IMONIYAME HOLDINGS LTD & APOSTLE S.E.K. OBRUTSE V. SONEB ENTERPRISES LTD & ORS. (2010)

Background

This appeal concerned the proper application of the undefended list procedure under Order 23 of the Cross River State High Court (Civil Procedure) Rules, 1987. Soneb Enterprises Ltd and Chief Sam Bassey commenced Suit No. HK/3/2000 at the Akamkpa Division of the High Court of Cross River State against Imoniyame Holdings Ltd and Apostle S.E.K. Obrutse, claiming N8,125,000.00. The claim was said to represent money owed and due for the supply of rubber lumps and/or lease rentals relating to Oban Rubber Estate Limited in Akamkpa Local Government Area. The plaintiffs also claimed interest at 21 per cent from January 1999 until judgment and 10 per cent on the judgment sum until liquidation.

The writ was supported by an affidavit setting out the basis of the claim and asserting that the defendants had no defence. The trial court consequently placed the action on the undefended list. The defendants entered conditional appearance and filed a notice of intention to defend supported by an affidavit. The trial Judge concluded that the affidavit did not disclose a real or substantial defence on the merit and entered judgment for the plaintiffs jointly and severally.

The defendants appealed to the Court of Appeal. That court identified several paragraphs of the defence affidavit, including paragraphs 16, 17, 19, 20, 21, 23 and 26, as raising contentious matters requiring oral evidence and cross-examination. It therefore allowed the appeal, set aside the summary judgment and directed that the matter be transferred to the general cause list for hearing upon pleadings. The matter eventually came before the Supreme Court.

Issue

The principal issue was whether, having regard to the affidavit evidence, the Court of Appeal was right not to strike out the appellants’ names and instead to order that the case proceed on the general cause list. The related question was whether the trial court was entitled to determine the substantive merits of the competing claims at the preliminary undefended-list stage.

Ratio Decidendi

The Supreme Court dismissed the appeal and affirmed the Court of Appeal. The Court held that the undefended list procedure is a special summary procedure designed to enable a claimant obtain quick judgment in clear cases involving a debt or liquidated monetary demand where the defendant has no genuine defence. It is not intended for cases involving disputed facts, competing accounts of a transaction or issues that require the examination and cross-examination of witnesses.

At the undefended-list stage, the trial court is not required to decide which party’s case is ultimately correct. Its limited task is to examine the claimant’s affidavit and the defendant’s affidavit accompanying the notice of intention to defend, and determine whether the defendant has disclosed a defence on the merit. A defence is disclosed where the affidavit contains facts that require an explanation from the claimant, seriously challenge the claim or demonstrate a bona fide and triable dispute. The defendant need not establish that the defence will ultimately succeed.

Where a defence on the merit is disclosed, the court is bound to grant leave to defend and remove the action from the undefended list to the general cause list under Order 23, rules 3(1) and (2). The case must then proceed by pleadings and oral evidence, unless the court orders that the affidavits already filed serve as pleadings. The affidavits are not pleadings merely because they have been filed in the summary proceeding, and the court cannot use them to conduct a full trial or make final findings of fact at that stage.

Court Findings

The Supreme Court found that the defence affidavit raised contentious matters concerning the nature of the transaction, the alleged liability of the appellants and whether the claim related to rubber lumps, lease rentals or both. Those matters could not properly be resolved by evaluating affidavit evidence as though the case had already been tried. The trial Judge therefore erred by rejecting the defence and entering judgment instead of transferring the action for a full hearing.

The Court also rejected the appellants’ argument that the Court of Appeal should have struck out their names under its statutory powers. Whether the appellants were proper parties, whether they were indebted and what obligations arose from the relevant transaction were matters to be determined after pleadings and evidence. The Court of Appeal had not ordered a retrial in the strict appellate sense; it had correctly directed the procedural transfer required by Order 23.

The Supreme Court further criticised the brief filed by counsel for the 3rd respondent. A respondent who has filed no appeal or cross-appeal is ordinarily expected to support the judgment under challenge, not urge the appellate court to allow the appellant’s appeal. The 3rd respondent’s brief was therefore held to be misconceived, incompetent and irrelevant, and it was struck out.

Conclusion

The appeal was dismissed as lacking merit. The judgment of the Court of Appeal, which transferred the matter from the undefended list to the general cause list and directed that it proceed upon pleadings and trial, was affirmed. Costs of N50,000.00 were awarded against the appellants in favour of the 1st and 2nd respondents.

Significance

The decision restates an important safeguard against the misuse of summary debt-recovery proceedings. The undefended list is available only for clear and substantially undisputed claims. Once a defendant places before the court facts that disclose a genuine issue for trial, the court must give the defendant an opportunity to defend. It cannot determine the probable success of the defence, resolve conflicts in affidavit evidence or enter judgment for either party on the substantive merits. The case also reinforces the proper forensic function of a respondent’s brief and the procedural consequences of granting leave to defend.