Tika-tore Press Limited Vs Ajibade Abina & Ors (1973)

LawGlobal-Hub Lead Judgment Report

FATAYI-WILLIAMS, J.S.C.

In Suit No. LD/546/68 commenced in the Lagos High Court, the plaintiffs claimed against the defendants “the sum of 2,143pounds:6:11d being balance of monies due and payable by the estate of Monsuru Badaru Abina deceased in respect of the said deceased’s account with the plaintiff, which account the deceased maintained under the trade name of Olaosebikan Stores.”

Paragraphs 3-7 of the statement of claim filed in support of the claim read-

“3.The said Olaosebikan Stores in its business transactions with the plaintiff had an account with the plaintiff for goods supplied at its request on credit.

4. Before the death of the sole proprietor of the business (Mr. Monsuru Badaru Abina) the said account had the sum of 4,931pounds:18:1d due and payable as the value of goods supplied on credit. Several demands were made but the debt was not settled, whereupon the company then instructed its solicitor to investigate and find out the person or persons trading under the name and style of Olaosebikan Stores and to institute an action to recover the debt. The enquiry revealed that the managing Director of the Plaintiff Company at the time (namely Mr. Monsuru Badaru Abina) was the sole proprietor.
5. When the sole proprietor was confronted with the proof, namely a certified true copy of the registration of the business under the Registration of Business Names Ordinance, the said Monsuru Badaru Abina, deceased, asked the Plaintiff to be lenient and promised to liquidate the debt by instalments and the plaintiff agreed.
6. Upon the death of the sole proprietor of Olaosebikan Stores in 1967, the defendants were granted Letters of Administration of his estate by the Probate Division of the High Court of Lagos on the 29th day of November, 1967.
7. At the time of his death the said Monsuru Badaru Abina had paid some instalments leaving a balance of 2,465 pounds unsettled.”

After explaining how the deceased was given credit for the sum of 321pounds:13:1d due to him as the Managing Director of the plaintiffs at his death leaving the balance of 2,143pounds:6:11d now being claimed, the plaintiffs averred further in paragraphs 10 and 11 of their statement of claim as follows:

“10. When written demands were served on the defendants, the defendants by their solicitor’s letter dated 4th March, 1968 confirmed that they knew about the debt but expressed surprise that the matter was being re-opened because they were under the impression that the debt had been written off.

11. The plaintiff avers that the debt was not written off. The company permitted the deceased to liquidate the debt by instalments but at no time was the debt intended to be written off in the manner suggested in the defendants’ said letter.”

In their statement of defence, the defendants admitted the averments in paragraphs 3, 6 and 10 of the statement of claim but categorically denied those in paragraphs 5, 7, and 11. They then explained how the debt was incurred as follows.

Sometime in 1965, the plaintiff Company ordered various consignments of goods valued at about 10,000pounds for several of its female customers. When these goods arrived, they did not meet the market and the said customers failed to collect them. After the goods had been lying in the plaintiff company’s stores unclaimed for some time they were offered to Olaosebikan Stores to clear, sell and pay the plaintiff company as and when they were sold. The offer was accepted. All the directors of the plaintiff company as well as its secretary were then aware of the late Mr. M.B. Abina’s connection with the said Olaosebikan Stores. As the goods did not meet the local market it became increasingly difficult for the said Olaosebikan Stores to sell the goods and consequently by 1965 part of the goods to the value of about 3,645pounds had not been sold and had deteriorated in condition with the result that their value had depreciated considerably. Consequently, as a result of representations made to them by Abina, the Board of Directors of the plaintiff company at a meting held on 18th March, 1965, decided that if Abina could pay a total sum of 1,200pounds by the 30th September, 1965, the book balance of 2,465pounds would be waived and written off as bad debt. This decision was communicated to Abina in a letter dated 19th March, 1965. Later, following further representations to the Board by Abina, the date for the payment of the sum of 1,200pounds was further extended to 31st December, 1965. What transpired thereafter was then explained in paragraphs 13 to 15 of the statement of defence as follows:

“13. When the late M.B. Abina paid the agreed sum of 1,200pounds by the 16th December, 1965, the plaintiff then waived and wrote off the difference of 2,465pounds from their books.

15. The fact that the said amount of 2,465pounds was written off by the plaintiff company was subsequently reflected in its Balance Sheet for the year ending 30th April, 1965.
16. The defendants will contend at the trial that in view of the foregoing the plaintiff company is estopped from claiming the said sum of 2,465pounds.”

The plaintiff company later filed a reply to the above averments in which they further averred in paragraphs 4 and 5 as follows:-

“4. The plaintiff deny paragraphs 11 and 13 of the statement of defence and say further that there is no record to show that the sum of 2,465pounds has been waived, nor does the company have in its possession copy of the alleged letter dated 17th of September, 1965.

5. The plaintiff will contend that the matter alleged in paragraphs 11 to 14 of the statement of defence is no answer in law to the plaintiff’s claim in this action.”

At the hearing, one James Johnson (1st P1/W) the Secretary and Accountant of the plaintiff company testified for the plaintiff company and produced the company’s audited account for the year which ended on 30th April, 1965, (Ex ‘N’) which contained the following extract from the letter written by the Auditors to the Board of the plaintiff company:-

“Bad Debt 2,465pounds: 7d

This amount was formerly owed by the defunct Olaosebikan Stores which was written off on the instruction of the Board of Directors.”

The 1st P1/W. also confirmed that he saw the audited account of the plaintiff company for the year 1966 and that the bad debt of 2,465pounds shown in the previous year’s audited account (Ex. ‘M’) was not repeated in the 1966 account. Another witness, Akinola Adio Adeshigbin (3rd P1/W) who has been a director of the plaintiff company since 1957, however, stated in his own testimony that there was no waiver by the Board of Directors of the plaintiff company, either expressly or by implication, of the balance of the debt owed by Olaosebikan Stores.

The above statement was disputed by Mohammed Mustapha Akande Umar (1st D/W) who was associated with the plaintiff company as Indent Manager and Secretary from 1953 to 1967. He testified that, in his capacity as secretary, he attended all directors meetings, recorded the minutes of such meetings, and took action on decision reached there. He admitted writing two letters, the first dated 19th March, 1965, (Ex. ‘N’) and the second dated 19th September, 1965 (Ex. ‘O’) in his capacity as the plaintiff company’s secretary. The contents of the first letter (Ex. ‘N’) read:-

“19th March, 1965

M.B. Abina, Esq.,

Tika-Tore Press Limited,

Lagos.

Dear Sir,

Re: Olaosebikan Stores Outstanding Balance Debt 3,665pounds.0.0d

I am writing to convey to you (although you were at the meeting) the decision of the Board of Directors on the above account. The Board, after taken into consideration the explanations offered by you, has decided that in the event of your being able to pay 1,200pounds:0:0d (one thousand and two hundred pounds) between now (March 19th) and the end of September, 1965, the balance amount of 2,465pounds:0:0d (Two thousand four hundred and sixtyfive pounds) be waived. This decision was reached at the Board of Directors meeting held on 18th February last and confirmed at its subsequent meeting of yesterday 18th March, 1965.

Yours faithfully,

for: Tika-Tore Press Limited,

(Sgd.)

Secretary”

The second letter (Ex. ‘O’) reads-

“17th September, 1965

M.B. Abina, Esq.,

Tika-Tore Press Limited,

132.134, Broad Street,

Lagos.

Dear Sir,

Re Account of Olaosebikan Stores

With reference to your letter dated the 9th ult., addressed to the Board of Directors asking for extension of time up to and inclusive of 31st December, 1965, within which to pay the final amount of 1,200pounds:0:0d, originally fixed by the Board for end of September, 1965, as contained in my letter of the 19th March, 1965, please note that the Board of Directors at its meeting of the 19th August granted your request. This decision was confirmed at yesterday’s meeting of the Board.

Yours faithfully,

for: Tika-Tore Press Limited

(Sgd.)

Secretary.”

Umar further testified that Abina made no secret of the fact that he was the proprietor of Olaosebikan Stores. He confirmed that the plaintiff company placed some orders for their women traders and that when the goods were not collected by these women because of a slump in trade, the plaintiff company diverted the goods to Olaosebikan Stores to help dispose of them. Umar then said that he wrote the letters (Ex. N & O) following decisions taken by the Board of Directors as a result of the representations made by Abina to the plaintiff company and confirmed that Abina eventually paid the sum of 1,200pounds agreed to.

Another witness who testified for the defendants is one Babatunde Dawodu, a chartered accountant and a member of the firm of accountants which audited the plaintiff company’s account in 1965. Part of his evidence reads –

“During the auditing, we called for the minutes of the Board of Directors and from them we confirmed what was recorded in the draft account presented to us regarding the bad debt of 2,465pounds written off. One Idowu was the Indent Accountant who prepared and submitted in draft the account we audited.

I did not attend the annual general meeting of the plaintiff company and would not know if the account was approved. I did attend the Board of Directors meeting at which the said account was approved. 3rd plaintiffs’ witness as a Director was present at the said meeting in 1965.” (The underlining is ours).

It is pertinent to observe that this witness was not cross-examined by the learned counsel for the plaintiff company.

In his judgment, the learned trial Judge, after reviewing the evidence and making certain observations both on the facts and as to the law applicable, dismissed the plaintiff company’s claim after finding as follows:-

“In the present case, there is abundant evidence to show that there was a true accord under which the plaintiff voluntarily agreed to accept the lesser sum of 1,200pounds in satisfaction of the greater sum of 3,665pounds. I accept as true the evidence of the first and the fifth witnesses for the defence in respect of the transaction leading to the waiver of the said sum of 2,465pounds. They were the two officers of the plaintiff company who knew anything in 1965 about the said transaction. It is significant that since the said amount was waived, no evidence was led of any demand by the plaintiff from the late Managing Director of the amount until the letter dated 26/2/68, Exhibit ‘K’ ‘K3’ written by the present secretary of the plaintiff company, Mr. Johnson. It is also of interest that the entry of the amount in the Bad Debts Ledger Exhibit ‘L’ was made in 1968 after the death of the late Managing Director as admitted by the 5th defence witness.

In my view, it will be inequitable for the plaintiff to enforce this claim. The plaintiff’s claim fails and it is dismissed accordingly.”

In the appeal now before us against this judgment, the learned counsel for the plaintiffs/appellants submitted that, although waiver was pleaded as a defence, the defence could not be sustained because there was no consideration given by the defendants/respondents for the promise to waive the balance due. Learned counsel also submitted that the learned trial Judge was in error in basing his judgment on “accord and satisfaction” which was not the defence put forward in the court below. Even assuming that waiver could be a defence, the evidence adduced in support, learned counsel further submitted, was not sufficient to establish waiver; consequently, the defence was not made out and the learned trial Judge was therefore in error to have dismissed the plaintiffs/appellants’ claim.

In reply, it was contended on behalf of the defendants/respondents that the defence put forward was a waiver and that the learned trial Judge based his judgment not on “accord and satisfaction” but on the defence of waiver resulting in estoppel. It was also contended that no consideration was necessary in order to maintain this equitable defence, but that if consideration was required, there was sufficient consideration; it was further submitted that the evidence which the court accepted, and which showed that Monsuru Abina, the proprietor of Olaosebikan Stores, allowed the goods, which had been lying unclaimed in the plaintiffs/appellants’ stores for some time, to be diverted to his shop in order to help dispose of them, was sufficient consideration for the waiver. Finally, learned counsel pointed out that since the balance still unpaid, as a result of the agreement to waive it, had been transferred first to the “Bad Debt Account” and later written off completely, the plaintiffs/appellants were estopped from claiming this net balance, knowing full well that Monsuru Abina with whom the agreement was concluded had since died.

To our mind, the case of the defendants/respondents, as can be gathered, both from the statement of defence and from the evidence given in support, seems to be this. Having finally agreed, in effect, that Monsuru Abina should pay the sum of 1,200pounds on or before the 31st December, 1965, in full and final settlement of the sum of 3,665pounds which he then owed the plaintiffs/appellants, and this amount having been paid as agreed, the plaintiff/appellants have waived their right to claim the balance and are therefore estopped from claiming it as they have done in the lower court. This, in our view, is the main plank of the defendants/respondents’ defence and is clearly stated in paragraph 15 of their statement of defence which we repeat hereunder:

“15. The defendants will contend at the trial that in view of the foregoing the plaintiff company is estopped from claiming the said sum of 2,465pounds.”

In short, the defence is one of estoppel by conduct. All the arguments about whether the evidence was indicative of the defence, either of “accord and satisfaction” or of “waiver”, or whether there was consideration for the “waiver” or not merely begged the issue and appear to have been put forward in an abortive effort to sidetrack the defence of estoppel, put forward by the defendants/appellants, and accepted by the learned trial Judge who rightly held that it “would be inequitable to enforce the claim.”

As a matter of fact, it may now be said, with commendable justification, that the former theoretical view that there is no consideration or nothing in writing to support the variation of the contract no longer nullifies the effect of the defence of estoppel.

Indeed, consideration is scarcely relevant, since the agreement to accept a lesser sum, in full and final settlement, concerns the modification or discharge of the contract, not its formation. In effect, this defence of estoppel by waiver (if it may be so conveniently described) is always pleaded by way of defence. It is set up, not as the foundation of an action for breach of contract, but as an answer to the contention of a creditor that the letter of the original contract must be observed. The principle, as we understand it, is that where one party has, by his words or conduct, made to the other a promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then, once the other part has taken him at his word and acted on it, the one who gave the promise or assurance cannot afterwards be allowed to revert to the previous legal relations as modified by himself, even though it is not supported in point of law by any consideration, but only by his word. (See Combe v. Combe (1951) 1 All ER 767 as per Denning, L.J. (as he then was) at page 770). The only qualification to the above principle is that it can only be invoked by a defendant. It can never stand alone as giving a cause of action in itself and cannot, therefore, do away with the necessity of consideration when that is an essential part of a plaintiff’s cause of action.

Again, the observation of Lord Denning, M.R., in D & C Builders Ltd. v. Rees (1965) 3 All ER 837 at 840 (a judgment in which most of the authorities on the point were considered), and to which learned counsel to the defendants/respondents has referred us, appears to accord with our stand in this appeal. It reads:-

“In point of law, payment of a lesser sum, whether by cash or cheque, is no discharge of a greater sum.

This doctrine of the common law has come under heavy fire. It was ridiculed by Sir George Jessel, MR., in Couldery v. Bartrum (1881) 19 Ch. D. 394 at p. 399. It was held to be mistaken by Lord Blackburn in Foakes v. Beer (1884) 9 App. Cas at p. 622. It was condemned by the Law Revision Committee in their Sixth Interim Report (Cmnd 5449) paragraph 20 and 22. But a remedy has been found. Equity has stretched out a merciful hand to help the debtor. The courts have invoked the broad principle stated by Lord Cairns L.C., in Hughes v. Metropolitan Railway Co. (1877) 2 App. Cas 439 at p. 448:

‘…….it is the first principle upon which all courts of equity proceed if parties, who have entered into definite and distinct terms involving certain legal results………afterwards by their own act, or with their own consent, enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, that the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable, having regard to the dealings which have taken place between the parties.’

It is worth noting that the principle may be applied, not only so as to suspend strict legal rights, but also so as to preclude the enforcement of them.

This principle has been applied to cases where a creditor agrees to accept a lesser sum in discharge of a greater. So much so that we can now say that, when a creditor and a debtor enter on a course of negotiation, which leads the debtor to suppose that, on payment of the lesser sum, the creditor will not enforce payment of the balance, and on the faith thereof the debtor pays the lesser sum and the creditor accepts it as satisfaction; then the creditor will not be allowed to enforce payment of the balance when it would be inequitable to do so.

In applying this principle, however, we must note the qualification. The creditor is barred from his legal rights only when it would be inequitable for him to insist on them. Where there has been a true accord, under which the creditor voluntarily agrees to accept a lesser sum in satisfaction, and the debtor acts on that accord by paying the lesser sum and the creditor accepts it, then is is inequitable for the creditor afterwards to insist on the balance.”

Applying the above principle to the case in hand, and bearing in mind the facts which the learned trial Judge accepted, we are unable to see any merit in the contention of the learned counsel for the plaintiffs/appellants that the learned trial Judge was in error, in holding as he did, that it would be inequitable to allow the plaintiffs/appellants to enforce their claim against the defendants/respondents. Indeed, no point of any real substance appears to have been urged upon us in this appeal which can affect our view that the learned trial Judge was right both in his assessment of the facts and in his decision. We accordingly dismiss the appeal with costs assessed at N86.00 (Eighty-six Naira).

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Other Citation: (1973) LCN/1659(SC)