Shell Petroleum Development Company of Nigeria Limited V. Chief N.y. Allaputa (2005)

LawGlobal-Hub Lead Judgment Report

JOHN AFOLABI FABIYI, J.C.A.

This an appeal against the judgment of Ichoku, the High Court of justice, Port Harcourt, Rivers State of Nigeria on the 29th of January, 2001.

The plaintiff at the trial court and respondent herein filed the writ of summons on 27/11/2000 and placed it on the undefended list. It is extant on page 1 of the transcript record of appeal that the writ was marked as undefended. The claims, against the defendant at the trial court and appellant herein read as follows:

“(i) The sum of N505 Million being money owed the plaintiff by the defendant inclusive of 15% interest on the initial N305 Million from the date it fell due being 24th of December, 1999 till judgment thereafter at 10% on the judgment debt until its satisfaction therefore.

(ii) And subsequently 10% interest on the balance as they shall fall due on the 14/12/2000 and 24/12/2001 until the satisfaction of the debt”?

The writ was verified by an affidavit of 5 paragraphs by the plaintiff on the 27th of November, 2000. On the same date, a motion ex-parte was contemporaneously filed under Order 23 rule 1 of the rules of the trial court praying for an order to enter the suit for hearing on the undefended list and to mark same accordingly. The application was heard on the same date and granted by the learned Chief Judge. The return date was slated for 6/12/2000.

The plaintiff who filed the suit in a representative capacity, deposed to a 17 paragraph affidavit with a view to sustaining his claim. A copy of the agreement between the parties is exhibit A. A receipt concerning the commencement of the registration of a trust fund was attached as exhibit ‘B’. A copy of Union Bank’s letter addressed to ‘the Trustees BTIP, Trust through solicitor is exhibit ‘C’.

Plaintiff’s solicitor’s letter forwarding exhibit ‘C’ to the defendant is exhibit ‘D’.

The requisite notice of intention to defend the suit pursuant to order 23 rule 3(i) of the rules of the trial court was filed by counsel on behalf of the defendant on 5th December, 2000. In support of the said notice of intention to defend the suit, an affidavit of 27 paragraphs was deposed to by Ume Maduka, a legal practitioner on behalf of the defendant on the same 5/12/2000.

The trial C.J. heard arguments of both counsel on 11/12/2000. The arguments canvassed appear very crisp. On 29th January, 2001, he entered judgment in favour of the plaintiff in the sum of N405 Million as well as interest of the sum of N15,750.000 being 15% interest on the amount of N305 Million that was due for over a year. A further 10% interest was granted from 29/1/2001 till the whole amount is liquidated. The trial C.J. fixed cost in favour of the plaintiff at N5,000.

The defendant felt unhappy with the judgment of the trial C.J. The original notice of appeal accompanied by five grounds of appeal was filed on 29/1/2001. Subsequently, five additional grounds were filed with the leave of the court.

On behalf of the appellant, four issues were formulated for a due determination of the appeal. They read as follows:

“1. Was the learned trial Judge right in entering judgment against the defendant under the undefended list procedure inspite of its affidavit disclosing a defence?

2. Whether the learned trial Judge was right in placing and or entertaining plaintiff’s claim under the undefended list on the basis of exhibit A and plaintiff’s affidavit in support of the claim?.
3. Whether the learned trial Judge was right in law to enter judgment for the plaintiff under the undefended list when on the material before him, plaintiff is not entitled to judgment?.
4. Was the learned trial Judge right to proceed to judgment under the undefended list on the finding made by him that defendant filed an affidavit showing facts that would relieve it of its obligations under exhibit A?.

On behalf of the respondent, a lone issue was distilled with precision for a due determination of the appeal. The issue reads as follows:

“Whether the learned trial Judge was right in entertaining and entering judgment in the plaintiffs claim under the undefended list procedure on the basis of exhibit A and the plaintiff’s affidavit in support of the claim notwithstanding the defendant’s affidavit to defend the suit?.”

At this juncture, I should point it out that the four issues couched on behalf of the appellant appear hair-splitting and repetitive. The success of an appeal certainly does not depend upon a host of unrelated grounds of appeal and issues therefrom. Proliferation of same should be avoided. Such a ploy often leads to confusion. I honestly think that counsel should bear this point in mind and appreciate that in it’s real essence, there is no difference between six and half a dozen.

In a suit placed in the undefended list, the vital unadulterated issue referable to the applicable court rules is – whether or not the defendant showed a defence on the merit which warrants that the suit be transferred to the general cause list for hearing and determination. The respondent’s counsel was right in the lone issue formulated as reproduced above for determination in this appeal.

When the appeal was heard on 19th January, 2005, each counsel on both sides adopted and relied on the amended brief of argument filed on behalf of the appellant and respondent respectively. Appellant’s counsel urged that the appeal be allowed. The learned senior counsel for the respondent after referring to the case of Carlen (Nig.) Ltd. v. Unijos & Anor. (1994) 1 NWLR (Pt. 323) 631 at 668-669 urged us to dismiss the appeal.

In its brief of argument, it was contended on behalf of the appellant that liability for debt claimed by the respondent on the basis of exhibit A was denied on two legal grounds as can be gleaned from averments contained in the affidavit in support of the notice of intention to defend. The appellant maintained that the offer to donate made in exhibit A is a voluntary and free offer made without any consideration from the respondent and is not a debt but an offer to donate which is not in law enforceable. Further, that if the stance stated was wrong, it is still not liable to the claim in debt because the condition precedent to it making any payment under exhibit A, namely the establishment of a Trust Fund, has not been satisfied by the respondent. In aid of his submission, appellant’s counsel referred to the cases of Dunlop Pneumatic Tyre Company Limited v. Selfridges & Co. Ltd. (1915) A.C. 847 at 852; Bioku v. Light Machine (1986) 5 NWLR (Pt. 39) 42 and Mrs. D. Udechukwu v. Ngene (1992) 8 NWLR (Pt. 261) 565.

Furthermore, it was submitted that an offer to make donation, by its nature, constituted no enforceable contract in law. Learned counsel opined that the money referred to in exhibit ‘A’ is purely an offer of a donation to be made or an intended gratuitous gift by the appellant to a Trust Fund. He felt that a promise simpliciter is not enforceable and cannot be acted upon unless it is made under seal or supported by consideration. He felt that exhibit A is neither expressed as a deed nor made under seal. It therefore cannot be said to be a valid and enforceable agreement in law; contended counsel who cited the case of B. Stabilini & Co. Ltd. v. Obasi (1997) 9 NWLR (Pt. 520) 293 at 300, 303, 305-6.

To further buttress the point made on the establishment of a Trust Fund as a condition precedent to the making of donation, appellant maintained that same has not been registered under the Companies and Allied Matters Act (CAMA) 1990 and such was fatal to the respondent’s case. He referred specifically to Section 679 of CAMA. Learned counsel felt that the trial CJ found that the appellant put forward facts that will get them out of fulfilling their obligation under the agreement, exhibit A and ought to have transferred the suit to the general cause list for full scale trial. He cited the cases of F.M.G. v. Sani (1990) 4 NWLR (Pt. 147) 688; SMIG (Nig.) Ltd. v. ED of Nigeria Ltd. (2003) FWLR (Pt.171) 1606; Hanseatic Int. Ltd. & Anr v. Clement Edrah (2002) 13 NWLR(Pt. 784) 375, (2001) WRN (Vol. 48) 163 at p. 170; Jipreze v. Okonkwo (1987) 3 NWLR (Pt. 62) 737.

On behalf of the respondent, learned senior counsel submitted that the contention that the offer to donate the sum of N505 Million as in exhibit A is without consideration does not reflect the reality in the agreement. He asserted that exhibit A is not an offer but a full fledged contract made up of offer and acceptance. He referred to paragraphs 4-9 of the affidavit verifying the claim which depict the respondent’s forbearance of their right to re-negotiate the Bonny Terminal Land Agreement of 1958 for the time being; for which the lump sum of N505 Million was agreed upon by the parties to be paid by the appellant. Senior counsel observed that consideration need not be adequate as it is sufficient if it has some value in the eyes of the law. He cited the case of Royal Exchange Assurance Nigeria Ltd. & Ors. v. Aswani iles Industries Ltd. (1991) 2 NWLR (Pt. 176) 639 at 666-667 G-A. ”

Senior counsel further contended that a gratuitous promise is even binding and enforceable as long as it is supported by nominal consideration. He referred to Chitty on Contracts (General Principles) 26th edition, paragraph 165 at page 115.

Senior counsel conceded the point that no impression of a wafer seal appears on exhibit A. He observed that it was stamped, subscribed and attested as a deed by officials of the appellant to wits: Director and its Manager attesting the signature of his Director. He opined that the presumption of sealing and delivery under Section 127 of the Evidence Act applies to exhibit A as to make it a deed. He observed that exhibit A was made and put forward by the appellant and any misuse of words therein should be construed against the appellant. He felt that the appellant should not be allowed to impugn exhibit A as it should not be allowed to take advantage of its own wrong. He cited the case of Adimora v. Ajufo (1988) 3 NWLR (Pt. 80) 1 at 14B in aid of his submission.

Senior counsel maintained that Trust Fund establishment was never made a condition precedent for the payment of the sum of N505 Million in exhibit A. He felt that it was merely collateral on secondary act of the plaintiff in the agreement to receive the payment in exhibit A. The Trust Fund is merely the conduit through which the money was to be paid according to senior counsel. The appellant had obligation to pay the stated sum to the Community. He felt that there is nothing in exhibit A which demanded a registration of a Trust or a Certificate of a Trust Fund. He opined that CAMA provides for the registration of a Trust. It does not provide for registration of a Trust Fund. Senior counsel maintained that appellant should not read into exhibit A extraneous conditions. Senior counsel felt that as required by exhibit ‘A’ the respondent provided a separate trust account and informed the appellant accordingly.

Learned senior counsel submitted that the appellant’s affidavit did not depict a defence on the merit as duly considered by the learned trial C.J. He referred to the case of UTC (Nig.) Ltd. v. Pamotei (1989) 2 NWLR (Pt. 103) 244 at 299F.

On issue of locus standi of the plaintiff, senior counsel observed that it was raised for the first time on appeal. He maintained that the plaintiff who sued in a representative capacity has the requisite locus to institute the action.

Senior counsel finally urged that the appellant should not be allowed to continue to postpone meeting its obligation. He referred to the case of Nishizawa Limited v. Jethwani (1984) 12 S.C. 234 at p.278 and prayed that the appeal be dismissed for lack of merit. The appellant made an issue as to whether or not the respondent furnished consideration for the lump sum it agreed to pay to the respondent. It is here relevant to have a clear definition of what is meant by consideration in law. In Black’s Law Dictionary, Sixth Edition at page 306, consideration is defined as:

“The inducement to a contract. The cause, motive, price or impelling influence which induces a contracting party to enter into a contract. The reason or material cause of a contract. some right, interest, profit or benefit accruing to one party or some forbearance, detriment, loss or responsibility, given, suffered or undertaken by the other. Richman v. Brookhaven Servicing Corp … 363 N.Y.S. 2nd 731,733. It is a basic, necessary element for the existence of a valid contract that is legally binding on the parties.”

The above is in tune with the opinion of the House of Lords in the case of Dunlop Pneumatic Tyre Company Limited v. Selfridge & CO. Ltd. (supra) at page 85. Therein, the position was put briefly thus:

“A second principle is that if a person with whom a contract not under seal has been made is to be able to enforce it, consideration must have been given by him to the promisor.”

The same opinion was expressed by our own courts in the cases of Bioku v. Light Machine (supra) and Mrs. D. Udechukwu v. Ngene (supra). Consideration, no doubt, is an essential element of a valid contract and without it, no contract would have been in existence.

However, it has now become trite that consideration need not be adequate as long as it has some value in the eyes of the law and flows from the promisee to the promisor. This is because it is the parties who dictate the terms of a contract freely entered into by them. Refer to Royal Exchange Assurance Nig. Ltd. v. Aswani iles Industries Ltd. (supra) at pages 666-667 G-A.

It must be stressed that it appears that even a gratuitous promise is binding and enforceable as long as it is supported by nominal consideration. The learned authors of Chitty on Contracts (General Principles) 26th Edition, paragraph 165 at page 115 stated the law as follows:

“Where an agreement is legally binding on the ground that it is supported by nominal consideration, the doctrine of consideration does not serve its main purpose of distinguishing between gratuitous and onerous promises. But the law has no settled policy against enforcing all gratuitous promises. It only refuses to enforce informal gratuitous promises and the deliberate use of a nominal consideration can be regarded as a form to make a gratuitous promise binding.”

In a bid to show that consideration was given by the respondent, senior counsel referred to paragraphs 4, 5, 6, 7, 8 and 9 of the affidavit deposed to by the respondent to prop the action filed in the undefended list.

The stated paragraphs read as follows:

“(4) That about the month of March, 1999 defendant went into negotiations with the representatives of the Bonny Kingdom for the payment of regenerative development funds to the community as a token recompense for its operations in the Bonny Terminal.

(5) That after several sessions of negotiations, the defendant agreed to pay the sum of N505 Million to the Bonny Kingdom by way of regenerative development Fund to the Kingdom and for the benefit of the entire Bonny Citizenry.

(6) That the meetings where this agreement was reached was attended by Mr. H. Nwokolo and Mr. V. Okwechime for and on behalf of the defendants while Chief Dr. O.R. Long John; Chief Dr. A.A. Finecountry, Chief N.Y. Alaputa with L.E. Nwosu Esq. and O. Willie-Pepple, Esq, as professional advisers, appeared on the mandate of his majesty the Amanyanabo of Bonny.

(7) That the Bonny Kingdom initially came to re-negotiate first and foremost the consideration for the Bonny Terminal Land made in the 1958 agreement between the Bonny Kingdom and the defendants but the defendants on their part insisted that they would not at this time re-negotiate or tamper with the aforesaid agreement except at a much later date (sic) after the new land rate have been determined.

(8) That the defendant in the alternative to the regeneration of Bonny Terminal Land consideration offered to pay a lump sum gratuity to the entire Bonny Kingdom in view of their numerous oil interest in pipeline, gas line, oil wells, flow stations, in-shore and off-shore loading facilities, storage and residence in the Bonny Kingdom under the title SPDC/BTIP.

(9) That following the position of the defendant the Bonny Kingdom agreed and entered into an agreement in the like terms which agreement was drafted by the legal department of the defendant for the payment of the sums of money on the dates hereunder outlined to the entire Bonny Kingdom.

(a) First instalment N305 Million payable on 24/12/99 N5 Million therefore being traditional comey to Chief Council.

(b) Second instalment N100 Million payable on 24/12/2000.

(c) Third instalment N100 Million payable on 24/12/2001.

A copy of the aforesaid agreement is herewith attached as exhibit A.”

It is clear to me that from the above paragraphs which the appellant in paragraph 7 of its own affidavit admitted in a qualified fashion, there is forbearance on the part of the respondent not to renegotiate the Bonny Terminal Land Agreement made in 1958, at least, for the mean-time. The appellant agreed to pay the lump sum of N505 Million for the forbearance of the respondent not to renegotiate, in the meantime, the 1958 agreement. To my mind, such forbearance is consideration in kind known to law given to the appellant, the ‘Promisor’. In short, there is consideration for appellant’s promise made in exhibit A.

Next, is the point that the appellant tried to impugn exhibit A by asserting that it was not expressed as a deed or made under seal. It is true that no wafer seal appears on exhibit A which was drafted by the Legal Department of the appellant. But it was stamped, subscribed and attested by a Director of the appellant to wit: Mr. J.R. Udofia while Mr. Ted Ene, a Manager attested to the signature of his director. The presumption of sealing and delivery of same under Section 127 of the Evidence Act applies to exhibit A. The stated Section 127 of the Evidence Act provides as follows:

“127. When any document purporting to be, and stamped as, a deed, appears or is proved to be or to have been signed and duly attested it is presumed to have been sealed and delivered although no impression of a seal appears thereon.”

From the above provision of the law, it is clear that the appellant, who prepared exhibit ‘A’ cannot be allowed to impugn same and renege from or back down from their obligation as dictated in the agreement – exhibit ‘A’. The appellant cannot be allowed to take advantage of a surmised wrong committed by it. Refer to Adimora v. Ajufo (1988) 3 NWLR (Pt. 80) 1 at page 14.

Even then, in modern times, if a document is signed by the alter ego of the company, sealing is no longer a sine qua non to the validity of the same since its purpose is to ensure that the right persons entered into an agreement on behalf of the company. Also, Section 77 of CAMA approves same. The case of Carlen (Nig.) Ltd. v. Unijos & Anor. (supra) at P.668 cited by the senior counsel to the respondent is clearly in point here.

It is clear that the fact that a seal is not affixed to exhibit A does not render it invalid. To my mind, that contention can be likened to clinging to a straw.

There is also the issue of registration of a Trust or Trust Fund being a condition precedent to the payment of the agreed sum of N505 Million in exhibit A. It is apt to reproduce the recital in exhibit A as it is here relevant. It goes thus on page 13 of the record:

“WHEREAS:

1. The Shell Petroleum Development Company of Nigeria Limited (hereinafter referred to as Shell) has decided to implement some project initiatives in support of development efforts in Bonny Community, in association with the Bonny Terminal Integrated Project (BTIP).
2. The Bonny Council of Chiefs (hereinafter referred to as the Council) for and on behalf of the Bonny Community as represented by Chief Dr. A. A. Finecountry as Secretary of Council has on behalf of the Bonny Community, requested that such initiatives be translated into monetary donations to Bonny Community, to enable the Community decide for itself, what beneficial projects to embark on.
3. The payment shall be made into a trust fund to be established by the Council to ensure prudent management.”

From the portion of exhibit A quoted above, can it be said that, registration of a Trust or Trust Fund is a must before the appellant honours its agreement in exhibit A drafted and signed by it? I think not. Parties are bound by the agreement freely entered into. None of the parties can be allowed to read into same what is not contained therein. Nothing in exhibit A demands a registration of a trust or a Certificate of Trust Fund. Registration of Trust Fund is not provided for by the Companies and Allied Matters Act (CAMA for short). I agree with the view of the trial C.J. that the respondent performed their part of the agreement to establish a trust fund as shown in exhibit B. They opened the Trust account with Union Bank as manifest in exhibit C. The demand of exhibit A has been met. I resolve this issue against the appellant.

I now move to the issue touching on whether or not the appellant showed defence on the merit to warrant the action being transferred to the general cause list. I dare say that the law relating to actions filed in the undefended list appears to be well settled. See the cases of Olubusola Stores v. Standard Bank of Nigeria Ltd. (1975) 4 SC 51; Ben Thomas Hotel Ltd. v. Sebi Furniture Ltd. (1989) 5 NWLR (Pt. 123) 523. A defendant who is served with such a writ has to file his notice of intention to defend the suit supported with an affidavit depicting triable issues; not frivolous ones, five clear days to the return date. If he fails to do so, judgment will be entered against him without much ado.

The defendant must show a defence on the merit or a bonafide defence. Such a defence must not be a sham. It must not be frivolous, spurious, worthless or designed to postpone the day of reckoning. See UTC (Nig.) Ltd. v. Pamotei & Ors. (1989) 2 NWLR (Pt. 103) 244; (1989) 2 NSCC (Pt. 1) 523; Macaulay v. NAL Merchant Bank Ltd. (1990) 4 NWLR (Pt. 144) 283; (1990) 21 NSCC (Pt. 2) 433; Agro Millers Ltd. v. CMB (Nig.) Plc. (1997) 10 NWLR (Pt. 525) 469 at 477-478. In Nishizawa Limited v. Jethwani (1984) 12 SC 234 at p.278, Aniagolu, J.S.C. pronounced bluntly thus:

” … A defendant who has no real defence to the action should not be allowed to dribble and frustrate the plaintiff and cheat him out of the judgment he is legitimately entitled to by delay tactics aimed, not at offering any real defence to the action but at gaining time within which he may continue to postpone meeting his obligation and indebtedness.”

I need to touch on the point made faintly by the appellant that the respondent has no locus standi to institute the action. I am unable to see where such was really canvassed and determined by the lower court. Howbeit since the money in exhibit A is to be paid to all the entire people of Bonny Kingdom and the suit is, brought in a representative capacity on behalf of the entire people of the Kingdom, I see no big deal in the complaint. The plaintiff/respondent, the Amanyanabo in council, the chiefs, elders and people of Bonny Kingdom he represents have the locus to institute the action.

The learned trial C.J. said it and I agree with him that ‘it is clear that the defendant is but fishing for defences.’ There is nothing in their affidavit which denied their undertaking to pay the money in principle. The condition precedent relied upon by them have been shown to be to no avail. It is clear that the appellant failed to show any defence on the merit that will warrant the suit being transferred to the General Cause List for a full scale trial.

This is a convenient point where I must reflect it that as discernible on page 2 of the transcript record of appeal, the suit was filed on 27/11/2000. As at that date, it is the first instalment in exhibit A at page 13 of the record that was due. The sum is N305 Million payable on 24/12/99. The second instalment of N100 Million payable on 24/12/2000 was not due. I am unable to trace in the record any amendment of the writ of summons. The liquidated sum due as at 27/11/2000 when the unamended writ was filed is N305 Million. This is the amount for which judgment should have been entered for the respondent by the trial C.J. on 29/1/2001. It is the amount that was due as at the time the writ was filed.

Equally, I am of the considered opinion that interest at the rate of 15% said to be N15,750,000 appears erroneous; with due respect. Nothing in exhibit A shows that such is within the contemplation of parties. And it is not a term of the agreement – exhibit ‘A’. I expunge the sum of N100 Million which is not a liquidated amount due on 27/11/2000 when writ was filed. As well, I delete the sum of N15,750,000 awarded as interest which appears like a bonus since it was not within the contemplation of parties. The respondent is only entitled to the sum of N305 Million being the only matured instalment and that shall be the judgment of the trial court. I endorse the order of 10% interest on the sum of N305 Million from the date of judgment – 29/12/2001 until the amount is liquidated in line with the rules of the trial court.

In conclusion, subject to the deductions made above by me in relation to the sum of N100 Million and interest of N15,750,000, the appeal is hereby dismissed. The respondent is entitled to costs which I assess and fix at N5,000.00 against the appellant.

Other Citations: (2005)LCN/1693(CA)