BREWTECH NIGERIA LIMITED v. FOLAGESHIN AKINNAWO & ANOR
(2016)LCN/8290(CA)
In The Court of Appeal of Nigeria
On Friday, the 11th day of March, 2016
CA/L/764/09
RATIO
COMPANY LAW: DEBENTURE; THE DEFINITION OF THE TERM DEBENTURE
What is a debenture? A debenture consists of a debt owed by a company to another secured by a deed which prescribes the condition of the realization of the debt. A debenture may be created over the fixed or floating assets of the company. When it is created over the floating assets, the debtor company is entitled to continue to use the assets in the ordinary course of its business, until the conditions prescribed for its realization occurs. When it occurs, the debenture holder, usually the creditor enforces his security by the appointment of a Receiver/Manager. The Manager under his powers in the debenture deed, takes over the assets of the company and the assets formerly available to the company now becomes fixed and is crystallized, and remains under the general control of the Receiver/Manager. See RIBSON V SMITH (1985) 2 CH. 118; RE CROMPTON & CO LTD (1914) 1 CH. 954.
The company ceases to have any right to deal with the assets. Its right thereto is suspended. The Receiver/Manager appointed by the debenture holder is now regarded as an agent of the company for the purposes of dealing with the assets in the Receivership. See CENTRAL LONDON ELECTRICITY LTD V BERNERS & ORS (1945) 1 K. B. D. 160. It is important to appreciate the fact that the company neither loses its legal personality nor its title to the goods in the receivership. See MOSES STEAMSHIP CO.LTD V WHINNEY (1912) AC 263 PER ATKINSON LJ; NEW DEVELOPMENT V CO-OP COMMERCIAL BANK (1978) 2 ALL E. R. 901. PER KARIBI-WHYTE, J.S.C. It is clear therefore that it is the company that issues a deed of debenture to the bank that had extended its facility to the company as occurred in this case. It is simply an acknowledgement of the debt. per. YARGATA BYENCHIT NIMPAR, J.C.A.
STATUTORY INTERPRETATION: WHETHER THE WORD “SHALL” IS A COMMAND WHICH COMPELS COMPLIANCE
I have noted the use of the word “shall” in the said provision and it is trite now that except in few cases, the word “shall” is a command which compels compliance. See the case of EMORDI V IGEKE (2011) 9 NWLR 41 where the apex Court held thus:
The employment of the word “shall” points to mandatory realm.”
And in the case of TABIK INVESTMENT LTD V GUARANTY TRUST BANK PLC (2011) LPELR-3131 (SC) the Court said:
“The word “shall” connotes mandatory discharge of a duty or obligation, and when the word is used in respect of a provision of the law that requirement must be met. The word “shall” may have other meanings, for when used in a legislation, it may be capable of translating into a mandatory act, giving permission or direction. See NONYE V. ANYICHIE & ORS (2005) 2 NWLR (Pt. 910) 623. The use of the word “shall” in the case at hand, to my mind conjures mandatoriness, the conditions of which must be met and satisfied.”
It therefore stands that the requirement of the law in S. 168 must be complied with. A deed of debenture must include the necessary particulars to qualify for registration by the Company and Allied Matter Act under Section 168. Inclusion of the necessary particulars may take the form of a schedule attached to the deed or incorporation by reference. In this case that was not done. The argument of the 2nd respondent is that no penalty is prescribed in the Act. That is true, but in the con of the word “shall” that is used in the provision, is compliance not required. A Court of law is required to enforce and give effect to mandatory provisions, see the authority of ADENIJI V NBN LTD (1989)1NWLR (Pt. 96) 212. per. YARGATA BYENCHIT NIMPAR, J.C.A.
CONTRACT: VOID AND VOIDABLE CONTRACT; THE DISTINCTION BETWEEN A VOID AND A VOIDABLE CONTRACT
There is a distinction between a void and a voidable contract as espoused by the apex Court in the case of FASEL SERVICES LIMITED & ANOR V NIGERIAN PORTS AUTHORITY & ANOR (2009) LPELR-1245 (SC) in the following words:
“The position of the law is that where a statute declares a contract or transaction between parties not only void but also imposes a penalty for violation, that contract or transaction is illegal ab initio. However where the legal sanction is merely to prevent abuse or fraud and no penalty is imposed for the violation of the provision of the statute, the violation is merely voidable and illegal. See SOLANKE V ABED, OIL FIELD SUPPLY CENTRE LTD V JOHNSON (1987) 2 NWLR (Pt. 58) 625 and IBRAHIM V OSIM (1988) 2 NWLR (Pt. 82) 25.” The Deed of Fixed and Floating Debenture is therefore voidable and not void abinitio. Failure to comply could throw up a number of issues. It could imply that the facility granted is unknown and that the stamp duty to government could also not be ascertainable thereby depriving government of the required revenue. per. YARGATA BYENCHIT NIMPAR, J.C.A.
CONSTITUTIONAL LAW: THE RIGHT TO FAIR HEARING; WHAT THE RIGHT TO FAIR HEARING INVOLVES
Fair hearing is constitutionally provided for in Section 36(1) of the 1999 Constitution and it states thus:
“In the determination of his civil rights and obligations, including any questions or determination by or against any government or authority a person shall be entitled to a fair hearing within a reasonable time by a Court or other tribunal established by law and constituted in such manner as to secure its independence or impartiality.”
Fair hearing is considered to be fair trial and they are synonymous as held in the case of MOHAMMED V KANO NATIVE AUTHORITY (1968) SCNLR 558 at 561 where the Supreme Court said thus:
“We think a fair hearing must involve a fair trial and a fair trial of a case consists of the whole hearing.”
Fair hearing is fundamental to every trial and it could arise incidentally in the course of proceeding or directly. The Court in the case of OYEYEMI V COMMISSIONER FOR LOCAL GOVERNMENT, KWARA STATE & ORS (1992) 23 NSCC (Pt 1) 37 had this to say:
“But sometimes, the breach of right of hearing could arise incidentally in the course of the proceedings. For example, part of the proceedings could be vitiated by want of hearing, even though a good part thereof is properly conducted. When such is the case a Court of justice cannot shut its eyes to the breach of the rule of fair hearing being a fundamental vice, the Court will yet go into the matter though it has arisen incidentally.”
Furthermore, fair hearing also lies in the procedure adopted by the Court in the determination of the case and not necessarily the rightness of the decision, See ORUGBO V UNA (2002) 9-10 SC 61 where TOBI, J.S.C. said thus:
“Fair hearing lies in the procedure followed in the determination of the case, not in the correctness.” per. YARGATA BYENCHIT NIMPAR, J.C.A.
JUSTICES
SIDI DAUDA BAGE Justice of The Court of Appeal of Nigeria
JOSEPH SHAGBAOR IKYEGH Justice of The Court of Appeal of Nigeria
YARGATA BYENCHIT NIMPAR Justice of The Court of Appeal of Nigeria
Between
BREWTECH NIGERIA LIMITED Appellant(s)
AND
FOLAGESHIN AKINNAWO
(Trading under the name and style of Respondents Folageshin Akinnawo & Co)
SKYE BANK PLC. Respondent(s)
YARGATA BYENCHIT NIMPAR, J.C.A. (Delivering the Leading Judgment): This appeal is against the judgment of the Federal High Court delivered on the 28th May, 2009 by HON. JUSTICE I. N. AUTA wherein the claim of the plaintiff was dismissed. Dissatisfied with the judgment the Appellant filed a Notice of appeal dated 13th September, 2011 setting out 7 grounds of appeal.
The Appellant took out a writ at the trial Court against the Respondents and by its amended statement of claim dated 25th of June 2007 sought the following reliefs:
i. A declaration that in the absence of a legal charge over the property of the Plaintiff, the letter of offer of N10,000,000.00 (Ten million naira) overdraft facility dated 30th January 2004 by the 2nd defendant and its acceptance by the Plaintiff constitute a simple as a mere creditors and the Plaintiff as mere debtor.
ii. A declaration that the Deed of Appointment of the 1st Defendant as Receiver/Manager is null and void as no Receiver/Manager can be appointed as a means of enforcing the repayment of any banking facility not secured by any charge.
iii. A Declaration that the purported Deed of fixed and Floating Debenture relied upon by the
2nd Defendant in appointing the 1st Defendant as Receiver/ Manager is invalid, null and void for noncompliance with the provision of CAMA 1990.
iv. A Declaration that the purported Deed of Fixed and Floating Debenture being relied upon by the 2nd Defendant in enforcing the repayment of the N10,000,000.00 (ten million Naira) overdraft facility is inadmissible in evidence in so far as it failed to comply with the provision of the Lagos State Lands Instrument Registration Law.
v. A Declaration that the invasion and occupation of the premises of the Plaintiff from to January to 26th April 2006 by the 1st Defendant based on an invalid document under which the power to appoint him was said to arise as well as an invalid disruption of the Plaintiff?s business activities and deprivation of peaceful enjoyment by the plaintiff.
vi. An order nullifying the purported appointment of the 1st defendant in furtherance of the said appointment by the 2nd defendant.
vii. An order nullifying all the actions taken by the 1st Defendant in furtherance of the said appointment by the 2nd defendant.
?viii. An order nullifying the purported deed of fixed and floating debenture
purportedly dated 22nd February 2005.
ix. An order compelling the defendant to refund the sum of N4,438,906. 16 (four million four hundred and thirty thousand nine hundred and six naira sixteen kobo only) being expenses purported to have been incurred by the 2ND Defendant on the purported deed of fixed and Floating debenture and in connection with the purported appointment of the 1st debenture and in connection with the purported appointment of the 1st defendant as the Receiver/manager as shown in the Plaintiff?s statement of Account for the period in question.
x. An order compelling the defendants to return the plaintiff?s equipment, plant and machinery and other moveable assets as well as those of the tenants Aseesa Engineering Company limited carted away from the Plaintiff?s premises to unknown destinations by the 1st Defendant purportedly in exercise of his power as Receiver/Manager. The details of all the equipment as annexed hereto.
?xi. In the ALTERNATIVE to claim 5 above an order for the payment of the sum of N128,749, 436.00( one hundred and twenty eight million seven hundred and forty nine thousand four hundred and thirty six Naira)
being the total value of the plaintiff?s equipment, plants and machinery and other moveable assets as well as the payment of the sum of N5,051,000.00( five million and fifty one thousand Naira only) being the value of the assets of the plaintiff?s tenants carted by the 1st Defendant in exercise of his powers as receiver/Manager.
xii. General damages in the sum of N30,000,000.00 (Thirty million Naira only) for the Defendant?s factory premises at Brewtech Street, Okota, Isolo, Lagos from the 31st January 2006 to 26th April 2006 as well as the damages done to the business reputation of the plaintiff by the publication in the aforesaid two dailies by the 1st defendant on the instructions of the 2nd Defendant.
The brief facts of the case are that the Appellant was granted a credit facility in 3 different trenches. The first was repaid, the second one was for N5million but before it could be repaid it was increased to N10million and secured by a Deed of Legal Mortgage. There was a Fixed and Floating debenture to cover the initial Five Million Naira. The Appellant defaulted in repayment and the 1st Respondent was appointed Receiver/Manager who took
steps to realize the money outstanding. Machines and equipment were removed from the premises by the Receiver/Manager, an action which aggrieved the Appellant who instituted the action. The Lower Court after hearing the suit dismissed the action thus this appeal.
The Appellant filed its Amended Appellant?s brief dated 13th March, 2014 on the same day and a reply the 4th August, 2010. The Respondents? brief of arguments was filed on the 22nd July, 2010. Briefs were adopted at the hearing of the appeal. The Appellant formulated 6 issues for determination as follows:
A. Whether the findings of the learned trial judge on Ex. ?L?, the Deed of fixed and floating Debenture are perverse and thereby amount to a miscarriage of justice.
B. Whether the failure of the learned trial judge to comprehend the case and consider the issues for determination as canvassed by the plaintiff/Appellant amounts to lack of fair hearing and miscarriage of justice.
C. Whether the letter of offer dated 9th December, 2003 for N5,000,000.00 overdraft facility, which was marked rejected could have been admitted in evidence.
?D. Whether the 1st Respondent?s appointment
as Receiver / Manager on the assets of the Appellant and his receivership were valid.
E. Whether the learned trial judge is correct by dismissing the appellant?s claim for Refund as well as special and general damages.
F. Whether the Appellant has over paid its indebtedness on the N10,000,000.00 overdraft.
The Respondents on their part distilled 4 issues for determination thus:
1. Whether the fixed and floating debenture dated 22nd February 2005 (Exhibit L) is valid and is effective vis a vis the overdraft facilities obtained by the plaintiff/Appellant?
2. Whether the appointment of the 1st Defendant/Respondent and all actions taken by the 1st defendant / Respondent against the plaintiff were lawful?
3. Whether the Plaintiff/Appellant can validly sustain a claim for damages against the Defendants/Respondents?
4. Whether the Plaintiff/Appellant over paid its indebtedness for the overdraft facilities obtained from the 2nd Defendant/Respondent?
Having considered the two sets of issues distilled by the parties, the 4 issues formulated by the Respondents are concise and direct on the areas of dispute between the parties. I shall therefore adopt them for
determination in this judgment.
ISSUE ONE
Whether the fixed and floating debenture dated 22nd February 2005 (Exhibit L) is valid and its effect vis a vis the overdraft facilities obtained by the plaintiff/Appellant?
Appellant?s counsel in arguing issues one and two together stated that the two (2) overdraft facilities granted to the Appellant by the 2nd Respondent, i.e. N10million and N5million are separate and distinguishable by virtue of the different terms and conditions attached to them. He also stated that the two (2) overdraft facilities reflect the cardinal ingredients of a contract: offer, acceptance and consideration and that no reference was made in the N10million facility to the earlier N5million facility, citing EDILCO (NIG) LTD V UNITED BANK FOR AFRICA PLC (2002) FWLR (PPT 21) 792, INCAR NIG PLC V. BOLEX ENTERPRISES (NIG) LTD (2002) FWLR (PT 58) 1187.
Appellant counsel submitted that the Appellant has no obligation under the terms and conditions of the N5million facility to repay. Appellant counsel also stated that facts admitted need no further proof, referred to OJO V. REGISTERED TRUSTEES (ALADURA) YABA (2002) 52 WRN 26. According to
Appellant Counsel, the learned trial judge erred in concluding that the first offer of N5million is the main contract without giving consideration to the 2nd Respondent?s letter of offer dated 30th January, 2003, to grant the overdraft facility of N10million and the Deed of Legal Mortgage. Appellant Counsel relied on LGGA V. SARHUNA (2008) 6 ? 7 S.C 101 in stating that the finding of the trial Court was perverse because it ignored the facts and evidence led before the Court. Relied on ATOLAGBE V. SHORUN (1985) 1 NSCC472, OKONJI V. NJOKANMA (1991) 7 NWLR (PT 202) 131, EGHAREVBA V. OSAGIE (2009) 12 SC (PT 111) 123 and urged this Court to reverse the findings of the trial Court, OGBUANYINYA V. OKUDO (NO 2) (1990) 4 NWLR (PT 146) 568.
?Appellant counsel also submitted that the Deed of Fixed and floating Debenture is not in conformity with the provisions of Section?168 of the Companies and Allied Matters Act (CAMA) because it does not show the principal amount borrowed. That there was no application, acceptance and consideration by the Appellant before the up stamp from N2million to N10million was registered and as such the parties were not ad- idem, relied
on YARO V. AREWA CONSTRUCTION LTD (2007) 4 FWLR (PT 399) 7285. He urged the Court to nullify the debenture and revoke Exhibit M (the certificate of registration of debenture). Appellant Counsel further submitted that the final demand notice was based on the N10million overdraft facility, therefore, the action taken against the Appellant by the Respondents on the N5million overdraft facility are unlawful due to the absence of a demand notice on it, referred to ISHOLA V. SGBN LTD (1993) 2 NWLR (PT 488) 405, WEMA BANK V. OSIBERU (2007) 8 CLRN 89.
Appellant Counsel also submitted that CAMA does not make provision for a continuing security under Section 168 (a) as a debenture must state the exact principal amount borrowed. He urged this Court to set aside the trial Court decision, relying on FSB INTERNATIONAL BANK PLC V. IMANO (2000) 7 S.S (PT 1) 1, IWUOHA V. NIPOST (2003) 4 S.C (PT 11) 37, ADEJUGBE V. OLOGUNJA (2004) 2 SS.C (PT 11) 44.
In response to the Appellants contention, the Respondents submitted that the N5million and N10million overdraft facilities granted to the Appellant are not distinct from each other but is an increase of the overdraft facility as
reflected in the 1st Paragraph of the 2nd Respondent?s offer letter dated 30th January, 2004 (Exhibit D) as well as the facility type clause. Respondent also submitted that the Deed of Fixed and Floating Debenture (Exhibit L) states clearly that the debenture is a continuing security which would be of effect whenever the Appellant is indebted to the 2nd Respondent. Respondent Counsel was of the opinion that since Exhibit L is a documentary evidence of the contract entered into by the parties, the parties are bound by the contract therein and oral evidence is inadmissible to contradict its contents. He also submitted that the duty of the Court is to interpret the contract in the light of their clear intention, SECTION 132 (1) EVIDENCE ACT, OJOH V. KAMALU (2005) 18 NWLR (PT 958) 523, LARMIE V DPMS LTD (2005) 18 NWLR (PT 958) 438. That the Court has no alternative but to act on the uncontradicted testimony of DW1 that the Deed of Legal Mortgage was only a further security to the entire loan, citing DUROSARO V AYORINDE (2005) 8NWLR (PT 927) 407.
?Respondent?s Counsel submitted that contrary to the assertion of the Appellant Counsel, Exhibit L is valid despite
the fact that it does not contain the principal amount secured. He submits that based on the word ?statement? under S.168 and S.169 (1) (2) of CAMA, it is not the intendment of CAMA that these details be specifically stated in a debenture and as such the interpretation of the Appellant Counsel is erroneous. He relied on S. 650 CAMA, S. 202 CAMA, FASAKIN V. FASAKIN (1994) 4 NWLR (PT 340) 597 in proof of his submissions and referred this Court to S. 198 (1) (a-b) CAMA in asserting that the Corporate Affairs Commission is to keep a register of charges with the specific details.
Respondent Counsel stated that there is substantial compliance with S. 168 CAMA and that CAMA does not make the requirements under S. 168 especially the particularization of statements in a debenture, a pre-condition for the validity of the debenture and as such Exhibit L remains valid. He contends that the Appellant is only seeking to avoid its contractual obligation.
?Respondent?s Counsel submitted that Exhibit L is valid having been duly executed by both parties to the contract and the document having been duly registered at CAC. That a party who has benefited from a
contract cannot now allege that the basis of the contract is void, relied on ADEDEJI V NBN (1989) 1 NWLR (PT 96) 212, BUSWELL V. GOODWIN (1971) ALL ER, BATALHA V WEST CONSTRUCTION CO LTD (2001) 18 NWLR (PT 744) 95, KWAJAFFA V. BON LTD (2004) 13 NWLR (PT 889) 146. Respondents Counsel also submitted that Exhibit L does not require the consent of the governor under S.22 of the Land Use Act, relied on ATUFE V. OGHOMIENOR (2004) 13 NWLR (PT 890) 327. Respondents Counsel further submits that Exhibit M (the Certificate of Registration) is conclusive evidence that Exhibit L was duly registered and up stamped at CAC for the purposes of securing the increase to N10million, relied on S. 150 of the Evidence Act.
In its reply to the Respondents contention, Appellant counsel rehashed his points under his Appellants brief and stated that a secured interest cannot exist on asset of a debtor when his obligations have lapsed. Appellants counsel further submitted that the late registration and stamp of Exhibit L is contrary to S. 197 (1) of CAMA and that it is of little significance if a piece of evidence was not challenged by the Appellant as
the oral evidence cannot be relied upon in the presence of a written document, CHRISTABEN GROUP LTD V ONI (2008) 1 NWLR (PT1097) 84. According to Appellant counsel, the Respondent is not debarred from suing for recovery of its money if the Deed of Debenture is declared void by the Court.
RESOLUTION:
The Appellant argued its issue one and two together so I shall also consider issue two of the Appellant for completeness. The main contention here as presented by the Appellant is the validity of the Fixed and Floating Debenture. As argued on both sides, the debenture is Exhibit L before the trial Court. It was dated and duly signed. This was therefore the security for the N5million Naira facility which was approved and offered to the Appellant through the offer letter the Court rejected. The Debenture was duly registered at the Corporate Affairs Commission as required by law. The offer letter for the N5million over draft specifically named the Debenture and personal guarantee of the Managing Director of the Appellant as security for the facility.
What is a debenture? A debenture consists of a debt owed by a company to another secured by a deed which prescribes the
condition of the realization of the debt. A debenture may be created over the fixed or floating assets of the company. When it is created over the floating assets, the debtor company is entitled to continue to use the assets in the ordinary course of its business, until the conditions prescribed for its realization occurs. When it occurs, the debenture holder, usually the creditor enforces his security by the appointment of a Receiver/Manager. The Manager under his powers in the debenture deed, takes over the assets of the company and the assets formerly available to the company now becomes fixed and is crystallized, and remains under the general control of the Receiver/Manager. See RIBSON V SMITH (1985) 2 CH. 118; RE CROMPTON & CO LTD (1914) 1 CH. 954.
The company ceases to have any right to deal with the assets. Its right thereto is suspended. The Receiver/Manager appointed by the debenture holder is now regarded as an agent of the company for the purposes of dealing with the assets in the Receivership. See CENTRAL LONDON ELECTRICITY LTD V BERNERS & ORS (1945) 1 K. B. D. 160. It is important to appreciate the fact that the company neither loses
its legal personality nor its title to the goods in the receivership. See MOSES STEAMSHIP CO.LTD V WHINNEY (1912) AC 263 PER ATKINSON LJ; NEW DEVELOPMENT V CO-OP COMMERCIAL BANK (1978) 2 ALL E. R. 901. PER KARIBI-WHYTE, J.S.C. It is clear therefore that it is the company that issues a deed of debenture to the bank that had extended its facility to the company as occurred in this case.
It is simply an acknowledgement of the debt.
The argument of the Appellant however, is that the debenture did not comply with the requirement of S. 168 of the Company and Allied Matters Act (CAMA). The said Section provides thus:
“Every debenture shall include a statement on the following matters, that is;
a. The principal amount borrowed;
b. The maximum discount which may be allowed on the issue or reissue of the debentures, and the maximum premium at which the debentures may be made redeemable;
c. The rate of and the dates on which interest on the debentures issues be paid and the manner in which payment shall be made;
d. The date on which the principal amount shall be repaid or the manner in which redemption shall be effected, whether by the payment of
instalments of the principal or otherwise;
e. In the case of convertible debentures, the date and terms on which the debenture may be converted into shares and the amounts may be credited as paid up on those shares and the amounts which may be credited as paid up on those shares, and the dates and terms on which the holders may exercise any right to subscribes for shares in respect of the debentures held by them.
f. The charges securing the debentures and the conditions subject to which the debenture shall take effect.?
A careful perusal of Exhibit L shows that some of the requirements of Section 168 of CAMA are actually missing, they are not reflected on the Debenture, Exhibit L. What is the effect of the missing particulars? I have searched but could not find an authority where a debenture was challenged for not having all the particulars required by law. I have noted the use of the word ?shall? in the said provision and it is trite now that except in few cases, the word ?shall? is a command which compels compliance. See the case of EMORDI V IGEKE (2011) 9 NWLR 41 where the apex Court held thus:
The employment of the word
“shall” points to mandatory realm.”
And in the case of TABIK INVESTMENT LTD V GUARANTY TRUST BANK PLC (2011) LPELR-3131 (SC) the Court said:
“The word “shall” connotes mandatory discharge of a duty or obligation, and when the word is used in respect of a provision of the law that requirement must be met. The word “shall” may have other meanings, for when used in a legislation, it may be capable of translating into a mandatory act, giving permission or direction. See NONYE V. ANYICHIE & ORS (2005) 2 NWLR (Pt. 910) 623. The use of the word “shall” in the case at hand, to my mind conjures mandatoriness, the conditions of which must be met and satisfied.”
It therefore stands that the requirement of the law in S. 168 must be complied with. A deed of debenture must include the necessary particulars to qualify for registration by the Company and Allied Matter Act under Section 168. Inclusion of the necessary particulars may take the form of a schedule attached to the deed or incorporation by reference. In this case that was not done. The argument of the 2nd respondent is that no penalty is
prescribed in the Act. That is true, but in the con of the word”shall” that is used in the provision, is compliance not required? A Court of law is required to enforce and give effect to mandatory provisions, see the authority of ADENIJI V NBN LTD (1989)1NWLR (Pt. 96) 212.
There is a distinction between a void and a voidable contract as espoused by the apex Court in the case of FASEL SERVICES LIMITED & ANOR V NIGERIAN PORTS AUTHORITY & ANOR (2009) LPELR-1245 (SC) in the following words:
“The position of the law is that where a statute declares a contract or transaction between parties not only void but also imposes a penalty for violation, that contract or transaction is illegal abinitio. However where the legal sanction is merely to prevent abuse or fraud and no penalty is imposed for the violation of the provision of the statute, the violation is merely voidable and illegal. See SOLANKE V ABED, OIL FIELD SUPPLY CENTRE LTD V JOHNSON (1987) 2 NWLR (Pt. 58) 625 and IBRAHIM V OSIM (1988) 2 NWLR (Pt. 82) 25.”
The Deed of Fixed and Floating Debenture is therefore voidable and not void abinitio. Failure to comply could
throw up a number of issues. It could imply that the facility granted is unknown and that the stamp duty to government could also not be ascertainable thereby depriving government of the required revenue.
The other contention is that Exhibit L was no longer a valid security because of the new offer letter which required a different type of security for the increase of the overdraft from N5million to N10million. Indeed, there were two separate offers and acceptances for N5million and N10 million naira. Each of these had different securities applying. The first security was the Fixed and Floating Debenture, the second in Exhibit D, the second offer of N10million, is a Deed of Legal Mortgage which was not perfected despite the deductions from the account of the Appellant towards that purpose. So each of the transactions had its offer and acceptance and that makes it two separate contracts with different conditions and terms. The second offer did not incorporate the terms in Exhibit L by reference or adoption. The offer said it was an increase from N5million to N10million but named a different security for the said amount.
?Another problem is one that is evident here
is that the debenture was first registered for N2million and then an up stamping of the debenture for the sum of N8million, when no facility was granted for that amount nor was there an offer for any of the said amounts; there is nowhere in the entire relationship between the parties that N2million or N8million is named. If the overdraft facility figure was named in the debenture, an arbitrary amount could not have been named nor up stamped to that figure.
The 2nd Respondent argued that the debenture was upstamped to N10million, the question is upon which offer? The offer letter for N10million did not mention that a debenture is part of its security and it was not incorporated by reference. So on what contract was it upstamped to N10million? The relationship between the parties here, the Appellant and the 2nd Respondent is rooted purely in contract. A contract is simply an agreement between two or more persons which creates an obligation to do or not to do a particular thing. Its essential ingredients are competent parties, subject matter, a legal consideration, mutuality of agreement and mutuality of obligation, see BILANTE INTERNATIONAL LTD V NDIC (2011)
LPELR-781 (SC). There was offer and acceptance for N5million overdraft with terms and conditions. The intention of the parties can be clearly seen in the offer letter which was accepted. This offer letter evidence of the contract made between the parties. The words are clear and unambiguous, see UBN V OZIGI (1994) 3 NWLR (PT333) 385 at 403, where the Court therein said:
“the general rule of interpretation is that where the words of a document are unambiguous, the operative words in it should be given their simple and ordinary meaning.”
The clear and unambiguous security named in Exhibit D is a Deed of Legal Mortgage and that is not the same as a Deed of Fixed and Floating debenture. The 2nd Respondent cannot therefore resile from the contents of Exhibit D which named a specific security and it is bound by it, see EGBASE V ORIAREGHAN (1985) 1 NWLR (Pt. 10) 884 and OKOYA V SANTILLI (1994) 4 NWLR (Pt. 338) 256. The oral evidence of DW1 that the Deed of Legal Mortgage was requested for as further security is not so stated in the second contract and oral evidence cannot vary a written contract. In the case of U.B.N. LTD. V SAX (NIG.) LTD. [1994] 8
NWLR (PART 361)150, the Court held as follows:
“When an agreement has been reduced into writing oral evidence will not be admitted to add to, subtract from or contradict the terms of the written agreement.”
Furthermore the Court in the same case above PER ADIO J.S.C also said;
“It is the general rule that where the parties to an agreement have set out the terms thereof in a written document, extrinsic evidence is not admissible to add to, vary, subtract from or contradict the terms of the written instrument. See OLALOYE V. BALOGUN, (1990) 5 NWLR (PT. 148) 241; UNION BANK OF NIGERIA LTD., V. PROF. ALBERT OJO OZIGI (1994) 4 NWLR (Pt. 333) 385 and Section 131 (1) of the Evidence Act. Therefore, if there is any disagreement between the parties to a written agreement as to what is the term of the agreement on any particular point, the authoritative and legal source of information for the purpose of resolving the disagreement is the written agreement executed by the parties”
Furthermore, the fact that a piece of evidence is unchallenged cannot vary the content of a document, see the case of U.B.N. LTD. V SAX (NIG.) LTD (SUPRA)
The Debenture was
initially stamped for N2million and later up stamped for N8million when there was never an offer and acceptance of N8million and the debenture relates to the N5million overdraft. The clear figures are N5million and N10million. These are two different contracts with clear distinctive terms and the tenors too are different. The two cannot be taken to be one but upon the coming into effect of the second one the first became extinct and that can be confirmed by the use of the word “increase from N5million to N10million”. It therefore stands to reason that the terms and conditions of the second contract superseded the first. That being the case can the 2nd Respondent revert back to the security for the non ? existent facility in order to recover any outstanding? No facility was also granted to the Appellant on the 4th April 2003 as found by the trial judge. This was not supported by evidence and the finding is therefore perverse.
Evidently, there was another offer for N10million with separate terms and conditions. I therefore agree with the Appellant that at the offer and acceptance of the N10million facility with different terms and conditions and
a different security to ensure repayment, the first one ceased to exist. What existed between the parties at the time of demand for repayment was only the N10million contract. Furthermore, though the second contract talked about increase of the facility from N5million to N10million, it did not make any reference to the earlier contract neither did it adopt the security therein. The contention that the security in the first contract (i.e. the deed of debenture) is continuing security refers to the sum stated in that contract and could not have talked of a continuing security for a sum that did not exist. Besides, it is clearly stated in the debenture that the parties intend the Fixed and Floating Debenture serves as a continuing security with respect to monies thereby secured, i.e. the N5million facility. Continuation is from a known position progressing forward. There is also a similar phrase in Exhibit D for N10, 000. 000. 00. (Ten Million Naira).
?Now, if we want to assume that the argument of the 2nd Respondent that the first contract was still valid is correct, why was there no demand for the payment of the sum in that contract with interest generated there
upon? The demand letter, Exhibit F was strictly on the second contract because the first one has been subsumed into the second contract. It is obvious that the indebtedness of the Appellant is covered by the second contract Exhibit D.
I agree with the 2nd Respondent that a party who has taken benefit of a contract cannot turn round to say the contract is invalid but that is not the situation in this case. The Appellant is not in any way denying that it owed the 2nd Respondent. However, what is challenging is the existence of two contracts over one facility and the wrong use of the instrument with which recovery of the overdraft was executed. Consequently, the findings of the trial judge on the validity of Exhibit L are perverse and hereby set aside.
The Appellant also contended that the failure of the trial judge to consider its issues and submissions amounted to denial of fair hearing. Fair hearing is constitutionally provided for in Section 36(1) of the 1999 Constitution and it states thus:
“In the determination of his civil rights and obligations, including any questions or determination by or against any government or authority a person shall be
entitled to a fair hearing within a reasonable time by a Court or other tribunal established by law and constituted in such manner as to secure its independence or impartiality.”
Fair hearing is considered to be fair trial and they are synonymous as held in the case of MOHAMMED V KANO NATIVE AUTHORITY (1968) SCNLR 558 at 561 where the Supreme Court said thus:
“We think a fair hearing must involve a fair trial and a fair trial of a case consists of the whole hearing.”
Fair hearing is fundamental to every trial and it could arise incidentally in the course of proceeding or directly. The Court in the case of OYEYEMI V COMMISSIONER FOR LOCAL GOVERNMENT, KWARA STATE & ORS (1992) 23 NSCC (Pt 1) 37 had this to say:
“But sometimes, the breach of right of hearing could arise incidentally in the course of the proceedings. For example, part of the proceedings could be vitiated by want of hearing, even though a good part thereof is properly conducted. When such is the case a Court of justice cannot shut its eyes to the breach of the rule of fair hearing being a fundamental vice, the Court will yet go into the matter though it has arisen
incidentally.”
Furthermore, fair hearing also lies in the procedure adopted by the Court in the determination of the case and not necessarily the rightness of the decision, See ORUGBO V UNA (2002) 9-10 SC 61 where TOBI, J.S.C. said thus:
“Fair hearing lies in the procedure followed in the determination of the case, not in the correctness.”
The Appellants complaint is that its case was not considered when the trial judge simply agreed with the 2nd Respondent and entered judgment for the Respondents. It is trite that a Court is duty bound to consider the case of both sides before arriving at a decision; when there is a failure then, the side whose case was not considered would not be said to have had a fair trial.
?However, on the issues raised for determination, the Court is not bound to adopt issues formulated by parties for determination. It can reframe the issues in order to determine the main issues in contention between the parties and that alone cannot be a breach to fair hearing. See the case of UNITY BANK PLC V. BOUARI [2008] ALL FWLR (Pt. 416) 1825
The Court is however duty bound to resolve all issues canvassed by
both sides to arrive at a decision. I have gone through the record of appeal and the fact that the trial Court failed to agree with the submissions of the Appellant did not mean it was denied a hearing. In the case of WOMILOJU V. ANIBIRE (2010) 10 NWLR (Pt. 1203) 545 the Court held as follows:
“Where a trial has been conducted in which the authority of the Court has fairly been exercised in consistence with the fundamental principles of justice embraced within the contemplation of the process of the law, then there is said to be a fair hearing. This contemplates of allowing the parties equal opportunity to present evidence; to cross examine witnesses and for the trial Court to make findings which are supported by evidence.”
Fair hearing therefore is basically comprised of the twin pillars which determines or circumscribes the parameters of measuring whether it was breached or not. Errors do occur because judges are human but there was none here to warrant finding the trial a breach of the twin pillars of fair hearing.
?The trial Court reviewed the evidence before the Court before arriving at a decision. The correctness of decision is a different
kettle of fish. I find that the Appellant was not denied fair hearing.
Issue one is resolved in favour of the Appellant while the second issue is resolved in favour of the Respondent.
ISSUE TWO
Whether the appointment of the 1st Defendant/Respondent and all actions taken by the 1st defendant/Respondent against the plaintiff were lawful?
On this issue Appellant counsel submits that since Exhibit L wherein the 1st Respondent?s appointment purportedly arose is invalid, then the Deed of Appointment and the Certificate of Registration are incurably defective and as such the receivership is unlawful. According to Appellant Counsel, the 1st Defendant did not observe due diligence in scrutinizing the documents in support of his appointment and he contends that the instrument lacks legal capacity for enforcement, relied on S.22 of the Land Use Act, AWOJUGBAGBE LIGHT INDUSTRIES LTD V. CHINUKWE (1993) NWLR (Pt. 270) and OWONIBOYS TECH SERVICES LTD V. UNION BANK LTD (2003) 7 SC 165. He further submitted that the 2nd Respondent is at best an unsecured creditor whose remedy is to sue for recovery in a simple contract, referred to UBA V ABDULLAHI (2003) NWLR (Pt. 807)
359.
On the other hand, Respondent Counsel submitted that the procedure for appointment, duties and liabilities and other relevant provisions with respect a receiver is in S. 390 ? S. 400 and Schedule 11 of CAMA. Also referred to the following cases on the duties of receiver, WEMA BANK & ORS V PRINCE B. A. ONAFOWAKAN & ORS (2004) 12 CLRN 54, TANAREWA NIG LTD V PLASTIFARM LTD (2003) 14 NWLR (Pt. 840) 355, NBCI V. ALFIJIR (MINING) NIG LTD (1993) 4 NWLR (Pt. 287) 346.
Respondent Counsel submitted that it was established at the trial Court that the 1st Respondent was duly appointed by Exhibit Q, the Deed of Appointment pursuant to Clause 6 and 7 of Exhibit L and that the 1st Respondents actions were in compliance with the provisions of S.390 CAMA. Counsel further stated that the records of the activities of the 1st Respondent were duly registered at the CAC and as such the Court should presume regularity with its formal validity, referred to Section 150 of the Evidence Act. Respondent Counsel went ahead to state that in view of the validity of Exhibit L, the appointment of the 1st Respondent and all other actions taken thereon are
valid.
RESOLUTION
It is well settled that the appointment of a receiver does not annihilate the company. The receiver takes possession and control of the property charged and the powers of the directors are in abeyance as regards them, see INTERCONTRACT ORS V. N.P.F.M.B. (1988) NWLR (Pt. 76) 280. However, the contention under this issue is whether the receiver was validly appointed. Having earlier held that the only operative security is the Deed of Legal Mortgage which the 2nd Respondent did not perfect even though the Appellant had been surcharged for its perfection, consequently therefore, the 2nd Respondent was wrong to have fallen back on the Exhibit L, the Deed of debenture to appoint the Receiver/Manager in order to realize the debt outstanding. The appointment of the Receiver/Manager was illegal and wrongful. All actions taken by the said Receiver/Manager are illegal and has occasioned miscarriage of justice to the Appellant. This issue is resolved in favor of the Appellant.
ISSUE THREE AND FOUR.
The Respondent argued its issues 3 and 4 as one issue. The Court shall also resolve both issues together as both issues are interrelated.
With respect
to damages, Appellant counsel contends that there is a distinction between special and general damages, that the learned trial judge did not make a proper distinction between specific and general damages in its findings and that the trial judge did not give adequate attention to the case of the Appellant, referred to IJEBU-ODE LOCAL GOVERNMENT V. ADEDEJI BALOGUN (19991) 9 NWLR (Pt. 166) 122.
Appellant Counsel also faulted the finding of the trial Court for stating that the Appellants claim is an afterthought since the Appellant never raised a protest on the loss of its goods. According to Counsel, it was on record that the Appellant protested through its counsels letters which were tendered through the Respondents witness. Counsel also urged this Court to hold that the debits from the Appellants account by the 2nd Respondent with respect to the perfection of Exhibit L, the Debenture and Exhibit E, the Deed of Legal Mortgage were wrong and should be returned to the Appellant. Appellant?s Counsel states that these debits were not necessary, not supported by receipts at trial and that there is no evidence that Exhibit E
was submitted for Governors consent and registration despite the huge deductions for its perfection. Appellant contends that since the Respondents did not controvert the special damages claim of the Appellant, the trial Court ought to have accepted the evidence as sufficient proof of the claim, referred to ARABAMBI V. ADVANCE BEVERAGES & CO LTD (2005) 12 SC (Pt. 1) 60, OBI OBEMBE V WEMABOD ESTATE LTD (1977) NSCC 264, CALABAR CO ? OPERATIVE THRIFT & CREDIT SOCIETY LTD V IKOT (1999) 12 SC (Pt. 11) 133.
On the issue of general damages, Appellant counsel submits that the trial Court ought to grant the sum of N30million claim in view of the 1st Respondents unlawful entry, relied on JULIUS BERGER NIG PLC V. OMOGUI (2001) FWLR (Pt. 64) 305 and that deprivation of the Appellants use of its premises even after payment of the total sum of N15million, makes the Respondents liable for the tort of conversion, cited DANJUMA V UNION BANK OF NIGERIA PLC (1995) 5 NWLR (PT 395) 318. Appellant also submitted that the Respondents defamed the Appellant and damage was done to the reputation of the Appellant by the publication in 2 national
dailies by the 1st Respondent, AKWARA V. INTERNATIONAL BANK FOR WEST AFRICA LTD (2000) FWLR (PT 11) 1766. That the publications were not even necessary since by virtue of S. 392 (1) CAMA, notice is only required to be given to the Corporate Affairs Commission. He urged this Court to hold that both publications are actionable libel and that substantial damage be awarded in favour of the Appellant, referred to BRITISH AMERICA INSURANCE CO LTD V SULE (2001) FWLR (Pt. 58) 1178.
Appellant argued that where there is an expiry date for an overdraft, the agreed interest rate will be applicable from the date the agreement came into force up to the date the facility expired, INTEGRATED DIMENSIONAL SYSTEMS LTD V AFRICAN INTERNATIONAL BANK LTD (2002) 14 WRN 149. Appellant further submitted that in this case, the 2nd Respondent continued to calculate interest on the Appellants account after the expiration of the tenor. He therefore submitted that the 2nd Respondent is only entitled to recover the sum of N12, 235,046.36 and urged this Court to order that the 2nd Respondent pays back the excess amount recovered from the Appellant.
In response to the Appellants
submission, Respondents counsel argued that the Appellant has not discharged the burden placed on it by law in support of its claims of looting and that the 1st Respondent has placed before this Court evidence of his actions, inventory, payments and accounts. That the Court should accept as the truth an inventory taken on the day the 1st Respondent vacated the premises signed by PW1 and the 1st Respondent, YASID (NIG) LTD V GREAT NIG INS. CO LTD (2001) 11 NWLR (PT 725) 529.
He submitted that the Appellant must prove all material elements of his case and should not rely on any perceived weakness in the Respondents case, citing OGWULE ANKPA AGATU CO ? OPERATIVE GROUP FARMING SOCIETY & ANOR V. NIGERIAN AGRICULTURAL AND CO ? OPERATIVE BANK LTD (1992) 2 NWLR (Pt. 234). Respondents also submitted that the Appellants list of the 1st Respondents alleged looting was not signed and was made after the 1st Respondent had left the premises and it should therefore be disregarded, S. 91 (4) EVIDENCE ACT, EDILCO NIG LTD V. UBA PLC (2001) 2 NWLR (PT 698) 492, SPDC NIG LTD V OLANREWAJU (2002) 16 NWLR (PT 792) 38, OJO V. ADEJOBI (1978)
3 SC 65. That there were also no complaints made to the 1st Respondent of items being carted away, no information during the receivership that any tenant existed and that in the light of the advertorial made by the Respondents, no one came to claim any assets. That a perusal of Exhibit N, the Appellants statement of accounts, shows that all payments complained of were directly agreed by the Appellant and were all chargeable under Exhibit L.
Respondent counsel therefore submitted that this Court should weigh the evidence before the Court in favour of the Respondent as the Court is at liberty to give its own assessment of any evidence placed before it, referred to OMEGA BANK (NIG) PLC V OBC LTD (2002) 16 NWLR (PT 794) 483, OGUNYOMBO V OKOYA (2002) 16 NWLR (PT 793) 224. Respondents also submitted that no right of the Appellant was violated, especially, since the actions of the 1st Respondent was legitimately exercised, UBA PLC V. SAMBA PETROLEUM CO. LTD (2002) 16 NWLR (PT 793) 361, ADENE V. DANTUNBU (1994) 2 NWLR (PT 328) 509. As to the Appellants claim of damages to its reputation, Respondent’s Counsel submitted that the tort of defamation was not
specifically pleaded as required by law, NEPA V CHIEF ETIM INAMETI (2002) 11 NWLR (PT 778) 397 and that the Appellant is therefore not entitled to any claims made in respect of damages of defamation.
RESOLUTION
Having found that the appointment of the Receiver/Manager was faulty and premised on the wrong authority, the Receivers actions cannot be justified and his wrongful entry is tantamount to trespass which must attract damages.
It is not in doubt that the Appellant succeeded in paying off its indebtedness to the 2nd Respondent. Appellant went further to claim special damages and by the nature of the pleadings for damages it is of special damages which require strict pleading and proof. The credible evidence is lacking in this regard. Exhibit H2, which listed the costs of the goods allegedly carted away from the Appellants premises by the 1st Respondent was not signed. The law is trite that an unsigned document is worthless and void, see the case of GARUBA V. KWARA INVESTMENT CO. LTD & 2 ORS. (2005) 5 NWLR (PT 917) 160, GBADAMOSI & ANOR V. BIALA & ORS (2014) LPELR ? 24389(CA). Therefore, it commands no judicial value before
this Court. The other document the Appellant seeks to rely on, Exhibit K, though signed does not quantify or particularize the actual loss suffered by the Appellant. Hence, I find that special damages was not strictly proved.
On the deductions made towards perfecting the deed of legal mortgage, the consideration for which has failed, it must be refunded along with the deductions made in respect of the receivership and the receivers fees. The 2nd Respondent also collected more than it was owed including interest; that must also be refunded. As to the issue of defamation based on the publications made by the 1st Respondent in the 2 national dailies, the Appellant merely alleged there was adverse effect on its business based on the publications but no evidence was adduced at the Lower Court in support of the complaint. Given the circumstances, the claim of defamation cannot succeed.
This issue is partly resolved in favour of the Appellant.
ISSUE FIVE
Whether the letter of offer dated 9th December, 2003 for N5,000,000.00 overdraft facility, which was marked rejected could have been admitted in evidence.
The Appellant under its issue three questioned the
propriety of the trial Courts rejection of the offer letter for the N5million facility. The Respondents did not join issues with the Appellant on this point. The Appellant Counsel submitted that both parties variously pleaded the said letter of offer dated 9th December, 2004 and they also showed intention to rely on same during trial and that since the letter of offer is admissible in evidence, the trial Court ought to have admitted in evidence the said letter of offer, relied on BRAWAL SHIPPING (NIG) LTD V. ONWADIKE (2002) FWLR (PT 23) 1254, DUNIYAN V. JOMOH (1994) 3 NWLR (PT 334) 609.
Appellant counsel also submits that the letter qualifies under S. 95 (b) Evidence Act 2004 (now S. 87 (b) Evidence Act 2011) as a copy which can be admitted especially since the Respondents, the maker of the letter, did not produce the original to contradict the contents of the photocopy and also stated that the trial Court can still look at the letter it erroneously marked as rejected, referred to NWANJI V COASTAL SERVICES (NIG) LTD (2004) 6 ? 7, SC 38, ARIBISALA V. OGUNYEMI (2001) FWLR (PT 31) 2867, NASCO V. ANAMCO TRANSPORT LTD (2003) 2 NWLR (PT 804)
290.
RESOLUTION
The letter of offer dated 9th December, 2004 was duly pleaded and is relevant to the N5million facility the 2nd Respondent offered the Appellant and consequently the enquiry before the Court. It is not a public document in which a copy cannot be admitted without certification. The letter was identified and tied to the case of the Appellant. There was therefore no reason to reject same. The Court in the case of MRS HANSINE N. DONLI V MALLAM MAGAJI ABDULLAHI &ORS (2014) LPELR ? 23011(CA) held as follows: ?Relevance is the hall mark of admissibility of documents. Once it is relevant and pleaded and ordinarily admissible under the Evidence Act, then such a document ought to be admitted. The issue of photocopy or custody would be immaterial. It will only go to the probative value to be attached to such documents. See DADA V AYENI (1978) NSCC 147 at 159; DR. TORTI V UKPABI & ORS 91984) 1 SCNLR 214 at 277?.
It is trite that admissibility is different from the weight or probative value that the Court would give during evaluating of evidence.
?The Court was wrong not to admit the letter of offer of the N5million. The same letter
was mentioned by the 2nd Respondent as basis for Exhibit L. One may ask, where then did the Court trace the root of Exhibit L, when the offer letter that made Exhibit L a security was not allowed in evidence? The offer letter for the N10million facility did not mention the deed of floating and fixed debenture. Flowing from that, the Receiver/Manager was also appointed pursuant to the debenture and if the root is taken out then the appointment would also not have any basis. The order of the trial Court rejecting the offer letter for N5million Naira dated 9th December, 2003 is hereby set aside and its place I make an order admitting the letter in evidence under Section 15 of the Court of Appeal Act.
On the whole, this appeal succeeds in part and is allowed. I invoke the powers conferred on this Court under Section 15 of the Court of Appeal Act and enter judgment in favour of the Appellant for the sum of N2,974,753 being refund of the deductions made towards perfecting the deed of legal mortgage, the receivership and the receivers fees as claimed under its Amended Statement of Claim. I also order interest post judgment at the rate of 5% on the above sum.
The sum of N2,000,000.00 is awarded in favour of the Appellant as general damages for the trespass to its premises by the 1st Respondent on the authority of the 2nd Respondent.
Cost of N50,000 in favour of the Appellant against the Respondents.
SIDI DAUDA BAGE, J.C.A.: I was privileged to have read, before now, the judgment prepared and just delivered by my learned brother Yargata Byenchit Nimpar, JCA. My learned brother has ably dealt with the issues of determination submitted for this appeal. And I have nothing extra to add.
On whole, I cannot but concur with the reasoning and conclusion reached in the said judgment, to the effect that the appeal succeeds in part and is also hereby allowed by me. I abide by the consequential orders made as to costs.
JOSEPH SHAGBAOR IKYEGH, J.C.A.: I agree with the elaborate judgment written by my learned brother, Yargata Byenchit Nimpar, J.C.A., which I had the honour of reading in draft with nothing useful to add. ? ?
Appearances
DAMOLA SALAMI (MRS)For Appellant
AND
FUNKE ONAKOYA (MRS) with, T. OYEDARA (MRS)For Respondent
