POST-JUDGMENT INTERESTS IN NIGERIA
It is common knowledge that the Nigerian Courts will not award a relief that was not expressly claimed by a party at trial because the Courts are prevented from doling out unsolicited gifts like Father Christmas. However, it appears that many companies are unaware of an exception to this rule, which exists in the rules of almost every High Court in Nigeria wherein the Courts are permitted to award post-judgment interest on every judgment sum, even where same was not claimed by a successful litigant in his pleadings.
Post Judgment Interests in the Various Rules of High Court
Every Court of equipollent jurisdiction with the high court (Federal High Court, State High Courts, National Industrial Court and the Investment and Securities Tribunal) has a provision in its rules which recognizes the award of post-judgment interests on judgment debts at the rate of not more than 10% per annum.
This interest shall immediately apply on every judgment debt and it is immaterial whether the judge made no pronouncement on it or whether the successful party did not claim for this relief.
In the Federal High Court, Order 23 Rule 5 of the Federal High Court Civil Procedure Rules 2019 provides as follows:
“The Judge at the time of making any judgment or order or at any time afterwards may direct the time within which the payment is to be made or another act is to be done, reckoned from the date of the judgment or order or from some other point of time, as the judge deems fit and may order interest at a rate not exceeding ten per cent per annum to be paid upon any judgment.”
In the High Court of Lagos State, Order 39 Rule 4 of the High Court of Lagos State (Civil Procedure) Rules 2019 similarly provides as follows:
“The Judge may at the time of making any Judgment or Order or at any time afterwards, direct the time within which the payment is to be
- made or another act is to be done,
- reckoned from the date of the Judgment or Order, or some other date or time, as the Judge deems fit; and may order interest at a rate not less than 10% per annum to be paid upon judgment.”
Similar provisions exist in the rules of the various State High Courts in Nigeria such as Order 35 Rule 4 of the Akwa Ibom State High Court (Civil Procedure) Rules, 2009, etc.
In the Investments and Securities Tribunal, Order 7 Rule 7 of the Investments and Securities Tribunal (Procedure) Rules 2014 also contains a more detailed provision thus:
“When a decision awards a party a monetary sum (other than in respect of costs and expenses), the award shall, unless set aside, and subject to any variation on appeal or review, carry interest at the commercial rate from the date of the event giving rise to the application to the Tribunal and or at the rate of ten per cent from the date of the decision. The interest may be recovered in the same manner as the award to which it relates.”
Rationale Behind the Award of Post-Judgment Interests
Post Judgment interests on a judgment sum are awarded to a successful litigant to encourage judgment debtors to pay off the judgment debt as soon as possible. Our legal system also acknowledges the inordinate length of time it takes for appeals to be heard.
An appeal may take as long as ten years to be concluded at the Apex Court, such that a monetary award of the trial Court may have lost its worth by the time the Supreme Court affirms the judgment of the Trial Court. Hence, the rules of every trial/High Court empowers the Courts to award post-judgment interest on every judgment debt at the rate of not less than 10% per annum.
Interestingly, every judgment of the trial/High Court actually carries post-judgment interests at the rate of 10% p.a. Hence, even where the trial Court is silent on the issue of post-judgment interest, the apposite rules of that Court automatically impute interest at the rate of 10% per annum on the judgment sum.
The Supreme Court of Nigeria has explained the rationale behind the compulsory award of post-judgment interests in the case of Berliet (Nig.) Ltd. v. Kachalla (1995) 9 NWLR (Pt.420) 478 when the Noble Lord Ogundare JSC held with exquisite erudition as follows:
“The principle seems to me to be to provide an incentive to judgment debtors for the speedy payment of judgment-debts and to ensure that judgment creditors do not suffer much detriment as a result of a delay in the settlement of judgment debts. The wording of the rule clearly shows that the judgment automatically carries interest at 10 per centum per annum until it is satisfied. The rule, however, gives the court a discretion to order otherwise. In my respectful view, this discretion is a veto which the trial court may exercise to direct that no interest be paid on a judgment debt or to order that a lesser interest be paid. Where he does not give any direction or where the judgment is silent as to payment of interest on the judgment debt, the judgment debt automatically carries interest at the rate fixed by the rule, that is, 10 per centum per annum from the date of the judgment.”
Interpretation of this Rule by the Courts
Undoubtedly, statutes and rules of Court are to be given their literal and unambiguous meanings where the wordings of the legislature are clear and precise.
However, the Court may invoke the golden and/or mischief rule of interpretation where the religious application of the literal rule will amount to an absurdity. A prima facie observation of the various rules of Court on the award of post-judgment interest would reveal that the rule appears to give the judges the discretion to choose to order the award of post-judgment interests or not.
Some recalcitrant Judgment Debtors have contumaciously held on to the literal construct of these rules to avoid paying post-judgment interests where same was not expressly awarded by the Courts. Some have argued that the use of the verb “may” in these rules evinces the intention of the draftspersons of the rules NOT to connote that it is mandatory and that it rather it confers a discretion on High Court judges to choose to award the post-judgment interest or to refrain from doing so.
This argument has been rejected by the Apex Court on a number of occasions, including the locus classicus case of G.K.F Investment Nigeria Limited v Nigeria Telecommunications PLC (2009) 15 NWLR (Pt. 1164) 344 SC where the Apex Court laid this vexed issue of the interpretation of the rules of Court on post-judgment interests to a definite rest while interpreting the provisions of Order 38 Rule 7 of the Lagos State High Court (Civil Procedure) Rules 1994 which has now metamorphosed into Order 39 Rule 4 of the High court of Lagos State (Civil Procedure) Rules 2019 as follows:
“In the instant case where the rules of court have provided for the recovery of interest on a judgment sum, the entitlement is automatic unless otherwise ordered by the court. Since the lower court had neither ordered the payment of interest to the Appellant nor given a direction to the contrary, the sum of N200,000.00 awarded to the Appellant automatically carries interest at the rate of 7 1/2% fixed by Order 38 Rule 7 of the Lagos State High Court (Civil Procedure) rules 1994 as amended.”
Similarly, in the case of Berliet (Nig.) Ltd. v. Kachalla (1995) 9 NWLR (Pt.420)478, the Apex Court while interpreting the provisions of Order 27 Rule 8 of the High Court (Civil Procedure) Rules 1976 of Kano State had earlier held with unambiguous clarity as follows:
“It is not difficult to resolve the main issue in this appeal which is the construction to be placed on Order 27 rule 8 of the High Court (Civil Procedure) Rules 1976, of Kano State. The rule is very clear and unambiguous. Unless the court otherwise orders: a judgment debt carries 10 per centum per annum interest from the date of judgment until it is liquidated by the judgment-debtor.”(emphasis mine).
The Court of Appeal in absolute fealty to the inveterate doctrine of stare decisis has also followed the illustrious reasoning of the Apex Court above in the case of Uli Microfinance Bank Nigeria Limited v. Agbanu Norbert (2018) LPELR-44953(CA) when the jurisdiction of the appellate Court was activated to interpret the provisions of Order 35 Rule 4 of the Anambra State High Court (Civil Procedure) Rules, 2006 which also deals with the automatic application of post-judgment interests on judgment debts.
Pragmatic Circumnavigation of the Murky Waters of Post-Judgment Interests
As earlier stated, many Judgment Debtors are in the habit of raising frivolous objections when a victorious Judgment Creditor demands for the payment of the outstanding post-judgment interests on a judgment debt after the forensic dispute between the parties has been finally settled by the Apex Court.
It is only after losing out on appeals that some Judgment Debtors discover that the compounding post-judgment interests will have doubled the value of the judgment debt. The safest way to escape the financial agony which is sure to accompany the demand for the payment of outstanding judgment debt and post-judgment interests is to place the value of the judgment debt in a high interest yielding account before filing a notice of appeal against the decision of the trial Court.
This will provide a safe fall-back cushion in the event that the Judgment Debtor loses on appeal as the judgment debt would have generated sufficient interests to satisfy the post-judgment interest when the Judgment Creditor eventually comes knocking for his outstanding judgment debt and interests thereon.
It is certain that as night follows the day, post-judgment interests at the rate of 10% per annum shall apply to every monetary judgment debt of the High Courts, except where the Court expressly declares otherwise.
It will, therefore, be futile for any Judgment Debtor to attempt to escape the payment of post-judgment interests on monetary judgment debts of trial Courts. Any objection to the compulsory application of post-judgment interests would be treated as a moot point which may only succeed in irking the Courts further and result in the imposition of costs while the outstanding interests shall still continue to run.
Nonso Anyasi is a Dispute Resolution and Data Privacy Attorney based in Lagos and can be reached via email@example.com.