Intercontractors Nigeria Ltd. V. Uac Of Nigeria Ltd. (1988)

LawGlobal-Hub Lead Judgment Report

G. KARIBI-WHYTE, J.S.C.

The only issue for determination properly raised before the learned trial Judge in the High Court of Lagos State was whether the Applicant Company can bring an application to stay indefinitely the execution of a judgment debt obtained against it in default of defence. The learned trial Judge ruled that it could not. The Court of Appeal affirmed his judgment. Appellant has appealed further to this Court. Although the issue is as stated above as can be seen from the facts outlined hereunder giving rise to this litigation, Appellant’s grounds of appeal and his formulation of issues for determination, has gone further to touch on matters concerning the legal position of a receiver viz-a-viz property contained in the receivership. This is a matter not raised on the application before the trial Judge.

It is important for an understanding of this appeal to state the facts giving rise to the litigation which remain uncontradicted and undisputed. The affidavit in support of the summons to stay execution of judgment against the Appellant namely, the Defendant company was sworn to by J.P. Adegboye, the Chief Accountant of the Defendant company and deposed in paragraphs 1-10 as follows:-

“I, J.P. Adegboye, Christian, Male, Nigerian, of Kilometre 11 Lagos Badagry Expressway, make oath and say as follows:-

1. I am the Chief Accountant of the Defendant by virtue of which I am conversant with the facts of this case and authorized to make this affidavit.
2. That on 6/5/85 the Plaintiff entered judgment in this matter against the Defendant for N1,197,775.79k plus interest at the rate of 6% per annum from the date of the writ till liquidation of the debt, plus N1,951.20k cost.
3. That on 10/7/78 the Defendant created a debenture (in its former name – Bartolotti Nigeria Limited) in favour of Savanah Bank of Nigeria Limited and THEREBY CHARGED ALL ITS FIXED AND FLOATING ASSETS to the said BANK. A copy of the said debenture is attached hereto as Exhibit A.
4. That the Defendant has since changed its name to that above. Exhibit B is attached hereto in evidence thereof.
5. That the Defendant has since defaulted on and failed to comply with Exhibit A by virtue of which Savannah Bank of Nigeria Limited appointed J. O. Munis Esq. as Receiver/Manager over the Defendant with effect from 27/6/85. A copy of the deed of appointment is attached hereto, shown to me and marked Exhibit C.
6. That the judgment debt owed is not in dispute, but the Defendant is also indebted in large sums of money to several others, both secured and unsecured, including judgment creditors.
7. That the Defendant is now being managed by the said Receiver/Manager who by virtue of his office, is trying to reorganize the company and realise all its debts.
8. That pending the incidence of the receivership the Defendant is incapacitated and paralysed with respect to all its assets, out of which payments would have been made to the Plaintiff and other creditors.
9. That until the receivership terminates, leading either into liquidation or solvency of the Defendant, all its assets are beyond the reach of (subordinated secured creditors and all unsecured creditors including) the Plaintiff.
10. That the Defendant will meet its obligations either in liquidation or solvency after the receivership, if assets remain to cover such obligations.”

The application which the affidavit supports is for an ORDER that (execution of writ of fieri facias on) the JUDGMENT HEREIN DATED the 6th day of May, 1985 BE STAYED INDEFINITELY, or that such other relief may be granted as the Court may think fit on the grounds –

1. that the Defendant herein is in receivership,
2. that all the assets of the Defendant herein are comprised in debentures issued by Defendant,
3. that judgment obtained before, during or after receivership cannot attach property subject to receivership,
4. that a judgment creditor takes subject to all equities,
5. that it may amount to trespass and contempt of court to attach property in receivership,
6. that matters have occurred since the date of the said judgment, id est, receivership of the Defendant, which render it inequitable that the said judgment should be carried into effect.

upon such terms and conditions as the court shall deem fit to make in the circumstances.

AND that the costs of and occasioned by this application be borne by the Plaintiff.”

Thus the Defendant/Appellant admits judgment was given against them in default of appearance and defence in the sum of N1,197,775.79k plus interest at the rate of 6% per annum from the date of the writ till liquidation of the debt plus N1,951.20k cost. On the 7th March, 1985, judgment was enrolled and the judgment creditors issued a writ of Fieri facias. On the 27th June, 1985, Savannah Bank of Nigeria Ltd., the Debenture-holders exercising its powers under the Debenture deed, appointed a receiver over the assets of the Defendant/Appellant company, claiming the crystallization of the floating charge created over it on the 10th July, 1978. On the 12th September, 1985, Defendant/Appellant Company, not the receiver/manager, caused a summons to be issued seeking indefinite stay of the execution of the writ of Fieri Facias issued by the Plaintiff/Respondent Company, against its assets. Plaintiff on the 22nd April, 1986, filed a notice of preliminary objection to the jurisdiction of the Court to hear the summons on the grounds that

“1. The application although styled indefinite stay of judgment is in fact an attempt to endorse:-

(a) Receivership and or the Legal Charge dated 10th July, 1978.

(b) Priority as between the creditors vis-a-vis the judgment-debtor Company.

(c) A claim not before the court in the original action in respect of which a stay is being sought.

(d) A claim arising from the operations of Companies Decree, 1963 – a matter for the Federal High Court.

2. There is no proceeding in which the existence or extent of a legal right power, duty, liability, privilege, interest, obligation or claim is in issue as between the Defendant/Appellant and the Plaintiff/Respondent/Applicant.
3. There is no Appeal pending in respect of the judgment to warrant the provisions of the Sheriff and Civil Process Law, Cap.27 Laws of Lagos State, 1973.
4. The Defendant is not seeking leave of Court to pay the judgment debt by instalments.
5. The Court is nut competent to give judgment on the one hand and stay the same judgment indefinitely on the other hand unless there is an Appeal on that judgment or proper disclosure in an application for payments by instalments.
6. The Receiver/Manager and M/s Savanah Bank of Nigeria Ltd are not parties to Suit No. ID/916/84 judgment on which the application is based.”

Upholding the preliminary objection, the learned Judge, Ilori, J., observed that the application before him was not an application by the Receiver/Manager seeking a declaration as to priority between him and holder of debenture and the execution-creditor with a prayer for an injunction to safeguard the Receiver/Manager’s rights in that behalf: but an application by a Judgment-Debtor simpliciter, seeking an order to stultify the effect of the judgment by staying its enforcement sine die. The learned Judge went on to hold as follows –