Nov 20, 2019

Case Review: Raji v. Truck Sabinos (NIG) Ltd (2018) LPELR-45011 (CA) | Ayodeji Ayolola


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? 

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:


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:


(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;



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:



“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.



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 was N300,000.00 (Three Hundred Thousand Naira) per annum payable on a quarterly installment of N75,000.00 (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.


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 of N300,000 annual retainer fee; N75,000 being the 4th quarter 2006 retainer fee; and N400,000 being general damages for the breach of the retainership agreement together with N200,000 being cost of the action.


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.


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.




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.




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 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. 



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




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