Weakness of a Case: Whether Valid Ground for Striking Out a Suit

TFacts he Appellant entered into a Partnership Agreement with the Respondent, for the distribution of network services through sale of starter packs, handsets, airtime or any other product introduced by the Respondent from time to time, through its distribution outlets in Benue State. By an email from the Respondent’s dealer account executive sales and distribution agent, the Appellant was informed of the Respondent’s Revised Trade Partners’ Discount and Commissions Structure which became effective on 1st July, 2013, as part of their contract. On 30th July, 2013, however, the Appellant received another email from the Respondent’s dealer account executive forwarding a letter dated 23rd July, 2013, which terminated the Partnership Agreement, for

failure of the Appellant to meet up with set performance measures and compliance grid in the Partnership Agreement. The effective date of the termination was given as 1st August, 2013. Subsequently, the Respondent’s agent sent an email to the Appellant, requesting the Appellant to return the Respondent’s property in its possession. This was followed by the Respondent dispatching its agents, who went into the Appellant’s sales outlet to cart away properties belonging to the Respondent.

Aggrieved by the termination of the Partnership Agreement, which the Appellant adjudged was in breach of Clause 16 of the Agreement stipulating that the Respondent shall be entitled to terminate the agreement upon giving 60 (sixty) days written notice, the Appellant instituted an action against the Respondent at the High Court of Lagos State, for breach of the Partnership Agreement. The Respondent did not file a Statement of Defence to the suit; therefore, the Appellant filed a motion for judgement in default of defence. The Respondent, however, filed a Preliminary Objection on the ground that the Respondent’s suit did not disclose a reasonable cause of action. The trial Court upheld the Respondent’s Preliminary Objection and struck out the suit. Dissatisfied with the decision of the trial Court, the Appellant appealed to the Court of Appeal.

Issues for Determination The Court of Appeal considered the following issues:

(i) Whether the Respondent was required to file a Statement of Defence before raising a Preliminary Objection; and

(ii) Whether the suit disclosed a reasonable cause of action.

Arguments Arguing the first issue, Counsel for the Appellant submitted that the Respondent was required to file a Statement of Defence and raise the Preliminary Objection as a point of law for disposal by the Court, as provided for under Order 15 Rule 1(1) of the High Court of Lagos State (Civil Procedure) Rules, 2012. He also argued that the Appellant having filed a motion for judgement in default of defence, the trial Court should have considered the motion under Order 20 Rule 9(1) of the Rules. The Appellant submitted that the failure to adhere to Rules of the trial Court, led to a miscarriage of justice. He relied, amongst others, on the cases of OJUKWU v ONYEADOR (1991) 7 NWLR (PT. 203) 286 AT 331; NWORA v NWABUEZE (2011) 15 NWLR (PT. 1270) 467 AT 497. He urged the Court of Appeal to set aside the ruling of the trial Court, and to remit the suit for re-assignment to another judge. In response, the Respondent argued that the entire sets of facts comprising the action at the trial Court, did not constitute an enforceable contract as to transform into a cause of action. Further, Counsel argued that the non-existence of a cause of action against the Respondent, is a feature in the case which prevented the trial Court from exercising jurisdiction and that being an issue of jurisdiction, it could be raised without filing a Statement of Defence. He cited the cases of MADUKOLU v NKEMDILIM (1962) 2 NSCC 374 AT 378 -379; MOBIL PRODUCING NIG. UNLIMITED v LASEPA (2002) 18 NWLR (PT. 798) 1; and ELEBANJO v DAWODU (2006) 15 NWLR (PT. 1001) 76 AT 116, among others.

On the second issue, learned Counsel for the Appellant, contended that from the Appellant’s Statement of Claim at the trial Court, there was a binding contract between the parties both expressly and by conduct, forming a reasonable cause of action entitling the Appellant to file the action for the enforcement of its claim. He placed reliance on a number of cases inter alia - COOKEY v FOMBO (2005) 15 NWLR (Pt. 947) 182; THOMAS v OLUFOSOYE (1986) 1 NWLR (PT. 18) 669. Counsel for the Respondent on his part, submitted that the partnership agreement relied on by the Appellant, was unexecuted or unsigned by the Respondent, so as to constitute an enforceable contract which can transform into a cause of action. He cited the case of LSBPC v PURIFICATION TECH. (NIG.) LTD (2013) 7 NWLR (PT. 1532) 82 AT 102. The Respondent further argued that the “Appointment Clause” in the Proposed Partnership Agreement stated that the Partnership Agreement would take effect on a date which did not materialise, as the condition specified in the agreement was not fulfilled as to make the contract enforceable. Consequently, he argued that the trial Court was right in holding that there was no enforceable cause of action, for the Court to assume jurisdiction. He argued that the trial Court could not have considered the Appellant’s application for judgement as per the Statement of Claim as it did not disclose a cause of action.

Court’s Judgement and Rationale Deciding the first issue, the Court of Appeal held that an application to strike out or dismiss a suit for disclosing no reasonable cause of action, can be made at a stage when only the Statement of Claim is filed without any other pleading and without any evidence at all. The Court relied on the case of YUSUF v AKINDIPE (2000) 8 NWLR (PT. 669) 376 AT 387 to hold that the Respondent was not required to file a Statement of Defence before raising the Preliminary Objection on the ground that the suit did not disclose a reasonable cause of action, and the trial Court could not have been surefooted if it had considered the application for judgement in default of the Statement of Defence in the circumstance.

On the second issue, the Court of Appeal held that a cause of action, is the totality of facts giving a claimant the legal right to claim a remedy in law or equity against his adversary at litigation. A reasonable cause of action, is a cause of action with some chance of success when only the averments in the Statement of Claim are considered. The fact that the case is weak and not likely to succeed, is no ground for striking it out that it discloses no reasonable cause of action, unless the case disclosed in the Statement of Claim is hopeless or obviously incontestably bad.

Great circumspection and care should be taken by the Court, in exercising the power to dispose of a case in limine or on the threshold of disclosing no reasonable cause of action, because a party/ Claimant is ordinarily entitled to his day in Court. This procedure to get rid of an action for disclosing no reasonable cause of action, is only to be followed when the Statement of Claim considered alone is clearly and ex facie unsustainable.

In this case, in considering whether the suit disclosed a reasonable cause of action, the trial Court relied on the Partnership Agreement frontloaded with the Statement of Claim, which it perused to hold that the Agreement was not enforceable between the parties having not been signed and executed by the Respondent. The Statement of Claim before the Court disclosed on its face, a case founded on contract with facts showing the alleged obligations and infringement of the Appellant’s legal rights. The trial Court was therefore, wrong in relying on the content of the Partnership Agreement to rule that the suit did not disclose a reasonable cause of action.

Appeal Allowed.

Representation: Mr. A. Okafor for the Appellant

Mr. R.A.O Adegoke and Mr. J. James for the Respondent. Reported by Optimum Publishers Limited (Publishers of the Nigerian Monthly Law Reports (NMLR))