Thor Limited V. First City Merchant Bank Ltd (2002)

LAWGLOBAL HUB Lead Judgment Report

In the High Court of Lagos State holden at Lagos, summary judgment was entered on 9th December, 1994 against the Appellant who was Defendant (per A. Ade Alabi J.) for N12,303, 145.19 plus interest and costs under Order 10 (now Order 11) of the High Court (Civil Procedure) Rules, 1972. Briefly put, the Respondent (hereinafter referred to as the Plaintiff) claimed against the Appellant (in the rest of this judgment referred to as Defendant the following reliefs: “(a) The sum of N12,303,145.19 (Twelve Million, Three Hundred and Three Thousand, One Hundred and Forty Five Naira, Nineteen Kobo), being outstanding debit balance on the defendant’s Account No. 50494001820 with the Plaintiff as at 31st of December, 1993, in respect of various credit facilities (Banker’s Acceptance, Revolving Credit and Overdraft granted by the Plaintiff to the Defendant between December, 1987 and February, 1989. (b) Interest on the said sum at the rate of 21% per annum from the 1st of January, 1994 until the whole amount outstanding is fully liquidated. The Defendant can pay the amount claimed, the interest thereon and costs.”

The Defendant on its part filed a Statement of Defence and Counterclaim and by Paragraph 2-4 of the latter, the Defendant claimed against the Plaintiff as follows: “2. The Defendant counter-claims against the Plaintiff the sum of N1,943,000.00 being overpayments made by the Defendants to the Plaintiff over the material time 3. The sum of US $150,000.00 deposited by Decacia International Limited as Red Letter portion of letters of credit issued in favour of the Defendant. 4. The Sum of N2,000.00 as damages for breach of contract to wit the unlawful and unilateral suspension.” By summons for judgment brought pursuant to Order 10 Rules 1 and 2 of the High Court of Lagos State (Civil Procedure) Rules 1972, the Plaintiff sought an order of the Lower Court in the terms set out hereinbefore and attached thereto an affidavit of 38 paragraphs against the Defendant filed on 4th May, 1994 with no exhibits attached termed “Affidavit of Merits” salient among which are: “1. That I am the Chief Executive Officer of the Defendant company and that I make this oath with all authority from facts in my personal knowledge. 2. That at all material times I did deal with the Plaintiff herein in respect of the transactions that are the subject of this action. 3. That I do not know Mr. Ademola Bakre, do not believe that he is or was an employee or other officer of the Plaintiff and he is certainly unable to swear positively to the facts related in his affidavit dated 8th April, 1994. 4. That I verify the facts averred in the Defence filed for the Defendant on 8th April, 1994. 5. That the alleged indebtedness of the Defendant arises from a series of credit arrangements each with distinct and different terms as to interest rate, repayment date, repayment source and method and all were fully collateralized by security in excess of the repayments due which security was easily realizable and at all times within the full control of the Plaintiff. 6. That the facility of N1.2 Million granted on 31/12/94 was a temporary cash advance against the Defendants domiciliary account balance of Pound Sterling 169,600 then valued at N1,272,000.00. 7. This facility was to be repaid latest by 15th March, 1988 and effected by the recovery of the said foreign exchange to which the Plaintiff demanded and obtained a letter of set off dated 1st January, 1988. 8. That the Plaintiff did in fact realize this balance at its own convenience and in any event interest on this facility ceased to accrue on the said 15th March, 1988 despite any default by the Plaintiff to realize it. 9. That the said credit was augmented under the terms of a letter of offer dated 12th February, 1988 by N4 Million secured against security provided to the Plaintiff as it requested by Decacia International Limited its long-standing customer and trading partner. 10. That this facility was to be repaid from disposal of export proceeds receivable and received by the Plaintiff and disposed of by them accordingly from time to time. 11. That accordingly, it was a condition of the facility that a sizeable portion of the Defendants business with Decacia Limited would be channeled through the Plaintiff bank and this was a consideration accruing to the Plaintiff. 12. That at all times the business of Decacia International was crucial to the relations with the Defendant and the Defendant was treated accordingly as an agent of Decacia International at least to the extent that any facility of credit required the approval and support of Decacia International Limited. 13. That this credit was available for 12 months and was never expressly or otherwise renewed. 15. That at the end of twelve months the facility was due and recoverable by the Plaintiff at which point interest and other charges due thereunder and calculated up to the due date ceased. 17. That at the expiry thereof by the latest, the Plaintiff recovered the said collateral which was at all times in its possession and control. 19. That any sums outstanding due apart from the above sums was secured as indicated by the off shore primary obligations of Decacia International Limited. 21. That all offers of alternative security in excess of any outstanding were refused by the Plaintiff who meanwhile withdrew unilaterally from the Defendant the right to utilize such facilities. 22. This action was unreasonable and unfair and was in breach of the contracts under which the facilities were granted. 23. That the Plaintiff refused to call in the guarantee of Decacia International and continued to negotiate with it, the credits of the Defendant without consulting the Defendant and accordingly continued to rely on the illegal off shore guarantee to sustain its continuing debits to the Defendant on the frozen accounts. 24. That under secret arrangements made with Decacia International whose business it did not wish to loose, the Plaintiff extended the maturity of the Defendants letters of credit and reached with Decacia binding agreements for the full and final settlement of certain credits including the letter of credit No. 890284 upon which the Plaintiff continued to debit charges and interest against the Defendant’s account. 25. That in respect of interest, the Plaintiff continued to debit and capitalize interest on the Defendant’s account while the account was frozen. 26. That the Plaintiff also capitalized interest in respect of facilities that had been paid or recovered. 27. That the Plaintiff capitalized interest monthly before the expiry of facilities over a period when interest was not overdue. 28. That interest was calculated uniformly on the entire purported debit balance and the capitalization was illegal and contrary to banking practice or the agreement inter parties. 29. That several debits on the Defendant’s account were purely unauthorized and were deliberate manipulations created to deceive the Central Bank of Nigeria. 30. That the Defendant relied on Plaintiff’s advise in its response to the new guidelines from the Central Bank of Nigeria by offering new security yet the Plaintiff received the proposals and did not act on them while it debited the Defendant nearly N400,000.00 which it alleged was a penalty imposed upon it by the Central Bank upon the Plaintiff’s own failure. 31. That the bankers acceptances debited to the Defendant were further manipulations not authorized by the Defendant whereby the Plaintiff funded its own credit by short term facilities held by itself and charged the Defendant for these without authority. 32. That the Plaintiff debited the Defendant for losses due to fluctuations of the value of either or both the Naira and foreign exchange which were incurred by default of the Plaintiff to exercise its right of set off. 33. That the Plaintiff charged the Defendant several duplicated and imaginary sums in order to regularize its account with the Central Bank of Nigeria. 34. That the Plaintiff without the knowledge or consent of the defendant manipulated or debited the Defendant’s account against transaction to which it knew nothing about. 35. That it was later discovered by the Defendant that the Plaintiff was fronting with the Defendant’s account in order to regularize its own account situation with the Central Bank of Nigeria, 36. That the Defendant has a valid defence to this action and a counter claim based on breaches by the Plaintiff of the credit contracts, which it is ready and willing to prosecute.” The underlining above is mine and it is to underscore how formidable and unassailable the Plaintiff’s case was vis-à-vis the Defendant’s Defence and Counterclaim.

Thus, by his earlier Ruling delivered on 9th of December, 1994 the learned trial Judge refused leave to defend and entered judgment for the Plaintiff by stating as follows: “Accordingly, an order is hereby made empowering the Plaintiff to enter judgment in the sum of N12,303,145.19. The Plaintiff also claimed interest at the rate of 21% per annum from the 1st of January, 1994 until the final liquidation of the whole debt with cost. It is obvious to me that the Plaintiff in this case is being kept out of money, which ought to have been paid to her. On the strength of the principle established in the case of N.G.S.C. Limited v. N.P.A. (1990) 1 NWLR (Part 129) page 741 at 748, I hold that the Plaintiff is entitled to interest at the rate of 10% per annum until judgment debt is finally liquidated. Costs assessed at N2,000.00 is awarded in favour of the Plaintiff.” Aggrieved by the said decision, the Defendant filed a Notice of Appeal dated 17th January, 1995 containing two grounds to the Court of Appeal. The lone issue formulated from those two grounds for that Court’s determination was: Whether the Defendant was entitled to be let in to defend the claim of the Plaintiff on the basis of the “Affidavit of Merit” and the Statement of Defence before the Court. After giving due consideration to the issue raised the Court (per Oguntade, Aderemi and Nzeako, JJ.A.C.) held as follows: “In the case of Nishizawa Ltd. v. Stinchand N. Jethwani (1984) 12 SC. 234, these principles were well examined and determined. In that case, one of the issue relevant to this appeal which the Supreme Court had to determine was: “Whether the Courts below were right in holding that the Defendant had duly established that he has a good defence to the action on the merits or that he had disclosed such facts as may be deemed sufficient to entitle him to defend the action.” One principle relevant to this appeal and which came out glaringly is that what the trial Judge will be looking for at that stage of the proceedings before him when considering a summons for summary judgment under Order 10, is whether the Defendant has disclosed by his affidavit such facts as may be deemed sufficient to entitle him to defend the action. What are deemed facts sufficient to entitle him to defend the action depend on the circumstances of the case.

If, for example, the Defendant pleads facts which are grounded in law, and the issue of law is substantial, the Judge hearing the summons for judgment will not readily grant leave to the Plaintiff to enter judgment. He will let in the Defendant to defend the suit . If on the other, the facts seem to ground a defence, which is frivolous, or worthless or as the Courts sometimes describe it, “a sham” the Court will surely grant the Plaintiff leave to enter judgment and refuse to let in the Defendant See Mclardy v. Slateum (1890) 24 QBD 504, Nishizawa Ltd. v. Stinchard N. Jetwani (supra). Also Macaulay v. NAL Merchant Bank Ltd. (1990) 4 NWLR (Part 144) 283. To pin the principles further down, what a trial Judge looks for under the Order 10 procedure are facts, which raise triable issues. See Nishizawa Ltd. case (supra)” Applying the principles identified above, the lower court concluded in the following words: “Was the learned trial Judge wrong in the light of the above? I think not. The learned trial Judge cannot be faulted in his consideration of the materials before him for each party – whether the Plaintiff complied with the Rules and properly put forward their cause of action under Rule 10, on the part of the Defendant, whether it complied with the rules and satisfied the requirements in decided cases by the Supreme Court by their Statement of Defence and Affidavit of Merit. I affirm that the Plaintiff (sic) duly complied with order 10 and the principles I earlier set out.” It is against these core findings that the Defendant has appealed to this Court on a Notice of Appeal dated 25th day of January, 2000 containing two grounds, and the issues therein, to which the Plaintiff herein has raised a preliminary objection as to their validity as well a the appeal itself. The ground for this objection as demonstrated, is that the two grounds of appeal are at best grounds of mixed law and fact for which neither the requisite leave of the lower court nor of this Court was obtained for the filing of the appeal. To further elucidate Section 213(2) and (3) of the 1979 Constitution (now Section 233 (2) and (3) of the 1999 Constitution) the section gives a party a right of appeal from the decision of the Court of Appeal to the Supreme Court in that by virtue of subsection (2) thereof, a party who is aggrieved by the decision of the Court of Appeal has a right of appeal on grounds of appeal which are of law only. Where, however, the ground or grounds of appeal which are not of law alone but of mixed law and fact or fact simpliciter, the right of appeal from the Court of Appeal to the Supreme Court can only be exercised where the aggrieved party has first sought and obtained the leave of either the Court of Appeal or the Supreme Court. Since the Defendant’s counsel in the instant case appears clearly to concede that the appeal was filed without leave, presupposing that the two grounds are of law, it is clear therefore that the appeal was brought under Sub-section (2) of Section 213 (ibid). For the appeal to be competent, the two grounds of appeal must perforce be of law only. Any of these grounds that is not that of law simpliciter, will not support an appeal under Sub-section (2) of Section 213 and will therefore be incompetent.

As Eso, JSC has occasion to point out in the case of J. B. Ogbechie & Ors. v. Gabriel Onochie & Ors. (1986) 2 NWLR (Part 23) 484 at page 491: “There is no doubt that it always difficult to distinguish a ground of law from a ground of fact but what is required is to examine thoroughly the grounds of appeal in the case concerned to see whether the grounds reveal a misunderstanding by the lower tribunal of the law or a misapplication of the law to the facts already proved or admitted, in which case it would be question of law, or one that requires questioning the evaluation of facts by the lower tribunal before the application of the law in which case it would amount to question of mixed law and fact. The issue of pure fact is easier to determine.” (Underlining is for emphasis). See also Comex Ltd. v. N.A.B. Ltd. (1997) 3 NWLR (Part 496) 625 at page 658, paragraphs A-C (per Ogundare, JSC). On determination of whether a ground of appeal is a ground of law or of mixed law and fact or fact see also the case of Metal Construction (W.A) Ltd. v. Migliore (1990) 1 NWLR (Part 126) 299 and Nwadike v. Ibekwe (1987) 4 NWLR (Part 67) 718. In the light of my observation above I now proceed to the two grounds in the instant appeal, which complain as follows: “GROUND ONE The Honourable Justices erred in law when they held the Plaintiff was entitled to judgment on its application of summary judgment.

Particulars (i) The Honourable Justices held (at paragraph 11) “that there is no doubt that the Plaintiff’s application had been properly constituted having satisfied the requirement in the Order 10 procedure having verified the cause of action, the amount claimed and stating in their believe (sic) that there is no defence to the action.” (ii) Mere compliance with the form or technicalities of Order 10 is not sufficient to discharge the Plaintiff’s onus in Order 10 procedure. (iii) The Plaintiff must “verify” which is to prove at least prima facie, his right to judgment and the court has no power to grant judgment not established by the Plaintiff whether the defendant filed an affidavit or not. (iv) The case of the Plaintiff was technically and evidently weak and did not show a prima facie right to judgment. (v) The Defendant’s argument went deeply to falsifying the basis of the claim and these were rather critical to the discretion to give judgment. (vi) The Plaintiff’s own further affidavit falsified the basis of the claim and supported the Defendant’s objection. GROUND TWO The Honourable Justices misdirected themselves when they held that the Defendant had not placed before the Lower Court, sufficient facts to enable the Defendants obtain leave to defend. Particulars: (i) The burden of establishing or proving a case is on the Plaintiff who asserts and the Defendant may present minimal materials sufficient to contradict the affidavit evidence of the Plaintiff, if the Plaintiff has not proved the case. (ii) The Defendant’s affidavit contradicted the Plaintiff in material and triable particulars and the law does nor require evidence such as would be tendered at the trial. (iii) The learned Justices failed to take note of the key issues that since the Plaintiff/Respondent at all times had exclusive possession of collateral, this was not simply a matter of loan granted but the Plaintiff had the onus of explaining the utilization of the collateral. (iv) The Justices failed to consider the impact of interlocutory applications as raising critical inquiries, which undermined the Plaintiff’s case. (v) The Defendants raised preliminary technicalities, which the Justices failed to resolve and which were fundamental to the case made.

Though ground one postulates that it is a ground of law, a thorough examination of it and its particulars show, in my opinion, that the complaint of the Defendant is that the Plaintiff’s case was weak and defective and could not sustain the claim on the Writ. See also the paragraphs of’ the Affidavit of Merits above. Certainly, a decision on this issue would have to take account of facts relied on by the Plaintiff in support of its claim. Having taken cognizance of those facts and whether these facts as alleged by the Plaintiff are strong enough to entitle them to judgment, I take the view that the ground is one of mixed law and fact. See Coker v. U.B.A. PLC (1997) 2 NWLR (Part 490) 641 at 664 (D); Ogbechie & Ors. v. Onochie & Ors. (1986) 2 NWLR (Part 23) 484 at 487; I.A.I. Ltd. v. Chika Bros. Ltd. (1987) 4 NWLR (Part 63) 92 and Comex Ltd. v. N.A.B. Ltd. (supra).

After all, the mere christening of a ground of appeal as a ground of law does not make it necessarily so. Ground two of the grounds of appeal states: “The Honourable Justices misdirected themselves when they held that the Defendant had not placed before the Court, sufficient facts to enable the Defendants obtain leave to defend.” The particulars of this ground of appeal on a careful and thorough examination also clearly demonstrate that the complaint is against the non-recognition if the facts as presented as being enough for the Defendant to be granted leave to defend. Unfortunately, however, they do not. I am therefore of the view that the Defendant having not obtained leave to argue this ground of appeal, it is accordingly declared incompetent and liable to be struck out. Vide Maigoro v. Garba (1999) 10 NWLR (Part 624) 555 at 568. It is trite that where a ground of appeal is incompetent, any issue for determination based on such incompetent ground of appeal to which a concession was indeed made during hearing goes to no issue and should be struck out. See Agbaka v. Amadi (1998) 11 NWLR (Part 572) 16 at 24 E – F. I accordingly have no hesitation in striking out the two issues for determination identified and argued in the Defendant’s Brief as incompetent. PAGE| 6 The two Grounds of appeal and issue for Determination being incompetent, the appeal itself is incompetent. Accordingly, I strike out this appeal and award N10,000.00 costs to the Plaintiff.

SC. 245/2000