Midas Bank Plc V. Commerce Progetti (Nig) Limited (2009)

LawGlobal-Hub Lead Judgment Report

MOHAMMED LAWAL GARBA, J.C.A.

The Respondent as plaintiff, had taken out a writ of summons against the Appellants as defendants, by the order of the Rivers State High Court, was entered under the undefended list pursuant to order 23 Rule of the Civil Procedure Rules of that Court, 1986 (hereafter be named 1987 Rules). The claims of the Respondent, as endorsed on the writ were as follows:-

“The plaintiff claims against the defendants jointly and severally the following reliefs:

1. The sum of N41, 993, 790. 22 (forty-one million nine hundred and ninety-three thousand seven hundred and ninety- naira twenty-two kobo) being the unpaid outstanding Import finance facility inclusive of the accrued interest as at 2/5/2003 which the plaintiff granted to the 1st defendant as at “its request and guaranteed by the 2nd defendant.
2. Interest on the said sum of N41, 993, 790.22 at the rate of 35% per annum with effect from 3/5/2003 till the date of judgment and thereafter at the 10% per annum from the date of judgment until full payment of the entire debt.

An affidavit of verification of the above claims consisting of 33 paragraphs to which were annexed several documents marked as Exhibits ‘A’ – ‘K’ was filed along with the writ. The affidavits along with the Exhibits run from the back of page 3 – 47 of the record of appeal

After the service of the writ and other processes of the case on them, the Appellants filed a notice of intention to defend the action accompanied by an affidavit of 41 paragraphs in supporting the notice of intention to defend as required by the 1987 Rules of the High Court. The notice of intention to defend the action was dated and filed on 29/7/2003 as shown at page 92 of the record of the appeal.

There is no record that the suit was heard on the return date of 31/7/2003 but on 12/2/2004, the matter was mentioned and adjourned to the 19/4/2004 for ruling/judgment as shown at page 125 of the record of appeal. On the 19/4/2004, judgment was entered under the undefended list in all the terms of the Respondents’ claims as set above, thereby refusing the Appellants leave to defend the action. The High Court held that the affidavit of the Appellants which accompanied the notice of intention to defend did not disclose a defence on the merit as required by Order 23 Rule 3 [1] of the 1987 Rules to warrant the granting leave to defend and transfer of the case to the general cause list for determination.

Being very dissatisfied with that decision, the Appellants’ learned counsel filed two [2] notices of appeal against it. The first of the Notice of Appeal was dated and filed on the 21/4/2004 and is at pages 100 – 102 of the record of appeal. The second Notice of Appeal was dated and filed on the 10/5/2004 and appears at pages 128 – 135 of the record of appeal.

In line with the requirements of Order 6, Rules 2, 3 [i] and 4 [1] of the CAR 2002 [now Order 17, Rule 2, 3 [1] and 4 [1] of CAR 07], briefs of argument were filed by learned counsel for the parties to the appeal. The Appellants’ brief was filed on the 1/7/2005 which was the same date the records of the appeal were transmitted from the High Court to the Court. The Respondents’ brief was filed on the 28/3/2006 but deemed properly filed and served on the 26/9/2006 when the application for enlargement of time within to file same was granted by the court. In response or reaction to the Respondents’ brief, the Appellant filed an Appellants’ Reply brief on the 10/10/2006. On the 16/2/2009 when the appeal came up for hearing, the briefs were adopted by learned counsel as their respective submissions in support of their different positions in the appeal. We were urged by them to allow or dismiss the appeal as the case may be for the reasons set out in their respective briefs. In addition, Mr. B.E.I. Nwofor, SAN who appeared for the Respondent informed the Court that he wished to withdraw/abandon the preliminary objection raised and argued at pages 8 – 11 of the Respondents’ brief. He urged us to strike out the said objection. For being withdrawn or abandon by the learned senior counsel, the said preliminary objection raised at the 2nd paragraph of page 8 and argued at paragraph C2 to page 11 of the Respondents’ brief is hereby struck out. All submissions of the learned counsel for the parties on the preliminary objection are therefore no longer of relevance in the consideration of the appeal and would be discountenanced.

From the eleven [11] grounds of appeal contained on the Notice of Appeal on 10/5/2004, the learned counsel for the Appellants formulated and submitted that the following issues arise for determination in the appeal:-

i. whether the learned trial court was right when it held that the defendants/appellants did not disclose any defence on the merit to transfer the matter to the general cause list;

ii. whether the learned trial court was right when it placed on the Defendants/Appellants a burden to prove by evidence their defence on the merit before the matter could be transferred to the general cause list;

iii. Whether a counter-claim is a pre-condition in law for raising triable issues under the undefended list procedure,’

iv. Whether the 35% interest per annum awarded by the learned trial court In favour of the Respondent is permissible in law,

For the Respondent, it was submitted that two [2] issues as follows, require determination in the appeal:-

1. Whether the Appellants as Defendants In the lower court raised any defence on the merit from their affidavit in support of Notice of Intention to defend as to warrant the trial Judge to transfer the matter from the undefended list to the general cause list
2. Whether the learned trial judge exercised his discretion judicially and judiciously in entering judgment for the Respondent under the undefended list

As can easily be discovered, the only difference between the issues submitted by the learned counsel is as to the manner or form of their formulation. The substance of the four [4] Issues raised by the learned counsel for the Appellants are adequately covered by the Issues distilled by the learned counsel for the Respondent However for being concise and precise, the formulation by the learned Appellants’ counsel is preferable to me and so I would consider and determine the appeal on the four [4] issues raised by him.

The first issue is whether the High Court was right when it held that the Defendant/Respondents did not disclose any defence on the merit to transfer the matter to the general cause list. The issue was said to flow from grounds ii, iv and x of the Notice of Appeal.

The submissions of the learned counsel for the Appellant started with a restatement of the law that where a notice of Intention to defend disclosed a defence on the merit, leave would be granted to defend the suit and it will be transferred to the general cause list. The case of AGRO MILLERS LTD. v. CONTINENTAL MERCHANT BANK PLC (97) 10 NWLR (525) 469 @ 466 and NAB LTD v. FELLY KEME LTD (95) 4 NWLR (387) 100 @ 113 were cited on the principle. It was submitted that a notice of intention to defend discloses a defence on the merit when it raises triable Issue which can only be resolved by the court after hearing evidence. Reliance was placed on JIPRELE v. OKOWKURO (87) 3 NWLR (162) 737, V.S. STEEL LTD v. GOVT. OF ANAMBRA STATE (01) 8 NWLR (715) 454 @ 466, CALVENPLY LTD v. PEKAB ENT. LTD (01) 9 NWLR (717 164 @ 174.

It was further submitted that on the authority of EURO-BATI CONCEST S.A. v. T.I.C. LTD (09) 18 NWLR (744) 165 @ 175- 6 and ACB LTD v. GWAGWADA [94] 5 NWLR [342] 25, a defendant is not required in law to prove his defence before he can be granted leave to defend and that only a defence is required to be disclosed. It was contended that the Appellants: notice of intention to defend disclosed a defence on the merit by raising triable issues some of which the High Court Identified in its judgment. According to learned counsel, the High Court embarked on an improper determination of the issues and thereby imposed on the Appellants a burden not required by law to establish the defence raised before leave would be granted. He said that the Appellants’ defence was not bare and that liability for the claim was denied and particulars of the defence set out as follows;-

(i) That the Plaintiff/Respondent reneged on the overdraft facility of N7, 000, 000 [seven million Naira] for the clearing of the consignment which resulted in high demurrage;

(ii) that the Plaintiff/Respondent in opening the letters of credit erroneously and negligently described the wine as sparkling wine which resulted in the custom duty being 100% as against 65%.

(iii) That the Plaintiff/Respondent warehoused the consignment of wine and refused the Defendants/Appellants access to the wine and later sold 3,139 cartons without rendering account of the sale to the Defendants/Appellants.

(iv) That 1540 cartoons of the wine were sold by the 1st Defendant/Appellant and the proceeds paid into the Plaintiff/Respondent.

(v) That the Plaintiff/Respondent unilaterally cancelled portion of the letters of credit in breach of its agreement with the 1st Defendant/Respondent

(vi) That the Plaintiff/Respondent wrongly charged excessive interest on the 1st Defendants/Respondents account by calculating interest on N20,000,000 [twenty Million Naira] while letters of credit were opened for only N13, 310, 000 [Thirteen million, three hundred and ten thousand Naira]

(vii) That the Defendants/Appellants commissioned a third party, firm of chartered accountants, Alatta, Nzewi & Co to reconcile the accounts which reconciliation found that the 1st Defendants/Appellants account on which the suit was founded was in credit.

It was argued that the above facts when taking together with the averments in support of the claims raised triable issues which could not be resolved under the undefended list procedure and so the suit ought to have been transferred to the general cause list.

The case of OLOKO v. UBE [01] 13 NWLR [729] 161 @ 182 cited for the position and it further argued that even if the issues could be resolved on the affidavit evidence, they ought to have been resolved in favour of the Appellants because the Respondent did not file counter affidavit to controvert the Appellants’ averments which the High Court should have accepted and relied on, in the circumstances. UBN PLC v. GOVT. ANAMBRA STATE [01] 12 NWLR [726] 155 @ 170 was relied on as authority for that submission.

Furthermore, it was submitted that under the undefended list procedure, it is desirable that the court calls into play a measure of liberality in the determination of whether or not a defence on the merit is disclosed in a defendant’s affidavit. As support, SAWTORY CO. LTD v. ELABER [98] 12 NWLR [569] 538 @ 544 and JOS NORTH L.G. v. DANIYAW [2000] [10] NWLR [675] 281 @ 289 were cited and it was contended that the High Court did not consider the Appellants’ affidavit with the amount of liberalism required by law, did not properly evaluate it nor exercise its discretion judicially and judiciously when judgment was entered against the Appellants. For these reasons, we were urged by the learned counsel to resolve the issue in favour of the Appellants.

The 1st issue raised by the learned counsel for the Respondent is on all fours with the above issue save for the way it was couched. The issue was said to have been raised from grounds 4, 5, 6, 7, 8, 9 and 10 of the Notice of Appeal filed on 10/5/2004. After setting out the provisions of Order 23, Rules 1 and 3 [1] of 1987 Rules, learned counsel for the Respondent said that where a notice of intention to defend together with an affidavit was filed as in this appeal, the question of whether or not a defence on the merit has been disclosed can be answered by looking at the affidavit evidence of the parties. G.S. & F CO. LTD v. OBGE KEZIE [97] 10 NWLR [526] 577 @ 579, OKOLI v. MORECAB FINANCE LTD [01] FWLR [60]1597 @ 1600 among other cases were cited on the point.

It was submitted that what will constitute a defence on the merit is within the discretion of the court which must be exercised as required by law after a full and exhaustive consideration of the affidavit. That for such a defence to be disclosed, the defendants affidavit must condescend upon particulars and should as far as possible deal specifically with the plaintiffs’ affidavit and state clearly and concisely what the defence is and’ what facts are relied upon as supporting it. It should state whether the defence goes to the whole or parts of the claim and specify which part. Reliance was placed on GRAWD CEREALS & OIL MILLS v. A.I.M. & P. LTD [2000] 4 NWLR [652] 310 @ 321, NISHIZAWA v. JETHWANI [84] ALL NLR 470 @ 484 – 5 and UDEMBA v. MORECAB FINANCE [2003] 1 NWLR [800] 96 @ 99 & 108. Paragraphs 10, 11, 15, 16, 22 and 23 of the Respondents’ affidavit in support of the claims were set out by learned counsel who submitted that the Appellants admitted paragraphs 10 and 11 in their paragraphs 5 and 9 of the affidavit in support of the notice of intention to defend and that the legal effect of the clear admissions is that the admitted paragraphs are proved and do not need further proof.

Section 75 of the Evidence Act, Cap E14, LFN 2004 and IKPALA ESTATES HOTELS LTD v. NEPA[2004] 11 NWLR [884] 249 at 254 and 269 were cited as supporting the position. In addition, it was said that the Appellants did not make any averments to deny the Respondent’s paragraphs 15 and 16 and the effect is that the failure to deny the facts means that they are deemed admitted and therefore no longer in controversy. That when positive averments in an affidavit which go to the claim, were not challenged by way of a counter affidavit, they are left undenied and the court is bound to accept them as proved. Reference was made to LADOKE v. OLO BAYO [1992] 5 NWLR [261] 605 @ 620, AJOMALS v. YADWAT [1991] 5 NWLR [191] 257 @ 282 – 3, NWOSU v. IMO STATE E.S.A [1990] 2 NWLR [135] 688 @ 721.

It was the further submission of learned counsel that the Appellants admitted paragraphs 22 and 23 of the Respondents’ affidavit in paragraphs 11, 12 and 13 of the affidavit in support of the notice of intention to defend and did not challenge Exhibits B, D, H and J which are the documents embodying the terms of the agreement for the loan facilities granted by the Respondent to the Appellants. Relying on the case of SHITTA-BEY v. A.G.F [1998] 10 NWLR [570] 392 @ 419, he said the law is that documents attached to an affidavit constitute admissible evidence which in this appeal are deemed admitted for being unchallenged.

It was contended further that in order for the Appellants to raise a defence on the merit, it had a duty to deny specifically and with particulars, the positive depositions which go to the root of the claim against them which they failed to do and so the High Court was bound to accept the depositions deemed admitted by the Appellants. LADOKE v. OLOBAYO [supra] was relied on again. That the Appellants did not also deny the Respondent’s paragraphs 27 and 28 of the affidavit in support of the claim along with Exhibit K which was the statement of their account with the Respondent and therefore did not challenge the veracity or otherwise of the facts set out in the Respondent affidavit in any material particulars as to constitute a defence on the merit. On the defence as raised in paragraphs 10, 14, 16, 17, 21, 24, 25, 26, 27, 28, 31, 32, 34, 35, 38, 39 and 41 [v] of the affidavit in support of notice of intention to defend, it was submitted that the Appellants did not set out the particulars of the facts or provide any documentary evidence upon which the defences were based or which can support the defences. In particular, that the bare averment of the Appellants that they have counter claim without setting out the facts relied upon clearly and concisely to support such a claim will not suffice to raise’ a defence on the merit. For these reasons, learned counsel urged us to resolve the issue in the negative.

Before delving into a consideration, of the merit of the submissions of the learned counsel on the issue, I will like to say that the provisions of Order 23 of the 1987 Rules under which the High Court entered the judgment appealed against are in pari material with the provisions for “undefended List” in all the Rules of Civil Procedure enacted for’ the High Court in other States of the Federation. They in fact are part of what has remained “still boon” uniform Rules of Civil Procedure for the High Courts in Nigeria which have remained a mere dream or wish for long now. As a result, similar provisions have at various times been considered by the superior courts in the process of which certain principles were recognised and established to serve as guidelines in the application of the peculiar procedure provided in the provisions. I say the principles are meant to serve as guidelines and not binding because the procedure provided in the provisions involves the exercise of the discretion vested in the High Court to deal with certain categories of claims that do not deserve to be subjected to rigours and most times tedious procedure of hearing evidence that usually end up in unnecessary delay and waste of precious time of that court and resources; both human and material. In the exercise of such discretion, the High Court is to be confined to the peculiar facts and affidavit evidence placed before it in the application of the provisions to the cases that come before them. The law is that in the exercise of a judicial discretion, a court of law is not bound to follow any previous decision on the exercise of discretion because to be bound will be putting an end to the discretion. Hon Justice Wali, JSC [then] in the case of HON. JUSTICE KALU ANYA v. AFRICAN NEWSPAPERS OF NIG LTD, [1992] 6 NWLR [247 319 @ 334 paragraph D put the position thus:-

“—You cannot lay down hard and fast rules as to the exercise of judicial discretion by a court; for the moment you do that, the discretion is fettered’.

See also LONG-JOHN v. BLAKK [1998] 6 NWLR [555] 524 @ 543, GABARI v. ILORI [2002] 14 NWLR [786] 78 @ 102, IKHAZUAGBE v. COP [2004] 7 NWLR [872] 346 @ 365. It should be remembered however that being a judicial discretion, it is not at large or left to the whims of a trial judge, but must be exercised in accordance with the established principles of law is judicially and judiciously. That is the only binding aspect of the exercise of a judicial discretion.

The recognised primary object of the provisions for undefended list procedure is to enable a court to summarily deal with claims which are unarguable and where the facts are undisputed and it is inexpedient to allow a defendant to defend for mere purposes of delay. It is a unique or special procedure designed to shorten the determination of claims where they are for liquidated sums and to eliminate the technicalities entailed in the usual filing of pleadings and hearing oral evidence. The procedure is peculiar in its subject and application meant to provide a quick channel for recovery of debt or liquidated sums, yet creating and ensuring an opportunity for fair hearing and doing substantial justice to the parties. See MACAULAY v. NAL MERCHANT BANK LTD [1990] 4 NWLR [144] 283 @ 324 – 5, BALKO v. UBN PLC [2003] FWLR [180] 1500, 2004] 4 NWLR [862] 123. The major problem associated with the otherwise Simple and straight forward provisions for the procedure and which often arises in their application by the High Courts is the consideration of whether an affidavit of a defendant filed together with the notice of intention to defend discloses a defence on the merit to warrant leave to be granted to defend and transfer of the suit to general or ordinary cause list for determination. This is the problem that has so frequently been the subject or issue in appeals against decisions of trial courts to this court under the undefended list procedure which for that reason has been likened to an unruly horse for creating more problems than it was intended to avoid or obviate. S.P.D.C LTD v. ARHO-JOE NIG. LTD [2006] ALL FWLR [33] 1330. However no ready made solution can be provided to the problem associated with the determination of what qualifies or constitute a defence on the merit to be adopted or used in all cases largely because, the facts and circumstances of a case are very rarely, if at all, the same with those of another. The courts are only guided by the established principles I have earlier mentioned which include that:-

(a) The affidavit of a defendant must disclose a prima facie bona fide defence. MAGREGOR v. N.M.B. [1996] 2 SCNJ 72 @ 82, BENDEL CONSTRUCTION CO. v. ANGLO DEV. CO. [72] 3 SC [Reprint] 37, [72] ALL NLR [1]153.

(b) That the affidavit must not merely contain a general statement that the defendant has a good defence, but it must set out particulars of facts and the materials which if proved would constitute a legal defence. JOHN HOLT & CO (LIVERPOOL) v. FAJE MIROKUW [6] ALL NLR , ATAGUBA v. GURA LTD [2005]2 5C [I] 101 @ 109.

(c) That the aggregate of the facts set out clearly and sufficiently in the affidavit disclose a triable issue of law or question or dispute as to the facts which ought to be tried, F.M.G. v. SANI [1990] 4 NWLR [147] 688, NISHIZAWA v. JETHWANI [supra]. MOHAMMED v. SOCIETY GENERAL BANK [2006] ALL FWLR [340] 1182.

(d) That the affidavit must condescend upon the particulars and deal as far as possible with the plaintiff claims. PETER TIWELL NIG. LTD v. INLAND BANK [1997] 3 NWLR [494] 408, KNIGHT BOUDGE v. ATAMAKO [2000] 2 NWLR [645 387.

(e) That the affidavit must set out clearly the grounds of the defence which must not be frivolous vague and designed to delay the hearing of the action under the procedure. A.CB. v. GWAGWABA [1994] 4 SCNJ 26B, MACAULAY v. NAL MERCHANT BANK [supra]

(f) That the affidavit is not required to establish or prove a defence on the merit. EURO-BAT CONCEPT S.A. v. T.I.C. LTD [supra] MALEY v. ISAH [2000] 5 NWLR [658] 651, AUGBERUNE CO. LTD v. HABIB BANK [2002] 4 NWLR [757 338.

All the cases cited supra by the learned counsel in their respective briefs have recognised one or more of these principles and restated them as being relevant for consideration in the determination of what constitutes a defence on the merit under the undefended list procedure.

Now, after filing the notice of intention to defend together with an affidavit it is the primary duty of a trial court to closely examine the evidence put forward by the defendant In the affidavit along with any documents that may be exhibited thereto in order to make a finding or come to the conclusion on whether a defence on the merit as required by the Rules of court, was shown or disclosed. The examination’ involves a consideration of the averments contained in the defendants affidavit as well as the affidavit of the appellant/plaintiff which they are meant to challenge. Because it is peculiar, the hearing or consideration of the case is entirely based on the affidavit evidence filed by the parties, and so the trial court has the duty to examine the case put up by each of them, Since affidavit evidence is not sacrosanct, the trial court is entitled in law to prima facie, evaluate or assess it to ensure its veracity and/or authencity, like oral or documentary evidence,

SEE OKOYE v. CENTRE POINT MERCHANT BANK [2008] ALL FWLR [441] 810. In this regard in the determination of defence on the merit, it would be desirable and even required of the trial court to look at the averments of the defendant’s affidavit in support of the notice of intention to defend against the averments in the plaintiffs affidavit in support of the claims in order to find out if any doubt is raised on the claims or that a real and bona fide dispute or question was disclosed which will necessitate further explanations by way of hearing further evidence for its resolution, AGRO MILLERS LTD v. CONT. MERCHANT BANK PLC [supra], ATAGUBA V. GURA [supra].

Where no real dispute arises as to the specific facts upon which the claims are based from the affidavit of the notice of intention to defend, a defence on the merit would be absent and a defendant would in such a situation not be entitled to the grant of leave to defend the action or the transfer of the case to the general cause list.

In the premises of the above principles I now proceed to consider the relevant parts of the affidavit evidence placed by the parties before the High Court along with the decision of that court as contained in the judgment appealed against for me to determine whether or not the decision is right. The crux of the Respondents’ claims is to be found in paragraphs 10, 11, 15, 16, 22 and 23 of the affidavit in support of the claims which contain the specific and clear facts upon which they were made. It is expedient to set them out and so is as follows:-

“10. that by its dated 21/12/2000 and addressed to the 1st defendant company, the plaintiff Bank informed the of defendant company that it has granted/approved a

N20, 000, 000 [twenty million Naira] import facility in favour of the 1st defendant company in line with the said 1st defendants application for the facility.

11. That a copy of the said plaintiff Banks letter dated 21/12/2000 granting the import finance facility to the 1st defendant company which letter also contains the terms and conditions for the facility is hereto exhibited and marked EXHIBIT B.
12. That by its letter dated 3/1/2001 and addressed to the 1st defendant company, the plaintiff bank informed the 1st defendant company that it has granted/approved a temporary overdraft facility of N9, 000, 000 [Nine million Naira] in favour of the 1st defendant company in line with its application [Exhibit C]
13. That a copy of the said plaintiffs bank’s letter dated 3/7/2001 granting the credit facility of N9, 000, 000 to the 1st defendant company which letter also contains the terms and conditions for the facility is hereto exhibited and marked EXHIBIT D.
14. That by its letter dated 6/11/2001 and addressed to the 1st defendant company, the plaintiff bank informed the 1st defendant company that it has granted/approved a temporary overdraft of N7, 000, 000 [Seven million Naira] in favour of the 1st defendant company in line with its request as per EXHIBIT H.
15. That a copy of the said plaintiffs letter dated 6/11/2001 granting the credit facility of N7, 000,000 the defendant company which letter also contains the terms and conditions for the facility Is hereto exhibited and marked EXHIBIT J. ”

Put shortly, the above facts are to the effect that on the 1st Appellant’s application the Respondent granted it (1st Appellant) the following facilities:-

(i) A N20,000,000 import finance facility on the terms and conditions contained in Exhibit B1 attached to the affidavit.

(ii) A temporary overdraft facility of N9, 000, 000.00 on terms and conditions contained in Exhibit D attached to the affidavit,

(iii) A temporary overdraft facility of N7, 000,000.00 on terms and conditions contained in Exhibit J attached to the affidavit.

The Appellants on their part, have the following averments in paragraphs 5, 6, 9, 11, 12, and 13 of the affidavit in support of the notice of intention to defend in reaction to the above facts deposed by the Respondent.

5. That the estimated cost price of the importation deposed to in paragraph 4 hereto was N30, 000, 000 (Thirty million Naira) and the estimated total sales value was N70, 000, 000 (Seventy million Naira) However, It was common ground between the pasties that the 1st defendant would make in equity contribution of N10, 000, 000 (ten million Naira) to the transaction while the plaintiff would open letters of credit to the tune of N20, 000, 000 (Twenty million Naira) In favour of the 1st defendant
6. That consequent upon paragraphs 4 and 5 hereof the plaintiff by letter dated 21/12/2000 made an offer to the 1st defendant for an import finance facility of N20, 000, 000 (twenty million Naira which the 1st defendant duly accepted.
7. That the plaintiffs, after the execution of the letter of offer deposed to in paragraph 6 hereof and conclusion of formalities thereto, opened letters of credit in favour of the foreign suppliers.
8. That consequent upon the facts deposed to in paragraph 10 hereof the 1st defendant was experiencing cash flow problem when the second consignment of seven containers of perutti non alcoholic wine arrived at Onne port. The 1st defendant therefore requested an overdraft facility of N7, 000. 000 (seven million Naira) from the plaintiff to enable the 1st defendant clear the consignment of seven containers of perutti non alcoholic wine at Onne port.
9. That by a letter of offer dated 6/11/2001 the plaintiff extended a temporary overdraft facility of N7, 000, 000 (seven million Naira) to the 1st defendant.
10. That the 1st defendant accepted the plaintiff’s offer letter dated 6/11/2001 and made an equity contribution of N1, 400, 000 (one million, four hundred thousand Naira) in respect of the facility.”

What these paragraphs clearly show is that the Appellant has applied to the Respondent for letters of credit worth N20, 000, 000.00 and temporary overdraft facility of N7, 000, 000.00 which the Respondent opened and granted respectively. I have read the 41 paragraphs of the Appellants’ affidavit but did not find any averment or deposition denying or challenging the application and grant of the temporary overdraft – facility of N9, 000, 000.00 (as contained in paragraphs 15 and 16 of the Respondents’ affidavit) to 1st Appellant. In other words, the Respondents’ averments on the said facility were not challenged let alone controverted by the Appellants’ affidavit. As rightly submitted by the learned counsel for the Respondent the legal consequences of that failure is that the averments of the Respondent are deemed correct, established and admitted by the Appellants. In addition to the authorities cited by the learned counsel on the point, see ADESUNA v. COMMISSIONER (1996) 4 SCNJ 112 @ 119, UBN PLC v. ODUSOTE BOOKSTORES (1994) 3 SCNJ 1. Further more, the documents exhibited in support of the averments for being parts thereof, are also deemed admitted by the Appellants. So when considered side by side, the averments of the parties on the letters of credit and the temporary overdraft facilities prima facie, show that:-

(a) that letters of credit to the tune of N20, 000, 000.00 were opened by the Respondent as requested/supplied for by the 1st Appellant.

(b) That at the request/application of the 1st Appellant, the Respondent granted it temporary overdraft facilities of N9, 000, 000.00 and N1, 000, 000.00 which were fully utilized.

However the Appellants’ affidavit in supporting the notice of intention to defend, in paragraphs 19, 21 – 23, 25 – 32 have deposed as follows:-

19. That consequent upon paragraph 18 hereof the consignment of wine was delivered by the 1st defendant to a warehouse designated by the plaintiff. The warehouse was also under the control and management of the plaintiff.
20. That after the delivery of the consignment of wine to the plaintiff’s designated warehouse the plaintiff refused the 1st defendant access to the wine but insisted that the 1st defendant should pay the price of the wine to the plaintiff before the 1st defendant could have access to the wine.
21. That it was only on 5/4/2002, after several threats and negotiations by the 1st defendant, that the plaintiffs allowed the 1st defendant access to 3861 cartons of the wine while the plaintiff wrongfully kept 3139 cartons of the wine.
22. That by 5/4/2002 the expiry date of the consignment of wine was less than seven months away.
23. That the plaintiff without the knowledge and consent of the 1st defendant proceeded to sell the bulk of the consignment of the wine in the ware house at under price.
24. That the plaintiff till date has not accounted to the 1st defendant the sales of the 1st defendant’s wine by the plaintiff
25. That the plaintiff till date is still selling the consignment of wine, which has since expired, to an unsuspecting public, not withstanding the health hazards.
26. That the plaintiff without the 1st defendants consent cancelled the letters of credit opened for the third and final consignment of Ethel body lotion notwithstanding that the letters of credit were irrevocable and the Central Bank of Nigeria had approved its extension.
27. That as a result of the wrongful cancellation of the letters of credit by the plaintiff the 1st defendant lost the money it had deposited with the foreign suppliers.
28. That the plaintiff opened letters of credit in the value of N7, 390, 000.00 In respect of the consignment of Mama Mia Tomatoes and N5,920, 000.00 in respect of the Perutti wine consignment, totaling N13, 310, 000.00.
29. That the plaintiff unilaterally cancelled the letters of credit in the value of N6, 690, 000.00 In respect of the consignment of Ethel Body lotion.

32 That notwithstanding the facts deposed to in paragraphs 30 and 31 hereof the plaintiff calculated and charged the 1st defendant interest on N20, 000.00.

The communal import of the above depositions is that the consignment of wine imported on the letters of credit opened by the Respondent was made to be delivered by the 1st Appellant to a warehouse designated and under the control and management of the Respondent. That without the knowledge and consent of the 1st Appellant, the Respondent proceeded to sell the bulk of the consignment of the wine in the warehouse at under price and has not accounted for the sale to the 1st Appellant. Also that without the consent of the 1st Appellant, the Respondent cancelled the letters of credit opened for the third and final consignment of Ethel Body lotion. That the letters of credit opened by the Respondent and utilized for the consignment of Mama Mia Tomatoes puree was in the value of N7, 390, 000.00 and for the wine; N5, 920, 000.00 which total N13, 310, 000.00 but the Respondent calculated and charged interest on the letters of credit worth N20, 000, 000.00. So even though the Appellants have admitted the opening of the letters of credit to the value of N20, 000, 000.00 they have deposed to facts which have challenged the Respondent on the cancellation of the said letters in respect of the last and final consignment of the items/products which were to be imported under them.

The Respondent in the affidavit in support of the claims did not depose to the fact that the letters of credit worth N20, 000,000.00 opened by them were fully utilized by the 1st appellant. In the application by the 1st Appellant to the Respondent for the import licence facility, which is attached to the Respondents’ affidavit as Exhibit A, the N20, 000, 000.00 was applied for to augment the financing of importing tomato puree, non alcoholic wine, and ensure body lotion, wall and floor tiles. Exhibit A is at page 7 of the record of appeal. The averments of the Appellants’ that the Respondent unilaterally cancelled the letters of credit for the consignment of the body lotion, sold the bulk of the wine consignment without accounting to the 1st Appellant and charging interest on the initial letters of credit opened in the value of N20, 000, 000.00 are in my view very weighty and serious facts which if proved, would avail the Appellant of real and bona fide defence to the claims of the Respondent as set out in the affidavit in support thereof. These depositions are directed at the Respondents’ claims and call for further explanations from the Respondent by way of additional evidence in order to erase the doubt created by the averments of the Appellants to the claims.

The Appellants averments have consequently raised questions on the Respondents’ claims which could not be answered from the available affidavit placed before the High, Court. Put another way, the questions that arise from the Appellants’ averments cannot be resolved under the undefended list procedure provisions of the High Court because additional or further evidence will be required outside the affidavit evidence placed before that court by the parties. The procedure is not one that admits of further and better affidavit or a counter affidavit because the mere fact that further evidence was required in the matter is enough and sufficient to warrant the transfer to the general cause list for determination. Let it be remembered that the law does not require that the Appellants prove or establish the defence, particulars of which they set out in their affidavit at this stage of the procedure. NVA v. EDEM (2000) 8 NWLR (669) 349, ACB v. EZENWA (2004) 7 NWLR (859) 65. All that is required, as stated earlier is for the Appellants’ affidavit to set out clearly and concisely the particulars of the facts upon which the defence is based which will create doubt on the claims made against them. A doubt in the sense that the facts show that the Respondent have some further explanations to make by way of evidence in order to sustain the claims it made against the Appellants. Triable issues or questions would have been raised or arisen in such a situation that would make it unavoidable not to transfer the matter to the general cause list for trial to enable the necessary further evidence to be adduced by the parties for the issues to be resolved or questions answered. For that reason, my decision is that by the state of the affidavit evidence placed before the High Court, the matter was/is not one that can properly be heard and determined under the provisions of Order 23, Rule 4 of the 1987 Rules because the affidavit of the Appellants had raised issues that cannot be resolved without further evidence. The Appellants’ affidavit has thereby disclosed a defence on the merit which necessitates the grant of leave to defend the action and warrant the transfer of the matter to the ordinary cause list for determination. In the result, I resolve the 1st issue in the negative and in favour of the Appellants.

My decision on the first issue would appear to have taken care of the other issues raised in the appeal which in my opinion are subsidiary to it. For the record and development of the law, I would consider and determine them mindful of the requirement of the law that being an intermediate appellate court; the court should deal with all the Issues canvassed by the parties in the appeal. See ADAH v. NYSC (2004) ALL FWLR (223) 1850, OJO v. KAMALU (2005) 18 NWLR (958) 523, ALO v. AKANO (2005) ALL FWLR (264) 799 @ 807. I am also aware of the law that where other issues are subsumed in an issue already decided, there will be no need to consider the other issues. See BALOGUN v. LABIRAN 512, (88) 3 NWLR (80) 66 @ 80, OKOWJI v. NJOKANMA (1991) 2 NWLR (202) 131 @ 146, COOKEY v. FOMBO (2005) 5 SC (11) 102 @ 111. My intention in delving into these other issues is to briefly bring out and highlight the general principle of law on the undefended list procedure as they affect the said issues. I would do no more.

The second issue raised by the learned counsel for the Appellants is whether the trial court was right when it placed on the Appellants a burden to prove by evidence their defences on the merit before the matter could be transferred to the general cause list.

The submissions of the learned counsel on the issue are that the Appellants’ were only required in the undefended list procedure to disclose a defence on the merit and not prove the defence by evidence. He cited OBI V. NKWO MARKET COMM. BANK LTD (2001) 2 NWLR (696 113 @ 128 – 9, NWIV OF NIG. V. ORAZULIKE TRADE CO. LTD (1989) 5 NWLR (119) 19 AND F.M.G. v. SANI [supra] arguing that the trial court adopted a wrong criterion when he considered and dismiss the defences set up by the Appellants’ as unproved. According to him, section 149 [d] of the Evidence Act is not applicable under the undefended list procedure as the trial court at the stage is not concerned with proof, but disclosure of a defence on the merit and so the burden to provide evidence in proof of the defences raised was unwarranted in law since the particulars of the defences were given by the Appellants. Learned counsel urged us to resolve the issue in favour of the Appellants.

The submissions of the learned counsel for the Respondent on the issue are to the effect that the defences raised were mere averments which were not supported by either particulars or documentary evidence. It was contended that it is not enough to make bare allegation that a situation exists by the assertion must be supported by evidence and reliance was placed on AGRO MILLERS LTD v. C.M.B. [supra]. In addition, that since the Appellants had admitted the Respondents’ claims and failed to state clearly and concisely the facts relied on to support any or all the defences raised, we were urged to resolve the issue in favour of the Respondent The issue argued in the Respondent’s issue 1.

It may be recalled in my consideration of the 1st issue had stated the principle of law that under the undefended list procedure provided for in Order 23 of the 1987 Rules, like all other similar provisions in other High Court of the federation, what a defendant’s affidavit is required to disclose a defence or the merit. Such an affidavit is not required to prove or establish the defence on the merit as was settled and restated in the authorities cited earlier on the point.`

The question that arises now is whether from the record of the judgment appealed against, the High Court required that the defences raised in the Appellants’ affidavit needed to be proved or established for the matter to be transferred to the general cause list.

I have before now stated that the duty of the High Court in the matter was to consider the facts deposed to in support of the claims as well as the notice of intention to defend and then decide whether prima facie, the facts set out in the notice of intention to defend show or disclose a defence which if proved would avail the defendant. A defence that will cast some doubt on the claims made by the plaintiff in the sense that additional or more explanations would be required for it to be sustained. So at that stage, the duty of High court was not that of assessment and evaluation of the facts presented in order to find out if the defences were sustainable, proved or established. The learned counsel for the Appellants was right when he submitted that at that stage, the High Court was not concerned with the proof of the defences but the disclosure of such defences by the aggregate of the facts put forward in the Appellant’s affidavit. The High Court in the judgment appealed against which is at pages 103 – 114, but particularly from pages 110 – 113, under took a forensic assessment and evaluation of some of the facts of the defence raised by the Appellants to find out if each of them was proved or established by the facts averred. In fact, the provisions of section 149 [d] of the Evidence Act was employed; and applied by the High Court in ascribing probative value to the facts averred by the Appellants in its verification of whether one of the defences raised was proved or established by the facts. That approach is erroneous under the peculiarities of the undefended list procedure because the High Court was not at the stage of the determination of whether the Appellants’ affidavit disclosed a defence on the merit, called upon to ascertain the merit of the defences raised in the affidavit evidence. Unlike in other proceedings where issues are determined on affidavit evidence, the High Court’s only duty in the undefended procedure is to consider whether a defence was disclosed on the face of the affidavit evidence which without further evidence in the matter, would make the claims of the plaintiff doubtful. It needs to be stressed that the duty does not involve an evaluation of the facts in such a manner that would require the proof or merit of the defence/s rose therein. The law as demonstrated earlier, does not require proof of the defences at that stage but disclosure of facts, particulars of which show prima facie a defence that can avail the Appellants in law if proved at the trial. In consequence of the above, I answer the issue in the terms that High Court was in error to have required proof of the defences raised in the Appellants’ affidavit for triable issues to have been raised in the matter which would have warranted the transfer to the ordinary cause list. The issue is resolved in favour of the Appellants.

The next issue, i.e. issue (iii) is whether a counter-claim is a precondition in law for raising triable issues under the list procedure. In his submissions on the issue, learned counsel set out a portion of the judgment appealed against on the point a rid said that triable issues would arise where a defendant’s affidavit is such that the plaintiff will be required to explain certain questions with regard to his claims or where it throws a doubt on such claims. He relied on the cases of UBA, PLC v. MODE (NIG) LTD (2001) 3 NWLR (730) 335 @ 364, C & C BANK PLC v. SAMED INVEST. CO. LTD (2000) 4 NWLR (651) 19 and OBI v. NKWO MKT. COMM. BANK (supra) and argued further that a counter claim is therefore not a prerequisite for ‘a triable issue. Learned counsel then urged us to resolve the issue in favour of the Appellants.

The learned counsel for the Respondent argued the issue of counter claim in the issue 1 formulated by him. However all the submissions made in respect thereof are to the effect that no counter claim was shown to exist or established by the Appellant to raise a defence on the merit. Reference was made to the finding of the High Court at page 112 of the record of appeal to that effect in which it also held that there was no triable issue to warrant a transfer to the general cause list. This was the part of the judgment referred to and set out by the learned counsel for the Appellants to ground the issue raised by him. It is expedient to set out the portion of the judgment complained against in the issue. It is as follows:-

“There were no facts or particulars/ disclosed by the Defendants in their affidavit in support of Notice of Intention to defend amounting to a counter claim or to compel this court to regard as one. In the circumstance I hold that there is no triable issue to warrant a transfer of this matter to the general cause list”.

My view is that the above finding is quite unambiguous and simple. The decision of the High Court in the finding is that the Appellant’s affidavit did not contain facts or particulars amounting to a counter claim as a result of which, no triable issue was disclosed to warrant the transfer, of the matter to the general cause list. I would like to remind the learned counsel that the issue or defence of a counter claim was only one of the many issues or defences considered and pronounced on by the High Court in the judgment appealed against.

Before and after the finding on the issue or defence of the counter claim, that court had considered and made specific findings on each of the defences raised in the Appellants’ affidavit before finally holding that each of the defences did not amount to a defence on the merit and “in the result, it is my humble view that the case has been established”.

There is no nowhere in the judgment that the High Court made the finding that a counter claim is a prerequisite for the disclosure of a defence on the merit. However its finding that since no counter claim was disclosed by the Appellants’ affidavit no triable issue existed is only in respect of that defence and not the existence of a defence on the merit that would warrant the transfer. It is not disputed that a counter claim where it is properly made and shown on a defendant’s affidavit would raise a triable issue which in turn would amount to or constitute a defence on the merit that justifies a transfer to the general cause list. The case of IVAN v. BELAWGE INC LTD (1998) 5 NWLR (550) 396 @ 402 cited in the High Court judgment is on this position which is based on the reason that a counter claim would raise questions or issue which could only be resolved by further evidence outside the affidavit evidence filed under procedure by the parties.

Because the High Court had considered all the other defences raised in the Appellants’ affidavit including that of a counter claim, it would not be correct to say that it had made a finding that a counter claim is pre-requisite for the disclosure of a triable issue that would warrant a transfer to the general cause list in the undefended list procedure. If the only defence raised in the Appellants’ affidavit was that of a counter claim, the position might-be different because the disclose of the counter claim in such a situation would be pre-requisite for the existence of a triable issue that would warrant a transfer to the general cause list. For the above reasons, I find no merit in the submissions by the learned counsel for the Appellants on the issue which is hereby resolved against the Appellants.

The last issue is whether the 35% per annum awarded by the learned trial court in favour of the Respondent is permissible in law. The submissions for the Appellants are that interest are not awarded as a matter of course but based on the evidence placed before the court to establish the rate and date from which it runs. The case of EKWUNIFE v. WAYNE (WA) LTD (1989) 5 NWLR (122) @ 445 was relied on. It was also submitted that from the evidence before the High Court, the Respondents’ claims were based on a series of transactions one of which attracted 25% while the other attracted 35% interest and so for that reason, the case should have been transferred to the general cause list. We were urged to resolve the issue in Appellants’ favour by learned counsel.

For the Respondent it was submitted that the principle at common law is that interest is payable where there is express agreement to that effect. KADUNA STATE TRANSPORT AUTHORITY v. OFODIRE (1999) 10 BWKR (622) 259 @ 268 and EKWUNIFE v. WAYNE (WA) LTD [supra] were cited and it was further submitted that Exhibit B and D attached to the Respondents’ affidavit represent the agreement of the parties on the rate of interest which was liable to fluctuations because it was regulated by the Central Bank of Nigeria from time to time. Reliance was placed on case of KEWFRAWR NIG LTD v. UBN PLC (2002) 8 NWLR (789) @ 73, BANK OF WEST AFRICA LTD, SAPELE v. NWAKUBA (67 – 68) MSNLR 116 and UBN PLC v. OZIGI (1994) 3 NWLR (333) 385 @ 403 & 404.

Finally it was submitted that having stated in Exhibit ‘B’ that the lending rates fluctuate, the interest rate claimed by the Respondent was not excessive. Like the other issues, it was argued in Respondents’ issue 1.

Taking into account my decision on the 1st issue, I would only restate the general principle law on the claims and award of pre-judgment interests in civil matters. The law is that prejudgment interest on a debt or loan can only be awarded where there is sufficient evidence of an agreement between the parties that such interest would be paid. The agreement should contain details such as (a) rate of interest

(b) Date of commencement

(c) Date due; whether weekly, monthly, yearly or other specified period.

However even where such an agreement was not entered into expressly by the parties, its existence would be readily implied where the plaintiff or judgment creditor is a bank or other lending institution because of the custom in that trade or under the principle of equity, EKPEYONG v. NYONG (1975) 2 SC 71, BARKLEYS BANK v. ABUBAKAR (1977) 10 SC 13, HIMMA MARCHANTS v. ALIYU (1994) 5 NWLR (347) 667, VEE PEE IND. LTD v. COCOA IND. LTD (2008) 13 NWLR (1105) 486 @ 513. In line with these authorities therefore, pre-judgment interest can only be awarded in the following circumstances to be established by evidence:-

(a) Express agreement of the parties or

(b) Existence of mercantile or trade custom, or

(c) Under a principle of equity such as a breach of fiduciary relationship.

In particular, where there is sufficient and credible evidence of an agreement of the parties, containing all the essential details of the interest payable on the debt or loan, a court would have no option than to give effect to such agreement. This is based on the principles that parties are bound by the terms and conditions of an agreement freely entered between themselves and the duty of the court to give effect to that agreement. A court of law has no power to add or subtract from such an agreement thereby recounting it for the parties. R.E.A. v. ASWANI ILES IND. LTD (1991) 2 NWLR (176) 639, KWAZAFFA v. BANK OF THE NORTH (2004) 5 SC (1) 103, LARMIE v. D.P.M.S. LTD (2005) 12 SC (1) 93.

This is the much I would and should say on the issue which has effectively been over taken by my decision on the issue 1.

In the final result, for the reasons set out before now, I find merit in the appeal and allow it. Consequently, the judgment of the High Court of Rivers State delivered on 19/4/2004 in suit NO. PHC/805/2003 in favour of the Respondent under the undefended list is hereby set aside. The Appellants’ affidavit filed together with the notice of intention to defend the action contained sufficient and concise particulars of facts which disclosed a defence on the merit. Leave is accordingly granted to the Appellants to defend the action which is hereby transferred to the ordinary cause list under Order 23 Rule 3 (1) of the 1987 Rules for determination by the High Court. The matter is remitted to the Chief Judge, Rivers State High Court for assignment to another judge of that court for trial.

Parties are to bear the costs of prosecution the appeal.

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Other Citations: (2009)LCN/3213(CA)