‘Failure To Complain Timeously Amounts To Waiver Of Delay’

Facts

The Appellant engaged the services of the respondent to reconcile the account position of some concessions it granted certain companies. They agreed that the fees for the services, would be 18% of the amount recoverable. The Respondents rendered the said service, and submitted their reports to the Appellant, albeit late, but the Appellant did not complain. The Respondents considered the high amount of the discoveries and decided to reduce the payment to be made by the Appellant to 5%, but the Appellant refused to pay the Respondents.

Further to the Appellant’s failure to pay for the services rendered, the Respondents filed an action at the Federal High Court, Lagos under the Undefended List Procedure claiming the sums of USD9,186,701 and N144,303,981.00, as the agreed fees for their service. They also claimed interest at the rate of 10 percent on these sums. The Appellant filed a Notice of Intention to Defend the suit, which was supported by an affidavit. The trial court, however, found that the defenses raised in the Appellant’ s affidavit did not call for the transfer of the suit to the General Cause List, and delivered judgement in favour of the Respondents. Dissatisfied, the Appellant appealed to the Court of Appeal, but the Court also found for the Respondents; this led to a further appeal to the Supreme Court.

Issues for Determination

In resolving the appeal, the Supreme Court considered the following issues 1. Whether the Respondents’ cause of action falls within the jurisdiction of the Federal high Court.

2 Whether the filing of Exhibits/ documents, is a condition precedent to the transfer of the suit to the General Cause List

3. Whether the Court of appeal rightly held that paragraphs 3 to 14 of the appellant’s affidavit in support of the notice of the Intention to defend the action, were hearsay evidence and therefore, inadmissible.

4. Whether the Court of Appeal rightly affirmed the judgement entered in favour of the Respondents by the trial court, in the sum of USD9, 186, 701 and N144,303,981.00.

5. Whether the Court of Appeal rightly confirmed the pre and post judgement interests, awarded against the Appellant by the trial court.

6. Whether the court of appeal rightly found that, there was a waiver of the time of completion of contract by the Appellant.

Arguments

On the first issue, the Appellant argued that the Respondents cause of action was in respect of a contract of service, and that same was outside the jurisdiction of the Federal High Court. He relied on Section 251 of the Constitution of the Federal Republic Nigeria 1999 (as amended) and cited the case of ONUORAH V KRPC LTD (2005) 6 NWLR (pt. 921) 393 at 405 Para. A-D amongst other cases.

The Respondents argued that, their cause of action relates to the administration or management and control of the Appellant. They referred to Section 251 of the Constitution and argued that, even if the action was founded on contract the trial Court still has jurisdiction to entertain same, as, the court has jurisdiction to entertain all matters involving the Federal government or any of its agencies.

On the second issue, Counsel for the appellant argued that, it was unnecessary for the Appellant to have attached documents to the affidavit in support of its Notice of Intention to Defend the suit. He submitted that, the Respondents had confessed their inability to support the judgement of the trial court; therefore, the Court of Appeal should have set aside the judgement of the trial court. He relied on the case of I.H.LTD v SONEB ENT. LTD. (2010) 4 NWLR (Pt. 1185) 561 SC. The Respondents, on their part, argued that, the reason for the refusal by the trial court to grant leave to defend the suit, was not because there were no documents attached to the Appellant’s affidavit, but because it did not place any material which disclosed any defence before the Court

Arguing the third issue, the Appellant posited that, contrary to the decision of the Court of Appeal, the inadmissibility of paragraphs 3- 14 of the Appellant’s affidavit was not the basis of the judgement of the trial Court, and that the Appellant’s affidavit was unchallenged by the Respondents. The Respondents argued that, under the Undefended List Procedure, a Plaintiff is not permitted to file a further affidavit to controvert the facts contained in the Defendants affidavit. He argued that, failure to file such further affidavit, is not an admission of the facts stated in the Appellant’s affidavit. They relied on the case of S.A.V. v TROPICAL INDUSTRY CO. LTD. (2002) FWLR (Pt. 121) 1913.

The Appellant submitted on the fourth issue that, there was no consensus ad idem on the fees payable by the Appellant to the Respondents. Counsel stated that, the parties agreed to 18 percent and not 5 percent of the recoverable. He contended that 5 percent is a unilateral variation of the contract by the Respondents, and that same was a counter-offer made by the Respondents, which was incapable of being enforced as a contract. He cited the case of NNSC V AFRICOR INCORPORATION (1994) 3 NWLR Page 332. The appellant argued further that, the trial Court ignored the deposition in its affidavit, that the contract was not satisfactorily executed. Responding to the above submission, counsel for the Respondents stated that, since the Appellant was contending that the reduction was not agreed to by the parties, recourse should be made to the old and existing contract. On the issue of non-satisfactory execution of the contract, the Respondents argued that, the Appellant did not communicate its dissatisfaction to the Respondents, and that same was an afterthought.

On the fifth issue, the Appellant argued that, Respondents did not tender any evidence of agreement, custom or trade usage in respect of the payment of interest on the outstanding fee. Further, it posited that, the court is limited to a liquidated sum in its judgement. The Respondents, on their part, contended that the trial court has authority to award interest as contained in Order 42 Rule 7 of the Federal High Court (Civil Procedure) Rules, 2004.

The position of the Appellant on the sixth issue, was that the Court of Appeal wrongly applied the doctrine of waiver; since same was not specifically pleaded by the Respondents. The Respondents countered this submission, by stating that parties need not plead waiver in their pleadings in order to enjoy the defence, and that it was too late to be raising the issue of late submission of reports. He relied on the case of AUTO IMPORT EXPORT v ADEBAYO (2005) 19 NWLR (Pt. 959) 44.

Court’s Judgement and Rationale

Deciding the first issue, the Supreme Court held that, the Respondents’ suit relates to the administration and control of the Appellant. It stated that the Appellant, an agency of the Federal Government, had by its administrative powers, instructed the Respondents to reconcile the concessions it gave to certain companies. Consequently, by virtue of Section 251(1) of the 1999 Constitution, the Federal High Court had jurisdiction. More so, the cases referred to by the appellant, related to simple contracts which are distinguishable from the present case.

On the second issue, the Court opined that, under the Undefended List Procedure, all that the Defendant is required to do in his affidavit, is to provide adequate grounds for asking to be heard in defence. It is not the law, that a party who filed a Notice of Intention to Defend must, as a condition precedent, attach a document in proof of the depositions in the affidavit.

The Supreme Court found that, the trial courts reason for refusing to grant the Appellant leave to defend the suit, was not because exhibits were not attached to the Appellant’s affidavit, but because the Appellant did not place any material before the Court to show that there was a substantial matter to be tried.

On the third issue, the Apex Court held that, the reason for the trial court’s refusal to grant leave to defendant, was not because of the allegations that some paragraphs of the Appellant’s affidavit amounted to hearsay. Thus, the issue of hearsay, was of no moment.

Regarding the fourth issue, their Lordships found that the parties agreed that the respondents would be paid 18% of the recoveries, and that the Respondents reduced it to 5.percent. The Court held that, an agreement to vary an existing contract, must possess the basic elements of a valid contract. However, since there was no breach on the part of the Respondents, their claim for a lesser percentage as their entitlement, did not vitiate the entire agreement.

On the fifth issue, the Court held that, before a pre-judgement interest can justifiably be awarded, a plaintiff often pleads it, and where it is pleaded, he must prove the basis for his entitlement, by showing that it is supported by statue, contract or based on mercantile custom or principle of equity. However, pre-judgment interest on a monetary or liquidated sum, can be awarded to a successful party, even where such party did not plead or adduce evidence in proof of such claim. Such interest, as in the instant case, naturally accrues from the failure to pay the amount Involved over a long period of time, thereby depriving a party from the use of the money. Further, the Federal High Court, (Civil Procedure) Rules, empowers the trial court to award judgement interest.

On the Sixth issue, the Court held that, although the Respondents submitted their final report to the Appellant late, the Appellant did not complain. Also, the bill of charges was sent to the Appellant, and it did not reject it or raise the issue of late submission of the report, until the suit was instituted at the trial court. Their lordships concluded that, failure to complain timeously, amounted to a waiver of the delay.

Based on the foregoing, the Supreme Court affirmed judgement of the Court of Appeal.

Appeal Dismissed.

Representation:

Professor Taiwo Osipitan, SAN with A.M. Kayode, C.I.A. Ofoegbunam and Wole Aroge for the Appellant

Peter Olomola for the Respondent

Reported by Optimum Publishers Limited

(Publishers of Nigerian Monthly Law Report (NWLR)