Vulcan Gases Limited V. Gesellschaft Fur Industries Gasverwertung A.G.(G.I.V.) (2001)

LAWGLOBAL HUB Lead Judgment Report

IGUH, J.S.C.

This is an appeal against the judgment of the Court of Appeal, Kaduna Division, delivered on the 3rd day of June, 1992 wherein the Court of Appeal affirmed the decision of R. D. Muhammad, J., as he then was, sitting at the Federal High Court of the Sokoto Judicial Division. The appellant being dissatisfied with the said decision of the Court of Appeal has further appealed, with leave, to this court.

I think it is necessary for a better appreciation of the issues that arise for decision in this appeal to give a background history of the dispute between the parties.

Following an agreement between the parties sometime in 1978, the respondent, Gesellschaft Fur Industries Gasvenvertung A.G. (G.I.V.), a foreign company with its headquarters in Geneva, Switzerland, shipped some quantities of oxygen and acetylene producing machines to the appellant at a total contract price of U.S. $606,852.00. The goods were cleared by the appellant from the Nigerian Ports Authority in Lagos without the production of the original Bill of Lading and it thereby avoided payment for the said machines. When the appellant failed to pay the purchase price of the goods, the respondent was obliged to commence a winding-up proceedings in suit No. FHC/KD/3/82 against the appellant at the Sokoto Judicial Division of the Federal High Court. This was with a view to recovering from the appellant the total contract price of U.S. $606,852.00 for which the goods were sold.

In the course of the proceedings, the parties went into negotiation with a view to resolving their differences out of court and the learned trial Judge was duly informed of this development on the 8th day of June, 1983. The negotiation was between Counsel for the two parties. In particular, the respondent, through its solicitors in Geneva, drew up its terms of settlement and got the same delivered to its Counsel in Nigeria on the 22nd November, 1983 with clear instructions to settle the case strictly on the conditions therein stipulated.

For some undisclosed reasons, however, the respondent’s Counsel in Nigeria on the 6th November, 1986 purported to agree to terms of settlement with the appellant’s Counsel which were at complete variance with those which his client had authorised. When the respondent became aware of this unauthorized development, it wrote to both its Counsel in Nigeria and to Counsel for the appellant stating categorically that it did not authorise the settlement on the terms in question and that it unequivocally rejected the same. This is on the ground that its Counsel in Nigeria had exceeded the express written instructions and authority given to him by the respondent. These letters were both dated the 18th December, 1986. The respondent in those letters made it clear that it did not recognise the validity of the transaction entered into by its Counsel. In reply, however, the appellant’s Counsel asserted that the authority of the said respondent’s Counsel to bind his client could not be questioned and that he would therefore insist on the recognition of the disputed terms of settlement of the claim. For his own part, the respondent’s Counsel in Nigeria wrote to the Registrar, Federal High Court, Sokoto, on the 14th day of May, 1987 conveying his client’s rejection of the disputed terms of settlement. The immediate reaction of the appellant’s Counsel was to address their letter of the 25th May, 1987 to the respondent’s Counsel stating that they had since filed a copy of the terms of settlement in court and that they would proceed to seek judgment based thereunder. This was inspite of the fact that they had been effected with actual notice that the said Terms of Settlement were in dispute and unacceptable to the respondent on the ground that they were reached by the respondent’s Counsel without authority and contrary to his instructions.

Although the appellant’s Counsel by their letter of the 25th May, 1987, to the respondent’s Counsel claimed that a copy of the Terms of Settlement had been filed by them in court, it is instructive that this representation was in fact incorrect. It was not until two months thereafter. That is to say, on the 27th July 1987 that the appellant’s Counsel went ahead to file the alleged Terms of Settlement in court. Strangely enough, it was on the same day, that is to say, the 27th July 1987 that the appellant’s Counsel moved the court in the absence of the respondent and its Counsel to enter judgment in the suit in terms of the disputed Terms of Settlement. The fact that there was a dispute as to the said Terms of Settlement was, however, not brought to the notice of the court by learned Counsel for the appellant. It was under such circumstance that the learned trial Judge. Ofili. J., in the mistaken belief that the purported Terms of Settlement represented the true agreement between the parties entered a consent judgment in respect thereof. He observed:

“…….. I am satisfied that the terms of settlement constitute the mutual agreement of the parties and I therefore enter judgment on terms of the settlement in Exhibit A.

No order as to costs,” (Italics supplied)

In consequence of this development, the respondent engaged the services of the law firm of Beatrice Fisher and Company, Legal Practitioners and instructed them to apply for the consent judgment to be set aside. This fresh proceeding which was commenced at the Federal High Court, Sokoto Judicial Division by way of Originating Summons is the origin of the present appeal. The originating summons was commenced by the respondent by its lawful attorney, one Olaniyi Okunlola Esq., a Barrister and Solicitor in the chambers of Beatrice Fisher and Co.

By the said Originating Summons dated the 27th day of June, 1988 the respondent, as the applicant, sought for the following orders:-

“1. A declaration that the consent judgment dated the 27th July, 1987, and given by this Honourable Court in. Suit No. FI-IC/KD/3/82, was given under a mistake of fact and misrepresentation, and is therefore a nullity.

2. A consequential order setting aside the consent judgment dated the 27th day of July, 1987.
3. An order directing that any amount of money that has been paid or which remained to be paid under the terms of Settlement dated 6th November, 1988. Exhibit “2” herein, be paid to this Honourable Court, pending the final determination of the actual liability of the respondent to the petitioner in Suit No. FHC/KD/3/82.”

At the hearing of the originating summons, the appellant herein raised a preliminary objection to the competence of the action. This was on the ground that the said Mr. Okunlola had not obtained a Power of Attorney at the time he filed the action, authorising him to institute the proceeding for and on behalf of the respondent. It was his submission that before a party could commence an action, it must be shown that he had locus standi in the matter. (Italic mine)

In his ruling delivered on the 25th January, 1989 the learned trial Judge considered the arguments in respect of the preliminary objection and dismissed the same. Upon a careful consideration of the prayers in the originating summons, the court granted reliefs 1 and 2, holding that the consent judgment was given under misrepresentation and mistake of fact. Accordingly, it set aside the said consent judgment made on the 27th July, 1987. The learned trial Judge, however, refused to gram prayer 3 but ordered instead that the sum of N247,625.53 paid to the respondent’s solicitors by the appellant for delivery to the respondent which amount the former held on to, be returned to the appellant forthwith. In his view, the money was paid under a mistake in that there was no agreement between the parties in respect of the payment and no useful purpose would, therefore, be served by paying the same into court pending the determination of the appellant’s actual liability as prayed for Said he :-