EKULO FARMS LTD & BONIFACE OFFORKAJA V. UNION BANK OF NIGERIA PLC (2006)

Background

This appeal concerned the operation of the undefended-list procedure and the constitutional limits on appeals from interlocutory decisions granting a defendant unconditional leave to defend an action. Union Bank of Nigeria Plc commenced proceedings in the High Court of Anambra State, Onitsha Judicial Division, claiming jointly and severally against Ekulo Farms Limited and Boniface Offorkaja the sum of N4,912,797.30, together with interest at 21% per annum from 1 February 1994 until judgment and post-judgment interest at 5% per annum until liquidation of the debt.

The bank’s writ of summons was marked “undefended” and served on the defendants. The defendants did not initially file their notice of intention to defend within the prescribed period. They subsequently applied for an extension of time and for their notice of intention to defend, together with the supporting affidavit, to be deemed properly filed and served. The bank opposed the application by counter-affidavit.

After hearing the parties on the application, the trial judge granted the prayers sought. The judge also ordered that the action be transferred from the undefended list to the general cause list and directed the parties to file pleadings. The bank appealed to the Court of Appeal, arguing, among other matters, that the trial judge had transferred the case without hearing it on that specific issue. The Court of Appeal held that the transfer order was null and void, set it aside, and remitted the case for trial de novo before another judge. It rejected the defendants’ preliminary objection that the appeal was constitutionally incompetent.

Issues

1. Whether the Court of Appeal had jurisdiction to entertain an appeal against the trial court’s order which, in substance, granted the defendants unconditional leave to defend the action.
2. Whether the constitutional bar against an appeal from a decision granting unconditional leave to defend an action ceased to apply because the Court of Appeal considered the trial court’s order to be null and void.
3. Whether the trial judge was required to hear oral submissions from counsel before transferring the suit from the undefended list to the general cause list.

Ratio Decidendi

The Supreme Court allowed the appeal and held that section 220(2)(a) of the 1979 Constitution absolutely denied a right of appeal from a decision of a High Court granting unconditional leave to defend an action. The trial judge’s order transferring the action to the general cause list had the legal effect of allowing the defendants to defend the claim without conditions. Consequently, the bank had no right of appeal to the Court of Appeal, whether as of right or by leave.

The Supreme Court rejected the Court of Appeal’s attempt to distinguish between an ordinary decision granting unconditional leave to defend and an allegedly null decision granting such leave. The words of section 220(2)(a) were clear and unambiguous. The provision did not create an exception for orders alleged to be null, nor could the court import such an exception into the constitutional text. Section 220(1), which listed circumstances in which an appeal could lie as of right, and section 221(1), which dealt with appeals requiring leave, were both subject to the express restriction in section 220(2).

The Court reaffirmed that the right of appeal is created by statute or by the Constitution. An appellate court has no jurisdiction to hear an appeal unless the relevant constitutional or statutory provision confers that jurisdiction. Where the Constitution expressly removes the right of appeal, an appellate court cannot assume jurisdiction by characterising the complaint as one concerning jurisdiction or nullity.

Court Findings

The Court explained that the undefended-list procedure begins with the claimant’s application for a writ concerning a liquidated money demand, supported by an affidavit stating the basis of the claim and the belief that there is no defence. If the court is satisfied that there are grounds for believing that the claim is undefended, the matter is placed on the undefended list. A defendant wishing to contest the claim must file a notice of intention to defend and an affidavit disclosing a defence on the merits.

Upon considering the defendant’s affidavit, the court may grant leave to defend on such terms as it considers appropriate. If unconditional leave is granted, the action is removed from the undefended list and placed on the general or ordinary cause list, bringing the summary-judgment procedure to an end. If no sufficient defence is disclosed, judgment may be entered for the claimant without calling evidence.

The Supreme Court held that the trial judge was entitled to determine the procedural course of the action after examining the affidavits. Oral argument by counsel was not a mandatory prerequisite to transferring the suit. Although a judge may, in appropriate circumstances, invite counsel to address the court, counsel has no right of audience on the initial decision whether the matter should remain on the undefended list or proceed on the general cause list. The parties had already placed their respective positions before the court through the affidavits, and there was therefore no denial of fair hearing.

The Court also emphasised constitutional supremacy. Any law, order, or judicial decision inconsistent with the Constitution is void to the extent of the inconsistency. However, the question whether an order was valid could not be examined by the Court of Appeal where the Constitution had already removed its jurisdiction to entertain the appeal. The Court of Appeal’s proceedings and decision were therefore incompetent.

Conclusion

The Supreme Court set aside the judgment of the Court of Appeal and upheld the defendants’ preliminary objection. The entire appeal before the Court of Appeal was struck out for want of competence. Costs of N7,500 were awarded in the Court of Appeal and N10,000 in the Supreme Court.

Significance

This decision confirms the strict constitutional character of appellate jurisdiction in Nigeria. It establishes that the bar in section 220(2)(a) of the 1979 Constitution was absolute in relation to an order granting unconditional leave to defend an action. The corresponding modern principle is reflected in section 241 of the 1999 Constitution. The case is also important for undefended-list practice: once a defendant discloses a prima facie defence, the proper consequence is ordinarily removal of the matter to the general cause list, and the court need not conduct a separate oral hearing before making that procedural order.