Sir Denis Ofordeme V. Engr. Chukwuma Onyegbuna (2005)

LawGlobal-Hub Lead Judgment Report

ADEKEYE, J.C.A.

In the suit No. E/702/2003, the plaintiff, now judgment creditor/respondent in this application instituted an action on the undefended list claiming the sum of $10,000 dollars or N 1, 350,000 from the defendant – now judgment debtor/applicant, which the latter failed to pay to the former’s foreign suppliers in China-Maxwell China Limited and 25% interest per annum until the sum is recovered. The trial court gave judgment in favour of the plaintiff/respondent on 16/2/04. The applicant before this court filed a motion before the trial court on 22/4/04 praying the court for an order staying execution of the judgment of the court pending the determination of the appeal filed by the applicant. In a considered ruling delivered on the 16/6/04 the lower court refused to grant the application for stay of execution of the judgment.

By virtue of Order 3 rule 3(3) of the Court of Appeal Rules, 2002 the applicant, filed a motion before this court on the 23/6/04 as defendant/judgment debtor prayed this court to stay execution of the judgment delivered on 16/2/04 pending the determination of the appeal already filed by him. He filed an application to amend the original grounds of appeal filed by him on 16/3/05 and this was granted by this court on the 9/5/05. The applicant filed a 22-paragraph affidavit in support of his application for stay of execution to which he annexed three documents as exhs. AUC-AUC2. The respondent reacted to this application by filing a 12-paragraph affidavit with two documents attached as exhibits A and B. Both parties filed written addresses – the applicant on 13/5/05 and the respondent on 19/5/05.

The crux of the argument of the applicant in respect of the application for stay of execution of the judgment delivered by the trial court on 16/2/04, is that he has appealed against the said judgment, while his grounds of appeal are substantial, cogent and arguable as they border on the illegality and unenforceability of the action. This touches upon the jurisdiction of the court to hear and determine the matter. The cause of action was ab initio founded upon an illegality, which contravenes sections 1, 2 and 3 of Part 1 of the Money Laundering Act M18, Laws of the Federation of Nigeria, Vol. 9, No. 3 of 1995. The respondent failed to comply with the requirements of section 3(1)(a), (b) and (c) of the Money Laundering Act, 1995 which regulates over the counter-exchange transactions. The learned trial Judge adopted the wrong procedure in the application of the Law for undefended list suit. On the claim of N800, 000 set up by the defendant, the matter should have been transferred to the general cause list.

What is special circumstance in an application for stay is not exhaustive. Facts and conditions do vary from case to case. In the instant case, the res is the monetary sum of N800, 000 set off against the respondent’s claim for $10.000. This court is urged to grant this application as its refusal would destroy the subject-matter of the appeal, foist upon the Court of Appeal a situation of complete helplessness and render nugatory any order made by this court after hearing and determination of this appeal. If the application for stay is granted – status quo would be preserved and this would provide him the means to prosecute the appeal as the applicant has every chance of success in the appeal. The applicant is of the opinion that the respondent would not suffer any hardship by granting the application. The respondent failed to give undertaking to pay damage in the event of the success of the appeal.

The respondent in his reply gave a background of the transaction between them as backed up by exh. A, which is the agreement between the parties. The applicant defaulted in the transaction by remitting only $80,000 dollars out of the $90,000 paid for and refused to return the said $10,000 dollars or the N1, 350,000 equivalents to the respondent with a 25% per annum interest rate. There is nothing illegal on the face of the agreement, exh. A. The relevant law on which the applicant relies to prove illegality of the transaction specified on exh. A shall be determined on appeal. The Foreign Exchange Monitoring and Miscellaneous Provisions Act No. 17 of 1995 which currently governs foreign exchange transactions in Nigeria makes the type of agreement and transactions entered into by the parties legal and proper. The appeal supposed to be filed by the applicant is only at the stage of filing notice and grounds of appeal. Records are yet to be settled and compiled for onward transmission to the Court of Appeal. Any applicant who wishes to deprive a successful litigant from reaping the fruits of the judgment must show special or exceptional circumstance which the court can take into account. The applicant has no facts disclosed in support of his application which can qualify as special circumstance. The subject matter of the appeal here is the return of the money paid to the applicant based on an agreement and even a valid and subsisting judgment of court. The status quo being asked by the applicant to be preserved is holding over the respondent’s money unlawfully.

The respondent substantiated the fact that he is a man of means by disclosing his business strength and source of income. He guaranteed the repayment of the judgment debt even without demand of the sum should the applicant succeed on appeal. The respondent cited the case of Okafor v. Nnaife (2002) 12 NSCQR pg. 511 or (1987) 9-10 SCNJ 63; (1987) 4 NWLR (Pt. 64) 129, while this court is urged to refuse the application as the applicant has not established any special reason to disturb the order of the trial court made on 16/6/04.

This court has painstakingly considered the arguments and submission of the applicant and the respondent in this application.

By virtue of section 18 of the Court of Appeal Act, Cap. 75, Laws of the Federation of Nigeria, 1990, an appeal under the Act shall not operate as a stay of execution. The Court of Appeal may order a stay of execution either unconditionally or upon the performance of such conditions as may be imposed in accordance with the rules of court.

Kosofe L.G. v. Demuren (2003) 9 NWLR (Pt.826) 435.

Certain major considerations when an application for stay is in issue are:

1. That a judgment of the trial court remains valid and subsisting until the contrary is proved.
2. That the respondent is entitled to reap the fruit of his judgment for this is the whole essence of litigation.
3. The court in considering an application for stay has a duty to ensure that:-

(1) It does not frustrate its judgment or that of the lower court until a further appeal.

(2) That a successful party reaps the fruit of his successful litigation, as that is the whole essence

of litigation.

(3) The discretion to be exercised must take into consideration dispassionately the competing rights of the parties. It has to consider both sides of equity and justice.

(4) An applicant seeking to deprive a successful litigant of the fruit of his labour must show substantial reasons why the court must grant him such indulgence.

Governor of Lagos State v. Ojukwu (1986) 1 NWLR (Pt. 18) 621, Vaswani Trading Co. v. Savalakh (1972) 12 SC 77; Deduwa v. Okorodudu (1974) 6 SC 21, Lijadu v. Lijadu (1991) 1 NWLR (Pt.169) 627.

The grant of stay of execution is an equitable remedy which is not granted as a matter of course, the applicant must show substantial or exceptional reasons, which the court has a duty to painstakingly determine. What will amount to or constitute special or exceptional circumstance for the purpose of granting a stay of execution vary from case to case.

By and large, such circumstance must involve a consideration of some collateral circumstances and perhaps in some cases inherent matters which may unless the order is granted,

(a) Destroy the subject-matter of the proceeding.

(b) Foist upon the court especially the Court of Appeal a situation of complete helplessness.

(c) Render nugatory any order or orders of the Court of Appeal.

(d) Generally provide a situation in which whatever happens to the case and in particular even if the appellant succeeds in the court of appeal there could be no return to the status quo.

Ajayi v. Oladele (1999) 7 NWLR (Pt. 612) 567; UBN Ltd. v. Odusote Bookstore Ltd. (1994) 3 NWLR (Pt. 331) 129.

The burden is however on the applicant to prove that special or exceptional circumstances exist for the court to grant the application and suspend the execution of judgment. Kigo v. Holman Bros. (Nig.) Ltd. (1980) 5-7 SC 60; Okafor v. Nnaife (1987) 4 NWLR (Pt.64) 129.

In the circumstance of the application, the court before coming to a decision on whether or not to grant a stay of execution pending appeal considered:

1. Whether the applicant established special or exceptional circumstances in which case, the court would grant a stay.

Whether or not granting a stay pending appeal would render the appeal nugatory such that the res would be destroyed before the appeal is heard.

Whether making the applicant to satisfy the judgment would make his financial position such that he could not prosecute the appeal. Although poverty per se is said not to be a ground for granting a stay, the pecuniary position of the applicant vis-a-vis the prosecution of the appeal is taken into account.

Whether it will be difficult to secure the refund of the judgment debt or the damages and costs from the respondent, if the appeal succeeds. For this purpose, the financial ability of the respondent is taken into account.

Kigo v. Holman Brothers (1980) 5-7 SC 60, Balogun v. Balogun (1969) 1 All NLR 349.

The special or exceptional circumstances relied upon by the applicant are as follows:-

That the ground of appeal is cogent and substantial, which is the issue of jurisdiction of the trial court. The contention of the applicant is that the transaction between the parties based on exh. A is illegal and unenforceable. The transaction contravenes sections 1, 2 and 3 of the Money Laundering Act, Decree No.3 of 1995, Vol. 9, Laws of the Federation.

The refusal to grant a stay would destroy the subject-matter of the appeal, which to him is the sum of N800, 000 set up as counterclaim against the sum of 1.35 million Naira – which will have the effect of foisting upon the Court of Appeal a situation of complete helplessness and render nugatory any orders of the court.

Granting of the stay would preserve the status quo and provide the applicant the means to prosecute the appeal as the applicant has every chance of succeeding in his appeal.

I shall now consider these special circumstances which form the pivot of the applicant’s request for stay of the judgment of the trial court. The issue of jurisdiction has always been considered substantial by the courts of record and they readily exercise their discretion in favour of granting a stay based on same where genuinely raised by the applicant. The applicant in this case raised the issue of the illegality of the transaction between him and the respondent which consequently called into question the issue of the jurisdiction of the trial court. The applicant in the application at the lower court relied upon section 1(1)(a) of the Exchange Control (Anti Sabotage) Act, Cap. 114, Laws of the Federation. It was his contention that the transaction which was the basis of the respondent’s claim was in breach of same. It is noteworthy that the transaction between the parties took place in 2003. Decree No.8 of 1995, the Exchange Control (Repeal) Decree and Decree No. 17 of 1995 Foreign Exchange (Monitoring and Miscellaneous Provisions) Decree had repealed the enabling statute cited by the applicant. Section 38(1) of Decree No. 17 of 1995 provides that the following enactments are hereby repealed as follows:-

(a) Exchange Control (Anti Sabotage) Decree, 1984.

(b) The Foreign Currency (Domiciliary Account) Decree, 1985.

The Second Tier Foreign Exchange Market Decree, 1986.

In the year 2003 when the transaction between the parties took place, the Exchange Control Anti-Sabotage Decree, 1984 was no longer operative. In the application before this court; the applicant cited Money Laundering Act Decree No.3 of 1995. The Foreign Exchange (Monitoring and Miscellaneous) Decree 19 of 1995 now regulates all foreign exchange transactions. This particular transaction between the parties was routed through a bank. The defendant cannot therefore be held as a victim of illegality in a transaction undertaken by a properly constituted and licenced bank.

It cannot be concluded by this court that the issue raised in the grounds of appeal is substantial and same cannot be relied upon as exceptional or special circumstance to grant the application. Estoppel by conduct or estoppel by matter in pais can easily be raised in favour of the respondent, having substantially performed the transaction with the payment of $80,000 dollars out of the $90,000 with a balance of $10,000 due from him, he cannot turn round to plead illegality of the entire transaction. Nsirim v. Nsirim (2002) 3 NWLR (Pt.755) 697.

The applicant raised the issue of the preservation of the res.

The res in this case are the sum of 1.35 million Naira as money paid for a consideration that failed. The applicant failed to pay back the money, and even after judgment of court, he is applying for stay of execution of that judgment. The res, the judgment debt is not by any standard perishable. The respondent gave the guarantee and even deposed to his source of income to substantiate that he is not a man of straw, and that he would readily make the judgment debt available if the applicant should win on appeal. The applicant did not dispute this.

The applicant also pleaded that if he pays the judgment debt, he would not have the means to prosecute his appeal. Although poverty is not a reason to grant a stay of execution, a situation where an applicant will be unable to exercise his constitutional right of appeal due to impecuniosity will be a special circumstance that may persuade the court to grant such applicant an unconditional stay.

The court in the circumstance will have to consider:-

(a) The ability of the respondent to refund the judgment.

(b) The ability of the applicant to pursue his appeal if ordered to pay the judgment debt pending appeal.

This is a situation in which the court has to consider the competing rights of the parties, the successful party, the respondent and the unsuccessful party, the applicant. Deduwa v. Okorodudu (1974) 1 All NLR 272; Uniport v. Kraus Thompson Organisation (1999) 11 NWLR (Pt. 625) 91.

The applicant unlike the respondent disclosed nothing to substantiate his impecuniosity. All he requested from this court is to be allowed to use the fruits of the respondent’s judgment to prosecute and appeal against him. Any order to this effect will amount to the court destroying with another hand what it has built with one hand.

The court should not encourage a situation where an order of stay should be seen as a substitute to a judgment the trial court denied the party.

In summary, the applicant has failed to establish the exceptional or special circumstance that would entitle him to this court exercising its discretion in favour of granting the stay of execution of the judgment delivered on 16/2/04. The application is hereby refused.

No order as to costs.

Other Citations: (2005)LCN/1784(CA)