A.R.E.C Ltd v. Amaye (1986)

[1986] 3 .
A.R.E.C. Ltd. v. Amaye
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ASSOCIATED REGISTERED ENGINEERING

CONTRACTORS LIMITED & ORS.

V.

ENGINEER S.D.Y. AMAYE

COURT OF APPEAL

(BENIN DIVISION)

CA/B/39/85

SALIHU MODIBBO ALFA BELGORE, J.C.A. (Presided and Read the Lead Judgment)

DAHIRU MUSDAPHER, J.C.A.

OLATUNJI AJOSE-ADEOGUN, J.C.A.

WEDNESDAY, 14TH MAY, 1986

COMPANY LAW – Directors – Resignation of appointment – Oral notice or written notice.

COMPANY LAW – Unlawful removal of Director – Remedy available under Companies Act.

COMPANY LAW – Directors – Unlawful removal – Damages – Whether Company and other Directors jointly and severally liable.

COMPANY LAW – Removal of Directors – Powers of the Company thereto.

DAMAGES – Award by trial court – Interference by appellate court – Guiding principles.

DAMAGES – Exemplary damages – Conditions for grant.

JURISDICTION – Federal High Court – Scope of jurisdiction.

JURISDICTION – Master and Servant relationship – Whether Federal High Court has jurisdiction.

LOCUS STANDI – Right of shareholder of company to sue – Personal claim in the company as opposed to corporate claim.

PRACTICE AND PROCEDURE – Pleadings – Duty of court thereto.

Issues:

1.
Whether the award in this case of the sum of N275,000.00 as exemplary or punitive damages is justified in law.

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2.
Whether the Judge is right in awarding damages against the 2nd to 6th appellants when the said appellants were never employers of the respondent.

3.
Whether the learned trial Judge was right to award general damages at all when no proof nor plea of any loss of general and unquantifiable nature was made at the trial.

4.
Whether the Federal High Court has jurisdiction to entertain a claim for damages arising from master and servant relationship.

Facts:

The respondent was a Managing Director to the 1st appellant. Associated Registered Engineering Contractors Limited. The company was incorporated in 1974 with the 2nd to 4th appellants as subscribers. Later in the same year, the 5th and 6th appellants joined its Board of Directors.

The respondent was the Managing Director and the 2nd appellant was elected the Chairman of the Board of Directors in 1975.

In 1979 the company secured a contract worth N2,800,000.00 with the Ministry of Defence. The second appellant, the Chairman wished to take over the supervision of the execution of the contract but the respondent insisted that it was his own duty as Managing Director to supervise the execution of the contract.

A meeting of the company took place on 20th of August, 1979 and it was at this meeting that parties fell apart. The respondent was alleged to have verbally resigned and surrendered his shares in the company for sale. The respondent however said he found the meeting rowdy over the matter of personnel and who was to control them in the execution of the contract and he walked out to stay in his office. A meeting was called for the next day at which the respondent was not present because he was not called and it was decided to accept the resignation of the respondent as the Chief Executive of the company.

The parties thereafter became irreconcilable and the respondent was no longer allowed into the company. The 1st appellant company in the Resolution of 21st of August, 1979 purported to appoint the 2nd appellant as the Managing Director. The respondent sued the defendants/appellants in the Federal High Court at Benin for the following reliefs:

(a)
a declaration that he was still the Managing Director of the company and that the purported appointment of the 2nd defendant as Chairman/Managing Director was null and void.

(b)
an order setting aside a letter dated 21st of August, 1979 informing the plaintiff of his purported removal as the Managing Director.

(c)
a declaration that all acts done by the 2nd to 6th defendants as Managing Director, Directors or shareholders of the company are void, illegal and of no effect.

(d)
an order that the 2nd to 6th defendants should refund to the company all monies, remunerations, dividends, etc. received by or for them as Managing Directors, Directors, shareholders.

(e)
a declaration that the plaintiff was entitled to be paid all his remuneration, dividends, etc. from the purported date of removal.

(f)
an order of injunction restraining the 2nd to 6th defendants from operating the accounts of the company in the 7th and 8th defendant banks; and

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(g)
an order that the 2nd to 6th defendants should render an account; and in the ALTERNATIVE, the plaintiff claimed against the 1st to 6th defendants the sum of N1,300,000.00k as special and general damages for the wrongful removal of plaintiff as Managing Director. Director and shareholder of 1st defendant company by 1st to 6th defendants.

At the conclusion of hearing, the trial court held that the main claim fails but awarded N275,000.00 as general damages against the 2nd to 6th appellants.

Held (Unanimously allowing the appeal):

1.
It is settled law that a person can give oral notice of his resignation as a Director despite a request in the Company’s Articles of Association that it be written.

2.
The pleadings of the parties in a case should guide the trial court in arriving at a conclusion, and any evidence which is in support of matters not pleaded goes to no issue.

3.
An appellate court will not interfere with the award of damages by a trial court unless the award is based on wrong principles of law or it is unreasonably high.

4.
The damages awarded by the trial court in this case are based on unknown principles of law and therefore wrong.

5.
Under the Companies Act the remedies that avail a person who is removed as a Director of a company would not be claim for damages.

6.
A Managing Director is an employee of the Company.

7.
For a Director of a company who is also a shareholder and sometimes a motivator of the company, the contract of service need not be written but it can be fixed at the company’s meeting what the remunerations and other entitlements of the director are.

8.
A plaintiff who claims damages for unlawful removal as a director of a company cannot claim jointly and severally against the company (his employer) and the other directors for breach of his contract of service. The contract of employment is only with the company and not with the other Directors.

9.
The Federal High Court is a creature of statutes i.e. the Constitution of the Federal Republic of Nigeria, 1979 and the Federal High Court Act, 1973.

10.
The powers of the Federal High Court are clearly spelt out in sections 230 and 231 of the 1979 Constitution and section 7 of the Federal High Court Act, 1973.

11.
A Managing Director to all intent and purposes is another director only with added responsibilities.

12.
A Director can be removed at any time if that is the wish of the majority in the Company.

13.
A claim for damages for wrongful dismissal as a company director is not within the jurisdiction of the Federal High Court.

14.
A trial Judge must confine himself to and decide only on the claim before him.

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15.
In this case there was no claim for exemplary damages before the trial Judge and he ought not to award exemplary damages as he did.

16.
Any matter not pleaded is not in issue and if given in evidence such evidence should be ignored as completely irrelevant.

17.
Punitive or exemplary damages are not simple matters to be left at the discretion of the court, they must be specifically pleaded.

18.
Exemplary damages can only be awarded in exceptional circumstances for example:

 (a)
where it is expressly authorized by statute; or

 (b)
where the award is against the government servants in cases of oppressive, arbitrary or unconstitutional action by them; or

 (c)
where the defendant’s conduct has been calculated by him to make a profit for himself which may exceed the compensation payable to the plaintiff.

19.
The plaintiff in this case never in his pleading or evidence in court or by implication indicated any of the exceptional circumstances.

20.
Where the claim of a shareholder is not related to his personal claim in the company but to the corporate, the company itself is to sue, unless the plaintiffs claim is under the Companies Act for winding up the company on the ground of oppression of minority.

21.
A Director who was unlawfully removed could still be removed properly despite the improper notice and procedure adopted earlier since the company has a statutory right to remove anybody from its Board and the only remedy available to the removed director is to apply for a winding up order on the ground that it is just and equitable for the court to make such an order.

Nigerian Cases Referred to in the Judgment:

Abubakri v. Smith (1973) 6 SC 31

Agaba v Otubusin (1961) 1 All NLR 299

Buffa v. Bappale (1969) NMLR 1

Ezeani v. Ejidike (1965) 1 All NLR 402

J.T. Chanrai & Co. Nig. Ltd. v. Khawani (1965) 1 All NLR 182

Kerewi v. Odegbesan (1965) 1 All NLR 95

Laibru Ltd. v. Building and Civil Engineering Contractors Ltd. (1969) 1 All NLR 387

Oduro v. Davies 14 WACA46

Tika Tore Press Ltd. v. Abina (1973) 4 SC 63

Zik’s Press Ltd. v. Ikoku (1951) 13 WACA 188

Foreign Cases Referred to in the Judgment:

Ashby v. White (1803) 2 Ld. Rayn 838 k

Bentley-Stevens v. Jones (1974) 2 A.E.R. 653

Foss v. Harbottle 67 E.R. 189

Hatchfood Premier Cinema Ltd. v. Ennion (1931) 2 Ch 409

Lee v. Lee Air Farming Ltd. (1961) A.C. 12

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       Lincoln Mills (Australia) Ltd. v. Gough (1964) V.R. 193

       Rookes v. Barnard (1964) A.C. 1129

       Sawyer v. Man Financiers Ltd. (1938) 184 LTJ 2

Nigerian Statutes Referred to in the Judgment:

Companies Act, 1968

Constitution of the Federal Republic of Nigeria, 1979, Ss. 230 and 231

Federal High Court Law, 1973, Ss. 7(c)(i) and 9

High Court of Lagos Act, S. L2

Foreign Rules Referred to in the Judgment:

Rules of Supreme Court, England, O. 18 r. 8(iii)

Appeal:

This was an appeal against the judgment of the Federal High Court (sitting at Benin) which granted N275,000 as damages to the plaintiff/respondent as atonement for the respondent’s “right which was unjustifiably invaded”. The Court of Appeal allowed the appeal and set aside the judgment.

History of the Case:

Court of Appeal:

Division of the Court of Appeal to which the appeal was brought: Court of Appeal, Benin

Names of Justices that sat on the appeal: Salihu Modibbo Alfa Belgore, J.C.A. (Presided and Read the Lead Judgment); Dahiru Musdapher, J.C.A.; Olatunji Ajose-Adeogun, J.C.A.

Appeal No.: CA/B/39/85

Date of Judgment: Wednesday, 14th May, 1986

Names of Counsel: G. C. Akoro (with him, E. Rewane holding brief for A. Sogbesan, SAN) – for the Appellants

O. Debayo-Doherty (with him, Anomuoghanran holding brief for K. Sofola, SAN) – for the Respondent

High Court:

Name of the High Court: High Court of Benin

Counsel:

G. C. Akoro (with him, E. Rewane holding brief for A. Sogbesan, SAN) – for the Appellants

O. Debayo-Doherty (with him, Anomuoghanran holding brief for K. Sofola, SAN) – for the Respondent

BELGORE, J.C.A. (Delivering the Lead Judgment): Respondent, Managing Director to the first appellant company, seemed to be the motivating force behind the company’s formation. The alleged holding by each director in the 1st appellant’s company was placed by appellants as follows:

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                       1st Repondent       15,835 shares

                       2nd Appellant       15,835 shares

                       3rd Appellant        15,835 shares

                       4th Appellant        15,835 shares

                       5th Appellant        15,835 shares

                       6th Appellant        15,835 shares

                       TOTAL                  95,000 shares.

The company was incorporated in 1974 and it was subsequent to its incorporation that the 5th and 6th appellants joined its Board in the same year. The respondent was the Managing Director and 2nd appellant was elected its Chairman in 1975 after some dispute not relevant to this appeal. Sometime in 1979 the 1st appellant’s company secured a contract worth N2,800,000.00 with the Ministry of Defence and this otherwise great breakthrough in securing a contract to have brought in its wake the disagreement which finally culminated in the action leading to this appeal. The second appellant, the Chairman, wished to take over the supervision of the execution of the contract but the respondent insisted it was his own duty as Managing Director to supervise the execution of the contracts. Also as a qualified and professional Engineer he believed he was better suited to supervise the execution of the contract. A meeting of the company took place on 20th August, 1985, and it was at this meeting that parties fell apart. The respondent was alleged to have verbally resigned and surrendered his shares in the company for sale. The respondent said he found the meeting rowdy over the matter of personnel and who was to control them in the execution of the contract and he walked out to stay in his office. A meeting was called for the next day, at which respondent was not present because he was not called and it was decided to accept the resignation of the respondent as Chief Executive of the company. From this moment, it would seem, the parties became irreconcilable and the respondent would no longer be allowed into the company i.e. 1st appellant in that the resolution of 21st August, 1979 purported to appoint 2nd appellant the Managing Director. In consequence of this development, the respondent took action in the Federal High Court at Benin against the company and 2nd and 6th appellants as follows:

1.
Against the 1st to the 6th defendants a declaration:

(a)
that he was still the Managing Director of the company and that the purported appointment of the 2nd defendant as Chairman/Managing Director of the company was null and void;

(b)
an order setting aside a letter dated August 21st, 1979, informing the plaintiff of his purported removal as the Managing Director;

(c)
a declaration that all acts done by the 2nd to 6th defendants either as Managing Director, Directors, or shareholders of the company are void, illegal and of no effect;

(d)
an order that the 2nd to 6th defendants should refund to the company all monies, remunerations, dividends etc received by or for them as Managing Directors. Directors, shareholders etc;

(e)
a declaration that the plaintiff was entitled to be paid all his remuneration, dividends, etc. from the purported date of removal; and

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A.R.E.C. Ltd. v. Amaye
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(f)
order of injunction restraining the 2nd to 6th defendants from operating the accounts of the company in the 7th and 8th defendants/banks;

(g)
and order that the 2nd to 6th defendants should render an account.

2.
IN THE ALTERNATIVE, the plaintiff claims from the 1st to 6th defendants jointly and severally the sum of N1,300,000.00 (One million, three hundred thousand Naira) being special and general damages for the wrongful removal of plaintiff as Managing Director, Director and shareholder of 1st defendant company by 1st to 6th defendants.

Particulars of Special Damages

Loss of salary at N11,780.00

per annum for 10 years                                          N117,800.00

Loss of Directors remuneration

for 40 years at N10,000.00 per annum                  N400,000.00

Loss of driver’s allowance at

N120.00 per month for 10 years                              N14,400.00 

Loss of night-watchman allowance

at N120.00 per month for 10 years                           N14,400.00 

Loss of car basic allowance at

N60.00 per month for 10 years                                   N7,200.00

Loss of estimated dividend at 50k

per share of N15,834 shares of N1.00

each for 10 years                                                      N316,680.00

Loss of present market value of

N15,834 shares as per valuation report                    N154,000.00 

GENERAL DAMAGES                                           N275,520.00 

TOTAL                                                                   N1,300,000.00

The learned trial Judge, reviewed all the evidence on both sides and came to the conclusion that the main claim must fail. He found as a fact that the respondent never gave oral notice of his resignation as Managing Director or Director of the company nor did he relinquish his shares. It is true in law a person can give oral notice of his resignation as a Director despite a request that it be written in the company’s articles, but the Judge found that no such oral notice was given by the respondent. (Hatchfood Premier Cinema Ltd. v Ennion (1931) 2 Ch. 409; and Sawyer v. Man Financiers Ltd. (1938) 184 LTJ 2 do not therefore apply). He found a lot of irregularities perpetrated but said nothing of them as related to the claim before him. He finally found as follows:

“The plaintiff succeeds in the alternative claim only with regards (sic) to general damages for wrongful removal. The award must be such as would atone for the assault on the plaintiff’s right which was unjustifiably invaded and it must reflect the reaction of the law to the imprudent and illegal exercise in the course of which the invasion was unleashed.

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There will be general damages against the 1st – 6th defendants jointly and severally in the sum of N275,000.00 and costs assessed at N2,000.00.”

Against this snap decision there is an appeal by defendants, now appellants. The plaintiff was equally dissatisfied and a cross-appeal was filed. The company and the five other appellants raised seven main issues to be determined from their twelve grounds of appeal, to wit:

“1.
Whether the learned trial Judge was right to award general damages at all in this case, when no proof nor plea of any loss of general and unquantifiable nature was made at the trial;

2.
Whether the learned Judge was right not to draw a distinction in this case between respondent’s status as an employee of the first appellants (Managing Director) and that as a Director of the company; and whether in awarding the lump sum damages of N275,000.00 the learned Judge is right in not assigning separate portions of that sum to his status as Managing Director on the one hand, and another specific portion to his status as Director on the other;

3.
Whether the Judge is right in awarding damages against the 2nd to 6th appellants when the said appellants were never employers of the respondent; nor was the respondent serving the 2nd – 6th appellants as Director.

4.
Whether the learned trial Judge had jurisdiction to try issues of master and servants, ordinary debts, tort, conspiracy, breach of contract and such like, as can only be the reason or justification for the N275,000.00 award of damages in this case.

5.
Whether (assuming the court has jurisdiction and (4) above is wrong), the award in this case of exemplary or punitive damages is justified in law.

6.
Whether, having regard to various findings of fact made by the learned Judge and for which no specific orders or remedies were made – except for the award of general damages – he was right to have ignored and failed to give effect to the principles in Foss v. Harbottle (1943) 67 ER 189 and its modern implications in England and in Nigeria.

7.
Whether in the nature of this case i.e. bearing on the main claims and the alternative claims and the manner in which the judgment was written this is a satisfactory way by which a court should proceed to try a case.

Mr. Sogbesan, SAN for the appellants questioned the award of general damages by the learned trial Judge to the tune of N275.000.00 when, according to him there was nothing in the pleadings showing any “general or unquantifiable loss” suffered by respondent. In this claim, none of the specific damages was successful as the learned Judge evaluated the evidence on them, made some findings and never awarded anything by way of remedy. He found the respondent never resigned as a Director and that there was no verbal

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resignation from the company by him. He found the other Directors manipulated the minutes of the company dated 21st August, 1979; and after they deviously succeeded in removing the respondent they went on “withdrawal spree” from the bank. The learned trial Judge there and then jumped to his conclusion quoted earlier in this judgment that the respondent succeeded in the alternative claim only and that the damages to be awarded must be an atonement for the respondent’s “right which was unjustifiably invaded.” The learned Judge unfortunately never advanced reasons for this sudden conclusion. What are the rights of the respondent that were unjustifiably invaded? Why atoning for wrong not explained? The learned Judge reviewed all the evidence but only with reference to specific claims, not for the alternative claim and not for general damages. It is the submission of Sogbesan, SAN, that whatever damages a plaintiff claims must be pleaded and proved at the trial. It is not enough to baldly claim a sum without advancing proof by evidence. There was a claim of N275,000.00 as general damages but there seems to be no evidence advanced to support this claim and the learned Judge made no review on this before he virtually from nowhere decided to atone the respondent for invasion of his right. There is nowhere in the pleadings any claim for invasion of any right and a court must not award a remedy not sought. The pleadings of the parties as supported by evidence on matters therein joined will guide the trial court in arriving at a conclusion; anything unpleaded however strongly supported by evidence goes to no issue, aliter when there is no evidence. J. T. Chanrai & Co. Nigeria Ltd. v. J. U. Khawani (1965) 1 All NLR 182, 188; Ezeani v. Ejidike (1965) 1 All NLR 402,405,406; Kerewi v. Odegbesan (1965) 1 All NLR 95, 98, 99.

Mr. Sofola, SAN for the respondent, also cross-appealed but argued that this court must not reverse award of general damages unless it found the trial judge acted on wrong principles of law. (Oduro v. Davies XIV WACA 46; Agaba v. Otubusin (1961) 1 All NLR 299; Ziks Press Ltd. v. Alvan Ikoku (1951) 13 WACA 188.1 cannot with respect, understand the rationale behind the learned Judge’s conclusion as to award of general damages. He never, in his long judgment alluded to any reason that can lead to inescapable conclusion that the respondent must be atoned. “Every injury imports a damage, though it does not cost one farthing” (Ashby v. White (1703) 2 Ld. Rayn 938m 855) is surely right law, but here the learned Judge left all matters of special damages and in essence held that they were not proved. He then went on to general damages and gave substantial award without evaluating the evidence and making findings leading to such an award. This is an award based on unknown principles of law and therefore wrong. The Judge never specified what the damages were except to atone for infringement or invasion of a right.

The respondent was a Director of the first appellant as well as its Managing Director, and was also a substantial shareholder. He claimed special damages for alleged removal as Director. Managing Director and shareholder; for these, no general damages could be awarded as alternative. He either succeeded in those claims and he would under normal circumstances be awarded damages proved or failed to prove in which case the claims would be dismissed. The trial Judge appears to have held to the latter. Surely under Companies Act. the remedies that avail the respondent for removal as a Director would not be claim for damages;

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and his shares would be his unless he sold them or otherwise dispose of them. As a Managing Director the respondent occupied a second position as an employee, that of master and servant between him and the first respondent company. Lee v. Lee Air Fanning Ltd. (1961) AC 12; Lincoln Mills (Australia) Ltd. v. Cough (1964) VR 193. As an employee there was between him and the company a contract of service. In the case of a director of a company who is also a shareholder and sometimes a motivator of the company the contract of service need not be written but it can be fixed at the company’s meeting what his remunerations and other entitlements are as Chief Executive. To all intent and purposes, the learned Judge never found for the respondent on his main claim but only for general damages which he awarded on a wrong principle of law.

The award has caused more confusion than settlement in the dispute between the parties. Should the award, even though for general damages, be for atonement for those of position as first appellant’s Chief Executive and also as a director and shareholder the Judge was in error. He cannot award general damages jointly and severally against 1st appellant (as employer of respondent) and other appellants as directors for breach of his contract of service. His contract is only with first appellant and not with the others. Secondly, should the award be for removal as a director, claim for damages will not be his remedy under the Companies Act, 1968. Similarly, for removal as shareholder his remedy might be in a declaration. If the award were to be against first appellant alone for wrongful dismissal, in the state of the judgment the learned Judge made no award for that.

The next question relates to jurisdiction. Sogbesan, SAN submitted that Federal High Court’s jurisdiction is limited within the compartment of section 7(c)(1) of Federal High Court Law, 1973, which says:

“The Federal High Court shall have and exercise jurisdiction in civil causes and matters –

……

……

 (c)    arising from –

(i)
the operation of the Companies Act, 1968 or any other enactment regulating the operation of companies incorporated under Companies Act, 1968.”

This subsection, submits Mr. Sogbesan does not cover the exercise of jurisdiction of Federal High Court in purely “master and servant” dispute or claims for debt or in tort or contract outside the operation of Companies Act, 1968. He cited V.C. Eka v Onagoruwa & Anor. (unreported, decided by Lagos Branch of this Court on 5/7/84).

The Federal High Court is a creature of statutes – the Constitution of the Federal Republic of Nigeria. 1979 and Federal High Court Act, 1973. The powers of the Federal High Court are clearly spelt out in sections 230 and 231 of the Constitution and section 7 of the Federal High Court Act, 1973. Can it be safely said that the power to appoint a Managing Director, a servant as such of the company, is stricto sensu in operation of Companies Act, 1968?

The respondent has dual purpose in the company – he is a director with substantial shareholding and he was also appointed Managing Director from among other directors. By virtue of S. 395 of Companies Act definition of ”director” is

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“director includes any person occupying post of director by whatever name called.”

In Schedule 1 Table A Part I of the Companies Act, Regulation 106 clearly shows the position of the Managing Director, Regulation 107 explains remuneration of the Managing Director? while Regulation 108 touches on the powers of the Managing Director:

Regulation 106 says:

“The Directors may from time to time appoint one or more of their body to the office of Managing Director for such period and on such terms as they think fit and subject to the terms of any agreement entered into in any particular case may revoke such appointment. A director so appointed shall not, whilst holding that office, be subject to retirement by rotation or be taken into account in determining the rotation of retirement of directors, but his appointment shall be automatically determined if he ceases from any cause to be a director.”

To all intent and purposes, a Managing Director is another director only with added responsibilities. A director can be removed at any time if that is the wish of the majority. The respondent’s remedies are there in the Companies Act e.g. S. 201 thereof, and what the respondent went to court for, may in the true sense be a grievance, but the remedy being sought is not the one recognized by Companies Act. Therefore, his claim for damages for what looks like wrongful dismissal is not within the jurisdiction of Federal High Court Law. As I said earlier in this judgment the damages of N275,000.00 cannot be attached with any degree of certainty to any head of claim other than what it said, i.e. general damages. So it cannot be said to cover his claim of salaries, dividends, sale of shares etc. claimed.

It is further submitted that the award of damages by the language employed by the learned Judge is punitive and or exemplary. The use of the phrase “atone for invasion of plaintiff’s right” in the light of clear and unambiguous claim before the court not including this phrase connotes that the learned trial Judge saw outrage in what was done to the respondent. Unfortunately, the respondent, though perhaps cheated and shabbily treated, enumerated what he wanted the court to do for him. Some of the remedies claimed certainly would not be efficacious of the injury he suffered as they are not known to special provisions and procedure of Companies Act, the Judge ought to keep himself to the claim and not wander beyond it. Having not found for the respondent on the main claim and holding that he found on the alternative claim but awarding on general damages only in a language indicative of some punishment he was awarding exemplary damages. There was no issue of exemplary damages before the court. There was no claim for exemplary damages before the court, there was no evidence as to it either. Any matter not pleaded is not in issue and if given in evidence such evidence should be ignored as completely irrelevant. Our rules of civil procedure in the High court are silent as to plea on punitive and exemplary damages. Unlike English Courts attached substantially to Common Law principles on pleadings, the Nigerian Courts derive their substantive laws and procedural powers from statutes. The obiter of House of Lords in Broome v. Cassell (1972) AC 1027 led to Rules of Supreme Court (England) being amended in Order 18 rule S(iii) as follows:

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“A claim for exemplary damages must be specifically pleaded together with the facts on which the party pleading relies.”

There is no similar provision in Federal High Court Rules of Civil Procedure. Section 9 of Federal High Court Act however provides:

“The jurisdiction vested in the Federal High court shall, so far as practice and procedure are concerned, be exercised in the manner provided by this Act or any other enactment or by such other rules and orders of court as may be made pursuant to this Act or. in the absence of any such provisions, in substantial conformity with the practice and procedure for the time being in force in the High Court of Lagos State.”

In section 12 of the High Court of Lagos Act (Cap. 80, Laws of Nigeria, 1958) the above provisions of S. 9 Federal High Court Act is virtually repeated and verbatim except that the words “High Court of Lagos State” are replaced by “Her Majesty’s High Court of Justice in England”. The combined effect is that it would appear that Federal High Court cannot escape the R.S.C. Ord. 18 rule 8(iii) (supra); Laibru Limited v Building and Civil Engineering Contractors Ltd. (1969) 1 All NLR 387; Sharijf Baffa v. Sherub Bappale (1969) NMLR 1. The essence of litigation is not merely the pleasure of going to court; It is because there is some claim or injury which is sought to be remedied. The claim must be clear and unambiguous and that is why pleadings are necessary in most cases. The pleadings must contain all the facts a party relies upon for his claim so that the other party will know with certainty what he has to face or must reply to. Punitive and exemplary damages are rare but that is no reason that they cannot be awarded. But in the face of our courts being creatures of statutes, our pleadings must leave nothing to chance. A party claiming punitive and exemplary damages must say so clearly and unambiguously. The circumstances giving rise to the damages and the extent of the damages must be specifically pleaded. Going back to English Rules is not falling back on common law; quite the contrary. It is simply applying our statutes and to us it is a statutory provision that drives us back to English Rules. Punitive or exemplary damages are not simple matters to be left at the discretion of the court, they must be specifically pleaded. In England, to qualify to a claim for exemplary damages the situation must be exceptional, to wit.

1.
Where it is expressly authorized by statute;

2.
Award against the government servants in cases of oppressive, arbitrary or unconstitutional action by them; and

3.
Where defendants conduct has been calculated by him to make a profit for himself which may exceed the compensation payable to the plaintiff.

Rookes v Barnard (1964) AC 1129

The Supreme Court seems to approve the above proposition in Ezeani v. Ejidike (1964). 1 All NLR 402, 406.

In this case at hand, the respondent never in his pleading or evidence in court or by implication indicated any of the exceptional circumstances.

The respondent’s destination is to claim remedy for the wrong done to him. But he is riding on a wrong vehicle. Can he be removed as a shareholder when he

[1986] 3 .
A.R.E.C. Ltd. v. Amaye
(Belgore, J.C.A)
665

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has not sold or otherwise alienated his shares? No amount of resolutions by other directors can divest him of his shares that are fully paid up and as dividends are declared he is entitled to his ow n. To effect a transfer of his shares the co-operation of respondent is required in law by the Board of the Company. There was no issue before the court of his being divested of his shares. The respondent did not go to court by virtue of the principle in Foss v. Harbottle (1843) 2 Hare 461; 67 ER 189. i.e. if the claim is not related to his personal claim in the company but to the corporate right of the company itself, i.e. first appellant, the company is to sue. unless the plaintiffs claim is under Companies Act for winding up the company on the ground of oppression of minority. The plaintiff is not asking for either. At any rate the respondent’s claim was founded on wrong application of the law; he tries to be granted relief under general law when the Companies Act specifically spells out the remedies that avail him. Secondly the respondent could still be removed as a director, despite the improper notice and procedure adopted earlier as the company has statutory right to remove anybody from its board and the only remedy available to the removed director is to apply for a winding up order on the ground that it is just and equitable for the court to make such an order. Tika Tore Press Ltd. & Ors. v. Ajibade Abina & Ors. (1973) 4 SC 63; Ebrahimi v. Westbourne Galleries Ltd. (1912) 2 All ER 492: Alhaji Imam N. Abubakri & Ors. v. Abudu Smith (1973) 6 SC 31; Bentley-Stevens v. Jones & Ors. (1974) 2 All ER 653.

Sofola, SAN conceded that the learned trial Judge failed to give consideration to each item claimed under special damages and that it was incumbent upon him to consider each item. The result is that up to this very moment one is at a loss as to what the N275,000.00 was awarded for in the alternative claim. The Federal High Court has special jurisdiction in S. 7 of its statute and that stands it out of State High Courts that have general jurisdiction except those Federal High Court Act specifically ousts from them. Parallel court does not exist in England and the comment of the learned author of “Law and Practice Relating to Company Directors” is right but when it comes to exercise of jurisdiction the statute of Federal High Court must be read along with the Companies Act to know where jurisdiction in specific instances lie. While Lincoln Mills (Australia) Ltd. v. Gough (1964) V.R. 193 could be heard in one court, the issue brought by respondent are so wide that they straddle both Federal High Court and State High Court, each foot not being transferable.

The cross-appeal by respondent makes virtually the same complaint that the learned Judge failed to give consideration to each and every item of the claim on the writ and the pleadings and the evidence. It is true the case hinges on what transpired on 21st August, 1979 where the respondent was purportedly removed as a director and managing director. The trial Judge found that exercise, a futile one but gave no remedy or relief. However, in face, Tika Tore Press Ltd. & Ors. v. A. Abina (supra); and Bentley-Stevens v. Jones & Ors. (supra) it is difficult to see how the court could accede to the entreaties of the respondent.

This appeal therefore succeeds as there was no plea to justify the award of general damages which in the words employed by the learned Judge indicate punitive or exemplary damages. Whether the award was made to the respondent

666
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23 June 1986
(Belgore, J.C.A)

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as a director. Managing Director or shareholder it was completely incompetent as the matter was not properly before the court in accordance with Companies Act as the remedies invited could not be properly dealt with by that court. Further there was nothing between the respondent and 2nd to 6th appellant’s indicative of the relationship of master and servant to justify any award of general damages or exemplary or punitive damages against them. What were formulated in respondent’s statement of claim are in respect of corporate rights of the company i.e. 1st appellant and give not right to respondent to sue as he did and for the court to assume jurisdiction. In the circumstance of this case the lower court ought to have struck out the entire claim of the plaintiff/respondent and I hereby so order. This order consequently takes care of the cross-appeal which is hereby dismissed. For the avoidance of doubt the award of N275,000.00 as general damages is hereby set aside. I award the cost of N500.00 against the respondent as cost of this appeal.

MUSDAPHER, J.C.A .: I have had the preview of the judgment just delivered by my learned brother, Belgore, J.C.A. and I agree with the reasoning and conclusions reached thereat. I too, would allow the appeal, set aside the award of N275,000.00 as damages and strike out the respondent’s case. I award the appellants N500.00 as costs of this appeal.

AJOSE-ADEOGUN, J.C.A.: Having had a preview of the judgment just delivered by my learned brother. I now say that there is nothing more that I can usefully add. I am in agreement with His Lordships reasoning and conclusions.

In the result, I also endorse the consequential orders made in the said judgment, including the award of costs.

Appeal allowed.

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