Case Review of Raji v. Truck Sabinos (NIG) Ltd
(2018) LPELR-45011(ca) on the jurisdiction of the Federal High Court over the
removal of Company Secretaries; a shift in Corporate Law Practice?
(2018) LPELR-45011(ca) on the jurisdiction of the Federal High Court over the
removal of Company Secretaries; a shift in Corporate Law Practice?
There are some
interesting court decisions which have the potential of shifting long-standing
jurisprudence of certain issues in corporate law practice in Nigeria. One of
such developments is the issue of the jurisdiction of the Federal High Court
over the removal of a company secretary. A legal practitioner of few years
post-call or even almost every Nigerian corporate lawyer would reason that
there is no legal argument worthy of contesting the jurisdiction of the Federal
High Court over the removal of a company secretary, as such jurisdiction is statutorily
vested on the Federal High Court under Section 251(e) of the 1999
Constitution which states thus:
interesting court decisions which have the potential of shifting long-standing
jurisprudence of certain issues in corporate law practice in Nigeria. One of
such developments is the issue of the jurisdiction of the Federal High Court
over the removal of a company secretary. A legal practitioner of few years
post-call or even almost every Nigerian corporate lawyer would reason that
there is no legal argument worthy of contesting the jurisdiction of the Federal
High Court over the removal of a company secretary, as such jurisdiction is statutorily
vested on the Federal High Court under Section 251(e) of the 1999
Constitution which states thus:
251. (1) Notwithstanding anything to the contained
in this Constitution and in addition to such other jurisdiction as may be
conferred upon it by an Act of the National Assembly, the Federal High Court
shall have and exercise jurisdiction to the exclusion of any other court in
civil causes and matters:
in this Constitution and in addition to such other jurisdiction as may be
conferred upon it by an Act of the National Assembly, the Federal High Court
shall have and exercise jurisdiction to the exclusion of any other court in
civil causes and matters:
…
(e) arising from the operation
of the Companies and Allied Matters Act or any other enactment replacing the
Act or regulating the operation of companies incorporated under the Companies
and Allied Matters Act;
of the Companies and Allied Matters Act or any other enactment replacing the
Act or regulating the operation of companies incorporated under the Companies
and Allied Matters Act;
A literal
interpretation of the foregoing provision is that the Federal High Court has
exclusive jurisdiction over every matter that arises from the operation of the
Companies and Allied Matters Act, and that should obviously include matters
bordering on the removal of company secretaries. However, the Court of Appeal in
RAJI v. TRUCK SABINOS (NIG) LTD (2018)
LPELR-45011(CA) has adopted a more constructive interpretation which is to
the effect that the Federal High Court does not have jurisdiction over the
removal of the company secretary of a private company. The foregoing
interpretation is supported by the finding of the Court that the Companies and
Allied Matters Act (CAMA) does not have any provisions on the removal of the
company secretary of a private company; as section 296(2) of CAMA, which
only provides for the removal of the company secretary of a public company, states
thus:
interpretation of the foregoing provision is that the Federal High Court has
exclusive jurisdiction over every matter that arises from the operation of the
Companies and Allied Matters Act, and that should obviously include matters
bordering on the removal of company secretaries. However, the Court of Appeal in
RAJI v. TRUCK SABINOS (NIG) LTD (2018)
LPELR-45011(CA) has adopted a more constructive interpretation which is to
the effect that the Federal High Court does not have jurisdiction over the
removal of the company secretary of a private company. The foregoing
interpretation is supported by the finding of the Court that the Companies and
Allied Matters Act (CAMA) does not have any provisions on the removal of the
company secretary of a private company; as section 296(2) of CAMA, which
only provides for the removal of the company secretary of a public company, states
thus:
“Where it is intended to remove the secretary of a public company, the board of directors shall…”
Let us briefly review the case of RAJI v. TRUCK SABINOS (NIG) LTD (2018)
LPELR-45011(CA) in order to fully
understand the reasoning of the Court.
LPELR-45011(CA) in order to fully
understand the reasoning of the Court.
Brief Facts:
The Plaintiff
was the company secretary of the Defendant under a solicitor’s retainer
agreement between the Plaintiff and the Defendant. The agreed fee for the
retainer wasN300,000.00 (Three Hundred
Thousand Naira) per annum payable on a quarterly installment ofN75,000.00 (Seventy-five Thousand Naira
each). The said Agreement dated 1st July, 2003 was executed between the parties
to ratify the appointment of the Plaintiff as Company Secretary/Legal Adviser.
was the company secretary of the Defendant under a solicitor’s retainer
agreement between the Plaintiff and the Defendant. The agreed fee for the
retainer was
Thousand Naira) per annum payable on a quarterly installment of
each). The said Agreement dated 1st July, 2003 was executed between the parties
to ratify the appointment of the Plaintiff as Company Secretary/Legal Adviser.
The Defendant had been paying the amount due under the agreement until the last
quarter of the year 2006 when it refused to pay as agreed by both parties in
the retainer agreement. The Plaintiff thereafter sent several demand letters
requesting for the payment of the sum due. When no response was received from
the Defendant, a final demand letter dated 21st November, 2006 was sent to the
Defendant in respect of the quarterly fee due. The Defendant, in a reply letter,
stated that the Plaintiff was not entitled to the demanded fees having not
performed its part of the agreement.
The Plaintiff
consequently brought an action before the Federal High Court claiming a
declaration that the unilateral termination of the retainership agreement
between the appellant and the respondent, as solicitor and client respectively,
in the running of the corporate affairs/engagements of the respondent was
wrongful and occasioned pecuniary damages ofN300,000
annual retainer fee;N75,000 being the
4th quarter 2006 retainer fee; andN400,000
being general damages for the breach of the retainership agreement together
withN200,000 being cost of the action.
consequently brought an action before the Federal High Court claiming a
declaration that the unilateral termination of the retainership agreement
between the appellant and the respondent, as solicitor and client respectively,
in the running of the corporate affairs/engagements of the respondent was
wrongful and occasioned pecuniary damages of
annual retainer fee;
4th quarter 2006 retainer fee; and
being general damages for the breach of the retainership agreement together
with
Decision of the Lower Court
The Federal High
Court held that it had no jurisdiction to entertain the action. The court also
refused to transfer the action to the High Court of Lagos State on the ground
that it (High Court of Lagos State) had also struck out the matter believing it
lacked the jurisdiction to entertain same. The Federal High Court therefore
struck out the matter for lack of jurisdiction. The counter claim which the
Court below held was in negligence was also struck out for lack of
jurisdiction. The appellant, dissatisfied with the decision of the Court below
appealed to the Court of Appeal.
Court held that it had no jurisdiction to entertain the action. The court also
refused to transfer the action to the High Court of Lagos State on the ground
that it (High Court of Lagos State) had also struck out the matter believing it
lacked the jurisdiction to entertain same. The Federal High Court therefore
struck out the matter for lack of jurisdiction. The counter claim which the
Court below held was in negligence was also struck out for lack of
jurisdiction. The appellant, dissatisfied with the decision of the Court below
appealed to the Court of Appeal.
Appellant’s Argument
The appellant
was dissatisfied with the decision of the Court below and filed a notice of
appeal with three grounds of appeal and subsequently filed a brief of argument
in which it contended that, considering the claim in the writ of summons and
the statement of claim which was on the duties of the appellant as the company
secretary, the Court below had the exclusive jurisdiction to entertain the
action and should not have struck it out.
was dissatisfied with the decision of the Court below and filed a notice of
appeal with three grounds of appeal and subsequently filed a brief of argument
in which it contended that, considering the claim in the writ of summons and
the statement of claim which was on the duties of the appellant as the company
secretary, the Court below had the exclusive jurisdiction to entertain the
action and should not have struck it out.
Respondent’s Argument
The respondent, on
the other hand, contended that there is no provision in Section 22(2) of the
Federal High Court Act empowering it to transfer any matter which ordinarily
ought to have been commenced in the High Court of a State to that Court where
the case had already been struck out by the High Court for want of jurisdiction.
The respondent relied on the case of Adetayo v. Ademola (2010) 15 NWLR
(pt.1215) 169 at 195. The respondent therefore urged that the appeal be
dismissed for lacking in merit.
the other hand, contended that there is no provision in Section 22(2) of the
Federal High Court Act empowering it to transfer any matter which ordinarily
ought to have been commenced in the High Court of a State to that Court where
the case had already been struck out by the High Court for want of jurisdiction.
The respondent relied on the case of Adetayo v. Ademola (2010) 15 NWLR
(pt.1215) 169 at 195. The respondent therefore urged that the appeal be
dismissed for lacking in merit.
Decision of the Court of Appeal
In reaching its decision,
the Court of Appeal relied on the fact that here was no indication in the processes
filed in the action indicating that the Respondent is a public company.
Following the fact that the respondent is a private company which is outside
the purview of 296(2) of CAMA, the court held that the matter could be decided
without recourse to CAMA or any enactment regulating operation of companies
under CAMA; which further removes the matter from under the purview of section
251(e) of the 1999 Constitution. The court held that actions founded on a
contractual relationship between a company and its employees as well as claims
for recovery of debts though concerning a company are not matters arising from
the operation of CAMA or any other enactment relating to CAMA or regulating the
operation of companies incorporated under CAMA which is outside the
jurisdiction of the Federal High Court as enshrined in Section 251(e) of the
1999 Constitution. The appellate court therefore affirmed the decision of the
lower court that the Federal High Court does not have the jurisdiction to
entertain the suit, having regard to the fact that it is a matter of simple
contract of employment and a claim for damages arising from alleged wrongful
termination of the contract. The appeal was therefore dismissed.
the Court of Appeal relied on the fact that here was no indication in the processes
filed in the action indicating that the Respondent is a public company.
Following the fact that the respondent is a private company which is outside
the purview of 296(2) of CAMA, the court held that the matter could be decided
without recourse to CAMA or any enactment regulating operation of companies
under CAMA; which further removes the matter from under the purview of section
251(e) of the 1999 Constitution. The court held that actions founded on a
contractual relationship between a company and its employees as well as claims
for recovery of debts though concerning a company are not matters arising from
the operation of CAMA or any other enactment relating to CAMA or regulating the
operation of companies incorporated under CAMA which is outside the
jurisdiction of the Federal High Court as enshrined in Section 251(e) of the
1999 Constitution. The appellate court therefore affirmed the decision of the
lower court that the Federal High Court does not have the jurisdiction to
entertain the suit, having regard to the fact that it is a matter of simple
contract of employment and a claim for damages arising from alleged wrongful
termination of the contract. The appeal was therefore dismissed.
The Court of Appeal however noted in its decision that the matter was a pending
action in 2010 when Section 254C of the Third Alteration Act amending the 1999
Constitution (which provides for the exclusive jurisdiction of the National
Industrial Court) was made by the National Assembly in 2010. Consequently,
section 24(3) of the National Industrial Court Act would still apply to save
the action for its transfer to the National Industrial Court. The order
striking out the action was therefore varied to an order transferring the
action to the National Industrial Court Lagos for determination.
Comments:
The decision of the Court of Appeal in this matter is indeed a welcome
precedent. The courts have always transcended from giving only literal judicial
interpretation of the Constitution to embarking on more constructive
interpretations and holistic interpretations. Section 251(e) of the 1999
Constitution which is germane to the present case states that the Federal High
Court shall have exclusive jurisdiction in civil causes or matters arising from
the operation of CAMA and any other enactment replacing that Act or regulating
the operation of companies incorporated under the CAMA. It is therefore
axiomatic that the removal of the company secretary of a private company does
not fall under the jurisdiction of the Federal High Court as CAMA has no
provisions for such procedure. Accordingly, the matter should be treated as a
simple employment matter which under the exclusive original jurisdiction of the
National Industrial Court.
However, the
precedent created by the Court of Appeal in this matter will be difficult to
enforce due to the fact that section 22 of the Federal High Court Act does not
provide for the transfer of cases from the Federal High Court to the National
Industrial Court. The problem caused by the lacuna is that labour/employment
matters of this nature which are filed at the Federal High Court after the
coming into force of Section 254C of the (Third Alteration) Act, 2010 cannot be
transferred by the Federal High Court to the National Industrial Court which
now has the exclusive original jurisdiction over such matters. It is therefore
important that the National Assembly fills the lacuna by an amendment of
Section 22 of the Federal High Court Act to accommodate the transfer of cases
of this nature by the Federal High Court to the National Industrial Court which
has exclusive original jurisdiction to determine such cases.
precedent created by the Court of Appeal in this matter will be difficult to
enforce due to the fact that section 22 of the Federal High Court Act does not
provide for the transfer of cases from the Federal High Court to the National
Industrial Court. The problem caused by the lacuna is that labour/employment
matters of this nature which are filed at the Federal High Court after the
coming into force of Section 254C of the (Third Alteration) Act, 2010 cannot be
transferred by the Federal High Court to the National Industrial Court which
now has the exclusive original jurisdiction over such matters. It is therefore
important that the National Assembly fills the lacuna by an amendment of
Section 22 of the Federal High Court Act to accommodate the transfer of cases
of this nature by the Federal High Court to the National Industrial Court which
has exclusive original jurisdiction to determine such cases.
Ayodeji Ayolola is an Adjunct
Lecturer of Corporate Law Practice at the Nigerian Law School, Lagos campus;
and an Associate Counsel at Wole Olanipekun & Co., Lagos, Nigeria. Email:ayolola@lawschoollagos.org, ayodeji.a@woleolanipekun.com
Lecturer of Corporate Law Practice at the Nigerian Law School, Lagos campus;
and an Associate Counsel at Wole Olanipekun & Co., Lagos, Nigeria. Email:ayolola@lawschoollagos.org, ayodeji.a@woleolanipekun.com