LOYE & ANOR v. NEWLIFE MICROFINANCE BANK LTD
(2022)LCN/17033(CA)
In The Court Of Appeal
(LAGOS JUDICIAL DIVISION)
On Tuesday, June 21, 2022
CA/L/364/2012
Before Our Lordships:
Onyekachi Aja Otisi Justice of the Court of Appeal
Adebukunola Adeoti Ibironke Banjoko Justice of the Court of Appeal
Peter Oyinkenimiemi Affen Justice of the Court of Appeal
Between
1. MRS EBUN OLAYINKA LOYE 2. MR ISAAC AGBOOLA LOYE APPELANT(S)
And
NEWLIFE MICROFINANCE BANK LTD RESPONDENT(S)
RATIO
WHETHER OR NOT AN OBJECTION ALLEGING STATUTE BAR CONSTITUTES A CHALLENGE TO THE COMPETENCE OF THE ACTION CONSTITUTED
It is merely restating the obvious that an objection alleging statute bar constitutes a challenge to the competence of the action as constituted and ex ipso facto the jurisdiction of the Court to entertain and determine the action: EGBE v ADEFARASIN (No. 1) [1985] 1 NWLR (PT. 3) 549 and AJAYI v ADEBIYI & ORS (2012) LPELR-7811 (SC) 1 at 40–41]; even as the pre-eminent status and stature of jurisdiction in the scheme of legal proceedings is well ingrained in our jurisprudence. Jurisdiction is determined by reference to the claimant’s demand and not the defendant’s answer. See NZEKWE v NNADOZIE (1952) 14 WACA 361. Although an objection alleging statute bar is required to be sufficiently pleaded as a special defence, otherwise it is deemed to have been waived [see Halsbury Laws of England (Vol. 28), 4th ed., p. 408 and U.B.R.B.D.A. v ALKA [1998] 2 NWLR (PT. 537) 328], it would seem that the rule that has crystalised is that being an objection that goes to the roots of the competence of a suit, the objection can be taken after receipt of the statement of claim and before any defence is filed [see LASISI FADARE & ORS v ATORNEY-GENERAL, OYO STATE (1982) 4 SC 1 and MOBIL OIL (NIG) PLC v IAL 36 INC [2000] 6 NWLR (PT. 659) 146], just as it may be raised as a distinct point of law in the pleadings, and the Court may dispose of the point so raised before, at or after the trial. When the plea of statute bar is raised, the Court takes into consideration the date of accrual of the cause of action and the date of filing the suit to ascertain whether it falls within or without the limitation period prescribed by the applicable limitation statute: EGBE v ADEFARASIN supra. Also, where an objection that the claimant’s action is statute-barred is sustained by the trial Court, the proper order to make is one of dismissal of the claimant’s action and not to merely strike it out. See EGBE v ADEFARASIN supra at 15, LAMINA v IKEJA LOCAL GOVERNMENT [1993] 8 NWLR (PT. 314) 758 at 771, EBOIGBE v NNPC [1994] 5 NWLR (PT. 347) 649 at 666 and NPA v LOTUS PLASTICS LTD (2005) 12 SCNJ 165, [2005] 19 NWLR (PT. 959) 158 at 189. PER AFFEN, J.C.A.
THE DEFINITION OF THE PHRASE CAUSE OF ACTION
The phrase ‘cause of action’ has been variously defined in judicial decisions as the fact or combination of facts that gives rise to a right to sue, which consists of the wrongful act of the defendant which gives the plaintiff the right to complain and the damage consequent due to the wrongful act. See EGBUE v ARAKA supra at 613, ECOBANK (NIG) PLC v GATEWAY HOTELS LTD [1999] 11 NWLR (PT 627) 397 at 418, EGBE v ADEFARASIN [1987] 1 NWLR (PT 47) 1 at 20, AFOLAYAN v OGUNRINDE [1990] 1 NWLR (PT 127) 369 at 373 and SAVAGE v UWECHIA (1972) 1 All NLR (PT 1) 251 at 257, (1972) 3 SC 214 at 221 to mention but a few. It is the factual basis or some factual situations a combination of which makes the matter in litigation an enforceable right or an actionable wrong. See IBRAHIM v OSIM [1988] 1 NSCC 1184 at 1194, TUKUR v GOVT OF GONGOLA STATE [1989] 4 NWLR (PT. 117) 517 at 581 and EMIATOR v NIGERIAN ARMY [1999] 12 NWLR (PT 631) 262 at 369-370. Accrual of cause of action is the event whereby a cause of action becomes complete so that the aggrieved party can commence and maintain his action: OKECHUKWU ADIMORA v NNANYELUGO AJUFO & ORS [1988] 3 NWLR (PT. 80) 1.
A cause of action is time barred if legal proceedings can no longer be validly brought or maintained because the period laid down by applicable limitation law has lapsed. A claimant’s cause of action to seek redress for wrong allegedly suffered as a result of the defendant’s action is to be distinguished from a right of action, which is a remedial right: the warrant to enforce presently a cause of action. A statute of limitation however removes the right of action and leaves a claimant with a barren and empty cause of action which he cannot enforce. See EGBE v ADEFARASIN supra. PER AFFEN, J.C.A.
THE POSITION OF LAW WHERE A STATUTE PROVIDES FOR THE INSTITUTION OF AN ACTION WITHIN A PRESCRIBED PERIOD
Thus, where a statute provides for the institution of an action within a prescribed period, no proceedings shall be commenced after the time prescribed by such statute, and any action brought after the prescribed period is said to be statute-barred. See NATIONAL REVENUE MOBILISATION ALLOCATION AND FISCAL COMMISSION v JOHNSON [2019] 2 NWLR (PT. 1656) 247 at 270, SANDA v KUKAWA LOCAL GOVT [1991] 2 NWLR (PT 174) 379, EKEOGU v ALIRI [1991] 3 NWLR (PT 179) 258, EBOIGBE v NNPC [1994] 5 NWLR (PT. 346) 649 at 659 and P. N. UDOH TRADING CO LTD v SUNDAY ABERE [2001] 11 NWLR (PT 723) 114, [2001] 24 WRN 1. PER AFFEN, J.C.A.
THE POSITION OF LAW ON WHEN TIME BEGINS TO RUN IN A CAUSE OF ACTION
Time begins to run when the cause of action accrues [see FADARE v AG, OYO supra]; but computation of time in a statute of limitation “may, at times, be tricky as it involves both the interpretation of the relevant statute and the construction of the document or documents that gave rise to the cause of action”. See OMOTAYO v NIGERIAN RAILWAY CORPORATION [1992] 7 NWLR (PT. 254) 471 at 480 (CA).
From the authorities, it would seem that the yardstick for ascertaining the date of accrual of cause/right of action when considering an objection based on a plea of statute bar is threefold. First, the general rule is that the Court is enjoined to look only at the writ of summons and statement of claim [or originating summons and supporting affidavit] to exhume the cause of action and when it arose, and placing it side by side with the date the action was commenced, which are the essential requirements for determining whether a suit falls within or without the applicable limitation period. See MBONU v NIGERIAN MINING CORPORATION [2006] 13 NWLR (PT 998) 659, ADIGUN v AYINDE [1993] 8 NWLR (PT 313) 516, ELEBANJO v DAWODU supra, CORPORATE AFFAIRS COMMISSION v GOVERNING COUNCIL OF INDUSTRIAL TRAINING FUND [2015] 4 NWLR (PT 1439) 114 at 131, EREGBOWA & ORS v OBANOR & ORS (2010) LPELR-8964, ADEKOYA v FEDERAL HOUSING AUTHORITY [2008] 11 NWLR (PT 1099) 539 and OMOMEJI v KOLAWOLE [2008] 14 NWLR (PT 1106) 180. Second, where the cause of action cannot be properly located within the confines of the originating processes, recourse can be had to the statement of defence [or counter affidavit]. This is however subject to the qualification that the date of accrual of cause of action pleaded in the statement of defence is admitted by the claimant in a reply. In different words, the date pleaded by the claimant rather than the date pleaded in the statement of defence must be relied upon unless the latter is admitted by the claimant in his reply. See ADEYEMI v OPEYORI (1976) 9-10 SC 31, AREMO II v ADEKANYE [2004] 13 NWLR (PT. 891) 572, KASANDUBU & ANOR v ULTIMATE PETROLEUM LTD [2008] 7 NWLR (PT. 1086) 274 at 297 and IBRAHIM & ORS v YUSUF (2016) LPELR-40259(CA) 1 at 9-11. Third, where the matter proceeds to trial and the evidence adduced indicates the date of accrual of the cause of action. Here, a Court is entitled to take cognisance of that date and apply the applicable limitation law. See CHIMZOBAM v PDP & ORS (2019) LPELR-48674 (CA) 1 at 14-16.
Generally, a cause of action accrues on the date on which the incident giving rise to the cause of action occurs: EBOIGBE v NNPC supra; it arises at the time or date when a breach or any act that would warrant the person who is adversely affected by the act of another to take action in Court: WOHEREM v EMEREUWA [2000] 3 NWLR (PT. 650) 529 at 538. But no prescription runs against a person who was hindered in bringing a Court action: ADMINISTRATOR AND EXECUTOR OF ESTATE OF ABACHA v EKE-SPIFF & ORS (2009) LPELR-3152(SC) 1 at 44-45 –per Aderemi JSC. PER AFFEN, J.C.A.
PETER OYINKENIMIEMI AFFEN, J.C.A. (Delivering the Leading Judgment): The factual matrix undergirding this interlocutory appeal is straightforward, and by no means complex or convoluted. The Appellants are husband and wife, whilst the Respondent is a financial institution (formerly known as Agidingbi Community Bank). The Respondent granted a 90-day credit facility in the sum of N500,000.00 to the 1st Appellant to enable her “purchase 10 V50 Suzuki Motorcycles for sale” upon the terms and conditions contained in a letter of offer dated 4/8/97. The facility was to be repaid from “proceeds from sales into your [i.e. 1st Appellant’s] account with the bank” with “a penalty charge of 10% compounded every month on every past due repayment”. The offer was accepted the same day, and the 2nd Appellant issued a personal guarantee dated 23/7/97 as well as deposited the title documents of his property situate at Railway Crossing, Agbado in Ifo Local Government Area of Ogun State with No. Tros/OG/04794 covered by Certificate of Occupancy No. 020319 as security for the facility. The Respondent alleged that the 1st Appellant failed or neglected to fulfil her repayment obligations at all material times, save for a cheque of N50,000 paid into her debt service account on 19/7/99.
The Respondent further alleged that the 2nd Respondent admitted in a letter dated 14/7/99 that the outstanding principal debt as at 27/5/98 stood at N283,141.08 whilst interest on the facility was compounding, but pleaded for a waiver of interest and promised to liquidate the entire debt in October 1999 which promise was not kept; and that several negotiation meetings aimed at reconciling accounts and make compromises (where necessary) were initiated by the Appellants between 2003 and 2004 to no avail; that the Respondent instructed its solicitors, Messrs Oluropo Awoyele & Co which gave a final demand notice dated 21/1/10; and that the principal loan and accrued interest as at 18/3/10 stood at N4,029,461,00. The Respondent (qua claimant) subsequently initiated Suit No. ID/1281/2010 vide a writ of summons issued out of the Registry of the High Court of Lagos State on 8/9/2010 claiming against the Appellants (qua defendants), jointly and severally, the following reliefs:
“a. An order of this Honourable Court foreclosing the defendants’ equity of redemption and equitable right to redeem the property mortgaged in favour of the claimant by deposit of title deeds of same in that respect.
b. An order of this Honourable Court effectively putting the claimant in undisturbed possession of the property mortgaged in favour of the claimant.
c. An order of this Honourable Court empowering the claimant to sell the landed property mortgaged in its favour by the Defendants in realisation of its security for the loan.
Alternative to prayer “C” above.
d. The sum of N4,029,461.00(Four Million, Twenty-nine Thousand, Four Hundred and Sixty-one Naira) representing principal and accrued interests on the loan facility granted the 1st Defendant from the 4th of August 1997 till March 18, 2010.
e. 10% (ten percent) compound interest on the accrued and unpaid sum from the 18th day of March 2010 till the date the judgment debt in this matter is finally liquidated.
f. Cost of this litigation.”
The Appellants joined issues with the Respondent by filing a statement of defence on 3/5/11 along with a motion on notice praying the Court for “an order dismissing the entire suit in limine” on the grounds that: “1. The claims and reliefs sought by the Claimant/Respondent are statute barred”; “2. The claims are self-defeating, unobtainable and disclose no reasonable cause of action as presently constituted”; and “3. The Honourable Court lack jurisdiction to entertain the suit”. The Respondent filed a counter affidavit and written address in opposition to the Applicants’ motion, which was heard and eventually dismissed by Pedro, J. in a considered Ruling delivered on 22/1/12 (which lies at pp. 150 – 159 of the records). The Appellants are peeved by the Ruling and lodged the present appeal. They faulted the Ruling on the three grounds set out in the Notice of Appeal dated 29/2/12 (copied at pp. 162 – 165 of the records). As enjoined by the Rules of this Court, briefs or arguments were filed and duly exchanged. The Appellants’ Brief filed on 13/7/12, the Respondent’s Brief filed on 17/9/12, and the Appellants’ Reply Brief filed on 24/9/12 were all regularized by the orders of this Court. At the hearing of this appeal on 21/3/22, O. A. Owolabi, Esq. of counsel adopted the briefs filed on behalf the Appellants and urged the Court to allow the appeal; whilst the Respondent’s Brief was deemed argued pursuant to Order 19 Rule 9(4) of the Court of Appeal Rules 2021.
Three issues are distilled for determination in the Appellant’s Brief as follows:
(i) Whether the cause of action arose on 19th October 1999 as held by the Learned Trial Judge (Ground 2)
(ii) Whether the action of the Claimant is statute-barred (Ground 1).
(iii) Whether the reliefs sought by the Claimant are self-defeating, unobtainable and disclose no reasonable cause of action (Ground 3).
On its part, the Respondent identified two issues for determination in the Respondent’s Brief thusly:
(i) Whether the cause of action arose on 19th October 1999 as determined by the Learned Trial Judge.
(ii) Whether this suit can be said to be statute-barred in view of the prevailing circumstances of this matter vis-à-vis the applicant’s refusal to respond to the respondent’s correspondences.
The similarity in the issues formulated by the parties is obvious, save that the Respondent sidestepped the third issue bordering on non-disclosure of reasonable cause of action. I will adopt the three issues identified by the Appellants in the determination of this appeal.
Appellant’s submission
The Appellant contends that the reference to EGBE v ADEFARASIN [1987] 1 NWLR (PT 47) 2 on the definition of cause of action is correct but the Learned Trial Judge erred in holding that the cause of action in this matter arose on 19/10/99 and thereby misapplied S. 29(1) of the Limitation Law of Lagos State; that it is stated clearly in the letter of offer that the loan was for a duration of 90 days, which meant that the date of expiry was 3/11/97; that the loan was deposited into the account of the 1st Appellant (1st defendant) on 2/9/97 and drawn down substantially on 3/8/97, as such even if the facts are stretched and time is computed from 2/9/97 (when the 1st Appellant’s account was credited) or 3/9/97 (when it was drawn down), the facility still expired on 1/12/97 or 2/12/97 — being the dates of the factual situation that gives the Respondent (claimant) a right to sue to recover the debt; that the cause of action arose at the expiration of the 90-day duration of the loan as provided in the letter of offer as that is when (in the words of the Learned Trial Judge) there is “in existence a person who can sue and another who can be sued”; and that no matter what is contained in the pleadings, the date of accrual of cause of action cannot be stretched further than that, citing AKIBU v AZEEZ [2003] 5 NWLR (PT 814) 643.
The Appellants further contend that as against the 1st Appellant (being the alleged primary debtor), the action filed by the Respondent on 8/9/10 is defeated not only by Ss. 8(1) of the Limitation Law, Cap 167, Laws of Lagos State 2003, but also by Ss. 29(1), 30(1) and 31(1) thereof in that the suit was brought 12 years 10 months (or 12 years 7 months) after the cause of action arose, calling in aid the case of MRS COMFORT OLUFUNMILAYO ASABORO & ANOR v PAN OCEAN OIL CORPORATION (NIG) LTD & ORS [2006] 4 NWLR (PT 971) 595 at 617; that both the principal loan and interest thereon are caught by Limitation Law and the learned Trial Judge erred in holding that the ‘issue of interest remains a live issue which will be determined at the trial stage’ and thereby unjustifiably ignored S. 30(1) of the Limitation Law which limits claims on arrears of interest to six years; and that having clearly exceeded six years (whichever computation, including that of the Learned Trial Judge, is utilised in determining when the cause of action arose), the issue of interest was dead and could no longer be a live issue. The cases of ELABANJO v DAWODU [2006] 15 NWLR (PT 1001) 76, P. N. UDOH TRADING COMPANY LIMITED v SUNDAY ABERE & 2 ORS [1996] 8 NWLR (PT 467) 479 at 492 (on reasons for the existence of statutes of limitation) and JOHN EBOIGBE v NIGERIAN NATIONAL PETROLEUM CORPORATION [1994] 5 NWLR (PT 347) 649 are referred to.
It is further contended that pleadings are not a magic wand and the averment in paragraph 12 of the statement of claim (which appeared to have swayed the lower Court) cannot stand alone but must be related to previous paragraphs and frontloaded documents which clearly show that the cause of action arose in 1997; that a combined reading of paragraphs 10 and 12 of the statement of claim reveals that the October 1999 date becomes relevant only in relation to the 2nd Appellant’s letter of 14/7/99, which has nothing to do with the 1st Appellant; and that the liability of the 2nd Appellant (as guarantor) becomes extinguished once the claim against the primary debtor is statute-barred, insisting that a guarantee has no life of its own but exists only when the primary obligation subsists and dies as soon as the primary obligation is discharged, either by payment or operation of law or whatever means, placing reliance on MACFOY v U.A.C. (1962) A. C. 152 at 160.
On Issue 3, the Appellants argued that the reliefs sought are self-defeating, unobtainable and disclose no reasonable cause of action; that it is averred in paragraph 10 of the statement of claim that the 2nd Appellant admitted owing N283,141.08 and promised to pay up in October 1999 via a letter dated 14/7/99, which admission cannot bind the 1st Appellnat (even though they are husband and wife), but Respondent (as claimant) frontloaded a statement of account up to 30/11/2000 showing that the 1st account had been reduced to zero; that the 2nd Appellant’s alleged admission was made in July 1999 whilst the statement of account frontloaded by the Respondent shows that there was no indebtedness one year and four months later in November 2000; that statements made against interest are admissible and defeat the claim as in the instant case, and the Appellants are entitled to an Order dismissing the reliefs sought in limine. Reference is made to S. 75 of the Evidence Act and the case of ANIGBOGU v UCHEJIGBO [2002] 10 NWLR (PT. 776) 472 at 487. They maintained that the innovation in the Rules of Court on frontloading “is a positive direction in the development of the judicial process and the attainment of speedy and fair dispensation of justice”, and the lower Court should have looked at the frontloaded documents in determining the reasonableness of the cause of action. The Appellants submitted that reasonableness of cause of action is determined by reference to the statement of claim and if the Respondent frontloaded a document showing that the 1st Appellant had repaid the loan, then there is nothing more to proceed to trial upon, insisting that no reasonable cause of action is disclosed and embarking on a trial would be an academic exercise in futility. This Court was urged to resolve all three issues in favour of the Appellants, allow the appeal, set aside the Ruling of the High Court of Lagos State and dismiss the action in limine.
Respondent’s submission
The Respondent cited EGBE v ADEFARASIN supra and ADEKOYA v FEDERAL HOUSING AUTHORITY [2008] 28 WRN 1 at 6-7 (on the proposition that the writ of summons, statement of claim and evidence adduced are relevant in determining when a cause of action arises) and maintained that the Appellants stopped servicing the loan since 19/10/99 (as averred in paragraph 12 of the statement of claim) but correspondence was exchanged until 2004 with a view to settling the matter amicably, which did not materialise owing to the Appellants’ rigid posture; that the cause of action arose when the agreement was breached and/or when there was no longer any hope of settlement between the parties, which was in 2004 when correspondence between the parties aimed at resolving the matter ceased; and that the facts averred in the statement of claim disclose a reasonable cause of action against the Appellants and cannot be said to be statute barred. The Respondent maintained that it caused some letters to issue on the Appellants but received no response for reasons best known to them albeit malafide; and that rather than defending the suit, the Appellants ventured into a voyage of distraction, postponing the evil day for nothing. This Court has been urged to reject “the invitation to frivolity” extended to it by the Appellants and dismiss the appeal with costs.
Appellants’ Reply
By way of reply, the Appellants maintained that the Respondent’s failure or neglect to address Issue 3 is a clear indication that it has nothing to urge; that the Respondent’s submission is contrary to the reasoning and ruling of the lower Court against which the Respondent has not appealed; that negotiations of whatever colouration cannot extend the limitation period once it did not result in any admission or final settlement of a dispute; and that the instant appeal raises fundamental issues of jurisdiction relating to statute of limitation and whether the action is self-defeating bearing in mind that the 1st Appellant’s statement of account account showing a zero debit balance was frontloaded by the Respondent itself. The Court was urged to discountenance the Respondent’s submissions and allow this appeal.
Resolution of Appeal.
It is merely restating the obvious that an objection alleging statute bar constitutes a challenge to the competence of the action as constituted and ex ipso facto the jurisdiction of the Court to entertain and determine the action: EGBE v ADEFARASIN (No. 1) [1985] 1 NWLR (PT. 3) 549 and AJAYI v ADEBIYI & ORS (2012) LPELR-7811 (SC) 1 at 40–41]; even as the pre-eminent status and stature of jurisdiction in the scheme of legal proceedings is well ingrained in our jurisprudence. Jurisdiction is determined by reference to the claimant’s demand and not the defendant’s answer. See NZEKWE v NNADOZIE (1952) 14 WACA 361. Although an objection alleging statute bar is required to be sufficiently pleaded as a special defence, otherwise it is deemed to have been waived [see Halsbury Laws of England (Vol. 28), 4th ed., p. 408 and U.B.R.B.D.A. v ALKA [1998] 2 NWLR (PT. 537) 328], it would seem that the rule that has crystalised is that being an objection that goes to the roots of the competence of a suit, the objection can be taken after receipt of the statement of claim and before any defence is filed [see LASISI FADARE & ORS v ATORNEY-GENERAL, OYO STATE (1982) 4 SC 1 and MOBIL OIL (NIG) PLC v IAL 36 INC [2000] 6 NWLR (PT. 659) 146], just as it may be raised as a distinct point of law in the pleadings, and the Court may dispose of the point so raised before, at or after the trial. When the plea of statute bar is raised, the Court takes into consideration the date of accrual of the cause of action and the date of filing the suit to ascertain whether it falls within or without the limitation period prescribed by the applicable limitation statute: EGBE v ADEFARASIN supra. Also, where an objection that the claimant’s action is statute-barred is sustained by the trial Court, the proper order to make is one of dismissal of the claimant’s action and not to merely strike it out. See EGBE v ADEFARASIN supra at 15, LAMINA v IKEJA LOCAL GOVERNMENT [1993] 8 NWLR (PT. 314) 758 at 771, EBOIGBE v NNPC [1994] 5 NWLR (PT. 347) 649 at 666 and NPA v LOTUS PLASTICS LTD (2005) 12 SCNJ 165, [2005] 19 NWLR (PT. 959) 158 at 189.
The phrase ‘cause of action’ has been variously defined in judicial decisions as the fact or combination of facts that gives rise to a right to sue, which consists of the wrongful act of the defendant which gives the plaintiff the right to complain and the damage consequent due to the wrongful act. See EGBUE v ARAKA supra at 613, ECOBANK (NIG) PLC v GATEWAY HOTELS LTD [1999] 11 NWLR (PT 627) 397 at 418, EGBE v ADEFARASIN [1987] 1 NWLR (PT 47) 1 at 20, AFOLAYAN v OGUNRINDE [1990] 1 NWLR (PT 127) 369 at 373 and SAVAGE v UWECHIA (1972) 1 All NLR (PT 1) 251 at 257, (1972) 3 SC 214 at 221 to mention but a few. It is the factual basis or some factual situations a combination of which makes the matter in litigation an enforceable right or an actionable wrong. See IBRAHIM v OSIM [1988] 1 NSCC 1184 at 1194, TUKUR v GOVT OF GONGOLA STATE [1989] 4 NWLR (PT. 117) 517 at 581 and EMIATOR v NIGERIAN ARMY [1999] 12 NWLR (PT 631) 262 at 369-370. Accrual of cause of action is the event whereby a cause of action becomes complete so that the aggrieved party can commence and maintain his action: OKECHUKWU ADIMORA v NNANYELUGO AJUFO & ORS [1988] 3 NWLR (PT. 80) 1.
A cause of action is time barred if legal proceedings can no longer be validly brought or maintained because the period laid down by applicable limitation law has lapsed. A claimant’s cause of action to seek redress for wrong allegedly suffered as a result of the defendant’s action is to be distinguished from a right of action, which is a remedial right: the warrant to enforce presently a cause of action. A statute of limitation however removes the right of action and leaves a claimant with a barren and empty cause of action which he cannot enforce. See EGBE v ADEFARASIN supra.
In navigating the stormy waters of an objection alleging statute bar, the task before a trial Court is to ascertain the date of accrual of the claimants’ cause of action vis-a-vis the date of filing of the action within the context of limitation of action: the principle of law that enjoins a claimant, as a matter of obligation, to seek prompt remedy for the breach of his right in a Court of law within the time limited by law, otherwise his cause/right of action becomes unenforceable at the expiration of the period allowed by law for commencing the action.
Thus, where a statute provides for the institution of an action within a prescribed period, no proceedings shall be commenced after the time prescribed by such statute, and any action brought after the prescribed period is said to be statute-barred. See NATIONAL REVENUE MOBILISATION ALLOCATION AND FISCAL COMMISSION v JOHNSON [2019] 2 NWLR (PT. 1656) 247 at 270, SANDA v KUKAWA LOCAL GOVT [1991] 2 NWLR (PT 174) 379, EKEOGU v ALIRI [1991] 3 NWLR (PT 179) 258, EBOIGBE v NNPC [1994] 5 NWLR (PT. 346) 649 at 659 and P. N. UDOH TRADING CO LTD v SUNDAY ABERE [2001] 11 NWLR (PT 723) 114, [2001] 24 WRN 1.
Time begins to run when the cause of action accrues [see FADARE v AG, OYO supra]; but computation of time in a statute of limitation “may, at times, be tricky as it involves both the interpretation of the relevant statute and the construction of the document or documents that gave rise to the cause of action”. See OMOTAYO v NIGERIAN RAILWAY CORPORATION [1992] 7 NWLR (PT. 254) 471 at 480 (CA).
From the authorities, it would seem that the yardstick for ascertaining the date of accrual of cause/right of action when considering an objection based on a plea of statute bar is threefold. First, the general rule is that the Court is enjoined to look only at the writ of summons and statement of claim [or originating summons and supporting affidavit] to exhume the cause of action and when it arose, and placing it side by side with the date the action was commenced, which are the essential requirements for determining whether a suit falls within or without the applicable limitation period. See MBONU v NIGERIAN MINING CORPORATION [2006] 13 NWLR (PT 998) 659, ADIGUN v AYINDE [1993] 8 NWLR (PT 313) 516, ELEBANJO v DAWODU supra, CORPORATE AFFAIRS COMMISSION v GOVERNING COUNCIL OF INDUSTRIAL TRAINING FUND [2015] 4 NWLR (PT 1439) 114 at 131, EREGBOWA & ORS v OBANOR & ORS (2010) LPELR-8964, ADEKOYA v FEDERAL HOUSING AUTHORITY [2008] 11 NWLR (PT 1099) 539 and OMOMEJI v KOLAWOLE [2008] 14 NWLR (PT 1106) 180. Second, where the cause of action cannot be properly located within the confines of the originating processes, recourse can be had to the statement of defence [or counter affidavit]. This is however subject to the qualification that the date of accrual of cause of action pleaded in the statement of defence is admitted by the claimant in a reply. In different words, the date pleaded by the claimant rather than the date pleaded in the statement of defence must be relied upon unless the latter is admitted by the claimant in his reply. See ADEYEMI v OPEYORI (1976) 9-10 SC 31, AREMO II v ADEKANYE [2004] 13 NWLR (PT. 891) 572, KASANDUBU & ANOR v ULTIMATE PETROLEUM LTD [2008] 7 NWLR (PT. 1086) 274 at 297 and IBRAHIM & ORS v YUSUF (2016) LPELR-40259(CA) 1 at 9-11. Third, where the matter proceeds to trial and the evidence adduced indicates the date of accrual of the cause of action. Here, a Court is entitled to take cognisance of that date and apply the applicable limitation law. See CHIMZOBAM v PDP & ORS (2019) LPELR-48674 (CA) 1 at 14-16.
Generally, a cause of action accrues on the date on which the incident giving rise to the cause of action occurs: EBOIGBE v NNPC supra; it arises at the time or date when a breach or any act that would warrant the person who is adversely affected by the act of another to take action in Court: WOHEREM v EMEREUWA [2000] 3 NWLR (PT. 650) 529 at 538. But no prescription runs against a person who was hindered in bringing a Court action: ADMINISTRATOR AND EXECUTOR OF ESTATE OF ABACHA v EKE-SPIFF & ORS (2009) LPELR-3152(SC) 1 at 44-45 –per Aderemi JSC.
In dismissing the Appellants’ objection, the lower Court held (at p. 158 of the records):
“I find that even though the loan was granted in 1997, the cause of action only arose in 1999 when there is in existence a person who can sue and another who can be sued.
I find that the action arose on 19th October, 1999 when the 1st and 2nd Defendants were averred to have failed and/or deliberately refused to service the principal debt and the accrued interests as they had agreed to do in the Guarantee Agreement.
The period of limitation stipulated under the statute Section 29(1) of the Limitation Law which Applicants have raised is 12 years.
I find that from 19th October 1999 (when there is in existence a person who can sue and another who can be sued) till 8th September, 2010 when this matter was filed is only a period of eleven years and one month which is less than twelve years Limitation Law prescribed by the statute.
I find that the argument of Learned Counsel that this suit is caught by Limitation Law cannot stand and that this action is not statute barred having been brought within the period allowed by Section 29(1) of the Limitation Law. As regards the arrears of interest. Having held that the main claim for the principal sum of money is not statute barred, I will be careful not to deal with the issue of interest at this stage of proceedings. The issue as to whether the arrears of interest on the principal sum of money is statute barred remains a live issue. That point of law will be determined at the trial stage in line with Order 22 Rule 2(1) of the High Court of Lagos State (Civil Procedure) Rules 2004.”
The Appellants have faulted the above decision, insisting that the basis of the Respondent’s claim against them is the letter of offer dated 4/8/97 wherein the tenor of the facility is clearly stated to be 90 days, whilst the loan was credited into the 1st Appellant’s account on 2/11/97 and drawn down the following day, thus the cause of action arose on 3/11/97 or 1/12/97 or 2/12/97 as the case may be and the action filed on 8/9/10 is statute barred, having been filed 12 years and 10 months (or 12 years and 7 months) after the cause of action arose. But the Respondent, in drumming up support for the decision of the lower Court, insisted that the Appellants stopped servicing the loan since 19/10/99 as averred but correspondence was still being exchanged with a view to resolving the matter amicably until 2004, albeit unsuccessfully; and that the cause of action arose when the agreement was breached and/or when correspondence between the parties ceased in 2004 and every hope of settlement was dashed. Who is right and who is wrong? We shall find out presently.
The point has already been made that the first port of call in determining whether a suit falls within or without the applicable limitation period is to look at the writ of summons and statement of claim to exhume the cause of action and when it arose, and placing it side by side with the date the action was commenced. Our recourse therefore is to the relevant paragraphs of the statement of claim (copied at pp. 3–5 of the records), wherein the Respondent (qua claimant) averred thusly:
“4. Sometime in July 1997, the 1st defendant applied for, and was granted a loan facility of N500,000.00 (Five Hundred Thousand Naira) by the claimant vide a facility offer letter dated 4th August, 1997. The said letter is hereby pleaded.
5. This credit facility which had a maturity date of 90 days was secured by the 1st Defendant with the following:
i. an equitable mortgage of the 1st and 2nd defendants’ property at Railway Crossing, Agbado in Ifo Local Government Area of Ogun State backed up by Property No. Tros/OG/04797 and Certificate of Occupancy No.020319;
ii. personal guarantee by the 2nd defendant evidenced in Contract of Guarantee between the claimant and the 2nd Defendant dated the 23rd day of July 1997, guaranteeing the payment of the principal loan and all accrued interests; and
iii. personal guarantee evidenced in Letter of Guarantee dated 4th August 1997. The claimant shall rely on all the documents relating to the security of the loan facility in its favour in proof of its claim at the trial of this suit.
6. By the terms of the offer letter in respect of the facility, the loan was to be repaid by deposit of proceeds of sale of the 1st defendant’s stocks into her account held with the claimant and failure to deposit the agreed monthly instalment attracted a penalty charge of 10% (ten percent) compounded on a monthly basis on any due and unpaid instalment.
7. Shortly after the loan was disbursed to the 1st defendant, the sum of N400,000.00 (Four Hundred Thousand Naira) was deposited into the 1st defendant’s account with the claimant on the 2nd September 1997 and on the next day, being 3rd September 1997, a cash withdrawal in the sum of N375,000.00 (Three Hundred and Seventy-five Thousand Naira) made by the 1st defendant from the said account, in effect, leaving only the sum of N25,000.00 (Twenty-five Thousand Naira) towards servicing the loan. Bank statements evidencing the various withdrawals from and deposits into the 1st defendant’s debt service account with the claimant are hereby pleaded.
8. Several demand notices served on the 1st Defendant to fulfil her obligation of servicing the debt as agreed were ignored.
9. A cheque of N50,000.00 (Fifty Thousand Naira) was subsequently paid into the debt service account of the 1st defendant held with the claimant on the 19th day of July 1999 and after this, no further payment was made by either the 1st or 2nd defendants towards repayment and/or offsetting the loan.
10. The 2nd Defendant vide a letter dated 14th July 1999, while admitting that the principal debt was outstanding in the sum of N283,141.08 (Two Hundred and Eighty-three Thousand, One Hundred and Forty-One Naira, Eight Kobo) as at 27th May, 1998, and that interest on the loan was compounding, pleaded for a waiver of the interests on the loan with a promise to liquidate the entire debt in October 1999. The claimant shall rely on the said letter from the 2nd defendant at the trial of this suit.
11. The Claimant avers that several negotiation meetings were initiated by both the defendants and the claimant between 2003 and 2004 aimed at reconciling the accounts and, if necessary, make a compromise but further negotiations broke down when the defendants engaged the services of a solicitor who made matters worse by suffocating the Claimant with his ignorance about bank loan operations, secured credit transactions and even alternative dispute resolution process, to say the least, and who did nothing to promote further negotiations in respect thereof.
12. The Claimant avers that the Defendants have since the 19th October 1999 failed and/or deliberately refused to service the principal debt and the accrued interests as they had agreed to do in the loan facility agreement and the Guarantee Agreement which, as at 18th March, 2010 stands at N4,029,461.00 (Four Million, Twenty-nine Thousand, Four Hundred and Sixty-one Naira).
13. The claimant shall contend that it is entitled to the full sum of N4,029,461.00 embodying principal and interests which represents legitimate earnings of the Bank to meet its costs and obligations towards represents depositors and other creditors and would not stand aloof to watch its legitimate earnings being trampled over, deprived or denied, if it must remain in business.
14. The Claimant shall contend that sometime in January, 2010, it briefed its lawyers Messrs. Oluropo Awoyele & Co. to write the final notice of demand to the 1st Defendant with a view reminding him of the necessity to pay his debt to the claimant but to no avail. The said letter dated 21st January, 2010 is hereby pleaded.”
I have carefully examined the above averments. It is correct that the tenor of the loan granted by the Respondent to the 1st Appellant and guaranteed by the 2nd Appellant (as stated in the letter of offer dated 4/8/97) was 90 days. But quite contrary to the Appellants’ contention, the Respondent’s cause/right of action to proceed against them did not necessarily accrue at the expiration of 90 days on 3/11/97 (or 2/12/97 or 3/12/97 if the 90 days is reckoned from the date the facility was disbursed and drawn down respectively). It is averred in paragraph 12 of the statement of claim that the Appellants’ continued to service the loan up until 19/7/99 when they deposited a cheque of N50m and stopped making further payments.
More crucially, the law, as I understand it, is that debts (including those arising from overdrafts, facilities or loans granted by banks to their customers) are generally repayable either on demand or on notice given or upon other condition agreed upon by the parties. The decision of the Supreme Court in ISHOLA v SOCIETE GENERALE BANK (1997) 2 SCNJ 1, [1997] 2 NWLR (PT. 488) 405 at 422 donates the proposition that it is an implied term of the relationship between a banker and his customer that there should be no right of action until there has been a demand or notice given, thus the cause of action in an action for recovery of debt accrues upon demand for the payment of the debt, and a cause of action does not arise and no action can be commenced if no demand was made or notice given. See also AGBABIAKA v FIRST BANK OF NIGERIA PLC [2020] 6 NWLR (PT 1719) 77 at 101(SC) and KOLO v FIRST BANK OF NIGERIA [2003] FWLR (PT 179) 130, [2003] 3 NWLR (PT. 806) 216 (CA).
Against the backdrop of the foregoing, it seems to me that the cause of action did not arise on 3/11/97 or 2/12/97 or 3/12/97 as contended by the Appellants. It also did not accrue on 19/7/99 as held by the trial Court. Rather, the cause of action accrued at the expiration of the demand notice given in the letter dated 21/1/10 written by the Respondent’s solicitors, Messrs Oluropo Awoyele & Co as averred in paragraph 14 of the statement of claim. In the said letter titled “RE: YOUR OUTSTANDING INDEBTEDNESS TO NEW LIFE MICROFINANCE BANK LTD – NOTICE OF FINAL DEMAND” (copied at p. 26 of the records), the Appellants were given up till 15th February 2010 to liquidate the total sum of N4,029,461.00 being principal loan and interest, failhich “we shall be left with no option than to turn the heat of litigation in full blast against you even without any further recourse to you”; and the action was eventually filed on 8/9/10. It would seem therefore that the cause of action accrued on 15/2/10.
The Limitation Law, Cap 167, Laws of Lagos State of Nigeria, 2003 provides in S. 29 (1) that: “Where a principal sum is secured by a mortgage or charge on land, or on movable property (other than a ship), no action will be brought to recover such sum after the expiration of twelve (12) years from the date when the right to recover the money accrued”. On the strength of binding case law authorities to which I have referred, the Respondent’s suit at the lower Court for the recovery of outstanding loan (and interest thereon) granted by the Respondent to the 1st Appellant and secured by deposit of title documents of the 2nd Appellant’s landed property (which thereby created an equitable mortgage in favour of the Respondent: YARO v AREWA CONSTRUCTION supra, USENFOWOKAN v IDOWU & ANOR (1975) 4 S.C. (Reprint) 136, PHARMATEK INDUSTRIAL PROJECTS LTD v TRADE BANK (NIG) PLC [2009] ALL FWLR (PT. 495) 1678 at 1705 and MATTHEW v GOOD DAY (1861) 31 L .J CH.282] cannot be said to be statute barred.
It is however a sad commentary that learned counsel on both sides of the divide cited and relied on a decided case that has no bearing whatsoever with statute bar in an action for debt recovery, and consequently did not assist the Court in the quest to ascertain the date of accrual of cause of action. Counsel owes a duty to assist the Court by citing decided cases that are relevant to the enquiry before it, which duty was observed in the breach in the instant appeal.
The lower Court reached the correct conclusion that the suit is not statute-barred notwithstanding that it erred in holding that the Respondent’s cause of action accrued on 19/7/99 when the Appellants stopped servicing the loan as averred in paragraph 12 of the statement of claim.
An appellate Court is always preoccupied with the correctness of the decision appealed against and not whether the reasons given for the decision are correct. See NDAYAKO v DANTORO [2004] 13 NWLR (PT 889) 189 at 220.
Thus, insofar as the eventual decision is correct, the reasons given by the lower Court, however flawed they may be, are of no moment. See DAIRO v UBN PLC [2007] 16 NWLR (PT 1059) 99 at 161. The Appellants clearly did not succeed in their gallant attempt at torpedoing the ship of the Respondent’s suit, which has not been shown to be “mired in the intractable web of limitation law” so as to divest the lower Court of jurisdiction. See FAM-LAB NIG LTD & ANOR v JAHMARCO NIG LTD & ANOR (2018) LPELR-44730 (CA) 1 at 34 –per Ogbuinya, JCA. Issues One and Two are resolved against the Appellants in favour of the Respondent.
The Appellant’s contention in respect of Issue three is that the reliefs sought by the Respondent (claimant) are self-defeating, unobtainable and disclose no reasonable cause of action. They maintain that whereas the Respondent averred in paragraph 10 of the statement of claim that the 2nd Appellant admitted owing N283,141.08 and promised to pay up in October 1999 via a letter dated 14/7/99, the 1st Appellant’s statement of account frontloaded by the Respondent shows that the account had been reduced to zero as at 30/11/2000, which is an admission against interest that defeats the claim and the Appellants are entitled to an order dismissing the reliefs sought in limine. Without much ado, the above contention is misconceived.
An objection alleging want of reasonable cause of action involves two interrelated elements. The first element is that the claimant has no cause of action against the defendant, whilst the second is that even though a cause of action is disclosed, that cause of action is not ‘reasonable’. In DR IRENE THOMAS v THE MOST REVEREND TIMOTHY OLUFOSOYE [1986] 1 NWLR (PT. 18) 669 at 682, the Supreme Court (per Obaseki, JSC) adopted the dictum of Pearson, L.J. in DRUMMOND-JACKSON v BRITISH MEDICAL ASSOCIATION & ORS (1970) 1 WLR 688 at 696 wherein the phrase ‘reasonable cause of action’ was defined thus:
“…No exact paraphrase can be given, but I think ‘reasonable cause of action’ means a cause of action with some chance of success, when…only the allegations in the pleadings are considered. If when those allegations are examined it is found that the alleged cause of action is certain to fail, the statement of claim should be struck out.”
In determining whether a reasonable cause of action is disclosed, the Court needs only to look at and examine the averments in the statement of claim: AJAYI v MILITARY ADMINISTRATOR, ONDO STATE [1997] 5 NWLR (PT. 503) 237, 7UP BOTTLING CO. LTD v ABIOLA [2001] 29 WRN 98 at 116 and OTUBU v OMOTAYO [1995] 6 NWLR (PT. 400) 247. The statement of claim must set out the legal right of the plaintiff and the obligation of the defendant. It must then go on to set out facts constituting infraction of the plaintiff’s legal right or failure of the defendant to fulfill his obligation in such a way that if there is no proper defence, the plaintiff will succeed in the relief or remedy he seeks: DR IRENE THOMAS v THE MOST REVEREND TIMOTHY OLUFOSOYE supra EGBE v ADEFARASIN supra and RINCO CONSTRUCTION CO. LTD v VEEPEE INDUSTRIES LIMITED [2005] 9 MJSC 197 at 204. It is sufficient for a Court to hold that a cause of action is reasonable once the processes filed disclose some questions fit to be decided by a Judge notwithstanding that the case is weak or not likely to succeed. The perceived weakness of the case and/or even the fact that the case is not likely to succeed are not sufficient reasons to stop the claimant from coming before the Court to determine the infraction of his civil rights and obligations arising from the transactions alleged in the statement of claim. The proper course for the defendant to take is to wait and take advantage of the weakness, if any, of the claimant’s case when the action goes to trial: IBRAHIM v OSIM supra at 1198, A-G, FEDERATION v AG. ABIA STATE [2001] 40 WRN 1 at 52 and MOBIL PRODUCING NIGERIA UNLIMITED v LASEPA [2003] 1 MJSC 112 at 132.
The reliefs sought by the Respondent (as claimant) as endorsed in the writ of summons as well as the relevant averments in the statement of claim are set out hereinbefore. The Appellants’ grouse, as I understand it, is not that the facts pleaded do not aggregate to a reasonable cause of action. Rather, it is that the 1st Appellant’s statement of account frontloaded by the Respondent allegedly reveals a zero debit balance as at 30/11/2000 and defeats the claim. I am afraid, the Appellants are not at liberty to allege want of reasonable cause of action on the basis of a document annexed to the writ of summons in compliance with the frontloading requirements in the Rules of Court. In legal proceedings not conducted on the basis of affidavit evidence, documents pleaded in a statement of claim or referred to in a statement on oath and which are frontloaded as prescribed by the Rules of Court do not constitute evidence until and unless they are tendered and properly admitted in evidence as exhibits. Until that happens, the Court is not at liberty to rely or act on them. And even at that, cause of action is not determined by reference to evidence.
The point to underscore is that an application to strike out a statement of claim must rely on the defect in the statement of claim itself for its success. Any fact introduced aliunde or from the statement of defence cannot be relied upon. No evidence is admissible in an application seeking to strike out a statement of claim as having no reasonable cause of action. The application must accept the facts as averred, and the Court will determine the issue on the statement of claim alone: IBRAHIM v OSIM supra at 1197, SHELL B. P. PETROLEUM DEVELOPMENT COMPANY OF NIGERIA LTD v ONASANYA (1976) 6 SC 89 at 94 and CHEVRON (NIG) LIMITED v LONESTAR DRILLING (NIG.) LIMITED [2007] 16 NWLR (PT 1059) 168 at 179. Thus, whatever perceived weakness of the Respondent’s case or even the fact that it is not likely to succeed because the statement of account frontloaded by the Respondent allegedly shows that the 1st Appellant’s indebtedness has been reduced to zero are not sufficient reasons to stop the Respondent from coming before the Court to determine the infraction of its civil rights and obligations arising from the loan transaction subject matter of the suit as pleaded. Rather than allege want of reasonable cause of action, the Appellants could simply have waited patiently to take advantage of the alleged weakness when the matter proceeds to trial. Issue 3 ought to be resolved against the Appellant, and I so resolve it.
That signals the collapse of this appeal. The Appellant’s objection before the lower Court as well as the present appeal against the ruling dismissing the objection are clearly not well taken. I hereby record an order dismissing this appeal for being bereft of merit. The ruling of the High Court of Lagos State delivered on 22/1/12 in Suit No. ID/1281/2010 is hereby affirmed. The costs of this appeal are assessed at N500,000.00 against the Appellants in favour of the Respondent.
ONYEKACHI AJA OTISI, J.C.A.: My Learned Brother, Peter Oyinkenimiemi Affen, JCA, made available to me a copy of the Judgment, in draft form, in which this appeal was dismissed. I agree with, and adopt as mine the resolution of the issues as done by my Learned Brother. This appeal is also dismissed by me. I abide by the orders made in the leading judgment.
ADEBUKUNOLA ADEOTI IBIRONKE BANJOKO, J.C.A.: I have carefully perused the draft copy of the judgment delivered by my Learned Brother, PETER OYINKENIMIEMI AFFEN, JCA and found out that he rightly resolved all the Issues in this judgment.
A Reasonable Cause of Action is a Cause of Action with some chance of success If when those allegations are examined, it is found that the cause of action is bound to fail, then the suit ought to be struck out.
In determining whether or not a Statement of Claim discloses a reasonable cause of action, it is irrelevant to consider the weakness of the Plaintiff’s claims. What is important is to examine the Averments in the pleadings and see if they raise some questions fit to be decided by a Judge. See FIDELITY BANK VS MARCITY CHEMICAL INDUSTRIES LTD & ORS (2022) LPELR-56866(SC), BARBUS & CO (NIG) LTD & ANOR VS OKAFOR-UDEJI (2018) LPELR.44501 (SC); RINCO CONSTRUCTION CO LTD VS VEEPEE INDUSTRIES LTD & ANOR (2005) LPELR-2949 (SC); IBRAHIM VS OSIM (1988) LPELR-1403 (SC). In this instant case, the reliefs sought by the Respondent (as Claimant) in the Writ of Summons and Statement of Claim discloses a Reasonable Cause of Action against the Appellants. The Appellant cannot rely on a frontloaded document to claim that there was no cause of action as the frontloaded documents do not constitute evidence unless they are tendered and properly admitted in as evidence.
For the above reasons, I also dismiss this appeal for being unmeritorious. Therefore, the judgment delivered on the 22nd November 2012 in Suit No. ID/1281/2010 is hereby affirmed. I also abide by the decision of my Learned Brother as to the order made to costs.
Appearances:
O. A. Owolabi, Esq. For Appellant(s)
…For Respondent(s)
