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APPLICATION OF THE CORPORATE VEIL LIFTING IS NOT EXCLUSIVE TO THE FEDERAL HIGH COURT JURISDICTION

Dictum

The doctrine of lifting the corporate veil has been utilised by the Courts when it becomes necessary to expose the individual hiding behind the corporate entity for the purpose of doing justice. The application of the doctrine is not exclusive to the jurisdiction of the Federal High Court. See Alade Vs Alic (Nigeria) Limited (2012) All FWLR (Part 563) 1849, Adeyemi Vs Lan & Baker Nigeria Limited (2000) 7 NWLR (Part 663) Oyebanji vs The State (2015) All FWLR (Part 800). In Alade v. Alic (Nig) Ltd (2012) All FWLR (Pt. 563) 1849, the action commenced in the High Court of Oyo State with the claimant claiming about Three Million Naira as damages for fraud committed against him by the 1st defendant – a limited liability company and plaintiff’s business partner, and the 2nd defendant – Managing Director of the 1st Defendant. The defendants opposed the action. The trial judge entered judgment for plaintiff against the defendants jointly and severely by lifting the veil of the 1st defendant. The defendants’ appeal to the Court of Appeal was successful. However, the plaintiff appealed to the Supreme Court and one of the issues for determination was whether the defendants/respondents could be held jointly and severally liable for damages occasioned as a result of a fraudulent breach of partnership agreement between the appellant and 1st respondent. In agreeing with the trial judge that the defendants should be jointly and severally liable for the fraudulent breach of the partnership agreement, the Supreme Court held that the Oyo High Court Judge rightly applied the principle of lifting the veil. His Lordship, Galadima JSC held at page 1862-1863E-B thus: “…One of the occasions when the veil of incorporation will be lifted is when the company is liable for fraud as in the instant case. In FDB Financial SERVICES Ltd v. Adesola (2002) NWLR (pt. 668) 170 at 173, this Court considering the power of Court to lift the veil of incorporation held thus: “The consequence of recognising the separate personality of a company is to draw a veil of incorporation over the company. One is therefore generally not entitled to go behind or lift this veil. However, since a statute will not be allowed to be used as an excuse to justify illegality or fraud, it is a quest to avoid the normal consequence of the statute which may result in grave injustice that the Court as occasion demands have to look behind and pierce the corporate veil.” Also, in Adeyemi v. Lan & Baker (Nig) Ltd (2000) 7 NWLR (Pt. 663) 33, it was held as follows:- “A party should not be allowed to benefit from its own wrong. This is encapsulated in the Latin maxim “Nullis commodium capere potest de injuria sua pria.” It is abundantly clear that the 2nd respondent was responsible for the management of the 1st respondent company and on him fell squarely the responsibility of rendering proper accounts of the partnership business on behalf of the said 1st respondent. It was as a result of this that the trial Court rightly looked beneath the facade and lifted the veil of incorporation to discover the thread that ties the 1st respondent and the 2nd respondent together as parties in conspiracy to commit fraud and committing that fraud. The 2nd respondent is therefore jointly and severally liable with the 1st respondent to make good all sums improperly paid out or accrued due to his failure to exercise the care necessary in the running of the 1st respondent.” (Underlining supplied). In Oyebanji v. State (2015) All FWLR (Pt. 800) 1256, the criminal trial commenced at the Oyo State High Court, where the appellant was charged for stealing a sum of money contrary to and punishable under Section 390(9) of the Criminal Code, Laws of Oyo State 1978. The money alleged to be stolen by the appellant was received by him in his capacity as managing director of Baminco Nigeria Ltd and the money was the property of Associated Commodities and Foodstuffs Nigeria Ltd that was engaged in a venture with Baminco Nigeria Ltd. The money was meant for the importation of certain goods, which Baminco Nigeria Ltd failed to purchase and the money was unaccounted for. The appellant was tried and convicted for stealing the money as the trial Court reasoned that the facts of the case required lifting the veil of Baminco Nigeria Ltd to reveal the appellant as the real fraudster. The appellant’s appeal to the Court of Appeal and the Supreme Court failed. Rhodes-Vivour JSC at pages 1279 1280 of the judgment stated as follows: “My Lords, after lifting the veil of incorporation of Baminco (Nig) Ltd, both Courts below were able to see that the appellant is the alter ego of Baminco (Nig) Ltd. He collected the sum off N1,180,593.75 (one million, one hundred and eighty thousand, five hundred and ninety-three Naira, seventy-five kobo) from Associated Commodities and Foodstuffs (Nig) Ltd to import tyres, tube and granulated sugar on the company’s behalf. The Courts further found that the sums collected by the appellant were not paid into Baminco Nig) Ltd’s account, neither was a letter of credit for the importation of the goods in the name of Baminco (Nig) Ltd. It becomes clear that the appellant never imported the goods or returned the money despite repeated demands. The appellant acted in his own interest and not on behalf of the company. The appellant’s acts amount to fraudulent conversion of N1,180,593.75 (one million, one hundred and eighty thousand, five hundred and ninety-three naira, seventy-five kobo). A clear case of stealing.” In the same judgment, Ogunbiyi JSC supported the application of the principle of lifting the veil of incorporation and said at page 1283 of the report, inter alia, as follows: “….The principle of ‘lifting the veil of incorporation’ is where it becomes expedient to expose the individual hiding behind the corporate entity, for the purpose of doing justice. The case is issued, especially with reference to the evidence of PW2, who described the appellant affirmatively as the ‘all in all’ of the company, gives the reason why the appellant should be exposed. The act against the company is fraudulent and depicts evidence of manipulation and deceit. In the absence of any evidence of a separate bank account in the name of Messrs Baminco (Nig) Ltd, the appellant’s dealings with the Associated Commodities was in his own person and capacity. He cannot now pretend and seek to wriggle out of it…”

— M. Peter-Odili, JSC. Oboh & Anor v. NFL (SC.841/2016, January 28, 2022)

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INCORPORATED BODIES QUALIFY AS A PERSON

On whether an incorporated body qualifies as a “person”, it is trite that where a company, or other body of persons, is registered under the Companies and Allied Matters Act, it is vested with the status of a legal entity and is regarded as a person. In Kasandubu vs. Ultimate Petroleum Ltd (2008) 7 NWLR (Pt.1086), a person was defined to mean both artificial and natural persons and includes sole or public bodies, corporate or incorporate.

— Oweibo, J. Megawatts v. Gbagada phase (2020) – FHC/L/CS/982/2020

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CERTIFICATE OF INCORPORATION ESTABLISHES CORPORATE STATUS

It has averred that it is a registered Company under the laws in Nigeria, it was incumbent on it to produce and exhibit the certificate of incorporation. The law is that where the legal personality of incorporated company is called into question and issue joined thereon, the onus is on the party claiming the status of juristic person derived from such incorporation to establish it and the corporate status of a body is established by the production of its certificate of incorporation. By Section 36 (6) of the Companies and Allied Matters Act Cap 59 Laws of the Federation 1990 only a Certificate of Registration or incorporation of a Company or Association is prima facie evidence of incorporation of such Company or Association.

– Adekeye, J.S.C. Goodwill v. Witt (2011) – SC. 266/2005

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CORPORATE BODIES HAVE THE RIGHT TO SUE FOR INFRINGEMENT OF FUNDAMENTAL RIGHTS

In Okechukwu vs. EFCC (2015) 18 NWLR (Pt 1490), the Court of Appeal held as follows – “Assuming a limited liability company is involved in a case where it was denied fair hearing, it has the right to sue for breach of its fundamental right to fair hearing. Again if the processes filed by the appellants were couched in such a way to show that the 1st Appellant’s ordeal and unwarranted arrests and detention was based primarily on the fact that he is the Managing Director of the 2nd appellant, then the 2nd appellant has a right to sue for the infringement of the fundamental rights of its managing Director.’

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