Sotuminu Vs Ocean Steamship (Nig) Ltd (1992)

LawGlobal-Hub Lead Judgment Report

M. L. UWAIS, J.S.C. 

The appellant instituted a suit in the High Court of Lagos State against the respondents claiming, as appropriate, as follows:-

1. As against the 1st respondent, a declaration that the appellant is entitled to 5% of the gross earnings of the 1st respondent as per the agreement between the appellant and the 1st respondent and the minutes of the meeting of the board of the 1st respondent which was held on 18th February, 1983.
2. An order directing the 1st respondent to pay to the appellant the sum of N1,052,603.61 being 5% of the gross earnings of the 1st respondent.
3. As against the 1st respondent, an order for the payment to the appellant of the sum of N1,160,000.00 being the salaries and house rents for the period of 4 years (1983-1986) being owed by the 1st respondent.
4. An order for inquiry into all payments of money made by the 1st respondent to the 4th and 5th respondents as Legal Adviser and Secretary respectively to the 1st respondent and for such payments to be refunded to the 1st respondent.
5. As against the 1st and 7th respondents, an order for inquiry into all withdrawals of money from the fixed deposit account of the 1st respondent kept with the 7th respondent otherwise than in accordance with the mandate subsisting as at the 23rd day of January, 1987 and for the payment of the said withdrawals back into the said account.

The appellant’s case in the High Court before Agoro J, (as he then was) was that on 18th February, 1983, the 1st respondent entered into a parol agreement with the appellant whereby the appellant would guarantee overdraft facilities to be made available to the 1st respondent by Owena Bank Limited (6th respondent) in consideration of which the appellant would be paid by the Ist respondent 5% of the latter’s gross earnings. In furtherance of the parol agreement, the appellant, who is a legal practitioner, pledged his certificate of occupancy with the 6th respondent as security for the overdraft facilities to be granted to the 1st respondent. The total earnings made by the 1st respondent from sailings was N21,052,072,24. By another agreement reached at the meeting of the Board of Directors of the 1st respondent, which was held on 31st March, 1987, the appellant, as Director of the 1st respondent, was to be paid salary and house rent for the period 1983 to 1986. That the 4th and 5th respondents were appointed as special legal adviser and Secretary respectively at a meeting of the Board of Directors held on 1st April, 1987, while no notice of the meeting was served on the appellant. That since the Boards meeting of 31st March, 1987, the Directors of the 1st respondent, excluding the appellant, had colluded to withdraw monies from the accounts of the 1st respondent with the 6th and 7th respondents for their (i.e. Directors) personal use.

The case for the 1st, 2nd and 3rd respondents was that no meeting of the 1st respondent’s Board of Directors was held on 31st March, 1987 and that neither the 2nd nor the 3rd respondent or any director of the 1st respondent attended such a meeting. But that there was a meeting of a Board of Directors held on 1st April, 1987 which was attended by the appellant. The 4th and 5th respondents were invited to the meeting to advise the Board on issues of law that might arise. There was an Extraordinary General Meeting of the 1st respondent on 23rd April, 1987. Notice of the meeting was previously delivered to the office of the appellant on 9th April, 1987. It was decided at the extraordinary General Meeting to remove the appellant as a director of the 1st respondent and as a signatory to any of the bank accounts of the 1st respondent. The appointment of the 4th respondent as Company Secretary to the 1st respondent was approved and confirmed.

The case for the 4th and 5th respondents was that they were invited to the meeting of the Board of Directors of the 1st respondent held on 31st March, 1987 which they attended in their professional capacities. That there was an Extraordinary General Meeting of the 1st respondent on the 23rd April, 1987 which was attended by all its shareholders and that the appointment of the 4th respondent as Company Secretary was approved and confirmed by the Extraordinary General Meeting.

The learned trial Judge made the following findings in his considered judgment:-

“It was not in dispute that the plaintiff (appellant) financed the incorporation and the initial take-off of the 1st defendant company (1st respondent). He was appointed one of the first set of Directors. He was also allotted 50,000 ordinary shares of the Company. But, as regards the claims which proceeded to trial at the hearing of this action most of the Defendants (respondents) challenged the claims of the Plaintiff …. In the light of the foregoing observations, it seems to me that no reasonable Court or Tribunal would place any reliance on the contents of Exhibit “P 18”, (being minutes of the meeting of the Board of Directors of the 1st respondent held in Germany) in support of the plaintiff’s claims. And with due respect to the plaintiff, this Court must prefer and accept the oral testimony of Mr. Mutert, Captain Hayes and Captain Bormann as against the evidence of the plaintiff and Mr. Bolarinwa which I reject.

As regards the minutes marked Exhibit “P21”, there was evidence by Mr. Mutert (D.W.l) and Captain Bormann (D.W.3) which I accept, that no meeting of the Board of Directors was ever held or attended by both witnesses as stated in Exhibit “P.21” on 31st March, 1987. And as it happened in this action, Mr. Mutert was in transit by air to Nigeria while he was alleged by Exhibit “P.21” to have attended a Board Meeting at 10.00 a.m. at 14/16 Abibu Oki Street, Lagos. I am, therefore, inclined to agree with the learned Senior Advocate that Exhibit “P.21” is a bogus and fictitious document which is unworthy of any reliance or belief’ (Parenthesis mine).

The learned trial Judge concluded the judgment by dismissing all the claims of the appellant in the following terms:-

“Finally, in view of the decision which I have reached in this action and for the reasons stated herein, the claims … under paragraph 39 of the Amended Statement of Claim, fail and are hereby dismissed. But having regard to the special circumstances of the parties to this action, I think that the justice of the matter demands that the parties should bear their costs of the action.

There will be consequential order discharging all injunctions imposed on the 6th and 7th Defendants (respondents) in respect of the Current Account and Fixed Deposit (Account) of the 1st Defendant company (1st respondent)” (Parenthesis mine)

Dissatisfied with the judgment, the appellant appealed against it to the Court of Appeal and then applied to the learned trial Judge for a stay of the execution of the judgment pending the determination of the appeal and for an injunction to restrain the 6th and 7th respondents from releasing any funds from the accounts of the 1st respondent. The application was refused and dismissed by the learned trial Judge.

The appellant then made the same application to the Court of Appeal urging thus:-

“1. An order staying the execution of the judgment of this Honourable Court (sic) dated the 1st day of September, 1989 pending the determination of the appeal already filed against the said judgment.

2. An order of injunction restraining the 6th and 7th Defendants/Respondents herein from releasing to the 1st Defendant/Respondent or any of the Defendants/Respondents any sum of money whatsoever in the account of or held on behalf of the 1st Defendant/Respondent company pending the final determination of the appeal filed in this case.

And for such further order or orders as this Honourable Court may deem fit to make in the circumstances.”

The first prayer was withdrawn and subsequently struck out at the hearing of the application. Consequently, the Court of Appeal considered only the second prayer. The affidavit filed in support of the application was amended by a further affidavit filed by the appellant. Paragraphs 2,6,8,9 (as amended), and 12 of the affidavit in support of the application read as follows;-

“2. The 1st Defendant (1st respondent) has a fixed deposit account with the 6th and 7th Defendants (6th & 7th respondents) and also a current account numbered 0201000552 with the 6th Defendant.”

“6. That the 1st Defendant/Respondent has no asset in Nigeria apart from the funds in its bank accounts with the 6th and 7th Defendants.”

“8. That if the monies standing to the credit of the 1st Defendant/Respondent company with the 6th and 7th Defendants/Respondents are released there will be no money or property to satisfy the judgment if the plaintiff’s (appellant’s) appeal succeeds.

“9. That on the 3rd day of May, 1989 the plaintiff swore to a further affidavit in support of a motion for stay of execution of the ruling of the High Court of Lagos State dated 10th March, 1989 wherein it was disclosed that the 1st Defendant/Respondent company had only recently been paid the sum of over N8 million by the Ajaokuta Company Limited.

“11. That by reason of the payment of the said N8,402,568.00 to the 1st Defendant/Respondent, the latter now has more than enough funds to pay salaries and incidental expenses, if any.

“12. That I verily believe that if this Honourable Court makes an order restraining the release of the monies standing to the credit of the 1st Defendant/Respondent with the 6th and 7th Defendant/Respondents, the Defendants/Respondents will not be prejudiced thereby.”

A counter-affidavit and a further counter-affidavit were sworn to, by Mr. Edet Okon, a litigation clerk of counsel, on behalf of the 1st respondent. Paragraphs 2,3,4 and 5 of the further counter-affidavit read:-

“2. I am aware that on the 10th day of March, 1989 the learned trial judge granted an interlocutory injunction restraining the sixth Defendant bank from releasing funds from the 1st Defendant’s accounts on condition that the Plaintiff gives an undertaking as to damages in the form of Bank Guarantee in the sum of N500,000.00.

3. The plaintiffs never gave any guarantee until the judgment was delivered.
4. The 1st Defendant has several members of Staff and property in respect of which it incurs an average monthly bill of N10,000.00
5. The 1st Defendant carries on the business of a shipping company for which it requires funds to enable it meet its obligations relating thereto, such as Port fees, etc.”

The appellant filed a reply to the counter-affidavit and the further counter-affidavit. Paragraphs 3, 6 and 8 of the reply read as follows:-

“3. That I am informed by the Appellant Mr. Olumuyiwa Sotuminu and I verily believe him that contrary to paragraph 5 of the 1st Defendant’s (Further) Counter-Affidavit the company is not doing any business and in particular the last cargo lifted by the 1st Defendant was in early December, 1986 which was under the only contract which the company had got through the Appellant’s efforts since the 1st Defendant’s incorporation in 1982 which contract had been terminated by the Nigerian National Shipping Line Ltd. in early 1987.”

“6. That the Appellant also informed me and I verily believe him that he is genuinely interested in his appeal and that he is afraid that if the 1st Defendant is allowed to deal with the funds in its account before the conclusion of this appeal, it will definitely siphoned (sic) all the funds in the account therefrom and there will be nothing to meet the judgment of this Court if in his favour particularly as the 1st Defendant has no other assets in Nigeria which the appellant could hold on to.”

“8. That the Appellant also informed me and I believe him that the 3rd Respondent who is the Managing Director of the 1st Defendant is a German Citizen who would leave Nigeria at any time after withdrawing the funds in dispute.”

In its ruling, dismissing the application, the Court of Appeal (Ademola, J.C.A., Akpata, J.C.A., as he then was, and Kalgo, J.C.A.) made the following observations per Kalgo, J.C.A.:-

“It is entirely upon the applicant to supply the material upon which the Court can exercise the said discretion. In this application, the learned counsel for the respondents are saying that the applicant has not supplied that material required for the grant of his application pointing out that all his claims were dismissed by the trial Court and that the money (sic) in question were not the subject of the litigation at the trial Court. These facts stand out very clearly from the affidavit evidence of the parties and are not challenged in any way. I also agree with the submission of Chief Williams, SAN that having regard to the findings of the learned trial Judge in his judgment dated 1st September, 1989, there is nothing in the grounds of appeal filed against the judgment raising any substantial issue of law to be resolved on appeal……..The applicant has not shown that any of his legal rights would be infringed if the injunction is refused. He did not show that the balance of convenience is in his favour in any way.”

The interlocutory appeal before us is against the refusal by the Court of Appeal to grant the injunction sought pending the appeal in that Court. Two issues for determination, which read thus have been formulated by learned counsel for the appellant in the latter’s brief of argument-

“1. Whether the Court of Appeal was right in law in refusing to grant the Appellant’s application for injunction pending appeal when there was uncontradicted affidavit evidence before the Court that the 1st respondent had no other assets or property in Nigeria except the funds in its Bank’s accounts to satisfy the claims of the appellant if the appellant’s appeal succeeds.

2. Whether the Court of Appeal gave due consideration and necessary weight to relevant facts put before it by the appellant in determining the appellant’s application for injunction pending appeal.”

The 1st respondent is the only respondent contesting the appeal. It adopted, in its brief of argument, the questions for determination in the appeal as formulated in the appellants’ brief of argument.

Arguing the appeal, the appellant referred in his brief to the depositions in paragraphs 6,8 and 13 (quoted above) of the affidavit in support of his application in the Court of Appeal and submitted that the 1st respondent did not put any fact before the Court of Appeal in contradiction of the facts he deposed to nor give information about any assets or property which it owns in Nigeria. Reference was also made to paragraph 3 (quoted above) of the reply to the further counter-affidavit of the 1st respondent and it was argued that the Court of Appeal in considering where the balance of convenience rested, in the application, failed to make any finding of fact based on the deposition in paragraph 3 of the reply. Furthermore, it was contended that as the Court of Appeal found in its ruling (quoted above) that there was conflict between the counter-affidavit and further counter-affidavit of the 1st respondent and the appellant’s reply, no oral evidence was called by the lower Court to resolve the conflict before it concluded that the balance of convenience was in favour of the 1st respondent.

The following authorities were inter alia cited in support of the appellant’s case – Shodeinde v. The Registered Trustees of the Ahmadiyya Movement-in-Islam (1980) 2 S.C. 163 at pp.178-181; Eringford Properties Ltd. v. Cheshire County Council (1974) 1 Ch.261 atpp.267-268; Orion Property Trust v. Du Cane, (1962) 3 All E.R. 466 at p.471 and Mareva Campania Naviera SA v. international Bulk Carriers SA.; (1975) 4 L.L. Rep. 509 at pp.5 10-511. In his oral argument, Mr. Oyetibo, learned counsel to the appellant, submitted that the award of Mareva injunction in the last authority is not limited to foreigners but can be awarded as well against a party that is not a foreigner and cited in support the cases of A.J. Bekhor C & Co. Ltd. v. Bilton, (1981) 1 Q.B. 923 at p.926 and Z. Ltd. v. A-Z. AND AA-LL (1982) Q.B. 558 at pp.584 and 586. Learned counsel argued that the Court of Appeal exercised its discretion wrongly under section 18 of the High Court Law, Cap. 52 of the Laws of Lagos State, 1973, in refusing to grant the injunction sought.

In the 1st respondent’s brief of argument it is stated that the learned trial Judge rejected the contention of the appellant that there was a contract between him and the respondent under which the latter agreed to pay the former 5% of its gross earning. The trial Judge did not also believe the appellant’s claim that the 1st respondent agreed to pay him salary and rent allowance as remuneration for being a Director of the 1st respondent. On these premises it is argued that these are findings of fact and that the grounds of appeal before the Court of Appeal on the appeal against the substantive case are no more than a challenge to the trial’s Court findings of fact. The Court of Appeal, it is submitted, was quite right in holding that the grounds of appeal raise no substantial issue of law to be determined. And the appellant having failed this hurdle, it was not necessary for the Court of Appeal to proceed to consider whether there were special circumstances on which the 1st respondent as successful litigant could be prevented from enjoying the fruits of the judgment of the trial Court given in his favour. To buttress the argument the following cases are cited – Vaswani Trading Co. v. Savalakh & Co. (1972) 1 All NLR (Pt.2) 483 at p.487; Okafor v. Nnaife, (1987) 4 NWLR (Pt.64) 129; Nwabueze v. Nwosu (1988) 4 NWLR (Pt.88) 257 and Mohammed v. Olawunmi (1990) 2 NWLR (Pt.l33) 458.

On the issue of balance of convenience, it is argued that the greater hardship from having its funds tied down on the application of the appellant, who has already failed to establish his claims after a full trial, would be on the 1st respondent. It is then submitted that the Court of Appeal was right in holding accordingly since the balance of convenience has been held to mean the “balance of the risk of doing an injustice” in Coyne v. Global Natural Resources Plc., (1984) I All E.R. 225 at p.237 Hand Francome v. Mirror Group Newspapers, (1984) 1 W.L.R. 892 at p.893 E.

In his oral argument, Mr. Ogundipe as learned counsel for the respondent (though being the 4th respondent in the appeal but not contesting) stated that the appellant in his affidavit in support of the application in the Court of Appeal deposed to conflicting facts in paragraphs 6, to and 11 thereof (quoted above) and argued that the appellant had therein recognised that the 1st respondent was doing some business in Nigeria. He submitted that the Court of Appeal applied the right principles and came to the right decision that the balance of convenience in the application was on the side of the 1st respondent. He cited Ajomale v Yaduat, (1991) 5 NWLR (Pt.191) 266 at pp.286 C-290 B in support.

I think the issues raised in this appeal can best be viewed from the laid down principles applicable to an application for interlocutory injunction. Section 18 subsection (1) of the High Court Law, Cap.52 provides inter alia that the High Court of Lagos State may grant an injunction in all cases in which it appears to the High Court to be just or convenient to do so. And section 18 subsection (3) thereof further provides that the High Court may grant an application for injunction if the High Court thinks fit. It is quite clear from these statutory provisions that the grant of an application for interlocutory injunction is purely discretionary though the Court is enjoined to consider in the exercise of its discretion whether the grant of the discretion will be just or convenient. In other words for the exercise of the discretion to be judicial, it is sine qua non that the grant of the application should be either just or convenient.

Now section 16 of the Court of Appeal Act, Cap.75 of the Laws of the Federation of Nigeria. 1990 gives the Court of Appeal the general powers in any appeal before it to “grant any injunction which the Court below is authorised to make or grant”. In considering the appellant’s application, the Court of Appeal was therefore obliged to take into consideration the provisions of section 18 of the High Court Law. cap. 52. In other words the Court of Appeal had a discretion whether to grant the application and in granting the application to take into consideration the justice or convenience of doing so.

The principle upon which the Court acts in granting interlocutory injunction is therefore statutory. However, in Chandler v. Royle. (1887) 36 Ch. D. 425 at p.436. Cotton L.J. observed as follows-

“It is very true that in all cases of interlocutory injunction the Court does consider and ought to consider the balance of convenience and inconvenience in granting or refusing the injunction.” And in the case of Hilton v. Earl of Granville (1841) Cr. Ph. 238 where an interim injunction was sought by owners of houses to restrain the working of mines because it was feared that the houses would be totally destroyed or irreparably damaged; Lord Cottenham, L.C. said:-

“I have to determine, whether balancing, the question between these two parties, and the extent of the inconvenience likely to be incurred on the one side and on the other, it is the most proper exercise of the jurisdiction of the Court to grant the jurisdiction or to withhold it.”

More recently, the House of Lords, per Lord Diplock in American Cyanamid v. Erhicon Ltd. (1975) A.C. 396 made the following remarks on pp. 408 H 409 C thereof:

“Save in the simplest cases, the decision to grant or to refuse an interlocutory injunction will cause to whichever party is unsuccessful on the application some disadvantages which his ultimate success at the trial may show he ought to have been spared and the disadvantages may be such that the recovery of damages to which he would then be entitled either in the action or under the plaintiff’s undertaking would not be sufficient to compensate him fully for all of them. The extent to which the disadvantages to each party would be incapable of being compensated in damages in the event If his succeeding at the trial is always a significant factor in assessing where the balance of convenience lies .. and if the extent of the uncompensatable disadvantage to each party would not differ widely, it may not be improper to take into account in tipping the balance the relative strength of each party’s case as revealed by the affidavit evidence adduced on the hearing of the application. This, however, should be done only where it is apparent upon the facts disclosed by evidence as to which there is no credible dispute that the strength of one party’s case is disproportionate to that of the other party. The Court is not justified to embark upon anything resembling a trial of the action upon conflicting affidavits in order to evaluate the strength of either party’s case.

I would reiterate that, in addition to those to which I have referred, there may be many other special factors to be taken into consideration in the particular circumstances of individual cases.” (italics mine)

Now returning to the present case, the effect of the affidavit in support of the application as well as the 1st respondent’s counter-affidavit and further counter-affidavit and the appellants’ reply thereto is that there were conflicts in the facts deposed to. The Court of Appeal appreciated this situation when Kalgo, J.C.A. remarked as follows:-

“It would appear that there is some conflict in the counter-affidavits of the respondents and the reply to the counter-affidavit of the applicant on whether the 1st respondent company stopped doing any business since 1987. In the event of this happening, it is trite law that the only answer is to call oral evidence to resolve the conflicts (Afolabi v. Afolabi (sic) (1976) 1 NMLR 169 at 171).”

Learned counsel to the appellant complained that, that notwithstanding the Court of Appeal did not call any oral evidence to resolve the conflict but went on to rely on the counter-affidavit and further counter-affidavit to hold that the appellant failed to give bank guarantee in the High Court as an undertaking for damages when the learned trial Judge granted his application, for an interim injunction restraining the 6th respondent pending the trial of the case before him.

In my view, it was not necessary for the Court of Appeal to resolve the conflict in all the affidavits, by whatever name, before it could exercise its discretion to grant or refuse the application for interlocutory injunction. In Obeya Memorial Hospital v. A.G. of the Federation (1987) 3 NWLR (Pt.60) 325 at p.338 E-G; Obaseki, J.S.C. held as Follows:-

“In cases where the legal rights of the parties depend upon the facts that are in dispute between them, as in the instant appeal, the evidence available to the Court at the hearing of the application for an interlocutory injunction is incomplete. It is given on affidavit and has not been tested by oral cross-examination. The supporting affidavit of John Ede and Obande has not been tested in oral cross-examination. Neither has the counter-affidavit of Bernard Iyorbyam Hom, the Attorney General of Benue State been tested in oral cross-examination.

The purpose sought to be achieved by giving to the Court Discretion to grant such injunctions would he stultified if the discretion were dogged by a technical rule forbidding its exercise if upon that incomplete untested evidence the Court evaluated the chances of the plaintiff’s ultimate success ”

(Italics mine)

See the second italicised sentence in the quotation above from American Cyanamid’s case (supra).

What is important and need be done in this case, is to examine the factors which influenced the Court of Appeal in order to determine if the Court was right in its conclusion that the balance of convenience was on the side of the 1st respondent. In his lead judgment Kalgo, J.C.A. with whom Ademola, J.C.A. and Akpata, J.C.A. (as he then was) concurred, gave the following reasons for refusing to grant the application by the appellant:-

1. That the Court of Appeal had a discretion to grant or refuse the application.
2. That the appellant did not supply enough material for the application to be granted.
3. That all the claims of the appellant in the High Court had been dismissed.
4. That the monies, for which the 6th and 7th respondents were to be restrained from releasing, were not the subject of the action in the High Court.
5. That there was nothing in the grounds of appeal filed by the appellant in the appeal pending before the Court of Appeal which raised any substantial issues of law to be resolved by the Court of Appeal.
6. That the appellant did not show that any of his legal rights would be infringed if the injunction sought was refused.
7. That the appellant did not show that the balance of convenience was in his favour in any way.

None of these grounds is based on any of the conflicting affidavits filed by either the appellant or the 1st respondent. So that in arriving at the grounds, the Court of Appeal did not rely on the depositions in any of the affidavits. The facts which gave rise to the grounds are contained in the notice of the appeal to the Court of Appeal against the ruling given by the High Court ordering the appellant to obtain bank guarantee, the judgment of the trial Court in the substantive action, the order drawn upon the dismissal by the High Court of the application for interim injunction and the notice of appeal against the decision of the High Court dismissing the appellant’s action; all of which were exhibited to the affidavit in support of the appellant’s application to the Court of Appeal.

In John Holt Nigeria Ltd. v. Holt African Workers Union of Nigeria and Cameroons, (1963) 2 SCNLR 383; (1963) 1 All NLR 379, this Court, per Ademola C.J.N., observed as follows:-

“The principles upon which the Court acts in granting interlocutory injunctions to our mind must be strictly observed, and of course it is impossible to lay down any general rule by which the discretion of the Court ought, in all cases, to be regulated: but it must be borne in mind that interlocutory injunctions are not granted as of course. It appears to us that what the plaintiffs have asked for in this matter is for the Court to prevent the defendants from carrying on their business in the manner they think it beneficial to themselves, and this before the trial of the action.”

In the light of all the authorities referred to in the foregoing I am satisfied that the Court of Appeal acted judicially in arriving at the conclusion that the balance of convenience in the application brought by the appellant did not favour him. The Court of Appeal was therefore right in refusing to grant the application – See Kotoye v. C.B.N. (1989) 1 NWLR (Pt.98) 419 at pp.441 per Nnaemeka-Agu, J.S.C and Cesare Missini & Ors. v. Balogun & Anor. (1968) 1 All NLR 318 at p.326 where Lewis, J.S.C stated thus:-

“In addition it is not the normal practice to grant an interim injunction if a merely pecuniary matter is at issue and whilst there is an issue of insolvency here which was not present in the cases to which we were referred we do not see that that alters the fundamental basis of the practice. Here the applicants are only concerned with a pecuniary issue, their claims as creditors of the Company, and on all scores of convenience we do not consider that they have made out their case for restraint.”

Mr. Oyetibo relying on Mareva’s case (supra) and the cases of Bekhor and Z. Ltd. (supra) had contended that there was the likelihood of the 2nd respondent, who is a German citizen, withdrawing the monies in the accounts of the 1st respondent with the 6th and 7th respondents by virtue of his being the Managing Director of the 1st respondent; and after doing so to leave Nigeria. That, that was a ground on which the interlocutory injunction should have been granted. I do not find any substance in the contention because the 1st respondent is a Nigerian Company with Nigerian shareholders. If the possibility indeed existed (which I doubt) that the 2nd respondent would withdraw the 1st respondents’ monies and abscond -which is a criminal act- the 1st respondent would equally be at a risk of losing the monies. So that the likelihood which the appellant claimed would prejudice his interest would also affect that of the 1st respondent. That is not the basis on which the three cases learned counsel cited above were decided. In any case, even if the appellant’s conjecture were true it could only help the lower Court in the determination as to which party in the application the balance of convenience should be tilted. But since both the appellant and the 1st respondent would in such event be at equal disadvantage, the conjecture was neither here nor there and could not have supported the case of the appellant in the application.

In the result, this appeal has no merit and it is hereby dismissed with N1,000.00 costs to the 1st respondent.

S. KAWU, J.S.C: I had previously had a preview of the draft of the lead judgment of my learned brother, UWA1S, J.S.C. which has just been delivered. I am in complete agreement with him that the appeal lacks merit and should be dismissed. I am satisfied that in refusing the application for an interlocutory injunction for the reasons fully set out in the lead judgment of Kalgo, JCA., the Court of Appeal correctly exercised its discretion. I see no merit in the appeal which is dismissed with N1,000.00 costs to the respondent.

P. NNAEMEKA-AGU, J.S.C.: This is an appeal by Mr. Olumuyiwa Sotuminu who was an applicant for a relief, before the Court of Appeal, of injunction “restraining the 6th and 7th defendants/respondents from releasing to the 1st defendant/respondent or any of the defendants/respondents any sum of money whatsoever in the account of, or held on behalf of, the 1st defendant/respondent pending the final determination of the appeal filed in this case.”

The Court of Appeal dismissed the application upon the grounds so lucidly set out by my learned brother. Uwais, J.S.C. in his lead judgment. I shall only repeat those grounds in this judgment for purposes of emphasis and add a few comments of my own on some of those grounds.

The grounds were:-

1. That the Court of Appeal had a discretion to grant or refuse the application:
2. That the appellant did not supply enough material for the application to be granted;
3. That all the claims of the appellant in the High Court had been dismissed;
4. That the monies, for which the 6th and 7th respondents were to be restrained from releasing, were not the subject of the action in the High Court:
5. That there was nothing in the grounds of appeal filed by the appellant in the appeal pending before the Court of Appeal which raised any substantial issues of law to be resolved by the Court of Appeal;
6. That the appellant did not show that any of his legal rights would be infringed if the injunction sought was refused; and
7. That the appellant did not show that the balance of convenience was in his favour in any way. It is of material significance that what is sought to be restrained by the injunction is different from the substance of the suit. In the suit, the appellant claims that he is entitled to 5% of the gross earnings of the 1st defendant company and a sum of money equivalent to that percentage – and then another sum of money said to be for his rents and allowances for four years. Then he claims for an inquiry into the sums paid by the 1st respondent to the 4th and 5th respondents as legal adviser and secretary to the 1st respondent and also into all withdrawals by the 1st respondent from the fixed deposit account it kept with the 7th respondent. He seeks to restrain the 6th and 7th defendant banks from releasing any money whatsoever to the 1st respondent from the accounts of the 1st respondent in the said banks.

On the materials before the Court, applicant’s claims before the High Court of Lagos had been tried and dismissed. The agreement between the applicant and the 1st respondent was said to be oral and the essential linchpin of the applicant’s case, to wit; Exhibit P.21, the minutes of a meeting of the 1st defendant said to have been held in Germany where the indebtedness to the appellant was admitted was found by the learned trial Judge to be bogus and unreliable. At this stage, as we are not hearing the appeal, I ought not to make any comments on the merits or otherwise of the case which may prejudice the hearing of the appeal: See Egbe v. Onogun (1972) 1 All NLR (Pt.1) 95; Ojukwu v. Governor, Lagos State (1985) 2 NWLR (Pt.10) 806. Yet, by law, we are supposed to presume that the findings of the Courts below on the facts are correct until they are set aside: See Williams v. Johnson (1937) 2 WACA 253; Bakare Folorunso v. I.I. Adeyemi (1975) 1 NMLR B 128. It is from the background of these that I shall approach this appeal.

The appellant has submitted that he is relying in this application upon the principle in the case of Mareva Compania Naviera S.A. v. international Bulkcarriers S.A. (1975) 2 LI, L.R. 509. In particular, he relies upon the ratio at pp.510-511 where it is stated thus:-

“In my opinion that principle applies to a creditor who has a right to be paid the debt owing to him, even before he has established his right by getting judgment for it. If it appears that the debt is due and owing – and there is a danger that the debtor may dispose of his assets so as to defeat it before judgment – the Court has jurisdiction in a proper case to grant an interlocutory judgment so as to prevent him disposing of those assets. It seems to me that this is a proper case for the exercise of this jurisdiction. There is money in a bank in London which stands in the name of these time charters. The time charters have control of it. They may at any time dispose of it or remove it out of this country. If they do so, the ship-owners may never get their charter hire. The ship is on its way to India. It will complete the voyage and the cargo discharged. And the ship-owners may not get their charter hire at all. In face of this danger, I think this Court ought to grant an injunction to restrain the defendants from disposing of these monies now in the bank in London until the trial or judgment in this action.”

(Italics mine)

In other words, the appellant is basing his case, the subject of this appeal, on a Mareva injunction. Such injunctions are nove! and came on the firmament of injunctions only in 1975, in the case relied upon. The granting of such an injunction was a fundamental departure from the erstwhile general rule that a plaintiff would take his queue with other creditors of the defendant and if he obtained a judgment against the defendant he would simply, subject to the rules on priorities of debts, execute it on the defendant’s available assets or on the person of the defendant. In 1975, the Court of Appeal in the judgment cited above introduced a more ubiquitous feature into the practice of injunctions. This introduced a limited exception to the general rule by granting ex parte injunctions restraining defendant’s from disposing of or dealing with any other assets within the jurisdiction of the Court or removing or disposing out of the jurisdiction monies standing to the credit of the defendant even before a judgment against him. See – Nippon Yusen Kaisha v. Karageorgis (1975) 1 WLR 1093. But as the case itself says, such will be granted only if it appears that the debt is due and owing.

As this type of injunctions is a relatively new development in English practice, the first question I must address is whether it could be granted in the High Court of Lagos. As counsel on both sides argued this appeal on the assumption that that type of injunction is obtainable in Nigeria, I feel entitled to say a few words on the basis of that assumption.

Now section 18 of the High Court Law of Lagos State provides as follows:-

“(1) The High Court may grant. an injunction by an interlocutory order in all cases in which it appears to the Court to be just or convenient so to do.”

The type of injunctions over which the Court may exercise jurisdiction were not categorized or limited. Rather, the Court was in section to confer with the general jurisdiction, powers, and authorities which are vested in or capable of being exercised by the High Court of Justice in England.” Also section 13 empowers the Court as follows:-

“‘(13) Subject to the express provisions of any enactment, in every civil cause or matter commenced in the High Court, law and equity shall be administered by the High Court concurrently and in the same manner as they are administered by the High Court of Justice in England.”

I am of the clear view that by the joint effect of sections 10,13 and 18 of the High Court Law of Lagos State, that Court has jurisdiction and power to entertain and, inappropriate cases, grant a Mareva injunction as was developed by the High Court of Justice in England in 1975. By section 16 of the Court of Appeal Act, 1976, that Court could in an appeal pending before it exercise that power.

The question raised by this appeal is whether the appellant was entitled to this order on the facts of this case. Now, all the decided cases on the point show that the Courts are ever conscious of the fact that because of its very nature. Mareva injunctions could be open to abuses. So they have evolved some rules and principles which are designed to guard against such abuses. By these rules, before a Mareva injunction could be granted the applicant must show:-

(i) that he has a cause of action against the defendant which is justiciable in England: See- Siskina (Owners of Cargo lately laden on board) v. distas Compania S.A. (1979) A.C. 210;

(ii) that there is a real and imminent risk of the defendant removing his assets from jurisdiction and thereby rendering nugatory any judgment which the plaintiff may obtain: See -Barclay-Johnson v. Ynill (1980) 1 WLR 1259. at p.1264; also – Rahman (Prince Abdul) him Turki al Sudiary v. Abu – Taha (1980) 1 WLR 1268, at p.1272;

(iii) that the applicant has made a full disclosure of all material facts relevant to the application: see – Negocios Del Mar SA. v. Doric Shipping Corp. SA. (The Assios) (1979) 1 LI. Rep. 331;

(iv) that he has given full particulars of the assets within the jurisdiction.

(v) that the balance of convenience is on the side of the applicant; and

(vi) that he is prepared to give an undertaking as to damages.

If he rails to satisfy the Court in any of these preconditions for a grant of a Mareva injunction, it ought not to be granted.

In the instant case, appellant’s application was bound to fail on the 1st, 2nd, 5th and 6th of the above conditions. His action had been dismissed by the High Court and until that dismissal has been reversed on appeal the Court was entitled to presume that the judgment was correct. So, there was no question of his being able to show that he had a cause of action against the respondents. The dismissal of his claim would be tantamount to his having no cause of action against the respondents. Further, he had not deposed to any facts from which one could infer that there was real and imminent risk of any of the respondents taking the assets out of jurisdiction. It was not enough to just assert that the 3rd respondent was a German. It is material that the 1st, 6th and 7th respondents are Nigerian companies and the rest of the respondents, except the 3rd who is merely a director and shareholder of the 1st respondent, are Nigerian citizens. Also the appellant did not offer or give any undertaking as to damages. In view of the high risk and hardship that are usually involved in an order of Mareva injunction, such an undertaking is the price and a sine qua non to the grant of it. Additionally, as the Court of Appeal found, the appellant had failed to give a bank guarantee which had been earlier ordered as a condition for the grant of an interlocutory injunction pending trial in the Court of trial.

But, above all, the greatest weakness to the appellant’s case was the balance of convenience. Now, if the appellant had succeeded in showing that he had a cause of action against the respondents he would have been obliged to show, inter alia, like in an interlocutory injunction, that the balance of convenience was in his favour before he would be entitled to the grant of a Mareva injunction. For, under section 18 of the High Court Law of Lagos State, the only lawful ground upon which that Court, or either the Court of Appeal or the Supreme Court which is basically exercising the power of the High Court in the matter, could grant any injunction is that it is just or convenient to do so. The intendment of the section as well as the implication of balance of convenience is that the Court must weigh and determine on which side justice lies – whether there will be better justice in granting it than in refusing it. In a case like this where the question is not whether any party could be adequately compensated for its loss for the order being made or refused, it will, of necessity, involve a consideration of a wide range of matters, depending on the facts of the particular case, which go to make up the general balance of convenience. In this case, on applicant’s side of the balance is his mere expression of fear that the 3rd respondent, a German, may take the funds of the first respondent out of the country, so that if he wins his appeal, he may not be able to satisfy the judgment. He has not deposed to any steps being taken by the 3rd respondent to take the funds out of the country. The danger is merely feared. It is a quia timet ground for the injunction. Of course this ground has in theory long been established as a valid one for injunctions (for which see Attorney-General v. Long Eaton U.D .C. (1915) 1 Ch.127, p.124). But the condition precedent to a grant of it on quia timet grounds is that the applicant must establish a strong case. For as Lord Dunedin observed, rightly in my view, in Attorney-General for the Dominion of Canada v. Ritchie Contracting and Supply Co. Ltd. (1919) A.C. 999, at p.1005-

“But no one can obtain a quia timet order by merely saying ‘Timeo’ he must aver and prove that what is going on is calculated to infringe his rights.”

He must prove that there is an imminent danger of very substantial damage or further damage and show extreme probability of irreparable injury to the right or property of the applicant. See – Hooper v. Rogers (1975) Ch.43, at p. 49; Attorney General v. Nottingham Corporation (1904) 1 Ch. 673.

The applicant in the instant case never even attempted to establish any imminent danger of the funds being siphoned out of the country. Mere expression of unsubstantiated fear is not enough, On the side of the respondents. I cannot ignore the fact that what the applicant is claiming in the suit is only 5% of the gross earnings and another sum of N1,160,000.00 said to be unpaid salaries and house rents for four years and that these are only a small fraction of the funds sought to be restrained that a Court of competent jurisdiction has already held, in a subsisting judgment, that the document, Exhibit. “P.2 1” upon which the 5% claim is based is bogus and not worthy of belief and that the claims for salaries and allowances were not established; that as uncontradicted affidavit evidence before the Court shows, the 1st respondent spends about N100,000.00 every month on the salaries of its staff so that the order sought would mean that it must close down its business altogether or owe its staff salaries indefinitely. Above all, only one of the seven respondents is either not a Nigerian citizen or a Nigerian company so that any evidence of an attempt to siphon the funds out of the country must have to be strong and cogent; and that the 3rd respondent is only a director and shareholder of the 1st respondent company, among some Nigerians. Taking all these facts into consideration on the side of the respondents and balancing them with the mere quia timet allegation of the appellant it is clear that the balance of convenience lies on the side of the respondents. The Court of Appeal was, therefore, right to have so held and dismissed the application.

For the above reasons and the fuller reasons given by my learned brother, Uwais, J.S.C., in his lead judgment which I take as my own, I dismiss the appeal with N1,000.00 costs against the appellant.

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Other Citation: (1992) LCN/2540(SC)