Agro Millers Limited V. Continental Merchant Bank (Nigeria) Plc (1997)

LawGlobal-Hub Lead Judgment Report

MOHAMMED, J.C.A. 

This is an appeal against the judgment of Dagara Mallam J. of the Kaduna State High Court of Justice delivered on 30/11/92. The respondent as plaintiff had filed an action under the undefended list at the lower court against the appellant which was the defendant, to recover a debt in the sum of N7,913,346.64k. The respondent’s writ of summons was filed together with an affidavit and a further affidavit in support of the claim. On being served with the writ of summons and the supporting affidavits, and in compliance with the rules of the lower court, the appellant duly filed its notice of intention to defend the suit with an affidavit and a further affidavit in support of the notice. On the date fixed for the hearing of the undefended suit, the learned trial Judge heard arguments from learned counsel on both sides on whether the appellant as defendant ought to be granted leave to defend the suit on its affidavits in support of its notice of intention to defend the suit, or judgment should be entered for the respondent as plaintiff. In a considered ruling/judgment delivered by the learned trial Judge on 30/11/92, he refused to grant the appellant/defendant leave to defend the action and entered judgment for the respondent/plaintiff in the sum of N7,913,346.64k with interest at the rate of 27% per annum from 18/11/91. In that ruling/judgment, the learned trial Judge also held that the affidavits in support of the defendant’s notice of intention to defend did not disclose any defence on the merits as required by ORDER 22 RULE 3 of the Kaduna State High Court (Civil Procedure) Rules 1987. Dissatisfied with the ruling/judgment, the defendant now appellant has appealed against it to this Court. The Notice of Appeal dated 7/12/92 contains 7 grounds of appeal.

The parties, in accordance with the rules of this court duly filed their respective briefs of argument. In the appellant’s brief, the following 2 issues for determination were formulated.

“1. Whether or not the learned trial Judge was right in holding that the appellant’s notice of intention to defend did not disclose a defence on the merit and in entering judgment for the respondent

2. Whether or not the learned trial Judge over amplified the requirement of Order 22 Rule 3, High Court of Kaduna State Civil Procedure Rules as relates to onus of proof under the undefended list.”

In the respondent’s brief of argument however, only the following one issue was identified for the determination of the appeal –

“Was the Honourable learned trial Judge right in holding that the appellant’s affidavit in support of the Notice of Intention to defend the action discloses no defence on the merits as required by Order 22 Rule 5 of the Kaduna State High Court (Civil Procedure) Rules 1987.”

Looking at the second issue for determination raised in the appellant’s brief of argument, it is quite plain that the resolution of the issue one way or the other will not affect the result of this appeal because the issue has not been related to the decision of the lower court refusing to grant the appellant leave to defend the action, nor to the judgment of the lower court granting the respondent’s reliefs. In other words whether the learned trial Judge over amplified the requirement of ORDER 22 RULE 3 OF THE KADUNA STATE HIGH COURT (CIVIL PROCEDURE) RULES 1987 as relates to onus of proof, whatever that means, or he did not, as long as the answer is not sought to be linked with the decision of the lower court being challenged in this appeal, it is not a proper issue for determination in the appeal.

The remaining issue for determination in the appellant’s brief and the sole issue formulated in the respondent’s brief are virtually the same having been framed on the requirements of the application of ORDER 22 RULE 3 of the Kaduna State High Court (Civil Procedure) Rules 1987. Rule 3(1) of Order 22 of the Rules which is relevant reads:-

“3(1) If the party served with the writ of summons and affidavit as provided in Rules 1 and 2 hereof delivers to the Registrar not less than 5 days before the date fixed for hearing a notice in writing that he intends to defend the suit, together with an affidavit disclosing a defence on the merit, the court may give him leave to defend upon such terms as the court may think just.” (Italics mine)

It is quite clear from this rule that it is not the notice of intention to defend that must disclose a defence on the merit as stated in the issue as formulated in the appellant’s brief. It is the affidavit accompanying the notice of intention to defend that must disclose a defence on the merit before a defendant is granted leave to defend the action.

Therefore in so far as the issue formulated by the appellant has attributed the disclosure of defence on the merit to the notice of intention to defend rather than the appellant’s affidavit as stated by the rule, the issue is not properly framed. Similarly, the only issue as identified in the respondent’s brief is also defective in that the issue referred to RULE 5 instead of the relevant RULE 3 OF ORDER 22. Be that as it may, having regard to the circumstances of this case, I am of the view that there is only one issue for determination as identified in the respondent’s brief and also as formulated in the appellant’s Issue No.1 but slightly modified to reflect the legal requirements of RULE 3 of ORDER 22 of the Kaduna State High Court (Civil Procedure) Rules 1987. The issue properly framed should read thus:-

“Whether or not the learned trial Judge was right in holding that the appellant’s affidavits in support of its notice of intention to defend did not disclose a defence on the merit and in entering judgment for the respondent”

In support of the appellant’s arguments on this issue, its learned counsel Mr. Ashiekaa referred specifically to paragraphs 10, 11, 12, 13, 14, 15, 16 and 17 of the appellant’s affidavit in support of its notice of intention to defend and submitted that these paragraphs which were neither denied nor disputed were deemed admitted by the respondent and therefore no longer in controversy. The case of Nwosu v. Imo State Environmental Sanitation Authority (1990) 2 NWLR (Pt. 135) 688 at 721 among others was cited in support of the submission. Learned counsel pointed out that from the quoted paragraphs, it was clear that the appellant had raised triable issues such as the uncertainty of the amount being claimed in the action, the charging of more interest than agreed between the parties and duplication of debit entries for various amounts in the appellant’s account with the respondent among others justifying the learned trial Judge accepting the same as having disclosed a defence on the merit. Counsel stressed that at that stage of the hearing of the undefended suit, it was not necessary for the court to decide whether the defence has been established. That what was required simply was for the court to look at the facts averred in the affidavits of the defendant to see if they can prima facie afford a defence to the action. He cited the case of Nishizawa Ltd. v. Jethwani (1984) 12 SC 234. Learned counsel complained that the learned trial Judge had placed undue reliance on the case of Macaulay v. Nal Merchant Bank (1990) 6 SCNJ 117; (1990) 4 NWLR (Pt.144) 283 which is quite distinguishable with the present case as that case was decided under ORDER 10 RULES 1 and 2 of the Lagos State High Court Civil Procedure Rules which are not the same as ORDER 22 RULES 1 and 3 of the Kaduna State High Court Rules. Counsel therefore maintained that the appellant’s affidavit had disclosed a defence on the merit to warrant it being allowed to defend the action as the type of defence required to be disclosed in the affidavit is not a defence beyond reasonable doubt. It was also argued for the appellant that the lower court had placed a greater burden on the appellant than required by RULE 3 of ORDER 22 and that since it was obvious that there were conflicts in the evidence contained in the affidavits of the parties, particularly as to the rate of interest, the actual amount of the outstanding debt and the double debit entries, the only way the conflicts could have been resolved was by hearing oral evidence when the suit is transferred to the general cause list for hearing on the authority of Jipreze v. Okonkwo (1987) 3 NWLR (Pt.62) 737. Finally, the appellant concluded that by entering judgment for the respondent, the lower court had denied it a hearing and this had caused a miscarriage of justice.

It was however contended for the respondent that the appellant’s affidavits, particularly the paragraphs referred to in the appellant’s brief did not disclose any defence on the merits to justify granting the appellant leave to defend the action. Respondent’s counsel who described the paragraphs in the appellant’s affidavits as being mere blanket denial, pointed out that paragraphs 3, 4, 5, 6 & 7 of the appellant’s affidavit in support of its notice of intention to defend had in fact admitted the respondent’s claim. Learned counsel to the respondent further observed that all the averments in paragraphs 7 through to 17 of the appellant’s affidavit required supporting documents pointing out that paragraph 15 in particular in respect of which the Central Bank Circular fixing the interest rate of 21% at the material time ought to have been exhibited as the court cannot take judicial notice of a government circular which has not been produced before it as was decided in Katto v. Central Bank of Nigeria (1991) 9 NWLR (Pt. 214) 126. That for that reason, the lower court was right not to have given any weight to the appellant’s bare averments in its affidavit. A number of cases including Kimdey v. Governor of Gongola State (1988) 2 NWLR (Pt. 77) 445 at 473 – 474 was cited in support of this argument. Still on the bare averments of the appellant’s affidavit, the respondent further submitted that since the averments in the respondent’s affidavit in support of its claim on the undefended list were fully supported by documents while the averments in the appellant’s affidavit were bare and unsupported by any document, the learned trial Judge was right in entering judgment for the respondent on the authority of Udechukwu v. Ngene (1992) 8 NWLR (Pt. 261) 565 at 577.

It is indeed true as rightly submitted in the appellant’s brief of argument that the procedure under the undefended list as provided in the provisions of Order 22 Rules 1 to 5 of the Kaduna State High Court (Civil Procedure) Rules 1987 is not designed to exclude a defendant who can show in his own affidavit that there are triable issues in the action. It is also settled law that in determining whether a defendant has a good defence to the action on the merit, it is not necessary for the trial court to decide at that stage whether the defence has been established. What is required is simply to look at the facts averred in the defendant’s affidavit in support of the notice of intention to defend and see if those facts can prima facie support a defence to the action on the merit. Whether that defence will ultimately succeed is totally irrelevant at that stage. See Nishizawa Ltd. v. Jethwani (1984) 1 SC 234. In other words where a defendant in an action under the undefended list raises substantial question of fact or law which ought to be tried, leave should be granted to such a defendant to defend the action. Leave to defend will also be granted where there is an alleged misrepresentation by the plaintiff or where the facts alleged by the plaintiff are of such nature as to entitle the defendant to interrogate the plaintiff or cross-examine the plaintiff’s witnesses on the accompanying affidavit. See University of Nigeria Nsukka v. Orazulike Trading Co. (1989) 5 NWLR (Pt. 119) 19 at 29.

However, it is equally the law that under the undefended list procedure, a defendant who has no real defence to the action should not be allowed to dribble and frustrate the plaintiff and cheat him out of the judgment he is legitimately entitled to by the delay tactics aimed, not at offering any real defence to the action but at gaining time within which he may continue to postpone meeting his obligation and indebtedness. See Nishizawa v. Jethwani (1984) 12 SC 234 and Macaulay v. Nal Merchant Bank Ltd. (1990) 4 NWLR (Pt. 144) 283. It is equally the law that for the trial court to hold that the defendant has satisfied the requirements of Order 22 Rule 3 of the Kaduna State High Court (Civil Procedure) Rules, 1987, to be entitled to be granted leave to defend the suit, the defendant’s affidavit in support of the notice of intention to defend must of necessity disclose facts which will at least throw some doubt on the case of the plaintiff. See Jipreze v. Okonkwo (1987) 3 NWLR (Pt. 62) 737 at 744.

In the present case, the appellant as defendant was relying specifically on the facts averred in paragraphs 10 to 17 of the affidavit of its General Manager Mr. Ushe Uba of 22/5/92 as having disclosed defences on the merit to the action. The facts averred in these paragraphs starting from paragraph 9 are as follows:-

“9. That I have read the affidavit of one Engineer Abubakar Fari particularly paragraphs 9, 10, 11 and 12 thereof to the effect that the defendant is indebted to the plaintiff to the tune of N7,913,346.64k.

10. That the said figure cited in paragraph 9 hereof is a gross exaggeration and distortion of the state of affairs and bears no semblance to the extent of defendant’s indebtedness.
11. That I know as of fact that the defendant irregularly and without requisite authorization paid out sums of money yet to be ascertained to Trana Limited and others and debited the plaintiff’s Account. This debit entries form part of the alleged defendant’s indebtedness to the plaintiff.
12. That I know as of fact that on 21st December, 1988 the defendant duplicated legal charges of N42,715.00 and debited same together with interest therein to defendant’s account.
13. That the plaintiff contrary to agreement, has been charging 1% on the outstanding loan as at the beginning of each quarter instead of charging per quarter on the outstanding goods in the warehouse.
14. That I know as of fact that based on this erroneous premise the plaintiff has continued and persisted in charging the defendant a whooping sum of N33,722.84 per quarter based on the 1% of outstanding loan. These amount form part of the plaintiff’s claim against the defendant.
15. That in January 1991, the Central Bank fixed the maximum Interest rate at 21%. The plaintiff however continued to charge the defendant’s interest at 30.5%.
16. That the defendant will at the trial hereof urge the court to reverse the said compound interest from January, 1991 to date.
17. That I know as of fact that on the 25th May 1990 the plaintiff duplicated an entry of N25,300.00 and debited same against the defendant. The plaintiff continued to charge compound Interest on this amount up to 15th April 1992. This amount forms part of plaintiff’s claim against the defendant.

The learned trial Judge in his judgment at pages 37 – 40 of the record duly considered all the facts averred in these paragraphs of the appellant’s affidavit in support and came to the conclusion that no real defence had been disclosed therein to justify granting the appellant leave to defend the action. I have myself examined these paragraphs of the appellant’s affidavit and having regard to the claim of the respondent contained in the writ of summons and supported by clear averments in the affidavit duly supported by the relevant documents exhibited in support of the claim, I entirely agree with the learned trial Judge that the bare averments of facts contained in the appellant’s affidavit in support of the notice of intention to defend, unsupported by the vital documents from which the facts were averred, did not disclose any defence to the respondent’s claim for the repayment of the sum of N7,891,346.64k granted to the appellant as loan. Indeed the appellant having admitted in paragraph 5 of its affidavit in support dated 22/5/92 that the respondent had approved a facility of N7 million naira to the appellant which commenced draw down of the same upon signing the requisite agreement, the burden was on the appellant to show in its affidavit that the amount had been paid back to the respondent in whole or in part thereof or the reasons for the failure to repay the DEBT. See Macaulay v. Nal Merchant Bank Ltd. (supra). Certainly, for the appellant to simply say that the amount being claimed is a gross exaggeration and distortion of the state of affairs and bears no semblance to the extent of its indebtedness, is not a defence to the action upon which leave could be granted to defend. Further more, all the allegations of improper payments, or wrong and double debit entries in the appellant’s account with the respondent, or the over charging of interest contrary to what was agreed in the loan agreement between the parties, and the specific amounts averred in paragraphs 11, 12, 13, 14, 15, 16 & 17 of the appellant’s affidavit were clearly facts lifted from various relevant documents which were not exhibited with the affidavit for the trial court to see and be adequately guided in the determination of the matter. Surely the averment of the appellant in paragraph 12 of its affidavit in support which stated that there was a duplication of debit entry of the sum of N42,715.00 in its account for example, can only amount to a defence if the duplication of the entry was in fact made as alleged in the paragraph. Therefore without exhibiting the relevant statement of account showing at least the duplicated entries and the dates they were made, the averment in that paragraph is devoid of any evidential value and as such would not have disclosed any defence as rightly found by the learned trial Judge on the authority of Macaulay v. Nal Merchant Bank Ltd., (supra). Therefore by merely stating the obvious, namely, that the bare averments in the appellant’s affidavit not supported by the relevant documents which were the real source of the facts averred, did not disclose any defence on the merit, the learned trial Judge was not guilty of placing more burden of proof than necessary as required by ORDER 22 RULE 3 on the appellant.

On the complaint of the appellant that there were conflicts in the affidavits of the parties filed at the lower court which necessitated the resolution of such conflicts by the lower court by hearing oral evidence when the case is transferred to the general cause for hearing, I must say straight away that the procedure for the determination of an undefended suit under ORDER 22 RULES 1 to 5 does not permit the resolution of conflicts in affidavits by hearing oral evidence as a means of allowing a defendant leave to defend. What in fact is provided by the rules governing the procedure is that the plaintiff’s case and the defendant’s defence to it on the merit are to be determined on each of the parties’ affidavit alone. In other words a judgment for the plaintiff under the undefended list is determined only on the plaintiff’s affidavit in support of the claim in the writ of summons filed under RULE 1 of ORDER 22 of the rules. Similarly, the question of whether a defendant has a defence to the undefended suit is determined solely from the affidavit filed by the defendant in support of the notice of intention to defend as provided in RULE 3 of ORDER 22 of the same rules. The learned trial Judge was therefore right in not even attempting to examine any alleged conflicts in the affidavits of the parties warranting resolution by oral evidence, let alone use the same as the basis for transferring the case to the Ordinary Cause List for hearing in clear violation of the rules.

From what I have said so far on the lone issue raised for determination in this appeal, I cannot but entirely agree with the learned trial Judge that the appellant’s affidavit in support of its notice of intention to defend the action did not disclose any defence on the merit to justify granting the appellant leave to defend the action. This is because the facts deposed in the affidavits of the appellant in support of its notice of intention to defend the suit do not contain enough facts and particulars to satisfy any reasonable tribunal that a defence on the merit to the action had been disclosed warranting the transfer of the case to Ordinary Cause List for hearing. See Pan Atlantic Shipping & Transport Agencies Ltd. v. Rhein Mass GMBH (1997) 3 NWLR (Pt.493) 248 at 256. In the circumstance of the case, having regard to the affidavit evidence with all the relevant documents in support of the claim in the writ of summons, the lower court was indeed right in entering judgment for the respondent in terms of its claim against the appellant.

In the result, this appeal must fail. THE APPEAL IS ACCORDINGLY DISMISSED and the judgment of the lower court of 30/11/92 is HEREBY AFFIRMED.

There shall be N1,500.00 costs to the respondent against the appellant.

Other Citations: (1997)LCN/0332(CA)