ADAMU ABUBAKAR V. MICHELIN MOTOR SERVICES LIMITED (2020)

Background

Adamu Abubakar, a businessman, entered into a dealership and distributorship agreement with Michelin Motor Services Limited in 1989, under which he distributed the respondent’s motor tyres. In accordance with the agreement, he paid a refundable deposit which remained in the respondent’s possession. The arrangement also entitled him to certain end-of-year and progress bonuses. A dispute later arose concerning alleged indebtedness and whether Michelin was entitled to retain the deposit and bonuses to offset sums which it claimed were due from the appellant.

In 1999, Abubakar demanded the refund of his deposit and payment of the bonuses. Michelin refused the demand in a letter dated 26 July 1999. The appellant subsequently commenced an action in the High Court of Plateau State on 30 April 2007, claiming N4,400,000 as the refundable deposit, N1,936,919.54 as bonuses, interest, special damages and costs. The trial court entered judgment for the appellant on the principal claims. On appeal, however, the Court of Appeal held that the action was statute-barred and that the trial court lacked jurisdiction. The appellant appealed to the Supreme Court.

Issue

The principal issue was whether the Court of Appeal was right to hold that the appellant’s action was barred by section 18 of the Plateau State Limitation Law, Edict No. 16 of 1988. The appellant argued that section 14, which provides a ten-year limitation period for certain claims involving money secured by mortgage or charge, applied instead. The respondent maintained that the claim was founded on a simple contract and was governed by the five-year period in section 18.

Ratio Decidendi

The Supreme Court unanimously dismissed the appeal and affirmed the decision of the Court of Appeal. The Court held that the appellant’s claim arose from the alleged refusal to refund a contractual deposit and pay contractual bonuses. It was therefore an action founded on contract, not an action to recover money secured by a mortgage, charge or proceeds of sale of land. Section 14 of the Plateau State Limitation Law was consequently inapplicable. The governing provision was section 18, which states that an action founded on contract, tort or another action not otherwise specifically provided for must be brought within five years from the date on which the cause of action accrued.

The Court explained that a cause of action is the factual situation which entitles a person to obtain a remedy from another. Its essential elements are the defendant’s wrongful act and the consequential damage suffered by the claimant. In this case, the cause of action accrued when Michelin clearly refused to honour the appellant’s demand, namely on 26 July 1999. Since the writ was not filed until 30 April 2007, approximately eight years later, the action was commenced outside the statutory five-year period and was statute-barred.

Court Findings

The Court stated that whether an action is statute-barred is ordinarily determined by examining the writ of summons and statement of claim, without taking oral evidence. The court identifies the nature of the claim, determines when the cause of action accrued, and compares that date with the date the action was instituted. If the action was commenced after the prescribed period, the court is deprived of jurisdiction to entertain it.

The Court further held that although it is desirable for a defendant to plead the relevant limitation statute, pleading limitation is not mandatory. Because limitation affects jurisdiction, it may be raised at any stage of the proceedings, including for the first time on appeal, provided the opposing party is given fair notice and is not taken by surprise. Once an action is found to be statute-barred, its hearing abates and the defect cannot be cured by proceeding to determine the substantive merits.

The justices emphasised that limitation statutes serve the public interest by requiring the diligent prosecution of claims, protecting defendants from stale demands, and promoting certainty and finality in legal affairs. The Court recognised that limitation rules may not assist a party in appropriate cases involving matters such as fraud, mistake or disability, but found no such exceptional circumstance on the facts before it. The appellant’s separate loan arrangement with U.B.A. Plc, for which title documents were deposited as collateral, did not convert his claim against Michelin into a mortgage or charge claim. U.B.A. Plc was not a party to the dealership dispute.

Conclusion

The Supreme Court concluded that the appellant’s right to enforce the alleged contractual obligations was extinguished by the expiry of the five-year limitation period. The appeal was dismissed, the Court of Appeal’s judgment was affirmed, and no order as to costs was made.

Significance

This decision reinforces the strict application of limitation laws in Nigerian civil litigation. It confirms that the character of a claim is determined from the pleadings and the transaction directly in dispute, rather than from an unrelated financing arrangement. It also clarifies that contractual claims in Plateau State under section 18 of the 1988 Limitation Law must be filed within five years from accrual of the cause of action. Claimants must therefore act promptly after a clear refusal or breach, while defendants may raise limitation as a jurisdictional objection even if it was not initially pleaded.