When a Subsequent Suit will Constitute an Abuse of Court Process

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In the Supreme Court of Nigeria Holden at Abuja On Friday, the 18th day of December, 2020

Before Their Lordships

Mary Ukaego Peter-Odili

Olukayode Ariwoola

Kudirat Motonmori Olatokunbo Kekere-Ekun

John Inyang Okoro

Chima Centus Nweze

Justices, Supreme Court

SC.692/2014

Between

INTERNATIONAL TRUST BANK PLC APPELLANT

And

LOUIS OKOYE RESPONDENT

(Lead Judgement delivered by Honourable Kudirat Motonmori Olatokunbo Kekere-Ekun, JSC)

Facts

The Appellant advanced an overdraft facility, to a certain Excellent Manufacturers Ltd. The Respondent was the Chief Executive Officer/Managing Director of the company. A Deed of Debenture was executed between the Appellant and the company, wherein the company’s assets were charged as security for the loan facility. The Respondent also executed a Deed of Guarantee/Indemnity in favour of the Appellant. Upon the Company’s default in repaying the loan, the Appellant appointed a Receiver/Manager over the assets of the Company pursuant to the Deed of Debenture. The Receiver/Manager with the company in receivership and the Respondent Bank as Co-Applicants, filed an action against the Respondent and other Directors of the company at the Federal High Court in Suit No. FHC/L/CS/769/2004, seeking preservatory orders in respect of the said assets.

Subsequently, the Appellant filed an action under the Undefended List at the High Court of Anambra State, seeking to enforce the Respondent’s personal guarantee under the Deed of Guarantee. It claimed the sums due to it, under the overdraft facility.

Upon being served with the Writ of Summons and accompanying processes, the Respondent filed a Notice of Intention to Defend the Suit. The basis of the Respondent’s Notice was that the Appellant lacked the locus standi to institute the action, having appointed a Receiver over the assets of the company pledged as security for the loan, and for this reason, it had discharged itself of all responsibility under the Deed of Guarantee executed by the Respondent. The Respondent also posited that the Appellant illegally withdrew some sums from the Company’s account, and that the mortgaged property was worth more than N18 million.

After considering the submission of counsel, the trial court held that the Respondent did not disclose any triable issue for defence. Thereafter, the court entered judgement in favour of the Appellant in the sum of N10 million, being the Respondent’s limit under the Deed of Guarantee.

The Respondent appealed to the Court of Appeal which allowed his appeal and struck out the Appellant’s claim at the trial court, on the ground that it was an abuse of Suit No. FHC/L/CS/769/2004 which was pending before the Federal High Court. Dissatisfied, the Appellant appealed to the Supreme Court.

Issues for Determination

In determining the appeal, the Supreme Court considered the issues below:

1. Whether the Court of Appeal was right in holding that the Appellant’s suit was an abuse of Suit No. FHC/L/CS/769/2004 – TAMUNO NATHAN GEORGE & 2 ORS v LOUIS OKOYE & 4 ORS. pending at the Federal High Court, Lagos.

2. Whether the Court of Appeal was right when it held that, the Respondent disclosed triable issues entitling him to be let in to defend the Appellant’s suit at the trial court.

Arguments

Arguing the first issue, counsel submitted on behalf of the Appellant that the fact that the Receiver/Manager appointed pursuant to the Deed of Debenture between the Appellant and the company instituted Suit No. FHC/L/CS/769/2004, cannot affect the Appellant’s right of action under the Deed of Guarantee as both contracts are separate and independent in law. He argued that the suit was instituted by the Receiver/Manager for the preservation of the company’s assets which were the subject of the Deed of Debenture, and the Receiver’s only concern, and it was not brought on behalf of the Appellant to recover the debt guaranteed by the Respondent under the Deed of Guarantee. He submitted that the company was not a party to Exhibit EM4; hence, it cannot derive any benefit or suffer any detriment thereunder.

Counsel for the Respondent did not advance any arguments, to counter the Appellant’s submissions. However, he objected to the competence of Ground 2 of the Notice and Grounds of Appeal from which the issue was framed, on the basis that it was not derived from the specific finding of the Court of Appeal, as the Appellant’s suit relates to abuse of court process. He urged the court to discountenance the Appellant’s submissions on the issue.

In response to the Respondent’s objection, counsel for the Appellant referred to Order 8 Rule 2(2) of the Supreme Court Rules and submitted that all that is required of an Appellant when framing a Ground of Appeal, is to clearly state the aspect of the finding of the lower court he is dissatisfied with and the particulars and nature of the errors complained about.

Regarding the second issue, counsel submitted on behalf of the Appellant that where a Defendant has been served with a Writ under the Undefended List Procedure, his affidavit in support of his Notice of Intention to Defend must state clearly and concisely as possible, what his defence is. He relied on the case of SANUSI BROS. NIG. LTD v COTIA C. E. I. S. A. (2000) 11 NWLR (Pt. 697) 56, and submitted that the Respondent failed to disclose any triable issue or defence to the suit. He further submitted that the onus was on the Respondent to show evidence of any sum received by the Receiver/Manager on behalf of the Appellant, the purported illegal withdrawal by the Appellant, or that the Respondent had paid any part of the N10 million which he guaranteed to pay. Conversely, counsel for the Respondent submitted that the Respondent had disclosed a fair probability of a defence in the affidavit filed in support of his Notice of Intention to Defend, and the Court of Appeal was correct in holding that he ought to have been given the opportunity to defend the suit.

Court’s Judgement and Rationale

On the objection raised by the Respondent to the competence of Ground 2 from which Issue One was formulated, the court held that a ground of appeal will not be held to be incompetent, if the court and the other side are not in doubt as to what the complaint is. The court is to look at substance over form in furtherance of its duty to do substantial justice between parties, and not be bogged by technicalities. Thus, the Ground of Appeal was competent, because by its wordings and the particulars of error stated thereunder, it was clear that it was challenging the decision of the Court of Appeal on abuse of court process.

In resolving the first issue for determination, the court held that before a suit can be said to amount to be an abuse of court process on the basis of multiplicity of actions, the suit and the suit it is claimed to be abusive of, must be between the same parties; on the same subject-matter; and on the same issues – OKORODUDU v OKOROMADU (1977) 3 SC 21; OKAFOR v A. G. ANAMBRA STATE (1991) 6 NWLR (Pt. 200) 659 at 681. The three conditions must co-exist for an abuse of court process to ensue.

The suit before the Federal High Court in FHC/L/CS/769/2004 was essentially a suit instituted by the Receiver/Manager of Excellent Manufacturers Ltd and two other Plaintiffs pursuant to the Deed of Debenture, to protect the assets of the company and to prevent the Respondent as the Chief Executive Officer and other Directors, from tampering with them. On the other hand, the suit that gave rise to the instant appeal was instituted by the Appellant against the Respondent in his personal capacity as a guarantor for the debt owed by the company, based on his unequivocal and irrevocable undertaking in the Deed of Guarantee. The court noted that company is separate and distinct from the Respondent, and the company was not a party to the contract of guarantee. The most pertinent indices to be considered for a suit to be termed an abuse of court process, is that there are multiple actions between the same parties over the same subject-matter which is not the position in the instant case. It cannot therefore, be said that the Appellant’s suit that led to the instant appeal constituted an abuse of FHC/L/CS/769/2004, as the suits were on different subject matters, independent of each other, and the reliefs sought in each suit were completely different from the other.

On the 2nd issue, the court held that where a Defendant avers that he disputes all or part of the claim, he must be specific as to what part of the claim, he must be specific as to what part of the claim he disputes and the real nature of the defence relied on – NISHIZAWA LTD v JETHWANI (1984) 12 SC 234. All that was available in the affidavit filed in support of the Respondent’s Notice of Intention to Defend the suit, were mere speculative allegations. The affidavit did not disclose any sum of money paid by the Respondent in favour of the Appellant, or any sum of money received by the Receiver/Manager to the credit of the Appellant in discharge of the sum guaranteed by the Respondent. The Respondent’s affidavit showed a mere posturing, rather than particulars and necessary details required to sway the hand of the hands of a court to bring in a Defendant to defend. Mere denial of the claim by the Defendant of its indebtedness, is not sufficient. The Defendant must disclose a defence or elicit a triable issue upon which it would be let in to file and defend the suit, as required by the Rules of court.

Appeal Allowed; Decision of trial court restored.

Representation

Emeka Mozia for the Appellant.

Obi Anizoba for the Respondent.

Reported by Optimum Publishers Limited, Publishers of the Nigerian Monthly Law Report (NMLR)(An Affiliate of Babalakin & Co.)