Lagos State Development & Property Corporation V. Citymark (West Africa) Limited (1988) LLJR-SC

Lagos State Development & Property Corporation V. Citymark (West Africa) Limited (1988)

LAWGLOBAL HUB Lead Judgment Report


On the 20th day of April, 1998. I dismissed this appeal and then indicated that I would give my reasons for so doing today. I now proceed to do so.

In suit No. LD/2123/87, the plaintiff on the 9th day of November. 1989, obtained judgment against the defendant in the Lagos Judicial Division of the High Court of Lagos State in the sum of N7,787,500.00 with N2000.00 costs. The defendant having appealed against the said decision moved the trial High Court for a stay of execution of the judgment pending the determination of the appeal. This application was on the 6th day of March, 1990 granted on the following terms-

“1. The amount of N7,787,500.00 (Seven Million. Seven Hundred and Eighty-Seven Thousand, Five Hundred Naira) be deposited by the applicant in an account to be opened with the Bank of Credit and Commerce International (Nigeria) Limited, Lagos in the joint names of the applicant and respondent on or before 6th day of April, 1990; the condition being that whoever wins on appeal, shall be entitled to the amount deposited.

  1. That upon compliance with Condition (1) above, the plaintiff/respondent shall lodge with the Chief Registrar, High Court, Lagos on or before the 6th day of April, 1990, a Bank Guarantee from the Bank of Credit and Commerce International (Nigeria) Limited, Lagos in the sum of N7,787,500.00(Seven Million, Seven Hundred and Eighty-Seven Thousand, Five Hundred Naira) to repay to the applicant/defendant herein the sum of N7,787,500.00 should the appeal lodged succeed.
  2. That the respondent’s solicitor – namely – N. A, Dabiri & Co., be paid the sum of N2,000.00 awarded as costs, and the same to enter into undertaking on or before the 6th day of April, 1990 to refund the sum of N2,000.00 if the appeal succeeds.
  3. That upon fulfillment of conditions 1 and 2 above, execution as to damages be stayed: and on fulfillment of condition 3 above, execution as to costs be stayed or both stay of execution as the case may be, pending the determination of the appeal against the aforesaid judgment.”

Being dissatisfied with the aforesaid terms, the defendant subsequently moved the Court of Appeal for better conditions for the grant of Its prayer for Stay of execution. In its application, the defendant urged the Court of Appeal to grant the stay on the following conditions and or terms –

“1. That half the judgment debt be paid to the plaintiff against a guarantee to be given by the plaintiff to return same with interest at the Central Bank’s (CBN’s) ruling rate as may be fixed from time to time in the event of this court deciding the appeal in favour of the Defendant.

  1. That the defendant do give bank guarantee in respect of the other half of the judgment debt to pay the sum due under that guarantee with interest thereon at C.B.N’s interest rate as may be fixed from time to time to the plaintiff in the event of the appeal being determined in favour of the plaintiff.”

In the affidavit in support of its application, the defendant deposed inter alia as follows –

“7. That the applicant being dissatisfied with the ruling of 6th March, 1990 in respect of the stay is now seeking a variation of the said order to the effect that the applicant gives a bank guarantee to cover the judgment debt in lieu of depositing the said sum in a joint account as directed by the lower court.

  1. That the applicant will be hard put to put down physical cash for the amount of the judgment debt.
  2. That I am further informed by the said general manager and I verily believe that the applicant’s company operates mainly in the provision of social amenities and residential accommodation at very low cost to the masses and that the payment of cash to the magnitude of the judgment debt will cripple it’s activities in this field.
  3. That I am informed by the said general manager of the applicant and I verily believe that the order of lower court in the terms made is unfair to the applicant, it was made in a manner that will enable the plaintiff/respondent utilize the amount ordered to be paid in by the defendant/applicant as a source of the instrument of guarantee from bank for credit commerce and industry.
  4. That the appeal has a good chance of succeeding.
  5. That the respondent will not be prejudiced if this application is granted.
  6. That it will be in the interest of justice if this application is granted.

The plaintiff, in its counter-affidavit, deposed inter alia as follows-

“2. That as stated in paragraph 8 of the Judgment debtor’s affidavit before the lower court, the only ground on which it requested a stay of execution was its allegation or mere speculation of poverty on the part of the judgment creditor who, the judgment debtor stated, will find it difficult if not impossible to refund the Judgment sum should the Judgment debtor win on appeal.

  1. That it was in response to the said speculation by the judgment debtor that the judgment creditor had to procure a bank guarantee from its bankers, bank of Credit and Commerce International (Nigeria) Limited at a cost of 1% of the judgment sum (i.e N77,870.00 Seventy-Seven Thousand, Eight Hundred and Seventy Naira only)apart from other collaterals which the judgment creditor had to provide at enormous costs in terms of legal expenses and corporate time, the said debit advice of the bank being herewith annexed as Exhibit “A”.

4.(a) That the business of judgment creditor had been adversely affected since 1984 when the breach of a N29.5 million contract by the judgment debtor led inter alia to the temporary withdrawal of the Foreign Technical Partners of the judgment creditor from Nigeria upon their losing confidence due to the acts of the judgment debtor and some State Governments over contracts.

(b) That the amount of US$570,000 owed by the judgment creditor to its Foreign Technical Partners which was initially equivalent to N570,000 approx. before 1985 rose to N1,890,519 in 11986 and had metamorphosed due to the continuous depreciation of the Naira and the passing of time to N4, 232, 649 in 1989 in annual leaps as follows:

Year Naira Loss Due to Depreciation

Equivalent Of the Naira Exchange Rate


1986 1,890,519 1,515,669

1987 2,360,256 469,737

1988 3,051,381 691,125

1989 4,232,649 1,181,268

The confirmation of these facts vide a certification statement by the Auditors to the judgment creditor (Messrs Ogunbajo Okubule and Co.-Chartered Accountants) is herewith annexed as Exhibit “B”.

(c) That although the said Foreign Technical Partners had through their appointment of a Nigerian Attorney and Solicitor threatened to wind up the Judgment Creditor in October 1989, it was able to bargain with the said Foreign Technical Partners who, later confirmed their faith in the Nigerian Judiciary and agreed to a discount of 5% off the book value of the debt (that is, they agreed to a settlement of N2, 116,325 instead of N4, 232,649) on the condition that the, Judgment Creditor Pay N750,000 latest in July 1990 (due to their own unavoidable financial obligations) and issue them with reference shares for the balance of N1,366,325 upon which they would resume their technical partnership with the company status quo and institute winding up processes.

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(d) That letters from the said Nigerian Attorney and Solicitor are annexed hereto as Exhibits “C” and “D” respectively.

  1. That the Judgment creditor will suffer irreparable harm if the judgment sum is not paid to the Judgment creditor.
  2. That on the other hand, If the judgment sum is paid to the judgment creditor in keeping with the wordings of the bank guarantee which was exhibited at the lower court and a copy of which is herewith annexed as “E” the judgment creditor will be able to gain over N2 million in debt reduction as contained in 4(c) hereof, beef up its working capital and regain its corporate buoyancy within less than one year of the payment of the judgment sum.
  3. That the Judgment creditor is willing, if so required by the Honourable Court of Appeal (and the bankers to the Judgment creditor have equally confirmed their readiness) to refund the judgment sum at a fixed and referably statute-backed interest rate as opposed to the current erratic and unstable market rates in the Nigerian Finance Market if the Judgment debtor should ever win on appeal and, in that connection, herewith annexed as Exhibit “P” are pages 1 and 14 of Business Concord of 24th April, 1990 carrying stories and confirmations by Bankers and bank that the recent wave of high interest rates is prone to fluctuation and is unreliable.”

The Plaintiff prayed that the judgment debt be paid to it against a guarantee to be given by an Insurance Company.

In urging this variation on the court below, learned counsel for the defendant submitted that in view of the large size of the amount involved, it was more equitable for the parties to bear equally, the risk involved in the purchasing power of the Naira. In his view, this purchasing power of the Naira would have drastically fallen by the time this appeal would have been decided some three years hence.

The plaintiff, for its own part, opposed the proposals urged upon the court by the defendant. The contention was that its capacity to repay the judgment debt in the event of the appeal succeeding was overwhelming. It asserted that the defendant was in real estate business which at all material times was booming at its peak and that the defendant also controlled a “great chunk” of the estate business in Lagos State. The plaintiff, therefore, proposed that the judgment debt be paid to it. The plaintiff further proposed that it would in turn issue an insurance guarantee to be obtained from a consortium of insurance companies to cover any repayment of the amount in the unlikely event of the defendant’s appeal succeeding.

In its ruling, the Court of Appeal held as follows

“The proposal contained in the counter affidavit of the respondent is to my mind a more satisfactory financial arrangement., i.e. the payment of the whole sum by the applicant who in my view has the resources on the affidavit evidence before me. A repayment with a guarantee from the respondent that such money will be refunded with interest at the end of the appeal at CBN’s ruling rate at the time of the judgment.

I do not entertain the fear that the insurance company cannot guarantee such an amount of money to be paid now. Having regard to liquidity problem, a bank or two may not be in a position to guarantee an amount of over N7 Million to a single customer. It is in that light that I would depart from the normal practice of using banks to guarantee the sum and use other financial institutions like insurance companies which have been in business for sometime.

I am inclined to grant the stay of execution on condition that the applicant pays the whole sum to judgment creditor and the sum paid by the applicant be guaranteed by two of the insurance companies to be agreed on by the parties. And upon such agreement reached as to any two of the insurance companies listed In paragraph 3 of the further and better counter affidavit sworn to on the 19th day of October, 1990 by the Chairman and Managing Director of the respondent company, a formal order would have to be drawn up later.”

It is against this decision of the Court of Appeal that the defendant has now appealed to this court. I shall hereinafter refer to the defendant and the plaintiff in this judgment as the appellant and the respondent respectively.

Pursuant to the rules of this court, the parties through their learned counsel filed and exchanged their written briefs of argument in the appellant’s brief of argument, the following three issues are identified as arising for the determination of this appeal, namely.

“1. Can the Court of Appeal vary the conditions of stay granted by the trial court at the instance of a respondent to that application who has not appealed against the terms and set by the trial court.

  1. On an application for better conditions for stay from the High Court to the Court of Appeal, can the Court of Appeal impose more stringent terms and conditions than those set by the trial court
  2. What, having regard to the facts of this case, should be the appropriate order and conditions the court should impose for granting stay to the defendant.”

The respondent, for its own part, submitted two issues in its brief of argument as arising In this appeal for the determination of this court. These are –

“(a) Whether the appellant herein could validly challenge the exercise of the discretion vested in the Court of Appeal by the Court of Appeal Act, 1976 and Order 1 Rules 4, 5 and 8 of the Court of Appeal Rules, 1981.

(b) Whether the rules of Justice and Equity would allow a party adjudged to be a judgment debtor by a Superior Court of Record to dictate terms and stipulate conditions which discharge him of his obligation under the law.”

I did closely examine the two sets of issues identified in the respective briefs of the parties and was of the opinion that the issues raised on behalf of the appellant appeared more consistent with the grounds of appeal filed. They appeared, however, to be inter related and to revolve around the question whether or not the grant of stay of execution ordered by the Court of Appeal was justifiable, having regard to the particular circumstances of the case. I propose in these reasons for judgment, therefore, to consider all three issues together.

On issue 1 as formulated in the appellant’s brief, attention must be drawn to Section 18 of the Court of Appeal Act, 1976 which provides as follows –

“An appeal under this part shall not operate as stay of execution, but the Court of Appeal may order a stay of execution either unconditionally or upon the performance of such conditions as may be imposed in accordance with the rules of court’”

There are also the provisions of Order 1, rule 20 sub Rules 4, 5 and 8 of the Court of Appeal Rules which, to some extent, are relevant to the issue under consideration and state as follows –

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“Rule 20(4) The court shall have power to draw inferences of fact and to give any judgment and make any order which ought to have been given or made and to make such further or other order as the case may require, including any order as to costs”. (Italics for emphasis).

Rule 20(5) The powers of the court under the foregoing provisions of this rule may be exercised notwithstanding that no notice of appeal or respondent’s notice has been given in respect of any particular part of the decision of the court below, or by any particular party to the proceedings in that court, or that any ground for allowing the appeal or for affirming or varying the decision of the court is not specified in such a notice; and the court may make any order on such terms as the court thinks just, to ensure the determination on the merits or the real question in controversy between the parties.” (Italics for emphasis).

Rule 20(8) The court shall have power to make orders by way of injunctions……. and such other necessary orders for the protection of property or person pending the determination of an appeal to it even though no application or such an order was made in the court below.” (Italics for emphasis).

The combined effect of the above provisions of the law and the rules seems to be that the Court of Appeal, without doubt, possesses very far reaching powers to make just and equitable order or orders in the best interest of the administration of justice with a view to preserving the subject matter in dispute between the parties. These just and equitable orders, in so far as applications for a stay of execution are concerned, include those which, in all the circumstances of the case, tend to preserve the res or the subject matter in dispute between the parties and thus prevent any acts which will destroy the subject matter of the proceedings or foist upon the court, a situation of complete helplessness, or render nugatory, any judgment, order or orders of the Court of Appeal or provide a situation in which whatever happens to the case, and, in particular, even if the appellant succeeds in the appeal, there would be no return to the status quo. See Vaswani Trading Co. v. Savalakh and Co. (1972) 12 S.C. 77 at 81 – 82, Deduwa and others v. Okorodudu and others (1974) 6 S.C. 21 at 24 – 26; Kigo (Nigeria) Ltd. v. Holman Bros (Nigeria) Ltd. (1980) 5 – 7 S.C. 60 etc.

Accordingly, it is not the law that the Court of Appeal in arriving at its decision in an application for a stay of execution pending an appeal must necessarily be confined to the order made by the trial court in order to exercise its discretion or come to a conclusion one way or the other. The powers of the Court of Appeal under Section 18 of the Court of Appeal Act, 1976 which are in pari materia with Section 24 of the Supreme Court Act 1960 are not in any way fettered by the terms of the grant in the lower court in an application for stay; and the Court of Appeal may entertain an application for a stay of execution by a person who is dissatisfied with the terms on which he was granted such a stay by the lower court. So, in Oyeti v. Soremekun (1963) 1 All NLR 349 at 351 (1963) 2 SCNLR 320 at 322 this court stated the position as follows-

“It appears to us that the power of this court under Section 24 of the Act is in no way fettered by the fact that a previous application to the High Court has been granted in the High Court……..

In this connection, it ought to be borne in mind that the application before the Court of Appeal dated the 13th March, 1990 was, at all events, made directly to that court in its own original jurisdiction specifically praying for “an order for stay of judgment of the High Court dated 9th November, 1989”. It was not an application for a review or a variation of the order made by the trial court; neither was it an appeal against the order of the trial court in the application for stay. I think the Court of Appeal was absolutely right in the exercise of its discretion to prescribe new terms or conditions, quite distinct and different from those stipulated by the trial court, so long as such new terms or conditions were given in the interest of and within the confines of the law, justice and equity.

Without doubt, an applicant may, if he so desires, seek more favourable conditions in the Court of Appeal if he considers that the conditions laid down by the High Court are onerous or, for any other reason, are found to be unreasonable. See Oyeti v. Soremeku (supra). While, however, the Court of Appeal has the necessary jurisdiction to make an order for a stay of execution on terms or conditions which may differ from those imposed by the trial High Court in granting a similar prayer, the jurisdiction may only be exercised at the instance of the party who had sought the order for stay in the court below. See Cogefar SPA v. Nigerian Ports Authority ( 1972) 1 ALL N.L.R. (Pt. 2) 509 where this court per Coker, J.S.C. stated as follows –

“We are in agreement with learned counsel for the applicants that section 24 of the Supreme Court Act does give this court the power to order a stay of execution on terms or conditions which may differ from those imposed by the court below in granting a similar prayer.”

A little later in its judgment, this court continued thus –

“However, the party who had applied for a variation of the terms and conditions (as in this case) was the party who had applied for the stay of execution…………….The court held, but at the instance of the party who had applied for a stay of execution, that it would exercise its jurisdiction to vary the conditions imposed on granting a stay of execution by the High Court even if such variation would tantamount to annuling those conditions.”

The courts have over the years evolved standard principles to be considered in granting an application for stay of execution of the judgment of courts pending an appeal. The court has a discretion to grant a stay of execution if it is satisfied that there are exceptional and special or substantial reasons or circumstances to warrant a deprivation of the successful party of the fruits of his judgment. See Michael Balogun v. Dorcas Balogun (1969) 1 ALL N.L.R. 349 at 351. The onus is on the party applying for a stay of execution to satisfy the court that in the special circumstances of his case there are some special and exceptional reasons which make the granting of a stay desirable. See Vaswani Trading Company v. Savalakh and Co., (supra) Nwabueze v. Nwosu (1988) 4. NWLR (Pt. 88) 257; Government of Gongola State v. Tukur (1989) 4 NWLR (Pt.117) 592 etc. These standard principles are not now in issue in the present appeal.

I have already indicated with regard to issue 1 that the Court of Appeal may vary the conditions of stay granted by a trial court. The appellant however pressed further for a determination as to whether the Court of Appeal could entertain an application for a stay from a respondent who did not appeal against the terms imposed by the trial court. In the present case, however, the respondent made no application to the Court of Appeal for any stay. It merely filed a counter-affidavit to the applicant’s motion in which averments of facts were deposed to. These facts were neither challenged nor controverted. In my view, it cannot be seriously argued that the Court of Appeal is not entitled to consider such facts put before it with a view to exercising its discretion judicially and judiciously, taking into account the parties” competing rights to justice. See Okafor v. Nnaife (1987) 4 NWLR (Pt.64) 129. I therefore had no difficulty in resolving issue 1 against the appellant.

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With regard to issue 2, I have also stated that the Court of Appeal, was entitled to impose any fresh terms and conditions for the Stay it granted so long as such terms met the equities of the case. See too William v. Buhari (1973) 2 S.C. 19. Accordingly, issue 2 was also resolved against the appellant. I will now turn to issue 3.

Issue 3, in effect, poses the question whether or not the terms and conditions imposed by the Court of Appeal in granting the stay of execution were appropriate, having regard to all the facts and circumstances of the case. In this regard, the main complaint of learned counsel for the applicant was that in view of the large size of the money involved in the judgment debt, it was more equitable for the parties to bear equally, the risk involved in the fluctuating purchasing power of the naira pending the final determination of the appeal. It was his submission, that by the time the appeal would be decided in two or three years’ time by the Court of Appeal, the purchasing power of the naira would have fallen considerably.

There is, in opposition, the respondent’s counter-affidavit which contained copious facts as to its ability to repay the entire judgment debt to the applicant in the unlikely event of the substantive appeal succeeding. For the avoidance of doubt, it was also prepared to guarantee this repayment by a solid insurance company of undisputed integrity and acceptance rather than a bank, having regard to liquidity problems and the enormous amount of N7 million which would be due to a single customer. It deposed that the applicant was in real estate business which was booming at all material times in spite of difficulties in the other Sectors of the economy and collected enormous high rents in various parts of Lagos like Victoria Island and Ikoyi. The respondent therefore urged the court to order direct payment of the judgment debt to it against the guarantee it proposed which could not be faulted.

Dealing, with these proposals, the Court of Appeal, per the leading ruling of Ademola, J.C.A., stated as follows –

“The argument proffered by Professor Kasunmu that both parties should bear the loss of the depreciation of the value of money which is the raison d’etre of his proposal is to say the least unacceptable to any man with the least knowledge of financial matters.

Put in a simple term, what Professor Kasunmu is saying is that a creditor must share with his debtor any loss in the value of money which may arise before such a debtor fulfils his obligation at a later date. In other words, not only will the debtor pay less of what he owed, but the creditor must assist him now to pay that less money at a future date. This is not business nor any sound financial proposal.”

I agree entirely with the above observations of the Court of Appeal and find myself unable to fault them. I think, with great respect to learned appellant’s counsel, that what it appears he did lose sight of was the fact that the respondent was fully entitled to the entire judgment debt awarded from the date of the judgment and that this judgment was presumed correct and binding until set aside on appeal.

The general position of the law is that a judgment creditor is entitled to the full benefits and fruits of his judgment by the court, and nothing less. The maxim is that equity follows the law. I can see no equity in all the circumstances of this case by the apportionment of the financial burden and/or risk in respect or any devaluation of the Judgment debt in equal shares as between the parties or in any other proportion whatever. As was rightly observed by the court below, this will tantamount to a debtor shifting his debt to a creditor under the guise of equitable sharing of some risk. I agree that there is neither equity in this conception nor does it amount to a sound or acceptable commercial practice.

On the issue of whether or not the appellant would be able to make down payment of the judgment debt, attention must be drawn to the undertaking or learned counselor the appellant in the trial court. This is contained in the ruling of the learned trial Judge where he observed thus –

“Professor Kasunmu -S.A.N., learned counsel for the applicant/defendant also argued in the alternative. that the applicant could pay the judgment debt to the respondent, on terms that the respondent gives a bank guarantee from a first class bank, which guarantee should incorporate payment of interest.”

The above undertaking which clearly amounts to an admission of the appellant’s ability to pay the entire judgment debt to the respondent binds the appellant and would easily have influenced both courts below in their decisions. I therefore agree with the court below that the best arrangement in the circumstances is payment of the whole judgment debt by the appellant to the respondent and for the respondent to obtain guarantee bond for the refund or the sum involved with interest from any two or the insurance companies in the respondent’s further counter-affidavit.

In this regard, the respondent deposed in paragraph 4 of its further counter-affidavit as follows€¢

“(4) That the Insurance Companies mentioned in paragraph 3 of this further and better-counter-affidavit are all viable and buoyant Insurance Companies with financial international reputation and each and every one of them can adequately refund the judgment debt with interest in the unlikely event of the appeal being decided in favour of the judgment debtor/applicant.”

There can therefore be no difficulty, in choosing any two of the listed Insurance Companies since each of them can adequately refund the judgment debt with interest as deposed.

It is for the above reasons that I dismissed this appeal on the 20th April, 1998 and affirmed the decision of the court below with costs to the respondent against the appellant which I assessed and fixed at N10.000.00.


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