General Oil Limited & Anor V. Fsb International Bank Plc (2004)

LawGlobal-Hub Lead Judgment Report

D. MUHAMMAD, J.C.A.

The Lagos Division of thy Lagos State High Court on 20th October, 2000, ruled in favour of the respondent in the instant Appeal. It had taken out a writ of summons against the appellants claiming jointly and severally the sum of N9,480,515.229k being outstanding balance of a loan advanced to the 1st appellant.

This amount included a 21% interest per annum on the borrowed sum. 2nd appellant guaranteed the loan. Respondents statement of claim was filed on 3rd July, 1997. The appellants’ statement of defence and counter-claim was dated and filed on 10th October, 1997.

The respondent filed a summons for judgment for the claimed sum on 3rd November, 1997, to which the appellants filed a counter-affidavit. Parties have filed and exchanged their written addresses on the summons for judgment. In a considered ruling, dated 20th October, 2000, the court having found that appellants’ statement of defence and counter-claim had not disclosed a defence on the merits to respondent’s claim, entered judgment in favour of the latter. Appellants are dissatisfied with the ruling of the lower court against them. They have appealed to this court.

Parties to the appeal have filed and exchanged briefs of arguments.

Formulated in appellant’s brief as having arisen for the determination of the appeal are the following two issues:

(1) Whether on the facts disclosed in the appellants’ statement of defence and counter-claim, appellant’s counter-affidavit to respondent’s summons for judgment, the court below was right in entering judgment in favour of the respondent and holding that the facts disclosed in the appellants’ statement of defence and counter-affidavit disclosed no good defence?

(2) Whether it was proper for the court below to fail to consider the appellants counter-claim in giving its ruling entering judgment for the respondent.

On the part of the respondent, the following two issues have been formulated:-

(1) Whether the lower court is right in entering judgment under Order 11 of High Court of Lagos State (Civil Procedure) Rules, 1994, in favour of the respondent herein having regard to all the papers filed in the case to wit the statement of claim, the affidavits in support of summons for judgment, statement of defence and counter-affidavit filed by the appellant together with all the exhibits annexed to the processes filed by the parties.

(2) Whether the lower court is right in holding that the counter-claim filed by the appellant ought and should not affect the determination of an application for the judgment under Order 11 of High Court of Lagos State Civil Procedure Rules, 1994.

In arguing the appeal, appellants contend that they have disclosed triable issues both in their statement of defence and counter-affidavit to entitle them leave of the court to defend their action. Order 11 of the lower court’s rule of procedure is not designed to shut the defendant who has manifested in the two documents that he has a defence on the merit. Amongst the many judicial authorities relied upon by the appellants are: Macaulay v. NAL Merchant Bank (1990) 4 NWLR (Pt.144) 283; Okambah v. Sule (1990) 7 NWLR (Pt.160) 1; UTC v. Pamotei (1989) 2 NWLR (Pt.103) 244; FSB International Bank Ltd. v. Imano Nigeria Ltd. (2000) 11 NWLR (Pt.679) 620, (2000) 7 SC (Pt. 1) 1.

Further arguing the issue, paragraphs 6, 7 and 10 of the statement of defence and paragraphs 7 and 8 of appellants counter-affidavit have been cited to build a defence that the amount claimed by the respondent was not owed by the 1st appellant whose account was wrongly debited to the tune of N22.305,054.00. Besides, the guarantee relied upon by the respondent had long been discharged as same was in respect of an earlier transaction. All these had raised “triable issues” which the court needed to investigate in a full trial.

Interest in excess of the stipulated ceiling had also been charged. With these substantial issues raised, a complication had arisen necessitating a hearing. Conflicts also existed between the averments in the affidavits for or against the application for summary judgment. Only oral evidence would, on the authority of Falobi v. Falobi (1976) 9-10 SC 1 resolve such conflict.

Appellants asked that the issue be resolved in their favour.

Appellants contend for their 2nd issue that 1st appellant’s account had from 1995 to when their counter-claim was filed been wrongly debited. There is a wrong rate of interest on the perceived principal, The appellants’ counter-claim had been admitted since the respondent did not file any defence thereto. The counter-claim being in excess of respondent’s claim, failure of the lower court to take into consideration the counter-claim in deciding respondent’s claim, it is argued, amounted to denying the appellant’s access to justice. It had caused miscarriage of justice.

Appellants urged that their appeal be allowed. Also, the lower court’s decision should be set-aside and the matter remitted back for same to be heard on the merits by another Judge. In arguing the appeal, respondent contends that it takes more than a mere filing of an affidavit for a court approached by virtue of Order 11 of the Lagos State High Court Civil Procedure to allow a defendant to defend an action. The court must satisfy itself that such a defendant by averments both in the statement of defence and the counter-affidavit has disclosed good defence. This is done if all the materials before the court, the pleadings and affidavits of parties, are scrutinized along with all supporting affidavits. And where the court’s decision evolve after discharging this burden, it cannot be interfered with on appeal. Respondent has commended the decision in Adebisi Macgregor Associates Ltd. v. NMB Ltd. (1996) 2 NWLR (Pt.431) 378 to stress the point. Respondent argues that appellants’ pleadings and counter-affidavit have in no way disclosed the facts necessary to make the court allow them defend the action against them. No where had the appellants denied taking a loan of N18,360,00 from the respondent as conveyed by, exhibit M1. Only one transaction had brought about the debt of N9,480,515.29 claimed by the respondent exhibit M3, appellant’s statement of account, is clear and unambiguous. The only complaint of appellants relate to the interest charged. By exhibit M6 and exhibit DD1 appellants had agreed to pay charges, and other losses arising from the foreign exchange transaction. Respondent further argues that exhibit M6 and exhibit DD1 have overridden exhibit AA annexed to appellant’s counter-affidavit.

Beyond these documents, exhibit MM and exhibit MN had been duly signed by appellants thereby admitting respondent’s claim leaving no room whatsoever for allowing the appellants to defend the action. Facts before the court left no conflict for the court’s resolution. The defence advanced by the appellants was a “sham”. Respondent further x-rayed all documents available to the lower court and concluded that on the further authority of Sanusi Brothers (Nig.) Ltd. v. Cotia C.E. 1.5A (2000) 11 NWLR (Pt. 679) 566 and Nishizawa v. Jethwani (1984) 12 SC 234 its first issue be resolved against the appellants.

Under respondent’s 2nd issue it is submitted that a counterclaim is substantially a cross-action. It is treated as an independent action. The appellants were free to continue with the prosecution of their counter-claim where the claim against them had been determined pursuant to the procedure under Order 11 rules 1 and 2 of the Lagos State (Civil Procedure) Rules for summary judgment. Another judgment could have been given for Appellants’ counterclaim being a different action from the one on which respondent’s claim was predicated. The lower court’s holding that appellants’ counter-claim should not affect respondent’s claim, it is submitted, is correct and should not be disturbed. Respondent refers and relies on Kaduna ile Ltd. v. Umar (1994) 1 NWLR (Pt.319) 143; Gowan v. Ike Okongwu (1994) 2 NWLR (Pt. 326) 355 and Obi v. Biwater D Shellabear (Nig.) Ltd. (1997) 1 NWLR (Pt. 484) 722.

Finally, respondent urges that the appeal be dismissed.

Both parties to this appeal have agreed on what the summary judgment procedure pursuant to Order 11 of the trial court’s rule of procedure entails. It is a procedure which provides for the quick resolution of issues that are not contentions. Not surprisingly, the only question being asked by both is whether or not appellants had in their statement of defence and counter-affidavit in opposition to the respondent’s application for summary judgment -disclosed such defence on the merit to the claim for the matter to be fully heard by the court.

Respondent’s case is that appellants had not disclosed such a defence. If the facts of the case indeed sustain the assertion, respondent by virtue of Order 11 will undeniably be entitled to judgment. It is appellants’ victory in this Appeal it the facts point otherwise. So what are the relevant facts?

By exhibit M1 annexed to respondent’s affidavit in support of the application ion for summary judgment, 1st appellant was granted an import facility for the sum of N18,460,000.00. The very document contains the terms and conditions for the grant. Exhibit M2 is 1st appellant’s board of directors resolution approving the procurement of the loan as granted by virtue of exhibit M1. Exhibit MX is 2nd appellant’s guarantee for the loan in fulfillment of one of the terms specified by exhibit M1. Exhibit M3 is a comprehensive statement of 1st appellant’s account with the respondent from 1995 when the loan was procured to 1997, when with the 1st appellant’s failure to pay, a writ was taken out against it. The document shows a complete picture of 1st appellant’s indebtedness as guaranteed by the 2nd appellant.

By exhibit MM and exhibit MN of 29th January, 1997 and 14th April, 1997 respectively, appellants offered to the respondent the sum of N5,000,000.00 as a full and final settlement of their debt invariably pursuant to exhibit Ml. It is note worthy that in exhibit MM and exhibit MN appellants did not make reference to the fact that there had been multiple transactions between them and the respondent and/or that the offer contained therein was in respect of all such offers or any, other than the one they enjoyed by virtue of exhibit M1.

Respondent’s Writ of summons, the statement of claim and its application for summary judgment are all predicated on exhibit M1 and the refusal of the appellants to pay the balance of that very loan in addition to file interest and charges thereto as contained in exhibit M3. Furthermore, given exhibit M6 and exhibit DD1, appellants had undertaken to reimburse the respondent the complete cost of the secured fund used by the respondent in the course of purchasing the foreign exchange applied for by the 1st appellant. Liability of the appellants must be determined within the purview of the very documents wherein such liabilities are created and stipulated. Section 131 of the Evidence Act makes determination of such liability by reference to matters external to the documents wrong. This rule of evidence strengthens the age-old principle that parties to a contract must be bound only by terms of their agreement. Colonial Development Board v. Joseph Kamson (1955) 21 NLR 75; Sapara v. U.C.H. Board (1988) 4 NWLR (Pt. 86) 58.

It is striking to note that appellants have neither denied receipt of the loan indicated in exhibit M1 nor provided particulars of the errors as to the charges and/or interest which the loan wrongly attracted and was as such mistakenly debited against 1st appellant’s account. Their mere ipse dexit not be allowed to frustrate the recovery of an otherwise fully established debt. The truth from all the materials before the lower court is that appellants had not disclosed such facts which constitute a defence to warrant a hearing into their matter. Where as in the instant case, materials a defendant provides the court in the light of an application for summary judgment under Order 11 of the rules do not satisfactorily rebut the plaintiff’s claim, the court is duty bound as it had done to enter judgment for the plaintiff. The procedure for summary judgment under the rules of court must prevail on the face of a defence that is a mere “sham” contrived only to keep the plaintiff from a proven right. Appellants cannot legitimately complain where a court has, because its adjectival provision has so empowered it, rightly exercised a discretion. The plethora of judicial authorities including and particularly Nishizawa v. Jethwani supra have repeatedly stressed that under the procedure provided for by Order 11, a defendant is indulged only on the basis of such facts disclosed by him. The 1st issue in the appeal must, be and is hereby resolved against the appellants.

Appellants have insisted that it was wrong of the court to have considered respondent’s claim, in isolation from their claim. By the rules of court although they were entitled to present their counter-claim, being defendants to respondent’s action, the rules did not provide that the two must be determined simultaneously. A counter-claim, appellants must be reminded is an independent action that stands to be proceeded with should the plaintiff s claim succeed, or even abate either because same had been discontinued or had not succeeded. Appellants’ counter-claim persists until same is eventually determined notwithstanding the fact that respondent’s claim had already been determined. See Ogbonna v. Attorney-General, Imo State (1992) 1 NWLR (Pt. 220) 647 and Effiom v. Ironbar (2000) 11 NWLR (Pt. 678) 344.

On the whole, this appeal lacks merit and is hereby dismissed. The decision of lower court is resultantly affirmed. I adjudge appellants liable to the respondent for the cost of this appeal fixed at N7,000.

Other Citations: (2004)LCN/1624(CA)