Armaford Nigeria Limited & Ors V. Nigerian Deposit Insurance Corporation (2014)

LawGlobal-Hub Lead Judgment Report – COURT OF APPEAL

CHINWE EUGENIA IYIZOBA, J.C.A. (Delivering the Leading Judgment)

This is an appeal against the Ruling of Archibong J. of the Federal High Court, Lagos in Suit no FHC/L/FBC/342/2000 delivered on 28/1/08 refusing to join Wema Bank Plc as a party in the Respondent’s suit for the recovery of a debt owed to a failed bank. The 1st Appellant obtained a term loan of US$400,000 in October 1989 from Nigerian Bank for Commerce and Industry [NBCI] for the procurement of plant, machineries and equipments for the production of exhaust mufflers from recorded steel waste.

The loan was secured by the Personal Guarantee of the 2nd and 3rd Appellants. The amount due and payable as at 30/11/98 when the suit was initially instituted was the sum of US$852,527.12. There is no dispute at all regarding the appellant’s indebtedness and the amount owed. The appellants claimed they could not install the said plants and machineries due to lack of funds and later to the political situation during the Military regime of General Sani Abacha. The machineries were then kept for storage in a warehouse in Oregun Lagos owned by Phoenix Motors Limited for a fee.

The appellants claimed that upon a visit to the warehouse by the 2nd Appellant sometime in August 2005, he discovered that the equipments were no longer in the warehouse. On enquiries as to the whereabouts of the machineries, they claimed they were informed that Wema Bank Plc had appointed a Receiver, Wemabod Estates Ltd for Phoenix Motors Limited in liquidation. The Appellants claimed they had intended to sell the plants and machineries stored with Phoenix Motors in order to liquidate the loan facility obtained from NBIC.

The Respondent on the other hand claimed that the alleged sale of the equipment by Wema Bank Plc (party sought to be joined) concerned Mitsubishi Pick-Up, 505 Saloon Car, Mitsubishi Saloon Car, Mazda 929 Saloon Car, Yamaha Generator, Power Generator, Porta Cabin, Lathe Machines Stainless Boiler and was concluded in January 2005. It further alleged that the 2nd Appellant by letter to Wemabod Estates Ltd said that he saw the equipment purchased with the term loan in the warehouse where they were kept in April 2005 long after the liquidator appointed by Wema Bank Plc had concluded the sale.

The Respondent claimed that the equipment said to have been sold by Wema Bank Plc were never the same equipment the Appellants are alleging were plants and machinery bought with the term loan. The Respondent claimed the party sought to be joined was never a party to the loan transaction nor had any relationship with the parties in the suit whether in pursuit of the loan or any interest on the loan. The Appellants alleged that they had contractual relationship with Phoenix Motors Ltd (a company in liquidation).

The contract was that Phoenix Motors Ltd was to store the Appellants’ equipment in the warehouse which at a time fell into the possession of Wemabod Estates Ltd. On the liquidation of Phoenix Motors Ltd, Wemabod Estates Ltd took over possession of the premises occupied by Phoenix Motors Ltd.

At that time the Appellants inspected the warehouse in April 2005 and found the said equipments purchased with the term loan intact. (See page 120 – 121 of the Record). The Respondent claimed Wema Bank Plc had no contact with the equipments said to be purchased with the term loan.

In a reserved Ruling delivered on 28/1/08 the learned trial Judge dismissed the application for joinder of Wema Bank in the suit. Dissatisfied with the Ruling, the Appellants filed this appeal with a notice of appeal containing four grounds out of which they formulated the following issues:

1. Whether a party sought to be joined in an action needs only to have a direct and legal interest in the suit rather than an existing interest at the commencement of the suit.
2. Whether having regard to the Appellants’ averments as contained in their Statement of Defence and their affidavit in support of their application for joinder both dated 17 February 2006, the Appellants have established a clear nexus between Wema Bank and the Appellants thus making it essential that Wema Bank be joined as a necessary party to the suit.
3. Whether the merits of a case can only be decided on events as they occurred at the commencement of the suit.

The Respondents on their part formulated the following issues for determination:

1. Whether or not there is a competent appeal.
2. Assuming without conceding that there is a competent appeal whether Wema Bank Plc is a necessary party to be joined in the action for the recovery of debt owed to the Respondent by the Appellants and which debt has not been disputed by the Appellants.
3. Whether the Respondent can be compelled to join in an action a party with whom it has no claim and with whom there is no existing interest.

I am of the view that the Respondent’s issues are more germane to the grounds of appeal. I shall therefore adopt the Respondent’s issues in the determination of this appeal. Further the Respondent’s issue one being a complaint against the competence of the appeal and a jurisdictional issue needs to be taken first. Other issues will then follow if need be.

ISSUE 1: WHETHER OR NOT THERE IS A COMPETENT APPEAL

RESPONDENTS ARGUMENTS:

Learned counsel for the Respondent on this issue submitted that Grounds 1, 2, 3 and 4 of the notice of appeal filed on 31/7/11 are grounds of mixed law and facts; and that the appellant failed to obtain leave of court to appeal on mixed law and facts. Counsel submitted that the leave of the lower court sought and obtained was in compliance with section 15 of the Court of Appeal Act LFN 2004 which allows interlocutory appeal with the leave of the lower court or Court of Appeal.