Sanusi Brothers (Nigeria) Limited V. Cotia Commercio Exportacao E Importacao S. A. (2000)

LAWGLOBAL HUB Lead Judgment Report

WALI, J.S.C.

The respondent as plaintiff filed in the High Court of Justice, in the Lagos Judicial Division a specially indorsed writ wherein he claimed as follows:-

‘The Plaintiff’s claim as indorsed on the writ reads as follows- The plaintiff’s claim against the defendant is for Five hundred and sixty thousand, three hundred and fifty-eight dollars and seventy-three cents ($560,358.73) (United States Dollars), being the currency of account and payment, or its current equivalent in Naira under the Second Tier Foreign Exchange Market, for interest payable on overdue bills in respect of goods sold and delivered by the plaintiff to the defendant at the request of the defendant, made up as follows:-

(i) The sum of Three hundred and seventy-nine thousand four hundred and seventy-five dollars and seventy-three cents ($379,475.73) United States Dollars) being the overdue interest; and

(ii) The sum of One hundred and eighty thousand, eight hundred and eighty-three dollars and forty-two cents ($180,883.42) (United States Dollars), being interest payable on the above sum of money from the 26th day of February, 1985 till the 26th day of April, 1987 or until the date of judgment.

Particulars of claim are as contained in the annexure attached hereto and the interest thereon as stated in clause (ii).”After service of the writ and its annexures, the defendant filed his statement of defence and an application on notice dated 9th July, 1987 in which he was asking for the plaintiff to give security for costs; it being a foreign corporation carrying on business in Brazil with no tangible assets within the jurisdiction of the High Court of Lagos State. The application was fixed for hearing on 14/9/87.

The plaintiff on his part by an application dated 21/8/87, filed on 31/8/87 and fixed for hearing on 12/10/87 (sought) for leave and order of the court to enter judgment against the defendant as per the writ of summons and statement of claim.

The record did not show whether the application for security for costs was moved or abandoned. But by a considered ruling of the trial court delivered by Ayorinde J, [as he then was], the application for leave to sign judgment against the defendant was granted on 9/6/88 as prayed. In the ruling the learned Judge concluded as follows –

“In respect of Order 10, leave of court is required to allow the defendant to defend. But leave will only be granted upon the defendant satisfying the court that he has a good defence to the action on the merit or upon the defendant disclosing such facts as may be deemed sufficient to entitle the defendant to defend generally. Such facts are required to be given on oath or affidavit. But an issue of law constituting a good defence need not be given by affidavit.

The defendants have failed to disclose such facts upon affidavit which are sufficient to entitle them to defend generally. The agreement showed that the defendant had to pay 11% interest in respect of the 1st 180 days on overdue debts and thereafter 22% for 360 days. These are well calculated and computed. There are no facts challenging these averments.

The plaintiff does not prove such fact beyond reasonable doubt. In this country sections 134-136 of the Evidence Act govern the burden of proof. There is no defence on the merit and there is insufficiency of facts to enable them defend generally. There is nothing. The defendant raised the defence of frustration and illegality. The first part is based on an imagination that the Nigerian Government made a regulation prohibiting payment of interest over and above 180 days. The court takes judicial notice of all laws and regulation. The burden or onus of bringing such regulation to the notice of the court as a special defence is on the defendant. They have failed in this respect. I hold that such regulation did not exist in light of Exhibit C where the defendant obtained permission in Form 17.

There is no frustration. This is tied up with illegality. There is no evidence or fact of any illegal deal. The plaintiff dealt with the defendant through an authorised agent i.e. U.B.A. LTD. It was not illegal to pay interest on overdue account. There is no defence on the merit and mere filing of a sham defence cannot stop the court from giving judgment. On the question of rate of exchange,

Miliango’s case settles the issue that it should be from the date of the writ of summons or the date the order of judgment is made. In this case, I hold it should be from date claimed by the plaintiff in the statement of claim i.e. date of the writ of summons.

Finally, there will be final judgment for the plaintiff as per the statement of claim with costs.”

Aggrieved by the trial court’s decision, the defendant filed an appeal in the Court of Appeal, Lagos Division. The Court of Appeal after hearing the parties on their respective briefs and orally, unanimously dismissed the appeal. In the lead judgment of the court delivered by Babalakin JCA [as he then was and with which Ogundere and Awogu JJCA agreed]”the learned Justice opined and concluded –

“As a matter of fact, what happened in this case cannot strictly be described as trial under Order 10 proceedings in that both counsel argued the defences put forward by the appellant and the learned trial Judge after a careful consideration of counsel’s submissions made a finding of fact that they were sham defences. A finding with which I agree. And when one remembers that under Order 10 proceedings only defences on merit are allowed, it is not difficult to agree with the learned trial Judge’s conclusions which are ably supported by the above quoted decisions of the Supreme Court in the case of Macaulay v. NAL Merchant Bank Limited (supra). The defences put forward by the appellant are not tenable defences under trial under Order 10 proceedings.

For the above reasons, this appeal is dismissed.

The ruling of Ayorinde J, (as he then was) delivered on 9th June, 1988 giving judgment to the respondent is hereby affirmed.”

The defendant has further appealed to this court. In his application for a summary judgment under Order 10 Rule 1(a) of the High Court of Lagos (Civil Procedure) Rules, 1972, the plaintiff filed along withit, an affidavit in support sworn to by one Armando Mange, Managing Director of Cotia Nigeria Ltd, which was described as a sister company to the plaintiff. The deponent deposed to the following facts –

“2. That I have the authority of the plaintiff company to depose to this affidavit.

3. That sometime, between 1981 and 1982 the plaintiff sold to the defendant some goods and for this purpose issued commercial invoices Nos. EXP.537/81, EXP.538/81, EXP.539/81, EXP.540/81, EXP.541/81, EXP.561/81, EXP.562/81 and EXP.098/82.
4. The documents shown to me and marked Exhibits A1-A8, are the photostat copies of the said commercial invoices.
5. The goods were shipped to the defendant who received them and enjoyed the benefit thereof but refused to honour the said bills as and at when due.
6. That shown to me and marked Exhibits B1-B6, are photostat copies of the clean report of findings issued by Societe Generale de Survilance (S.G.S. Brazil).
7. As a result of the default in the payment of the said bills at due dates, interest accrued on the said debts which further attracted further interests.
8. That shown to me and marked Exhibits C1-C8, are the Photostat copies of the debit advices, showing dates of payments of the said bills.
9. That the total amount of interest that accrued as a result of the default in paying at due dates was the sum of Three hundred and seventy-nine thousand, four hundred and seventy-five dollars and seventy-three cents ($379,475.73) (United States Dollars).
10. That shown to me and marked Exhibit “D”, is the summary of or details of the said debt.
11. That the above debt further attracted an interest of Twenty-two per centum (22%) per annum from the 26th day of February, 1985 when payment on the principal sum for goods sold were liquidated, till the 17th day of April, 1987 which is a period ofTwenty-Six (26) months.
12. That the total indebtedness of the defendant to the plaintiff is the sum of Five hundred and sixty thousand, three hundred and fiftyeight, dollars, seventy-three cents ($560,358.73) as stated in paragraphs 9 and 11 of this affidavit as well as the writ of summons and the statement of claim.
13. The currency of account and payment is the United States Dollars, as shown in Exhibits A1-A8 and C1-C8.
14. The defendant has by various letters dated the 26th day of July, 1984, 10th day of November, 1984, 29th day of November, 1984

and the 26th day of February , 1985 respectively acknowledged that the rate of interest payable are as stipulated in various proforma

invoices, that is to say, Exhibits A1-A8 attached to the original affidavit dated the 17th day ofJuly, 1987.

15. The defendant also by the letters referred to above, acknowledged that interest on the sum owed are still outstanding.

E 16. The documents shown to me and marked Exhibits E1, E2, E3 and E4 are the letters referred to above.

17. The said interests have not yet been paid.
18. The transactions were carried out in strict compliance with the Nigerian Exchange Control Laws.
19. That shown to me and marked Exhibit “G”, is a letter dated the 23rd day of February, 1985 forwarding the application to purchase foreign currency form “M” to the authorised dealer, the United Bank for Africa Limited.
20. That I was informed by the plaintiff’s counsel, M. F. Alakija Esq., and I verily believe him that the defendant, having failed to honour its obligation as and at when due in accordance with stipulations contained in Exhibits A1-A8 and B1-B6 as well as the acknowledgment contained in Exhibits E1-E4, the defendant has no defence to this claim.”

The defendant filed a counter-affidavit sworn to by Abdul Sanusi, the Executive Vice-Chairman of the defendant in which he deposed as follows:-

“3. For the reasons hereinafter set out the defendant denies that it is liable to pay the plaintiff the sums claimed in the writ of summons and statement of claim.

4. The defendant was prevented, in 1984, from paying sums of money to the plaintiff which represented interest payments on overdue payments as a result of Central Bank of Nigeria/Federal Ministry of Finance regulations.
5. The defendant is advised by its solicitors and verily believes that this governmental intervention rendered the defendant’s obligation to pay the said interest impossible of performance and thereby discharged the defendant therefrom.
6. After the issue of the writ in this action and before the issue of the summons herein, the defendant’s solicitors served on the plaintiff’s solicitors a statement of defence setting out the grounds upon which the defendant relies for its defence to this action. I crave the leave of this honourable court to refer to the said statement of defence which forms part of the record of this court in this action.
7. Having regard to the matters aforesaid, I verily believe that the defendant has a good defence on the merits to the plaintiff’s claim, and I accordingly ask that the defendant may be given unconditional leave to defend herein.”

From the counter-affidavit the defendant raised in paragraphs 4 and 5, the impossibility of meeting his obligation under the contract to wit: paying sums of money to the plaintiff which represented interest payments on overdue payment because of regulations issued out by the Central Bank of Nigeria/Federal Ministry of Finance. As deposed in the counter-affidavit this type of defence was raised in paragraphs 5, 6 and 7 of the statement of defence (supra).

In addition, the defendant also raised alternative defence of waiver in paragraph 9 as follows:-

“9. In the alternative to the foregoing, the defendant avers that it offered, by letter dated 10th November, 1984, to pay to the plaintiff’s agent in Nigeria – Cotia (Nigeria) Limited – the equivalent in local currency of the outstanding interest at the said date. The said sum was N117,377.85. The offer referred to at paragraph 9 hereof, which was made as a gesture of goodwill to the plaintiff, was never accepted by the plaintiff.”

Both parties, in compliance with rules of this court filed and exchanged briefs of argument. In the defendant/appellant’s brief three issues were formulated as follows:-

(i) Whether the appellant had, by the statement of defence and affidavit showing cause, disclosed facts which, if established at trial, would have afforded the defendant an absolute defence to the claims of the respondent;

(ii) Whether the Court of Appeal was in error in failing to consider the facts put forward by the appellant for the purpose of determining whether those facts could constitute valid defences to the respondent’s claims: and

(iii) Whether the Court of Appeal was in error in treating the application for summary judgment as an occasion to determine the truth or otherwise of disputed issues of fact.”

The plaintiff/respondent raised the following seven issues in his brief-

“1. Whether mere filing of a statement of defence that is nothing but a sham defence will entitle the defendant to an order granting leave to defend.

2. Whether mere filing of a statement of defence will prevent the plaintiff from making an application for summary judgment under Order 10 of the Lagos High Court (Civil Procedure) Rules.
3. Whether the plaintiff has by its statement of claim together with the affidavit in support of its motion satisfied the court on all the requirements of Order 10 of the Lagos High Court (Civil Procedure) Rules.
4. Whether from the facts and materials before the court, contained in the statement of claim and the affidavit in support of the motion for summary judgment, the statement of defence and the counter affidavit opposing the motion for judgment together with submissions of counsel during the argument of the motion, the defendant has given a satisfactory answer to the plaintiffs claim, or has only made an attempt “to dribble and frustrate the plaintiff and cheat him out of the judgment he is legitimately entitled to by delay tactics aimed, not at offering any real defence to the action but at gaining time within which he may continue to postpone meeting his obligation and indebtedness” and/or
5. Whether there was any material evidence before the lower court that needed to be examined and which would have tilted the scale of justice in favour of the appellant.
6. What is the proper order to be made by the court on an application for judgment under Order 10 of the Lagos State High Court (Civil Procedure) Rules when it finds that the defence put up by defendant is nothing but a sham defence

Alternatively, whether the plaintiff has not satisfactorily countered or answered all the said defences put up by the defendant namely.; Illegality; Frustration; and, the Equitable defence.”

In the reply brief by the defendant/appellant objection was raised to issues 1, 2, 6 and 7 in the plaintiffs/respondent’s brief as not arising out of the grounds of appeal and asked that they be struck out. In my view issues 1, 2 and 6 of the plaintiff/respondent’s brief speak of one and same thing, which is what will be the court’s approach to a statement of defence described as a sham defence when the procedure under Order 10 rule 1(a) is put in motion The issues are mere a repetition and come under the umbrella of ground 1(b) of the grounds of appeal. Issue 7 objected to is also covered by ground 1(a) of the said ground. The objection is misconceived and accordingly over-ruled. But this notwithstanding, and having regard to the solitary ground of appeal filed in this appeal, the real issue in controversy is whether having regard to the statement of claim, the statement of defence, the affidavit in support and its annexures and the counter-affidavit filed, the defendant/appellant had, prima facie disclosed a defence to the plaintiffs/respondent’s claim on merit to entitle him to an order of unconditional leave to defend. See F.M.G. V. Sani (1990) 4 NWLR (Pt.147) 688.

I shall first deal with the statement of defence. Apart from the general denial of the plaintiffs claiim; the defendant/appellant did not specifically deny the plaintiff’s claim. Rather, he raised in paragraphs 5 – 7 of the statement of defence the question of prohibition of payment to the plaintiff as a non-resident person under the Exchange Control Act, 1962 without the permission of Ministry of Finance or Central Bank of Nigeria, the arrears of interest claimed. In the affidavit sworn to by Abdul Sanusi, which in fact and substance is a counter-affidavit to the affidavit sworn to by Armando Edward Mange in support of plaintiff/respondent’s application for summary judgment under Order 10 Rule 1(a) of the Lagos High Court (Civil Procedure) Rules, 1972, the defendant/appellant repeated the same defence of his inability to settle the plaintiff’s claim due to the Central Bank of Nigeria/or Federal Ministry of Finance regulation. No identifiable reference of such regulations was provided or annexed to the defendant/appellant’s affidavit. Even paragraphs 5 – 7 of the statement of defence did not state that the defendant was going to produce and rely on such regulations at the trial.

From the pleadings and the affidavits and counter-affidavit with the documents exhibited with them, the transactions and the delivery of goods were not denied by the defendant/appellant. What he was disputing is the extra payment of 22% current commercial bank interest on the amount due for the periods covered by the delay in making the payment of said amount claimed at the time when each became due. See Exhibit D attached to the plaintiff/respondent’s statement of claim. Since it is a specially endorsed writ, it is for the defendant/appellant to support his counteraffidavit with the particulars of the relevant laws, rules and regulations referred to in his statement of defence. They would have afforded the trial court an opportunity to consider whether he has raised a prima facie defence on the merit. The defendant’s affidavit must condescend upon particulars and as far as possible deal specifically with the plaintiffs claim and affidavit, and should also clearly and concisely state what the defence is. A mere denial by the defendant of the plaintiff’s indebtedness is not enough: Walligngford v. Mutual Society (1880) 5 APP. CAS. 685 at 704. It is also not enough for the defendant to show a case of hardship, nor a mere inability to pay: Besant v. Townsend 22 L. R 1 r 389. In all cases the defendant must provide sufficient particulars to show that there is a bona fide defence. Where legal objection is raised, the fact and the point of law arising there from must be clearly and adequately stated. See Macaulay v. NAL Merchant Bank (1990) 4 NWLR (pt.144) 283.

The fact that a defendant has served a statement of defence can only be sufficient to allow him defend the claim if it is not a sham defence. See Mclardy v. Slateum (1890) 24 Q.B .D. 504.

On the materials placed before him, it is my view that the conclusion arrived at by the learned trial Judge earlier referred to, cannot be faulted. Similarly the Court of Appeal rightly concluded after considering the defendant/appellant’s statement of defence and the counter-affidavit when it opined thus –

“The learned trial Judge (as he then was) has been fair in his approach to issues raised in the statement of defence. Both counsel addressed him extensively on the defences raised by the appellant in their proposed statement of defence which he discovered to be a sham defence.

The essence of proceedings under Order 10 is to give judgment for admitted claim. On the facts of this case and having regard to the exhibits tendered the learned trial Judge found that the appellant received the goods and admitted the claims of the respondent. The appellant was unable to show that he had defences on merit to the action. In circumstances such as this, the court should give judgment to the plaintiff as was rightly done by the learned trial Judge in this case.”

All relevant facts pleaded by the plaintiff/respondent have been adequately supported by relevant documentary evidence which does not require calling any oral evidence to resolve any inconsequential conflict in the affidavit evidence. See Kanno v. Kanno (1986) 5 NWLR (Pt. 40) 138. The Court of Appeal is therefore right in its conclusion that –

“And when one remembers that under Order 10 proceedings only defences on the merit are allowed, it is not difficult to agree with the learned trial Judge’s conclusions which are ably supported by the above quoted decisions of the Supreme Court in the case of Macaulay v. NAL Merchant Bank Limited(supra). The defence put forward by the appellant are not tenable defences under trial under Order 10 proceedings.

For the above reasons, this appeal is dismissed. The decisions involve concurrent findings of fact with which I find no valid reason to interfere. The appeal is therefore dismissed. The judgment of the Court of Appeal confirming the ruling of the trial court is hereby affirmed. I award N10,000.00 costs to the plaintiff/respondent against the defendant/respondent.

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SC.3/1995