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WHAT IS FRAUD?

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Dictum

What then is fraud or what in law can amount to fraud? In law, fraud has simply been defined as an advantage gained by unfair means; a false representation of fact made knowingly, or without belief in its truth, or recklessly, not caring whether it is true or false. Fraud also means an intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or to surrender a legal right. It is also a false representation of a matter of fact whether by words or by concealment of that which should have been disclosed, which deceives another so he shall act upon it to his legal injury, Jowitt’s Dictionary of English Law, Vol. 1, 2nd Edition, p. 827; Black’s Law Dictionary, 8th Edition, p. 660.

— C.C. Nweze, JSC. APC v. Sheriff (2023) – SC/CV/1689/2022

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COMPANY WILL NOT BE USE AS AN INSTRUMENT OF FRAUD

It must be stated unequivocally that this court, as the last court of the land, will not allow a party to use its company as a cover to dupe, cheat and or defraud an innocent citizen who entered into lawful contract with the company, only to be confronted, with the defence of the company’s legal entity as distinct from its directors. Most companies in this country are owned and managed solely by an individual, while registering the members of his family as the share holders. Such companies are nothing more than one-man-business; hence, the tendency is there to enter into contract in such company name and later turn around to claim that he was not a party to the agreement since the company is a legal entity.

– MUNTAKA-COMASSIE JSC. Alade v. Alic (2010)

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WHERE FRAUD, COURT WOULD LIFT THE VEIL OF INCORPORATION

FDB FINANCIAL SERVICES LTD. v. ADESOZA (2002) 8 NWLR (Pt. 668) 170 AT 173, the Court considering the power of a Court to lift the veil of incorporation held thus: “The consequences of recognizing 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 consequences of the statute which may result in grave injustice that the Court as occasion demands have to look behind or pierce the corporate veil.”

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FRAUD IN CIVIL SUIT MUST BE SPECIFICALLY PLEADED

It is trite law that where fraud is alleged it must be specifically pleaded and the particulars of the fraud given in order to enable the party defending the allegation to understand the case he is facing and thereby prepare his defence.

– Amaizu, J.C.A. Adeniran v. Olagunju (2001)

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FRAUD LIFTS VEIL OF INCORPORATION

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. – Galadima JSC. Alade v. Alic (2010)

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PARTIES BOUND BY CONTRACTUAL TERMS IN ABSENCE OF FRAUD

The well laid down position of the law is that Courts do not rewrite contact for the parties where the terms of the contract are clear. In the absence of fraud, duress and undue influence, misrepresentation, the parties are bound by their contract. It is only parties to a contract that can sue and be sued on it.

– Rhodes-Vivour JSC. Alade v. Alic (2010)

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ALLEGATION OF FRAUD NOT PARTICULARISED IS USELESS AND CANNOT SUCCEED

This is because in law, an allegation of fraud requires that the particulars of fraud be set out to confer any modicum of seriousness on such an allegation of fraud to warrant further enquiry into it at trial. In other words, unless and until an allegation of fraud is, expressly, made and supported by its particulars, it is a non-starter as it is well settled that a mere or bare or banal allegation of fraud, no matter how grave, is of no moment if it is not supported by the relevant particulars as required by law, Nammagi v. Akote [2021] 3 NWLR (pt. 1762) 170. An allegation of fraud that is merely generic, vague and lacking in the specific and particulars is in law a non-starter and useless, PDP v. INEC and Ors (2012) LPELR 9724 (SC) Nishizawa Ltd v. Jethwani (1984) 12 SC 234; UBA and Anor v. Alhaji Babangida Jargaba [2007] 11 NWLR (pt. 1045) 247.

— C.C. Nweze, JSC. APC v. Sheriff (2023) – SC/CV/1689/2022

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