UNION HOMES SAVINGS & LOANS PLC & ANOR v. UBN
(2022)LCN/16589(CA)
In The Court Of Appeal
(LAGOS JUDICIAL DIVISION)
On Thursday, June 02, 2022
CA/L/CV/354/2020
Before Our Lordships:
Monica Bolna’an Dongban-Mensem Justice of the Court of Appeal
Jimi Olukayode Bada Justice of the Court of Appeal
Abubakar Sadiq Umar Justice of the Court of Appeal
Between
1. UNION HOMES SAVINGS AND LOANS PLC 2. ASO SAVINGS AND LOANS PLC APPELANT(S)
And
UNION BANK OF NIGERIA PLC RESPONDENT(S)
RATIO
THE POSITION OF LAW IN AN ACTION INSTITUTED UNDER A SUMMARY JUDGEMENT PROCEDURE AND ENTERED ON YTHE UNDEFENDED LIST OF THE COURT
The authorities are clear that in an action instituted under a summary judgment procedure and entered on the undefended list of the Court, a defendant who intends to defend the action must show or demonstrate to the satisfaction of the Court that he has a defence on the merit or that the facts are in dispute and that there are triable issues which call for some explanation from the plaintiff. See ATAGUBA CO V. GURA NIG. LTD (SUPRA). The defendant at that stage is not required to prove his defence or to show that he is likely to succeed. All that the law requires of him is to show by his affidavit that he has a defence on the merit and to state the particulars of the defence. PER UMAR, J.C.A.
THE POSITION OF LAW ON THE BINDINGNES OF TERMS OF A CONTRACT BETWEEN PARTIES TO A CONTRACT
The word contract is defined in Black’s Law Dictionary, Seventh Edition as “An agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at Law – a binding contract.” The law is trite regarding the bindingness of terms of agreement on the parties. Where parties enter into an agreement in writing, they are bound by the terms thereof. This Court, and indeed any other Court will not allow anything to be read into such agreement, terms on which the parties were not in agreement or were not ad-idem. See BABA V. NIGERIAN CIVIL AVIATION TRAINING CENTRE, ZARIA (1991) 5 NWLR (PT.192) 388, UNION BANK OF NIGERIA LTD. V. B. U. UMEH & AMP, SONS LTD. (1996) 1 NWLR (PT.426) 565, S.C.O.A. NIGERIA & NBSP LTD. V. BOURDEX LTD. (1990) 3 NWLR (PT. 138) 380 AND KOIKI V. MAGNUSSON (1999) 8 NWLR (PT. 615) 492 AT 514. PER UMAR, J.C.A.
ABUBAKAR SADIQ UMAR, J.C.A. (Delivering the Leading Judgment): This is an appeal against the judgment of the Federal High Court, Lagos Division delivered by Honourable Justice M.S. Hassan on the 30th day of April, 2020, wherein the learned trial judge entered judgment in favour of the Respondent against the Appellants under the undefended list procedure.
BRIEF STATEMENT OF FACT
The action culminating into the instant appeal was instituted under the undefended list procedure by the Respondent as Plaintiff at the trial Court vide a Writ of Summons and affidavit in support dated 27th November, 2019 (at pages 29-120 of the Record of Appeal), wherein the Respondent sought the following reliefs: –
a. “The sum of N1,108,837,637.47 (One Billion, One Hundred and Eight Million, Eight Hundred and Thirty-Seven Thousand, Six Hundred and Thirty-Seven Naira, Forty-Seven Kobo) as at 31st December 2016 being the 1st Defendant’s outstanding indebtedness to the plaintiff on the credit facilities granted to the 1st Defendant by the Plaintiff together with compound interest thereon at the rate of 25% per annum effective from 1st January, 2017 until date of judgment and thereafter interest at 10% per annum on the Judgment debt until the entire judgment debt is fully liquidated.
b. The sum of N1,041,643,763.80 (One Billion, Forty One Million, Six Hundred and Forty Three Thousand, Seven Hundred and Sixty Three Naira, Eighty Kobo) as at 31st December, 2015 being the 1st Defendant’s outstanding indebtedness to the Plaintiff on the matured time deposits paid by the Plaintiff on behalf of the 1st Defendant (after setting off Plaintiff’s liabilities to the 1st Defendant under the Transaction Implementation Agreement) together with compound interest at 25% per annum effective from 1st January, 2016 until date of judgment and thereafter interest at the rate of 10% per annum until judgment debt is finally liquidated.
ALTERNATIVELY, (TO RELIEF TWO ABOVE)
c. The sum of N1,927,387,082.74 (One Billion, Nine Hundred and Twenty-Seven Thousand, Three Hundred and Eighty-Seven Thousand, Eighty-Two Naira, Seventy-Four Kobo) being the 1st Defendants full indebtedness to the Plaintiff on account of deposits/interest paid to the 1st Defendant’s depositors at the Defendant’s request. Plaintiff further claims compound interest on the said judgment at the rate of 25% per annum effective from 1st January, 2016 until date of judgment and thereafter interest at the rate of 10% per annum until the judgment sum is liquidated.
d. AN ORDER of Injunction restraining the 1st and 2nd Defendants whether by themselves, agents or privies from dissipating, disposing of/selling or utilizing the assets of the 1st Defendant or dealing with the said assets in any manner capable of frustrating this suit, the judgment of this Honourable Court or rendering the said judgment academic.
e. AN ORDER of Injunction restraining the 1st and 2nd Defendants from instigating/further instigating the Economic and Financial Crimes Commission by way of petition, criminal complaint or in any manner whatsoever to investigate or inquire into the civil dispute between the Plaintiff and the 1st or 2nd Defendant.
f. General damages in the sum of N10, 000, 000 (Ten Million Naira) for the wilful deprivation of the Plaintiff of its funds by the 1st and 2nd Defendants.
Upon being served with the originating processes together with the application for summary judgment under the undefended list procedure, the Appellants in response filed a Notice of Intention to Defend with a supporting affidavit on 20th February, 2020. The Notice of Intention to defend and supporting affidavit are at pages 123 to 144 of the Record of Appeal.
After the judicial exercise carried out by the trial Court, judgment was entered in favour of the Respondent under the undefended list and the trial Court granted reliefs 1 and 2 as contained in the Respondent’s Writ of Summons. (The judgment of the lower Court is at pages 158 – 172 of the Record of Appeal).
Disgruntled by the decision of the trial Court, the Appellants invoked the appellate jurisdiction of this Court vide an amended notice of appeal filed on 16th February, 2021.
In line with the rules and practice of this Court, parties filed and exchanged their respective briefs. The Appellants’ amended brief of argument was filed on 16th February, 2021. The Appellants’ reply brief of argument was also filed on 15th June, 2021. Both briefs were settled by OLUSEGUN OLAIYA ESQ., who for the determination of the instant appeal distilled four issues as follows:
a. “Whether having regards to the facts and circumstances of the case, the lower Court can grant the reliefs of the Respondent under the undefended list despite the fact that the money sought and claimed in relief 1 of the Writ of Summons by the Respondent was not yet and had not become due for payment? (Grounds 1 & 2)
b. Whether the lower Court can grant relief 2 in the Writ of Summons under the undefended list on the basis that the 1st Appellant’s letters dated 22nd February, 2016 and 2nd August, 2016 constitute admissions notwithstanding that the Appellants challenged the authenticity of the letters and raised the issue of fraud? (Ground 3)
c. Whether the lower Court was right when it held that the Respondent can unilaterally decide to Set Off 1st Appellant’s alleged indebtedness against monies and payments due to third parties? (Ground 5)
d. Whether the 2nd Appellant is a proper and necessary party to the action by virtue of being a party to the Transaction Implementation Agreement between the Appellants and the Respondent? (Ground 4).”
OLUWATOSIN ADISA, ESQ., settled the Respondent’s brief of argument filed on 8th March, 2021. For the determination of the instant appeal, the Respondent distilled the following four issues:
a. “Whether Learned trial Judge rightly or wrongly entered Judgment against the Appellants in the sum of N1,041,643,763.80 being repayments of matured investments/fixed deposits which the Respondent made on behalf of the 1st Appellant to 1st Appellant’s depositors. GROUND 3.
b. Whether Learned trial Judge rightly upheld Respondent’s right to demand for the repayment of the term loan of N1,000,000,000 and accrued interests thereon prior to the agreed maturity date for repayment of the term loan on the ground of 1st Appellant’s changed circumstances, asset stripping embarked on by the 2nd Appellant and Respondent’s apprehension. GROUNDS 1 & 2.
c. Whether learned trial Judge rightly held that Respondent was entitled to offset 1st Appellant’s indebtedness to her against monies which the Respondent had agreed to pay to third parties on 1st Appellant’s behalf. GROUND 5
d. Whether learned trial Judge rightly held that 2nd Appellant was a proper party who was rightly sued by the Appellant. GROUND 4.”
ARGUMENTS AND SUBMISSIONS OF COUNSEL ON
ISSUE NO. 1
On issue no.1, counsel for the Appellants submitted that the undefended list procedure of the Federal High Court is aimed at ensuring speedy conclusion of cases for debts and liquidated money claims where there is no defence on the merits that where there is a defence to a claim under undefended list procedure, the Court is duty bound to move the matter to the general cause list and hear the matter on the merit. Reference was made to U.B.A. PLC. V. JARGABA (2007) 11 NWLR (PT. 1045) PG. 272, PARAS. E-H, OGBONNA V. UKAEGBU (2005) 17 NWLR (PT. 954) PG. 444.
It was also the submission of counsel that parties to a loan agreement are exclusively bound by the express terms of the agreement and offer letter for which credit facility was disbursed; and that the Respondent cannot seek to recall a credit facility relying on an extraneous ground that is not captured in the loan agreement and offer letter. In his further submission, counsel stated that the trial Court shut out the Appellants when it wrongfully denied them the opportunity to defend the suit despite the disclosure of a prima facie defence in their affidavit attached to the notice of intention to defend. He contended that by the Appellants’ affidavit evidence, not only was the matter supposed to have been transferred to the general cause list for full trial, the trial Court ought to have struck out the Respondent’s relief no.1 as contained in its Writ of Summons; failure of which occasioned a miscarriage of justice. That the cause of action giving rise to relief no.1 sought by the Respondent had not arisen because the credit facility had not become due for payment at the time the Respondent instituted the action at the trial Court.
Counsel submitted that in an agreement of contractual nature, parties are bound by the agreement which they voluntarily entered in the absence of fraud, mistake or misrepresentation. Reference was made to A.T. (NIG) LTD. V. U.B.N PLC (2010) 1 NWLR (PT. 1175) PG. 383, PARAS. B-C, EDILCON (NIG.) LTD. V. U.B.A. PLC (2017) 18 NWLR (PT. 1596) PG. 99.
According to the submission of the Appellants’ counsel, the Offer of Credit Facility by which parties agreed to create the loan relationship did not make any provisions whatsoever for recall of the loan before the end of the tenor, hence any justification for the recall of the loan outside of the agreement amounts to introducing extraneous terms. That every form of default envisaged by the agreement was taken care of by means of penalty fee and not recall of the loan before due date. That the justification for the recall of the loan outside the agreement amounts to rewriting the loan, which the trial Court had no power to do. The case of LARMIE V. D.P.M.S. LTD. (2005) 18 NWLR (PT. 958) PG. 459 was cited in support.
Counsel also submitted that decision of the Court cannot be based on speculations or mere conjectures. Reliance was placed on IKENTA BEST (NIG) LTD V. AG RIVERS STATE (2008) LPELR 1476(SC). In the final analysis of issue no.1, counsel urged the Court to resolve this issue in favour of the Appellants and against the Respondent.
In response to the Appellants’ issue no.1, counsel for the Respondent submitted that having regard to the Offer Letter, which preserves the general powers/rights of the Respondent as a Banker, the provisions on the time for repayment of the facility are not immutable. Counsel submitted that the Appellants’ submission on the standard clauses in loan agreements on the right of a Bank to recall a loan is not based on any evidence before the Court below. Counsel argued that the law is trite that submission of Counsel no matter how brilliant is not substitute for evidence and pleadings. Reliance was placed on CHUKWUJEKWU V. OLALERE & ANOR (1992) 2NWLR (PT. 221) 86 AT PAGE 93.
Counsel submitted that granted that there is no express provision in the loan agreement on power of recalling the facility prior to the due date(s), it is equally true that there is no provision in the loan agreement prohibiting the Respondent from demanding repayment of the facility before the due date especially where there is evidence of changes in the financial circumstances of the 1st Appellant which resulted in apprehension by the Respondent. That in the absence of express prohibition in the agreement on recalling of loan, the Respondent cannot be stopped from recalling the facility before due date.
Counsel referred the Court to clause 5.8 of the credit facility offer which states that:
“In addition to any general lien or similar right to which the Bank may be entitled by Law the Bank may at any time and without notice to the borrower combine or consolidate all or any other account with any liabilities to the Bank and set-off or transfer any sum or sums standing to the credit of anyone or more of such accounts towards satisfaction of the borrower’s liabilities to the Bank or any other respect whether such liabilities be actual or contingent primary or collateral and several or joint.”
Flowing from the above, counsel for the Respondent submitted further that the consolidation/set off rights granted to the Respondent is exercisable at any time whether Appellants liabilities is actual (crystallised) or is still contingent. That the above clause shows that the Respondent is at liberty to recall the loan before the due date. Counsel also submitted that the clause also recognises the general rights which a Banker is entitled to under the Law and that one of such recognized rights of a Banker is the right to recall a facility before maturity date. Counsel also contended that the right to recall a loan is an implied term in banking law. Reliance was placed on UNION BANK V. OZIGI (1994) 3 NWLR (PT. 333) 358; TONIER V. NATIONAL PROVINCIAL BANK AND UNION BANK OF ENGLAND (1924) 2K B 461. Counsel submitted that the Appellants have rightly contended that learned trial Judge predicated his decision on Respondent’s right to recall the facility on issue of assets stripping embarked on by 2nd Appellant and apprehension that on account of 1st Appellant’s financial state, closure of its two branches and the sending of wrong signal to the market on its inability to continue in business. He further submitted that if the Respondent had anticipated or thought about the above prior to executing the agreement, it would have insisted that provisions should be inserted in the agreement as events for recalling the facility.
In the final analysis of issue no.1, the Respondent’s counsel urged the Court to affirm the decision of the trial Court on the right of the Respondent to recall the loan.
By way of reply, counsel for the Appellants in his Reply Brief submitted that in the absence of specific terms/clause to the contrary, the time for repayment is indeed immutable, such that recalling the facility before that due date offends the equitable principle of estoppel and amounts to a breach of contract in law.
Reliance was placed on AG FERRERO & CO LTD V. HENKEL CHEMICAL NIG LTD (2011) LPELR-12(SC) Pp. 17-18 paras C-A. Counsel submitted further that repayment time is a fundamental term and at the centre of the agreement, forming the basis upon which the Appellant entered into the agreement in the first place. That it is irrational for a borrower to agree to lend some funds from the lender without establishing the time that same would be due for payment. Counsel submitted that the due date is what defines whether he has breached the agreement or not and that this is a fundamental term which cannot be subject to variation. Reliance was also placed on NIGER INSURANCE CO LTD V. ABED BROTHERS LTD & ANOR (1976) LPELR. Counsel submitted that existence of a due date excludes the need to expressly prohibit premature recall of the facility.
According to the Appellants’ counsel, recalling of loan prior to due date is not an implied term, that it is implausible and an incorrect line of argument that recalling a facility before the due date without any special clause in the agreement to this effect is an implied term in a commercial agreement, especially where it negates a fundamental term.
Counsel also submitted that the position of law is clear that the imputation of custom or Banking practice cannot override the terms of a written contract, that to insist on same constitutes wrong imputation which the law regards as a rewrite of contract. The case of KAYDEE VENTURES LTD V. HON MINISTER OF FCT & ORS (2010) 7 NWLR (PT 1192) 171 AT 217-218 was cited in support of this position.
The Appellants’ counsel once again, urged the Court to resolve the first issue in favour of the Appellants’ and against the Respondent.
RESOLUTION OF ISSUE NO.1
On this issue, it is not in dispute that the 1st Appellant was granted a credit facility by the Respondent in the sum of N1,000,000,000 (One Billion Naira) by virtue of an offer letter dated 4th November, 2015 for a tenor of ten years with two equal payments of N500, 000, 000 (Five Hundred Million Naira) due on 30th December, 2021 and 30th December, 2024 respectively.
Flowing from the submissions and arguments of counsel for the respective parties on this issue, the area of conflict is whether by virtue of the agreement between the parties, the Respondent had the power to recall the loan facility granted to the 1st Appellant before the due date in the light of the fact that the 2nd Appellant having acquired the 1st Appellant will be involved in asset stripping of the 1st Appellant which may jeopardize the Respondent’s chances of recovering the loan granted to the 1st Appellant. In the resolution of this issue, the trial Court at pages 170 – 171 of the record of appeal held as follows:
“On the issue of whether a Bank can recall a term loan, learned Counsel for the Defendants argued that the restructural term loan in the sum of N1,000,000,000 (One Billion Naira) granted to the 1st Defendant has not crystalized and therefore not due and payable yet contrary to the submission of learned Counsel there are prevailing circumstances that warrant the Plaintiff to recall the term loan, more so the Plaintiff have the right to recall the term loan as rightly submitted by learned senior Counsel for the Plaintiff that the 2nd Defendant having acquired the 1st Defendant will be involved in asset stripping of the 1st Defendant which may jeopardise the Plaintiff’s chances of recovering the loan granted to the 1st Defendant. The Plaintiff from the facts of this case and the affidavit evidence is apprehensive because of the huge amount of money involved, the Plaintiff in the prevailing circumstances of this case in my humble view have the right to recall the term loan granted to the 1st Defendant…..”
The word contract is defined in Black’s Law Dictionary, Seventh Edition as “An agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at Law – a binding contract.”
The law is trite regarding the bindingness of terms of agreement on the parties. Where parties enter into an agreement in writing, they are bound by the terms thereof. This Court, and indeed any other Court will not allow anything to be read into such agreement, terms on which the parties were not in agreement or were not ad-idem. See BABA V. NIGERIAN CIVIL AVIATION TRAINING CENTRE, ZARIA (1991) 5 NWLR (PT.192) 388, UNION BANK OF NIGERIA LTD. V. B. U. UMEH & AMP, SONS LTD. (1996) 1 NWLR (PT.426) 565, S.C.O.A. NIGERIA & NBSP LTD. V. BOURDEX LTD. (1990) 3 NWLR (PT. 138) 380 AND KOIKI V. MAGNUSSON (1999) 8 NWLR (PT. 615) 492 AT 514.
The credit facility granted to the 1st Appellant by the Respondent is governed by an offer letter of banking facility dated 4th November, 2015. See pages 80 – 83 of the record of appeal. The offer letter was duly executed by the 1st Appellant and the Respondent upon acceptance of the terms specified therein. Having carefully perused the offer letter which forms the fulcrum of the contractual rights and obligations of the parties, the terms and conditions including the tenor of the credit facility were clearly spelt out. It was stated therein as follows:
“Tenor: 10 Years. Principal Repayment: Two equal repayments of N500,000,000 (Five Hundred Million Naira) each at the end of 7 years (30th December 2021) and 10 years (30th December 2024) respectively.”
Going by the record of appeal transmitted to the Registry of this Court, the Respondent instituted the suit culminating into the instant appeal on 28th November, 2019. In its Writ of Summons, the Respondent under relief no.1 is asking for the repayment of the said sum of N1, 000, 000, 000 granted to the 1st Appellant together with the accrued interest as at 31st December, 2016.
There is no gainsaying that the repayment of the loan which the Respondent sought to enforce under the undefended list had not crystalize with the first part in the sum of 500, 000, 000 set to be due and payable on 30th December, 2021. By simple mathematical calculation, the 1st Appellant still had two years to pay the first part of the loan as agreed by the parties.
I have carefully read through the offer letter at pages 80 – 83 of the record of appeal and there is no clause contained therein which empowered the Respondent to recall the loan before the due date. I have also struggled to see if any clause wherein the powers of recall can be inferred. As a matter of fact, it was stated in clause (V) of the “OTHER TERMS AND CONDITIONS” of the offer letter that:
“No change in the business operations and conditions (financial or otherwise) or other prospects shall affect the full repayment of the facility at maturity.”
In view of the above covenant, the argument of learned counsel for the Respondent which was endorsed by trial Court that the Respondent had the right to recall the loan in view of the fact that the 1st Appellant will be involved in asset stripping having been acquired by the 2nd Appellant is of no moment. As evidently stated in clause (V) of the offer letter, no change in the business operations and conditions (financial or otherwise) or other prospects shall affect the full repayment of the facility at maturity. To add credence to the position taken by learned counsel for the Appellants, the offer letter provides for the following clause at page 82 of the record of appeal:
“SUCCESSOR IN TITLE
For the purpose of this facility, and in relation thereto, ‘Union Homes Savings and Loans Plc’ refers to the burrower, and the expression shall where the context so admits include the burrower’s successors – in – title and assigns.”
Also in Exhibit A which is the Memorandum of Understanding confirming the sale of the Respondent’s shares in the 1st Appellant to the 2nd Appellant, the 2nd Appellant specifically agreed/covenanted in Clause 4 with the Respondent that:
“The acquisition and assumption of all Union Homes deposit liabilities as well as other assets and liabilities of the company (1st Appellant), following the conclusion of the confirmatory due diligence.” (See page 72 of the Record of Appeal).
Premised on the forgoing, the trial Court was wrong when it held that the Respondent had the right to recall the loan when such right was not stated therein in the agreement between the parties. The law is trite that parties are bound by their contract and of course, the Court has a duty to enforce a contract voluntarily entered into by the parties. Holding that the Respondent could recall the loan when the said repayment had not crystalize contrary to the agreement of the parties on the maturity dates is tantamount to rewriting the contract for the parties.
I have also struggled to agree with counsel for the Respondent that the right to recall a loan before its due date in the absence of an express term in the loan agreement is an implied term known to Banking Law. The Respondent’s counsel’s submission to the effect that in the absence of express prohibition in the agreement on recalling of loan, the Respondent cannot be stopped from recalling the facility before due date is contrary to logic and the dictates of common sense. On a contrary, in the absence of an express provision empowering the Respondent to recall the loan before the due date, the Respondent is estopped from doing so. I am of the view that the existence of a due date should necessitate the need to insert a clause in the contract empowering the Respondent with the power to recall the loan if it so wishes. In the absence of such powers in the loan agreement, the existence of a due date has automatically excluded the power of premature recall of the loan facility. The law is trite that where the intention of the parties to a contract are clearly expressed in a document as in this case, the Court cannot go outside the document in search of other documents not forming part of the intention of the parties.
The mere fact that the 1st Appellant is involved in asset stripping which may jeopardize the chances of the Respondent in recouping the loan when the said loan had not crystalized or when the 1st Appellant is not in breach cannot be a justification for the Respondent’s decision to recall the loan. The trial Court descended into the realm of conjecture and speculation contrary to the established principle that Courts are duty bound to predicate their decisions on facts and evidence and not to be involved in the realm of speculations. Speculation has no place in law.
Be that as it may, ‘Clause V’ of the loan agreement has already taken care of the Respondent’s apprehension by providing that no change in the business operations and conditions (financial or otherwise) or other prospects shall affect the full repayment of the facility at maturity.
In view of all that have been said, I am of the humble but firm view that the Respondent’s claims under relief no.1, apart from not being maintainable under the undefended list considering the 1st Appellant’s defence on the immaturity of the loan sum sought to be recovered, the Respondent’s action under relief 1 is not ripe, and would only be maintainable when the loan crystalizes on either 30st December 2021 or 30th December, 2024. As rightly submitted by learned counsel for the Appellants in paragraph 3.05 of the Reply Brief, repayment time is a fundamental term and at the centre of the agreement, forming the basis upon which the 1st Appellant entered into the agreement in the first place. I concur with counsel’s position that it is irrational for a borrower to agree to lend some funds from the lender without establishing the time that same would be due for payment. As a matter of fact, the due date is what defines whether the borrower has breached the agreement or not and the due date is so fundamental and can only be subject to variation by the agreement of the parties. Variation of a due date cannot be done unilaterally by the lender.
Without further ado, this issue is hereby resolved in favour of the Appellants and against the Respondent. Relief no.1 granted in favour of the Respondent by the trial Court under the undefended list is hereby set aside and struck out.
ARGUMENTS AND SUBMISSIONS OF COUNSEL ON ISSUE NO.2 & ISSUE NO.3
The arguments and submissions of counsel on issues no.2 and 3 and the resolution of same shall be taken together. By so doing, the issues will be put in proper perspective and the resolution of the issues is believed to be better appreciated.
Issue no.2 is predicated on the propriety of the relief no.2 granted to the Respondent by the trial Court.
On this issue, learned counsel for the Appellants submitted that the trial Court ought not to have granted the Respondent’s relief no.2 of the Writ Summons in view of the Appellant’s challenge of the authenticity and alleged fraudulent procurement of the 1st Appellant’s letters dated 22nd February, 2016 and 2nd August, 2016 admitting the 1st Appellant’s indebtedness to the Respondent’s claim under relief no. 2.
Counsel submitted further that the trial Court ought to have been satisfied that the Respondent had established a prima facie case against the Appellants before granting the claims of the Respondent under the undefended list. Reference was made to AKPAN V. A.I.P. & INV. CO. LTD (2013) 12 NWLR (PT. 1368) 400.
Counsel referred the Court to paragraphs 9, 10, 11, 12 and 14 of the affidavit of the notice of intention to defend at pages 125 – 126 of the record of appeal and submitted that the Appellants challenged the Respondent’s claims as per relief 2 including the claims of payment of time deposits on behalf of the 1st Appellant. Counsel submitted further that the 1st Appellant denied collecting deposits and also issuing deposit receipts to the organizations and agencies listed therein. That the allegation of fraud and misrepresentation by the Appellants in the affidavit in support of the notice of intention to defend constitutes a triable issue, therefore the matter was unfit for trial under the undefended list procedure and ought to have been transferred to the general cause list for determination on the merit. Reliance was placed on DENTON-WEST V. MUOMA (2010) 2 NWLR (PT. 1177) PG. 19 AT 44-45, PARAS E-C, U.N.N V. ORAZULIKE TRADING CO. (1989) 5 NWLR (PT. 119) 19, ZAHKEM INTERNATIONAL V. OFOMA (2000) 11 NWLR (PT. 679) 609, OGBONNA V. UKAEGBU (2005) 17 NWLR (PT. 954) 432.
In the final analysis of this issue, counsel urged the Court to resolve the issue in favour of the Appellants and against the Respondent.
In response to the Appellants’ issue no.2, counsel for the Respondent submitted that the trial Court evidently based its decision on admissions made by the 1st Appellant on its indebtedness to the Respondent with respect to the payment made on its behalf by the Respondent. Counsel further submitted that where a Court is faced with a binding admission, such admission provides the proper platform for entering summary Judgment in favour of a Plaintiff. Reliance was placed on IFEANYICHUKWU T.I.V. LTD. v. O.C.B. LTD. (2015) 17 NWLR (Pt. 1487) 1 AT 37-38 (Para. H-A). It was the submission of the Respondent’s counsel that the 1st Appellant’s said admissions are on the Letter Headed papers of the 1st Appellant which was co-signed by 1st Appellant’s Executive Director. That the sham defence put up by the Appellants in the Court below that Exhibits E and F were forged by employees of the Respondent who were on secondment to the 1st Appellant was rightly ignored by Learned trial Judge. The respondent’s counsel therefore urged the Court to resolve this issue in favour of the Respondent and against the Appellants.
In his reply brief, counsel for the Appellant submitted that the authenticity of Exhibits E and F are triable issues which can only be properly determined under a full blown trial as opposed to affidavit evidence, where the Court has the opportunity to take cognizance of the demeanour of witnesses under cross-examination in respect of the circumstances surrounding the Exhibit E and F stated to have been written by staff seconded to the 1st Appellant by the Respondent. Counsel argued that it is trite law that for Court to be able to determine the weight ascribable to an evidence, the document must pass the conjunctive test of admissibility, conclusiveness, relevance, credibility and probability of evidence. Reliance was placed on OSIGWE V. UNIPETROL (2005) 5 NWLR (PT. 918) 261.
On issue no. 3 which is predicated on whether the trial Court was right when it held that the Respondent can unilaterally decide to Set Off 1st Appellant’s alleged indebtedness against monies and payments due to third parties, counsel for the Appellant submitted that a banker’s right to set-off is said to arise in a situation where a customer has more than one account with his bank, at least one of which is in debit and one of which is in credit. Reference was made to ALABI V. STANDARD BANK OF NIGERIA (1967-1975) 2 N.B.L.R 551, ALLIED BANK OF NIGERIA LTD V AKUBUEZE (1997) LPELR-429 (SC). Counsel submitted further that the Respondent’s right to set-off as a Bank does not apply in the instant case as there has been no combination of accounts maintained by the 1st Appellant with the Respondent. That what the Respondent has done which was wrongfully affirmed by the lower Court is to set off Respondent’s purported liabilities to the 1st Appellant under the Transaction Implementation Agreement (TIA) executed between the parties against the matured time deposits allegedly paid by the Respondent to the 1st Appellant’s depositors on the 1st Appellant’s behalf. Counsel further submitted that the Transaction Implementation Agreement (TIA) does not provide for any right of set off between the parties to the agreement. It was also the submission of counsel that assuming but without conceding that the Respondent has a right to set off, the right to set-off can only be exercised and applied towards the Respondent’s liabilities to the 1st Appellant and not against it liabilities to third parties. That the Respondent’s obligations under the Transaction Implementation Agreement (TIA) include amongst others to pay the staff liabilities of ex-staff of the 1st Appellant and tax liabilities of the 1st Appellant to the relevant tax authorities.
Counsel urged the Court to set aside the decision of the trial Court in this regard and to resolve the issue in favour of the Appellants and against the Respondent.
By way of reply, counsel for the Respondent submitted that it is common ground that Respondent set off the sum of N885,773,318.94 (Eight Hundred and Eighty-Five Million, Seven Hundred and Seventy-Three Thousand, Three Hundred and Eighteen Naira and Ninety Four Kobo) out of the sum ofN1,927,387,082.74 due to her from the 1st Appellant on the fixed deposit/investment which she repaid on behalf of the 1st Appellant in order to arrive at the net sum of N1,041,643,763.80 as the amount due for payment to the Respondent. That the 1st Appellant has admitted that the total sum of N N1,927,387,082.74 was paid on her behalf to her depositors/investors. The Respondent’s counsel submitted that there is a right of set off where a creditor owes the debtor and/has financial obligations to the debtor. Counsel further submitted that it is consequently of no moment to the exercise of Respondent’s right to set off, that 1st Appellant was not shown to have had multiple accounts with the Respondent and that the debt in respect of which set off was applied was not a debit in a specific bank account. According to the Respondent’s counsel, set off arises in banking as well as non-banking related transactions. Counsel submitted that contrary to the submissions of the Appellants’ counsel, there is no privity of contract between Respondent and tax authorities and 1st Appellant’s ex staff. That the Respondent consequently has no liabilities to tax authorities and ex-staff and that the Respondent’s obligation is to the 1st Appellant and not third parties. Relying on the cases of AG FEDERATION v AIC LTD (2000) 10 NWLR (PT. 675) P 293, MAKWE v. NWUKOR (2001) 14 NWLR (PT.733) 356 AT 372, counsel for the Respondent submitted that under the privity of contract principle, non-contracting parties cannot enforce contracts even if made for their benefits.
Flowing from the hills of the above, counsel urged the Court to resolve this issue in favour of the Respondent and against the Appellants.
In his reply brief, counsel for the Appellants submitted that it is not of common ground as stated by counsel for the Respondent that the Respondent set off the sum of N885,773,318.94 (Eight Hundred and Eighty-Five Million, Seven Hundred and Seventy Three Thousand, Three Hundred and Eighteen Naira and Ninety Four Kobo) out of the sum of N1,927,387,082.74 due to her from the 1st Appellant on the fixed deposit/investment which she repaid on behalf of the 1st Appellant in order to arrive at the net sum of N1,041,643,763.80 as the amount due for payment to the Respondent. Counsel for the Appellants submitted further that the funds in the custody of the Respondent is way more than the sum purportedly set off and as a result of this discrepancy, the trial Court ought to have transferred the suit to the general cause list. That it is overreaching in effect to allow the Respondent unilaterally supply arbitrary figure as representing the extent of its obligation to the ex-staff of the 1st Appellant and Tax liabilities to be settled on the 1st Appellant’s behalf in the face of evidence to the contrary.
On the absence of privity of contract between the Respondent and the third parties on whose behalf the TIA was entered, counsel for the Appellants submitted that the Respondent, having voluntarily entered into an agreement with the Appellants, undertaking to take up the liability for the entitlement of the 1st Appellant’s ex-staff and tax liabilities, is bound by the agreement.
RESOLUTION OF ISSUE NO.2 & 3
The authorities are clear that in an action instituted under a summary judgment procedure and entered on the undefended list of the Court, a defendant who intends to defend the action must show or demonstrate to the satisfaction of the Court that he has a defence on the merit or that the facts are in dispute and that there are triable issues which call for some explanation from the plaintiff. See ATAGUBA CO V. GURA NIG. LTD (SUPRA). The defendant at that stage is not required to prove his defence or to show that he is likely to succeed. All that the law requires of him is to show by his affidavit that he has a defence on the merit and to state the particulars of the defence.
In the instant case, the Appellants disputed the Respondent’s claims and also raised the issue of fraud regarding the purported letters from the 1st Appellant dated 22nd February, 2016 and 2nd August, 2016 respectively admitting payment of Time Deposits by the Respondent on behalf of the 1st Appellant. The said letters admitting the 1st Appellant’s indebtedness can be gleaned at pages 112 – 113 of the record of appeal. In paragraphs 10, 11, 12 and 14 of the affidavit in support of the notice of intention to defend (page 125-126 of the record), it was deposed that the letters admitting payment by the Respondent to the 1st Appellant’s depositors were fraudulently signed by the staff of the Respondent when the 1st Appellant was under the management and control of the Respondent. The above appears to me as the blurry particulars of fraud provided by the 1st Appellant regarding the authenticity of Exhibits E and F.
Contrary to the above, I will begin by stating that the parties are not in dispute regarding the fact that the 1st Appellant was a subsidiary of the Respondent up and until the circular/regulation dated 15th November, 2010 issued by the Central Bank of Nigeria directing all Banks to divest from non-core banking subsidiaries. In strict obedience with this directive of the Apex Bank, the Respondent divested its interest in the 1st Appellant vide a sale of its shares in the 1st Appellant Company to the 2nd Appellant. The sale was evidenced vide a Transaction Implementation Agreement “TIA” dated 31st December, 2013. (See paragraphs 8, 9, 10, 11 and 12 of the Respondent’s affidavit at page 6 of the record of appeal). These depositions were never controverted by the 1st Appellant in its affidavit in support of its notice of intention to defend. It is trite law that, where an opponent fails to challenge depositions in an Affidavit, those depositions are deemed admitted and therefore true. See LONG JOHN V. BLAK (1998) 6 NWLR (PT.555) 524 AT 532, FEDERAL AIRPORTS AUTHORITY OF NIGERIA (FAAN) V. WAMAL EXPRESS SERVICES (NIG) LTD (2011) SCNJ 133 AND FRANCIS V. CITEC INTERNATIONAL ESTATE LTD (2010 16 NWLR (PT.1219) 243.
In substantiating its alleged fraudulent procurement of Exhibits E and F which the trial Court held as constituting admissions to the relief no. 2 sought by the Respondent in its Writ of Summons, the 1st Appellant submitted that the letters admitting payment by the Respondent to the 1st Appellant’s depositors were fraudulently signed by the staff of the Respondent who were on secondment to the 1st Appellant from the Respondent when the 1st Appellant was under the management and control of the Respondent.
As I stated earlier, the sale of the Respondent’s shares in the 1st Appellant’s company putting an end to the holding/subsidiary relationship of the 1st Appellant and Respondent was evidenced vide a Transaction Implementation Agreement dated 31st December, 2013. The letter admitting the 1st Appellant’s indebtedness at pages 112 – 113 of the record of appeal were both written on 22nd February, 2016 and 2nd August, 2016 respectively, over two years of the end of the holding/subsidiary relationship of 1st Appellant and Respondent.
Flowing from above undisputed facts, I struggle to reason with the rather lame and rusty defence of fraud put up by the 1st Appellant. I share the view of learned counsel for the Respondent that there was nothing before the trial Court that when the signatories of Exhibit E and F signed the Letters, they were employees of Respondent who had been seconded to the 1st Appellant. As a matter of fact, their Letters of employment with the Respondent was not before the Court below. The Letters seconding them to the 1st Appellant was also not before the Court below. The clear and undisputed fact that the letters were signed several months after Respondent’s divestment from the 1st Appellant is enough reason to ditch the lame allegation of fraud put up by the 1st Appellant. The trial Court having been starved of necessary material would have had to speculate on the issue of secondment and fraud.
In Exhibits E, the 1st Appellant admitted its indebtedness to the Respondent as follows:
“February 22, 2016. RC: 203457 UNION HOMES SAVINGS AND LOANSPLC. 153, Ikorodu Road, Onipanu, Lagos. P.M.B.041, Shomolu, Lagos.
website: www.unionhomes.com.ng
The Head of Finance. Union Bank of Nigeria Plc.
36, Marina,
Lagos.
Dear Sir,
TIME DEPOSITS PAID BY UNION BANK ON BEHALF OF UNION HOMES.
We write to confirm that Union Bank of Nigeria Plc. paid the under listed matured deposits on behalf of Union Homes Savings and Loans Plc, due to liquidity challenges.
The details of the liabilities as at December 31, 2015 are as stated below:
POSITION AS AT DECEMBER 31, 2015
NAME TOTAL LIABILITIES
FBN MICROFINANCE 100,000,000.00
PPPRA 1,200,000,000.00
TETFUND 595,178,082.19
CHIEF TREASURY REGISTRAR, IKEJA HIGH COURT. 32,209,000.55
TOTAL 1,927,387,082.74
Meanwhile, we wish to add that the outstanding liabilities will be repaid over a period of 60 months (5 years) subject to your kind consideration and approval.
Yours faithfully,
FOR: UNION HOMES SAVINGS AND LOANS PLC.
ESTHER MOGAHA IFEANYI OZOH
GROUP HEAD, SHARED SERVICES EXECUTIVE DIRECTOR
“RC: 208457 UNION HOMES SAVINGS AND LOANS PLC.
153, Ikorodu Road, Onipanu, Lagos. P.M.B.041, Shomolu, Lagos.
website: www.unionhomes.com.ng
August 2, 2016.
The Managing Director,
Union Bank of Nigeria Plc,
Head Office Stallion Plaza, 30 Marina, Lagos.
Attention; Olugbenga Adeoye Jumoke Lambo.
Head, Financial Control Head, Legal Department
Dear Sir,
RE: TIME DEPOSITS PAID BY UNION BANK OF NIGERIA ON BEHALF OF UNION HOMES SAVINGS AND LOANS PLC.
Your letter dated July 22, 2016 on the above subject matter refers.
We wish to represent our request to pay the sum of N1,927,387,082.74 being total deposits paid on behalf of Union Homes over a period of 60months (five years) for your kind consideration and approval.
Our request is based on the fact that the liquidity issues which led to the payment of the deposits on behalf of Union Homes have not been resolved due to unforeseen circumstances at a critical moment of our merger process with ASO Savings and Loans Plc. Although efforts are being made to resolve the liquidity issues as soon as possible, we are presently not in a position to honor your demand for immediate payment.
We hereby appeal that you reconsider our aforementioned request favorably. We also appeal that you treat the issues arising from (i) the Transaction Implementation Agreement dated December 31, 2013 between Union Homes Savings and Loans Plc, ASO Savings and Loans Plc. and Union Bank of Nigeria Plc and (ii) the Memorandum of Understanding dated December 10, 2013 between Union Bank of Nigeria Plc. and ASO Savings and Loans Plc. separately in order not to jeopardize our operations. Presently, two (2) of our branches in Anambra State have been shut down owing to unresolved tax issues. The closure of the branches has sent wrong signal to the market which we are battling to contend with.
We thank you for your patience and understanding in this regard.
Please acknowledge receipt on the duplicate of this teller.
Yours faithfully,
For: UNION HOMES SAVINGS AND LOANS PLC
ESTHER MOGANA (MRS.) IFEANYI OZOH
GROUP HEAD, SHARED SERVICES EXECUTIVE DIRECTOR (RETAIL).”
Summary judgment procedure is to be used where the plaintiff believes that the defendant has no defence to his claim. Judgment is to be entered against a defendant pursuant to an application for summary judgment where it appears that the defendant has no good defence to the claim. In THOR LTD V. FCMB LTD. (2005) LPELR-3242 (SC) AT 12(B-D). The Supreme Court Per EDOZIE, J.S.C held that:
“The summary judgment procedure which is similar to the undefended list procedure, is designed to enable a party obtain judgment especially in liquidated demand cases, without the need for a full trial where the other party cannot satisfy the Court that it should be allowed to defend the action. See Nishizawa Ltd v. Jethwani (1984) 12 SC 234, Macaulay v. NAL Merchant Bank (1990) 4 N.W.L.R. (Pt. 144) 283, 314, Pan Atlantic Shipping and Transport Agencies Ltd. v. Rhein Mass G.M.B.H. (1997) 3 N.W.L.R. (Pt. 493) 248.’’
As a result of the 1st Appellant’ acknowledgment of its indebtedness to the Respondent, the trial Court was on a firm standing when it held at page 169 of the record of appeal that:
“In the instant case, I have again read Exhibit E attached to paragraph 27 of the plaintiff’s affidavit in support, the 1st Defendant’s letters dated 22nd February, 2016 and 2nd August, 2016 in my humble view as quite in a direct, positive, clear and unequivocally terms admitting the 1st Defendant’s indebtedness to the Plaintiff to the tune of the sum of N1,927,387,082.74 (One Billion, Nine Hundred and Twenty Seven Million, Three Hundred and Eighty-Seven Thousand, Eighty-Two Naira and Seventy Four Kobo) being part of the monies claimed by the Plaintiff on the Writ of Summons, it is therefore my considered view that there is no reason why full and due probative weight should not be given to the admitted facts in the circumstance of this case.”
However, the only defence I find worthy of consideration in the Appellants’ affidavit in support of their notice of intention to defend is predicated on the fact that discrepancies in the amount admitted by the Respondent as liabilities to the ex-staff and tax liabilities under the TIA ought to have prevented the trial Court from granting relief no.2 under the undefended list procedure. While the Respondent claimed that its liabilities to Ex-staff under the TIA is N885,773,318.94 (Eight Hundred and Eighty-Five Million, Seven Hundred and Seventy-Three Thousand, Three Hundred and Eighteen Naira and Ninety Four Kobo) (See paragraph 34 of the affidavit in support of the Writ of Summons), the 1st Appellant on the other hand at paragraph 19 of the affidavit in support of the notice of intention to defend stated that under clause 9.2.5 of the TIA, the estimated outstanding tax liabilities of 1st Appellant to be paid by the Respondent stood at N931,714,000 (Nine Hundred and Thirty-One Million, Seven Hundred and Fourteen Thousand Naira).
This discrepancy affects the veracity of the claims of Respondent under relief no. 2 of the Writ of Summons. Having stated above that the 1st Appellant vide Exhibits E admitted being indebted to the Respondent in the sum of N1,927,387,082.74 (One Billion, Nine Hundred and Twenty-Seven Thousand, Three Hundred and Eighty-Seven Thousand, Eighty-Two Naira, Seventy-Four Kobo) being the 1st Appellant’s full indebtedness to the Respondent on account of deposits/interest paid to the 1st Appellant’s depositors at the Appellant’s request, what remains in dispute is whether it is the sum of N885,773,318.94 (Eight Hundred and Eighty Five Million, Seven Hundred and Seventy-Three Thousand, Three Hundred and Eighteen Naira and Ninety Four Kobo) that will be deduced from the 1st Appellant’s admitted indebtedness of N1,927,387,082.74 (One Billion, Nine Hundred and Twenty-Seven Thousand, Three Hundred and Eighty-Seven Thousand, Eighty-Two Naira, Seventy-Four Kobo) as claimed by the Respondent or it is the sum of N931,714,000 (Nine Hundred and Thirty-One Million, Seven Hundred and Fourteen Thousand Naira) that will be deducted from the admitted sum of N1,927,387,082.74 (One Billion, Nine Hundred and Twenty-Seven Thousand, Three Hundred and Eighty-Seven Thousand, Eighty-Two Naira, Seventy-Four Kobo) as claimed by the 1st Appellant.
The discrepancy in the affidavit evidence of both parties regarding to the Respondent’s liability under the TIA ought to have prevented the trial Court from granting relief no.2 under the undefended list. I am of the view that a triable issue has been made out by the Appellants regarding the grant of relief no.2 under the undefended list procedure. The 1st Appellant’s affidavit in support of its notice of intention to defend is such that the Respondent will be expected to explain certain matters with regard to its claim under relief no.2, also this discrepancy cast doubt on the Respondent’s claims under relief no.2 contained in the Writ of Summons. See FARO BOTTLING COMPANY LTD V. OSUJI (2002) 1 NWLR (748) 311, NATIONAL INLAND WATERWAYS AUTHORITY v. STANDARD TRUST BANK PLC (2008) 2 NWLR (1072) 483. Consequently, I hereby set aside relief no.2 granted to the Respondent by the trial Court.
One whether the trial Court was right to have held that the Respondent had the right of set off against the Respondent’s liability to the entitlement of the 1st Appellant’s ex-staff and tax-liabilities as provided in paragraphs 9.2.4 and 9.2.5 of the Transaction Implementation Agreement at pages 39 – 66 of the record of appeal. For ease of reference my Lords, permit me to reproduce the provisions of clauses 9.2.4 and 9.2.5 of the TIA. The said clauses provide as follows:
“9.2.4 for purposes of UHSL settling outstanding Staff Liabilities, create a credit line for UHSL which shall be applied solely for the purposes of the Staff Liabilities. Provided that the credit line shall subsequently be written off entirely by UBN; and
9.2.5 be responsible for settling the outstanding Tax Liabilities of Union Homes’ which are estimated at N931, 714, 000 (Nine Hundred and Thirty-One Million, Seven Hundred and Fourteen Thousand Naira) as has been agreed with ASO, of which N468, 300, 000 (Four Hundred and Sixty Eight Million, Three Hundred Thousand Naira) has been accrued to date. Provided that UBN shall make payment in respect of the undisputed outstanding tax obligations and will – subject to further verification and agreement also pay any balance outstanding in respect of unpaid taxes (including Value Added Tax and Withholding Tax).”
Flowing from the above clauses, it is evident that the Respondent agreed to make payments on behalf of the 1st Appellant on tax and ex-staff benefits, however, this does not create privity of contract between Respondent and tax authorities/ex-staff as to create 3rd party obligations to the Respondent. As rightly submitted by the learned counsel for the Respondent, the ex-staff of the 1st Appellant and the tax companies are not privies to the TIA. Going by the TIA, the Respondent is only responsible for settling the outstanding tax liabilities of the 1st Appellant. I am also in agreement with counsel for the Respondent that a contract affects only the parties thereto and cannot be enforced by or against a person who is not a party to it. Only a party to a contract can sue or be sued on it. A stranger can neither sue or be sued even if it is made for his benefit and purports to give him the right to sue or make him liable upon it. The only liability owned by the Respondent was to the 1st Appellant and not to the third parties.
This buttresses the fact that the ex-staff of the 1st Appellant only took out legal proceedings and got judgment delivered in their favour against the 1st Appellant in Suit No. NICN/LA/232/2014 BETWEEN ADEMULEGUN GBENGA COSMAS & 232 ORS (EX-STAFF OF UNION HOMES SAVINGS AND LOANS PLC) V. UNION HOMES SAVINGS AND LOANS. (See Exhibits AEC1, AEC2, AEC3 and AEC4 at pages 131 – 141 of the record of appeal). The Respondent was not and could not have been made a party to the suit notwithstanding the fact that the TIA was made in favour of the ex-staff of the 1st Appellant.
Having established this, it naturally follows that the trial Court was right to have upheld the Respondent’s right of set off against the 1st Appellant. It is imperative to correct the position taken by the Appellant’s counsel to the effect that set off is exercisable in banker-customer relationship in respect of a customer with different accounts. Contrary to the above submission, set off applies to all debtor and creditor relationships. It is not necessarily restricted to circumstances where there is a customer who has more than one account. I am of the view that notwithstanding the fact that the agreements create third party obligations for the Respondent, this will still not prevent the Respondent from exercising its right of set-off against the money earmarked for third parties. Consequently, the trial Court was right when it held that monies payable by the Respondent to third parties on behalf of the 1st Appellant can be used to set off 1st Appellant’s indebtedness to the Respondent.
Having held under issue no.2 that the 1st Appellant vide Exhibits E admitted being indebted to the Respondent in the sum of N1,927,387,082.74(One Billion, Nine Hundred and Twenty-Seven Thousand, Three Hundred and Eighty-Seven Thousand, Eighty-Two Naira, Seventy-Four Kobo) being the 1st Appellant’s full indebtedness to the Respondent on account of deposits/interest paid to the 1st Appellant’s depositors at the Appellant’s request, this Court standing upon the powers granted to it under Section 15 of the Court of Appeal Act, 2021 is on a good standing as much as the trial Court to grant relief no.3 (albeit with slight modifications) which was claimed in alternative to relief no.2 already set aside in this judgment.
For the avoidance of doubt, I hereby grant to the Respondent relief no.3 (with slight modifications) on the face of the Writ of Summons in place of relief no.2 wrongly granted by the trial Court under the undefended list procedure. The said relief will be extensively reproduced in the concluding part of this judgment.
ARGUMENTS AND SUBMISSIONS OF COUNSEL ON ISSUE NO.4
On whether the 2nd Appellant is a proper and necessary party to the action by virtue of being a party to the Transaction Implementation Agreement between the Appellants and the Respondent, counsel for the Appellants submitted that trial Court was wrong when it held that the 2nd Appellant is a proper and necessary party to the suit because it is privy to the Transaction Implementation Agreement (Exhibit A) and Memorandum of Understanding (Exhibit B) and as such is going to be affected by the outcome of the proceedings. Counsel submitted further that a perusal and analysis of the Transaction Implementation Agreement (at pages 39 -67 of the Record of Appeal) and Memorandum of Understanding (at pages 68-79 of record of Appeal) reveal that the agreements deal primarily with and set outs the terms and obligations of the parties under the agreement regarding acquisition of 1st Appellant from the Respondent by 2nd Appellant. That the Respondent’s action at the lower Court was neither for the interpretation of the agreements (Transaction Implementation Agreement Memorandum of Understanding) nor enforcement of the Respondent’s rights under the agreements. On who a necessary party is, counsel referred to SIFAX (NIG.) LTD. V MIGFO (NIG.) LTD. (2018) 9 NWLR (PT. 1623) PG. 138 AT PG. 185, L.S.B.P.C. v PURIFICATION TECH. (NIG.) LTD. (2013) 7 NWLR (Pt. 1352) 82. Counsel therefore urged the Court to resolve this issue in favour of the Appellants and against the Respondent.
In response to the above submissions of the Appellants on the propriety of the joinder the 2nd Appellant, counsel for the Respondent submitted that the 2nd Appellant was a necessary party who was properly joined as a Defendant to the suit in the trial Court. That quite apart from being the new/sole owner of the 1st Appellant, the 2nd Appellant is the alter ego and controlling mind of the 1st Appellant and in that capacity it was pleaded that 2nd Appellant planned to sell/strip the assets of the 1st Appellant such that Respondent would be unable to recover outstanding facilities/debt.
In the final analysis of this issue, counsel urged the Court to resolve this issue in favour of the Respondent and against the Appellant.
Having perused the reply brief filed by the Appellants, it is evident that no submissions and arguments were preferred in respect of the points canvased in the Respondent’s brief under this issue. Notwithstanding, I shall proceed with the determination of the issue on the merits.
RESOLUTION OF ISSUE NO. 4
A necessary party is a party whose presence is essential for the effectual and complete determination of the issues before the Court. It is a party in whose absence the claim cannot be effectually and completely determined. A necessary party is one who is interested in the subject matter of the proceedings and in whose absence the proceedings cannot fairly and judiciously be decided. See GASSOL V. TUTARE (2013) 14 NWLR (PT. 1374) PG. 221@ PG. 249, paras. C-E, wherein the Supreme Court held that:
“The blue litmus test for the determination of who may be a necessary party to a suit is predicated on whether the judgment will affect the party, and one of the reasons which makes it necessary to make a particular person a party to an action is that he will be bound by the result of the action and to put an end to parallel litigations.”
The issue under consideration poses no legal threat. It is simple and straightforward. The fundamental question in determining whether the 2nd Appellant is a necessary party is “will the 2nd Appellant be bound by the result of the action in order to put an end to parallel litigations?” The answer to the above is readily available in the Memorandum of Understanding which was exhibited as Exhibit A. In the said Exhibit, the 2nd Appellant specifically agreed/covenanted in Clause 4 with the Respondent that:
“The acquisition and assumption of all Union Homes deposit liabilities as well as other assets and liabilities of the company (1st Appellant), following the conclusion of the confirmatory due diligence.” (See page 72 of the Record of Appeal).
As rightly submitted by counsel for the Respondent, the above covenant makes the 2nd Appellant a necessary party to Respondent’s debt related litigation against the 1st Appellant. The learned trial Judge rightly upheld the 2nd Appellant as a necessary party who was properly joined as a co-defendant in the suit. At page 171 of the record of Appeal, learned trial judge observed and rightly held thus:
“…… Exhibits A and B attached to paragraph 12 and 16 of the Plaintiffs. Affidavit in support clearly show that the 2nd Defendant is not only a proper party but also necessary party to this suit, the 2nd Defendant is privy to the contract in Exhibit A and B, he is a party in the subject matter of the proceedings and is going to be affected by the outcome of this proceedings. See the case of Green vs. Green (1987) 3 NWLR (Pt. 61) P. 480 SC.”
The above decision of the learned trial Judge is evidently supported by the evidence before the Court and I see no basis to disturb the said finding of facts.
In my final analysis, this issue is hereby resolved in favour of the Respondent and against the Appellants.
On the whole, the appeal succeeds in part. Relief no. 1 granted by the trial Court is hereby set aside and consequently struck out. Relief no. 2 granted under the undefended list is also hereby set aside. In place of relief no.2 and on the basis of the Appellants’ admission in Exhibits E. Like I earlier said in this judgment this Court is in the same position as trial Court and is empowered by Section 15 of the Court of appeal Act to make appropriate orders which the lower Court ought to have made given the circumstances of the case. Consequently, I hereby enter judgment in favour of the Respondent in the following terms:
“An order is made entering judgment against the Appellants jointly and severally in favour of the Respondent in the sum of N1,927,387,082.74 (One Billion, Nine Hundred and Twenty-Seven Thousand, Three Hundred and Eighty-Seven Thousand, Eighty-Two Naira, Seventy-Four Kobo) being the 1st Appellant’s full indebtedness to the Respondent on account of deposits/interest paid to the 1st Appellant’s depositors at the Appellant’s request with a simple interest on the said judgment sum at the rate of 20% per annum effective from 1st January 2016 until date of judgment and thereafter interest at the rate of 10% per annum until the judgment sum is liquidated.”
Parties are to bear their respective cost.
MONICA BOLNA’AN DONGBAN-MENSEM, P.C.A.: I agree with the lead judgment prepared by my learned brother, ABUBAKAR SADIQ UMAR, JCA allowing this appeal in part only.
The 2nd Appellant submits that since it was not privy to the loan agreement between the 1st Appellant and the Respondent, it is not a proper and necessary party in the suit and the trial Court was wrong to have held the 2nd Appellant liable in the circumstance.
In finding that the 2nd Appellant is a necessary party, the trial Court relied on the case of GREEN v. GREEN (1987) 3 NWLR PT. 61 PG. 480 where proper parties were defined as:
“…those named in the suit and those who though not interested in the Plaintiffs claim, are made patties for some good reasons, while necessary parties are those who in their absence, the proceedings could not be fairly dealt with…”
A proper party is any party whose interest would be affected one way or the other by the decision of the Court in a suit. Any party whose interest will be directly affected if a relief claimed in the action were granted is a proper party to a suit. See MOBIL PRODUCING (NIG) UNLTD. V. LASEPA & ORS (2002) LPELR – 1887 (SC) and YUSUF V. OGUNOLA (2015) LPELR – 41728 (CA).
The submission of the 2nd Appellant is of no moment because the 2nd Appellant acquired the 1st Appellant and the 2nd Appellant is a party to the Transaction Implementation Agreement which forms part of the issues in this appeal. (See pages 39 and 67 of the Records). Also, the Interpretation Section of the Transaction Implementation Agreement to which the Appellants and Respondent are parties states that references to party or parties shall be construed as references to a Party or the parties to this agreement and their respective successors and assigns. (See pages 44-45 of the Records). Furthermore, the Offer Letter for the loan facility has a Successor in Title Clause which stipulates that the reference to the 1st Appellant (The Borrower) includes the 1st Appellant’s successors-in-title and assigns. (See page 82 of the Records).
Flowing from the above, I too hold that the 2nd Appellant is a proper and necessary party in the instant appeal having acquired the 1st Appellant.
For this reason and other reasons expounded in the lead judgment, I too hereby allow this appeal in part. I adopt the consequential orders made in the lead judgment as mine.
JIMI OLUKAYODE BADA, J.C.A.: I had the advantage of reading in draft a copy of the leading judgment of my learned brother, ABUBAKAR SADIQ UMAR, JCA, just delivered and I agree with the reasons given as well as the conclusion reached.
I have also perused the records of appeal as well as the briefs of argument filed and exchanged by the parties to this appeal. Nevertheless, the settled position of the law is that the undefended list procured is designed to prevent delay in cases where a Plaintiff has a clear case and the Defendant has no defence. Therefore, where a Plaintiff is able to satisfy the Court with affidavit evidence which, the defendant cannot answer, the Court would enter judgment for the Plaintiff, thereby avoiding full blown trial with the usual expense and delay. On the other hand, if the defendant files an affidavit which discloses a defence on merit, he would be granted leave to defend by the Court.
See – ATAGUBA COMPANY vs. GURA NIGERIA LIMITED (2005) 8 NWLR PART 927 PAGE 429.
In this appeal under consideration, I agree with my Lord that the trial Court was wrong when it held that the Respondent had the right to recall the loan when such right was not stated therein in the agreement between the parties.
But the above position notwithstanding, in view of the Appellant’s admission in Exhibit “E”, I am also of the firm view that the Respondent is entitled to judgment in his alternative claim as stated in the leading judgment.
In view of the foregoing and for fuller reasons in the leading judgment, I also allow this appeal in part.
I abide by the consequential orders made in the said leading judgment.
Appearances:
OLUSEGUN OLAIYA, For Appellant(s)
Prof. TAIWO OSIPITAN, (SAN) with him, ADETOLA OGUNLEWE, For Respondent(s)
