3PLR – FARID KHAWAM V. FOUAD MICHAEL ELIAS

POLICY, PRACTICE AND PUBLISHING, 3PLR, LAW REPORTS

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FARID KHAWAM

V.

FOUAD MICHAEL ELIAS

FEDERAL SUPREME COURT OF NIGERIA

17TH NOVEMBER, 1960.

F.S.C.154/1960

3PLR/1960/59 (SC)

OTHER CITATIONS

 

 

 

BEFORE THEIR LORDSHIPS

MYLES JOHN ABBOTT, F.J. (Presided and Read the Judgment of the Court)

LIONEL BRETT, F.J.

JOHN IDOWU CONRAD TAYLOR, F.J.

REPRESENTATION

Chief F.R.A. Williams, Q.C. (with him Miss Grant) -for the Appel­lant.

Chief H. O. Davies, Q.C. (with him Adewunmi, A. O. Bickersteth) – for the Respondent.

MAIN ISSUES

REAL ESTATE: Lease – Entitlement at equity to residue of unexpired term of lease –

DEBTOR AND CREDITOR: Loan secured against mortgage of unexpired term of lease

POWER OF ATTORNEY – Registration of at Lands Registry – Whether constitutes notice – Necessity for search.

ETHICS – LEGAL PRACTITIONER: Legal practitioner mishandling of client’s suit – Attitude of court thereto

APPEAL: – Grounds of appeal – Grounds complaining about judgment not appealed against – Not arguable.

PRACTICE AND PROCEDURE: Discretion of Court – Award of – Discretion of court to deny to successful party.

PRACTICE AND PROCEDURE – ORDER OF COST:  Exercise of trial court’s discretion to order cost- When appellate court will inter­fere

PRACTICE AND PROCEDURE – Default judgment – Guiding principle for a successful application to set aside default judgment- Whether at discretion of court.

PRACTICE AND PROCEDURE – Order granting judgment in default of defence – Dismissal of motion to re-list –Effect of an appeal against dismissal but not against order granting judgment – Grounds of appeal complaining about order granting judgment – Whether arguable.

PRACTICE AND PROCEDURE-Service of writ -Irregularity therein – Whether Defendant acceptance of service and taking other steps in furtherance thereof amounts to waiver of irregularity.

WORDS AND PHRASES – “Valid” in pleading – Connotation.

MAIN JUDGMENT

ABBOTT, F.J. (Delivering the Judgment of the Court):

This is an appeal by the defendant against the order of the High Court of the Western Region holden at Ibadan, made on the 21st August, 1959, entering judgment for the plaintiff “on his claim against the defendant.” This order was made on a Mo­tion on Notice for judgment to be entered for the plaintiff in default of the filing of a Statement of Defence.

Chief Rotimi Williams, Q.C., and Miss Grant appeared for the appel­lant, and Chief H. O. Davies and Mr. Adewunmi for the respondent.

 

It is necessary for the purposes of this judgment to go into certain mat­ters of the history of this case, beginning with the nature of the claim ad­vanced by the plaintiff in his Writ. This reads as follows:­

 

The Plaintiff seeks as against the Defendant a Declaration that he is entitled in equity to the property known as 21 Lebanon Street, Ibadan, Western Region of Nigeria, for the residue unex­pired of the term created by a Lease dated the 31st day of Oc­tober, 1945 and registered as No. 28 at Page 28 in Volume 680 of the Lands Registry in the office at Ibadan.

 

The said Lease was made between Mrs. Flora Atunwaola Soetan, Dr. Henry Aremu Aderonmu Doherty and Mrs. Rosaline Adetutu Snares as Lessors and the Defendant as Lessee with effect from the 1st day of February, 1944 for a term of 40 years and the term was later extended by a further period of 30 years.

 

On the 12th June, 1954, the Defendant borrowed from the Plaintiff the sum of £10,000-Os-Od and agreed with the Plaintiff to have the repayment thereof secured by a Mortgage of the residue unexpired of the said term.

 

The Plaintiff further claims possession of the said premises No. 21 Lebanon Street, Ibadan, Western Nigeria, for the residue unexpired of the said term.

 

Concurrently with his application for the Writ the plaintiff applied for an order that the Writ of Summons be served upon Alfred Khawam, described in the Notice of Motion as the agent of the defendant, and that such service be deemed sufficient service on the defendant.

 

This Motion was supported by an Affidavit, of which paragraph 2 reads as follows:­

 

That the Defendant borrowed from me the sum of £10,000­Os-Od upon having the repayment secured by a mortgage on the residue unexpired of the Lease of the property at 21 Lebanon Street, Ibadan, dated 31st October, 1945 and registered as No. 28 at Page 28 in Volume 680 of the Lands Registry in the office at Ibadan and made between Mrs. Flora Atunwaola Soetan, Dr. Henry Aremu Aderonmu Doherty and Mrs. Rosaline Adetutu Soares as Lessors and the Defendant as Lessee.

 

Paragraph 4 of the Affidavit avers that the defendant was then outside the jurisdiction of the Court, being away from this country, and that letters sent to him at his address in Germany had neither been acknowledged nor returned to the plaintiff. Paragraph 5 states that Alfred Khawam collects rents on behalf of the defendant and that Alfred Khawam must therefore be aware of his present address; and paragraph 6 states the belief that if the Writ is served on Alfred Khawam the same will come to the knowledge of the defendant. The order for substituted service was thereupon made and while there is on the record no Affidavit of service it appears that when the matter came before the Ibadan High Court on the 9th December, the Court was satisfied that service had been effected, presumably upon Alfred Khawam.

 

On that occasion pleadings were ordered and a Statement of Claim was duly filed. For reasons which will afterwards appear, it is important to set out paragraph 5 of this Statement of Claim, which reads as follows:­

 

By an Indenture dated the 12th June, 1954, and made bet­ween the plaintiff as ‘Lender’ and the defendant as ‘Borrower’, the defendant acknowledged the receipt of £10,000 lent to him by the plaintiff and secured the repayment of the said sum by a Sub-lease of portion of the parcel referred to in paragraph 3 above for the residue unexpired of the term expressed in the said lease.

 

The “parcel referred to in paragraph 3” is, in fact, 21 Lebanon Street, Ibadan.

 

That the Statement of Claim was served upon Alfred Khawam is shown by an Affidavit by one of the Solicitors to the plaintiff, filed in support of the Motion for Judgment in default of Defence, which it is common ground had not and never has been filed, as yet. The Motion paper states the Motion purports to be brought “under Order 2 Rule II (Sheriffs and Civil Process Ordinance).” This is a misdescription, what was meant apparently being Order II Rule 12 (b) of the Judgment (Enforcement) Rules, which reads as follows:­

 

(b)     if a defendant in any suit makes such default or failure the court may give judgment by default against such defendant, or make such other order as to the court may seem just. But any such judgment by default may be set aside by the court upon such terms as to costs or otherwise as the court may think fit.

 

After sundry adjournments due to there being no evidence of service of this Notice of Motion for judgment, the matter ultimately came before the Court on the 21st August, 1959, as did a further Motion on Notice filed by the Solicitor for a man named Joseph Saliba, in which this individual asked to be joined as a co-defendant with the defendant. The defendants address on this Notice of Motion is given as c/o Joseph Saliba (the person mentioned above) 68 Oluwole Street, Lagos, and the address of Joseph Saliba is given as c/o his Solicitor, A. Okubadejo, Co-operative Bank Building, Ibadan. The two Motions were heard together by Quashie-Idun, J., (as he then was). Before the learned Judge there appeared Mr. Bolarinwa holding the brief of Chief H.O. Davies, Q.C., for the plaintiff, and Miss Grant for the defen­dant, and it appears from the record that Miss Grant also appeared for the applicant Joseph Saliba, who desired to be joined as a co-defendant. After hearing argument the learned Judge refused the application for joinder but granted the prayer of the plaintiff’s Motion and entered judgment for the plaintiff on his claim against the defendant, with costs assessed at 45 guineas, and the formal order was drawn up in exactly the same words as appear in the learned Judge’s notes. The important portion of the formal order reads as follows:­

 

The motion of the plaintiff is allowed and judgment is en­tered for the plaintiff on his claim against the defendant. Costs for plaintiff assessed at 45 guineas.

 

Ten days later, on the 1st September, 1959, Mr. Okubadejo, as Solicitor for the defendant, filed a Motion on Notice praying the Court to re-list the suit and to set aside the order made on the 21st August, 1959, and this appli­cation was supported by an Affidavit which in its first paragraph discloses that the deponent, who is Alfred Khawam, previously referred to in this judgment as agent of the defendant, held a Power of Attorney by virtue whereof, according to him “I am the Lawful Attorney of the defendant in the above suit.” It is also important to mention that this Power of Attorney was registered in the Ibadan Lands Registry and its existence could therefore have been ascertained by the plaintiff by making a search there.

 

In passing I may point out that had this elementary step been taken, no doubt the plaintiff would have sued the defendant through Alfred Khawam as his lawful attorney.

 

In any case it seems to me that there could have been no objection, un­less of course it were raised by Alfred Khawam, to suing him as agent for Farid Khawam, the defendant, or suing Farid Khawam “through his agent Alfred Khawam.” It has been within the knowledge of the plaintiff for a very long time, first that Farid Khawam was out of Nigeria, and, as one gathers, that he is unlikely ever to return to this country, and secondly, that Alfred Khawam was his agent. Had one of the two courses mentioned above been adopted, most of the trouble and expense which has now been occasioned would have been avoided.

 

I now return to the Affidavit of Alfred Khawam in support of the Mo­tion to re-list the suit and set aside the order of the 21st August,1959. The second paragraph admits service of the Writ upon the deponent as the agent of the defendant, and paragraph 3 discloses that Alfred Khawam knew of the order for pleadings made on the 9th December, 1958. The Affidavit then goes on to detail various journeys on business, made by the deponent, until paragraph 8 is reached, and that avers that the deponent required instruc­tions from the defendant personally, to enable him to instruct a Solicitor to file a Statement of Defence, and that from February to July 1959 the depo­nent made repeated efforts, in vain, to get in touch with the defendant. Paragraph 9 states that the deponent had finally succeeded in obtaining in­structions from the defendant and avers the belief that he had a good De­fence to the plaintiff’s claim. This paragraph also exhibits the proposed Statement of Defence.

 

Pausing here for a moment, I cannot help pointing out that no instruc­tions from the defendant personally would have been necessary to enable Alfred Khawam to instruct a Solicitor to ask for an extension of time within which to file the Defence, and why this was not done passes my comprehen­sion. It would seem from the contents of the Affidavit to which I last referred above, that there were at least reasonable grounds for such an application. Be that as it may, no such application was made. The defence exhibited to the Affidavit last above referred to does very little more than traverse the paragraphs of the Statement of Claim which contain the basis for the action. Paragraph 4 of this proposed Defence avers that “there never have been at any time any valid monetary transaction between the plaintiff and the defen­dant secured upon the defendant’s property situate at 21 Lebanon Street, Ibadan, or any part of the said property.”

 

The Motion to re-list the case and set aside the order of the High Court came before that Court on the 5th January, 1960, when Mr. Okubadejo ap­peared for the defendant/applicant. It was apparently part of Mr. Okubadejo’s submission that the plaintiff should have been called to give evidence, even though the defendant had failed to file his Defence, before judgment was entered for the plaintiff, but on this point the learned Judge did not find it necessary to hear Counsel for the plaintiff/respondent, and in giving his decision on the Motion he used these words:-

 

There is no substance in this application. 1 see no grounds disclosed in the affidavit upon which I can exercise my discretion in granting the application. It is accordingly dismissed. Costs for respondent assessed at £10-10s-Od to be paid by the deponent. The formal order repeats those words.

 

The appeal with which this Court is concerned is, as I have above indi­cated, against this decision of Quashie-Idun, J., not against, I would point out, the order entering judgment for the plaintiff. Again, why no appeal was lodged against that order I utterly fail to understand.

 

The omissions to appeal against that order had repercussions when Chief Rotimi Williams proceeded to argue this appeal before us, because certain of the grounds of appeal sought to be argued raise matters which in our view could only have been raised on an appeal against the order for entry of judgment in favour of the plaintiff, and we decided that in particular addi­tional grounds of appeal Nos. 2 and 3, which read as follows:­

 

(2)     The learned trial Judge erred in refusing to make the order to set aside the default judgment when it is patent on the face of the proceedings that the plaintiff is not entitled to judgment in terms of the Writ of Summons.

 

(3)     The learned trial Judge erred in law in failing to consider the pro­visions of the Native Lands Acquisition Law (or the Native Lands Acquisition Ordinance) before giving judgment by de­fault.

 

could not be argued on this appeal.

 

The gravamen of Chief Rotimi Williams’ argument was thus reduced al­most entirely to the regularity or otherwise of the service of the Writ and other proceedings upon Alfred Khawam in his capacity as agent and/or at­torney for the defendant, but I can dispose of this matter reasonably briefly. It seems to me beyond doubt that Alfred Khawam (and the defendant through him) having in his Affidavit admitted the service of the Writ upon him, Alfred Khawam, as the agent of the defendant, and his, Alfred Khawam’s knowledge of the order for pleadings, and having exhibited to that Affidavit the proposed Defence, the defendant cannot now.be heard to complain of any irregularity in the service of the Writ. If in fact there was ir­regularity, in my opinion the defendant has, at least vicariously, completely waived it.

 

The next point to consider is whether this Court should allow the appeal and direct that the High Court Order of the 21st August, 1959, be set aside. Chief Rotimi Williams submitted to us that this Court can consider whether the substantive order entering judgment for the plaintiff was right, but as I have above indicated, there being before this Court no appeal against this substantive order, I cannot accept that submission.

 

Chief Williams cited to us the case of Evans v. Bartlam 1937 2 A.E.R. 646, 1937 A.C.473, and there are certain passages from the opinion of Lord Atkin in the House of Lords, to which I propose to refer. Before dealing with those however, I would express the view that it is quite clear that the grant or refusal of an application to set aside a default judgment is a matter of the discretion of the Court before whom the application is made. At page 480 of the report in 1937 A.C. Lord Atkin says this:

 

The courts, however, have laid down for themselves rules to guide them in the normal exercise of their discretion. One is that where the judgment was obtained regularly there must be an af­fidavit of merits, meaning that the applicant must produce to the Court evidence that he had a prima facie defence.

 

Pausing there for the moment, there is in this instance no such affidavit, but it is fair to say that in such cases as the present it has not been the practice in the Courts in this country for such an affidavit to be filed, and I would be prepared to accept the affidavit in support of the motion to set aside the de­fault judgment plus the proposed Defence exhibited thereto, as an affidavit of merits for this purpose, if indeed that Defence disclosed real merit. In my opinion it does nothing of the sort. The only paragraph which could by any stretch of imagination, be said to disclose any merit, is paragraph 4, which reads as follows:­

The defendant will further aver at the trial that there never have been at any time any valid monetary transactions between the plaintiff and the defendant secured upon the defendant’s property situate at 21 Lebanon Street, Ibadan, or any part of the said property.

 

and while Chief Williams endeavoured to persuade us that this shows merit in fact, I prefer the view advanced by Chief Davies that the use of the word “valid” shows merit in law, which is not a proper subject of any portion of a pleading.

 

That being my view I must say that there is before us no affidavit of merits, or anything to show that the defendant has a prima facie defence. Again quoting from page 480 of the report last above mentioned, Lord Atkin goes on to say that even the rule as to affidavit of merits “could, in no doubt rare but appropriate cases, be departed from.” In my view this is not one of the cases to which that exception should apply.

 

The matter however, does not end there, and I quote a further passage from Lord Atkin’s judgment, on the same and the following page:­

 

I conceive it to be a mistake to hold, as Greer L.J. seems to do, that the jurisdiction of the Court of Appeal on appeal from an order is limited so that, as the Lord Justice said, the Court of Ap­peal “have no power to interfere with his exercise of discretion unless we think that he acted upon some wrong principle of law.” Appellate jurisdiction is always statutory: there is in the statute no restriction upon the jurisdiction of the Court of Appeal: and while the appellate Court in the exercise of its appellate power is no doubt entirely justified in saying that normally it will not inter­fere with the exercise of the Judge’s discretion except on grounds of law, yet if it sees that on other grounds the decision will result in injustice being done it has both the power and the duty to re­medy it.

 

The passages which I have quoted at the beginning of this judgment from the Writ and the Statement of Claim show that the former claims the declaration in respect of the whole of the property known as 21 Lebanon Street, Ibadan, and equally possession of the whole of the property, but paragraph 5 of the Statement of Claim avers that the money lent by the plaintiff to the defendant was secured by a sub-lease of only a portion of that property.

 

To revert once more to the order of the High Court entering judgment for the plaintiff, I again quote part of the words of that order:

 

Judgment is entered for the plaintiff on his claim against the de­fendant.

 

I apprehend that that means that judgment was entered for the plaintiff on his claim as set out in the Writ, and if, as appears from paragraph 5 of the Statement of Claim, the security for the loan was only a portion of No. 21 Lebanon Street, it is quite plain that to allow the High Court order entering judgment for the plaintiff to stand might, and probably would work consid­erable injustice, not only to the defendant, but very likely to other persons as well, who might in various ways have an interest in the property. That being so, it is my view that this Court, which undoubtedly has a discretion in this matter in the same way as did the High Court in making the order for judg­ment for the plaintiff, should regard it as its duty to remedy the injustice, which in my opinion has manifestly been caused by that order-or would be caused if it were upheld. In my view therefore, this appeal should be allowed and the order of the Court below set aside in so far as it enters judgment for the plaintiff. I would direct that the suit be re-listed forthwith and that the defendant be ordered to file his Defence to the action within twenty-one days from today.

 

In my view the defendant by his agent Alfred Khawam, has been grossly negligent in putting forward his defence to the plaintiff’s claim, and I have in this judgment indicated various directions in which I consider that negli­gence is to be found. The defendant must consider himself very fortunate that he has not been entirely shut out from defending the plaintiff’s claim. In those circumstances I would not disturb the order for costs made by the Court below.

 

With regards to the costs of this appeal, it is clear that the High Court can in any case, if it thinks fit, not only deprive a successful party of his costs, but order that he pay the costs of the unsuccessful party, and in view of the fact that it is undoubted that this court has a discretion at least as wide as that of the High Court, I consider that the appellant should be ordered to pay the respondent’s costs of this appeal, which I would assess at twenty-two guineas.

 

BRETT, F.J.: I concur.

 

TAYLOR, F.J.: I concur.

 

Appeal allowed. Re-list ordered.

 

 

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