Lexington International Insurance Co. Ltd V. Sola Holdings Ltd. (2006)
LawGlobal-Hub Lead Judgment Report
GALINJE, J.C.A.
The respondent herein is the Landlord of the premises lying and situate at No, 10 Turton Street, Lagos. By an agreement dated the 16th day of June 1996 between the appellant and the respondent, the appellant became the respondent’s tenant in respect of the first floor of the said premises at No.10 Turton Street, Lagos for a term of two years beginning from the 1st day of June 1996 at the rent of three hundred and fifteen thousand naira (N315,000.00) per annum. One of the conditions included in the agreement aforesaid was that the tenant would pay the rent for two years clear of all deductions.
By a letter dated 28th May 1996, the appellant paid rent for two years but withheld the sum of N63,000,00 as “Withholding Tax” from the and rent. The respondent, through its agent, Fine Shelter Trust Ltd, protested against the withholding of the sum of N63,000.00 and the matter was subsequently resolved when the appellant refunded the N63,000.00.
At the expiration of the two years, the appellant made payment of rent for one year. This time the appellant deducted N3,500,00 from the rent of N315,000.00 as withholding tax for that year, and in addition the appellant deducted N63,000.00 as withholding tax for the previous payment. The total deduction stood at N94,500.00.
This time the respondent protested without success, as a result it initiated a civil action at the Lagos State High Court in order to recover the money so deducted by the appellant. In its writ of summons and the statement of claim dated 10th March 1999 respectively the respondent set out its claims as follows:-
“The sum of N94,500.00 (Ninety four thousand, five hundred naira) being the total sum deducted by the defendant purportedly as ‘withholding tax’ from the net rent of N945,000.00 payable by the defendant to the plaintiff in respect of the first floor office accommodation occupied by the defendant as the plaintiff’s tenant for the period 1st June, 1996 to 3rd, May 1998 and from 1st June, 1998 to 31st May 1999 respectively.”
On being served with the particulars of the claim, the appellant brought an application by way of motion on notice, dated 6th day of April 1999 before that court in which it prayed for:-
“An order striking out the statement of claim and dismissing this suit in its entirety for disclosing no reasonable cause of action, frivolous, vexations and a gross abuse of the processes of this court.”
The respondent filed a counter affidavit and the motion was contested. After hearing both parties, the lower court held at page 5 of its ruling which is at page 35 of the record as follows:-
“I am therefore of the opinion that the defendant/appellant are (sic) obliged to the plaintiff, as no fraud could be established before me and under clause 3 of exhibit ‘A’ which is the tenancy agreement…”
Thereafter the lower court dismissed the application and dispensed with further proceedings in the suit. The appellant, being dissatisfied with the decision has appealed to this court by a notice of appeal dated 13th day of October 1999, on three grounds of appeal, which I reproduce hereunder without their particulars as follows:-
“(A) The learned Judge of the lower court erred in law when he dismissed the defendant/appellant’s application seeking the dismissal of the suit in its entirety and summarily (without trial) ordered the defendant to pay the plaintiff’s claim in this suit.
(B) The learned Judge of the lower court erred in law when he dismissed the plaintiff’s application seeking “inter alia” the dismissal of the suit after conceding that the cited statutory authorities are binding on the parties.
(C) the learned Judge of the lower court erred In law when he failed to make a pronouncement as to whether the plaintiff’s claim discloses a reasonable cause of action.”
By virtue of Order 6 rule 2 of the Court of Appeal Rules 2002, the appellant filed its brief of argument dated 16th of May 2002. The respondent neither filed a brief of argument nor put up appearance on the day fixed for hearing of this appeal despite being served with hearing notice. Since the respondent filed no brief of argument, its appearance would have made no difference, since by Order 6 rule 10 of the rules of this court it would have not been heard in oral argument. This appeal will therefore be determined solely on the appellant’s brief of argument.
From the eight grounds of appeal, the appellant has identified two issues for determination of this appeal. The two issues are set out at page one of the appellant’s brief of argument and they read:-
“1. Whether the learned Judge of the lower court was right to rule (sic) (to have ruled) rather summarily that the defendant are (sic) (is) obliged to the plaintiff without any formal application whatsoever and viva voce evidence from neither of the parties in view of the fact that the suit herein was commenced by a writ of summons and statement of claim.
- Whether the learned Judge of the lower court was right in not making any specific pronouncement on the appellant’s contention that the respondent’s claim discloses no reasonable cause of action and in failing to dismiss the suit after conceding that the relevant statutory provisions relied upon by the appellant are binding on the parties?”
On issue one, Kunle Ogunba Esq. of counsel for the appellant in his argument, submits that in an action commenced by a writ of summons and a statement of claim, judgment in such suit as in the instant case can only be delivered after viva voce evidence from the parties or by a specific application for judgment for failure of the defendant to take a procedural step required by the Rules of Court. In a further argument, learned counsel submits that what was before the lower court was an application for the dismissal of the suit for disclosing no reasonable cause of action, but the trial Judge in dismissing the application made pronouncement on the substantive matter, an action which is wrong In law. In support of his submission Ogunba Esq. referred to the authorities in Director SSS v. Agbakoba (1999) 3 NWLR (Pt. 595) 314; Gomwalk v. Okwuosa (1996) 3 NWLR (Pt. 439) 681 and Okeke v. Okoli (2000) 1 NWLR (Pt. 642) 641.
The suit before the lower court was commenced by a writ of summons and a statement of claim. The defendant in that suit had not filed a statement of defence when it brought an application to challenge the competence of the suit by filing an application dated 6th day of April 1999 in which he sought for the dismissal of the substantive suit for disclosing no reasonable cause of action. There was nothing wrong with that application as the appellant had, an unfettered right to challenge the suit if it so wished.
In Ege Shipping and Trading Ind. v. Tigris International Corp. (1999) 14 NWLR (Pt.637) 70 at 84 paragraph D, the Supreme Court said:-
“Where a defendant conceives that a case is not made out against him either in the writ of summons or in the statement of claim, he can challenge the plaintiff by way of an application to have the case against him dismissed on that ground.”
Where such application is granted, the substantive suit stands dismissed. Where the application is refused then the contest in the substantive suit remains on course, this is because the respondent who never asked for any relief in the application cannot be given anything.
In the instant appeal, the lower court having refused the application which challenged the competence of the substantive suit, went ahead to determine the substantive suit without hearing the parties. This procedure in my view is against natural Justice and contrary to the rule of fair hearing. The principle of audi alteram partem is the foundation upon which fair hearing revolves. In all actions commenced by writ of summons and statement of claim, both parties must be heard unless one of the parties, either by his conduct or by express conclusion indicates that he is not willing to be heard, then such principle that both sides must be heard may be dispensed with.
In Yakaje v. Haira (2003)10 NWLR (Pt.828) 270 at page 283-284 paragraphs H-B – this Court held:-
“The constitution and the principles of natural Justice demand that both parties to an adjudication should be heard. This is what is encapsulated in the latin maxim audit alteram partem. In the instant case, the adoption of the unorthodox procedure by the trial court deprived the appellant or as well as other respondents to the said application of their right to fair hearing which is guaranteed under section 33 of Chapter 4 of the 1979 Constitution.”
In the case of Director, SSS v. Agbakoba (supra) which was cited and relied upon by Ogunba, learned counsel for the appellant, the Supreme Court, per Uwais C. J. N, said;
“Where an action is commenced by a motion there cannot be any pleadings because the deposition in the affidavit in support of the motion on notice is not the same as mere averments in a statement of claim or statement of defence which has to be supported with either a viva voce evidence or documentary evidence.”
Clearly the pronouncements of the learned Judge of the lower court that the defendant is obliged to the plaintiff without viva voce evidence from the parties is without legal basis. The learned Judge had no authority to pronounce on the substantive suit at that level of the case, since the ruling was on an interlocutory application.
In UBA v. Immarches (Nig.) Ltd. (2003) 6 NWLR (Pt. 817) 529 at 543, this Court cited with approval, the case of West African Automobile & Engineering Co. Ltd & Ors v. Ebun Akinsete (1999) 13 NWLR (Pt. 636) 600 at 609, in which the case of S.C.C. (Nig.) Ltd. v. Our Line Ltd. (1995) 5 NWLR (Pt. 395) 364 at 372 was cited and said:-
“A court of law should not unwittingly decide the very same matter which is yet to be dealt with in the substantive case before it at the interlocutory stage.”
Also in Adenuga v. Odumeru (2003) 8 NWLR (Pt. 821) 163 at 187 paragraphs B-C, the Supreme Court said:-
“In an interlocutory application, the Court must refrain from making an order which has the effect of deciding the substantive issues or reliefs in the case,”
See: Orji v. Zaria Industries Ltd. (1992) 1 NWLR (Pt.216) 214; Egbe v. Onogun (1972) 1 All NLR (Pt.1) 95; ICON Ltd. (Merchant Bankers) v. FBN. Ltd. (1995) 6 NWLR (pt.40) 370 at 377.
On this issue, I allow the appeal. The decision of the lower court to the effect that the defendant is obliged to the plaintiff is hereby set aside and quashed as that decision was made without any legal basis.
On issue two Mr. Ogunba, learned counsel for the appellant submits that the failure of the learned trial Judge to resolve the issue of whether or not the suit discloses a reasonable cause of action in his ruling of 6th October 1999 has occasioned miscarriage of Justice to the appellant herein. In a further submission, learned counsel referred this court to a number of authorities, and said that the appellant’s action in withholding the deductions was dictated by the provision of Companies Income Tax Act Cap 60 Laws or the Federation of Nigeria 1990 and that the tax deducted had been paid to the relevant tax authority as such it was not liable to the plaintiff/respondent. Continuing his submission, Mr. Ogunba said the learned trial Judge ought to have given effect to the intention of the law makers when they specifically provided that the Company paying such rent shall, at the date when the rent is paid or credited, which ever comes first occurs, deduct there from tax at the rate prescribed under subsection (2) of this section and shall forthwith pay over to the Board the amount so deducted.
The respondent filed a writ of summons along with the statement of claim in which he claimed N94,500.00 being the sum deducted from the rent of N945,000 by the appellant in respect of the premises occupied by the appellant, as the respondent’s tenant for the period covering 1st June, 1996 to 31st May 1999.
The appellant’s application of 6th April 1999 sought for an order striking out the statement of claim and dismissing the respondent’s suit in its entirety for disclosing no reasonable cause of action, frivolous, vexations and a gross abuse of the processes of this Honourable Court on grounds as contained in the schedule hereto. The grounds as contained in the schedule arc as follows:-
“(i) This suit is instituted primarily to recover the sum paid over to relevant statutory authorities by the defendant/applicant as stipulated by provisions of law.
(ii) This suit as is presently couched and constituted is against public policy as it is a crude ploy to avoid payment of tax.
(iii) This suit is a ploy to cripple and frustrate the machinery of state including the Judiciary to non-fulfillment of requisite tax obligation.”
In order to determine whether a cause of action is disclosed in an action, reference is often made to the writ and statement of claim or counterclaim, If any. It is the examination of these processes filed by the plaintiff that will disclose a reasonable cause of action. See Takum Local Government v. U. C. B. Ltd (Nig.) Ltd. (2003) 16 NWLR (Pt. 846) 288 at 300 paragraph G.
In its writ of summons and the statement of claim dated 10th March 1999 respectively the respondent claimed N94,500 which was deducted from the rent of N945,000.00 by the appellant. The justification for the deduction and proper accountability for the amount so deducted by the appellant are issues at stake. This is so because at the time both parties entered into the agreement of 16th June 1996 which contained the provision that the rent be “clear of all deductions”, the appellant was aware of the provision of S.61 (1) and (2) of the Tax Act Cap 60 Laws of the Federation of Nigeria 1990. The schedule to the application is the substance or the defendant’s defence to the action, which he has to establish at the trial on the preponderance of evidence. The appellant has, at the trial to show that the money deducted was in accordance with the tenancy agreement that same has been so remitted to the tax authority as there is no evidence that the appellant remitted the amount deducted to the tax authority and the receipt to that effect has been banded over to the respondent.
Because of the issues I have discussed herein above, and for the simple fact that the appellant attempted to set up a defence to the claim of the respondent clearly demonstrates that the action by the respondent at the lower court discloses a reasonable cause of action and it is not frivolous and a gross abuse of the processes of the court as the defence has so failed to show. I therefore answer this issue in the negative. The ground of appeal from which this issue is formulated fails and it is hereby dismissed.
On the whole this appeal partly succeeds. The matter in suit No.LD/686/99 is hereby remitted to the Chief Judge of the High Court of Lagos State to be assigned to another Judge of the High Court other than Oyekan-Ahdullahi, J. for trial.
Other Citations: (2006)LCN/1927(CA)
