A Federal High Court in Lagos has struck out a N1.86bn suit filed against the founder of the Living Faith Church, a.k.a. Winners’ Chapel, Bishop David Oyedepo, by a stock brokerage firm, Valueline Securities and Investment Limited.
Justice Jude Dagat, in a ruling on Friday, described the plaintiffs’ suit as incompetent and dismissed it for want of jurisdiction.
Valueline Securities and Investment Limited and its Managing Director, Samuel Enyinnaya, had in February 2015 sued Oyedepo and his family for an alleged breach of contract in a N9bn stock market deal.
Joined as the 10th defendant in the suit was the Security and Exchange Commission.
The plaintiffs, through their lawyer, Mr. Rickey Tarfa (SAN), sued for the enforcement of their fundamental rights and were claiming a total of N1.86bn from the defendants jointly and severally as professional fees and damages.
The plaintiffs, in their statement of claim, averred that Oyedepo, his family and organisations entered into an Investment Portfolio Management Agreement with them and appointed them as the portfolio managers to oversee and to ensure the profitability of the said investment worth about N9bn in the Nigerian Stock Exchange.
According to the plaintiffs, it was agreed that 2.25 per cent of the net asset value of the portfolio and an annual incentive fee of 10 per cent of the returns on the investment would be paid to the plaintiffs.
The plaintiffs said that in order to enhance the profitability of the investment, they obtained some margin loans from some Nigerian banks, which, they claimed, turned out to be a great boost to the investment.
They however said trouble started “when Oyedepo wanted to buy his first private jet and the World Mission Agency Inc ordered the sale of majority of the securities in the investment portfolio, and that despite the professional advice to the contrary, the plaintiffs were made to sell the securities to raise the N3bn needed to buy the jet, a development which brought about huge losses to the investment.”
According to the plaintiffs, following the said sale of the shares coupled with the global economic meltdown which caused stock market across the globe to crash at the time, the N9bn investment recorded losses.
The plaintiffs, however, alleged that in a bid to avoid their financial obligations to the plaintiffs, Oyedepo and his organisations accused them of fraud and mismanagement and wrote a petition against them to the Economic and Financial Crimes Commission.
They however claimed that the EFCC found them innocent after six years of investigation after which Oyedepo further dragged them before the Nigerian Stock Exchange.
The plaintiffs alleged that the NSE unlawfully froze their business accounts and did not give them fair hearing.
They had urged the court to order the NSE to immediately unfreeze their accounts.
They also sought the payment of N1.86bn as their professional fee and damages.
But the Oyedepos, through their lawyer, Mr. Chioma Okwuanyi, filed a preliminary objection and asked the court to dismiss the suit for lack of jurisdiction.
Contrary to the plaintiffs’ claim, Okwuanyi maintained that the losses recorded on the N9bn investment were due to the plaintiffs’ recklessness, adding that the margin loan they took was without the consent of the Oyedepos and that the loan was not channeled into his clients’ investment.
In the three-ground preliminary objection, Okwuanyi contended that by the provisions of Section 34 of the Investment and Securities Act, only the Investment and Securities Tribunal had the vested authority to entertain a dispute between a capital market operator and his client and not a Federal High Court, to which the plaintiff had brought the matter.
The lawyer further argued that the plaintiffs’ suit, as constituted before the Federal High Court, was premature, as the plaintiff had yet to explore all the internal dispute resolution mechanism within the NSE before heading for the court.
In its own objection, the NSE, through its counsel, Mr. M.O. Liadi, also contended that the plaintiffs ought to have approached the NSE council to ventilate their grievances rather than rush to the Federal High Court.
“Given the complaints of the plaintiffs against the decision of the applicant, the plaintiffs ought to have approached the applicant’s council and if still unsatisfied, the plaintiff is obliged to proceed to the Securities and Exchange Commission.
“If still unsatisfied, by the provisions of sections 284 and 289 of the Investment and Securities Act, the plaintiffs are permitted to proceed to the tribunal. We submit that the plaintiffs have failed to do this,” Liadi contended.
In his ruling on Friday, Justice Dagat upheld the defendants’ preliminary objections and dismissed the plaintiffs’ suit.
The judge agreed with the defendants that the plaintiffs ought to have taken their case before the Security and Investment Tribunal rather than the Federal High Court.
The judge also held that the plaintiffs failed to exhaust the internal dispute resolution mechanism provided in the Security and Exchange Commission before resorting to a legal action.
The judge held, “On the whole, I hold as follows: This suit is based on a simple contract between the plaintiffs and the 1st to 10th defendants, which the Federal High Court has no jurisdiction to entertain.
“The plaintiffs have not complied with the pre-action requirements of the 11th defendant under its rules and the Investment and Securities Act 2007. Even after satisfying both requirements, the appropriate venue to institute this action is the Investment and Securities Tribunal.
“The preliminary objection filed by the 1st to 10th defendants/applicants and that filed by the 1th defendant/applicant have merit. This court declines jurisdiction to entertain this suit. The court cannot further transfer the suit to the Investment and Securities Tribunal because even the pre-action requirements have not been satisfied. The suit is hereby struck out.”