⦿ CASE SUMMARY OF:
Olumuyiwa Sotuminu v. Ocean Steamship (Nigeria) Ltd & Ors. (1992) – Supreme Court
by PipAr Chima
⦿ NOTABLE DICTA
* GRANT OF INTERLOCUTORY INJUNCTION DISCRETIONARY
It is quite clear from these statutory provisions that the grant of an application for interlocutory injunction is purely discretionary though the Court is enjoined to consider in the exercise of its discretion whether the grant of the discretion will be just or convenient. In other words for the exercise of the discretion to be judicial, it is sine qua non that the grant of the application should be either just or convenient. – Uwais JSC. Sotuminu v. Ocean Steamship (1992)
* GRANT OF INTERLOCUTORY INJUNCTION IS STATUTORY
The principle upon which the Court acts in granting interlocutory injunction is therefore statutory. – Uwais JSC. Sotuminu v. Ocean Steamship (1992)
* MAREVA INJUNCTIONS ARE NOVEL
In other words, the appellant is basing his case, the subject of this appeal, on a Mareva injunction. Such injunctions are novel and came on the firmament of injunctions only in 1975, in the case relied upon. The granting of such an injunction was a fundamental departure from the erstwhile general rule that a plaintiff would take his queue with other creditors of the defendant and if he obtained a judgment against the defendant he would simply, subject to the rules on priorities of debts, execute it on the defendant’s available assets or on the person of the defendant. – Nnaemeka-Agu JSC. Sotuminu v. Ocean Steamship (1992)
* CONDITIONS FOR THE GRANT OF MAREVA INJUNCTION
By these rules, before a Mareva injunction could be granted the applicant must show:
(i) that he has a cause of action against the defendant which is justiciable in England: See- Siskina (Owners of Cargo lately laden on board) v. Distas Compania S.A. (1979) A.C. 210; (ii) that there is a real and imminent risk of the defendant removing his assets from jurisdiction and thereby rendering nugatory any judgment which the plaintiff may obtain: See -Barclay-Johnson v. Ynill (1980) 1 WLR 1259. at p.1264; also – Rahman (Prince Abdul) him Turki al Sudiary v. Abu-Taha (1980) 1 WLR 1268, at p.1272; (iii) that the applicant has made a full disclosure of all material facts relevant to the application: see – Negocios Del Mar SA. v. Doric Shipping Corp. SA. (The Assios) (1979) 1 LI. Rep. 331; (iv) that he has given full particulars of the assets within the jurisdiction.; (v) that the balance of convenience is on the side of the applicant; and (vi) that he is prepared to give an undertaking as to damages. – Nnaemeka-Agu JSC. Sotuminu v. Ocean Steamship (1992)
* DAMAGES SINE QUA NON FOR GRANT OF MAREVA INJUNCTION
Also the appellant did not offer or give any undertaking as to damages. In view of the high risk and hardship that are usually involved in an order of Mareva injunction, such an undertaking is the price and a sine qua non to the grant of it. – Nnaemeka-Agu JSC. Sotuminu v. Ocean Steamship (1992)
* MAREVA INJUNCTION REQUIRES BALANCE OF CONVENIENCE IN APPLICANT’S FAVOUR
But, above all, the greatest weakness to the appellant’s case was the balance of convenience. Now, if the appellant had succeeded in showing that he had a cause of action against the respondents he would have been obliged to show, inter alia, like in an interlocutory injunction, that the balance of convenience was in his favour before he would be entitled to the grant of a Mareva injunction. – Nnaemeka-Agu JSC. Sotuminu v. Ocean Steamship (1992)
Above all, only one of the seven respondents is either not a Nigerian citizen or a Nigerian company so that any evidence of an attempt to siphon the funds out of the country must have to be strong and cogent; and that the 3rd respondent is only a director and shareholder of the 1st respondent company, among some Nigerians. Taking all these facts into consideration on the side of the respondents and balancing them with the mere quia timet allegation of the appellant it is clear that the balance of convenience lies on the side of the respondents. The Court of Appeal was, therefore, right to have so held and dismissed the application. – Nnaemeka-Agu JSC. Sotuminu v. Ocean Steamship (1992)
* ESTABLISH A STRONG CASE FOR QUIA TIMET INJUNCTION TO BE GRANTED
In this case, on applicant’s side of the balance is his mere expression of fear that the 3rd respondent, a German, may take the funds of the first respondent out of the country, so that if he wins his appeal, he may not be able to satisfy the judgment. He has not deposed to any steps being taken by the 3rd respondent to take the funds out of the country. The danger is merely feared. It is a quia timet ground for the injunction. Of course this ground has in theory long been established as a valid one for injunctions (for which see Attorney-General v. Long Eaton U.D.C. (1915) 1 Ch.127, p.124). But the condition precedent to a grant of it on quia timet grounds is that the applicant must establish a strong case. For as Lord Dunedin observed, rightly in my view, in Attorney-General for the Dominion of Canada v. Ritchie Contracting and Supply Co. Ltd. (1919) A.C. 999, at p.1005- “But no one can obtain a quia timet order by merely saying ‘Timeo’ he must aver and prove that what is going on is calculated to infringe his rights.” – Nnaemeka-Agu JSC. Sotuminu v. Ocean Steamship (1992)
* MAREVA INJUNCTION ORDERED BEFORE SUITS COMMENCES
The first is that the Mareva injunction is ordered before the action between the parties had been heard and determined. In that case in fact the first order of injunction was granted before the writ commencing the action was issued. This is because of the urgency usually attached to the application for and issuance of a Mareva injunction. In the instant case on appeal however, the Court has gone into the case between the parties on its merits and dismissed the plaintiff’s case. What is involved thereafter is the normal application for an interlocutory injunction and not a Mareva injunction. Secondly, reasons must be shown for a belief that the defendant has assets within the jurisdiction which the plaintiff/applicant is seeking to prevent from being removed outside the jurisdiction. In the present case, the applicant’s affidavit evidence suggests the contrary. – Omo JSC. Sotuminu v. Ocean Steamship (1992)
Ocean Steamship (Nigeria) Ltd & Ors.
⦿ LEAD JUDGEMENT DELIVERED BY:
M. L. Uwais, JSC
* FOR THE APPELLANT
– Mr. Oyetibo.
* FOR THE RESPONDENT
– Mr. Ogundipe.
⦿ CASE HISTORY
The appellant’s case in the High Court before Agoro J, (as he then was) was that on 18th February, 1983, the 1st respondent entered into a parol agreement with the appellant whereby the appellant would guarantee overdraft facilities to be made available to the 1st respondent by Owena Bank Limited (6th respondent) in consideration of which the appellant would be paid by then 1st respondent 5% of the latter’s gross earnings. In furtherance of the parol agreement, the appellant, who is a legal practitioner, pledged his certificate of occupancy with the 6th respondent as security for the overdraft facilities to be granted to the 1st respondent. The total earnings made by the 1st respondent from sailings was ₦21,052,072,24. By another agreement reached at the meeting of the Board of Directors of the 1st respondent, which was held on 31st March, 1987, the appellant, as Director of the 1st respondent, was to be paid salary and house rent for the period 1983 to 1986. That the 4th and 5th respondents were appointed as special legal adviser and Secretary respectively at a meeting of the Board of Directors held on 1st April, 1987, while no notice of the meeting was served on the appellant. That since the Boards meeting of 31st March, 1987, the Directors of the 1st respondent, excluding the appellant, had colluded to withdraw monies from the accounts of the 1st respondent with the 6th and 7th respondents for their (i.e. Directors) personal use.
The case for the 1st, 2nd and 3rd respondents was that no meeting of the 1st respondent’s Board of Directors was held on 31st March, 1987 and that neither the 2nd nor the 3rd respondent or any director of the 1st respondent attended such a meeting. But that there was a meeting of a Board of Directors held on 1st April, 1987 which was attended by the appellant. The 4th and 5th respondents were invited to the meeting to advise the Board on issues of law that might arise. There was an Extraordinary General Meeting of the 1st respondent on 23rd April, 1987. Notice of the meeting was previously delivered to the office of the appellant on 9th April, 1987. It was decided at the extraordinary General Meeting to remove the appellant as a director of the 1st respondent and as a signatory to any of the bank accounts of the 1st respondent. The appointment of the 4th respondent as Company Secretary to the 1st respondent was approved and confirmed.
The case for the 4th and 5th respondents was that they were invited to the meeting of the Board of Directors of the 1st respondent held on 31st March, 1987 which they attended in their professional capacities. That there was an Extraordinary General Meeting of the 1st respondent on the 23rd April, 1987 which was attended by all its shareholders and that the appointment of the 4th respondent as Company Secretary was approved and confirmed by the Extraordinary General Meeting.
The Trial Court gave judgement in defendant/respondent’s favour.
Dissatisfied with the judgment, the appellant appealed against it to the Court of Appeal and then applied to the learned trial Judge for a stay of the execution of the judgment pending the determination of the appeal and for an injunction to restrain the 6th and 7th respondents from releasing any funds from the accounts of the 1st respondent.
⦿ ISSUE(S) & RESOLUTION
1. Whether the Court of Appeal was right in law in refusing to grant the Appellant’s application for injunction pending appeal when there was uncontradicted affidavit evidence before the Court that the 1st respondent had no other assets or property in Nigeria except the funds in its Bank’s accounts to satisfy the claims of the appellant if the appellant’s appeal succeeds.
RULING: IN RESPONDENT’S FAVOUR.
i. In his lead judgment Kalgo, JCA with whom Ademola, JCA and Akpata, JCA (as he then was) concurred, gave the following reasons for refusing to grant the application by the appellant:-
1. That the Court of Appeal had a discretion to grant or refuse the application.
2. That the appellant did not supply enough material for the application to be granted.
3. That all the claims of the appellant in the High Court had been dismissed.
4. That the monies, for which the 6th and 7th respondents were to be restrained from releasing, were not the subject of the action in the High Court.
5. That there was nothing in the grounds of appeal filed by the appellant in the appeal pending before the Court of Appeal which raised any substantial issues of law to be resolved by the Court of Appeal.
6. That the appellant did not show that any of his legal rights would be infringed if the injunction sought was refused.
7. That the appellant did not show that the balance of convenience was in his favour in any way.
ii. In the light of all the authorities referred to in the foregoing I am satisfied that the Court of Appeal acted judicially in arriving at the conclusion that the balance of convenience in the application brought by the appellant did not favour him. The Court of Appeal was therefore right in refusing to grant the application.
iii. I do not find any substance in the contention because the 1st respondent is a Nigerian Company with Nigerian shareholders. If the possibility indeed existed (which I doubt) that the 2nd respondent would withdraw the 1st respondents’ monies and abscond -which is a criminal act- the 1st respondent would equally be at a risk of losing the monies. So that the likelihood which the appellant claimed would prejudice his interest would also affect that of the 1st respondent. That is not the basis on which the three cases learned counsel cited above were decided. In any case, even if the appellant’s conjecture were true it could only help the lower Court in the determination as to which party in the application the balance of convenience should be tilted. But since both the appellant and the 1st respondent would in such event be at equal disadvantage, the conjecture was neither here nor there and could not have supported the case of the appellant in the application.
⦿ ENDING NOTE BY LEAD JUSTICE – Per
⦿ REFERENCED (STATUTE)
Section 18 subsection (1) of the High Court Law, Cap. 52 provides inter alia that the High Court of Lagos State may grant an injunction in all cases in which it appears to the High Court to be just or convenient to do so.
Section 18 subsection (3) thereof further provides that the High Court may grant an application for injunction if the High Court thinks fit.
⦿ REFERENCED (CASE)
* BALANCING INCONVENIENCES BEFORE INJUNCTION IS GRANTED
Hilton v. Earl of Granville (1841) Cr. Ph. 238 where an interim injunction was sought by owners of houses to restrain the working of mines because it was feared that the houses would be totally destroyed or irreparably damaged; Lord Cottenham, L.C. said:- “I have to determine, whether balancing, the question between these two parties, and the extent of the inconvenience likely to be incurred on the one side and on the other, it is the most proper exercise of the jurisdiction of the Court to grant the jurisdiction or to withhold it.”
* CONSIDERATIONS FOR INTERLOCUTORY INJUNCTION
American Cyanamid v. Erhicon Ltd. (1975) A.C. 396 made the following remarks on pp. 408H-409C thereof: “Save in the simplest cases, the decision to grant or to refuse an interlocutory injunction will cause to whichever party is unsuccessful on the application some disadvantages which his ultimate success at the trial may show he ought to have been spared and the disadvantages may be such that the recovery of damages to which he would then be entitled either in the action or under the plaintiff’s undertaking would not be sufficient to compensate him fully for all of them. The extent to which the disadvantages to each party would be incapable of being compensated in damages in the event If his succeeding at the trial is always a significant factor in assessing where the balance of convenience lies .. and if the extent of the uncompensatable disadvantage to each party would not differ widely, it may not be improper to take into account in tipping the balance the relative strength of each party’s case as revealed by the affidavit evidence adduced on the hearing of the application. This, however, should be done only where it is apparent upon the facts disclosed by evidence as to which there is no credible dispute that the strength of one party’s case is disproportionate to that of the other party. The Court is not justified to embark upon anything resembling a trial of the action upon conflicting affidavits in order to evaluate the strength of either party’s case. I would reiterate that, in addition to those to which I have referred, there may be many other special factors to be taken into consideration in the particular circumstances of individual cases.”
* DISCRETION FOR INJUNCTION NOT TO BE MADE TECHNICAL BY RULES
Obeya Memorial Hospital v. A.G. of the Federation (1987) 3 NWLR (Pt. 60) 325 at p.338 E-G; Obaseki, JSC held as follows:- “In cases where the legal rights of the parties depend upon the facts that are in dispute between them, as in the instant appeal, the evidence available to the Court at the hearing of the application for an interlocutory injunction is incomplete. It is given on affidavit and has not been tested by oral cross-examination. The supporting affidavit of John Ede and Obande has not been tested in oral cross-examination. Neither has the counter-affidavit of Bernard Iyorbyam Hom, the Attorney General of Benue State been tested in oral cross-examination. The purpose sought to be achieved by giving to the Court Discretion to grant such injunctions would he stultified if the discretion were dogged by a technical rule forbidding its exercise if upon that incomplete untested evidence the Court evaluated the chances of the plaintiff’s ultimate success.”
⦿ REFERENCED (OTHERS)
⦿ SIMILAR JUDGEMENTS