INTERNATIONAL AGRICULTURAL INDUSTRIES (NIGERIA) LIMITED & ANOR (APPELLANT)
v.
CHIKA BROTHERS LIMITED (RESPONDENT)
(1990) All N.L.R. 74
Division: Supreme Court of Nigeria
Date of Judgment: 12th January, 1990
Case Number: S.C. 42/1988
Before: Obaseki, Uwais, Kawu, Belgore, Agbaje, JJ.S.C.
The respondent sued the appellants at the Federal High Court, Port Harcourt claiming:
(1) A declaration that the plaintiff is not and has never been a shareholder of the 1st defendant company.
(2) A declaration that the sum of N58,200.00 was and is still a loan and is a debt owing from the defendants to the plaintiff.
(3) The sum of N49,600.00 due and payable by the defendants to the plaintiff being the balance still outstanding and owing from the defendants to the plaintiff paid to the 1st defendant at the request of the 1st defendant and the 2nd defendant.
(4) Interest on the said N49,600.00 at the rate of 4% per annum until the judgment debt is paid.
In its statement of claim the respondent as plaintiff averred that the 2nd appellant was the founder and Managing Director of the 1st appellant and thereby acted as its Chairman. This fact was however traversed by the appellants as defendants in their statement of defence which averred that by the 7th extra ordinary meeting of the 1st appellant had on the 26th of October 1976, one Chika Akanu Agu who was the Chairman of the respondent company had been appointed the Chairman of the appellant company while the 2nd defendant remained as Managing Director thereof. Reference was made in this regard to pages 19- and 51 of the minute book of the 1st defendant verifying the above facts.
At the hearing the appellants sought to tender the said minute book in evidence and the respondent objected on the ground that inter alia it did not comply with the provisions of section 382 of the Companies Act 1968 in that it did not conform with precautions laid down in that section.
The trial Judge in his ruling upheld that objection of the respondent and rejected the minute book. Dissatisfied the appellants appealed to the court of Appeal which affirmed the decision of the trial court whereupon the appellants further appealed to the Supreme Court.
HELD:
(1) Before a book is rejected as a minute book there must be raised an objection as to its admissibility challenging its authenticity either as to falsification or tampering, or not being in the proper form or that the book totally fails to answer the requirements of these sections were not complied with without pointing out specific acts of non-conformity is not enough.
(2) By virtue of section 382 of the Companies Act 1968 the minutes in a minute book need not be kept in a bound book but may be recorded in loose leaf books to be kept by a company or in any manner in accordance with accepted usage provided that adequate precaution is taken for guarding against falsification and facilitating discovery.
(3) In the instant case there was no evidence before the trial court that the method of recording matters in the rejected minute book which was a bound volume and boldly titled "Minute book" was in violation of any of the provisions of the Companies Act.
(4) The expression "to enter in a book" means to record something in that book. Accordingly, when a type-
written sheet of paper is so attached, affixed or pasted to a page of a book to the extent that the type-written sheet can no longer be removed from the page without destroying it, that type written sheet has become a part of the book.
(5) It is recognised by section 138(2) of the Companies Act 1968 that a court can take judicial notice of the fact that the usual plan adopted for taking minutes is for the Secretary to make notes at each meeting of what passes and subsequently to enter same in a proper minute book ready for reading and signature by the Chairman after they have been read and approved at the next meeting.
(6) Minutes of a Company's meeting if signed by its Chairman, are only taken as prima facie. They can be contradicted by other evidence.
(7) Parties should not throw to the wind the wisdom of leaving the prosecution of issues or points that can be taken advantageously after the final decision of the Court of first instance in an appeal before an appellate court till the court of first instance has given its final decision and appeal against the decision lodged.
Appeal allowed; decision of the Court of Appeal reversed, trial to commence de novo.
Cases referred to:
Donohue v. Smith (1968) 22 A.C.J. 62.
In re Indian Zoidone Co. (1884) 26 ch.D 70.
Legal and General Life Assurance Co. v. Gill (1878) 6 O.V.R. 206.
Lionharry Hemiglite Iron Ore Co. v. Roney (1864) 4 Dc 9.J. & Sons 426.
Onwuka v. Taywani (1968) 2 A.L.R. (Comm.) 310.
Oruwari v. Okunna unreported Suit No. F.R.C./L/77/76.
Statutes referred to:
Companies Act, 1968.
English Companies Act, 1929.
English Companies Act, 1948.
E.T.O. Njoku for the Appellants.
I.N. Umezurike for the Respondent.
Belgore, J.S.C.:-On the 16th day of October, 1989, I allowed this appeal and reserved to today my reasons for so doing. I now give my reasons.
The appellants were defendants at the Federal High Court, Port Harcourt, to a suit by the respondent company, Chika Brothers Ltd., claiming as follows:-
(1) A declaration that the plaintiff is not and has never been a shareholder of the 1st defendant.
(2) A declaration that the said sum of N58,200.00 was and still is a loan and is a debt owing from the defendants to the plaintiff.
(3) The sum of N49,600.00 due and payable by the defendants to the plaintiff being the balance still outstanding and owing from the defendants to the plaintiffs to the 1st defendant at the request of the 1st defendant and the 2nd defendant.
(4) Interest on the said N49,600.00 at the rate of 4% per annum until the judgment debt is paid.
In paragraph 3 of the respondent's statement of claim, it was averred as follows:
"The second defendant who resides in Aba within the jurisdiction of this Honourable Court is the founder and Managing Director of the 1st defendant. He shall hereinafter be called 'the 2nd defendant' and both the defendant and the 2nd defendant shall hereinafter together be referred to as 'the Defendants.' The defendant was at all times material to this action Managing Director of the 1st defendant and acted as its Chairman."
The appellant filed joint statement of defence and traversed paragraph 3 of Statement of Claim as follows:
"The defendants admit paragraph 3 of the Statement of Claim to the extent that the 2nd defendant was the Chairman, founder and Managing Director of the 1st defendants. The defendants however explain that by the 7th extra ordinary meeting of the 1st defendant held on the 25th of October, 1976, the 2nd defendant ceased to be the Chairman of the 1st defendants. Chika Akanu Agu Chairman of the plaintiff Company was appointed the Chairman of the 1st defendants while the 2nd defendant retained his position as the Managing Director of the 1st defendants. The defendants will at the trial rely on the Minute Book of the 1st defendants at pages 49 and 51."
During the hearing of evidence, D. Okorie Onyemanwa Okorie, the second defendant (now second appellant), identified the Minute Book of first appellant and through him, counsel for the appellant sought to tender the said Minutes Book. The respondent's counsel, Mr Umezuruike, was recorded by learned trial Judge as follows:
"The defence has objection. He (sic) says it does not comply with the provision (sic) of section 382 of the Companies Act, 1968 in that it does not conform with precautions laid down in the section. In making this submission I would rely on the case of Oruwari & Ors. v. Okunna & Ors."
The counsel had not with him the reference of the case he cited and nothing more about it. But to this submission, Mr Njoku of counsel, for the defendants (now appellants) urged the Court to hold that the Minute Book complied with section 382 of Companies Act, 1968 and that the minutes were pasted on it in the regular way with no indication of any tampering with the book.
Learned trial Judge in a ruling held that the Minute Book did not comply with section 382 of Companies Act and therefore for that non-compliance was not a Minute Book. That the court went beyond the argument of the parties and considered section 138 of Companies Act, instead of section 382 thereof. This is because section 138 of the Act actually created the Minute Book and made it evidence of what transpires at the company's proceedings of directors or general meetings. (section 138(1) refers). But it is section 382 of the Act that explains what the contents of the book should be and how it is to be kept. It states:
"382 (1) Any register, index, minute book or book of account required by this Decree to be kept by a company may be kept either by making entries in bound books or by recording the matters in question in any other manner in accordance with accepted commercial usage.
(2) Where any such register, index, minutes book or book of account is not kept by making entries in a bound book, but by some other means, adequate precaution must be taken for guarding against falsification and for facilitating its discovery and where default is made in complying with this subsection, the company and every officer of the company who is in default shall be liable to a fine . . ."
But the section creating the minutes book is section 138 which states that:
"(1) Every company shall cause minutes of all proceedings of general meetings, all proceedings at meetings of its directors, and where there are managers, all proceedings at meetings of its managers to be entered in books kept for that purpose."
The court of first instance alludes mainly to section 138(1) (supra) and relied on the decision in Onwuka v. Taywami & Ors. (1968) 2 A.L.R. (Commercial) 310 and reference made in that case of English case of Hearts of Oak Assurance Company Ltd. v. James Flower & Sons (1936) Ch.D, 76. The Court of Appeal upheld decision of the trial court that the minute book tendered offended section 382 and section 138 of Companies Act. To my mind, the Court of Appeal adverted more to the state of the law, but never considered whether the facts thereto establish the legal position supported the judgment of the trial court. All that the case of Onwuka v. Taywani & Ors. (supra) decided in regard to minute book can be summarised as follows:
"Entries made on loose sheets of paper, whether kept in a file or fastened together between covers, are not admissible in evidence as minutes entered in a book within the meaning of section 73 of the Companies Act (Cap. 37) Laws of Nigeria, 1958, and pasting them into a book at a later stage does not make them evidence."
Section 73 of the Companies Act, 1958 is slightly different from section 138 of the Companies Act, 1968, but their interpretation should not bring difficulty as they are virtually in pari materia. But the decision in Onwuka's case (supra), is based on Hearts of Oak Assurance Co. Ltd. v. James Flower & Sons (supra). However, this latter case concerned a book consisting of a number of loose sheets of paper fastened together in two covers which were tendered in evidence. The documents were "in such physical condition that at any moment, if any one wishes to do so he can take any number of leaves out and substitute any number of other leaves. It is a thing with which any one disposed to be dishonest can easily tamper." It was held therefore to offend English Companies Act, 1929, section 120, which is in pari materia with our section 382 of the Companies Act, 1968. At the time the case was decided in 1936, there seemed to be no authority on that point concerning the minute book.
In the present appeal, there is a world of difference between the facts before the court and the law. Before a book is rejected as minute book, there must be raised an objection as to its admissibility, challenging its authenticity either as to falsification, or tampering, or not being in the proper form or that the book totally fails to answer the requirements of section 382(2) Companies Act, 1968. To simply assert that it did not answer the requirements of the section without more, is not enough; specific acts of nonconformity with the subsection must be pointed out. What transpired before the trial court as quoted earlier on certainly fell short of the requirements needed before the rejection of the book. The respondent's counsel acted prematurely.
However, the book now in court and marked as "Rejected Exhibit" is a bound volume titled "MINUTE BOOK." The pleading of the appellant quoted earlier on, clearly stated in paragraph 3 that reliance would be placed on pages 49 and 51 of the minute book. The book is a bound volume with ledger index and it contains 480 pages. All the minutes are typed on foolscap paper and pasted to odd pages i.e. every other odd number page from page 1. In the minutes relevant to the instant appeal, pages 49 and 51, contain the pastings. Page 50 does not contain anything just as every other even number page from page 2 to page 48 contains no pasting of minutes. In the respondent's counsel's submission, there is no allegation of falsification or tampering; bald allegation of offending section 382 or 138 of the Act is not enough. In Hearts of Oak case (supra), the documents were in loose form for appreciable period before they were held together in two volumes (not bound). Whereas in cases after 1948, the courts in England and Australia have looked the other way from decisions like Hearts of Oak (supra) and Re A Solicitor ex parte "The Prothonotary" (1939) 56 N.S.W.W.N. 53 and have held that it will be sufficient for minutes to be recorded in a rough scrapbook as in the old case of Legal & General Life Ass. Co. v. Gill (1878) 4 O.V.R. 204; or minutes pasted into a book were sufficient and that any person challenging them was to call for evidence as to when they were entered in order to show that they were not made within the proper period-Donohue v. Joynton Smith (1948) 22 A.L.J. 62. This is because of the Companies Act, 1948 (11 and 12 Geo 6 c. 36) whose provisions in section 145 and section 436 are the same as our sections 138 and 382 respectively of Companies Act, 1968. Similar provisions exist in Australia.
It is for the foregoing reasons that I found merit in this appeal and allowed it by setting aside the decision of the Court of Appeal which upheld the trial court's ruling.
Obaseki, J.S.C.:-On the 16th day of October, 1989 after hearing the submissions of counsel and reading the briefs filed together with the record of proceedings and judgment in the court below, I found merit in this appeal and allowed the appeal and reserved the delivery of my reasons for the judgment till today. I now proceed to give it.
Before now, I have had the privilege of a preview of the Reasons for Judgment just delivered by my learned brother, Belgore, J.S.C. I agree with all the opinions expressed on the issues raised in the appeal for determination.
The only issue raised in this appeal is whether the Minute Book held inadmissible and marked "Rejected" by the learned trial Judge because it did not comply with section 382 of the Companies Act, 1968 is admissible or not.
I have myself examined the book. It is a bound Minute Book and had the title "Minute Book" impressed on it. The minutes were typed and pasted on alternate pages of the Minute Book but the typed pages are numbered serially in respect of the meeting to which it relates. The relevant minutes are at pages 49 and 51 of the Book but the typed sheets are numbered pages 1 and 2. Section 382(1) and (2) of the Companies Decree does not render the Minute Book inadmissible as interpreted by the lower court. That section only cautioned in subsection (2) that:
"where any such register, index, minute book or book of account is not kept by making entries in a bound book but by some other means, adequate precaution must be taken for guarding against falsification and for facilitating its discovery and where default is made in complying with this subsection, the company and every officer of the company who is in default shall be liable to a fine."
The subsection deals with situation where the book is not kept by making entries in a bound book. It is quite proper to observe that the rejected minute book is a bound book and although the entries contained therein were not made by hand, they were nevertheless entries but only in a type written form. It cannot therefore be contended that the entries were not entries in a bound book. The Court of Appeal was therefore in error to have affirmed the ruling of the learned trial Judge rejecting the minute book from admission as evidence in the proceedings. The book is relevant and it is admissible as original document.
It is sad to observe that it was at the tail end of the proceedings in the High Court that this interlocutory decision to reject the document was made. It is even sadder to observe that the proceedings before the High Court had to be stayed to allow the pursuit of appeal proceedings against the decision. Although the hearing before this Court did not take more than an hour to conclude, it took 8 years for the appeal to travel from the High Court through the Court of Appeal to this Court. If the plaintiff had allowed the learned trial Judge to conclude the hearing and deliver his judgment, he could still have had the opportunity to raise the issue of admissibility in the appeal courts. He would have enjoyed the added advantage that if the point raised succeeded, the decision in the case could have been reversed in his favour and the rights of the parties in the matter determined finally. What is the position now?
Although the point raised before us has been upheld and resolved in the appellant's favour, the rights of the parties cannot be determined finally in this Court as hearing before the High court, Aba, had not been concluded. The case has to be remitted to the High Court for hearing to proceed. In the meantime, information has reached this Court that the learned trial Judge conducting the trial is dead. That being the case, trial has to commence de novo before another Judge of the High Court of Imo State, Aba Judicial Division.
It is therefore necessary to emphasise that parties should not throw to the wind the wisdom of leaving the prosecution of issues or points that can be taken advantageously after the final decision of the High Court till the High Court has given its final decision and appeal against the decision lodged.
It was for the above reasons that I allowed the appeal and set aside the decision of the Court of Appeal on the 16th day of October, 1989.
Uwais, J.S.C.:-This is an interesting case on a company's minutes book. The appellants were the defendants in the Federal High Court, Port Harcourt, where the respondent company brought an action against them, inter alia, claiming for a declaration that it was not and had never been a shareholder of the 1st appellant. Pleadings were filed. In their amended joint statement of defence, the appellants pleaded the following averments in paragraphs 7, 8, 10 and 11 thereof:
"(7) At the 1st Annual General Meeting of the 1st defendants held at Burnaby Vancouver, Canada, on the 17th of September, 1975, the 2nd defendant as the Managing Director was authorised to invite Chika Agu of the plaintiffs' Company amongst others to become members of the Company. The said Chika Agu was and still is the Chairman of the board of directors of the plaintiffs. The defendants will at the trial rely on the minutes of this meeting at pages 7, 11 of the Minutes book.
(8) At the meeting of the 1st defendants held at Abriba between the 8th and 12th January, 1976, the said Chika Agu who was present at the meetings accepted to be associated with the activities of the company as a member. As a result of the acceptance he was given a copy of the 1st defendants' document titled THE INAGRINDUS GROUP OF COMPANIES-AN INTERIM REPORT AND ACCOUNTS FOR 1975/76 FISCAL YEAR. The defendants will rely on the copy of this and on the minutes book at the trial."
(10) At the sixth extraordinary General Meeting held at Cotonou in the Republic of Benin of the 17th of July, 1976 at the residence of Chika Akanu Agu the plaintiffs acquired 51% Equity shares in the 1st defendants Company and Messrs Chika Akanu Agu, Ina K. Agu and Mark Okoroafor all of the plaintiffs Company were appointed Directors of the 1st defendants. The defendants will at the trial rely on the minutes at pages 37 and 39 of the 1st defendants' minutes book . . .
(11) Chika Akanu Agu and other representatives of the plaintiffs namely Akanu I. Agu, Ina K. Agu and Irolo Nnam-
Nmaju, Solicitor/Legal Adviser to the plaintiffs, attended and participated at various formal and informal meetings of the 1st defendants between January, 1976 and May, 1978. Defendants will at the trial rely on the minutes of the 1st defendants at pages 15, 19, 23, 39, 41, 51 of the Minutes Book." (Italics mine)
At the hearing of the suit before Osakwe, J., the 2nd appellant, as 2nd defendant, gave evidence and the defence sought to tender through him the minutes book of the 1st appellant. Counsel for the respondent, then as plaintiff, raised objection to the admission of the minutes book on the ground that the minutes book "does not comply with the provisions of section 382 of the Companies Act, 1968 in that it does not conform with the precautions laid down in that section." In his ruling, upholding the objection, the learned trial Judge stated as follows:
"Before I go further, I think it is important to repeat here that section 73 of the old Companies Act (Cap. 37 of the Laws of the Federation of Nigeria, 1958) is in pari materia with section 138 of the present Companies Act, (1968).
It seems to me that in Onwuka's case (supra) (1965 Lagos High Court Reports, 62), it took several months before the typed loose sheets of the minutes were pasted in the Minutes Book. I do not think that the period between the time the minutes were typed on the loose leaves and the time they were pasted on the minutes books is the relevant factor to be considered. In my view, the issue is, whether the minutes were written down in the minutes book in which case it would have complied with the provisions of section 138 of the Companies Act, (1968) (formerly section 73 of the old Companies Act) or whether the minutes were typed in loose sheets and subsequently, at later time, pasted in the Minutes Book. In the latter case it seems to me that it does not comply with the provisions of the law and falls completely outside the requirements. Such Minutes book in such a case offends the provisions of section 138 of the Companies Act, 1968. I, therefore, hold the view that this Minutes Book, sought to be tendered by the defendants in this case, which, as I have seen it, are typed loose sheets of the minutes which were subsequently pasted on the Minutes Book, does not constitute Minutes Book under the provisions of section 138 and section 382 of the Companies Act. It does not comply with those sections of the Company Act." (parenthesis and italics mine).
The appellants, therefore, appealed against the ruling to the Court of Appeal. That Court (Nasir, P.C.A., Nnaemeka-Agu, J.C.A,. as he then was, and Babalakin, J.C.A.) upheld the ruling of the trial court. In his lead judgment, Babalakin, J.C.A., concluded as follows:-
"The necessity for keeping a company's minutes book in strict compliance with the provisions of the Companies Act is indeed very important.
I, therefore, uphold the learned trial Judge's conclusion that the minutes book sought to be tendered by the appellant, which were typed loose sheets of the minutes which were subsequently pasted on the minutes book, does not constitute minutes book under the provisions of section 138 and 382 of the Companies Act, 1968 and was rightly rejected.
On the submission of learned counsel for the appellant that the learned trial Judge having come to the conclusion that the minutes were not made as entries in the minutes book, failed to consider whether the means adopted was in accordance with accepted commercial usage and its delivery whether the means guarded against falsification and for facilitating its discovery as provided in section 382(2) of the Companies Act, quoted above, I wish to emphasise that it was the duty of the learned counsel to present evidence of these matters to the court. He did not do so and the court cannot consider it.
This appeal is therefore, hereby dismissed."
The appellants, therefore, appealed further to this Court. They formulated the following issues in their brief of argument for determination by us:
"(1) Whether the decisions in (a) Hearts of Oak Assurance Co. Ltd. v. James Flower & Sons. (1936) Ch. 76 (b) Onwuka v. Taywani & 6 Ors. (1968) A.L.R. Commercial 313(3), (c) Oruwari & Ors. v. Okuna & Ors. Suit No. FRC/L/77/74 (unreported) were rightly followed and applied t