OKOYA AND ORS. V. SANTILLI AND ORS.

• Pages: 367-407

OKOYA AND ORS. V. SANTILLI AND ORS.

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367

In the result I too allow the appellant's appeal, set aside the decision of the trial

court and that of the Court of Appeal and enter judgment in favour of the plaintiff in

terms of his claim as per the lead judgment. I abide by the order as to costs in the

lead judgment.

Perhaps the decision we have just given will also meet the moral justice of this

case having regard to the following evidence of the plaintiff:-

"Plaintiff identified Exhibit A as the conveyance in favour of Victor Oludemi. I also

bought 6 plots of land for myself from the vendors. I bought on behalf of other

people as well. Exhibit `B' is the conveyance executed in my favour in respect of

the 6 plots I bought off the vendors for myself."

The 3rd defendant Yesufu Alade giving evidence in court admitted that the proper

representatives of Alade family executed Exhibit B in favour of the plaintiff. It appears

to me most unlikely that the same plaintiff would not as regards Exhibit A get the

same proper representatives of Alade family to execute it.

Appeal Allowed.

OKOYA AND ORS. V. SANTILLI AND ORS.

CHIEF R. A. OKOYA

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APPELLANTS

MRS K. OKOYA

ALBION CONSTRUCTION CO. LIMITED

V

S. SANTILLI

A. DAVONZO

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RESPONDENTS

PRINCE D.A. ADEMILUYI

SUIT NO. SC. 206/1989

SUPREME COURT OF NIGERIA

NNAMANI,



J.S.C.

UWAIS,



J.S.C.

KARI BI -WHYTE,



J. S. C.

KAWU,



J.S.C.

AGBAJE,



J.S.C.

23rd March, 1990.

Company Law - Appointment of receiver and Manager - How made - Foss v Harbottle -

When applicable.

Practice and Procedure - Stay of execution - Purpose of Remedies - Whether

interchangeable - Declaratory Orders - Executory orders - Distinction of Declaratory

Orders - Effect of - Courts - Duty to abide by (emu on the motion paper - Exercise of

discretion - When appellate court may iii terfere.

Words and Phrases - 'With Liberty to apply - Applicability to declaratory Orders - Meaning

of

ISSUES:

1.

Whether a defendant who has filed an appeal against purely declaratory orders

made against him is entitled to apply for stay of execution of those orders pending

the hearing and determination of the appeal.

2.

Whether there can be a stay of execution of declaratory judgments.

368

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NIGERIAN SUPREME COURT CASES

[1990] 1 N.S.C.C.

3.

What is the distinction between an executory order and a declaratory Order.

4.

Whether the various remedies of stay of execution are interchangeable.

5.

Whether a refusal to abide by a declaratory Order amounts to a contempt of court.

6.

What is the meaning of the expression 'With Liberty to apply' when implied in a

declaratory judgment.

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5

7.

Whether the appointment of a receiver or manager for a company owing to

disputes as to the shareholdings can offend against the rule in

Foss v. Harbottle.

8.

Whether the requirement of security is mandatory before an appointment of a

receiver or manager is made.

FACTS:

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10

The plaintiffs sued the defendants in the Federal High Court, Lagos Division

claiming,

inter alia,

a declaration that all shares held by the 3rd defendant in the

Albion Construction Company Limited (the 3rd plaintiff company) were held by him

in trust for the 1st plaintiff, and an order directing the said defendant to execute a

transfer of the said shares to the 1st plaintiff.

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15

After hearing the parties and their witnesses, the learned trial Judge granted all

the plaintiff's prayers. Dissatisfied with the decision of the trial Judge, the defendants

appealed to the Court of Appeal, Lagos Division contending,

inter alia, that the

learned trial Judge erred in Law, and in the evaluation of the facts before him in

awarding 51°,/0 of the adjudged N200,000 Authorised Share Capital to the 1st and 20

2nd plaintiffs, and in directing the 3rd defendant to execute an instrument of transfer

of the said 51% shares to the 1st plaintiff.

Subsequently, the defendants brought an application before the trial Judge

seeking for a stay of execution of all the declarations granted to the plaintiffs by the

learned trial Judge. The trial Judge refused the application, holding that a stay of 25

execution is never to be used as a substitute for obtaining the judgment which the

trial court has denied a party.

The defendants then applied to the Court of Appeal for an order staying execution

of the orders of the learned trial Judge granted to the plaintiffs pending the deter-

mination of the appeal lodged by them. The plaintiffs raised a preliminary objection 30

to the application on the ground,

inter alia,

that the prayer for a stay of execution of

the orders of the learned trial judge sought by the defendants is incompetent and

untenable as there is nothing (left) to stay.

The Court of Appeal in its ruling dismissed the plaintiffs' preliminary objection

against the defendants' application for an order staying the orders of the trial court. 35

The Court of Appeal, consequently granted the defendants' application for a stay of

execution on the condition, among others, that there would be (appointed) a Board

of Receivers and Managers for the 3rd Plaintiff company pending the determination

of the substantive appeal.

The Plaintiffs then appealed to the Supreme Court contending,

inter alia,

that the 4C

Court of Appeal erred in Law in granting the application for a stay of execution, and

in making an order for the appointment of a Board of Receivers and Managers.

HELD:

1.

A defendant who has filed an appeal against a declaratory judgment or order is

not entitled to apply for a stay of execution of that judgment or order. This is 4E

beacuse a declaratory judgment or order has no coercive effect and threatens

no one. In the instant case, the defendants/respondents' application for a stay

of execution of the declaratory orders of the learned trial judge made against

them is misconceived as it has no validity in Law.

2.

There cannot be a stay of execution of declaratory judgments, as there cannot 5(

be any execution of a declaratory order. This is because a declaratory order

merely declares a legal situation or rights or relationship. It is complete in itself,

the declaration being the relief. It does not order anyone to do anything. So until

subsequent proceedings have been taken on a declaratory judgment following

its violation or threatened violation and the right, declared in the judgment,

receives enforcement or is given legal sanction for its violation, there cannot be

OKOYA AND ORS. V. SANTILLI AND ORS.

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369

a stay of execution of the declaratory judgment, because, prior to the subsequent

proceedings, it merely proclaims the existence of a legal relationship and it does

not contain any order which may lie enforced against the defendant. Thus, in

the instant case, it was wrong of the defendants/respondents to have assumed

that there can be a stay of execution of declaratory orders.

3.

An executory judgment or order has coercive force and declares the respective

rights of the parties and proceed to order the defendant to act in a particular way,

namely, to pay damages, or refrain from interfering with plaintiff's rights and such

order being enforceable by execution if disobeyed. An executory judgment is a

final and investitive order or judgment.

A declaratory judgment, on the other hand, merely proclaims the existence of a

legal relationship, and do not contain any order which may be enforced against

the defendant. It proclaims an exisi:ing right without at the same time creating a

new one. It is a final judgment or order which does not require any coercive order

for its effectiveness. Its effectiveness lies in the validity of the declaration. A

declaratory order or judgment can be and usually is the ground subsequent

proceedings in respect of the enforcement of the violation of the right so declared.

In the instant case, the orders sought to be stayed were mainly declaratory.

4.

The various remedies of a stay of execution are not interchangeable. An

application for a stay of execution on one of the remedies cannot be satisfied by

the grant of any of the others. Though the effect of a successful application in

respect of each of the remedies is the suspension of the action and the

preservation of the res. It is clearly not the same thing to say that the effect of a

successful application is the same, as to say that the reliefs ate interchangeable.

In the instant case, the Court of Appeal was in error in holding that the different

remedies which have the effect of preserving the res pending an appeal are

interchangeable.

5.

A refusal to abide by the terms of a declaratory order made is not regarded as a

contempt of court, though the other party to the action can go back to the court

and seek an injunction to enforce the order. In the instant case, it would not have

been contemptuous of the defendants/respondents if they had refused to abide

by the declaratory orders made against them.

6.

The expression 'With Liberty to apply' when a declaratory judgment carries it or

when it is implied in the judgment is no more than a clear warning to a defendant

against whom a declaratory order is made that the order is a ground of a

subsequent proceeding in which the right declared by the judgment if violated

will receive enforcement. The expression will not and cannot convert a

declaratory judgment into an executory judgment capable of enforcement and

which is a proper subject for a stay of execution.

7.

In a situation where, owing to disputes as to shareholdings, the conduct of the

affairs of a company will suffer or will be in jeopardy, the appointment of a receiver

or manager of the undertaking and assets of a company will not and cannot offend

against the rule

in Foss v Harbottle.

In such a situation, there is paralysis or

imminent paralysis of the conduct of the affairs of the company which the court

by its intervention has to avert by the appointment of a receiver or manager for

the company. Thus, in the instant case, the Court of Appeals order appointing

receivers and managers for the 3rd plaintiff company is not a violation of the rule

in

Foss v Harbottie.

8.

The appointment of receiver is only complete on the giving of security on the part

of the receiver to account for his receipts and to pay some to the court unless

the court otherwise directs. The requirements of security is mandatory even

where all the parties are

Sui juris

and are willing to dispense with security, if the

nomination is made by the Court. However, the requirement of security may be

dispensed with where all the parties interested in the property are

Sui juris

and

themselves nominate the receiver. In the instant case, the requirement of a

security on the part of the receivers and managers is mandatory, the appointment