A.T.S. & SONS & ORS V. BEN ELECTRONICS CO. NIG. LTD (2018)

Background

This appeal arose from a commercial dispute concerning the supply of 3,000 motorcycles in Taraba State. Ben Electronics Co. Nig. Ltd, the respondent, was initially awarded the contract by the Nigeria Union of Teachers, Taraba State Wing. The respondent later entered into an arrangement with A.T.S. & Sons, represented by Alh. Mohammed Sani Gama, under which A.T.S. & Sons would take over the supply obligations and the parties would share the profit generated from the transaction.

Following difficulties in implementing the motorcycle scheme, particularly the failure to establish an effective deduction-from-salary arrangement for participating teachers, the parties negotiated a settlement. It was agreed that the respondent would receive N29,000,000 as its share. A.T.S. & Sons subsequently issued an Irrevocable Standing Payment Order, or ISPO, dated 30 May 2006. The ISPO directed the relevant officials of the Nigeria Union of Teachers to pay 30 per cent of the outstanding amount due to A.T.S. & Sons directly to Ben Electronics until the agreed sum was fully paid.

The third and fourth appellants made payments totalling N6,500,000, but further payments stopped. The respondent therefore sued for the balance of N22,500,000, together with damages and costs. The trial High Court dismissed the claim. On appeal, the Court of Appeal set aside that decision and entered judgment for the respondent in the amount claimed, excluding damages. The appellants then appealed to the Supreme Court.

Issues

1. Whether the respondent’s action was properly constituted and whether alleged irregularities concerning the writ of summons and filing fees deprived the courts below of jurisdiction.
2. Whether the Court of Appeal could enter judgment against A.T.S. & Sons after making observations concerning its juristic personality.
3. Whether the respondent’s pleadings sufficiently raised the legal effect of the ISPO as a chose in action.
4. Whether the ISPO constituted an assignment of a debt that bound the appellants.
5. Whether the balance of N22,500,000 was a due and payable liquidated demand or was dependent on the future recovery of money from the teachers.

Ratio Decidendi

The Supreme Court dismissed the appeal and affirmed the judgment of the Court of Appeal. The Court held that grounds of appeal alleging a failure to consider pleaded issues, the misapplication of law to admitted facts, or the legal effect of a document are grounds of law alone. Such grounds may be filed as of right under section 233(2)(a) of the Constitution and do not require leave. However, a fresh jurisdictional complaint that depends on disputed facts and requires fresh evidence cannot properly be raised for the first time on appeal without seeking leave to adduce that evidence.

The Court further held that inadequate payment of filing fees is ordinarily a procedural irregularity, not a defect that removes jurisdiction. The party asserting inadequacy bears the burden of proving the amount paid, the amount required and the alleged shortfall. Rules of court regulate the exercise of jurisdiction; they do not themselves confer jurisdiction, and breach of such rules will not ordinarily nullify proceedings.

On the ISPO, the Court applied the principles governing an assignment of a chose in action. A chose in action includes a contractual or proprietary right enforceable only through legal proceedings, such as a debt. An assignment is the transfer of a right or interest from one person to another. Under section 25(6) of the Judicature Act, applicable in Taraba State through the relevant state legislation, an absolute written assignment of a debt, accompanied by express written notice to the debtor, effectively transfers the legal right, remedies and power of discharge.

The Court concluded that the ISPO satisfied those requirements. It was written and signed by the assignor, was expressed to be irrevocable, identified the sum to be paid, and was directed to the persons responsible for making payment. The surrounding agreement, the parties’ pleadings, the evidence and the actual payments made under the ISPO confirmed that the payment right had been transferred to the respondent. The respondent did not need to provide fresh consideration to enforce the assigned right.

Court Findings

The Supreme Court rejected the argument that the respondent had failed to plead the legal expression “chose in action.” Pleadings are required to state material facts, not legal conclusions. The respondent pleaded the agreement for N29,000,000, the issuance of the ISPO, the payment mechanism and the part-payments already made. Those facts enabled the court to determine the legal effect of the document. The appellants had also joined issue on the ISPO in their defence, so there was no denial of fair hearing or decision outside the pleadings.

The Court treated the observation concerning the juristic personality of A.T.S. & Sons as an obiter dictum rather than the ratio necessary to the Court of Appeal’s decision. Nevertheless, the attempt to raise the issue for the first time in counsel’s brief was impermissible because it sought to contradict evidence already given concerning the business operated by Alh. Sani Gama. Counsel’s argument could not replace evidence or the issues joined by the parties.

The claim for N22,500,000 was also held to be liquidated. A liquidated demand is a specific sum that is ascertained or ascertainable by arithmetic without further investigation. The parties had fixed the respondent’s entitlement at N29,000,000, and N6,500,000 had already been paid. The balance was therefore readily calculable. The ISPO did not make payment conditional upon the teachers’ individual repayment of the motorcycle loans or upon some uncertain future event.

Conclusion

The appeal was dismissed for want of merit. The judgment of the Court of Appeal was affirmed, and costs of N200,000 were awarded against the appellants in favour of the respondent.

Significance

The decision is important for Nigerian civil and commercial litigation. It clarifies the distinction between grounds of law and grounds of fact, the limited effect of procedural non-compliance on jurisdiction, and the circumstances in which a fresh jurisdictional issue may be considered on appeal. It also confirms that a written and notified direction assigning a contractual payment right may operate as a chose in action. Finally, the case demonstrates that a precisely ascertainable contractual balance can constitute a liquidated demand, even where the underlying commercial transaction involved future instalment payments and third-party collection arrangements.