Beloxxi & Company Limited & Anor V. South Trust Bank & Ors. (2012)

LawGlobal-Hub Lead Judgment Report – COURT OF APPEAL

KUMAI BAYANG AKAAHS, OFR, J.C.A.: (Delivering the Leading Judgment)

The issue raised in this appeal is whether a trial court can proceed to determine or hear evidence concerning a counter claim after it has dismissed the suit. The argument advanced by the appellants is that the trial court having dismissed the suit becomes functus officio and therefore cannot proceed with the counter – claim.

It is necessary at this stage to state the background facts leading to this appeal. On 21/10/2005, the present appellants as plaintiffs commenced legal proceedings in the Federal High Court Lagos against the respondents as defendants in Suit No.FHC/L/CS/1113/05 claiming the following declaratory reliefs endorsed on the Writ of Summons:-

“The plaintiffs’ claim against the defendants jointly and severally is for:

1. A declaration that upon a proper construction of the true spirit and letters of the loan agreement comprised in (a) proposal letter from the 1st defendant dated 29th October 2003 (b) letter from the 2nd defendant dated 10th February, 2004 (c) LETTER AGREEMENT (d) PROMISSORY NOTE and (e) Letter of Guarantee all dated 2nd March, 2004 the principal sum of 2,207,600 dollars with accrued interests thereon is neither due nor payable now.
2. A declaration that consequent upon the said fundamental breach by the defendants, which affected “payment schedules” and “amount of payment” the plaintiff’s are entitled to withhold payment of instalments of the principal sum and interest until the issue of the said breach is resolved or rectified.”

The 2nd defendant on being served with the Writ of Summons and Statement of Claim filed its Statement of Defence and counterclaimed. The relevant paragraphs of the Statement of Defence are 5, 6, 7, 8, 9 while the Counterclaim is contained in paragraphs 17, 18, 19 and 21, wherein the Defendant/Counter – Claimant averred as follows:-

“5. In response to paragraphs 7 and 8 of the Statement of Claim, the 2nd Defendant avers that the 1st Defendant granted the 1st Plaintiff a loan facility for the purchase of biscuit manufacturing equipment to the tune of 2,207,600.00 dollars which said loan was guaranteed by the 2nd Plaintiff.

6. In further answer to paragraphs 7 and 8 of the Statement of claim, the 2nd Defendant avers that with regard to the loan facility, it was the agreement of the parties that the principal sum shall be repayable semi-annually in not more than 10 approximately equal consecutive instalments on July 25 and January 25 respectively, commencing on July 25, 2005 and terminating on January 25, 2010. The 2nd Defendant shall rely on the Promissory Note and Letter Agreement both dated 2nd March, 2004, and the Guarantee Letter from the 2nd Plaintiff in proof of this averment and the same are hereby Pleaded.
7. Further to paragraphs 7 and 8 of the Statement of Claim above, the 2nd Defendant avers that by an Assignment, the 1st Defendant assigned all its rights, title and interest in the promissory Note of Beloxxi & Company Limited dated 2nd March 2004 to the 2nd Defendant. The 2nd Defendant shall rely on the Form of Assignment of credit in proof of this averment and the same is hereby pleaded.
8. The 2nd Defendant avers that subsequent to the assignment in paragraph 7 above and the plaintiffs’ default in making payment on 25th July 2005, it made a formal demand for the payment of the outstanding sum of 2,283,251.92 dollars on the 1st plaintiff and 2nd plaintiff who guaranteed the loan. The 2nd Defendant shall rely on the said demand letters both dated 5th October 2005 and the Plaintiffs are hereby given notice to produce them at the trial.
9. With respect to the facts averred to in paragraph 13 of the Statement of Claim, the 2nd Defendant avers that the plaintiffs have failed, refused or neglected to pay their indebtedness to the 2nd Defendant under the loan agreement as at when due.

COUNTER CLAIM

17. The 2nd Defendant avers that with respect to the loan of 2,207,600.00 (dollars) two instalments were due for payment namely July 25, 2005 and January 25, 2006 and the Plaintiffs have not paid any of the instalments.
18. The 2nd Defendant avers that the Plaintiffs failed to settle these sums as at when due and in consequence, the 2nd Defendant is entitled under the Promissory Note dated 2nd March, 2004 to claim the entire outstanding amount and interest on the loan granted the Plaintiffs.
19. The 2nd Defendant avers that it is entitled under the Promissory Note to collection expenses which comprises of the Global Recovery Group fees, Attorney’s fees and court costs.

Particulars

(i) Global Recovery collection fees = 583,615.97 dollars

(ii) Attorney’s fees and court fees = 127,034.52 dollars

The 2nd Defendant will at the trial rely on various vouchers, invoices and other relevant documents in proof of this averment.

21. Wherefore the 2nd Defendant counter claims against the Plaintiffs jointly and severally: –

1) The sum of $2,207,600.00 (Two Million, Two Hundred and Seven Thousand, Six Hundred U.S. Dollars) being the principal sum in the loan facility granted to the Plaintiffs by the 1st Defendant which sum remains outstanding.

2) Interest on the said sum as follows: –

(i) 3.15% from 2nd March 2004 to 25 July 2005 [the date of the first default (i.e. 1.15% of Libor rate during the period plus 2%).