant/respondent by the 1st – 3rd defendants/ respondents.
2.02 Whether the plaintiffs/appellants were denied fair hearing when the lower court decided the appeal before it only on the bundle of documents filed by the defendants/appellants before it and completely ignored the bundle of documents filed by the plaintiffs/ respondents now the appellants and thereby occasioning a miscarriage of justice.
2.03 Whether the court below decided the appeal before it on wrong principles of law and in particular the rule in Foss v. Harbottle when the case on appeal clearly falls within the exception to that rule.
2.04 Whether the court below was right in allowing the defendants’ appeal and dismissing the appellants’ case when the defendants acted in contempt of the orders of the lower court by fraudulently collecting funds belonging to the 8th defendant and spending all the funds without banking them and clearly in violation of the injunctive orders of the lower court dated 18/12/98 ” and 16/6/99 restraining the 1st – 3rd defendants from collecting and/or in any way spending the funds of the 8th defendant.”
The 4th to 7th respondents filed a brief of argument in which learned counsel for them virtually aligned himself with the case of the appellants. At the hearing of the appeal this court pointed it out – to the learned counsel that since he filed no appeal on behalf of the 4th to 7th respondents, he could not be heard upon such a freak advocacy intended to project the appellants’ position. Accordingly, I intend to discountenance the brief of argument filed on behalf of the 4th to 7th respondents and “will not entertain the oral argument of Mr. S. B. Monokpo as counsel for them. -,
I have examined the substance of the issues reproduced above against the grounds of appeal and the judgment of the court below. I need to make relevant observations. In respect of ground 1, the complaint is that the court below preferred the issues raised by the appellants to those of t: respondents before that court as being more germane to the grounds of appeal. No issue is formulated regarding this ground. If issue 2 was intended to cover it, of which there is nothing to indicate, no argument has been proffered in support. Ground 2 complains that the court below nowhere in its judgment referred to the facts deposed to by the 4th defendant. There is no issue formulated regarding this ground and in any event no worthy argument in support. The same observation applies to the following other grounds, namely ground 3 (which complains of failure of the court below to consider the facts deposed to by the plaintiffs); ground 6 (which complains that the court below erred to have held that the plaintiffs did not disclose the nature of their legal right); ground 7 (which complains that the court below thought that the interlocutory application was a subterfuge to get orders in respect of reliefs to be considered after a full trial); ground 9 (which complains that the court below thought it was improper for the trial court to grant all the reliefs sought in the substantive suit by the orders it made); ground 10 (which complains of looting, embezzlement and disobedience of court order when none was an issue at any stage of the proceedings); ground 11 (which in part complains of the court below descending into the arena and failing to act as unbiased umpire when there is nothing on record to that effect).
Grounds 4 and 5 appear to be complaints against the view of the court below that it was not enough that plaintiffs alleged that they were financial members of the 8th defendant without showing the proportion they represented among the total financial membership. It was in this connection Foss v. Harbottle (1843) 2 Hare 461 and Wallersteiner v. Moir(No. 2) (1975) 2WLR 389 were cited by the court below. Finally, ground 8 is about the view of the court below that the relationship between the Nigerian College of Accountancy, Jos and the 8th defendant was not shown (for example to be that of principal and agent) so as to justify making an order against the former who was not a party in the case.
A close study of the four issues for determination and the eleven grounds of appeal reveals to me the following: (a) issues 1,2 and 4 are not reasonably referable to any of the grounds of appeal. Furthermore, the question of mismanagement and embezzlement of funds and the fraudulent collection and spending of funds belonging to the 8th defendant by the 1st – 3rd defendants without banking them as stated in issues 1 and 4 were neither pleaded in the statement of claim nor deposed to in the affidavit in support of the motion for interlocutory injunction which gave rise to this appeal. They were not in the circumstances matters canvassed or capable of being canvassed in the proceedings.
As regards issue 3, it would appear this was formulated from grounds 4 and 5. The court below made reference to the averment in the statement of claim (as equally deposed to in the affidavit in support of the motion) which says that the plaintiffs are financial members of the 8th defendant and that by virtue of that they have a right to bring this action. The view was then expressed that that was not enough to entitle them to bring the action to seek the type of relief claimed therein. The learned trial Judge had expressed a contrary view. The court below said in part in this regard:
“In accepting the view that being merely a financial member was sufficient, the learned trial Judge overlooked the fact .that the majority of the financial members of the 8th defendant who at the end of the day are those to elect the officers for the 8th defendant might choose not to make any issue of the fact that the 1st to 3rd defendants had overstayed their tenure. See Foss v. Harbottle (1843) 2 Hare 461 and Wallersteiner v. Moir (No.2) (1975) 2 WLR 389 at 395.”
The appellants have attacked this observation of the court below and argued that the two authorities cited were irrelevant to this case.
I agree with the appellants. The rule established in Foss v. Harbottle is simply that when a decision has been irregularly taken on behalf of a company, it will be futile for the minority shareholders to take legal steps to oppose it since, if it is a decision the company or corporation can take, the majority shareholders can easily ratify it. That is a rule which in that case has resulted from the refusal of the court to interfere in the management of a company at the instance of a minority of members who were dissatisfied with the conduct of the company’s affairs by the majority or by the board of directors on the basis that it is a waste of time to seek to get the court to set aside what may be ratified by a majority of members once it is within their power to do so. As Mellish, L.J put it in MacDougall v. Gardiner (1874-1875) 10 Ch. D. 606.
“… if the thing complained of is a thing which in substance the majority of the company are entitled to do, or if something has been done irregularly which the majority of the company are entitled to do, or if something has been done illegally which the majority of the company are entitled to do legally, there can be no use in having litigation about it, the ultimate end of which is only that a meeting has to be called, and then ultimately the majority gets its wishes.”
The rule is now given statutory effect under section 299 of the Companies and Allied Matters Act, 1990. There are, of course, known exceptions now also provided in section 300. Neither the rule nor the exceptions can be seen to apply or be intended to apply to the circumstances of the present case. The case Wallersteiner v. Moir (No.2) (1975) 1 All ER 849; (1975) 2 WLR 389 cited and relied on by the court below also bears no relevance to this case. However, the court below did not stop with the rule in Foss v. Harbottle. It cited Thomas v. Olufosoye (1986) 1 NWLR (Pt.18) 669 where this court held that a communicant in the diocese of an Anglican Church did not by that fact alone have sufficient interest to bring a suit to challenge the election of a Bishop of the Diocese of that Church. Accordingly, the court below said that the appellants having merely averred in their statement of claim to be financial members of the 8th defendant did not thereby disclose sufficient interest to support their locus standi to bring the action. I think there is merit in this view. Locus standi denotes the legal capacity, based upon sufficient interest in a subject-matter, to institute proceedings in a court of law to pursue a certain cause. In order to ascertain whether a plaintiff has locus standi, the statement of claim must be seen to disclose a cause of action vested in the plaintiff and also establish the rights and obligations or interests of the plaintiff which have been or are about to be violated, and in respect of which he ought to be heard upon the reliefs he seeks:
See Adefulu v. Oyesile (1989) 5 NWLR (Pt.122) 377; Odeneye v. Efunuga (1990) 7 NWLR (Pt. 164) 618; Adesokan v. Adegorolu (1997) 3 NWLR (Pt.493) 261; Owodunni v. Reg. Trustees ofCCC (2000) 10 NWLR (Pt.675) 315.
The interest which a plaintiff alleges must be such, as pleaded, which can be considered to be real not superficial or merely imaginary.. In Amusa Momoh v. Jimoh Olotu (1970) 1 All NLR 117, it was held that it was not enough for a plaintiff to state that he was a member of the family laying claim to a chieftaincy title; he has to go further to aver in the statement of claim that he has interest in the chieftaincy title. Not only that, the statement of claim must show how his interest in the chieftaincy title arose. In his observation in reference to the statement of claim in that case, Ademola, CJN said at page 123:
“Now, what is the averment in paragraph I? The plaintiff says that he is a member of the Olukare family.
The question may be asked, is it enough for the plaintiff to state that he is a member of the family? Has he not got to state that he has an interest in the chieftaincy? Surely not every member of a chieftaincy family as such has interest in the chieftaincy title. We are of the view that it is not enough for the plaintiff to state that he is a member of the family; he has to state further that he has an interest in the chieftaincy title, and furthermore, state in his statement of claim how his interest in the chieftaincy title arose.”
In the present case, apart from the averment in paragraph 1 of the statement of claim, which I set out at the beginning of this judgment, that the plaintiffs are financial members of the 8th defendant, nothing else whatsoever was pleaded as to their interest in pressing for an annual general meeting and the election of new officers. So there is nothing to indicate why they consider that their rights or obligations have been violated to entitle them to seek the various reliefs in the suit they brought. Looking at the averments in the statement of claim as a whole, one fails to see any cause of action in the plaintiffs. This failure to discover the cause of action has enormous bearing on the application for the interlocutory injunction in which the plaintiffs sought and obtained such elaborate and far-reaching orders.
In an application for an interlocutory injunction, the plaintiff must show an existence of his right which needs to be protected in the interim. He must at the same time satisfy the court that there is a real question to be tried in the substantive suit: See Egbe v. Onogun (1972) 1 All NLR 95 at 98. This does not require the court to determine the merit of the plaintiff’s entitlement to the claim. But it places on the plaintiff an initial burden. It is the burden of showing
that there is a serious question to be tried upon the affidavit evidence (as well with averments in the statement of claim, if any has been filed): See Obeya Memorial Hospital v. Attorney-General of the Federation (1987) 3 NWLR (Pt.60) 325.
It is necessary to emphasise that it is of vital importance for a plaintiff seeking an interlocutory injunction to adduce sufficiently precise factual affidavit evidence to satisfy the court that his claim for a permanent injunction at the trial is not frivolous; or at any rate, based on the substantive claim, to produce affidavit evidence to satisfy the court in justification of his application for an interlocutory injunction to maintain the status quo. It is only when this has been
done that it will become necessary for the court to proceed further with the application to consider the balance of convenience.
Otherwise the application ought to be refused at the point the court is not so satisfied. This is clear from the observation made by Lord Diplock in American Cyanamid Co. ,v. Ethicon Ltd. (1975) 1 All ER 504 at 510 at to what should be the approach in considering an application for an interlocutory injunction.
He said inter alia:
“It is no part of the court’s function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at the trial. .. So unless the material available to the court at the hearing of the application for an interlocutory injunction fails to disclose that the plaintiff has any real prospect of succeeding in his claim for a permanent injunction at the trial, the court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that is
It seems to me that even if there had been no cause for me to comment adversely on the complaints laid in the grounds of appeal and the issues set down for determination, this appeal stood no chance of succeeding. The likelihood that a plaintiff would have succeeded in establishing his right to an injunction if the action had gone to trial is a factor to be brought into the balance by the Judge in weighing the risks that injustice may result from his deciding the application for an interlocutory injunction one way rather than the other: See NWL Ltd; v. Woods (1979) 3 All ER 614 at 626.
The learned trial Judge in the present case, with due respect to him, was not circumspect in the exercise of his discretion. He did not take into consideration the apparent barrenness of the statement of claim for failure to establish locus standi and cause of action. He did not take into account that there were conflicts of evidence on affidavit as to whether (a) all the plaintiffs were still financial members; (b) all the council I members retire at the same time every three years or only one-third at a time retire according to the rules and regulations which the 1st – 3rd defendants cited; (c) some ex parte orders made by courts in Abuja and Lagos, particularly the one by Kusherki, J., in Abuja were militating factors against the 1st – 3rd defendants’ ability to call a meeting as they deposed; (d) the effect of the orders he made decided the substantive reliefs in an irreversible way when such was most inappropriate, undesirable and indefensible in the circumstances of this case. He even made orders against a non-party – the Nigerian College of Accountancy, Jos, – by freezing its accounts and forbidding it from collecting funds, orders which were clearly not in law binding on them: See Green v. Green (1987) 3 NWLR (Pt. 61) 480,(1987)2 NSCC(Vol. 18)1115. These same orders were, in addition, not related to the reliefs claimed in the substantive suit and in principle cannot be made as permanent orders at the trial. It follows that the grant of those orders in the interim cannot be justified. What the learned trial Judge did was
simply and clearly. an indiscreet use of judicial powers.
The court below had no option but to put an end to the gross injustice which the interlocutory injunction and other orders granted by the trial court engendered. I find no merit in this appeal. It is dismissed with N10,OOO.00 costs against the plaintiffs/appellants in favour of the 1st – 3rd defendants/respondents.
BELGORE, J.S.C.: The mere fact that appellants are financial members of the eighth defendant has not conferred on them locus standi because that alone would not disclose sufficient interest for them to bring this action. Looking at the statement of claim the appellants have not disclosed sufficient interest to justify their bringing this action. A party must in his statement of claim aver enough facts to indicate what his interests are in the matter and how those interests stand threatened if the action was not brought. It is not enough to blandly state that he has an interest, there must be an averment that the interest is threatened. Adefulu v. Oyesile (1989) 5 NWLR (Pt.122) 377; Adesokan v. Adegorolu (1997) 3 NWLR (Pt.493) 261. Thus an existence of a right legally capable of being defended must be manifested in the affidavit so as to attract court’s discretion to grant an interlocutory injunction. The affidavit. in
support of such application must clearly and not superficially indicate the clear interest of the applicant and real possibility of that interest being under threat of either being vitiated or extinguished if the injunction is not granted.
The trial court was in gross error to have granted the interlocutory injunction and some other prayers not sought on affidavit bereft of any notion of an interest or threat to that interest.
I therefore agree with my learned brother, Uwaifo, JSC that this appeal has no merit, I also dismiss the appeal with NI0,000.00costs against the appellants in favour of 1st – 3rd defendants/respondents.
ONU, J.S.C.: Having been privileged to have a preview of the judgment of my learned brother, Uwaifo, JSC just delivered, I agree with him that there is no merit in the plaintiffs/appellants’ appeal.
Accordingly, I too dismiss it and award NI0,000.00 costs in favour of the defendants/respondents.
KALGO, J.S.C.: I have had a preview of the judgment of my learned brother, Uwaifo, JSC just delivered. I entirely agree with him that there is no merit in the appeal and it ought to be dismissed. The learned trial Judge exercised his discretion indiscreetly after hearing the interlocutory application in the light of the evidence before him particularly in making orders against the interest of persons who were not parties before him. He also made orders which have the
effect of deciding substantive issues in the case. This he cannot do in the light of the decision in Elufioye v. Halilu (1993) 6 NWLR (Pt.301) 570 at 596; Orji v. Zaria Industries Ltd. (1992) 1 NWLR (Pt.216) 124 at 141; Egbe v. Onogun (1972) 1 All NLR (Pt. 1) 95.
The Court of Appeal was perfectly right in my view, to allow the appeal in the circumstances and set aside the orders made by the trial court. I therefore dismiss the appeal with NI0,000.00 costs in favour of the Ist- 3rd defendants/respondents.
EJIWUNMI, J.S.C.: I was privileged to have read in advance the draft of the judgment just delivered by my learned brother, Uwaifo, JSC. As he has cogently considered the issues raised in this appeal before concluding that there is no merit in the appeal, I also adopt the judgment as my own.
In the result, I also dismiss the appeal and award to the 1st-3rd defendants/appellants, costs in the sum of N10,000.00.