Can an Employee of a Subsidiary Validly Testify for the Parent Company?

CASE TITLE: FALMA ORGANICS LTD & ANOR v. IPCA LABORATORIES LTD LPELR-83445(CA)
JUDGMENT DATE: 13TH MARCH, 2026
JUSTICES: JOSEPH EYO EKANEM, J.C.A.
ABUBAKAR MUAZU LAMIDO, J.C.A.
OYEJOJU OYEBIOLA OYEWUMI, J.C.A.
DIVISION: LAGOS
PRACTICE AREA: EVIDENCE

FACTS:

This appeal borders law of evidence.

This appeal is against the decision of the High Court of Lagos State (the trial Court) sitting in the Lagos Judicial Division delivered on 23/6/2021 by S. B. A. Candide-Johnson, J. In the decision, the trial Court entered judgment in favour of the respondent.

The respondent entered into an agreement with the Global Fund to fight AIDS, Tuberculosis (TB) and Malaria for Affordable Medicines Facility Malaria (AMFm) which is a financing mechanism of the Global Fund to expand access to affordable Artemisinin-based combination of therapies (ACTs) for malaria.

Forty-six First Line buyers in Nigeria signed undertaking to import subsidised ACTs with the 1st appellant being one of them. The Nigerian subsidiary of the respondent acted as the liaison between the 1st appellant and the respondent. The Global Fund was to pay a major proportion of the cost while first line buyers were to pay only part of the remainder.

The 1st appellant placed an order with the respondent for the supply of pharmaceutical products. The total worth of the products was US$3,000,000 out of which the Global Fund, under the arrangement, paid US$2,910,293.49. The balance, according to the respondent, of US$299,997.00 was due and payable by the appellants to the respondent in fulfilment of its obligation under the arrangement. The respondent only paid US$21,960.00 leaving a balance of US$278,037.00 still owed and due to the respondent from the appellants.

The respondent sued the appellants at the trial Court claiming the sum due, compound interest thereon and costs of the action.

The appellants denied being indebted to the respondent any sum whatsoever. They further contended that the respondent is indebted to them in the sum of US$ 179,247.3 being moneys due as reimbursement as promised by the respondent. After taking final written addresses of the parties, the trial Court found in favour of the respondent. Dissatisfied, the Appellants approached the Court of Appeal.

ISSUES FOR DETERMINATION:

The Court considered the following issues:

1. Whether the delivery of judgment in this matter against the appellants by the lower Court without giving them the opportunity of adopting their final written address and adumbrating on same, that is failure to serve them a hearing notice for the Court’s sitting of 16th June, 2021 and 23rd June, 2021 does not amount to denial of fair hearing.

2. Whether the lower Court was right in relying on the evidence of the CW1 who is a staff of a distinct and separate company from the respondent.

COUNSEL SUBMISSIONS:

Counsel for appellants stated that the respondent is a company registered in India while the CW1 testified that he works with IPCA Pharmaceuticals Nigeria Limited and that the latter is a subsidiary of the respondent. He noted that the CW1 did not tender any document to evidence such fact of IPCA Nigeria Ltd being a subsidiary of the respondent. Again, he stated that the CW1 gave evidence of various acts to which neither he nor his company was privy to or perform on behalf of the respondent. He noted further that Exhibits 2 and 2A were sent directly to the appellants by the respondent while Exhibits A, B, C and D were sent directly to the respondent by the appellants. He emphasised that none of those exhibits passed through IPCA Nigeria Limited.

Counsel submitted that assuming that IPCA Nigeria Limited is a subsidiary of the respondent, that was not enough for its staff to give evidence of facts exclusively known to the respondent. He contended that the evidence of CW1 was at best hearsay coming from a party who had no interest in the subject matter of the suit and that the evidence is hearsay. He placed reliance on Section 38 of the Evidence Act. He concluded by stating that the trial Court was wrong in relying on the evidence of CW1 to deliver judgment.

Counsel for the respondent stated that it was in evidence that IPCA Nigeria Limited is a subsidiary of the respondent and that Evidence Act does not require that only an employee of a company can be a competent witness for the company. He placed reliance on Section 175 of the Evidence Act. He submitted that IPCA Nigeria Limited, being a subsidiary of the respondent, is also an agent of the respondent and also acted as an intermediary between the respondent and first-line buyers of respondent’s products including the 1st appellant. He therefore posited that IPCA Nigeria Limited was in a proximate position to understand the facts of the case and, accordingly, to testify through its employee. He placed reliance on Port Harcourt Refining Company Ltd (PHRC) v Okoro ((2010) LPELR-4861(CA). He contended that the CW1, being an employee of the agent, was thus qualified to testify.

​Counsel argued that the CW1, due to his position in the subsidiary company, had personal knowledge of the transaction between the parties.

He submitted that CW1’s evidence was not hearsay as he came to his knowledge in the course of business and it consisted of records made in the ordinary course of business. He placed reliance on Sections 39 and 41 of the Evidence Act.

DECISION/HELD:

In the final analysis, the appeal was dismissed.

RATIO:

EVIDENCE – COMPETENT WITNESS: Whether a staff of a subsidiary is competent to testify on behalf of a parent company where the subsidiary was involved in the transaction under testimony

“The fact that IPAC Nigeria Limited, the employee of the CW1, is a subsidiary of the respondent and also acted as a liaison between the appellants and the respondent (as pleaded in paragraph 9 of the statement of claim) was admitted by the appellants in paragraphs 3 and 8 of the statement of defence. It is desirable for me to set out the contents of those paragraphs hereunder.

In paragraph 9 of the statement of claim, it is averred thus:

“9. The claimant avers that its Nigerian subsidiary, IPCA Pharmaceuticals Nigeria Limited (IPCA), acted as liaison between the Defendant and the Claimant. IPCA’s role was to identify and induct 1st line buyers for the AMFm programme and facilitate all necessary paper work in Nigeria.”

The appellants responded thus in paragraphs 3 and 8 of the statement of defence:

“(3) The Defendants admit paragraph 9 of the statement of claim to the extent that IPCA Pharmaceuticals Nigeria Limited acted as the liaison between the Defendants and Claimant…”

(8) The Defendant aver that on the 21st February, 2011 the Claimant through its Nigerian subsidiary IPCA Pharmaceuticals Nigeria Limited, who acted as Liaison between the 1st Defendant and Claimant and who also facilitated all paper works in Nigeria for the Claimant…”

The appellants therefore admitted and further averred that IPAC Pharmaceuticals Nigeria Limited:

(i) is a subsidiary of the respondent;

(ii) acted as the liaison between the parties; and

(iii) also facilitated all paperwork in Nigeria for the respondent.

The law is that what is admitted requires no further proof. See Section 123 of the Evidence Act, 2011, Udofia v. Afia (1940) 6 WACA 216, National Investment v. Thompson Organisation (1969) 1 NMLR 99, 103 and Uche v. Orji (2025) 7 NWLR (Pt. 1988) 189, 200.

A subsidiary company is a legal entity having its own separate legal personality. Generally, the act of a subsidiary company cannot be imputed to the parent company nor can the act of the parent company be imputed to the subsidiary company. See Unity Bank Plc v. Eforce Inerservice Ltd (2025) 18 NWLR (Pt. 2016) 143, 165 and Union Beverages Ltd v. Pepsicola International Ltd (1994) 2 NWLR (Pt. 330) 1, 16 and Mobil Producing Nigeria Unlimited v. Registered Trustees of Mineral Resources Awareness Initiative of Akwa Ibom State (2022) LPELR-56541(CA).

However, in the case of Aso Motel Limited v Suleiman (2020) LPELR-51306(CA) 14, Hussaini, JCA, opined that:

“Granted that the 1st Appellant is/was a corporate body having its own legal personality as held in Salomon vs. Salomon (supra), the fact still remains that the 1st Appellant is a subsidiary of the 2nd Appellant and thus an agent of the 2nd Appellant in all its undertakings.”

Thus, IPCA Pharmaceuticals Nigeria Limited acted as the agent of the respondent in respect of the transaction between the respondent and the appellants which sired the instant matter.

Again, it was common ground between the parties, as I have already stated, that IPCA Pharmaceuticals Nigeria Limited served as a liaison between the respondents and the appellants. The word “liaison” means:

“A relationship between two organizations or different departments in an organization, involving the exchange of information or ideas”-

Oxford Advanced Learner’s Dictionary of Current English 7th edition page 849.

IPCA Pharmaceuticals Nigeria Limited also served to “facilitate all paperwork in Nigeria for the Claimant” as averred to by the appellants in their statement of defence. The word “facilitate” means “to make an action or process possible or easier”- Oxford Advanced Learner’s Dictionary of Current English supra page 523.

Since IPCA Pharmaceuticals Nigeria Limited is an agent of the respondent, served as a liaison (which implied or meant the exchange of information and ideas) between the parties in respect of the transaction and facilitated all paperwork, it was in a position to know of the transaction between the respondent and the appellants. It could therefore testify on the transaction and its testimony cannot be described as hearsay. But the company being an artificial person was incapable of testifying in person. Since the CW1 testified in his capacity as an employee and Superintendent Pharmacist of IPCA Pharmaceuticals Nigeria Ltd, his testimony was the testimony of the company as to facts that were within its knowledge.

In Ishola v. Societe Generale Bank Nig. Ltd (1997) LPELR-1547(SC) 26-27, Iguh, JSC, restated the law as follows:

“…it cannot be overemphasized that a company being a legal person or a juristic person can only act through its agents or servants and any agent or servant of a company can therefore give evidence to establish any transaction entered into by that company. Where the official giving the evidence is not the one who actually took part in the transaction on behalf of the company, such evidence is nonetheless relevant and admissible and will not be discountenanced or rejected as hearsay evidence. The fact that such official did not personally participate in the transaction on which he has given evidence may in appropriate cases, however, affect the weight to be attached to such evidence. See Kate Enterprises Ltd v. Daewood (Nig.) Ltd. (1985)2 NWLR (Pt.5) 116, Anyaebosi v. R.T. Briscoe (Nig.) Ltd (1987) 3 NWLR (Pt.59) 84, Chief Igunbor & Ors v. Chief Ugbede (1976) 9-10 SC 179 at 187 etc.”

The CW1 was eminently qualified to testify under Section 175 of the Evidence Act and his evidence cannot be qualified as hearsay nor would probative value be denied it especially in the light of exhibits tendered in the trial Court. The learned trial Judge was therefore correct in holding at pages 177-178 of the record of appeal that:

“In the long run, IPCA Nigeria Limited is the subsidiary of the Claimant which was not disproved and I see no reason why a subsidiary cannot act on behalf of its parent company especially where it relates to the ordinary business of the company. This is because a business would normally have its records which would be easily available in-house and facts relating to a course of business need not be such that it is the personal knowledge of the maker but should be that corresponding with the business records.” Per EKANEM, J.C.A.

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