ORIENTAL ENERGY RESOURCES LTD v. HERCULES OFFSHORE (NIG) LTD
(2020)LCN/15372(CA)
In The Court Of Appeal
(LAGOS JUDICIAL DIVISION)
On Friday, September 25, 2020
CA/L/1312/2018
RATIO
WORDS AND PHRASES: CONTRACT OF GUARANTEE
A contract of guarantee is a collateral contract by which a promisor undertakes to answer for the debt, default or miscarriage of another as distinguished from an original and direct contract for the promisor’s own act. By the letters of comfort, the Appellant gave an undertaking to be responsible if Afren failed to pay the Respondent. Afren having failed to pay, the Appellant became liable for the debt owed to the Respondent. See ROYAL EXCHANGE ASSURANCE (NIG) LTD vs. ASWANI TEXTILE IND. LTD (1992) LPELR (2960) 1 at 18, CHAMI vs. UBA PLC (2010) LPELR (841) 1 at 32 and NWANKWO vs. ECUMENICAL DEVELOPMENT CO-OPERATIVE SOCIETY (2007) LPELR (2108) 1 at 41-42. PER UGOCHUKWU ANTHONY OGAKWU, J.C.A.
PLEA OF ESTOPPEL: WHETHER A PLEA OF ESTOPPEL CAN SOLELY GIVE RISE TO A CAUSE OF ACTION
Now, although the plea of estoppel, generally, is a shield for the protection of a defendant, it has also been settled that it can never stand alone as giving a cause of action in itself to a claimant. Accordingly, the plea cannot do away with the necessity to prove consideration in law where that is an essential part of a claimant’s cause of action. In that sense, it can be validly employed as a sword by a claimant in appropriate cases. See ABALOGU vs. SPDC (NIG) LTD (2003) LPELR (18) 1 at 30, ODJEVWEDJE vs. ECHANOKPE (1987) 1 NWLR (PT 52) 633 or (1987) 2 NSCC 313 at 370, CHINWENDU vs. MBAMALI (1980) 3-4SC 31 at 48 and ADAMS vs. FASASI (2018) LPELR (44379) 1 at 19-20. PER UGOCHUKWU ANTHONY OGAKWU, J.C.A.
JURISDICTION OF COURT: WHETHER A COURT HAS JURISDICTION TO RAISE AN ISSUE SUO MOTU
By all odds, it is rudimentary law that a Court has no jurisdiction to raise an issue suo motu and unilaterally resolve it without hearing the parties, particularly the party that may be adversely affected by the issue raised: OSHODI vs. EYIFUNMI (2000) 13 NWLR (PT 684) 298 at 332, MOJEKWU vs. IWUCHUKWU (2004) LPELR (1903) 1 at 25 and LEADERS & COMPANY LTD vs. BAMAIYI (2010) LPELR (1771) 1 at 11-12. Let me festinate and state that the need to hear parties on an issue raised suo motu is not imperative where the issue raised suo motu goes to the jurisdiction of the Court. See OMOKUWAJO vs. FRN (2013) 9 NWLR (PT 1359) 300 at 332, ALIMS LTD vs. UBA (2013) 1 MJSC (PT 1) 156 at 170 and OLUTOLA vs. UNIVERSITY OF ILORIN (2005) ALL FWLR (PT 245) 1154. PER UGOCHUKWU ANTHONY OGAKWU, J.C.A.
CONTRACT LAW: INGREDIENTS OF A VALID AND LEGALLY ENFORCEABLE CONTRACT
The law is settled beyond peradventure that in the construction of documents, the words therein should first be given their simple and ordinary meaning. See UNION BANK vs. SAX (NIG) LTD (1994) LPELR (3390) 1 at 18-19. Put differently, where the words of a contract or agreement are clear, the words should be given their plain, simple, literal and natural meaning. See BERLIET NIG LTD vs. KACHALLA (1995) 12 SCNJ 147, OWENA BANK vs. NIGERIA STOCK EXCHANGE (1997) 8 NWLR (PT 315) 15 and AMASIKE vs. THE REGISTRAR-GENERAL, CAC (2010) LPELR (456) 1 at 47. The words employed in the letters of comfort are plain, simple and should therefore be given their ordinary, literal, natural and grammatical meaning.
For a valid and legally enforceable contract to come into existence, the following essential elements must be present:
a) A precise and definite offer,
b) An unqualified and unconditional acceptance,
c) Intention to create a legal relationship,
d) Consideration, and
e) Legal capacity to contract.
See TSOKWA MOTORS NIG. LTD vs. UBN LTD (1996) 9 NWLR (PT 471) 129, TSOKWA OIL MARKETING CO. LTD vs. B.O.N. (2002) 5 SCNJ 176 and YARO vs. AREWA CONSTRUCTION LTD (2007) 17 NWLR (PT 1063) 333. The elements of a valid and enforceable contract canvassed by the parties in this appeal are acceptance and consideration. PER UGOCHUKWU ANTHONY OGAKWU, J.C.A.
Before Our Lordships:
Mohammed Lawal Garba Justice of the Court of Appeal
Joseph Shagbaor Ikyegh Justice of the Court of Appeal
Ugochukwu Anthony Ogakwu Justice of the Court of Appeal
Between
ORIENTAL ENERGY RESOURCES LIMITED APPELANT(S)
And
HERCULES OFFSHORE NIGERIA LIMITED RESPONDENT(S)
UGOCHUKWU ANTHONY OGAKWU, J.C.A. (Delivering the Leading Judgment): The provenance of this appeal is in the charter party agreement between the Respondent and Afren Resources Limited (hereinafter Afren) for the hire of the Respondent’s Vessel, the MV Bullray, for use at the Ebok Field. Afren fell into hard times and was unable to pay the cost of the hire of the Vessel; whereupon the Appellant herein, the joint venture partner of Afren issued two letters of comfort to the Respondent, guaranteeing the payment of the debt owed by Afren, in order to guarantee the continuity of the Ebok Field project and to avoid any delay or disruption to the conduct of operations.
The Appellant failed to honour its guarantee, consequent upon which the Respondent instituted proceedings before the Federal High Court, which action was later transferred to High Court of Lagos State in SUIT NO. LD/437CMW/2018: HERCULES OFFSHORE NIGERIA LIMITED vs. ORIENTAL ENERGY RESOURCES LIMITED. The Respondent claimed the following reliefs:
a. A DECLARATION that the Letters of Comfort dated 16 April 2015 and 29 July 2015 both issued by the Defendant to the Claimant in respect of the debts owed by with [sic] Afren Resources Limited to the Claimant under the Uniform Time Charter Party with Code Name ‘Supplytime 89’ dated 24 February 2014 between the Claimant and Afren Resources Limited for the charter of the vessel known as the MV Bullray constitute a Contract of Guarantee between the Claimant and the Defendant.
b. A DECLARATION that under the Contract of Guarantee, the Defendant is liable to pay the debts owed to the Claimant by Afren Resources Limited within the relevant time period stated in the Letters of Comfort in the event of a default by Afren Resources Nigeria Limited and that Defendant is estopped from reneging on its promises/assurances the Claimant had relied upon to its detriment.
c. AN ORDER OF THIS HONOURABLE COURT granting judgment against the Defendant in the sum of $7,955,954.95(Seven Million, Nine Hundred Fifty-Five Thousand, Nine Hundred and Fifty-Four United States Dollars, Ninety-Five Cents) being the total principal sum payable by the Defendant under the Letters of Comfort dated 16 April 2015 and 29 July 2015 between the Claimant and the Defendant with respect to the debts of Afren Resources Limited under the Uniform Time Charter Party Code Name ‘Supplytime 89’ dated 24 February, 2014 between the Claimant and Afren Resources Limited for the charter of the vessel known as the MV Bullray. Afren Resources Limited under the Uniform Time Charter Party with Code Name ‘Supplytime 89’ dated 24 February, 2014 between the Claimant and Afren Resources Limited for the charter of the vessel known as the MV Bullray.[sic]
d. AN ORDER OF THIS HONOURABLE COURT granting judgment against the Defendant in the sum of $1,215,758.59 (One Million, Two Hundred and Fifteen Dollars, [sic] Seven Hundred and Fifty Eight Dollars, Fifty Nine Cents) being accrued interest on the outstanding sums as at 1 February, 2018 based on the agreed interest rate of 5% per annum and pre-judgment interest on the outstanding sum at the same rate of 5% from 22 January 2016 up until the date of judgment.
e. AN ORDER OF THIS HONOURABLE COURT granting post-judgment interest at the rate of 10% per annum from the date of judgment until the judgment debt is finally liquidated.
Subsequently, on 29th June, 2018 the Respondent filed a motion for summary judgment pursuant to the Order 11 Procedure of the High Court of Lagos State (Civil Procedure) Rules, 2012. The Respondent sought the following reliefs on the motion:
1. AN ORDER ENTERING FINAL JUDGMENT in favour of the Appellant in the sum of $7,955,945.95 (Seven Million, Nine Hundred and Fifty-Five Thousand, Nine Hundred and Forty-five United States Dollars, Ninety- Five Cents) being the total principal sum payable by the Defendant under the contracts of guarantee dated 16 April 2015 and 29 July 2015 between the Claimant and the Defendant with respect to the debts of Afren Resources Limited under the Uniform Time Charter Party with Code Name ‘Supplytime 89’ dated 24 February, 2014 between the Claimant and Afren Resources Limited for the charter of the vessel known as the MV Bullray.
2. Interest on the outstanding sums in the sum of $1,215,758.59 (One Million, Two Hundred and Fifteen Dollars, [sic] Seven Hundred and Fifty Eight Dollars, Fifty Nine Cents) as at 1 February, 2018 based on the agreed interest rate of 5% per annum and pre-judgment interest on the outstanding sum at the same rate of 5% from 22 January 2016 up until the date of judgment.
3. Post judgment interest at the rate of 10% per annum from the date of judgment until the judgment debt is finally liquidated.
The parties filed and exchanged affidavits as well as written addresses on the said motion. The lower Court took argument on the application and in its judgment, it granted the application in terms of the reliefs claimed by the Respondent in the application. The Appellant being dissatisfied with the judgment of the lower Court appealed against the same. The judgment of the lower Court which was delivered on 4th October 2018 is at pages 998-1009 of Volume II of the Records, while the extant Notice of Appeal on which the appeal was argued was filed on 11th October 2018 and it is at pages 1033-1039 of Volume II of the Records.
The two-Volume Records of Appeal were compiled and transmitted and the parties filed and exchanged briefs of argument. At the hearing of the appeal, the learned counsel for the parties urged the Court to uphold their respective submissions in the determination of the appeal.
The Appellant’s brief of argument was filed on 3rd December 2018, wherein four issues were formulated for determination, videlicet:
i. WHETHER THE LOWER COURT WAS RIGHT WHEN IT HELD THAT THE COMFORT LETTERS DATED APRIL 16, 2015 AND JULY 29, 2015 RESPECTIVELY, ISSUED BY THE APPELLANT TO THE RESPONDENT, AMOUNTED TO AN ENFORCEABLE CONTRACT OF GUARANTEE, IN VIEW OF THE FACT THAT THE ESSENTIAL ELEMENTS OF A VALID CONTRACT WERE ABSENT IN THE SAID LETTERS? (DISTILLED FROM GROUND ONE [1])
ii. ASSUMING WITHOUT CONCEDING THAT THE COMFORT LETTERS DATED APRIL 16, 2015 AND JULY 29, 2015 RESPECTIVELY CONSTITUTE AN ENFORCEABLE CONTRACT OF GUARANTEE, WAS THE LOWER COURT RIGHT IN HOLDING THAT THE RESPONDENT FULFILLED THE CONDITIONS PRECEDENT STIPULATED IN THE SAID LETTERS, ESPECIALLY IN VIEW OF THE UNCONTROVERTED EVIDENCE ESTABLISHING THAT THE RESPONDENT WAS NO LONGER OPERATING ON THE EBOK FIELD, AS THE TIME CHARTER HAD EXPIRED AND A RE-DELIVERY NOTE DULY EXECUTED? (DISTILLED GROUND THREE [3])
iii. WHETHER THE LOWER COURT BREACHED THE APPELLANT’S RIGHT OF FAIR HEARING WHEN: (A) IT DECIDED SUO MOTU AND WITHOUT INVITING ARGUMENTS FROM BOTH PARTIES, THAT THE COMFORT LETTER DATED JULY 29, 2015 PREVAILS AND SUBSUMED THE COMFORT LETTER DATED APRIL 16 2015; AND (B) IT HELD THAT THE RESPONDENT WAS ON THE EBOK FIELD WHEN THE COMFORT LETTERS WERE ISSUED BY THE APPELLANT, IN VIEW OF UNCHALLENGED EVIDENCE ADDUCED BY THE APPELLANT TO THE CONTRARY? (DISTILLED FROM GROUND TWO[2])
iv. WHETHER THE LOWER COURT WAS RIGHT TO HAVE ENTERED SUMMARY JUDGMENT AGAINST THE APPELLANT, THEREBY SHUTTING THE APPELLANT OUT, IN VIEW OF THE CONFLICTING AVERMENTS OF THE PARTIES ON CRUCIAL POINTS AND THE PROSPECTS OF SUCCESS OF THE APPELLANT’S DEFENCE? (DISTILLED FROM GROUND FOUR [4])
The Appellant further filed a Reply Brief on 21st January 2019.
In the Respondent’s brief of argument which was filed on 3rd January 2019, three issues were distilled for determination, scilicet:
a. Whether the Lower Court rightly held that the Letters of Comfort dated 16th April 2015 and 29th July 2015 issued by the Appellant to the Respondent are valid contracts of guarantee which are enforceable by the Respondent? Distilled from Grounds 1 and 3 of the Notice of Appeal.
b. Did the Lower Court raise and decide any issues suo motu? Distilled from Ground 2 of the Notice of Appeal.
c. In view of the ‘defence’ filed by the Appellant, was the Lower Court right to have entered summary judgment in favour of the Respondent? Distilled from Ground 4 of the Notice of Appeal.
Even though the issues crafted by the parties do not agree in terms of numbers, the said issues are the same two and tuppence as the Respondent’s issue number one is an amalgam of the Appellant’s issue numbers one and two. In the circumstances, I will presently review the submissions of learned counsel on the issues as nominated by them and thereafter resolve the appeal ensemble.
SUBMISSIONS OF THE APPELLANT’S COUNSEL
In argument of its issue number one, the Appellant referred to the case ofEMORI vs. ESUKU (2012) LPELR-9797 on the definition of a contract and the elements of a valid contract as set out inJEGEDE vs. MAYOR ENGINEERING CO. LTD (2013) LPELR-20284. It was stated that the Respondent did not accept the offer made in the letters of comfort and therefore there was no valid contract vide UTB (NIG) LTD vs. AJAGBULE (2006) 2 NWLR (PT965) 447 at 481 and RABILU vs. USMAN (2016) LPELR-40233 (CA) at 51-53. It was asserted that the Respondent’s case that it put the Vessel on standby did not constitute acceptance of the offer to continue operations on the Ebok field, but was a counter offer.
It was further contended that the Respondent did not furnish consideration as the Vessel had been re-delivered to the Respondent prior to the letters of comfort. It was maintained that there being no acceptance and consideration, there was no valid contract. The lower Court, it was opined, relied on speculation that the Respondent threatened to terminate the contract in holding that there was an enforceable contract, as the resumption of performance was consideration. The Courts, it was added, are to refrain from speculation. The cases of ORHUE vs. NEPA (1998) 7 NWLR (PT 557) 187 and IHEWUEZI vs. EKEANYA (1989) 1 NWLR (PT 96) 232 were relied upon.
On its second issue, the Appellant submits that a contract which is subject to a condition precedent being fulfilled can only be enforced where the condition precedent has been satisfied vide NIGER CLASSIC INVESTMENT LTD vs. UACN PROPERTY DEVT CO. PLC (2016) LPELR-41426 (CA) and BEST (NIG) LTD vs. BLACKWOOD HODGE (NIG) LTD (2011) 5 NWLR [no part supplied] 95 or (2011) LPELR – SC.31/1999.
It was asserted that the Respondent did not satisfy the conditions precedent stated in the letters of comfort, id est, not terminating operations at Ebok field and “should all else fail with Afren’s efforts”. It was stated that the time charter had lapsed by effluxion of time and a Re-Delivery Note executed by the parties in respect of the Vessel before the letters of comfort were written.
It was argued that the Respondent never stated that it continued operations but merely averred that the Vessel was on standby. All the invoices, it was posited, were issued to Afren and they were for services rendered before the letters of comfort. It was contended that services rendered before the letters of comfort were past consideration which is no consideration for a contractual promise. The cases of AKENZUA II, OBA OF BENIN vs. BENIN DIVISIONAL COUNCIL (1959) WRNLR 1 and BARCLAYS BANK vs. OKOTIE-EBOH (1972) NCLR 174 were cited in support. It was maintained that in the light of the Re-Delivery Note for the Vessel, the finding of the lower Court that the Respondent was on Ebok field when the letters of comfort were issued, was not borne out by the evidence and therefore perverse.
On the second condition precedent, the Appellant contended that the Respondent did not make any claim against Afren or a Creditor’s claim on Afren’s winding-up. The lower Court, it was stated, was therefore wrong in holding that it was a futile exercise to make any claim on a company being wound up which cannot pay its debt; since Afren still retained its legal existence as a going concern until dissolved after a full winding up. The case of OREDOLA TRADING CO. vs. BCCI (2014) LPELR – SC. 96/2003 was relied upon. It was submitted that the failure of the Respondent to lodge any claim with Afren’s liquidators was a breach of the condition precedent that “should all else fail with Afren’s efforts.”
The Appellant’s submission on its third issue is that a Court should not raise an issue suo motu and resolve it without hearing from the parties. The cases of OBAWOLE vs. WILLIAMS (1996) 10 NWLR (PT 477) 146 or (1996) LPELR –SC. 198/1990 and EAGLE SUPER PACK (NIG) LTD vs. ACB PLC (2006) 19 NWLR (PT.1013) 20 at 39 were called in aid. It was stated that the decision of the lower Court that the second letter of comfort subsumed the first letter of comfort was not raised by the parties and that the lower Court raised it in its judgment and decided the same without hearing the parties.
It was further contended that the failure of the lower Court to consider the Appellant’s evidence on the Re-Delivery Note that the Vessel had been returned to the Respondent, and so the Respondent was no longer at Ebok field, was a breach of the Appellant’s right to fair hearing vide PAM vs. MOHAMMED (2008) LPELR –SC. 238/2007 or (2008) 16 NWLR (PT 1112) 1 at 58, EJEKA vs. THE STATE (2003) 7 NWLR (PT 819) 408 or (2003) LPELR –SC. 258/2001 and SHEKETE vs. NAF (2007) 14 NWLR (PT 1053) 159 at 190-191. The Court was urged to set aside the decision reached in breach of fair hearing by the lower Court.
The contention of the Appellant on its fourth issue is that summary judgment is not available where the defendant has disclosed a prima facie defence, a triable issue and that a complete defence need not be shown at that stage. The cases of N.C.M.B. (NIG) LTD vs. OBI (2010) 14 NWLR (PT 1213) 169, UBA vs. ARIBISALA (2016) LPELR -40353 (CA) and OKAMBAH vs. SULE (1990) LPELR 2422 or (1990) NWLR [no volume stated](PT 160) 1 were relied upon.
It was further submitted that where there are material conflicts in the affidavits and which requires the claimant to make some explanation, a plenary trial should be ordered vide G.M.O. NWORAH & SONS CO. LTD vs. AKPUTA (2010) ALL FWLR (PT 524) at pp 101-102. It was maintained that the Appellant disclosed sufficient defence to provide adequate answer to the Respondent’s claim and that the lower Court was wrong to enter summary judgment for the Respondent, instead of ordering a plenary trial.
The Appellant asserted that where conflicts in affidavits cannot be resolved by documentary evidence, the Court is to call oral evidence to resolve the conflict. The case of FALOBI vs. FALOBI (1976) LPELR SC 112/75 was referred to. It was opined that the lower Court was wrong to have relied on NWOSU vs. IMO STATE ENVIRONMENTAL SANITATION AUTHORITY (1990) 2 NWLR (PT 135) 717 and used documents to resolve the conflict, when all the Appellant needed to show was a defence with prospects of success and not a defence on the merit. The cases of AKINSETE vs. AKINDUTIRE (1966) 1 ANLR 147, UNION BANK vs. AWMAR PROPERTIES LTD (2018) LPELR-44376 (SC), MACAULAY vs. NAL MERCHANT BANK (1990) LPELR-1801 (SC) and JACOB’S vs. BOOTH’S DISTILLERY COMPANY (1901-2) VOLUME 85 N.S. were referred to.
It was asserted that the interpretation of the letters of comfort was substantial enough to show that the essential elements of a contract were not present and that the conditions precedent were not fulfilled. It was conclusively submitted that the lower Court should have, pursuant to Order 11 Rule 5 of the High Court of Lagos State (Civil Procedure) Rules jettisoned the summary judgment procedure in favour of a plenary trial, since the Appellant had disclosed a good defence.
SUBMISSIONS OF THE RESPONDENT’S COUNSEL
Arguing the first issue it distilled, the Respondent referred to the elements of a valid contract and submitted that the lower Court rightly held that the letters of comfort were valid and enforceable contracts of guarantee since there was acceptance and consideration, which are the elements in issue. The case of OGUNNIYI vs. HON. MIN OF FCT (2014) LPELR -23164 was referred to. It was submitted that the letters of comfort were unilateral contracts made by the Appellant, for which consideration on the part of the Respondent is actual performance, which the Respondent furnished by not terminating operations, making the Vessel available and effecting the technical modifications to the Vessel requested by the Appellant. The case of AMANA SUITES HOTELS LTD vs. PDP (2006) LPELR -11675 (CA) was relied upon.
It was asserted that the Respondent’s compliance with the terms of the letters of comfort was acceptance of the offer made in the letters of comfort, which was acceptance by conduct vide AMANA SUITES HOTELS LTD vs. PDP (supra) and BFIG vs. BPE (2008) ALL FWLR (PT 416) 1915 at 1936-1937. The Respondent maintained that the terms of the time charter required the Respondent to mobilize the Vessel and put it on standby for the duration of the contract. The definition of Time Charter on page 285 of Black’s Law Dictionary, 10th Edition, was called in aid.
The case of OYEWALE vs. LAWAL (2008) LPELR -4118 was referred to on the meaning of consideration and it was iterated that the Respondent furnished consideration by not terminating operations and continued to render services by making the Vessel available and making the Technical modifications requested by the Appellant. It was asserted that the lower Court properly evaluated the evidence and did not make perverse findings, in consequence of which an appellate Court will not interfere. It was further stated that based on the letters of comfort, the Respondent refrained from enforcing its legal rights to sue, which forbearance to sue constitutes sufficient consideration for a contract of guarantee vide ABIODUN vs. AJISAFE (2018) LPELR – 43879.
Without necessarily conceding that it did not furnish consideration, the Respondent stated that even if no consideration was furnished, promissory estoppel could be used to link the letters of comfort with the underlying contract. Section 169 of the Evidence Act, 2011 and the cases of BARCLAYS BANK OF NEW YORK vs. GOLDMAN 517 F SUPP 403 SNDY [1981], DRENNAM vs. STAR PAVING CO. 51 Cal. 2d 409 [1958] and ABALOGU vs. S.P.D.C. LTD (2003) 13 NWLR (PT 837) 309 were cited in support.
The Respondent further submitted that a document speaks for itself and that where a Court draws inferences from words used in a document, it does not amount to speculation vide OTITO vs. ODIDI (2010) NWLR [no volume stated](PT 1245) 108. The Respondent asserted that the consideration it furnished was not past consideration since by the nature of a contract of guarantee the creditor is promised that the guarantor will be responsible for the principal debt, the existing and future obligations to the creditor, if the principal debtor fails to perform his obligation. The consideration, it was further stated, was not past consideration because it would have terminated the operations at Ebok field, if not for the letters of comfort. The cases of OLAM (NIG) LTD vs. INTERCONTINENTAL BANK LTD (2009) LPELR -8275 and SANUSI vs. DANIYAN (1973) 5 SC (Reprint) 128 were referred to.
It was posited that the Respondent fulfilled the conditions precedent in the letters of comfort as it did not terminate its services at Ebok field. It was stated that consequent upon the Re-Delivery Note, a fresh charter was agreed upon and the Vessel was re-imported vide the Customs Temporary Importation Permit (T.I.P.) before the first letter of comfort was written. On the second condition precedent of the phrase “should all else fail…”, it was stated that it was non-existent as a condition since it was not in the second letter of comfort which superseded the first letter of comfort as rightly held by the lower Court.
It was maintained that even if such a condition existed, that the Respondent complied with the same since its literal interpretation meant that the Appellant would pay should Afren fail in its efforts to pay. It was asserted that by the letters of comfort, the Respondent did not have to make a claim on Afren’s liquidators or partake in the winding-up of Afren before it can have recourse to the Appellant’s guarantee. It was opined that it was not for the Appellant to circumscribe how the Respondent is to exercise its right to recover the debt owed to it. The case of R-BENKAY NIG LTD vs. CADBURY NIG LTD (2012) 9 NWLR (PT 1306) 596 at 624 was relied upon.
The Respondent’s contention on the second issue it distilled is that the Appellant was given every opportunity to present its case and that there was no denial of its right to fair hearing. The cases of ASUQUO vs. ESHIET (2008) ALL FWLR (PT 401) 970 at 983 and AIRTEL LTD vs. AGWALEMERE (2018) LPELR – 44814 were referred to. It was opined that the fact that the documents placed before the lower Court were not interpreted in favour of the Appellant cannot found an allegation of breach of fair hearing.
It was submitted that where a case is largely documentary, the inferences drawn from the documents by a Court and the findings made are not raising issue suo motu vide TANGALE TRADITIONAL COUNCIL vs. FAWU (2001) 17 NWLR (PT. 742) 301 at 335-336. It was stated that the parties were well aware of the documents on which they founded their cases, therefore the evaluation and analysis of the documents by the Court cannot be raising issue suo motu, but a discharge by the Court of its duty. The cases of OYEWINLE vs. IRAGBIJI (2012) LPELR-9328 and REV. KING vs. THE STATE (2016) LPELR -40046 were cited in support.
It was further submitted that a Court need not specifically express the weight and consideration given to each document put in evidence and so the Appellant cannot be heard to contend that the lower Court did not consider the Re-Delivery Note vide OKUMAGBA vs. EKE (2009) 16 NWLR (PT 1166) 1. It was further stated that the Re-Delivery Note was not in contention since the cause of action arose from the letters of comfort which were issued after the Re-Delivery Note. It was consequently opined that considering the Re-Delivery Note would have been a waste of judicial time, especially when there was evidence of re-importation of the Vessel thereafter and the real issue in controversy were the letters of comfort. The Courts, it was maintained, do not waste precious judicial time on an academic exercise. The case of AMAH vs. NWANKWO (2008) ALL FWLR (PT.411) 879) at 895 was called in aid.
The quiddity of the Respondent’s submission on the third issue it crafted, is that the Appellant did not disclose a prima facie defence and that the lower Court was right to enter summary judgment against it. The case of OBASANJO FARMS (NIG) LTD vs. MUHAMMED (2016) LPELR -40199, RESORT SAVINGS & LOAN LTD vs. SKYE BANK PLC (2015) 17 NWLR (PT 1488) 225 at 241-242 and EJIDIKE vs. OGUEJIOFOR (2007) WRN (VOL.44) at 156-157 were referred to. It was stated that the Respondent’s claim was a liquidated money demand, but that under the Order 11 procedure of the High Court of Lagos State (Civil Procedure) Rules, 2012, summary judgment was no longer limited to liquidated money claims vide ‘The Blue Book 2013- A Practical Approach to the High Court of Lagos State Civil Procedure Rules 2012, 3rd Ed., Ecowatch Publications, Dr. Muiz Banire, SAN et. al.’
The case of JOHNNY vs. EDOJA (2007) ALL FWLR (PT 365) 527 at 544 was referred to on the meaning of liquidated money demand and MAJA vs. SAMOURIS (2002) 7 NWLR (PT 765) 78. It was asserted that since the Appellant did not disclose a defence, the lower Court was correct in entering summary judgment, which was a judgment on the merits, as there was no need for a plenary trial. The case of NASCO TOWN PLC vs. NWABUEZE (2014) LPELR -22526 (CA) was relied upon. It was maintained that the Appellant was not shut out since the stipulations of Order 11 Rule 4 of the Rules of the lower Court were complied with and the Appellant filed its processes, only that the decision of the Court was against it. The case of AGBABIAKA vs. FIRST BANK (2006) LPELR-11756 (CA) was cited in support.
The Respondent conclusively submitted that the lower Court was right by using the documents to resolve the conflicts in the affidavits, thus showing that it was unnecessary to conduct a plenary trial videLSDPC vs. ADOLD STAMM INTERNATIONAL NIG LTD (2005) 2 NWLR (PT 910) 603 at 621.
APPELLANT’S REPLY ON LAW
The Appellant submits in the Reply Brief that claims suitable for summary judgment are claims that can be ascertained in exactitude or by mathematical calculation and not claims that are devious, crafty or open to conjecture. The cases of UBA vs. JARGABA (2007) 11 NWLR (PT 1045) 247 and OKAMBAH vs. SULE (supra) were referred to. It was maintained that it is not every sort of claim that can be subject of summary judgment and that the Courts always set aside decisions which are not fitting for the summary judgment procedure vide NASCO TOWN PLC vs. NWABUEZE (supra) and MAJA vs. SAMOURIS (supra).
It was argued that the Respondent’s case cannot be established without first proving that the condition in the letters of comfort were met. Furthermore, that the amount purportedly due as stated in the Time Charter and the Invoices issued would have availed the Respondent if the action was against Afren, as opposed to the Appellant, which was not privy to the documents.
The Appellant posited that promissory estoppel was not pleaded and so cannot avail the Respondent, more so, when estoppel is used as a shield and not a sword. The cases of AJIDE vs. KELANI (1985) LPELR –SC. 76/1984 or (1985) NWLR [no volume stated](PT 12) 248 and BULET INTERNATIONAL NIGERIA LTD vs. BALOGUN (2001) LPELR –CA/K/155/97 were referred to. It was said that even if promissory estoppel would apply, that there was nothing in the evidence to show that the conditions precedent in the letters of comfort were met, more so, as there was no existing contractual relationship between the parties prior to the letters of comfort. The cases of CENTRAL LONDON PROPERTY TRUST LTD vs. HIGH TREES HOUSE LTD (1947) KB 130 was relied upon. The Appellant further contended that the Respondent cannot raise new/fresh points not made at the lower Court when leave was not granted for that purpose vide IDUNG vs. COP (2017) LPELR–CA/C/71/2015.
It is the further submission of the Appellant that in a unilateral contract, there can only be consensus ad idem where the offeree performs the exact act stipulated by the offeror, which is not so in this case and the Respondent can therefore not be said to have accepted the offer and that in the absence of evidence that the Time Charter was renewed after the termination by the Re-Delivery Note, there cannot be any acceptance by conduct.
It was also submitted that consideration by forbearance did not avail the Respondent since the Appellant did not admit owing the Respondent or contract with the Respondent to forebear, but merely sought to provide the Respondent comfort in respect of Afren’s debt. It was opined that nothing in the letters of comfort shows an earlier threat to terminate operations and that the finding of the lower Court in that regard was perverse and ought to be set aside. The case of ATOLAGBE vs. SHORUN (1985) NWLR [no volume stated] (PT 2) 360 or (1985) LPELR–SC. 14/1984 was called in aid. The rest of the submissions in Appellant’s Reply Brief are a repetition and rehash of the arguments earlier ventilated in the Appellant’s Brief. It would therefore be inutile to review them again.
RESOLUTION
As earlier indicated, this appeal was spawned by the application for summary judgment which was granted by the lower Court. Let me start with a broad overview of the general principles governing proceedings under the summary judgment procedure. By Order 11 of the High Court of Lagos State (Civil Procedure) Rules, 2012, a defendant served with originating processes alongside a motion for summary judgment is enjoined, where he intends to defend the suit, to file a statement of defence and other processes. Where the defendant files his processes, the Court has a duty to consider the same to see if he has disclosed a good defence and ought to be permitted to defend the claim. Although the Court is imbued with the discretion on whether to permit the defendant to defend the claim where he has a good defence, in exercising this discretion the Court has a duty to consider the affidavits filed by both parties. See BEFAREEN PHARMACY LTD vs. A.I.B. LIMITED (2005) 17 NWLR (PT 954) 230 at 233.
The object of the procedure under Order 11 for summary judgment is to ensure the speedy disposal of cases where the matter is straightforward, uncontested and incontestable. It is often employed in claims for a debt or liquidated money demand and it is a truncated form of civil hearing to ensure quick dispatch of cases where there is no good defence to the claimant’s claim. See UBA PLC vs. JARGABA (2007) 11 NWLR (PT 1045) 247 at 272, BON LTD vs. INTRA BANK SA (1969) 1 All NLR 91 and OSIFO vs. OKOGBO COMMUNITY BANK (2006) 15 NWLR (PT 1002) 260 at 278. It is designed to relieve the Courts of the rigour of pleadings and burden of hearing tedious evidence on sham defences mounted by defendants who have no defence and are just determined to dribble and cheat claimants out of reliefs they are normally entitled to. See PLANWELL WATERSHED LTD vs. OGALA (2003) 12 S.C. (PT II) 39 at 43-44 or (2003) 18 NWLR (PT 852) 478. Where the matter is straightforward and incontestable, the Court proceeds to enter judgment for the claimant as stipulated in Order 11 without embarking upon a plenary trial and calling upon the claimant to formally prove his case by calling witnesses. But the summary judgment procedure is not a procedure for denying the defendant a right to defend the claim against him, if he has a defence thereto. See NIGERIAN COTTON SEED CO. LTD vs. CELTIC COMMERCE & IND. LTD (2002) 1 WRN 67 at 75. Therefore the speedy disposal of a case under the summary judgment procedure is short-circuited where the defendant is able to disclose a good defence, in which case the Court is bound to grant the defendant leave to defend the suit and conduct a plenary trial. What then is a good defence, which in earlier incarnations of the adjectival law has been referred to as a defence on the merit, which a defendant has to disclose to entitle him to be granted leave to defend?
It seems to me that a good defence or defence on the merit is an issue raised by way of defence, which is prima facie plausible and would necessitate the Court to require further explanation from the claimant. It is a triable issue. See JOS NORTH LG vs. DANIYAN (2000) 3 WRN 60; FMG vs. SANI (1990) 4 NWLR (PT 147) 688 at 699. At page 286 of the book, “The Nigerian Judge” the learned author, Hon. Justice Niki Tobi, gave the following instances of what would constitute triable issues. He stated:
“The following situations then postulate triable issues, for example (a) where there are difficult points of law involved in the issues raised; (b) where there are disputes as to facts which ought to be tried; (c) where there are disputes as to the amount due to the party making a claim which would necessitate taking an account to determine the amount; or (d) where there are reasonable grounds or a fair probability of a bona fide counter-claim.”
In GOD’S LITTLE TANNERY vs. NWAIGBO (2005) 7 NWLR (PT 924) 298 at 332, Ba’aba, JCA stated:
“… [T]he triable issue envisaged should not be at large but related to the Defendant’s defence. Defence, in my respectful opinion, are facts which, if proved, would exonerate the Defendant from the Plaintiff’s claim. The affidavit is required to set up a defence against the Plaintiff’s claim and not to rake up fresh suit or cause or causes of action against the Plaintiff.”
The decision as to whether or not a defence under the summary judgment procedure discloses a triable issue does not depend so much on the discretion of the Court. It involves the evaluation of the affidavit evidence before the Court for it to determine whether or not a triable issue has been made out by the defence. SeeUBA PLC vs. JARGABA (supra) at 273 and GENERAL SECURITIES & FINANCE CO. LTD vs. OBIEKEZIE (1997) 10 NWLR (PT 526) 577.
It is pertinent to state that in determining whether a good defence has been disclosed, it is not necessary for the Court to consider whether the defence has been proved at that stage. No. A complete defence need not be shown. It suffices if the defence set up shows that there is a triable issue or question or that for some other reason there ought to be a trial: OKAMBAH vs. SULE (1990) 7 NWLR (PT 160) 1 and YAHAYA vs. WAJE COMMUNITY BANK (2001) 46 WRN 87 at 96. It is not necessary for the defendant’s processes disclosing his defence to provide a cast iron defence or disclose proof beyond reasonable doubt before he can be granted leave to defend: V. S. STEEL (NIG) LTD vs. GOVT OF ANAMBRA STATE (2001) 8 NWLR (PT 715) 454. The defendant is not required at that stage of proceedings to satisfy the Court that the defence disclosed will succeed, it suffices that the defence disclosed constitutes a valid defence in law or fact.
In considering whether a good defence has been disclosed, the Courts are usually liberal. See IMONIYAME HOLDINGS vs. SONEB ENT. LTD (2002) 4 NWLR (PT 758) 618 at 658. While the Courts are liberal and do not require a cast-iron defence, the processes filed to disclose a defence must still show a good defence. It has been held that it is not enough merely to assert that there is a good defence without giving full particulars of the actual defence. See A.C.B. vs. GWAGWADA (1994) 5 NWLR (PT 342) 25 at 36; PLANWELL WATERSHED LTD vs. OGALA (supra) at 43-44. Where particulars of actual defence are given, it must condescend on particulars. A clearly and concisely stated defence must be set up with the facts supporting it. See NISHIZAWA vs. JETHWANI (1984) 12 SC 234 at 260, MACAULAY vs. NAL MERCHANT BANK LTD (1990) 4 NWLR (PT 144) 283 at 306-307 and PLANWELL WATERSHED LTD vs. OGALA (supra) at 47. It is not enough for the defendant to deny the claim without more. See FRANCHAL (NIG) LTD vs. NIGERIAN ARAB BANK LTD (1995) 8 NWLR (PT 412) 176 at 188. The defence must not be a sham defence designed to frustrate and dribble the Plaintiff. See BATURE vs. SAVANNAH BANK (1998) 4 NWLR (PT 546) 438 and OKOLI vs. MORECAB NIG LTD (2007) 33 WRN 1 at 8.
The lower Court held that the Appellant did not disclose a good defence and proceeded to enter summary judgment in favour of the Respondent. It is against the backdrop of the foregoing principle that I will examine the contention of the Appellant to see if the lower Court arrived at the correct decision.
Now, the hub of the disceptation in this matter and on which the Respondent founded its action against the Appellant are the letters of comfort issued by the Appellant to the Respondent. I will reproduce the text of the letters of comfort which are dated 16 April 2015 and 29 July 2015 respectively, and which were attached as Exhibits H7 and H10 to the motion for summary judgment. The letter of comfort of 16th April 2015 reads as follows:
“Letter of Comfort
We refer to the services supplied by your Company to the Ebok project for Afren. As Operator of the asset and Joint Venture partners of Afren, we are aware that Afren has been diligently working to improve their liquidity status in order to settle outstanding payments.
We believe that at this juncture, it is prudent for us and in our interest as Operator and Joint Venture partners with Afren to guarantee the continuity of the Ebok project as is and to avoid any delay or disruption to the conduct of operations.
By this letter, we hereby guarantee on the condition that you do not terminate operations, that all outstanding payment due as of 20 March 2015, will be settled by Oriental should all else fail with Afren’s efforts. We assure you that all payments due shall be made to you.”
The letter of comfort dated 29th July 2015 reads thus:
“Letter of Comfort
We refer to the services supplied by your Company to the Ebok project for Afren. As Operator of the asset and Joint Venture partners of Afren, we are aware that Afren has been diligently working to improve their liquidity status in order to settle outstanding payments.
We believe that at this juncture, it is prudent for us and in our interest as Operator and Joint Venture partners with Afren to guarantee the continuity of the Ebok project as is and to avoid any delay or disruption to the conduct of operations.
By this letter, we hereby guarantee on the condition that you do not terminate operations, that all outstanding payment due as of 10th July 2015, will be settled by Oriental in due course.
We will be inviting you shortly to discuss payments and transfer of contracts.”
The law is settled beyond peradventure that in the construction of documents, the words therein should first be given their simple and ordinary meaning. See UNION BANK vs. SAX (NIG) LTD (1994) LPELR (3390) 1 at 18-19. Put differently, where the words of a contract or agreement are clear, the words should be given their plain, simple, literal and natural meaning. See BERLIET NIG LTD vs. KACHALLA (1995) 12 SCNJ 147, OWENA BANK vs. NIGERIA STOCK EXCHANGE (1997) 8 NWLR (PT 315) 15 and AMASIKE vs. THE REGISTRAR-GENERAL, CAC (2010) LPELR (456) 1 at 47. The words employed in the letters of comfort are plain, simple and should therefore be given their ordinary, literal, natural and grammatical meaning.
For a valid and legally enforceable contract to come into existence, the following essential elements must be present:
a) A precise and definite offer,
b) An unqualified and unconditional acceptance,
c) Intention to create a legal relationship,
d) Consideration, and
e) Legal capacity to contract.
See TSOKWA MOTORS NIG. LTD vs. UBN LTD (1996) 9 NWLR (PT 471) 129, TSOKWA OIL MARKETING CO. LTD vs. B.O.N. (2002) 5 SCNJ 176 and YARO vs. AREWA CONSTRUCTION LTD (2007) 17 NWLR (PT 1063) 333. The elements of a valid and enforceable contract canvassed by the parties in this appeal are acceptance and consideration.
The Appellant argued that the letters of comfort are not valid and enforceable contracts because the Respondent did not accept the offer made therein and also did not furnish consideration. The words used in the letters of comfort are explicit that the Appellant guaranteed to settle all outstanding payments due to the Respondent from Afren. The first letter of comfort deals with outstanding payments due as of 20 March 2015, while the second letter of comfort extended the period to 10 July 2015. The Appellant’s contention that the Respondent did not accept the offer is premised on its position that the Time Charter had already been terminated before the letters of comfort were written and the Re-Delivery Note for the Vessel issued and so the Respondent did not continue operations on the Ebok field. This contention of the Appellant is not borne out by the affidavit evidence. In paragraph 6 (b) – (e) of the Respondent’s Further Affidavit, it is deposed as follows:
“b. In response to paragraph 25 of the IK Affidavit, the Applicant states that it took steps to regularize its Temporary Importation Permit (TIP) in compliance with Afren’s instruction to demobilize the MV Bullray earlier agreed and regularize the TIP, the Applicant removed the MV Bullray from Nigerian waters and secured a new TIP which was issued by the Nigeria Customs Service on 10 March, 2015 for a period of twelve months, and this was done for the sole purpose of meeting Afren’s request to use the vessel for the continued operation of the Ebok Field.
c. The statements in paragraph 27 of the IK Affidavit are entirely false. The Applicant accepted the terms of the Letters of Comfort and altered its position in reliance on the Respondent’s undertaking to pay the debts of Afren. There is nothing in the Letters of Comfort which restricted the debts guaranteed to contractual parties that were servicing Ebok Field at the time of the Letters. The Letters of Comfort were addressed to the Applicant directly. The Applicant provided consideration by continuing to be on standby with the vessel while attending to technical requests for modification as well as responding to clarifications from Afren’s representative during the period covered by the Letters of Comfort.
d. Further to the above, the Applicant states that attending to the requests from Afren took considerable man-hours of the Applicant, and the Applicant would not ordinarily have attended to those requests but for the promises made by the Respondent to guarantee the debts owed to the Applicant by Afren.
e. The Applicant also states that part of the consideration for the Letters of Comfort was that the Applicant refrained from taking adverse steps against Afren on account of the overdue invoice based on the assurance of payment made by the Respondent via the Letters of Comfort.”
The first of the two comfort letters is dated 16th April 2015. The above deposition in the Further Affidavit is crystal clear that as at 10th March 2015 (before the first letter of comfort was written), the Respondent had secured a new Temporary Importation Permit (TIP) for the Vessel, MV Bullray, and the Vessel was available for use by Afren for continued operations of the Ebok field. There is further evidence that the technical modifications requested to be made to the Vessel by Afren were effected and that based on the letters of comfort, the Respondent refrained from taking adverse steps against Afren on account of the indebtedness. The acceptance required of the Respondent in the letters of comfort was for it not to terminate operations. The obligation of the Respondent under its Time Charter with Afren was for it to make available the MV Bullray for the Ebok field project. The affidavit evidence is limpid that the Respondent continued to make available the Vessel, which view is further fortified by the fact that after the first letter of comfort of 16 April 2015, the Appellant wrote the second letter of comfort on 29 July 2005, still requesting that the Respondent should not terminate operations. If, as contended, that the Respondent had terminated operations prior to the first letter of comfort, it would have been so stated in the second letter of comfort and it would have required the Respondent to “resume” operations which it had terminated, as opposed to asking it not to terminate operations which is indicative that it had not terminated operations. So, from the affidavit evidence, the Respondent accepted the offer in the terms of the letters of offer by not terminating operations.
The law is that forbearance to sue or to take the principal debtor to Court, given at the request of the guarantor constitutes sufficient consideration for a contract of guarantee: YOUNIS vs. CHIDIAK (1970) LPELR (3530) 1 at 7 and ABIODUN vs. AJISAFE (supra). The Respondent deposed in Paragraph 6 (e) of the Further Affidavit (already reproduced) that based on the letters of comfort it furnished consideration by refraining from taking adverse steps against Afren on account of the indebtedness. This is more so when the letters of comfort required the Respondent to ensure that the project continued, it would have been antithetical to the continuation of the Ebok Field project if the Respondent had pursued its rights against Afren. So, by so refraining in order for the project to continue, it was not a past consideration that the Respondent furnished especially when the Appellant had guaranteed that the outstanding payments for which the Respondent had already rendered services would be settled by it. So there was an acceptance of the offer and the Respondent offered consideration. The lower Court rightly held that there was a valid and enforceable contract.
The Appellant next contended that the conditions precedent in the letters of comfort were not fulfilled by the Respondent. Bearing in mind that the letters of comfort are to be given their ordinary grammatical meaning, we will now explore the said conditions precedent to see if they were fulfilled. In considering the issue of whether the Respondent furnished consideration, I have already held that it did. The concomitance is that “the condition that you do not terminate operations” was fulfilled by the Respondent.
The second condition precedent is the Appellant’s contention that the Respondent did not exhaustively pursue payment of the outstanding debt from Afren. Quite apart from the fact that this condition is not contained in the second letter of comfort, the simple, plain, natural and ordinary grammatical meaning of the words employed in the first letter of comfort does not conduce to the construction being made out by the Appellant. The relevant portion of the letter reads:
“…that all outstanding payment due as of 20 March 2015, will be settled by Oriental should all else fail with Afren’s efforts.” (Emphasis supplied)
The phrase “should all else fail with Afren’s efforts” in my deferential view, refers, not to any actions of the Respondent, but to Afren’s efforts to discharge its obligations. It has to be remembered that the Respondent had already sent its invoices to Afren, which Afren could not settle. The Appellant guaranteed to pay if Afren remained unable to pay. There is no condition therein that the Respondent is to pursue payment by Afren through the liquidator and winding-up creditor’s claim before the Appellant’s guarantee will crystallize. To put a wrap on this issue, if arguendo the condition precedent is as the Appellant had contended, the fact the condition is not in the second letter of comfort indicates that the Appellant no longer intended it as a condition precedent for its guarantee obligations to crystallize. In the circumstances, I am unable to agree with the Appellant that the Respondent did not fulfil the conditions precedent under the letters of comfort.
The Appellant argued that its right to fair hearing was breached on account of the fact that the lower Court raised the issue of the second letter of comfort having prevailed and subsumed the first letter of comfort suo motu and resolved the same without hearing from the parties. It was further argued that the lower Court failed to consider the evidence of the Re-Delivery Note which was a breach of the right to fair hearing. By all odds, it is rudimentary law that a Court has no jurisdiction to raise an issue suo motu and unilaterally resolve it without hearing the parties, particularly the party that may be adversely affected by the issue raised: OSHODI vs. EYIFUNMI (2000) 13 NWLR (PT 684) 298 at 332, MOJEKWU vs. IWUCHUKWU (2004) LPELR (1903) 1 at 25 and LEADERS & COMPANY LTD vs. BAMAIYI (2010) LPELR (1771) 1 at 11-12. Let me festinate and state that the need to hear parties on an issue raised suo motu is not imperative where the issue raised suo motu goes to the jurisdiction of the Court. See OMOKUWAJO vs. FRN (2013) 9 NWLR (PT 1359) 300 at 332, ALIMS LTD vs. UBA (2013) 1 MJSC (PT 1) 156 at 170 and OLUTOLA vs. UNIVERSITY OF ILORIN (2005) ALL FWLR (PT 245) 1154. The issue which the Appellant complains that the lower Court raised is not an issue of jurisdiction, so if indeed the lower Court raised the issue suo motu, it was enjoined by law to give the parties a hearing on the said issue raised suo motu. The pericope of the decision of the lower Court which the Appellant contends was raising an issue suo motu is at page 1008 of Volume II of the Records where the lower Court stated that “the second guarantee prevails and subsumed the first one.”
Now, it has to be remembered that the parties relied on the letters of comfort, so it was in evidence before the lower Court having been attached as Exhibits H7 and H10 to the application for summary judgment. So the effect and implication of the letters of comfort was one of the questions in dispute for determination by the Court. It behoved on the lower Court to determine the effect of the said documents. See EJOWHOMU vs. EDOK-ETER MANDILAS LTD (1986) 9 SC 41 at 102-103, AKINTOLA vs. SOLANO (1986) LPELR (360) 1, MARINE MANAGEMENT ASSOCIATES INC vs. NMA (2012) LPELR (20618) 1 at 27, ADEBAYO vs. A-G OGUN STATE (2008) LPELR (80) 1 at 17 and NKUMA vs. ODILI (2006) LPELR (2047) 1 at 17.
In order to crystallize the views of the lower Court which the Appellant contends was raising an issue suo motu, I will set out in extenso the evaluation of the letters of comfort by the lower Court at pages 1006-1008 of Volume II of the Records. Hear the lower Court:
“I now proceed to consider what the letters of comfort are. The letters of comforts were attached to the Motion as exhibits H7 and H10. The relevant paragraphs of exhibit H7 read-
‘We believe that at this juncture, it is prudent for us and in our interest as operator and joint venture partners with Afren to guarantee the continuity of the Ebok project as is and to avoid any delay or disruption to the conduct of operations.
By this letter, we hereby guarantee, on the condition that you do not terminate operations, that all outstanding payment due as of 20 March, 2015, will be settled by Oriental should all else fail with Afren’s efforts. We assure you that all payments due shall be made to you.’ (underlining mine)
Those in exhibit H10 reads-
‘We believe that at this juncture, it is prudent for us and in our interest as operator and joint venture partners with Afren to guarantee the continuity of the Ebok project as is and to avoid any delay or disruption of the conduct of operations.
By this letter, we hereby guarantee, on the condition that you do not terminate operations, that all outstanding payment due as of 10 July 2015, will be settled by Oriental in due course.’
(underlining mine).
It is unfortunate that Counsel for the Defendant denied the exhibits as contracts of guarantee despite the self-inscription of the letters as guarantees by the Defendant. The Defendant and their Counsel are estopped from denying the content of their documents.
A guarantee is a collateral agreement for performance of another person’s undertaking…
I take the underlined phrases one after the other to analyze their effects vis-a-vis the defences raised against the Motion. First are the phrases that read-
‘Guarantee the continuity, and you do not terminate operations’
These indicate a prior threat by the Claimant to terminate the contract between the Claimant and Afren. In my view, resumption of performance of the contract will therefore qualify as a good consideration…
The Defendant alleged that the Claimant was not entitled to take the benefits of the letters of comfort because it was not on Ebok field when they were issued.
This argument is lame. Firstly, the two letters of comfort were addressed to the Claimant and not to the general public, in which case, the burden would have been on the Claimant to prove that it fits into the parties still on Ebok field when the letters were issued.
Secondly, assuming that the Claimant was not on Ebok field when the first letter of comfort was issued, why was the letter renewed or extended in the second letter of comfort? The last renewal of the contract between the Claimant and Afren covered 01/03/2015 – 01/06/2015, with an option to renew for one month. The first letter of comfort was issued on 16/04/2015 and covered the debt owed as at 20/03/2015. If there was no performance, one would have expected either a protest or a cancellation of the first letter of comfort instead of issuance of the second letter of comfort. The second letter of comfort is evidence of continued performance of the contract between the Claimant and Afren and satisfied the requirement of consideration for the contract and acceptance of the letters.
Thirdly, the condition given in the two letters of comfort, which qualified as a consideration on the part of the Claimant was for the Claimant not to terminate operations. If the vessel had been moved out of the Ebok field as alleged, it implies that the contract had been terminated and these letters wouldn’t have been so drafted i.e. the Claimant wouldn’t have been told not to terminate operations. Not to terminate operations therefore means that the vessel was still on the field. In view of this, I believe and I so hold that the Claimant was on Ebok field when the two letters of comfort were issued.
I must quickly add here that by the above, I did not resolve irreconcilable facts. As I said earlier, this case borders on documentary evidence and the law in such a situation is that even if the facts are in dispute and there are documentary evidence on the disputed facts, the Court will be in order to resolve them by relying on the document…
Another defence raised arose from the phrase – ‘Should all else fail’. This was argued to mean that the Claimant ought to establish that all attempt to recover the debt from Afren has failed. This argument fails for two reasons. One, the phrase is not in the second letter of comfort. By extension of the first guarantee in the second guarantee, the second guarantee prevails and subsumed the first one. Secondly, the Defendant says that Afren is being wound up. By Section 408 of the Companies and Allied Matters Act (Cap C20) LFN 2004, a company is liable to be wound up if it cannot pay its debt. By its own Counter Affidavit, the Defendant deposed to the fact that Afren could not pay its debt or had financial crisis. I therefore wonder why the Defendant expects the Claimant to engage in a futile exercise.
The Cause of Action in this case is anchored on exhibits H1, H2, H7 and H10. From the Statement of Defence and the Counter Affidavit, there is no prima facie response to the exhibits. Ipso facto, I hold that there is no prima facie defence or triable issues to require a plenary trial.”
It seems to me that what the lower Court did in the above pericope from its judgment was not raising an issue suo motu. It was evaluating the evidence relied upon by the parties and interpreting the documents relied on and drawing inferences therefrom. I will invite my Lord, Tobi, JSC to speak to this. In ENEKWE vs. IMB LTD (2006) LPELR (1140) 1 at 25 he asseverated:
“A judge has the right in our adjectival law to use particular words or phrases, which in his opinion, are germane to his evaluation of facts of the case. In so far as he does that in line with the evidence before him, it will be unfair for counsel to castigate him or accuse him of raising issue suo motu.”
The fact that the lower Court used the word or phrase that the second letter of comfort “prevails and subsumed” the first letter of comfort is a product of its evaluation of the documentary evidence before it and definitely not raising an issue suo motu. I will further invite my Lord, Garba JCA, to lend his voice to this. This is what he said, inter alia, in OTU vs. ANI (2013) LPELR (21405) 1 at 31-34:
“…it is clear that so long as the issue is derivable from the facts and evidence of the parties before the Court, the Court cannot be said to have raised it suo motu for reason only that it used particular words or phrases not used by the parties to describe the issue.”
See also TOWOJU vs. GOV OF KWARA STATE (2005) LPELR (5390) 1 at 38-39, CHIDI vs. CONSOLIDATED HALLMARK INSURANCE PLC (2018) LPELR (44384) 1 at 16-24, TSEGBA vs. REGD TRUSTEES OF MISSION HOUSE (2018) LPELR (44242) 1 at 51-52, FCMB vs. ACTION ALLIANCE (2018) LPELR (44445) 1 at 10-11 and FINNIH vs. IMADE (1992) 1 NWLR (PT 219) 511 at 537.
The further contention of the Appellant on the alleged denial of its right to fair hearing is that the lower Court failed to consider the Re-Delivery Note by which the Time Charter was terminated on account of the Vessel having been returned to the Respondent. This contention is not correct. The lower Court duly considered whether the Time Charter had been terminated before the letters of comfort were written and held as follows at page 1008 of Volume II of the Records:
“If the vessel had been moved out of the Ebok field as alleged, it implies that the contract had been terminated and these letters wouldn’t have been so drafted i.e. the Claimant wouldn’t have been told not to terminate operations. Not to terminate operations therefore means that the vessel was still on the field. In view of this, I believe and I so hold that the Claimant was on Ebok field when the two letters of comfort were issued.”
There was no breach of the Appellant’s right to fair hearing and the attempt to rope in the fair hearing principle in this matter is futile as the alleged breach is not borne out by the Records. The complaint of breach of fair hearing can only be raised and avail a litigant when, in fact, the right had been denied. The admonition of apex Court in this regard is instructive. Hear Tobi, JSC in ADEBAYO vs. A-G OGUN STATE (2008) LPELR (80) 1 at 23-24:
“Learned counsel for the appellant roped in the fair hearing principle. I have seen in recent times that parties who have bad cases embrace and make use of the constitutional provision of fair hearing to bamboozle the adverse party and the Court, with a view to moving the Court away from the live issues in the litigation. They make so much weather and stop there. They rake the defence in most inappropriate cases because they have nothing to canvass in their favour in the case. The fair hearing provision in the Constitution is the machinery or locomotive of justice; not a spare part to propel or invigorate the case of the user. It is not a casual principle of law available to a party to be picked up at will in a case and force the Court to apply it to his advantage. On the contrary, it is a formidable and fundamental constitutional provision available to a party who is really denied fair hearing because he was not heard or that he was not properly heard in the case. Let litigants who have nothing useful to advocate in favour of their cases leave the fair hearing constitutional provision alone because it is not available to them just for the asking.”
See also KOLO vs. COP (2017) LPELR-42577 and BROSSETTE MANUFACTURING LTD vs. M/S OLA ILEMOBOLA LTD (2007) 14 NWLR (PT 1053) 109 at 139.
Equally, inMAGAJI vs. NIGERIAN ARMY (2008) 8 NWLR (PT 1089) 338 or (2008) LPELR (1814) 1 at 40, Tobi, JSC observed as follows:
“It has become a fashion for litigants to resort to their right to fair hearing on appeal as if it is a magic wand to cure all their inadequacies at the trial Court. But it is not so and cannot be so. The fair hearing constitutional provision is designed for both parties in the litigation, in the interest of fair play and justice. The Courts must not give a burden to the provision which it cannot carry or shoulder. I see that in this appeal. Fair hearing is not a cut-and-dry principle which parties can, in the abstract, always apply to their comfort and convenience. It is a principle which is based and must be based on the facts of the case before the Court. Only the facts of the case can influence and determine the application or applicability of the principle. The principle of fair hearing is helpless or completely dead outside the facts of the case.”
See also ORUGBO vs. UNA (2002) 16 NWLR (PT 792) 175 at 211 and 212. The Appellants have clearly missed the mark in their attempt to drag the fair hearing principle into this matter. The principle is inapplicable. It cannot be forced into this matter!
The Appellant further argued that the Respondent’s case was not suited for the summary judgment procedure and that in view of the conflicting affidavits the lower Court should have ordered a plenary trial and call evidence to resolve the conflict. I have set out the reliefs sought by the Respondent in the application for summary judgment. The reliefs claimed were for a debt or liquidated money demand. It is properly suited for the summary judgment procedure under the Order 11 Procedure of the Rules of the lower Court vide UBA PLC vs. JARGABA (supra) and OSIFO vs. OKOGBO COMMUNITY BANK (supra). The lower Court rightly found and held that the Appellant did not disclose a prima facie defence or triable issues to require a plenary trial. In the circumstances the matter was correctly dealt with under the summary judgment procedure.
While it is abecedarian law that where there are conflicts in affidavits, oral evidence has to be called to resolve the conflict: FALOBI vs. FALOBI (1976) 9-10 SC 1; as a Court of law has no competence to suo motu and willy-nilly reconcile affidavit evidence without oral evidence: See PHARMACISTS BOARD vs. ADEBESIN (1978) 5 SC 43 and NATIONAL BANK (NIG) LTD vs. ARE BROTHERS (NIG) LTD (1977) 6 SC 97. However, where there is enough documentary evidence outside the conflicting affidavit evidence, the Court can make use of that evidence without needing to call oral evidence: LIJADU vs. LIJADU (1991) 1 NWLR (PT 169) 627 at 649 and EZEGBU vs. FATB LTD (1992) 1 NWLR (PT 220) 699. In this regard, the lower Court was justified when it used the documentary evidence before it to resolve the conflicting affidavits, thus obviating the need to call oral evidence. This is what the lower Court stated at page 1008 of Volume II of the Records:
“I must quickly add here that by the above, I did not resolve irreconcilable facts. As I said earlier, this case borders on documentary evidence and the law in such a situation is that even if the facts are in dispute and there are documentary evidence on the disputed facts, the Court will be in order to resolve them by relying on the document…”
As we begin to approach the harbour to berth this judgment, let me state that I considered the Appellant’s submission that the Respondent did not raise issue of estoppel by conduct and that estoppel is to be used as a shield and not as a sword. Once again, the Appellant seems to demonstrate a paucity of knowledge of the case ventilated by the Respondent. Now, the rule of estoppel by conduct otherwise known as estoppel by matters in pais is that where a person by his words or conduct wilfully causes another to believe the existence of certain things and induces him to act on that belief so as to alter his previous position, the former is precluded from averring against the latter a different state of things as existing at the same time. See UDE vs. NWARA (1993) LPELR (3289) 1 at 27-28, NSIRIM vs. NSIRIM (2002) 2 SC (PT 1) 47, OKONKWO vs. KPAJIE (1992) LPELR (2483) 1 at 38-39 and NSUGBE vs. OKOBI (2014) LPELR (24481) 1 at 25-26.
In the instant matter, the Appellant issued letters of comfort to the Respondent guaranteeing to pay all outstanding amounts due to the Respondent from Afren if it continued operations at Ebok field. The Respondent altered its position by refraining from terminating the contract on account of the indebtedness and continued operations. The Appellant is consequently estopped from going back on its guarantee, since the guarantee induced the Respondent to believe in the state of things that the Appellant would pay the amount owed to it. And, yes, the Respondent did raise estoppel in its Further Affidavit. In paragraph 6 (c) and 6 (e) of the Further Affidavit, the Respondent deposed as follows:
“(c) The statements in paragraph 27 of the IK Affidavit are entirely false. The Applicant accepted the terms of the Letters of Comfort and altered its position in reliance on the Respondent’s undertaking to pay the debts of Afren. There is nothing in the Letters of Comfort which restricted the debts guaranteed to contractual parties that were servicing Ebok Field at the time of the Letters. The Letters of Comfort were addressed to the Applicant directly. The Applicant provided consideration by continuing to be on standby with the vessel while attending to technical requests for modification as well as responding to clarifications from Afren’s representative during the period covered by the Letters of Comfort.”
“(e) The Applicant also states that part of the consideration for the Letters of Comfort was that the Applicant refrained from taking adverse steps against Afren on account of the overdue invoice based on the assurance of payment made by the Respondent via the Letters of Comfort.”
It is therefore translucent that contrary to the Appellant’s contention, the Respondent in fact raised the principle of estoppel in its affidavit.
Now, although the plea of estoppel, generally, is a shield for the protection of a defendant, it has also been settled that it can never stand alone as giving a cause of action in itself to a claimant. Accordingly, the plea cannot do away with the necessity to prove consideration in law where that is an essential part of a claimant’s cause of action. In that sense, it can be validly employed as a sword by a claimant in appropriate cases. See ABALOGU vs. SPDC (NIG) LTD (2003) LPELR (18) 1 at 30, ODJEVWEDJE vs. ECHANOKPE (1987) 1 NWLR (PT 52) 633 or (1987) 2 NSCC 313 at 370, CHINWENDU vs. MBAMALI (1980) 3-4SC 31 at 48 and ADAMS vs. FASASI (2018) LPELR (44379) 1 at 19-20. In the course of this judgment I have held that the Respondent furnished consideration for the contract of guarantee embodied in the letters of comfort which it acted upon and altered its position, consequently it is not offensive to the law for the Respondent to rely on the evidential principle of estoppel by conduct (estoppel in pais) in the prosecution of its case against the Appellant.
Finally, I am unable to agree with the Appellant that the evaluation of the documentary evidence by the lower Court and the inferences drawn therefrom amounted to speculation by the lower Court. The Appellant in its letters of comfort evinced the desire “to guarantee the continuity of the Ebok project as is and to avoid any delay or disruption in the conduct of operations.” It then guaranteed to pay outstanding debts on the condition that the Respondent does not terminate operations. It was not speculation but a finding borne out by the proper construction and interpretation of the letters of comfort for the lower Court to hold that there was a threat to discontinue operations consequent upon which the Appellant expressed its desire to guarantee the continuity of the project if operations were not terminated.
Just as the lower Court did not find any good defence or prima facie case made out for there to be a plenary trial, I equally do not find any good defence made out by the Appellant. A contract of guarantee is a collateral contract by which a promisor undertakes to answer for the debt, default or miscarriage of another as distinguished from an original and direct contract for the promisor’s own act. By the letters of comfort, the Appellant gave an undertaking to be responsible if Afren failed to pay the Respondent. Afren having failed to pay, the Appellant became liable for the debt owed to the Respondent. See ROYAL EXCHANGE ASSURANCE (NIG) LTD vs. ASWANI TEXTILE IND. LTD (1992) LPELR (2960) 1 at 18, CHAMI vs. UBA PLC (2010) LPELR (841) 1 at 32 and NWANKWO vs. ECUMENICAL DEVELOPMENT CO-OPERATIVE SOCIETY (2007) LPELR (2108) 1 at 41-42. Rather than make good its guarantee, the Appellant engaged in legalese designed to obfuscate issues in order to thwart the Respondent’s efforts and dribble it from the seat of justice by angling for a plenary trial in order to cheat the Respondent out of the relief it is entitled to under the summary judgment procedure. I endorse the decision of the lower Court where it held at page 1008 of Volume II of the Records that:
“The Cause of Action in this case is anchored on exhibits H1, H2, H7 and H10.
From the Statement of Defence and the Counter Affidavit, there is no prima facie response to the exhibits. Ipso facto, I hold that there is no prima facie defence or triable issues to require a plenary trial.”
In a summation, this appeal is totally bereft of merit, it accordingly fails and it is hereby dismissed. The decision of the lower Court, Coram Judice: Animahun, J., delivered on 4th October 2018 is hereby affirmed. The Respondent is entitled to the cost of this appeal which I assess and fix at N500,000.00.
MOHAMMED LAWAL GARBA, J.C.A.: After reading the illuminating draft of the lead judgment written by my learned brother Ugochukwu Anthony Ogakwu JCA, I agree, entirely, that this appeal is completely devoid of any plausible merit in law and would add, that the appeal was brought to intentionally delay and eventually frustrate the financial obligations the Appellant owes to the Respondent which by Comfort Letters it freely and voluntarily, agreed to meet or discharged.
The attempt may not end here, but I would refer to the admonition by the Apex Court, per Coker, JSC in Adewunmi vs. Plastex Limited (1986) 3 NWLR (Pt 32) 767 citing the Rules of Professional conduct in the Legal Profession of 25/12/1967 amended on 15/01/1979, that: –
“Every lawyer upon his own responsibility must decide what cases he will bring into Court for plaintiffs and what cases he will contest in Court for defendants. It is his responsibility for advising as to questionable transactions, for bringing questionable suits and for arguing questionable defences. He cannot escape it by arguing, as an excuse, that he is only following his client’s instructions.
Where counsel is confronted with an inescapable, unsustainable legal position, the proper course for him to adopt in the discharge of his duty to his client and to uphold the dignity and integrity of his office as an officer of the Court, is to submit judgement in accordance with the law.”
My learned brother has succinctly dealt with all the issues raised in the appeal and for all the pungent reasons set out in the lead judgement, which are adopted by me, I join in dismissing the appeal in all the terms set out therein.
JOSEPH SHAGBAOR IKYEGH, J.C.A.: I agree with the robust judgment prepared by my learned brother Ugochukwu Anthony Ogakwu, J.C.A., with nothing useful to add.
Appearances:
I. Umeche, Esq. For Appellant(s)
Shehu Mustafa, Esq. For Respondent(s)
