CELTEL NIGERIA LTD V. ECONET WIRELESS LTD & ANOR.
(2010)LCN/3690(CA)
In The Court of Appeal of Nigeria
On Tuesday, the 13th day of April, 2010
CA/L/764/07
RATIO
PLEADINGS: POSITION OF THE LAW AS TO AMENDMENT OF PLEADINGS
The state of the law as adumbrated by our courts in relation to amendment of pleadings is that in an amendment the effect of which is to help the trial court in determining in an existing suit the real question in controversy between the parties ought to be allowed. See S.P.D.C.N. Ltd vs. Edankue (2009) 14 NWLR (PT.1160)1. I am particularly enamored by the exposition of my learned brother BELGORE, JCA in Abah vs. Jabusco Nig. Ltd (2008) 3 NWLR (pt 1075) 526 at 545 where he stated thus:
“The law generally is that an application to amend pleadings can be made any time before judgment. There are certain times when amendments are allowed on appeal. There cannot be a better notice of the case a party intends to make than his pleadings. It is a notice and can never be a substitute for evidence required in proof of the facts pleaded. In the High Court cases are fought on pleadings and the law is that parties are bound by their respective pleadings. See Obmiami Brick & Stone (Nig) Ltd vs. ACB Ltd (1992) 3 NWLR (pt. 229) 260. For these reasons, it is within the power of the court to grant an amendment even if the amendment would add to the existing cause of action or substitute therefore a new cause of action, provided the additional or the new cause of action arises out of the same or substantially the same facts as are contained in the pleadings. Not only is a court entitled to make formal amendments, it indeed has a duty to do so and this duty remains whether there is a formal application before the court or not and whether it is in the trial court or any of the appellate courts”. See also Sadiku Osho & Anr vs. Michael Ate (1998) 8 NWLR (PT 562) 492, Ipadeobe vs. Oshomode (1987) 3 NWLR (PT 59) 18. Chief Defence Staff vs. Adhekegbe (2005) 13 NWLR (PT 1158) 332. Our locus classicus is the Supreme Court decision in Chief Adedapo Adekeye vs. Chief O.B. Akin Olugbade (1987) 3 NWLR (PT. 60) 214 where the Supreme Court recommended 5 grounds upon which amendment to pleadings may be refused. These are: (a) where the amendment being sought is being made mala fide (b) it would cause unnecessary delay (c) it would anyway prejudice the opposite party (d) it is quite irrelevant or useless and (e) it would merely raise technical issues. Kayode Eso, JSC at pages 223 – 224 gave the general disposition of our courts on the issue of amendment of pleadings thus:
“The aim of amendment is usually to prevent the manifest justice of the cause from being defeated or delayed by formal slips which arise from the inadvertence of counsel. It will certainly be wrong to visit the inadvertence or mistake of counsel on the litigant. The courts have therefore through the ages taken a stand that however negligent or careless may have been the slip, however late the proposed amendment, it ought to be allowed if this can be done without prejudice to the other side for step taken to ensure justice cannot at the same time and in the same breath be used to perpetuate an injustice on the opposite party. The test as to whether a proposed amendment should be allowed is therefore whether or not the party applying to amend can do so without placing the opposite party in such a position which cannot be redressed by the panacea which heals every sore in litigation namely costs.”
This statement of the law was cited with approval in Akaniwo vs. Nsirim (2008) 9 NWLR PT 1093) 439. In this judgment, Mohammed JSC at page 460 had this to say:
“The law is indeed well settled that an amendment of pleadings should be allowed at any stage of the proceedings unless it will entail injustice to the other side responding to the application. The application should also be granted unless the applicant is acting mala fide or by his blunder, the applicant has done some injury to the respondent which cannot be compensated in terms of costs or otherwise”. See also Adetutu vs. Aderohunmu & Ors. (1984) 15 N.S.C.C. 38.  From the above, it is very clear that the disposition of our courts to the amendment of pleadings is indeed very liberal. Even though judgments and rulings involving the exercise of discretion do not constitute binding precedents, the legal principles articulated therein must guide trial courts in the exercise of their discretionary powers. A trial court faced with an application for an amendment of pleadings therefore ought to grant the application unless there are grounds for refusal that bring the application within the five grounds for refusal set out in Adekeye vs. Akin Olugbade supra. An application for amendment of pleadings is not granted as a matter of course. The applicant must, as in all other applications for the exercise of the court’s discretion, establish prima facie by affidavits evidence in line with the Supreme Court decision in Williams vs. Hope Rising Voluntary Funds (1982) 1-2 SC 145 his entitlement to the prayer sought. Having done that, it is incumbent on the party contesting the application to place before the court affidavit evidence establishing any of the five grounds upon which the court may refuse the application. This is more so where ‘bad faith’ or ‘mala fides’ ‘prejudice’ or ‘over-reaching’ is alleged. The term ‘Bad faith’ is a term of art. It connotes dishonesty of belief or purpose. See Blacks law Dictionary 8 ed. P. 149. It is a deduction that can only be made from set out facts. It is in effect a conclusion when averred. A party relying on such an averment in an affidavit must set out the facts constituting the bad faith alleged. He who alleges proves. When therefore facts founding the averment of bad faith in a pleading or an affidavit are not set out, the opposing party is not obliged to join issues thereon. This also goes for allegations of ‘prejudice’ or ‘over reaching’. There is infact a growing body of opinion that in such instances the burden of proof rests on the party alleging them. See Ananso vs. R.T.D.T.C. (2009) 17 NWLR (PT.1170) 207. PER R.C. AGBO, J.C.A.
JUSTICES:
CLARA BATA OGUNBIYI Justice of The Court of Appeal of Nigeria
RAPHAEL CHIKWE AGBO Justice of The Court of Appeal of Nigeria
ADAMU JAURO Justice of The Court of Appeal of Nigeria
Between
CELTEL NIGERIA LIMITED – Appellant(s)
AND
1. ECONET WIRELESS LIMITED
2. CORPORATE AFFAIRS COMMISSION – Respondent(s)
R.C. AGBO, J.C.A. (Delivering the Leading Judgment): The appellant is the first defendant in Suit No. FCH/C/1S/172/2003. By paragraph 26 of the amended statement of claim, the plaintiff claimed of the defendant as follows:
“1. A declaration that the plaintiff is still a shareholder and member of the 1st defendant company.
2. A declaration that the 1st defendant’s letter of 24th November, 2003 removing the plaintiff’s name as shareholder and member of the 1st defendant company is illegal, null and void.
3. A declaration that all General Meetings (be they Annual or Extra Ordinary) of the 1st defendant held after the 13th November, 2003 and to which the plaintiff was not put on notice are irregular, illegal, null and void.
4. A declaration that all resolutions passed by the company in lieu of the holding of a general meeting pursuant to the provisions of section 234 of the Companies Allied Matters Act 1990 to which the plaintiff is not a party is irregular, illegal, null and void.
5. A declaration notwithstanding the provisions of Section 234 of the Companies and Allied Matters Act a resolution to effect change of name of the 1st defendant cannot be validly effected without complying with the provision s of Section 31(3) and 45(1) of Companies and Allied Matters Act amongst other provisions.
6. An order setting aside all resolutions and decisions taken at any such meetings as referred to in Claims 3 and 4 above.
7. A declaration that pending the determination of this suit and Suit No. FHC/L/962/2003 between the parties now pending before the Federal High Court, Lagos the 1st defendant cannot and should not transfer its assets including the (licence granted to it by the 2nd defendant) for the operation of a Global System for Mobile Networks (GSM) in Nigeria, to any other company and in particular any company incorporated and jointly owned by the 1st defendant and Vodacom and any other company.
8. An order setting aside any decision already taken by the 1st defendant in so far as a decision has been taken by it which is inconsistent to declaration (7) above.
9. An order of injunction against the 2nd defendant from giving any effect to any request made to it by the 1st defendant for the transfer of the licence granted to it by the 2nd defendant until the determination of this suit and Suit No. FHC/L/CS/962/2003.
10. An order of injunction restraining the 1st defendant from doing any of the acts set out in claim 7 above.
11. An order setting aside the resolution circulated by the 1st defendant, pursuant to the provisions of section 234 of Companies and Allied Matters Act, amongst its shareholders to the exclusion of the plaintiff for the change of company’s name.
12. An order setting aside the certificate of change of name issued by the 3rd defendant in the 1st defendant effecting a change of its corporate name from Econet Wireless Nigeria limited to Vee Networks limited.
13. Cost of this action as may be assessed by the court.”
Pleadings were filed and exchanged. The appellant as first defendant in paragraph 23 of the statement of claim pleaded paragraphs 5-26 as its pleadings in its counter claim. In paragraph 27 of the said pleadings, the appellant counterclaimed against the plaintiff as follows:
“27.1. An order rectifying the register of members of the claimant by deletion of the entry in respect of the defendant the same having been entered without, any or, sufficient cause.
27.2. An order of perpetual injunction restraining the defendant, (its agents, officers, directors, members or anyone whosoever claiming through it), from claiming to be, parading, holding out, or describing itself, as a member or shareholder of the claimant.”
The case proceeded to hearing. The plaintiff (1st respondent in this appeal) called three witnesses and closed its case. The appellant opened its defence, called one witness and filed a motion on notice praying the leave of the trial court to amend its statement of defence and counter-claim. The plaintiff/1st respondent opposed the application and filed a counter-affidavit. After exhaustive argument by both sides, the trial court ruled as follows on 14/3/2007:
“In Adekeye vs. Akin Olugbade supra, it was held that a court ought to refuse an application for amendment where (a) it will in anyway unfairly prejudice the opposite party; (b) it would cause unnecessary delay; (c) it is made mala fide or (d) it is quite irrelevant or useless or (e) it would merely raise technical issue. The plaintiff in paragraph 3(a) – (g) of the counter affidavit raises all these issues of bad faith; delay; prejudice etc, and that same is nowhere controverted or denied. And gloaning (sic) from the proposed amendments particularly paragraph 17 of same in my view raises fresh issues that are technical in nature which will undoubtedly cause unnecessary delay. On the strength of the foregoing; I could not but agree with the submission of Mr. Ojo on behalf of the plaintiff that the proposed amendment is in bad faith and is capable of prejudicing the plaintiff in this case. The application is therefore refused.”
The appellant, dissatisfied with this ruling, has filed this appeal. In the notice of appeal, the appellant set out five grounds of appeal to wit:
‘1. The learned trial judge erred in law when he refused the appellant’s application to further amend its statement of defence and counterclaim given that the proposed amendments are vital to a determination of the real issues in controversy between the parties.
2. The learned erred in law and on the facts when he held that the appellant’s proposed amendment of its statement of defence and counter-claim raised fresh issues that were technical in nature, would cause unnecessary delay, was brought male fide and would unfairly prejudice the 1st respondent.
3. The trial judge erred in law and on the facts in the exercise of his discretion.
4. The trial judge erred when he held that the court would only allow amendment upon strong justification.
5. The trial judge erred in refusing appellant’s application to amend its counter-claim.’
The parties exchanged briefs of argument. The appellant in its brief of argument distilled one issue for determination wit – ‘Whether the learned trial judge properly exercised his discretion in refusing the appellant’s application for an amendment of its further amended statement of defence and counter claim.’
The 1st respondent also distilled one issue for determination to wit:
‘Whether, having regard to the nature of the amendment sought by the appellant and the circumstances of the case before the learned trial judge, the decision of the learned trial judge to refuse to grant the appellant leave to amend its further amended statement of defence and counter-claim was based upon a proper exercise of judicial discretion’.
But for the play on words, the issues articulated by the appellant and 1st respondent are asking exactly the same question i.e.” did the trial court in its refusal of the appellant’s application to amend its pleadings act judicially and judiciously?” This is all the more, so as the basic requirement of the law relating to a court’s exercise of discretion is that it acts judicially and judiciously.
The 2nd respondent also raised a sole issue for determination and that is ‘whether this interlocutory appeal, being purely procedural, is necessary and unavoidable since issues arising therefrom could be dealt with conveniently in any substantive appeal that may arise at the end of the trial in the High Court’.
I had earlier set out part of the offending ruling containing the reason given by the trial court for refusing the application to amend the statement of defence and counter-claim. The state of the law as adumbrated by our courts in relation to amendment of pleadings is that in an amendment the effect of which is to help the trial court in determining in an existing suit the real question in controversy between the parties ought to be allowed. See S.P.D.C.N. Ltd vs. Edankue (2009) 14 NWLR (PT.1160)1. I am particularly enamored by the exposition of my learned brother BELGORE, JCA in Abah vs. Jabusco Nig. Ltd (2008) 3 NWLR (pt 1075) 526 at 545 where he stated thus:
“The law generally is that an application to amend pleadings can be made any time before judgment. There are certain times when amendments are allowed on appeal. There cannot be a better notice of the case a party intends to make than his pleadings. It is a notice and can never be a substitute for evidence required in proof of the facts pleaded. In the High Court cases are fought on pleadings and the law is that parties are bound by their respective pleadings. See Obmiami Brick & Stone (Nig) Ltd vs. ACB Ltd (1992) 3 NWLR (pt. 229) 260. For these reasons, it is within the power of the court to grant an amendment even if the amendment would add to the existing cause of action or substitute therefore a new cause of action, provided the additional or the new cause of action arises out of the same or substantially the same facts as are contained in the pleadings. Not only is a court entitled to make formal amendments, it indeed has a duty to do so and this duty remains whether there is a formal application before the court or not and whether it is in the trial court or any of the appellate courts”. See also Sadiku Osho & Anr vs. Michael Ate (1998) 8 NWLR (PT 562) 492, Ipadeobe vs. Oshomode (1987) 3 NWLR (PT 59) 18. Chief Defence Staff vs. Adhekegbe (2005) 13 NWLR (PT 1158) 332. Our locus classicus is the Supreme Court decision in Chief Adedapo Adekeye vs. Chief O.B. Akin Olugbade (1987) 3 NWLR (PT. 60) 214 where the Supreme Court recommended 5 grounds upon which amendment to pleadings may be refused. These are: (a) where the amendment being sought is being made mala fide (b) it would cause unnecessary delay (c) it would anyway prejudice the opposite party (d) it is quite irrelevant or useless and (e) it would merely raise technical issues. Kayode Eso, JSC at pages 223 – 224 gave the general disposition of our courts on the issue of amendment of pleadings thus:
“The aim of amendment is usually to prevent the manifest justice of the cause from being defeated or delayed by formal slips which arise from the inadvertence of counsel. It will certainly be wrong to visit the inadvertence or mistake of counsel on the litigant. The courts have therefore through the ages taken a stand that however negligent or careless may have been the slip, however late the proposed amendment, it ought to be allowed if this can be done without prejudice to the other side for step taken to ensure justice cannot at the same time and in the same breath be used to perpetuate an injustice on the opposite party. The test as to whether a proposed amendment should be allowed is therefore whether or not the party applying to amend can do so without placing the opposite party in such a position which cannot be redressed by the panacea which heals every sore in litigation namely costs.”
This statement of the law was cited with approval in Akaniwo vs. Nsirim (2008) 9 NWLR PT 1093) 439. In this judgment, Mohammed JSC at page 460 had this to say:
“The law is indeed well settled that an amendment of pleadings should be allowed at any stage of the proceedings unless it will entail injustice to the other side responding to the application. The application should also be granted unless the applicant is acting mala fide or by his blunder, the applicant has done some injury to the respondent which cannot be compensated in terms of costs or otherwise”. See also Adetutu vs. Aderohunmu & Ors. (1984) 15 N.S.C.C. 38.  From the above, it is very clear that the disposition of our courts to the amendment of pleadings is indeed very liberal. Even though judgments and rulings involving the exercise of discretion do not constitute binding precedents, the legal principles articulated therein must guide trial courts in the exercise of their discretionary powers. A trial court faced with an application for an amendment of pleadings therefore ought to grant the application unless there are grounds for refusal that bring the application within the five grounds for refusal set out in Adekeye vs. Akin Olugbade supra. An application for amendment of pleadings is not granted as a matter of course. The applicant must, as in all other applications for the exercise of the court’s discretion, establish prima facie by affidavits evidence in line with the Supreme Court decision in Williams vs. Hope Rising Voluntary Funds (1982) 1-2 SC 145 his entitlement to the prayer sought. Having done that, it is incumbent on the party contesting the application to place before the court affidavit evidence establishing any of the five grounds upon which the court may refuse the application. This is more so where ‘bad faith’ or ‘mala fides’ ‘prejudice’ or ‘over-reaching’ is alleged. The term ‘Bad faith’ is a term of art. It connotes dishonesty of belief or purpose. See Blacks law Dictionary 8 ed. P. 149. It is a deduction that can only be made from set out facts. It is in effect a conclusion when averred. A party relying on such an averment in an affidavit must set out the facts constituting the bad faith alleged. He who alleges proves. When therefore facts founding the averment of bad faith in a pleading or an affidavit are not set out, the opposing party is not obliged to join issues thereon. This also goes for allegations of ‘prejudice’ or ‘over reaching’. There is infact a growing body of opinion that in such instances the burden of proof rests on the party alleging them. See Ananso vs. R.T.D.T.C. (2009) 17 NWLR (PT.1170) 207.
In order to determine whether or not the trial court properly exercised its discretionary powers in refusing the application to amend the appellant’s pleadings, we must re visit the affidavit in support of the application and the 1st respondent’s counter-affidavit.
The appellant’s affidavit reads:
“1, Olugbuyiro Akinola, Male, Christian, Nigerian, Legal Practitioner of 57 Marina, Lagos do hereby asseverate as follows:
1. I am a counsel in the law firm of Messrs Olaniwun Ajayi, representing the 1st defendant in this matter, and by virtue of my position, I am conversant with the facts of this case.
2. I have the consent of the 1st defendant to depose to this affidavit.
All the facts deposed in this affidavit are derived from my personal knowledge and from information given to me by Dayo Idowu of counsel, which information I verily believe.
3. I have read all the processes filed by the 1st defendant and patiently followed proceedings of this Honourable Court. Thus, I believe that in order to enable the court determine the real issues in controversy in this matter, it is necessary to further amend the 1st defendant’s further Amended Statement of Defence and Counterclaim to reflect some material facts advertently omitted especially the particulars of equitable fraud pleaded in paragraph 9 of the said Further Amended Statement of Defence and Counterclaim dated 30/09/2005.
4. Further, I believe that the amendment is also necessary for the 1st defendant to properly articulate the facts of its counterclaim against the plaintiff.
5. In consequence, the 1st defendant has now prepared a 1st further amended statement of defence and counterclaim. Now attached, shown to me and marked Exhibit EWNL 1 is proposed 1st further amended statement of defence and counterclaim.
6. The plaintiff will not be prejudiced in any way if this application is granted.
7. I make this affidavit in good faith believing same to be true in accordance with oaths Act cap 333 Laws of the Federation of Nigeria 1990.”
The 1st respondent’s counter-affidavit on the other hand reads thus:
“I, Olusola Odeyinka, male, Nigerian, Litigation Officer of 10 Sabiu Ajose Crescent, off Bode Thomas Street, Surulere, Lagos do make oath and state as follows:
1. That I am a litigation officer in the Chambers of Prof. A.B. Kasunmu SAN and I have the authority of the plaintiff to depose to the facts in this counter affidavit.
2. That the said facts are based on information either known to me personally by reason of my employment or those given to me by our Seyilayo Ojo Esq. which I verily believe to be true.
3. That I am particularly informed by Seyilayo Ojo of Counsel and I verily believe him as follows:
a. That he has read the application dated January 24 2007 and filed by the 1st defendant herein
b. That contrary to the averments in paragraph 3 of the supporting affidavit, the proposed amendments will not in any way assist the court to determine the issues in controversy in this case.
c. That the natures of the proposed amendments are such as will occasion undue delay in the proceedings before this court in that it will cause the plaintiff to file an amended reply, which will in turn, lead to the plaintiff reopening its case.
d. That the proposed amendments, in addition, seek to introduce facts and evidence that are not in any way relevant to the issues in controversy and/or have been declared inadmissible by the court.
e. That the plaintiff stands to be greatly prejudiced if this application is granted.
f. That in addition, the facts sought to be introduced by the proposed amendment are not facts that are just coming to the knowledge of the 1st defendant.
g. That the application for an amendment is brought mala fide and that it is in the interests of justice that the application be refused.
4. That I swear to this counter affidavit in good faith believing same to be true and in accordance with the provisions of the oaths Act.”
It is clear from the above affidavits that, nowhere did the 1st respondent’s affidavit disclose facts founding its averment of prejudice, bad faith or the technical nature of the amendment sought. It is of course correct law that judicial discretion exercised bona fide by a lower court uninfluenced by irrelevant consideration and not arbitrary or illegal will not as a general rule be interfered with by an appellate court – see Unilag vs. Aigoro (1985) 1 NWLR (pt 1) 143. In this regard justices of the appellate courts must take care not to substitute their discretion for the discretion of the courts below. The principle therefore is that for an appellate court to interfere with the exercise of the discretionary power vested in the courts below, it must show how that power was wrongly exercised to justify the intervention. See Althom S.A. vs. Saraki (2005) 1 SC (pt 1) 1, Ceekay Traders Ltd vs. General Motors Co. Ltd (1992) 2 NWLR (pt. 222) 132, Rasaki A. Salu vs. Madam Towuro Egeibon (1994) 6 NWLR (pt.349) 23. An appellate court shall however not hesitate to interfere with the exercise of judicial discretion where it is shown that there had in fact been a wrongful exercise of discretion. The court will so hold where the lower court acted under a misconception of the law or misapprehension of the facts by giving weight to irrelevant or unproved facts or omitted to take into account relevant facts or exercised or failed to exercise discretion on wrong or inadequate material or where it is in the interest of justice to interfere. See Unilag vs. Aigoro supra. It is to be noted that the trial court completely ignored the fact that the statement of defence sought to be amended also constitutes the defendants pleadings in the appellant’s counter claim where the appellant had sought to add two new heads of claim, a suit in which the appellant was yet to lead evidence in proof thereof. In such circumstance how can the 1st respondent whose right to lead evidence in rebuttal subsists be said to be prejudiced? How can the trial court talk of unnecessary delay when it had just allowed very substantial amendments to the plaintiff’ reply. I confess that I fail to see the ‘mere technical’ nature of the comprehensive amendments sought in the defendant’s pleadings which amendments include the addition of two new prayers to the counter-claim as to cause unnecessary delay. In the particular circumstance of this case I hold that the refusal by the trial court of the appellant’s application to amend its pleadings engendered a substantial miscarriage of justice. The 1st respondent can adequately be recompensed in costs. This appeal succeeds. The ruling of the trial court on 14/3/07 is hereby set aside. The amendments sought by the appellant at the trial court in its motion dated on 24/01/07 are hereby allowed. N30,000.00 costs to the appellant against the 1st respondent.
CLARA BATA OGUNBIYI, J.C.A: I agree that the amendment sought for would aid the just determination of the case and the refusal by the learned trial judge, despite the circumstance placed before him, was not with all respect, an exercise of judicious and judicial discretion.
I also allow the appeal in the same terms as the lead judgment of my brother Agbo J.C.A., and further abide by all order made therein inclusive of that made as to costs.
ADAMU JAURO, J.C.A: I have had a preview of the lead judgment just delivered by learned brother, Agbo, J.C.A. His lordship has meticulously considered the lone issue for determination in this appeal. I am in complete agreement with the lead judgment and adopt same as mine.
The appeal herein is against the ruling refusing the appellant an opportunity to amend his statement of defence and counter claim. The grant of an application to amend pleadings is discretionary, and the guiding principle is that the amendment should be for the purposes of determining in the suit the real questions in controversy between the parties. Hence, an application to amend pleadings should be allowed unless it will entail injustice to the respondent or the applicant acted mala fide or by his blunder has done some injury to the respondent which cannot be compensated by way of costs. See Akaniwo v. Nsirim 2008 9 NWLR Pt. 1093 439 Adekeye v. Akin Olugbado (1987) 3 NWLR (Pt. 60) 214. The amendment sought in this case is not within the forbidden range.
For the above and fuller reasons contained in the lead judgment, I also allow the appeal. I abide by all consequential order made, including that of costs.
Appearances
O. OPASANYA;
M. Amadi ;
Miss C. Okeke For Appellant
AND
Seyilayo Ojo;
Owolabi Olukoya;
S.O.S. Amaefule For Respondent
