Negotiation by parties doesn’t suspend limitation period

FRONTERA PETROLEUM RESOURCES INC v. NIGERIA DEPOSIT INSURANCE CORPORATION CITATION: (2019) LPELR-47527 (CA)

In the Court of Appeal
(Lagos Judicial Division)

ON WEDNESDAY, 15TH MAY, 2019
Suit No: CA/L/405/2012

Before Their Lordships:

TOM SHAIBU YAKUBU, JCA
UGOCHUKWU ANTHONY OGAKWU, JCA
JAMILU YAMMAMA TUKUR, JCA

Between

FRONTERA PETROLEUM RESOURCES INC. -Appellant(s)

And

NIGERIA DEPOSIT INSURANCE CORPORATION
(Liquidator of Gulf Bank of Nigeria PLC) -Respondent(s)

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

FACTS OF THE CASE
This appeal is against the ruling of the Federal High Court of Lagos State.

The fact of the case bothers on a commercial transaction between the Appellant and the liquidated Gulf Bank of Nigeria PLC. Flowing from the said transaction, the Appellant contended that Gulf Bank owed it monies on the said transaction and instituted proceedings before the High Court of Lagos State against the Respondent, the Liquidator of Gulf Bank.
The Respondent raised an objection to the jurisdiction of the High Court of Lagos State to entertain the action. Consequent upon this objection the Appellant filed a notice discontinuing the action at the High Court of Lagos State.

Thereafter, the Appellant instituted a fresh action before the Federal High Court. Upon being served the Court processes, the Respondent filed an application challenging the competence of the action upon the ground that the action is statute barred. The parties filed and exchanged processes on the application and in its ruling, the Federal High Court held that the action was statute barred and dismissed same.

The Appellant was dissatisfied and appealed against the said ruling at the Court of Appeal.

ISSUES FOR DETERMINATION
The Court determined the appeal on the issues formulated by the Appellant, as follows:
1. Was the lower Court right to have had recourse to the period of the pendency of Suit No: LD/1585/07 between the Appellant and the Respondent and in relation to the same cause of action pending before it in the determination of whether the Appellant’s suit was statute barred? 2. Was the lower Court right in its decision that there was no negotiation between the Appellant and the Respondent as would warrant the suspension of the running of the limitation period for instituting the action?

APPELLANT’S COUNSEL SUBMISSION
On issue one, the Appellant submitted that the action commenced at the High Court of Lagos State was within the limitation period and that the limitation period ceased to run while the said action was pending and that the Federal High Court was consequently wrong to have taken the period of the pendency of the said suit in calculating the limitation period. Submitting further, the Appellant argued that the fact of the existence of a prior suit does not constitute part of the facts grounding the Appellant’s cause of action but a fact, which by implication of law suspends and/or freezes the running of the limitation period. It was stated that it therefore need not be pleaded since law or implication of law is not a matter for pleading vide UBA PLC vs. GODM SHOES INDUSTRIES (NIG) LTD (2010) LPELR – 9255 (CA), OKOEBOR vs. POLICE COUNCIL (2003) 5 SC 11 and NAWA vs. A-G CROSS RIVER STATE (2008) ALL FWLR (PT 401) 807.

On issue two, the Appellant submitted that it was in order to allow for the amicable resolution of the dispute between the parties that it discontinued the suit filed at the High Court of Lagos State; but that arising from the failure of the negotiation, it instituted the action at the Federal High Court. The negotiation it was submitted was to be taken into account in considering whether an action is statute barred vide NWADIORA vs. SHELL PETROLEUM DEVELOPMENT COMPANY (1990) 5 NWLR (PT 150) 332 at 338.

RESPONDENT’S COUNSEL SUBMISSION
On issue one, the Respondent submitted that where there are events, which will prevent a cause of action from running, the said events have to be made part of the facts pleaded before the Court. It was stated that the Appellant did not plead the facts of the earlier suit before the High Court of Lagos State, and not being before the Federal High Court, it could not have acted on speculation or assumption as it only had a duty to consider the material facts placed before it. The cases of IROEGBU vs. MV CALABAR CARRIER (2008) 5 NWLR (PT 1079) 147 at 168 and DALYOP vs. MADALLA (2017) LPELR – 43349 (CA) were referred to.

On issue two, the Respondent submitted that the parties were never engaged in any negotiations whatsoever and that the Appellant’s submissions in that regard were not borne out by the evidence and were merely speculative and should be discountenanced vide RAJCO INTERNATIONAL LTD vs. LE CAVALIER MOTELS AND RESTRAURANTS LTD (2016) LPELR – 40082 (CA) and IWUANYANWU vs. HON. MINISTER OF AGRICULTURE & WATER RESOURCES (2016) LPELR – 40208 (CA). It was asserted that even if there were negotiations between the parties, which was not conceded, it would not prevent or stop the limitation period from running. The cases of EBOIGBE vs. NNPC (1994) 5 NWLR (PT 347) 649 at 659 to 600 [sic] and LAHAN vs. A-G, WESTERN NIGERIA (1961) WNLR 39 were cited in support.

RESOLUTION OF ISSUES
In resolving issue one, the Court held relying on SIFAX NIG LTD vs. MIGFO NIG LTD (2018) 9 NWLR (PT 1623) 138 that the settled state of the law is that time ceased to run for the purpose of limitation period during the pendency of the previous action at the High Court of Lagos State and the Federal High Court would therefore appear to be wrong, having included the said period in its computation. Similarly, on the Respondent’s argument that the Federal High Court was not wrong because the Appellant failed to plead the said previous proceeding at the High Court of Lagos State in its Statement of Claim, the Court held that the material consideration is whether in the consideration of the application, the fact of the previous proceedings was before the Federal High Court in order for the Federal High Court to apply the provisions of the law consequent thereon. The Court found that from paragraph 4 (c) of the appellant’s counter affidavit at the Federal High Court and the written address in support of the counter affidavit, there were clearly materials before the Federal High Court on which to make a determination on the point of law of whether limitation period ceased to run during the pendency of the action at the High Court of Lagos State and that the Federal High Court however failed to make any pronouncement on the issue but went ahead to include the said period in its computation of time. This issue was resolved in favour of the Appellant.

In resolving issue two, the Court held that the period of limitation would not cease to run merely because the parties are engaged in negotiation. Where the negotiation does not result in a settlement or in an admission of liability, the time devoted to negotiation will not be excluded from the period, which should be taken into consideration in determining whether an action is statute barred. The only exception to where negotiations will stop time from running according to the Court, will depend on the stage reached in the negotiations and if there has been an admission of liability during the negotiations and all that remained is fulfillment of the agreement and the party fails to perform, in such an instance it will not be just and equitable for the action to be barred after the statutory period.

The Court held that nothing on the cold printed records showed that even if there were negotiations, the stage reached or that it resulted in an admission of liability by the Respondent from which they later resiled. Accordingly, that the Federal High Court rightly held that there was no negotiation that would warrant the suspension of the running of the limitation period. This issue was resolved in favour of the Respondent.

HELD
In the final analysis, the Court held that the appeal was meritorious and allowed it. The decision of the Federal High Court was set aside and the case was remitted back for expeditious hearing and determination of the action.

Appearances:
Thaddeus Idenyi, Esq. -For Appellant(s)
Adenrele Adegborioye, Esq. with him, Miss Faith Onuoha -For Respondent(s)

Compiled by LawPavilion