MILAN INDUSTRIES LTD v. POLARIS BANK LTD & ORS
(2022)LCN/17104(CA)
In The Court Of Appeal
(LAGOS JUDICIAL DIVISION)
On Friday, December 02, 2022
CA/LAG/CV/476/2021
Before Our Lordships:
Jimi Olukayode Bada Justice of the Court of Appeal
Muhammad Ibrahim Sirajo Justice of the Court of Appeal
Peter Oyinkenimiemi Affen Justice of the Court of Appeal
Between
MILAN INDUSTRIES LIMITED APPELANT(S)
And
1. POLARIS BANK LIMITED 2. ASSET MANAGEMENT CORPORATION OF NIGERIA 3. 11 PLC RESPONDENT(S)
RATIO
THE POSITION OF LAW WHERE AN ORDER OF DISMISSAL IS MADE AFTER A HEARING WHICH IS NOT BASED ON THE MERIT
The settled principle of law is that when an action is struck out, it is still alive and could be resuscitated by the Plaintiff/Appellant. But when an action is dismissed on merit, the matter has come to a final bus stop. However, where a matter is dismissed on the basis of objection raised as in this case, that the process is technically bad, the dismissal will not be on merit and the originator of the suit will be at liberty to refile the suit after compliance with the correct position of the law.
All I am saying is that where a matter has not been heard on the merit and it is withdrawn and an order of dismissal is made, the order dismissing the suit will amount to a striking out.
In PANALPINA WORLD TRANSPORT VS. J. B. OLANDEEN INTERNATIONAL (2010) LPELR – 2902 (SC); (2010) 19 NWLR PART 1226 PAGE 1 it was held among others that –
“… when an order of Court is made in respect of an application not heard on the merits it amounts to striking out simpliciter, even where an order of dismissal is made following a hearing which is not based on the merit, such an order is still considered in law a mere striking out”.
And in ABAYOMI BABATUNDE VS. PAN ATLANTIC SHIPPING AND TRANSPORT AGENCIES LTD. & OTHERS (2007) 13 NWLR PART 1050 PAGE 113. It was held among others that –
“… the principle of law for some time has been settled that withdrawn cases are not usually dismissed by just a mere wave of hand”.
The trial Court must ensure that a point of no return or litis contestatio has been reached by the parties. See – ERONINI VS. IHEUKO (1989) 2 NWLR PART 101 PAGE 46.
In NIGERIA AIRWAYS LTD. VS. LAPITE (1990) 7 NWLR PART 163 PAGE 392, Uwais, JSC (as he then was) made the following observations:
“the power of Court to dismiss a case in limine should be exercised with utmost circumspection and not lightly as a matter of course”. PER BADA, J.C.A.
JIMI OLUKAYODE BADA, J.C.A. (Delivering the Leading Judgment): This appeal emanated from the judgment of the Federal High Court, Lagos Judicial Division, delivered on the 2nd day of July 2021 in Suit No.: FHC/L/CS/1643/2020 – BETWEEN: MILAN INDUSTRIES LIMITED VS (1) POLARIS BANK LIMITED (2) ASSET MANAGEMENT CORPORATION OF NIGERIA (3) 11 PLC wherein the trial Court dismissed the Respondents/Cross Appellants’ Notice of Preliminary Objection (which challenged the jurisdiction of the Court to entertain the suit) and also the Appellant/Cross Respondent’s substantive suit.
Briefly, the facts of the case are that by an Originating Summons dated 11th day of November 2020 and filed on 20th day of November 2020, the Plaintiff/Appellant presented the following questions for the Court’s determination:-
“(1) Whether having paid N2 Billion secured under the Deed of Legal Mortgage of 10th September 2010 the 1st Defendant can dispose of the mortgaged property and security of the plaintiff as a collateralized or secured non-performing loan or as an eligible bank asset.
(2) If Issue 1 is answered in the negative, whether the 2nd Defendant can lawfully sell the mortgage property to the 3rd Defendant as an eligible bank asset acquired from the 1st Defendant.
(3) Whether the 1st Defendant can recover an amount in excess of the N2 Billion secured and upstamped at the Corporate Affairs Commission”.
In anticipation of the questions above being answered in favour of the Plaintiff/Appellant, it sought the following reliefs:-
“(a) A Declaration that the 1st Defendant cannot dispose of the secured debt and security of the plaintiff to the 2nd Defendant as an eligible bank asset.
(b) A Declaration that the security of the plaintiff under the Deed of Legal Mortgage is void in relation to any amount in excess of the N2 Billion secured and upstamped.
(c) An Order setting aside the sale of the Plaintiff’s mortgage property as an eligible bank asset to the 2nd Defendant.
(d) An Order setting aside the sale of the mortgaged property (Intercontinental Hotel) by the 2nd Defendant as an eligible bank asset to the 3rd Defendant.
(e) And for such further or other Orders as the Honourable Court may deem fit to make in the circumstances”.
At the conclusion of the hearing, judgment was delivered in which the Respondents/Cross Appellants’ Notice of Preliminary Objection which challenged the jurisdiction of the trial Court to entertain the suit was dismissed. Also, the Appellant/Cross Respondent’s Suit was dismissed.
The Appellant and the Respondents who were dissatisfied with the judgment of the trial Court filed Notices of Appeal and Cross-Appeal respectively.
The Learned Senior Counsel for the Appellant formulated a sole issue for the determination of the appeal. The sole issue is reproduced as follows:-
“Whether from the state of the affidavit evidence the lower Court was right in holding that the evidence in support of the claim that the plaintiff repaid the sum secured was not credible” (Distilled from ground one of the Notice of Appeal).
On the other hand, the learned Counsel for the Respondents/Cross-Appellants also formulated a sole issue for the determination of the appeal. The issue is reproduced as follows:-
“Whether the learned trial Judge was right when he held “in my view the evidence in support of the claim by the plaintiff that it has repaid the sum secured is not credible”.
At the hearing of the appeal on 22/9/2022, the Learned Senior Counsel for the Appellant stated that the appeal is against the judgment of Federal High Court, Lagos Judicial Division delivered on 2/7/2021.
The Notice of Appeal was filed on 8/7/2021 while the record of appeal was transmitted to this Court on 14/7/2021.
The Appellant’s brief of argument was filed on 23/8/2021. There is also Appellant’s reply brief containing Cross Respondent’s brief of argument which was filed on 25/5/2022.
Learned Senior Counsel for the Appellant adopted and relied on the said Appellant’s brief as well as the Appellant’s reply brief containing Cross Respondent’s brief in urging that the appeal be allowed and the cross-appeal dismissed.
In his own case, the learned Counsel for the Respondents/Cross-Appellants referred to the Respondents/Cross-Appellants’ brief of argument filed on 15/12/2021.
The Notice of Cross-Appeal was filed on 19/8/2021. There is also an additional record of appeal transmitted on 13/12/2021 and deemed as properly transmitted on 31/5/2022. The learned Counsel for the Respondents/Cross-Appellants referred to the Cross-Appellants’ reply brief filed on 14/6/2022.
He adopted and relied on –
(1) Respondents/Cross Appellants’ brief and
(2) Cross Appellants’ reply brief as his argument in urging that the main appeal be dismissed and the cross-appeal allowed.
I have gone through the issues formulated for the determination of the appeal by Counsel for both parties. The issues are like half a dozen and six ie., more or less the same.
I will therefore rely on the issue formulated for the determination of the appeal on behalf of the Appellant.
ISSUE FOR THE DETERMINATION OF THE APPEAL
“Whether from the state of the affidavit evidence the lower Court was right in holding that the evidence in support of the claim that the plaintiff repaid the sum secured was not credible”. (Distilled from ground one of the Notice of Appeal).
The learned Senior Counsel for the Appellant in his submission argued that apart from the statement of account exhibited in support of the N2 billion secured, the Respondents never denied that the N2 billion secured was repaid and that uncontroverted facts are deemed admitted.
He relied on the affidavit in support of the Originating Summons to support the contention that as at 3/8/2015 the Appellant had repaid N2.135 billion to discharge the N2 billion secured.
It was also contended that the Respondents did not positively deny the deposition in paragraphs (13) and (14) of the affidavit in support of the Originating Summons. He relied on the following cases:-
– OLA VS. UNILORIN (2014) LPELR – 2278 (CA).
– TILLEY GYADO LTD. & CO. NIGERIA LIMITED VS. ACCESS BANK (2019) LPELR – 4708 (CA).
– CGB NIGERIA PLC VS. OZOBU (1993) 3 NWLR PART 541 PAGE 290 AT 310 – 311.
The learned Counsel for the Appellant admitted that as at 3/8/2015 the Plaintiff/Appellant had not repaid all the facilities of about N15 Billion principal availed it by the 1st Defendant/Respondent. But that the 1st Defendant/Respondent registered the charge for the sum of N2 Billion.
He relied on – SECTION 227 OF THE COMPANIES AND ALLIED MATTERS ACT 2020 (CAMA).
It was also contended on behalf of the Appellant that Exhibits M4 and M5 were prepared by 1st Defendant/Respondent who did not challenge the authenticity of the accounts although duplicated but that it proved the repayment of N2 Billion.
Learned Senior Counsel for the Appellant submitted that the trial Court should have given credence to the statements of account as proof of the repayment of the N2 Billion in issue. He went further in his submission that it is the primary duty of the trial Court to evaluate and ascribe probative value to evidence led and where the trial Court fails to properly perform its duty, the appellate Court has a duty to intervene and evaluate the evidence especially where the evaluation does not involve the credibility of witnesses and their demeanor. He relied on the following cases:-
– ANOLIEFO VS. ANOLIEFO (2019) LPELR – 47247 (CA).
– IHUA-MADUENYI VS. ROBINSON (2019) LPELR – 47252 (CA).
He concluded his argument that if Exhibits M4 and M5 which were not challenged had been evaluated properly by the lower Court, it would have come to the conclusion that the sum of N2 Billion secured had been liquidated.
He urged this Court to hold that the lower Court was wrong in holding that there was no credible evidence that the Appellant repaid the N2 Billion secured.
He urged that this appeal be allowed, set aside the judgment of the lower Court and grant the reliefs claimed in the Originating Summons.
In his response, the Learned Counsel for the Respondents contended that the case of the Appellant is built on the statement that the loan facility obtained from the 1st Respondent which was secured by a Deed of Legal Mortgage and up-stamped and registered at Corporate Affairs Commission for the sum of N2 Billion has been repaid. And consequently, the issue before the trial Judge was –
“Whether from the evidence before the Court, the Appellant had repaid the loan it took from the 1st Respondent”.
Learned Counsel for the Respondents stated that in proof of the repayment, the Appellant exhibited Exhibits M4 which is on a dollar account of four pages, but only pages 1 and 2 were exhibited and repeated 5 times. He referred to pages 32 – 42 of the Record of Appeal.
The second proof of the payment was Exhibit M5 which he stated in a Naira account – 15 pages but that only pages 1, 2, 3, 9 and 14 were exhibited and repeated 5 times. He referred to pages 45 – 70 of the Record of Appeal.
It was submitted on behalf of the Respondents that the purported proofs of payments exhibited by the Appellant have no dates when payments were made and how much was paid on each date. On the definition of credible evidence, he relied on the case of:- AGBI VS. OGBEH (2006) 11 NWLR PART 990 PAGE 65.
He referred to paragraph 17 of the Counter Affidavit which he contended denied the payment of the N2 Billion. He relied on the following cases –
– CAN VS. LAMIDO (2012) 8 NWLR PART 1303 PAGE 560.
– BILANTE INTERNATIONAL LTD. VS. NDIC (2011) ALL FWLR PART 598 PAGE 804.
– JOHN OREKIE ANYAKO VS. AFRICAN CONTINENTAL BANK LTD. (1976) 2 S.C. PAGE 41.
– WEMA BANK VS. OSILARU (2008) 10 NWLR PART 1094 PAGE 150 AT 180 PARAGRAPH B.
– B.E.G.H. LTD. VS. H.S.&L. LTD. (2011) 7 NWLR PART 1246 PAGE 286 PARAGRAPHS E-F.
It was further submitted on behalf of the Respondents that the statement of the Appellant with respect to the payment of N2 Billion is speculative and Courts are enjoined not to grant speculative claims. He relied on the case of – U.T.B. NIG. VS. OZOEMENA (2007) 3 NWLR PART 1022 PAGE 448 AT 487 PARAGRAPH C.
Learned Counsel therefore urged this Court to resolve this issue in favour of the Respondents and uphold the judgment of the lower Court.
It was also submitted on behalf of the Respondents that the Appellant is basically relying on the alleged weakness of the defence in asking for judgment in its favour. But that the law is settled that a Plaintiff in a case must succeed on the strength of his own case and not on the weakness of the defence. The following cases were relied upon:-
– ONUKOGU VS. ONUIGBO & OTHERS (2015) LPELR – 24574.
– WOLUCHEM VS. GUDI (1981) 5 SC PAGE 294.
– AKINOLA VS. OLUWO (1962) 1 ALL NLR PAGE 224.
– KODILINYE VS. ODU (1935) 2 WACA PAGE 236.
The learned Counsel for the Respondents submitted that the Appellant ought to lead credible evidence to support its case. He relied on the following cases:-
– HUSSEINI & ANOTHER VS. MOHAMMED & OTHERS (2005) LPELR – 7520 (CA).
– OKONKWO VS. F.R.N. (2011) 11 NWLR PART 1258 PAGE 215.
– OGOEJEOFO VS. OGOEJEOFO (2006) 2 NWLR PART 966 PAGE 205.
He finally urged that this appeal be dismissed.
In the Appellant’s reply brief on points of law, the Learned Senior Counsel for the Appellant submitted that the statement of account on pages 45 to 47 of the record of appeal shows the date and amounts paid to liquidate the N2 Billion secured contrary to the argument of the Respondent’s that the date of payment and the amount paid was not stated.
In conclusion, learned Senior Counsel for the Appellant urged this Court to hold that the Naira statement of account pages 45 – 47 of the Record of Appeal prepared by the 1st Respondent which was not disowned or controverted is an admission of the repayment of the N2 Billion secured in Exhibit M2.
RESOLUTION
The sole issue in this appeal is:-
“Whether from the state of the affidavit evidence the lower Court was right in holding that the evidence in support of the claim that the Plaintiff repaid the sum secured was not credible”. (Distilled from Ground One of the Notice of Appeal).
The claim of the Appellant at the trial Court was set out earlier in this judgment.
It would be necessary at this juncture to reproduce relevant paragraphs of the affidavit in support of the Originating Summons as well as the relevant paragraphs of the Counter Affidavit filed on behalf of the Respondents in order to have a clear understanding of the issue in dispute.
The Originating Summons is supported by a 24 paragraph affidavit, relevant paragraphs are 3 to 23 reproduced as follows: –
“3. That the Plaintiff is a company incorporated under the Laws of the Federal Republic of Nigeria with a temporary office at Plot G2 Iganmu Avenue Lagos.
4. That the 1st Defendant is a financial institution formerly known as Skye Bank Plc and is duly registered to carry on the business of banking.
5. That the 2nd Defendant is a creation of statue and one of their function is to acquire eligible bank assets of banks and have allegedly acquired the asset in dispute from the 1st Defendant.
6. That the 3rd Defendant is a company registered under the laws of the Federal Republic of Nigeria and has acquired the asset forming the subject matter of the dispute through a subsidiary company unknown to the Plaintiff.
7. That by virtue of the banking relationship between the Plaintiff and the 1st Defendant various banking facilities were availed to the Plaintiff.
8. That a Deed of Legal Mortgage dated 10th September 2010 was executed by the Plaintiff in favour of the 1st Defendant for the various sums of money and the property of the Plaintiff at Plots 244 and 245 (now 52/54) Kofo Abayomi Street, Victoria Island, Lagos comprising of the 361 room five-star Intercontinental Hotel was the security for the N2 Billion secured under the Legal Mortgage. Attached as Exhibit M1, is a copy of the Legal Mortgage.
9. That the sum acknowledged, secured and stamped on the Legal Mortgage is N2 Billion Naira.
10. That the Deed of Legal Mortgage was registered with the Corporate Affairs Commission and was up-stamped and a Certificate of Registration Exhibit M2 issued as evidence of the amount secured.
11. That the security under the Legal Mortgage was to secure the repayment of the amount stated under the Legal Mortgage, and any other amount as may be up stamped.
12. That by the letter dated 30th of November 2018 the 2nd Defendant notified the Plaintiff that they have taken over their indebtedness from the 1st Defendant. Attached as Exhibit M3 is a copy of the letter of the 2nd Defendant.
13. That as at 3rd of August 2015 the Plaintiff had already repaid the N2.135 Billion Naira to discharge the secured, acknowledged and up-stamped amount in the Deed of Legal Mortgage and Certificate of Registration, Exhibit M2.
14. That between 14th March 2014 and 5th December 2016 the Plaintiff repaid the 1st Defendant N2,485,000.00 and USD3,440,000.00.
15. That the repayments made to the 1st Defendant is captured in the Bank Statement of the Plaintiff Exhibit M4 (USD ACCOUNT) & EXHIBIT MS (NGN ACCOUNT).
16. That I was informed by Bikram Sharma the financial controller of the Plaintiff on the 24th of December 2019 at noon in our office and I verily believe him to be true that;
(a) He received Exhibits M4 and M5 from the 1st Defendant via 2 emails, Exhibits M4(A) and M5(A).
(b) The 2 emails M4(A) & M5(A) which has attached to them Exhibits M4 and M5 emanated from his computer HP Pro 200 All-In One desktop and HP printer PSC 1410.
(c) The 2 emails Exhibits M4(A) & M5(A) and Exhibits M4 & M5 were produced from his desktop and printer during a period over which all the devices were used regularly to store and process information for activities carried out regularly.
(d) Over the period of time, the Desktop and printer were regularly used by him in the ordinary course of his activities and the devices properly operating throughout the time the information in Exhibits M4, M5, M4(A) & M5(A) was gathered.
(e) Exhibits M4, M5, M4(A) & MS(A) are true and accurate representations of what was produced from his computer and printer and sent to the Plaintiff by the Defendant.
17. That at the time the 2nd Defendant entered into the agreement to purchase the Plaintiff’s secured debt/security there was no collateralized and secured loan to dispose of as a non-performing eligible bank asset because the amount secured under the Deed of Legal Mortgage had been repaid.
18. That the security of the plaintiff is void in relation to any amount in excess of the amount secured under the Deed of Legal Mortgage.
19. That the 3rd Defendant in a press release on the 23rd of December 2010 announced to the general public that they have acquired the Plaintiff’s Intercontinental Hotel from the 2nd Defendant through one of their unnamed subsidiary.
20. That by a letter dated 19th November 2019, Exhibit M6, the Plaintiff informed the 1st and 2nd Defendants of the liquidation of the amount secured and demanded for the discharge of the security.
21. That at the time the 2nd Defendant sold the Plaintiff’s asset (Intercontinental Hotel) to the unnamed subsidiary of the 3rd Defendant the Plaintiff had discharged its obligation under the Legal Mortgage by paying the amount secured.
22. The asset/security of the Plaintiff under the Deed of Legal Mortgage was not validly vested in the 2nd Defendant.
23. The 2nd Defendant cannot sell to the 3rd Defendant or any other person an asset not validly acquired as an eligible.”
There is also a Counter Affidavit of 31 paragraphs pertinent, paragraphs of which are 5 to 29 reproduced as follows:-
“(5) Contrary to the deposition in paragraphs 8, 9, and 10 of the affidavit in support of the Originating Summons and for ease of understanding of the real facts in issue, I know as follows:
a) That by virtue of the banking relationship between the Plaintiff herein and the 1st Defendant, the Plaintiff was availed US. Dollars and Naira Facilities respectively in the sum of US$29.8M {Twenty Nine Million, Eight Hundred Thousand U.S Dollars} and N3.8Billion {Three Billion, Eight Hundred Million Naira} for the construction of the Intercontinental Hotel {now Lagos Continental Hotel}.
b) That in addition to my deposition above, due to various changes in the construction project, the Plaintiff applied for and was availed additional facilities by the 1st Defendant towards the construction of the said Hotel.
c) Attached and marked as Exhibit 1 (a) to (e) are facility letters {among others} dated 14th May, 2007; 4th February, 2010; 6th April, 2010; 16th February, 2011 and 14th June, 2012 respectively duly accepted by the Plaintiff herein, evincing the availment of various facilities to the Plaintiff by the 1st Defendant.
d) Also attached and marked Exhibit 2 {a} to {f} are letters dated 7th April, 2010; 12th August, 2010; 9th December, 2010. 9th December, 2010; 18th February, 2011 and 8th June, 2012 respectively from the Plaintiff herein, applying for additional facilities as aforementioned deposed.
e) That in addition to the U.S Dollar and Naira Term Loan availed the Plaintiff towards the construction of the Hotel, the 1st Defendant also availed the Plaintiff an Over Draft Facility in the sum of N500million {Five Hundred Million Naira} “to urgently fund payments to contractors and importation of material required for completing the hotel project”. Attached herein and marked ‘Exhibit 3’ is {among others} duly accepted offer letter dated 9th December, 2010 buttressing the fact herein.
f) That the purpose of the availed facilities was to finance the 361 rooms, five star Intercontinental Hotel {now Lagos Continental Hotel} situate at Plot 244 & 245 {now described as 52} Kofo Abayomi Street, Victoria Island, Lagos.
g) I know that from the various offer letters {the foundation of the suit}, the security for the advancement of the various facilities is a Legal Mortgage on the land and the building of the Lagos Continental Hotel.
h) Further to my deposition above, I know that the Plaintiff herein executed a Deed of Legal Mortgage in favour of the 1st Defendant dated 10th September, 2010 wherein it covenanted to pay the 1st Defendant all sums due and discharge all liabilities under the Deed of Legal Mortgage.
i) I also know that as a continuing security for the sum availed, the 1st Defendant charged its property known and situate at Plot 244 & 245 {now 52}, Kofo Abayomi Street, Victoria Island, Lagos which comprises of the 361 rooms five star Lagos Continental Hotel. Copy of the duly perfected Legal Mortgage is hereby attached and marked “Exhibit4”.
j) I also know that in addition to registering the Legal Mortgage, the instrument was also perfected and/or registered at the Corporate Affairs Commission, in favour of the 1st Defendant herein and same was variously up- Stamped.
k) That at the expiration of the tenure of the various facilities extended by the 1st Defendant, the Plaintiff failed and/or neglected to liquidate the various facilities and same continues to accrue interest in line with the practice in the 1st Defendant’s industry.
l) Further to my deposition above, upon the failure of the Plaintiff to liquidate the facilities as mutually covenanted, attached herein as Exhibit 5{a} to {d} are {among others} correspondence/demand letters authored by the 1st Defendant to the Plaintiff on its outstanding indebtedness.
m) I know that the Plaintiff has variously admitted/acknowledged its indebtedness to the 1st Defendant. Attached herein and marked Exhibit 6 {a} to {f} are correspondence dated 8th December, 2015; 23rd March, 2016; 20th June, 2016; 19th July, 2016; 16th September, 2016 and 29th November, 2016 respectively authored by the Plaintiff herein, duly admitting/ acknowledging its huge indebtedness to the 1st Defendant.
n) That in spite of the receipt of several letters of demand, the Plaintiff refused to liquidate its over-due outstanding indebtedness to the 1st Defendant herein, notwithstanding the fact that the Hotel financed by the 1st Defendant has since been completed, same has been carrying on business.
o) That in view of the huge indebtedness of the Plaintiff, the 1st Defendant was left with no other option than to exercise the powers vested in it by virtue of Clause 6.05 of the Deed of Legal Mortgage executed by the Plaintiff and the 1st Defendant herein which the appointment of a Receiver/Manager is predicated upon.
p) The 1st Defendant in exercising its right as stated in the Deed of Legal Mortgage appointed a Receiver/Manager over the secured asset of the Plaintiff. The Deed of Appointment of the said Receiver/Manager is hereby attached and marked ‘Exhibit 7’ while the certificate of registration of the Deed of appointment with the Corporate Affairs Commission, Abuja is also attached and marked ‘Exhibit 8’.
6. I also know that upon appointment of the Receiver/Manager, the Plaintiff at different times authored several correspondences to the 1st Defendant admitting its indebtedness to the Plaintiff and its attempts to settle same out of Court. Attached and marked as ‘Exhibit 9’ are copies of the correspondence evincing this assertion.
7. Further to the above and in a bid to resolve the Plaintiff’s chronic indebtedness, the Plaintiff and the 1st Defendant herein jointly appointed the auditing firm of Ernest and Young to reconcile the accounts and the indebtedness of the Plaintiff. Attached and marked as “Exhibit 10” is a copy of the Report from the Auditing Firm showing clearly that the Plaintiff is hugely indebted to the 1st Defendant.
8. Contrary to paragraphs 8 and 9 of the affidavit in support of the Originating Summons, the Plaintiff by the Deed of Legal Mortgage covenanted to pay on demand to the 1st Defendant all moneys and discharge all obligations and liabilities incurred to the 1st Defendant by the Plaintiff in whatever currency denominated.
9. Further to the above, I know that the Plaintiff charged all its assets as described in the schedule to the Deed of Legal Mortgage {Plot 244 & 24S} Kofo Abayomi Street, Victoria Island, Lagos as a continuing security for the payment of sums owed and discharge of all liabilities under the Deed of Legal Mortgage.
10. That in addition to paragraph 10 of the supporting affidavit, I know that the Plaintiff failed and/or neglected to register the Deed of Legal Mortgage at the Corporate and Affairs Commission, necessitating the 1st Defendant to register same.
11. Contrary to the deposition in paragraph 11 of the Affidavit in support of the Originating Summons, the Deed of Legal Mortgage was created to secure the entire sum {as clearly covenanted in the various facility letters duly executed the parties} owed the 1st Defendant by the Plaintiff.
12. In response to paragraph 12 of the Affidavit in support of the Originating Summons, I know that the 2nd Defendant by virtue of its power under the AMCON Act purchased the indebtedness of the Plaintiff from the 1st Defendant.
13. Contrary to ‘the depositions in paragraphs 13, 14 and 15 of the Affidavit in support of the Originating Summons, I know that the Plaintiff was availed various facilities to wit; Project Finance Facility in Naira and Dollar and Over draft.
14. That the facilities availed the Plaintiff is one that attracts interest in line with common practice in the 1st Defendant’s industry and the attached statement of accounts did not state whether the alleged payment of N2,485,000.00 and USD3,440,000.00 as deposed to in paragraph 14 of the supporting affidavit was for the payment principal sum or accrued interest thereto and how the total sum was arrived at.
15. That as at 3rd August, 2015 the Plaintiff had not repaid all the facilities of about N15,000,000,000 {Fifteen Billion Naira Only} Principal sum availed it by the 1st Defendant as duly covenanted in the facility letters and the Deed of Legal Mortgage.
16. Without prejudice to the foregoing, I also know that the alleged sum paid as at 5th December, 2016 was paid from the repayment source of the loan and not upon activation of the Deed of Legal Mortgage, when the security for the loan was taken over by the Receiver/Manager in 2017.
17. That upon the activation of the security under the Deed of Legal Mortgage as covenanted in the various offer letters in 2017, the sum of N2Biliion has not been paid by the Plaintiff in liquidating its huge indebtedness to the 1st Defendant to justify the Plaintiff’s claim herein.
18. Further to the above, I know that the Deed of Legal Mortgage executed by the Plaintiff and the 1st Defendant does not secure the Plaintiff’s debt only to the sum of 2 Billion; same was created to secure the “last dime” owed by the Plaintiff.
19. That by the Deed of Legal Mortgage, the payment of 2 Billion by the Plaintiff does not discharge the Plaintiff of its liabilities or entitle the Plaintiff to redemption of the mortgaged asset.
20. I also know contrary to paragraph 13 of the affidavit in support of the Originating Summons that the purpose of stamp duty is merely to enable the government raise revenue, same is not to determine the amount to be recovered under the instrument so up-stamped.
21. I also know as a Legal Practitioner that where an instrument is not properly up-stamped, this Honourable Court has the power to order that the instrument be fully stamped to cover the entire sum.
22. Further to the above, I also know as a Legal Practitioner that under the relevant laws, the Plaintiff has the duty to up-stamp the Deed of Legal Mortgage securing a charge on its property.
23. Contrary to the deposition in paragraph 18 of the Affidavit in support of the Originating Summons, the 2nd Defendant purchased a collateralized and secured loan from the 1st Defendant as’ the Deed of Legal Mortgage was created to secure the entire sum owed by the Plaintiff to the 1st Defendant.
24. Without prejudice to the above, I also know that under the guidelines on the Operation of the Asset Management Corporation of Nigeria 2010, the 2nd Defendant has the power to purchase both secured and unsecured non-performing loan of a Bank and dispose same as an eligible bank asset.
25. Contrary to the deposition in paragraph 18 of the Affidavit in support of the Originating Summons, the security of the Plaintiff under the Deed of Legal Mortgage is valid for the total sum owed by the Plaintiff to the 1st Defendant and same is to be utilized in recovering the total indebtedness of the Plaintiff in the event of failure to adequately repay same as duly covenanted in the offer letters and under the Deed of Legal Mortgage.
26. That in response to the Plaintiff’s correspondence of 19th November, 2019, the Defendants’ Solicitors authored a correspondence dated 20th November 2019 wherein the Plaintiff was duly informed that its demand for a deed of release is highly misconceived as the Deed of Legal Mortgage was created to secure the entire sum owed the 1st Defendant. The said correspondence is herewith attached and marked “Exhibit 11”.
27. That contrary to the depositions in paragraphs 21 and 22 of the affidavit in support of the Originating Summons, the Plaintiff failed and/or neglected to discharge its obligations under the Deed of Legal Mortgage. It failed to repay sums availed it via the different offer letters as duly covenanted.
28. That Contrary to the depositions in paragraphs 22 and 23 of the Plaintiff’s Affidavit, the 2nd Defendant validly purchased the loan from the 1st Defendant, same being an eligible bank asset and it consequently has the power to dispose same to a third party.
29. Further to the above, I also know that the stamp duty paid is to be applied on “reducing balances” and the Deed of Legal Mortgage shall continue to remain force and effective so long as there is an attachable outstanding indebtedness thereto.”
In this appeal, the Appellant was availed various facilities by the 1st Respondent and the Deed of Legal Mortgage was registered at the Corporate Affairs Commission in accordance with the Provision of Section 223(3) of Companies and Allied Matters Act and Certificate of Registration issued as evidence of the amount secured.
It is not in dispute that the 1st Respondent availed the Appellant several billions of Naira but for reason best known to the 1st Respondent only N2 Billion was registered against the charge as evidenced by the Certificate of Registration Exhibit M2.
As could be gleaned from the affidavit in support of the Originating Summons, the Appellant deposed to the fact that as at 3/8/2015 it had repaid N2.135 Billion to discharge the N2 Billion secured and upstamped. It stated further that between 14/3/2014 and 5/12/2016 the sum of N2,485,000,000.00 and USD3,440,000.00 was repaid. It exhibited Exhibit M4 and M5 in proof of the repayment.
Although the Respondents denied it in the Counter Affidavit that the sum of N2 Billion has not been paid by the Plaintiff/Appellant in liquidating its indebtedness to the 1st Defendant/Respondent to justify the Plaintiff’s claim.
But as could be seen from the affidavit in support of the Originating Summons, the repayment made to the 1st Defendant/Respondent was captured in the Bank Statement of the Plaintiff/Appellant ie., Exhibit M4 (USD Account) and Exhibit M5 (Naira Account).
The statement of account on pages 45 – 47 of the Record of Appeal showed that the Appellant has repaid the N2 Billion secured in the manner detailed as follows:-
“14/3/14 – principal liquidated – N366,000,000.00
15/4/14 – principal liquidated – N250,000,000.00
3/4/14 – principal liquidated – N629,444,154.00
1/7/14 – principal liquidated – N100,000,000.00
13/8/14 – principal liquidated – N250,000,000.00
17/10/14 – principal liquidated – N200,000,000.00
20/10/14 – principal liquidated – N50,000,000.00
27/10/14 – principal liquidated – N70,000,000.00
18/12/14 – principal liquidated – N100,000,000.00
06/1/15 – principal liquidated – N100,000,000.00
17/2/15 – principal liquidated – N200,000,000.00
01/7/15 – principal liquidated – N95,000,000.00
03/8/15 – principal liquidated – N70,000,000.00
4/8/15 – principal liquidated – N50,000,000.00
7/9/15 – principal liquidated – N297,797,471.50
15/9/15 – principal liquidated – N50,000,000.00
21/10/15 – principal liquidated – N50,000,000.00
23/11/15 – principal liquidated – N100,000,000.00
2/12/15 – principal liquidated – N236,000,000.00”
A careful examination of the statement of account set out above would reveal that the Appellant even paid more than N2 Billion.
Although the Respondents claimed in the Counter Affidavit that the N2 Billion which the Appellant claimed to have paid has not been liquidated but with the deposition of the Respondent in paragraph 16 of the Counter Affidavit on page 115 of the Record of Appeal which stated that the alleged sum paid as at 5/12/2016 was paid from the repayment source of the loan and not upon the activation of the Deed of Legal Mortgage, is an admission of the facts deposed to in the Affidavit in support of the Originating Summons that the N2 Billion has been liquidated.
The issue before the trial Court was not whether the Appellant had repaid all the facilities availed and standing at N15 Billion, the issue in dispute was whether the Appellant had repaid the N2 Billion secured. For reason best known to the 1st Respondent, it registered the charge under consideration for N2 Billion when it could have registered it for the maximum amount availed, including the accrued interest.
Under SECTION 227 OF THE COMPANIES AND ALLIED MATTERS ACT 2020 –
where a charge particulars of which registration under Section 222 is expressed to secure all sums due or to become due or some other uncertain or fluctuating amount, the particulars under Section 222(9) shall state the maximum sum deemed to be secured by such charge (being the maximum sum covered by the stamp duty paid therein) and such charge shall be void, so far as any security on the company’s property is thereby conferred, as respect any excess over the stated maximum”.
In this case, the maximum amount secured was N2 Billion and the 1st Respondent cannot use the property charged to liquidate any amount in excess of the maximum amount secured and where the maximum amount secured is paid the security is discharged. The excess amount not secured is an unsecured debt which can only be recovered through a debt action and not by enforcement of the charge. In this matter, the maximum amount secured in the sum of N2 Billion has been repaid to discharge the security. As I said earlier, the Respondent cannot enforce the charge for any amount in excess of the N2 Billion registered against the charge.
The law regulating enforcement of charges is regulated by SECTION 222(1) AND SECTION 223(1) & (2) AND SECTION 227 OF THE COMPANIES AND ALLIED MATTERS ACT 2020.
In my humble view, the law regulating enforcement of charges does not permit the 1st Respondent to recover any sum of money in excess of the amount secured and where the amount secured has been repaid the security is discharged and the excess amount is treated as an unsecured debt to be recovered through a debt action.
Furthermore, it is important to note that the statements of account Exhibits M4 and M5 were prepared by the 1st Respondent who did not challenge the authenticity of the duplicated account which proved the repayment of the N2 Billion. Therefore the trial Court should have given credence to the statements of account although duplicated but contained the same information in proof of the N2 Billion repaid.
The extract of the statement of account of the Appellant was earlier set out in this judgment. The affidavit in support of the Originating Summons showed that between 14/3/2014 and 5/12/2016 the Appellant repaid the 1st Respondent N2,485,000.00 and USD3,440,000.00. The extract pages of the statement of account exhibited contain relevant transaction dates and details to establish repayment by the Appellant therefore the trial Court was wrong when it held that the Appellant did not state the dates of payment and amount paid.
It is trite law that it is the primary duty of the trial Court to evaluate and ascribe probative value to the evidence led but where the trial Court fails to properly perform its duty, the appellate Court has a duty to intervene and evaluate the evidence, especially where the evaluation does not involve the credibility of witnesses and their demeanor. See S.S. GMBH VS. DOSUNMU INDUSTRIES LTD. (2010) 11 NWLR PART 1206 PAGE 589.
Exhibits M4 and M5 presented in support of the repayment of the sum of over N2 Billion is in my view admissible, credible and relevant. Moreso, the veracity of the Exhibits was not challenged by the 1st Respondent who prepared the statement of account.
Furthermore, a customer who is claiming to have liquidated his indebtedness only needs to tender the statement of account prepared by the bank showing the liquidation of the debt.
Consequent upon the foregoing, I am in the view that the Appellant having paid the N2 Billion secured under Deed of Legal Mortgage of 10/9/2010 the 1st Defendant/Respondent cannot dispose of the mortgaged property and security of the Appellant as a collateralized or secured non-performing loan or as an eligible bank asset. In other words, there was no eligible bank asset to acquire by the 2nd Respondent.
In the circumstance, the 2nd Respondent cannot lawfully sell the mortgaged property to the 3rd Respondent as an eligible bank asset acquired from the 1st Respondent.
The sole issue for determination in this appeal is therefore resolved in favour of the Appellant and against the Respondents.
There is merit in this appeal and it is allowed.
In the result, the judgment of the trial Court in SUIT NO.:FHC/L/CS/1643/2020 – MILAN INDUSTRIES LIMITED VS (1) POLARIS BANK LIMITED (2) ASSET MANAGEMENT CORPORATION OF NIGERIA (3) 11 PLC DELIVERED ON 2ND DAY OF JULY 2021 is hereby set aside.
In its place the following declarations are hereby made:-
(a) A declaration that the 1st Defendant/Respondent cannot dispose of the secured debt and security of the Plaintiff/Appellant to the 2nd Defendant/Respondent as an eligible bank asset.
(b) A declaration that the security of the Plaintiff/Appellant under the Deed of Legal Mortgage is void in relation to any amount in excess of the N2 Billion secured and up-stamped.
(c) It is hereby ordered that the sale of the Plaintiff’s mortgage property as an eligible bank asset to the 2nd Defendant/Respondent is hereby set aside.
(d) It is also ordered that the sale of the Mortgage Property (Intercontinental Hotel) by the 2nd Defendant/Respondent as an eligible bank asset to the 3rd Defendant/Respondent is hereby set aside.
The Appellant is entitled to cost which is fixed at N300,000.00 (Three Hundred Thousand Naira) against the Respondents jointly and severally.
Appeal allowed.
CROSS APPEAL
This Cross Appeal emanated from part of the judgment of the trial Court delivered on 2/7/2021 which dismissed the Notice of Preliminary Objection of the Respondents/Cross-Appellants and the trial Court assumed jurisdiction to entertain the Appellant/Cross Respondent’s substantive suit.
The learned Counsel for the Cross-Appellants filed a Notice of Cross-Appeal on 19/8/2021. He went further to file the Cross Appellants’ brief of argument on 15/12/2021 and also the Cross Appellant’s Reply brief of argument.
The following issues were distilled for determination:
“(1) Whether the Learned trial Judge erred in law when he overruled the Cross Appellants’ Preliminary Objection challenging its jurisdiction to hear the suit and consequently proceed with the determination of the Cross Respondent’s suit (Distilled from Ground 3 of the Notice of Cross-Appeal).
(2) Whether the Court below was legally mandated to properly determine all the issues submitted to it by the Cross-Appellants and to consequently reiterate the dismissal of the Cross-Respondent’s suit on the vital points/issues submitted by the Cross-Appellants in their processes before the Honourable Court (Distilled from Grounds 1 and 2 of the Notice of Cross-Appeal)”.
The learned Counsel for the Cross Respondent filed his brief and adopted the issues formulated for determination of the appeal on behalf of the Cross-Appellants and argued the issues.
ISSUE NO. 1
The learned Counsel for the Cross-Appellants referred to the Notice of Preliminary Objection to the jurisdiction of the trial Court to entertain and adjudicate on the Cross Respondents’ suit. He stated the grounds of the objection as follows:-
“- The Cross Respondent had filed an earlier suit against the same parties in the instant suit, claiming the same reliefs against them on the same subject matter, the said earlier suit was dismissed {upon being withdrawn after parties had joined issues} by the Honourable Court Coram Aikawa J.
– The Cross Respondent’s suit amount to an abuse of Court process, in view of several other suits pending between the parties, on the same subject matter.
– The filing of the instant suit while suit no. FHC/L/CS/255/18 and suit No. FHC/L/CS/463/2018 are still pending before the Court of Appeal and the Federal High Court constitutes a serious/grievous abuse of Court process.
– The 2nd Cross-Appellant is a statutory Corporation that requires the issuance of pre-action notice before the action could be commenced against it, no such pre-action notice was issued and/or served on it before the filing of the said suit.
– By the provision of Section 33A of the Asset Management Corporation of Nigeria {Amendment} Act 2019, the Cross
Respondent {Plaintiff} is legally barred from maintaining the action herein against the 2nd Cross-Appellant on the grounds of the 2nd Cross Appellant’s acquisition of the assets of the Cross Respondent from the 1st Cross-Appellant.“.
Learned Counsel for the Cross-Appellants stated that in a judgment delivered on 2nd day of July 2021, the trial Court dismissed the Cross Appellants’ Preliminary Objection and consequently assumed jurisdiction to entertain the Cross Respondent’s suit.
ON THE ISSUE OF THE DISMISSAL OF THE CROSS RESPONDENT’S EARLIER SUIT FILED AGAINST THE CROSS APPELLANTS ON THE SAME SUBJECT MATTER
The learned Counsel for the Cross-Appellants referred to an action which was filed earlier through Originating Summons in Suit No. FHC/L/CS/2411/2019 which was before R. M. Aikawa J. at the Federal High Court Lagos Division.
It was contended that after issues had been joined by the parties in the said Suit No. FHC/L/CS/2411/2019, the Cross Respondent applied to the trial Court for leave to withdraw the suit against the Cross-Appellants. And after considering the argument of Counsel for the parties, the trial Court dismissed the Cross Respondent’s suit.
Learned Counsel for the Cross-Appellants relied on the case of MAKUN & OTHERS VS. FUTMINNA & OTHERS (2011) LPELR – 15514 (SC) where it was held that an order of dismissal operates as an estoppels per rem judicatam and ipso facto bars the loosing party for all times re-litigating the same subject matter.
It was submitted that the order of the trial Court which dismissed the suit is a final order and forecloses further litigation on the same subject matter.
The following cases were relied upon:-H. B. (NIG.) PLC VS. LODIGIANI NIG. LTD. (2010) 14 NWLR PART 1213 PAGE 330 AT 348.
– IBOK VS. HONESTY II (2007) 6 NWLR PART 1029 PAGE 55 AT 69.
– ALOR VS. NGENE (2007) 17 NWLR PART 1062 PAGE 163.
It was submitted on behalf of the Cross-Appellants that the trial Court having finally determined the rights of the parties with respect to the claims of the Cross Respondent is functus officio from reopening the same matter against the same parties and cannot revisit the order made.
The following cases were also referred to – INTEGRATED REALITY LTD. VS. ODOFIN (2018) 3 NWLR PART 1606 PAGE 301.
– ABUBAKAR VS. B. O. & A. P. LTD. (2007) 18 NWLR PART 1066 PAGE 319 AT 373.
– OGBORU & ANOTHER VS. UDUAGHAN & OTHERS (2013) LPELR 20805 (SC).
Learned Counsel for the Cross-Appellants urged this Court to hold that the trial Court erred in law when it construed the dismissal as a striking out order and held that the Cross Respondent had the right to re-file the suit.
ON FAILURE OF THE CROSS-RESPONDENT TO SERVE STATUTORY NOTICE ON THE 2ND CROSS RESPONDENT
It was contended on behalf of the Cross-Appellants that the trial Court in holding that Cross Respondent issued statutory notice on the 2nd Cross-Appellant failed to consider the Cross-Appellants’ further affidavit and reply on points of law in support of the preliminary objection where it was argued that no pre-action notice was attached to the Originating Summons filed by the Cross-Respondent as mandated by Order 3 Rule 9(2) of the Federal High Court (Civil Procedure) Rules. The case of – A.G. BENUE STATE & OTHERS VS. UMAR & OTHERS (2007) LPELR – 8076 (CA) was relied upon.
Learned Counsel for the Cross-Appellants urged this Court to find that the failure to attach a vital document was detrimental to the Cross-Respondent’s case.
It was also submitted that the 2nd Respondent is not Polaris Bank Ltd. who duly acknowledged receipt of the alleged pre-action notice.
He urged this Court to hold that the trial Court erred in law when it held that the 2nd Cross-Appellant was served with pre-action notice.
ON CROSS RESPONDENT’S SUIT BEING AN ABUSE OF COURT PROCESS IN VIEW OF SEVERAL OTHER PENDING SUITS BETWEEN THE PARTIES ON SAME SUBJECT MATTER
The learned Counsel for the Cross-Appellants submitted that the Learned trial Judge did not properly examine the facts of the various suits attached as Exhibits to the Cross Appellants’ affidavit in support of their objection when the Court held that the Cross Respondent’s instant suit does not amount to an abuse of the process of Court.
He referred to Suit No. FHC/L/CS/255/2017 wherein the 1st Cross-Appellant sought to recover depositors’ funds from the Cross-Respondent which was struck out but that the 1st Cross-Appellant filed an appeal in CA/L/557/2018 which according to Counsel is still pending before this Court. It was stated that in the said Suit/Appeal, the Cross Respondent challenged its indebtedness to the 1st Cross-Appellant. The learned Counsel for the Cross-Appellants stated that the Cross Respondent without waiting for the determination of the issues of its indebtedness proceeded to file an action against the 1st Cross-Appellant in Suit No. FHC/L/CS/463/2018 in respect of same indebtedness. And that the said action is pending before the Federal High Court. Reference was also made to Suit No. LD/5014GCMW/2018 before the High Court of Lagos State which was later dismissed. Learned Counsel for the Cross-Appellants stated that in defiance of the order of dismissal the Cross-Respondent filed the instant suit against the same 1st Cross-Appellant touching on the same facilities availed it.
Learned Counsel for the Cross-Appellants submitted that the trial Court erred in law when it held that the instant suit does not amount to an abuse of the process of Court. He relied on the case of – TSA IND. VS. FBN PLC (NO.1) (2012) 14 NWLR PART 1320 AT 344B.
THE CROSS RESPONDENT BEING LEGALLY BARRED FROM MAINTAINING THE ACTION AGAINST THE 2ND CROSS APPELLANT
It was submitted on behalf of the Cross-Appellants that the trial Court erred in law when it held that the Cross Respondent was not barred from maintaining the instant action against the 2nd Cross-Appellant by virtue of the salient provisions of the Asset Management Corporation of Nigeria Act (AMCON).
It was stated that the Cross Respondent’s grievance with the 2nd Cross-Appellant is solely because the 2nd Cross-Appellant acquired the eligible bank asset of the Cross Respondent from the 1st Cross-Appellant.
The learned Counsel for the Cross-Appellants contended that the 2nd Cross-Appellant is a creation of statute ie., AMCON Act. It was submitted that any action taken against the 2nd Cross-Appellant in contravention of the AMCON Act will be null and void and that the said action is liable to be set aside or dismissed by the Court. Reliance was placed on Section 33A of the AMCON ACT 2019.
It was submitted on behalf of the Cross-Appellants that the Cross-Respondent’s suit wherein it challenged the sale of the eligible bank asset from the 1st Cross-Appellant to 2nd Cross-Appellant is dead on arrival.
Learned Counsel for the Cross-Appellants urged that this issue be resolved in favour of the Cross-Appellants.
On the other hand, the Learned Senior Counsel for the Cross Respondent in his response – ON THE ISSUE OF THE DISMISSAL OF THE CROSS RESPONDENT’S EARLIER SUIT FILED AGAINST THE CROSS APPELLANTS ON THE SAME SUBJECT MATTER submitted that the issue for determination is whether the dismissal of FHC/L/CS/2411/2019 before Honourable Justice Aikawa amounts to a dismissal on merit or a striking out.
He referred to the judgment of the trial Court where it was held that Suit No. FHC/L/CS/2411/2019 before Honourable Justice Aikawa was not determined on merit and that it is not in all cases where a matter is dismissed that such dismissal would completely terminate the case and that in such situation, the dismissal merely amounts to a striking out.
ON FAILURE OF THE CROSS-RESPONDENT TO SERVE STATUTORY NOTICE ON THE 2ND CROSS-APPELLANT
The learned Counsel for the Cross Respondent referred to Exhibit R1 attached to the counter affidavit in opposition to the Notice of Preliminary Objection that the Pre-Action Notice was served on the 2nd Respondent on the 6th of November 2019 and that this action was instituted on the 20th of November 2020 a period well over 90 days required under the AMCON Act.
He also referred to the further counter affidavit on pages 480 to 483 of the Record of Appeal filed in opposition to the Notice of Preliminary Objection where it was deposed that Exhibit R1 was served on the Polaris Task Force Unit of the 2nd Respondent/Cross-Appellant responsible for recovering the indebtedness of the Cross Respondent. Reference was made to Exhibits 1, 2 and 3 to show that there was a Polaris Task Force Unit within the 2nd Respondent that acknowledged receipt of Exhibit R1.
THE CROSS-RESPONDENT’S SUIT BEING AN ABUSE OF COURT PROCESS IN VIEW OF SEVERAL OTHER PENDING SUITS BETWEEN THE PARTIES ON THE SAME SUBJECT MATTER.
In determining whether an action is an abuse of Court process, Learned Counsel for the Cross Respondent referred to the case of –CHIEF VICTOR UMEH VS. PROF. MAURICE IWU (2008) LPELR – 3363 (SC) where it was held amount others that for one to sustain a charge of abuse of Court process there must co-exist inter alia (1) a multiplicity of suits (2) between the same opponents (3) on the same subject matter (4) on the same issue.
The four factors listed above must co-exist and must not be given effect to in a disjunctive manner and where one or any of the four factors cannot be established, the claim for abuse of Court process must fail. Suit No.: FHC/L/CS/255/17 – SKYE BANK PLC & ANOTHER VS. MILAN INDUSTRIES.
Learned Senior Counsel for the Cross Respondent referred to Suit No.-FHC/L/CS/255/17 filed by the 1st Cross Appellant which was struck out on 20/5/2018 and is the subject matter of appeal in CA/L/557/2017 instituted by the Cross Appellants. He argued that there are similarities in the parties, the reliefs claimed in the suit and this present one is different. In FHC/L/CS/255/17 the 1st Cross-Appellant is seeking for protective orders for the Receiver/Manager in the exercise and performance of his duties over the asset charged. He referred to the Originating Summons on pages 152 – 155 of the Record of Appeal filed by the Cross-Appellants.
On the other hand, it was contended on behalf of the Cross Respondent that the Originating Summons filed in the present action on appeal seeks to set aside the sale of the Cross-Respondents’ property as an eligible bank asset.
SUIT NO.:FHC/L/CS/463/18 – MILAN INDUSTRIES LIMITED VS. SKYE BANK PLC & ANOTHER
It was argued by the Learned Senior Counsel for the Cross Respondent that Suit No.: FHC/L/CS/463/18 was instituted by the Cross Respondent and sought mainly for a declaration that by virtue of the maturity date of the facilities contained in the letter dated 14/9/2012, the 1st Cross Appellant’s appointment of Kunle Ogunba SAN as Receiver/Manager of the Cross Respondent prior to September 2021 is premature and invalid. He referred to the Statement of Claim on pages 240 – 247 of the Record of Appeal.
SUIT NO.: LD/5014/GCNW/18 – MILAN INDUSTRIES LIMITED VS. SKYE BANK PLC
It was contended on behalf of the Cross Respondent that the reliefs claimed in Suit No.: LD/5014/GCNW/18 is not the same as the reliefs claimed in the present suit on appeal. Reference was made to pages 240 – 246 of the Record of Appeal to show that the relief claimed in Suit No.: LD/5014/GCNW/18 was for a declaration that the 1st Cross-Appellant has utilized the proceeds of the Hotel to liquidate all sums allegedly outstanding on the facilities and not one single relief claimed related to the sale of the Cross Respondent’s asset as an eligible bank asset.
It was submitted on behalf of the Cross Respondent that filing of multiple actions which do not necessarily seek the same or similar relief though between the same parties will not amount to an abuse of the process of Court.
Reliance was placed on the following cases of – MOBIL PRODUCING NIGERIA UNLIMITED VS. MONOKPO (2003) 18 NWLR PART 852 AT PAGE 346 AT 430.
– AIC LTD. VS. FAAN (2015) LPELR – 2453 (CA).
– FASAKIN FOODS NIG. CO. LTD. VS. SHOSANYA (2003) 17 NWLR PART 849 AT PAGE 237.
THE CROSS RESPONDENT BEING LEGALLY BARRED FROM MAINTAINING THE ACTION AGAINST THE 2ND CROSS APPELLANT.
It was submitted on behalf of the Cross Respondent that there must be a valid acquisition of an eligible bank asset before the provision of Section 33A can be invoked.
It was submitted that the mortgagee, the 1st Cross-Appellant cannot recover any amount in excess of the amount secured. Where the mortgagee grants various facilities but only secures the sum of N2Billion as in this case, the 1st Cross-Appellant cannot recover any amount in excess of the amount secured and where the amount secured has been paid the security is discharged. Reference was made to the provision of Section 202 of CAMA 1990.
The learned Senior Counsel for the Cross Respondent referred to paragraphs 13, 14, 15, 16, 17 and 18 of the Affidavit in Support of the Originating Summons to show that between 14th March 2014 and 5th December 2016 a sum in excess of the N2 Billion was repaid to discharge the N2 Billion secured by Exhibit M2.
He submitted that this Court has the power to evaluate the statement of account and form its own opinion on it.
He finally urged that this Court should hold that the secured and collateralized loan of N2 Billion has been repaid to discharge the mortgaged property and that Section 33A will not be applicable in the circumstances.
RESOLUTION OF ISSUE NO. 1
The issue here is whether the Learned trial Judge erred in law when he overruled the Cross Appellants’ Preliminary Objection challenging its jurisdiction to hear the suit and consequently proceeded with the determination of the Cross Respondent’s suit.
The Cross-Appellants had filed a notice of Preliminary Objection challenging the jurisdiction of the trial Court to entertain and adjudicate on the Cross Respondent’s suit.
The grounds for the objection were set out earlier in this Judgment.
The trial Court delivered its judgment on 2/7/2021 in which it overruled the objection and consequently assumed jurisdiction to entertain the Cross Respondent’s suit.
ON THE ISSUE OF THE DISMISSAL OF THE CROSS RESPONDENT’S EARLIER SUIT FILED AGAINST THE CROSS APPELLANTS ON SAME SUBJECT MATTER
The issue to be examined here is whether the dismissal of Suit No.: FHC/L/CS/2411/2019 before Honourable Justice Aikawa amounts to a dismissal on merit or a striking out.
The trial Court held that Suit No.: FHC/L/CS/2411/2019 before Honourable Justice Aikawa was not determined on merit and that it is not in all cases where a matter is dismissed that such dismissal would completely terminate the case and that in such situations the dismissal merely amounts to a striking out.
It would be recalled that the trial Court in arriving at its conclusion that the dismissal amounted to a striking out found that the effect of the failure to serve pre-action notice which was the reason for discontinuing Suit No.: FHC/L/CS/2411/2019 meant that the action filed was incompetent and since that was the case, there was nothing to dismiss.
The situation here is that the suit was not dismissed on merit.
The settled principle of law is that when an action is struck out, it is still alive and could be resuscitated by the Plaintiff/Appellant. But when an action is dismissed on merit, the matter has come to a final bus stop. However, where a matter is dismissed on the basis of objection raised as in this case, that the process is technically bad, the dismissal will not be on merit and the originator of the suit will be at liberty to refile the suit after compliance with the correct position of the law.
All I am saying is that where a matter has not been heard on the merit and it is withdrawn and an order of dismissal is made, the order dismissing the suit will amount to a striking out.
In PANALPINA WORLD TRANSPORT VS. J. B. OLANDEEN INTERNATIONAL (2010) LPELR – 2902 (SC); (2010) 19 NWLR PART 1226 PAGE 1 it was held among others that –
“… when an order of Court is made in respect of an application not heard on the merits it amounts to striking out simpliciter, even where an order of dismissal is made following a hearing which is not based on the merit, such an order is still considered in law a mere striking out”.
And in ABAYOMI BABATUNDE VS. PAN ATLANTIC SHIPPING AND TRANSPORT AGENCIES LTD. & OTHERS (2007) 13 NWLR PART 1050 PAGE 113. It was held among others that –
“… the principle of law for some time has been settled that withdrawn cases are not usually dismissed by just a mere wave of hand”.
The trial Court must ensure that a point of no return or litis contestatio has been reached by the parties. See – ERONINI VS. IHEUKO (1989) 2 NWLR PART 101 PAGE 46.
In NIGERIA AIRWAYS LTD. VS. LAPITE (1990) 7 NWLR PART 163 PAGE 392, Uwais, JSC (as he then was) made the following observations:
“the power of Court to dismiss a case in limine should be exercised with utmost circumspection and not lightly as a matter of course”.
Not much longer thereafter, Tobi, JSC following suit in the case of – REGISTERED TRUSTEES OF IFELOJU FRIENDLY SOCIETY VS. KUKU (1991) 5 NWLR PART 189 PAGE 65 AT 79 held that –
“It is only when the justice of the case tilts heavily in favour of dismissal of the action in limine that he should toe that cruel and lonesome path, a path that a trial Judge should really dread to tread, unless all other pedestrainable paths, including that of striking out are closed to him … In our democracy where the rule of law both in its conservative and contemporary constitutional meaning operates, the door of the Courts should be left wide open and I mean really wide throughout the day for aggrieved persons and the generality of litigants to enter and seek any form of judicial redress or remedy. This is a desideratum in our polity”.
In this case, it is my view that since the dismissal of Suit FHC/L/CS/2411/2019 was not on merit, it should be treated as a striking out, moreso that Aikawa J. did not determine any of the issues in controversy and no oral or documentary evidence was led and a decision rendered on the merit.
The trial Court was therefore right when it construed the dismissal as a striking out order.
ON FAILURE OF THE CROSS RESPONDENT TO SERVE STATUTORY NOTICE ON THE 2ND CROSS-APPELLANT
The learned Counsel for the Cross-Appellants submitted that the Cross Respondent failed to serve pre-action notice on 2nd Respondent but the Cross Respondent referred to Exhibit R1 attached to the Counter Affidavit in opposition to the Notice of Preliminary Objection to show that Pre-action Notice was served on the 2nd Respondent on 6/11/2019 and this action was instituted on 20/11/2020.
In the further Counter Affidavit on pages 482 – 483 of the Record of Appeal the Cross Respondent deposed to the fact that Exhibit R1 the Pre-action Notice was served on the Polaris Task Force Unit of the 2nd Cross-Appellant responsible for recovering the indebtedness of the Cross Respondent.
Exhibits 1, 2 and 3 showed that there was a Polaris Task Force Unit within the 2nd Cross-Appellant that acknowledged receipt of Exhibit R1.
I agree with the submission of the Counsel for the Cross Respondent that the 2nd Appellant has not denied that they have a Polaris Task Force Unit headed by Dorcas Adegoke. Exhibit R1 was addressed to the 2nd Cross-Appellant and was received and stamped by Polaris Bank Limited Task Force by the 2nd Cross-Appellant.
In view of the foregoing, I am therefore in agreement with the trial Court when it held that Exhibit R1 was served upon the Polaris Task Force Unit of the 2nd Respondent/Cross-Appellant and that it is not the law that the life span of the pre-action notice served on the 2nd Cross-Appellant ended with Suit No.: FHC/L/CS/2411/2019 which was withdrawn.
ON CROSS RESPONDENT’S SUIT BEING NO ABUSE OF COURT PROCESS IN VIEW OF SEVERAL OTHER PENDING SUITS BETWEEN THE PARTIES ON THE SAME SUBJECT MATTER.
The learned Counsel for the Cross-Appellants submitted that the trial Court did not properly examine the facts of the various suits attached as Exhibits to the Cross Appellants’ affidavit in support of their objection, when the Court held that the Cross Respondent’s instant suit does not amount to an abuse of the process of Court.
On the other hand, the Learned Senior Counsel for the Cross Respondent referred to the case of – CHIEF VICTOR UMEH VS. PROF. MAURICE IWU (2008) LPELR – 3363 (SC), (2008) 8 NWLR PART 1089 PAGE 225, where it was held among others that –
“In order to sustain a charge of abuse of process, there must co-exist inter-alia
(1) a multiplicity of suits
(2) between the same opponents
(3) on the same subject matter
(4) on the same issues”.
The four factors listed above must not be given effect to in a disjunctive manner and where one or any of the four factors cannot be established the claim for abuse of Court process must fail.
In order to determine whether the present suit now on appear constitutes an abuse of Court process, it would be necessary to examine this suit along with other matters.
Suit No.: FHC/L/CS/255/17 filed by the 1st Cross Appellant. The suit sought for protective orders for the Receiver/Manager in the exercise and performance of his duties over the asset charged. See pages 152 – 155 of the Record of Appeal. The said suit was struck out on 20/5/2018 but it is on appeal in CA/L/557/2017 instituted by the Cross-Appellants. The parties in the two suits are similar but the reliefs claimed in the two suits are different.
The Originating Summons filed in this suit on appeal sought to set aside the sale of the Cross Respondent property as an eligible bank asset. The Cross-Respondent’s cause of action in the present suit on appeal arose in November 2018 when the 2nd Cross-Appellant wrote Exhibit M3 on page 30 of the Record of Appeal on 30/11/2018 notifying the Cross Respondent of the sale of the asset mortgaged as an eligible bank asset.
Furthermore, the Originating Summons in FHC/L/CS/255/17 Skye bank Plc & Another Vs. Millan Industries on pages 152 to 155 of the Record of Appeal was instituted in 2017 long before the mortgaged property was sold as an eligible bank asset to the 2nd Cross-Appellant. The issue of the sale of the mortgaged property as an eligible bank asset could not have been raised in the action filed in 2017.
SUIT NO – FHC/L/CS/463/18 – MILAN INDUSTRIES LIMITED VS. SKYE BANK PLC & ANOTHER.
The Learned Counsel for the Cross-Appellants referred to the affidavit in support of the Preliminary Objection that the Cross Respondent without waiting for the determination of the issues of its indebtedness in Suit No.CA/L/557/2018 proceeded to file an action against the 1st Cross-Appellant in FHC/CS/463/2018 regarding its same indebtedness.
The Learned Counsel for the Cross Respondent contended that Suit No.: FHC/L/CS/463/18 is challenging the validity of the appointment of the Receiver/Manager but has nothing to do with the sale of the asset of the Cross-Respondent as an eligible asset. Other reliefs claimed are for a Declaration that upon taking over possession of the Cross Respondent’s hotel the 2nd Cross-Appellant owed the Cross Respondent a fiduciary duty and obligation to observe the utmost good faith in managing the affairs and assets of the Cross Respondent.
It is observed that the Cross Respondent could not have raised the issue of the sale of the Cross Respondent’s property as an Eligible Bank Asset in March 2018 when Suit No.: FHC/L/CS/463/18 was filed in view of the fact that the cause of action in respect of the sale of the property as an eligible bank asset did not arise until November 2018 when the 2nd Respondent/Cross-Appellant wrote Exhibit R3 notifying the Cross Respondent of the take-over of the mortgaged property as an Eligible Bank Asset.
SUIT NO.- LD/5014GCMW/2018 – MILAN INDUSTRIES LIMITED VS. SKY BANK PLC
The Learned Counsel for the Cross-Appellants submitted that the Learned trial Judge was wrong when he held that the Cross Respondent’s instant suit does not amount to an abuse of the process of Court.
In his own case the Learned Senior Counsel for the Cross Respondent stated that the reliefs claimed in Suit No.-LD/5014GCNW/18 is not the same as the reliefs claimed in the present suit on appeal. He referred to the Statement of Claim on pages 240 – 247 of the Record of Appeal to show that the relief claimed in Suit No.: LD/5014GCNW/18 was for a declaration that the 1st Cross-Appellant has utilized the proceeds of the hotel to liquidate all sums allegedly outstanding on the facilities and not one single relief claimed relates to the sale of the Cross Respondent’s asset as an Eligible Bank Asset.
The cases reviewed above showed that the Cross Respondent claimed different reliefs in all the actions under consideration. I am therefore of the view that the filing of multiple actions which do not necessarily seek the same relief though between the same parties will not amount to an abuse of the process of Court. See – MOBIL PRODUCING NIGERIA UNLIMITED & 1 OTHER VS. MONOKPO VS. ANOTHER (SUPRA) PAGE 346 AT 430.
THE CROSS RESPONDENT BEING LEGALLY BARRED FROM MAINTAINING THE ACTION AGAINST THE 2ND CROSS APPELLANT
The learned Counsel for the Cross-Appellants submitted that the trial Court erred in law when it held that the Cross Respondent was not barred from maintaining the instant action against the 2nd Cross-Appellant by virtue of the salient provisions of the Asset Management Corporation of Nigeria (AMCON) Act.
He argued that from the Originating Process, the Cross Respondent’s grievance with the 2nd Cross-Appellant is solely because the 2nd Cross-Appellant acquired the Eligible Bank Assets of the plaintiff from the 1st Cross-Appellant. He referred to reliefs (a) and (c) in the Originating Summons earlier set out in this Judgment.
Learned Counsel for the Cross-Appellants referred to Section 33A of the Asset Management Corporation of Nigeria (Amendment) Act 2019 which provides thus:-
“33A- No action or proceeding shall lie, be instituted or maintainable against the corporation or any of its directors or officers by reason only of the acquisition of an eligible bank asset by the corporation under this Act, and any action or proceedings already existing shall cease and abate except where the eligible bank asset became vested in the corporation as specified under this Act”.
The learned Senior Counsel for the Cross Respondent is of a contrary view that the said Section 33A of the AMCON Act 2019 is not applicable to this case.
There is no doubt that by the provision of Section 33A of the AMCON Act 2019, no action or proceeding shall lie or be instituted against the 2nd Cross-Appellant by reason only of the acquisition of an Eligible Bank Asset. What this means is that before the provisions of Section 33A can be invoked, there must be a valid acquisition of an eligible bank asset.
The contention of the Cross Respondent is that there was no eligible bank asset to acquire from the 1st Cross-Appellant.
It was further contended on behalf of the Cross Respondent that the said eligible bank asset which was secured by the sum of N2 billion had been discharged long before the 2nd Cross-Appellant acquired the asset.
A careful reading of the provision of Section 202 of the Companies and Allied Matters Act 1990 which provides thus:
“Where a charge particulars of which require registration under Section 197 is expressed to secure all sums due or to become due or some other uncertain or fluctuating amount, the particulars required under Section 197 shall state the maximum sum deemed to be secured by such charge (being the maximum sum covered by the stamp duty paid thereon) and such charge shall be void, so far as any security on the company’s property is thereby conferred, as respects any excess over the stated maximum”.
would reveal that the mortgagee, i.e., the 1st Cross-Appellant cannot recover any amount in excess of the amount secured.
In this appeal under consideration as I said earlier in this judgment, for the reason best known to the parties i.e., the Cross Respondent and 1st Cross-Appellant, the amount secured as evidenced by Exhibit M2 – the Certificate of Registration issued by the Corporate Affairs Commission was N2 Billion and this amount had been liquidated as at the time the 2nd Cross-Appellant was acquiring the asset from the 1st Cross-Appellant.
I am of the view that where the amount secured has been liquidated the 1st and 2nd Cross-Appellants are left with the unpaid excess sum as an unsecured debt which is void and unenforceable against the charge.
There is no doubt that the Cross Respondent is still indebted to the 1st Cross-Appellant, but the 1st Cross-Appellant cannot recover more than the N2 Billion secured and the excess amount owed which is not secured will be void against the charge but can be recovered as an unsecured debt.
The Cross Respondent as shown in the affidavit in support of the Originating Summons showed that between the 14th March 2014 and 5th December 2016 a sum in excess of the N2 Billion was repaid to discharge the N2 billion secured by Exhibit M2.
The affidavit in support of the Originating Summons showed the statement of account prepared by 1st Cross-Appellant which was attached revealed the principal amount liquidated as from 14th March 2014 as follows:-
“14/3/14 – principal liquidated – N366,000,000.00
15/4/14 – principal liquidated – N250,000,000.00
3/4/14 – principal liquidated – N629,444,154.00
1/7/14 – principal liquidated – N100,000,000.00
13/8/14 – principal liquidated – N250,000,000.00
17/10/14 – principal liquidated – N200,000,000.00
20/10/14 – principal liquidated – N50,000,000.00
27/10/14 – principal liquidated – N70,000,000.00
18/12/14 – principal liquidated – N100,000,000.00
06/1/15 – principal liquidated – N100,000,000.00
17/2/15 – principal liquidated – N200,000,000.00
01/7/15 – principal liquidated – N95,000,000.00
03/8/15 – principal liquidated – N70,000,000.00
4/8/15 – principal liquidated – N50,000,000.00
7/9/15 – principal liquidated – N297,797,471.50
15/9/15 – principal liquidated – N50,000,000.00
21/10/15 – principal liquidated – N50,000,000.00
23/11/15 – principal liquidated – N100,000,000.00
2/12/15 – principal liquidated – N236,000,000.00”
It is settled law that on documentary evidence this Court has as much as the same forensic leverage as the trial Court to form its own opinion on them.
See – NNORODIM VS. EZEANI & OTHERS (2001) 2 SCNJ PAGE 1.
– GONZEE (NIG.) LTD. VS. NIGERIAN EDUCATIONAL RESEARCH & DEVELOPMENT COUNCIL & OTHERS (2005) 13 NWLR PART 943 PAGE 634.
The Cross-Appellants attempted to deny that N2 Billion was paid. In paragraph 16 of the Counter Affidavit filed in opposition to the Originating Summons, it was admitted that the repayments were made but that the payments were from the repayment source of the loan and not upon the activation of the Deed of Legal Mortgage when the security for the loan was taken over by the Receiver/Manager in 2017.
As I stated earlier the repayments were captured in the statement of account prepared by the 1st Cross-Appellant with the narration “principal liquidation” therefore the source of repayment in my view is immaterial.
In view of the foregoing, my conclusion is that the secured and collateralized loan of N2 Billion has been repaid to discharge the mortgaged property. Furthermore, Section 33A will not be applicable because the only thing the 1st and 2nd Cross-Appellants could have acquired was the unsecured and uncollateralized loan and the excess amount not secured is void against the charge.
In the circumstance, I agree with the decision of the trial Court that there was no eligible bank asset to acquire by the 2nd Cross-Appellant and therefore that Section 33A of the AMCON Act 2019 does not apply to this case.
Consequent upon the foregoing this issue No. 1 is resolved in favour of the Cross Respondent and against the Cross-Appellants.
ISSUE NO. 2
“Whether the Court below was legally mandated to properly determine all the issues submitted to it by the Cross-Appellants and to consequently reiterate the dismissal of the Cross Respondent’s suit on the vital points/issues submitted by the Cross-Appellants in their processes by the Honourable Court”. (Distilled from Grounds 1 and 2 of the Notice of Cross-Appeal).
The learned Counsel for the Cross Appellant referred to Section 36(1) of the 1999 Constitution of the Federal Republic of Nigeria (as amended). He contended that cases on interpretation of the concept of fair hearing has been held to mean that all parties must be given equal opportunity to present their cases for litigation before the Court. He relied on the following cases:-
– UKWUYOK & OTHERS VS. OGBULU & OTHERS (2019) LPLER – 48741.
– ADAMU & ANOR. VS. F.R.N. (2019) LPELR – 48775 (SC).
– ARIJE VS. ARIJE & OTHERS (2018) LPELR – 44193 (SC).
He referred to the Originating Summons filed on 20/11/2020 where questions were presented for the determination of the trial Court. He also referred to the Counter Affidavit and the Written Address opposing same.
He contended that the lower Court ought to have given credence to the Cross Appellants’ process which were pleaded before it, in determining the suit on the merit, however, that the trial Court failed to give credence to the processes filed by the Cross-Appellants and proceeded to determine the matter solely on the Cross Respondents processes.
He argued that the argument of the Cross-Appellants in their Written Address and Counter Affidavit were not considered. That this has occasioned a serious miscarriage of justice.
He relied on the following cases:-
– NIGERIAN CEMENT CO. PLC. & OTHERS VS. OBIDIKE (2015) LPELR – 40647 (CA).
– OVUNWO VS. WOKO (2011) 17 NWLR PART 1277 PAGE 522.
– ABDULLAHI VS. THE GOVERNOR OF KANO STATE & OTHERS (2011) LPELR – 8925 (CA).
– INTERNATIONAL BEER AND BEVERAGES INDUSTRIES LTD. & ANOTHER VS. MUTUNCI CO. NIG. LTD. (2011) LPELR – 4329 (CA).
– NGGILARI VS. STATE & OTHER (2017) LPELR – 42985 (CA).
It was submitted by Counsel for the Cross-Appellants that the trial Court having failed in its constitutional duty to consider the issues submitted to it by the Cross-Appellants, he urged this Court to consider the said issues and make positive findings on them. He relied on Section 15 of the Court of Appeal Act 2004.
He relied on the case of –
– WAZIRI VS. POLICE SERVICE COMMISSION & ANOTHER (2015) LPELR – 2461 (CA).
In their Written Address in opposition to the Originating Summons, the Cross-Appellants submitted three issues for the consideration of the trial Court viz –
“(1) Whether or not the security pledged by the plaintiff is void in relation to any amount in excess of N2 Billion for which the Deed of Legal Mortgage was up-stamped.
(2) Whether having “allegedly” paid the sum of N2 Billion secured under the Deed of Legal Mortgage before 30/11/2018 when the Asset Management Corporation of Nigeria took over the Debt/Security under the Legal Mortgage the debt/security of the plaintiff qualifies as an Eligible Bank Asset.
(3) Whether the 2nd Defendant can dispense of the Eligible Bank Asset acquired from the 1st Defendant to the 3rd Defendant”.
It was submitted that the foundation of all the facilities availed the Appellant/Cross Respondent is the offer letters and by the said offer letters the security clause therein provides thus:-
“Security: Legal Mortgage on the land and the building of the proposed Intercontinental Hotel on Kofo Abayomi Street, Victoria Island Lagos”.
Learned Counsel for the Cross Appellant referred to clauses 1.01 and 3.01 of the Deed of Legal Mortgage on pages 13 and 15 of the record of appeal respectively and contended that under the charging clause, the mortgaged property is to be utilized as a continuing security for the payment of all moneys and the discharge of all obligations and liabilities hereby covenanted to be paid or otherwise hereby secured subject to cesser an redemption.
He referred to the case of – E.A. LTD. INDUSTRIES VS. NERFUND (2009) 8 NWLR PART 1144 PAGE 552.
Sections 198(2) and 199(1) and (2) of the Companies and Allied Matters Act were referred to and Learned Counsel for the Cross-Appellants submitted that assuming without conceding that the Deed of Legal Mortgage was not registered and properly up-stamped to cover the entire indebtedness of the Appellant/Cross Respondent, that it should not be allowed to benefit from its wrong doing. The case of –C.G.C. NIGERIA LIMITED VS. YUSUF (2016) LPELR – 41567 (CA).
Learned Counsel for the Cross-Appellants finally urged this Court to hold that the trial Court erred in law when it failed to consider the crucial issues argued by the Respondent/Cross-Appellants in their Written Address in opposition to the Originating Summons, he urged this Court to resolve all the issues in favour of the Respondent/Cross-Appellants and allow the cross-appeal.
In his response, the learned Senior Counsel for the Cross Respondent submitted that Grounds 1 and 2 of the Cross-Appeal from which Issue two (2) was distilled did not arise from the judgment of the trial Court and the failure to pronounce on all issues did not amount to a denial of fair hearing. Reliance was placed on the case of – KANTIN KWARI MARKET TRADERS ASSOCIATION VS. LABARAN (2016) LPELR – 41329 (CA).
He argued that the Record of Proceedings showed that the Cross-Appellants were given the opportunity to be heard and not denied fair hearing.
Learned Senior Counsel for the Cross Respondent agreed with the submission of Cross-Appellants that under the charging clause that the mortgaged property is to be utilized as a continuing security for the repayment of the loan but contended that Section 202 of CAMA 1990 (now Section 227 CAMA 2020) which the Cross Respondent is relying upon is not inconsistent or at variance with clause 3.01 of the Deed of Legal Mortgage.
It was contended on behalf of the Cross Respondent that it is not the Cross Respondent’s argument that the failure to have the document stamped or up-stamped is a ground to render the instrument void for recovery of the sum owed.
The argument of the Cross Respondent is that the Cross Appellant cannot recover beyond the maximum amount secured by the registration of the charge and where the maximum amount secured has been liquidated the security will be discharged. The excess amount not secured cannot be enforced against the company’s security and can only be recovered through a debt action.
It was also submitted on behalf of the Cross-Respondent that the argument that AMCON is exempted from paying stamp duty under Section 60 of AMCON Act is untenable. It was submitted further that the 1st Cross-Appellant should have registered the charge for the maximum amount before AMCON came into the picture. The duty to register was on both the 1st Cross-Appellant and Cross-Respondent and not AMCON. The 1st Cross-Appellant as the party interested took up the responsibility to register the charge but failed to register for the maximum amount loaned with the accrued interest.
The learned Senior counsel for the Cross Respondent urged that the cross-appeal be dismissed.
In his reply brief of argument, the Learned Counsel for the Cross-Appellants submitted that the Deed of Legal Mortgage between the Cross Respondent and the 1st Cross Appellant was created to secure all money owed by the Cross Respondent to the 1st Cross-Appellant and same is not void with respect to any money availed the Cross Respondent in excess of N2 Billion.
It was submitted further that the Deed of Legal Mortgage as well as the offer letter between the Cross Respondent and the 1st Cross-Appellant did not classify any sum in excess of N2 Billion as an uncollateralized facility, and also that the debt acquired by the 2nd Cross-Appellant from the 1st Cross-Appellant is a secured/collateralized debt which qualifies as an eligible Bank asset. Reliance was placed on Section 24 of the AMCON Act paragraph 5 of its guidelines.
Learned Counsel for the Cross-Appellants finally urged that this Cross Appeal be allowed.
RESOLUTION OF ISSUE NO. 2
The learned Counsel for the Cross-Appellants submitted that a perusal of the judgment of the trial Court revealed that the arguments of the Cross-Appellants in their Written Address in opposition to the Originating Summons and Counter Affidavit to same were not duly considered and as a result their right to fair hearing was violated.
A careful perusal of the record of appeal would reveal that the Cross-Appellants were given the opportunity to be heard and not denied fair hearing. The trial Court heard both sides before it delivered its judgment.
The art of judgment writing is a style which each Judge is at liberty to adopt. There is no prototype style which is obligatory for adoption. The most important in my view is the substance contained in the judgment portraying justice expected which is meted out to the parties. It may not be a fair objective to cast aspersion against a style of judgment writing.
In this case, both parties were not satisfied with the judgment of the trial Court and they have appealed on various issues which are due for determination.
The learned Counsel referred to Clause 3.01 of Deed of Legal Mortgage on page 15 of the Record of Appeal which provides thus:-
“The Mortgagor as Beneficial Owner hereby conveys to the Bank all that property specified in the schedule hereto and all buildings and fixtures from time to time thereon (together referred to as the property) as a continuing security for the payment of all monies and the discharge of all obligations and liabilities hereby covenanted to be paid or otherwise hereby secured subject to cesser on redemption.”
The charging clause referred to above is the effect that the mortgaged property is to be utilized as a continuing security for the repayment of the loan but upon a careful perusal, it would be seen that it is consistent with the provision of Section 202 of CAMA 1990 now Section 227 of CAMA 2020 which provides that – when a charge, particulars of which requires registration under Section 197, is expressed to secure all sums due or become due or some uncertain or fluctuating amount, the particulars of the charge as prescribed under Section 197 shall state the maximum sum deemed secured.
Section 202 of the Companies and Allied Matters Act 2020 clearly stipulates that where a charge as in the instant case is expressed to secure all sums due or to become due or some other uncertain or fluctuating amount, the charge must state the maximum amount deemed to be secured by the charge (being the maximum sum covered by the stamp duty paid) and such shall be void, so far as any security on the company’s property is concerned in respect of any excess over the stated maximum.
In this case, the 1st Cross-Appellant in compliance with Section 197 of CAMA 1990 registered the charge but failed to up-stamp the charge for the maximum amount loaned which they were entitled to do under the Deed of Legal mortgage and pursuant to the provision of Section 202 of CAMA 1990 now Section 227 CAMA 2020.
The major consequence of not securing the charge for the maximum amount (both principal and interest) is that the lender will not be allowed to recover any amount in excess of the amount secured by the charge and where the amount secured is liquidated the lender’s right to enforce the charge would be lost.
The Learned Counsel for the Cross-Appellants have argued that by the provisions of Section 199(1) and (2) of CAMA the duty rest on the Cross Respondent to register the charge and to adequately up-stamp same. The Provision of Section 199(1) and (2) (supra) which though states that the company shall have a duty to send to the commission for registration the particulars of every charge created, it goes further to impose a duty on any person interested to apply for registration.
It was submitted on behalf of the Cross Respondent that the Cross-Appellants submitted the charge for registration because they stand to lose more if the charge is not registered but for reasons best known to them, they failed to up-stamp the charge for the maximum amount loaned including interest. I am ad idem with the Cross Respondent on this point.
It is not the Cross Respondent’s argument that the failure to have a document stamped or up-stamped is a ground to render the instrument void for recovery of the sum owed. The Cross Respondent’s argument is that the 1st Cross Appellant cannot recover beyond the maximum amount secured by the registration of the charge and where the maximum amount secured has been liquidated the security will be discharged. It means that the excess amount not secured cannot be enforced against the company’s security and it can only be recovered through a debt action.
The issue, in this case, is not about payment of stamp duty or whether the Certificate of Registration Exhibit M2 is admissible or not admissible for not being stamped.
In this appeal under consideration, the 1st Cross-Appellant as a party interested in the charge up-stamped for the maximum amount secured in Exhibit M2 and paid stamp duty on the amount secured.
The failure to register the charge for the maximum amount loaned has consequences and it is now late to go back and rectify the shortcoming by up-stamping for the maximum amount of N15 Billion involved or to settle out of Court.
The consequence of the failure of the 1st Cross-Appellant to register for the maximum amount is that they cannot recover beyond the amount stated in Exhibit M2 and where the amount stated in Exhibit M2 is liquidated the security will be discharged.
The excess amount which is void against the charge is the unsecured amount not registered, which can only be recovered through a debt action and not against the charge of the company. The 1st and 2nd Cross-Appellants will be entitled to the unsecured amount not registered against the charge of the company which is an uncollateralized and unsecured debt.
As stated earlier in the judgment the 1st Cross Appellant ought to have registered the charge for the maximum amount loaned before the 2nd Cross Appellant came into the controversy.
Finally, the law governing registration of charges is Section 199 (1) and (2) of CAMA which provides thus: “1. It shall be the duty of a company to send to the Commission for registration, the particulars of every charge created by the company and of the issues of debentures of a series requiring registration under Section 197 of this Act, but registration of any such charge may be effected on the application of any person interested therein. (Emphasis ours)
2. Where registration is effected on the application of some person other the company, that person shall be entitled to recover from the company the amount of any fees properly paid by him to the Commission on the registration.”
The provision set out above would reveal that the duty to register the Deed of Legal Mortgage being a charge and to up-stamp same rests on both the 1st Cross-Appellant and the Cross Respondent. But the 1st Cross-Appellant who stood the risk of losing more ought to have registered the charge for the maximum amount loaned including interest.
In view of the foregoing, this Issue No. 2 is also resolved in favour of the Cross Respondent and against the Cross-Appellants.
With the resolution of Issues No. 1 and 2 in favour of the Cross Respondent and against the Cross-Appellants, it is my view that this Cross Appeal lacks merit and it is hereby dismissed.
The Cross Respondent is entitled to costs which is fixed at N250,000.00 against the Cross-Appellants jointly and severally.
Cross-Appeal dismissed.
MUHAMMED IBRAHIM SIRAJO, J.C.A.: The Appellant’s property, a 361 Room Intercontinental Hotel in Lagos, now Lagos Continental Hotel, was the security for the Two Billion Naira loan facility advanced to the Appellant by the 1st Respondent under a Deed of Legal Mortgage executed by the Appellant in favour of the 1st Respondent and duly registered with the Corporate Affairs Commission. That was in September, 2010. The dispute leading to this appeal arose following the purported sale of the Appellant’s secured debt/security to the 2nd Respondent on the ground that the Appellant has not liquidated the amount for which the property was charged under the Deed of Legal Mortgage. The Appellant insisted that it had paid over Two Billion Naira in liquidating the facility and that as at the time the 1st Respondent entered into agreement to sell the Appellant’s secured asset to the 2nd Respondent, there was no collateralized and secured asset to sell to the 2nd Respondent. It was also the case of the Appellant that at the time the 2nd Respondent sold the Appellant’s Intercontinental Hotel to the 3rd Respondent, the Appellant had discharged its obligation under the Legal Mortgage by paying the amount secured by the property. The two Statements of Account of the Appellant with the 1st Respondent tendered before the lower Court as Exhibits MA and M5 shows that the Appellant has paid back over Two Billion Naira to the 1st Respondent before the purported sale of the secured debt to the 2nd Respondent.
In the draft of the leading judgment made available to me before now, my learned brother, JIMI OLUKAYODE BADA, PJCA, has exhibited a perfect understanding of the dispute between the parties, especially as it relates to the Two Billion Naira being the maximum limit upon which the Appellant’s property was charged under the Deed of Legal Mortgage. His lordship has ably dissected the lone issue in the appeal and I am in total agreement with his reasoning and conclusion that the appeal has merit and ought to be allowed. I find that there was no eligible bank asset to be acquired by the 2nd Respondent because the Appellant has liquated his indebtedness before the purported transaction between the 1st Respondent and the 2nd Respondent and between the 2nd Respondent and the 3rd Respondent. I adopt his lordship’s reasoning and conclusion in the leading judgment as mine in also allowing the appeal. I abide by all the orders made in the leading judgment including that of costs.
I also dismiss the cross-appeal as was done in the leading judgment of my learned brother, JIMI OLUKAYODE BADA, PJCA. I abide by the order as to costs.
PETER OYINKENIMIEMI AFFEN, J.C.A.: I have had the benefit of a preview of the leading judgment just delivered by my noble Lord, Jimi Olukayode Bada; JCA wherein the issues in contention are set out in extenso.
The judicial reasoning and conclusions reached on the issues raised accord with mine, and I hereby affirm my agreement with the leading judgment which allowed the main appeal and dismissed the cross-appeal. I equally abide by the orders on costs.
Appearances:
MR. AHMED RAJI, SAN, with him, A. B. Kasumu, Esq. For Appellant(s)
CHIEF PAUL C. OBI, with him, O. A. Divine, Esq. O. T. Ogunba, Esq. and Charles Mba, Esq. For Respondent(s)
