➥ CASE SUMMARY OF:
Chief R.A. Okoya & Ors. V. S. Santilli & Ors. (SC.206/1989, 23 March 1990)
by Branham Chima.
➥ ISSUES RAISED
Stay of execution in respect of declaratory orders;
Foss v. Harbottle.
➥ CASE FACT/HISTORY
The background material to this appeal is as follows. The plaintiffs, Chief R.A. Okoya, Mrs. K. Okoya and Albion Construction Ltd. sued the defendants, S. Santilli, A. Davanzo and Prince D.A. Ademiluyi in a Federal High Court Lagos Division, claiming against them the following reliefs inter alia:- A declaration that the document, copies of which were lodged with the registrar of Companies and the Federal Inland Revenue Department, to which the 1st and 2nd plaintiffs were subscribers, is the only true memorandum and articles of association of the Albion Construction Co. Ltd.
This ruling is in respect of the application for stay of execution.
➥ ISSUE(S) & RESOLUTION(S)
I. Whether a defendant who has filed an appeal against purely declaratory orders made against him is entitled to apply for “stay of execution” of those orders pending the hearing and determination of the appeal?
RESOLUTION: IN APPELLANT’S FAVOUR.
[THERE CANNOT BE A STAY IN RESPECT OF DECLARATORY JUDGEMENTS
‘The conclusion I reach is that there cannot be a stay of execution of declaratory judgments. The glosses which counsel for the defendants/respondents seeks to put on this general proposition have in my judgment no validity in law. It follows in my judgment that a defendant who has filed an appeal against a declaratory judgment or order is not entitled to apply for a stay of execution of that judgment or order. Such an application in the circumstance will be misconceived.’]
II. Whether the Court of Appeal had jurisdiction to make the orders contained in its decision dated 30.5.89 having regard to the rule in Foss v. Harbottle and, in particular the rule that the court ought not to interfere in matters relating to the internal management of the affairs of a corporation or association save at the instance of the corporation itself or at the instance of a majority of its members AND whether or not it was proper for the court below to have made the appointment of receivers and managers for the 3rd plaintiff/company?
RESOLUTION: IN APPELLANT’S FAVOUR.
[THERE WAS NO REASON TO APPOINT RECEIVER MANAGER
‘For the lower court to have grounded its appointment of receivers and managers for the 3rd plaintiff/company on a non existent accord between the parties to the appeal before it amounts in my judgment to the exercise of its statutory power in this regard on wrong considerations. In effect, the lower court has not properly decided that it was just and convenient to appoint receivers and managers for the 3rd plaintiff/company. This being so I am satisfied that I am entitled to interfere with the appointment. And seeing that the respondent to this appeal, the defendants have not filed any notice of intention to contend that the decision of the court below should be affirmed on grounds other than those relied on by that court, under order 8 rule 3(2) of the rules of this court, I have no choice but to set aside the order appointing the receivers and managers for the 3rd plaintiff/company.’]
‘In the result, the appeal of the plaintiffs/appellants is allowed by me. The order of the lower court granting a stay of execution in the matter now on appeal together with the whole of the conditions attached to the stay of execution including the appointment of a board of receivers and managers for the 3rd defendant/appellant is hereby set aside by me. The order of Odunowo, J., at the trial court on the stay of execution of the order directing the third defendant to execute an instrument of transfer in respect of 51% or 102,000 shares which, according to the declaratory judgment, he holds in trust for the 1st plaintiff is restored without prejudice to any of the declaratory judgments granted by the court. The plaintiffs/appellants are entitled to their costs in this court and in the court below which I assess at ₦500.00 and ₦300.00 respectively.’
➥ FURTHER DICTA:
⦿ EXECUTORY JUDGEMENT VS DECLARATORY JUDGEMENT
Executory judgment declares the respective rights of the parties and then proceeds to order the defendant to act in a particular way. e.g. to pay damages or refrain from interfering with the plaintiffs’ rights, such order being enforceable by execution if disobeyed. Declaratory judgments, on the other hand, merely proclaim the existence of a legal relationship and do not contain any order which may be enforced against the defendant. Second: A declaratory judgment may be the ground of subsequent proceedings in which the right, having been violated, receives enforcement but in the meantime there is no enforcement or any claim to it … A declaratory judgment is complete in itself since the relief is the declaration. See Vol. 1 Halbury Laws, 4th Ed., para. 185 187; Akunnia v. Attorney General of Anambra State (1977) 5 S.C. (161 at 177). — Agbaje JSC.
⦿ A STAY OF PROCEEDINGS CAN ONLY BE GRANTED IN RESPECT OF EXECUTORY ORDER
A stay of execution only prevents the plaintiffs or beneficiary of the judgment or order from putting into operation the machinery of the law, the legal process of warrants of execution and so forth. An order for stay pending appeal therefore can only be granted in respect of executory judgment or order. But the judgment of the Court of Appeal is not an executory order. — Agbaje JSC.
⦿ COURT CANNOT GO OUTSIDE THE TERMS/ORDERS OF THE MOTION
The Court of Appeal cannot go outside the terms of the motion however misconceived it is. It is bound by the terms or prayers in the motion filed. (Commissioner for Works Benue State v. Devcon Construction Co. Ltd. (1988) 3 N.W.L.R. (Pt.83) 407 at 420). Since there was nothing to stay, the Court of Appeal was in error to have made the order prayed for. — Agbaje JSC.
⦿ THE APPOINTMENT OF A RECEIVER/MANAGER DOES NOT OFFEND FOSS v. HARBOTTLE
It is clear law that if owing to disputes among the directors they are unable to act and the affairs of the company cannot be carried on the court will interfere by an injunction or by the appointment of a receiver or manager of the undertaking and assets of the company until the management of the company is restored to a proper footing. See Featherstone v. Cooke (1873) L.R. 16 Ex 298; Trade Auxiliary Co. v. Vicker L.R. 76 Ex 303; and Standfied v. Gebbon (1925) W.N. 11 1925. The above principles will apply in my view in a situation where owing to disputes as to shareholdings the conduct of the affairs of a company will suffer or will be in jeopardy. In my judgment, the appointment of a receiver or manager of the undertaking and assets of a company in the situations I have just described above will not and cannot offend against the rule of Foss v. Harbottle (supra). In such a situation there is paralysis or imminent paralysis of the conduct of the affairs of the company, which the court by its intervention has to avert by the appointment of a receiver or manager for the company. — Agbaje JSC.
⦿ AN APPLICANT IS BOUND BY HIS PRAYERS IN HIS MOTION
It is an elementary but fundamental principle of our adversary system that an applicant is bound by the prayers in his motion. See A.C.B. Ltd. v. A.G. Northern Nigeria (1969) N.M.L.R. 231. — Karibi-Whyte JSC.
⦿ THERE CANNOT BE A STAY AGAINST A DECLARATORY ORDER
In my opinion, there cannot be a stay of execution of a declaratory order or judgment. The contentions of Chief Benson for the respondents has not shown that it is a conceptual possibility. A defendant who has filed an appeal against a declaratory judgment or order is not entitled to apply for a stay of execution of that judgment or order. This is because a declaratory judgment or order has no coercive effect and threatens no one. — Karibi-Whyte JSC.
➥ LEAD JUDGEMENT DELIVERED BY:
⦿ FOR THE APPELLANT(S)
Chief Williams, S.A.N.
⦿ FOR THE RESPONDENT(S)
Chief Benson, S.A.N.
➥ MISCELLANEOUS POINTS
➥ REFERENCED (LEGISLATION)
➥ REFERENCED (CASE)
➥ REFERENCED (OTHERS)
⦿ MEANING OF JUST AND FAIR
In the latter regard I refer to Halsbury’s Law of England, Vol. 21, page 348 para. “370.Meaning of just or convenient. The words just or convenient in the statutory provision (k) must be read just, as well as convenient (l). They do not mean that the court can grant an injunction simply because the court thinks it convenient, but mean that the court should grant an injunction for protection of rights or the prevention of injury according to legal principles (m). They confer no arbitrary nor unregulated discretion on the court, and do not authorise it to invent new modes of enforcing judgment in substitution for the ordinary modes (o).” — Agbaje JSC.