United Bank of Kuwait Plc V Chief B.o. Rhodes (1999)

LawGlobal-Hub Lead Judgment Report

SANUSI, J.C.A.

This is an appeal against the ruling of A.A. Alabi J., of the Lagos Division of Lagos State High Court granting the Respondent’s application seeking an order that the Appellant herein give security for costs in the sum of ?50,000.00 (Fifty Thousand Pounds Sterling).

The Appellant, a public liability company sued the Respondent at the lower court by a writ of summons accompanied by a Statement of Claim for the sum of ?97,528.55 or its equivalent in naira plus accruable interest on the loan facility granted the Respondent which the latter failed to settle. On being served with the writ and statement of claim the Respondent filed statement of defence along with a counter-claim to the tune of ?280.000.00 for damages arising out of what he called fraudulent, reckless and hasty sale of his flat in the United Kingdom. It is sequel to the counter-claim that the Respondent applied for an order for security for costs. The trial court after taking the application granted the order for security for costs for the sum of ?50.000. Aggrieved by the ruling of the lower court granting the said security for costs the Appellant appealed to his court.

Counsel for parties formulated one issue for this court’s determination and that is, whether the lower court properly exercised its discretion in ordering the Appellant to provide security for the Respondent’s costs in the sum of ?50,000.00 considering the circumstance of the case.

It is the submission of learned counsel for the Appellant that although the trial court had discretion to make order for security for costs to be provided it did not exercise such discretion judicially and judiciously. The learned counsel went further to argue that even though the trial judge correctly stated some of the principles to guide it in determining whether or not to grant such costs the said trial Judge did not apply these principles to the facts of the case. He further argued that there was no material placed before the lower court to justify the grant of the order and as such the order was made arbitrarily. Relying on the authorities of Nzeribe v. Dave Engineering Co. (1994) 8 NWLR (Pt.361) 124 and Anyah v. African Newspaper of Nigeria Ltd. (1992) 6 NWLR (Pt.247) 319 the learned counsel argued that an appeal court will only interfere with the exercise of discretion by lower court where such discretion was not exercised judicially and judiciously. This is the correct position of the law and I do not think he can be more correct than that.

In his brief, the learned counsel for the Respondent argued that the trial judge when making the order had applied the guiding principles, facts and circumstances of the case after evaluating them. He said the trial Judge’s order was not arbitrary. He further argued that the Appellant’s counsel did not show in which way the discretion was not exercised judicially and judiciously. He referred to the cases of Bamidele v. Commissioner of Local Government (1994) 2 NWLR (Pt.328) 568 at 584 and Eronini v. Iheuko (1989) 2 NWLR (Pt.101) 46 at 60/61.

Order 55 Rules 1 & 2 of the Lagos State High Court (Civil Procedure) Rules of 1994 gives the court power to, and suo motu or on the application of any Defendant, give security for costs to its satisfaction by way of deposit or otherwise or to give better security. It may as well order any Defendant to give further or better security for cots of any proceedings undertaken in his interest. Such order may be made at the commencement or during the currency of the proceedings. This is a discretionary power given to the court, albeit, such discretion must be exercised judiciously and judicially and in good faith. In other words, the discretion must not be exercised arbitrarily, capriciously or against the tenets of justice.

Also Order 55 of the same Rules gives the court the discretion to order Plaintiff who is ordinarily resident out of its discretion to give security for costs. The discretion must also be exercised in good faith without giving weight to irrelevant and unproved matters or omitting to consider relevant mattes. See University of Lagos v. Aigoro (1985) 1 NWLR (Pt.1) 143; Nneji v. Chukwu (1988) 3 NWLR (Pt.81) 184; Enekebe v. Enekebe (1964) 1 All NLR 102.

It is clear from the affidavit in support of the application before the lower court which gave rise to the ruling of the lower court which is now being appealed against, that the applicant in the lower court who is the Respondent in this appeal averred that the present Appellant is a company not registered in Nigeria but registered in the United Kingdom and was carrying its banking business there. It was also averred that it had no representative or agent in Nigeria and is also not incorporated under the Companies and Allied Matters Act of 1990. The Respondent also established in the affidavit evidence that it had a counter claim and that the Appellant had no agent or representative against whom an order for costs security may be executed upon the success of the counter-claim. The Respondent concluded that the Appellants will not be prejudiced if the application for giving security for cost is granted but he, on the other hand, will be prejudiced if such application is refused. It is clear that none of the averments mentioned above was controverted as the Appellant did not file any counter affidavit before the lower court.

Depositions in affidavit which are not countered or controverted are deemed to have been admitted. See Nwanganga v. Military Governor of Imo State (1987) 3 NWLR (Pt.59) 185 at 193. The Statement of Claim filed at the lower court also shows in its paragraph 1, that the company appellant is registered in the United Kingdom and is doing its business there. On this latter deposition or averment the learned trial judge had this to say in his Ruling at page 5:-

“It is therefore beyond any controversy that the Plaintiff in this case, is ordinarily resident out of the jurisdiction of this court. It is a case where other things being equal, the Plaintiff may be ordered to give security for costs.”

The learned trial judge went further to say the following on the same page:-

“Under Order 55 Rule 5 of the High Court of Lagos State Civil Procedure Rules 1994 costs of and incidental to all proceedings in the High Court, including the administration of Estate and trusts shall be in the discretion of the court or a judge in chambers shall have full power to determine by whom and to what extent the costs are to be paid.

This has the effect of conferring upon the judgment real discretion and indeed, the court is bound by virtue thereof to consider the circumstances of each case, and in the light thereof to determine whether and to what extent or for what amount a Plaintiff (or the Defendant as the case may be ordered to provide security for cost), italics mine. In exercising its discretion, the court will have regard to all the circumstance of the case. Security can only be ordered if the court thinks it just to order such security in the circumstance of the case.”