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Home » Nigerian Cases » Supreme Court » Nidb & Anor V. Kan Biscuits Co. Ltd (2022) LLJR-SC

Nidb & Anor V. Kan Biscuits Co. Ltd (2022) LLJR-SC

Nidb & Anor V. Kan Biscuits Co. Ltd (2022)

LAWGLOBAL HUB Lead Judgment Report

UWANI MUSA ABBA AJI, J.S.C.

The Respondent by a loan and mortgage agreement dated 26/8/1992 took a term loan of US$921,080.00, US$25,094.00 and from the 1st Appellant to acquire additional plant, equipment and machinery for its biscuit factory project (Kan Biscuit Factory) situate at Aba in Abia State. In default, the 2nd Appellant was appointed as Receiver. The Respondent, who was the Plaintiff, at the Federal High Court sued the Appellants as Defendants in February, 1999, challenging the appointment of the 2nd Appellant by the 1st Appellant as Receiver in respect of the assets of the Respondent, an order directing the Appellants to reconcile its account with the Respondent and an order of injunction restraining the Appellants from taking over or disposing the Respondent’s assets. Before the proper hearing, the Respondent vide a motion for interlocutory injunction sought to restrain the Appellants from selling KAN Biscuit Factory. The application was however refused by the trial Court on 27/10/1999. This prompted the Respondent to appeal to the lower Court on 8/11/1999. Nevertheless, while the substantive matter was pending before the trial Court and the interlocutory appeal before the lower Court, the Appellants went ahead and sold the factory of the Respondent to DE-ENDY INDUSTRIAL COMPANY LIMITED. Consequently, the Respondent vide a motion on notice before the Federal High Court where the substantive matter was pending, sought to set aside the sale being made pendente lite. The trial Court delivered its ruling on 30/4/2002 setting aside the sale.

Dissatisfied, the Appellants appealed to the lower Court, which dismissed the appeal and upheld the decision of the trial Court. Further aggrieved, the Appellants have appealed to this Honourable Court seeking for determination:

Whether having regard to the entire circumstances of the claims constituted in the substantive suit, all being declaratory claims and reliefs and the decision of the Courts on the interlocutory application to set aside the sale of items of personal properties-chattels (plant, equipment and machinery) other than landed property (real property) at interlocutory stage of the proceedings, the trial Court and Appeal Court were not wrong in applying the common law doctrine of lis pendens to the instant case and thereby inadvertently disposing of the substantive claims and reliefs still pending and abandoned before the trial, which led the Courts to give perverse judgments.

The Respondent’s learned Counsel however distilled these issues for determination by this Court:

  1. Whether an Appellant can raise an issue on a fact not found.
  2. Whether the sale of the Respondent’s factory, the subject matter of the suit and the appeal made during the pendency of the suit and the interlocutory appeal was rightly set aside on the basis of the doctrine of lis-pendens and self-help.
  3. Whether with or without the application of the doctrine of lis pendens, it is legally permissible for any litigant in a pending suit to destroy the subject matter of the suit or to do anything to frustrate or make nullity of any possible Court order.
See also  Mrs. Alero Jadesimi V. Mrs. Victoria Okotie-eboh & Ors (1996) LLJR-SC

I shall adopt the Appellants’ issue for determination in this appeal.

The learned Counsel to the Appellants submitted that the principle of lis pendens applied by both the trial and lower Courts is at variance with the facts in relation to the sale of items of chattel and machinery not touching landed property, which is the subject matter of the deed of loan and mortgage agreement between the Respondent and the 1st Appellant dated 26/8/1992. His submission is that lis pendens applies to real property and not personal or declaratory reliefs as in the present appeal. He heavily relied on BARCLAYS BANK OF NIGERIA LTD V. ALHAJI ADAM BADEJOKO ASHIRU & 2 ORS (1978) 6-7 SC AT 87, MATTHEW ENEKWE V. INTERNATIONAL MERCHANT BANK OF NIGERIA LTD & 2 ORS (2006) 11- 12 SC AT 13. He therefore prayed this Court to allow the appeal and set aside the decision of the lower Court.

The Respondent’s learned Counsel submitted on the other hand that the issue that the Respondent’s case is declaratory never came up before both the trial and lower Courts to be considered for the first time before the Apex Court. Thus, a fresh issue raised without leave is liable to be struck out. He quoted DWAYE V. IYONAHAM (1983) 8 SC 76. Furthermore, he submitted that it was the assets of the Respondent that was sold, which comprised all assets with the land inclusive. He concluded that the doctrine of lis pendens does not allow litigant parties and give to them pending the litigation, rights in the property in dispute so as to prejudice the opposite party. He therefore begged this Court to dismiss the appeal.

The motion on notice filed by the Respondent was “to set aside the sale of Kan Biscuit factory at Umuola Aba, property/Asset…” as contained at page 101 of the record. Nevertheless, the Appellants’ learned Counsel has brilliantly and persuasively pressed the argument that what the Respondent sought for was declaratory in nature and therefore not covering the doctrine of lis pendens. Further, that the interlocutory application to set aside the sale was “of items of personal properties-chattels (plant, equipment and machinery) other than landed property (real property)” contained at pages 262-268. See paragraph 4.2 of the Appellants’ brief. I see this argument dimly.

It is without disputation that this Court earlier made the application of the doctrine of lis pendens to apply only to suits in which the object is to recover or assert title to a specific property; the property however, must be real property, for the doctrine has no application to personal property. See BARCLAYS BANK OF NIGERIA LTD. V. ALHAJI ASHIRU (1978) 6-7 SC. 99 AT PAGE 128 and MATTHEW OKECHUKWU ENEKWE v. INTERNATIONAL MERCHANT BANK OF NIGERIA LIMITED. & ORS (2006) LPELR-1140(SC)(Pp. 21 paras. E) respectively.

The present appeal sprang from the concurrent judgments of the trial and lower Courts tilting in favour of the Respondent and upholding the doctrine of lis pendens. In the pricking conscience of the lower Court concerning the unfortunate attitude and shenanigan of the Appellants in selling Kan Biscuit Factory to De-Endy Industrial Company Limited during the pendency of the suit, it painfully observed that “…it is unfortunate that a Counsel in the temple of justice, fully aware that he represents a party in litigation pending before the same temple of justice (Court) and is yet to be determined, would say that the transaction between the parties in litigation was commercial in which his clients – the appellants had right to sell the factory to recover its outlay…lt is a misconception to say that a party, properly before a competent Court of law like the Federal High Court… has right to dispose of the res completely without due regard to that Court… that act amounted to self-help.

See also  Attorney-general Of The Federation V. A.I.C. Limited & Ors (1995) LLJR-SC

It must be observed herein that the rationale and wisdom behind the doctrine of lis pendens is to forestall self-help which may render nugatory the judgment or decision of any Court of competent jurisdiction. This was re-stated by Per Fabiyi, JSC in BFI GROUP CORPORATION V. BUREAU OF PUBLIC ENTERPRISES (2012) LPELR-9339(SC) (PP. 35 PARAS. B), that “it is being touted that the respondent has taken steps to foist a fait accompli on the Court. The respondent must be made to appreciate the purport of the doctrine of lis pendens which is aimed at preserving the subject matter of litigation. Any extraneous body including Russal which buys the subject of litigation does so at its own risks.”

I will not want to make another law or re-establish another doctrine contrary to that laid down earlier that the doctrine of lis pendens applies to real property. However, in extenso, where the res or subject matter, during the pendency of a suit is to be tampered with, or where the decision of the Court is to be rendered useless, or there are steps to foist a fait accompli on the Court, or where a party may resort to self-help, the doctrine of lis pendens can apply in order to do substantial justice than adhere to technical justice as in the instant appeal.

Similarly, this Court, applied the doctrine of lis pendens outside the ‘res’ other than real property. Per George Adesola Oguntade, JSC, in MR. PETER OBI V. INDEPENDENT NATIONAL ELECTORAL COMMISSION & ORS (2007) LPELR-2166(SC) (P. 104, PARAS. D-E), opined that “under the doctrine of lis pendens, parties to proceedings pending in Court ought not to do anything which may have the effect of rendering nugatory the judgment of the Court.” Furthermore, it was held that “The doctrine of lis pendens finds expression in the assertion that it prevents any transfer of any right or the taking of any steps capable of foisting a state of helplessness and/or hopelessness on the parties or the Court during the pendency in Court of an action and even after. By that doctrine, the law does not allow to litigant parties or give to them during the currency of the litigation involving the rights in it so as to prejudice any of the litigating parties. The doctrine negates and disallows any transfer of rights or interest in any subject-matter that is being litigated upon during the pendency of litigation in respect of the said subject-matter.” See Per ADEREMI, JSC, in RT. HON. ROTIMI CHIBUIKE AMAECHI V. INDEPENDENT NATIONAL ELECTORAL COMMISSION & ORS (2008) LPELR-446(SC) (PP. 268 PARAS. D).

See also  Albert Martin Lewis And Anor V Abigail Majekodunmi (1966) LLJR-SC

In any case, the Appellants’ cunning and subtle argument that it must involve real property and not personal is a distinction without a difference in this appeal. What then is the difference between real and personal property of/in KAN Biscuit Factory that was sold to De-Endy Industrial Company Limited by the Appellants during the pendency of the present suit? Without equivocation, KAN Biscuit Factory consists of the land and machinery sold during the pendency of the present suit. Whatsoever be the case, I am of the stern opinion that the sale was caught up by the doctrine of lis pendens. In essence, the sale must be set aside as void and transferring no title or property whatsoever.

The appeal is unmeritorious and is hereby dismissed. I strongly guess that this appeal has tenaciously scaled to this Honourable Court by the Appellants to lag or frustrate the speedy prosecution and dispensation of the Respondent’s case. I am impelled to award costs of N1,000,000 against the Appellants.


SC.228/2008

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