Kwara State Govt & Ors V. Guthrie (Nig) Ltd (2022)
LAWGLOBAL HUB Lead Judgment Report
CHIMA CENTUS NWEZE, J.S.C.
The respondent herein commenced an action at the High Court of Kwara State (hereinafter, simply, referred to as “the trial Court”) by way of Writ of summons under the undefended list procedure against the appellants. It claimed for the payment of the sum of N586,206,883.33 as money due to it.
Upon being served with the writ of summons and accompanying affidavit, the appellants joined issues with the respondent by filing a Notice of Intention to defend together with a supporting affidavit. They urged the trial Court to transfer the suit to the general list for hearing on the merits. The appellants, simultaneously, raised a preliminary objection to the hearing of the suit. They prayed the Court to strike out the suit for want of jurisdiction or stay proceedings thereon, and refer the matter to arbitration. They drew the trial Court’s attention to the existence of an arbitration clause in the agreement between the parties. In response, the respondent filed a counter-affidavit in opposition to this application.
The trial Court, by its ruling delivered on March 23, 2017, upheld the appellants’ preliminary objection, thereby declining jurisdiction. It referred the suit to arbitration.
Dissatisfied with the ruling of the trial Court, the respondent appealed to the lower Court via a Notice of Appeal filed on April 20, 2017, containing four Grounds of Appeal.
In its judgment, delivered on November 20, 2017, the lower Court, unanimously, allowed the appeal and set aside the decision of the trial Court. The lower Court then ordered that the suit be remitted to the trial Court for a re-hearing by another Judge.
Dissatisfied, the appellants then appealed to this Court via a Notice of Appeal filed on December 20, 2017, containing four Grounds of Appeal.
The appellants, by their brief of argument filed on October 15„ 2018, distilled two issues for determination, to wit:
- Whether the Court below was right when it held that the filing of a Notice of intention to defend contemporaneously with the preliminary objection by the appellants amounted to taking steps in the light of the provisions of Section 5 (2) of the Arbitration and Conciliation Act?
- Whether the Court below was in order to have relied on the decisions in Obembe v Wemabod Estates (1977) LPELR – 2161 and SCOA Nig. Plc v Sterling Bank Plc (2016) LPELR – 40566 (sic) to order the re-assignment of the case to another judge of the trial Court?
On its part, the respondent by its brief of argument filed on December 14, 2018, adopted the appellants’ issues for determination by this Court.
Whether the Court below was right when it held that the filing of a Notice of intention to defend contemporaneously with the preliminary objection by the appellants amounted to taking steps in the light of the provisions of Section 5 (2) of the Arbitration and Conciliation Act?
Ayinla Salman Jawondo, SAN, learned Attorney General of Kwara State, for the appellants, submitted that, since there is no express provision for filing a Memorandum of Appearance under the Undefended list procedure, the Notice of Intention to defend and affidavit required to be filed by Order 23 Rule 3 (1) of the Kwara State High Court (Civil Procedure) Rules, 2005, are akin to entering appearance but do not amount to taking of steps.
Learned counsel further posited that the nature of the Undefended List Procedure is such that it is guided by strict rules of procedure. They require urgent attention, failing which, judgment may be obtained against the defendant. Heavy reliance was placed on Mc Investment Ltd and Anor v Core Investments and Capital Markets Ltd (2012) 12 NWLR (pt. 1313) 1, 18, paras A-C.
He further contended that the appellants acted in accordance with settled principles of law and rules of Court. He urged this Court to so hold. He cited The City Waiters Limited v. Jimoh Adio (2015) All FWLR (pt. 795) 368, 384, paragraph B; E B. NV. Abraham (2008) 18 NWLR (pt. 1118) 172, paras A-D; MV Arabella v NAIC (2008) 11 NWLR (pt. 1097) 182, 205-206, paras G-C; Wema Securities & Finance Plc v Nigeria Agricultural Insurance Corp (2015) LPELR-24833 (SC) 68, paras B-F. He urged this Court to resolve issue one in favour of the appellants.
RESPONDENT’S SUBMISSIONS ON ISSUE ONE
For the respondent, it was contended that the appellants’ submission cannot be sustained by Order 23 of the High Court of Kwara State (Civil Procedure) Rules, 2005.
It was further posited that the Notice of Intention to defend and the affidavit were not a mode of appearance or akin to appearance as submitted by the appellants. Rather, that those processes established a defence to the undefended list action and not a memorandum of appearance. He cited NPA v Aminu Ibrahim and Co (2018) 12 NWLR (pt. 1632) 62, 89, paragraphs E-G; Wema Securities and Finance Plc v NAIC (2015) LPELR- 24833 (SC).
He opined that the appellants cannot rename or convert an affidavit to a memorandum of appearance and neither Order 23 of the Rules nor Section 5 of the Arbitration and Conciliation Act, Cap A18, LFN 2004, supports such reclassification of an affidavit.
While relying on the case of Mainstreet Bank Capital Limited v Nig. Re  14 NWLR (pt. 1640) 423, 445, paragraph G, learned counsel posited that the appellants failed the statutory test for stay of proceedings pending arbitration in Section 5 of the Act.
He further pointed out that the appellants elected to comply with the Rules of Court in utter disregard for the import of Section 5 of the Act, adding that compliance with the rules should not be used as an excuse for taking steps in the proceeding contrary to Section 5 of the Act. He further opined that having done this, the appellants must abide by the full consequence of waiving their recourse to arbitration. Reference was made to the case of Nasir v Civil Service Commission, Kano State (2010) 6 NWLR (pt. 1190) 253, 276. He urged this Court to resolve this issue in favour of the respondent.
APPELLANT’S REPLY BRIEF
While placing heavy reliance on the case of Abacha v Kurastic Nig. Ltd (2014) LPELR – 22703 (SC), learned counsel for the appellants submitted that under the undefended list procedure, the filing of Notice of Intention to defend constitutes an entry of appearance.
He further posited that by the clear reading of Section 5 of the Arbitration and Conciliation Act, there is no where it is stated that processes cannot be filed, simultaneously, particularly in this case where one of such processes is an entry of appearance and the other is an application. He urged this Court to so hold.
RESOLUTION OF THE ISSUE
The central question here is: what is the effect of the Notice of intention to defend and the supporting affidavit in an undefended list procedure? That is, having been filed by the defendant, would it amount to taking a step in the proceedings, which can result in a waiver of recourse to arbitration sought by the defendant?
It is an elementary principle of law that where parties to a contract have, under the terms thereof, agreed to submit to arbitration if there is any dispute arising from the contract between them, a defendant who has not taken any steps in the proceedings commenced by the other party, may apply to the Court for a stay of proceedings of the action, to enable the parties go to arbitration as contracted, Obembe v Wemabod Estates Ltd.  5 SC 115, Owners of the MV Lupex v. Nigerian Overseas Chartering and Shipping Ltd  LPELR-3195 (SC),Sakamori Construction (Nig.) Ltd v Lagos State Water Corporation  LPELR – 56606 (SC).
Learned counsel for the respondent made the point that the notice of intention to defend, as well as the affidavit in support, established a defence to the undefended list action. They do not constitute a memorandum of appearance. The appellants cannot, therefore, rename or convert an affidavit to a memorandum of appearance.
Now, the undefended list procedure is a specialised summary procedure peculiar in its subjects and application. It is meant to provide a quick channel for the recovery of debts or claims. Suits filed on the undefended list are not lumped together, and confused, with other species of suits that are expected to follow normal procedure for suits in the general cause list. As a result, there is absence of pleadings. Evidence is not, equally, called by the under the undefended list procedure.
A suit brought under this procedure presupposes that the defendant has no defence or real defence to the plaintiffs’ suit. A defendant who, therefore, intends to defend himself when served with a Writ of Summons under the undefended list is required, pursuant to Order 23 Rule 3 of the High Court of Kwara State (Civil Procedure) Rules, 2005, as follows:
(1) If the party served with the Writ of summons and affidavit delivers to the Registrar, not less than 5 days before the day fixed for hearing, a notice in writing, that he intends to defend the suit, together with an affidavit disclosing a defence on the merit, the Court may give him leave to defend upon such terms as the Court may think just.
(2). Where leave to defend is given under this rule, the action shall be removed from the undefended list and placed on the Ordinary Cause List; and the Court may order pleadings or proceed to hearing without further pleadings.
This is a general requirement for every defendant served with a Writ of summons under the undefended list procedure before the High Court of Kwara State, and indeed every other High Court in the country.
The Court must first scrutinize the affidavit evidence of the defendant attached to the Notice of Intention to defend to decide whether the defendant has any defence to the suit of the plaintiff in relation to the debt or liquidated money demand.
At this stage, what the trial Court seeks is to reach a definite and unequivocal decision on whether or not the defence put forward by the defendant has raised a triable issue. It does not matter at that stage even if the defendant’s defence is shallow or shadowy, provided a triable issue is raised in the Notice of Intention to defend. Here, the chance of success of the said defence or its merits is immaterial, U. T.C (Nig.) Ltd v. Pamotei  2 NWLR (pt. 103) 244, Imoniyame Holdings Ltd and Anor v. Soneb Enterprises Ltd and Ors.  LPELR – 1504 (SC).
In other words, such a defendant is seeking leave of the Court to enter a defence. He is devoid of freewill to enter a defence, unless the Court sees it fit that he can, and is not just a sham intended to frustrate or delay the plaintiff, Macaulay v. NAL Merchant Bank Ltd. (supra). This is a condition precedent to the validity of any proceedings sought to be transferred from the Undefended list to the General Cause list. The procedural requirements must be obeyed.
At page 151 of the record, the lower Court, inter alia, held thus:
I also reason the same way with the appellant. Proceedings under Order 23 of the Rules of the lower Court are indeed special and unique. A case under the undefended list to me prescribes the method in which a simple unliquidated money demand can be addressed without delay. It prescribes a time frame for doing of certain things failing which a consequence is attached to the action or inaction of the defendant. By the filing of the Notice of Intention to defend, with the accompanying affidavit, the respondent has more or less filed a defence as to why judgment ought not to be entered for the plaintiff. It is akin to filing a Statement of Defence, and to me it amounted to taking a sizable step in the proceedings…
While I agree with the acknowledgment by the lower Court that the undefended list procedure is indeed special and unique, as I have also indicated above, I do not agree with its opinion in so far as it is an argument in favour of the respondent’s arguments on this issue. It appears to me that the lower Court failed to advert its mind to just how specific the procedure under Order 23 Rule 3 of the High Court of Kwara State (Civil Procedure) Rules, 2005 is.
It is established by sufficient authority that where any law or rule of Court provides specifically for the commencement of a particular action in a particular way, a party is bound to commence the action in the way prescribed, and the Court is bound to give enforcement to it, Ifezue v Mbadugha 1 SCNLR 427; Dongtoe v. Civil Service Commission, Plateau State  9 NWLR (pt. 717) 132. The result here is that, assuming a memorandum of appearance was filed by the appellants at the trial Court, as the respondent contended, it will still amount to non-compliance with the rules and thereby be liable to be set-aside on appeal to the appellate Court. This was the judgment in the case of Nishizawa Ltd v. Jethwani  12 SC 234. In that case, instead of an affidavit, a Statement of Defence was filed. It was held that this was still non-compliance with the rules.
Furthermore, in that case, a Statement of Defence was, clearly, distinguished from an affidavit. The materials contained in the Statement of Defence cannot be sufficient to show cause necessary to aid the Judge in his determination of whether or not to give leave to defend.
I therefore fail to see how the appellants’ act of filing of a notice of intention to defend amounts to taking a step in the proceeding, thereby running contrary to Section 5 of the Arbitration and Conciliation Act, as held by the lower Court. I therefore have no hesitation in holding that the lower Court erred in arriving at its conclusion.
Taking a step in the proceedings has become a term of art. Issue one is resolved in favour of the appellant.
Whether the lower Court was in order to have relied on the decisions in Obembe v Wemabod Estates (1977) LPELR – 2161 (SC) and SCOA Nig. Plc v Sterling Bank Plc (2016) LPELR – 40566 (sic) to order the re-assignment of the case to another judge of the trial Court?
It is the contention of learned counsel for the appellants that the lower Court, wrongly, applied the decisions of Obembe v. Wemabod Estates (1977) LPELR- 2161 (sic) and SCOA Nig. Plc v. Sterling Bank Plc (2016) LPELR- 40566 (sic) to this case. He explained that those cases were not instituted under the Undefended list procedure and had gone to full trial.
Learned counsel further submitted that the case of Obembe v. Wemabod Estates (supra) was, wrongly, applied by the lower Court below in the light of the principle of stare decisis which governs the applicability of the judicial precedents as case law. He cited MC Investment Ltd and Anor v Core Investments and Capital Markets Ltd (Supra) in support.
In distinguishing the case of SCOA Nig. Plc v. Sterling Bank Plc (supra) from this present case, learned counsel posited that this present appeal was instituted via the undefended list procedure as opposed to the general form of a writ of summons.
He further pointed out that, at the trial Court, the issue of jurisdiction was not raised suo motu, rather, that it was the appellants who filed a preliminary objection challenging the jurisdiction of the Court on the basis that the respondent herein was hasty and acted contrary to the provisions of the agreement from which her claims were an offshoot.
He further argued that the decisions in Obembe v Wemabod Estates (supra) and SCOA Nig. Plc v Sterling Bank Plc (supra) do not represent the current position of the law and in light of the peculiar facts of this present case. As such, he pointed out, the lower Court was wrong to rely on the cases to order the re-assignment of this case to another Judge of the trial Court. He urged the Court to resolve this issue in favour of the appellants.
Learned counsel for the respondent submitted that the lower Court rightly relied on the decisions of Obembe v. Wemabod Estates (1977) LPELR-2161 and SCOA Nig. Plc v. Sterling Bank Plc (2016) LPELR-40566, in arriving at its decision, adding that the appellants’ argument that the cases were applied in isolation of the facts before the Court below was, misleading.
Contention was further made that reliance on these authorities, which the appellants alleged were wrongfully applied by the lower Court, did not really affect the outcome of the appeal. This is because, even on consideration of Section 5 of the Act alone, the decision of the lower Court is correct. He urged the Court to resolve this issue in favour of the respondent.
APPELLANT’S REPLY BRIEF
Learned counsel for the appellants, in reply, pointed out that the law Courts are not Courts of sentiments and ought not to be swayed by the tides of emotions by the parties,Okpe v Fan Milk Plc and Anor (2016) LPELR – 42562 (SC) 29, paragraph, B – C.
RESOLUTION OF THE ISSUE
Questions of law and principles of law established in the cases of Obembe v. Wemabod Estates  LPELR – 2161 and SCOA Nig. Plc v. Sterling Bank Plc  LPELR – 40566 are based on facts distinguishable in their legal consequences from those in the case at hand.
The very able and plausible argument of counsel for appellants has prompted a very thorough investigation of all the authorities referred to by counsel, and all within the reach of this Court. After such investigation, I am entirely satisfied, upon reason and largely preponderant authority that the lower Court was wrong to rely on the cases to order the re-assignment of this case to another Judge of the trial Court.
It is obvious that this case is different from the case of Obembe v Wemabod Estates  LPELR-2161 (SC), where the action was commenced by way of Writ of summons. There was, equally, no application for stay of proceedings made by any of the parties, to refer the case to arbitration, notwithstanding the fact that there existed an arbitration clause in the agreement between the parties. Again, it is different from the case of SCOA Nig, Plc v. Sterling Bank Plc (2016) LPELR-40566 where the parties voluntarily submitted themselves to the jurisdiction of the Court, in spite of an arbitration clause contained in the agreement. The suit was also commenced by way of Writ of summons.
I think my resolutions in issue one appropriately answers issue two. I will end this judgment by saying that the resultant effect of all that I have decided here is that the two issues formulated for the determination of this appeal are resolved in favour of the appellant.
Appeal allowed. I hereby enter an order setting aside the judgment of the lower Court which had earlier set aside the judgment of the trial Court. I also order that the parties obey their arbitration clause.