NIGERIAN BANKING LAW REPORTS - NDIC 8 Part 2.pdf · v seniority list of justices of the court of appeal as at november 30th, 2007 1. hon. justice umaru abdullahi, con (president)

NIGERIAN BANKING

LAW REPORTS [1998]

VOLUME 8 (PART II)

To be cited as: [1998] 8 N.B.L.R. (PART II)

Nigeria Deposit Insurance Corporation

2011

Nigeria Deposit Insurance Corporation Plot 447/448 Airport Road Central Business District P.M.B. 284, Garki Abuja, Federal Capital Territory [FCT] Nigeria Tel: +23495237715-6, +523696740-44

This Volume is to be cited as [1998] 8 N.B.L.R. (PART II)

All rights reserved. No part of this publication may be reproduced or transmit-ted in any form or by any means, including electronic, mechanical, photocopy-ing and recording without the written permission of the copyright holder, application for which should be addressed to the publisher. Such written permission must also be obtained before any part of this publication is stored in any retrieval system of any nature.

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EDITORIAL BOARD

1. Professor J.O. Anifalaje Chairman Faculty of Law, University of Ibadan

2. Alheri Bulus Nyako Editor-in-Chief

Board Secretary/Director, Legal Department

NDIC

3. Michael Olufemi Olaitan Member Legal Practitioner

4. Ahmed Almustapha Member Registrar-General Corporate Affairs Commission

5. Gabriel Olukayode Kembi Member Legal Practitioner

6. Adekunle Oladapo Omowole Member Legal Practitioner Corporate Affairs Commission

7. Nasiru Tijani Member Legal Practitioner

Senior Lecturer, Nigerian Law School

8. Belema A. Taribo Member Legal Practitioner NDIC

9. Moses Ter-llumun Adaguusu Member Legal Practitioner Corporate Affairs Commission

10. Dan Ike Agwu Secretary Legal Practitioner NDIC

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LIST OF JUSTICES OF THE SUPREME COURT OF NIGERIA AS AT NOVEMBER 30TH, 2007

1. HON. JUSTICE IDRIS LEGBO KUTIGI, CON (Chief Justice of Nigeria)

2. HON. JUSTICE SYLVESTER UMARU ONU, CON

3. HON. JUSTICE ALOYSIUS IYORGYER KATSINA ALU, CON

4. HON. JUSTICE NIKI TOBI, CON 5. HON. JUSTICE DAHIRU MUSDAPHER, CON 6. HON. JUSTICE GEORGE ADESOLA

OGUNTADE, CON 7. HON. JUSTICE SUNDAY AKINOLA

AKINTAN, CON 8. HON. JUSTICE ALOMA MARIAM MUKHTAR,

CON 9. HON. JUSTICE MAHMUD MOHAMMED, CON 10. HON. JUSTICE WALTER SAMUEL NKANU

ONNOGHEN, CON 11. HON. JUSTICE IKECHI FRANCIS OGBUAGU,

CON 12. HON. JUSTICE FRANCIS FEDODE TABAI,

CON 13. HON. JUSTICE IBRAHIM TANKO

MUHAMMAD, CON 14. HON. JUSTICE PIUS OLAYIWOLA ADEREMI,

CON 15. HON. JUSTICE CHRISTOPHER MITCHELL

CHUKWUMA-ENEH, CON

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SENIORITY LIST OF JUSTICES OF THE COURT OF APPEAL AS AT

NOVEMBER 30TH, 2007

1. HON. JUSTICE UMARU ABDULLAHI, CON (President)

2. HON. JUSTICE ISA AYO SALAMI, (OFR) 3. HON. JUSTICE JAMES OGENYI OGEBE, (OFR) 4. HON. JUSTICE RABIU DANLAMI

MUHAMMAD, (OFR) 5. HON. JUSTICE RAPHAEL OLUFEMI

ROWLAND, (OFR) 6. HON. JUSTICE MUHAMMAD S. MUNTAKA

COOMASIE 7. HON. JUSTICE DALHATU ADAMU, (OFR) 8. HON. JUSTICE BABA ALKALI BA’ABA 9. HON. JUSTICE SAKA ADEYEMI IBIYEYE 10. HON. JUSTICE ZAINAB ADAMU

BULKACHUWA 11. HON. JUSTICE SULEIMAN GALADIMA 12. HON. JUSTICE VICTOR AIMEPOMO O.

OMAGE 13. HON. JUSTICE JOHN AFOLABI FABIYI 14. HON. JUSTICE KUMAI BAYANG AKAAHS 15. HON. JUSTICE OLUFUNLOLA OYEOLA

ADEKEYE 16. HON. JUSTICE M. DATTIJO MUHAMMAD 17. HON. JUSTICE AMIRU SANUSI 18. HON. JUSTICE CLARA BATA OGUNBIYI 19. HON. JUSTICE ISTIFANUS THOMAS 20. HON. JUSTICE JAFARU MIKA’ILU 21. HON. JUSTICE AMINAT ADAMU AUGIE 22. HON. JUSTICE ABUBAKAR ABDULKADIR

JEGA 23. HON. JUSTICE STANLEY SHENKO ALAGOA 24. HON. JUSTICE MONICA DONGBAN-

MENSEM 25. HON. JUSTICE NWALE SYLVESTER

NGWUTA

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Nigerian Banking Law Reports

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26. HON. JUSTICE MOHAMMED LAWAL

GARBA 27. HON. JUSTICE JEAN OMOKRI 28. HON. JUSTICE TIJANI ABDULLAHI 29. HON. JUSTICE UWANI M. ABBA AJI 30. HON. JUSTICE MARY PETER ODILI 31. HON. JUSTICE KUDIRAT M.O. KEKERE-

EKUN 32. HON. JUSTICE MOHAMMED LADAN

TSAMIYA 33. HON. JUSTICE RAPHAEL CHIKWE AGBO 34. HON. JUSTICE BODE RHODE VIVOUR 35. HON. JUSTICE SOTONYE DENTON-WEST 36. HON. JUSTICE PAUL A. GALINJE 37. HON. JUSTICE JIMI OLUKAYODE BADA 38. HON. JUSTICE OLUKAYODE ARIWOOLA 39. HON. JUSTICE O. GEORGE SHOREMI 40. HON. JUSTICE HELEN M. OGUNWUMIJU 41. HON. JUSTICE OYEBISI FOLAYEMI

OMOLEYE 42. HON. JUSTICE ADZIRA GANA MSHELIA 43. HON. JUSTICE ABDU ABOKI 44. HON. JUSTICE AHMAD O. BELGORE 45. HON. JUSTICE ALFRED P.E. AWALA 46. HON. JUSTICE JUMMAI HANATU SANKEY 47. HON. JUSTICE IBRAHIM MOH’D M.

SAULAWA 48. HON. JUSTICE ALI A.B. GUMEL 49. HON. JUSTICE HUSSEIN MUKHTAR 50. HON. JUSTICE MOJEED A. OWOADE 51. HON. JUSTICE UZO I. NDUKWE-ANYANWU 52. HON. JUSTICE JOHN I. OKORO 53. HON. JUSTICE CHIDI NWAOMA UWA 54. HON. JUSTICE IGNATIUS IGWE AGUBE

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SENIORITY LIST OF JUSTICES OF THE FEDERAL HIGH COURT OF NIGERIA AS AT

NOVEMBER 30TH, 2007

1. HON. JUSTICE R.N. UKEJE (Chief Judge) 2. HON. JUSTICE A. MUSTAPHA 3. HON. JUSTICE D.D. ABUTU 4. HON. JUSTICE I.N. AUTA 5. HON. JUSTICE M.A. EDET 6. HON. JUSTICE A.A. ABDU-KAFARATI 7. HON. JUSTICE SOBA 8. HON. JUSTICE O.J. OKEKE 9. HON. JUSTICE S. YAHAYA 10. HON. JUSTICE A. BELLO 11. HON. JUSTICE A.O. AJAKAIYE 12. HON. JUSTICE F.F. OLAYIWOLA 13. HON. JUSTICE ADAMU HOBON 14. HON. JUSTICE J.T. TSOHO 15. HON. JUSTICE S.J. ADAH 16. HON. JUSTICE CHUKWURA NNAMANI 17. HON. JUSTICE R.O. NWODO 18. HON. JUSTICE G.C. OKEKE 19. HON. JUSTICE G.K. OLOTU 20. HON. JUSTICE J.E. SHAKARHO 21. HON. JUSTICE L. AKANBI 22. HON. JUSTICE C.M. OLATOREGUN 23. HON. JUSTICE BINTA F.M. NYAKO 24. HON. JUSTICE A. LIMAN 25. HON. JUSTICE S. YAHUZA 26. HON. JUSTICE C. ARCHIBONG 27. HON. JUSTICE I. EJIOFOR 28. HON. JUSTICE A.I. CHIKERE 29. HON. JUSTICE M.L. SHUAIBU 30. HON. JUSTICE SALIU SAIDU

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31. HON. JUSTICE G.O. KOLAWOLE 32. HON. JUSTICE A.O. FAJI 33. HON. JUSTICE B. BELLO ALIYU 34. HON. JUSTICE B. I MOLOKWU 35. HON. JUSTICE A.F. ADETOKUNBO-

ADEMOLA 36. HON. JUSTICE CHUDI NWOKORIE 37. HON. JUSTICE M.I. AWOKULEHIN 38. HON. JUSTICE R.N. OFILI-AJUMOGOBIA 39. HON. JUSTICE L. ALLAGOA 40. HON. JUSTICE A.O. OGIE 41. HON. JUSTICE BABS KUEWUMI 42. HON. JUSTICE UMAR M. GARBA 43. HON. JUSTICE NYAURE BABA 44. HON. JUSTICE A.R. MOHAMMED 45. HON. JUSTICE T. ABUBAKAR

[1998] 8 N.B.L.R. (PART II)

The Nigerian Banking System

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THE NIGERIAN BANKING SYSTEM

1. The Development of Banking in Nigeria The historical development of the financial system in Nige-ria dates back to 1892 when modern banking business com-menced and a formal and institutional channel of saving mobilization was introduced into the economy with the establishment of the African Banking Corporation (“ABC”). The operation of ABC was later taken over in 1894 by the British Bank of West Africa (which later be-came Standard Bank) and subsequently, First Bank of Nige-ria. Owing to the colonial heritage, the pioneer commercial banks in Nigeria were of foreign origin and their operations favoured finance of foreign trade and commerce.

Thereafter, several other foreign and a host of indigenous banks were established. The establishment of indigenous banks was initially propelled largely by nationalistic con-sciousness rather than the existence of relevant resources, including basic skilled manpower, for running such institu-tions. Consequently most of the early indigenous banks collapsed in rapid succession. Banks that failed during the early stage of the evolution of the Nigerian financial system were largely those with problems of inadequate capital, poor management, and fraudulent practices, among other factors.

An important feature of the Nigerian financial system, es-pecially before the establishment of the Central Bank of Nigeria (“CBN”), was small scope of operations of partici-pating foreign institutions and the complete absence of any form of institutional regulatory framework which would provide the necessary guide for both the operations and orderly development of the system. These were some of the reasons behind the slow development of the financial system during the pre-CBN era.

The situation, however, changed from 1958 when the CBN was established. Since then, series of efforts have been made by the CBN and other relevant authorities to promote the growth and development of the Nigerian financial system.

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For example, the need to develop the system and create an avenue for investment of short term funds informed the issue by the CBN in 1960 of Treasury Bills as a supplement to Commercial Papers that were already in the market. Other money market instruments after the establishment of the CBN but prior to the introduction of the Structural Adjust-ment Programme (“SAP”) in 1986 included Treasury Cer-tificates in 1968, Certificates of Deposit in 1975 and the Bankers’ Unit Fund as well as Stabilization Securities in 1976. The establishment of the CBN also aided the devel-opment of the capital market. This was achieved by ensuring the emergence of the securities markets and instruments (primary and secondary) and by promoting the establishment of development banks.

Following the adoption of the SAP in 1986, and the subse-quent deregulation of the financial system, the banking sys-tem witnessed radical changes. Apart from the introduction of measures and instruments to deregulate the financial services industry, the techniques and the range of products offered by the industry changed significantly. The major objective of the deregulation was to enhance economic effi-ciency and effective resource allocation through service-driven competition and improvement in quality and spread of financial services delivery.

On July 6th, 2004 the Governor of CBN announced a banking reform programme aimed at strengthening and consolidating the banking system. The reform is expected to address the safety of depositor’s funds, enable the banking sector play an active developmental role in the economy and transform Nigerian banks into competitive players in the African and Global financial system.

2. The Nigeria Deposit Insurance Corporation One of the key measures introduced during the era of de-regulation of the banking sector was the establishment of the Nigeria Deposit Insurance Corporation (“N.D.I.C.”), with the promulgation of Decree No. 22 of 1988 now Cap 301 Laws

[1998] 8 N.B.L.R. (PART II)

The Nigerian Banking System

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of the Federation 1990, (as amended). The NDIC was estab-lished to insure all the deposit liabilities of licenced banks, promote banking stability and a sound financial system. Al-though the NDIC enabling Act was promulgated in 1988, the Corporation only commenced operations in March, 1989. The Nigeria Deposit Insurance Corporation scheme was intro-duced to provide a further layer of protection to depositors and complement the role of prudent bank management as well as the Central Bank of Nigeria’s (“CBN”) supervisory activities in ensuring a safe and sound banking system. It was also considered as an additional framework to serve as a vehicle for addressing some of the challenges that followed the deregulation of the financial system under the SAP. Prior to the establishment of the NDIC, the Government had played the role of what in industry parlance is referred to as an im-plicit insurer, by bailing out troubled banks in its bid to pro-tect depositors. With deregulation, an explicit Deposit Insurance Scheme (“DIS”) became imperative. The estab-lishment of NDIC was also informed by the change in gov-ernment bank-support policy, the bitter experiences of prior bank failures in Nigeria and the lessons of other countries with bank deposit insurance schemes. The scheme aims at increasing the competitive efficiency of the banking system as well as reducing the system’s vulnerability to destructive runs, panic-induced shocks by reinforcing depositors’ confi-dence in the nation’s financial system.

The mission of the Corporation is to protect depositors through effective supervision of insured institutions, provi-sion of financial and technical assistance to eligible insured institutions, prompt payment of guaranteed sums and the orderly resolution of failed financial institutions.

The Corporation currently acts as the Liquidator of thirty four (34) banks out of a total of thirty six (36) banks whose operating licenses were revoked by the Governor of the CBN. All depositors of the banks in liquidation who have come forward to file their claims have been paid their in-sured deposits while liquidation dividends making up 100%

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of total uninsured deposits have been declared and paid to depositors of ten (10) banks in Liquidation.

In September 1997, the Corporation commenced publica-tion of the Failed Banks Tribunals Law Reports (“FBTLR”) which contained only reported decisions of the Tribunal established under the Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act, 1994 and decisions of the Special Appeal Tribunal established under the Recovery of Public Property (Special Military Tribunal) Decree, 1984. In 1999, with the return to civil rule, the Corporation re-structured the publication into a compendium of decisions of all banking matters given by our superior courts of record from 1933 to date. This gave rise to the birth of the Nigerian Banking Law Reports (“NBLR”).

Nigeria Deposit Insurance Corporation November, 2005

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FOREWORD

Banking is the most important sub-sector of the economy of any nation. Banks facilitate economic transactions between various national and international economic units and by so doing encourage trade, commerce and industry. It is widely acknowledged that a sound and efficient finance industry, of which banks constitute the major segment, would promote growth of the real sector while the opposite is the case if the financial sector is repressed and inefficient. Therefore, the Law of Banking assumes a position of pre-eminence in economic development and this underscores the importance of a Law Report on the subject.

The efforts of the Nigeria Deposit Insurance Corporation in the development of the Law of Banking through the pub-lication of a banking law report started over 8 years ago. It would be recalled that in September, 1997, the Corporation launched the Failed Banks Tribunal Law Reports (“F.B.T.L.R.”) at the International Conference Centre, Abuja. Although the Failed Banks Law Reports were short-lived following the advent of civil rule in 1999, they none-theless served as a veritable reference material for Judges, Legal Practitioners, Jurists, Bankers, Students and the gen-eral public.

It is for the foregoing reason that when the Corporation decided to expand the scope of the publication by including the decisions of the Supreme Court and the Court of Appeal on banking matters and re-named it the Nigerian Banking Law Reports (“N.B.L.R.”), I did not hesitate in giving my consent.

The NBLR is a compendium of case law on Nigerian banking from 1933 to date. The first batch of the compen-dium contains cases decided between 1933–2002 which I understand would continue to 2004. Thereafter, the reports would be published regularly. This initiative will prove invaluable to users who would not have to wade through

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different law reports when conducting research on Nigerian banking case law.

The publication of the NBLR is one reliable means of dis-seminating information and knowledge of banking law and practices to depositors and other members of the public as part of the Corporation’s contribution to safe and sound banking practices. Hence, it is well known that the Corpora-tion did not embark upon publication of the NBLR in order to make profit.

Specialized law reports are very rare mainly because of the tedium, great expenses, time and labour required to produce them. However, when available, such reports generate con-siderable public interest. I am therefore pleased that the presentation of the Nigerian Banking Law Reports has be-come a reality. The laudable decision of the Management of the NDIC to shoulder this onerous burden for the Nigerian Banking industry is a practical example of the social as well as corporate responsibilities expected of modern Corpora-tions.

I have no doubt in my mind that the publication will en-dure and I am therefore pleased to recommend the Nigerian Banking Law Report, which is a worthy and befitting legacy for posterity, especially the world of learning, to all and sundry.

Hon. Justice Mohammed Lawal Uwais, GCON Chief Justice of Nigeria November, 2005

[1998] 8 N.B.L.R. (PART II)

Preface to the Nigerian Banking Law Reports

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PREFACE TO THE NIGERIAN BANKING LAW REPORTS

The decision of the Nigeria Deposit Insurance Corporation to publish the Nigerian Banking Law Report has its origin from its involvement in the implementation of the Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act 1994. The Law was promulgated by the then Military Government with the combined objectives of re-covering the debts owed to failed banks and prosecuting directors, officers and customers of banks who were sus-pected to have committed banking malpractices, which led to the collapse of most of the failed banks.

Furthermore, in 1994, when the Corporation was appointed as the Liquidator to carry out the liquidation of some failed banks, it was observed that there were hardly any records relating to the winding up of banks that had failed in the past. There was also no sufficient data on the causes of the past bank failures. The Corporation therefore took the initia-tive, in September, 1997 to report and publish decisions of the Failed Banks Tribunal established under the Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act, 1994. This effort culminated into the publication of the Failed Banks Tribunal Law Reports (“FBTLR”). Thus, the Corporation was motivated by the need to place on perma-nent record the lessons from the new wave of bank failures/ distress, particularly with regard to the causes of such failures/ distress and efforts made to resolve such failures.

Hitherto, the absence of proper documentation relating to the bank failures experiences in the early fifties had made it exceedingly difficult for practitioners and researchers to make references to such failures. The decision to publish the FBTLR was to ensure that the mistakes of the past were not repeated, through elaborate documentation of the recent failures, the essence of which were captured in the decisions of the Failed Banks Tribunal.

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However, with the return to democratic rule in May, 1999, the Failed Banks Act was amended by the Tribunals (Certain Consequential Amendment, etc) No. 62 of 1999, which abrogated the Tribunal. The civil and criminal jurisdictions of the Tribunal were accordingly transferred to the Federal High Court. Consequently, the title of the Publication was changed to Nigerian Banking Law Reports.

Furthermore, in response to the new democratic dispensa-tion, the Corporation decided to expand the scope of the publication into a compendium containing decisions of the Supreme Court, Court of Appeal as well as Federal and State High Courts on banking matters from 1933 to date in order to provide a comprehensive data base for all banking related cases decided by the superior courts of record. Also in order not to miss the tremendous achievements recorded by the Failed Banks Tribunal during their relatively short tenure, their decisions have been included in the compendium thereby making the NBLR very comprehensive. In addition, there is an index for the compendium up to 2002, which would soon be updated to 2004 and thereafter, it would be published on regular basis.

It is therefore my hope that legal practitioners, my Lords the honourable justices and judges, distinguished scholars and law professors, bankers, students and the general public would find this initiative useful.

I would like to express my profound appreciation to the Editorial Board of the Nigerian Banking Law Reports under the distinguished chairmanship of Prof. Anifalaje, an erudite professor of law and the Dean of the Faculty of Law, Uni-versity of Ibadan ably assisted by seasoned Legal Practitio-ners and staff of the Legal Department of the Corporation, for their patriotic commitment, diligence and ingenuity for details, that went into the production of the NBLR. They left no stone unturned in bringing the Corporation’s dream of making this worthy contribution to legal knowledge and

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Preface to the Nigerian Banking Law Reports

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research a reality. Their commitment in ensuring the com-pletion of the project is highly commendable.

Management will on its part do everything possible to en-sure that publication of the Nigerian Banking Law Reports (NBLR) is sustained.

G.A. Ogunleye, OFR Managing Director/Chief Executive November, 2005

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TABLE OF CONTENTS

Index of Table of Cases Reported......................... xxiIndex of Subject Matter ........................................ xxiiiIndex of Nigerian Cases referred to ..................... xxixIndex of Foreign Cases referred to ...................... xxxvIndex of Nigerian Statutes referred to .................. xxxviiIndex of Nigerian Rules of Court referred to .......... xliIndex of Foreign Rules of Court referred to .......... xliiiIndex of Books referred to ................................... xlv

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TABLE OF CASES REPORTED

Page 1. Angwe Asen Nigeria Ltd and others v. NDIC ...... 1372. FBN. v. Associated Motors Nigeria Ltd ............... 6913. FRN v. Abiodun and another ............................... 994. FRN v. Baba-Bangoji and another........................ 6315. FRN v. Owoade and others ................................... 1666. Ifenandu v. Amicable Bank Nigeria Ltd ............... 6837. In Re: Commercial Trust Bank Ltd ...................... 1558. Int. Bank for W/A Ltd v. Unakalamba .................. 19. NDIC v. African Pulp and Paper Mills Ltd and

others .................................................................. 4510. PGP Ltd and another v. NDIC ............................. 93

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INDEX OF SUBJECT MATTER

BANKING Banker and customer relationship – Admission by cus-

tomer of indebtedness – Duty of Failed Banks Tribu-nal to enter judgment and stipulate time to pay Ifenandu v. Amicable Bank Nigeria Ltd [1998] 8 N.B.L.R. (PART II) 683

Banker and customer relationship – Bank obtained loan from NEXIM for on-lending to export stimulation company – Banker issued promissory notes and ir-revocable standing orders to the CBN to debit its cur-rent accounts with CBN if company fails to repay NEXIM loan – Customer executed equipment lease agreement in favour of banker in respect of equipment bought with the NEXIM loan – Two guarantors guar-anteed the repayment of loan to the Banker – Whether the arrangement could be classified as one in the ordi-nary business of a bank so as to give right of action before the Failed Banks Tribunal – Whether the rela-tionship between banker and customer was that of lender and borrower – Whether the bank only acted as an agent of NEXIM NDIC v. African Pulp and Paper Mills Ltd [1998] 8 N.B.L.R. (PART II) 45

Banking and customer relationship – Banker granted cus-tomer loan for the stockpile of sand – Repayment of the loan was agreed to be from the proceeds of sale of sand – Banker engaged a security company to guard the stockpiled sand as agreed with customer – Cus-tomer alleged that the stockpiled sand was stolen due to the negligence of the security company – Whether the alleged negligence of the security company was sufficient reason for the customer to refuse to repay the debt PGP Ltd v. NDIC [1998] 8 N.B.L.R. (PART II) 93

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Banker’s obligation to remit money deposited by cus-tomer overseas – Failure to remit same – Whether amounts to breach of contract FBN v. Associated Mo-tors Nigeria Ltd [1998] 8 N.B.L.R. (PART II) 691

Director of Bank – Disclosure or declaration of interest in advance from bank – What constitutes under section 18(3), (6) Banks and Other Financial Institutions De-cree No. 25 of 1991 and section 227 Companies and Allied Matters Act Cap 59 Laws of the Federation of Nigeria, 1990 – What Prosecution to prove FRN v. Owoade [1998] 8 N.B.L.R. (PART II) 166

Interest Rate – Need for parties to agree on the rate to be charged FBN v. Associated Motors Nigeria Ltd [1998] 8 N.B.L.R. (PART II) 691

“Irrevocable letter of credit” – Connotation of – Article 3, Uniform Customs Rules considered Int. Bank for W/A Ltd v. Unakalamba [1998] 8 N.B.L.R. (PART II) 1

Offences – Advance/Credit Facility – Grant of by officer of bank without authority and in contravention of rules and regulations of the bank – Offences under section 19(1)(b) and 19(1)(c) of the Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Decree No. 18 of 1994 (as amended) FRN v. Baba-Bangoji [1998] 8 N.B.L.R. (PART II) 631

Offences – Charge of failure to take all reasonable steps to secure compliance with the requirements of BOFID by failing to keep proper books of account – Section 24, Banks and Other Financial Institutions Decree No. 25 of 1991 – Ingredients of offence FRN v. Owoade [1998] 8 N.B.L.R. (PART II) 166

Offences – Director of bank failing to secure compliance with BOFID – Section 46(a) Banks and Other Finan-cial Institutions Decree No. 25 of 1991 – Effect F.R.N. v. Owoade [1998] 8 N.B.L.R. (PART II) 166

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Offences – Whether a non-bank official can conspire with bank official to grant unauthorised overdraft FRN v. Baba-Bangoji [1998] 8 N.B.L.R. (PART II) 631

“Overdraft” – Definition thereof – Nature of agreement – Whether express or implied Int. Bank for W/A Ltd v. Unakalamba [1998] 8 N.B.L.R. (PART II) 1

“Placement”, “loan”, “advance”, “overdraft” – Meaning and status of FRN v. Owoade [1998] 8 N.B.L.R. (PART II) 166

Remittance of money overseas on behalf of a customer by a banker – Failure to remit same – Whether action can be founded on the tort of negligence FBN v. Associ-ated Motors Nigeria Ltd [1998] 8 N.B.L.R. (PART II) 691

Revocation of Banking Licence – Appointment of Nigeria Deposit Insurance Corporation as provisional liquida-tor – Whether prohibited by section 509 Companies and Allied Matters Act Cap 59 Laws of Federation of Nigeria, 1990 In Re: Commercial Trust Bank Ltd [1998] 8 N.B.L.R. (PART II) 155

Revocation of Banking Licence – Implication of – Whether Bank can be wound up under just and equi-table rule In Re: Commercial Trust Bank Ltd [1998] 8 N.B.L.R. (PART II) 155

Security for loan or facility – Negative pledge – When a security – Essence of FRN v. Owoade [1998] 8 N.B.L.R. (PART II) 166

COMPANY LAW Provisional Liquidator – Nigeria Deposit Insurance Cor-

poration – Appointment of as provisional liquidator for bank to be wound up – Whether invalid by virtue of section 509 Companies and Allied Matters Act Cap 59 Laws of Federation of Nigeria, 1990 In Re: Com-mercial Trust Bank Ltd [1998] 8 N.B.L.R. (PART II) 155

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Registered Company – Consequences of incorporation – Associated Company – Meaning of FRN v. Owoade [1998] 8 N.B.L.R. (PART II) 166

CONSTITUTIONAL LAW Meaning and Constitutionality of – Section 33(8) Consti-

tution of the Federal Republic of Nigeria, 1979 – Dif-ference between retrospective law and establishing a Court to try an offence which was committed under an existing law FRN v. Owoade [1998] 8 N.B.L.R. (PART II) 166

CRIMINAL LAW AND PROCEDURE Charge – Offences charged under a statute – Offences

committed while statute in operation – Statute subse-quently repealed – Whether charges can lie – Use of the phrase “led to the exposure of ...” in a charge of stealing – Effect FRN v. Owoade [1998] 8 N.B.L.R. (PART II) 166

Conspiracy to steal – Stealing – Ingredients of offence – What prosecution must prove – Sections 383(1) and 516 Criminal Code Cap 77 Laws of the Federation of Nigeria, 1990 FRN v. Owoade [1998] 8 N.B.L.R. (PART II) 166

Trial – Prosecution’s opening statement – Trial and con-viction for offence based on evidence not mentioned in opening statement – Effect – Rule 4(1) Schedule 2, Failed Banks Decree No. 18 of 1994 (as amended) FRN v. Owoade [1998] 8 N.B.L.R. (PART II) 166

DISHONOURED CHEQUES ACT Offences thereunder – Whether mandatory for prosecu-

tion to tender same at the trial FRN v. Abiodun [1998] 8 N.B.L.R. (PART II) 99

EVIDENCE Failure to produce evidence – Presumption that it

would be unfavourable to person withholding it –

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Section 149(d) Evidence Act Cap 112 Laws of the Federation of Nigeria, 1990 – Effect on the burden of proof in criminal matters – Documentary evidence – Proof of contents – Whether oral evidence necessary FRN v. Owoade [1998] 8 N.B.L.R. (PART II) 166

Witness whose statement had been admitted – Not testify-ing at all – Court not to consider statement as evi-dence of fact FRN v. Baba-Bangoji [1998] 8 N.B.L.R. (PART II) 631

FAILED BANKS TRIBUNAL Computerised statement of accounts – Tendering of –

Operation of Bank not computerised – Proprietary of tendering same FRN v. Abiodun [1998] 8 N.B.L.R. (PART II) 99

Criminal trials at the Failed Banks Tribunal – Jurisdiction of Tribunal to try offences laid under the Criminal Code and other enactments – Section 3(1)(b)–(d) Failed Banks Decree No. 18 of 1994 (as amended) – Procedure for – Summary trial FRN v. Owoade [1998] 8 N.B.L.R. (PART II) 166

Criminal trials therein – Discrepancies between the amount of facilities granted by the accused and that stated in the charge – Whether fatal to prosecution – Section 18(1) Banks and Other Financial Institutions Decree No. 25 of 1991 considered FRN v. Abiodun [1998] 8 N.B.L.R. (PART II) 99

Criminal trials therein – Dishonoured cheques – Whether mandatory for persons to tender same at the trial – Cheques not tendered at trial – Effect thereof FRN v. Abiodun [1998] 8 N.B.L.R. (PART II) 99

Jurisdiction of – Cannot try offences under Recovery of Public Property (Special Military Tribunal) Act Cap 389 Laws of the Federation of Nigeria, 1990 FRN v. Baba-Bangoji [1998] 8 N.B.L.R. (PART II) 631

[1998] 8 N.B.L.R. (PART II)


xxviii

Memorandum of appearance – Whether to be signed by defendant personally Angwe Asen Nigeria Ltd v. NDIC [1998] 8 N.B.L.R. (PART II) 137

Offences – Granting unapproved and unsecured credit fa-cilities contrary to bank laid down rules and regula-tions – Section 18(1) Banks and Other Financial Institutions Decree No. 25 of 1991 – Requirements of offence therein FRN v. Abiodun [1998] 8 N.B.L.R. (PART II) 99

Offences under section 19(1) Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Decree No. 18 of 1994 (as amended) – What prosecution must prove FRN v. Baba-Bangoji [1998] 8 N.B.L.R. (PART II) 631

Recovery of bank loan – Whether the hearing of a matter by the High Court deprive the Failed Banks Tribunal of jurisdiction to hear the same matter – Whether a Failed Bank could prove the indebtedness of a cus-tomer by tendering only letters of customer acknowl-edging indebtedness and statements of account Angwe Asen Nigeria Ltd v. NDIC [1998] 8 N.B.L.R. (PART II) 137

INTERPRETATION OF STATUTES Global view of statute – Use of in interpretation of statute

– Guiding principle FRN v. Owoade [1998] 8 N.B.L.R. (PART II) 166

Repeal of statute – Effect on existing rights, obligations and offences – Section 6 Interpretation Act Cap 192 Laws of the Federation of Nigeria, 1990 FRN v. Owoade [1998] 8 N.B.L.R. (PART II) 166

WORDS AND PHRASES “Placement”, “advance”, “overdraft” – Meaning and

status of FRN v. Owoade [1998] 8 N.B.L.R. (PART II) 166

xxix

INDEX OF NIGERIAN CASES REFERRED TO

A A.C.B. Ltd v. Yesufu (1980) N.S.C.C. 22 1Adegbite v. Ogunfaolu (1990) 4 N.W.L.R.

(Part 146) 578 45Adesokan v. Adetunji (1994) 5 N.W.L.R. (Part

346) 540 166Adimora v. Ajufo (1988) 3 N.W.L.R. (Part 80) 1 691Agbonmagbe v. CFAO (1966) 1 All N.L.R.

140 691Ajiboye v. The State (1994) 8 N.W.L.R. 587 166Ajidahun v. The State (1991) 9 N.W.L.R. (Part

213) 33 99,631Akilu v. Fawehinmi (No.2) (1989) 1 N.W.L.R.

(Part 102) 122 691Akinfosile v. Ijose (1960) S.C.N.L.R. 447 691Akinsanya v. U.B.A. Ltd (1986) 4 N.W.L.R.

(Part 35) 273 1Akpan v. The State (1992) 6 N.W.L.R. (Part

248) 439 99Alake v. The State (1991) 7 N.W.L.R. (Part

205) 567 99Alraine (Nigeria) Ltd v. Eshiett (1977) 1 SC 89 691Anyaoke v. Adi (1986) 3 N.W.L.R. (Part 31)

731 691Armel’s Transport Ltd v. Transco (Nigeria)

Ltd (1974) 11 S.C. 237 691Asakitipi v. The State (1993) 5 N.W.L.R. (Part

296) 641 166Attorney-General Bendel State v. Wilson

(1985) 1 N.W.L.R. (Part 4) 572 166Attorney-General Lagos State v. Dosumu

(1989) 3 N.W.L.R. (Part 111) 552 166Azie v. The State (1973) N.S.C.C. Vol. 8 page

162 631

[1998] 8 N.B.L.R. (PART II)


xxx

B B.C.E. v. Barawo (1982) 10 S.C. 48 155B.E.O.O. Ind. (Nigeria) Ltd v. Maduakoh

(1975) 12 S.C. 91 691B.P.P.C. v. Gwagwada (1989) 4 N.W.L.R.

(Part 116) 439 691Bakare v. The State (1987) 1 N.W.L.R. (Part

52) 579 S.C. 99, 631Balogun v. UBA (1992) 6 N.W.L.R. (Part 247)

336 45Bashir v. Same (1992) 4 N.W.L.R. (Part 236)

491 45Bature v. The State (1994) 1 N.W.L.R. (Part

320) 267 166Bekederemo v. Colgate Palm Olive Nigeria

Ltd (1976) 6 S.C. 35 1Bello v. Attorney-General of Oyo State (1986)

5 N.W.L.R. (Part 45) 828 691Boshali v. Allied Commercial Exporters Ltd

(1961) All N.L.R. 917 45

C Chia v. The State (1996) 6 N.W.L.R. (Part

455) 465 166

D Dunlop Nigeria Industries Ltd v. Forward

Nigeria Enterprises Ltd (1976) N.C.L.R. 243 166

E Ebba v. Ogodo (1984) 1 S.C.N.L.R. 372;

(1984) 4 S.C. 84 631, 691Egbase v. Oriaregham (1985) 2 N.W.L.R.

(Part 10) 884 1Ekpenyong v. State (1991) 6 N.W.L.R. (Part

200) 683 631Emezie v. The State (1970–71) E.C.S.L.R. 178 166Enang v. Adu (1981) 11–12 S.C. 25 691

[1998] 8 N.B.L.R. (PART II)

Index of Nigerian Cases Referred to

xxxi

Erim v. The State (1994) 5 N.W.L.R. (Part

346) 522 631Eze v. The State (1992) 7 N.W.L.R. (Part 251)

75 631F

F.M.B. Ltd v. NDIC (1995) 6 N.W.L.R. (Part 400) 226 at 240–241 155

FRN v. Abubakar (1998) 1 F.B.T.L.R. 129 166, 631Federal Republic of Nigeria v. Odebode

(1999) 2 F.B.T.L.R. 37 99, 166Finnih v. Imade (1992) 1 N.W.L.R. (Part 219)

511 691G

Gani v. The State (1996) 7 N.W.L.R. (Part458) 111 166

Gukas v. J.I.B. Ltd (1991) 6 N.W.L.R. (Part 199) 614 691

H Haruna v. The State (1972) 2 All N.L.R. 302;

(1972) 8–9 S.C. 174 631I

Ifegwu v. Federal Republic of Nigeria (1997) 1 F.B.T.L.R. 86 99

Ikpasa v. Attorney-General Bendel State (1981) 9 S.C. 7 99, 166

Ikpo v. State (1995) 9 N.W.L.R. (Part 421) 540 99Inusa Seidu v. The State (1982) 4 S.C. 41 631

J Jimoh Yesufu v. The State (1976) 6 S.C. 167 631Jizurumba v. The State (1976) 3 S.C. 89 631John Holt and Co (Liverpool Ltd) v. Fajemi-

rokun (1961) 1 All N.L.R. 492 1Johnson v. State (1981) 2 S.C. 29 166

K Kalio v. Kalio (1975) 2 S.C. 15 1Kalio v. Woluchem (1985) 1 N.W.L.R. (Part 4)

610 45

[1998] 8 N.B.L.R. (PART II)


xxxii

Kanu v. King 14 W.A.C.A. 30 99Kopa v. State (1971) 1 All N.L.R. 150 99

L Lion Investment Ltd v. NDIC (1997) 2

F.B.T.L.R. 16 99

M Madukolu v. Nkemdilim (1962) 1 A.N.L.R.

587; (1962) S.C.N.L.R. 341 155, 166Majekodunmi v. R. (1952) 14 W.A.C.A. 64 631Makeri v. Kafinta (1990) 7 N.W.L.R. (Part

163) 411 155Makeri v. State (1994) 3 N.W.L.R. (Part 330)

55 99Marina Nominees Ltd v. F.B.I.R. (1986) 2

N.W.L.R. 48 166Mogaji v. Odofin (1978) 4 S.C. 91 691Mosheshe General Merchant Ltd v. Nigeria

Steel Products Ltd (1987) 4 S.C. 152 683Mumuni v. The State (1975) 6 S.C. 79 631

N N.I.P.C. Ltd v. Bank of West Africa (1962) 2

S.C.N.L.R. 324 1Nigerian Maritime Services Ltd v. Afolabi

(1978) 2 S.C. 79 45Nwosu v. The State (1986) 2 N.S.C.C. Vol. 17

page 1029 631

O Obiefuna v. Okoye (1961) 1 S.C.N.L.R. 144 691Odiete v. Okotie (1972) 6 S.C. 83 691Odofin v. Ayoola (1984) 11 S.C. 72 691Odulaja v. Haddad (1973) 11 S.C. 357 45Ogbomor v. State (1985) 1 N.W.L.R. (Part 2)

223 99Ohuka v. The State (1988) 1 N.W.L.R. (Part

72) 539 166Okagbue v. Romaine (1982) 5 S.C. 133 45

[1998] 8 N.B.L.R. (PART II)

Index of Nigerian Cases Referred to

xxxiii

Okolo v. Uzoka (1978) 4 S.C. 77 691Okparaeke v. Egbuonu (1941) 7 W.A.C.A. 53 1Oladejo v. The State (1994) 6 N.W.L.R. (Part

348) 101 631Onafowokan v. The State (1987) 3 N.W.L.R.

(Part 61) 538 99Onayemi v. Bouari (1954) 14 W.A.C.A. 597 1Onochie v. The Republic (1966) N.M.L.R.

307 99, 166Onyekaonwu v. Ekwubiri (1966) 1 All N.L.R.

32 45Oshinjinrin v. Elias (1970) 1 All N.L.R. 153 691Osuji v. Isiocha (1989) 3 N.W.L.R. (Part 111)

623 691Obue v. The State (1976) 2 S.C. 141.) 631

Q Queen v. Tuke (1961) All N.L.R. 258 166Queen v. Ukpona (1961) 1 All N.L.R. 26 631Queen v. Zakwakwa (1960) S.C.N.L.R. 36 99

R R v. Varni (1952) 14 W.A.C.A. 30 631R. v. Omokoro 7 W.A.C.A. 146 99R. v. Orizu 14 W.A.C.A. 45 166Rotimi v. Macgregor (1974) 11 S.C. 133 1

S Salami v. Savannah Bank of Nigeria Ltd

(1990) 2 N.W.L.R. (Part 130) 106 691SCOA (Nigeria) Ltd v. Bourdex Ltd (1990) 3

N.W.L.R. (Part 138) 380 691Sele v. State (1993) 1 N.W.L.R. (Part 269) 276 166Shell B.P. Petroleum Dev. Co Ltd v. Jamal

Engr. Ltd (1974) 4 S.C. 33 691Shell Petroleum Dev. Co (Nigeria) Ltd v.

F.B.I.R. (1996) 8 N.W.L.R. (Part 446) 256 166Shodiya v. The State (1992) 3 N.W.L.R. (Part

230) 457 166Solomon v. A.S.C. Ltd 9 N.L.R. 99 691

[1998] 8 N.B.L.R. (PART II)


xxxiv

Standard Consolidated Dredging and Constr. Co Ltd v. Katonecrest Nigeria Ltd (1986) 5 N.W.L.R. (Part 44) 791 1

State v. Haruna (1972) 8–9 S.C. 174 166State v. Onagoruwa (1992) 2 N.W.L.R. (Part

221) 33 166

T Tewogbade v. Akande (1968) N.M.L.R. 404 691Thomas v. C.O.P. 12 W.A.C.A. 490 166

U UBN Ltd v. Odusote Bookstores Ltd (1995) 9

N.W.L.R. (Part 421) 558 691Ugbaka v. State (1994) 8 N.W.L.R. (Part 364)

568 166Ugo v. Obiekwe (1989) 1 N.W.L.R. (Part 99)

566 1Umani v. The State (1988) N.S.C.C. Vol. 19

137 631Umeji v. Attorney-General Imo State (1995) 4

N.W.L.R. (Part 391) 552 166Union Bank of Nigeria Plc v. Sax Nigeria Ltd

(1994) 8 NWLR (Part 361) 150 45Uwaifo v. Attorney-General Bendel State (1982)

7 S.C. 124 155

W W.A.S.A. v. Kalla (1978) 3 S.C. 21 691Williams v. Daily Times of Nigeria (1990) 1

N.W.L.R. (Part 124) 1 691Williams v. The State (1975) 9/11 S.C. 139 631

xxxv

INDEX OF FOREIGN CASES REFERRED TO

B Bray v. Ford (1896) A.C. 44 166

C Clack v. Arthur’s Engineering Ltd (1959) 2

Q.B.D. 21 1

D Davies v. P.D.A.C. Ltd (1942) A.C. 601 691

F Flint v. Lovell (1935) I.K.B. 354 691

G Gallie v. Lee (1971) A.C. 1004 1Gibaud v. G.E. Rly (1921) 2 K.B. 426 691Guinness Plc v. Saunders (1990) 2 A.C. 166Guinness Plc v. Ward (1988) B.C.L.C. 104 166

H Hadley v. Baxendale (1854) 9 Exch. 341 691Hollier v. Rambler Motors (A.M.C.) Ltd

(1972) 2 Q.B. 71 691

J John Lee (Grantham) Ltd v. Railway Execu-

tive (1949) 2 All E.R. 581 691Joseph Travers and Sons v. Cooper (1915) 1

K.B. 73 691

K Kiwi Polish v. Kempthorne (1922) N.Z.L.R.

77 691Koney v. U.T.C. (1934) 2 W.A.C.A. 188 691

L London and North Western Rly v. Neilson

(1922) 2 A.C. 263 691

[1998] 8 N.B.L.R. (PART II)


xxxvi

N Nance v. British Columbia Electric Rly Co Ltd

(1951) A.C. 601 691Nepture (Vehicle Washing Equipment) Ltd v.

Fitzgerald (1995) 3 All E.R. 811 166P

Peresterllo E. Companhia Limitada v. UnitedPaint Co. Ltd (1969) 1 W.L.R. 570 691

Prehn v. Royal Bank of Liverpool (1870) 2 L.R. 5 Exch.92 691

Price and Co v. Union Lighterage Co (1904) 1 K.B. 412 691

R R. v. Goswami (1968) 2 All E.R. 22 166R. v. Olivo (1942) 28 Cr. App. R. 173 166R. v. Peckham (1935) 25 Cr. App. R. 125 166R. v. Sykes (1913) 8 CAR 233 99Ratcliffe v. Evans (1892) 2 K.B. 524 691Re Horne (1950) 2 All E.R. 716 166Re: Eastern Telegraph Company Ltd (1947) 2

All E.R. 104 155Rutter v. Palmer (1922) 2 K.B. 87 691

S Salomon v. Salomon and Co Ltd (1897) A.C. 22 166Stephen v. State (1986) 5 N.W.L.R. (Part 46)

978 631T

Thomas v. Thomas (1947) 1 All E.R. 582 691U

United City Merchant Invest. Ltd v. RoyalBank of Canada (1983) A.C.M.L. 168 1

W Walker v. Walker (1967) 1 All E.R. 412 137Wallingford v. Mutual Society (1880) 5 A.C.

685 1Wills (George) and Sons Ltd v. Cunningham

(R.S.) Sons and Co Ltd (1924) 2 K.B. 220 691

xxxvii

INDEX OF NIGERIAN STATUTES REFERRED TO

Banking Act Cap 28 Laws of the Federation of Nigeria, 1990

s 11(1) ........................... [1998] 8 N.B.L.R. (PART II) 166 s 11(4) ........................... [1998] 8 N.B.L.R. (PART II) 166 s 11(5) ........................... [1998] 8 N.B.L.R. (PART II) 166 s 11(7) ........................... [1998] 8 N.B.L.R. (PART II) 166

Banks and Other Financial Institutions Decree No. 25 of 1991

s 14(i)(e) ......................... [1998] 8 N.B.L.R. (PART II) 45 s 18(1) ............................. [1998] 8 N.B.L.R. (PART II) 99 s 18(3) ........................... [1998] 8 N.B.L.R. (PART II) 166 s 18(6) ........................... [1998] 8 N.B.L.R. (PART II) 166 s 18(7) ........................... [1998] 8 N.B.L.R. (PART II) 166 s 18(8) ........................... [1998] 8 N.B.L.R. (PART II) 166 s 18(9) ........................... [1998] 8 N.B.L.R. (PART II) 166 s 20(c) ............................. [1998] 8 N.B.L.R. (PART II) 45 s 38(3) ........................... [1998] 8 N.B.L.R. (PART II) 155 s 38(4) ........................... [1998] 8 N.B.L.R. (PART II) 155 s 46(a) ........................... [1998] 8 N.B.L.R. (PART II) 166 s 62(2) ........................... [1998] 8 N.B.L.R. (PART II) 166

Companies and Allied Matters Act Cap 59 Laws of the Federation of Nigeria, 1990

s 227.............................. [1998] 8 N.B.L.R. (PART II) 166 s 408.............................. [1998] 8 N.B.L.R. (PART II) 155 s 509.............................. [1998] 8 N.B.L.R. (PART II) 155

Constitution of the Federal Republic of Nigeria, 1979 s 33(8) ........................... [1998] 8 N.B.L.R. (PART II) 166 s 33(12) ......................... [1998] 8 N.B.L.R. (PART II) 166

Court of Appeal Act, 1976 s 16.................................... [1998] 8 N.B.L.R. (PART II) 1

[1998] 8 N.B.L.R. (PART II)


xxxviii

Criminal Code Cap Act 77 Laws of the Federation of Nigeria, 1990

s 383(2) ......................... [1998] 8 N.B.L.R. (PART II) 166 s 390(7) ......................... [1998] 8 N.B.L.R. (PART II) 166 s 435(2) ........................... [1998] 8 N.B.L.R. (PART II) 99 s 516.............................. [1998] 8 N.B.L.R. (PART II) 166

Dishonoured Cheques (Offences) Act Cap 102 Laws of the Federation of Nigeria, 1990

s 1(1) ............................... [1998] 8 N.B.L.R. (PART II) 99

Evidence Act Cap 112 Laws of the Federation of Nigeria, 1990

s 6.................................. [1998] 8 N.B.L.R. (PART II) 137 s 19................................ [1998] 8 N.B.L.R. (PART II) 137 s 20................................ [1998] 8 N.B.L.R. (PART II) 137 s 23................................ [1998] 8 N.B.L.R. (PART II) 137 s 38.......................... [1998] 8 N.B.L.R. (PART II) 99, 137 s 75................................ [1998] 8 N.B.L.R. (PART II) 166 s 133.............................. [1998] 8 N.B.L.R. (PART II) 166 s 136.................................. [1998] 8 N.B.L.R. (PART II) 1 s 137.................................. [1998] 8 N.B.L.R. (PART II) 1 s 138.............................. [1998] 8 N.B.L.R. (PART II) 166 s 139.............................. [1998] 8 N.B.L.R. (PART II) 691 s 149(d) ........... [1998] 8 N.B.L.R. (PART II) 99, 166, 691

Failed Banks (Recovery of Debts) and Financial Mal-practices in Banks Decree No. 18 of 1994 (as amended)

generally ......................... [1998] 8 N.B.L.R. (PART II) 93 s 3(1) ............................. [1998] 8 N.B.L.R. (PART II) 631 s 3(1)(a) .......... [1998] 8 N.B.L.R. (PART II) 45, 166, 631 s 3(1)(b) ........................ [1998] 8 N.B.L.R. (PART II) 166 s 3(1)(c)................... [1998] 8 N.B.L.R. (PART II) 99, 166 s 3(1)(d) .......... [1998] 8 N.B.L.R. (PART II) 99, 166, 631 s 9 ................................... [1998] 8 N.B.L.R. (PART II) 45 s 12(1) ........................... [1998] 8 N.B.L.R. (PART II) 683 s 12(2) ........................... [1998] 8 N.B.L.R. (PART II) 683

[1998] 8 N.B.L.R. (PART II)

Index of Nigerian Statutes Referred to

xxxix

Failed Banks (Recovery of Debts) and Financial Mal-practices in Banks Decree No. 18 of 1994 (as amended) — continued

s 13(1) ........................... [1998] 8 N.B.L.R. (PART II) 683 s 19(1) ........................... [1998] 8 N.B.L.R. (PART II) 631 s 29.......................... [1998] 8 N.B.L.R. (PART II) 45, 166 Schedule 1 Order 7 rule 3................ [1998] 8 N.B.L.R. (PART II) 137 Schedule 2 rule 4(1)...... [1998] 8 N.B.L.R. (PART II) 166 Schedule 2 rule 4(2)...... [1998] 8 N.B.L.R. (PART II) 166

Interpretation Act Cap 192 Laws of the Federation of Nigeria, 1990

s 6.................................. [1998] 8 N.B.L.R. (PART II) 166

Part I of the Fifth Schedule to the Constitution of the Federal Republic of Nigeria, 1999

page 294........................ [1998] 8 N.B.L.R. (PART II) 631

Part II of Fifth Schedule Cap 63 Laws of the Federation of Nigeria, 1990

generally ....................... [1998] 8 N.B.L.R. (PART II) 631

Penal Code Act Cap 345 Laws of the Federation of Nigeria, 1990 s 97................................ [1998] 8 N.B.L.R. (PART II) 631

Recovery of Public Property (Special Military Tribunal) Act Cap 389 Laws of the Federation of Nigeria, 1990

s 1(2)(d) ........................ [1998] 8 N.B.L.R. (PART II) 631 s 1(3) ............................. [1998] 8 N.B.L.R. (PART II) 631 s 1(4) ............................. [1998] 8 N.B.L.R. (PART II) 631 s 5(1) ............................. [1998] 8 N.B.L.R. (PART II) 631 s 5(2) ............................. [1998] 8 N.B.L.R. (PART II) 631 s 22................................ [1998] 8 N.B.L.R. (PART II) 631

[1998] 8 N.B.L.R. (PART II)

Index of Nigerian Statutes Referred to

xli

INDEX OF NIGERIAN RULES OF COURT REFERRED TO

Companies Winding Up Rules, 1983 Order 24 rule 2.............. [1998] 8 N.B.L.R. (PART II) 155

xliii

INDEX OF FOREIGN RULES OF COURT REFERRED TO

Uniform Customs Rules Article 3 ............................ [1998] 8 N.B.L.R. (PART II) 1

xlv

INDEX OF BOOKS REFERRED TO

Archbold 1992 Edition Volume 2 paras 4–260................... [1998] 8 N.B.L.R. (PART II) 166

Black’s Law Dictionary page 72.......................... [1998] 8 N.B.L.R. (PART II) 166

Chamber’s Twentieth Century Dictionary page 75.............................. [1998] 8 N.B.L.R. (PART II) 1

Commercial Law by Roy Goode (2ed) pages 642–647 .............. [1998] 8 N.B.L.R. (PART II) 166

Company Law and Practice in Nigeria by J.O. Orojo (3ed) 1991

page 327........................ [1998] 8 N.B.L.R. (PART II) 166

Halsbury’s Laws of England, Volume 2, (3ed) page 227............................ [1998] 8 N.B.L.R. (PART II) 1 page 338............................ [1998] 8 N.B.L.R. (PART II) 1

Maxwell on Interpretation of Statutes (12ed) (1976) page 36.......................... [1998] 8 N.B.L.R. (PART II) 166

Nigeria Companies and Allied Matters Law and Practice by Deji Sasegbon

page 674........................ [1998] 8 N.B.L.R. (PART II) 155

Okonkwo and Naish – Criminal Law in Nigeria (2ed) pages 203–204 .............. [1998] 8 N.B.L.R. (PART II) 631

Paget’s Law of Banking (8ed) page 132.................... [1998] 8 N.B.L.R. (PART II) 1, 166

Words and Phrases Legally Defined Volume 1 (2ed) by J.B. Saunders

page 289........................ [1998] 8 N.B.L.R. (PART II) 166

[1998] 8 N.B.L.R. (PART II) (COURT OF APPEAL, PORT-HARCOURT DIVISION)

International Bank for West Africa Ltd v. Sylvanus I Unakalamba 1

a

b

c

d

e

f

g

h

i

j

International Bank for West Africa Ltd v. Sylvanus I. Unakalamba

COURT OF APPEAL, PORT-HARCOURT DIVISION NSOFOR, KATSINA-ALU, UWAIFO, JJCA Date of Judgment: 10 JUNE 1998 Suit No.: CA/PH/65/93

Banking – “Irrevocable letter of credit” – Connotation of – Article 3, Uniform Customs Rules considered

Banking – “Overdraft” – Definition thereof – Nature of agreement – Whether express or implied

Facts The defendant who is a businessman was a customer of the plaintiff. In the course of his business, he requested in writ-ing for an overdraft facility to enable him to import some stockfish from ISADHL and Co in Norway. The defendant asked the plaintiff to open an irrevocable letter of credit for him which the plaintiff did. The defendant’s Account was overdrawn to the tune of N15,984.04 as at 20th April, 1978. The overdraft facility was secured by the defendant’s title deed in respect of his landed property at Aba.

The defendant took out a Marine Insurance Policy to cover the goods to be imported from Norway. The stockfish were shipped from Norway, but never arrived in Nigeria. It got lost in transit. Consequently, the defendant claimed against the insurer for the loss of the goods. Initially, the defendant instructed the insurer to settle the claim through the plaintiff in order to liquidate his indebtedness to the Bank but subse-quently countermanded his earlier instruction to the insurers because it has come to his notice that the Bank had failed to make available to ISADHL and Co, the cost of the fish.

At the conclusion of trial, the learned trial Judge entered a judgment of non-suit against the plaintiff/bank. Dissatisfied, both plaintiff and defendant appealed and cross-appealed respectively, to the Court of Appeal.


2 Nigerian Banking Law Reports [1998] 8 N.B.L.R. (PART II)

a

b

c

d

e

f

g

h

i

j

Held –

1. An overdraft is money lent. A payment by a Bank under an arrangement by which the customer has an overdraft is a lending by the Bank to the Customer. A Banker is not obliged to let his customer overdraw unless he had agreed to do so. But such an agreement need not be ex-press. It is sufficient and valid if it be inferred from the course of business. Borrowing and lending are matters of contract not necessarily pre-meditated but possibly spon-taneously.

2. An irrevocable letter of credit is defined as a definite un-dertaking on the part of an issuing bank and constitutes the engagement of that bank to the beneficiary or as the case may be, to the beneficiary and bona fide holders of drafts drawn in and/or documents presented thereunder that the provisions for payment, acceptance or negotia-tion contained in the credit will be duly fulfilled pro-vided that all the terms and conditions of the credit are complied with. An irrevocable credit may be advised to a beneficiary through another bank without an engage-ment on the part of that other bank (the advising bank) but when an issuing bank authorises another bank to confirm its irrevocable credit and the latter does so, such confirmation constitutes a definite undertaking on the part of the confirming bank either that the provision for payment or acceptance will be duly fulfilled. Such un-dertaking can neither be modified nor cancelled without the agreement of all concerned.

Appeal allowed and cross appeal dismissed.

Cases referred to in the judgment

Nigeria

A.C.B. Ltd v. Yesufu (1980) N.S.C.C. 22

Akinsanya v. U.B.A. Ltd (1986) 4 N.W.L.R. (Part 35) 273



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Bekederemo v. Colgate Palm Olive Nigeria Ltd (1976) 6 S.C. 35 Egbase v. Oriaregham (1985) 2 N.W.L.R. (Part 10) 884 John Holt and Co (Liverpool Ltd) v. Fajemirokun (1961) 1 All N.L.R. 492 Kalio v. Kalio (1975) 2 S.C. 15 N.I.P.C. Ltd v. Bank of West Africa (1962) 2 S.C.N.L.R. 324 Okparaeke v. Egbuonu (1941) 7 W.A.C.A. 53 Onayemi v. Bouari (1954) 14 W.A.C.A. 597 Rotimi v. Macgregor (1974) 11 S.C. 133 Standard Consolidated Dredging and Constr. Co Ltd v. Ka-tonecrest Nigeria Ltd (1986) 5 N.W.L.R. (Part 44) 791 Ugo v. Obiekwe (1989) 1 N.W.L.R. (Part 99) 566

Foreign Clack v. Arthur’s Engineering Ltd (1959) 2 Q.B.D. 21 Gallie v. Lee (1971) A.C. 1004 United City Merchant Invest. Ltd v. Royal Bank of Canada (1983) A.C M.L. 168 Wallingford v. Mutual Society (1880) 5 A.C. 685

Nigerian statutes referred to in the judgment Court of Appeal Act, 1976, section 16 Evidence Act Cap 112 Laws of the Federation of Nigeria 1990, sections 75, 136 and 137

Foreign rules of court referred to in the judgment Uniform Customs Rules, Article 3

Books referred to in the judgment Chamber’s Twentieth Century Dictionary, page 75 Halsbury’s Laws of England, Volume 2 (3ed) pages 227 and 338 Paget’s Law of Banking (8ed) page 132



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Counsel

For the appellant: C.O. Ezekwesiri

For the respondent: E.T.O. Njoku

Judgment

NSOFOR JCA: (Delivering the lead judgment) The transac-tion giving rise to the present appeals – an appeal and a cross-appeal – arose from or in the course of international trade between the parties – involving irrevocable letters of credit (L.C.). In the modernity of international trade, it is now common place and of common knowledge, (See Lord Diplock in United City Merchant (Investment) Ltd v. Royal Bank of Canada (1983) A.C.M.L. 168) that four autono-mous though by no means disconnected but rather inter-connected contractual relationship do and are involved. One is the underlying contract for the sale of the goods or mer-chandise to which the only parties or operators are the buyer and the seller. Then is the other contract between the buyer and the issuing bank under which the latter agrees to issue the credit and either itself or through a confirming bank to notify the credit to the seller and to make payments to the seller or to the order of the seller (or to pay, accept or nego-tiate bills of exchange drawn by the seller) against the pres-entation of stipulated documents of title such as bills of lad-ing, constituting a security to the issuing bank. A third cate-gory of the contract arises, too, if payment is to be effected through a confirming bank, and authorising and requiring the latter to make such payment and to remit the stipulated documents to the issuing bank in return and agreeing to re-imburse the confirming bank for payment made under the credit. And lastly, there also invariably does arise a fourth category of contracts between the confirming bank and the seller under which the confirming bank undertakes or pays to the seller (or accept, negotiate without recourse to the drawer bills of exchange drawn by him) up to the amount of the credit against the presentation of stipulated document.


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In the present case giving rise to the appeals, the relationship between the parties arose, “ex contractu”. The appellant is a banker or a bank. The cross-appellant is the customer to the bank. The defendant/cross-appellant was interested in an in-ternational trade; that of importing into Nigeria some stock-fish heads from Norway. On which of the four contracts their action – the controversy between them is hoisted, re-mains to be identified as shall be made manifest anon. But lest it be lost sight of, let it be remembered and borne in mind that these contracts or relationships between the parties howsoever called, in my view, are inter-dependent. A con-tract stricto sensu apart, an element of agency is involved and by no means totally excluded.

I did earlier on in the judgment make a reference to letters of credit (or irrevocable letter of credit). It is desirable in-deed, in order to appreciate what I may be disposed to say later, to say a word or two of what that term connotes and denotes in international trade of the class involved in the cir-cumstances of these appeals. I now refer to Article 3 of the Uniform Customs Rules.

Rule 3 (supra) defines irrevocable letter of credit. “An irrevocable letter of credit is defined as a definite undertaking on the part of an issuing bank and constitutes the engagement of that bank to the beneficiary or as the case may be, to the benefici-ary and bona fide holders of drafts drawn in and/or documents pre-sented thereunder that the provisions for payment, acceptance or negotiation contained in the credit will be duly fulfilled provided that all the terms and conditions of the credit are complied with. An irrevocable credit may be advised to a beneficiary through an-other bank without an engagement on the part of that other bank (the advising bank) but when an issuing bank authorises another bank to confirm its irrevocable credit and the latter does so, such confirmation constitutes a definite undertaking on the part of the confirming bank either that the provisions for payment or accep-tance will be duly fulfilled or . . . such undertaking can neither be modified nor cancelled without the agreement of all concerned.”

It is with the above stated principle that the liability of the parties, inter se, lies to be established, of course depending on the state of the pleaded facts proved in evidence by


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evidence at the trial. From the state of the pleadings, the contract involved, as shall be shown anon was or is between Bergen Bank of Norway and the bank, herein the appellant. That contract, assume argumento, I be right in my view, falls within the third category in the United City Merchant (Investment) Ltd v. Royal Bank of Canada (supra). And if so, it follows naturally on the long established and generally accepted principle of privity of contract that neither the de-fendant/cross-appellant herein before us nor his overseas sellers (ISDAHL and Co) has any interest in that contract. The reason is clear. They are just “strangers” to or in the contract. Being such strangers, they or either of them cannot, as the law, in my respectful opinion, now stands enforce the contract. Neither of them may even insist on the contract, and this notwithstanding that the contract may be for the in-terest of either or both of them, pure and simple.

The above having been stated to facilitate a quick and bet-ter appreciation of the pleadings, the issues involved and canvassed at the trial, it remains for me to say, at this stage too, that the appellant/banker had earlier on pursuant to the procedure, popularly called in the legal profession, “spe-cially endorsed writ of summons” sought to recover from the defendant/customer the liquidated money sum due and ow-ing to it by the customer. Simply put, the action was placed on what is called the “Undefended List” of actions, a proce-dure designed to secure quick justice and avoid the injustice likely to occur when there is no genuine defence, a defence on the merits to the plaintiff’s claims. The procedure saves time and costs in undefendable actions.

But for reasons, not readily decipherable from the records, the trial court did not proceed to deal with the case as pre-sented before it as by the rules of the court provided. (See e.g. John Holt and Co (Liverpool) Ltd v. Henry Fajemirokun (Trading as Henry Stephens and Sons) (1961) 1 All N.L.R. 492 and also Wallingford v. Mutual Society (1880) 5 A.C. 685, 697.)

The trial court (C.U. Mbachu, J) made an order for written pleadings to be filed. In the course of trial, that is after the


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plaintiff has called the evidence of its first witness, but be-fore, ever, it brought its case to a close, it sought for leave to amend its pleadings (i.e. statement of claim) and to file same. Leave was granted. The plaintiffs filed an amended statement of claim copied in pages 50 to 57 of the record of proceedings). (See Col. Rotimi v. Macgregor (1974) 11 S.C. 133.) I am, therefore, enabled to say straight away that the issues were joined on the pleadings settled at the amended statement of claim and, the statement of defence, (dated the 3rd of July, 1986 and copied in pages 23 to 29 of the re-cord).

For what was claimed against the defendant, paragraph 16 reads:– “16. WHEREFORE (sic) the plaintiff claims from the defendant

as follows:– (i) The sum of N84,657.90 (eighty-four thousand, six hun-

dred and fifty-seven naira, ninety kobo) being the balance of an overdraft facility granted by the plaintiff to the de-fendant on the defendant’s current account with the plain-tiff, which said debt the defendant has refused or ne-glected and still refuses to pay despite demand.

(ii) Interest on the said sum at the rate of 11½ (eleven and a half) per centum per annum with monthly rents from the 29th day of December, 1985 up to the date of judgment is entered in this suit and 4% (four per centum) interest per annum on the judgment debt from the date of judgment aforesaid until the whole debt with interest is liquidated.”

At the conclusion of all the available evidence legally re-ceivable and legally received – oral and documentary – and after receiving the final oral addresses by the Counsel en-gaged in the trial, the learned trial Judge reserved the judg-ment till the 18th December, 1990. In a reserved and consid-ered judgment, the learned trial Judge entered a judgment of non-suit against the plaintiff/bank. In reaching his conclu-sion, he expressed himself in page 119 of the record of pro-ceedings, inter alia, as follows:–

“From the totality of the evidence and the issues discussed above based on the facts adduced, the plaintiff is not entitled to


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judgment. The judgment of the court is a non-suit against the plaintiff.”

Thereafter, he proceeded to mulct the plaintiff in costs. He awarded the sum of N500 as costs in favour of the defen-dant.

Neither the plaintiff nor the defendant was wholly satisfied with the decision. So, each party has appealed from the judgment to this Court. Hence, the appeal by the plain-tiff/bank and the cross-appeal by the defendant/customer to the bank.

The plaintiff/bank had challenged the validity of the judg-ment on seven (7) grounds of appeal (copied in pages 120 to 128 of the record) from which Counsel to the appellant dis-tilled five issues for determination. The defendant/cross-appellant raised two grounds of appeal. They are copied in pages 129 to 131 of the record of proceedings. Learned Counsel in the cross-appeal identified two issues for deter-mination. To avoid prolixity, I decline to reproduce the grounds of appeal together with their respective “Particu-lars”.

Perhaps, it is necessary at this stage to state the back-ground facts of the case giving rise to the appeals. Rather than extract the facts from the pleadings, “sese ipse”, I shall summarise them, albeit briefly. Where and when necessary so to do, I shall permit myself to carry the relevant para-graphs of the respective pleadings for the purposes of eluci-dation and clarity.

Ex facie pleadings, it is a straight forward banker/customer relationship in international commercial credit transaction. It may be stated sooner than later in the interest of complete-ness in treatment, that the buyer, who pursuant to his sales contracts, instructs his banker to issue a credit (or letter of credit (L.C.) undertakes thereby either expressly or impli-edly to put the banker in funds to meet a payment under it, if the documents against which the banker pays are what the buyer calls for. Where he does so provide the funds, the


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banker is bound to apply them for the purpose to which they are appropriated. Normally, and in the absence of any ex-press agreement to the contrary, the banker on payment un-der the credit debits the buyer’s account. Having said the above, what then was the case of the plaintiff/bank as pleaded? It is this.

The defendant, qua customer of the bank, had in the course of his business with the plaintiff/banker requested in or, by writing (see the letter dated 28th August, 1977) and another letter, undated, (but received by the plaintiff/banker on the 11th of October, 1977) for an overdraft facility to enable him (the defendant/customer) to import into Nigeria from Norway some stockfish heads. By the terms of the over-draft:–

(a) The ceiling was N20,000;

(b) Interest was calculated at the rate of 11½ (per cen-tum) per annum with monthly rests to be charged and paid into the account by the defendant on the principal amount lent or loaned;

(c) The overdraft was recallable at the plaintiff/bank’s absolute discretion.

The defendant/customer asked the plaintiff/bank to open an irrevocable letter of credit for him to enable him to import the stockfish heads. The cost price of the fish was in foreign currency, i.e. Norwegian Kronas, to the tune of 247,500. Their equivalent in the Nigerian naira currency was put at N29,963.86 as at the date.

The bank did open the credit. In doing so, it dealt with Bergen Bank of Norway. It was the confirming or corre-spondent bank.

The plaintiff’s/bank did grant the overdraft facility to the defendant/customer as requested on the 20th of April, 1978. The letter of credit (L.C.) opened by the plaintiff//bank for the defendant was no. 11/77.


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After all the necessary entries were made and passed, as the plaintiff/bank pleaded, the defendant/customer’s account with the plaintiff/bank stood overdrawn to the tune of N15,988.4 as at the 20th April, 1978.

It was part of the plaintiff/bank’s case as pleaded that the defendant/customer secured the overdraft facility granted to him by depositing with the plaintiff the documents of title to his (defendant’s) landed property namely:– (1) No. 20 Pound Road, Aba. (2) No. 16, Howell Crescent, Aba. (3) An expired building lease in respect of No. 228 Ehi

Road, Aba and (4) Some share certificates. The above apart, the defendant/customer signed for the plaintiff “Legal Mortgage Forms” covering the transaction.

For cover, the defendant took out a Marine Insurance Pol-icy in respect of the goods to be imported or shipped to Ni-geria from Norway. His insurers were National Insurance Corporation of Nigeria (NICON for short).

That the stockfish heads were in fact shipped from Norway was a non-issue. It is a common ground. But, surprisingly, the goods never ever arrived in Nigeria. They got lost, “in transitu”. Consequently, the defendant/customer claimed against the insurers for the loss. He was indemnified of the insured value of the stockfish.

As the plaintiff/bank alleged, the defendant/customer be-fore ever he collected the insured value of the goods from the NICON had instructed the insurers in or by writing to settle the claim through the plaintiff. Presumably to liquidate his indebtedness to the bank. This letter was, however, endorsed to the plaintiff/bank by the defendant himself. But the defendant subsequently countermanded his earlier instruction to the insurers. The result was, as stated above, that he collected the insured value of the goods directly from NICON But why this change of mind, this “U” turn, to


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countermand his instruction to the insurer? Paragraphs 9, 10 and 11 of the statement of defence tell the story fully and comprehensively. I shall reproduce these paragraphs later in the judgment at an appropriate stage.

Still on the plaintiff’s case: paragraphs 12, 14 and 15 of the amended statement of claim deserved my special mention. They read:– “12. The payment for the letter of credit is not subject to the

plaintiff’s payment to their principal Bergen Bank of Nor-way. As soon as approval was given by the Central Bank of Nigeria the plaintiff reimbursed the foreign bank aforesaid on the 29th March, 1983, when the principal sum of Nok 247,538 plus charges of Nok 500 totalling Nok 248,000 = N29,776.16 was actually paid to it. The said foreign bank charged interest on the said principal sum of Nok 247,560 at the rate of 15% (fifteen per centum) per annum from the 16th day of March, 1977. The debt balance in the defen-dant’s account moved from N29,045.77 on 23rd May, 1983 to N61.964.16 on 9th June, 1983 because of the interest of N32,918.39 which was added en bloc and not on month to month to the debit balance of N29,045.77 already on the de-fendant’s account and the addition of the plaintiff’s own in-terest charges. The interest Nok 327,538=N32,918.39 paid to the said foreign bank after payment of the said principal constituted an additional current facility granted to the de-fendant on his said current account. The plaintiff will pro-duce and rely on all documents evidencing the payment at the trial of this action.

14. Earlier by a letter dated 19th January, 1979 the defendant admitted that he owed the plaintiff the sum of N16,087.72 but the interest on the principal sum had been and is mount-ing. The plaintiff will rely on the said letter at the trial.

15. As at 28th December, 1985 the defendant has outstanding unpaid in his said account, the sum of N84,657.90 which said sum plus interest is now due and payable to the plain-tiff by the defendant. The amount of N66,531.06 was the debit balance for 28th December, 1983. A typographical er-ror was made in the statement of account of the defendant tendered in court in the above action as exhibit G. In that document the typist in carrying forward in November, 1985 the balance of N83,737.46 actually erroneously put down N73,737.49 instead of N83,737.49. The next debt figure


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which went into the said account was N920.48 which brought the total as at 28th December, 1985 when the above action was proposed to N84,657.90. The correct statement of account of the defendant shall be produced and tendered and relied upon and the plaintiff will also produce and ten-der and rely on the defendant’s notice of intention to defend his affidavit in support and all letters and documents relat-ing to this suit at the hearing of this action. The plaintiff will also produce and rely on an exchange risk indemnity dated 30th March, 1978 where the defendant undertook to pay for any shortfall or claim arising from the transaction.”

The case of the defendant is simple and straight forward. There is some area of common ground between him and the plaintiff. The defendant does not deny he imported some stockfish heads from Norway – 1000 bags thereof. The Norwegian seller/company was ISADHL and Co A/S (here-inafter referred to, simply as “the ISADHL”, for short). This, according to the defendant, was sometime in 1977. The stockfish heads valued in Norwegian currency Nok 247,500.

The defendant admits he did request the plaintiff for an overdraft facility to import the fish. He does, however, al-lege that his credit account with the plaintiff was a little short of the required purchase price of the stockfish. Hence, the request for the overdraft facility to augment the shortfall. The difference between what credit he really had in his ac-count with the plaintiff and the purchase price or value of the fish to be imported was N15,988.41. It was for this dif-ference that the plaintiff was requested to open a letter of credit.

The defendant admits that the fish, although shipped from Norway did, however, get lost, “in transitu”. He made a claim on the Marine insurers. He was paid the insured value. He collected the insured value directly, himself. That he did, at a stage, instruct the NICON to settle the claim through the plaintiff and that he later countermanded his instruction to pay the plaintiff directly were all not denied. He admitted these facts by his pleadings.


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I now advert to paragraphs 9, 10 and 11 of the statement of defence, as I said I would, for their relevance: “9. But before NICON could pay, it had come to the notice of

the defendant that the plaintiff bank had failed to make available to ISDAHL and Co A/S the cost of the fish cut part of which amount N15,988.41 had been debited against the defendant. The defendant will at the trial rely on the let-ters dated 23rd October, 1979 and 9th May, 1980 written by ISDAHL and Co A/S to the defendant complaining about the failure to pay for the price of the fish cut. The defendant will also at the trial found on the letter Ref: B/100/OE/210 of 7th February, 1979 written by the plaintiff bank to Ber-gen Bank Norway indicating that the bill had not been paid. A copy of this letter was endorsed to the defendant.

10. On the receipt of these letters from Isdahl and Co A/S re-ferred to in the preceding paragraph the defendant gave a counter instruction to NICON not to pay the claim they were about to pay to the plaintiff bank because they did not after all send the cost of the fish cut to either Isadhl and Co A/S or to its banker.” (The italics is supplied.)

In paragraph 11 of the defence, it was pleaded thus, inter alia: “11. At the time the plaintiff bank filed the action and at the time

the defendant filed a notice of intention to defend the plain-tiff bank had not paid the N29,776.16 for which letters of credit were opened to either Isadhl and Co A/S or its banker despite the fact that the bank was charging interest on the N15,988.41 its own money which is added to N13,787.75 defendant’s own money in his account with the plaintiff bank. The two sums of money made up the N29,776.16 re-quired to be paid by the plaintiff bank to Isadhl and Co A/S or its bankers.”

The above apart, the defendant had vehemently denied giv-ing to the plaintiff any form of security in respect of any overdraft facility. Whatever documents of title in or to any of his landed property in Aba or, any share certificates of the defendant in the custody of the plaintiff, the defendant al-leged, were so left with the plaintiff just for their safe keep-ing only. (See paragraph 12 of the statement of defence.)


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Paragraph 18 of the statement of defence pleaded:– “The defendant will require proof of how the defendant’s indebt-edness amounted to what the plaintiffs are claiming in paragraphs 15 and 16 of the statement of claim. The defendant will at the trial found on various statements of account . . .”

Now, it ought to be borne in mind that an overdraft is money lent. A payment by a bank under an arrangement by which the customer has an overdraft is a lending by the bank to the customer. A banker is not obliged to let his customer over-draw unless he has agreed to do so. But such an agreement need not be express. It is sufficient and valid if it be inferred from the course of business. Borrowing and lending are mat-ters of contract not necessarily premeditated but possibly spontaneously. See Paget’s Law of Banking (8ed) 132.

On the pleadings, in my respectful opinion, the singular is-sue coming on for trial was simple and straight forward. I shall attempt to formulate it based on my view of the plead-ings. The defendant had been compensated or rather indem-nified for the loss of the stockfish, “in transitu”. Afterwards, that is the purpose of what the marine insurance of the ship-ment from Norway to Nigeria of the fish cut is about. Now, these pertinent questions immediately arise:– Q.(1): Did the defendant/customer, if he did not get the stock-

fish, gratis, a free gift from the ISADHL and Co A/S of Norway, pay for the value of the fish, the value for their loss he had recovered from NICON?

Q.(2): But could the defendant be indemnified for the loss, “in transitu” of the stock unless he had title to the fish? And title to the fish is the bill of lading. It is a document of title. So, how did he obtain the document of title to the fish to be enabled to make a claim on the insurer?

Q.(3): The plaintiff/bank dealing not with the goods them-selves but with documents i.e. bill of lading, did surren-der the document of title to the stockfish to the defen-dant. Would the plaintiff not have paid for the value of the fish to be seized of those vital documents it surren-dered to the defendants? And I did discuss above, the category of the contract between the plaintiff/bank and Bergen Bank of Norway. The question arises, further.


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Q.(4): Would the defendant be relying lawfully on any corre-spondences from the sellers i.e. ISADHL and C A/S to refuse to reimburse or, pay the plaintiff for its services and payment to the Bergen Bank of Norway for an on-ward transmission of the purchase price of the fish to the sellers by the Bergen Bank?

Q.(5): And if the Bergen Bank of Norway made the payment pursuant to the contract between it and the plain-tiff/appellant/bank, would the defendant legitimately in law or at law not accept the liability to pay to the plaintiff both the principal sum i.e. the purchase value of the fish and any interest rate chargeable and charged by the Bergen Bank of Norway against the plaintiff/appellant?

Q.(6): And apart from the contract between the issuing bank and the correspondent bank of Norway was the plain-tiff/appellant bank not also an agent for the defen-dant/customer in the wholesale and purchase of fish im-portation transaction?

I have on purpose formulated the issue expansively notwith-standing they may, concisely stated, be condensed into this one question i.e. would the respondent herein the customer be allowed to take with both hands, the fish or its value from the NICON and refuse to pay for the fish value to the sellers after the plaintiff had paid for them? i.e. reimburse the plain-tiff?

In my view, a resolution of the above holds the master key to the appeal. But let it not be overlooked, what is the pur-pose of the legal effect of the “Exchange Risk Indemnity” dated 30th March, 1978 executed by the customer for and on behalf of the plaintiff/bank?

Out of his seven grounds of appeal, Counsel for the appel-lant had identified five issues for determination. These are:– “(i) Was the learned trial Judge right in making an order for

non-suit without calling on Counsel on both sides to address him on the propriety of making that order.

(ii) Was the learned trial Judge right in holding that if at all the plaintiff (appellant) granted the facility to the defendant (re-spondent) it did so by an irregular and unorthodox means as there was no letter from the plaintiff to the defendant com-municating its approval and grant of the facility.


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(iii) Whether the learned trial Judge properly directed himself on the pleadings and the evidence before him in regard to the deposit of the title deeds of the respondents with the appel-lant; the justification of the countermanding the authority to the appellant and receiving payment directly from NICON and in regard to the understanding by the respondent of the content of the Exchange Risk Indemnity exhibit M.

(iv) Whether the learned trial Judge placed a correct interpreta-tion on the term ‘Irrevocable letter of credit’ and whether he was right in comparing and examining documents not ex-amined during the proceedings.

(v) Whether the learned trial Judge correctly directed himself in placing the delay in remitting the money to Bergen Bank of Norway on the shoulders of the appellant and in refusing to give judgment to the appellant with accrued interest”.

Four issues were formulated by the Counsel for the respon-dent. They are hereunder immediately set down:– “1. Whether the order of non-suit was the proper order to be

made considering the circumstances of the case. 2. Whether there was a formal grant of overdraft facility by

the appellant to the respondent. 3. Whether the learned trial Judge’s evaluation of evidence

and pleading was right on the issues of the deposit of title deeds of the respondent; the countermanding of the pay-ment from his insurers having earlier directed his insurers to pay to the appellant placing the responsibility in the delay in remitting the money due to the confirming bank of Norway on the appellant meaning of exhibit M.

4. Whether the learned trial Judge correctly interpreted the terms irrevocable letter of credit and if the answer is in the negative whether such wrong interpretation rendered the payment of the court unjustifiable.”

With regard to the cross-appeal, as formulated by the Coun-sel for determination, are these two issues namely:– “(i) Whether the proper order should not have been that of dis-

missal instead of a non-suit considering the various findings of fact made by the court.

(ii) Whether in a case of debt, simpliciter, a non-suit order can be made.”


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The cross-respondent formulated one issue for determination in page 3 of the cross-respondent’s brief. It is:–

“Could the learned trial Judge dismiss or non-suit the claim of the plaintiff/ appellant/cross-respondent having regard to the state of the pleadings and the evidence before him.”

At the hearing of the appeal before us, each Counsel had adopted and relied on his set of briefs of arguments. On the one hand, the appellant in laudably short a speech urged us to allow the appeal and on that account dismiss the cross-appeal. Mr Njoku for the respondent urged us contrariwise i.e. to dismiss the appeal and allow the cross-appeal accord-ingly.

Contentions Counsel’s contention on Issue No. l as formulated in the ap-pellant’s brief centres on the propriety or otherwise of the making of an order of non-suit without firstly inviting an address by Cou

Documents

NIGERIAN BANKING LAW REPORTS - NDIC 8 Part 2.pdf · v seniority list of justices of the court of appeal as at november 30th, 2007 1. hon. justice umaru abdullahi, con (president)