- CL|Corporate Veil|Separate Legal Personality
EMMANUEL ARMAH ESQ
CHIEF ALBERT KORUBO HORSFALL
(Delivered By CHINWE EUGENIA IYIZOBA, JCA)
This is an appeal against the Judgment of Femi-Adeniyi J of the High Court of Lagos State, Lagos Judicial Division in Suit No LD/1053/2007 delivered on the 29th day of January 2014. The Appellant as Claimant instituted this suit against the Respondent as Defendant on 22/08/07 claiming as follows:
"1. The sum of N650,000,000.00 (Six Hundred and Fifty Million Naira Only) being professional fees for legal services rendered to you at your request sometime in the year 2003 in Lagos within jurisdiction of this Honourable Court and in respect of which a bill of charges specifying work done has been sent to you and to which you failed, omitted or refused to be taxed in the manner and within the period stipulated in the Legal Practitioner's Act and by so doing or failing to so act, you have admitted the indebtedness in the amount claimed above by the Claimant.
2.Interest on the above sum at the rate of 15% per annum from the date of the initial demand until the entire judgment is liquidated.
3.Cost of the action."
The Appellant's case at the lower court is that instructions were given by the Respondent to Armah Law Chambers in 2003 to prepare a set of documents to carry into effect a joint venture/partnership transaction between the Respondent (Chief Horsefall) and a Spanish company COPINASA SA QUESTO. The transaction was to be carried on under the auspices of COPINASA NIGERIA LIMITED. Pursuant to those instructions four sets of Agreements were prepared, namely, An All-parties Agreement, Deed of Appointment of Horsefall and Co, Deed of Appointment of Chief Albert Korubo Horsefall as Special Consultant, a Power of Attorney authorizing Antonio Garia Lopez to raise N6.5BilIion naira or its equivalent in Euro currency. The Appellant claimed that these documents were prepared and engrossed and sent to the law office of Chief Albert Korubo Horsefall for execution by the Respondent. A claim was thereafter made by the Appellant for the legal services rendered. This prompted an exchange of correspondence, whereby the Respondent disclaimed liability for the fees, saying the instructions were given to Mrs Armah personally as part of the retainer arrangement he had with her.
The Respondents case is that he did not at any time engage the Appellant or his chambers to handle any legal matter for him; that he placed the Appellants wife on a retainership in her personal capacity for his confidential matters because of their close family relationship and paid her promptly for services rendered including the service which forms the Appellants cause of action.
In the midst of the dispute, Mrs Tiena died and the appellant consequently reasserted the claims of his Law office to the fees outstanding for the work done.
When the matter could not be resolved amicably, the Appellant instituted this action under the Summary Procedure Rules and claimed as set out above. The Respondent opposed the application, filing in response a Counter-Affidavit and Statement of Defence. The learned trial judge, Ishola J ruled that the defence was a sham and entered judgement for the Appellant. The Respondent appealed against the said judgement in Appeal No CA/L/168/2010. The appeal was allowed by this court on 02/06/11 and leave was granted to the Respondent to defend the suit. The court also ordered that the matter be tried before another Judge. The suit was consequently reassigned to Femi-Adeniyi J who proceeded to try the matter on the merits. At the trial the Appellant testified in person and tendered 4 exhibits. The Respondent also testified in person and tendered 4 exhibits. The thrust of the Respondents defence to the appellants claims was hinged on the following facts viz:
(i) That the Respondent had no solicitor/client relationship with the Appellant given the fact that the Respondent engaged and /or contracted Mrs. Tiena Armah and not the Appellant to handle personal legal matters for which she was duly paid.
(ii) The proposed joint venture between Copinasa Nigeria Limited and some Spanish Corporate interests as well as the road construction contract sought to be secured from the Rivers State government never materialized.
(iii) That legal services relating to the subject matter of this case was required for the benefit of Copinasa Nigeria Limited and not the Defendant herein.
At the close of trial the parties adopted their final written addresses. The learned trial judge delivered judgment on 29/01/14 dismissing the Appellant's claims on the ground that there was no evidence to establish a solicitor-client relationship between the Appellant and the Respondent. His Lordship further held that Mrs. Tiena Armah had known and accepted from the onset that Copinasa Nigeria Ltd was to pay for the services rendered and therefore the Respondent could not be held liable for the fees.
The Appellant, dissatisfied with the judgment appealed against it by Notice of Appeal filed on 21/3/14 with four grounds of appeal. The Appellant's brief was settled by Seyi Sowemimo SAN and out of the four grounds of appeal; he formulated two issues for determination as follows:
i. Whether on the totality of the evidence placed before the Court the defendant is not (sic) fact the contracting party having given instructions directly to the claimant
ii. Whether the claimant was at liberty to elect the party to sue in the circumstances of this case.
The Respondent's brief of argument was settled by Victor Ogude Esq. and therein he also distilled two issues for determination as follows:
1.Whether having regard to the facts and circumstances of this case the Appellant proved the existence of a solicitor /client relationship between himself and the Respondent as far as the transaction which gave rise to his claims is concerned.
2.Whether the findings of fact made by the lower court on the issues submitted before it for determination can be faulted or impeached.
On the first issue, learned Senior counsel for the Appellant submitted that the learned trial judge in coming to his decision did not fully and correctly appraise the evidence adduced by the parties, as the evidence before the court clearly showed that Copinasa Nig Ltd was a mere facade and that the Respondent, as the instructing party, was in reality the principal party in giving the instructions for the preparation of the Agreements produced by the Appellant. Learned Senior Counsel further submitted that Mrs Armah's expectation that Copinasa Nig Ltd would pay for the brief was as a result of the misleading impression given by the Respondent as she had never met any official of Copinasa Nigeria Ltd and had merely relied on the fact that the company was to be the arrow head of the transaction. He argued that the misapprehension of the facts was seized upon by the Respondent as an excuse to wriggle out of his obligation.
Mr. Sowemimo submitted that in any given case where one person purports to transact business on behalf of another it is a question of fact whether the party transacts in reality as agent or principal. After examining various cases and authorities on the incidence of liability of principal and agent in contracts, learned senior counsel submitted that in certain circumstances even persons who purport to act as agents can be contractually liable if the circumstances reveal that they were in reality the contracting party. He further submitted that in coming to the view that Copinasa Nig Ltd is the party which bears sole responsibility' for the Claimant's fees, the learned trial judge overlooked certain crucial considerations such as, amongst many others the fact that the Respondent was the only person with whom the claimant's firm dealt with throughout the briefings and that the defendant had a special personal interest in the transaction which gave rise to the power of attorney to safeguard his interest Learned Senior Counsel submitted that there is no correspondence in which it was expressly stipulated at the outset that in giving his instructions, the defendant was merely acting as an agent. He submitted that in putting forward his defence, the defendant spoke from both sides of the mouth. In one breath, he claimed he was merely acting as agent for Copinasa Nigeria Limited whilst in another breath, he said that the work that was done was part of the retainer he had with Mrs. Tiena Armah and that she had been paid by him. Evidence of such payment was curiously never tendered, despite the fact that he bore the onus of proof.
On the second issue (Whether the claimant was at liberty to elect the party to sue in the circumstances of this case), the learned senior advocate submitted that the trial judge placed heavy reliance on the declaration made by Mrs. Armah in her letter of 22nd November (Ex. C3) that Copinasa Nigeria Ltd would be responsible for the fees payable on the brief handed to her firm. Mr. Sowemimo argued that the learned trial judge overlooked the fact that a contracting party who has dealt with an agent may in certain circumstances elect either to sue the agent or the principal especially in circumstances where it is revealed that the agent is in reality the contracting party. After again referring and quoting from decided cases and text books, counsel submitted that in the case of a disclosed principal, the third party has a right of election as against whom to proceed. He argued that this election comes after all the full facts are known and that a declaration at some point by Mrs. Tiena Armah that she intended to hold Copinasa Nigeria Ltd liable for her fees can not amount to an irrevocable election. He submitted that the true choice was made when Copinasa Nigeria Ltd failed to come forward to assume responsibility and a suit had been taken out against the Defendant, being the person who personally gave out the instructions and was the arrowhead of the joint venture transaction to be captured by the agreements that were prepared by the Claimant.
Victor Ogude Esq of counsel for the Respondent in his brief of argument on issue one whether a solicitor/client relationship existed between the parties herein, submitted that the Respondent did not at any time engage the Appellant as a legal practitioner to advise and prepare documents for the purpose of a joint venture project between Copinasa Nigeria Limited and some Spanish Corporate interests. Counsel submitted that the Respondent had in his statement of defence and witness deposition denied the existence of a Client/Attorney relationship between himself and the Appellant. Learned counsel submitted that the Respondent at the trial led evidence which was not challenged by the Appellant that the Respondent engaged the Appellant's wife Mrs. Tiena Armah to act for him and made it clear that he wanted nothing to do with the Appellant or his law firm. Counsel contended that it was clear from the evidence led that Copinasa Nigeria Limited was the instructing party and the recipient or beneficiary of the power of attorney and related legal services rendered by Mrs. Tiena Armah. Counsel further contended that the Respondent made it clear to Mrs. Armah that he would need to obtain the approval of the board of directors of Copinasa Nigeria Limited who was to be the beneficiary of the contract to instruct her if and only if the contract was awarded and the proposed joint venture with the foreign partners crystallized. Counsel submitted that the Respondent paid Mrs. Armah for the draft power of attorney which was the only document presented and stopped her from proceeding further when it became obvious that the contract would not crystallize. He further submitted that the Appellant by failing to file a reply to the statement of defence nor an additional witness statement coupled with his failure to cross - examine the Respondent on these material points accepted the testimony of the Respondent on these material facts. Counsel relied on the cases of Amadi v. Nwosu (1992) 5 NWLR (Pt 241) 273 and Daggash v. Bulama (2004) 14 NWLR (Pt 892) 144 ratio 42.
Counsel submitted that from exhibit C3 a letter written by the Appellant's wife and tendered in evidence by the Appellant, it was clearly understood by the Appellant's wife with whom the Respondent interfaced in all discussions pertaining to the transaction that Copinasa Nigeria Limited was the party liable for the fees. Counsel submitted that the lower Court was justified in coming to the conclusion from the evidence led that no solicitor/client relationship existed between the Appellant and the Respondent.
Counsel further submitted that the argument of the Appellant that the Respondent ought to be held liable on the ground that he was an agent of Copinasa and that the company was a fa?ade for the Respondent, should be discountenanced as it is a fresh issue that was never canvassed at the lower court neither was evidence adduced in support thereof nor leave sought from this court to raise it as a fresh issue. Counsel submitted that the contention is a radical departure from the case presented at the lower court where the Appellant contended that he contracted with the Respondent. Counsel relying on the case of Ajide v. Kelani (1985) 3 NWLR (Pt.12) page 248 submitted that the law frowns at such inconsistency.
On issue two, whether the findings of fact made by the lower court on the issues submitted before it for determination can be faulted or impeached, learned counsel referred to the findings of the lower court that:
(i) in the light of facts which this court has elicited from the documents, particularly exhibit C3, it is clear that Mrs. Tiena Armah knew from the onset that Copinasa Nig Ltd was to pay for the services and accepted the terms, and she had also concluded that it was Copinasa Nig Pic who had given the instruction and was therefore liable to pay the outstanding fees'.
(ii) I find and hold that based on the evidence before this court that there was no client/solicitor relationship between the Claimant and the defendant in respect of the Copinasa Nig Ltd transaction and consequently, that no contract existed between them'
(iii) 1 therefore hold that the Claimant's claim for payment of professional fees against the Defendant is unfounded and baseless. Having failed to establish the existence of a contract between the two parties to this action, the Claimant cannot succeed on his other claims.
Counsel submitted that the Appellant did not appeal against the specific finding of the lower court that Copinasa gave the instructions and was therefore liable to pay the outstanding fees. He further submitted that the appellant failed to prove that the findings of the trial court were perverse or not based on the evidence adduced before the lower court. Relying on the cases of O.S.LE.C V. Action Congress (2010) 19 NWLR (PT.126) PQ. 273 at 321-322, Olodo V. Josiah (2010) 18 NWLR (PT.122S) PQ. 653 at 676 and 671, he urged us not to interfere with the findings.
The contention of the appellant is that the Respondent, contrary to the decision of the learned trial judge should be held responsible for the professional fees as he issued all the instructions and that the company Copinasa Nigeria Ltd was a mere fagade. The contract of service between the parties is not in writing. It can only be inferred from the facts pleaded and evidence led. From the evidence, both sides are in agreement that the interfacing was between the Respondent and Mrs Tiena Armah. It is therefore correct to assume that Mrs Armah is in the best position to say what she and the Respondent agreed on. She said so in Exhibit C3. In the judgment, the lower court at page 299 of the Record came to the following conclusion:
"One of the principal players in the unfolding drama, Mrs. Tiena Armah then responded vide letter dated 22/11/2004-Exhibit C3.
The following facts emerged therefrom:
1.The legal services rendered by Armah Law Chambers was to Copinasa Nig. Ltd.
2.Mrs. Tiena Armah had undertaken professional services under the aegis of Armah Law Chambers.
3.The defendant had agreed that Armah Law Chambers handle the brief on Copinasa Nig. Ltd and the documents had been prepared by the Claimant.
4.Copinasa Nig. Ltd was to pay for the services.
5.Copinasa Nig. Ltd was liable to pay for the work done at its instance and its outstanding debt.
The claimant had contended that the defendant is both a shareholder and subscriber of Copinasa Nig Ltd, the company appearing to be at the centre of this dispute. Does that then make the defendant liable to pay the debts of the Company which interfacing partner of Armah Law Chambers, Mrs. Tiena Armah, has so eloquently stated was the client and was liable to pay in Exhibit C3?
The law is settled that a company such as Copinasa Nig Ltd has a separate legal personality from its promoters, subscribers and directors. See Salomon vs. Salomon (1879) AC 22. See also Section 37 Companies & Allied Matters Act 2004 and Onuekwusi & Ors vs. The Registered Trustees of the Christ Methodist Zion Church (2011) 6 NWLR 341 where the Supreme
Court said that 'the effect of incorporation and registration of a company, firm etc is to confer on it legal entity as a person separate and distinct from its members. It is a legal person with personality of its own"
Can the above analysis of the lower court be faulted in any way? I think not. The Appellant's contention that the Respondent should be held responsible for the fees because he issued the instruction is with respect misconceived. As rightly held by the learned trial judge a "company has no soul or body through which to act, it can only do so through human agents; but which acts they cannot be personally held liable for." The contention of the Appellant in this appeal that the company, Copinasa Nig Ltd was a mere facade is of no help to him. He did not make the allegation in his pleadings and the evidence led in the case did not disclose any such situation. In fact the evidence led leaves no doubt that the intention was that Copinasa would pay. If the transaction had gone through as expected, N650 million naira legal fees (being 10% of six billion five hundred Naira expected to be brought in by the foreign partner) could be within the contemplation of the Company. Such an amount cannot possibly be within the contemplation of the parties if the Respondent was to pay the legal fees personally. Further the learned trial judge observed:
"It is trite law that he who alleges must prove. In other words, he who alleges the affirmative of a fact has the burden of proving the existence of that fact. The burden of proving that a contract exists between the parties herein lies squarely on the claimant who has alleged it, See Agbaje vs Fashola (2008) 6 NWLR (Pt. 1082) 90 and S. 137 E.A.
It is only where the claimant has proved the existence of the contract that the burden will shift to the defendant to prove his denial of its existence.
However, in the light of the facts which the Court has elicited from the documents, particularly exhibit C3, it is clear that Mrs Tiena Armah knew from the onset that Copinasa Nig Ltd was to pay for the services and accepted the terms and she had also concluded that it was Copinasa Nig Pic who had given the instruction and was therefore liable to pay the outstanding fees. It is trite contract law principle that a stranger to a contract cannot sue or be sued on it even if the contract was made for his benefit and even if indeed the benefit did in fact accrue to him. See Makwe vs Nwukor (2001) 14 NWLR (pi.733) 356."
As earlier stated there is no evidence that the company was a mere fagade. Mr. Sowemimo's submission that Mrs. Armah's expectation that Copinasa Nig Ltd would pay the fees was as a result of the misleading impression created by the Respondent as she had never met any official of Copinasa Nig Ltd is with respect misconceived. The Respondent is a shareholder and director of Copinasa. How can it be contended that Mrs. Armah never met any official of the company when she was actually discussing with one of the principal officers of the company? The fact that the understanding between Mrs. Armah and the Respondent is that instructions were being issued on behalf of Copinasa and that Copinasa would pay is not in doubt as clearly shown in Exhibit C3.
Mr, Sowemimo's lengthy submission as to whether the Respondent transacted the business as agent for Copinasa is quite irrelevant in the present situation as it is all a matter of what was agreed by the parties. Where the agreement is not in writing as in the instant case, their intention can only be deduced from evidence presented. Exhibit C3 left no doubt as to the intention of the parties. At page 6 of the appellant's brief of argument, it was submitted that "the claimant acted on trust for the defendant as Mrs. Tiena Armah had a long standing professional relationship with the defendant and the claimants firm would not have proceeded to act for a total stranger in documenting a complex legal transaction without first demanding a deposit or an outright payment of his fees before handing over either draft or engrossed documents to the defendant". It is this long standing professional relationship between the Respondent and Mrs. Tiena Armah that should stamp the contents of Exhibit C3 as authentic. The agreement as indicated by Mrs. Armah in Exhibit C3 was that Copinasa would pay the legal fees and not the Respondent in his personal capacity. The Appellant's contention that a party to a transaction as in this case has a right to elect who to sue cannot apply in the circumstances of the present case. Where it is agreed that the transaction is with a limited liability company, a party cannot elect to sue any other entity than the company. An individual sued in place of the company will succeed in challenging the action. The cases of Idahosa vs. Oronsaue (1959) 4 FSC 166 and Basma v. Weeks 12 WACA 316 cited by learned senior counsel for the Appellant are inapposite. The Respondent herein did not go into the contract as an agent for the company. It was the company through the respondent a director of the company that entered into the contract and was to pay for the job done according to Mrs. Armah who interfaced with the Respondent. These facts were well amplified by Mrs. Armah in her letter Exhibit C3.
With due respect, I am of the view that the Appellant has failed to show that the findings reached by the lower court were perverse or not based on the evidence adduced before the lower court. From the evidence adduced, there was no contract between the Appellant and the Respondent. Consequently there was no client/solicitor relationship between them such as would bring into play the provisions of the Legal Practitioner's Act.
In the final result, I hold that this appeal lacks merit. It is hereby dismissed. The judgment of the lower court is affirmed. I make no order as to costs.
SIDI PAUPA BAGE I had the honour of reading in draft, the lead judgment just delivered by my learned brother, Honourable Justice CHINWE EUGENIA IYIZOBA, JCA. I am in full agreement with the reasoning and conclusion contained therein. The appeal lacks merit, and is also dismissed by me. I abide by the order as to costs contained in the lead judgment.
JAMILU YAMMAMA TUKUR JCA I had the privilege of reading the lead judgment just delivered by my learned brother CHINWE EUGENIA IYIZOBA JCA and I agree with him that the appeal lacks merit.
I also dismissed same and I abide by the consequential orders made in the judgment.
O. S. SOWEMIMO SAN WITH C. R. COKER (MISS) AND D. M. IFARAJIMI (MISS) FOR THE APPELLANT,
V. O. OGUDE ESQ. FOR THE RESPONDENT,