Pan Afican Int. Incorporation & 2 Ors V Shoreline Lifeboats Ltd & Anor (2010)
LAWGLOBAL HUB Lead Judgment Report
F.F. TABAI, J.S.C.
This is an appeal against the judgment of the Lagos Judicial Division of the Court of Appeal delivered on the 19th of June 2003. The Appellant who were the 2nd, 3rd and 4th Defendants were also the 2nd, 3rd and 4th Appellants respectively at the Court below. The Plaintiff, SHORELINE LIFEBOATS NIGERIA LTD, was the sole Respondent at the Court below and the 1st Respondent herein. And the 2nd Respondent herein INTERNATIONAL OFFSHORE CONSTRUCTION LTD was the first Defendant.
The action itself was commenced at the Federal High Court, Lagos about the 9th of February, 1999 when the writ of summons was issued. Pleadings were filed, exchanged and amended. In paragraph 15 of the Amended Statement of Claim the Plaintiff/1st Respondent claimed from the Defendants jointly and severally.
(i) The sum of US$404,000.00 (four hundred and four thousand United States Dollars or the equivalent in Nigeria Naira being total amount due to the Plaintiffs from the Defendants’ use of the Plaintiff’s Liftboats known as “Shoreline VII” and four which use the Defendants have refused, failed and neglected to pay despite several demands from the Plaintiffs.
(ii) The sum of N1,000,000.00 being solicitors fees already incurred by the Plaintiffs as a result of the failure of the Defendants to pay for the use of the Plaintiff’s Liftboat known as “Shoreline VII” as aforesaid.
(iii) Interest at the rate of 21% per annum on the above total sum from 19th May 1997 date of judgment and thereafter at the rate of 8% per annum until the entire judgment debt and costs are liquidated.
On the 2nd of March 2000 the only witness in the case, Commodore Salaudeen Akanni (Rtd) testified and concluded his testimony. It is instructive to note that from the 9th of February 1999 when the Writ of Summons was issued to the 2nd of March 2000 when the sole witness commenced and concluded his testimony INTERNATIONAL OFFSHORE CONSTRUCTION LTD., remained the only defendant.
By a motions dated 21st of March 2000 but filed on the 24th of March 2000 the Plaintiff/1st Respondent sought the joinder of the 2nd, 3rd and 4th Defendant/Appellants and amendment of the statement of claim. This motion was heard and granted on the 6th of June 2000. On the 9th of November 2000 Chief B. A. Ayorinde addressed the Court and the matter was adjourned for judgment.
In a motion dated the 13th of December 2000 the 1st Defendant/Appellant sought:
- An order arresting of fore-bearing the reading, rendering given or pronouncement of the ruling or judgment order to decree in respect of this matter in that the Defendant was not or has not been served with any processes in this matter.
- An order directing the Plaintiff/Respondent or their counsel; if represented by counsel to serve all processes in this suit on counsel to the Defendant/Applicant forthwith.
On the 14th of December this motion was argued. The application was however refused. In refusing the application the trial court relying on BOB-MANUEL V. BRIGGS (1995) 7 NWLR (Part 409) 537 at 592 held that the procedure for the arrest of a judgment was alien to our Civil Procedure Rules. In the concluding part of the ruling the trial court said:-
“It is trite that the jurisdiction of a Court can only be exercised in accordance with the Rules and Procedure. On the above premise I hold that the present application seeking to arrest the judgment of this Court fixed for today in the above mentioned suit is incompetent and is accordingly struck out.”
The Court then proceeded to read the judgment wherein all the reliefs as claimed were granted.
Dissatisfied with the said judgment, the Defendant went on appeal to the Court below. By the unanimous judgment on the 19th of June 2003 the appeal was dismissed and the judgment of the trial court affirmed.
The Defendants are still aggrieved by the judgment of the lower court and have come on appeal to this Court. The parties, through their counsel settled, filed and exchanged their briefs of argument. The Appellant’s Brief of Argument was prepared by A.M. Makinde and it was filed on the 8th of January, 2009. The brief of the Respondent was prepared by S. E. Elema of the firm of B. Ayorinde & Co and same was filed on the 26th of March, 2009.
In the Appellants’ Brief Mr. M. A. Makinde formulated the following four issues for determination:
- Whether the court below was right to have upheld the award of interest at 21% per annum against the Appellants when it was not a term in the contract.
- Whether the court below was right to have sustained the award of the sum of N1,000,000.00 (one million naira) solicitor’s fees against the Appellants when same was not a term of the contract.
- Whether corporate veil could be lifted in the absence of any allegation or evidence of fraud to expose the Appellants particularly 1st and 2nd Appellants who were artificial person on ground of being sister companies to the 1st Defendant/Respondent and the 3rd Defendant/Appellant for being a director in the three companies.
- Whether there was overwhelming evidence before the trial court as reasoned by the court below in its judgment in the light of the record that the only evidence available was that given by the PW1 against the Defendant/Respondent on the 2nd of March 2000 before the joinder of the Appellants on the 11th April 2000 and amendment of the 6th June 2000 for which no further evidence was given to establish any liability against the Appellants.
In the Respondents’ Brief Mr. Elema did not appear to have proposed issues for determination. He appears to have adopted the issues as proposed by the Appellants. I would therefore adopt the four issues proposed by the Appellants.
On the 1st issue learned Appellants’ counsel referred to the testimony of the plaintiff’s witness and submitted that there was no evidence relating to interest. He argued that although matters relating to interest were pleaded, pleadings can never amount to evidence. It submitted therefore that the failure to adduced evidence of interest was fatal to any claim for interest.
With respect to the 2nd issue it is the submission for the Appellants that the payment of solicitor’s fees was not a term of the contract of the 30th October, 1994. It was counsel’s submission that there was no unchallenged evidence capable of being acted upon. Learned counsel distinguished this case from REWANE v. OKOTIE EBOH (1960) N.S.C.C. Vol. 1 Page 135 which, he submitted, does not apply in this case.
On the 3rd issue for determination learned counsel submitted that companies have distinct legal personalities from their directors and relied on SOLOMON v. SOLOMON (1897) AC 22. It was submitted that corporate veil can be lifted to do justice as stated by the Court below. It was further submitted that CNLFORD MOTOR & CO. v. HORNE (1933) Ch. 935 relied upon by the Court below is inapplicable. It was counsel’s further contention that the contract of the 30th October, 1994 was between the Plaintiff and 1st Defendant and the 2nd, 3rd and 4th Appellants were clearly not parties to the said contract and lifting the corporate veil would violate the establish legal principle of privity of contract and distinct legal personality.
On the 4th issue of whether there was overwhelming evidence before the trial court to establish the liability of the 2nd, 3rd and 4th Defendants/Appellants, learned counsel for the Appellants referred to the only evidence in the case on the 2nd of March 2000 and the fact that the 2nd, 3rd and 4th Defendants/Appellants were only joined on the 6th of June 2000 and submitted that the evidence could not by any stretch of imagination amount to overwhelming against the Appellants who were strangers to the contract. The finding, counsel argued, has led to a miscarriage of justice. Learned counsel urged finally that the appeal be allowed and the judgment of the court below set aside.
In the Respondent Brief of Argument Mr. S. E. Elema advanced the following arguments. With respect to the 1st issue of the propriety or otherwise of the award of 21% interest, learned counsel argued that claims in commercial matters must necessarily attract interest when money falls due for payment but remains unpaid. Reliance was placed on N.G.S. Co. Ltd v. N.P.A. (1990) 1 NWLR (Pt.129) 141.
On the second issue of whether the lower court was right to sustain the award of N1,000,000.00 (One million naira) solicitor’s fee against the Appellants, learned counsel argued that counsel’s fees firm part of costs recoverable by a successful litigant. He relied on REWANE v. OKOTIE-EBOH (1960) N.S.C.C. Vol.1 page 135 at 139.
As regards the third issue of whether the lower court was right to have lifted the corporate veil in the circumstances of this case, learned counsel argued that although the said contract was expressed to be between the Respondent and the 1st Appellant, it was not executed under the common seal and the it was executed by the 4th Appellant in his personal name. Counsel further referred to the pledge made by the 4th Appellant at page 148 of the record using the letter headed paper of the 2nd Appellant, Pan African International Incorporated and contended that the entire transaction was entered into by the 4th Appellant using the names of the 1st – 3rd Appellants and that in the circumstances lifting the veil of incorporation was the only way the court could do justice to the parties.
With respect to the 4th issue of whether the evidence was overwhelming or sufficient to support the judgment counsel referred to the principles regarding amendments and joinder of parties and submitted that once the amendment was granted its effect dates back to the date of the original claim and relied on AREMO V. ADEKUNLE (2001) NWLR (Part. 644) 257. He urged finally that the appeal be dismissed and the judgment of the Court below affirmed.
Because of what I consider to be the effect the 4th issue I would like deliberate on this appeal by starting with that issue. The question is whether the procedure complained of occasioned some miscarriage of justice. Before considering this issue, it is necessary to restate the principle that this court would not interfere with the concurrent findings of fact of the two courts below unless there is a miscarriage of justice. This principle was restated in NGWUTA MBELE v. THE STATE (1990) 4 NWLR (Part 145) 484. This court would therefore only interfere with the concurrent findings of fact of the two courts below if it is established that there was a breach of the principles of fair hearing occasioning some miscarriage of justice or even the likelihood of it. The Appellants alleged that the action was not defended because they were not aware. Section 36 of the 1999 Constitution incorporates the audi alteram partem rule which stipulates and ensures that no verdict can be entered by a court or tribunal against a person in a mater relating to his civil rights and obligations without being given the opportunity of being heard. This is so because both under the Constitution and rules of natural justice no decision of a court or tribunal can be regarded as valid unless it heard both sides involved in the dispute. See STATE V. OMOGORUWA (1992) 2 NWLR (Part 221) 33 at 56 and 58; DEDUWA V. OKORODUDU (1976) 8-10 SC 329; AMADI V. THOMAS ADLIN & CO. LTD (1972) 4 SC 228. Also fair hearing lies, not in the correctness or propriety of the decision but rather in the procedure followed in the trial and determination of the case. In State v. Onagoruwa (supra) at 56, the Supreme Court per KARIBI-WHITE, JSC re-emphasized this principle when he said:-
“It is only when the opponent has been heard that the judge would be seen to be discharging the duty of an unbiased amspire. Learned counsel for the Respondent appears to consider the absence of miscarriage of justice as a consideration to ameliorate an infringement of a provision of fundamental human right. This is not the correct legal position. The violation of the rule of audi alteram partem perse lies in the breach of the fundamental human right. Once right is violated, it is irrelevant whether the decision made subsequent thereto is correct (underlining mine) see ALHAJI UMARU ABBA TUKUR v. GOVERNMENT OF GONGOLA STATE; (1989) 9 SCNJ 1 1989) 4 N.W.L.R (Part 117) 517”
The question is what is the barometer for measuring when the rule of fair hearing has been breached. It has been settled that the true test of fair hearing is the impression of a reasonable person who was present at the trial whether from his observation justice has been done in the case. See for this IJEOMA v. STATE (1990) 6 NWLR (Part 158) 567 MOHAMMED V. KANO NATIVE AUTHORITY (1968) 1 All NLR 4224; OKAFOR v. A.G. ANAMBRA STATE (1991) 6 N.W.L.R. (Part 200) 659 at 678.
Apply this test of a reasonable man to the facts and circumstances of this case, can it be said that, from the inception of the case of the 2nd of March 2000 when the only witness in the case testified and up to the 14th of December 2000 when judgment was delivered, justice was done Although I had earlier stated that substance of the facts relevant to the question I would nevertheless repeat a narrative of some salient facts.
At the commencement of the action on the 9th of February 1999 the only Defendant was INTERNATIONAL OFFSHORE CONSTRUCTION LTD. And it remained so until the 2nd of March 2000 when the only witness in the case testified and concluded his evidence. The motion of joinder of the 2nd, 3rd and 4th Defendants/Appellants filed on the 24th of March 2000 was not taken until the 6th of June 2000 when it was heard and granted by the trial Court. The 2nd, 3rd and 4th Defendants/Appellants thus became parties to the action only on the 6th of June 2000, four months after the evidence had been recorded. In other words, the evidence which purportedly established their liability was not only taken behind their back, but taken when they were not parties. The only witness in the case Commodore Salaudeen Akani (Rtd) was not recalled for purposes of cross-examination by the 2nd, 3rd and 4th Defendants/Appellants. They were thus denied the opportunity of contesting the case of the Plaintiff/Respondent.
The compliant of the Defendants/Appellants is that their fundamental rights of fair hearing guaranteed under section 36 of the 1999 constitution and the rules of natural justice were violated. In my view, there is a lot of force in this argument and I am therefore persuaded by it. The liability of the 2nd, 3rd and 4th Defendants/Appellants cannot be determined by the evidence of the 2nd of March 2000. The result is that the use of that evidence against them constituted a clear breach of their Appellant of fair hearing under 36 of the Constitution and the rules of natural justice.
What then is the effect of this finding that the proceedings constituted a breach of the principles of fair hearing. It is settled principle of law that where, in any proceedings, the rules of natural justice or the principles of fair hearing are breached, such a breach renders the entire proceedings null and void and the appropriate consequential order is one of retrial before another judge of the court. In support of this principle see the case of RASAKI ASALU V. MADAM TOWURO EGBEIBON (1994) 6 N.W.L.R. (Part 348) 23 at 44; ADIGUN V. A.G. OYO STATE (1987) 1 NWLR (Part 53) 678. In view of the foregoing, there can be no question of evidence let alone overwhelming evidence against the Appellants. As against the Appellants therefore there is no legal evidence the proceedings having been rendered null and void. The result is that the fourth issue is resolved in favour of the Appellants.
The resolution of this issue in favour of the Appellants determines the appeal. The proceedings before the trial court having been held to be null and void, it would be an exercise in futility to consider the other issues in the appeal.
In conclusion. I hold that this appeal succeeds. The proceedings including the judgment of the trial court and its affirmation by the Court of Appeal be and are hereby set aside. The case be and is hereby remitted back to the trial Federal High Court for retrial by another judge.
The Defendant/Appellants are entitled to cost against the Plaintiff/1st Respondent which I assess at N10,000.00 at the trial court, N20,000.00 at the Court below and N50,000.00 in this Court.
SC.283/2003