So much has been said on garnishee proceedings in Nigeria, yet the last has not been said. As the days unfold and as the practice of law grows in sophistication, the frontiers of the jurisprudence of garnishee proceedings keep expanding with numerous questions begging for judicial interpretation. One of such daunting and seemingly intractable questions is whether funds belonging to a State Government in the Federation Account can be attached by garnishee proceedings for liquidation of a judgment debt. This article is intended to address this question so as to engender further discuss on this novel but highly sensitive aspect of the jurisprudence of garnishee proceedings.
The Federation Account:
The Federation Account is a pool to which monies accruing to the federation of Nigeria are paid into for sharing or distribution to the three levels of administration in the country, namely, the Federal Government being the government at the center, the States and the Local Government Councils making up the federation of Nigeria.
The concept of the Federation Account is a creation of the Constitution. By section 162 of the Constitution of the Federal Republic of Nigeria, 1999 (as amended), Nigeria shall maintain a special account to be known as ‘’the Federation Account.’’ For ease of reference and clarity of our discussion, we take the liberty to reproduce the relevant provision of the said section 162 herein below:
162(1) – The Federation shall maintain a special account to be called ‘’the Federation Account’’ into which shall be paid all revenues collected by the Government of the Federation, except the proceeds from the personal income tax of the personnel of the armed forces of the Federation, the Nigeria Police Force, the Ministry or department of government charged with responsibility for Foreign Affairs and the residents of the Federal Capital Territory, Abuja.
(3) Any amount standing to the credit of the Federation Account shall be distributed among the Federal and State Governments and the Local Government Councils in each State on such terms and in such manner as may be prescribed by the National Assembly.
Pursuant to the above provisions of section 162, the National Assembly of Nigeria enacted the Allocation of Revenue (Federation Account, Etc.) Act, Laws of the Federation of Nigeria, 2004. The Act prescribes the basis for distribution of revenue accruing to the Federation Account between the Federal and State Governments and the Local Government Councils in the State.
By section 1 of the Act, the amount in the Federation Account shall be shared or distributed among the Federal and State Governments and the Local Government Councils in the following proportion: (a) the Federal Government – 56.00 per cent (b) the State Governments – 24.00 per cent, and (c) the Local Government Councils – 20.00 per cent. The section also provides that the sum equivalent to 13 per cent of the revenue accruing to the Federation Account shall be paid to the States producing natural resources.
It is clear from the above that the concept of the Federation Account is an issue of law. Aside the fact that the constitution of the Federal Republic of Nigeria has provided for the establishment of the Federation Account, the National Assembly has gone a step further to enact the Allocation of Revenue (Federation Account, Etc.) Act, Laws of the Federation of Nigeria, 2004 providing for the modalities for the distribution of money from the account.
It suffices to add that the major source of funding of the Federation Account is money accruing from the sale of crude oil. The other sources are: revenue from Customs and Excise, Federal Inland Revenue, etc.
Every State is entitled to the Revenue:
By the objective, structure and legal framework of the Federation Account, every State in the Federation of Nigeria is entitled to a share of the revenue in the Account. It is on the strength of this that on a monthly basis, monies are distributed to the various States of the Federation to assist in the payment of salaries, execution of projects and other expenditures incidental to governance. In other words, States are entitled as of right to their share of the monies in the Federation Account. By extension, the States can sue for their share if what accrues to them is withheld without lawful justification. The case of Lagos State where funds accruing to Local Government Councils in the State were withheld during the administration of President Olusegun Obasanjo readily comes to mind at this juncture. The Government of Lagos went to court to seek the enforcement of their right to a monthly share of the revenue in the Federation Account.
Most States are big Debtors:
From experience, most States are big debtors. They owe contractors, public servants, retirees, pensioners, persons whose property have been compulsorily acquired without payment of compensation, etc. Most of the persons mentioned here usually approach the courts as the last resort and pray the courts to enter judgment against the States in their favour. Upon delivery of such judgment, the next worry is how to enforce it against the affected State. This is where garnishee proceedings usually become the most reliable option especially where the judgment in issue is a money judgment.
The Big Question:
The big question here is: Can money belonging to a State in the Federation Account be attached by garnishee proceedings for satisfaction of a judgment debt?
The Case of Central Bank of Nigeria v. Chief Obla Ubana (2017) 15 NWLR (Pt. 1587) 151 in Perspective
Facts of the case:
At the High Court of Cross River State sitting in Ugep, Chief Obla Ubana and five others obtained judgment against the Cross River State Government and two others. The judgment was thereafter registered at the Federal Capital Territory High Court, Abuja by counsel for the judgment creditors on the instruction of his clients.
Upon the registration of the judgment at the FCT High Court, the judgment creditors commenced garnishee proceedings against the Central Bank of Nigeria as garnishee. In the application, the judgment creditors prayed the court for an order nisi attaching the monthly allocation of the Cross River State Government from the Federation Account for the month of March, 2012. They argued that the said monthly allocation in the Federation Account is in the custody or possession and control of the Central Bank of Nigeria and that the court should order the garnishee pay over the money to the judgment creditors in satisfaction of the judgment debt.
The application was granted as prayed and, an order nisi was made attaching the funds of the Cross River State Government in the Federation Account for the month of March, 2012. It appears that the garnishee was unable to show cause why the order nisi should not be made absolute. Consequently, the order was made absolute by the learned trial judge and the garnishee (Central Bank of Nigeria) ordered to pay over the judgment sum to the judgment creditors.
Aggrieved, the Central Bank of Nigeria appealed against the judgment of the trial court contending inter alia that the money accruable to States in the Federation Account is not a debt owing and payable to the judgment debtors (Cross River State Government and others) and therefore such money cannot be attached by garnishee proceedings. Appellant also contended that it has no power in law to seize a State’s share of the monthly allocation in the Federation Account neither does it have the power to make deductions from such allocation. Counsel also argued that neither the Cross River State Government nor any of its agencies against whom the judgment creditors obtained judgment had an account with the Central Bank of Nigeria and for that reason, there was no money against which a garnishee order could be made. They contended further that the order nisi granted to the judgment creditors on 1st day of March, 2012 was an order made in error as there was no debt due and owing to the judgment debtor on the date the order was made and that the application was speculative and largely anticipatory.
Responding, counsel for Chief Obono Ubana and the other set of first respondents, argued that the order of the trial court was in respect of the allocation accruing to the Central Bank as at March, 2012. That the claim by the Central Bank that the Cross River State Government does not have an account with the bank is not supported by the law establishing the bank. He referred the court to section 36(2) of the Central Bank of Nigeria Act, 2010 (which provides inter alia that the Central Bank shall receive and disburse Federal Government monies and keep account thereof) and section 162(1)(3) and (4) of the Constitution of the Federal Republic of Nigeria, 1999 (which provides for the Federation Account).
He therefore submitted that the monies due and owing to the Government of Cross River State in the Federation Account for which the garnishee orders were made was the monthly allocation accruable to the State from the Federation Account to which the State was entitled as of right. That for this reason, such monies were liable to be attached by garnishee proceedings for purpose of satisfaction of the judgment debt owed the judgment creditors. Authorities were cited to support each side of the argument.
Issue for Determination:
The principal issue presented to the Court of Appeal for determination went thus: ‘’Whether monies accruing to a State in the Federation Account from its monthly share of the Federal Revenue can be subject of a garnishee order against the Central Bank?’’
Decision of the Court:
Addressing the above issue, the Court of Appeal sitting in Abuja in the lead judgment delivered by Mohammed Mustapha, JCA and concurred by Adumein and Hassan, JJCA, held thus:
‘’[T]he question of the existence or none existence of debt can be ascertained by a simple question thus: Can the Cross River State Government be entitled to sue the Central Bank of Nigeria if the Central Bank refuses or fails to pay or release monies meant for the Cross River State Government for that month? If the answer to this question is in the affirmative, then it is the considered opinion of this court that it is a debt that can be garnisheed.’’
(See page 173, paragraphs G-H)
The court went on to hold at page 175 paragraphs E – G as follows:
‘’What is important in an application of this nature is that the garnishee owes the debtor and the money owed the debtor is in the custody of the garnishee, and that is what is sought to be attached. That being so, the order absolute in this case is impeccable, as it cannot be faulted.’’
The ruling of the trial court making the garnishee order absolute against the Central Bank of Nigeria (which order attached and made payable to the judgment creditors, the funds accruing to the Cross River State Government in the Federation Account), was upheld by the Court of Appeal and the appeal dismissed with cost awarded against the apex bank.
Implication of the Judgment:
From the above decision of the appellate court, the issue has been put beyond doubt that monies accruing to a State Government in the Federation Account in the custody of the Central Bank of Nigeria can be attached by garnishee proceedings. In as much as the State has a right over the monies and can sue the Central Bank for payment in the event of delay or refusal to pay, such monies qualify as debt and can be attached by garnishee proceeding. This case is indeed a locus classicus on this aspect of garnishee proceedings.
Attaching the monthly allocation of any State in the Federation Account through garnishee proceedings is never going to be an easy hurdle to cross. The garnishee, in this case the Central Bank of Nigeria is surely going to resist such attempt and where the order nisi is made absolute in spite of the resistance, the bank is sure to appeal the matter up to the Supreme Court. This is not to imply that the Central Bank is immune from loosing cases. When the facts and the law are up against a party the court has no option than to determine the matter on the merit using the provisions of the law and the need to do justice as the parameter for its decision notwithstanding the status of the party in issue.
The message here is that a lawyer who desires to enforce the judgment of a court of law against the Government of a State through garnishee proceedings by attachment of funds accruing to the State from the Federation Account, must start strong by filing the right set of processes. There is no room for trial and error when the stakes are this high.
The last has not been said of the special procedure known as garnishee proceedings. Its frontiers will continue to expand as long as the practice of law continues to gain sophistication. One of the most recent expansions of these frontiers is the above decision of the appellate court on the possibility of attachment of funds belonging to the State in the Federation Account.
While we await the decision of the Supreme Court on this issue, it is however safe to say that, for now, this is the highest authority on the issue and by the doctrine of stare decisis or judicial precedent, applicable to court in Nigeria, trial courts and even the Court of Appeal are bound by this decision to the extent that, funds belonging to the Government of any State within the Federation of Nigeria in the Federation Account can rightly be attached through garnishee proceedings for satisfaction of judgment debts.
Ekemini Udim is a Barrister and Solicitor of the Supreme Court of Nigeria. He is the author of the bestselling book, Principles of Garnishee Proceedings in Nigeria. He is also the author of: Practice Guide on No Case Submission, Trial within Trial in Criminal Proceedings, Practical Approach to Effective Cross-Examination and, Application for Bail. He is reachable on: firstname.lastname@example.org