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Home » Nigerian Cases » Supreme Court » Nathaniel Adedamola Babalola Kotoye V. Central Bank Of Nigeria & Ors (1989) LLJR-SC

Nathaniel Adedamola Babalola Kotoye V. Central Bank Of Nigeria & Ors (1989) LLJR-SC

Nathaniel Adedamola Babalola Kotoye V. Central Bank Of Nigeria & Ors (1989)

LawGlobal-Hub Lead Judgment Report

This appeal involves a question which has raised some serious furor in recent times, to wit: The question of ex parte orders of injunction. It touches an area of law which, in spite of numerous appellate decisions, appears to have been quite often misunderstood and misapplied by some courts of trial. Recent instances show that there is an urgent need to state the law.

The facts leading to the appeal are important for a full appreciation of the legal problems involved. Certain allegations of mismanagement by the third Defendant, Societe General Bank (Nigeria) Limited, came to the notice of the Central Bank of Nigeria. After investigating the allegations and taking instructions from the Federal Ministry of Finance, the Central Bank issued to the Chairman of the Bank, Mr. N. A. B. Kotoye, a written directive which because of its bearing in this appeal, I hereby set out in full. It runs thus:

“Central Bank of Nigeria

P.M.B.12194,

Tinubu Square,

Lagos.

The Deputy Governor

Our Ref: DG/COMBANKS/Vol.I/359

Tel. 661283/660100/104

14th April, 1987

Mr. N. A. B. Kotoye,

Chairman,

Society General Bank (Nigeria) Ltd.,

13 Martins Street,

Sarah House,

Lagos.

Dear Mr. Kotoye,

SOCIETE GENERALE BANK NIGERIA LIMITED PETITION BY DR. SOLA SARAKI ON ALLEGATION OF FRAUDULENT TRANSFER OF N2,240,000 SHARES BELONGING TO MRS. SARAKI, MISMANAGEMENT AND MANIPULATION AGAINST NIGERIAN SHAREHOLDERS BY FRENCH FOREIGN PARTNERS IN COLLUSION WITH SOME NIGERIAN SHAREHOLDERS.

Government takes exception of the very serious disagreement among the board members of your bank on fundamental issues resulting in the resignation of majority of the members culminating in the total collapse of the board and particularly allegations of the following:

(a) Fraudulent Transfer to Mr. N. A. B. Kotoye of N 2,240,000 shares said to belong to Mrs. Saraki,

(b) Persistent violation of government regulations and advice.

(c) Representation on the board/method of appointing directors.

(d) Accumulation of bad debts and non-payment of cash dividend,

(e) Lapses in the Nigerian policy;

(f) Borrowing by board members/share holders vis-a-vis the bank lending policy.

In view of the urgent need to resolve the above issues which are capable of wrecking the very existence of the bank, the effect of which could have very serious implications on the larger interest of the banking system, the supervising Federal Ministry of Finance having considered our report has directed us, in consideration of the powers conferred on the Honorable Minister of Finance, under Section 22 and particularly, Sub-section (a)(ii) of this Section of the Banking Act 1969, to transmit to you, the following directives of the government for immediate implementation without further delay:

  1. The shareholding/illegal transfer of Mrs. Saraki’s Shares:

That Dr. Saraki and Mr. Kotoye should revert to their status quo as at the date of the meeting both of them had with the Federal Minister of Finance in 1982. Accordingly the 1982 position when adjusted to December, 1986, would be as in Appendix I of this letter thus:

Dr. Sola Saraki – N6,876,840 Shares

Mr. N. A. B. Kotoye- N2,937,540 Shares

All other fresh shares acquired after 1982 should be divested to other Nigerians within two months of the receipt of this letter.

  1. Representation and Procedure for appointing Directors on the Board of the Bank:

That the government accepted our observations that the issue of appointing new directors revolves around control which cannot be divorced from the issue of ownership and that once the ownership dispute is resolved, it would provide an acceptable solution to how much control both parties could have in running the affairs of the bank.

Similarly, the government is in agreement with the proposal contained in paragraph four of the Nigerian Enterprises Promotion Board’s letter reference CT. 3422/V 01.1/233 of 27th October, 1986 addressed to the Managing Director (Photo-stat copy attached).

In consequence, you are strictly directed to incorporate into the Memorandum and Articles of Association of the bank all agreed understanding between the two partners (Nigerian/French) which formed the basis of your application for banking license and upon which the banking license was issued. You are also required to incorporate in the Memorandum and Articles of Association appropriately the Management Agreement on page nine of the feasibility report which is the basis agreed upon between the partners of the method of nomination of Directors of the Board of the bank which now must be followed in the reconstitution of the new Board and should be ratified soon after the new Board has been properly constituted.

Furthermore, the government accepted our recommendation that some of the Articles of Association of the bank would need to be re-examined for suitable amendment by the new Board. For example, article 104 dealing with the quorum of the Board may create problem of interpretation, as it can be interpreted to mean two representatives of the French Foreign Partners on the Board to the exclusion of Nigerians or vice versa.

Similarly, articles 64(1) regarding the quorum of the general meeting can also give room for excluding either one of the partners yet a valid quorum could be formed. In order to avoid future conflicts, government has directed that such Articles of Association be amended appropriately within two months of the inception of the new Board and the Ministry notified accordingly through the Central Bank of Nigeria.

Pursuant to the foregoing a fresh Board should therefore, be constituted now and be fully functional within four weeks of receipt of this letter and inform us immediately for onward transmission to the Ministry. Accordingly, the Nigerian and foreign partner should each make its nomination to the Board at once.

Please note that under no circumstance should any of those on the former board which has been fragmented be re-appointed to serve on the new Board. This is to say that those who have served or are presently serving on the Board should not be re-appointed to serve on the new Board to be constituted.

Accordingly, the Government directs that the Nigerian Shareholders should meet as a group urgently without delay to nominate the Nigerian representatives to serve on the Board. The list of the nominees should reach us not later than 10 days from the date of this letter, failing which the Government will be compelled to take appropriate action in accordance with the provisions of the Banking Decree 1969.

Similarly, the French Partners should forward to us the list of their nominees to reach us within the same time frame.

These directives of government are aimed at ensuring that the normal operations of the bank are uninterrupted.

  1. Accumulation of Bad debts and Nonpayment of Cash Dividends.

Our Special Investigation revealed that facilities obtained from the bank by directors/shareholders were either poorly serviced or never serviced as shown in Appendix II of this letter Most of the facilities were either not secured at all or not adequately secured contrary to the provisions of Section 13(i)(c) of the Banking Act, 1969. These irregularities and other weaknesses in the Credit Administration Machinery of the bank constitute an indictment on the competence and integrity of the Board and Management of the bank. Furthermore, the special investigation revealed a phenomenal increase in the classified bad and doubtful debts from about N24.2 Million to about N149.2 Million between our 1982 and 1986 examination reports of which 10% were facilities extended to Dr. Saraki and companies introduced by him.

The case with which most of the facilities now classified as bad and doubtful debts were obtained did not reflect the level of expert in Credit Administration, one would expect from the French Technical Partner which is largely responsible for the day to day management of the bank.

As regards the issue of non-payment of cash dividends, the expectation of Dr. Saraki is unrealistic in view of the sharp rise in the accumulated bad debts. The payment of cash dividend by a bank whose capital had been inadequate could not be regarded as prudent, as earnings from which cash dividends could be paid should be seen as a “return on capital” rather than as “return of capital.”

The Federal Ministry of Finance viewed the foregoing observations made by the Central Bank with grave concern and in view of the ineptitude in the conduct and administration of the Board and Management team, the government has directed that they be reciprocally dealt with. Accordingly, by the powers conferred on the Honorable Minister of Finance under Section 22 and Sub-section (a) (ii) of this Section of the Banking Decree 1969, the government directs that the management team for the bank be replaced as a matter of urgency within 3-6 months of the inception of the new Board so as to enhance the smooth running of the bank under the new Board.

In this regard, the new board should ensure that monthly returns of the gradual phasing out of the present management team is made to us for onward transmission to the Federal Ministry of Finance.

As regards the overdue loans and advances, the government accepts the recommendation of the Central Bank and directs that the new Board when appointed, should cause all delinquent borrowers to submit realistic and acceptable repayment proposals to it while the debt collection machinery should be overhauled to ensure effective collection of past due debts.

  1. Persistent Violation of Government Regulations and Advice.

The Special Investigation Report revealed series of contraventions of the provisions of the Banking Act 1969 and violations of government regulations and advice particularly with regard to (1) capital holding structure by Nigerians, (2) the management agreement which up to the time of our investigation had not been registered with the National Office of Industrial Property (NOIP) as required by Section 5(1) of the National Office of Industrial Property Act 1979 and (3) the holding of the Board Meeting of 28th October, 1986. The non-observance or deliberate violation of laid down regulations by the Monetary Authorities and other regulatory agencies such as NEPB and SEC will not serve the best interest of the bank.

Accordingly, the government warns the Board and Management that failure to comply with given financial regulations and government advice will in future fetch your bank serious consequences including the suspension of your bank’s dealership license.

As regards the foreign exchange fraud involving N397, 450 perpetrated in November, 1984, the government accepts our recommendation that the bank be allowed to implement its decision to pay this amount to its customer – (Mr. K. B. Omatseye) under the new dispensation of SFEM and accordingly directed that the settlement be effected within three weeks of receipt of this letter.

  1. Nigerianisation:

The Special Investigation report revealed that while the management of the bank’s branches with very limited authority was in the hands of Nigerians, Head Office Operations in the areas of General Management, Inspection, Treasury, Computer Operations, Organization and Method (O & M), Commercial lending and the post of Chief Executive were in the hands of the expatriates. The government agreed with our observation that unless necessary adjustment is effected in the allocation of responsibility between the expatriate and Nigerian officers, the control of the bank would hardly be diminished by the projected expatriate staff of six (6) in 1990.

Accordingly, the government directs that succession plan be reviewed immediately with a view to enabling Nigerians to be actively involved in the affairs of the bank. The new Board, when appointed, is expected to note this directive of government for strict adherence and should submit situation report every six months to the Central Bank on the progress made to Nigerianise the identified posts for onward transmission to the Federal Ministry of Finance.

Please, note the urgent need to implement the government directives without resorting to acrimony and/or confrontation with the authorities. It is in the best interest of your bank and the entire banking system that the directive, and recommendations contained herein are complied with strictly.

Yours sincerely,

A. O. G. OTITI, DEPUTY GOVERNOR.

Att.

From appellant’s own affidavit this letter was received by him on the 18th of April, 1987, nine clear days before the date scheduled for the General Meeting of the 3rd Respondent bank, the notice of which had been issued on the 26th of March, 1987.

On the 22nd of April, 1987, the appellant issued a writ claiming against the 1st, 2nd and 3rd Respondents the following reliefs that is to say:

(i) A Declaration that the directive given by the 1st Defendant in its letter DG/COMBANKS Nol.1/359 of the 14th of April, 1987 to the effect that the shareholding of the plaintiff in the 3rd Defendant should revert to the reduced figure of N2,937,450 shares held by him in 1982 is ultra vires the 1st Defendant and is null and void.

(ii) A Declaration that the directive given by the 1st Defendant in the said letter that all shares acquired by the plaintiff in the 3rd Defendant since 1982 be divested to other Nigerians is ultra vires the 1st Defendant.

(iii) A Declaration that the plaintiff is owner of 8,386,100 shares of N1.00 each in the Defendant Bank.

(iv) A Declaration that the directive of the 1st Defendant that a fresh Board of the 3rd Defendant be re-constituted so that former members of the board be not re-appointed thereto is:

(a) ultra vires the 1st Defendant and void; and

(b) is an unwarranted interference with the affairs of the company as constituted.

(c) an unwarranted interference with the plaintiffs rights to be re-elected a Director under the Articles of Association of the Bank.

(v) A Declaration that the plaintiff is entitled to be re-appointed a Director of the 3rd Defendant Bank at its scheduled Annual General Meeting fixed for the 25th of April, 1987 in accordance with the proof Articles 96, 97 and 98 of the Articles of Association of the 3rd Defendant Bank.

(vi) A Declaration that the directive given by the Federal Ministry of Finance by letter dated the 6th day of April, 1987 to the effect that the Annual General Meeting of the Bank fixed for the 25th April, 1987 be postponed until a new Board of Directors is constituted is ultra vires null and void.

(vii) A Declaration that the plaintiff is entitled to remain in office as a Director of the 3rd Defendant Bank until he is removed from office in accordance with the provisions of the Companies Act or the Articles of Association of the 3rd Defendant Bank.

(viii) An Injunction restraining the 1st and 2nd Defendants from exercising any of their respective powers whether under the Banking Act or under the Companies Act in such a way as to give effect to or provide sanctions against the plaintiff for failure to give effect to any of the aforesaid directives of the 1st Defendant.

(ix) An Injunction restraining the 1st and 2nd Defendants from in any way obstructing or frustrating the holding of the Annual General Meeting of the 3rd Defendant Bank for the purposes of electing new Directors or effecting any of the Statutory purposes for which Annual General Meetings are required to be held by the Companies Act 1968.

Dated this 22nd Day of April, 1987.”

The 4th to 8th Respondents were joined after the order, the subject of this appeal.

On the same day, the appellant filed a motion ex parte under Order 20 of the Federal High Court Rules, 1976, for an order:

“(i) Restraining the 1st and 2nd Defendants their servants and/or agents from in any way obstructing or frustrating the holding of the Annual General Meeting of the 3rd Defendant Bank until the final determination of this suit;

(ii) For an order of injunction that until the determination of this suit the Defendants be restrained from appointing or recognizing the appointment of any person or persons as Directors of the 3rd Defendant company other than such of them as are or may be duly appointed in accordance with the provisions of the Articles of Association of the 3rd Defendant Bank.” The application was supported by an affidavit and an affidavit of urgency. The affidavit of urgency runs thus:

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“AFFIDAVIT OF URGENCY

I, Nathaniel Adelamola Babalola Kotoye, Nigerian, Director of 13 Martins Street, Lagos make oath and say as follows:

  1. That I am the plaintiff herein.
  2. That I am the Chairman of the Board of Directors of the 3rd Defendant Bank.
  3. That Notice summoning the Annual General Meeting of the 3rd Defendant Bank for the 25th of April, 1987 was issued on the 26th of March, 1987.
  4. That on the morning of Thursday the 16th of April, 1987 I returned home a little after 12 noon and was shown a letter addressed to me by the 1st Defendant herein directing that the Nigerian Directors of the 3rd Defendant Bank to meet urgently and to select its representatives on the Board of the Bank and forward a list thereof to the 1st Defendant within 10 days of the letter. The said letter is dated the 14th of April, 1987 and a copy of the same is already exhibited to the Affidavit in support of the Motion filed herein.
  5. That the 1st Defendant has threatened in its aforesaid letter that if the list of new Directors is not supplied to it within 10 days of the said letter it would take appropriate measures against the 3rd Defendant under the Banking Act.
  6. That I have therefore commenced these proceedings seeking a number of declarations and injunctive relief.
  7. That I have also filed an ex parte Motion for interim injunction and it is of crucial importance that this application for interim injunction be heard immediately in view of the fact that the Annual General Meeting of the bank is due to be held at the end of this week and the time limit within which the 1st Defendant has demanded a list of Directors will expire on the 24th April, 1987.
  8. That I therefore pray that this application be heard as a matter of urgency. “No motion on notice was filed to the same effect.

The ex parte motion was heard the same day by Anyaegbunam, C.J. He then proceeded to make the following orders:

(i) That 1st and 2nd Defendants/Respondents, their servants and agents should not in any way obstruct or frustrate the holding of the Annual General Meeting of 3rd Defendant/Respondent Bank whenever it is fixed.

(ii) That when the said Annual General Meeting is held the ordinary affairs of the 3rd Defendant/Respondent Bank should be discussed.

(iii) That no new Directors will be appointed, the old Directors should continue to function until the determination of this Application or the Court otherwise orders.

(iv) I hereby also order that 1st, 2nd and 3rd Defendants/Respondents be served with all the motion papers. This will enable them file whatever papers they wish to. Adjourned Application to Monday, 27/4/87 at 1 p.m.” By a Notice of Appeal dated the 5th day of May, 1987, the 1st Respondent herein appealed. After hearing the appeal, the Court of Appeal, Lagos Division allowed the appeal. In the lead judgment of Awogu, J.C.A., to which Akpata and Kalgo, J.J.C.A., concurred, he held inter alia, as follows:

(i) That what the learned C. J. made was in the nature of an immediate absolute order, not an interim order; and not one appropriate under the rule it was purported to have been brought;

(ii) That the order made by the learned C. J. amounted to a final order, without hearing the Respondents;

(iii) That the trial court granted to the applicant more than what he asked for;

(iv) That although an affidavit of urgency was filed no case of urgency was made out to warrant an ex parte hearing; and that although he was allowing the appeal on other grounds, he would additionally have done so for failure of the applicant to give an undertaking as to damages.

The applicant, hereinafter called the appellant, has appealed to this court. All the Defendants including those who were joined after the order was made, shall be called the Respondents.

So much confusion and conflict appear to have surrounded the use of the expressions “ex parte”, “interim”, and “interlocutory” in the briefs of counsel that I deem it necessary to begin by examining these terms. Indeed, even in decided cases this lack of agreement as to the precise meanings of these words is pretty obvious. At times they are used as if “interlocutory” and “interim” were interchangeable.

In Kufeji v Kogbe 1 All N.L.R. 113, at p. 114, an application for an injunction which was fully argued and deliberated upon and in every way had all the attributes of an interlocutory injunction was referred to as interim injunction. In fact “interim” and “interlocutory” were freely used as if they were interchangeable. See also I. U. Iroegbu v. Mark A. Ugbo (1970-71) 1 E. C. S. L. R.162.

I think it is correct to say that “ex parte” in relation to injunctions is properly used in contradistinction to “on notice” – and both expressions, which are mutually exclusive, more strictly rather refer to the manner in which the application is brought and the order procured. An applicant for a non injunction may bring the application ex parte, that is without notice to the other side or with notice to the other side, is appropriate. By their very nature injunctions granted on ex parte applications can only be properly interim in nature. They are made, without notice to the other side, to keep matters in status quo to a named date, usually not more than a few days, or until the Respondent can be put on notice. The rationale of an order made on such an application is that delay to be caused by proceeding in the ordinary way by putting the other side on notice would or might cause such an irretrievable or serious mischief. Such injunctions are for cases of real urgency. The emphasis is on “real.” What is contemplated by the law is urgency between the happening of the event which is sought to be restrained by injunction and the date the application could be heard if taken after due notice to the other side. So, if an incident which forms the basis of an application occurred long enough for the applicant to have given due notice of the application to the other side if he had acted promptly but he delays so much in bringing the application until there is not enough time to put the other side on notice, then there is a case of self-induced urgency, and not one of real urgency within the meaning of the law. This self-induced urgency will not warrant the granting of the application ex parte.

Megarry, J., as he then was, put the principle rather succinctly in the case of Bates v. Lord Hailsham of Marylebone (1972) 3 ALL E.R. 1019, at p. 1025, where he stated:

“An injunction is a serious matter, and must be treated seriously. If there is a plaintiff who has known about a proposal for ten weeks in general terms and for nearly four weeks in detail, and he wants an injunction to prevent effect being given to it at a meeting of which he has known for well over a fortnight, he must have a most cogent explanation if he is to obtain his injunction on an ex parte application made two and a half hours before the meeting is due to begin. It is no answer to say, as counsel for the plaintiff sought to say, that the grant of an injunction will do the Defendants no harm, for apart from other considerations, an inference from an insufficiently explained tardiness in the application is that the urgency and the gravity of the plaintiff’s case are less ,than compelling. Ex parte injunctions are for cases of real urgency, where there has been a true impossibility of giving notice of motion.

On the other hand, even though the word interlocutory comes from two Latin words “inter” (meaning between or among) and “locutus” (meaning spoken) and strictly means an injunction granted after due contest inter partes, yet when used in contradistinction to “interim” in relation to injunctions, it means an injunction not only ordered after a full contest between the parties but also ordered to last “until the determination of the main suit.”

Applications for interlocutory injunctions are properly made on notice to the other side to keep matters in status quo until the determination of the suit. Evidence is by affidavit. On the hearing of the application for an interlocutory injunction, the court, after avoiding all controversial issues of fact, has to decide a number of important issues, including:

(i) the strength of the applicant’s case. A long time ago, the plaintiff was required to show a strong prima facie case that he was entitled to relief (see Harman Pictures N. V. v. Osborne (1967) 1 W.L.R. 723). However since the decision of the House of Lords in American Cyanamid Co. v. Ethicon Ltd. (1975) A.C. 396, at pp. 407-409 it has been held that what the applicant needs to show is only a real possibility, not a probability, of success at the trial- that there is a serious question to be tried. This is now an accepted principle in this country.

See Obeya Memorial Specialist Hospital v. Attorney General of the Federation and Anor.(1987)3 N. W. L. R. (Pt.60) 325, at p.340. It does appear, too, from the decision in Cory v. Reindeer S.S. Co. (1915) 31 T.L.R. 530 that once the plaintiff satisfies this requisite standard in this respect, the order will still be made even though the Defendant has a technical defence.

(ii) Once the applicant gets over the initial hurdle of showing that there is a serious question to be tried, he must succeed in showing that the balance of convenience is on his side, that is that more justice will result in granting the application than in refusing it. The onus of proving that the balance of convenience is on his side is that of the applicant: See Missini and Ors. v. Balogun (1968) 1 All N.L.R. 318.

(iii) The applicant, to succeed, even if he has shown that he has a good case and that the balance of convenience is on his side must furthermore show that damages cannot be an adequate compensation for his damage, if he succeeds at the end of the day.

(iv) Conduct of the parties has also, quite often, been a relevant factor in the consideration of whether or not to grant an application for interlocutory injunction, as with permanent injunction. For an example, a plaintiff who is also in substantial breach of contract cannot himself get an order of interlocutory injunction against a Defendant alleged to be in breach. See on this Jackson v. Hamlyin (1953) 1 W.L.R. 713.

Also delay in bringing the application will defeat it because such a delay postulates that there is no urgency in the matter and destroys the very basis for a prompt relief by way of interlocutory injunction.

It can be seen from the nature of the above issues that they are such that they cannot, and ought not, be decided without hearing both sides to the contest.

Interim injunctions, on the other hand, while often showing the trammels of orders of injunction made ex parte are not necessarily coterminous with them. Their main feature which distinguishes them from interlocutory injunctions is that they are made to preserve the status quo until a named date or until further order or until an application on notice can be heard. They are also for cases of real urgency. But, unlike ex parte orders for injunction, they can be made during the hearing of a motion on notice for interlocutory injunction when, because of the length of the hearing, it is shown that an irretrievable mischief or damage may be occasioned before the completion of hearing. Also it can be made to avoid such an irretrievable mischief or damage when due to the pressure of business of the court or through no fault of the applicant it is impossible to hear and determine the application on notice for interlocutory injunction. See Beese v. Woodhouse (1970) 1 W.L.R. 586, at p. 590. It must, however, be emphasized that what the court does in such a case is not to hear the application for interlocutory injunction ex parte, behind the back of the respondent, but to make an order which has the effect of preserving the status quo until the application for interlocutory injunction can be heard and determined. This is the way I see the dicta of Griffith, C.J. in Thomas Edison Ltd. v. Bullock (1912) 15 C.L.R. 679, at p. 681 which Chief Williams has cited in argument. The learned C.J. said:

“There is a primary precept governing the administration of justice, that no man is to be condemned unheard; and therefore, as a general rule, no order should be made to the prejudice of a party unless he has the opportunity of being heard in defence. But instances occur where justice could not be done unless the subject matter of the suit were preserved, and, if that is in danger of destruction by one party, or if irremediable or serious damage be imminent, the other may come to the court, and ask for its interposition even in the absence of his opponent, on the ground that delay would involve greater injustice than instant action.” I entirely agree with him. But there is nothing in the above dicta or in the case itself to warrant the hearing of an interlocutory application for injunction ex parte. Indeed this court sounded much the same caveat, per Ibekwe, J.S.C. (as he then was) when he stated in Woluchem v. Wokoma (1974) 1 All N.L.R. (Part 1) 605, at p. 607.”An interlocutory injunction has a binding effect until it is discharged. Failure to comply with it could lead to disastrous consequences, such as having to commit the offending party to prison for contempt. It is a well settled rule of practice in civil proceedings that the party to be affected by the order sought should normally be put on notice.” See on the above: Daniel’s Chancery Practice (7th Edn.) pp. 1363-1364, Snell’s Principles of Equity (28th Edn.) pp. 639-644 and 646; vol. 24 Hals. Laws of Eng. para. 1052. In my opinion it is in these senses that the expressions “ex parte”, “interim” and “interlocutory” should be used. It is from the above principles that I shall now consider the arguments which have been urged on us in this appeal.

Chief G.O.K. Ajayi S.A.N., while conceding it that an application for an injunction “until the final determination of the suit” is one for an interlocutory injunction, submitted that by the joint effect of section 13 of the Federal High Court Act, 1973, Order 33 (particularly rules 5, 8, and 10) of the Federal High Court Rules, 1976, and Order 20 (particularly rules 4 and 5) of the same, a party can apply for an interlocutory injunction ex parte. He went further to submit that a court can make such an order ex parte and that the rules provide that any person affected by an order made ex parte is entitled to apply for its review. He relied on the case of WEA Records Ltd. v. Visions Channel 4 Ltd. (1983) 1 W.L.R. 721.

Professor Kasunmu, S.A.N., while not disputing it that the rules provide that such an application can be made ex parte, submitted that once it is one “until the final determination of the suit,” it is one for interlocutory injunction which ought not be heard or granted ex parte. He urged the court to approve the decision of the Court of Appeal to that effect in a number of decisions, including – F.C.A./L/5/81: University of Lagos & Anor. v. Olaniyan of 8 February, 1981.Ojukwu v. Governor of Lagos & Anor. (1986) 3 N.W.L.R. (part 26) 39, at p. 44.

On his part, M. O. Adio, the Director of Civil Litigation Federal Ministry of Justice, for the 2nd Respondent, made submissions. He submitted that what the appellant applied for was an order of interlocutory injunction and that he was wrong in law, to have applied for it ex parte. What he should have applied for was an interim order. He, however submitted that the learned Chief Judge was right to have entertained it and for cutting the application to size in the way he made subsequent five orders.

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“Chief Olowofoyeku for the 3rd Respondent filed a brief in which he attacked the decision of the Court of Appeal and urged that the appeal should be allowed. Chief Williams objected to the whole brief on the ground that, as counsel for a Respondent, not having cross-appealed or filed a Respondent’s notice, he was not competent to argue as he did. We came to the conclusion that the objection was well-taken. This court has said a number of times that what is open to a Respondent in the position of the 3rd Respondent is either to cross-appeal or file a Respondent’s notice as the case may be: See Oguma Associated Companies (Nig.) Ltd. v. I.B.W.A. Ltd. (1988) 1 N.W.L.R. (Pt.73) 658, at p. 681; Eliochin (Nig.) Ltd. v. Mbadiwe (1986) 1 N.W.L.R. (part 14) 47. So, the brief was struck out. We did not hear counsel in oral argument.

Chief F.R.A. Williams, S.A.N., submitted that the Court of Appeal was right to have held that both prayers were for interlocutory injunction in so far as the application was “until the final determination of the suit.” He submitted that the learned Chief Judge ought not to have entertained the application at all. In this country, he submitted, we must read whatever section 13 of the Federal High Court Act and Orders 20 and 33 say with the provision of section 33(1) of the Constitution in view. He pointed out that 0r.33 r. 10 gives three options to a court before whom such an application comes: but those options must be exercised with the constitutional provision in view.

I wish to begin my consideration of this aspect of this appeal by pointing out that there is really no dispute that an application for injunction “until the final determination of the suit” is an application for an interlocutory, and not an interim order. The real issue is as to whether such an application can be heard and granted ex parte. I have examined above the nature of a decision in an interlocutory injunction and shown that it entails a deliberation on a number of well-settled issues upon which the right of an applicant to the grant of it depends. The question, therefore, is, in view of the provisions of section 33 of the Constitution of 1979, can and should a court proceed to deliberate on those issues and come to conclusions on them on an ex parte hearing, that is without hearing all the parties to be affected by the order To answer this question properly, it is necessary to consider the provision under section 33 of the Constitution of 1979, particularly sub-section (1).

This provides as follows:

“(1) In the determination of his civil rights and obligations, including any question or determination by or against any government or authority, a person shall be entitled to a fair hearing within a reasonable time by a court or other tribunal established by law and constituted in such manner as to secure its independence and impartiality. “Clearly whenever the need arises for the determination of the civil rights and obligations of every Nigerian, this provision guarantees to such a person a fair hearing within a reasonable time. Fair hearing has been interpreted by the courts to be synonymous with fair trial and as implying that every reasonable and fair minded observer who watches the proceedings should be able to come to the conclusion that the court or other tribunal has been fair to all the parties concerned. See on this Mohammed v. Kano N. A. (1968) 1 All N.L.R. 424, at p. 426.

There are certain basic criteria and attributes of fair hearing, some of which are relevant in this case. These include:

(i) That the court shall hear both sides not only in the case but also in all material issues in the case before reaching a decision which may be prejudicial to any party in the case. See Sheldon v. Bromfield Justices (1964) 2 Q.B. 573, at p. 578.

(ii) That the court or tribunal shall give equal treatment, opportunity, and consideration to all concerned. See on this: Adigun v. Attorney General, Oyo State and Ors. (1987) 1 N. W. L. R. (Pt.53) 678.

( iii)that the proceedings shall be held in public and all concerned shall have access to and be informed of such a place of public hearing and

(iv)That the proceedings shall be held in public and all concerned shall have access to and be informed of such a place of public hearing and that having regard to all the circumstances, in every material decision in the case, justice must not only be done but must manifestly and undoubtedly be seen to have been done: R. v. Sussex Justices, ex parte McCarthy (1924) 1 K.B. 256, at p.259; Deduwa and Ors. v. Okorodudu (1976) 10 SC. 329.

Thus, fair hearing in the con of section 33(1) of the Constitution of 1979 encompasses the plenitude of natural justice in the narrow technical sense of the twin pillars of justice – audi alteram partem and nemo judex in causa sua as well as in the broad sense of what is not only right and fair to all concerned but also seems to be so. In the con of interlocutory injunctions in which, as I have shown above, a number of decisions on set principles most of which are highly contentious, need be made, can it be doubted that to decide them after hearing only one side clearly offends each and everyone of the above criteria and attributes of fair hearing I do not want to concern myself with the unnecessary exercise of examining whether or not such applications can, on the letters of the rules, be brought ex parte. But I am of the clear view that, once it is conceded that what is involved is an order for interlocutory injunction and not a mere interim order to keep matters in status quo pending the hearing of the application for interlocutory injunction on notice to both sides or until a near named date, then the procedure runs counter to the letters and spirit of section 33 of the Constitution of 1979 and ought not be entertained. For while it can be said that an interim order of injunction merely leaves matters in status quo and that the court does not have to decide any contentious issue before so doing, I do not see how the same could be said when the order by its very nature depends on the resolution of such issues as whether the applicant has established his possibility of success, that the balance of convenience is on his side as against the Respondent, that the award of damages cannot sufficiently compensate his damage, and that his conduct all through entitles him to the discretion of the court. It must always be borne in mind when we consider English decisions on the point that in Nigeria, the right of fair hearing is a right entrenched in the Constitution whereas in England it is a creation of the common law which is regulated by the Rules. The effect of entrenching a provision in the Constitution is that it overrides all contrary provisions in any law of the land, be they substantive or adjectival. As it is so, Chief Williams and Professor Kasunmu were right when they submitted that Orders 20 and 33 of the Federal High Court rules must be interpreted and applied in such a way as not to run counter to the letters and spirit of section 33 of the Constitution. In so far as this was the attitude of the Court of Appeal in their decisions which have been referred to in argument and which they applied in this case, that Court has been right in the matter. I therefore wish to emphasize that although Order XXXIII rule 10 of the Federal High Court Rules, which is by the way general to all interlocutory applications and not limited to applications for injunctions, provides for three alternative orders by the Court, namely:

(i) Refusing to make the order;

(ii) Granting the order to show cause why the order should not be made; or

(iii) Allowing the order to be made on notice,

There is nothing in the rule to empower the court to grant the application ex parte. An order to show cause implies a postponement of the hearing and bringing the opposite party to court for him to be heard before the order is made. Although rule 7 says that a motion may be brought ex parte or on notice, motions for interlocutory injunctions ought not to be expressed to be ex parte.

Before I consider the nature of the order made by the learned Chief Judge I would like to express an opinion on the submission of Mr. Adio that the 1st Respondent, as the appellant in the Court of Appeal, should have applied to the learned Chief Judge to set aside the order rather than appealing against it. When it is noted that Mr. Adio is counsel to the 2nd Respondent in this appeal, as well as in the court below, one wonders what procedure he has adopted. As a Respondent’s counsel, unless he cross-appealed or filed a Respondent’s notice, his traditional role ought to be to defend the judgment appealed against. If he wanted to depart from this role, he was obliged to cross-appeal or file a Respondent’s notice.Maybe, the other counsel for the Respondent did not object to that part of his brief because, in the end, he came to the conclusion that the appeal should be dismissed. Be that as it may, I must state it clearly that without taking these necessary steps, a Respondent’s counsel has not got the power to freely criticize the judgment of the court he is supposed to defend.

However, considering the point for what it is worth, I would allow myself to be guided by the Constitution. Now under sections 219,220, and 221 of the Constitution of 1979, a party is empowered to appeal, as of right or by leave to the Court of Appeal, as the case may be, against decisions of a High Court, Federal or State.

The word “decision” is defined in Section 277 of the same Constitution as meaning:

“in relation to a court any determination of that court and includes judgment, decree, order, conviction, sentence or recommendation of the court. It is, therefore, wide enough to include the type of order appealed against in this case. It follows, therefore, that by the very letter of the Constitution which is not only the supreme law of the land but also, in appropriate metaphor, the touchstone and yard-stick of measurement of the validity of all other laws, it is intended that such decisions should be appeal able. As it is so, all rules of court which run counter to or are inconsistent with this enabling provision of the Constitution are, ipso facto, null and void to the extent of the inconsistency. Much as there could be occasions when a person affected may wish to invoke the provisions of Order XXXIII rule II of the Federal High Court (Civil Procedure) Rules and apply to discharge or vary an ex parte interim order obtained against him, such an application should never arise in the case of an order of interlocutory injunction, for the simple reason that it ought never be made ex parte, in this country at least. This is because, as I have shown, an order of interlocutory injunction is predicated on the determination of a number of contentious issues which would require that the court hears both sides before deciding. Moreover, in my judgment to give a person the right to apply to set aside an order after it has been made can never be an equal right with hearing him before the order is made. For, in the former case, the onus is on him to satisfy the court that the order, already made, ought to be discharged or varied. And he has the onerous burden of displacing the presumption that a judgment or order of court is correct. In the latter case, he has at least as much an opportunity as his adversary of showing why the order should not be made. He can also bring before the court materials which could support his stand. If, after the court has considered all the materials brought, and argument advanced, by both sides the odds are evenly weighted or in favour of the Respondent, the order will not be made: for the onus at that stage is on the applicant to satisfy the court. These are the reasons why it is recognized by high authority that, ex post facto hearing is inferior to hearing before decision. See De. Smith: Judicial Review of Administrative Action (4th Edn.) p. 193. As this is so, the right to apply to vary or discharge an order of interlocutory injunction made ex parte lacks one of the attributes of fair hearing which I have enunciated above, to wit: equality of opportunity to both sides to the contest. It, therefore, falls short of the expectations of section 33(1) of the 1979 Constitution. This is why in this country an application to set aside an order made ex parte should arise only in the case of interim orders which should not cause serious detriment to the person affected and where there is a case of real urgency and it is impracticable to afford an antecedent hearing.

A good deal of argument was advanced by counsel on different sides as to the nature of the procedure adopted by the learned Chief Judge in determining the application before him. Chief Ajayi, while conceding as I have stated, that there was only one application ex parte and that by the nature of the application, it was an interlocutory order, submitted that all that the learned Chief Judge did was to make an interim order on it on the 22nd of April, 1987 and then adjourn it to the 27th for hearing when the Respondents were to be heard. Mr. Adio supported him somehow by stating that the learned Chief Judge rightly made as much order as was necessary on the 22nd of April and adjourned the hearing. Professor Kasunmu and Chief Williams, on the other hand, pointed out that there was only one motion, and that was the motion ex parte; that the first two orders made were in the nature of absolute orders which granted to the appellant all that he prayed for in the application; and that the other orders were ancillary. Chief Williams also submitted that even if it is assumed that the 4th order which adjourned the application (after it had been decided) to the 27th of April converted it into an interim order – a point he would not concede – the order for hearing on the 27th April when the meeting was fixed on the 25th was a spent order, which offends against section 33 of the Constitution.

My first regret in this aspect of the arguments is that procedure in, and order of, court on a matter with set procedure should be allowed to drift into quibbling uncertainty by reason of a mere whimsical deviation from settled practice. For it is settled that a person who seeks an interim order ex parte while also applying for an interlocutory injunction files two motions, simultaneously, one ex parte asking for the interim order, and the other on notice applying for an interlocutory injunction. The court before whom the applications come takes the ex parte motion and, if satisfied that it has merit ex facie, grants it making the order to the date when the motion on notice shall be heard. Parties and their counsel ought not to be encouraged to file and argue a sole application ex parte when asking for orders which can only be properly made on notice.

See also  Total International Limited V. Prince A. O. Awogboro (1994) LLJR-SC

In the instant case, there is force in the arguments of Chief Williams and Professor Kasunmu that the first two orders made were in the nature of absolute orders, granting to the appellant his main prayers in the ex parte application set out above without the other side being given a hearing. In point of fact, he also decided some of the issues raised in the letter of directive of the Central Bank being contested in the writ and the statement of claim. Having granted them, there was nothing left to be heard on the 27th of April. It is immaterial that an order was made about service of papers on them. The Respondents, without being heard in opposition, had been restrained from preventing the holding of the general meeting of the 3rd Respondents scheduled to take place on the 25th of April. I do not see how it could ever be doubted that they were entitled to be heard on this point before the order was made. I did not, in my opinion consider the type of analysis which Chief Ajayi went into in this case relevant. He tried to show that the main question was the appointment of directors. Nor need I consider whether or not the order as made was more benficial to the appellant or the Respondents. In my judgment the over-riding question is whether in the orders relating to restraining the holding of the general meeting as well as touching on the appointment of directors, the Respondents were, in the court of trial, entitled to be heard before the application was heard and the order made. Once I come to the conclusion that they should as I feel bound to do, it is no longer necessary to go into an analysis of the order made to find out whether or not it is beneficial to the applicant or whether it should have been granted if a hearing was had. For the rule of fair hearing is not a technical doctrine. It is one of substance. The question is not whether injustice had been done because of lack of hearing. It is whether a party entitled to be heard before deciding had in fact been given the opportunity of a hearing. Once an appellate court comes to the conclusion that the party was entitled to be heard before a decision was reached but was not given the opportunity of a hearing, the order or judgment thus entered is bound to be set aside. This is because such an order is against the rule of fair hearing, one of the twin pillars of natural justice which is expressed by the maxim: audi alteram partem. It is note-worthy that Chief Ajayi conceded in his brief that “the effect of the two interim orders made by Anyaegbunam, C.J. was not only to prevent the 1st and 2nd Defendants from preventing the holding of the Annual General Meeting but also to place a restriction on the plaintiff from proceeding to appoint new Directors. . . .”The Court of Appeal was therefore right to hold that the order for service of unspecified papers on the respondents which the learned Chief Judge made after making the orders ex parte was tantamount to shutting the stable after the animal had bolted away. In such matters the court proceeds on general principles. Blackburn, J., expressed this general principle over one century ago in these words in the case of R. v. Rand (1866) L.R. 1 Q.B. 834, at p. 836:

“It is not only of some importance, but is of fundamental importance that justice should not only be done, but should manifestly and undoubtedly be seen to be done.” See also Lord Hewart, C.J., in R. v. Sussex J.J., ex parte McCarthy (1924) 1 K.B. 256, at p. 259. Having heard the application ex parte and made the far reaching orders which I have set out above, I do not see what hearing was left to be done on the 27th of April. The decision in WEA Records Ltd. v. Visions Channel 4 Ltd. (1983) 1 W.L.R. 721 relied upon by Chief Ajayi is inapplicable in so far as it decided that orders for interlocutory injunctions can be made ex parte and served on the Respondent with his liberty to apply to set it aside.

The learned Senior Advocate for the appellant further attacked the opinion of the Court of Appeal that even if they were orders which the learned C.J. could have made on the ex parte application, there was no case of real urgency established and so the application should have been dismissed on that ground. He pointed out that there was an affidavit of urgency filed and that the only necessary value of such an affidavit was to help the learned Chief Judge to decide whether or not to take the application on grounds or urgency: once the court, upon a view of the affidavit of urgency, decided to take the application, the affidavit of urgency was spent. So, as this was a matter within his discretion, once he so decided his decision cannot be set aside on appeal. He conceded it, however, that decided cases show that ex parte injunctions are made on cases of real urgency, but went ahead to submit that what the learned Judge did was not to decide the application but to direct that the other side be put on notice.

With respect, I believe that the learned Senior Advocate for the appellant has missed the point. To start with, as I have stated, the C.J. decided the application. Also the basis of granting any ex parte order of injunction, particularly in view of section 33(1) of the Constitution of 1979, is the existence of special circumstances, invariably, all-pervading real urgency, which requires that the order must be made, otherwise an irretrievable harm or injury would be occasioned to the prejudice of the applicant. Put in another way, if the matter is not shown to be urgent, there is no reason why ex parte order should be made at all: the existence of real urgency, and not self-imposed urgency, is a sine qua non for a proper ex parte order of injunction. On the contents of the affidavit of urgency set out above, I agree with the learned Justices of the Court of Appeal that no case of real urgency or any other exceptional circumstances was made out. What was shown was self-imposed urgency caused by the applicant’s culpable delay in bringing the application. This was not enough.

The learned Senior Advocate for the appellant has also further argued that the Court of Appeal was wrong to have held that even if the ex parte order of injunction made by the learned Chief Judge was to set aside on other grounds, it would have been set aside for the failure of the appellant to give an undertaking as to damages. He submitted that where an appellate court comes to the conclusion that such an undertaking was necessary but had not been given, it is no proper ground to set aside the order. The proper order to make was one directing the applicant to give the undertaking. In support, he cited the following cases:

Smith v. Day (1882) 22 Ch. D. at p. 424

Graham v. Campbell (1877-1878) 7 Ch. D. 490, p. 494

Att.-General v. Albany Hotel Coy. (1896) 2 Ch. 696, pp. 699-700

Adamson v.Wilson (1864) 10 L.T. 24 and

Chappel v. Davidson 44 E.R. 289.

He therefore submitted that the “immutable position” which the Court of Appeal took in this case as it did in Appeal No. F.C.A./L5/81: University of Lagos v. Olaniyan of the 8th of February, 1981, wherein it held that failure of the appellant to give or to offer an undertaking as to damages was a sufficient ground for discharging the order was in error. The learned Senior Advocates for the Respondents strongly supported the opinion of the Court of Appeal on the matter.

In my respectful opinion, neither the statement of the general law nor the ratio of the cases cited by Chief Ajayi appears to support his contention on the point. The learned authors of Vol. 24 Hals. Law of Eng. (4th Edn.) para. 1072 at pages 596-597 have stated thus with respect to interlocutory injunctions:

“An undertaking as to damages is the price which the person asking for an interlocutory injunction has to pay for it, and it ought to be required in every interlocutory order, except in High Court and county court matrimonial and children’s matters concerning personal conduct and except, possibly, in a clear case of fraud. By the undertaking the party obtaining the order undertakes to abide by any order as to damages which the court may make in case it should afterwards be of opinion that the Defendant has, by reason of the order sustained any damages which such party ought to pay”

This was exactly what the Court of Appeal decided in Olaniyan’s Case. Indeed the ratio of some of the cases cited by the learned Senior Advocate for the appellant lends support to the conclusion that the above is a correct statement of the law.” In the case of Graham v. Campbell (supra) James L.J. stated at page 496:

The undertaking as to damages which ought to be given on every interlocutory injunction is one on which (unless under special circumstances) effect ought to be given.”

While Chief Ajayi does not seriously dispute that an undertaking ought to have been given, he submitted that there are exceptions; that failure to give it ought not result in the discharge of the order of interlocutory injunction and that in England where a Judge fails to make an order for an undertaking, it could be inserted by the Registrar.

The known exceptions are not relevant in this case. I do not think that any Registrar of any court in Nigeria has power to insert such an order for an undertaking where a Judge who made the order for an injunction failed to order it. It is my view that a necessary corollary to the fact that an undertaking as to damages is the price that an applicant has to pay for the order of interlocutory injunction is that failure to give the undertaking leaves the order, with a quid pro quo, and, so should be a ground for discharging the order. This ought to be more so in respect of ex parte orders in which the order is being made without the other side being head. Indeed the need for it to be so is stronger in Nigeria where no Registrar has got the power to insert the order for the undertaking to be given while drawing up the order. Above all, this Court ought to take notice of the numerous cases of abuse of ex-parte injunctions that have come up in recent times. The operation of a bank has been halted on an ex-parte order of injunction granted to a person who had been removed as a director of the bank. Installation ceremonies of chiefs have been halted in the same way even though the dispute had been dragging on for years. The convocation ceremony of a university has been halted on an ex parte application by two students who failed their examinations. As the courts cannot prevent such applicants from exercising their constitutional rights by stopping such applications, they can, and ought, at least see that justice is done to the victims of such ex-parte applications and orders by ensuring that the applicant fully undertakes to pay any damages that may be occasioned by any such order which may turn out to be frivolous or improper in the end. It is, therefore, my view that, save in recognized exceptions, no order for an interlocutory or interim injunction should be made, ex parte or on notice, save upon the condition that the applicant gives a satisfactory undertaking as to damages. Chief Ajayi has again suggested that where such an undertaking as to damages was necessary but not considered or given, an appellate court should order that it be given. I do not agree. This is for the simple reason that invariably the damage, if at all, is done within a few days. It will serve no useful purpose to make an order on appeal which will have the effect of, as it were, closing the stable after the animal has bolted away. In my judgment, therefore where a court of first instance fails to extract an undertaking as to damages where it should, an appellate court ought normally to discharge the order of injunction on appeal.

Chief Williams has raised the point that the whole action as filed by the appellant was based on injuries to the company and not those personal to him. He therefore raised the issue of competency of the action in view of the rule in Foss v. Harbottle (1843) 67 E.R. 189. Relying on the case of Heyting v. Dupont (1963) 3 ALL E.R. 97 he submitted that only the company could sue. Chief Ajayi, on the other hand, submitted that the appellant was personally injured by the acts complained of and so could bring the action. During the course of argument, it was revealed to us that a substantive appeal was pending on that issue in the Court of Appeal. As it is so, I would not wish to pre-empt that appeal by expressing an opinion on the issue at the moment.

While considering what consequential order to make, my attention was drawn to the order made by the Court of Appeal, Awogu, J.C.A.; in his lead judgment stated:

“The orders of Anyaegbunam made in F.H.C./L35/87 on April, 22, 1987, are hereby set aside and declared null and void. The suit is remitted to the Federal High Court for continuation before another Judge.”

Chief Williams in a Notice of Appeal dated 15th June, 1988, has attacked this order. In his sole ground of appeal, he contends that the Court of Appeal in omitting to strike out the plaintiff’s Motion ex parte in view of its decision that the motion was incompetent and ought not to have been granted.

In my view, Chief Williams is right. The decision of the Court of Appeal which has been confirmed by this judgment is that the learned C.J. granted the motion for interlocutory injunction ex parte but that he ought not to have done so. On the fact of that decision there is no basis for declaring the order null and void. But it is one that ought to have been set aside. As the only application before the learned Chief Judge was one for an interlocutory injunction which as I have held, he had wrongly granted ex parte, there is nothing left to be remitted to another Judge of the Federal High Court for determination. Having held that it was in error, the Court of Appeal should have just said so and, if need be, made an order striking out the application.

For all the reasons I have given above, the appeal fails and is hereby dismissed. The cross-appeal succeeds and is allowed. I hereby strike out the ex parte application.

The appellant shall pay the costs of this appeal which I assess as follows:

N500.00 in favour of the 1st Respondent;

N500.00 in favour of the 4th to 8th Respondents.

I have no order as to costs to the 2nd and 3rd Respondents.


SC.118/1988

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