March 28, 2024

Whether Facts Introduced Aliunde can be Considered in an Objection to Strike out a Statement of Claim

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AGBOTI vs. BALOGUN & ORS.(2020)LCN/14236(CA)

ISSUE: NOVATION OF CONTRACT-Whether facts introduced aliunde can be considered in an objection to strike out a statement of claim for novation of contract(Issue is mine)

PRINCIPLE:
“In determining the present appeal, therefore, it would be necessary to bear in mind that the decision finally arrived at by the Court below was that there was an agreement between the 1st – 2nd respondents and the appellant for a monetary consideration and that–
“To look beyond this point would lead to seeking to determine issues that should be left until the trial proper. At this stage, I am of the opinion that there is a reasonable cause of action between the Claimants and the 2nd Defendant. The order sought is refused and the preliminary objection is dismissed.” (vide pages 89 – 90 of the record).
Even though the Court below considered paragraph 7 of the statement of defence and paragraph 6 of the further affidavit of one Uju Ibekwe deposed to on 14.10.13 as well as paragraph 7 of the affidavit of 14.10.13 which deposed that it was on the premise of paying the appellant a fee that the transaction was concluded, after it said it was of the view that there had been a novation of the agreement between the 1st and 2nd respondents as 1st – 2nd defendants at the Court below by the introduction of the claimants at the Court below into the agreement and the stepping aside of the 2nd defendant from the agreement, the Court below held in its final decision (supra) on the controversy that there was a reasonable cause of action as such issues could not be determined at the preliminary stage of the case but “should be left until after the trial proper.”
The question to pose is whether the decision (supra) finally arrived at by the Court below was right, not necessarily whether part of the reasoning process of the Court below was wrong.
​The issue whether there is a reasonable cause of action is intertwined with the issue of jurisdiction. Both issues are determined by looking at the claim of the claimant as disclosed on the writ of summons and pleadings filed by the claimant. The statement of defence or the pleading filed by the defendant is in that wise not material in determining the issue whether there is a reasonable cause of action to vest the Court with jurisdiction over the action vide the cases (supra) cited by the parties on the issue in their respective briefs. See also ABIEC v. Kanu (2013) 13 NWLR (Pt. 1370) 69; Ahmed v. Ahmed (2013) 15 NWLR (Pt. 1377) 274; Oshiomhole v. Airhiavbere (2013) 7 NWLR (Pt. 1353) 376; Society Bic S.A. v. Charzin Ind. Ltd. (2014) 4 NWLR (Pt. 1398) 497; Mulima v. Usman (2014) 16 NWLR (Pt. 1432) 160.
A reasonable cause of action is said to be a cause of action which, when only the allegation in the claimant’s originating process and/or pleadings are considered has a chance of success vide Barbus and Co. Nig. Ltd. v. Okafor-Udeji (2018) 11 NWLR (Pt. 1630) 298; Uwazuruonye v. The Governor of Imo State and Ors.(2013) 8 NWLR (Pt. 1355) 28 following Dantata v. Mohammed (2000) 7 NWLR (Pt. 664) 176 and the cases (supra) cited on the issue.
It would therefore be necessary to look at the statement of claim to determine whether the facts or combination of facts and every material fact or all things contained therein give a right of action for relief entitle the 1st – 2nd respondents as claimants to sue in the present case which as considered together should show the case has a chance of success vide Elabanjo v. Dawodu (2006) 15 NWLR (Pt. 1001) 76 at 153; P.N. Udoh Trading Co. Ltd. v. Abere (2001) 11 NWLR (Pt. 723) 114 at 129 cited with approval in Uwazuruonye v. Gov., Imo State (supra)at 50 – 51.
Now the statement of claim averred these facts in paragraphs 1 – 25 thereof contained in pages 4 – 7 of the record –

  1. “The 1st and 2nd Claimants are partners and alter ego of Quest Realty Company of 108, Bode Thomas Street, Surulere, Lagos, Nigeria.
  2. The 1st Defendant is a Multi-Purpose Cooperative Society carrying on activities that are beneficial to it and its staff with registered address at No. PC 35, Idowu Taylor Street, Victoria Island, Lagos State.
  3. The 2nd Defendant is an executive member of the 1st Defendant of No. 1 Adediran Street, Magodo, Lagos State.
  4. Sometimes in December 2008, the 2nd Defendant introduced herself to the Claimants, as an executive member of the 1st Defendant and offered to assign her interest in a five (5) bed room detached house with one room boys quarters, at Golden Leaf Estate, situate along Alpha beach Road, at Okun Ajah Area of Lekki, Lagos State (“The Property”), being the vast estate belonging to the 1st Defendant.
  5. The 2nd Defendant further stated that the said Golden Leaf Estate was a proposed development by the 1st Defendant through its wholly owned subsidiary, Royal Violet Ventures Limited, which held a Certificate of Occupancy granted by the Lagos State Government.
  6. The 2nd Defendant represented to the Claimants that the purchase price for the Property was N35, 000,000.00 (Thirty Five Million Naira) only, Twenty percent (20%) of the total purchase price in the sum of N7,000,000.00 (Seven Million Naira) was expected to be paid in advance and Eighty Percent (80%) of the total purchase price in the sum of N28,000,000.00 (Twenty -Eight Million Naira) shall be payable upon delivery of the said Property.
  7. The 2nd Defendant informed the Claimants that as the immediate beneficiary wanting to transfer her interest to the Claimants, the Claimants will have to buy out her interest by paying to her the sum of N6,374,645.61 (Six Million Three Hundred and Seventy-Four Thousand Six Hundred and Forty-Five Naira Sixty-One Kobo) out of the N35,000,000.00 (Thirty-Five Million Naira) as purchase price.
  8. The Claimants entered into an agreement with the 2nd Defendant of her interest in the unit assigned to her by virtue of her being a staff of British American Tobacco Co. Limited and a member of the 1st defendant and in further to the said agreement made Six (6) installment payments for the property by cash lodgments directly into 2nd Defendant’s GT Bank Plc Account between December, 2008 and June 2009. The Claimants plead and shall at the trial rely on GT Bank Plc deposit slips in the name of Quest Realty Company in favour of the 2nd Defendant in the total sum of N7,500,00.00 (Seven Million Five Hundred Thousand Naira) with the breakdown as follows:-
    i. N4,250,000.00 dated December 22, 2008;
    ii. N1,000,000.00 dated December 23, 2009;
    iii. N1,250,000.00 dated December 27,2009; and
    iv. N1,000,000.00 dated May 22,2009.
  9. The Claimants upon much pressure and demand by the 2nd Defendant and having refused to issue relevant documentation in their favour were coerced by the 2nd Defendant to source for more money and in order not to lose the already invested sum, the Claimants instructed their stock brokers, Marina Securities to liquidate their share holdings and issue Bank drafts in favour of the 2nd Defendant in the sum of N2,374,645,61 (Two Million Three Hundred and Seventy-Four Thousand Six Hundred and Forty-Five Naira Sixty-One Kobo)with the breakdown as follows:-
    a. N1,374,645.61 dated June 12, 2009
    b. N1,000,000.00 dated June 19, 2009
  10. The total payments made to and acknowledged by the 2nd Defendant was N6,374,645.61 (Six Million Three Hundred and Seventy-Four Thousand Six Hundred and Forty-Five Naira Sixty-One Kobo).
  11. The 2nd Defendant however obtained a receipt from the 1st Defendant in favour of the Claimants in the sum of N3,500,000.00 (Three Million Five Hundred Thousand Naira) only and not for the total sum of N6,374,645.61 (Six Million Three Hundred and Seventy-Four Thousand Naira Sixty-One Kobo) paid by the Claimants. Since then, it has been difficult contacting the Defendants for any positive response.
  12. The Claimants plead and shall at the trial of this case rely on the 1st Defendant’s official Receipt No: 0000214 dated 1st April, 2009.
  13. After much pressure by the Claimant the 2nd Defendant through an e-mail dated 16th day of June, 2009 instructed the 1st Defendant’s administrative office to issue a Letter of Allocation which was not given to the Claimants until they made paid an additional sum of N3,500,000.00 (Three Million five Hundred Thousand Naira Only).
  14. The Claimants had to source for and pay a further sum of N3,500,000.00 (Three Million Five Hundred Thousand Naira) in February, 2010 in line with the 2nd Defendant’s request for further payment as contained in the 2nd Defendant e-mail dated 16th June, 2009. The Letter of Allocation was issued in June, 2009, which is hereby pleaded and shall be relied upon at the trial of this case.
  15. The payment receipt dated 24th February, 2010 for the sum of N3,500,000.00 (Three Million Five Hundred Thousand Naira) issued by one Opuehi Joy, a member of staff of the 1st Defendant is hereby pleaded and shall be relied upon at trial.
  16. As contained in the Letter of Allocation, completion of work on the Golden Leaf Estate was to have been completed within Twenty-Four (24) months commencing from April, 2009. The Defendants as at the time of filing this action has not commenced work on site. No dredging, no structure on ground and no hope of completing the agreed project in the nearest future which is a clear breach of contract existing between parties herein.
  17. The Claimants visited the site in late 2011 and took pictures of what was on ground. The said pictures of the Golden Leaf Estate shall be relied upon at the trial of this case.
  18. The Defendants have failed to abide by the agreed terms and the Claimants have been denied the use of their money and have not been put into possession of the Property till date.
  19. The Defendants have failed to deliver any premises or property to the Claimants as at date or at all.
  20. The Claimants plan was to take possession of the Property at the expiration of the Twenty (24) months from April 2009 as agreed. Since this was not possible. The Claimants were forced to take up a tenancy in the sum of N2,100,000.00 (Two Million One Hundred Thousand Naira) only per annum at Northern Foreshore Estate Lekki, Lagos. The Claimant pleads and shall at the trial rely on the tenancy agreement dated 1st November, 2010 – 31st October, 2012.
  21. The Claimants upon the Failure of the Defendants to deliver the property as agreed demanded from the Defendants a refund of the deposit and other sums paid to the Defendants being the total sum of N13,374,645.61 (Thirteen Million Three And Seventy-Four Thousand Six Hundred and Forty-Five Naira Sixty One Kobo) which refund the Defendants have failed, refused and/or neglected to make despite repeated demands.
  22. The Claimants further instructed their Solicitors to demand for the refund of the deposit of N7,000,000.00 (Seven Million Naira) paid to the 1st Defendant commission of N6,374,645.61 made to 2nd Defendant but which demand, the Defendants failed, refused and/or neglected to effect. The Claimants shall at the trial rely on their Solicitors letter dated 14th and 31st October, 2011 respectively.
  23. The Claimants shall contend at the trial of this suit that the failure of the Defendant to deliver possession of the property at the expiration of his tenancy as at the 31st of October, 2012 cause them to renew their tenancy in November, 2012 for another period of one year in the sum of N2,300,000.00 (Two Million Three Hundred Thousand Naira). The said agreement shall be relied upon at trial.
  24. The Claimant will at the trial of this case rely on all relevant documents and subject matter of this suit and hereby give Notice to produce the original copies of all documents in custody of the Defendants at the trial of this case.
  25. Whereof the Claimants claims against the Defendant jointly and severally as follows:-
    a. The sum of N7,000,000.00 (Seven million Naira) from the 1st defendant being deposit made to it for a house on the Golden Leaf Estate which house the 1st Defendant has failed and/or refused to deliver within the agreed term.
    b. Interest at the said sum of N7,000,000.00 at the rate of 21% per annum from 24th February, 2010 till judgment and thereafter at the rate of 10% per annum until final liquidation.
    c. The sum of N6,374,645.61 (Six Million Three Hundred and Seventy Four Thousand Six Hundred and Forty Five Naira Sixty One Kobo) from the 2nd Defendant being commission and fees she collected from the Claimants upon sale of her allocation in Golden Leaf Estate which property has not been delivered to the Claimants within the agreed period.
    d. Interest on the said sum of N6,374,645.61 at the rate of 21% per annum from 24th February 2010 until final judgment and thereafter at the rate of 10% per annum until final liquidation.
    e. The sum of N100,000.00 being general damages for breach of contract.”
    The net or aggregate of the facts pleaded in the statement of claim (supra) culminated with the leg of claim of N6,374,645.61 (Six Million, Three Hundred and Seventy Four Thousand, Six Hundred and Forty Five Naira Sixty One Kobo) which the 1st – 2nd respondents, as claimants at the Court below, seek to recover from the appellant, as 2nd defendant at the Court below, being commission and fees the appellant, as the 2nd defendant, at the Court below allegedly collected from the 1st – 2nd respondents, as the claimants at the Court below, upon sale of her allocation in Golden Leaf Estate which property had not been delivered to the 1st – 2nd respondents, as claimants at the Court below within the agreed period as stated in paragraph 25(c) of the statement of claim (supra) containing the principal relief sought by the 1st – 2nd respondents, as claimants at the Court below, against the appellant, as the 2nd defendant at the Court below.

The principal relief contained in paragraph 25(c) of the statement of claim (supra) is accompanied with the leg of claim of pre-judgment and post-judgment interest (supra) on the sum claimed in the principal relief in paragraph 25(c) of the statement of claim (supra). There is also the leg of claim of N100,000.00 being general damages (supra) against the appellant jointly and/or severally with the 3rd respondent as the 1st defendant at the Court below.
​I think a glance at the totality of the facts averred in the statement of claim (supra) discloses a reasonable cause of action which, standing alone, and on its face value/ surface, might succeed, or has a chance of success. It does not matter at this stage whether the case as disclosed on the face of the statement of claim (supra) is certain or bound to fail, or is weak, for the purpose of deciding whether it discloses a reasonable cause of action vide Iyeke & Ors. v. Petroleum Training Institute and Anor. (2019) 2 NWLR (Pt. 1656) 217. It is only where the facts averred in the statement of claim (supra) put together presents a hopeless case or a case that looks like a fairy-tale or a case that is obviously and patently/incontestably bad on the surface of the statement of claim (supra) that a case of no reasonable cause of action will be made vide Ibrahim v. Osim (1988) 1 NWLR (Pt.82) 257 at 268 thus–
“However the definition of the words “cause of action” is, for the purposes of the present case, incomplete without the meaning of the word or adjective “reasonable” ascertained. In Black’s Law Dictionary, Special Deluxe, 5th Edition, the word has been defined to mean, “fair, proper, just, moderate, suitable under the circumstances.” But the phrase “reasonable cause of action” which is used in Order 18 Rule 19 of the English Rules of the Supreme Court (See Volume 1 of The Supreme Court Practice 1979) had been defined in Drummond-Jackson v. British Medical Association & Ors. (1970) 1 WLR 688 at p. 696 by Lord Pearson who observed- “First there is in paragraph (1) (a) of the rule the expression ‘reasonable cause of action’, to which Lindley MR called attention in Hubbuck & Sons Ltd. v. Wilkinson, Heywood & Clark Limited, (1899) 1 QB 86 pp. 90-91. No exact paraphrase can be given, but I think ‘reasonable cause of action’ means a cause of action with some chance of success, when (as required by paragraph (2) of the rule) only the allegations in the pleadings are considered. If when those allegations are examined it is found that the alleged cause of action is certain to fail, the statement of claim should be struck-out.” (Italics mine)
This definition was approved by this Court in Chief (Dr.) Irene Thomas & Ors. v. The Most Reverend Timothy Omotayo Olufosoye, (1986) 1 NWLR p. 669 at pp. 682. (per the lead judgment prepared by Uwais, JSC).
Obaseki, JSC, added in his own judgment in page 271 of the law report thus– “The law is settled that when an objection is raised that the statement of claim does not disclose a reasonable cause of action, it is the statement of claim that has to be examined and not the statement of defence to ascertain whether there is a reasonable cause of action before the Court. Unless there is a counter-claim, one does not expect to find a cause of action in a statement of defence. It is therefore premature to advert to the defences contained in the statement of defence as the appellant would want us to do”.
While Karibi-Whyte, JSC also added in his judgment in page 275 of the law report thus– “It is important to emphasise that an application to strike out a statement of claim, must rely on the defect in the statement of claim itself for its success. Any fact introduced aliunde or from the statement of defence cannot be relied upon. No evidence is admissible in an application seeking to strike out a statement of claim or defence as having no reasonable cause of action. On the same-hypothesis the jurisdiction to dismiss an action on this ground cannot be exercised by scrutinising documents and facts to see whether or not there is a cause of action – see Wenlock v Moloney (1965) 1 WLR 1238. Hence an application to strike out the statement of claim must accept the facts as averred, and the Court will determine the issue on the statement of claim alone”.
Accordingly, no matter the allure of lustre of the temptation it might be to look at the statement of defence where the appellant raised the defence of novation which is the main plank of the preliminary objection as contained in the grounds upon which it was based vide page 48 of the record and, in essence could afford a defence to any action upon the old contract, the said temptation must at this preliminary stage of the proceedings be resisted/avoided. The Court below so resisted it by ordering that such issues be ventilated at the hearing of the action on the merit. Based solely on the facts disclosed on the face of the statement of claim (supra), I too agree with the Court below that a reasonable cause of action has been disclosed by the statement of claim.

Being a discretionary remedy, power to deploy the summary process to get rid of civil proceedings without trial has to be exercised with great caution and circumspection and/or judicially and judiciously by the Court called upon to dispose of the action at the threshold of the case for disclosing no reasonable cause of action vide Ibrahim v. Osim (supra) at 275 where Kabiri-Whyte, JSC, stated in his judgment that– “Hence the Court in the exercise of its power, does so only with the greatest care and circumspection, knowing fully well that the party affected may be deprived of his right to a plenary trial. It is a fundamental principle of our administration of justice, a cardinal requirement of our notions of justice and entrenched in the provisions of Section 33 of our Constitution that every party whose right is to be determined must be given a reasonable opportunity of being heard. Thus a plaintiff seeking justice before our Courts will not be barred from the judgment seat by denying him a right to be heard except in the clearest cases where the cause of action was obviously incontestably bad… Hence this procedure is only to be adopted when the statement of claim considered alone is ex facie unsustainable; or where it is beyond that unarguable. Because the Judge is vested with discretion in the matter, the Court must be satisfied on the pleadings as to the worthlessness of the claim.” See also Jambo v. Governor of Rivers State (supra).

It is therefore, my considered opinion that the Court below reached the right decision in the case not to terminate the action at the preliminary stage of the proceedings and being a discretionary power which was exercised judiciously and judicially, I am slow to interfere with the exercise of its discretion in the matter in the circumstance.
I wish to state by way of addendum that foreign decisions on the same issues are of persuasive force and may be followed by the Court especially where there are no indigenous decisions of the Court or the Supreme Court on the issues vide the case (supra) cited by the appellant and the case of Sifax (Nig.) Ltd. v. Migfo (Nig.) Ltd. (2018) 9 NWLR (Pt.1623) 138 per the exhaustive lead judgment prepared by His Lordship, Augie, JSC. But in the instant case, there are litany of decisions of the Court and the Supreme Court cited (supra) by the parties in their respective briefs on the issue of novation of contract, consequently the Tasmania case of Commercial Bank of Tasmania v. Jones (supra) save to add weight to the indigenous decisions (supra) was dispensable to the case.

On the whole, I find the interlocutory appeal unmeritorious and hereby dismiss it and affirm the decision of the Court below (Adebajo, J.). The appellant shall pay N200,000 costs to the 1st – 2nd respondents.” Per IKYEGH, JCA

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