A. Obikoya V. Wema Bank Limited (1989)
LawGlobal-Hub Lead Judgment Report
This appeal is an offshoot of a previous case which came before the Supreme Court sitting as a full Court. That case SC.110/82 – Wema Bank Ltd. v. Bronik Motors Ltd. and A. O. Obikoya, was later to become the leading authority on the limits of the jurisdiction of the Federal High Court.
The appeal herein arises from an interlocutory application brought after judgment in the principal case referred to above and relates to the proper construction to be placed on a portion of the judgment of this Court as it affects the liability of the appellant who was the 2nd Defendant in the original suit.
The relevant facts as they relate to this appeal are as follows and the parties will hereafter be referred to simply as plaintiffs and defendants.
On the 25th of March, 1980, the plaintiff, Wema Bank Limited took out a Writ of Summons against the defendants in the High Court of Lagos for:
“1. Specific performance of an agreement between the parties and evidenced in letters dated 10/1/76, 28/1/76 and 2/2/76 whereby the defendants promised to execute legal mortgage of the defendant’s properties lying and situate at (a) 400 Herbert Macaulay Street, Yaba (Lagos) (b) Adekunle Fajuyi Street, Ibadan (c) Ijebu-Bye Pass, Oke-Ado, Ibadan (d) 21 Barracks Road, Calabar and (e) Mile 3 Aba/Port-Harcourt Road, Aba; in favour of the plaintiffs to secure various overdrafts amounting to over N2,000,000.00 made to the defendants in Lagos between 1976 and 1979.
- The sum of N2,135,092.57k (Two Million One Hundred and Thirty-Five Thousand Ninety-Two Naira and Fifty-Seven Kobo) being balance due to the plaintiffs for overdrafts granted by the plaintiffs to the 1st defendants at the plaintiff’s Mushin and Ebute-Metta Branches, in the normal course of their business as Bankers to the 1st defendants at their request and for Bank charges incidental expenses upon money due from the defendants to the plaintiffs which money the defendants have refused and or neglected to pay inspite of repeated demands.
Plaintiffs also claim interest on the said sum of N2,135,092.57k at the rate of 8% per annum from 1st October, 1979 until judgment and 5% per annum thereafter until final liquidation of the whole debt or part thereof.”
It would appear that the 2nd Defendant was sued as a guarantor of the 1st Defendant for in the following paragraphs of the amended Statement of Claim (amongst others), the plaintiff pleaded that:
“7. By letter dated 2/2/76, the plaintiffs approved overdraft facility of N500.000.00 for the use of Bronik Motors unincorporated upon terms stated therein, including legal mortgage of (a) 400 Herbert Macaulay Street, Yaba (b) Adekunle Fajuyi Street, lbadan (c) Ijebu-Bye Pass, Oke-Ado, Ibadan (d) 21 Barracks Road, Calabar (e) Mile 2 Aba/Port-Harcourt Road, Aba and (f) 8 acres of land at Ikorodu Road, Lagos.
- By an endorsement on the copy of letter dated 2/2/76, referred to in paragraph 7 above, Bronik Motors unincorporated and the 2nd Defendant signified acceptance of all the terms and conditions stipulated therein.
- By Deed of Guarantee dated 21/6/76, the 2nd Defendant guaranteed payment to the plaintiffs of all monies and liabilities owing or incurred to the plaintiffs by Bronik Motors unincorporated and the 1st Defendants up to the limit of N500,000.00.”
The case proceeded to trial and in his judgment, the learned trial Judge, Onalaja, J. found inter-alia, as follows:
“The liability of the 2nd Defendant arises when the principal debtor has made a default in the payment to the plaintiff, which was demanded by Exhibits 8, 10, 16 and 18.
The liability of the 2nd Defendant cannot be unduly extended beyond the strict provisions of Exhibit 2. The liability of the 2nd Defendant is limited to the loan of half a million Naira chargeable with interest only that Exhibit2 is silent as to the rate of interest.
Section 75 of the Evidence Act says that all facts except the contents of documents, may be proved by oral evidence. Since Exhibit 2 is silent as to the rate of interest, I accept the oral evidence and the documentary evidence before me that by mutual agreement, the rate of interest was reduced to 8% from 9%. I hold that the rate of interest chargeable on both the loan guaranteed by the 2nd Defendant and all transactions in this case is chargeable with 8% interest.
I therefore enter judgment for the plaintiff on the personal liability of the 2nd Defendant as a guarantor of the 1st Defendant to the tune of ‘half a million Naira (N500,000.00) chargeable with interest at the rate of 8% per annum.”
After dealing with other aspects of the case, judgment was entered against the defendants in the following terms:
“In the final result, judgment is hereby entered for the plaintiff against the defendant for:
(1) an order of specific performance against the defendants to execute legal mortgage of their properties situate, lying designated, described as (a) 400 Herbert Macaulay Street, Yaba, Lagos and (b) 21 Barracks Road, Calabar in favour of the plaintiffs.
(2) the total sum of N2,135,092.57 kobo (Two Million, One Hundred and Thirty-five Thousand and Ninety-two Naira Fifty-seven kobo) plus interest at the rate of 8%, before this judgment and 4% thereafter this judgment, until final liquidation of the judgment debt.
(3) the sum of N500,000.00 against the 2nd defendant as a guarantor of the 1st defendant with interest at the rate of 8% per annum before judgment and 4% thereafter.”
The defendants were dissatisfied with that judgment and appealed to the Federal Court of Appeal (as it then was) on a number of grounds, one of which alleged that:
“5. The learned trial Judge erred in law in giving judgment against the 2nd defendant.
PARTICULARS OF ERROR:
(a) The 2nd defendant did not guarantee the debt of the 1st defendant.
(b) Even if (which is not admitted) there was a valid substitution of Bronik Motors Ltd. for A.O. Obikoya & Sons Ltd. (or Bronik Motors) as debtors of plaintiff Bank, such substitution must operate as a discharge of the 2nd defendant as a guarantor.”
The arguments on the appeal took four days and in a well considered judgment, the lower court dismissed the appeal on all grounds except one.
Ademola, J.C.A., who read the lead judgment, (Nnaemeka-Agu, J.C.A. (as he then was) and Uthman Mohammed, J.C.A., concurring) made an exhaustive review of the full facts of the case and stated at pages 175/176 of the Record:
“Let me summarise the issues that have arisen out of this appeal thus:
(a) Specific Performance
(b) Illegality of the contract under S.13(1), S.13(5) of the Banking Act, 1969.
(c) The question of unjust enrichment if the issue of illegality raised succeeds.
(d) Assignment of the debt of Bronik Motors to Bronik Motors Limited as it is contended for by the Respondent.
(e) Novation as what should have been done instead of assignment as contended for by the Appellant.
(f) Pleadings and the causes of action.
(g) Liability of the 2nd Appellant on the guarantee in Exhibit 2.
Those are matters in my view which I shall dwell upon as having arisen from the argument of counsel; the facts proved in this case and the exhibits tendered.”
The learned Judge then proceeded to deal with each of those issues in turn.
In regard to item (g), which forms the subject-matter of this appeal, Ademola, J.C.A., held as follows:
“It is convenient at this stage to deal with the liability of the 2nd Appellant on the guarantee given by Exhibit 2……………..
The document Exhibit 2 is the only one that must determine this matter however much the knowledge of the 2nd Appellant may be in respect of Exhibits 4, 5, 5A and 5B………..
“Clause 3 of Exhibit 2 would in my opinion take care of the situation of a change from Bronik Motors to Bronik Motors Ltd. effected by Exhibits 4, 5, 5A, 5B and 6. It was up to the 2nd Appellant if he does not wish to continue the guarantee to give notice to the respondent’s bank as so stipulated in that clause. Assuming that there was no change in the name, style or constitution of Bronik Motors, it is my view that 2nd Appellant would still be liable under Clause 4 of Exh. 2.
I am also of the view that on the proved facts of this case, Clause 18 is also relevant as to the liability of the 2nd Appellant. The conclusion then is that the change that took place in respect of Bronik Motors had not affected the liability of the 2nd Appellant. The grounds of appeal as to his non-liability in respect of the account at the Mushin Bank of the respondent fail.”
The learned Justice then went on to consider other aspects of the appeal and eventually, he gave judgment in these terms:
“Having thus disposed of all the submissions, I have no hesitation in coming to the conclusion that this appeal will have to be dismissed save in respect of the order for specific performance made by the learned trial Judge.
Therefore the judgment of the Lagos High Court presided over by Onalaja, J. is hereby confirmed in part; the order for specific performance on properties at 400 Herbert Macaulay Street, Yaba, Lagos and 21 Barracks Road, Calabar is hereby set aside as null and void. The appeals of the Appellants on other grounds are accordingly dismissed.”
As previously stated, Nnaemeka-Agu, J.C.A. (as he then was) and Mohammed, J.C.A. concurred in that judgment and in the decision to dismiss the appeal, particularly in regard to the liability of the 2nd Defendant. The two defendants were not satisfied with that judgment and they appealed to the Supreme Court. The appeal took a new turn in this Court, because in addition to the 12 original grounds of appeal filed, the appellants in a further ground of appeal called upon the Supreme Court:
- To hold that the State High Court had no jurisdiction to adjudicate on the claim before it as the subject-matter of the suit – banking – was a matter on the exclusive Legislative list, and that under the 1979 Constitution, it was a matter which was cognisable before the Federal High Court only and
- To overrule its previous decision of 9 years standing on the point as contained in the case of Jammal Steel Structures Ltd. v. A.C.B. Ltd. (1973) 1 All N.L.R. Part 11 208.
In consequence of the 2nd prayer above, a full Court was empanelled to take the appeal. In a unanimous decision, the Court held that the State High Court did have jurisdiction and declined the invitation to overrule the decision in Jammal’s case supra. The judgment of this Court is reported as Bronik Motors Limited and anor. v. Wema Bank Ltd. (1983) 6 S.C.158. It is necessary to mention here that because of the importance of the case, a good portion of the judgment of all the seven Justices who sat on the appeal was devoted to the constitutional points raised in the appeal. However, Nnamani, J.S.C., who read the lead judgment, after dealing exhaustively with the Constitutional issues went on to touch on other aspects of the appeal. In particular, His Lordship considered the limit of the liability of the 2nd Defendant (Appellant herein) and held as follows:
“As regards the other matters in this appeal, Ademola, J.C.A. in his lead judgment had set them down at page 176. I had earlier on in this judgment indicated the matters I propose to deal with and set down appellant’s ground of appeal relating to those matters. I would only wish to deal with the guarantee, admitted in the proceedings as exhibit 2, given by the 2nd appellant to the respondent. The Court of Appeal affirmed the decision of the learned trial Justice on that point. As regards the liability of the 2nd Appellant, Chief Williams had submitted that even if he was liable, the liability cannot exceed N500,000. In fact the order of the learned trial Justice was for “judgment against the defendant for:
“(3) the sum of N500,000 against the 2nd Defendant as a guarantor of the 1st defendant with interest at the rate of 8% per annum before judgment and 4% thereafter.”
I agree that the terms of the order should be varied such that the judgment is against the 2nd defendant (i.e. 2nd appellant herein) for N500,000 at the rates of interest mentioned above.
As for the merits of the appellants’ case on the guarantee, the argument on Exhibit 2 had been that the guarantee given by the 2nd appellant was on behalf of Bronik Motors (a division of A. Obikoya and Sons Limited) and not on behalf of BRONIK MOTORS LIMITED (1st Appellant) which had not been incorporated at the time the guarantee was given.
I agree with the Court of Appeal that paragraph 3 of exhibit 2 which reads as follows:-
“(3) The guarantee shall be continuing security binding on the Guarantor or on each of the Guarantors and his/their executors administrators and legal representatives until the expiry three calendar months after the receipt by the Bank of notice in writing to discontinue same from Guarantor to any of the guarantors or from his/their executors administrators or legal representatives and notwithstanding any change in the name style or constitution of the Principal” certainly disposed of that contention. Paragraph 4 of the guarantee was also in these terms:
“(4) If the Principal be a Committee or other unincorporated body which has no legal existence or which is under no legal liability to discharge obligations undertaken or purported to be undertaken by it or on its behalf this guarantee shall be valid and binding upon the Guarantor or Guarantors notwithstanding that fact and as though the Guarantor was the principal debtor or if there be more than one Guarantor as though the Guarantors were joint and several principal debtors.”
The terms of paragraphs 5, 13 and 18 of exhibit 2 also leave me in no doubt as to the liability of the guarantor to the limit agreed by the parties in exhibit 2.
For all the foregoing reasons this appeal must fail and it does fail. It is accordingly dismissed. I affirm the judgment of the Federal Court of Appeal dated 6th July, 1982. I also award N300 costs against the appellants and in favour of respondents.” (italics ours).
It is this portion of the judgment that has given rise to the present appeal. The 2nd Defendant contends that his liability on the amount due to the plaintiff is limited to the sum of N500,000 as stated by Nnamani, J.S.C. and that once he pays that amount, he is completely absolved from further liability on the guarantee.
The plaintiff on the other hand, claims that the mere payment of the sum guaranteed does not wholly discharge the 2nd Defendant. He asserts that under Clause 11 of the guarantee (Exhibit 2), the liability of the 2nd Defendant is continuous until the debt of over N2 million is paid by the 1st Defendant.
That knotty point as to the real extent of the liability of the 2nd Defence is now the subject of an appeal before the lower court and, in my view, it would not be right to express any opinion on it in this appeal so as not to prejudge the issues which might be canvassed before the lower Court.
Because of this, it will be necessary to determine at this stage, the exact limits of the scope of the appeal in this court. In this respect, I bear in mind that this appeal arose out of a Motion filed before the Court of Appeal for:
(a) extension of time within which to appeal
(b) leave to appeal, and
(c) stay of execution pending the appeal.
The lower Court refused those prayers and gave as its reasons the fact that the proposed grounds of appeal were not prima facie substantial grounds. In other words, the lower Court was of the opinion that the proposed grounds did not contain any arguable points. See Ukpe Ibodo & ors. v. Enarofia (1980) 5-7 S.C.42 at p.53; University of Lagos v. Olaniyan (1985) 1 NWLR (Pt.1) )56 at p.166.
In those circumstances, this appeal will be limited to a consideration of the reasons given for dismissing the Motion, and to ascertaining whether the Court of Appeal was right for holding that the proposed grounds were not substantial. In my view, it would be premature at this stage, to make a decision on the actual merits of the proposed grounds of appeal. I shall now give a short resume of the relevant facts which gave rise to this appeal.
Whilst the principal case (S.C.110/82) was pending in the Supreme Court, and following an application made by the defendants, this Court on 15/11/82 granted a stay of the execution of the trial Court’s judgment, on the following conditions (amongst others):
(a) That the defendants should pay the sum of N50,000.00 within 7 days of the order
(b) That the defendants should thereafter, pay N50,000.00 every month until the appeal is disposed of, – the first of such monthly payments to be made at the end of December, 1982
(c) That in default of any of the conditions stipulated by the court, the stay thereby granted would automatically abate and be discharged. (italics ours).
It will be seen from the 2nd condition above, that the stay was granted pending the determination of the appeal. The appeal was in fact disposed of on the 10th of June, 1983, and the 2nd Defendant claimed that by that time, he had personally paid the sum of N350,000.00 to the plaintiffs.
On the 14th day of June, 1983 (i.e. 4 days after the Supreme Court judgment), the plaintiffs made the following offer to the Defendants:
“14th June, 1983
Chief F.R.A. Williams, S.A.N.,
Palm Grove House, B
1 Shagamu Avenue,
Ikorodu Road, ILUPEJU,
RE: SUIT NO. SC./110/82
Bronik Motors Ltd. & anor. vs. Wema Bank Ltd.
Following the judgment of the Supreme Court delivered in favour of our client on the 10th June, 1983 it would appear that the order for stay of execution, subject to the payment of N50,000.00 monthly until the appeal was disposed of, automatically terminated with effect from 10/6/83.
- We would be obliged if your clients would confirm within 7 DAYS their willingness to continue the instalmental payment of N50.000.00 monthly until the entire judgment-debt of N2.441.122.36k (Two million. four hundred and forty-one thousand, one hundred and twenty-two naira thirty-six kobo) as at 30/9/82 plus 4% interest from 30/9/82 is fully liquidated.
- Unless this confirmation is received as requested: we have instruction to revive execution of the Writ of Fifa suspended since 1981 and to proceed with public auction of landed properties of the judgment-debtors. We would not wish to embarrass your clients further in this matter if only they would now co-operate with us to settle the debt.
LADOSU LADAPO & CO.
The defendants were quick to accept that offer by letter dated 20/6/83 which states:
“20th June, 1983
LADOSU LADAPO & CO.
52/54 Murtala Muhammed Way,
RE: SUIT NO. SC.110/82
Bronik Motors Ltd & anor. vs. Wema Bank Ltd.
I refer to your letter dated 14th June, 1983 and do hereby confess the willingness of my clients to continue the instalmental payment on the terms and in the manner stated in your letter.
F.R.A. Williams, Esq. S.A.N.”
But a few days later, the plaintiffs withdrew their original offer and made a new offer to the defendants in these terms:
“15th July, 1983.
F.R.A. Williams Esq., S.A.N.,
Chief Rotimi Williams Chambers,
Palm Grove House,
1 Shagamu Road,
RE: SUIT NO. SC.110/82
Bronik Motors Ltd. & anor. v. Wema Bank Limited
Further to our letter of 14/6/83 and your reply of 20/6/83, we regret to say that your client’s proposal to pay the judgment debt of N2,441.122.34k as at 30/9/82, plus 4% interest from 30/9/82 by N50,000.00 monthly instalment was rejected by the Board of Directors of the Bank at their meeting of 14/7/83.
- In view of the contravention by our clients of S.13(1) of the Banking Act, 1969 and the penalty being paid to the Central Bank under S.13(5) (which contravention formed the basis of ground 11 of your grounds of appeal at the Supreme Court), the Board of Directors of the Bank have directed that your clients be advised to pay a lump sum of N400,000.00 (Four Hundred Thousand Naira) and thereafter to pay monthly instalment of N50,000.00. In the alternative, your clients should be advised to pay monthly instalment of N100,000.00.
- The Board of Directors of the Bank note that it will take over 4 (four) years to liquidate the judgment debt on the basis of your clients proposal; whereas the loan overdraft was granted on
a short term basis.
- In the light of the above, we shall be pleased if you would confirm which of the alternatives your clients would prefer. In the meantime we shall suspend further action until we hear from you.
LADOSU LADAPO & CO.
In his reply to the above, Chief Williams took care to set out what he considered to be the legal position of the two defendants. This is what he said:
“24th September, 1983.
Wema Bank Limited,
52/54 Murtala Muhammed Way,
RE: SUIT NO. S.C.110/82
Bronik Motors Ltd. & anor. v. Wema Bank Limited
We write on behalf of Mr. A.O. Obikoya who was the second defendant in the above matter. As you are aware, one of the results of the appeal to the Supreme Court was to limit the liability of that defendant to the sum of N500,000.00 with interest “at the rate of 8% per annum before judgment and 4% thereafter.”
You may have observed (as the fact is) that all payments made pursuant to the order of the Supreme Court up to date were made personally by Mr. Obikoya from his personal resources and not by the 1st defendant. At the same time the 1st defendant are taking urgent steps to see that they play their part fully in the repayment programme.
It is observed that by making the aforementioned payments, our client has fully repaid the sum of N500,000.00. In the circumstances Mr. Obikoya has asked us to make it plain to you that the further payment of N50,000.00 herewith enclosed and paid from his personal resources should be treated as payment on account of his liability for interest.
You will no doubt agree that in computing Mr. Obikoya’s liability for interest you have to work on the amount of interest attributable to his total liability only. Mr. Obikoya has computed this amount in the sum of N82,499.59. If you agree with this figure then he will let you have his proposal for repayment. Thereafter we intend, on behalf of Bronik Motors to take up and settle with you the repayment of the outstanding balance.
We look forward to having your confirmation that the sum due from Mr. Obikoya is N82,499.59. We shall also be grateful for your statement of the balance due from Bronik Motors for our consideration.
Thanking you in advance for your co-operation.
cc: Ladosu Ladapo, Esq.,
Ladosu Ladapo & Co.,
52/54 Murtala Muhammed Way,
There was no response to the above letter and so Chief Williams sent another. It reads as follows:-
“20th October, 1983.
Obikoya v Wema Bank Ltd.
Wema Bank Limited,
52/54 Murtala Muhammed Way,
SUIT NO. SC.110/82
Bronik Motors Ltd. & anor. v. Wema Bank Ltd.
“We refer to our letter dated 24th September, 1983 addressed to you on behalf of Mr. A.O. Obikoya in respect of the above matter. You have, up to date failed to accord to us the courtesy of an acknowledgment or reply to that letter.
- In the circumstances we have advised our client to make his own calculations of the sum due and payable by him with interest attributable to the amount of N500,000.00 guaranteed. This has worked out in the sum of N32,499.59 and cheque for this amount is enclosed herewith.
- Our client, Mr. A.O. Obikoya has now completely discharged all his liabilities to the Bank as Guarantor for Bronik Motors. As you know, the Company is pursuing in Court an application to pay the balance by instalments.
F. R. A. Williams.
cc. Ladosu Ladapo, Esq.”
Still there was no reply to this letter, and so Counsel filed a Motion before the trial Court for:
(a) Stay of execution of the judgment debt and
(b) Instalmental payments (N25,000.00 monthly) of the said debt.
Although the application was brought “on behalf of the defendants” i.e. the two defendants, yet it was quite apparent from the accompanying affidavit that it was the 1st Defendant who was asking for the stay and it was he who was offering to make the instalmental payments. The relevant paragraphs read:
“8. That the 2nd Defendant has paid the sum of N500,000.00 adjudged by the Supreme Court to be his liability in this action.
- That the first Defendant is now hit with the recession which is now plaguing the country and as a result, trade is practically nil.
- That the first Defendant has to retrench its staff because of the recession.
- That the 1st Defendant is willing to liquidate same by monthly instalment of N25,000.00 (Twenty-five Thousand Naira).
- That the 2nd Defendant intends to file further affidavit in support of this application immediately he is available.
- That the Plaintiff has issued a writ of fifa against the 1st Defendant’s assets but this was stayed by the Supreme Court pending the hearing of the substantive appeal which has been disposed of.”
The Bank’s reaction to the above paragraphs was short and sharp: it opposed the instalmental payment and filed two counter-affidavits in which it averred that:
“12. Exhibits B & C (i.e. Chief Williams’ letters of 24/9/83 and 20/10/83 supra) are attempts to exonerate 2nd Defendant from his liability to the plaintiff, when the 1st Defendant is still indebted to the plaintiff by almost N2 million, contrary to clause II of the Deed of Guarantee dated 21/6/76 made in favour of the plaintiff by 2nd Defendant and tendered at the trial of this action as Exhibit 2.”
After hearing the parties, the trial Court, per Onalaja, J. on 17/6/85, granted a stay of its judgment on the following terms:
“(a) That the defendants/applicants pay the arrears of N100,000.00 ordered by the Supreme Court to be paid before it delivered its judgment in this case; it is to be paid on or before 31st day of July, 1985;
(b) Thereafter from 1st day of August, 1985 the defendants/applicants shall liquidate the balance by monthly instalment of N25,000.00.
(c) Any default in monthly instalment shall make the balance on the judgment debt to be due and payable.”
The defendants were dissatisfied with that Ruling and they appealed to the Court of Appeal on the following grounds:
“3. GROUNDS OF APPEAL:
- The learned trial Judge erred in law in granting a stay of execution on the conditions stated in his order of 17/6/85 to wit:
(i) That the defendants should pay before 31/7/85 the arrears of N100,000.00 ordered by the Supreme Court to be paid before its judgment in this case.
(ii) That the defendants pay N25,000.00 monthly from 1st of August, 1985.
When from the affidavit evidence before the Court is conclusive evidence that the 2nd Defendant is no longer a judgment debtor in that he has fully discharged the sum guaranteed by him having regard to the judgment of the Supreme Court in Bronik Motors Limited and anor. v. Wema Bank Limited S.C.110/82 and that the conditions for stay above stated should not have been applicable to him.
- The learned trial Judge erred in law in ordering the Defendants to pay the sum of N100,000.00 on or before the 31st July, 1985 on the assumption or basis that this sum due under the order made by the Supreme Court in its order of 15/11/82 when in fact no such sum is due under that order.”
It will be seen that the main point in the appeal was that he had fully discharged his obligations to the plaintiffs and was no longer a judgment debtor.
Consequent upon filing the appeal, the 2nd Defendant filed another Motion before the trial Court, in which he asked for a stay of the Ruling of the High Court (dated 17/6/85) pending the appeal lodged against that ruling. In the accompanying affidavit the applicant’s wife deposed to the fact that the 2nd Defendant was under State detention and that she was acting for him. She also swore that:
“5. I am informed by Counsel for the 2nd Defendant that the 2nd Defendant is no longer a judgment-debtor under the said judgment.
- Unless stay is granted, the Plaintiff will levy execution on the properties of the 2nd Defendant and will not be able to return these properties to the 2nd Defendant if judgment should go against them on appeal.”
At the hearing of this application, the plaintiff/respondent raised objection to the Motion on the ground that the grounds of appeal were incompetent since those grounds were of mixed law and facts, and no leave of the trial Court had been sought and obtained as required by S.221 of the 1979 Constitution. Although the learned trial Judge upheld the objection of the Respondent’s Counsel he nonetheless went on to grant the stay on some conditions, one of which was that the 2nd Defendant should pay the judgment debt by monthly instalments of N25,000.00. Suffice it to say that those conditions were not acceptable to the 2nd Defendant since they depicted him as a judgment debtor which he claimed he was not. That Ruling was given on 20th September, 1985 and so, the 2nd Defendant applied direct to the Court of Appeal for:
(a) An extension of time within which to file an application for leave to appeal.
(b) leave to appeal against the Ruling of the trial Court dated 17/6/85 Stay of execution of the said trial Court’s order pending the determination of this appeal.
In the supporting affidavit, the 2nd Defendant attached a copy of the proposed grounds of appeal, the trial Court’s Ruling and other relevant documents.
In his oral argument, the appellant’s Counsel relied on that portion of the judgment of Nnamani, J.S.C. in Bronik Motors Ltd. & anor’s case (supra) which declared that the limit of the liability of the 2nd Defendant was N500,000.00. Counsel therefore submitted that since the appellant had paid that sum together with the interest ordered by the Court, he was completely absolved from further liability.
In his reply, Mr. Ladosu, S.A.N. for the Respondent made a three pronged attack on the application. He submitted:
Firstly, that the present application was an attempt to re-open the issues which had been conclusively settled by the Supreme Court in Bronik Motors Ltd. & anor’s case and the Motion was therefore an abuse of the process of the Court.
Secondly, Counsel argued that the order of the Supreme Court for instalmental payment was made jointly against the two defendants, and until the whole debt was repaid, there could not be a discharge of either of the defendants.
Thirdly, Mr. Ladosu submitted that the proposed grounds of appeal were not substantial.
It will be seen that both counsel had presented their arguments on the Motion as if they were making submissions, on the appeal itself. In this respect, one can easily understand the anxiety of counsel. In an effort to persuade the court to accept his arguments, it is not unusual for a counsel to present his arguments on a much wider area than the subject-matter of the case calls for.
But a Judge does not have such latitude. He must confine himself within respectable limits of the scope of the enquiry before the Court. A motion should be dealt with as a Motion, whilst an appeal should be treated in all respects as an appeal. The Judge should not be seen to have prejudged a legal point which is yet to come before him in related proceedings otherwise he would disqualify himself from sitting on the latter aspect of the case.
In the instant Motion therefore, it would be wrong for the Court to make a definite decision on the merits of the proposed grounds of appeal when the appeal itself was not before the Court. In my view, such a course of action would eventually prejudice the fair hearing of the appeal, if it is heard by the same panel of Justices.
The lower Court seemed to have appreciated the need for this cautious approach for in his Ruling on the Motion, Nnaemeka-Agu, J.C.A. (as he then was), who read the lead judgment stated as follows:
“It must be noted however that upon consideration of these two grounds what the Court must be satisfied about is that they are prima facie good grounds of appeal; the Court is not yet hearing the appeal and so need not consider whether or not they must succeed.”
This is well said and it accords with the provisions of Order 3 rule 4(2) of the Court of Appeal Rules 1981. But in another portion of his judgment, the learned Justice said:
“I must observe that on a proper view of the above judgment (i.e. – Judgment of the trial Court), the financial liability of the 2nd Appellant does not appear to be limited to the award under paragraph (c) above (i.e. N500,000.00). I do not want to say more on this aspect of the case, in the meantime.”
(Parentheses are mine).
However, the learned Justice had more to say on that aspect of the case when he came to construe the judgment of Nnamani, J.S.C. This is what he said:
“I have my doubts as to whether my Lord, Justice Nnamani, in the above judgment decided to limit the liability of the second appellant to that under the guarantee covered by paragraphs (c) and (d) of the above judgment of Onalaja, J., in the High Court. I do not think his Lordship considered it necessary to deal with paragraphs (b)(i) and (ii) of the above judgment. The Supreme Court dismissed the appeal without qualification. My understanding of the judgment is that apart from what it said about the liability of the 2nd appellant under the guarantee every other item in the judgment of this Court stands. For example the judgment in paragraph (b) (i) was clearly against both defendants.”
Eventually, the learned Justice went on to consider the proposed grounds of appeal and held:
- That payment of the sum of N500,000.00 did not discharge the Appellant.
- That since the Supreme Court order for instalmental payment was made jointly against the two defendants, he did “not see how a question of separate discharge of the 2nd appellant’s liability has arisen.”
- That because of his decision on items 1 and 2 above, he was of the opinion that the proposed grounds of appeal were not substantial.
He therefore dismissed the three prayers of the applicant. The other two Justices (Ademola and Kutigi, JJ.C.A.) concurred with the order made. The 2nd Defendant was dissatisfied and he has appealed to this Court on three grounds:
“(1) The Court of Appeal erred in law in misconstruing the judgment of the Supreme Court in regard to the liability of the appellant herein as guarantor.
It cannot reasonably be doubted that the judgment of the Supreme Court in so far as this Appellant was concerned was limited to N500,000.00.
(2) The Court of Appeal erred in law in failing to observe that where two parties are jointly liable for the payment of a debt it is permissible for either party to pay such debt and further that where the liability of the party making such payment is limited to N500,000.00 such party is completely discharged from any further liability.
(3) The Court of Appeal erred in law in holding that the evidence before it did not disclose that all the various payments made pursuant to the order of the Supreme Court and thereafter were made by this Appellant alone.
(4) For the reasons stated in grounds 1 to 3 above, the Court of Appeal ought to have made the orders sought for by the Appellant in his application before the Court of Appeal.”
In his brief, Prof. Kasunmu, S.A.N., for the Appellant has formulated four issues for determination and these are:
“1. Was there any basis for the doubt expressed by the Court of Appeal and also for re-opening the issue of the limit of the liability of the present Appellant as contained in the judgment of the Supreme Court as read by Nnamani, J.S.C. in Suit No.S.C.110/82.
- Was the Court of Appeal right in holding that the evidence on record did not disclose that all payments made pursuant to the order of the Supreme Court was made by the present Appellant Is it also proper to allow the Respondent to raise the issue of who actually made these payments at the Court of Appeal when the affidavit evidence of the Appellant on this was uncontradicted and the affidavit evidence of the Respondent impliedly admit the fact that these payments were made by the present Appellant for the case made by the Respondent at the hearing before the High Court was that notwithstanding those payments the appellant was still not discharged from his obligations under the guarantee having regard to Clause 11 of the guarantee document.
- Could payment made by A to C in discharge of debt jointly owed by himself and B to C not lead to a separate discharge of A from liability if there is a limit to the liability of A in respect of the total indebtedness of B to C
- Must it be expressly stated at the time of payment by A to C that the payments being made were by him and will failure so to do be a bar to being discharged even when there is evidence to show that the payments were in fact made by A.”
Mr. Ladosu has not set out any questions for determination and I take this to mean that he agrees with those formulated by the Appellant’s Counsel.
I have gone over those issues and I find that they all revolve round the question as to whether or not the 2nd Defendant’s liability on the guarantee was limited to half a million Naira. In my view, that is the principal question which would have to be determined on the proposed grounds of appeal when that appeal comes up for hearing.
As stated before, I do not think that this court should, as at now, be called upon to express any opinion on that question. Unfortunately, the lower Court allowed itself to be drawn into the vortex of the conflict and was persuaded to decide at the hearing of a Motion for leave to appeal, points of law which would necessarily need to be decided at the hearing of the appeal itself. This is not right. See Igboho Local Government v. Boundary Settlement Commissioner (1988) 1 NWLR (Pt.69) 189.
In my view, the real question which this Court has to decide is whether the proposed grounds of appeal were good and substantial grounds. In short, are they grounds which raise serious arguable points of law or are they frivolous
The answer to that question is not difficult to resolve. I have taken pains to set out ail the various documents, letters, affidavits, judgments etc. which form the back-ground of the proposed appeal and which were made available to the lower court. It was on those voluminous papers that the appellant proposes to call on the lower Court to construe the judgment of the Supreme Court. In order to come to a decision, it would be necessary for the appellate Court to peruse carefully the Supreme Court judgment, as well as the judgments of the High Court and the Court of Appeal. It would also be necessary to examine closely the clauses of the guarantee Exhibit 2, and to compare and contrast those clauses with the Court’s order.
Now I ask: can it be said that a ground of appeal which calls for such legal exercise is frivolous I think not. I am of the clear view that the proposed grounds of appeal raise serious points of law for determination; and the prayers sought should have been granted.
Indeed, the learned Justice in his lead judgment, stated that he had some “doubts” as to whether Nnamani, J.S.C. intended to limit the liability of the appellant under clauses (c) and (d) or under clause (b) of the guarantee; in my view, that lingering doubt should have been taken as a clear indication that the appellant had arguable grounds which raise substantial points of law.
For the several reasons given above, I would allow the appeal and set aside the Ruling of the lower Court. In its place, it is ordered that the appellant shall be granted;
(1) 30 days extension from today within which to file an application for leave to appeal
(2) Leave to appeal and
(3) Stay of execution of the trial Court’s order pending the determination of the appeal.
In the result, the appeal succeeds and it is allowed. The Ruling of the Court of Appeal is hereby set aside and it is ordered that the appellant’s Motion be granted as prayed.
In view of my observation that the lower Court appeared to have decided the main issue which would be raised in the proposed appeal, and in order that the parties may be given a fair hearing, it is further ordered that the proposed appeal shall be heard by a different panel other than that which sat on the Motion.
There shall be costs in favour of the Appellants assessed at N500.00.