Alhaji Aminu Ibrahim V. Mr. Felix Osim (1988)
LawGlobal-Hub Lead Judgment Report
L. UWAIS, J.S.C.
In this case the respondent took out a writ of summons in the High Court of Lagos State claiming, as per his statement of claim, against the appellant as follows-
“(1) The sum of N106,400.00 due, owing and payable to the plaintiff as his entitlement of the net profit of the import business transaction pursuant to a contract entered into between the plaintiff and the defendant on Friday the 28th day of December, 1984.
(2) The sum of N393,600.00 being general damages for breach of the said contract by the defendant, on the facts above stated.”
The facts which led to the institution of the suit are as follows. On the 22nd of October. 1984, the respondent was issued a licence which permitted him to import sardine worth N100,000.00. At the time of the issuance of the import licence, the respondent lacked the money with which to buy the sardine abroad. He therefore thought of approaching his friends and business colleagues for financial assistance to facilitate the importation of the sardine.
The respondent was introduced to the appellant by one of the respondent’s friends. There was a discussion between the respondent and the appellant from which a negotiation ensued and the parties reached an agreement that the appellant would wholly finance the importation of the sardine using the import licence issued to the respondent. The terms of the agreement reached were put in writing in a letter dated the 29th December, 1984 which the respondent wrote to the appellant. The terms have been specifically pleaded in paragraph 8 of the respondent’s statement of claim and they are –
“(1) That the defendant should finance the importation of sardines by the licence No. 84/P009878 lawfully belonging to the plaintiff;
(2) That the profit of the transaction would be shared exclusively between the plaintiff and the defendant as follows-
(i) 5% first to the defendant as out of pocket expenses.
(ii) The remainder of the profit to be shared equally between the plaintiff and the defendant.
(3) That there would be no third party interference.
(4) That the defendant would use any bank of his choice in Lagos to execute the transaction.
(5) That the defendant would keep the plaintiff duly informed of the progress and course of the transaction.”
According to the averments made in the statement of claim, the appellant breached all the terms of the agreement. The appellant opened a letter of credit, for the purchase of the sardine abroad, with a bank in Kano instead of Lagos. The sardine was brought in 4,400 cartons to Nigeria in a ship. Although the respondent was notified by the appellant of the ship’s arrival and was asked to look for buyers, the sardine was secretly sold by the appellant without the knowledge of the respondent.
The sum of N224.000 was allegedly realised by the appellant as profit from the sale of the sardine. When the respondent demanded from the appcl1ant a statement of account and his share of the profit, he was allegedly merely offered N4.000.00 as a gift. In order to show that the transaction between the parties was not illegal, the following averments were made in paragraphs 9 and 10 of the respondent’s statement of claim –
“9. That at no time did the plaintiff sell or surrender or agree to sell or surrender to the defendant or otherwise to deal with the import licence in such a manner as to divest the plaintiff oft he property in or the proprietorship of the said import licence in favour of the defendant exclusively.
- That all transactions in respect of that import licence pursuant to the agreement of Friday. 25th December, 1984, aforesaid, were carried out by the defendant in the name, of the plaintiff and under his (plaintiffs) business name and logo, and that the plaintiff did personally. receive correspondences (sic) from the shipping agencies handling the freight of the sardine being imported.
After the appellant was served with the statement of claim he filed a statement of defence in which he denied all the facts pleaded by the respondent and further alleged in paragraphs 4, 5, 6, and 7 of the statement of defence, as follows-
“4. Save and except that on or about the 28th day of December, 1984 the plaintiff approached the defendant with a view to selling to the defendant one import licence due to expire three days later, the defendant strenuously denies the allegations contained in paragraphs 4 to 26 of the statement of claim and puts the plaintiff to the strictest proof thereof.
- The defendant avers that if, which is strenuously denied, the plaintiff entered into any contract or arrangement with the defendant in connection with the alleged import licence, the same was contrary to public policy, illegal and void.
- The defendant further avers that the allegations contained in the statement of claim are scandalous and vexatious and should be struck-out.
- The defendant will show that it is a condition of the issuance of import licences by the Federal Government that the said licences should be strictly utilized by the person to whom they were issued and that any purported transfer of the same is illegal and renders the transferor and transferee liable to sanctions.”
Simultaneous with the filing of the statement of defence, the appellant filed a motion in the High Court pursuant to Order 22 rule 4 of the High Court of Lagos State (Civil Procedure) Rules, Cap. 52 praying for an order that the statement of claim filed by the respondent be struck-out on the grounds-
“1. That it discloses no reasonable cause of action; and
- That it is frivolous and vexatious.”
The application was heard by Segun J. who dismissed it. There was an appeal by the appellant to the Court of Appeal. That appeal did not succeed and it was dismissed. The present appeal is from the decision of the Court of Appeal, and it is based on 2 grounds which read thus-
“(1) The Court of Appeal erred in law in holding that the writ of Summons and the Statement of Claim as filed by the Respondent in this matter did disclose a proper cause of action.
Particulars of Error
(a) No specific contract is identifiable from the Respondent’s Writ of Summons and/or the Statement of Claim.
(b) The particulars of the alleged “Contractual business transaction” are not clearly stated in the Respondent’s pleadings.
(c) No clear breach of any specific contract is properly alleged in the Statement of Claim.
(II) The Court of Appeal misdirected itself in law when it came to the conclusion that no issue of illegality arose ex facie in the Statement of Claim.
Particulars of Misdirection
“In the business world appearances and make-believe matters a lot and no business man would think the less of a man who has an Import Licence getting money from another who does not have an Import Licence. In fact it was a strange paradox of business life in Nigeria then, that those who have Import Licences are those who have no money and those who have money have no Import Licence. The parties get together and the man with the money finance (sic) the man with the licence upon terms as in this case. In so far as the Import Licence is in the name of the owner no illegality is committed by a man who has money financing an Import Licence belonging to another person. Such is the stuff of which business is made of.”
Particulars of Error
The allegation in the Statement of Claim was that the Respondent handed over to the Appellant the relevant Import Licence to be utilized by the Appellant on the pretence that it was the Respondent who so utilized the same. The alleged facts are clearly in contravention of section 44 of the Customs and Excise Management Act, 1958 and the Finance Act of 1961.
(b) The Respondent sought the Court’s assistance to benefit from the said illegal transaction.”
Now Order 22 rule 4 of the High Court of Lagos State (Civil Procedure) Rules, Cap.52 provides as follows-
“The Court or a Judge in chambers may order any pleading to be struck-out, on the ground that it discloses no reasonable cause of action or answer, and in any such case or in case of the action or defence being shown by the pleadings to be frivolous or vexatious, the Court or Judge in Chambers may order the action to be stayed or dismissed, or judgment to be entered accordingly, as may be just.”
When the application to strike-out the respondent’s statement was heard in the High Court, that court held thus –
“I have carefully gone through the statement of claim filed by the plaintiff/respondent in this case and in paragraph 8 (quoted above) the particulars of the contract entered into between the parties were clearly set-out………When paragraph 8 is read along with the remaining paragraphs of the statement of claim, it becomes clear that a reasonable cause of action is founded all contract……There are sufficient averments in the statement of claim herein which clearly identified the contract between the parties………
If an import licence is issued for the importation of sardine by the appropriate authority, I cannot see how such an importation could be declared illegal and under what circumstances the court would declare it illegal. The import licence is the authority to bring the sardine into this country and in the absence of any declaration that it is null and void, prima facie it is valid and subsisting until revoked by the issuing authority……………
In the instant case, since there is nothing in the statement of claim to forbid the importation of the sardine and import licence to cover it was validly issued, there does not seem to be, on the face of the pleadings as it stands, the possibility and probability of illegality.” (parenthesis and italics mine).
It was this finding by the High Court that was upheld by the Court of Appeal. Before us Mr. Mbanefo learned counsel for the appellant has argued, as done in the appellant’s brief of argument, that no discernable cause of action is evident from either the respondent’s writ of summons or statement of claim. Learned counsel contended that although the-endorsement on the writ of summons has alleged “contractual business transaction” between the parties; the endorsement is not sufficient to identify the cause of action. He canvassed further that no specific contract is identifiable from the writ of summons and/or the statement of claim; the particulars of the “contractual business transaction” alleged are not clearly stated in the respondent’s pleadings; and that no clear breach of any specific contract is properly alleged in the statement of claim.
The same argument, as the foregoing, was advanced in the Court of Appeal and Ademola, J.C.A. who delivered the lead judgment in that Court, with which Akpata and Awogu, JJ.C.A. concurred, held-
“There is no difficulty in coming to a conclusion that the writ and the statement of claim filed in this matter disclose a reasonable cause of action if the statement of claim is read as a whole and not disjunctively, as Mr. Mbanefo tended to do. It should be seen as a story told of a business transaction, the parties entered into. Simply put, it is a story of a ‘plaintiff who has an Import Licence but no money wanting to import goods entering into an arrangement with the defendant who has money hut no Import Licence but also anxious to bring in goods. The story is also unfolded by the Statement of Claim that the profit on such importation should be shared in certain proportion. The story ends up by saying that the defendant imported the goods and has kept the proceeds to himself and had not given the plaintiff any share.”
The point must not be lost, that one of the two prayers advanced in the High Court was that the statement of claim filed by the respondent did not disclose a reasonable cause of action and by that reason, amongst others, the statement of claim should be struck out in accordance with the provisions of Order 22 rule 4 of the High Court of Lagos State (Civil Procedure) Rules, Cap.52 of the Laws of Lagos State, 1973 (quoted above). Q
By the two elements in the foregoing definition of “cause of action” there can be no doubt that as far as the respondent was concerned and as indicated in his statement of claim, the wrongful act of the appellant was that the appellant imported sardine with the import licence issued to the respondent, made profit and refused to share the profit as agreed with the respondent. By this, if proved, the respondent would be entitled to damages for breach of contract.
However the definition of the words “cause of action” is, for the purposes of the present case, incomplete without the meaning of the word or adjective “reasonable” ascertained. In Black’s Law Dictionary, Special Deluxe, 5th Edition, the word has been defined to mean, “fair, proper, just, moderate, suitable under the circumstances.” But the phrase “reasonable cause of action” which is used in Order 18 rule 19 of the English Rules of the Supreme Court (See Volume 1 of The Supreme Court Practice 1979) had been defined in Drummond-Jackson v British Medical Association & Ors., (1970) 1 W.L.R. 688 at p.696 C by Lord Pearson who observed-
“First there is in paragraph (1)(a) of the rule the expression ‘reasonable cause of action’, to which Lindley M.R. called attention in Hubbuck & Sons Ltd. v Wilkinson, Heywood & Clark Limited, (1899) 1 Q.B. 86 pp.90-91. No exact paraphrase can be given, but I think ‘reasonable cause of action’ means a cause of action with some chance of success, when (as required by paragraph (2) of the rule) only the allegations in the pleadings are considered. If when those allegations are examined it is found that the alleged cause of action is certain to fail, the statement of claim should be struck-out.” (Italics mine)
This definition was approved by this Court in Chief (Dr.) Irene Thomas & Ors. v The Most Reverend Timothy Omotayo Olufosoye, (1986) 1 N.W.L.R. 669 at pp.682 (per Obaseki, J.S.C.).
In his effort to show that the cause of action in this case is not likely to succeed, learned counsel for the appellant further contended that the transaction between the appellant and respondent was tainted with illegality and it is, therefore, contrary to public policy. He referred to paragraph 7 of the statement of claim, where the respondent averred that he handed-over the import licence to the appellant, and paragraph 9 (quoted above) and argued as follows.
If the transaction had been a loan agreement and the appellant had granted, as loan, the money with which the letter of credit was opened (which is contrary to what was averred in the statement of claim) then the transaction might have been legal, but this is subject to compliance with the requirements of Moneylenders Law, Cap.8S of the Laws of Lagos State, 1973.
But if the appellant had utilised the import licence on the pretence that he was the respondent as, he submitted, was clearly indicated by paragraph 13 of the statement of claim, then the transaction was illegal. To show the illegality, learned counsel for the appellant referred to Schedule 3 to the Finance Act 1981 as amended by section 2 subsection (1) of the Economic Stabilisation (Temporary Provisions) Order. 1984 and item 120 of Schedule 2 to the Order, which specified tinned fish as one of the goods prohibited from being imported except authorised with an import licence.
Learned counsel adverted to the definition of “import licence” under section 3 subsection (3) of the Finance Act. 1981 and submitted that the alleged importation of sardine by the appellant, using the import licence handed over to the appellant by the respondent, is an offence punishable under Section 44 of the Customs and Excise Management Act, 1958.
It is true that if in an action of contract it clearly appears from the statement of claim that there is no contract between the plaintiff and the defendant or there is no contract which is valid in law or the contract is illegal, the statement of claim will be struck out by virtue of Order 22 rule 4 of the High Court of Lagos State (Civil Procedure) Rules; See South Hertoll Coal Co. v Haswell, (1898) 1 Ch. 465, Humphreys v Polak & Anor., (1901) 2 K.B. 385; Shaw v. Shaw, (1965) 1 W.L.R. 537; (1965) 1 All E.R. 638 C.A.
As has been shown, the question whether or not a reasonable cause of action existed in the statement of claim filed by the respondent is a question of fact based on the circumstances of the transaction between the appellant and the respondent. Both Segun J. and the learned justices of the Court of Appeal have concurrently found that a reasonable cause of action has been disclosed by the pleadings. That is that there is a chance that the cause of action. as disclosed by the statement of claim, might succeed. It has been held in Carl Zeiss Stiftung v Rayner & Keeler Ltd…(No.3), (1970) CH. 506; (1969) 3 W.L.R. 991 and Gleeson v. J. Wippel & Co., (1977) 1 W.L.R. 510 at p. 518 that the power to strike out any pleading or any part of a pleading under Order 18 rule 19 of the English Rules of Supreme Court, (which is similar to Order 22 rule 4 of the High Court of Lagos State (Civil Procedure) Rules. Cap.52) is not mandatory but permissive and the power confers a discretionary jurisdiction to be exercised having regard to the quality and all the circumstances relating to the pleadings. Although the appellant’s line of argument is that no reasonable cause of action has been revealed by the statement of claim, the argument has not been accepted by the lower courts. Having regard to the averments in the statement of claim. I am satisfied that the lower courts were right in finding that a reasonable cause of action has been shown by the respondent. It appears clearly from the statement of claim that there was a contract between the parties for the respondent to provide the licence to import sardine and for the appellant to finance the importation of the sardine. The profit to be made and which the respondent alleged had been made, was to be shared between the parties but this was not done; instead the appellant had kept the profit to himself. On the face of the statement of claim, as pleaded in paragraphs 9 and 10, quoted above, there was prima facie no illegality as contested by Mr. Mbanefo. I, therefore, see no reason or any special circumstance to warrant any interference by this Court with the exercise of the discretionary power of the High Court or the confirmation of the exercise of the discretion by the Court of Appeal – See University of Lagos & Anor v M.I. Aigoro, (1985) 1 N.W.L.R. 143 at p.148; and University of Lagos v Olaniyan, (1985) 1 N.W.L.R. 1156 at p.163.
Finally, when this Court heard the argument presented by learned counsel to the appellant, it was decided that it was not necessary to call on Mr. Omowole, learned counsel to the respondent, to reply; and so Mr. Omowole did not address us. I wish however to commend him for the well prepared brief of argument which he filed on behalf of the respondent. I found the brief helpful.
For all the reasons which I have given I have come to the conclusion that there is no merit in this appeal. Accordingly, the appeal is hereby dismissed with N500.00 costs to the respondent.