Unibiz (Nig.) Ltd. V. Commercial Bank Credit Lyonnais Ltd (2003)

LAWGLOBAL HUB Lead Judgment Report

O. EJIWUNMI, J.S.C.

This appeal is against the judgment of the Court of Appeal (Lagos Division: Coram Oguntade, Galadima, Aderemi, JJCA). The leading judgment of the court was delivered by Aderemi, JCA, with which the other Justices concurred, dismissed the appeal of the appellant from the ruling made by Okeke, J. of the Federal High Court, Lagos. The action was commenced by the respondents, who as applicants before the Federal High Court, with an ex-parte originating summons for the following orders: –

” (1) An order of this Honourable Court directing the receiver to take such steps as may be necessary to realize the assets of the respondent with a view to paying its outstandings to the applicant.

(2) An order of this Honourable Court restraining the respondent, its agents, privies and assigns including but not limited to its directors, and officers from doing anything that would prevent the receiver from performing his lawful duties as a receiver.

(3) And for such further order or orders as this Honourable Court may deem fit to make in the circumstances.”

In support of this application, Olugbenga Ojo, a senior official of the applicant bank attached to its Debt Recovery Unit, deposed to an 18-paragraphed affidavit. And in order to appreciate why the applicant had to have recourse to the court, I deem it necessary to refer to paragraphs 6, 7, 8, 9, 10, 11, 12, 14, 15 and 16.

“6. By the end of September, 1999, the exposure of the respondent to the applicant stood at N77,194,576.30 and the charge against the assets of the respondent has been up-stamped to cover this amount.

7. Over a period of time, the applicant had made series of efforts to recover the large outstanding sum of money due to it from the respondent to no avail.
8. That arising from the above, the applicant sometime in 1998, appointed Mr. Babington Ashaye, Chartered Accountant of 21 Araromi Street, Off Moloney Street, Lagos as Receiver/Manager of the respondent company. A copy of the Deed of Appointment dated 3rd of June, 1998 is attached herewith and marked EXHIBIT 0F 3.
9. That as a result of entreaties by the respondent, Mr. Babington Ashaye was instructed by the applicant bank not to assume his position as receiver in order to give the respondent time to make good its promise to make arrangements for the liquidation of its outstanding indebtedness to the applicant.
10. That whilst negotiation was going on between the applicant and the respondent, the respondent instituted suit No. LD/1978/98 in which it alleged that it was not indebted to the applicant bank and the bank was obliged to file a defence to the said suit and make a counterclaim against the respondent.
11. That the respondent’s action as deposed to in paragraph 10 above was taken by it with full knowledge that its claim was not meritorious but was initiated for the sole purpose of frustrating and or preventing any action the applicant might want to take to recover the outstanding loan.
12. That in proof of the facts stated in paragraph 11 hereof the respondent pleaded with the applicant bank to restructure the repayment of the credit facilities granted by it and the applicant did oblige the respondent as shown in the documents attached herewith as exhibit OF 4.
13. That inspite of concessions made by the applicant bank, the respondent has still not responded to demands for the liquidation of the sums outstanding against it hence the desire by the applicant to direct the Receiver/Manager to take over the assets and management of the respondent.
14. That on the advice of its solicitors, fresh instrument of appointment has been issued to the Receiver/Manager – Exhibit OF 6.
15. That the applicant is desirous of having the appointment of the Receiver confirmed by this Honourable Court and is also seeking the protection of the court to restrain the respondent from interfering with and or preventing the Receiver from performing the functions of his office.”

Pursuant to this application, the learned Judge of the Federal High Court made the following orders: –

“1. That the receiver is hereby directed to take such steps as may be necessary to realise the assets of the respondent with a view to paying its outstanding to the applicant bank.

2. That the respondent, its agents, privies and assigns including but not limited to its directors and officers is hereby restrained from doing anything that would prevent the Receiver from performing his lawful duties as a Receiver.”

As the appellant was dissatisfied with the ruling and orders of the court, an appeal was lodged with the court below. As the appellant was still not satisfied with the judgment of that court, it appealed further to this court. Pursuant to the rules of this court, briefs were filed and exchanged between the parties. For the appellant, the issues identified in its brief for the determination of the appeal are as follows: –

“(i) Who is the proper party that has locus standi as between a debenture holder who has appointed a Receiver/Manager and the Receiver/Manager, to institute an action under section 391 of the CAMA to protect the assets forming the subject matter of the Receivership

(ii) Whether the Court of Appeal was right in law in holding that the orders made by the trial court upon an ex-parte application were properly made.”

In the brief filed on behalf of the respondent, these issues were identified for the determination of the appeal: –

“(i) Does the respondent lack locus standi to invoke the jurisdiction of the lower (sic) trial court under section 391 of CAMA as a joint applicant.