Position of the Law Where a Person Personally Guarantees the Liability of a Third Party By Entering Into a Contract of Guarantee or Suretyship

CASE TITLE:  OKPALAOKA v. GTBANK PLC & ANOR (2025) LPELR-81679 (CA)

JUDGMENT DATE: 10TH JUNE, 2025

PRACTICE AREA: CONTRACT

LEAD JUDGMENT: UWABUNKEONYE ONWOSI, J.C.A.

SUMMARY OF JUDGMENT:

INTRODUCTION:

This appeal borders on the liability of a guarantor.

FACTS:

This is an interlocutory appeal against the ruling of the High Court of Justice, Lagos State, sitting in Lagos and delivered by HON. JUSTICE O. A. ADEFOPE-OKOJIE on the 22nd day of February, 2011.

The 1st Respondent (Claimant at the trial Court) instituted the suit via a Writ of Summons filed on the 19th of May, 2010, against the 2nd Respondent (1st Defendant at the Court below) and Appellant (2nd Defendant at the Court below) for a debt owed by the 2nd Respondent and which the Appellant executed as a personal guarantee. The 1st Respondent claimed against the 2nd Respondent and Appellant at the trial Court as follows:

1. Payment of the sum of N146,882,127.57 (One Hundred and Forty-Six Million, Eight Hundred and Eighty-Two Thousand, One Hundred and Twenty-Seven Naira, Fifty-Seven Kobo only) being the outstanding accrued debt owed to the Claimant as of 31st March, 2010, in respect of the Overdraft/Margin Trading Facility granted to the 1st Defendant and guaranteed by the 2nd Defendant.
2. Interest on the said sum of N146,882,127.57 at the agreed contractual rate of 18% per annum from the 1st of April, 2010, until judgment and thereafter at the post judgment rate of 21% per annum until the debt is fully liquidated.
3. Cost of the action.

Upon the service of the Originating Process on the Appellant, the Appellant filed a Notice of Preliminary Objection dated 23rd June, 2010, challenging the jurisdiction of the Court to entertain the suit between a bank and a non-customer.

The 1st Respondent, on the other hand, filed a counter-affidavit on the 8th day of July, 2010, to the Notice of Preliminary Objection filed by the Appellant before the trial Court.

Both parties adopted their affidavits, counter-affidavits and other accompanying processes. Thereafter, the trial Court adjudicated the case. Upon the determination, the trial Court entered its ruling in favour of the 1st Respondents and dismissed the Appellant’s notice of preliminary objection.

Dissatisfied with the decision, the Appellant filed the instant appeal.

ISSUES FOR DETERMINATION:

The Court determined the appeal on these issues, thus:

a. Whether in view of the provisions of Section 251(1)(d) of the Constitution of the Federal Republic of Nigeria 1999, the Learned Trial Judge was right in dismissing the 2nd Defendant’s/Appellant’s Preliminary Objection and assuming jurisdiction to entertain the Claimant’s/ Respondent’s case.

b. Whether the Claimant/Respondent’s case against the 2nd Defendant/Appellant falls within the sole proviso in Section 251(1)(d) of the Constitution of the Federal Republic of Nigeria 1999.

DECISION/HELD:

In the final analysis, the appeal was dismissed.

RATIOS:

• CONTRACT- CONTRACT OF GUARANTEE/SURETYSHIP: Position of the law where a person personally guarantees the liability of a third party by entering into a contract of guarantee or suretyship
• COURT- JURISDICTION: What determines jurisdiction of Court to entertain a cause/matter?
• JURISDICTION- JURISDICTION OF THE STATE/FEDERAL HIGH COURT: Whether the State High Court or Federal High Court has jurisdiction over a simple contract

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