African Construction & Financing Corp. v NASSCORP [2010] LRSC 37 (31 August 2010)
African Construction and Financing Corporation (AFRICOF) by and thru its Chairman and Managing Director, ZAHR Nigib said of Abidjan, 09 — P.O. Box 668 Abidjan-09. Cote D’Ivoire and thru its Authorized Representative, Mohammed J.A. Idriss, of Universal Printing Press (UPP), P.O. Box 218, Randall Street, Monrovia, Liberia APPELLANT Versus National Social Security & Welfare Corporation (NASSCORP), a Public Corporation organized and Existing under the laws of the Republic of Liberia, Represented by and thru its Director-General, Deputy Director-General and all other authorized Officials of The Corporation of the City of Monrovia, Liberia APPELLEE
HEARD: DECEMBER 1, 2009 DECIDED: AUGUST 31, 2010
MR. JUSTICE KORKPOR DELIVERED THE OPINION OF THE COURT
The appellee in this case, the National Social Security & Welfare Corporation (NASSCORP) is an agency of the Liberian Government. The appellant, African Construction & Financing Corporation (AFRICOF) is a corporation organized and registered under the laws of Liberia. The appellant is involved in construction activities.
Appellee and appellant entered a construction contract on April 5, 1988 for the construction of a residential housing complex known as the Samuel Kayon Doe Housing Complex (Satellite 1). The parties subsequently signed an amendment to the construction contract on April 24, 1989. Under the amendment, they agreed to convert the United States dollar component of the contract to Liberian dollars with an increase of the amount by 115%.
On September 18, 2008, appellee filed a petition for declaratory judgment against the appellant. The petition for declaratory judgment substantially alleged that as far back as October 20, A.D. 1997, appellee received a letter from the appellant over the signature of one M.S. Idriss, submitting a statement of account with attachments thereto which included several promissory notes executed by the appellee; that the letter demanded several payments to be made to appellant because the appellant had performed 75% works under the construction contract and the amendment thereto, thereby accruing an obligation of $L21, 657,508. 13 as at June 19, 1992.
The petition further alleged that in 2004, the appellee received a copy of a power of attorney from one Mr. Mohammed J.A. Idriss, of P.O. Box 218, Randall Street, Monrovia, Liberia, purporting to be executed by the appellant at its address in Abidjan, Cote D’Ivoire, authorizing him to act on appellant’s behalf in all its matters, including the collection of any money due the appellant by the appellee, growing out of the construction contract and the amendment thereto.
The appellee relied on chapter two (2) subchapter (b) § 2.13 (1), of the Liberian Civil Procedure Law as the basis for its petition for declaratory judgment. That section provides: “An action to obtain payment of a debt or for damages for breach of a contract based on a written instrument or acknowledgment shall be commenced within seven (7) years of the time the right to relief accrued.” The appellee contended in its petition that in keeping with the appellant’s own submission to the appellee and the acknowledgment of the appellee through its promissory notes to pay, the right of the appellant to the amount due accrued as far back as 1990 and subsequently confirmed in the appellant’s demand of June 1992; that the appellant has been under no disability to assert its right, but has deliberately failed and neglected to do so for a period far in excess of the time provided for under the statutory laws of the Republic of Liberia and therefore the appellant is guilty of waiver and lashes; that by the failure of the appellant to have timely sought relief based on the claim growing out of the construction contract entered into between them, the appellant is forever barred from asserting this claim and any claim or claims whatsoever, growing out of the construction contract entered between them, including instituting any legal action for any relief and by virtue of the tolling of the time, the trial court was empowered to declare that the appellant had waived its right to any relief that may have accrued to it, growing out of the construction contract and the amendment thereto.
The appellee prayed the lower court to declare as follows: a) That the construction contract having been entered into between the appellee and the appellant as far back as April 1988 and the appellant completing seventy-five percent (75%) of the work specified in the contract as at. June 1992, at a cost of Six Million Nine Hundred Fifty Two Thousand One Hundred Thirty Three United States Dollars Thirty One Cents (US$6,952,133.31) or its equivalent in Liberian dollars at the prevailing rate at the time, accrued to the benefit of the appellant as at June 1992; b) that any right of relief under the construction contract and amendment thereto between the parties and especially the claim for the amount of Six Million Nine Hundred Fifty Two Thousand One Hundred Thirty Three United States Dollars Thirty One Cents (US$6,952,133.31) or its equivalent in Liberian dollars at the prevailing rate at the time having matured since June 1992, and the appellant having failed to assert its rights as provided under the laws of the Republic of Liberia, up to the filing of this petition, a period in excess of the seven (7) years prescribed by law, the appellant is hereby barred; that 7 years having passed since the right to relief accrued to the appellant growing out of the construction contract entered into between the appellee and the appellant, the appellant has slept on its rights and therefore is forever barred from bringing any claims whatsoever, whether for works done under the construction contract of April 5, 1988, and the addendum thereto entered into on April 24, 1989 or to enforce performance and compliance.
The appellant filed its response on October 24, 2008 which it withdrew and amended. The appellant stated in its amended response that it read the case in the October 2-5, 2008, issue of the Liberian Express Newspaper. The appellant denied that its claim under the construction contract was time barred and maintained that the filing of the petition for declaratory judgment has in fact acknowledged the debt, as the admission made in the petition for declaratory judgment was not made in defense against a suit, but a voluntary admission in an effort to avoid the obligation of a contract.
The appellant conceded the provision of our statute relied on by the appellee concerning an action to obtain payment of a debt or for damages for breach of a contract based on a written instrument or acknowledgment, but denied that the statute of limitation ever ran out because the appellee acknowledged its claim in 2004 and in 2005, as well as in the petition for declaratory judgment; that the position taken by appellee is a desperate and an unusual attempt to avoid the discharge of an obligation that the appellee had not fulfilled over the years, despite repeated demands. The appellant averred that under the law, the statute of limitation is an affirmative defense employed only when a suit has been instituted against the party involving the statute; that in the case at bar, no action was filed against the appellee, instead, appellee has voluntarily admitted in court that it is indeed indebted to appellant in the sum of Six Million Nine Hundred Fifty Two Thousand One Hundred Thirty Three United States Dollars and Thirty One Cents (US$6,952,133.31) which the appellant requests court to collect from the appellee; that in keeping with the law on statute of limitation, the statute begins to run anew when the party against whom a claim is pending admits to the claim either directly or by an agent acting within the scope of his authority. The appellant stated that by letter referenced NASSCORP/DG/78/04 dated April 22, 2004, the appellee acknowledged appellant’s claim and requested the appellant to furnish supporting documents which appellant submitted by letter dated April 26, 2004 and repeatedly demanded payment, but the appellee kept appealing for time because “it did not have the resources to pay.”
The appellant said that both appellee and appellant suffered serious disability caused by the fourteen (14) year civil war during which both parties closed operations for a long time. The appellant requested the trial court to take judicial notice of the Liberian civil war and the damage and interruption it caused. The appellant maintained that although 75% of the work was completed under the construction contract, the contract was not fully executed and appellant repeatedly stated to appellee its readiness and ability to continue the works, therefore, it is premature to seek declaratory judgment to effectively abrogate the contract; that abrogating an ongoing contract in this manner is against the spirit and interest of Article 25 of the Liberian Constitution which prohibits Government from making law that may impair the obligation of contract. The appellant further stated that a former Director-General of NASSCORP, SL. Fleming, submitted an affidavit stating that NASSCORP never denied the debt, but could not pay because NASSCORP never had the financial capacity to pay and also that the bank — ACDB – through which the parties agreed to make all payments was not in operation.
The appellant prayed the trial court to: a) deny the petition for declaratory judgment because it was filed in bad faith and merely for the purpose of avoiding obligation under an ongoing contract; b) declare that appellee has freely made an admission as to its indebtedness to appellant in the amount of US$6,952,133.31 (Six Million Nine Hundred Fifty Two Thousand One Hundred Thirty Three United States Dollars and Thirty One Cents), which admission revives the statute of limitation; c) order the appellee to pay the amount of US$6,952,133.31 (Six Million Nine Hundred Fifty Two Thousand One Hundred Thirty Three United States Dollars and Thirty One Cents), which it has admitted owing plus interest and cost of these proceedings.
The appellee filed its reply to the amended response on March 3, 2009, principally confirming and affirming its petition for declaratory judgment and simultaneously filed a motion to strike the appellant’s amended response.
The basic contention in the motion to strike the appellant’s amended response is that the amended response was filed outside the time allowed under the law and that the appellant did not seek and obtain leave of court to file the amended petition. The appellee therefore prayed the trial court to consider the applicable laws in such cases and further consider the numerous interpretations given by this court on the issue of withdrawal and amendment of pleadings, especially when made without the pale of the law and without court’s permission to do so.
The appellant filed resistance to the motion to strike its amended response contending essentially that § 9.10, 1 LCLR , Civil Procedure Law, provides that “At any time before trial, any party may, in so far as it does not unreasonably delay trial, once amend any pleading made by him”. The appellant maintained that this provision of the statute does not state specific time for a party to withdraw and file a pleading; so long it is filed before trial commences. The appellant further contended that any interpretation which adds to the plain meaning of this statutory position is not tenable in law, since the Supreme Court neither makes nor formulates laws, and cannot extend the provisions of statutes to incorporate additions, restrictions, limitations or demands.
On May 20, 2009, the trial judge heard argument on the motion to strike and granted same, thereby striking the appellant’s amended response.
On June 1, 2009, the trial judge heard argument in the petition for declaratory judgment and ruled as follows:
“Wherefore and in view of the foregoing, it is the ruling of this Honourable Court, that the petition for declaratory judgment, consistent with section 43.1, of our Civil Procedure Law, is hereby granted for reasons herein stated and this court hereby declares that petitioner is hereby released from making any payment to the respondent for work performed under the said contract of April 5, 1988, and any amendment thereto. And it is hereby so ordered.”
The appellant excepted to the ruling and announced and appeal to the Supreme Court.
On July 25, 2009, the appellant filed an appeal bond through the Omega Insurance Company as surety in the amount of One Hundred Thousand United States dollars (US$100,000.00).
On June 29, 2009, appellee filed exceptions to the surety of the appellant’s appeal bond on the ground that the amount on the bond was grossly insufficient, inadequate, and limited as to the time of its validity in order to satisfactorily guarantee the amount specified in the bond.
On July 1, 2009, appellant filed what it entitled “appellant’s returns” to the exceptions to surety in which it mainly contended that the lower court had lost jurisdiction over the case, since the appellant had filed its bill of exceptions, appeal bond and notice of completion of appeal. With respect to the appellee’s contention that the amount on the appeal bond was grossly inadequate and limited as to its validity to guarantee the amount in the bond, the appellant argued that the amount of US 100,000.00 on its appeal bond was quite sufficient to take care of court costs and related expenses, since the appellee had not filed a suit claiming money judgment. The appellant further argued that it had updated its statement of guaranty attached to the bond and that the bond was good not only for the duration of the appeal, but the entire case.
The trial judge dismissed the exceptions to surety on the sole ground that the court had lost jurisdiction over the matter, so any objection to the appeal bond can only be brought before the Supreme Court.
The appellee filed before this Court, a motion to dismiss the appellant’s appeal essentially raising the same issue raised before the lower court— that the amount stated on the appeal bond was grossly inadequate and limited as to its validity to guarantee the amount on the bond. At the call of the case we, based on reasons we will now state in this opinion, denied the motion to dismiss the appeal, whereupon, arguments were heard from the counsels representing both sides.
For the determination of this case, we will consider the following issues:
1. Whether or not “returns” is the proper responsive pleading to an exception to surety on an appeal bond, if not what is the effect?
2. Whether or not an appeal bond in the amount of One Hundred Thousand United States dollars (US$100,000.00) filed by an appellant in an action of declaratory judgment in which the appellee has obtained judgment barring the payment of debt to the appellant is insufficient and inadequate?
3. Whether or not the trial judge erred when he ruled striking the appellant’s amended response without giving the appellant the opportunity to produce evidence on bare denial?
The first issue concerns the filing of “returns” to the exceptions to surety. The appellee contended that the appellant served its appeal bond on appellee on June 29, 2009; that within three days appellee filed and served on appellant exceptions to the surety on the appeal bond; and that instead of filing a motion to justify surety within three days as of the date the appellant received the exceptions to surety which is the necessary responsive pleading, the appellant elected to file “response” to the exceptions to its surety.
Section 63.5, Exception to surety; allowance where no exception taken,1 LCLR, Civil Procedure Law provides:
“1. Exceptions. A party may except to the sufficiency of a surety by written notice of exceptions served upon the adverse party within three days after receipt of the notice of filing of the bond. Exceptions deemed by the court to have been taken unnecessarily, or for vexation or delay, may, upon notice, be set aside, with costs.”
“2. Allowance where no exception taken. Where no exception to sureties is taken within three days or where exceptions taken are set aside, the bond is allowed.”
Section 63.6, Justification of surety, provides:
“1. Motion to justify. Within three days after service of notice of exception, the surety excepted to or the person on whose behalf the bond was given shall move to justify, upon notice of the adverse party. The surety shall be present upon the hearing of such motion to be examined under oath. If the court finds the surety sufficient, it shall make an appropriate endorsement on the bond.”
“2. Failure to just. If a motion to justify is not made within three days after the notice of exception is served, or if the judge finds a surety insufficient, he shall require another surety or sureties in place of any who have not justified. Any surety who has not justified shall remain liable until another surety signs the bond and the bond is allowed.”
It is clear from the sections of our Civil Procedure Law quoted above that the appellee’s contention is right. Having received from appellee in three days, exceptions to surety on the appellant’s bond, the appropriate thing the appellant should have done was to have filed, also within three days, a motion to justify its surety. Our statute does not provide for the filing of “returns” to exceptions to surety. So, we agree that the appellant was in error.
However, a careful perusal shows that the content of what the appellant filed is in reality a justification to its surety. So, in our opinion, the heading or title of what was filed does not really matter, so long the content thereof speaks to the issue. The appellee’s position is not that the appellant failed to move to justify surety; the appellee’s argument is that what the appellant filed was not entitled motion to justify surety as the statute provides. We do not see the harm caused appellee by the wrong heading.
Our law provides that “[The court at every stage of the proceeding must disregard any error or defect in the proceeding which does not affect the substantial rights of the parties.” §1.5, 1 LCLR, Civil Procedure Law.
We hold, therefore, that the wrong title used by the appellant was a harmless error which did not affect the substantial rights of the appellee. We also hold that the trial judge properly ruled dismissing the exception to surety on the ground that the trial court had lost jurisdiction over the case. The records show that at the time the appellee filed exception to surety at the lower court, the appellant had already filed its bill of exceptions, appeal bond and notice of completion of appeal. At that point, the proper forum for any objection to the appeal bond is in the Supreme Court. This Court has consistently held that the filing of the notice of completion of appeal divests the lower court of jurisdiction and confers jurisdiction on the Supreme Court.
The second issue concerns the filing of the appeal bond in the amount of One Hundred Thousand United States dollars (US$100,000.00) by the appellant. The appellee contended that the appeal bond filed by the appellant is defective because the amount of One Hundred Thousand United States dollars (US$100,000.00) on the bond is less than the amount on the judgment; therefore the bond provided inadequate indemnity. We do not agree. An appeal bond is a bond given on taking appeal, by which the appellant and his sureties are bound to pay costs if the appellant fails to successfully prosecute the appeal. In this jurisdiction appeal bonds serve mainly to secure costs and assure the Court of compliance with its judgment. Thus this Court has consistently held that an appeal bond is defective where the amount on the bond is inadequate to indemnify the appellee. This means that the amount on the appeal bond must be equal to or more than the judgment.
It must be remembered that the matter before us is not one in which a money judgment was entered in favor of the appellee. Rather, the appellee sought and obtained a judgment in the lower court, which barred the appellant from recovering the amount of US$6,952,133.31 (Six Million Nine Hundred Fifty Two Thousand One Hundred Thirty Three United States Dollars and Thirty One Cents) against the appellee on the ground that the statute of limitation had tolled against the appellant. So, in the case before us, it is the appellant who is claiming money judgment and not the appellee. It follows that whatever costs that may accrue to the appellee as a result of the appellant’s unsuccessful prosecution of this appeal will be negligible, since there is no question of indemnity for the appellee. Therefore, we cannot understand the contention of the appellee that the amount on the bond is insufficient to satisfy the judgment in this case. Under the circumstance we hold that the amount of One Hundred Thousand United States dollars (US$100,000.00) on the appeal bond filed by the appellant is quite sufficient to satisfy all costs in this case.
The counsel for the appellee argued in his brief filed with this Court that on the face of the certificate issued by the Omega Insurance Company which is attached to the bond, the period stated was three months. This, according to the appellee’s consul, meant that the bond had a validity period of only three months and that as at September 17, 2009, the bond would have expired while the appeal would still be pending before the Supreme Court undetermined. But the appellant’s counsel countered this argument that the appellant updated its statement of guaranty attached to the bond and that the bond was good not only for the duration of the appeal, but the entire case.
We see two instruments issued by the Omega Insurance Company. The first instrument, issued on June 18, 2009 states the period of three (3) months, while the second instrument, issued on June 30, 2009 has on it face the period ” Duration of the case.” Both instruments serve as guaranty for the payment of One Hundred Thousand United States dollars (US 100, 00.00) on the appellant’s appeal bond. It appears that the appellant, having discovered the limitation placed on the first statement of guaranty issued on the appearance bond, contacted the Omega Insurance Company who issued the second statement which provided payment guaranty on the bond during the period of the case instead for just three months as was stated on the first statement. We are satisfied with the second statement of guaranty which replaced the first, especially given, as we have said, that the matter before us is not one of money judgment in favor of the appellee.
We address next, whether or not the trial judge erred when he ruled striking the appellant’s amended response without giving the appellant opportunity to produce evidence on bare denial? We hold that the trial judge properly ruled striking the appellants amended response, but he should have allowed the appellant to produce evidence
Section 9.10, 1LCL Rev., tit.1 (1973) provides:
“At any time before trial any party may, insofar as it does not unreasonably delay trial, once amend any pleading made by him by:
(a) Withdrawing it and any subsequent pleading made by him;”
(b) Paying all costs incurred by the opposing party in filing and serving pleadings subsequent to the withdrawn pleading; and
(c) Substituting an amended pleading.”
The appellee contended that even though our law provides for a party to withdraw and once amend a pleading any time before trial, so long it does not unreasonably delay trial, the Supreme Court has given interpretation to what constitutes unreasonable delay under the statute. The appellee has relied on two main cases in which this Court provided such interpretations. In the case: M.D. Sengbe vs. John Powell[1983] LRSC 58; , 31 LLR 141 (1983), this Court held that the right to withdraw and amend a pleading at any time, in so far it does not unreasonably delay trial, as provided by the statute does not give a party the right to withdraw and refile two (2) months and twelve days, or at anytime he/ wishes. In the case: City Bank vs. York[1988] LRSC 41; , 35 LLR 101 (1988), this Court held that while it is true that any party may withdraw at anytime and refile any pleading previously filed by him, it is mandatory that such withdrawal of an amendment be made within ten days from the date of the last pleading.
The records show that the last pleading in this case, the reply, was filed and served on the appellant on November 3, 2008. And it was on February 25, 2009 that the appellant served its amended response on the appellee. Clearly, the amended response was filed in violation of the law extant. Therefore, the trial judge was not in error for striking the amended response which was not file in keeping with law.
However, the trial judge should have permitted appellant to produce evidence in support of a general denial contained in the petition for declaratory judgment. Section 9.1 (2) 1 LCLR Civil Procedure Law provides: “…if a defendant appears within the time prescribed by section 3.62, his failure to interpose an answer shall be deemed a general denial of all the allegations in the complaint. At trial, such a defendant may cross examine plaintiffs witnesses and introduce evidence in support of his general denial, but may not introduce evidence in support of any affirmative matter.”
The appellant in this case appeared in the time allowed by law and filed a response to the petition for declaratory judgment; he however withdrew the response and filed an amended response outside of the time allowed by law. For this reason, the trial judge was right in striking the amended response. Having withdrawn the initial response, and having filed an amended response which was not accepted by the trial court and rightly so, the appellant had no other pleading left at the trial court. But because the appellant appeared within the time prescribed by section 3.62 of the statute, the absence of its pleading at the trial should have been taken as a general denial of all the allegations in the petition for declaratory judgment and the appellant should have been allowed to cross examine the appellee’s witnesses and produce evidence in support of the general denial that the statute of limitation tolled against the appellant.
The records show that the appellant, though an entity established under the laws of Liberia and was doing business in Liberia, is owned by foreign investors. During the civil crisis in this Country, the appellant, like many other business entities, was forced to close down its offices and activities and flee the Country. The records further show, and this was not disputed, that the appellant lost all equipment brought in the Country with which it did construction works for the appellee. So, the owners of appellant were residing outside of Liberia even as at the time the petition for declaratory judgment was filed, still skeptical and waiting for indication from the appellee to return to Liberia. This accounts for why the petition was served by publication.
Under the construction agreement between the appellee and appellant, the parties agreed that all payments for works done under the construction agreement should be made through the Agriculture and Cooperative & Development Bank. We must note that as a result of the civil war, that bank was looted and destroyed and is still closed today. These events are historical facts which all courts are required to take judicial notice of.
The appellant has stated that whenever it made demands on the appellee for the appellee to settle its obligation to appellant under the construction contract, appellee persistently told appellant to wait until the Agriculture and Cooperative & Development Bank resumes operations. The appellant also stated that by letter referenced NASSCORP/DG/78/04 dated April 22, 2004, the appellee acknowledged appellant’s claim and requested the appellant to furnish supporting documents which appellant submitted by letter dated April 26, 2004 and repeatedly demanded payment, but the appellee kept appealing for time because “it did not have the resources to pay.”
The law is that ” If a claimant gives notice of or presents a claim within due time, but the public official or body that is required to pass upon it delays action beyond the time ordinarily needed, the entire period of delay may be deducted from the time that has elapsed prior to suit in determining whether the claim is barred by statutory limitation, because the conduct of government officials while considering a claim amounts to an estoppel to contend that the time during which the claim was pending before them should be included in the total elapsed time in determining whether the limitation period had run. However, if the statute of limitation runs from the “rejection” of the claim, a delay by public officials in considering a claim does not prejudice the creditor’s rights.” § 155, 51 AM JUR 2d, Delay by public official or body. The question is, did the appellee tell appellant to wait in respect of the appellant’s claim presented? In other words, was the delay in pursuing the appellant’s claim occasioned by the appellee’s failure to timely address or pass on the claim?
The appellant also stated that the appellee acknowledged its claim in 2004 and 2005. In this jurisdiction, the statute of limitation does not start to run until there is a disclaimer to the party’s claim. Leigh-Parker vs. IB, decided Mayl 1, 2007. But did the appellee acknowledge the appellant’s claim or was there a denial of the claim?
In this jurisdiction, the statute of limitation does not run against a party during war.
It is public knowledge that we had war for a protracted period. The question is, minus the war years, is the appellant’s claim against the appellee time barred?
In this jurisdiction, also, the statute of limitation does not run against a party, if that party is outside of the Country. Is the appellant’s claim time barred minus the period the appellant spent outside of the Country as a consequence of the war?
In view of what we have said, we hold that it will not meet the end of justice if evidence is not taken in this case so that the many questions asked which involve factual issues can be properly answered. The object of a statute of limitation is to bar stale claims and not to deny or suppress defenses. We have therefore decided, not withstanding the holdings in the M.D. Sengbe vs. John Powell case and the City Bank vs. York case mentioned above, to allow the amended response filed by the appellant to stand. The apparent extenuating circumstances which we enumerated above compel us to take this position. And because of this position we have taken to allow the appellant’s amended response to stand, we will not address the question whether or not the trial judge erred when he granted the petition for declaratory judgment. This question will be considered on our next review of this matter, should this be necessary.
Wherefore, the ruling of the trial court granting the petition for declaratory judgment is reversed and the case remanded. The trial court is mandated to allow the amended returns filed by the appellant to stand. The lower court is further mandated to conduct a full trial, taking evidence from both parties in this case to determine whether or not the statute of limitation ran against the appellant, thereby extinguishing its claim against appellee from being asserted. Costs to abide final determination. It is so ordered.
Ruling reversed, case remanded.
COUNSELLORS COOPER W. KRUAH OF HENRIES LAW FIRM AND BENJAMIN M. TOGBAH OF COOPER AND TOGBAH LAW FIRM APPEARED FOR APPELLANT. COUNSELLOR CYRIL JONES OF JONES & JONES LAW FIRM APPEARED FOR APPELLEE.