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Sifax v. Migfo and Limitation Laws in Nigeria: Triumph of Pragmatism over Formalism?

Document Cited authorities 2 Cited in Related
Vincent
DOI10.3366/ajicl.2020.0340
Pages577-595
Date01 November 2020
Published date01 November 2020
INTRODUCTION

Limitation laws are as old civil litigation itself.1 They have been applied in different forms from time immemorial. It is a concept which is common to practically every legal system. Before 1623 when the first general English Limitation Act was enacted, time limit applies to claims in respect of property rights with various dates stipulated as a cut-off for such claims. Thus, at some point in English history, statutes fixed the time limit for actions bordering on seisin on the death of Henry I or the date of the voyage of Henry II into Normandy.2 By 1236, such date was fixed at the coronation of Henry II.3 During the reign of Henry VIII, there was a shift away from the fixation of time limit on specific events. However, a new regime, which specified a period of time and a mechanical calculation of such a period, was introduced. The Act of Limitation 1540 introduced various time limits ranging from 30 to 60 years for real property claims.4

Actions for contracts and torts were first brought within the purview of limitation statutes in 1623 when the Limitation Act of that year was passed.5 The 1623 Act made provisions for some common law actions like the writ of assumpsit, action on the case for words, trespass and detinue among others with a prescribed time limit of two to four years from the date of accrual of the cause of action. Expectedly, the Act was meant to address the old common law actions, which have now fallen into disuse in most jurisdictions. The deficiencies and unsuitability of the 1623 Act called for a review and then the proposal for a new Act by the Wright Committee.6 This led to the enactment of the Limitation Act 1939, from which most Limitation Acts in the common law jurisdictions, including Nigeria, are modelled.7 The 1939 Act has been subjected to further review and eventually replaced in the United Kingdom.8 Other states such as New Zealand,9 Australia,10 Republic of Ireland,11 Singapore12 and Canada13 among others have also carried out a holistic review of the Limitation Acts inherited or adapted from the United Kingdom.

In Nigeria, limitation law is a residual matter and therefore falls within the legislative competence of the component states. The majority of the limitation laws are modelled after the English Limitation Act of 1939.14 A few states such as Kano and Plateau15 still apply the English Limitation Act 1623 as a statute of general application because these states have not deemed it necessary to enact any replacement.16 Apart from these general limitation statutes, several other statutes have time limits for the commencement of actions. Notably among such statutes are the Public Officers (Protection) Act,17 the Carriage of Goods by Sea Act,18 the Civil Aviation Act19 and the Nigerian National Petroleum Act,20 among others.

Nigerian courts have been faithful to the provisions of the limitation laws. The laws are applied mechanically as fixed rules of law as they were intended to be applied in 1623. In Adekoya v. Federal Housing Authority,21 the Supreme Court confirms this approach by stating that judges have little or no discretion in determining whether a suit is statute-barred or not because the period must be calculated with mathematical precision and exactness. Such a strict and formalistic approach does not take into consideration various practical problems and resulting injustice that has been recorded both in Nigeria and other jurisdictions.

Sifax presents a typical complexity that can result from a ‘strict liability’ limitation law regime. This article critically examines the recent Nigerian Supreme Court's decision in Sifax and seizes the opportunity to flag the inadequacies in the extant limitation laws in Nigeria. The article argues that a total overhaul of the limitation laws is long overdue as they are not only old-fashioned and ambiguous but are also producing undesirable results. It predicts that it is unlikely that any legislative intervention may be witnessed in the nearest future. Therefore the article suggests that the courts must continue to fill the gaps by a pragmatic interpretation of the laws within the bounds of the general policy objectives of the limitation laws. Finally, it identifies the areas that the courts must (re)consider and some tools – judicial globalisation and comparative law methodology – that can be used to achieve this.

The article is divided into four parts. Part I gives a short background to limitation laws. Part II examines the Supreme Court decision in Sifax, the significance of the decision and its implications. Part III considers the judicial approach to limitation laws in Nigeria, the undesirable results it has produced, the need for a complete review of the laws, and what should be the proper approach by the courts moving forward from Sifax. Part IV summarises the arguments canvassed in the article.

 <italic toggle="yes">SIFAX</italic> v. <italic toggle="yes">MIGFO</italic> Facts

In 2003, the federal government of Nigeria concluded plans to privatise her ports. In December 2003, the government invited applicants to bid for the concession of certain terminals in the Nigerian ports. In response to the said advertisement, the Appellants22 (simply referred to as Sifax or Appellants) together with the 1st and 2nd Respondents, i.e. Migfo Nigeria Ltd and Denca Services Ltd (referred to as Migfo and Denca or the Respondents) concluded a memorandum of understanding to jointly bid for Terminal C of the Lagos Port. By the said memorandum, which is dated 27 July 2005, the parties agreed to form a joint venture company to run the terminal if their bids were successful. The ownership structure of the proposed company is stated to be 40:30:30 respectively.

The parties emerged as the preferred bidder and as stipulated in the MoU, Migfo and Denca were expecting Sifax to come up with a proposal on how to go about the formation of the joint venture company. While waiting for the next steps, Migfo and Denca became aware of the fact that Sifax had surreptitiously incorporated the proposed company, Port and Cargo Handling Services Company Ltd (PCHSCL), and that the Nigerian Port Authority had handed over the terminal to it accordingly. They conducted a search at the Corporate Affairs Commission on 20 July 2006 and found that the company had been registered and that they were not included either as shareholders or directors.

Migfo and Denca commenced an action against Sifax at the Federal High Court Lagos in suit no. FHC/L/CS/664/2006. Sifax challenged the jurisdiction of the Federal High Court on the ground that the action borders on a simple contract. The court dismissed the objection holding that it had jurisdiction under section 251(1)(g) of the Constitution, which vests jurisdiction in the Federal High Court for actions affecting federal ports. Sifax unsuccessfully challenged the ruling at the Court of Appeal. However, in 2012, the Supreme Court upheld their arguments and ruled that the Federal High Court did not have jurisdiction in that case because it was principally a dispute on a simple contract.

On 18 July 2012, Migfo and Denca commenced a fresh suit at the High Court of Lagos State. Again, Sifax filed a preliminary objection, arguing this time around that the action was statute-barred. The basis of their objection was that the cause of the action arose in 2005 when Sifax and other Appellants incorporated the Port and Cargo Handling Services Company Ltd. According to section 8 of the Limitation Law of Lagos State, no action on a simple contract could be brought after six years. The Lagos High Court relied on the view expressed by Professor Andrew McGee in his well-known book on limitation law23 and held that time stopped running on the date Migfo and Denca filed the first suit. Hence the application was dismissed.

 Decision

Two issues were formulated by Sifax at the Court of Appeal but the one that is of paramount concern here is the validity of the trial court's conclusion that the action was not statute-barred having regard to the circumstance of this case and the provision of section 8 of the Limitation Law of Lagos State. The gravamen of Sifax's argument was that the operative date for the accrual of the cause of action was December 2005 when the alleged joint venture company was incorporated to the exclusion of Migfo and Denca. Hence, between December 2005 and July 2012 when the second suit was filed, the six-year period had elapsed. Sifax also argued that the lower court erred in relying on Professor McGee's opinion to vary a clear statutory provision and that such position, even if correct, cannot apply to the Federal High Court suit, which in law amounts to a nullity because it was struck out.

Migfo and Denca contended that a holistic assessment of their claims reveals that their action was founded on specific performance, injunction, implied or constructive trust and fraud. As such, these factors ought to take the action outside the scope of section 8 of the Limitation Law.

In resolving the issues, the Court of Appeal reasoned as follows:

There is no doubt from the above averment amongst others, that the cause of action cannot rationally be held to accrue on 20 December 2005 when the 5th appellant was incorporated, given the facts and circumstance of the case, that the respondents were laboring under the unfortunate illusion that the 1st appellant was still working on behalf of the joint venture and in the interest of all the parties concerned and with little or no knowledge of the fact that the 1st, 2nd and 3rd appellants had conspired to incorporate the 5th appellants to fully take over and carry on the concession and management of Terminal C of the Tincan Island Port to the absolute exclusion of the respondents. It was only when the respondents learnt about the handover of the Terminal C by the NPA/BPE to the 5th appellant and that the lst to 4th appellants were responsible for the incorporation of the 5th appellant that they went in search of the truth from...

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