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Intercontractors Nigeria Ltd. V. Uac Of Nigeria Ltd. (1988) LLJR-SC

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.

  1. 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.
  2. 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.
  3. The Defendant is not seeking leave of Court to pay the judgment debt by instalments.
  4. 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.
  5. 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 –

“In my view, the question of priority of equities between a receiver and a judgment-creditor can be properly considered only in an action brought by the Receiver for that purpose before a proper forum. The judgment constitutes res judicata between the judgment creditor and the judgment debtor. No further issue can be raised upon it, except by an appeal or action to set aside.”

In amplification of this view, the learned trial Judge stated the well settled principle that on the coming into effect of a receivership, the Receiver/Manager became entitled to all the assets of the Applicant/Appellant. Consequently “The proper party to institute an action to determine priorities thereafter would be the Receiver/Manager in whom the assets became vested or the holders of the Debentures who had their interests to protect.”

The learned Judge upheld the objection of counsel to the Plaintiff to the application that since the judgment sought to be stayed indefinitely was res judicata between the parties; Defendant/Applicant having not appealed against the judgment had no locus standi to bring the application. The application was dismissed with N150 costs. Appellant appealed to the Court of Appeal. The grounds of appeal are as follows –

“Error In Law;

The Learned Trial Judge erred in law when he held that stay of execution will only be granted if there is a pending appeal against judgment sought to be stayed.

Particulars of Error:

The learned trial Judge confused issue in taking the preliminary objections as to jurisdiction to hear the summons for stay and the said summons together.

The learned trial Judge confused provisions of Order 59 Rule 13 RSC (England 1985) on one hand, and Order 47 Rule 1 and Order 45 Rule 11 RSC (England 1985), and the Court’s inherent jurisdiction, on the other, to grant stay of execution.

The power to stay under the former rule is separate and distinct from the latter vide Ellis v. Scott (1964) All E.R. 787.

Misdirection:

That learned Judge misdirected himself in law in holding that the issues of the debenture – (Exhibit A creating) – and the receivership do not arise.

Particulars of Error:

1n view of the fact that the affidavit supporting the summons was unchallenged or contradicted by a counter affidavit, it means in law, following the decision of Alagbe v. Abimbola (1978) 2 SC. 39,40 that, all the facts therein are admitted including that on receivership.

Receivership, (and the debenture which created it), were clearly in issue, as the effect of the same, is the incidence of a legal occurrence that, makes for grant of stay of execution, vide: Krans V. Bright Oridami (Unreported Suit No. FSC 322/61) and Mandilas and Karaberis v. Anglo Canadian Cement C. (1967) NCLR 42

Upon the appointment of a receiver, he becomes the alter ego of the Company vide ala Olu Modern Bakery Ltd. v. Arthur Young Osindero & Co. Vol. 3 FRCR (1977) 37 and bound, (further to clause 1 of Exhibit C, and Clause 12(1) of Exhibit A in the proceedings), to appear as the agent and attorney of the company.

Ex hypothesi, receivership was not only an issue was germane to the application, and ought to have been considered.

Error In Law:

The learned trial Judge erred in law in not dismissing the Respondent’s application that, it had no jurisdiction, and in not exercising its discretion in favour of the Appellant.

Particulars of Error:

The summons for stay ought, on plethora of authorities, to have been granted.

The preliminary objection ought to have been struck out with cost as misconceived and an abuse of process, vide: Solimpec Nig Limited v. Intercontractors Nigerian Limited (Unreported Suit ID/414/84 of 18/4/86).

In refusing to grant the stay, the Respondent will, if it levies execution, incur civil liability vide: Krans v. Bright Oridomi (Ibid) and probably criminal liability vide Lane v. Sterne (1862) Giff 629.

In a well considered judgment of the Court read by Uthman Mohammed J.C.A. to which Adenekan Ademola and Nnaemeka-Agu, JJ.C.A concurred dismissing the appeal, it was held that the trial Judge rightly observed that the application for stay of execution was not brought by a Receiver/Manager seeking a declaration as to priority between him or holders of debenture and the execution creditor with a prayer for an injunction to safeguard the Receiver/Manager’s right in that behalf, but an application by a judgment debtor seeking an order to suspend the effect of judgment by staying its enforcement sine die.

The Court of Appeal also held that apart from the application not having been brought by the Receiver/Manager, it is for an order for indefinite stay of execution of judgment against debenture holders in respect of the assets in which a Receiver/Manager was subsequently appointed. It was also held that the Receiver/Manager did not apply for directions as required under S.337 of the Companies Act.

Finally, the Court of Appeal held agreeing with the learned Judge that the proper party to institute an action to determine priorities after the judgment would be the Receiver/Manager in whom the assets of the company became vested or the holders of the debentures who had their interests to protect. The Court after discussing the legal position of a Company in receivership held:

“I therefore agree with the learned trial Judge that the Appellant having failed to appeal against the judgment has no locus standi to apply for a stay of the execution of the judgment.”

Appellant has filed six grounds of appeal against the judgment of the Court of Appeal. The grounds of Appeal excluding particulars are as follows:

“3.1 Error In Law:

The Court of Appeal erred in misconceived, misunderstood, and misconstrued the law, which it misapplied, apropos the effect of the appointment of a receiver by a debenture holder on execution creditors by relying on the illogical and unreasonable equation of receivership pursuant to charges and receivership pursuant to interlocutory court orders pendite litem, past judgment etc., when it held that:-

“A receiver can only be…………appointed through an application brought before the Court for………getting in and holding or securing funds or other property which the court at trial or in the course of the action will have the means of distributing…..”

3.2 Error In Law:

The Court of Appeal misconceived and misunderstood the law and thereby arrived at an unreasonable decision when it held that

“Under S.337 of the Companies Act, 1968 companies have been given powers to appoint a receiver or manager out of Court. But once appointed … he is to apply to Court for directions…”

3.3 Error In Law:

The Court of Appeal erred in law when it held that the proper

procedure to have adopted was to have sought an order of court

for a declaration of priorities.

3.4 Error In Law:

The Court of Appeal misconceived and misunderstood the law when it held that stay of execution could only be granted pending an appeal, and thereby arrived at an unreasonable unjudicious and unjust decision.

3.5 Error In Law:

The Court of Appeal, having rightly held that judgment creditors take subject to equities and that receiverships by or out of court have the same effect on judgment creditors, gravely erred in law in not granting stay of execution, because it would be contrary to common sense to allow a debenture holder appointed, receiver to defeat the rights of a judgment creditor, as in such case there is no priority of equities.

3.6 Error In Law:

The Court of Appeal erred in law in refusing the application because the Receiver did not in his name bring the application and therefore that the Appellant had no locus standi.

Stricto sensu only the 6th ground of appeal arises from the decision of the Court of Appeal.

Counsel filed their briefs of argument, and have before us relied on them. Appellant’s counsel strenuously endeavoured both in his brief of argument and his oral presentation before us to demonstrate how the courts below misconstrued and misapplied the law relating to receiverships. Indeed out of the six grounds of appeal, four relied on these errors. This approach to the appeal led counsel to rove all over the field of the law relating to the rights, powers and duties of a receiver. This is clear from his formulation of the issues for determination as follows:-

“The issues formulated by the Appellant for determination of this appeal are as follows:-

2.1 Whether or not the intendment, purpose and effect of the appointment of a receiver pursuant to a charge, are the same as a receiver appointed pursuant to Orders 30, 50 & 51 RSC, or Order 3914 Lagos State High Court (Civil Procedure Rules) 1972, or on application by an unsecured judgment creditors or on equitable execution order

2.2 Whether, if the replication to the above is in the negative, the effect of the appointment of a receiver, pursuant to statutory and decisional company law, is not an incidence of a legal occurrence warranting the grant of a stay of execution

2.3 Whether irrespective of the replication to issue 2.2, it can be asserted affirmatively that an unsecured judgment creditor does not take after a secured creditor or subject to equities

2.4. Whether it is required of a receiver/manager over a company in receivership to bring, take, defend or continue actions in his own name being the latter’s alter ego and lawful attorney

2.5 Whether or not, if the answer to issue 2.4 is negative a judgment debtor, in receivership, retaining its legal persona cannot bring an application – under Orders 47 Rule 1 and 45 Rules 1 & 11 RSC, and Section 16 CAP 127 Laws of Lagos State – for a stay of execution

2.6 Whether or not a stay of execution granted vide the Rules set out above is not separate and distinct from a stay granted vide Order 59 Rule 13 RSC and Section 51(4) CAP 52 Laws of Lagos State

2.7 Whether or not, if the reposite to issue 2.6 is not in the affirmative, it is a correct proposition of law that a stay of execution will only be granted if an appeal is pending

None of the issues set down above for determination would be directly relevant to the judgment of the Courts below. This is because the issues are not those arising from the facts of the application. It seems to me that Counsel for the Respondent’s approach to the issues for determination is closer to the right approach. They are as follow:-

“Issues Arising For Determination

“1. Whether a Receiver/Manager (appointed out of Court pursuant to a debenture) who was not a party in Suit, can at any time after judgment in the Suit apply (as Attorney or Alter-Ego) on behalf of yet another that is not before the Court, to arrest a judgment of a Court of record validly given

  1. Whether a judgment-creditor who after obtaining judgment against a judgment debtor for the value of goods sold on credit to the judgment-debtor and who had a Writ of FIERI FACIAS already issued by the Court should be prevented from realising the fruits of its litigation simply because the judgment-debtor subsequently went into receivership
  2. Whether having regard to the circumstances of this case, the Learned Justices of Appeal were right in affirming the Learned Trial Judge’s refusal to stay indefinitely his judgment until the determination of Receivership moreso when the Applicant before the Court was not a party in the proceedings that led to the judgment
  3. Whether the Learned Justices of Appeal were right in upholding the Ruling of the Learned Trial Judge particularly when the appointment of the Receiver/Manager was clearly made subsequent to the judgment and with a view to frustrating a valid judgment of a Court set up under the Constitution of the Federal Republic of Nigeria
  4. Whether the High Court of Lagos State presided over by Ilori, J., after delivery of judgment on the 6th day of May, 1985 had jurisdiction to hear and determine the Summons dated the 12th day of September, 1985 when there was no civil proceeding in existence as to the legal right, power, duty, liability, privilege, interest, obligation or claim in issue between the Applicant and the Respondent having regard to S.258(1) of the Constitution of the Federal Republic of Nigeria, 1979, as modified

This is because the first and second issues formulated above follow necessarily from the determination of the application. They are not merely hypothetical issues.

I have already summarised the ratio of the judgment of the Courts below. I think a correct formulation of the issues for determination before this Court is as follows –

(i) Was the Court of Appeal right in affirming the judgment of the High Court that applicant not being a receiver could not apply for a stay of execution of the judgment against the applicant company This is the issue of locus standi.

(ii) Was the Court of Appeal right in holding that applicant company having not appealed against the judgment against it could not apply for a stay of its execution

The application which appears on its face to be very simple, does on closer examination appear to be fraught with difficult legal subtleties. It is a simple application of a judgment debtor seeking indefinite stay of execution of a judgment debt. On the face of the application this was all that the applicant was seeking and the issue could be determined on the rules applicable to such applications.

It is elementary but fundamental principle of determination of disputes that the Judge can only decide the case before him between the parties before him and on the issues properly raised before him relating to and concerning the matter in dispute, see Ochonma v. Unosi (1965) NMLR 321. Matters concerning third parties who are not parties to the dispute before him cannot be validly raised and even if raised can properly be ignored by the Judge – See Ojogbue & Anor v. Nnubia & Anor (1972) 1 All NLR (Pt.2) 226.

For a better understanding of the issues in this appeal, it is necessary to recapitulate the essential facts that have resulted in this application which gave birth to this appeal. On 6th May, 1985, Respondent signed judgment in respect of an undisputed indebtedness on a simple trial debt due to it from the Applicant/Appellant. Applicant did not apply for a stay of execution and did not give any notice of appeal against the judgment. A charge fixed and floating had been created over the assets of the Applicant/Appellant company in July, 1978 in favour of Savannah Bank of Nigeria Limited. As a result of Applicant/Appellant’s default Savannah Bank Ltd. exercising its power under the debenture appointed a Receiver/Manager over the Applicant/Appellant company with effect from the 27th June, 1985. This was more than six weeks after the Applicant/ Appellant had submitted to judgment in an action against it for a simple debt. The writ of Fieri Facias was issued thereon on 7th May, 1985, judgment having been enrolled. The Applicant/Appellant brought an application to stay indefinitely the execution of the judgment essentially on no other ground than that –

(a) the applicant is being managed by the Receiver/ Manager who by virtue of his office is trying to reorganise the company and realize all its assets,

(b) the applicant is incapacitated and paralysed with respect to all its assets out of which payments would have been made to the Plaintiff and other creditors,

(c) until the receivership terminates, leading either into liquidation or solvency of the defendant, all its assets are beyond the reach of the Plaintiff.

These were the reasons why Applicant/Appellant was seeking for stay of execution indefinitely.

It is convenient to consider grounds 1, 2, 3, 4, 5, which deal with the enforcement of execution of judgment against a company in receivership.

Counsel for the Appellant has argued in his brief and submitted before us that the receiver’s title prevails over that of an execution creditor, even if the monies secured by the debenture have not become payable. If the execution has been levied the Sheriff will be ordered to withdraw from possession and return the goods.

Accordingly it was submitted that the right of a receiver appointed pursuant to security created after judgment, prevails in the event of execution by the judgment creditor – see Geisse v. Taylor (1905) 2 KB 658; Mandilas & Karaberis v. Anglo-Canadian Cement Co. (1967) NCLR 42; Labaran v. Shonibare 13 NLR. 122. Counsel cited several cases to support his contention that no Court will protect a judgment-creditor or sheriff who with notice of a receivership levies execution. Counsel submitted that the Respondent judgment creditor takes subject to the equities of the prior registered charge. He referred to Onyejiaka v. Awari SC.201/1964; Re Standard Manufacturing Co. (1891) 1 Ch. 629; Simultaneous Colour Printing Syndicate V. Fowler (1901) K.B. 774 and Sales – The Law Relating to Bankruptcy Liquidation & Receiverships, 6th Edition P. 305.

Conceding that the Court of Appeal stated the principles correctly, counsel submitted that it applied the principles wrongly. He referred to Evans v. Coventry (1855) 3 Drew 80 and Re Bond & ors. (1912) 2 KB. 988 and submitted that the receiver in those cases were those relating to receiverships appointed by a judgment creditor and not a judgment debtor.

Counsel for the Appellant also submitted that the court was in error to have introduced the issue of equitable execution and equating same to the appointment of a receiver out of court by a debenture holder. It was finally submitted on this ground that to affirm the view of the court below would not only involve the Respondent in civil liability for trespass but will also expose the Sheriff to trespass and other penalties. It would mean re-writing the law relating to receiverships and defeat the statutory rights and protection given by sections 94 and 344 of the Companies Act 1968 Sections 19, 20, 24 Conveyancing Act 1881; Section 123 Property and Conveyancing Law, Sections 7, 8, 81, 82 & 84 Cap. 119 Laws of Lagos State, section 22 & 24 Cap. 121 Laws of Lagos State.

See also  Chief L.L.B. Ogolo Vs Joseph T. Ogolo (2006) LLJR-SC

Counsel also submitted that the Court of Appeal was in error in holding that a receiver appointed out of court must not be allowed to defeat the right to execution. It was submitted that the debenture created a charge on all the assets and an equitable mortgage on reality. It was submitted that every mortgagee or charged has a right to appoint a receiver even if the power to do so were not mentioned – see s.344(b) Companies Act 1948.

Since the security created was duly registered this was constructive notice to the whole world of the existence of the charge. The case of Trenco Ltd. v. African Real Estates Ltd. (1978) 4 SC.9, 27 was relied upon. He contended the charge was created in 1978 long before the debt giving rise to the judgment, accordingly the debt must be subject to the prior legal interest. Counsel then canvassed the true effect of a receivership upon the appointment of a debenture holder whether by the Court or by a debenture holder on the claims of a judgment creditor. It was submitted that the receivership being an incidence of a legal occurrence, warrants grant of a stay of execution.

On ground 4 counsel submitted that the Court of Appeal was wrong to have held that a stay of execution could only be granted pending an appeal; and that the Court of Appeal gave a wrong interpretation to the decision of Olayinka v. Elusanmi (1971) 1 NMLR. 277. It was submitted that a stay of execution could be granted even if a party had not appealed against the judgment. It was submitted in Olayinka v. Elusanmi that what the Supreme Court had in mind was that a judgment when given remains binding till set aside, hence a stay of execution can only be granted pending an incidence of a legal occurrence. Counsel contended that a receivership in this case is therefore an incidence of a legal occurrence, which is part of and relevant to the judgment. The writ is being enforced against the property of one other than the judgment debtor.

On ground 3 argued as an extension of ground 4 counsel submitted that the Court of Appeal was wrong to have observed that Applicant! Appellant on appointment should have applied to the Court for directions as to priorities. He contended that this was a misunderstanding of the provisions of section 337 of the Companies Act relied upon which merely required such applications to be made only in difficult and special situations, if the need arises.

Ground 2, is also an attack on the observation of the Court of Appeal that Applicant/Appellant ought to have applied to the Court for directions. It was submitted that section 337 of the Companies Act is permissive and not mandatory. It merely enables receivers to apply to the Court for directions. Ground 6 attacks the holding of the court below that the proper party to file the application should be the Receiver/Manager.

Counsel has submitted that this is a misunderstanding of the law relating to receivership. It was submitted that the Appellant had locus standi to bring the application either as a company or as constituted in receivership, being a person aggrieved. Counsel referred to clause 12(1) of the Debenture and Clause 1 of the Deed of Appointment of a Receiver/Manager, wherein the Receiver/Manager is the attorney and agent of the Appellant with power to take proceedings in the name of the Appellant, and to use the name of the Appellant in the exercise of his powers. Counsel submitted that the law is that a Receiver/Manager must take or defend actions in the name of his principal except in exceptional circumstances which this case is not.

The contention of counsel to the Appellant’s simply stated is that the appointment of a Receiver/Manager over the assets of the Appellant company should be regarded automatically operating as a stay of execution of the judgment in favour of the Respondents. This was regarded as an answer to the preliminary objection.

At p.6 of his brief of argument, and before us, counsel for the Respondents has summarised the contention of Appellant’s Counsel as follows:-

“When a Receiver/Manager is appointed (irrespective of whether he is appointed by a Court or outside the Court) he thus becomes a party in an existing suit with a right to apply for any relief and at any time, all because there is a Debenture.

He submitted that the judgment sought to be enforced is a legal interest and is not a competing equity with the Appellant’s claim to priority thus the maxim that secured creditors take prior to unsecured creditors did not apply to the facts of this case. This submission appears to ignore the issues before the Court and the judgments being supported. It was submitted that the Receiver/Manager was never a party to the litigation leading to the judgment sought to be stayed. Counsel submitted that it was an abuse of the process of the courts to reopen a matter merely for the purpose of determining the issue of priority between the Debenture holders and the Respondents.

Counsel submitted that since there was no pending proceeding between the Appellant company and the Respondents, or any proceeding involving the Debenture holders, the Respondent could not be a defendant to a claim introduced by the Receiver/Manager, acting as Agent of the Appellant/Defendant company. Replying to the contention of counsel for the Appellant in ground 4 of his Grounds of Appeal that the appointment of the Receiver/Manager after judgment was the legal occurrence after judgment necessitating the grant of a stay of execution as was decided in Olayinka v. Elusanmi (1971) 1 NMLR 277 is in the circumstance an abuse of the process of the Court. It was submitted that the Receiver/Manager was appointed after the judgment was given in the undefended suit on the 6th May, 1985. He pointed out the dangers with which the practice of the Appellant/Applicant Company was fraught – namely a debtor company, in respect of whose property there is a charge will submit to judgment but before execution will advise the Debenture holder to appoint a Receiver/Manager to assume control and frustrate the judgment creditor reaping the fruits of the litigation. Counsel had pointed out that the company is not in liquidation and that if execution was levied the substratum of the company will be removed to the prejudice of the Debenture holders.

Finally counsel submitted that the issue before the learned trial Judge was a simple one involving the exercise of his discretion. An appellate court will only interfere with the exercise of judicial discretion where there was a departure from the accepted principles of law. It was submitted that there was no wrongful exercise of judicial discretion and that the judgment of the Court of Appeal should not be disturbed. Finally it was submitted that there was no evidence that the judgment debtor had defaulted in accordance with the terms of the Debenture.

I have deliberately set out above the main contentions of counsel at great length and detail, not because they are all relevant but to show that counsel arguing an appeal and attacking a judgment must endeavour to discover the reasons on which the Judge relied for coming to his decision and show before the appellate court that on the facts of the case before him those reasons were wrong in law, or that the inferences drawn do not follow from the facts. I have already set out the undisputed facts in the application before the learned Judge. The main reason why the learned Judge held that Applicant/Appellant had no locus standi was that he had not by evidence shown that the application was brought by the Receiver/Manager of the Applicant/Appellant company, who is empowered in law to bring action in the name of the company.

At the risk of repetition I have to state the legal effect of the appointment of Receiver/Manager by the debenture holders over the assets involved in the debenture. A floating charge, as the assets in this debenture is, is ambulatory and floats over the property until the event indicated in the debenture deed happens which causes it to settle, remain fixed and crystallize into a fixed charge. – See Govt. Stock Co. v. Manilo Ry (1897) A.C. 81, 86.

When the floating charge crystallises, the debenture-holder is entitled and empowered under the Debenture Deed to appoint a Receiver/Manager who would then enforce the security and recover his money by taking over the assets in the Debenture. The appointment of Receiver is an event which causes the floating charge to crystallise: See Re Crompton & Co Ltd. (1914) 1 Ch. 954. The effect of the appointment of Receiver/Manager is to paralyse the powers of the owner of the goods from dealing with it. A company does not lose its legal personality neither are the goods vested in the Receiver/Manager on the appointment: See Vine v. Raleigh (1833) 24 Ch.D. 233.

He is however entitled to possession of the goods, subject to all specific charges validly created in priority to the floating charge: See Sections 92, 297 of the Companies Act 1968. He is also subject to all rights of set-off acquired by debtors to the company in respect of dealings with it: See s.297. His title however prevails over those of unconcluded execution creditors: See Re Opera Ltd. (1891) 3 Ch. 260. The Receiver/Manager is usually appointed the agent of the Company, as was done specifically in this case – See Clause 1 of the Instrument of Appointment of Receiver/Manager and Clause 12of the Debenture Trust Deed. This enables him to institute and defend actions in the name of the debenture-holder or the company entitled to the goods under the debenture. Although the right to institute or defend actions in the name of Company is covered under the general authority to collect and take possession of the assets in the debenture, the legal effect of his appointment which paralyses the company in respect of dealing with the assets and the Receiver/Manner not having any legal estate in the goods, and the company retaining its title and legal personality renders it essential for the Receiver/Manager to seek leave of the Court where he intends to bring or defend actions in the name of the company with respect to goods involved in his Receivership. Counsel for the Applicant/Appellant has submitted that the provisions of section 337 of the Companies Act 1968 which requires the Receiver/Manager to seek directions is not applicable to a debenture holder not appointed by the Court. He submitted that application was only required in exceptional cases. I think this is too simplistic a view of the protection offered by the provisions of the section. It is well settled that where a Receiver/Manager has been appointed in a Mortgagee’s action, it is for the court to determine whether proceedings shall be taken at the expense of the mortgaged property. The Receiver cannot begin or defend actions on his own initiative without the direction of the Court – see Bristowe v. Needham (1847) 2 Ph. 190.The appointment of a Receiver/Manager is made not only to protect the interest of the debenture holder, but also the estate involved in the debenture and for the benefit of all concerned. Thus in sanctioning the Receiver/Manager taking proceedings, the Court will have regard to what it considers right and proper in the interest of all the parties – see Viola v. Anglo-American Cold Storage Company (1912) 2 Ch.305 at p.311. The question whether leave is to he granted a Receiver/Manager to institute or defend actions in the name of the Debenture-holder is a matter of discretion to be exercised in accordance with the particular circumstances of each case. It is clearly not one for the private initiative of the Receiver/Manager as Counsel for the Appellant seems to assume.

I think it is necessary to seek leave of the Court where the Receiver/Manager intends to bring or defend an action in the name of the owner of the goods since he has no legal title to the property in the debenture and the Receiver/Manager cannot claim any title in respect thereof. The application should he by summons stating the name of the person having title to the goods as Plaintiff or Defendant as the case may be, and seeking an order for the Receiver/Manager appointed by the Instrument made under the Debenture Deed, for liberty to commence/continue/defend an action in the name of the Plaintiff as the agent of the Debenture-holder-until judgment, and etc. In the case of defending an action, the substance of the claim in the action should be set out.

This is in my opinion the first step Applicant/Appellant should have taken. After the order granting leave has been made he can bring the application for indefinite stay of execution. Counsel for the Appellant/Applicant has criticised the judgments of the courts below for holding that he had no locus standi for bringing the application for stay of execution. I think he is wrong and they were right to so hold on the facts before them. On a careful perusal of the affidavit in support of the application there was nothing to show that the application was made by Mr. J.O. Munis. Receiver/Manager as Agent for the Applicant/Appellant Company. All that was disclosed by the attachments was that there was a Receivership and the Company in Receivership was applying for an indefinite stay of execution. This it obviously in law cannot do, unless in certain circumstances which were not shown in this case.

Again, the Applicant/Appellant company is the judgment debtor in the undefended suit in respect of which the writ of Fifa was issued. Applicant/Appellant has not given any notice of Appeal against the judgment in respect of which Execution is sought to be levied. Indeed, Applicant/Appellant’s only remedy is to rely on the provisions of section 16 of the Sheriff and Civil Processes Law Cap. 127 of Lagos State which enables the Court on the application of a judgment debtor upon satisfaction that full disclosure of his property and circumstances of his inability to pay, and that he has not been guilty of Misconduct, to stay the issue of execution of any writ, and to order release even where execution has been issued, for such time and upon such terms until the inability has ceased. This is not the case of the Appellant. His case is that on the appointment of Receiver/Manager under the provisions of the Debenture Deed, it operates both as an injunction restraining judgment debt and as equitable execution. It is pertinent to point out that a Receivership does not operate as an equitable execution – see Norburn v. Norburn (1894) I Q.B. 448. It is merely a right to claim a relief. In his submission he contended relying on Olayinka v. Elusanmi (1971) 1 N.M.L.R. 277, that the appointment of a Receiver was the incidence of a certain legal occurrence which will operate as a stay of execution. This is a clear misunderstanding of the ratio decidendi of that case. The ratio decidendi of the Supreme Court for allowing the appeal was that the Respondent had not appealed against the judgment of the Ife Native Court. The order for indefinite stay of execution was granted on a motion brought by the Respondent. The High Court dismissed the appeal against the motion. It is this dismissal of appeal against the motion that came before the Supreme Court. In setting aside the judgment of the High Court on the appeal against the motion, Coker, J.S.C., reading the judgment of the Court said at p.279:

“To start with, we must observe that the case that was cited by the learned judge (i.e. Macfoy v. UAC Ltd.) in support of the reasoning which he had employed is clearly distinguishable from the present proceedings, and the Judge fell into the error of taking the present proceedings as one asking for the judgment of the Native Court in 1954 to be set aside. It is not.”

Its similarity with the case in hand is the bringing of application in both cases after the issue of writ of execution consequent upon judgment against the applicant. The Supreme Court held that the Judge was clearly in error to assume that the application was to arrest the operation of the writ of execution. Counsel relying on the view expressed that a stay of execution may be sought pending the incidence of a certain legal occurrence, submitted that the appointment of a Receiver/Manager is such legal occurrence to arrest the execution of the writ. I am unable to accept this interpretation of the expression. In my view the incidence of legal occurrence that can influence a stay of execution must arise naturally from the proceedings and not debtors the action.

It is for this reason that a notice of appeal against the judgment is such incidence of certain legal occurrence. It is well settled that every judgment takes effect on pronouncement -see Bank of West Africa v. NIPC Ltd. (1962) LLR. 31; Olayinka v. Elusanmi (1971) 1 NMLR 277. A judgment debtor seeking to stay the execution must show that he is challenging the judgment, or is asking for time to comply with the terms of the judgment. If it is a challenge of the judgment a notice of appeal ought to have been filed, or will on undertaking be filed – see Oladapo v. ACB (1951) 13 W.A.C.A. 110. The grant of a stay of execution involves the exercise of discretion, which involves a consideration of the chances of the applicant succeeding on appeal – see Odufoye v. Faloke (1975) 1 N.M.L.R. 222; Shoge v. Musa (1975) 1 N.M.L.R. 133; Wey v. Wey (1975) 1 SC. 1.

The applicant’s ability to satisfy the judgment debt if the appeal is unsuccessful, and the general rule to maintain the status quo between the parties, are important considerations – Balogun v. Balogun (1969) 1 All NLR 349; Wilson v. Church (No.2) 12 Ch.D. 454. It is well settled that a third party not a party to the action cannot ask for a stay of execution. He may succeed if he shows that the judgment was a fraud on him – see Gore v. Vander Lann (1967) 1 All E.R. 361. Appellant/Applicant has not shown that the Receiver/Manager was a party to the action in respect of which he is asking for a stay of execution. He has not shown that he has given notice of appeal or asking for stay of execution on other grounds. I agree therefore with the trial Judge and the Court of Appeal that he has no locus standi to bring this application.

On the views expressed above I agree entirely with the Courts below that it is premature to consider the effect of the appointment of a Receiver/Manager in this case on the application for the execution of a writ of Fifa in respect of the judgment against the Appellant Company. Appellant Company has not shown that it has satisfied the conditions to enable the trial Judge to exercise his discretion to stay execution of the writ. Also it has not been shown that the Receiver/Manager has been granted leave to bring or defend actions in the name of the company. I therefore dismiss the appeal.

Appellant shall pay N500 as costs to the Respondents.A. NNAMANI, J.S.C.: I had a preview of the judgment just delivered by my learned brother, Karibi-Whyte, J.S.C. He has fully dealt with all the issues raised before us and I accordingly entirely agree with his reasoning and conclusions.

Although learned Counsel had filed copious briefs of argument, and proffered detailed oral argument, the issues in this appeal appear to me quite simple. It is not in dispute that the Plaintiff/Respondent herein on 6/5/85 obtained judgment in default of pleading against the Defendant/Appellant in the sum of N1,197,775.79k with interest at 6% per annum from 21st December, 1984 till payment. Costs of N1,959.20 were also awarded. No appeal against this judgment was filed by the Defendant/Appellant. The Plaintiff/Respondent on 7th May, 1987 took out a writ of Fieri-Facias. It is not in dispute that the Defendant/Appellant appears to have issued a debenture in favour of Messrs Savannah Bank of Nigeria Ltd. in 1978. The debenture created a charge over all the assets of the Defendant/Appellant as they then stood. When the Defendant/Appellant could not meet its obligations, Savannah Bank of Nigeria Ltd on 27th June, 1985 appointed Mr. Joseph Olutoyin Munis as Receiver/Manager over all the assets charged by the said Debenture. The Defendant/Appellant, not the Receiver/Manager, on 12/9/85 took out a summons in the High Court praying for-

“An order the High Court to stay indefinitely the judgment of 6th May, 1985, until the receivership terminated.”

In the course of argument before the High Court, the Court of Appeal and even in this Court; so much was said about priorities of equities etc. I am of the view that this was premature. The only issue was really whether at the stage the Receiver/Manager could obtain an indefinite stay of an action in which he was not a party; whether it was the Defendant/Appellant or the Receiver/Manager who ought to have sued. It is pertinent to mention that although the appointment of the Receiver was mentioned in paragraph 5 of the affidavit supporting the application, there was nothing on the face of the application showing the Receiver/Manager as a party.

Mr. Ajayi, learned counsel to the Appellant in argument before this Court raised some consequences of the appointment of a Receiver/Manager which are not really in contention. Some of these were as follows:-

(1) The Receiver/Manager becomes entitled to the possession of the assets of the Appellant company.

(2) The floating charge becomes crystallised and accordingly constitutes a fixed charge upon all the assets of the company. Refers to Halsbury’s Laws of England 4th Edition Vol.7 para. 880. The Directors’ powers with respect to the property charged are paralysed, but the directors’ powers remain in relation to other issues.

(3) The title of the Receiver/Manager prevails over that of Execution creditors.

(4) The Receiver/Manager acquires no right of action by virtue of his appointment. He cannot sue in his own name as Receiver. In such cases he must maintain the action in the name of the person or persons who would be entitled if there had been no appointment Wheeler and Co v. Warren (1928) CH.D. 840,844,845. The Receiver/Manager has power to maintain an action as agent of the Company.

After argument on the application as well as on the preliminary objection filed by the Plaintiff/Respondent, Ilori, J. held as follows-

“It is pertinent to observe that this is not an application by the Receiver/Manager seeking a declaration as to priority between him or holders of debenture and the execution-creditor………but an application by a judgment debtor seeking an order to stultify the effect of the judgment by staying its enforcement sine die. In my view, the question of priority of equities between a Receiver and a judgment creditor can be properly considered only in an action brought by the Receiver for that purpose before the proper forum. The judgment constitutes res judicata between the judgment creditor and the judgment debtor…………………………….Since the judgment in this case on 6th May, 1985 creates res judicata between the parties herein the applicant has no locus to bring this application unless it is based on a pending appeal.”

The Court of Appeal agreed with these views, and I see nothing to fault in them. The Appellant argued this appeal as if the appointment of the Receiver was the end of the matter. The Receiver may be vested with considerable powers over the property charged on his appointment, but in the circumstances of this case, there is nothing to show that the Receiver initiated the application as agent of the Defendant/Appellant.

It was for these reasons, and the detailed reasons in the lead judgment that I too dismissed the appeal. N500 costs to Respondent.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.

See also  Nwafor Nwawuba & Ors. V. Jereome Enemuo & Ors. (1988) LLJR-SC

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.

  1. 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.
  2. 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.
  3. The Defendant is not seeking leave of Court to pay the judgment debt by instalments.
  4. 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.
  5. 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 –

“In my view, the question of priority of equities between a receiver and a judgment-creditor can be properly considered only in an action brought by the Receiver for that purpose before a proper forum. The judgment constitutes res judicata between the judgment creditor and the judgment debtor. No further issue can be raised upon it, except by an appeal or action to set aside.”

In amplification of this view, the learned trial Judge stated the well settled principle that on the coming into effect of a receivership, the Receiver/Manager became entitled to all the assets of the Applicant/Appellant. Consequently “The proper party to institute an action to determine priorities thereafter would be the Receiver/Manager in whom the assets became vested or the holders of the Debentures who had their interests to protect.”

The learned Judge upheld the objection of counsel to the Plaintiff to the application that since the judgment sought to be stayed indefinitely was res judicata between the parties; Defendant/Applicant having not appealed against the judgment had no locus standi to bring the application. The application was dismissed with N150 costs. Appellant appealed to the Court of Appeal. The grounds of appeal are as follows –

“Error In Law;

The Learned Trial Judge erred in law when he held that stay of execution will only be granted if there is a pending appeal against judgment sought to be stayed.

Particulars of Error:

The learned trial Judge confused issue in taking the preliminary objections as to jurisdiction to hear the summons for stay and the said summons together.

The learned trial Judge confused provisions of Order 59 Rule 13 RSC (England 1985) on one hand, and Order 47 Rule 1 and Order 45 Rule 11 RSC (England 1985), and the Court’s inherent jurisdiction, on the other, to grant stay of execution.

The power to stay under the former rule is separate and distinct from the latter vide Ellis v. Scott (1964) All E.R. 787.

Misdirection:

That learned Judge misdirected himself in law in holding that the issues of the debenture – (Exhibit A creating) – and the receivership do not arise.

Particulars of Error:

1n view of the fact that the affidavit supporting the summons was unchallenged or contradicted by a counter affidavit, it means in law, following the decision of Alagbe v. Abimbola (1978) 2 SC. 39,40 that, all the facts therein are admitted including that on receivership.

Receivership, (and the debenture which created it), were clearly in issue, as the effect of the same, is the incidence of a legal occurrence that, makes for grant of stay of execution, vide: Krans V. Bright Oridami (Unreported Suit No. FSC 322/61) and Mandilas and Karaberis v. Anglo Canadian Cement C. (1967) NCLR 42

Upon the appointment of a receiver, he becomes the alter ego of the Company vide ala Olu Modern Bakery Ltd. v. Arthur Young Osindero & Co. Vol. 3 FRCR (1977) 37 and bound, (further to clause 1 of Exhibit C, and Clause 12(1) of Exhibit A in the proceedings), to appear as the agent and attorney of the company.

Ex hypothesi, receivership was not only an issue was germane to the application, and ought to have been considered.

Error In Law:

The learned trial Judge erred in law in not dismissing the Respondent’s application that, it had no jurisdiction, and in not exercising its discretion in favour of the Appellant.

Particulars of Error:

The summons for stay ought, on plethora of authorities, to have been granted.

The preliminary objection ought to have been struck out with cost as misconceived and an abuse of process, vide: Solimpec Nig Limited v. Intercontractors Nigerian Limited (Unreported Suit ID/414/84 of 18/4/86).

In refusing to grant the stay, the Respondent will, if it levies execution, incur civil liability vide: Krans v. Bright Oridomi (Ibid) and probably criminal liability vide Lane v. Sterne (1862) Giff 629.

In a well considered judgment of the Court read by Uthman Mohammed J.C.A. to which Adenekan Ademola and Nnaemeka-Agu, JJ.C.A concurred dismissing the appeal, it was held that the trial Judge rightly observed that the application for stay of execution was not brought by a Receiver/Manager seeking a declaration as to priority between him or holders of debenture and the execution creditor with a prayer for an injunction to safeguard the Receiver/Manager’s right in that behalf, but an application by a judgment debtor seeking an order to suspend the effect of judgment by staying its enforcement sine die.

The Court of Appeal also held that apart from the application not having been brought by the Receiver/Manager, it is for an order for indefinite stay of execution of judgment against debenture holders in respect of the assets in which a Receiver/Manager was subsequently appointed. It was also held that the Receiver/Manager did not apply for directions as required under S.337 of the Companies Act.

Finally, the Court of Appeal held agreeing with the learned Judge that the proper party to institute an action to determine priorities after the judgment would be the Receiver/Manager in whom the assets of the company became vested or the holders of the debentures who had their interests to protect. The Court after discussing the legal position of a Company in receivership held:

“I therefore agree with the learned trial Judge that the Appellant having failed to appeal against the judgment has no locus standi to apply for a stay of the execution of the judgment.”

Appellant has filed six grounds of appeal against the judgment of the Court of Appeal. The grounds of Appeal excluding particulars are as follows:

“3.1 Error In Law:

The Court of Appeal erred in misconceived, misunderstood, and misconstrued the law, which it misapplied, apropos the effect of the appointment of a receiver by a debenture holder on execution creditors by relying on the illogical and unreasonable equation of receivership pursuant to charges and receivership pursuant to interlocutory court orders pendite litem, past judgment etc., when it held that:-

“A receiver can only be…………appointed through an application brought before the Court for………getting in and holding or securing funds or other property which the court at trial or in the course of the action will have the means of distributing…..”

3.2 Error In Law:

The Court of Appeal misconceived and misunderstood the law and thereby arrived at an unreasonable decision when it held that

“Under S.337 of the Companies Act, 1968 companies have been given powers to appoint a receiver or manager out of Court. But once appointed … he is to apply to Court for directions…”

3.3 Error In Law:

The Court of Appeal erred in law when it held that the proper

procedure to have adopted was to have sought an order of court

for a declaration of priorities.

3.4 Error In Law:

The Court of Appeal misconceived and misunderstood the law when it held that stay of execution could only be granted pending an appeal, and thereby arrived at an unreasonable unjudicious and unjust decision.

3.5 Error In Law:

The Court of Appeal, having rightly held that judgment creditors take subject to equities and that receiverships by or out of court have the same effect on judgment creditors, gravely erred in law in not granting stay of execution, because it would be contrary to common sense to allow a debenture holder appointed, receiver to defeat the rights of a judgment creditor, as in such case there is no priority of equities.

3.6 Error In Law:

The Court of Appeal erred in law in refusing the application because the Receiver did not in his name bring the application and therefore that the Appellant had no locus standi.

Stricto sensu only the 6th ground of appeal arises from the decision of the Court of Appeal.

Counsel filed their briefs of argument, and have before us relied on them. Appellant’s counsel strenuously endeavoured both in his brief of argument and his oral presentation before us to demonstrate how the courts below misconstrued and misapplied the law relating to receiverships. Indeed out of the six grounds of appeal, four relied on these errors. This approach to the appeal led counsel to rove all over the field of the law relating to the rights, powers and duties of a receiver. This is clear from his formulation of the issues for determination as follows:-

“The issues formulated by the Appellant for determination of this appeal are as follows:-

2.1 Whether or not the intendment, purpose and effect of the appointment of a receiver pursuant to a charge, are the same as a receiver appointed pursuant to Orders 30, 50 & 51 RSC, or Order 3914 Lagos State High Court (Civil Procedure Rules) 1972, or on application by an unsecured judgment creditors or on equitable execution order

2.2 Whether, if the replication to the above is in the negative, the effect of the appointment of a receiver, pursuant to statutory and decisional company law, is not an incidence of a legal occurrence warranting the grant of a stay of execution

2.3 Whether irrespective of the replication to issue 2.2, it can be asserted affirmatively that an unsecured judgment creditor does not take after a secured creditor or subject to equities

2.4. Whether it is required of a receiver/manager over a company in receivership to bring, take, defend or continue actions in his own name being the latter’s alter ego and lawful attorney

2.5 Whether or not, if the answer to issue 2.4 is negative a judgment debtor, in receivership, retaining its legal persona cannot bring an application – under Orders 47 Rule 1 and 45 Rules 1 & 11 RSC, and Section 16 CAP 127 Laws of Lagos State – for a stay of execution

2.6 Whether or not a stay of execution granted vide the Rules set out above is not separate and distinct from a stay granted vide Order 59 Rule 13 RSC and Section 51(4) CAP 52 Laws of Lagos State

2.7 Whether or not, if the reposite to issue 2.6 is not in the affirmative, it is a correct proposition of law that a stay of execution will only be granted if an appeal is pending

None of the issues set down above for determination would be directly relevant to the judgment of the Courts below. This is because the issues are not those arising from the facts of the application. It seems to me that Counsel for the Respondent’s approach to the issues for determination is closer to the right approach. They are as follow:-

“Issues Arising For Determination

“1. Whether a Receiver/Manager (appointed out of Court pursuant to a debenture) who was not a party in Suit, can at any time after judgment in the Suit apply (as Attorney or Alter-Ego) on behalf of yet another that is not before the Court, to arrest a judgment of a Court of record validly given

  1. Whether a judgment-creditor who after obtaining judgment against a judgment debtor for the value of goods sold on credit to the judgment-debtor and who had a Writ of FIERI FACIAS already issued by the Court should be prevented from realising the fruits of its litigation simply because the judgment-debtor subsequently went into receivership
  2. Whether having regard to the circumstances of this case, the Learned Justices of Appeal were right in affirming the Learned Trial Judge’s refusal to stay indefinitely his judgment until the determination of Receivership moreso when the Applicant before the Court was not a party in the proceedings that led to the judgment
  3. Whether the Learned Justices of Appeal were right in upholding the Ruling of the Learned Trial Judge particularly when the appointment of the Receiver/Manager was clearly made subsequent to the judgment and with a view to frustrating a valid judgment of a Court set up under the Constitution of the Federal Republic of Nigeria
  4. Whether the High Court of Lagos State presided over by Ilori, J., after delivery of judgment on the 6th day of May, 1985 had jurisdiction to hear and determine the Summons dated the 12th day of September, 1985 when there was no civil proceeding in existence as to the legal right, power, duty, liability, privilege, interest, obligation or claim in issue between the Applicant and the Respondent having regard to S.258(1) of the Constitution of the Federal Republic of Nigeria, 1979, as modified

This is because the first and second issues formulated above follow necessarily from the determination of the application. They are not merely hypothetical issues.

I have already summarised the ratio of the judgment of the Courts below. I think a correct formulation of the issues for determination before this Court is as follows –

(i) Was the Court of Appeal right in affirming the judgment of the High Court that applicant not being a receiver could not apply for a stay of execution of the judgment against the applicant company This is the issue of locus standi.

(ii) Was the Court of Appeal right in holding that applicant company having not appealed against the judgment against it could not apply for a stay of its execution

The application which appears on its face to be very simple, does on closer examination appear to be fraught with difficult legal subtleties. It is a simple application of a judgment debtor seeking indefinite stay of execution of a judgment debt. On the face of the application this was all that the applicant was seeking and the issue could be determined on the rules applicable to such applications.

It is elementary but fundamental principle of determination of disputes that the Judge can only decide the case before him between the parties before him and on the issues properly raised before him relating to and concerning the matter in dispute, see Ochonma v. Unosi (1965) NMLR 321. Matters concerning third parties who are not parties to the dispute before him cannot be validly raised and even if raised can properly be ignored by the Judge – See Ojogbue & Anor v. Nnubia & Anor (1972) 1 All NLR (Pt.2) 226.

For a better understanding of the issues in this appeal, it is necessary to recapitulate the essential facts that have resulted in this application which gave birth to this appeal. On 6th May, 1985, Respondent signed judgment in respect of an undisputed indebtedness on a simple trial debt due to it from the Applicant/Appellant. Applicant did not apply for a stay of execution and did not give any notice of appeal against the judgment. A charge fixed and floating had been created over the assets of the Applicant/Appellant company in July, 1978 in favour of Savannah Bank of Nigeria Limited. As a result of Applicant/Appellant’s default Savannah Bank Ltd. exercising its power under the debenture appointed a Receiver/Manager over the Applicant/Appellant company with effect from the 27th June, 1985. This was more than six weeks after the Applicant/ Appellant had submitted to judgment in an action against it for a simple debt. The writ of Fieri Facias was issued thereon on 7th May, 1985, judgment having been enrolled. The Applicant/Appellant brought an application to stay indefinitely the execution of the judgment essentially on no other ground than that –

(a) the applicant is being managed by the Receiver/ Manager who by virtue of his office is trying to reorganise the company and realize all its assets,

(b) the applicant is incapacitated and paralysed with respect to all its assets out of which payments would have been made to the Plaintiff and other creditors,

(c) until the receivership terminates, leading either into liquidation or solvency of the defendant, all its assets are beyond the reach of the Plaintiff.

These were the reasons why Applicant/Appellant was seeking for stay of execution indefinitely.

It is convenient to consider grounds 1, 2, 3, 4, 5, which deal with the enforcement of execution of judgment against a company in receivership.

Counsel for the Appellant has argued in his brief and submitted before us that the receiver’s title prevails over that of an execution creditor, even if the monies secured by the debenture have not become payable. If the execution has been levied the Sheriff will be ordered to withdraw from possession and return the goods. Accordingly it was submitted that the right of a receiver appointed pursuant to security created after judgment, prevails in the event of execution by the judgment creditor – see Geisse v. Taylor (1905) 2 KB 658; Mandilas & Karaberis v. Anglo-Canadian Cement Co. (1967) NCLR 42; Labaran v. Shonibare 13 NLR. 122. Counsel cited several cases to support his contention that no Court will protect a judgment-creditor or sheriff who with notice of a receivership levies execution. Counsel submitted that the Respondent judgment creditor takes subject to the equities of the prior registered charge. He referred to Onyejiaka v. Awari SC.201/1964; Re Standard Manufacturing Co. (1891) 1 Ch. 629; Simultaneous Colour Printing Syndicate V. Fowler (1901) K.B. 774 and Sales – The Law Relating to Bankruptcy Liquidation & Receiverships, 6th Edition P. 305.

Conceding that the Court of Appeal stated the principles correctly, counsel submitted that it applied the principles wrongly. He referred to Evans v. Coventry (1855) 3 Drew 80 and Re Bond & ors. (1912) 2 KB. 988 and submitted that the receiver in those cases were those relating to receiverships appointed by a judgment creditor and not a judgment debtor.

Counsel for the Appellant also submitted that the court was in error to have introduced the issue of equitable execution and equating same to the appointment of a receiver out of court by a debenture holder. It was finally submitted on this ground that to affirm the view of the court below would not only involve the Respondent in civil liability for trespass but will also expose the Sheriff to trespass and other penalties. It would mean re-writing the law relating to receiverships and defeat the statutory rights and protection given by sections 94 and 344 of the Companies Act 1968 Sections 19, 20, 24 Conveyancing Act 1881; Section 123 Property and Conveyancing Law, Sections 7, 8, 81, 82 & 84 Cap. 119 Laws of Lagos State, section 22 & 24 Cap. 121 Laws of Lagos State.

See also  Oba Amos Babatunde & Anor. Vs Mr. Simon Olatunji & Anor (2000) LLJR-SC

Counsel also submitted that the Court of Appeal was in error in holding that a receiver appointed out of court must not be allowed to defeat the right to execution. It was submitted that the debenture created a charge on all the assets and an equitable mortgage on reality. It was submitted that every mortgagee or charged has a right to appoint a receiver even if the power to do so were not mentioned – see s.344(b) Companies Act 1948.

Since the security created was duly registered this was constructive notice to the whole world of the existence of the charge. The case of Trenco Ltd. v. African Real Estates Ltd. (1978) 4 SC.9, 27 was relied upon. He contended the charge was created in 1978 long before the debt giving rise to the judgment, accordingly the debt must be subject to the prior legal interest. Counsel then canvassed the true effect of a receivership upon the appointment of a debenture holder whether by the Court or by a debenture holder on the claims of a judgment creditor. It was submitted that the receivership being an incidence of a legal occurrence, warrants grant of a stay of execution.

On ground 4 counsel submitted that the Court of Appeal was wrong to have held that a stay of execution could only be granted pending an appeal; and that the Court of Appeal gave a wrong interpretation to the decision of Olayinka v. Elusanmi (1971) 1 NMLR. 277. It was submitted that a stay of execution could be granted even if a party had not appealed against the judgment. It was submitted in Olayinka v. Elusanmi that what the Supreme Court had in mind was that a judgment when given remains binding till set aside, hence a stay of execution can only be granted pending an incidence of a legal occurrence. Counsel contended that a receivership in this case is therefore an incidence of a legal occurrence, which is part of and relevant to the judgment. The writ is being enforced against the property of one other than the judgment debtor.

On ground 3 argued as an extension of ground 4 counsel submitted that the Court of Appeal was wrong to have observed that Applicant! Appellant on appointment should have applied to the Court for directions as to priorities. He contended that this was a misunderstanding of the provisions of section 337 of the Companies Act relied upon which merely required such applications to be made only in difficult and special situations, if the need arises.

Ground 2, is also an attack on the observation of the Court of Appeal that Applicant/Appellant ought to have applied to the Court for directions. It was submitted that section 337 of the Companies Act is permissive and not mandatory. It merely enables receivers to apply to the Court for directions. Ground 6 attacks the holding of the court below that the proper party to file the application should be the Receiver/Manager. Counsel has submitted that this is a misunderstanding of the law relating to receivership. It was submitted that the Appellant had locus standi to bring the application either as a company or as constituted in receivership, being a person aggrieved. Counsel referred to clause 12(1) of the Debenture and Clause 1 of the Deed of Appointment of a Receiver/Manager, wherein the Receiver/Manager is the attorney and agent of the Appellant with power to take proceedings in the name of the Appellant, and to use the name of the Appellant in the exercise of his powers. Counsel submitted that the law is that a Receiver/Manager must take or defend actions in the name of his principal except in exceptional circumstances which this case is not.

The contention of counsel to the Appellant’s simply stated is that the appointment of a Receiver/Manager over the assets of the Appellant company should be regarded automatically operating as a stay of execution of the judgment in favour of the Respondents. This was regarded as an answer to the preliminary objection.

At p.6 of his brief of argument, and before us, counsel for the Respondents has summarised the contention of Appellant’s Counsel as follows:-

“When a Receiver/Manager is appointed (irrespective of whether he is appointed by a Court or outside the Court) he thus becomes a party in an existing suit with a right to apply for any relief and at any time, all because there is a Debenture.

He submitted that the judgment sought to be enforced is a legal interest and is not a competing equity with the Appellant’s claim to priority thus the maxim that secured creditors take prior to unsecured creditors did not apply to the facts of this case. This submission appears to ignore the issues before the Court and the judgments being supported. It was submitted that the Receiver/Manager was never a party to the litigation leading to the judgment sought to be stayed. Counsel submitted that it was an abuse of the process of the courts to reopen a matter merely for the purpose of determining the issue of priority between the Debenture holders and the Respondents.

Counsel submitted that since there was no pending proceeding between the Appellant company and the Respondents, or any proceeding involving the Debenture holders, the Respondent could not be a defendant to a claim introduced by the Receiver/Manager, acting as Agent of the Appellant/Defendant company. Replying to the contention of counsel for the Appellant in ground 4 of his Grounds of Appeal that the appointment of the Receiver/Manager after judgment was the legal occurrence after judgment necessitating the grant of a stay of execution as was decided in Olayinka v. Elusanmi (1971) 1 NMLR 277 is in the circumstance an abuse of the process of the Court. It was submitted that the Receiver/Manager was appointed after the judgment was given in the undefended suit on the 6th May, 1985. He pointed out the dangers with which the practice of the Appellant/Applicant Company was fraught – namely a debtor company, in respect of whose property there is a charge will submit to judgment but before execution will advise the Debenture holder to appoint a Receiver/Manager to assume control and frustrate the judgment creditor reaping the fruits of the litigation. Counsel had pointed out that the company is not in liquidation and that if execution was levied the substratum of the company will be removed to the prejudice of the Debenture holders.

Finally counsel submitted that the issue before the learned trial Judge was a simple one involving the exercise of his discretion. An appellate court will only interfere with the exercise of judicial discretion where there was a departure from the accepted principles of law. It was submitted that there was no wrongful exercise of judicial discretion and that the judgment of the Court of Appeal should not be disturbed. Finally it was submitted that there was no evidence that the judgment debtor had defaulted in accordance with the terms of the Debenture.

I have deliberately set out above the main contentions of counsel at great length and detail, not because they are all relevant but to show that counsel arguing an appeal and attacking a judgment must endeavour to discover the reasons on which the Judge relied for coming to his decision and show before the appellate court that on the facts of the case before him those reasons were wrong in law, or that the inferences drawn do not follow from the facts. I have already set out the undisputed facts in the application before the learned Judge. The main reason why the learned Judge held that Applicant/Appellant had no locus standi was that he had not by evidence shown that the application was brought by the Receiver/Manager of the Applicant/Appellant company, who is empowered in law to bring action in the name of the company.

At the risk of repetition I have to state the legal effect of the appointment of Receiver/Manager by the debenture holders over the assets involved in the debenture. A floating charge, as the assets in this debenture is, is ambulatory and floats over the property until the event indicated in the debenture deed happens which causes it to settle, remain fixed and crystallize into a fixed charge. – See Govt. Stock Co. v. Manilo Ry (1897) A.C. 81, 86.

When the floating charge crystallises, the debenture-holder is entitled and empowered under the Debenture Deed to appoint a Receiver/Manager who would then enforce the security and recover his money by taking over the assets in the Debenture. The appointment of Receiver is an event which causes the floating charge to crystallise: See Re Crompton & Co Ltd. (1914) 1 Ch. 954. The effect of the appointment of Receiver/Manager is to paralyse the powers of the owner of the goods from dealing with it. A company does not lose its legal personality neither are the goods vested in the Receiver/Manager on the appointment: See Vine v. Raleigh (1833) 24 Ch.D. 233. He is however entitled to possession of the goods, subject to all specific charges validly created in priority to the floating charge: See Sections 92, 297 of the Companies Act 1968. He is also subject to all rights of set-off acquired by debtors to the company in respect of dealings with it: See s.297. His title however prevails over those of unconcluded execution creditors: See Re Opera Ltd. (1891) 3 Ch. 260. The Receiver/Manager is usually appointed the agent of the Company, as was done specifically in this case – See Clause 1 of the Instrument of Appointment of Receiver/Manager and Clause 12of the Debenture Trust Deed. This enables him to institute and defend actions in the name of the debenture-holder or the company entitled to the goods under the debenture. Although the right to institute or defend actions in the name of Company is covered under the general authority to collect and take possession of the assets in the debenture, the legal effect of his appointment which paralyses the company in respect of dealing with the assets and the Receiver/Manner not having any legal estate in the goods, and the company retaining its title and legal personality renders it essential for the Receiver/Manager to seek leave of the Court where he intends to bring or defend actions in the name of the company with respect to goods involved in his Receivership. Counsel for the Applicant/Appellant has submitted that the provisions of section 337 of the Companies Act 1968 which requires the Receiver/Manager to seek directions is not applicable to a debenture holder not appointed by the Court. He submitted that application was only required in exceptional cases. I think this is too simplistic a view of the protection offered by the provisions of the section. It is well settled that where a Receiver/Manager has been appointed in a Mortgagee’s action, it is for the court to determine whether proceedings shall be taken at the expense of the mortgaged property. The Receiver cannot begin or defend actions on his own initiative without the direction of the Court – see Bristowe v. Needham (1847) 2 Ph. 190.The appointment of a Receiver/Manager is made not only to protect the interest of the debenture holder, but also the estate involved in the debenture and for the benefit of all concerned. Thus in sanctioning the Receiver/Manager taking proceedings, the Court will have regard to what it considers right and proper in the interest of all the parties – see Viola v. Anglo-American Cold Storage Company (1912) 2 Ch.305 at p.311. The question whether leave is to he granted a Receiver/Manager to institute or defend actions in the name of the Debenture-holder is a matter of discretion to be exercised in accordance with the particular circumstances of each case. It is clearly not one for the private initiative of the Receiver/Manager as Counsel for the Appellant seems to assume.

I think it is necessary to seek leave of the Court where the Receiver/Manager intends to bring or defend an action in the name of the owner of the goods since he has no legal title to the property in the debenture and the Receiver/Manager cannot claim any title in respect thereof. The application should he by summons stating the name of the person having title to the goods as Plaintiff or Defendant as the case may be, and seeking an order for the Receiver/Manager appointed by the Instrument made under the Debenture Deed, for liberty to commence/continue/defend an action in the name of the Plaintiff as the agent of the Debenture-holder-until judgment, and etc. In the case of defending an action, the substance of the claim in the action should be set out.

This is in my opinion the first step Applicant/Appellant should have taken. After the order granting leave has been made he can bring the application for indefinite stay of execution. Counsel for the Appellant/Applicant has criticised the judgments of the courts below for holding that he had no locus standi for bringing the application for stay of execution. I think he is wrong and they were right to so hold on the facts before them. On a careful perusal of the affidavit in support of the application there was nothing to show that the application was made by Mr. J.O. Munis. Receiver/Manager as Agent for the Applicant/Appellant Company. All that was disclosed by the attachments was that there was a Receivership and the Company in Receivership was applying for an indefinite stay of execution. This it obviously in law cannot do, unless in certain circumstances which were not shown in this case.

Again, the Applicant/Appellant company is the judgment debtor in the undefended suit in respect of which the writ of Fifa was issued. Applicant/Appellant has not given any notice of Appeal against the judgment in respect of which Execution is sought to be levied. Indeed, Applicant/Appellant’s only remedy is to rely on the provisions of section 16 of the Sheriff and Civil Processes Law Cap. 127 of Lagos State which enables the Court on the application of a judgment debtor upon satisfaction that full disclosure of his property and circumstances of his inability to pay, and that he has not been guilty of Misconduct, to stay the issue of execution of any writ, and to order release even where execution has been issued, for such time and upon such terms until the inability has ceased. This is not the case of the Appellant. His case is that on the appointment of Receiver/Manager under the provisions of the Debenture Deed, it operates both as an injunction restraining judgment debt and as equitable execution. It is pertinent to point out that a Receivership does not operate as an equitable execution – see Norburn v. Norburn (1894) I Q.B. 448. It is merely a right to claim a relief. In his submission he contended relying on Olayinka v. Elusanmi (1971) 1 N.M.L.R. 277, that the appointment of a Receiver was the incidence of a certain legal occurrence which will operate as a stay of execution. This is a clear misunderstanding of the ratio decidendi of that case. The ratio decidendi of the Supreme Court for allowing the appeal was that the Respondent had not appealed against the judgment of the Ife Native Court. The order for indefinite stay of execution was granted on a motion brought by the Respondent. The High Court dismissed the appeal against the motion. It is this dismissal of appeal against the motion that came before the Supreme Court. In setting aside the judgment of the High Court on the appeal against the motion, Coker, J.S.C., reading the judgment of the Court said at p.279:

“To start with, we must observe that the case that was cited by the learned judge (i.e. Macfoy v. UAC Ltd.) in support of the reasoning which he had employed is clearly distinguishable from the present proceedings, and the Judge fell into the error of taking the present proceedings as one asking for the judgment of the Native Court in 1954 to be set aside. It is not.”

Its similarity with the case in hand is the bringing of application in both cases after the issue of writ of execution consequent upon judgment against the applicant. The Supreme Court held that the Judge was clearly in error to assume that the application was to arrest the operation of the writ of execution. Counsel relying on the view expressed that a stay of execution may be sought pending the incidence of a certain legal occurrence, submitted that the appointment of a Receiver/Manager is such legal occurrence to arrest the execution of the writ. I am unable to accept this interpretation of the expression. In my view the incidence of legal occurrence that can influence a stay of execution must arise naturally from the proceedings and not debtors the action.

It is for this reason that a notice of appeal against the judgment is such incidence of certain legal occurrence. It is well settled that every judgment takes effect on pronouncement -see Bank of West Africa v. NIPC Ltd. (1962) LLR. 31; Olayinka v. Elusanmi (1971) 1 NMLR 277. A judgment debtor seeking to stay the execution must show that he is challenging the judgment, or is asking for time to comply with the terms of the judgment. If it is a challenge of the judgment a notice of appeal ought to have been filed, or will on undertaking be filed – see Oladapo v. ACB (1951) 13 W.A.C.A. 110. The grant of a stay of execution involves the exercise of discretion, which involves a consideration of the chances of the applicant succeeding on appeal – see Odufoye v. Faloke (1975) 1 N.M.L.R. 222; Shoge v. Musa (1975) 1 N.M.L.R. 133; Wey v. Wey (1975) 1 SC. 1. The applicant’s ability to satisfy the judgment debt if the appeal is unsuccessful, and the general rule to maintain the status quo between the parties, are important considerations – Balogun v. Balogun (1969) 1 All NLR 349; Wilson v. Church (No.2) 12 Ch.D. 454. It is well settled that a third party not a party to the action cannot ask for a stay of execution. He may succeed if he shows that the judgment was a fraud on him – see Gore v. Vander Lann (1967) 1 All E.R. 361. Appellant/Applicant has not shown that the Receiver/Manager was a party to the action in respect of which he is asking for a stay of execution. He has not shown that he has given notice of appeal or asking for stay of execution on other grounds. I agree therefore with the trial Judge and the Court of Appeal that he has no locus standi to bring this application.

On the views expressed above I agree entirely with the Courts below that it is premature to consider the effect of the appointment of a Receiver/Manager in this case on the application for the execution of a writ of Fifa in respect of the judgment against the Appellant Company. Appellant Company has not shown that it has satisfied the conditions to enable the trial Judge to exercise his discretion to stay execution of the writ. Also it has not been shown that the Receiver/Manager has been granted leave to bring or defend actions in the name of the company. I therefore dismiss the appeal.

Appellant shall pay N500 as costs to the Respondents.A. NNAMANI, J.S.C.: I had a preview of the judgment just delivered by my learned brother, Karibi-Whyte, J.S.C. He has fully dealt with all the issues raised before us and I accordingly entirely agree with his reasoning and conclusions.

Although learned Counsel had filed copious briefs of argument, and proffered detailed oral argument, the issues in this appeal appear to me quite simple. It is not in dispute that the Plaintiff/Respondent herein on 6/5/85 obtained judgment in default of pleading against the Defendant/Appellant in the sum of N1,197,775.79k with interest at 6% per annum from 21st December, 1984 till payment. Costs of N1,959.20 were also awarded. No appeal against this judgment was filed by the Defendant/Appellant. The Plaintiff/Respondent on 7th May, 1987 took out a writ of Fieri-Facias. It is not in dispute that the Defendant/Appellant appears to have issued a debenture in favour of Messrs Savannah Bank of Nigeria Ltd. in 1978. The debenture created a charge over all the assets of the Defendant/Appellant as they then stood. When the Defendant/Appellant could not meet its obligations, Savannah Bank of Nigeria Ltd on 27th June, 1985 appointed Mr. Joseph Olutoyin Munis as Receiver/Manager over all the assets charged by the said Debenture. The Defendant/Appellant, not the Receiver/Manager, on 12/9/85 took out a summons in the High Court praying for-

“An order the High Court to stay indefinitely the judgment of 6th May, 1985, until the receivership terminated.”

In the course of argument before the High Court, the Court of Appeal and even in this Court; so much was said about priorities of equities etc. I am of the view that this was premature. The only issue was really whether at the stage the Receiver/Manager could obtain an indefinite stay of an action in which he was not a party; whether it was the Defendant/Appellant or the Receiver/Manager who ought to have sued. It is pertinent to mention that although the appointment of the Receiver was mentioned in paragraph 5 of the affidavit supporting the application, there was nothing on the face of the application showing the Receiver/Manager as a party.

Mr. Ajayi, learned counsel to the Appellant in argument before this Court raised some consequences of the appointment of a Receiver/Manager which are not really in contention. Some of these were as follows:-

(1) The Receiver/Manager becomes entitled to the possession of the assets of the Appellant company.

(2) The floating charge becomes crystallised and accordingly constitutes a fixed charge upon all the assets of the company. Refers to Halsbury’s Laws of England 4th Edition Vol.7 para. 880. The Directors’ powers with respect to the property charged are paralysed, but the directors’ powers remain in relation to other issues.

(3) The title of the Receiver/Manager prevails over that of Execution creditors.

(4) The Receiver/Manager acquires no right of action by virtue of his appointment. He cannot sue in his own name as Receiver. In such cases he must maintain the action in the name of the person or persons who would be entitled if there had been no appointment Wheeler and Co v. Warren (1928) CH.D. 840,844,845. The Receiver/Manager has power to maintain an action as agent of the Company.

After argument on the application as well as on the preliminary objection filed by the Plaintiff/Respondent, Ilori, J. held as follows-

“It is pertinent to observe that this is not an application by the Receiver/Manager seeking a declaration as to priority between him or holders of debenture and the execution-creditor………but an application by a judgment debtor seeking an order to stultify the effect of the judgment by staying its enforcement sine die. In my view, the question of priority of equities between a Receiver and a judgment creditor can be properly considered only in an action brought by the Receiver for that purpose before the proper forum. The judgment constitutes res judicata between the judgment creditor and the judgment debtor…………………………….Since the judgment in this case on 6th May, 1985 creates res judicata between the parties herein the applicant has no locus to bring this application unless it is based on a pending appeal.”

The Court of Appeal agreed with these views, and I see nothing to fault in them. The Appellant argued this appeal as if the appointment of the Receiver was the end of the matter. The Receiver may be vested with considerable powers over the property charged on his appointment, but in the circumstances of this case, there is nothing to show that the Receiver initiated the application as agent of the Defendant/Appellant.

It was for these reasons, and the detailed reasons in the lead judgment that I too dismissed the appeal. N500 costs to Respondent.


SC.93/1987

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