Aboseldehyde Laboratories Plc Vs.union Merchant Bank Limited & Anor (2013)

LAWGLOBAL HUB Lead Judgment Report

WALTER SAMUEL NKANU ONNOGHEN, JSC

This appeal is against the Ruling of the Court of Appeal,Holden at Lagos in an application No. CA/L/392M/2001 praying the court for anorder for stay of execution/injunction delivered on the 18th day of December,2002 in which the court dismissed the application. The facts of this case include the following: PAGE| 2 By a Deed of Mortgage Debenture between appellant and 1strespondent at pages 40 – 66 of the record entered into on the 21st day of May,1999 appellant mortgaged/charged all its movable property contained in theschedules thereto to the 1st respondent as security for appellantsindebtedness to the said 1st respondent. Upon the failure/neglect of appellantto settle its said indebtedness, 1st respondent appointed 2nd respondent as areceiver/manager over the appellant vide the Deed of Appointment of receiver onthe 11th day of June, 1999 – See pages 67 – 69 of the record. On the 5th day of July, 1999, the 1st respondent filed anOriginating Summons No. FHC/L/CS/777/99 at the Federal High Court praying thecourt for the following reliefs:- ‘(a) AN ORDER of this Honourable Court directing theReceiver to take such steps as may be necessary to realise the assets of theRespondent (that is Aboseldehyde Laboratories Plc) with a view of paying itsoutstanding debt to the Applicant. (b) AN ORDER of this Honourable Court restraining theRespondent, its agents, privies and assigns including officers from doinganything that would prevent the Receiver from performing his lawful duties as aReceiver.’ The suit was assigned to Hon. Justice Odunowo. While that action was pending appellant instituted anaction, suit No. FHC/L/CS/803/99 on the 9th day of July, 1999, which action wasassigned to Hon. Justice Mustapha, against the present respondents claiming thefollowing reliefs: (a) A Declaration that the appointment of the secondDefendant by the first Defendant as a Receiver in respect of the propertiessituate, lying and being at Plot C20, Alakoso Avenue, Amuwo Odofin Scheme Apapaand No. 7 Akin Osiyemi Street, Off Allen Avenue Ikeja respectively is illegal,unconstitutional, null and void and of no effect whatsoever. (b) A Declaration that the forcible entry into theplaintiffs factory and office situate at Plot C20, Alakoso Avenue Amuwo OdofinScheme, Apapa and No. 7 Akin Osiyemi Street, Off Allen Avenue, Ikejarespectively by Defendant and their agents with arms, cutlasses, matchets andother dangerous weapons is unlawful, illegal, unconstitutional, null and voidand of no effect whatsoever. (c) A Declaration that the Defendants have no right totake possession of the plaintiffs factory and office save in accordance withdue process and law. (d) A sum of N200M Naira only being special and generaldamages jointly and severally for unlawful and forcible entry and closure ofthe plaintiffs factory and business premises by the Defendants, their agents,servants and/or officers. (e) An injunction restraining the Defendants, theiragents, servants, privies or officers or any person or body of personshowsoever from continuing the acts of trespass and from advertising in anynational newspaper the appointment of the second Defendant as a Receiver to disposethe plaintiffs property. Appellant followed the above suit with an application forinterim injunction restraining the 2nd respondent from taking over theappellants company pending the hearing of the application for interlocutoryinjunction which sought the same reliefs, which interim order was granted byMustapha J. (as he then was). Upon service of the interim order on them on13/7/99, the respondents withdrew from the premises of the appellant and filedan application on 14/7/99 in the court praying for the discharge of the saidinterim order of injunction. On the 14th day of February, 2001 the trial courtdelivered a ruling on the applications – (a) for interlocutory injunction and(b) discharge of the interim order of injunction in which it discharged theinterim injunction and dismissed the application for an order of interlocutoryinjunction pending the determination of the suit. Meanwhile with regards to the proceedings inFHC/L/CS/777/99, on the 9th day of August, 1999, Hon. Justice Odunowo orderedappellant not to temper with any of the 214 chattels including vehicles listedin the second schedule to the Deed of Mortgage Debenture whether by way ofsale, transfer or other dispositions pending the hearing and determination ofthe applications before the court. The ruling of Mustapha J. (as he then was) inFHC/L/CS/803/99 delivered on 14/2/2001 resulted in an application by appellantbefore that court praying for an order of stay of execution and/or injunctionfiled on 22/2/2001 which the trial court dismissed vide a ruling delivered on10th September, 2001. PAGE| 3 Being dissatisfied with the above ruling, appellant fileda similar application at the Court of Appeal dated 14th September, 2001 – forstay of execution and/or injunction, – which application was also dismissed on18th December, 2002 resulting in the instant appeal before this Court theissues for the determination of which have been identified by learned Counselfor appellant, CHIEF WALE TAIWO, in the appellant brief filed on 7/2/12, asfollows:- ‘3.01 Whether the Appellant in the circumstances ofthis case was not entitled to an order of stay of Execution/or injunction asprayed before the lower court (Grounds 1, 2 & 4). 3.02 Whether the learned Justices of the Lower Court wereright to have in the course of considering the Appellants application for stayof execution and/or injunction pronounced in (sic) the entire facts of the casethereby determining the substantive issues yet to be determined by the Court offirst instance (Ground 3)’. On his part, learned Counsel for the respondents DR. WALEOLAWOYIN formulated a single issue for determination in the respondents brieffiled on 9/2/12 to wit: ‘Whether the Court of Appeal in refusing to grant theapplication dated 14 September, 2001 for an order of stay of Execution/orinjunction exercised its discretion judicially and judiciously?’ It is important to note that appellant is seeking thefollowing reliefs from this Court: ‘RELIEFS SOUGHT FROM THE SUPREME COURT OF NIGERIA (1) An order allowing the appeal. (2) An order staying execution of the decision of thecourt of first instance delivered on the 14th February, 2001 pending thehearing and determination of the appeal filed against the decision of theFederal High Court at the Court of Appeal and the substantive suit at theFederal High Court, Lagos. ALTERNATIVELY (3) AN ORDER OF INJUNCTION restraining the Respondentsfrom selling and/or alienating the Appellants assets and/or taking or causingto be taken any steps pursuant to the decision of the Federal High Courtdelivered on the 14th February, 2001 pending the hearing and determination ofthe appeal filed against the said decision at the Court of Appeal and thesubstantive suit at the Federal High Court, Lagos’ see page 206 of therecord. I must point out at this stage that reliefs 2 and 3 supraare very similar to reliefs 1 & 2 before the trial court and the lowercourt; in the applications filed before those courts on 22/2/2001 and 14/9/2001respectively. For ease of reference I reproduce them hereunder as follows: ‘1. AN ORDER staying execution of the decision ofthis Honourable Court delivered on the 14th February, 2001 pending the hearingand determination of the appeal filed against the said decision at the Court ofAppeal. ALTERNATIVELY 2. AN ORDER OF injunction restraining theDefendants/Respondents whether by themselves, their servants, agents and/orprivies or whosoever from taking/or causing to be taken any steps pursuant tothe decision of this Honourable Court delivered on the 14th February, 2001pending the hearing and determination of the appeal filed against the saiddecision at the Court of Appeal.’ PAGE| 4 While that filed before the lower court prays thus: ‘1. An order staying execution of the Ruling of theFederal High Court delivered on the 14th February, 2001 pending the hearing anddetermination of the appeal filed against the said decision. ALTERNATIVELY 2. An order of injunction restraining the Respondentwhether by themselves, their servants, agents and/or privies or howsoever fromtaking or causing to be taken any steps pursuant to the decision of the FederalHigh Court delivered on 14th February, 2001 pending the hearing anddetermination of the Court of Appeal.’ From the above reliefs before the lower courts, it is veryclear and I hereby find and hold that there is an appeal pending before thelower court against the decision of the Federal High Court made on 14thFebruary, 2001 in which the court dismissed appellants application for stay ofexecution or injunction etc. as supra which appeal existed side by side thesimilar application filed before the lower court on 14/10/2001 praying for thesimilar reliefs earlier reproduced in this judgment. It is therefore very clearthat the appeal pending before the lower court and the application that courtdecided which gave rise to the instant appeal before us have the samesubstratum, as they both seek the same reliefs. No wonder appellant haspractically abandoned the appeal against the ruling of the trial court refusingthe application for interlocutory injunction!! I will, however return to thismatter later in this judgment. However, in arguing the appeal, learned Counsel forappellant referred the court to the principles guiding the courts in decidingapplications for stay of execution/or injunction. Learned Counsel referred thecourt to the grounds of appeal in the notice of appeal dated 14/1/13 at pages202-207 of the record and submitted that they are cogent and compelling; thatas at the time the lower court decided the application, the rights of theparties were yet to be determined either by the trial court or the lower courtso as to know the successful party; that the reliefs being sought at the trialcourt ‘is a formal challenge of the appointment of the 2nd respondent andhis right (2nd Respondent) to continue to remain in possession of theAppellants properties.’ It is the further submission of learned Counsel thatthough the courts have decided that for an order of stay of execution to bemade, the applicant must show special and exceptional circumstances, it is alsosettled that the constituents of special and exceptional circumstances includeacts which tend to: (a) destroy the subject matter of the proceedings; (b) foist upon the court especially the Court of Appeal, asituation of complete helplessness; (c) render nugatory any order or orders of the Court ofAppeal; (d) paralyse in one way or the other the exercise by thelitigant of this Constitutional right of appeal; or (e) generally provide a situation in which whateverhappens to the case and in particular, even if the appellant succeeds in theCourt of Appeal, there could be a return to the status quo. It is the further submission of Counsel that theappointment and intention of the 2nd respondent to sell the assets of theappellant, the subject matter of the substantive suit should have weighedheavily in the minds of the learned Justices of the Lower Court in granting theapplication for stay/injunction; that by the refusal of the application impliedliberty is given the respondents to proceed to sell the assets of the appellantand that the constitutional right of appeal of the appellant is therebyparalysed and that there would be no return to the status quo if appellantsucceeds in the suit as the subject matter would have been destroyed by thesale. Finally, Counsel submitted that the lower court wasinfluenced by an extraneous matter which was incorrect and prejudicial to thecase of appellant to wit that the trial judge had already stated that theappointment of the 2nd respondent as Receiver and/or Manager by the 1strespondent is valid in coming to the decision to refuse the application andurged the court to resolve the issue in favour of appellant. On his part, learned Counsel for respondents submittedthat it is settled law that the power conferred on the lower court to grant anapplication for stay of execution or injunction is discretionary whichdiscretion is exercisable judicially and judiciously that the lower court didexercise its discretion in this case judicially and judiciously by consideringthe affidavit evidence before it; that the lower court found as a fact that therespondents were entitled to take over and occupy the factory and business premisesof the appellant pursuant to a Deed of Mortgage Debenture between the 1strespondent and appellant exhibit UBN 1, at pages 40 to 66 of the record; thatappointment of 2nd respondent had already been advertised on page 63 of theGuardian Newspaper of Tuesday 13 July, 1999 before the service of the courtorder in suit No. FHC/L/CS/803/99; that respondents first occupied the premisesof appellant before service of the interim order of injunction but vacated samesoon after service of the order on them; that they again occupied the premisesfollowing the order of 14th February, 2001 refusing the application forinterlocutory injunction and discharging the earlier interim order, dated 13July, 1999; that appellant failed to show any exceptional or specialcircumstances to justify the exercise of the courts discretion in its favour. PAGE| 5 It is also the submission of Counsel that the principlesgoverning grant of interlocutory injunction are well settled, relying onLadunni v. Kukoyi (1972) 3 S.C 31 at 34; Obeya Memorial Hospital Ltd v. AG ofFederation (1987) 3 NWLR (pt. 60) 325; that appellant did not dispute the factsdeposed to by respondents in the counter affidavit which makes the reliance onthe facts by the lower court justifiable; that appellant failed to disclosematerial facts to the lower court such as the existence of a Deed of MortgageDebenture between appellant and 1st respondent pursuant to which 1st respondentappointed the 2nd respondent as receiver/manager; the indebtedness of appellantto 1st respondent which, at the time, stood at N266, 577,974.48, whichsuppression constitute a ground for refusal of the application for injunction,relying on Onyemelukwe v. Attamah (1993) 5 NWLR (pt. 293) 350: Hart V. TSKJNig. Ltd (1998) 12 NWLR (pt. 578) 372 at 399; Adeyemi Works Construction V.Omolehin (2004) 6 NWLR (pt. 870) 650 at 665. It is the further submission of Counsel that a grant ofinjunction postulates the existence of a legal right to be protected, relyingon Union Beverages Ltd. v. Pepsi Cola (1974) 3 NWLR (pt. 330) 1 at 12; Akano V.Hakeem – Habeeb (1992) 6 NWLR (pt.241) 266, 290 – 291; that the lower court wasright from the facts before it, in concluding that appellant failed toestablish a legal right to be protected particularly as appellant had, by theDeed of Mortgage Debenture divested its legal ownership of the assets involved,as long as the debt remained unpaid; that the balance of convenience is not infavour of appellant, relying on Buhari v. Obasanjo (2003) 17 NWLR (pt. 850) 587at 648 – 649; that appellant is a chronic debtor whose creditors obtainedjudgments which were executed by attachment of the properties secured by theDeed of Mortgage Debenture as a result of which 1st respondent cannot fold itshands while the secured properties are being carted away by other creditors;that an appellate court is wary of setting aside the exercise of discretion bya lower court as the court is not at liberty to substitute its own discretionfor the discretion already exercised by the lower court except where theappellate court reaches a clear conclusion that there has been a wrongfulexercise of discretion, relying on Ikenta Best (Nig) Ltd. v. A-G Rivers State(2008) 6 NWLR (pt.1084) 612 at 647. On the issue of reliance on extraneous factors learnedCounsel submitted that the lower courts refusal of the application was basedon hard facts which tilted the balance of convenience in favour of therespondents; that it is not every mistake that would result in the settingaside of the judgment and urged the court to resolve the issue againstappellant. I will begin a consideration of this issue by asking aquestion as to what is the proper relief between stay of execution andinterlocutory injunction having regards to the facts of this case. LearnedCounsel for both parties have addressed the court on the principles of lawguiding the courts in applications for stay of execution and interlocutoryinjunction thereby leaving the court to choose the applicable relief in thecircumstances of the case. The question posed supra is relevant due to the fact thatit is not every judgment/order that is subject to the relief of stay ofexecution simpliciter. It is settled law that a declaratory judgment or order ofa court cannot be stayed by an interim order see Tukur v. Government of GongolaState (1989) 4 NWRL 592; Akibu v. Oduntan (1991) 2 NWLR; 1, except thedeclaratory order is coupled with a mandatory order – such as an order ofinjunction. From the facts of this case, it is clear that the judgmentor ruling/decision of the lower courts sought to be stayed are interlocutorydecisions, which dismissed appellants application for an order of stay ofexecution or interlocutory injunction which made the decisions declaratory innature as there was not mandatory order which went along with the said ordersdismissing the applications. The orders also did not grant any monetarypayment(s) to the respondent. In the circumstance, it is clear, and I herebyhold that the principles guiding the courts in applications for stay ofexecution of the judgment of the courts are not applicable to the facts of thiscase and are consequently discountenanced by me in this judgment. In the circumstance of the above holding, it is clear thatthe only relief open to appellant in this case is that of interlocutoryinjunction pending the determination of the appeal, which, as I had earlierfound in this judgment based on the facts on record, is the same as theapplication for stay of execution or interlocutory injunction. In considering the application, the lower court made thefollowing findings at pages 191 – 192 of the record: ‘From the affidavit before the court the followingissues are clear and uncontroverted. 1. That the Appellant/Applicant is indebted to the 1stRespondent as at 14th February, 2001, amount of indebtedness to 1st Respondentstood at N265, 577, 974.48 (Two Hundred and Sixty-Five Million, Five Hundredand Seventy-Seven Thousand, Nine Hundred and Seventy Four Naira, Forty-EightKobo). 2. That there exist a Board (sic) of Mortgage DebentureExhibit UBN between the Appellant/Applicant and the Respondents pursuant towhich the 1st Respondent appointed the 2nd Respondent as Receiver and orManager of the Appellant/Applicants company. 3. That the two Rulings of the lower court dated 16th May,2009 and 14th February, 2001 stated that the appointment of the 2nd Respondentby the 1st Respondent as receiver and or manager to be valid. 4. That the Appellant/Applicant is a chronic debtorindebted to several creditors to several million (sic) of naira.’ I must say that the above findings are backed by theevidence on record and that apart from (3) supra, appellant has not challengedthe said findings of facts by the lower court. The lower court continued its consideration of theapplication at pages 192 – 193 of the record as follows:- ‘For the Appellant/Applicant to succeed in thisapplication, the applicant must show special or exceptional circumstances aswould warrant the court depriving the successful party the fruits of hisjudgment pending appeal. In the instant application, the Appellant/Applicant hassought to show that the continued closure of its factory and business premisesby the appointment of the 2nd Respondent as Receiver or Manager has caused irreparabledamage to the Appellant/Applicant in that PAGE| 6 (i) it cannot transact its business (ii) it is losing money running into millions of nairadaily. (iii) it cannot meet its obligation to customers,suppliers (sic) employer (sic), creditors etc and (iv) the production machines are being destroyed due tonon use and will require large amount of money to put it back into use. That due to the order of the lower court on 14th February,2001 the Respondents has taken over the Appellant/Applicants business factor (sic) and are in theprocess of disposing and setting the assets. That unless the Respondent, their agents, and privies arerestrained pending the appeal, all the plaintiff will gesting (sic) the mostlikely exhausted the appeal being successful will be a date (sic) barred (sic)judgment.’ The lower court then went on to make the followingevaluation and concluded, inter alia as follows: ‘I have given due consideration to the above specialor exceptional circumstances put forward by the Appellant/Applicant. It is myview that in the face (sic) before the court, the special or exception (sic)circumstances put forward by the Appellant/Applicant cannot avail it. It isvery clear that under Exhibit UBN 1 the Deed of Mortgage Debenture the 1st Respondentis entitled to appoint a Receiver and or Manager to the undertaking of theAppellant/Applicant in default of payment of the loan forcibly granted toAppellant/Applicant and in the exercise of its powers under Exhibit UBN 1 ithas appointed the 2nd Respondent. The Appellant/Applicant has not disputed theloan and has not show (sic) that it has paid the loan. Clause 13(a) of ExhibitUBN 1 empower the 3rd Respondent when so appointed in the exercise of hisduties as Receiver and or Manager to sell of (sic) dispose as (sic) theproperties of the Appellant/Applicant… Another issue that deserved serious consideration is thefact the Appellant/Applicant is a chronic debtor owing several creditorsapproval (sic) millions of naira, these creditors have started excusing (sic)court judgments on the properties of the Appellant/Applicant, the Respondentsas secured creditors shall not fold their arms whilst the properties which theyhave secured their interest are being carted away by other creditors, the Respondentsown (sic) themselves a duty to move forward and protect their secured interest. Another issue of paramount importance is the fact apparenton the affidavit of the Appellant on the affidavit of the Appellant/Applicantthat is that they did not exhibit good faith in their dealings with theRespondents. In Appellant/Applicant deposed in para 14 (ii) of its affidavit insupport of this application. The para reads:- 14(ii) That the continued closure of the plaintiffsfactory and business has caused irreparable damage to the plaintiff is (sic)that it is losing money running into millions of naira daily. By the facts and the affidavit before the court theRespondents vacated the factory and the business premises after their initialtakeover … on the 13th July, 1999. Since on the 13th July, 1999 to 14thFebruary, 2001 … the Appellant/Applicant has been in possession of itsfactory and business premises and by their own admission has been makingmillions of naira daily. They have not shown to this court that out of themillions of naira they are making daily they have paid the Respondents a koboin satisfaction of their admitted debts to the Respondents. It is thereforeclearly an act of bad faith if inspite of the millions of naira they make dailythey fail (sic) and neglected to pay out a single kobo to the Respondents towhen (sic) they admitted they are indebted…….. I therefore hold that in thecircumstances of this case the Appellant/Applicant is not entitled to have thediscretion of this court exercise (sic) in its favour…’ Emphasissupplied by me. PAGE| 7 Having regards to the above findings of fact based on theaffidavit evidence on record, can it be said that the lower court did notexercise its discretion in refusing the application for interlocutoryinjunction judicially and judiciously? Appellants Counsel has contended thatthe lower court failed to so act while Counsel for respondents insists that itdid. Which of them is correct? It is settled law that the aim of an order of injunctionis to protect an established right of the applicant. This is a fundamentalrequirement. The question is whether appellant has established any right to theinjunction sought. I had earlier reproduced the findings of the lower court onthe facts before the court which findings have not been challenged in thisappeal and therefore deemed to have been accepted as true by appellant. Therelevant facts are that: (a) appellant and 1st respondent executed a Deed ofMortgage Debenture, exhibit UBN 1 for a loan transaction which Deed gave 1strespondent the power to appoint a receiver and/or manager over the assets ofappellant in case of default in the payment of the secured loan; (b) that appellant defaulted in the repayment schedule asa result of which 1st respondent appointed the 2nd respondent as itsreceiver/manager to take over the management and sale of the secured propertiesand business premises of appellant.

SC. 276/2003