Okambah Limited Vs Alhaji Ganiyu A. Sule (1990)

LawGlobal-Hub Lead Judgment Report

KAWU, J.S.C.

By a specially indorsed writ, the respondent in this appeal, as plaintiff in the High Court, claim from the appellant the sum of N375,000.00. This amount was said to be balance due and payable to the respondent as commission for the sale of 200,000 bags of granulated sugar calculated at the rate of N2.00 per bag. The respondent filed an affidavit in support of his application for summary judgment under order 10 rule 1 of the High Court of Lagos (Civil Procedure) Rules, 1972, and the relevant paragraphs of the affidavit read as follows:-

“I, Ganiyu Akanbi Sule, Nigerian citizen, businessman of 29, Marcarthy Street, Lagos, muslim, make an oath and declare as follows:-

1. That I am the plaintiff in the above suit.
2. That the defendants are indebted to me in the sum of N375,000.00 as claimed in the endorsement at the back of the writ of summons.
3. That the said sum of N375,000.00 represents the balance of due to me as my agency commission which the 1st defendant on behalf of his company i.e. 2nd defendant agreed to pay me by letter dated 24th day of December, 1984 attached hereto as Exhibit ‘A’.
4. That the particulars of the claim are as stated in the statement of claim endorsed on the writ of summons.
5. That the defendants have entered appearance in the registry. A copy of the memorandum of appearance is attached hereto as Exhibit ‘B’
6. That the defendants through the agency of the plaintiff bought 200,000 bags of granulated sugar ex M.V. Nineta from Messrs, main food company limited for the sum of N7,500,000.00 at the rate of N37.50k per bag.
7. That the defendants paid the sum of N400,610.31k for custom duty and the sum of N180,000.00 for warehousing; the total sum of which amount to N580,610.31k.
8. That the defendants sold the whole shipload of 200,000 bags of granulated sugar in lots to several buyers at the rate of N30.00 per bag and collected the sum of N11,600,000.00k.
9. That defendants made a net profit of N3,519.389.69k after deduction of the various money paid

(1) as purchase price,

(2) custom duty,

(3) warehousing.

10. That the whole transactions between the defendants and Messrs. Main Food Company Limited who sold to the defendants AND all customers who bought from the defendants were conducted in my presence.
11. That when I made certain that all moneys due to the defendants from his customers have been fully paid to him, I approached him for my commission in accordance with the terms of the undertaken in his letter Exhibit ‘A’.
12. That 1st defendant refused to honour his agreement.
13. That to the best of my knowledge and belief the defendants have no defence to my claim because they could easily afford to pay my commission from their net profit of N3,519,389.69k realised from the transaction contained in Exhibit ‘A’.”

Now the document marked Exhihit ‘A’ and annexed to the respondent’s affidavit reads as follows:-

“Alhaji G.A. Sulle,

Dated December 24,1984,

29 McCarthy Street,

LAGOS.

Dear Sir,

10,000 (Ten thousand) metric tons granulated sugar ex M/V “NINETA”

This is to confirm our discussion on the above.

For the services rendered by your group, we guarantee to you a payment of N2.00 (Two naira) only per bag for the ship load of 20,000 (two hundred thousand) bags of granulated sugar. The payment is to be made when the shipload is sold and the funds released to our bankers. The payment should also he made through Mr. Ezenwafor, who linked us.

Thanks for your co-operation and services.

Yours faithfully,

FOR: OKAMBAH LTD.

(SGD)

MANAGING DIRECTOR.

cc: Mr. C. Ezenwafor.”

The appellant’s defence to the application for summary judgment was that shortly after their offer to the respondent contained in Exhibit ‘A’, it became obvious to them that they could not go on with the sale of the shipload of sugar because of the Federal Government’s restrictions on foreign exchange. They therefore wrote another letter dated 7/1/85 to the respondent withdrawing their offer of 24/12/84. They also alleged that the shipload of sugar was not sold by them but was, with the assistance of the respondent, sold by Manamark Consultants Ltd. They denied making a part payment of N25,000.00 to the respondent. Their counter affidavit sworn to by the 1st appellant, reads as follows:-

“I, CHIEF OKAFOR MBA, Nigerian, christian of No. 1 Okambah Street, Aguda, Surulere, Lagos, do hereby make oath and declare as follows:-

1. That I am the 1st defendant in this suit.
2. That I have the authority of the 2nd defendant to depose to this affidavit on its behalf as well.
3. That I acted as the agent of the 2nd defendant throughout the transaction the subject matter of this suit and never in my personal capacity.
4. That the 2nd defendant had an arrangement with the plaintiff to sell a shipload of sugar ex M. V. Nineta, and in anticipation of a huge profit therefrom the 2nd defendant wrote a letter of offer of commission dated 24/12/84 to the plaintiff.
5. That about a week after the 2nd defendant’s offer of commission it became obvious that the sale of the shipload could not go on because of the Federal Government restrictions on foreign exchange and the plaintiff was aware of this development.
6. That the 2nd defendant having noticed the total frustration in the earlier sale arrangement wrote another letter to the plaintiff dated 7/1/85, formally explaining the position and withdrawing the offer of commission. The said letter is herein exhibited as Exhibit ‘A’.
7. That the shipload of sugar was later sold by Manamark Consultants Limited of 82 Bode Thomas Street, Surulere, Lagos, having obtained the necessary permits from the Federal Government’s Scarce Commodities Committee with the active aid of the plaintiff. Manamark Consultants Ltd. also collected and disbursed all the money from the sale.
8. That the plaintiff is aware that I was arrested and detained in early June 1985 by the Customs Dept. for being the agent of the 2nd defendant over the sale of the shipload of sugar ex M.V. Nineta.
9. That after about 2 weeks in detention I was released when the Customs Dept. confirmed that the shipload of sugar was actually sold by Manamark Consultants Ltd.
10. That the 2nd defendant and I never sold the shipload of sugar and therefore could not have made the profit of over N3 million as alleged by the plaintiff thereby paying N400,000.00 commission therefrom to the plaintiff.
11. That the 2nd defendant avers that the transaction between it and the plaintiff was totally frustrated.
12. That the 2nd defendant and I deny ever owing the plaintiff the sum of N400,000.00. We deny ever making a part payment of N25,000.00 and we deny owing him a balance of N375,000.00.
13. That I make this declaration bona fide.”

The respondent filed an affidavit in reply to the affidavit of Chief Okafor Mba which reads as follows:-

“I, Ganiyu Akanbi Sulle, businessman of No. 29 Mccarthy Street, Lagos, muslim, Nigerian citizen, make oath and say as follows:-

1. That I am the plaintiff in this suit.
2. That I have read the affidavit sworn to by the 1st defendant.
3. That the 1st defendant told lies in paragraphs 2-12 of his affidavit.
4. That the 1st defendant contracted with me in his personal capacity as the owner of the business carried out in the name of “Okambah Limited” and he signed all documents as the managing director of the 2nd defendant.
5. That the 2nd defendant is an invisible person unknown to any person and I could not have contracted with a ghost in Exhibit’ A’ attached to my original affidavit. Paragraphs 2, 3, 4, 5, 6, 10, 11, 12 are therefore false.
6. That the 1st defendant never wrote or sent the letter dated 7/1/85 to me and he is telling lies when he deposed in paragraphs 6 and 7 of his affidavit that the transaction between us has been frustrated in the circumstances narrated in the said paragraphs 6 and 7.
7. The following documents and/or letters pertaining to the transaction between us prove conclusively that the contract between us was still alive and subsisting long after the 7/1/85 and was concluded in the later part of April, 1985 when he sold all shipload through his sub agents, Manamark Consultants Limited.
8. The documents and/or letters referred to in paragraph 7 are attached herewith as Exhibits ‘A-A8’.
9. That the 1st defendant’s depositions in paragraph 7 are untrue in that Messrs. Manamark Consultants Ltd., was appointed by the 1st and 2nd defendants as their sub agents for the sale of shipload and money collected was paid to the 1st and 2nd defendants see Exhibits ‘A’, ‘A1’, ‘A2’, ‘A4’, ‘A5’.
10. The 1st and 2nd defendants are one and the same as deposed to above and 1st defendant is only trying to escape liability by falsely referring to himself as agent for the 2nd defendant.
11. That in all letter headings bearing the name of the 2nd defendant no other name except that of defendant appears as sole owner of the business carried out in the name of Okambah Ltd. See Exhibits ‘A1’, ‘A2’, ‘A3’, ‘A4’, ‘A5’, ‘A6’,
12. That the 1st defendant paid N25,000.00 for the plaintiff in exhibit “A8” to the plaintiffs creditor in part payment of commission due to him. See Exhibits “A6” and “A7″. Paragraph 12 of the 1st defendant’s affidavit is therefore untrue and it is incorrect for the 1st defendant as deposed to in paragraph 11 of his affidavit that the transaction between us was totally frustrated.
13. That I don’t know anything about the arrest and detention of the 1st defendant in connection with transaction between me and him.
14. That the contents of this affidavit are true and correct.”

It is pertinent to observe that on the materials before the learned trial Judge two issues clearly emerged for determination. The first was whether it was true that the defendants by their letter dated 7/1/85 had in fact informed the respondent that the offer made to the respondent on 24/12/84 had been withdrawn. The second was whether, as alleged by the respondent, a part payment of N25,000.00 was made to the respondent.

The learned trial Judge considered all the materials before him, and in his ruling on the application for summary judgment, came to the conclusion, that on those materials, the respondent was entitled to judgment. In his ruling the learned trial Judge rejected the contention of the appellant that the contract between the parties had been frustrated. He based his decision on some letters and documents marked Exhibit A-A8, which the respondent had attached to his affidavit in reply to the affidavit of the 1st appellant. He also made a finding, again on the materials before him, that the appellants, in fact made a part payment of N25,000.00 to the respondent. In rejecting the appellant’s application to be allowed to defend the action on the merits, the learned trial Judge held as follows:-

“I agree with the submission of Mr. Ogunsiji that, as far back as April 1985 see Exhibit A6, the contract was still subsisting. The content of Exhibit A6 belied the fact that there was a frustration of contract in the case. Exhibit A6 was written to Chief B. Olowofoyeku by the 1st defendant appealing to him to request the plaintiff to exercise some patience in collecting his cheque. Thus the story that on 7/1/85 withdrawing the letter of December 24th, 1984 due to frustration of the contract is concocted and misleading. I think the story was invented in order to defeat the end of justice by the defendants otherwise if the story of the defendants are true to fact, there would be no need for any correspondence between the parties after 7/1/85. The fact was further stated that the defendants paid the sum of N25,000.00 leaving a balance of N375,000.00 but defendants are denying the fact. Surely, see the defendants cheque Exhibit ‘8’ in which the name of the defendants were written. It ought to have put the defendants on enquiry, but this point is not being canvassed by the defendant that Exhibit ‘A8′ is a forgery by the plaintiffs.

The defendants did not in the case fight back to claim that the exhibits attached to the reply of their affidavit are all forgeries. Upon a careful perusal of these exhibits, I am convinced beyond reasonable doubt that the defendants had a lot to hide in this case.

The defence of the defendants having been that of frustration of contract is frivolous, baseless and concocted, and it would be a waste of time to set the case down for trial in that circumstances. Having come to this conclusion, the plaintiff is entitled to judgment in the sum of N375,000.00 against the 2nd defendant as claimed.”

The appellants appealed to the Court of Appeal which, in a unanimous judgment dated 3rd February, 1988 (Ademola, Akpata (as he then was), and Babalakin, JJ.C.A.) dismissed their appeal. In upholding the finding of the learned trial Judge on the appellant’s defence of frustration of contract, Babalakin, J.C.A., who wrote the lead judgment held as follows:-

“It is because the appellant’s main defence of frustration of contract has been deflated that the learned trial Judge held that no useful purpose will be served by granting the appellants leave to defend the action and he entered judgment in favour of the respondent. I hold that he is right in doing so on the facts of this case. His findings are supported by the affidavits and documents before him.”

Now Order 10 rule 1(a) of the High Court of Lagos State (Civil Procedure) Rules, Cap.52 reads:

“1 (a) Where the defendant appears to a writ of summons specially indorsed with or accompanied by a statement of claim under order 3 rule 4, the plaintiff may on affidavit made by himself or by any other person who can swear positively to the facts, verifying the cause of action and the amount claimed (if any liquidated sum is claimed), and stating that in his belief there is no defence to the action except as to the amount of damages claimed. If any, apply to a Judge in chambers for liberty to enter judgment for such remedy or relief as upon the statement of claim the plaintiff may be entitled to. The Judge thereupon, unless the defendant shall satisfy him that he has a good defence to the action on the merit or shall disclose such facts as may be deemed sufficient to entitle him to defend the action generally, may make an order empowering the plaintiff to enter such judgment as may be just. Having regard to the nature of the remedy or relief claimed.”

Now the purpose of the procedure under this order is to enable the plaintiff to obtain summary judgment without trial where his case is patently clear and unreasonable. See Cow v. Casey (19-19) I K.RA74 and Sodipo v. Lemminkainen OY and Ors. (1986) N. W.L. R. (Pt.15) 220. It is not designed to shut out a defendant who can show that there is a triable issue. see Nishizawa Ltd. v. Jethwani (1984) 12 S.C. 234. In determining whether a defendant has good defence to the action or has disclosed such facts as may be deemed sufficient to entitle him to defend, it is not necessary for the trial judge to decide at that stage whether the defence has been established. “What is required is simply to look at the facts deposed to in the counter affidavit or indeed the facts averred in the statement of defence, where applicable and see if they can prima facie afford a defence to the action” per Uwais, J.S.C., in F.M.G. v. Sani [1990] 4 N.W.L.R. (Pt.14) 688; (1990) 7 S.C.N.J. 161 at p.164.

In the present case the main defence of the appellants was that the contract between the parties had been frustrated and that a letter was written to the respondent to this effect withdrawing their earlier offer of commission. The respondent denied receiving such a letter, and indeed went further to say that such a letter was never written. On the conflicting affidavit evidence of both parties, the learned trial Judge made a finding that the appellants” defence was “frivolous. baseless and concocted.” In my view the appellant had, both in their statement of defence and their affidavit, shown there was a triable issue which ought to be investigated, and the learned trial Judge was definitely in error in coming to the conclusion, at that stage, that there was no substance whatsoever in the appellants’ defence. With regard to the payment of N25,000.00, both the trial court and the court below heavily relied on Exhibit A6 for their finding that the denial by the appellants that they paid N25,000.00 to the respondent was false.

I think both courts were in error to have made such a finding. As has been pointed out earlier in this judgment all that the appellants were required to do at that stage was to raise a defence bona fide which they had in fact, done in this case. In the circumstances the appellants ought to have been allowed to defend the action.

In the result, this appeal succeeds and it is hereby allowed with N500.00 costs awarded to the appellants. The case is remitted to the High Court of Lagos State to be heard on the merits by a judge other than the trial Judge.

UWAIS, J.S.C.: I have had the opportunity of reading in draft the judgment read by my learned brother Kawu J.S.C. I entirely agree with the judgment. The appellant had shown by counter affidavit that it had a prima facie defence to the claim. The Court of Appeal and the trial court should not have shut the appellant out. Consequently, the appeal succeeds. The decisions of the Court of Appeal and the High Court of Lagos State are hereby set aside with N500.00 costs to the appellant. I endorse the order that the case should be remitted to the High Court to he heard on its merits by a Judge other than Famakinwa. J.

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Other Citation: (1990) LCN/2407(SC)