Asset Management Group Limited V. Genesiscorp Limited & Ors (2000)
LawGlobal-Hub Lead Judgment Report
G.A. OGUNTADE, J.C.A.
The appellant as Plaintiff before the Lagos High Court issued a specially indorsed writ of summons pursuant to order 3 rules 4 and 9 of the Lagos State Civil Procedure Rules claiming from the 1st and 2nd Respondents (as 1st and 2nd Defendants) the sum of N500,000 being credit facilities granted by the Plaintiff to the 1st Defendant. Interest and penalty were also claimed on the principal sum. In compliance with the rules, a Statement of Claim was filed along with the writ of summons.
The Plaintiff thereafter brought a motion exparte praying for an order:
“Removing into the custody of this Honourable Court the Peugeot 503 Saloon Car with Registration No. LA 1000R; the Volkswagen Jetta Saloon Car with Registration No. LA 556R and the Volkswagen Jetta Saloon Car with Registration No. LA 557R property of the 1st defendant pending the determination of the motion on Notice;
In paragraphs 2(i), 4, 5, 6, 7, and 8 of the affidavit in support of the motion it was deposed thus:
“2(1) On or about the 15th day of June 1993 at the request of the 1st Defendant, the Plaintiff, by its letter of the said date placed funds amounting to N500.000 (Five hundred thousand naira) with the 1st Defendant. A copy of the said letter is exhibited herewith and marked “AMG 1″.
4. That I am aware that the 1st Defendant owns a Peugeot 505 Saloon Car. Registration No. LA 1000R; a Volkswagen Jetta Saloon car Registration No. LA 556R; and a Volkswagen Jetta Saloon Car Registration No. LA 557R.
5. That the aforementioned cars are the only tangible assets of the 1st Defendant now remaining.
6. That both the 1st and 2nd Defendants are in grave financial difficulty whereupon they are likely in the immediate future to dispose of the cars in question without regard to the interests of the Plaintiff herein.
7. That the current value of the 3 (three) cars is not sufficient to meet the 1st Defendant’s outstandings to the Plaintiff.
8. That I honestly and reasonably believe that once the cars are disposed of by the defendant any judgment obtained by the Plaintiff against the said Defendants herein would be a mere barren judgment in that there would be no property of the said Defendant left upon which execution can be levied in satisfaction of any sum awarded.”
Several documentary exhibits were annexed to the affidavit in support of the motion ex-parte. The lower court (Coram Thomas J) as he then was) on 4th October, 1994 granted the application pending the determination of the motion on Notice. The intervener/Respondent in this appeal later brought an application on notice seeking the following orders:
“1. Leave for the applicant to intervene in this suit.
2. An order discharging the order of mareva injunction granted by this court on 11 October 1994 as it relates to the following vehicles:-
i. 505 Saloon Car with Registration No. LA 1000R
ii. Volkswagen Jetta Saloon Car with Registration No. LA 556R.
iii. Volkswagen Jetta Saloon Car with Registration No. LA 557R.
3. An order releasing the aforementioned vehicles to the applicant or in the alternative;
4. An order that the Plaintiff pay to the intervener the amount of money owed the intervener by the 1st Defendant.”
An affidavit was filed in support of the application. A further and better affidavit was later filed. The Defendants in the suit deposed to a counter-affidavit. On 25/11/94, arguments were addressed to the lower court in support and against the grant of the intervener’s motion. The lower court on 13/1/95 granted the orders sought on the motion. Dissatisfied, the Plaintiff has brought this appeal before this court on three grounds of appeal. In the appellant’s brief filed, the issues for determination were identified as the following.
“1. On whom lies the burden of proof of due compliance with S.197 of the Companies and Allied Matters Act (Cap. 59). Laws of the Federation of Nigeria. 1990. Or on the other hand who will fail if no evidence is adduced on either side.
2. Is the appellant a Creditor of the Company”?
The Respondent formulated one issue for determination which is”……..
“Whether the learned trial judge was right to have discharged the mareva injunction and ordered the release of the said vehicles to the intervener”.
The intervener Respondent in its briefs raised a preliminary objection as to the competency of the 1st and 2nd grounds of appeal. It was argued that this appeal being an interlocutory one should have been brought with leave because the 1st & 2nd grounds of appeal raised issues of mixed law and fact or fact.
Counsel relied on Nwadike v. Ibekwe (1987) 4 N.W.L.R. (Pt.67) 71. The appellant on the other hand argued that the 1st and 2nd grounds of appeal were on law. The 1st and 2nd grounds of appeal read thus:
“1. The learned trial judge erred in law when he held that it was the Plaintiff’s duty to prove that the intervener had not registered its “chattel mortgage” at the Corporate Affairs Commission in Compliance with S.197 of the Companies and Allied Matters Decree (Cap. 59), Laws of the Federation of Nigeria 1990, thereby rendering the said Chattel Mortgage void against the liquidator of a Creditor.
PARTICULARS
(a) Success of the intervener’s application was by necessary implication arising from operation of law, premised upon the validity of the charge it obtained from the 1st Defendant in connection with the 3(three) motor vehicles forming the subject matter of the said application.
b. The combined effect of SS.197(1) and (2)(a) of the Companies and Allied Matters Decree (Cap.59), Laws of the Federation of Nigeria, 1990 is to provide, inter alia, that unless the prescribed particulars of such a charge as is held by the Intervener herein, together with the instrument, if any, by which the said charge is created or evidenced, have been or are delivered to or received by the Commission for registration within ninety days of its creation, such charge becomes void against the liquidator and any creditor of the company.
c. The Intervener failed to prove any evidence whatsoever that it had complied with the requirements of S.197(1) of the Companies and Allied Matters Decrees, 1990 or that it was entitled to benefit from any of the exceptions or provisos to the operation of the said section.
d. The learned trial judge failed to apply the elementary principle of law clearly set – out in the case of Moses Ola & Sons v. Bank of the North Limited (1992) 3 NWLR (Pt.229) 370 at 390 B -D. which was cited before him, and a long line of other similar cases, to the effect that in a Civil case, the burden of proof is on the party who substantially asserts the affirmative of an issue, and who must fail assuming no evidence was adduced on either side.
2. The learned trial judge erred in law when he held that the Plaintiff did not show that it is a Creditor or Liquidator.
PARTICULARS
a. The fact that the Plaintiff is a Creditor of the 1st Defendant is elaborately deposed to in 2 (two) separate affidavits deposed to on 27th September, 1994 in the Suit herein.
b. It was on the basis of one of the said affidavit, deposed to in support of the Motion Ex- parte dated 27th September, 1994, that the learned trial judge granted the interim order for the removal of the cars into the Court’s custody.
c. By its Further Affidavit in support of the application deposed to mon 14th November, 1994, the Intervener exhibited the 2nd Defendant’s Counter Affidavit deposed to on 24th October, 1994 wherein it was clearly tacitly admitted in paragraph 1 thereof that the Plaintiff is a Creditor of the 1st Defendant.
d. The learned trial judge was entitled to consider all documents filed in the Suit in arriving at a just decision on any matter arising therein. See Mhambe v. Shide (1994) 2 NWLR (Pt. 214) 210 and Oke v. Aiyedun (1986) 2 NWLR (Pt. 23) 548.
e. The learned trial judge, having raised the question of the Plaintiff’s status as a creditor suo motu, he ought, to have in all the circumstances, directed the parties to address him thereupon.
I have looked closely at the first ground of appeal. The complaint embodied in the ground is that upon a perusal of Section 197 of C.A.M.A. the lower court should have concluded that the onus of showing compliance with Section 197 was upon the intervener/Respondent. The court is not being invited to re-assess or re-evaluate the facts before the lower court. The facts before the lower court are not being disputed. In hearkening to the complaint of the appellant, all that I need to do is to interpret the provision of Section 197 of C.A.M.A. with a view to determining whether or not the intervener/Respondent bore the onus of showing that he had complied with Section 197 of C.A.M.A. It seems to me therefore that the 1st ground of appeal is a ground of law.
The 2nd ground of appeal is a complaint that by stating that the Plaintiff did not show that it was a creditor or liquidator, the lower court was in error. This complaint is an extension of the complaint in the 1st ground of appeal. Viewed against the background of this case, the second ground of appeal is in my view a ground of law. If a court holds that a party has not called evidence to enable it decide a point in the case in the favour of the party, the court does not thereby delve into the assessment or evaluation of evidence. In approaching the issue raised on the 2nd ground of appeal, my duty is to determine whether Section 197 imposes the duty on the Intervener respondent to show compliance with Section 197 of C.A.M.A and whether indeed the Intervener/respondent showed such compliance by calling the requisite evidence. This ground is a ground of law.
I accordingly overrule the preliminary objection. I propose to consider the two issues together. Section 197(1) of C.A.M.A. provides:
“197(1) Subject to the provisions of this Part of this Act, every charge created by a company being a charge to which this section applies, shall so far as any security on the Company’s property or undertaking is conferred be void against the liquidator and any creditor of the company, unless the prescribed particulars of the charge together with the instrument if any, by which the charge is created or evidenced have been or are delivered to or received by the Commission for registration in the manner required by this Act within 90 days after the date of its creation but without prejudice to any contract or obligation for repayment of the money thereby secured. and when a charge becomes void under this section, the money thereby secured shall immediately become payable.”
The appellant has not argued that the intervener/respondent did not register the mortgage in its favour to secure the loan it granted to the Defendants/Respondents. The argument of the appellant is that there was no evidence before the lower court to show that the Chattel Mortgage in favour of the intervener/respondent was registered. Appellant’s counsel relying on Moses Ola & Sons v. Bank of the North Ltd (1992) 3 N.W.L.R (Pt. 229) 370 submitted that the burden of proof was upon a party “who substantially asserts the affirmature of an issue and who must fail assuming no evidence is adduced on either side.”
Understood against the background of this case the submission of appellant’s counsel translates into this – ‘Since it was the intervener/respondent who brought an application to set aside the order of mareva injunction upon the ex-parte application of the Plaintiff, the intervener/respondent bore the evidential burden of showing that it had complied with the provisions of Section 197(1) of CAMA .”
The intervener/respondent’s counsel on the other hand argued that the Plaintiff being an unsecured creditor has no locus standi to complain of want of registration under Section 197(1) of CAMA. Counsel further submitted that even an unregistered charge is valid as between the mortgagor and the mortgagee.
Counsel submitted further that the success of the motion brought by the intervener depended on validity not registration. There was therefore no need for the intervener/respondent to show that the charge in its favour was registered.
It is important that I first discuss the facts made available to the lower court for the purpose of the application by the intervener/respondent that the mareva order made ex-parte be set aside. In paragraphs 3, 4, 5, 6, 7 and 8, the affidavit in support of the application it was deposed thus:
“3. That on or about the 23rd of January, 1992, the intervener granted the 1st defendant a loan of N500,000.00 and as security for its repayment the 1st defendant mortgaged to the intervener vehicles. The vehicles were seized by this court at the instance of the Plaintiff. A copy of the Deed of Chattel mortgage as well as the accepted intervener’s offer letter is attached hereto as Exhibits A and B respectively.
4. Unfortunately, when the loan became repayable the 1st defendant could not perform. Consequently the intervener in accordance with clause 7 of Exhibit A seized one of the mortgaged cars namely, Volkswagen Jetta Saloon with Registration No. LA 556R
5. The intervener further made strenuous unsuccessful efforts to seize the remaining two mortgaged cars but could not locate their whereabouts.
6. That while the aforementioned car was parted at the intervener’s premises at Plural House. Oyin Jolayemi Street, Victoria Island, Lagos, some officials of the court accompanied by armed Policemen and officers of the plaintiff came to our premises on October 11, 1994 and forcefully took away the vehicle.
7. That all attempts to get the entourage to appreciate the superiority of the intervener’s claim were unsuccessful.
8. That the three vehicles currently in the custody of the court by virtue of an order of the court actually belong to the applicant by virtue of an agreement dated January, 1992.”
There were annexed to the affidavit as exhibits some documents to show that the defendants/respondents took a loan of N500.000.00 from intervener/respondent. In particular, there was exhibited the mortgage agreement entered into between the defendants/respondents and the intervener/respondents.
The intervener/respondent later filed a further and better affidavit. In paragraph 2 thereof, he deposed:
“Further to paragraphs 4, 5, 6, 7 and 8 of the affidavit in support of the motion of the intervener; the intervener had long before the order of mareva injunction exercised its power under the mortgage as buttressed by the attached counter-affidavit sworn to by the second defendant and marked Exhibit C. It is important that I set out the contents of the counter-affidavit deposed to by the 2nd defendant and attached to the counter-affidavit as exhibit ‘C’. It reads;
“1. The 1st defendant is not indebted to the Plaintiff in the sum of N1,239,501.00 (One million, two hundred and thirty-nine thousand, five hundred and one naira only) as interest rate has been wrongly calculated at the rate of 15% per month from 1st January, 1994.
2. Paragraph 4 of the affidavit of Samuel Ekanem is not true. The 1st defendant no longer owns Peugeot 505 Saloon Car Registration No. LA 1000R, Volkswagen Jetta Saloon car Registration No. LA 556R and Volkswagen Jetta Saloon Car Registration No. 557R as the same have been mortgaged to Guaranty Trust Bank Ltd since 20th January, 1992 as security for loan taken from Guaranty Trust Bank Ltd. Attached herewith and marked Exhibit “A” is a copy of the Chattel Mortgage.
3. The loan with interest which the 1st defendant took from Guaranty Trust Bank Limited has since matured and the 1st defendant has been unable to repay the same as a result of which Guaranty Trust Bank Limited has exercised its right over the aforesaid cars mortgaged to it.
4. Contrary to paragraph 5 of the affidavit of Mr. Samuel Ekanem, the cars aforementioned are no longer the assets of the 1st defendant but that of Guaranty Trust Bank Limited.
5. I depose to this affidavit in good faith.”
It is to be observed here that the Plaintiff/appellant did not file any counter-affidavit to the affidavit in support of the application. I can therefore say that for the purpose of the intervener’s motion, the undisputed facts as summarized by the lower court at page 58 of the record of proceedings were these:
“In summary, the facts in the intervener’s affidavits are the following: On the 23/1/92, the intervener granted the 1st defendant a loan of N500.000 and as security for its repayment the 1st defendant mortgaged to the intervener. Its vehicles a copy of the Deed of Chattel mortgage and the intervener’s offer letter were attached as Exhibits A and B respectively to the affidavit.
The 1st defendant did not perform when the loan became payable. The intervener seized one of the mortgaged cars namely Volkswagen Jetta Saloon car with Registration No. LA 556R in accordance with Clause 7 of Exhibit A. Strenuous efforts by the intervener to get the remaining two mortgaged cars were unsuccessful as the cars whereabout were not located.
On October, 11, 1994, the officials of the court accompanied by armed Policemen and officer of the Plaintiff came to the intervener’s premises at 6 Adeyemi Alakya Street, Victoria Island, Lagos and forcefully took away the Volkswagen Saloon Car with registration No. LA 556R. The intervener claims that the three vehicles presently in the custody of the court by the court’s order belong to the intervener by virtue of the agreement of 23/1/92. It is deposed on behalf of the intervener that the said intervener had exercised its power under the mortgage long before the mareva injunction. A copy of counter-affidavit sworn to by the 2nd defendant and marked Ex. C was exhibited to confirm the fact that the intervener had exercised its power under the mortgage.”
The Plaintiff/appellant has not challenged the above facts as found by the lower court. I shall now approach the rights of the parties in this appeal from the background of the facts before the lower court. I think that it was not necessary for the intervener/respondent to show upon his application that the deed of chattel mortgage executed in its favour by the defendants was registered. All that the intervener needed to show was that he was the mortgagee to whom the defendants had transferred the ownership of the vehicles. This was sufficient for the purpose of the intervener’s application. It is to be borne in mind that there is no standard of proof that is absolute. Proof of a fact in any proceedings is always a relative matter. The same proof found sufficient in a case where the opponent has not called evidence may be found in-sufficient where the adversary has called evidence.
In this case the Plaintiff did not challenge the intervener’s depositions on oath to the effect that the vehicles had been mortgaged to it. The deed of mortgage ex facie appears regular and valid. It was not open to the lower court to speculate as to any impropriety or invalidity concerning the deed of mortgage when there was nothing whatsoever to put it on any enquiry.
Section 197(1) of CAMA only makes an unregistered charge void as against a liquidator or creditor of a company. The section however protects any contract or obligation secured by an unregistered charge such that a creditor under an unregistered charge can still recover his money. The plaintiff in this case was not in the position of a liquidator of the 1st defendant company. Neither was the plaintiff a creditor within the meaning of Section 197(1).
The plaintiff who did not show that he was a secured creditor could not by simply contending that the chattel mortgage in plaintiff’s favour was not registered place himself on a higher position on the scale of priorities than the intervener.
I think that the plaintiff in the way he argued overlooked the essential purpose Section 197(1) was enacted to serve. It seems to me that the essential purpose of section 197(i) is three-fold. (1) To prevent fraud so that an insolvent company may not collusively dispose of his assets by creating spurious charges in order to defeat legitimate creditors (2) To enable the would be creditors ascertain in advance the state of solvency of a Company before deciding whether or not to extend credit to it (3) To ensure that a scale of priorities is readily ascertainable so that creditors of an insolvent company in liquidation may be paid from the assets in accordance with their position on the scale.
The Plaintiff would need also to show how non – registration of the Chattel Mortgage had injured it such that it be avoided as against It. The Plaintiff who was not a secured creditor could not have argued that the non-registration of the Chattel mortgage in favour of the intervener/respondent affected it. In Re Jackson and Bassford Ltd (1906) 2 Ch 467, 476 and Esberger & Son Ltd v Capital and Counties Bank (1913) 2 Ch 366, 374, it was stated that the purpose of the legislation requiring Registration of Charges created by a Company is to enable those who deal with limited companies to search the register to find whether the company has encumbered its property or not. The Plaintiff who did not as much as secure its credit to the defendants could not therefore rely on Section 197(1) of C.A.M.A.
In any case, there was the affidavit of the 2nd defendant which showed that as at the time the ex-parte order of mareva injunction was obtained, the title in the cars had passed to the intervener/respondent. The purpose of a mareva injunction is to restrain a defendant against whom a suit is pending from removing or dissipating any of his assets within jurisdiction which may be utilised to satisfy any judgment that may be pronounced against him. In essence therefore a mareva injunction is anticipancy in nature. It seeks to ensure that any judgment which the court may give against a defendant (the anticipated judgment debtor) can be satisfied from his assets.
It follows therefore that where it is shown that a particular property does not belong to the anticipated judgment debtor (i.e the defendant), it is not permissible to keep in force any mareva injunction against such property.
In the final conclusion, this appeal lacks merit. It is dismissed with N4,000.00 costs to the respondents.
Other Citations: (2000)LCN/0736(CA)