IN THE SUPREME COURT OF NIGERIA
On Thursday, the 31st day of Jnauary 1963
1. ABIMOLA GEORGE
2. A.M.P. LUFOWORA
3. C. AYODELE
(trading as Abimola George and Sons) ...................................... APPELLANT
DOMINION FLOUR MILLS LTD (By its Attorney, Leslie Howard) .............................................. RESPONDENT
Appeal by defendants.
The plaintiffs, who were exporters of flour from Canada, sold flour to the defendants, and sued them for the balance due. The defendants denied owing the amount claimed; they also alleged that the plaintiffs advised them to sell as the flour was deteriorating, that they sold and suffered loss, and were entitled to be re-embursed by the plaintiffs.
Flour could not be imported except under licence issued to the importer under a certain Order in Council; this was not referred to in the Defence, which did not plead illegality or allege any facts which would make up the plea. Nevertheless the plaintiffs' witness was cross-examined to show that the defendants, when placing orders with the plaintiffs, used licences issued to other persons; and later the defendants' witness testified that they, at the plaintiffs' request, bought licences from others so as to place a large enough order for import. Upon the trial Judge saying that he would disregard this evidence of illegality, the defendants applied to amend the Defence but the Judge refused leave. In his judgment he ignored the evidence on illegality because it had not been pleaded, and explained that he refused leave to amend as an amendment to plead illegality would be unfair to the plaintiffs, who had concluded their case; and he gave judgment for the plaintiffs.
The grounds of appeal complained that the Judge erred (I) in refusing leave to amend the Defence when the illegality complained of became apparent from the evidence, and (2) in ignoring the question of illegality which appeared from the evidence. Counsel relied on the general principle that the courts would not enforce an illegal contract.
(1) Where the contract is not ex facie illegal and the question of illegality depends on the circumstances, as a general rule, the court will not entertain it unless it is raised by the pleadings.
(2) The aim of pleadings is to give notice of the case to be met, which enables either party to prepare his evidence and arguments upon the issues raised and saves either party from being taken by surprise. As the defence did not plead illegality or allege any facts of illegality, the plaintiffs could not prepare and could not call evidence in that regard.
(3) In exercising his discretionary power to give leave to amend, the trial Judge should have regard to the rule of audi alteram partem; in this case Judge was right in refusing such leave after the plaintiffs had concluded their case.
(4) Evidence which is not material to any issue raised by the pleadings may be disregarded; the Judge was entitled to ignore any evidence bearing illegality, even though obtained in cross-examination of the plaintiffs' witness, as there was no issue of illegality before him.
Where illegality is pleaded on the basis of a statute, the provision should be cited in the Defence.
Gedge v. Royal Exchange Assurance Corporation  2 Q.B. 214, 220; Scott v. Brown, Doering, McNab & Co.  2 Q.B. 724; Holman v. Johnson (1775) Cowp. 341 (98 Eng. R. 1120); North-Western Salt Co. Limited v. Electrolytic Alkali Co. Limited  A.C. 461, 473; Ambrosini v. Allen 8 N.L.R. 24, 9 N'.L.R. 8 (Privy Council) sub nom Ambrosini v. Tiko & another; Shomade v. Ogunbiyi 3 W.A. C.A. 48.1
APPEAL from the High Court of Lagos.
Chief H.O. Davies, Q.C. (with him A.O.Bickersteth) for the Appellants.
A. Adewale, for the Respondents.
Bairamian, F.J.:-The defendants have appealed from the judgment of Onyeama, J. in the Lagos Suit No. 338 of 1958 on a number of grounds, but their learned Counsel, Chief H.O. Davies, confined his arguments to the following two:-
(1) The learned trial Judge erred in law in refusing the defendants leave to amend their pleading so as to allege illegality when the illegality complained of became apparent from the evidence before the court.
(2) (numbered 3 in the notice of appeal as amended). The learned trial Judge erred in law in failing to take notice and give consideration to the question of illegality which appeared from the evidence brought before the court.
The grounds indicate that the Defence did not allege facts, or raise a plea of illegality, but Chief Davies relies on a number of cases, from which it will be enough to quote a passage from Gedge v. Royal Exchange Assurance Corporation,  2 Q.B., 214, at 220 where Kennedy, J., quoted from previous judgments, as follows:-
"Ex turpi causa non oritur actio. This old and well known legal maxim is founded in good sense and expresses a clear and well-recognised legal principle, which is not confined to indictable offences. No Court ought to enforce an illegal contract or allow itself to be made the instrument of enforcing obligations alleged to arise out of a contract or transaction which is illegal, if the illegality is duly brought to the notice of the court, and if the person invoking the aid of the court is himself implicated in the illegality. It matters not whether the defendant has pleaded the illegality or whether he has not. If the evidence adduced by the plaintiff proves the illegality, the court ought not to assist him."
That came from the judgment of Lindley, L.J. in Scott v. Brown, Doering, McNab & Co.,  2 Q.B. 724. It is followed by this passage from Lord IMansfield's judgment in Holman v. Johnson, (1775) Cowp. 341 (98 Eng. R., 1120):-
"If from the plaintiff's own stating or otherwise, the cause of action appears to arise ex turpi causa, or the transgression of a positive law of this country, there the court says he has no right to be assisted. It is upon that ground the court goes; not for the sake of the defendant, but because they will not lend their aid to such a plaintiff."
In Gedge, etc., the marine policy sued upon was illegal in view of the express provision in the Marine Insurance Act, 1745, section 1, that an assurance like that sort of policy "shall be null and void to all intents and purposes"; so, it made no difference that the defendants did not plead illegality. They did, however, plead that the persons on whose behalf the plaintiffs effected the policy had no insurable interest in the ship, and the policy gave itself away as a wagering contract by one of its terms, that in the event of loss:-
"It is hereby agreed that this policy shall be deemed a full and sufficient proof of interest."
Lindley, L.7. is described by Viscount Haldane, L.C. in the House of Lords' case cited by Mr Adewale, the learned Counsel for the plaintiffs -North Western Salt Co. Limited v. Electrolytic Alkali Co. Limited, (1914) A.C., 461, at 473, as "one of the most cautious and accurate judges of our time", and it should be noted that in the passage from the judgment of Lindley, L.J. quoted in Gedge etc., there are these "ifs":-
"if the illegality is duly brought to the notice of the court, and if the person invoking the aid of the court is himself implicated in the illegality if the evidence adduced by the plaintiff proves the illegality."
Those conditions may not be present in a given case. No doubt if the contract on which the plaintiff sues is ex facie illegal, the courts will decline to enforce it whether the illegality is pleaded or not: for the courts administer the law of the land, and will not help a plaintiff who breaks it. Where, however, the contract is not ex facie illegal and the question of illegality depends upon the surrounding circumstances the above House of Lords case shows that, in the words of the head note to it, "as a general rule, the court will not entertain the question unless it is raised by the pleadings." Those in the case in hand will now be summarised.
The plaintiffs are exporters of flour from Canada, and the defendants importers in Lagos. The plaintiffs had Eastwood and Sharples Limited as their agents. There were transactions between 1956 and 1958, and the plaintiffs sued for the balance due to them on flour sold to the defendants, with accounts annexed to the Statement of Claim. The flour market deteriorated in 1957 in Nigeria; the defendants had a large quantity of flour in store which began deteriorating, and the plaintiffs' agent advised the defendants to sell in time. The dfence is that they sold accordingly and suffered loss, which the plaintiffs should re-embers; the defendants denied owing the amount claimed and made a counter claim, which the plaintiffs denied. The issues were simple on which the parties went to trial. The Defence did not allege any facts which raised a case of illegality, and did not plead illegality.
Nevertheless some questions were asked in the cross-examination of the plaintiffs' witness which were directed to show illegality; he answered as follows:-
"I received no licences directly; we paid for no licences but I believe Abimbola George and Sons paid for some licences from small importers; we did not buy the licences but we made allowances to Abimbola George at his request for licences he had bought; we were anxious to get as much flour into Nigeria as possible; I produce some of the order forms signed by the defendant; admitted and marked exhibit 10: (five forms) in none of exhibit 10 was the defendant's licence quoted; the defendant was not our agent; we do not know any of the people whose licences are quoted on exhibit 10; they must have been the defendants' distributors"
The witness had explained in chief that for the sake of exchange control flour could not be imported from Canada, a dollar area, except under licence, but too many licences were issued, and the market became glutted; the defendant had a large stock of flour; but neither the plaintiffs nor their agents had agreed to bear the defendants' loss.
That evidence in chief was doubtless meant to negative the counterclaim for loss: the questions in cross-examination were rather designed to show that the plaintiffs' agents took orders from the defendants on licences in the names of other persons, which was not relevant to any issue on the pleadings. The aim of eliciting facts of illegality became plain when the witness for the defendants gave evidence, as these portions show:-
"we ordered in quantities of two tons and five tons; Eastwood and Sharples told us they could not ship on such small indents. when we got the licences we took them to the office of the import agents, in this case, Eastwood and Sharples; we used to take our licences to them but as our quota was small they used to require us to go round and collect licences from other-flour dealers so as to make up a worth-while shipment they said they would pay us 2s-6d commission on every bag on each licence we got; we collected several licences; when we handed the licences over to Eastwood and Sharples they would make out an order sheet which they would require us to sign ....
the owner of a licence is entitled to order the quota on his licence."
The crucial part follows; the notes read:-
"Question. In spite of this fact Eastwood and Sharples and you are advancing and buying licences from the holders?
Whereupon the learned Judge observed:-
"Court: In so far as this question and answer raise the question of illegality they will be disregarded."
That was, of course, because there was no issue of illegality to make the evidence relevant. The notes go on:-
"Davies: Under Order 33 I apply to amend the Statement of defence so as to plead illegality, agency and plaintiff shipping when told to stop.
MacFarlan: The court would deal with illegality if it is apparent; not for defence to wait and hear the evidence and then to decide what their defence is going to be.
Court: I refuse leave to amend at this stage. If there was a genuine issue of illegality, I do not doubt it would have been taken at the outset when pleadings were settled. To plead agency now would completely alter the Statement of Defence which admits paragraphs 1, 2, 3, 4 and 8 of the Statement of Claim. This admission negatives any question of agency and the plaintiff has prosecuted his case on that basis."
Counsel for the plaintiffs apparently thought it was prudent to ask some questions in cross-examination; the answers were:-
"When the flour is received each person whose licence had been used would come to my store, sell his quota and hand me the c.i.f. price with handling and transport charges; he takes whatever profit is made; when the market fell these traders failed to turn up to clear their quota."
The above excerpts were referred to as bearing on the grounds of appeal. The learned Judge wrote this in his judgment:-
"I intimated that I would not consider the evidence as illegality had not been specifically pleaded. An application was then made to amend the statement of defence so that illegality might be made an issue in the case. I refused the application because I considered it would unduly delay the trial and that to allow it at this stage would unfairly prejudice the plaintiffs who had concluded their case. I considered also that if there had been any bona fides in the defence of illegality, the facts on which it was founded would certainly have been pleaded in the statement of defence at the outset."
The first ground of appeal complains of the refusal to amend, and relies on Order 33 of the local rules, together with Ambrosini v. Allen 8 N.L.R. 24 and Shomade v. Ogunbiyi, 3 W.A.C.A., 48, as examples of case in which Order 33 was used. The decision in Ambrosini was reversed in the Privy Council: 9 N.L.R. 8; in Shomade one of the judges of appeal disagreed on the propriety of amendment. It is all a question of using the discretionary power to give leave to amend in of the paramount consideration that the aim should be to have a fair trial.
The fairness of a trial can be tested by the maxim audi alteram partem. Either party must be given an opportunity of being heard; but a party cannot be expected to prepare for the unknown; and the aim of pleadings is to give notice of the case to be met; which enables either party to prepare his evidence and arguments upon the issues raised by the pleadings, and saves either side from being taken by surprise. Incidentally, it makes for economy. "The plaintiff will, and indeed must, confine his evidence to those issues: but the cardinal point is the avoidance of surprise. That is why the defendant is expected to raise in his Defence any facts and pleas which make, according to the case he intends to present at the trial, the claim void or unenforceable. Illegality is such a plea, and the facts which make up the plea should be alleged in the Defence together with a plea of illegality. A contract may be illegal either by the common law or under a statute; in the latter case it is highly desirable to cite the statutory provision. That will give the plaintiff notice of the case to be met, and he will prepare himself with all the evidence and arguments that may bear on illegality. Then both sides will be able to present their evidence and arguments of law in full, and the trail Court will have all the circumstances and be able to adjudicate on the issue of illegality.
That is made clear in the judgment of Lord Moulton in the House of Lords case at 476, where his Lordship said this:-
"The plaintiffs have received no notice that the point will be raised, and are presumably not prepared with the necessary evidence. Even if they are in a position to call the evidence they are not at liberty to do so, because they are only entitled to call evidence on the issues raised by the pleadings. The facts before the court at the end of the case are therefore only a casual selection from the surrounding circumstances, and the court has no longer the right to treat them as properly and fully representing those surrounding circumstances so as to Justify its pronouncing on their true effect upon the contract."
In the present case there was no plea or allegation of facts of illegality, or reference to the statutory provision which made the transactions or any of them illegal. The request for leave to amend the Defence was made after the plaintiff's case was closed. If leave to amend were given, the maxim of audi alteram partem would not have been observed; so the learned trial Judge had no choice but to refuse leave to amend. In North Western Salt Co. Limited etc. (the House of Lords case cited (supra)) the trial Judge, Scrutton, J., refused leave to amend in the course of the plaintiffs' case on the ground that it would be unfair to them to allow such an amendment to be made when the trial had already commenced, and the reasonableness of his refusal was never questioned.
There is a passage in the judgment of Lord Sumner in that case which is in point in this appeal: it is this:-
"Much of the oral evidence was strictly immaterial since, though obtained in cross-examination, it went to no issue. It may, therefore, be disregarded."
Onyeama, J., having rightly refused leave to add the plea of illegality to the Defence, was right in disregarding all evidence bearing on illegality, whether in the cross-examination of the plaintiffs' witness or in the evidence for the defence: for any such evidence had no bearing on the issues for adjudication.
The defendants are, however, entitled to rely on the passage from the judgment of Lindley, L.7., and show that the evidence adduced by the plaintiffs to prove their case proves illegality. They argue that the plaintiffs transgressed Clause 4 of the Order in Council No. 50 of 1950 made under the Customs Ordinance and published at 399 of the 1950 Supplement of the Laws of Nigeria. The defendants are entitled to refer the court to legislation; but as they did not cite the statutory provision in the court below, they should have cited it in their grounds of appeal.
That Clause 4 will be quoted to the extent that may be relevant here; it provides:-
"(1) no goods....may be imported into Nigeria except under the authority of a licence granted by the appropriate authority and subject to such terms and conditions as may be contained therein.
(2) A licence shall be either-
(b) a specific licence granted to an importer authorising him to import from a territory or territories specified in the licence goods of a description and quantity so specified; or
(c) a special licence granted to an importer authorising him to import specific goods in special circumstances."
Chief Davies has argued that licences were not transferable: there was, he said, a condition to that effect in the licences which were issued. The particular licences involved in this case were not produced in evidence in the court below, and it is not know whether there was any such condition attached to them. Be it added, however, that as the aim of producing them would have been to prove illegality, which was not an issue on the pleadings, the trial Judge would have been entitled to disregard them.
I do not propose to discuss the defendants' submission that the evidence in the notes on which they rely-proves illegality. Not that I assent to it: but, I have in mind what Lindley, L.J., said: "if the illegality is duly brought to the notice of the court." Confining myself to that condition, I have no doubt that illegality was not duly brought to the notice of the court in this case, and am of opinion that the House of Lords case is conclusive in favour of the plaintiffs.
In this case, the defendants have relied solely on evidence which the learned trial Judge rightly disregarded. There is no suggestion that the evidence which the plaintiffs adduced to prove their claim or to negative the counterclaim proved illegality on their part; in my judgment the grounds of appeal must fail, and I would dismiss the appeal.
The following order is proposed:
"The appeal of the defendants from the judgment given on August 12th, 1960 in Suit No. 338 of 1958 of the High Court of Lagos is hereby dismissed with thirty-three guineas costs to the plaintiffs."
Brett, F.J.:- I agree.
Taylor, F.J.:- I agree.