Supreme Court Judgement: Definition of Parties Under the Doctrine of Estoppel Per Rem Judicatam

In the Supreme Court of Nigeria Holden at Abuja On Friday, the 18th day of February, 2022

Before Their Lordships

Mary Ukaego Peter-Odili

Ejembi Eko

Mohammed Lawal Garba

Ibrahim Mohammed Musa Saulawa

Tijjani Abubakar

Justices, Supreme Court

SC.205/2010

Between

1. ADALMA TANKERS & BUNKERING SERVICES LTD

2. MIKE SAMBO ESSIEN  APPELLANTS

And

1. CENTRAL BANK OF NIGERIA

2. MERCANTILE BANK OF NIGERIA PLC  (IN LIQUIDATION)

3. NIGERIA DEPOSIT INSURANCE CORPORATION

4. CHIEF J. L. E. DUKE RESPONDENTS

(Lead Judgement delivered by Honourable Mary Ukaego Peter-Odili, JSC)

Facts

The 1st Appellant obtained a loan from the 2nd Respondent, for the purchase of a ship named M.V. Adalma. They entered into a loan agreement, and pursuant to this, the 2nd Respondent in its capacity as a banker, opened a loan account no. 1671 in favour of the 1st Appellant. The 2nd Respondent solely funded the account. Additionally, the 1st Appellant and the 2nd Respondent executed Deed of Mortgage and Deed of Conveyance. The Appellants defaulted on all of their obligations under the Deeds. In exercise of its power of seizure under the Deeds, the 2nd Respondent seized the ship, and advertised it for sale. Following the seizure of the ship, the 1st Appellant sued the 2nd Respondent together with its staff, at the Federal High Court in Suit No. FHC/CA/3/85. The 2nd Respondent counter-claimed for an order of foreclosure of the ship, or in the alternative, an order for payment of the sum of the loan and the interest that had accrued on it. The trial court delivered judgement in favour of the 1st Appellant, and non-suited the 2nd Respondent’s Counter-claim.

Dissatisfied, the 2nd Respondent appealed to the Court of Appeal in Appeal No. CA/E/80/88. The Court of Appeal allowed the appeal, and granted the 2nd Respondent’s Counter-claim for an order of foreclosure. Aggrieved, the 1st Appellant filed an appeal before the Supreme Court in Appeal No. SC/46/1993. The Appeal was abandoned by the 1st Appellant, thereby leading to its dismissal by the Apex Court on 22nd February, 1995. However, prior to this and immediately after the 1st Appellant obtained judgement in Suit No. FHC/CA/3/85, the Appellants filed another action in Suit No. FHC/CA/4/87 against the 2nd Respondent and others at the Federal High Court. They sought inter alia, a declaration that the 2nd Respondent wrongly took over and operated the 1st Appellant’s loan account No. 1671 with the 2nd Respondent without the Appellants’ consent, and without allowing the Appellants to operate the account. They sought orders directing the 2nd Respondent to refund several sums transferred from the account.

In the course of proceedings, the Appellants applied to join the 1st and 3rd Respondent as parties to the suit. They sought an order of substituted service of the                                                     originating processes on them, through delivery at their respective head offices by DHL Courier Service. The trial court granted the application for substituted service through DHL Courier Service. The Appellants however, purported to serve the 1st Respondent through another company called Crown Courier Service.

Suit No. FHC/CA/4/87 eventually proceeded to trial in 1996, in the absence of any representation for the 1st Respondent. The trial court delivered judgement in favour of the Appellant. Thereafter, the Appellants took steps to enforce the judgement. It was at this stage that the 1st Respondent became aware of the suit, and the Respondents filed applications to set aside the judgement based on the judgement of the Court of Appeal in Appeal No. CA/E/80/88, which they pleaded as res judicata. The trial court dismissed the Respondents’ applications.

Aggrieved, the 1st to 3rd Respondent appealed to the Court of Appeal which allowed their appeal and held that the proceedings in the suit ought to have abated immediately judgement in Appeal No. CA/E/80/88 was delivered on 4th May, 1990, and especially when the appeal against it to the Supreme Court in Appeal No. SC/46/1993 had been abandoned and dismissed. The Court of Appeal also held that the trial court denied the 1st Respondent the right to fair hearing, when it conducted the trial in its absence. Consequently, the Court of Appeal set aside the proceedings and judgement in the suit for being incompetent, on the ground of res judicata. Dissatisfied, the Appellants lodged an appeal before the Supreme Court.

Issues for Determination

The Supreme Court determined the appeal on the following issues:

1. Whether the Court of Appeal was right in holding that the failure of the Appellants to comply with the court-ordered mode of service of the originating processes on the 1st Respondent culminated in lack of service or due service on the 1st Respondent, and thus, robbed the trial court of the jurisdiction to entertain their claim against the 1st Respondent.

2. Whether the Court of Appeal was right in holding that the case of the Appellants, was caught up by res judicata. 

Arguments

On the first issue, counsel for the Appellants contended that it was evidently clear from the court’s records that every legal method permissible was employed, to ensure the appearance of the Respondents. He submitted that the Court of Appeal erred when it interfered with the findings of the trial court, by holding that the trial court conducted its trial in secrecy.

Counsel for the Respondents, on the other hand, argued that the failure by the Appellants to comply with the mode specified by the court in its order of substituted service, was fatal to the proceedings and the Appellants’ case against the 1st Respondent. They argued further that the entire trial was conducted in breach of the 1st Respondent’s right to fair hearing, as the 1st Respondent had been consistently absent and had never been served with the Amended or Further Amended Statement of Claim or Hearing Notice.

On the 2nd issue, Counsel for the Appellants argued that the Appellants’ claim at the trial court in Suit No. FHC/CA/4/87 that emanated into the instant appeal, is totally different from that in Appeal No. CA/E/80/88. He submitted that the lower court held erroneously that the Appellants’ case was caught by estoppel per rem judicata, especially when the Respondents at the trial and lower courts neither pleaded res judicata nor proffered evidence in support. Conversely, counsel for the Respondents argued that the Appellants’ case is caught by res judicata, in light of the subsisting judgement of the Court of Appeal in Appeal No. CA/E/80/88 in respect of the operation of the Appellants’ Account No. 1671. They argued further that the trial court was wrong to have failed to consider the defence of res judicata, which was in fact specifically pleaded by the 1st Respondent.

Court’s Judgement and Rationale

Deciding the first issue, the court relied on its decision in DR HARRY v O.C. MENAKAYA (2017) LPELR – 42363 (SC) that once an order for substituted service is sought and obtained, in the absence of a subsequent order varying the earlier one, neither the Applicant nor the Bailiff of the court has the discretion to effect service in any other manner or on any other person, than as stated in the order. Service of any process subsequent to the grant of an order of substituted service, must be effected in strict compliance with the order.

Guided by the decision above, the court held that the Appellants’ purported service of the originating processes on the 1st Respondent through Crown Courier Services rather than DHL as specifically ordered by the court, apart from being a disobedience to the orders of court, amounted to no service at all. The Court of Appeal was thus right, to hold that the 1st Respondent was not served with the originating processes, so as to confer jurisdiction on the trial court to entertain any claim against it.  

On the second issue, the court relied on its decision in ODUTOLA v ODERINDE & ORS (2004) 12 NWLR (Pt. 888) 574, (2004) LPELR – 2258 (SC) at 10, to hold that to sustain a plea of res judicata, the party pleading it must satisfy the following conditionalities, to wit – (1) The parties (or their privies as the case may be) are the same in the present case as in the previous case; (2) That the issue and subject-matter are the same in the previous suit, as in the present suit; (3) That the adjudication in the previous case, must have been given by a court of competent jurisdiction; and (4) That the previous decision must have finally decided the issues between the parties. 

The court held further that for the purpose of the application of the doctrine of estoppel per rem judicatam, this court consistently held that parties are defined not only in terms of those on record, but also as including privies to the parties on record, those who may be interested in the outcome of the case, and those who ought to have been made parties to an action, but were not joined. The court referred to its earlier decisions in AYENI v ELEPO (2007) All FWLR (Pt. 383) 71 and MUSA IYAJI v SULE EYI GEBE (1987) LPELR -1577 SC 1 at 22-23 G-A. 

In demonstrating the applicability of the constitutive ingredients to the instant appeal, the Supreme Court held that the parties in Appeal No. CA/E/80/88 are the same as those in Suit No. FHC/CA/4/87. Both the Appellant and the Respondent in the said appeal were parties in the suit, and are still parties in the instant appeal as 1st Appellant and 2nd Respondent. The community interest between the 1st Respondent which bought over the 2nd Respondent for the purpose of restructuring, and thus. became its successor-in- title, the 3rd Respondent which is 2nd Respondent’s official liquidator, and 4th Respondent who was the Managing Director of the 2nd Respondent when it was still a going concern, clearly made them privies of the 2nd Respondent.

The court held further that Suit No. FHC/CA /3/85 which was set aside in Appeal No. CA/E/80/88 and Suit No. FHC/CA/4/87 resolved both the broad subject-matter of alleged seizure of the M.V. Adalma, and the narrow issue of the alleged wrongful takeover and operation of the 1st Appellant’s account No. 1671 with the 2nd Respondent. The subject-matter are thus the same. Furthermore, the subsisting judgement in Appeal No. CA/E/80/88 was given by a court of competent jurisdiction, and the Court of Appeal in its decision finally decided the issue in controversy between the parties regarding the maintenance and operation of the 1st Appellant’s account with the 2nd Respondent. All the constitutive ingredients for the applicability of the doctrine of res judicata which had been specifically pleaded in the 2nd Respondent’s Amended Statement of Defence were thus satisfied, and the Court of Appeal rightly applied same.

Appeal Dismissed.

Representation

Ademola Abimbola with others for the Appellants.

Okogbuje Odion for the 1st Respondent.

Edidiong Usungurua with others for the 2nd and 3rd Respondents.

4th Respondent absent and unrepresented though served.