Royal Exchange Assurance Nigeria Ltd & Ors. V. Aswani Ile Industries Ltd (1992)

LawGlobal-Hub Lead Judgment Report

G. KARIBI-WHYTE, J.S.C. 

On Monday the 6th January, 1992, I dismissed the application of the applicants seeking more favourable terms than was imposed for repayment of the judgment by the Court below. I however in the interest of substantial justice varied the terms somewhat, and indicated that fuller reasons for so doing will be given today. This I now proceed to do below.

The ruling is sequel to the Motion on Notice of the Applicants seeking a stay of execution of the judgment of the Court of Appeal, Lagos delivered on the 11th day of February 1991 on more favourable terms pending the hearing and determination of the appeal against the said judgment. Applicant also prayed for such further and/or other orders as this Honourable Court may deem fit to make in the circumstances

The facts of this case are not in dispute. They are that the Respondents, a ile manufacturing company, insured its assets for twelve months with a consortium of nine insurance companies, led by the Applicant. On the 6th March, 1982 i.e. 25 days to the renewal of the insurance on the 31st March, 1982, the Respondents insured properties suffered a fire incident, and-were considerably damaged or completely destroyed by fire. The fire incident was reported to a member of the Consortium, the New India Insurance Company Ltd, on the same day. Notice of claims for loss was given to, all the members of the Consortium, Loss Adjusters were appointed. Respondent made a claim for 31 Million Naira. The Adjusters came out with a claim for N25,091,253.

Negotiations for settlement commenced. A committee of three members of the Consortium was appointed and duly opened negotiation. Settlement was reached on the amount found by the Loss Adjusters. The New India Insurance Company Ltd. one of the members of the settlement Committee wrote to the Respondent offering N25,091,253 in settlement – Exh A. Respondent accepted the offer in Exh.5. However, some members of the Consortium disclaimed liability of the agreed sum of N25,091,253. Respondent therefore brought an action in the High Court, Lagos, “claiming the agreed amount of N25,091,253, with interest at 14% per annum from the 21st October, 1982 up to date.’

The suit was tried on pleadings. The learned Judge awarded the amount claimed in favour of the Respondent. Applicants appeal to the Court below was dismissed on the 11th February 1991. Applicant appealed to this Court and applied to the Court of Appeal for a stay of execution pending the determination of the appeal to this Court. The Court of Appeal on the 14th May, 1991 granted the application on the following conditions –

“1. Applicants shall within thirty days from today, pay over to the Respondents, the judgment debt plus interest.

2. Upon payment Respondent shall, within 14 days procure a Bank Guarantee from the Continental Merchant Bank Nigeria Limited of Marble House, I Kingsway Road, Ikoyi, Lagos, for the refund of the total amount plus interest on same at the prevailing Bank rate between now and the date of the judgment of the Supreme Court should the appeal be successful.

The application before us is for more favourable terms than the above.

In his argument before us, Kehinde Sofola SAN’s idea of more favourable terms is the grant of stay of execution without conditions. He submitted that if the money was paid, Respondent would have benefited even if they could refund in the event of a successful appeal. Applicant can pay with interest if the appeal fails and does not require any Bank Guarantee for the purpose.

Chief Williams in reply pointed out that the only issues between the parties are the terms. Respondents are not now concerned with the stay of execution, or whether there is an arguable appeal. The question is, on what terms should the stay of execution be granted Learned Counsel referred to the Bank Guarantee on the part of the Respondent. This has been negotiated and provided. The Guarantee covers the case. Chief Williams refers to the interest of 14% referred to in the judgment and urged us to take judicial notice of inflation. It was finally submitted that the real issue is whether there should be any interference with the ruling.

The principle is well settled and invariably applied that a judgment creditor is entitled to enjoy the fruits of the judgment- See Abina & Ors. v. Tika Tore Press Ltd. (1968) 1 All NLR.210. A debtor who seeks to vary the application of this principle is required to give valid reasons why the enjoyment of the fruits of the judgment by the judgment creditor should be delayed. – See lntercontractors Nig. Ltd. v. VAC. of Nigeria Ltd. (1988) 2 NWLR. (Pt.76) 303 at 325. However, this principle is not, in this case being subjected to a direct attack. The applicant has appealed against the judgment. He is not contending that he is incapable of paying the judgment debt with interest. He is also not saying that the judgment creditor will be unable to refund in the event of a successful appeal. His contention, which is curious reasoning, is that the judgment creditor is likely to benefit if the money was paid, should the appeal eventually succeed. Mr. Sofola would seem to have ignored the fact that the amount involved is a judgment debt, due in law to the Respondent. The interest of justice requires that if there should be any benefit arising therefore it should enure to the benefit of the Respondent. Yet Applicant is still keeping the money and is seeking a stay of execution.

It seems to me strange for learned Counsel to the Applicant to seek unconditional stay of execution when he is capable of repaying the judgment debt with interest in the event of his appeal being unsuccessful. Mr. Sofola was not contending that Respondent is unable to refund the judgment debt in the event of a successful appeal.

In the circumstances of this case where there is parity in the ability of the parties to make payment or refund; and where the law, and the balance of the equities is in favour of the Respondent who is the judgment creditor, it is in the interest of justice not to disturb the exercise of discretion by the Court below. Applicant who has declared his ability to pay the judgment debt cannot seriously contend that the conditions imposed are onerous or unreasonable. It is also not disputed that Respondents are not in a position to refund in the event of a successful appeal. – See Balogun v. Balogun (1969) 1 All NLR.349. On the arguments in this application, I find that the conditions are not only reasonable but also favourable to the Applicant.

I am of opinion that the Court of Appeal was right in the exercise of its discretion to impose the condition of entering into a Bank Guarantee. The application is therefore accordingly dismissed.

However, since Respondents also claim that they are in a position to refund the amount paid to them in the event of a successful appeal, the Order of the Court of Appeal is varied as follows –

The Respondent shall simultaneously on the payment to them of the Judgment Debt with interest at 14% within 30 days of this Order, give to the Applicants a Bank Guarantee from the Continental Merchant Bank Ltd, 1 Kingsway Road, IKOYI/, LAGOS for the refund of the Judgment Debt with interest and costs in the event of a successful appeal.

This variation of the Order of the Court below by the simultaneity in the payment with the provision of the Bank Guarantee by Respondent, will secure to and assure the Applicants of the recovery of Judgment debt and costs if their appeal succeeds. The above are my reasons for dismissing the application.S. KAWU, J.S.C.: After hearing counsel’s submissions on the applicants’ application on 6th day of January,1992 seeking more favourable terms than were imposed for repayment of the judgment. I dismissed the application and indicated that I would, today, give full Reasons for my Ruling. I have had the advantage of reading, in draft the Reasons of my learned brother. Karibi-Whyte, J.S.C. just delivered. I entirely agree with his reasons and respectfully adopt those reasons as mine. I too will vary the order of the Court of Appeal as follows:-

The Respondent shall simultaneously on the payment to them of the Judgment Debt with interest at 14% within 30days of this Order, give to the Applicants, a Bank Guarantee from the Continental Merchant Bank Ltd., I Kingsway Road, IKOYI, LAGOS for the refund of the Judgment Debt with interest and costs in the event of a successful appeal.S. M. A. BELGORE, J.S.C.: This application for stay of execution on more favourable terms than the one granted by the Court of Appeal ordering the appellants to pay the entire judgment debt first and then provide a bank guarantee fails. It is not always that the discretion of the Court below will be set aside once it is clear it has been given on just and legal reasons. The appellants/applicants had judgment concurrently given against them in the two Courts below. The Court of Appeal in granting the stay on its discretion did so on sound reasons and I find no reason to interfere substantially with the order. However, I shall maintain the stay on the same ground that the judgment debt be paid to the respondent but on condition that respondent will first or simultaneously provide a bank guarantee for the same amount at 14% per annum before the judgment debt is so paid to the respondent. It was for the above reasons that I dismissed the application.

O. OLATAWURA, J.S.C: The application is for a stay of execution of the judgment of the Court of Appeal, Lagos Division delivered on 11th February 1991. The applicants had applied to the lower court which granted the stay on certain conditions which the applicants now seek to vary “on more favourable conditions”.

After listening to Mr. Kehinde Sofola, S.A.N., learned counsel for the applicants and Chief Williams S.A.N. the learned counsel for the respondent, I dismissed the application subject to the respondent giving a Bank guarantee before payment is made; that payment to be made 30 days after the guarantee by the Bank. I then indicated I would give my reasons today.

It is within the right of any party who had earlier been granted a stay of execution in the lower court to apply to a higher court for a variation of the earlier order on more favourable terms; OYEYI V. SOREMEKUN (1963) 2 SCNLR 320 (1963) 1 All N.L.R. 349/351. The conditions on which the stay granted by the lower court was based are as follows:

“Applicants shall, within thirty days from today, pay over to the Respondent, the judgment-debt plus interest. Upon payment, the Respondent shall, within 14 days procure a Bank Guarantee from the Continental Merchant Bank Nigeria Limited of Marble House, 1 Kingsway Road, Ikoyi, Lagos, for the refund of the total amount plus interest on same at the prevailing Bank rate between now and the date of the judgment of the Supreme Court, should the appeal be successful”.

These are the conditions which applicants now seek to vary on more favourable terms and they are clearly set out in paragraph 7 of the affidavit in support of the motion. The other material paragraphs in support of the application are 9-16, 23, 25 which read thus:

“9. That the judgment involves a large sum of money and I verily believe that if any portion of it is paid to the Respondent, it will be diverted to other uses other than to reinstate any part of the alleged damage and it will be unable to repay the same back to the Applicants in the likely event of the appeal succeeding.

10. That the Respondent on the evidence, before the Court at the trial had for a long time already received several millions of Naira on the alleged damage from other Insurance Companies but had done nothing to repair or reinstate any part of the said alleged damage.
11. That evidence before the Court of trial showed that the Respondent has serious liquidity problems.
12. That the Applicants are substantial Insurance Companies with the Federal Government being the majority shareholders and all of them are in a position to satisfy the judgment debt and costs immediately in the most unlikely event of the appeal not being allowed by the Supreme Court.
13. That to part with so large a fund will deprive the Applicants not only of the use to which they can put the fund as Insurers but will also deprive them of considerable amount of interest on such a large sum.
14. That the payment of any part of the judgment debt plus interest as ordered by the Court of Appeal will confer on the Respondent such a substantial financial benefit to which it is not in law and equity entitled and will amount to an unjust enrichment.
15. That it is in the interest of justice that the party that ultimately wins an appeal should be able to reap the fruit of the judgment.
16. That unless a stay of execution is granted, all the Applicants will obtain, in the most likely event of the appeal succeeding, will be a mere barren judgment.
17. That substantial issues of law have been raised in the appeal where either side may have a decision in its favour and the interest of justice requires that matters should be kept in status quo for a free and unhampered consideration by this Honourable Court of the legal issues involved.
18. That the Respondent will not lose anything if this application for a stay is granted by this Honourable Court.”

Mr. Kehinde Sofola S.A.N. relied on the grounds of appeal and that they have raised allegations of fraud against the respondent. The interest payable on the money involved which will continue to run is in favour of the respondent, but that the applicants are unable to satisfy the condition of payment.

In reply Chief Williams pointed out that once the respondent produces the Bank guarantee ordered by the court, then the money ordered to be paid is safe. He has asked us to take judicial notice of inflation. The lower court having exercised its discretion in granting the application this court should not interfere with the exercise of that discretion. The respondent is still willing to produce the Bank guarantee. Chief Williams further pointed out that 70% of the judgment debt had been paid. He urged us to refuse the application.

In reply Mr. Sofola pointed out that since 70% of the judgment debt had already been paid, the balance of 30% will not cause any hardship.

The basis for the application is predicated more on the chances of success of the appeal than inability to pay the judgment debt. The ground of appeal though not frivolous is not a good ground for depriving the successful party of the fruits of the judgment in its favour. In this case the lower court went a little further to ensure that if the appeal succeeds the appeal is not rendered nugatory. I therefore ordered the respondent to produce a Bank guarantee that the applicant will be paid should the appeal succeed. There cannot be a better guarantee than this. Since the order already made guarantees a mutual genuineness of the guarantee, the fear of loss of money by the applicants is no longer there.

The argument that since 30% of the judgment debt is the amount now outstanding because 70% of the judgment debt had already been paid appears to me an invalid reason to deprive the judgment creditor of the fruits of success. Even if it was the case of the applicants that the difficulty in recovering the amount, if paid, will be greater once there is a guarantee I think the applicants should be satisfied with that. Since the ability of the Continental Merchant Bank to repay the debt has not been challenged at all, I don’t think the applicants have any substantial cause to complain. It was for these reasons that I dismissed the application subject to the aforementioned condition.

E. O. I. AKPATA, J.S.C.: The applicants in their motion sought for a stay of execution of the judgment delivered on the 11th day of February, 1991, by the Court of Appeal on more favourable conditions pending the hearing and determination of the appeal against the said judgment. The application was supported by a 26 paragraphed affidavit. After hearing arguments from counsel on 6th January, 1992, I found no merit in the application, and I accordingly refused it. I however varied slightly the conditions imposed by the Court of Appeal and indicated that I would give my reasons today for the refusal of the application. The facts relating to the application and the issues involved will be stated very briefly.

At the Lagos High Court the respondent as plaintiff claimed against each of the applicants, Insurance Companies, various sums of money amounting to some millions of Naira. In a considered judgment the learned trial Chief Judge granted the reliefs claimed by the respondent. The applicants appealed to the Court of Appeal on a number of grounds. The appeal was dismissed.

Following the dismissal of the appeal the appellants filed their notice of appeal to this Court and applied to the Court of Appeal for an unconditional stay of execution of its judgment. The Court of Appeal granted a stay “on condition that the applicants shall, within thirty days from today (14/5/91) pay over to the respondent the judgment-debt plus interest. Upon payment, the respondent shall within 14 days procure a Bank Guarantee from the Continental Merchant Bank Nigeria Ltd for the refund of the total amount plus interest on same at the prevailing Bank rate between now and the date of judgment of the Supreme Court, should the appeal be successful”.

As the applicant found the conditions for the stay “onerous and unreasonable”, they filed the application which I refused on 6th January, 1992.

In the 26 paragraphed affidavit in support of the application, the applicants averred amongst other things that the judgment involved a large sum of money and that if any portion of it was paid to the respondent it would be diverted to other uses other than to reinstate any part of the alleged damage to its property and that the respondent would be unable to repay the applicants in the event of the appeal succeeding. The applicants also made the point that the respondent had serious liquidity problems. The deponent, on behalf of the applicants, went on to depose thus:

“13. That to part with so large a fund will deprive the Applicants not only of the use to which they can put the fund as Insurers but will also deprive them of considerable amount of interest on such a large sum.

14. That the payment of any part of the judgment debt plus interest as ordered by the Court of Appeal will confer on the Respondent such a substantial financial benefit to which it is not in law and equity entitled and will amount to an unjust enrichment.
15. That unless a stay of execution is granted, all the Applicants will obtain, in the most likely event of the appeal succeeding, will be a mere barren judgment.
16. That the Applicants are public liability Companies and they employ many Nigerians whose livelihood depends on their continued existence.
17. That it will not be in the best interest of the Applicants to part with so large an amount of money pending the determination of the appeal as it will adversely and seriously affect their business operations particularly, having regard to the present economic situation in the country. 20. That the Managing Directors of the Applicants have all informed me and I verily believe that the refusal of a stay of execution pending the hearing and determination of the appeal will cause the Applicants very great hardship and render the appeal nugatory if they should eventually succeed.”

In his submission Mr. Sofola S.A.N., appearing for the applicants pointed out that no counter-affidavit was filed by the respondent challenging the averments in the affidavit. According to him the respondent had nothing to lose because if the applicants failed in their appeal they would pay interest on the judgment debt to the respondent.

In praying for more favourable conditions learned counsel relied on the case of Oyeti v. Soremekun (1963) 2 SCNLR 320, (1963) 1 All NLR. 349 at page 351 where this Court observed that “an applicant may, if he so desires seek more favourable conditions in the Supreme Court, if he thinks the conditions laid down by the High Court are onerous or, for any reason, are found unreasonable”.

In reply Chief Williams SAN, appearing for the respondent, contended that the respondent would be the loser if it was not paid now. He drew our attention to the fact that this Court is always loath to tamper with the discretion exercised by the lower court.

I find nothing in the affidavit which needed to be refuted by the respondent by way of a counter-affidavit. If an affidavit is self-contradictory or if the facts contained therein are presumed to be true and when taken together are not sufficient to sustain the prayers of the applicant, it would be needless for a respondent to file a counter-affidavit.

At paragraph 9 of the affidavit the applicants missed their fear that if the respondent was paid the judgment-debt it would divert it to other uses and would be unable to repay should they succeed on appeal. Also at paragraph 11 it was averred that “the evidence before the court of trial showed that the respondent has serious liquidity problems”. These averments only go to support the need for a Bank Guarantee which the Court of Appeal ordered and which I have also imposed as a condition for the stay in refusing the application on 6/1/92. Two courts have already pronounced the respondent as entitled to the amount claimed by it. It should not be deprived of the fruits of its judgment. The payment by the applicants of the judgment-debt may solve the respondent’s liquidity problems. Whether or not the respondent would be prudent in the use of the money when paid to it is not in issue.

The applicants have in no way challenged the financial buoyancy of the Continental Merchant Bank to meet its obligation to them should they succeed on appeal and should the respondent fail to refund the amount and interest involved. A guarantee is a written undertaking made by one person to a second person to be responsible if a third person fails to perform a certain duty, e.g. pay a debt. What is of importance is the financial position of the guarantor and not the financial inadequacy of the person guaranteed. It cannot therefore be correct as submitted at paragraph 16 of the affidavit that the applicants would obtain “a mere barren judgment” if a stay is granted in the event the appeal succeeds.

Paragraph 14 of the affidavit which I have reproduced earlier is highly presumptuous. The two lower courts have adjudged that the respondent is entitled “in law and equity” to the amount claimed by it. As at now there is the presumption that the two courts were right in their pronouncements. Whilst some of the ten grounds of appeal against the judgment of the Court of Appeal attached to the affidavit appear to be arguable, and the appeal cannot be said to be frivolous, the circumstances of this case does not warrant granting an unconditional stay which the applicants have prayed for.

As Chief Williams rightly pointed out, this Court is loath to interfere with the exercise by the lower court of its discretionary powers when they appear to have been exercised judicially and judiciously. If I were in the position of the lower court I would have unhesitatingly made a similar order of a conditional stay.

It is for the above reasons that I refused the application on the 6th of January, 1992 and ordered as follows:-

“The application is refused. The refusal is subject to the giving of a Bank Guarantee by the Continental Merchant Bank before the payment of the judgment debt. Payment should be made within 30 days after the Bank Guarantee has been given. Costs assessed at N100.00 in favour of the respondent.”

Application dismissed.

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SC.124/1991