NIGERIAN BANK FOR COMMERCE AND INDUSTRY v. DAUPHIN NIGERIA LIMITED
(2010)LCN/3845(CA)
In The Court of Appeal of Nigeria
On Thursday, the 3rd day of June, 2010
CA/L/789/08
RATIO
JUDGMENT: REQUIREMENTS FOR A STAY OF EXECUTION BE VARIED BY AN APPELLATE COURT
The very essence of an order for deposit of judgment sum in an interest yielding account is to ensure that a successful party is not deprived of the fruits of the litigation. My learned brother Lokulo-Sodipe, JCA in Julius Berger Nig Plc v Daniel (2009) 31 W.R.N. 146 at 159 aptly expressed the following views:
“It is no doubt settled law that an appellate court such as this court will vary the conditions upon which a lower court has granted a stay of execution of judgment if the said conditions are shown to be onerous, oppressive, unwarranted, unreasonable, and/or punitive, In other words, an applicant seeking the variation of the terms or conditions upon which a lower court has granted a stay of execution of its judgment upon showing that the condition or conditions is/are onerous, oppressive, unwarranted, unreasonable, and/or punitive would have established compelling exceptional circumstances.” PER HUSSEIN MUKHTAR, J.C.A.
JUSTICES
CLARA BATA OGUNBIYI Justice of The Court of Appeal of Nigeria
RAPHAEL CHIKWE AGBO Justice of The Court of Appeal of Nigeria
HUSSEIN MUKHTAR Justice of The Court of Appeal of Nigeria
Between
NIGERIAN BANK FOR COMMERCE AND INDUSTRY Appellant(s)
AND
DAUPHIN NIGERIA LIMITED Respondent(s)
HUSSEIN MUKHTAR, J.C.A. (Delivering the leading Judgment) The appellant/applicant (hereinafter referred to as ‘the applicant’) has by a motion on notice dated and filed on the 7th April, 2009 sought for an order varying the conditions imposed by the Federal High Court Lagos (the court below) on stay of execution in respect of its judgment delivered on 4th August 2008, the subject of the pending appeal. The order for conditional stay of execution was granted by the court below in its ruling delivered by Ajakaiye, J. on 24th March, 2009 by depositing the judgment sum of Sixty Six million and Forty Thousand Naira (N66,040,000.00) with the Chief Registrar of the court below to be paid into an interest yielding account with a reputable bank pending the determination of the appeal.
The motion is supported by a seven-paragraph affidavit of even date, a further affidavit and a second further affidavit filed 27th May, 2009 and 25th February, 2010 respectively.
Arguing the motion on 8th March, 2010 the learned senior counsel for the applicant Omotayo Oyetibo. SAN relied on the three affidavits and urged the court to grant an unconditional stay of execution or alternatively order the filing of a bank guarantee in view of the large sum involved that could consequently annihilate the applicant. He also referred to the recondite issue of jurisdiction raised in the notice of appeal. Reliance was placed especially on paragraph 6 of the further affidavit filed 27th May, 2009 and paragraphs 5 and 6 of the second further affidavit filed on the 25th February, 2010. The said paragraph 6 of the further affidavit reads thus:
“6. Further to paragraph 6 of my affidavit of 7th April, 2009, I am informed by Mr. Emmanuel Onoji, the legal adviser of the appellant and I verily believe him that the appellant is seriously aggrieved by the judgment of the court below because:
a) The respondent’s claim in the court below arose out of an export contract executed between the respondent and Messrs Peacock Group Inc of Orlando Florida, U.S.A. whereby the respondent was to export some leather goods to the overseas buyers.
b) The appellant was not a party to the contract but only offered at the instance of the overseas buyers to issue a bank guarantee for the performance of the contract.
c) Despite the clear facts on the record that the appellant was not a party to the contract, the court below nevertheless awarded the sum of USD763000.00 or its Naira equivalent which is N6,040, 000.00 against the appellant for breach of the export contract.
d) The court below also awarded N5,000,000.00 as general damages against the appellant thereby giving the respondent double compensation.
e) The respondent’s claim in the court below was for the tort of negligence simpliciter which claim the Federal High Court has no jurisdiction to entertain.
f) The Court below failed to give the appellant a fair hearing in that the court shut its eyes against the crucial evidence led by the appellant in defence of the heads of claims of the respondent.
g) The appellant is a public institution established to assist, in particular, small and medium enterprises and businesses promoted by women.
h) The appellant is unable to pay the judgment debt because it has been experiencing financial difficulties in the last two years. It is however willing, able and ready to provide a bank guarantee to assure the respondent that the judgment debt would be paid if the appeal is unsuccessful.” (emphasis supplied)
In the second further affidavit the same deponent John Olayemi further averred in paragraphs 5 and 6 as follows:
“5. I have been further informed by Mr. Emmanuel Onoji, the legal adviser of the appellant on Wednesday 24th February, 2010 in a telephone conference with our office and I verily believe him that:
a) The appellant is incapacitated by the judgment of the court below in that the current financial situation of the appellant is such that the payment of the judgment debt in issue in this case would put the appellant out of operation which would consequently lead to the annihilation or destruction of the appellant.
b) Again by reason of the current economic and financial meltdown, if the appellant has to pay the judgment debt, it would lead to its insolvency.
c) It is in the interest of justice to grant the appellant’s application for stay in order to save the appellant from corporate death/annihilation before the appeal is determined.
6. further to paragraph 5 above, I verily believe that it would not be in the interest of justice to impose on the appellant a constitution that could lead to its corporate death when its appeal has a great chance of success.” (emphasis supplied)
The learned counsel for the respondent Dr. Joseph Abugu raised an objection and relied on the counter affidavit filed on the 27th May, 2009. There is however, no averment in the said counter affidavit of 25 paragraphs, denying either the averment in paragraph 6 of the further affidavit filed on 27th May, 2009 or the depositions in paragraphs 5 and 6 of the second further affidavit filed on 25th February, 2010. The court is therefore entitled to rely on them not only as uncontroverted but also as duly admitted by the respondent. The respondent’s counsel submitted that the applicant has failed to satisfy the conditions for variation of stay of execution. He relied on Julius Berger Nig Plc v Daniel (2009) 31 WRN 156. He said the applicant has not shown that the conditions granted by the court below were onerous, oppressive or unwarranted, He further relied on Igwe v Amuehukwu (2005) 10 N.W.L.R. (pt. 933) 420 at 422. He further contended that judgment sum should be paid into an interest yielding account as ordered by the court below. See Obayemi v Prince Aledo (2005) 25 W.R.N. 50.
The respondent’s counsel finally urged the court not to tamper with the exercise of the lower court’s discretion and to dismiss the application with substantial cost.
The genesis of the legal dispute between the applicant and the respondents which I think is a relevant critical factor to the determination of this application, was sequel to a contract for export of leather executed between the respondent and Messrs Peacock Groop Inc. of Orlando Florida, USA. The appellant acted as a guarantor for the oversea buyer and issued, in that respect, a bank guarantee for the performance of the contract. The court in the exercise of its discretion to grant or refuse an order for variation of conditional stay, will take into consideration the entire surrounding circumstances of the case. The conditions for the grant of the order as applied in the other cases cited by the respondent cannot be blindly transplanted in a straight jacketed manner irrespective of the peculiarities of the instant case. The right upon which the judgment against the appellant was entered in the court below was premised on a bank guarantee. I am of the view that there could hardly be a more deserving situation in which the judgment debt pending appeal could be secured by a similar guarantee than the instant one. Moreover, the appellant has further shown that it will be subjected to financial hardship capable of threatening its corporate existence to a state of complete annihilation if it has to deposit the entire judgment sum. These facts have been admitted by the respondent who has failed to controvert them. Furthermore the recondite issue raised in the notice of appeal is a factor worthy of consideration in the exercise of the court’s discretion to vary an order for stay of execution. My learned brother Niki Tobi, JCA (as he then was) in the case of Orient Bank Nig Plc v Bilante Int’l Ltd (1996) 5 NWLR (pt 447) 166 at 181 paras C-G observed as follows:
“Where the failure to grant an application for stay of execution will result in the complete annihilation or destruction of the applicant to the extent that it becomes non-existent, a court of law, as a court of equity, should be inclined and favourably disposed to granting of the application. This is the only way for the court to ensure that the applicant is alive to prosecute the appeal. If the court would preserve the res of litigation, it should be interested also that an appellant exists to prosecute his appeal, if the appellant is dead, the appeal will be rendered nugatory. In the light of the fact that the judgment debt in the present case is well above the equity paid up capital of the applicant, the applicant will suffer a corporate death if the court insists on payment of the judgment debt pending appeal.
A situation where the appellant suffers a corporate death because of poverty, a death which denies it of means of prosecuting the appeal, is not justice. This is a different situation from where the applicant is alleging poverty on the ground that he will not be able to pursue the appeal.”
The very essence of an order for deposit of judgment sum in an interest yielding account is to ensure that a successful party is not deprived of the fruits of the litigation. My learned brother Lokulo-Sodipe, JCA in Julius Berger Nig Plc v Daniel (2009) 31 W.R.N. 146 at 159 aptly expressed the following views:
“It is no doubt settled law that an appellate court such as this court will vary the conditions upon which a lower court has granted a stay of execution of judgment if the said conditions are shown to be onerous, oppressive, unwarranted, unreasonable, and/or punitive, In other words, an applicant seeking the variation of the terms or conditions upon which a lower court has granted a stay of execution of its judgment upon showing that the condition or conditions is/are onerous, oppressive, unwarranted, unreasonable, and/or punitive would have established compelling exceptional circumstances.”
The averment in the appellant’s affidavit that payment of the entire judgment sum into an interest yielding account could lead to its annihilation before the appeal is determined is a critical factor which the court has to consider along with the other critical factors in the exercise of its discretion to vary the conditional order for stay of execution granted by the court below. My learned brother Edozie, JCA in Nwanosike v Udosen (1993) 4 NWLR (pt. 290) 684 at 695 paras A-C made the following pronouncement:
“A ground or statement that an applicant would be unable to prosecute his appeal unless stay of execution is granted has been considered a good ground to justify the grant of stay of execution but a bare averment of this ground is unavailing in the absence of sufficient materials to convince the court of its truthfulness. In this application, the appellant in his counter affidavit deposed to facts which cast doubts on the respondent’s alleged poverty but there was no further affidavit by the respondent in rebuttal.”
An application to review the order for payment of judgment debt into an interest yielding account is not granted as a matter of course. However, the task or burden on the applicant is not to show exceptional circumstances why stay must be granted but rather why the conditionaI order for stay must be varied. It presupposes that the applicant had already established exceptional circumstances for stay of execution at the time when such order was granted. The applicant’s task at this stage is to show such compelling circumstances that would necessitate varying the earlier order for conditioned stay. The instant case originated from issuance of a bank guarantee. Moreover, the payment of the full judgment sum into an interest yielding account has been shown to be threatening the applicant’s existence before the appeal is determined These critical factors have shown circumstances compelling enough to vary the order for conditional stay of execution granted by the court below. The application succeeds and the order for conditional stay made by the court below on the 24th March, 2009 is hereby varied by requiring the applicant to provide a bank guarantee from a reputable commercial bank in Nigeria for the judgment sum of Sixty Six Million and Forty Thousand Naira (N6,040,000.00) in the stead of payment into an interest yielding account, which is friendly to both parties and risk-free. It is further ordered that the applicant shall comply with the variation order within thirty (30) days. I make no order as to cost.
CLARA BATA OGUNBIYI, J.C.A: In an application of this nature and where the order earlier made for conditional stay would as in the case at hand work total extermination of the applicant, the justice of the appeal would not therefore be served due to inability to prosecute. In the circumstance, I agree with the lead ruling by my brother Hussein Mukhtar JCA that the order to review the payment of judgment debt into an interest yielding account should be varied and rather that the applicant should provide a bank guarantee as per the order made in the lead ruling; I further make an order that the compliance should be made within 30 days of the ruling.
RAPHAEL CHIKWE AGBO, J.C.A: I have read before now the lead ruling written and delivered by my learned brother Mukhtar, JCA and I agree that there is merit in the application. I also allow the application and abide by the consequential orders made in the lead ruling.
Appearances
Omotayo Oyetibo, SAN
(with him) 1. John Aga
and 2. Toyosi KuteyiFor Appellant
AND
Dr. Joseph Abugu
(with him) 1. Austin I. Ogbodo
and 2. I. Olatinbosum. MrsFor Respondent
