ADALMA TANKERS BUNKERING SERVICES LTD & ANOR V. CENTRAL BANK OF NIGERIA & ORS (2022)

Background

This appeal arose from a long-running dispute concerning a loan granted by Merchantile Bank of Nigeria Plc to Adalma Tankers Bunkering Services Ltd for the purchase of a ship, M.V. Adalma 1. The bank opened and funded account No. 1671 for the transaction. The parties executed deeds of mortgage and covenant under which the appellants were required to register the ship and repay the loan, with interest, within the stipulated period. The appellants neither registered the vessel nor repaid the loan. The bank consequently seized the ship and advertised it for sale.

The appellants commenced an earlier action challenging the seizure and seeking damages. The Federal High Court initially granted reliefs to the appellants and non-suited the bank’s counterclaim for foreclosure. On appeal, however, the Court of Appeal dismissed the appellants’ claims and granted the bank an order of foreclosure and sale of the ship. The appellants’ further appeal to the Supreme Court was dismissed in 1995, leaving the Court of Appeal judgment binding and subsisting.

Despite that decision, the appellants subsequently instituted another action concerning the alleged wrongful takeover and operation of account No. 1671 and various transfers of money from the account. The trial court granted their claims. After judgment, the respondents applied to set it aside, contending, among other matters, that the proceedings were incompetent because the Central Bank had not been served in the court-ordered manner, that the proceedings breached fair hearing, and that the action was barred by res judicata. The Court of Appeal allowed the respondents’ appeal and struck out the appellants’ claims. The appellants then appealed to the Supreme Court.

Issues

1. Whether the lower courts were right to apply the doctrine of res judicata and strike out the appellants’ action.
2. Whether the trial proceedings were rendered invalid because the Central Bank was not duly served and was not given the opportunity to cross-examine witnesses or present its defence.
3. Whether the respondent was entitled to formulate more than one issue from a single ground of appeal and whether the appellants’ preliminary objection had any practical utility.
4. Whether the appeal was competent in the absence of leave required under section 233(2) and (3) of the 1999 Constitution.

Ratio Decidendi

The Supreme Court dismissed the appeal. It held that the plea of res judicata was established because the parties, their privies, the subject matter and the decisive issues were substantially the same as those determined in the earlier proceedings. The earlier judgment had been delivered by a court of competent jurisdiction and had finally resolved the dispute concerning the loan, the ship and the operation of account No. 1671. A litigant cannot avoid the effect of a final judgment by reformulating an issue already determined as a new claim.

The Court explained that “party” for the purposes of estoppel per rem judicata includes not only persons named in the earlier action, but also privies and persons connected by blood, title or interest. The Central Bank and the Nigerian Deposit Insurance Corporation were privies of the failed bank because of the takeover, liquidation and succession arrangements. The final judgment was therefore binding on them as well as on the original parties.

The Court further held that service of originating processes must strictly comply with the order of court. The appellants themselves had requested substituted service on the Central Bank through DHL at its Lagos head office, and the order was granted in those terms. Their use of Crown Courier instead was not substantial compliance; it was disobedience to a subsisting court order. Until varied or set aside, an order of court must be obeyed exactly. The purported service was consequently ineffective.

Court Findings

The Court found that the absence of valid service deprived the Federal High Court of jurisdiction over the Central Bank. It also found that no proper hearing notices were shown to have been served after the Central Bank failed to appear. Hearing notice is fundamental because it informs a party of the date on which the court will proceed. Failure to serve it violates the right to fair hearing guaranteed by section 36(1) of the Constitution and renders the affected proceedings and judgment null and void.

The Supreme Court emphasised that an appellate court determines an appeal from the record transmitted before it. The record showed that, after PW2 completed evidence-in-chief, the trial court adjourned for addresses without demonstrating that the respondents had been given an opportunity to cross-examine the witness or present their defence. The Court of Appeal was therefore entitled to interfere with the trial court’s findings.

The Court also held that the appellants’ objection concerning the formulation of issues was academic. Even if the issues in one respondent’s brief had been struck out, substantially identical issues had been competently raised by other respondents. Courts do not decide moot points or exercise jurisdiction in vain.

Conclusion

The Supreme Court unanimously dismissed the appeal as wholly unmeritorious. It affirmed the Court of Appeal’s decision striking out the appellants’ claims. Costs of N5,000,000 were awarded against the appellants in favour of each respondent. The Court’s decision preserved the earlier foreclosure judgment and rejected the attempt to relitigate matters connected with the loan and account after the original dispute had been finally determined.

Significance

The decision reinforces the strict jurisdictional importance of service, particularly where substituted service is ordered in precise terms. It also confirms that res judicata extends to privies and successor entities and may completely oust the jurisdiction of a court. The judgment carries a strong warning against debtors who obtain commercial loans, fail to honour their repayment obligations, and then use successive proceedings to frustrate recovery. Judicial process must not be used to evade binding judgments or delay the enforcement of legitimate commercial rights.