NEWGATE MICROFINANCE BANK NIGERIA LIMITED & ORS v. KEYSTONE BANK LIMITED
(2019)LCN/13315(CA)
In The Court of Appeal of Nigeria
On Tuesday, the 21st day of May, 2019
CA/L/155/2017
JUSTICES
MOHAMMED LAWAL GARBA Justice of The Court of Appeal of Nigeria
JOSEPH SHAGBAOR IKYEGH Justice of The Court of Appeal of Nigeria
ABIMBOLA OSARUGUE OBASEKI-ADEJUMO Justice of The Court of Appeal of Nigeria
Between
1. NEWGATE MICROFINANCE BANK (NIG.) LTD
2. FRANCIS ACHEBE
3. FOLA ODUFUYE Appellant(s)
AND
KEYSTONE BANK LIMITED Respondent(s)
RATIO
THE PURPOSE OF A SUMMARY JUDGEMENT
In the case of Continental Pharmaceuticals Ltd. v. Scanbech (Frank Bech) Denmark (2002) FWLR (pt.104) 576, the Court of Appeal stated that the purpose of summary judgment is to ensure quick dispensation of justice but certainly not at the expense of fair hearing. The position of the law is that the defendant must show a bona fide, a prima facie defence on the merit. In C.C.E. Importacao v. Sanusi Brothers Nig. Ltd. (2002) F.W.L.R. (pt.12) 2046, (2006) 6 SCNJ 453, the Supreme Court considered what constitutes a bona fide defence and held that:
?The defendant?s affidavit must condescend upon particulars and as far as possible deals specifically with the plaintiff?s claim and affidavit and should also clearly and concisely state what the defence is. A mere denial by the defendant of the indebtedness is not enough. It is not enough for the defendant to show a case of hardship, nor a mere inability to pay. In all cases, the defendant must provide sufficient to show that there is a bona fide defence?.
Where the defendant does not show a triable issue, he will not be let in to defend and the claimant will be entitled to judgment. In the case UBA v. Jargaba (2007) 11 NWLR (pt.1045) 247, it was held that the defendant?s affidavit evidence must disclose that there is a real dispute and not merely a frivolous and vague defence designed to delay the quick determination of the action. It has also been held that a defendant whose affidavit or oral examination by the Judge does not disclose that he has a good defence to the action on the merits or disclose sufficient facts to entitle him to defend the action generally, will fail to stop the plaintiff from entering summary judgment.
The allegation that the 1st defendant was wound up by the Central Bank of Nigeria or by the Nigerian Deposit Insurance Corporation is not an arguable defence for those two bodies cannot legally wind up a company, they do not have the power to do so. Ergo, the contention that by reason of being wound up the 1st defendant does not owe claimant cannot stand. ln any event, even if a company is wound up it still exists and is liable for any indebtedness it has, the fact that its liability has been bought or taken over by another means that other can be called upon to pay after the 1st defendant is duly adjudged indebted. See Co-operative and Commerce Banking Nig. Plc. v. Mbakwe (2002) NWLR (pt.755) 523 and CCB (Nig.) Plc. v. O Silvawax Int. Ltd.(1999) 7 NWLR (pt.609) 97. It was held in Uniben v. K. T. Org. Ltd. (2007) 14 NWLR (pt.1055) 449, that under the summary judgment procedure, only a prima facie defence is required and not a defence on the merit at that stage.
The allegation that there were wrong charges, unjustified debits, and unilaterally increased interest rates applied to the 1st defendant?s account or fictitious and frivolous entries on its statement of account raises triable issues but does not constitute a good defence against the whole claim. PER IKYEGH, J.C.A.
THE UNDERLYING PRINCIPLE OF SUMMARY JUDGEMENT
It agrees with the underlying principle that summary judgment procedure be used to forestall a defendant who has no viable defence from using the machinery of justice as a ploy to delay the action and frustrate a claimant from expeditious determination of the uncontested action vide Sanusi v. Cotia (2000) 6 S.C. (pt.111) 43 at 53, Bona iles Ltd. v. A.T.M. Plc (2013) 2 NWLR (pt.1338) 357, Akpan v. A.I.P. and Investment Co. Ltd. (2013) 12 NWLR (pt.1368) 377, Grand Systems Petroleum Ltd. v. Access Bank Plc (2015) 3 NWLR (pt.1446) 317, Thor Ltd. v. FCMB Ltd. (2005) 14 NWLR (pt.946) 969, Macaulay v. Merchant Bank Ltd. (1990) 4 NWLR (pt.144) 283, U.T.C. v. Pamotei (1989) 2 NWLR (pt.103) 244, Ifeanyichukwu v. O.C.B. Ltd. (2015) 17 NWLR (pt.789) 46. PER IKYEGH, J.C.A.
JOSEPH SHAGBAOR IKYEGH, J.C.A. (Delivering the Leading Judgment): The appeal is from the judgment of the High Court of Lagos State (the Court below) whereby it entered summary judgment in the sum of N15,000,000.00 (fifteen million naira) against the appellants in favour of the respondent being money owed the respondent by the appellants on a credit facility granted by the former to the latter.
?Briefly, the dispute condescends to the facts that the 1st appellant was granted a loan with interest of 19% per annum by the respondent guaranteed by the 2nd ? 3rd appellants which rose to N15 million and became due without repayment upon demand by the respondent. The respondent brought an action for summary judgment in respect of the said sum of money owed by the 1st appellant and guaranteed by the 2nd ? 3rd appellants. The action was supported by affidavit evidence and an amended statement of claim. The appellants filed a motion for extension of time to defend the action. The motion was filed a day after close of proceedings. The Court below considered the defence contained in the motion and ruled that the defence was not bona fide
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and entered summary judgment for the said sum of N15 million in favour of the respondent against the appellant.
Dissatisfied with the judgment, the appellant filed a notice of appeal with four grounds which were argued together under a side issue for determination contained in the brief of argument filed on 06.03.18 but deemed as duly filed on 07.03.18 to the effect that a triable issue was raised in the defence to the action showing ?
?(i) That the 1st Defendant (1st Appellant) has been shut down by the Central Bank of Nigeria and liquidated by Nigerian Deposit Insurance Corporation (NDIC).
(ii) That the assets and liabilities of the 1st Defendant (1st Appellant) have been signed off to the Central Bank of Nigeria by the management of the 1st Defendant.
(iii) That the Claimant (Respondent) has been charging interest on the facility in excess of the agreed interest rate of 19% per annum without notification to the 1st Defendant and contrary to Central Bank of Nigeria guidelines and regulation.
(iv) That the cumulative outstanding balance includes unjustified debits, fictitious and frivolous entries in the 1st Defendant’s
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Statement of Account.
(v) That the Claimant’s claim is statute barred by virtue of the Limitation Law of Lagos State.
(vi) That the claimant (Respondent) has refused since 2008 till date to pay the 1st Defendant (1st Appellant) the agreed income from two ATM Terminals it deployed for the use of the Claimant (Respondent) and its customers which income was to be utilized to offset the facility.
(vii) That as a result of the liquidation of the 1st Defendant (1st Appellant), the Defendants (Appellants) by Central Bank of Nigeria and Nigeria Deposit Insurance Corporation the Defendants (Appellants) are not indebted to the Claimant (Respondent)”.
The appellants argued in the brief that, based on these grounds there was a good and arguable defence which the Court below should have been persuaded to let the appellants in to defend the action on the merit citing in support the cases of Macaulay v. NAL Merchant Bank Ltd. (1990) 4 NWLR (pt.144) 283 at 322 and 324, British Airways Plc v. Akinyosoye (1995) 1 NWLR (pt. 374) 722 at 730 read with Section 24 and 25 of the Nigeria Deposit Insurance Corporation Act (NDIC Act), upon which the
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appellants urged that the appeal should be allowed and the judgment of the Court below set aside and the appellants be granted leave to defend the action.
The respondent?s brief was filed on 28.03.18. It was contended therein that the appellants expressly admitted in paragraph 5 of the statement of defence that it utilized the N15 million loan granted it by the respondent before it was wound-up, not dissolved; and that having admitted the principal sum of N15 million pleaded by the respondent in paragraph 5 of the amended statement of claim, the appellants had the burden to establish repayment of the loan which they failed to discharge, therefore the Court below was right in entering judgment in the said sum of N15 million against the appellants citing in support the case of Kenfrank Nigeria Ltd. v. UBN Plc (2002) 15 NWLR (pt.789) 46 at 73 read with Order 11 Rule 5(3) of the Lagos State High Court (Civil Procedure) Rules 2012 (the rules of the Court below).
?It was also argued that there was no nexus between the loaned sum of money and the income from ATM terminals as the Memorandum of Understanding which is in pages 332 ? 336 of the
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record was executed on 09.09.08, while the contract of overdraft facility was entered into in December, 2008 with no reference to the memorandum of understanding; more so, the loan facility lapsed in June, 2009 while the memorandum of understanding lapsed in September, 2009; consequently, the respondent contended that the Court below was right in holding that the memorandum of understanding did not raise any triable issue as it was unrelated to the loan facility; and that the counter claim, if any, did not necessarily entitle the appellants to leave to defend the action, especially as the counter-claim in the case appeared groundless vide Thor Limited v. FCMB Ltd. (2005) 14 NWLR (pt.946) 696 at 716.
?The respondent also argued that the order for joinder followed by a consequential amendment of the writ and statement of claim related back to the date the writ of summons was filed ruling out the application of limitation of action more so, the appellants did not plead in paragraph 20 of their statement of defence the parties affected by the Limitation Law of Lagos State and raised the issue in favour of the 2nd ? 3rd appellants for the first time on
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appeal citing in support the case of Akpamgbo-Okadigbo and Ors. v. Chidi (2016) 3 M.J.S.C. (pt.11) 123 at 141 read with Order 13 Rule 4 and 17 of the Rules of the Court below on the effect of joinder of parties.
The respondent further contended that the liquidation of a company does not automatically terminate the juristic life of the company as held by the Court below citing in support the case of Oredola Okeya Trading Co. v. Bank of Credit and Commerce International (2015) All FWLR (pt.806) 284 at 295; upon which the respondent advocated for the appeal to be dismissed.
The Court below, indeed, considered the proposed defence to the action though brought out of time which was in tandem with the cases of U.B.A. v. Nwora (1978) 11 ? 12 S.C. 1, British American Insurance Co. Ltd. v. Sillo (1993) 2 NWLR (pt.277) 507, Savannah Bank of Nigeria Plc v. Kyentu (1998) 2 NWLR (pt.536) 41, Akumechiel v. B.C.C. Ltd. (1997) NWLR (pt.484) 695, Nkwocha v. MTN (2008) 11 NWLR (pt.1099) 460. I too agree with the course charted or taken by the Court below.
?The appellants conceded in page 7 of the brief that the action was commenced within time against the 1st
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appellant, the principal borrower showing the defence that the action is statute barred is a sham with respect to the 1st appellant. The other contention of the appellants that the 2nd ? 3rd appellants were joined in the action after the limitation period overlooks the fact that their joinder was to the existing and pending action filed within time, not a new cause of action. It is now trite that time ceases to run for the purpose of limitation enactment during the pendency of an action, so held the Supreme Court in the fairly recent case of Sifax (Nig.) Ltd. v. Migfo (Nig.) Ltd. (2018) 9 NWLR (pt.1623) 138.
Further, the joinder of the 2nd ? 3rd appellants in the action with the consequential order amending the writ of summons and statement of claim antedated the action back to the original date the action was filed within time thus knocking out the issue of the limitation of the action.
The Court below held in part of its judgment in pages 390 ? 392 of the record of appeal (the record) thus ?
?The claimant has made out a prima facie case with the pleadings, affidavit and exhibits it placed before the Court. It has
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established that there is a loan agreement executed between it and the 1st defendant, for a N15,000,000 overdraft facility as evidenced in Exhibit 1. The 2nd and 3rd defendants executed personal guarantee agreements in respect of the facility as evidenced in Exhibits 3a and 3b. The statement of account Exhibit 6 shows that the 1st defendant utilized the loan and has a debit balance of N63,644,593.14 on its account.
In the case of Continental Pharmaceuticals Ltd. v. Scanbech (Frank Bech) Denmark (2002) FWLR (pt.104) 576, the Court of Appeal stated that the purpose of summary judgment is to ensure quick dispensation of justice but certainly not at the expense of fair hearing. The position of the law is that the defendant must show a bona fide, a prima facie defence on the merit. In C.C.E. Importacao v. Sanusi Brothers Nig. Ltd. (2002) F.W.L.R. (pt.12) 2046, (2006) 6 SCNJ 453, the Supreme Court considered what constitutes a bona fide defence and held that:
?The defendant?s affidavit must condescend upon particulars and as far as possible deals specifically with the plaintiff?s claim and affidavit and should also clearly and concisely
8
state what the defence is. A mere denial by the defendant of the indebtedness is not enough. It is not enough for the defendant to show a case of hardship, nor a mere inability to pay. In all cases, the defendant must provide sufficient particulars to show that there is a bona fide defence?.
Where the defendant does not show a triable issue, he will not be let in to defend and the claimant will be entitled to judgment. In the case UBA v. Jargaba (2007) 11 NWLR (pt.1045) 247, it was held that the defendant?s affidavit evidence must disclose that there is a real dispute and not merely a frivolous and vague defence designed to delay the quick determination of the action. It has also been held that a defendant whose affidavit or oral examination by the Judge does not disclose that he has a good defence to the action on the merits or disclose sufficient facts to entitle him to defend the action generally, will fail to stop the plaintiff from entering summary judgment.
The allegation that the 1st defendant was wound up by the Central Bank of Nigeria or by the Nigerian Deposit Insurance Corporation is not an arguable defence for those two bodies
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cannot legally wind up a company, they do not have the power to do so. Ergo, the contention that by reason of being wound up the 1st defendant does not owe claimant cannot stand. ln any event, even if a company is wound up it still exists and is liable for any indebtedness it has, the fact that its liability has been bought or taken over by another means that other can be called upon to pay after the 1st defendant is duly adjudged indebted. See Co-operative and Commerce Banking Nig. Plc. v. Mbakwe (2002) NWLR (pt.755) 523 and CCB (Nig.) Plc. v. O Silvawax Int. Ltd.(1999) 7 NWLR (pt.609) 97. It was held in Uniben v. K. T. Org. Ltd. (2007) 14 NWLR (pt.1055) 449, that under the summary judgment procedure, only a prima facie defence is required and not a defence on the merit at that stage.
The allegation that there were wrong charges, unjustified debits, and unilaterally increased interest rates applied to the 1st defendant?s account or fictitious and frivolous entries on its statement of account raises triable issues but does not constitute a good defence against the whole claim. It cannot be a good defence against a claim for the undenied principal
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sum of N15,000,000.00, the defendants not having pleaded that the 1st defendant made any payment towards repaying its debt.
The vague assertion that income from ATM terminals was due and unpaid to the 1st defendant does not also constitute a good defence particularly as the 1st defendant is not pleading set off and it is entitled to and can counterclaim for any moneys due to it from the claimant. The blanket assertion that the claim is statute barred without any facts (such as the date the cause of action arose) pleaded to that effect does not constitute a good defence.
I do believe that the proposed defence has raised issues, which if decided in the defendant?s favour, can answer part of the claim of the claimant in the light of the foregoing I find that the facts pleaded by the defendant can only establish a defence against that part of the claim that would represent the interest and charges that accrued on the principal sum of N15,000,000.00. The claimant is therefore entitled to judgment for the said principal sum.?
The appellants were unable to fault the above holding which, in my considered opinion, is sound.
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It was not shown on the face of the defence to the action that the respondent was dissolved as a company. Liquidation of a financial institution or company which appears to be the picture painted by the defence to the action does not snuff out the live of the financial institution or company as a corporate entity that can sue and be sued vide Re Amolegbe (2014) 8 NWLR (pt.1408) 76 where the Supreme Court held inter alia that the liquidation of a financial institution or company keeps the financial institution or company alive as an incorporated body and that it is the dissolution of the financial institution or company that leads to its death as a suable entity. See also the case of Oredola Okeya Trading Co. v. Bank of Credit and Commerce International (supra) cited by the respondent.
The Court below found as a fact that the uncontested sum was N15 million and entered judgment in the said sum of money less than the N63,644,593.14 claimed by the respondent which also excluded the claim of interest on the loan as indicated in its judgment (supra).
?I do not, therefore, find the entry of summary judgment in the case objectionable. It agrees with the underlying
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principle that summary judgment procedure be used to forestall a defendant who has no viable defence from using the machinery of justice as a ploy to delay the action and frustrate a claimant from expeditious determination of the uncontested action vide Sanusi v. Cotia (2000) 6 S.C. (pt.111) 43 at 53, Bona iles Ltd. v. A.T.M. Plc (2013) 2 NWLR (pt.1338) 357, Akpan v. A.I.P. and Investment Co. Ltd. (2013) 12 NWLR (pt.1368) 377, Grand Systems Petroleum Ltd. v. Access Bank Plc (2015) 3 NWLR (pt.1446) 317, Thor Ltd. v. FCMB Ltd. (2005) 14 NWLR (pt.946) 969, Macaulay v. Merchant Bank Ltd. (1990) 4 NWLR (pt.144) 283, U.T.C. v. Pamotei (1989) 2 NWLR (pt.103) 244, Ifeanyichukwu v. O.C.B. Ltd. (2015) 17 NWLR (pt.789) 46.
In conclusion, I find no merit in the appeal and hereby dismiss it and affirm the decision of the Court below (Williams, J.) with N200,000.00 costs against the appellants in favour of the respondent.
?MOHAMMED LAWAL GARBA, J.C.A.: My learned brother Joseph Shagbaor Ikeyegh. JC. has fully considered and resolved the crucial issue in the appeal on whether the Appellant has any prima facie or good
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defence to the admitted debt of N15,000,000 owed to the Respondent, in the lead judgment which I read before now. I completely agree with the lead judgment that the Lower Court was right to have entered a Summary judgment in favour of the Respondent for the principal Sum of the loan granted to and utilized by the Appellant; which is though down with malaise, is not legally dead until it was formally dissolved by an order of a Court of competent jurisdiction. See Re: Amolegbe (2014) 8 NWLR (1408) 76; Spring Bank Plc. v. ACB Int. Bank. Plc. (2016) 18 NWLR (1544) 254.
I join in dismissing the appeal in all the terms of the lead judgment.
ABIMBOLA OSARUGUE OBASEKI-ADEJUMO, J.C.A.: I have had the opportunity to read in advance the lead judgment of my learned brother, JOSEPH SHAGBAOR IKYEGH, JCA and I agree with the reasoning and conclusion of my learned brother.
I also find the appeal unmeritorious and it is hereby dismissed. The decision of the High Court of Lagos state delivered by Williams, J is also affirmed. I abide by all other consequential orders in the lead judgment.
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Appearances:
Mr. R. SerikiFor Appellant(s)
Mr. U. AnekeFor Respondent(s)
Appearances
Mr. R. SerikiFor Appellant
AND
Mr. U. AnekeFor Respondent
