CORAM

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PARTIES

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POLAK INVESTMENT AND LEASING CO. LTD APPELLANTS

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STERLING CAPITAL MARKET LIMITED RESPONDENTS

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AREA(S) OF LAW

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SUMMARY OF FACTS

This appeal is against the decision of the High Court where the trial Court while granting in part the Appellant’s claims, adjudged the Respondent liable to make a refund of N166,475,279.88 (One Hundred and Sixty-Six Million, Four Hundred and Seventy-Five Thousand, Two Hundred and Seventy-Nine Naira, Eighty-Eight Kobo Only) to the Appellant. With respect to the Respondent’s counter-claim, the Court adjudged the Appellant to be indebted to the Respondent in the sum of N269,999,279.88 (Two Hundred and Sixty Nine Million, Nine Hundred and Ninety Nine Thousand, Four Hundred and Seventy-Three Naira, Eighty-One Kobo Only). The lower court then concluded its judgment by setting off the aforesaid sum of N166, 475,279.88 from the judgment sum as per the counter claim and consequently entered judgment in favour of the Respondent against the Appellant in the net sum of N103, 524,193.09 (One Hundred and Three Million, Five Hundred and Twenty-Four Thousand, One Hundred and Ninety-Three Naira, Nine Kobo Only). Aggrieved with the decision of the lower court, the Appellant filed Notice of Appeal. The Respondent was also dissatisfied with part of the decision of the lower court, and has filed a Notice of Cross Appeal.

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HELD

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Appeal Dismissed, Cross Appeal Allowed In Part

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ISSUES

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Having held that the Respondent was under a contractual obligation to, within the tenor of the facility, dispose of the shares in the Appellant’s Account, is the lower court right in its decision entering judgment for the Respondent on its counter-claim rather than holding that the Appellant is discharged from further obligation for the repayment of the amount outstanding on the facility? Having entered judgment against the Appellant for the payment of the amount adjudged as outstanding, is the lower court right in its failure to grant the Appellant’s claims in paragraph 25(q), (u) and (y) of the Statement of Claim and also refusing to order the release to the Appellant of the remainder of the shares purportedly bought on behalf of the Appellant within the 180-day period of the facility and the shares pledged as additional security? Is the court right in its decision adjudging the Appellant liable for the shares purchased by the Respondent in the names of the 3rd parties with part of the facility and consequently dismissing the Appellant’s claims in relation to those shares? Is the court below right in its decision adjudging the Appellant liable for the shares purchased by the Respondent purportedly in the name or on behalf of the Appellant before the coming into effect of the agreement in Exhibit 1? Having regards to the finding of the court below that the Respondent acted in breach of the agreement in Exhibit 1 more particularly by the Respondent’s failure to sell the shares within the tenure of the facility, is the lower court right in its decision refusing to enter judgment in favour of the Appellant in terms of the entirety of the claims contained at paragraph 25 of the Statement of Claim? CROSS APPEAL Whether the lower court was right when it held that any shares and stocks purchased by the Respondent/Cross-Appellant after the expiration of the margin trade facility cannot be charged into the account of the Appellant/Cross Respondent’s margin trade account kept with the Respondent/Cross Appellant as to entitle the Appellant/Cross Respondent to a refund of the sum of N166,475,279.88 being cost of those shares as adjudged by the lower court? Whether or not the lower court was right when it failed to award judgment in favour of the Respondent/Cross Appellant against the Cross Respondents jointly and severally as per its Counter-claim?

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RATIONES DECIDENDI

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TERMS OF AGREEMENT- DETERMINATION OF THE TERMS OF AN AGREEMENT BETWEEN PARTIES TO A CONTRACT

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“Although the express terms of the agreement between the parties is evident on the face of Exhibit 1, the law is settled however that in order to identify the terms and real intention of the parties to a contract, all the documents relevant to the consummation of the contract must be read and construed together. See Obaike V Benue Cement Co. Plc [1997] 10 NWLR (PT 525) 435 at 447, paras C – D; Sparkling Breweries Ltd V Union Bank Of Nigeria [2001] 15 NWLR (PT 737) 539 at 565, paras D – F.” –

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BURDEN OF PROOF- ON WHO LIES THE BURDEN OF PROOF IN A SUIT

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“It is the law that every decision of a court should be based on the facts and evidence as presented by the parties. A corollary of this position is that whoever desires any court to give judgment as to any liability dependent on the existence of facts which he asserts shall prove that those facts exist. In other words, the burden of proof in a suit lies on the lies on the person who would fail if no evidence at all were given on either side. See Section 131 and 132 of the Evidence Act; Okoye & Ors V Nwankwo (2014) LPELR – 23172 SC; CPC v INEC & ORS (2011) LPELR -8257 (SC); Ajadi V Ajibola [2004] 10 NWLR (PT 898) 91. The party who asserts in his pleadings the existence of a particular fact is required to prove such fact by adducing credible evidence; if he fails to do so, his case fails, as he would be expected to succeed on the strength of his own case and not on the weakness of the defence. See Buhari v Obasanjo [2005] 2 NWLR (PT 910) 241. –

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DOCUMENTARY EVIDENCE-DUTY ON A PARTY TENDERING DOCUMENTARY EVIDENCE

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“It is not enough to dump documents before the court expecting the court to sift through the exhibits in order to reach a conclusion favourable to the Appellant. That duty remains with the Appellant. As the Apex Court rightly stated in Okereke v Umahi & Ors (2016) LPELR – 40035 (SC);
“… this Court decided in replete of numerous authorities to the effect that in any case whether election or non-election matter, any party tendering documentary evidence has the task of linking such documents to the specific aspects of his case for which such documents so tendered be leading evidence of the purport of the document in relation to the aspect of his case. In other word, he should not merely dump them in Court or Tribunal and expect the Tribunal or Court to embark on speculation in determining the purport for which it was tendered or to which aspect of the case such document relates, without being guided by oral evidence led in open Court. Infact, this Court in the case of Action Congress of Nigeria (ACN) v. Lamido & others (2012) LPELR 782J (SC) had this to say at page 38 per Fabiyi JSC:- “It is not in doubt that the stated Exhibits were not demonstrated were not demonstrated in open Court. They were the type of documents which this Court affirmed as rightly expunged by the Court of Appeal in Buhari v. INEC (2008) 19 NWLR (pt 1120) 246 at 414. This is so, as there is a dichotomy between admissibility of documents and the probative value to be based on relevance, probative value depends not only on relevant but also on proof. Evidence has probative value if it tends to prove an issue.” I must say, that it is not the duty of a Court or Tribunal to act within the realm of conjecture in determining what a document so tendered relates to, or for what purpose it was meant to serve by tendering it, or to proceed to embark on making inquiry into the case outside the Court not even by examining of such documents which are in evidence but not examined in open Court….”
See also Emmanuel v Umana & Ors (2016) LPELR – 40037 (SC).”
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ORDER OF COURT- A COURT DOES NOT MAKE AN ORDER IN VAIN

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“A court does not make an order in vain. See Makinde & Ors v Akinwale & Ors (1995) LPELR – 1828 (SC) where ADIO, JSC, remarked that “a court will not indulge in making a useless order. It has a duty to ensure that it does not make an order in vain.” See also Oke & Anor V Mimiko & Ors (2013) LPELR – 20645 (SC); Chief Of Air Staff & Ors V Iyen (2005) LPELR – 3167 (SC).” –

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VARIATION OF TERMS OF AN AGREEMENT- MODE OF VARYING THE TERMS OF A WRITTEN AGREEMENT

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“The general rule of law is that where a contract is in writing, any agreement which seeks to vary the original agreement, must itself, be in writing. See CBN v Igwillo (2007) LPELR – 835 (SC); A-G, Gombe State v Gadzama (2014) LPELR – 23423 (CA)”. –

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TERMS OF AN AGREEMENT-DUTY OF A PARTY ALLEGINGTHE ORAL VARIATION OF A WRITTEN AGREEMENT

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“While oral agreement is ipso facto capable of changing the content of an earlier written agreement, it is the law however that the party alleging the oral variation of the written agreement must prove same. See A-G, Lagos State V Purification Tech. (Nig.) Ltd [2003] 16 NWLR (PT 845) 1; Usman V Ram [2001] 8 NWLR (PT 715) 449;” –

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SPECULATION- DECISION OF COURT MUST BE BASED ON FACTS NOT SPECULATION

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“I think I need to reiterate the position I earlier stated, that a court of law should not base its decision on mere speculation but rather do so based on facts and evidence as presented by the parties. See ACB PLC v Emostrade Ltd [2002] 8 NWLR (PT 770) 501; AGIP (NIG) LTD v AGIP Petroli Int’l [2010] 5 NWLR (PT 1187) 348. –

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FINDINGS OF FACT- INSTANCE WHEN AN APPELLATE COURT WILL DISTURB THE FINDING OF FACTS OF A TRIAL COURT

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“As a matter of law, it is within the province of a trial court to evaluate and ascribe probative value to the evidence led by the parties before it, and an Appellate Court will generally not disturb any finding of fact made by a trial court unless it is not supported by the evidence established before the court, leading to a perverse conclusion. See Ezeafulukwe V John Holt Ltd (1996) LPELR – 1196 (SC); Guardian Newspapers Ltd & Anor V Ajeh (2011) LPELR – 1343 (SC)”. –

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LIABILITY OF A COMPANY- INSTANCE WHEN A COMPANY SHALL BE LIABLE FOR ACTS DONE BY ITS DIRECTORS

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“Section 65 of the Companies and Allied Matters Act clearly stated that the act of its director done while carrying on in the usual way of the business of the company shall be treated as the act of the company itself and the latter shall be liable as if it is a natural person. See Hung & Ors V E.C. Investment Co. (Nig.) Ltd v Anor (2016) LPELR – 42125 (CA). In Adeyemi V Lan & Baker (Nig.) Ltd [2000] 7 NWLR (Pt 663) 33, it was held by the Apex Court that a party will not be allowed to use his company as a cover to dupe, cheat and/or defraud another party who entered into a lawful contract with the company only to be confronted with the defence of the company’s legal entity as distinct from its directors”. –

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SANCTITY OF A CONTRACT – PARTIES ARE BOUND BY THE TERMS OF CONTRACT THEY FREELY ENTERED INTO

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“It is loud law that the Court must respect the sanctity of contract made by parties. Therefore when parties enter into a contract, they are bound by the terms of that and it will be unfair to read into such a contract the term on which there are no agreement. In plain words, Thus in all matters relating to the determination of the rights and obligations of parties to a contract, the court must be mindful of the position that parties are bound by the agreement they freely entered into. See Oforishe V Nigerian Gas Co. Ltd (2017) LPELR – 42766 (SC); Edilcon (Nig) Ltd v UBA PLC (2017) LPELR – 42342; Idufueko V Pfizer Products Ltd & Anor (2014) LPELR – 22999 (SC); Baba V Nigerian Civil Aviation & Anor (1991) LPELR – 692 (SC); Aminu Ishola Investment Ltd V Afribank Nig. Plc (2013) LPELR – 20624 (SC).” –

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NOVATION – MEANING AND PRINCIPLE OF NOVATION

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“The principle of Novation received judicial approval of the Supreme Court in old case of Phillips v ARCO Ltd (1971) LPELR – 2918 (SC) where LEWIS, JSC remarked:
“Mr. Coker for the respondents for his part submitted that Exhibit 3 could not be treated as a novation because a novation could only occur when different parties to those in the original contract were included in the later agreement. However, he relied for that submission on Halsbury’s Laws of England Third Edition Volume 8 page 262 which far from supporting his submission in our view shows quite the contrary. It states:- “460 MEANING OF NOVATION. Novation is, in effect, a form of assignment in which, by the consent of all parties, a new contract is substituted for an existing contract. Usually, but not necessarily, a new person becomes party to the new contract, and some person who was party to the old contract is discharged from further liability. The introduction of a new party prevents the new contract from being a mere accord without satisfaction, and thus affords a defence to any action upon the old contract. For novarion to ensue there must not only be the substitution of some other obligation for the original one, but also the intention or animus novandi.”
Similarly, in NNPC v Clifco Nig. Ltd (supra) commended to us by the Counsel on behalf of the Cross-Appellant, the Supreme Court, per FABIYI, JSC explained what novation of contract entails in the following words:
“Novation is the substitution of a new contract for an existing one between the same or different parties. It is done by mutual agreement. It is never presumed. The requisites for novation are a previous valid obligation, an agreement of all parties to a new contract, the extinguishment of old obligation and the validity of the new one.”
“In our law therefore, novation takes place when an obligation is released upon the terms that simultaneously another obligation takes its place. It is pertinent to observe here that novation arising from contract, novatio voluntaria, voluntary novation is essentially a matter of intention and consensus. Thus, in order to determine whether by entering into a subsequent agreement, there was a novation, it is necessary, in my view, to consider the extent and scope of the subsequent agreement, and whether such contract obliterated the rights and obligations that were created by the original contract.” –

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TERMINATION OF CONTRACT- WHETHER A PARTY IS AT LIBERTY TO TERMINATE A CONTRACT UPON THE OCCURRENCE OF A BREACH

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“The law seems settled to me that a party is entitled by law to put an end to a contract by reason of a breach of an essential promise. See African Petroleum Plc V Aborishade & Anor (2013) LPELR – 20362; Merrimack Marbles (Nig) Ltd V Obasi & Anor (2018) LPELR – 43786 (CA).” –

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BREACH OF CONTRACT- CONSEQUENCE OF A FAILURE TO TREAT A BREACH OF CONTRACT AS REPUDIATED

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“The consequence of the failure of a party to treat a breach of contract as repudiated was explained by the Supreme Court, per SOWEMIMI, JSC in old case of Bekederemo V Colgate-Palmolive Nig. Ltd (1976) LPELR – 762 (SC), where it was held:
“It has to be remembered also that if a party is entitled to put an end to a contract by reason of a breach of an essential promise and he does not exercise his right to do so on becoming aware of the breach he loses that right and cannot afterwards exercise the right without giving reasonable notice of his intention to do so… But the fact, however, that the company condoned the breach after the first delivery did not prevent them from terminating the agreement when further breaches occur.”
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AWARD OF INTEREST- PREREQUISITE FOR AN AWARD OF INTEREST

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“A fortiori, it is commonplace that courts are always reluctant to generally award interest; thus, any claim for interest, particularly pre-judgment interest, must not only be specifically pleaded but also strictly proved. See Sani Abacha Foundation For Peace And Unity & Ors v UBA PLC (2010) LPELR – 3002 (SC); Berliet (Nig) Ltd V Kachalla (1995) LPELR – 775 (SC); G.K.F. Investment (Nig) Ltd V Nitel Plc (2009) LPELR – 1294 (SC).” –

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COURT – MODE OF SATISFYING THE COURT ON THE EXISTENCE OF ANY MATTER

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“It is pertinent to note that the best method of satisfying a Court about the existence of any matter is by adducing credible, sufficient, satisfactory and convincing evidence about. See Dasofunjo V Ajiboye (2017) LPELR – 42354 (CA).”. –

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OBLITERATED OBLIGATION- EFFECT OF AN OBLITERATED OBLIGATION

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“Certainly, an obliterated obligation (utterly destroyed; wiped out) cannot be revived; the parties who voluntarily agrees to the novation, must sink or swim with the new obligations.” –

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CASES CITED

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STATUTES REFERRED TO

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Companies and Allied Matters Act, 2004|High Court of Lagos State (Civil Procedure) Rules, 2012|

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