AEROBELL NIGERIA LIMITED V. NIGERIA DEPOSIT INSURANCE CORPORATION (LIQUIDATOR OF LIBERTY BANK PLC IN LIQUIDATION) (2017)

Background

Aerobell Nigeria Limited had earlier commenced proceedings against Liberty Bank Plc in Suit No. LD/581/2007 for arrears of rent and mesne profits in the sum of N28,511,486.34 relating to premises at Maritime House, Oshodi-Apapa Expressway, Lagos. The dispute was purportedly resolved amicably. The parties executed terms of settlement dated 19 February 2009, and the High Court of Lagos State entered those terms as a consent judgment on 10 March 2009. By the terms, Aerobell was to submit its claim and supporting documents to the Nigeria Deposit Insurance Corporation (NDIC), which had become liquidator of Liberty Bank Plc, for settlement, subject to the provision of supporting evidence and the Companies and Allied Matters Act 1990.

A disagreement subsequently arose concerning the legal effect and enforceability of the consent judgment. Aerobell commenced proceedings before the Federal High Court in Suit No. FHC/L/CS/596/13 by originating motion, seeking declaratory and injunctive or mandatory reliefs against NDIC. NDIC filed a preliminary objection and a separate response to the originating motion. Its counter-affidavit was later withdrawn and struck out because of irregularities. The Federal High Court dismissed the preliminary objection but also dismissed Aerobell’s substantive application. The trial court held that the terms of settlement did not resolve the dispute or determine the parties’ rights and obligations in an enforceable manner. Aerobell appealed to the Court of Appeal.

Issues

1. Whether the 2009 consent judgment was a valid judgment known to law and capable of enforcement.
2. Whether the Federal High Court, being a court of coordinate jurisdiction with the Lagos State High Court, improperly sat on appeal over or reviewed the consent judgment.
3. Whether the withdrawal and striking out of NDIC’s counter-affidavit meant that Aerobell was entitled to the declaratory and mandatory reliefs sought without further proof.
4. Whether the appeal was competent without leave, and whether the issues formulated by Aerobell were properly tied to its grounds of appeal.

Ratio Decidendi

The Court of Appeal held that the decision of the Federal High Court was final, not interlocutory, because it finally determined the application before it and left nothing further for that court to decide concerning the enforceability of the consent judgment. Consequently, Aerobell could appeal as of right under section 241(1)(a) of the Constitution of the Federal Republic of Nigeria 1999, as amended. Leave was not required. The constitutional requirement of leave for an appeal from a decision made with the consent of the parties under section 241(2)(c) applied where the consent judgment itself was being appealed against. Aerobell’s appeal, however, challenged the refusal to enforce the consent judgment, not the consent judgment directly.

The court explained that terms of settlement become a consent judgment only when filed in court and adopted as the judgment of the court. A consent judgment has the force of a final judgment and is ordinarily appealable only with leave. Nevertheless, its terms must reflect a free and voluntary agreement, consensus ad idem, and must be clear, certain and unambiguous. A court should not enforce terms that leave the parties’ rights and obligations dependent upon uncertain future decisions or undefined conditions.

Court Findings

The Court accepted that the terms of settlement had been filed and adopted by the Lagos State High Court, but found that the crucial provision was vague and conditional. It required Aerobell to submit its claim to NDIC with supporting evidence for settlement, yet it did not identify what evidence would be sufficient, who would determine its sufficiency, or whether NDIC was obliged to pay the stated amount once the claim was submitted. The provision therefore did not impose a definite obligation on NDIC to pay N28,511,486.34. It merely created a process by which Aerobell could present a claim for consideration and possible settlement.

The Federal High Court had not reviewed, reversed, set aside or reheard the Lagos State High Court’s judgment. It had only considered whether the reliefs sought by Aerobell could be granted on the wording of the judgment relied upon. This was an enforcement question, not an appellate review of a decision of a court of coordinate jurisdiction.

The Court further held that a withdrawn and struck-out process must be treated as though it had never been filed. The trial judge was therefore wrong to refer to the withdrawn counter-affidavit. That error did not, however, justify allowing the appeal. Claims for declarations must succeed on the strength of the claimant’s own evidence. Even where a defendant makes an admission, defaults in filing a defence, or offers no effective opposition, the claimant must independently establish entitlement to the declaratory reliefs. Aerobell’s originating motion and supporting affidavit did not prove a presently enforceable obligation against NDIC.

On appellate procedure, the court reiterated that issues for determination must arise from the grounds of appeal. It also disapproved of proliferating issues by formulating more than one issue from a single ground. However, the misdescription of the particular grounds from which Aerobell’s issues were distilled did not cause injustice or obscure the real questions. The issues were considered on their substance. The court also stated that a reply brief is intended to answer new points in the respondent’s brief and is not an opportunity to reformulate the appellant’s issues.

Conclusion

The Court of Appeal unanimously dismissed the appeal and affirmed the judgment of the Federal High Court delivered on 10 June 2015 in Suit No. FHC/L/CS/596/13. The parties were ordered to bear their own costs. Although the 2009 document had been entered as a consent judgment, its operative terms were too imprecise and conditional to support the declaratory and enforcement orders sought by Aerobell.

Significance

The decision demonstrates that a consent judgment is not automatically enforceable merely because it has been adopted by a court. Its terms must clearly and positively establish ascertainable rights and obligations. Parties drafting settlements should specify the precise obligation to be performed, the evidence or conditions required, the person responsible for assessing compliance, and the consequences of non-compliance. The case also confirms that an application to enforce a judgment is distinct from an appeal against that judgment, and that declaratory relief cannot be granted solely because the opposing party has failed to contest the claim.