IN THE COURT OF APPEAL OF NIGERIA
On Friday, The 28th day of February, 2014
1. BELOXXI & COMPANY LIMITED ................. Appellants
2. OBI EZEUDE
1. SOUTH TRUST BANK
2. EXPORT-IMPORT BANK OF UNITED STATES .............. Respondents
3. PRIVATE EXPORT FUNDING CORPORATION
F.R. Onoja Esq. for Appellants
Olumide Aju Esq. with B.C. Akunya Esq. for Respondents
CHINWE EUGENIA IYIZOBA, J.C.A. (Delivering the Leading Judgment):
This appeal is against the judgment of Archibong J. of the Federal High Court, Lagos Division in Suit No. FHC/L/CS/113/2005 delivered on the 15th day of November, 2012. The facts leading to the suit and the appeal may be summarized thus: Sometime in 2003, the 1st Appellant sought and obtained a loan from the 1st Respondent for the purchase of biscuits manufacturing equipment in the sum of $2,207,600.00 (Two Million Two Hundred and Seven Thousand Six Hundred U.S, Dollars). Two types of guarantees with different consequence were provided to secure the loan. The first type of guarantee was the personal guarantee of the 2nd Appellant who is a Managing Director/Chief Executive Officer of the 1st Appellant. The loan documentation included a Promissory Note and a Letter Agreement both dated 2nd March 2004 (Pages 16 - 25 of the Record of appeal). The second type of guarantee was a form of insurance provided to the 1st Appellant by Export-Import Bank of the United States (the 2nd Respondent). The 2nd Respondent is an organ of the government of the United States of America with the object of financing exports of goods and services from the United States to foreign countries. By this second guarantee, the 2nd Respondent undertook to repay the 1st Respondent if the Appellants defaulted in paying the 1st Respondent; the 2nd Respondent will then be subrogated into the shoes of the 1st Respondents to recover the loans from the Appellants. At some point, in the process of restructuring of the 1st Respondent, the loan was assigned to the 3rd Respondent.
The Appellants defaulted on the loan and the 2nd Respondent repaid the 1st Respondent through the 3rd Respondent. The 2nd Respondent then obtained an assignment of the loans and all the documents from the 1st Respondent. The Appellants were aware of this arrangement at all material times of the transaction. Rather than pay back the 2nd Respondent, the Appellants as Plaintiffs sued the Respondents at the Federal High Court, Lagos division seeking a declaration that they are not entitled to repay the loan because of the assignment of the loan to the 3rd Respondent. The 2nd Respondent then filed a statement of defence in which they counterclaimed for the loan.
The case proceeded to trial on the 24th day of September 2008 when the Appellants' first witness (the 2nd Appellant) began his testimony. In the course of the testimony, the lower court suo motu, raised the issue as to whether the Appellants have a cause of action against the Respondents and requested Counsel to address the court solely on the issue whether the Appellants' Statement of claim disclosed a cause of action having regard to the facts pleaded and the reliefs sought. Counsel addressed the court and in a considered ruling the court held that the Plaintiffs have no cause of action against the Defendants and consequently dismissed the Plaintiffs' claim and set down the Counterclaim for hearing. (Pages 184 - 196, 220-222 and 234 - 244 of the record of appeal). The Appellants filed two appeals against two interlocutory decisions of the trial court in this matter which were dismissed by the Court of Appeal.
At the conclusion of hearing, the trial court found the Plaintiffs/Appellants liable for the reliefs in the Counterclaim save for the Attorney's fees and court costs. Dissatisfied with the judgment, the Appellants filed this appeal vide two Notices of Appeal dated 19th November 2012 and 29th November 2012. The Appellants are relying on the Notice of Appeal dated 29th November 2012 but filed on 30th December 2012 whilst the Notice of Appeal dated 19th November 2012 is deemed abandoned having not been argued. Out of the 10 grounds of appeal in the notice of appeal dated 29/11/12, the Appellants distilled five issues for determination.
1. Whether having regards to the facts and circumstances of the case, the lower Court had jurisdiction to have entertained the counter-claim
2. Whether the learned trial Judge was right to have entered judgment for the Respondents for the principal sum and interests on the ground only that the Promissory Note being a 'separate obligation' is not discharged by repayment of the principal and interest of the loan?
3. Whether the learned trial Judge had jurisdiction to have awarded 'reasonable Attorney's fees' to the Respondents?
4. Whether the learned trial Judge was right to have entered judgment against the Appellants jointly?
5. Whether the Appellants have not suffered a miscarriage of justice by the delivery of the judgment of the lower court after more than six months from the date of final addresses of the parties?
The Respondents in their brief adopted the above issues formulated by the Appellants.
"Whether having regards to the facts and circumstances of the case, the lower court had jurisdiction to have entertained the Counterclaim?
The Appellants argument on this issue is that the Counterclaim being an action to recover a debt by a guarantor on behalf of a principal debtor, it did not qualify as a banking transaction as to vest jurisdiction on the Federal High Court. Counsel argued that the fact that the transaction originated as a banking transaction did not confer jurisdiction on the lower court. He argued that the loan and interest had been repaid in full; and that the counter claim was simply an action by the 2nd Respondent to claim the value of the guaranteed repaid loan. Learned Counsel for the Respondents of course disagreed and insisted that the lower Court was right in holding that it had jurisdiction to entertain the suit.
The relevant part of the decision of the lower court at pages 446-447 of the record of Appeal is as follows:
"I will start by addressing the issue of jurisdiction. Section 251(1)(d) extends the jurisdiction of the Federal High Court to matters connected with or pertaining to banking and I think the transaction in question originated as a banking transaction and indeed the counterclaimant is a bank as well. Section 251(1)(h) extends the jurisdiction of the Federal High Court to diplomatic, consular and trade representation. The last item could naturally include trade promotion, which among other things is what the US Export-Import Bank is all about as acknowledged by the Defendant. As far as choice of jurisdiction being the Courts of the State of New York, the Defendant commenced the original action which has since been dismissed in the Federal High Court of Nigeria, Lagos Division; a waiver of choice which the counter-claimant concurred with by joining issues and making the present counterclaim which will be considered on its merits.
Besides the transaction was concluded in this jurisdiction, the benefit of it, essentially a trade promotion facilitated by a banking loan, was within this jurisdiction, the beneficiary being a Nigerian registered company domiciled here. I see nothing to oust the jurisdiction of this Court; I so hold."
The above reasoning of the lower court cannot be faulted. The Respondent is absolutely right that the transaction giving rise to the appeal having arisen from a banking transaction, the lower court had jurisdiction to entertain the counterclaim. A loan facility was advanced to the 1st Appellant by the 1st Respondent (who is an American Bank). The loan was guaranteed by the 2nd Appellant. One of the condition precedents to qualify for the loan which the Appellants validly agreed to, was that the 2nd Respondent will guarantee the loan. Further and as rightly submitted by the Respondent, and upheld by the trial Judge the loan was as a result of a trade promotion between Nigeria and USA involving exportation of goods from the United States of America to Nigeria. It is an Export Import Bank loan by which the United States of America seeks to fund, promote and encourage industrial activities in Nigeria. The jurisdiction clause in the Loan Agreement is at page 5 of Exhibit BB at pages 205-209 of the record and provides as follows:
"The Company irrevocably:
Submits to the non-exclusive jurisdiction of any Federal District Court of the United State of America in New York or the District of Colombia, United States of America in connection with any suit action or proceeding arising out of relating to this letter Agreement or the Note and further submit to the competent court of its corporate domicile or proceedings against it,
Waives to the fullest extent permitted by law the defence of inconvenient forum".
The corporate domicile of the 1st Appellant is at No. 31 Ekololu Street, Surulere, Lagos Nigeria. By the above clause, both the relevant courts in the United States of America as well as the Court of the corporate domicile of the 1st Appellant has jurisdiction in respect of any suits arising out of the loan It is clear from the above that the Appellants unconditionally agreed to submit to the jurisdiction of the Nigerian court in respect of any action such as the Counter-claim instituted against them for the recovery of the loan granted to them.
Learned Counsel for the Appellants had further submitted that that the counterclaimant and the other Respondents are not Banks within the meaning, definition and intendment of Nigerian Law. I again agree with the learned counsel for the Respondent that the argument is misconceived. This view is further supported by the provisions of the law and it is better to set out the provisions explicitly: Section 251 of the 1999 Constitution of the Federal Republic of Nigeria provides:
1.Notwithstanding anything to the contrary contained in this Constitution and in addition to such other jurisdiction as may be conferred upon it by an Act of the National assembly, the Federal High Court shall have and exercise jurisdiction to the exclusion of any other court in civil cases and matters -
d. Connected with or pertaining to banking, banks, other financial institutions, including any action between one bank and another, any action by or against the Central Bank of Nigeria arising from banking, foreign exchange, coinage, legal tender, bills of exchange, letters of credit, promissory notes and other fiscal measures:
Provided that this paragraph shall not apply to any dispute between an individual customer and his bank in respect of transactions between the individual customer and the bank;
h. diplomatic, consular and trade representation;
Section 66 of the Banks and Other Financial Institutions Act, Cap B3 Laws of the Federation of Nigeria, 2004, defines "other financial institution" to mean:
"Any individual, body, association or group of persons, whether corporate or unincorporated, other than the banks licensed under this Act which carries on the business of discount house, finance company and money brokerage and whose principal object include factoring, project financing, equipment leasing, debt administration, fund management, private ledger services, investment management, Local Purchases Order financing, export finance, project consultancy, financial consultancy, pension fund management and such other business as the bank may, from time to time designate."
It is clear then from the above provisions that jurisdiction is conferred on the Federal High Court, not only in respect of Banks but also financial institutions as defined above. The transaction giving rise to this action is both project financing and export finance undertaken by the United States Government through Export-Import bank and a local U.S. bank to support manufacturing activities in Nigeria. The question as posed by learned counsel for the Respondent is, if the Appellants genuinely believed that this is not an action that should be instituted at the Federal High Court, why did they commence the action against these Banks at the Federal High Court? The fact is that Section 251(1)(d) of the 1999 Constitution gives jurisdiction to Federal High Court in respect of any matter connected to banks, banking and other financial institutions. The Supreme Court while considering the import of the proviso in S.251(1)(d) in the case of NDIC v Okem Enterprises Ltd (2004) 10 NWLR (Pt 880) 107 held that by the proviso both the Federal High Court and the State High Court has jurisdiction in disputes between an individual customer and his bank. It is now firmly established by the Supreme Court, that in a Banker/Customer relationship of this nature, the Federal High Court has jurisdiction to entertain the matter. It is also not in doubt that the 2nd Respondent qualifies as a financial institution under the combined provisions of the Banks and Other Financial Institutions Act, 2004 (Section 66) and Section 251(1)(h) of the 1999 Constitution The decision in Adetayo v. Ademola (2010) 15 NWLR (pt.1215) 169 at 189 cited by the Appellants dealt with the jurisdiction of the Federal High Court to hear land matters in which the Federal Government or any of its agency is a party. I agree with Respondent's counsel that it has no relevance whatever to this appeal.
In the Appellants' Reply Brief, Mr. Onoja submitted that the Supreme Court decision in Merill Guarantee Savings and Loans Ltd & Anor V. Worldgate Building Society Ltd. (2013) 1 NWLR (Pt.1336) 581 supports their contention that once the bank loan initially advanced to the 1st Appellant has been paid off by the 2nd Respondent, in his capacity as guarantor, the banking transaction came to an abrupt end. The counter-claim was therefore a mere action by a guarantor to recoup the exact amount paid to liquidate the loan. He contended that it becomes an entirely new cause of action and no longer a banking matter in which the Federal High Court has jurisdiction. I have read the authority above. I see nothing therein that supports the contention of the Appellant or that derogates from the decision of the lower court that the Federal High Court has jurisdiction. In the case, the Respondent a limited liability Company placed an investment of N500,000.00 with the 1st Appellant, a finance company. The investment was at an interest rate of 8.5% per month for 90 days to fall due on 24/8/93, The 2nd Appellant, the Managing Director of the 1st Appellant executed a personal guarantee in favour of the Respondent on the investment. The Appellants failed to redeem the Respondent's investment despite several demands. The Respondent instituted an action in the High Court of Lagos State. The appellants filed a preliminary objection challenging the jurisdiction of the High Court on the grounds that the two parties were financial institutions and that the Federal High Court had exclusive jurisdiction to hear the matter. The High Court agreed with the appellants and struck out the Respondent's action. The Respondent appealed to the Court of Appeal and the Court upheld the appeal on the grounds that there was nothing on the Respondent's claim to suggest that the parties were financial institutions. Secondly that the transaction did not come within the exclusive jurisdiction of the Federal High Court and that even if the parties were financial institutions and Section 230(1)(d) applied, they were in the same class as banks and therefore the proviso to Section 230(1)(d) applied to the dispute. That means that both the High Court and the Federal High Court had jurisdiction. The Supreme Court confirmed the judgment of the Court of Appeal. The case clearly did not support the Appellant in any way. On the contrary it supported the case of the Respondent. The Supreme Court in its judgment and the language used clearly showed displeasure at a debtor who is seeking a technical way out of his obligation by wrongly contending that the court where he was sued had no jurisdiction. The situation here is even more reprehensible. The Appellants were the ones that rushed to the Federal High Court and instituted the action that gave rise to the counter claim. After their action was dismissed and the counter-claim granted, they turned round to contend that the Federal High court had no jurisdiction. It is obvious from the authorities that both the High Court by virtue of the proviso to Section 251(1)(d) of the Constitution of the Federal Republic of Nigeria and the Federal High Court have jurisdiction in these matters. Section 259(1)(d) and (h) of the Constitution reinforce the argument that the Federal High Court had jurisdiction to entertain the counter-claim. Issue 1 is resolved against the Appellant and in favour of the Respondents.
Whether the learned trial Judge was right to have entered judgment for the Respondents for the principal sum and interests on the ground only that the Promissory Note being a 'separate obligation' is not discharged by repayment of the principal and interest of the loan?
Learned Counsel for the appellant on this second issue submitted that the lower court having found that the loan had been repaid and liquidated by the 2nd Respondent ought to have dismissed the Counterclaim in its entirety, as the 2nd Respondent has no cause of action against the Appellants to claim for a discharged debt since the law does not recognize the assignment of a debt that has been discharged. Mr. Onoja further submitted that the 2nd Respondent did not make a case for the enforcement of the Promissory Note at the trial and that the learned trial Judge erred in holding that the Promissory Note issued as security for repayment of the loan is a separate obligation which entitled the 2nd Respondent to recover against the Appellants.
Mr Olumide Aju for the Respondents in his brief in reply to this second issue submitted that the argument is misconceived for the following reasons:
1. That the Appellants do not dispute the loan nor their indebtedness therefrom; that the subsequent assignment of the loan to the 2nd Respondent, who insured the loan and repaid the loan, is also governed by contractual obligations, which the Appellants freely entered into with the 1st and 2nd Respondents; that the Promissory Note executed by the Appellants for the loan, Exhibits AA, duly recognized the 2nd Respondent as their guarantor. (Pages 21 - 25 of the records of appeal).
The promissory Notes provide as follows:
"Notwithstanding the fourth paragraph hereof, beginning on the date (the "Ex-Im Bank claim payment Date") on which the Export-Import Bank of the United States ('Ex-Im bank" makes a claim payment to the lender under the Master Guarantee Agreement (Medium Term Credits - Electronic Compliance Program), dated as of March 15, 2001 between the lender and Ex-Im Bank (the "MGA"), in the event of any amount of principal of, or accrued interest on, this Note owing to Ex-Im Bank is not paid in full when due (whether at stated maturity, by acceleration or otherwise), the Maker shall pay to Ex-Im Bank on demand interest on such unpaid amount (to the extent permitted by applicable law) for the period from the date such amount was due until such amount shall have been paid in full, at an interest rate per annum equal to one percent (1%) per annum above the interest rate otherwise then applicable under the first paragraph hereof.
Upon default in the prompt and full payment of any installment of principal hereof or interest on this Note, the entire outstanding principal amount hereof and interest on the note to the date of payment shall become due and payable shall become due and payable at the option and upon demand of Ex-Im Bank".
(2). A Promissory Note is defined in the Dictionary of law, 4th edition as follows:
'An unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand or at a fixed determinable future time, a sum certain in money to or to the order of a specified person, or to bearer : section 83 of the Bills of Exchange Act, 1882. See Claydon v. Bradley (I987) 1 WLR 521; Kwok v. Commissioner of Estate Duty (1988) 1 WLR 1035.'
Mr. Aju submitted that the assignment of the interest of the 1st Respondent on the loan to the 2nd Respondent through the 3rd Respondent (PEFCO) appears on the back of page 1 of Exhibit AA. By this assignment, the 2nd Respondent became subrogated (substituted) to the position of the 1st and 3rd Respondents and could lawfully enforce the remedy which the 1st and 3rd Respondents could have enforced against the Appellants. (Paragraph 23 of the 2nd Defendant's Amended Statement of Defence and Counter-claim Page 350 -354 of the record of appeal).
Counsel submitted that the word 'subrogation' is defined in Blacks Law Dictionary 6th edition as 'the substitution of one person in the place of another with reference to a lawful claim, demand or right, so that he who is substituted succeeds to the rights of the other in relation to the debt or claim and its rights, remedies, or securities.' It refers, for example, to an insurer's right to enforce a remedy, which the assured could have enforced against a third party. See Phoenix Assurance Co v. Spooner (1905) 2 KB 753; Orakpo v. Mason Investments (1978) AC 95.
(3) Mr. Aju stated that the Appellants had argued that the trial judge gave judgment and enforced the promissory note suo motu and thereby breached the rule of fair hearing. He submitted that the argument is misconceived because the Promissory Note was not introduced by the Judge. It was one of the documents evidencing the loan transaction which was tendered at the trial and which the Appellants have all opportunity to impeach but did not. The effect of the Promissory Note which is that it is a bill of exchange, subject to endorsement and it is a separate obligation to unconditionally pay to the order of South-Trust Bank the principal sum due together with interest to LIBOR. As evidence the Appellants' obligation to repay the loan, the Appellant (Company) undertook to execute and deliver to SouthTrust Bank one promissory Note ("the Note") in the principal sum of US$2,207,600 or so much as shall be disbursed. The Appellants authorized SouthTrust Bank to complete the Note and agreed to it by filling in the appropriate dates. In the event of a conflict between the terms of this Note and the terms of this Letter Agreement, the terms contained in the Note shall govern."
Counsel further submitted that the Promissory Note is not only a bill of exchange but a distinct commitment provided as security for the loan agreement. It is not discharged by the loan itself being discharged by any party other than the borrower. The commitment to pay the principal sum of the loan agreement and the rate of interest accruable therein is an unconditional one assignable by an endorser as if it was the original issuer of the Note; the original maker, in this case, the Appellants. 1st Respondent is the acceptor and the endorsee in this case, the 2nd Respondent is the payee. See Black's Law Dictionary, 6th edition page 1214.
Counsel submitted that the cases of Victino Fixed Odds Ltd. v. Ojo (2010) 8 NWLR (Pt.1197) 486; Jerric Nig. Ltd. v. UBN Plc. (2000) 15 NWLR (Pt.691) 447 and Liman v. Mohammed (1999) 9 NWLR (Pt.617) 116 relied on by the Appellants were cited out of context and should be disregarded.
(4) Counsel submitted that where parties have lawfully entered into a contract to bind their relationship, the court must give full terms and effect to the provision of that contract. Ifeta v. SPDC Nig. Ltd (2006) 8 NWLR (938) 585. Counsel further submitted that it is a usual banking custom and practice that an assignee of a loan acquires all the rights, title and interest of the original lender bank. See Bateman v. Liggett 279 N.W. 2d 137, 203 Neb. 472 (Neb,, 1979), where the US court held as follows:
'Where, in the process of liquidating and terminating the business of an instalment loan licensee, a legal and valid instalment loan obligation is assigned to a creditor of the licensee in satisfaction of an indebtedness of the licensee, the assignee acquires all the right, title and interest of the licensee and may sue for, collect, and receive any lawful rate of interest provided for in the instalment loan agreement although the assignee does not have a license to engage in the instalment loan business.'
Counsel submitted that similarly, a guarantor, like the 2nd Respondent has a valid cause of action for the repayments of all sums of money paid on behalf of a borrower upon redemption by him of the loan taken by the borrower. In Adeosun v. Jibesin (2001) 11 NWLR Part 724 page 290 Greene L.J. held as follows:
"I will state my reasons for agreeing with the decision of the learned registrar.
It is, in my opinion, settled beyond possibility of dispute that where "A." at the request of "B." guarantees payment of "B.'s" debt to "C," the law implies an undertaking by "B." to indemnify "A." in respect of any sums which he properly pays to "C." under the guarantee. This is merely a branch of a wider rule which is laid down in numerous authorities. I may quote as examples Britain v. Lloyd (1845)14 M. & W. 762 where at p.773, Pollock, C.B., says:
"It is clear, that if one requests another to pay money for him to a stranger, with an express or implied undertaking to repay it, the amount, when paid, is a debt due to the party paying from him at whose request it is paid, and may be recovered on a count for money paid...the request to pay, and the payment according to it, constitute the debt; and whether the request be direct, as where the party is expressly desired by the defendant to pay, and does pay, makes no difference."
Counsel submitted that the above legal principle was confirmed and adopted in the Nigerian case of Onwukeme v. Onwuegbu (1970) N.C.L.R. page 399 at page 401 per Bate, S.P.J as follows:
"Where a principal debtor asks another person to guarantee the payment of the principal debt, it is well established that, if the guarantor has to pay, he may recover from the principal debtor: 18 Halsbury's Laws of England, 3rd ed., at 479 ff., and Snell's Equity, 25th ed, at 43 ff. Therefore in the present case the plaintiff is entitled to recover from the defendant the amount which the plaintiff paid to the bank to liquidate the defendant's overdraft"
Counsel submitted that even without an assignment of the loans in favour of the guarantor, the obligation of the borrower to repay the loans to the guarantor is sacrosanct. Consequently, he urged the Court to hold the Appellants jointly and severally liable to the 2nd Respondent for the loan. Mr. Aju submitted that the most ridiculous part of the Appellants argument on this issue is that a borrower who borrowed millions of dollars from a bank, agreed with a guarantor/insurer to step in the gap for him if he is not able to meet some of the instalment payments, and having undertaken to pay back the guarantor, now turns round upon redemption of the loan by the guarantor to claim that he is not liable to the guarantor on the loan. To accede to the Appellants on this issue will be laying a very bad precedent, which will potentially destroy the whole concept of banking business.
(5) Counsel submitted that the Appellants had argued on this issue that the Note shall be governed and construed in accordance with the law of the State of New York, USA and that the question whether the payment by the 2nd Respondent will discharge the Promissory Note or not should be decided based on American Law. The Appellants further argued that no evidence of American law was presented at the lower court and relied on the cases of JFS Investment Ltd v. Brawal Line Ltd (2010) 18 NWLR (Pt.1225) 495; Sona Breweries Plc v. Peters (2005) 1 NWLR (908) 478; Owoniboys Technical Services Ltd w UBN Ltd (2003) 15 NWLR (844) 545 and Standard Eng. Co. Ltd v. B.B.C.I (2006) 7 NWLR (978) 198 in support of this argument.
Counsel again submitted that this argument is misconceived and the cases cited by the Appellants not helpful to the Appellants. He submitted that in addition to the fact that the jurisdiction clause covers both the Courts of U.S.A. and Nigerian Courts; the Appellants have not shown that the position of American law on guarantees is different from Nigerian law.
On the contention of the Appellants that there was no basis for the award of interest by the trial court to the 2nd Respondent as there was no pleading and proof of same, counsel submitted that the nature of interest awarded by the trial court is one, which arose as of right based on the contractual agreement of the parties. The said rate of interest was pleaded and evidence was given at the trial in proof of this rate. In Paragraph 30 of the 2nd Respondent's Amended Statement of Defence and Counterclaim which is on pages 350 to 354 of the records of appeal, the 2nd Defendant counter-claimed against the Plaintiffs jointly and severally as follows:
'(1) The sum of $2,207,600 (Two Million Two Hundred and Seven Thousand, Six Hundred U.S. Dollars) being the principal sum in the loan facility granted to the Plaintiffs by the 1st Defendant and repaid by the 2nd defendant which sum remains outstanding till date.
(2) Interest on the said sum as follows:
(i) 3.15% from 2nd March 2004 to 25th July 2005 (the date of the first default (i.e. 1.15% of Libor rate during the period plus 2%.
(ii) 15.92% from 26th July, 2005 to 20th September, 2005 (i.e Libor of 3.92% plus 12%).
(iii) 7.21% from 21st September, 2005 till the date of judgment and until full and final payment is made (i.e. Libor of 4.21% plus 3%).
Counsel submitted that in support of the above pleading, the 2nd Defendant tendered Exhibit BB at the trial court. This is the evidence i.e. the contract providing the applicable interest rate. Paragraph 2 page 2 of Exhibit BB on page 48 of the records of appeal, provides as follows:
'The company will pay interest in arrears on the outstanding balance of the loan at an interest equal to two percent (2.00%) above LIBOR'
Counsel opined that this is the basis upon which the claim for interest in the Counter-claim was made. He argued that the Appellants admitted taking this loan, and the Promissory Note and the Letter Agreement (Exhibits AA and BB tendered by the Respondents) govern the terms of the loan. Counsel submitted that award of interest is determined by two factors namely agreement to pay interest and by usual banking custom and practice.
In Ekwunife v. Wayne (W/A) Ltd (1989) 5 NWLR (Pt. 122) 422 the Supreme Court per Nnaemeka-Agu JSC observed as follows:
"It is important to note that interest may be awarded in a case in two distinct circumstances, namely:
As of right; and Where there is a power conferred by statute to do so, in exercise of the court's discretion.
Interest may be claimed as a right where it is contemplated by the agreement between the parties, or under a mercantile custom, or under a principle of equity such as breach of a fiduciary relationship"
Counsel submitted that the 2nd Respondent adequately pleaded and proved the claim for interest, which was rightly awarded by the trial court. The Appellants did not impeach this evidence and also failed to call any witnesses and/or evidence to rebut the rate at the trial. They rested their case solely on the evidence of the Counterclaimant. Learned Counsel submitted that contrary to the arguments of the Appellants; that the interest awarded by the trial court was backed up by pleadings and credible evidence. He urged the Court to resolve this issue against the Appellants.
I reproduced all of the submissions of learned counsel on this issue because he covered the grounds and I am in complete agreement with him in all his arguments on this second issue. In all honesty, I do not understand the case the Appellants are making. They do not deny borrowing the money in question. They signed all the relevant documents tendered at the trial including the Promissory Note. In the agreements it was indicated that the 2nd Respondent would guarantee the loan and that if the appellants defaulted the loan would be paid by the 2nd Respondent who would now step into the shoes of the 1st Respondent to claim the money with interest from the Appellants. The Appellants are fully aware of these terms. How can the Appellants turn round to claim that because the money was paid by the guarantors, no loan is outstanding anymore? The payment of the loan by the 2nd Respondent cannot and did not extinguish the obligations of the Appellants to repay with interest a loan they duly took and which was properly documented. It is indeed ludicrous for the Appellants to imagine that they can escape liability on the loan by the kind of arguments they were putting up. Appellant's counsel had argued that the promissory Note was issued as security for the repayment of the loan to the 1st Respondent; that its lifespan is tied to the repayment of the loan itself; that once the loan is liquidated by payment, the promissory note expires! This is indeed laughable. The obligation of the borrower to repay the loans to the guarantor is sacrosanct and the appellants are fully aware of this. I am sure that the Appellants did not expect anyone to take their argument seriously. At any rate, Mr. Aju has exhaustively answered their lame submissions. The learned trial Judge was absolutely right in entering judgment for the Respondents for the principal sum and interests on the ground that the promissory note is not discharged by repayment of the principal and interest of the loan by the guarantor. Issue 2 is resolved against the Appellants and in favour of the Respondents.
Whether the learned trial Judge had jurisdiction to have awarded 'reasonable Attorney's fees' to the Respondents?
Learned Counsel for the Appellants, Mr. Onoja on this issue relying on a number of authorities submitted that what the learned trial Judge awarded as fees is 'reasonable attorney's fees' and that 'attorney's fees' as a component of a claim in Court cannot be claimed in a court in Nigeria. Counsel urged the court to resolve the issue in their favour and to set aside the award.
Mr. Aju for the Respondents submitted that the learned trial Judge had powers and jurisdiction to award reasonable Attorney's fees to the Respondents. He submitted that the 2nd Respondent in paragraph 27 of its Amended Statement of Defence and Counterclaim pleaded and made a claim for collection expenses and Attorney's fees. The claim was made based on the contractual terms of the Promissory Note (Exhibit AA) executed by the Appellants. At page 23 of the record of appeal, Exhibit AA provides as follows:
'To the maximum extent permitted by law, the Maker or Applicants agree to pay on demand all costs and expenses of the lender and Ex-Im Bank that are incurred in connection with the enforcement of this Note, including but not limited to reasonable attorney's fees and expenses related thereto.'
Counsel submitted that these are expenses incidental to the Appellants' failure to repay the principal and interest on the loans as they fell due. Upon 2nd Respondent paying the total outstanding principal and interest to the 3rd Respondent, they demanded repayment of these sums from the Appellants but the Appellants failed to pay. Counsel contended that it was the Appellant's default that prompted the 2nd Respondent to engage the services of a recovery agent (Global Recovery Group LLC) of America to recover these monies at a cost. Counsel argued that if the Appellant had paid these sums on demand, this additional cost would not have been incurred. The 2nd Respondent in proof of its claim for collection fees tendered Exhibit EE, being the contractual document between the 2nd Respondent and the recovery agent, showing the liability of the 2nd Respondent to the Company. The agreed fee on page 28 of Exhibit EE tagged 'Contractual proposal' is 35% of any claim over $1,000,000 in the African Region in a 100% recovery. Upon the engagement of the Global Recovery Group, the Company also made a written demand for payment of the outstanding principal and interest from the Appellants to no avail. The recovery agent therefore engaged the services of a Nigerian law firm (Messrs. F.O. Akinrele & Co.) to defend the Respondents in the suit filed by the Appellants and to recover the amount owed to the 2nd Respondent Counterclaimant. The collection fees was $583,615.97 whilst the attorney's fees and court expenses were assessed at US$225,239.23 being 5% gross of the principal sum and interest claimed. See paragraphs 20, 21, 22, 23, 24, 24, 25, 26 and 27 of the 2nd Respondent's Amended Statement of Defence and Counterclaim at pages 350 - 354 of the records.
Counsel argued that the learned trial judge rightly found that the 2nd Respondent was entitled to collection expenses, which it pleaded and proved and consequently awarded same. The trial court however did not award the attorney's fees of US$225,239.23.
The arguments of Mr. Aju for the Respondent are compelling. The relevant part of the judgment of the trial court on the issue is on pages 449 -450 of the record of appeal and reads thus:
"The defence to the Counter-claim, such as it (sic) discloses no defence whatsoever. The Counter-claim succeeds as far as the principal and the interest claimed. I think in the interest of public policy and the upholding of this country's reputation as a safe haven for foreign money, to accept the general customs and trade practices of New York with regard to the recovery of money sourced from the United States. I find the fees due to Global recovery group retained by the Counter claimant fall within the meaning and definition of 'reasonable attorney's fees and expenses related thereto incurred in connection with the enforcement of this Promissory note.' I order that the fees be paid by the defendants.'
Although the learned trial Judge did not do any evaluation of the evidence before coming to the conclusion he arrived at, it cannot be said that there has been any miscarriage of justice thereby. The terms were clearly spelt out in the Promissory note which the Appellants duly executed. They agreed to pay on demand all costs and expenses of the lender and Ex-Im Bank that are incurred in connection with the enforcement of the Promissory Note, including but not limited to, reasonable attorney's fees and expenses related thereto.' The fees were duly pleaded by the Respondents and proven by documentary evidence. The fees referred to are collection fees and not solicitor's fees. I agree with the submissions of Mr. Aju that the Appellants argument regarding the award of attorney's fees i.e. Solicitors fees are misconceived and not borne out of the judgment of the lower court as the trial court did not award Solicitors fees. The award of the learned trial Judge which was for collection fees duly pleaded and proved is in order. Issue 3 is resolved against the Appellant and in favour of the Respondents.
"Whether the learned trial Judge was right to have entered judgment against the Appellants jointly?
Mr. Onoja for the appellants on this issue submitted that so long as the lower Court limited its judgment to enforcing the promissory note issued by the 1st Appellant, there was no legal basis for entering the judgment against the 2nd Appellant who is a distinct person from the 1st Appellant who issued the promissory note. Counsel submitted that the claim of the 2nd Respondent was for the payment of the guaranteed repaid loan granted to the 1st Appellant and that no liability has been established against the 2nd Appellant for the repayment of the loan which had already been paid back by the 2nd Respondent as guarantor.
Mr. Aju for the Respondents submitted that the learned trial judge was right in awarding judgment against the Appellants jointly because the loan given to the 1st Appellant which is the subject matter of this Appeal was unconditionally guaranteed by the 2nd Appellant who at all material times to this transaction was the President/Chief Executive Officer of the 1st Appellant. The personal guarantee of the 2nd Appellant is at pages 16 - 25 of the record of appeal. Contrary to the arguments of the Appellant's Counsel, apart from being an officer of the 1st Appellant, the 2nd Appellant also binds himself to pay back this loan in his personal capacity. The personal guarantee of the 2nd Appellant on page 25 of the records provides as follows:
'FOR VALUE RECEIVED, the undersigned, as primary obligor, hereby unconditionally and irrevocably guarantees the full, prompt and complete payment when due (whether at scheduled maturity, by reason of acceleration or otherwise) of the principal of an interest on the foregoing promissory Note, and hereby waives acceptance, diligence, presentment, demand, protest or notice of any kind whatsoever (including notice of default or non-payment) as well as any requirement that the holder exhaust any right or take any action against the maker of the foregoing Promissory note and hereby consents to any extension of time or renewal or other modification thereof. This is a continuing, absolute and unconditional guarantee of payment and not merely of collection. To the maximum extent permitted by applicable law, the undersigned hereby waives all defenses of a surety or guarantor to which it might be entitled by statute or otherwise.'
Further, the lower court did not limit its judgment only to the enforcement of the Promissory Note alone but took into consideration all the documents/exhibits tendered as well as the evidence presented by the Respondents since the Appellants failed to either call any witness and/or present evidence in this case. At page 448 of the record of appeal, the learned trial Judge held as follows:
'To the order of the South Trust Bank' who entered a loan transaction covered by the guarantee of the US Export- Import Bank backed by a promissory Note executed by the defendant, accepting the implied conditionality of a trade promotion arrangement in which South Trust Bank acts essentially as an agent of the US Export- Import Bank; a nominated financier. In other words, the promissory Note formalizes what was a term of the Letter Agreement. The Counter claimant did not insinuate itself unbided by the Defendants. See Letter of Agreement.'
Counsel further submitted that it is erroneous to argue as the Appellants did that the Promissory Note had nothing to do with the 2nd Appellant. By the terms of the personal guarantee executed by the 2nd Appellant, the 2nd Appellant as primary obligor unconditionally and irrevocably guaranteed the full, prompt and complete payment of the principal and interest on the Promissory Note. The 2nd Appellant further agreed that the guarantee was a continuing, absolute and unconditional guarantee of payment and not merely of collection, and as a result waived all defences of a surety or guarantor to which he might be entitled by statute or otherwise. Counsel further submitted that contrary to the argument of the Appellant's Counsel, the 2nd Respondent obtained all the rights that accrued to the 1st Respondent upon an assignment of that loan to it after repayment rights. These rights include the existing personal guarantee of the 2nd Appellant which is of a continuing nature and continues to be in force until the 1st Appellant discharges all of its obligations on the loan. Counsel urged the Court to uphold the finding of the trial court that the 1st and 2nd Appellants are jointly liable to the 2nd Respondent and resolve this issue against the Appellants in favour of the Respondents.
It seems the appellants' memory is short as regards the documents they signed in relation to this transaction. With the personal guarantee of the 2nd Appellant at page 25 of the Record by which he bound himself in his personal capacity to pay the loans, how come the Appellants are surprised or contending that the judgment should not have been against the Appellants jointly. It appears that in their anxiety to get hold of the loan, the Appellants were ready to sign whatever; and actually signed documents apparently without digesting properly the contents of the documents they signed. There does not appear to be any escape route for the Appellants in this transaction. This issue is again resolved against the appellants and in favour of the Respondents.
"Whether the Appellants have not suffered a miscarriage of justice by the delivery of the judgment of the lower court after more than six months from the date of final addresses of the parties"?
Mr Onoja for the Appellants on issue 5 submitted that judgment in the case was delivered over six months from the date the parties adopted their final addresses in contravention of Section 294(1) of the Constitution of the Federal Republic of Nigeria. Counsel citing some alleged anomalies in the judgment and relying on the case of First Bank of Nig. Ltd v Adeputu (2009) 11 NWLR (Pt. 1151) 156 @ 171 - 172 submitted that upon a calm review of the entire case and the judgment, it was apparent that the learned trial judge had completely lost his impression of the issues and the evidence at the time the judgment was delivered and that this consequently occasioned a miscarriage of justice to the appellants. Counsel urged the court to declare the judgment of the Court a nullity.
Mr. Aju for the Respondents in his brief submitted that the Appellants' argument on this issue constitutes another feeble attempt to look for anything that will assist them to avoid paying the loan. Counsel conceded that indeed the evidence and final addresses closed on 7th May 2012 and the judgment was reserved for 16th July 2012; a date the trial court thought it would be able to deliver the judgment but the judgment was eventually delivered on 15th November 2012. Counsel urged the Court to take judicial notice of the annual court vacation which fell in between the period and which at the Federal High Court runs from late July to September every year. Therefore approximately 2 months was in the course of annual vacation. Counsel submitted that it is arguable whether this period should count in the first instance but that at best the complaint is that the delay was only 3 months. Counsel submitted that Appellants' counsel was informed of the date of judgment and on which date the learned trial judge asked the parties to re-adopt their arguments as allowed under Order 22 Rule 9 of the Federal High Court (Civil Procedure) Rules 2009.
Learned Counsel submitted that the argument of the Appellants' Counsel that the trial court lost his impression of the case and made avoidable errors because the trial judge reviewed the original Counterclaim of the 2nd Respondent instead of the Amended Statement of Defence and Counterclaim is misplaced. He argued that a review of the lower court's judgment shows that the lower court relied on the 2nd Respondents' Amended Statement of Defence and Counterclaim and not the original counterclaim. For example, the claim for Global recovery collection fees, which the Court awarded, did not appear in the claim/reliefs in the 2nd Respondent's original Counterclaim. The Assertion that the lower court lost his impression based on the facts is the imagination of the Appellants' Counsel. On the Appellants' Counsel's contention that "the trial judge reviewed the respective case of the parties on a completely flawed foundation" Mr. Aju submitted that the question which the said Counsel failed to answer is whether the Appellants presented any case at the lower court. Counsel submitted that the Appellants' Statement of Claim was dismissed in 2009; and the two unsuccessful appeals against the dismissal were dismissed by this Court. The Appellants also did not present any evidence or witness in defence of the Counterclaim. Therefore the Appellant had no case to be reviewed. The only evidence, which was in the record, came from the Respondent's sole witness. This evidence was concluded on 6th March 2012. Counsel submitted that it is the Appellants' Counsel that lost his impression of this case rather than the trial judge. On the Appellants' contention that the finding of the trial judge that 'the transaction was concluded in this jurisdiction' is erroneous, Mr. Aju submitted that the statement was rightly made by the trial court in his consideration of the application in determining jurisdiction in respect of contractual matters. The contract relates to delivery of equipments in Nigeria, the Appellants are domiciled in Nigeria and indeed the Appellants did not dispute that the delivery and installation of the biscuit manufacturing equipment was actually done in Nigeria. This is the basis of the finding of the trial judge on jurisdiction.
The learned trial court was therefore right when he held that the transaction was concluded in Nigeria. Counsel submitted that the case of First Bank of Nig. Ltd v. Adepetu & Co. (2009) 11 NWLR (Pt.1151) 156 heavily relied on by the Appellants was not apposite. In that case, the judgment was delivered more than two years after final addresses whereas in the instant case, it was delivered within six months (2 months of which was vacation period). Again, in the First Bank case, there was no evidence led in proof of rate of interest thereof but in the instant case, the 2nd Respondent pleaded interest and tendered exhibits AA and BB in proof as the basis for the interest claim. The Appellants did not contradict or discredit the 2nd Respondent's witness on interest claim during cross examination nor did the Appellants call any witnesses and/or evidence in contrast to the 2nd Respondent's claim. The learned trial judge was therefore right in awarding the 2nd Respondent's claim for interest. Counsel urged the court to resolve the issue against the Appellants and in favour of the Respondents.
Counsel finally urged the Court to dismiss this appeal as being frivolous and unmeritorious and to affirm the judgment of the lower court delivered on 15th November 2012.
I have carefully considered the argument of the parties on this issue. The law on the point is quite recondite. I shall first set out the relevant provision of the law.
Section 294(1) & (5) of the Constitution of the Federal Republic of Nigeria provide:
"(1) Every court established under this Constitution shall deliver its decision in writing no later than ninety days after the conclusion of evidence and final addresses and furnish all parties to the cause or matter determined with duly authenticated copies of the decision within seven days of the delivery thereof.
(5) The decision of a court shall not be set aside or treated as a nullity solely on the ground of non-compliance with the provisions of subsection (1) of this section unless the court exercising jurisdiction by way of appeal or review of that decision is satisfied that the party complaining has suffered a miscarriage of justice by reason thereof."
The law is clear. Failure to deliver the judgment within three months does not automatically render the judgment a nullity. The Appellant must satisfy the court that he has suffered a miscarriage of justice thereby. The appellant is aware of this and made a futile attempt to set up what he considered to be flaws in the judgment which showed the recollection of the learned trial Judge had waned giving rise to a miscarriage of justice.
The law is that the miscarriage of justice must be tangible and clear on the face of the proceedings. The injury allegedly suffered by the appellant must be clearly traceable to the failure of the trial judge to deliver the judgment within the statutory period. The section cannot be used as a saving grace for a losing party to have a judgment against him set aside. See Walter V. Skyll (Nig.) Ltd (2001) 3 NWLR (Pt. 701) 438 @ 474 D - G; Chukwu V. The State (1992) 1 NWLR Pt. 217) 255 @ 271. The appellant clearly has no case. He cannot use the delivery of the judgment outside the statutory period to have this very sound judgment set aside. I agree totally with the submissions of the Mr. Aju on this issue. It is resolved against the Appellant and in favour of the Respondents.
Having resolved all the issues against the appellant, I hold that this appeal lacks merit. It is hereby dismissed. The judgment of Archibong J of the Federal High Court, Lagos Division in Suit No FHC/L/CS/113/2005 delivered on the 15th day of November, 2012 is hereby affirmed. Cost assessed at N50,000.00 against the Appellants and in favour of the Respondents.
I commend learned counsel for the Respondents for his well researched and well written briefs.
SIDI DAUDA BAGE, J.C.A.:
I have had the privilege of reading in draft, the lead judgment of my learned brother CHINWE EUGENIA IYIZOBA, JCA, and I have nothing extra to add.
My learned brother CHINWE EUGENIA IYIZOBA, JCA, dealt with the issues in this appeal thoroughly and well, and left no space for further contribution, for the above reasons and the more detailed reasons given in the lead judgment, I too join my learned brother in holding that the injury allegedly suffered by the Appellant must be clearly traceable to the failure of the trial judge to deliver the judgment within the statutory period. The section cannot be used as a saving grace for a losing party to have a judgment against him set aside. See Walter V. Skyll (Nig.) Ltd. (2001) 3 NWLR (Pt. 701) 438 @ 474 D - G; Chukwu V. The State (1992) 1 NWLR (Pt.217) 255 @ 271. The Appellant clearly has no case. He cannot use the delivery of the judgment outside the statutory period to have this very sound judgment set aside. I agree totally with the submissions of the Mr. Aju on this issue. It is resolved against the Appellant and in favour of the Respondents.
Having resolved all the issues against the Appellant, I too hold that this appeal lacks merit and it is also hereby dismissed by me. The judgment of Archibong J, of the Federal High Court, Lagos Division in Suit No. FHC/L/CS/113/2005 delivered on the 15th day of November, 2012 is hereby affirmed. Cost assessed at N50,000.00 against the Appellants and in favour of the Respondents.
RITA NOSAKHARE PEMU, J.C.A.:
I had the advantage of reading in draft the lead Judgment just delivered by my brother CHINWE EUGENTA IYIZOBA JCA, and I agree with his opinion and conclusion, which has been articulately set out, and the issues eruditely dealt with. I have nothing to add but to reiterate the fact that where the delivery of Judgment after the statutory time does not occasion any tangible miscarriage of Justice, it cannot amount to a nullity.
If any injury was suffered by a party for failure of the Judge to deliver his judgment within the statutory period, that injury must be traceable to that failure.
I also dismiss the appeal for want of merit.
I abide by the consequential order made as to costs.