SAFETRUST SAVINGS AND LOANS LIMITED v. GOVERNOR OF EKITI STATE & ORS
(2014)LCN/7098(CA)
In The Court of Appeal of Nigeria
On Tuesday, the 8th day of April, 2014
CA/EK/58/2013
RATIO
WHETHER AN APPEAL COURT MAY INTERFERE WITH THE JUDICIAL DISCRETION OF A TRIAL COURT
The law is settled that the discretion of a court must at all times be exercised not only judicially but also judiciously on sufficient materials. See: UDENSI v. ODUSOTE (2003) 6 NWLR (Pt. 817) 545 at 558 PARAGRAPH B, OGBUEHI v. GOVERNOR OF IMO STATE (1995) 9 NWLR (Pt. 417) 53; UNVERSITY OF LAGOS v. M.I. AIGORO (1985) 1 NWLR (Pt. 1) 143 at 148.
It is equally settled that if judicial discretion has been exercised bonafide un-influenced by irrelevant consideration and not arbitrarily or illegally by the Court, the general rule is that the appeal Court will not accordingly interfere. However, an appellate court may interfere with the exercise of judicial discretion if it is shown that there has been a wrongful exercise of judicial discretion such as where the court, below acted under a misconception of law or under misapprehension of fact in that it either gave way to irrelevant or unproved matters or it omitted to take into account matters that are relevant or where it exercised or failed to exercise the discretion on wrong or inadequate materials and in all other cases where it is in the interest of justice to interfere. See: UDENSI v. ODUSOTE (SUPRA) at PAGE 558 PARAGRAPH C-E, ENEKEBE v. ENEKEBE (1964) 1 ALL NLR 102. PER PAUL ADAMU GALINJE, J.C.A.
JUSTICES
PAUL ADAMU GALINJE Justice of The Court of Appeal of Nigeria
MASSOUD ABDULRAHMAN OREDOLA Justice of The Court of Appeal of Nigeria
FATIMA OMORO AKINBAMI Justice of The Court of Appeal of Nigeria
Between
SAFETRUST SAVINGS AND LOANS LTD Appellant(s)
AND
GOVERNOR OF EKITI STATE & ORS Respondent(s)
PAUL ADAMU GALINJE, J.C.A. (Delivering the Leading Judgment): By a motion dated 26th August, 2011 and filed on the 2nd September, 2011, the 1st and 2nd Respondents herein sought before the Ekiti State High Court, the following reliefs: –
“1. An order of interlocutory injunction of this Honourable Court restraining the 3rd, 4th, 5th and 6th Defendants from constituting, convening or sitting as arbitration panel; convening an arbitration session; presiding as arbitrators; making any award or issuing any notice or report in respect of the 1st Defendant’s claims to the 2nd claimant’s sum of N42,350,554.80 (Forty-two Million, Three Hundred and Fifty Thousand, Five Hundred and Fifty-Four Naira, Eighty Kobo) only, being part of the sum of N189,325,000.00 (One Hundred and Eighty-Nine Million, Three Hundred and Twenty-Five Thousand Naira) only, deposited with the 2nd defendant which is subject to the Irrevocable Bank Guarantee Agreement executed by the 1st and 2nd Defendants (sic) on 22nd day of April, 2010, pending the hearing and determination of the substantive suit.
2. AN ORDER OF INTERLOCUTORY INJUNCTION restraining the 2nd Defendant from making any payment to the 1st Defendant on account of the latter’s claim to the 2nd claimant’s sum of N42,350,554.80 (Forty-two Million, Three Hundred and Fifty Thousand, Five Hundred and Fifty-Four Naira, Eighty Kobo) only or any other sum whatsoever under the IBG and MOU executed by parties hereto, in respect of the project for the construction of 72-Housing-Units at Ado-Ekiti, pending the hearing and determination of the substantive suit between the parties.”
At the Ekiti State High Court, henceforth to be referred to as the lower court, the Appellant herein was the 1st Defendant/Respondent, while the 1st and 2nd Respondents herein were the Claimants/Applicants. The 3rd, 4th, 6th and 7th Respondents in this appeal were 2nd,3rd, 4th and 5th Defendants/Respondents in the ruling of the lower court which is subject of this appeal.
The Appellant herein who was the 1st Respondent entered an appearance to the claims of the 1st and 2nd Respondents herein on the 10th October, 2011 and by a motion on notice filed on the same 10th October, 2011 sought for the following reliefs:
“1. An order directing that the dispute in this suit be referred to an arbitrator as contained in the provision of Clause 17 of the Memorandum of Understanding between the 2nd claimant and the 2nd Defendant.
2. An order of this Honourable court to stay further proceedings in this suit pending the hearing and the arbitral award by the Arbitrator.”
The two motions were heard together. In a reserved and considered ruling, Abodunde, J. granted the application for interlocutory injunction and ordered the parties to subject themselves to the provision of Clause 17 of the Memorandum of Understanding, which provides as follows: –
“Any dispute arising out of or in connection to this MOU shall to the extent, possible, be settled amiably by negotiation and discussion between the parties. Otherwise, such dispute shall be settled in accordance with the provisions of the Arbitration and Conciliation Act, Laws of the Federation of Nigeria. The Arbitral Tribunal shall be comprised of a[1992 No. 87.] single arbitrator and where both partie s are unable to agree on a sole arbitrator either party shall apply to the Chief Judge of Ekiti State High Court who shall then appoint a sole arbitrator. The place of arbitration shall be Ekiti State and the language of arbitration shall be English.”
The Appellant is dissatisfied with the ruling and has brought this appeal. Its notice of appeal dated 1st March, 2013 and filed on the 5th of March, 2013 contains two grounds of appeal.
Parties filed and exchanged briefs of argument. Appellant formulated two issues for determination of this appeal at page 4 of its brief dated 17th June, 2013 and filed on the 18th June, 2013, but deemed filed on the 23rd October, 2013. These issues read as follows:
i. Whether it is right for the lower court to assume jurisdiction by the restraining order of 4th July, 2012 on the subject of Irrevocable Bank Guaranty IBG issued by the 3rd Respondent in favour of the Appellant that was not before the court.
ii. Whether the lower court possess (sic) any power to rewrite arbitration clause (Agreement) for the parties.
The 1st and 2nd Respondents, in their joint briefs of argument, settled by Daniel Alumun, Esq.,formulated two issues for determination of this appeal. These issues are hereunder reproduced for clarity as follows:
1. Whether from the circumstances of this case, the lower court has powers to preserve the subject matter res, being the sum of N42,350,554.80 (Forty-two Million, Three Hundred and Fifty Thousand, Five Hundred and Fifty-Four Naira, Eighty Kobo) only being part of the sum of N189,325,000.00 (One Hundred and Eighty-Nine Million, Three Hundred and Twenty-Five Thousand Naira) only, deposited with the 2nd Defendant (3rd Respondent herein) which is subject matter of suit No: HAD/188/2011 pending at the High Court, Ado-Ekiti between the parties to this Appeal.
2. Whether considering the case of the claimants/1st and 2nd Respondents at the trial court, the Ruling of 4th July, 2012 amounts to rewriting agreement for the parties.
For the 3rd Respondent, one issue is formulated for determination of the appeal. It reads as follows:
“Whether from the facts and circumstances of the case, the Appeal is not misconceived, having regard to the facts that the ruling of the lower court appealed against is pursuant to all the prayers sought by the Appellant.”
The 4th, 5th, 6th and 7th Respondents did not file briefs of argument and were therefore not heard in argument.
A Respondent who neither files a cross-appeal nor a respondent’s notice can only formulate issues from the grounds of appeal filed by the appellant. A fortiori, a respondent’s argument must be aimed at contradicting the appellant’s arguments that are aimed at demolishing his victory as such he does not need to formulate issues at variance with the issues formulated by the Appellant. In the instant appeal, I intend to consider the issues formulated by the Appellant. In doing so, I will consider the issues and the argument canvassed thereupon in the order in which they were argued by the Appellant.
In arguing the first issue for determination of this appeal, which is said to be formulated from the 1st ground of appeal, Mr. Babatunde Jemilehin, learned Counsel for the appellant, submitted that the Appellant’s application for stay of proceedings pending arbitration should have been granted without the further order by the lower court to restrain the parties in the IBG that was not before the court. Learned Counsel cited ENYIELIKE v. OGOLOMA (2008) 14 NWLR (Pt. 1107); ONWARD ENTERPRISES LIMITED v. MV. MATRIX (2010) 2 NWLR (Pt. 1179) 530. In a further argument, learned Counsel submitted that the Appellant did not take any step other than filing a memorandum of conditional appearance to the suit filed by the 1st and 2nd Respondents herein and the application to stay further proceeding on the MOU. Learned Counsel made reference to Clause 17 of the MOU and further submitted that the 1st and 2nd Respondents are not parties to the IBG, as such, the court cannot give a restraining order on the subject matter of IBG on the basis of the Application of the 1st and 2nd Respondents. Still in argument, learned Counsel submitted that the lower court ought not to have dealt with the IBG that was not before it and should have limited its order to stay of proceedings in the suit before it.
Mr. Daniel Alumun, learned Counsel for the 1st and 2nd Respondents, in reaction to the argument of the Appellant’s Counsel submitted that the lower court was right when it made pronouncement on IBG, since the subject matter of the IBG touches on the 1st and 2nd Respondents’ right to N42,350,554.80 (Forty-two Million, Three Hundred and Fifty Thousand, Five Hundred and Fifty-Four Naira, Eighty Kobo) being part of N189,325,000.00 (One Hundred and Eighty-Nine Million, Three Hundred and Twenty-Five Thousand Naira) only, deposited with the 3rd Respondent which is subject matter of the Irrevocable Bank Guarantee Agreement executed between the 3rd Respondent and the Appellant.
In a further argument, Learned Counsel submitted that the trial court has all the inherent powers to make preservative orders in line with Section 6(6)(a) of the Constitution of the Federal Republic of Nigeria, 1999, as amended, since such orders upon applications are discretionary. In support of learned Counsel’s submission, the authorities of NIGERIA PORT AUTHORITY v. COJEFA (1981) NCCLR 313 at 321; and KAYO v. ROYAL EXCHANGE ASSURANCE (1977) WNLR 158 were cited.
Finally, learned Counsel submitted that where there is a challenge to the existence of an arbitration clause in an agreement by way of an originating summons to determine whether or not a dispute is referable to arbitration, the court will grant an injunction against the arbitrators. In aid, learned Counsel cited METAL SCRAP TRADE CORP. LTD. v. KATE SHIPPING CO. LTD (THE GLADYS 1988) 3 ALL ER 32; BEN & CO. LTD v. PAKISTAN EDIBLE OIL CORP. LTD. (1978) TIMES 13 JULY, REFERRED TO AKINS’ COURT TORMS 1989; VOL.6 PAGE 74.
For the 3rd Respondent, it is argued that the lower court had a duty to preserve the res, as such the court’s ruling was based on a sound principle of law. In aid, the authority in UNIVERSITY OF ILORIN v. AKINYANJU (2007) ALL FWLR 1767 at 1777 PARA. B-D; YINKA v. FOLAWIYO & SONS LTD. were cited.
In a further submission on behalf of the 3rd Respondent, it is argued that the power of court to order a stay under Section 5(2) of the Arbitration and Conciliation Act is discretionary and that such power will only be exercised upon settled principles and upon some conditions being met by the Appellant. In aid, learned Counsel cited KAYODE v. ROYAL EXCHANGE ASSURANCE (1977) WNLR 158 and contended that the fact that an agreement refers to arbitration does not stop a party from seeking protection from the court. Finally, learned Counsel urged this court to disregard the submissions of the learned Counsel for the Appellant.
In resolving the two applications, one by the 1st and 2nd Respondents for interlocutory injunction, and the 2nd application by the Appellant, the trial court in its ruling granted the application for stay and ordered that the dispute between the parties be submitted to the arbitration panel.
Once again, this Court has been called upon to review what is purely an exercise of the discretionary powers of the court below. A grant or refusal of the application, subject matter of this appeal by the lower court is purely within the province of the discretionary powers of that court. The law is settled that the discretion of a court must at all times be exercised not only judicially but also judiciously on sufficient materials. See: UDENSI v. ODUSOTE (2003) 6 NWLR (Pt. 817) 545 at 558 PARAGRAPH B, OGBUEHI v. GOVERNOR OF IMO STATE (1995) 9 NWLR (Pt. 417) 53; UNVERSITY OF LAGOS v. M.I. AIGORO (1985) 1 NWLR (Pt. 1) 143 at 148.
It is equally settled that if judicial discretion has been exercised bonafide un-influenced by irrelevant consideration and not arbitrarily or illegally by the Court, the general rule is that the appeal Court will not accordingly interfere. However, an appellate court may interfere with the exercise of judicial discretion if it is shown that there has been a wrongful exercise of judicial discretion such as where the court, below acted under a misconception of law or under misapprehension of fact in that it either gave way to irrelevant or unproved matters or it omitted to take into account matters that are relevant or where it exercised or failed to exercise the discretion on wrong or inadequate materials and in all other cases where it is in the interest of justice to interfere. See: UDENSI v. ODUSOTE (SUPRA) at PAGE 558 PARAGRAPH C-E, ENEKEBE v. ENEKEBE (1964) 1 ALL NLR 102.
The question now is: Whether the lower court was justified in the exercise of its discretion when it restrained the 3rd Respondent herein from making any payment to the Appellant on account of the Appellant’s claim to the 2nd Respondent’s sum of N42,350,554.80?
The motion filed on the, 2nd September, 2011 sought for a restraining order on the 3rd, 4th, 5th and 6th Defendants in prayer 1 and 2nd Defendant in prayer 2. The Appellant herein was the 1st defendant at the High Court. The Order for injunction was not specifically made against it. It is only remotely connected with the 3rd Respondent who was restrained from making any payment, just as the 2nd Respondent herein, is so connected to the 3rd Respondent, because the 3rd Respondent is holding its money. If anyone was to appeal at all, it is the 3rd Respondent against whom the order was made. 3rd Respondent has not appealed against that decision. I clearly do not see the role of the Appellant herein, since the order against which it is quarrelling was not made against it.
The Appellant has admitted entering into an agreement with the 2nd Respondent, an agreement which he said is a Memorandum of Understanding. As far as I am concerned, Memorandum of Understanding is not an agreement yet. Blacks Law Dictionary, 6th Edition defines Memorandum as an informal record, note or instrument embodying something that the parties desire to fix in memory by the aid of written evidence, or that is to serve as the basis of a future formal contract or deed. In KERNER v. HUGHES TOOL CO. 128 CAL RPTR. 839 at 845, it was stated that Memorandum implies something less than a complete contract and that the Memorandum functions only as evidence of the contract and need not contain every term, so that a letter may be a sufficient Memorandum to take a case out of frauds.
By my comment here, I am not trying to delve into the substantive case, but what I have done here, is to justify the lower Court’s decision in which he restrained the 3rd Respondent from paying out any money belonging to the 1st and 2nd Respondents, pending the hearing and determination of the substantive summons. Be that as it may, the lower court has the general powers to make preservative Orders where the exigencies demand, and this is what it has done here, on admission by parties that there is dispute to be submitted to an arbitration panel in line with paragraph 17 of the Memorandum of Understanding signed by the Appellant and the 2nd Respondent.
The orders sought by the Applicants were for injunction to restrain certain parties from doing certain acts. There was no prayer for stay of proceedings, which I have noticed in the argument of parties in their respective briefs of argument. For the reasons I have set out herein, the first issue is resolved in favour of the Respondents and against the Appellant. The ground of appeal upon which it is formulated is hereby dismissed.
On issue two, learned Counsel for the Appellant submitted that the lower court, in ordering itself to stay proceedings added the phrase, “26 units of four bedrooms detached Bungalows.” This, according to the learned counsel amount to making a case for the parties, since none of the parties raised it. In aid, learned counsel cited DIAMOND BANK LTD. v. UGOCHUKWU (2008) 1 NWLR (Pt. 1067) 1, WEMA BANK PLC. v. OSILARU (2008) 10 (Pt. 1094). On the whole, learned Counsel urged this court to set aside the ruling of the lower court delivered on the 4th July, 2012 and to direct the parties to an Arbitrator for the resolution of the dispute arising from the MOU. Learned Counsel also asked the Court to stay proceeding in the suit pending the resolution by the Arbitrator.
Learned counsel for the 1st and 2nd Respondents in his argument, submitted that the 2nd issue formulated by the Appellant does not flow from the 2nd ground of appeal, from which the issue was formulated. Learned Counsel reproduced the issue and the 2nd ground of appeal and submitted that the issue is incompetent and ought to be struck out. This is a new issue raised by the 1st and 2nd Respondents. The Appellant was required to file a reply which he did not do. He has therefore admitted that the issue formulated by the Appellant is incompetent.
Even at the risk of repetition, let me reproduce the 2nd ground of appeal as follows:
“The learned trial Judge misdirected herself in law when she directed the Claimant’/Respondent to move his application first before hearing the 1st Defendant/Appellant application and arrived at a decision on both application in a single ruling.”
The issue formulated from this ground reads as follows:-
“Whether the lower Court possesses any power to rewrite arbitration clause (Agreement) for the parties.”
Reading through the 2nd ground of appeal and the issue so formulated therefrom, it is clear that the issue does not arise from the said ground of appeal. The Supreme Court has in a number of decisions which have been followed by this court, held that, issues formulated for determination of appeal must arise from and be based on the grounds of appeal. See: LONGE v. F.B.N. PLC. (2010) 6 NWLR (Pt. 1189) 1; CHAMI v. UBA PLC. (2010) 6 NWLR (Pt. 1191) 474.
Having found the 2nd issue so formulated for determination of this appeal incompetent, same is hereby struck out. The 2nd ground of appeal is also struck out as it is not supported by issue for determination of this appeal. For appeals in this Court are decided on the basis of issues formulated by parties. The argument so canvassed from the issue I have just struck out, goes along with the ground of appeal.
The only issue consistent with the surviving ground, one of the grounds of appeal having been resolved against the appellant and in favour of the 1st and 2nd Respondents, this appeal shall be and it is hereby dismissed.
I make no order as to cost.
MASSOUD ABDULRAHMAN OREDOLA, J.C.A.: I have had the privilege of reading in draft the judgment just delivered by my learned brother, Paul Adamu Galinje, JCA. I agree entirely with his incisive analysis regarding the issue involved therein and conclusion reached thereon. Thus, for the reasons given in the said judgment and which reasons I most respectfully adopt as mine, I too would dismiss the appeal. It is devoid of worth or merit. It is thereby dismissed by me. I abide by the consequential orders made in the said lead judgment inclusive of the one regarding costs.
FATIMA OMORO AKINBAMI, J.C.A.: I have had the privilege of reading in draft, the lead judgment just delivered by my learned brother PAUL ADAMU GALINJE, JCA and I entirely agree with the reasoning contained therein and the conclusion arrived thereat.
I also accordingly dismiss this appeal and abide by the consequential order made therein.
Appearances
Mr. Babatunde Jemilehin – AppellantFor Appellant
AND
Mr. Ola Olanipekun, Esq., with Daniel Alumun for the 1st and 2nd Respondents.
Mr. Georgewill Osaki Bright – 3rd Respondent.
4th, 5th, 6th and 7th Respondents not representedFor Respondent
