International Trust Bank Plc. V. Kautal Hairu Company Ltd. (2005)
LawGlobal-Hub Lead Judgment Report
JEGA, J.C.A.
This is an appeal against the judgment of the Kano High Court of Justice, presided over by Hon. Justice Mohammed Umar Alkali in suit No. K/430/97, wherein he entered judgment on the undefended list against the appellant on 26th August, 1997, in the sum of $120,000.00 American dollars, plus 15% interest from 26th April, 1995 to the 26th August, 1997, and thereafter, interest at 10% court rate from the 26th August, 1997, until judgment debt is fully liquidated. The appellant is not satisfied with the judgment and has filed an appeal dated 30th September, 1999, after obtaining an extension of time from this court on the 29th September, 1999. There were two grounds of appeal on the original notice of appeal. This court on the 22nd April, 2002, granted leave to the appellant to amend its notice of appeal. The appellant has now filed and served the amended notice of appeal dated 25th April, 2002, which pursuant to the leave granted by this court inter alia now includes an additional ground of appeal and raised a fresh issue to wit whether the lower court had the jurisdiction to hear and give judgment in this case as an undefended list suit.
The fact of this case as can be seen from the totality of the records presented before this court inclusive of the filed briefs, are as follows: By a writ of summons dated the 18th July, 1997, the respondent herein filed an action against the appellant under the undefended suit. No leave of court was sought nor obtained to issue, enter or place the writ of summons on the undefended list. The parties then engaged in negotiating an out of court settlement, but while these negotiations were on, the respondent pressed for judgment before the court and this the court acceded to on the 26th August, 1997. In the course of the arguments on whether judgment on the undefended list should be entered against the appellant, counsel representing the appellant challenged the claim for interest and urged the court not to award that claim. The learned trial Judge failed to record or rule on the arguments of counsel, but in a ruling given on the 24th November, 1997, upon an application by counsel to the appellant that he corrects what he thought was a slip in the judgment of the lower court acknowledged that objection to award interest was indeed raised, but was neither recorded nor ruled upon by him for the reasons that he thought the parties will resolve that in their negotiations. The objections of counsel to the appellant to the award of interest have not been heard and determined one way or the other by the lower court.
Upon the three grounds of appeal as contained in the amended notice of appeal filed by the appellant dated the 25th day of April, 2002, learned Counsel for the appellant formulated three issues for determination. The issues are:
- “Whether the lower court was right in awarding interest of 15% per annum on the sum of $120,000 American dollars from the 26th April, 1995 to the 26th August, 1997 in favour of the respondent.
- Whether the appellant was not denied a fair hearing on the issue of interest claimed by the respondent having regard to the acknowledgement of the lower court that it failed to record and rule on behalf of the appellant.
- Whether the entire judgment on the undefended list including the award of interest made by the Judge was not a nullity.”
The respondent also formulated three issues for determination. The issues are stated thus:
- “Whether the respondent is entitled to claim interest against the appellant on a call deposit account at the rate of 15% on the sum of $120,000 US dollars and whether the lower court was right in awarding the said interest.
- Whether the appellant is entitled to be heard in an undefended suit procedure where the appellant failed and refused to file any paper after being served with the writ of summons containing the claim of the respondent against it.
- Whether the appellant can now raise a preliminary objection at an appellate stage in an undefended suit proceeding.”
When this appeal was heard on the 10th May, 2005, learned Counsel for the appellant, Mr. O.E.B. Offiong adopted the appellant’s brief of argument which was deemed filed by an order of this court on 21st May, 2002 and urged the court to allow the appeal.
Learned Counsel for the respondent Mr. R. A. Sadik adopted the respondent’s undated brief of argument filed pursuant to court order of extension of time dated 7th February, 2005 and urged the court to dismiss the appeal.
The issues formulated by the appellant and the respondent are not exactly dissimilar accordingly, the issues as formulated by the appellant would adequately disposed of this appeal.
Issue No.1 – Whether the lower court was right in awarding interest of 15% on the sum of $120,000 American dollars from the 26th April, 1996 to the 26th August, 1997, in favour of the respondent. On this issue, the learned Counsel for the appellant submits that the learned trial Judge was wrong to have awarded interest of 15% per annum on the sum of $120,000 to the respondent, when the respondent had neither established a right to such interest, nor did he make a sufficient endorsement of the claim for interest so as to raise the claim for determination, neither was there any proof of how they came about the right to interest and the rate of interest. It is further submitted for the appellant that it is now well settled that a claim of interest could only arise either (a) as a right or (b) where there is a power conferred by statute to do so in the exercise of the court’s discretion. It is further the contention of the appellant that a claim of interest as of right arises where it is contemplated by the agreement of the parties or under mercantile custom or under a principle of equity such as breach of a fiduciary relationship. Reference made to Reoben N. A. Ekwunife (Trading Under the name of and style of Gonglobe Associates and Company) v. Wayne (West Africa) Ltd. (1989) 5 NWLR (Pt.122) 422 at 445; Himma Merchants Ltd. v. Alhaji Inuwa Aliyu (1994) 5 NWLR (Pt.347) 667 at 676 G-H; Jos Steel Rolling Co. Ltd. v. Bernestieli (Nig.) Ltd. (1995) 8 NWLR (Pt.412) 201 at 208; Enahoro v. IBWA Ltd. (1991) 1 NCLR 180.
Learned Counsel for the appellant argues that even if interest is not claimed on the writ, but facts are pleaded on the statement of claim and evidence is given which show entitlement thereto, the court may if satisfied with the evidence, award the claim of interest. That adjudication on the plaintiff’s right to interest in such case is like any other issue in the case based on the evidence placed before the court. The evidence called at the trial will in such a case, establish the proper rate of interest and the date from which it should begin to run whether from the accrual of the cause of action or otherwise. Reference made to Saeby Jerstober Maskinfabrk A/S v. Olaogun Enterprises Ltd. (1999) 14 NWLR (Pt.637) 128 at 144 H – 145 A-B; Akpabuyo Local Govt. v. G.O. Duke (trading under the name & style of Giffobass Ventures) (2001) 7 NWLR (Pt.713) 557 at 573 H574 A – B. Counsel for the appellant urges us to uphold its complaint under issue 1 that the lower court erred in awarding the claim for interest to the respondent and to set aside the award and dismiss the claim.
In reply to the submissions on issue No.1, learned Counsel for the respondent submits that the nature of the contract between the appellant and the respondent herein was that of banker/customer relationship where the respondent deposited its money in the sum of $120,000.00 US dollars in a call deposit with the appellant. It is the contention of the respondent’s counsel that once a customer makes a deposit in a call deposit account, the customer is entitled to interest on the said deposit. Submits that the appellant and the respondent were in agreement that the said deposit by respondent was an investment with the appellant that this was confirmed by exhibits KHL3 and KHL4 attached to the claim of the respondent against the appellant before the lower court. Counsel further submits that the respondent was entitled to the interest claimed in this suit at the rate of 15%-which claim the appellant did not deny or dispute before the lower court. That the claim of the respondent was with the appellant for almost two months before the date of judgment which the appellant never challenged at all. Thus, the respondent was entitled to judgment in the sum claimed inclusive of the rate of interest. Learned Counsel for the respondent argues that the lower court was right in awarding the interest of 15% in favour of the respondent as the appellant did not challenge same at the hearing of the suit under the undefended list. That the counsel that represented the appellant before the lower court admitted that the appellant was owing the respondent thus they did not file any paper. That admission by a counsel is binding on the client.
Issue No. 1 as formulated by the appellant concerns the justification on the award of 15% interest per annum on the sum of $120,000 American dollars from the 26th April, 1995 to the 26th August, 1997, in favour of the respondent. The claim of 15% interest by the respondent is contained in paragraph 2 of the respondent’s particulars of claim as filed in the lower court. The said paragraph 2 of the respondent’s particulars of claim read thus:
“2. The plaintiff also claims against the defendant, an interest of 15% per annum on the said sum of US $120,000 from the date of deposit that is, 26th April, 1995 to date of judgment and 10% court rate from the date of judgment until final liquidation of the entire judgment debt.”
This court stated clearly the position of the proper procedure for raising claim of interest on a sum claimed in an action in Jos Steel Rolling Co. Ltd. v. Bernestielli Nig. Ltd. (supra). This court states thus:
“For a claim of interest to properly exist for determination in a court of law, it must be stated in the endorsement of the claims to the writ of summons or in the statement of claim also the grounds upon which the claim of interest is based must be stated whether the claim is based on contract or statute. Consequently, before a person can succeed on a claim of interest, he must endorse the claim on the writ and also plead facts which would show that he is entitled to such interest. In the instant case, the respondent having sued under the undefended list must state in the endorsement of the claims to the writ of summons or in the affidavit whether the claim of interest is based on contract or statute and the grounds upon which the claim is based. (Himma Merchants Ltd. v. Aliyu (1994) 5 NWLR (Pt.347) 667 referred to.)”
In the appeal at hand, the respondent in his particulars of claim before the lower court merely claim against the appellant interest of 15% per annum on the sum of $120,000 American dollars from the 26th April, 1995 to the date of judgment. His suit is on the undefended list there is nothing in his writ of summons or in the affidavit before the court stating whether the claim of interest is based on contract or statute and the grounds upon which the claim is based. I have carefully perused the writ of summons and affidavit evidence before the court as filed by the respondent there is nothing whatsoever showing or indicating the circumstances or grounds upon which the claim of 15% per annum on the $120,000 is based. The law is that payment of interest on a debt must be strictly proved by evidence for a trial court will not infer payment of interest for alleged usage or custom unless such usage or custom is established by evidence. In Akpabuyo Local Government v. Duke (supra) this court states the law thus:
“Interest will be payable where there is an express agreement to that effect and that such an agreement may be inferred from a course of dealing between the parties. In the instant case, since neither the supporting affidavit to the writ nor the writ itself disclosed any agreement between the parties as the basis for the award of the interest, the award of the interest on the principal sum cannot be sustained. (Alfortrin Ltd. v. A.-G., Fed. (1996) 9 NWLR (Pt.475) 634; Ekwunife v. Wayne (W.A.) Ltd. (1989) 5 NWLR (Pt.122) 422 referred to).”
As stated earlier in this judgment, the respondent has not by his writ of summons or in his affidavit in support of his claim on the undefended list disclose the grounds upon which he based his claim of 15% interest per annum on the $120,000.00. Therefore his claim of 15% interest per annum on the said sum of $120,000.00 before the lower court is not sustainable. Accordingly, issue No. 1 is resolved against the respondent in favour of the appellant.
Issue No.2 – Whether the appellant was not denied a fair hearing on the issue of interest claimed by the respondent having regard to the acknowledgement of the lower court that it failed to record and rule on the objection made on behalf of the appellant.
Learned Counsel for the appellant submits that in this case the learned trial Judge acknowledged that the appellant had raised objections to the claim for interest of 15% per annum when the respondent applied for judgment. That he also acknowledged that he did not note it. From the record of appeal it is also obvious that he did not determine the objections of the appellant by ruling on those objections. Learned Counsel contends that it was the duty of the Hon. Judge to record fully the proceedings before him including the objections raised by the appellant to the claim for interest at 15% per annum. Counsel referred to section 84 of the Kano State High Court Law, Cap. 57, Vol. 2, Laws of Kano State. Counsel also referred to Professor Folarin Shyllon v. Mrs. Judith Aseiw (1994) 6 NWLR (Pt.353) 670 at 687 & 695: Alhaji Chief Yelani Otapo v. Chief R.O.O. Sunmonu & Ors. (1987) 2 NWLR (Pt.58) 587 at 624; Fawehinmi Construction Co. Ltd. v. Obafemi Awolowo University (1998) 6 NWLR (Pt.553) 171 at 182.
Further, counsel for the appellant submits that the trial Judge failed in his duty first to record the objections of the appellant and also failed in his duty to decide the objections of the appellant. Counsel contends that the learned trial Judge was bound to rule on the objections of the appellant regarding the claim for interest and his failure to do so constituted a denial of fair hearing guaranteed to the appellant under the Constitution. Reference made to Dr. Nnamdi Eriobuna v. Obiorah (1999) 8 NWLR (Pt.616) at 622; Dominic Okoro v. Margaret Okoro & Anor. (1998) 3 NWLR (Pt.540) 65 at 74; Jeremiah Akor & Ors. v. Ameh Abu (1988) 3 NWLR (Pt.85) 696 at 713; Alhaji Aminu Mikailu v. The State (2001) 8 NWLR (Pt.715) 469 at 487; Adigun v. A.-G., Oyo State (1987) 1 NWLR (Pt.53) 678. For the meaning of the word “hearing”, counsel referred to Stroud’s Judicial Dictionary, Fourth Edition, Vol. 2. Finally, on issue No.2, counsel urged that the decision to award interest of 15% per annum on the sum of US $120,000 reached in violation of the appellant’s constitutional right to fair hearing be set aside as a nullity.
In reply on issue No.2, learned Counsel for the respondent submits that the appellant was not entitled to be heard on whatever issue before the lower court in an undefended suit as it failed to file any notice of intention to defend the suit after being served with the writ of summons containing the detailed claim of the respondent against it. Learned Counsel for the respondent argues that the question of not recording what the appellant said or submitted before the lower court on the issue of awarding interest did not arise because the appellant did not file any notice of intention to defend. That the position of the law as rightly held in the case of Ben Thomas Hotels Ltd. v. Sebi Furniture Co. Ltd. (1989) 12 SCNJ 71; (1989) 5 NWLR (Pt. 123) 523 is that once a party/defendant to an undefended suit does not file a notice of intention to defend is not entitled to be heard on the date of hearing.
The complaint of the appellant on issue No.2 was that he was denied a fair hearing on the issue of interest claimed by the respondent having regard to the acknowledgement of the lower court that it failed to record and rule on the objections made on behalf of the appellant.
The case against the appellant at the lower court was heard and determined under what is known as the undefended list and Order 23 of the Kano State High Court (Civil Procedure) Rules, 1988, set out clearly the procedure to be adopted in the disposal of a case brought under the undefended list procedure and in the instant appeal Order 23 rule 3(1) and (4) of the Kano State High Court (Civil Procedure) Rules are relevant in the determination of issue No.2 under consideration. Order 23 rule 3(1) states:
“If a party served with this writ of summons and affidavit delivers to the Registrar 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.”
Order 23 rule 4 states:
“Where any defendant neglects to deliver the notice of defence and affidavit prescribed by rule 3(1) or is not given leave to defend by the court, the suit shall be heard as an undefended suit and judgment given thereon, without calling upon the plaintiff to summon witnesses before the court to prove his case formally.”
From the printed record of proceedings before the court, specifically page 12 of the record of proceedings and the proceedings of 31st July, 1997, it is clear that the case against the appellant is being heard on the undefended list and if the appellant intends to contest the suit under the law he must file his notice of intention to defend the suit within the time allowed by the law together with an affidavit disclosing a defence on the merit for the consideration of the lower court which may give him leave to defend upon such terms as it may think just. In the instant appeal, there is nothing whatsoever indicating that the appellant has filed notice of intention to defend or was given such leave to defend. The failure of the appellant to comply with the provisions of Order 23 rule 3(1) of the Kano State High Court (Civil Procedure) Rules, leaves the lower court with only one option, that is to apply the provisions of Order 23 rule 4 of the Kano State High Court (Civil Procedure) Rules that is to enter judgment in the undefended suit. The Supreme Court in Ben Thomas Hotels Ltd. v. Sebi Furniture Ltd. (supra) held thus:
“By the provisions of Order 3 rules 8-12 of the High Court of Kwara State (Civil Procedure) Rules, 1975, when a case entered on the ‘undefended list’ comes to court on the return date, the court has one and only one duty, namely to see whether the defendant has filed a notice of intention to defend and an affidavit. If no such notice and affidavit has been filed within five days before the return date, the court has no choice in the matter but to proceed to judgment.”
In the appeal at hand, going by the above pronouncement of the Supreme Court, since there is nothing to show that the appellant has filed a notice of intention to defend with an affidavit disclosing a defence on the merit. The only option opened to the lower court is to proceed to judgment.
Therefore, the issue that the appellant has not been heard on the issue of 15% interest does not arise at all. If at all, he wants to be heard on the issue, he has to comply with the procedure prescribed by Order 23 rule 3(1). Accordingly, issue No. 2 is resolved against the appellant in favour of the respondent.
Issue No.3 – Whether the entire judgment on the undefended list including the award of interest made by the Judge was not a nullity. It is submitted for the appellant that the respondent neither sought for nor obtained leave to issue, place or enter the writ of summons for hearing on the undefended list and judgment delivered on 26th August, 1997, including the award of interest a nullity. Reference made to Cash Affairs Finance Ltd. & Anor. v. Inland Bank (Nig.) Plc. (2000) 5 NWLR (Pt.658) 568 at 587-589; Elizabeth Maley v. Habibullah Isah (2000) 5 NWLR (Pt.658) 651.
In reply to the submissions of learned Counsel to the appellant on issue No.3, learned Counsel to respondent submits that the preliminary objection now raised by the appellant that the respondent did not obtain leave to file the suit under the undefended suit is an after thought. That this objection ought to be raise timeously. That the suit was filed before the lower court on 18th July, 1997 and the writ was served on the appellant on 23rd July, 1997, but the appellant did not say anything in respect thereof till 22nd April, 2002, when it applied for leave to raise it for the first time on appeal. Counsel for the respondent contends that the preliminary objection is late as the appellant has taken steps by paying the principal sum of $120,000.00. Reference made to Dr. Sola Saraki v. N.A.B. Kotoye (1990) 4 SCNJ 97; (1990) 4 NWLR (Pt. 143) 144.
The printed record before the court clearly indicates that the suit of the respondent is on the undefended list. The writ itself at page 2 of the printed record is marked undefended list. The proceedings of 31st July, 1997, at page 12 of printed record shows beyond any iota of doubt that the suit is on the undefended list. The appellant through his counsel participated fully in the proceedings and did not object that the suit was not properly brought on the undefended list. In the cause of proceedings of 26/8/97, the counsel to the appellant admitted the claim of the respondent and promised to pay. It is on record that the appellant has taken step by paying the principal amount in the sum of $120,000.00 US dollars. I therefore see no merit whatsoever in issue No.3 as formulated by the appellant. Accordingly, the issue is resolved against the appellant in favour of the respondent.
In the result, since issue No. 1 is resolved in favour of the appellant, the appeal partially succeeds. Accordingly, an order is hereby made setting aside the award of 15% per annum interest on the US $120,000.00 from 26th April, 1995 to 26th August, 1997. However, the appeal against the principal sum lacks merit and is hereby dismissed. The judgment in the sum of $120,000.00 and 10% court interest with effect from 26/8/97, till the judgment is fully liquidated in favour of the respondent in suit No. K/430/97 delivered on 26/8/97 by Alkali, J. is hereby affirmed. No order as to costs.
Other Citations: (2005)LCN/1827(CA)
