Court with Jurisdiction in Dispute after Appointment of Receiver
In the Supreme Court of Nigeria
Holden at Abuja
On Friday, the 19th day of July, 2024
Before Their Lordships
Uwani Musa Abba Aji
Jummai Hannatu Sankey
Stephen Jonah Adah
Abubakar Sadiq Umar
Mohammed Baba Idris
Justices, Supreme Court
SC/234/2016
Between
1. FIRST BANK OF NIGERIA PLC
2. ELIJAH OLA ADEDIWURA APPELLANTS
And
1. BEN-SEGBA TECHNICAL SERVICES LTD
2. MR BERNARD ESEGBA RESPONDENTS
(Lead Judgement delivered by Honourable Stephen Jonah Adah, JSC)
Facts
This appeal is an offshoot of the strained banker-customer relationship between the 1st Appellant and the Respondents, arising from a loan facility advanced to the 1st Respondent by the 1St Appellant. By a writ of summons dated 23rd June, 2008, the Respondents filed an action against the Appellants before Delta State High Court seeking, amongst others reliefs, a declaration that the loan transaction between the 1st Appellant and the 1st Respondent was frustrated by the 1st Appellant and natural causes, for which reason the 1st Appellant ought not to have charged any interest on the same. The Respondents also sought an order nullifying the appointment of the 2nd Appellant by the 1st Appellant as the Receiver/Manager of the 1st Respondent; damages for breach of contract and orders of injunction against the Appellants.
Upon being served with the Respondents’ processes, the Appellants entered conditional appearance, and reacted by filing a motion on notice praying the court to strike out the Respondents’ suit on the ground that the trial court lacked jurisdiction to entertain the suit because the 1st Respondent was in receivership. After taking arguments on the objection, the trial court held that the Respondents’ claims were well situated within the jurisdiction of the State High Court and consequently, dismissed the Appellants’ objection.
Dissatisfied, the Appellants appealed to the Court of Appeal. In its judgement, the Court of Appeal held that only claims Nos. 4, 6 and 11 can be heard and determined by the Federal High Court, while the other claims were well within the jurisdiction of the trial State High Court. Aggrieved with the latter part of the decision, the Appellants filed an appeal before the Supreme Court.
Issue for Determination
In determining the appeal, the Supreme Court adopted the issue distilled by the Respondents, as follows:
Whether the lower court was right in holding that the trial State High Court had the jurisdiction to entertain the Respondents’ claim, except reliefs 4, 6 and 11.
Arguments
Counsel for the Appellants submitted that although by Section 251(1) of the 1999 Constitution (as amended), the Federal High Court and State High Court have concurrent jurisdiction on matters arising from Banker-Customer relationship; however, where the issue arising therefrom relates to the appointment of a Receiver/Manager which is regulated the Companies and Allied Matters Act 2004 (CAMA), it is only the Federal High Court that can exercise exclusive jurisdiction over such matter. Counsel placed particular reliance on Section 251(1)(e) of the 1999 Constitution, in support of his argument that the State High Courts do not have jurisdiction over the operation of the Companies Act. Counsel submitted that Exhibit “AA15” — the Letter of Appointment of the 2nd Appellant as Receiver/Manager fell within the purview of Sections 387 to 400 of the Companies and Allied Matters Act (CAMA) 2004 which regulates the appointment of a Receiver/Manager, hence, the State High Court could not, by any means, exercise jurisdiction over any questions arising from or connected to the same. Counsel submitted that the Court of Appeal was wrong to have held that the High Court of Delta State, which is a State High Court, can adjudicate on the action filed by the Respondents.
In response, Counsel for the Respondents argued that the lower court was correct in holding that the trial court had jurisdiction to entertain the Respondents’ claims, except for reliefs 4, 5, and 11. Counsel submitted that it is not the practice of the courts to strike out an entire suit merely because certain reliefs fall outside the jurisdiction of the court, particularly where the court retains jurisdiction over a substantial portion of the claims.
Counsel further contended that none of the authorities cited by the Appellants establish that the State High Court must decline jurisdiction over an entire suit, simply because some claims fall within the concurrent jurisdiction of the Federal High Court. According to him, the mere fact that jurisdiction is shared does not render the State High Court incompetent to adjudicate on matters properly within its scope. Counsel maintained that where a trial court lacks jurisdiction over certain reliefs, it does not affect its competence to determine the remainder of the suit. Relying on REGISTERED TRUSTEES OF LIVING CHRIST MISSION v ADUBA (2000) 3 NWLR (PT. 647) 14, Counsel submitted that the proper course in such circumstance is to strike out only the affected reliefs and proceed to determine those within the court’s jurisdiction. In conclusion, Counsel urged the Supreme Court to dismiss the appeal for lacking in merit.
Court’s Judgement and Rationale
In resolving the sole issue, the Supreme Court emphasised that the jurisdiction of every court is created by the statute setting up the court and the Constitution. The Apex Court affirmed that the Constitution of the Federal Republic of Nigeria 1999, expressly confers jurisdiction exclusively on the Federal High Court to hear and determine issues relating to receivership and the operation of the Companies and Allied Matters Act.
The Court held that where there are mixed reliefs, the court with competent jurisdiction to handle all should be used and not otherwise, thus, where there is a court that has the capacity or jurisdiction to settle all issues in a case, that court alone should be approached to hear the issues.
The Supreme Court held further that where ancillary or incidental or accessory claims are so inextricably tied to or bound up with the main claims before the court in a suit, a court cannot adjudicate over them where it has no jurisdiction to entertain the main claims if such incidental or ancillary claims cannot be determined without a determination at the same time of the main claims, or where the determination of such incidental or ancillary claims must necessarily involve a consideration or determination of the main claims. The Court referred to its decision in GAFAR v GOVT OF KWARA STATE & ORS (2007) LPELR-8073 (SC) (PP. 22 PARAS A).
The Supreme Court held that it was evident that at the time the Writ was taken out by the Respondents, the 1st Appellant had under Clause 8 of the Tripartite Legal Mortgage Agreement between the parties, appointed the 2nd Appellant as a Receiver/Manager over the 1st Respondent. The Court held that this fact definitely, was signpost indicative of the fact that the issue at stake was no longer the simple issue of Customer/Banker relationship, but had metamorphosed into that of receivership; and the appointment of a Receiver/Manager under the agreement not only raised the issues of recovery of the loan and receivership, but the inter-play and operation of the Companies and Allied Matters Act (CAMA), which by Section 251(1)(e) is exclusively meant for the Federal High Court. The Court held that this is particularly so, as reliefs 4, 6 and 11 out of the 11 reliefs sought by the Respondents were predicated on the appointment of a Receiver, and it was evident that the main grouse of the Respondents lay in the appointment of a Receiver for the 1st Respondent, following their default to meet their obligation to repay the loan advanced to the 1st Respondent.
The Apex Court held that it is apparent that the principal claims of the Respondents are as set out in paragraphs 4, 6 and 11 of the writ of summons and the other reliefs are consequential reliefs sought, should the principal claims in respect of receivership succeed. Therefore, insofar, as the trial State High Court is not competent to entertain claims nos. 4, 6 and 11; it is the Federal High Court, as opposed to the Delta State High Court, that is vested with the requisite jurisdiction to determine the entire claims of the Respondents. The Apex Court agreed with the Appellants’ Counsel that the lower court was truly in grave error, in failing to disqualify the trial court from exercising jurisdiction in hearing and determining the Respondents’ action as constituted.
Appeal Allowed.
Jim Okodaso with Uvie Oru for the Appellants.
Onome Egbon for the Respondents.
Reported by Optimum Publishers Limited, Publishers of the Nigerian Monthly Law Reports (NMLR)(An affiliate of Babalakin & Co.)
