The Jurisdiction of the NICN: Loans, Mortgages

& Other Employment-related arrangements

By

Hon Justice Ikechi Gerald Nweneka

Preliminary

I feel honoured to be invited by the Nigerian Bar Association Institute for

Continuing Legal Education to lead the discussion on the jurisdiction of the NICN:
loans, mortgages & other employment-related arrangements. The views expressed
here are my opinion and are only for discussion and enlightenment.

Introduction

Jurisdiction is pivotal to any adjudication. That is why it is often regarded as the

live wire of adjudication. There is no amount of logic that can make up for the
absence of jurisdiction. If a Court does not have jurisdiction to adjudicate on a
case, whatever it does with respect to the case is an exercise in futility. See
Obiuweubi v. CBN1 and Attorney General of Kwara State & Anor v.
Adeyemo & Ors2.

Jurisdiction has been described as the authority given to a Court by the

Constitution or statute to decide matters that come before it. It is the limits
imposed on the power of a validly constituted Court to determine issues between
persons seeking to avail themselves of its process by reference to the subject
matter of the issues or to the persons between whom the issues are joined or to
the reliefs sought. These factors operate exclusively of one another such that the
Court cannot exercise any valid jurisdiction if one is lacking and the others are
present. The mere presence of one feature does not exclude the need for the
others. See Angadi v. PDP & Ors3 and Attorney General of Kwara State &
Anor v. Adeyemo & Ors [supra].

The jurisdiction of a Court is often confused with the competence of the Court.
They are different, but a Court must have both jurisdiction and competence to be
properly seised of a matter. While jurisdiction is conferred on the Court by the
Constitution or statute, a Court is competent when: it is properly constituted with
respect to the number and qualification of members; the subject matter of the
action is within its jurisdiction and there is no feature in the case which prevents
the Court from exercising its jurisdiction; the action is initiated by due process of
law; and upon fulfillment of any condition precedent to the exercise of its

1
[2011] 2-3 SC [Pt I] 46 at 91
2
[2017] 1 NWLR [Pt 1546] 210 at 239
3
[2018] 15 NWLR [Pt 1641] 1 at 22
1
jurisdiction. See Madukolu & Ors v. Nkemdilim4, Obiuweubi v. CBN5, and
Attorney General of Kwara State & Anor v. Adeyemo & Ors [supra]. A
Court cannot entertain a case which it has no jurisdiction to adjudicate upon.

Perhaps I should mention here that jurisdiction is of two types, procedural and
substantive. Substantive jurisdiction is the statutory powers conferred on the
Court to decide matters which come before it, while procedural jurisdiction deals
with matters which must be in place for the Court to exercise its substantive
jurisdiction, for example, issuance of pre-action notice, filing, and service of
processes. These are procedural steps made for the benefit of a party in litigation
and can be waived. Substantive jurisdiction cannot be waived even by the consent
of the parties as a matter of public policy. It is often said that where a Court is
devoid of jurisdiction, the parties cannot by consent confer jurisdiction on it. See
Williams & Anor v. Udofia & Ors 6. However, where a Court has substantive
jurisdiction, and there is a lack of competence due to a procedural hitch, such
incompetence can be waived or cured. See RFG Limited & Anor v. Skye Bank
Plc7 and Attorney General of Kwara State & Anor v. Adeyemo & Ors 8.

The jurisdiction of the National Industrial Court of Nigeria

The jurisdiction of the National Industrial Court of Nigeria has been a subject of
intense debate and judicial interpretation. Our focus, today, is the jurisdiction of
the National Industrial Court with respect to employment-related loans.
Unquestionably, the jurisdiction of the National Industrial Court is both
constitutional and statutory. So much has been written on the subject and I will
not bore you with the history of the National Industrial Court. The jurisdiction of
the NIC is donated by Section 7[1] of the National Industrial Court Act, 2006, and
Section 254C [1], [2], [4] and [5] of the 1999 Constitution, as amended.

Section 7[1] of the National Industrial Court Act, 2006, provides:

[1] The Court shall have and exercise exclusive jurisdiction in civil
causes and matters –

[a] relating to –

[i] labour, including trade unions and industrial

relations; and

[ii] environment and conditions of work, health, safety

and welfare of labour, and matters incidental
thereto; and

4
[1962] LPELR-24023[SC] 9-10
5
[supra] pages 91–94
6
[2016] LPELR-41358[CA] 6 - 7
7
[2012] LPELR-7880[CA] 14-15
8
[supra] pages 239-240
2
 [b] relating to the grant of any order to restrain any person
or body from taking part in any strike, lock-out or any
industrial action, or any conduct in contemplation or in
furtherance of a strike, lock-out or any industrial action;

[c] relating to the determination of any question as to the

interpretation of –

[i] any collective agreement,

[ii] any award made by an arbitral tribunal in respect

of a labour dispute or an organizational dispute,

[iii] the terms of settlement of any labour dispute,

organizational dispute as may be recorded in any
memorandum of settlement,

[iv] any trade union constitution, and

[v] any award or judgment of the Court.

This jurisdiction was expanded by the Third Alteration Act of 2010. See Section
254C of the 1999 Constitution, as amended. Section 254C [1] [a] of the 1999
Constitution, as amended, provides:

[1] Notwithstanding the provisions of sections 251, 257, 272 and

anything contained in this Constitution and in addition to such
other jurisdiction as may be conferred upon it by an Act of the
National Assembly, the National Industrial Court shall have and
exercise jurisdiction to the exclusion of any other court in civil
causes and matters –

[a] relating to or connected with any labour, employment,

trade unions, industrial relations and matters arising from
workplace, the conditions of service, including health,
safety, welfare of labour, employee, worker and matters
incidental thereto or connected therewith;

The words “relating to”, “connected with”, or “incidental thereto” mean largely
the same thing, and indicate that the causes or matters must be linked with
labour, employment, trade unions, etc. The Court of Appeal, in interpreting this
provision, in the case of Salami v. National Judicial Council9, while
acknowledging that it “bestowed exclusive jurisdiction on the Court in all matters
relating to or connected or incidental to labour, trade disputes, and industrial
relations”, added the phrase “other ancillary matters that may arise out of the
same which hitherto had been within the confines of concurrent jurisdiction of the
State High Courts and Federal High Court at first instance.” You will agree that
9
[2014] LPELR-22774[CA] 25-27
3
 the word “ancillary” was not used in the statute and does not have the same
meaning as the words “relating to”, “connected with”, or “incidental thereto” used
in the Constitution.

The same Court, in Kano State Government & Ors v. Muhammad 10, per
Abiru, JCA, observed that “The consensus of the Court is that by the provisions,
the National Industrial Court possesses exclusive jurisdiction over all matters
relating or incidental to an employee/employer relationship….” In Nwagbo & Ors
v. National Intelligence Agency11, Mustapha, JCA, observed that “… the words
‘relating to or connected with’ used to state the jurisdiction of the National
Industrial Court in Section 254[C][k] [sic] of the Constitution of the Federal
Republic of Nigeria, 1999, as amended are very clear in both intent and meaning
and as such ought to be interpreted to be inclusive rather than exclusive …. the
jurisdiction of the National Industrial Court is not limited to disputes between
employer and employee only; it extends to any dispute related to labour and
industrial relations.”

Similarly, in Medical and Health Workers Union of Nigeria v. Dr Alfred

Ehigiegba12, Oho, JCA, noted that:

It is now [a] settled principle of interpretation of statutes that the

lawmaker does not use any words in vain. The argument here is that
the repetitive use of the words; “connected with”, “related to”,
“pertaining to”, “arising from”, “incidental thereto”, or “connected
therewith” used in Section 254[1][a] [sic] of the Nigerian
Constitution, 1999 as amended were not used in vain as the
lawmakers must have meant their use to emphasize and reiterate the
wide jurisdiction of the National Industrial Court over all issues arising
from employment and labour disputes regardless of the nature of the
claims or reliefs in the suit. Generally, the nature of the dispute
between parties and the set of facts giving rise to the dispute should
naturally determine whether the National Industrial Court has
jurisdiction in a particular matter or not. [emphasis mine]

The same Court in the unreported decision in Ecobank Nigeria Limited v. Mrs
Winifred Effiok Osu13, Tijjani Abubakar, JCA [as he then was], posits that the
“National Industrial Court is a Court of limited jurisdiction in terms of subject
matter, as clearly spelt out in Section 254C of the 1999 Constitution, as amended.
Its jurisdiction is limited to matters closely related to labour and employment
matters [emphasis mine]. The National Industrial Court cannot entertain any
matter outside its constitutionally prescribed subject matter area. A claim cannot
be considered as [sic] ancillary to the main claim when it is completely removed
from the subject matter of the main claim.” [emphasis mine] Here, his Lordship
introduced the words “closely related” and “ancillary” which are not found in the

10
[2016] LPELR-41334[CA] 29
11
[2018] LPELR-46201[CA]
12
[2018] LPELR-44972[CA]
13
Appeal no. CA/L/963/2016, delivered on 24th February 2020, on page 22
4
Constitution, showing the difficulty the appellate Court has in properly interpreting
the jurisdiction of the National Industrial Court.

Again, in Central Bank of Nigeria v. Gabriel Oodo & Anor 14, Nimpar, JCA,
noted that “the National Industrial Court is strictly a labour and employment-
related matters [Court], it is a specialized Court, [and] it is not a Court of general
jurisdiction. [The] subject matter is the most important factor in determining
whether the National Industrial Court will have jurisdiction in a matter and
regardless of the parties.”

What can be deduced from the decisions of the Court of Appeal, cited above, is
that while the Court acknowledges that the repeated use of the words “connected
with”, “relating to”, “pertaining to”, “arising from”, “incidental thereto”, or
“connected therewith” in Section 254C of the 1999 Constitution, as amended,
illustrate the expansive jurisdiction of the National Industrial Court on issues
arising from employment, labour and the workplace, it occasionally reads into the
section words that are alien to it in some of its decisions, thus unwittingly
circumscribing the Court’s jurisdiction, especially in cases dealing with
employment-related loans. This will engage us shortly.

Employee loans and mortgages

It is not unusual for employers to provide financial support for their employees to
meet various needs. The most common are salary advances, asset acquisition
loans, shares purchase loans, and housing loans. More often, some of these
facilities are not collateralized. Repayment is usually tied to the employee’s salary
and agreed monthly deductions are made from his salary. In some cases,
especially those involving housing loans, the employee is required to deposit the
title document with the employer and execute a deed of mortgage, in addition to
agreed monthly deductions from his salary and allowances. While the employment
relationship subsists, there is usually no problem. The problem arises after the
cessation of the employment relationship. The question is, should the employer
recover these facilities in an action in the National Industrial Court?

Synopsis of cases on employment-related loans

After the Third Alteration Act of 2010, the National Industrial Court has been
inundated with claims for the recovery of employment-related loans. The attitude
of the Court in each case depends on the facts and circumstances of the case. We
will now look at a few of the cases.

The most cited is the case of Zenith Bank Plc v. Mr Obaro Odeghe15. The facts
are simple. The Defendant was granted two mortgage loans and a personal loan
[2021] 18 NWLR [Pt 1809] 461 at 512 - 513
14

Suit No. NICN/LA/342/2014, delivered on 12th January 2016, Coram: Hon. Justice O. A. Obaseki-
15

Osaghae
5
while in the employment of the Claimant. After resignation, he filed an action at
the Lagos High Court and succeeded, but the counterclaim was struck out for
failure to obtain leave. The Claimant filed a recovery proceeding at the National
Industrial Court. After taking arguments from the parties, relying on Section 254C
[1] [a] and [k] of the 1999 Constitution, as amended, the Court held that “The
jurisdiction of this court is subject matter based. A careful look at the claimant’s
claims before the court shows that claims a to e are in respect of mortgage and
personal loans the claimant granted the defendant whilst he was still in its
employment. A look at the statement of facts reveals that the averments are not
related to or connected with any dispute arising from payment or non payment of
salary, pension, gratuity, allowances, benefits, other entitlements or employment.”
His Lordship continued “The averments in the claimant’s statement of facts are in
respect of the loans the defendant was given while in employment and his alleged
indebtedness.… The court is not empowered to entertain suits relating to loans
and commercial transactions as they are not within the scope of section 254C[1]
[a] & [k] of the 1999 Constitution as amended.” In that case, the Court found that
the loans were mortgage and personal loans which were not connected with his
employment, and thus declined jurisdiction and struck out the suit. This is a
restrictive interpretation of the section, especially as the Court found that the
facilities were given in the course of the Defendant’s employment.

However, in Mrs Vivien Folayemi Asana v. First Bank of Nigeria Ltd 16, my
Lord, Hon. Justice B. B. Kanyip, President of the National Industrial Court,
assumed jurisdiction over the claims for recovery of mortgage loans and granted
part of the counterclaim. I am of the humble view that this is a proper application
of Section 254C of the 1999 Constitution, as amended. The overriding
consideration is whether it is incidental to or connected with labour and
employment. If it is, the Court should exercise jurisdiction. This was what I did in
Keystone Bank Ltd v. Mr Nonso R. Odigboh17, relying on a ruling by Hon.
Justice B. B. Kanyip in a sister case18 wherein he found that the loan facilities were
granted to the Defendant in the course of his employment with the Claimant and,
therefore, within the jurisdiction of the Court pursuant to Section 254C[1] of the
1999 Constitution, as amended, I assumed jurisdiction over the recovery claim and
entered judgment in favour of the Claimant. The Defendant appealed 19 and
succeeded. The facts of the case are the Defendant, as an employee of Platinum
Habib Bank Plc [“Bank PHB”], obtained various facilities from the Bank. Upon his
resignation on 25th July 2010, the Bank did not make any demand for settlement
of the facilities. Bank PHB was subsequently acquired by Keystone Bank Limited
on 5th August 2011, and by letter dated 2nd October 2013, the Bank made a
demand on the Defendant for settlement of his indebtedness. This was followed
up with the Bank’s Solicitors’ letter dated 9th November 2015. In spite of the
letters, he failed to liquidate the loans, hence the suit. The documentary evidence
16
Suit No. NICN/LA/184/2016, the judgment of which was delivered on 9th October 2018
17
Suit no. NICN/LA/250/2016, which judgment was delivered on 12th October 2020
18
Keystone Bank Ltd v. Mr Uche Egonu, Suit no. NICN/LA/246/2016 delivered on 11th July 2017
19
Mr Nonso R. Odigboh v. Keystone Bank Limited, Appeal No. CA/LAG/CV/163/2021, which judgment was
delivered on 6th December 2022.
6
consists of the employment letter, resignation letter, demand letters, evidence of
acquisition of Bank PHB, and statement of account. The defence was sparse. He
merely denied the relevant paragraphs of the statement of facts and urged the
Court to dismiss the suit. Under cross-examination, he admitted to receiving the
facilities and being indebted to the Bank. I entered judgment for the Claimant, but
on appeal, the judgment was set aside for lack of jurisdiction.

The reasoning of the Court of Appeal is instructive. First, the Court found that the
loans were not staff loans, but loans advanced to him in his capacity as a
customer of the Bank. Thus, the Court drew a distinction between loans granted
to an employee as an employee and loans granted to him as a customer of the
Bank. Otisi, JCA, who read the leading judgment had this to say:

A close scrutiny of Exhibit 1 does not reveal that one of the terms of his
employment was that he must open and operate an account or a staff
account [with] Bank PHB. None of the terms of their [sic] contract of
employment indicates that he was entitled to receive a loan from the Bank
in his capacity as a staff of Bank PHB. That is to say, there was no
compulsion on him to open an account with the Bank PHB as part of the
terms of his employment, neither was there an obligation for Bank PHB to
grant him a staff loan under their employment terms.

The Court also found that the Respondent did not adduce any empirical evidence
to prove that the facility was staff loans. As a result, the Court held that “a loan
facility that has not been shown to have been tied to the employment terms of the
employee must remain distinct and separate. An employment contract with the
lender/bank is a distinct and separate agreement from the loan agreement
between the parties…. Further, whether the loans were advanced to the Appellant
as staff loans thereby incidental to his employment by Bank PHB, is germane to
the jurisdiction of the lower Court, having regard to the provisions of Section
254C(1)(a) of the 1999 Constitution, as amended. The reason simply being, if the
loans were staff loans, then obviously, they were incidental or connected to
matters arising from the workplace, then the lower Court would have jurisdiction.”
[emphasis mine] The Court further found that the Respondent did not notify the
Appellant of any outstanding staff loan when he resigned on 25th July 2010.

As I said earlier, the Court of Appeal tried to distinguish between staff loans and
personal loans. It is a staff loan where the facility is tied to the terms of the
employee’s employment, in which case, it is incidental or connected to his
employment and within the jurisdiction of the National Industrial Court. If there is
nothing linking it with the terms of the employee’s employment, it is a personal
loan and outside the jurisdictional competence of the National Industrial Court.
While the justification for this distinction is not manifest in Section 254C, the
decision may be justified by the peculiar facts of this case. The Bank could not
produce the loan documents or employee handbook which set out the basis for
the grant of the loans and applicable interest rate.

7
Earlier, in The Registered Trustees of Self-Reliance Economic
Advancement Programme v. Sadiat20, the Court of Appeal, per Uwa, JCA,
noted that “From the clear provisions above [Section 254C[1][a] and [k] of the
1999 Constitution, as amended], repayment of personal loan between employer
and employee or repayment of loan between any two parties, whatever the case
may be is not included in the above provision concerning the jurisdiction of the
NIC. I am of the humble but firm view that the staff loan granted to the cross
appellant has nothing to do with the appellant’s contract of employment … The
loan contract which was personal has nothing to do with her employment except
that the agreed sum of N55,000.00 [fifty five thousand naira] was to be deducted
from the cross appellant’s salary account on monthly basis.” This case introduced
another dimension to the recovery of employment loans. It does not make any
distinction between staff loans and personal loans, and strips the National
Industrial Court of jurisdiction in employment-related loans, whether classified as
staff loans or personal loans. It is my respectful view that this decision did not
consider the expansive jurisdiction of the National Industrial Court in Section 254C
expressed in the words “any”, “relating to”, “incidental to” and “connected with”.
In addition, the case of Odigboh v. Keystone 21 appears to be in conflict with this
decision, and notwithstanding that, this case was not cited in the Odigboh v.
Keystone case, I am of the humble view that, being later in time, it ought to be
followed.22

Based on the binding nature of these cases, in Royal Exchange Plc & Anor v. Mr
Ejike Osisioma23, I declined jurisdiction and struck out the recovery claim. I said
this:

Relief 3 seeks a declaration that, as at 30th November 2018, the Defendant

is indebted to the 2nd Claimant to the tune of N3,429,778.99 [three million,
four hundred and twenty-nine thousand, seven hundred and seventy-eight
naira, ninety-nine kobo] under the loan facility availed to the Defendant by
the 2nd Claimant by virtue of the Defendant’s employment with the 1st
Claimant. Exhibit 14 is the offer letter. The first observation is that the letter
is addressed to the Defendant in his personal capacity. Paragraph 1 reads:
“We refer to your application letter dated August 10, 2016 requesting for
review of some of the conditions in the Offer letter and are pleased to
inform you that Management has considered and approved review of the
Offer under the following terms and conditions:” The terms and conditions
are similar to the terms and conditions of regular personal loans. The
conditions precedent to draw down include receipt of all upfront fees;

20
[2017] LPELR-45686[CA] 29-36
21
Supra
22
See PDP v. INEC [2023] LPELR-59444[CA] 25-27 and Edo State Government & Ors v. Eholor [2022]
LPELR-58255[CA] 17-22
23
Suit No. NICN/LA/12/2019, which judgment was delivered on 17th July 2023
8
 receipt of title documents on the property situate at Maiyegun Town, off
Lagos Epe Expressway, Eti-Osa LGA, Lagos State; receipt of report from a
surveyor confirming the location of the property; receipt of executed loan
agreement, and indemnity agreement form. In paragraph 23 of the
statement of facts, the Claimants averred that the Defendant was availed
the loan he requested from the 2nd Claimant at the rate he was availed
based on his current employment with the 1st Claimant. This averment
refers to clause 5 page 2 of Exhibit 14 on exit from employment, which
provides that the concessionary interest rate of 17% per annum is
applicable to Royal Exchange Group staff only. If the borrower exits Royal
Exchange’s employment before the loan is liquidated, the balance on the
loan will automatically be rebooked at the higher of 26% and the prevailing
commercial rate effective staff exit date. Any way one looks at this
stipulation, it is not sufficient to make the loan incidental to Defendant’s
employment. One principle of interpretation of documents is that the
document should be read as a whole and the words used therein given their
natural meaning. See Federal Capital Development Authority & Ors v.
Nzelu & Anor [2014] 5 NWLR [Pt 1401] 565 at 584. Therefore, I am
not persuaded, reading Exhibit 14 as a whole, that the transaction is
incidental to Defendant’s employment. What is more, from the evidence
before me, there is no employment relationship between the 2nd Claimant
and the Defendant. The fact that the 2nd Claimant is a wholly owned
subsidiary of the 1st Claimant is immaterial.

I need to mention that this case was decided on its peculiar facts. The Defendant
was not an employee of the 2nd Claimant, which is a subsidiary of the 1st
Claimant and a finance company. In addition, the terms of the loan bespeak
ordinary commercial transactions.

Summary of key points from the decisions

Without a doubt, the subject matter of a case determines whether or not the
National Industrial Court will assume jurisdiction in a case, and in determining
jurisdiction, it is the claim endorsed on the originating process that will be
considered. See Attorney General of Kwara State & Anor v. Adeyemo &
Ors24, Society BIC S.A. & Ors v. Charzin Industries Ltd 25, Salami v.
National Judicial Council26 and Central Bank of Nigeria v. Okefe27. The
provision of Section 254C of the 1999 Constitution, as amended, is wide enough to
accommodate employment-related loans whether they are classified as personal

24
Supra, page 239
25
[2014] 2 SC [Pt II] 57 at 87
26
supra
27
[2015] LPELR-24825[CA] 43-44
9
loans, mortgage loans, or mere staff loans. However, for practical purposes, the
following points should be noted:

a. Whether the National Industrial Court will assume jurisdiction on any

employment-related loans will depend on the facts and evidence
before the Court.

b. The loans must be made an integral part of the contract of

employment. That is to say, the letter of employment and employee
handbook must clearly stipulate the basis of entitlement to the
facilities and make it conditional upon employment and remaining in
employment. In addition, it should be a term of the contract of
employment that the employee maintains an account with the
employer where the employer is a financial institution.

c. The pleading and evidence must be detailed enough, and supported

by documentary evidence. Nothing should be left to chance.

Conclusion

In conclusion, it is beyond dispute that the National Industrial Court has

jurisdiction over employment-related facilities in so far as they are related to
the contract of employment. This is so even when the employee is
compelled to resign. Each case will be determined on the basis of its facts
and merit.

Thank you for your attention.

10