WHETHER ONLY THE FEDERAL HIGH COURT CAN ENTERTAIN SUIT IN RESPECT TO LIFTING OF CORPORATE VEIL?

-

WHETHER ONLY THE FEDERAL HIGH COURT CAN ENTERTAIN SUIT IN RESPECT TO LIFTING OF CORPORATE VEIL? 


by Branham Chima. 

Subscribe: https://branhamchima.substack.com/embed 


✓ DEFINITION(S): 

Lifting corporate veil: Lifting the corporate veil, also known as piercing the corporate veil, is a legal concept that refers to a situation where a court disregards the separate legal personality of a corporation or limited liability entity. This means that the personal assets of the shareholders are generally protected from the debts and liabilities of the corporation. However, in certain circumstances, a court may decide to ‘lift’ or ‘pierce’ the corporate veil and hold the shareholders personally liable for the obligations of the corporation. This is typically done when it is determined that the corporation is being used to perpetrate fraud, injustice, or to evade legal obligations. By lifting the corporate veil, the court treats the rights, liabilities, or actions of the corporation as those of the shareholders or owners. 


✓ ANSWER: 

The answer is No. Hear the Court in Oboh & Anor v. NFL (SC.841/2016, January 28, 2022): 

‘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.”’  

Comments

Post a Comment

What are your thoughts?

Popular posts from this blog

WHEN IS AN APPEAL DEEMED ENTERED AT THE COURT OF APPEAL?

-
WHEN IS AN APPEAL DEEMED ENTERED AT THE COURT OF APPEAL? by Branham Chima. Subscribe: https://branhamchima.substack.com/embed An appeal is considered to be officially submitted to the Court of Appeal when the records of the previous court’s proceedings are received by the Court of Appeal. Once an appeal has been submitted and until it is finally resolved, the Court of Appeal will have control over the entire case between the involved parties. Unless stated otherwise in the Rules, all applications related to the case must be made to the Court of Appeal and not to the original trial Court. However, it is possible to file an application in the trial Court for it to be transferred to the Court of Appeal. The above position was encapsulated in the National Industrial Court case of Ayangbade v. UBA (NICN/YL/05M/2020, 9th February 2021) per Kado J. thus: ‘the counsel for the judgment creditor/respondent has also contended that no appeal has been entered before the court of appeal. Let m...
Read more

WHETHER CONFLICTING FACTS CAN BE PLEADED WHERE ALTERNATIVE RELIEFS ARE SOUGHT?

-
WHETHER CONFLICTING FACTS CAN BE PLEADED WHERE ALTERNATIVE RELIEFS ARE SOUGHT?  by Branham Chima.  ✓ DEFINITION(S):  • Conflicting facts: refer to contradictory or opposing pieces of information or evidence that are presented. It occurs when different sources, perspectives, or accounts provide inconsistent or conflicting details about a specific matter or issue.  • Pleaded: When a person pleads, they are presenting their case or defense to the court, either admitting or denying the allegations against them. The plea can be made orally or in writing, depending on the jurisdiction and the specific circumstances of the legal proceedings. The term "pleaded" is commonly used to describe the past action of making a plea.  • Alternative reliefs: refer to different forms of remedies or outcomes that a party seeks in a legal proceeding as alternatives to each other. By seeking alternative reliefs, a party acknowledges that there may be multiple ways to address their conc...
Read more

OBITER DICTA OF THE ULTIMATE COURT ON IMPORTANT POINTS ARE BINDING ON LOWER COURT

-
OBITER DICTA OF THE ULTIMATE COURT ON IMPORTANT POINTS ARE BINDING ON LOWER COURT by Branham Chima.  Subscribe: https://branhamchima.substack.com/embed  Obiter dictum, or incidental remarks by a judge that are not binding, play an important role in legal opinions. Generally, lower courts are not obligated to follow obiter dictum. However, there is an exception: when the ultimate court makes an obiter dictum on an important point of law, it becomes binding and must be followed by all lower courts. This exception ensures consistency and uniformity in the interpretation and application of the law across the judicial hierarchy.  This position was affirmed in the case of Bennett Ifediorah & Ors. V. Ben Ume & Ors. (1988) per Nnaemeka-Agu JSC thus: ‘Although this opinion was given in a criminal appeal, it has been followed and applied by the Court of Appeal in many civil appeals against interlocutory decisions. See for an example Akinsola Dawodu & Anor. v. F. O. Olo...
Read more