➥ CASE SUMMARY OF:
Bernard Ojeifo Longe V. First Bank Of Nigeria Plc. (CA/L/492/2003 • 5 Jan 2006)
by Branham Chima (LL.B.)
➥ SUBJECT MATTER(S)
Suspension of director;
Executive and non-executive directors.
➥ CASE FACT/HISTORY
The claims of the plaintiff which eventually went to trial were adumbrated on the statement of claim as follows:- “(i) A declaration that the defendant’s Board of Directors cannot lawfully hold any meeting of the said Board without giving notice thereof to the plaintiff and accordingly all decisions taken at any such meeting is unlawful, invalid, null and void and incapable of having any legal consequence; (ii) A declaration that in particular the decision of the defendant’s Board of Directors held on the 13th of June, 2002 to revoke the plaintiff’s appointment as Managing Director/Chief Executive is wrongful, unlawful, invalid, null and void and incapable of having any legal consequence; (iii) A declaration that any purported implementation of the said decision made on the 13th of June, 2002 (including any appointment to the office held by the plaintiff in the defendant company) is ineffective, unlawful and null and void; (iv) An order of injunction restraining the said defendant from giving effect or continuing to give effect to any of the decisions of the Board mentioned in claims (i) and (ii) hereof without first complying with the mandatory procedural requirements stipulated in section 266(3) of CAMA; (v) A declaration that the plaintiff is entitled to remain in the premises allocated to him by the defendant including the enjoyment of all associated services until the expiration of a reasonable time from the date of any lawful and valid termination of his contract of service with the defendant; (vi) In the alternative to the foregoing, the plaintiff claims the sum of ₦136,614,584.00 being the amount due and owing to the plaintiff as at 13th of June, 2002; (vii) Interest on the said sum of ₦136,614,584.00 at the rate of 21% per annum or at such other rate of interest as the court only adjudged to be fair and just; (viii) In further alternative to claims the sums of ₦804,885,117.00; US$207,306.00 and Stg. 359,100.00 being special damages suffered by him as a result of the wrongful termination of his appointment.” The plaintiff, at the hearing, testified on his own behalf and tendered six documents. The defence called five witnesses in addition to producing twenty-four documents in evidence.
The learned trial Judge, after painstakingly and fairly reviewing the evidence and the submissions of the learned senior counsel representing the parties, in a reserved and well considered judgment, concluded as follows:- “In the circumstance, I hold that the just and appropriate order to make and I so do is grant leave to plaintiff to abandon reliefs (vi)-(viii) and the said reliefs are struck out. In the light of the foregoing claims (i) to (v) are respectively dismissed and claims (vi) to (viii) struck out. I award ₦10,000.00 costs in favour of the defence.”
The plaintiff was unhappy with the decision and being dissatisfied has appealed to this court on a notice of appeal containing eight grounds of appeal.
➥ ISSUE(S)
I. Whether the termination of appellant’s employment had proceeded on the basis of the Company and Allied Matters Act or otherwise?
➥ RESOLUTION(S) OF ISSUES
[APPEAL DISMISSED]
↪️ ISSUE 1: IN RESPONDENT’S FAVOUR.
[A SUSPENDED DIRECTOR IS NOT ENTITLED TO NOTICE OF MEETING
‘The suspension of the appellant is not an issue in this appeal. The appellant’s grouse is predicated on the appellant being a director. There could not be a valid decision removing him as the managing director at a meeting he was not served a notice inviting him to attend. Since the appellant is comfortable with the suspension of his appointment as managing director/chief executive the plank on which his claim rests collapsed. Having accepted the suspension of his only subsisting appointment with the respondent he was not entitled to the notice of the meeting. On suspension of the appellant’s appointment of managing director/chief executive all his rights, privileges and powers consequential or attached to the employment, including attending boards meetings, ceased. The notice of the board meeting is not given for the fun of it. It is given for serious business of the company. It is, therefore, not issued informally to a person who is otherwise entitled to attend but barred by reason of his suspension. All authorities show that he was not entitled to the notice of the meeting except to enable him to be there to disrupt the meeting or cover up his tracks. Assuming he was entitled to the notice, without so deciding, the practice is that the person being discussed would step out to enable other members of the board freely take their decision concerning him.’
‘It follows that appellant was not a director appointed as a managing director. He was an executive director, a fact he admitted in evidence, immediately before he was appointed the managing director. He testified to this effect in his evidence-in-chief as well as cross-examination. The submission of the appellant that he was a director and managing director and there is no provision in the Companies and Allied Matters Act to suspend the plaintiff as a director may be ingenious but not candid. It is not candid because there is no shred of evidence on the record supporting the claim that appellant was ever a director of respondent. There is no provision in the Companies and Allied Matters Act for appointment of executive director. It is therefore not surprising that the same Act has no provision for suspension or discipline of an executive director. A situation adequately covered by Article 105 already recited earlier in this judgment.’
EXECUTIVE DIRECTOR AND MANAGING DIRECTOR DOES NOT RUN CONCURRENTLY
‘The appellant was employed an executive director by way of promotion by virtue of exhibit V. He was subsequently promoted as Managing Director/Chief Executive by virtue of exhibit A. The two documents were made pursuance of the power of the Board of Directors under Article 105 of the Articles of Association of the First Bank of Nigeria Plc. The two positions do not run concurrently but consecutively: the former appointment terminates on the elevation of its holder to the position of a managing director. One is strengthened in this view by the inference that could be drawn from proviso to paragraph 1.00 of exhibit V, appellant’s letter of appointment as an executive director. I recite same immediately hereunder:- “Provided however that in the event of a serving Executive Director becoming the Managing Director/Chief Executive, his period of total service as Managing Director/Chief Executive shall begin to run from the date of his appointment as Managing Director/Chief Executive without taking into consideration the number of years he served as Executive Director.”’
APPELLANT DID NOT ENJOY DUAL CAPACITY AS MANAGING DIRECTOR AND A EXECUTIVE DIRECTOR
‘It is crystal clear from the above that the appellant never enjoyed dual capacity. His employment as Executive Director terminated on his appointment to the office of Managing Director/Chief Executive his mantle as Executive Director was given to another. His period total service as Executive Director ended on his appointment as Managing Director. There is nothing on record to show that he continued to earn the salary and allowances of the Executive Director on his appointment as Managing Director/Chief Executive of the respondent. In any case, there is no evidence on record that the two positions were held together by appellant. The burden was on him. The burden of proof is on the party who asserts or who will fail if no evidence on the issue is produced. See Section 136 of the Evidence Act, Ojomo v. Ijeh (1987) 4 NWLR (Pt. 64) 216, 230; Bakare v. ACB (1986) 3 NWLR (Pt. 26) 47, 57; Onobruchere v. Esegine (1986) 1 NWLR ((Pt. 19) 799. It will not be in accord with common sense, with respect, to sustain the contention of the appellant, that on his appointment as the Managing Director/Chief Executive of respondent he retained his position as the Executive Director thereby creating the hybrid image of a bat – neither a bird nor a mammal. He was conceding that he was suspended and at the same time contending that he remained a member of the Board of Directors who was entitled to a lie notice. Appellant cannot approbate and reprobate: Ajide v. Kelani (1985) 3 NWLR (Pt. 12) 248, 269. In any case, when the appellant was suspended in his capacity as the Managing Director/Chief Executive of the respondent by the directors, a body that could equally have suspended him as an executive director of the respondent it would be reasonable to infer that he was also suspended from the latter position if truly that appointment still subsisted. It will be a matter of course.’
THE SUSPENSION OF THE APPELLANT AS MANAGING DIRECTOR IS PROPER
‘The next question is whether the Board of Directors could have suspended him. There are allegation of impropriety made against the appellant which required the Board of Directors to investigate. It is in accord with judicial decision and business practice to ask the officer being investigated to stay away from the place of work to permit unhindered investigation to be carried out and also to allow peace to reign at his place of work. The period of suspension will keep such person out of further mischief and provide his employer further time for reflection and rumination. There are both foreign and local judicial decisions approving suspension of an employee pending the final determination of his involvement in the accusation. In University of Calabar v. Esiaga (1997) 4 NWLR (Pt. 502) 719 at 739-740 this court stated the meaning of suspending an employee from his employment:- “The word suspension means a temporary privation or deprivation, cessation or stoppage of or from the privileges and rights of a person. The word carries or conveys a temporary or transient disciplinary procedure which keeps away the victim or person disciplined from his regular occupation or calling, either for a fixed or terminal period or indefinitely. The disciplinary procedure gives the initiator of the discipline a period to make up his mind as to what should be done to the person facing the discipline. Although in most cases, suspension results in a disciplinary action, it is not invariably so. There are instances when the authority decides not to continue with the matter. This could be because the investigations did not result in any disciplinary conduct.”’
‘I am unable therefore to subscribe to the submission, on behalf of appellant, in his brief of argument, that even if the suspension of the appellant as the managing director were lawful and valid, such suspension could only affect the exercise of his executive functions. I am unable to understand the purport of this submission but in as much as he gained membership of the board on the platform of his being the Managing Director of the respondent, his function at all time was executive. The function of the appellant included attending board meetings from where he received his instructions and report back to the Board. The consequence of appellant’s suspension does not allow for mundane submission bordering on splitting the hair. The concomitant of the appellant’s suspension is suspension and cessation of the appellant’s contract of employment as well as right and privileges, duties and powers attached to the position including attendance at the respondent’s meetings be it board or otherwise.’
AT THE STAGE OF SUSPENSION THE RULES OF NATURAL JUSTICE ARE SUSPENDED
‘The appellant is not contesting his suspension but for purposes of completeness and in the event of further appeal, I want to ask myself whether he ought to have been heard before his suspension. The appellant was suspended and eventually removed because it became necessary to do so in the interest of the respondent’s business. It is a desperate situation which demands drastic action. It cannot wait for legal finesse such as fair hearing or natural justice. That can wait! The interest of the respondent’s business is of paramount consideration and the appellant will not be entitled to hearing prior 19 to the suspension. The principle of fair hearing, at this stage, at least, is shut out. In such circumstance, the long line of authorities are to the effect that the principle of natural justice is kept in abeyance. See Lewis v. Heffer and Sons (1978) 3 All ER 254. At page 364, Lord Denning exposed the legal situation thus:- “Very often irregularities are disclosed in a government department or in a business house; and a man may be suspended on full pay pending inquiries. Suspicion may rest on him; and so he is suspended until he is cleared of it. No one, so far as I know, has ever questioned such a suspension on the ground that it could not be done unless he is given notice of the charge and an opportunity of defending himself, and so forth. The suspension in such a case is merely done by way of good administration. A situation has arisen in which something may be done at once. The work of the department or the office is being affected by rumours and suspicions. The others will not trust the man. In order to get back to proper work, the man is suspended. At that stage the rules of natural justice do not apply.”’
‘Also in the case The Shell Petroleum Development Company Ltd. v. Lawson-Jack (1998) 4 NWLR (Pt. 545) 249 this court observed as follows at pg. 270:- “What it has done from the facts available was to set up an investigating panel to look into certain complaints bordering on alleged impropriety committed by one Mr. Ntuk Ntuk, a member of staff of the appellant company. In the process the respondent was suspended from duty on full pay pending the investigation. He was the head of the department directly concerned with the allegation against Mr. Ntuk Ntuk. A suspension of an employee is not an unusual procedure taken in order to facilitate such an investigation. The person affected can hardly complain, in the process, of not having been given a hearing; nor can he demand that the rules of natural justice should apply. The interest of the business of the defendant becomes paramount and the plaintiff is made to keep off the premises thereof until later.”’
THE POWER OF THE BOARD TO HIRE ALSO INCLUDES THE POWER TO FIRE
‘It appears that the axiom, the power to appoint is the power to remove, is supported by Interpretation Act. Section 11(1) of the Interpretation Act, Cap. 192 of the Laws of the Federation of Nigeria, 1990 provides as follows:- “11(1) where an enactment confers a power to appoint a person either to an office or to exercise any functions, whether for a specific period or not the power includes:- (a) … (b) power to remove or suspend him.” It follows from the above that the removal of the appellant by the respondent’s board which appointed him is covered by the above provision. The invocation of the principle of the power to ‘hire’ is the power to ‘fire’ by the learned trial Judge is supported by the statutory provisions. The directors of the respondent employed or appointed him; that body, therefore, has reciprocal power to remove him. The Articles of Association, to my mind, is a subsidiary legislation made pursuant to Companies and Allied Matters Act. The appointment made by the board pursuant to Article 105 of the respondent’s Articles of Association has the force of a legislation. In case I am wrong, the provisions of section 41(3) of the Act gives force or cover of all enactment to the Article of Association. The appointment by the board of directors under Article 105 has the effect of one made under an enactment. He can, therefore be removed or suspended by the board.’
‘Appellant must be reminded out rightly of the provision of section 10(2) of the Interpretation Act, which provides:- “10(2) An enactment which confers power to do any act shall be construed as also conferring all such other powers as are reasonably necessary to enable that Act to be done or are incidental to the doing of it.”’]
.
.
.
✓ DECISION:
‘The appellant as observed earlier is disqualified to attend the meeting and was consequently not entitled to the notice of the meeting. He was disqualified by reason of his suspension by the board of directors under Article 105 read in conjunction with the provisions of section 41(3) of the Companies and Allied Matters Act. The appeal is unmeritorious. It lacks merit and is dismissed by me. I affirm the decision of the learned trial Judge, Nwodo, J. There is order as to costs assessed at ₦10,000.00 to the respondent.’
➥ FURTHER DICTA:
⦿ WHERE NO NEW POINT IS RAISED, A REPLY BRIEF IS UNNECESSARY
I wish respectfully to observe that the appellant’s reply brief went contrary to the principle governing writing of a reply brief. There is a demand for a reply brief when an issue of law or, argument in the respondent’s brief deals with fresh point, it should therefore be restricted or devoted strictly to proffering answer to the new points raised in the respondent’s brief. It is not the intention of Order 6 rule 5 which provides for a reply brief, to allow the appellant to re-argue or re-open his appeal all over again under the pretext of writing a reply brief by merely re-emphasising argument already contained in the appellant’s brief. It is therefore clear that where there is no fresh point raised in the respondent’s brief, appellant’s reply brief would not only be unnecessary but also uncalled for and an unwholesome waste of the time of the respondent and the court. See Supreme Court’s observation in Olafisoye v. Federal Republic of Nigeria (2004) 4 NWLR (Pt. 864) 580, 644 per Niki Tobi, JSC and Ikine v. Edjerode (2001) 18 NWLR (Pt. 745) 446, 461 per Ejiwunmi, JSC. This is not only a typical example of the benediction being longer than mass but also in fragrant disregard of respondent’s right to reply. — Salami, JCA.
⦿ STATUS OF A MANAGING DIRECTOR – CONTRACT OF SERVICE
It is settled that executive directors are mere senior managers appointed by the Board under the Articles of Association for convenience and interest of running the company. In Yalaju-Amaye v. Associated Registered Engineering Contractors Ltd. (1990) 2 NSCC 462, 475; (1990) 4 NWLR (Pt. 145) 422 at 444 it was observed on the status of a managing director as follows:- “The Court of Appeal stated the general rule and the usual position that there is generally the relationship of master and servant between the managing director and his company. As an employee, there is usually a contract of service between him and the company. The Managing Director relies on his tenure on the Articles of Association of the company and any other contract of service supplemental thereto. Thus, a valid determination of his contract of service will depend on the terms of such contract of service. No such contract of service was proved.” — Salami, JCA.
⦿ NON-EXECUTIVE DIRECTORS
The respondent’s board, in the instant case, consists of two classes of directors, executive and non-executive. The non-executive are directors appointed directly under sections 247, 248 and 249 of the Companies and Allied Matters Act, Cap. 59. The second tier of directors are not employees of the company as they do not have contract of employment and do not draw salaries. The remuneration paid to them are in the nature of fees or allowances fixed at the Annual General Meeting by resolution and draw or earn it only when and if they attend meeting of Board of Directors. Their appointments, duties, powers and removal are provided for in the Companies, and Allied Matters Act. They are not usually required to report for duty at the office and their functions, being of part time nature, they could be engaged in some other endeavour which could be full or part-time. I agree with the learned senior counsel for respondent that appellant falls within modern day executive directors who are employees and devote their whole time and attention to the work of their employer to the exclusion of any other paid jobs. They are employed by the bank to attend to the daily running and management of the company. Each of them has a contract of service with his employer and earns salaries. Their appointments, powers, duties, rights, discipline and tenure are regulated by the Articles of Association of the respondent particularly Articles 105-108 as well as their respective contracts of service. Unlike directors, they do not retire by rotation and their remuneration are determined by the Board of Directors. — Salami, JCA.
⦿ DAMAGES IS THE HIGHEST THAT CAN BE ASKED FOR IN A MASTER-SERVANT RELATIONSHIP
The case of Malloch v. Aberdeen Corporation (1971) 2 All ER 1278 at 1294, (1971) 1 WLR 1578, 1595 cited in the respondent’s brief of argument is being referred to in connection with exclusion of requirement of natural justice and the nature of remedy available to a plaintiff. A plaintiff can only ask for, in pure master and servant cases, at the most damages, Lord Wilberforce states as follows at the relevant pages of the reports:- “The argument that once it is shown that the relevant relationship is that of master and servant, this is sufficient to exclude the requirements of natural justice is often found, in one form or another, in reported cases. There are two reasons behind it. The first is that, in master and servant cases, one is normally in the field of common law of contract inter parties so that principles of administrative law, including those of natural justice, have no part to play. The second relates to the remedy; it is that in pure master and servant cases, the most that can be obtained is damages, if the dismissal is wrongful; no order for reinstatement can be made, so no room exists for such remedies as administrative law may grant, such as a declaration that the dismissal is void. I think there is validity in both of these arguments.” — Salami, JCA.
➥ LEAD JUDGEMENT DELIVERED BY:
Salami, JCA
➥ APPEARANCES
⦿ FOR THE APPELLANT(S)
Professor Adesanya, adopted and relied on appellant’s brief and appellant’s reply briefs prepared by Chief F.R.A. Williams (SAN).
⦿ FOR THE RESPONDENT(S)
Chief Richard Akinjide.
➥ MISCELLANEOUS POINTS
➥ REFERENCED (LEGISLATION)
➥ REFERENCED (CASE)
➥ REFERENCED (OTHERS)
