The Honda Place Ltd. V. Globe Motor Holdings Nig. Ltd. (2005)

LAWGLOBAL HUB Lead Judgment Report

KATSINA-ALU, J.S.C.

This appeal is from the decision of the Court of Appeal, Lagos Division in appeal No. CA/L/164/99 given on 12th December, 2000. The appellant had filed a motion before the Lagos High Court whereby it sought an order dismissing the respondent’s suit on ground of res judicata and abuse of court process. The High Court dismissed the appellant’s motion. The appellant’s appeal to the Court of Appeal, Lagos Division was dismissed. The decision of the High Court was affirmed. The appellant has further appealed to this court.

In order to appreciate the submissions and arguments on behalf of the parties, I think it is desirable to state the facts of this case in detail. The facts of the case are these. The appellant was a dealer appointed by the Japanese manufacturers of Honda cars, to import and market Honda cars in Nigeria. On 2nd December, 1993, the appellant entered into a sub-dealership agreement with the respondent as a sub-dealer of Honda cars with the right to import and market 45% of cars allotted to the appellant by the Japanese manufacturer.

Afterwards, a dispute arose between the parties in the operations of the sub-dealership agreement. This led to a spate of litigations, the principal one being suit No. LD/1643/96 between the appellant as 1st plaintiff and the respondent as 1st defendant. The suit was eventually settled out of court with the “Terms of Settlement” duly signed by all the parties. The terms of settlement were embodied in and became the judgment of the court. The judgment of the court reads as follows:

“Judgment is hereby entered as per the terms of settlement filed by both parties as follows:

1. The 1st and 2nd defendants, their servants, agents and/or privies shall cease from any publication or advertisement or presentation of themselves to the public as otherwise sole or exclusive distributors or sole dealers of Honda cars in Nigeria;
2. The plaintiffs and the 1st and 2nd defendants have agreed that all advertisements will include all other authorized Honda dealers under one umbrella, each dealer to be identified by the words “Honda” + their respective locations. The words “T.H.P. Limited” shall appear in one comer in small letters in all adverts.
3. The 1st and 2nd defendants shall cease forthwith after the arrival of 106 units of Honda cars already committed to and arriving before the end of November 1996, the importation of Honda cars into Nigeria from the United States of America, the middle east or any other source and shall deal only in and participate in the sale of Honda cars imported or sold in Nigeria by Honda Motor Company Limited of Japan through the 2nd plaintiff, the sole and exclusive distributor of Honda Japan in Nigeria.
4. The 1st defendant shall purchase a backlog of 45 units of Honda cars from the plaintiffs at a price to be mutually agreed upon before ordering/importing any new Honda cars through the plaintiff and the plaintiff shall subsequently supply information, prices, polices and guidelines. On completion of the backlog, the plaintiff shall provide proforma invoices through T.H.P. Limited on request by the 1st and 2nd defendants. Payments for the said backlog shall be done as agreed by the plaintiffs and the 1st and 2nd defendants.
5. The plaintiffs and the 1st and 2nd defendants hereby agree that the sub-dealership agreement of 2nd December, 1993 is no longer operative.
6. The plaintiffs hereby re-appoint the 1st defendant as a dealer for Honda cars subject to the above conditions and in line with Honda rules, polices and guidelines and both parties shall enter into a new dealership agreement subject to the approval of Honda Motor Company of Japan.
7. The plaintiff hereby discontinue this action against 3rd, 4th and 5th defendants.
8. Parties to bear their costs.”

(Italicising supplied for emphasis)

On 23rd, September, 1997 the respondent brought an action in suit No. M/471/97 at the Lagos High Court seeking an order of the court “compelling the appellant to comply with the orders of the Honourable Court delivered on the 15th day of July, 1996 in suit No. LD/1643/96.”

The respondent also asked for N900, 000,000.00 damages.

While suit No. M/471/97 was still pending at the Lagos High Court, the respondent filed a fresh action against the appellant in suit No. ID/915/98 at the Ikeja Division of the Lagos State High Court. In that suit the respondent pleaded the sub-dealership agreement of 2nd December, 1993 and sought the following reliefs:

“i. A declaration that the memorandum of agreement dated the 3rd (sic) day of December, 1993 signed by both parties to this action remains binding and effective.

ii. A declaration that the defendant has failed to carry out or perform the obligation imposed upon it under clauses 3 (a) and (b) of the said agreement;

iii. A declaration that the aforementioned agreement dated the 3rd (sic) day of December, 1993, does not absolutely and completely prohibit the plaintiff from importing Honda motor cars from any willing supplier for resale and distribution in Nigeria;

iv. A declaration that the defendant has no right to prevent the plaintiff from importing Honda motor cars for resale and distribution in Nigeria after he (the said defendant) had repudiated or deliberately failed to implement the aforementioned agreement dated 3rd (sic) day December, 1993;

v. An order of perpetual injunction restraining the defendant, its servants and agents from preventing or doing any act or taking any action or step to prevent the plaintiff from importing into Nigeria Honda motor cars for resale and distribution in Nigeria on the alleged ground that no one in Nigeria (apart from the defendant) can lawfully import such cars into the country for resale and distribution.

vi. N4 billion damages for breach of the said agreement.”

Upon the receipt of the said processes, the appellant entered a conditional appearance and filed a defence wherein it raised the issue of res judicata based on the consent judgment, and abuse of court process based on the pending suit No. M/471/97.

Thereafter the appellant filed an application to dismiss or strike out the suit on the grounds that the suit is res judicata, an abuse of court process and the court lacked jurisdiction.

As I stated earlier on, the High Court dismissed the application.

Appellant’s appeal to the Court of Appeal was also dismissed. The present appeal is against the judgment of the Court of Appeal.

Based on the grounds of appeal filed, the appellant has submitted three issues for determination in this appeal. The issues are as follows:

“1. Whether there was sufficient material before the High Court to enable it consider and decide the plea of res judicata.

2. Whether if as decided by the court below, it is necessary for a court to examine the writ of summons and pleadings filed in an earlier suit before deciding whether a plea of res judicata avails the defendant, the court below was right in dismissing the appellant’s application instead of striking it out.
3. Whether the suit is not an abuse of court process bearing in mind the consent judgment in suit No. LD/1643/96.”

The issues raised by the respondent are similar to the appellant’s issues. I do not think it is necessary to set them out.

Issue No.1

The issue here, in the main, is whether there was sufficient material before the High Court upon which to found a plea of res judicata. In his ruling the learned trial Judge said:

“The main pivot of the counsel for the defendant’s argument is on res judicata. The Supreme Court in Adedayo v. Babalola (1995) 7 NWLR (Pt.408) 383 set out the conditions for sustaining a plea of res judicata as follows:

“(a) That there was an adjudication of the issue joined by parties;

(b) That the parties or their privies as the case may be are the same in the present case as in the previous case;

(c) That the issue and subject matter are the same in the previous case as in the present case;

(d) That the adjudication in the previous case was given by a court of competent jurisdiction, and (e) That the previous decision finally decided the issues between the parties, that is, the rights of the parties were finally determined.”

The defendant has attached a number of exhibits to its application and exhibits A, Al and B are all photocopies of some court processes between the parties and some others in other suits. Unfortunately the defendant did not exhibit any considered judgment in respect of either of these suit neither did he exhibit the statement of claim or statement of defence filed in these suits or the writ of summons. If these processes were exhibited, I would have had the privilege of examining the claim and would then be in the best position to judge whether the claims and the issues involved in this case are one and the same with the one that is pending before the Lagos Judicial Division. Apart from this fact, the exhibits are consent judgments and terms of settlement arrived at by the parties before the matter went to trial, so suit No. LD/1643/96 was never tried on its merit neither was suit No. M/47/97. These cases therefore were never adjudicated upon and determined as it were as required by the law for the plea of res judicata to avail the defendant.”

The Court of Appeal was of the same view. In its judgment, per Oguntade, JCA (as he then was) the court reasoned thus:

“For the purpose of responding to the issues in contest between the parties, it is necessary to examine section 54 of the Evidence Act, it provides.

’54. Every judgment is conclusive proof as against parties and privies, of facts directly in issue in

the case, actually decided by the court and appearing from the judgment itself to be ground on which it was based; unless evidence was admitted in the action in which the judgment was delivered which is excluded in the action in which that judgment is intended to be proved.’

There is nothing in section 54 above which can be construed as excluding a judgment by consent from giving rise to an estoppel by record. I think this view draws support from Huddersfied Banking Co. Ltd. v. Henry Lister & Son Ltd. (1895) 2 Ch. 273. See also Odunsi v. Boulos (1954) SCNLR 591, (1954) FS.C. 234. Whether or not a particular consent judgment can be relied upon in a future case as creating estoppel by record will depend on the facts available to the court in the latter case in determining the questions of law or fact decided in the earlier case. There is always a difficulty to be encountered in relying on a consent judgment to sustain a plea of res judicata. The difficulty arises in relation to the ascertainment of the issues of law or fact decided in the earlier case. It is to be borne in mind that section 54 above makes a judgment conclusive proof “of facts directly in issue in the case, actually decided by the court and appearing from the judgment itself …”

I have deliberately quoted in extenso the judgments of the High Court and the Court of Appeal in order to bring out the flaws therein having regard to the facts of this case.

The starting point is the affidavit in support of the motion for an order dismissing or striking out the suit on the ground that the suit is res judicata. As has been pointed out in the appellant’s brief of argument, the respondent did not controvert any of the depositions contained in the affidavit in support of the application before the trial court. Of particular importance are paragraphs 4 and 7 of the affidavit. These state thus:

“4. That in suit No. LD/1643/96, the parties to this suit had settled the issues upon which the present suit is based and judgment had been entered based on the terms of settlement filed. Copies of the terms of settlement and the judgment entered by the court are attached herewith and marked exhibit ‘A’ and ‘A1’.

7. That the issues and reliefs in this suit are the same and arose out of the same transaction already decided in suit No. LD/1643/96 between the parties and which decision the plaintiff is seeking to enforce in suit No. M/147/98 which is still pending.”

It is not in dispute that the respondent did not counter these averments. The respondent did not file a counter-affidavit. Both the High Court and the Court of Appeal noted the failure by the respondent to file a counter-affidavit. The High Court in its judgment said:

“Learned counsel for the plaintiff opposed this application but did not file any counter-affidavit. His objection was centred on points of law only.”

For its part, the Court of Appeal said:

“Plaintiff did not file a counter-affidavit before the lower court. The result was that the depositions as to issue of fact on the affidavit in support of the motion were unchallenged.”

The Court of Appeal nevertheless proceed to hold that:

“The deposition in paragraph 7 of the affidavit was therefore a conclusion of law or a statement of fact which still needed to be proved.”

(Italicising mine)

The Court of Appeal was plainly in grave error. The law is that where the facts in an affidavit remain unchallenged and uncontroverted, the court is bound to accept those facts as established as those facts were deemed to have been admitted. See Nwabuoku v. Ottih (1961) 2 SCNLR 233. No counter-affidavit was filed by the respondent with the result that the facts deposed to in support of the application were neither challenged nor disputed by the respondent.

What this means is this. Those facts remain unchallenged and uncontroverted. The inevitable consequence is that those facts deposed to in the affidavit filed by the applicant must be deemed to have been admitted by the respondent and must also be taken as true by the court unless they are obviously false to the knowledge of the court. See Alagbe v. Abimbola (1978) 2 SC 39 at 40. The said facts show that the issues and the reliefs in the present suit are the same and arose out of the same transaction already decided in suit No. LD/1643/96 between the parties. It is the decision in suit LD/1643/96 that the respondent is seeking to enforce in suit No. M/471/97 which is still pending at the Lagos High Court.

The courts below cannot claim that the facts deposed to in the affidavit are false to their know ledge. However if the facts deposed to were to the effect that, for instance, Kaduna is the capital of Nigeria or that Nigeria has a population of 50m, then the court which should take judicial notice of such facts would not accept the deposition as true, the failure to file a counter-affidavit notwithstanding.

I think the case of the appellant that the issues in the present suit and the previous action are the same has been made out.

But that is not all. I think that there is enough material in the present suit (ID/915/98) brought by the respondent to indicate on a careful reading that the issues in both actions are the same. In this regard, I will read part (ii) paragraphs 4 to 10 of the statement of claim. They read as follows:

“(ii) The Agreement of 1993.

4. In or around 1993 there was a back log of Honda motor cars ordered by the Nigerian customers

who were distributors or retailers of such vehicles in Nigeria.

5. In order to promote the sale of Honda motors cars in Nigeria, the Japanese manufactures appointed the defendant their sole agents in Nigeria on condition that the said defendant will-

(a) clear the entire backlog of motor vehicle ordered from the Japanese manufactures and mentioned in paragraph 4 hereof

(b) build a service station with adequate facilities for catering for purchasers or users of Honda vehicles in Nigeria and;

(c) continue to import Honda motor cars from Japan for use in the Nigeria market.

6. In order to enable him fulfil the requirement of the Japanese manufactures of Honda, the new respondent entered into an agreement dated December, 1993. The plaintiff hereby pleads the agreement and will rely on the full thereof.
7. By the said agreement and subject to the terms and conditions therein stipulated, the plaintiff

(inter alia) covenanted to import (i.e. be responsible for payment for the importation) of 45% of the Honda car allowed for importation to Nigeria by the Japanese manufactures.

8. The plaintiff fulfilled its obligations under the agreement mentioned in paragraph 7 hereof and

in particular it –

(a) it established irrevocable and confirmed letters of credit in favour of the manufactures for clearing the backlog of Honda motor cars referred to in paragraph 2(a) of the said agreement in conjunction with the defendant and;

(b) was at all material times ready and willing to take up 45% of all Honda cars imported into Nigeria by the defendant.

9. The defendant, apparently finding that the business of selling Honda cars in Nigeria was highly

profitable, defaulted in giving the plaintiff his (i.e. plaintiff’s) contractual rights to take up 45% of

vehicle allocated for importation into Nigeria, as pleaded in paragraph 7 thereof. The plaintiff states that this conduct on the part of the defendant constitutes a breach of the agreement mentioned in paragraph 6 and 7 hereof.

10. The defendant has made efforts, including abuse of judicial process, to frustrate the operation of the aforementioned agreement. The plaintiff will contend at the trial of this action that the said

1993 agreement was valid and is still in force.”

(Italicising mine.)

It seems plain to me that the action was founded on the 1993 agreement between the parties which was incorporated in the consent judgment in suit No. LD/1643/96. Paragraphs 4 to 10 of the Statement of Claim read together with the reliefs claimed in paragraph 16 thereof, which I have earlier on reproduced, should leave one in no doubt that the present suit is predicated on the 1993 agreement.

Clause 5 of the terms of agreement embodied in the judgment reads:

“The plaintiffs and the 15t and 2nd defendants hereby agree that the sub-dealership Agreement of 2nd December 1993 is no longer operative.”

(Italicising for emphasis)

It is this agreement which the plaintiff/respondent claims that it remains binding and effective. Relief No.1 reads:

“(1) A declaration that the memorandum of agreement dated the 3rd (sic) day of December, 1993 signed by both parties to this action remains binding and effective.”

(Italicising mine)

By clause 5 of the terms of settlement which was entered as consent judgment by the court, the parties had agreed to rescind the sub-dealership agreement of 2nd December, 1993. The said agreement is no more binding on the parties. It therefore means that the issue whether the sub-dealership agreement is still in operation or is still binding on the parties has been settled in suit No. LD/1643/96. In my judgment, aside from the uncontroverted paragraphs 4 and 7 of the affidavit in support of the application, I hold that there was sufficient material before the trial court to enable it to consider and decide the plea of res judicata raised by the appellant.

The doctrine of res judicata rests on the principle that there must be an end to litigation. A party should not and must not be allowed to relitigate a matter that has been settled in a final decision of a court of competent jurisdiction. The law is that for a plea of res judicata to succeed, the following condition must be met:

1. There must be an adjudication of the issues joined by the parties;
2. The parties or their privies as the case may be must be the same in the present case as in the previous case;
3. The issues and subject matter must be the same in the previous case as in the present case;
4. The adjudication in the previous case must have been by a court of competent jurisdiction; and
5. The previous decision must have finally decided the issue between the parties, i.e. the rights of the parties must have been finally determined.”

See Udo v. Obot (1989) 1 NWLR (Pt.95) 59; Cardoso v. Daniel (1986) 2 NWLR (Pt.20 1; Dzungwe v. Gbishe 91985) NWLR (Pt.8 528; Ezenwa v. Kareen (1990) 3 NWLR (pt.138) 258.

It has been submitted fort the appellant that this case is a case where the doctrine of res judicata applies squarely. I couldn’t agree more. All the conditions for a successful plea of res judicata have been met. The consent judgment in suit No. LD/1643/976 given on 15th July, 1996 is a final decision. A decision of a court is final when it finally disposes of the rights of the parties. In other words if the decision or order given by a court is such that the matter respect of which it is given would not be brought back to the court for further adjudication, such decision or order is final. See Odutola v. Oderinde (2004) 12 NWLR (Pt.888) 574. The dispute in relation to the sub-dealership agreement of 2 December, 1993 was determined between the parties under the terms of settlement and was embodies in the order of the court in suit No. LD/1643/96. By clause 5 there it was stated clearly that the sub-dealership agreement was no longer operative. Upon reading the consent judgment, it will clearly seen that the issue of the sub-dealership agreement was final determined by its abrogation. There was nothing, in this respective that would be brought back to the court for further adjudication.

The respondent therefore cannot now be permitted to bring free action founded on the sub-dealership agreement which is no long operative. In Houstead v. Commissioner of Taxation (1926) AC 155 at 165 the judicial committee of the privy council held thus:

“Parties are not permitted to begin fresh litigation because of the views they may entertain of the law the case, or new versions which they present as to should be proper apprehension by the court of the legal result either of the construction of the documents or weight of certain circumstances. If this were permitted litigation would have no end, except when legal ingenuity is exhausted.”

This leads me to the argument and submission of the learned counsel for the respondents. Learned counsel submitted that no legal binding and enforceable rights and obligations between persons are created were an agreement stipulate that it is ” subject to contract”. He place reliance on the English case of Winn v. Bull (1977) 7 Ch. D. 29.

It was also said that an agreement made subject to the approval third party was held “not an agreement at all” in the case of Pym Campbell (1946) 6 E & B 370. it was his further contention that agreement made “subject to the approval of the court” was held not binding and enforceable unless and until the approval was given.

For this contention, counsel relied on Smallman v. Smallman (1972) Fam, 25. Similarly, a lease at “a rent to be agreed” and an option to sell land “at a price to be agreed” were held not to create a binding and enforceable contract. The cases of King Motors (Oxford) Ltd. v. Lax (1970) 1 WLR 426 and Brown v. Gould (1972) Ch. 53 were cited in support of these contentions.

Relying on the above cases, it was contended for the respondent that the stipulation in the consent judgment in the present case that “a backlog of 45 units of Honda cars” was to be purchased by the 1st defendant from the plaintiffs “at a price to be mutually agreed upon” and that “payments for the said backlog shall be done as agreed by the plaintiffs and the 1st and 2nd defendants” create no legally binding and enforceable rights and obligations. The same, it was urged, goes for the stipulation that the re-appointment of the 1st defendant as a dealer for Honda cars was “subject to the above conditions” including the stipulation that both parties shall enter into a new dealership agreement subject to the approval of Honda Motor Company of Japan.”

These submission seem quite attractive and convincing. But with respect I think they are misplaced. The main question is the sub-dealership agreement of 2nd December, 1993. That agreement was abrogated. It was rescinded by the parties. Clause 5 of the terms of agreement embodied in and as the judgment of the court spells that out clearly. Again I read clause 5. It reads:-

“5. The plaintiffs and the 1st and 2nd defendants hereby agree that the sub-dealership agreement of 2nd December, 1993 is no longer operative.”

The abrogation of the sub-dealership agreement is not made subject to anything. It is not subsisting. It was not made subject to a date in the future. It is dead for all purposes. It died on the 5th day of July, 1996.

It is this dead agreement that the respondent seeks to bring back to life. The agreement should have been the focus of the arguments and submissions of respondent’s counsel. The submissions, as powerful as they were, did not touch on the core issue the abrogation of the sub-dealership agreement of 2nd December, 1993 by the parties themselves.

In my judgment, therefore, for the reasons I have given above, the doctrine of res judicata applies to the present case. The respondent cannot be allowed to re-litigate the matter. The first issue therefore succeeds.

I think the resolution of this issue has disposed of the appeal. I do not consider it necessary to deal with the remaining issues whose consideration will be merely academic.

In the result, I allow the appeal and set aside the judgment of the court below which affirmed the judgment of the High Court. I enter an order of dismissal of the plaintiff/respondent’s claim before the High Court. I make no order as to costs.

---

SC.161/2001