SCOA (NIGERIA) PLC V. CHIEF ALI MAGED TAAN & ORS. (2018)

Background

This appeal arose from a dispute concerning a substantial property situated at No. 157, Apapa-Oshodi Expressway, Agunlejika Bus Stop, Iyana-Isolo, Lagos State. Chief Ali Maged Taan commenced proceedings at the High Court of Lagos State, claiming that he was a joint owner of the property with Mrs Salwa Hajaig and seeking declarations, possession, damages for use and occupation, and costs against SCOA Nigeria Plc. SCOA occupied the property under a sublease granted by Mrs Hajaig for a term of 25 years commencing on 1 January 1982 and expiring on 31 December 2006. The sublease contained an option for a further term, at a rent to be mutually agreed.

Mr Hassan Mohammed Fadallah was subsequently joined as a party. Mrs Hajaig and Mr Fadallah filed a defence and counterclaim. Among other reliefs, they sought declarations concerning ownership and trusteeship, an order setting aside an alleged deed of assignment in favour of Mr Taan, possession of the property, mesne profits of N26,000,000 per annum, and interest. Although some counterclaim reliefs were directed against Mr Taan, other reliefs, particularly those seeking possession, mesne profits and interest, were directed solely against SCOA, which was a co-defendant and had not asserted any claim against the counterclaimants.

The trial court dismissed Mr Taan’s principal claims but granted some of the counterclaims. It awarded N5,000,000 per annum for use and occupation of the property and directed the parties to meet and finalise the rent payable for a renewed 25-year lease. SCOA appealed against the award made under the counterclaim. Mrs Hajaig and Mr Fadallah filed a cross-appeal, challenging the reduction of the claimed mesne profits and the finding that SCOA had exercised its option to renew the sublease.

Issues

1. Whether a defendant could competently maintain a counterclaim solely against a co-defendant where the original claimant was not made a party to that counterclaim.
2. Whether an interlocutory order directing interim payment of mesne profits prevented the trial court, after a full hearing, from determining the issue of mesne profits on the evidence.
3. Whether the trial court was right to hold that SCOA had exercised its contractual option to renew the sublease and to order the parties to agree on the rent for the renewed term.

Ratio Decidendi

The Court of Appeal held that a counterclaim is, in substance, a cross-action by a defendant against the claimant. Although a defendant may in appropriate circumstances counterclaim against another defendant or an additional party, the original claimant must also be a party to the counterclaim. A defendant cannot maintain a counterclaim solely against a co-defendant who has made no claim against that defendant. Because the relevant reliefs for possession, mesne profits and interest were directed solely against SCOA, without joining Mr Taan as a defendant to those reliefs, they were incompetent, null and void. The trial court’s contrary conclusion was perverse and had to be set aside.

The court further held that an interlocutory order is provisional, temporary and preservative. Its purpose is to regulate the parties’ position pending the final determination of the substantive dispute; it is not a final adjudication of the rights in issue. Consequently, the earlier order requiring interim payments of N15,000,000 per annum did not prevent the trial judge, after hearing oral and documentary evidence, from assessing the appropriate mesne profits. The trial court had jurisdiction to award less than the amount claimed where that lower amount was what the evidence established.

On the renewal issue, the court emphasised that parties are bound by the terms of their contract. The correspondence and meeting records showed that SCOA had exercised its option to renew and that the parties had agreed in principle to a further 25-year sublease. Their remaining disagreement concerned the amount of rent. The cross-appellants could not rely on one position during the trial and adopt an inconsistent position on appeal. Such conduct amounted to approbating and reprobating, which equity prohibits.

Court Findings

The court found that reliefs (vii) and (viii) of the counterclaim, directed solely against SCOA, did not constitute a competent counterclaim because Mr Taan, the original claimant, was not joined as a defendant to those reliefs. The appeal was therefore allowed, and the portion of the High Court judgment awarding mesne profits and interest against SCOA under those reliefs was set aside. The reliefs were struck out.

In relation to the cross-appeal, the court held that the interlocutory payment order did not crystallise the final amount of mesne profits. The order expressly operated only until the final determination of the case. Upon trial, the High Court was entitled to evaluate the evidence and award N5,000,000 per annum rather than the N26,000,000 claimed or the N15,000,000 earlier ordered on an interim basis. The court also affirmed the finding that SCOA had exercised the option to renew the lease. The direction that the parties meet to agree the rent was a proper consequential order flowing from that finding and was within the inherent jurisdiction of a superior court of record under section 6(6)(a) and (b) of the 1999 Constitution, as amended.

Conclusion

The main appeal by SCOA Nigeria Plc was allowed. The award of mesne profits and interest against SCOA under the incompetent counterclaim reliefs was set aside and those reliefs were struck out. The cross-appeal by Mrs Hajaig and Mr Fadallah was dismissed, and the award of N5,000,000 per annum together with the order to finalise the rent for the renewed lease was affirmed. There was no order as to costs.

Significance

The decision clarifies the procedural limits of counterclaims in Nigerian civil litigation. It confirms that a counterclaim must retain the character of a cross-action involving the original claimant and cannot be transformed into an independent claim solely between co-defendants. It also explains that interlocutory orders for interim payments do not determine the substantive rights of the parties and may not fetter the trial court’s later evaluation of evidence. Finally, the case demonstrates that courts may grant less than the amount claimed where the evidence supports a lower award, and may make consequential orders necessary to implement their findings, including directions facilitating the completion of an agreed contractual renewal.