Dresser Inc. V. Anatrade Limited (2003)

LawGlobal-Hub Lead Judgment Report

ABUBAKAR ABDUL-KADIR JEGA, J.C.A.

This is an appeal from the decision of the Lagos High Court contained in the Orders made by the Honourable Justice K.O. Alogba on the 26th day of June 2001 whereby an order of interim injunction was made against the Appellant sequel to the Ex-parte application filed by the Respondent on the 15th day of June, 2001.

The Appellant is a corporation established under the laws of the United States of America while the Respondent is a company incorporated in Nigeria.

By a Sales Representative Agreement dated the 15th day of January, 1996 made between the Appellant and the Respondent, the Appellant granted the Respondent the exclusive right to promote the sales of the Appellant’s products called DSVD products throughout Nigeria excluding Chevron Overseas Petroleum (C.O.P.I).

The Agreement which expired automatically on December, 31 1996 Pursuant to Clause 9 thereof, was reviewed by both parties and its validity extended from 1st January 1997 to 31st December, 1997 without any alteration or addition.

The parties did not execute a formal renewal of the Agreement after December 31, 1997 but agreed to continue their relationship on virtually the same basis and terms under the Agreement save for the modifications spelt out in the Appellant’s letter of February, 12th, 1998.

By virtue of Clause 14 of the Agreement, the parties agreed that if any controversy shall arise out of the agreement the matter shall be settled exclusively by Arbitration in accordance with the rules then prevailing of International Chambers of Commerce of Paris.

Clause 9 of the Agreement provides for termination of the Agreement by either party upon giving the other party not less than ninety (90) days written notice of termination.

The Appellant by its letter of March, 20 2001 and in accordance with Clause 9 of the Agreement gave the Respondent ninety days written notice of termination of the Agreement.

On the 15th day of June, 2001, five days to the effective date for the termination of the Agreement sequel to the Appellant’s letter of March 20, 2001, the respondent instituted an action against the Appellant at the Lagos State High Court. On the 20th day of June, 2001, five days after the suit was instituted; the respondent filed a motion Ex-parte whereby it prayed the Lagos State High Court with inter alia, for an order of interim injunction against the appellant. The motion Ex-parte filed by the respondent was heard and granted by the court on the 26th day of June, 2001.

The Appellant was dissatisfied with the Order of Interim Injunction granted by the High Court of Lagos State, therefore filed an appeal against the decision. We took the appeal on the 14th October, 2003 the appellant filed his brief of argument on 26th March, 2002 and reply brief on 7th October, 2002. Counsel to the appellant adopted and relied on both the brief of argument and the reply brief and urged us to allow the appeal. Counsel to the respondent filed the respondent’s brief of argument on 9th July, 2002, counsel to the respondent adopted his brief of argument and relied on it and urged us to dismiss the appeal.

Counsel to the Appellant in his brief of argument formulated two issues for determination. The issues are:
i) Whether the learned trial judge was right in granting the order of interim injunction in favour of the Respondent having regard to the principles laid down by the Supreme Court of Nigeria in the case of KOTOYE V. CBN & OTHERS 1989 ALL NLR 76.
ii) Whether the lower court can exercise jurisdiction on the suit instituted by the respondent when the Agreement executed by the appellant and the respondent stipulates that any controversy between them shall be settled exclusively by Arbitration.

The respondent initially formulated three issues for determination but at the hearing of the appeal abandoned its issue No. 2 thereby leaving two issues for determination which are stated thus:
i) Whether the Sales Representative Agreement dated the 15th day of January and renewed in 1997 was still the operative and effective Agreement governing the new contractual relationship between the parties having regard to the facts and circumstances of the case.
ii) Whether the learned trial judge was right in granting the order of interim injunction to the Respondent in view of the facts and circumstances of the case.

The appellant Notice of Appeal filed on the 2nd November, 2001 contained two grounds of appeal, the two grounds of appeal without their particulars are:
i) The learned trial judge erred in law in granting the order of interim injunction against the Defendant/Appellant in that the Plaintiff/Respondent’s exparte application for an order of interim injunction fell short of the conditions for the grant of an order of interim injunction as enunciated in the case of KOTOYE V. CENTRAL BANK OF NIGERIA & ORS (1989) ALL NLR 76.
ii) The learned trial Judge erred in law in granting the Order of interim Injunction against the Defendant/Appellant when the court lacks jurisdiction to hear and/or determine the subject matter of the suit.

From the two grounds of appeal it is clear that issue No.1 formulated by the Respondent does not relates to any ground of the appeal, it is trite law that issue must relate to the ground of appeal and any issue that does not relate to the ground of appeal goes to no issue and must be discountenanced, therefore issue No.1 formulated by the Respondent together with the submissions in its support are hereby discountenanced.

Issue No. 1 formulated by the Appellant and issue No. II formulated by the Respondent are the same as such will be treated as the same.

On issue No.1, counsel to the Appellant submits that having regard to the principles laid down in KOTOYE V. CENTRAL BANK OF NIGERIA AND OTHERS (1989) ALL NLR 76. The respondent’s application dated the 13th day of June, 2001 and filed on 20th day of June, 2001 should not have been granted by the lower court as no case of real urgency or any other exceptional circumstances was made out by the Respondent, that neither the affidavit of urgency nor the affidavit in support of the motion ex-parte which were sworn to by one Joseph Oziegbe on the 20th day of June, 2001 disclosed any real urgency.

Counsel to the appellant contends that a proper scrutiny of the affidavit is support of the Motion Ex-parte by the court will lead to an inevitable conclusion that there was no real urgency and that the Respondent was guilty of delay.

That it is clear from the averments in paragraph 11 of the Statement of Claim and paragraph 15 of the affidavit in support of the Motion Ex-parte that the action instituted at the lower court by the Respondent as well as the application for an order of interim injunction were predicated on the appellant’s letter of March, 20th 2001, whereby the appellant gave the Respondent a ninety (90) days notice of termination of its Agreement with the respondent.

The respondent did receive the Appellant’s letter on the 20th day of March, 2001 but failed to do anything until the 15th day of June, 2001 when the action was instituted. Worse still, the motion for an order of interim injunction was not filed until 20th June, 2001 when the termination became effective upon expiration of the ninety (90) days. Counsel therefore argues that the ex-parte application which was filed ninety days after the respondent received the appellant’s notice of termination of the agreement was predicated on self-imposed urgency caused by the respondent’s culpable delay.

Counsel submits that the ex-parte application should have been refused by the lower court since the existence of real urgency is a Sine Quo Non for the grant of an ex-parte injunction, that the lower court should not have granted the ex-parte application but ought to have directed the Respondent to put the appellant on notice, reference made to Bank Boston NA USA V. Adegoroye (2000) 2 NWLR (PT. 644) 215, Alexander Marine Mangt v. Koda Int. Ltd. (1999) 1 NWLR (pt.588), Itama v. Osaro Lai (2000) 6 NWLR (pt.661) 515.

It is also the submission of the appellant’s counsel that in determining whether to grant the ex-parte application for an order of interim injunction or not, the court must consider the nature of the prospective injury which the applicant may likely suffer if the order of interim injunction is not granted – reference made to Bright Motors Ltd. v. Honda Motor Co. Ltd. (1998) 12 NWSLR (pt. 575) 230.

Further counsel to the appellant submits that the respondent failed to establish by its affidavit in support of the ex-parte application, the irreparable damage it will suffer if the interim order of injunction was not granted by the lower court, reference made to Saraki v. Kotoye (1990) 4 NWLR (Pt.143) 144.

Further there was no material before the court that the appellant will not be able to compensate the respondent in damages. That the learned trial judge by granting the order of interim injunction exercised his discretion contrary to fixed principles, common sense and justice, reference to UBA v. GMGH (1989) 3 NWLR (Pt.110) 374 at 399; Long-John v. Blakk (1998) 6 NWLR (pt. 555) 524; University of Lagos v. Aigoro (1985) 1 NWLR (pt.1) 143 at 148; Oyeyemi v. Irewole Local Govt. (1993) 1 NWLR (pt.270) 462; Echaka Cattle Ranch Ltd. v. NACB Ltd. (1998) 4 NWLR (pt.547) 526; Hart v. T.S.K.J. (1998) 12 NWLR (pt.578) 372.

Counsel urged us to answer issue No. 1 in the negative and resolve same in favour of the Appellant.
On issue No.2. counsel to the appellant refers to Clause 14 of the Sales Representative Agreement duly executed by the Appellant and the Respondent which provides thus:
The parties agree that if any controversy shall arise out of the Agreement, the matter shall be settled exclusively by arbitration in accordance with the procedure and rules then prevailing of International Chamber of Commerce of the parties.

Counsel to the appellant submit that the lower court has no jurisdiction to entertain the suit instituted by the respondent as the appellant and the respondent have agreed that any controversy between them shall be settled exclusively by arbitration. Counsel referred to Sonnar (Nig) v. Norwind (1987) All NLR 548 at 574; A.I.D.C. V. Nigeria L.N.G. Ltd. (2000) 4 NWLR (pt.653) 494; Kurbo v. Motison (Nig) Ltd. (1992) 5 NWLR (pt.239) 102.

Counsel to the appellant contends that any dispute between the appellant and the respondent to arbitration is therefore a condition precedent to exercise of jurisdiction by the lower court, that the lower court is not competent to entertain the suit instituted by the respondent in that the condition precedent has not been fulfilled by the respondent, reference made to Madukolo v. Nkemdilim (1962) All NLR (pt.2) 581; A.G. Lagos State v. Dosunmu (1989) 3 NWLR (Pt.111) 552.

That the learned trial Judge ought to have declined jurisdiction in view of the arbitration clause in the agreement executed by the Appellant and the respondent, counsel urged us to answer issue No. 2 in the negative and resolve of the appellant and to strike out the suit for lack of jurisdiction by the lower court.

In his reply brief learned counsel to the respondent formulated three issues while arguing the appeal he abandoned issue No.2 and is left with two issues that is issue No. 1 and issue No.3.

Issue No. 1 is:
Whether the sales representative agreement dated 1st day of January 1996 and reviewed in 1997 was still the operative and effective agreement governing the new contractual relationship between the parties having regard to the facts and circumstances of the case.

The Notice of Appeal filed by appellant contained two grounds of appeal; the Grounds of Appeal without their particulars are thus:
1 – the learned trial Judge erred in law in granting the order of interim injunction against the Defendant/Appellant in that the Plaintiff/Respondent’s ex-parte application of an order of interim injunction fell short of the conditions for the grant of an order of interim injunction as enunciated in the case of KOTOYE V. CBN & ORS. (1989) All NLR 76.

2 – The learned trial judge erred in law in granting the order of interim injunction against the Defendant/Appellant when the court lacks jurisdiction to hear or determine the subject matter of the suit.

It is apparent that the Respondent’s issue No.1 is not raised on any of the two grounds of appeal filed by the appellant. It is settled law that the appellate court can only hear and decide on issues raised on the grounds of appeal filed before it, the Supreme Court in MUSA SHA (JNR) AND ANR. V. DA RAP KWAN & ORS. (2000) 8 NWLR (PT. 670) 685 AT 700 states.
“An appellate court can only hear and decide on issues raised on the grounds of appeal filed before it and an issue not covered by any ground of appeal whether framed by the parties or by the court is incompetent and will be struck out.”

Issue No.1 formulated by the respondent is not covered by any ground of appeal filed before the court accordingly it is incompetent and is hereby struck out and all the submission made in the brief in respect of the said issues are hereby struck out as they go to no issue.

Already the respondent has abandoned issue No.2, so it is left with only issue No. 3. In his submissions on issue No.3 learned counsel to the Respondent submitted that the affidavit in support of the motion ex-parte and the affidavit of urgency disclosed sufficient materials based on which the court rightly exercised its discretion and granted an order of interim injunction in the respondent’s favour.

Learned counsel to the respondent further submitted the affidavit in support of the motion ex-parte and the affidavit of urgency put forward sufficient facts to establish that there was real urgency and that the respondent would suffer an irreparable damage and an irreversible injury if the orders were not made in his favour.

In reply on points of law, counsel to appellant submits that the parties did not at any time manifest the intention of a complete extinction of the written agreement but merely modified same reference made to Morris v. Baron & Co. (1918) A. C. 1 at 19.

That if the parties had an intention not just to modify the 1997 agreement but to render it extinct the appellant would not have referred to the agreement in its Notice of Intention to terminate the same dated March 20, 2001; and that the reaction of the respondent to the appellant’s Notice of March, 20, 2001 which led to the commencement of the action at the lower court is indeed a clear manifestation that the intention of the parties was only for the modification of 1997 agreement and not a complete extinction.

Further contends that if the respondent firmly holds the view that the 1997 agreement was extinct it would not have bothered to institute an action against the appellant after receiving the notice which seeks to terminate the 1997 agreement.

Submits that the modification to the 1997 agreement as contained in the appellant’s letter of February, 12, 1998 did not affect the Arbitration Clause in Clause 14 of the Sales Representative Agreement which is subsisting between the parties, reference made to FGN V. ZEBRA ENGERY LTD. (2002) 3 NWLR (PT.754) 471 at 492.

On issue No. 3 formulated by the respondent, the appellant replied that the respondent who claimed that it was faced with a desperate situation conceded that the appellant’s notice of termination was received on March 20, 2001 but waited till the 20th day of June, 2001 to file the ex-parte application for interim injunction against the appellant, counsel to the appellant submits that the respondent who decisively and deliberately did nothing for about three months after receiving the appellant’s notice of termination cannot seriously contend that there was any real urgency, reference made to OKECHUKWU V. OKECHUKWU (1989) 3 NWLR (pt.108) 234; Bates v. Lord Hailsham of St. Marylebone (1972) 3 All E.R 1019.

Further the submission of the counsel to the respondent as to the losses which the respondent would suffer if an order of injunction was not granted are of a pecuniary nature which can adequately be compensated in damages and do not constitute irreparable damage as defined by the Supreme Court in Saraki v. Kotoye (1990) 4 NWLR (pt. 143) 144. See also Missini v. Balogun (1968) All NLR 310 at 317.

On issue No. 1 for determination which is the same with the respondent issue No.3, for determination, that is whether the learned trial judge was right in granting the order of interim injunction in favour of the respondent having regard to the principles laid down by the Supreme Court of Nigeria in the case of Kotoye v. CBN & Ors (supra).

The general principles to be considered in the grant of an ex-parte order for injunction are as stated by the Supreme Court in Kotoye v. CBN (supra) which are stated thus:
(a) It can be made when there is real urgency but not a self-induced or self-imposed urgency.
(b) It can be made in an interlocutory or interim injunction application until a certain day usually the next motion date by which time the other side should have been put on notice.
(c) It cannot be granted pending the determination of the substantive suit or action.
(d) It can be granted where the court considers on a prima facie view that an otherwise irreparable damage may be done to the plaintiff before an application for an interlocutory or interim injunction can be heard after notice has been given to the opposing party.
(e) It can be granted where it is necessary to preserve the res which is in danger or imminent danger of being destroyed.
(f) A person who seeks an interim order ex-parte while also applying for an interlocutory injunction, files two motions simultaneously, one ex-parte asking for the interim order and the other on notice applying for an interlocutory injunction; the court before whom the applications come takes the ex-parte motion and if satisfied that it had merit ex facie grants it making the order to the date when the motion on notice shall be heard.
(g) Although it is made without notice to the other party, there must be a real impossibility of bringing the application for such injunction on notice and serving the other party.
(h) The applicant must not be guilty of delay.
(i) It must not be granted unless the applicant gives a satisfactory undertaking as to damages.
(j) Where a court of first instance fails to extract all undertaking as to damages, an appellate court ought normally to discharge the order for injunction on appeal.

In the instant appeal, the appellant exercising its right under Clause 9 of the Agreement entered between the appellant and the respondent by a letter of March, 20 2001 gave the Respondent ninety days written notice of termination of the agreement, on the 15th day of June, 2001 five days to the effective date for the determination of the agreement sequel to the appellant’s letter of March 20, 2001 the respondent instituted an action against the appellant at the Lagos State High Court, on 20th June, 2001, five days after the suit was instituted, the Respondent filed a motion ex-parte whereby it prayed the Lagos High Court for an order of interim injunction against the appellant. The motion ex-parte was heard and granted by the Court on the 26th June, 2001.

The interim order of injunction that was granted to the respondent read thus:
“An order of interim injunction is hereby made restraining the Defendant/Respondent from bidding either directly or through any other third party for any contract in the Federal Republic of Nigeria in respect of the stocking and supply of DVD Valves, pumps and actuators otherwise in concert with the Plaintiff herein and from otherwise entering into any arrangements or contractual relationships or doing any acts or omissions that may prevent the effective marketing of DVD products stocked by the Plaintiff in Nigeria pending the determination of the Motion on Notice filed in this court”.

The main complaint of the respondent against the appellant was that as a result of the oral agreement they entered after the expiration of their 1997 Sales Representative Agreement, the respondent has expended colossal sum of money both in foreign and local currency in efforts to meet up the requirement of their post 1996/97 agreement and the respondent invoking a clause contained in the 1997 Sales Representative Agreement gave the respondent ninety days notice of the termination of the agreement. The respondent vehemently objected to the notion that the 1996/97 Sales Representative Agreement governs the relationship between the parties.

The respondent claim was that the parties did not after the 31st of December 1997, execute any written document extending the agreement. However, the business relationship between the respondent and the appellant continued beyond 1997, albeit on a basis different from that established by the 1996/97 Agreement, certain aspects of the 1996/97 relationship did form part of the post 1997 relationship, such as procurement of orders by Anatrade in respect of DVD products in return of which Anatrade earned a commission but that under the post 1997 relationship, the respondent performed functions that were wider than and in some respects inconsistent with the limited role prescribed in Clause 4 of the 1996/97 Agreement.

At this stage the relevant issue for consideration is whether the respondent satisfied the requirement for the grant of an ex-parte order of injunction based on the foregoing facts of the case.

The respondent was served with the notice of termination by a letter dated 20th March, 2001 and did not do anything until on the 15th of June, 2001 when he instituted an action against the appellant at the Lagos High Court, the motion ex-parte was filed on 20th June, 2001 three months after the written notice of termination was issued, certainly by filing the action against the respondent on the 15th June, 2001, and the motion ex-parte on the 20th June, 2001, the respondent is guilty of delay and it cannot said that there is real urgency that would warrant the filing of the ex-parte motion and its subsequent grant by the court.

The basis of the respondent’s ex-parte motion was the Appellant’s Notice of termination dated 20th March, 2001 and the respondent did not file his ex-parte motion until on 20th June, 2001, three months after it became aware of the termination. In Kotoye v. CBN (supra) Nnaemeka-Agu JSC states thus:
“what is contemplated by the law is urgency between the happening of the event which is sought to be restrained by injunction and the date the application could be heard if taken after due notice to the other side. So if an incident which forms the basis of an application occurred long enough for the applicant to have given due notice of the application to the other side if he had acted promptly but he delays so much in bringing the application until there is not enough time to put the other side on notice, then there is a case of self – induced urgency within the meaning of the law. This self – induced urgency will not warrant the granting of the application ex-parte”.

In the instant appeal from the facts before the court there is no real urgency that will warrant the granting of the application ex-parte.

In his affidavit in support of the ex-parte application the respondent has stated that he has expended colossal amount of money both in local and foreign currency to meet up demands anticipated in the agreement between the parties and would suffer losses if an order of injunction is not granted.
It is crystal clear that the losses that the respondent would suffer if the injunction is not granted are of pecuniary nature which can be adequately compensated in damages as defined by the Supreme Court in Saraki v. Kotoye.

The respondent in his submission stated thus:
— Whereas the present case is concerned with the respondent seeking the protection of the courts to safeguard his investments and financial interests which had come under threat of loss—.
The investments and financial interests of the respondent can be quantified monetarily and the appellant can be ordered to pay the respondent in the event that the respondent suffers any loss.

In Missini v. Balogun (Supra) the Supreme Court states:
— It is not the normal practice to grant an interim injunction if a merely pecuniary matter is at issue—.

Based on this, respondent should not have been granted the order of interim injunction by the lower court. In view of all I have said, issue No. 1 is answered in the negative in favour of the appellant.
On issue No. II that is whether the lower court can exercise jurisdiction on the suit instituted by the respondent when the agreement executed by the appellant and the respondent stipulates that any controversy between them shall be settled exclusively by Arbitration.

This issue of jurisdiction was never raised at the court below, this is very clear from the record of proceedings before the court, it was raised for the first time before this court and the appellant did not seek leave of this court to raise same, accordingly issue No. II having not been raised or canvassed before the lower court and no leave of this court having been sought to raise it for the first time before this court is incompetent and ought to be struck out. Accordingly issue No. II is struck out.

On the whole, this appeal succeeds, the order of interim injunction made in the suit by Hon. Justice K. O. Alogba on 26th June, 2001 is hereby set-aside. The Ex-parte Motion for interim injunction before the lower court is dismissed. The suit is remitted back to Lagos High Court for assignment by the Hon. Chief Judge to another Judge of the court other than Alogba J. for determination on the merit. A cost of N5,000.00 is awarded to the appellant against the respondent.

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Other Citations: (2003)LCN/1519(CA)