KOTOYE V. CENTRAL BANK OF NIGERIA (1989)

Background

Nathaniel Adedamola Babalola Kotoye was the Chairman of Societe Generale Bank (Nigeria) Limited. Following investigations into alleged mismanagement, shareholding irregularities, bad debts, board disputes and other regulatory concerns, the Central Bank of Nigeria issued directives to the bank in April 1987. Among other things, the directives required changes to certain shareholdings, the constitution of a new board, the exclusion of former directors from reappointment, and urgent nominations of new Nigerian directors. The directives were issued shortly before the bank’s scheduled annual general meeting.

Kotoye commenced proceedings in the Federal High Court challenging the validity of the Central Bank’s directives. On the same day, he filed a motion ex parte seeking injunctions restraining the Central Bank and the Attorney-General from obstructing the annual general meeting and from appointing or recognising directors contrary to the bank’s Articles of Association. Although the motion sought orders lasting until the final determination of the suit, the application was presented as urgent. The trial Chief Judge granted the application and ordered that the meeting should proceed, that ordinary affairs should be discussed, and that no new directors should be appointed while the existing directors continued to function. The respondents were directed to receive the papers and file responses, with the matter adjourned to a date after the scheduled meeting.

The Court of Appeal set aside the orders. Kotoye appealed to the Supreme Court, while some respondents cross-appealed against the order remitting the case to the Federal High Court for continuation.

Issues

1. Whether an application for an injunction expressed to operate “until the final determination of the suit” could properly be heard and granted ex parte.
2. Whether the urgency alleged by Kotoye justified dispensing with notice to the persons affected.
3. Whether the orders made by the trial court were interim orders preserving the status quo or substantive interlocutory orders which effectively determined the disputed issues.
4. Whether failure to obtain an undertaking as to damages required the injunction to be discharged.
5. Whether the Court of Appeal properly dealt with the appeal and whether a respondent seeking different grounds for setting aside a judgment must file a cross-appeal or respondent’s notice.

Ratio Decidendi

The Supreme Court dismissed the appeal and allowed the cross-appeal. It held that an ex parte application may be filed in relation to an injunction, but an injunction intended to last until the final determination of the suit is an interlocutory injunction. Because the grant of such relief requires consideration of contentious matters—including whether there is a serious question to be tried, the balance of convenience, the adequacy of damages and the conduct of the parties—it should ordinarily be heard on notice.

An ex parte injunction is exceptional. Its purpose is to prevent imminent and irretrievable harm where giving notice would defeat the relief sought. Such an order must be temporary, normally lasting only until a named date or until the respondent can be heard. Real urgency is required; urgency created by the applicant’s own delay is insufficient. Kotoye knew of the Central Bank’s directive on or about 16 April 1987 but waited until 22 April to apply, despite the annual general meeting being scheduled for 25 April. The Supreme Court regarded this as self-induced urgency, not the emergency contemplated by the law.

The Court also held that fair hearing under section 33(1) of the 1979 Constitution required the court to hear both sides before making a determination prejudicial to a party. Although section 6(6)(a) preserved the inherent powers of courts and the rules permitted ex parte applications in appropriate circumstances, those provisions had to be interpreted consistently with the constitutional guarantee. Any rule inconsistent with the Constitution was void to the extent of the inconsistency.

Court Findings

The trial court’s orders were not merely temporary safeguards. The order allowing the annual general meeting to proceed “whenever it is fixed,” restricting the matters to be discussed, and directing that no new directors be appointed effectively granted substantial portions of the relief claimed in the substantive action. The subsequent direction that the respondents be served with the papers could not cure the failure to hear them before the prejudicial orders were made. A later opportunity to apply for discharge or variation was not equivalent to a prior hearing, because the affected party would then bear the burden of displacing an order already made.

The Court interpreted Order 33 rule 10 of the Federal High Court (Civil Procedure) Rules 1976 as giving the court three permissible options on an ex parte motion: refuse the order, direct the opposing party to show cause, or allow the motion to proceed on notice. The rule did not authorise the court to grant an immediate, final or indefinite interlocutory injunction without hearing the affected parties.

The Court further affirmed that an undertaking as to damages is ordinarily the price paid by an applicant for an interlocutory or interim injunction. It protects the respondent if the order later proves unjustified and helps restrain abuse of injunctive relief. A Nigerian court registrar could not insert such an undertaking where the judge had failed to order it. Consequently, where an undertaking was required but omitted, an appellate court should normally discharge the injunction rather than attempt to repair the defect after the damage may already have occurred.

Conclusion

The appeal was dismissed, the cross-appeal was allowed, and the ex parte application was struck out. The Court held that the Court of Appeal should have set aside the trial court’s orders rather than describing them as both set aside and null and void, and there was no basis for remitting the incompetent application for further determination. Costs of N500 were awarded to the Central Bank and N500 jointly to the fourth to eighth respondents; there was no order as to costs for the second and third respondents.

Significance

Kotoye v. Central Bank of Nigeria is a leading Nigerian authority on the distinction between interim and interlocutory injunctions. It establishes that ex parte procedure is not a device for obtaining final or long-lasting relief without hearing the opposing party. Courts must scrutinise alleged urgency, prevent self-created emergencies, preserve constitutional fair hearing, and require an undertaking as to damages except in recognised special circumstances. The decision also confirms that a court cannot grant relief wider than the claim and that a respondent who wishes to challenge a judgment on grounds beyond those supporting the judgment must use a cross-appeal or respondent’s notice.