When Does a Contract of Purchase of Shares Take Effect?

CASE TITLE: ASUQUO v. ACCESS BANK (2022) LPELR-57919(CA)

JUDGMENT DATE: 1ST JULY, 2022

PRACTICE AREA: COMPANY LAW

LEAD JUDGMENT: MUHAMMED LAWAL SHUAIBU, J.C.A.

SUMMARY OF JUDGMENT:

INTRODUCTION

This appeal borders on Recovery of money deposited for allotment of shares.

FACTS

This appeal is against the judgment of the High Court of Cross River State sitting at Calabar, delivered by Hon. Justice Ayade Emmanuel Ayade on 26th day of April, 2018 entering judgment partly in favour of the appellant.

The appellant applied for 10,000 shares in the respondent’s bank and paid the sum of N149,000.00 for the shares. When the shares were not allotted, appellant applied for the return of his money, which request the respondent refused to honour. After several fruitless visits to the respondent’s branch in Calabar in 2008 and 2009, appellant was constrained to retain the services of a solicitor and paid the sum of N300,000.00 being solicitors’ fees to recover his money with accrued interest.

The appellant as claimant at the trial Court took out a writ of summons and statement of claim respectively filed on 30/8/2016 and claimed against the defendant, now respondent as follows: –

1. An Order directing the defendant to refund to the claimant forthwith the sum of N149,000.00 (One Hundred and Forty-Nine Thousand Naira only) being the sum paid to and received by the defendant over 9 (Nine) years ago for shares which were not issued to him.

2. An Order directing the defendant to pay to the claimant 10% monthly interest on the invested sum of N149,000.00 from 11th September, 2007 till judgment is delivered in this suit, and thereafter till the judgment is liquidated.

​3. Award of special damages of N300,000.00 (Three Hundred Thousand Naira only) being solicitors’ professional/filing fees paid by the claimant to facilitate the institution and prosecution of this suit.

4. Award of N10,000,000.00 (Ten Million Naira only) general damages against the defendant for unlawfully withholding on to the claimant’s money.

Upon consideration of the cases of the parties, the trial Court, in its judgment delivered on 26th April, 2018, found that the consideration for which the sum of N149,000.00 was paid by the claimant has completely failed and that he was entitled to claim the money back from the defendant. Nonetheless, the Court found that the claimant was not entitled to interest accruing from the invested sum because there was no full compliance with the terms of the agreement by the parties. Finally, the Court declined to entertain the claim for solicitors’ fees being claimed.

The appellant irked by the judgment of the trial Court, appealed.

ISSUES FOR DETERMINATION

The Court considered the following issues for the determination of the appeal;

1. Whether in the circumstances of this case, there was a valid contract between the appellant and the respondent?

2. Whether the appellant is not entitled to interest on the money placed on deposit with the respondent for the purchase of shares, which were not allotted to him for the period the money was held over by the respondent?

3. Whether the legal fees paid by the appellant to his solicitors to prosecute this action of him at the trial Court do not fall under the category of special damages to be claimed from the respondent by the appellant?

DECISION/HELD

The appeal failed and was dismissed.

RATIOS:

• COMPANY LAW – COMPANY SHARES: Position of the law on contract of purchase of shares and when same will take effect
• CONTRACT – FORMATION OF CONTRACT: Whether an offer must be clearly accepted in order to crystallize into a contract
• JUDGMENT AND ORDER – AWARD OF INTEREST: Guiding principles on the award of pre-judgment interest; instance where pre-judgment interest will not be awarded on money deposited for the purchase of shares
• JURISDICTION – JURISDICTION OF THE FEDERAL HIGH COURT: Exclusive jurisdiction of the Federal High Court to determine civil matters that have to do with operation of the Companies and Allied Matters Act
• LEGAL PRACTITIONER – RECOVERY OF LEGAL FEES BY CLIENT: Condition to succeed on a claim to recover solicitor’s fees