IMPERIAL HOMES MORTGAGE BANK
D - VAR CONSULTING LTD
DELIVERED BY YARGATA BYENCHIT NIMPAR (JCA)
This appeal is against the ruling of the Lagos State High Court delivered on the 18th day of March, 2015 by HON. JUSTICE O- A. TAIWO. The Appellant had filed an application at the lower court praying the Honourable Court to strike out in limine the Respondent's action on the ground that it does not disclose any reasonable cause of action. The court however dismissed the Appellant's application and awarded costs in favour of the Respondent. The Appellant dissatisfied with the said ruling has now filed an Amended Notice of Appeal dated 19th of March, 2015 setting out 3 grounds of appeal.
The Appellants brief of Arguments dated 25th May, 2015 was filed on same day and adopted on the 15th of March, 2016. The Respondent's brief dated 1/07/15 also filed on the same day was adopted on the 15th of March, 2016. The Appellant formulated 3 issues for determination as follows:
1. Whether the High Court of Lagos State per Taiwo, J. was right in holding that the statement of Claim discloses a reasonable cause of action.
2. Whether the High Court of Lagos State per Taiwo, J. was right in holding that the Statement of Claim disclosed a binding contract.
3. Whether in view of the clear provisions of Order 22 Rules 1 and 2 of the High Court of Lagos State (Civil Procedure) Rules 2012, the costs awarded against the Appellant is justifiable at law.
The Respondent formulated 2 issues for determination namely:
1. Whether Hon. Justice OA. Taiwo of the High Court of Lagos State was right in holding that the Respondent has a reasonable cause of action and that the duty of the Court in the instant suit will be to determine the intention of the parties by construing the surrounding circumstances including all written agreement, emails and oral statement
2. Whether Hon. Justice O. A. Taiwo of the High Court of Lagos State was right in exercising his discretionary power by awarding cost of Ten thousand Naira (N10,000.00) in favour off the Respondent
A total of 5 issues was formulated by both sides though the Appellant argued its issues 1 and 2 together. For a proper determination of the complaint of the Appellant, the issues it formulated shall be adopted by the court as issues for determination.
ISSUE 1 AND 2
Being that the Respondent's action at the lower court is based on the breach of an alleged contract, the Appellant submitted that the Respondent failed to establish by its pleadings or any frontloaded document that there exists an alleged contract between the Respondent and the Appellant. That the Respondent's letter dated June 13, 2011 is not a contract but merely a proposal which outlines the services the Respondent intends to render and how those services will be billed, referred to BEST (NIG) LTD V BH (NIG) LTD (2011) 5 NWLR (PT 1239) 95. The Appellant further stated that even if it was true as held by the Trial court that the Confidentiality Agreement made the proposal letter binding, the lower court had failed in its responsibility to examine the proposal letter along the claim to determine if the "Total Contract Sum" as stated in the claim had been entered into, referred to FRN V DARIYE (2011) 13 NWLR (PT 1265) 521, LAGOS STATE GOVERNMENT V TOLUWASE (2013) 1 NWLR (PT 1336) 555. In essence, the Appellant submitted that the court erred in law in holding that the Respondent's statement of claim discloses both a reasonable cause of action and a binding contract, referred to the following cases: ATOLAGBE V SHORUN (1985) NWLR (PT 2) 8 - 9 (sic), A RUE VARIJE (2011) 13 NWLR (PT 1264) 265 @ 291, BURAIMOH OLORIODE V SIMEON OYESI (1984) LPELR - SC. 46 / 1982, IBRAHIM V OSIM (1988) 1 NSCC 1184 @ 1197, OJUKWU V YAR'ADUA (2009) 12 NWLR (PT 1154) 50, SHELL BP V ONASANYA (1976) ALL NLR 338 @ 341.
In reply, the Respondent submitted that from the averments in its statement of claim, there exist sufficient facts giving right to the Respondent to institute the suit at the trial court. It was also submitted that the Respondent had averred the wrongful act of the Appellant which gave rise to the Respondent's right of action and the damage caused thereby. That it is a settled principle of law that evidence cannot be led at the preliminary stage of proceedings when a point of law is being raised. The Respondent therefore submitted that the lower court was right in holding that the Respondent has a reasonable cause of action and the duty of the court is to determine the intention of parties by construing all surrounding circumstances, relied on OJUKWU V YAR'ADUA (2009) ALL FWLR (PT 482) 1119 - 1120, EGBE V ADEFARASIN (1987) 1 NWLR (PT 47) 1, NISSAN (NIG) LTD V YOGANATHAN (2009) ALL FWLR (PT 494) 1600, CENTRAL BANK V MANEPORT S. A. & ORS (1987) 1 NWLR (PT 47) 86.
The issue questions whether the statement of claim of the Respondent discloses a reasonable cause of action and a binding contract. The Appellant however denies that the relationship between it and the Respondent has resulted into an enforceable contractual agreement, insisting that the documents tendered by the Respondent only shows that the contract, terms of engagement and possible remuneration regarding the services will be finalized in a future negotiation. Therefore, the Appellant posits that there is no reasonable cause of action in the suit.
It is trite beyond citing legal authorities that before a matter is commenced for determination by the courts, there must be a cause of action cognizable in law, a cause of action being simply a factual situation the existence of which entitles a person to obtain from the court a remedy against another person, see AG FEDERATION V AG ABIA STATE (2011) 11 NWLR (PT 725) 689- Therefore, facts to be pleaded must be facts which would establish the cause of action before the court. When such facts disclose a cause of complaint and not necessarily a measure of success based only on the averments in the pleading, then it can be said that there is a reasonable cause of action. In the case of UBN V UMEODUAGU (2004) 13 NWLR (PT. 890) 352, the court held as follows:
"Cause of action had been defined by courts to mean a combination of facts and circumstances giving rise to the right to file a claim in court for a remedy. It includes all things which are necessary to give a right of action and every material fact which has to be proved to entitle the plaintiff to succeed."
In determining the existence of a reasonable cause of action, the court is bound to consider only the statement of claim and nothing else.
In the case of CHEVRON (NIG.) LTD. V L. D. (NIG.) LTD. (2007) NWLR (PT. 1059) 168, the court held thus:
"A decision on whether or not a plaintiff7 has reasonable cause of action can only be made after an examination of the facts pleaded in the statement of claim. It has nothing to do with the nature of the defence which the defendant may have to the plaintiffs claim. The court must therefore confine itself only to the averments in the statement of claim in its assessment of whether or not the plaintiff has a reasonable cause of claims. See Shell B.P. Petroleum Dev. Co. of Nig. Ltd. v. Onasanya (1976) 6 SC89.
Based on the averments in the Statement of Claim, does the case of the Respondent at the lower court disclose a reasonable cause of action? A section of the statement of claim is reproduced hereunder:
3. The Claimant avers that in the year 2011, the Defendant contracted the Claimant to execute a project to design an Enterprise Risk Management (ERM) Framework and Implementation for the Defendant. The Claimant shall rely on Proposal / commercial arrangements dated the 13? day of June 2011 and a confidentiality agreement dated the 15th day of June 2011 executed by the Claimant and Defendant at the hearing of this suit.
6. The Claimant avers that it promptly executed the 1st Phase of the project and was paid the sum of N750,000.00 (Seven Hundred and Fifty Naira only) by the Defendant. The Claimant shall rely on its invoice number: 084 dated 27/06/11 at the hearing of this suit
7. The Claimant avers that after the completion of the 1st phase of the said project, the Claimant was to commence the other phases of the project which was to consume 180 man days without any contingency and a sum ofN50, 000. 00 (Fifty Thousand Naira only) was billed for each day by the Claimant totaling a sum of N9,000,000.00 (Nine Million Naira only).
10. The Claimant avers that on the 23d day of August 2011, it sent an E- mail to the Defendant stating that it planned to resume the continuation of the project with a little modification to address the concerns of the management and board and pursuant to the review of requirements of the Central Bank of Nigeria and the Claimant also attached a work plan for the completion of the project to the E - mail which was to effectively start from September 2011. The Claimant shall rely on the E-mail exchanged between the Claimant and the Defendant dated the 23d day of August 2011 at the hearing of this suit.
11. The Claimant avers that pursuant to the Claimants meeting with the staff of the Defendant, it was unanimously agreed that the remaining phases of the project (ERM) Framework Implementation) which the Claimant had earlier developed for the Defendant should commence on the 1st working day of October 2011 which is the 4h day of October 2011.
12. The Claimant avers that its team on the 4h of October 2011 got to the Defendants office to commence the remaining phases of the project but were told that they could not commence work. The Claimant shall rely on the E - mail exchanged between the parties dated the l4h day of October 2011 at the hearing of this suit.
13. The Claimant avers that it demanded from the Defendant a formal letter on or before the 21st day of October 2011 to the effect that the Claimant has not fulfilled its obligations under the contract as a result of the Defendants non readiness to proceed on the remaining phases of the project.
14. The Claimant avers that it waited for one year without being allowed by the Defendant to complete the remaining phases of the said project and it wrote a letter dated the &h day of July 2012 to the Defendant through its solicitor Olagoke Obawole & Co. to express its grievances as regards the non-completion of the project and to demand that it should be allowed by the Defendant to perform the remainder of the project or that the Defendant pay for the losses incurred by the Claimant as a result of the action and inaction of the Defendant The Claimant shall rely on the Claim ant's Solicitor's (Olagoke Obawole & Co.) letter dated &h day of July 2012 at the hearing of this suit"
While I agree with the Appellant that an action founded on contract must disclose a reasonable cause of action, it isevident that the Respondent pleaded facts to establish its claim before the lower court. From the pleadings, there exists a subsisting relationship between both parties regarding the design and implementation of an Enterprise Risk Management (ERM) for the Appellant. The alleged proposal and Confidentiality Agreement signed between both parties is a fact the consequence of which requires legal determination by the court. These are triable issues which the court can adjudicate upon to determine the nature of the relationship between the parties.
The question as to the existence of a binding contract between the parties cannot be determined at this stage of the proceedings. The fact that documents were attached to the writ and statement of claim as proof of the averments in the statement of claim is a prerequisite in the frontloading process, the aim being to expedite trial and consequently, achieve a speedy dispensation of justice. However, this does not mean that the documents are to be considered in line with the averments in the statement of claim to determine whether or not a reasonable cause of action had arisen. It is one thing to aver a material fact in one's pleading and quite a different thing to establish such fact by evidence. In determining whether a claim discloses a reasonable cause of action, the court is not obliged to consider seriatim all the averments in the statement of claim, nor consider the evidence in proof of the claims.
The court must restrict itself to the averments in the statement of claim as a whole to consider what constitutes the gravamen of the claim, see the case of YARE v. NATIONAL SALARIES, WAGES AND INCOME COMMISSION (2013) LPELR- 20520 (SC).
Consequently, the lower court erred in considering the alleged proposal and Confidentiality Agreement in determining whether or not there was a binding contract between the parties. The existence of a valid and enforceable contract is a substantive issue that ought to be determined at trial and not at the preliminary stages.
Since the requisite factual elements are present in the statement of claim, a cause of action inures notwithstanding the fact of weakness and the unlikelihood of success of the case, see ACCORD PARTY & ORS. V. GOVERNOR OF KWARA STATE & ORS (2009) LPELR -3584 (CA). In the case of H. S. ENGR. LTD V S.A. YAKUBU (NIG.) LTD (2009) 10 NWLR (PT. 1149) 416, the Supreme Court while referring to the case of CHIEF S. A. DADA & 3 ORS. V. OTUNBA ADENIRAN OGUNSANYA & ANOR. (1992) 3 NWLR (PT. 212) 754 held inter alia, as follows:
"Determining reasonable cause of action in so doing, it is irrelevant to consider the weakness of the plaintiffs claim. What is important is to examine the averments in the pleadings and see if they disclose some cause of action or raise some questions fit to be decided by a Judge."
The action must not comprise every piece of evidence which is necessary to be proved. Clearly, the Respondent stated certain facts in its statement of claim and exhibited documents in proof of such facts.
The onus therefore lies on the Appellant to counter or defend such claims as it had done in its statement of defence. The success or failure of the claim is another matter which is to be determined by trial at the lower court. Consequently, I find that the Respondent's case discloses a reasonable cause of action.
Under this issue, the Appellant submitted that its defense at the lower court was brought pursuant to the proceedings in lieu of demurrer pursuant to Order 22 Rules (1) (2) of the High Court of Lagos State Rules. That the lower court was bound to determine the application and therefore awarding costs amounts to being punished for complying with the rules of court. That the costs awarded will likely discourage adherence to the rules of court and that the legal mantra of "costs follow events" cannot apply in a situation where the other party did not apply for grant of costs, referred to JOE V CO - OPERATIVE SOCIETY (2003) 4 MJSC 171. He therefore urged this court to set aside the award of costs.
However, the Respondent submitted that it had in its written address against the Appellant's motion on notice to strike out in limine the Respondent's action, prayed that the Appellant's motion be dismissed and substantial cost awarded. Consequently, the Respondent submitted that the lower court was right in exercising its discretion in awarding costs of N 10,000 in favour of the Respondent, and such award was not punitive in nature but was to assuage the Respondent for part of its expenses, referred to UNION BANK OF NIGERIA PLC V CHARLES OLUSOLA TOYIN (2009) 1 CLRN 168.
The first issue having been resolved against the Appellant, there is no need to belabor this issue as to cost. The Appellant contends that the award of cost is unjustifiable. Costs follow the events and the cost awarded by the tribunal is compensatory and not punitive. To state that award of costs will discourage adherence to the rules of court is laughable. The courts discretion in awarding costs against the losing party is not determined by a party's adherence to the rules so far as the discretion was judicially and judiciously exercised. In the case of UNIVERSITY OF UYO v. AKPAN (2013) LPELR - 1995(CA), the court held:
"As a general principle therefore, it may be said that costs are in the discretion of the court and for that reason, where the Court exercised its discretion judicially and judiciously as opposed to doing so capriciously or upon any wrong principle, an appellate court is without power to interfere with such honest exercise of the Court's discretion."
The trial court awarded costs reasonably and in accordance with the law and the court will not tamper with such discretion, see LAYINKA V. MAKINDE (2002) 10 NWLR (PT.775) 358. This issue is resolved in favour of the Respondent.
On the whole, I find this appeal lacking in merit. The Ruling of HON. JUSTICE O. A. TAIWO delivered on the 18th day of March, 2015 is hereby affirmed. The hearing of the suit can now proceed unimpeded. However, because the lower court has formed an opinion in the matter by determining that a contract exist at this preliminary stage, the case is hereby remitted to the Chief Judge of Lagos State for reassignment to another judge.
Each party to bear its cost.
SIDI DAUDA BAGE
My learned brother YARGATA BYENCHIT NIMPAR, JCA has afforded me the privilege of reading in draft a copy of the judgment just delivered. She has exhaustively dealt with the issues presented for consideration vis-a-vis. And I am in complete agreement with the reasoning and conclusion contained therein.
In the circumstance, I too hold that this appeal is unmeritorious The Ruling of Hon. Justice 0. A. Taiwo, delivered on 18th day of March, 2015 is hereby affirmed. I abide by the consequential order made in the lead judgment and order as to costs.
ABIMBOLA OSARUGUE OBASEKI-ADEJUMO. JCA: I have the rare privilege of reading in draft the well articulated judgment just delivered by my Learned brother, NIMPAR, JCA. I agree with his reasoning and conclusions. Having resolved the issues in this appeal against the Appellant, I also join him to conclude that the appeal is unmeritorious and should be dismissed.
I therefore hold that the appeal lacks merit and is hereby dismissed. I abide by the consequential orders contained in the lead judgment.
EHIS AGBOGA - FOR APPELLANT
TIMOTHY SHOBIYE - FOR RESPONDENT
TEMILADE EGBEWUNMI (MISS) FOR RESPONDENT
KEVIN ONWUZURIKE FOR RESPONDENT