A debt may simply be recovered by the borrower paying back the loan. In most cases however, this is hardly the case as the debtor may dispute a portion/entire debt or may be tardy in liquidating his indebtedness. In such situations, an average Nigerian creditor (justifiably frustrated) will likely procure the services of the Nigerian Police Force. In some trivial cases, they might deploy the Nigerian troops to the recover the sum.
Besides the obvious unconstitutionality of the use of the Police and or the Military to resolve purely contractual disputes, it is often messy and a downright waste of tax payers’ funds.
In the event a creditor decides to be civil in recovering his money from a debtor, the legal regime provides for some mechanisms to assist him in doing so. Some of which are:
· Claim at the Magistrate Court
A party who decides to initiate an action in a Magistrate Court in Lagos State must comply with Order 2 Rule 1 & 2 of the Magistrates Court Rules 2009. An action can be brought primarily where the defendant or one of the defendants resides or carries on business in Lagos or where the cause of action arose wholly or partly in Lagos.
What to claim before the Court:
1. Ordinary Debt Cases: The particulars of the claim should show dates of all items, goods or other debts, and also cash received or credits.
2. Unliquidated damages: In claims for unliquidated damages, the plaintiff can state that he limits his claim to a certain sum, which will then in general be deemed to be the amount claimed, certainly in respect of the court fee to be paid or in relation to any award of costs against an unsuccessful plaintiff.
3. Moneylender’s Action: In money lender’s action, the particulars of claim must show that the plaintiff was at the date of the loan, a duly licensed money lender and also state the particulars of the loan.
4. Hire Purchase Claims: In action for recovery of goods let under Hire-Purchase agreements the particulars of claim must state: The date of the agreement and the parties thereto; the goods claimed; the amount of the hire-purchase price; the amount paid by or on behalf of the hirer; the amount of the unpaid balance of the hire-purchase price; the date when the right to demand delivery of the goods accrued; the amount if any claimed as an alternative to the delivery of the goods; and the amount claimed in addition to delivery of the goods or the alternative money claim, stating which.
5. In Possession Cases: The Plaintiff can join a claim for mesne profit, arrears of rent, damages for breach of covenant, or payment of the principal money or interest secured by a mortgage or charge. A full description of the property in question, together with a statement of the net annual rate-able value (or if not having a separate rate-able value, the rent (if any) and the grounds on which possession is claimed, must be included in the particulars).
6. Claims against the State: In proceedings against the State, the particulars of claim must contain information as to the circumstances in which it is alleged the liability of the state has arisen and as to the government departments and officers of the State concerned.
7. Claims on Mortgages: Claims by a mortgagor to recover moneys secured by his mortgage or charge (whether principal or interest), must show the following particulars:
a) The date of the mortgage or charge;
b) The amount of principal money lent;
c) The amount still due with interest.
A plaintiff may apply for a default summons where his claim is for the recovery of a debt or liquidated money demand and he believes that the defendant has no defence to his claim.
· Claim at the High Court
The most common way to recover a debt at the high court is by taking out a writ of summons. A writ of summons is a formal document issued by a court stating concisely the nature of the claim of a plaintiff against a defendant, the relief or remedy claimed and commanding the defendant to “cause an appearance to be entered” for him in an action at the suit of the plaintiff within a specific period of time, usually forty two days (Lagos), after the service of the writ on him, with a warning that, in default of his causing an appearance to be entered as commanded, the plaintiff may proceed therein and judgment may be given in defendant’s absence.
· Summary Judgment/Undefended List Procedure
A summary judgment is one given in favour of the plaintiff or claimant summarily, without going through a full trial or plenary trial of the action. That is, it is the fastest method by which a plaintiff or claimant can obtain judgment where there is plainly no defence to the claim. Thus, the normal steps of filing all necessary pleadings, hearing evidence of witness and addresses by counsels before the court’s judgment are not followed.
Such judgment is based on the writ of summons, the statement of claim and, sometimes, statement of defence. The main reason for summary judgment is to save time and cost of lengthy and expensive trial where the defendant obviously has no defence to the action.
· Winding up Proceedings
Where a company is the debtor, it may be wound-up by an order of the court. The court with the exclusive power is the Federal High Court whose jurisdiction covers the area where the registered office or head office of the company is located – section 407(1) of Companies and Allied Matters Act 1990. Section 408 (d) of the Companies and Allied Matters Act provides that a creditor may commence winding up proceedings against a company if it is unable to pay its debts. Section 409 Act provides that a company shall be deemed to be unable to pay its debts if it is indebted to a creditor in a sum exceeding N2, 000 (about $ 8) and same remain unpaid after 3 weeks of service of a statutory letter of demand delivered at the registered place of business of the company.
Blacks Law Dictionary, 8th Edition, Thomson West, USA p. 156, defines Bankruptcy as ‘’A statutory procedure by which a (usu. Insolvent) debtor obtains financial relief and undergoes a judicially supervised reorganisation of liquidation of the debtor’s assets for the benefit of creditors’ In commencing bankruptcy proceedings, the requirements of the Bankruptcy Act must be strictly observed, failing which, the petition may be struck out. The conditions stated in section 4 of the Act are cumulative and must be complied with.
Please note that the conditions, by themselves, are incapable of grounding a bankruptcy proceeding unless the debtor commits any of the acts of bankruptcy provided for under Section 1 of the Bankruptcy Act.
· Ways to enforce the Judgment of the Court
There are several ways of enforcing different types of judgments like money judgments, land judgments, and other judgments. Please find a summary below:
1. A judgment for payment of money may be enforced by writ of fiery facias, garnishee proceedings, a charging order, a writ of sequestration or an order of committal on a judgment debtor summons.
2. A judgment for possession of land may be enforced by a writ of possession, a writ of sequestration or a committal order.
3. A judgment for delivery of goods may be enforced by a writ of specific delivery or restitution of the goods or their value, a writ of sequestration, or an order of committal.
4. A judgment ordering or restraining the doing of an act may be enforced by an order of committal or a writ of sequestration against the property of the disobedient person.
5. After the judgment or order has been made, the judgment creditor will apply to the Registrar of the Court which made the judgment or order for an appropriate process of execution to be issued.
As can be seen above, the Nigerian legal system has a number of ways to recover a debt. Whether or not some of them are veritable means to procure the repayment of the debt will entirely depend on the nature of the debt and the strategy of the legal practitioner briefed to recover the same. So before you think of engaging the services of law enforcement agents or recovery the same via self help, it is advisable to seek legal advice towards knowing the best option available to you.
Please feel free to contact the author if you require further clarification on any of the debt recovery methods open to you.