LONESTAR DRILLING NIGERIA LIMITED v. NEW GENESIS EXECUTIVE SECURITY LIMITED (2011)

LONESTAR DRILLING NIGERIA LIMITED v. NEW GENESIS EXECUTIVE SECURITY LIMITED

(2011)LCN/4563(CA)

In The Court of Appeal of Nigeria

On Monday, the 23rd day of May, 2011

CA/PH/142/2009

RATIO

DEBT: MEANING OF THE WORD DEBT

A debt according to BLACK’S LAW DICTIONARY 5th edition is -a sum of money due by certain and express agreement, it is a specific sum of money owing to one person from another including not only the right of the creditor to receive and enforce payment. PER EJEMBI EKO, J.C.A.

UNDEFENDED LIST PROCEDURE: WHETHER FOR A CLAIM TO BE UNDER THE UNDEFENDED LIST PROCEDURE IT MUST BE FOR LIQUIDATED MONEY DEMAND OR DEBT

Under the undefended List Procedure, as submitted correctly by the Appellant, the claim must either be for liquidated money demand or a debt. Order 11 Rule 8(1) of the extant Rules of the trial Court, earlier reproduced, speaks of a claim to recover a debt or liquidated money demand. PER EJEMBI EKO, J.C.A.

LIQUIDATED MONEY DEMAND: MEANING OF THE WORD ”LIQUDATED MONEY DEMAND”

AWARD OF COSTS: THE PRINCIPLES GUIDING THE COURT IN DETERMINING THE AMOUNT OF COST

The claim for costs is for indemnification of the party adjudged to be in the right for his expenses in the litigation. Order 49, Rule 1 of the extant Rules of the trial court provides- “1(1). In fixing the amount of costs, the principle to be observed is that the party who is in the right is to be indemnified for the expenses to which he has been necessarily put in the proceedings, as well as compensated for his time and effort in coming to court. The Judge may take into account all the circumstances of the case. 2. When costs are ordered to be paid, the amount of such costs shall, if practicable be summarily determined by the judge at the time of delivering the judgment or making the order. 3. When the judge deems it to be impracticable to determine summarily the amount of any costs which he has adjudged or ordered to be paid, all questions relating thereto shall be referred by the Judge to a taxing officer for taxation. It is abundantly clear from the foregoing that costs fall into two broad species, namely the necessary expenses in the proceedings made by a party and costs in terms of the litigant’s “time and effort in coming to court,” The former category includes filing fees, and solicitors fees. This category belongs to the realm akin to special damages. They are easily ascertainable by producing, for instance, receipts. That is why the Rules classify them as expenses. The latter category which the Rules allow the litigant to be compensated for is the litigant’s “time and effort in coming to court. “The court, under this category, usually takes into account the number of appearances of the litigant and his counsel in court. PER EJEMBI EKO, J.C.A.

UNDEFENDED LIST PROCEDURE: WHAT THE TRIAL COURT SHOULD TAKE INTO CONSIDERATION IN CONSIDERING WHETHER TO GRANT LEAVE TO THE DEFENDANT TO DEFEND ACTIONS BROUGHT ON THE UNDEFENDED LIST

The Supreme Court in UBA Plc v. ALHAJI JARGABA (supra) at page 22 states the law to the effect that trial courts, in considering whether to grant leave to the defendant to defend actions brought on the undefended list, should adopt a liberal attitude. What that means is that once the facts supporting the Notice of Intention as defend, as averred in the supporting affidavit, disclose the existence of triable issues, as apposed to mere sham, frivolous, vague and fanciful defence designed only to delay trial of the action, such suit should be transferred to the general cause list for all the disputed facts to be tried or trashed out. PER EJEMBI EKO, J.C.A.

Juctice

MUSA DATTIJO MUHAMMAD Juctice of The Court of Appeal of Nigeria

EJEMBI EKO Juctice of The Court of Appeal of Nigeria

TUNDE OYEBANJI AWOTOYE Juctice of The Court of Appeal of Nigeria

Between

LONESTAR DRILLING NIGERIA LIMITEDAppellant(s)

AND

NEW GENESIS EXECUTIVE SECURITY LIMITEDRespondent(s)

EJEMBI EKO, J.C.A. (Delivered the Leading Judgment): The appeal is against the judgment of Hon. J. N. Akpughunum, I of Rivers State High Court delivered on 19th January, 2009 wherein the Appellant was ordered to pay to the Respondent the following sums-
(a) A total of $1,091,208.40 (one Million, Ninety-six Thousand, Two Hundred and Eight US Dollars and forty cents) being the total Dollar amount covering the months of January, February, March, June, July, August and September, 2007 {exclusive of VAT charges) for security services rendered by the claimant/Respondent to the defendant (Appellant for which the defendant/Appellant was alleged to have refused or failed to pay despite repeated demands.
(b) A total sum of N99,559,000,84 (Ninety-Nine Million, Five Hundred and Fifty-Nine Thousand Naira, Eighty Kobo) being the naira payment for security and catering services (exclusive of VAT Charges) rendered to the defendant/Appellant by the Claimant/Respondent which sum the defendant/Appellant was alleged to have failed or refused to pay despite repeated demands.
(c) The sum of N50,000.00 (Fifty Thousand Naira) awards as costs.
The suit was heard under the undefended List procedure. The Claimant/Respondent has claimed the sums of $1,096,208.40 and N99, 559,000.84 as liquidated sums for services rendered under a written agreement. The 10% interest per annum was claimed as a statutory interest an judgment sum until the same was fully liquidated. In the suit of the claimant/Respondent the sum of N500.000.00 was claimed as costs of the litigation. Out of this sum the learned trial judge, in her discretion awarded N50, 000.00 representing 10% of the sum claimed. In accordance with the Rules of this court the parties duly exchanged Briefs of Arguments. For the Appellant three (3) issues for determination were formulated from the four (4) grounds of appeal. The issues formulated are:-
1. Whether having regard to the evidence before the lower Court, the learned trial judge was right when he proceeded to enter judgment for the Respondent under the undefended List.
2. Whether the Appellant’s Notice of Intention to Defend raises a triable issue so as to entitle the Appellants to be let in to defend.
3. Whether the writ of summons in this suit under the undefended List Defend Procedure can be issued without the leave of court being sought and obtained.
I have read the Respondent’s Brief. The Respondent thinks that only one issue really stands out from the 4 grounds of appeal for determination. The lone issue formulated is:
Whether the Appellant’s notice of Intention to Defend disclosed any defence on the merits as to warrant the transfer of the suit to the General Cause List of the High Court.
In my humble view the issues formulated by the Appellant cover more grounds that the lone issue formulated by the Respondent. I will, and I do hereby therefore, adopt the issues formulated by the Appellant and accordingly, consider the Appeal.
Appellants third issue queries the competence of the originating process, which according to the Appellant was not issued in accordance with Order 11 Rule 8(1) & (2) of the High Court (Civil Procedure) Rules, 2006 that provide.
8(1) where a claimant in respect of a claim to recover a debt of liquidated money demand believes that there is ns defence to his claim, he shall make an application to a court for the issue of a writ of summons in respect of the claim to recover such debt or liquidated money and shall support the application by an affidavit setting forth the grounds upon which the claim is based and stating that in the deponent’s belief there was no defence thereto.
(2) The Court shall, if satisfied that there are grounds for believing that there is no defence thereto, enter the suit for hearing in what shall be called the “undefended List”, and mark the writ accordingly, and enter thereon a date for hearing suitable to the circumstances of the particular case.
Appellant submits correctly in my view that under the foregoing Rules leave of, court to place the suit on the undefended List procedure must be first sought and obtained before the Writ of Summons under the undefended List would be issued. Appellant further argues that in the instant case the said leave was not first sought and obtained before the Writ of Summons (at pages 1-52 of the Record) was taken out on 29th October, 2008. I do not think that the Record of appeal supports this submission. It is trite that the parties, especially the appellant, are bound by the Record. The claimant’s motion ex-parte for leave for the action to be heard and determined under the Undefended List Procedure was filed on 22nd August 2008 – pages 58-94 of the Record. The application was heard and granted on 23rd October 2008 see pages 141-142 of the Record. The writ of summons was, in consequence of the ex-parte order, taken out on 29th October, 2008. There belies the falsity or fallacy of this submission.
Issue 3 shall be, and is, hereby therefore resolved against the Appellant.
Under the undefended List Procedure, as submitted correctly by the Appellant, the claim must either be for liquidated money demand or a debt. Order 11 Rule 8(1) of the extant Rules of the trial Court, earlier reproduced, speaks of a claim to recover a debt or liquidated money demand.

The same BLACKS LAW DICTIONARY defines liquidated money demand  as a demand the amount of which has been ascertained by agreement of the parties, or otherwise.
In BEFAREEN PHARM LTD.  v. A.I.B. LTD (2005) 17 NWLR (pt 954) 230, at page 244. Adekeye JCA (as she then was) suggests, and I agree, that Liquidated claim includes ” a claim for an amount previously agreed by the parties or that (which) can be precisely determined by operation of law or by the terms of the parties”.While claim for costs, which generally is in the nature of special damages which must be specifically pleaded and proved, as stated in GUINNESS NIGERIA PLC (2001) FWLR (pt 36.) 981 and can, generally speaking, be added to other claims for debt or liquidated money demand under the Undefended List procedure; the claim for N500, 000.00 costs in this instant suit falls short of one for special damages. In the instant case the claim for N500, 000″00 as costs of this litigation was not in any way itemized, particularized and proved. At best, as it is on the Writ of Summons, it is a claim for general damages calling for the exercise of the trial court’s discretion judicially and judiciously. Since there was no prima facie evidence establishing that claim of N500.000.00 as costs, the trial court should have transferred that claim to the general cause list for proof.
The claim for costs is for indemnification of the party adjudged to be in the right for his expenses in the litigation. Order 49, Rule 1 of the extant Rules of the trial court provides-
“1(1). In fixing the amount of costs, the principle to be observed is that the party who is in the right is to be indemnified for the expenses to which he has been necessarily put in the proceedings, as well as compensated for his time and effort in coming to court.
The Judge may take into account all the circumstances of the case.
2. When costs are ordered to be paid, the amount of such costs shall, if practicable be summarily determined by the judge at the time of delivering the judgment or making the order.
3. When the judge deems it to be impracticable to determine summarily the amount of any costs which he has adjudged or ordered to be paid, all questions relating thereto shall be referred by the Judge to a taxing officer for taxation.
It is abundantly clear from the foregoing that costs fall into two broad species, namely the necessary expenses in the proceedings made by a party and costs in terms of the litigant’s “time and effort in coming to court,” The former category includes filing fees, and solicitors fees. This category belongs to the realm akin to special damages. They are easily ascertainable by producing, for instance, receipts. That is why the Rules classify them as expenses.  The latter category which the Rules allow the litigant to be compensated for is the litigant’s “time and effort in coming to court. “The court, under this category, usually takes into account the number of appearances of the litigant and his counsel in court.
All I am saying is that the claim for N500,000,00 as costs having not been shown to claim for necessary expenses of the proceedings ought to have been pleaded and proved. Even if it were for necessary expenses in the proceedings, there was no proof of such necessary expenses to warrant its being claimed under Undefended List Procedure. By awarding N50,000.00 instead of the N500.000.00 claimed the trial court, apparently by conduct, agreed that the claimant did not prove the claim as necessary expenses but one presumably as compensation for the claimant’s time and effort in coming to court.
The claim for 10% interest per annum on the judgment sum until Finally liquidated was slotted in as a consequential order the trial court may make in the event of its awarding the sums claims. The trial Judge is permitted to make this consequential order under Order 35, Rule 4 of the High Court (Civil Procedure) Rules 2006. He is entitled to Order, as he deems it fit, that “interest at a rate not less than 10% per annum be paid upon any Judgment” sum until the said sum was finally liquidated As Adekeye, JCA (as she then was) puts it in BEFAREEN PHARMACY case (supra), this claim for interest is one claimed “by operation of law.” This now takes me to whether the claims for $1,096,208.40 USD and N99.559, 000.84 were properly heard and determined under the undefended List Procedure . Upon service of the originating processes on the defendant, the present Appellant, he filed Notice of Intention to defend under Order 11, Rule 10 (1) of the extant Rules of the trial court.
In the said Notice the Appellant raised inter alia the issue of Shell Petroleum Development Company’s (SPDC) payment/non-payment of the amount they ought to pay the claimant/Respondent under the terminated  agreement, and that the amounts of $500,000.00 USD and $275,566.20 USD had been paid by telegraphic transfer to the   claimant/Respondent. Appellant also raised the issues of mandatory arbitration clause 16 in the agreement, Exhibit AJNI, from which claims and their dispute arose. The affidavit in support of the Notice of  Intention to defend avers in paragraphs 3(b) – (i)
3. That on Tuesday, the 11th day of November,2008 I was informed by the Defendant’s Legal Adviser, Kunle Edu, Esq, and I verily believe as follows:
(a) –
(b) That the payment of $500,000.00 USD by telegraphic transfer to the claimant’s account about a fortnight ago is not reflected in the Claimant’s affidavit.
(c) That on the 4h December 2007, the Defendant transferred into the claimant’s account, the sum
of $275,566.20 USD by telegraphic transfer;
(d) That the Defendant operate and perform certain drilling services for SPDC in Nigeria and other major oil drilling companies;
(e) That due to increased criminal activities creating a security risk to the crew and equipment, the Defendant on the 1st October, 2007, executed Agreement with the Claimant to provide security Personnel and thereafter catering services for the Defendant’s Rigs. The said agreement is hereby annexed and marked as Exhibit “AJNI”;
(f) That by clause 16 of the said Agreement Exhibit “AJNI” the parties agreed that Any dispute arising out of the term of this agreement shall be settled by arbitration under the rules of the Arbitration and Conciliation Act of Nigeria 1990 by three arbitrators in accordance with such rules. The arbitration shall be held in Lagos, Nigeria
(g) That by the provisions in the Agreement, the claimant’s invoices are to be settled by or paid after SPDC’S settlement of the Defendant’s Invoices;
(h) That by Exhibits “D” and “E” respectively, annexed to the claimant’s affidavit in support of the writ of summons, the parties are in despite as to SPDC” payment and non-payment;
(i) That the parties are also in further dispute as to the claimant’s claim and or entitlements as the same does not reflect payment transfer from the Defendant to the claimant, particularly the sums of $500,000.00 USD and  $275,566.20 USD, respectively,
(j) That the above mentioned disputes hereinabove mentioned have not been resolved by the parties herein, either personally and or by arbitrator pertinent to dispute resolution in the said agreement, before the institution of this suit.
This affidavit, together with the Notice of Intention to Defend, were filed on 12th November, 2008. On 15th January 2009 the Defendant/Appellant filed a further Affidavit in support of the Notice of Intention to Defend. In the said further affidavit the Appellant exhibited the remittance advance, Exhibit LDN 2, to authenticate and or establish its assertion that $500,000.00 USD had been paid or transferred to the account of the Claimant/Respondent. The further Affidavit was filed 4 days before the trial court delivered its judgment on 19th January, 2009. In view of Exhibit LDN 2 the learned trial judge was perverse in holding that no documents were attached to show that the sum of $500,000.00 USD was transferred or paid into the Claimant/Respondent’s account by telegraphic remittance, The Appellant was specific and categorical that the sum $275.566.20 was transferred to the Claimant’s account on 4th December, 2007. This was not refuted. The law is trite that facts not refuted or disputed are taken as established. The most effective way the claimant could have refuted this fact of transfers of funds is for the claimant to have produced its statement of account. This, the Appellant, ominously had failed to do. An impression has thus been created that the judgment appealed was obtained by fraud of concealment.
I agree with the Respondent on the authority of U.B.A. Plc & Anor V. ALHAJI JARGABA (2007) 5 SC 1 at 13 that the defence the defendant, sued under the undefended List Procedure, is expected to show is not one that is a sham, frivolous, vague or fanciful defence designed only to delay trial. I have read the originating process, including the supporting affidavit, and also the Notice of Intention to defend, including the supporting affidavit and the further affidavit of the defendant/Appellant. The defence raised therein by the defendant/Appellant call not be easily wished away or dismissed as sham, frivolous, vague or fanciful. The claimant’s right to the sums claimed flow from the terminated agreement. The agreement is between the Appellant (Lonestar Drilling Nig. Ltd) and the Claimant/Respondent (NGES). The agreement, like Exhibits D.E.F and G seems to suggest that the fees for the Claimant/Respondent’s services to the appellant are contingent upon payment by or funds coming from, Shell Petroleum Development Company (SPDC). There is that suggestion in clauses 3, 4 and 5 of the said agreement. In my judgment the defendant/Appellant seems to have disclosed a reasonable triable defence, and not a mere sham or fanciful defence, when it pleaded that it owed the claimant because funds were not forthcoming from the SPDC. Disputes, as this, over non-payment of fees are contemplated by clause 16 of the agreement earlier reproduced, for reference to arbitration. The learned trial judge therefore erred when she held that “no dispute has arisen from the Agreement that would warrant same being referred for arbitration.”
The Supreme Court in UBA Plc v. ALHAJI JARGABA (supra) at page 22 states the law to the effect that trial courts, in considering whether to grant leave to the defendant to defend actions brought on the undefended list, should adopt a liberal attitude. What that means is that once the facts supporting the Notice of Intention as defend, as averred in the supporting affidavit, disclose the existence of triable issues, as apposed to mere sham, frivolous, vague and fanciful defence designed only to delay trial of the action, such suit should be transferred to the general cause list for all the disputed facts to be tried or trashed out. In view of all I have stated above I am of the firm view that Appellant’s issues 1 and 2, above reproduced, should be and are hereby resolved in favour of the Appellant against the Respondent. The Notice of Intention to Defend clearly disclosed or raised triable issues as to entitle the Appellant to be let in to defend the suit under the General cause List. The learned trial Judge was therefore in error, in the circumstances of the suit, when she entered judgment for the claimant/Appellant under the undefended List procedure. The appeal succeeds in part. The decision including all the orders therein made on 19th January, 2009 in the suit No. PHC/1440/2008 at the High court of Rivers state are hereby set aside. The suit shall be heard on the General cause List under the extant Rules of the trial court by a Judge, other than Hon, Joy N. Akpughunum, J. The Appellant is entitled to costs and I hereby order the Respondent to pay costs assessed at N50, 000.00 to the Appellant.

M. DATTIJO MUHAMMAD, J.C.A.: I read in draft the lead judgment of my learned brother Eko JCA and agree with him that this appeal has merit. I adopt the judgment as mine and allow the appeal on the basis of reasonings the and conclusions reflected therein. I abide by the consequential orders made in the lead judgment.

T.O. AWOTOYE, J.C.A.: I have had the benefit of reading the draft of the lead judgment of my learned brother EJEMBI EKO JCA, just delivered this morning. I agree that this appeal has merit and should be heard on the General cause list by a judge, other Akpughunum J of High Court of Rivers State.
By way of addition I shall comment on some aspects of this appeal.
The appellant in its issue No.3 as formulated in his brief had urged the court to hold that the failure of the Respondent to seek and obtain leave of court for the issuance of the writ of summons was fundamental and a breach of a condition precedent to the institution of the suit at the lower court under the undefended list and consequently the suit should be struck out. He relied on BABA v. HABIB NIG. BANK LTD (2003) 7 NWLR (pt.712) page 496 at 505 – 506.
In understanding the grouse of the appellant on this issue one needs to re-examine the application of the respondent at the lower court. The respondent who was the claimant at the lower court by a motion exparte filed on 22/8/2008 prayed for the following orders.
“An order granting leave to the claimant/Applicant to bring this suit under the undefended list and to list and mark the writ of summons accordingly.”
The application was granted on 23/10/2008 in the following terms
“1. Order as prayed as per the motion paper dated 21/8/2008 and filed on the 22/8/2008.
2) The order, the writ of summons and all other court processes in this case shall be served on the defendant before the date fixed for hearing.”
The contention of the appellant was that the claimant did not apply for the issuance of the writ of summons as stipulated by order 11 rule 8 (1) of the Rivers High court of Rivers State (civil procedure) Rules of 2006.
With due respect, I am of the view that, the submission of learned counsel for the appellant docs not hold water. Order & Rule 1 of the same Rivers State.
“Originating process shall be prepared by & claimant or his Legal practitioner, and shall he clearly printed on good quality white opaque paper.”
No doubt & writ of summons is an originating process. If order 11 Rule 8 (1) is therefore viewed in the light of order 6 Rule 1 it would be clear that the claimant has the duty to prepare the writ of summons but the court must endorse the purpose of the issuance as stated in order 8 Rule 2 of the same Rules. In which case when the claimant prepares the writ of summons, the court on the application of the said claimant endorses the purpose of the issuance after satisfying that there are good grounds for believing that there is no defence there to enter the suit for hearing in what shall be called the undefended list. see order 11 Rule 8(2).
If a claimant as the respondent at the trial court applies for “Leave to bring his suit under the undefended list and to list and mark the writ of summons accordingly”, he has in essence complied with the provisions of Order 11 Rule 8(1) of the Rules of High Court of Rivers state 2006. In short, such a claimant is seeking for the endorsement of the court to use the writ of summons for the purpose of undefended list procedure. The procedure adopted by the lower court in this respect is therefore in my respectful view unassailable.
One other point I wish to comment upon is whether or not the claimant was right in including the claim for cost in an undefended list action. The lower court had awarded the cost of N50,000.00 as cost of the litigation in favour of the claimant instead of the sum of N500,000.00 claimed as cost by the claimant in its writ of summons.
In his brief learned counsel for the Respondent relied on Order 4 Rule 4 (1) of the Rules of Court 2006 which provided as follows:
“Where the claim is for debt or liquidated demand only the originating process shall state the amount claimed for debt or in respect of such demand with costs and shall further state that the Defendant may pay the amount with costs to the claimants legal practitioner within the time allowed for appearance and that that upon such payments the proceedings shall terminate.”
It seems to have escaped the notice of learned counsel for the Respondent that Order 4 Rule 4 (1) is not on the undefended list procedure and cannot by any stretch of imagination be applied to it.
Order 11 Rules 8 – 12 of the Rules specifies the procedure to be adopted under the undefended list and does not include claim for costs.
Order 11 Rule 8 (1) is very clear on this it reads:-
“8(1) Where a claimant in respect of a claim to recover a debt or liquidated money demand believes that there is no defence to his claim, he shall make an application to a court for the issue of a writ of summons in respect of the claim to recover such debt or liquidated money demand and shall support the application by an affidavit setting forth the grounds upon which the claim is based and stating that in the deponent’s belief there was no defence thereto.”
It therefore follows from the above that a claim for cost in an action under the undefended list is in appropriate, The trial court ought not to have granted it.
An action under the undefended list must be either in respect of liquidated money or debt. The factors for determining a liquidated sum are as follows:
(a) The sum must be automatically ascertainable without further investigation.
(b) in respect of contract, as In this appeal, the parties to the contract must have mutually and unequivocally agreed on a fixed amount payable on breach.
(c) The agreed and fixed amount must be known prior to the breach. See NWORSI v. AKPUTA (2010) 42 NSC QR 302 at 322.
The above clearly excludes costs of a pending suit which are assessed at the discretion of the court. see Order 49 Rule 6 of the High court of Rivers State Rules 2006. Until assessed and fixed by the court the costs of the litigation cannot be ascertainable, This takes costs clearly out of the purview of Order 11 Rule 8 of the Rules.
In view of all these and the points ably considered in the lead judgment, I am of the respectful view that the learned trial judge erred to have entertained this suit under the undefended list.
This appeal has merit. It is hereby allowed. I abide by the consequential orders made in the lead judgment including order as to costs.
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