The Federal Republic of Nigeria v Tibit Ltd

• Jurisdiction: British Virgin Islands
• Judge: Bennett JA
• Judgment Date: 24 March 2023
• Judgment citation (vLex): [2023] ECSC J0324-8
• Docket Number: BVIHCMAP2021/0044
• Court: Court of Appeal (British Virgin Islands)

Between:

The Federal Republic of Nigeria

Appellant

and

[1] Tibit Limited

First Defendant/Respondent

[2] Justin Ickonga

Second Defendant/Respondent

Before:

The Hon. Mr. Paul Webster Justice of Appeal [Ag.]

The Hon. Mr. Sydney A. Bennett Justice of Appeal [Ag.]

The Hon. Mr. Godfrey Smith Justice of Appeal [Ag.]

BVIHCMAP2021/0044

EASTERN CARIBBEAN SUPREME COURT

IN THE COURT OF APPEAL

Civil appeal — Default judgment — Rule 12.9(2) of Civil Procedure Rules 2000 — Whether a claim against one defendant can be determined separately from the claim against other defendants — Whether there was some practical reason, connected with the efficiency or expediency of the further conduct of the litigation to explain the deferral of the entry of default judgment

The Federal Republic of Nigeria (“FRN”) brought legal proceedings to recover what it claims to be the proceeds of a corrupt oil deal involving its former Minister for Petroleum Resources, Chief Dauzia Loya Etete and a Nigerian company named Malabu Oil & Gas Limited (“Malabu”). FRN alleges that Mr. Etete, abused his position as minister, to engage in corrupt transactions which saw the sum of US$1,092,040,000 (“the Malabu Proceeds”) transferred from the Federal Republic of Nigeria to Malabu, a company which he controlled and of which he was a beneficial owner. The monies were allegedly used to fund the acquisition of a Bombardier Global Vision 6000 business jet (the “jet”). Tibit Limited (“Tibit”), a company registered in the British Virgin Islands has since April 2013 been the legal owner of the jet. It is alleged that the jet was acquired in Tibit's name at the direction of and for the benefit of Mr. Etete. Mr. Ickonga, a Congolese national, is the registered owner of the sole issued share in Tibit. The FRN contends that Tibit and Mr. Ickonga inter alia, assisted Mr. Etete to acquire and then conceal Mr. Etete's interest in Tibit and the jet, and /or by enabling and then concealing the use of the Malabu Proceeds to acquire and maintain the jet on behalf of Mr. Etete.

In the court below, FRN asserted a proprietary claim over the jet in addition to personal claims for compensation. FRN also sought an order that Tibit and Mr. Justin Ickonga account as constructive trustees to FRN and that there be equitable compensation or damages on the basis that Tibit and/or Mr. Ickonga are dishonest assistants, and interest on the amounts ordered to be paid under that claim. Tibit was served and filed an amended defence to the claim. Mr. Ickonga was also served however he has not filed an acknowledgment of service and/or a defence to the claim. As a result, FRN filed an application for default judgment against Mr. Ickonga.

The application for entry of default judgment came up for hearing before the learned judge in the Commercial Division and the learned judge in applying rule 12.9(2) of the Civil Procedure Rules, 2000 (or “CPR”) ruled that FRN's application for default judgment to be entered against the Second Defendant Mr. lckonga, be adjourned until trial of the action. The formal judgment issued by the court recites that the application was adjourned pending trial on the basis that the claim against Mr. lckonga cannot be determined separately from the claim against the First Defendant Tibit. The transcript of trial proceedings however shows that the learned judge had concluded that that the claims against the respective defendants could be determined separately but he had exercised his judicial discretion to have the application for judgment against Mr. Ickonga dealt with at the same time as the claim against Tibit. The learned judge regarded the allegations relating to the claim of dishonest assistance against Mr. Ickonga and against Tibit as being so inextricably intertwined that it would be impracticable to dispose of the claims against each defendant separately.

The learned judge gave permission to appeal and the FRN has appealed against the decision of the learned judge pursuant to the leave so granted. FRN has filed three grounds of appeal which turns on the correct interpretation of CPR 12.9(2) and the right approach to the question of whether a claim against one defendant can be determined “separately” from the claim against other defendants.

Held: allowing the appeal, setting aside the order of the learned Judge made 2 ^nd December 2021, ordering that judgment in default of acknowledgment of service and/or defence be entered up against Mr. Justin Ickonga pursuant to rule 12.9(2)(a)(i) of the Civil Procedure Rules 2000 and that the Respondent Mr. Ickonga pay the costs of FRN, such costs to be assessed by a judge of the Commercial Court if not agreed within 21 days, that:

• 1. CPR Rule 12.9 (2) (a) provides that if a claimant applies for a default judgment against one of two or more defendants, and the claim can be dealt with separately from the claim against the other defendants, the court may enter judgment against that defendant. The word “may” in the context of CPR 12.9(2)(a) is permissive and indicates that on an application for default judgment under CPR 12.9 the court is vested with a discretion to refuse to enter judgment in default even if case can be dealt with separately. While the court may exercise this discretion to refuse to enter judgment in default, there must be some practical reason, connected with the efficiency or expediency of the further conduct of the litigation, which will explain the deferral of the entry of such judgment.

  Rule 12.9(2)(a)(i) of the Civil Procedure Rules 2000 applied; John Page v Champion Financial Management Limited et al [2014] EWHC 1778 (QB) applied; Otkritie International Investment Management Ltd v Urumov [2012] EWHC 890 (Comm) applied; Crown Aluminium Limited v. Northern & Western Insurance Company Limited, Cambridge Risk Advisors Limited [2011] EWHC 277 applied

• 2. In the instant case the learned judge correctly determined that the claim against Mr. Ickongo was one which fell into the category of claims controlled by CPR 12.9 (2) (a) and could accordingly be dealt with separately from the claim against Tibit. The judge correctly appreciated that notwithstanding the reasons given in his decision, the claims could be tried together. Nonetheless he had exercised his discretion not to enter judgment against Mr. Ickonga for the reasons appealed against. The learned judge did so on the premise (a) that the claims made against Mr. Ickonga and Tibit were based on, or involved their joint liability for dishonest assistance; (b) that the entry of judgment in default against Mr. Ickonga would necessarily disadvantage Tibit by giving rise to the inference or assumption that both defendants have been involved in a corrupt transaction and that in that event the Court would have to undertake the difficult task of compartmentalising that assumption and inference in trying the claim against Tibit; and (c) that the entry of default judgment involved an undesirable risk of inconsistent judgments. However, these premises involved an erroneous analysis of the legal position, as dishonest assistance is a form of civil secondary liability whereby the assistant is held jointly and severally liable along with the trustee whose misconduct he assisted. The instant case is not one in which a finding of liability on the part of one defendant is contingent on the liability of the other. Mr. Ickonga's liability is claimed to have arisen from his personal actions in having facilitated the purchase of the jet by Mr. Etete and having procured the concealment of the purchase by the arrangement with Tibit, knowing or having reason to suspect that Mr. Etete's scheme to acquire the jet involved a fraudulent breach of trust. The learned judge's concern about the apparent claim of joint liability against the defendants and the importance of that factor in dealing with the respective claims against them is misplaced. No reason has been shown which could explain the learned judge's departure from the usual practice of entering judgment against a defaulting defendant where the claim against him could be dealt with separately from the claim against the other defendant. The learned judge therefore erred in this regard.

  Byers & Ors v Samba Financial Group [2021] EWHC 60 (Ch) applied; Twinsectra Limited v Yardley [2002] 2 AC 164 applied; Martin Didier et al v Royal Caribbean Cruises Ltd SLUHCVAP2017/0051 (delivered 6th June 2016, unreported applied; Lewison LJ in Broughton v Kop Football (Cayman) Ltd [2012] EWCA Civ 1743 applied.

Appearances:

Mr. Steven Thompson, KC with him Mr. Faisal Osman, Mr. Richard Brown and Mr. Paul Griffiths for the Appellant

Mr. Matthew Hardwick, KC with him Mr. Neil McLarnon and Ms. Monique Peters for the Respondent

1 Bennett JA [AG.]: This is an appeal by the Federal Republic of Nigeria against the decision of the learned judge made 2 ^nd December 2021 whereby he declined to enter judgment against the Second Defendant, Mr. Justin Ickonga, for failure to file an acknowledgment of service and/or defence and ordered that the application by the Federal Republic of Nigeria be adjourned until trial.

Background

2 The Federal Republic of Nigeria (“FRN”), a sovereign state in West Africa, has brought legal proceedings in several jurisdictions to recover what it claims to be the proceeds of a corrupt oil deal involving a Nigerian company named Malabu Oil & Gas Limited (“Malabu”). The instant case is one such proceeding. FRN alleges that Chief Dauzia Loya Etete, otherwise known as Dan Etete (“Mr. Etete”), the Minister for Petroleum Resources for the Federal Government of Nigeria between 1993 and 1998, his position as such minister by allocating to Malabu, a company which he controlled and of which he was a beneficial owner, an oil prospecting licence for Block 245, an oil field located in the Eastern Nigerian Delta in the offshore territorial waters of Nigeria (“OPL 245”) at a gross...