GLOBAL BANK LTD v. STANDARD ALLIANCE INSURANCE
(2010)LCN/3606(CA)
In The Court of Appeal of Nigeria
On Friday, the 5th day of March, 2010
CA/L/462/02
RATIO
PROCEDURE: NATURE OF A TRIAL UNDER THE UNDEFENDED LIST PROCEDURE
Trial under the undefended list procedure is very simple and straight forward. It allows a fast track method of trial of a suit by affidavit evidence where the claim of the plaintiff is in respect of debt or liquidated money demand in which the plaintiff deposed in his supporting affidavit that the defendant has no defence to the action and the defendant fails, by the averments in his affidavit supporting notice of intention to defend, to disclose a prima facie defence. It is not the duty of the trial court to consider, at that stage, the merits of the defence. It suffices if a prima facie defence has been disclosed, in which case the court has nothing else to do than to transfer the case to the general cause list and conduct full trial. The Court of Appeal per Mahmoud Mohammed, J.C.A. (as he then was) in the case of Agro Millers Ltd v C.M.B. (supra) observed thus:
‘It is not the duty of the court while considering action under the undefended list procedure to determine at that stage whether the defence will ultimately succeed. The duty of the court at this stage is to look at the facts as averred in the defendant’s affidavit in support of the notice of intention to defend and see if those facts can prima facie support a defence to the action on the merit. Whether that defence will ultimately succeed is totally irrelevant at that stage’. PER HUSSEIN MUKHTAR, J.C.A.
PROCEDURE: MEANING OF DISCLOSING A DEFENCE ON MERIT UNDER THE UNDEFENDED LIST PROCEDURE
Disclosing a defence on the merit simply means showing a prima facie defence and has nothing to do with whether it will succeed as that is only determinable from the merits of the case, which is extraneous at the stage of undefended list proceedings. In Nya v Edem (supra) this court per Opene, J.C.A. observed at page 361 paras B-C thus:
‘An affidavit disclosing a defence on the merit does not mean that the defendant must show that his defence must succeed at any event or that he must show a rock proof or iron cast defence. All that it means is that the defendant must show prima facie that he has a defence to the plaintiff’s action. The defence may fail or succeed but it is not the business of the court to determine that at this stage; this can only be done at the trial’ PER HUSSEIN MUKHTAR, J.C.A.
PROCEDURE: PURPOSE OF THE UNDEFENDED LIST PROCEDURE
The real purpose of the undefended list procedure is to deal summarily with the plaintiff’s claim and enter quick judgment if the defendant has no defence to such claim in order to save time, and unnecessary expense. If really the plaintiff’s claim is a liquidated one or a clear debt in respect of which the defendant who has had an opportunity of admitting or denying the claim does not dispute it by raising a prima facie defence, the court should even by the dictates of common sense, enter judgment for such plaintiff without further ado, The court must, however, view the evidence averred in both affidavits liberally in order to determine if any defence on the merit has been disclosed by the defendant against the plaintiff’s claim. If there is disclosure of a prima facie defence, the court can no longer enter judgment under the undefended list procedure but must transfer the case to the general cause list. In Santory Co. Ltd v Elabed, Oguntade, JCA (as he then was) aptly observed at page 554 paras E-F thus:
‘In the instant case, there was a disputed issue of fact which was very crucial in its effect upon the case of the respondent. The respondent had deposed that he worked for the appellants for a period of ten months and that he was only paid for a period of four months. The appellants on the other hand deposed that the respondent only worked for four months for which he was fully paid. How was the lower court able to resolve the obvious conflict on the affidavits of parties? In such setting as this, the trial judge should have transferred the case to the general cause list’. PER HUSSEIN MUKHTAR, J.C.A.
JUSTICES
BODE RHODES-VIVOUR Justice of The Court of Appeal of Nigeria
PAUL ADAMU GALINJE Justice of The Court of Appeal of Nigeria
HUSSEIN MUKHTAR Justice of The Court of Appeal of Nigeria
Between
GLOBAL BANK LTD Appellant(s)
AND
STANDARD ALLIANCE INSURANCE Respondent(s)
HUSSEIN MUKHTAR, J.C.A.(Delivering the Leading Judgment): This appeal is brought against the decision of the High Court of Lagos State delivered by S. O. Ojikutu-Oshode, J. on 1st February, 2002 entering judgment under the undefended list procedure against the appellant herein.
Hostilities between the parties originated from a credit facility granted by the appellant to one of its customers known as Interglobal Services limited. The respondent issued a performance guarantee bond in the sum of Seventy Million Naira (N70,000,000) in favour of the appellant guaranteeing repayment of the facility .
When Interglobal Services Ltd defaulted in repayment of the facility, the appellant sued both the company and the respondent in another suit, which is not the subject of this appeal. Subsequently the respondent, who is also a customer to the appellant, sought to withdraw the sum of Two Million, Two Hundred and Sixty Thousand, Three Hundred and Fourteen Naira, Fifty Three Kobo (N2,260,314.53) from its fixed deposit account with the appellant. The appellant refused to allow that withdrawal claiming right of lien/set-off on account of the N70,000,000:00 guaranteed by the respondent, which has not been redeemed.
The respondent filed a suit against the appellant under the undefended list to recover its money in the fixed deposit account being withheld by the appellant. The appellant filed a notice of intention to defend supported by an affidavit of Twenty one paragraphs. The depositions in paragraphs 5-19 thereof state as follows:
“5 That sometimes in 1987, the plaintiff opened a fixed deposit account with the defendant.
6. That the defendant denies ever advising the plaintiff on the 6th June, 1999 that the plaintiff’s deposit stood at N1,727,946.89 or any sum whatsoever at maturity date on the 20th of June, 1999. The defendant puts the plaintiff to the strictest proof thereof.
7. That the defendant contends that on 12th August, 1998, the defendant granted an overdraft facility of N50 Million to one Interglobal Services Ltd to finance the importation of various products such as cements, rice and sugar. Attached as exhibit ‘A’ is a copy of the facility letter.
8. That the said facility was repayable in 90 days from the proceed of the sale of the said goods at an interest rate of 26% per annum but subject to variations in statutory regulations and money market.
9. That on the 2nd of March, 1999 Interglobal Services Ltd approached the defendant and claimed to have secured a local purchase order for the supply of N120,000 bags from one Standard Construction Company Ltd at Abuja.
10. That the defendant refused to release the said 120,000 bags of cement unless Interglobal Services obtain a Performance Guarantee Bond from a reputable company.
11.That the Interglobal Ltd sought for and obtained from the plaintiff a Performance Guarantee Bond issued in favour of the defendant.
12. That by and under the said Performance Guarantee Bond the plaintiff undertook to indemnify the defendant to the tune of N70,000,000 (Seventy Million Naira) in the event of default of payment by Interglobal Services Ltd.
13.That consequent upon and relying on the assurance and guarantee provided for by the plaintiff in the said Performance Guarantee Bond the defendant permitted Interglobal Services Ltd to remove from the defendant’s warehouse the 120,000 bags of cement out of the said 300,000 bags for the purpose of supplying same to Standard Construction Company Ltd.
14.That while the defendant was waiting to receive payment from Interglobal Service Ltd the defendant later discovered on enquiries made, that Interglobal Services Ltd did not in fact supply the 120,000 bags of cement to Standard Construction Company.
15.That up till date, Standard Construction Company denied ever taking delivery of the 120,000 bags of cement and Interglobal Services Ltd has refused, failed and neglected to pay the amount due from the proceed of sale of the 120,000 bags of cement.
16.That in spite of repeated demand made to the plaintiff to fulfill its obligation to the defendant as contained in the Performance Guarantee Bond, the plaintiff has also failed, refused and/or neglected to pay to the defendant the sum of N70 Million due to the defendant.
17.That upon the refusal of the plaintiff to fulfill its obligation to the defendant on the Performance Guarantee Bond, the defendant exercised its right of lien over the remaining amount in the plaintiff account.
18.That the above facts the subject matter of suit No. LD/287/2000 – Global Bank Ltd v Standard Alliance Insurance Ltd and ORS.
19.That it is in the interest of justice that the defendant be allowed to defend this suit as it has a good defence”.
The learned trial judge considered these averments and held that they did not disclose a defence on the merit to justify transferring the case to the general cause list. He observed, in the judgment, thus:
”The law is quite explicit on this. That is to say that in the absence of any agreement or of circumstances from which such an agreement could reasonably be implied, a bank has no power to withhold money of a customer in a fixed deposit with it without the express authority of the customer to do so. In the present suit the defendant has not adduced any evidence to show that in the event of default by the company on the Performance Bond Guaranteed by the plaintiff the defendant shall have a lien on the balance of money outstanding in the fixed deposit account held by the defendant in favour of the plaintiff”.
The appellant was dissatisfied with the judgment and appealed against it on seven grounds which are hereunder reproduced less their particulars.
‘1 The learned trial judge erred in law when she refused to grant leave to defend to the appellant, when it was clear from the materials before the court that the appellant had made out a case entitling it to leave to defend.
2 The learned trial judge erred in law when she held that the appellant had not established a right of lien on the respondent subject money.
3 The learned trial judge misdirected herself in law when she held that:
The law is quite explicit on this. That is to say that in the absence of any agreement or of circumstances from which such an agreement could reasonably be implied, a bank has no power to withhold money of a customer in a fixed deposit with it without the express authority of the customer to do so. In the present suit the defendant has not adduced any evidence to show that in the event of default by the company on the Performance Bond Guaranteed by the plaintiff the defendant shall have a lien on the balance of money outstanding in the fixed deposit account held by the defendant in favour of the plaintiff”.
4 The learned trial judge erred in law when she held as follows:
‘That is to say that in the absence of any agreement or of circumstances from which such an agreement could reasonably be implied, a bank has no power to withhold money of a customer without the express authority of the customer to do so.
5 The learned trial judge erred in law when she held as follows:
In the present suit the defendant has not adduced any evidence to show that in the event of default by the company on the Performance Bond Guaranteed by the plaintiff the defendant shall have a lien on the balance of money outstanding in the fixed deposit account held by the defendant in favour of the plaintiff.
6 The learned trial judge misdirected herself when she held that the subject matter in suit No. LD/287/2000 relates only to the plaintiff liability to the defendant under the performance Bond, ‘which is a completely different matter to the present case’.
7. The learned trial judge erred in law when it held that the defendant has failed to raise substantial issues in its affidavit which ought to be tried on its merits.
Three issues were distilled from the above seven grounds by the learned counsel for the appellant as follows:
‘1. Whether the learned trial judge was right in proceeding to determine or decide upon the defence raised by the appellant on the merit, holding that the same was unmeritorious and thereby proceeding to refuse the appellant leave to defend.
2. Whether the learned trial judge was right in holding that the appellant having failed to establish the existence of an express agreement to that effect, cannot rely on the defence of right of lien.
3. Whether the learned trial judge was right in holding that the appellant had failed to raise substantial issues in its affidavit thus making it unnecessary to go to full trial on the merit.
The respondent however raised two issues thus:
‘1 Whether the bare assertion by the appellant that it had exercised a right of lien/set off over money kept with it for safekeeping without more, was enough to have enabled the lower court exercise its discretion in favour of the appellant to let it in to defend this action.
2. Whether the appellant in all the surrounding circumstances of this suit, can rely on a right of lien/set off to justify its refusal to honour the banker/customer obligations due and owing from it under the matured deposit account kept with it by the respondent in the absence of agreement so to do, to discharge future obligations which are contingent upon the happening of some event’.
The common denominator in all the issues raised that boils down to the core issue for determination is whether the defendant/appellant’s affidavit supporting the notice of intention to defend has disclosed a defence on the merit that could warrant an order by the court below transferring the suit from the undefended to the general cause list.
The learned counsel for the appellant submitted that the appellant has, by averments in the supporting affidavit raised defence of lien and/or set off against the respondent’s claim. The learned trial Judge, it was further submitted, should not have determined the merits of the defence disclosed in the supporting affidavit at that stage, but rather should have transferred the matter to the general cause list so that the case may be tried on the merits. He relied on Engineer Peter Nya v Chief Joseph Edem & Anor (2000) 8 NWLR (pt. 669) 349; Santory Co. Ltd v Elabed (1998) 12 NWLR (pt.579) 538; Jos North L.G. V Daniyan (200) 10 NWLR Pt 675 page 281 at 289-290; Ekuma v. Silver Eagle Shipping Agencies Ltd (1987) 4 NWLR pt 68 page 472; Peat Marwic, Ani, Ogunde & CO v. Okike (1995)1 NWLR (pt 369)71; Agwuneme V Eze (1990) 3 (pt 137) page 242; Macaulay V NAL Merchant Bank Ltd (1990) 4 NWLR pt 144 page 283; Jipreze v. Okonkwo (19787)3 NWLR (pt 62) 737; Eneji Iter’l TRANS Ltd (2000) 11 NWLR pt 678 P 225 at 232-234; Knightsbride Ltd Vatamako (2000) 2 NWLR pt 645 p. 385. The learned counsel for the appellant urged the court to resolve the issue in favour of the appellant.
However, the learned counsel for the respondent referred to the affidavit evidence as averred by both parties and submitted that the defendant in an undefended list suit cannot be let in to defend the action unless he delivers a notice of his intention to defend the suit and accompanies same with an affidavit which discloses a defence on the merit. In other words, the defendant must satisfy the court that he, prima facie, disputes the claim of the plaintiff and as such should be let in to put across his own case by evidence. He referred to the definition of ‘prima facie’ in the Black’s Law Dictionary 6th Edition at page 1189 as follows:
‘At first sight; on the first appearance; on the face of it; so far as can be judged from the disclosure; presumably; a fact presumed to be true unless disproved by some evidence to the contrary’.
The learned counsel for the respondent then further submitted that it was not enough for the defendants to merely depose that they had exercised a right of lien/set off over money kept in a fixed deposit with it without showing how they became entitled to exercise such right. It was further submitted that the appellants have failed to satisfy the requirement of order 60 rule 3 of the High Court of Lagos State (Civil Procedure) Rules 1994 (equivalent to order 11 r. 4 of the 2004 Rules) under which the suit was heard at the court below and that the court had rightly exercised its discretion by determining the case under the undefended list. He cited, in support of that contention, the cases of Agro Millers Ltd v C.M.B. (1997) 10 NWLR (pt. 525) 469 at 477-478 H-A; Nishizawa v Jethwani (1984) 12 S. C. 234; Macaulay v Nal Merchant Bank Ltd (1990) 4 NWLR (pt. 144); Taiwo v Danbare (2001) 14 W.R.N. 52.
The learned counsel, for the respondent urged the court to resolve this issue against the appellant because, it failed to do what was required to be entitled to defend the action. The appellant, he further observed, failed to deny the deposition in paragraph 11 of the plaintiff’s affidavit in support of the ex-parte application for placement of the suit under the undefended list to the effect that the respondent placed a deposit with the appellant which matured on 19th March 2001. Failure to deny this claim, it was further argued, entitled the respondent to judgment under the undefended list procedure. See Aikabeli v A.P. Plc (2001) 3 W.R.N 140 at 148.
It was further contended that the cases cited by the appellant’s counsel were distinguishable. In Nya v Ndem (supra), for example the defendant raised a counter claim in the affidavit supporting the notice of intention to defend. The respondents counsel also submitted that since the facts in the plaintiff’s (respondent’s) affidavit were not denied by the plaintiff (appellant) in the affidavit supporting the notice of intention to defend, such facts are deemed to be admitted and the learned trial judge was, therefore, duty bound to act on same and enter judgment under the undefended list.
Trial under the undefended list procedure is very simple and straight forward. It allows a fast track method of trial of a suit by affidavit evidence where the claim of the plaintiff is in respect of debt or liquidated money demand in which the plaintiff deposed in his supporting affidavit that the defendant has no defence to the action and the defendant fails, by the averments in his affidavit supporting notice of intention to defend, to disclose a prima facie defence. It is not the duty of the trial court to consider, at that stage, the merits of the defence. It suffices if a prima facie defence has been disclosed, in which case the court has nothing else to do than to transfer the case to the general cause list and conduct full trial. The Court of Appeal per Mahmoud Mohammed, J.C.A. (as he then was) in the case of Agro Millers Ltd v C.M.B. (supra) observed thus:
‘It is not the duty of the court while considering action under the undefended list procedure to determine at that stage whether the defence will ultimately succeed. The duty of the court at this stage is to look at the facts as averred in the defendant’s affidavit in support of the notice of intention to defend and see if those facts can prima facie support a defence to the action on the merit. Whether that defence will ultimately succeed is totally irrelevant at that stage’.
The question is not whether or not a defence of lien or set off is open to the appellant, but whether lien or set off is a defence that could be raised in a liquidated money demand. If it qualifies as a prima facie defence, the case must be transferred to the general cause list. It has nothing to do with whether the appellant was entitled to raise it, as that would tantamount to going into the merits of the case.
Disclosing a defence on the merit simply means showing a prima facie defence and has nothing to do with whether it will succeed as that is only determinable from the merits of the case, which is extraneous at the stage of undefended list proceedings. In Nya v Edem (supra) this court per Opene, J.C.A. observed at page 361 paras B-C thus:
‘An affidavit disclosing a defence on the merit does not mean that the defendant must show that his defence must succeed at any event or that he must show a rock proof or iron cast defence. All that it means is that the defendant must show prima facie that he has a defence to the plaintiff’s action. The defence may fail or succeed but it is not the business of the court to determine that at this stage; this can only be done at the trial’
The real purpose of the undefended list procedure is to deal summarily with the plaintiff’s claim and enter quick judgment if the defendant has no defence to such claim in order to save time, and unnecessary expense. If really the plaintiff’s claim is a liquidated one or a clear debt in respect of which the defendant who has had an opportunity of admitting or denying the claim does not dispute it by raising a prima facie defence, the court should even by the dictates of common sense, enter judgment for such plaintiff without further ado, The court must, however, view the evidence averred in both affidavits liberally in order to determine if any defence on the merit has been disclosed by the defendant against the plaintiff’s claim. If there is disclosure of a prima facie defence, the court can no longer enter judgment under the undefended list procedure but must transfer the case to the general cause list. In Santory Co. Ltd v Elabed, Oguntade, JCA (as he then was) aptly observed at page 554 paras E-F thus:
‘In the instant case, there was a disputed issue of fact which was very crucial in its effect upon the case of the respondent. The respondent had deposed that he worked for the appellants for a period of ten months and that he was only paid for a period of four months. The appellants on the other hand deposed that the respondent only worked for four months for which he was fully paid. How was the lower court able to resolve the obvious conflict on the affidavits of parties? In such setting as this, the trial judge should have transferred the case to the general cause list’.
The court below unfortunately delved in to controversial issues instead of simply considering if the defendant’s (i.e appellant’s) affidavit supporting the notice of intention to defend has disclosed a prima facie defence. Whether there was any agreement or circumstance that could sustain the appellant’s claim to lien or set off could only have been considered in a trial under the general cause list. Once a prima facie defence has been disclosed the defendant could not be required to show further evidence by which such defence could be established otherwise it would tantamount to placing the burden of proof on the defendant right from the onset, which burden is clearly on the plaintiff. It was further observed in the Sanitory Co. Ltd v Elabed at page 544 para G thus:
”A court should refrain from adopting the approach that a defendant must upon his affidavit show that he could get a decision in his favour upon a full trial. Such approach will lead to a miscarriage of justice as this has the effect of placing the burden of proof on the defendant”.
Any consideration by the court on intricate areas of the law which requires full address of counsel and research by the court will automatically entitle the defendant to be allowed to defend the action by transferring the matter to the general cause list. In the present case the court below observed as follows (see page 17 of the record of appeal):
”The law is quite explicit on this. That is to say that in the absence of any agreement or circumstance from which such an agreement could reasonably be implied, a bank has no power to withhold money of a customer in a fixed deposit with it without the express authority of the customer to do so. In the present suit the defendant has not adduced any evidence to show that in the event of default by the company on the Performance Bond Guaranteed by the plaintiff the defendant shall have a lien on the balance of money outstanding in the fixed deposit account held by the defendant in favour of the plaintiff”.
Where a defendant gives notice of intention to defend in an undefended list procedure and his affidavit discloses a prima facie defence, he shall be entitled, ‘ex-debito justiae’, to defend the action but cannot be shut out simply because the affidavit does not contain further evidence to prove such line of defence. The appellant was not required, as the court below erroneously held, to adduce evidence to show that in the event of default by the company on the Performance Bond Guaranteed by the respondent, the appellant shall have a lien on the balance of the money outstanding in the fixed deposit account held by the respondent on behalf of the appellant. The only business for the court at that stage was to see if a prima facie defence has been disclosed. Consideration of the merits of such disclosed defence could only be inquired into after transferring the case to the general cause list.
The court below was therefore in error by closing its eyes to the prima facie defence or claim of lien or set off made by the appellant against the respondent and proceeding to enter judgment against the appellant on the undefended list in favour of the plaintiff as good as if nothing worthy of consideration in a full trial had been disclosed in the appellant’s affidavit. That decision was clearly perverse and ought to be set aside. The singular issue for determination is therefore resolved in favour of the appellants and the appeal which succeeds per force is hereby allowed. The judgment entered under the undefended list procedure by the lower court on the 1st February, 2002 is accordingly set aside. It is further ordered that the respondent’s claim against the appellant be and is hereby transferred to the general cause list and same be reassigned by the Chief Judge of Lagos State to another judge of that court for trial on these merits.
The appellant is entitled to cost against the respondent assessed at N30,000:00
BODE RHODES-VIVOUR J.C.A.: I have had the privilege of reading in advance the judgment just delivered by my learned brother Mukhtar, J.C.A. I agree that this appeal should be allowed with the consequential orders his lordship makes.
PAUL ADAMU GALINJE, J.C.A.: I read before now, the judgment just delivered by my learned brother, Mukhtar, J.C.A. and I agree with the reasoning contained therein and the conclusion arrived thereat.
My learned brother has carefully dealt with the sole issue raised in the appeal and arrived at a just decision. For the same reasons ably articulated by my learned brother, I too allow the appeal and subscribe to all the consequential orders made in the lead judgment including Order as to cost.
Appearances
O. E. Ale-DanielFor Appellant
AND
O. Olalero with Yomi AkinlagunFor Respondent
