Alhaja Silifatu Kikelomo Omotayo V. Christopher Ajibola Ogundipe (1994)
LawGlobal-Hub Lead Judgment Report
UWAIFO, J.C.A.
When may a conditional leave to defend be given? This appeal raises that main issue. It decides when a trial Judge may, in the exercise of his discretion under Order 11 rule 4 of the High Court of Lagos State (Civil Procedure) Rules 1972, give as a condition for defending an action that the defendant do pay into court the whole (or part) of the amount claimed by the plaintiff. I will here set out the provisions of the said rule as follows:
“Leave to defend may be given unconditionally or subject to such terms as to giving security or time or otherwise as the Judge may think fit.”
This rule is similar to the former R.S.C. 1883 Order 14 rule 6, R.S.C. (Rev.) 1962, Order 14 rule 3 and the present R.S.C. 1965 Order 14 rule 4(3) of England. There are English decided cases in which the provisions in question have been interpreted. I have searched in vain for any Nigerian authority in which the rule has been considered. I rather think there is none. I shall have to seek guidance from the English authorities.
In the present case, the plaintiff sued for specific performance of (land) sale agreement or in the alternative (a) an order for a refund of the sum of N150,000.00 paid as deposit for a consideration that has totally failed; (b) N50,000 damages for breach of contract of sale; and (c) interest at the rate of 15% per annum from 17 March, 1984 till judgment is delivered and thereafter interest at the rate of 10%.
The property which is the subject of the sale agreement is 12 Adekitan Street, Mushin, Lagos. The N150,000.00 was paid in three lots of N50, 000.00 each. As the agreement indicates, this probably enabled the defendant to pay the sum of N70, 000.00 to one Elijah Alao so as for him to forego his interest in the said property which the judgment in suit No. ID/123/77 had given him. That done, the title in the property became solely in the 1st defendant.
The sale was agreed at N550, 000.00. There was thus a balance of N400,000.00. Clause 2(d) of the agreement provides:
“(d) The balance of N400, 000.00 (Four Hundred Thousand Naira) will be paid to the Vendor through her solicitors immediately
(i) Upon execution of a Deed of Assignment in favour of the Purchaser, Mr. C.A. Ogundipe and
(ii) Upon obtaining the necessary Governor’s consent to the Deed of Assignment between Elijah Alao and the Vendor, Alhaja S.K. Omotayo and registration of the said document at the Lands Registry, Lagos.”?
As will be shown later, it is this clause which the learned trial Judge identified as posing a dispute as to who was in breach.
The facts relied on by the plaintiff seem to be founded on an alleged breach by the 1st defendant of the condition of sale as stated in clause 2(d). It is sufficient to refer to paragraphs 12, 13, 14 and 15 of the statement of claim which read:
“12. The plaintiff shall contend at the hearing of this case that he paid the said sum of N150,000 as part of the purchase price of the said property at 12 Adekitan Street, Mushin, Lagos State with an understanding that the balance of N400,000 (Four hundred thousand Naira) is to be paid as per the conditions on the Sale Agreement dated 17th March 1984 ..
- The plaintiff avers that since 17th of March 1984 when the Agreement was executed he has visited the 2nd defendant several times to get the Deed of Assignment in respect of the said property at 12 Adekitan Street, Mushin, Lagos prepared in his favour but he had always given the plaintiff one excuse or the other and has since failed to perfect the conditions on the Sale Agreement.
14.. The plaintiff states that he thereafter went to see the 1st defendant and asked her to perfect the conditions on the sale Agreement between the plaintiff and the 1st defendant or to give the plaintiff the sum of N150,000 already paid for the said house and property at 12 Adekitan Street, Mushin, Lagos.
- The plaintiff avers that the 1st defendant thereafter arranged a meeting at Chief Somefun’s office in which the plaintiff, the 1st defendant and the 2nd defendant were all present.”?
It may be noted here that the 2nd defendant is the solicitor who prepared the sale agreement and through whom, as averred by the plaintiff, the N150,000.00 was paid to the 1st defendant. The plaintiff later abandoned his claim against the 2nd defendant because, according to his counsel during the proceedings of 11 June, 1990 at the court below, the 1st defendant had admitted receiving the money. The 1st defendant filed a statement of defence which included a counterclaim for N750,000.00 for an alleged breach of contract by the plaintiff. Paragraphs 7, 8, 9 and 10 which, I must remark, was written in pretty poor English, represent the core of her defence. I produce them as they are:
“7. The 1st defendant admits paragraph 15 of the plaintiff statement of claim at that meeting he confess that he (the plaintiff) is not in the position to pay the balance of N400,000.00 (Four hundred thousand Naira) the purchase price of the property.
- To the hearing of the 2nd defendant and my solicitor (Chief J.A. Somefun) the plaintiff appeals to the 1st defendant to assist him with some amount of money out of the N150,000 (One hundred and fifty thousand Naira) he deposited with the 1st defendant and the 1st defendant should forget the balance as his business has collapsed and cannot afford to buy the property anymore.
- The 1st defendant was surprised at the utterances that is to say his (plaintiff) appeal for help and she told the plaintiff at the said meeting that she is not in a position to assist, all she wanted is the balance of her N400,000.00 (Four hundred thousand Naira) which he, the plaintiff has refused to pay the 1st defendant for the past six (6) years despite repeated demand.
- That the plaintiff is in total breach of the sales agreement as he has totally failed to comply with the sale agreement and most importantly to pay the balance of the N400,000.00 (Four hundred thousand Naira).”?
The plaintiff filed a reply to the statement of defence together with a defence to the counter-claim in which the averments in paragraphs 7,8, and 9 above were denied.
As regards paragraph 10 the plaintiff simply averred:
“5. The plaintiff states that contrary to paragraph 10 of the statement of defence it is the 1st defendant that is in breach of the sales agreement dated the 17th day of March 1984 by failing to comply with clause 2(d) of the agreement.”?
It will be necessary to allude later to the significance of these averments. At the moment I will say it would appear that both parties found their claims on clause 2(d) as to their respective ideas of who was in breach. So it would appear that if there was ambiguity, it might be proper and inevitable to take evidence as to how either party expected the clause to be complied with. In other words, there would have to be a contest before a just decision can be arrived at.
The plaintiff had, before pleadings were closed, brought a summons for judgment under Order 11 of the High Court of Lagos State (Civil Procedure) Rules.
The affidavit in support contained the same facts as in the statement of claim and reply to the statement of defence. The failure to comply with clause 2(d) of the sale agreement was relied on and the 1st defendant was said to have no defence to the claim. The Counter-affidavit of the 1st defendant deposed to facts similar to those in the statement of defence. In paragraph 12, the 1st defendant said that in anticipation of the N400,000.00 he had incurred debt and that his creditors were contemplating taking her to court.
On 11 June, 1990 at the High Court, Ikeja, Ilori, J., heard and determined the summons for judgment. The ruling he gave ex-tempore was quite terse. It will bear its own testimony by reproduction as follows:
“The 1st defendant did not deny receiving a deposit of N150,000 from the plaintiff as part payment of the purchase price of the 1st defendant’s property. Both parties acknowledge the agreement exhibited with the plaintiff’s application as binding between them. The only dispute is as to the construction of clause 2(d) of that agreement. I will make no comment at this stage on that particular clause. I believe that upon a consideration of the facts in the affidavit before me, the interest of justice will be served by granting the 1st defendant a conditional leave to defend and giving directives on further trial. Pursuant to Order 11 Rule 4 I hereby grant the 1st defendant leave to defend subject to the condition that the N150,000 she received from the plaintiff shall be paid into an interest yielding bank account in the name of the Chief Registrar of this court, in a reputable bank and the receipt for such payment shall be filed in this court within 7 days. Directions for trial shall be given after the receipt has been filed.”?
The 1st defendant has raised five issues for determination in her appeal against that ruling. The plaintiff has also raised five issues. I do not intend to set them out. I am not particularly impressed with counsel raising a multiplicity of issues instead of identifying the key grievance in a matter and directing a couple of properly formulated issues thereto. It is boring and burdensome to appellate courts to have to ruminate on several detached and usually unco-ordinated and irrelevant issues to decide a case. In fact, if I may indulge in saying so, it tends to call into question whether some counsel have shown a willingness to stand up to the expertise required of them. In my view, from the various issues raised in this appeal by both parties, the following two issues can be seen to arise: (a) Whether there was a real issue which should go to trial in regard to clause 2(d) of the sale agreement upon which either party relies for its claim to breach of contract. (b) Whether from the circumstances of the case the learned trial Judge exercised his discretion in a manner that would justify the granting of leave to defend upon the condition imposed by him.
I have set out at the beginning of this judgment, Order 11 rule 4 under which the learned trial Judge imposed the condition that the 1st defendant do pay the N150,000.00 into court before she could defend the action. The decided cases on the said rule show that such an order could be made. It has in fact been recognised as the practice that: “The condition of payment into Court, or giving security, is nowadays more often imposed than formerly…”?: See the House of Lords case in M.V. Yorke Motors (a firm) v. Edwards 1024 1 All ER. (1924) at 1028 per Lord Diplock. I think in an appropriate case this practice can have a salutary effect in achieving justice and providing some guarantee to a plaintiff against a devious debtor.In the present case, the learned trial Judge rightly acknowledged that a dispute had arisen as to the construction of clause 2(d) of the sale agreement in question.
The plaintiff relies on it and says the 1st defendant is in breach thereof. On the other hand the 1st defendant relies on it and contends that the plaintiff has failed to satisfy it by making payment of the N400,000.00. It is a very serious dispute, in my view, arising from a clause of the sale agreement.
The question that follows is whether, in view of the need to interpret the clause first, it was justifiable to make it a condition for the 1st defendant to defend only upon her paying into court the deposit of N150,000.00 she received from the plaintiff towards the sale of the property. The learned trial Judge did not appear to have taken any relevant facts in contest into consideration before imposing that condition. All he said was that there was no dispute that the 1st defendant was paid the deposit of N150,000.00; and that in the “interest of justice” the money be paid into court before she can be allowed to defend. I cannot see that as an exercise of discretion which this Court ought not to interfere with. The respondent canvassed extensive argument to the effect that this Court will not interfere with the exercise of discretion by a trial court unless such discretion is shown to have been exercised on wrong principles. I think that is a correct statement of the law. But I do not think that it serves any useful purpose in adjudication to state principles of law as mere platitudes. They must be seen to be relevant to the circumstances of the case.
In the exercise of discretion a court must be influenced by certain considerations. There can be no proper exercise of a discretion if the Judge has given no weight or sufficient weight to those considerations which ought to have weighed with him. If he takes into account irrelevant matters or excludes from consideration relevant matters, or acts on wrong principles or takes nothing into consideration, the result will be the same. He cannot simply hide behind the phrase “interest of justice” to justify his exercise of discretion. This statement of the law can be found in the authorities which are numerous. It is sufficient to refer to four Supreme Court decisions, namely Kudoro v. Alaka (1956) SCNLR 255 where Charles Osenton & Co. v. Johnston (1942) A.C. 130 was cited with approval. There it was held that a discretion entrusted to a Judge could be reviewed not only on the grounds that he had erred in principle but also where he had not given proper weight to a relevant factor. The same case was cited in Okere v. Nlem (1992) 4 NWLR (Pt. 234) 132 at 149 where Nnaemeka-Agu, J.S.C. added that an exercise of discretion by a Judge without adverting to a material consideration is just as bad as exercising it on a wrong principle. The other two cases are Usikaro v. Itsekiri Communal Land Trustees (1991) 2 NWLR (Pt. 172) 150 at 176-177; Okafor v. Bendel Newspapers Corporation (1991) 7 NWLR (Pt. 206) 651 at 666.
In order to decide whether to grant a conditional leave to defend, the trial Judge must give a thought to a number of factors. First, he must consider all the relevant circumstances of the case to be satisfied whether there is a triable issue.
If there is, the court ought to rule in a way to have the opportunity of seeing what is the truth of the matter without necessarily deciding it, and whether the defendant may be liable without necessarily so holding at that stage. If upon the affidavit evidence the court does not find it easy to give judgment for the plaintiff, it ought not to grant a conditional leave to the defendant to defend. The case ought to go to trial unconditionally. In other words, where a defendant is entitled to defend, an order cannot be made upon him to have the effect that, if he does not comply with a prohibitive condition, judgment would have to go against him: see Fuller v. Alexander (1882) 47 L.T. 443 at 444; Kodak Ltd. v. Alpha Film Corporation, Ltd. (1930) 2 K.B. 340.
Second, if there is no sign of bad faith in the defendant nor anything to show that the defence raised is a sham nor that there are suspicious circumstances as to the mode of presenting the case, leave to defend should not be made conditional:
see Fieldrank Ltd. v. E. Stein (1961) 3 All E.R. 681 at 683; Lloyd’s Banking Co. v. Ogle (1876) 2 Ex. D. 262 at 264.
Third, if the circumstances show the qualities stated above or the defence is C shadowy (per Lord Denning M.R. in Van Lynn Developments Ltd. v. Petias Construction Co. Ltd. (1969): Q.B. 607 at 614) or there is little or no substance in it or the case is almost one in which summary judgment should be ordered (see Ionian Banks Ltd. v. Couvreur (1969) 2 All E.R. 651), then leave to defend if it is given at all should be made conditional. Similarly, if the court is not satisfied with the bona fides of the defendant’s affidavit, it may grant a conditional leave to defend by imposing terms: see Blaiberg v. Abrams (1910) 77 LTJ 255 where Bowen L.J. said: “In deciding whether the defence set up is a real defence or not, all the circumstances must be looked at”; see also Dane v. Mortgage Insurance Corporation (1894) 1 Q.B. 54.
Fourth, the powers under Order 11, rule 4 are very wide. The terms imposed on granting conditional leave to defend may relate, as the rule plainly says to the giving of security or time or otherwise. It may relate to the mode of trial.. It has been shown that those conditions include the paying into court within a specified time a sum representing the whole or part of the claim: see Van Lynn Developments Ltd. v. Pelias Construction Co. Ltd. (supra). It is to be noted that the effect of ordering money to be paid as a condition to defend is that in default the plaintiff may be granted leave to sign final judgment for such sum specified: see Powszechny Bank Zwiazkowy W Polsce v. Paros (1932) 2 K.B. 353.
Fifth, when granting conditional leave to defend, the court is required to consider the financial circumstances of the defendant. A condition for the defendant to pay money as would make the fulfilment of the condition impossible, when the impossibility was known or should have been known to the court by reason of the evidence placed before it should not be imposed. That would amount to grave hardship on the defendant. A conditional leave granted on such basis would be a wrongful exercise of discretion. In the present case it would be tantamount to giving judgment for the plaintiff notwithstanding the learned trial Judge’s opinion that there was an issue or question in dispute which ought to be tried. A similar view was expressed by Lord Diplock in M.V. Yorke Motors v. Edwards (1982) 1 All E.R. 1024 at 1027. On the question of hardship Delvin L.J. in comparable circumstances to the present case said in Fieldrank Ltd. v. Stein (supra) at page 683:
“If the defendant’s case is the right one, then, in accordance with the agreement that was made, he will have parted with the money – the so-called” deposit” – and got only the material in exchange, and it might well be a hardship on him that he should have to find the money to pay into court as a condition of being allowed to set up his version of the bargain…”The relevance of this is that in the sale agreement exhibited before the trial court, it is stated that the defendant was to pay one Elijah Alao N70,000.00 to buy off his interest in the property in question. Further, in the defendant’s counter affidavit, she said in anticipation of the N400,000.00 she had incurred debt. It may be necessary to consider from the above if there could be any element of hardship on the defendant by ordering her to pay the N150,000.00 into court as a condition of being allowed to defend the action brought against her for breach of contract of sale. As I said earlier she alleges that it is the plaintiff that is in breach for failing to pay the N400,000.00. It is the construction to be given clause 2(d) of the sale agreement, among other things, that will help to determine who is in breach as between the two.
In my view, the learned trial Judge did not take relevant factors into consideration before granting the conditional leave to defend in which he imposed on the defendant the obligation to pay the N150,000.00 received as deposit by her towards the sale of the property in question. I will also like to add that by making such an order, the learned trial Judge either overlooked or pre-empted the alternative claim of the plaintiff to specific performance. If his case is made out, it would be to his immense benefit to have an order of specific performance. What then would be the justification for depriving the defendant of that money for what may be a considerable length of time and at the same time in the end compel her to convey? The discretion under Order 11, rule 4 was therefore, in my view, not properly exercised and cannot be allowed to stand. I will allow the appeal and set aside the order of conditional leave to defend. Instead I order that the case shall go to trial upon unconditional leave to defend. I award the defendant/appellant N600.00 costs against the plaintiff/respondent.
Other Citations: (1994)LCN/0194(0194)
