Whether a Pre-Judgment Interest Award Can Be within the Purview of Undefended List Procedure

PRACTICE AREA:           UNDEFENDED LIST PROCEDURE

FACTS:

This is an appeal against the judgment of the High Court of Federal Capital Territory, Abuja, delivered by Asmau Akanbi Yusuf, J.

The Respondent approached the trial court vide a Writ of Summons under the undefended List Procedure, praying for the following relief:

“WHEREOF the Plaintiff claims from the Defendants the sum N98,103,795.75 as of 26/07/2018 plus interest accruing thereon at the rate of 45% per month until full settlement of the debt plus costs of the action.”

In response, the Appellants filed a notice of preliminary objection challenging the jurisdiction of the Court on the ground that the suit is unconnected to the liquidated sum as provided in the High Court (Civil Procedure) Rules 2018 of the Federal Capital Territory, Abuja, as the suit relates to pre-judgment interest as at the time of filing same. In addition, the Appellants also filed a Notice of Intention to defend, stating that the facility was secured with a legal mortgage.

The trial Court dismissed the Notice of Preliminary Objection of the Appellants and gave judgment in favour of the Respondent in terms of the writ of summons. The Appellants, aggrieved with the Judgment, appealed to the Court of Appeal.

CASE TITLE:      ALIBRO TRANSPORT SERVICES LTD & ANOR v. ACCESS BANK PLC (2023) LPELR-60432(CA)

JUDGMENT DATE:      5TH MAY, 2023

JUSTICES:                STEPHEN JONAH ADAH, JCA

UGOCHUKWU ANTHONY OGAKWU, JCA

DANLAMI ZAMA SENCHI, JCA   

DIVISION: ABUJA

ISSUES:

The issue identified for determination was:

Whether the lower Court was correct when it entered judgment in favour of the Respondent under the undefended List Procedure?

COUNSEL SUBMISSIONS:

Learned counsel for the Appellants submitted that the trial Court lacked jurisdiction to entertain the suit under the Undefended List Procedure. He argued that the suit was a prejudgment interest suit, which falls outside the purview of the Undefended List Procedure. He referred the Court to relevant cases that establish that pre-judgment interest claims are based on agreements between parties or mercantile customs or equity.

The Appellants’ counsel pointed out that Exhibit A, which was the Respondent’s offer of credit, revealed that the parties agreed to an interest rate of 22.59% per annum and a default indemnity clause of 45% as a penalty fee if the borrower fails to make payments. He argued that the suit is essentially a prejudgment interest suit because the interest element had already been determined by the parties’ agreement.

He contended that the 45% default fee was conditional and subject to the occurrence of an event, such as the borrower’s failure to pay. Therefore, he argued that the relief sought by the Respondent (pre-judgment interest) cannot be accommodated under the Undefended List Procedure.

In response, the learned Respondent’s counsel argued that the Appellants’ affidavit in support of their notice of intention to defend failed to counter the Respondent’s contention that they were indebted in the claimed amount, along with the 45% monthly interest rate. The Respondent’s counsel cited a relevant case to support the idea that when a party’s evidence is not challenged or cross-examined upon, the Court may act on it as established.

The Respondent’s counsel also contended that the Appellants’ claim that the trial Court lacked jurisdiction was misleading. He argued that the jurisdiction and competence of the Court are determined by the plaintiff’s claim before the Court. In this case, the Respondent’s claim was based on a term loan contract with penalties for failure to make payments, which he argued was not a pre-judgment interest claim.

In conclusion, the counsel for the Respondent urged the Court to uphold the trial Court’s judgment, dismiss the appeal, and uphold the Respondent’s sole issue in the appeal.

DECISION/HELD:

In the final analysis, the sole issue for determination was resolved against the appellants and the appeal was dismissed.

RATIO: PRACTICE AND PROCEDURE – UNDEFENDED LIST PROCEDURE: Whether a claim that involves pre-judgment interest can be heard under the undefended list procedure

“On the issue whether pre-judgment interest can be awarded under an undefended list procedure (liquidated money demand) per SANUSI, JSC in NPA v. AMINU IBRAHIM & CO. & ANOR (2018) LPELR-44464 (SC) (Pp. 39-40 paras. C) held thus “…The law is well settled that before a pre-Judgment interest can justifiably be awarded, a plaintiff often pleads that he is entitled to such interest and also that where he so pleads it, he must prove the basis for his entitlement of same by showing that it was supported either by statute or contract agreement between the parties or based on mercantile custom or on principle of equity. Such claim of interest is normally pleaded and proved, See AG Ferrero & Company Ltd vs Henkel Chemicals Nigeria Ltd (2011) LPELR-12(SC); Adeyemi vs Lan and Baker Nig Ltd (2000) 7 NWLR (pt 663) 3 at 48.

It is however a valid law that a Court can still grant pre-Judgment interest on a monetary or liquidated sum awarded to a successful party, even in a situation where such a party did not plead or adduce evidence in proof of such claim. Such interest, like in this instant case, naturally accrues from the failure or refusal to pay the amount involved over a long period of time, thereby depriving a party of the use of and/or enjoyment of the sum involved which is the fruit of his Judgment. See Petgas Res Ltd v. Mbanefo (2007) 6 NWLR (pt 1081) 545…”

Further, in MAJA v. SAMOURIS (2002) LPELR-1824(SC) (Pp. 21-22 paras. F) it is also reported in (2002) 7 NWLR (Pt. 765) 78 or (2002) 3 S.C. 37 the Supreme Court held:

“A liquidated demand is a debt or other specific sum of money usually due and payable and its amount be ascertained or capable of being ascertained as a mere matter of arithmetic without any of further investigation. Whether therefore, the amount to which a plaintiff is entitled can be ascertained by calculation or fixed by any scale of charges or other positive data, it is said to be liquidated or made clear.

Again, when the parties to a contract, as part of the agreement between them, fix the amount payable on the defendant or one of them or in the event of breach by way of damages, such is classified as liquidated damages where it is in the nature of a genuine pre-estimate of the damage which would arise from breach of the contract so long as the agreement is not obnoxious as to constitute a ‘penalty’ and it is payable by the party on default. The term is also applied to sums expressly made payable as liquidated damages under a statute.”

The sum of money being owed as debt together with the interest and/or penalties accruing on the unpaid debt is liquidated if the sum of money together with a specified and fixed rate of interest or penalty as payable periodically on the unpaid sum is known and agreed by the parties to the transaction. Both the agreed sum of money and the agreed accruable rate of interest and penalty constitute a liquidated debt because they are all known, agreed on, fixed, and certain. The fundamental principle or proposition is for the said sum to be ascertainable and in the contemplation of both parties from the onset of the transaction or agreement. See the case of UZOR & ORS Vs. EZIMUZO MICROFINANCE BANK (NIGERIA) LTD (2013) LPELR-21880 (CA).

Now drawing inspiration from the aforementioned authorities, it is clear that where a prejudgment interest is expressly stated in an agreement by parties without ambiguity and such agreement is precise, ascertainable and capable of precise arithmetic calculation and it is a liquidated debt or money demand, such prejudgment interest can be a claim and a subject under the undefended action.

Applying the above position of the law in the present appeal, it is indeed without ambiguity that the prejudgment sum referred to by the Appellant is precise and agreed in the offer letter, Exhibit A. In other words, it is embedded in the agreement between the parties. It states that “If the Borrower fails to pay any sum of principal interest or otherwise due or to become due hereunder the Borrower shall be liable to a penalty fee of 45percent flat per annum of unpaid portion of the facility the fee which shall be charged on the 1st working day after the sum is due, will be in addition to the prevailing temporary overdraft interest on the unpaid sum from the date when such payment falls due up to the date of payment”.

The express provision of the 45 percent dispels all arguments as to whether the said sum is liquidated money demand. Therefore, learned Counsel submission that pre-judgment interest award is outside the purview of the undefended list procedure is in my view too narrow a view of the law. It is a view that did not take care of the exceptions as postulated above. Thus, the argument of Learned Counsel for the Appellants is highly a misconception of the law and of no moment and I so hold. I, therefore, agree with the trial Court that the said claim of 45 percent interest is within its jurisdiction and a matter triable under the Undefended List Procedure.” Per SENCHI, J.C.A.