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Vulcan Gases Limited V. Gesellschaft Fur Industries Gasverwertung A.G.(G.I.V.) (SC.67/1995, 4th May 2001)

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➥ CASE SUMMARY OF:
Vulcan Gases Limited V. Gesellschaft Fur Industries Gasverwertung A.G.(G.I.V.) ( SC.67/1995, 4th May 2001)

by Branham Chima.

➥ ISSUES RAISED
Power of attorney;
Agency relationship;
Consent judgement;
Authority of client;

➥ CASE FACT/HISTORY
Following an agreement between the parties sometime in 1978, the respondent, Gesellschaft Fur Industries Gasvenvertung A.G. (G.I.V.), a foreign company with its headquarters in Geneva, Switzerland, shipped some quantities of oxygen and acetylene producing machines to the appellant at a total contract price of U.S. $606,852.00. The goods were cleared by the appellant from the Nigerian Ports Authority in Lagos without the production of the original Bill of Lading and it thereby avoided payment for the said machines. When the appellant failed to pay the purchase price of the goods, the respondent was obliged to commence a winding-up proceedings in suit No. FHC/KD/3/82 against the appellant at the Sokoto Judicial Division of the Federal High Court. This was with a view to recovering from the appellant the total contract price of U.S. $606,852.00 for which the goods were sold. In the course of the proceedings, the parties went into negotiation with a view to resolving their differences out of court and the learned trial Judge was duly informed of this development on the 8th day of June, 1983. The negotiation was between Counsel for the two parties. In particular, the respondent, through its solicitors in Geneva, drew up its terms of settlement and got the same delivered to its Counsel in Nigeria on the 22nd November, 1983 with clear instructions to settle the case strictly on the conditions therein stipulated. For some undisclosed reasons, however, the respondent’s Counsel in Nigeria on the 6th November, 1986 purported to agree to terms of settlement with the appellant’s Counsel which were at complete variance with those which his client had authorised. When the respondent became aware of this unauthorized development, it wrote to both its Counsel in Nigeria and to Counsel for the appellant stating categorically that it did not authorise the settlement on the terms in question and that it unequivocally rejected the same. This is on the ground that its Counsel in Nigeria had exceeded the express written instructions and authority given to him by the respondent. These letters were both dated the 18th December, 1986. The respondent in those letters made it clear that it did not recognise the validity of the transaction entered into by its Counsel. In reply, however, the appellant’s Counsel asserted that the authority of the said respondent’s Counsel to bind his client could not be questioned and that he would therefore insist on the recognition of the disputed terms of settlement of the claim. For his own part, the respondent’s Counsel in Nigeria wrote to the Registrar, Federal High Court, Sokoto, on the 14th day of May, 1987 conveying his client’s rejection of the disputed terms of settlement. The immediate reaction of the appellant’s Counsel was to address their letter of the 25th May, 1987 to the respondent’s Counsel stating that they had since filed a copy of the terms of settlement in court and that they would proceed to seek judgment based thereunder. This was in spite of the fact that they had been effected with actual notice that the said Terms of Settlement were in dispute and unacceptable to the respondent on the ground that they were reached by the respondent’s Counsel without authority and contrary to his instructions.

Although the appellant’s Counsel by their letter of the 25th May, 1987, to the respondent’s Counsel claimed that a copy of the Terms of Settlement had been filed by them in court, it is instructive that this representation was in fact incorrect. It was not until two months thereafter. That is to say, on the 27th July 1987 that the appellant’s Counsel went ahead to file the alleged Terms of Settlement in court. Strangely enough, it was on the same day, that is to say, the 27th July 1987 that the appellant’s Counsel moved the court in the absence of the respondent and its Counsel to enter judgment in the suit in terms of the disputed Terms of Settlement. The fact that there was a dispute as to the said Terms of Settlement was, however, not brought to the notice of the court by learned Counsel for the appellant. It was under such circumstance that the learned trial Judge. Ofili. J., in the mistaken belief that the purported Terms of Settlement represented the true agreement between the parties entered a consent judgment in respect thereof. He observed: “… I am satisfied that the terms of settlement constitute the mutual agreement of the parties and I therefore enter judgment on terms of the settlement in Exhibit A. No order as to costs.”

This is an appeal against the judgment of the Court of Appeal, Kaduna Division, delivered on the 3rd day of June, 1992 wherein the Court of Appeal affirmed the decision of R. D. Muhammad, J., as he then was, sitting at the Federal High Court of the Sokoto Judicial Division. The appellant being dissatisfied with the said decision of the Court of Appeal has further appealed, with leave, to this court.

➥ ISSUE(S) & RESOLUTION(S)
[APPEAL DISMISSED]

↪️ I. Whether the Court of Appeal was correct in affirming the decision of the Federal High Court that it had jurisdiction to entertain the suit of the respondent?

RESOLUTION: IN RESPONDENT’S FAVOUR.
[THE LAWYER WAS APPOINTED TO REPRESENT THE RESPONDENT – WAS AN AGENT
‘It cannot be seriously disputed that the respondent before the institution of the present proceeding did authorise and/or instruct the law firm of Beatrice Fisher and Co. to institute an action to set aside the consent judgment entered at the Federal High Court on the 27th day of July, 1987 in suit No. FHC/KD/3/82. This is deposed to in the affidavit of one Rene Merkt, a director of the respondent company as far back as on the 14th April, 1988 well before the originating summons was filed. This is per paragraph 21 of his said affidavit of the 14th April. 1988. It is not in dispute that Mr. Olaniyi Okunlola was at all material times a Counsel in the firm of Beatrice Fisher and Co. It is also clear on the face of the originating summons itself that the action was brought by the Mr. Okunlola as the lawful Attorney, of the respondent company. He did not purport to sue for himself. The respondent repeatedly affirmed that it aurhorised Mr. Okunlola to be its agent in the matter of the present proceeding for the setting aside of the disputed consent judgment. I think, in these circumstances that one may say without any fear of contradiction that the respondent, by express appointment, had constituted Mr. Okunlola its agent in the matter of the prosecution of the proceeding in issue.’

Available:  Ishmael Amaefule & Anor v. The State (1988) - SC

SUBSEQUENT RATIFICATION OF THE LAWYER’S REPRESENTATION BY THE RESPONDENT IS GOOD IN LAW
‘The effect of ratification of an agent’s act is to put the parties concerned in the same position as that in which they would have been if the act ratified had been previously authorised. Thus, even if an action is commenced without the authority of the purported plaintiff and is therefore incompetent and improperly constituted, the plaintiff can ratify his solicitors act, so that it will no longer be open to the defendant to object that the action is not properly brought. See Danish Mercantile Co. v. Beaumont (1951) Ch. 680. It does not, therefore, seem to me a correct proposition of law as contended by teamed Counsel for the appellant that where an action is brought without the authority or the purported plaintiff, such an action is automatically rendered a complete nullity and that no amount of subsequent ratification can cure the defect. I think that view of the law. With respect, is totally erroneous, misconceived and it is hereby rejected.’
‘I am therefore prepared to hold that if an action is commenced without the authority of the purported plaintiff and is therefore not properly constituted, such a plaintiff can ratify his solicitor’s act and it may then not be open to the defendant to object that the action is not properly before the court.’]
.
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↪️ II. Whether the Court of Appeal was correct in affirming the decision of the Federal High Court that set aside the consent judgment in Suit No. FHC/KD/3/82 in the entire circumstances of the case?

RESOLUTION: IN RESPONDENT’S FAVOUR.
[THE CONSENT JUDGEMENT WAS ENTERED WITHOUT THE APPROVAL OF THE RESPONDENT; RESPONDENT COUNSEL EXCEEDED HIS AUTHORITY
‘It is however indisputable that the respondent’s Counsel had limited and written instructions, that the compromise agreement he reached with the appellant’s Counsel was at variance with and contrary to his client’s clear instructions and that the said agreement was immediately repudiated by the respondent the moment it was communicated to it. There is also no doubt that both the trial court and Counsel for the appellant were advised in writing by the respondent that it had unequivocally rejected the purported terms of settlement as unauthorized and that the appellant responded by insisting on the recognition of the disputed terms of settlement. It was two months after the appellant received notice of the respondent’s repudiation of these disputed terms of settlement that it made good its threat by getting the trial court to make the rejected terms of settlement a consent judgment. This, the appellant did, in the absence of both the respondent and its Counsel. It is also clear from the record of proceedings that at no time did the appellant’s Counsel intimate the court that the said terms were not only disputed but that they had been rejected outright by the respondent and that the parties as at that date were not ad idem, on the issue. On the contrary, the impression conveyed to the trial court was that the terms represented the mutual agreement between the parties. Indeed, it cannot be doubted that the trial court entered a consent judgment in the matter in the mistaken belief that the terms represented the genuine agreement between both parties.’

RESPONDENT COUNSEL MISLEAD THE COURT THAT GAVE THE CONSENT JUDGEMENT
‘I also ask myself whether it can be said, again with any degree of seriousness, that the appellant’s Counsel acted bonafide when, at the height of the disagreement between the parties with regard to the purported terms of settlement, he went ahead unilaterally to file them in court and urged that the same be immediately entered by the court as consent judgment in the suit in the absence of both the respondent and its Counsel. I think not. Another serious point of note is that it does not appear from the court records that the respondent and its Counsel were even served with any hearing notice against the court hearing of the 27th July 1987 on which date the appellant purportedly reported amicable settlement of the suit by the parties to the court. The suit was on the 5th February, 1986 adjourned sine die for an out of court settlement. Thereafter the case was not called up again until the 27th July, 1987. On that date both the appellant and its Counsel were present in court. The respondent and its Counsel were absent. There was no indication on record whether or not the latter were served with hearing notice in respect of the report of the alleged settlement. This state of affairs notwithstanding, the appellant’s Counsel still found himself able to report the purported out of court settlement of the suit unilaterally. He further proceeded to press for the alleged terms of settlement which to his knowledge were rejected by the respondent to be entered as consent judgment of the parties in the suit. Perhaps, more seriously, is the fact that the learned appellant’s Counsel, whether deliberately or by inadvertence, failed to disclose to the trial court on the said 27th July, 1987 that the terms of settlement in issue were rejected by the respondent. Indeed, from the records, it does appear that the impression he, conveyed to the trial court on that date was that the said terms represented the mutual agreement of the parties.’

‘It is plain to me that the trial court, if it had known the true and full facts surrounding the alleged terms of settlement, would never have described them as constituting the mutual agreement of the parties in the suit. In fact and in truth those terms were not the mutual agreement of both parties. On the contrary, they were terms which the parties violently disagreed upon from the onset and could hardly be described as terms mutually agreed upon by them.’

‘It seems to me that whether or not dishonesty can be imputed to the general conduct of Counsel for the appellant in this matter, one serious act of misconduct stands out. This is the failure of Counsel for the appellant to disclose to the trial court that the terms of settlement he represented as the mutual agreement of the parties and on the basis of which the court was obliged to enter a consent judgment had been rejected and/or repudiated by the respondent on the ground of want of authority on the part of the respondent’s Counsel. I think this conduct must be regarded as unfortunate.’]
.
.
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✓ DECISION:
‘In conclusion, I find no substance in this appeal and the same is hereby dismissed with costs to the respondent against the appellant which I assess and fix at ₦10,000.00.’

Available:  Deacon J.K. Oshatoba & Anor v. Chief Johnson Olujitan & Anor (2000)

➥ FURTHER DICTA:
⦿ FIVE WAYS IN WHICH PRINCIPAL AND AGENT RELATIONSHIP MAY ARISE
Usually, the relationship of Principal and agent may arise in anyone of five ways, namely: – 1. By express appointment whether orally or by letter of appointment or, indeed, by a Power of Attorney, Under this heading. No formality, such as writing is required for the valid appointment of an agent except for instance, where the authority of the agent is to execute a deed on behalf of a principal. in which case, the agency itself must be created by deed. 2. By ratification of the agent’s acts by the principal. See for example Bird v. Brown (1850) 4 Exch 786, Firth v. Staines (1897) 2 QB. 70 etc. This mode of creation of agency is sometimes expressed in the maxim omnis ratihabitio retrotrahitur et mandato priori aequiparatur. 3. By virtue of the doctrine of estoppel. 4. By implication of law in the case of agency of necessity and 5. By presumption of law in the case of cohabitation. — Iguh JSC.

⦿ DONEE OF POWER OF ATTORNEY MUST SUE IN HIS PRINCIPAL NAME
This is because, the donee of a Power of Attorney or an agent in the presentation of a court suit or action pursuant to his powers must sue in the name of the donor or his principal and not otherwise. See Timothy Ofodum v. Onyeacho 1966/67 10 E.N.L.R. 132; Jones v. Gurney (1913) WN 72; John Agbim v. Mallam Gamba Jemeyita (1972) 2 ECSLR 365. — Iguh JSC.

⦿ AMENDMENT TAKES EFFECT FROM THE DATE OF COMMENCEMENT OF ACTION
In the second place, it is beyond dispute that an amendment relates back to the commencement of a suit. An order of amendment takes effect, not from the date when the amendment is made or granted but from the date of commencement of the action. In other words, once ordered, what stood before amendment is no longer material before the court and no longer defines the issues to be tried. See Grace Amanamhu v. Alexander Okafor and Another (1966) 1 All NLR 205; Warner v. Sampson (1952) 2 WLR 109; Col. Rotimi v. Mc Gregor (1974) 11 SC 133 at 152; Osita Nwosu v. Imo State Environmental Sanitation Authority (1990) 2 NWLR (Pt. 135) 688. Accordingly, having regard to the amendment of the 24th February, 1997, it must be deemed that it was the respondent itself that commenced this action in its own name ab initio and, all arguments relating to whether or not Mr. Okunlola had locus standi at the time he commenced the proceeding as a donee of a Power of Attorney automatically go to no issue. — Iguh JSC.

⦿ CONSENT JUDGEMENT MAY BE SET ASIDE
It is long settled that a consent judgment or order made by a court to give effect to the compromise of a legal claim by the parties may be set aside, not only on the ground of fraud, but for any other reason which would afford a good ground for setting aside the agreement on which the judgment or order is based, e.g. on the ground of a common mistake, fraudulent misrepresentation or misconception. See Attorney-General v. Tomline (1877) 7 Ch. D. 388, Huddersfield Banking Company Ltd. v. Henry Lister and Son Ltd. (1895-99) All E.R. 868 (C.A.) … It is thus clear that apart from fraud which, if established in any judgment or order, necessarily invalidates the same, a consent judgment or order may be set aside for cogent and sufficient reason which in law would constitute a ground for setting aside the agreement on which such consent judgment or order was based. As Lindley, LJ. put it in Huddersfield-Banking Company Ltd. v. Henry Lister and Son Ltd. (supra) at Page 871:- “A consent order, I agree, is an order, and so long as it stands, it must be treated as such, and so long as it stands I think it is as good an estoppel as any other order. I have not the slightest doubt on that point. But that a consent order can be impeached not only on the ground of fraud but upon any grounds which invalidate the agreement it expresses in more formal way than usual. I also have not the slightest doubt.” — Iguh JSC.

⦿ COURT HAS JURISDICTION TO SET ASIDE ITS OWN DECISION MADE IN MISTAKE OR MISREPRESENTATION
The court in its inherent jurisdiction has definite jurisdiction or power to set aside its own order or decision made without jurisdiction if such order or decision is in fact a nullity and an appeal in such circumstance cannot be said to be necessary. It can thus be said that outside the appellate procedure, a judgment or order can be set aside if it is a nullity or where a court was misled into giving the judgment by some mistake, believing that the parties consented to its being given, whereas, in fact, they did not. See Craig v. Kanseen (1943) K.B. 256 or (1943) 1 All ER 108 at 113; Okoli Ojiako and others v. Onwuma Ogueze and Ors. (1962) 1 All NLR 58; Ekerete v. Eke 6 NLR 118. — Iguh JSC.

⦿ BLESSING OF THE COURT IN RESPECT TO A CONSENT JUDGEMENT
As it was said by this court in Abel Woluchem v. Dr. Charles Wokoma (1974) 3 S.C. 153 per Ibekwe, JSC: – “The rule is that actions may be settled by consent during the trial, usually, such settlement is a compromise and, in order to have binding effect on the parties, it is imperative that it should have the blessing of the court. Settlement between the parties may be described as a contract whereby new rights are created between them in substitution for, and in consideration of, the abandonment of the claim or claims pending before the court. When the court moves and takes action as agreed upon by the parties, it becomes a consent judgment.” In order to have a consent judgment, therefore, the parties must reach a complete and final agreement on the vital issue in their terms of settlement. They must be ad idem as far as the terms of their compromise agreement are concerned and their consent must be free and voluntary. The consent judgment emerges the moment the court on the application of the parties enters such compromise agreement as the judgment of the court. The position was explained by this court per Ibekwe, JSC in Abel Woluchem v. Dr. Charles Wokoma (supra) as follows:- “As far as we can discern from the record of appeal, the parties never reached a complete and final agreement on the issue of settlement………..In order to have a consent judgment, the parties must be ad idem as far as the agreement is concerned; their consent must be free and voluntary when the court makes an order based upon such terms of settlement, there emerges a consent judgment, from which the parties could appeal only by leave of the court.” — Iguh JSC.

Available:  Tinubu v. I. M. B. Securities Plc (2001)

⦿ CONSENT JUDGEMENT MAY BE SET ASIDE WHERE VITIATED BY FRAUD, MISTAKE, OR ANY OTHER VICE
Where, however, purported consent judgment is vitiated by fraud, mistake, misconception or by any other vice which would afford a ground for setting aside the compromise agreement on which the order was based, no true consent judgment binding on the parties would have emerged. The result, in such a case is that the so called consent judgment can be set aside but by a fresh action. See Talabi v. Adeseye (1972) 8-9 SC 20. The court, therefore, has discretionary jurisdiction to examine the entire circumstances of a case in order to determine whether the alleged compromise agreement entered into by the parties should be sanctioned and made an order of court. It is this jurisdiction that the respondent in the present application invited the trial court to exercise, alleging that the consent judgment in issue was vitiated by mistake and misconception and that there was, in fact, no concensus ad idem between the parties in the terms of the compromise agreement which were the basis of the consent judgment. I will now briefly dispose of the right of a party to repudiate the action of his solicitor. — Iguh JSC.

⦿ WHERE COUNSEL HAS LIMITED AUTHORITY TO ACT FOR CLIENT
The general principle of the law is that at the trial of an action the authority of Counsel extends, when it is not expressly limited, to the whole of the court action and all matters incidental to it and to the conduct of the trial. See Sourendra Nath Mitra v. Srimati Tarubala Dasi (1930) 46 T.L.R. 191 PC. This general principle, however, does not and has not fettered the discretion of the court where it deems it fit so to exercise the same. See Adewunmi v. Plastex Ltd (1986) 3 NWLR (Pt. 32) 767 at 785.  In this regard, it cannot be disputed that where Counsel by the authority of his client and with full knowledge of the facts consents to an order, there being no mistake or surprise in the case, the client cannot arbitrarily withdraw such consent, and the court may proceed to perfect the order but without prejudice to any application which the other side might make to the court to be relieved from his consent all the ground of fraud, mistake, misrepresentation or surprise or for other cogent and sufficient reason. See Harvey v. Croydon Union Rural Sanitary Authority (1884) 26 ChD. 249, CA, Holt v. Jesse (1876) 3 Ch. D. 177. But if it is established that Counsel agreed to the consent order being made under some misapprehension, the court will not hold him or his client to the agreement. See Shepherd v. Robinson (1919) 1 K.B. 474, C.A. Where the authority of Counsel has been expressly limited by the client and Counsel has in defiance consented to an order or judgment contrary to his client’s clear instructions, various considerations would appear to arise. If the limitation of authority is known or communicated to the other side, consent of Counsel outside the limits of his authority and in breach of the express instruction of his client will be inconsequential and of no effect. See Strauss v. Francis (1866) L.R. 1 Q.B. 379 at 382. Where, however, the limitation of authority is unknown to the other side who enters into the compromise in the belief that the opponent’s Counsel has the ordinary unlimited authority of his client, the position would appear, to some extent, to be fluid and uncertain. In such situation the learned authors of Halsbury’s Laws of England, 4th Edition, Volume 3, paragraph 1182 have formulated the applicable true rule under the circumstance as follows:- “But the true rule seems to be that in such case the court has power to interfere; that it is not prevented by the agreement of Counsel from setting aside or refusing to enforce a compromise; that it is a matter for the discretion of the court; and that when, in the particular circumstances of the case, grave injustice would be done by allowing the compromise to stand, the compromise may be set aside, even although the limitation of Counsel’s authority was unknown to the other side, or where clear and unequivocal instructions of limitations have been given.” I confess that I have given the above passage a most careful consideration and must fully and most respectfully endorse the same as the correct position of the present law. It is my view, therefore, that the court possesses the discretionary jurisdiction to examine the entire circumstances of a particular case, in order to determine whether or not the compromise entered into by Counsel should be sanctioned by the court. The remedy, being discretionary, must be exercised with the utmost care and with regard to the injustice or otherwise of allowing an order to stand. It is this jurisdiction that both courts below invoked and exercised in favour of the respondent as plaintiff in the originating summon. — Iguh JSC.

⦿ CONSENT JUDGEMENT IS BINDING ONLY ON THOSE WHO CONSENTS
Such, therefore, is the binding force of a consent judgment. Accordingly,no consent judgment or order has any operation or effect whether by way of estoppel or otherwise against any of the parties who is not shown to have consented to it; but as between consenting parties and their privies, a consent judgment or order is as effective in respect of the matters which are thus settled as any judgment given after the matters are fully fought out to the end. See Talabi v. Madam Adeseye (1972) 1 All NLR (Pt. 2) 255. A court judgment is either by consent in which case it must have been passed with the mutual consent of the parties whose blessing it must receive or else it is one passed by the court after the action has been contested and fought out to the end. — Iguh JSC.

➥ LEAD JUDGEMENT DELIVERED BY:
Iguh JSC

➥ APPEARANCES
⦿ FOR THE APPELLANT(S)
A. Oyeyipo Esq.

⦿ FOR THE RESPONDENT(S)
Dr. B.O. Babalakin.

➥ MISCELLANEOUS POINTS

➥ REFERENCED (LEGISLATION)

➥ REFERENCED (CASE)

➥ REFERENCED (OTHERS)

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