Limitation of Actions: Does The Clock Really Stop Ticking?

LIMITATION OF ACTIONS: DOES THE CLOCK REALLY STOP TICKING? INTRODUCTION A person will usually have a right to bring an action in court against another person when there has been the violation of a legal right. However this right to bring an action in court is one that is not exercisable in perpetuity due to the operation of the statutes of limitation which limit the time periods within which certain types of actions may be brought by a Claimant. Once this time period limited by the statute of limitation expires, a Claimant’s right of action will be extinguished and become unenforceable against a Defendant and can be referred to as having become statute barred. The resulting effect of a Claimant’s claim becoming statute barred is that such a claim can no longer be properly entertained by a court as the court will, on the claim becoming statute barred, have lost jurisdiction to entertain the claim.

Nigeria’s jurisprudence on limitation of actions is not scant and the aforementioned general statement of the law on the effect of a claim becoming statute barred is by no means recondite under Nigerian law. However, in the case of SIFAX NIGERIA LTD V MIGFO NIGERIA LIMITED (2015) LPELR-24655 (CA) (the SIFAX case) the Lagos Division of the Court of Appeal recently had to determine an issue in limitation law for which there is scant judicial precedent in Nigeria.

The issue was whether upon the filing of an action by a party, time ceases to run for the purposes of the statutes of limitation. This article looks at the decision of the Court of Appeal in the SIFAX case on this narrow point on the law of limitation of actions and considers whether the decision of the court is a welcome development of the law on limitation of actions in Nigeria.

FACTS OF THE CASE Sometime in 2005 Sifax and Migfo put up a Memorandum of Understanding (MOU) to jointly bid for the concessioning and joint management of Terminal ‘C’ of the Tin Can Island Port in Lagos which was then being concessioned by the Federal Government of Nigeria, through the Bureau of Public Enterprises and the Nigerian Ports Authority. A dispute subsequently broke out between the parties with respect to the MOU which resulted in Migfo filing an action

against Sifax at the Federal High Court for, amongst other things, the enforcement of the provisions of the MOU. Judgment was given in favour Migfo at the Federal High Court and affirmed on Sifax’s appeal to the Court of Appeal. On Sifax’s further appeal to the Supreme Court the suit was struck out on the ground that the Federal High Court lacked jurisdiction to entertain the action instituted by Migfo as the subject matter was a simple contract. See PORTS AND CARGO HANDLING ERVICES COMPANY LTD V MIGFO NIGERIA LTD (2012) 18 NWLR (PT 1333) 555.

Migfo thereafter commenced the action leading to this appeal at the High Court of Lagos State.

In response to this suit, Sifax filed an objection to the jurisdiction of the court to hear the action on the ground that pursuant to the provisions of section 8 of the Limitation Law of Lagos State Migfo’s claim had become statute barred having been instituted after 6 years from the date Migfo’s cause of action accrued. The High Court of Lagos State dismissed the objection. Being dissatisfied with the Ruling, Sifax appealed to the Court of Appeal.

DECISION OF THE COURT OF APPEAL The Court of Appeal was called upon to decide on two principal issues in the appeal only one of which is relevant for the purposes of this discussion. The Court found that from the circumstances of the case, Migfo’s claim was actually not statute barred but went further to consider the issue of “whether time ceases to run upon the filing of an action by a party, which suit is subsequently struck out, for the purpose of the limitation law” due to the recondite nature of the issue. In resolving this rather novel issue, the court considered the book titled ‘Limitation Period’ by Professor Andrew McGee which at page 29 states that: “…Time ceases to run when the Plaintiff commences legal proceedings in respect of the cause of action in question. It is a general principle of some importance that the bringing of an action stops the running of time for the purpose of that action only.”

and also the decision of the Supreme Court in the case of ALHAJI HARUNA KASSIM (Trading as cash stores) v HERMAN EBERT (1966-69) NNLR 75.

To understand the court’s reliance on the KASSIM case, the facts of the case are necessary. The simple facts of the KASSIM case are that the Plaintiff sued for a debt before it was statute barred but his counsel, unable to file a Statement of Claim, obtained an Order striking out the claim with liberty to apply for relisting without payment of further Summons fees. He later obtained an Order relisting the suit. On appeal the Defendant objected that when the suit was relisted the claim had become statute barred and could no longer be brought. The Supreme Court decided that after the suit was struck out with liberty to apply to relist, an application could be made to relist it even outside the time limited by the statute of limitation because the suit remained a pending cause, so when it was relisted it was not a new suit but still the old suit, which had been brought within the time limited by the statute of limitation.

Relying on the book by Professor McGee and the KASSIM case, in its final decision on the issue, the court held that where an aggrieved person commences an action within the period prescribed by the statute and such action is subsequently struck out for one reason or the other without being heard on the merit or subjected to an outright dismissal, such an action is still open to be recommenced at the instance of the Claimant and the limitation period shall not run during the pendency of the earlier suit. The essence of the judgment of the Court of Appeal was aptly stated at page 64 of the leading judgment of Oseji, JCA where his Lordship stated that “In other words, computation of time during the pendency of an action shall remain frozen from the filing of the action until it is determined or abates.”

In a concurring judgment, Ikyegh, JCA adopted the reliance of the leading judgement on the book by Professor McGee and the KASSIM case but went further to hold that no enactment can dictate the pace at which cases are to be heard in court and so long as a case is pending in court it is contrary to public policy to treat time as running against the case for the purpose of limitation period provided by the statute of limitation. It was also held that the revival of Migfo’s case in the High Court of Lagos State after it had been struck out at the Federal High Court for lack of jurisdiction was still the continuation of the same action that was struck out, so

the stoppage of time during the pendency of the action that was struck out would count in favour of the renewed action at the High Court of Lagos State.

DOES THE DECISION OF THE COURT OF APPEAL SET THE RIGHT PRECEDENT? It was pointed out by the Court of Appeal, and rightly so, that the issue which arose for determination in this appeal fell within a very dry area of Nigerian law. Notwithstanding this, considering the settled position of Nigerian law on the operation of a statute of limitation and even the authorities relied upon by the court in reaching its decision, there is the crucial question of whether the decision of the Court of Appeal has laid the right precedent in this dry area of Nigerian law? Considering the authorities relied on by the court in reaching its decision, it is difficult to see how the answer to this question can be in the affirmative. Breaking down the ratio of the decision of the Court of Appeal, it is clear that the decision is essentially predicated on two principal grounds. The first ground is the passage referred to above from Professor McGee’s book and the Supreme Court decision in the KASSIM case. The second ground is that no statute can prescribe the time period within which a court must hear cases and deliver its decision.

The First Ground On the first ground, with respect to the reliance placed by the court on Professor McGee’s book, it is clear that the interpretation given by the court to the passage quoted from the book is at variance with the passage itself, even upon a literal reading of the passage. The second part of the quote states that “the bringing of an action stops the running of time for the purpose of THAT ACTION ONLY”. It is clear that in stating that, with respect to the statute of limitation, time ceases to run specifically for the purpose of an action that has already been brought, time will continue to run against actions that have not been brought, even if in respect of the same cause of action. In holding that time ceases to run, the court also cited some English authorities which had been cited in Professor McGee’s book, one of which is the case of LEFEVRE V WHITE [1990] 1 LLOYDS REP 569. Looking at the decision of Popplewell J. in the LEFEVRE case, it is clear that the principle of law as stated by Professor McGee and indeed in the LEFEVRE case was, with respect, misinterpreted and misapplied by the Court.

Briefly, the facts LEFEVRE case are that Mr Evans, the insured, had an accident with his car, in which the Plaintiff, who was a passenger, sustained several injuries. It was later found that Mr Evans had been reckless in driving his car and he was subsequently convicted for several road traffic offences. The Plaintiff subsequently brought an action against Mr Evans, to the exclusion of Mr Evans’ insurance company and judgment was given in favour of the Plaintiff. Mr Evans then brought an action against his insurance company seeking indemnity in respect of the Plaintiff’s judgment against him. Mr Evans was then subsequently made bankrupt on the Plaintiff’s Petition after which the Plaintiff brought an action against Mr Evans’ insurance company pursuant to the Third Party (Rights Against Insurers) Act 1930, outside the time limited by the statute of limitation. The effect of the Third Party (Rights Against Insurers) Act 1930 is to, in the event of an insured (Mr Evans) becoming bankrupt, transfer to the third party (in this case the Plaintiff) the rights which previously existed in the insured and to divest the insured of any rights thereafter. In its final decision, the court held that although the Plaintiff stepped into the shoes of Mr Evans with respect to the cause of action against the insurer and Mr Evans had brought his claim against the insurer within time, the Plaintiff’s action was still caught by the statute of limitation and consequently statute barred. The timely issuance of a Writ by Mr Evans did not operate to stop time from running against the Plaintiff, notwithstanding the fact that Mr Evans’ and the Plaintiff’s right of action was one and the same and derived from the same cause of action against the insurance company.

It is clear that the decision of the court in the LEFEVRE case is in consonance with a literal reading of Professor McGee’s general statement of the principle that upon the filing of an action, for the purposes of the limitation statutes time ceases to run only with respect to that action and not any other subsequent action which may be brought pursuant to the same cause of action on which the first action was founded. In this respect, it is clear that the decision of the Court of Appeal is irreconcilable with the LEFEVRE case.

Moving on to the KASSIM case, the brief facts and decision of which have earlier been recounted, it is difficult to see how the case can be a basis for the decision of the Court of Appeal. In the KASSIM case it was the exact same suit that had been previously struck out that

was relisted by the same court that struck it out. The rationale for the KASSIM case was that even when struck out, the suit was still pending on the general cause list and upon relisting the suit could then be moved to the hearing cause list. Essentially, the suit was not caught by the statute of limitation because even though the suit was struck out, proceedings could still be taken in it as all that was required was for the suit to be relisted, to continue exactly from where it stopped before being struck out. Considering the facts and circumstances of the KASSIM case, it is very difficult to see how it could be a used as a precedent for the SIFAX case under review, for the proposition that, with respect to the statute of limitation, once an action is filed time ceases to run for subsequent actions filed pursuant to the same cause of action that the initial action was filed.

In the SIFAX case, Migfo’s initial suit had been struck out by the Supreme Court for lack of jurisdiction of the Federal High Court to entertain the matter, which led Migfo to institute a fresh action at the High Court of Lagos State which is a completely different court with different jurisdiction from the Federal High Court. At the High Court of Lagos State Sifax had to cause a fresh Writ to be issued by that court and had the matter proceeded to trial, the trial would have had to be conducted in ignorance of the struck out Federal High Court proceedings.

When the matter before the Federal High Court was struck out for lack of jurisdiction the implication, in law, was that the entire proceedings before that court was a nullity for all intents and purposes. See SALEH V. MONGUNO (2006) LPELR-2992(SC). Essentially, the Federal High Court proceedings are to be regarded, in law, as having no consequence and could confer no legal rights or obligations on any of the parties. See OSAFILE v. ODI (1990) LPELR-2783(SC).

Considering the nullity of the Federal High Court proceedings, the simple question then is whether it could, for the purposes of the statute of limitation, operate to ‘freeze’ time such that Migfo’s suit which was filed at the High Court of Lagos State outside the time limited by statute was not statute barred? It is hard to see how this question could be answered otherwise than in the negative. This is because, in essence, for the purpose of the limitation statute, time never ceased to run against Migfo’s right to bring an action against Sifax in any court with competent jurisdiction to hear the matter despite the fact that Migfo had initially

brought an action at the Federal High Court in respect of the same cause of action. See EBOIGBE V. NNPC (1994) LPELR-992 and GBADAMOSI LAHAN V THE ATTORNEY-GENERAL, WESTERN NIGERIA (1963) 2 SCNLR 47.

The Court of Appeal quite obviously held a different view as was stated by the court at page 81 of the report as follows: “…the revival of the action after it had been struck out was still the continuation of the same action that was struck out, so the stoppage of time during the pendency of the action that was struck out would count in favour of the renewed action at the court with the requisite jurisdiction of the court below.”

Assuming that the decision of the Court of Appeal is right and the institution of the Federal High Court action did freeze time with respect to Migfo’s right to bring an action at the High Court of Lagos State several critically unresolved issues arise. Firstly, after the Federal High Court action was struck out, how much time did Migfo have left to now approach the right court with jurisdiction to entertain the action? Was it the remainder of the time left between when Migfo instituted the Federal High Court action and the final day it could have brought an action or a longer time? Assuming the answer to this question is in the affirmative, why then was it importantly identified in the decision of the Court of Appeal that Migfo brought its second action at the High Court of Lagos State quickly when it still had spare time to do so? If the exercise of a right of action through the institution of an action freezes time for the purposes of the limitation statute, will the purpose of the statute of limitation not been defeated, as a Claimant will perpetually remain entitled to exercise his right of action notwithstanding the fact that the right is statute barred? Also, the decision of the Court of Appeal being right would mean a cause of action can only generate one right of action exercisable by a Claimant and even where the exercise of that right is nullified by a court, the Claimant will still be entitled to a re-exercise of that right, thereby reviving the already nullified process.

Looking at the decision in the SIFAX case, it is doubtful that in handing down this decision, the intention of the Court of Appeal was to alter the settled principles of Nigerian law that a right of

action that is statute barred is unenforceable (See EGBE v. ADEFARASIN (1987) LPELR1032(SC)) as from the judgment there is no patent indication of such an intention. In the circumstance, it is clear that the current position of Nigerian law on limitation of actions and indeed the authorities relied on by the Court of Appeal do not support the decision of the court in this case, thereby leading to the inevitable conclusion that the decision is, with respect, erroneous in law in this regard.

The Second Ground As already identified above, the second ground relied on by the court in reaching its decision was that any law that prescribes the time period within which a court must determine a suit is unconstitutional. In this respect, there are also reasons for why the decision of the court can be seen as having been borne out of a misinterpretation of the provisions of the law. The limitation statute in question in the SIFAX case, which was the Limitation Law of Lagos State, does not prescribe the time within which actions are to be heard and determined by the courts.

In fact, section 8 of the Limitation Law, which was in issue in this case, provides that certain actions “shall not be brought after the expiration� to the time prescribed by the Law. Reading the law, it is very clear that it has nothing to do with the time within which a court must hear and determine an action pending before it as the Law is clearly targeted at the bringing of an action and not the determination of the action. This second ground of the decision of the court in the SIFAX case, does not present a better justification for the decision than the first ground as it is apparent that the interpretation given to the Law is at odds with a literal reading of the law itself. There was also no clear prior authority cited in support of the proposition that the provision of the Limitation could rightly be interpreted in the manner done by the court in this case.

In the final analysis, considering all of the foregoing, it is clear that the decision of the Court of Appeal seems to fall out of line in terms of previous authorities on the limitation of actions, notwithstanding the fact that the decision of the court in this case is on a seemingly previously arid area of Nigerian law on the limitation of actions. As a result, it is difficult to reach a conclusion that the decision of the court in the SIFAX case has set the right precedent in this

area of Nigerian law, as from the foregoing analysis the opposite is seemingly the case.

Notwithstanding this, it is clear that with this decision, the jurisprudential ball has been set rolling in this admittedly novel area of Nigerian law, which should see more decisions being made by the courts in this regard.

From a humanitarian perspective, it does seem like a harsh proposition that a Claimant who is ultimately found by the Supreme Court to have approached the wrong court in the exercise of his right of action will be precluded from re-exercising that right in the appropriate court because the exercise of the right had become statute barred and consequently extinguished.

This is especially in the light of the seemingly unresolved issues as to the exclusive jurisdiction of the Federal High Court which at times leaves Claimants to only find out at the Supreme Court, several years after the bringing of the action, that they had been on a wild goose chase all along in a court with no jurisdiction to hear the action. However, the courts are clearly duty bound to interpret and apply the law as it is and not as it ought to be. Without legislative intervention, it is difficult to see how the current position of the law on the limitation of actions can be so malleable as to incorporate the certainly novel principles and approach taken by the Court of Appeal in the, what will certainly be, landmark case of SIFAX NIGERIA LTD V MIGFO NIGERIA LIMITED.

MOFESOMO TAYO-OYETIBO1

1

Mofesomo Tayo-Oyetibo is of the Commercial Law Practice Group at the Law Firm of Tayo Oyetibo & Co.