IN THE HIGH COURT OF LAGOS STATE
IN THE IKEJA JUDICIAL DIVISION
HOLDEN AT IKEJA
BEFORE HON. JUSTICE O.H. OSHODI
JUDGE
COURT NO 32. GENERAL CIVIL, REVENUE AND MORTGAGE
DIVISIONS
TODAY WEDNESDAY THE 4TH DAY OF FEBRUARY 2008
SUIT NO. ID/127M/2008
BETWEEN:
1. LUKMAN BUARI
2. LADI FAGBENJA ... CLAIMANTS
AND
1. COMMISSIONER FOR FINANCE LAGOS STATE
2. LAGOS STATE INTERNAL REVENUE SERVICE
3. THE ATTORNEY GENERAL OF LAGOS STATE ... DEFENDANTS
Adebayo Haroun for the 1st & 3rd Defendants.
No appearance for 2nd Defendant.
No appearance for Claimant.
JUDGMENT
This Judgment was to have been delivered on Monday, 1st December 2008, but for the strike embarked upon by the staff of the Judiciary. The Court is fully aware of the Constitutional requirement as contained in section 294 (1). The only reason why the Judgment was not delivered as scheduled is for the reason stated above. It is the candid view and opinion of the Court that no miscarriage of justice will be suffered by any of the parties herein.
The Claimants herein commenced this suit by causing to be filed an Originating Summons dated 25th February 2008, but sealed on 27th February 2008. By the Originating Summons, hereinafter referred to as the 'application', the Claimants seek for the determination of the following questions:
1. "Whether by virtue of Section 4,5, and item 59 of the Exclusive legislative fist in the 1999 constitution the administration and collection of Personal Income Tax is within the exclusive Legislative and Executive jurisdiction of the Federal Government or State Government".
2. "Whether by virtue of combined effect of Sections 2,8,25,26,59 and 68 of the Federal Inland Revenue Service (Establishment) Act 2007, the Defendants has (sic) the right to assess, collect and or enforce the payment of the Claimants' Personal Income Tax contrary to the provisions of the Act herein cited".
3. "Whether by virtue of provision of sections 2 and 68 of the Federal Inland Revenue Service (Establishment) Act 2007, the Claimants ate obliged or liable to payment of Personal Income Tax to the Lagos State Internal Revenue Service (the 2nd Defendant)".
The Claimants, by the application, are seeking for the following reliefs:
1. "A Declaration that by virtue Sections 4 & 5 and item 59 of the Exclusive Legislative list in the 1999 constitution, administration and collection of Personal Income Tax is with the exclusive Legislative and Executive jurisdiction of the Federal Government and not the State Government".
2. "A Declaration that by virtue of the provisions of Section 2, 8, 25, 26, 59 and 68 of the Federal Inland Revenue Service (Establishment) Act 2007 the Defendants has (sic) no right or power to assess, collect, review and enforce payment of Income Tax against the Claimants".
3. "A Declaration that by virtue of the provisions of Sections 2,8,25,26,59 and 68 of the Federal Inland Revenue Service (Establishment) Act 2007, the Claimant (sic) is not obliged or liable to payment of Income Tax to the 2nd Defendant (the Lagos State Internal Revenue Service) as demanded".
4. "A Declaration that the public notice published by the Defendants in the Punch Newspaper of 31st of January 2008, in Introducing its self assessment procedure of Personal Income Tax to be used for all tax payers in Lagos State including the Claimants as to payment of their Tax to the 2nd Defendant in contravention of the provisions of Federal Inland Revenue Act 2007, is illegal, null and void".
5. Perpetual Injunction restraining the Defendants, their agents, servant (sic) and howsoever from assessing, collecting or enforcing payment of Income Tax against the Claimants".
6. "Cost of this action".
In support of the application is a 23 paragraphed affidavit deposed to by the 15t Claimant. A document, which is a copy of a self assessment guide, is attached to the affidavit as exhibit. A written address dated 25th February 2008, raising 3 issues for determination, was also filed along with the application.
Upon being served, the 2nd Defendant caused to be filed a memorandum of appearance and later on filed a Notice of Preliminary Objection dated 22nd May 2008. This Notice of Preliminary Objection was on 18th September 2008 withdrawn by learned counsel for the 2nd Defendant. To the application, a counter affidavit of 12 paragraphs deposed to by one Oduwole Gbemisola, a legal officer with the 2nd Defendant, was filed challenging the application. To this counter affidavit, a written address, dated 22nd May 2008, in which the objection was considered and the issues raised by the Claimants in their written address were argued upon, was filed.
The 1st & 3rd Defendants, after being granted leave, filed a joint counter affidavit to the application deposed to by one Olorunnisomo Tolu, a Senior State Counsel in the Chambers of the 3rd Defendant. A document, probably generated from the internet, is attached to this counter affidavit as exhibit. A written address in which 2 issues are raised was filed along with the counter affidavit.
Interestingly, these latter set of Defendants, filed a 'Counter-Claim' against the Claimants. The Counter-Claim is dated 23rd May 2008. In the Counter-claim, these set of Defendants are seeking as follows:
1. "A Declaration that the provisions of sections 2, 8,25,26, 59 and 68 of the Federal Inland Revenue Service (FIRS) Act 2007 are inconsistent with the provisions of Section 4 (2) and (4) and Item D Paragraph 7 of Part II of the 2nd Schedule of the Constitution of Nigeria 1999 and therefore invalid, null and void".
2. "A Declaration that to the extent of taking away the taxing power or right of the State Government to assess, collect and enforce payment of tax on income or profit of persons resident in Lagos State (except personnel of Armed Forces Police Force and Ministry of Foreign Affairs), the Federal Inland Revenue Service (FIRS) Act 2007 is a gross violation of the established principle of fiscal Federalism in the constitution of Nigeria 1999 and therefore null and void".
3. "A Declaration that to the extent of taking away the tasking (sic) power or right of the State Government to assess, collect and enforce payment of tax on capital gain and stamp duty on persons and non corporate bodies resident in Lagos State, the Federal Inland Revenue Service (FIRS) Act 2007 is a gross violation of the established principle of fiscal federalism in the constitution of Nigeria 1999 and therefore null and void".
4. "A Declaration that the Claimants being residents in Lagos State are obliged to continue to comply with the directives of the Defendants to pay their income tax to the State Government and no other body".
5. "A Declaration that the Personal Income Tax Act Decree 104 of 1993 NOW Cap P8 Laws of the Federation of Nigeria 2004 is an existing Law valid, subsisting and binding on the Claimant (sic)".
6. "A Declaration that by virtue of the provisions of the Constitution of Nigeria 1999 Personal Income Tax Act, Capital Gain Tax Act and Stamp Duty Act, the Defendant (sic) have the right and power to assess, collect, review and enforce payment of income tax, capital gain tax and stamp duty on individuals and non-corporate bodies resident in Lagos State including the Claimants".
On the 18th September 2008, the application was formally moved. In moving the application, learned counsel to the Claimants, O. Ibrahim Esq.; referred to the reliefs in the application, the contents of the affidavit in support together with the exhibit attached and adopted his written address. Learned counsel then urged the Court to grant the application. After the submission of learned counsel, the Court then directed him to address the Court as to the issue of the locus standi of the Claimants. In his short reply or submission, learned counsel referred to paragraphs 16,17 & 19 of the affidavit in support.
In objecting to the application, learned counsel to the 1st & 3rd Defendant, Lawal Pedro S.A.N. referred to the contents of the counter affidavit filed for these Defendants and adopted his written submission. Learned S.A.N. then withdrew reliefs 2 & 3 as appearing in the Counter-Claim. On the propriety of the Counter-claim, that is, whether such a procedure is appropriate where the suit is commenced using the Originating Summons procedure, learned S.A.N. relied on the decision in PEENOCK V HOTEL PRESIDENTIAL (1982) 12 SC PG 1.
It is submitted on behalf of the 1st & 3rd Defendants, with reference to issue 1 raised by the Claimants, that where there is a law that deals with a general subject, tike the FIRS Act 2007 and another law with a particular subject, like the Personal Income Tax Law, the latter will prevail. Reliance is placed on AQUA LTD V ONDO S.S.C. (1988) 4 NWLR PT 91 PG 622 @ 641 – 642 and CROWN STAR & CO. LTDV THE VESSEL, M.V. VALI (2000) 1 NWLR PT 637 PG 37 @ 60.
On issue 2, it is submitted that the word "may" in line 1 of item D of paragraph 7 of Concurrent Legislative List should be read to mean "shall" as imposing duties on the National Assembly to vest power of assessment and collection of Personal Income Tax Act in the State. Learned S.A.N then referred to the decision in RABIU V GOVERNMENT OF KANO STATE (1989) 4 NWLR PT 117 PG 517 and urged the Court to dismiss the application.
On her on part, learned counsel to the 2nd Defendant, Mrs. F. A. Afolayan, referred to the contents of the counter affidavit filed for the 2nd Defendant and adopted her written address urging the Court to dismiss the case.
At the conclusion of addresses by learned counsels present, the Court then asked whether it was procedural permissible for a party to file a counter-claim in an action begun by way of Originating Summons. To this question, learned S.A.N contended that an Originating Summons, by the Rules of Court, is an Originating process, which calls for defence. Learned counsel for the 2nd Defendant aligned herself with the contention of Mr. Pedro S.A.N, while learned counsel to the Claimants simply told the Court that he had no problem with the counter-claim.
It must be stated that after conclusion of addresses, and the suit had been adjourned for Judgment, a correspondence dated 9th October 2008, written by learned counsel to the 1st & 3rd Defendants was brought to the attention of the Court. In this written correspondence, further authorities were brought to the attention of the Court, especially on the interpretation of the word "may" as appearing in Statutes and the proprietness of filing a counter-claim to an action began by way of Originating Summons.
The Court has read the contents of the affidavits filed in respect of the application. The Court has also read the contents of the written submissions filed also in respect of the application. These written submissions are herewith incorporated into this Ruling with specific reference made to them when the need arises. However, before going on into the merit or demerit of this action, together with the counter-claim, the Court will like to make an observation.
As stated above, this action was commenced by way of Originating Summons with an affidavit in support. The 1st & 3rd Defendants filed a counter-claim. It is noted that the Claimants did not file any defence to the counter-claim, nor did the 1st & 3rd Defendants support the counter-claim with any form of pleadings!
To this Court, the critical issue that must first be determined is whether the Claimants have shown any locus standi to seek the reliefs sought for. This issue was raised by the 2nd Defendant by way of preliminary objection, which was withdrawn and treated in the written address filed along with its counter affidavit. At the conclusion of addresses, the Court suo motto raised this issue of locus standi. Learned counsel to the Claimants referred to paragraphs 16,17 &19 of the affidavit in support to show the locus of the Claimants,
In EJIWUNMI V COSTAIN (W.A.) PLC (1998) 12 NWLR PT 576 PG 149, it is held that the first way to determine whether a Claimant has the necessary capacity to institute the action is to examine the statement of claim and see if he has any enforceable connection with the subject matter. There must be a nexus between the Claimant and the disclosed cause of action concerning his rights or obligations which has been breached or threatened to be violated. Further, it is held that the term locus standi denotes the legal capacity to institute proceedings in a court of law or tribunal to enforce a right recognized by law. It is the right to appear before a court to prosecute or defend an action affecting a legal right. The best way to determine whether the Claimant has the necessary capacity to institute this action is to examine the statement of claim and see if he has any enforceable connection with the subject matter. To summarize, there must be a nexus between the Claimants and the Defendants and the disclosed cause of action concerning their rights and obligations which has been breached or threatened to be violated.
The Court of Appeal in AGWARAMGBO V UBN (2001) 4 NWLR PT 702 PG 1, held that the meaning of locus standi denotes the legal capacity to institute proceedings in a court. The fundamental aspect of locus standi is that it focuses on the capacity of the party seeking to present his complaint before a court of law and not on the issues he wishes to have adjudicated. The question whether or not a Claimant has locus standi is determinable from the totality of all the averments in his statement of claim. See also WILLIAMS VDAWODU (1988) 4 NWLR PT 87 PG 189 @ 192 and OLUBODUN VLAWAL (2008) 9 MJSC PG 1.
With these statements of law in mind, an examination of the affidavit in support now becomes imperative. As stated, the 1st Claimant deposed to the affidavit in support. In the affidavit, the deponent stated that before the commencement of the Federal Inland Revenue Service (Establishment) Act 2007, he and the other Claimant had been paying their Personal Income Tax as at when due to the Lagos State Government. He however failed to exhibit proof of this assertion. The deponent then reproduced the provisions of the Federal Inland Revenue Service (Establishment) Act 2007 and the Constitution and further deposed that on 31st January 2008, the 2nd Defendant put an advert in the Punch Newspaper, exhibit "A", and that by virtue of the Federal Inland Revenue Service (Establishment) Act 2007, he and the 2nd Claimant fall within the category of people who must pay their taxes to the Federal Inland Revenue Service on demand. How they fall into this category is not stated!
This brief recount of the deposition of the 1st Claimant is what gives the Claimants, 2 in number in this action, the locus standi to institute this action, jointly, as submitted by their learned counsel.
Now, nowhere in the affidavit did any of the Claimants deposed to the fact that they had paid their personal income tax as at when due. Proof of payment of such income tax is kept away from the view of the Court. None of the Claimants deposed that they had been assessed by the Federal Inland Revenue Service, and that they had paid their current taxes. None of the Claimants deposed that the 2nd Defendant had sent them any assessment to which they are contesting. But their claim to fame is that they saw an advert in the newspapers, and it is this advert that gives them a right of action in this regard!
With respect to learned counsel to the Claimants, the Claimants have not shown any nexus between them and the disclosed cause of action concerning their rights or obligations which has been breached or threatened to be violated. Reading an advert in the newspaper does not confer them any locus standi to bring this action. The question to ask is what capacity are the Claimants bringing this action? They have not proved that they are tax payers, or tax compliant, as nothing to this effect is before the Court.
In the written address filed on behalf of the Claimants, their learned counsel talked about 'double taxation'. However, how he arrived at that suggestion is not laid before the Court. It is one thing to submit or contend, it is another thing to rest submissions and contentions on hard proof. For the avoidance of repetition, what other taxes have the Claimants paid, in which they want to avoid double taxation? A far as the Court is concerned, none. They are the ones to produce evidence of payment of taxes, and it is not for the Court to assume that indeed, these Claimants are tax compliant!
The 2nd Defendant, in the counter affidavit, paragraph 3 thereof, deposed that these Claimants have not paid any tax to the Government of Lagos State and neither have they paid to the Federal Government. This deposition was not challenged or controverted by any of the Claimants. Further, the 2nd Defendant deposed that the Federal Inland Revenue Service has not assessed or demanded income tax from the Claimants. This deposition was also not challenged or refuted. It is trite that a fact in an affidavit not challenged or controverted is presumed to be correct.
As rightly submitted by learned counsel to the 2nd Defendant, in paragraph 2.3 of the written address, the Claimants have not disclosed any fact concerning their interest, status and or injury suffered in relation to the acts or omissions of the 2nd Defendant or have they shown how the advert affected or applied to them.
With these findings the Court holds that the Claimants have no locus standi to institute this present action.
The next issue for consideration is the appropriateness of the counter-claim filed by the 1st & 3rd Defendants. As stated, the 1st & 3rd Defendants did not file any 'pleading' to put flesh to their claims. Also, the Claimants did not file any 'pleading' or defence to the counter-claim. What is just before the Court are claims or reliefs being sought for without any fact supporting them.
It is trite that a counter-claim is a separate action to the main claim. There is nowhere in our Rules of Court that permits the filing of a counter-claim in an action began by way of Originating Summons. Learned S.A.N., in his submissions referred the Court to section 2 of the High Court of Lagos State (Civil Procedure) Rules 2004. I think he means High Court of Lagos State (Civil Procedure) Law 2004, and not 'Rules'.
By the provision of this section, the Court is empowered to adopt such procedure as will in its view do substantial justice between the parties concerned where no adequate provisions are made in the Rules, (Italics and underlining mine for emphasis).
Learned S.A.N. then made reference to Order 28 Rule 7 of the Rules of the Supreme Court, England and also Order 40 Rule 6 of the Federal High Court (Civil Procedure) Rules 2000.
To this Court, notwithstanding the urging of learned S.A.N, the procedure adopted by the 1st & 3rd Defendants is not permissible by our Rules of Court. By Order 17 Rule 16 of our Rules of Court, a Respondent to an Originating Summons shall file a counter affidavit together with all the exhibits he intends to rely upon and a written address within 21 days after service of the Originating Summons. This provision did not talk about any 'counter-claim' in an Originating Summons proceeding. Further, Order 17 Rules 6 & 7 provides for counter-claim. A close reading of these rules will clarify the issue that a counter-claim, which is an independent action, always follows a statement of defence and not an affidavit, be it counter affidavit.
Now, in my view, it will be improper to allow the procedure adopted by learned S.A.N. This is more so that the Rules of the Supreme Court England, which is basically the same as that of the Federal High Court, he relies upon gives the Court the discretion to Order the counter-claim to be struck out or tried separately. Further, as stated above, there are no facts or pleadings to support the reliefs or claims being sought in the counter-claim.
Another reason why the counter-claim is incompetent is that the proper parties for the just determination of the reliefs sought are not before the Court.
The proper parties to answer the live issues arising out of prayers 1,4,5 & 6, the 2nd & 3rd prayers having been withdrawn, of the counter-claim are not before the Court. The 1st & 3rd Defendants want the Court to declare some sections of an Act of the National Assembly invalid, null and void. The National Assembly or A.G Federation or the Federal Inland Revenue Service are not joined as Defendants to the counter-claim. These set of Defendants also want the Court to declare a Law of a State valid and a blanket declaration that the Claimants are to pay their income taxes to Lagos State, when there in nothing before the Court that these Claimants are actually within the tax area of Lagos State. On this point it should be mentioned that the Punch Newspaper in not a local newspaper confined within Lagos State.
In P.N. UDOH TRADING COMPANY LIMITED VABERE (2001) 11 NWLR PT 723 PG 114, the Supreme Court held, while referring to the decision in PEENOK INVESTMENTS LTD V HOTEL PRESIDENTIAL (1982) 12 SC 1, that although a judgment creates law, such law is only between parties to the litigation and their privies, and not any party outside these group.
Further in OKUMU OIL PALM COMPANY LIMITED V ISERHIENRHIEN (2001) 6 NWLR PG 660, the apex Court held that a person not a party to an action (or privy) would not be bound by the result of that action. This being the case, the Court finds and holds that the counter-claim is incompetent.
In the final analysis, the Court holds that the Claimants have no locus standi to institute this action as formulated and that the counter-claim of the 1st & 3rd Defendants is incompetent. Accordingly, the Originating Summons is hereby dismissed. The counter-claim is hereby struck out.
Hon. Justice O. H. Oshodi
Judge
IN THE IKEJA JUDICIAL DIVISION
HOLDEN AT IKEJA
BEFORE HON. JUSTICE O.H. OSHODI
JUDGE
COURT NO 32. GENERAL CIVIL, REVENUE AND MORTGAGE
DIVISIONS
TODAY WEDNESDAY THE 4TH DAY OF FEBRUARY 2008
SUIT NO. ID/127M/2008
BETWEEN:
1. LUKMAN BUARI
2. LADI FAGBENJA ... CLAIMANTS
AND
1. COMMISSIONER FOR FINANCE LAGOS STATE
2. LAGOS STATE INTERNAL REVENUE SERVICE
3. THE ATTORNEY GENERAL OF LAGOS STATE ... DEFENDANTS
Adebayo Haroun for the 1st & 3rd Defendants.
No appearance for 2nd Defendant.
No appearance for Claimant.
JUDGMENT
This Judgment was to have been delivered on Monday, 1st December 2008, but for the strike embarked upon by the staff of the Judiciary. The Court is fully aware of the Constitutional requirement as contained in section 294 (1). The only reason why the Judgment was not delivered as scheduled is for the reason stated above. It is the candid view and opinion of the Court that no miscarriage of justice will be suffered by any of the parties herein.
The Claimants herein commenced this suit by causing to be filed an Originating Summons dated 25th February 2008, but sealed on 27th February 2008. By the Originating Summons, hereinafter referred to as the 'application', the Claimants seek for the determination of the following questions:
1. "Whether by virtue of Section 4,5, and item 59 of the Exclusive legislative fist in the 1999 constitution the administration and collection of Personal Income Tax is within the exclusive Legislative and Executive jurisdiction of the Federal Government or State Government".
2. "Whether by virtue of combined effect of Sections 2,8,25,26,59 and 68 of the Federal Inland Revenue Service (Establishment) Act 2007, the Defendants has (sic) the right to assess, collect and or enforce the payment of the Claimants' Personal Income Tax contrary to the provisions of the Act herein cited".
3. "Whether by virtue of provision of sections 2 and 68 of the Federal Inland Revenue Service (Establishment) Act 2007, the Claimants ate obliged or liable to payment of Personal Income Tax to the Lagos State Internal Revenue Service (the 2nd Defendant)".
The Claimants, by the application, are seeking for the following reliefs:
1. "A Declaration that by virtue Sections 4 & 5 and item 59 of the Exclusive Legislative list in the 1999 constitution, administration and collection of Personal Income Tax is with the exclusive Legislative and Executive jurisdiction of the Federal Government and not the State Government".
2. "A Declaration that by virtue of the provisions of Section 2, 8, 25, 26, 59 and 68 of the Federal Inland Revenue Service (Establishment) Act 2007 the Defendants has (sic) no right or power to assess, collect, review and enforce payment of Income Tax against the Claimants".
3. "A Declaration that by virtue of the provisions of Sections 2,8,25,26,59 and 68 of the Federal Inland Revenue Service (Establishment) Act 2007, the Claimant (sic) is not obliged or liable to payment of Income Tax to the 2nd Defendant (the Lagos State Internal Revenue Service) as demanded".
4. "A Declaration that the public notice published by the Defendants in the Punch Newspaper of 31st of January 2008, in Introducing its self assessment procedure of Personal Income Tax to be used for all tax payers in Lagos State including the Claimants as to payment of their Tax to the 2nd Defendant in contravention of the provisions of Federal Inland Revenue Act 2007, is illegal, null and void".
5. Perpetual Injunction restraining the Defendants, their agents, servant (sic) and howsoever from assessing, collecting or enforcing payment of Income Tax against the Claimants".
6. "Cost of this action".
In support of the application is a 23 paragraphed affidavit deposed to by the 15t Claimant. A document, which is a copy of a self assessment guide, is attached to the affidavit as exhibit. A written address dated 25th February 2008, raising 3 issues for determination, was also filed along with the application.
Upon being served, the 2nd Defendant caused to be filed a memorandum of appearance and later on filed a Notice of Preliminary Objection dated 22nd May 2008. This Notice of Preliminary Objection was on 18th September 2008 withdrawn by learned counsel for the 2nd Defendant. To the application, a counter affidavit of 12 paragraphs deposed to by one Oduwole Gbemisola, a legal officer with the 2nd Defendant, was filed challenging the application. To this counter affidavit, a written address, dated 22nd May 2008, in which the objection was considered and the issues raised by the Claimants in their written address were argued upon, was filed.
The 1st & 3rd Defendants, after being granted leave, filed a joint counter affidavit to the application deposed to by one Olorunnisomo Tolu, a Senior State Counsel in the Chambers of the 3rd Defendant. A document, probably generated from the internet, is attached to this counter affidavit as exhibit. A written address in which 2 issues are raised was filed along with the counter affidavit.
Interestingly, these latter set of Defendants, filed a 'Counter-Claim' against the Claimants. The Counter-Claim is dated 23rd May 2008. In the Counter-claim, these set of Defendants are seeking as follows:
1. "A Declaration that the provisions of sections 2, 8,25,26, 59 and 68 of the Federal Inland Revenue Service (FIRS) Act 2007 are inconsistent with the provisions of Section 4 (2) and (4) and Item D Paragraph 7 of Part II of the 2nd Schedule of the Constitution of Nigeria 1999 and therefore invalid, null and void".
2. "A Declaration that to the extent of taking away the taxing power or right of the State Government to assess, collect and enforce payment of tax on income or profit of persons resident in Lagos State (except personnel of Armed Forces Police Force and Ministry of Foreign Affairs), the Federal Inland Revenue Service (FIRS) Act 2007 is a gross violation of the established principle of fiscal Federalism in the constitution of Nigeria 1999 and therefore null and void".
3. "A Declaration that to the extent of taking away the tasking (sic) power or right of the State Government to assess, collect and enforce payment of tax on capital gain and stamp duty on persons and non corporate bodies resident in Lagos State, the Federal Inland Revenue Service (FIRS) Act 2007 is a gross violation of the established principle of fiscal federalism in the constitution of Nigeria 1999 and therefore null and void".
4. "A Declaration that the Claimants being residents in Lagos State are obliged to continue to comply with the directives of the Defendants to pay their income tax to the State Government and no other body".
5. "A Declaration that the Personal Income Tax Act Decree 104 of 1993 NOW Cap P8 Laws of the Federation of Nigeria 2004 is an existing Law valid, subsisting and binding on the Claimant (sic)".
6. "A Declaration that by virtue of the provisions of the Constitution of Nigeria 1999 Personal Income Tax Act, Capital Gain Tax Act and Stamp Duty Act, the Defendant (sic) have the right and power to assess, collect, review and enforce payment of income tax, capital gain tax and stamp duty on individuals and non-corporate bodies resident in Lagos State including the Claimants".
On the 18th September 2008, the application was formally moved. In moving the application, learned counsel to the Claimants, O. Ibrahim Esq.; referred to the reliefs in the application, the contents of the affidavit in support together with the exhibit attached and adopted his written address. Learned counsel then urged the Court to grant the application. After the submission of learned counsel, the Court then directed him to address the Court as to the issue of the locus standi of the Claimants. In his short reply or submission, learned counsel referred to paragraphs 16,17 & 19 of the affidavit in support.
In objecting to the application, learned counsel to the 1st & 3rd Defendant, Lawal Pedro S.A.N. referred to the contents of the counter affidavit filed for these Defendants and adopted his written submission. Learned S.A.N. then withdrew reliefs 2 & 3 as appearing in the Counter-Claim. On the propriety of the Counter-claim, that is, whether such a procedure is appropriate where the suit is commenced using the Originating Summons procedure, learned S.A.N. relied on the decision in PEENOCK V HOTEL PRESIDENTIAL (1982) 12 SC PG 1.
It is submitted on behalf of the 1st & 3rd Defendants, with reference to issue 1 raised by the Claimants, that where there is a law that deals with a general subject, tike the FIRS Act 2007 and another law with a particular subject, like the Personal Income Tax Law, the latter will prevail. Reliance is placed on AQUA LTD V ONDO S.S.C. (1988) 4 NWLR PT 91 PG 622 @ 641 – 642 and CROWN STAR & CO. LTDV THE VESSEL, M.V. VALI (2000) 1 NWLR PT 637 PG 37 @ 60.
On issue 2, it is submitted that the word "may" in line 1 of item D of paragraph 7 of Concurrent Legislative List should be read to mean "shall" as imposing duties on the National Assembly to vest power of assessment and collection of Personal Income Tax Act in the State. Learned S.A.N then referred to the decision in RABIU V GOVERNMENT OF KANO STATE (1989) 4 NWLR PT 117 PG 517 and urged the Court to dismiss the application.
On her on part, learned counsel to the 2nd Defendant, Mrs. F. A. Afolayan, referred to the contents of the counter affidavit filed for the 2nd Defendant and adopted her written address urging the Court to dismiss the case.
At the conclusion of addresses by learned counsels present, the Court then asked whether it was procedural permissible for a party to file a counter-claim in an action begun by way of Originating Summons. To this question, learned S.A.N contended that an Originating Summons, by the Rules of Court, is an Originating process, which calls for defence. Learned counsel for the 2nd Defendant aligned herself with the contention of Mr. Pedro S.A.N, while learned counsel to the Claimants simply told the Court that he had no problem with the counter-claim.
It must be stated that after conclusion of addresses, and the suit had been adjourned for Judgment, a correspondence dated 9th October 2008, written by learned counsel to the 1st & 3rd Defendants was brought to the attention of the Court. In this written correspondence, further authorities were brought to the attention of the Court, especially on the interpretation of the word "may" as appearing in Statutes and the proprietness of filing a counter-claim to an action began by way of Originating Summons.
The Court has read the contents of the affidavits filed in respect of the application. The Court has also read the contents of the written submissions filed also in respect of the application. These written submissions are herewith incorporated into this Ruling with specific reference made to them when the need arises. However, before going on into the merit or demerit of this action, together with the counter-claim, the Court will like to make an observation.
As stated above, this action was commenced by way of Originating Summons with an affidavit in support. The 1st & 3rd Defendants filed a counter-claim. It is noted that the Claimants did not file any defence to the counter-claim, nor did the 1st & 3rd Defendants support the counter-claim with any form of pleadings!
To this Court, the critical issue that must first be determined is whether the Claimants have shown any locus standi to seek the reliefs sought for. This issue was raised by the 2nd Defendant by way of preliminary objection, which was withdrawn and treated in the written address filed along with its counter affidavit. At the conclusion of addresses, the Court suo motto raised this issue of locus standi. Learned counsel to the Claimants referred to paragraphs 16,17 &19 of the affidavit in support to show the locus of the Claimants,
In EJIWUNMI V COSTAIN (W.A.) PLC (1998) 12 NWLR PT 576 PG 149, it is held that the first way to determine whether a Claimant has the necessary capacity to institute the action is to examine the statement of claim and see if he has any enforceable connection with the subject matter. There must be a nexus between the Claimant and the disclosed cause of action concerning his rights or obligations which has been breached or threatened to be violated. Further, it is held that the term locus standi denotes the legal capacity to institute proceedings in a court of law or tribunal to enforce a right recognized by law. It is the right to appear before a court to prosecute or defend an action affecting a legal right. The best way to determine whether the Claimant has the necessary capacity to institute this action is to examine the statement of claim and see if he has any enforceable connection with the subject matter. To summarize, there must be a nexus between the Claimants and the Defendants and the disclosed cause of action concerning their rights and obligations which has been breached or threatened to be violated.
The Court of Appeal in AGWARAMGBO V UBN (2001) 4 NWLR PT 702 PG 1, held that the meaning of locus standi denotes the legal capacity to institute proceedings in a court. The fundamental aspect of locus standi is that it focuses on the capacity of the party seeking to present his complaint before a court of law and not on the issues he wishes to have adjudicated. The question whether or not a Claimant has locus standi is determinable from the totality of all the averments in his statement of claim. See also WILLIAMS VDAWODU (1988) 4 NWLR PT 87 PG 189 @ 192 and OLUBODUN VLAWAL (2008) 9 MJSC PG 1.
With these statements of law in mind, an examination of the affidavit in support now becomes imperative. As stated, the 1st Claimant deposed to the affidavit in support. In the affidavit, the deponent stated that before the commencement of the Federal Inland Revenue Service (Establishment) Act 2007, he and the other Claimant had been paying their Personal Income Tax as at when due to the Lagos State Government. He however failed to exhibit proof of this assertion. The deponent then reproduced the provisions of the Federal Inland Revenue Service (Establishment) Act 2007 and the Constitution and further deposed that on 31st January 2008, the 2nd Defendant put an advert in the Punch Newspaper, exhibit "A", and that by virtue of the Federal Inland Revenue Service (Establishment) Act 2007, he and the 2nd Claimant fall within the category of people who must pay their taxes to the Federal Inland Revenue Service on demand. How they fall into this category is not stated!
This brief recount of the deposition of the 1st Claimant is what gives the Claimants, 2 in number in this action, the locus standi to institute this action, jointly, as submitted by their learned counsel.
Now, nowhere in the affidavit did any of the Claimants deposed to the fact that they had paid their personal income tax as at when due. Proof of payment of such income tax is kept away from the view of the Court. None of the Claimants deposed that they had been assessed by the Federal Inland Revenue Service, and that they had paid their current taxes. None of the Claimants deposed that the 2nd Defendant had sent them any assessment to which they are contesting. But their claim to fame is that they saw an advert in the newspapers, and it is this advert that gives them a right of action in this regard!
With respect to learned counsel to the Claimants, the Claimants have not shown any nexus between them and the disclosed cause of action concerning their rights or obligations which has been breached or threatened to be violated. Reading an advert in the newspaper does not confer them any locus standi to bring this action. The question to ask is what capacity are the Claimants bringing this action? They have not proved that they are tax payers, or tax compliant, as nothing to this effect is before the Court.
In the written address filed on behalf of the Claimants, their learned counsel talked about 'double taxation'. However, how he arrived at that suggestion is not laid before the Court. It is one thing to submit or contend, it is another thing to rest submissions and contentions on hard proof. For the avoidance of repetition, what other taxes have the Claimants paid, in which they want to avoid double taxation? A far as the Court is concerned, none. They are the ones to produce evidence of payment of taxes, and it is not for the Court to assume that indeed, these Claimants are tax compliant!
The 2nd Defendant, in the counter affidavit, paragraph 3 thereof, deposed that these Claimants have not paid any tax to the Government of Lagos State and neither have they paid to the Federal Government. This deposition was not challenged or controverted by any of the Claimants. Further, the 2nd Defendant deposed that the Federal Inland Revenue Service has not assessed or demanded income tax from the Claimants. This deposition was also not challenged or refuted. It is trite that a fact in an affidavit not challenged or controverted is presumed to be correct.
As rightly submitted by learned counsel to the 2nd Defendant, in paragraph 2.3 of the written address, the Claimants have not disclosed any fact concerning their interest, status and or injury suffered in relation to the acts or omissions of the 2nd Defendant or have they shown how the advert affected or applied to them.
With these findings the Court holds that the Claimants have no locus standi to institute this present action.
The next issue for consideration is the appropriateness of the counter-claim filed by the 1st & 3rd Defendants. As stated, the 1st & 3rd Defendants did not file any 'pleading' to put flesh to their claims. Also, the Claimants did not file any 'pleading' or defence to the counter-claim. What is just before the Court are claims or reliefs being sought for without any fact supporting them.
It is trite that a counter-claim is a separate action to the main claim. There is nowhere in our Rules of Court that permits the filing of a counter-claim in an action began by way of Originating Summons. Learned S.A.N., in his submissions referred the Court to section 2 of the High Court of Lagos State (Civil Procedure) Rules 2004. I think he means High Court of Lagos State (Civil Procedure) Law 2004, and not 'Rules'.
By the provision of this section, the Court is empowered to adopt such procedure as will in its view do substantial justice between the parties concerned where no adequate provisions are made in the Rules, (Italics and underlining mine for emphasis).
Learned S.A.N. then made reference to Order 28 Rule 7 of the Rules of the Supreme Court, England and also Order 40 Rule 6 of the Federal High Court (Civil Procedure) Rules 2000.
To this Court, notwithstanding the urging of learned S.A.N, the procedure adopted by the 1st & 3rd Defendants is not permissible by our Rules of Court. By Order 17 Rule 16 of our Rules of Court, a Respondent to an Originating Summons shall file a counter affidavit together with all the exhibits he intends to rely upon and a written address within 21 days after service of the Originating Summons. This provision did not talk about any 'counter-claim' in an Originating Summons proceeding. Further, Order 17 Rules 6 & 7 provides for counter-claim. A close reading of these rules will clarify the issue that a counter-claim, which is an independent action, always follows a statement of defence and not an affidavit, be it counter affidavit.
Now, in my view, it will be improper to allow the procedure adopted by learned S.A.N. This is more so that the Rules of the Supreme Court England, which is basically the same as that of the Federal High Court, he relies upon gives the Court the discretion to Order the counter-claim to be struck out or tried separately. Further, as stated above, there are no facts or pleadings to support the reliefs or claims being sought in the counter-claim.
Another reason why the counter-claim is incompetent is that the proper parties for the just determination of the reliefs sought are not before the Court.
The proper parties to answer the live issues arising out of prayers 1,4,5 & 6, the 2nd & 3rd prayers having been withdrawn, of the counter-claim are not before the Court. The 1st & 3rd Defendants want the Court to declare some sections of an Act of the National Assembly invalid, null and void. The National Assembly or A.G Federation or the Federal Inland Revenue Service are not joined as Defendants to the counter-claim. These set of Defendants also want the Court to declare a Law of a State valid and a blanket declaration that the Claimants are to pay their income taxes to Lagos State, when there in nothing before the Court that these Claimants are actually within the tax area of Lagos State. On this point it should be mentioned that the Punch Newspaper in not a local newspaper confined within Lagos State.
In P.N. UDOH TRADING COMPANY LIMITED VABERE (2001) 11 NWLR PT 723 PG 114, the Supreme Court held, while referring to the decision in PEENOK INVESTMENTS LTD V HOTEL PRESIDENTIAL (1982) 12 SC 1, that although a judgment creates law, such law is only between parties to the litigation and their privies, and not any party outside these group.
Further in OKUMU OIL PALM COMPANY LIMITED V ISERHIENRHIEN (2001) 6 NWLR PG 660, the apex Court held that a person not a party to an action (or privy) would not be bound by the result of that action. This being the case, the Court finds and holds that the counter-claim is incompetent.
In the final analysis, the Court holds that the Claimants have no locus standi to institute this action as formulated and that the counter-claim of the 1st & 3rd Defendants is incompetent. Accordingly, the Originating Summons is hereby dismissed. The counter-claim is hereby struck out.
Hon. Justice O. H. Oshodi
Judge
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