The Appellant and Respondent were in a banker/customer relationship. The Respondent obtained several loan facilities from the Appellant, including a term loan facility obtained to consolidate the existing facilities into a single loan of US$10 000 000. 00. The term loan facility was also meant to settle the balance sum of US$3 408 624.65. The tenor was 60 months, equating to 60 monthly instalments.
During the course of the banking relationship, the Appellant bank was acquired by Atlas Mara Group on 30 June 2016. On 24 January 2017, a letter of demand for the full settlement of the sum of US$12.229 065.63 million was made to the Respondent. The Respondent was to pay the sum owed within 14 days, failure to which a receiver and a manager would be appointed to ensure recovery of the debt.
The Respondent subsequently commenced an action against the Appellant, seeking, amongst other things, an injunction to restrain the bank from prematurely appointing a receiver to manage its affairs. Upon the Respondent filing a defence to the counter claim, the Appellant applied for entry of judgment on admission, deposing in its affidavit that the Appellant had admitted to owing the counter claimed sum of US$12 229 065.63.
The High Court Judge held that granting the judgment on admission would fly in the teeth of his ruling dated 13 July 2017 which held that the issues raised could only be determined at trial. In addition, the Court further stated that granting the remedy and relief sought by would be tantamount to terminating the Plaintiffs’ action without being given an opportunity to be heard as dictated by one of the rules of natural justice audi alterem patem.
The Appellant appealed.
1. The Court has discretionary power to enter judgment on admission under Order 27 of the High Court Rules. This power is exercised in only plain cases where admission is clear and unequivocal.
2. An admission has to be plain and obvious, on the face of it without requiring a magnifying glass to ascertain its meaning. Admissions may be in pleadings or otherwise. A court cannot refuse to grant judgment on admission in the face of clear admissions.
3. A judgment on admission can be entered before determining whether the admitted sum can be liquidated in instalments. The entry of judgment on admission has no bearing on other claims.
4. An applicant must satisfy the threshold for issuance of interlocutory injunctions, that is: there must be a prima facie case with a probability of success, that the applicant will suffer irreparable injury which would not adequately be compensated by an award of damages and if the court is in doubt, it will decide the application on the balance of convenience.
5. A prima facie case is one in which on the material presented, a court properly directing itself, will conclude that there exists a right which has apparently been infringed by the other party.
6. A debenture security provides for the appointment by the secured creditor upon any default by the debtors or occurrence of specified events, of a receiver with powers to carry on the company’s business with the view of reviewing the company or to the beneficial sale of the entity as a going concern.
7. A debenture holder has the right to exercise its contractual right pursuant to the debenture upon clear default.
8. The court will not normally interfere with the appointment of a receiver under the terms of a debenture holder, unless it is not for the benefit of the holder or the appointment was in bad faith. A debenture often gives power to appoint a receiver and manager in specified events.
9. Parties in a contractual relationship are bound by the contract. The value of the security is not a basis to challenge the appointment of a receiver where the bank intends to realize the security as a debenture holder.
10. A debtor cannot restrain the appointment of a receiver by a creditor pursuant to a debenture, where there is a clear default by the debtor. The default disentitles the applicant from seeking the aid of equity.