Where a Claim for Solicitor’s Fees doesn’t Form Part of Cause of Action, Same can’t be Granted

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CHRIS BAYWOOD IBE & ANOR v. BONUM NIGERIA LIMITED 

LEAD JUDGMENT DELIVERED BY UGOCHUKWU ANTHONY OGAKWU, J.C.A.

FACTS OF THE CASE 
The provenance of the matter is in the ‘TRU Project’ contract between the appellants and Chevron Nigeria Limited. The respondent entered into a contract with the appellants to provide project management consultancy services on the said TRU Project with Chevron Nigeria Limited. The respondent duly rendered the consultancy services but there arose a disagreement on the agreed percentage, which was to be paid to the respondent for its services. The respondent, after several demands, wrote a demand letter to the appellant, which, on the face of it was stated to have been copied to about 17 persons.

Pleadings were filed and parties were heard before the court delivered its judgment on October 5, 2016. Both parties recorded relative successes on their respective claim and counterclaim. However, they were both dissatisfied with aspects of the judgment and appealed against the same.

After the judgment of the lower court, the respondent commenced garnishee proceedings to realize the aspect of the judgment favourable to it. A garnishee order nisi was obtained which was later set aside upon the application of the appellants. Upon the said setting aside, the lower court further made a conditional order for stay of execution. This was in the ruling of the lower court delivered on December 13, 2016. Once again, the parties were both dissatisfied with the said ruling and appealed against the same. So the appeal and cross appeal of the parties incorporate their complaints against the judgment of October 5, 2016 and the ruling of December 13, 2016.

ISSUES FOR DETERMINATION
The appeal is determined on the following issues viz: “i. Whether, having held in its judgment of October 5, 2016 that the payments received from the appellants by the respondent be set off the amounts held by the court to be due to the respondent and having not ascertained the outstanding judgment debt, the lower court was wrong in its ruling of December 13, 2016 that the judgment debt of N8, 994,985.48 and $92,812.95 be paid into a designated interest-yielding account in the name of the Chief Registrar of the High Court of Lagos State.

ii. Whether there is cause of action against the 2nd appellant in the counter-claim of the respondent as to warrant the grant of judgment against the 2nd appellant.

iii. Whether the lower court was right when it refused the exchange rate of N132 to 1 dollar for the payment of the contractual fee of the respondent.

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iv. Whether the lower court was right in refusing to award legal cost paid by the appellants in the prosecution of their case.

v. Whether the lower court was right when it ordered the appellants to pay interest on the judgment sum at the rate of 10 percent per annum from July 2010 until judgment.

ARGUMENTS
On issue one, the pith of the appellants’ argument is that the decision of the lower court is that the amount adjudged as due to the respondent be set off from payments already made by the appellants to the respondent and that it is after this setting off that the amount (if any) that the respondent will be entitled to can be ascertained. It was opined that the lower court was therefore in error when it made the conditional order for stay of execution for the amount adjudged as due, without the setting off having been done, to be paid into an interest yielding account. It was further contended that the order for the judgment debt, as adjudged, to be paid into an interest yielding account was tantamount to amending, reviewing or varying the judgment.

The respondents’ claim on the other hand is that the lower court was right in its conditional order for stay of execution. It was submitted that the payments due to the respondent under its contract with the appellants is denominated in Naira and Dollars and that the Naira component cannot be set off from the Dollar component. It was argued that the grant of conditional stay of execution did not amount to a review, variation or amendment of the judgment. Further, that it was well within the power of the court to protect its judgment by granting a conditional order for stay of execution, which is in the nature of a consequential order.

On issue two, it was the appellants’ submission that there is no privity of contract between the 2nd appellant and the respondent in respect of the agreement sought to be enforced; consequently, that there was no cause of action against the 2nd appellant. Appellants canvassed that even though the absence of cause of action was not raised at the lower court, it is an issue of jurisdiction, which could be raised for the first time on appeal.

The respondents on their own part submitted that in determining whether there is a cause of action, the court will consider the writ of summons and statement of claim and that the respondents’ pleadings disclosed a cause of action against the 2nd appellant.

It was further asserted that there was testimonial and documentary evidence showing that the 2nd appellant was a party to the contract between the respondent and the appellants and that the lower court having evaluated the evidence was right in its decision and that an appellate court would not interfere where the trial court has properly discharged its primary duty of evaluating the evidence and ascribing probative value thereto

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In regard of issue three, it was the appellants’ submission that the lower court was in error when it refused to adopt the exchange rate of N132 to $1 used for the payment of the contractual fee which the respondent sought to enforce in its counterclaim. It was opined that based on the said exchange rate of N132 to $1, the appellants had completely paid the respondent its entitlement for services rendered under the consultancy.

The respondent, in relation to this issue, argues that the appellant’s action is not based on the contract between the appellants and the Respondent, and that their averments on conversion rate therefore went to no issue. The respondent it was stated, pleaded that the payment due to it was based on a percentage of the amount approved by Chevron per change/variation.

On issue four, it was appellants’ contention in this regard that their claim for libel having succeeded, they were entitled to the claim for the legal cost expended for the prosecution of the claim. That even though the documents established a lesser sum than what was claimed, the lower court should have entered judgment for the lesser amount proved.

The respondent argues that special damages must be specifically and strictly proved and that the fact that evidence is unchallenged does not invariably mean that the court must rely on it as proof of special damages. According to the respondents, the appellants had a duty to itemize and particularize the items constituting special damages and not to generally refer to it as legal costs without specifying what it comprises. It was further contended that having awarded the appellants general damages for libel, any other award of damages will be tantamount to double compensation.

In respect of issue five, the appellants argued that the lower court was wrong to have awarded pre-judgment interest on the judgment debt in favour of the respondent as this would amount to double compensation.

On the respondents’ part, it was posited that the pre-judgment interest as ordered by the lower court would only be arrived at after the set off ordered by the Court is applied since the judgment sum cannot exist independently of the right to set off as ordered; thus, same will not constitute double compensation.

RESOLUTION OF ISSUES
On issue one, the court clarified that while the power of the trial court to make a conditional order for stay of execution cannot be confuted, the conditional order made was not in sync with the terms of the judgment. This is because what the lower court described as the principal judgment debt is not the amount due to the respondent by the terms of the judgment as the principal judgment debt can only be arrived at after the setting off as ordered by the court has been done.

In conspectus, the court’s position on issue two is that in determining whether a reasonable cause of action is disclosed, the court needs only to look at and examine the averments in the statement of claim. That is, it is sufficient for a court to hold that a cause of action is disclosed and is reasonable once the processes filed disclose some cause of action or some questions, fit to be decided by a judge, notwithstanding that the case is weak or not likely to succeed.

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Accordingly, since the respondent had disclosed a cause of action against the 2nd appellant based on the averments in its pleadings, the Court of Appeal herein posited that the trial court was imbued with the jurisdiction to entertain the counterclaim against the 2nd appellant.

On issue three, the court stated that it is a hornbook principle of law that a person who is not a party to a contract cannot be bound by it. The court observed that it is agreed on all sides that the respondent is not a party to the contract between the appellants and Chevron Nigeria Ltd, so, it was the court’s finding that the provisions in the said contract as it relates to the conversion rate of N132 to $1 will not bind the respondent except where the contract was incorporated into the respondents contract with the appellants.

Here, issue four, the court posited that the appellants’ cause of action was for libel and the claim for legal costs was not part of the said cause of action. Therefore, it cannot be granted.

Further, that given the diacritical circumstances of the manner in which the decision of the trial court turned, in which neither party could be said to have wholly carried the day, acceding to the appellants submission to award legal costs of N22.8 million under Order 49 Rule 1 (1)(a) of the High Court of Lagos State (Civil Procedure) Rules, 2012 would be granting the appellants an unwarranted bonus, and unjustly mulcting the equally successful respondent in costs.

The summary of the court’s finding on issue five is that appellants have not contended that an order for pre-judgment interest ought not to have been made in the circumstances of this case but rather, that the pre-judgment interest can only be paid on any amount outstanding after the set off. The Court of appeal therefore held that the lower Court was therefore right in the order for pre-judgment interest.

HELD
Having considered the issues for determination, the appeal was said to be devoid of merit and it was thereby dismissed. There was no order as to costs.

Full Citation: CHRIS BAYWOOD IBE & ANOR v. BONUM NIGERIA LIMITED (2019) LPELR-46452 (CA)

Compiled by: LawPavilion

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