SKYE BANK PLC v. CORNELIO COLOMBARA & ANOR
(2014)LCN/7080(CA)
In The Court of Appeal of Nigeria
On Monday, the 31st day of March, 2014
CA/L/103/2011
RATIO
WORDS AND PHRASES: ‘GUARANTEE’
A guarantee, legally speaking is a contract whereby the guarantor promises the actual or potential creditor to be responsible to him in addition to the principal debtor of his existing or future obligations to the creditor, if the principal debtor fails to perform those obligations. See CHITTY ON CONTRACTS (26 EDITION, 1989) Vol. II CAP 12.
Also in Blacks Law Dictionary 9th Edition page 1968 Guarantee is defined as a promise to answer for the payment of some debt, or the performance of some duty in case of the failure of another who is liable in the first instance. PER SAMUEL CHUKWUDUMEBI OSEJI, J.C.A.
JUSTICES
JOSEPH SHAGBAOR IKYEGH Justice of The Court of Appeal of Nigeria
SAMUEL CHUKWUDUMEBI OSEJI Justice of The Court of Appeal of Nigeria
TIJJANI ABUBAKAR Justice of The Court of Appeal of Nigeria
Between
SKYE BANK PLC Appellant(s)
AND
1. CORNELIO COLOMBARA
2. G. CAPPA PLC Respondent(s)
SAMUEL CHUKWUDUMEBI OSEJI, J.C.A. (Delivering the Leading Judgment): This appeal is against the Ruling of the High Court of Lagos State delivered by Y. A. Adesanya J. on 25/6/2009 in suit No.ID/272/2005 wherein a garnishee Order Nisi for the sum of US$52,441.97 and N1,600,472,32 was made absolute.
The 1st Respondent herein had as Claimant in the Lower Court filed a writ of summons and a statement of claim dated 17/5/2005 against the 2nd Respondent (as defendant) claiming the sum of $52,441,47 and N1,600,472,32 being offshore and onshore entitlements due to the 1st Respondent from the 2nd Respondent and interest in the above sum at 10% per annum from 31/7/2003 till judgment is delivered.
In a judgment delivered on the 25/6/2009 the Lower Court dismissed the 2nd Respondent’s Counter-claim and entered judgment in favour of the 1st Respondent (as claimant) in the sum of $52,441,97 and N1,600,472 and interest thereon at the rate of 10% per annum from 31/7/2003 till 25/6/2009 and thereafter at the same rate until judgment debt is fully liquidated.
Subsequently, the 1st Respondent commenced a garnishee proceeding against the appellant pursuant to which a Garnishee Order Nisi was made against the appellant by the Lower Court on 23/11/2009 to show cause why the Order Nisi will not be made absolute.
The appellant reacted by filing a total of four affidavits to show cause in succession. On the return date, the Lower Court after due consideration of the contents of the appellant’s affidavits delivered a ruling wherein it entered an Order Absolute on 10/12/2010.
Being aggrieved by the said Ruling granting a garnishee order absolute, the appellant filed a notice of appeal containing three grounds of appeal.
Brief of argument were subsequently filed and served pursuant to the relevant Rules of the Court.
The appellant’s brief of argument dated 17/6/2013 and filed on 19/6/2013 was deemed properly filed on 9/10/2013. The Respondent’s brief of argument was dated and filed on 10/10/2013.
In the appellant’s brief of argument three issues were formulated for determination as follows:-
(1) Whether the appellant had a lien of the attached funds.
(2) Whether the learned trial judge was right in the circumstance of the proceedings before the court to have made a garnishee order absolute against the appellant without first directing the appearance of the Lagos State Government and concluding an inquiry.
(3) Whether the Lower Court was right in holding that the 60% advance payment was inclusive of the profits accruable to the 2nd Respondent.
In the Respondent’s brief of argument one issue was formulated as follows:
“Whether the Learned Trial judge of the High Court of Lagos State was right to have made a garnishee order absolute against the appellant attaching funds in the account held in the name of the 2nd Respondent with the appellant having regard to the totality of the Affidavit and documentary evidence before the Lower Court.”
I will however adopt the three issues in the appellant’s brief in the determination of this appeal.
Issues one and three were argued together in the appellant’s brief and I so adopt the same approach given the facts that the two issues are similar.
ISSUE ONE AND THREE
Dwelling on the issues learned counsel for the appellant submitted that it was apparent from the letter of award of contract dated 17th August 2009 and issued by the Lagos State Government to the 2nd Respondent (judgment debtor) that the total contract sum was N210,000,000.00 and that only 60% of the contract sum was to be released to the 2nd Respondent on presentation of an acceptable bank guarantee and the balance was to be paid based on the certified work done subject to 5% retention fee to be paid six month after completion.
He added that the 60% advance payment works out to N126 million and for which sum the appellant issued an advance payment Guarantee and the sum of N110 million paid as part of the advance payment sum through a G.T. Bank cheque dated 25/11/2009 and issued in the name of the 2nd Respondent was paid into the 2nd Respondent’s account with the appellant. The said sum was later transferred to a special projects account from where the Appellant disbursed it strictly for the purpose of paying sub-contractors working for the 2nd Respondent on the project.
Learned counsel further submitted that the finding of the learned trial judge that “the funds paid into the judgment debtor’s account for the execution of the contract awarded to it by the Lagos State Government comprises both the principal needed to actually complete the project and G. Cappa’s profit accruing from the project” was perverse as it was not based on clear evidence before the court.
ISSUE TWO
Herein, learned counsel submitted that the learned trial judge did not undertake a proper evaluation of the totality of the affidavit before the court before it made the order absolute.
He referred to the four affidavits filed by the appellant which according to him, suggests that the funds in the judgment debtor account domiciled with the appellant did not belong to the 2nd Respondent for its personal use, and benefit but the use and benefit of the Lagos State Government which represented the 60% advance payment for the execution of a contract for the renovation of the Headquarters building of the Lagos State Water Corporation for which payment the appellant issued an advance payment guarantee.
He further referred to the case of G.T. BANK PLC Vs. UNION BANK OF NIGERIA PLC (2007) 5 CLRN 109 which was relied upon by the learned trial judge in holding that the word “may” as interpreted by the appellate court in Section 87 of the Sheriff and Civil Process Act as not suggesting an obligation or duty meant to be mandatory also applies to Section 88 of the said Act.
He contended that the word “may” in a statute can be equivalent to “shall” and mandatory and as such is not discretionary in all cases. He relied on CONTRACT RESOURCES (NIG) LTD Vs. U.B.A. PLC (2011) 16 NWLR 592 and OGULAJI Vs. A.G. RIVERS STATE (1997) 6 NWLR (PT.508) 209 at 233.
Consequently, he argues that the word “may” as used in Section 88 of the Sheriff and Civil Process Act must be construed as “shall” and therefore mandatory in which case the learned trial judge ought to have ordered the appearance of the Lagos State Government to disclose its interest in the funds held in the 2nd Respondent’s account once there was a suggestion that the funds belong to the Lagos State Government.
He referred to the case of IDOSU Vs. OJIKUTU (Supra) to submit that if by an means it comes to the knowledge of the court that there is a third party claim to a sum attached in an Order Nisi, it is the duty of the court to withhold a garnishee order absolute and direct an inquiry. He also cited other local and foreign authorities in support of his stance that the decision in G.T.BANK PLC Vs. U.B.N. LTD Supra is not applicable to this case because it was based on Section 87 and not Section 88 of the Sheriff and Civil Process Act.
Learned Counsel then posited that since there is overwhelming documentary evidence before the trial court upon which it has made a finding that there was reasonable grounds for the suggestion that the attached funds belong to the Lagos State Government and as such conduct an inquiry. It follows that trial court erred in law in making the garnishee order absolute without following the mandatory statutory condition precedent stipulated by Section 88 of the Act. He then urged this court to set aside the Order Absolute.
Responding via the sole issue for determination as contained in the 1st Respondent’s brief of argument, learned counsel for the Respondent referred to the following:-
(a) Paragraphs 5, 5 and 7 of the Garnishee 1st Affidavit date 11/01/2010.
(b) Paragraphs 5 – 11 of the Garnishee further and better affidavit to show cause dated 3/2/2010.
(c) Paragraphs 5, 6, 7 and 8 of the Garnishee 3rd affidavit to show cause dated 11/3/2010; and
(d) Paragraphs 5-13 of the Garnishee’s 4th affidavit to show cause dated 2/7/2010.
Learned counsel then submitted that the learned trial judge in making the Order Absolute considered all the facts and evidence put before him by the parties in their respective affidavits. He then referred to the Ruling of the learned trial judge at pages 247 to 249 of the Record of appeal to submit that the learned trial judge painstakingly analyzed the affidavit evidence of the parties before arriving at a conclusion with the exercise of the discretion to grant an Order Absolute.
Learned Counsel further contended that by virtue of Section 85 of the Sheriff and Civil Process Act, once an Order Nisi is served on a Garnishee, it binds the debt or funds in the account of the judgment debtor in the hands of the Garnishee and the said provision has been applied in the following cases: – FMBN LTD Vs. DESIRE GALLERY LTD (2004) 13 NWLR (PT.891) 522 at 540 – 541; U.B.A. PLC Vs. EKANEMU (2010) 2 NWLR (PT.1177) 181 and C.B.N. Vs. AUTO IMPORT EXPORT (2013) 2 NWLR (PT 1337) 80 at 128.
On the Appellant’s contention that money in the account of the 2nd Respondent with the appellant is money meant to secure advance payment guarantee issued by the appellant on behalf of the 2nd Respondent. He referred to the finding of the trial court on the issue and argued that the money paid to the 2nd Respondent by the Lagos State Government and which was in the former’s account at the time of the service of the Order Nisi cannot be said to be money due and owing either the appellant or the Lagos State Government.
He referred to Exhibit LA1, and LA2 attached to the further and better affidavit to show cause dated 3/2/2010 to submit that it shows that the alleged contract sum is N210,000.000 and the Advance Payment Guarantee was issued in respect of 60% of the total contract sum of N210,000.000 which amounts to N125, 000.00. But by exhibit LA3 which is the statement of account and paragraph 9 of the affidavit deposed to on 3/2/20t0 it was revealed that the sum of N110,040.000 was the sum allegedly credited to the account of the 2nd Respondent on 30/11/2009.
Therefore he says, the sum of N110,040,000 cannot represent the 60% of the contract sum referred to Exhibit LA1 and LA2 and thus negates the appellant’s claim that the sum of N110,040,000 paid into 2nd Respondent’s account represents an Advance Payment Guarantee.
On the appellant’s contention that by virtue of Section 88 of the Act, the learned trial judge ought to direct the appearance of the Lagos State Government who is alleged to have an interest in the attached funds standing to the credit of the 2nd Respondent because the word “may” in the section connotes mandatoriness.
Learned counsel submitted that the word “may” as used in Section 88 of the Sheriff and Civil Process Act cannot be construed to impose a mandatory condition because it was not the intention of the legislature to do so and besides the word “may” as used in Section 87 and 88 was given due interpretation by this court in the case of GTBANK PLC Vs. UNION BANK OF NIGERIA PLC (2007) CLRN 109.
Furthermore he says, the fund sought to be attached in the custody of the appellant was not traced to the accounts of the Lagos State Government but that of the 2nd Respondent.
On the case of HANCOOK Vs. SMITH (1889) 41 CHD 455 cited by the Appellant, learned counsel submitted that the facts therein are distinguishable from that of the instant case and as such does not apply.
He also referred to Section 92 of the Sheriff and Civil Process Act to support the argument that any payment made by a garnishee after becoming aware of the Garnishee Order Nisi is null and void and of no effect. He then urged this court to dismiss the Appeal for lacking in merit.
ISSUE ONE AND THREE
Whether the Appellant had a lien of the attached funds and whether the Lower Court was right in holding that the 60% advance payment was inclusive of the profits accruable to the 2nd Respondent.
The appellant’s main grouse is that a garnishee order absolute ought not to have been made by the Lower Court without first directing the appearance of the Lagos State Government to whom the advance payment belonged and then conduct an inquiry into the interest of the aforementioned before making the order.
Strong reliance was placed on the four different affidavits to show cause filed by the appellant which according to it contained enough evidence relating to the interest of the Lagos State Government as well as the appellant right of lien over the sum kept in the 2nd respondent’s account with it.
It will be necessary therefore to review the relevant portion of the affidavit in question in order to ascertain the justification for the appellant’s contention.
The first affidavit to show cause filed by the appellant and dated 11/1/2010 was sworn to by one Leke Alli and paragraphs 5 to 8 reads thus:
5. That the date the Garnishee order was served on the bank, an account audit was carried out.
6. That the said audit revealed that the judgment debtor operates on account with the Bank which is well funded.
7. That the account referred to in paragraph 6 above has a credit balance of N9,466,767.82 (Nine Million four hundred and sixty six thousand seven hundred and sixty seven naira eighty two kobo).
8. That a “No Debit status” was immediately placed on the account subsequent to the order of the honorable court.
The appellant also deposed to a “further and better affidavit to show cause” dated 3/2/2000 it has 16 paragraphs with four documents attached as Exhibits LA1 to LA4.
Paragraphs 5 to 13 are relevant and reads as follows”
5. That alter the court sitting on 18th January 2010, I contacted the branch to confirm that the “No debit Status” placed on the account was still in place but I was informed by the Branch Development Manager and I verily believe her that the funds in the judgment debtor’s account are funds used to secure an Advance Payment Guarantee (“APG”) issued by the Bank on behalf of the Lagos State Government.
6. That further to the above, I was further informed that when the initial request was made for the account to be blocked the officer in charge at the branch did not confirm the purpose the funds in the account were meant for but erroneously placed a No debit Status on part of the amount pursuant to the court ruling dated 23rd November 2009.
7. That to confirm the above position I obtained a copy of the Advance Payment Guarantee No. SKYE/APG/3969/2009 dated 26th August 2009 in the sum of N16,000,000.00 (One Hundred and Twenty Six Million Naira) issued by Skye Bank Plc in favaur of the Lagos State Government and on behalf of G. Cappa Plc. same is hereby attached and marked as Exhibit LA1.
8. That I further obtained a copy of the Contract Award letter from Lagos State Tenders Board dated 17th August 2009 which is addressed to The Managing Director; G. Cappa Plc. Same is hereby attached and marked as Exhibit LA2.
9. That as further evidence to show that the money in the judgment debtor’s account with the Bank is security/collateral for the Advance Payment Guarantee referred to above; I requested for all relevant documents from the branch. The Statement of Account of G. Cappa is hereby attached and marked as Exhibit LA3. The said account shows that the sum of N110,040,000.00 was credited into the account on 30th November 2009 being working capital payment and advance APG utilization.
10. That the current balance on the account based on the attached Statement of Account is the sum of N906,395.59, and the said sum is liable to be withdrawn at anytime as it is port of the funds credited into the account as part of working capital and advance APG utilization.
11. That the judgment Debtor accepted the offer of working capital/APG utilization from Skye Bank Plc. Attached and marked s Exhibit LA4 is the extracts of minutes of meeting of the Board of Directors of the Judgment Debtor accepting the said offer.
12. That from all the above, it is clear that the funds in the judgment debtors account with the Bank is collateral for the APG advance and same should only be used for performing the contract awarded by the Lagos State Government.
13. That the previous affidavit filed was prepared in error as all the relevant facts were not made known to the deponent before same was filed in court.
The content of the four exhibits will be revisited in this judgment. The 1st Respondent as the applicant for the garnishee order in the Lower Court filed a counter affidavit to challenge the Appellant’s affidavit and further affidavit and paragraphs 9-13 are hereby reproduced below:
9. I have seen and carefully studied the Statement of Account of the judgment Debtor with the td Garnishee Bank and I know as a fact that on the date the Order Nisi made by this court was served on the 2nd Garnishee Bank, being made 16th December, 2009, the sum of N100,628,563.09 (One Hundred Million Six Hundred and Twenty-eight Thousand, Five Hundred and Sixty-three Naira and Nine Kobo) was standing as credit balance in the account of the judgment Debtor with the 2nd Garnishee Bank. A copy of the Statement of Account which was brought before this court by the 2nd Garnishee Bank is attached and marked as Exhibit “CC2”,
10. I know as a fact that as shown in the Statement of Account aforesaid, the sum of N100,600,000.00 (One Hundred Million Six Hundred Thousand Naira) was withdrawn from the account a day alter the service of the Order Nisi, that is, 17th December, 2009 and a subsequent payment of N15,000,000.00 (Five Hundred Naira) made into the account on 23rd December, 2009.
11. Attached herewith and marked Exhibits “CCS’ and “CC4” are copies of the Affidavit of Service of the Order Nisi made by Mr. Adebowale Adebola Samwill, a Baillif of the Court and a copy of the Order Nisi duly endorsed by the same Leke Alli of 3:00pm on 16th December 2009 upon receipt of the original copy of the Order Nisi made by this court on 23rd November, 2009.
12. From the Statement of Account of the Judgment Debtor with the 2nd Garnishee Bank, it is clear that the 2nd Garnishee Bank proceeded to allow withdrawals to be made from the account after becoming aware of a valid and subsisting order of this court and in flagrant disobedience of a valid order of this Court.
13. I know as a fact that the actions of the 2nd Garnishee Bank amount to contempt in the face of the Court which this Honourable Court ought not to tolerate in the maintenance of this Court’s sacred integrity.
The appellant thereafter filed a “2nd Garnishee’s further affidavit showing cause”. It is dated 11/3/2010 and has 16 paragraphs. Paragraphs 5 to 9 are relevant and the need as follows:
5. Although the account of the judgment debtor to which the order nisi relates is held in the name of the judgment debtor, G. Cappa Plc, the sum in the account was not “a debt due or accruing to the judgment debtor from the garnishee at the time of the service of the order nisi but as money advanced by the Lagos State Government for the renovation of the Lagos Water Corporation headquarters at Ijora and for which the 2nd garnishee had issued an Advance Payment Guarantee (APG) in favour of the Lagos State Government the application of the funds towards the completion of renovation of the Water Corporation Headquarters and the performance of the renovation contract.
6. By the said Advance Payment Guarantee to issue the garnishee also became obligated to guarantee and became liable to the Lagos State Government to ensure that: the 60% advance payment of N126,000,000.00 advanced by the Lagos State Government and lodged in the said account is applied directly for the execution of the contract of renovation of the Water Corporation headquarters failing which the garnishee would be liable to make a refund to the Lagos State Government.
7. Sometime after the receipt of the order nisi and despite the facts and circumstances deposed to in paragraphs 5 & 6 above the 2nd garnishee had specifically set aside the sum of N9,446,767.82 towards the satisfaction of the judgment sum but to also ensure that the performance of the renovation contract which is tied to time is not delayed or completely account that was in excess of the quantum of the judgment sum the subjected of the garnishee proceedings.
8. I verily believe that in view of the fads and circumstances the 2nd garnishee is not liable to the judgment debtor for the payment of the said sum of N9,446,767.82 presently attached in consequence of the order nisi as the sum is not money which is due and accruing to the judgment debtor from the garnishee and therefore the order nisi ought not to be made absolute.
9. The 2nd garnishee would suffer injustice and the performance of the contract for the renovation of the Water Corporation Headquarters will also be stalled in the event that the order nisi is made absolute and the order absolute will also be against public policy and public interest in the circumstance.
The fourth one is headed “Garnishees affidavit to show further cause”. It is dated 2/7/2010 and sworn to by Dapo Olowo a legal practitioner. Paragraphs 2 to 9 are hereby reproduced below:
2. Further to the previous affidavits filed on behalf of the garnishee in this cause it became expedient to place further facts and evidence before the court to clarify and explain the entries in the statement of account filed in court and enable the court determine the issue arising in the proceedings.
3. The said statement of account indicates that as at the date of the service of the order nisi on the garnishee there was a credit balance of N110,095,330.97 in the judgment debtors account No. 1331770005819 domiciled at the Adeola Odeku branch of the garnishee.
4. However the said sum N110,095,330.91 comprised the sum of N110,040,000.00 the 60% advance payment lodged into the account in via LASG – EXPENDITURE ACCOUNT Guarantee Trust Bank cheque dated November 25, 2009 for the contract for the renovation of the Water Corporation Headquarters and a Balance of N55,330.91 which was the only attachable fund as monies due accruing to the judgment debtor. Now shown to me and marked Exhibits S1 is a true copy of the said cheque.
5. Since the cheque for the said advance payment was drawn in the name of the judgment debtor it had to be first cleared through the only existing account of the judgment debtor maintained with the garnishee before the funds were subsequently transferred to on escrow or special account from where the funds will be disbursed through the judgment debtors account in tranches to enable it apply the funds for the execution of the project of contract for the renovation of the Lagos Water Corporation headquarters.
6. The proceeds of the cheque which was lodged in the account is neither the property of the judgment debtor nor was it paid into the judgment debtors account for its benefit and the sum was also security for the advance payment guarantee – APG – issued by the garnishee in favour of the Lagos State Government.
7. The order nisi was served on the bank before the funds were transferred to escrow or project account that the order nisi was served on the garnishee.
8. Notwithstanding the fact that the funds in the judgment debtor’s account comprised substantially of the advance payment the garnishee complied with the order nisi by hypothecating the sum of N9,466.86 attached by the order and transferring same to an interest yielding fixed deposit account on which a post no debit status was placed pending the further order of the court.
9. The said sum of N9,466,767,86 attached by the order nisi to answer to and satisfy the judgment debt remains in the interest yielding fixed deposit account till date.
From the various paragraphs of the appellant’s affidavit to show cause set out above, I can only without much ado agree with the Respondent’s counsel, that they are conflicting and contradictory in terms. While in the first affidavit dated 11/1/2010 it was deposed to in paragraphs 5 to 7 that the date the garnishee order was received by the appellant an account audit was conducted which revealed that the 2nd Respondent operates an account with it and that as that date the 2nd Respondent had a credit balance of N9,466,767.82 and to which a “No debit” status was immediately placed on the account pending a further order of the Lower Court.
However, in the second affidavit dated 3/2/2010 there was a volte face in paragraph 5 that the funds in the 2nd Respondent’s account are funds used to secure an Advance Payment Guarantee (APG) issued by the bank on behalf of Lagos State Government which funds are to be used only for performing the contract awarded by the Lagos State Government. He went on with brazen temerity to depose thus:
“That for all intents and purposes, therefore no funds to be attached in satisfaction of the debt owned by the judgment debtor”.
Meanwhile in paragraph 9 it had been deposed that the sum of N110,040,000 was credited into the account on 30/11/2009 being working capital payment and “Advance APG” utilization.
What is more. Though the appellant had deposed in its affidavit dated 11/1/2010 that the amount standing to the credit of the 2nd Respondent as at the date of receipt of the Order Nisi was N9,466,767,82. The statement of account attached to the third affidavit to show cause dated 3/2/2010 revealed that the account of the 2nd Respondent with the appellant had a credit balance of N100,628,563.09 as at the 16th December 2009 when the Order Nisi was served on the appellant and that on the 17th December 2009, a day after receipt of service of the Order Nisi allowed the withdrawal of the sum of N100,600,000.00 from the account of the 2nd Respondent in clear and contemptible defiance of the order of the Lower Court.
The conflicts in the appellant’s affidavit to show cause was further accentuated in the appellant’s fourth affidavit to show cause dated 2/7/2010 wherein it deposed in paragraphs 7 to 9 as follows:
7. The order nisi was served on the bank before the funds were transferred to escrow or project account that the order nisi was served on the garnishee.
8. Notwithstanding the fact that the funds in the judgment debtor’s account comprised substantially of the advance payment the garnishee complied with the order nisi by hypothecating the sum of N9,466.86 attached by the order and transferring same to an interest yielding fixed deposit account on which a post no debit status was placed pending the further order of the court.
9. The said sum of N9,466,767,86 attached by the order nisi to answer to an satisfy the judgment debt remains in the interest yielding fixed deposit account till date.
Thus while contending on one hand that there was no money to be attached in the account of the 2nd Respondent as deposed to in paragraph 15 of the affidavit dated 3/2/2010, there was on the other hand a sudden flow of remorse or repentance when it deposed in paragraphs 7 to 9 above that actually money was transferred from the account after receipt of the Order Nisi and the sum of N9,466,767,86 transferred to interest yielding account pending the outcome the further order of the Lower Court.
It is so sad and unfortunate that the personalities deposing to this claim of pejurious facts are legal practitioners who are expected to know better in terms of protecting and defending the dignity of our revered temple of justice. Rather they opted to embark on a game of hide and seek in pursuit of enlightened self interest. This is indeed an absurd as it is loathsome. Section 85 of the Sheriff and Civil Process Act is very clear on what a garnishee is expected to do upon receipt of service of on Order Nisi. It provides thus:-
“Service of an order that a debt is due or accruing to the judgment debtor shall be attached, or notice thereof to the garnishee, in such manner as the court may direct shall bind such debt in his hands.”
The case of FMBN LTD Vs. DESIRE GALLERY LTD (2004) 13 NWLR (PT.891) 522 cited by the Respondent is apt in this regard. This court at pages 540 to 541, held thus:-
“By virtue of section 85 and 88 of the Sheriff and Civil Process Act a garnishee cannot unilaterally and without the leave of court, pay any money to third parties out of the moneys which by an order of a competent court had been attached. In the instant case, the money belonging to the defendants which was in the hands of the Appellant became payable to the Respondents upon the judgment of the trial court in their favour and also became attached upon the service of the garnishee decree Nisi on the appellant. In the circumstance the Appellant ought not to have paid the money to third parties.”
See also RE DIAMOND BANK LTD (200) 17 NWLR (PT.759) 120 and CBN AUTO IMPORT EXPORT (2013) 2 NWLR (PT.1337) 80.
In the instance case it was wrong for the appellant to have allowed the transfer or withdrawal of any amount whatsoever from the 2nd Respondent’s account twenty four hours after having been served with an Order Nisi by the Lower Court.
On the issue of lien on the amount in the 2nd Respondent’s account, I give due credit to the learned trial judge who thoroughly and exhaustively evaluated the affidavit evidence presented to her in reaching a sound conclusion in her ruling which is at page 247 to 248 of the record and it reads thus:
A garnishee proceeding by its nature is separate and distinct from the main action culminating in the judgment sought to be enforced by the proceeding and is strictly between the judgment creditor and the garnishee, (the third party who is indebted to the garnishee) hence the propriety of the judgment Debtor filing processes in the proceedings and being heard on same had been questioned. A Garnishee is essentially a third party, who being indebted to the judgment debtor or having custody of his money (as in the instant case, Skye Bank Plc.) and who at the instance of the judgment creditor (in this instance, the Applicant) is being called upon to pay the judgment debt from his indebtedness to the judgment debtor or from the creditor of the judgment debtor in the account thereof with the third party.
See NITEL Vs. I.C.I.C (Directory Publishers) Ltd. & Anor. (2009) 16 NWLR 656.
In the instance, the fund that is being sought to be attached standing to the credit of G. Cappa with Skye Bank Plc. is not a fund which stands to the credit of Skye Bank. There is no doubt that Skye Bank has an obligation under the Advance Payment Guarantee to pay maximally N126 Million upon the failure of the G. Cappa (the contractor) “to utilize the advance payment for the purpose of the contract.” In effect, the liability of the Garnishee on the Advance Payment Guarantee is conditional upon default of the G. Cappa, the judgment Debtor.
See African Insurance Development Corporation (A.I.D.C.) Vs. Nigeria Liquified Natural Gas Ltd. (2000) 4 NWLR (Pt.653) Page 494.
In the event of default by G. Cappa to perform the contract awarded by the Lagos State Government and the eventual payment by Skye Bank on the advance payment guarantee, the latter is entitled to look towards G. Cappa for reimbursement. That is an incident of advance payment guarantee. Ordinarily a garnishee has a right of set off if the judgment debtor is indebted to it, but that is not a case of direct set off but of Skye Bank preserving the fund in its hand, standing to the credit of the Judgment Debtor in favour of another third party, who is not ordinarily a party to this proceeding. To that extent, the Garnishee cannot be said to have a charge or a lien on the fund standing to the credit of the judgment Debtor i.e. G. Cappa. There is no sum presently due or owing by the judgment debtor to Skye Bank or the Lagos State Govt. The obligation of G. Cappa. The judgment debtor is delivered on the contract awarded to it by the Lagos State Govt. The working capital advance to G. Cappa is not money due and owing from the judgment Debtor to either the Bank or the Lagos State Government at the time of the service of the order nisi on Skye Bank.
There is no averment in any of the affidavits to shoe cause stating that it the sum due and owing to the judgment Creditor is paid, the Bank would not be reimbursed or indemnified by G. Cappa in the event of its been liable on the advance payment guarantee. The essence of garnishee is to follow up the assets of the judgment debtor in the hand of a garnishee. The garnishee has an obligation to make a disclosure of the funds of the judgment debtor which comes into its hands at date of service of the Order Nisi.
See the English Court of Appeal case of Heppenstall Vs. Jackson & Barclays Bank Ltd. (1939) 1 KB 585.
At page 249 of the record, the learned trial judge further stated as follows:
It is the considered opinion of this court that the above case is distinguishable from the instance, in that the fund paid into the judgment Debtor’s account for the execution of the contract awarded to it by the Lagos State comprises both the principal needed to actually complete the project and G. Cappa’s Profit accruing from the project. I therefore find and hold that the money standing to the credit of the G. Cappa as shown by the statements of account exhibited as exhibit LA3 and S4 attached to the affidavits to show cause is not held in trust by the judgment Debtor for the Lagos State Government. I also find and hold that no charge or lien exist over the said sum by the Lagos State Government or the Garnishee.
I entirely agree with the above finding of the Lower Court and added to that, Exhibit LA2 attached to the appellants 2nd affidavit to show cause dated 3/2/2010 speaks for itself. It is a copy of the letter of award of contract by the Lagos State Government to the 2nd Respondent. The content of the said letter dated 17/8/2009 read thus:
CONTRACT AWARD FOR THE RENOVATION OF LAGOS WATER CORPORATION HEADQUATER BUILDING AT IJORA. (PHASE 1)
Refer to your quotation and the subsequent meeting held with your representative on Saturday, 1st August, 2009 in respect of the above project, I am pleased to inform you that after due consideration of the State Tenders Board’s recommendations, approval has been given that your Company be awarded the contract for the Renovation of Lagos Water Corporation Headquarter Building at Ijora, (Phase 1) at a fixed sum of N210,000,000.00 Two hundred and ten million Naira.
2. You are expected to complete the project within six (6) Months, while 60% (sixty percent) of the contract sum would he released to your Company as Advance Payment on the presentation of an acceptable Advance Payment Bank Guarantee. Balance Payment would be Made based on certified work done subject to 5% retention lee to be paid six (6) months after completion. Furthermore, “obligation of either party shall take effect upon receipt of the Advance Payment by your company or the receipt of Advance Payment Guarantee in favour of the Government”.
3. Please ensure payment of Administrative Fee to this Office, Agreement Fee to Lagos S tate Ministry of justice and other official fees.
4. For any clarifications, please liaise with the Group Managing Director, Lagos State Water Corporation.
5. Your letter of acceptance of the offer as well as photocopy of the Advance Payment Guarantee should reach the undersigned within a week from the date of this letter.
6. Congratulations.
Signed
E. A. Fatunde
Secretary (STB)
The said letter indeed speaks for itself to the effect that whatever money transaction involved is between the Lagos State Government and the 2nd Respondent. The 2nd paragraph referred to direct release of 60% of the contract sum of N210,000,000 to the 2nd Respondent as advance payment upon the provision of a bank guarantee. Whatever amount paid to the 2nd Respondent was its own part of the bargain in the performance of the contract for the renovation of the Lagos Water Corporation Headquarter building. It contains no provision that the Lagos State Government is to follow and monitor how every naira is disbursed in the performance of the contract. All that was required and as evidenced in exhibit LA1 is a bank guarantee in the event of non execution of the contract.
Therefore whatever money that finds its way from the contract into the 2nd Respondent’s account remains its rightful resource to be regarded as its funds in the account maintained with the garnishee. To my mind therefore, it does not fall within the category of third party interest contemplated by Section 88 of the Sheriff and Civil Process Act and as such the Lagos State Government has no business being invited to assert its interest in the amount it paid for a contract for renovation.
The issue of lien on the sum in the 2nd Respondent’s account with the appellant does not therefore arise with regard to the appellant, there is nothing in Exhibit LA1 (Advance Payment Guarantee) showing that by virtue of same it has control over the disbursement of any amount credited to the 2nd Respondent’s account or that it has a right of lien over same. Exhibit LA1 frequently referred to and relied upon by the appellant speaks for itself and it will be futile to read any contrary intention into it.
Issue one and three are therefore resolved in favour of the 1st Respondent.
ISSUE TWO
Whether the learned trail judge was right in the circumstance of the proceedings before the court to have made a garnishee order absolute against the Appellant without first directing the appearance of the Lagos State Government and conducting an enquiry.
The submission of both parties in this appeal had earlier been summarized in this judgment.
I had also dealt with this issue while considering issues one and three wherein I reproduced the portion of the judgment of the Lower Court at page 247 to 250 of the record. I need not repeat same again but to emphasis that the finding of the learned trial judge and her decision to grant a garnishee order absolute is unassailable given the fact that she duly considered and evaluated every available evidence before coming to the conclusion that no charge or lien exists over the sum by the Lagos State Government or the garnishee. For emphasis, the Exhibit LA2, letter of award of contract by the Lagos State Government to the 2nd Respondent which I had earlier reproduced in this judgment speaks for itself to the effect that the 60% of the contract sum of N210,000,000 was to be disbursed to the 2nd Respondent upon presentation of a Bank guarantee and nothing more to it. There is no provision in the contract document that the Lagos State Government shall have a charge or lien on the advanced sum of money until the contract is concluded or that the appellant shall control the method of disbursement of any amount standing to the credit of the 2nd Respondent.
A guarantee, legally speaking is a contract whereby the guarantor promises the actual or potential creditor to be responsible to him in addition to the principal debtor of his existing or future obligations to the creditor, if the principal debtor fails to perform those obligations. See CHITTY ON CONTRACTS (26 EDITION, 1989) Vol. II CAP 12.
Also in Blacks Law Dictionary 9th Edition page 1968 Guarantee is defined as a promise to answer for the payment of some debt, or the performance of some duty in case of the failure of another who is liable in the first instance.
In the light of the above definition, the appellant by virtue of the advance payment guarantee issued to the Lagos State Government stands as a surety for the 2nd Respondent with respect to any sum of money disbursed to the latter. The Lagos State Government therefore has no business with how and when the money is utilized provided the contract is completed as agreed. It has no control, charge or lien as alluded to by the appellant. It has the appellant and 2nd Respondent to hold responsible in the event of the Renovation work not carried out as agreed. Exhibit LA2 did not provide for any control of such fund by the Lagos State Government neither did Exhibit LAL also by its content confer on the appellant any right or control or even lien over the money in the account of the 2nd Respondent.
Section 88 of the Sheriff and Civil Process Act provides that:
“Whenever in any proceedings to obtain a attachment of a debt it is suggested by the garnishee that the debt sought to be attached belongs to some third person or that any third person has a lien or charge upon it, the court may order such third person to appear and state the nature and particulars of his claim upon such debt.”
The learned trial judge in compliance with above provision duly considered the affidavit evidence and documents before the court and after due evaluation came to the conclusion that there was no charge or lien on the sum attached, either by the Lagos State Government or the appellant. Learned counsel for the appellant has relied on a number of authorities to content that the word “may” as used in Section 88 connotes a mandatory order, he relied on CONTRACT RESOURSES (NIG) LTD Vs. U.B.A. PLC (2011) 16 NWLR (PT.592) 607 – 608. However, he a graciously cited in addition the case of OGULAJI Vs. A.G. RIVER STATE (1997) 6 NWLR (PT.508) 209 at 233 per Iguh JSC where he held that:
“It was said that in interpreting the word “may” it is the duty of the court to try and get at the real intention of the legislature by carefully attending to the whole scopes of the statute to be construed.”
I am minded to apply the above principle to the instant case and the resultant effect is that I am minded to opine that the real intention of the legislature as per Section 88 of the Sheriffs and Civil Process Act is that the word “may as used therein is meant to be permissive and not mandatory. It gives the court room to consider the available evidence and the circumstance of the case in deciding whether it will be necessary to order such third person to appear and state the nature of his claim. If it were to be otherwise by interpreting the word “may” to be mandatory as the word “shall” it will no doubt open a flood gate or irrational and unwarranted claims and invitations and leave the court helpless as per its judicial responsibility to control frivolous and unnecessary claims which may end up frustrating or slowing down the course of justice to the advantage of the aggrieved.
In the circumstance, I hold that the Lower Court is not in breach of Section 88 of the Sheriff and Civil Process Act as there are no reasonable grounds to suggest that the attached funds belong to the Lagos State Government thereby necessitating an order or directive to compel its appearance in the court before it made the garnishee order absolute.
This issue is therefore resolved against the appellant.
On the whole I find that this appeal lacks merit and it is accordingly dismissed.
The ruling of the High Court of Lagos State delivered by Y. A. Adesanya J. on the 10th day of December 2010 is hereby affirmed.
I award the sum of N50, 000 as cost against the appellant in favour of the 1st Respondent.
JOSEPH SHAGBAOR IKYEGH, J.C.A.: My Lord, Samuel Chukwudumebi Oseji, J.C.A., has in the lead judgment which I had the advantage of reading in draft traversed the salient areas in dispute in the appeal which I cannot improve upon.
Accordingly, I agree with the said lead judgment and adopt it as my judgment in the appeal.
TIJJANI ABUBAKAR, J.C.A.: My learned brother OSEJI JCA granted me the privilege to read before now the lead judgment just delivered.
My learned brother dealt with the issues comprehensively and I have nothing more to add, except to join my brother in dismissing the appeal and affirming the ruling of the High Court of Lagos State delivered by Y. A. Adesanya J on 10th December 2010.
I abide by the consequential orders including that on costs.
Appearances
A. A. Durojaiye with C. Ojiekwe (Miss)For Appellant
AND
S. Ogwemoh with M. Ashaolu and Miss O. Sadiku for the 1st Respondent.
A. Ajiboye with A. Oroyo (Miss) for the 2nd Respondent.For Respondent
