ALHAJI ADELEKE LUKMAN ALANI OLALEKAN v. GUARANTY TRUST BANK PLC
COURT OF APPEAL
(AKURE DIVISION)
(ORJI-ABADUA; ANDENYANGTSO; ALlYU, JJ.CA)
FACTS
Guaranty Trust Bank PLC (the Respondent) initiated legal proceedings against Alhaji Adeleke Lukman Alani Olalekan (the Appellant), who operates under the registered business name “Alhaji Lucky Star Bakery”, of which he is the sole proprietor. The Respondent’s claim was premised on an overdraft facility allegedly granted to the Appellant, which he personally guaranteed. In addition to this personal guarantee, the facility was secured by a legal mortgage over the Appellant’s property. The Respondent contended that the Appellant defaulted in repaying the overdraft and the agreed interest, which accrued at an annual rate of 18%, within the time stipulated in the agreement. At the time of instituting the suit, the Respondent claimed the total outstanding debt, comprising principal and accrued interest, stood at ₦21,491,757.48.
In response, the Appellant did not deny having obtained the overdraft facility. However, he disputed the amount claimed by the Respondent, asserting that his indebtedness at the expiration of the renewed facility was approximately ₦5 million. He alleged that the significant increase in the debt figure was due to the Respondent’s imposition of excessive interest, arbitrary charges, and irregular postings to his account. The Appellant maintained that these actions unjustly inflated his liability to over ₦21 million and adversely affected his ability to fully settle the debt. He contended that the imposition of double interest and unconventional charges directly contributed to the financial strain experienced by his business.
The Appellant also filed a counterclaim, alleging a breach of the overdraft agreement by the Respondent. He argued that the bank prematurely initiated legal proceedings against him at the High Court before the agreed repayment period had lapsed. Consequently, he sought general damages of ₦5 million for breach of contract, along with the cost incurred in defending the suit.
After evaluating the evidence, the learned trial judge entered judgment in favour of the Respondent. Dissatisfied with the outcome, the Appellant appealed to the Court of Appeal. Among the key issues raised for determination was: whether there were proper parties before the trial court to vest it with the jurisdiction to entertain the matter, particularly in light of the Appellant’s contention that he was not personally liable for the overdraft facility allegedly granted to Alhaji Lucky Star Bakery.
ARGUMENTS
The learned counsel for the Appellant contended that the trial court lacked jurisdiction to adjudicate the matter, as the proper parties were not before it. The counsel argued that the account number used to apply for the overdraft facility was registered under the name Alhaji Lucky Star Bakery, and the loan was granted to the business, not to the Appellant personally, as evidenced by the statement of account. It was submitted that the account was not owned by the Appellant in his personal capacity, but rather by the bakery, of which he was the managing director. Therefore, the Respondent wrongly sued the Appellant in this suit, claiming that he personally owed the debt.
The Appellant’s counsel further argued that the Appellant was not a proper party to the suit, and as a result, any judgment rendered in the case was a nullity due to the trial court’s lack of jurisdiction. Counsel asserted that there was no valid legal contract between the Appellant and the Respondent, as the account holder and borrower was Alhaji Lucky Star Bakery, a distinct legal entity, not the Appellant in his individual capacity. It was further contended that the Respondent’s failure to demonstrate any direct legal relationship between the Appellant and the overdraft facility undermined its claim.
In addition, the Appellant’s counsel pointed out that the Respondent had not provided any explanation for how the Appellant’s name was linked to the transaction or the contract between the Respondent and the bakery. Given that the Appellant was not a party to the original contract and was merely a guarantor for the facility, it was argued that he could not be sued as if he were personally liable for the debt, particularly when he was not a signatory to the loan agreement. Therefore, the Appellant was deemed a stranger to the contract and, as such, should not have been the subject of legal action. Finally, it was submitted that the Respondent’s case was not justiciable and should not have been entertained by the court, given that the wrong party was sued in this transaction.
In response to the Appellant’s contention, learned counsel for the Respondent submitted that the Appellant is a necessary and proper party to the suit, without whom the questions in controversy cannot be effectively or conclusively resolved. He argued that it is a settled principle of law that where a binding and enforceable judgment is sought against a person, that person must be made a party to the proceedings. It follows, therefore, that the Appellant’s joinder was not only appropriate but imperative for the just determination of the issues arising from the contractual relationship between the parties.
Counsel further submitted that throughout the lifespan of the various loan transactions and ancillary contractual instruments executed between the parties, the Appellant presented himself, under various names and signatures, as the same individual operating the business known as Lucky Star Bakery. Particularly telling are the Appellant’s written statements on oath, already part of the court’s record, in which he unequivocally identified himself as “the proprietor of Lucky Star Bakery, my humble self,” and further described himself as “trading under the name and style of Alhaji Lucky Star Bakery” as well as being a credit customer of the Respondent. These admissions, made voluntarily under oath, demonstrate not only the Appellant’s central role in the financial dealings in question but also his conscious adoption of the business name in a manner that eliminates any distinction between his personal identity and that of the bakery.
Moreover, learned counsel highlighted that the Appellant, on multiple occasions, acted in several capacities with respect to the loan facilities, specifically as borrower, guarantor, indemnifier, and mortgagor. These roles were assumed personally and not merely as a representative of a separate legal entity. Therefore, even if one were to accept, arguendo, that the Appellant and “Alhaji Lucky Star Bakery” are separate and distinct entities, the Appellant would nonetheless remain a proper and necessary party to the suit, in view of his personal liabilities under the contract of guarantee and related undertakings. In such circumstances, the presence or absence of the named borrower as a party would not negate the Appellant’s direct exposure to liability under the relevant agreements.
DECISION OF THE COURT
In resolving this issue, the Court of Appeal held that:
A business name does not enjoy the status of a separate legal personality unlike a company registered under the Companies and Allied Matters Act (CAMA). Rather, it is merely a commercial label or trading style under which an individual or group of individuals conducts business. As such, the business name has no juristic personality and cannot, in law, sue or be sued independently of its proprietor. The Court further observed that since the business name is inseparable from its owner, the management and control of the business cannot be alienated or transferred to another in the way shares or directorship in a company may be assigned. The legal rights and obligations arising from transactions carried out under the business name are, in substance and effect, the rights and obligations of the proprietor personally.
The Court went on to hold that, in circumstances where legal proceedings are initiated in respect of acts carried out in the course of business conducted under a registered business name, it is the proprietor who is the proper and indeed the only party to be sued. This is because liability incurred in the name of the business is, in reality, the liability of the person behind it. Therefore, in a case such as the present, where a proprietor is sued in respect of obligations or transactions entered into through the business name, there can be no doubt that the suit is properly constituted.
Issue resolved in favour of the Respondent.
M. O. Fadunmoye, Esq., for the Appellant
Adedayo Olajide, Esq., for the Respondent
This summary is fully reported at (2023) 10 CLRN in association with ALP NG & Co.
See www.clrndirect.com ; www.alp.company.
