➥ CASE SUMMARY OF:
Mrs. Ethel Onyemaechi David Orji V. Dorji Textiles Mills (Nig) Ltd. (SC.62/2003, 18 DEC 2009)
by Branham Chima (LL.B.)
➥ ISSUES RAISED
Locus standi;
General meeting of company.
➥ CASE FACT/HISTORY
The appellant, as applicant, asked for the following reliefs at the Federal High Court, Port Harcourt, in an originating summons: “(i) That an Extraordinary General Meeting of the company and the Board may be convened by the court for the purpose of considering and if thought fit passing the Resolution as set forth in the schedule hereto; (ii) That the court may give directions as to the manner in which the said meeting is to be called, held and conducted and all such ancillary and consequential directions as it may think expedient. (iii). That the court may direct that applicant be allowed to attend any general meeting or other meeting of the 1st Respondent and its board and to speak and vote on any resolution before the meeting and to participate in the business and activities of the 1st Respondent company without obstruction, restraint or interference by the 2nd and 3rd respondents, their servants, agents, privies workers howsoever. (iv) That the court may direct that applicant be allowed right of entry into the offices and premises of 1st respondent to attend meetings and participate in the business, activities and affairs of the 1st respondent company. (v) That the court may declare that applicant as director and share holder of the 1st Respondent company is entitled to all proprietary rights and profits accruing to the 1st Respondent company. (vi) That the costs of this application be provided for.” The appellant swore to a 17-paragraph affidavit in support of the originating summons. The 3rd respondent swore to a counter-affidavit of 10 paragraphs. The appellant also swore to further and better affidavits.She exhibited Particulars of Director shares allotted, Memorandum and Articles of Association and all that. The 3rd respondent also swore to a further counter-affidavit. The learned trial Judge did not see any merit in the case of the appellant. Dismissing the originating summons, the learned trial Judge said at page 102 of the Record: “
In conclusion, after a careful consideration of all the documentary evidence before me, in the instant case, I hold that the present Application fails on the ground that the Applicant has not satisfactorily proved before this Court that she is a shareholder, member/director of the Respondent Company entitled to seek for the relief claimed in the Originating Summons pursuant to the provision of Sec. 223 of the Companies and Allied Matters Act 1990, It is hereby dismissed.”
Dissatisfied, she appealed to the Court of Appeal. That court also dismissed the appeal.
➥ ISSUE(S) & RESOLUTION(S)
[APPEAL DISMISSED]
↪️ I. Whether the Appellant proved her membership and directorship of the company?
RESOLUTION: IN RESPONDENT’S FAVOUR.
[THE BURDEN WAS ON THE APPELLANT
‘It is clear from the above section and totality of the reliefs sought that the appellant claims to be a director and a member of the respondent company. There cannot be any argument about that. Section 223(1) clearly provides that a director or a member of a company can initiate an action in a court of law for the purposes of calling or conducting a meeting. In view of the fact that the appellant based her action and sought the reliefs under section 223 of the Companies and Allied Matters Act, the section 137(1) burden of proof is on the appellant and not on the respondents. In accordance with section 137(1) of the Evidence Act, I ask the question rhetorically: who or which of the parties will have or obtain judgment in this case if no evidence of directorship, membership or shareholding is given? Can that party be the appellant? No. Certainly not. Can that party be the respondents? Yes, and unequivocally so. After all, the appellant claims to be a director and member of the companies and should prove her dual status in order to obtain judgment. Section 223 clearly provides for the locus standi and the appellant must prove that she has the standing to sue.’
‘The particular fact which, in my view, is the material and determining fact in this case is the claim by the appellant that she is a director and member of the 1st respondent company. This, being a particular fact within the knowledge of the appellant which she wants the court to believe in its existence, the burden is unequivocally on her to prove the particular fact. It is after the appellant has discharged the burden on her that it shifts to the respondents. Where the appellant fails to prove the particular facts in section 139 of the Evidence Act, the burden does not shift to the respondents.’
APPELLANT FAILED TO PROVE THAT SHE IS A MEMBER OF THE COMPANY
‘Did the appellant satisfy the burden of proof placed on her by the Evidence Act? And here, the burden on her is to prove that she was a director and member of the 1st respondent company which made her a director and shareholder. Let me take the evidence of the appellant. In the main affidavit in support of the originating summons of 17 paragraphs, appellant’s only exhibit is the letter she sent to the Secretary of the 1st respondent asking him to summon a meeting of Directors/Shareholders, Is that letter proof that the appellant was a Director or shareholder of the company to justify or vindicate paragraphs 2 and 3 of the Affidavit in Support? I think not. A letter calling for a meeting of a company cannot by any way be regarded or taken as document or evidence of being a Director or Shareholder of a company. In other words, a letter requesting for a meeting of a company cannot metamorphose to membership of the company.’
THE DOCUMENT RELIED UPON BY THE APPELLANT ARE SPENT IN LAW – INVALID
‘The documents relied upon by the appellant in respect of her status as director and shareholder of the company is dated 13th January, 1986. They are the documents which gave birth to the formation of the company. Companies have the legal right to amend, alter or change their memorandum and articles of association. They also have the right to amend, alter and change their Particulars of Directors. This is clearly provided in Form C07 as follow: “Particulars of Directors of any changes therein”. See Yalaju Amaye v. AREC Ltd. (1990) 4 NWLR (pt. 145) 422. If any alteration or change is carried out in accordance with the provisions of the CAMA, a court of law is not competent to hold against the alteration or change. Sections 44 to 48 of CAMA provide for the alteration of the Memorandum and Articles of Association and where a company complies with the provisions, that is the end of the matter. The alteration in the Particulars of Directors was made on 23rd March, 1993; some seven years after the initial documents that gave birth to the companies. It is elementary law that where a document is altered, it no more enjoys any legal life. The document becomes moribund or dead to the extent of the alteration. Accordingly, a party cannot rely on such a document because it is lifeless in law. The existing legal life is transferred to the new document which provides for the alteration. It is in this regard, I come to the conclusion that the documents relied upon by the appellant in all her affidavits are totally spent in law and therefore of no evidential or probative value, and I so hold.’
THE APPELLANT WAS REMOVED AS DIRECTOR AND SHAREHOLDER OF THE COMPANY
‘This is a case of concurrent findings of the two lower courts: the Federal High Court and the Court of Appeal. The crux or fulcrum of this case is the removal of the appellant from the companies. On that issue, the learned trial Judge said at page 102 of the Record: “From C07 which contains the particulars of Directors and any changes therein filed in support of the Application as Exhibit B shows that the present applicant has been removed by the shareholders at an extraordinary General Meeting of the company held on 23/3/91 effective from 23rd March 1993.” Dealing with the same issue, the Court of Appeal said at page 157 of the Record: “The onus was clearly on the appellant to show that as at the time of the action she was still a shareholder or member of the companies. In respect of Palm Garden Hotels Ltd., page 63 shows that the appellant was removed as Director on the 23rd March 1993. There was also evidence at pages 11-13 that the applicant was removed as Director by an extraordinary General Meeting from the Board of Dorji Textile Mills Ltd. with effect from 23rd March, 1993. The appellant produced no evidence to show that she paid cash for shares in the two companies as she claimed and produced no evidence to show that she was not removed, as Director.” I do not see any perversity in the above concurrent findings of the two courts. They are clearly borne out from the Record and I so hold.’]
.
.
.
✓ DECISION:
‘I expected the appellant to challenge her removal if she thought that it offended due process in that it did not comply with the relevant provisions of the Companies and Allied Matters Act, but she did not. In the absence of such action, appellant cannot succeed in the action she took asking the court to convene an Extraordinary General Meeting. If she was rightly removed as contended by the respondents and agreed by the two courts below and this court, she has no valid action and I so hold.’
➥ FURTHER DICTA:
⦿ MEANING OF THE EXPRESSION ‘DEEMED’
The operative and telling expression or word in section 79(1) is “deemed”. The present tense of the word is “deem”, it means to treat a thing as being something that it is not or as possessing certain qualities that it does not possess. It is a formal word often used in legislation to create legal fictions. A deeming provision, according to Advanced Law Lexicon, Vol. 2 (3rd edition) is a provision of law which makes supposition. The deeming provision is intended to enlarge the meaning of a particular word or to include matters which otherwise may or may not fall within the main provision. When a person, for example, is deemed to be something, the only meaning possible is that whereas he is not in reality that something, the Act of Parliament requires him to be treated as if he were. I will be more comfortable to read section 79(1) in that context. — Niki Tobi JSC.
⦿ A DEEMING PROVISION WILL GIVE WAY TO THE REAL PROVISION
In my humble view, a deeming provision in a statute is more of a caricature than anything. It is also more of a camouflage than anything. The word, in short, stands in the place of a reality. And a deeming provision in a section of a statute will always operate in the absence of the real provision; it cannot operate side by side with the real provision. In other words, both the real and deemed provisions cannot be in the same section dealing with the same subject matter. In such a situation, a supposed deeming provision will give way to the real provision. — Niki Tobi JSC.
⦿ BETTER WAY TO PROVE MEMBERSHIP OF A COMPANY
However, I must emphasis that there is no better way the appellant could have conclusively discharged the onus of proving that she is a member of the two companies that is, Dorji Textiles Mills (Nig) Ltd and Palm Gardens Hotels Ltd, than by exhibiting to her affidavit in support of the Originating Summons the membership registers or the certified copies of the same, that is particularly as the two companies are still thriving concerns. — C.M. Chukwuma-Eneh, JSC
➥ LEAD JUDGEMENT DELIVERED BY:
Niki Tobi, J.S.C.
➥ APPEARANCES
⦿ FOR THE APPELLANT(S)
Chief Amaechi Nwaiwu.
⦿ FOR THE RESPONDENT(S)
Chief Donald Udogu.
➥ MISCELLANEOUS POINTS
➥ REFERENCED (LEGISLATION)
➥ REFERENCED (CASE)
➥ REFERENCED (OTHERS)
