Nishizawa Limited V Strichand N. Jethwani (1984)
LawGlobal-Hub Lead Judgment Report
The Nigerian General Motors Ltd. of 56 Marina, Lagos was indebted to the plaintiffs, a limited liability company based in Japan whose registered address is No.83 Chome, Bingo-Machi, Higashi-Ku, Osaka, Japan, to the tune of 1,149,198,633 Japanese Yen (One billion, one hundred and forty nine million, one hundred and ninety-eight thousix hundred and thirty three Japanese Yen) and US Dollars 586,412.39 (Five hundred and eighty six thousand four hundred and twelve dollars and thirty-nine cents) the total equivalent value in Naira being N3, 172,533.30 (three million, one hundred and seventy two thoufive hundred and thirty three Naira, thirty kobo). This was on 21st day of November, 1979 when the defendant executed a deed of guarantee under seal (exhibit KM/ 1) to pay the debt to the plaintiff if the Nigerian General Motors Limited defaults in payment of any instalment due. The Nigerian General Motors Limited was to pay the debt in instalments as set out in the schedule incorporated in the deed.
By 16th June, 1981 when the specially endorsed writ was taken out against the defendant, the amount owing was N3,123,466.20 (three million, one hundred and twenty three thousand, four hundred and sixty six Naira, twenty kobo), the value of Japanese Yen 1,005,013,845 and US Dollar 586,413.39. The defendant entered appearance to the writ on the 13th day of July, 1981. After the defendant had entered appearance to the writ, the plaintiff by notice of motion applied under Order 10 rules 1 and 2 and Order 40 rule 1, High Court of Lagos Civil Procedure Rules for an order empowering the plaintiff/appellant to enter judgment against the defendant/respondent as upon the writ of summons and statement of claim. The motion was supported by affidavit verifying the facts pleaded in the statement of claim containing 17 paragraphs. This was on the 23rd day of July 1981.
The defendant did not file any counter-affidavit until the 2nd day of September, 1981. The facts deposed to in the affidavit in support of the motion read:
“I Keigo Muruyama, Company Director, Japanese citizen, of 51 Awolowo Road, Ikoyi, Lagos do hereby make oath and say as follows:
(1) That I am the Managing Director of Nishizawa (Nigeria) Limited a sister company to the plaintiff company in this suit, and by virtue of my position I am familiar with the fact of this case.
(2) That I have the authority of the plaintiff company to depose this affidavit.
(3) That by an agreement in writing and under seal, dated the 21st day of November, 1979, the defendant Strichand N. Jethwani, then of 53 Adeola Odeku Street, Victoria Island, and now of Plot 876, Ozumba Mbadiwe Street, Victoria Island guaranteed payment to the plaintiff company of certain sums of money owed to the plaintiff company by Nigeria General Motors Limited, a company of which the defendant is a director.
(4) That shown to me and marked Exhibit KM/1 is a photostat copy of the said agreement on 21st November, 1979.
(5) That the terms of the said guarantee agreement were, inter alia, that the defendant, in consideration of an agreement between the plaintiff and the said Nigeria General Motors Limited would guarantee the payment by Nigeria General Motors Limited of certain sums due to the plaintiff under that company’s agreement with the plaintiff.
(6) The said guarantee agreement further provided that should the said Nigeria General Motors Limited default in payment to the plaintiff, the entire sum owed to the plaintiff by Nigeria General Motors Limited would be paid by the defendant.
(7) The Nigeria General Motors Limited were under a separate agreement with the plaintiff to make monthly payment to the plaintiff commencing in November, 1979.
(8) That no payments have been made by Nigeria General Motors Limited since February, 1980, because the cheques given to the plaintiff by Nigeria General Motors Limited were returned unpaid.
(9) That shown to me and marked Exhibit KM/2-KM/13 are photostat copies of twelve cheques drawn by Nigeria General Motors Limited on Standard Bank Nigeria Limited 208/212 Yakubu Gowon Street (now Broad Street) Lagos, which were returned to the plaintiff unpaid, and totalling N1,224,347.20.
(10) That the total indebtedness of Nigeria General Motors Limited to the plaintiff was 1,149,198,633 Japanese Yen (One billion, one hundred and forty nine million, one hundred and ninety eight thousand six hundred and thirty three) and US. Dollars 586,412.39 (Five hundred and eighty six thousand, four hundred and twelve dollars thirty nine cents).
(11) That the Naira equivalent of the said sum as agreed between the plaintiff and the Nigeria General Motors Limited is N3,172,533.30.
(12) That the present indebtedness of Nigeria General Motors Limited is Japanese Yen 1,005,013,845 (one billion, five million, thirteen thousand, eight hundred and forty five) and US $586,412.39 (five hundred and eighty six thousand, four hundred and twelve dollars, thirty nine cents).
(13) That the Naira equivalent of the current indebtedness is N3,123,466.20 calculated as follows:
Japanese Yen 1,005,013,845 converted
(a) Yen 359-N1.00 = 2,799,481.46
US. Dollars 586,412.37 converted
(a) $1.81-N1.00 = N3,123,466.20.74
(14) That shown to me and marked Exhibit KM/14 is a photostat copy of the confirmation letter relating to the debt owed by Nigeria General Motors Limited.
(15) That shown to me and marked Exhibit KM/15, KM/16 and KM/ 17 are the payment schedules referred to above and also referred to in Exhibit KM/14 (the confirmation letter referred to above).
(16) That I am informed by the plaintiffs legal advisers, Chief Rotimi Williams’ Chambers, and I verily believe them that the defendant having voluntarily entered into the guarantee agreement under seal, has no defence to this claim.
(17) That I make this affidavit in good faith and in support of the plaintiffs’ application for judgment herein.”
The defendant did not challenge the facts deposed to by affidavit, i.e. counter-affidavit. Instead, one Samuel Ikherevbore a clerk and process server in the chambers of Mr. J. A. Cole, Solicitor and counsel to the respondent, deposed to a counter-affidavit on the 2nd day of September, 1981 as follows:
“1. I am a clerk and process server in the chambers of Mr. J. A. Cole, defendant’s counsel and the facts deposed to in this affidavit are within my knowledge.
- Appearance was entered on behalf of the defendant to the plaintiffs writ on the 16th day of July, 1981.
- Mr. J. A. Cole aforesaid informed me and I verily believe him that the defendant has defence to plaintiffs claim and does intend to file a defence accordingly;
- The High Court of Lagos State went on long vacation on the 20th July, 1981 ending on 31st August, 1981.
- Mr. J. A. Cole defendant’s solicitor travelled out of Nigeria on the 19th July, 1981 and returned on 11th August, 1981.
- On the 23rd July, 1981 the plaintiff filed a motion for judgment in default of defence and a copy thereof was received from the court on the 13th August, 1981.
- There were public holidays on the 30th and 31st July, 1981 respectively. ”
Instead of the defendant showing cause against the application by his affidavit, the defendant’s solicitor filed a statement of defence dated 1st September, 1981. The statement of defence does not seem to meet directly the facts deposed in the affidavit in support of the motion. Neither has the counter-affidavit of Samuel Ikherevbore met the facts deposed to in the affidavit in support of the motion.
Order 10 rule 1 (a) reads:
“(a) Where the defendant appears to a writ of summons specially endorsed with or accompanied by a statement of claim under Order 3 rule 4, the plaintiff may on affidavit made by himself or by any other person who can swear positively to the facts, verifying the cause of action and the amount claimed (if any liquidated sum is claimed) and stating that in his belief there is no defence to the action except as to the amount of damages claimed, if any, apply to a judge in chambers for liberty to enter judgment for such remedy or relief as upon the statement of claim the plaintiff may be entitled to. The judge thereupon, unless the defendant shall satisfy him that he has a good defence to the action on the merits or shall disclose such facts as may be deemed sufficient to entitle him to defend the action generally, may make an order empowering the plaintiff to enter such judgment as may be just, having regard to the nature of the remedy or relief claimed.”
The Rules went on to provide how the defendant may show cause in rule 3 of Order 10 and this rule reads:
“(a) The defendant may show cause against such application by affidavit or the judge may allow the defendant to be examined upon oath.
(b) The affidavit shall state whether the defence alleged goes to the whole or to part only, and, (if so), to what part of plaintiff’s claim.
(c) The judge may, if he thinks fit, order the defendant or in the case of a corporation, any officer thereof, to attend and be examined upon oath or to produce any leases, deeds, books or documents or copies of or extracts therefrom”.
As rules 4 and 5 of the Order 10 are relevant to the consideration of the defence, it is desirable to set out their provisions.
Order 10 rule 4 reads:
“If it appears that the defence set up by the defendant applies only to a part of the plaintiff’s claim, or that any part of the claim is admitted, the plaintiff shall have judgment forthwith for such part of his claim as the defence does not apply to or is admitted, subject to such terms, if any, as to suspending execution, or the payment of the amount levied or any part thereof into court, the taxation of costs, or otherwise, as the judge may think fit. And the defendant may be allowed to defend as to the residue of the plaintiff’s claim”.
Order 10 rule 5 reads:
“If it appears to the judge that any defendant has a good defence to or ought to be permitted to defend the action and that any other defendant has not such a defence, and ought not to be permitted to defend, the former may be permitted to defend, and the plaintiff shall be entitled to final judgment against the latter and may issue execution upon such judgment without prejudice to his right to proceed with the action against the former”.
The rules therefore clearly indicate that in claims instituted by writs specially endorsed with or accompanied by statement of claim
(1) The defendant is not permitted to defend except by leave of the judge;
(2) Leave will only be granted upon the defendant satisfying the judge that he has a good defence to the action on the merits or upon the defendant disclosing such facts as may be deemed sufficient to entitle him to defend generally;
(3) Such facts are required to be given on oath either by affidavit or by examination on oath;
(4) An issue of law constituting a good defence need not be given by affidavit.
It appears the point was raised before the judge that motion for sumjudgment was filed on the 23rd July, 1981 and served on the 24th July, 1981 both dates falling within the annual long vacation which commenced on the 20th July 1981 and ended on the 31st day of August, 1981. Times for filing and serving pleadings do not run during the annual vacation. The learned High Court judge, Bada, J. sitting at Lagos heard the motion for the order empowering the plaintiff to enter judgment against the defendant as upon the writ of summons and the statement of claim, refused the application and granted leave to defend. In his ruling, the learned trial judge said:
“The irregularities which appear in respect of this application were the filing and service during the vacation and as these irregularities could be waived, they are voidable and remain valid until avoided. Therefore, since the defendant knew of the irregularities and took no steps to avoid the application to show that he had more days within which to deliver his defence, he was obliged to comply with the procedure laid down under rule 3 of Order 10 of the High Court Rules. See Macfoy’s case (supra). The plea that the defendant was not obliged to deliver his defence at the time the plaintiff brought his application would therefore not avail the defendant. Indeed, a plaintiff is not precluded from bringing an application of this nature even after the defence had been filed. See Mclardy v. Slateum (1890) OBD 504. Rule 3 of Order 10 of the High Court Rules prescribes the steps to be taken by defendant under this type of application. The defendant herein did not comply with this procedure, rather he filed a defence simpliciter. In a situation such as this, I have held the view that the purpose of the said rule 3 should be looked into, which is to ascertain whether or not a defendant has a valid defence or if on the face of the defence filed, the defendant disclosed averments which show a defence on the merits, leave to defend should be granted.
I have gone through the statement of defence filed and I am of the view that the averments contained in the said statement of defence raise triable issues for which leave to defend ought to be granted. The defence therefore having been filed within the time limited for filing a defence and the plaintiff not having challenged or disclosed facts to dislodge the pedestal on which the defence stands, this application fails and it is hereby dismissed.”
The plaintiff was dissatisfied and took the matter to the Court of Appeal with leave of the Court of Appeal. Four grounds of appeal were filed with the notice of appeal. The main complaint of the appellant was that having held that the purpose of rule 3 of Order 10 is to ascertain whether or not the defendant has a valid defence failure to follow the procedure laid down in the rule deprived the judge of the materials necessary for the decision that the defendant has a valid defence.
The requirement of the rule, I may observe, is the presentation of materials on oath showing a good defence. A valid defence is not necessarily a good defence. A good defence is always a valid defence.
The grounds of appeal that epitomised appellant’s complaint are grounds 3 and 4 and they read as follows:
“3. The learned trial judge erred in law in failing to enter judgment for the plaintiff when
(a) this is not a case where on the face of it the claim of the plaintiff is unsustainable, and
(b) he has found that the defendant has not complied with Order 10 rule 3.
- In the absence of any evidence whatsoever in favour of the defendant, there is absolutely no basis for dismissing the summons.”
The appeal came up for hearing before Ademola, Nnaemeka-Agu and Kutigi, J.C.A. constituting the Court of Appeal. The matter was extensiveargued before that court. But in a considered judgment, the Court of Appeal unanimously dismissed it. Ademola, J.C.A. in the concluding part of his lead judgment said:
“I have gone into this matter at length to show that under Order 10 all that is required of a defendant showing cause is to satisfy the judge by whatever means be it affidavit, statement of defence, which shows a real defence, that leave to defend ought to be granted. In this appeal, one of the complaints is that the statement of defence filed is of no value and should not have been looked at since an application for judgment has been filed. It is said that the case of McLardy v. Slateum (supra) supports this. I am not sure this submission is sound. However irregular the filing of a statement of defence might be and in this con it is, for it is a way of showing cause under Order 10 rule 3 the learned judge was right to look at and act on it as he did in giving leave to defend as the defence filed showed a defence on merits. See The Central Bank of Nigeria Ltd. & Anor. v. The National Bank of Nigeria Ltd. (supra). That some points in the statement of defence show triable issue cannot be seriously contested hence the submission at the later stage of this appeal that respondent be given leave to defend the amount mentioned in paragraph 12 of his statement of defence under Order 10 rule 4 while the appellant signs judgment for a sum minus that amount. From the statement of defence filed, I do not think respondent is raising any issue of counter-claim or set-off as learned senior counsel has submitted. The respondent is denying liability on all grounds of facts and law. Therefore I do not think I can act under Order 10 rule 4 to give respondent leave to defend part of the claim.
The net result is that this appeal is dismissed.” With this conclusion and the reasons given by Ademola, J.CA., Nnaemeka J.C.A. and Kutigi, J.C.A. concurred.
The appellant was still dissatisfied and lodged this his appeal to this court and filed only two grounds of appeal. They read:
“The learned judge erred in law in holding that an application brought pursuant to Order 10 rule 1 of the High Court of Lagos (Civil ProceRules may be resisted by the filing of a statement of defence after the application has been filed and served on the defendant,
(a) Order 18 rule 6 of the Civil Procedure Rules of the Lagos High Court, prohibits the filing of a statement of defence by a defendant who has been served with an application for judgment brought under Order 10 rule 1 of the Civil Procedure Rules.
(b) Order 10 rule 3 of the Civil Procedure Rules of the Lagos High Court stipulates the only papers that may be filed by a defendant in order to resist an application for judgment brought under Order 10 rule 1 of the Civil Procedure Rules.
The learned judges erred in law in treating a statement of defence irregularly filed in answer to an action commenced by a writ of sumspecially endorsed under Order 3 rule 4 of the Civil Procedure Rules as being substantially similar to a statement of defence irregularly filed in answer to a writ of summons issued in accordance with Order 2 rules 3 and 6.
PARTICULARS OF ERROR
(a) where a defendant appears to a writ of summons specially endorsed with or accompanied by a statement of claim, and the plaintiff thereafter brings an application for summary judgment, the defenis only entitled to defend the action if he satisfies the judge in the manner set out in Order 10 rule 3 of the Civil Procedure Rules.
(b) the filing of a statement of defence simplicities in answer to an application for summary judgment is an act calculated to prejudge the determination of the application in the defendants’ favour and consequently is improper and ought not to be allowed.”
The appellant filed and served his brief of argument pursuant to Order 9 rule 3 (1) Supreme Court Rules 1977. The respondent also filed and served a brief in reply pursuant to Order 9 rule 3 (2) Supreme Court Rules 1977. The appellant finally filed and served a reply brief pursuant to Order 9 rule 3 (3). In addition, the Court heard oral arguments from both counsel for each side pursuant to Order 9 rule 6 (1) of the Supreme Court Rules 1977.
The question for determination in this appeal is as stated in the brief of the appellant, i.e.
“Whether the courts below were right in holding that the defendant has duly established that he has a good defence to the action on the merits or that he has disclosed such facts as may be deemed sufficient to entitle him to defend the action generally.”
The respondent’s view of the question for determination is however at variance with the view expressed by the appellant. As stated in the respondent’s brief, it is
“whether or not a defendant who failed to file an affidavit ‘showing cause’ but has instead filed a defence disclosing ‘triable issues’ should be debarred from defending a suit in which an application for summary judgment under Order 10 has been lodged by the plaintiff.”
The respondent’s view of the question severely narrowed the ambit of the question for determination and I agree with the submission of the learned counsel for the appellant that the respondent’s view of the question does not fully reflect the matters in controversy. Chief F. R. A. Williams, S.A.N., learned counsel for the appellant conceded that a defendant need not file any affidavit in cases where, e.g.
(a) the affidavit in support of the application for judgment was not sworn by a person qualified to do so in terms of the rules of court, or
(b) the affidavit aforesaid is insufficient to verify the cause of action as required by the rules; or
(c) the statement of claim on which the plaintiff relies discloses no reasonable cause of action, or
(d) the defendant regularly filed his statement of defence before the application for judgment and that statement of defence discloses triable issues of fact or law.
Counsel went on to submit that as no finding was made against the plaintiff in regard to the 1st limb of Order 10 rule 1, it means that it was not disputed but conceded in this case that:
(a) there was a writ of summons specially endorsed with or accompaby a statement of claim under Order 3 rule 4 of the High Court of Lagos Civil Procedure Rules;
(b) the defendant has entered appearance to the writ;
(c) the plaintiff has applied to a judge for liberty to enter judgment for amount claimed on the writ;
(d) there was filed in support of that application an affidavit by a deponent who swore positively to the facts verifying the cause of action and the amount claimed.
Learned counsel further submitted that with regard to the second limb of Order 10 rule 1, the only situation or circumstance in which the judge is to withhold making an order as aforementioned is “unless the defendant shall satisfy him that he has good defence to the action on the merits or shall disclose such facts as may be deemed sufficient to entitle him to defend the action generally.” The related question for determination set out in the appellant’s brief is whether it is permissible for the defendant to file the statement of defence dated 1/9/81 for the purpose of resisting the plaintiff’s application for judgment under the provisions of Order 10 of the High Court Rules. “Learned counsel contended that the counter-affidavit filed by the respondid not fulfil the requirement of Order 10 rule 3 (a) as it did not purport to show cause why the respondent should be given leave to defend. Counsel contended that under the special procedure prescribed in the provisions of Order 10 the defendant is not required to file his defence until the expiration of the time prescribed by Order 18 rule 6. It was conceded by counsel that at the time the statement of defence dated 1/9/81 was filed, the time limit for the defendant to do so had not expired. Counsel then submitted that the respondent was not required to file a statement of defence after service on the respondent of the applicafor judgment under Order 10 rule 1. Learned counsel then referred to the provisions of Order 18 rule 6 which provides that “Where a defendant has entered an appearance, he shall file his defence within fourteen days from the time limited for appearance or from the service of the statement of claim, whichever shall be later, unless such time is extended by consent in writing, or by the court or a judge in chambers or in actions in which the writ of summons has been specially endorsed with or accompanied by a statement of claim under Order 3 rule 4 the plaintiff in the meantime serves a summons for judgment under Order 10”.
He compared the rule with the English equivalent, Order 21 rule 6 of the English Rules between 1955 and 1962. Counsel then cited Order 18 rule 7 as pointing to the fact that the defendant is not to file a statement of defence after being served with the summons for judgment. Order 18 rule 7 of the High Court of Lagos (Civil Procedure) Rules reads:”Where leave has been given to a defendant to defend under Order 10 he shall file his defence if any within such time as shall be limited by the order giving him leave to defend or if no time is thereby limited, then within eight days after the order.”It is clearly the intention of the Rules that after service of the summons for judgment, it is not obligatory on the defendant to file a statement of defence until leave has been granted to the defendant by the judge or court and he shall file and serve his statement of defence within the time limited by the order granting leave to defend. I think learned counsel for the appellant is right in his submission and I agree with him that time does not run between the time of taking out, and the conclusion of the hearing, of an application for judgment under Order 10. When an application for judgment is taken out under Order 10 the defendant ought not to file and serve a statement of defence. See Hobson v. Monks & Anor. 1884 W.N.8. Although I will not go so far as learned appellant’s counsel to say that it is not permissible to file a statement of defence, I will and I do hold that Order 10 does not authorise the filing of a statement of defence in order to show cause against the application for judgment. The question that arises when a statement of defence is filed as in the instant appeal before the consideration of the application for judgment under Order 10 is whether it fulfils the requirement of the rule that the defendant may “show cause”.The Court of Appeal (per Ademola, J.C.A.) in its judgment answered this question by saying: “In the 1950 Annual Practice Book, the following statement occurs at p. 188 ‘show cause’. By delivering defence-‘the fact that he has delivered a defence may be sufficient to enable a defendant to get leave to defend’. Mclardy v. Slateum 24 QBD 504 is cited as authority for the proposition. “With the guidelines given by Order 10 rule 3 (a), (b) and (c) in mind, a statement of defence simpliciter is not a manner of showing cause against a statement of claim verified by affidavit. The only problem is whether the judge or court can shut his or its eyes against the statement of defence. The clear answer is that faced with the difficult task of deciding that the defendant has no defence to the action, he cannot shut his eyes against it. This must not be taken as elevating a statement of defence to the requirement of the rule. If a defendant wants to elevate the facts pleaded to that requirement, he must depose them on oath in an affidavit. If the plaintiff in his statement of claim alleges that the defendant owes him a sum of money and the defendant denies it in his statement of defence, then if in the application for summary judgment the plaintiff deposed to an affidaverifying the facts and proceeded to exhibit the agreement for the loan and the receipt given by the defendant as evidence of the loan, it is idle to think that a bare statement of defence denying the loan will amount to a good defence under Order 10. A statement of defence may plead statutory defence or other defences grounded in law but whether these will amount to a good defence on the merit will depend on the circumstances of the case. If the issue of law raised is substantial, surely the judge or court will hesitate to give leave to the plaintiff to sign judgment without giving defendant leave to defend. If the statement of defence is frivolous, and worthless, its presence will not stay the hand of the judge or court in entering judgment for the plaintiff for his claim.
Learned counsel for the appellant submitted and quite rightly, in my view, that Mclardy v. Slateum (supra) is no authority for the statement that “the fact that he has delivered a defence may be sufficient to enable a defendant to get leave to defend” but only an authority for the proposition that “the plaintiffs application for judgment may be made even after the delivery of a statement of a defence”.I do not see how a defendant who refuses to comply with Order 10 rule 3 and in disobedience to Order 18 rule 6 filed a statement of defence can expect the judge or court to give it the sanctimonious treatment and regard due to an affidavit on oath filed under Order 10 rule 3 (a) or an examination of the defendant on oath under Order 10 rule 3 (b). It can only get peripheral treatment. This is because “or otherwise” which appears in the English rule, Order 14 rule 4 (1), is absent from our rule, Order 10 rule 3. Order 14 rule 4 (1) of the English Rules (i.e. Rules of the Supreme Court 1965) reads:
“a defendant may show cause against an application under rule 1 by affidavit or otherwise to the satisfaction of the court.”
“Or otherwise” is absent from our Rules on this point. The Supreme Court Practice 1976 in Notes 14/3-4/3 in part at p. 137 of Vol. 1 reads:
“The defendant may show cause by ‘affidavit or otherwise’. It is anticipated that in practice masters will generally require an affidavit from the defendant before they will feel ‘satisfied’ that the defendant is entitled to defend save in exceptional or obvious cases, e.g. in a small claim-a letter from the defendant acting in person living a long way from the court raising a genuine issue may be sufficient. The use of the term ‘or otherwise’ is not intended to open wide the door for giving leave to a defendant who has no real defence; the primary obligation remains on the defendant to satisfy the court that there is a triable issue or question or that there ought to be a trial for some other reason.
Thus the fact that he has served a defence may be sufficient to enable a defendant to get leave to defend, but not if it is a sham defence served at or soon after appearance. See Mclardy v. Slateum (1890) 24 QBD 504 where the plaintiff successfully applied for judgment under Order 14 one month after the defence was served.”
Under Note 14/3-4/4, the learned authors said of DEFENDANTS AFFIDAVIT:
“The defendant’s affidavit must ‘condescend upon particulars’ and should, as far as possible deal specifically with the plaintiffs claim and affidavit, and state clearly and concisely what the defence is and what facts are relied on as supporting it. It should also state whether the defence goes to the whole or part of the claim and in the latter case it should specify the part. A mere general denial that the defendant is indebted will not suffice (Wellingford v. Mutual Society (1880) 5 App Cas per Blackburn at p. 704; Re General Rail Whiteby’s case (1900) 1 Ch per Lindley M.R., at p. 369. Anon (1875) 249 per Quain J. at p. 250) unless the grounds on which the defendant relies as showing that he is not indebted are stated . . .
If the defence relied on is fraud the affidavit should state the particulars of the fraud (Wellingford v. Mutual Society (1880) 5 App Cas 685). A mere vague general allegation of fraud is useless (ibid). Similarly if a legal objection is raised the facts and the point of law arising thereon must be clearly stated.
Indeed, in all cases, sufficient facts and particulars must be given to show there is a bona fide defence (Wellingford v. Mutual Society 5 App Cas 685. See judgment of Lord Blackburn at p. 704; Harrison v. Botten26 WR 362; Ray v. Barker 4 Ex D 283; Shurmur v. Young (1889) 5 TLR 155)”. The failure of the defendant therefore to file an affidavit disclosing a good defence places the defendant in an intolerably weak position to satisfy the judge or court that he has a good defence.
Where the defendant files no affidavit the plaintiff cannot file any affidavit in reply to meet the defendant’s attempt to show cause. But as the case cannot be tried on affidavit if the defendant’s affidavit shows a good defence it will be useless for the plaintiff to file an affidavit in reply. The disclosure of a good defence in the defendant’s affidavit entitles him to an order giving him leave to defend.
It should be realised that the phrase by affidavit “or otherwise” which occurs in the English Rules has been interpreted by English judges to mean:
“Some kind of evidence beyond the mere statement of counsel which is not sufficient” See Anglo-Italian Bank v. Wells 38 LTR 197 at p. 199 per Jesselt MR.
Learned counsel for the appellant contended that the statement of defence having been filed in contravention or disobedience to Order 18 rule 6 is a nullity as the defect is a failure to comply with statutory requirements so serious as to render the proceedings in which they occur a nullity and any order made therein a nullity. Learned counsel then drew the court’s attention to the dictum of Robert Gofft J. in Carmel Exporters v. See-Land Inc. (1981) 1 WLR. 1068 at p. 1077 where he said:
“I do not doubt that there are defects in procedure so fundamental that the court will invariably exercise its power to set aside the relevant proceedings or step in the proceedings.”
He also referred to the case of Berustein v. Jackson (1982) 1 WLR. 1082 where Dunn, L.J, dealing with failure to renew a writ of summons within the time specified in the rules held that the defect was so fundamental that it was not a proper case for the exercise of the discretion of the court under Order 2 rule 1.
In conclusion, learned counsel for the appellant contended, and I agree with him, that it would be clearly contrary to the provisions of section 90 of the Evidence Act to treat a statement of defence, i.e. the facts pleaded, as evidence. Principal among the reasons for so holding is the fact that direct oral evidence of facts to contradict or deny the facts sworn to in the affidavit in support of the plaintiff’s claim would be admissible in the proceedings under Order 10 rules 1 (a), 3 (a) and 3 (c). There is also the reason that the statement of defence is a statement made by learned counsel for the defendant in a document and it is not established that the maker of the document had personal knowledge of the matters dealt with in the said statement of defence.
Counsel for the respondent’s main contention is that the statement of defence is not void and since it raises triable issues the defendant should not be barred from defending the suit but given leave to defend.
As said earlier above, the filing of a statement of defence is not an appropriate way of showing cause under Order 10 rule 3 (a). The absence of an affidavit has deprived the judge or court below of the material to act on in his deliberation on whether or not to give leave to defend.
What are the materials contained in the statement of defence to answer the claim for a liquidated damage I ask this question because the learned judge, Bada, J. in his ruling said:
“The defence therefore having been filed within the time limited for filing a defence and the plaintiff not having challenged or disclosed facts to dislodge the pedestal on which the defence stands this applicafails and it is hereby dismissed.”
It should again be repeated that the statement of defence was filed after the service on the defendant of the motion for summary judgment which raised the issue whether to allow the defendant to file his statement of defence, i.e. to defend. Not being a counter-affidavit, it was erroneous to impliedly suggest that the plaintiff should have filed an affidavit in reply. The contents of the statement of defence read:
“1. Save as hereinafter specifically admitted the defendant denies each and every allegation contained in the statement of claim as though the same were herein set out and traversed seriatim.
- The defendant admits paragraphs 1 and 2 of the statement of claim.
- The defendant admits paragraph 3 of the statement of claim but pleads that his liability on the guarantee is subject to the breach of conditions set out in the alternative in the said guarantee.
- The defendant will plead that Nigeria General Motors Limited (hereinafter called “The principal debtor”) was not in breach of its obligations to the plaintiff and that the plaintiffs right of action against the defendant has not accrued when this suit was commenced.
- In reply to paragraph 4 of the statement of claim the defendant denies that the principal debtor has been in default of its obligato the plaintiff.
- Further to paragraph 4 above and in answer to paragraph 6 of the statement of claim the defendant pleads that he is not obliged to pay any sum of money to the plaintiff pursuant to the guarantee as per plaintiffs suit.
- The defendant denies paragraph 5 of the statement of claim.
- Further to paragraph 7 above the defendant pleads that up to 30th November 1980 the plaintiff had accepted cheques and other consideration from the principal debtor totalling the equivalent of Yen 654,844,942.80.
- The defendant pleads that neither the principal debtor nor the defendant had notice of dishonour of any of the cheques issued by the principal debtor to the plaintiff.
- The plaintiff by a letter dated 21st November 1979 admitted to the Nigerian General Motor Limited liability in the sum of Yen 200,321,746.00.
- The principal debtor by a letter dated 2nd January 1980 informed the plaintiff inter alia that plaintiffs liability to it is Yen 354,211,900.00 and not Yen 200,321,746.00 and that the said sum of Yen 354,211,900.00 be appropriated by the plaintiff in part liquidation of the liability of the principal debtor.
- By reason of paragraphs 10 and 11 above the plaintiff has been authorised and entitled to set off and ought to have set off against the debt of the principal debtor the said sum of Yen 354,211,900.00 and treat the same as having been paid.
- The defendant will contend the plaintiffs claim is premature and misconceived.
- The defendant will contend that there has been no default in payment on the part of the principal debtor as would entitle the plaintiff to claim against the defendant on the guarantee.”
This statement of defence can only be a reply to the statement of claim and not to the affidavit made by Keigo Muruyama the Managing Director of Nishizawa (Nigeria) Limited a sister company to the plaintiff swearing positively to the facts verifying the cause of action and the amount claimed and stating that in his belief there is no defence to the action. The statement of claim contained only 6 paragraphs whereas the affidavit contained 17. This statement of claim to which the statement of defence was a reply reads:
“1. The plaintiff is a limited liability company based in Japan and whose registered address is 8, 3 Chome, Bengo-Machi, Higashiku Osaka, Japan.
- The defendant is a director of Nigeria General Motors Limited whose address is 65, Marina, P.O. Box 3694, Lagos.
- By an agreement under seal made on the 21st November, 1979, the defendant personally guaranteed to the plaintiff the due payof certain sums due to the plaintiff from Nigeria General Motors Limited of 65 Marina, Lagos.
- Pursuant to the terms of agreement, the defendant agreed inter alia that on default by Nigeria General Motors Limited of payment to the plaintiff the balance owed by Nigeria General Motors Limited to the plaintiffs remaining unpaid would be paid forthwith to the plaintiffs by the defendant.
- Nigeria General Motors Limited has defaulted in its payments to the plaintiffs and has refused or failed despite repeated demands to pay the balance of Japanese Yen 1,005,013,845 and us. Dollars 586,412.39 owed to the plaintiffs.
- The plaintiffs have claimed payment from the defendant pursuant to the terms of the said agreement but the defendant has refused and failed to make such payments to the plaintiffs claim:
- The sum of N3, 262,397.79 being the Naira equivalent of the sum outstanding as at 30th April, 1981 calculated at the rates of Japanese Yen 359 to N1.00 and us Dollars 1.75 to N1.00.
- Such further or other relief as may be just.”
Accompanying the affidavit filed in support of the motion as exhibits are Photostat copies of
(1) The agreement of guarantee exhibit KM/1.
(2) Twelve cheques drawn by Nigeria General Motors Limited on Standard Bank of Nigeria Ltd. 208/212 Yakubu Gowon Street (now Broad Street) Lagos which were returned unpaid and totalN1,224,347.20.
(3) Confirmation letter dated 21/11/79 relating to the debt owed to plaintiff by Nigeria General Motors Limited Exhibit KM114.
(4) Payment schedules referred to in exhibit KM/1 (the deed of guarexhibits KM/15, KM/16 and KM/17.
By the deed of guarantee under seal, exhibit KM/1 clauses 1 and 2, the defendant, Strichand N. Jetwani, now respondent undertook to pay the debts of the Nigeria General Motors Limited. Clause 2 in particular reads:
“2. Further, if default is made by Nigeria General Motors Limited
(a) For a continuous two instalments plus 10 days grace (total being 70 days) at anyone time, in the payments due as per the payment schedule attached lists marked (i), (ii) and (iii) or
(b) Minimum payment of Japanese Yen 418,000,000 (Japanese Yen four hundred and eighteen million) for 1st period of 13 months ending on 30th November, 1980; or
(c) Minimum payment of equivalent to Japanese Yen 494,000,000 (Japanese Yen four hundred and ninety four milwhich represents both Japanese Yen and US. Dollar indebtedness for 2nd period of 13 months ending on 31st December, 1981; or
(d) Balance payments during grace period ending on 30th June, 1982 together with interest only after 1st January, 1982 if any The whole of the said sum of Japanese Yen 1,149,198,633 (JapaYen One billion, one hundred and forty nine million, one hundred and ninety eight thousand, six hundred and thirty three) and US. Dollar 586,412.39 (US. dollar five hundred and eighty six thousand, four hundred and twelve and thirty nine cents) or bathereof at that time remaining unpaid shall forthwith be paid by you.”
Clauses 1, 2 and 3 of the letter of confirmation of the debt owed the plaintiff by the Nigeria General Motors Limited signed by the defendant on behalf of the Nigeria General Motors as its Managing Director on 21st November, 1979, exhibit KM/14, reads:
NISHIZAWA LIMITED V. JETHWANI
- Nigeria General Motors Limited will pay the outstanding bills together with bills interest in accordance with payment schedule as per attached list marked (1).
- The payment shall be made on monthly basis and to be finished by the last business day of each month. Nigeria General Motors Limited will give to Nishizawa (Nigeria) Limited International Merchant Bank (Nigeria) Limited’s confirmation letter of local payment and shall instruct them to advise Nishizawa Limited of Osaka, Japan through relative Japanese Bank as well as Nishizawa (Nigeria) Limited Lagos. By receiving such evidence, Nishizawa Limited of Osaka, Japan will confirm the local payment.
- For the security of A-I above, Nigeria General Motors Limited shall issue post-dated cheques for each instalment amount drawn on the First Bank of Nigeria Limited 208/212 Broad Street, Lagos to Nishizawa (Nigeria) Limited in equivalent of Nigeria Naira made payable to Nishizawa (Nigeria) Limited. The said cheques shall be issued immediately after signing of this confirmation letter. Such cheques will be returned to Nigeria General Motors Limited by Nishizawa (Nigeria) Limited immediately after the confirmation of local payment has been received by Nishizawa Limited of Osaka, Japan.”
It appears to me that the learned judge, Bada, J. did not avert his mind to these material facts contained in the documents exhibited along with the affidavit otherwise he would have without hesitation held that the stateof defence is a sham defence and offers no material on which to grant leave to defend. Exhibits KM/2 to KM/13 which are 12 post dated cheques signed by the defendant on behalf of Nigeria General Motors Limited and returned unpaid were not answered by the statement of defence.
Learned counsel for the respondent raised the point of notice of dishonand submitted that the appellant did not give him and the principal debtor notice of dishonour.
Exhibit KM/2 was due for payment on 28/1/80; it was not paid but referred to drawer. Exhibit KM/3 was due for payment on 28/2/80. It was not paid but was endorsed “Drawer’s confirmation required”. Exhibit KM/4 was due for payment on 29/2/80. It was not paid but was endorsed “Drawer’s confirmation required”. Exhibit KM/5 was due for payment on 27/3/80. It was not paid but endorsed ‘Refer to drawer’. Exhibit KM/6 was due for payment on 28/4/80. It was not paid but endorsed ‘Refer to drawer’. The remaining 7 cheques due for payment on 27/5/80, 29/7/80, 27/8/80t 29/9/80t 27/10/80t 29/11/80 and 30/12/80 respectively were each unpaid and endorsed with ‘Refer to drawer’.
In the circumstances surrounding the non-payment of the cheques it is not necessary to give notice of dishonour to the defendant who is both the drawer of the cheques acting for the Nigeria General Motors Limited and the guarantor for payment.
There is the presumption that arises from the endorsement ‘Refer to drawer’ which is that the drawer has no effects to pay. The endorsement ‘Drawer’s confirmation required’ clearly implies that payment has been countermanded. The law may be stated as follows:
“The drawer of a cheque is equally with the drawer of a bill entitled to notice of dishonour unless such notice is excused or waived but notice will not be necessary where the dishonour is due as is usually the case to absence of effects in the banker’s hands or when payment has been countermanded. Normally the dishonoured cheque after receipt by the collecting banker is returned to the customer except in the case where the collecting banker is himself relying on it or notice of dishonour is not excused or waived”. See Byles on Bills of Exchange 24th Edition 247.
I am not persuaded by the decision of the High Court in the case of Central Bank of Nigeria & Anor. v. National Bank of Nigeria Limited 1975 1 CCHJ 137 that a statement of defence simpliciter filed after service of a motion for summary judgment in an action commenced by a writ of summon specially endorsed with or accompanied by a statement of claim is permissible under Order 10 rule 1 and Order 10 rule 3 having regard to the purport of the application. What is required is an affidavit showing the proposed defence to enable the judge decides whether the respondent should be given leave to defend. Order 10 rule 3 of the High Court of Lagos State Rules is unambiguous and does not create room for the adoption hook line and sinker of the interpretation given to Order 14 rules (1) and 4 (1) of the English Rules of the Supreme Court 1965 whose provisions as they stand today are not wholly in pari materia with the Lagos High Court Rules Order 10 rules (1) and 3 (a). The statement of defence can be allowed in through the door of “or otherwise” appearing in Order 14 rule 4 (1) Rules of the Supreme Court 1965 of the English Rules. There is no such door created by Order 10 rule 3 (a) of the Lagos High Court Rules.
It is conceded quite rightly by learned counsel for the appellant that no barrier exists to prevent a defendant from filing a statement of defence before the service of plaintiff’s application for summary judgment as was done in Mclardy v. Slateum 24 QBD 504. The cases of Daimler Co. Ltd. v. Continental Tyre & Rubber Co. (Great Britain) Ltd. (1916) 2 AC. and Sheppards v. Wilkinson 6 TLR. 13 cited by the respondents show clearly that the defendants filed their affidavit to show cause.
The case of Jacobs v. Booths Distillery Co. 85 LT 282 while containing the dictum that “Order 14 was not intended to shut out a defendant who could show that there was a triable issue applicable to the claim as a whole from laying his defence before the court . . .” does not show that the need for the defendant to file an affidavit in answer to plaintiffs affidavit verifying the cause of action, the claim and the facts could be side tracked.
I agree with counsel for the appellant that the case of Mclardy v. Slateum far from being an authority against the appellant’s stand enables a plaintiff to apply for summary judgment in spite of the existence of a statement of defence in the file. If a statement of defence filed by the defendant in the exercise of his right under the Rules before the applicafor summary judgment in the circumstances of the case did not stop the judge from granting the prayer for summary judgment, a statement of defence filed after the filing of the application will likewise have no effect on the legitimate course of the application for summary judgment.
More so as the statement of defence filed by the respondent which is demonstrably incapable of amounting to a good defence on the merit to entitle the defendant to an order granting leave to defend.
This Court is in as good a position as the High Court in this application and having considered the statement of defence in the interest of justice, I find that it does not amount to a good defence on the merits.
The Court of Appeal and the High Court erred in holding that the statement of defence in the light of the admissions contained in it and the facts disclosed in the affidavit filed by the plaintiff raises a triable issue.
In practice, the Court will simply approach an appeal of this kind as a rehearing [European Asian Bank v. Punjab & Sind Bank (No, 2) (1983) 1 WLR. 642.] See section 22 of the Supreme Court Act, 1960. The appeal succeeds and it is hereby allowed.
The decisions of the Court of Appeal and the High Court are hereby set aside. In place of the order of the High Court, there will be the following:
(1) The application for leave to sign judgment for the amount claimed is hereby granted;
(2) There will be judgment for the plaintiff for the sum of N3,172,533.30 (three million, one hundred and seventy two thousand, five hundred and thirty three Naira thirty kobo) claimed and costs assessed as follows:
(a) In this Court N300.00
(b) In the Court of Appeal N300.00
(c) In the High Court N5,00.00
Other Citation: (1984) LCN/2207(SC)