Facts:

The respondent is a shareholder of the 1st appellant. The 2nd appellant is the parent company of the 1st appellant. The respondent sued the appellants at the Federal High Court, Lagos Division on the allegation that the 2nd appellant failed to validate the respondent’s share certificate. The respondent had intended to sell its shares in the 1st appellant, and so sent the share certificate to the 2nd appellant to verify and validate same. On several occasions, the certificates were returned by the 2nd appellant unverified, making it impossible for the respondent to sell the shares. The respondent was aggrieved and filed a suit against the appellants seeking an order to restrain them from continuing to disregard its rights over its shares in the 1st appellant and exemplary damages. The 2nd appellant however contended that its action was predicated on a directive from the Securities and Exchange Commission (SEC) indicating that the respondent and other companies were under investigation and that share certificates of the respondent be handled with caution. After hearing the parties, the trial court gave judgment in favour of the respondent and awarded the sum of N5,000,000.00 (Five Million
Naira) as exemplary damages against the appellants.

The appellants were dissatisfied with the decision of the trial court and filed a notice of appeal at the Court of Appeal, Lagos Division challenging the holding of the trial court and urging the Court of Appeal to reverse the trial court. The sole issue adopted by the court as being apt is whether the trial court rightly adjudged
the conduct of the appellants wrongful and therefore found them liable in exemplary and aggravated damages.