➥ CASE SUMMARY OF:
Aboseldehyde Laboratories Plc V. Union Merchant Bank Limited & Otunba Olutola Senbore (SC.276/2003, 8 March 2013)
by Branham Chima (LL.B.)
➥ ISSUES RAISED
Interlocutory injunction;
➥ CASE FACT/HISTORY
By a Deed of Mortgage Debenture between appellant and 1st respondent at pages 40 66 of the record entered into on 21 May 1999,appellant mortgaged/charged all its movable property contained in the schedules thereto to the 1st respondent as security for appellant’s indebtedness to the said 1st respondent. Upon the failure/neglect of appellant to settle its said indebtedness, 1st respondent appointed 2nd respondent as a receiver/manager over the appellant vide the deed of appointment of receiver on 11 June 1999 see pages 67 69 of the record.
Appellant instituted an action in suit No. FHC/L/CS/803/99 on 9 July 1999, which action was assigned to Hon. Justice Mustapha, against the present respondents claiming the following reliefs: (a) A declaration that the appointment of the second defendant by the first defendant as a receiver in respect of the properties situate, lying and being at Plot C20, Alakoso Avenue, Amuwo Odofin Scheme Apapa and No. 7 Akin Osiyemi Street, Off Allen Avenue, Ikeja respectively is illegal, unconstitutional, null and void and of no effect whatsoever. (b) A declaration that the forcible entry into the plaintiff’s factory and office situate at Plot C20, Alakoso Avenue, Amuwo Odofin Scheme, Apapa and No. 7 Akin Osiyemi Street, Off Allen Avenue, Ikeja respectively by defendant and their agents with arms, cutlasses, machetes and other dangerous weapons is unlawful, illegal, unconstitutional, null and void and of no effect whatsoever. (c) A declaration that the defendants have no right to take possession of the plaintiff’s factory and office save in accordance with due process of law. (d) A sum of N200,000,000.00 (two hundred million naira) only being special and general damages jointly and severally for unlawful and forcible entry and closure of the plaintiff’s factory and business premises by the defendants, their agents, servants and/or officers. (e) An injunction restraining the defendants, their agents, servants, privies or officers or any person or body of persons howsoever from continuing the acts of trespass and from advertising in any national newspaper, the appointment of the second defendant as a receiver to dispose the plaintiff’s property.
Appellant followed the above suit with an application for interim injunction restraining the 2nd respondent from taking over the appellant’s company pending the hearing of the application for interlocutory injunction which sought the same reliefs, for which interim order was granted by Mustapha J. (as he then was). Upon service of the interim order on them on 13 July 1999, the respondents withdrew from the premises of the appellant and filed an application on 14 July 1999 in the court praying for the discharge of the said interim order of injunction.
On 14 February 2001, the trial court delivered a ruling on the applications (a) for interlocutory injunction and (b) discharge of the interim order of injunction in which it discharged the interim injunction and dismissed the application for an order of interlocutory injunction pending the determination of the suit.
The ruling of Mustapha J. (as he then was) in FHC/L/CS/803/99 delivered on 14 February 2001 resulted in an application by appellant before that court praying for an order of stay of execution and/or injunction filed on 22 February 2001 which the trial court dismissed vide a ruling delivered on 10 September 2001. Being dissatisfied with the above ruling, appellant filed a similar application at the Court of Appeal dated 14 September 2001 for stay of execution and/or injunction which application was also dismissed on 18 December 2002 resulting in the instant appeal before this court.
➥ ISSUE(S) & RESOLUTION(S)
[APPEAL DISMISSED]
↪️ I. can it be said that the lower court did not exercise its discretion in refusing the application for interlocutory injunction judicially and judiciously?
RESOLUTION: IN APPELLANT’S FAVOUR.
[THE LOWER COURT REACHED A GOOD DECISION
‘In considering the application, the lower court made the following findings at pages 191 192 of the record: “From the affidavit before the court, the following issues are clear and uncontroverted. 1. That the appellant/applicant is indebted to the 1st respondent as at 14 February 2001, amount of indebtedness to 1st respondent stood at N265,577, 974.48 (two hundred and sixtyfive million, five hundred and seventy-seven thousand, nine hundred and seventyfour naira, forty-eight kobo). 2. That there exist a Deed of Mortgage Debenture exhibit UBN between the appellant/applicant and the respondents pursuant to which the 1st respondent appointed the 2nd respondent as receiver and/or manager of the appellant/applicant’s company. 3. That the two rulings of the lower court dated 16 May 2000 and 14 February 2001 stated that the appointment of the 2nd respondent by the 1st respondent as receiver and/or manager to be valid. 4. That the appellant/applicant is a chronic debtor indebted to several creditors to several millions of naira.” I must say that the above findings are backed by the evidence on record and that apart from (3) supra, appellant has not challenged the said findings of facts by the lower court.’
‘The lower court then went on to make the following evaluation and concluded, inter alia as follows: “I have given due consideration to the above special or exceptional circumstances put forward by the appellant/applicant. It is my view that in the face (sic) before the court, the special or exceptional circumstances put forward by the appellant/applicant cannot avail it. It is very clear that under exhibit UBN 1 the Deed of Mortgage Debenture, the 1st respondent is entitled to appoint a receiver and/or manager to the undertaking of the appellant/applicant in default of payment of the loan forcibly granted to appellant/applicant and in the exercise of its powers under exhibit UBN 1 it has appointed the 2nd respondent. The appellant/applicant has not disputed the loan and has not shown that it has paid the loan. Clause 13(a) of exhibit UBN 1 empowers the 3rd respondent when so appointed in the exercise of his duties as receiver and/or manager to sell off or dispose off the properties of the appellant/applicant… Another issue that deserved serious consideration is the fact the appellant/applicant is a chronic debtor owing several creditors approval of millions of naira, these creditors have started executing court judgments on the properties of the appellant/applicant, the respondents as secured creditors shall not fold their arms while the properties which they have secured their interest are being carted away by other creditors, the respondents owe themselves a duty to move forward and protect their secured interest. Another issue of paramount importance is the fact apparent on the affidavit of the appellant on the affidavit of the appellant/applicant that is that they did not exhibit good faith in their dealings with the respondents. In appellant/applicant deposed in paragraph 14(ii) of its affidavit in support of this application. The paragraph reads: 14(ii) That the continued closure of the plaintiff’s factory and business has caused irreparable damage to the plaintiff and that it is losing money running into millions of naira daily. By the facts and the affidavit before the court, the respondents vacated the factory and the business premises after their initial takeover … on 13 July 1999. Since on 13 July 1999 to 14 February 2001 … the appellant/applicant has been in possession of its factory and business premises and by their own admission has been making millions of naira daily. They have not shown to this court that out of the millions of naira they are making daily they have paid the respondents a kobo in satisfaction of their admitted debts to the respondents. It is therefore clearly an act of bad faith if inspite of the millions of naira they make daily they failed and neglected to pay out a single kobo to the respondents till when they admitted they are indebted… I therefore hold that in the circumstances of this case the appellant/applicant is not entitled to have the discretion of this court exercised in its favour…..”’
THE BALANCE OF CONVENIENCE DOES NOT FAVOUR THE APPELLANT
‘It is settled law that the aim of an order of injunction is to protect an established right of the applicant. This is a fundamental requirement. The question is whether the appellant has established any right to the injunction sought. I had earlier reproduced the findings of the lower court on the facts before the court which findings have not been challenged in this appeal and therefore, deemed to have been accepted as true by the appellant. The relevant facts are that: (a) Appellant and 1st respondent executed a Deed of Mortgage Debenture, exhibit UBN 1 for a loan transaction which deed gave 1st respondent the power to appoint a receiver and/or manager over the assets of appellant in case of default in the payment of the secured loan. (b) That appellant defaulted in the repayment schedule as a result of which 1st respondent appointed the 2nd respondent as its receiver/manager to take over the management and sale of the secured properties and business premises of the appellant. (c) The appellant is a chronic debtor whose various creditors instituted actions in various courts and obtained judgments against appellant which judgments were executed on some of the properties of appellant secured by exhibit UBN 1, thereby depleting the assets of appellant available to satisfying its debt to 1st respondent. (d) Despite the admission by appellant that while in occupation of the premises it made millions of naira from its operations, there is no scintilla of evidence that it paid any kobo in part satisfaction of its indebtedness to 1st respondent. (e) With exhibit UBN 1, the legal rights in the properties charged therein ceased to be in appellant but with 1st respondent thereby leaving appellant with only the equitable right of redemption which can only mature upon full discharge or payment of the secured debt to the 1st respondent. (f) With appellant’s failure or neglect to repay the secured loan, its equity of redemption of the mortgaged properties remains not qualified of protection by an order of injunction as it cannot compete with the 1st respondent’s legal right over the properties by virtue of the provisions of exhibit UBN 1. (g) That appellant concealed vital facts relating to the application from the court, such as the existence of exhibit UBN1 etc, etc. Can it be said that the balance of convenience is on the part of appellant? I do not think so either. Here is a situation in which some of the properties of appellant which had been mortgaged to 1st respondent to secure a loan which appellant has failed and/or neglected to repay are being sold in execution of judgments obtained against appellant for various debts, meanwhile, appellant is saying that 1strespondent should be restrained from taking steps to protect its secured interest in the properties by taking over the management and/or sale of some of the available assets to realise its loan to appellant. At the rate at which the properties of appellant were being sold in execution of judgments, 1st respondent would at the end of the day be without the means of realising the loan. I hold the considered view that, having regards to the facts and circumstances of this case, justice and equity is more on the side of the respondents than appellant and in the circumstance, the lower court exercised its discretion to refuse the application for interlocutory injunction judicially and judiciously.’]
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.
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✓ DECISION:
‘ In conclusion, I find no merit in the issue which is accordingly resolved against appellant. The two issues formulated by the learned counsel for the appellant having been resolved in favour of the respondents, I hold that the appeal is grossly without merit and is consequently dismissed with costs which assess and fix at N500,000.00 (five hundred thousand naira) against appellant and in favour of the respondents. Appeal dismissed.’
➥ FURTHER DICTA:
⦿ A DECLARATORY ORDER CANNOT BE STAYED BY AN INTERIM ORDER
It is settled law that a declaratory judgment or order of a court cannot be stayed by an interim order: Tukur v. Government of Gongola State (1989) 4 NWLR (Pt. 117) 517; Akibu v. Oduntan (1991) 2 NWLR (Pt. 171) 1; except the declaratory order is coupled with a mandatory order – such as an order of injunction. From the facts of this case, it is clear that the judgment or ruling/decision of the lower courts sought to be stayed are interlocutory decisions, which dismissed appellant’s application for an order of stay of execution or interlocutory injunction which made the decisions declaratory in nature as there was no mandatory order which went along with the said orders dismissing the applications. The orders also did not grant any monetary payment(s) to the respondent. In the circumstance, it is clear and I hereby hold that the principles guiding the courts in applications for stay of execution of the judgment of the courts are not applicable to the facts of this case and are consequently discountenanced by me in this judgment. — Onnoghen JSC.
⦿ FOR A COURT TO DECIDE WHETHER OR NOT IT SHOULD GRANT AN INJUNCTION, IT HAS TO CONSIDER THE COMPETING LEGAL RIGHTS
I agree with the submission of learned counsel for respondents that the lower court in making the comments complained of did not determine the substantive suit at the interlocutory stage. For a court to declare whether or not to grant an injunction pending appeal, it has, as of legal necessity to go into a consideration of the competing legal rights of the parties to the protection of the injunctive relief. It is a duty placed on an applicant seeking injunction pending appeal to establish by evidence in affidavit(s) the legal right he seeks to protect by the order which of necessity makes it mandatory for the court to go into the facts to determine whether such entitlement has been established. — Onnoghen JSC.
⦿ EXTENDING EQUITY TOO FAR
It is trite that equity is the body of principles constituting what is fair and right. And as it is said, “he who wants equity, must do equity,” hence the legal maxim “nothing is more unjust than to extend equity too far”. In other words, the appellant has shown clearly that it does not deserve any protection from the court by way of an order of injunction of a court of equity. — Ariwoola, JSC.
➥ LEAD JUDGEMENT DELIVERED BY:
Onnoghen JSC
➥ APPEARANCES
⦿ FOR THE APPELLANT(S)
Chief Wale Taiwo.
⦿ FOR THE RESPONDENT(S)
Dr. Wale Olawoyin.
➥ MISCELLANEOUS POINTS
➥ REFERENCED (LEGISLATION)
➥ REFERENCED (CASE)
➥ REFERENCED (OTHERS)
