NIGERIAN BANKING LAW REPORTS - ndic.gov.ng 2.pdf · justice isa ayo salami 4. hon. justice james ogenyi ogebe 5. hon. justice rabiu danlami muhammad 6. hon. justice mahmud mohammed

NIGERIAN BANKING

LAW REPORTS [1967 – 1975]

VOLUME 2

Published by Nigeria Deposit Insurance Corporation

2006

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 [1967 – 1975] 2 N.B.L.R.

All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, including electronic, mechanical, photocopying 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.

© 2006 ISSN 1595-1030

Printed by: LexisNexis Butterworths South Africa Durban: 215 North Ridge Road, Morningside, 4001 Johannesburg: Grayston 66, 2 Norwich Close, Sandton, 2196 Cape Town: Ground Floor, Watford House, 2 Ring Road, Century City, 7441

Printed and bound by Interpak Books Pietermaritzburg

iii

EDITORIAL BOARD

1. Professor J.O. Anifalaje Chairman Dean, Faculty of Law, University of Ibadan 2. Alheri Bulus Nyako Editor-in-Chief Board Secretary/Head of Legal

Department

N.D.I.C. 3. Michael Olufemi Olaitan Member Legal Practitioner 4. Ahmed Almustapha “ Registrar-General Corporate Affairs Commission 5. Gabriel Olukayode Kembi “ Legal Practitioner 6. Adekunle Oladapo Omowole “ Legal Practitioner Corporate Affairs Commission 7. Nasiru Tijani “ Legal Practitioner Senior Lecturer, Nigerian Law

School

8. Belema A. Taribo “ Legal Practitioner N.D.I.C. 9. Moses Ter-llumun Adaguusu “ Legal Practitioner N.D.I.C. 10. Dan Ike Agwu Secretary Legal Practitioner N.D.I.C.

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LIST OF JUSTICES OF THE SUPREME COURT OF NIGERIA AS AT MAY 17TH, 2005

1. HON. JUSTICE MUHAMMADU LAWAL UWAIS, GCON (Chief Justice of Nigeria)

2. HON. JUSTICE SALIHU MODIBBO ALFA BELGORE

3. HON. JUSTICE IDRIS LEGBO KUTIGI 4. HON. JUSTICE SYLVESTER UMARU ONU 5. HON. JUSTICE ALOYSIUS IYORGYER

KATSINA-ALU 6. HON. JUSTICE UMARU ATU KALGO 7. HON. JUSTICE AKINTOLA OLUFEMI

EJIWUNMI 8. HON. JUSTICE NIKI TOBI 9. HON. JUSTICE DAHIRU MUSDAPHER 10. HON. JUSTICE DENNIS ONYEJIFE EDOZIE 11. HON. JUSTICE IGNATIUS CHUKWUDI

PATS-ACHOLONU 12. HON. JUSTICE GEORGE ADESOLA

OGUNTADE 13. HON. JUSTICE SUNDAY AKINOLA

AKINTAN

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LIST OF JUSTICES OF THE COURT OF APPEAL AS AT MAY 17TH, 2005

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

2. HON. JUSTICE ALOMA MARIAM MUKHTAR 3. HON. JUSTICE ISA AYO SALAMI 4. HON. JUSTICE JAMES OGENYI OGEBE 5. HON. JUSTICE RABIU DANLAMI

MUHAMMAD 6. HON. JUSTICE MAHMUD MOHAMMED 7. HON. JUSTICE RAPHAEL OLUFEMI

ROWLAND 8. HON. JUSTICE MUHAMMAD S. MUNTAKA

COOMASIE 9. HON. JUSTICE DALHATU ADAMU 10. HON. JUSTICE IBRAHIM TANKO

MUHAMMAD 11. HON. JUSTICE BABA ALKALI BA’ABA 12. HON. JUSTICE SAKA ADEYEMI IBIYEYE 13. HON. JUSTICE ZAINAB ADAMU

BULKACHUWA 14. HON. JUSTICE SULEIMAN GALADIMA 15. HON. JUSTICE VICTOR AIMEPOMO O.

OMAGE 16. HON. JUSTICE JOHN AFOLABI FABIYI 17. HON. JUSTICE F.F. TABAI 18. HON. JUSTICE PIUS OLAYIWOLA ADEREMI 19. HON. JUSTICE KUMAI BAYANG AKAAHS 20. HON. JUSTICE OLUFUNLOLA OYEOLA

ADEKEYE 21. HON. JUSTICE ABOYI JOHN IKONGBEH 22. HON. JUSTICE PATRIC IBE AMAIZU 23. HON. JUSTICE JOSEPH JEREMIAH UMOREN

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24. HON. JUSTICE WALTER S.N. ONNOGHEN 25. HON. JUSTICE M. DATTIJO MUHAMMAD 26. HON. JUSTICE CHRISTOPHER M.

CHUKWUMA-ENEH 27. HON. JUSTICE AMIRU SANUSI 28. HON. JUSTICE IFEYINWA CECILIA NZEAKO 29. HON. JUSTICE ISTIFANUS THOMAS 30. HON. JUSTICE JAFARU MIKA’ILU 31. HON. JUSTICE IKECHI F. OGBUAGU 32. HON. JUSTICE AMINA A. AUGIE 33. HON. JUSTICE ABUBAKAR ABDULKADIR

JEGA 34. HON. JUSTICE NWALE SYLVESTER

NGWUTA 35. HON. JUSTICE MONICA DONGBAN-

MENSEM 36. HON. JUSTICE STANLEY SHENKO ALAGOA 37. HON. JUSTICE M. L. GARBA 38. HON. JUSTICE JEAN OMOKRI 39. HON. JUSTICE TIJANI ABDULLAHI 40. HON. JUSTICE UWANI M. ABBA AJI 41. HON. JUSTICE MARY PETER ODILI 42. HON. JUSTICE KUDIRAT M.O. KEKERE-

EKUN 43. HON. JUSTICE GERTRUDE IFUNANYA

UDOM AZOGU 44. HON. JUSTICE BODE RHODES VIVOUR 45. HON. JUSTICE RAPHAEL CHIKWE AGBO 46. HON. JUSTICE LADAN MOHAMMED

TSAMIYA

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LIST OF JUSTICES OF THE FEDERAL HIGH COURT OF NIGERIA AS AT MAY 17TH, 2005

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 R. O. OLOMOJOBI 6. HON. JUSTICE M. A. EDET 7. HON. JUSTICE A. A. ABDU-KAFARATI 8. HON. JUSTICE SOBA 9. HON. JUSTICE O. J. OKEKE 10. HON. JUSTICE S. YAHAYA 11. HON. JUSTICE A. BELLO 12. HON. JUSTICE A. B. GUMEL 13. HON. JUSTICE A. O. AJAKAIYE 14. HON. JUSTICE F. F. OLAYIWOLA 15. HON. JUSTICE ADAMU HOBON 16. HON. JUSTICE J. T. TSOHO 17. HON. JUSTICE S. J. ADAH 18. HON. JUSTICE CHUKWURA NNAMANI 19. HON. JUSTICE R. O. NWODO 20. HON. JUSTICE G. C. OKEKE 21. HON. JUSTICE G. K. OLOTU 22. HON. JUSTICE J. E. SHAKARHO 23. HON. JUSTICE L. AKANBI 24. HON. JUSTICE C. M. OLATOREGUN 25. HON. JUSTICE BINTA F. M. NYAKO 26. HON. JUSTICE A. LIMAN 27. HON. JUSTICE S. YAHUZA 28. HON. JUSTICE C. ARCHIBONG 29. HON. JUSTICE I. EJIOFOR 30. HON. JUSTICE A. I. CHIKERE

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31. HON. JUSTICE M. L. SHUAIBU 32. HON. JUSTICE SALIU SAIDU 33. HON. JUSTICE G. O. KOLAWOLE 34. HON. JUSTICE A. O. FAJI 35. HON. JUSTICE B. BELLO ALIYU 36. HON. JUSTICE B. I MOLOKWU 37. HON. JUSTICE A. F. ADETOKUNBO-

ADEMOLA 38. HON. JUSTICE CHUDI NWOKORIE 39. HON. JUSTICE M. I. AWOKULEHIN 40. HON. JUSTICE R. N. OFILI-AJUMOGOBIA 41. HON. JUSTICE L. ALLAGOA 42. HON. JUSTICE A. O. OGIE 43. HON. JUSTICE BABS KUEWUMI 44. HON. JUSTICE UMAR M. GARBA 45. HON. JUSTICE NYAURE BABA 46. HON. JUSTICE A. R. MOHAMMED 47. HON. JUSTICE T. ABUBAKAR

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TABLE OF CONTENTS

Index of Table of Cases Reported ........................ xiii Index of Subject Matter ........................................ xvii Index of Cases referred to..................................... xxxix Index of Statutes referred to ................................. lxi Index of Rules referred to ..................................... lxvii Index of Books referred to.................................... lxix

xiii

TABLE OF CASES REPORTED

Page

Adekunle v. African Continental Bank Limited............ 307Aderibigbe v. Inspector–General of Police Nigeria and

others .......................................................................... 618African Continental Bank Limited v. Adewuyi and

others .......................................................................... 57African Continental Bank Limited v. Attorney–

General of Northern Nigeria....................................... 34African Continental Bank Limited v. Babayemi and

another ........................................................................ 231African Continental Bank Limited v. Eke ..................... 201African Continental Bank Limited v. Jimfat (Nigeria)

Limited........................................................................ 435African Continental Bank Limited v. Kembi and

another ........................................................................ 546African Continental Bank Limited v. Khalil and

another ........................................................................ 356African Continental Bank Limited v. Kotun ................. 242Alabi v. Standard Bank of Nigeria Limited................... 551Anuku v. Standard Bank of Nigeria Limited................. 340Ashiru v. Barclays Bank of Nigeria Limited and

others .......................................................................... 584Atrib v. United Bank for Africa Limited....................... 76Ayuba v. Ogunleye and others ...................................... 297Balogun v. African Continental Bank Limited and

others .......................................................................... 375Bank of America National Trust and Savings v.

Nigerian Travel Agencies Limited ............................. 51Bank of America National Trust and Savings

Association v. Alexander............................................ 225Bank of the North Limited v. Central Bank of Nigeria . 401Bank of West Africa Limited v. Balogun...................... 265

[1967 – 1975] 2 N.B.L.R.

Nigerian Banking Law Reports

xiv

Bewac Limited v. African Continental Bank Limited........................................................................ 444

British and French Bank Limited v. El-Assad............... 28Carrara Marble Company Limited v. Bolado Limited .. 272Construction Industries Company Limited v. Bank of

the North Limited ....................................................... 95Delalu v. Akappo and another ....................................... 41Eagle Line Limited and others v. Attorney–General of

the Federation and another ......................................... 277Edu v. National Bank of Nigeria Limited and another.. 364Effiwatt v. Barclays Bank, DCO (Nig) Limited and

another ........................................................................ 257Egwekweh v. Barclays Bank of Nigeria Limited.......... 460Enahoro and Co Limited and another v. Bank of West

Africa Limited ............................................................ 317Esso Standard (Nigeria) Limited v. Akanbi .................. 248George v. United Bank for Africa Limited.................... 414Ifop v. Central Bank of Nigeria ..................................... 520Imarsel Chemical Company Limited v. National Bank

of Nigeria Limited ...................................................... 542Ingyengierefaka v. Giadom ........................................... 472Irosogie v. Standard Bank Nigeria Limited................... 515Jammal Steel Structures Limited v. African

Continental Bank Limited .......................................... 476Johnson v. Sobaki .......................................................... 143Ladipo v. Standard Bank of West Africa Limited......... 179Merchants Bank Limited v. Onigbanjo ......................... 197Mussini and others v. Balogun and Compagnie

Financiere France Afrique.......................................... 119Nasr v. Berini Beirut-Riyad Nigeria Bank Limited....... 151National Bank of Nigeria Limited and another v.

Peters and another....................................................... 348National Bank of Nigeria Limited v. Okafor Lines

Limited........................................................................ 14National Bank of Nigeria Limited v. Olatunji............... 563National Bank of Nigeria v. Hotchand and others ........ 65

[1967 – 1975] 2 N.B.L.R.

Table of Cases Reported

xv

Nwasike v. Onwuameze ................................................ 303Ogundana and another v. Akinwunmi........................... 71Ojikutu v. African Continental Bank Limited ............... 102Ojikutu v. Agbonmagbe Bank Limited, Mbadike and

another ........................................................................ 187Olekanma v. Njoku........................................................ 533Osawaye v. National Bank of Nigeria Limited ............. 426Oyewole v. Standard Bank of West Africa Limited...... 111Pool House Group (Nigeria) Limited v. African

Continental Bank ........................................................ 217Standard Bank Nigeria Limited v. Ikomi ...................... 1Standard Bank of Nigeria Limited v. Attorney–

General of the Federation ........................................... 335Thadant and another v. National Bank of Nigeria

Limited and another.................................................... 383Thomas Wyatt and Son (West Africa) Limited v.

United Bank for Africa Limited ................................. 208United Nigeria Insurance Co Limited v. Muslim Bank

(West Africa) Limited ................................................ 391Visinoni Limited and others v. National Bank of

Nigeria Limited .......................................................... 571Yassin v. Barclays Bank DCO ...................................... 130

xvii

INDEX OF SUBJECT MATTER

BANKING

Accounts – Opening of accounts for customers – Duty of bank United Nigeria Insurance Co Limited v. Muslim Bank (West Africa) Limited [1967 – 1975] 2 N.B.L.R. 391 (Supreme Court of Nigeria)

Accounts – New Customers – Current account opened by a Limited liability company – Prerequisites thereto – Bewac Limited v. African Continental Bank Limited [1967 – 1975] 2 N.B.L.R 444 (High Court of Lagos)

Action for recovery of money exchanged for old Nigerian currency notes to new ones – Failure to effect the exchange Ifop v. Central Bank of Nigeria [1967 – 1975] 2 N.B.L.R. 520 (Supreme Court of Nigeria)

Advances made to a customer – Whether recoverable before the whole agreed advance had been made National Bank of Nigeria Limited v. Okafor Lines Limited [1967 – 1975] 2 N.B.L.R. 14 (Supreme Court of Lagos State)

Bailment – Deposit with bank – Bailee for goods specifically received for banking purpose – No liability for goods kept on premises by mere increase without bailment Johnson v. Sobaki [1967 – 1975] 2 N.B.L.R. 143 (High Court of Lagos State)

Bank employee – Cashier – Duties in bank – Bank liable only if cashier acting within course of employment Ogundana and another v. Akinwunmi [1967 – 1975] 2 N.B.L.R. 71 (High Court of Lagos State)

Bank taking over another bank – Claiming debt owed to defunct bank – What that bank must prove to be entitled to recover debt George v. United Bank for Africa Limited [1967 – 1975] 2 N.B.L.R. 414 (Supreme Court of Nigeria)

[1967 – 1975] 2 N.B.L.R.


xviii

BANKING – continued

Banker and customer – Negligence of bank in paying cheque from a third parties other than payee – Liability of bank – Protection afforded bank by section 60, Bills of Exchange Act (Cap 21) Irosogie v. Standard Bank Nigeria Limited [1967 – 1975] 2 N.B.L.R. 515 (High Court of Lagos State)

Banker and customer relationship – Right of customer to deposit and withdraw funds in bank account – Freezing of account – Legality of – Need to give reasons for freezing Eagle Line Limited and others v. Attorney–General of the Federation and another [1967 – 1975] 2 N.B.L.R. 277 (High Court of Lagos State)

Banker/customer – Customer drawing cheque in excess of amount in account – Effect Delalu v. Akappo and another [1967 – 1975] 2 N.B.L.R. 41 (High Court of Lagos State)

Banker/customer relationship – Claim by banker on overdraft granted to customer – Whether a matter within the exclusive jurisdiction of the Federal Revenue Court Jammal Steel Structures Limited v. African Continental Bank Limited [1967 – 1975] 2 N.B.L.R. 476 (Supreme Court of Nigeria)

Banker/customer relationship – Contractual relationship – Special contractual relationship may over ride implied contract National Bank of Nigeria v. Hotchand and others [1967 – 1975] 2 N.B.L.R. 65 (High Court of Lagos State)

Banker/customer relationship – Demand for repayment of overdraft facility – Whether writ of summons sufficient demand on a banker Merchants Bank Limited v. Onigbanjo [1967 – 1975] 2 N.B.L.R. 197 (High Court of Lagos State)

[1967 – 1975] 2 N.B.L.R.

Index of Subject Matter

xix


Banker/customer relationship – Loan – Duty of bank to prove the loan in order to recover debt owed it by customer African Continental Bank Limited v. Jimfat (Nigeria) Limited [1967 – 1975] 2 N.B.L.R. 435 (High Court of Lagos State)

Banker/customer relationship – Nature of Osawaye v. National Bank of Nigeria Limited [1967 – 1975] 2 N.B.L.R. 426 (High Court of Mid-Western State)

Banker/customer relationship – Security for banker’s advances – Enforcement of – Refusal by mortgagor to execute deed – Banker applying under nugatory law to have same executed – Consequence of Ashiru v. Barclays Bank of Nigeria Limited and others [1967 – 1975] 2 N.B.L.R. 584 (Court of Appeal Western State)

Banker/customer relationship at common law – Banker as customer’s agent – Banker’s liability for conversion of customer’s goods Bank of West Africa Limited v. Balogun [1967 – 1975] 2 N.B.L.R. 265 (Supreme Court of Nigeria)

Banker’s book – Admissibility of – What must be established – Section 96(2) of Evidence Act Yassin v. Barclays Bank DCO [1967 – 1975] 2 N.B.L.R. 130 (Supreme Court of Nigeria)

Banker’s lien – Banker exercising lien on customer’s bank balance Alabi v. Standard Bank of Nigeria Limited [1967 – 1975] 2 N.B.L.R. 551 (High Court of Kaduna State)

“Banking business” – What is? Ojikutu v. Agbonmagbe Bank Limited, Mbadike and another [1967 – 1975] 2 N.B.L.R. 187 (High Court of Lagos State)

Bills of Exchange – Cheque – Negotiable instrument similar to cash – Action to enforce payment does not

[1967 – 1975] 2 N.B.L.R.


xx


permit defence of set off or counterclaim Carrara Marble Company Limited v. Bolado Limited [1967 – 1975] 2 N.B.L.R. 272 (High Court of Lagos State)

Bills of Exchange – Discharge of – “Payment in due course” – Meaning of National Bank of Nigeria Limited v. Olatunji [1967 – 1975] 2 N.B.L.R. 563 (High Court of Lagos State)

Bills of Exchange – How discharged – Failure of bank to produce bill discharged – Effect – Options available to the banker – Whether precluded from giving secondary evidence thereof National Bank of Nigeria Limited v. Olatunji [1967 – 1975] 2 N.B.L.R. 563 (High Court of Lagos State)

Bills of Exchange and cheque – Production of paid cheque by banker – Presumption raised thereby National Bank of Nigeria Limited v. Olatunji [1967 – 1975] 2 N.B.L.R. 563 (High Court of Lagos State)

Books used in ordinary course of business – Interpretation of Yassin v. Barclays Bank DCO [1967 – 1975] 2 N.B.L.R. 130 (Supreme Court of Nigeria)

Cheque – Crossed cheque – Bank paying contrary to crossing – Liability of bank Ladipo v. Standard Bank of West Africa Limited [1967 – 1975] 2 N.B.L.R. 179 (High Court of Lagos State)

Cheque – Dishonour of cheque where customer’s account is in fund – Allegation of breach of banker and customer contract – Customer a trader – Quantum of damages Bank of America National Trust and Savings Association v. Alexander [1967 – 1975] 2 N.B.L.R. 225 (High Court of Lagos State)

Cheques – Action for money had and received – Money received for converted cheque – Theft, misappropriation of cheque – Conversion of cheque

[1967 – 1975] 2 N.B.L.R.


xxi


money received for converted cheque Thomas Wyatt and Son (West Africa) Limited v. United Bank for Africa Limited [1967 – 1975] 2 N.B.L.R. 208 (High Court of Lagos State)

Cheques – Cause of action for dishonour of – Whether cause of action for breach of contract operates as estoppel against same Esso Standard (Nigeria) Limited v. Akanbi [1967 – 1975] 2 N.B.L.R. 248 (High Court of Western State of Nigeria)

Cheques – Collection – Defective title of customers – Statutory defence under section 2(2) Bills of Exchange Act, 1964 – How proved Bewac Limited v. African Continental Bank Limited [1967 – 1975] 2 N.B.L.R. 444 (High Court of Lagos State)

Cheques – Collection by bank – When banker protected – Section 2(2) Bills of Exchange Act, 1964 Atrib v. United Bank For Africa Limited [1967 – 1975] 2 N.B.L.R. 76 (High Court of Lagos State)

Cheques – Conversion of – Action against banker – Negligence alleged against banker – Absence of – Onus of proof on banker – Section 2(2) Bill of Exchange Act, 1964 – Protection of – When available to banker – Principles applicable Atrib v. United Bank For Africa Limited [1967 – 1975] 2 N.B.L.R. 76 (High Court of Lagos State)

Cheques – Defective title of customer – Liability of bank thereof – Whether banker liable in negligence Bewac Limited v. African Continental Bank Limited [1967 – 1975] 2 N.B.L.R. 444 (High Court of Lagos State)

Cheques – Defective title of customer – Whether banker can avail itself of the protection under section 2(2) of the Bills of Exchange Act – Onus of proof – On

[1967 – 1975] 2 N.B.L.R.


xxii


whom lies Bewac Limited v. African Continental Bank Limited [1967 – 1975] 2 N.B.L.R. 444 (High Court of Lagos State)

Cheques – Notice of dishonour – What constitutes African Continental Bank Limited v. Eke [1967 – 1975] 2 N.B.L.R. 201 (High Court of Mid-Western State, Nigeria)

Cheques – Wrongful dishonour of – Whether payee of a dishonoured cheque who has returned same to drawer qualifies as a “holder” so as to recover damages for same – Section 38(a) of Bills of Exchange Act (Cap 21) Esso Standard (Nigeria) Limited v. Akanbi [1967 – 1975] 2 N.B.L.R. 248 (High Court of Western State of Nigeria)

Claim for the recovery of title deeds from bank – Whether the deposit of title deeds with the bank amounts to breach of section 7(1)(g) of the Banking Act Nasr v. Berini Beirut-Riyad Nigeria Bank Limited [1967 – 1975] 2 N.B.L.R. 151 (Supreme Court of Nigeria)

Closure of account – Nature of evidence required in proof of Egwekweh v. Barclays Bank of Nigeria Limited [1967 – 1975] 2 N.B.L.R. 460 (High Court of East-Central State)

Currency conversion – Issue of currency – Section 21(3), Central Bank Act, 1958 and section 1(1)(a) and (b) Central Bank (Currency Conversion) decree No. 51 of 1967 – Purport of – Whether contemplates application to the Governor of Central Bank of Nigeria Bank of the North Limited v. Central Bank of Nigeria [1967 – 1975] 2 N.B.L.R. 401 (Supreme Court of Nigeria)

Current account – Opening and operating of – Bankers negligence – How proved Atrib v. United Bank For Africa Limited [1967 – 1975] 2 N.B.L.R. 76 (High Court of Lagos State)

[1967 – 1975] 2 N.B.L.R.


xxiii


Customer – Corporate customer – Who is the proper authority in a company to give security for an overdraft Pool House Group (Nigeria) Limited v. African Continental Bank Limited [1967 – 1975] 2 N.B.L.R. 217 (High Court of Lagos State)

Customer in possession of passbook – Question whether plaintiff owns passbook or not – On whom onus lies – Section 145 Evidence Act Egwekweh v. Barclays Bank of Nigeria Limited [1967 – 1975] 2 N.B.L.R. 460 (High Court of East-Central State)

Customer’s cheque – When bank bound to honour Osawaye v. National Bank of Nigeria Limited [1967 – 1975] 2 N.B.L.R. 426 (High Court of Mid-Western State)

Debenture – Stamping and upstamping – Need for upstamping to cover the amount of loan – Failure to re-register – Effect of Mussini and others v. Balogun and Compagnie Financiere France Afrique [1967 – 1975] 2 N.B.L.R. 119 (High Court of Lagos State)

Delay in releasing funds to depositor when there is credit in account – When amounts to conversion – When does not amount to conversion Effiwatt v. Barclays Bank, DCO (Nig) Limited and another [1967 – 1975] 2 N.B.L.R. 257 (High Court of Lagos State)

Dishonour of cheque – When bank will be liable in damage for injury to customers credit Osawaye v. National Bank of Nigeria Limited [1967 – 1975] 2 N.B.L.R. 426 (High Court of Mid-Western State)

Endorsement of “effect uncleared” – Whether libellous Alabi v. Standard Bank of Nigeria Limited [1967 – 1975] 2 N.B.L.R. 551 (High Court of Kaduna State)

Freezing of account of customer – Bank examiner freezing account of company and officers – Power said to be exercised under section 2(2) of Banking

[1967 – 1975] 2 N.B.L.R.


xxiv


Amendment decree, 1966 – Validity of – Time limit for freeing – Effect of exceeding period of three months Eagle Line Limited and others v. Attorney–General of the Federation and another [1967 – 1975] 2 N.B.L.R. 277 (High Court of Lagos State)

Freezing of account of customer – Justification for – Conditions precedent to exercise by bank examiner – Sections 1(1) and 2(2) of Banking Amendment decree, 1966 Eagle Line Limited and others v. Attorney–General of the Federation and another [1967 – 1975] 2 N.B.L.R. 277 (High Court of Lagos State)

Freezing of account of customer under Banking Amendment decree 1966 – Banker protected by section 3 of the Banking Amendment decree 1966 Aderibigbe v. Inspector–General of Police Nigeria and others [1967 – 1975] 2 N.B.L.R. 618 (High Court of Lagos State)

Guarantee – Continuing guarantee – Meaning of – Construction of agreement of guarantee African Continental Bank Limited v. Adewuyi and others [1967 – 1975] 2 N.B.L.R. 57 (High Court of Western Nigeria)

Guarantee – Contract – Modification of contract of guarantee without the consent of guarantor – Modification substantial and prejudicial to interest of guarantor – Effect of African Continental Bank Limited v. Khalil and another [1967 – 1975] 2 N.B.L.R. 356 (High Court of Western State)

Guarantee – Increase in overdraft facility without consent of guarantor African Continental Bank Limited v. Khalil and another [1967 – 1975] 2 N.B.L.R. 356 (High Court of Western State)

[1967 – 1975] 2 N.B.L.R.


xxv


Guarantee – Modification of contract of guarantee – Discharge of guarantee African Continental Bank Limited v. Khalil and another [1967 – 1975] 2 N.B.L.R. 356 (High Court of Western State)

How discharged – Failure of bank to produce bill discharged – Effect National Bank of Nigeria Limited v. Olatunji [1967 – 1975] 2 N.B.L.R. 563 (High Court of Lagos State)

Interest – Award thereof where the bank did not give evidence as to the rate chargeable – Need to consider the rate positively established by evidence Nasr v. Berini Beirut-Riyad Nigeria Bank Limited [1967 – 1975] 2 N.B.L.R. 151 (Supreme Court of Nigeria)

Judgment debt – Rate of interest on judgment debt – Section 17, English Judgments Act, 1838 Ojikutu v. African Continental Bank Limited [1967 – 1975] 2 N.B.L.R. 102 (Supreme Court of Nigeria)

Loan – Bank taking over assets and the liability of another bank – New bank seeking to recover loan – Proof of authority to recover loan – When necessary British and French Bank Limited v. El-Assad [1967 – 1975] 2 N.B.L.R. 28 (High Court of Lagos State)

Loan – Debenture – Upstamping of – Effect of – Validity for purposes of enforcement Mussini and others v. Balogun and Compagnie Financiere France Afrique [1967 – 1975] 2 N.B.L.R. 119 (High Court of Lagos State)

Loan – Interest therein – Right to interest – Whether bank not in operation can claim interest British and French Bank Limited v. El-Assad [1967 – 1975] 2 N.B.L.R. 28 (High Court of Lagos State)

Loan – Meant for development of a school – Effect of Education (Proprietorship and Management of Schools) Edict, No. 14, 1971 – Whether extinguishes

[1967 – 1975] 2 N.B.L.R.


xxvi


liability Ingyengierefaka v. Giadom [1967 – 1975] 2 N.B.L.R. 472 (High Court Rivers State)

Loan – Mortgage deed – Whether duly executed without inserting a date – Insertion of a date different from date of due execution – Whether renders document fraudulent of a party Anuku v. Standard Bank of Nigeria Limited [1967 – 1975] 2 N.B.L.R. 340 (High Court of Western State)

Loan – Overdraft – Interest on overdraft National Bank of Nigeria Limited and another v. Peters and another [1967 – 1975] 2 N.B.L.R. 348 (High Court of Western State)

Loan – Overdraft – Limitation of action – Recovery barred six years after last advance, not after demand for repayment National Bank of Nigeria Limited and another v. Peters and another [1967 – 1975] 2 N.B.L.R. 348 (High Court of Western State)

Loan – Payment by post-dated cheque – Cheque not presented within a reasonable time – Effect Ingyengierefaka v. Giadom [1967 – 1975] 2 N.B.L.R. 472 (High Court Rivers State)

Loans – Grant of by bank – Where involves illiterate persons – Duty on bank to comply with the Illiterates Protection Act – Consequence of non-compliance therein African Continental Bank Limited v. Kotun [1967 – 1975] 2 N.B.L.R. 242 (High Court of Lagos State)

Loans – Overdraft – Interest charged must be proved in court by a banker where the banker wants to recover the interest National Bank of Nigeria v. Hotchand and others [1967 – 1975] 2 N.B.L.R. 65 (High Court of Lagos State)

Loans – Overdraft – Interest on overdraft – Must be fair, reasonable and agreed to by the customer National

[1967 – 1975] 2 N.B.L.R.


xxvii


Bank of Nigeria v. Hotchand and others [1967 – 1975] 2 N.B.L.R. 65 (High Court of Lagos State)

Loans – Overdrafts – Bank’s right to charge interest on loans – Trade usage or custom of charging interest on loans and overdrafts – Whether applicable in the absence of specific agreement – Proof of trade custom – How established Enahoro and Co Limited and another v. Bank of West Africa Limited [1967 – 1975] 2 N.B.L.R. 317 (Supreme Court of Nigeria)

Memorandum of guarantee – Deposit of the deeds creating a charge on the premises comprised in the deed – Absence of covenant in document to pledge personal liability – Whether constitute a contract to create personal liability Edu v. National Bank of Nigeria Limited and another [1967 – 1975] 2 N.B.L.R. 364 (Supreme Court of Nigeria)

Money – Note issue – Legal tender Nwasike v. Onwuameze [1967 – 1975] 2 N.B.L.R. 303 (High Court of Lagos State)

Money mistakenly paid into ex-employees bank account by former employer – Money already paid by bank to ex-employee before ex-employer instructed bank not to effect payment – Whether bank liable to refund ex-employer the money mistakenly paid into the ex-employee bank account Standard Bank of Nigeria Limited v. Attorney–General of the Federation [1967 – 1975] 2 N.B.L.R. 335 (High Court of Lagos State)

Mortgage – Equitable mortgage by deposit of title deeds – Essence of – Conditions to be fulfilled to create Delalu v. Akappo and another [1967 – 1975] 2 N.B.L.R. 41 (High Court of Lagos State)

Mortgage – Notice of forfeiture – Validity of – Power of sale – Debtor appealing for more time to pay and for suspension of power of sale – When creditor to

[1967 – 1975] 2 N.B.L.R.


xxviii


suspend sale in respect thereof Ojikutu v. Agbonmagbe Bank Limited, Mbadike and another [1967 – 1975] 2 N.B.L.R. 187 (High Court of Lagos State)

Negligence – Customer opened and operated account in fictitious name – Bank receiving and clearing cheques fraudulently obtained – Bank’s duty of care to drawer of cheques African Continental Bank Limited v. Attorney–General of Northern Nigeria [1967 – 1975] 2 N.B.L.R. 34 (Supreme Court of Nigeria)

Negligence – Failure of bank to obtain references from new customer – Conversion of another’s cheque by new customer – Liability of bank to drawer United Nigeria Insurance Co Limited v. Muslim Bank (West Africa) Limited [1967 – 1975] 2 N.B.L.R. 391 (Supreme Court of Nigeria)

Negligent misstatement of bank manager – Liability of bank therefore – Scope and extent of liability Imarsel Chemical Company Limited v. National Bank of Nigeria Limited [1967 – 1975] 2 N.B.L.R. 542 (High Court East-Central State)

Overdraft – Approval for grant of by bank manager who has no authority to do so – Whether customer can recover damages for refusal by bank to advance amount so approved Construction Industries Company Limited v. Bank of the North Limited [1967 – 1975] 2 N.B.L.R. 95 (High Court of Lagos State)

Overdraft – Interest on overdraft is added to principal and becomes part of principal due National Bank of Nigeria Limited and another v. Peters and another [1967 – 1975] 2 N.B.L.R. 348 (High Court of Western State)

[1967 – 1975] 2 N.B.L.R.


xxix


Overdraft – Interest rate chargeable – Bank charging interest at rate higher than rate agreed despite protest by customer – Customer entitled to refund of amount overcharged Construction Industries Company Limited v. Bank of the North Limited [1967 – 1975] 2 N.B.L.R. 95 (High Court of Lagos State)

Overdraft – Limit a customer can draw when granted overdraft African Continental Bank Limited v. Adewuyi and others [1967 – 1975] 2 N.B.L.R. 57 (High Court of Western Nigeria)

Overdraft – Mortgage of customer’s property in respect thereof – Customer writing and appealing to bank not to exercise power of sale after same had arisen – Customer requesting for more time to pay – Whether bank bound to suspend sale Ojikutu v. Agbonmagbe Bank Limited, Mbadike and another [1967 – 1975] 2 N.B.L.R. 187 (High Court of Lagos State)

Overdraft – No formal application for overdraft – Cheque honoured without credit in account African Continental Bank Limited v. Eke [1967 – 1975] 2 N.B.L.R. 201 (High Court of Mid-Western State, Nigeria)

Overdraft – Repayment – No cause of action without demand for repayment or notice Johnson v. Sobaki [1967 – 1975] 2 N.B.L.R. 143 (High Court of Lagos State)

Overdraft – Ultra vires lending by bank manager – Effect – Dishonour of cheque justifiable by insufficient funds in an account – Mortgagee’s power of sale – Form of notice required – Mortgages – Balance of proceed of sale – Entitlement of surety thereto Visinoni Limited and others v. National Bank of Nigeria Limited [1967 – 1975] 2 N.B.L.R. 571 (High Court of North-Central State)

[1967 – 1975] 2 N.B.L.R.


xxx


Overdraft – What amount to – No application for overdraft – Application implied African Continental Bank Limited v. Eke [1967 – 1975] 2 N.B.L.R. 201 (High Court of Mid-Western State, Nigeria)

Overdraft – Whether bank has right to third parties securities deposited by customer Delalu v. Akappo and another [1967 – 1975] 2 N.B.L.R. 41 (High Court of Lagos State)

Overdraft – Written agreement for grant of – Whether subsequent written reply by bank to a written complaint by customer in which bank made suggestion can amount to fresh condition or an undertaking varying subsisting written agreement Construction Industries Company Limited v. Bank of the North Limited [1967 – 1975] 2 N.B.L.R. 95 (High Court of Lagos State)

Overdraft facility – Facility given to partnership – Managing director of partnership signatory to account – No evidence that he is a partner or held himself out as such – Whether can be held personally liable Balogun v. African Continental Bank Limited and others [1967 – 1975] 2 N.B.L.R. 375 (Supreme Court of Nigeria)

Partner solely borrowing money from the bank – When such transaction would bind the partnership firm – Scope of implied authority of a partner in the circumstances African Continental Bank Limited v. Babayemi and another [1967 – 1975] 2 N.B.L.R. 231 (High Court of Lagos State)

Pledge – Borrowing money in currency not legal tender as declared by law – Whether the pledgee could retain the property pledged Olekanma v. Njoku [1967 – 1975] 2 N.B.L.R. 533 (High Court of East-Central State)

[1967 – 1975] 2 N.B.L.R.


xxxi


Security for banker’s advances – Guarantee of – Where banker obtains judgment against customer – Judgmentnot executed before his death – Whether guarantor can be sued on the same debt African Continental Bank Limited v. Kembi and another [1967 – 1975] 2 N.B.L.R. 546 (High Court of Lagos State)

Solicitor of bank engaged to handle bank suit – Agreed amount payable as commission to be proved by a solicitor Adekunle v. African Continental Bank Limited [1967 – 1975] 2 N.B.L.R. 307 (Court of Appeal, Western State of Nigeria)

Statement of account – Admissibility of – Section 96 of Evidence Act Yassin v. Barclays Bank DCO [1967 – 1975] 2 N.B.L.R. 130 (Supreme Court of Nigeria)

Statute – Banking Obligation (Eastern State) Decree No. 56 of 1970 – Scope of Egwekweh v. Barclays Bank of Nigeria Limited [1967 – 1975] 2 N.B.L.R. 460 (High Court of East-Central State)

Suspense account – Meaning of – Money in suspense account – Whether attachable under a garnishee order Ayuba v. Ogunleye and others [1967 – 1975] 2 N.B.L.R. 297 (High Court of Lagos State)

Vicarious liabilities to third party in tort – Scope of authority Ogundana and another v. Akinwunmi [1967 – 1975] 2 N.B.L.R. 71 (High Court of Lagos State)

Where banker honours cheque in excess of customers credit balance – Implication of National Bank of Nigeria Limited v. Olatunji [1967 – 1975] 2 N.B.L.R. 563 (High Court of Lagos State)

Where drawer draws cheque for sum in excess of his credit balance – Implication of – Whether a request for loan/overdraft National Bank of Nigeria Limited v. Olatunji [1967 – 1975] 2 N.B.L.R. 563 (High Court of Lagos State)

[1967 – 1975] 2 N.B.L.R.


xxxii


Wrongful dishonour of cheque – Liability of bank thereof Oyewole v. Standard Bank of West Africa Limited [1967 – 1975] 2 N.B.L.R. 111 (High Court of Lagos State)

BILL OF EXCHANGE

Authorised signatories signing after authority to sign has been withdrawn – Forgery of Bill of Exchange – Right of holder in due course defeated by forgery Bank of America National Trust and Savings Association v. Nigerian Travel Agencies Limited [1967 – 1975] 2 N.B.L.R. 51 (Supreme Court of Nigeria)

Cheques – Action for conversion against banker – Negligence alleged against banker – Absence of – Onus of proof on banker – Test applicable – Section 2(2) Bills of Exchange Act, 1964 – Protection of – When available to banker – Principles governing Atrib v. United Bank For Africa Limited [1967 – 1975] 2 N.B.L.R. 76 (High Court of Lagos State)

Cheques – Collection of by bank – When banker protected in course of – Section 2(2) Bills of Exchange Act, 1964 – Defence thereunder – When available to banker Atrib v. United Bank For Africa Limited [1967 – 1975] 2 N.B.L.R. 76 (High Court of Lagos State)

How discharged – Failure of bank to produce bill discharged – Effect National Bank of Nigeria Limited v. Olatunji [1967 – 1975] 2 N.B.L.R. 563 (High Court of Lagos)

COMPANY LAW

Director of a bank – Entering into contract with the bank which he has personal interest – Whether breach of

[1967 – 1975] 2 N.B.L.R.


xxxiii

COMPANY LAW – continued

his fiduciary duty Nasr v. Berini Beirut-Riyad Nigeria Bank Limited [1967 – 1975] 2 N.B.L.R. 151 (Supreme Court of Nigeria)

Non-compliance with the provision of section 73(1) of the Companies Act – Need for court to draw inference Nasr v. Berini Beirut-Riyad Nigeria Bank Limited [1967 – 1975] 2 N.B.L.R. 151 (Supreme Court of Nigeria)

Pre-incorporation contract – Ratification of pre-incorporation contract by company – Effect on the third party Enahoro and Co Limited and another v. Bank of West Africa Limited [1967 – 1975] 2 N.B.L.R. 317 (Supreme Court of Nigeria)

CONTRACT Accord and satisfaction – Acceptance of a lesser sum by

solicitor handling bank suits in satisfaction of a larger sum without immediate protest – Effect of Adekunle v. African Continental Bank Limited [1967 – 1975] 2 N.B.L.R. 307 (Court of Appeal, Western State of Nigeria)

Breach of contract – Customer’s account shows enough credit to meet cheque presented – Banker exercising lien on customer’s money not reflected in the account – Whether refusal to honour cheque amounts to breach of contract Alabi v. Standard Bank of Nigeria Limited [1967 – 1975] 2 N.B.L.R. 551 (High Court of Kaduna State)

Illegal Contract – Frustration by supervening event – Contract unenforceable Nwasike v. Onwuameze [1967 – 1975] 2 N.B.L.R. 303 (High Court of Lagos State)

Two documents evidencing a contract – One drawn up in furtherance of another – Duty to construe the two

[1967 – 1975] 2 N.B.L.R.


xxxiv

CONTRACT – continued together National Bank of Nigeria Limited v. Okafor Lines Limited [1967 – 1975] 2 N.B.L.R. 14 (Supreme Court of Lagos State)

Written contract – Interpretation of – Admissibility of oral evidence when written contract inconclusive – Guiding principles African Continental Bank Limited v. Adewuyi and others [1967 – 1975] 2 N.B.L.R. 57 (High Court of Western Nigeria)

DAMAGES Assessment by court – Quantum of damages recoverable

for wrongful dishonour of cheque Oyewole v. Standard Bank of West Africa Limited [1967 – 1975] 2 N.B.L.R. 111 (High Court of Lagos State)

Assessment by the court – Customer is entitled to market price of converted goods as damages, subject only to the rules as to limitations based on remoteness of damage Bank of West Africa Limited v. Balogun [1967 – 1975] 2 N.B.L.R. 265 (Supreme Court of Nigeria)

Quantum of damages to be awarded by court in cases of wrongful dishonour of cheques Bank of America National Trust and Savings Association v. Alexander [1967 – 1975] 2 N.B.L.R. 225 (High Court of Lagos State)

EVIDENCE Bankers Book – Admissibility of – What must be

established Yassin v. Barclays Bank DCO [1967 – 1975] 2 N.B.L.R. 130 (Supreme Court of Nigeria)

Presumption as to date of document – Section 124 of Evidence Act, Cap 62 Laws of the Federation of Nigeria, 1958 Anuku v. Standard Bank of Nigeria Limited [1967 – 1975] 2 N.B.L.R. 340 (High Court of Western State)

[1967 – 1975] 2 N.B.L.R.


xxxv

EVIDENCE – continued

Res judicata – Dismissal of action for declaration that documents were void – Another action asking for the same declaration Standard Bank Nigeria Limited v. Ikomi [1967 – 1975] 2 N.B.L.R. 1 (Supreme Court of Nigeria)

EXCHANGE CONTROL

Exchange Control Act, 1962 – Exchange control permit – Absence of – Effect thereof on money deposited in the absence of such permit Ayuba v. Ogunleye and others [1967 – 1975] 2 N.B.L.R. 297 (High Court of Lagos State)

GUARANTEESHIP

Contract of guarantee – Enforcement of – Whether judgment creditor required to make demand on the personal representatives of deceased debtor before suing the guarantor African Continental Bank Limited v. Kembi and another [1967 – 1975] 2 N.B.L.R. 546 (High Court of Lagos State)

JUDGMENT AND ORDER

Award of interest by court – Interest during pendency of action until judgment – Interest after judgment until liquidation of judgment debt – Power of Nigerian court to award – Principles guiding Enahoro and Co Limited and another v. Bank of West Africa Limited [1967 – 1975] 2 N.B.L.R. 317 (Supreme Court of Nigeria)

JURISDICTION

Immovable property outside the jurisdiction of the court – Court has jurisdiction to grant declaratory relief in respect of mortgage relating to same executed by

[1967 – 1975] 2 N.B.L.R.


xxxvi

JURISDICTION – continued

parties resident within its jurisdiction Ashiru v. Barclays Bank of Nigeria Limited and others [1967 – 1975] 2 N.B.L.R. 584 (Court of Appeal Western State)

Jurisdiction of State High Court to entertain banking matters – Scope of – Section 9(1)(b)(iii) Federal Revenue Court decree, 1973 – Whether jurisdiction is in the Federal Revenue Court or State High Court – Section 7(1)(b)(iii) Federal Revenue Court decree, 1973 – Interpretation of Jammal Steel Structures Limited v. African Continental Bank Limited [1967 – 1975] 2 N.B.L.R. 476 (Supreme Court of Nigeria)

LIMITATION OF ACTION Action for recovery of debt – Plea that action is statute

barred – Acknowledgment of the debt – Whether negatives plea – Principles governing Thadant and another v. National Bank of Nigeria Limited and another [1967 – 1975] 2 N.B.L.R. 383 (Supreme Court of Nigeria)

MORTGAGE Mortgage deed – Right of a mortgagee to protect security

– Right of a mortgagee of a ship to take possession before debt due if security materially impaired National Bank of Nigeria Limited v. Okafor Lines Limited [1967 – 1975] 2 N.B.L.R. 14 (Supreme Court of Lagos State)

PARTNERSHIP Authority of partner to borrow money for and on behalf

of the partnership – Implied nature of – Scope of – Exceptions thereto African Continental Bank Limited v. Babayemi and another [1967 – 1975] 2 N.B.L.R. 231 (High Court of Lagos State)

[1967 – 1975] 2 N.B.L.R.


xxxvii

PRACTICE AND PROCEDURE

Estoppel by record – Whether mere fact that one of two alternative remedies is pursued in a court of justice precludes one from pursuing the other remedy Esso Standard (Nigeria) Limited v. Akanbi [1967 – 1975] 2 N.B.L.R. 248 (High Court of Western State of Nigeria)

Rules of court (Judgment Enforcement Rules) inconsistent with High Court Law – Effect of Ashiru v. Barclays Bank of Nigeria Limited and others [1967 – 1975] 2 N.B.L.R. 584 (Court of Appeal Western State)

STATUTE

Provisions of the Central Bank Act, 1958 and Central Bank (Currency Conversion) Decree No. 51 of 1957 – Swap of old currency for new – Conflicts therein – Which prevails Bank of the North Limited v. Central Bank of Nigeria [1967 – 1975] 2 N.B.L.R. 401 (Supreme Court of Nigeria)

Section 82 Bills of Exchange Act – Interpretation and purport thereof African Continental Bank Limited v. Attorney–General of Northern Nigeria [1967 – 1975] 2 N.B.L.R. 34 (Supreme Court of Nigeria)

TORT

Negligence – Remoteness of damage Alabi v. Standard Bank of Nigeria Limited [1967 – 1975] 2 N.B.L.R. 551 (High Court of Kaduna State)

WORDS AND PHRASES

“Holder” – Section 2 of Bills of Exchange Act (Cap 21) Esso Standard (Nigeria) Limited v. Akanbi [1967 – 1975] 2 N.B.L.R. 248 (High Court of Western State of Nigeria)

[1967 – 1975] 2 N.B.L.R.


xxxviii

WORDS AND PHRASES – continued “Payment in due course” – Meaning of National Bank of

Nigeria Limited v. Olatunji [1967 – 1975] 2 N.B.L.R. 563 (High Court of Lagos State)

“Trade” – Meaning and connotation thereof Bank of America National Trust and Savings Association v. Alexander [1967 – 1975] 2 N.B.L.R. 225 (High Court of Lagos State)

xxxix

INDEX OF CASES REFERRED TO

Nigerian

A

Abimbola George and another v. Dominion Flour Mills Ltd (1963) 1 All N.L.R. 72 [1967 – 1975] 2 N.B.L.R. 174 (Supreme Court of Nigeria)

Adereti v. Attorney–General of Western Nigeria (1965) 1 All N.L.R. 254; W.N.L.R 213 [1967 – 1975] 2 N.B.L.R. 206 (High Court Mid-West Nigeria)

Agbonmagbe Bank Ltd v. C.F.A.O. (1966) 1 All N.L.R. 206 [1967 – 1975] 2 N.B.L.R. 39 (Supreme Court of Nigeria)

Ajayi v. Fisher (1956) 1 F.S.C. 90 [1967 – 1975] 2 N.B.L.R. 140 (Supreme Court of Nigeria)

Ajike v. Cardoso 5 W.A.C.A. 134 [1967 – 1975] 2 N.B.L.R. 389 (Supreme Court of Nigeria)

Akwule v. R (1963) N.N.L.R. 105 [1967 – 1975] 2 N.B.L.R. 479 (Supreme Court of Nigeria)

Alashe v. Ilu (1964) 1 All N.L.R. 390 [1967 – 1975] 2 N.B.L.R. 138 (Supreme Court of Nigeria)

Asylum for Idiots v. Handysides and others (1906) 22 T.L.R 573 [1967 – 1975] 2 N.B.L.R. 137 (Supreme Court of Nigeria)

B

Barclay’s Bank DCO v. Adigun (1961) All N.L.R. 536; 1962 N.N.L.R. 40 [1967 – 1975] 2 N.B.L.R. 107 (Supreme Court of Nigeria)

Barclay’s Bank DCO v. Hassan (1961) All N.L.R. 836 [1967 – 1975] 2 N.B.L.R. 100 (High Court of Lagos State)

[1967 – 1975] 2 N.B.L.R.


xl

C

Coleshill and District Investment Co Ltd v. Minister of Local Government and another (1968) 1 W.L.R. 600 [1967 – 1975] 2 N.B.L.R. 490 (Supreme Court of Nigeria)

Craig v. Craig (1967) N.M.L.R. 52 [1967 – 1975] 2 N.B.L.R. 425 (Supreme Court of Nigeria)

D

Demuren v. Asuni (1967) N.M.L.R. 158; (1969) 1 All N.L.R. 94 [1967 – 1975] 2 N.B.L.R. 331 (Supreme Court of Nigeria)

E Ebiassah v. Ababio (1946) 12 W.A.C.A 106 [1967 – 1975] 2

N.B.L.R. 540 (High Court East Central State)

Ex Parte Young In Re Kitchin (1881) 17 Ch.D. 668 [1967 – 1975] 2 N.B.L.R. 135 (Supreme Court of Nigeria)

Ezeani v. Ejidike (1964) 1 All N.L.R. 402 [1967 – 1975] 2 N.B.L.R. 271 (Supreme Court of Nigeria)

G

George v. Dominion Flour Mills Ltd (1963) 1 All N.L.R. 71 [1967 – 1975] 2 N.B.L.R. 174 (Supreme Court of Nigeria); [1967 – 1975] 2 N.B.L.R 421 (Supreme Court of Nigeria)

George v. UBA Ltd (1972) 8/9 S.C. 264 [1967 – 1975] 2 N.B.L.R. [1967 – 1975] 2 N.B.L.R. 449 (High Court of Lagos State)

H

Halliday v. Alapatira 1 N.L.R. 7 [1967 – 1975] 2 N.B.L.R. 246 (High Court of Lagos State)

[1967 – 1975] 2 N.B.L.R.

Index of Cases referred to

xli

I

Independence Brewery Ltd (Golden Guinea Breweries Limited) v. Uttah S.C. 61/73 [1967 – 1975] 2 N.B.L.R. 539 (High Court East Central State)

In re Robinson’s Settlement, Gant v. Hobbs (1912) 1 Ch. 717, 718 [1967 – 1975] 2 N.B.L.R. 141 (Supreme Court of Nigeria)

Ijale v. AG Leventis and Co Ltd [1961] All N.L.R. 762 at page 769 [1967 – 1975] 2 N.B.L.R. 12

J

Jones v. Chapman (1847) 2 Exch. 803 [1967 – 1975] 2 N.B.L.R 537 (High Court of East Central State)

Johnson v. Odeku 3 A.L.R. Comm. 282 [1967 – 1975] 2 N.B.L.R. 147 (High Court of Lagos State)

K

Kadiri v. Olusoga (1956) 1 F.S.C. 59 [1967 – 1975] 2 N.B.L.R. 194 (High Court Lagos State)

L

Lows v. Telford (1876) 1 A.C. 414 [1967 – 1975] 2 N.B.L.R. 537 (High Court East Central State)

M

Merchants Bank Ltd v. Federal Minister of Finance (1961) All N.L.R. 598 [1967 – 1975] 2 N.B.L.R. 490 (Supreme Court of Nigeria)

Missri v. Bank of West Africa Ltd (1967) 1 A.L.R. Comm. 427 [1967 – 1975] 2 N.B.L.R. 329 (Supreme Court of Nigeria)

N

Nahman v. Odutola (1953) 14 W.A.C.A. 381 [1967 – 1975] 2 N.B.L.R. 69 (High Court of Lagos State)

[1967 – 1975] 2 N.B.L.R.


xlii

Nasr v. Bouari (1969) N.M.L.R. 38 [1967 – 1975] 2 N.B.L.R. 487 (Supreme Court of Nigeria)

National Bank of Nig. Ltd v. Awolesi (1964) (1) A.L.R. Comm. 279; (1964) 1 W.L.R. 1311 [1967 – 1975] 2 N.B.L.R. 362 (High Court Western State)

National Employer Mutual v. Martins (1969) 3 A.L.R. Comm. 331; (1969) N.M.L.R. 23 [1967 – 1975] 2 N.B.L.R. 332 (Supreme Court of Nigeria)

Nigerian Concrete Indus. Ltd v. Machado (1968) (1) A.L.R. Comm. 10, 1965 Lag. L.R. 111 [1967 – 1975] 2 N.B.L.R. 254 (High Court Western State of Nigeria)

Nigerian Ports Authority v. Panalpina world Transport (Nigeria) Ltd and others (1973) 5 S.C page 77 [1967 – 1975] 2 N.B.L.R. 596 (Court of Appeal Western State)

Nwankwo v. Okoronkwo (1972) 2 E.C.S.L.R. 96 [1967 – 1975] 2 N.B.L.R. 539 (High Court East Central State)

N.I.P.C v. Thompson Organisation Ltd and others S.C 192/67 [1967 – 1975] 2 N.B.L.R 421 (Supreme Court of Nigeria)

O Official Receiver v. Moore (1959) Lag. L.R. 46 [1967 –

1975] 2 N.B.L.R. 199 (High Court of Lagos State) Ogboda v. Adulugba (1971) 1 A11 N.M.L.R. 68 [1967 –

1975] 2 N.B.L.R 421 (Supreme Court of Nigeria)

Ogwo v. Ikpeazu S.C. 231/70 delivered on 29/10/71 [1967 – 1975] 2 N.B.L.R. 11 (Supreme Court of Nigeria)

Okpiri v. Jonah (1961) 1 All N.L.R. 102 [1967 – 1975] 2 N.B.L.R. 538 (High Court East Central State)

Onyekonwu and others v. Ekwubiri and others (1966) 1 All N.L.R. 32 [1967 – 1975] 2 N.B.L.R. 467 (High Court East Central State)

Otegbeye v. Little (1906) 1 N.L.R. 70 [1967 – 1975] 2 N.B.L.R. 246 (High Court of Lagos State)

[1967 – 1975] 2 N.B.L.R.


xliii

Owoniyi v. Omotosho (1961) 1 All N.L.R. 304 [1967 – 1975] 2 N.B.L.R. 138 (Supreme Court of Nigeria)

Oyewole v. Standard Bank of West Africa Ltd, (1968) (2) A.L.R. Comm. 111 (1968) 2 All N.L.R. 32 [1967 – 1975] 2 N.B.L.R. 433 (Supreme Court of Nigeria)

P

Pappoe v. Bank of British West Africa (1933) 1 W.A.C.A. 287 [1967 – 1975] 2 N.B.L.R. 67 (High Court of Lagos State); [1967 – 1975] 2 N.B.L.R. 329 (Supreme Court of Nigeria)

Paul v. Mrs George 4 F.S.C. 198 [1967 – 1975] 2 N.B.L.R. 142 (Supreme Court of Nigeria)

Price v. Richardson (1927) 1 K.B. 448 [1967 – 1975] 2 N.B.L.R. 141 (Supreme Court of Nigeria)

R

Rickett v. Bank of West Africa Ltd 5 F.S.C. at page 114-118 [1967 – 1975] 2 N.B.L.R. 442 (High Court of Lagos State)

Rickaby v. Lewis (1905) 22 T.L.R. 130 [1967 – 1975] 2 N.B.L.R. 140 (Supreme Court of Nigeria)

S

S.C.O.A. v. Okon (1959) 4 F.S.C 220 [1967 – 1975] 2 N.B.L.R. 246 (High Court of Lagos State)

Sabbah v. Bank of West Africa Ltd (1967) 1 A.L.R. Comm. 420 [1967 – 1975] 2 N.B.L.R. 107 (Supreme Court of Nigeria); [1967 – 1975] 2 N.B.L.R. 331 (Supreme Court of Nigeria)

Sanusi v. Daniel (1956) 1 F.S.C. 93 [1967 – 1975] 2 N.B.L.R. 196 (High Court of Lagos State)

Swiss-Nigerian Wooden Industries Ltd v. Bogo (1970) A.L.R.423 [1967 – 1975] 2 N.B.L.R. 558 (High Court Kaduna State)

[1967 – 1975] 2 N.B.L.R.


xliv

U

U.A.C. Ltd v. E. Edems and Ajayi (1958) N.R.N.L.R. 33 [1967 – 1975] 2 N.B.L.R. 246 (High Court of Lagos State)

U.A.C. Ltd v. Taylor (1934) 2 W.A.C.A. 67 [1967 – 1975] 2 N.B.L.R. 109 (Supreme Court of Nigeria)

Usen v. Bank of W.Africa Ltd (1965) A.L.R. Comm. 415 [1967 – 1975] 2 N.B.L.R. 205 (High Court Mid-Western State, Nigeria)

Foreign

A

AG for Ceylon v. AD Silva (1953) A.C. 462; (1953) 1 Lloyd’s Rep 563 [1967 – 1975] 2 N.B.L.R 577 (High Court of North-Central State)

Aithken v. Meckan [1895] A.C. 310 [1967 – 1975] 2 N.B.L.R. 467 (High Court East Central State)

Amarasigiah v. State of Rajastan (1965) A.L.I.R. Sup. Ch. 504 [1967 – 1975] 2 N.B.L.R. 499 (Supreme Court of Nigeria)

Anglo Italian Bank v. Davies (1878) 38 L.T. 197 [1967 – 1975] 2 N.B.L.R. 275 (High Court Lagos State)

Anisminic v. Foreign Compensation Commission (1969) 2 W.L.R. 163 [1967 – 1975] 2 N.B.L.R. 286 (High Court of Lagos State)

Att. General for Ceylon v. Silva (1953) A.C. 462 (1953) 1 Lloyd’s rep. 563 [1967 – 1975] 2 N.B.L.R. 577 (High Court North-Central State)

B

Baker v. Barclays Bank Ltd (1955) 2 All E.R. 571 [1967 – 1975] 2 N.B.L.R. 396 (Supreme Court of Nigeria)

Baker v. Cates 2 Q.B.D 171 [1967 – 1975] 2 N.B.L.R. 589 (Court of Appeal Western State)

[1967 – 1975] 2 N.B.L.R.


xlv

Bank of Australasia v. Breillat 13 E.R. 642 [1967 – 1975] 2 N.B.L.R. 239 (High Court of Lagos State)

Bank of England v. Vagliano Brothers [1891] A.C. (H.C.) 107 [1967 – 1975] 2 N.B.L.R. 507 (Supreme Court of Nigeria)

Barber v. Mackrell (1892), 68 L.T. 29; 41 W.R. 341 [1967 – 1975] 2 N.B.L.R. 550 (High Court of Lagos State)

Barclay’s Bank Ltd v. Cole [1966] 3 A11 E.R. 948 [1967 – 1975] 2 N.B.L.R. 346 (High Court of Western State of Nigeria)

Barclays v. Bank of New South Wales (1880) 5 A.C 37 [1967 – 1975] 2 N.B.L.R. 314 (Court of Appeal Western State of Nigeria)

Barnewell and Alderson; Pott v. Clegg (1847) 16 M and W 321 [1967 – 1975] 2 N.B.L.R. 569 (High Court of Lagos State)

Bavins Junr and Sims v. London and South Western Bank Ltd (1900) 1 Q.B. 270; (1899) 81 L.T. 655 [1967 – 1975] 2 N.B.L.R. 453 (High Court of Lagos State)

Beeming v. Dove (1833) 5 C.A.P. 427 [1967 – 1975] 2 N.B.L.R. 314 (Court of Appeal Western State of Nigeria)

Belford Union Guardians v. Pattison (1856), II Exch. 623, 156 E.R. 980 [1967 – 1975] 2 N.B.L.R. 550 (High Court of Lagos State)

Bellamy v. Marjoribanks (1852) 7 Ex 389; 155 E.R. 999 [1967 – 1975] 2 N.B.L.R. 185 (High Court of Lagos State)

Berry v. Berry (1929) 2 K.B. 316; [1929] All E.R. Rep 281 [1967 – 1975] 2 N.B.L.R. 100 (High Court of Lagos State)

Bidder v. Bridge (1887) 37 Ch. D. [1967 – 1975] 2 N.B.L.R. 315 (Court of Appeal Western State of Nigeria)

[1967 – 1975] 2 N.B.L.R.


xlvi

Birmingham and Midlands Omnibus Co. Ltd v. Worcestershire Country Council (1967) 1 W.L.R. [1967 – 1975] 2 N.B.L.R. 286 (High Court of Lagos State)

Bradford Old Bank Ltd v. Sutchffe (1918) 2 K.B. 833 [1967 – 1975] 2 N.B.L.R 424 (Supreme Court of Nigeria)

Broderick, Ex P., In re Beetham (1887) 18 Q.B.D. 766; 56 L.J. Q.B. 635 [1967 – 1975] 2 N.B.L.R. 48 (High Court of Lagos State)

Brown, Shipley and Co. Ltd v. Alica Hosiery Let (1966) Lloyd’s 869 [1967 – 1975] 2 N.B.L.R. 275 (High Court of Lagos State)

Brown v. Dean (1833) 5 B. Ad. Page 842 [1967 – 1975] 2 N.B.L.R. 440 (High Court of Lagos State)

Brown v. NCB [1962] A.C. 574 [1967 – 1975] 2 N.B.L.R. 494 (Supreme Court of Nigeria)

C

Carpenters Co. v. British Mutual Banking Co. Ltd (1938) 1 K.B. 511; [1937] 3 All E.R. 811 [1967 – 1975] 2 N.B.L.R. 458 (High Court of Lagos State)

Carter v. White (1883), 25 Ch. D 666; (1881 – 1885) All E.R. Rep 291 [1967 – 1975] 2 N.B.L.R. 550 (High Court of Lagos State)

Chapman v. Smethurst (1909) 1 K.B. 927 [1967 – 1975] 2 N.B.L.R. 381 (Supreme Court of Nigeria)

Chief Sule Jimbo and others v. Aminu Asani and others S.C. 373/67 [1967 – 1975] 2 N.B.L.R. 421 (Supreme Court of Nigeria)

Chettiar v. Chettiar [1962] 1 All E.R. 494 [1967 – 1975] 2 N.B.L.R. 153 (Supreme Court of Nigeria)

Clay Hill Brick and Tile Co. Ltd v. Rawlings (1938) 4 All E.R. 100; (1938) 159 L.T. 482 [1967 – 1975] 2 N.B.L.R. 224 (High Court of Lagos State)

[1967 – 1975] 2 N.B.L.R.


xlvii

Columbian Fireproofing Co Ltd, In re (1910) 102 L.T. 835 [1967 – 1975] 2 N.B.L.R. 128 (High Court of Lagos State)

Commissioners of Taxation v. English, Scottish and Australian Bank Ltd (1920) A.C. 683; (1920) 36 T.L.R. 305; (1920) 123 L.T. 34 [1967 – 1975] 2 N.B.L.R. 93 (High Court of Lagos State); [1967 – 1975] 2 N.B.L.R. 397 (Supreme Court of Nigeria); [1967 – 1975] 2 N.B.L.R. 455 (High Court of Lagos State)

Constantine v. Imperial Hotels Ltd (1944) K.B. 693; (1944) 2 A.E.R. 171 [1967 – 1975] 2 N.B.L.R. 118 (High Court of Lagos State)

County of Gloucester Bank v. Rudry Merthyr Steam and House Coal Colliery Co (1895) 1. Ch. 629; (1895) 72 L.T. 375 [1967 – 1975] 2 N.B.L.R. 224 (High Court of Lagos State)

Craven v. Smith (1969) L.R. Exch. 146 [1967 – 1975] 2 N.B.L.R. 606 (Court of Appeal Western State)

Cross Kill v. Bower (1863) 32 Bear. 86; 55 E.R. 34 [1967 – 1975] 2 N.B.L.R. 329 (Supreme Court of Nigeria)

Cumber v. Wane (1731) 1 Stra. 426 [1967 – 1975] 2 N.B.L.R. 315 (Court of Appeal Western State of Nigeria)

Cummings v. London Bullion Co. Ltd (1952) 1 K.B. 327; (1952) 1 All E.R. 383 [1967 – 1975] 2 N.B.L.R. 302 (High Court of Lagos State)

Cuthbert v. Roberts, Lubbock and Co (1909) 2 Ch.D. 226; 8 L.J. Ch. 529 [1967 – 1975] 2 N.B.L.R. 45 (High Court of Lagos State); [1967 – 1975] 2 N.B.L.R. 206 (High Court Mid-Western State of Nigeria); [1967 – 1975] 2 N.B.L.R. 569 (High Court of Lagos State)

Constantine Line Ltd v. Imperial Smelting Corporation [1942] A.C. 154 [1967 – 1975] 2 N.B.L.R. 440 (High Court of Lagos State)

[1967 – 1975] 2 N.B.L.R.


xlviii

D

Davidson v. Barclays Bank Ltd [1940] 1 All E.R. 316 (1940) at 164 [1967 – 1975] 2 N.B.L.R. 433 (High Court Mid-Western State)

Derry v. Peek (1889) 14 App. Case 337 [1967 – 1975] 2 N.B.L.R. 346 (High Court of Western State)

Deschamps v. Miller (1908) 1 Ch.D. 856 [1967 – 1975] 2 N.B.L.R. 596 (Court of Appeal Western State)

Dixon v. Muckleston (1872) L.R. 8 Ch. 155 [1967 – 1975] 2 N.B.L.R. 49 (High Court of Lagos State)

Doe v. Frankis 11 A. and E. page 792-795 [1967 – 1975] 2 N.B.L.R. 441 (High Court of Lagos State)

Drake v. Mitchell (1803) 3, East 251, 102 E.R. 5 E. 4 [1967 – 1975] 2 N.B.L.R. 255 (High Court Western State of Nigeria)

E

EB Savory and Co v. Lloyds Bank Ltd (1932) 2 K.B. 122 [1967 – 1975] 2 N.B.L.R. 459 (High Court of Lagos State)

Eberle’s Hotel and Restaurant Co. Ltd v. Jones and Bros. (1887) 18 Q.B.D. 459 [1967 – 1975] 2 N.B.L.R. 270 (Supreme Court of Nigeria)

Edgeware Trust Ltd v. Lawrence (1961) 1 W.L.R.P. page 1354-1359 [1967 – 1975] 2 N.B.L.R. 442 (High Court of Lagos State)

Erinle v. Adelaja (1969) 1 N.M.L.R. 132 [1967 – 1975] 2 N.B.L.R. 421 (Supreme Court of Nigeria)

F

Fairlie v. Denton 3 C. and P. at Page 103 [1967 – 1975] 2 N.B.L.R. 441 (High Court of Lagos State)

[1967 – 1975] 2 N.B.L.R.


xlix

Fibrosa Spolka Akgna v. Fairbairn Lawson Combe, Barbour Ltd (1943) A.C. 32 [1967 – 1975] 2 N.B.L.R. 173 (Supreme Court of Nigeria)

Flach v. London and SW Bank Ltd (1915) 1 T.L.R. 334 [1967 – 1975] 2 N.B.L.R. 561 (High Court of Kaduna State)

Flanagan v. Great Western Railway Co (1869) L.R. 7 Eq. Ca. 116 [1967 – 1975] 2 N.B.L.R. 168 (Supreme Court of Nigeria)

Freeman v. Coker (1848) 2 Exh. 654; 154 E.R. 652 [1967 – 1975] 2 N.B.L.R. 428 (High Court Mid-Western State)

Furze v. Sharwood (1841) 2 Q.B. at 410; 114 E.R. [1967 – 1975] 2 N.B.L.R. 205 (High Court Mid-Western State, Nigeria)

G

Gallagher v. Shilcock (1949) 2 K.B. 765 [1967 – 1975] 2 N.B.L.R. 271 (Supreme Court of Nigeria)

Gartside v. LRC [1968] A.C 553 [1967 – 1975] 2 N.B.L.R. 494 (Supreme Court of Nigeria)

Gibbons v. Westminster Bank Ltd (1939) 3 All E.R. 599; (1939) 2 KB. 882 [1967 – 1975] 2 N.B.L.R. 115 (High Court of Lagos State); [1967 – 1975] 2 N.B.L.R. 229 (High Court of Lagos State); [1967 – 1975] 2 N.B.L.R. 559 (High Court Kaduna State)

Gibson v. Minet (1824) 2 Bing 7 130 E.R. 206 [1967 – 1975] 2 N.B.L.R. 212 (High Court of Lagos State)

Gill v. Donald Humberstone and Co. Ltd (1963) 1 W.L.R. 929 [1967 – 1975] 2 N.B.L.R. 494 (Supreme Court of Nigeria)

Gowers v. Lloyds and N.P.F. Bank 1938 1 All E.R 766 [1967 – 1975] 2 N.B.L.R. 338 (High Court of Lagos State)

Grocott v. Lovart and another (1916) W.N. 317 [1967 – 1975] 2 N.B.L.R. 528 (Supreme Court of Nigeria)

[1967 – 1975] 2 N.B.L.R.


l

H

Hadley v. Baxendale (1854) 9 Exchange. 341 [1967 – 1975] 2 N.B.L.R. 470 (High Court East Central State); [1967 – 1975] 2 N.B.L.R. 558 (High Court Kaduna State)

Hadley Bryne and Co. Ltd v. Heller and Partners Ltd (1940) A.C. 465; [1964] A.C. 465 [1967 – 1975] 2 N.B.L.R. 39 (Supreme Court of Nigeria); [1967 – 1975] 2 N.B.L.R. 545 (High Court East Central State)

Hampstead Guardians v. Barclays Bank Ltd (1923) 39 T.L.R 229; 67 Sol Jo 440 [1967 – 1975] 2 N.B.L.R. 452 (High Court of Lagos State); [1967 – 1975] 2 N.B.L.R. 518 (High Court of Lagos State)

Henderson v. Henderson 67 E.R. 313 at 319 [1967 – 1975] 2 N.B.L.R. 11 (Supreme Court of Nigeria)

Henry Pound Son and Hutchins, In re (1889) 42 Ch.D. 402; 62 L.T. 137 [1967 – 1975] 2 N.B.L.R. 129 (High Court of Lagos State)

Higgins v. Beauchamp (1914) 3 K.B. 1192 [1967 – 1975] 2 N.B.L.R. 239 (High Court of Lagos State)

Holme v. Brunskill (1878), 3 Q.B. 495; 38 L.T. [1967 – 1975] 2 N.B.L.R. 361 (High Court West State)

House Property Co. of London Ltd v. London County and Westminster Bank Ltd (1915) 84 L.J.K.B. 1846; 113 L.T. 817 [1967 – 1975] 2 N.B.L.R. 92 (High Court of Lagos State)

Hoystead and others v. Commissioner of Taxation 1926 A.C. 155 at 170 [1967 – 1975] 2 N.B.L.R. 11 (Supreme Court of Nigeria)

Huntley v. Thornton and others. (1957) 1 All E.R. 234 [1967 – 1975] 2 N.B.L.R. 294 (High Court of Lagos State)

[1967 – 1975] 2 N.B.L.R.


li

I In re Liverpool Household Stores Association (1890) 62

L.T. 873 [1967 – 1975] 2 N.B.L.R. 168 (Supreme Court of Nigeria)

In re Young and Harston’s Contract (1885) 31 Ch. D. 168; 53 L.T. 837 [1967 – 1975] 2 N.B.L.R. 550 (High Court of Lagos State)

In re County Life Assurance Co. (1870) 5 Ch. App. 288; 22 L.T. 537 [1967 – 1975] 2 N.B.L.R. 222 (High Court of Lagos State)

In re Wellstead (1949) Ch. 296 [1967 – 1975] 2 N.B.L.R. 499 (Supreme Court of Nigeria)

In the Goods of Groos (1904) 269 [1967 – 1975] 2 N.B.L.R. 504 (Supreme Court of Nigeria)

Inland Revenue Commissioners v. Hinchy (1960) A.C. (H.L.) 748 [1967 – 1975] 2 N.B.L.R. 487 (Supreme Court of Nigeria)

Inland Revenue Commissioners v. Frere [1965] A.C. 402 [1967 – 1975] 2 N.B.L.R. 489 (Supreme Court of Nigeria)

J Jacker v. International Cable Co. Ltd (1888) 5 T.L.R. 13

[1967 – 1975] 2 N.B.L.R. 139 (Supreme Court of Nigeria)

James Lamont and Co. Ltd v. Hyland Ltd (1950) 1 K.B. 555 [1967 – 1975] 2 N.B.L.R. 275 (High Court of Lagos State)

Jayson v. Midland Bank Ltd (1967) 2 Lloyd’s Rep 563; (1967) 111 Sol Jo 719 [1967 – 1975] 2 N.B.L.R. 116 (High Court of Lagos State)

Joachimson v. Swiss Bank [1921] 3 K.B. 110; (1921) All E.R. 92 [1967 – 1975] 2 N.B.L.R. 199 (High Court of Lagos State); [1967 – 1975] 2 N.B.L.R. 259 (High Court of Lagos State); [1967 – 1975] 2 N.B.L.R. 569

[1967 – 1975] 2 N.B.L.R.


lii

(High Court of Lagos State); [1967 – 1975] 2 N.B.L.R. 433 (High Court Mid-Western State); [1967 – 1975] 2 N.B.L.R. 569 (High Court of Lagos State)

Joshua Stubbs, Ltd, Barney, In Re v. Joshua Stubbs Ltd (1819) 1 Ch.D. 475; (1819) 64 L.T. 306 [1967 – 1975] 2 N.B.L.R. 129 (High Court of Lagos State)

K

Kelly v. Williams (1822) 5 Ex. Ald. 815 [1967 – 1975] 2 N.B.L.R. 569 (High Court of Lagos State)

Kelner v. Baxter (1866) 1.R. 2 C.P. at 186; 15 L.T. at 214 [1967 – 1975] 2 N.B.L.R. 325 (Supreme Court of Nigeria)

Khan v. God Almighty Through Asaf Ali Khan and others (1962) A.I.R. 364 [1967 – 1975] 2 N.B.L.R. 487 (Supreme Court of Nigeria)

King v. Alston (1848) 12 Q.B. 971; 116 E.R. 1134 [1967 – 1975] 2 N.B.L.R. 212 (High Court of Lagos State)

Konfas v. C. Czarnikow Ltd (1969) A.C. 350 [1967 – 1975] 2 N.B.L.R. 559 (High Court Kaduna State)

Kruse v. Johnson (1898) 2 Q.B. 91 [1967 – 1975] 2 N.B.L.R. 614 (Court of Appeal Western State)

L

Ladbroke and Co v. Todd (1914) 111 L.T. 43; 30 T.L.R. 433 [1967 – 1975] 2 N.B.L.R. 92 (High Court of Lagos); [1967 – 1975] 2 N.B.L.R. 399 (Supreme Court of Nigeria); [1967 – 1975] 2 N.B.L.R. 451 (High Court of Lagos State)

Laurie v. Scholefield (1869) L.R. 4 C.P. 622; 38 L.J.C.P. 890 [1967 – 1975] 2 N.B.L.R. 206 (High Court Mid-Western State, Nigeria)

Letang v. Cooper (1965) 1 Q.B. 232 [1967 – 1975] 2 N.B.L.R. 490 (Supreme Court of Nigeria)

[1967 – 1975] 2 N.B.L.R.


liii

Levy v. Pyne 174 E.R. 586 [1967 – 1975] 2 N.B.L.R. 239 (High Court of Lagos State)

Liversidge v. Anderson and another (1942) A.C. 206 [1967 – 1975] 2 N.B.L.R. 623 (High Court of Lagos State)

Lloyd v. Grace Smith and Co. [1912] A.C. 716 [1967 – 1975] 2 N.B.L.R. 544 (High Court East Central State)

Lloyds Bank Ltd v. Chartered Bank of India, Australia and China (1929) 1 K.B. 40; [1928] All E.R. 285 [1967 – 1975] 2 N.B.L.R. 93 (High Court of Lagos State); [1967 – 1975] 2 N.B.L.R. 454 (High Court of Lagos State)

Lloyds Bank Ltd v. E.B. Savory and Co. (1933) A.C. 201 [1967 – 1975] 2 N.B.L.R. 91 (High Court of Lagos State); [1967 – 1975] 2 N.B.L.R. 396 (Supreme Court of Nigeria); [1967 – 1975] 2 N.B.L.R. 452 (High Court of Lagos State)

London Chatham and Dover Railway Co. v. South E. Railway Co. (1893) A.C. 429 [1967 – 1975] 2 N.B.L.R. 330 (Supreme Court of Nigeria)

Lumley v. Gye 1853 2 E. and B. 216 [1967 – 1975] 2 N.B.L.R. 292 (High Court of Lagos State)

M

Mahoney v. East Holyford Mining Co. (1875) L.R. 7 H.L. 869; 33 L.T. 383 [1967 – 1975] 2 N.B.L.R. 224 (High Court of Lagos State)

Marfani and Co. Ltd v. Midland Bank Ltd (1968) 1 W.L.R. 956; (1968) 2All E.R. 573 [1967 – 1975] 2 N.B.L.R. 396 (Supreme Court of Nigeria); [1967 – 1975] 2 N.B.L.R. 457 (High Court of Lagos State)

Marquess of Bute v. Barclays Bank Ltd, (1955)1 Q.B. 202; (1954) 3 All E.R. 365 [1967 – 1975] 2 N.B.L.R. 457 (High Court of Lagos State)

[1967 – 1975] 2 N.B.L.R.


liv

Marzetti v. Williams (1830) 1 B. and Ad. 415; 109 E.R. 842 [1967 – 1975] 2 N.B.L.R. 116 (High Court of Lagos State)

Matthew v. Osborne 13 C.B. 919 E.R. 138/1965 [1967 – 1975] 2 N.B.L.R. 557 (High Court Kaduna State)

Mckenzie v. British Linen Co. [1881] 6 A.C. 82; 44 L.T. 431 [1967 – 1975] 2 N.B.L.R. 432 (High Court Mid-Western State)

Mechanisations (Eaglescliffe) Ltd, In re (1966) Ch.D. 21; [1964] 3 All E.R. 840 [1967 – 1975] 2 N.B.L.R. 123 (High Court of Lagos State)

Metropolitan Asylum District v. Hill [1881] 6 A.C. 193 [1967 – 1975] 2 N.B.L.R. 409 (Supreme Court of Nigeria)

Midland Bank Ltd v. Reckitt (1933) A.C. 1; (1932) 148 L.T. 374 [1967 – 1975] 2 N.B.L.R. 453 (High Court of Lagos State)

Misa v. Currie and others. (1876) 1 A.C. 554 [1967 – 1975] 2 N.B.L.R. 556 (High Court Kaduna State)

Morison v. London Country and Westminster Bank Ltd (1914) 3 K.B. 356 [1967 – 1975] 2 N.B.L.R. 56 (Supreme Court of Nigeria)

Motor Traders Guarantee Corporation Ltd v. Midland Bank (1937) 4 All E.R. 90 [1967 – 1975] 2 N.B.L.R. 396 (Supreme Court of Nigeria)

N

National Provincial and Union Bank of England v. Charnley (1924) 1 K.B. 431; (1923) 130 L.T. 465 [1967 – 1975] 2 N.B.L.R. 125 (High Court of Lagos State)

North-Western Transportation Co. v. Beatty (1887) 12 A.C. 589 [1967 – 1975] 2 N.B.L.R. 167 (Supreme Court of Nigeria)

[1967 – 1975] 2 N.B.L.R.


lv

O

Otto Elec. Mfg. Co, In re (1905) Ltd (1906) 2 Ch.D. 390; (1906), 95 L.T. 141 [1967 – 1975] 2 N.B.L.R. 127 (High Court of Lagos State)

Oscar Harris, Son Co v. Vallaman Co. (1940) 1 All E.R. 185; (1940). 162 L.T. 212 [1967 – 1975] 2 N.B.L.R. 275 (High Court of Lagos State)

Oshey v. Sir Baptist Hicks Cro. Jac. 263 [1967 – 1975] 2 N.B.L.R. 345 (High Court of Western State)

P

P.C. Cutts v. Taltal Rail Co. Ltd (1918) Sol Jo 423 [1967 – 1975] 2 N.B.L.R. 314 (Court of Appeal Western State Nigeria)

Palmer v. Jarmain (1837) 2 M. and W. 282; 282 150 E.R. [1967 – 1975] 2 N.B.L.R. 212 (High Court of Lagos Sate)

Parr’s Banking Co. Ltd v. Yates (1898) 2 Q.B. 460, (1898) 79 L.T. 321 [1967 – 1975] 2 N.B.L.R. 354 (High Court Western State)

Phillips v. Boardman 1965 2 W.L.R. 839 [1967 – 1975] 2 N.B.L.R. 171 (Supreme Court of Nigeria)

Plunkett and others v. Barclays Bank Limited 1936 (2) KB 107 [1967 – 1975] 2 N.B.L.R. 562 (High Court Kaduna State)

Powell v. Mary (1946) K.B.D. 330 [1967 – 1975] 2 N.B.L.R. 594 (Court of Appeal Western State)

Prescott Dimsdale, Cave, Tugwell and Co. Ltd v. Bank of England (1894) 1 Q.B. at 351-354 [1967 – 1975] 2 N.B.L.R 424 (Supreme Court of Nigeria)

[1967 – 1975] 2 N.B.L.R.


lvi

Pyke v. Hiberian Bank Ltd (1950) 1.R. 193 (Volume 32 English and Empire Digest page 88) [1967 – 1975] 2 N.B.L.R. 562 (High Court Kaduna State)

Q

Quin v. Leathem (1901) A.C. 495 [1967 – 1975] 2 N.B.L.R. 292 (High Court of Lagos State)

R

R v. City of London Court Judge (1892) 1 Q.B. 273 [1967 – 1975] 2 N.B.L.R. 492 (Supreme Court of Nigeria)

R v. Halliday (1917) A.C. 260 [1967 – 1975] 2 N.B.L.R. 624 (High Court of Lagos State)

R v. Mitchell (1847) 1 Den 282 [1967 – 1975] 2 N.B.L.R. 56 (Supreme Court of Nigeria)

R v. Prince (1868) L.R. 1 C.C.R. 150, 38 L.J.M.C. 8 [1967 – 1975] 2 N.B.L.R. 206 (High Court Mid-Western State, Nigeria)

Re Conley (1938) 2 A.E.R. 127 [1967 – 1975] 2 N.B.L.R. 369 (Supreme Court of Nigeria)

Re Jones Ltd v. Waring and Gillow Ltd [1926] A.C. 1070 [1967 – 1975] 2 N.B.L.R. 396 (Supreme Court of Nigeria)

Re Slater, ex parte Slater, 76 L.T.R. 529 [1967 – 1975] 2 N.B.L.R. 345 (High Court of West State Nigeria)

Re Wrexham, Molds (1889) 1 Ch. 205 [1967 – 1975] 2 N.B.L.R. 239 (High Court of Lagos State)

Robinson v. Harman (1848) 1 Exch. 850 [1967 – 1975] 2 N.B.L.R. 470 (High Court East Central State)

Roxburghs v. Cox (1881) 17 ch. D. 520 [1967 – 1975] 2 N.B.L.R. 556 (High Court Kaduna State)

[1967 – 1975] 2 N.B.L.R.


lvii

Royal British Bank v. Turquand (1856), 6 E. and B. 327; 119 E.R. 886 [1967 – 1975] 2 N.B.L.R. 223 (High Court of Lagos State)

Russo–Chinese Bank v. Li Yau Sam (1910) A.C. 174; (1909) 101 L.J. 639 [1967 – 1975] 2 N.B.L.R. 101 (High Court of Lagos State)

S

S.S. Ardennes (Cargo Owners) v. S.S. Ardennes (Owners) (1951) 1 K.B. 55 [1967 – 1975] 2 N.B.L.R. 63 (High Court of Western Nigeria)

Salomon v. Salomon [1897] A.C. 22 [1967 – 1975] 2 N.B.L.R. 487 (Supreme Court of Nigeria)

Savory v. Lloyds Bank Ltd (1932) 2 K.B. 122 [1967 – 1975] 2 N.B.L.R. 39 (Supreme Court of Nigeria)

Sewell v. National Tel. Co. Ltd (1907) 1 K.B. 557; (1904 – 1907) A.E.R. Rep. 457 [1967 – 1975] 2 N.B.L.R. 73 (High Court of Lagos State)

Sinclair v. Brougham (1914) A.C 398 [1967 – 1975] 2 N.B.L.R. 527 (Supreme Court of Nigeria)

Smith v. East Elloe Rural District Council and others (1956) A.C. 736 [1967 – 1975] 2 N.B.L.R. 286 (High Court of Lagos State)

Smith v. Selwyn (1914) 3 KB 98; (1914 – 1915) All E.R. Rep 229 [1967 – 1975] 2 N.B.L.R. 108 (Supreme Court of Nigeria)

Smith v. Woods (1929) 1 Ch. 14 [1967 – 1975] 2 N.B.L.R. 369 (Supreme Court of Nigeria)

Spencer v. Hemmerde [1922] 2 A.C. 507 [1967 – 1975] 2 N.B.L.R. 388 (Supreme Court of Nigeria)

Stamford Spalding and Boston Banking Co v. Smith (1892) 1 Q.B. 175 [1967 – 1975] 2 N.B.L.R. 388 (Supreme Court of Nigeria)

[1967 – 1975] 2 N.B.L.R.


lviii

Steele v. Mart 107 E.R. 1060 [1967 – 1975] 2 N.B.L.R. 345 (High Court of Western State)

Stirling v. Barclays Bank Ltd (1930) Times July 18 [1967 – 1975] 2 N.B.L.R. 562 (High Court Kaduna State)

Strickland v. Hayes (1896) 1 Q.B.D. 290 [1967 – 1975] 2 N.B.L.R. 592 (Court of Appeal Western State)

Strong v. Carlyle Press (1893) 1 Ch. 268; 68 L.T. 396 [1967 – 1975] 2 N.B.L.R. 129 (High Court of Lagos State)

Sutters v. Briggs [1960] 1 A.C. 1 [1967 – 1975] 2 N.B.L.R. 487 (Supreme Court of Nigeria)

Symonds v. Jenkins 34 L.T. 277 [1967 – 1975] 2 N.B.L.R. 524 (Supreme Court of Nigeria)

T Tanner v. Smart (1827) 6 B. and C. 103 [1967 – 1975] 2

N.B.L.R 389 (Supreme Court of Nigeria) The Insurance Commissioner v. Joyce (1948) 77 C.L.R. 39

[1967 – 1975] 2 N.B.L.R. 176 (Supreme Court of Nigeria)

The Lord Strathcona (1925) P. 143; (1925) 133 L.T. 765 [1967 – 1975] 2 N.B.L.R. 26 (High Court of Lagos State)

The Manor (1907) P. 339; (1907) 96 L.T. 871 [1967 – 1975] 2 N.B.L.R. 26 (High Court of Lagos State)

The Medina [1920] A.C. 113 [1967 – 1975] 2 N.B.L.R. 471 (High Court East Central State)

The Zamora (1916) 2 A.C. 77 [1967 – 1975] 2 N.B.L.R. 624 (High Court of Lagos State)

Thomas v. Sutters (1900) 1 C.H.D. 10 [1967 – 1975] 2 N.B.L.R. 592 (Court of Appeal Western State)

Torquay Hotel Co. Ltd v. Cousins (1969) 2 W.L.R. 289 [1967 – 1975] 2 N.B.L.R. 293 (High Court of Lagos State)

Transvaal Lands and Co. v. New Belgium Co. (1914) 2 Ch. 488 [1967 – 1975] 2 N.B.L.R. 167 (Supreme Court of Nigeria)

[1967 – 1975] 2 N.B.L.R.


lix

V Victoria Laundry v. Newman Industries (1949) 1 All E.R.

997 [1967 – 1975] 2 N.B.L.R. 470 (High Court East Central State)

W Walker Property Investment (Brighton) Ltd v.

Walker (1947) 177 L.T. 204 [1967 – 1975] 2 N.B.L.R. 62 (High Court of Western Nigeria)

Wallis v. Smith (1882) 21 Ch. D. 243 [1967 – 1975] 2 N.B.L.R. 470 (High Court East Central State)

Wan v. Walters 102 E.R. 972 [1967 – 1975] 2 N.B.L.R. 13 (Supreme Court of Nigeria)

Ward v. National Bank of New Zealand Ltd (1883), 8 App. Case 755; 49 L.T. 315 [1967 – 1975] 2 N.B.L.R. 360 (High Court West State)

Waterhouse’s Policy, In Re (1937) Ch. 415; [1937] 2 All E.R. 91 [1967 – 1975] 2 N.B.L.R. 123 (High Court of Lagos State)

Wegg Prosser v. Evans (1895) 1 Q.B., (1895) 72 L.T. 8 [1967 – 1975] 2 N.B.L.R. 255 (High Court Western State of Nigeria)

White v. Riley 1921 1 Ch. 1 [1967 – 1975] 2 N.B.L.R. 294 (High Court of State)

Wilkinson v. Byers 1A. 8E. 106 [1967 – 1975] 2 N.B.L.R. 315 (Court of Appeal Western State of Nigeria)

Willmot v. Rose (1854) 23 L.J. Q.B 281 [1967 – 1975] 2 N.B.L.R. 504 (Supreme Court of Nigeria)

Wookey v. Pole and others 106 English Reports 839 [1967 – 1975] 2 N.B.L.R. 527 (Supreme Court of Nigeria)

Y Yates v. Dalton (1858) 28 L. Ex 69 [1967 – 1975] 2

N.B.L.R. 240 (High Court of Lagos State)

lxi

INDEX OF STATUTES REFERRED TO

Nigerian

Bankers Book Evidence Act, 1879 s 3 ....................................... [1967 – 1975] 2 N.B.L.R. 441 s 4 ....................................... [1967 – 1975] 2 N.B.L.R. 441

Banking Act s 7(1)(c) .............................. [1967 – 1975] 2 N.B.L.R. 162 s 7(1)(g) .............................. [1967 – 1975] 2 N.B.L.R. 162

Bills of Exchange Act, 1958 (Cap 21) s 2 ....................................... [1967 – 1975] 2 N.B.L.R. 256 [1967 – 1975] 2 N.B.L.R. 568 s 3 ....................................... [1967 – 1975] 2 N.B.L.R. 276 s 24 ..................................... [1967 – 1975] 2 N.B.L.R. 54 s 38(a)................................. [1967 – 1975] 2 N.B.L.R. 256 s 47(2)................................. [1967 – 1975] 2 N.B.L.R. 254 s 59(1)................................. [1967 – 1975] 2 N.B.L.R. 568 s 60(1)................................. [1967 – 1975] 2 N.B.L.R. 518 [1967 – 1975] 2 N.B.L.R. 569 s 73 ..................................... [1967 – 1975] 2 N.B.L.R. 275 s 78 ..................................... [1967 – 1975] 2 N.B.L.R. 184 s 79 ..................................... [1967 – 1975] 2 N.B.L.R. 184

Bills of Exchange Act, 1964 s 1 ....................................... [1967 – 1975] 2 N.B.L.R. 569 s 2(2)................................... [1967 – 1975] 2 N.B.L.R. 89 [1967 – 1975] 2 N.B.L.R. 396

Central Bank of Nigeria Act, 1958 (Cap 30) generally ............................. [1967 – 1975] 2 N.B.L.R. 490 s 18 ..................................... [1967 – 1975] 2 N.B.L.R. 304 s 21 ..................................... [1967 – 1975] 2 N.B.L.R. 304 s 21(1)................................. [1967 – 1975] 2 N.B.L.R. 406 s 21(3)................................. [1967 – 1975] 2 N.B.L.R. 410 s 23 ..................................... [1967 – 1975] 2 N.B.L.R. 406

[1967 – 1975] 2 N.B.L.R.


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Companies Act, 1958 (Cap 37) s 77 ..................................... [1967 – 1975] 2 N.B.L.R. 221 s 94 ..................................... [1967 – 1975] 2 N.B.L.R. 122 s 101 ................................... [1967 – 1975] 2 N.B.L.R. 123 s 128 ................................... [1967 – 1975] 2 N.B.L.R. 127 s 209 ................................... [1967 – 1975] 2 N.B.L.R. 122

Constitution of the Federal Republic of Nigeria s 78(1)................................. [1967 – 1975] 2 N.B.L.R. 505 s 78(2)................................. [1967 – 1975] 2 N.B.L.R. 505

Education (Proprietorship and Management of Schools) Edict No. 14, 1971

s 3(1)(b) .............................. [1967 – 1975] 2 N.B.L.R. 474 s 4(2)................................... [1967 – 1975] 2 N.B.L.R. 474

Evidence Act, 1958 (Cap 42) s 90 ..................................... [1967 – 1975] 2 N.B.L.R. 171 s 136 ................................... [1967 – 1975] 2 N.B.L.R. 177 s 136(1)............................... [1967 – 1975] 2 N.B.L.R. 233 s 141 ................................... [1967 – 1975] 2 N.B.L.R. 591

Evidence Act (Laws of the Federation and Lagos), 1958 (Cap 62)

s 14 ..................................... [1967 – 1975] 2 N.B.L.R. 329 s 34 ..................................... [1967 – 1975] 2 N.B.L.R. 69 s 96 ..................................... [1967 – 1975] 2 N.B.L.R. 47 s 96 ..................................... [1967 – 1975] 2 N.B.L.R. 69 s 96(1)................................. [1967 – 1975] 2 N.B.L.R. 47 [1967 – 1975] 2 N.B.L.R. 352 s 131 ................................... [1967 – 1975] 2 N.B.L.R. 69 s 145 ................................... [1967 – 1975] 2 N.B.L.R. 484 s 226(1)............................... [1967 – 1975] 2 N.B.L.R. 140

Exchange Control Act, 1962 (Cap 63) s 7 ....................................... [1967 – 1975] 2 N.B.L.R. 300 s 7(d) .................................. [1967 – 1975] 2 N.B.L.R. 169 s 28 ..................................... [1967 – 1975] 2 N.B.L.R. 301

[1967 – 1975] 2 N.B.L.R.

Index of Statutes referred to

lxiii

Interpretation Act, 1964 s 1(4) .................................. [1967 – 1975] 2 N.B.L.R. 486 s 3(1) .................................. [1967 – 1975] 2 N.B.L.R. 486 s 18(3) ................................ [1967 – 1975] 2 N.B.L.R. 486

Law Reform (Miscellaneous Provisions) Act, 1934 s 3 ...................................... [1967 – 1975] 2 N.B.L.R. 330

Moneylenders Act (Cap 124) s 13 .................................... [1967 – 1975] 2 N.B.L.R. 189

Rent Control (Lagos) Amendment Act, 1965 s 1(4) .................................. [1967 – 1975] 2 N.B.L.R. 489

Sheriffs and Civil Process Act (Cap 116) s 2 ....................................... [1967 – 1975] 2 N.B.L.R. 612

Stamp Duties Act (Cap 191) s 57 ..................................... [1967 – 1975] 2 N.B.L.R. 535 s 81 ..................................... [1967 – 1975] 2 N.B.L.R. 123 s 81(2) ................................ [1967 – 1975] 2 N.B.L.R. 123 s 101 ................................... [1967 – 1975] 2 N.B.L.R. 123 s 182 .................................. [1967 – 1975] 2 N.B.L.R. 122

Foreign

Australian Bills of Exchange Act, 1909 s 88(1)................................. [1967 – 1975] 2 N.B.L.R. 93

Banking Amendment Decree, 1966 s 1(1)................................... [1967 – 1975] 2 N.B.L.R. 622 s 2(2)................................... [1967 – 1975] 2 N.B.L.R. 284 s 4(1)................................... [1967 – 1975] 2 N.B.L.R. 284 s 4(2)................................... [1967 – 1975] 2 N.B.L.R. 620

Banking Obligation (Eastern State) Decree No. 56 of 1970

s 1(a)................................... [1967 – 1975] 2 N.B.L.R. 469 s 1(b)................................... [1967 – 1975] 2 N.B.L.R 469 s 2 ....................................... [1967 – 1975] 2 N.B.L.R. 468

[1967 – 1975] 2 N.B.L.R.


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Banking Obligation (Eastern State) Decree No. 56 of 1970 – (continued)

s 2 ....................................... [1967 – 1975] 2 N.B.L.R. 468 s 2(5)................................... [1967 – 1975] 2 N.B.L.R. 469 s 2(5)(b) .............................. [1967 – 1975] 2 N.B.L.R. 469 s 3 ....................................... [1967 – 1975] 2 N.B.L.R. 468 s 8 ....................................... [1967 – 1975] 2 N.B.L.R. 468 s 8(1)................................... [1967 – 1975] 2 N.B.L.R. 468

Banking Ordinance generally ............................. [1967 – 1975] 2 N.B.L.R. 173

Bankruptcy Act, 1914 s 14(1)................................. [1967 – 1975] 2 N.B.L.R. 371

Central Bank (Currency Conversion) Decree, 1967, No. 51, as amended by the Central Bank (Currency Conversion) (Amendment) Decree, 1968

s 1(b)................................... [1967 – 1975] 2 N.B.L.R. 304 s 1(1)(a) .............................. [1967 – 1975] 2 N.B.L.R. 409 s 1(1)(b) .............................. [1967 – 1975] 2 N.B.L.R. 409 s 1(2)................................... [1967 – 1975] 2 N.B.L.R. 410 s 2(a)................................... [1967 – 1975] 2 N.B.L.R. 538 s 2(b)................................... [1967 – 1975] 2 N.B.L.R. 538

Central Bank of Nigeria Ordinance generally ............................. [1967 – 1975] 2 N.B.L.R. 263

Criminal Code s 464 ................................... [1967 – 1975] 2 N.B.L.R. 55 s 465 ................................... [1967 – 1975] 2 N.B.L.R. 55

Currency Conversion (South Eastern State and Other States) Decree No. 49 of 1968

s 1A..................................... [1967 – 1975] 2 N.B.L.R. 263 s 2 ....................................... [1967 – 1975] 2 N.B.L.R. 264

Customary Courts Law of the Western State of Nigeria s 19(b)................................. [1967 – 1975] 2 N.B.L.R. 504 s 19(c) ................................. [1967 – 1975] 2 N.B.L.R. 504 s 19(d)................................. [1967 – 1975] 2 N.B.L.R. 504

[1967 – 1975] 2 N.B.L.R.

Index of Statutes referred to

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English Bills of Exchange Act, 1882 s 82 .................................... [1967 – 1975] 2 N.B.L.R. 37

English Judgment Act ((1838) 1 & 2 vict; c 110) s 17 ..................................... [1967 – 1975] 2 N.B.L.R. 107

Federal Revenue Court Decree, 1973 s 7(1)(a) .............................. [1967 – 1975] 2 N.B.L.R. 481 s 7(1)(b)(iii) ....................... [1967 – 1975] 2 N.B.L.R. 477 [1967 – 1975] 2 N.B.L.R. 481 s 7(1)(d) [1967 – 1975] 2 N.B.L.R. 481 s 7(2)................................... [1967 – 1975] 2 N.B.L.R. 488 s 8(1)................................... [1967 – 1975] 2 N.B.L.R. 484 s 8(2) .................................. [1967 – 1975] 2 N.B.L.R. 484 s 8(3) .................................. [1967 – 1975] 2 N.B.L.R. 484 s 26 .................................... [1967 – 1975] 2 N.B.L.R. 487 s 33(1) ................................ [1967 – 1975] 2 N.B.L.R. 481 s 33(2) ................................ [1967 – 1975] 2 N.B.L.R. 481 s 63(4)................................. [1967 – 1975] 2 N.B.L.R. 491

High Court Law, 1959 (Cap 44) s 8 ...................................... [1967 – 1975] 2 N.B.L.R. 330 s 22 .................................... [1967 – 1975] 2 N.B.L.R. 606 s 37 .................................... [1967 – 1975] 2 N.B.L.R. 610 s 49(1) ................................ [1967 – 1975] 2 N.B.L.R. 610 s 52(2) ................................ [1967 – 1975] 2 N.B.L.R. 611 s 58 .................................... [1967 – 1975] 2 N.B.L.R. 613

Law of Property Act, 1925 s 40 ..................................... [1967 – 1975] 2 N.B.L.R. 141

Limitation Decree, 1966 (No. 88) s 7 ....................................... [1967 – 1975] 2 N.B.L.R. 146 s 7(1)................................... [1967 – 1975] 2 N.B.L.R. 441

Limitation Law, 1959 (Cap 64) s 2 ....................................... [1967 – 1975] 2 N.B.L.R. 353

Native Lands Acquisition Law generally ............................. [1967 – 1975] 2 N.B.L.R. 9 s 3 ....................................... [1967 – 1975] 2 N.B.L.R. 9

[1967 – 1975] 2 N.B.L.R.


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Penal Code generally ............................. [1967 – 1975] 2 N.B.L.R. 491

Statute of Frauds, 1677 s 4 ....................................... [1967 – 1975] 2 N.B.L.R. 13

United Kingdom Companies (Consolidation) Act, 1908 s 212 ................................... [1967 – 1975] 2 N.B.L.R. 128

United Kingdom Companies Act, 1948 s 98(1)................................. [1967 – 1975] 2 N.B.L.R. 125 s 98(2)................................. [1967 – 1975] 2 N.B.L.R. 125

lxvii

INDEX OF RULES REFERRED TO

Nigerian

High Court (Civil Procedure) Rules (Cap 44) Order 1, rule 12 .................. [1967 – 1975] 2 N.B.L.R. 611 Order 29, rule 7 .................. [1967 – 1975] 2 N.B.L.R. 331 Order 35, rule 10 ................ [1967 – 1975] 2 N.B.L.R. 330

High Court Rules (West) (Cap 116) Order 10, rule 11 ................ [1967 – 1975] 2 N.B.L.R. 588

Judgment (Enforcement) Rules (Cap 116) Order 1, rule 12 .................. [1967 – 1975] 2 N.B.L.R. 611 Order 6, rule 13 .................. [1967 – 1975] 2 N.B.L.R. 590 Order 10, rule 11 ................ [1967 – 1975] 2 N.B.L.R. 594

Sheriff and Civil Process Rules Order 10, rule 11 ................ [1967 – 1975] 2 N.B.L.R. 589 Order VI, rule 13 ................ [1967 – 1975] 2 N.B.L.R. 590

Supreme Court (Civil Procedure) Rules (Cap 211) Order III, rule 9 .................. [1967 – 1975] 2 N.B.L.R. 273 Order III, rule 11 ................ [1967 – 1975] 2 N.B.L.R. 276 Order XLVI, rule 7............. [1967 – 1975] 2 N.B.L.R. 332 Order 32, rule 13 ................ [1967 – 1975] 2 N.B.L.R. 142

Foreign

Rules of Supreme Court (English) Order 42, rule 16 ................ [1967 – 1975] 2 N.B.L.R. 107

lxix

INDEX OF BOOKS REFERRED TO

Bowstead on Agency (12ed) page 258, article 113 ......... [1967 – 1975] 2 N.B.L.R. 380

Bowstead on Agency (13ed) pages 373-374,

articles 117-118.............. [1967 – 1975] 2 N.B.L.R. 380

Bullen Leake’s Precedents of Pleadings (11ed) page 664 ............................. [1967 – 1975] 2 N.B.L.R. 527

Chitty’s Contracts (21ed) page 111 ............................. [1967 – 1975] 2 N.B.L.R. 116

Chitty’s Contracts (22ed) vol 1, page 87 ..................... [1967 – 1975] 2 N.B.L.R. 12

Chitty’s Contracts (23ed) para 149 .............................. [1967 – 1975] 2 N.B.L.R. 577

Encyclopaedia of Forms and Precedents (Other than Court Forms) (4ed)

vol 14, 863-864 .................. [1967 – 1975] 2 N.B.L.R. 580

Halsbury’s Laws of England (3ed) page 229, para 427 ............. [1967 – 1975] 2 N.B.L.R. 329 page 233, para 522 ............. [1967 – 1975] 2 N.B.L.R. 337 vol 3, article 335................. [1967 – 1975] 2 N.B.L.R. 473 vol 3, page 177 .................. [1967 – 1975] 2 N.B.L.R. 274 vol 6, page 430, para 833 ... [1967 – 1975] 2 N.B.L.R. 223 vol 11, page 94-95,

para 190............................[1967 – 1975] 2 N.B.L.R. 150 vol 11, page 218, para 386 . [1967 – 1975] 2 N.B.L.R. 118 vol 11, page 224 ................. [1967 – 1975] 2 N.B.L.R. 116 vol 11, page 285-286.......... [1967 – 1975] 2 N.B.L.R. 117 vol 15, page 171 ................. [1967 – 1975] 2 N.B.L.R. 254 vol 15, page 335 ................. [1967 – 1975] 2 N.B.L.R. 606 vol 18, page 413, para 770 . [1967 – 1975] 2 N.B.L.R. 370 vol 18, para 827 .................. [1967 – 1975] 2 N.B.L.R. 140

[1967 – 1975] 2 N.B.L.R.


lxx

Halsbury’s Laws of England (3ed) – continued vol 25, page 536-540.......... [1967 – 1975] 2 N.B.L.R. 72 vol 27, page 155, para 237 . [1967 – 1975] 2 N.B.L.R. 597 vol 27, page 301, para 364 . [1967 – 1975] 2 N.B.L.R. 580 vol 27, page 301, para 564 . [1967 – 1975] 2 N.B.L.R. 580 vol 35, page 100, para 336 . [1967 – 1975] 2 N.B.L.R. 25 vol 36, page 415, para 415 . [1967 – 1975] 2 N.B.L.R. 12 vol 36, page 294 ................. [1967 – 1975] 2 N.B.L.R. 12 vol 36, para 627 .................. [1967 – 1975] 2 N.B.L.R. 408 vol 37, page 124 ................. [1967 – 1975] 2 N.B.L.R. 281

Halsbury’s Laws of England (4ed) vol 3, para 78 ..................... [1967 – 1975] 2 N.B.L.R. 555

Lord Denning in The Recovery of Money page 38 ............................... [1967 – 1975] 2 N.B.L.R. 213

Maxwell on Interpretation of Statutes (10ed) pages 128-129 .................... [1967 – 1975] 2 N.B.L.R. 493

Maxwell on Interpretation of Statutes (11ed) page 4 ................................. [1967 – 1975] 2 N.B.L.R. 507 pages 162-163 .................... [1967 – 1975] 2 N.B.L.R. 194

Maxwell on Interpretation of Statutes (12ed) page 105 ............................. [1967 – 1975] 2 N.B.L.R. 493

Paget’s Law of Banking (5ed) page 229 ............................. [1967 – 1975] 2 N.B.L.R. 261 page 254 ............................. [1967 – 1975] 2 N.B.L.R. 337

Paget’s Law of Banking (6ed) page 48 ............................... [1967 – 1975] 2 N.B.L.R. 68 page 311 ............................. [1967 – 1975] 2 N.B.L.R. 213

Paget’s Law of Banking (7ed) page 223 ............................. [1967 – 1975] 2 N.B.L.R. 185

Paget’s Law of Banking (8ed) page 504 ............................. [1967 – 1975] 2 N.B.L.R. 556

[1967 – 1975] 2 N.B.L.R. (SUPREME COURT OF NIGERIA)

Standard Bank Nigeria Limited v. Ikomi 1

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Standard Bank Nigeria Limited v. Ikomi

SUPREME COURT OF NIGERIA

LEWIS, MADARIKAN, FATAYI-WILLIAMS, JJSC

Date of Judgment: 21st JANUARY 1972 S.C.: 124/1968

Evidence – Res judicata – Dismissal of action for declara-tion that documents were void – Another action asking for the same declaration

Facts

The plaintiff’s/appellant’s claim against the defen-dant/respondent is for the specific performance of his under-taking given to the plaintiffs/appellants on the 11th July, 1960 to make and execute to the plaintiffs/appellants on de-mand a valid Legal Mortgage of Land situate at Ogbe–Ijoh, Delta Province and Covered by Deeds registered as No. 21 at page 21 in Volume 550 of the Lands Registry in the Of-fice at Lagos and No. 28 at page 28 in Volume 187 of the Lands registry in the Office at Ibadan to secure the repay-ment on demand of all sums now or hereafter due and owing by him to the plaintiffs/appellants and whether as principals or surety or otherwise in such form and with such provisions and powers as the plaintiffs/appellants may require and which the defendant/respondent has refused to execute al-though requested to do so.

The defendant/respondent at the lower court alleged that the documents were void for non-compliance with the provi-sions of the Native Lands Acquisition Law, while the plain-tiffs/appellants in counter averred that the issue had already been pronounced upon by another court in an earlier suit be-tween the same parties, hence the matter was res judicata.

Nevertheless the lower court still found for the defen-dant/respondent whereupon the plaintiffs/appellants took the case to the Supreme Court.


2 Nigerian Banking Law Reports [1967 – 1975] 2 N.B.L.R.

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Held –

1. Where a given matter becomes the subject of litigation and of adjudication by a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of the matter which might have been brought forward as part of the subject in contests but which was not brought forward, only because they have from negligence inadvertence, or even accident, omitted part of their case.

2. The plea of res judicata applies except in special cir-cumstances not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment on but to every point which prop-erly belonged to the subject of litigation, and which the parties exercising reasonable diligence, might have brought forward at the time.

Appeal allowed.

Cases referred to in the judgment

Nigerian

Ijale v. AG Leventis and Co Ltd [1961] All N.L.R. 762 at page 769 Ogwo v. Ikpeazu S.C. 231/70 delivered on 29/10/71

Foreign

Henderson v. Henderson 67 E.R. 313 at 319 Hoystead v. Commissioner of Taxation 1926 A.C. 155 at 170 Wan v. Warlters 102 E.R. 972

Counsel

For the appellants: Bentley

For the respondent: Pessu



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Judgment

MADARIKAN JSC: (Delivering the judgment of the court) The appellants before us were the plaintiffs/appellants in an action instituted in the High Court, Warri (Suit No. W/29/65) and in which their writ was endorsed as follows:

“The plaintiffs claim against the defendant is for the specific per-formance of his undertaking given to the plaintiffs on the 11th day of July, 1960 to make and execute to the plaintiff on demand a valid Legal Mortgage of Land situate at Ogbe–Ijoh, Delta prov-ince and Covered by deeds registered as No. 21 at page 21 in Volume 550 of the Lands Registry in the Office at Lagos and No. 28 at page 28 in Volume 187 of the Lands registry in the Office at Ibadan to secure the repayment on demand of all sums now or hereafter due and owing by him to the plaintiffs and whether as principals or surety or otherwise in such form and with such pro-visions and powers as the plaintiffs may require and which the defendants has refused to execute although requested to do so, and for the cost of this suit.”

As the main issues involved in this case were clearly set out in the pleadings, we propose to reproduce them in extenso.

The amended statement of claim read: “1. The plaintiffs are bankers and the defendant is an auctioneer.

2. On the 11th July, 1960 the defendant in consideration of the plaintiff granting or continuing banking accommodation to AG Yon Dan Kolo and Sons guaranteed the payment to the plaintiffs on demand of all sums then or at any time thereaf-ter owing by the said firm to the plaintiffs up to a limit of £6,000 by a written guarantee the full terms whereof will be referred to at the trial of this action.

3. As security for the said Guarantee on the same date the de-fendant executed in favour of the plaintiffs a Memorandum of Deposit of Deeds which said Memorandum provided ;‘inter alia’ that the documents referred to in the Schedule to the same were deposited with the intention of creating an Equitable Mortgage.

4. The said Memorandum has been registered as No. 14 at page 14 Volume 412 of the Lands Registry in the Office at Ibadan and the full terms thereof will be referred to at the trial of this action as if they have herein been set out in extenso.


Madarikan JSC


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5. Documents deposited were declared by the said:

‘Memorandum to have been deposited with the intent to cre-ate an equitable mortgage upon all the property comprising therein for securing the payment and discharge on demand of all sums which may then or at any time thereafter be due from the defendant to the plaintiffs.’

6. The Schedule to the said Memorandum reads:

‘Lands situated at Ogbe–Ijoh, Delta Province containing area of approximately 5,329.04 square yards. Rent £40 per annum. Lease expires 1985. Indenture 21/21/550 dated 25/11/38. Indenture 28/28/187 dated 18/10/57 relating to the above.’

7. The said Memorandum also provided ‘inter alia’ that the de-fendant would on demand at his own cost make and execute to the plaintiffs a valid legal mortgage of or on the property covered by the documents deposited or any part thereof in such form and with such provisions and powers of sale leas-ing and appointing a receiver and otherwise as the plaintiffs may require.

8. The validity of the said Memorandum and of the said Guar-antee were upheld by the High Court of Western Nigeria sit-ting at Warri on the 31st January, 1962 in Suit No. W/50/60 between the defendant and the plaintiffs and an appeal against the said decision by the defendant (F.S.C. 172/1963) was dismissed by the Supreme Court of Nigeria on the 18th January, 1965.

9. By a letter dated 27th May, 1965 the plaintiffs demanded of the defendant to execute a valid mortgage in accordance with the above recited covenant in the said Memorandum and the defendant in his reply to the said letter stated that he with regret would not execute same.

10. There is now due and owing from the said AG Yon Dan Kolo and Sons to the plaintiffs a sum of £7,182.11s.1d and the plaintiffs have demanded payments from the defendant in accordance with his afore cited guarantee but the defen-dant has neglected or failed to reply to the letter of demand or to make payment of the same or any part thereof. AND the plaintiffs claim as per writ of summons.”


Madarikan JSC


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The defendant in paragraph two to 10 of his statement of de-fence averred as follows:–

“2. Defendant admits paragraph one of the alleged amended statement of claim and adds that he is an Itsekiri and native of Nigeria while plaintiffs are an alien company incorpo-rated in England.

3. Paragraphs two, three and five of the alleged amended statement of claim are denied. Defendant states that the al-leged guarantee and the said documents referred to therein were obtained from him by fraud and misrepresentation per-petrated by the plaintiffs’ servant and Manager, Mr Knight.

4. In further answer to paragraphs two, three and five of the al-leged amended statement of claim, the defendant avers that the alleged guarantee and documents were obtained from him in respect of a consideration that has totally failed or if there was any consideration in the regard, which is denied, the same was grossly inadequate that fraud can and will be found upon it.

5. Defendant is not in a position to admit or deny paragraphs four and six of the alleged statement of claim.

6. As regards paragraph seven of the alleged amended state-ment of claim, defendants repeats paragraphs three and four hereof.

7. Defendant avers that Suit No. W/50/60 and F.S.C. 172/1963 referred to in paragraph eight of the alleged amended state-ment of claim have bearing on the relief now sought by the plaintiffs.

8. Paragraph nine of the alleged amended statement of claim is admitted.

9. Regarding paragraph 10 of the alleged amended statement of claim, defendant states that he is not in a position to admit or deny whether AG Yon Dan Kolo and Sons are owing to the plaintiffs the sum alleged or any sum at all.

10. At the trial of this action the defendant will contend:

(a) That the alleged mortgage intended to be created by the transaction between plaintiffs, a company incorporated in England, and the defendant, an Itsekiri and native of Nigeria, is void and of no legal effect and cannot support the claim advanced by the plaintiffs.


Madarikan JSC


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(b) That if valid, which is denied, the contract relied upon by the plaintiffs is not one admitting the relief sought by them.

(c) That clause or paragraph four of the alleged mortgage contains a provision clogging the defendant equity of re-demption, which constitutes a bar to plaintiffs’ claim.”

The plaintiffs then filed a reply in the following terms: “1. The plaintiff joins issue with the defendant on his statement

of defence.

2. In further answer to paragraphs three, four, six and 10 of the statement of defence, the plaintiff avers that the defendant ought not to be admitted to make the pleas contained therein because on the 11th August, 1960 before the commencement of this action the defendant brought an action against the now plaintiff in the High Court of Justice of Western Nige-ria, in the Warri Judicial Division, Holden at Warri, being Suit No. W/50/60, in which the now defendant sought a dec-laration that the mortgage the subject matter of this suit was void and that it be set aside on the ground of fraud and/or mistake and/or failure of consideration and in support of his claim raised the issues pleaded in paragraphs three, four, six and 10 of the statement of defence in this suit and the plain-tiff joined issue on the said defence and the said action and issues were tried before the Honourable Mr Justice Kester who delivered judgment in the said suit on the 31st January, 1962 when he dismissed the defendant’s claim with costs.

3. The defendant appealed against the said judgment at the Su-preme Court (F.S.C. 172/63) which on the 18th January, 1965 dismissed the appeal with costs.

4. Further or in the alternative, if, which is denied, the defen-dant did not raise all or any of the issues averred in para-graphs 3, 4, 6 and 10 in the first mentioned suit the same were issues that should have been raised by him in the said suit and the plaintiffs aver that he is barred from raising them in this suit.

5. That in further answer to paragraph 10(a) of the statement of defence the plaintiffs aver that the defendant is barred by law from raising such an issue in respect of an instrument that has been registered and further or in the alternative that the said instrument is valid.”


Madarikan JSC


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In consequence of which the defendant filed a rejoinder as follows:

“1. Defendant joins issue with the plaintiff on their reply.

2. Defendant states in his rejoinder to paragraphs 2, 3 and 4 of the reply that the subject matter of this action is not the same as the one determined in Suits Nos. W/50/1960 and F.S.C. 172/63.

3. Defendant puts the plaintiffs to the strictest proof of the averments contained in paragraph 5 of their reply.”

At the trial, the plaintiffs relied on two documents in support of their case. The first document (exhibit A) was a personal guarantee dated the 11th July, 1960, whereby the defendant guaranteed the plaintiffs with interest at 5 percent per annum of all the sums then due or which might become due to the plaintiffs by Messrs AG Yon Dan Kolo and Sons up to a limit of £6,000. The second document (exhibit B) was a memorandum of deposit of deed. As, by this action, the plaintiffs were seeking part performance of one of the under-takings in exhibit B, it is essential to reproduce exhibit B. It reads as follows:

“TO SECURE SIX THOUSAND POUNDS (£6,000). 1. The documents specified in the Schedule hereto have been

deposited with you by the undersigned with intent to create an equitable mortgage upon all the property contained therein or to which the same or any of them relate for secur-ing the payment and discharge on demand of all sums which now are or at any time or times hereafter may become due or owing or may be accruing or becoming due to you by the undersigned either jointly or with any other person or per-sons company or companies on any account or liability what-soever and whether in the character of principle debtor or guarantor or surety or otherwise howsoever and also all usual bank charges and commission and interest at the rate of 10 per centum per annum or at such other rate as may be ar-ranged from time to time to be calculated on the balance ow-ing from day to day and to be payable by monthly instal-ments on the last day of each month.

2. The undersigned will on demand at his or their own cost make and execute to you or as you may direct a valid legal


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mortgage of or on the said property or any part thereof in such form and with such provisions and powers of sale leas-ing and appointing a receiver and otherwise as you may re-quire.

3. The powers of leasing or agreeing to lease and of accepting or agreeing to accept surrenders of leases and tenancies conferred on borrowers by the statute or ordinance in that behalf shall not be exercised without your previous consent in writing and no restriction on consolidation of mortgages shall apply to this security.

4. This security shall not be considered as satisfied or dis-charged by any intermediate payment or satisfaction of the whole or any part of the monies hereby secured but shall constitute and be a continuing security to you not with-standing any settlement of account or other matter or thing whatsoever and shall not operate so as in any way to preju-dice or affect the security created by any deposit which may have already been made with you of the said documents or any other security which you may now or at any other time hereafter hold in respect of the monies hereby secured or any part thereof.

5. The liability of the undersigned if more than one shall be joint and several and no one of the undersigned shall be nor shall this security be released or discharged by death or by the death release or discharge of any other of them or by the situation of any other debtor or security or any change in the Constitution of any partnership or any change in the Constitution of any of the undersigned may be a member.

Dated this eleventh day of July, 1960.

The Schedule above referred to:

Land situated at Ogbe–Ijoh, Delta Province containing an area of approximately 5,329.04 square yards. Rent £40 per annum. Lease expires 1985. Indenture 21/21/550 dated 25/11/38. In-denture 28/28/187 dated 18/10/57 relating to the above.”

It was not disputed that at the time the action was brought, the account of Messrs AG Yon Dan Kolo and Sons was overdrawn to the tune of £7,182.11s.1d which they had re-fused to pay despite repeated demands.


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The defendant testified that he did not read exhibits A and B before signing them on the 11th July, 1960; and that con-sequent upon what Yon Dan Kolo told him the following day, he (defendant) decided to recover exhibits A and B from the plaintiffs. He then asked the plaintiffs to return ex-hibits A and B to him but they refused.

In rejecting the evidence of the defendant that he did not read exhibits A and B before signing them the learned trial Judge commented as follows in his judgment:

“No reasonable tribunal will accept the evidence of the defendant that he signed exhibits A and B with his eyes shut to the con-tents.”

In regard to the defence of fraud, mistake and insufficiency of consideration, the learned trial Judge said:

“On the issue of fraud, mistake or insufficiency of consideration the defendant cannot be heard as the decision in the previous case Suit W/50/60 (F.S.C. 172/1963) between the parties settled those issues finally.”

Section 53 of the Evidence Act reads:

“Every judgment is conclusive proof as against parties and privies, of facts directly in issue in the case, actually decided by the court and appearing from the judgment itself to be the ground on which it was based unless evidence was admitted in the action in which the judgment was delivered which is excluded in the action in which that judgment is intended to be proved.”

The learned Judge then considered the submission of learned Counsel for the defendant that exhibit B was unenforceable because it was neither approved by the Governor in Council nor by the appropriate Minister as regards section 3 of Na-tive Lands Acquisition Law; and came to the conclusion that exhibit B was unenforceable. Finally he stated that as the plaintiffs were in effect seeking specific performance of a contract of guarantee, they were not entitled to that remedy as it was an equitable remedy. He then dismissed the claim with costs.


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It is against this decision that the plaintiffs have now ap-pealed. On behalf of the appellants, Mr Bentely pointed out that in Suit No. W/50/60, the present respondent had insti-tuted an action in the High Court, Warri, against the present appellants seeking: “1. A declaration that the deed of Guarantee and/or Charge on

the landed property of the plaintiff lying and situate at Chi-coco Market Warri, dated on or about the 11th July, 1960 and signed by plaintiff in favour of defendants is VOID.

2. That the deed of Guarantee and/or Charge on the landed property of the plaintiff lying and is situate at Chicoco Mar-ket Warri, dated on or about the 11th July, 1960 and signed by plaintiff in favour of defendant, by set aside on the ground of fraud and/or mistake and/or failure of considera-tion.

3. An order for return of plaintiff’s deed of lease in respect of plaintiff’s property lying and situate at Chicoco Market Warri, which deed was delivered by plaintiff to defendant on or about the 11th July, 1960.”

The action related to the documents marked as exhibits A and B in the present proceedings, on the 29th January, 1962, was dismissed by Kester, J (as he then was); and that in Ap-peal No. F.S.C./172/1963, the judgment of Kester, J was af-firmed by the Supreme Court on the 18th January, 1962. Ar-guing the sixth ground of appeal, it was the contention of Mr Bently that as the present respondent had failed to obtain the declaration sought in Suit No. W/50/60, the documents (ex-hibits A and B) were void. It was an abuse of court process to allow him to re-open the matter by challenging the valid-ity of exhibits A and B again in the present proceedings whether on the grounds relied upon by him in the previous case or on any new grounds.

Learned Counsel for the respondent could find no answer to the arguments of Mr Bently on the sixth ground of appeal and he eventually conceded that the point was well taken.

We consider that Mr Bently’s contention is well founded. Indeed, if such a rule does not prevail, litigation would be


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interminable. Support for this view is to be found in the re-cent decision of this Court in Ogwo and others v. Chief Kanu Ekpeazu and others SC 231/1970 delivered on the 29th October, 1971 in which we said:

“The effect of what Mr Ogwo claimed he could do was to ignore the decision of three courts including the then highest possible appellate court (the Privy Council) and to take a point that could (and indeed should as lack of jurisdiction ought to be pleased though it may otherwise be raised at the hearing) have been taken. We do not think that in such circumstances, notwithstand-ing the provisions of section 52 of the Evidence Act, that it was in any way an error of the learned trial Judge to hold that this was an abuse of the process of the court . . . We therefore refused to allow Mr Ogwo to argue on the merits that the learned trial Judge was wrong to come to the conclusion that the order transferring the suit to the Aba High Court was in fact validly made as we did not think he was entitled to raise the issue.”

That decision is in accord with the following observations of Wigram VC in Henderson v. Henderson (1843) 3 Hare 114 reported in 67 ER 313 at page 319:

“I believe I state the rule of the court correctly when I said that, where a given matter becomes the subject of litigation in, and of adjudication by, a court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of the matter which might have been brought forward as part of the subject in contest, but which was not brought forward only because they have from negligence, in-advertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the par-ties, exercising reasonable diligence, might have brought forward at the time.”

This passage was quoted with approval by the Privy Council in Hoystead and others v. Commissioner of Taxation [1926] A.C. 155 at page 170 and was therein described as settled law on the subject and also by the High Court of Lagos in AG


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Ijale v. AG Leventis and Co Ltd [1961] All N.L.R. 762 at page 769.

We must therefore come to the conclusion that having un-successfully contested the validity of exhibits A and B in Suit No. W/50/60, it was not competent for the respondent to contend in any subsequent proceedings between the par-ties that the documents were void. It follows, in our view that the learned trial Judge was in error in entertaining the defence of the respondent that the documents were void and grounding his judgment upon it. As this disposes of the ap-peal, it seems to us unnecessary to consider the other grounds of appeal except to refer, in passage, to the other observations of the learned trial Judge on the doctrine of part performance. He said:

“The plaintiffs are not entitled to the relief sought. Further, the Court of Chancery would not enforce a contract of guarantee. Exhibit B is tied to exhibit A the Guarantee.”

The learned authors of Halsbury’s Laws of England dealing with the doctrine of part performance said at page 294 para-graph 415 of Volume 36 of Halsbury’s Laws (3ed):

“The doctrine of part performance does not extend to contracts which the Court of Chancery would not enforce even if they had been in writing; thus, it does not apply to a contract for work and labour, or for personal service extending over a period exceeding a year, or to a contract of guarantee . . .

A contract which concerns land and other property to which the doctrine of part performance does not apply, may not be sever-able, and, if, not, specific performance cannot be obtained under the doctrine of part performance as regards the land.

Specific performance is an equitable remedy. It is not available on the facts of this case to the plaintiffs.”

We think that the learned trial Judge was relying on the statement of the law in Halsbury’s Laws of England (3ed), Volume 36 at page 294 where the learned author said the doctrine of part performance does not extend to a contract of guarantee. A similar statement of the law appears as a foot-note 34 at page 87 of Chitty on Contracts (22ed) Volume 1


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but, it is to be noted, has been removed in the 23rd Edition Volume 1 at page 90 where the text otherwise re-appears. The authority for the statement would appear from Hals-bury’s Laws of England to be the case of Wain v. Warlters (1804) 5 East 10 reported in 102 ER 972. In that case, the defendant had promised in writing to pay the debt of a third party and the plaintiff sought to reply upon the written un-dertaking to ground his action. Upon the grounds that the document did not satisfy the provisions of section 4 of the Statute of Frauds, and that it was a promise or agreement appearing to be without consideration upon the face of it, the court held that it was nudum pactum and gave no cause for action. It is sufficient for us to say that having held that view that the learned Judge was wrong in entertaining and accept-ing the defence that exhibit A and B were void, we fail to see how the decision in Wain’s case (supra) could be ex-tended to cover the present case.

In the result this appeal must succeed and it is hereby al-lowed. The judgment of the High Court, Warri, in Suit No. W/29/65 delivered by Obaseki J on the 7th December, 1967, together with the order for cost is hereby set aside and judgment is entered for the plaintiffs in the terms of the writ. The plaintiffs/appellants are entitled to costs which we as-sess at 74 guineas in the High Court and 130 guineas in this Court.

Appeal allowed.

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF LAGOS STATE)


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National Bank of Nigeria Limited v. Okafor Lines Limited

HIGH COURT OF LAGOS STATE

TAYLOR CJ

Date of Judgment: 30 JANUARY 1967

Banking – Advances made to a customer – Whether recov-erable before the whole agreed advance had been made

Contract – Two documents evidencing a contract – One drawn up in furtherance of another – Duty to construe the two together

Mortgage – Mortgage deed – Right of a mortgagee to pro-tect security – Right of a mortgagee of a ship to take posses-sion before debt due if security materially impaired

Facts

The plaintiffs claimed against the defendant a declaration that their rights under a deed of mortgage executed between the two parties had become vested and exercisable, possession of mortgage property and recovery of certain sum of money due to the plaintiffs on the banking facilities granted to the defen-dants in accordance with the terms of the mortgage deed. The plaintiffs agreed to advance to the defendants, the sum of £470,000. Part of this advance was for the purchase price of a vessel named “Chief Awosika” which was duly advanced to the defendant by the plaintiff and the balance of £222,500 was to be in form of instalmental payments to the defendants to cover their expenses. The said vessel “Chief Awosika” was also used by the defendant as security for these advances. By agreement between the parties, interest was payable on each advance of the principal sum from the date such advance was made. The defendant further signed a promissory note which acknowledged the said advances and which substantially reit-erated the terms and conditions of the mortgage deed.


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By the term of the mortgage deed, in the event of certain specified acts, plaintiff was given the right to declare all the principal sum on the note then outstanding with interest thereon to be due and payable and to bring suit at law, in eq-uity or in admiralty to recover judgment for any and all amounts due under the note. The mortgage deed further em-powered the mortgagee to take the vessel without legal process and also gave the mortgagee the right of sale. At the trial the plaintiffs contended that the defendants, being in-debted to the Nigerian Ports Authority for harbour dues had incurred liabilities and liens which were contrary to the covenants of the mortgage deed. The plaintiffs further con-tended that the defendants had been in breach of various terms of the mortgage deed and as such the plaintiffs had the right to institute the proceedings to take possession of the vessel and to recover the advance made to the defendant de-spite the fact that the agreed sum had not been fully ad-vanced to the defendant. The defendants however contended that no covenants had been broken and that even if there had been a breach, the principal sum and/or interest is/are not due until the maturity date agreed to between the parties.

Held –

1. The mortgagees are bound by the mortgage deed to ad-vance the whole mortgage debt to the mortgagor and by the terms of the agreement, the mortgagor’s expenses were to be covered up to that sum.

2. In the absence of any proven breach of any of the condi-tions and covenants in the mortgage deed, the defendants are entitled to the full amount under the mortgage deed.

3. The foremost right of a mortgagee of a ship or a majority of shares in a ship, is the right in proper circumstances to take possession. This he may do even before any part of the mortgage debt is due if his security is being impaired in some material way.



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4. The mortgage deed and the promissory note made in fur-therance of the mortgage deed are to be read together to determine the rights of the parties as set out in the two documents

Judgment for Defendants.


Foreign

The Lord Strathcona (1925) P. 143; (1925) 133 L.T. 765 The Manor (1907) P. 339; (1907) 96 L.T. 871

Counsel

For the plaintiff: Odesanya

For the defendant: Whyte

Judgment

TAYLOR CJ: The plaintiffs’ claims against the defendants are:–

“(a) A declaration that their rights under section 19 of the first preferred mortgage of 3 June 1966 have become vested and exercisable.

(b) A declaration that the defendants are in breach of the cove-nants of the said deed and that as a result, the plaintiffs are entitled to possession of the ‘Chief Awosika.’

(c) £501,162. 12s.3d, as money due to the plaintiffs by the de-fendants on the banking facilities granted to the defendants in accordance with the deed of mortgage.”

The plaintiffs, in proof of their case, led evidence and ten-dered the mortgage deed, dated June 3rd, 1966, executed by the parties to this action. The defendants have called no evi-dence at all. It is clear from the evidence adduced that the mortgage debt of £470,000 as witnessed by the deed was made up of the sum of £247,500, the purchase price of the vessel “Chief Awosika” and the balance of £222,500 which was to be made up of advances covering, the expenses of the defendants. According to the claim, the advance made ex-ceeded this sum of £222,500 by the sum of £31,162.12s.


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The first point for consideration is whether the evidence led shows that this sum of £222,500, or this sum and the excess, was advanced to or on behalf of the defendants. The plain-tiffs’ witness Mr Abudul Azeez Olayide Duroshola, their general manager, tender the general account of the defen-dants as from April 1966, when the “Chief Awosika” was purchased, till 24 December 1966. The account was com-piled by the witness from the plaintiffs’ ledger used in the ordinary course of their business and the witness has de-posed to its correctness. It shows that the defendants’ ac-count during the aforesaid period stood at £520,316.19s.4d on 24 December 1966. On 22 September, 1966, when the summons before me was issued, the claim stood at £476,414.15s.9d. The interest chargeable to the defendants’ account as per this ledger is £18,335.16s.2d. If the interest was rightly charged, the plaintiffs would, by the date of the issue of the summons, have advanced to the defendants the sum stipulated in the deed of mortgage. If, on the other hand, as contended by Mr Whyte for the defendants, the in-terest is not chargeable till 1972, then the sum advanced to the defendants would be £458,078.19s.7d, a sum falling short of the stipulated amount by £11,921.0s.5d. The rele-vant provision in the mortgage deed is section 2 which states: “The shipmaster is firstly indebted to the mortgagee in the sum of £470,000, lawful money of the Federation of Nigeria, evidenced by the promissory note.” Now the prom-issory note provides as follows, inter alia:–

“For value received, the undersigned, Okafor Lines Limited, a Ni-geria Corporation (‘the company’), promises to pay on June 2nd, 1972, £1,972 to the order of Nigerian National Bank Limited (‘the bank’) at its principal office in Lagos, Nigeria, or at such other address as the holder hereof may designate, in lawful money of the Federation of Nigeria, the principal sum of £470,000, together with interest at the rate of 10% per annum on the said principal sum remaining from time to time un-paid . . . The principal sum, having been advanced to the com-pany in instalments, interest shall be payable on each advance of the principal sum from the date such advance was made.”



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I have evidence led by the plaintiffs, in the form of the ledger, to show that the sum of £458,078.19s.7d has been advanced to the defendants at the date the writ was issued and not the principal sum of £470,000 as stipulated in the mortgage deed. It is true that, by the last citation from the promissory note, interest is due on each advance from the date of such ad-vance, but that, in my view, does not free the plaintiffs from the liability of advancing the principal sum (less interest) of £470,000. This they have not done. The promissory note em-bodies the terms and conditions contained in the mortgage deed. It is Mr Odesanya’s case that the defendants had broken some of the covenants in the mortgage deed and that, as a re-sult, the principal and interest, or whatever sum may be due in 1972, are now due and payable. Mr Whyte, on the other hand, while contending that no covenants have been broken, urged that, even if this were the case, the principal sum and/or inter-est is (or are) not due until 2 June, 1972.

It must be accepted that the mortgage deed and the promis-sory note are to be read together; that they are not contradic-tory; and that the rights of the plaintiffs and defendants are as set out in both. That this is so can be gathered from the ha-bendum clause, to which I have been referred and which needs no quotation from me. The plaintiffs’ case rests mainly on the interpretation of section 19 of the mortgage deed. Section 19, article II of the mortgage deed provides for “events of default” and remedies in case of default. It then goes on to state seven such events or acts of default, to some of which I shall later on refer, and proceeds:–

“Then, and in each and every such case, the mortgagee shall have the right to:–

(i) declare all the principal sum on the note then outstanding, with the interest thereon, to be due and payable immediately. Upon such declaration the sum, with interest and charges to the date of declaration, shall become and be immediately due and payable and thereafter shall bear interest at the rate of 10% per annum,

. . .


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(iii) bring suit at law, in equity or in admiralty, as it may be ad-vised, to recover judgment for any and all amounts due un-der the note, or otherwise hereunder, and collect the same out of any and all property of the ship owner, whether cov-ered by this mortgage or otherwise.”

Then there is subsection (d) on which the second claim in the writ is based. It empowers the mortgagees to:–

“. . . take the vessel without legal process wherever the same may be and the shipowner or other person in possession, forthwith upon demand of the mortgagee shall surrender to the mortgagee possession of the vessel and the mortgagee may without being re-sponsible for loss or damage, hold, lay up, lease, charter, operate, or otherwise use the vessel for such time and upon such terms as it may deem to be for its best advantage . . .”

The last subsection, subsection (e), gives the mortgagee a right of sale for the vessel but, as this right is not claimed in the writ of summons, there is no need for me to set it out. It is apparent then that the rights claimed by the plaintiffs or rather the declarations contained in the first and second part of the writ are contained in section 19(a) and 19(b) of article 11 of the mortgage deed. The next 1ogical step is to enquire whether any of the events of default, as enumerated in sec-tion 19(a) to (g), have taken place, by virtue of which the plaintiffs would be entitled to the discretionary remedy of the declarations in the first and second claims in the writ. Mr Odesanya for the plaintiffs places reliance on the provisions of section 19(c) as an act, or acts, of default which brings, or may bring, the remedies into play.

Section 19(c) refers to – “default in the due and punctual observance and performance of any provisions of ss. 1, 4, 5, 6, 7, 8, 9, 10, 12, 13, 14, 15, 17 or 18 hereof . . .” The acts of default complained of in this paragraph are said to be con-tained in sections 1, 4, 6, 7, and 9 of the mortgage deed.

Section 1 provides as follows:–

“The shipowner will comply with and satisfy all the provisions of the laws and regulations of the Republic of Liberia in order to es-tablish and maintain this mortgage as a first preferred mortgage



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thereunder upon the vessel and upon all renewals, improvements and replacements made in or to the same, and the shipowner shall furnish to the mortgagee, from time to time, such proofs as the mortgagee may reasonably request for its satisfaction with respect to the shipowner’s compliance with the foregoing covenant.”

Mr Odesanya, on this point, referred to the evidence of Mr Abdul Azeez Duroshola, the plaintiffs’ first witness, to the effect that the plaintiffs asked for particulars which were not supplied. The evidence of this witness on the point is as fol-lows:–

“On 11 July, 1966 we received this letter from the defendants in answer to our letter asking for certain particulars. It was tendered with no objections. The company did not tell us the truth about its liabilities in the letter. We did not receive any balance sheet from the defendants as promised in that letter.”

The letter written to the defendants for particulars or its copy was not tendered in evidence and, from a perusal of the statement of liabilities, I cannot see how I can infer that, whatever letter was sent by the plaintiffs, or request made, it was one which came within the provisions of section 1, that is to say, a request for proof of the shipowners’ compliance with the laws and regulations of the Republic of Liberia, with particular reference to maintaining the mortgage as a first preferred mortgage. I am aware of the submission of Mr Odesanya that, until the contrary is proved, it must be taken that the laws of Liberia are the same as those of Nigeria. I think that is sound law. But, whether that is so or not, for the moment suffice it to say that, whatever law is applicable in the absence of the letter of demand written by the plaintiffs on 5 July, 1966, I cannot, from the statement of liabilities infer that letter was one which came within the meaning of section l aforesaid, the breach of which can incur such a drastic remedy as the sale or possession of the defendants’ vessel.

Although section 4 of article I was the next section referred to by Counsel in his address, when dealing with the various sections listed under article II, section 19(c), Counsel did not


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address me specifically on this section. I will say no more here than that the answer to the plaintiffs’ allegation of a breach as at the date of the summons is their own failure to advance the principal sum by that time. I shall now pass on to section 6 which states:–

“The shipowner will pay and discharge, or cause to be paid or dis-charged, when due and payable and from time to time, all taxes, assessments, governmental charges, fines and penalties lawfully imposed on the vessel.”

Mr Odesanya referred to this section as the most important part and I submit that the evidence given by the second wit-ness for the plaintiffs, Amos O Olatunji, from the Nigerian Ports Authority is sufficient evidence of a breach of this sec-tion. Now the material parts of the evidence of this witness are as follows:–

“The defendants are indebted to the Nigerian Ports Authority in respect of ‘Chief Awosika’ as from September 13th, to December 29th, 1966 in the sum of £34,495.5s.2d as harbour dues, etc. A bill for £3,307.13s.9d as part of this sum was sent to the defen-dants. A further bill was raised. No payment has been made.”

The witness then went on to enumerate the defendants’ gen-eral indebtedness to the Nigerian Ports Authority in respect of other vessels and wound up his examination in chief with these words:–

“The ship ‘Chief Awosika’ is incurring mooring dues at the rate of £29.5s.3d per 49 hours with effect from 12 October, 1966. It is also liable for anchorage dues at the rate of £10.3s.4d per day with effect from 14 October, 1966. The company has been owing us amounts as far back as June, 1966 and nothing has been paid. We have in fact sued the defendants. The case has not yet been heard.”

Now it is clear from the wording of section 6 that for a breach of this covenant to occur, the failure to pay must be in respect of sums “lawfully imposed on the vessel,” ie, the “Chief Awosika.” I am not therefore entitled, in that respect, to consider the previous or subsequent indebtedness of the defendants in relation to other vessels owned or chartered by



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them. The evidence of the witness in question states the in-debtedness of the defendants in relation to the “Chief Awosika” as from 13 September 1966 to 29 December 1966, but the summons was filed on 22 September 1966. I have nothing on record as to the amount of such indebted-ness up to the date of the summons. I am therefore not in a position to say that, at the date of the issue of this writ of summons, there had been a breach of section 6 of the mort-gage deed in relation to the vessel in question, and I do not think I am entitled to take into account the proceedings in respect of which I have just given a ruling, if its effect would be to contradict the oral evidence led in court.

Sections 7 and 9 can be taken together and section 7 reads as follows:–

“Neither the shipowner nor the master of the vessel nor the char-terer nor anyone acting in its or their behalf nor any other person has or shall have any right, power or authority to create, incur or permit to be placed or imposed or continued upon the vessel any lien whatsoever other than for crews’ wages or salvage.”

Now what evidence do I have that, up to 22 September 1966, when this suit was brought, any lien other than that for crews’ wages or salvage was imposed or continued upon the vessel? I have none. I only have evidence of the indebted-ness of the owners of the ship both in respect of the ship and other vessels to the Nigerian Ports Authority and the Nige-rian Produce Marketing Board, as well as certain claims for insurance, etc., which were met by the plaintiffs in this suit.

As I have said before, I have no specific evidence of the sums due on this ship as at 22 September, 1966. I have no evidence of the existence of any maritime or possessory liens on the vessel and I cannot find that there has been a breach of section 7 at the date of the issue of the writ. Dif-ferent considerations apply in relation to section 9 and I have quoted section 7 in full because the former seems to take off where the latter ends and the two should be read


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together. Section 9 provides as follows:–

“Except for the lien of this mortgage, the shipowner will not suffer to be continued any lien, encumbrance or charge on the vessel having equality with, priority to, or preference over the lien of this mortgage and, in due course, but in no event later than 30 days after the shipowner shall have received notice that the same became due and payable, will pay or cause to be discharged or make adequate provision for the satisfaction or discharge of all claims or demands which, if unpaid, might, in admiralty, in eq-uity, at law, or pursuant to any statute, have equality with, prior-ity to or preference over the lien of the mortgage on the vessel or will cause the same to be released or discharged from any lien, encumbrance or charge therefor.”

In the light in which I read this section, coming as it does after section 7, which forbids the creation of any lien on the vessel except those for crews’ wages or salvage, it seems to me that this section is an all embracing one dealing with all liens which are at par with, or have priority to, or preference over, the lien held by the mortgagees over the ship. In this regard it permits the shipowner a period of 30 days’ grace after receiving notice that such lien has become due and payable, to discharge it and, in this respect, the lien for crews’ wages and/or salvage are not excepted. In the ledger tendered in evidence by the plaintiffs, there is an item con-tained on folio against 24 December, 1966 for the sum of £14,007.11s.2d being “crew wages disbursement September and November, 1966.” I have no evidence before me as to whether any part of this sum was due before 22 September, 1966, nor evidence as to whether the wages of the crew are paid monthly and, if so, whether in advance or at the end of each month. It is true that I have the evidence of Mr Abdul Azeez Olayide Duroshola that – “since June, 1966 we have been paying the wages of the ship’s crew. The defendants were unable to pay. We have paid up to December, 1966.” I take it, as I must on this evidence and that of the ledger, that the wages paid for June to August, have been included in the ledger and, that being the case, what I have said earlier, that the defendants’ account stood at £458,078.19s.7d less



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interest at 22 September, 1966, equally applies to this claim. In other words, by the terms of mortgage and the evidence of Mr Duroshola, the defendants could call on the plaintiffs to pay any sum and the latter were, by the terms of the mort-gage, bound to advance such sum of up to and inclusive of £470,000 less interest. The sums advanced as crews’ wages being continued in the sum of £458,098.19s.7d, again I must hold that a breach of section 9 has not been shown.

Closely connected with this last point is the argument raised in respect of section 16 which states:–

“The shipowner will reimburse the mortgagee promptly, with in-terest at the rate of 6% per annum, for any and all expenditure which the mortgagee may from time to time make, lay out or ex-pend in providing such protection in respect to insurance, dis-charge or liens, taxes, dues assessment, governmental charges, fines and penalties lawfully imposed, repairs, attorneys’ fees and other matters as the shipowner is obligated herein to provide, but fails to provide. Such obligation of the shipowner to reimburse the mortgagee shall be an additional indebtedness due from the shipowner secured by this mortgage.”

I have evidence of payments by the plaintiffs of attorneys’ fees incurred by the defendants as well as insurance fees and other matters, but, on the evidence of Mr Duroshola, they are all contained in the ledger. He stated in his evidence un-der cross-examination by Mr Whyte that:–

“The ‘Chief Awosika’ cost £247,500, whereas mortgage debt was £470,000. The mortgage was to cover all the defendants’ ex-penses, not necessarily on the ship, up to £470,000.”

It is clear that the advances referred to in section 16, which carry interest at the rate of 6%, must be advances over and above the sum of £470,000. For this reason there had been no breach of section 16 up to 22 September, 1966.

I now return again to section 19, with which I was previ-ously dealing before I went to consider section 16. I had al-ready dealt with all the relevant sections under section 19(c). There is no need for me to deal specifically with the argu-ments under section 19(g) because the breaches alleged by


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Mr Odesanya under this are those contained in sections 2 and 16 with which I have already dealt.

The next argument on section 19 dealt with sec-tion 19(f)(ii), which provides for another “event of default” in which the mortgagee may exercise his rights, as where the shipowner shall – “be unable or admit in writing its inability to pay its debts as they mature.” The short answer to this is that, in the absence of any proven breach of any of the con-ditions or covenants in the mortgage deed, the date of matur-ity is 1972 and, inasmuch as at the time this summons was issued the plaintiffs had not fully advanced to the defendants the full amount under the mortgage deed, I cannot see how there can be a breach of this section.

The other sections to which my attention was drawn, ie, sections 19(4), (5), 23 and 25 all deal with rights which the mortgagee has and may exercise when a breach of any of the covenant has taken place. On the findings above, the conclu-sion I have reached is that, up to and inclusive of the date of the summons, the plaintiff had not fully paid to the defen-dants, or for and on behalf of the defendants, the sum they were, by contract, bound to pay. They were short of this fig-ure, as I have said, by £11,921.0s.5d. It was shown on the day of hearing that, by this time, the sums advanced to the defendants as per the ledger were much in excess of the stipulated figure of £470,000 and that, in addition to this, the defendants, on the evidence before the court, were heavily committed to the Nigerian Ports Authority. I have taken no-tice of the fact that the latter have moved the court to attach the vessel and to sell the same. I have also taken note of the ruling I have just delivered. Though I must dismiss this ac-tion as premature, I find on the facts before me that, on the unrebutted evidence of the plaintiffs as at the date of the summons, the plaintiffs had made advances to the defen-dants totalling £458,078.19s.7d less interest.

It is stated in Halsbury’s Laws of England (3ed), Volume 35 at page 100, paragraph 336 that:–



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“The chief right of a mortgagee of a ship or a majority of shares in a ship, is the right in proper circumstances to take possession. This he may do even before any part of the mortgage debt is due if his security is being impaired in some material way.”

The facts in The Lord Strathcona (1925) P. 143; (1925) 133 L.T. 765 and The Manor (1907) P. 339; (1907) 96 L.T. 871 as to the indebtedness of the mortgagor and his inability to pay are quite similar to those in the case before me.

In The Lord Strathcona Hill J described the plight of the mortgagor in this manner (1225) at 155-156; 133 L.T. at 771:–

“But in succeeding years the owners will be in a still worse, posi-tion. Having no funds to get the ship away, they cannot employ her, even if any profitable freight should offer; and it is notorious that freights are worse now than in December last. Whilst the ship is idle, lay up expenses will be running on and probably the ship will become subject to possessory lien or rights of some har-bour or dock authority to detain and sell and to maritime liens for wages – for someone must be kept on board. In the meantime the mortgage interest will be accumulating, and the plaintiffs, if they choose to do so, can sue the owners in personam in Canada . . .”

In The Manor (supra) Lord Alverstone CJ said at (1907) at 359-360:–

“As I have already said, there had been a breach of contract in the matter of insurance, though I should not think that sufficient by itself, because, for some reason or other, the mortgagees have thought it wise to step into the breach, and to pay the £250 to pro-tect the insurance; but it must not be overlooked that those insur-ances only lasted till some early date in July, and have nothing to do with the insurance of the vessel when she left Cardiff, all which would have to be dealt with by future proceedings . . .

I think, therefore, that the dealing with this ship by the mortga-gor, in the state of circumstances which existed when she arrived in the port of Cardiff, was such that, if the ship was left in the possession of the mortgagor, the security of the mortgagee would have been seriously impaired . . . I think the learned Judge ought to have held that the mortgagee was entitled to take


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possession . . .” (These words do not appear in the report of the case at 96 L.T. 871).

The circumstances of the case before me which take it out-side those authorities are that, up to the date of this sum-mons the whole mortgage debt had not been advanced to the mortgagor, and, by the terms of the agreement, the mortga-gors were to be covered up to that sum, which expenses in-cluded insurance, solicitors’ fees, crews’ wages, etc. The mortgagees are bound by the mortgage deed and I must hold that there had been no breach of the deed up to and inclusive of the date of the writ of summons and therefore dismiss this claim. I shall hear the parties on costs.

Judgment for the defendants.



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British and French Bank Limited v. El-Assad


ADEFARASIN J

Date of Judgment: 23 FEBRUARY 1967

Banking – Loan – Bank taking over assets and the liability of another bank – New bank seeking to recover loan – Proof of authority to recover loan – When necessary

Banking – Loan – Interest therein – Right to interest – Whether bank not in operation can claim interest

Facts

The plaintiffs are bankers and the defendant was its cus-tomer. The plaintiff granted a loan to the defendant. Subse-quently, the United Bank for Africa Limited succeeded the plaintiffs and took over some of their assets and liabilities and was authorised by plaintiff to collect the debts of the de-fendant. Part of the debt was recovered and the plaintiffs brought the present action to recover the balance of £5,380.4s.4d together with interest due thereon.

The defendant denied being indebted to the plaintiffs and alleged that there was an oral agreement between the plain-tiffs and himself wherein he paid the plaintiffs a sum of £6,500 in June, 1960 leaving a balance of £4,500 which was written off. He contended at the trial, that action must fail so long as there was no instrument before the court, executed by the plaintiffs, appointing the successor bank as agent and as the plaintiff had failed to appear and testify.

Held –

1. Where a bank takes over the assets and liabilities of an-other and, as agent of the latter, attempts to collect a debt, it need not adduce evidence to establish its agency in a subsequent action brought by principal to enforce


British and French Bank Ltd v. El-Assad 29

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payment of the debt if such agency is established by the other evidence to the court’s satisfaction.

2. A plaintiff need not himself appear at the trial or testify if it is possible for him to produce evidence at the trial on sufficient proof of his claim.

3. Where a bank institutes an action to recover a loan made to a customer, it is only entitled to interest while the bank is in operation.

In the instant case, the plaintiffs are not entitled to charge any more interest after they had ceased to operate as a bank in Nigeria on 30th September, 1961.

Judgment for the plaintiff

Counsel

For the defendant: Agu

For the plaintiff: Appearances not stated

Judgment

ADEFARASIN J: In this claim the plaintiffs are claiming a sum of £5,380.4s.4d, as money lent to the defendant by the plaintiffs at the request of the defendant, together with inter-est due thereon. The plaintiffs filed a statement of claim in which they averred that they carried on the business of bank-ing and that the defendant, trading as the Swiss West Africa Trading Agency, was their customer. Furthermore, the plain-tiffs averred that as at 31st December, 1965 the defendant owed them the sum of £5,380.4s.4d endorsed on their writ.

The defendant in his statement of defence denied being in-debted to the plaintiffs and alleged that there was an oral agreement between the plaintiffs and himself, whereby he paid to the plaintiffs a sum of £6,500 in June leaving a bal-ance of £4,500, which the defendant stated he had repaid to the plaintiffs. Paragraphs 6, 7 and 8 of the defendant’s statement of defence are relevant and they read as follows:–

“6. The defendant avers that by an oral agreement between the plaintiffs and himself a compromise was struck whereby the


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plaintiffs agreed to close the defendant’s account No. 1 if he would pay a substantial part of the sum therein.

7. The defendant sold his property at Apapa for £6,500 and paid this to the plaintiffs in June, 1960, leaving a balance of £4,500, whereupon the plaintiffs closed the No. 1 account and opened No. 2 account immediately. Since then the de-fendant has paid off the outstanding debt of £4,500 in the No. 1 account by instalments.

8. The defendant will contend at the trial of this action that the balance of £4,500 accrued no interest after the closing down of No. 1 account by the plaintiffs and that the action is there-fore speculative and vexatious and should be dismissed with substantial costs.”

At the hearing two witnesses testified on behalf of the plain-tiffs. One of them, Mr Donald Dunckley, tendered in evi-dence a photostat copy of the defendant’s statement of ac-count with the plaintiffs. Mr Dunckley and the plaintiffs’ second witness, Mr Scott, worked for the United Bank for Africa Limited, who succeeded the plaintiffs in Nigeria and took over some of their assets and liabilities. Mr Dunckley also testified to the effect that the plaintiffs authorised the United Bank for Africa Limited to collect the money, which is the subject-matter of this claim, from the defendant. Counsel for the defendant made great play of this position and submitted that the plaintiffs’ claim must fail so long as the United Bank for Africa Limited had failed to produce an instrument appointing them as agents. I will therefore deal with that point first. It is my view that a plaintiff need not himself appear at the trial or testify if it is possible for him to produce evidence at the trial in sufficient proof of his claim. I am therefore of the opinion that the fact that no one has testified on behalf of the plaintiffs should have no adverse effect on the case if witnesses produced by them have given no satisfactory proof of maters in controversy between par-ties. This is a suit by the plaintiffs and it is unnecessary for the United Bank for Africa Limited to establish agency. The defendant’s statement of defence shows that he admits that he was a customer of the plaintiffs and that he was indebted


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to them for the sum claimed. However, he alleged an oral agreement whereby his No. 1 account was closed and the debt written off. The witness called on behalf of the plain-tiffs has shown quite satisfactorily that the allegations made by the defendant are untrue. Besides, the defendant who made these assertions has a duty to prove them. The bank statement of the defendant shows that, as at 31st December, 1965, he was indebted to the bank in the sum of £5,380.4s.4d. The letters show that the plaintiffs instructed the United Bank for Africa Limited to take steps to recover the outstanding debt against the defendant. The defendant, while giving evidence, stated in a rather vague manner that one Mr Thompson employed by the plaintiffs and another bank officer whose name he did not remember, came to him and asked him to pay whatever he could and that 33% of his debt would be written off. This statement is contrary to what he pleaded in his statement of defence. He went on to say that he paid £6,500 into his No. 1 account, whereupon the account was closed. He said that the agreement was oral. I do not believe that any such agreement was ever reached. The facts given in evidence by the defendant differ from what he pleaded in his statement of defence. He averred there that when he paid in a sum of £6,500 there was a bal-ance of £4,500 in his No. 1 account and that he had since June 1960, paid over this balance to the plaintiffs. The evi-dence shows that the defendant did not pay any sum of £4,500 into his No. 1 account with the plaintiff company. He did not make the allegation in his evidence. Contrary to the evidence and pleading of the defendant, it is manifest that the defendant wrote a letter on 6th July, 1964, to the United Bank for Africa Limited, in which he offered to go to the United Bank for Africa Limited later with a proposition as to how he would pay a sum of £4,108.0s.6d. The evidence ad-duced on behalf of the plaintiffs and the defendant leaves me in no doubt of the defendant’s indebtedness to the plaintiffs on their claim.


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Finally I would like to deal with the point taken by Coun-sel for the defendant that paragraph 3(a) of the memoran-dum of association of the United Bank for Africa Limited showed that the object of the latter was to take over all the assets and liabilities of the plaintiffs. I must say at once that I take a contrary view. Clause 3(a) of the memorandum of association reads as follows:–

“The objects for which the bank is established are:–

. . . to acquire and take over as a going concern the goodwill and undertaking of the banking business now carried on by British and French Bank Limited as branches in Nigeria and all or any of its assets and liabilities in connection therewith and to enter into and carry into effect with such . . . alterations as may be agreed upon, an agreement in the terms of the draft agree-ment . . . between British and French Bank Limited . . . and the bank . . . and which has been subscribed by Sir John Balfour with a view to its identification, and to carry on, develop and turn to account the business and the property and assets comprised in that agreement.”

It will be seen from the foregoing that the objects of the United Bank for Africa Limited were not to take over all the assets of the plaintiffs. In any event it has been established to my satisfaction that the United Bank for Africa Limited did not take over the debt which is the subject matter of the present action.

The plaintiffs claim interest at the rate of 5%. In my judg-ment the plaintiffs’ claim of interest is only maintainable up to the time the debt was due to the plaintiffs. I am of the view that the plaintiffs are not entitled to charge any more interest after they had ceased to operate as a bank in Nigeria. Therefore, the plaintiffs are not entitled to charge interest after 30th September, 1961, for they ceased to operate as a bank in Nigeria on that date. The United Bank for Africa Limited took over some of their business as from 1st Octo-ber, 1961. As the plaintiffs have charged interest in the statement of account, I will make no order that interest be paid on the sum due to the plaintiffs after 30th September,


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1961. The principal sum and the interest due as at 30th Sep-tember, 1961 is, according to the statement of account, £4,336.16s.4d.

There will therefore be judgment in favour of the plaintiffs against the defendant for £4,336.16s.4d, with £63 costs.

Judgment for the plaintiffs.



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African Continental Bank Limited v. Attorney General of Northern Nigeria


ADEMOLA CJN, BRETT, COKER JJSC

Date of Judgment: 9 MARCH 1967 S.C.:360/1966

Banking – Negligence – Customer opened and operated ac-count in fictitious name – Bank receiving and clearing cheques fraudulently obtained – Bank’s duty of care to drawer of cheques

Statute – Section 82 Bills of Exchange Act – Interpretation and purport thereof

Facts

A clerk in the sub-treasury of Northern Nigerian Govern-ment fraudulently opened an account with the appellant bank in the name of a fictitious contractor. He thereafter by fraudulent means induced some Government officials to is-sue cheques in the name of the fictitious contractor which cheques he lodged in the account and were cleared by the appellant bank. He thereafter withdrew the money. The At-torney–General on behalf of Government sued the bank for negligence. The bank pleaded section 82 of the Bills of Ex-change Act which at the initial time was identical with sec-tion 82 of the English Bills of Exchange Act, 1882.

Section 82 of the English Bills of Exchange Act, 1882 states:–

“82(1) Where a banker in good faith without negligence receives payment for a customer of a cheque crossed generally or especially to himself and the customer has no title or a de-fective title thereto, the banker shall not incur any liability to the true owner of the cheque by reason only of having received such payment.

(2) A banker receives payment of a cheque for a customer notwithstanding that he credits his customer’s account


African Continental Bank Ltd v. Attorney–General of Northern Nigeria 35

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with the amount of the cheque before receiving payment thereof.”

Held –

1. The banker who allows an account to be opened in any particular name does not thereby guarantee the holders integrity and true identity.

2. The Court will not impose a higher duty of care on a banker than Hedley Byrne’s case or Agbonmagbe Bank’s case did.

Appeal Allowed.


Nigerian

Agbonmagbe Bank Ltd v. CFAO (1966) 1 All N.L.R. 140

Foreign

Hadley Byrne and Co Ltd v. Heller and Partners Ltd (1940) A.C. 465 Savory v. Lloyds Bank Ltd (1932) 2 K.B. 122

Statutes referred to in the judgment

Nigerian Statute

Bills of Exchange Act, 1964, section 82

Foreign Statute

English Bills of Exchange Act, 1882, section 82

Appeal

This was an appeal from the decision of the High Court, Northern Nigeria awarding damages for negligence against the appellant. The Supreme Court allowed the appeal with costs in favour of the appellant.

Counsel

For the appellant: Ikoku

For the respondent: Belgore



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Judgment

BRETT JSC: (Giving the reasons for the decision of the court) In this case the Attorney–General of Northern Nigeria sued on behalf of the Government of Northern Nigeria. The particulars attached to the writ of summons read:–

“The plaintiff’s claim against the defendant is for the sum of £9,702.13s.8d (nine thousand and seven hundred and two pounds and thirteen shillings and eight pence only) being the damage suf-fered by the Government of Northern Nigeria due to the negli-gence of the defendant.

The defendant bank by its negligence enabled one Johnson Ogu to draw the amount aforesaid dishonestly from the Government of Northern Nigeria by operating an account with the defendant bank in the fictitious name of P.N. Oku during the period June 1959 to January, 1961.”

The claim was thus unequivocally based on negligence, which meant that the plaintiff undertook to show that the bank had committed a breach of a duty of care owed to the Government of Northern Nigeria and that the Government had suffered loss as a result of that breach of duty.

The evidence showed that between the 19th June, 1959, and the 18th January, 1961, the Government, through the sub-treasury, Jos, was induced by the fraud of a clerk in the sub-treasury department named Johnson Ogu, and any con-federates he may have had, to issue eight cheques to a total value of £9,722.13s.8d, of which £9,702.13s.8d was in-tended as payment for work purporting to have been done by a contractor named P.N. Oku, and to send these cheques to the defendant bank. No work had in fact been done by a con-tractor named P.N. Oku, but Johnson Ogu had opened an account in that name with the defendant bank and the pro-ceeds of the cheques were ultimately credited to that ac-count. It is common ground that the defendant bank was in no way privy to the fraud. In six of the cheques the payee was “African Continental bank” (or “A.C.B.”) “A/C for P.N. Oku” (or “Mr P.N. Oku”); in one it was “A.C.B.A/C for sundry persons;” in one it was “manager A.C.B. Limited,


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Jos.” The usual practice when sending a cheque to a payee bank was to send also a “bank certificate” showing the ac-count to be credited. The signatures on the vouchers confirm-ing that the sums for which the cheques were drawn were due and that the cheques might properly be issued had been forged, but the cheques themselves were signed by duly authorised officers of the Government; they were valid orders for the payment of the money and a holder in due course could have enforced payment. In each case the defendant bank presented the cheque, received payment for it and cred-ited the account of P N. Oku. There were constant drawings on the account and by the 23rd February, 1961, the credit bal-ance was only £30.3s.

In his opening and closing addresses Counsel for the plain-tiff referred to section 82 of the Bills of Exchange Act, and the English decisions he cited turned on the right of a bank to claim the protection of section 82 of the English Bills of Exchange Act, 1882, of which the wording is identical. Counsel for the defendant based his defence mainly on the section, and the judge treated his decision as turning on whether the bank had shown such negligence as not to be entitled to the protection of the section. The section has since been repealed and replaced with variations. At the ma-terial time it read:–

“82(1) Where a banker in good faith and without negligence re-ceives payment for a customer of a cheque crossed gener-ally or especially to himself, and the customer has no title or a defective title thereto, the banker shall not incur any liability to the true owner of the cheque by reason only of having received such payment.

(2) A banker receives payment of a cheque for a customer notwithstanding that he credits his customer’s account with the amount of the cheque before receiving payment thereof.”

As Counsel on both sides had invited the judge to treat the section as governing the issues he had to decide it was


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natural that he should have done so, but with respect, it led him to lose sight of what the plaintiff has to prove on a claim for damages for negligence and to assume that the bank must be held liable unless it could prove that it had acted in good faith and without negligence. We do not consider that the section has any application to the claim pleaded. The section does not create a ground of liability; it protects a banker who would otherwise be liable to the true owner of a cheque on a claim either for money had and received or for damages for conversion. On such a claim it is ordinarily immaterial whether the defendant acted negligently or not, but where the claim is brought by the true owner of a cheque against a banker the section creates a special exception to the normal rule that negligence is immaterial, and in relation to certain cheques it protects a banker who can show that he received payment in good faith and without negligence. However, negligence in receiving payment would not be a ground of action in itself and the plaintiff has to prove that he has some other ground of action before section 82, as matter of defence, becomes material at all.

In the present case the trial Judge held that since “P.N. Oku’s” title to the cheques was defective the Government was the true owner, and treated the case as if the claim had been brought for damages for conversion. The issues arising on a claim for conversion had not been fully argued before him, and were not argued at all in this Court, since we held that on the writ of summons and the pleadings the claim was founded on negligence and not on conversion. The differ-ence vitally affects the burden of proof and we regard it as one of substance and not merely of words. If conversion had been properly pleaded the defendant would have had the op-portunity of considering any defences that might have been open to him in addition to that afforded by section 82 of the Bills of Exchange Act, on which the burden of proof lay on him. We find no circumstances to justify a departure from the rule that a plaintiff must be held to the case put forward in his writ of summons and pleadings.


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We come therefore to the true issue in the case, that is, whether the plaintiff has established his claim in negligence. The negligence pleaded consisted in allowing Johnson Ogu to open an account in the name of P.N. Oku, knowing this to be a fictitious name. The trial Judge did not find it proved that the bank knew the name to be fictitious, but he held that if the bank had made effective inquiries it would have found this out and, following such English decisions as Savory v. Lloyds Bank Ltd (1932) 2 K.B. 122, that as it had asked for no references and made no effective inquiries it was not pro-tected by section 82 of the Bills of Exchange Act. We have already pointed out that negligence for the purpose of sec-tion 82 differs from negligence as a separate ground of ac-tion, and we express no opinion on the extent of the inquir-ies which a banker in Nigeria must make before opening an account for a new customer if he is to bring himself within section 82. We also find it unnecessary to decide whether, in view of his pleadings, the plaintiff could not rely on the lack of inquiries or the omission to ask for references as consti-tuting actionable negligence, since in any event it has not been shown that the plaintiff’s loss resulted from the open-ing of the account in the name of “P.N. Oku.”

Mallam Belgore submitted that a contractor who had a bank account was more “respectable” than one who had not, but there was no evidence to suggest that the fact that payment to a bank was asked for, played any part in deceiving the offi-cers who accepted the forged vouchers as genuine and signed the cheques. Even if it did, we should not be prepared to hold that that of itself was enough to make the bank liable in neg-ligence. In Agbonmagbe Bank Ltd v. CFAO S.C. 576/1964 (judgment delivered 25th May, 1966) this Court followed the views expressed in the House of Lords in Hadley Byrne and Co Ltd v. Heller and Partners Ltd (1964) A.C. 465, by treat-ing liability in negligence as no longer confined to physical damage to person or property and as extending to pecuniary damage from a negligent misrepresentation provided


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a duty of care existed, but if the present claim succeeded it would impose a far heavier duty of care on a banker than Hadley Byrne’s case or the Agbonmagbe Bank’s case did, and one which we are not willing to recognise. The respon-dent’s submission in this Court amounts to saying that if a banker allows an account to be opened in any particular name, and persons with whom the holder of the account has dealings learn through him of the existence of the account, the banker may be treated as having made some implied rep-resentation to those persons as to the holder’s integrity or true identity. We unhesitatingly reject that submission.

On the 2nd February, 1967; the appeal was allowed with costs, and these are the reasons for our decision.

Appeal allowed with costs.


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Delalu v. Akappo and another


GEORGE AGJ

Date of Judgment: 31 MARCH 1967

Banking – Banker/customer – Customer drawing cheque in excess of amount in account – Effect

Banking – Mortgage – Equitable mortgage by deposit of title deeds – Essence of – Conditions to be fulfilled to create

Banking – Overdraft – Whether bank has right to third par-ties securities deposited by customer

Facts

The plaintiff brought an action against the defendants to re-cover the title deeds of his mortgaged property and for dis-charge of all claims between the first and second defendants.

The first defendant requested financial assistance from the plaintiff who thereupon created a legal mortgage of his property and gave the proceeds to the first defendant and his family. When the plaintiff requested settlement of the debt and redemption of the mortgage, the first defendant said he had arranged to obtain money from his bank, the second de-fendants, to clear the debt but that they wanted to see the ap-propriate documents. At the plaintiff’s request the mort-gagee forwarded the mortgage and title deeds to the second defendants, who did not then pay off the mortgage debt or return the deeds because their legal department had not yet approved of this step, despite repeated requests to do so by the mortgagee. The first defendant, by a cheque drawn on the second defendant bank, paid off the mortgage and the plaintiff instituted the present proceedings to recover his title deeds and discharge the claims of the defendants.

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second defendants were not entitled to retain the title and mortgage deeds as security for an equitable mortgage.

The first defendant did not enter a defence and judgment was entered against him on an application by motion by the plaintiff; the plaintiff then proceeded against the second de-fendants alone.

The second defendants maintained that the plaintiff re-quested a loan from them on the security of the title deeds to his already mortgaged property. They argued that there was an equitable mortgage by deposit of title deeds and that the sending of the deeds to them by the mortgagee was an act of part performance.

Held –

1. If a bank’s customer draws a cheque for a sum in excess of the amount standing to the credit of his current ac-count, it is really a request for a loan, and if the cheque is honoured the customer has borrowed money. But it does not follow that such a simple transaction is a bor-rowing upon a security not belonging to the customer and known to the bankers to be deposited for a special purpose.

2. Conditional agreement by the party is ineffectual to cre-ate a contract.

3. The essence of an equitable mortgage by deposit of title deeds is an agreement between the parties concerned fol-lowed by an act of part performance. Where a party, pur-suant to a parol agreement, deposits his title deeds with a bank, the act of depositing the deeds is regarded as part performance of an agreement. It is this act of part per-formance which removes the transaction from the provi-sions of the Statute of Fraud 1677, that is the require-ment of memorandum in writing.

4. Two conditions must be fulfilled if a bank want to rely



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on an equitable mortgage by deposit of title deeds. They are:–

(a) a parol agreement between the bank and the customer, and

(b) an act of part performance on the part of the customer.

Judgment for Plaintiff.

Counsel

For the plaintiff: Ogunro

For the defendants: Sanni


Foreign

Broderick, Ex P., In re Beetham (1887) 18 Q.B.D. 766; 56 L.J. Q.B. 635 Cuthbert v. Robarts, Lubbock and Co (1909) 2 Ch.D. 226 Dixon v. Muckleston (1872) L.R. 8 Ch. 155


Nigerian Statute

Evidence Act, Cap 62, 1958, section 96

Foreign Statute

Statute of Frauds, 1677, section 4

Judgment

GEORGE AGJ: This is a very curious case. The plaintiff’s claim is for the delivery to him by the defendants of the title deed of his property at 35 Binuyo Street, Lagos, and for a discharge of all claims as between the first defendant and the second defendants.

The first defendant did not put up defence and judgment was entered against him on an application by motion by the plaintiff. He is the son-in-law of the plaintiff, and the second

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF LAGOS STATE) George AGJ


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defendants were at all material times the bankers of the first defendant.

The plaintiff, in paragraph 4 of his statement of claim averred:–

“The first defendant, by a letter dated 31st July, 1958 from Lon-don, requested financial assistance from me and inconsequence I mortgaged my house, 35 Binuyo Street, Lagos, to the National Bank of Nigeria, Lagos, for £550 and the proceeds of the mort-gage were remitted to the first defendant in London.”

These facts were admitted by the second defendants in para-graph 3 of their statement of defence.

The plaintiff’s case is that, as a result of the letter he re-ceived from the first defendant in July 1958, he executed a legal mortgage of the property known as 35 Binuyo Street, Lagos, to the Mutual Aids Society Limited for the sum of £550. Out of this he remitted £400 to the first defendant, and the balance of £150 to the first defendant’s wife for the maintenance of their children. On the return of the first de-fendant from the United Kingdom in 1959, the plaintiff asked him to settle his debt and redeem the mortgage. The first defendant then said he had arranged with his bank to obtain money to clear the mortgage debt. While admitting that he wrote a letter requesting the Mutual Aids Society Limited to send the title deeds of 35, Binuyo Street to the second defendants, the plaintiff explained that a letter was written because the first defendant told him his salary was being paid through his bank and that the bank wanted to see the documents. The mortgage and the title deeds were for-warded to the bank by the manager of the Mutual Aids Soci-ety Limited by a letter dated 11th September, 1959. This let-ter was addressed to the manager, African Continental Bank, Limited, and in paragraph 2 of the reply, the manager wrote: “We shall forward you our cheque or return documents as soon as we hear from our legal department.”

As the second defendant bank did not pay the sum of £550 to the National Bank, the manager of the Mutual Aids Society


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Limited wrote letters demanding the return of the deeds of conveyance and mortgage. These letters were admitted in evidence because they were signed by the writer and the witness who produced them was conversant with the signa-ture of the manager under whom he worked. Counsel’s ob-jection to the admission of the documents was therefore overruled. The witness referred to above is the accountant at the head office of the National Bank. He gave evidence on behalf of the plaintiff and testified that the manager of the second defendant did not pay any money to the National Bank or the Mutual Aids Society Limited in respect of the loan. He said it was the first defendant who paid the loan and interest.

The first witness for the second defendant bank admitted that the first defendant paid the National Bank the sum of £612.5s.10d by cheque dated 31st May, 1960. He further deposed with respect to the counterclaim that the plaintiff guaranteed the first defendant’s overdraft in writing but that the file containing the guarantee was missing.

Such then is the nature of the claim and the evidence ad-duced by the defendants to controvert it. I shall deal first with the counterclaim. The second defendants in their state-ment of defence and counterclaim averred that they :–

“agreed to grant the loan only upon adequate security where upon the plaintiff requested them to grant the loan upon the security of his title deeds then with theNational Bank. The second defen-dants therefore redeemed and kept as security the plaintiff’s title deeds by repaying the loan of £550 together with interest to the National Bank.”

The evidence led by the second defendants does not support their statement of defence and counterclaim. On the contrary, the evidence of their first witness is that the sum of £612.5s.10d was paid by the first defendant. If the first defen-dant issued a cheque drawn on the second defendants and this made him overdraw, it was by itself an unsecured loan by the bank to the first defendant. In the case of Cuthbert v. Robarts,



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Lubbock and Co (1909) 2 Ch.D. 226, Cozens-Hardy, MR said (1909) 2 Ch.D. 226 at 233; (1908 – 1910) All E.R. Rep at 165:–

“If a customer draws a cheque for a sum in excess of the amount standing to the credit of his current account, it is really a request for a loan, and if the cheque is honoured the customer has bor-rowed money. But it does not follow that such a simple transaction is a borrowing upon a security not belonging to the customer and known to the bankers to be deposited for a special purpose. In my opinion the mere drawing a cheque by cancellor, without reference to the security, was not a borrowing upon the plaintiff’s shares. It was not intended by him to be an act done in pursuance of the au-thority [to borrow money upon the shares], and the bankers could not, by their own mere volition, treat it as an act done by cancellor is pursuant of the authority.”

This authority, when applied to the facts of this case, shows that it was first defendant who redeemed the mortgage. But it should be remembered that the second defendant bank had refused to pay the sum of £612.5s.10d to the Mutual Aids So-ciety Limited until they received approval from their legal department.

As the consideration for the mortgage to the Mutual Aids Society Limited was paid by the first defendant, it behove him to return the title deeds to the plaintiff as he promised to do. But instead of doing this, he cleverly induced the plaintiff, an 80 year old man, to request the Mutual Aids Society Lim-ited to forward the deeds of conveyance to the second defen-dants. I appreciate the fact that the deeds were forwarded to the second defendants before the payment was made, but the mortgage was not redeemed until about four months after the receipt had been acknowledged by the second defendants’ manager and, even then, it was the first defendant who took the initiative.

I certainly do not accept the proposition that the plaintiff deposited his title deeds with the second defendants for the purpose of securing a loan of £3,000. The letter written by the plaintiff to the Mutual Aids Society Limited merely spoke of


George AGJ


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the redemption of the mortgage. There is no evidence what-soever that the plaintiff went to the offices of the second de-fendant bank and I do believe the evidence of the plaintiff that, apart from writing the letter he had no dealing whatso-ever with them.

My finding from the evidence adduced is that the plaintiff was manoeuvred by the first defendant into believing that, once the title deeds were sent to the second defendants, the bank would redeem the loan on the property, as his salary was being paid to the bank and that the bank could readily get back their money by deductions from his salary. This is the only inference I can draw from the conversation between the plaintiff and the first defendant with regard to the transfer of the mortgage to the second defendants.

If the second defendant’s contention is right that the plain-tiff deposited his title deeds with them to obtain a loan, why did they reply to the Mutual Aids Society Limited that they were consulting their legal department? This statement of the second defendants shows that, even assuming that the plain-tiff offered to deposit his title deeds as security for a loan, they accepted the offer only on condition that their legal de-partment agreed. It is a well-known rule of the law of contract that conditional agreement by one party is ineffectual to cre-ate a contract.

Reverting to the counterclaim, I observe that the witness for the second defendants said that the guarantee was in writing. It is a fundamental rule of the law of evidence that once a transaction has been reduced into writing, oral evi-dence of its contents is only admissible under the provisions of section 96 of the Evidence Act (Cap 62). Section 96(1)(c) reads:–

“(1) Secondary evidence may be given on the existence, condi-tion or contents of a document in the following cases:–

. . .

(c) when the original has been destroyed or lost and in the latter case all possible search has been made for it . . .”



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The paragraph requires the second defendants, if they are giving evidence under it, to prove either that the original has been destroyed or lost, and, if lost, to give evidence that all possible searches had been made for it. The witness did not give evidence that the document was destroyed or lost, but merely said it was missing. He did not even attempt to give evidence to show that any search was made for it, nor did he give evidence of the contents of the alleged guarantee. All he said was that the plaintiff guaranteed the loan. In the cir-cumstances, the counterclaim is dismissed.

With regard to the plaintiff’s claim, the essence of an equitable mortgage by deposit of title deeds is an agreement be-tween the parties concerned followed by an act of part per-formance. Where a party, pursuant to a parol agreement, de-posits his title deeds with a bank, the act of depositing the deeds is regarded as part performance of an agreement. It is this act of part performance, which removes the transaction from the provisions of the Statute of Frauds, 1677.

In the case of Ex p. Broderick, In re Beetham (1887) 18 Q.B.D. 766; 56 L.J. Q.B. 635 a bankrupt, being indebted to a bank, made an oral promise to give the title deeds when re-quired as security for the debt. He was then entitled to a re-versionary interest in one-fifth of a farm on the death of his mother, who was tenant for life and who held the title deeds. The mother afterwards died and the title deeds came into the possession of the respondent, who was manager of the bank and who was also entitled to a one-fifth interest in the prop-erty. The respondent told the bankrupt that he had posses-sion of the deeds and that he held the bankrupt’s one-fifth interest for the bank. The bankrupt expressed his assent. The English Court of Appeal held that the bank had not got a valid equitable mortgage of the bankrupt’s share in the farm, for there was no memorandum in writing to satisfy section 4 of the Statute of Frauds, 1677, as amended. The conversa-tion which took place between the bankrupt and the respon-dent as to the custody of the deeds, not being followed by


George AGJ


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any act which altered the legal position of the parties, was not such a part performance of the oral promise to give secu-rity as would exclude the operation of the statute. Also, in the case of Dixon v. Muckleston (1872) L.R. 8 Ch. 155 two properties were concerned. The relevant portion of the judgment of Lord Selborne, LC with regard to the Cotton Hill Estate is as follows (L.R. 8 Ch. at 162-163):–

“They are not mentioned in the letter, and the mere possession of deeds without evidence of the contract upon which the possession originated or at least of the manner in which that possession originated, so that a contract may be inferred, will not be enough to create an equitable security . . . I am clearly of the opinion, therefore, that, so far as the decree of the Master of the Rolls ex-tends the security in this case to the Cotton Hill Estate, it is erro-neous . . .” (These words do not appear in the report of the case at 26 L.T. 752).

It is therefore clear that two conditions must be fulfilled if the defendants want to rely on an equitable mortgage by de-posit of title deeds: (a) a parol agreement between the plain-tiff and the defendant and (b) an act of part performance of the plaintiff.

I do not regard the sending of the title deeds by the Na-tional Bank to the second defendants as an act of part per-formance. In the first place the plaintiff was deceived by his son-in-law and in the second place there was no parol agreement between the plaintiff and the second defendants. I do not believe the evidence of the first witness for the de-fendants when he said: “The bank wanted to sue Dr Akappo and he rushed to him with a letter from the plaintiff; the let-ter is lost.”

At what time did the bank make an attempt to sue Dr Akappo? And when did he rush to the bank? Was it before he left for the United Kingdom or on his return to Nigeria? The plaintiff’s letter to the Mutual Aids Society Limited was writ-ten while Dr Akappo was in England so the defendant could not have been referring to this letter. When the plaintiff wrote the letter, nobody rushed to see the second defendants.



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In my view an equitable mortgage has not been created. It is Dr Akappo who is entitled to an account for the £612.5s.10d and the subsequent overdraft amounting to over £4,000 and not the plaintiff. The plaintiff was concerned only with £550, which Dr Akappo has paid.

Judgment is therefore entered for the plaintiff for the return of the mortgage and title deeds. The second claim in the plaintiff’s writ of summons is unnecessary as the plaintiff is not indebted to the second defendants.

Judgment for the plaintiff.


Bank of America Nat Trust and Savings Ass v. Nig Travel Agencies Ltd 51

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Bank of America National Trust and Savings Association v. Nigerian Travel Agencies

Limited


BRETT AGCJN, COKER, LEWIS, JJSC

Date of Judgment: 19 MAY 1967 S.C.407/1965

Bill of Exchange – Authorised signatories signing after au-thority to sign has been withdrawn – Forgery of Bill of Ex-change – Right of holder in due course defeated by forgery

Facts

The plaintiff as the holder in due course of two cheques drawn by the defendants upon their accounts at Barclays Bank DCO in favour of C, which cheques were endorsed by the said C to the plaintiff for valuable consideration C and A were both authorised signatories to the account of their company. C was dismissed at 9:15 am on the 27th Septem-ber, 1962, and procured A to sign the cheques at 10:00 am when the bank’s mandate to accept cheques signed by C had been withdrawn at 8:00 am. The bank dishonoured the cheques and they were marked “cheque stopped.” The Chief Magistrate held that since A acted in good faith, the com-pany was precluded from setting up the want of authority to avoid payment. In the High Court, the court held that the cheques were forgeries and allowed the company’s appeal. The company appealed to the Supreme Court.

Held –

1. The cheques were false documents and since C’s author-ity to sign on behalf of the company has been withdrawn, the signature amounts to forgery. The defence under sec-tion 24 of the Bills of Exchange Act will avail the appel-lant.

Appeal dismissed with costs.



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Foreign Morison v. London Country and Westminster Bank Ltd (1914) 3 K.B. 356 R v. Mitchell (1847) 1 Den 282

Nigerian statutes referred to in the judgment

Bills of Exchange, section 24 Criminal Code, section 464

Counsel

For the appellant: Burke

For the respondent: Impey

Judgment

LEWIS JSC: (Delivering the judgment of the court) This is an appeal from the decision of Alexander J in the Lagos High Court on the 12th October, 1964, in which he allowed the appeal of the defendants against the decision of Mr AR Bakare, Chief Magistrate, who had entered judgment for the plaintiffs for the sum of £230 and costs. The learned Judge of Appeal dismissed the plaintiffs’ claim with costs.

The plaintiffs’ claim was as follows:– “The plaintiffs’ claim as holders in due course of two cheques drawn by the defendants upon their account at Barclays Bank DCO, 55 Marina, Lagos, in favour of one T.A.N. Cockram and which cheques were endorsed by the said T.A.N. Cockram in blank to the plaintiffs for valuable consideration.”

The said cheques were dishonoured on presentation to the said bank and were returned to the plaintiffs marked “pay-ment stopped.”

PARTICULARS OF CHEQUE £ S d 1. No. 66/A091286 dated

27.9.62 ............ 140 0 0

2. No. 66/A091284 dated27.9.62

............ 90 0 0

230 0 0



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The facts were that the defendant company authorised two persons, one called Cockram who was the manager, and the other called Ajayi who was a director, to sign jointly cheques on behalf of the company. On the 7th September, 1962, the first defence witness (N.P. Roberts), who was an-other director of the company, dismissed Cockram with two months’ notice. On the 27th September, 1962, Roberts went to the manager of Barclays Bank DCO, 55 Marina, Lagos, and informed him that as Cockram had been dismissed and was leaving Nigeria the next day, he was withdrawing Cock-ram’s authority as a signatory of the cheques of the com-pany. Roberts then returned to the offices of the company and informed Cockram that he had withdrawn the authority of Cockram to sign cheques for the company and that he should leave and pack. On the 27th September, 1962, how-ever, these cheques were signed by Ajayi and Cockram on behalf of the company and whilst the company was willing to honour four of them, two, which in fact were made out in Cockram’s name were endorsed by Cockram to the Bank of America, Lagos and used by him to purchase traveller’s cheques, but these two cheques were subsequently dishon-oured being endorsed “payment stopped.”

It is the case for the plaintiffs/appellants that as they are holders in due course, the defendants are liable to pay on the cheques, but the defendants rely on section 24 of the Bills of Exchange Act and claim that the cheques were forged, and that, therefore, they are not liable. Now the main ground of appeal is whether the learned Judge of Appeal was right to hold that the cheques were forged. After some argument, it eventually resolved itself in the main into a question of fact as to whether when the cheques were signed, the authority of Cockram to sign on behalf of the company had been with-drawn. If it had been, then it was submitted that they were forgeries. There was evidence given by Roberts that he went to Barclays Bank at 8:00 am and withdrew the mandate to accept cheques with Cockram’s signature on behalf of the company, and at about 9:15 am, he dismissed Cockram and



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then left the offices of the company at 9:30 am. Roberts said that Cockram did not sign any cheques between 9:00 am. and 9:30 am. Ajayi said in his evidence that he signed the two cheques, which in fact were later dishonoured, at 10:00 am. at the request of Cockram whom he did not then know had had his authority to sign withdrawn, as Roberts never informed him (Ajayi) of this till the next day, the 28th September, 1962. Now if these facts were accepted, then it was clear that Cockram procured Ajayi’s signature after his (Cockram’s) authority to sign had been withdrawn, but Mr Burke for the appellants maintains that the learned Chief Magistrate never specifically made a finding accepting this evidence. On the contrary, Mr Burke maintains that the Chief Magistrate showed his doubt by stating in his judgment –“I find the action of the first defence witness hard to under-stand.” It is necessary to look at the full passage in the judg-ment rather than to take one sentence in isolation in order to understand what the learned Chief Magistrate was referring to. His judgment in this respect reads as follows:–

“Can section 24 of the Bills of Exchange Act avail the defendant company in the circumstances narrated above, I find the action of the first defence witness hard to understand. Cockram was given notice of termination of his appointment on 7-9-62. His authority to sign cheques jointly with Ajayi was not withdrawn there and then. On 27-9-62 Cockram was dismissed summarily, yet, the first defence witness failed to inform Mr Ajayi of his action in withdrawing that morning the authority of both Ajayi and Cock-ram as signatories to the company’s cheques. The company’s cheque book was not immediately taken into custody by the first defence witness. Mr Ajayi was not given to know at any time that Cockram had been served with notice of termination or that he had been dismissed from the company’s service.

In signing the cheques exhibits A and A1, Mr Ajayi acted in good faith. The plaintiffs had no notice of the withdrawal of Cockram’s authority to sign the defendant’s cheques. If Cockram’s signature alone had appeared on exhibits A and A1 and the plaintiffs had accepted it as genuine, they would not have been in a position to enforce payment of the cheques. As it is, the signatures on the



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cheques were those persons usually authorised to draw the defen-dant’s cheques and in my view, the defendant/company is pre-cluded from setting up the want of authority on the part of the signatories to avoid payment.”

The first defence witness had not done all that a reasonable person should do effectively to withdraw the authority of both Cockram and Ajayi as signatories to the company’s cheques and accordingly, the defendant is liable to the plaintiff/bank.

We agree with Mr Impey for the respondents that the sen-tence on which Mr Burke relies does not show that the learned Chief Magistrate was not believing the story of Rob-erts (the first defence witness), but rather that he thought his failure to take away the cheque books and to notify Ajayi that Cockram’s authority was withdrawn amounted to negli-gence on the part of Roberts. The learned Chief Magistrate accepted that Ajayi acted in good faith and impliedly found that Cockram did not. We do not therefore consider that Mr Burke was correct in his argument that the evidence as to when the cheques were signed was disbelieved.

Alexander J considered that the cheques were forgeries and he therefore held that the defendants had established their defence under section 24 of the Bills of Exchange Act. We consider he was right in so holding. In our view, the cheques were false documents within the meaning of section 464(b) of the Criminal Code which reads:–

“A document or writing is said to be false if the whole or some material part of the document or writing purports to be made by or on behalf of some person who did not make it or authorise it to be made, or if, in a case where the time or place of making is ma-terial, although the document or writing is made by or by the au-thority of the person by whom it purports to be made, it is with a fraudulent intent falsely dated as to the time or place of making.”

Accordingly were forgeries within section 465 of the Crimi-nal Code, as the action of Cockram in passing the cheques to the Bank of America and using them to obtain traveller’s cheques for himself, clearly showed his intent that they



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should be acted upon as genuine, as indeed they were by the unfortunate Bank of America. Mr Impey sought to rely on the case of R v. Mitchell (1847)1 Den 282 as showing the actions of Cockram amounted to forgery, but we do not think it helpful to refer to this case when the words of the Criminal Code, which is what applies in Lagos, are what are material, and when these, in our view, are clear.

Mr Burke sought to rely on Morison v. London County and Westminster Bank Ltd (1914) 3 K.B. 356 as establishing that these cheques were not forgeries, but in our judgment, that case is not in pari materia as it deals with when a person has authority to sign a cheque on behalf of another yet abuses his right by misapplying the proceeds. That is not the posi-tion here where the issue is whether or not Cockram had au-thority to sign the cheques at all at the time he and Ajayi did so.

Mr Burke did also submit that there was no evidence that Roberts had the power to withdraw the authority to sign cheques on behalf of the company from Cockram, but Mr Impey rightly, in our view, pointed out that Ajayi, another director, said “first defence witness is in control of day to day running of the company, and he decides who the signa-tories of the company’s cheques shall be,” which answers this objection. The appeal is accordingly dismissed with 33 guineas costs.

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF WESTERN NIGERIA)

African Continental Bank Ltd v. Adewuyi and others 57

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African Continental Bank Limited v. Adewuyi and others

HIGH COURT OF WESTERN NIGERIA

AKINKUGBE J

Date of Judgment: 31 MAY 1967

Banking – Guarantee – Continuing guarantee – Meaning of – Construction of agreement of guarantee

Banking – Overdraft – Limit a customer can draw when granted overdraft

Contract – Written contract – Interpretation of – Admissibil-ity of oral evidence when written contract inconclusive – Guiding principles

Facts

The plaintiff’s claims against the defendants jointly and sev-erally was for the sum of £684.0s.10d representing principal and interest on an overdraft granted to the defendant on 9th October, 1961. The first defendant was the principal debtor while the second and third defendants, stood as his sureties.

The plaintiff was requested by letter by the second and third defendants, as sureties, to grant an overdraft for a spe-cific amount to the first defendant, the principal debtor. As a result an agreement was drawn up under which all three de-fendants promised, jointly and severally, to pay back the loan at a fixed rate of simple interest. Both the letter of re-quest to the plaintiff from the sureties and the agreement were made on stereotyped forms supplied by the bank to customers applying for overdraft. The plaintiff and the first defendant later agreed on a further and considerably larger loan transaction. When the first defendant refused to repay the loan, the plaintiff instituted the present proceedings against the three defendants.



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Judgment was obtained by the plaintiff against the first de-fendant and it elected to proceed against the second defen-dant but not the third defendant. It contended that: (a) the second defendant was liable to the full extent of the over-draft plus interest under the overdraft arrangement; (b) a let-ter which the second defendant purported to write, giving notice that he was withdrawing his guarantee, was never re-ceived; (c) the second defendant fully understood the con-tents of the original letter of request and the agreement made in furtherance of it; (d) both the letter and the agreement should be read together in ascertaining the parties’ intention in the agreement; and therefore (e) as the letter mentioned a continuing guarantee, the transaction amounted to a continu-ing guarantee.

The second defendant maintained that: (a) he was only li-able on his original guarantee for half the proposed over-draft; (b) in any event, he withdrew his guarantee on learn-ing that the first defendant proposed to enter into a much greater loan transaction and communicated this withdrawal by letter to the plaintiff; (c) the guarantee entered into by himself under the overdraft agreement was not a continuing guarantee but one for a fixed period of time; (d) since the plaintiff entered into a new agreement with the first defen-dant without his knowledge, this effectively discharged him from liability on the original guarantee.

Held –

1. If in a contract guaranteeing an overdraft, the surety is liable for as long as the principal sum remains out-standing for the payment of interest, that contract amounts to a continuing guarantee.

In the instant case, the guarantee agreement – exhibit C – which contain the clause “and also so long as any prin-cipal sum remains outstanding to pay interest thereon at the rate aforesaid” is a continuing guarantee.



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2. Where an overdraft is granted, by a bank, it will entitle the customer to overdraw on his account to the limit of the overdraft.

3. Where a written agreement between the parties to a par-ticular transaction which is not intended to contain all the terms is preceded by an oral agreement between them, the oral agreement is equally part and therefore must be incorporated into the contract as evidence of in-tention.

In the instant case, the transaction between the parties is not based mainly in the letter of request – exhibit A the guarantee agreement – exhibit C. The oral evidence on both sides that the transaction was for an overdraft must be incorporated into the transaction.



Foreign S.S. Ardennes (Cargo Owners) v. S.S. Ardennes (Owners) (1951) 1 K.B. 55 Walker Property Investment (Brighton) Ltd v. Walker (1947) 177 L.T. 204

Counsel

For the plaintiff: Akinjoba and Aderemi

For the defendant: Sarumi

Judgment

AKINKUGBE J: The plaintiff claims from the defendants, jointly and severally, the sum of £684.0s.10d, representing principal and interest on an overdraft granted to the defen-dants on October 9th, 1961.

The first defendant is the principal debtor, whilst the sec-ond and third defendants stood as his sureties. According to the evidence the second and third defendants requested the plaintiff bank, on 9th October, 1961, to grant overdraft of £500 to the first defendant – see exhibit A. On the same day


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the second defendant sent exhibit B requesting an overdraft for £500 for the first defendant. On the face of exhibit A, the request made by the second and third defendants, an agree-ment, exhibit C, was prepared so that, for the purpose of the second defendant’s liability, it is exhibit A and not exhibit B that will be considered since it is as a result of exhibit A that exhibit C was made.

In exhibit C it is shown that the principal debtor, the first defendant, and the second and third defendants, his guaran-tors, promised jointly and severally to pay back the sum of £500 with simple interest of 8% per pound per month. Ac-cording to exhibit D the defendants owed £684.0s.10d.

It was pointed out that judgment was obtained against the first defendant and that the plaintiff is not proceeding against the third defendant, so that the case is only against the sec-ond defendant. The second defendant said in evidence that he was only liable on his original guarantee to the extent of £250. He said that when he knew that the first defendant had entered into a loan transaction to the extent of £3,000 he withdrew his guarantee. He tendered exhibit E, a post office slip of registered letter, and exhibit F, a copy of the original letter he sent to the plaintiff, which the plaintiff could not produce although a notice to produce it was served on him. It was however given in evidence in favour of the plaintiff that it was not received.

With regard to exhibits E and F, I have not the slightest doubt that the original exhibit F was sent to the plaintiff by registered post and that it was received by the plaintiff.

Although the second defendant said that his liability on ex-hibits A and C was only to the extent of £250, I think that view is wrong. His liability under exhibits A and C is joint and several. It is to the extent of £500 with simple interest of 8% per pound per month.

Mr Sarumi for the second defendant argued that exhibit C, the agreement entered into by the second defendant with the


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bank, was not a continuing guarantee. He argued that it was an agreement for only one month.

Mr Sarumi also argued that, since the bank entered into a new agreement with the first defendant without the knowl-edge of the second defendant, the latter is discharged from his liability.

Both the letter of request, exhibit A, from the second and third defendants to the bank for an overdraft of £500 in favour of the first defendant and the agreement exhibit C, made thereafter, were made on stereotyped forms supplied by the bank to their intending customers who might wish to apply for overdrafts. The second defendant, as pointed out by Mr Aderemi for the bank and from my impression of him, fully understood what was contained in exhibits A and C. Ex-hibit C was prepared in furtherance of exhibit A and both are to be read together in ascertaining the intention of the parties in case of any difficulty of construction of any part of ex-hibit C.

The part of the agreement attacked by Mr Sarumi is where it is stated that:–

“The borrower and the guarantors do hereby promise, jointly and severally, to repay to the company the principal sum together with all legal expenses incurred in connection with the loan, with sim-ple interest due and payable thereon at the rate of 8% per pound per month by one consecutive equal monthly instalment, the first payment of such instalments to be paid at the end of every month from October, 1961, and also as long as any principal sum re-mains outstanding to pay interest thereon at the rate aforesaid.”

The above hardly makes sense. I do not agree with Mr Sa-rumi that it was to be paid in one. It refers to – “one consecu-tive equal monthly instalment,” which is difficult to under-stand. The rate of instalment is not stated.

Exhibit D, the statement of account, was tendered on behalf of the plaintiff. There it is shown that as long as the first de-fendant owed money to the plaintiff bank he was to continue to pay interest. It was not stated how much he was supposed


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to repay in any month. Paragraph 2 of exhibit A, the letter of request for the loan, speaks of a continuing guarantee. I hold that the transaction is a continuing guarantee, having regard to paragraph 2 of exhibit A and the part of exhibit C which states: “[A]nd also as long as any principal sum remains out-standing to pay interest thereon at the rate aforesaid.”

Coupled with the above is the statement of account, ex-hibit D. The second limb of Mr Sarumi’s argument is that, on October 9th, 1961, the loan of £500 was never advanced to the first defendant as contained in the agreement, ex-hibit C. It is common ground that the transaction was not just an ordinary loan but an overdraft facility. It is well known that if it was an overdraft transaction, it would entitle the first defendant to overdraw on his account to the extent of £500. Thus on 9th October, 1961, if he owed the sum of £517.12s,3d, according to exhibit C, then by virtue of the overdraft facility granted, he was entitled to withdraw at any time to the extent of £1,017.12s.39., provided that the ac-count was not separated from the existing one.

The transaction between the parties cannot, in view of the evidence adduced on behalf of the plaintiff bank and that of the second defendant, be based mainly on the letter of re-quest for the loan and the agreement. The oral evidence on both sides that the transaction was for an overdraft must be incorporated into the transaction. The transaction was partly oral and partly written.

In Walker Property Investment (Brighton) Ltd v. Walker (1947) 177 L.T. 204 the draft, in a treaty for the lease of a flat belonging to the plaintiffs orally stipulated that the de-fendant would, on leasing the plaintiffs’ flat, have two rooms in the basement and the garden for his use. Subse-quently a written agreement was drawn up in which refer-ence was not made to the use of the two basement rooms and the garden. In an action filed by the plaintiffs, the Eng-lish Court of Appeal held that the oral agreement about the


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basement rooms and garden must be read with the written agreement.

In S.S. Ardennes (Cargo Owners) v. S.S. Ardennes (Own-ers) (1951) 1 K.B. 55 the plaintiffs were growers of oranges in Spain. They made an oral agreement with the defendants’ agent, the defendants being ship owners, to ship their car-goes of oranges straight to London. The oranges were loaded in the defendants’ ship, but instead of going straight to London, it first went to Antwerp and by the time it arrived London the plaintiffs had lost a favourable market. In an ac-tion by the plaintiffs against the defendants, the defendants relied on certain terms in the bill of lading which expressly allowed them to proceed by any route and whether directly or indirectly to London. The court held the ship owners li-able, and held that the oral agreement that the ship would sail straight to London should be read as part of the contract.

As the transaction was that of a loan by way of overdraft, it was up to the first defendant to withdraw to the extent of £500 over and above his account with the bank on October 9th, 1961. I have pointed out that on 9th October, 1961, he owed the bank the sum of £517.12s.3d. No evidence was adduced as to how he came to owe that amount but, in the absence of evidence, it could be taken that he had the right to withdraw £500 over his existing liability which would make a total of £1,017.12s.3d.

Mr Sarumi drew my attention to exhibit D into which on 30th October, 1961, the first defendant paid in £850 and on 2nd November, 1961, from which he withdraw £850. Mr Sarumi said that his client was no longer liable, but as the transaction was a continuing one, he is still liable to the ex-tent of £500. No evidence of the other transactions apart from the other one under consideration has been shown.

I will reject the assertion of the second defendant that the first defendant applied for an overdraft of £3,000. Since there is no evidence of a new arrangement about a £3,000 overdraft the letter of the second defendant exhibit L, is not


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worth considering. On the face of exhibit D the liability of the first defendant on 30th July, was £848.11s.2d, so that the letter did not absolve the second defendant from liability.

I notice that, from exhibit D, it is difficult to discover the interest chargeable on the £500 loan granted to the first de-fendant as an overdraft. Interest calculated in exhibit D represents the interest on sums above £500 and even on debts incurred before he took the loan of £500. This the sec-ond defendant cannot be made to pay. As it is difficult to know the actual interest chargeable on £500 from the com-putation in exhibit D, I will set aside the interest insofar as the second defendant is concerned.

My judgment, therefore, is that the second defendant is li-able to pay the sum of £500, the loan granted to the first de-fendant. I also order that the liability should be joint and several with that of the first defendant against whom the plaintiff has obtained judgment. Also, whatever might have been awarded to the plaintiff against the first defendant, the joint liability of the second defendant should only be to the extent of £500.

I award costs assessed at £21 against the second defendant in favour of the plaintiff.

Order accordingly.


National Bank of Nigeria v. Hotchand and others 65

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National Bank of Nigeria v. Hotchand and others


ALEXANDER J

Date of Judgment: 14 JULY 1967

Banking – Banker/customer relationship – Contractual rela-tionship – Special contractual relationship may over-ride implied contract

Banking – Loans – Overdraft – Interest charged must be proved in court by a banker where the banker wants to re-cover the interest

Banking – Loans – Overdraft – Interest on overdraft – Must be fair, reasonable and agreed to by the customer

Facts

The plaintiff claims against the defendants, jointly and sev-erally, principal and interest on an overdrawn account.

The plaintiff (bank) granted overdraft facilities to the defen-dant company based on a certain type of mandate contract. The plaintiff could not prove the interest payable on the overdraft and could not prove the mandate contract with the customer. The court finds that the rate of interest chargeable was not proved.

Held –

1. The banker in order to recover interest on overdraft must prove the type of interest charged by admissible evi-dence to make it possible for the court to verify the cor-rectness of the charges on account of interest, in particu-lar where there are numerous entries in an account relat-ing to interest and substantial sums of interest involved.

Plaintiff case non-suited.



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Nigerian

Nahman v. Odutola (1953) 14 W.A.C.A. 381 Pappoe v. Bank of British West Africa (1933) 1 W.A.C.A. 287

Nigerian statute referred to in the judgment

Evidence Act, Cap 62, 1958, section 34, 96, 131

Book referred to in the judgment

Paget’s Laws of Banking (1961) 6ed, page 48

Counsel

For the plaintiff: Odesanya

For the first defendant: Ajibola

For the second and third defendant: Impey

Judgment

ALEXANDER J: The plaintiff claims from the defendant in this action jointly and severally:–

“the sum of £96,019. l0s.4d, being monies due and payable to the plaintiff by the defendants on the defendants’ overdrawn account, the overdraft being granted to the defendants at their request. The plaintiff also claims interest on the said sum of money from July 1st, 1966 at the rate of 5% per annum until the judgment is given.”

Pleadings were ordered, filed and delivered. At the com-mencement of the trial the plaintiff’s Counsel announced that the plaintiff was not claiming interest for the period af-ter the date of the application for the summons. This was confirmed by the plaintiff’s witness under examination-in-chief.

Only one witness, Mr REB Osborne, the plaintiff’s senior accounting clerk, testified on behalf of the plaintiff. The de-fendants did not testify. In fact no evidence was adduced on their behalf.


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The following facts are established to my satisfaction and are indeed uncontradicted by any evidence. The plaintiff is a banking company incorporated under Nigerian law with its registered office at 82/86 Broad Street, Lagos. The defen-dants, at the time they opened an account with the plaintiff on 5th September, 1956, were trading in the name and style of “Lagos Fishing company.”

It is alleged by the plaintiff that, at the request of the de-fendants, banking facilities were granted to them by the plaintiff in consequence of which their account with the plaintiff was overdrawn to the extent of the sum claimed in the writ of summons, “which sum includes interest and other bank charges.” The defendants have, in their respective statements of defence, denied these allegations and put the plaintiff to strict proof thereof.

First of all, although the account is clearly admissible in evidence, it is not, in my opinion, sufficient proof per se of the claim which, as already stated, includes interest. There is no evidence of the rate of interest charged from time to time or of the manner in which the sums charged as interest were arrived at.

There is also no evidence as to whether the interest is sim-ple or compound and whether it is in accordance with the custom of bankers in Nigeria or fair and reasonable. In Pap-poe v. Bank of British West Africa (1933) 1 W.A.C.A. 287 it was held that a charge of 10% compound interest with monthly rests on an overdrawn current account was fair and reasonable, and in accordance with the well recognised cus-tom of bankers in England and the Gold Coast and that such custom had been proved to be well known to the plaintiff who acquiesced in the rate of interest charged against him. There is in the present suit no evidence on which any such or similar findings may be made.

In view of the numerous entries relating to interest (about 151) and the very substantial sums of interest involved, I con-sider essential that the rate of interest charged from time to

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF LAGOS STATE) Alexander J


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time and the type of interest, whether simple or compound, should be disclosed by admissible evidence to make it possi-ble for the court to ascertain and verify the correctness of the charges on account of interest and, consequently, the correct-ness of the total amount claimed in the writ of summons.

Apart from the fact that the rate of interest is not disclosed either in the writ of summons, or in the statement of claim, or by the evidence adduced on behalf of the plaintiff, the plaintiff’s witness testified under cross-examination that the account was opened on behalf of the defendants on the strength of a mandate in a form known as Form 9 at the plaintiff bank. This mandate no doubt forms the basis of the contractual relationship between the plaintiff and the defen-dants in relation to the opening of the account, the facilities granted, and the terms and conditions on which these facili-ties were granted.

In Paget’s Laws of Banking (6ed) at 48 (1961) this special relationship is described as follows:–

“ . . . (S)uperimposed on this general relationship of banker to cus-tomer there may be special relationships arising from particular circumstances and requirements and usually expressed in writing. For instance, banks have a variety of forms of mandate designed to provide for the special considerations applying to the accounts of companies, partnerships, clubs and other unincorporated bod-ies, executors, trustees and other joint customers. The express terms of such mandates, insofar as they conflict (which usually they do not) with the implied terms of the general relationship, override them. In all cases the rights and obligations inherent in the giving and acceptance of such mandates are contractual and breach would give rise to a claim in damages.”

The difficulty, however, is that there appears to be no ad-missible evidence of this document which is fundamental to a determination of the issues before the court. A copy of the document referred to as Form 9 and said to have been signed by the defendants after completion appears at page 91 of the certified true copy of the proceedings in a previous Suit No. L.D. 264/1961 (see exhibit 2). Being a copy and not an


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original, Form 9 at page 91 of exhibit 2 can only be admissi-ble evidence if it falls within the rules relating to the admis-sibility of secondary evidence. No foundation has been laid upon which it could be held that this document is admissible as secondary evidence pursuant to section 96 of the Evi-dence Act (Cap 62). It will be observed from page 25 of ex-hibit 2 that the third defendant in this suit who was the first plaintiff in the earlier suit tendered the mandate in the earlier suit and that it was then admitted in evidence. Unfortunately, this evidence in the earlier proceeding is not admissible in the present suit since the conditions prescribed by section 34 of the Evidence Act (Cap 62) for the admissibility of such evidence do not exist. The parties to the two suits are not the same. In the earlier suit the present second and third defen-dants were the plaintiffs and the present first defendant was the only defendant. The present plaintiff was not a party thereto. Further, the questions now in issue are not substan-tially the same as in the earlier suit which was in connection with the existence, operation and dissolution of the partner-ship between the parties to that suit and the operation of an-other bank account with the present plaintiff in the name of the present second and third defendants, “Bombay Stores.”

Exhibit 2 was indeed tendered by consent, but no reference was made to any particular document and certainly not to the document in question which was first referred to in cross-examination of the plaintiff’s witness. Under sec-tion 131 of the Evidence Act exhibit 2 is clearly evidence of the judicial proceedings in Suit No. L.D. 264/1961, but that does not make the testimony of the witnesses in that suit evidence in this suit. Nor can this section, in my view, jus-tify the reception of secondary evidence, whether oral or written, of the document in question without the necessary foundation being laid.

In Nahman v. Odutola (1953) 14 W.A.C.A. 381 the court relying on the best evidence rule held that, notwithstanding the fact that the whole record of an earlier suit was admitted



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in evidence by consent, the conditions laid down in sec-tion 34(1) of the Evidence Act were not established at the time the record was admitted in evidence so as to justify the reception of the statements of a witness who had testified in the earlier suit as evidence in the later suit.

In the result, I hold that there is no satisfactory, or even admissible, evidence of the mandate forming the basis of the contractual relationship between the plaintiff and the defen-dants and, in particular, no evidence of the terms and condi-tions on which overdraft facilities were granted to the defen-dants or of the rate at which they agreed or were liable to pay interest from time to time. It is necessary for the court to know these facts before arriving at a decision.

In the circumstances, I do not consider it necessary to ex-amine the defences based on the Limitation Acts and the date of dissolution of the partnership between the parties.

I therefore hold further that satisfactory evidence has not been given entitling either the plaintiff or the defendants to the judgment of the court and I hereby non-suit the plaintiff. Having regard to all the circumstances of the case, and bear-ing in mind the provisions of Order 14, rule 5 of the Su-preme Court (Civil Procedure) Rules (Cap 211), it is hereby ordered that the parties do bear their own costs.

Order accordingly.


Ogundana and another v. Akinwunmi 71

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Ogundana and another v. Akinwunmi


TAYLOR CJ

Date of Judgment: 6 NOVEMBER 1967

Banking – Bank employee – Cashier – Duties in bank – Bank liable only if cashier acting within course of employ-ment

Banking – Vicarious liabilities to third party in tort – Scope of authority

Facts

The respondent claimed against the appellants jointly and severally in the magistrate court general damages for false imprisonment. A customer of the second defendant lost some money while within the premises of the Bank and the first appellant herein a cashier of the second appellant identi-fied the respondent as the person responsible and which led to the arrest and detention of the respondent by the police. He was subsequently released, and he filed this action against the cashier and joined the second appellant. The sec-ond appellant contended that the scope of the first appel-lant’s employment did not cover such identification. The magistrate gave judgment against both appellants.

The appellants appealed against the judgments of the mag-istrate court.

Held –

1. The bank cashier is only authorised to receive money paid in by customers to the bank and is not acting within the scope of his authority actual or implied in identifying a customer to the police and taking steps to cause his ar-rest. First defendant liable, second defendant appeal suc-ceeds.



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Case referred to in the judgment

Foreign Case

Sewell v. National Tel. Co Ltd (1907) 1 K.B. 557; [1904 – 1907] All E.R. Rep. 457


Halsbury’s Laws of England (3ed), Volume 25 at pages 536-540

Counsel

For the defendants/appellants: Olofinmakin

For the plaintiff/respondent: Awopeju

Judgment

TAYLOR CJ: The plaintiff, now the respondent, sued the de-fendants, now the appellants, for the sum of £250 as dam-ages for false imprisonment.

The facts were that a customer of the second defendant bank, Amadu Yaro by name, lost some money while on the second defendant’s premises. The plaintiff, also a customer of the second defendant, alleges that the first defendant, an employee of the second defendant, made a positive identifi-cation of the plaintiff as the thief. As a result the plaintiff was arrested by the police and kept in a police cell for two days, when he was released without being prosecuted.

The defence was a denial of the allegation that the first de-fendant accused the plaintiff of the theft, though the first de-fendant admitted that, at the identification parade held by the police, he pointed out the plaintiff not as the thief but as one of the persons at his bank counter on the relevant day.

The learned Chief Magistrate accepted the plaintiff’s case and held that the claim was proved. He awarded the plaintiff the sum of £150 as general damages against both the defen-dants jointly and severally. He held inter alia that:–

“Without the act of the first defendant, the plaintiff would not have been arrested and detained. The question now is – was the first defendant acting within the scope of his employment? I say he


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was because Yaro is as much a customer of the second defendant as the plaintiff is.”

On the first ground, my attention was drawn by learned Counsel for the appellants to the case of Sewell v. National Tel. Co Ltd (1907) 1 K.B. 557; [1904 – 1907] All E.R. Rep 457. But the facts of the present case are quite distinct from those in Sewell’s case for on the evidence of the plaintiff as accepted by the learned Chief Magistrate, the first defendant directly caused the arrest and imprisonment of the plaintiff. The evidence further showed that, in spite of the fact that Amadu Yaro said he could identify the thief, he did not identify the plaintiff as the thief at the identification parade. There is, in my view, no substance in the first ground on the facts as found by the Chief Magistrate. The only ground of some substance was the ground which urged that the first defendant was not acting within the scope of his employ-ment at the material time.

I find it difficult to see the reasoning in the portion of the judgment of the chief magistrate on this most controversial legal point that the first defendant was so acting within the scope of his employment with the second defendant because both the plaintiff and Amadu Yaro were the latter’s custom-ers.

Is a bank clerk acting within the scope of his employment as cashier in accusing and taking steps which lead to the ar-rest of a customer for alleged theft of money not from the bank but from a customer in the act of paying in? In Hals-bury’s Laws of England (3ed), Volume 25 at pages 536-537 it is stated:–

“The relation of master and servant amounts to a representation by the master that the servant has authority to perform the duties which he is employed to perform, and to do such acts as are inci-dental to their performance. Where, therefore, a tort committed by the servant falls within the scope of the authority to be implied from his employment, the master cannot escape liability on the ground that he gave his servant no authority to commit torts, or

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even on the ground that he had expressly prohibited the servant from committing the tort in question.”

The learned author goes on to say (ibid at 539-540):–

“It is not sufficient to show that the relation of master and servant existed between the actual tortfeasor and the person sought to be made liable, or even that the act in the doing of which the third person was injured was done on the master’s behalf. The act must be shown to have been performed while the servant was acting within the course of his employment, that is while the servant was engaged on his master’s business and was performing either duties falling within the scope of this authority which he was em-ployed to perform or functions which were at least incidental to his employment. Unless this is established, any action against the master will fail.”

The onus was on the plaintiff to establish this. The evidence adduced at the hearing went no further than to show that the first defendant was a cashier of the second defendant. Dif-ferent considerations, I believe, would have applied if the money stolen had been the property of the second defendant and, similarly, if the first defendant had been a security offi-cer attached to the second defendant. But to say that a cash-ier, authorised to receive money paid in by customers to a bank, is acting within the scope of his employment, actual or incidental, in making accusations of theft in respect of money held by a prospective or actual customer is a proposi-tion to which I cannot lend authority.

Mr Awopeju also argued that the act of the first defendant was adopted by the second defendant but I can find nothing on record to show this.

In my view, the learned Chief Magistrate erred, on the facts before him, in holding that the first defendant was act-ing within the scope of his employment and should have dismissed the case against the second defendant.

There is no substance in the argument as to the damages being excessive and I dismiss it.


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The appeal of the second defendant succeeds and the judgment of the Chief Magistrate is set aside to that extent. The appeal of the first defendant is dismissed.

The order for costs in the court below will remain, but against the first defendant only. The parties will bear their costs of this appeal.

Order accordingly.



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Atrib v. United Bank For Africa Limited


ALEXANDER J

Date of Judgment: 2 DECEMBER 1967

Banking – Cheques – Collection by bank – When banker protected – Section 2(2) Bills of Exchange Act, 1964

Banking – Cheques – Conversion of – Action against banker – Negligence alleged against banker – Absence of – Onus of proof on banker – Section 2(2) Bill of Exchange Act, 1964 – Protection of – When available to banker – Principles appli-cable

Banking – Current account – Opening and operating of – Bankers negligence – How proved

Bills of Exchange – Cheques – Action for conversion against banker – Negligence alleged against banker – Absence of – Onus of proof on banker – Test applicable – Section 2(2) Bills of Exchange Act, 1964 – Protection of – When avail-able to banker – Principles governing

Bills of Exchange – Cheques – Collection of by bank – When banker protected in course of – Section 2(2) Bills of Ex-change Act, 1964 – Defence thereunder – When available to banker

Facts

The plaintiff brought an action against the defendant bank to recover a sum of money as damages for conversion of a cheque by the defendant or, in the alternative, as money had and received by the defendant for the plaintiff’s use.

The plaintiff was offered the assignment of a plot of state land for a specified consideration by one Nguluruma, a Ni-gerian Ambassador. He accepted this offer and drew a cheque on his bank for the specified amount in favour of “Nguluruma or bearer” and crossed it “A/c payee.” The


Atrib v. United Bank for Africa Ltd 77

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plaintiff handed this cheque to one Abubakar, who claimed to be acting as Nguluruma’s agent, on Nguluruma’s prem-ises, and accepted as genuine the documents of title supplied to him. The plaintiff’s cheque was then paid into a bank ac-count of an individual purporting to be Nguluruma, but who had already an account with another branch of the same bank. The account was opened on the strength of a reference from Abubakar who was personally known to the manager of the bank, even though the manager knew the payee to be a customer of the bank under another name. Within a month of the cheque being paid into the bank, the bulk of the money was withdrawn, at that stage the police instigated in-quires into the plaintiff’s property transaction with Abubakar. Abubakar later disappeared. The plaintiff insti-tuted the present proceedings to recover the value of the cheque as either damages for conversion by the defendant or as money had and received by the defendant for the plain-tiff’s use.

The plaintiffs contended that:–

“(a) the defendant, through its manager and its accountant, who knew that the person claiming to be Nguluruma was in fact using an assumed name, acted in a negligent manner in al-lowing the account to be opened with the proceeds of the plaintiff’s cheque and therefore facilitated the conversion;

(b) the defendant failed to fulfill the normal precautions of a collecting banker in not checking that the person presenting the cheque was in fact the payee;

(c) because the individual claiming to be Abubakar received the plaintiff’s cheque with intent to steal it and its proceeds, the plaintiff was the true owner of the cheque and the person lawfully entitled to complain of its conversion; and therefore

(d) the defendant cannot avail itself of the defence in sec-tion 2(2) of the Bills of Exchange Act, 1964.”

The defendant maintained that:–

“(a) through its manager and accountant, it had acted throughout in good faith and without negligence so as to entitle it to the



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protection of section 2(2) of the Bills of Exchange Act, 1964; and

(b) in the event, the plaintiff was no longer the true owner of the cheque and was therefore disentitled from bringing and ac-tion for its conversion.”

Held –

1. When a banker opens, or operates an account for a cus-tomer or collects a cheque for him, the test of negligence on his part is whether the circumstances of the transac-tion or actual or proposed conduct of the account are so out of the ordinary course that they ought to have aroused reasonable suspicion in his mind and caused him to make inquiries or take references to satisfy himself as to the customer’s identity and circumstances.

2. The drawer of a cheque received by another, who in-tended to steal it and its proceeds, remains the true owner of the cheque and the proceeds, even after the theft, so as to lawfully entitle him to bring an action for its conversion.

3. Where a banker collects a cheque for a customer who has no title or a defective title to that cheque, the banker is liable in conversion for the customer’s lack of title once the true owner proves his title and the act of taking by the customer. The absence of negligence or of inten-tion or knowledge are alike immaterial as defences, unless the action arises under section 2(2) of the Bills of Exchange Act, 1964, and the absence of ordinary pru-dence on the part of the true owner is immaterial whether the issue arises at common law or by statute.

4. Where a banker credits a cheque to which the bearer has no title, to an account opened without due references be-ing sought and effective inquiries made, the true owner’s remedy is an action for conversion, not for money had and received.

5. Where a banker relies on section 2(2) of the Bills of Ex-change Act, 1964, as his defence to a claim founded on negligence in respect of the banker’s receipt of payment



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for a customer of a cheque crossed to the customer, the burden of proof is on the banker to prove absence of negligence to the true owner.

6. A banker who receives payment for a customer of a cheque crossed generally or specially to himself, to which the customer has no title or a defective title, is guilty of negligence towards the true owner of the cheque if he fails to make inquiries when the paying in of the cheque by the customer, coupled with the circumstances antece-dent and present, is so out of the ordinary course that it ought to have aroused doubt in the banker’s mind, and he cannot then avail himself of the protection of section 2(2) of the Bills of Exchange Act, 1964.

7. A banker is guilty of negligence towards the drawer of a cheque, “Account payee only” if he opens an account for the person presenting the cheque and collects the money for it without making inquiries. There is of course, no real distinction between a crossing of “account payee” and a crossing of “Account payee only.”

8. A bank may be negligent in not making inquiries as to a customer on opening an account, and there may be neg-ligence in not noticing the account of the customer from time to time and considering whether it is a proper or a suspicious one.

Per Curiam “Having regard to the principles enunciated and the illustrations given in the authorities cited above, I hold, in conclusion, that the defendant is not entitled to the protection of section 2(2) of the Bills of Exchange Act, 1964. The defendant’s servants have been guilty of negligence in opening the account on the recommenda-tion of Abubakar, whose own account at the material time and to their knowledge being operated by him in an unsatisfactory man-ner, to say the least, without making necessary inquires into the circumstances in which a customer known to them as ‘Mallam La-gos’ was opening a new account at the Kaduna branch of the bank in the name of ‘Mohammed Nguluruma’ and a cheque crossed ‘A/c payee’ for £3,000 in favour of Mohammed Nguluruma



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and drawn on a Lagos branch of another bank. On their own ver-sion of the facts, which I do not accept (that neither Abubakar nor Mallam Lagos was known to them at the time the account was opened), they would, in my opinion also be guilty of negligence. The defendant was also guilty of negligence in collecting the pro-ceeds of the cheque on behalf of Mallam Lagos, alias ‘Ngulu-ruma,’ who to its knowledge, already had a meagre account at the bank in his correct name, and thereafter, paying out the proceeds on his instructions and on his behalf.”



Foreign

Commissioners of Taxation v. English, Scottish and Austra-lian Bank Ltd (1920) A.C. 683; (1920), 89 L.J. P.C. 181 House Property Co of London Ltd v. London County and

Westminster Bank Ltd (1915) 84 L.J.K.B. 1846; 113 L.T. 817

Ladbroke and Co v. Todd (1914) 111 L.T. 43; 30 T.L.R. 433 Lloyds Bank Ltd v. Chartered Bank of India, Australia and

China (1929) 1 K.B. 40; (1928) All E.R. Rep 285 Lloyds Bank Ltd v. E.B. Savory and Co (1933) A.C. 201;

(1933) 102 L.J. K.B. 224


Bills of Exchange Act, 1964, section 2(2)

Counsel

For the plaintiff: Chief Davies and Adedipo

For the defendant: Bentley

Judgment

ALEXANDER J: The plaintiff’s claim against the defendant is for – “the sum of £3,000 as damages for conversion by the defendant of a cheque, No. 27/085287 and dated 14th Octo-ber, 1965, for that amount, the property of the plaintiff or,


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alternatively, for £3,000 as money had and received by the defendant to the plaintiff’s use.”

Pleadings where ordered, filed and delivered. The trial proceeded on the basis of the plaintiff’s amended statement of claim filed on 23rd December, 1966 and the defendant’s statement of defence filed on 27th January, 1967, as later amended by order of court dated 13th April, 1967. Both the plaintiff and the defendant adduced oral evidence and a number of documentary exhibits were also admitted in evi-dence at the instance of the parties.

The plaintiff is a businessman carrying out the business of a pools promoter at 10 Balogun Square, Lagos and else-where, while the defendant is a banking company with headquarters in Lagos and branches in other parts of Nigeria including Kaduna. On 13th October, 1965, the plaintiff was offered by one Mohammed Nguluruma, whom he was in-formed was Nigeria’s ambassador in Cairo (then in Nigeria on leave), the assignment of a plot of state land in Victoria Island in Lagos (Plot No. 196) on which Mohammed Ngulu-ruma held a 99 year lease, for a consideration of £3,000. The plaintiff accepted the offer.

On the following day, 14th October, 1965, the plaintiff drew a cheque of the same date on Barclays Bank DCO, Ba-logun Square, Lagos, Nigeria for the sum of £3,000 in fa-vour of “Mohammed Nguluruma or bearer.” He crossed the cheque “A/c payee,” that is “Account payee.”

On that very day the plaintiff went to the residence of Mo-hammed Nguluruma at 6 First Avenue, Ikoyi, for the pur-pose of handing over the cheque to him. When the plaintiff arrived, he found several visitors there and was unable to see Nguluruma. However one Abubakar came to the plaintiff and told him that Nguluruma sent him to collect the cheque and was preparing all the necessary documents and the re-ceipt. The plaintiff therefore handed over the cheque to Abubakar who told him to go back to his house and that the papers and receipt would be sent to him.



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The plaintiff had negotiated personally with Nguluruma in respect of the plot of land on 13th October, 1965 and actu-ally accompanied Nguluruma to the site at Victoria Island on that day. But he never saw Nguluruma after that, although he went to see if he could find him two days after handing over the cheque. Believing that Abubakar was acting on be-half and with the authority of Nguluruma, the plaintiff not only handed the cheque to Abubakar, but, later accepted as genuine the documents brought to him by Abubakar alleg-edly in connection with the transaction. The plaintiff thereaf-ter took the documents to the Land Registry, where they re-mained until the police investigated the activities of Abubakar in connection with the transaction and arrested and charged him. He later “jumped” bail and his where-abouts are unknown to the police. The plaintiff had no trans-action with Abubakar personally in connection with the land for which he drew the cheque for £3,000 and the title to the land has not been transferred to the plaintiff.

It is pertinent to observe at this stage that five days after the transaction the plaintiff was involved in a motor accident and had to be taken to a hospital in London, and was there-fore unable to communicate further with Nguluruma. Never-theless he did not entertain any suspicion when he received the documents from Abubakar.

The duty to investigate Abubakar in connection with the transaction fell on Police Inspector Ezema. On 28th January, 1966 a case of forgery was reported to the Central C.I.D. by the Chief Lands Officer, Ministry of Lagos Affairs. A power of attorney, a receipt for £3,000 and a letter purporting to have been written by one Nguluruma, were alleged to have been forged. These documents related to plot No. 196 at Victoria Island.

In the course of his investigations Inspector Ezema col-lected the cheque from Barclays Bank DCO, Martins Street. He discovered that the cheque had been cashed at the Ka-duna branch of the defendant bank. He left for Kaduna on


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11th March, 1966, and interviewed the bank manager, Jean Louis Signorino, who, on seeing the cheque, said it was brought to the bank by one Abubakar in the company of one Mallam Lagos, a customer of the Kaduna branch of the bank. The manager said further that he knew Abubakar very well as Minister of Police Affairs. Inspector Ezema told the manager that in fact Abubakar was the political secretary to the minister who was in charge of police affairs for the Fed-eration. The manager went on to say that Abubakar intro-duced a man to him as “Nguluruma” and that this man asked him to open an account with the cheque for £3,000 at the Kaduna Branch of the bank in the name “Nguluruma” The bank manager told Inspector Ezema that Mallam Lagos was a customer of the bank and that he was surprised to see Mal-lam Lagos answering to the name of “Nguluruma.” The manager explained that he permitted this because Abubakar was a “very big man and well known.”

The inspector asked the manager where he could find Mal-lam Lagos and the manager asked one of his clerks to take him to the Northern Sports Commission office in Kaduna, where Mallam Lagos was working at the time. When they arrived at that office, the man pointed out by the clerk as Mallam Lagos admitted that he was Mallam Lagos and not Nguluruma. The inspector took Mallam Lagos with him to the manager who identified Mallam Lagos as “Nguluruma,” that is the person who came with Abubakar to open the ac-count with the cheque. After some persuasion by the Inspec-tor, the manager prepared a brief statement in regard to the circumstances in which the account was opened “in the name of Mohammed Nguluruma, Secretary of the Northern Nigeria Sports Commission.”

The foregoing is, of course, Inspector Ezema’s account of what took place during his interview with the bank manager in Kaduna. The bank manager gave his own account in his testimony before the court, and was substantially supported by his accountant, Muheeb Ayinla Ashiru. The manager



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testified that Abubakar telephoned and asked to see him in his office, that was just before he left for lunch. Abubakar mentioned that he wanted to introduce a prospective cus-tomer. The manager said that at that stage he knew nothing about Abubakar except that he was a customer of the bank. He said he had never met him. He went for his lunch and, on his return to the bank with his accountant, Ashiru, at about 2:00 pm, he met two people, who introduced themselves as “Abubakar” and “Nguluruma.” An account had already been opened for “Nguluruma” and they were waiting to see the manager, who asked them into his office. The bank accepted the recommendation of Abubakar in opening the account. The manager felt that no other references were needed be-cause of this. He went on to say that Abubakar was a very good customer. Abubakar also had an account with the La-gos East Branch of the bank at 12 Broad Street, Lagos, and it was at the request of that branch that an account had been opened for him at the Kaduna branch.

The manager took Abubakar and “Nguluruma” into his of-fice. The accountant, Ashiru, was also present. Ashiru intro-duced Abubakar to the manager and Abubakar introduced the other man, whom the manager, so he said, was seeing for the first time, as “Nguluruma.” The manager said further that at the time of opening the account he did not know that “Nguluruma” who opened the account was indeed the same person as Mallam Lagos. He asked “Nguluruma” if he had any previous banking account in Nigeria and the reply was negative. The banking forms were already completed and, according to him, “all necessary information had already been obtained.” “Nguluruma’s” address was given as c/o Nigeria Sports Commission, Kaduna.

The manager said he saw the customer on this occasion because the payment into the new account was to be made by cheque. He later marked the cheque “special” to indicate that it was to be given special clearance at the request of the customer paying it into the account. This meant that the


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cheque would be specially presented for payment and that, in the case of such cheque being presented at Kaduna for collection in Lagos, it would take one day less to clear.

The manager, again at the request of the customer, tele-phoned him in the name of “Nguluruma” at the Sports Commission Office in Kaduna, to inform him about the fate of the cheque, the proceeds of which where received on 26th October, 1967, five days after the account was opened and the cheque presented at the Kaduna branch. The man-ager denied knowing that the “Nguluruma” who opened the account also went by the name Mallam Lagos, but admitted that he knew that one Mallam Lagos had a small personal account at the Kaduna branch.

The manager also admitted that a cheque crossed “account payee” can only be credited to an account in the name of the payee, who was in this case Mohammed Nguluruma. He fur-ther admitted that it was part of the bank’s rules that an ac-count should not be opened without investigating the cir-cumstances as well as the character of the new customer, but denied that there were any written instructions by the bank as for the guidance in opening accounts. Almost in the same breath, he admitted after all that there are instructions in writing about opening an account for the first time with a cheque. He said he did not, however, have these instructions with him.

The manager agreed, and this is confirmed by reference to the account, that within a month of the payment of the pro-ceeds of the cheque into the account opened by “Ngulu-ruma,” alias Mallam Lagos, the bulk of the money had been withdrawn, but he said he was not surprised as it does hap-pen in similar cases that the money may already have been committed.

Muheeb Ashiru, the accountant, said also that Abubakar and “Nguluruma” came to the bank around 2:00 pm. Abubakar introduced himself as a customer of the bank and said that he had come to introduce a prospective customer,



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namely, “Mohammed Nguluruma.” The accountant said he had not met either of them face to face before. He went through the formalities of opening the account and intro-duced the two men to the manager. He said he had not even heard of Mallam Lagos at the time but he subsequently dis-covered that the bank had an account in the name of Mallam Lagos.

Ashiru said he was not required to find out the character, antecedents and background of a prospective customer in all cases. What he would require was the name of the previous banker of the prospective customer, from whom any neces-sary information about the customer could be obtained. If the prospective customer had no previous banker, he would have to get a “well known customer” of the bank to intro-duce him.

Ashiru agreed that he would be surprised to hear that the manager had testified that Abubakar was a very good cus-tomer of the bank, having regard to the fact that there was correspondence between the Kaduna branch and the Lagos East branch of the bank indicating that the Kaduna branch had had to dishonour eight cheques issued by Abubakar for various amounts for lack of funds, and also having regard to the letter that Abubakar’s dealings were being investigated by the C.I.D. I can only conclude that the manager has been deliberately untruthful, particularly as the accountant, Ashiru, also admitted that the manager knew of the letters which were written about Abubakar’s conduct and activities while a customer of the bank. Indeed Ashiru was finally driven to admit that Abubakar was a bad customer, a com-plete contradiction of the view expressed by his manager. It is, however, pertinent to observe at this stage that at least the first three “dud” cheques must have come to the notice of the manager and his accountant, Ashiru, before the new ac-count was opened in the name of “Nguluruma” on 20th Oc-tober, 1965.

Ashiru further admitted that it did not occur to him to ask


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“Nguluruma” how he obtained this cheque for £3,000 as it would have been embarrassing to a prospective customer to have been asked such a question. Again, it is of some sig-nificance that Ashiru said that “Nguluruma” was telephon-ing nearly every day to know the fate of the cheque and that, when the proceeds were received by the bank, both the man-ager and himself telephoned “Nguluruma” to inform him about it. Having regard to all these circumstances, I have no doubt that the manager and accountant were negligent in their dealings with Abubakar and the so called “Ngulu-ruma.” They literally tried to please them in all respect be-cause they considered these people to be of some importance in Kaduna circles. In the same way they did not appear to care about the haste in which “Nguluruma” withdrew the proceeds of the cheque within a month.

The defendant called two expert banking witnesses, John Derrick Woodhead and Anthony Stuchbury Freeman. I was rather more impressed with Freeman’s testimony than that of Woodhead, an official of the bank, who like the manager, Signorino, seemed bent throughout on protecting the interest of the bank. Freeman on the other hand, is an official of the Standard Bank of West Africa and gave his testimony in a somewhat more detached manner.

Dealing first with Woodhead’s testimony, the following extract from his evidence is revealing:–

“Q: To what extent can a man misconduct his account before he is disqualified as a referee?

A: If I saw any sign of dishonesty then I would not accept his reference.

Q: Three cheques were dishonoured one after another and you would not say that the drawer was dishonest?

A: I would be unhappy. I would go after the money but I would not call him dishonest.”

He continued:–

“As far as I know everything that was done at our Kaduna branch



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was in order. There is nothing wrong with a customer arriving af-ter office hours. If the accountant knew neither the customer nor the referee and opened an account within a few minutes, it would be in order since the accountant may have taken steps to satisfy him. There is nothing wrong with the accountant accepting Abubakar as a referee, with the knowledge that three of his cheques had been dishonoured and that he was owing £16 to the bank. I would weigh other considerations against these facts. I don’t see anything wrong in a man who had three cheques re-ferred to drawer in a month being a referee or in the bank accept-ing him as a referee.”

I think that learned Counsel for the plaintiff was justified, in the circumstances, in suggesting to this witness that he was giving evidence to protect the interest of the bank, a sugges-tion with which the witness of course disagreed.

Freeman, on the other hand, gave his evidence in a some-what more independent manner. He said, inter alia:–

“The customer may have a personal introduction by another cur-rent account holder. Sometimes prospective accounts holders are unable to provide a personal introduction, but they can give us names of other people who are not known to us, in which case we would get letters of reference from them. But it is important that the references, where possible, are verified. It is not necessary for a prospective customer being introduced by an account holder of the particular branch to have written references. Any current ac-count holder of the branch could be accepted, provided he main-tained a relatively satisfactory account and that the bank was not in possession of any knowledge that he was involved in anything derogatory to his character. Provided I had opened the account in the name of the payee and the man presenting this particular cheque had been personally introduced by a customer known to me and thereby identified as the payee, the cheque could be ac-cepted. As a collecting banker the words ‘Account payee’ do stimulate interest. A collecting banker taking a cheque for collec-tion which is crossed ‘account payee,’ must take the usual pre-cautions of crediting the proceeds to the account of the named payee. It is part of the precaution to check that the person who presents, or holds the cheque is the payee. Any cheque crossed and marked ‘account payee’ is a sign of caution to the collecting banker to be very careful.”


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Of the two versions of the circumstances of the opening of the account by “Nguluruma,” alias Mallam Lagos, the one given by Inspector Ezema reporting what the manager and accountant told him at Kaduna during his investigations and the other given by the manager in his testimony before this Court and supported to some extent by the accountant, I ac-cept that given by Inspector Ezema, who gave his evidence in a straightforward manner and is an independent witness in no way connected with either party in this action. On this view of the evidence, I hold that the defendant’s manager and accountant, well knowing that Mallam Lagos already had an account with the Kaduna branch, was using an as-sumed name to open another account and having had the opportunity of knowing that Abubakar who offered himself as a referee was operating his own account in an unsatisfac-tory manner to say the least, acted in a negligent manner in assisting “Nguluruma” to open a new account with the pro-ceeds of the cheque £3,000 thereby facilitating the conver-sion thereof by “Nguluruma” and, consequently the bank.

Even assuming the version given by the manager and ac-countant to be correct, having regard to their own admis-sions and to Freeman’s evidence, they would be clearly guilty of negligence in so hastily opening the account for “Nguluruma” who, according to them was unknown to them, on the recommendation of Abubakar who was also unknown to them, and whose account to their knowledge was being unsatisfactorily operated, without making any in-quires about the character or antecedents of “Nguluruma” or indeed any other inquires whatever.

On either view of the evidence, I cannot see how the de-fendant bank can escape liability for conversion or rely for its defence on the protection given by section 2(2) of the Bills of Exchange Act, 1964, which reads as follows:–

“(2) Where a banker in good faith and without negligence,

(a) receives payment for a customer of a prescribed instrument to which the customer has no title or a defective titled; or



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(b) having credited the customer’s account with the amount of such a prescribed instrument, receives payment of the instrument for himself, the banker does not incur any li-ability to the payment of it; and a banker is not to be treated for the purpose of this subsection as having been negligent by reason only of his failure to concern himself with the absence of, or irregularity in, endorsement of a prescribed instrument of which the customer in question appears to be the payee.”

This action has been brought as an action for conversion by the defendant and in the alternative, for money had and re-ceived by the defendant to the use of the plaintiff. At this stage it can be said that, on the evidence and having regard to the fact that the proceeds of the cheque have been paid out by the defendant from the account opened in the name of “Mohammed Nguluruma,” spelt “Muhammadu Ngalere-rume” therein, the plaintiff remedy is not now for money had and received, but for conversion. The plaintiff has testi-fied that he has not received the proceeds of the cheque and, in the circumstances of the case, it must also be inferred that the proceeds did not reach Mohammed Nguluruma, Nige-ria’s ambassador in Cairo, the person in whose favour the plaintiff drew the cheque. On the other hand, it must be in-ferred that the proceeds were actually drawn out from the Kaduna branch of the bank by “Nguluruma,” alias Mallam Lagos, who was well known to the manager as Mallam La-gos; so well known that the manager expressed surprise at Mallam Lagos answering to the name of “Nguluruma,” yet made no proper inquiry for the purpose of satisfying himself that it was in order to open the account.

On the facts I have already found it must also be inferred that Abubakar, at the time he received the cheque from the plaintiff, did so with the intent to steal it and the proceeds thereof. The plaintiff accordingly remained the true owner of the cheque and proceeds even after the cheque was stolen by Abubakar, and the plaintiff is therefore the person lawfully entitled to complain of the conversion of the proceeds by


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Abubakar and Mallam Lagos, acting in concert, and subse-quently by the bank.

However, on the facts, I would not presume that the man-ager and his accountant acted in bad faith although I am sat-isfied that they were grossly negligent.

I shall now turn to some relevant authorities. The cases I am about to cite deal with the question of negligence in the context of a similar English provision, that is, section 82 of the Bills of Exchange Act, 1882, which reads as follows:–

“When a banker in good faith and without negligence receives payment for a customer of a cheque crossed generally or spe-cially to himself, and the customer has no title or a defective title thereto, the banker shall not incur any liability to the true owner of the cheque by reason only of having received such payment.”

It is clear from all the cases that the onus is on the banker to prove that there has been no negligence on his part. In Lloyds Bank Ltd v. Savory and Co, Lord Wright said (1933) A.C. at 228-229; 102 L.J.K.B. at 234-235): -

“The only question is whether they establish that they handled the cheques without negligence. Unless the appellants can establish that they acted without negligence, they like other bankers in a similar position are responsible in damages for conversion if their customers had no title or a defective title. In an ordinary action for conversion, once the true owner proves his title and the act of taking by the defendants, absence of negligence or of intention or knowledge are alike immaterial as defences. Section 82 is there-fore not the imposition of a new burden or duty on the collecting banker, but is a concession affording him the means of avoiding a liability in conversion to which otherwise there would be no de-fence. As it is for the banker to show that he is entitled to this de-fence, the onus is on him to disprove negligence. And just as in an action in conversion it is an immaterial averment that the con-version was only possible because of want of ordinary prudence on the part of the true owner, so that averment is equally immate-rial if the issue arises under section 82. As the defence of the sec-tion is invoked against the true owner, it is as against him that the absence of negligence is to be proved, and hence the case is put as a duty towards the true owner.”



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In House Property Co of London Ltd v. London County and Westminster Bank Ltd (1915) 84 L.J.K.B. 1846; 113 L.T. 817, a cheque drawn in favour of “F.S. Hanson . . . and oth-ers or bearer,” crossed with the words “a/c payee,” was col-lected by a bank and credited to a customer, the bearer of the cheque. It was held that the bearer was not the payee, and that the bank was negligent in not making inquiries as to the circumstances in which the customer was the bearer of the cheque.

In Ladbroke and Co v. Todd (1914) 111 L.T. 43; 30 T.L.R. 433 it was again held that a banker guilty of negligence to-wards the drawer of a cheque “account payee only” if he opens an account for the person presenting the cheque and collects the money for it without making inquiries. There is, of course, no real distinction between a crossing of “account payee” and a crossing of “account payee only.” Bailhache J said (111 L.T. at 44, 30 T.L.R. at 434):–

“The last question is whether the defendant received the cheque and collected the money for it without negligence. On that point I have felt great difficulty. The words ‘without negligence’ cannot mean without breach of duty towards himself or towards the per-son who is his customer. They must mean without taking due care to protect the person whose name appears on the cheque as being the payee, and especially in the case of a cheque marked ‘account payee only”.

Was the defendant under any obligation to make any inquiries when he received the cheque? If I had been left without any evi-dence on the point I should have been disposed to think that the defendant was not under any obligation to make any inquiries in the absence of anything to make him suspicious. But I am not left to my own views on this point, because I had the evidence of two gentlemen, one of whom was the manager of National Bank, and the other a retired branch manager of the Bank of Australia, both of whom said it was the practice of banks in a case of this kind to make inquires. It was true that banks were willing to take cheques, but before they would allow them to be operated upon they must be satisfied as to the respectability of the intended cus-tomer. Sometimes that was done through references, sometimes an introduction through a customer. That being the evidence of


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ordinary practice of bankers, I am not left to form my own con-clusions. The defendant in fact, did fall short of that degree of care ordinarily exercised by bankers, and therefore he was guilty of negligence.”

In Commissioners of Taxation v. English, Scottish and Aus-tralian Bank Ltd (1920) A.C. 683; (1920), 89 L.J. P.C. 181, it was held that the “negligence” referred to in section 88(1) of the Australian Bills of Exchange Act, 1909, which is in the same terms as section 82 of the United Kingdom Bills of Exchange Act, 1882, is negligence in collecting the cheque not in opening the account, and that the test is whether the paying in of any given cheque, coupled with the circum-stances antecedent and present, was so out of the ordinary course that it ought to have aroused doubt in the banker’s mind, and caused him to make inquiries.

Finally, in Lloyds Bank Ltd v. Chartered Bank of India, Australia and China (1929) 1 K.B. 40; (1928) A.E.R. Rep. 285, Sanky LJ said (1929) 1 K.B. at 69; (1928) A.E.R. Rep. at 295):–

“There are numerous test which have been applied in the courts from time to time suggesting what may or may not be negligence. For example a bank may be negligent in not making inquiries as to a customer on opening an account: Ladbroke and Co v. Todd; Commissioners of Taxation v. English, Scottish and Australian Bank; and there may be negligence in not noticing the account of the customer from time to time and considering whether it is a proper or a suspicious one: Morison’s case.”

Having regard to the principles enunciated and the illustra-tions given in the authorities cited above, I hold, in conclu-sion, that the defendant is not entitled to the protection of section 2(2) of the Bills of Exchange Act, 1964. The defen-dant’s servants have been guilty of negligence in opening the account on the recommendation of Abubakar, whose own account was at the material time and to their knowledge being operated by him in an unsatisfactory manner, to say the least, without making necessary inquiries into the cir-cumstances in which a customer known to them as “Mallam



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Lagos” was opening a new account at the Kaduna branch of the bank in the name of “Mohammed Nguluruma” and a cheque crossed “a/c payee” for £3,000 in favour of Mo-hammed Nguluruma and drawn on a Lagos branch of an-other bank. On their own version of the facts, which I do not accept (that neither Abubakar nor Mallam Lagos was known to them at the time the account was opened), they would, in my opinion also be guilty of negligence. The defendant was also guilty of negligence in collecting the proceeds of the cheque on behalf of Mallam Lagos, alias “Nguluruma,” who to its knowledge, already had a meagre account at the bank in his correct name, and thereafter, paying out the proceeds on his instructions and on his behalf.

In addition, the haste in which the formalities in opening the account were completed, at about 2:00 pm after the usual business hours of the bank, the carelessness exhibited in spelling the name of the new customer as “Muhammadu Ngalererume” instead of “Mohammed Nguluruma” as writ-ten on the cheque and in crediting the proceeds to “Mu-hammadu Ngalererume” instead of “Mohammed Ngulu-ruma,” the actual payee of the cheque, the connivance of the manager in respect of Mallam Lagos, who already had an account in that name, now answering to the name of “Ngulu-ruma,” the facility of special clearance accorded to the new customer in these circumstances, all strongly support a find-ing of negligence on the part of the defendant, and I accord-ingly so find.

In the result I hold that the defendant is liable for conver-sion of the proceeds of the cheque and is not protected by section 2(2) of the Bills of Exchange Act, 1964. I therefore give judgment for the plaintiff against the defendant for £3,000 damages as claimed and cost assessed and fixed at 190 guineas.



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Construction Industries Company Limited v. Bank of the North Limited


ADEDIPE J


Banking – Overdraft – Approval for grant of by bank man-ager who has no authority to do so – Whether customer can recover damages for refusal by bank to advance amount so approved

Banking – Overdraft – Interest rate chargeable – Bank charging interest at rate higher than rate agreed despite protest by customer – Customer entitled to refund of amount overcharged

Banking – Overdraft – Written agreement for grant of – Whether subsequent written reply by bank to a written com-plaint by customer in which bank made suggestion can amount to fresh condition or an undertaking varying subsist-ing written agreement.

Facts

The plaintiff’s claim against the defendant was for the sum of £10,992.15s.8d, being special and general damages for breach of contract.

The plaintiff maintained an overdraft account with the de-fendant which it opened in April, 1961, there being a written agreement between the parties before the account was opened.

The Chairman of the defendant bank at the material time, Mr Alli Arab had agreed to give the plaintiff a £20,000 overdraft at an interest of 7.5% per annum, which was 2.5% per annum higher than the rate chargeable by the Bank of England. The agreement for the security of the loan covered



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two properties: 46 Marine Road, Apapa and 3 Queen’s Bar-racks Road, Apapa.

A dispute arose between the parties which resulted in the closure of the account in June, 1966. The dispute arose over the complaint made by the plaintiff that the 8.5% interest actually charged by the defendant was too high and exces-sive, and that what should have been charged was 7.5%. The plaintiff insisted that all excess charges be refunded when the manager Mr Khoury offered to refund the excesses for the month the complaint was made.

The defendant unilaterally wrote to the plaintiff informing that the interest rate had been increased to 10% from 12th December, 1964.

After enquiry and comparison of the interest rate charged by the defendant with that of the Bank of England and add-ing the overdraft, the plaintiff discovered that the defendants had overcharged them £775.1s.10d.

The defendant wrote a reply to the complaint of the plain-tiff suggesting that the plaintiff should reduce its loan ac-count to £10,000 within the maximum period of three months and transfer the loan account to an overdraft ac-count. This was to be on the understanding that the available security then would stay, and the account be run actively so as to reduce the overdraft by £2,000 or £3,000 every year. When this reply was written, the plaintiff owed the defen-dant bank £13,600 but it later paid £5,000 and thereby re-duced its debt to £8,600.

The defendant refused the plaintiff opening the overdraft account after the above suggestion and even when the plain-tiff sold one of the securities and paid the entire debt, with the hope that it would be granted an overdraft facility of £10,000, the defendant still refused. The plaintiff’s solicitor also wrote a letter to the bank’s defendant complaining about the interest overcharged, making reference also to the suggestion in the defendant’s reply.



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The plaintiff alleged that the reply of the defendant was a variation of the agreement and also alleged that the bank was bound to honour the approval by the bank’s manager, one Abu Nadab, to give the plaintiff a clean overdraft of £10,000.

Held –

1. That paragraph 2 of the written agreement between the parties stated that the interest would be calculated at a rate of 7.5% per annum or at a rate 2.5% per annum higher than the rate chargeable by the Bank of England, whichever was the higher. The rate actually charged by the defendant was even higher than the rate agreed upon. There was no evidence that the plaintiff agreed to this higher rate and there was evidence that the plaintiff pro-tested to the defendant against the overcharge. In light of all the foregoing, the plaintiff is entitled to a refund of the sum £775.1s.10d overcharged.

2. That the reply written by the bank made no reference to the agreement for the overdraft. It was therefore not a condition or an undertaking, neither was it an agreement nor a promise but a mere suggestion which did not vary the existing agreement. There was therefore no breach.

3. That it was clear that the manager had no authority to grant the plaintiff an overdraft of £10,000, and therefore the bank could not be liable to the plaintiff in damages for failure on the part of its manager to do so.



Nigerian Barclays Bank DCO v. Hassan (1961) All N.L.R. 836 Foreign

Berry v. Berry (1929) 2 K.B. 316; [1929] All E.R. Rep 281 Russo–Chinese Bank v. Li Yau Sam (1910) A.C. 174; (1909)

101 L.J. 639



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Counsel For the plaintiff: Abudu

For the defendant: Razaq

Judgment

ADEDIPE J: The plaintiff’s claim against the defendant is for the sum of £10,992.15s. 8d being special and general dam-ages for breach of contract.

The plaintiff is a limited liability company, while the de-fendant is the plaintiff’s banker. The plaintiff maintained an overdraft account with the defendant, which it opened in April 1961, there being a written agreement between the parties before the account was opened.

Mr Alli Arab was the chairman of the defendant bank at the material time, and he agreed to give the plaintiff a £20,000 overdraft at an interest of 7.5% per annum, which was 2% per annum higher than the rate chargeable by the Bank of England. The agreement for the security of the loan covers two properties: 46 Marine Road, Apapa and 3 Queen’s Barracks Road, Apapa.

The plaintiff stated that the account was closed about June, l966 when a dispute arose. The monthly statements of ac-count for the period between 9th March, 1962 and 27th April, 1966 sent by the defendant to the plaintiff were tendered in evidence. The dispute arose over the complaint made by the plaintiff that the 8.5% interest actually charged by the defen-dant was too high and excessive, and that what should have been charged was 7.5%. Mr Khoury, manager of the defen-dant’s branch at Apapa, asked for time to look into the matter, offered to refund the excess interest charged for the month in which the complaint was made but the plaintiff refused and asked that all the excesses for the previous months be re-funded as well. This was some time in 1963.

After this the defendant wrote to the plaintiff to say that the interest rate had been increased to 10% as from 12th De-cember, 1964. If the rate as agreed upon, was 7.5% and the


Adedipe J


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increase 2%, as shown in this letter, the rate should have been 9.5% and not 10%. The plaintiff alleged that the rate charged from January 1963 to 1966, when the account was closed, was 10%.

An enquiry was made by the plaintiff, about the bank rate charged by the Bank of England for the period 8th December, 1960 to 26th January, 1967, and he found that the rate had varied from time to time.

The plaintiff compiled an account for the period March, 1962 to March, 1966. This shows the interest charged and the interest chargeable on the overdraft, the rate of interest and the interest overcharged, which amounted to £581.15s.2d The overcharge for 1961 was given as £193.6s.8d, which brings the total amount overcharged to £775.1s.l0d and not £992.15s.0d as shown in the statement of claim.

The defendant’s reply to the complaints made by the plain-tiff was written in Arabic but, in English translation, informed the plaintiff that the rate of interest had risen in England and that the plaintiff’s account had stayed dormant for a long pe-riod, in spite of the promise made to repay the balance out-standing on the loan account. A suggestion was then made that the plaintiff should reduce its loan account to £10,000 within the maximum period of three months, and transfer the loan account to an overdraft account. This was to be on the understanding that the security available then would stay, and the account be run actively, so as to reduce the overdraft by £2,000 or £3,000 every year. When this reply was written, the plaintiff owed the defendant £13,600 but it later paid £5,000 and thereby reduced its debt to £8,600.

The plaintiff alleged that after this payment, it made a re-quest for the opening of an overdraft account of £10,000, which was refused. The plaintiff later got the title deed of 46 Marine Road, Apapa from the defendant, with whom it was deposited, sold it for £14,000, and paid the whole amount realised to the defendant in the hope that it would be

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF LAGOS STATE) Adedipe J


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granted an overdraft facility for £10,000. This was not granted.

The plaintiff then instructed its solicitor to write a letter of complaint to the defendant about the interest overcharged, reference being made to a condition stipulated in writing. This no doubt refers to the defendant’s aforesaid reply. In my opinion, the last paragraph of this reply was merely, a suggestion, not a condition or an undertaking.

Paragraph 2 of the written agreement between the parties stated that interest would be calculated at the rate of 7.5% per annum, or at a rate 2.5% per annum higher than the rate chargeable by the Bank of England, whichever was the higher. In fact, the rate actually charged by the defendant was even higher than the rate agreed upon, and there is no evidence that the plaintiff agreed to this higher rate. The case of Berry v. Berry (1929) 2 K.B. 316; [1929] All E.R. Rep 281, referred to by the learned Counsel for the defen-dant, does not, in my opinion, apply, because in that case both parties agreed that the terms of the original deed should be varied in certain aspects, but there was no such agreement here.

There is evidence that the plaintiff protested to the defen-dant against the overcharge: see Barclays Bank DCO v. Hassan (1961) All N.L.R. 836. The amount overcharged is £775.1s.10d, and I hold that the plaintiff is entitled to a re-fund of this amount.

The plaintiff’s Counsel submitted that the defendant’s re-ply was a variation of the terms of the agreement and he too referred to Berry v. Berry (supra). But the reply made no reference to the agreement. Its language is clear; it is neither an agreement nor a promise. I hold therefore that there was no breach.

The plaintiff also alleged that Abu Nadah, a former man-ager of the bank, who is now a prisoner of war in Israel, of-fered to give the plaintiff a clean overdraft for £10,000. The


Adedipe J


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defendant did everything possible to contact Abu Nadah but did not succeed. Evidence was adduced to show that every manager could only grant £500 in respect of the granting of overdrafts and that a manager could only grant £500 on his own limited authority. The plaintiff was shown in evidence to have known the procedure to be allowed before an over-draft is granted. It is clear that the manager had no authority to grant the plaintiff an overdraft of £10,000, and therefore the bank could not be liable to the plaintiff in damages for any failure on the part of its manager to do so. I refer to Russo–Chinese Bank v. Li Yau Sam (1910) A.C. 174; (1909) 101 L.J. 639.

It is true that the plaintiff sold its properties and paid the proceeds of one of them to the defendant, but there is no evi-dence the defendant induced it to do so.

There will be judgment for the plaintiff in the sum of £775.1s.l0d with 75 guineas costs.




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Ojikutu v. African Continental Bank Limited


COKER, LEWIS, MADARIKAN, JJSC


Banking – Judgment debt – Rate of interest on judgment debt – Section 17, English Judgments Act, 1838

Facts

The plaintiff at the lower court now respondent instituted this action on the undefended list against the defendant now appellant who was at all material time the respondent Bank customer in order to recover the balance of the principal and interest due on loan from the appellant.

The respondent’s claim against the appellant was for the sum of £10,857.1s together with interest thereon at 9% per annum from the date of judgment until payment for money lent to the appellant by the respondent which sum the appel-lant has failed or neglected to repay despite demand. The appellant after giving notice of intention to defend the action admitted in his statement of defence that he took a loan of £13,000 from the respondent but claimed that he had repaid £8,000 out of it and also that he was not liable to pay the sum of £627 which appeared in his account in respect of fees paid to an auctioneer. The appellant also claimed in his de-fence that the rate of interest on his account was agreed at 5% per annum and not at the current bank rate of interest as claimed by the respondent in his statement of claim. Thus the only area of dispute between the appellant and the re-spondent centred only on the exact rate of interest payable on the loan/or judgment debt. Accordingly, the respondent filed this action against the appellant not only to recover the outstanding principal and interest thereon but also to recover further interest between the date of issue of the writ of sum-mons and date of judgment.


Ojikutu v. African Continental Bank Ltd 103

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At the end of trial in Lagos High Court before (Alexander J.) judgment was given in favour of the respondent as per their claim, but the court reduced the amount of the appel-lant’s liability by an amount in respect of certain additional fees claimed from the appellant by the respondent.

The High Court also held that the appellant should pay in-terest on the judgment debt until payment at 5% per annum.

The appellant being dissatisfied with the learned trial Judge’s judgment, appealed against same contending inter alia as follows:–

(a) That the judgment of trial Judge was against the weight of evidence in finding that the rate of in-terest agreed was the current bank rate interest and in holding the appellant liable to pay the respondent’s lawyer for preparation of certain documents.

(b) That the trial Judge erred in law in holding that interest on the judgment debt should be paid at the rate of 5% per annum from the date of judgment until payment.

(c) The trial Judge erred in law in holding that the respondent’s action could proceed, even though the appellant alleged that the crime of forgery had oc-curred in respect of his statement of account.

Held –

1. The learned trial Judge could only have ordered interest at the rate of 4% per annum from the date of judgment until payment of the judgment sum as opposed to 5% per annum which was never agreed to by the parties under section 17 of the English Judgment Act, 1838, a statute of General Application applicable in Nigeria and Lagos which prescribes 4% on judgment debt, coupled with section 12 of the High Court of Lagos Act which allows the application of foreign law in matter of practice and procedure where there is no local provision on the sub-ject matter in question.



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2. The statutorily imposed rate of interest of 4% per annum on judgment debt under English Judgment Act, 1838 is only applicable where there is no express agreement be-tween the contracting parties as to the actual rate of in-terest payable on loan and judgment debt.

3. The appeal of the appellant is therefore allowed, but only to the extent that the order of Alexander, J., that interest at the rate of 5% per annum be paid from the date of judgment until payment be set aside and order that inter-est at the rate of 4% per annum be substituted thereof. In all other respects the appeal is dismissed.

Appeal partly allowed.


Nigerian

Barclays Bank DCO v. Adigun (1961) All N.L.R. 536; 1962 N.N.L.R. 40 Sabbah v. Bank of West African Ltd (1967) 1 A.L.R. Comm.

420 U.A.C. Ltd v. Taylor (1934) 2 W.A.C.A. 67

Foreign

Smith v. Selwyn (1914) 3 K.B 98; (1914 – 1915) All E.R. Rep 229


Judgments Act (1838) 1 and 2 vict; (c 110), section 17 Rules of Supreme Court (English), Order 42, rule 16

Counsel

For the defendant/appellant: Ojikutu

For the plaintiff/respondent: Sanni and Whyte

Judgment

LEWIS JSC: (Delivering the judgment of the court) The ap-pellant in this appeal was the defendant in Suit No. L.D. 120/64 in which Alexander J, in the High Court of Lagos on


Lewis JSC


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27th November, 1964, gave judgment for the plaintiff in the sum of:–

“£10,026.3s.5d, being the difference between the outstanding amount of principal and interest claimed, that is, £10,857.1s.1d and the amount of £830.17s.8d (that is, £627 plus interest of £203.17s.8d charged thereon), together with interest on the said amount of £10,026.3s.5d at 9% per annum from 19th March, 1964 (the date of the application for the writ of summons) until 27th November, 1964 (the date of judgment) and 5% per annum from the date of judgment until payment, with costs assessed and fixed at 55 gns.”

The plaintiff bank had sought initially to bring this action in the undefended list, claiming as follows:–

“The plaintiff’s claim against the defendant is for the sum of £10,857.1s.1d together with interest thereon at 9% per annum from the date of judgment until payment for money lent to the de-fendant by the plaintiff, which sum the defendant has failed or neglected to repay despite demands.”

The defendant, after giving notice to defend, admitted in his statement of defence that he had had a loan of £13,000 from the plaintiff, but claimed that he had repaid £8,000 of it and that he was not liable to pay the sum of £627, which ap-peared in his account in respect of fees paid to an auctioneer. The defendant also claimed that the rate of interest on his account was agreed at 5% per annum and not at the current bank rate of interest, which the plaintiffs had claimed was the agreement, and relied on paragraphs (d) and (e) of the statement of claim which read:–

“(d) It was a term of the advance made to the defendant that he should pay to the plaintiff interest at a rate usual or normal with the plaintiff at any particular time and other banking charges.

(e) In January 1958 the plaintiff’s rate of interest for the kind of loan made to the defendant was 11%. It later went down to 8%, and finally went up again to 9%.”

The learned trial Judge found in favour of the defendant and held that it was not proved that he was liable to pay the £627. He accordingly reduced the claim from £10,857.1s.1d


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to £10,026.3s.5d to take account of that sum and interest charged in the account upon it, but he otherwise found proved the fact that the defendant owed the money claimed by the plaintiff.

The defendant’s first ground of appeal was that the judg-ment of the learned trial Judge was against the weight of evi-dence in two respects, namely, first, as to the finding that the rate of interest agreed was not 5% but the current bank rate of interest and, secondly, in finding that the defendant was liable to pay the sum of £315, which appeared in the account as – “expenses incurred by our lawyer for preparing your docu-ments.” So far as the rate of interest was concerned, this turned on the evidence of the plaintiff’s only witness that, from the bank records, this was agreed at the current bank rate of interest, and statements sent to the defendant at inter-vals had not been challenged when interest had been charged accordingly. The evidence of the defendant himself was that what was agreed was a flat 5% rate of interest, and we see no reason to upset the finding in favour of the plaintiff that the learned trial Judge made in this respect. So far as the objec-tion to the finding that the £315 owed by the defendant as part of the account is concerned, it is to be noted that this was canvassed before us for the first time. It was not raised by the defendant in his notice of intention to defend, though he drew attention there to other alleged inaccuracies in the accounts. It was not subsequently objected to specifically in the statement of defence and neither, according to the record of the appeal before us, was it put to the plaintiff’s witness in cross-examination nor raised by Counsel for the defen-dant in his final address to the trial Judge. It was also not denied that fees for lawyers had been incurred, though what Counsel sought to argue was the amount charged and who was liable to pay it. We do not consider that the defendant can now object to the finding of the learned trial Judge that this sum, which was in the account, was owed by the defen-dant. We see no merit in this ground of appeal.


Lewis JSC


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The defendant’s second ground of appeal was that the learned trial Judge erred in law in holding that the interest on the judgment debt should be paid at the rate of 5% per an-num from the date of judgment until payment. Mr Ojikutu for the defendant referred us to the case of Barclays Bank DCO v. Adigun (1961) All N.L.R. 536; (1962) N.N.L.R. 40 in support of his submission that there was no power to or-der 5% or any other interest on the sum due as from the date of judgment. We referred Counsel, however, to the decision of this Court in Sabbah v. Bank of West Africa Ltd (1967) 1 A.L.R. Comm. 420 where this Court rejected the argument that the decision of Smith SPJ in Barclays Bank DCO v. Adigun was applicable, at any rate in the High Court of La-gos, but followed the provisions of section 17 of the English Judgments Act, 1838, being a statute of general application, which reads:–

“Every judgment debt shall carry interest at the rate of four pounds per centum per annum from the time of entering up the judg-ment . . . until the same shall be satisfied, and such interest may be levied under a writ of execution on such judgment.”

This Court said in Sabbah v. Bank of West Africa Ltd (1967) 1 A.L.R. Comm. at 423-424):–

“Smith SPJ in Barclays Bank DCO v. Adigun (1) was of the opin-ion that, as there was, no local provision similar to the above English Rule 16 (Order 42, rule 16 of the English Supreme Court Rules which stated that ‘every writ of execution for the recovery of money shall be indorsed with a direction to the Sheriff, or other officer or person to whom the writ is directed, to levy the money really due and payable and sought to be recovered under the judgment or order, stating the amount, and also to levy inter-est thereon, if sought to be recovered, at the rate of £4% per an-num from the time when the judgment or order was entered or made, provided that in cases where there is an agreement between the parties that more than £4% interest shall be secured by the judgment or order, then the endorsement may be accordingly to levy the amount of interest so agreed’), the bank could not re-cover interest on the judgment debt as a present debt payable upon judgment being given.”


Lewis JSC


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Assuming for the moment that a judgment debt which is payable forthwith carries interest, we are inclined to think that it would be wrong to deprive the judgment creditor of interest merely on the ground that there was no local rule similar to the above English rule. The maxim ubi jus ibi remedium might be invoked to entertain an application for interest. But in a Lagos case that point does not arise, for section 12 of the High Court of Lagos Act provides that:–

“The jurisdiction vested in the High Court shall, so far as practice and procedure are concerned, be exercised in the manner pro-vided by this or any other Act, or by such rules and orders of court as may be made pursuant to this or any other Act, and in the absence of any such provisions in substantial conformity with the practice and procedure for the time being of Her Majesty’s High Court of Justice in England.”

Thus the absence of a local rule does not matter, and the question of substance is whether the Judgments Act, 1838 applies as being a statute of general application in accor-dance with our Law (Miscellaneous Provisions) Act (Cap 89, as amended), section 45(1) and (2).

Later, the court was of the following opinion (1967 (1) A.L.R. Comm. at 425):–

“Once it has been conceded by Mr Lardner that the Judgments Act, 1838 applies, nothing in the local legislation has been re-ferred to for not applying section 17 to a judgment debt that is payable forthwith. But the High Court could not have ordered in-terest at 5% and the judgment under appeal will be varied to make it 4%.”

We must, therefore, hold that Alexander J was in error in ordering interest to be paid at the rate of 5% per annum from the date of judgment until payment as he could only have ordered interest at the rate of 4% per annum. We accord-ingly allow this ground of appeal.

The defendant’s final ground of appeal was that the learned trial Judge erred in law in holding that the rule in Smith v. Selwyn (1914) 3 K.B. 98; (1914 – 1915) All E.R. Rep 229 did not apply to this case. The basis of this complaint was


Lewis JSC


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that in his statement of defence the defendant had pleaded as follows:–

“(e) The defendant avers that there is a written agreement for a loan of £13,000 between the plaintiff and the defendant and that the agreement was altered and forged without the knowledge and consent of the defendant.”

Relying on this, his Counsel at the hearing of the action had taken a preliminary point that this allegation was sufficient to bring the rule in Smith v. Selwyn (1914) 3 K.B. 98 into play and so stop the plaintiff’s action from proceeding, but this was overruled by the learned trial Judge. Mr Ojikutu submit-ted to us that the principle in Smith v. Selwyn was that the plaintiff must be prevented from benefiting from his felonious act and so could not be permitted to sue if the defendant al-leged that he based his claim on a felonious act. We do not see that Smith v. Selwyn decided anything of the sort. It was dealing with exactly the opposite situation, where a plaintiff was bringing an action against a defendant for damages based on a felonious act of the defendant, and Swinfen Eady LJ in the English Court of Appeal said (1914) 3 K.B. at 105; (1914 – 1915) All E.R. Rep at 232):–

“It is well established that according to the law of England, where injuries are inflicted on an individual under circumstances which constitute a felony, that felony cannot be made the foundation of a civil action at the suit of the person injured against the person who inflicted the injuries until the latter has been prosecuted or a reasonable excuse shown for his non prosecution.”

It is strictly only on this basis that the decision of Smith v. Selwyn has always been applied. It was on this basis that the West African Court of Appeal in the Gold Coast case of U.A.C. Ltd v. Taylor (1934) 2 W.A.C.A. 67 applied it. No authority was cited to us to show the converse applied, and we consider the learned trial Judge was right to reject the submission that Smith v. Selwyn (1914) 3 K.B. 98 could be extended in the way that was suggested. We would, more-over, in fairness to the plaintiff, also add that we would agree with the trial Judge that the defendant’s allegation of


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felony had not in any case been substantiated by evidence at the trial.

The appeal of the defendant is therefore allowed, but only to the extent that the order of Alexander J, that interest at the rate of 5% per annum be paid from the date of judgment un-til payment, is set aside. We order that interest at the rate of 4% per annum from 27th November, 1964 until payment be substituted therefor. In all other respects the appeal is dis-missed. The appellant is entitled to costs in this appeal, which we assess at 30 guineas.

Order accordingly.


Oyewole v. Standard Bank of West Africa Ltd 111

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Oyewole v. Standard Bank of West Africa Limited


TAYLOR CJ

Date of Judgment: 22 APRIL 1968

Banking – Wrongful dishonour of cheque – Liability of bank thereof

Damages – Assessment by court – Quantum of damages re-coverable for wrongful dishonour of cheque

Facts

The plaintiff, a legal practitioner, was a customer of the de-fendant bank. The plaintiff has a business and savings ac-count with the defendant bank. On July 4th, 1966, the plain-tiff prepared a cheque for £200 and asked the defendant bank for an overdraft to cover the cheque. The terms of the overdraft facilities were discussed and agreed on. When the cheque was presented for payment, it was dishonoured by the defendant bank. As a result of the wrongful dishonour of the cheque, the plaintiff then instituted this suit claiming in-ter alia, the sum of £5,000 as damages for the defendant’s breach of contract in not paying, out of the monies con-tracted to be available. It was the contention of the plaintiff that though he had no sufficient fund in his account to cover the cheque at that material time, that the failure of the bank to honour the cheque when it was presented was in breach of their agreement. The plaintiff contended further that as a le-gal practitioner, he was a businessman entitled to substantial measure of general damages in respect of injury to his credit.

The defendant contended that they had no agreement with the plaintiff; that if at all there was any such agreement that the plaintiff is only entitled to nominal damages not being a businessman or trader.



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Held –

1. A bank would be held liable for breach of contract for failing to honour the plaintiff’s cheque.

2. A plaintiff who is not a businessman or trader is only en-titled to nominal damages.

Normal damages for Plaintiff.


Foreign

Constantine v. Imperial Hotels Ltd (1944) K.B. 693; (1944) 2 A.E.R. 171 Gibbons v. Westminster Bank Ltd (1939) 2 K.B. 882; (1939)

3 A.E.R. 599 Jayson v. Midland Bank Ltd (1967) 2 Lloyd’s Rep 563;

(1967) 111 Sol Jo 719

Marzetti v. Williams (1830) 1 B. and Ad. 415; 109 E.R. 842

Counsel

For the plaintiff: Babalola

For the defendants: Bentley

Judgment

TAYLOR CJ: The plaintiff claims from the defendant bank the sum of £5,000 as damages for the following:– “(a) the defendants’ breach of contracts in not paying, out of the

monies contracted to be made available for that purpose, a cheque No. D/8 648685 dated 4th July, 1967 and drawn by the plaintiff on the defendant bank and duly presented at the Chase Branch of the defendant Bank on or about July 8th, 1966 for the credit of the account of Mr H.A. Mufti, a person entitled to receive the amount of such cheque.

(b) words falsely and maliciously published of and concerning the plaintiff in a letter ref. KGA/HIV dated 28th June, 1967 and addressed to the national Employers’ Life Assurance Company Limited.”


Taylor CJ


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In the statement of claim filed, the sum of £3,600 was claimed on the first head and £1,400 on the second head, but at the hearing learned Counsel for the plaintiff abandoned the claim under the latter and I accordingly strike it out. I shall hear parties at a later stage on the issue of costs.

The issue in this case is a particularly simple one depend-ing on the credibility of the witnesses who gave evidence on the point. The defence is contained in paragraph 3 of the statement of defence, which states:–

“Paragraph 2 of the statement of claim is admitted, but the defen-dants say that having no agreement with the plaintiff they were justified in dishonouring a cheque which was an order to pay from a particular account and was drawn on an account which they could not combine with any other account and in which there were insufficient funds to meet the cheque when the said cheque was presented for payment on 5th July, 1966.”

It is admitted that a cheque was issued to one H.A. Mufti by the plaintiff for the sum of £200 and was dated 4th July, 1966. It is also agreed that when this cheque was presented, it was marked “refer to drawer.” The plaintiff admits that at the relevant time he did not have in his business or savings account, or both when taken together, sufficient funds to cover this cheque, and there can of course be no considera-tion given to whatever sum he might have had standing to his clients’ account.

Shortly put then, the issue is this: did the defendants agree on 4th July, 1966 to honour the plaintiff’s cheque for £200 in spite of his not having the necessary funds to meet this amount? It is the word of the plaintiff on the one hand against the word of an employee of the defendants, a Mr Theodore Adesanya Doherty, on the other.

The plaintiff states that on the day in question he went to the bank and asked for a Mr Doherty and when the latter came, the plaintiff showed him a cheque he had prepared for £200. The plaintiff then asked for overdraft facilities to cover the cheque. Mr Doherty sent for the ledger cards covering



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the plaintiff’s three accounts. The terms of the overdraft fa-cilities were discussed and agreed on, and the plaintiff asked Mr Doherty to certify the cheque so that it would be paid when presented. Mr Doherty said this was unnecessary, but made some pencil recordings on one of the ledger cards, which recordings the plaintiff did not see.

Mr Doherty could not remember the date the plaintiff came to the bank. He started off by saying that it was some time in June or July 1966. He agreed that the plaintiff came for overdraft facilities, and says that he eventually agreed to let the plaintiff have a £50 overdraft to expire on 12th June, 1966. He recorded this on the relevant card and stoutly de-nies ever seeing or being shown the cheque before it was re-turned marked “refers to drawer.” Under cross-examination he agreed that the figure £3 in £30 in the column marked “overdraft limit,” but no explanation was forthcoming as to when and why this insertion or correction was made. He fur-ther agreed that the date, 12th June, 1966, could be an error for 12th July, 1966.

I think the most significant thing about the evidence of this witness on this point is that on June 12th, 1966 the plain-tiff’s business account was in credit by the sum of £442.19s.4d. It had been in credit with over £200 from 7th April, 1966, and on July 12th, 1966 it was in credit with £387.0s.8d. It was on 4th or 5th July that his account stood at £106.8s.2d. This lends credence to the plaintiff’s story, and at the same time leaves me wondering why and how this error of June for July could have been made, as well as the superimposition of the 5th over the 3rd. This latter alteration calls for explanation, in view of the fact that the superimpo-sition was not made in the same ink as the writing of 12th June, 1966 as the expiry date and 10% as the rate of interest. This suggests that it was not made contemporaneously with the plaintiff’s request.

After a full consideration of the evidence of these two wit-nesses and their demeanour, I accept the plaintiff’s version


Taylor CJ


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as the correct one. In doing this I have taken into considera-tion the evidence led by the other witnesses for the defen-dants as to the system prevailing in the bank, and I have taken into account the plaintiff’s cross-examination, which shows that he was in no way unfamiliar with the system. Whatever the procedure may have been, there was nothing to stop Mr Doherty from coming to the agreement he did with the plaintiff. This is even more the case when there is no defence that the said witness was not acting within the scope of his authority.

The defendants, having failed to honour the plaintiff’s cheque, as deposed to by the plaintiff and accepted by me, have broken their contract with the plaintiff. The other issue, and the more difficult one to decide, is the quantum of dam-ages to which the plaintiff is entitled.

The plaintiff was at the material time a legal practitioner and was proposing to go into private practice in July 1965. He gave evidence that as a result of the dishonouring of the cheque the agreement to give him a retainer by Abco Indus-tries (Nigeria) Limited was deferred and that he has not broached the subject with the firm since this incident. Mr Babalola for the plaintiff asks for substantial damages, but Mr Bentley for the defendants urges on the contrary that the plaintiff would be entitled only to nominal damages.

This case differs from the majority of cases dealing with claims for damages for failing to honour a cheque in the fact that there is no dispute here that the plaintiff did not have the necessary funds to cover the cheque. He relies on an agree-ment by the defendants to give him the necessary overdraft facilities to cover the cheque.

In the case of Gibbons v. Westminster Bank Ltd, Lawrence J said this (1939) 2 K.B. 882 at 888; (1939) 3 A.E.R. 577 at 579:–

“ . . . (A)nd it remains only to consider whether the plaintiff, who, it is admitted, is not a trader, is entitled to recover more than nom-inal damages for the dishonour of her cheque without having



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pleaded or proved special damage.

The authorities which have been cited in argument all lay down that a trader is entitled to recover substantial damages for the wrongful dishonour of his cheque without pleading and proving actual damage, but it has never been held that exception to the general rule as to the measure of damages for breach of contract extends to any one who is not a trader.”

Lord Tenderden CJ remarked in Marzetti v. Williams that (1 B. and Ad. at 424; 109 E.R. at 845):–

“At the same time I cannot forbear to observe, that it is a discredit to a person, and therefore injurious in fact, to have a draft refused payment for so small a sum, for it shows that the banker had very little confidence in the customer. It is an act particularly calclated to be injurious to a person in trade.”

Mr Babalola drew my attention to the passage in 2 Chitty on Contracts (1955), (21ed) at 111 which reads thus:–

“A breach of the banker’s contract to honour a customer’s cheque is so necessarily injurious to the customer’s credit that substantial damages may be recovered in respect of it. But of recent years the tendency has been, except in the case of business men, to require special damage to be proved before anything more than nominal damages are awarded.”

Learned Counsel for the plaintiff has asked me to say that the plaintiff, a legal practitioner, comes within the excepted cases under the category “business men.” One of the cases referred to in Chitty, op. cit., at 111 under this particular head is that of Gibbons v. Westminster Bank Ltd (supra), which talks of “traders,” an appellation which I hope will not describe a member of this honourable profession. In the case of Jayson v. Midland Bank Ltd (1967) 2 Lloyd’s Rep 563; (1967) 111 Sol Jo 719, the plaintiff was a trader carry-ing on a business as manufacturer and retailer of ladies’ gar-ments.

The learned author of Halsbury’s Laws of England, Vol-ume 11 (3ed) at 224 states that:–

“Except in the case of breach of promise of marriage exemplary damages cannot be awarded in an action for breach of contract,


Taylor CJ


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since the existence of misconduct cannot alter the rule by which the damages for breach of contract are assessed.”

In note (c) on the same page it is stated that:– “There may also be one other exceptional case where exemplary damages can be awarded for breach of contract, namely, where a banker dishonours a trader’s cheque when there are funds in hand to meet it.”

There again the reference is to Gibbons v. Westminster Bank Ltd (1939) 2 K.B. 882; (1939) 3 A.E.R. 599, and similarly in Halsbury’s Laws of England, Volume 11, (3ed) at 285-286 we find the following:–

“Thus, in an action upon contract against a banker for refusing to pay a trader’s cheques, although he has moneys of the trader in his hand, damages may be given for injury to the trader’s credit. It is not necessary to prove that any damage has in fact been suf-fered, and the damages may be substantial in amount. Where the bank customer is not a trader, however, actual injury to credit must now, it seems, be pleaded and proved as special damage.”

On the first part of the claim for breach of contract, para-graph 12 of the statement of claim makes it plain that the claim for £3,600 is for general damages. It therefore follows from this and on the authorities that, as special damages are not being pleaded, the plaintiff is entitled only to nominal damages.

I think a little should be said about paragraph 6 of the statement of claim and the evidence led in proof of it. The paragraph reads:–

“In consequence of the act of the defendants, the plaintiff has lost a retainer fee worth £600 per annum.”

In view of the heading in paragraph 12 of the statement of claim, which makes claims only in respect of general dam-ages, I am constrained to hold that this item of £600 is in-cluded in the claim for £3,600 as general damages and is not a plea for special damages. The result is that paragraph 6 cannot be said to be a plea for special damages within the statement of the law in Gibbons v. Westminster Bank Ltd (supra).



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If for one moment one could say that special damages were pleaded, the evidence of the “loss” is so vague and unsatis-factory that I would not hold it proven. I have earlier re-ferred to the evidence of the plaintiff himself on the subject, which shows not a loss but a deferment of the arrangement for a retainer. On the other hand, the evidence of Mr Mufti, a witness for the plaintiff, showed that he, Mr Mufti, was plac-ing the recommendation before the directors of the com-pany, who may accept it is or refused, refused because of the subject-matter of this case, it is not a loss resulting from the circumstances of this particular case. It is said in 11 Hals-bury’s Laws of England, Volume 11, (3ed) at 218, paragraph 386 that:–

“In contrast to general damages special damages must be claimed specially and proved strictly, and are recoverable only where they can be included in the appropriate measure of damages and are not too remote.”

I must now decide to what the plaintiff is entitled as nominal damages. Such damages are defined in the same authority to which I have just made reference (ibid at 221) as:–

“. . . a sum of money that may be spoken of, but that has no exis-tence in point of quality, or a mere peg on which to hang costs. In practice, however, a small sum of money is awarded, usually 40s. Such damages must be distinguished from small or contemptuous damages, which indicate the opinion of the jury that the action ought not to have been brought.”

However, in the case of Constantine v. Imperial Hotels Ltd (1944) K.B. 693; (1944) 2 A.E.R. 171, Birkett J awarded the sum of five guineas as nominal damages.

I would assess nominal damages in this case also in the sum of five guineas, and will hear parties on costs.

Order accordingly.


Mussini and others v. Balogun and Compagnie Financiere France Afrique 119

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Mussini and others v. Balogun and Compagnie Financiere France

Afrique


KAZEEM J


Banking – Debenture – Stamping and upstamping – Need for upstamping to cover the amount of loan – Failure to re-register – Effect of

Banking – Loan – Debenture – Upstamping of – Effect of – Validity for purposes of enforcement

Facts

The applicants applied for an order to restrain the receiver and manager of Nigerian Marble Industry Limited from sell-ing or otherwise alienating or disposing of the assets of the said Nigerian Marble Industry Limited until the determina-tion of the petition for compulsory winding-up. The Nige-rian Marble Industry Limited (hereinafter called the com-pany) executed a debenture for an unlimited amount secured on all its assets in favour of the bank (second respondent) who pursuant to the powers conferred under the debenture appointed a receiver and manager to take over the company. The debenture was upstamped £70,000 and later to cover £225,000. The company contended inter alia that the up-stamping to £225,000 is not valid since no Registrar’s cer-tificate was obtained as if representing a fresh charge, under section 101 of the Companies Act (Cap 37) as a separate document under section 101 of the Stamp Duties Act (Cap 191) for the advance of £155,00. The respondents con-tended, inter alia, that the debenture was valid for £225,000 as an upstamped security being regarded as a separate document under the provisions of section 182 of the Stamp



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Duties Act only for the purposes of revenue collection and re-registration being unnecessary once registration was ef-fected under section 101 of the Companies Act.

Held –

1. When a debenture is upstamped it does not thereby be-come a new and separate document for other purposes other than for revenue collection.

2. There is nothing in section 101 of Companies Act (Cap 37) which requires a charge to be registered over and over again once it has been registered on its creation.

Application dismissed.


Foreign Cases

Columbian Fireproofing Co Ltd, In re (1910) 102 L.T. 835 Henry Pound Son and Hutchins, In re (1889) 42 Ch.D. 402;

62 L.T. 137

“Otto” Elec. Mfg. Co, In re: (1905) Ltd (1906) 2 Ch.D. 390; (1906), 95 L.T. 141

Joshua Stubbs, Ltd, Barney, In re v. Joshua Stubbs Ltd (1819) 1 Ch.D. 475; (1819) 64 L.T. 306

Mechanisations (Eaglescliffe) Ltd, In re (1966) Ch.D. 21; [1964] 3 All E.R. 840

National Provincial and Union Bank of England v. Charnley (1924) 1 K.B. 431; (1923) 130 L.T. 465

Strong v. Carlyle Press (1893) 1 Ch. 268; 68 L.T. 396 Waterhouse’s Policy, In re (1937) Ch. 415; [1937] 2 All

E.R. 91

Nigerian statutes referred to in the judgment Companies Act, (Laws of the Federation of Nigeria and La-

gos, 1958) Cap 37 section 94, section 101, section 128, section 209



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Stamp Duties Act, Cap 191 (Laws of the Federation of Nige-ria and Lagos, 1958), section 81

Counsel For the applicants: Impey

For the first respondent in person: Balogun

For the second respondent: Kushimo

For the Registrar of Companies: Akinseye

Judgment

KAZEEM J: This is an application for an order to restrain the receiver and manager of Nigerian Marble Industry Limited from selling or otherwise alienating or disposing of the as-sets of the said Nigerian Marble Industry Limited until the determination of the petition for compulsory winding up.

The facts relevant to this matter are that the first applicant petitioned for the compulsory winding up of Nigerian Mar-ble Industry Limited (hereinafter called “the company”), and the other applicants, amongst others, entered appearances to support the pending petition. On 29th November, 1963, the company executed a debenture for an unlimited amount se-cured on all its assets in favour of the second respondent, who pursuant to the powers conferred under the said deben-ture appointed the first respondent as receiver and manager on 1st March, 1968. Because of the default of the company in meeting its obligations on demand, the first respondent, in exercise of the powers conferred upon him under the deben-ture, published his intention in all the Nigerian daily newspa-pers of 7th and 8th March, 1968 to sell all the assets of the company and that all offers must be received by him by Wednesday 20th March, 1968. The debenture, which origi-nally was for an unlimited amount, was unstamped to £70,000 by 17th November, 1964) and the Registrar’s cer-tificates of registration were obtained accordingly. Later, by 21st November, 1967, it was upstamped to cover an amount of £225,000, an excess of £155,000 over the £70,000, but no Registrar’s certificate of registration was obtained.



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The excess of £155,000 arose from a financial arrangement between the company on the one hand and the second re-spondent, the Northern Nigeria Development Corporation (hereinafter called “the N.N.D.C”), and the Nigeria Indus-trial Development Bank (hereinafter called “the N.I.D.B”) on the order, that both the N.N.D.C and the N.I.D.B. should make the sum available to the second respondent to lend to the company.

The company, which was originally a private company, proceeded to convert itself into a public company by passing special resolutions to that effect, and those resolutions were confirmed on 7th September, 1966.

There is no dispute as to the validity of the debenture for a sum of £70,000, but it was contended on behalf of the appli-cants that:–

(a) the debenture was not valid for an amount of £225,000, because it was not registered for the excess of £155,000, which legally would be regarded as unsecured;

(b) insofar as the company did not take out a trading certifi-cate after its conversion into a public company, the addi-tional advances totalling £155,000 made to the company would be irrecoverable; and

(c) since the advance was made within three months of the commencement of the winding up proceedings, it was invalid by virtue of section 209 of the Companies Act (Cap 37).

Moreover, the bona fides of the first respondent was also at-tacked, and it was argued that there was some collusion be-tween him and one Mr J.P Baldwin, who was referred to by the applicants as assistant receiver and manager, to sell the assets of the company to the N.N.D.C. and N.I.D.B. or their nominees. In support of the last contention, a great deal of af-fidavit evidence was filed which merely attacked the manner in which the company had been managed by Mr Baldwin as general manager to the detriment of the second applicant, who was at the material time the managing director of the company. Mr Baldwin was also accused of mismanagement of the company but the only attack on the first respondent


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was that he would not be impartial, being an official of the N.I.D.B.

As regards the contention that the debenture is not valid for a sum of £225,000, learned Counsel for the first applicant referred to section 81(2) of the Stamp Duties Act (Cap 191), and submitted that each time the debenture was unstamped for a higher amount it should be regarded as a separate document and be registered as a charge under section 101 of the Companies Act (Cap 37) (hereinafter referred to as “the Act”). In support of his submission he referred to the certifi-cates of registration given when the debenture was upstamped for £50,000 and £70,000, and relied upon the judgment of Farwell LJ in In re: Waterhouse’s Policy (1937) Ch. 415; [1937] 2 All E.R. 91.

It was, however, argued on behalf of the respondents that the debenture is valid for £225,000, and that each time a secu-rity is upstamped it is regarded as a separate document under the provisions of section 81(2) of the Stamp Duties Act (Cap 191) only for the purposes of revenue collection, and that it is absolutely unnecessary to re register a security once its registration has already been effected under section 101 of the Companies Act. It was submitted further that the two cer-tificates of registration issued by the Registrar when the de-benture was upstamped for £50,000 and £70,000 were unnec-essary in law and were mere surplusage, and that the deben-ture ought to be honoured according to its tenor independent of the Registrar’s certificate. The decision in In re: Mechani-sations (Eaglescliffe) Ltd (1966) Ch.D. 21; [1964] 3 All E.R. 840 was cited in support of this submission.

It is common ground that the debenture which was exe-cuted on 29th November, 1963 was originally given for an unlimited amount, and that it was registered as such under section 101 of the Act, which requires a debenture created by a company registered in Nigeria to be registered within 21 days after the date of its creation. There is also no doubt



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that a debenture is created on the date of its execution. It is also agreed that the debenture was validly upstamped and registered to the tune of £70,000. It was, however, contended that although the debenture was upstamped for a sum of £225,000, insofar as the additional advances totalling £155,000 were not provided by the second respondent it could not be used to secure advances made by both the N.N.D.C. and the N.I.D.B.

It is sufficient to dismiss this contention as misconceived because on a close examination of the financial arrangement between the company, the second respondent, the N.N.D.C. and the N.I.D.B., the letter of clarification of the arrange-ment which was assented to by the second applicant as man-aging director of the company, and the joint guarantee for the sum of £225,000 given by both the second and third ap-plicants, I am satisfied that it was the second respondent that actually made the additional sum of £155,000 available to the company. In the circumstances, I am of the opinion that the debenture, by the nature of its terms, could be used as security for the additional £155,000.

Having dismissed that contention, it may then be asked: Was it necessary for the debenture to be re-registered after it was upstamped for £225,000? Firstly, the case of In re: Waterhouse’s Policy (8) cited by learned Counsel for the applicants, rather than support his contention, confirms the respondent’s submission, for Farwell LJ said (1937) Ch. at 420; (1937) All E.R. at 96.

“If a bank, or any other person lends money with no limit on the amount to be lent and stamps the security which it takes for a lim-ited sum and subsequently desires that security to be increased so that it will cover a larger sum, then on every occasion when it is desired to increase the security it is necessary to stamp the secu-rity with a further duty, and for that purpose the security shall be deemed to be a new and separate instrument on the date on which the advance or loan is made. If that is not done, then the lender is precluded from holding his security, in whatever form it may be,


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as security for any amount over that which the stamp upon it will cover.”

Hence I am unable to accept the applicant’s submission that when the debenture in this case was upstamped for £225,000 it was a new and separate document for other purposes than for revenue collection. Secondly, I have also examined the provisions of section 101 of the Act, and I cannot find any-thing therein which requires a charge to be registered over and over again once it has been registered on its creation. The two subsections which are considered relevant for our purposes here are subsections (2) and (5).

Subsection (2) provides:–

“The Registrar shall keep with respect to each company, a register in the prescribed form of all the mortgages and charges created by the company and requiring registration under this section; and shall, on payment of the prescribed fee, enter in the register, with respect to every such mortgage or charge, the date of creation, the amount secured by it, short particulars of the property mortgaged or charged, and the names of the mortgagees or persons entitled to the charge.”

Subsection (5) provides:–

“The Registrar shall give a certificate under his hand of the regis-tration of any mortgage or charge registered in pursuance of this section, stating the amount thereby secured, and the certificate shall be conclusive evidence that the requirements of this section as to registration have been complied with.”

These two subsections are in pari materia with section 98(l) and (2) of the United Kingdom Companies Act, 1948, which were considered by Buckley J in In re: Mechanisations (Eaglescliffe) Ltd (supra) where the learned Judge first re-ferred to the views of Scrutton LJ in National Provincial and Union Bank of England v. Charnley (1924) 1 K.B. 431; (1923) 130 L.T. 465 and then said (1966) Ch.D. at 33, 35; (3 All E.R. at 847, 849):–

“Scrutton LJ dealt with the matter in these terms (151 K.B. 431, 444):–

‘The result of the legislation as it appears to me is that if the



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document sent in for registration does contain a charge on par-ticular property, even if the company sending it in has misstated that charge, or the Registrar considering it judicially has misun-derstood it, when once the 20 certificates had been given, the grantees are safe. Though one can see that this may cause great hardship to a person who gives credit to the company in reliance on a defective register, one can also see that equal hardship would be caused to secured creditors if their security was to be upset for reasons connected with the action of persons over whom they had no control.’

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In order to discover the terms and effect of the charge (as was pointed out in the passages I have read from the judgments in Na-tional Provincial and Union Bank of England v. Chamley) one must look at the document creating the charge and not at the reg-ister. It is from that document that one will discover what moneys are secured and what is the total amount secured by the charge.

It is perhaps just worth noticing that section 98(2) does not say that the certificate shall be conclusive evidence that the amount thereby stated to be secured by the charge is in fact the amount secured by the charge: it is only conclusive evidence that the re-quirements as to registration have been complied with; and al-though no doubt the legislature contemplated that when particu-lars are submitted to the Registrar they will be accurate and that when the Registrar makes entries in the register he will have checked the accuracy of such particulars against the instrument which he has for that purpose, the legislature has not made accu-racy in that aspect a condition of the validity of the charge. As was pointed out by Scrutton LJ in the passage I read from his judgment, this may in certain circumstances cause hardship if there is any inaccuracy. But the Lord Justice does not seem to have thought that any such inaccuracy could in any way affect the validity of the charge itself, once the process of registration has gone through and the Registrar has given his certificate.”

In our present case, the facts of which appear similar to those in In re: Mechanisations (Eaglescliffe) Ltd (supra) in-sofar as the debenture which was created in November, 1963 for an unlimited amount was registered as such and was also upstamped for an amount of £225,000, it seems immaterial that the particulars of the upstamping for the excess of


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£155,000 could not be found on the register. What seems material is the tenor of the debenture, which makes it clear that the company would pay to the bank, ie, the second re-spondent, “the balance which on the account of the company with the bank shall for the time being . . . be due or owing to the bank in respect of all moneys now or from time to time hereafter owing by the company or for which the company may be liable. . .” And what was due and owing by the com-pany to the bank as of 21st November, 1967 was an amount of £225,000.

In the circumstances, I am of the opinion that the deben-ture is valid for an amount of £225,000, and it need not be re-registered under section 101 of the Act, since it was regis-tered in November, 1963.

There are two other points raised by the applicants which touch on the validity of the debenture for an amount of £225,000. It was argued, first, that since the company con-verted itself from a private to a public company but failed to take out a trading certificate, contrary to the provisions of section 28(2) of the Act, the restrictions imposed by sec-tion 94 of the Act would apply and as such the excess of £155,000 which was lent after the conversion would be irre-coverable. The case of In re: “Otto” Elec. Mfg. Co Ltd (1905), Limited (1906) 2 Ch.D. 390; (1906) 95 L.T. 141) was cited in support of that contention. Secondly, it was ar-gued that since the amount of £155,000 was advanced within three months of the commencement of winding up proceedings on 11th January, 1968, and the company was insolvent, the debenture would be invalid to the tune of that amount by virtue of section 209 of the Act.

Having held that the debenture is valid for the total sum of £225,000, it would have been unnecessary to deal specifi-cally with those points. However, it was submitted on behalf of the respondents that the provisions of section 128(2) of the Act were in fact complied with by the company, and Mr Akinseye, who represented the Registrar of Companies at



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the hearing, confirmed it to be so. Even if a trading certifi-cate was not obtained by the company after its conversion, insofar as it has commenced business as a private company from its incorporation, I am of the opinion that the restric-tions as to commencement of business stipulated by sec-tion 94 of the Act would not apply to it. It seems to me that those provisions only affect a public company seeking to commence business on its incorporation and not a private company that has converted itself into a public company. The case of In re: “Otto” Elec. Mfg. Co (supra) relied upon by learned Counsel for the applicant is in my view inapplic-able because it deals with a public company which has failed to take out a trading certificate.

On the question of the operative effect of section 209 of the Act, in agreement with the submission of learned Coun-sel for the second respondent that since the debenture was created on 29th November, 1963, it is not caught by the pro-visions of section 209 of the Act, and that in any case the exception to that section covers our present case since the cash payment of £155,000 was made subsequent to the crea-tion of the debenture: see In re: Columbian Fireproofing Co Ltd (1910) 102 LT 835, where the cash payment was made shortly before the creation of the charge and yet it was held that it was not caught by section 212 of the United Kingdom Companies (Consolidation) Act, 1908, the provisions of which are the same as our section 209.

As regards the charge of mala fides against the first respon-dent and Mr J.P. Baldwin, who was referred to as assistant re-ceiver and manager, I have perused all the affidavits on which the applicants rely and I am more than convinced that although Mr Baldwin might not have been quite as competent to man-age the company as the second applicant would have wished, however the misfortune of the company was mostly due to the incompatibility between the two persons. I do not therefore see how that should affect the exercise of the powers of the re-ceiver and manager in realising the assets of the company.


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Mr Balogun is undoubtedly an official of the N.I.D.B. but the debenture holders are empowered under section 9 of the debenture to appoint any person, whether an officer of the bank or not, to be a receiver and manager. In the absence of any specific charge of fraud or collusion against him, I am not satisfied that a charge of mala fides can be sustained against him. The receiver and manager is equally empowered under the debenture (whose validity is undisputed for £70,000 and which I have also held to be valid for a sum of £225,000), inter alia, to take possession of, collect and get in all the as-sets of the company and to sell or concur in selling those as-sets.

It is not disputed that Mr Balogun’s appointment was valid; the question is whether this Court can interfere in the exercise of those powers? I have perused all the authorities to which I have been referred by Mr Balogun, and I am sat-isfied that this Court ought not to interfere in the exercise of his powers as receiver and manager, let alone to appoint a liquidator in his place: see In re: Henry Pound Son and Hut-chins (1889) 42 Ch.D. 402; 62 L.T. 137; In re Joshua Stubbs, Ltd, Barney v. Joshua Stubbs Ltd (1819) 1 Ch.D. 475; (1819) 64 L.T. 306; Strong v. Carlyle Press (1893) 1 Ch. 268; 68 L.T. 396. For these reasons, the application has failed; and it is hereby dismissed. The applicants are to pay 25 guineas costs to each respondent.

Application dismissed.



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Yassin v. Barclays Bank DCO


BRETT, LEWIS, MADARIKAN, JJ SC

Date of Judgment: 17 MAY 1968 S.C.:213/67

Banking – Banker’s book – Admissibility of – What must be established – Section 96(2) of Evidence Act

Banking – Books used in ordinary course of business – In-terpretation of

Banking – Statement of account – Admissibility of – Sec-tion 96 of Evidence Act

Evidence – Bankers Book – Admissibility of – What must be established

Facts

The plaintiffs/respondents claim in the court below was for the sum of £4527.16s.11d which was granted. The defen-dants, not satisfied with the judgment went on appeal to the Supreme Court contending inter alia that there was wrong-ful admission of evidence in that the statement of account which was tendered and received in evidence did not comply with section 96 of the Evidence Act which reads as follows:–

“96(1) Secondary evidence may be given of the existence, condi-tions or contents of a document in the following cases:–

. . .

(h) when the document is an entry in a banker’s book.

96(2) The secondary evidence admissible in respect of the origi-nal documents referred to in the several paragraphs of sub-section (1) is as follows:–

. . .

(e) in paragraph (h) the copies cannot be received as evidence unless it be first proved that the book in which the entries copied were made was at the time of making one of the ordinary books of the bank, and


Yassin v. Barclays Bank DCO 131

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that the entry was made in the usual and ordinary course of business, and that the book is in the cus-tody and control of the bank, which proof may be given orally or by affidavit by a partner or officer of the bank, and that the copy has been examined with the original entry and is correct, which proof must be given by some person who has examined the copy with the original entry and may be given orally or by affidavit.”

Held –

1. To admit a copy of banker’s book, the following matters must be established:–

(i) the book in which the entries were made was at the time of making one of the ordinary books of the bank; and

(ii) the entry was made in the usual and ordinary course of business; and

(iii) the book is in the custody and control of the bank; and

(iv) the copy has been examined with the original entry and is correct;

(v) in the instant case the statement of account was rightly admitted.

2. The evidence for item (iv) can be given by any person who has made the necessary examinations but the evi-dence for items (i), (ii) and (iii) must be given by a part-ner or officer of the bank concerned either orally or by affidavit.

3. Books used in the ordinary course of business do not have to be in daily use as it is sufficient if the bank keeps the books so as to be able to refer them when necessary.

Appeal dismissed.


Nigerian

Ajayi v. Fisher (1956) 1 F.S.C. 90



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Alashe v. Ilu (1964) 1 All N.L.R. 390 at 397 Asylum for Idiots v. Handysides and others (1906) 22 T.L.R. 573 Ex Parte Young In Re Kitchin (1881) 17 Ch.D. 668 In re Robinson’s Settlement, Gant v. Hobbs (1912) 1 Ch. 717, 728 Owoniyi v. Omotosho (1961) 1 All N.L.R. 304 Paul v. Mrs George 4 F.S.C. 198 Price v. Richardson (1927) 1 K.B. 448, 453 Rickaby v. Lewis (1905) 22 T.L.R. 130

Foreign

Jacker v. International Cable Co Ltd (1888) 5 T.L.R. 13

Nigerian statute referred to in the judgment Evidence Act, Cap 62, 1958, sections 96, 226(1)

Counsel For the appellant: Bentley For the respondent: Kushimo

Judgment

LEWIS JSC: (Delivering the judgment of the court) In Suit No. JD/24/64 Bate J in the Jos High Court gave judgment on the 19th December, 1966, for the plaintiffs for £4,527.16s.11d with the costs of £140.9s.0d and against that decision the defendant has appealed to this Court.

The plaintiff’s writ reads as follows:– “The plaintiffs claim is against the defendant for the sum of £4,527.16.11d being monies due to the plaintiffs from the defen-dant under a contract of guarantee dated 7th November, 1960 whereby the defendant guaranteed due repayment to the plaintiffs of all monies due and owing from the firm of Messrs MA Yassin and Sons to the plaintiffs up to a maximum sum of £7,780 which said sum £4,527, 16.11d the defendant has refused or neglected to pay, and paragraphs 3, 4, 5 and 6 of their statement of claim read:–

‘3. In November, 1960 following the execution of a legal mort-gage of the defendants as ordered by the court in Suit No. K/115/60: Barclays Bank DCO v. MA Yassin and Sons,


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over certain property of the judgment debtors held by them under and by virtue of Certificate of Occupancy No. 8188, approaches were made to the plaintiffs by the defendant with a view to persuading the plaintiffs not to take any fur-ther steps towards implementing the judgment against the aforesaid debtors. The plaintiffs agreed not to proceed with the sale of the aforesaid property provided that an agreed repayment programme was strictly observed and provided that the defendant executed a guarantee in favour of the plaintiffs in respect of the unpaid balance of the judgment debt and costs.

4. The defendant promised that the said judgment debt and costs could be repaid within six months and on the 7th No-vember, 1960 the defendant signed a deed of guarantee in favour of the plaintiffs for the sum of £7,780. The plaintiffs will rely on this document at the trial of this action.

5. Subsequently the judgment debtors in the aforementioned suit failed to adhere to the agreed repayment programme, and the plaintiffs sold the judgment debtors’ aforesaid prop-erty pursuant to the legal mortgage for the sum of £4,000.

6. The balance of monies due to the plaintiffs under the terms of the aforesaid judgment amounts to £4,527.16s.11d which sum the plaintiffs have called upon the defendant to settle under the terms of the aforesaid guarantee, but the defen-dant has refused or neglected to settle it or any part thereof’.”

The defendant in paragraphs 2-7 of his statement of defence pleaded as follows:–

“2. Save as admitted above the defendant completely denies the allegations set out and contained in paragraphs 3, 4, 5, and 6 and states that the plaintiffs are not entitled to the sum claimed or to any sum from the defendant.

3. The plaintiffs obtained judgment and issued execution against one MK Yassin. The defendant approached the plaintiffs with one Racha and agreed with the plaintiffs that if the plaintiffs would withhold the execution and forbear further execution the defendant would as soon as funds came to his hand settle the judgment debt of MK Yassin.


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4. The defendant had never undertaken to repay the debt in six months. MK Yassin was not present at and did not partici-pate in the agreement reached as aforesaid and did not and could have failed to ‘adhere to the agreed repayment pro-gramme.’

5. The defendant signed a guarantee purporting to embody the agreement of the parties without reading the guarantee and later discovered that the guarantee did not contain the terms of the agreement.

6. The plaintiffs sold the property of MK Yassin without no-tice to the defendant and in breach of the agreement of No-vember, 1960.

7. The defendant pleads (a) a discharge, (b) failure of consid-eration, (c) the guarantee is unenforceable on the face of it, and (d) if enforceable, did not contain the true terms of agreement reached and is therefore void in law.”

The plaintiff bank was suing the defendant on the guarantee which he entered into with the bank on the 7th November, 1960, and it is only necessary for the purposes of this appeal to quote the first paragraph thereof which reads:–

“1. In consideration of your giving time, credit and/or Banking facilities and accommodation to MK Yassin and Sons of Aerodrome Road, Kano (hereinafter referred to as ‘the Prin-cipal’) I/We the undersigned hereby guarantee to you the payment of and undertake on demand in writing made on the undersigned by you or any of your Directors, Local Direc-tors, managers or acting managers to pay to you all sums of money which may now be or which hereafter may from time to time become due or owing to you anywhere from or by the Principal either as principal or surety and either solely or jointly with any other person upon current banking account bills of exchange or promissory notes or upon loan or any other account whatsoever or for actual or contingent liability including all usual banking charges.”

At the hearing of the action the defendant set up two de-fences, namely that the guarantee was conditional on the bank not selling the property mortgaged by the debtor which condition the bank broke, and that the guarantee gave the defendant unlimited time to repay and was therefore


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unenforceable against him. The learned trial Judge found against both submissions of the defendant and held that he was bound by the terms of the guarantee and gave judgment accordingly for £4,527.16.11., having found that the original liability in the guarantee of £7,780 had been reduced to the sum of £4,527.16.11. by the sale of the debtor’s property.

Mr Bentley, for the appellant, has based his appeal on two main contentions. First he says that the debt was wrongly proved by the admission of inadmissible evidence, and sec-ondly that the condition precedent in the guarantee, that the guarantor be asked in writing to pay, had not been proved.

So far as his first contention is concerned, Mr Bentley rightly, in our view, showed that the only evidence on the record establishing the amount of the defendant’s indebted-ness to the plaintiff was the bank statement of account (ex-hibit 2), as relying on Ex Parte Young In Re Kitchin (1881) 17 Ch.D. 668 he submitted that any judgment against the principal debtor did not bind the surety and was evidence against him in an action by the creditor, though in fact the learned trial Judge here in no way relied on the judgment against the debtor doubtless because he saw that, in this ac-tion, it was quite immaterial as establishing the claim as it was given some three months before the guarantee was en-tered into and there were subsequent transactions to the guarantee including the sale of the principal debtor’s prop-erty, the proceeds of which being paid to the plaintiff had reduced the debt and the surety’s liability therefor. The bank statement of account showing the indebtedness of the prin-cipal debtor was admitted. Mr Perritt, an officer of Barclays Bank DCO., the plaintiff bank, gave evidence and he stated as follows:–

“I have true copy of statement of Yassin and Sons’ account with plaintiff bank: have compared with the original books of plaintiff bank and found it to be accurate. The books with which I com-pared the books of the bank kept in ordinary course of business. I produce true copy of bank statement. (Admitted as exhibit 2). Shows total indebtedness – £8527.16.11. I see exhibit 1, paragraph 9.


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Bank claims less than amount due on statement because it has re-alised difference on sale of M.A. Yassin and Sons’ property. Bank asks judgment for difference between amount due on statement and amount realised on sale.”

Now Mr Bentley has submitted to us that this statement should not have been admitted as the conditions for its right-ful admission laid down in section 96(2)(e) of the Evidence Act had not been complied with. Sections 96(1)(h) and 96(2)(e) of the Evidence Act read as follows:–

“96(1) Secondary evidence may be given of the existence, condi-tions or contents of a document in the following cases:–

. . .

(h) when the document is an entry in a banker’s book.

96(2) The secondary evidence admissible in respect of the origi-nal documents referred to in the several paragraphs of sub-section (1) is as follows:–

. . .

(e) in paragraph (h) the copies cannot be received as evi-dence unless it be first proved that the book in which the entries copied were made was at the time of mak-ing one of the ordinary books of the bank, and that the entry was made in the usual and ordinary course of business, and that the book is in the custody and con-trol of the bank, which proof may be given orally or by affidavit by a partner or officer of the bank, and that the copy has been examined with the original en-try and is correct, which proof must be given by some person who has examined the copy with the original entry and may be given orally or by affidavit.”

If one divides up in section 96(2)(e) the matter which must be proved this shows that to admit a copy of a banker’s book it must be established that:– 1. the book in which the entries copied were

made was at the time of making one of the ordinary books of the bank, and

2. the entry was made in the usual and ordinary course of business, and


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3. the book is in the custody and control of the bank, and

4. the copy has been examined with the original and is correct.

The evidence for item 4 can be given by any person who has made the necessary examination, but the evidence for items 1, 2 and 3 must be given by a partner or officer of the bank concerned, either orally or by affidavit. Mr Bentley does not dispute item 4 was complied with here, but he does contend that not one of items 1, 2 and 3 was specifically complied with. This issue turns on the evidence of Mr Perritt which we have already cited.

Whilst we agree with Mr Bentley that Mr Perritt, according to the record, did not use the precise words set out in sec-tion 96(2)(e), it must be kept in mind that the judge writing down the evidence does not necessarily record every exact word of a witness but often paraphrases unless there is a dis-pute as to what he is saying. In any case, here we consider that when Mr Perritt said that he had compared the statement with “the books of the bank kept in the ordinary course of business” it is established that they were ordinary books of the bank, eg item 1 (supra). From the same phrase we think that it is clearly implied that the entries there were made in the usual and ordinary course of business so item 2 (supra) was complied with. Finally, though we agree that Mr Perritt never specifically said the books he examined were in the custody and control of the bank, this was the only natural inference to be derived from his evidence as an officer of that bank and in our view it should, in the circumstances, have been specifically put to him that they were not in the custody and control of the bank if the defendant wished to dispute. Here the defendant, albeit at the hearing appearing in person though he employed a legal practitioner to draft his statement of defence, did not see fit either to challenge the admission of the statement of account or to cross-examine on it. The case of Asylum for Idiots v. Handysides and others


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(1906) 22 T.L.R. 573, where the court was dealing with sec-tion 4 of the Bankers’ Books Evidence Act, 1879, which reads: -

“A copy of an entry in a banker’s book shall not be received in evidence under this Act unless it be first proved that the book was at the time of the making of the entry one of the ordinary books of the bank, and that the entry was made in the usual and ordinary course of business, and that the book is in the custody or control of the bank.

Such proof may be given by a partner or officer of the bank, and may be given orally or by an affidavit sworn before any commis-sioner or person authorised to take affidavits.”

It is therefore, so far as the point in dispute here are con-cerned, identical, shows that the court did not give a limited meaning to the interpretation of “books used in the ordinary course of business in the bank” but held that the books did not have to be in daily use as it was sufficient if the bank kept the books so as to be able to refer to them when neces-sary. So here we consider that we can give a liberal interpre-tation to the words of the officer of the bank as showing that the only natural and unchallenged inference is that the books to which he was referring were in the custody and control of the bank. If the defendant had challenged this then more searching questions could have been asked to discover ex-actly what Mr Perritt was meaning to say, but as this was not done we consider that the learned trial Judge was perfectly entitled to admit the statement as complying prima facie, with section 96(2)(e) of the Evidence Act.

We must make it clear that if inadmissible evidence has been received then it is the duty of the Court of Appeal to reject it and to decide the case on the legal evidence, (see Owonyin v. Omotosho (1961) All N.L.R. 304), and in Alashe v. Ilu (1964) 1 All N.L.R. 390 we said at page 397:–

“Regarding the plan exhibit A, Mr Alakija for the respondents concedes that it was wrongly admitted in evidence: his contention is that the objection should have been taken before the trial Judge.”


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The prohibition against the admission of the plan in evi-dence is a statutory one; the plan was not countersigned by the Regional Director of Surveys and so is caught by sec-tion 23(1)(b) of the Survey Act. It is the duty of all courts to give effect to legislation and the parties cannot by consent or acquiescence or failure to object nullify the effect of a stat-ute. This court in Owonyin v. Omotosho (1961) All N.L.R. 304, 308, called attention to the impropriety of relying on inadmissible evidence in arriving at a decision. It was there said, on the authority of Jacker v. International Cable Co Ltd (1888) 5 T.L.R. 13:–

“When matter has been improperly received in evidence in the court below, even when no objection has been raised, it is the duty of the court of appeal to reject it and to decide the case on legal evidence.”

We do not, in this judgment, seek to derogate from what we said in Alashe v. Ilu in any way. That case was dealing with evidence absolutely inadmissible by virtue of the statutory provisions applicable there, but here the statement of ac-count is expressly declared to be admissible under section 96 of the Evidence Act if certain conditions are satisfied. If in-admissible evidence is not objected to and is admitted it must still be rejected on appeal but if the evidence can be interpreted as complying with the appropriate statutory re-quirement, then it is a matter to be taken into consideration when interpreting the evidence that it went in unchallenged. In other words, if the evidence can be treated as admissible it is not to be treated as inadmissible because there is a pos-sible other interpretation which would render it inadmissible when that possible other interpretation had not been tested by questions from the party who could have objected to the evidence being admitted.

We would only wish to add in this regard that, though it does not arise, Mr Kushimo sought to argue before us that if we found that the statement of account had been wrongly admitted, then no miscarriage of justice had been occasioned


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thereby, and referred us to a number of English cases on the point, but we pointed out to him that this is not the correct test as in Nigeria it is section 226(1) of the Evidence Act that deals with the wrongful admission of evidence and the correct test when evidence has been wrongfully received is whether – “the evidence so admitted cannot reasonably be held to have affected the decision and that such decision would have been the same if such evidence had not been admitted”; and we have in Ajayi v. Fisher (1956) 1 F.S.C. 90 set out the princi-ple to be applied on appeal when dealing with that section.

Mr Bentley’s second submission was that the plaintiff bank did not prove the necessary condition precedent to the guar-antee, namely a demand made to the defendant in writing for payment. His contention that a condition precedent must be fulfilled was not disputed by Mr Kushimo and indeed Hals-bury’s Laws of England, (3ed), Volume 18, paragraph 827, clearly so shows as does Rickaby v. Lewis (1905) 22 T.L.R. 130, in respect of a demand in writing, but Mr Kushimo for the respondent objected that it was too late for Mr Bentley to take this point before us as it was neither pleaded nor taken in any way at the hearing of the action.

Now so far as the position in England is concerned, the Rules of the Supreme Court there put the matter beyond ar-gument as we note Order 18, rule 7(4) which reads:–

“A statement that a thing has been done or that an event has oc-curred, being a thing or event the doing or occurrence of which, as the case may be, constitutes a condition precedent necessary for the case of a party is to be implied in his pleading.”

And Order 18, rule 8 reads:– “1. A party must in any pleading subsequent to a statement of

claim plead specifically any matter, for example, perform-ance, release, any relevant statute of limitation, fraud or any fact showing illegality:–

(a) which he alleges makes any claim or defence of the op-posite party not maintainable; or

(b) which, if not specifically pleaded, might take the oppo-site party by surprise; or


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(c) which raises issues of fact not arising out of the preced-ing pleading.

2. Without prejudice to paragraph (1), a defendant to an action for the recovery of land must plead specifically every ground of defence on which he relies, and a plea that he is in posses-sion of the land by himself or his tenant is not sufficient.”

In the Supreme Court Practice 1967, Volume 1, at 239, it is said:–

“This Rule enforces one of the cardinal principles of the present sys-tem of pleading, viz., that every defence or reply must plead spe-cifically any matter which makes the claim or defence in the pre-ceding pleading not maintainable or which might take the opposite party by surprise or raises issues of fact not arising out of the pre-ceding pleading. Put shortly, wherever a party has a special ground of defence or raises an affirmative case to destroy a claim or de-fence, as the case may be, he must specifically plead the matter he relies on for such purpose. ‘The effect of the rule is, for reasons of practice and justice and convenience, to require the party to tell his opponent what he is coming to the court to prove’ (per Buckley LJ In re Robinson’s Settlement, Gant v. Hobbs (1912) 1 Ch. 717, 728): but the rule does not prevent the court from giving effect in proper cases to defences which are not pleaded (ibid, and see Price v. Richardson (1927) 1 K.B. 448, 453).

It often is not enough for a party to deny an allegation in his op-ponent’s pleading; he must go further and dispute its validity in law, or set up some affirmative case of his own in answer to it. It will not serve his turn merely to traverse the allegation; he must confess and avoid it. Thus, if the plaintiff sets up a contract which was in fact made, it will be idle for the defendant merely to trav-erse (ie, deny) the making of the contract: he should confess (i.e. admit) that he made the contract, but avoid the effect of that con-fession by pleading the Statute of Frauds or Limitations or sec-tion 40 of the Law of Property Act, 1925, or setting up that the contract has been duly performed or rescinded.”

The effect of this is that in England the defendant must plead specifically that any condition precedent has not been com-plied with if he is going to rely on that. In the Jos High Court, however, the former Supreme Court (Civil Proce-dure) Rules apply, but if there is a lacuna then, under sec-tion 35 of the High Court of Northern Nigeria, in civil


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causes and matters the English practice and procedure is ap-plicable. Counsel on both sides have directed our attention to Order 32, rule 13 of the Supreme Court (Civil Procedure) Rules which reads:–

“13. The defence must allege any fact not stated in the statement of claim on which the defendant relies in defence, as estab-lishing, for instance, fraud on the part of the plaintiff, or showing that the plaintiff’s right to recover or to any relief capable of being granted on the petition, has not yet accrued, or is released, or barred, or otherwise gone.”;

and to Paul v. Mrs George 4 F.S.C. 198 as showing the ne-cessity under that rule to plead facts upon which it is neces-sary to rely to set up a special defence. In our view, how-ever, quite apart from rule 13 there is the provision of Or-der 32, rule 11 which reads:–

“11. When a party denies an allegation of fact he must not do so evasively, but answer the point of substance. And when a matter of fact is alleged with diverse circumstances it shall not be sufficient to deny it as alleged along with those cir-cumstances, but a fair and substantial answer must be given.”

And the effect of that, in our judgment, is to require the alle-gation that a failure of a condition precedent exists to be spe-cifically pleaded. In any case, we are of the view that para-graph 6 of the statement of claim dealt with a number of separate matters, namely (1) that the balance of money due was £4,527.16s.11d. and (2) that the plaintiff had called upon the defendant to settle under the terms of the guarantee, and (3) that the defendant had refused to settle it or any part thereof, and a general denial of the paragraph would not, in our view, be sufficient to raise the issue that a condition precedent which was not specifically mentioned (so was, at the most, implied) had not been complied with. It is therefore our view that the defendant had neither complied with Or-der 32, rule 11 nor with Order 32, rule 13 and that accord-ingly the issue not having been raised on the pleadings, nor indeed at the hearing, it is now too late for him to do so.

The appeal is accordingly dismissed with costs to the re-spondents assessed at 31 guineas.


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Johnson v. Sobaki


ADEBIYI AGJ

Date of Judgment: 28 AUGUST 1968

Banking – Bailment – Deposit with bank – Bailee for goods specifically received for banking purpose – No liability for goods kept on premises by mere increase without bailment

Banking – Overdraft – Repayment – No cause of action without demand for repayment or notice

Facts

The plaintiff (liquidator of a bank) brought an action to re-cover the amount due on the defendant’s overdraft, and the defendant counterclaimed for arrears of his salary and re-covery of some articles left on the bank’s premises.

The defendant was an employee of the bank, and took an overdraft which was still unpaid until the bank went into liquidation. This is a suit by the liquidator to recover the outstanding overdraft with interest. The defendant did not dispute the balance unpaid on the overdraft but counter-claimed for arrears of salary and recovery of his properties left on the premises of the bank. The plaintiff contended that the claim for arrears of salary is statue barred and is not li-able for articles left in the banks premises.

Held –

1. Where an overdraft is granted by a bank, no cause of ac-tion for repayment arises for the purposes of the Limita-tion Decree, 1966 until there has been a demand made or notice given.

2. Where owner of goods on the bank’s premises is a mere licensee, and in the absence of special contractual provi-sion, the bank has no obligation towards him in respect of the goods.



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Judgment for the plaintiff, counterclaim dismissed

Statute referred to in the judgment

Limitation Decree, 1966 (No. 88), section 7.

Counsel

For the plaintiff: Ademakinwa

For the defendant: Awopeju

Judgment

ADEBIYI AGJ: The plaintiff’s claim against the defendant is for the sum of £694.7s.6d, being money loaned to the defen-dant by the Merchants Bank Limited (now in liquidation) between September 29th, 1959 and September 23rd, 1960 inclusive, at the defendant’s request which the defendant has refused or neglected to pay in spite of repeated demands. The plaintiff also claims interest at the rate of £5 percent per annum on the said sum from the date of judgment until payment.

The defendant counterclaimed from the plaintiff for (as amended):–

£. s. d.

(a) the sum of £196, being

(i) arrears for acting allowance for period April to 23rd September, 1960 at £30 per month ................. 173, 0. 0.

(ii) arrears for salary for 1st Septem-ber to 23rd September, 1960 at £30 per month .............................. 23. 0. 0.

£196. 0s. 0d.

(b) the return and release of the following articles of hislocked up on the bank’s premises since 1960, which theplaintiff has refused and/or neglected to return to the de-fendant in spite of repeated demands, or for £106.l0s.8dtheir value at the date of the lock up–


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£. s. d.

(i) 1 P.M. Collar of time Loyal Order of Ancient Shepherds .................. 5. 0. 0.

(ii) Cash in the defendant’s drawer in two envelopes .............................. 7. 10. 0.

(iii) One Remington portable type-writer newly bought ..................... 48. 10. 0.

(iv) One building plan No. M0005 for Mr J. Amusan .............................. 35. 0. 0.

(v) One lodge certificate (framed) ..... 1. 12. 0.

(vi) Two ledger account books at £1.15s.6d each ............................. 3. 11. 0.

(vii) One cash book analysis ............... 18. 6.

(viii) One lodge membership roll analy-sis book ........................................ 17. 6.

(xi) One table, inscription – “A.S.A. Sobaki” ........................................ 6. 6.

(x) Eating utensils-basins, plate, knife, fork and spoons ................. 1. 15. 0.

(xii) 15 dozen or 180 two penny stamps .......................................... 1. 10. 0.

£106. 10s 6d.

The plaintiff’s case is that he is the liquidator in a voluntary winding up of the Merchants Bank Limited. The bank was closed by order of the late Federal Minister of Finance on 23rd September, 1960, and it went into voluntary liquidation in April, 1962. He found from the books of the bank that the defendant was one of its customers, and that at the closure of the bank the defendant owed it £694.7s.6d. The defendant refused or neglected to pay the said sum.

The defendant, in answer to the plaintiff’s claim, said he was not indebted to the bank in that sum. He was the ac-countant of the bank and at its closure he was acting as its general manager. He had during the hearing been with his Counsel and the plaintiff and his Counsel to the Supreme Court to look at the bank’s ledger, and seen therein that his

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF LAGOS STATE) Adebiyi AGJ


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current account at the bank showed a debit balance of £694.7s.6d. He said, however, that the bank owed him £23 as his salary for the period 1st to 23rd September, 1960 as well as an acting allowance for the period April to 23rd Septem-ber, 1960 at the rate of £30 per month, totalling £173. Also, when the bank was closed without notice he had some per-sonal property on its premises which had not been returned to him. These personal belongings were as listed in the opening paragraph of this judgment and he wished them to be returned to him or alternatively for their value to be paid.

In answer to the counterclaim the plaintiff said the defen-dant’s salary for the 23 days in September 1960 had not been paid to him because he failed to bring him the neces-sary certification from the bank’s managing director. The plaintiff disputed the acting allowance as he had no informa-tion about it. As to the defendant’s property said to be on the bank’s premises when the bank was closed, the plaintiff said he saw no such things, and he produced an inventory of the physical assets which the liquidators found at the bank’s premises on 14th November, 1962 when they took stock. This showed only “one typewriter.” The list was disputed by the defendant who gave evidence that the bank had a table and ceiling fans and, indeed, more than one typewriter.

In his address, learned Counsel for the defendant, Mr Awopeju, submitted that the claim for the debt to the bank was statute-barred since the evidence was that the money was lent between 29th September, 1959 and 23rd Septem-ber, 1960 and the action was filed on 9th September, 1966. Reference was made to section 7(1)(a) and (b) of the Limita-tion Decree, 1966. He submitted that as the last entry in the copy of the defendant’s bank account was on 29th August, 1960 time must begin to run from that date. An alternative submission was made that time should run from when each advance was made. Reference was made to the cases – Offi-cial Receiver and Liquidator v. Moore, Garden v. Bruce, and Joachimson v. Swiss Bank Corp.


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On the defendant’s counterclaim, Counsel conceded that the claim arrears of salary and of acting allowance was stat-ute-barred. In respect of the defendant’s goods, it was sub-mitted that time had to run out as a demand for them was made in a letter which was dated 23rd January, 1963 and was acknowledged by a letter dated 5th February, 1963. If the goods were proved to have been in the bank and were lost, then the plaintiff should compensate the respondent for their loss.

Mr Ademakinwa, learned Counsel for the plaintiff, submit-ted that there could be no doubt as to the indebtedness of the defendant to the bank, as the defendant, who was the bank’s accountant, had agreed in evidence that he had been with him to the Supreme Court and seen the entries in his account in the bank’s ledger held there on an appeal. He submitted that, following the decisions in Official Receiver and Liqui-dator v. Moore and Johnson v. Odeku, the limitation period did not run in this case until a demand had been made by the bank or the liquidator. The question then resolved itself, it was submitted, to when a demand was made, and it was fur-ther submitted that this should be when the letter of 5th Feb-ruary, 1963, was written.

On the defendant’s goods in the bank, Mr Ademakinwa said since they were not found on the premises by the plain-tiff, the plaintiff could not be made responsible for them. He submitted that the burglary reported to the defendant’s wit-ness, Mr SO Kamson, must have been responsible for their loss. He concluded by asking for judgment for the plaintiff on his claim and a dismissal of the defendant’s counter-claim.

I am satisfied from the evidence of the plaintiff and the evidence of the defendant that when he saw the bank’s ledger at the Supreme Court his account showed a debit bal-ance of £694.7s.6d. And that the defendant was, at the clo-sure of the bank, indebted to the bank in that sum. There had not been any serious attempt in denying that liability, and



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the only defence raised to it is that the claim was statute-barred in that the last entry in the account showing a transac-tion between the defendant and the bank was dated 29th Au-gust, 1960 and the writ was applied for on 9th September, 1966, a few days after the expiration of the limitation period of six years. Is that contention right? I do not think so, as I prefer to follow the reasoning of Dickson J in the case Offi-cial Receiver and Liquidator v. Moore, where he held that where an overdraft is granted by a bank, the cause of action should not be deemed to have arisen until there has been a demand made or notice given. In this action the letter of 5th February, 1963, contains a demand, but the plaintiff also gave evidence that:–

“When Mr Dawodu and I took over as liquidators we sent out de-mand letters to all customers of the bank asking them to pay whatever was due from them. That occasion would be the first time we wrote to the defendant.”

The letter of 5th February, was, therefore, not the first de-mand made on the defendant. The earliest that a demand could have been made must have been in April, 1962 when the bank went into voluntary liquidation, and taking that date as that on which the cause of action arose, the action could not have been statute-barred in September, 1966 when the writ was applied for. There must, therefore, be judgment for the plaintiff in the sum of £694.7s.6d claimed. The writ made a claim for interest at £5 per centum from the date of judgment until payment, but in his evidence the plaintiff claimed such interest from the date of liquidation in April, 1962 to judgment. These two claims are irreconcilable, and I propose to make no order for the payment of interest.

The plaintiff by his defence to the counterclaim (paragraph 5) pleaded that:–

“any claim, if at all, that the defendant may have against him is statute-barred and cannot be recovered.”

Mr Ademakinwa made no submission in support of this plea, but I take the view that the court has to consider the


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plea in any case. In my opinion, the claim for salary and act-ing allowance made in the statement of counterclaim dated and filed on 4th November, 1967 and for which cause of ac-tion had arisen by 23rd September, 1960 is statute-barred and no action can be brought upon it. I think it is fair to say that so much was conceded by Mr Awopeju in the course of his submissions. But for that statutory limitation I am satis-fied, on the evidence, that the defendant is entitled to both the salary and the allowance claimed.

The question of the defendant’s goods is not as easy of solu-tion as either Counsel made it sound. Mr Awopeju thought the defendant should be compensated once the goods were proved to have been in the bank and were lost. Mr Ademakinwa for his part thought that since the goods were not found in the bank by the plaintiff, then the plaintiff could not be made responsible for them. This latter view could not be right, as if the goods had been specifically re-ceived by the bank, eg, for safe custody, then in my view the bank would be liable to pay the depositor their value irre-spective of the fact that subsequently they were not found at the bank. The other view could not be right either, as the bank’s liability can only arise if the goods were on the prem-ises to the knowledge of the bank and for a purpose of the bank.

I think it is clear that the plaintiff here cannot assume any higher responsibility for those goods than the bank itself could have been saddled with. I have, therefore, had to con-sider what the position of the bank was in regard to the de-fendant’s goods. I have come to the conclusion on the evi-dence that the bank knew nothing of these goods and that it was just the case of an employee of the bank bringing on to the bank’s premises his personal property for his own pur-poses. In the course of cross-examining the plaintiff, learned Counsel for the defendant suggested that the goods were in the drawers of the defendant’s desk at the bank and that the defendant still had the key to that desk. I find, therefore, that



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the custody of the articles in question was in the defendant’s hands. In those circumstances there could not have been any bailment and although the defendant had a right to go on to the bank’s premises as an officer of the bank, I have no doubt that as regards his keeping his personal goods on the premises he was only a licensee and, in that case, in the ab-sence of special contractual provision, there is no obligation on the part of the bank towards the defendant in respect of the goods, see 2 Halsbury’s Laws of England (3ed), at 94-95, paragraph 190 and Tinsley v. Dudley, per Evershed MR. I believe the evidence of the plaintiff that when he came to take stock of the bank’s physical assets in November, 1962, all that he found are as listed in the liquidator’ inventory, and did not include any of the defendant’s goods. It is wor-thy of note that the bank’s managing director, Mr Kamson, told of how he had reported a burglary of the bank’s prem-ises to the police in the period between closure and the ap-pointment of liquidators. The defendant’s counterclaim for the said goods or their value must, therefore, fail.

In conclusion, it is the judgment of the court that the de-fendant should pay to the plaintiff the sum of £694.7s.6d, being money owed to the Merchants Bank Limited by the defendant, with 50 guineas costs. The plaintiff’s claim for interest on the debt is refused. The defendant’s counterclaim is dismissed, but I wish to say to the plaintiff that all the de-fendant is prevented from doing by law is to take an action to recover the claim relating to salary and acting allowance, and I commend for the plaintiff’s consideration my finding on the said claim.

Order accordingly.


Nasr v. Berini Beirut-Riyad Nigeria Bank Limited 151

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Nasr v. Berini Beirut-Riyad Nigeria Bank Limited


COKER, LEWIS, MADARIKAN JJSC

Date of Judgment: 25 OCTOBER 1968 S.C.: 313/67

Banking – Claim for the recovery of title deeds from bank – Whether the deposit of title deeds with the bank amounts to breach of section 7(1)(g) of the Banking Act

Banking – Interest – Award thereof where the bank did not give evidence as to the rate chargeable – Need to consider the rate positively established by evidence

Company Law – Director of a bank – Entering into contract with the bank which he has personal interest – Whether breach of his fiduciary duty

Company Law – Non-compliance with the provision of sec-tion 73(1) of the Companies Act – Need for court to draw inference

Facts

The plaintiff sued the defendants in the Lagos High Court, claiming the return of a deed of lease for which he had made several demands, but all to no avail. The defendants filed a counterclaim, claiming from the plaintiff the sum of £40,710.19s.4d, plus accrued interest. Four witnesses, in-cluding the plaintiff gave evidence in support of the plain-tiff’s case, but Counsel for the defendants stated at the close of the plaintiff’s case that he would not call any evidence on the defendants’ behalf. The trial Judge in reserved judgment, dismissed the plaintiff’s claim and gave judgment with costs against him in favour of the defendants on the counterclaim, stating that he found the defendants entitled to the sum of £28,916.18s.3d and £6,377.15s.1d on their two heads of claim, plus interest at the rate of 9% per annum up to the



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date of judgment. The plaintiff appealed to the Supreme Court against both the dismissal of his claim, and the awards to the defendants on the counterclaim. The controversy on appeal centred on the counterclaim. The defendants had pleaded, inter alia, that the plaintiff, acting in concert with the former manager of the defendant bank had opened an account with the defendants in the name of his nephew who did not reside in Nigeria or carry on business therein, so as to enable the plaintiff to obtain advances from the bank in contravention of the provisions of the Banking Act. The de-fendants further pleaded that the plaintiff was at the time of the transaction relating to the said advances, a director and deputy chairman of the defendant bank, and thus had a fidu-ciary duty towards the defendants, which duty he acted in breach of.

Held –

1. The clear provisions of section 7(1)(g) and 7(1)(c) of the Banking Act do not admit of any argument. To hold that the deposit of title deeds with the bank is in compliance with section 7(1)(g) of the Banking Act as against sec-tion 7(1)(c) would have been incontrovertibly perverse and in our view, the trial Judge rightly rejected that con-tention.

2. The gravamen of the present complaint about interest is that the Judge was wrong in awarding interest at the rate of 9%. If the testimony of Mr Casis on this point is ac-cepted, it seems unarguable that interest at a rate of 7% at least would have been raised on the account of Emile Nasr. We notice that apart from this evidence of Casis there is no other evidence fixing the rate specifically at 9%. In those circumstances, therefore, especially as the bank called no evidence on the point, we think the Judge should have acted on a rate which was positively estab-lished by the evidence, ie, 7½% and we will amend the judgment by altering the rate of interest to be charged on the principal amount due on Emile Nasr’s account from 9% to 7%.



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3. It is a fundamental principle of company law that a di-rector is precluded from dealing on behalf of the com-pany with himself and from entering into engagements in which he has a personal interest conflicting with or which possibly may conflict with the interests of those whom he is bound by fiduciary duty to protect, and this rule is as applicable to the case of one of several direc-tors as to a managing or sole director. Any such dealing or engagement may, however, be affirmed or adopted by the company, provided such affirmation or adoption is not brought by unfair or improper means.

4. There is a broad principle of equity developed to ensure that trustees, agents or persons standing in such legal re-lationship shall not retain a profit made in the course of or by means of their office. The principle extends to all fiduciaries and is applied in a wide variety of circum-stances.

5. Where directors chose not to record in the official min-utes or records of their company, the transaction into which they had entered, they could not be heard to com-plain that a court of law had drawn inferences on their conduct which were adverse to themselves.

Appeal dismissed in part, the rate of interest amended.


Nigerian

George v. Dominion Flour Mills Ltd (1963) 1 All N.L.R. 71 Abimbola George and another v. Dominion Flour Mills Ltd

(1963) 1 All N.L.R. 72

Foreign

Chettiar v. Chettiar [1962] 1 All E.R. 494

Fibrosa Spolka Akgna v. Fairbairn Lawson Combe, Barbour Ltd (1943) A.C. 32



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Flanagan v. Great Western Railway Co (1869) L.R. 7 Eq. Ca. 116

In re Liverpool Household Stores Association (1890) 62 L.T. 873

North-Western Transportation Co v. Beatty (1887) 12 A.C. 589

Phipps v. Boardman (1965) 2 W.L.R. 839

The Insurance Commissioner v. Joyce (1948) 77 C.L.R. 39 Transvaal Lands and Co v. New Belgium Co (1914) 2 Ch.

488

Nigerian statutes referred to in the judgment Banking Act, section 7(1)(c) and (g) Evidence Act, section 90, section 136 Exchange Control Act, 1962, section 7(d)

Counsel

For the appellant: Cole

For the respondent: Chief Williams

Judgment COKER JSC: (Delivering the judgment of the court) The appellant was the plaintiff and the respondents the defen-dants in Lagos High Court, Suit No. L.D. 571/66. The plain-tiff had sued the defendants and his writ of summons was endorsed as follows:–

“The plaintiff claims from the defendant the delivery of the origi-nal deed of lease dated the 16th May, 1962 and registered as MO 2778 for plot Nos. XRL 3042 and 3043 situate at Apapa, Lagos. The plaintiff has made several demands for the return of the said deed of lease but the defendant has refused to deliver and still de-tains the same.”

Pleadings were ordered and filed and the defendants asked for and obtained the leave of court to file a counterclaim against the plaintiff. The pleadings filed include a statement of claim by the plaintiff, a statement of defence and counter-claim by the defendants and a reply to the statement of


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defence and defence to the counterclaim (with an amend-ment) by the plaintiff. The defendants’ counterclaim reads as follows:–

“The defendants’ counter from the plaintiff is for the sum of £40,720.19.4d where of:–

(a) £32,616.5.3d is total amount (plus accrued interest) paid to one Joseph Naaman by the defendants at the instance of the plaintiff between 15th March, 1965 and 28th September, 1966 for the purpose of erecting six flats on the plaintiff’s land at Apapa with interest at 9% per annum till the date of judgment; and

(b) £8,094.14.1d is total of amounts (plus accrued interest) paid by the defendants in respect of purchase price, premium and rents for the said land with interest at 9% per annum till date of judgment.”

Three witnesses apart from the plaintiff gave evidence in support of the plaintiff’s case, but learned Counsel for the defendants stated at the close of the plaintiff’s case that he would not call any evidence on behalf of the defendants. The evidence was therefore only given on the plaintiff’s side and the main issues on which the claims and counterclaims de-pended were extensively discussed in the addresses of Coun-sel on both sides. In a reserved judgment Kazeem AGJ (as he then was) dismissed the claims of the plaintiff and gave judgment with costs against him in favour of the defendants on the counterclaim, stating at the end of his judgment as follows:–

“In the circumstances, I find that the defendants are entitled to res-titution in the sum of £28,916.18.3d advanced in respect of the building and fittings, and in the sum of £6,377.15.1d advanced in respect of purchase of land, premium and rent plus interest at the rate of 9% per annum up to the date hereof and judgment is hereby given to them accordingly.”

The plaintiff has appealed to this Court against both the dis-missal of his claim and the awards to the defendants on the counterclaim. Several grounds of appeal were filed and ar-gued on his behalf. After some argument before us, however,


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learned Counsel for the plaintiff conceded that the plaintiff was not entitled to the return of the document he sought when he commenced the action and therefore gave up the appeal against the dismissal of the claim. The circumstances under which the defendants came to be in possession of the deed of lease on which the claim was founded, as well as the condi-tions of its redeemability, are all clear issues of the fact and of law and we do not conceive that the judge’s findings of fact and his application of the law in that connection can be seri-ously impugned. It is not surprising therefore that Counsel abandoned this part of his appeal. We will formally dismiss the plaintiff’s appeal in that respect with costs which we will deal with in our final order on the appeal.

The legal controversy on appeal centred on the counter-claim. In his statement of claim the plaintiff had pleaded, in paragraphs 4 and 6 as follows:–

“4. The plaintiff is the owner of two plots of leasehold land Nos. XRL 3042 and 3043 situate at Apapa, Lagos and reg-istered on the 16th May, 1962 as Title No. MO 2778 at the Federal Land Registry, Lagos.

. . .

6. On 21st June, 1965 the plaintiff, as usual entrusted his original deed of title No. MO2778 in respect of his plots Nos. 3042 and 3043 situate and lying at Apapa and regis-tered in the Land Registry, Lagos on the 16th May, 1962 to the defendant to be kept in safe custody. The defendant ac-knowledged receipt of same in writing bearing the date 21st June, 1965.”

The defendants had pleaded, inter alia as follows:– “4. With further reference to paragraph 4 of the statement of

claim the defendants aver that the plaintiff authorised the then manager of the defendant bank to cause the bank to fi-nance the building of a block of six flats on the plots in question as per detailed agreement signed between him (the said plaintiff) and one Joseph Naaman, a building contrac-tor, and to charge all payments made to the contractor to the account of one Emile Nasr.

5. The defendants aver that the account standing in the name of


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the said Emile Nasr was in fact operated by or at the discre-tion of the plaintiff and fictitiously opened for the purpose of circumventing the provisions of the Banking Act.

Particulars of Paragraph 5

(a) The plaintiff is the uncle of the aforesaid Emile Nasr who at all material times was resident outside Nigeria.

(b) The plaintiff acting in concert with the former manager of the defendant bank established the account in the name of Emile Nasr who does not carry on any busi-ness in Nigeria.

(c) When the plaintiff wanted an advance for the erection of a building on the plots in question he was perfectly aware that it was a contravention of the Banking Act to obtain the said advances or the benefit thereof without security.

(d) The plaintiff, acting in concert with the former man-ager of the defendant Bank, procured the said manager to make the said advances as if they were advances to the aforesaid Emile Nasr thereby concealing the con-travention of the Banking Act.

(e) The plaintiff was, at the time of the transaction relating to the said advances, a director and deputy chairman of the defendant bank and thus had a fiduciary duty to-wards the defendant.

6 (1) The defendant bank in fact made the payments to Joseph Naaman, the building contractor, in sums totalling £28,916.18s.3d in respect of the building on the plots in question as well as in respect in increase in prices of mate-rials fittings for the said building. The payments were made between 15th March, 1965 and 28th September, 1966 and debited to the account of Emile Nasr.

6 (2) Between 8th November, 1961 and the date of this action payments were made in respect of deposit for purchase, premium and rents due in respect of the plots in question. These payments amount to £6,377.15s.1d as at 31st December, and were debited to the account of Emile Nasr.

6 (3) As at 31st December, 1966, the interest on the payments re-ferred to in subparagraph (1) of this paragraph amount to a


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total of £3,699.7s and the interest on those referred to in subparagraph (2) amount to a total of £1,716s.10d.

6 (4) The total amounts thus debited to the account of Emile Nasr plus interest thereon at the usual bank rate of 9% per annum is £40,710.19.4d as at 31st December, 1966 made up as follows:–

Amount advance in respect of building,fittings, etc,

£ 28,916 18s.3

Interest thereon as at 31/12/66 £ 3,699. 7s.0d

Amount advanced in respect of Purchasepremium, rent, etc.

£ 6,377. 15s.1

Interest thereon £ 1,716. 9s.0d

Total £ 40,710 9s.4d

. . .

10. With reference to paragraph 6 of the statement of claim the defendants deny that the plaintiff entrusted the title deed re-lating to the property in question merely to be kept in safe custody and aver that the deed was delivered to the bank primarily as security for the advances to the plaintiff which were debited to the account of the aforesaid Emile Nasr.

. . .

13. The defendants aver that:–

(i) Both the plaintiff and the former manager of the de-fendant bank were aware that the defendant bank was required by law and banking practice to have security for advances made to the plaintiff whether directly or through an agent.

(ii) Neither plaintiff nor the defendant bank had the per-mission of the Minister of Finance to grant credit fa-cilities to or place any sum of money to the credit of the aforesaid Emile Nasr, a person resident outside Nigeria and accordingly the direction of the plaintiff to the effect that the advances for the building of the flats be charged to the account of Emile Nasr is ille-gal, void and ineffective.

(iii) In the alternative, both the plaintiff and the former manager of the defendant bank were fully aware that they or either of them had no authority to advance


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sums of money of the order debited to the account of Emile Nasr without any security and without interest.

14. By acting illegally and beyond their authority, both the plaintiff and the then manager of the defendant bank have caused the defendant to lose the amount of £40,710.19s as claimed in the counterclaim to this action.

15. In the alternative, the defendants aver that the plaintiff acted in breach of his fiduciary duty to the defendant com-pany directing the former manager of the defendant bank to advance moneys chargeable to the account of his nephew who was resident outside Nigeria for the purpose of erect-ing the six flats on the plaintiff’s property on terms that the title deed to such property shall be returned to the plaintiff and without any written agreement between the parties or the approval of the alleged transaction by the board of di-rectors.

16. In the premises, the defendants aver that the plaintiff has been unjustly enriched at the expense of the defendants and as the result of the breach by the plaintiff of his fiduciary duty.

. . .”

The plaintiff filed a reply to that pleading and the principal averments in his reply are as follows:–

“1. With regard to paragraph 4 of the statement of defence and counterclaim the plaintiff says that the purported authorisa-tion was given to the manager pursuant to the tacit ar-rangement by the bank to provide accommodation for its staff. The plaintiff at all material times acted on behalf of the bank and in an effort to protect the bank from the con-sequences of an alleged contravention of the Banking Act.

The land at Apapa was purchased in 1961, and the building contract was not executed until March, 1965 after which the erection of the building commenced.

2. With further reference to paragraph 4 the plaintiff avers that only plot No. 3042 was purchased for £6,000 but the plaintiff later got plot No. 3043 in addition to accommodate a Block of six Flats. The plaintiff has been paying the rent of the land to the L.E.D.B. since 1966.

3. The plaintiff denies paragraph 5 of the statement of defence


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and counterclaim and states that Emile Nasr’s account was used as a cover for the bank because at that time the bank already owned two plots of land in Lagos for purposes other than those allowed by the Banking Act and it is ar-ranged that plaintiff should buy and the bank should fi-nance the construction of the building, take occupation af-ter completion and set-off the cost with rents payable for five years. It is on the direction of the Chairman that the account was established.

. . .

5. With regard to paragraph 6(1) to (4) of the defence and counterclaim the plaintiff contends that on the terms of the tacit agreement there was no question of the defendants charging interest on the advances. They were to finance the erection and take up possession at an agreed rental for a pe-riod of 5 years after which a fresh agreement is to be en-tered into for continued tenancy by the staff. The new Dep-uty Chairman, M. Suleiman Makarem and the new man-ager, M. Izzat Jureidini ordered and paid for the additional cost of £2,926.18s.3d to the contractor Mr Naaman without reference to the plaintiff because they acknowledged and accepted the terms of the tacit arrangement. Otherwise they would have refused to pay without the plaintiff’s authority.

6. With reference to paragraphs 7 and 8 of the statement of defence and counterclaim the plaintiff states that the Chairman of the bank was at all material times in posses-sion of major facts concerning the transactions and this is especially evidenced by letters and returns dated 6th April, 1965, 21st April, 1965, statement of account for the year ended 30th September, 1962 by the bank’s auditors, and Monthly Returns to Beirut under No. 435 ‘no conditions applied’ list.

11. The plaintiff contends that he and the manager of the defen-dant/bank were acting at all material times in the sole interest of the bank and the results of their management are made manifest in the profits realised by the bank during their tenure of office. The transactions were approved and adopted in the minutes of the meetings of the board of the bank.

12. The plaintiff says that there was no collusion with the man-ager or breach of fiduciary duty on his part in the whole transaction.


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. . .

15. The plaintiff will rely on the Banking Act, the Statute of Frauds and all equitable defences at the trial and will con-tend on the facts the counterclaim is unmaintainable.

16. With further reference to the plea of estoppel in paragraph 15 above the defendant bank is estopped from denying that there was a tacit arrangement that the defendant agreed to finance the erection of the building on the understanding that it will be used for accommodating the senior bank offi-cials for a specified period and that no interest would be charged on the monies advanced for the erection of the building and that the Chairman of the bank was aware of the major facts about the transaction.”

As stated before, all the oral evidence there was given to the plaintiff and his witness. Of these Joseph Naaman, the con-tractor who built the block of flats at Apapa said nothing di-rectly touching on the main issues to be resolved in this case. The manager of the bank during the tenure of office of the plaintiff, ie, Mr Cassis, gave evidence for the plaintiff. He testified in effect that the dealings which are featured in this case were duly authorised by the authorities of the de-fendants (hereinafter also referred to as the bank) and regu-larly executed by him and other officials concerned in ac-cordance with directions from or by the Chairman of the bank. Emile Nasr, another witness for the plaintiff, testified that he was resident in and carrying on business in Nigeria during 1960 and 1961 and that he was, during that period, approached by Mr Cassis and requested by him to allow the bank to use his name as the owner of a fictitious account which the defendant proposed to open and operate in order to deceive the Central Bank. He said, inter alia, as follows:–

“Cassis told me that they wanted to operate the account for the erection of a building at Apapa for accommodation of bank staff. I first refused, but when he told me that he had instructions from the bank’s Chairman to that effect, I then agreed. I then told Cas-sis that I would not accept any responsibility for the account and he agreed and said that no interest would be charged. I then signed a white paper to open the account. In 1963, I left Nigeria


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for Togoland. I heard nothing further about the account until in October, 1966 when I received a letter from the defen-dant . . . demanding the payment of a loan of over £35,000. I then sent a reply dated 29th October, 1966 . . . I have no cheque book from Berini Bank. I never put a penny in Berini Bank.”

The plaintiff himself gave evidence that he was a director and Deputy Chairman of the bank from May, 1961 and that he ceased to be its Deputy Chairman in October, 1965. He had a power of attorney from the Chairman of the bank, a Mr Pierre Edde, who admittedly resided in Lebanon, the headquarters of the defendant company. He claimed to be the owner of the block of flats erected at Apapa as well as the lessee of the land on which the building stands; he had a “tacit arrangement” with the bank as to the payment for the building which was financed by the bank. He disclaimed any immediate liability to the bank either in the sum claimed or at all in any case to the payment of interest at whatsoever rate it was charged.

The learned trial Judge had ruled that the deposit of the deed of lease with the bank was made by the plaintiff as a security for the loan which he had authorised in favour of himself and which if allowed to remain unsecured would have constituted an infraction by the bank of section 7(1)(c) of the Banking Act. He had rejected the contention put for-ward for the plaintiff that the deposit of the document was made in order to cover up a breach of section 7(1)(g) of that Act. Section 7 of the Banking Act, insofar as it is material on this point reads as follows:–

“7(1) A licensed bank shall not in Nigeria:

. . .

(c) grant or permit to be outstanding unsecured advances or unsecured credit facilities of an aggregate amount in ex-cess of five hundred pounds,

(i) to any one of its directors whether such advances or facilities are obtained by its directors jointly or severally;

(ii) to any firm, partnership or private company in


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which it or anyone or more of its directors is inter-ested as director, partner, manager or agent, or to any individual, firm, partnership or private com-pany to whom of whom or of which any one or more of its directors is a guarantor. For the purpose of this paragraph, a private company means a pri-vate company as defined in section 128 of the company in which it; or

(iii) to any public company in which it or any one or more of its directors jointly or severally maintains a controlling interest;

. . .

(g) purchase, acquire or lease real estate except as may be necessary for the purpose of conducting its business, in-cluding provisions for future expansion or other excep-tional circumstances where the agreement of the Central Bank is obtained, or housing its staff, provided that:–

(i) in respect of any real estate held or leased by a bank at the coming into operation of this Act for purposes other than those referred to herein, that bank shall be allowed a period of three years in which to comply with this paragraph; and

(ii) a bank may secure a debt on any real or other property and in default of repayment may acquire such property for resale by the bank as soon as possible thereafter.”

The clear provisions of this section do not admit to any ar-gument. The lease of the land at Apapa was and is in the name of the plaintiff and the claim itself in this case presup-poses that. To hold that the deposit of the title deeds with the bank is in compliance with section 7(1)(g) of the Banking Act as against section 7(1)(c) would have been incontro-vertibly perverse and in our view the judge rightly rejected that contention. The demerits of the claim are obvious; but it is nevertheless the springboard from which it was sought to defend or defeat the counterclaim.

The argument in favour of the plaintiff before us postulates that the bank was the owner of the building at Apapa. A


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number of letters brought to our attention by Mr Cole (and these were admitted in evidence at the trial) admittedly re-ferred to the building at Apapa as the property of the defen-dants, but the argument must be considered specious, for the only operative document which confers title in the land re-mains in the name of the plaintiff. This is the original deed of lease covering the land – exhibit 15. This submission, al-beit, was the basis of the arguments for the plaintiff and the following principal submissions were made on his behalf:–

“(i) that the bank account 1961 was faced with a breach of the Banking Act by virtue of its owning some landed properties and it therefore decided to transfer those properties into a fictitious account in the name of one of its customers, Emile Nasr;

(ii) that the plaintiff acted in good faith in depositing title deeds of his Apapa property with the defendants in order to cover up the illegality already committed by the bank.

(iii) (a) that the plaintiff was entitled to contract as he did with the bank and that the authorities of the bank were fully aware of all the dealings of the plaintiff;

(b) that the judge was wrong to come to the conclusion that the plaintiff had unjustly enriched himself and that he was therefore liable to pay to the defendants the sum counterclaimed or any part of it:

(iv) (a) that if there was any illegality attaching to the action of the plaintiff, the defendants themselves were in pari delicto as they had treated the building as property and had indeed taken actual possession of some sections of the building; and

(b) that in those circumstances, the counterclaim should have been, like the claim, dismissed;

(v) that under no circumstances should the plaintiff be held li-able to pay the defendants any money immediately or any interest thereon.”

The several submissions are not mutually exclusive of each other and a discussion of one must necessarily impinge upon the areas of another or of others.

With respect to the first submission in (iv)(b) that in those


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circumstances, the counterclaim should have been, like the claim, dismissed.

With respect to the first submission in favour of the plain-tiff, there is very little evidence about the properties stated to have been owned illegally by the bank. Section 7(1)(g) of the Banking Act quoted above certainly gives a bank a period of three years within which to deal with real assets which it was holding at the date of the Act. The evidence in this case is confusing and in any case it was the plaintiff who alleged an illegality and it was for him to prove it. On the other hand, the relevant exhibits showed, as the judge rightly found, that there was no breach of section 7(1)(g) of the Banking Act shown to have been committed by the bank. In his pleadings the plaintiff averred that one of the two plots of land that are contained in the Land Certificate, exhibit 15, was purchased for £6,000 in 1961 and that later he, ie, the plaintiff “got” (he did not say how or for how much) a lease of the other plot. Although an amount of over £6,000 has been shown in the account of Emile Nasr as having been paid out by the bank, and debited to that account yet Emile Nasr had not put a penny in this bank and indeed he owned no cheque book. The document, exhibit 15, shows the plaintiff as the real lessee of both plots of land and we think the inference was rightly that no breach of section 7(1)(g) by the bank had been established.

It was again contended in favour of the plaintiff that he acted in good faith in depositing the title deed of the Apapa property with the bank. We have already stated that we think the judge was right in concluding that apart from initially fail-ing to comply with the provisions of section 7(1)(c) of the Banking Act, there was no illegality committed by the bank and that the plaintiff did what he ought to have done in any case, assuming that he had the authority to authorise a loan to finance the building on his land. There was no oral evidence before the court nor was there any document to show that the plaintiff was a debtor to the bank. All the debits went into the fictitious account which was being


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run in the name of Emile Nasr and that no time or stage was it shown to the court that the plaintiff accepted responsibility for the debits shown in the account of Emile Nasr.

The third submission on behalf of the plaintiff opens up a large area of argument with which it is necessary to deal in some detail. The plaintiff was at all material times a director of the bank and its deputy Chairman. He was in possession of a power of attorney from the Chairman of the bank authorising him to do, in effect, everything that the Chair-man could do. The powers of the Chairman of the bank, as contained in the Articles of Association, exhibit 25, are very wide and it is not disputed that by virtue of the power of at-torney which he possessed, the powers of the plaintiff in the conduct of the affairs of the bank are extensive. Mr Cole in submitting that the appellant was entitled to contract with the bank referred us to article 3 of the Articles of Associa-tion of the company, exhibit 25, which reads as follows:–

“articles Nos. 2, 5, 20, 35 to 43, inclusive, 45, 51, 68, 70, 77, 78, 79, 87, 88 and 108 of the aforesaid Table A shall not apply to the company.

May not profit by means of contracting with the company.”

The purpose of the reference is to impress on us that arti-cle 77 in Table A to the Companies Act, which prohibits some dealings by directors of a company with the company has been specifically excluded by the Articles of Association of the bank. We note that the figure 77 in article 3 of ex-hibit 25 is astericised and under the asterisk the following.

“May not profit by means of contracting with the company.”

There is a conflict of opinion between Counsel as to the im-port and meaning of the words within the asterisk. We are in no doubt that whatever else might have been the intention of the framers of exhibit 25, it was clearly contemplated that a director might not, even if he could, contract with the com-pany, or negotiate such a contract as would put him in a posi-tion to profit at the expense of the company. In this case it is clearly the duty of the plaintiff to satisfy the court that he


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was entitled to enter into the particular contract with the bank and we do not think that on the evidence he had done so. Assuming that the “tacit arrangement” could be regarded as a contract (which we do not think it was) even if he was entitled to contract with the bank there are a number of rea-sons why we think the judge was right to come to the con-clusion which he did that the plaintiff might not enforce such a contract. First of all, there are the clear provisions of the Banking Act to which reference had been made. Sec-ondly, the circumstances of the present advances are such that: (i) they did not comply with the provisions of the Com-panies Act or indeed of any other law, and (ii) the advances in the circumstances in which they are made are apparently irrevocable. In the course of his judgment the learned trial Judge observed this on this point as follows:–

“It is a fundamental principle of company law that a director is precluded from dealing on behalf of the company with himself and from entering into engagements in which he has a personal interest conflicting or which possibly may conflict with the inter-est of those whom he is bound by fiduciary duty to protect and this rule is as applicable to the case of one of several directors as to a managing or sole director. Any such dealing or engagement may, however, be affirmed or adopted by the company, provided such affirmation or adoption is not brought by unfair or improper means: see North-Western Transportation Co v. Baetty (1887) 12 A.C. 589 at pages 593 to 594 and Transvaal Lands and Co v. New Belgium Co (1914) 2 Ch. 488 at pages 494 to 496.”

Although the pleadings of the plaintiff aver that his dealings were with the full knowledge of the authorities of the bank, no evidence was led to show that any record of this particu-lar transaction appeared in the official minutes book of the company, which were produced in evidence as exhibits 10 and 10A. Section 73 of the Companies Act, (Cap 38), pro-vides as follows:–

“73 (1) Every company shall cause minutes of all proceedings of general meetings and (where there are directors or manag-ers) of its directors or managers to be entered in books kept for that purpose.


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(2) Any such minute if purporting to be signed by the chair-man of the meeting at which the proceeding were had or by the chairman of the next succeeding meeting, shall be evidence of the proceedings.

(3) Until the contrary is proved, every general meeting of the company of meeting of directors or managers in respect of the proceedings whereof minutes have been so made shall be deemed to have been duly held and convened and all proceedings had thereat to have been duly had, and all ap-pointments of directors, managers or liquidators, shall be deemed to be valid.”

It is not contended by the plaintiff that there had been a compliance with this section and in those circumstances one cannot appreciate how the plaintiff can seek to enforce against the defendants any contract which was not so re-corded. See Flanagan v. Great Western Railway Co (1868) L.R. 7 Eq. Cas 116 – see per Gifford V.C. at page 123. In In re Liverpool Household Stores Association (1890) 62 L.T. 873, it was held that where directors chose not to record in the official minutes or records of their company, the transac-tion into which they had entered, they could not be heard to complain that a court of law had drawn inferences on their conduct which were adverse to themselves. It is clear that the conduct of the plaintiff contracting with the bank did not comply with the provisions of the Companies Act. It has not been argued that it complied with any other law. The busi-ness of financing the building at Apapa commenced with a directive issued by the plaintiff (exhibit 8) to the manager of the bank, Mr Cassis, instructing him to finance:–

“the building of a block of six flats as per the detailed agreement signed with Mr Joseph Naaman contractor.”,

and directing that “all payments effected by you are to be charged to Mr Emile Nasr’s account for which land and building are hypothecated to your bank in security to the said debt.” There was no evidence that exhibit 8 was author-ised by any other official or executive of the bank except the plaintiff himself. Mr Cassis in his evidence testified that the


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fictitious account in the name of Emile Nasr was opened in 1961 on the instruction or direction of the Chairman of the bank and had suggested that the transaction in exhibit 8 was known of by the Chairman of the bank. The documents ex-hibit 11 and 12 which are in effect reports by Mr Cassis to the Chairman on the activities of the bank do not support his oral evidence and considering this and other conflicts in his evidence one must at least be left in some serious doubt as to the veracity of his testimony. It was argued that the accounts of the bank, exhibit 7, showing the advances made for fi-nancing the Apapa building, were expressly passed by the meeting of the Board of Directors in Lebanon on the 24th June, 1966. It is only necessary to mention that this was ages after the monies concerned had left the bank and the various steps to retrieve same had been put in hand. Even if it was shown (and we think it was not as we will show later) that the bank had formally adopted a resolution to accept the ac-counts we do not think that the act of adoption of the ac-counts by itself will be tantamount to adopting the action of the plaintiff.

Thus, we are left in the position that it was not proved that the contract in this case was executed or entered into with the bank with the consent or direction of its proper authori-ties and that it was a transaction which complied with law. It was not in dispute that after 1961 Emile Nasr left this coun-try for Togoland and has not since come back. In 1965, when exhibit 8 was addressed to Mr Cassis, the supposed owner of the account standing in the name of Mr Emile Nasr was out of the country and the bank was therefore not enti-tled, in view of the provisions of section 7(d) of the Ex-change Control Act, 1962, to make any advances made, pur-portedly to Emile Nasr, were ex facie, irrecoverable.

The plaintiff denied present liability to refund the money advanced on the building of the flat at Apapa and claimed that he had an arrangement with the bank by which the claims should be met. We have earlier on set out the main


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paragraphs of his pleadings. Paragraph 1 of the reply to statement of defence and defence to counterclaim averred in effect that the plaintiff wrote exhibit 8 “pursuant to the tacit arrangement made by the bank to provide accommodation for its staff.” A plain reading of this pleading shows that what was relied on therein is a unilateral decision by the bank made for the purpose of providing accommodation for its staff. At the trial, however, the plaintiff sought to equate this arrangement to an agreement. The tacit arrangement he contended is set out in his solicitor’s letter to the bank dated the 5th October, 1966 exhibit 23. That letter sets out what the plaintiff described as the main proposal of the tacit ar-rangement as follows:–

“Main Proposals

(a) That the bank should build a block of 6 flats on Mr Diab Nasr’s plots of land (Nos. XRL 3042 and 3043) at Apapa at a cost not exceeding £26,000.

(b) That the plan of the building should be made in the name of Diab Nasr being the owner of the land.

(c) That the bank should employ a firm of contractors to erect the building and pay the cost.

(d) That on completion of the building the rent of each flat should be fixed at £1,250 per annum, (ie £7,500 per annum), having regard to the prevailing rents in Apapa at the time.

(e) That the flats be reserved for the use of the bank’s officials. The new bank manager now resides in the building in accor-dance with this tacit arrangement.

(f) The bank should recover the advance of £26,000 from the annual rentals within five years with effect from the 1st January, 1966, when it was deemed the erection must have been completed.

(g) The sum of £11,500 being the difference between £26,000 which was the contract price of construction and the esti-mated £37,500 rent accruals for the five years to be credited to the bank for outgoings and as developer’s profits.

(h) The building on the land should revert to Mr Diab Nasr after the specified period of five years when the rental will be subject to review between the parties.”


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We have already observed that if indeed there was a contract of the nature suggested by the plaintiff, it was not made in accordance with law and we need only add that the plain-tiff’s attempt to “magnify” what was described as a “tacit arrangement” by the bank in his oral evidence, was rightly rejected by the trial Judge.

At this juncture we comment briefly on a point of law which arose whilst this aspect of the case was being argued. Chief Williams for the defendants submitted that the letter, exhibit 23, should not be regarded as evidence of its contents in view of the provisions of section 90 of the Evidence Act. That section precludes the admission as evidence of written statements when the maker of such statement is not called as a witness and the other conditions of admissability under that section are not shown to exist. We think the argument overlooked some of the peculiar features of this case. The letter, exhibit 23, was put in evidence by Mr Nasr himself. He had given evidence that he instructed his solicitors to write the letter and he thereafter testified as follows:–

“Exhibit 23 speaks of a tacit arrangement between me and the bank . . . the main terms of the tacit arrangement are contained in exhibit 23.”

In the circumstances in which exhibit 23 was put in evi-dence, therefore, the maker of it, ie, the plaintiff, even though he acted through his agent, his solicitor, gave oral evidence indicating that he was the author of the contents of ex-hibit 23 as if the document was evidence of its contents.

We do not accept the argument that the plaintiff had not un-justly enriched himself at the expense of the bank. There is a broad principle of equity developed to ensure that trustees, agents or persons standing in such legal relationship shall not retain a profit made in the course of or by means of their of-fice. The principle extends to all fiduciaries and is applied in a wide variety of circumstances see Phillips v. Boardman (1965) 2 W.L.R. 839. It cannot be disputed that in this case thousands of pounds belonging to the defendants’ company


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had been lent out in order to finance the building on land be-longing to the plaintiff and standing in his name. There is no doubt that the advances were being debited into a fictitious account under the name of a person resident outside the ju-risdiction of this Court, in contravention of the Exchange Act. There is as well no doubt that on the face of the docu-ments in evidence the building remains the property of the plaintiff who has not put a penny into the building and who clearly, whether by the terms of the “tacit arrangement” set up by him or otherwise, could go back to the enjoyment of the property. It is difficult to see how on the principles al-ready set out it can be seriously argued that the plaintiff had not unjustly enriched himself at the expense of the bank. In the course of his judgment, the learned trial Judge took that view. We think that there was a plethora of evidence enti-tling him to come to that conclusion. It follows, therefore, that the court can order a restitution of the amount involved and that is what we conceive the learned trial Judge did.

A further submission on behalf of the plaintiff presupposed that he had acted illegally in respect of his dealings with the bank but suggests that the defendants themselves are equally guilty inasmuch as they had by their conduct adopted the ac-tion of the plaintiff. It is said that in those circumstances the court should not lend its aid to the enforcement of any obli-gations which are thereby created. The facts relied upon for this submission may be briefly summarised as follows:–

(a) The bank was fully aware of the illegality of advancing monies to the account of Emile Nasr for the use of the plaintiff and did not in fact charge any interest on those advances.

(b) The bank was aware that the account of Emile Nasr was a fictitious account and that there was no security for the advances made on that account.

(c) The transaction existed in the books of the bank signed by the officers of the bank and the bank derived benefit from the transaction by:–

(i) writing a number of letters complaining about the structure; and


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(ii) taking physical possession of part of the build-ing.

It was further argued that it is an established principle of law that where there is moral turpitude attaching to both sides of a contest the court should not assist one at the expense of the other. Reference was made to the speech of Lord Wright in the House of Lords in the case of Fibrosa Spolka Akgna v. Fairbairn Lawson Combe, Barbour Ltd (1943) A.C. 32 at page 494.

Nobody will doubt the existence of a principle as enunci-ated by Mr Cole which is so universally applied but where illegality does not appear ex facie the court is not entitled to speculate upon its incidence let alone expressly pronounce upon it unless it was made a part of the case on either side. In this case, illegality had not been expressly pleaded in the context now being urged upon us by learned Counsel for the plaintiff and it is sufficient to say that in order to succeed on this ground the plaintiff ought to have pleaded and estab-lished the illegality on which he relied. Nevertheless, we have examined the evidence in this case, both oral and documentary, to see whether or not the submission of Mr Cole can be sustained. We have already indicated that there is a serious contradiction of the oral evidence of Mr Cassis by the documents exhibits 11 and 12 which were made by him. Although he stated in his oral evidence before the court that the Chairman of the bank, Mr Pierre Edde, was aware of the creation and existence of the fictitious account in the name of Emile Nasr, yet in his letter, exhibit 12, dated 29th May, 1965, and addressed to the Chairman of the bank, he stated in part as follows:–

“Reference is made to your letter 11-4-198 of the 20th May, 1965. No particular document held securing the said account, only the usual opening of account form signed by Mr Emile Nasr. This account has been established fictitiously in order to conform with Banking Ordinance regulations, in cover of our land property at Apapa. The title deed still in the name of Mr D. Nasr and is kept by him. Transfer of property has been deferred to avoid unneces-sary expenses.”


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It must be borne in mind that the case of the defendants was and is that the plaintiff and the witness Cassis, who was the manager of the bank at the material time, acted in collusion throughout and that the events which happened were as a result of this collusion and the learned trial Judge so found. There was evidence that both parties left the defendant’s bank about the end of 1965 and that early in 1966 the plain-tiff and Cassis were respectively the Chairman and general manager of a newly formed bank in Lebanon. Our attention was drawn to exhibit 7 which is the audited accounts of the defendants’ bank for the year ending September, 1965, and it was stated that the account was signed by the Chairman of the company. There is nothing in exhibit 7 which is a printed document, to show that it was signed physically by the chairman of the company and it is significant that the min-utes of the meeting purported to be held on 24th June, 1966 (exhibit 10) were not signed by anybody. In order to be of any legal effect section 73 of the Companies Act will require such minutes to have been signed. There is indeed no evi-dence that any other official of the bank, apart from the plaintiff and Mr Cassis, knew anything about the entire transaction. Again reliance was placed upon the series of let-ters exhibits 22-22F that passed between the bank and the building contractors and in which the building at Apapa was not infrequently referred to as the property of the bank. Those letters were written between the 11th October, 1965 and the 20th July, 1966. Both the plaintiff and Mr Cassis had either left the bank or were on their way out and having re-gard to the contents of exhibit 12, to which we had referred earlier on, it is not unreasonable to take the view that there was at that period a misapprehension created by the stage that had earlier on been set. The fact that the bank occupied a portion of the building was rightly considered in the same light. In the case of Abimbola George and another v. Do-minion Flour Mills Ltd (1963) 1 All N.L.R. 72 this Court observed that where a party relies on specific and latent ille-gality it must be pleaded and proved. The observations made


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by us must dispose of any claims to the effect that the ille-galities referred to by Counsel for the plaintiff were proved. We do not consider that defendants’ company was in pari delicto with the plaintiff and that on that basis their counter-claim should have been dismissed. We do not think that it was established that the plaintiff and the manager, Cassis, were genuinely acting on behalf of the bank at all times ma-terial to this case.

The final submission for the plaintiff concerns his immedi-ate liability to repay the money due to the bank with interest. It was urged upon us that the judge erred in giving judgment against the plaintiff for the immediate payment of the amount adjudged. It is apparent that such contention must rest on an acceptance by the court of the “tacit arrangement” propounded by the plaintiff as the basis of an effectual con-tract between him and the bank. We have said enough al-ready about our views on such a course of argument and we only say now that the judge rightly rejected it. The moral ob-ligation on the part of the bank to charge interest on over-drawn accounts or loans or advances was conceded by Counsel for the plaintiff and indeed was pre-supposed in one of his submissions about illegality on the part of the bank. The document exhibit 14 shows a list of all the overdrawn and loans accounts in the bank and all but the account of Emile Nasr were shown to carry interest ranging from 7.5% to 9%. Mr Cassis himself, in his evidence, testified as fol-lows with respect to the rate of interest chargeable on such accounts:–

“The rate of interest charged by the bank on secured accounts var-ies from 7½% to 9% depending on the importance of the amount advanced, the nature of the transaction subject to fluctuation in the rate of interest in Beirut, London or Nigeria. In 1965 if a sum of £25,000 was advanced to you by the bank, it is possible that you will be charged a rate of interest lower than 9%.”

The gravamen of the present complaint about interest is that the judge was wrong in awarding interest at the rate of 9%. If the testimony of Mr Cassis on this point is accepted, it


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seems unarguable that interest at a rate of 7.5% at least would have been raised on the account of Emile Nasr. We notice that apart from this evidence of Mr Cassis there is no other evidence fixing the rate specifically at 9%. In those circumstances, therefore, especially as the bank called no evidence on the point, we think the judge should have acted on a rate which was positively established by the evidence ie 7.5% and we will amend the judgment by altering the rate to be charged on the principal amount due on Emile Nasr’s ac-count from 9% to 7.5%.

It is appropriate to refer in this judgment to a submission which was made by Mr Cole and extensively canvassed by him in the course of this appeal. He has submitted to us that the defendants’ company was not entitled, as it did, to ab-stain from giving evidence in court and that in those circum-stances the court should have regarded their conduct with disfavour and accept the evidence given by and on behalf of the plaintiff as unchallenged. Mr Cole referred to a number of passages in the Australian case of The Insurance Com-missioner v. Joyce (1948) 77 C.L.R. 39. In particular Coun-sel referred to the portion of the judgment of Rich J at page 49 in which he stated as follows:–

“Obviously the question was one to be decided on circumstances. But when circumstances are proved indicating a conclusion and the only party who can give direct evidence of the matter prefers the well of the court to the witness box a court is entitled to be bold.”

We do not agree that the decision referred to supports any view which tends to disturb the established rule about proof in civil cases. That this was always present in the minds of the court that decided Joyce’s case is manifest from the ob-servations of Dixon J at page 61 of that report, to the follow-ing effect:–

“It is proper that a court should regard the failure of the plaintiff to give evidence as a matter calling for close scrutiny of the facts upon which he relies and as confirmatory of any inferences which may be drawn against him. But it does not authorise the court to


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substitute suspicion for inference or to reverse the burden of proof or to use intuition instead of reconciliation.”

We would like at this point to draw attention to the provisions of section 136 of the Evidence Act which reads as follows:–

“136 (1) In civil cases the burden of first proving the existence or non-existence of a fact lies on the party against whom the judgment of the court would be given if no evidence were produced on either side, regard being had to any presumption that may arise on the pleadings.

(2) If such party adduces evidence which ought reasonably to satisfy a jury that the fact sought to be proved is estab-lished, the burden lies on the party against whom judg-ment would be given if no more evidence were adduced; and so on successively. Until all the issues in the plead-ings have been dealt with.

(3) Where there are conflicting presumptions, the case is the same as if there were conflicting evidence.”

That section sufficiently describes the position about burden of proof in civil cases and it is clear that a defendant who is satisfied that the plaintiff has failed to comply with subsec-tion 1 of that section is entitled to rely, as the defendants did in this case, on the evidence of the plaintiff without calling any evidence himself.

These considerations dispose of all the points which were canvassed on this appeal. The arguments involve extensive deliberations and significant matters of law and of fact and the ingenuity and industry of Counsel have been of consid-erable assistance to this Court. We have come to the conclu-sion that all the grounds of appeal canvassed on behalf of the plaintiff, except that relating to the rate of interest ordered, cannot succeed and that the appeal must fail. We make the following orders:–

(i) that the appeal of the plaintiff against the dismissal of his claim in Suit No. L.D. 571/66 is dismissed;

(ii) that the appeal of the plaintiff against the judgment of the High Court in the same suit, awarding the de-fendants the total of £35,294.13.4d, together with 9%


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interest up to the date of the judgment, is dismissed but the rate of interest is amended from 9% to 7.5%;

(iii) that the appellant shall pay to the respondents the costs of this appeal fixed at 80 guineas.

Appeal dismissed in part.

The rate of interest amended.


Ladipo v. Standard Bank of West Africa Ltd 179

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Ladipo v. Standard Bank of West Africa Limited


SOWEMIMO J

Date of Judgment: 30 OCTOBER 1968

Banking – Cheque – Crossed cheque – Bank paying con-trary to crossing – Liability of bank

Facts

In this suit the plaintiff is claiming from the defendants, who are bankers:–

1. A declaration that the defendants have wrongfully, deb-ited the plaintiff’s account with the amount of the crossed cheque for £4,000 dated August 25th, 1965.

2. £4,000 damages, being the loss sustained by the plaintiff in consequence of the defendants’ negligence or breach of contract by an unauthorised payment of the said cheque.

3. Interest at 19% or at the current bank rate from August, 25th 1965 until judgment.

The particulars of negligence as set out on the writ of sum-mons were based on the three facts that the defendants: (a) dis-regarded the general crossing on the said cheque and paid the cheque otherwise than to a banker; (b) paid the cheque to a person other than the payee notwithstanding the said crossing.

The defendant on the other hand alleged that the cheque was paid in cash to the person named on the cheque on the personal instruction of the plaintiff across the counter con-trary to the crossing of the cheque. This, plaintiff denied.

Section 78 of the Bills of Exchange Act provides as fol-lows:–

“A crossing authorised by this Ordinance is a material part of the



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cheque; it shall not be lawful for any person to obliterate or, ex-cept as authorised by this Ordinance, to add to or alter the cross-ing.”

Section 79(2) of the Bills of Exchange Act provides as fol-lows:–

“Where the banker on whom a cheque is drawn which is so crossed nevertheless pays the same, or pays a cheques crossed generally otherwise than to a banker, or if crossed specially oth-erwise than to the banker, he is liable to the true owner of the cheque for any loss he may sustain owing to the cheque having been so paid: provided that where a cheque is presented for pay-ment which does not at the time of presentment appear to be crossed, or to have had a crossing which has been obliterated or to have been added to or altered otherwise than as authorised by this Ordinance, the banker paying the cheque in good faith and without negligence shall not be responsible or incur any liability, nor shall the payment be questioned by reason of the cheque hav-ing been crossed, or of the crossing having been obliterated or having been added to or altered otherwise than as authorised by this Ordinance and of payment having been made otherwise than to a banker or to the banker to whom the cheque is or was crossed, or to his agent for collection being a banker, as the case may be.”

Held –

1. By the provisions of sections 78 and 79(2) of Bills of Exchange Act, a banker who has paid a crossed cheque otherwise than as provided by the law, that is, through another bankers, shall be liable, where loss is sustained, to the true owner.

2. It is the law that payment contrary to the crossing is apart from any statutory enactments negligence on the part of the banker, and if loss ensues the banker cannot charge the customer.

3. Therefore payment in contravention of the crossing, which is in itself against the customer’s mandate, is an unauthorised payment with which the banker cannot debit the customer.



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Foreign

Bellamy v. Marjoribanks (1852) 7 Ex. 389; 155 E.R. 999

Nigeria statute referred to in the judgment

Bills of Exchange Act, (Cap 21), Sections 78 and 79

Counsel

For the plaintiff: Smith

For the defendant: Bentley and Adeniyi

Judgment

SOWEMIMO J: In this suit the plaintiff is claiming from the defendants, who are bankers:–

1. A declaration that the defendants have wrongfully deb-ited the plaintiff’s account with the amount of the crossed cheque for £4,000 dated August 25th, 1965.

2. £4,000 damages, being the loss sustained by the plaintiff in consequence of the defendants’ negligence or breach of contract by unauthorised payment of the said cheque.

3. Interest at 10% or at current bank rate from August 25th, 1965 until judgment.

The particulars of negligence as set out on the writ of sum-mons were based on the three facts that the defendants (a) disregarded the general crossing on the said cheque other-wise than to a banker; (b) paid the cheque to a person other than the payee notwithstanding the said crossing.

The case for the plaintiff was that he issued a crossed cheque dated 25th August, 1965 in favour of Pedrocchi and Co Limited for an amount of £4,000. The crossed cheque was tendered as exhibit A in this case. For some reasons which are not material to this case, the plaintiff instructed his bankers, the defendants, to stop payment of the cheque. This was on August 27th, 1965. At one stage in the evidence

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF LAGOS STATE) Sowemimo J


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of the defendants’ representative, it was stated that the order for stoppage was written. In any case, however, the plaintiff countermanded his instruction that payment should be stopped. What latter happened has been the subject of dis-pute between the parties. According to the plaintiff, he found later that his account was debited for the amount of £4,000 covered by exhibit A, but his investigation revealed that the person who claimed the amount was not the payee as ap-peared on exhibit A. He therefore sued Pedrocchi and Co Limited for a refund of the £4,000. The judgment in that case, Suit No. L.D. 402/67 was tendered. I am informed that the case is on appeal to the Supreme Court; however, the plaintiff lost his claim in the High Court proceedings.

The plaintiff stated that although he withdrew his order for stoppage of payment he did not go to the bank personally in order to authorise the defendants to pay the amount covered by the cheque in cash to any person. On the other hand, the only witness for the defendants was the manager of the Ma-rina Branch of the bank at the particular time when this transaction took place. Making allowance for the fact that by the very nature of his duty it would be very difficult for him to remember the details of day to day transactions in his of-fice, especially a transaction that took place over three years ago, this witness stated that after the plaintiff countermanded his instruction, he recollected that he came to the bank in the company of one Pedrocchi. According to him it was usual for the plaintiff, who is a substantial customer of the bank, to come to claim cash in large sums, in which case he was af-forded the facility of going to the office of the supervising cashier, who would deal directly with him. This is in no doubt special treatment which gives greater security in the case of customers who have to cash large sums of money from the bank.

From what he could remember, the plaintiff knocked at the door of his office and put his head in, and that, according to the witness of the defendants, was an indication that he required


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urgent attention. Exhibit A was then passed on to him; he signed it after stamping it and gave it to his messenger with the intention that he would take the plaintiff and Mr Pedroc-chi to the supervising cashier. He was quite sure, however, that he knew the cheque was crossed, and unless the cross-ing had been removed the amount could only be paid through a banker. He did not give instruction to the messen-ger that the supervising cashier should pay the amount in cash. His impression, however, was that by the presence of the plaintiff himself with this Mr Pedrocchi, there was no doubt that it was the intention that the cheque should be paid in cash, but this he said would in any case necessitate the plaintiff altering the crossing on the cheque

The plaintiff has stoutly denied that he ever visited the bank with a Mr Pedrocchi. He had also denied ever giving instructions that cash payment should be made to this man. So far as this case is concerned, the person to whom the £4,000 was paid is unknown. Although the supervising cash-ier who paid out the large amount of money is said to be in Kano at present, and although he would be the only person who could tell the court what actually took place as regards the payment of the amount shown on exhibit A, he was not called to give evidence. I was not told why the defendants did not consider it necessary, in view of the pleadings in this case, that this vital witness should be called to give evi-dence. Mr Impey for the plaintiff had addressed me on the presumption that is impliedly raised under section 148(d) of the Evidence Act, (Cap 62), that the failure of the defendants to call this vital witness shows that they are quite aware that his evidence would definitely not be in their favour.

I find it a bit difficult to accept the fact that the plaintiff, having countermanded his instruction, would also come to the bank for the payment of a cheque in cash which was crossed and which had been issued to a particular company. I have not been told what special circumstances existed as to why the plaintiff could have acted in this manner. It is my



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opinion that in the absence of the supervising cashier’s evi-dence and that of the messenger who was alleged to have taken the plaintiff and a Mr Pedrocchi to the supervising cashier, I would have to reject that portion of Mr Harding’s evidence with regard to the presence of the plaintiff at the bank on the material date which impliedly suggests that the plaintiff’s showing his head through the door of his office was an indication that he wanted the cheque paid in cash. In fairness to him, however, he admitted that he did not speak to the plaintiff, so that what the plaintiff wanted could not have been known on this occasion. In any case, even if I ac-cept his evidence in toto as being true, it does not resolve the fact that he, Mr Harding, was at any time instructed by the plaintiff to remove the crossing on the cheque in order to make it payable for cash.

Section 78 of the Bills of Exchange Act, (Cap 21), pro-vides as follows: “A crossing authorised by this Ordinance is a material part of the cheque; it shall not be lawful for any person to obliterate or, except as authorised by this Ordi-nance, to add to or alter the crossing.” There is no evidence before me that the plaintiff has ever authorised any person to add to or alter the crossing on the cheque in this case.

It is not in dispute between the parties that when a cheque is crossed payment can only be made through a banker. Sec-tion 79(2) of the Bills of Exchange Act provides as fol-lows:–

“Where the banker on whom a cheque is drawn which is so crossed nevertheless pays same, or pays a cheque crossed gener-ally otherwise than to a banker, or if crossed specially otherwise than to a banker to whom it is crossed, or his agent for collection being a banker, he is liable to the true owner of the cheque for any loss he may sustain owing to the cheque having been so paid: Provided that where a cheque is presented for payment which does not at the time of presentment appear to be crossed, or have had a crossing which has been obliterated or to have been added to or altered otherwise than as authorised by this Ordinance, the banker paying the cheque in good faith and without negligence


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shall not be responsible or incur any liability, nor shall the pay-ment be questioned by reason of the cheque having been crossed, or of the crossing having been obliterated or having been added to or altered otherwise than as authorised by this Ordinance and of payment having been made otherwise than to a banker or to the banker to whom the cheque is or was crossed, or to his agent for collection being a banker, as the case may be.”

It is quite apparent from the provision of our law which I have just referred to that a banker who has paid a crossed cheque otherwise than as provided by the law, that is, through another banker, shall be liable, where loss is sus-tained, to the true owner. It is the law that payment contrary to the crossing is, apart from any statutory enactment, negli-gence on the part of the banker, and if the loss ensues the banker cannot charge the customer. This was decided in the case of Bellamy v. Marjoribanks (1). The learned authors of Paget’s Laws of Banking, (7ed) (1968), after referring to the case I have just mentioned, state at 223:–

“The negligence is obviously greater at the present day in view of the statutory recognition and regulation of crossings. The element of loss consequent on the negligence is not specifically referred to in the above passage. If it is an essential, it would seem to be supplied in the cases where the customer’s liability for the debt, for which the cheque was given, revives in the event of the cheque being paid to a person other than the creditor, contrary to the conditions on which it was accepted by him in discharge of the debt and to his loss. When the direct prohibition was in force, a creditor clearly only accepted a cheque in satisfaction on the condition that, if crossed, it was paid in accordance with the crossing; and it is submitted that, notwithstanding the omission of the direct prohibition, the wording and obvious intention of the crossed cheques sections, and the invariable custom of bankers not knowingly to pay cheques contrary to the crossing, are suffi-cient to import the condition in every case in which a cheque is taken in payment.”

Mr Harding in his evidence admitted that in view of the crossing he himself could not have authorised payment in cash unless the plaintiff expressly authorised that to be done. There is no evidence either direct or circumstantial that the



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plaintiff ever authorised that the crossed cheque should be paid other than through a bank. Therefore payment in con-travention of the crossing, which is in itself against the cus-tomer’s mandate, is an unauthorised payment with which the banker cannot debit the customer.

Whatever may be the decision in Suit No. L.D. 402/67 which was tendered as exhibit C in this case, it has no rele-vance to the present proceedings, because the parties have admitted that neither was exhibit A paid through the banker nor was it paid even to the payee, Messrs Pedrocchi and Co Limited.

In the circumstances therefore, and on the evidence before me, I am satisfied that the plaintiff has proved the particulars of the negligence as alleged on his writ of summons. Further in view of the provision of section 79(2) of the Bills of Ex-change Act, (Cap 21), I hold that the defendants are liable to the plaintiff as per items 1 and 2 of his writ of summons.

With regard to the claim for interest, I do not see how I can hold the defendants liable because if this incident had taken place, as was alleged, in August, 1965, the present suit in court was not filed until July 10th, 1968. I am satisfied on the evidence before me that no reason had been given to jus-tify such a delay. In the circumstances, therefore, I do not think that this is a case in which interest on the amount should be granted. I therefore refuse the claim for interest as per item 3 of the particulars of the claim.

There will therefore be judgment for the plaintiff to re-cover the sum of £4,000 from the defendants with costs as-sessed at 100 guineas inclusive.



Ojikutu v. Agbonmagbe Bank Limited, Mbadike and another 187

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Ojikutu v. Agbonmagbe Bank Limited, Mbadike and another


ALEXANDER J


Banking – “Banking business” – What is?

Banking – Mortgage – Notice of forfeiture – Validity of – Power of sale – Debtor appealing for more time to pay and for suspension of power of sale – When creditor to suspend sale in respect thereof

Banking – Overdraft – Mortgage of customer’s property in respect thereof – Customer writing and appealing to bank not to exercise power of sale after same had arisen – Cus-tomer requesting for more time to pay – Whether bank bound to suspend sale

Facts

The plaintiff who was at all times material, a customer of the defendant, obtained overdraft facilities secured by mortgag-ing his properties including the one subject matter of this suit. Upon default the said property was sold to the second and third defendants on 13th April, 1966.

The plaintiff challenged the sale contending in the main that he did not receive notice of the sale and that the interest charged was excessive and contrary to the Moneylenders Act.

The defendants rely on a letter written by the plaintiff after notice of foreclosure and sale was served on him giving an undertaking that he would discharge his indebtedness by 31st March, 1966, and also an authorisation to the first de-fendant to sell the property by private treaty if his indebted-ness was not discharged by that date. The said letter was admitted as exhibit 1.



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Held –

1. When a mortgagee’s power of sale has arisen, a mort-gagee is not bound to suspend the sale based on the debtor’s appeal for more time to pay unless considera-tion in respect thereof has moved from the debtor and there is a binding agreement in that regard. In the instant case, the respondent was not bound to suspend the sale of the property based on exhibit 1.

2. A notice of foreclosure once given and received remains valid and in force until the exercise of the bank’s power of sale. In the instant case, the notice of forfeiture dated 31st January, 1965, remained valid and in force notwith-standing exhibit 1 of 23rd June, 1965, asking for exten-sion of time to pay.

3. “Banking business” is defined as the business of receiv-ing money on current account from the general public, of paying or collecting cheques drawn by or paid in by cus-tomers and of making advances to customers. In the in-stant case, the relationship between plaintiff and defen-dant was “banking business” regulated by the Banking Act and not “money lending business” regulated by the Moneylenders Act. Since the interest charged herein was within the Banking Act, it cannot be said to be excessive.

Dismissing plaintiff’s claim.


Nigerian

Kadiri v. Olusoga (1956) 1 F.S.C. 59

Sanusi v. Daniel (1956) 1 F.S.C. 93


Moneylenders Act, (Cap 124), (Laws of the Federation of Nigeria and Lagos), 1958, section 13



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Counsel For the plaintiff: Ojikutu

For the first defendant: Abudu

For the second and third defendants: Alokolaro

Judgment ALEXANDER J: The plaintiff’s claim is for (a) a declaration that the purported sale of his property situated at No. 10, Onikoro Street, Lagos by private treaty on April 13th, 1966 is void and should be set aside, and (b) for an injunction to restrain the defendant, its servants or agents, from parting with the said property which is mortgaged to them pending the determination of this matter. The claim was originally against the first defendant only, but the second and third de-fendants were subsequently joined on their own application. Pleadings were ordered, filed and delivered.

The plaintiff’s case is that the first defendant as mortgagee exercised its power of sale in respect of the property known as No. 10, Onikoro Street, Lagos, mortgaged by the plaintiff with it to secure loans or advances by way of overdraft, without notice to him; and further, that the rate of interest of 15% charged on these loans or advances is excessive and illegal, as being contrary to the Moneylenders Act, (Cap 124), section 13 and consequently, both the mortgage and subsequent sale are irregular and illegal, and the sale is therefore void and should be set aside. This contention of illegality was, however, expressly raised only in the closing address of learned Counsel for the plaintiff. More will be said about this later.

The first defendant, as well as the second and third defen-dants, rely on a letter written by the plaintiff after notice of foreclosure and sale was served on him, giving an undertak-ing that he would discharge his indebtedness by March 31st, 1966, and also an authorisation to the first defendant to sell the property by private treaty if his indebtedness was not discharged by that date. Their case is, therefore, that the plaintiff, having received notice of foreclosure and sale,



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gave this undertaking and authorisation but, having failed in his undertaking, the first defendant was at liberty to sell the property to the second and third defendants and accordingly did so.

The second and third defendants aver, further, that before purchasing the property they made the necessary investiga-tions and exercised reasonable diligence and were satisfied that the first defendant’s power of sale could be validly ex-ercised and that the property could be sold by private treaty.

The following are the facts of the case. The plaintiff, as a customer of the Agbonmagbe Bank Limited, the first defen-dant, (hereinafter referred to as “the bank”), obtained ad-vances by way of overdraft from the bank by mortgaging three of his properties, including No. 10, Onikoro St., Lagos, to the bank. The interest charged from time to time was 15% and was agreed to by the plaintiff. The original transaction took place about 12 years ago, and accounts were furnished by the bank to the plaintiff from time to time. On June 23rd, 1965, the plaintiff’s indebtedness to the bank stood at £6,024.9s.4d. It is implicit in the plaintiff’s statement of claim that he was indebted to the brink up to the time that the bank exercised its power of sale under the mortgage and sold No. 10, Onikoro St., Lagos to the second and third de-fendants. Indeed, the plaintiff admitted in his own evidence that he is still indebted to the bank, and that he owed the bank £6,024.9s.4d on June 23rd, 1965, as previously ac-knowledged by him in writing. (Exhibit 1). He also admitted under cross-examination that between June, 1965 and March, 1966 he did not pay a penny to the bank. Chief Ok-upe testified on behalf of the bank and was clearly a witness of truth. I accept his evidence in its entirety. He said that even after the sale of No. 10, Onikoro St., Lagos, the plain-tiff was still owing £3,238.12s.11d. It is therefore clear, and beyond any doubt whatever, that the bank’s power of sale had arisen before June 23rd, 1965, and subsisted up to the time of the sale to the second and third defendants.


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In exhibit 1 dated June 23rd, 1965, the plaintiff appealed to the bank to stop charging him interest as from September, 1965 up to March 31st, 1966, when he promised to settle his account in full. He assured the bank that settlement of his account “up to the last penny” would be made by him on March 31st, 1966. He went on to say: “I further agree that if I fail to fulfil my promise in settling the said account at the specified time, I hereby authorise the Agbonmagbe Bank Limited to sell my mortgaged property by private treaty and not by public auction to avoid public disgrace.”

The plaintiff complained that, although the bank accepted his proposals in exhibit 1 by letter dated July 1st, 1965, it did not stop charging interest. It was, of course, not bound to make any such concession or to suspend the exercise of its power of sale, since no consideration moved from the plain-tiff and there was no binding agreement between the parties in that regard. exhibit 1 is no more than what it is expressed to be, an appeal by the plaintiff to the bank not to exercise its power of sale, which it was entitled to exercise immedi-ately, before March 31st, 1966, that is, about nine months later, on a self-imposed condition that his admitted indebt-edness would be discharged on that date, and an authorisa-tion to the bank to sell the property by private treaty to avoid the disgrace of a public auction, if he defaulted. The plaintiff in fact defaulted and it is difficult to see how he can legally hold the bank to its promise to stop the interest if he dis-charged his indebtedness in full on or before March 31st, 1966.

Chief Okupe explained that the bank had agreed to make these concessions as a result of the intervention of two gen-tlemen who are mutual friends of the plaintiff and Chief Ok-upe.

The plaintiff, on the other hand, was hoping to get some compensation for land acquired from him by the Lagos Ex-ecutive Development Board in order to discharge his indebt-edness to the bank. There was no legal obligation on the



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bank to await the pleasure or convenience of the plaintiff or the Lagos Executive Development Board before exercising its legitimate power of sale. The bank was well within its rights in ignoring exhibit 3 requesting it to give the plaintiff a further extension of eight weeks to enable him to pay up. exhibit 4 purports to be a request to stop the sale, but was written 12 days after the sale had taken place and is conse-quently of no evidential value.

Although there is no doubt that the bank’s power of sale had arisen, the plaintiff contends that he received no notice of the impending sale of No. 10, Onikoro Street., Lagos. He denied receiving the notice of foreclosure dated January 31st, 1965. I have no doubt, having regard to the evidence of Chief Okupe and Mr Awosanya on the point, which I be-lieve, that the notice of foreclosure was sent to the plaintiff by registered post, and I go further and find as a fact that he must have received this notice, notwithstanding his denial. On the whole, I was not favourably impressed by the plain-tiff’s demeanour in the witness-box, and I reject his evi-dence wherever it conflicts with the evidence of Chief Ok-upe.

The notice of foreclosure is the only notice to which the plaintiff was entitled and he did not in fact make any request in exhibit 1 that the bank should notify him further on any impending sale in exercise of its powers under the mortgage. Learned Counsel contended on his behalf that this notice ex-pired or lapsed as a result of the bank’s acceptance of ex-hibit 1 and suspension of the exercise of its power of sale. I disagree with this contention and hold that the notice of foreclosure, once given and received, remained valid and in force until the exercise of the bank’s power of sale. There is no evidence that the authority given by the plaintiff to the bank in exhibit 1, to sell No. 10, Onikoro Street, Lagos by private treaty if he defaulted, was cancelled before the bank exercised its power of sale, and he is, in the circumstances, estopped from questioning the manner of sale.


Alexander J


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Learned Counsel for the plaintiff also contended that the 15% rate of interest charged by the bank is excessive and illegal. The plaintiff merely pleaded, in his statement of claim that the rate of interest of 15% is excessive. It is, how-ever, the rate of interest agreed by him. There is nothing in the statement of claim to indicate that illegality is pleaded or relied on by the plaintiff.

However, in his closing address, learned Counsel for the plaintiff contended that the rate of interest of 15% contra-vened the Moneylenders Act, (Cap 124), section 13. The Moneylenders Act is “an Act relating to moneylending.” “Moneylender” is defined as including “every person whose business is that of moneylending.” It, however, excludes:–

“. . . any person bona fide carrying on the business of banking . . .”

Section 13(1) of the Act provides:–

“The interest which may be charged on loans whether by a money-lender or by any person other than a moneylender shall not ex-ceed the respective rates specified hereunder:–

(a) on loans secured by a charge on any freehold property . . . simple interest at the rate of fifteen percent per an-num for the first five hundred pounds or part thereof and at the rate of twelve and a half per cent per annum on any amount in excess of five hundred pounds.”

On the other hand, the Banking Act, (Cap 19) is – “an Act to provide for the regulation and licensing of the business of banking.” “Bank” is defined in section 2 of the Act as – “any person who carries on banking business.” “Banking busi-ness” is defined as – “. . . the business of receiving money on current account from the general public, of paying or col-lecting cheques drawn by or paid in by customers and of making advances to customers.”

Section 7(4) of the Act, as added by the Banking (Amendment) Act, 1962, section 6 provides:–

“Rates of interest charged on advances or other credit facilities by licensed banks shall be linked to the minimum re-discount rate of the Central Bank subject to a stated minimum rate of interest, and



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the interest rate structure of each licensed bank shall be subject to the approval of the Central Bank; and the minimum rate of inter-est when so approved shall be the same for all licensed banks.”

Chief Okupe testified and exhibits 10 and 11 show that the Central Bank of Nigeria notified the appropriate rates of in-terest to the defendant bank and that the rate of interest of 15% is applicable to “other advances,” in which category the advances made by the bank to the plaintiff fall.

In my view, the transaction between the plaintiff and the bank related not only to the making of such advances, but came within the definition of “banking business,” and was, therefore, regulated by the Banking Act. Persons bona fide carrying on the business of banking, like the defendant bank, are also specifically excluded from the operation of the Moneylenders Act, and, in my view, they do not fall within the category of persons other than moneylenders mentioned in section 13(1) of the Act. It appears to me that the words “any person other than a moneylender” refer to a person (other than a bank) who does not make moneylending his regular business but who might indulge in a single transac-tion or very occasional transactions of moneylending.

To sum up, the transaction between the plaintiff and the bank was “banking business” regulated by the Banking Act, (Cap 19), and not “moneylending business” regulated by the Moneylenders Act. Consequently, the case of Kadiri v. Olu-soga 1 F.S.C. 59 cited by Counsel for the plaintiff, which relates to a mere “moneylending” transaction and not to a “banking” transaction, is inapplicable to the circumstances of this case.

The following passage in Maxwell on Interpretation of Statutes, (11ed) at pages 162-163 (1962), puts the matter in a nutshell:–

“It is sometimes found that the conflict of two statutes is apparent only, as their objects are different and the language of each is re-stricted . . . to its own object or subject. When their language is so confined, they run in parallel lines, without meeting.”


Alexander J


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I, therefore, hold that the interest of 15% charged by the bank is not excessive or illegal and that the term as regards interest of 15% in no way vitiates the agreement for ad-vances, the security therefore or the sale consequent on the power of sale exercised under the mortgage.

I have carefully considered the evidence in this case, and the arguments of learned Counsel for the plaintiff and the defen-dants and the enactments and cases cited by them and, in my judgment, the plaintiff’s plea of want of notice, as well as his belated contention of illegality, both fall to the ground.

The second defendant, Mr Marcus Mbadike, testified that he and the third defendant, Mr Victor Oguamananu, bought No. 10 Onikoro Street, Lagos jointly from the bank for £3,300 on April 13th, 1966, and that they paid the purchase money by cheque. No valuer has been called, and in fact no evidence has been adduced by the plaintiff to show that this property was sold at an undervaluation, although there is some such suggestion in paragraphs 11 and 13 of the state-ment of claim. Both the second and third defendants saw the plaintiff’s letter to the bank requesting it not to exercise its power of sale before they purchased the property by private treaty. Mr Mbadike admitted, however, that they did not go so far as to contact the plaintiff before paying for the prop-erty. I do not consider that it was any concern of theirs to contact the plaintiff once they were satisfied, after reading exhibit 1, that the bank’s power of sale had arisen and that there was no reason to doubt that it could at the material time be validly exercised. Chief Okupe testified that the bank conveyed the property to the second and third defen-dants. There was, indeed, no irregularity or illegality known to them or which ought to have been known to them since, in fact, no irregularity or illegality had occurred or existed.

The Conveyancing Act, 1881, section 21(2), which is an English statute of general application in force in Nigeria, provides as follows:–

“Where a conveyance is made in professed exercise of the power



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of sale conferred by this Act, the title of the purchaser shall not be impeachable on the ground that no case had arisen to authorise the sale, or that due notice was not given or that the power was otherwise improperly or irregularly exercised; but any person damnified by an unauthorised or improper or irregular exercise of the power shall have his remedy in damages against the person exercising the power.”

In Sanusi v. Daniel (1956) 1 F.S.C. 932, the appellant mort-gaged his house to the first respondent as security for loans received. The first respondent exercised his power of sale under the mortgage and the property was sold by public auc-tion and conveyed to the second respondent. The appellant sought to have the sale set aside on the ground of certain de-fects in the exercise of the mortgagee’s power of sale and it was held that by virtue of the provisions of section 21(2) of the Conveyancing Act, 1881, the second respondent’s title could not be impeached.

On the evidence before me, and having regard to the au-thorities, the plaintiff’s claim fails in its entirety, and this ac-tion is accordingly dismissed, with costs assessed and fixed at 50 guineas to be paid by the plaintiff to the first defendant and 75 guineas to be paid by the plaintiff to the second and third defendants jointly.



Merchants Bank Limited v. Onigbanjo 197

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Merchants Bank Limited v Onigbanjo

HIGH COURT OF LAGOS STATE ADEFARASIN J Date of Judgment: 3 JANUARY 1969

Banking – Banker/customer relationship – Demand for re-payment of overdraft facility – Whether writ of summons suf-ficient demand on a banker

Facts

The plaintiffs brought an action against the defendant in the High Court of Lagos State to recover an overdraft facility of £984.10s.7d which the defendant has defaulted in repaying. The court considered whether any demand had been made by the plaintiff on the defendant for the repayment of the debt. The defendant denied that there was ever a demand for the repayment of the said overdraft and that therefore, no cause of action had accrued accordingly.

Held –

That the mere issue of a writ of summons by the plaintiff is a sufficient demand for the repayment of the debt owed by a banker.



Nigeria

Johnson v. Odeku 3 A.L.R. Comm. 282 Official Receiver v. Moore (1959) Lag. L.R. 46

Foreign

Joachimson v. Swiss Bank (1921) 3 K.B. 110; [1921] All E.R. 92

Counsel

For the plaintiffs: Molajo



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For the defendant: Makanju

Judgment

ADEFARASIN J: Only two short points arise for a decision in this case. They are:

(i) Whether the defendant was a customer of the Merchants Bank Limited, and if so whether he owes the sum of money for which he is sued by the liquidator of the bank; and

(ii) Whether there was a demand for the sum due by the plain-tiffs and, if not, whether the plaintiffs’ present action is maintainable.

I will deal first with the first point. The defendant’s defence to the first issue – whether he was a customer of the bank and whether he owes the money – was that he denied all the allegations in the statement of claim of the plaintiffs and put the plaintiffs to the strict proof of their averments; and he pleaded that he was at all material times an agent of one Al-haji TS Calfos who operated the current account with the plaintiffs. The evidence adduced by the plaintiffs and that adduced by the defendant leaves no room for doubting that it was the defendant, and no one else who opened the account in the name and style of his business, the Alboni Builders; it was he who drew cheques on the bank, and it was he who obtained the overdraft, the subject matter of this case. The evidence which the defendant himself led was contrary to the pleading in his statement of defence, particularly in paragraph 5. I am satisfied having heard the oral evidence of the parties that the defendant operated a current account with the plaintiffs’ bank now in liquidation and thereon was overdrawn in the sum now claimed on behalf of the bank. In fact the defendant admitted that much, but he said he did not know how much he owed. It is clear from his evidence that the defendant is not a witness to be believed. I am satisfied that he owes the bank the sum claimed.

Turning now to the second issue whether there was a de-mand for the sum owed by the defendant, I ought to say that


Adefarasin J

Merchants Bank Limited v. Onigbanjo 199

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the defendant denied in a general way in his pleadings that there was a demand. In his oral evidence however he said he had moved away from the premises No. 58, Apongbon Street, as from July, 1966, whereas the letter of demand was dated August 15th, 1966. The defendant adduced no evi-dence other than his own that he had left the premises by August 15th, 1966. He did not give the date when if at all the building No. 58 Apongbon Street, was demolished and he did not call the Lagos Executive Development Board of-ficers or those of the Lagos City Council to give evidence as to the date of demolition. It was his duty to establish that which he asserts. That he has not done. The defendant has therefore failed to show that a demand was not made on him. Assuming, however, that I am wrong in this finding, I think learned Counsel is in error in relying on the decision in Official Receiver v. Moore for the proposition that by the failure of a commercial bank to make a demand by letter on a customer a cause of action would not accrue. The decision in that case was not to that effect. In fact the point in the de-cision turned on whether the Statute of Limitation could be raised and it was held, following Joachimson v. Swiss Bank that for practical consideration there is an implied term be-tween customer and banker where an overdraft is given that there should be no right of action until notice is given and demand made, and therefore that the particular debt was not statute-barred since there had been no demand by the bank. The following quotation by the learned Judge quoting the Joachimson case makes the point quite clear (1959 Lag. L.R. at 49):–

“The question whether there was an accrued cause of action on August 1, 1914 depends upon whether a demand upon a banker is necessary before he comes under an obligation to pay his cus-tomer the amount standing to the customer’s credit on his current account. This sounds as though it was an important question. In a sense no doubt it is, but it is very rarely that the question will in practice arise.

In most of the cases in which to complete the cause of action, a

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF LAGOS STATE) Adefarasin J


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writ is a sufficient demand. It is only therefore in the unlikely case of a banker pleading the Statute of Limitations, or in a case like the present where the facts are very special, that the question becomes important. In the present case the writ was not issued till June 5, 1919. To succeed in the action, the plaintiffs had to prove a cause of action existing long before that date-namely, on August 1, 1914, Roch J (sic), while recognising that at first sight the conclusion as a matter of business seemed startling gave judgment in favour of the plaintiff’s holding that the point had been decided in Foley v. Hill and Pott v. Clegg.” (Emphasis supplied.)

As was pointed out by Banker LJ in the Joachimson case, the mere issue of a writ is a sufficient demand. My attention has been drawn to the decision of this Court by Taylor CJ in Johnson v. Odeku on the same point, in which the learned Chief Justice observed that the issue of the writ was a suffi-cient demand and held that the action in the case was not statute-barred.

There is really no defence to the action and I would enter judgment in favour of the plaintiff against the defendant for £984.10s.7d with costs assessed at 75 guineas.


[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF MID-WESTERN STATE, NIGERIA)

African Continental Bank Limited v. Eke 201

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African Continental Bank Limited v. Eke

HIGH COURT OF MID-WESTERN STATE, NIGERIA

IGHODARO J


Banking – Cheques – Notice of dishonour – What constitutes

Banking – Overdraft – No formal application for overdraft – Cheque honoured without credit in account

Banking – Overdraft – What amount to – No application for overdraft – Application implied

Facts

The plaintiff claims against the defendants the sum of £1,212.15s.5d, being an amount outstanding in the defen-dant’s account with the plaintiff as a debt on the overdraft which the defendant obtained from the plaintiff’s bank. The defendant, a customer of the bank, drew a cheque on another bank and lodged it with the plaintiff. The cheque was dis-honoured, but the plaintiff did not notify the defendant but continued to honour cheques drawn by the defendant and continued until the account went into debit. After a year the plaintiff instituted this action claiming the debit balance and interest as debt on an overdraft obtained from the bank by the defendant. The defendant contended that he was not no-tified of the dishonour of his cheque, and did not apply for overdraft.

Held –

1. There is no particular form of notice of dishonour re-quired; in any case notice of dishonour may be dis-pensed with where the drawer and drawee are the same.

2. Where the customer paid the cheque to his banker and draw another for payment before the one he paid was cleared, he was only asking the bank for a loan.



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Case non-suited.


Nigerian

Adereti v. Attorney–General of Western Nigeria S.C. 459/64 (unreported) Usen v. Bank of West Africa Ltd (1965) A.L.R. Comm. 415

Foreign

Cuthbert v. Roberts Lubbock and Co (1909) 2 Ch.D. 226 and 8 L.J. Ch. 529 Furze v. Sharwood (1841) 2 Q.B. at 410; 114 E.R. at 163 Laurie v. Scholefield (1869) L.R. 4 C.P. 622; 38 L.J.C.P.

890 R v. Prince (1868) L.R. 1 C.C.R. 150, 38 L.J.M.C. 8

Counsel

For the plaintiff: Akenzua and Esengedo

For the defendant: Aqun

Judgment IGHODARO J: In this suit the plaintiff’s claim against the defendant is:–

“for the sum of £1,212.15s.5d, being an amount outstanding in the defendant’s account with the plaintiffs, as a debt on the overdraft which the defendant obtained from the plaintiffs as bankers in Benin City on the security of a mortgage dated November 8th, 1965. Despite repeated demands, the defendant has refused or neglected to pay the said sum of £1,212.15s.5d or any part of it.”

The plaintiffs in their statement of claim averred that the de-fendant, who carried on the business of a building contractor in the name of Omorogbe Eke and Sons, opened a current account on December 23rd, 1966 at No. 89 Akpakpava Road, Benin City with £140 and by the end of March, 1968 the defendant’s indebtedness to the plaintiffs by way of overdrafts stood at £1,203.3s.3d including interest which be-came £1,212.15s.5d at the end of April, 1968.

The defendant denied in his statement of defence that at


Ighodaro J


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any time between 23rd December, 1966 and March, 1968 or thereafter did he overdraw his account “or enter into an overdraft and/or a loan agreement with the plaintiff bank.” The defendant admitted, however, that at regular intervals statements of his accounts were sent to him.

The plaintiff company called two witnesses besides the manager; these were the accountant and the assistant ac-countant. The defence called two witnesses, ie, the defen-dant and a member of the senior staff working with the Standard Bank of West Africa.

The plaintiff’s accountant in his evidence tendered state-ment of account, and showed that at the end of January, 1967 the defendant had a credit balance of £17,4s.6d. On April 30th, 1967 the balance was £68.19s.6d.

During the month of April, 1967, the defendant issued on April 29th, 1967, a Standard Bank of West Africa cheque No. B/12/468379 for £1,700. In that month the defendant issued a total of 50 cheques; amongst these was the cheque for £1,700 which was dishonoured, and advice of which was sent to the defendant. At the end of May, 1967 the balance was £1,566.14s.4d in debt and in October, 1967 there was a debit balance of £1,298.0s.2d including the interest on the overdraft in the months of September and October being £10,1s.8d and £9,16s.11d respectively. By April, 1968, the debit balance was £1,212.1s.5d including £8.18s.0d as inter-est. A comprehensive statement was forwarded to the defen-dant. When the plaintiff’s accountant was asked in cross-examination what security the defendant had to offer, he re-plied that the security was the agreement, ie, exhibit N.

The manager of the plaintiff bank in his own evidence said that an application for an overdraft may be written or oral, and said that the overdraft in this particular case was cov-ered by the security, that is, the undertaking given by the Benin City Council and the Ministry of Works, exhibit N. It is only when this form, exhibit N, is sent to the Benin City Council and the council acknowledges that the proceeds will

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF MID-WESTERN STATE, NIGERIA) Ighodaro J


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be paid to the bank, that it becomes a valid security. He ad-mitted that there was no acknowledgment by the Benin City Council. As a matter of fact the Ministry of Works did not pay any money to the bank on the account of the defendant. The manager also said he was not aware of any mortgage.

The third witness gave evidence relating to the returned cheque No. 488377 for £1,700, which the defendant denied receiving.

The defendant in his evidence denied asking for the over-draft and maintained that the plaintiffs never kept him in-formed at any time of his overdraft until the manager of the plaintiff bank, one Nti and Mr Oguname called at his house and told him he was owing £100. The defendant said that, there and then, he signed two cheques, one for £1,700 and another for £150, on loose Standard Bank of West Africa cheques made payable to the African Continental Bank, in order to help them “to balance their books.” The defendant added that the cheques were never returned to him at any time. When letters were received from Nti that the defendant was indebted to the bank, he therefore wrote to the Lagos Branch: see exhibit AA, where the defendant indeed dis-puted owing the bank the current overdraft of £1,307.12s.2d.

The defendant said under cross-examination that at the time £1,700 was credited to his account he did not see it, and that it was when the amount was debited to his account that he took notice of it and protested against owing the bank any money.

The defendant’s witness, Emmanuel Ogbemi, a member of the senior staff of the Standard Bank of West Africa, gave evidence of banking practice as to the necessity for security for a loan or overdraft exceeding £500.

Learned Counsel for the defendant contended that where a manager granted an overdraft in excess of his power it was a matter between the bank and the manager. He also contended that the manager should have brought to the defendant’s


Ighodaro J


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knowledge the full facts relating to the two cheques, £1,700 and £150, and failure to do this was suggestive of fraud. It is well settled, where fraud has not been pleaded, that neither party may invite the court to find it proved, and there are even stronger objections to the court’s doing so uninvited. It is also settled that a party who intends to prove fraud must plead it expressly, and that if he has not done so he will not be allowed to produce evidence which points to fraud and nothing else: See Usen v. Bank of West Africa (8), per Brett JSC (1985 A.L.R. Comm. at 428).

In this respect, paragraph 4 of the statement of defence de-nied owing the plaintiffs at all and referred to the letters dated December 16th, 1967 and April 15th, 1968 upon which this trial would be founded. In my view, fraud has been expressly pleaded here by reference to those letters dated December 16th, 1967 and April 15th, 1968, exhibit P and exhibit O respectively.

Learned Counsel for the defence referred to the failure of the plaintiffs to prove that the returned cheques for £150 and £1,700 were delivered to the defendant. This fact alone in my view cannot be taken as evidence of fraud on the part of the plaintiff bank.

The defendant denied personally receiving and signing for these returned cheques. There is no particular form of notice of dishonour required: Furze v. Sharwood (1841) 2 Q.B. at 410; 114 E.R. at 163. If a note of dishonour is given through the post and it is proved to have been given, notwithstanding any miscarriage by the post office such notice is still valid, section 49(o) Bills of Exchange Act, (Cap 21). In any case notice of dishonour may be dispensed with where the drawer and drawee are the same. Bills of Exchange Act (Cap 21), section 50(2)(c)(i).

The defendant denied ever asking for an overdraft. There was evidence that in February, March, April, and May, 1967 there were letters signed by the defendant asking for a loan or an overdraft of exhibits BB, BB2, BB3 and BB4. There

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF MID-WESTERN STATE, NIGERIA) Ighodaro J


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was, however, no evidence that after May, 1967 the defen-dant applied or asked for an overdraft, or that the bank in compliance with the banking law then in operation sought any security on granting a loan in excess of £500 see Bank-ing Act (Cap 19), section 7(1)(c). In Cuthbert v. Roberts, Lubbock v. Co (2) it was held that when a client paid a cheque to his banker and drew another for payment before the one he paid was cleared, he was only asking the bank for a loan, see also Adereti v. Attorney–Genereal of Western Ni-geria. The taking of an overdraft from a bank even in breach of instructions is no more than accepting a loan. R v. Prince (5). There is nothing also to stop the bank from making unlimited advances to the customer: Laurie v. Scholefield.

It is my view that the defendant cannot escape liability for securing an overdraft provided the cheques were genuinely drawn by him, and forwarded for clearing. In this particular case, there is a vital point which escaped the scrutiny of both Counsel during the whole trial and failure to clear the point is bound to affect this case.

On a careful examination of the numerous documents ten-dered in court, my findings concerning the cheque for £1,700 are:

1. The cheque for £1,700 which was sent for clearing is No. 468377 – exhibit U. There is a green label, exhibit G, signed by Oguname stating that the cheque attached is 488377. There is also a letter, exhibit Y, sent by the manager, Standard Bank of West Africa Limited, dated May 2nd, 1967, to the plaintiff bank on which the fol-lowing words were written by hand: “Your cheque No. 468377 rtd unpaid. Reason – No account.” The cheque which was addressed to the plaintiff bank on May 4th, 1967 and received and signed for by Oguname, was numbered 468377 in the despatch book, exhibit Z.

2. I find also that the credit slip for the African Continental Bank Limited was for the cheque No. 468379 – exhibit F. The defendant’s letter referred to the same cheque bearing


Ighodaro J


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the number 468379 – exhibit O. The statement of ac-count, exhibit B, which was written by hand, bore No. 468379 and the typed statement of account, exhibit A, and the duplicate of account, exhibit Q1, bore the same number.

3. Can this be a mistake which can be dismissed as a lapsus calami – a slip of the pen?

From the above, it is clear that the cheque which was sent for clearing at the Standard Bank of West Africa Limited, No. 468377, was different from the cheque which was des-patched to the plaintiff bank and said to have been credited, then debited, and later returned to the defendant. Who was the drawer of No. 468377 and who was the drawee?

4. In this case it seems there is more than meets the eye. There was no evidence in court about the book of cheques of the Standard Bank of West Africa from which the leaves Nos. 468377, 468378 and 488379 were taken. I have found no difficulty as to the cheque for £150, No. 468378 which was returned see exhibit S dated May 8th, 1967.

Now in view of the divergent numbers of the cheques and the fact that none of these cheques were available, combined with the nature of the defence, I do not find myself able to give judgment in favour of the plaintiff bank. In the circum-stances, I order that the plaintiffs be non-suited. I award 50 guineas. costs to the defendant.

Order accordingly.



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Thomas Wyatt and Son (West Africa) Limited v. United Bank for

Africa Limited


GEORGE J


Banking – Cheques – Action for money had and received – Money received for converted cheque – Theft, misappropria-tion of cheque – Conversion of cheque money received for converted cheque

Facts

The plaintiff claims against the defendant the total value of cheques received and disbursed by the defendant bank with-out the plaintiff’s authority.

The plaintiff company is a customer of the defendant bank. The plaintiff normally pays its employees their salary by drawing cheques payable to the defendant with instructions to the defendant as to how the money should be disbursed. The bank made some payments not authorised by the plaintiff and the plaintiff instituted this action to recover the monies.

The defendant contended that in order to succeed the plain-tiff must prove conversion. The plaintiff contended that the proper form of action was for money had and received.

Held –

The action for money had and received is not merely an al-ternative to conversion, or dependent on the existence of a conversion, it is an independent and wide spreading form of action and lies in many cases where conversion would not, as for the recovery of money paid for a consideration which has failed.

Plaintiff’s claim dismissed.


Thomas Wyatt and Son Ltd v. United Bank for Africa Ltd 209

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Foreign

Gibson v. Minet (1824) 2 Bing 7; 130 E.R. 206 King v. Alson (1848) 12 Q.B. 971; 116 E.R. 1134 Palmer v. Jarmain (1837) 2 M. and W. 282; 282 150 E.R.

Counsel

For the plaintiff: Impey and Adesina

For the defendant: Kushimo

Judgment

GEORGE J: In this case the plaintiff’s amended writ of summons is endorsed as follows:

“The plaintiff’s claim is for £12,078.14s.5d being money had and received by the defendant to the use of the plaintiff by six cheques particularised by letter dated April 23rd, 1968 which said sum the defendant disbursed without the plaintiff’s authority.”

Pleadings were ordered and filed.

The plaintiff’s case is that the defendant company was the banker of the plaintiff company throughout the period 1965 – 1966. The plaintiff company usually paid the senior mem-bers of its staff their monthly salaries by drawing cheques payable to the defendant bank with instructions as to how the money should be disbursed. Between February, 1965 and July, 1966, the plaintiff company drew nine cheques for a total of £12,078.14s.5d on the defendant bank made pay-able to the defendant but without any signed authority as to how the moneys should be disbursed. The defendant com-pany followed the practice of disbursing the sums in these cheques by paying them to the various accounts of the plain-tiff’s employees as contained in the unsigned instructions received by them along with the cheques. The plaintiff’s main complaint is that since the instructions received in writing by the defendant company were not signed by any accredited representative of the plaintiff company, the de-fendant bank was liable for disbursing the amounts on these

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF LAGOS STATE) George J


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cheques as if the written instructions had been signed by the plaintiff’s accredited representative.

In paragraphs 3, 4, 5 and 6 of the statement of claim the plaintiff averred as follows:– “3. Between February 1st, 1965 and July 31st, 1966, the plain-

tiff company drew cheques to a total of £12,078.14s.5d payable to the defendant bank to the intent that the defen-dant bank should hold the proceeds of such cheques pend-ing the receipt of instructions by the plaintiff company for the disposal thereof.

4. The defendant bank well knew that the proceeds of the said cheques should only be disbursed on the authority in writ-ing of the plaintiff company duly signed by an authorised representative of the plaintiff company in accordance with previous practice and usage between the parties.

5. Without any such signed authority the defendant bank paid out the proceeds of the said cheques in manner follow-ing . . .

6. In making the said payments without the requisite authority the defendant bank converted the said proceeds of the said cheques amounting to £12,078.14s.5d to its own use.”

The defendant company in its statement of defence, while admitting that cheques to the value of £12,078.14s.5d were drawn as averred in paragraph 3 of the statement of claim, denied that the proceeds of the cheques were to await dis-posal instructions. The defendant further averred that cheques were drawn and delivered to it simultaneously with disposal instructions.

In paragraphs 4 and 5 of the statement of defence the de-fendant averred:– “4. Save that the defendant admits that the proceeds of the said

cheques were to be disbursed on the plaintiff’s written au-thority, paragraph 4 of the statement of claim is denied and the plaintiff is put to the strictest proof.

5. Even if the defendant acted without written authority, which is denied, the defendant avers that the conduct of the plain-tiff at all material times was such as to ratify the various payments and the action of the defendant.”


George J


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Before the plaintiff’s only witness gave evidence, Counsel for the plaintiff informed the court that he did not intend to pursue the issue of conversion. The action is therefore for money had and received, and nothing else.

The plaintiff’s witness who was the general manager of the plaintiff company, testified that during the period 1965 – 1967 a Mr C Wood was the manager of the plaintiff com-pany. During the period 1965 – 1967 the company had a current account with the defendant bank. When Mr Wood left the plaintiff company, it was discovered that there were irregular dealings with the money of the company. This led the plaintiff company to make enquiries about these irregu-larities. The plaintiff company therefore requested the de-fendant bank to give it proof of the instructions of the com-pany to the defendant bank with regard to the disbursement of their funds with them. As a result of this inquiry the de-fendant bank forwarded certain documents to the plaintiff company. These documents were tendered and marked ex-hibits A-A29. The witness testified further that exhibits A, A1, A8, A9, A10, and A13 were not signed. These docu-ments are the disposal instructions sent along with the cheques exhibits B-B5. The amount on exhibits B-B5 was £12.078.l4s.5d for which the plaintiff account was debited.

The witness continued:– “The disbursement concerned payment of salaries to senior staff. These salaries were paid monthly. Wood calculated how much was due to each person . . . He had to get a cheque from some-body else. He had no power to draw cheques. Each month the cheques were made payable to the defendant company. He (Wood) then sent the cheque together with instructions.”

It is on the evidence of this witness as well as the documents that the plaintiff company based its claim for the recovery of the sum of £12,078.14s.5d.

Counsel for the defendant elected not to call evidence.

Anticipating Counsel for the defendant company, Mr Im-pey for the plaintiffs, in the course of his address, submitted



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that the proper action to bring in a case of this nature is one for money had and received. He cited the cases of Palmer v. Jarmain, Gibson v. Minet and King v. Alston cited by the learned editor of 12 English and Empire Digest at 635-636.

The facts of the case of Gibson v. Minet cited by Counsel for the plaintiff are not relevant to the matter in issue. In that case, the plaintiff requested the defendant to hold the sum of £400 from his private account to the disposal of J Mintern and Co, but latter not requiring the money, it was not paid to them or passed to their account. The plaintiff revoked the order before it was paid or carried to Mintern’s account, but despite the revocation the defendant afterwards paid the money. The plaintiff sued the defendant for money had and received and obtained a verdict in his favour. On appeal Best CJ held, dismissing the appeal (2) Bing at 9; 130 E.R. at 207:–

“ . . . (If) the money had been actually transferred, or credit given to Mintern and Co at the time that the order was lodged, it would not have been revocable . . . The Jury have done perfectly right.”

The case of King v. Alston deals with a different issue, There the money had been paid to the minister for marriages, but by the Church Building Act, l819 two-thirds of the fees re-ceived for marriages in district chambers should “belong and be paid” to the rector. It was held that the rector could re-cover from the minister the two-thirds in an action for money had and received.

The instant case is clearly distinguishable from these two cases. On Gibson v. Minet the order had been revoked be-fore payment was made, while in the instant case there was no such revocation. In King v. Alston the plaintiff followed the money into the hands of the minister. Here the plaintiffs do not seek to recover the moneys from the persons to whom they were paid but from the bank that made the payment.

Counsel for the defendant on the other hand submitted that in order to succeed in an action for money had and received based on unauthorised dealings with negotiable instruments,


George J


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the plaintiff must prove conversion. He cited Paget’s Law of Banking, (6ed) at 311 (1961), but the learned author does not make such a broad proposition. After stating that an ac-tion for money had and received in respect of negotiable in-struments is an alternative to a claim for conversion where conversion lies and money has been received, the author goes on (loc cit):–

“The action for money had and received is, however, not merely an alternative to conversion, or dependent on the existence of a conversion; it is an independent and widespreading form of ac-tion, and lies in many cases where conversion would not as for the recovery of money paid for a consideration which has failed . . .”

It cannot therefore be said that in order to recover money for unauthorised dealings with negotiable instruments the plain-tiff must prove conversion.

The real basis of an action for money had and received has been already explained by Lord Denning in The Recovery of Money 65 Law Quarterly Review at 38 (1949) where he wrote:–

“Indebitatus assumpsit for money had and received to the plain-tiff’s use lay whenever the defendant had received money which in justice and equity belonged to the plaintiff. This action was not based on an implied contract or an implied promise. It was based on a concept of property.”

And he stated further:– “Rid of the error about the implied contract, the action for money had and received was and is an effective remedy for the recovery of money. Whenever money was wrongfully taken from the true owner, this action lay to recover it back. It applied to money in all its tangible forms, such as coins or banknotes which the owner had in his possession, or cheques which he held payable to him-self or bearer. He might be deprived of such money by thieves or forgers, by fraudulent agents or merely by losing it. It might change its form from coins to cash at bank, or from cheques to notes or in any way whatsoever. It might come into the hands of persons innocent of any fraud. . . . (The plaintiff to whom it be-longed had this action to recover it back unless and until it



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reached the hand of one who received it in good faith and for value and without notice of the misappropriation). This action therefore covered not only the same field as conversion of cheques but it also covered cases where conversion did not lie, such as when coins were taken.” (Emphasis supplied.)

It is therefore clear that although it is difficult to think of an instance where, in an action for money had and received based on unauthorised dealings with negotiable instruments, the plaintiff need not prove conversion, the two actions are independent, and circumstances are not inconceivable where trover does not lie and an action for money had and received is maintainable.

The case of Palmer v. Jarmain is an example. In that case the Court of Exchequer decided that (2 M. and W. at 282; 159 E.R. at 762):–

“If a party, authorised by the holder of a bill of exchange to get it discounted, and to apply the proceeds in a particular way, does get it discounted, but misapplies any part of the proceeds, cannot be sued in trover for the bill, but must be sued for money had and received.”

A review of the authorities therefore shows that in the in-stant case, where the cheque was drawn on the bank itself, the proper form of action is for money had and received and not conversion.

It would be convenient at this stage to consider one of the main issues in this case: whether the proceeds of the cheques were paid out with the authority of the plaintiff company. The plaintiff’s witness has given a complete answer to this question. In giving evidence in chief this witness said that it was Wood’s duty to calculate how much should be paid to each member of staff and that he had no power to issue cheques. This witness also admitted that the cheques and the authority to pay out money emanated from the plaintiff’s of-fice. He said:–

“They are our letters. All the exhibits A to A29 were letters issued by the plaintiff company.”


George J


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If these letters were issued by the plaintiff company, the plaintiff company cannot complain that the proceed of the cheques were irregularly paid out. Whether exhibits A to A29 were signed by Mr Wood or not is not vital to the issue.

The plaintiff’s witness, who is also the general manager, has admitted that the instructions, exhibits A to A29, were letters by the plaintiff. In other words they are the acts of the plaintiff. The plaintiff cannot now complain that because the instructions were not signed by Mr Wood the defendant bank should not have proceeded to pay out the salaries of the senior members of its staff. It is enough for the purposes of this action that the plaintiff has admitted that it issued the instructions. The evidence of this witness under cross-examination may be summarised as follows:–

1. All the persons mentioned in exhibits A9, A13, A8, A10, A and Al were employees of the plaintiff company at the material time and each of them was entitled to be paid a salary.

2. The witness himself was paid his salary for the period covered by exhibits A9, A13, A8, Al0, A and Al and the salaries paid to him were the amounts stated in these in-structions.

3. It is a fair assumption that every employee was paid his monthly salary.

4. The practice was to deliver the cheques simultaneously with the instructions.

5. The plaintiff company could have written the names of the employees to be paid at the back of the cheques without any signature.

6. The cheque exhibits B-B5 were properly drawn and the authority to pay resides in exhibits B-B5.

The inference one can draw from the evidence of this wit-ness is that the plaintiff company claims from the defendant company the salaries paid by the defendant on behalf of the



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plaintiff to the plaintiff’s servants. There is no evidence that any servant of the plaintiff company is not entitled to the salary paid to him during the period covered by exhibits A to A29. If there are irregularities in these payments, the plain-tiff company can recover them from its employees to whom the money has been paid.

In view of the evidence of this witness in cross-examination, I do not consider it necessary to inquire into the issue of estoppel by acquiescence. The plaintiff’s witness has destroyed the basis of the plaintiff’s case.

The plaintiff’s claim is therefore dismissed with costs to the defendant assessed at 35 guineas.

Judgment for the defendant.


Pool House Group (Nigeria) Ltd v. African Continental Bank Ltd

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Pool House Group (Nigeria) Limited v. African Continental

Bank Limited


ADEFARASIN J


Banking – Customer – Corporate customer – Who is the proper authority in a company to give security for an over-draft

Facts

The plaintiff brought an action against the defendants for a declaration voiding a deed of mortgage insofar as it pur-ported to confer title to land on the defendants.

The plaintiff company secured an overdraft from the de-fendant (bank), and executed a deed of mortgage in favour of the bank, however one of the directors that signed was a Lebanese. The plaintiff contended that being an alien he does not have the legal capacity to be a director in a Nige-rian company by virtue of section 57, Immigration Act, and therefore the mortgage deed is a nullity.

Held –

A third party dealing bona fide with the company through its directors is entitled to assume that they are directors and as between the company and such third party, the acts of such directors de facto in the ordinary course of the com-pany’s business will bind the company, and giving its bank-ers security for an overdraft is an act in the ordinary course of the business of a company empowered to raise money in order to carry out its objects.

Action dismissed.



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Cases referred to in the judgment Foreign

Clay Hill Brick and Tile Co Ltd v. Rawlings (1938) 4 All E.R. 100; (1938) 159 L.T. 482

County of Gloucester Bank v. Rudry Merthyr Steam and House Coal Colliery Co, (1895) 1. Ch. 629; (1895) 72 L.T. 375

In re: County Life Assurance Co (1870) 5 Ch. App. 288; 22 L.T. 537

Mahoney v. East Holyford Mining Co (1875) L.R. 7 H.L. 869; 33 L.T. 383

Royal British Bank v. Turquand (1856), 6 E. and B. 327; 119 E.R. 886

Counsel

For the plaintiffs: Chief Williams and Sikuade

For the defendants: Solesi and Sanni

Judgment

ADEFARASIN J: The Pool House Group (Nigeria) Limited is a limited liability company incorporated under the Compa-nies Act (Cap 37) to carry on the pool business. The defen-dants are a company also incorporated under the Companies Act and carry on business at Lagos as bankers. The plaintiffs are the customers of the defendant bank. On June 13th, 1966 the plaintiffs desired an overdraft of a sum of £25,000 from the defendants and in consideration for this overdraft they executed a deed of mortgage, which was registered as num-ber 17 at page 17 in Volume 926 of the Lands Registry at Ibadan. Malik Mattar, purporting to act as director of the plaintiff company, was one of the two persons who executed the deed, the other being Peter Ezenwa. The plaintiffs claim on their writ a declaration that the purported deed of mort-gage is null and void insofar as it purports to confer a lease-hold title on the defendants for a term of 90 years, in that Malik Mattar, being an alien, and not having had the permis-sion of the minister, was prohibited by law from acting as or


Adefarasin J


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performing the functions of a director of the plaintiff com-pany. The plaintiffs contended that Malik Mattar is a Leba-nese and therefore an alien within the provisions of the Im-migration Act, 1963.

Only one short point arises for decision, and it is whether the deed of mortgage is valid. The argument of Chief Rotimi Williams, as I understand it, is that Malik Mattar being an alien he could not be a director of the plaintiff company, and that the execution by him of the deed made the transaction therein null and void under the provisions of section 33(4) of the Immigration Act, 1963. Chief Williams contended that when the Immigration Act came into force, Malik Mattar, who until then was a director of the company, ceased to be a director. The parties tendered a letter, exhibit 5, by consent. The letter had been written to Malik Mattar by the Chief Immigration Officer, who in paragraph 2 of the letter said there was no objection to Malik Mattar remaining a director. Now section 8(1) of the Immigration Act, 1983 provides:–

“No person other than a citizen of Nigeria shall:– (a) accept employment (not being employment with the Federal

Government or a Regional Government) without the consent in writing of the Chief Federal Immigration Officer; or

(b) on his own account or in partnership with any other person, practice a profession or establish or take over any trade or business whatsoever or register or take over any company with limited liability for such purpose, without the consent in writing as to the locality of operation and persons to be employed by or on behalf of such person, as the Minister may prescribe.”

The contention of Chief Williams is that Malik Mattar ceased to be a director on August 1st, 1963 and that it has not been shown that he has, since then, been appointed a di-rector. In the submission of Chief Williams, an illegality arises which the defendants could not overlook. Mattar could not be a director as section 38(4) of the Immigration Act made it a crime for an alien to be a director of a com-pany without necessary permission.



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I have formed the view that the plaintiffs have not estab-lished that Malik Mattar is an alien. In paragraph 4 of the plaintiffs’ statement of claim they pleaded, inter alia, that Malik Mattar is an alien. In paragraph 5 of the statement of defence the defendants pleaded they were in no position to admit or deny this, and put the plaintiffs to the strictest proof of the averment. In proof of the averment that Malik Mattar is an alien, the plaintiffs called another director, Albert Olu-wole Obikoya, who said:–

“Malik Mattar is a Lebanese. He has not got permission to be a di-rector of the plaintiff company before August 1st, 1963.”

In my judgment this evidence is not sufficient proof of the fact that Malik Mattar is an alien. Malik Mattar was not himself called to give evidence. Under the Nigerian Consti-tution it is possible for a person who was not originally a Nigerian citizen to acquire citizenship by registration or naturalisation. How does one know for certain that Malik Mattar has not become a naturalised Nigerian citizen? Where the nationality of a person is in dispute in a case of this nature, it is my view that some of the ways in which the party seeking to establish that he is an alien may do so are (a) to call him, or (b) to call the immigration authorities to testify to his entry into the country and his nationality, etc, or (c) to call officers of the Ministry of Internal Affairs to testify to the fact that he is an alien and that he has not ac-quired Nigerian citizenship in the manner prescribed under the Constitution. The plaintiffs have to my mind failed to establish that Malik Mattar is an alien, an averment of which the defendants have put them to a strict proof and which, if they are to succeed, they must prove satisfactorily.

I am assuming, however, in this judgment that I am wrong in my view that Malik Mattar has not been proved to be an alien. Assuming therefore that he is an alien, does that fact render the deed of mortgage a nullity? I think it does not.

In the first place, reg. 28 of the articles of association of the plaintiff company, dated January 11th, 1963, provides


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that the first directors of the company shall be Peter Ezenwa, Malik Mattar and Oluwole Obikoya and that these directors shall be known as the permanent directors of the company and that they shall hold office for life until they die or re-sign. It is contended on behalf of the plaintiffs that with the coming into force of the Immigration Act, 1963 the ap-pointment of Malik Mattar became void, the permission of the chief immigration officer in exhibit 5 notwithstanding, by the mere fact that he was not re-appointed. I do not agree with this point of view. I think the appointment of Malik Mattar as a director was for life. Had he not obtained the permission of the Chief Immigration Officer to continue in office as director his office as director would have come to an end. By the permission contained in the letter exhibit 5 I think, it is saved.

Secondly, I think it is doubtful whether the case of Malik Mattar that is raised here properly comes under either of sec-tions 8 or 33 of the Immigration Act. Learned Counsel for the plaintiffs appeared to have based his arguments on sec-tion 33 of the Act. Section 33 deals with the employment of immigrants in this country, and section 8 deals with the ac-ceptance of employment in the country by an alien and car-rying on business in the country by an alien. In the case in hand Malik Mattar acted as a witness to the execution of a document purporting to be a director of the company.

Thirdly, the evidence led by the plaintiffs does not support the averment in paragraph 4 of their statement of claim that Malik Mattar did not obtain the permission of the minister. The evidence of the plaintiffs’ witness Obikoya was that he did not obtain the permission of the Chief Federal Immigra-tion Officer, and this appeared to be the line pursued by the plaintiffs throughout their case.

Fourthly, the acts of a director shall be valid notwithstand-ing any defect that may afterwards be discovered in his ap-pointment or qualification. This is the provision of sec-tion 77 of the Companies Act (Cap 37). The present action



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commenced prior to the enactment of the Companies Decree, 1968. Chief Williams submitted that this section was intended to cure any defect where there was an appointment in exis-tence which is defective, and he argued that in this case there was no appointment at all. I think section 77 of the Compa-nies Act applied and would save the mortgage deed notwith-standing the disqualification imposed on Malik Mattar by the Immigration Act, 1963. In this case the plaintiff company was running an account with the defendant company and they executed the deed in order to cover the overdraft facilities which the bank granted to them. The company had, previous to the execution of the deed, submitted the names of three signatories of the company any two of whom were authorised to sign the cheques of the company, and Malik Mattar was one of them. Chief Williams argued that all the authorities deal with cases where there had been non-compliance with the articles of association of the company which such com-pany could put right itself. He suggested that the case here was not one of such. I do not agree. Regulation 51 of the arti-cles of association of the company provides that the seal of the company when affixed to an instrument by the authority of a resolution of the company in the presence of one of its directors and the secretary who shall sign the instrument shall bind the company.

Fifthly, I think that by the act of affixing the seal of the company to the deed when it was witnessed by its secretary (against this the plaintiffs do not complain) and one of its directors in the ordinary course of the company’s business is binding upon it. The memorandum of association of the company gives it the power to carry on the business of pool agents formerly carried on by Malik Mattar and in order to do this to draw, accept and negotiate bills of exchange and promissory notes, and to borrow money with or without se-curity, etc.

In In re: County Life Assurance Co (3), the Court of Ap-peal held that a policy of insurance entered into by a stranger


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at the company’s office which was signed by three of the de facto directors and sealed with what purported to be the company’s seal, bound the company. Giffard LJ said (5 Ch. App. at 293, 294; 22 L.T. at 538):–

“The company is bound by what takes place in the usual course of business with a third party where that third party deals bona fide with persons who may be termed de facto directors, and who might, so far as he could tell, have been directors de jure. A seal which purports to be the seal of the company, that seal being put by three persons who represent themselves to be directors, and who are de facto directors, and countersigned by the person who was de facto secretary. I do not hesitate to say that the business of companies of this description could not possibly be carried on if this was not held to be the law.”

Persons contracting with a company and dealing in good faith may assume that acts within its Constitution and pow-ers have been properly and duly performed, and are not bound to inquire whether acts of internal management have been regular see Royal British Bank v. Turquand (5), and also 6 Halsbury’s Laws of England, (3ed) at 430, paragraph 833. I am satisfied that the defendants entered into the trans-action in good faith and that the seal of the plaintiff com-pany was properly affixed on the deed and witnessed by a director and secretary of the company; see page 4 of the deed of mortgage. In Buckley on the Companies Acts, (13ed) at 373 (1957), the learned authors in dealing with section 180 of the Companies Act, 1948 of England, which provision is identical with our own section 77 of the Com-panies Act (Cap 37), said:–

“If persons are held out as, and act as directors, and the sharehold-ers do not prevent them from so doing, outsiders are entitled to assume that they are directors, and, as between the company and such outsiders, the acts of such directors de facto will bind the company.”

There is a line of decisions which would cover the case of the defendants here and make the deed binding upon the plaintiff company, if indeed Malik Mattar was not appointed



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a director of the company, see Mahoney v. East Holyford Mining Co (4); County of Gloucester Bank v. Rudry Merthyr Steam and House Coal Colliery Co (2); Clay Hill Brick and Tile Co Ltd v. Rawlings (1). In the Mahoney case (4), the company’s bankers received from the company’s office a formal notice signed by the “secretary” that they were to pay cheques signed by “either two or three of the following three directors.” It was held that they were entitled to pay on cheques so signed although no directors or secretary had really ever been appointed. In Clay Hill Brick and Tile Co Ltd v. Rawlings (1) it was held that a member of the public dealing in good faith with a de facto managing director was entitled to assume that the latter had authority to receive on the company’s behalf, payment in cash of sums due to the company for goods sold, and that a cheque drawn in favour of the managing director personally and cashed by him was tantamount to a payment to him of cash and so was good payment to the company.

For reasons which I have discussed I am of the view that the deed of mortgage entered into by the plaintiff company by its secretary and director and to which its seal is affixed, is binding upon it. In any event the deed in question was executed in the manner prescribed by section 130 of the Evidence Act (Cap 62) and it must take effect. That being my finding, I decline to make the declaration sought and I dismiss the plaintiff’s action with costs assessed at £21.

Action dismissed.


Bank of America National Trust and Savings Ass v. Alexander 225

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Bank of America National Trust and Savings Association v

Alexander


SOWEMIMO J

Date of Judgment: 30 OCTOBER 1969 Suit No: L.D. 30A/69

Banking – Cheque – Dishonour of cheque where customer’s account is in fund – Allegation of breach of banker and cus-tomer contract – Customer a trader – Quantum of damages

Damages – Quantum of damages to be awarded by court in cases of wrongful dishonour of cheques

Words and phrases – “Trade” – Meaning and connotation thereof

Facts

The plaintiff/respondent, a Company Director, opened a cur-rent account with the appellant bank in February, 1966. The said account was to be a joint account of the respondent and his wife. The account was however never run as a joint ac-count since respondent was the sole signatory to the account and was running same alone.

Sometime around 16th August, 1966, the respondent re-quested his bankers in London, Messrs Lloyds to transfer the sum of £1,500 to his account with the appellant bank due to an urgent need of money by the respondent, and instruction relating to the transfer of money to the appellant bank was communicated by the respondent to the appellant’s manager. On 29th August, 1966 the respondent issued a cheque for the sum of £250 in favour of Mr W Swannik for a business transaction; which cheque was subsequently dishonoured upon presentation to the defendant/appellant bank; notwith-standing sufficiency of fund in the respondent’s account



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with the appellant bank. Consequent upon the cheque being dishonoured the plaintiff/respondent brought an action against the appellant bank at the Magistrate Court contend-ing that the appellant bank was in breach of contract with the respondent by dishonouring the cheque issued by the re-spondent and also that the appellant bank was liable in dam-ages for dishonouring same.

The trial Magistrate gave judgment in favour of the plain-tiff/respondent.

The defendant/appellant being dissatisfied with the trial Magistrate’s judgment appealed to the High Court.

On appeal Counsel for the defendant/appellant contended that:–

1. The trial Magistrate was wrong to have held that there was a breach of contract by the appellant.

2. That the trial Magistrate was wrong in law by holding that the plaintiff/ respondent was entitled to substantial damages since the occupation of the plain-tiff/respondent did not come within the term trade.

Held –

1. On the evidence before the court the said £1,500 should have been credited to the current account of the plain-tiff/respondent and that the defendant/appellant bank was in breach of their contract with the plain-tiff/respondent by dishonouring the cheque and conse-quently the defendant/appellant was liable in damages.

2. A businessman whose cheque is wrongfully dishonoured by a bank as in this case will be entitled to substantial damages like a trader without the necessity to allege and prove loss or damage.

3. The word “trade” is defined as “business especially me-chanical or mercantile employment as opposed to a pro-fession carried on as means of livelihood or profit.” Ap-plying this definition to the occupation of the plain-tiff/respondent as described in the evidence before the



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trial Magistrate comes within the definition of the word trade. The trial Magistrate was therefore right in assess-ing damages to have taken into consideration the occu-pation of the plaintiff/respondent.

Appeal dismissed.


Foreign

Gibbons v. Westminister Bank Ltd [1939] 3 All E.R. 577

Counsel

For the appellant: Burke

For the respondent: Oyewole

Judgment

SOWEMIMO J: The respondent in this case opened a current account with the appellant bank in February, 1966. It was to be a joint account of respondent and his wife. As a matter of fact, however, it was never run as a joint account as the only signatory to the signature card and the person who operated the account was the respondent. Therefore, for all intents and purposes, and so far as the record of the bank was con-cerned, the respondent was the only customer running the account and their liability is to the respondent only. That was the contract between appellant bank and respondent.

Sometime in the middle of August, around 16th August, 1966, the respondent requested his bankers in London, Messrs. Lloyds Bank to transfer a sum of £1,500 to his ac-count with the appellant bank. The reason for this was that the respondent was in urgent need of money and this was communicated to the manager of the appellant bank a Mr Owen. Respondent, inter alia, stated:–

“Following this I continually phoned Mr Owen and he realising my anxiety agreed to phone me back as soon as the money ar-rived. On the 27th August, 1966, Mr Owen phoned me that the money had at last arrived. On 29th August, 1966, I issued a cheque for £250 made out to Mr W. Swannick for a business



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transaction. I was very surprised when Mr Swannick arrived in my office on the 30th August, in a very agitated way with my cheque, which I found on examination to have been dishonoured by the bank.”

He said that this caused him a considerable loss of business and he instructed a solicitor to write to the appellant.

There were different versions given as to what was to be done to the £1,500 from London when it arrived at appel-lants’ bank. The learned Chief Magistrate in his judgment stated thus:–

“I believe the evidence of the plaintiff, and I find as a fact that he never told Mr Owen that he is intended to open a savings account with the money coming from London . . . I hold also that know-ing that the plaintiff had only one existing account, and that the London Bank’s instruction was that existing account be credited with the £1,500, and also having regard to the fact that the exist-ing account, even though a joint account was operated solely by the plaintiff, the said £1,500 should have been credited to that ac-count and I hold further that the defendant bank was in breach of their contract with the plaintiff by dishonouring exhibit A and that the defendant is liable in damages.”

On the evidence before the learned Chief Magistrate, and on his findings of facts, I am in complete agreement with his conclusions. This would dispose of the first ground of ap-peal which stated that the Chief Magistrate was wrong to have held that there was a breach of contract.

The second ground of appeal was that the learned Magis-trate was wrong in law in holding that the respondent was entitled to substantial damages. The learned Chief Magis-trate in his judgment stated as follows:–

“With regards to measure of damages, I hold that the plaintiff be-ing a business man, which I find him to be, is entitled to substan-tial damages like a trader, without the necessity to allege and prove loss or damage the plaintiff is awarded £200 as general damages.”

Counsel’s contention was that plaintiff/respondent was a company director and the cheque that was dishonoured was


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issued in respect of respondent’s personal account. There is the fact however, and this was not challenged, that the cheque was issued in payment for a business transaction be-tween plaintiff and Mr Swannick. It is very embarrassing to a man of the respondent’s status to have a cheque issued by him dishonoured when he had sufficient funds in his ac-count. That is bound to affect his reputation in any case and have a detrimental effect on his trade.

The contention of Counsel is that the occupation of the re-spondent does not come within the term, “trade.” The word is defined “as business, especially mechanical or mercantile em-ployment as opposed to a profession carried on as means of livelihood or profit.” Applying this definition, to the occupa-tion of the respondent as described in the evidence before the learned Chief Magistrate, it comes within the definition of the word trade. The Chief Magistrate was, therefore, right in as-sessing damages to have taken into consideration the occupa-tion of the respondent. In Gibbons v. Westminster Bank Ltd [1939] 3 All E.R. 577 page 477 the head note reads:–

“A bank wrongful dishonoured a cheque of the plaintiff, who was not a trader. The plaintiff did not, in the statement of claim, plead any matters showing loss of credit, but proved that, after the cheque was dishonoured, her landlord has asked her to pay her rent in cash, and not by cheque.

Held–

(1) The plaintiff not being a trader was entitled to only nominal damages in respect of the wrongful dishonoured of a cheque by her bank.

(2) In the circumstances, the plaintiff was not entitled to leave to amend the statement of claim.”

In the judgment of Lawrence J he stated the law as follows:–

“The authorities which have been cited to us laid it down that a trader is entitled to recover substantial damages without pleading and proving actual damage for the dishonour of his cheque, but it has never been held that that exception to the general rule as to the measure of damages for breach of contract, extends to anyone who is not a trader.”



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Since it has been held that the respondent is a trader he is, therefore entitled to substantial damages. The amount awarded by the learned Chief Magistrate has not been chal-lenged and no reason had been given why it should be al-tered. The appellant, therefore, fails on the second ground of appeal.

With regards to the third ground of appeal, there does not seem to be any substance whatsoever. The appeal will, therefore, be dismissed with costs.

Appeal dismissed.


African Continental Bank Ltd v. Babayemi and another 231

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African Continental Bank Limited v Babayemi and another


DOSUNMU J

Date of Judgment: 3 NOVEMBER 1969 Suit No: L.D.: /730/68

Banking – Partner solely borrowing money from the bank – When such transaction would bind the partnership firm – Scope of implied authority of a partner in the circumstances

Partnership – Authority of partner to borrow money for and on behalf of the partnership – Implied nature of – Scope of – Exceptions thereto

Facts

The plaintiff’s claim against the defendants was for payment of the sum of £5,134.165.9d representing the balance owed by the defendants arising from a bank overdraft granted by the plaintiff together with accrued interest thereon.

The plaintiff’s case was that sometime in the year 1964, the firm of the defendants applied to open a current account at their Idumota Branch. The application form dated 17th August, 1964 – exhibit B Part A thereof showed the names of Messrs Mercury Builders as the customer. Part B of the form was duly completed with the full names of the two de-fendants. The form was however signed by the first defen-dant alone and the rubber stamp of the firm was affixed. The operation of the said account resulted into overdrawn bal-ances in the sum of £3,862,105.8d which liability was ad-mitted by a letter dated 30th August, 1965 by the first de-fendant as the managing director of the said Mercury Build-ers.

The first defendant admitted the plaintiff’s claim but con-tested the rate of interest charged. For the second defendant



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it was her case that because the opening of the firm’s ac-count including the overdraft was done without her authority and also because the first defendant was the only one operat-ing the bank account; she was not liable. She contended that as the loan was applied for and obtained by the first defen-dant without her knowledge and consent, and utilised by the first defendant for himself only and not for the joint venture, he alone should be liable for the repayment.

Held –

1. One of the most important of the implied powers of a partner is that of borrowing money at the credit of the firm. At the same time, the implied power of borrowing money like every other implied powers of a partner, only exists where the business is of such a kind that it cannot be carried on in the usual way without such a power. It is therefore necessary, to ascertain the nature of the busi-ness of the firm before deciding whether a partner has an implied authority to bind the firm, otherwise actual au-thority or ratification has to be proved.

2. The law is that where a bill of exchange or promissory note is drawn, accepted, or endorsed by one of two per-sons who are partners in a business which is not a trade, eg attorneys, in the name of the firm and the partner who did not write the names of the firm denies the drawing, acceptance or endorsement respectively, the plaintiff must adduce evidence of the authority of the other part-ner to draw, accept or endorse in the name of the firm; but in the case of a commercial firm, this is not neces-sary, as there is a general authority. In the instant case, it becomes necessary to look for the actual authority or ratification of the second defendant to bind the firm since their business is a non-trading one. Thus, as all evidence points to the fact, that the business was entirely one man’s and that of the first defendant; the opening of the account and its operation including the overdrawing thereof. The mere sending of monthly statements of



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account to the firm as given in evidence by the first plaintiff’s witness as evidence of such ratification on the part of the second defendant would not suffice. There-fore, the first defendant cannot bind the firm with the re-payment of the overdraft.

Judgment for plaintiff against first defendant only.


Foreign

Bank of Australasia v. Breillat 13 E.R. 642 Higgins v. Beachamp (1914) 3 K.B. 1192 at 1195 Levy v. Pyne 174 E.R. 586 Re Wrexham, Mdds (1889) 1 Ch. 205 at 440 Yates v. Dalton (1858) 28 L. Ex. 69


Evidence Act, (Cap 42), (Laws of the Federal), 1958, section 136(1)

Appearances not stated.

Judgment

DOSUNMU J: The two defendants trading under the name and style of Mercury Builders have been sued by the plain-tiff/bank for the payment of the sum of £5,134.16s.9d repre-senting the balance owing by them in respect of bank a overdraft granted to them by the plaintiff together with in-terest accruing thereon. The defendants denied liability but filed different defences.

In proof of its claim the plaintiff called two witnesses namely, Messrs Christian Okocha and JV Williams. Both are officers of the bank and the latter is the Accounts Super-visor. The second plaintiff’s witness, Mr Williams gave evi-dence that sometime in the year 1964, the firm of the defen-dants applied to open a current account at their Idumota

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF LAGOS STATE) Dosunmu J


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Branch in an application form dated 17th August, 1964 ad-mitted as exhibit B. Part A of the said form which is in-tended to be completed by all customers shows the names of Messrs Mercury Builders as the customer. Part B of this same form which is intended for “Firms, Societies, Compa-nies Only,” requires the following additional information to be filled in:

(a) The date on which the Business/Society was established and registered and the Registration.

(b) The full names of all Directors/Partners in-cluding and stating those who will not be operating on the account.

In this case Part B of the said application form was duly completed, and the full names of the two defendants were written thereon. The form was, undoubtedly, signed by first defendant alone and the rubber stamp of the firm was af-fixed. There can be no question therefore that the plaintiff knew who its customers were and whether the first defen-dant was acting on his own behalf or on behalf of a firm when he applied to open a current account. The witness, continuing his evidence, said an account was duly opened for the firm, and the signature card which was also opened contained only the specimen signature of the first defendant as the person to sign. This card which was admitted as ex-hibit C is obviously meant to be completed in the case of Companies and Partnerships only. The same witness also produced a certified true copy of the registration certificate of the firm of Mercury Builders which shows the general na-ture of the business of the company as Building and Civil Engineering Contractors. The two defendants are shown as partners in the business. The certificate was admitted and marked exhibit D. It carries a jurat which apparently refers to the second defendant who is a woman.

However, the firm commenced to operate their account by making an initial deposit of £50 on 17th August, 1964. By 22nd August, 1964 an amount of £21.10s.0d had been withdrawn


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leaving a credit balance of £28.10s.0d. On 24th August, 1964 the defendant company drew a cheque for £1,200 which the bank honoured and paid. This resulted in an over-draft of £1,171.10s.0d. It is this sum of £1,200 that the first defendant referred to in paragraph 8(iii) of his own defence when he stated:–

“That there was no interest attached to the said overdraft facilities granted to the company on the initial amount of £1,200 granted on the 22nd August, 1964.”

The witness further stated that the plaintiff/bank charges in-terest on overdraft granted to customers at the rate of 9% per month. The interest is calculated on the amount overdrawn at the end of every month and statement of account is forwarded to the customer. These facts are known to the defendants. Further he stated that the overdraft limit of the defen-dant/company was £2,000 and in a letter dated 6th June, 1965, exhibit M under the hand of the first defendant as the Managing Director, a request was made to exceed this amount by £500 and the request was granted. As at 30th Au-gust, 1965 the debit balance of the defendant/company in the bank’s ledger stood at £3,862.10s.8d as shown in exhibit G which shows the defendant’s account up to November, 1965. In a letter dated 30th August, 1965 written by the first defen-dant as the Managing Director of the said Mercury Builders and addressed to the plaintiff/bank, the defendants admitted theliability of the said sum of £3,862.10s.8d. The letter was admitted as exhibit F, and it is hereon reproduced:–

“The manager,

A.C.B. Limited,

Idumota Branch,

Lagos.

Dear Sir,

OUR OUTSTANDING OVERDRAFT ACCOUNT- £3,862.10s.8d.

We thank you for your letter dated 13th August, 1965, in connec-tion with the above outstanding account. We regret to note that



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the amount has been outstanding for a considerable length of time and, in fact, this was due to the sickness of our Managing Direc-tor.

We are today confirming to you that all our outstanding contracts are now in progress and our overdraft will be liquidated on or be-fore the 15th September, 1965.

Our Managing Director will interview you on the 31st of August, at 10 am.

Thanking you for your co-operation in this connection.

Yours faithfully,

for MERCURY BUILDERS,

Sgd. Managing Director.”

The second witness also produced in evidence the ledgers of the defendants’ account showing the state of their account at various intervals. As at 30th December, 1965 the defen-dant’s debit balance was £4,010.9s.8d as per exhibit H. As at 29th December, 1966 the balance stood at £4,393.19s.6d as per exhibit J. Also as at 29th December, 1967 the amount owing by the defendants are stated as £4,766.18s.6d as in exhibit R. And by the time action was instituted against the defendants the debit account of the defendants at 29th Octo-ber, 1968 was £5,134.16s.9d as in exhibit L. The differences are the monthly interest which range between £30 to £40 and all these are clearly stated in the exhibits as “IT,” mean-ing interest.

The witness gave evidence that monthly statements of the accounts were regularly forwarded to the defendants and that the plaintiff did not receive any queries whatsoever from them. Yet the amount of £5,134.16s.9d remained un-paid in spite of demands. The evidence of this witness was practically the same as the one given by the other officer of the bank, Mr Okocha. Both witnesses denied ever receiving notification from the first defendant that he resigned from the business of the firm with effect from 17th June, 1966.

At the end of the plaintiff’s case the two defendants called no evidence. It is, therefore, hardly necessary to consider the


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conflicting allegations made in their respective statements of defence as against one another. On behalf of the first defen-dant, it was submitted that the plaintiff has not discharged the onus of proof by virtue of section 136(1) of the Evidence Act, and by this, Counsel said he meant that it was not proved that the rate of interest has been transmitted to his client. I do not see any substance in this submission as there was the unchallenged evidence that the rate of interest at 9% charged on overdrafts was well known to the defendants. Again the first defendant’s Counsel contended that although he would submit to judgment in respect of the sum of £3,862.10s.8d as admitted in exhibit F, he would contend that no interest should be charged as from the date of the exhibit F as there was no agreement to charge interest. Again, I can see no merit in this argument if the very amount of £3,862.10s.8d which the first defendant admitted, was inclusive of interest as it is shown in the ledgers of the plaintiff. The statement of account, exhibit A, rendered to the defendants show interest charges. Counsel failed to convince me why interest should suddenly stop after the sum of £3,862.10s.8d which was ad-mitted owing on as at 30th August, 1966. The last point made by the Counsel was that his client was not liable to pay inter-est as from 17th June, 1966 when he purported to resign from the partnership. In the first place there was no evidence that the first defendant informed the plaintiff of his resignation from the company from 17th June, 1966 or at any time. He did not give evidence or produce any of the letters which he pleaded in his statement of defence as notification to the plaintiff. He sought, however, to rely on a newspaper publica-tion in the Daily Times of 18th July and 26th September, 1966 respectively admitted as exhibits P and Q containing notice by one Mr Gbajabiamila that he (the first defendant) has ceased to be a member of the firm of the Mercury Build-ers. How can the plaintiff/bank take such notification purport-ing to show that the first defendant has been sacked, so to say, as a notice by him that he has resigned his membership of the firm? But all this aside, the liability in this case accrued



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before the purported resignation, and, therefore, the first de-fendant cannot claim to be absolved. On the whole I have no difficulty in finding the first defendant liable.

What has given me some difficulty is the question of the liability of the second defendant. It was contended on her behalf that because the opening of the firm’s account includ-ing the overdraft, was done without her authority and also because the first defendant was the only one operating the bank account, she was not liable. This was her main defence to this action as can be seen from the statement of defence filed on her behalf. Paragraph 4 of her statement of defence reads thus:–

“This defendant will contend that the loan was applied for and ob-tained by the first defendant without her knowledge and consent and it was utilised by the first defendant for himself only and not for the joint venture and that he should be liable alone for the re-payment thereof.”

But she gave no evidence.

The author of Lindley on Partnership (12ed), at page 177 has this to say on borrowing money by partners:–

“One of the most important of the implied power of a partner is that of borrowing money at the credit of the firm . . . At the same time, the implied power of borrowing money like every other im-plied power of a partner, only exists where the business is of such a kind that it cannot be carried on in the usual way without such a power. If money is borrowed by one partner for the declared pur-pose of increasing the partnership capital or of raising the whole or part of the capital agreed to be subscribed in order to start the firm or if the business is such as is customarily carried on on readymoney principles, eg, mining on the stock cost-book princi-ple, or without borrowing, as in the case of Solicitors or Cine-matograph theatre proprietors, the firm will not be bound unless some actual authority or ratification can be proved.”

It is necessary, therefore, to ascertain the nature of the busi-ness of the firm before deciding whether a partner has an implied authority to bind the firm or actual authority or rati-fication has to be proved. It has been held in a number of


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authorities that overdrawing a banking account is borrowing money, see Re Wrexham, Molds (1899) 1 Ch. 205, 440. In the case of Levy v. Pyne 174 E.R. 586 it was held that if a bill of exchange or promissory note be drawn, accepted, or endorsed by one of two persons who are partners in a busi-ness which is not a trade, eg, attorneys, in the name of the firm, and the partner who did not write the names of the firm denies the drawing, acceptance or endorsement respectively, the plaintiff must give evidence of the authority of the other partner to draw, accept or endorse in the name of the firm, but in the case of a commercial firm, this is not necessary, as there is a general authority, see also Bank of Australasia v. Breillat 13 E.R. 642. Exhibit D which is the certificate of registration of the defendant/company sets out the nature of the business of the firm as follows: “Building and Civil En-gineering Contractors, Plumbing, Sanitary, Hot Water and Heating Engineering, Valuation and Estate Agents, Quantity and Land Surveyors, Shop Fitters, and Electrical Engineers and Estimators.” Obviously this is not a trading partnership. A trading business has been defined as one which consists of buying and selling goods, see Higgins v. Beauchamp (1914) 3 K.B. 1192, at page 1195 per Lush J, where it was held that the business of a cinematograph theatre proprietors was not a trading partnership. In this case it becomes necessary, therefore, to look for the actual authority or ratification of the second defendant to bind the firm since their business is a non-trading one. First exhibit C shows that it was the first defendant only who opened the account, howbeit in the name of the firm. He signed as the only person whose signa-ture is to be recognised. In addition, the evidence of the first witness for the plaintiff was to the effect that where a partner is to operate a banking account on behalf of a firm, there must be authority from the other partners for him to do so. In this case, there is no evidence of any such authority. This witness further stated under cross-examination by the second defendant’s Counsel that all cheques drawn on the bank on behalf of the firm were drawn by the first defendant only.



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That this is true is borne out by all the cheques tendered in evidence as exhibits N-N8, and O-O16. What is more strik-ing is that a good number of these cheques were drawn out by the first defendant in his own favour. The evidence of the second plaintiff’s witness who claims to be senior in rank to the first witness and more knowledgeable is more revealing. He stated that exhibit B which was the application to open a current account was signed by the first defendant only. The letter dated 6th November, 1965 and admitted as exhibit M, asking for an increase in the overdraft limit by £500 was signed alone by the first defendant. He further stated that the bank forwarded monthly statements of account to the first defendant because he was the only person known to the bank. Having considered the plaintiff’s evidence and the ex-hibits tendered, I do not find the express authority of the sec-ond defendant to bind the firm. And it is not sufficient to say she is a partner. In Yates v. Dalton (1858) 28 L. Ex. 69 the facts are as follows. Two partners carried on business to-gether as brokers, under an agreement that they were to get orders on commission and divide the expenses. One of them travelled for orders and having incurred expenses, drew a bill, for the first time, in the partnership’s name, to raise funds to execute the order. The other accepted it but before it was issued, countermanded the authority to negotiate and it was negotiated without his knowledge. The court held that the mere partnership did not render him liable upon it.

The matter does not, however, rest there. Can I, on the evi-dence of the plaintiff, find ratification on the part of the sec-ond defendant. Before such a finding can be made, evidence must be given to prove that at the time of the alleged ratifi-cation she knew of these acts, in this case, the acts of over drawing the bank account. As I said earlier all the evidence points one way, and that is that the business is entirely one man’s and that of the first defendant. The opening of the ac-count and its operation including the overdrawing have not been proved to be known to the second defendant. I cannot


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hold that the mere sending of monthly statement of account to the firm as given in evidence by the first plaintiff’s wit-ness is evidence of such ratification on the part of the second defendant.

In the result I hold that the first defendant cannot bind the firm with the repayment of overdraft as claimed, and there will, therefore, be judgment for the plaintiff against the first defendant only in the sum of £5,134.16s.9d with costs fixed at 100 guineas. The plaintiff will pay to the second defen-dant her costs fixed at 30 guineas.

Judgment for the plaintiff against first defendant only.



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African Continental Bank Limited v Kotun


KAZEEM J

Date of Judgment: 1 DECEMBER 1969 Suit No. L.D.:/119/68

Banking – Loans – Grant of by bank – Where involves illit-erate persons – Duty on bank to comply with the Illiterates Protection Act – Consequence of non-compliance therein

Facts

Before the Lagos State High Court, the plaintiff claimed against the defendant the sum of £1,970.145.4d representing amount due from and payable by the defendant to the plain-tiff arising from a loan by way of overdraft facilities granted to the defendant. The claim also included interest and bank charges on the defendant’s overdrawn account between No-vember, 1962 and June,1966.

The defendant on his part filed a notice of intention to de-fend the claim and averred that she was a customer of the bank for over fifteen years, but not indebted to the bank in any sum at all. It was her case that the transaction in ques-tion related to a loan made to one Liadi Salakoh in the sum of £1,500 for which he gave as security documents covering eleven plots of land and three houses and which documents were still with the plaintiff bank who requested her to stand surety for the said Salakoh. Also that she was told she would not be called upon until the securities given by the said Salakoh had been sold and the money realised had been found to be insufficient to satisfy the loan. She maintained that no overdraft had been granted to her in respect of the said transaction as alleged.

Pleadings were filed and exchanged. At the trial, it turned out that the defendant who was an illiterate, was not treated as such through the entire transaction.


African Continental Bank Limited v. Kotun 243

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Held – The object of the Illiterates Protection Act is to protect an illiterate person from possible fraud. Strict compliance therein is obligatory as regards the writer of the document. If the document creates legal rights and writer benefits there-under, those benefits are only enforceable by the writer of the document if he complies strictly with the provisions of the Ordinance. If a document which does not comply with the provisions of the Ordinance creates legal rights between the illiterate and a third party, then evidence may be called to prove what happened at the time the document was pre-pared by the writer and the parties who signed it. The writer himself cannot adduce evidence in this consistently, that of-ficials of the bank prepared cheques for her to sign and her allegation while under cross-examination was that she thumb impressed her cheques after signing them could if possible have been met by producing her older cheques.

Action dismissed.


Nigerian

Halliday v. Alapatira 1 N.L.R. 7 Otegbeye v. Little (1906) 1 N.L.R. 70 S.C.O.A. v. Okon (1959) 4 F.S.C. 220 U.A.C. Ltd v. E Edems and Ajayi (1958) N.R.N.L.R. 33

Counsel

For the plaintiff: Akande

For the defendant: Akande

Judgment

KAZEEM J: The plaintiffs head their application for a writ of summons “undefended writ brought under Order III, rule 9” and claim therein “the sum of £1,970.14s.4d being the total amount due from and payable by the defendant to the plain-tiffs in respect of loan by way of overdraft facility given by the plaintiffs to the defendant at the defendant’s request as

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF LAGOS STATE) Kazeem J


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well as in respect of interest and bank charges on her over-drawn account between November, 1962 and June, 1966, as per attached statement of account.” The application alleges, as usual, that several demands for the debt were not met; and to it was attached an affidavit sworn to by one George Ife-donachukwu Emecheta which states that the defendant is justly and truly indebted to the plaintiffs in the sum claimed and that the statement of account attached to it is a true copy of the original statement of account. The defendant filed no-tice of her intention to defend the claim and attached to it an affidavit in which she says, inter alia, that she was a cus-tomer of the bank for over fifteen years, that she is not in-debted to the bank in any sum at all, that the transaction in question relates to a loan made to one Liadi Salakoh in the sum of £1,500 for which he gave as security, documents covering eleven plots of land and three houses and which documents are still with the plaintiffs, who asked her to stand surety for the said Salakoh and told her that she would not be called upon until the securities given by the said Salakoh had been sold and the money realised had been found to be insufficient to satisfy the loan; and that no over-draft had been granted to her in respect of the said transac-tion as alleged by the plaintiffs.

Pleadings were ordered and duly filed and served. The first witness for the plaintiff was called to say not more than that he prepared the statement of account, exhibit C, for checking by the second witness for the plaintiffs, Chima Opara, who testi-fied that he was an Accountant of the plaintiff’s bank at their Martins Street Branch. He tendered the defendant’s signature card, exhibit A, and all the other exhibits (B-J) in this case. I am surprised to find that a bank allowed a customer, who gave a specimen signature such as the defendant was alleged to have given on exhibit A, to transact business with them with it.

The defendant says in paragraph 3 of her statement of de-fence that she is not in a position to admit or deny para-graphs 3, 4 and 5 of the statement of claim, which relate to


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the cheques. Exhibits B, D, E and F, and that she puts the plaintiffs to the strict proof of the allegations contained therein. The proof put forward is unacceptable as will be shown later in this judgment.

Paragraphs 6 to 8 of the original statement of claim reads as follows:–

“6. On the 13th February, 1964, the defendant placed an order for goods from London for one W.O. Salakoh through the plaintiff’s bank and issued cheque No. 13/A 18421 for £1,510, to cover the goods in favour of the plaintiff’s bank and the plaintiff accordingly ordered the goods for her.

7. However, when the goods arrived it was discovered that the actual and total cost was £1,300 and the charges, commis-sions and postage amounted to £9.

8. The plaintiff, therefore, accordingly debited the defendant’s account on the 13th February, 1964, with the said cost of the goods and the charges, commissions and postage.”

But the evidence of plaintiff’s witness 2 about the cheque for £1,510, exhibit G is, in short, that the defendant tendered it on the 13th of February, 1964, and the bank honoured it but did not pay it in cash because the defendant went to plaintiff’s witness 2 who took her to their manager, whom she told in his presence that she had some goods to pay for and that she wanted the bank to transfer the money to an ad-dress in London. She said that the transfer should be made on her behalf in favour of one Salakoh who was not known to the bank. The defendant was asked by the manager to make out the cheque and plaintiff’s witness 2 made it for her in his own handwriting. The bank accepted the cheque to prepare the transfer of the money. Later that day, the defen-dant came back, and said that she discovered that the cost of the goods should be £1,300 and not £1,500. The £10 extra was for bank charges. The bank debited her with £1,300 and £9 bank charges. These pieces of evidence plainly contradict paragraphs 6 to 8 of the statement of claim; and, moreover, this witness who is the only important witness for the plain-tiffs tried to explain away this contradiction by giving

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF LAGOS STATE) Kazeem J


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fantastic pieces of evidence. For instance, he said that ex-hibit H was a transfer receipt which they should have given the defendant but that they did not give it to her because she went without asking for it. And this witness said while under cross-examination, that he knew the defendant could not read.

I was amused when the learned Counsel for the plaintiffs put exhibits D and E into the hands of the defendant and asked her if she did not sign them; I was more amused when he appeared to be quite happy when she answered in the af-firmative. Scratches made by an illiterate on a document cannot be accepted as a signature, especially when they are such that can be easily forged and are not consistently simi-lar to those in the cheques and signature card alleged to have been signed by the defendant.

The second witness for the plaintiffs became a sorry man while under cross-examination, so much so that the learned Counsel for the plaintiffs, in an attempt to save a bad case, asked for an adjournment and came with an amended writ of summons and statement of claim in which the plaintiffs’ claim was reduced to £661.14s.4d, but the story of PW2 could not be amended and his answers to further cross-examination ruined plaintiffs’ case the more.

The case of Halliday v. Alapatira 1 N.L.R. 7 and Animoru Otegbeye v. Little (1906) 1 N.L.R. 70 warn of the danger in dealing with natives who cannot read or write without mak-ing sure that they understand the contents of documents on which their adversaries rely; and as stated by Smith J in U.A.C. Ltd v. E Edems and Ajayi (1958) N.R.N.L.R. 33 and confirmed by the Federal Supreme Court in S.C.O.A. v. Okon (1959) 4 F. S.C. 220 at 223:–

“that the object of the Illiterates Protection Act, (Cap 83), vol. III (Laws of Nigeria) is to protect an illiterate person from possible fraud. Strict compliance therewith is obligatory as regards the writer of the document. If the document creates legal rights and the writer benefits thereunder, those benefits are only enforceable


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by the writer of the document if he complies strictly with the pro-visions of the Ordinance. If a document which does not comply with the provisions of the Ordinance creates legal rights between the illiterate and a third party then evidence may be called to prove what happened at the time the document was prepared by the writer and the parties signed it. But the writer himself cannot adduce evidence in his own favour to remedy the omission.”

The defendant said consistently that officials of the bank prepared cheques for her to sign and her allegation while under cross-examination that she thumb impressed her cheques after signing them could, if possible, have been met by producing her cheques which are much older than those before me. Exhibit F undoubtedly relates to Salakoh’s loan.

For the reasons which I have given, I dismiss plaintiffs claim with costs to the defendant assessed at £52.17s.0d.

Action dismissed.

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF WESTERN STATE OF NIGERIA)


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Esso Standard (Nigeria) Limited v Akanbi

HIGH COURT OF WESTERN STATE OF NIGERIA

AGBAJE J


Banking – Cheques – Cause of action for dishonour of – Whether cause of action for breach of contract operates as estoppel against same

Banking – Cheques – Wrongful dishonour of – Whether payee of a dishonoured cheque who has returned same to drawer qualifies as a “holder” so as to recover damages for same – Section 38(a) of Bills of Exchange Act (Cap 21)

Practice and Procedure – Estoppel by record – Whether mere fact that one of two alternative remedies is pursued in a court of justice precludes one from pursuing the other remedy

Words and Phrases – “Holder” – Section 2 of Bills of Ex-change Act (Cap 21)

Facts

The plaintiff sued the defendant claiming the sum of £890.8s.4d on two cheques drawn in their favour by the de-fendant which were dishonoured. The defendant admitted in his defence, drawing the two cheques, in favour of the plain-tiff on Barclays Bank Ondo in payment for petroleum prod-ucts bought by him from the plaintiffs. The defendant also alleged that the two cheques were not dishonoured and that he had no notice of the dishonour. The defendant also set up the plea of estoppel.

Three witnesses called by plaintiff testified with intent to prove that the defendant’s cheques were dishonoured and that he was given notice of the dishonour of the cheques.


Esso Standard (Nigeria) Limited v. Akanbi 249

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Counsel for the defendant succeeded in putting in evidence, through the second witness for the plaintiff, the certified true copy of the proceedings and judgment in an earlier suit be-tween the plaintiffs and the defendant, Suit No. I/208/66. The defendant’s plea of estoppel was founded on those pro-ceedings. The witnesses for the plaintiff testified tendering in evidence copies of the notices of dishonour sent to the de-fendant and also testified that the dishonoured cheques were returned to the defendant. The defendant argued that since the amount now claimed formed part of the grand total said to be due from the defendant to the plaintiff in the earlier suit, and since the cheques subject-matter of this action were accounted for before the grand total was arrived at, the pre-sent action and the earlier one were founded on the same subject-matter and the plaintiff, having lost the first suit should not be permitted to re-open it in this suit.

Held –

1. That the mere fact that one pursues one of two alterna-tive remedies in a court of justice does not by itself pre-clude one from pursuing the other remedy. Since it was not proved that the present plaintiffs have taken any benefit under or arising out of their course of conduct ie Suit No. I/208/66. It cannot therefore be said of the plaintiffs that by pursuing one remedy in Suit No. I/208/66 and no more, they are precluded from pursuing the alternative remedy in this case.

2. That the causes of action in Suit No. I/208/66 and in the present one before the court were not the same, because Suit No. I/208/66 being founded on a contract, the cause of action was the breach of that contract, liability for which the defendant was called upon to answer, whereas the cause of action in the present action upon cheques, is the dishonour of cheques. The plaintiffs are therefore not estopped from bringing this action by reason of the deci-sion in the earlier suit between the parties to the action, that is Suit No. I/208/66.



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3. That by virtue of section 38(a) of the Bills of Exchange Act (Cap 21), the holder of a bill of exchange may sue on the bill on his own name. The plaintiffs were no longer in possession of the cheques on which they were suing at the time the action was instituted having re-turned them to the defendant. They had ceased to be holders of the cheques who by virtue of section 2 of the same Bills of Exchange Act must be in possession. They cannot therefore avail themselves of the remedies pro-vided for a holder of a bill of exchange under sec-tion 38(a) of the Bills of Exchange Act (Cap 21) ie can-not sue in their name.

4. Section 2 of the Bills of Exchange Act defines “holder” as the payee or endorsee of a bill or note who is in pos-session of it or the bearer thereof.

Obiter Dictum

“But as I have said earlier, if the causes of action in the earlier ac-tion and the one now before me are the same then, of course the earlier action will operate as a bar to the present one.”

Action dismissed.


Nigerian

Nigerian Concrete Indus. Ltd v. Machado (1968) (1) A.L.R. Comm. 10, 1965 Lag. L.R. 111

Foreign

Drake v. Mitchell (1803) 3, East 251, 102 E.R. 5 E. 4

Wegg Prosser v. Evans (1895) 1 Q.B., (1895), 72 L.T. 8


Bills of Exchange Act, (Cap 21), (Laws of the Federation of Nigeria Lagos), 1958, sections 2, 38(a), 47(2)



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Halsbury’s Laws of England (3ed), Volume 15 at page 71 Spencer, Bower and Turner, The Doctrine of Res Judicata, (2ed)

Counsel For the plaintiff: Aiyeola For the defendant: Sonoiki

Judgment

AGBAJE J: The plaintiffs are suing on two cheques drawn in their favour by the defendant. The two cheques together are for the sum of £990.8s.4d but the plaintiffs are claiming £890.8s.4d on them, the difference of £100 representing the amount said to have been paid by the defendant to the plain-tiffs when the former had notice of dishonour of the cheques. The defendant admitted in his defence drawing the two cheques to wit: cheque No. 44/850488 for £363.15s and cheque No. 43/850487 for £626.13s.4d in favour of the plaintiffs on Barclays Bank, Ondo in payment for petroleum products bought by him from the plaintiffs. Contrary to the plaintiffs’ allegations in their statement of claim, the defen-dant alleged in his defence that the two cheques were not dishonoured and that he had no notice of their dishonour. The defendant also set up the plea of estoppel in his defence

The plaintiffs called three witnesses, their evidence being directed to proving that the defendants’ cheques were dis-honoured and that he was given notice of the dishonour of the cheques. The defendant himself did not give evidence nor did he call any witness to testify on his behalf. His Counsel, Mr Sonoiki, however, succeeded in putting evi-dence through the second witness for plaintiff Mr Oladun-joye Oshinowo, the certified true copy of the proceedings and judgment in an earlier suit between the plaintiffs and the defendant, Suit No. I/208/66, and it is exhibit B in this case. The defendant’s plea of estoppel is founded on those pro-ceedings. The evidence of the plaintiffs’ witnesses satisfied

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF WESTERN STATE OF NIGERIA) Agbaje J


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me that the two cheques in question were not paid when pre-sented by the plaintiffs to the bank concerned for payment and that the defendant was so informed. This is so because the evidence for the plaintiffs on these points was uncontra-dicted, exhibit C, a statement of the defendant’s account with his bankers for the relevant period, shows that the two cheques were not reflected in his account. And there is evi-dence from the third witness for plaintiff to the effect that if the cheques in question were presented and unpaid no entry or entries about them would appear in exhibit C. Copies of the notices of the dishonour of the cheques were put in evi-dence by the plaintiffs. They are exhibits A and A1. The first witness for the plaintiffs, Mr Omolaiye, when recalled to the witness box testified to it that he delivered the originals of exhibits A and Al to the defendant. And as I have already said, the defendant did not go into the witness box to give evidence. The first witness for the plaintiff, Mr Omolaiye, also stated when testifying in the witness box that the cheques on which the plaintiffs are suing were returned by him to the defendant. According to him, the cheques accom-panied the notices of their dishonour to the defendant. It fol-lows from this evidence, that at the time the plaintiffs insti-tuted this action they were no longer in possession of these cheques. A good deal will turn on this point in this judg-ment.

Let me first of all consider the defendant’s plea of estoppel and see if it is well founded or not. The basis of this plea, as I indicated above, is exhibit B, the certified true copy of the proceedings and judgment in an earlier suit between the plaintiff and the present defendant. The suit was No. I/208/66 in the High Court of Justice at Ibadan and the claim read thus:–

“The plaintiffs’ claim is for the sum of £1,065.l3s.7d being the balance due and owing by the defendant to the plaintiff for petro-leum products sold and delivered by the plaintiffs to the defen-dant at Ore during the period 1964 to 1965 as per attached state-ment of account.”


Agbaje J


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Thus framed, the action was based on a contract for the sale of goods. The second witness for the plaintiff, Mr Oshi-nowo, in his evidence in this Court said in answer to ques-tions by the court on the defendant’s statement of account with the plaintiffs:–

“I kept only one account for the whole of the transactions between the plaintiffs and the defendant. The debit balance in that account was £1,065,13s.7d which was claimed in Suit No. I/208/66. Ex-hibits A and Al (the notices of the dishonour of the cheques) were reflected in this account.”

This evidence shows that before the present plaintiffs de-cided to claim £1,065,13s.7d from the present defendant in Suit No. I/208/66, cognisance was taken of the fact that the cheques the subject-matter of this action, issued in payment for goods forming part of the subject-matter in Suit No. I/208/66, were presented for payment and returned un-paid, that is to say were dishonoured. The evidence of this witness cannot in my view alter the basis of the action in Suit No. I/208/66, which as I have already said was founded on a contract for the sale of goods. The parties in Suit No. I/208/66 and the present action before me are undoubtedly the same. What I have to decide in relation to the plea of es-toppel by record set up by the defendant is whether the cause of action in this case and in the earlier are the same.

The learned authors of Spencer, Bower and Turner, The Doctrine of Res Judicata, (2ed) at 372, article 448 (1969) said:–

“A former judgment cannot operate as a bar to any subsequent proceedings unless they are founded upon the same ‘cause’ (in the largest sense of the word, and so including both grounds of civil complaint, and criminal offence) as that upon which such former judgment proceeded.”

Mr Sonoiki for the defendant submitted that since the amount now claimed formed part of the grand total said to be due from the defendant to the plaintiff in the earlier suit, and since the cheques, the subject-matter of this action, were accounted for before the grand total was arrived at, the



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present action and the earlier one were founded on the same subject-matter, and the plaintiffs having lost the earlier suit should not be permitted to reopen it in this suit. The only case of some relevance to the case in hand referred to by Mr Sonoiki in support of his point is the case of Nigerian Con-crete Indus. Ltd v. Machado (2). That case decided that a plaintiff could elect to take his action for goods sold and de-livered, instead of suing upon a dishonoured cheque not-withstanding the provisions of the Bills of Exchange Act (Cap 21), section 47(2). The case did not say that such an election is a bar to a subsequent action upon a dishonoured cheque issued in payment for goods sold and delivered. And indeed the point did not call for determination in the case, 15 Halsbury’s Laws of England (3ed) at page 171 states the common law principle which puts a man to this election be-tween alternative inconsistent courses of conduct thus:–

“The principle that a person may not approbate and reprobate ex-presses two propositions, first, that the person in question, having a choice between two courses of conduct, is to be treated as hav-ing made an election from which he cannot resile, and, second, that he will not be regarded, in general at any rate as having so elected unless he has taken a benefit under or arising out of the course of conduct which he has first pursued and with which his subsequent conduct is inconsistent.”

It will appear from this principle of law, that the mere fact that one pursues one of two alternative remedies in a court of justice does not by itself alone preclude one from pursu-ing the other remedy. It has not been suggested in this case, let alone proved, that the present plaintiffs have taken any benefit under or arising out of their earlier course of con-duct, ie, Suit No. I/208/66. For this reason it is my view that it cannot be said of the plaintiffs that by pursuing one rem-edy in Suit No. I/208/66 and no more, they are precluded from pursuing the alternative remedy in this case.

But, as I have said earlier, if the causes of action in the ear-lier action and the one now before me are the same then, of course, the earlier action will operate as a bar to the present


Agbaje J


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one. Lord Ellenborough CJ in Drake v. Mitchell (1) said (3 East at 258-259; 102 E.R. at 296):–

“I have always understood the principle of transit in rem judi-catam to relate only to the particular cause of action in which the judgment is recovered operating as a change of remedy from its being of a higher nature than before. But a judgment recovered in any form of action is still but security for the original cause of ac-tion, until it be made productive in satisfaction to the party; and therefore till then it cannot operate to change any other collateral concurrent remedy which the party may have.”

In Drake v. Mitchell it was held that judgment in an action on a negotiable instrument was no bar to a subsequent action on an instrument under seal whereby the judgment debtor jointly with others had guaranteed payment of the debt for which the negotiable instrument was given, because the causes of action were not the same. The case was referred to with approval in Wegg Prosser v. Evans (3), where it was held that an unsatisfied judgment against one joint contrac-tor on a cheque given by him alone for the joint debt was not a bar to an action against the other joint contractor on the original debt. In that case Lord Esher MR said ((1895) 1 Q.B. at 112; 72 L.T. at 9):–

“But the cheque was dishonoured, and Thomas did not pay it. Thereupon the plaintiff sued him upon the cheque. The cause of action was the dishonour of the cheque, and upon that the plain-tiff recovered judgment.”

Applying the principle in these cases to the one now before me, it is my view that the causes of action in Suit No. I/208/66 and in the present one before me are not the same, because Suit No. I/208/66 being founded on a contract the cause of action was the breach of that contract, liability for which the defendant was called upon to answer, whereas the cause of action in the present action upon cheques is the dis-honour of the cheques. I therefore hold that the plaintiffs are not estopped from bringing this action by reason of the deci-sion in the earlier suit between the parties to this action, that is Suit No. 1/208/66. The defendant’s plea of estoppel in my



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judgment therefore fails. I must mention that the point that the complaint in this and the earlier actions was substantially the same in that it was a complaint about non-payment of the same amount, taken by Counsel for the defendant, was by and large one of the points taken by Counsel for the defen-dant in Wegg Prosser v. Evans (3). Counsel in Wegg Prosser v. Evans did not carry the court with him to hold on this point that the causes of action were the same. I am also not with Mr Sonoiki, Counsel for the defendant in this case, on this point.

I shall now consider the case as presented by the plaintiffs and if on the facts before me they are entitled to the relief claimed. The plaintiffs are suing on cheques. By virtue of section 38(a) of the Bills of Exchange Act (Cap 21), the holder of a bill of exchange may sue on the bill in his own name. Section 2 of the same Act defines “holder” as: “the payee or endorsee of a bill or note who is in possession of it or the bearer thereof.” As I have pointed out earlier the evi-dence for the plaintiffs shows that they were no longer in possession of the cheques on which they are suing at the time this action was instituted, having, according to Mr Omolaiye their witness, returned them to the defendant. For this reason they have in my view ceased to be holders of the cheque. And this being the position they cannot in my view avail themselves of the remedy provided for a holder of a bill of exchange by section 38(a) of the Bills of Exchange Act (Cap 21). It is for this reason that I hold that the present action is misconceived. And it is hereby dismissed with costs which I am now going to assess.

Action dismissed.


Effiwatt v. Barclays Bank, DCO (Nig) Ltd and another 257

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Effiwatt v. Barclays Bank, DCO (Nig) Limited and another


TAYLOR CJ

Date of Judgment: 15 JANUARY 1970 Suit No: L.D. 70/69

Banking – Delay in releasing funds to depositor when there is credit in account – When amounts to conversion – When does not amount to conversion

Facts

The plaintiff’s action was for exemplary damages for wrongful and malicious conversion of the plaintiff’s £1,012.13s.4d.

The facts are that, on 8th October, 1968, the plaintiff re-quested the first defendant to transfer the sum of £300 into another account; but the first defendant could not do this be-cause the bank holiday arising from the currency exchange exercise in South Eastern State of Nigeria between 15th Sep-tember, to 15th November, 1968 and that evening after the opening of the banks, the first defendant could only release £20 to the plaintiff as a result of an order from the Central Bank of Nigeria.

Held –

In the instant case, the delay to release funds to the plaintiff between 15th November, 1968 and 3rd April, 1969 was not unreasonable having regard to the circumstances in the country at the material time. The action in conversion cannot therefore succeed.

Plaintiff’s action dismissed.



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Foreign

Joachimson v. Swiss Bank Corporation (1921) All E.R. 92


Currency Conversion (South Eastern State and Other States) decree No. 49 of 1968, section 2

Counsel

For the plaintiff: Noibi for Lardner

For the first defendant: Kushimo

For the second defendant: Okorodudu

Judgment

TAYLOR CJ: The plaintiff originally sued the defendants claiming: 1. A declaration that the defendants had no

power to “freeze” the plaintiff’s account in the first defendant’s bank at Calabar.

2. The sum of £1,012.13s.4d with 10% interest from 15th September, 1968, being the sum standing to plaintiff’s account in the said bank; and

3. £5,000 as exemplary damages for wrongful and malicious conversion of the plaintiff’s said £1,012.13s.4d despite repeated demands.

Before the cause was heard, and on the 14th April, 1969, the plaintiff Mr EBO Effiwatt, a member of the Bar, with-drew the first and second parts of his claim which were ac-cordingly struck out leaving only the claim for “exemplary damages for wrongful and malicious conversion.” Pleadings were ordered and have been filed. The plaintiff has set out the particulars of damage claimed out of which the sum of £280.11s.0d represents special damages and £4,719.9s.0d general damages.

The defendants do not deny that the account of the afore-said estate of Otu Efiom Otu Ekong II was frozen and that


Taylor CJ


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the first defendant bank was acting on the instructions of the second defendant who pleaded that this was done as a result of a “currency exchange exercise” in the South Eastern State of Nigeria.

It is a fact common to all the parties in the suit and is relied on by the plaintiff in paragraph 3 sub-paragraphs v. and VI of the particulars supplied in his amended statement of claim that the first defendant/bank was closed as were all banks in that area from the 15th September to the 15th November, 1968, as a result of a bank holiday declaration. The plaintiff in his evidence, therefore, limited his claim on this head from mid-November, 1968 to March, 1969, when his ac-count was declared operative. Evidence was led by the plaintiff that his demand for funds from the bank was made during this period when the bank holiday was declared and that, in his own words:–

“I did not make any further written request after that.”

The first point, therefore, for decision is whether there was a “wrongful and malicious conversion” of the plaintiff’s funds in the first defendant’s bank in the absence of oral written evidence as to a specific demand. Learned Counsel for the plaintiff drew my attention to the case of Joachimson v. Swiss Bank (1921) A.E.R. 92 and contended that the writ was evidence of the demand, ie, the writ issued on the 10th February, 1969.

It is common cause that, on the 8th October, 1968, the plaintiff wrote a letter to the first defendant. A copy of this letter is not in evidence but the reply of the first defendant is exhibit D and it reads, inter alia, as follows:–

“Re Estate of Otu Ekong II A/C

We refer to your letter of 8th October concerning your request for us to transfer the sum of £300 from the above account in our books to your account at our 40 Marina Lagos branch, and advise that following the closure of the banks in Calabar on 15th Sep-tember during the currency Exchange exercise, the banks have reopened for business transaction on 15th November, 1968.



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Consequent upon this the Central Bank in Lagos has ordered the freezing of every credit balance of an account in the bank Books permitting payment of only £20 on every account until further notice.

In the circumstances we are unable to remit the £300 as in-structed . . .”

The reply of the first defendant bank makes it abundantly clear that a demand for the sum of £300 was made by the plaintiff on the 8th October which request could not be granted owing to the closure of the banks that even after the banks were re-opened on the 15th November, 1968, the first defendant bank realised that this demand was still operative but they could not comply with it on the 19th November, 1968, the date on which exhibit D was written, because of the instructions given by the second defendant bank.

The demand having been made and a refusal given, the only point for consideration is whether the refusal was justi-fied. To be justified it has to be shown that the second de-fendant bank was empowered to “freeze” such accounts.

On this point exhibit S dated the 2nd September, 1968, was and is a letter written by the second defendant bank to the first defendant bank. In as much as this letter deals with the period during which the bank holiday was declared the letter is not of much assistance on the point in view of the plaintiff’s evidence limiting his claim to the period after the re-opening of the first defendant bank subsequent to the said holiday.

On the 7th November, 1968, exhibit T was written by the second defendant bank to the first defendant bank on the same subject matter as exhibit S, ie, “Exchange of old Nige-rian currency notes in the South Eastern State.”

This letter shows that in that exercise of exchange of the old Nigerian currency notes the first defendant bank is or was supplied with new notes only to the tune of £20 on their li-ability on the 6157 deposit accounts under which the present


Taylor CJ


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plaintiff’s account was classed. The letter ends with this paragraph:–

“Your appointment as an Exchange Authority for the purpose of declaring a bank Holiday, as communicated to you in our letter of 19th September, 1968, is now revoked and it is expected that your branch in Calabar will re-open for business in New Nigerian Currency Notes with immediate effect. Except for repayments of not more than £20 per depositor as indicated above, all deposit accounts as at 14th September, 1968, should remain blocked and should be segregated from new accounts.”

Finally, on the 3rd April, 1969, the first defendant bank wrote to the plaintiff informing him that the account was now “unfrozen.” The nett result was that as between the 15th November and the 3rd April, 1969, the plaintiff’s account was not completely “frozen” but he was at liberty to with-draw the sum of £20 out of the previous request for £300. This case is really a novel one and I am unable to find, and indeed no case has been cited, where a banker does not deny that the customer has the sum demanded by the latter in his bank; where the banker still holds such money to the credit of the customer and is prepared to pay part of such sum to the customer on the instructions of a higher authority (if I may use such phrase) and nevertheless, the banker is sued for conversion.

A conversion is defined in Paget’s Law of Banking (5ed) at page 229 as:–

“. . . a wrongful interference with goods, as by taking, using or de-stroying them, inconsistent with the owner’s right of possession. To constitute this injury, there must be some act of the defendant repudiating the owner’s right or some exercise of dominion in-consistent with it.”

In the examples given on the same page as to when an action is maintainable there is not an instance of a similar nature to the present one. There is not one single case where the banker has never denied the fact that the customer still has the sum claimed in his establishment and to his credit but



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where the limitation is on the amount that the customer is allowed to withdraw.

The learned Author of Paget’s Law of Banking at page 86 states that:–

“Reading these citations dispassionately, the true conclusion seemed to be that there can only be conversion where the defen-dant asserts a title adverse to that of the true owner, either in him-self or a third party, or where, while not expressly doing this, he detains the goods from the rightful owner for an unreasonable time, thereby impliedly doing so. If the depositor himself applies, any delay is unreasonable, and refusal is a negation of his title.”

In this particular case the delay was one between the 15th November, 1968, and the 3rd April, 1969. I must ask myself whether it has been shown that this delay was unreasonable or unjustified in law. I must take judicial notice of the exis-tence of the civil war in Nigeria and of the important fact that the South Eastern State by which that part of Nigeria is now known was occupied by forces rebellious to the Federal Military Government of Nigeria. I must also take judicial notice of the trafficking in old Nigerian currency that has resulted from such occupation of those parts of Nigeria by rebel forces, where the old currency was in use when the new currency was made the only legal tender in other areas of Nigeria under the Federal Military Government.

The plaintiff who is an indigene of the South Eastern State was well aware of this exercise. In fact he wrote exhibit E to the Chairman, Currency Conversion Investigating Panel, Central Bank, in which he put forward his case to the Panel and received in reply exhibit F which states, inter alia, that:–

“The question of currency exchange is being actively investigated by my Panel and it is hoped that work will be completed in as short a time as possible in order that your deposits could, where appropriate, released to you. When this position is reached, a public announcement will be made; but meanwhile, if you have any information which would enable the Panel conclude its work speedily and effectively, please send such information, in confi-dence, to the undersigned . . .”


Taylor CJ


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There is no evidence that the plaintiff availed himself of this request. In fact his evidence is to the contrary. Two months after this the plaintiff’s account was unfrozen. There is not a shred of evidence direct or from which an inference can be drawn that this delay was unreasonable.

On the alternative point as to whether the delay was justifi-able, the objects of the Central Bank of Nigeria are con-tained in the Central Bank of Nigeria Ordinance as amended from time to time. Of particular importance is its relation with other banks as contained in section 39 and the amended section 40 of the Act. The latter begins with these words:–

“The bank may from time to time issue directions which shall sub-sequently be published in the Gazette requiring each bank li-censed under the Banking Act to do the following . . .”

The plaintiff’s real cause of complaint lies in the first part of his claim which has been abandoned, for if he were able to show that the second defendant bank had no power to “freeze” his assets, then both the second defendant bank and the bank acting under its instructions, ie, the first defendant bank, would be liable for their actions in relation thereto.

Mr Lardner, despite the abandonment of the first and second parts of his claim addressed me on this point. Objection was raised by Chief Okorodudu for the second defendant bank. I in-timated that I would give a ruling on this point in my judgment.

Let me first of all state Mr Lardner’s contention. It is this, that the powers of freezing accounts purported to be exer-cised by the Central Bank under the Currency Conversion (South-Eastern and Other States) Regulations, 1968, is not a power coming within decree No. 49 of 1968. The Currency Conversion (South-Eastern and other States) (Amendment) Decree, 1968. The former purports to have been made in ex-ercise of the power conferred by section 1A of the latter which provides that:–

“The Federal Commissioner for Finance after consultation with the Central Bank may, if he thinks fit, make regulations generally for the purposes of this decree.”



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Learned Counsel then goes on to argue, but I think with little or no conviction, that because section 2 provides that:–

“Without limiting the generality of the power hereby conferred, regu-lations may provide for the closing of banks without thereby incur-ring liability to customers as others using the bank where the closure is for the purpose of giving effect to currency conversion . . .”

The Central Bank does not have the power to “freeze” ac-counts only to close banks. What learned Counsel has not taken into account is that L.N. 85/68 was made in exercise of the general powers contained in section 1A and not sec-tion 2. But even in section 2 the pregnant words are “without limiting the generality of the power hereby conferred.”

Quite apart from this it seems most absurd to me to say that the second defendant bank is empowered to close banks with the inevitable result that no account can be operated during that time, but it is not given the lesser power to per-mit banks to open with the limitation that only such and such limited transaction must be conducted.

I have given consideration to this point in spite of the ob-jection of Chief Okorodudu, because the plaintiffs’ claim for conversion by the defendants is really based on a miscon-ceived idea that the lesser is not included in the greater power contained under section 1A of decree No. 49 of 1968. He is entitled to be heard pro tanto.

For the reasons given there is no substance in this action and it is dismissed. I shall hear the parties on costs.

Court: I suggest that parties bear their costs.

Mr Kushimo: We have made seven appearances in this case. I would suggest 50 guineas.

Chief Okorodudu: We should have some costs.

Court: I order that costs be borne equally by both sides. No order as to costs in view of the particular circumstances of this case.

Plaintiff’s action dismissed.


Bank of West Africa Limited v. Balogun 265

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Bank of West Africa Limited v Balogun


COKER, LEWIS AND FATAI-WILLIAMS JJSC

Date of Judgment: 27 FEBRUARY 1970 S.C.: 9/1968

Banking – Banker/customer relationship at common law – Banker as customer’s agent – Banker’s liability for conver-sion of customer’s goods

Damages – Assessment by the court – Customer is entitled to market price of converted goods as damages, subject only to the rules as to limitations based on remoteness of damage

Facts

The plaintiff/respondent is a customer of the defen-dant/appellant. By virtue of a letter dated the 20th Decem-ber, 1963 and admitted as exhibit B the respondent did spe-cifically request the appellant to clear, from two ships vis s.s. “Shomron” and s.s. “Tidra” certain goods from the Cus-toms Department for him and at his expense. The respondent alleged that there was a custom between him as customer and the appellant as bankers whereby at the respondent’s re-quest the appellant would comply with the respondent’s in-structions and debit the respondent with all the costs and ex-penses of such clearance. The appellant eventually cleared the goods ex-Tidra but belatedly cleared the goods ex-Shomron into appellant’s stores at a time when the goods had incurred considerable amount of rent and other charges. The appellant insisted that the respondent should pay the Nigerian Ports Authority rents and charges as well as the costs of the goods before they would release the goods to the respondent. The respondent brought this suit with alternative claims for either delivery of the seized goods or damages for



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the sum of £13,725.1s.8d being general and special damages in detinue. However, it was revealed at the trial that the ap-pellant had sold the goods in dispute thereby effectively de-feating the enforcement of a possible court order for delivery of the goods to the respondent. Consequently, the trial pro-ceeded with the concurrence of both parties that a conver-sion had taken place. The appellant denied that there was any such custom as alleged by the respondent especially on the ground that such a custom as alleged by the respondent was in contravention of the bank’s regulations. The appel-lant also denied any liability to the respondent. The Supreme Court affirmed the decision of the trial court.

Held –

1. That the respondent has by preponderance (or weight) of evidence, established the existence of a custom between the parties whereby the banker would act as an agent of the customer and that the trial court was perfectly justi-fied in the view it took of the probative value of the evi-dence before it.

2. That the appellant is liable in damages for conversion for the market price of the goods which is all that the loss of the goods meant to the plaintiff subject only to the rules as limitations based on remoteness of damages.

Appeal dismissed.

Obiter

“The plaintiff (respondent) would have been entitled in the event of his succeeding on this claim to an order for delivery to him of the goods. See Eberle’s Hotel and Restaurant Co Ltd v. Jones and Bros (1887) 18 Q.B.D. 459.”


Nigerian

Ezeani v. Ejidike (1964) 1 All N.L.R. 402



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Foreign

Eberle’s Hotel and Restaurant Co Ltd v. Jones and Bros (1887) 18 Q.B.D. 459 Gallagher v. Shilcock (1949) 2 K.B. 765

Counsel For the appellant: Bentley

For the respondent: Cole

Judgment

COKER JSC: (Delivering the judgment of the court) The ap-pellants, the Bank of West Africa Limited, now Standard Bank Nigeria Limited, were the defendants in an action in-stituted in the High Court, Lagos, whereby the plaintiff, now respondents, claimed as follows:–

“The plaintiff’s claim against the defendant is for the delivery of the plaintiff’s cartons of rubber sponge sheets Nos. 71/22, 71/23, 71/24, 71/25 and 71/26 in the custody of the defendants which the defendants have refused to deliver.

Or in the alternative the plaintiff claims the sum of £13,725.1s.8d being general and special damages for the unlawful detention of the said goods since the 25th of February, 1964.”

Pleadings were ordered to be delivered and were duly deliv-ered.

The plaintiff’s statement of claim averred in substance that:– “(i) the defendants were the bankers of the plaintiff; (ii) there was a custom between them whereby the plaintiff

would request the defendant to clear his goods from the customs for him and at his expense and the defendant would comply with those instructions and debit the plain-tiff with all the cost and expenses of such clearance;

(iii) the plaintiff had on the 20th December, 1963, requested the defendant to clear on his behalf from the Customs two consignment of goods consigned to him by:

(a) s.s ‘Shomron,’ and (b) s.s ‘Tidra’;

[1967 – 1975] 2 N.B.L.R. (SUPREME COURT OF NIGERIA) Coker JSC


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(iv) the defendants eventually cleared the goods ex ‘Tidra’ but have failed and/or refused to clear those ex ‘Shomron’;

(v) the defendants later cleared the said goods ex ‘Shomron’ into their stores but not until the goods had incurred a con-siderable amount of rent and other charges;

(vi) the defendants now insisted that they would not release the goods to the plaintiff unless and until he paid the Nigerian Ports Authority rents and charges as well as the cost of the goods.”

On the other hand, the statement of defence denied liability to the plaintiff as alleged or at all and in effect averred that:–

“(i) the defendants were unaware of any custom as alleged by the plaintiff since in any case such a custom would have been in contravention of the bank’s regulations;

(ii) the plaintiff did not request them to clear the goods on his behalf by letter on the 20th December, 1963;

(iii) they did clear the goods ex ‘Tidra’ on the arrival of the ship;

(iv) they did not clear the goods ex ‘Shomron’ on the instruc-tions of the plaintiff but did so eventually on the instruc-tions of their own principals; and

(v) they did and do still require the plaintiff to pay the cost of, and all charges and rents on the goods before they could be released to him.”

At the trial the plaintiff gave evidence and called three other witnesses to support the averments in the statements of claim. The defence called four witnesses in support of the allegations in their statement of defence. In the course of a reserved judgment, Omololu J acceded to the claims of the plaintiff and gave judgment to him awarding him damages in the total amount of £9,399.15s. On the issue of the custom alleged by the plaintiff, the learned trial Judge found as fol-lows:–

“I have carefully examined the evidence and I must say at once that formidable as the witnesses for the defence are none of them was categorical in telling me that there was no room for the prac-tice alleged by the plaintiff . . . I believe the evidence of the plain-tiff and his witnesses that there was a custom and practice in the


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way the plaintiff had alleged . . . I find sufficient evidence to sub-stantiate the special arrangements alleged by the plaintiff . . . I find as a fact that the plaintiff was under the impression that the defendants had acted on his instructions and had cleared and stored the goods for him.”

The learned trial Judge also found as a fact that contrary to the contention of the defendants on their pleadings but con-sistent with the evidence of some of the defence witnesses, the plaintiff did specifically request the defendants to clear the goods in question by virtue of a letter from him to the defendants dated the 20th December, 1963, and admitted in evidence as exhibit B.

On appeal before us it was contended on behalf of the de-fendants that the learned trial Judge should not have found on the evidence that the custom alleged by the plaintiff was proved. The argument overlooks the fact, that civil cases are proved by preponderance or weight of evidence. The learned trial Judge, as undoubtedly he was entitled to, had accepted the evidences of the plaintiff and witnesses on the point. He then rejected the evidence by which the defence had sought to counter the evidence which did not categorically deny the existence of the custom alleged by the plaintiff and in fact directly contradicted the denial of the defendants that they had got no instructions from the plaintiff to clear the goods for him.

We think that the learned trial Judge was perfectly justified in the view he took of the probative value of the evidence before him and on the question of liability we are in no doubt ourselves that the defendants have failed to show that the judgment was wrong.

It was however also argued for the defendants that the Judge was wrong to have awarded damages to the plaintiff on the basis of the gross profit he would have made on the goods when there was evidence that he would normally have incurred some expenses on the goods in the course of selling

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them. On the question of damages, in the course of his judgment the learned trial Judge had observed as follows:–

“I find that relying, on this custom and practice with the defen-dants, plaintiff was entitled to refuse to pay the extra cost in-curred by the negligence of the defendants and consequently he lost the goods of which the market price was £9,399.15s.0d. The defendants are liable for this loss.”

Touching on this point, there is evidence from the plaintiff to the following effect:–

“I would have sold goods for £9,399.15s.1d. It is out of the £9,399.15s.1d that I would pay the wages, rent, depreciation etc. Also tax, cost price.

Cost of the goods would be about £6,000 (with insurance etc.) I would have a profit of £3,500 out of which I would have to pay all the mortgages.”

This evidence was accepted by the learned trial Judge, thus although learned Counsel for the defendants elicited from the plaintiff the fact that he would have to pay some ex-penses on the sale of the goods, he failed to pursue the point further and so obtain the actual amount of those expenses. As originally put the claim of the plaintiff was in detinue with an alternative claim for damages. The plaintiff would have been entitled in the event of his succeeding on this claim to an order of delivery to him of the goods, see Eberle’s Hotels and Restaurant Co Ltd v. Jonas and Bros (1887) 18 Q.B.D. 459. We think that the argument of learned Counsel on behalf of the plaintiff that he would still have been liable to the consignors for the cost of the cost price of the goods or (as there was evidence of part-payment) whatever balance of it is still unpaid, is justified.

The evidence at the trial however revealed that in the meantime the defendants had sold the goods in dispute thereby making it impossible for themselves to deliver the goods to the plaintiff even if such an order were made. The trial therefore proceeded on the basis, to the knowledge and with the concurrence of both parties, that a conversion had taken place and that the defendants were no more able to


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deliver the goods which were once in their possession. In those circumstances the defendants would be liable in dam-ages for all that the loss of the goods meant to the plaintiff subject only to the rules as limitations based on remoteness of damages, see Gallagher v. Shilcock (1949) 2 K.B. 765: also Henry Ezeani v. Ejidike (1964) 1 All N.L.R. 402.

In the present case the acceptance of the plaintiff’s evi-dence coupled with the absence of evidence from the defen-dants challenging that, clearly entitled the Judge to base his assessment of the plaintiff’s damages on the material before him.

All the grounds of appeal argued on behalf of the defen-dants must fail. The appeal therefore fails and it is dis-missed. The appellant must pay the costs of the respondent fixed at 44 guineas.

Appeal dismissed.



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Carrara Marble Company Limited v Bolado Limited


GEORGE J


Banking – Bills of Exchange – Cheque – Negotiable instru-ment similar to cash – Action to enforce payment does not permit defence of set off or counterclaim

Facts

The plaintiff claimed against the defendant the total value of cheques drawn on the defendant payable to the plaintiff which was dishonoured.

The action was instituted by the plaintiff through the unde-fended list procedure to recover the total value of the cheques dishonoured by the defendant. The defendant claimed a total failure of consideration, while the plaintiff contended that the defendant cannot set up any defence of set off or counterclaim.

Held –

Where there is an action between the immediate parties to a bill of exchange, then in the ordinary way judgment should be given upon that bill of exchange as for cash aside, it is not to be held up by virtue of some counterclaim relating to the specific subject matter of the contract.



Foreign

Anglo Italian Bank v. Davies (1878) 38 L.T. 197 Brown, Shipley and Co Ltd v. Alica Hosiery Ltd (1966)

Lloyd’s 869


Carrara Marble Company Limited v. Bolado Limited 273

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James Lamont and Co Ltd v. Hyland Ltd (1950) 1 K.B. 555 Oscar Harris, Son Co v. Vallaman Co (1940) 1 All E.R.

185; (1940) 162 L.T. 212


Bill of Exchange Act, Cap 21 (Laws of the Federation of Nigeria and Lagos), section 73

Counsel For the plaintiffs: Chief Williams and Adejiare

For the defendants: Ladner

Judgment

GEORGE J: On the application of the plaintiffs, pursuant to Order III, rule 9 of the Supreme Court (Civil Procedure) Rules Laws of Nigeria, 1948, (Cap 211), this suit was en-tered for hearing in the undefended list for March 9th, 1970.

On March 4th, 1970 the defendant’s solicitor filed a notice of intention to defend supported by an affidavit sworn to by one Ado Ibadan, a director of the defendant company.

The plaintiff’s writ of the summons is specially endorsed as follows:– “1. The defendants drew upon the Martins Street branch of the

African Continental Bank Limited each of the three follow-ing cheques bearing dates shown in the first column for amounts shown in the second column payable to the plain-tiffs:

Date s. d. November 20th, 1969 1,000 0 0 December 15th, 1969 1,000 0 0 December 30th, 1969 1,410 15 3

2. The plaintiffs duly presented each of the said cheques through their own bankers, the Apapa Branch of the United Bank for Africa Limited, but each cheque was dishonoured by non payment.

3. The plaintiffs’ solicitor, by letter dated February 19th, 1970, gave due notice of the said dishonour to the defendants.

And the plaintiffs claim against the defendants as drawers the total sum of 3,410.15s.3d.”



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The plaintiffs exhibited the three dishonoured cheques re-ferred to in their statement of claim, and filed an affidavit sworn to by a clerk in the chambers of their solicitor, stating the facts complained of in their statement of claim.

The defendants, while admitting in their affidavit that the dishonoured cheques were drawn by them in favour of the plaintiffs, denied liability to honour them on the ground that no consideration was given for them.

Counsel for the plaintiffs urged this Court to refuse to grant the defendant leave to defend on the ground that they had no valid defence. His argument, stated syllogistically, is as follow:–

“A cheque is a bill of exchange, a bill of exchange has always been regarded as cash; there can therefore be no defence to the plaintiffs’ obtaining the cash given them by the defendant.”

Counsel for the defendants on the other hand contended that since there had been a total failure of consideration the defendants were entitled to defend the action.

The real point in issue is whether the defendants have filed a valid ground of defence to the action. In this respect, it is pertinent to note that Counsel for the defendants in the course of his address said that the defendants had filed an action claiming £5,000 in damages in Suit No. L.D. 133/70. It appears that Counsel for the defendants is in doubt as to whether the proper procedure is to counterclaim for the sum of £5,000 or to bring a cross-action, hence he has filed one. Nevertheless, he contended that since there has been a total failure of consideration the defendants were entitled to de-fend the action. He cited 3 Halsbury’s Laws of England (3ed), at 177, which reads:–

“Where the consideration for which a party signed a bill or note consists of a definite sum of money or of something the value of which is definitely ascertained in money, and it was either origi-nally absent in part or has subsequently failed in part, the sum which a holder standing in immediate relation to such party is en-titled to receive from him, is pro tanto reduced. But a remote


George J

Carrara Marble Company Limited v. Bolado Limited 275

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party who has given value for the instrument may be entitled to receive payment in full.”

The above passage does not, in my view, support the conten-tion of Counsel that he is entitled to be granted leave to defend; his claim for a set-off is for labour and materials, amounts which are not definite in value. Apart from this, the authority cited by the learned authors of Halsbury’s for this proposition, Oscar Harris, Son and Co v. Vallarman and Co (2), does not support the proposition of the authors themselves.

Counsel for the plaintiffs drew my attention to the case of James Lamont and Co Ltd v. Hyland Ltd (3), which was ap-proved in the recent case of Brown, Shipley and Co Ltd v. Alicia Hosiery Ltd (1). The position is made clear in the judgment of Lord Denning MR where he says (1966) 1 Lloyd’s Rep. at 869):–

“For many years the courts of this country have treated bills of ex-change as cash. In James Lamont and Co Ltd v. Hyland Ltd (1950) 1 K.B. 585, this Court declared that where there is an ac-tion between the immediate parties to a bill of exchange, then in the ordinary way judgment should be given upon that bill of ex-change as for cash and it is not to be held up by virtue of some counterclaim which the defendant may assert, even, as in that case, a counterclaim relating o the specific subject-matter of the contract. Here the counterclaim is in relation to a different con-tract altogether from that which initiated the bills of exchange.

It seems to me, in following that case and refusing a stay of exe-cution, that Judge here was following the ordinary practice of the courts in bills of exchange matters. I do not say that there may not be some cases in which the court may in its discretion grant a stay of execution. I think it is possible, but, as Sir George Jessel MR said in an earlier case (Anglo Italian Bank v. Davies (1878) 38 L.T. 197) that is only in exceptional circumstances.”

It is thus clear from this judgment that a bill of exchange has always been regarded as cash in the hands of the holder. The defendants in this case issued three cheques to the plaintiffs. Our own Bills of Exchange Act (Cap 21) makes the position of a cheque quite clear in section 73, where it says:–

“A cheque is a bill of exchange drawn on a banker payable on



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demand. Except as otherwise provided in this Part, the provisions of this Act applicable to a bill of exchange payable upon demand apply to a cheque.”

By section 3 of the same Act a bill of exchange is defined as:– “. . . (A)n unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determin-able future time a sum certain in money to or to the order of a specified person, or to bearer.”

From the aforegoing it will be observed that when, as admit-ted by the defendants in paragraph 2 of their affidavit, they issued three cheques to the plaintiffs, they actually gave the plaintiffs bills of exchange which, in the judgment of Lord Denning MR should be interpreted as meaning cash in the hands of the plaintiffs. A set-off or counterclaim is not a de-fence to this action.

I am aware of the fact that Order III, rule 11 of the Su-preme Court (Civil Procedure) Rules (Cap 211) says that: “if the party served with the writ of summons and affidavit de-livers to the Registrar . . . notice in writing that he intends to defend the suit,” then the suit should be entered in the gen-eral list. This however, is subject to his filing an affidavit setting out the grounds of his defence. The defendants in this case have set out what they claim as their grounds of de-fence, but the grounds stated in their affidavit are not valid. In my view Order III, rule 11 does not mean that whenever a defendant delivers a ground of defence, however frivolous it may be, then he is entitled to defend. The defendants have given the plaintiffs what in the eye of the law is cash and it is no defence whatsoever to their obtaining that cash that there was no consideration.

The defendants are therefore refused leave to defend the action and judgment is entered for the plaintiffs in the sum of £3,410.15s.3d with costs assessed at 60 guineas. to the plaintiffs.

Judgment for the p1aintiff.


Eagle Line Ltd and others v. Att-Gen of the Fed and another 277

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Eagle Line Limited and others v Attorney–General of the Federation and another


TAYLOR CJ

Date of Judgment: 23 MARCH 1970 Suit No.: L.D. 339/69

Banking – Banker and customer relationship – Right of cus-tomer to deposit and withdraw funds in bank account – Freezing of account – Legality of – Need to give reasons for freezing

Banking – Freezing of account of customer – Bank examiner freezing account of company and officers – Power said to be exercised under section 2(2) of Banking Amendment Decree, 1966 – Validity of – Time limit for freeing – Effect of ex-ceeding period of three months

Banking – Freezing of account of customer – Justification for – Conditions precedent to exercise by bank examiner – Sections 1(1) and 2(2) of Banking Amendment decree, 1966

Facts

The first plaintiffs, the Eagle Line Limited and the second plaintiffs, the International Maritime Services (Nigeria) Limited, are shipping companies incorporated under the Companies Act and the third plaintiff, Mr LE Etim, is their managing director. It was agreed in 1968 that Messrs Eagle Lines Limited should ship a cargo of Nigerian produce per m.v. Danaos to Rotterdam, Marseilles, etc under a contract existing between first plaintiff and second defendants whereby first plaintiffs were to carry Nigerian produce to any port in the world. There was difficulty in obtaining for-eign exchange, first plaintiffs advised the second defendants to reimburse the shipowner and pay export expenses on the



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vessel m.v. Danaos at foreign ports. It was also agreed that the first plaintiffs would pay in Nigerian currency. It was later discovered that the accounts of the three plaintiffs had been frozen by the order of the bank examiner under sec-tions 1(1) and 2(2) of the Banking Amendment Decree, 1966, which empowered the banking examiner to make such an order if he is of the opinion that certain bodies of person having banking accounts are suspected of bribery, corrup-tion, extortion or abuse of office, but there was, however, no shred of evidence that the Eagle Line Limited or the Interna-tional Maritime Services are bodies or persons suspected of such malpractices as enumerated above.

The plaintiffs claimed that they have discharged their obli-gations to the second defendants under a contract, the per-formance of which was guaranteed by the African Continen-tal Bank Limited in a memorandum dated 29th November, 1968. They also claimed £500,000 each against the second defendants for unlawfully interfering or procuring the Fed-eral Ministry of Finance to interfere with the contracts be-tween each of their respective bankers.

The first defendant later pleaded that the court had no ju-risdiction to enquire as to whether the circumstances justi-fied the making of the said order which was purportedly made under the Banking Amendment Decree of 1966 and the second defendants, through their Counsel, submitted to the judgment with respect to the first claim of the plaintiffs that they have duly discharged their obligations to the sec-ond defendants under the contract.

Held –

1. It is the inherent right vested in any individual to deposit funds in any bank with which he may choose to do busi-ness to enter into all lawful contracts with such bank or banks; and as long as he has funds in such bank or an agreement with such bank, to supply him with funds in the absence of such funds in his own personal account, no one has any right to freeze his account or accounts



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with his bankers unless for reasons provided by law, statute, decree or edict.

In the instant case, the first defendant while admitting the freezing of the account of the three plaintiffs, no rea-son or justification is set up in the defence for such ac-tion in spite of the serious repercussions it obviously must have on the persons affected.

2. By section 2(2) of the Banking Amendment Decree, 1966, if a bank examiner is of the opinion that items in the accounts of a customer of a bank or in any of then confirm or tend to confirm the reasonable suspicion of the Head of the Federal Military Government, he may by the same or any judgment order direct the manager to stop all untoward payments, operations or transactions in the account. By section 1(1), reasonable suspicion of the Head of the Federal Military Government will be aroused where the account of persons with any bank are such as may involve the offences of bribery, corruption, extortion or abuse of office.

3. Even if the Banking Amendment Decree, 1966 were ap-plicable to freeze the accounts of two shipping compa-nies and the personal account of the Managing Director of those companies, it can under no stretch of the imagi-nation be said to be steps taken within section 2(2), of the Banking Amendment Decree, 1966.

4. By virtue of section 2(2), Banking Amendment Decree, 1966, the powers contained therein are to be exercised for a period “not exceeding three months” whereas on the unchallenged evidence in this case, the accounts had been frozen since July/October, 1968 – roughly one and a half years to the date of conclusion of the hearing.

5. From the wording of the Banking Amendment Decree, 1966 and its whole tenor, the obvious intention is that a person who is reasonably suspected of offences involv-ing bribery, corruption, extortion or abuse of office shall



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be allowed some small sums from his account from time to time pending investigation into his accounts.

In the instant case, exhibits F, G and H contain the word “nil” which means no withdrawal is to be made at all. This is contrary to Form 2 where the words “here state the amount of £50 or less” is clearly stated.

6. The bank examiner has assumed the power to amend or alter the provisions of the decree outside the normal pro-visions of the law. Both the form and the decree specifi-cally provide that the order contained in paragraph 2 is to have a limited effect only, not exceeding three months but the bank examiner has in his wisdom inserted the words “until further notice” thereby lengthening the pe-riod as already stated in an earlier part of this judgment.

It is really difficult to believe that there could be such a complete disregard for the provisions of the law as has taken place in the circumstances of this case. How there-fore can any one sensibly argue that the bank examiner was acting within or had done everything “in pursuance of this Decree.”

Plaintiffs’ claim partially succeeded.


Foreign

Anisminic v. Foreign Compensation Commission (1969) 2 W.L.R. 16 Birmingham and Midlands Omnibus Co Ltd v. Worcester-

shire Country Council (1967) 1 W.L.R. Huntley v. Thornton and others (1957) 1 All E.R. 234 Lumley v. Gye 1853 2 E. and B. 216 Quin v. Leathem ( 1901) A.C. 495 Smith v. East Elloe Rural District Council and others (1956)

A.C. 736. Torquay Hotel Co Ltd v. Cousins (1969) 2 W.L.R. 289 White v. Riley 1921 1 Ch. 1



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Halsbury’s Laws of England, Volume 37 (3ed), page 124

Stroud’s Judical Dictionary

Counsel

For the plaintiffs: Williams

For the first defendant: Worrey

For the second defendant: Adeduro

Judgment TAYLOR CJ: The plaintiffs in their writs filed on the 9th July, 1969, claim certain declaratory orders and consequen-tial orders against the defendants in the first part of the claim and £500,000 each against the second defendants only for unlawfully interfering or procuring the Federal Ministry of Finance to interfere in the contracts between the said plain-tiffs and their respective bankers.

During the address of learned Counsel, Mr Lardne for the second defendants submitted to judgment against the second defendants on the first sub-paragraph of the first claim which reads thus:–

“The plaintiffs’ claim against the defendants jointly and sever-ally:–

(i) a declaration that the first plaintiffs have duly discharged their obligations to the second defendants under a contract the per-formance of which was guaranteed by the African Continental Bank Limited in a memorandum dated 29th November, 1968.”

It seems to me that if judgment goes against the second de-fendants between whom the plaintiffs’ contractual obliga-tions arise, the first defendant cannot be heard to the con-trary, being a third party.

In spite of this submission to judgment on that head, it is still necessary to go into the facts of the case in order to de-termine the claims in sub-paragraphs (ii) and (iv) as well as the claim for damages brought only against the second de-fendants.


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The Eagle Line Limited and the International Maritime Services (Nig) Limited are shipping companies incorporated under the Companies Act and the third plaintiff, Mr LE Etim, is their Managing Director. The Eagle Line Limited is a subsidiary of the International Maritime Services (Nigeria) Limited. It is agreed because it is not contested that in 1968 Messrs Eagle Line Limited shipped a cargo of Nigerian pro-duce per m.v. Danaos to Rotterdam, Marseilles, etc. A dis-pute arose because no foreign exchange was arranged by the Central Bank or Ministry of Finance. A contract existed be-tween first plaintiff and the second defendant whereby first plaintiffs was to carry Nigerian produce to any port in the world.

When there was difficulty of obtaining foreign exchange first plaintiffs advised second defendant to arrange to reim-burse the ship owner and pay port expenses on the vessel m.v. Danaos at foreign ports and the first plaintiffs would pay the second defendants locally in Nigerian currency. The sum due to the owners of m.v. Danaos was £13,000. The shipowners claimed a sum of £33,700 sterling together with port expenses.

Sometime between July and October, 1968, the third plain-tiff noticed that the accounts of all three plaintiffs were blocked. Various letters passed between the parties to this action but up to the close of evidence the accounts of the plaintiffs remained frozen and no explanation has been given or advanced at the hearing for this step. Evidence of this blockage of the plaintiffs’ accounts was given by wit-nesses who were cross-examined by the defendants to wit, plaintiff’s witness 2 George Emecheta of the African Conti-nental Bank, plaintiff’s witness 3 Geoffrey Hall of the Stan-dard Bank, Marina, Lagos and plaintiff’s witness 4 Ronald Corden of the United Bank For Africa, Marina Lagos.

The first defendant does not deny this in his statement of defence paragraph 4 which states that:–

“With further reference to paragraph 5 of the statement of claim,


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the first defendant admits that the banking examiner issued direc-tives to commercial banks with whom the plaintiffs and each of them have dealings to freeze their accounts but deny the repre-sentations were made to the Ministry of Finance by the second defendants.”

Further to this paragraph 7 of the statement of defence avers that:–

“The first defendant admits that there was a meeting at which the first plaintiff was asked to produce a guarantee as pleaded in paragraph 10 of the statement of claim, but denies that there was any agreement to defreeze the account of the plaintiffs upon the production of the said guarantee or at all.”

Before making any further enquiries as to the facts led in proof of the plaintiffs’ case it would be of great assistance and would have the effect of abbreviating a judgment that might otherwise be lengthy, if any enquiry is directed at the reasons for the stoppage of the plaintiffs’ accounts and their justification. I like to believe that I am in order in saying that it is an inherent right vested in any individual to deposit funds in any bank with which he may chose to do business: to enter into all lawful contracts with such bank or banks, and as long as he has funds in such bank or an agreement with such bank to supply him with funds in the absence of such funds in his own personal account, no one has the right to freeze his account or accounts with his bankers unless for reasons provided by law, statute, decree or edict. It is there-fore most surprising to find in the statement of defence of the first defendant that while the freezing of the accounts of the three plaintiffs are admitted, no reason or justification is set up in the defence for such action in spite of the serious repercussions it obviously must have had on the persons af-fected.

Some two months after filing of the statement of defence a motion was filed by the solicitor acting for the first defen-dant asking to add a new paragraph to the statement of de-fence to read:– “11A. The first defendant will contend that this Court has no


Taylor CJ


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jurisdiction to justify whether the circumstances justifies the making of the said order, direction or requirement.”

During the course of Counsel’s address it was evident that this was to form the defence of the first defendant. It would therefore be a wise course of action to turn to that defence for if successful, it would dispose of this case. If unsuccess-ful, and in view of the absence of any other real defence in the statement of defence of the first defendant, coupled with the submission of the second defendant to judgment as aforesaid, the only matter for consideration would be the claim for damages against the latter.

Mrs Isikalu submitted that all the plaintiffs had done was to show that the orders were made in bad faith but that no evidence was adduced to show it was an ultra vires order, that whereas a court may enquire into an ultra vires act, the court had no jurisdiction even if the order was made in bad faith. In this respect my attention was drawn to the Banking Amendment Decree, 1966, and reliance was placed on sec-tion 2(2) and section 4(1). I shall first of all make reference to section 2(2) which reads thus:–

“If a bank examiner is of opinion that items in the accounts or in any of them confirm or tend to confirm the reasonable suspicion of the Head of the Federal Military Government, he may by the same or any subsequent order direct the manager to stop all out-ward payments, operations or transactions (including any bill of exchange) of amounts in any one banking day and at intervals of not less than one week, not exceeding fifty pounds or such lesser amount on any one banking day as a bank examiner may approve in respect of a particular account in the accounts or in any par-ticular account in the ordinary course of banking and in any other case the prior approval in writing of the bank examiner shall be required. Where any such direction is given it shall have effect for a period mentioned in the order not exceeding three months unless sooner reduced by order of a bank examiner in writing.”

The first and most important point on which attention should be focused is that contained in the first few lines, which empower a bank examiner to take certain steps if he “is of the opinion that items in the account . . . confirm or tend to confirm


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the reasonable suspicion of the Head of the Federal Military Government . . .” Now under what circumstances is the rea-sonable suspicion of the Head of the Federal Military Gov-ernment aroused? The answer to this will be found in sec-tion 1(1) of the decree which states inter alia, that:–

“Where the Head of the Federal Military Government has reason-able cause to suspect that transactions, whether before or after the commencement of this decree, in the accounts of persons (herein referred to as the accounts) with the bank are as may involve the offences of bribery, corruption, extortion or abuse of office . . .”

There is no allegation whatever or any shred of evidence that the Eagle Line Limited, or the International Maritime Services (Nigeria) Limited or Mr LE Etim are bodies or a persons suspected of bribery, corruption, extortion or abuse of office against whom the Head of the Federal Military Government has directed the issues of orders addressed to their bank manager for the purposes of investigating their accounts. This Decree is therefore not relevant to the case before me. I will go further and point out that even if it were applicable, to freeze the accounts of two shipping companies and the personal account of the Managing Director of those shipping companies, can under no stretch of the imagination be said to be steps taken within section 2(2). By virtue of this section such powers contained therein are to be exer-cised for a period “not exceeding three months,” whereas on the evidence unchallenged before me the accounts have been frozen since July/October, 1968 – roughly one and a half years to the date of conclusion of the hearing.

Reliance was further placed as I have said before on sec-tion 4 which states that:–

“The question whether any provision of Chapter III of the Consti-tution of the Federation has been, is being, or would be contra-vened by anything done in pursuance of this decree shall not be enquired into by any court of law, and accordingly Sections 32, 115 and 117(2)(d) of that Constitution shall not apply in relation to any such question; and no court or person shall be concerned to enquire whether the circumstances justify any order, direction or requirement under this decree.”


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Chapter III of the Constitution is of course the chapter dealing with fundamental rights. I am aware of the statement con-tained in the earlier part of this judgment as I am of the fact that exhibits F, G, and H purport to be actions taken by the bank examiner under section 2 of the Banking Amendment Decree, 1966. On the question of jurisdiction of the court my attention was drawn by Mrs Isikalu, learned Counsel for the first defendant, to the cases of Smith v. East Elloe Rural Dis-trict Council and others (1) and Birmingham and Midlands Omnibus Co Ltd v. Worcester County Council (2). The for-mer case was considered by the House of Lords in the latter case of Anisminic v. Foreign Compensation Commission (3) to which reference was made by Chief Williams for the plain-tiffs. The other case of Birmingham and Midland Omnibus Co Ltd (2) in my view is of no assistance to the case of the second defendant. It seems to me that the only passage in the judgment of the Court of Appeal which might have a bearing on the matter now before me will be found in the judgment of Winn LJ, at page 422 where he said that:–

“In my opinion, one test, which to my limited experience usually proves to be a decisive test, of whether or not a purported exer-cise of a statutory power is within or without the power, so as to be intra or ultra vires, is to ask whether or not the person purport-ing to exercise that power can, applying the ordinary test of the reasonable juror, have rationally believed that he was exercising power for the purpose for which Parliament expressly granted that power.”

With this view as to reasonableness Lord Denning MR at page 423 agreed. The same view is stated in Stroud’s Judi-cial Dictionary in which reference is made to several cases at page 244 where it is said that:–

“. . . accordingly it is held that if any public or private body or per-son charged with the execution of an Act of Parliament, or of any public duty or authority, honestly intends to put the law in motion and really and not unreasonably believes in the existence of facts, which, if existent would justify his acting and acts accordingly, his conduct will be ‘in pursuance’ or ‘under or by virtue’ of the statute under which he believes he is acting, although he errs in such belief.”


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The quotation, however, goes on in these words that:–

“. . . but the presence or absence of such reasonable ground can only be relied on for the purpose of determining whether the be-lief was bona fide or not . . .”

So that pausing there for a moment and considering this point, can one say, applying the test of the reasonable juror, that the freezing of the account of the three plaintiffs or any of them for a period of one and a half years or more in the face of the decree which provided a maximum of three months, is the action of a man reasonably believing he was acting under the decree? When one looks further at exhibits F, G and H, one finds the following facts which go to show quite conclusively the arbitrary action taken by the bank ex-aminer in this matter and which are wholly and completely out of tenor with the provisions of the decree.

The first point to note is that the form used is Form 2 in exhibits F, G, and H and it is headed “Supplementary Or-der.” The use to which Form 2 is to be put is contained in the Banking Amendment decree and it reads thus:–

“A bank examiner, after production to the manager of his author-ity, shall consider the record furnished by the bank and may, if he thinks fit thereafter by supplementary order in the Form 2 in the Schedule to this decree direct the manager to give to him further information and produce books or documents relating to particu-lar items in the record of any of the accounts; and the manager shall furnish such information within an agreed time or, if no time is agreed, then within three days after the date of the order.”

The obvious object of this section and the form to be used is that this is supplementary to Form 1. Form 1 is an order by the bank examiner to the manager of the bank for a report on the accounts of the person or persons to be investigated and this is made clear by section 1(2) of the Decree. It is after the bank examiner has “considered the record furnished by the bank,” that he may or may not issue Form 2 requesting further information and production of further books. In the present case there is no evidence whatsoever that Form 1


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was ever made use of by the bank examiner. In fact the evi-dence, such as it was points to the negative.

Putting that aside for the moment, let us look at the use to which Form 2 was put, bearing in mind what I have called from section 2(1), that it is intended to be used for calling on the manager to produce further records or evidence. Exhib-its F, G and H read, inter alia:–

“To the manager . . .

Under the authority conferred on me by section 2 of the Banking Amendment Decree, 1966, you are hereby ordered:–

(a) to supply the following information relating to the un-der mentioned accounts, that is to say:

NIL

(b) to produce the books and documents relating to the un-der mentioned accounts, that is to say:

NIL

(c) to stop all outward payments, operations or transactions (including bills of exchange ) as far as possible in the ordinary course of banking in respect of the following accounts:

1. Mr Lawrence E. Etim

2. Eagle Line Limited

3. International Maritime Services Limited.”

Pausing there for a moment, it will be seen that in addition to the fact that no report as asked for was required by Form 1; in Form 2 no further information was sought. This dero-gation from the provision of the Decree is but minor when compared with the further violation contained in the latter parts of exhibits F, G and H, which reads thus:–

“2. Nothing in this order shall prevent any amount of transactions submitted to and approved by the bank examiner, or the with-drawal without such approval on any one banking day or thereafter at intervals of not less than one week of amounts not exceeding at any one time . . .”

In Form 2 we find the words “here state the amount of £50 or less” but in exhibit F, G and H we find the word NIL.


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From the wording of the Decree and from its whole tenor the obvious intention is that a person who is reasonably sus-pected of offences involving bribery, corruption, extortion or abuse of office shall be allowed some small sums from his account from time to time pending investigations into his accounts. Hence the insertion of the words “£50 or less” as well as the wording of section 2(2) to which I have already alluded which empowers the bank examiner to direct the manager “to stop all outward payments, operations or trans-actions of amounts in any one banking day and at intervals of not less than one week, not exceeding fifty pounds or such lesser amount . . .” I do not think it is necessary for me to refresh my diction by any definition of what is a lesser amount. Nil is no amount at all.

Finally, and again showing the bank examiner’s complete disregard for the provisions of the very banking decree by which he is bound, exhibits F, G and H continue in para-graph 3 as follows:–

“This order shall cease to have effect until further notice.”

The bank examiner has here assumed the power to amend or alter the provisions of the law. Both the form and the decree specifically provide that the order contained in paragraph 2 is to have a limited effect not exceeding three months but the bank examiner has in his wisdom inserted the words “until further notice” thereby lengthening the period as already stated in an earlier part of this judgment.

It is difficult to believe that there could be such a complete disregard for the provisions of the law as has taken place in the circumstances of this case. How therefore can any one sensibly argue that the bank examiner was acting within or had done everything “in pursuance of this Decree.” He had acted from start to finish wholly outside the provisions of this decree and not in pursuance of it.

Although this is outside the scope of this particular case it is nevertheless of assistance on the particular point under


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consideration and I hope also to those who purport to act under this Decree. It is provided in section 2(3) of this De-cree that:–

“The bank examiner investigating the accounts shall forthwith re-port his findings to the Permanent Secretary, Federal Ministry of Finance; and if the report confirms or tend to confirm the reason-able suspicion of the Head of the Federal Government, the bank examiner shall at the same time deliver a copy of the report to the Director of Public Prosecutions in the locality where the accounts were investigated and the Director of Public Prosecutions shall thereafter take such actions as appear to him necessary.”

Now how can the bank examiner make or deliver a copy of the report when he has neither acted under Form 1 nor re-quested further evidence under Form 2 but has merely pro-ceeded to stop the accounts of the plaintiffs for an indefinite period of time. Section 2(3) emphatically states that he shall do so “forthwith.” Be it noted that this subsection follows immediately after section 2(2) which makes the order in Form 2 valid for only three months at the most.

I would, in bringing the judgment on the first part of the claim to an end, quote from the judgment delivered by Lord Pearce in the case of Anisminic v. Foreign Compensation Commission (3) at 191 where the learned law Lord said that:–

“My Lords, the courts have a general jurisdiction over the admini-stration of justice in this country. From time to time Parliament sets up special tribunals to deal with special matters and gives them jurisdiction to decide those matters without any appeal to the courts. When this happens the courts cannot hear appeals from such a tribunal or substitute their own view on any matters which have been specifically committed by Parliament to the tri-bunal.

Such tribunals must, however, confine themselves within the powers specially committed to them on a true construction of the relevant Acts of Parliament. It would lead to an absurd situation if a tribunal having given a circumscribed area of inquiry, carved out from the general jurisdiction of the courts, were entitled of its own motion to extend that area by misconstruing the limits of its mandate to inquiry and decide as set out in Act of Parliament.”


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For those reasons and in view of the submission to judgment of the second defendant in the first sub-paragraph of para-graph 1 of the claim, the plaintiffs are entitled to succeed on such paragraphs I to IV of the said paragraphs.

I now turn to the claim for damages which reads thus:–

“The first and third plaintiffs each claim £500,000 damages against the second defendants for unlawfully interfering or pro-curing the Federal Ministry of Finance to interfere with the con-tracts between the said plaintiffs and their respective bankers.”

In their statement of claim the plaintiffs plead in paragraph 5(a), that:–

“Without producing the full bills and or vouchers referred to in paragraph 4(b) hereof and without demanding payment of the sum of £33,700 sterling aforesaid, the second defendants made representations to the Federal Ministry of Finance who in turn caused the banking examiner of the Central Bank of Nigeria to is-sue directives to commercial banks with whom the plaintiffs and each of them deal to ‘freeze’ their accounts as hereinafter ex-plained.”

On this issue it is Chief Williams’ argument if a person rec-ommends to another or influences that other or persuades him to do something lawful and which at the same time amounts to interference with a contract existing between two contract-ing parties then the person interfering and the person influ-encing him are equally liable. The position or allegation in the case before me can be put a little more clearly by employing the use of the letters of the alphabet. The plaintiffs’ case is that a contract exists between A (plaintiffs) and B (plaintiffs’ bankers) and that C the second defendants have persuaded D, the first defendant, to interfere with the contract between A and B by freezing the accounts of A in B’s bank.

Chief Williams argues that qui facit per alium facit per se but one may very well ask whether it is not equally true that nemo potest facere per alium, quod per se non potest.

I do not for one moment doubt the correctness of the au-thorities to which my attention was drawn by Chief Williams


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and particularly to the statement where it is stated that:–

“The principles of Lumley v. Gye (5) is that each of the parties to a contract has a right to the performance of it: and it is wrong for another person to procure one of the parties to break it or not to perform it. That principle was extended one step further by Lord Macnaughten in Qunn v. Leathem (6) so that each of the parties has a right to have his contractual relations with the other duly observed. ‘It is,’ he said at page 510, ‘a violation of legal right to interfere with contractual relations recognised by law if there be no sufficient justification for the interference . . .’ The time has come when the principle should further extended to cover delib-erate and direct interference with the execution of a contract without that causing any breach.”

Lord Denning then went on to state the three elements that must exist. The first is that:–

“. . . There must be interference in the execution of a contract. The interference is not confined to the procurement of a breach of contract. It extends to a case where a third person prevents or hinders one party from performing his contract, even though it be not a breach.”

But I cannot see how these cases or any of them can be brought within the facts of the present case. The first defen-dant or the banking examiner interfered in the contract be-tween the plaintiffs and their bankers by the wrongful use made by him of the Banking Decree and thereby instructed the plaintiffs’ bankers not, in effect, to honour their contract with the plaintiffs.

The doctrine of qui facit per alium is said to be the general doctrine upon which the law relative to the rights and liabili-ties of principal and agent depended. Can it in any way be said in the circumstances under construction that any such relationship existed between the banks examiners and the second defendant? I think not. Then again, I would have thought that an essential ingredient of the doctrine is that the person to be charged with the action of the other must be able and capable of doing that which the other has done and for which he is in law to be made responsible. Hence the


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latin maxim I have earlier cited that nemo potest facere per alium, quod per se non potest. In the particular circum-stances of this case the bank examiner has purported to act under decree which empowers him to do certain things, but to do them only, and I repeat only on the orders of the Head of the Federal Military Government as contained in section 1(1) of the decree. He cannot under any circumstances be procured to use these powers by the second defendant.

The case of Torquay Hotel Co Ltd v. Cousins and others (4) a case dealing with trade unions and the effect of black-listing, is not really of much assistance for there the act which caused the damage or brought about the breach of contract was through the actual interference by the defen-dant union. The majority of cases to which reference is made in the report deal with trade unions, strikes, etc. The law as to interference with contractual relations or inducement to commit a breach of contract is tersely stated in Halsbury’s Laws of England, Volume 37, (3ed) at page 124 as follows:–

“When one person by means legal or illegal in themselves induces a second person to commit a breach of contract against a third person whereby that third person suffers damage, the first com-mits a wrong actionable at the suit of the third person unless such inducing is justifiable.”

This definition perfectly fits the case of the bank examiner inducing or ordering or compelling the banks (a second per-son) to commit a breach of their contract against the plain-tiffs (third persons) but it does not fit a case where the pre-sent second defendants are sued for representations made to the bank examiner as a result of or in consequence of which the bank examiner compels the bank to break its contract with the plaintiffs. Particularly where the question of the bank examiner being the agent of the second defendants cannot by any stretch of the imagination be said to exist. A more true construction would be the other way round, ie that the Nigerian Produce Marketing Co Limited, is subordinate to the Ministry of Finance.


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Different considerations may have applied if the action were framed in such a way as to come under the tort of con-spiracy to interfere with contractual relationship, ie a con-spiracy between the second defendant and the Ministry of Finance and the bank examiner. The learned author of the same legal work says at page 129 under the heading “Con-spiracy to interfere with contractual relations” that:–

“To interfere with contractual relations recognised by law if there is no sufficient justification for the interference is a violation of a legal right, and if done knowingly, is an unlawful act accordingly a conspiracy to procure breaches of contract is actionable.”

In such circumstance the act of each alleged conspirator would have to be examined and the words of Harman J in Huntley v. Thornton and others (7) at 251 would be perti-nent where he said:–

“On this subject also see White v. Riley (8) hereafter more particu-larly to be mentioned. If then all that Thornton or Langford did was to inform the employers that the continued employment of the plaintiff would have untoward results they did no more than they were entitled to do.”

It is important to note in the case before me that the letter, exhibit QQ, from the Deputy Inspector–General of Police to the bank examiner directing them to freeze the accounts only said so with respect to the accounts of the first and third plaintiffs only. Coupled with this is the evidence of Mr Na-than Marsh for the second defendant which I accept on this point that they, the second defendant company were dealing only with the first plaintiff. How then can it be said that they induced the breach of any contract between the second and third plaintiffs and their bankers?

Further Mr Nathan Marsh has said and it seems most obvi-ous to me that the steps taken by the Ministry of Finance and the bank examiner were not in the interest of the second de-fendant because the first plaintiffs with whom they deal are substantial customers. They carried substantial produce for the second defendants and the freezing of their accounts would and inevitably must lead to their inability to do future


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business with the second defendants not to mention a failure to meet up with any contract outstanding at the time the ac-count was “frozen.”

As I have previously noted, exhibits F, G, and H are dated the 7th November, 1968, and they tally with exhibit QQ, the letter to the bank examiner by the Deputy Inspector–General of Police. Chief Williams’ case on this point is used mainly on the documentary evidence tendered. Particular emphasis is placed on exhibit EE which is the only documentary evi-dence bearing a date previous to the 7th November 1968, and written by the defendant to the Ministry of Finance on this point. I have read through this letter and do not intend to reproduce it in this judgment. Suffice it to say that I can find nothing in this letter which amounts to inducing or procuring or even suggesting to the Ministry of Finance that the letter should compel the bank or all banks to dishonour their obli-gations to any or all of the plaintiffs.

For reasons which Chief Williams has put before the court, they have not joined the first defendant in their claim for damages. Whether he is correct in those views or not I am not here asked to rule, but suffice it to say that the damage caused the plaintiffs, and I have no doubt such damage is substantial, cause and caused solely by the erroneous and arbitrary use made by the defendant representing Ministry of Finance and the bank examiner, of the Banking Amendment Act.

For these reasons therefore the claim for damages against the second defendant must fail. I should further like to re-cord that I accept the explanation of the statement of Mr Na-than Marsh that his company is duty bound to inform the Nigerian Government or Ministry of Finance where any transaction is going to affect or disturb the earnings abroad in any foreign currency of the second defendant company, and that the Government had an interest in the cargo on board the m.v. Danaos valued at £228,400.13.1.


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The claim on the first head however succeeds in its entirety and I hereby declare:–

1. That the first plaintiffs have duly discharged their obli-gations to the second defendant under the contract, the performance of which was guaranteed by the African Continental Bank Limited in a memorandum dated 29th November,1968.

2. That all directives and particularly exhibits F, G and H stopping all outward payments, operations or transac-tions by the plaintiffs with their bankers are illegal and void.

I therefore order:–

1. that the directives aforesaid and contained in the second declaration be set aside.

2. that the first defendant and or his agents and servants, in the capacityin which he is sued as the representative of the Federal Military Government and with particular ref-erence to the Ministry of Finance and the bank examiner be and are hereby restrained from further action taken in respect of exhibits F, G and H and all directives in the matter.

I shall hear the parties on costs.

Plaintiff’s claim partially succeeded.


Ayuba v. Ogunleye and others 297

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Ayuba v. Ogunleye and others


BAKARE J


Banking – Suspense account – Meaning of – Money in sus-pense account – Whether attachable under a garnishee or-der

Exchange Control – Exchange Control Act, 1962 – Ex-change control permit – Absence of – Effect thereof on money deposited in the absence of such permit

Facts

The plaintiff/judgment creditor obtained judgment against the defendants for the sum of £1,250 with 70 guineas costs on 1st December, 1969. The judgment debt being wholly unsatisfied, the plaintiff/judgment creditor obtained a gar-nishee order nisi against the bank of America Inc (hereinaf-ter called the “garnishee”) banker to the judgment debtor. At the hearing, it was admitted by Counsel for the garnishee that a sum of £1,048.5s.0d. Stands deposited in the suspense account of the garnishee by the defendants in favour of an Italian overseas firm, awaiting an exchange control permit to remit the money overseas. Learned Counsel for the plain-tiff/judgment creditor contended that the money in question in the suspense account of the garnishee could not validly be owned by the overseas Italian firm but by the judgment debtor as it is against the Exchange Control Act, 1962, No. 16, for a bank to put money in an account to the credit of a foreign firm or to place money to the credit of someone resident out of Nigeria in a Nigerian Bank without an ex-change control permit. The court construed the provisions of section 7(a) and (d) and section 28(1) of the Exchange Con-trol Act, 1962.



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Section 7 of the Exchange Control Act, 1962:–

“Except with the Permission of the Minister, no person shall do any of the following things in Nigeria, that is to say:

(a) Make any payment to or for the credit of a person resident outside Nigeria; or

(b) Place any sum to the credit of any person resident outside Nigeria.”

Section 28(1):

“It shall be an implied condition in any contract that where by vir-tue of this Act the permission or consent of the minister is at the time of the contract required for the performance of any term thereof that term shall not be performed except insofar as the permission or consent is given or is not required.”

Held –

1. That a suspense account is an account used by a bank to debit or credit items which cannot be passed at once into the account to which they ought to go.

2. That the usual practice of bankers where limited orders are issued in garnishee proceedings is to transfer the amount of the judgment debt and costs plus a round sum for possible garnishee costs from a current account to a suspense account to await the hearing, and to permit the current account to be carried on.

3. That the amount of £1,048.5s.0d in the suspense account of the garnishee at the date of service of the order law-fully belongs to the judgment debtors.

4. That the money standing in the suspense account of the garnishee to the credit of the Italian firm is illegally placed there in the absence of the permit under the Ex-change Control Act. The said amount being therefore the lawful money of the judgment debtors is attachable un-der the garnishee order nisi.

Order absolute granted.



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Foreign

Cummings v. London Bullion Co Ltd (1952) 1 K.B. 327; [1952] 1 All E.R. 383


Exchange Control Act, 1962, (No. 16), section 7 and section 28

Counsel

For the plaintiff: Chief Williams

For the defendants: Folarin

Judgment

BAKARE J: In this case an order nisi issued on 5th January, 1970 for service on the Bank of America Inc. (hereinafter called the “garnishee”) to show cause why an order should not be made upon it for the payment to the judgment creditor of the amount of the debt due and owing or accruing from the garnishee to the judgment debtors, or so much thereof as will satisfy the debt due to the judgment creditor.

Judgment was entered on December 1st, 1969 in favour of the judgment creditor against the judgment debtors, trading under the name and style of Egbado Trading Company, for the sum of £1,250 with 70 guineas costs. The judgment debt remains wholly unsatisfied.

On the return date of the order nisi, Counsel for the gar-nishee informed the court that the current account of the Eg-bado Trading Company is in the red, the account having been overdrawn.

At the instance of Counsel to the judgment creditor, a bank official was offered for examination. On the second day of the examination and before further evidence was led the fol-lowing admissions were made by Counsel for the garnishee:

1. That the sum of £1,048.5s.0d stands deposited in the

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF LAGOS STATE) Bakare J


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suspense account of the garnishee by the Egbado Trad-ing Company in favour of an Italian overseas firm.

2. That the said amount was deposited in favour of the Ital-ian firm on 12th September, 1968.

3. That on the signature card, the name of the first judg-ment debtor appears as the sole signatory of the account of the Eghado Trading Company.

4. That an exchange control permit to remit the money overseas has not been granted.

For the judgment debtors their Counsel admitted that they are both partners in the Egbado Trading Company, and that the first judgment debtor was authorised by a resolution of the firm to operate the firm’s account with the garnishee.

Upon these facts learned Counsel for the garnishee submit-ted, inter alia, that the order nisi did not correctly designate the judgment debtors, that only money in the current account of a judgment debtor can be attached under a garnishee or-der, and that money in a suspense account is not attachable.

Learned Counsel for the judgment creditor submitted that it is against the Exchange Control Act, 1962 (No. 16) for a bank to put money in an account to the credit of a foreign firm as it is also illegal under the said Act to place money to the credit of someone resident out of Nigeria in a Nigerian Bank without an exchange control permit. The consequence of this submission is that the money in question in the sus-pense account of the garnishee is not owned by the overseas Italian firm, and as it still belongs to the judgment debtors is attachable.

The admission by Counsel for the judgment debtors that the judgment debtors are partners in the Egbado Trading Company disposes of the submission that the order nisi did not correctly designate the judgment debtors.

While the submission is good that money in a current ac-count is attachable, none of the authorities cited by Counsel support her submission that money in any form of account


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cannot as a general rule be attached. Indeed, there is no di-rect or even persuasive authority in support of the submis-sion that money in a suspense account is not attachable. What is a suspense account? The term is explained in Thompson’s Dictionary of Banking (10ed) at page 605 as follows:–

“SUSPENSE ACCOUNT.

Items which, for one reason or another, cannot be passed at once into the account to which they ought to go, are, in the meantime, debited or credited, as the case may be, to a suspense account. A cheque which is sent direct by one bank to another for collection and payment over, is, in some banks, debited to such an account until advice of the payment is received.”

It has been explained that the usual practice of bankers where limited orders are issued in garnishee proceedings, is to transfer the amount of the judgment debt and costs plus a round sum for possible garnishee costs from current account to a suspense account to await the hearing, to permit the cur-rent account to be carried on.

Section 7(a) and (d) of the Exchange Control Act, 1962 provides as follows:–

“Except with the permission of the Minister, no person shall do any of the following things in Nigeria, that is to say:–

(a) make any payment to or for the credit of a person resident outside Nigeria; or

(d) place any sum to the credit of any person resident outside Nigeria.”

Section 28(1) of the same Act provides as follows:– “It shall be an implied condition in any contract that where by vir-tue of this Act the permission or consent of the Minister is at the time of the contract required for the performance of any term thereof, that term shall not be performed except insofar as the permission or consent is given or is not required.”

Assuming that there is a contract between the judgment debtors and the Italian firm overseas, upon the admission that the exchange control permit has not been granted. I take it that the Italian firm cannot treat the judgment debtors as



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being in default of their promise to pay during such time as both parties agreed (by implication) that the contract was not (and lawfully cannot be) performed.

To whom then does the amount of £1,048.5s.0d in the sus-pense account of the garnishee belong at the date of service of the order nisi? In my view the money lawfully belongs to the judgment debtors. The case of Cummings v. London Bul-lion Co Ltd (1) is not on all fours with the case in hand but it throws light on the operation of the Exchange Control Act, 1947 of the United Kingdom from which the provisions of sections 7 and 28 of the local act are borrowed.

I have come to the conclusion that the money standing in the suspense account of the garnishee to the credit of the Italian firm is illegally placed there in the absence of the permit to be obtained under the Exchange Control Act. The said amount being the lawful money of the judgment debtors is attachable under the garnishee order nisi.

I accordingly make an order absolute that the sum of £l,048.5s.0d deposited in the suspense account of the gar-nishee be paid to the judgment creditor in part satisfaction of the judgment debt and costs.

Order accordingly.


Nwasike v. Onwuameze 303

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Nwasike v. Onwuameze


ADEFARASIN J


Banking – Money – Note issue – Legal tender

Contract – Illegal Contract – Frustration by supervening event – Contract unenforceable

Facts

The plaintiff brought an action against the defendant in the High Court of Lagos state to recover the balance of the pur-chase price of a car sold to the defendant during the civil war in Nigeria.

The defendant had given £250 in “Biafran” money to the plaintiff in part payment of the purchase price of the car and had issued a cheque for £1,000 to the plaintiff for the said balance which was intended between the parties to be paid also in “Biafran” currency. However, at the time the transac-tion was made by section 1(b) of the Central Bank (Cur-rency Conversion) decree, 1967, “Biafran” money was not to be legal tender. At the trial, the defendant contended that the contract between the parties had been frustrated by im-possibility of performance in that “Biafran” money was not legal tender in Nigeria.

Held –

1. That the currency of payment in Nigeria must be in legal tender.

2. That “Biafran” money was not legal tender.

3. That a contract not made in legal tender is an illegal con-tract.

4. That the contract between the parties was an illegal con-tract which cannot be enforced by the court.



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Action dismissed.

Editorial Note: See the following relevant statutes Central Bank of Nigeria Act, (Cap 30), sections 18 and 21

Central Bank (Currency Conversion) decree, 1967, (No. 51), section 1(b) as amended by the Central Bank (Currency Conversion) (Amendment) decree, 1968, (No. 48), section 1

Counsel For the plaintiff: Noibi

For the defendant: Ofodile

Judgment

ADEFARASIN J: This is a claim for £1,000 from the de-fendant, being money payable by the defendant to the plain-tiff as the purchase price of a private car No. EOA 2141 sold and delivered by the plaintiff to the defendant. The defen-dant does not deny that there was a transaction between himself and theplaintiff during August, 1969 whereby he purported to buy the car in question from the plaintiff for £1,250, whereof he paid £250 in “Biafran” money and is-sued the cheque exhibit 1 for £1,000 for the balance. He however contended that the transaction between them was entered into within the rebel enclave during the war and was expected to be paid in the so called “Biafran” money. The defendant pleaded that the contract between the parties had been frustrated by impossibility of performance, in that “Biafran” money had long ceased to be legal tender.

The plaintiff, in his oral evidence, admitted that both he and the defendant were resident within the rebel enclave at the time of the transaction; that Nsugbe, where the car was sold and delivered, was within the rebel enclave; that the de-fendant paid him £250 of the purchase price in the so called “Biafran” currency; that he would have collected the entire purchase price of £1,250 in “Biafran” money; that at the time the cheque for £1,000 balance of the purchase price was issued Onitsha was in Federal hands; and that it was impossible for the plaintiff to go there for any purpose.


Adefarasin J

Nwasike v. Onwuameze 305

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I have no doubt, having heard the evidence of the plaintiff and that of the defendant, that at the time of the transaction not only were the parties resident in the rebel enclave but they intended that payment in respect of the car be made in the currency of the so called Biafra. The receipt of the par-ties was stamped with two 2d stamps of “Biafra,” see ex-hibit 2. The defendant told the court, and I believe him, that at the time of the transaction the Onitsha II Branch of the African Continental Bank, on which he drew the cheque, exhibit 1, for £1,000, was operating at Nnewi and continued so to operate until the end of the war. The cheque book ex-hibit 5, as indeed the cheque exhibit 1, had the impressed Nigerian stamps on them, but I have no doubt that the cheque exhibit 1 was drawn on the African Continental Bank Branch II then operating in Nnewi and that, had the plaintiff presented the cheque there, he would have been paid in “Biafran” money. It seems to me that now that the war is ended and “Biafran” money, which formed the basis of the transaction of the parties, has been declared as illegal, the plaintiff is now seeking to make it appear that the cheque was meant to be paid in Onitsha, which in 1969 was in Fed-eral hands, which place was not accessible then to the plain-tiff. The plaintiff himself said that at the time of the transac-tion the African Continental Bank was not doing any busi-ness in Onitsha. How then could he have thought that the cheque was meant to be cashed in Nigerian money?

The position is that the plaintiff sold the car to the defen-dant for £1,250 “Biafran” money. He got only £250 of the purchase price. The plaintiff should ordinarily have been able to recover the balance. The defendant has no moral right to keep the balance of £1,000 “Biafran” money and keep the car. It has often been said, and I say it here, that our courts are not courts of morals. They are courts of law. The transaction between the parties was an illegal contract and cannot be enforced. In any event, by the declaration of the Federal Nigerian Government that the so called “Biafran”



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money was not legal tender, supervening events made it im-possible for that contract to be performed on the part of the defendant. It was due to no fault of the defendant that the plaintiff did not cash his cheque. The court would find it dif-ficult to enforce such a contract. In the first place, how does one evaluate the “Biafran” pound vis-a-vis the Nigerian pound? Surely they are not on par. The defendant said that in the rebel enclave black market £1 Nigerian money was being sold for £400 “Biafran” money. I am unable to enforce the contract between the parties in that it was an illegal con-tract. This no doubt will bring hardship upon the plaintiff but he may be able to pursue whatever other remedies he may have with regard to the car. The plaintiff’s claim is dis-missed. I make no order regarding costs.

Action dismissed.

[1967 – 1975] 2 N.B.L.R. (COURT OF APPEAL, WESTERN STATE OF NIGERIA)

Adekunle v. African Continental Bank Limited 307

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Adekunle v. African Continental Bank Limited

COURT OF APPEAL, WESTERN STATE OF NIGERIA OYEMADE, ESO, DELUMO JJCA Date of Judgment: 10 DECEMBER 1970 C.A.W.: /32/70

Banking – Solicitor of bank engaged to handle bank suit – Agreed amount payable as commission to be proved by a solicitor

Contract – Accord and satisfaction – Acceptance of a lesser sum by solicitor handling bank suits in satisfaction of a lar-ger sum without immediate protest – Effect of

Facts The plaintiff/appellant’s claim in the High Court was for the sum of £199.4s.11d being balance of the money that the ap-pellant alleged was due to him from the defen-dant/respondent as per an agreement between them.

The matter in dispute was as regards the entitlement of the appellant who had been the solicitor of the respondent dur-ing the period in question. It was the appellant’s case that he was entitled to 50% of the cost awarded in all suits handled by him for the respondents. The respondents on the other hand contended and led evidence to show that the amount due to the appellant was 50% of such costs as have been re-covered. It was not in dispute that the respondent had paid £150 to the appellant under the agreement.

At the trial the appellant led evidence and tendered a letter written by the secretary to the respondent, which rather than support the case, clearly showed that he was entitled to be paid 50% of the cost recovered. Evidence from the respon-dent’s manager also showed that the appellant accepted £150 as satisfaction for the entire sum due to him before same was credited to his account. He never complained de-spite having written to the bank shortly after that until about 5 months thereafter.



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The learned trial Judge found that the appellant did not prove his allegation that the amount due to him was 50% of all costs awarded as against all costs recovered and that the sum of £150 paid by the respondent to him was on the evi-dence, not merely an accord but also a satisfaction of what-ever debt might be owing to the appellant.

The appellant appealed to the Court of Appeal.

Held –

1. That the onus of proof of the terms of the agreement be-tween the parties of which the plaintiff/appellant is rely-ing lies on him. That since the plaintiff/appellant is al-leging that he is due to be paid 50% of cost irrespective of whether or not such costs have been recovered, the onus of proof is on him and he has not discharged the onus.

2. That from the evidence before the court the conduct of the appellant by accepting the sum of £150 without im-mediate protest showed that he agreed to take the same in full satisfaction of at least his share of the cost.

3. That one of the instances when payment of a lesser sum can operate as a satisfaction of a larger sum is when the amount is in dispute. That in this case, since there was a dispute as to the amount being claimed by the appellant from the respondent and the appellant agreed to take a lesser sum than the amount he claimed due to him, there was accord and satisfaction.

Appeal dismissed.


Foreign

Barclays v. Bank of New South Wales (1880) 5 A.C. 37 Beeming v. Dove (1833) 5 C.A.P. 427 Bidder v. Bridge (1887) 37 Ch.D Cumber v. Wane (1731) 1 Stra. 426



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P.C. Cutts v. Taltal Rail Co Ltd (1918) Sol. Jo. 423 Wilkinson v. Byers 1A. 8E. 106

Counsel For the appellant: Appearance not stated

For the respondent: Shonoiki

Judgment

ESO JCA: (Delivering the judgment of the court) In the High Court Ibadan, Aguda J the appellant claimed against the respondent for the sum of £199.4s.11d, being balance of money the appellant alleged was due to him from the re-spondent as per an agreement between them.

The facts which were not in dispute between the parties were that a sum of £150 was paid to the appellant who was plaintiff in the suit in the court below by the respondent, that the appellant was the solicitor to the respondent during the period in question and that the subject matter is in regard to 50% of costs awarded by court in litigation brought on be-half of the respondent by the appellant.

The matter in dispute was as regards the entitlement of the appellant whether the amount due would be 50% of the costs awarded in all the suits or whether the amount is 50% of such costs as would have been recovered.

The learned trial Judge held firstly that the appellant did not prove his allegation that the amount due to him was 50% of all costs awarded as against the contention of the respondent that the amount due would be 50% of such costs as have been recovered and secondly that the sum of £150 paid by the re-spondent to the appellant was not merely an accord but also satisfaction of whatever debt might be owing to the appellant.

Against this decision the appellant has appealed to this Court and he relied on the following grounds of appeal:–

“1. The learned Judge erred in law to hold there was accord and sat-isfaction as respects the first part of the claim having regard to: (a) the conflict between the statement of defence and the

evidence tendered in support thereof;


Eso JCA


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(b) the defendant’s failure to plead the facts testified to in defence, and upon which that part of the decision was partly rested;

(c) the omission by the defendants to put the said facts constituting their defence to the plaintiff under cross-examination and thereby springing upon him a surprise;

2. The learned Judge erred in law

(a) as to the other ground of his judgment deciding in ef-fect that there was a condition precedent, which had not been satisfied, as respects the first part of the claim, notwithstanding that no such issue was raised at all on the plea;

(b) by holding that the plaintiff did not prove the terms of the agreement upon which the first part of his claim was based, notwithstanding those terms were not put in issue on the pleadings, and the plaintiff’s evidence thereon;

(c) by holding in effect that the plaintiff to whom the de-fendants unilaterally paid a lesser sum in purported full satisfaction of a larger sum, was under a duty to object immediately irrespective of his previous declarations, verbal, written, and by conduct to the contrary and his change of circumstances shortly after the payment;

(d) by holding that there was consideration for the agree-ment when, on the defendant’s own showing, the whole idea as well as the writing relied upon emanated from them, and there was no writing at all by which the plaintiff bound himself; and regardless of the evidence tendered being in conflict with the statement of de-fence.”

In his submission, the appellant urged on us to allow the ap-peal having regard to the fact that the evidence led by the respondent was in contradiction of their pleading. He further submitted that the sum of £150, could not serve as accord and satisfaction of the sum owing and due to the appellant. In our view the issues in this appeal are simple. The first question is, what is the claim of the appellant as revealed by his writ and pleadings? Secondly, what evidence did appel-lant adduce in proof of the claim? The third question is


Eso JCA


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whether the sum of £150 paid by the respondent to the ap-pellant completely satisfied whatever amount might be ow-ing by the respondent.

In his writ the appellant pleaded an agreement between him and the respondent. In his statement of claim, he averred:– “4. Under the agreement the plaintiff fees, allowances, and

other remunerations, were to be paid separately by each branch as they became due.

5. Among these were half shares of costs awarded in the de-fendant’s favour after deducting expenses in every case in-stituted against their customers by the plaintiff.

6. Ilesha Branch in accordance with the said agreement paid all the fees, allowances, and other remunerations due from it to the plaintiff from time to time without fail until the termination thereof as respects that Branch.

7. Ibadan Branch also in accordance therewith paid the plain-tiff all fees, allowances and some half shares of costs due from it up to March, 1966; but in breach thereof it did not pay all other half shares of costs which are the subject mat-ter of this case.

8. The plaintiff’s practice at all material times was to put in his claim or claims as each case or group of cases was deter-mined and costs were awarded from time to time.

9. In March, 1966, the agreement as respects Ibadan Branch was terminated, and the plaintiff forwarded a list under cover of a letter dated 12th March, 1966, demanding pay-ment of the said outstanding half shares of costs.

12. In April, 1966, their said Head Office sent to the plaintiff a duplicate/original of their letter dated 7th April, 1966, to their Ibadan branch admitting the plaintiff’s claim, but in-structing the said Branch to pay only what had been recov-ered.”

In proof of these allegations the appellant gave evidence and tendered documents. A close study of the exhibits tendered by the appellant, coupled with his evidence, show that though the appellant alleged that the course of conduct of the respondent in regard to payment to him of costs awarded


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by court was documented there was nothing in the exhibits tendered in proof of this allegation. When appellant was questioned in cross-examination in regard to these docu-ments he said:–

“I must have had all documents showing previous payments made to me but they are not here and I have no notice to produce.”

To stop here for a moment, it appears to us odd that a party would make allegations, in proof of which he is in posses-sion of documents yet he would expect a notice to produce these documents especially when the allegations have not been admitted by the other side.

It is the case of the appellant that, apart from the course of conduct of the respondent, the respondent admitted the claim as being due. We have examined the exhibit relied upon by the appellant in regard to this issue. The exhibit D, reads:–

“I refer to Mr Adekunle’s letter of 13th March, 1966, claiming a sum of £349.1s.11d as fees due to him in respect of cases con-ducted by him, a list of which was enclosed.

In accordance with the terms of employment of retainers, half of the costs awarded in a case is paid to the solicitor after deducting out of pocket expenses of the bank; and after the costs have been recovered from the judgment debtor. I have no doubt that Mr Adekunle is entitled to the amount which he claims; but be-fore it is paid you have to find out how much of the judgment debts or costs have been actually recovered. Having found that out, you are authorised to pay him his share of the amount recov-ered.

Yours faithfully,

(Sgd.) E.N. Okuzu

Acting Secretary.

cc. Mr M. Adekunle

P.M.B. 5056, Ibadan.

Above for your information. It would be advisable if you would contact our manager at Ibadan Branch to find out how much of the costs have been actually recovered, since, from the terms of your employment of retainership you are only entitled to 50% of the costs recovered after deducting the bank’s out of pocket ex-penses.”


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The contents of this exhibit are clear and unambiguous. Rather than it being an admission of the appellant’s claim, it is a dispute of such claim and confirmation of the respon-dent’s point of view that the amount due to appellant would be 50% of such costs as would have been recovered. The secretary to the respondent made this abundantly clear in his letter when he said:–

“You are only entitled to 50% of the costs recovered after deduct-ing the bank’s out of pocket expenses.”

To us nothing could be clearer.

We have no hesitation therefore in agreeing with the con-clusion of the learned trial Judge when he said:–

“The onus of proof of the terms of the agreement between the par-ties of which the plaintiff is relying lies on him. In his case the plaintiff is alleging that he is due to be paid 50% of cost irrespec-tive of whether or not such costs have been recovered, and in my view the onus of proving this term is on him. However, I am far from being satisfied that he has discharged that onus . . .”

In regard to the complaints of the appellant against the deci-sion of the learned trial Judge as regards accord and satisfac-tion, the learned trial Judge accepted the evidence of the bank manager, Mr Kazeem and rejected that of the appel-lant. The evidence of the bank manager on this point is as follows:–

“The day of discussion with him (the appellant) would be about four days before the date shown on the exhibit O (This would be around the 5th June). During the discussion I offered Mr Adekunle £150 as full settlement of all outstanding claims in spite of share of costs and all outstanding payments due to him from the defendant from previous years up to time of payment . . . At our meeting when I offered the plaintiff £150 he was partly satisfied and partly not sat-isfied and he asked me to give him time to consider the whole is-sue and that be would get in touch with me on telephone to convey his decision. On 9th June, 1966, he (that is, the appellant) tele-phoned me and confirmed that he was satisfied to take the £150 on all the terms discussed at our meeting. It was after the discussion that I asked that his account be credited and I signed exhibit O . . . I paid all that the plaintiff agreed to accept in full satisfaction.”


Eso JCA


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Now, the sequence is as follows on the 5th June or there-abouts, the appellant met the bank manager of the respon-dent/bank. That manager put to him the question of the ap-pellant receiving £150 in total satisfaction of whatever sum might be due from the bank. The appellant did not make up his mind that day and he was non-committal. On the 9th June, he decided to accept this amount in full satisfaction of whatever might be due to him. He telephoned the bank man-ager to this effect. The manager then credited appellant’s ac-count with this amount that very day. The appellant knew this but did nothing. He did not protest against payment of the amount. He left Ibadan about a fortnight after this pay-ment and his first protest was in his letter exhibit P directed to the Head Office of the respondent wherein he threatened court action. This is clearly five months after he had re-ceived the money. From exhibit P it is obvious that appellant wrote a letter to the respondent on the 18th June, that is, nine days after his account had been credited with the sum of £150. There is no evidence that he protested against pay-ment of that sum in the letter of 18th June.

It is on the evidence before him that the judge based his decision that there was accord and satisfaction of the whole claim.

Now, accord and satisfaction involve an agreement. The question whether accord has been arrived at between parties is one of fact, see Beeming v. Dove (1), Barclays v. Bank of New South Wales (2) page 37; P.C. Cutts v. Taltal Rail Co Ltd (3). Each case must be examined on its own facts.

We have no doubt in our mind that the evidence presented before the learned Judge led undisputably to one of accord between the two parties. The appellant from his conduct, as would be seen in the exhibits which he tendered, protested at every stage whenever he was not satisfied with any point made by the respondent. However, it was he, on the facts as found by the learned trial Judge, who specifically agreed to this sum of £150 in full satisfaction of the debt owing before


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the money was paid to his account. His conduct after this payment justified the finding that he was in accord with the respondent over the question of this payment. He was in Ibadan for a fortnight, he neither protested by telephone nor in writing and though he wrote to the respondent within that fortnight, he raised no protest against the payment, nor did he do so until about five months after. We agree entirely with the finding of the trial Judge when he held:–

“I find as a fact that on 9th June, 1966, the plaintiff agreed to ac-cept the sum of £150 in full satisfaction of at least his share of cost.”

Be that as it may. It is trite that in law payment of a smaller sum does not operate as a satisfaction of debt for a larger sum. There are however exceptions to this. Where the sum is unliquidated or disputed, payment of the smaller sum will operate as satisfaction of the larger claim. There is no agreement between the parties, following the finding of the learned trial Judge as how much the respondent was owing to the appellant. While the appellant maintained that he was entitled to £349.4s.11d being 50% of the whole costs awarded by the court, the respondent maintained throughout that appellant would only be entitled to 50% of such costs as have actually been recovered.

We do not agree with the learned trial Judge therefore that the authorities of Cumber v. Wane (4) and Bidder v. Bridges (5) are applicable. These authorities would only be applica-ble where the sum is liquidated, in other words, where there is an agreement between the parties as to the amount owing. It would appear the judge equated the position there subsist-ing with one of ascertained debt. To our mind the position is more akin to what obtained in Wilkinson v. Byers (6), Little-dale J resolved the issue as follows:–

“But here the debtor says: ‘You have sued me for a debt, and may have troubled in recovering it; if you will forgo the cost, I will pay the debt now.’ If the creditor agreed to these terms he could not afterwards enforce payment of the costs. To do so he must


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have proceeded to final judgment but it would have been against his duty and against law to take that course.”

Littledale J went on and concluded:– “Looking at the case as between the parties, if after such an under-taking, the plaintiff attempted to go on with the action, it would be a breach of faith, and contempt, and the court would stay pro-ceedings.”

Parke J in the same case was of the same opinion, though he did not consider the case on the ground upon which Little-dale J, put it. The learned Judge had this to say:–

“If an action be brought on quantum meruit, and the defendant agrees to put a less sum than the demand in full, that is a good consideration for a promise by the plaintiff to pay his own costs and proceed no further. Payment of a less sum than the demand has been held to be no satisfaction in the case of a liquidated debt; where the debt is unliquidated it is sufficient”

Patterson J in the same case had the following to say:– “If a question had been rested upon the record the words ‘a certain alleged debt would have been a complete answer to the defen-dant’s objection: and, indeed, this seems almost admitted. It is consistent that the declaration, that there may have been dispute between the parties as to the sum actually due . . .’”

Here, there is a dispute as to the amount being claimed by the appellant from the respondent. The appellant, that is the creditor, agreed to take a less sum than the amount he claimed was due to him, and, as the two parties were in ac-cord it is our view that in this case there was also satisfac-tion.

The appeal therefore fails and is hereby dismissed. The judgment of the High Court is affirmed.

Appeal dismissed.


Enahoro and Co Ltd and another v. Bank of West Africa Ltd 317

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Enahoro and Co Limited and another v. Bank of West Africa

Limited


ADEMOLA CJN, LEWIS, FATAYI-WILLIAMS JJSC


Banking – Loans – Overdrafts – Bank’s right to charge in-terest on loans – Trade usage or custom of charging interest on loans and overdrafts – Whether applicable in the absence of specific agreement – Proof of trade custom – How estab-lished

Company law – Pre-incorporation contract – Ratification of pre-incorporation contract by company – Effect on the third party

Judgment and Order – Award of interest by court – Interest during pendency of action until judgment – Interest after judgment until liquidation of judgment debt – Power of Ni-gerian court to award – Principles guiding

Facts

The plaintiff/respondent brought this action in the High Court claiming money lent to the first defendant and guaran-teed by the second defendant/appellant. The plain-tiff/respondent lent money on bank loan account to the sec-ond defendant/appellant who thereafter incorporated the first defendant/appellant and transferred the loan to the first de-fendant/appellant, he then guaranteed the loan and other overdrafts to a limited amount at the rate of 5% interest per annum. The second defendant/appellant was the sole signa-tory to the account of the first defendant/appellant.

The plaintiff/respondent instituted this action to recover the loan with interest against the first defendant and the amount guaranteed standing against the second defendant.



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The first defendant contended that there was no proof that it requested for any loan, neither was any loan ratified by it after it was incorporated.

There was no agreement to pay interest on the loan granted neither was there any custom in Nigeria allowing such inter-est.

The High Court gave judgment in favour of the plain-tiff/respondent, for the cheque drawn on the first defen-dant/appellant account after incorporation as loan directly granted to the first defendant/appellant, and also for the li-abilities transferred to its account by the second defen-dant/appellant, at 5% interest per annum until judgment was delivered, and that the second defendant/appellant indebted-ness should not exceed his limit of guarantee. Both parties were dissatisfied with the decision, so the defen-dants/appellant appealed and the plaintiff/respondent cross-appealed asking for the total indebtedness and interest as claimed.

Held –

1. There can be no ratification by a subsequently formed company of an agreement purporting to be made on its behalf prior to its formation, without the assent of the other party and so in effect making it a new contract.

2. The company cannot be held liable for the transfer of second defendant’s liabilities to the plaintiff without the first defendant’s acceptance of such liabilities upon its coming into existence.

3. The transfer of the second defendant’s liabilities to the first defendant effectively discharged the second defen-dant of any liability to the plaintiff, and as there was no interest agreed upon between the plaintiff and the first defendant on the loan, transferred to it, none can be charged except the 5% agreed as part of the guarantee of the second defendant.

4. By virtue of Order 35, rule 10 of the High Court (Civil



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Procedure) Rules Laws of Western Nigeria and sec-tion 3(1) of the Law Reform (Miscellaneums Provisions) Act, 1934 the court has power to award interest from the date of the writ to the date of judgment at such rates as the court thinks fit. However, the rate at which interest can be made to be payable from the date of judgment can be 5% in the Western State of Nigeria and not 4% as in England. In the instant case the rate for the period from the date of the writ to the date of judgment should be the same as from the date of judgment to the date of payment, that is to say, not exceeding 5% per annum

5. For the universal custom applicable to banking in Eng-land to apply in Nigeria is a matter of proof whether it in fact applies. In the instant case such proof was not forth-coming, as there was no evidence of any agreement by the first defendant/appellant to pay any interest and no evidence was called on banking custom in Nigeria, and no Nigerian case was cited to show that what Halsbury’s Laws of England calls the universal custom in fact ap-plies in Nigeria for the purpose of section 14(2) of the Evidence Act, Cap 62, 1958.

Appeal allowed in part.


Nigerian

Demuren v. Asuni (1967) N.M.L.R. 158; (1969) 1 All N.L.R. 94 Missri v. Bank of West Africa Ltd (1967) 1 A.L.R. Comm.

427 National Employer Mutual v. Martins (1969) 3 A.L.R.

Comm. 331; (1969) N.M.L.R. 23 Pappoe v. Bank of British West Africa (1933) 1 W.A.C.A.

287 Sabbah v. Bank of West Africa Ltd (1967) 1 A.L.R. Comm.

420; (1966) 1 All N.L.R. 240



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Foreign

Cross Kill v. Bower (1863) 32 Bear. 86; 55 E.R. 34 Kelner v. Baxter (1866) 1.R. 2 C.P. at 186; 15 L.T. at 214 London Chatham and Dover Railway Co v. South E. Rail-

way Co (1893) A.C. 429

Nigerian statutes referred to in the judgment Evidence Act, Cap 62 (Laws of the Federation and Lagos), 1958, section 14 High Court Law, Cap 44 (Laws of Western Nigeria) 1959,

section 8 Law Reform (Miscellaneous Provisions) Act, 1934, section

3

Nigerian rules of court referred to in the judgment High Court (Civil Procedure) Rules Laws of Western Nige-

ria, 1959, Cap 44, Order 29, rule 7, Order 35, rule 10 Supreme Court (Civil Procedure) Rules Laws of Nigeria,

Cap 211, Order XLVI, rule 7

Counsel

For the defendants/appellants: Chief Williams and Adejare

For the plaintiff/respondent: Bentley, Adeniyi and Adebayo

Judgment

LEWIS JSC: (Delivering the judgment of the court) This is an appeal against the judgment of Morgan CJ Western Nige-ria (as he then was) in which he entered judgment for £34,625.11s.6d in favour of the plaintiff/respondent against the two defendants/appellants, together with interest of 5% per annum against the second defendant/appellant only for a certain period so that his indebtedness on the whole does not exceed £42,000. The argument before us at the hearing of the appeal cantered in part upon the writ as filed in the High Court and the pleadings, and we set out some relevant por-tions. The writ is as follows:–

“The plaintiff’s claim is for the sum of £42,526.19s.7d (Forty-two thousand, five hundred and twenty-six pounds nineteen shillings


Lewis JSC


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and seven pence) being moneys payable by the first defendant to the plaintiff for money lent by the plaintiff to the first defendant and for money paid by the plaintiff for the first defendant at its request at Ibadan during the years 1961 and 1962 and for interest upon money due from the first defendant to the plaintiff and for-borne at interest by the plaintiff to the first defendant at its re-quest.

2. Copies of the No. 1 and No. 2 accounts of the first defen-dant are hereto attached marked ‘A’ and ‘B’ respectively.

3. By agreement in writing dated April 28th, 1961 the second defendant agreed with the plaintiff to guarantee the first de-fendant’s accounts with the plaintiff to the extent of £42,000. Wherefore the plaintiff claims the sum of £42,000 from the second defendant.

4. The plaintiff further claims from the first and second defen-dants interest at the rate of 9% per annum from the date of application for the writ of summons to the date of judgment and thereafter interest at the rate of 5% per annum to the date of satisfaction of the debt.”

Paragraphs 4, 5, 6 and 7 of the plaintiff’s statement of claim are relevant and they read:–

“4. Since the year 1959 there has been a banker-customer rela-tionship between the plaintiff of the one part and the second defendant of the other part, whereunder the plaintiff as banker at the request of the second defendant lent moneys to and paid moneys for the second defendant at Ibadan, upon which mon-eys the second defendant agreed to pay to the plaintiff interest at the rate of 9% per annum.

5. In or about the month of August, 1959 the second defendant requested the plaintiff to advance to him a sum of £42,000 for the purpose of developing Plot 18 in the Links Reservation, Ibadan, of which plot he had obtained a Crown lease dated August 1st, 1959 registered as No. 6 at page 5 in Volume 297 of the Lands Registry at Ibadan, which the second defendant mortgaged to the plaintiff under a deed of mortgage dated May 6th, 1960 registered as No. 4 at page 4 in Volume 68 of the Lands Registry at Ibadan. The second defendant orally agreed with the plaintiff in the year 1959 that all banking ad-vances made to him by the plaintiff would be repaid by the second defendant out of advance rents to be paid to him by


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tenants of the properties erected and paid for out of the said banking advances.

6. Banking advances including the sum of £42,000 referred to in paragraph 5 hereof were accordingly advanced by the plaintiff partly to the first defendant and partly to the second defendant for the purpose of developing the said Plot 18 in Links Reser-vation between November 7th, 1959 and 17th May, 1961.

7. In or about the month of March, 1961 the second defendant formed a private limited liability company and incorporated it in the name of the first defendant in the Companies Registry at Lagos, and by a memorandum in writing dated 6th January, 1961, addressed by the second defendant to the plaintiff, the second defendant authorised the plaintiff to transfer both his loan accounts from his personal name to that of the first de-fendant company.”

It is also pertinent to refer to paragraphs 6C and 6D of the amended statement of defence, which read:–

“6C. The first defendant will contend at the trial of this action that:

(a) there is no privity of contract between it and the plaintiff and consequently there is no cause of action, against it;

(b) there is no contract binding upon the first defendant to pay the amount claimed on the writ of summons and statement of claim or any part thereof to the plaintiff.

6D. The second defendant will contend at the trial of this action that the claim against him is misconceived in law and further and in the alternative that the true relationship between him and the plaintiff is evidenced by a deed dated 6th May, 1960 and registered as No. 4 at page 4 in Volume 68 of the Lands Registry.”

A cursory glance at the pleadings or part thereof set out herein show essentially transactions between the plaintiff and the second defendant and to a large extent this is so, but it is to be kept in mind that the first defendant, the company which the second defendant set up, is controlled by the second de-fendant, who is the major shareholder, being the holder of 49,500 out of 50,000 shares; he is a director of the company and seems to have acted on its behalf throughout as if he was acting for himself alone. Be that as it may, the company


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is a separate entity and cannot be bound unless by its con-duct it has shown itself to be so bound.

The second defendant received advances from the plaintiff, with which he was a banking customer, to develop a build-ing plot in Ibadan which he mortgaged to the plaintiff on 6th May, 1960 until he had paid in full the liability on his per-sonal banking accounts with the plaintiff. On 6th January, 1961 the second defendant wrote to the plaintiff requesting them to transfer his existing accounts to the accounts of the company (the defendant) which he said he had formed, though in fact the company was not incorporated till 28th March, 1961. On 28th April, 1961 the company by resolution enabled the second defendant alone to act on its behalf so far as signing cheques, bills, promissory notes and certain other banking matters were concerned. Also on 28th April, 1961, the second defendant guaranteed the pay-ment of the first defendant’s accounts with the plaintiffs up to a maximum of £42,000 (see exhibit 17). On 17th May, 1961, £16,175.10s.0d was transferred from the second de-fendant’s No. 1 account to the first defendant’s No. 1 loan account, and on the same date £9,000.1s.6d was transferred from the second defendant’s No. 2 account to the first de-fendant’s No. 2 loan account. Also on the same date, the first defendant by the second defendant a director on its be-half drew on the first defendant’s No. 2 loan account in the sum of £9,450 a cheque payable to Nigersol Construction Company Limited (see exhibits 18 and 22A).

The main point taken by Chief Williams for the defen-dants/appellants is that the plaintiff by its writ sued for money lent by the plaintiff to the first defendant which the second defendant guaranteed. In his submission therefore whilst it may be that the second defendant might have a separate personal liability he was not so sued and his liabil-ity in this action must stand or fall on the first defendant’s liability and if that liability was not established his guarantee which was dependent on it failed also.


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Chief Williams pointed out, rightly in our view, that there is no evidence of the company (the first defendant) specifi-cally requesting a loan of up to £42,000 which the second defendant guaranteed nor was there any resolution of the company proved to have been passed to accept the loan ad-vances. In our view, however, that is not a complete answer, as one must look to see whether in fact the first defendant by its conduct held itself out as being bound at any time and in any way in respect of the loan accounts after the first defen-dant came into existence. Although the first defendant, as a company, is certainly a separate legal entity to the second defendant personally, we cannot shut our eyes to the fact that the company must act through its representatives and the main representative was its main shareholder and its di-rector who is the second defendant and who in fact gave his name to the company. Exhibit 18 reads as follows:

“Enahoro and Co Limited

Consultants Business, Investments, Public Relations

14/16 Port Novo Market Street, Lagos. Nigeria.

Telephone 26530

Directors: Hon. Chief Anthony Enahoro, M.P. H.I. Enahoro 17th May, 1961 The manager, Bank of West Africa Limited, P.M.B. 5111, Bank Road, Ibadan.

Dear Mr Harris,

Following the attached certificate from Design Group, we have issued a cheque for £9,400 to Nigersol Construction Co Limited, Ibadan, in respect of the buildings at the New Reservation, Ibadan.

Yours sincerely,

(Sgd.) Anthony Enahoro

Director.”


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This shows that the company through its director, the second defendant, drew a cheque on its loan account for £9,400 (though in fact when one examines exhibit 22A, the first de-fendant’s bank statement, one sees that the amount drawn was £9,450). We think the only conclusion to be drawn is that the company, through its director, was in fact requesting that loan on its No. 2 loan account and was therefore liable in respect of that sum of £9,450, as it was a liability incurred after the company came into existence. In other words this must be taken as a specific request by the company so as to make not only the company liable but the second defendant on his guarantee, but it is not to be confused with any ques-tion of ratification by the company of the earlier agreement by the second defendant on behalf of the company not then formed, as Kelner v. Baxter (3) (1R. 2 C.P. at 186; 15 L.T. at 214) shows that there can be no ratification by a subse-quently formed company of an agreement purporting to be made on its behalf prior to its formation without the assent of the other party and so in effect making it a new contract.

We do not see that the liability incurred by the second de-fendant prior to the coming into existence of the first defen-dant, albeit transferred to the loan accounts of the first de-fendant, was in fact ever accepted by the first defendant after the company came into existence, but, as we have indicated the £9,450 must be considered to have been received as a result of a request when the first defendant’s No. 2 loan ac-count was debited with it. The case was pleaded and fought so far as the second defendant is concerned on the basis of liability under the guarantee, not upon any personal liability of the second defendant as a principal debtor that may have existed or indeed may still exist, and no novation was in our view pleaded by the plaintiff, so that the plaintiff cannot now rely upon novation as the basis of the action. Mr Bent-ley for the plaintiff conceded that there was no novation as such put forward in the writ nor specifically in the pleadings, but in his submission it was “developed” in the statement of


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claim, though as we have indicated we do not in fact think it was.

The transfer, however, of £16,175.10s.0d from the second defendant’s No. 1 account to the first defendant’s No. 1 loan account (exhibit 21A) and the transfer of £9,000.ls.6d from the second defendant’s No. 2 account to the first defendant’s No. 2 loan account (exhibit 22A) on 17th May, 1961 must in our view be looked upon as a transfer effected by the second defendant for his own reasons in respect of sums for which he may personally have been liable, but merely by virtue of the transfer no liability was transferred to the first defendant when there was no evidence of request by it or that the sec-ond defendant was acting on its behalf, and Mr Bentley him-self conceded that there was no resolution of the company asking for the transfer of the sums to their loan accounts or accepting such transfer, and he could but ask us to infer ac-ceptance, which we do not consider it right to do. These sums are therefore not in pari materia with the £9,450. It follows that on the case as pleaded and presented, irrespec-tive of any other possible liability, the plaintiff can in our view succeed only in respect of the sum of £9,450 in the No. 2 loan account of the first defendant for which the first defendant is liable and therefore the second defendant in turn is liable under his guarantee. The appeal of the defen-dants against the award to the plaintiff of the sum of £34,625.11s.6d against the two defendants therefore suc-ceeds to the extent that the plaintiff is entitled only to re-cover in respect of the sum of £9,450 against the two defen-dants.

Mr Bentley for the plaintiff/respondent gave notice to vary the decision in the High Court in the following terms:– “1. That judgment be entered against the first defendant in the

sum of £42,526.19s.7d together with interest as hereinafter mentioned.

2. That judgment be entered against the second defendant in the sum of £42,000 together with interest as hereinafter mentioned.


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3. That the first defendant do pay interest at the rate of 9% per annum from 1st November, 1961 to the date of judgment in the lower court (ie, 4th May, 1965) and thereafter interest at the rate of 5% per annum to the date of satisfaction.

In the alternative that the first defendant do pay the interest at the rate of 61% per annum from 1st November, 1961 to the date of judgment in the lower court and thereafter inter-est at the rate of 5% per annum to the date of satisfaction.

4. That the second defendant do pay interest at the rate of 5% per annum from 19th November, 1962 to the date of judg-ment in the lower court and thereafter at the rate of 5% per annum to the date of satisfaction.”

And take notice that the grounds on which the respondent intends to rely are as follows:–

“(a) that the learned Judge erred both in fact and in law when he said in his judgment that – ‘there is no record in both ac-counts to show that any interest was due or outstanding, and there is no evidence as to how the interest shown on exhibits 21A and 22A as having been applied up to 30th June, 1961 was arrived,’ whereas the interest charged is clearly shown on both accounts Nos. 1 and 2 (exhibits 21 and 22) and the only witness for the plaintiff gave evidence that the second defendant agreed to pay all sums owing by him as well as all usual commissions and other customary charges and interest at the rate of 21% per annum above Bank of England rate with a minimum of 6% per annum, whichever shall be the higher.

(b) That the relationship between the plaintiff and the defen-dants is that of banker and customer and that the plaintiff gave a loan to the defendants and therefore is entitled to in-terest thereon against both defendants.”

The learned Chief Justice concluded his judgment as fol-lows:–

“There will therefore be judgment for the plaintiff against both de-fendants as follows:

Exhibit 21 No. 1 loan account as at 17th May, 1961

£16,175.10.0

Exhibit 22 No. 2 loan account as at 17th May, 1961

£9,000.1.6


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Exhibits Nos. 18 and 22 payment to Ni-gersol on 17th May, 1961

£9.450.0.0.

£34,625.11s.6d.

When accounts Nos. 1 and 2 were transferred the second defen-dant was discharged to the extent of the debts transferred. There is no record in the accounts to show that any interest was due or out-standing, and there is no evidence as to how the interest shown in exhibits 21A and 22A as having been applied up to 30th June, 1961 was arrived at. Furthermore, there is no evidence of any agreement between the plaintiff and the second defendant, as agent for the first defendant, as to the interest payable on the debts taken over and the latter loan to the first defendant. However, in accor-dance with exhibit 17, the second defendant gave a personal guar-antee to pay interest at the rate of 5% per annum on all sums due from the date of demand, which according to exhibit 10 is 19th November, 1962. I therefore enter judgment against the second de-fendant only for interest at 5% per annum on £34,625.11s.6d with effect from 19th November, 1962 until the date of this judgment but so that his total indebtedness does not exceed £42,000.”

The effect of Mr Bentley’s argument can conveniently be dealt with under three separate heads:– 1. Can interest be charged against the first defendant by the

bank (the plaintiff) on the loan accounts, and if so at what rate?

2. Can interest be ordered against the first defendant from the date of issue of the writ to the date of judgment, and if so at what rate?

3. Can interest be ordered against both the first and the sec-ond defendant from the date of judgment to the date of payment, and if so at what rate?

As we have shown from the passage in the judgment of the learned Chief Justice which we have quoted, he awarded 5% interest per annum against the second defendant on the sum of £34,625.11s.6d from 19th November, 1962 to the date of judgment but so that the total indebtedness of the second de-fendant should not exceed £42,000 and he awarded this be-cause of the terms of the guarantee that the second defendant gave to the plaintiffs, and Mr Bentley did not seek to alter


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that save only to add to the second defendant’s liability if he succeeds under heading 3 above. Having regard however to our finding that the liability of the defendants is limited to the sum of £9,450 the only question that remains is the, li-ability for interest on that sum.

As to heading 1 above, Mr Bentley submitted that there was a universal custom of bankers that gave a banker a right to charge simple interest at a reasonable rate on all overdrafts, and he referred us to Halsbury’s Laws of England, (3ed), para-graph 427 at 229 and to the case of Cross Kill v. Bower (1), though that case in fact dealt solely with English banking cus-tom. The difficulty, however, is that there was no evidence of any agreement by the first defendant to pay any interest and no evidence was called on banking custom in Nigeria, and no Ni-gerian case was cited to us to show that what Halsbury (loc cit) calls the “universal custom” in fact applies in Nigeria. The only evidence from the one witness whom the plaintiff saw fit to call was of a personal agreement between the second defen-dant and the plaintiff to pay interest at 2½% above the Bank of England rate which was to be at a minimum of 6½%. There was no evidence that this was other than a personal arrange-ment between the second defendant and the plaintiff. It may well be that one might expect the custom applicable to banking in England to apply in Nigeria, but it is a matter of proof whether it in fact does so, and in our view such proof was not forthcoming here. We indicated in Missri v. Bank of West Af-rica Ltd (1967) (1) A.L.R Comm. at 427 that for the purposes of section 14(2) of the Evidence Act (Cap 62), assuming it to apply, banking custom in the Gold Coast in 1933 decided in Pappoe v. Bank of British West Africa (7) could not be held to prove that such a banking custom existed in Nigeria today without further independent evidence. Having regard to this we do not consider that it was established that any interest had to be paid on the loan accounts by the defendants, so no interest will be payable by either of the defendants in respect of the £9,450 which was debited in the No. 2 loan account.


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As to heading 2, it was Mr Bentley’s argument that whilst there was no specific provision applicable in any Nigerian legislation that would permit the awarding of interest from the date of the writ to the date of judgment on what was in effect the judgment debt nonetheless there was power to do so by virtue of the provisions of section 8 of the High Court Law (Cap 44) as that gave the Western High Court the juris-diction, powers and authorities vested in the High Court in England and by virtue of that he referred us to section 3(1) of the Law Reform (Miscellaneous Provisions) Act, 1934, which reads:–

“3(1) In any proceedings tried in any court of record for the recov-ery of any debt or damages, the court may, if it thinks fit, or-der that there shall be included in the sum for which judg-ment is given interest at such rate as it thinks fit on the whole or any part of the debt or damages for the whole or any part of the period between the date when the cause of action arose and the date of the judgment:

Provided that nothing in this section:–

(a) shall authorise the giving of interest upon interest; or

(b) shall apply in relation to any debt upon which interest is payable as of right whether by virtue of any agreement or otherwise; or

(c) shall affect the damages recoverable for the dishonour of a bill of exchange.”

Indeed it is clear that it was necessary to go to the statute, as there was no power in England under the common law to grant interest for such a period, see London Chatham and Dover Railway Co v. South E. Railway Co (4) (per Lord Herschell LC, (1893) A.C. at 437; 63 L.J. Ch. at 96); but it seems to us that it is more appropriate to get there by way of the provision of Order 35, rule 10 of the High Court (Civil Procedure) Rules (Cap 44) of the Western High Court, which reads:–

“10. Where no provision is made by these rules or by any other written laws, the procedure and practice in force for the time being in the High Court of Justice in England shall so far as they can be conveniently applied, be in force in the


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court: provided that no practice which is inconsistent with these rules shall be applied.”

We have previously shown how resort may be had to this provision in (Demuren v. Asuni (2) (1967 N.M.L.R. at 162; (1967) 1 All N.L.R. at 99-100); and see also Sabbah v. Bank of West Africa (8) (1967 (1) A.L.R. Comm. at 424; (1966) 1 All N.L.R. at 243), on a comparable application of English Law in a Lagos case.

In the latter case it was apparently thought necessary to go on to consider whether the Judgments Act, 1838 was a stat-ute of general application. Even if it was in fact so necessary in Sabbah’s case, it could not be in the instant case, as the provision as to the application of statutes of general applica-tion in force in Nigeria on January 1st, 1900 does not apply in the Western State of Nigeria. In our view, therefore, there is power to award interest from the date of the writ to the date of judgment, and under section 3(1) of the Law Reform (Miscellaneous Provisions) Act, 1934 the rate of interest is at such rate as the court thinks fit. Moreover, as we shall show hereafter, we think that the rate at which interest can be made to be payable from the date of judgment can be 5% in the Western State of Nigeria and not 4% as in England. This being so we see no reason why the rate for the period from the date of the writ to the date of judgment should not be the same as from the date of judgment to the date of payment, that is to say, not exceeding 5% per annum. We would accordingly award the amount of 5% per annum from the date of the writ to the date of judgment in this case as against the defendants, and the judgment of the learned Chief Justice must be varied accordingly.

As to heading 3, Mr Bentley relied upon the provision of Order 29, rule 7 of the High Court (Civil Procedure) Rules (Cap 44) of the Western State High Court, which reads:–

“7. The court at the time of making any judgment or order, or at any time afterwards, may direct the time within which the payment or other act is to be made or done, reckoned from the


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date of the judgment or order, or from some other point of time, as the court thinks fit, and may order interest at a rate not exceeding five pounds per centum per annum to be paid upon any judgment, commencing from the date thereof or after-wards.

He submitted this enabled interest from the date of judgment to be granted at the rate of 5% per annum. Chief Williams for his part submitted that he was willing to concede 4%, if oth-erwise liable, on the basis of the decision of Sabbah v. Bank of West Africa Ltd (8).”

In National Employer Mutual v. Martins (6) we said (1969 (3) ALR Comm. at 337-338):–

“In Sabbah v. Bank of West Africa. Ltd (1967 (1) A.L.R. Comm. 402), decided by this Court on 22nd October, 1966, the respon-dent had been awarded 5% interest on a judgment debt by the High Court, Lagos, and on appeal to this Court it was contended that the High Court had no jurisdiction to award any interest. Learned Counsel for the appellant in that case conceded that the provisions of section 17 of the Judgments Act, 1838, being a stat-ute of general application in England, were applicable. That sec-tion reads as follows:–

Every judgment debt shall carry interest at the rate of four pounds per centum per annum from the time of entering up the judgment until the same shall be satisfied, and such interest may be levied under a writ of execution on such judg-ment.’

This Court varied the interest awarded from 5% to 4% by virtue of the provisions of that section but it is important to note that that decision proceeded on the basis of the concession made by Counsel that the Judgments Act, 1838 was applicable.

In the course of the argument before us, learned Counsel for the plaintiff referred us to Order XLVI, rule 7 of the Supreme Court (Civil Procedure) Rules (Laws of Nigeria), 1948, Cap 211, which reads as follows:–

The court at the time of making any judgment or order, or at any time afterwards, may direct the time within which the payment or other act is to be made or done, reckoned from the date of the judgment or order, or from some other point of time, as the court thinks fit, and may order interest at a rate not exceeding five pounds per centum per annum to be paid upon any judgment, commencing from the date thereof or afterwards.’


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It was his submission that the rule empowers the Lagos High Court to award interest at a rate not exceeding 5%.

We consider that the submission of Counsel is well founded and that the learned trial Judge was acting within the limits of his powers under Order XLV1, rule 7 when he awarded 4% interest.”

Order 29, rule 7 of the High Court (Civil Procedure) Rules of the Western High Court which we have quoted is in iden-tical terms to Order XLV1, rule 7 of the Supreme Court (Civil Procedure) Rules referred to in that case. It follows that, as was stated in that case, Sabbah v. Bank of West Af-rica Ltd (8) must be interpreted on the basis solely of the manner in which the matter was argued before the court and on the concessions of Counsel in it, and we see no reason why the reasoning of this Court in National Employer Mu-tual v. Martins (6) should not equally apply to Order 29, rule 7 when it is in identical terms with Order XLVI, rule 7 which was being dealt with in that case. This being so it is-possible to award interest at a rate not exceeding 5% per an-num from the date of judgment to the date of payment, and we do order that interest be paid by the first and second de-fendants at the rate of 5% per annum, and the judgment of the learned Chief Justice must be varied accordingly.

To sum up, the appeal is allowed and the judgment of the High Court is varied in that in place of the sum of £34,625.11s.6d the sum of £9,450 is awarded to the plaintiff against the two defendants. In place of the award in the judgment of the High Court of interest there is substituted judgment for the plaintiff against the two defendants for in-terest on the sum of £9,450 at the rate of 5% from the date of the writ, December 8th, 1962, to the date of payment, but so that the total liability of the second defendant in the action shall not in any circumstances exceed £42,000.

The order of the learned Chief Justice granting costs of £265.3s.0d in the High Court against both defendants jointly and severally is varied to one of £215.3s.0d, as the plaintiff did not succeed in full on its claim.


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The defendants/appellants are entitled to their costs of this appeal in this Court which we assess at 65 guineas.

We would only add that Mr Bentley informed us that the name of the plaintiff is now the Standard Bank Nigeria Lim-ited as the successor to the Bank of West Africa Limited, and judgment is accordingly given as we have set out to the plaintiffs under that title.

Order accordingly.


Standard Bank of Nigeria Ltd v. Attorney-General of the Fed 335

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Standard Bank of Nigeria Limited v. Attorney–General of the

Federation


TAYLOR CJ

Date of Judgment: 15 FEBRUARY 1971 L.D.: 22A/1970

Banking – Money mistakenly paid into ex-employees bank account by former employer – Money already paid by bank to ex-employee before ex-employer instructed bank not to effect payment – Whether bank liable to refund ex-employer the money mistakenly paid into the ex-employee bank ac-count

Facts

The plaintiff/respondent mistakenly paid the salary of an ex-employee into his bank account with the defendant for five months after he had ceased to be in Government Service. The ex-employee withdrew the salary paid into his account to the extent that his account was in the red before the plain-tiff realised that the ex-employee was not entitled to the sal-ary and wrote the defendant not to pay out the amount to the ex-employee. The plaintiff instituted this action against the defendant at the Chief Magistrate to recover the salary mis-takenly paid into the bank account of the ex-employee.

Subsequently, money was paid into the account of the ex-employee from other sources and the sum of £14.11s.3d was standing to the credit of the account. The Chief Magistrate held that the plaintiff was only entitled to recover from the defendant the amount standing to the credit of the bank ac-count of the ex-employee as at the date judgment was deliv-ered. The bank later made a refund of £162.18s.0d to the plaintiff/respondent.



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Held –

1. When an agent has received money paid to him by a third person under a mistake of fact, if he still has the money in his hands it can be recovered. If, on the other hand, he has paid it away to his principal, then it cannot be recovered from the agent, and the only remedy is to go against the principal.

2. Since the appellant bank had paid the salary to the ex-employee, the bank was not liable to make a refund to the plaintiff/respondent and the fact that the bank had in fact made a refund of £162.18s.0d to the plain-tiff/respondent did not in anyway affect the liability of the appellant bank.

Appeal allowed – Judgment of lower court set aside – Judgment of dismissal entered.


Foreign

Gowers v. Lloyds and N.P.F. Bank [1938] 1 All E.R. 766

Counsel

For the defendant/appellant: Bentley

For the plaintiff/respondent: Inyang

Judgment

TAYLOR CJ: The plaintiff, now respondent, sued the defen-dant for the sum of £409.2s.6d as monies paid to the account of one Mr Nnawuchi with the defendant bank as salary for the months of November, 1966 to March, 1967, and a small sum in respect of salary for October, 1966.

The fact of payment of the sum claimed was not in dispute nor was the fact that the aforesaid Mr Nnawuchi was not en-titled to these sums disputed in view of his no longer being in the service of the Government of the Federation at the relevant period. The evidence of the appellant went also to


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show, and this was also conceded on appeal by Mrs Omoto-sho for the respondent, that when the appellant bank re-ceived exhibit B asking them in effect not to pay out any amount standing to the account of Mr Nnawuchi ie on 8th June, 1967 the said account stood at a debit. Exhibit H in this respect shows that on 8th April, 1967 the account of Mr Nnawuchi was “in the red” to the tune of £7.1s.9d. It is an obvious conclusion then that all the sums paid in by the re-spondent to the credit of Mr Nnawuchi for the months in re-spect of which the claim is made, had, by the 8th April, 1967 been not just withdrawn, but overdrawn.

The sole issue for me to decide here is really, a very simple one, and is whether the appellant bank can be sued in respect of the payment made in the circumstances above stated where it is also shown that other monies are paid into the ac-count from sources other than the present respondent? To put it in problematic Form A under a mistake of fact pays money into B’s account with C bank. B withdraws that money leaving his account in debit. Subsequently D pays money into B’s account with the same bank or B pays money into his account from other sources. A now realising his error wishes to reclaim the sum or sums so mistakenly paid. Is his remedy against the bank who no longer hold, any of the money paid in by A, or is his action against B and if necessary joining the bank C or against C by way of gar-nishee proceedings?

Mr Bentley for the appellant made reference to the state-ment of the law contained in the 5ed of Paget’s Law of Banking at page 254 where it is said that:–

“The other position barring the recovery of money paid under mistake of fact is where it has been innocently received by an agent, and that agent, before notice of the mistake, has paid it over to his principal, or otherwise materially and irrevocably altered his position.”

The same principle of law is stated in different words of Halsbury’s Laws of England (3ed) at page 233 paragraph 522 as follows:–

“But if a third person pays money to an agent under a mistake of


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fact, or in conse quence of some wrongful act, the agent is person-ally liable to repay it, unless, before the claim for repayment was made upon him, he has paid it to the principal or done something equivalent to payment to his principal.”

So clear is the law on this subject that in the case of Gowers v. Lloyds and N.P.F. Bank [1938] 1 All E.R. 766 to which I was referred by Mr Bentley, the Master of the Rolls Sir Wilfred Greene said at page 773 of the report that:–

“It cannot be contested, and, indeed, it is not contested, that; where an agent has received money paid to him by a third person under a mistake of fact, if he still has the money in his hands it can be recovered. If, on the other hand, he has paid it away to his princi-pal, then it cannot be recovered from the agent, and the only rem-edy is to go against the principal.”

In that particular case the mistake of fact was one as to the identity of the person into whose account the money was paid, as distinct here from a mistake merely as to a state of fact only within the knowledge of the respondent ie as to whether the payee was or was not still in the (employ) of the respondent. Sir Wilfred Greene MR continued the above quotation in these words:–

“It is said here that the agents, the bank, are not entitled to rely on the second branch of that proposition, because they have not in fact paid that money to their principal. It is said that the principal for whom they purported to act was Mr Gibson, and they have not paid the money to Mr Gibson, but to some fraudulent person who was masquerading as Mr Gibson.”

With all respect to that argument, it appears to me to be based upon a fallacy. The bank was instructed by a person, whose identity has not been ascertained, who purported to be Mr Gibson, and the bank acting for that person, and as the agent of that person, received the money. They supposed that their principal was Mr Gibson. In point of fact, he was not.

But that does not, in my opinion, alter the fact that, that person who actually sent the instructions was their principal. The fact that they thought he was somebody else does not


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alter the fact that it was that person for whom they were act-ing. It is to that person that they have paid away the money. In those circumstances, it appears to me that the act that they were mistaken in thinking that their principal was Mr Gib-son is quite irrelevant.

I have quoted in extenso from the judgment because the principle stated therein though really quite an obvious and a simple one, is nevertheless of extreme importance, and more so in view of the number of claims that have come before my court of similar instances of alleged mistakes of fact by government departments paying ex-employees long after they had ceased to be employed by the Government. I do not know on what principle the learned Chief Magistrate based his decision that:–

“The statement of account of Mr Nnawuchi as it is presently stand-ing as at 22nd March, 1968 Credit £14.11s.3d. This amount is all that plaintiff could rightly claim. But as to the amount of £14.11s.3d now standing to the credit of the said Mr Nnawuchi I give judgment to plaintiff.”

In short what the learned Chief Magistrate has done is noth-ing short of giving judgment in an action against an agent of a disclosed principal, against the principal without the latter being made a party to the proceedings. Different considera-tions would have applied if the agent in the circumstances of this case still had in his possession the money mistakenly paid in by the respondent on behalf of the bank’s principal.

The fact that the bank had in fact made a refund of £162.18s.0d to the respondent does not in any way affect the liability on the claim before the court. For these reasons the judgment of the court below is set aside and a judgment of dismissal is hereby entered. I shall hear the parties on costs.

Mr. Bentley: I ask for 15 guineas only.

Mr. Inyang: Has nothing to say on costs.

Court: Costs assessed at 15 guineas to appellant.

Appeal allowed: Judgment of lower court set aside.

Judgment of dismissal entered.

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Anuku v. Standard Bank of Nigeria Limited

HIGH COURT OF WESTERN STATE

ADEMOLA J

Date of Judgment: 8 MARCH 1971 Suit No.: I/170/70

Banking – Loan – Mortgage deed – Whether duly executed without inserting a date – Insertion of a date different from date of due execution – Whether renders document fraudu-lent of a party

Evidence – Presumption as to date of document – Section 124 of Evidence Act, Cap 62 Laws of the Federation of Ni-geria, 1958

Facts

The plaintiff was granted overdraft facilities of £12,000 by the defendant using the leasehold document on his property in Ibadan as security for the loan. At the trial, plaintiff con-tended that apart from the application forms which he signed, he signed and executed no other document in favour of the defendant bank as he had left Ibadan for the Mid-west State at the material date the legal mortgage was purportedly executed. The plaintiff further contended that the insertion of his name on the deed of mortgage was fraudulent as he did not execute the said mortgage personally nor did he authorise anybody to do so on his behalf. It was however re-vealed at the trial that the plaintiff actually signed the mort-gage deed which was left undated at the time.

Held –

1. That the registration of the deed of mortgage executed by the plaintiff is not rendered null and void by the in-sertion of a date after such execution.

2. That the insertion of a date on an undated document after its execution could not be a fraudulent act on the part of one of the parties to it, regard being made for the


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precedent acts of the parties before the execution of such document to create some legal relations and be bound by them.



Foreign

Barclay’s Bank Ltd v. Cole [1966] 3 All E.R. 948 Derry v. Peek (1889) 14 App. Cas. 337 Oshey v. Sir Baptist Hicks Cro. Jac. 263 Re Slater, ex parte Slater 76 L.T.R. 529 Steele v. Mart 107 E.R. 1060

Counsel

For the plaintiff: Ige

For the defendant: Chief Okubadejo

Judgment

ADEMOLA J: The plaintiff was a businessman who lived at No. 17, Atiba Road, G.R.A., Ibadan. Sometime in 1966 he approached the defendant bank for overdraft facilities to the tune of £12,000. He signed exhibit 1 which is an application form for the loan and which is similar to exhibit 5 signed by him but contained more information, which plaintiff con-tends was put in by somebody else and not himself. It was agreed during the negotiation for the loan that the leasehold document on 17, Atiba Road, should be a security for the loan. The defendant replied in exhibit 2 accepting the offer. The properties on the leasehold on 17, Atiba Road consist of a duplex house and another storey building. The leasehold document on 17, Atiba Road, is exhibit 12. The plaintiff contended that during the negotiation Mr Duff inspected the premises and it was after the inspection that the loan was granted. It is however his point and a very important one too considering what happened later that he agreed that the secu-rity for the loan should be on the duplex house and should not cover the storey building on the plot of land. Plaintiff was granted the £12,000 loan by the defendant. The plaintiff

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contended that save for the loan application forms which he signed, he signed or executed no other document in favour of the defendant bank. He had as a result of the crisis that began in the country by July, 1966 left Ibadan for the Mid-west Region then, paying visits . . . to Ibadan until about the time the rebel forces overran the Mid-west State in August, 1967. Plaintiff did not execute exhibit 8, the legal mortgage on his property at 17, Atiba Road for on the date on the mortgage deed, he (plaintiff) was in Ozubulu in Onitsha Province and was within the territory of the East Central State under the control of the rebel forces. He learnt of the mortgage on the property for the first time when he came back to Ibadan in February, 1970 and also of the result of the case by the defendant against him in I/215/66, exhibit 7 be-gun before he left Ibadan. He said thus in paragraph 14 of his statement of defence:–

“The plaintiff will contend at the trial that the insertion of his name on the deed of mortgage the subject matter of this action was fraudulent and that at no time did he execute the said mort-gage personally nor did he authorise anybody to do so on his be-half.”

The defence did not deny the approach made by the plaintiff for a loan. It is its contention that plaintiff was given the loan; that the plaintiff signed a legal mortgage before one Stuart Anderson Fleming, a manager of the Agodi branch of the bank between June, 1966 to November, 1968. Mr Anderson gave evidence and said that plaintiff signed ex-hibit 8 in his presence before he signed as a witness to plain-tiff’s signature. The mortgage deed then was left undated and that he remembered that the period was in August, 1966, after he (Fleming) had taken over from Mr Duff who negoti-ated the loan with the plaintiff. This witness produced ex-hibit 12 which he said plaintiff deposited with the bank as security for the loan. The defendant bank started having dif-ficulties with the Ministry of Lands over the registration of the mortgage deed and payment of rent due on the leasehold. These difficulties were the direct result of the instruction of


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the plaintiff to the Ministry not to accept the rent due from anybody but himself, exhibit 6, exhibit 9, exhibit 10, ex-hibit 11. The defendant bank made all efforts to effect pay-ment and to register the deed of mortgage until matters came to a head and defendant had to commence action not only for the money lent to plaintiff but also asking the court for an order against the Ministry of Land to remove the em-bargo placed by the plaintiff as to the payment of rents and registration. The judgment of the court is exhibit 7(4). It was after this judgment that a date was inserted on exhibit 8 and the formalities about the registration completed. The issues in this case are these: Was there a legal mortgage prepared as security for this loan made by the defendant? Did the de-fendant execute this mortgage? Was the execution of such a deed if it existed procured by fraud as alleged by plaintiff as he was not a party to it? The plaintiff relied very much on his absence from Ibadan on the material date, the legal mort-gage bore as evidence of the fraud put at the door of the de-fendant, and the fact that the signature on the deed could not be his by the fact of his not being in Ibadan on that date.

Before going much further into this case, let me deal with some of the minor points that have come up during trial and perhaps if it had been taken care of could not have resulted in this action in its present form. The plaintiff contended that the agreement he reached with the defendant was to use as secu-rity the duplex house and not all the houses on the leasehold document on 17, Atiba Road, hence the true arrangement is shown on exhibit 1. There is some support for this view, as a reading of exhibit 2, letter dated 5th June, 1966 written to plaintiff by the negotiator of the defendant bank. Mr Duff shows exhibit 5 though dated 2nd June, 1966, must in my view have come into existence after this letter. Exhibit 5 is in my view an improvement on exhibit 1 by way of details of the negotiation between the parties. It must have come into existence after exhibit 1 and is not a copy of exhibit 1. I believe the plaintiff signed it and must have supplied



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the details to whoever prepared, it for the matters therein could only be given by him or someone he had authorised. The misunderstanding that later arose must have come after the plaintiff had realised that the mortgage deed prepared and executed (though he denied all these) had included the storey building in which he lived. I think he should have be-gun his battle then in another way against the defendant. I find as a fact that a legal mortgage was prepared and that the plaintiff did execute the mortgage before defendant’s wit-ness No. 2. In this conclusion that I have reached, I accept and believe the evidence of defendant’s witness No. 2 that plaintiff signed the legal mortgage document before he (Fleming) appended his signature as a witness. Another point which is worthy of mention is this: that as far back as the 4th November, at least the plaintiff himself wrote to a third party. I quote from exhibit 6 written by himself. The plaintiff in his letter, exhibit 6, to the Permanent Secretary, Ministry of Lands over Plot A.17, New G.R.A., Ibadan says in the last sentence:–

“The writer is still waiting for the bank to amend the mortgage or fulfil the original obligation.”

That this exhibit 6 must be dealing with the subject matter of this lease is shown by exhibit 11, 11(1), 11(2). In fact, ex-hibit 11(2) is a copy of exhibit 6 forwarded to the defendant solicitor by the Ministry of Lands. From it, it is clear that as from the date of the letter plaintiff was not only aware of the existence of a mortgage with the bank, but talked of amend-ing such mortgage. The defendant has raised in its pleading that this issue of execution of the legal mortgage by the plaintiff is a matter of estoppel inasmuch as the judgment in Suit No. I/215/66 is still subsisting. Defendant is right on this point as that aspect has in addition to other matters been dealt with by Craig J in his judgment in exhibit 7(4). In my view section 53 of the Evidence Act comes very much into the fore in this instance and can be invoked against the plaintiff on this point. But I prefer not to decide this point


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against the plaintiff by virtue of the findings in that judg-ment alone but also and very much on the evidence and the exhibits before me.

Lastly, the contention that the execution of the deed was procured by fraud as the plaintiff was not a party to it. Plain-tiff, as I have pointed out, relied on his absence from Ibadan on the date the legal mortgage bore to sustain this allegation of fraud against the defendant regarding the registration of the deed in exhibit 8. The date on the deed is 2nd Septem-ber, 1969. Plaintiff contended that on that date, he was not in Ibadan and could not have executed the deed and to say so as the defendant is saying, is an act of fraud on its part or his property. I am satisfied on the evidence led that the plaintiff was not in Ibadan on the date appearing on the document. In fact this point is not contested by the defence. Section 124 of the Evidence Act reads:–

“When any document bearing a date has been proved, it is pre-sumed to have been made on the day on which it bears date, but independent proof of the correctness of the date will be required if the circumstances are such that collusion as to the date might be practised, and would if practised, injure any person or defeat the objects of any law.”

The first part of the above quoted section is a re-enactment of what the common law is; see Steele v. Mart (1) at page 1063 where Holroyd J said:–

“the question is whether there was reasonable evidence to satisfy the jury that the lease was executed after the time it purports to bear date. For it is clearly established, that if it be executed after-wards, it takes effect from the date of the delivery, and not from the day of the date.”

and I take it to be clear that a party may show that the deed was delivered on a different date from which it bears date; Oshey v. Sir Baptist Hicks Cro. Jac. (2); see also Re Slater, ex parte Slater (3). I am satisfied by the evidence of defen-dant’s witness No. 2, Mr Fleming, that the document was executed by the plaintiff before the date shown on it and for the reasons given which I accept. The question now is, does



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the insertion of a date different from date of its due execu-tion render this document so dated fraudulent of the plain-tiff? Fraud is a very serious charge especially if made against such an institution as the defendant, from whom a standard of probity, honesty and good faith is not only ex-pected but most desirable if it were to survive in the business world. There have been many judicial definitions of the word fraud. I would not attempt to catalogue them here. I prefer and adopt the recent one given in the judgment of Lord Denning M.R. in Barclay’s Bank Ltd v. Cole (4) at page 950 where he said:–

“Fraud in ordinary speech means the using of false representations to obtain an unjust advantage.”

See the definition in the Shorter Oxford English Dictionary. Likewise in law “fraud” is proved when it is shown that a false representation has been made knowingly, or without belief in its truth or recklessly, careless whether it be true or false, see Derry v. Peck (5) per Lord Herschell. In any case “fraud” involves a “false representation.” What then is the false representation about exhibit 8? Is it the date on the document or the whole content of the document? The plain-tiff from the very beginning intended to give as security his leasehold property for the loan the defendant bank was to make him. By his signing of the letter of his application for the loan, he understood that he would sign a mortgage; see exhibit 1 and exhibit 5. The plaintiff got the loan of £12,000. I have found that he executed the mortgage prior to the date the mortgage deed had on it. Wherein lies the false represen-tation by the defendant bank to obtain an unjust advantage by inserting a date on a document after its execution by the plaintiff? It is a common practice among conveyancers or solicitors to obtain the signatures of parties to a document before submitting such documents for stamping, registration or consent by anybody required by law to give such consent if necessary. It is when such consent had been obtained or document ready to be stamped or registered, that a date is


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inserted. To shut my eyes to this practice is to ignore the re-alities of our time. Therefore it is my view that the insertion of a date on an undated document after its execution could not be a fraudulent act on the part of one of the parties to it regard, being made for the precedent acts of the parties be-fore the execution of such document to create some legal re-lations and be bound by them. The insertion of a date is a mere signification of such an intention.

The registration of the deed of mortgage executed by the plaintiff as I have found is not rendered null and void by the insertion of a date after such execution. The judgment of this Court then shall be that the instrument of mortgage regis-tered as Number 58 at page 58 in Volume 115 in the Land Registry, Ibadan is not null and void and has not been pro-cured by fraud on the part of the defendant bank. The in-junction asked for is refused. The defendant is at liberty to enforce against the properties whatever rights it has under the mortgage deed.




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National Bank of Nigeria Limited and another v. Peters and another


JOHNSON J


Banking – Loan – Overdraft – Interest on overdraft

Banking – Loan – Overdraft – Limitation of action – Recov-ery barred six years after last advance, not after demand for repayment

Banking – Overdraft – Interest on overdraft is added to principal and becomes part of principal due

Facts

The plaintiffs brought an action to recover the outstanding balance of an overdraft granted to the defendants with the accrued interest.

The first plaintiff granted an overdraft facility to the de-fendant over six years before the commencement of the ac-tion. The defendant withdrew the entire overdraft and the plaintiff continued to debit the account with the interest which is added to the principal sum periodically. The plain-tiff commenced this action more than six years after the de-fendant had last drawn on the account to recover the amount due on the accounts. The defendants pleaded the Limitation Law (Cap 64), Laws of Western Nigeria, 1959.

Held –

1. The course of action arose when money was advanced by the plaintiff to the defendants.

2. The ordinary practice of bankers is that the interest due on overdraft is from time to time added to the principal amount, and becomes itself part of the principal due.

Action dismissed.


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Foreign Parr’s Banking Co Ltd v. Yates (1898) 2 Q.B. 460, (1898) 79 L.T. 321


Evidence Act, Cap 62, section 96 Limitation Law Cap 64 (Laws of Western Nigeria), 1959, section 2

Counsel

For the plaintiffs: Somolu and Arulogun

For the defendants: Chief Okubadejo

Judgment

JOHNSON J: In this case the plaintiffs claim against the de-fendants jointly and severally the sum of £24,328.13s.8d (twenty-four thousand, three hundred and twenty-eight pounds thirteen shillings and eight pence) being the balance of an overdraft and the accrued interest thereon received by the defendants at Lagos and owing to the plaintiffs as at 31st December, 1966 by the said defendants, who trade as part-ners under the style and business name of Daramaja Produce Stores.

The writ of summons further claims that the defendants have failed to pay the said sum of money despite repeated demands. Pleadings were ordered and duly filed. Among other averments made in the statement of claim, the follow-ing appear pertinent to the relevant issues to be determined in this matter:– “6. The defendants were business partners who traded under the

business name of Daramaja Produce Stores and had their head office at Ibadan.

7. The defendants, as such partners under the name of Da-ramaja Produce Stores, applied to the second plaintiff in 1954 for appointment as a licensed buying agent under the second plaintiff.

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8. The defendants were so appointed and for several years thereafter they were appointed from year to year as licensed buying agents under the second plaintiff.

9. As such parties and under the same business name the de-fendants applied to the first plaintiff for a produce overdraft loan and advance payment facilities as customers of the first plaintiff.

10. The application of the defendants was granted and from that time the total overdraft for produce granted and which still remains unpaid as at 31st December, 1966 amounts to £24,328.13s.8d (twenty-four thousand three hundred and twenty-eight pounds thirteen shillings and eight pence).

11. When the defendants defaulted in the payment of the out-standing balance of the overdraft granted to them up to March, 1961 the first plaintiff asked to assign the debt to the second plaintiff since the defendants were still a li-censed buying agent under the plaintiff.

12. The defendants were consulted by the second plaintiff and the defendants agreed to the assignment proposal in writing.

13. The first plaintiff made an equitable assignment of the said debt of £24,328.l3s.8d to the second plaintiff on 1st April, 1961 with the knowledge and consent of the defendants.

14. The defendants have entered into several arrangements with the second plaintiff since then for the liquidation of the money but none has materialised.

15. The defendants have since failed to pay the said sum of £24,328.13s.8d despite repeated demands.

16. The defendants were supplied with a statement of account from time to time by the first plaintiff at the time the ac-counts were being operated by them.”

The amended statement of defence, besides admitting para-graphs 1 and 3 of the statement of claim, which stated the status of the plaintiffs, denied all other averments contained in the statement of defence and put the plaintiffs to strict proof thereof.

It further set up special defences as follows:–

“3. The defendants will contend at the trial that the plaintiffs’ statement of claim is not properly before this Honourable Court


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and that it should be struck out as it was filed out of time, and without obtaining the leave of the court.

. . .

5. The defendants will also contend at the trial that there was no notice of any assignment of the defendants’ debt (which is de-nied) to the second plaintiff ever given the defendants in writ-ing.

. . .

10. The defendants will contend at the trial that the plaintiffs merely claim a lump sum of money without giving particulars of their claim.

11. The defendants will contend at the trial that the present writ shows no cause of action as it does not state the date of com-mencement of the transaction between the plaintiffs and the defendants.

12. The defendants will contend at the trial that the plaintiffs’ claim is statute-barred by the Limitation Law (Cap 64) and should be dismissed.”

At the trial, evidence was led only by the plaintiff who called two witnesses. The defence called no evidence, but rested its case on the plaintiffs. Even though several material facts were averred in the statement of claim, no effort was made to lead evidence in establishing any of these material facts. For example, paragraph 12 of the statement of claim averred that the assignment proposal was agreed to in writ-ing, yet no such writing was produced in evidence. Para-graph 14 alleged that the defendants entered into several agreements with the second plaintiff since the assignment alleged in paragraph 13, none of which materialised, yet no evidence of any such arrangement was given. Paragraph 15 averred that the defendants failed to pay the said sum of £24,328.13s.8d despite repeated demands, yet no evidence of any such demands was given. Paragraph 16 averred that the defendants were supplied with a statement of account from time to time by the first plaintiff at the time accounts were being operated by them, yet no evidence in proof of such supply was made available to the court.



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To my mind, whether or not there was an assignment of the debt between the plaintiffs is in this case of no moment. This is because both the original creditor and the alleged as-signee have been joined as plaintiffs. At the worst even if the action succeeds, the original creditor will be entitled to judgment. The only materials of the transaction which the court has before it are as contained in exhibits A and B, which were admitted in accordance with the provision of section 96(l)(h) of the Evidence Act (Cap 62). The section provides as follows:–

“(1) Secondary evidence may be given of the existence, condi-tion or contents of a document in the following cases:–

. . .

(h) when the document is an entry in a banker’s book.”

I have examined and studied these exhibits carefully. Exhibit A showed that on 18th November, 1958 a total sum of £10,133.4s.7d was transferred from the Ibadan branch as balance of account. On this balance the record showed that interest was added at different intervals; and the five page document showed that it was on this balance transferred on 18th November, 1958 that the bank operated. Similarly, ex-hibit B showed that on the same date, 18th November, 1958, a sum of £12,43l.19s.6d was transferred from the Ibadan branch as balance of account. This also showed that interest was charged on this said amount until 1961, as shown in the four-page document. The documents were headed “Da-ramaja Produce Stores, Cocoa Account No. 1” and “Palm Kernel Account No. 1” respectively. The defendants in paragraph 12 of the statement of defence raised what I con-sider the crucial issue for determination in this matter in the following terms:–

“The defendants will contend at the trial that the plaintiffs’ claim is statute-barred by the Limitation Law (Cap 64) and should be dismissed.”

Both Counsel addressed on this issue as if the operative date was 31st March, 1961. If this were so, and this action was


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filed on 31st March, 1967 as shown on the date stamped on the writ of summons, it would appear to have been in time. This is an action either of debt arising out of a simple con-tract or for an account. How then does the Limitation Law operate? The Limitation Law (Cap 64) provides in section 4 as follows:–

“1. The following actions shall not be brought after the expiration of six years from the date on which the cause of action ac-crued, that is to say:

(a) actions founded on simple contract or on tort;

2. An action for an account shall not be brought in respect of any matter which arose more than six years before the com-mencement of the action.”

It is clear therefore that any such action cannot be brought after the expiration of six years from the date on which the cause of action accrued. If it is a simple contract, the deter-mination of the accrual date would be looked for in the terms of the contract, as it is possible that the parties might have provided the date when, if it is a debt, it should become due for payment. That date then becomes the date when the cause of action accrues. If, however, it is an action for an account, section 2(5) of the Limitation Law makes the fol-lowing provision:

“In Part II of this Law references to a right of action shall include references to a cause of action and to a right to receive money se-cured by a mortgage or charge on any property or to recover pro-ceeds of the sale of land, and to a right to receive a share or inter-est in the personal estate of a deceased person; and references to the date of the accrual of a right of action shall:–

(a) in the case of an action for an account, be construed as refer-ences to the date on which the matter arose in respect of which an account is claimed.”

Applying the above provisions to the facts of this case, the accrual date would appear to be the date or dates when the overdrafts were granted.

In paragraphs 9 and 10 of the statement of claim as quoted earlier, the plaintiffs averred, although no evidence was led



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in support, that the debt claimed consisted of an overdraft loan and advance payment facilities which were applied for by the defendants and granted, as they put it, from that time. In the context, having regard to the averments in paragraphs 7 and 8 quoted above, “that time” would appear to refer to the year 1954. The documents, exhibits A and B, tendered showed that as at November, 1958 there was an outstanding balance of a debit account by the defendants. In fact the first plaintiff’s witness admitted under cross-examination that he knew that the transaction between the plaintiffs and the de-fendants started in 1954 as shown by the records. If as shown in exhibits A and B the operative debit balance ex-isted from November 18th, 1958, then the latest time for an action to be brought to bring it within the Limitation Law would be 18th November, 1964.

A case in point on this issue is that of Parr’s Banking Co Ltd v. Yates (1), where it was held that the statute, (ie the Statute of Limitation) runs from the date of each advance even when the advances are guaranteed. It is therefore easily understood why the plaintiffs made no effort to lead any evidence to show the dates when the overdrafts granted to the defendants were in fact given. The documents, exhibit A and B, which they have tendered do not appear to have helped their case any better. In this regard, a closer examina-tion of Parr’s case (1) referred to above is necessary. The head note reads:–

“In an action on a guarantee it appeared that the defendant had guaranteed to the plaintiffs, a banking company, payment of all moneys which might be owing to them in account with a cus-tomer with interest, commission, and other banking charges; and it was provided that the guarantee should be a continuing guaran-tee, and should not be withdrawn except by six months’ written notice from the guarantor. The plaintiffs made advances to the customer by honouring his overdrafts from time to time down to a period more than six years before the action, but made no ad-vances subsequently to that period, and the customer paid sums in to his account with the bank against his liability from time to time down to a period within six years before the action. At the end of


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each half-year the plaintiffs debited him in account with the in-terest for the half year on the amount owing by him from time to time, and carried forward the balance to his debit as the amount owing at the commencement of the next half-year. Held, that the plaintiffs’ right of action upon the guarantee in respect of the sums advanced by them to the customer was barred by the Statute of Limitations, but that the action was maintainable in respect of interest which had accrued due from the customer within six years before the action and had not been paid (2 Q.B. at 460).”

The situation in the present case is not dissimilar to the one in the above case. Exhibits A and B showed that interest had been charged and added by the bank to the outstanding debit balance brought forward on 18th November, 1958. One would have expected that a banker would not allow an over-drawn account to lie dormant for six years or more, even from the date of the earliest advance, without some pay-ments on account or of interest, or some other acknowledg-ment sufficient to bar the Limitation Law. Vaughan Wil-liams LJ, in his judgment in Parr’s case (1), made reference to the practice of the bank in charging interest on overdrawn accounts and its effect in the following terms (1898) 2 Q.B. at 460; 79 L.T. at 321): “According to the ordinary practice of bankers the interest due is from time to time added to the principal, and becomes itself part of the principal due.”

Following this reasoning it is my judgment that the total balances outstanding shown in exhibits A and B form part of the outstanding balances as at 18th November, 1958. The debt therefore having been outstanding for a period of more than six years before the date of the writ in this action, the plaintiffs’ right of action thereon is barred by the Limitation Law. The action therefore fails and is accordingly dismissed with costs to be assessed. Action dismissed.



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African Continental Bank Limited v. Khalil and another


ODUNLAMI J


Banking – Guarantee – Contract – Modification of contract of guarantee without the consent of guarantor – Modifica-tion substantial and prejudicial to interest of guarantor – Effect of

Banking – Guarantee – Increase in overdraft facility without consent of guarantor

Banking – Guarantee – Modification of contract of guaran-tee – Discharge of guarantee

Facts

The plaintiff claims against the defendants the sum ad-vanced to the first defendant as overdraft and guaranteed by the second defendant. The plaintiff bank granted an over-draft facility to the first defendant at an agreed sum and guaranteed by the second defendant. The plaintiff increased the overdraft facility without consulting with the second de-fendant and without his consent. The plaintiff thereafter in-stituted this action to recover the outstanding balance of the account. The second defendant contended that the guarantee had been discharged because his position had been altered without his consent.

Held –

1. A long series of cases has decided that a co-surety is dis-charged by the creditor dealing with the principal or with a co-surety in a manner at variance with the contract, the performance of which the surety had guaranteed.

2. It is a well-established and strictly followed principle that any variation in the terms of the agreement between


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the creditor and the debtor which could prejudice the surety will, unless he consents thereto, discharge him from liability unless the contract of suretyship provides to the contrary.

Judgment for the plaintiff against the first defendant, action against the second defendant dismissed.


Nigerian

National Bank of Nig. Ltd v. Awolesi (1964) (1) A.L.R. Comm. 279; (1964) 1 W.L.R. 1311

Foreign

Holme v. Brunskill (1878), 3 Q.B. 495; 38 L.T. 838 Ward v. National Bank of New Zealand Ltd (1883), 8 App.

Cas. 755; 49 L.T. 315

Counsel

For the plaintiff: Sonoiki

For the second defendant: Akinjide

Judgment

ODUNLAMI J: The plaintiff’s claim against the defendants jointly and severally is for the sum of £997.14s.6d being the balance of money due to the plaintiff by way of short-term overdraft granted to the first defendant by the plaintiff be-tween February, 1969 and August, 1970 at his request with interest thereon, and in respect of which the second defen-dant is his guarantor. The plaintiff is also claiming interest on the judgment debt at 5% from the date of judgment to the date of final payment.

Pleadings were ordered, filed and delivered by the plaintiff and the second defendant. The first defendant was served substituted service. He did not file any statement of defence and neither did he appeal at the trial nor was he represented.

The case for the plaintiff is that the first defendant has been a customer of the bank since February, 1969, and on

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF WESTERN STATE) Odunlami J


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May 13th, 1969 he approached the bank manager to secure an overdraft facility of £500, payable at the end of every month. He was asked to produce a surety and he brought the second defendant, Mr Abdel Sulaiman, as his surety. They both signed exhibit A, a guarantor’s form wherein the sec-ond defendant stood surety for the first defendant in the sum of £500. The evidence shows that the first defendant was balancing his account every month until 3rd July, 1970, when he approached the bank for an additional £500 over-draft and was granted it. He failed to balance his account. The statement of account, exhibit B, was tendered and it shows £977.14s.6d as the outstanding balance of the over-draft and interest as at the end of August, 1970. There is evidence that letters of demand were sent to the defendants on September 1st, 1970, and as Counsel for the second de-fendant could not produce any of the original letters, a copy of one of them, exhibit C, was tendered.

The plaintiff’s first witness informed the court that when the additional overdraft of £500 was granted, the first defen-dant was asked to provide a surety which he failed to do, hence the claim jointly and severally against the first and second defendants is for £500, whilst the balance of £497.14s.6d is to be paid by the first defendant alone.

At the close of the plaintiff’s case, Akinjide, learned Coun-sel for the second defendant, informed the court that he did not know when his client would be coming back to Nigeria if ever he was, and that the first defendant had left the coun-try for good. He intimated to the court that he had no witness to call. Thus learned Counsel for the plaintiff addressed the court. Akinjide replied and he contended that there were two contracts in respect of that transactions – the one of 13th May, 1969 and that of 1st July, 1970, each for a separate £500. He informed the court that at the time the second con-tract, of July 1st, 1970, was entered into, there was a credit balance of over £205 in favour of the first defendant and that since the second defendant was not a party to the second


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contract, he contended that the first contract to which the second defendant was a party, terminated with the balance of £205 at the end of June, 1970.

It is pertinent to refer to some paragraphs of the statement of claim. Paragraph 6 states:–

“The defendants now jointly and severally owe the plaintiff the sum of £997.14s.6d, being the balance of overdraft granted to the first defendant by the plaintiff in Ibadan at the first defendant’s request between February, 1969 and August, 1970 with interest and charges thereon and in respect of which the second defendant is his guarantor to the tune of £500.”

The last paragraph before the date in the statement of claim also states that the plaintiff claims as per writ of summons, and the writ of summons shows African Cont. Bank Ltd v. Khalil (W.S. Nig.) that:–

“the plaintiff’s claim against the defendants jointly and severally is for the sum of £997.14s.6d, being balance of money due to the plaintiff by way of short term overdraft granted to the first defen-dant by the plaintiff at Ibadan between February, 1969 and Au-gust, 1970 at his request, with interest or charges thereon and in respect of which the second defendant is his guarantor.”

In the circumstances of this case it is essential to consider whether by the acts of the plaintiff the second defendants’ guarantee had been discharged.

It is clear from the statement of claim and from the evi-dence led in this Court that the plaintiff is treating the ac-counts of the first defendant relating to the overdraft of £500 which the second defendant guaranteed him and the transac-tion of a further overdraft of £500 which he did not guaran-tee him (the first defendant) as one transaction, and hence the bank is holding both of them liable jointly and severally for the sum of £977.14s.6d. Although, in evidence the plain-tiff’s first witness informed the court that the bank is claim-ing £500 jointly and severally from them whilst the balance of £447.14s.6d is expected to be paid by the first defendant alone.



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On the other hand, the second defendant contended that he had been discharged, and averred in paragraph 6 of the statement of defence that “the contract of guarantee on which the plaintiff relies is invalid, void and of no effect.” Paragraph 8 of the statement of defence further avers that – “before issuing the writ, in this case, claiming £997.14s.6d from the defendants jointly and severally, the plaintiff has altered the defendants’ position under the guarantee (if valid) without the second defendant’s consent,” whilst para-graphs 10 of the same statement of defence states: “The sec-ond defendant avers that he has been discharged from the guarantee (if valid) and is not liable to the plaintiff at all for any sum.”

It is the evidence of the plaintiff’s witness that when the second overdraft of £500 which increased the overdraft fa-cilities of the first defendant to £1,000, was granted, the first defendant was asked to produce the second defendant in or-der to increase his guarantee by £500 (ie to guarantee the first defendant for £1,000), but the second defendant did not turn up, and despite the fact that he did not sign any guaran-tee to increase the amount which he guaranteed the first de-fendant, and despite his lack of consent, the plaintiff allowed the first defendant an overdraft facility to the tune of £1,000. And there were occasions (see August 6th, 1970 and August 11th, 1970), when he was allowed to withdraw well over £500 at a time when he was already in the red in his account with the bank (ie, he was owing £73.4s.6d and £303.4s.6d respectively).

It is clear in this case that the plaintiff was dealing with the first defendant (the principal) in a manner at variance with the contract which the second defendant guaranteed, in that the bank had granted him an overdraft of £1,000 (as against the £500 which the second defendant guaranteed the first defen-dant). In Ward v. National Bank of New Zealand Ltd (3) their Lordships had this to say (8 App. Cas. at 763; 49 L.T. at 317):–

“A long series of cases has decided that a surety is discharged by


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the creditor dealing with the principal or with a co-surety in a manner, at variance with the contract, the performance of which the surety had guaranteed.”

The same judgment (8 App. Cas. at 764; 49 L.T. at 317) adopted the language of Cotton L.J. in Holme v. Brunskill (1) where he said (3 Q.B.D. at 505; 38 L.T. at 840):–

“The true rule in my opinion is that if there is any agreement be-tween the principals with reference to the contract guaranteed, the surety ought to be consulted, and that if he has not consented to the alteration, although in cases where it is without the inquiry evidence, that the alteration is unsubstantial, or that it cannot be other wise than beneficial to the surety, the surety may not be discharged; yet, that if it is not self evident that the alteration is unsubstantial, or one which cannot be prejudicial to the surety, the. Court will not, in an action against the surety, go into an in-quiry as to the effect of the alteration . . .”

In this case, I have no doubt that the second defendant was not consulted before the overdraft facilities for which he guaranteed the first defendant were increased from £500 to £1,000, and I am further satisfied that the second defendant never consented to the increase of the overdraft facilities. Further I have no doubt in my mind that the variation in the terms of agreement between the bank and the first defendant was to the prejudice of the second defendant. For, as at the end of June, 1970, before the additional overdraft of £500 was granted without the second defendant’s consent, the first defendant had £205.11s.9d to his credit in his account. It is well established and strictly applied principle any variation in the terms of the agreement between the creditor and the debtor which could prejudice the surety will, unless he con-sents thereto, discharge him from liability unless the contract of suretyship provides to the contrary.

The variation in the case in hand, in my view, is sufficient to discharge the first defendant from liability. It is observed that exhibit A stipulates that:–

“The guarantee is to be a continuing security for the whole amount now due or owing to you (the bank) or which may hereafter at



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any time become due or owing to you (the bank) as aforesaid by the principal until the expiration of three calendar months after the receipt by you from the undersigned or any one or more of them of notice in writing to discontinue it (but notwithstanding the discontinuance as to one or more of the under signed the guarantee is to remain a continuing security as to the other or others) but nevertheless the total amount recoverable hereon shall not exceed the sum of £500.”

This tends to show that the guarantee was a continuing secu-rity which could only be terminated by giving three months’ notice.

But in the case of National Bank of Nig. Ltd v. Awo1esi (1964) (1) A.L.R. Comm. at 283; (1964) 1 W.L.R. at 1313. One of the terms of the contract of suretyship was:

“I agree that this guarantee shall be a continuing security to the bank, and shall not be determined except, at the expiration of six calendar months, written notice given to the bank of my intention so to do, and in the event of my death the liability of legal per-sonal representatives and of my estate shall continue until the ex-piration of six months’ notice in writing given to the bank of the intention of my executors or administrator to determine this guar-antee” (ie, that the continuing security could only be terminated by giving six months’ notice).

Later the principal was allowed to open the second account and it was held that the creditors were permitting the posi-tion of the respondent (the surety) to be prejudiced as to his guarantee and the surety was discharged, notwithstanding that the surety did not give six months’ notice to determine the suretyship as required by the terms of the guarantee.

In this case the bank permitted the first defendant to oper-ate his overdraft account beyond what the second defendant had guaranteed without his (the second defendant’s) con-sent, and I hold he has been prejudiced. I therefore uphold the submission that the second defendant was discharged the moment that the increase of £500 overdraft facilities was granted to the first defendant without consulting or obtaining his (the second defendant’s) consent.

The case against him is therefore dismissed with £21 costs.


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In so far as the first defendant is concerned, I am satisfied that he is owing the bank, the sum of £997.14s.6d. I there-fore enter judgment in favour of the plaintiff against the first defendant alone for the sum of £997.14s.6d with interest at 5% per annum until the judgment debt and costs are settled.

Judgment for the plaintiff against the first defendant; ac-tion against the second defendants dismissed.



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Edu v. National Bank of Nigeria Limited and another


ADEMOLA CJN, MADARIKAN, FATAI-WILLIAMS JJSC

Date of Judgment: 15 OCTOBER 1971 S.C.: 104/1970

Banking – Memorandum of guarantee – Deposit of the deeds creating a charge on the premises comprised in the deed – Absence of covenant in document to pledge personal liability – Whether constitute a contract to create personal liability

Facts

The plaintiff/respondent a bank advanced overdraft facilities to West Africa Travel Agency Limited totalling £11,366.9s.3d. The said facilities were guaranteed by Chief SL Edu, (the appellant). A memorandum of guarantee dated 5th March, 1963 was executed by Chief SL Edu in respect of the said facilities.

Upon default of the West Africa Travel Agency to pay the loan, the bank claimed against the defendants, jointly and severally the sum of £11,366.9s.3d being money payable by the defendants for money lent by the plaintiffs/respondents as bankers.

They contended at the trial that since the first defendant (Chief SL Edu) executed a Memorandum of guarantee, he was liable to pay from his personal account upon default of West Africa Travel Agency. Chief SL Edu denied the al-leged guarantee; he contended that if what he signed on the 5th March, 1963 was a guarantee, then the plaintiff had not complied with the condition precedent (ie first making a demand on West Africa Travel Agency). The trial Judge held that by the memorandum of guarantee the surety was firstly liable to pay the sum secured, and by virtue of the said guarantee Chief SL Edu had guaranteed the payment and was therefore liable as surety.


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Chief SL Edu appealed against the judgment. The Counsel to the appellant submitted that as there was no covenant in the memorandum of guarantee, whereby the appellant pledged his personal credit, the memorandum of guarantee does not involve an undertaking that the appellant would be personally liable.

Replying, Counsel for the plaintiff/respondent submitted that the assumption of personal liability is not a necessary element in suretyship, and that a surety who provides his pledge or security is deemed to have his personal credit.

Held –

Since there was no personal liability of any kind imposed upon the first defendant/ appellant by virtue of the memo-randum of guarantee, the present action was misconceived and ought to have been dismissed.

Obiter “In our view, the remedy which the plaintiff bank ought to have pursued is contained in and clearly set out in that understanding. This they have failed to do . . . It is however, open to the plaintiff bank to pursue whatever action they may be advised to take on the strength of the undertaking in exhibit A (ie the memorandum of deposit of the deeds) that we have earlier referred to.”

Appeal allowed and Judgment of the High Court set aside.


Foreign

Re: Conley (1938) 2 A.E.R. 127 Smith v. Woods (1929) 1 Ch. 14

Foreign statute referred to in the judgment

Bankruptcy Act, 1914 (UK), section 14(1)

Counsel

For the appellant: Chief Williams (SAN)

For the respondent: Chief Sowemimo



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Judgment

MADARIKAN JSC: (Delivering the judgment of the court) The present appellant was the second defendant in an action instituted against him and the West African Travel Agency Limited as the first defendant in the High Court, Lagos (Suit No. L.D. 280/66). The plaintiff/company’s claim as en-dorsed on its writ was as follows:–

“The plaintiffs’ claim against the defendants jointly and severally is for the sum of £11,366.9s.3d being money payable by the de-fendants for money lent by the plaintiffs to the defendants and for money paid by the plaintiffs for the defendants as bankers for the defendants at their requests and for interest upon money due from the defendants to the plaintiffs up to and including February, 1966. The defendants have failed, refused or neglected to pay the said sum of money to the plaintiffs despite repeated demands.”

After pleadings had been ordered, learned Counsel for the plaintiff/company, Chief Sowemimo, sought leave to with-draw the claim against the first defendant (that is, the West African Travel Agency Limited) and it was struck out ac-cordingly. It would appear that the case then proceeded against the second defendant alone. But later in the proceed-ings, leave was obtained to join the West African Travel Agency Limited again, this time as the second defendant. We shall hereafter refer to Chief Shafi Lawal Edu as the first defendant and to the West African Travel Agency Limited as the second defendant/company.

In its statement of claim, the plaintiff/company averred as follows:– “1. The plaintiffs are a limited liability company carrying on

business of banking with their registered office at No. 82/86, Broad Street, Lagos.

2. Chief S.L. Edu is a reputable business magnate who resides at 26, Queens Drive, Ikoyi.

3. The West African Travel Agency Limited is a limited liabil-ity company carrying on business of a travel agency with its registered office at No. 9A, Martins Street, Lagos.

4. The plaintiff at the request of the West African Travel


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Agency Limited having been duly guaranteed by Chief S.L. Edu advanced on the basis of overdraft facilities to the said West African Travel Agency a total sum of £11,366.9s.3d inclusive of interest.

5. In pursuance of paragraph 4 above Chief S.L. Edu executed a memorandum of guarantee dated 5th March, 1963.

6. The plaintiffs will rely on the statement of account of the West African Travel Agency with the plaintiffs.

7. The plaintiffs have made repeated futile requests to the de-fendants for payment of the said sum. Whereof the plaintiff claims as per their writ of summons.”

and in the statement of defence of the first defendant, he pleaded as follows:– “1. The first defendant admits paragraph 2 of the statement of

claim.

2. The first defendant denies the alleged guarantee in paragraph 4 of the statement of claim and says further that if that which he signed on 5th March, 1963 were to be accepted as ‘guar-antee’ then, the guarantee was expressly limited to the landed properties mentioned in the schedule thereof.

3. The alleged guarantee (which is denied) is also subject to the condition precedent of a demand being made of the principal, that is to say, West African Travel Agency Lim-ited, before enforcement on the said properties. The plain-tiffs have not complied with that precedent to the knowl-edge and belief of the first defendant.

4. The plaintiffs, by discharging and or releasing the principal from his obligation through their withdrawal of the claim against the principal on the 14th November, 1966, have dis-charged the first defendant from all liability under the al-leged guarantee. Whereof the first defendant contends that plaintiffs’ claim must be dismissed with costs to him.”

The second defendant/company, for its part, admitted liabil-ity.

The only witness who testified at the trial was one Robert Emmanuel Babatunde Osborne who was called by the plain-tiff. He deposed that the first defendant guaranteed in writ-ing the repayment of the loan granted by the plaintiff (ie the


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National Bank of Nigeria Limited) to the second and marked as exhibit A; that the sum of £11,366.9s.3d claimed in the writ was the amount outstanding in respect of the loan; and that despite repeated demands, the second defendant refused to pay.

The first defendant elected not to call evidence at the trial.

In a reserved judgment, the learned trial Judge commented on exhibit A as follows:–

“Exhibit A is the memorandum of guarantee. The surety is firstly liable to pay the sum secured and such guarantee does not require registration . . . By virtue of exhibit A, Chief S.L. Edu had guar-anteed the payment and is therefore liable as the surety.”

Finally, he entered judgment against both defendants jointly and severally for the sum of £11,366.9s.3d together with 100 guineas costs.

The first defendant has now appealed against that judgment. As the argument before us cantered round the liability of the first defendant/appellant under exhibit A, it is convenient, at this stage, to reproduce exhibit A. It reads as follows:–

“£ 10,000.0s.0d

MEMORANDUM THAT CHIEF SHAFI LAWAL EDU OF 26 QUEEN’S DRIVE, IKOYI GUARANTOR FOR WEST AF-RICAN TRAVEL AGENCY LIMITED OF 9A MARTINS STREET, LAGOS.

Have this day deposited with the NATIONAL BANK OF NIGE-RIA LIMITED (hereinafter called ‘the Bank’) the deeds and writ-ings mentioned in the Schedule on the back hereof to be retained by the bank by way of continuing security to them for payment on demand of the sum of £10,000.0s.0d say TEN THOUSAND POUNDS together with interest at the rate of 10 per cent per an-num, commission, bank charges, law and other costs, charges and expenses. And for more effectual security, we charge the premises comprised in the said deeds and writings and the proceeds to arise from any sale or sales thereof or any part thereof with the payment of all such moneys and undertake that when required by the bank we and all necessary parties will at our own expense execute to the bank or as they shall direct a Mortgage of all our estate and interest in the premises comprised in the said deeds and writings which


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Mortgage shall contain such powers of entry, sale, leasing and other powers and provisions of the bank’s Solicitors or Counsel shall advise. This security shall be applicable and extend as well to our separate account and liabilities to any joint account or liabili-ties of us with any other person or persons as partners or otherwise.

As WITNESS our hands this 5th March, 1963.

Sgd. S.L. EDU

Witness to the Signature of

CHIEF SHAFI LAWAL EDU

R.O. KASSIM

5 Williams Street,

LAGOS.”

The deeds listed in the schedule at the back of exhibit A are as follows:

“Description of Security Value

Building Lease dated 18th June, 1948 and registered as No. 64 at page 64 in Volume 733 of the Land Reg-istry in the Office at Lagos.

Assignment of Leasehold Premises dated 9th May, 1949 and registered as No. 23 at page 23 in Volume 787 of the Lands Registry in the Office at Lagos.

Value £12,000.”

It was the submission of Chief Williams for the appellant that, as there is no covenant in exhibit A whereby the appellant pledged his personal credit, the document (exhibit A) does not involve an undertaking that the appellant will be person-ally liable. Counsel then contended that the learned trial Judge was wrong in law to have proceeded on the basis that the first defendant was personally liable and entered judgment against him on that ground. Counsel however conceded that, after taking all necessary steps, the properties listed at the back of exhibit A may be sold by the bank for payment of the debt that has arisen by virtue of exhibit A. Counsel relied on the case of Re: Conley (1938) 2 All E.R. 127 and Smith v. Woods (1929) 1 Ch. 14.


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In his reply, learned Counsel for the plaintiff/respondent, Chief Sowemimo, referred us to paragraph 770 at page 413 of 18 Halsbury’s Laws of England (3ed) where a surety is defined as one who engages with the creditor of a third party to be answerable, in the second degree, for some debt, de-fault or miscarriage, for which the third party then is, or may be or is intended to become liable to the creditor. Counsel submitted that the assumption of personal liability is now a necessary element in suretyship, and that a surety who pro-vides his pledge or security is deemed to have pledged his personal credit. He also referred us to the case of Re: Conley (supra).

In Smith v. Woods (supra), by a memorandum of charge, twelve persons deposited the title deeds of their respective properties and certain insurance policies to secure the pay-ment to the defendant of the debts due from a company to the defendant and they respectively charged their respective properties with the repayment of these sums. Subsequently, one of the guarantors prevailed upon the defendant to release to her the title deeds of three of the properties which she had deposited. The title deeds were handed over to her and she then mortgaged the houses covered by the title deeds to a building society to secure a loan of £600 with interest. When the defendant wanted to realise the properties charged, other than the properties released, the plaintiffs, who were seven of the depositors, brought an action seeking a declaration that the properties deposited by them had been released from liability under the memorandum of charge by virtue of the release of the title deeds to the three properties mentioned earlier. The court of first instance held that the defendant’s act in handing over the deeds of the three properties had brought about a substantial alteration in the contract con-necting the parties inter se and that consequently the proper-ties of such of the plaintiffs as had not consented to the al-teration were released from liability. This judgment was up-held by the Court of Appeal in England.


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In the course of his judgment at page 29, Russell LJ ob-served as follows:–

“In considering the legal position of the co-mortgagors under the deed in question, two points must be borne in mind. The first is that there is no personal liability of any sort or kind imposed upon them by the deed.”

Another case cited to us by both Counsel was Re: Conley (supra) where the wife of a bankrupt had deposited with a bank War Loan as security for the bankrupt’s indebtedness to the bank. Later the bankrupt’s mother deposited certain War Loan and Building Society shares for the same purpose. In depositing the said security in the bank neither the wife nor the mother of the bankrupt gave any covenant or under-taking of any kind to pay any sum to the bank. When large amounts were deposited in the bankrupt’s accounts which improved the state of his accounts by making them show a credit balance, both the wife and the mother of the bankrupt released and obtained back their securities. Soon after this, the business of the bankrupt was closed down and he was declared bankrupt. The main point that arose in the case was whether on the facts, both the wife and the mother of the bankrupt were “sureties or guarantors,” and the decision of Farwell J was that neither of them was, on the true construc-tion of section 14 of the Bankruptcy Act, 1914, a surety or guarantor of the bankrupt in respect of the bankrupt’s over-drafts.

The trustee in bankruptcy then appealed to the Court of Appeal which reversed the finding of Farwell J and remitted the case to the lower court for a rehearing on the ground that although the depositors did not enter into any contract to pay the bank, they were “sureties or guarantors” within the meaning of section 14(1) of the Bankruptcy Act, 1914, which provides as follows:–

“Every conveyance or transfer of property, or charge thereon made, every payment made, every obligation incurred, and every judicial proceeding taken or suffered by any person unable to pay his debts as they become due from his own money in favour of


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any creditor, or of any person in trust for any creditor, with a view of giving such creditor, or any surety or guarantor for the debt due to such creditor, a preference over the other creditors, shall, if the person making, taking, paying or suffering the same is adjudged bankrupt on a bankruptcy petition presented within three months after the date of making, taking, paying or suffering the same, be deemed fraudulent and void as against the trustee in the bankruptcy.”

The Court of Appeal further stated that Farwell J had placed too narrow an interpretation upon the words “sureties or guarantors.”

In the course of the judgment of Sir Wilfrid Greene MR in the Court of Appeal, he referred to the definitions of “guar-antee” and “surety” in several books and after stating that the definitions appeared to postulate the existence of a per-sonal liability of the surety or guarantor in respect of the matter guaranteed, he concluded by expressing the view that the assumption of personal liability is not a necessary ele-ment of suretyship.

Similarly, at page 133 Clauson LJ said:– “In comparatively modern commercial practice, the pledge (not, as a rule, of hawks or similar chattels, but more commonly of documents of title to choses in action) has again become common practice, often, for obvious reasons, divorced from any wider ob-ligation to be answered in person or in other property available for execution. These considerations have satisfied me that it would be unsound to treat the phrase ‘surety or guarantor’ as nec-essarily connoting a personal liability, and as failing to cover the very case on which the whole conception of suretyship and guar-antee appears as a matter of history to be founded, of a person who had provided a pledge without undertaking liability beyond the pledge.”

And dealing with the argument advanced on behalf of the trustee that both the mother and wife of the bankrupt were under personal liability to the banks in respect of the over-drafts, Luxmore J observed at page 134 as follows:–

“So far as the first point is concerned, the respective contracts be-tween the depositors and the banks are in each case regulated by


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a written document. In none of these documents is there any ex-press provision that the depositor is to be under any personal li-ability, and I am unable to appreciate on what ground it can prop-erly be said that personal liability is to be implied, and what is to be its limit. I am satisfied from an examination of the material documents that the intention of the parties in each case was to limit the depositor’s liability to the amount of the security depos-ited, and to exclude any personal liability on the part of the de-positor. In my judgment, there is no substance in the first point.”

In effect, the three judges in the Court of Appeal concurred in the view that both the mother and wife of the bankrupt were not under any personal liability to the bank.

It seems to us that the main point which falls to be deter-mined in this appeal is whether by virtue of the document (exhibit A), the first defendant/appellant had pledged his personal credit or not. The answer to this question can be found within the four corners of the document (exhibit A) which regulated the contractual relationship between the parties. Upon a careful examination of the document, we are in no doubt that:

1. it is a memorandum for the deposit of the deeds listed in the schedule on the back thereof;

2. the said deposit of deeds was to be a continuing security by the first defendant for the repayment of a loan to the second defendant of sums totalling £10,000 together with interest of 10% per annum; and

3. it created a charge on the premises comprised in the deeds with an undertaking on the part of the parties that:– “when required by the bank we and all necessary parties will at our own expense execute to the bank or as they shall direct a Mortgage of all our estate and interest in the premises comprised in the said deeds Mortgage shall contain such powers of entry, sale, leasing and other powers and provision as the Bank’s So-licitors or Counsel shall advise.”

In our view, the remedy which the plaintiff/bank ought to have pursued is contained in and clearly set out in that


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undertaking. This they have failed to do. Since there is no personal liability of any kind imposed upon the first defen-dant/appellant by virtue of the document (exhibit A), we are satisfied that the present action was misconceived and ought to have been dismissed. It is however open to the plain-tiff/bank to pursue whatever action they may be advised to take on the strength of the undertaking in exhibit A that we have earlier referred to.

In the result, the appeal succeeds and it is hereby allowed. The judgment of Sowemimo J (as he then was) in the High Court, Lagos in Suit No. L.D. 280/66 together with the order for costs insofar as it relates to the first defendant/appellant (Chief S.L. Edu) is hereby set aside. We accordingly order that the plaintiff/respondent’s claim against the defen-dant/appellant be and is hereby dismissed. The first defen-dant/appellant is entitled to costs which we fix at 64 guineas in the High Court and 57 guineas in this Court.

Appeal allowed: Judgment of High Court set aside.

[1967 – 1975] 2 N.B.L.R. 231 (SUPREME COURT OF NIGERIA)

Balogun v. African Continental Bank Limited and others 375

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Balogun v. African Continental Bank Limited and others


LEWIS, MADARIKAN, UDOMA JJSC

Date of Judgment: 14 JANUARY 1972 S.C.: 325/69

Banking – Overdraft facility – Facility given to partnership – Managing director of partnership signatory to account – No evidence that he is a partner or held himself out as such – Whether can be held personally liable

Facts

The first defendant/appellant was at all material times the Managing Director of the second and third defendants, a partnership. He was a signatory to the account of the part-nership along with the second and third defendants.

The partnership obtained an overdraft facility which was not repaid whereupon the plaintiff/respondent sought to re-cover same in the lower court. The lower court found for the plaintiff/respondent and adjudged the defendants jointly and severally liable for the debt.

Being dissatisfied the first defendant/appellant appealed on the ground that the trial Judge was wrong in holding the ap-pellant liable when he was merely an agent of the second and third defendants.

Held –

1. The trial Judge erred in coming to the conclusion that as the appellant appealed on the ground that he was one of the signatories of the cheques, he must be liable for hav-ing received the proceeds. This is more so as the appel-lant did not sign cheques as a partner but as Managing Director, and there was no evidence that he ever re-ceived the money paid on the cheques or that he held himself out as partner.



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2. Every agent who contracts personally, though also on behalf of his principal, is personally liable, and may be sued in his own name on the contract, whether the prin-cipal be named therein, or be known to the other con-tracting party, or not, and either the principal or agent may be sued, unless the other contracting party elects to give exclusive credit to the principal. But no agent is personally liable on any contract made by him merely in his capacity as an agent, even if he makes it fraudulently, knowing that he has no authority do so.

In the instant case, it is clear that the appellant held him-self out as an agent of the second and third defendants, he can not therefore be held personally liable to repay the overdraft facility obtained by his principals.

3. The question whether an agent who has made a contract on behalf of his principal is to be deemed to have con-tracted personally, and if so, the extent of his liability on the contract, depends on the intention of the parties to be deduced from the nature and terms of the particular con-tract and the surrounding circumstances including any binding custom.

In the instant case, the surrounding circumstances show that the appellant signed cheques as managing director and not as a partner, he cannot therefore he held person-ally liable.

Trial de novo ordered.


Foreign

Chapman v. Smethurst (1909) 1 K.B. 927

Books referred to in the judgment

Bowstead on Agency (12ed) page 258, article 113 Bowstead on Agency (13ed) pages 373-374, articles 117-118



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Counsel For the first defendant/appellant: Akinrele

For the respondents: Sotubo

Judgment

LEWIS JSC: In Suit No. L.D. 190/68, the plaintiff’s state-ment of claim read:–

“The plaintiffs are bankers incorporated as a Limited Liability Company under the Companies Act with their registered Head Office at 148 Broad Street, Lagos, and registered Branch Office at 27/29 Martins Street, Lagos. The defendants are Fish Sellers at 223 Bamgbose Street, Lagos, carrying on their business under the name of Ore-Ofe Women Fisheries Company.

1. On 26/3/63, the defendants opened a current account with the plaintiffs under the Name of Ore-Ofe Women Fisheries Company.

2. At the time of opening the account the three defendants were the only signatories to all the cheques drawn on the plaintiffs on behalf of the Trading Concern.

2a. The three defendants are the Managing Director, Directress and Secretary of the trading concern.

3. The defendants operated the account on credit basis until about 11/9/64 when the plaintiffs’ general manager ap-proved a loan of £2,000 to the defendants.

4. The defendants continued to operate the account which left a balance of £4,100.5s.1d inclusive of bank charges and in-terests at the rate of 9% per annum.”

And the first defendant in paragraphs 2, 3 and 6 of his statement of defence pleaded:–

“2. The partnership known as Ore-Ofe Women Fisheries Com-pany has wound up about two and a half years ago and is no more doing any business.

3. The first defendant avers that he was never a partner in the partnership business concern trading under the name and style of Ore-Ofe Women Fisheries Company. The first de-fendant further contends that he was only an agent of the said partnership.

6. The first defendant avers that he did not apply for or obtain


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any overdraft or loan from the plaintiffs for and on behalf of the partnership trading under the name and style of Ore-Ofe Women Fisheries Company.”

And the second and third defendants in paragraphs 1, 3 and 6 of their statement of defence pleaded:–

“1. The second and third defendants were Fish Sellers and they were partners with some other persons in the partnership known as Ore-Ofe Women Fisheries Company. But the sec-ond and third defendants aver that the partnership has ceased functioning more than two and a half years ago.

3. The second and third defendants aver that they did not apply for or obtain any loan or overdraft from the plaintiffs; and that they are not indebted to the plaintiffs at all.

5. The second and third defendants aver that their partnership concern known as Ore-Ofe Women Fisheries Company is in no way indebted to the plaintiffs.”

It was not in dispute that the first defendant in company with the second and third defendants went in March, 1963 to the bank of the plaintiffs and asked to open an account in the name of Ore-Ofe Women Fisheries Company, and that the first defendant then described himself as the Managing Di-rector of that partnership and that the second and third de-fendants described themselves as Director and Secretary re-spectively and that the three of them arranged to sign all the cheques drawn on behalf of the Ore-Ofe Women Fisheries Company. It was also not in dispute that the second and third defendants were partners in the Ore-Ofe Women Fish-eries Company. What was in dispute was the status of the first defendant in the matter, that is to say whether he was a partner in the Ore-Ofe Women Fisheries Company or whether he had held himself out to the plaintiffs to be such a partner and whether the partnership in fact asked for and ob-tained an overdraft on their account with the plaintiffs of which they were aware, from receiving statements periodi-cally from the plaintiffs without disputing them so that by January, 1966 that overdraft amounted to the sum of £4,100.5.10d which was the amount claimed by the


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plaintiffs in the present action. On the 9th May, 1969, Sowemimo J found for the plaintiffs and awarded them £4,100.5.10d, together with 60 guineas cost against all the defendants jointly and severally. Against that decision all the defendants filed notice of appeal but before us only the first defendant continued with his appeal and we accordingly dismissed the appeals of the second and third defendants on the 20th December, 1971.

Mr Akinrele for the first defendant argued on his behalf his ground of appeal that read:–

“The learned trial Judge erred in Law in holding the first defendant personally liable when in Law he was only an agent of the asso-ciation ‘Ore-Ofe Women Fisheries Company’.”

It was his submission that the first defendant was not a member of the partnership concerned, namely the Ore-Ofe Women Fisheries Company, and that the learned trial Judge made no finding that he was ever either a partner or held himself out as a partner, despite evidence in this regard, be-ing given on behalf of both the plaintiffs and the defendants. The learned trial Judge, in his submission, rested the case on one of agency and found that the first defendant had gone to the plaintiffs’ bank with the second and third defendants and asked for an account to be opened for the Ore-Ofe Women Fisheries Company and later sought an overdraft for that partnership and that as the first defendant held himself out to the bank as the Managing Director of that partnership, he was stopped from denying that. In his judgment the learned trial Judge said, inter alia:–

“Even if it is established that the defendants exceeded their agency the fact remains that they would be personally held jointly and severally as having received the monies.

All the defendants have held themselves out by signature on ex-hibit A, on the cheques exhibits B, C, D and E to have acted on be-half of the association. The fact that the first defendant acted because a Mr McEwen requested him to do so is immaterial. As a matter of fact Mr McEwen was not called to give evidence. Nothing has been said as to his connection with either the bank or the association.”


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It was not disputed that the first defendant was one of the signatories of cheques (exhibits B, C, D and E) drawn by the Ore-Ofe Women Fisheries Company, not in favour of him-self, but in favour of others designated in those cheques, but, in Mr Akinrele’s submission, as the first defendant was an agent for a disclosed principal, he could not be held person-ally liable and for that submission; he relied on Bowstead on Agency, (12ed), page 258 where it is stated:–

“But no agent is personally liable on any contract made by him merely in his capacity of an agent, even if he make it fraudu-lently, knowing that he has no authority to do so.”

However, that sentence must be read in the context of the whole of article 113 and not in isolated fashion, and article 113 reads:–

“article 113

AGENT LIABLE IF HE CONTRACT PERSONALLY, BUT NOT IF HE CONTRACT MERELY AS AN AGENT

Every agent who contracts personally, though also on behalf of his principal, is personally liable, and may be sued in his own name on the contract, whether the principal be named therein, or be known to the other contracting party, or not, and either the principal or agent may be sued, unless the other contracting party elect to give exclusive credit to the principal. But no agent is per-sonally liable on any contract made by him merely in his capacity of an agent, even if he make it fraudulently, knowing that he has not authority to do so.

The question whether an agent who has made a contract on behalf of his principal is to be deemed to have contracted personally, and if so, the extent of his liability on the contract, depends on the intention of the parties to be deduced from the nature and terms of the particular contract and the surrounding circumstances in-cluding any binding custom.”

In the latest edition of Bowstead on Agency, namely the 13ed, these principles are stated in articles 117 and 118 at pages 373 and 374 in the following terms:–

“Article 117

GENERAL RULE


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Where an agent makes a contract, solely in his capacity as agent, between his principal and a third party, he is not liable to the third party thereon.”

“Article 118

AGENT LIABLE IF HE CONTRACTS PERSONALLY

An agent who undertakes personal liability to the third party, in the course of making a contract on behalf of his principal is liable in accordance with the terms of any undertaking into which he has entered.”

Mr Akinrele then argued that accepting that if the first de-fendant held himself out as being personally liable, apart from the partnership, he could be successfully sued, none-theless, in his submission, he did not so hold himself out here and the learned trial Judge did not specifically so find. He further argued that the fact that the first defendant signed as Managing Director did not make him personally liable, apart from the partnership, as was shown by Chapman v. Smethurst (1909) 1.K.B. 927. As, in his submission, the learned trial Judge wrongly dealt with the issue as being one of agency and failed to deal with the really material issue as to whether the first defendant was a partner or held himself out to the plaintiffs as a partner of the Ore-Ofe Women Fisheries Company, learned Counsel applied for the plain-tiffs’ claim against the first defendant to be sent back for re-hearing de novo.

Mr Sotubo for the respondents conceded that the learned trial Judge made no finding as to whether or not the first de-fendant was a member of the partnership or had held himself out as a partner, but nevertheless contended that such find-ings should be implied from the passage in the judgment that we have already quoted (supra). He further argued in the al-ternative that, from the same passage in the judgment that we have quoted, it could be inferred that the first defendant held himself out as an agent who was personally liable. But when it was put to him by this Court, he had to concede that the question of the first defendant being personally liable, though an agent, was never how the plaintiffs’ case was


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pleaded or put in the High Court, for, having regard to the statement of claim which we have quoted (supra), the plain-tiffs’ case clearly turned on whether the first defendant ei-ther was a partner or held himself out to the plaintiffs as a partner; and Mr Sotubo agreed that the learned trial Judge did not deal with the issue in his judgment.

In our view, the learned trial Judge should not have gone into the issue of the first defendant being liable as an agent as this was not pleaded nor was it ever the plaintiffs’ case. Moreover, we do not think anyway that the learned trial Judge was finding, in the passage of his judgment which we have quoted and which was relied upon by Mr Sotubo, that the first defendant held himself out as being personally li-able. The learned trial Judge seems to have thought that, as the first defendant was one of the signatories of the cheques, he must be liable for having received the proceeds, yet the first defendant did not sign as a partner but as managing di-rector, and there was no evidence that he ever himself re-ceived the money paid on the cheques or that it went other-wise than to the persons designated in the cheques. As there was conflicting evidence on the issue as to whether the first defendant held himself out to the plaintiffs as a partner and as the learned trial Judge came to no finding of fact on this vital issue, we see no alternative but to conclude that the matter was never properly determined.

We accordingly allow the appeal and set aside as against the first defendant only the judgment together with the award of costs, and we do order that the plaintiffs’ claim against the first defendant be heard de novo before another judge of the Lagos High Court. The question of costs in the High Court shall abide the outcome of the rehearing, but the first defendant is entitled to his costs of this appeal which we assess at 56 guineas.

Trial de novo ordered.


Thadant and another v. Nat Bank of Nigeria Ltd and another 383

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Thadant and another v. National Bank of Nigeria Limited and

another


COKER, LEWIS, UDOMA JJSC

Date of Judgment: 21 JANUARY 1972 S.C.: 63/1969

Limitation of action – Action for recovery of debt – Plea that action is statute barred – Acknowledgment of the debt – Whether negatives plea – Principles governing

Facts

The defendant/appellants were sued in the lower court in re-spect of a certain sum of money owed the bank. At the trial it was pleaded in defence that the debt was statute barred, because more than six years had elapsed since the cause of action arose, whereupon the plaintiff/respondent replied that an acknowledgement of the debt from the appellants kept the action within time. The trial Judge upheld the contention of the plaintiffs/respondents, ruling that the acknowledgment of the debt owed negatived the plea under the statute of limita-tion. The defendants/appellants not satisfied with the deci-sion appealed to the Supreme Court.

Held –

1. An acknowledgment, in order to exclude the operation of the statutes must be absolute and unconditional and one from which a promise to pay the debt can be in-ferred. An acknowledgment to a stranger is not sufficient. It must be to the creditor or his agent, to someone who was entitled to receive payment of the debt and to whom it could be presumed a promise to pay the debt.

2. Beyond this, whether a document does this or not is a question of fact depending upon its contents. It is the duty of a court called upon to decide such an issue to



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study carefully the document in which reliance is placed by the defendant and ascertain as best as it can whether the document by its contents does recognise the exis-tence of a right or debt against himself. It is not neces-sary that the document should state the precise figure of the indebtedness.

3. The principle of acknowledgment or part payment is founded on the theory that by so doing the debtor estab-lished a fresh contractual relationship so that a cause of action then starts to run from the date of the fresh con-tractual relationship.

Appeal allowed.


Nigerian Ajike v. Cardoso 5 W.A.C.A. 134

Foreign Cases Spencer v. Hemmerde [1922] 2 A.C. 507 at 534 Stamford Spalding and Boston Banking Co v. Smith (1892) 1 Q.B. 175 at 768 Tanner v. Smart (1827) 6 B. and C. 103

Counsel For the appellant: Impey For the National Bank: Sowemimo

For the third respondent: Amen

Judgment

COKER JSC: (Delivering the judgment of the court) The sole point for determination in this appeal is whether or not a letter produced in evidence at the trial as exhibit ‘C was a sufficient acknowledgement of a debt to take the case out of the provisions of the Statutes of Limitation. The respondent, that is to say the National Bank of Nigeria Limited., had lent monies to the appellants by way of overdrafts on their cur-rent account and at the time of the institution of the present proceedings it is stated that the balance on the accounts of


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the defendants (now appellants) stood at £3,980.18.10d. The plaintiffs then instituted the present proceedings against the defendants claiming the above amount. In the course of the proceedings and after the parties had delivered their first set of pleadings a third party, Dr A Maja was joined by order of court. The parties then filed and served amended pleadings and the case went to trial. Both the present appellants, as de-fendants, and Dr Maja as an added defendant, resisted the claims of the plaintiffs and Dr Maja pleaded, inter alia, that he would contend at the hearing that the action was statute barred because more than six years has elapsed since the cause of action arose.’’ For reasons which are not relevant to this decision, it was adjudged that no case was made out by the plaintiffs against Dr Maja and the action was struck as against him.

We stated before that the appellants (who will hereafter in this judgment be referred to as the defendants) resisted the claim of the plaintiffs. Apart from alluding to the indemnity by Dr Maja in their pleadings, they disclaimed liability in their statement of defence, paragraphs 8 and 9 of which read as follows:–

“8. From the 30th January, 1956 the said joint account was never in credit and all transactions thereon were for the said partner-ship business of fishing.

9. The plaintiffs cause of action did not accrue within six years before the commencement of this action and the first and sec-ond defendants will rely upon section 3 of the Limitation Act, 1623 as a bar to this action.”

In a reserved judgment the learned trial Judge held that the claim was not statute barred in that there was indeed an ac-knowledgement of the debt by the defendants which took the matter out of the Statutes of Limitation. In the course of the hearing, the plaintiffs had produced a letter dated the 7th February, 1963 by which on that date their solicitor wrote to the defendants asking for payment of the amount


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now claimed. The letter was admitted in evidence as ex-hibit D and it reads as follows:–

“Dear Sirs,

I am instructed by my clients, the National Bank of Nigeria lim-ited, to demand from you the immediate payment of the sum of £3,980.18s.10d (three thousand, nine hundred and eighty pounds, eighteen shillings and ten pounds) being amount long overdue and owing to their bank up to and including the 31st January, 1963 as per attached statement of account.

Unless this amount is paid to my clients within 7 (seven) days from the date hereof, they shall be compelled to institute legal proceedings against you without further notice.”

The plaintiffs also produced a letter (admitted in evidence as exhibit C) by which the defendants replied to the letter ex-hibit D. That letter, ie exhibit C, is dated the 11the February, 1963 and it reads in full as follows:–

“Dear Sir,

We acknowledge receipt of your letter of the seventh instance to-gether with the statement of account enclosed.

The account was in connection with the defunct Lagos Fishing Company and we were advised at the time by Dr Maja to take money from the bank to run the Fishing boats and endorsed the cheques before our receiving money from the bank. If you go through the statements you will see that we were debited and cred-ited on the 1st March, 1957. After these the further debits from item £200 to item £250 were used in docking and repairing ‘Strath Blair.’

1. Item £432.14.10d on the 20th May, 1958 to pay National Bank for netting fishing gear for ‘Strath Blair’ which is owned by Dr Maja.

2. The item £327.6.6d on 5th June, 1958 was in connection also with the Lagos Fishing Company.

3. The item £218.0.0d was for coal supplied ‘Strath Blair’ by the Nigerian Railway.

All other items shown on the statements are for interest due.

We wish to inform you that we have taken Dr Maja owner of La-gos Fishing Company to the High Court in connection with this account and ask you to please hold on in the meantime until we hear the court’s decision.”


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The position therefore at the trial was that the plaintiffs sought to disprove paragraph 9 of the amended statement of defence by the letter exhibit C which was a reply to the plaintiffs’ letter ‘‘D.’’ The learned trial Judge, Sowemimo J (as he then was) heard arguments on this point from both sides and in his judgment stated as follows:–

“The letter exhibit C is a reply to exhibit D. Exhibit D is a letter of demand from the plaintiffs to the defendants for a payment of the sum which is the subject matter of this claim. exhibit C, as far as is material to this case, reads as follows:–

‘We acknowledge receipt of your letter of the seventh instant to-gether with the statements of account . . .

We wish to inform you that we have taken Dr Maja, the owner of Lagos Fishing Company, to the High Court in connection with this action and ask you to please hold on in the meantime until we hear the court’s decision.’

On a proper construction of this letter I hold that it is sufficient acknowledgement of the debts as set out in exhibit D and if I so hold, the defence of the debt barred on statute of limitation will be of no avail to the first and second defendants.”

He then gave judgment in favour of the plaintiffs against the defendants as claimed with costs.

The defendants have appealed to this Court against that judgment and as stated above, the only point argued before us was whether or not on a proper construction of the ex-hibit C it constituted an acknowledgement of the debt so as to destroy the plea of the defendants that the claim was stat-ute barred. In arguing the appeal, learned Counsel on both sides referred the court to a number of authorities and in-vited our attention to various dicta of judges as to what con-stitutes an acknowledgement for the purpose of the Statutes of Limitation.

We cannot but confess that the matter is not free from diffi-culty and whilst a tribunal faced with the construction of a document for this purpose will have to decide as a matter of law whether the document could constitute an acknowledg-ment, the issue whether it does so or not is a matter essentially


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of fact. In Spencer v. Hemmerde [1922] 2 A.C. 507 at page 534, Lord Sumner summarised the position as follows:–

“The decision on the exact meaning and effect of the precise words employed by generations of shifty debtors are, it is agreed on all hands, irreconcilable. It may, perhaps, serve in some de-gree to mitigate the appearance of hopeless contradiction if the theory, on which the decisions have gone, can, to some extent, be unified. I do not think it has been as self-contradictory as is gen-erally supposed. The restoration lawyers, no doubt, were brought face to face with two things: a multitude of debts still unpaid but long irrecoverable owing to the civil war, and a statute, which, in terms, left the creditor without remedy. When first new promises and acknowledgements came into recognition, and why, we do not know, but ultimately it became necessary to invent an expla-nation where a simple and existing rule of practice had to be ex-tended to complex cases.”

Before us, it was not contended that exhibit C could not con-stitute an acknowledgement; what learned Counsel for the defendants said was that it does not. On the other hand, learned Counsel for the plaintiffs contended that taken along with exhibit D, an acknowledgement of the debt is clearly inferrible. Section 3 of the Statutes of Limitation, 1623, pro-vides, so far as is material to this case, as follows:–

“3. And . . . all actions of trespass, quare clausum fregit, all ac-tions of trespass, detinue . . . all actions of debt grounded upon any lending or contract without specialitie, all actions of debt for arrerages of rent . . . shall be commenced and sued within the tyme and lymitacion hereafter expressed, and not after (that is to saic) the said accion upon the case (other than for slander) and the said accions for accompt and the said accions for trespass, debt, detinue . . . Within three years after the end of this present session of Parliament, or within six years next after the cause of such actions or suit, and not after . . .” [sic]

The principle of acknowledgement or part-payment is founded on the theory that by so doing the debtor establishes a fresh contractual relationship so that a cause of action then starts to run from the date of the fresh contractual relation-ship. In Stamford Spalding and Boston Banking Co v. Smith (1892) 1 Q.B. 765, Lord Herschell at page 768 stated thus


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concerning the effect of a document which is relied upon as an acknowledgement:–

“It cannot be disputed that an acknowledgement, in order to ex-clude the operation of the statute, must be absolute and uncondi-tional, and one from which a promise to pay the debt can be in-ferred. But it was argued that if an acknowledgement is in fact made, it is immaterial to whom it is made such appears to have been considered the law at one time, and there are certainly some dicta to that effect; but that is not the law now. In my opinion, since the decision in Tanner v. Smart (1827) 6 B. and C. 103 it has been abundantly settled that an acknowledgement to a stranger is not sufficient. It must be to the creditor or his agent, to someone who was entitled to receive payment of the debt, and to whom you could presume a promise to pay the debt.”

The position therefore is that before a writing could be de-scribed as an acknowledgement to take the case out of the Statutes of Limitation, the writing by the debtor should rec-ognise the existence of the debt or the rights against himself. Beyond this whether a document does this or not is a ques-tion of fact depending upon its contents. It is the duty of a court called upon to decide such an issue to study carefully the document on which reliance is placed by the defendant and ascertain as best as it can whether the document by its contents does recognise the existence of a right or debt against the defendant or indeed the existence of a right of recourse against himself. It is not necessary that the docu-ment should state the precise figure of the indebtedness. In Ajike v. Cardoso and another (1939) 5 W.A.C.A. 134, it was observed that the court would then turn to the letter written with a view to determining whether, according to the ordi-nary and the natural meaning of that letter, it contains either an expressed promise to pay or a clear acknowledgement of the debt and, in the latter case, whether the acknowledgment is coupled with words which prevent the implication of an unconditional promise.

Applying these directions, we have carefully studied the letters exhibits C and D ourselves. We do not share the


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views of the learned trial Judge that the letter exhibit C on which the defendants rely contains an acknowledgement by the defendant to the plaintiffs of a right against themselves or of the existence of a debt due and payable by them to the plaintiffs. It is agreed by all parties that the letter contains no promise to pay or repay any amount of any debt and in no part of the letter exhibit C did the defendants expressly or impliedly say that they were indebted to the plaintiffs and/or that such debt could be enforced against them. Evidently, by their letter exhibit C, all that happened was that the defen-dants acknowledge the receipt of the letter “D” with the statement of account enclosed, but they did not acknowledge as such that they accepted the liability shown as their in that account.

This was the only matter argued before us and we are of the view that the document exhibit C is not an acknowledg-ment which would take the claim out of the provisions of the Statutes of Limitation, 1625, which applied to the case. On this basis the plea of the defendants in paragraph 9 of their statement of defence should have been accepted and we will now do so.

The appeal succeeds and it is allowed. The judgment of the Lagos High Court in Suit No. L.D. 113/65, against the ap-pellants, including the order for cost, is set aside and it is or-dered that the plaintiff’s case be dismissed and that this shall be the judgment of the court. The respondents shall pay the costs of these proceedings fixed in this Court at 80 guineas and in the court below at 40 guineas.

Appeal allowed.


United Nigeria Insurance Co Ltd v. Muslim Bank Ltd 391

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United Nigeria Insurance Co Limited v. Muslim Bank (West Africa) Limited


ELIAS CJN, LEWIS, UDOMA, JJSC

Date of Judgment: 19 APRIL 1972 S.C.: 193/1969

Banking – Accounts – Opening of accounts for customers – Duty of bank

Banking – Negligence – Failure of bank to obtain references from new customer – Conversion of another’s cheque by new customer – Liability of bank to drawer

Facts

One Olatunde Odubiyi falsely using the name of Olatunde Odubiyi, a barrister-at-law, opened a savings account with the defendant/respondent bank in the sum of £3 and two days later lodged with the respondent a crossed cheque for £550 drawn by the plaintiff/appellant in favour of the real Olatunde Odubiyi and marked “Not Negotiable – Account Payee Only.” The said Olatunde Odubiyi collected various sums of money out of the said account leaving a balance of £300.10s.0d.

The respondent bank apparently made no inquiries about the prospective customer’s identity or character before open-ing the account or later before collecting the cheque on his behalf.

The plaintiff/appellant therefore claimed damages for neg-ligence. The trial Judge dismissed plaintiff’s claims where-upon the plaintiff appealed to the Supreme Court.

Held –

1. It is usual practice of banks not to open an account for a customer without obtaining a reference, and without in-quiry as to the customer’s standing; a failure to do so



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might prevent the bank from establishing a defence in an action brought by a drawer in case of impropriety in running the account.

2. In the instant case, the respondent bank was negligent in not obtaining satisfactory references when opening the savings account for Mr Olatunde Odubiyi or when the latter came to deposit the cheque for £550 two days later especially as they failed to make an initial inquiry about the prospective customer.

Appeal allowed.


Foreign Cases

Baker v. Barclays Bank Ltd [1955] 2 All E.R. 571 Commissioners of Taxation v. English, Scottish and Austra-

lian Bank Ltd (1920) 36 T.L.R. 305 Ladbroke and Co v. Todd (1914) 111 L.T. 43 Lloyds Bank Ltd v. Savoy [1933] A.C. 201 Marfani and Co Ltd v. Midland Bank Ltd [1968] 2 All E.R.

573 Motor Traders Guarantee Corporation Ltd v. Midland Bank

[1937] 4 All E.R. 90 Re Jones Ltd v. Waring and Gillow Ltd [1926] A.C. 1070

Counsel

For the plaintiff: Sofola

For the defendant: Ajayi

Judgment

ELIAS CJN: (Delivering the judgment of the court) In Suit No. L.D. 597/67 in the High Court of Lagos, the plaintiffs claimed against the defendants the sum of £550 as damages suffered by the plaintiffs from the defendants’ negligence in failing to make inquiries about a customer upon opening an account and collecting the plaintiffs’ crossed cheque for the said sum dated 14th February, 1967, and drawn in favour of one Mr Olatunde Odubiyi, a barrister-at-law of Abeokuta,


Elias CJN United Nigeria Insurance Co Ltd v. Muslim Bank Ltd 393

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which said cheque was wrongfully dealt with by the defen-dants.

After due hearing, the learned trial Judge, Sowemimo, J (as he then was), found the defendants not liable on the claim and awarded them 15 guineas costs. He, however, made an order that the defendant refund to the plaintiffs the sum of £300.10s.0d, being the amount then standing in the name of one Olatunde Odubiyi who kept an account with the defen-dant bank and who had since disappeared. From this judg-ment the appellants have appealed to this Court.

The facts were that the plaintiffs, an insurance company, drew a cheque for £550 on their bankers, the Standard Bank of West Africa Limited, Marina Branch, Lagos, now known as the Standard Bank of Nigeria Limited, in favour of Mr Olatunde Odubiyi, barrister-at-law for value in settle-ment of an insurance claim arising out of a motor accident which occurred on or about 13th July, 1966, along the La-gos-Abeokuta road on behalf of his client, Madam Simbiatu Popoola. The cheque was endorsed “Not negotiable a/c Payee only” and was crossed. The cheque having apparently been stolen was presented to the defendants with a forged endorsement upon it purporting to have been made by the said Olatunde Odubiyi. The amount of £550 on the cheque was collected by the defendants from the plaintiffs’ bank for this man who had opened an account in the sum of £3 with the defendant bank. The plaintiffs had on demand paid to the said Olatunde Odubiyi another amount of £550 in settlement on the insurance claim.

It was the plaintiffs’ case that the defendants as bankers acted negligently and in bad faith in collecting from the plaintiffs’ bank the cheque for £550. The defendants’ al-leged specific acts of negligence and bad faith consisted, ac-cording to the plaintiffs, in failure to obtain necessary refer-ences on opening of the account for the “fictitious” Olatunde Odubiyi, failure to obtain necessary authority from the Stan-dard Bank before parting with the proceeds of such a large


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cheque, failure to make necessary inquiries from the plain-tiffs (who are well-known) as to whether the said cheque was in order before collecting the proceeds thereof and part-ing with the same which inquiries could have been promptly and easily made, failure to take into consideration the unsatis-factory banking record and dealings of the “stranger and/or thief,” and failure to conform with the code of procedure adopted by members of the Nigerian Bankers Committee in dealing with new customers and crossed cheques. The defen-dants, on the other hand, had averred in their statement of de-fence, that one of their customers named Olatunde Odubiyi deposited into his account with them the cheque in question for £550 on 25th February, 1967, that this cheque was subse-quently collected for him from the bank on which it was drawn, that they received payment of the cheque from the paying banker in good faith and without negligence, that the person for whom they collected the cheque was a customer, and that, as the cheque was crossed, they claimed all the pro-tection afforded by the Bills of Exchange Act to collecting bankers.

What happened was that Mr Olatunde Odubiyi opened a savings account with the sum of £3 on 23rd February, 1967, and two days later, on 25th February, 1967, he lodged a cheque for £550 with the bank. On 3rd March, 1967, he with-drew £2.10s.0d and, on 6th March, 1967, he withdrew a fur-ther sum of £250, leaving a balance of £300.10s.0d in the ac-count.

The police officer (Sergeant Albert Ogunro) to whom a re-port was made about the stolen cheque, tendered the bank statement of account, and said that, on inquiry at the address given him by the defendant bank, he found the customer Ola-tunde Odubiyi had never lived there; he added that the alleged customer had never been produced up to the date of hearing of the case in court. The defendants alleged having received from the customer a letter of introduction from the plaintiffs who, on being shown, denied ever having issued such a letter.



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The police officer then returned the forged letter to the defen-dant bank, but it was never produced at the trial. The learned trial Judge observed that “the letter was not produced either by the police officer who investigated the case or the defen-dants,” and later in his judgment, “I have not been told why that letter has not been produced. If the defendant bank had acted on that letter I do not see what other enquiries they were expected to make.” The learned trial Judge rejected the plain-tiffs’ allegations that failure to obtain the necessary authority before parting with the proceeds of such a large cheque, to enquire of the plaintiff whether the cheque was in order be-fore collecting the same, and to take into consideration the unsatisfactory banking record and dealings of the said Ola-tunde Odubiyi amounted to negligence. But we consider that the learned trial Judge should not have rejected the allegations of negligence relating to the defendants’ failure to obtain nec-essary references and to follow necessary banking practice on the opening of an account. As regards the ground of negli-gence alleged to consist in the defendants’ failure to conform with the code of procedure adopted by members of the Nige-ria Bankers Committee in dealing with new customers on crossed cheques, the only evidence adduced by the plaintiff was that of the Chief Clerk of the Standard Bank of West Af-rica – Mr Alfred Adeyemi Beckley, who had admitted not be-ing himself a member of that Committee; it was no where shown in evidence that he was a member. We are prepared to ignore the submission by Mr Sofola, learned Counsel for the appellants, that Mr Olatunde Odubiyi was not a customer of the defendant bank, but we disagree with the learned trial Judge that “no negligence had been proved against the de-fendant bank.” It may be asked, on what ground did the learned trial Judge order that the balance of £300.10s still standing in the bank account of the said Olatunde Odubiyi, who had since disappeared, should be paid to the plaintiffs?

Mr Sofola, in his submissions argued all the grounds to-gether in order to avoid repeating himself, since the grounds


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as filed tend to overlap. He cited Baker v. Barclays Bank Ltd [1955] 2 All E.R. 571, in support of his contention that there is a universal practice for collecting banks to require refer-ence before paying cheques. The Court observed however, that whereas in the Baker case (supra) the bank in question gave evidence in the case on appeal, the defendant bank had given none at the trial. Mr Sofola also referred us to Motor Traders Guarantee Corporation Ltd v. Midland Bank Ltd [1937] 4 All E.R. 90, at page 95, as supporting his submis-sion that the collecting bank must have regard to the cus-tomer’s banking history, which in this case covered only the three items in the relevant statement of account. We con-sider that Re Jones Ltd v. Waring and Gillow Ltd [1926] A.C. 1070 to which he next referred us, which was a case of an attempt to recover money paid by mistake, has no rele-vance to a collecting banker’s responsibility for the payment of cheques. Mr Sofola finally cited Marfani and Co Ltd v. Midland Bank Ltd [1968] 2 All E.R. 573, where the collect-ing bank had obtained only one of the two references it de-manded and had on the strength of that one reference opened an account for a new customer who within a week rapidly ran down the account and disappeared. The bank in that case was not held negligent for the purpose of the English Cheques Act, 1957. There, Lord Wright’s dictum in Lloyds Bank Ltd v. Savory [1933] A.C. 201 had been referred to as being in support of the view that it is the duty of a banker, when opening a new account, to ascertain the name of the customer’s or customer’s spouse’s employer, in addition to obtaining suitable references. Mr Sofola, therefore, submit-ted that the defendant bank had been negligent in opening an account for a new customer without having obtained any reference as to identity and character; and that, by so doing, it had not followed the standard of the reasonable banker, as it had failed to give evidence of a satisfactory mode of con-ducting its banking business.

Mr GOK Ajayi for the respondents submitted that the defendant bank had not been negligent. He said he would rely on sec-tion 2(2) of the Nigerian Bills of Exchange Act, 1964 which



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he claimed to be in pari materia with section 88 of the Fed-eral Bills of Exchange Act, 1909, of Australia. He cited Commissioners of Taxation v. English, Scottish and Austra-lian Bank Ltd (1920) 36 T.L.R. 305 and quoted extensively from the judgment the facts of which he stressed were hardly distinguishable from those of the defendants’ case, and in which the Privy Council had ruled that the collecting bank was not liable in negligence. Counsel tried to show by means of exhibit K that the defendant bank had taken all necessary steps to obtain a reference and so prevent fraud, but he could not satisfy us as to why his clients had failed to produce the alleged letter at the trial. He, however, insisted that the defendants were not put on enquiry as the cheque presented by the customer (who had soon thereafter disap-peared) was regular on the face of it, it having been unnec-essarily endorsed at the back by the payee to himself. He, too, cited Motor Traders Guarantee Corporation Ltd v. Mid-land Bank Ltd (supra) in support of this his final submission.

We must first point out that the Commissioners of Taxation case (supra) on which Mr Ajayi rested his case was in the later case of Savory and Co v. Lloyds Bank Ltd (1932) 2 K.B. 122 distinguished and clarif per Lawrence LJ at page 144, as follows:–

“In the latter case (Commissioners of Taxation v. English, Scottish Australian Bank) Lord Dunedin, in delivering the judgment of Board, after stating that the standard of care to be taken by bank which had been laid down by the Chief Justice in the High Court. Australia as not being less than a man invited to purchase or cash a cheque for himself might reasonably be expected to take, was apposite, said at page 306:

‘If, therefore, a standard is sought, it must be the standard to be derived from the ordinary practice of banker, not individuals.’

In my judgment, neither of the pronouncements relied upon was intended to cover such a case as the present, which bankers, solely for the convenience of their customers, have adopt a system


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with an inherent and obvious defect which no reasonably careful banker could fail to observe. The respondent bank did not adduce any evidence tending to justify the system from the point view of the true owner of the cheques collected under it;

In my opinion, bankers who have disregarded their statutory duty towards the true owner of the cheques collected by them for cus-tomer cannot, when challenged by the true owner, successful plead that they have acted without negligence in his case because for a long time they and other bankers have acted in disregard of the statutory duty in other cases.”

In Lloyds Bank v. Savory and Co (1933) A.C. 201, on appeal before the House of Lords, P. and S. were clerks in the em-ployment of a firm of London stockbrokers and managed to have crossed cheques of certain of their employers’ custom-ers paid into the London bank’s two country branches at one of which P. had an account and, at the other, Mrs S. had an account. The manager of P.’s country branch bank knew he was a stockbroker’s clerk but did not know and did not ask the name of his employers. Mrs S.’s branch bank knew noth-ing of S. Both P. and Mrs S. had, however, given references which appeared satisfactory to the respective branch manag-ers. P stole many cheques and paid them in at one or other of the bankers’ London branches. The stolen cheques were in each case received by the London office and sent to the clearing house. When P.’s acts were discovered, the stock-brokers sued the bankers for conversion of the stolen cheques, and the bankers pleaded section 82 of the Bill of Exchange Act, 1882, alleging that they had in good faith and without negligence received payments of the cheques for their customers P. and Mrs S. It was held by a majority of 3:2 of the House of Lords, confirming the Court of Appeal which had earlier affirmed the trial Judge’s ruling, that the managers of the crediting branches had omitted to make suf-ficient inquiries when accepting P. and Mrs S. as customers and that, in the circumstances, the bankers had failed to prove that they had acted without negligence, and conse-quently, that they were liable. Lord Wright was particularly



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instructive regarding the scope of Commissioners of Taxa-tion, when he said, at pages 230-231:–

“It is true that the question of absence of negligence must be con-sidered separately in regard to each cheque, but it is also true that the matter must be considered, as Lord Dunedin says in Commis-sioners of Taxation v. English, Scottish and Australian Bank (su-pra), in view also of all the circumstances antecedent and present. There may thus be relevant negligence in connection with the opening of the customer’s account by the banker. It is now rec-ognised to be the usual practice of bankers not to open an account for a customer without obtaining a reference and without inquiry as to the customer’s standing; a failure to do so at the opening of the account might well prevent the banker from establishing his defence under section 82 if a cheque were converted subse-quently in the history of the account: this rule was applied by Bailhache J in Ladbroke and Co v. Todd 111 L.T. 43, who on that ground held that the banker had not made out his defence under section 82.”

It is clear law that if X draws a crossed cheque marked “A/C Payee Only” on the Y bank in favour of Z and sends it by ordinary post in the course of which it is stolen and comes into W’s hands who personates Z by forging his signature and opening an account with a banker with the stolen cheque, the banker will be liable in negligence and will not be protected under section 82 of the Bill of Exchange Act, 1882 if he fails to make necessary inquiry about W’s iden-tity or character before collecting the cheque for W’s ac-count: Ladbroke and Co v. Todd (1914) 111 L.T. 43, ap-proved in Lloyds Bank v. Savory [1933] A.C. 201.

We, therefore, hold that the defendant/appellant bank was negligent in not obtaining satisfactory references when opening the saving account for Mr Olatunde Odubiyi or when the latter came to deposit the cheque for £550 two days later especially as they had failed to make an initial in-quiry about the prospective customer. The defen-dant/appellant had failed to observe the standard expected of the reasonable banker.


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The appeal is accordingly allowed with costs assessed at 36 guineas.

The judgment and order of the High Court of Lagos in Suit No. L.D. 597/67, including the order for costs, are hereby set aside. Judgment is entered for the plaintiff in the sum of £550 as claimed, with costs assessed and fixed at 60 guin-eas.

Appeal allowed.


Bank of the North Limited v. Central Bank of Nigeria 401

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Bank of the North Limited v Central Bank of Nigeria


Elias CJN, Lewis, Udoma JJSC

Date of Judgment: 5 MAY 1972 Suit No. S.C.: 118/1970

Banking – Currency conversion – Issue of currency – Sec-tion 21(3), Central Bank Act, 1958 and section 1(1)(a) and (b) Central Bank (Currency Conversion) decree No. 51 of 1967 – Purport of – Whether contemplates application to the Governor of Central Bank of Nigeria

Statute – Provisions of the Central Bank Act, 1958 and Cen-tral Bank (Currency Conversion) decree No. 51 of 1957 – Swap of old currency for new – Conflicts therein – Which prevails

Facts

The appellant as plaintiff claimed against the respondent the sum of £88,800 with interest thereon at 4% per annum from 2/2/1968 to judgment, or in the alternative a declaration that the respondent was not entitled to debit the appellant’s ac-count with the said sum of £88,800 due and owing to the ap-pellant. In effect, it sued for unlawful refusal by the respon-dent to redeem currency deposited after 19 days. Following the change of currency, the respondent issued directives that the legal status of the 1959 and 1965 issues of the notes would be withdrawn with effect from the close of banking business on the 22nd January, 1968 and that deposits or ex-changes of the old notes would cease. However, the respon-dent would continue to accept deposits and undertake ex-changes of the old notes for banks up to the close of busi-ness on the 29th January, 1968, provided the deposits and exchanges would be limited to notes received by the banks on or before 22nd January, 1968.



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The appellants’ case was that between 23rd – 26th January, 1968, it paid into its account with the respondent currency notes issued in 1959 and 1965, the total value of £88,800 representing currency notes received by the appellant before the close of banking business on the 22nd January, 1968, but was desited by the respondent with the sum of £89,049.5s of which £88,800 had been received by the appellant.

The respondent’s case was that the payments made by the appellant were not done in accordance with the Central Bank of Nigeria circular, and that the appellant’s account was credited under a mistake of fact which mistake was induced and made by the appellant not disclosing or informing the respondent of the true and actual dates of receipt by it of the old currency notes, now disputed between the parties. The respondent maintained that in accordance with banking prac-tice the banker does not have or need to seek the customers’ authority before debiting the latter’s account with any money mistakenly credited in the relevant customers ac-count. The respondent also maintained that the appellant failed to submit any returns in respect of the said sum of £88,800 in the manner contained in a directive of the re-spondent to all banks in the Federation with respect to ex-changes or deposits of £550 and over.

At the end of the trial, the learned trial Judge found that the appellants did not establish either of their claims and accord-ingly dismissed the action with costs, hence the appeal to the Supreme Court.

Held –

1. Notwithstanding that the Central Bank (Currency Con-version) decree No. 51 of 1967 does not mention the re-demption of old notes as is provided for in section 21(3) of the Central Bank of Nigeria Act, 1958, it is precisely that which by implication is contemplated by providing that in special circumstances under section 1(1)(b) of de-cree No. 51 of 1967 old currency may be replaced by



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new currency within the period of 14 days from the ex-piry of the 19 days mentioned in section 1(1)(a) of that decree, the is to say within 14 days after the 22nd Janu-ary, 1968 in the present case.

2. Where a discretion whether or not to approve something is given to someone then the person exercising the dis-cretion can require conditions to be fulfilled before he is willing to exercise that discretion in favour of an appli-cation. In the instant case, exhibit T was a valid instruc-tion as the Central Bank of Nigeria could impose condi-tions upon which it would approve applications for con-version under section 1(1)(b) of decree No. 51 of 1967.

3. Section 1(1)(b) of the Central Bank (Currency Conver-sion) decree No. 51 of 1967 contemplates an application to the Governor of the Central Bank of Nigeria for ap-proval for conversion and requires his approval to such application which was not established in the instant case. Without proof of some additional directive from the Central Bank showing the Governor accepted the proce-dure adopted as compliance with section 1(1)(b) of de-cree No. 51 of 1967, the mere payment over the counter of the Central Bank of £88,000 was neither an applica-tion as such nor an approval by the Governor as such within the purport of section 1(1)(b). In effect, the pro-cedure required and laid down by the Central Bank for conversion had not been complied with.

Appeal dismissed.


Foreign Case

Metropolitan Asylum District v. Hill [1881] 6 A.C. 193 at 208


Central Bank of Nigeria Act, (Cap 30) (Laws of the Federation



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of Nigeria and Lagos), 1958, sections 21(1) – (3) and 23

Central Bank (Currency Conversion), decree No. 51 of 1967, section 1(1)(a) and (b) and (2)

History of the case

This was an appeal against the decision of the Lagos State High Court which dismissed the appellant’s claims. The Su-preme Court dismissed the appeal.

Counsel For the appellants: Impey

For the respondents: Chief Okorodudu (with him Williams)

Judgment

LEWIS JSC: (Delivering the judgment of the court) In Suit No. L.D. 634/68 the plaintiffs’ amended particulars of claim read:–

“The plaintiff’s claim against the defendant is for £88,800 with in-terest thereon at 4% per annum from 2nd February, 1968 to judgment or alternatively for a declaration that the defendant is not entitled to debit the plaintiff’s account with the said sum of £88,800 which is due and owing to the plaintiff.”

and paragraphs 3-7 of the statement of claim read:– “3. By a confidential directive to the plaintiff dated 23rd De-

cember, 1967 the defendant notified the plaintiff that all cur-rency notes issued by the defendant for the years 1959 and 1965 received by the plaintiff before 23rd January, 1968 and paid into the defendant before the 30th January, 1968 would be treated as legal tender for the purposes of crediting the plaintiff’s account with the defendant or exchange of new notes to the plaintiff by the defendant.

4. Paragraph 7 of the defendant’s said letter stated:– The legal status of the 1959 and 1965 issues of notes will be withdrawn with effect from the close of banking business on the 22nd January, 1968 and deposits or exchanges of the old notes will cease. However, the Central Bank will continue to accept deposits and undertake exchanges of the old notes for banks up to the close of business on the 29th January, 1968. These deposits and exchanges will be limited to notes


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received by the banks on or before the 22nd January, 1968. No deposits/exchanges of notes will be accepted from or un-dertaken for banks by the Central Bank or its agents after the close of business on the 29th January, 1968.

5. At all material times the plaintiff maintained a current bank-ing account with the defendant and between the 23rd Janu-ary, and the 26th January, 1968 the plaintiff paid into its ac-count with the defendant currency notes issued in 1959 and 1965 to the value of £88,800 in accordance with the said let-ter.

6. All the said currency notes had been received by the plaintiff before the close of banking business on 22nd January, 1968.

7. The defendant duly credited the said plaintiff’s banking ac-count with said payments, but on 2nd February, 1968 with-out the plaintiff’s authority debited the plaintiff’s said ac-count with the sum of £89,049.5s.0d of which £88,800 had been received by the plaintiff as aforesaid.”

and paragraphs 11-14 of the statement of defence read:– “11. As regards paragraph 5 of the statement of claim the defen-

dant Central Bank agrees that plaintiff bank maintained a current banking account with the defendant Central Bank and that between 23rd January, 1968 and the 26th January, 1968 the plaintiff bank paid into its account with the defen-dant Central Bank currency notes issued in 1959 and 1965 to the value of £88,800, but denied that the said payments were made in accordance with the directive of the special circular letter aforementioned in paragraph 6 herein which letter con-tained the directive from the defendant Central Bank to banks in the Federation to make such payment or payments and on the basis of which the issuance was to be made.

12. In particular the defendant Central Bank denies that the said currency notes now in dispute between the parties were re-ceived by the plaintiff bank after the aforementioned date and not in or before the said date.

13. The defendant Central Bank originally credited the plaintiff bank’s account with the said payments, but says that such credit was made under a mistake of fact which mistake of fact was induced and made by the plaintiff bank not disclos-ing to or informing the defendant Central Bank of the true and actual dates of receipt by it of the said old currency

[1967 – 1975] 2 N.B.L.R. (SUPREME COURT OF NIGERIA) Lewis JSC


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notes now in dispute between the parties and the defendant Central Bank states further thereon that in accordance with banking practice the banker does not have or need to seek the customer’s authority before debiting the latter’s account with any money mistakenly credited in the relevant cus-tomer’s account.

14. The plaintiff bank did not submit any return or returns in re-spect of the said sum of £88,800 now in dispute in the man-ner contained in a directive to all banks in the Federation made and issued on 23rd December, 1967 by the defendant Central Bank with respect to exchanges or deposits of £550 and over and in particular respect to signing and completing particulars of such transactions and returning the forms each day.”

On the 10th October, 1969, Sowemimo, J, after a very full and careful review of the evidence, found that the plaintiffs had not established either of their claims and accordingly dismissed the action with 75 guineas costs to the defendants.

The plaintiffs have now appealed to this Court and Mr Im-pey on their behalf first argued together grounds of appeal that read:–

“1. The learned trial Judge erred in failing to consider, deal with or answer the plaintiffs’ contention that in any event the de-fendants were under the obligation to redeem all the old cur-rency notes forming the subject matter of the plaintiffs’ claim upon demand and that by reason of sections 21 and 23 of the Central Bank of Nigeria Act, (Cap 30), the plaintiffs must be entitled to the relief claimed.

2. The learned trial Judge erred in failing to consider the effect of the admissions by the defendants’ witnesses that none of the said currency notes were lost, stolen mutilated or imper-fect.”

Mr Impey started by referring us to sections 21 and 23 of the Central Bank of Nigeria Act, (Cap 30) (Laws of the Federa-tion of Nigeria and Lagos), 1958, which read:–

“21. 1. Notes issued by the bank shall be legal tender in Nigeria at their face value for the payment of any amount.

2. Coins issued by the bank shall, if such coins have not been


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tampered with, be legal tender in Nigeria at their face value up to an amount not exceeding ten pounds in the case of coins of denominations of not less than six pence and up to an amount not exceeding one shilling in the case of coins of a lower denomination.

3. Notwithstanding the provisions of subsections (1) and (2) the bank shall have power, on giving not less than three month’s notice in the Gazette, to call in any of its notes and coins on payment of the face value thereof and any such notes or coins with respect to which a notice has been given under this clause shall, on the expiration of the no-tice, cease to be legal tender, but subject to the provisions of section 23, shall be redeemed by the bank upon de-mand.

23. No person shall be entitled to recover from the bank the value of any lost, stolen, mutilated or imperfect note or coin. The circumstances in which, and the conditions and limitations subject to which, the value of lost, stolen, muti-lated or imperfect notes or coins may be refunded as of grace shall be within the absolute discretion of the bank.”

He then submitted that reliance was never placed on section 23 in the pleadings by the defendants and that anyway not only was it not proved that the notes which the plaintiffs paid into their account with the defendants were “stolen, mutilated or imperfect notes” but there were in fact clear admissions to the contrary. He therefore relied in particular on the provisions of section 21(3) that even if notice was given in calling in notes so that they ceased to be legal ten-der they would still be redeemable by the Central Bank. He further submitted that the position was not altered by the Central Bank (Currency Conversion) decree, 1967 (decree No. 51 of 1967) section 1 of which reads:–

“1. (1) Where any existing currency is altered by the Central Bank, the Commissioner for Finance shall cause to be pub-lished in the Gazette and in such other manner as he may direct or require, notice fixing a date (in this decree hereaf-ter referred to as ‘the conversion date’) after which all cur-rency then issued and mentioned in the notice shall cease to be legal tender in Nigeria; but currency which is of the



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class or classes mentioned in the notice and is issued, held or in circulation in Nigeria immediately before the conver-sion date shall be replaced by the new currency to the equivalent value pursuant to this decree:

(a) If presented to the Central Bank by any person not more than 19 days after the conversion date, or

(b) if thereafter within a further period of 14 days (but no further) the Governor of that bank approves an appli-cation for conversion as a special case.

(2) In the application of subsection 1 any provision of the Central Bank of Nigeria Act inconsistent therewith shall be read subject to this subsection.

(3) Currency not in accordance with the altered shape and de-sign which is held outside Nigeria by any person shall, on and after the conversion date, be accepted for exchange with new currency under this decree only with the ap-proval of the Governor of the Central Bank of Nigeria given generally, or subject to such terms as he may think fit to impose, after consultation with the Commissioner for Finance.”

Moreover, section 1(2) according to him showed that it was only provisions inconsistent with the Central Bank of Nige-ria Act that must be read subject to the decree and, in his submission, none were here, as nowhere in section 1 of de-cree No. 51 of 1967 was it stated that old notes were not re-deemable, only that new currency would replace old cur-rency in certain circumstances. He further relied on the well established principle enunciated in Halsbury’s Laws of Eng-land (3ed), Volume 36, paragraph 627 which reads:–

“627. Unless it is clearly and unambiguously intended to do so, a statute should not be construed so as to interfere with or prejudice established private rights under contracts or the ti-tle to property, or so as to deprive a man of his property without his having an opportunity of being heard. In particu-lar, an intention to take away property without giving a legal right to compensation for the loss of it is not to be imputed to the legislature, unless that intention expressed in un-equivocal terms.”


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and on Metropolitan Asylum District v. Hill [1881] 6 AC 193 where Lord Blackburn at page 208 said:–

“It is clear that the burden lies on those who seek to establish that the Legislature intended to take away the private rights of indi-viduals to show that by express words, or by necessary implica-tion, such intention appears. There are not express words in this Act, and I think the weight of argument is rather against than in favour of such an implication.”

Finally, on these grounds of appeal, he argued that though section 1(1)(a) of decree No. 51 of 1967 did not apply to the facts of this case, section 1(1)(b) did. He however submitted that paragraph 7 of exhibit A issued by the defendants and which reads:–

“7. Legal Tender Status of Existing Notes:

The legal tender status of the 1959 and 1965 issues of notes will be withdrawn with effect from the close of banking business on 22nd January, 1968 and deposits or exchanges of the old notes should no longer be accepted or undertaken from the commencement of banking business on the 23rd January, 1968 as from which day the liability of the Central Bank to redeem the old notes will cease. However, the Central Bank will continue to accept deposits, and under-take exchanges, of the old notes for banks up to the close of business on 29th January, 1968. These deposits and ex-changes will be limited to notes received by the banks on or before 22nd January, 1968.

No deposits/exchanges of notes will be accepted from, or undertaken for, banks by the Central Bank or its agents after the close of business on 29th January, 1968.”

was inaccurate as by the Currency Conversion (Substituted Date) Notice, 1968, the 3rd January, 1968 was fixed as the currency conversion date under section 1(1) of decree No. 51 of 1967 so that as from that date, not the 22nd January, 1968 as stated in paragraph 7 of exhibit A, the old notes ceased to be legal tender but otherwise, in his submission, the plaintiffs had complied with the require-ments of exhibit A.

Now, in our view it is clear that though Mr Impey is right



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that decree No. 51 of 1967 does not mention the redemption of old notes such as is provided for in section 21(3) of the Central Bank of Nigeria Act, it is precisely that which by implication is contemplated when it is provided that in spe-cial circumstances under section l(1)(b) of decree No. 51 of 1967 old currency may be replaced by new currency within the period of 14 days from the expiry of the 19 days men-tioned in section 1(l)(a) of that decree, that is to say within 14 days after the 22nd January, 1968 in the present case. As section 1(2) of decree No. 51 of 1967 specifically provides that inconsistent provisions of the Central Bank of Nigeria Act must be read subject to decree No. 51 of 1967, we think section 21(3) of the Act (Cap 30) must be read subject to the provisions of the decree as to how new currency may be is-sued in place of old currency whether it is described as being “replaced” or “redeemed.” In other words, only if the plain-tiffs could establish that they had complied with the terms of section 1(1)(b) of decree No. 51 of 1967 could they succeed here. Whilst we would agree with Mr Impey that the legal position as to the status of the notes in question as legal ten-der is erroneously stated in paragraph 7 of exhibit A, that exhibit was only a directive from the defendants as to the basis upon which they would accept old notes for replace-ment by new notes after the 22nd January, 1968 and, as such, irrespective of the erroneous statement therein as to the basis of legal tender, it must otherwise be treated as a proper directive for the purposes of decree No. 51 of 1967.

That takes us to the next two grounds of appeal argued to-gether, namely:–

“(3) The learned trial Judge erred in refusing to examine the question raised by the defendants as to whether the defen-dant had any lawful justification to refuse to redeem the said old currency notes notwithstanding any failure on the part of the plaintiff to comply with one or more conditions imposed by the bank for redemption.

(6) The learned trial Judge misdirected himself in holding that his decision must depend on whether the plaintiff established


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it has complied with the defendants’ direction as to the re-cording of the names and addresses of the depositors of amounts of over £500 when he should have considered firstly whether or not such a failure constituted any defence to the action.”

It was here Mr Impey’s submission initially that exhibit T which read:–

“Suit No. L.D. 634/68

Bank of the North Limited v. Central Bank of Nigeria.

Central Bank of Nigeria,

Tinubu Square, Lagos,

Private Mail Bag 12194,

Cables Cebank:

Telephone:. . .

23rd December, 1967

Dear Sirs,

The New Nigerian Currency Notes

Consequent upon the issue of new Nigerian Currency Notes, you are required to comply with the following formalities:

(i) In respect of all persons (individuals) wishing to exchange old Nigerian Currency Notes for new ones, particulars are to be obtained as per attached form;

(ii) Completed forms referred to in (i) above in respect of ex-change of £500 and over should be forwarded to the Cen-tral Bank at the close of business each day.

Yours faithfully.”

Was not a valid instruction as all that the Central Bank of Nigeria could do was to approve an application for conver-sion under section 1(1)(b) of the decree and it could not im-pose conditions upon which it would act. After further ar-gument however he abandoned this submission, very rightly in our view, as to our mind if a discretion whether or not to approve something is given to someone then the person ex-ercising the discretion can require conditions to be fulfilled before he is willing to exercise that discretion in favour of an applicant.



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Finally, Mr Impey argued on the facts that the plaintiffs had discharged the onus of establishing that they had re-ceived the £88,000 of notes in question prior to the 22nd January, 1968 which they had then paid into the defendants on the 23rd January, 1968. The learned trial Judge, however, as we have said, made a most careful and thorough review of the evidence and we do not see that he was in any way shown to have come to a wrong conclusion thereon. It was the misfortune of the plaintiffs that the manager who was alleged to have received the £88,000 the money being, be it noted, uncounted and merely accepted by the manager as to the amount on the word of the depositor which to our mind was a banking procedure so incredible that in itself it must have cast doubt on the whole transaction had left the service of the plaintiffs so that they did not call him to give evidence though, apart from any difficulty they might have had in finding him, they may well have had their own good reasons for not seeking to bring him to court in view of his behav-iour. Be that as it may, we think the learned trial Judge was entitled to come to the conclusion that he did that the plain-tiffs had not made out their case that they had complied with the required procedure for replacing old notes with new ones. Indeed, although the learned trial Judge did not advert to it, it seems to us that section 1(1)(b) of decree No. 51 of 1967 contemplates an application to the Governor of the Central Bank for approval for conversion as a special case and requires his approval to such application and we do not see that this was ever established here. Without proof of some additional directive from the Central Bank, which was not forthcoming, showing that the Governor accepted the procedure adopted as compliance with section 1(1)(b) we do not think that the mere payment over the counter of the Cen-tral Bank of £88,000 was either an application as such or an approval by the Governor as such within the purport of sec-tion 1(1)(b). This however, is merely an additional reason as on the facts the learned trial Judge in any case found, as we have said we think he was entitled to do, that the procedure


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required and laid down by the Central Bank for conversion had not been complied with. The appeal accordingly fails and is dismissed with 44 guineas costs to the respondents.

Appeal dismissed.



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George v. United Bank for Africa Limited


ELIAS, CJN, FATAYI-WILLIAMS, UDOMA, JJSC

Date of Judgment: 29 SEPTEMBER 1972 S.C.: 209/1971

Banking – Bank taking over another bank – Claiming debt owed to defunct bank – What that bank must prove to be en-titled to recover debt

Facts

The respondent took over another bank called British and French Bank Limited and thereafter took out a writ against the appellant claiming a sum owed to the defunct bank.

In the action, they claimed to be successors to the British and French Bank, without more, not pleading the assignment of the debt and other relevant materials. The defen-dant/appellant on the strength of this, contented that the plaintiff/respondent had not proved his case. Nonetheless the court found for the plaintiff/respondent whereupon the de-fendant appealed to the Supreme Court urging on the court the same argument canvassed at the High Court.

Held –

In a case such as this, evidence relating to the terms and conditions of the take-over or the assignment of the assets such as a debt and of the liabilities of the bank which was taken over should have been put before the court.

Per Curiam “This evidence seems to suggest that a consortium of banks both in Europe and the United States of America raised money to buy up the assets of the British and French bank in Nigeria. There is no evidence showing that it was the same consortium which formed the plaintiffs/respondents’ bank (that is, the United Bank for Africa). This is particularly important as the witnesses further testified that the British and French bank still exists and in fact


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has shares in the plaintiffs/respondents’ banks. What about the li-abilities of the British and French bank? Were these also taken over as well or was British and French bank left to discharge these liabilities?

In a case such as this, evidence relating to the terms and condi-tions of the take-over or the assignment of the assets such as debt and of the liabilities of the bank which was taken over should have been put before the court. By way of illustration, we will refer to two cases namely Prescott Dimsdale Cave, Tugwell and Co Ltd v. Bank of England (1894) 1 Q.B. 351 at pages 351-354 and Bradford Old Bank Ltd v. Sutdiffe (1918) 2 K.B. 833 at page 835. The two cases dealt with claims arising out of the amalgamation of absorption of one bank by another bank or group of banks. The decision in each case shows clearly that there was evidence indicative of the terms of the amalgama-tion or absorption, which the court had to consider before de-termining the right and/or liabilities of all the banks concerned. In the instant case, the third plaintiff himself felt that ‘there must have been a Board meeting which covered this asset along with all the others.’ It may also be that a resolution was passed by the Board of Directors of each of the banks concerned, that is, the consortium of European and America banks, the British and French banks and possibly the plaintiffs/respondents’ bank before the buying-up and transfer of the assets of the British and French bank to the plaintiffs/respondents’ bank. Moreover, there might also be a written agreement between the two banks show-ing clearly what was sold, or bought or transferred. Of all these, there has been no evidence.”

Appeal allowed.


Nigerian

Chief Sule Jimbo and others v. Aminu Asani and others S.C. 373/67 Craig v. Craig (1967) N.M.L.R. 52 at 55 Erinle v. Adelaja (1969) 1 N.M.L.R. 132 George v. Dominion Flour Mills Ltd (1963) 1 All N.L.R. at 78-79



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N.I.P.C v. Thompson Organisation Ltd and others S.C. 192/67 Ogboda v. Adulugba (1971) 1 All N.M.L.R. 68

Foreign Cases Bradford Old Bank Ltd v. Sutchffe (1918) 2 K.B. 833 at 835 Prescott Dimsdale, Cave, Tugwell and Co Ltd v. Bank of England (1894) 1 Q.B. at 351-354

Counsel

For the appellant: Hughes

For the respondents: Horn

Judgment

FATAYI-WILLIAMS JSC: (Delivering the judgment of the court) In Suit No. K/64/1967, the plaintiffs in the Kano High Court claimed in their writ as follows:

The plaintiffs’ claim against the defendant is:– “1 For the sum of £21,178.9s.11d being money payable by the

defendant to the plaintiffs for money lent by the plaintiffs to the defendant and for money paid by the plaintiffs for the de-fendant as bankers and Agents for the defendant at his request and for interest upon money due from the defendant to the plaintiffs and foreborne at interest by the plaintiffs to the de-fendant at his request and for bank charges, full particulars of all which are contained in the affidavit in support hereof; and

2. For compound interest on the said sum of £21,178.9s.11d at the rate of 11 per centum with monthly rests from the 29th June, 1967, until repayment or judgment.”

Pleadings were ordered and were duly filed and delivered. The plaintiffs’ statement of claim reads:–

“1. The plaintiffs are a banking company carrying on business in Kano and elsewhere in Nigeria.

2. The plaintiffs are the successors to British and French Bank Limited who also carried on business in Kano and elsewhere in Nigeria.

3. The defendant is believed to be a merchant in Kano and re-sides at 24E Ado Bayero Road, Kano.

4. The defendant has a current banking account with the plaintiffs.


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5. The plaintiffs and their predecessors paid money to the de-fendant as bankers for the defendant at his request together with interest upon the money due from the defendant to the plaintiffs and forborne at interest by the plaintiffs to the de-fendant at his request and by reason thereof, the said account has been overdrawn in the sum of £21,178.9s.11d as at 29th June, 1967, which said sum is due and owing by the defen-dant to the plaintiff.

6. Compound interest with monthly rate is present accruing on the said sum of £21,178.9s.11d at the rate of eleven per cen-tum per annum.

7. The defendant by letter dated 16th February, 1963, ad-dressed to the plaintiffs admitted and acknowledged therein that he was at that date indebted under his said current bank-ing account in the sum of £17,794.

8. Whereof the plaintiffs claim as per writ of summons.”

Paragraphs 1-3 of the amended statement of defence read:– “1. Save as is hereinafter expressly admitted each and every al-

legation of fact set out in the statement of claim is denied in (sic) seriatim as if each was denied separately.

2. The defendant admits the allegations contained in para-graphs 1 and 3 of the statement of claim.

3. With regard to the facts alleged in paragraph 4 of the state-ment of claim the defendants says that his banking account was operated by him since October, 1959.”

The defendant averred further in the statement of defence that he was authorised by the British and French Bank Lim-ited, Kano, to overdraw his current account there to a limit of £8,000 and that he received advances from the said bank but could not say precisely the amount which he drew before October, 1959. He did not know whether or not he was charged any interest thereon and, if he was, how much inter-est he was charged. He then stated that the British and French Bank Limited or the plaintiffs hold a legal mortgage upon his property and that the value of the mortgaged prop-erty far exceeded any sum in which he might be indebted to the British and French Bank Limited or to the plaintiffs. He further stated that his legal rights and liabilities in respect of

[1967 – 1975] 2 N.B.L.R. (SUPREME COURT OF NIGERIA) Fatayi-Williams JSC


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any sum which he might owe the plaintiffs or the British and French Bank Limited were governed by the terms of the said mortgage . . . to the action. After pleading the Statutes of Limitation as another bar to the action, he stated finally that as regards the payment alleged to have been made by the British and French Bank Limited or the plaintiffs after 16th October, 1967, the consideration given, if any, was past con-sideration.

In support of the plaintiffs’ claim, one Alastair Glynne Foulkes (PW3), the assistant manager of the plaintiffs, testi-fied as follows:–

“I have been with the plaintiff bank for about eight years. I came in January, 1961, to join British and French bank. In October, 1961, that bank’s assets and liabilities in Nigeria were taken over by a consortium of foreign banks, including the British and French bank which still retain a majority share holding. A new company was formed called the United Bank for Africa Limited. The business of British and French bank was taken over by the U.B.A. We issued what we called ‘Bridge Forms’ to all custom-ers. I know the defendant. He is a customer owing us money. He was a customer of British and French bank since 1956. He did not sign a ‘Bridge Form.’ I do not think he was sent one to sign. I see exhibit 1. It is a copy of defendant’s account with British and French bank and with plaintiffs. When plaintiffs took over in Oc-tober, 1961, this account was taken into their book.”

When cross-examined further about the take-over of the British and French bank by the plaintiffs, the witness re-plied:–

“I do not agree we are acting as agents for British and French bank. We claim this money is due to us. We are legally entitled to this money. We bought the assets and took over the liabilities.

Several banks in Europe and one in America put money together and bought the assets in Nigeria of British and French bank. I cannot produce any documents. I cannot establish that this bal-ance was one of the assets which we took over. I suppose there must have been a Board Meeting which covered this asset along with others. We took over the Balance Sheet which included this debt. British and French bank still exists but does no direct busi-ness in Nigeria. They have shares in plaintiff bank.


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I agree exhibit 1 shows defendant himself has not operated the account since October, 1959.”

The defendant did not give evidence but only called one An-thony Dorman (first D/W), a Chartered Accountant, who testified as to the defendant’s account in the books.

At the close of the case, the learned Counsel for the defen-dant submitted that plaintiffs were claiming a debt due to the British and French bank which was admitted to be a separate legal entity, that there was no Power of Attorney enabling the plaintiffs to sue in place of the British and French bank, and that there was no proof of any legal or equitable assign-ment of the debt by the British and French bank to the plain-tiffs. For the plaintiffs, it was submitted that there was, for the documents tendered at the trial, an equitable assignment from the British and French bank Limited to the plaintiffs. The court was also asked to apply the common-law doctrine of novation. Finally it was submitted that, while the plain-tiffs conceded that there was no ‘‘Bridge-Form’’ sent to or signed by the defendant consenting to the assignment, con-sent could be signified by conduct where there was nova-tion.

In his judgment wherein the plaintiffs were awarded the amount claimed, the learned trial Judge observed as follows:–

“The most interesting part of the defence is the legal argument arising out of the change of identity of the creditor. plaintiffs say they took over all the business in Kano of the British and French bank. No details of any assignment are proved, but on the evi-dence before me which the defendant has not contradicted I am satisfied that this is so.”

After considering the submission of learned Counsel of both parties with respect to the legal issues to which we have re-ferred above, the learned trial Judge, before giving judgment for the plaintiff, finally found as follows:–

“In my view, Mr Horn is right. Obviously where the burden of a debt is being assigned, the creditor must consent or the assign-ment could be used as a simple means of avoiding liability. When the benefit of a debt is assigned, the debtor does not need to



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consent. He still owes the money which he previously borrowed, and so long as he knows whom to pay in order to get an effective receipt and discharge he has no cause to be consulted over the as-signment. Here, it is quite clear on the documents signed by the defendant that he knew well that his previously indebtedness to British and French bank (a) was still due (b) was still accruing in-terest, and (c) was to be paid by him to plaintiffs.”

In his appeal before this Court, five grounds of appeal were argued on behalf of the defendant/appellant but the only ground which merited any serious consideration reads:–

“The learned trial Judge erred in law and misdirected himself upon the evidence in finding that there had been a valid assignment by British and French Bank Limited to the United Bank for Africa Limited from the defendant.”

For the defendant/appellant, Mr Hughes’ argument may be summarised as follows:–

“On the evidence of the loan by the British and French bank to the plaintiff/respondents. He referred to the evidence of the third P/W, the assistant manager of the plaintiffs/respondents, who admitted that the defendant/appellant was not sent a Bridge Form to sign and was therefore not given any notice of the assignment, that he could not establish that the balance of the defen-dant/appellant’s account was one of the assets which his bank took over and who could only suppose that there must have been a Board Meeting which covered these assets along with all the others.”

Learned Counsel then submitted that the action against the defendant/appellant should have been brought by the British and French bank and not by the plaintiffs/respondents. He also referred to the letter exhibit 8 written on 16th February, 1963, about two years after the alleged assignment, which showed that the defendant/appellant was still of the view that whatever he owed was owed to the British and French bank.

Mr Horn who appeared for the plaintiff/respondents con-tended at first that there was evidence that the plain-tiffs/respondent came into being and took over the assets and liabilities of the British and French bank. He later conceded,


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however, that part of their pleadings relating to the take-over was not as comprehensive as it should have been. He also conceded that the evidence in support was also not sufficient proof of the take-over and then asked that the plain-tiff/respondent’s claim should be non-suited.

For the defendant/appellant, Mr Hughes urged us in reply to dismiss the claim if we were of the view that the take-over had not been proved, pointing out that that could not prevent the British and French bank who were still the credi-tors of the defendant/appellant from suing for the debt.

The first point to be considered in this appeal is whether the plaintiff/respondents pleaded the assignment by the British and French bank to them of the debt which they had claimed from the defendant/appellant. If the assignment is not pleaded, evidence regarding it goes to no issue and should not have been admitted; if admitted, it should have been ignored by the learned trial Judge in his judgment. (See George v. Dominion Flour Mills Ltd (1963) 1 All N.L.R. 71 at pages 78-79). In this respect we also wish to refer to our decision in Chief Sule Jimbo and others v. Aminu Asani and others S.C. 373/67 delivered on 13th March, 1970, where we ob-served as follows:–

“We are also concerned at the obvious departure from their plead-ings of the two sets of plaintiffs. The object of pleadings is to fix the issues for trial accurately and to appraise the other side of the case which it would meet in court. To allow that party to give evidence in direct contradiction of his pleadings is to allow that party to make a different case at the trial and should not have been allowed. Such evidence must be regarded as not belonging to the issues raised on the pleadings and should have been re-jected. We think the learned Judge was wrong to have allowed such evidence to be given. See Erinle v. Adelaja S.C. 332/1966 delivered on the 6th June, 1969; also N.I.P.C. v. Thompson Or-ganisation Ltd and other. S.C. 192/67 delivered on the 11th April, 1969.”

Again we refer to our decision in Ogboda v. Adulugba delivered



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on 12th February, 1971, where we emphasised the same point as follows:–

“We have pointed out numbers of times that the evidence in re-spect of matters not pleaded really goes to no issue at the trial and the court should not have allowed such evidence to be given. (See Sule Jimbo and others v. Aminu Asani and others S.C. 373/67 de-livered on 13th March, 1970). Even when such evidence had been wrongly allowed, the trial court should disregard it as irrele-vant to the issues properly raised by the pleadings.”

In the instant case, the plaintiff/respondent averred in para-graphs 1-4 of their statement of claim as follows:–

“1 The plaintiffs are a banking company carrying on business in Kano and elsewhere in Nigeria.

2. The plaintiffs are the successors to British and French Bank Limited who also carried on business in Kano and else-where in Nigeria.

3. The defendant is believed to be a merchant in Kano and re-sides at 24E Ado Bayero Road, Kano.

4. The defendant has a current banking account with the plain-tiffs.”

The defendant/appellant in his amended statement of de-fence, while admitting the averments in paragraphs 1 and 3 of the statement of claim, denied the averments in paragraph 2 thereof. With respect to those in paragraph 4, the defen-dant/appellant pointed out in paragraph 3 of his statement of defence that his banking account had not been operated by him since 1959, thereby implying that he had no current ac-count with the plaintiff/respondents at the time they said they took over the British and French bank in 1961.

In our view, it is not clear from paragraph 2 of the statement of claim what sort of business the British and French bank did in Kano and elsewhere in Nigeria or what the plain-tiffs/respondents ‘‘succeeded’’ to. Even assuming that the British and French bank were carrying on the business of banking in Nigeria, the averment did not show that the plain-tiffs/respondents “succeeded” to all or some of their banking business, or to all of the assets and liabilities of the bank


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generally or to the debt owed to it by the defendant/appellant in particular. On the basis of their pleadings alone, the plain-tiffs/respondents did not show that they had taken over or had been assigned the assets and liabilities of the British and French bank including the debt, if any, owed to that bank by the defendant/appellant.

Even the evidence adduced, which to our mind, should not have been admitted and should have therefore been ignored, did not appear to improve the situation. In this connection, we recall the answers given to questions asked under cross-examination by Mr Foulkes (third PW) the assistant man-ager of the plaintiffs/respondents’ bank in Kano at the time of the trial. These answers are as follows:–

“Several banks in Europe and one in America put money together and bought the assets in Nigeria of British and French bank. I cannot produce any documents. I cannot establish that this bal-ance was one of the assets which we took over. I suppose there must have been a Board Meeting which covered this asset along with all others. We took over the Balance Sheet which included this debt. British and French bank still exists but does no direct business in Nigeria. They have shares in plaintiffs bank.”

This evidence seems to suggest that a consortium of banks both in Europe and the United States of America raised money to buy up the assets of the British and French bank in Nigeria. There is no evidence showing that it was same con-sortium which formed the plaintiffs/respondents’ bank (that is, the United bank for Africa). This is particularly important as the witnesses further testified that the British and French bank still exists and in fact, has shares in the plain-tiffs/respondents’ banks. What about the liabilities of the British and French bank? Were these also taken over as well or was British and French bank left to discharge these li-abilities?

In a case such as this evidence relating to the terms and conditions of the take-over or the assignment of the assets such as debt and of the liabilities of the bank which was taken over should have been put before the court. By way of



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illustration, we will refer to two cases namely Prescott Dimsdale Cave, Tugwell and Co Ltd v. Bank of England (1894) 1 Q.B. 351 at pages 351-354 and Bradford Old Bank Ltd v. Sutchffe (1918) 2 K.B. 833 at page 835. The two cases dealt with claims arising out of the amalgamation of absorp-tion of one bank by another bank or group of banks. The de-cision in each case shows clearly that there was evidence in-dicative of the terms of the amalgamation or absorption, which the court had to consider before determining the right and/or liabilities of all the banks concerned. In the instant case, the third plaintiff himself felt that “there must have been a Board meeting which covered this asset along with all the others.” It may also be that a resolution was passed by the Board of Directors of each of the banks concerned, that is, the consortium of European and America banks, the Brit-ish and French banks and possibly the plaintiffs/respondents’ bank before the buying-up and transfer of the as-sets of the British and French bank to the plain-tiffs/respondents’ bank. Moreover, there might also have been a written agreement between the two banks showing clearly what was sold, or bought or transferred. Of all these, there has been no evidence.

In the absence of any clear averment in the statement of claim on these points and of any evidence showing what sort of agreement was reached which could have transferred the debt which the defendant/appellant was supposed to owe the British and French bank to the plaintiffs/appellants’ bank, we are unable to hold that the assignment of the debt has been proved. It is not, in our view, open to the third PW to suppose that there must have been a Board Meeting at which certain decision regarding the “assets” were taken. This is no more than a mere speculative observation and could not be a substitute for relevant and necessary evidence. The learned trial Judge was therefore in error in holding that the debt, if any, owed by the defendant/appellant to the British and French bank had been assigned to the plaintiffs/respondents.


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Since no assignment was proved, the defendant/appellant could not be held liable to them for the amount claimed.

Learned Counsel has asked that the plaintiffs/respondents be non-suited if we found that no assignment has been proved. As we had pointed out in Craig v. Craig (1967) N.M.L.R. 52 at page 55, and in other cases, an order of non-suit means giving a plaintiff a second chance to prove his case and the court has to consider whether, on the one hand, that would be wronging the defendant or whether, on the other hand, an order of dismissal of the suit would be wronging the plaintiffs. In the instant case, the plaintiffs/respondents had the chance to prove their case against the defendant/appellant and had completely failed to do so. An order of non-suit should only be made where a plaintiff has not failed in toto and where in any case the defendant is not entitled to the judgment of the court. (See Amobi v. Texaco Africa Ltd S.C. 593/1966 delivered on 20th March, 1972). On the meagre evidence adduced by the plaintiffs/respondents in the present case, the defendant/appellant is certainly entitled to judgment. We are of the view, therefore, that this is not a proper case for a non-suit.

The appeal is accordingly allowed and the judgment of the learned trial Judge delivered in the Kano High Court in Suit NoK/64/197 on 6th December, 1968, including the order as to costs, is hereby set aside. Instead, we order that the plain-tiffs/respondents’ claim be dismissed and this shall be the judgment of the court. Costs to the defendant/appellant are assessed in the court below at 110 guineas and in this Court at 76 guineas.

Appeal allowed.

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF MID-WESTERN STATE)


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Osawaye v. National Bank of Nigeria Limited

HIGH COURT OF MID-WESTERN STATE

OGBOBINE J


Banking – Banker/customer relationship – Nature of

Banking – Customer’s cheque – When bank bound to honour

Banking – Dishonour of cheque – When bank will be liable in damage for injury to customers credit

Facts

The plaintiff’s claim was for the sum of N10, 700 (Ten thousand, seven hundred) being special and general damages for breach of contract for refusal by the defendant to honour plaintiff’s cheque for N6,700 drawn and payable to one RE Ozigbo.

The facts of the case show that the plaintiff was a customer of the bank and was issued the cheque books on 18th De-cember, 1972. He issued a cheque for £3,000 but the cheque was dishonoured majorly because some amount had been withdrawn from his account with cheque leaves not from the two cheques issued to him by the bank. The matter was re-ported to the police. The plaintiff did not insist on the Pay-ment of the £3,000 but issued another cheque for £2,000 and was paid. The plaintiff did not make any lodgements into the account, but on January, 11th 1973 he issued another cheque for N6,700 (£3,350) to one Richard Ozigbo which was marked “return to drawer.”

Alleging that the dishonour was wrongful and that he has suffered damages in his business, the plaintiff brought this action against the bank.

[1967 – 1975] 2 N.B.L.R. 231 (HIGH COURT OF MID-WESTERN STATE)

Osawaye v. National Bank of Nigeria Limited 427

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Held –

1. When the plaintiff drew a cheque for N6,700 on the bank on 11th January, 1973, he knew that he had no such money in his account and having omitted to with-draw the cheque for £3,000 on 18th December, 1972 and substitute a cheque for £2,000 which was paid to him, he is estopped from disputing the state of his account with the bank.

2. If a banker without justification dishonours a customers cheque, he is liable to the customer in damage for injury to credit. In the instant case, the refusal of the bank to honour the cheque for N6,700 was not without justifica-tion.

3. For a banker to be obliged to honour his customer cheque, there must be sufficient funds standing to the customer’s credit and available to cover the whole amount of the cheque, for a banker is not obliged to pay any part of a cheque drawn for an amount exceeding an available balance, or in default of such sufficient and available funds there must be a special agreement for payment as where there is an arrangement for an over-draft.

The relationship of banker and customer is one of debtor and creditor with the additional feature that there is no obli-gation on the part of the banker, as debtor, to seek out his creditor, the customer, and pay him. His obligation is only to pay the customer when the customer makes a demand or gives direction for payment.

Action dismissed.


Nigerian

Oyewole v. Standard Bank of West Africa Ltd, (1968) (2) A.L.R. Comm. 111 (1968) 2 All N.L.R. 32

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF MID-WESTERN STATE)


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Foreign Cases Davidson v. Barclays Bank Ltd [1940] 1 All E.R. 316 (1940) at 164 Freeman v. Coker (1848) 2 exhibit 654; 154 E.R. 652, Joachimson v. Swiss Bank Corp (1921) 3 K.B. 110; [1921] All E.R. 92 Mckenzie v. British Linen Co [1881] 6 A.C. 82 at 109; 44 L.T. 431 at 435

Counsel For the plaintiff: Okeaya-Inneh

For the defendant: Oliha

Judgment

OGBOBINE J: The plaintiff’s writ of summons is endorsed with a claim which is set out in the following manner:

“The plaintiff is a businessman and a customer of the defendant banking company at all material times and keeps a current ac-count with the defendant bank in Benin City within the jurisdic-tion of this Honourable court. The plaintiff’s claim against the defendant is for the sum of N10,700 (ten thousand seven hundred naira) being special and general damages for breach of contract for refusal by the defen-dant company to honour the plaintiff’s cheque number. BC-K050078 of January 11th, 1973 for N6,700 lawfully drawn and payable to one R.E. Ozigbo, whereas the plaintiff had at all mate-rial times funds in his account with the defendant well over N6,800. The plaintiff has by this unlawful refusal of the defendant to hon-our his cheque suffered damages in his business. The plaintiff therefore claims N6,700 special damages and N4,000 general damages.”

In this action, pleadings were ordered on 12th February, 1973 and on the following day the plaintiff filed his state-ment of claim, while the defendant bank (“the bank”) deliv-ered its defence on 21st March, 1973. Actual hearing in the case commenced on 27th March and was concluded the fol-lowing day. Although the pleadings were rather copious, the facts were not seriously in issue, both on the state of the


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pleadings and the substance of the evidence led before me. The plaintiff testified and called the manager of the bank as his only witness but the bank led no evidence.

Briefly, these are the facts: The plaintiff is a customer of the bank in its branch at Akpakpava Road, Benin City. He opened a current account with the bank in July 1972 and was during the period before the controversy issued two cheque books, which he tendered as exhibits A and A1. On 18th December, 1972 he issued a cheque for £3,000, but the cheque was dishonoured. No payment was made on that cheque and the manager of the bank kept it. He was invited by the manager, who checked his cheque books and bank tellers to know the state of his account with the bank. After the manager had examined them he found that he had not overdrawn his account, it was also observed by him that the balance in his account was not up to £3,000, wherefore he issued another cheque for £2,000 and was paid. On the same day, the manager wrote a letter to him in which the manager stated that some cheque-leaves used in withdrawing money from his account did not come from the two cheque books issued to him. That letter is exhibit B.

On January 11th, he issued another cheque, for N6,700 (£3,350), to one Richard Ozigbo. The cheque was returned to him and was marked “Return to Drawer.” He also pro-duced the cheque, which was equally admitted in evidence and marked exhibit C. That particular cheque came from ex-hibit A1, which was one of the cheque books issued to him by the bank.

He knew that after he had withdrawn £2,000 on 18th De-cember, 1972 he should have had a balance of over £3,000 in his account with the bank, but between that date and January 11th, 1973 he made no lodgments into his account. The first statement of account sent to him by the bank was on 20th December, 1972, and this was marked exhibit E. He said that because the bank dishonoured his cheque on 18th December, 1972 he was unable to pay his directors and had

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF MID-WESTERN STATE) Ogbobine J


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thereby suffered damage. He maintained a personal account with the bank, and at no time did he give anybody authority to withdraw any money from that account and had never used any cheque-leaf in withdrawing any money from the bank except those in either exhibits A or A1.

The plaintiff however admitted:– (a) that he was aware of the irregularities in his account,

and he complained about them to the manager after he had refused to pay the amount of £3,000 on the cheque on 18th December, 1972;

(b) that he reported the anomalies in his account to the Nigeria Police, who are still carrying out their inves-tigation;

(c) that the bank was also carrying out its own internal investigation into his complaints about the state of his account;

(d) that after he had withdrawn £2,000 on 18th Decem-ber, 1972 he was informed by the manager that he had a balance of £390.14s.4d in his account;

(e) that between 18th December, 1972, when he with-drew £2,000, and 11th January, 1973, when he issued a cheque for N6,700 (£3,350), he made no lodgments into his account; and

(f) that on 11th January, 1973 he knew that the balance in his account was only £390.14s.4d.

The bank has also admitted that it is the duty of the bank to honour all cheques drawn on the bank if the customer has sufficient funds in his account, but has strenuously denied any liability to the plaintiff.

In summing up, learned Counsel for the plaintiff submitted that paragraph 15 of the statement of defence could not stay the hands of the plaintiff in bringing this action before the court as he neither pleaded any facts which disclosed the commission of a felony nor did he give evidence from which the court could infer that the evidence touched upon the commission of any felony. He also submitted that the bank


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dishonoured the plaintiff’s cheque exhibit C and the amount on it was not paid, although in paragraph 16 of the statement of defence the bank stated that the cheque was not dishon-oured. By its own admission in the said paragraph 16 of the statement of defence, the plaintiff is entitled to judgment. He further submitted that the bank has failed to explain the cheque with which certain withdrawals were made from the plaintiff’s account which did not come from exhibits A and A1 which were the cheque books given to him by the bank.

Mr Idehen, learned Counsel for the bank, however, con-tended that the plaintiff knew what the state of his account was on 11th January, 1973; that when he issued a cheque for N6,700 on that day he knew that he did not have that money in his account, as exhibit E, the statement of account, showed his balance to be about £390.14s.4d; and that the whole action was an abuse of the process of the court.

In this case the plaintiff is claiming the sum of N10,700, which is made up of the amount N6,700 on the unpaid cheque exhibit C drawn on the bank on 11th January, 1973 and general damages of N4,000. Although he is also claim-ing current bank-rate interest on the unpaid cheque. I do not intend to discuss this item of his claim as no evidence was led on it at all.

It is not disputed that the bank refused to honour exhibit C, and the first point which in my opinion has to be cleared is whether the refusal was reasonable. When the plaintiff issued a cheque for £3,000 on 18th December, 1972, that cheque, exhibit J, was not honoured and the explanation by the bank to the plaintiff was that he did not have sufficient funds in his account to cover the amount drawn on the bank in exhibit J. Thereafter the plaintiff, without insisting that the cheque ex-hibit J should be returned to him, proceeded immediately to issue another cheque, for the lesser sum of £2,000, which was paid to him. Further, on 20th December, 1972 he was served with a statement of account which showed that after payment of £2,000 to him on 18th December, 1972



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he had in his account a balance of £390.14s.4d and until 11th January, 1973 when he issued the cheque for N6,700 he had paid nothing into his account.

I am certainly of the view that when the plaintiff drew a cheque for N6,700 on the bank on 11th January, 1973 he knew that he had no such money in his account, and having omitted to withdraw the cheque for £3,000 on 18th December, 1972 and substituted a cheque for £2,000 which was paid to him, he is estopped from disputing the state of his account with the bank. A man is bound by what he does and he cannot alter what he does by saying that he did it without prejudice. The question which arises from the facts of the case is this: Was the conduct of the plaintiff such that a reasonable man in the position of the defendant would in all the circumstances have concluded that the plaintiff would not present a cheque for more than the balance in his account until the conclusion of the investigations by the po-lice and the bank with regard to the anomalies in his ac-count? In the general question of estoppel following on rep-resentation by words or conduct it is laid down (in what has been described by Lord Watson (Mckenzie v. British Linen Co [1881] 6 A.C. 82 at 109; 44 L.T. 431, at 435) as “care-fully chosen language”) by Parke, B. in Freeman v. Cooke (2) (2 Exch at 663; 154 E.R. at 656):–

“. . . And if, whatever a man’s real intention may be, he so con-ducts himself that a reasonable man would take the representation to be true and believe that it was meant that he should act upon it… the party making the representation would be equally pre-cluded from contesting its truth . . .”

On the total consideration of the facts pleaded by and given in evidence for the plaintiff, I do not consider that the refusal of the bank to honour the cheque when presented on January 11th, 1973 was unreasonable, when it is realised that inves-tigation had still not been concluded on the five irregular cheque with which the total sum of £2,971.17s.was with-drawn from the plaintiff’s account as shown in exhibits B and D. The facts in this case are clearly distinguishable from


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those in Oyewole v. Standard Bank of West Africa Ltd (4), where Taylor, CJ held the bank liable for breach of contract, having failed to honour the plaintiff’s cheque after an em-ployee of the bank had agreed to grant overdraft facilities to the plaintiff. In the instant case, there was no agreement be-tween the parties that the cheque by the plaintiff should be honoured by the bank.

It was not shown that the refusal of the bank to pay the amount on exhibit C was wrongful, and only if it is estab-lished that a bank without justification dishonours the cus-tomer’s cheque is it then that the bank can be held liable in damages – for injury to his credit. See the case of Davidson v. Barclays Bank Ltd (1) [1940] 1 All E.R. at 323-325; 164 L.T. at 28). There must be sufficient funds to cover the whole amount of the cheque presented, as there is no obliga-tion on the banker to pay any part of a cheque for an amount exceeding the available balance except by some arrangement with the bank to have an overdraft. In Joachimson v. Swiss Bank Corp (3), it was said by Atkin LJ (1921) 3 K.B. at 127-129; [1921] All E.R. at 100-101) that the relationship of banker and customer is one of debtor and creditor with the additional feature that there is no obligation on the part of the particular debtor to seek out his creditor and to pay him. His obligation is only to pay this particular creditor when the creditor makes a demand for payment or directs him to pay either the creditor or some other person nominated by the creditor; and for the payment to be made, there must be money standing to the credit of the creditor, and where there is no fund there should be a special agreement for such payment to be made. The funds must not only be sufficient but should be available.

On these grounds I have come to the conclusion that the plaintiff’s claim is premature and wholly misconceived. If I was satisfied that the failure of the bank to honour exhibit C was wrongful I would have awarded him nominal damages of N50.



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In the light of the conclusion which I have reached in this case I do not consider it necessary to discuss the other aspect of the matter, whether there should be a stay of the proceed-ings in this case pending the conclusion of police investiga-tions into the anomalies in the plaintiff’s account.

This action fails and it is accordingly dismissed, without prejudice however to any subsequent action which the plain-tiff may wish to bring against the bank or any other persons on the conclusion of the investigations now in progress with regard to his account in the bank. The bank shall have N42 costs against the plaintiff.

Action dismissed.

[1967 – 1975] 2 N.B.L.R. 231 (HIGH COURT OF LAGOS STATE)

African Continental Bank Limited v. Jimfat (Nigeria) Limited 435

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African Continental Bank Limited v Jimfat (Nigeria) Limited

HIGH COURT OF LAGOS STATE GOMES J

Date of Judgment: 27 APRIL 1973 Suit No. L.D. /1017/72

Banking – Banker/customer relationship – Loan – Duty of bank to prove the loan in order to recover debt owed it by customer

Facts

The plaintiff (bank) claimed against the defendant amount owing and due by the defendant to the plaintiff as money lent by plaintiff as banker to the defendant and fore borne at 9% per annum compound interest, which the defendant failed, refused on neglected to pay despite repeated de-mands. The plaintiff also claimed interest at the rate of 5% per annum simple interest from the date of judgment until the whole amount is paid.

Held –

1. The burden of proof in this case rests upon the party that is the plaintiff who substantially asserts the affirmative of the issue. The debt, according to the plaintiff arose as a result of a banking transaction and that transaction is governed by the banking law of this country. There is no proof before the court to show that such transaction took place between the plaintiff and the defendant.

2. There is no evidence before the court from which it could even infer that the defendant is indebted to the plaintiff.

Plaintiff’s case dismissed.



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Nigerian

Rickett v. Bank of West Africa Ltd 5 F.S.C. at page 114-118

Foreign Cases

Brown v. Dean (1833) 5 B. Ad. page 842 Constantine Line Ltd v. Imperial Smelting Corporation [1942] A.C. 154 Doe v. Frankis 11 A. and E. page 792-795 Edqeware Trust Ltd v. Lawrence (1961) I.W.L.R.P. page 1354-1359 Fairlike v. Denton 3 C. and P. at page 103


Bankers Book Evidence Act, 1879, sections 3 and 4 Limitation decree, 1966, section 7(1)

Rules of court referred to in the judgment

Supreme Court (Civil Procedure) Rules, Order 11, rules I and II, Order 32, rules 4-7

Counsel

For the plaintiff: Agwu

For the defendant: Alaka

Judgment

GOMES J: In this case the plaintiff is claiming a sum at £34,133.12 being the amount due from and owing by the de-fendant to the plaintiff as money lent by the plaintiff as bankers to the defendant and fore borne at 9% per annum compound interest, which the defendant has failed, refused or neglected to pay to the plaintiff despite repeated demands. The plaintiff is also claiming interest at the rate of 5% per annum simple interest from the date of judgment until the whole amount is paid.

This case was first entered on the undefended list but the


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defendant entered appearance with a “Notice of Intention to Defend.” The plaintiff was given 30 days within which to file his statement of claim and the defendant given 30 days within which to file his statement of defence.

On 18th December, 1972 the plaintiff file a Notice adopt-ing its claim against the defendant as its statement of claim and on 20th December, 1972 the defendant filed his state-ment of defence. The case was eventually fixed for hearing on 11th April, 1973.

The plaintiff called one witness who, according to evi-dence, is a Supervisor of the African Continental Bank, La-gos. The evidence of this witness can be summarised thus Mr A. according to our record on a specific date is indebted to us in Q naira. We wrote to Mr A and there was no reply. We sent a Demand Note and this was apparently ignored, therefore we want judgment for Q naira.

Under cross-examination by Mr Alaka, Counsel for the de-fendant, the witness admitted that there were collateral secu-rities in respect of this loan and that there was an Agreement between the plaintiff and the defendant which was not in his possession although the interest charged was a compound one.

There was no re-examination by the learned Counsel for the plaintiff. The plaintiff then closed his case Mr Alaka for the defendant then stated “And that also is the case for the defendant.”

Mr Agwu the learned Counsel for the plaintiff addressed the court. He stated that the plaintiff is the African Continental Bank, an indigenous bank registered in Nigeria. He submitted that the defendant opened an account with the plaintiff which he operated and as a result of this the defendant had a debit balance of N68,267.20 as at July, 1972. The defendant was given a statement of account from time to time and that letters were written to the defendant before a writ of summons was issued against him. Finally, that the plaintiff

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF LAGOS STATE) Gomes J


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adopted his writ of summons against the plaintiff as his statement of claim and that the plaintiff was claiming the amount from the defendant.

Mr Alaka, the learned Counsel for the defendant in reply stated that it was Incumbent on the plaintiff to prove that the sum claimed was owing by the defendant. He referred to the “Notice of Intention to adopt the claim as the statement of claim” filed by the plaintiff and contended that the proce-dural provisions contained in Order 3, rules 9 to 13 and the requirements that flow from the provisions of these rules do not form part of the claim of any plaintiff before the court, Even if the claim with the affidavit is taken as, the statement of claim yet the plaintiff must still prove his case. There was nothing before the court to show that the defendant is in-debted to the plaintiff. There was no letter or copies of let-ters tendered in court and no proof that any formal demand was made. There was nothing before the court to show when the loan was made to the defendant and even though the de-fendant stated in paragraph S of his statement of defence that he would be relying on the Statute of Limitation yet the plaintiff took no hint and the claim was never amended. With regard to the statement of account he contended that this was no more than a statement relating to an account as it stood on the day it was prepared. There is not even any proof that any statement of account was ever sent to the de-fendant. The witness was served with a “Notice to Produce” the necessary document, yet he came to Court and admitted that though there were collateral securities, yet these were left behind and were not tendered in court as exhibits and no reason was given for their non production. Finally that it was impossible from the evidence adduced before the court to know how much amount, if any at all, was owing to the plaintiff and that there was no evidence as to the period within which the money was to be repaid. That the plaintiff has failed to prove his case and that the action be dismissed.

I have given very careful consideration to the evidence adduced


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by the plaintiff, the address of the learned Counsel for the plaintiff and the reply of the learned Counsel for the defen-dant.

This case raises a few of interest. The plaintiff after filling his writ of summons and after the defendant had signified his intention, to defend the action filed a notice in the fol-lowing terms:–

“Notice of Intention to adopt the claim as the statement of claim.”

“Take notice that the plaintiff intends to adopt its claim against the defendant as its statement of claim.”

The learned Counsel in his address contended that this No-tice could not be taken as a statement of claim.

Order 11, rule I Supreme Court (Civil Procedure) Rules states thus:–

“Every suit shall be commenced by a writ of summons signed by a Judge Magistrate or other Officer empowered to sign summonses etc.”

and Rule II States:– “The writ of summons shall contain the name and place of abode of the plaintiff and of the defendant so far as they can be ascer-tained; it shall state briefly and clearly the subject matter of the claim and the relief sought for and the date (called the return date and place called the return place) of hearing.”

On the other hand, Order 32, rules 4 to 7 state thus:– “4. Wherever any pleading, statement of claim or defence is or-

dered to be filed, the provisions of the following rules shall be observed.

5. Every pleading shall contain a statement of all the material facts on which the party pleading relies but not the evidence by which they are to be proved, such statement being di-vided into paragraph, numbered consecutively and each paragraph containing as nearly as may be a separate allega-tion.

6. The facts shall be alleged positively precisely and distinctly and as briefly as is consistent with a clear statement.

7. Every statement of claim shall state specifically the relief which the plaintiff claims either simply or in the alternative



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and may also ask for general relief and the same rule shall apply to any counterclaim made or relief claimed by the de-fendant in his defence.”

It is obvious from the above rules that in such circumstances the claim could not form part of the statement of claim of the plaintiff. The claim even with the affidavit attached to it is no more than a writ of Summons and in my opinion it is nothing more than an evidence of the amount claimed but not a debt due. In this connection I refer to Brown v. Dean (1833) 5 B. and Ad. page 848 or 2 N and M at page 316. As-suming for the sake of argument that the defendant having filed a statement of defence has admitted by implication that the notice of intention to adopt the claim as the statement of claim was in fact a valid statement of claim which I do not subscribe to, yet it is the duty of the plaintiff to prove his case. Proof, divorced of all technicalities, is the establish-ment of such fact by proper legal means to the satisfaction of the court.

In Constantine Line Ltd v. Imperial Smelting Corporation [1942] A.C. 154 at 174 Lord Maugham stated:–

“The burden of proof in any particular case depends on the cir-cumstances in which the claim arises. In general the rule which applied is Ei qui affirmat non ei qui negat incumbit probation: It is an ancient rule founded on consideration of good sense and should not be departed from without good reasons.”

The burden of proof in this case rests upon the party ie. the plaintiff who substantially asserts the affirmative of the issue. The debt, according to the plaintiff arose as a result of a bank-ing transaction and that transaction is governed by the bank-ing law of this country. There is no proof before the court to show that such transaction took place between the plaintiff and the defendant. The plaintiff in evidence stated that state-ments of accounts were forwarded regularly to the defendant yet not one single statement of account was tendered before the court and even if a statement of account was attached to the Writ of Summons yet this was not evidence as the condi-tions precedent to the tendering of the account as required by


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the Bankers’ Book Evidence Act, 1879 sections 3 and 4 were not complied with though no effort was made even to pro-duce, much more to tender it. Furthermore there is no proof that any letter or demand was made on the defendant. Any-body would have thought that a copy of the Demand Notice or letter would have been tendered in court. If all these have been complied with and the defendant failed to reply or even ignore them, then one could have come to the conclusion that the defendant acquiesced in the matter but for reasons best known to the plaintiff he did practically nothing.

Furthermore the mere failure to answer a letter or object to an account however, will not necessarily imply an admission of its contents. In Fairlike v. Denton 3 C. and P. at page 103 Lord Tenderden stated;

“What is said to a man before his face, he is in some degree called on to contradict, if he does not acquiescence in it; but . . . it is too much to say, that a man by omitting to answer a letter . . . admits truth of the statements that letter contains” or

as stated by Lord Denman in Doe v. Frankis 11 A. and E. page 792 at page 795:–

“that every paper which a man might hold . . . to charge him with a debt or liability was evidence against him.”

A good formal demand is a pre-requisite to a case of this na-ture and it is obviously impossible from evidence before the court to state categorically that any formal demand much more a good formal demand was made on the defendant.

Another point worthy of consideration is paragraph 5 of the statement of defence.

This paragraph reads thus:–

“At the trial of this action the defendants will rely on the Statute of Limitation and Limitation decree, 1966.”

Section 7(i) of this decree read thus:–

“The following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued.”



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and subsection (a) states thus:–

“Actions founded on simple contracts.”

This paragraph 5 was, as stated earlier, raised in the state-ment of defence and the plaintiff did not care to take any hint. There is no scintilla of evidence to show when the loan, was granted to the defendant and the possibility that the loan was statute-barred could not be ruled out especially as this point was raised by the defendant in his statement of defence and the plaintiff did nothing. I am even inclined to believe that the plaintiff are fully aware that this claim offends against section 7(i)(a) of the Statute of Limitation, 1966, hence they decided to be silent on that point. It is the duty of the plaintiff to tell the court when the loan was granted.

Furthermore under cross-examination, the witness admit-ted that the interest on the alleged loan was compound inter-est. There is not a single document before the court to sup-port that the defendant was indebted to the plaintiff much more than he agreed to a compound interest being charged on the alleged loan. In Rickett v. Bank of West Africa Ltd 5 F.S.C at page 113-118, Hubbert AG FJ stated:–

“I come now to the question of the interest on the overdraft. The respondent bank appeals against the judgment under review on the ground that the Learned Judge should have held that the bank was entitled to charge interest on the overdraft at the rate of 8% with monthly cash. Compound interest on an overdraft is charge-able only where the customer has agreed to it or where he is shown or must be taken to have acquiesced, in account being kept on that basis.”

There is nothing before the court from which it could be in-ferred that the defendant agreed or acquiesced to such a charge or of any express agreement to such a charge.

Finally, this is a case of simple contract and it is incumbent on the plaintiff to bring the terms of the contract to the notice of the court, the plaintiff should not hide some and disclose some. The ratio decidendi of Diplock J, in the of Edgeware


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Trust Ltd v. Lawrence (1961) 1st Volume 1 W.L.R. page 1354 at 1359 which reads thus are very, pertinent to this is-sue.

“In my view (and I refer in passing to Duna Trust v. Feetham and Kent Trust Cohen (1946) K.B. 584), the memorandum itself must contain all the terms of the contract, and where, as in this case in my view, the memorandum does not contain the important provi-sions of the default clause, it is not permissible for me to look at the promissory note to ascertain what the meaning of those unintel-ligible words was meant to be unless a copy of the promissory note was left with the borrower. It seems to me that the whole purpose of section 6 of the act requiring a note or memorandum in writing of the Contract to be made and signed personally by the borrower, and a copy delivered or sent to the borrower within seven days of the Contract providing that unless this is done the contract shall not be enforceable, and that the note or memorandum shall contain all the terms of the contract would be defeated unless the document in the possession of the borrower contained all the terms of the con-tract.”

The loan was based on contract and it is the duty of the plain-tiff to bring all the terms of the contract to the notice of the court including the collateral securities. There is no evidence before the court from which it could even infer that the de-fendant is indebted to the plaintiff. It is a case carelessly pre-pared and conducted with a lackadaisical attitude.

In view of my observations above, it is clear and obvious that the plaintiff had failed to adduce any evidence in support of his claim. The plaintiff has failed to prove his case against the defendant and in the circumstances the case is hereby dismissed. Mr Alaka: The number of appearances do not reflect the amount of

work and research that have gone on in this case. I ask for N1,050.

Mr Agwu: I offer him N200. Court: I have considered the question of cost very carefully and

I hereby award a sum of N525 against the plaintiff in fa-vour of the defendant.



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Bewac Limited v. African Continental Bank Limited


LAMBO J

Date of Judgment: 4 JUNE 1973

Banking – Accounts – New customers – Current account opened by a Limited liability company – Pre-requisites thereto

Banking – Cheques – Collection – Defective title of custom-ers – Statutory defence under section 2(2) Bills of Exchange Act, 1964 – How proved

Banking – Cheques – Defective title of customer – Liability of bank thereof – Whether banker liable in negligence

Banking – Cheques – Defective title of customer – Whether banker can avail itself of the protection under section 2(2) of the Bills of Exchange Act – Onus of proof – On whom lies

Facts

The plaintiff brought an action against the defendant for damages for conversion or alternatively for money had and received

The plaintiff was a well-known company. Three cheques drawn in its favour which were its property were stolen by its employees. A nearby branch of the defendant bank re-ceived an application to open a current account for a limited company calling itself by a name which was an acronym of its registered name and the same as the plaintiff’s name. The company was fictitious.

The application omitted certain particulars which were ex-pected to be furnished, and stated others with obvious inaccu-racy. It was accompanied by a memorandum and articles of association which were deficient in subscriber’s signatures;


Bewac Limited v. African Continental Bank Limited 445

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a photocopy of a purported certificate of incorporation which did not show the seal of the Registrar of Companies; a letter, not a resolution of the company, stating that the ac-count was to be operated by a single director; and a signa-ture card to be operated by a single director; and a signature card singed in an assumed name. it named two referees and was signed by a third.

The defendant opened the account without checking the application or its accompanying documents, or receiving a resolution of the directors stating how the account was to be operated, or consulting the two named referees or otherwise attempting to obtain information about the directors. The referee who singed the application did not give evidence and there was no evidence who he was.

The stolen cheques were handed to the defendant bank for collection and payment to the newly opened account. En-dorsements on them showed the payee’s name incorrectly and were obviously questionable. Without questioning the plaintiff about the cheques, the defendant collected them and placed the proceeds to the account of the fictitious company. The plaintiff discovered the fraud six months later and instituted the present proceedings, claiming the amount of the cheques as damages for conversion and alternatively as money had and received. The defendant denied conversion and that the amount of the cheques was payable to the plaintiff as money had and re-ceived, and denied knowing that the cheques were stolen, but did not deny negligence or plead contributory negligence.

Held –

1. Under normal banking practice, the pre-requisites for opening a current account for a limited liability company are a resolution of the Board of Directors.

(1) A resolution of the board of directors of the com-pany explaining how the account is to be operated.

(2) A copy of the memorandum and articles of associa-tion of the company.



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(3) The certificate of incorporation.

(4) Specimen signatures of the signatories to the account.

(5) References of the directors of the company.

In the case of a public company the certificate of the Registrar of Companies entitling the company to com-mence business must be produced in addition to the above-stated requirements.

2. A banker who collects a cheque for a customer to which the customer has no title or a defective title is liable to the true owner for conversion or for money had and re-ceived, to the value of the cheque.

3. Where a banker collects a cheque for a customer to which the customer has no title or defective title, the question whether the banker has acted without negli-gence as to be protected by section 2(2) of the Bills of Exchange Act, 1964 is a question of fact, the proof of which lies on the banker.

4. For a banker to be protected by section 2(2) Bills of Ex-change Act 1964, the banker has to show that it acted with reasonable care in all material respect in opening the account and clearing the cheque.

Plaintiff’s claims succeed.


Nigerian

George v. UBA Ltd (1972) 8/9 S.C. 264

Foreign

Bavins Junr and Sims v. London and South Western Bank Ltd (1900) 1 Q.B. 270; (1899) 81 L.T. 655

Carpenters Co v. British Mutual Banking Co Ltd (1938) 1 K.B. 511; [1937] 3 All E.R. 811

Commissioners of Taxation v. English, Scottish and Austra-lian Bank Ltd [1920] AC 683; (1920) 123 L.T. 34



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EB Savory and Co v. Lloyds Bank Ltd (1932) 2 K.B. 122 Hampstead Guardians v. Barclays Bank Ltd (1923), 39

T.L.R. 229; 67 Sol. Jo. 440 Ladbroke and Co v. Todd (1914), 111 L.T. 43; 30 T.L.R.

433 Lloyds Bank Ltd v. Chartered Bank of India, Australia and

China, (1929) 1 K.B. 40; [1928] All E.R. 285 Lloyds Bank Ltd v. EB Savory and Co (1933) A.C. 201;

(1932) All E.R. Rep. 106 Marfani and Co Ltd v. Midland Bank Ltd (1968) 1 W.L.R.

956; (1968) 2 All E.R. 573 Marquess of Bute v. Barclays Bank Ltd (1955) 1 Q.B. 202;

(1954) 3 All E.R. 365 Midland Bank Ltd v. Reckitt (1933) A.C. 1; (1932) 148 L.T.

374


Bill of Exchange Act 1964, section 2(2)

Counsel For the plaintiff: Kushimo (with Okegbenro) For the defendant: Ikokwu (with Anaekwe)

Judgment

LAMBO J: The plaintiff is a limited liability company incor-porated in Nigeria on 13th October, 1959, as evidenced by the photocopy of the certificate of incorporation, exhibit E.

The three cheques, exhibits C, C1 and C2, which total £10,146.9s.6d and not £10,146.17s.6d as erroneously stated in the writ of summons, were stolen from the plaintiff by two of its employees. The cheques were then deposited with the defendant bank at its Apapa branch. The proceeds of the said cheques were subsequently collected and credited to the account of a fictitious company, the Building Engineers (West Africa) Co Limited.

Two employees of the plaintiff and their confederates were later convicted of stealing the cheques and sentenced to various terms of imprisonment. One of the confederates of

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF LAGOS STATE) Lambo J


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the ex-employees of the plaintiff was a Mr Fatai Odunaya, alias Oladele Olubunmi, who was the second accused in the criminal charge preferred against them in a Lagos chief magistrate’s court. He played a significant role in the open-ing of a new current account with the defendant bank with the stolen money.

The plaintiff, having lost the amount covered by the said cheques through the fraud of its convicted employees and their confederates, now sues the defendant bank in conver-sion or, in the alternative, for money had and received to the plaintiff’s use, as follows:–

“The plaintiff’s claim against the defendant is for the sum of £10,146.9s6d being damages for the wrongful conversion by the defendant of three cheques the property of the plaintiff and for wrongfully depriving the plaintiff of the same. Alternatively the plaintiff’s claim against the defendant is for £10,146.9s.6d for money payable by the defendant to the plaintiff as money had and received by the defendant to the use of the plaintiff.

And the plaintiff claims interest on the said sum of £10,146.9s.6d at the rate of 10% per annum from 6th October, 1970 until pay-ment or judgment.”

Paragraphs 6, 7 and 8 of the statement of claim summarise the basis of the claim as follows:–

“6. Between October, 1969 and May, 1970 the said Jeremiah Asein and Isa Ibrahim Bawa acting in concert with others handed the said three cheques to the defendant at the Apapa branch for collection.

7. The defendant collected the proceeds of the said cheques and placed them to the credit of an account opened by a fictitious company, namely, Building Engineers (West Africa) Co Limited.

8. In the premises the defendant has converted the said cheques of its own use and wrongfully deprived the plaintiff of the same whereby the plaintiff has suffered damage.”

The defendant bank denied knowing that the cheques were stolen or that it converted them to its own use and wrong-fully deprived the plaintiff of the same. It was further denied


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that the proceeds of the said cheques were payable to the plaintiff as money had and received by the defendant to the plaintiff’s use.

It is to be noted, in passing, that there was no specific plea by the defence of absence of negligence on their part. Such averment in a statement of defence is relevant if it is in-tended to be relied upon as a defence: see George v. UBA Ltd (5) where Fatayi-Williams JSC, delivering the judgment of the court, said as follows (1972) 8/9 SC at 272:–

“The first point to be considered in the appeal is whether the plain-tiffs/respondents pleaded the assignment by the British and French bank to them of debt which they had claimed from the de-fendant/appellant. If the assignment is not pleaded, evidence re-garding it goes to no issue and should not have been admitted; if admitted, it should have been ignored by the learned trial Judge in his judgment.”

The plaintiff’s second witness, who is an official of the Cen-tral Bank, identified the cheques exhibits C1 and C2 as hav-ing been drawn by that bank in favour of Bewac Limited, Apapa, and said further that their proceeds were collected by the defendant bank

Mr Isaac Soneye, the plaintiff’s third witness, who is an accountant in the service of the plaintiff, recognised ex-hibit E as the photocopy of the plaintiff’s certificate of in-corporation. The witness told the court that two employees of the plaintiff company, Jeremiah Asien and Ibrahim Bawa, stole three cheques, exhibits C, C1 and C2, belonging to the plaintiff between October, 1969 and May, 1970, and that the proceeds of these three cheques have not yet been received by the plaintiff.

Abdul Raheem Shiyanbola, an official of Barclays Bank, Lagos, testified to normal banking practice regarding pre-requisites for opening a current account for a limited liability company; these prerequisites are:–

1. A resolution of the board of directors of the company explaining how the account is to be operated.



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2. A copy of the memorandum and articles of association of the company.

3. The certificate of incorporation.

4. Specimen signatures of the signatories to the account.

5. References of the directors of the company.

In the case of a public company the certificate of the Regis-trar of Companies entitling the company to commence busi-ness must be produced in addition to the above-stated re-quirements.

As to the resolution of the board of directors on the mode of operating the account, it is to be noted that in this case none was passed or forwarded to the defendant bank. It was sought to show that the letter exhibit K dated 30th Decem-ber, 1969 satisfied such conditions as a board resolution would meet. In my opinion, exhibit K is not a board resolu-tion and cannot be regarded as such. It follows from this that the defendant bank did not obtain one prior to the opening of a current account for Building Engineers (West Africa) Co Limited, a company later found to be a fictitious body.

The copy of the so-called memorandum and articles pro-duced and tendered as exhibit H ought, I think, to have aroused the suspicion of the defendant bank so as to put it on inquiry. It will be seen that page 4 of the articles of associa-tion was not signed by the subscribers to the memorandum of association.

The photocopy of the pretended certificate of incorpora-tion, exhibit G, does not carry the seal of the companies reg-istry. The contention of learned Counsel for the defence that the impression of the seal cannot be detected on a blank pa-per overlooks the fact that the photocopy of the genuine cer-tificate of incorporation of the plaintiff company has the seal of the companies registry clearly imprinted on it. The defen-dant bank was not circumspect enough to discover that the document exhibit G was a bogus certificate. Quite strange


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enough is the use, on the certificate, of a conveyancing ex-pression after the name of the company, ie, (hereinafter called “Bewac Limited”). As the genuine Bewac Limited was about 250 or 300 yards away from the defendant bank, the latter ought to have been put on inquiry about their new customer, whose name is too like the name by which a well-known existing company is known.

The signature card, exhibit L, contains the specimen signa-ture of a thief, Oladele Olubunmi, who, as a director of the fraudulent company, had used an assumed name for the pur-pose of disguising his identity. Had the defendant bank ob-tained references on the directors of their new customer, it would have discovered that Oladele Olubunmi was a ficti-tious person and that his signature on the card was not worth the paper on which it was written. The necessity to obtain ref-erences on directors who will operate the account becomes more desirable when, as in this case, the company has no pre-vious banking account with the bank. I think it was an act of negligence for the defendant bank to have failed to do so. In Ladbroke and Co v. Todd (6) Bailhache J held the bank neg-ligent because it did not make enquiries about a proposing customer in opening an account and collecting a cheque for him. In the case now before me, the two referees, Smith and Alhaji Wonuola, whose names were put forward in the appli-cation form to open an account, exhibit J, were not asked by the defendant bank for any reference, and they did not give any. On the contrary, one JO Falusi recommended the ficti-tious customer to the defendant bank. There was no evidence before me as to who Mr Falusi is, and whether he is regarded by the bank as a reputable customer on whose reference it could readily act. Mr Falusi was not called as a witness by the defendant, to show his connection with the latter, and whether he had, in the past, given references to customers of the bank which the latter had accepted. I think this is a case where the provisions of section 148(d) of the Evidence Act (Cap 62) could justifiably be invoked against the defendant bank.



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In Hampstead Guardians v. Barclays Bank Ltd (6) the question whether a banker in receiving payment of a cheque for customer has acted without negligence, so as to be pro-tected by section 82 of the Bills of Exchange Act, 1882 if the customer has no title thereto, was held to be a question of fact. Acton J is reported as follows (39 T.L.R. 231):–

“It was a matter to put the bank on inquiry. The cashier had admit-ted a missing link in the chain of identification (of the customer), and he (his Lordship) thought that some inquiry would have been a natural, reasonable, and possible course from the point of view both of the bank and of the customer, and it might have rendered this fraud impossible.” (These words do not appear in the report of this case at 67 Sol Jo 440).

In Lloyds Bank Ltd v. EB Savory and Co (9) the managers of the bank’s crediting branches had failed to make sufficient inquiries when accepting P. and Mrs S as customers. It was held that in the circumstances the bankers had failed to prove that they had acted without negligence, and conse-quently that they were liable.

In the instant case there does not appear to me to be any justifiable excuse why the defendant bank failed to obtain references from the two referees, Mr Smith and Alhaji Wonuola, nor, as I said earlier, was any step taken by the defendant bank in that direction.

It was said by Mr Shiyanbola, the plaintiff’s fourth wit-ness, that a cheque drawn on N.I.D.B. could be collected so long as N.I.D.B. were customers of the bank. But “Bewac Limited” was not a customer of the defendant bank. If, as we know, the purpose of the endorsement at the back of the cheques exhibits C, C1 and C2 was to enable the proceeds of these cheques to go into the account of the payees, then the defendant bank was negligent in paying the said proceeds into the account of the fraudulent company at their branch. This is particularly so as Bewac Limited is not a customer of the defendant bank and its existence is very much known to the bank. In fact Bewac Limited can almost be regarded as a


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next-door neighbour of the defendant bank from the stand-point of proximity.

In Midland Bank Ltd v. Reckitt (II) the house of Lords held, inter alia, that as the defendants had, from the form of the cheques, notice as to the money not being T’s money, they were negligent in making no inquiry as to T’s authority to make these payments into his own account. It is also clear when one looks at the three cheques exhibits C, C1 and C2 that the endorsements at the back of each of them gave in-correct names of the payees. It was held in Bavins Junr and Sims v. London and South Western Bank Ltd (1) that in such circumstances the defendants were not protected from liabil-ity.

As to the procedure adopted by the defendant bank for opening an account for a company, Mr Adekola, the bank’s accountant, stated as follows:–

“We must see the certificate of incorporation, memorandum and articles of association; after that we give them our standard form of application to open a new account, a signature card and ask for a written authority on how the account will be operated. We can’t take references on a new company. We issue them a cheque book on being satisfied with the memorandum and articles of associa-tion.”

The witness went on to say that the defendant bank had no record of the names of the directors of the fraudulent com-pany. In addition to this, there is no evidence that the bank attempted to obtain any information about them.

Exhibit J, which is the application form for opening a new account, is a totally worthless document which ought not to have satisfied the defendant bank’s manager for the purpose of opening the new current account. Certain particulars which were expected to be furnished were omitted, and those which were furnished are replete with stupid inaccuracies. It is, therefore, not surprising when the accountant of the defen-dant bank said that he would not have proceeded with open-ing an account for the fraudulent company “without



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getting the particulars required to be furnished under ex-hibit J This witness, as must be expected agrees with the plaintiff’s fourth witness, Mr Shiyanbola, that a resolution of the company should be lodged with the defendant bank to explain the operation of the account, but that this was not done. Hence in the signature card exhibit L the appropriate column is left blank.

The defendant’s second witness, Rasheed Adekunle Adesina, was the accountant at the Apapa branch of the de-fendant bank when the current account was opened for the fraudulent company. The company, he said, had been intro-duced to him by a member of the staff of the bank whose name was not given and who also was not called as a wit-ness. It was the same member of the staff of the bank who introduced Oladele Olubunmi, the thief, as a director of the fraudulent company, who according to the letter exhibit K and the signature card exhibit L was to operate the current account alone. To have opened an account for a company only on the recommendation of a member of the defendant bank’s staff, without inquiries as to the integrity or character of its directors and, in particular, of those who would be re-sponsible for operating the account, savours of negligence. Whilst it is true, as Sankey LJ said in Lloyds Bank Ltd v. Chartered Bank of India, Australia and China (8) (1929) 1 K.B. at 73; [1928] All E.R. at 297), that – “it is not to be ex-pected that the officials of banks should also be amateur de-tectives,” the facts in the present case are such as eminently to put the defendant bank on the scent, it being admitted by the defendant bank’s own accountant that the true owners, who are well known, are virtually its next-door neighbours. An inquiry, by telephone or otherwise, in the process of col-lecting the proceeds of the cheques would have no doubt re-vealed the fraud and prevented payment to the crooks. This exercise, in my view, would neither have rendered the de-fendant bank’s business impracticable as a collecting bank, nor would it have brought a fraction of an hour’s business to


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a standstill. Lord Dunedin’s observation in Commissioners of Taxation v. English, Scottish and Australian Bank Ltd (4) [1920] A.C. at 688; 123 L.T. at 36), approved by Scrutton LJ in Lloyds Bank Ltd v. Chartered Bank of India, Australia and China (8) [1929] 1 K.B. at 59; [1928] All E.R. at 290), that to require a thorough inquiry into the history of each cheque would render banking business impracticable, must depend on the facts and historical circumstances of each case. I find, on the evidence, in the instant case, that it would not have been impracticable for the defendant, as the collect-ing bank, to inquire from its neighbours the true owners of the three cheques, considering the obviously suspicious en-dorsements at the back of each cheque.

In his evidence, the defendant bank’s accountant said it was the normal practice, among others, to obtain a minimum of two references when opening a current account for a lim-ited liability company. The two people, Smith and Alhaji Wonuola, whose names were given as the referees did not give any references, but a man, JO Falusi whose identity was apparently unknown to the defendant’s accountant, pur-ported to sign exhibit J as a referee. When asked “What prompted Mr Falusi to show up as a referee, not being one of the two referees named in exhibit J?” the defendant bank’s accountant replied, “I do not know.”

And nobody has come forward to testify on behalf of the defendant bank as to the identity of Mr Falusi and the type of character he is. In fact, the accountant said of him as fol-lows: “I met Mr Falusi for the first time when the CID stepped into this matter about six months later.” The defen-dant bank’s accountant frankly admitted that Building Engi-neers (West Africa) Co Limited were their customers and not Bewac Limited, who are the beneficiaries of the three cheques the subject-matter of the present claim. Though it is also in evidence by the accountant that – “it is customary to have a resolution passed by the board of directors before ob-taining a mandate to operate an account,” yet he was unable



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to explain why this condition was not observed in this case. He agreed that both exhibits H and J, the memorandum and articles of association and the application form for opening a new current account, were not properly checked by him, and that if he had done so the defendant bank would have called for more information before opening the account for the fraudulent company.

The contention of learned Counsel for the defence that ownership of the three cheques exhibits C, C1 and C2 was not proved is clearly untenable and overlooks the obvious fact that the cheques are made out in the name of the plain-tiff company. There is, on this point, the further evidence of the plaintiff’s second witness Augustine Awenlimobor, an official of the Central Bank, who said as regards the three cheques that – “they are issued in favour of Bewac Limited, Apapa.” In any case, the defendant is neither claiming the cheques nor alleging that they belong to someone else.

On defence Counsel’s submission that there was contribu-tory negligence in the plaintiff’s not reporting the fraud in time, I have to observe that this submission cannot be enter-tained for the simple reason that there is no such averment in the pleadings, and, secondly, because, as Tomlin, J said in the Lloyd Bank’s case (8) (1929) 1 K.B. at 79; [1928] All E.R. Rep at 300):–

“There can be no presumption that every fraud must be discovered or that discovery must be made within any given time, and, ex-cept upon the basis of some such presumption, I am unable to see why the Chartered Bank should have been entitled to assume that the absence of complaint in respect of any one transaction estab-lished the regularity of that or any subsequent transaction.”

So, apart from the fact that contributory negligence was not pleaded, and no evidence was led or could have been led on the issue, the failure to discover the fraud until about May 1971, is of no significance whatsoever, even though the theft of the cheques was some six months earlier.


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Cairns J, in Marfani and Co Ltd v. Midland Bank Ltd (10) [1968] 1 W.L.R. at 979; [1968] 2 All E.R. at 583) said that:–

“the onus of proving that they were not negligent in a material re-spect rests on the bank, and to establish that they have to show that they acted with reasonable care in material respects in open-ing the account and clearing the cheque.”

For my part, I think, in light of my several criticisms of the defendant bank, it is impossible to say that they acted with reasonable care – an excuse which would clearly have en-abled them to discover the defective title of their fraudulent customer.

The question which I must now ask myself is whether a case of conversion has been established against the defen-dant bank in respect of the three cheques, exhibits C, C1 and C2. That the cheques are the property of the plaintiff is un-arguable. They were stolen by certain of the plaintiff’s em-ployees then apparently acting in complicity with other peo-ple. McNair J, Marquess of Bute v. Barclays Bank Ltd (2) ((1955) 1 Q.B. at 211; [1951] 3 All E.R. at 368) said that:–

“In order to claim in conversion, it is not necessary for the plaintiff to establish that he is the true owner of the property alleged to have been converted. It is sufficient if he can prove that at the time of the alleged conversion he was entitled to immediate pos-session.”

Exhibits C1 and C2, which are cheques for £5,840.18s.5d and £3,137.10s.8d respectively, are stated by the Central Bank, the drawer of the cheques, to be the property of the plaintiff. Exhibit C, the cheque for £1,168.0s.5d was re-ceived and signed for in the dispatch book, exhibit D, by one Issa Ibrahim Bawa, an ex-employee of the plaintiff, who stole it. In these circumstances I am of the view that the plaintiff was the true owner of the cheques and was also en-titled to immediate possession of the said cheques had they not been stolen.

Upon all the facts and circumstances of this case, I am sat-isfied that the proximate cause of the loss to the plaintiff, of



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the total amount of the three cheques, is the negligence of the Apapa branch of the defendant bank, in failing to ob-serve normal banking practice in opening a current account for the fictitious company whose account was permitted to be operated by a convicted felon.

In the case of Carpenters Co v. British Mutual Banking Co Ltd (3), the plaintiffs as managers of a convalescent home, kept an account with the defendant bank. The plaintiffs em-ployed a secretary of the committee, which managed the home, who kept his personal account with the defendant bank. By a series of fraud, the secretary misappropriated cheques amounting to over £4,000, which were the property of the plaintiffs and which he contrived to have placed to his account with the defendant bank in the following manner. The cheques, which were crossed, were all properly signed by the plaintiffs’ proper officers, and in most cases were drawn to people who had supplied goods to the home, in which cases the secretary forged an endorsement, or pro-cured a forged endorsement of the payee, and paid the cheques into the defendant bank, asking the bank to credit his account with the amount of the cheques. In other cases, the secretary procured cheques to be drawn of forged in-voices in favour of fictitious persons, and in these cases the endorsements were similarly forged, and the amounts of the cheques credited to the secretary’s account. In action for conversion, the defendant bank pleaded:– (i) that the payees were non-existent persons, and that the sec-

retary was the bearer of the cheques;

(ii) that it had paid the cheques in good faith in the ordinary course of business, and was protected by the Bills of Ex-change Act, 1882, and the Stamp Act, 1853; and

(iii) that the cheques were crossed and that it received payment thereof for a customer in good faith and without negligence.

Greer LJ said as follows ((1938) 1 K.B. at 531; [1937] 3 All E.R. at 817):–

“In my judgment the defendant bank in this case was, as the re-ceiving bank, liable for conversion of the cheques. It received the


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crossed cheques from Blackborow at a time when the Carpenters’ Company as drawers were the true owners of the cheques. It dealt with the cheques at the request of the Carpenters’ Company’s fraudulent servant received the cheques from him, and immedi-ately passed them to the credit of his account. It did not in this case cash the cheques over the counter, and it is unnecessary to consider what would have been the result if instead of passing them to Blackborow’s credit the bank had paid him the cash over the counter. In my opinion, though it is unnecessary to decide this in the present case, it would still as receiving bank be liable for conversion. Be this as it may, on the facts proved in the present case I think when the bank received the cheques and passed them to the credit of Blackborow’s private account it converted the cheques by dealing with them as if they were Blackborow’s property and immediately crediting him with the amount thereof. Inasmuch as the learned judge has rightly found that the bank was guilty of negligence in so doing, it has failed to make out any an-swer to the Carpenters’ Company’s claim for damages for con-version. This seems to me a result which is strictly in accordance with the decision in EB Savory and Co v. Lloyds Bank Ltd (1932) 2 K.B. 122.”

I am satisfied that this is not a case where the defendant bank can claim the statutory protection under section 2(2) of the Bills of Exchange Act, 1964.

In my judgment the defendant bank has failed to prove, to my satisfaction, that it acted without negligence. I therefore find it liable to the plaintiff in the sum of £10,146.9s.6d or N20,292.95 being damages for the wrongful conversion of the plaintiff’s three cheques, or, in the alternative, for the receipt of the said sum of £10,146.9s.6d or N20,292.95 by the defendant bank to the use of the plaintiff.

The defendant bank will pay the plaintiff’s costs of this ac-tion, which I assess and fix at N210.

I will hear arguments, on the rate of interest to be awarded, on Friday, 8th June, 1973.


[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF EAST-CENTRAL STATE)


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Egwekweh v. Barclays Bank of Nigeria Limited

HIGH COURT OF EAST CENTRAL STATE

OPUTA J

Date of Judgment: 20 JUNE 1973 Suit No.: 0/92/72

Banking – Closure of account – Nature of evidence required in proof of

Banking – Customer in possession of passbook – Question whether plaintiff owns passbook or not – On whom onus lies – Section 145 Evidence Act

Banking – Statute – Banking obligation (Eastern State) de-cree No. 56 of 1970 – Scope of

Facts

The plaintiff claims from the defendant company the sum of £250 (N500) “being the plaintiff’s total deposit with the de-fendant” and interest on current bank rate from 11th August, 1965 to 30th May, 1967. The plaintiff also claimed damages for breach of contract.

The plaintiff‘s case is that he is the holder of passbook No. D842193 (exhibit 3). He was at all times in possession of the passbook and testified that he did not make any with-drawals from exhibit 3 between 1967 and 1970 and did not operate the account in any way. The defendant’s case is that the plaintiff account had been closed and that the plaintiff was not entitle to judgment. The defendant further contends that by virtue of section 8(1) of decree No. 56 of 1970, the plaintiff action is not maintainable:–

“Except to the extent to which a bank is obliged under the provi-sions of this decree to honour any claim of a customer relating to banking obligation, the right of the customer in respect of any banking obligations to which section 2 of this decree applies are hereby extinguished.”

[1967 – 1975] 2 N.B.L.R. (HIGH COURT EAST CENTRAL STATE)

Egwekweh v. Barclays Bank of Nigeria Limited 461

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Held –

1. Since the plaintiff was in possession of his passbook, the onus was on the defendant to prove that the plaintiff was not the owner of the Passbook thereby rebutting the pre-sumption raised under section 145 of the Evidence Act, which the defendant failed to do.

2. The question as to whether a customer of a bank has closed his account must be based on cogent and not on probable or possible assumption and inferences drawn from complete records of the bank. In the instant case, there was no cogent evidence that the plaintiff closed his account with the bank either before, on or after Decem-ber, 1967. The plaintiff is therefore entitled to be paid the amount in his account.

3. Under section 8(1), banking obligation (Eastern State) decree No. 56 of 1970, the rights that are extinguished are only those rights relating to banking obligations cov-ered by section 2 or section 3 of decree No. 56 of 1970. But even there, the rights are not extinguished if the bank is obliged under the provisions of the decree (No. 56 of 1970) to honour the claim of such customer. There are two important qualifications on, or curtailment of the extinguishment of the rights of a customer under section 8(1) of the decree (No. 56 of 1970). Firstly it is confined only to those rights that relate to obligations to which section 2 or 3 applies. Secondly the power to ex-tinguish a customer’s right cannot operate even in the cases covered by those section if there is an obligation on the bank under the decree to honour the customer’s claim. In this case the account exhibit 3 was not operated at all in any way either by deposit or by withdrawal dur-ing the period specified in section 2 of the decree that is from 30th May, 1967 to 12th January, 1970. Exhibit 3 is not therefore caught by section 2 or section 3 and there is thus no power under section 8(1) to extinguish any



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right which exhibit 3 confers on the plaintiff as a cus-tomer of the defendant bank.

4. Section 8(2) of decree No. 56 of 1970 relates only to ac-tions or suits arising out of any thing done to or in re-spect of a right extinguished under section 8(1). This too does not apply to exhibit 3 or to the plaintiff in this case. I am satisfied that the plaintiff can maintain this action in spite of the provision of section 8 of decree No. 56 of 1970.

5. Also subject to section 2(4) and (5) the banking obliga-tions to which the decree applies are those defined in sections 1(a) and (b) of the decree – that is to say bank-ing obligation which commenced on 31st May, 1967 and ended on 12th January, 1970 or a loan or deposit account which existed as at 31st May, 1967 where such account was subsequently operated in any manner whatsoever. The account No. D842193 (exhibit 3) does not therefore come within the ambit of the banking obligations cov-ered by section 1 of decree No. 56 of 1970.

6. Section 2(5)(b) of the decree specifically provides that a bank shall be obliged to honour a customer’s claim in re-spect of a deposit account which was not operated at all between 30th May, 1967 and 12th January, 1970. The account (exhibit 3) is thus fully covered by the specific provisions of section 2(5)(b) of decree of 1970.



Nigerian

Onyekonwu and others v. Ekwubiri and others (1966) 1 All N.L.R. 32

Foreign

Aithken v. Meckan [1895] A.C. 310



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Hadley v. Baxendale (1854) 9 Exchange 431 Robinson v. Harman (1848) 1 Exch 850 The Medina [1920] A.C. 113 Victorial Laundry v. Newman Industries [1949] 1 All ER 997 Wallis v. Smith (1882) 21 Ch.D. 243

Nigerian statutes referred to in the judgment Banking Obligation (Eastern State) Decree No. 56 of 1970, section 8

Evidence Act, Cap 62 (Law of the Federation of Nigeria), 1958, section 145

Counsel For plaintiff: Anyaduba

For the defendant/company: Onyiuke

Judgment

OPUTA J: The plaintiff claims from the defendant company the sum of £250 (N500) “being the plaintiff’s total deposit with the defendant.” There is also a claim for “interest” based on current bank rate on £250 (N500) from 11/8/65 up to 30th May, 1967” and interest based on current bank rate on £250 (N500) from 15th January, 1970 up to the date of judgment.” In addition to the above the plaintiff also claimed damages for breach of contract. Pleadings were or-dered filed and duly delivered on both sides. In his statement of claim the plaintiff alleged that on or about the 11th Au-gust, 1965 he opened, with £100, a savings account No. D842193 with the Bright Street Onitsha Branch office of the defendant’s company and made on various and subsequent dates deposits which on the 26/11/66 totalled £250 (N500). The above allegations of fact were made in paragraphs 3, 4 and 5 of the statement of claim. What is the defendant’s re-ply to these paragraphs? It is contained in paragraph 4 of the statement of defence as follows:–

“The defendant is not in a position to admit or deny paragraph 3, 4 and 5 of the statement of claim in view of loss of records of the bank.”

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF EAST-CENTRAL STATE) Oputa J


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In view of this unsatisfactory state of the pleadings the court called upon the parties to agree on and filed a Settle-ment of Issues under Order 32. This was done and the mate-rial questions in controversy between the parties were put down as follows:–

1. Whether the Passbook namely S/B No. D842193 is referrable to the plaintiff.

2. Whether £250 (N500) as claimed by the plaintiff under the said Savings Bank Passbook No. D842193 is main-tainable in view of defendant’s plea that the account had been closed before December, 1967.

3. If the account is maintainable whether interest will be paid.

The plaintiff specifically pleaded that Account No. D842193 is his account; that he opened it and that it is referable to him. There was no specific denial of this by the defendant. The defendant’s case as stated in paragraph 5 of the statement of defence seemed to be that “Account No. D842193 was closed sometime before December, 1967.” It was thus the duty of the defendant to show that the account under which the plaintiff now claims had been closed and that the plaintiff is not entitled to be paid any-thing under a closed account. Because of the nature of the material averments in the pleadings of the parties and the nature of the issues in controversy and also because of sec-tion 145 of Evidence Law, the court asked the defendant to start.

The first witness for the defendant company, Gabriel Erim admitted that Savings Bank PassBook No. D842913 was is-sued by the defendant. This passbook was tendered as ex-hibit 3. He also admitted that “there is nothing in exhibit 3 to show whether it is a live account or a closed account” but this witness quickly agreed that if exhibit 3 were closed by withdrawal of cash or by transfer, there should have


Oputa J


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appeared on exhibit 3 an entry like “Closed to cash” or “Closed and transferred to so and so” as the case may be. There are no such entries in exhibit 3. I am therefore satis-fied from the evidence that exhibit 3, Passbook No. D842193 was neither closed to cash nor closed and transferred to another branch as in either case exhibit 3 should have been withdrawn from the plaintiff. The evi-dence also revealed that an account may be closed on in-demnity as where a customer loses his passbook and then gets two current account customers of the bank to subscribe to an indemnity form to cover him. In the case of the closure by indemnity, the bank cannot possibly ask for nor can it withdraw from the customer a Passbook that he alleges has been lost. The defendant’s case here is that exhibit 3 must have been closed on indemnity. That may well be. But what is required of the defendant is proof that exhibit 3 was closed on indemnity rather than a mere allegations that it might have been so closed. Under cross-examination first defence witness, Mr Erim admitted that if exhibit 3 were closed on indemnity the fact would be so indicated on a ledger card of the bank. No ledger card was produced to me to show that exhibit 3 was closed on indemnity. The loss of the records of the defendant during the civil war might have rendered the problem of proving that exhibit 3. had been closed more difficult for the defendant. The court sympa-thies with the defendant on that score. And I think this cold sympathy is about the most the court do. The court cannot relieve the defendant bank of the burden of proof cast on it by law because the defendant now finds it difficult to dis-charge that burden. The burden still remains and if not dis-charged the defendant will lose.

The defendant bank called a second witness Cyril Okoye who checked and did not see index card for exhibit 3 – Account No. D842193. The witness then said that “in banking practice this will suggest that the account has been closed.” The two wit-nesses called for the defendant bank checked all the take-outs tendered as exhibit 1 and exhibit 3 was not reflected



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in exhibit 1. Second defence witness then continued: “in banking practice the absence of account No. D842193 in ex-hibit 1 shows that the account was not current at the time covered by exhibit 1.” According to second D.W. “under normal circumstances exhibit 3, the Passbook, should not have been with a customer whose account has been closed except only where the account was closed under indemnity.” The two defence witnesses confined themselves to the searches from incomplete materials, for the files containing indemnity forms were lost during the war as well as lodgers and index cards of closed accounts. The defence had not proved positively that exhibit 3 was closed. All the defen-dant bank is saying is that because the take-outs, exhibit 1, balanced with the journal, exhibit 2 and the account No. D842193 was not reflected in exhibit 1 the bank was en-titled to draw the inference that exhibit 3 must have been closed. That may well be a correct banking inference but in this Court the defendant has to prove more than, merely that the account might have been closed, the bank to succeed must prove not only that the account was in fact closed but also that it was closed by the plaintiff.

To understand better the onus of proof I may now review is the plaintiff’s case and a very short case it is. The plaintiff is the holder of Passbook No. D842193 (exhibit 3). He is in possession of it and testified that he is the owner of that ac-count. He swears that he did not make any withdrawals from exhibit 3 between 1967 and 1970 and did not operate the ac-count in any way. These facts are all reflected in exhibit 3. The plaintiff stated on oath that he did not close his account before the war and he now claims the amount he deposited with the defendant bank as shown in exhibit 3. By sec-tion 145 Evidence Law, Cap 49 of 1963:–

“When the question is whether any person is owner of anything of which he is shown to be in possession the burden of proving that he is not the owner is on the person who affirms that he is not the owner.”


Oputa J


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In this case the onus is on the defendant bank to prove that the plaintiff is not the owner of the passbook exhibit 3. The defendant bank must rebut the prima facie case the plaintiff established by the fact that he is in possession of the pass-book exhibit 3 if the bank is to avoid judgment for the plain-tiff on the ground of his possession: see Onyekonwu and others v. Ekwubiri and others (1). In this case the defendant bank completely failed to rebut the prima facie case of the plaintiff or rebut the presumption contained in section 145 Evidence Law. On the issue whether the passbook exhibit 3 is referable to the plaintiff I am forced to the conclusion that it is. From the evidence led on both sides and the overriding presumption contained in section 145 Evidence Law I am satisfied that the plaintiff is the owner of Passbook S/B No. D842193.

The second issue in this case as settled by the parties is whether the account in exhibit 3 has been closed. On this is-sue the plaintiff swore that he, the owner, did not close the account. The defendant bank maintained that from the re-cords they were able to recover, they are forced to the con-clusion that the account exhibit 3 might have been closed. The defendant did not however, show that the plaintiff closed the account exhibit 3. The difference between the plaintiff’s case and that of the defendant is that while the plaintiff deals with a state of fact (that he did not close his account) the defendant’s case deals with the possible or probable assumptions and inferences one may draw from the incomplete records at the disposal of the bank. This differ-ence cannot be regarded as a conflict on which evidence on one side is weighed against evidence of the same quality on the other side. The two classes of evidence run on different planes: Aithken v. Meckan (2). In this case the issue is not really one of belief or disbelief. The defendant bank may well be right in the inferences they drew but that does not prove that the plaintiff closed his account, which is what the bank has to prove to succeed. If the plaintiff, did not close



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his account with the defendant bank then he is entitled, in the absence of any law to the contrary, to be paid the amount shown in exhibit 3. On the issue of whether exhibit 3 was closed before 1967, I am satisfied that it has not been estab-lished that the plaintiff, his servant or agent closed that ac-count. In these circumstances I have to believe the plaintiff and I do believe him and find as a fact that he did not close his account in exhibit 3 before December, 1967. On the is-sues of fact in this case, I believe the plaintiff and I am satis-fied that the Passbook (exhibit 3) is referable to the plaintiff that is to say, that it belongs to the plaintiff, I am also satis-fied that the said plaintiff did not close his account with the defendant bank either before, on or after December, 1967.

I shall now consider the only important issue of the law raised in this case. Learned Counsel for the defendant sub-mitted during his final address that the plaintiff’s action is not maintainable in view of the provisions of section 8 of the Banking Obligation (Eastern States) Decree No. 56 of 1970. Section 8(1) of decree No. 56 of 1970 stipulates as follows:–

“Except to the extent to which a bank is obliged under the provi-sions of this decree to honour any claim of a customer relating to banking obligation, the rights of the customer in respect of any banking obligations to which section 2 or 3 of this decree applies are hereby extinguished.”

Under section 8(1) above the rights that are extinguished are only those rights relating to banking obligations covered by section 2 or section 3 of decree No. 56 of 1970. But even there, the rights are not extinguished if the bank is obliged under the provisions of the decree (No. 56 of 1970) to hon-our the claim of such customer. There are two important qualifications on, or curtailment of the extinguishment of the rights of a customer under section 8(1) of the decree No. 56 of 1970. Firstly it is confined only to those rights that relate to obligations to which section 2 or 3 applies. Secondly the power to extinguish a customer’s right cannot operate even in the cases covered by those sections if there is an obliga-tion on the bank under the decree to honour the customer’s


Oputa J


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claim. In this case the account exhibit 3 was not operated at all in any way either by deposit or by withdrawal during the period specified in section 2 of the decree that is from 30th May, 1967 to 12th January, 1970. Exhibit 3 is not therefore caught by section 2 or section 3 and there is thus no power under section 8(1) to extinguish any right which exhibit 3 confers on the plaintiff as a customer of the defendant bank. section 8(2) of decree No. 56 of 1970 relates only to actions or suits arising out of any thing done to or in respect of a right extinguished under section 8(1). This too does not ap-ply to exhibit 3 or to the plaintiff in this case. I am satisfied that the plaintiff can maintain this action in spite of the pro-visions of section 8 of decree No. 56 of 1970. Also subject to sections 2(4) and (5) the banking obligations to which the decree applies are those defined in sections 1(a) and (b) of the decree – that is to say banking obligations which com-menced on 31st May, 1967 and ended on 12th January, 1970 or a loan or deposit account which existed as at 31st May, 1967 where such account was subsequently operated in any manner whatsoever. The account No. D842193 (exhibit 3) does not therefore come within the ambit of the banking ob-ligations covered by s. 1 of decree No. 56 of 1970. Again section 2(5)(b) of the decree specifically provides that a bank shall be obliged to honour at par a customer’s claim in respect of a deposit account which was not operated at all between 30th May, 1967 and 12th January, 1970. The ac-count (exhibit 3) is thus fully covered by the specific provi-sions of section 2(5)(b) of decree of 1970. For all the rea-sons given above I am satisfied that learned defence Counsel was in error when he submitted that the present action is not maintainable by the plaintiff. I am on the evidence satisfied that exhibit 3 constitutes the defendant bank a debtor to the plaintiff with regard to all the sums paid into that account by the plaintiff together with interest to be calculated at the bank rate prevailing when such deposits were made. There will therefore be judgment for the plaintiff in the sum of £250 (N500) with interest calculated as indicated above. I do



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not accept the argument that section 2(5)(b) bars plaintiff’s right to interest on this deposit with the defendant bank. The par value is the face value of a security or share as con-trasted with its market value or selling value. With different financial regulations and devaluation the par value of ex-hibit 3 and interest accruing from it may be different from and lower than the actual value. The effect of section 2(5)(b) is to pay the par value notwithstanding the effect of any de-valuation or such similar occurrences.

I shall now consider the claim for damages for breach of contract. The plaintiff gave evidence that he made several demands on the defendant bank to pay him the amount in exhibit 3 but the defendant refused to pay. Generally speak-ing damages are not recoverable for failure to pay a debt: Wallis v. Smith (3). This however is not an inflexible rule of law rather it is a rule not unconnected with the other famous rule against remoteness of damage as explained in the lead-ing case of Hadley v. Baxendale (4). In case of breach of contract the aggrieved party is only entitled to recover such part of his loss actually resulting as was at the time of the contract reasonable foreseeable as liable to result from the breach: Victoria Laundry v. Newman Industries (5), at pages 1001-1002. I have no evidence of any loss suffered by the plaintiff as a result of the defendant’s refusal to honour ex-hibit 3. All I have is a claim for £100 (N200) damages-general damages I suppose. In Robinson v. Harman (6), at page 855, and in a long line of decisions following it, the idea has crystalised, that damages for breach of contract are a compensation to the plaintiff for the damage, loss or injury he has suffered through the breach. A plaintiff should by an award of damages, be placed as far as money can do it in the same position as if the contract had been performed. In this case if the plaintiff is paid the amount of his deposit and in-terest he will surely be placed in the same position as if this contract had been performed but with one difference that the plaintiff had to wait in pain and anguish for the repayment of his money, and as Lord Halsbury observed in the case of


Oputa J


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The Medina (7), at page 116: “how is anybody to measure pain and suffering in money counted?” Usually the courts regard damage from pain and suffering as remote. But a breach of contract is a legal wrong, an injuria, and even where no actual loss has been proved the court still award nominal damages for the legal wrong, the injury committed by the defendant.

I will here award the plaintiff nominal damages of N10.

In the final result there will be judgment for the plaintiff for the sum or £250 or N500 as per exhibit 3 with interest to be calculated at the relevant and current bank rate. The plaintiff is also awarded N10 as nominal damages for breach of contract. There will be costs to the plaintiff which I assess at N82.50.

Judgment for plaintiff for the sum of N500 with interest.

Plaintiff also awarded nominal damages of N10.

[1967 – 1975] 2 N.B.L.R. (HIGH COURT RIVERS STATE)


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Ingyengierefaka v. Giadom

HIGH COURT OF RIVERS STATE

HOLDEN CJ


Banking – Loan – Meant for development of a school – Ef-fect of Education (Proprietorship and Management of Schools) Edict, No. 14, 1971 – Whether extinguishes liability

Banking – Loan – Payment by post-dated cheque – Cheque not presented within a reasonable time – Effect

Facts

The plaintiff brought an action to recover from the defendant the sum of N1,192.30 being a loan given by him to the de-fendant. The defendant had issued a post dated cheque for settlement of the indebtedness which could not be presented by the plaintiff within time due to the Civil War. At the trial, the defendant contended that the action was premature as there was no evidence on the face of the cheque that it was ever presented and payment on it was refused. Also, the de-fendant contended that since the loan was meant solely for the development of the defendant’s school, he could no longer be held liable for the repayment of the loan since all schools including his own had been taken over by the Gov-ernment of Rivers State, and as such, his liability under the loan transaction had been taken over by the Rivers State Government under the Education Proprietorship and Man-agement of Schools (Edict) No. 14, 1971.

Held –

1. That failure to present a cheque within a reasonable time does not discharge the drawer from his liability and a right of action still subsists against him until barred by the operation of the Limitation Act.

2. That the Education (Proprietorship and Management of

[1967 – 1975] 2 N.B.L.R. 286 (HIGH COURT OF RIVERS STATE)

Ingyengierefaka v. Giadom 473

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Schools) Edict, No. 14, 1971 does not extinguish the debt or relieve the defendant from liability to repay the loan. The Edict does not provide for the State Govern-ment to settle outstanding liabilities or even set up ma-chinery for them to be ascertained, it merely provides for the former owner to claim compensation, and money due from them should be included in such a claim.

3. That the defendant had the right to claim compensation from the Government within the time laid down under section 4(2) of the said Edict.



Education (Proprietorship and Management of Schools) Edict No. 14, 1971, section 3(1)(b) and section 4(2)


Halsbury’s Laws of England (3ed) Volume 3, article 335

Counsel

For the plaintiff: Akomas

For the defendant: Fiberesima

Judgment

HOLDEN CJ: Plaintiff claims the sum of N1,192.30 being a loan given by him to defendant on 25th May, 1967 and still not repaid. He produced the original document showing the loan, which was not denied. He also produced a cheque which the parties agree was given post dated by defendant. It was not presented on time, owing to the civil war, and when eventually presented it was long out of date. defendant would not redate it to bring it to life again, and pleads that the action is premature as there is no evidence on the face of the cheque that it was ever presented and payment on it was refused. Mr Fiberesima for the defendant referred me to the Bills of Exchange Act, 1882 and to Halsbury’s Laws of Eng-land (3ed) Volume 3, article 335 on the duty of a holder of a Bill to present when due or within a reasonable time.

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF RIVERS STATE) Holden CJ


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I would refer him to article 338 where it made clear that a failure to present a cheque within a reasonable time does not discharge the drawer, as a right of action subsists against him and is barred only by the operation of the Limitation Act. What is a reasonable time in a question of fact in each case? In my view, the delay in presenting this cheque was not unreasonable, but on the other hand was rendered inevi-table by the civil war for which plaintiff was not to blame. This defence must fail.

The second defence needs careful consideration. By the (Proprietorship and Management of Schools) Edict No. 14, 1971, all schools and such establishments were taken over on 1 October, 1971 by the Government of Rivers State. Un-der section 3(1)(b), that takeover included:–

“all rights and liabilities to which any such proprietor or trustees were entitled or subject immediately before the coming into op-eration of this Edict, being rights and liabilities acquired and in-curred solely for the purpose of managing any such school as aforesaid or otherwise carrying on the business of the school or any part thereof.”

The document exhibit 1 reads:– “I Kemte Giadom Principal/Proprietor of Bodo City Secondary School Bodo, Ogoni received from Mr Dasetima Ingyengerefaka the sum of £596.3.0, (five hundred and ninety six pounds three shillings) on loan free of interest for the development of my school . . .”

Mr Akomas for the plaintiff argues that the loan was per-sonal and not to the School. Mr Fiberesima submits that the loan, being given expressly “for the development of my school,” is caught by the Edict and the debt having vested in the state government cannot be claimed from defendant.

In my view, the Edict does not extinguish the debt or re-move liability from the defendant’s shoulders. The burden of a debt cannot normally be transferred without the consent of the creditor. Under section 4, the defendant had the right to claim compensation within the time laid down by subsec-tion (2). We do not know whether he did, but he should have

[1967 – 1975] 2 N.B.L.R. 286 (HIGH COURT OF RIVERS STATE)

Holden CJ

Ingyengierefaka v. Giadom 475

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done, and should have included this sum due from him in the amount claimed. The Edict does not provide for the State Government to settle outstanding liabilities or even set up machinery for them to be ascertained. It merely provides for the former owner to claim compensation, and money due from them should be included in such a claim. There will be judgment for the plaintiff in the sum claimed and costs.



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Jammal Steel Structures Limited v. African Continental Bank Limited


ELIAS CJN, FATAYI-WILLIAMS AND IBEKWE JJSC

Date of Judgment: 28 NOVEMBER 1973 S.C.: 322/73

Banking – Banker/customer relationship – Claim by banker on overdraft granted to customer – Whether a matter within the exclusive jurisdiction of the Federal Revenue Court

Jurisdiction – Jurisdiction of State High Court to entertain banking matters – Scope of – Section 9(1)(b)(iii) Federal Revenue Court decree, 1973 – Whether jurisdiction is in the Federal Revenue Court or State High Court – Sec-tion 7(1)(b)(iii) Federal Revenue Court Decree, 1973 – In-terpretation of

Facts

The plaintiff/respondent claimed inter alia the sum of N641,328.39 from the defendant/appellant being the balance due to the plaintiff for an overdraft granted by the plaintiff to the defendant at their Idumota Branch, Lagos in the normal course of their business or bankers to the defendant all for money paid by the plaintiff to the defendant as bankers at the latter’s request, which sum the defendant had refused and/or neglected to pay in spite of repeated demands.

When the matter came before the High Court of Lagos, the defendant raised the point that the court has no jurisdiction to deal with the cause or matters having regard to the provi-sions of the Federal Revenue Court Decree, 1973.

The Learned Trial Judge in his ruling held inter alia that notwithstanding the provisions of the Federal Revenue Court Decree, 1973 (in particular section 7(1)(b)(iii) thereof) the High Court of Lagos State has jurisdiction in the cause or matter.


Jammal Steel Structures Ltd v. African Continental Bank Ltd 477

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The defendant appealed against the Ruling to the Supreme Court contending that the trial Court erred in assuming that jurisdiction as the subject matter of the action falls within the jurisdiction conferred on the Federal Revenue Court un-der the Federal Revenue Court Decree, 1973.

Section 7(1)(a),(b),(c) and (d) of the Federal Revenue Court decree No. 13, 1973 provides as follows:–

“The Federal Revenue Court shall have and exercise jurisdiction in civil causes and matters:– (a) relating to the revenue of the Government of the Federation

in which the said Government or any organ thereof or a per-son suing or being sued on behalf of the said Government is a party;

(b) connected with or pertaining to (i) the taxation of companies and of other bodies estab-

lished or carrying on business in Nigeria and all other persons subject to Federal Taxation;

(ii) customs and excise duties; (iii) banking, foreign exchange, currency or other fiscal

measures; (c) arising from:–

(i) the operation of the Companies Decree, 1968 or any other enactment regulating the operation of companies incorporated under the Companies Decree, 1968;

(ii) any enactment relating to copyright, patents designs, trade marks and merchandise marks;

(d) of admiralty jurisdiction.”

Held – 1. The eiusdem generis rule applies to the interpretation of

section 7(1)(b)(iii) of the Federal Revenue Court decree, 1973 with the result that the word “measures” must be taken to qualify each of the proceeding specifically enu-merated subjects, including “banking.” This means that the natural and ordinary meaning to be given to the sub-section is that it should be as “banking measures, foreign exchange measures, currency measures or other fiscal



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measures.” The words “or” and “other” in this context are not disjunctive within the meaning of section 18(3) of the Interpretation Act 1964 but, by virtue of section 1(4) of the same Act, they imply similarity as between the preceding specifically enumerated subjects – banking, foreign exchange and currency – and the genetic words “other fiscal measures.”

2. That in section 7(1)(b)(iii) of the Federal Revenue Court Decree No. 13, 1973, the word “other measures” must be construed eiusdem generis with the words “banking,” foreign exchange” and “currency.” That thus construed, banking measures would cover such pieces of legislation, orders and regulations of the Federal Government as it relates to banking – for example, the Banking Decree 1969, Central Bank of Nigeria Act (Cap 30 of 1958 Edi-tion), and ancillary enactments.

3. Where any dispute relates to breach of or non compli-ance with certain formalities required by law for the law-ful operations of banking business, it is a matter for the Federal Revenue Court because it involves a Govern-ment measure and the Government is a necessary party.

4. Where there involved only a dispute between a bank and one or more of its customers in the ordinary course of banking business or transaction, as in the instant case, a State High Court would have jurisdiction to entertain the matter.

Per Curiam “That it does not seem to us that the legislative intention behind the decree was to clutter up the new Revenue Court with ordinary cases involving banker/customer relationship, such as disputes in respect of an overdraft or negligent payment of a forged cheque or negligent dishonouring of a customer’s cheque – all ‘banking transactions’ having nothing to do with Federal Revenue Court. All the State High Courts and other appropriate courts must con-tinue to exercise their jurisdiction in these and similar matters if the Federal Revenue Court must be allowed to concentrate on its essentially revenue protection functions.”



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Appeal dismissed by majority of 2:1:


Nigeria

Akwule v. R (1963) N.N.L.R. 105 Merchants Bank Ltd v. Federal Minister of Finance (1961) All N.L.R. 598 Nasr v. Bouari (1969) N.M.L.R. 38

Foreign

Amarasigiah v. State of Rajastan (1965) A.L.I.R. Sup. Ch. 504 Bank of England v. Vagliano Brothers [1891] A.C. (H.C.) 107 at 144-145 Brown v. NCB [1962] A.C. 574 Coleshill and District Investment Co Ltd v. Minister of Local Government and another (1968) 1 W.L.R. 600 at 605 Gartside v. LRC [1968] A.C. 553 at 612 Gill v. Donald Humberstone and Co Ltd (1963) 1 W.L.R. 929 at 934 Inland Revenue Commissioners v. Hinchy [1960] A.C. (H.L.) 748 at 767 Inland Revenue Commissioners v. Frere [1965] A.C. 402 In the Goods of Groos (1904) 269 Letang v. Cooper (1965) 1 Q.B. 232 Khan v. God Almighty Through Asaf Ali Khan and others (1962) A.I.R. 364 In re: Wellstead (1949) Ch. 296 Salomon v. Salomon [1897] A.C. 22 Sutters v. Briggs [1960] 1 A.C. 1 at page 8 R v. City of London Court Judge (1892) 1 Q.B. 273 Willmot v. Rose (1854) 23 L.J. Q.B. 281 at 282


Central Bank of Nigeria Act, Cap 30, (1958 Edition)



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Constitution of the Federal Republic of Nigeria, section 78(1) and (2)

Customary Courts Law of the Western State of Nigeria, sec-tion 19(b), (c) and (d)

Federal Revenue Court Decree No. 13, 1973, sec-tion 7(1)(a)-(d) and (2), 8(1) and (3), 26, 33(1) and (2), 63(4)

Interpretation Act, 1964, section 1(4), 3(1) 18(3)


Maxwell on Interpretation of Statute, (10ed), pages 128-129 Maxwell on Interpretation of Statute, (12ed), page 105

Counsel For the appellants: Chief Williams For the respondents: Enwerem

Judgment

ELIAS CJN: This is an appeal from the ruling of Adefarasin J, in Suit No. L.D. 970/73 given in the High Court of Lagos State on 25th October, 1973, in which he held, inter alia, that notwithstanding the provisions of the Federal Revenue Court decree 1973, (in particular section 7(1)(b)(iii) thereof) the High Court of Lagos State has jurisdiction in the cause or matter or the subject-matter of this appeal. The plain-tiffs/respondents in their writ of summons dated 17th Sep-tember, 1973, claimed inter alia the sum of N641,328.39K (six hundred and forty one thousand, three hundred and twenty eight naira and thirty nine kobo) from the defen-dants/appellants, being the balance to the plaintiffs for an over draft granted by the plaintiffs to the defendants at their Idumota branch, Lagos, in the normal course of their busi-ness as bankers to the defendants and for money paid by the plaintiff to the defendants as bankers at the latter’s request, which said sum the defendants have refused and/or ne-glected to pay in spite of repeated demand.

When the case first came before the High Court of Lagos State on October, 1973, Chief FRA Williams, leading Counsel


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for the defendants/appellants sought the leave of the court to argue that the said court has no jurisdiction to deal with the cause or matter having regard to the provisions of the Fed-eral Revenue Court Decree, 1973. After hearing arguments from both parties on 22nd October, 1973 on the issue of ju-risdiction, the learned Judge gave the ruling three days later as already stated. Dissatisfied with the ruling, the defen-dants/appellants applied for leave to appeal on the same day, and the learned trial Judge, after hearing arguments of Counsel for both sides, granted leave to the appellants to ap-peal against the ruling.

The two grounds of appeal argued before us are as fol-lows:–

“1. The learned trial Judge erred in law in failing to observe that the plaintiff’s action being a claim connected with or pertaining to their business as bankers it clearly falls within the jurisdiction conferred on the Federal Revenue Court un-der section 7(1)(b)(iii) of the Federal Revenue Court Decree 1973, No. 13. Accordingly, the High Court of Lagos State has no jurisdiction to entertain the claim.

2. The learned trial Judge erred in law in assuming that the in-tention of the Federal Revenue Court Decree is to confer on the said Court jurisdiction in civil causes and matters in re-spect of the matters specified under paragraphs (a), (b), (c) and (d) of subsection (1) of section 7 of the said decree only in cases where they relate to the revenue of the Government of the Federation.

PARTICULARS OF ERROR

(i) there is no such limitation on the jurisdiction of the Fed-eral Revenue Court except in respect of the matters specified under paragraphs (a) of section 7(1);

(ii) section 33 of the Federal Revenue Court decree makes it clear that the jurisdiction of the Federal Revenue Court is not confined to revenue causes and matters as defined in subsection (2) of the said section 33.”

In order to deal with the important subject matter of the ap-peal fairly expeditiously, we granted the application by the Counsel for the defendants/appellants that the appeal be

[1967 – 1975] 2 N.B.L.R. (SUPREME COURT OF NIGERIA) Elias CJN


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heard and determined on the papers filed in support of the application. It is agreed that the substance of the appeal re-quires a determinationof the scope of the jurisdiction which is vested in the Federal Revenue Court by section 7(1)(a), (b), (c) and (d) of the decree. The relevant provisions of sec-tion 7(1) are as follows:–

“The Federal Revenue Court shall have and exercise jurisdiction in civil causes and matters:–

(a) relating to the revenue of the Government of the Federation in which the said Government or any organ thereof or a per-son suing or being sued on behalf of the said Government is a party;

(b) connected with or pertaining to:

(i) the taxation of companies and of other bodies estab-lished or carrying on business in Nigeria and all other persons subject to Federal Taxation;

(ii) customs and excise duties;

(iii) banking, foreign exchange, currency or other fiscal measures;

(c) arising from:

(i) the operation of the Companies Decree, 1968 or any other enactment regulating the operation of companies incorporated under the Companies Decree, 1968;

(ii) any enactment relating to copyright, patents designs, trade marks and merchandise marks;

(d) of admiralty jurisdiction.”

As the learned Attorney–General asked for and was granted permission to make his comments on section 7 of the Fed-eral Revenue Court decree before going on to the Federal Executive Council Meeting soon afterwards, we may record his argument as follows. After submitting that the learned trial Judge referred to drafting errors without specifying them and that he wrongly concluded that the legislative in-tention has not been properly out by the phraseology em-ployed in the drafting, he submitted that the trial Judge was in error when he held that, if the legislative intention had not been properly expressed in section 7, it would have been


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clear that not all banking transactions were intended to be subject to the jurisdiction of the Federal Revenue Court. He submitted that the learned trial Judge’s observations are merely speculative and his interpretation is highly idealistic; the learned trial Judge’s appraisal of section 7 has resulted from his lumping together all the subsections instead of tak-ing them separately. It is his submission that the various sub-sections under (a), (b), (c) and (d) are not necessarily inter related and that each of them stands on its own. He pointed out that if the legislative intention is only to protect Federal Government Revenue, as the learned trial Judge would ap-pear to have assumed, the reference in (d) to Admiralty cases is not apt. He further submitted that “banking” has a strong revenue element since the Federal Military Govern-ment now has financial participation in three commercial banks and even the African Continental Bank Limited, is be-ing propped up with a 2 million naira loan from the Federal Government. The learned Attorney–General conceded to the trial Judge that, in paragraph 3 of the Explanatory Note, the use of the word “such” might be considered ambiguous, but he contended that, if one looks at section 33(1)(i), the seem-ing ambiguity disappears and it becomes clear that the Fed-eral Revenue Court is required to deal with two types of matters revenue and other matters. He finally submitted that the learned trial Judge might have been misled by the title of the decree when he held that only revenue cases come within the jurisdiction of the Federal Revenue Court; and that priority applies only in revenue the court being endowed with power to deal with cases other than revenue ones. Be-fore leaving the court, the learned Attorney–General’s final submission is that “all banking transactions” are included within section 7(1)(b)(iii) of the decree. The result of this submission is that the Lagos State High Court has no juris-diction in the case which is the subject matter of this appeal, and that all disputes of whatever nature relating to “banking” must go to the Federal Revenue Court.



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Chief Williams began by adopting the arguments of the learned Attorney–General and said that he would only con-cern himself with the question of the kind of order which this Court should make on the determination of this appeal. He contended that section 8(1) and (2) of the Decree, which ousts the jurisdiction of the State High Courts, takes effect from 13th April, 1973 when the decree came into force (see section 5(1), (3) and (4) of decree No. 1 of 1966) so that the jurisdiction of the High Court of Lagos State ceased from that date. The saving clause is section 8(3) of the decree which must be read with the phrase “part heard” in light of the recent amending of the Federal Revenue Court Decree 1973 in place of “pending” cases. The date of assumption of functions by the Federal Revenue Court is 1st August, 1973 by virtue of Legal Notice 61/73, section 2. Chief Williams submitted that although the jurisdiction of the High Court ceased on 13th April, 1973, the decree enables the court to continue to exercise the jurisdiction in respect of a cause or matter which was part heard on 1st August, 1973; the result is that all revenue cases filed since 1st August, 1973, and all other cases filed since 1st April, 1973 are outside the juris-diction of the High Court. The recent amendment to the Federal Revenue Court Decree therefore has the effect of nullifying the exercise of jurisdiction by a State High Court between 13th April, 1973 and 1st August, 1973. Learned Counsel filed before the jurisdiction was conferred on the Federal Revenue Court and cases filed after such confer-ment; cases filed before should be deemed to be within the jurisdiction, while those completed since the Federal Reve-nue Court in fact began to function are clearly outside its ju-risdiction. He contended that, in the instant case, the action was filed on 17th September, 1973, after the Federal Reve-nue Court has started work and the High Court no longer has any jurisdiction. His final submission at this stage of the proceedings is that it is up to the Federal Military Govern-ment to put the position right by further statutory amend-ment of the Amended Federal Revenue Court Decree, 1973;


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and that, in the meantime, the Supreme Court should make an order striking out the action before the High Court on the ground that it has no jurisdiction.

Mr Enwerem, learned Counsel for the respondents, submit-ted that the judgment appealed from is right, including the learned trial Judge’s observations about punctuation and drafting errors. He contended that only banking matters that relate to revenue come within the jurisdiction of the Federal Revenue Court, and that he would interpret sec-tion 7(1)(b)(iii) a referring to fiscal matters, not to a simple contractual relationship such as that between banker and customer. His reply to the learned Attorney General’s argu-ment that the Federal Government has revenue interests in three commercial banks is that it is difficult for him to see what the position is in relation to all the other banks in which the Federal Government has no such interest. He would similarly not accept the learned Attorney–General’s argument that “banking” in the context of section 7(1)(b)(iii) means all “banking transactions.” In his submission, “bank-ing” in this context can only mean a transaction in which the Federal Government is interested, since, under sec-tion 7(1)(b)(i) and (ii) the Federal Government is clearly a party, whereas in section 7(1)(b)(iii) the Federal Govern-ment may not be interested in “banking,” though it is inter-ested in foreign exchange, currency and other fiscal meas-ures. Mr Enwerem agreed with Chief Williams that, that sec-tion 8(3) as recently amended requires further consideration on the part of the Federal Government with a view to further amendment to clarify the position.

At this point, the court drew the attention of Chief Wil-liams to the word “measures” which occurs at the end of the enumerated subjects in section 7(1)(b)(iii) and invited him, if he would, to comment on the possibility that the word “measures” attaches also to “banking” at the beginning of the subsection. Chief Williams asked for time to consider the point and the court to adjourn further hearing in the appeal



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for a week till 21st November, 1973. At the further hearing, Chief Williams submitted the following propositions for our consideration:–

“(i) The punctuations in section 7 of the Federal Revenue Court decree are part of the enactment and due attention must be paid to them in construing the section (see section 3(1) of the other Interpretation Act, 1964).

(ii) The phrase ‘or other fiscal measures’ must be construed in its ordinary and natural sense and in the context of the en-tire section 7.

(iii) The phrase ‘or other fiscal measures’ must be construed disjunctively and not as implying similarity with or modifi-cation of the specifically enumerated subjects preceding it in sub-paragraph 1(b) or even sub-paragraph 1(b).

(iv) In the alternative to (iii) above, the meaning of the phrase ‘or other fiscal measures’ may be modified or restricted by the scope of specifically enumerated subjects preceding it in accordance with the eiusdem generis rule, which, however, does not operate in the reverse. Accordingly, the phrase ‘or other fiscal measure’ cannot modify, restrict or otherwise give colour to the specifically enumerated words which pre-cede it, including the word ‘banking.’

(v) Therefore, it is submitted that the court should not modify or curtail the scope and meaning of the word ‘banking’ in section 7(1)(b)(iii), either on account of the phrase ‘other fiscal measures’ or because it is put together in the same paragraph with foreign exchange and currency.”

In his submission, the ordinary natural meaning would be fiscal measures other than those which come within the scope of the specifically enumerated matters, and that phrase cannot mean or imply that the preceding words are fiscal measures, in view of the express provision of section 18(3) of the Interpretation Act, 1964 which provides that the word “or” and the word “other” shall be construed disjunctively and not as implying similarity. Learned Counsel conceded that section 1 of the Interpretation Act provides for a situa-tion in which a contrary intention appears in a particular


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enactment, but contends that no such intention exists in the present context. Learned Counsel submitted that, while it is possible to argue that the eiusdem generis rule applies and that all the words have the same meaning, the rule requires that the general words take their colour from the specifically enumerated words, not vice versa; and he referred us to Nasr v. Bouari (1969) N.M.L.R. 38 at pp. 40 and 42. He also cited in Re: Wellsted (1949) Ch. 296, pp. 298 and 318; Amarasig-jah v. State of Rajastan (1965) A.L.I.R. Sup, Ct. 504 at 523; Khan v. God Almighty Through Asaf Ali Khan and others (1962) A.I.R. (Alhahabad) 364 at 368; and Salomon v. Salomon (1897) A.C. 22 at p. 38 – All in support of his con-tention that the eiusdem generis rule does not apply in the context of section 7(l)(b)(iii). The final submission of learned Counsel for the appellants in reply to the argument of learned Counsel for the respondents that the conse-quences of holding that all banking cases must go to the Federal Revenue Court would be grave is to refer us to sec-tion 26 of the Federal Revenue Court Decree which provides for smaller claims to be remitted by the Federal Revenue Court to the Magistrate’s Courts of the States. In his view, banker customer cases are not so time consuming as to cre-ate any problem for the Federal Revenue Court. He con-cluded his argument by referring us to Sutters v. Briggs [1960] A.C. 1 at page 8 and Inland Revenue Commissioners v. Hinchy [1960] A.C. 748 at 767 to buttress his argument that this Court need not be unduly concerned with possible inconvenient results of a legislative enactment, but to leave any remedial steps to be taken by the Government.

The learned Attorney–General who was also present on this occasion at our invitation, said that he would support Chief Williams on his submissions regarding the eiusdem generis rule, and would submit further that maxim noscitur a sociis applies in this case. It is his contention that the scope of the word “banking” is in issue in this case, not the scope of the phrase “other fiscal measures.” If it were otherwise he contended, Item 9 of the Exclusive Legislative List shows



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that only “currency,” “coinage” and “legal tender” have a relation with fiscal measures, and that the use of the phrase “foreign exchange” in section 7 of the decree instead of the phrase “exchange control” in item 14 shows that the first phrase is not a term of art. The learned Attorney–General maintained that, in his submission, all disputes relating to “banking” not matter where they arise and who the parties to the disputes are, must go to the Federal Revenue Court. In this connection, he drew our attention to section 8(2) of the decree which provides that the Head of the Federal Military Government may by order vest a State High Court or any other State Court with jurisdiction in revenue matters. The learned Attorney–General also submitted that when the word “or” is used before the last of a series of specifically enu-merated subjects as in the present context, the presumption is against the application of the eiusdem generis rule in in-terpreting the provision; and that in section 7(1)(b)(iii) the word “banking” is used as a noun, as is each of the words therein stated – “foreign exchange,” “currency” and “other fiscal measures,” each being independent of the other.

Mr Enwerem’s additional submissions are that the legisla-tive intention in section 7(1)(b)(iii) is not to give so wide a jurisdiction to the Federal Revenue Court as is contended for by both Chief Williams and the learned Attorney–General; that “banking” in this context must be limited to such bank-ing disputes as the Federal Government is interested in, that that the word “measures” qualifies each of the words enu-merated, including “banking”; and that the consideration of the jurisdiction granted to the Federal Revenue Court in sec-tion 7(2) of the decree along with section 7(1) as a whole in relation to offences connected with all the enumerated sub-ject would show that the consequences of giving sec-tion 7(1)(b)(iii) the interpretation suggested by both the learned Counsel for the appellants and the learned Attorney–General would be difficult to define.

After a very careful consideration of all arguments put before


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us, we think that the eiusdem generis rule applies to the in-terpretation of section 7(1)(b)(iii) with the result that the word “measures” must be taken to qualify each of the pre-ceding specifically enumerated subjects, including “bank-ing.” This means that the natural and ordinary meaning to be given to the subsection is that it should be as “banking measures, foreign exchange measures, currency measures or other fiscal measures.” The words “or” and “other” in this context are not disjunctive within the meaning of sec-tion 18(3) of the Interpretation Act, 1964 but, by virtue of section 1(4) of the same Act, they imply similarity as be-tween the preceding specifically enumerated subjects bank-ing, foreign exchange and currency and the generic words “other fiscal measures.” Thus in Nasr v. Bouari (1969) 1 N.M.L.R. 38, 40 and 42 where in ascertaining the meaning of “premises” in the Rent Control (Lagos) Amendment Act, 1965, this Court held that the words “or other lawful pur-poses” in section 1(4) of the Act must be construed as lawful purposes similar to “living or sleeping.” The particular phrase in that case is “a building of any description occupied or used by persons for living or sleeping or other lawful pur-poses.” (italics ours). That the repetitive “or” between the three specifically enumerated subjects makes no grammati-cal difference to the result but replaces the comma in our own phrase in section 7(1)(b)(iii) of the decree as borne out by the House of Lords decision in Inland Revenue Commis-sioners v. Frere [1965] A.C. 402 that the word “interest” in the phrase “interest, annuities or other annual payments” in the Income Tax Act, 1952 meant “annual interest,” as Vis-count Radcliffe observed, at page 426 ibid:–

“The collocation of interest with annuities and other annual pay-ments is the same as in the preceding heading, and as a straight forward question of construction alone I think that any reader would naturally suppose that the word ‘interest’ was being used in the same sense in each of the two successive headings, and would never guess that in the second one it was being used with a different meaning from that which he had attributed to it in the



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first. In my opinion, there is no change in the meaning that is in-tended.”

See also Letang v. Cooper (1965) 1 Q.B. 232. The Court of Appeal in England held in Coleshill and District Investment Co Ltd v. Minister of Local Government and another (1968) 1 W.L.R. 600 at 605 that in determining the meaning to be given to the phrase “building, engineering, mining or other operations” in section 12(1) of the Town and Country Plan-ning Act, 1947, the words “other operations” must be con-strued eiusdem generis with “building,” “engineering” and “mining.”

We are accordingly of the opinion that in sec-tion 7(1)(b)(iii) of the Decree, the word “other measures” must be construed eiusdem generis with the words “bank-ing,” “foreign exchange,” and “currency.” Thus construed, banking measures would cover such pieces of legislation, orders and regulations of the Federal Government as it re-lates to banking, for example, the Banking Decree, 1969, Central Bank of Nigeria Act (Cap 30 of 1958 Edition), and ancillary enactments. Where any dispute relates to breach of or non-compliance with certain formalities required by law for the lawful operations of banking business, it is a matter for the Federal Revenue Court because it involves a Gov-ernment measure and the Government is a necessary party. Thus in Merchants Bank Ltd v. Federal Minister of Finance (1961) All N.L.R. 598 the question at issue was the revoca-tion of the licence of the plaintiff bank by the defendant un-der the Banking Act, 1958 Edition. Such a case must go to the Federal Revenue Court. But where there involve only a dispute between a bank and one or more of its customs ordi-nary course of banking business or transaction, as is the case with the subject matter of the present case, the Government is not really interested in the outcome of the dispute, apart, of course from its interest in the general maintenance of law and order. We would even go further to say that certain criminal offences related to banking transactions, such as


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embezzlement or criminal breach of trust committed by anyone against a commercial bank (because it may be dif-ferent in the case of the Central Bank of Nigeria) should be prosecuted like any other crimes in any appropriate State High Court and not in the Federal Revenue Court. This is the essence of the Supreme Court decision in Akwule and others v. R (1963) N.N.L.R. 105 in which it was held that the relevant provision of the Penal Code relating to banking offences (eg. criminal breach of trust) was within the com-petence of the Northern Nigeria Legislature. In our view, the subject matter of this case would still be cognisable today in a High Court in the Northern States, and not in the Federal Revenue Court. We think that this is the true import of sec-tion 7(2) of the decree. All offences arising out of the other items enumerated in section 7(1) are triable in the Federal Revenue Court because they involve a revenue element in which the Federal Government is interested. All the various subsections relate to matters and causes involving the Fed-eral Government. It is significant to note that all the items enumerated in section 7 of the decree, including “banking,” are in the Exclusive Legislative List in the Constitution of the Federation, 1963 and the common denominator of them all is that they are matters of Federal competence and Fed-eral revenue interest.

It was argued by the learned Attorney–General that the inclu-sion of subsection (d) in section 7(1) of the decree in respect of admiralty case is an indication that the Federal Revenue Court was intended to have jurisdiction in other cases than revenue matters. This may be so, but we observe that the original jurisdiction in admiralty cases in respect of which the Supreme Court formerly had a monopoly was taken away from it and expressly given to the High Courts of the States by the Admiralty Jurisdiction Act, 1962, which is also referred to in section 63(4) of the Federal Revenue Court Decree, 1973. This last provision seems to say that, for the avoidance of doubt, the Admiralty Jurisdiction Act, 1962



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“shall be construed with such modifications as may be nec-essary to bring it into conformity with the provisions of” the Federal Revenue Court Decree. We do not understand this to mean that the Admiralty Jurisdiction Act, 1962 is thereby repealed, leaving jurisdiction in admiralty cases only to the Federal Revenue Court. It seems to us that only such causes or matters of admiralty as pertain to Federal Government vessel or property or revenue are within the jurisdiction of the Federal Revenue Court. If the true intention had been to take all admiralty jurisdiction out of the hand of all State High Courts, express provision would have been made for such a contingency in the Federal Revenue Court decree. We are of the view that the precise scope and character of the original admiralty jurisdiction which was conferred upon the Supreme Court under the Supreme Court Act, 1960 and which was later transferred to the State High Court by the Admiralty Jurisdiction Act, 1962 and now also conferred upon the Federal Revenue Court by the combined operation of section 7(1)(d) and section 63(4) of the decree will one day have to be determined, as what constitutes “admiralty cases” and “admiralty jurisdiction” is not free from contro-versy even in modern English Laws. See R v. City of Lon-don Court Judge (1892) 1 Q.B. 273, at pages 303 and 304. It is, however, unnecessary for us to decide the point in the present case.

We also think that another reason for giving sec-tion 7(1)(b)(iii) of the decree the construction we have adopted above is that the true object and purpose of the Fed-eral Revenue Court Decree, as can be gathered from the four corners of it, is the more expeditious despatch of revenue cases, particularly those relating to personal income tax, company tax, customs and excise duties, illegal currency deals, exchange, control measures and the like, which the State High Court were supposed to have been too tardy to dispose of especially in recent years. It does not seem to us that the legislative intention behind the decree was to clutter


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up the new Revenue Court with ordinary cases involving banker customer relationship, such as disputes in respect of an over draft, or the negligent payment of a forged cheque or negligent dishonouring of a customer’s cheques all “banking transactions” having nothing to do with Federal Revenue concern. The State High Courts and other appropriate courts must continue to exercise their jurisdiction in these and simi-lar matters if the Federal Revenue Court must be allowed to concentrate on its essentially revenue protection functions. In any case, we would require a clearer and more definitive provision than that in section 7(1)(b)(iii) of the decree before we should be disposed to assent to the submission of both Chief Williams for the appellants and the learned Attorney–General that jurisdiction is “all banking matters” throughout the Federation and whatever their nature has in fact been ex-clusively vested in the Federal Revenue Court. We find our-selves in agreement with the following passage from Max-well on Interpretation of Statutes, (10ed) at pages 128-129:–

“It is supposed that the legislature would not make any important innovation without a very explicit expression of its intention; es-pecially since in recent years such an intention has often been very explicitly expressed. It would not be inferred, for instance, from the grant of a jurisdiction to a new Tribunal over certain cases, that the legislature can indeed deprive the Superior Court of the jurisdiction which it already possessed over the same cases. Thus, an Act which provided that if any question arose upon tak-ing a distress it should be determined by a commissioner of taxes which would not thereby take away the jurisdiction of the High Court to try an action for an illegal distress.”

On the importance of construing a statute in light of its con-sequences, we would endorse this passage, again from Maxwell (12ed) at page 105:–

“Before adopting any proposed construction of a passage suscepti-ble of more than one meaning, it is important to consider the ef-fects or consequences which would result from it, for they often point out the real meaning of the words. There are certain objects which the legislature is presumed not to intend, and a construc-tion which would lead to any of them is therefore to be avoided.



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It is not frequently necessary, therefore, to limit the effect of the words contained in an enactment (especially general words), and sometimes to depart, not only from their primary and literal meaning, but also from the rules of grammatical construction in cases where it seems highly improbable that the words in their wide primary or grammatical meaning actually express the real intention of the legislature. It is regarded as more reasonable to hold that the legislature expressed its intention in a slovenly manner, than that a meaning should be given to them which could not have been intended.”

And as Lord Reid said in Brown v. NCB [1962] A.C. 574, sometimes the meaning of words is so plain that effect must be given to them regardless of the consequences; but more often a construction should be adopted with due regard to the consequences which must follow from it. Again, Lord Reid emphasised this point in Gartside v. LRC [1968] A.C. 553, at page 612 when he said:–

“It is always proper to construe an ambiguous word or phrase in light of the mischief which the provision is obviously designed to prevent, and in light of the reasonableness of the consequences which follow from giving it a particular construction.”

If we may quote yet another of Lord Reid’s recent state-ments in Gill v. Donald Humberstone and Co Ltd (1963) 1 W.L.R. 929 at page 934:–

“If the language is capable of more than one interpretation, we ought to discard the more natural meaning if it leads to an unrea-sonable result, and adopt that interpretation which leads to a rea-sonably practicable result.”

We would say at once that the decree is inelegantly drafted in a number of provisions including sections 7 and 33, and that a pruning knife would improve it. We think that there is merit in the criticism of section 8(3) of the decree suggested by learned Counsel for the appellants regarding its intend-ment with regard to “pending” and, “part heard” appeals as recently provided for in the Federal Revenue Court (Amendment) Decree, 1973. We are of the view that the Federal Government should cause another look to be had into the various provisions of this decree in light of its true


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object and purpose. A careful review of the decree would seem to be called for in order to remove uncertainties and ambiguities from some of its provisions.

In the view, we have taken section 7(1)(b)(iii) of the de-cree that only “banking measures” are contemplated therein and not “all banking transactions.” However, we hold that the subject matter of this appeal, which is a simple dispute between banker and customer in respect of an overdraft ac-count, is within the jurisdiction of the High Court of Lagos State, and not that of the Federal Revenue Court. We ac-cordingly dismiss the appeal with cost assessed at N120 payable to the respondents.

FATAYI-WILLIAMS JSC: (Dissenting judgment) In an ac-tion commenced in the Lagos High Court as undefended in Suit No. L.D. 970/73, the plaintiffs claimed:–

“against the defendants the total sum of N641,328.39 (six hundred and forty one thousand, three hundred and twenty eight naira, thirty nine kobo) being the balance due to the plaintiffs for over-draft granted by the plaintiffs to the defendants at the Idumota Branch, Lagos, in the normal course of their business as Bankers to the defendants and for money paid by the plaintiffs to the de-fendants as bankers at their request and for Bank Charges, inci-dental expenses and interest upon money due from the defendants to the plaintiffs which said sum the defendants have refused and/or neglected to pay in spite of repeated demands.”

The plaintiffs also claimed:–

“interest on the said sum of N641,328.39 at the rate of ten per cen-tum per annum from 17th September, 1973 until judgment and five per centum per annum thereafter until final liquidation of the whole debt or any part thereof.”

In the affidavit filed in support of the claim the supervisor of the plaintiff deposed that he was advised and verily believed that the defendants have no defence to the action.

The defendants, through their solicitor, on 8th October, 1973, gave due notice, as provided for in the High Court (Civil Procedure) Rules, of their intention to defend the suit



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and in pursuance of this, a counter-affidavit was filed by their general manager.

The case first came up for hearing on 15th October, 1973, when it was adjourned to 22nd October, 1973. At the hear-ing on that day, the learned Counsel for the defendants con-tended that since the transaction which led to the claim be-fore the court was a Banking transaction, it is the Federal Revenue Court and not the Lagos High Court which has ju-risdiction to adjudicate on the matter. For support, learned Counsel referred to the provisions of section 7 of the Federal Revenue Court Decree, 1971 (No. 13 of 1973) and to a number of decided cases.

In his reserved ruling, the learned trial Judge held as fol-lows:–

“I ought to say that I have no difficulty whatsoever in coming to the view that the transaction in this case was a banking transac-tion. I am in full agreement with the submissions of learned Counsel that this was a banking transaction. I however take a contrary view to that of learned Counsel in his arguments that any provision of the Federal Revenue Court Decree, 1973 confers ju-risdiction in all banking matters in the Federal Revenue Court which concerns admiralty jurisdiction. Although there are punctuation and drafting errors in the decree it appears absolutely clear from the wording of section 7 of the de-cree that the intention of the legislature is to confer jurisdiction in the Federal Revenue Court in all matters which relate to the reve-nue of the Federal Government and at the same time concern taxation of companies or customs and excise duties or banking, foreign exchange or such other matters or concerns the operation of the Companies decree, 1968 or copyright, patents, designs etc. or admiralty. It seems to me absurd to ascribe to the provisions of section 7 of the decree any intention to confer jurisdiction on the Federal Revenue Court on banking transactions which do not re-late to the revenue of the Federal Government of Nigeria or Taxa-tion of Companies established under the 1968 Companies De-cree . . .

One would have thought that the very name of the court itself is a pointer to the intention of the legislature – ‘the Federal Revenue Court.’ It is a court established to deal with Federal Revenue


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cases and not with banking or other transactions which have no revenue transaction.” (The italics are mine)

The learned trial Judge then referred to the contents of the explanatory notes to the decree in support of his earlier con-clusions before finally finding as follows:–

“The first and most elementary rule of construction is that the words and phrases of technical legislation are used in their tech-nical meaning if they have acquired one and otherwise their ordi-nary meaning. Accordingly, the words used in a statute should be given the sense which is their natural import. The wording of sec-tion 7 of the decree leaves one in no doubt that the Government did not contemplate that all banking matters unrelated to Federal Revenue should be dealt with by the Federal Revenue Court. I therefore hold that this Court, and not the Federal Revenue Court, has jurisdiction to deal with this matter.”

Against this ruling the defendants have now appealed to this Court on the following grounds:–

“1. The learned trial Judge erred in law in failing to observe that the plaintiffs’ action being a claim connected with or pertaining to their business as bankers clearly falls within the jurisdiction conferred on the Federal Revenue Court un-der section 7(1)(b)(iii) of the Federal Revenue Court De-cree, 1973 number 13. Accordingly, the High Court of La-gos State has no jurisdiction to entertain the claim.

2. The learned trial Judge erred in law in assuming that the in-tention of the Federal Revenue Court Decree is to confer on the said Court, jurisdiction in civil causes and matters in re-spect of the matters specified under paragraphs (a), (b), (c) and (d) of subsection (1) of section 7 of the said decree only in cases where they relate to the revenue of the Government of the Federation.

PARTICULARS OF ERROR

(i) There is no such limitation on the jurisdiction of the Federal Revenue Court except in respect of the matters specified under paragraph (a) of section 7(1);

(ii) Section 33 of the Federal Revenue Court Decree makes it clear that the jurisdiction of the Federal Revenue Court is not confined to revenue causes and matters’ as defined in subsection (2) of section 33.”



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The arguments in support of the grounds of appeal, as put forward by Chief Williams who appeared for the defen-dants/appellants, may be summarised as follows. In constru-ing the provisions of section 7 subsection (1) of the decree attention must be paid to the punctuation therein as this is part of the enactment. The plaintiffs’ case, as shown in the writ and the affidavit filed in support, is that the transaction be-tween them and the defendants is a banking transaction. The learned trial Judge found this to be so but went on to say that, in order to oust the jurisdiction of the High Court, the transac-tion, having regard to the construction which he had put on the provisions of section 7(1), must relate to the revenue of the Government of the Federation. The learned trial Judge was in error in coming to this conclusion because on a proper construction of the provision of the section, no such limitation is placed on the jurisdiction of the Federal Revenue Court ex-cept in respect of matters specified in paragraph (a) of sec-tion 7(1). The comma after each of the words in sub-paragraph (iii) of paragraph (b) of section 7(l) of the decree makes it clear that the word “banking should not be related to the words “other fiscal measures.” If the relevant part of sec-tion 7(1) is considered with the present case in mind, all it says is that the Federal Revenue Court “shall have and exer-cise jurisdiction in civil causes and matters connected with or pertaining to banking.” Of course, banking’ in this connection does not necessarily mean banking transaction to which the Government of the Federation is a party. Dealing with the phrase “or other fiscal measures” in sec-tion 7(i)(b) of the decree, Chief Williams submitted further as follows. The phrase “or other fiscal measures” must be construed in its ordinary and natural sense and in the context of the entire section 7. The phrase must be construed dis-junctively and not as implying similarity with or modifica-tion of the specifically enumerated subjects preceding it in sub-paragraph (1)(a) and (b). As an alternative to the above submission that the phrase should be construed disjunc-tively, Chief Williams further submitted that the meaning of the phrase “or other fiscal measures” may be modified or restricted by the scope of the specifically enumerated sub-jects preceding it in accordance with the eiusdem generis


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rule but as that rule does not operate in the reverse, the phrase cannot modify, restrict or otherwise give colour to the specifically enumerated words which precede it and which include the word “banking.” He submitted however that the word “banking” is used in the context of a noun, and that the eiusdem generis rule would not, therefore, apply. This is made clear by the use of the punctuation comma after the word “banking.” If there had been no comma, it is argu-able that the word might have been used as an adjective. As the sentence stands, nobody who knows the rules of gram-mar would say that the word is an adjective. In support of his submission that the eiusdem generis rule does not apply,

Chief Williams referred us to the following cases:– In re: Wellstead (1949) Ch. 296 at pages 298 and 318. Salomon v. Salomon [1897] A.C. 22 at page 38. Amarasigiah v. State of Rajastan (1955) A.I.R. (S.C.) 504 at page 523. Khan v. God Almighty Through Asaf Khan and others (1962). All India Reporters (Allahabad) 364 at page 368.

Another line of argument put forward by Chief Williams is this. Assuming that the eiusdem generis rule applies, the phrase “fiscal measures” must take its colour from the spe-cifically enumerated words. It must therefore mean “fiscal measures” not already covered by “banking, foreign ex-change, currency.” Any suggestion that the preceding spe-cific words take their colour from the phrase cannot stand in view of the express provisions of section 18(3) of the Inter-pretation Act, 1964 (No. 1 of 1964). In support of this con-tention we were referred to the case of Nasr v. Bouari (1969) N.M.L.R. 38 at page 40. Chief Williams finally sub-mitted that the court should not modify or curtail the scope and meaning of the word “banking” in section 7(1)(b) either on account of the phrase “other fiscal measures” or because it is grouped together in the same paragraph with foreign ex-change and currency.



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The Attorney–General of the Federation who appeared as Amicus Curiae agreed with ail the submissions made by Chief Williams. He agreed that the word “banking” in sec-tion 7(1)(b)(iii) of the decree is a noun which clearly stands by itself and must be construed as such. It cannot therefore be qualified by the word “measures.” He also agreed that the eiusdem generis rule does not, therefore, apply, and that, if it applies at all, the general words eg “or other fiscal meas-ures” must take their colour from the specific words and not vice versa because the rule does not apply in reverse. Refer-ring again to section 7(1)(b)(iii), the learned Attorney–General pointed out that if what is in issue had been the scope of the words “other fiscal measures” then the rule would apply but since what is in issue, both before the trial Judge and also in this Court, is the scope of the word “bank-ing” which must be interpreted on its own. In the context in which it is used refer to” other fiscal measures,” because the use of the comma after “banking” is deliberate and is in-tended to emphasize the distinctness of the word. The learned Attorney–General then referred to the words “bank-ing, foreign exchange, currency or other fiscal measures” in sub paragraph (iii) of section 7(1)(b) and pointed out that the word “fiscal” is the only adjective, while the other words are all nouns. He also explained that the word “measures” is not used as a term of art.

In dealing with the scope of all the words used in the sub-paragraph the learned Attorney–General amplified his views further as follows. Many banking transactions carried out by the commercial banks are now regulated by statute. Numer-ous cases as between banker and customer may pertain to measures other than banking. It is to guard against this prob-lem of classification that the decree provides that all banking matters should go before the Federal Revenue Court.

The learned Attorney–General also referred to the stric-tures passed by the learned trial Judge on the way the decree has been drafted. He said that it would have been better if the learned trial Judge had pointed to specific drafting errors which he had in mind but nowhere in his judgment did he


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point to any particular drafting or punctuation errors. It is this conception of certain errors that colours his attitude to the scope of the section of the decree in question. The learned trial Judge appears to infer that if the intention of the decree had been properly brought out, it would have been clear that all banking transactions do not come under the ju-risdiction of the Federal Revenue Court. This view is highly speculative and since he was not a party to the drafting of the decree, the learned trial Judge should have limited him-self to the ordinary rule of construction and interpreted the word “banking” as it is used in the decree. As it is, the learned trial Judge was in error in “lumping” the whole of section 7 together and stating that they all came under the umbrella of revenue matters.

In his reply, Mr Enwerem who appeared for the plain-tiffs/respondents submitted that the learned trial Judge was right in holding that as the case was not a revenue matter, he had jurisdiction to try it. Learned Counsel agreed with the views of the learned trial Judge that matters which have no revenue overtone should not go to the Federal Revenue Court, that the word “banking” in paragraph (iii) of the sub-section must refer to “other fiscal matters” in which the Government is a party and not to banking transactions be-tween one citizen and another citizen. Learned Counsel, however, agreed with the views of the learned Attorney–General that the point in issue is the interpretation of the word “banking” in section 7(1)(b)(iii) of the decree and that it is not the interpretation of the words “other fiscal meas-ures.” He submitted that those words must, however, colour the meaning of the word “banking” because the word “measures” is not only qualified by the word “fiscal” but also by the word. “banking” which preceded it.

In my view, what calls for determination in this appeal is the full scope of the provisions of section 7 subsec-tion (1)(b)(iii) of the decree. Of course, before going into this, it will be necessary, first of all, to find out whether the



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paragraph in question can stand alone and is capable of be-ing construed alone. It is only if this is possible that we can proceed to consider whether the word “banking” used in the paragraph is capable of standing by itself, whether, in the context, it stands by itself, and if it does, whether there should be any resort to the eiusdem generis rule to find out its meaning from the general words “or other fiscal meas-ures” assuming, of course, that it is possible to apply that rule in reverse.

The provisions of section 7(1) are as follows:– “7(1) The Federal Revenue Court shall have and exercise jurisdic-

tion in civil causes and matters (a) relating to the revenue of the Government of the Federa-

tion in which the said Government or any organ thereof or a person suing or being sued on behalf of the said Government is a party;

(b) connected with or pertaining to; (i) the taxation of companies and of other bodies es-

tablished or carrying on business in Nigeria and all other persons subject to Federal taxation,

(ii) customs and excise duties, (iii) banking, foreign exchange, currency or other fiscal

measures; (c) arising from;

(i) the operation of the Companies decree 1968 or any other enactment regulating the operation of com-panies incorporated under the Companies decree 1968;

(ii) any enactment relating to copyright, patents, de-signs, trade marks and merchandise marks;

(d) of Admiralty jurisdiction.”

If the paragraph which deals with banking is extracted from the whole of section 7(1), the paragraph will read:–

“The Federal Revenue Court shall have and exercise jurisdiction in civil causes and matters connected with or pertaining to:–

(i) the taxation of companies and of other bodies established or carrying on business in Nigeria and all other persons subject to federal taxation,


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(ii) customs and excise duties,

(iii) banking, foreign exchange, currency or other fiscal meas-ures.”

There is no doubt in my mind that the paragraph, as it stands, can alone unaided and does stand alone. The semi-colon after the word in paragraph (a) of section 7(1) and the other semi-colon after the word “measures” at the end of paragraph 7(1)(b) would appear to lend weight to this view. As is well known, a semi colon marks a longer pause and produces a more definite break in the sense than a comma.

The next question is this: does the word “banking” in this distinct separate paragraph stand alone or is it qualified by any other word or words in the paragraph? In, considering this question, it is necessary, I think to look at the provisions of sections 3(1) and 18(3) of the Interpretation Act 1 of 1964. Section 3(1) reads:–

“3(1) Punctuation forms part of an enactment, and regard shall be had to it accordingly in construing the enactment.”

The following are the provisions of section 18(3) “18(3) The word ‘or’ and the word ‘other’ shall, in any enactment

be construed disjunctively and not as implying similarity.”

Bearing the above provisions in mind, it seems to me that the use of the comma after the word “banking” and the in-sertion of the word “or” the phrase “other fiscal measures” show clearly that the intention of those who promulgated the decree is that the word “banking” as well as the word “for-eign exchange” and “currency” for that matter, should stand alone and be construed as such. It must be remembered that a comma is a punctuation mark used to separate the smaller members of a sentence. In coming to this conclusion, I am aware of section l of the Interpretation Act which provides that the Act apply to any enactment only insofar as no con-trary intention appears in the enactment in question. I can only say that I am unable to find any contrary intention in the Federal Revenue Court Decree to the above view. More-over, the title of the decree cannot be regarded as indicating



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a contrary intention because the title of an enactment cannot override the clear meaning of the enactment. The construc-tion of a statute is not limited by its title (see In the Goods of Groos (1904) page 269). As has been aptly pointed out by Lord Campbell in Willmot v. Rose (1854) 23 L.J. Q.B. 281 at page 282:–

“There is no doubt as to the construction to be put upon the words of the 11th section, though it clearly exceeds both the title and the preamble, and is a bad, though, I fear, a fair specimen of our leg-islation. We are bound to give to the section its full construction.”

Two local enactments in point are the Customary Courts Law of the Western State of Nigeria (Cap 31) and the Cus-tomary Courts Edict of the Mid Western State (No. 38 of 1966). While the title of each of these enactments would ap-pear to indicate that the customary courts established there-under deal only with actions relating to the customary law of their respective areas of jurisdiction, the section dealing with the jurisdiction of the court shows that their jurisdiction is not limited to matters of customary law. As a matter of fact, in addition to the jurisdiction conferred upon them with re-spect to the appropriate customary law, jurisdiction is also conferred on them in statutory matters as can be seen from the provisions of section 19(b), (c) and (d) of the Customary Courts Law of the Western State which states that a custom-ary court shall administer:–

“(b) the provisions of any written law which the court may be authorised to enforce by an order made under section 24;

(c) the provisions of any enactment in respect of which jurisdic-tion is conferred on the court by that enactment; and

(d) the provisions of all rules and by-laws made by a local gov-ernment council, or having effect as if so made, under the provisions of any enactment and in force in the area of juris-diction of the court.”

It would be absurd, to say the least, that because of the title of the enactment, these courts can only administer the ap-propriate customary law in force in their respective area of jurisdiction.


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Having observed that the word “banking” stands alone, the next question is whether the word, as it stands in the context, is used as a noun or as an adjective. To my mind, an indica-tion as to the sense in which the word is used will be found in the provisions of section 78(1) of the Constitution of the Federation which read:–

“78 (1) Parliament may make laws for Nigeria or any part thereof with respect to banks and banking.

(2) Nothing in this section shall preclude the legislature of a state establishing an authority for the purpose of carrying on (sub-ject to and in compliance with any Act of Parliament for the time being and in particular any Act relating to banks and banking) the business of banking in Nigeria or else where or from making such provision for the Constitution of that au-thority and regulating the performance by that authority of its functions as is consistent with any Act of Parliament.”

There can be no doubt that the word “banking” is used as a noun in the above section which clearly confers on the Fed-eral Military Government the power to legislate with respect to banking; incidentally this power by virtue of the provi-sions of Items 44 and 45 of the Exclusive Legislative List in the Schedule to the Constitution of the Federation and of Part III of the said Schedule, includes the power to provide for “the jurisdiction powers, practice and procedure of courts of law” established to carry out the provisions of any enact-ment passed by virtue of that power. As no Federal Courts have been established until now, that, I think, is why it is provided in section 3 of the Regional Courts (Federal Juris-diction) Act as follows:–

“Where by the law of a Region jurisdiction is conferred upon a High Court or a magistrate’s court for the hearing and determination of civil causes relating to matters with respect to which the legislature of the Region may make laws, and of appeals arising out of such causes, the court shall, except insofar as other provision is made by any law in force in the region, have the like jurisdiction with re-spect to the hearing and determination of civil causes relating to matters within the exclusive legislative competence of the federal legislature, and of appeal arising out of such causes.”



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It seems that the above jurisdiction, insofar as it relates to the matters enumerated in section 7 of the decree, has now been withdrawn from those courts because it is now pro-vided in section 63(4) of the decree that, for the avoidance of doubt, the Regional Courts (Federal Jurisdiction) Act (and other specified enactments not relevant to the case in hand) shall be construed with such modifications as may be neces-sary to bring them into conformity with the provisions of the decree.

A close look at the judgment of the learned trial Judge also shows that, he himself assumed that the word “banking” is used as a noun in the decree. In their respective submissions before us, both Chief Williams and the learned Attorney–General have also expressed the view that the word is used as a noun and not as an adjective. Having regard to the rele-vant provisions of the Constitution referred to above and to the context in which the word is used in section 7(1)(b)(iii) of the decree, I would like to make my own respectful con-tribution to this exercise in semantics and say that the word “banking” is used in the section as a noun and not as an ad-jective. As a matter of fact, the word “currency,” (except for the phrase “currency note” which is a term of art and is used to denote the current money of a country in actual use), is also used as a noun. The word is never used as an adjective; the adjective is the word “current” and when used with re-spect to money, such as “current money,” means money in general use as a medium of exchange. It therefore stands to reason that the word “banking” is used in the context as a noun.

If it is used as a noun, it must be construed as such and can have no connection or relationship with the word “meas-ures” qualified by the word “fiscal” at the end of the para-graph.

Now, having, formed the view that the word “banking” stands alone, I am also of the view that the word is used in its natural sense and is in no way used as a term of art. What


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then is the meaning to be given to the word in the context in which it is used, and should it be given a special and restric-tive meaning as has been done by the learned trial Judge? In this connection reference may be made to the rule of con-struction as has been aptly expressed in Maxwell on Inter-pretation of Statutes (11ed) at page 4.

The rule, based on a number of decided cases on the point, reads:–

“The rule of construction is to intend the legislature to have meant what they have actually expressed. It matters not, in such a case, what the consequence may be. Where, by the use of clear and un-equivocal language capable of only one meaning, anything is en-acted by the legislature, it must be enforced, even though it be absurd or mischievous. The underlying principle is that the mean-ing and intention of a statute must be collected from the plain and unambiguous expression used therein rather than from any no-tions which may be entertained by the court as to what is just or expedient. The words cannot be construed, contrary to their meaning, as embracing or excluding cases merely because no good reason appears why they should be excluded or embraced. However unjust, arbitrary or inconvenient the meaning conveyed may be, it must receive its full effect. When once the meaning is plain, it is not the province of a court to scan its wisdom or its policy. Its duty is not to make the law reasonable, but to expound it as it stands, according to the real sense of the words.”

What the courts have been advised not to do is precisely what the learned trial Judge has done in the court below and what we are now being asked to do in this Court. To my mind, the words “the Federal Revenue Court shall have and exercise jurisdiction in civil causes and matters. . . con-nected with or pertaining to. . . banking” are plain and clear enough and should have been given their ordinary meaning. In giving the word “banking” a special meaning and limiting to banking transactions which relate to the revenue of the Federal Government of Nigeria, the learned trial Judge seemed to have overlooked what was said by Lord Herschell in Bank of England v. Vagliano Brothers [1891] A.C. (H.C.)



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107 at pages 144-145 that the correct course when interpret-ing a statute is:–

“in the first instance to examine the language of the statute and to ask what is its natural meaning, uninfluenced by any considera-tions derived from the previous state of the law, and not to start with inquiring how the law previously stood, and then, assuming that it was probably intended to leave it unaltered, to see if the words of the enactment will bear an interpretation in conformity with this view.”

With this observation in mind, I would interpret “banking” in its ordinary sense and hold that the expression is wide enough to embrace every transaction coming within the le-gitimate business of a banker. The nature of the claim in the case in hand shows clearly that the transaction which formed the basis of it is that of banking. The learned trial Judge is also of the same view. It will be recalled that in the course of his judgment he said that he had “no difficulty whatsoever in coming to the view that the transaction in the case was a banking transaction.” As all that we are concerned with is the meaning of the word “banking” and as I have formed the view that the word stands alone, I am also of the view that the eiusdem generis rule does not apply.

Assuming, without conceding, that the rule does apply, I will now proceed to consider the scope of the rule with re-spect to the case in hand. The rule stemmed from a rule laid down by Lord Bacon that copulatio verborum indicat accep-tationem in codum sensu – the coupling of words together shows that they are to be understood in the same sense. Thus, where particular words used in a statute have some common characteristic which constitutes them a genus, and the general words (following the enumeration of the specific words) can be properly regarded as in the nature of a sweep-ing clause designed to guard against accidental omissions, then the rule of eiusdem generis will apply, and the general words will be restricted to things of the same nature as those which have been mentioned already. They take as it were, their colour from each other, the more general taking the


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colour of the specific words. The absence of a common ge-nus between the enumerated words will not, however, pre-vent the application of the rule. In all cases where the rule is applied, it is the general words which take the colour of the specific words. It is never the other way round. Thus in In re: Wellstead Will Trusts (1949) Ch. 296, Cohen LJ, in construing the provisions of section 28(1) of the Law of Property Act, 1925, aptly observed at page 318 of the judg-ment that he had never heard before of “an inverse applica-tion of the eiusdem generis rule.” The same view is ex-pressed in the Indian case of Amarasigiah v. State of Rajas-tan (1955) A.I.R. (S.C.) 504 at page 523 where the court ob-served as follows:–

“We do not base this conclusion on the ground put forward by Mr Achhru Ram that the word ‘jagir’ in article 31A should be read eiusdem generis with ‘other similar grants’ because the true scope of the rule of eiusdem generis is that words of a general nature following specific and particular words should be construed as limited to things which are of the same nature as those specified and not its reverse that specific words which precede are con-trolled by the general words which follow.”

Applying this principle to which I have referred, it seems to me that the general words “other fiscal measures” used in the paragraph can only take their colour from the particular word “banking” and cannot restrict or limit the meaning of the particular word. On the contrary, it is the word “bank-ing” which limits the meaning of the words “other fiscal measures” to measures relating to financial matters con-cerned with banking. For the same reason, the word “bank-ing” cannot, in my view, be limited either to banking trans-action to which the Government of the Federation is a party, or to matters relating to statutory provisions applicable to banking or revenue matters.

Another case in point, to which Chief Williams has re-ferred us, is that of Nasr v. Bouari (1969) N.M.L.R. 39. In that case, this Court had to construe the words “living or sleeping or other lawful purposes” in section 1(4) of Rent



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Control (Lagos) Amendment Act, 1965. The subsection reads:–

“(4) Premises’ for the purpose of this section, and where used elsewhere in this Act or any enactment amended by this Act unless the context otherwise requires, means a building of any description occupied or used by persons for living or sleeping or other lawful purposes, as the case may be, whether or not at any time it is also occupied or used under any tenancy as a shop or a store, and the expression in-cludes any room or other part of a building of not less than one hundred square feet of floor space separately let or sub-let as the case may be, for any such purpose.”

After observing that the court must lean against treating the words “or other lawful purpose” as surplusage or tautolo-gous and should give effect to the words of the subsection if it was possible so to do, the court held at page 42 as fol-lows:–

“The result, in our view, is that the appellants have discharged the onus of showing that section 1(4) of the Act discloses an inten-tion of applying the eiusdem generis principle as only by so doing can we give effect to that section as a whole. Accordingly the words ‘or of purposes’ must be construed as lawful purposes similar to ‘living or sleeping’ and use as a night club is not a similar use.”

In that case, the court, in effect, held that the general words which follows the words “living or sleeping” take their col-our from those particular words and should be construed ac-cordingly. If a similar course is followed in the case in hand, as the learned trial Judge could have done, it will be found that the phrase “or other fiscal measures” will take its colour from the words “banking, foreign exchange, currency” and not the other way around. Moreover, unlike the case in hand where the word “banking,” because of the use of the comma after it, stands alone, none of the words “living or sleeping or other lawful purposes” used in section 4(1) of the Act could be said to stand alone. Because of the word “for” which precedes the words “living” in the section, the words “living or sleeping,” unlike “banking,” clearly qualify the


Fatayi-Williams JSC


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word “purposes.” In spite of this, the court nevertheless, held that the eiusdem generis rule applies and that those general words which follow must be construed as being similar to the words “living or sleeping.” In view of the dis-tinction which I have drawn above, that case is, neverthe-less, no authority for saying that the eiusdem generis rule applies to the words used in section 7(1)(b)(iii) of the de-cree.

There is one other point. The provisions of section 33 of the decree to my mind, show a clear distinction between causes and matter relating to revenue referred to in para-graph (a) of section 7(1) of the decree and other causes and matters referred to in paragraphs (b), (c) and (d) of the same section. The provisions of section 33 are as follows:–

“33 (1) As far as practicable all revenue causes or matters shall notwithstanding anything to the contrary in any enactment or law be tried determined or disposed of in priority to any other business of the Federal Revenue Court.

(2) In this section, ‘revenue causes or matters’ means causes or matters concerned with, involving or pertaining to the revenue of the Government of the Federation in respect of which jurisdiction is conferred upon the Federal Revenue Court by or under the provisions of this decree.”

If the jurisdiction of the Federal Revenue Court as provided for in section 7 of the decree is limited only to matters per-taining to the revenue of the Government of the Federation as found by the learned trial Judge, then the above section can only be interpreted to mean that practically every case com-ing before the court must be given priority. This, of course, would be absurd because; if almost every case coming before the court is given priority, there would be hardly any case left to take second place and the whole purpose of the section would have been defeated. In short, the section would be completely superfluous. In my view it is not. The section pro-vides that all revenue causes or matters in respect of which jurisdiction is conferred on the Federal Revenue Court by virtue of the provisions of paragraph (a) of section 7(1)



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of the decree shall have priority over all other causes or mat-ters in respect of which jurisdiction is conferred by virtue of the provisions of paragraphs (b), (c) and (d) of the same sec-tion.

Therefore, whichever way one looks at it, it seems to me that, under section 7 of the decree, the Federal Revenue Court has jurisdiction not only in civil causes and matters relating to the revenue of the Government of the Federation, but also in other civil causes and matters such as those con-nected with or pertaining to the business of banking simplic-iter which formed the basis of the case in hand.

Having held that the Federal Revenue Court has jurisdic-tion in the matter, it follows that the High Court of Lagos, or any other state for that matter, ceases to have jurisdiction over such matters with effect from the date on which the court assumed its functions. In this connection, I refer to section 8(1) of the decree which read:–

“8 (1) In so far as jurisdiction is conferred upon the Federal Revenue Court in respect of the causes or matters men-tioned in the foregoing provisions of this Part, the High Court or any other court of a state shall, to the extent that jurisdiction is so conferred upon the Federal Revenue Court, cease to have jurisdiction in relation to such causes or matters.”

As regards the fear, expressed during the course of the ar-guments before us, that the Federal Revenue Court will be inundated with small claims by banks against their custom-ers or that the action may be taken in an area where there is no resident Judge of the Federal Revenue Court, the remedy for such an eventuality will be found in the provisions of sections 8(2) and 26 of the decree. The two sections read:–

“8 (2) Notwithstanding section (1) above, the Head of the Federal Military Government may by order and to the extent set out in the said order vest in the High Court or any other court of a state, Federal jurisdiction either generally in re-lation to the causes and matters set out in the preceding section or specially in relation to any particular cause or matter which may be specified in the said order.


Fatayi-Williams JSC


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. . .

26. Where in the opinion of a Judge of the Federal Revenue Court any cause or matter before him is such as will be heard and determined or disposed of more expeditiously by a magistrate’s court the Judge of the Federal Revenue Court may, subject to the provisions of this decree, at his discretion order that such cause or matter be heard and de-termined by a magistrate’s court exercising jurisdiction in the state in which the cause of action pertaining thereto arose, in accordance with rules of court made under sec-tion 43 below, and the magistrate’s court shall have juris-diction for the hearing and determination of such cause or matter and may exercise powers in relation thereto (within the limits of its general powers) as if original jurisdiction had been conferred upon it of this decree.”

In any case, as Lord Birkenhead has once pointed out in Sut-ters v. Briggs (1922) 1 App. Cas. 1 at page 8, where the le-gal issues are not open doubt, such as the case in hand, the duty of the court is to express a decision and leave the rem-edy (if one can be resolved upon) to others.

Similar views were expressed by Lord Reid in Inland Revenue Commissioners v. Hinchy [1960] AC (HL) 748 at 767 when he said:–

“But we can only take the intention of Parliament from the words which they have used in the Act, and therefore the question is whether these words are capable of a more limited construction. If not, then we must apply them as they stand, however unreason-able or unjust the consequences, and however strongly we may suspect that this was not the real intention of Parliament.”

Therefore, even if the eiusdem generis rule applies, (and I am still of the view that it does not), the learned trial Judge by not interpreting the word “banking” as it stands and giv-ing its colour to the words “other fiscal measures” is, in my view, still in error in holding that the jurisdiction of the High Court of Lagos is ousted only in respect of banking transac-tions which relate to revenue matters. In these circum-stances, I do not see how I can allow the ruling of the learned trial Judge to stand.



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With all diffidence, it is for all these reasons that I find myself unable to subscribe to the majority judgment just de-livered in this appeal. I would, therefore, allow the appeal and set aside the ruling of the learned trial Judge in Suit No. L.D. 970/73, delivered in the Lagos High Court on 25th Oc-tober, 1973, and order that the plaintiffs’ claim be struck out for want of jurisdiction.

Appeal dismissed by a Majority of 2:1.


Irosogie v. Standard Bank Nigeria Limited 515

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Irosogie v. Standard Bank Nigeria Limited


ADEBIYI J

Date of Judgment: 1 APRIL 1974 Suit No: L.D. 580/70

Banking – Banker and customer – Negligence of bank in paying cheque from a third parties other than payee – Li-ability of bank – Protection afforded bank by section 60, Bills of Exchange Act (Cap 21)

Facts

The plaintiff was a transporter and having done some work for the U.S.A.I.D. was entitled to pay £662.10. He did a later job and when the cheque for that job reached him from France before the cheque for the earlier job he was put on enquiry.

He went to the Chase Branch of the defendants and spoke to the manager who told him that the cheque for £662.10 had been cleared and also called in the police to look into the mat-ter. It appeared that the cheque which was sent from France by post fell into unauthorised hands before it reached the plaintiff and it was immediately presented for payment. Mrs, Aboaba, the bank cashier who paid the cheque, gave evidence for the defendants. She said that when the cheque was pre-sented for payment over the counter she asked for the man who presented it to be identified and the man came back later with someone having endorsed the cheque with a note identi-fying him which note was signed over a Central Bank stamp. She was obviously satisfied and the man having written his name and address at the back of the Cheque she sent the cheque for reference and both the reference clerk and the Ac-countant of the branch signed it authorising payment. She paid the Cheque and passed it on the day’s accounts having acted in the normal course of the bank’s business.



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The plaintiff by summons claimed from the defendant the sum of £662.10 (N1,325) being money received by the de-fendants and which the defendants have failed or refused to pay to him.

Held –

1. The man who presented and cashed the cheque was not the plaintiff and he acted fraudulently. On the evidence before the court, the bank Cashier acted in the ordinary course of the bank’s business.

2. By section 60(1) of the Bills of Exchange Act (Cap 21), when a bill payable to order on demand is drawn on a banker, and the banker on whom it is drawn pays the bill in good faith and in the ordinary course of business, it is not incumbent on the banker to show that the endorse-ment of the payee or any consequent authority of the person whose endorsement if purport to be, and the banker is deemed to have paid the bill in due course, al-though such endorsement has been forged or made with-out anything.

In the instant case, there’s nothing dishonest in the ac-tion of the bank cashier. She acted negligently but hon-estly and the encashment of the cheque was therefore in good faith. In those circumstances, the defendants are within the provisions of section 60(1) of the Bills of Ex-change Act and cannot be liable to the plaintiff.

Claim dismissed.


Foreign

Hampstead Guardians v. Barclays Bank Ltd 39 T.L.R. 229

Nigerian statute referred to in the judgment Bill of Exchange Act, Cap 21, section 60]

Counsel

For the plaintiff: Harrison-Obafemi

For the defendants: O Ojosipe


Irosogie v. Standard Bank Nigeria Limited 517

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Judgment

ADEBIYI J: The plaintiff, by the summons, claims from the defendants the sum of £662.10 (N1,325) being money re-ceived by the defendants and which the defendants have failed or refused to pay to him.

That summons does not properly describe the claim which the plaintiff sought to make from the defendants but nothing was made of that point at the trial. The facts of the matter are really not in dispute between the parties. The plaintiff was a transporter and having done some work for the U.S.A.I.D. was entitled to pay £662.10. He did a later job and when the cheque for that job reached him from France before the cheque for the earlier job he was put on enquiry.

He went to the Chase Branch of the defendants and spoke to the manager who told him that the cheque for £662.10 had been cleared and also called in the police to look into the matter. It appeared that the cheque which was sent from France by post fell into unauthorised hands before it reached the plaintiff and it was immediately presented for payment. Mrs Aboaba, the bank cashier who paid the cheque, gave evidence for the defendants. She said that when the cheque was presented for payment over the counter she asked for the man who presented it to be identified and the man came back later with someone having endorsed the cheque with a note identifying him which note was signed over a Central Bank stamp. She was obviously satisfied and the man hav-ing written his name and address at the back of the cheque she sent the cheque for reference and both the reference clerk and the Accountant of the branch signed it authorising payment. She paid the cheque and passed it on to the day’s accounts having acted in the normal course of the bank’s business.

I am satisfied that the man who presented and cashed the cheque was not the plaintiff and that he acted fraudulently. On the evidence, I also find that Mrs Aboaba, the bank cash-ier, acted in the ordinary course of the bank’s business. Mr

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF LAGOS STATE) Adebiyi J


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Harrison-Obafemi, learned Counsel for the plaintiff, submit-ted that the evidence disclosed gross negligence in Mrs Aboaba but I can find no support for that submission. Mr Ojosipe, learned Counsel for the defendants, in his submis-sions expressed the bank’s sympathy for the plaintiff in his loss but claimed that the bank was afforded protection by sec-tion 60 of the Bill of Exchange Act (Cap 21).

Mr Harrison-Obafemi referred to Hampstead Guardians v. Barclays Bank Ltd 39 T.L.R. 229 and said that where the de-fendants were found negligent the protection from liability afforded by section 60 of the Bill of Exchange Act would be lost. That case, unfortunately, deals with a situation totally different from the one in this case. That case considered the position where a banker receives payment, for a customer, of a crossed cheque provided for here in section 2(2) of the Bills of Exchange Act, 1964. In this case I think Mr Ojosipe is right. Section 60(1) of the Bills of Exchange Act (Cap 21) provides:–

“When a bill payable to order on demand is drawn on a banker, and the banker on whom it is drawn pays the bill in good faith and in the ordinary course of business, it is not incumbent on the banker to show that the endorsement of the payee or any subse-quent authority of the person whose endorsement it purports to be and the banker is deemed to have paid the bill in due course, al-though such endorsement has been forged or made without au-thority.”

By section 73 of the Act a cheque is a bill of exchange and section 90 provides that:–

“A thing is deemed to be done in good faith, within the meaning of this Act, where it is in fact done honestly, whether it is done neg-ligently or not.”

I have said that section 60(1) does apply to the transaction here and all it remains to consider in finding if the protection it af-fords ensures for the benefit of the defendants here is whether the defendants acted honestly in the encashment of that cheque. I can find nothing dishonest in the action of Mrs Aboaba, the bank cashier, and the most Mr Harrison-Obafemi


Adebiyi J Irosogie v. Standard Bank Nigeria Limited 519

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said about her was that she was negligent. I think Mrs Aboaba was deceived by the fraudulent person who cashed the cheque and it is my view that to require banks and their cashiers to guarantee identification processes will have the undoubted effect of bringing their business to a standstill. I find that the lady acted honestly and the encashment of the cheque was therefore in good faith. In those circumstances the defendants are within the provisions of section 60(1) of the Bills of Exchange Act and cannot be held liable to the plaintiff.

The plaintiff’s action is therefore dismissed with costs as-sessed at N45.

Claim dismissed.



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Ifop v. Central Bank of Nigeria


ELIAS CJN, SOWEMIMO AND IREKEFE JJSC

Date of Judgment: 18 APRIL 1974 S.C.:78/1973

Banking – Action for recovery of money exchanged for old Nigerian currency notes to new ones – Failure to effect the exchange

Facts

The appellant claim against the respondent the money paid in old currently notes which defendant failed to exchange, the plaintiff did not call evidence but from the pleadings the money belong to the plaintiff and some others, but there was no evidence of authority by the other part of owners given to the plaintiff to demand for the money.

Held –

That in the absence of written authority given by the various part owner to the plaintiff to reclaim the value of the money in the new currency or at least the receipts which she claimed to have obtained from the people concerned, the de-fendant is entitled to refuse to return any part of the money to the plaintiff.

Appeal dismissed.


Foreign

Grocott v. Lovart and another (1916) W.N. 317 Sinclair v. Brougham [1914] A.C. 398 at 418 Symonds v. Jenkins 34 L.T. 277 Wookey v. Pole and others 106 English Reports 839 at 841

Counsel

For the appellant: Chief Williams

For the respondent: Egbe


Ifop v. Central Bank of Nigeria 521

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Judgment

ELIAS CJN: (Delivering the judgment of the court) This ap-peal against the judgment of the Ikeja High Court delivered on September 27, 1971 raises an important question of pleading. Therein, Dosunmu J non-suited the plaintiff who claimed to have made a series of payments totalling £16,350 in 1968 to the defendant in old Nigerian currency notes for exchange into new Nigerian currency notes and which the defendant had failed to exchange for the plaintiff.

The matter arose in the following manner. The plaintiff’s writ of summons reads as follows:–

“The plaintiff’s claim against the defendant is for the sum of £16,350 being money paid in 1968 by the plaintiff to the defen-dant in old Nigerian currency notes to be exchanged by the de-fendants into new Nigerian currency notes and which the defen-dant has failed to exchange for the plaintiff. In the alternative the plaintiff claims the said sum as money had and received by the defendant to the use of the plaintiff.”

In her statement of claim, the plaintiff averred, so far as relevant, as follows:–

1. The plaintiff is a Nigerian Citizen ordinarily resident in Ogoja Province of the South Eastern State of Nigeria and the defendants are a bank established and incorpo-rated by and under the Central Bank of Nigeria Act.

2. The defendants were duly charged inter alia with the following duties in 1968:–

1. To issue currency notes in the Ogoja Province of the South Eastern State of Nigeria; and

2. To exchange old Nigerian Currency notes presented at places designated by the Governor of the defen-dant bank for new Nigerian currency notes circulat-ing at the present time in all parts of the country.

3. The plaintiff made eleven payments to the proper offi-cers or representatives of the defendant bank at the ap-propriate place and within the time prescribed of sums of



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money totalling £16,355 in old Nigeria currency notes for the purpose of receiving the equivalent amount in new Nigerian currency notes.

4. Soon after the payments pleaded in paragraph 3 hereof the defendant bank withheld payment to the plaintiff of the equivalent amount new Nigerian currency pending police investigation into a report that one Esuabana had demanded and was given £1,000 as bribe by the plaintiff.

5. At the end of their investigation the police could not find enough evidence to prosecute Mr Esuabana for receiving bribe.

6. Notwithstanding the conclusion of police investigation the defendants refused to pay the sum of £16,355 to the plaintiff.

7. The defendant has purported to confiscate the said sum.

In its statement of defence, the defendant, so far as relevant, averred as follows:–

3. The plaintiff had stated to the defendant’s servants and agents, that she gave £1,000 as bribe to one Mr Esua-bana, defendant’s servant, on demand by him to effect the change into new Nigeria currency notes.

4. Further the plaintiff had stated that the £1,000 aforemen-tioned was part of the total money given her to exchange into new Nigeria currency notes.

5. The plaintiff also stated to the defendant’s servants and agents that the sum of money claimed by her in this ac-tion was owned in separate aliquot portions by different persons, each not being herself and an aliquot part owned by herself.

6. The various part-owners of the money in dispute in this action are not parties to this action as laid before the court in particular the sum claimed being a summation in gross of the separate portions presented for exchange for persons not the plaintiff.


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9. In addition a number of other deposits each of £100 and above made contemporaneously with the Federal Ex-change Teams of the defendants in the same area in dis-pute in this action were selected for investigation involv-ing an additional 3,271 depositors which investigation must be carried out pari passu with plaintiff’s case.

10. The magnitudinous and detailed exercise involved as aforementioned includes the subject of the plaintiff’s claim and has not been finalised.

11. Consequently until the conclusion of the exchange exer-cise the defendant cannot decide whether the money claimed by the plaintiff or any part thereof should be duly and rightly paid to the plaintiff by the defendant.

At the close of pleadings, Counsel for the plaintiff, on April 24, 1971 moved the court for an order striking out the state-ment on the ground that it disclosed no defence to the action and entering judgment for the plaintiff as per her writ. On April 27, 1971, the defendant prayed the court for an order enabling the defendant to amend the statement of Defence by adding thereto:–

“In the alternative the defendant denies that the sum of money claimed by the plaintiff as owned by the plaintiff nor is it due and payable by the defendant to the plaintiff. And the defendant puts the strictest proof thereof.”

In a considered ruling delivered on 7th June, 1971, Do-sunmu J granted leave to the defendant to amend its state-ment of defence so as to include the new paragraph sought to be added. With regard to the plaintiff’s motion that the statement of defence be struck out, in that it disclose no de-fence to the action, Counsel for the plaintiff argued that, apart from admissions contained in paragraphs 1 and 2 of the statement of defence nowhere else where the specific al-legations made in paragraphs 3 and 5 of the statement of claim were specifically denied or refused to be admitted. The objection of Counsel for the plaintiff to the new para-graph 12 of the amended statement of defence was that it



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was a general traverse but the learned trial Judge observed as follows:–

“In my view the new paragraph 12 of the amended statement of defence is not a general traverse as we know it in practice. I do not think that it is even a general denial as I read it over again it seems to me to deal solely with the question of title or right to the money in question as raised in paragraph 5 of the statement of de-fence. It does not purport to traverse all the allegations in the statement of claim as if they were set out seriatim and specifically traversed. In my opinion it only reinforces the plea that not only is the plaintiff owner of certain part of the money in question, but in the alternative she is not the owner of the money at all.”

The learned trial Judge then concluded:–

“Reading the defence as a whole I cannot say it is an admission of the plaintiff’s claim especially with regards to paragraphs 5 and 12 of the statement of defence vis-a-vis paragraph 3 of the claim. But I have no doubt in my mind that the defence as a whole is only a plausibly good one, and the court ought not to strike it out in that event.”

Thus the learned trial Judge rejected the submission of the learned Counsel for the plaintiff that the statement of de-fence is an implied admission of the plaintiff’s claim under Order 18, rule 13 of the English Supreme Court Rules for which he cited Symonds v. Jenkins 34 LT 277. Having thus disposed of the two motions before him, the learned trial Judge called upon the parties to commence proceedings in the case itself. Chief Williams for the plaintiffs said he did not wish to call any evidence, while Chief Okorodudu for the defendant called evidence. In his address Chief Okoro-dudu said inter alia as follows:–

“The plaintiff gave no evidence therefore nothing to resolve the facts in statement of claim and statement of defence where con-flicting Defence proved that the plaintiff admitted that she brought eleven fictitious names and claim that they are owners of the money she is claiming. This has not been denied in evidence in court. Evidence led to show that only £5,000 can be exchanged for only one person. It becomes a part of the plaintiff’s case to show that she was entitled to a receipt of more than £500.”


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Refers to paragraph 49 statement of claim to show the falsity of the plaintiff’s claim. She admitted some element of cor-ruption in the exchange transaction. (See paragraph 9 of statement of claim again.) In the light of the evidence, the plaintiff can only get for himself the sum of £500.

“No evidence that the plaintiff deposited £16,350.”

The learned trial Judge, after reviewing the pleadings on both sides and the evidence adduced by the defendant, found as follows:–

“I pause here to observe that it is, indeed, correct that this aver-ment was nowhere denied specifically in the statement of de-fence; and I am prepared to accept the submission that it is deemed to be admitted. But what I think the paragraph means is no more than what it says that the plaintiff made eleven pay-ments.

This is far from saying that the defendant admitted that the plain-tiff made eleven payments all of her own money.”

Accordingly, the learned trial Judge came to the following conclusions:–

“It seems to me, therefore, that the plea that the various part own-ers of the money in dispute are not parties to this action is a good one. There was no evidence to show that the plaintiff had any au-thority to demand the money back on behalf of all of them. She did not affect to do so.”

Thereafter, the learned Counsel for the plaintiff urged the court to reconsider its previous ruling that, on the pleadings, the matter should not be regarded as concluded in favour of the plaintiff since “all the allegations of substance in the statement of claim is deemed to be admitted.” The learned trial Judge then examined very closely a number of deci-sions and came to the following further conclusion:–

“As I said earlier there is no averment meeting this point in the de-fence. In my humble opinion the effect of paragraph 6 of the statement of defence is to say that it is true you made eleven payments but they are not all your money that you paid to us but the money of other persons. And since the payment of money by the plaintiff to the defendant will not entitle her to its return



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whether it is her money or money jointly owned with others, the matter is not concluded by admission of the payments only.”

The present appeal has been brought by the appellant against this decision on the following four grounds:–

1. The learned trial Judge erred in law in failing to enter judgment for the plaintiff when the material facts in the statement of claim have not been denied in the statement of defence.

2. The learned trial Judge erred in law in failing to observe that on the pleadings the plaintiff is entitled to get Judg-ment.

3. The learned trial Judge erred in law in holding that the plaintiff cannot succeed in this action without joining other persons who are not party to the action.

4. The learned trial Judge erred in law in failing to observe that at all material times the plaintiff was the owner of the money and that owner ship of money is inseparable from possession thereof.

In arguing the appeal, Chief Williams, learned Counsel for the appellants, submitted that there were really the following two main points for argument: (1) On the pleadings the learned Judge should have entered judgment for the plain-tiffs: (this would cover grounds 1 and 2); and (2) in any case, on the evidence and the issues raised on the pleadings (ie on the merits), the plaintiff ought to have succeeded. It was his contention that, according to the established rules of pleadings, the defendant must specifically deny any aver-ment that he does not admit. As a corollary to this, the learned Counsel submitted that a person in possession of money which he has collected from different people is enti-tled to the money against the whole world except those who gave him the money and; also that, if a person on behalf of others takes money to a third person and delivers it to such third person in his own name, he is entitled to have the money back. It was his view that, since the averment of the


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plaintiff in paragraph 3 of his statement of claim has not been specifically denied by the defendant in paragraphs 5 and 6 of his statement of defence, the plaintiff’s averment must be taken as admitted, he contended, therefore, that the learned trial Judge was wrong in putting the onus on the de-fence to prove paragraphs 5 and 6 of the statement of de-fence. Learned Counsel cited the following passage from Bullen Leake’s Precedents of Pleadings (11ed) page 664, in support of his contention:–

“The primary object of the Defence is, as we have seen, to inform the plaintiff precisely how much of the statement of claim the de-fendant admits and how much he denies. To secure this end, it is provided by rule 13 of Order 19 that:

‘Every allegation of fact in any pleading, not being a petition or a summons, if not denied specifically, or by necessary implication, or stated to be not admitted in the pleading of the opposite party, shall be taken to be admitted, by inquisition.” (The italic are ours.)

We think that this passage shows that, even if it were neces-sary to deny paragraph 3 of the statement of claim, para-graphs 5, 6 and 12 of the statement of defence might be taken as a denial by “necessary implication,” if not expressly. learned Counsel also referred us to the White Book (1973) at page 290, paragraphs 18/13/3 concerning the issue of implied admissions, contending that the defendant’s failure specifi-cally to deny the averment in paragraph 3 of the statement of claim must be deemed to be an implied admission of that averment. We do not agree with these submissions for the reasons which we shall be stating anon. On the second issue suggested by him, namely the argument on the merits, learned Counsel submitted that, whatever the rules are as re-gards other chattels or goods, in the case of money, posses-sion and ownership are inseparable, he cited Sinclair v. Brougham [1914] AC 398, at page 418 and Wookey v. Pole and others 106 English Reports 839, at page 841, as author-ity for the proposition that the person who is found to be in possession of a bill of exchange is deemed to be the owner of the money or money’s worth.



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That this second submission of appellant’s Counsel should not apply in the present case was well brought out in the submission of Mr Egbe, learned Counsel for the respondent, who contended that Wookey v. Pole and others [1814 – 1823] All E.R. 553 at page 555 rather supports the view that possession may be inseparable from ownership only in the case of an innocent possessor, and not in the case of a pos-sessor in respect of whom fraud had been established. He cited, in particular, the following passage of the same case, at page 555:–

“We also know that bills of exchange are as frequently sold as they are delivered in payment. It is the business of bill brokers to negotiate these sales. The great point is that they are not like goods taken on the credit of the person from whom you receive them, but on that of government. The receiver never inquires from whom they come further than to satisfy himself that they are genuine bills. Indeed, when they are in blank, he has no means of ascertaining from whom they come. How could the defendants in this case find out that this bill has ever belonged to the plaintiff?”

As regards the first submission by learned Counsel for the appellant, Mr Egbe pointed out that the rule of practice also requires that the plaintiff should either have produced a let-ter giving her authority to reclaim the value of the money in the new currency or at least the receipts which she stated she had obtained from the eight persons whom she produced be-fore the defendant’s official investigators as the owners of the moneys she had paid in eleven instalments.

We think that the contention of the learned Counsel for the appellant that the failure of the defendant specifically to deny the averment in paragraph 3 of the statement of claim amounts to an implied admission on the part of the defendant is only a “plausibly good one.” Thus in Grocott v. Lovart and another (1916) W.N. 317 where, in an action for libel, para-graph 3 of statement of claim alleged that “on or about 25th May, 1915, the defendants falsely and maliciously wrote, printed and published” of the plaintiff a handbill containing-the words complained of, while paragraph of the statement


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of defence was that “the defendants deny the facts alleged in paragraph 3 of the statement of claim,” the learned trial Judge (Avery J) held that paragraph 1 of the defence was not a denial of the publication of the handbill. On appeal, the Court of Appeal ordered a new trial, holding that, although the defence was pleaded in a loose and irregular form. Avery J was wrong in treating the case as one in which the defen-dants had admitted publication.

The rule of pleading only requires the defendant to deny specifically what is clearly stated by the plaintiff in the statement of claim. Now, what does paragraph 3 of the statement of claim really aver? The paragraph, which it may be useful to repeat here, reads as follows:–

“The plaintiff made eleven payment to the proper officers or rep-resentatives of the defendant bank at the appropriate place and within the time prescribed of sums of money totalling £16,350 in old Nigerian currency notes for the purpose of receiving the equivalent amount in new Nigerian currency notes.”

A close look at the paragraph will show clearly that it con-tains only an averment on the part of the plaintiff that she paid a total of £16,350 on different dates for the exchange of old for new Nigerian currency notes. It does not assert, and cannot be read as asserting, that the plaintiff was the owner of any of the several moneys paid. At most, the paragraph only claims that the plaintiff was the payer of the moneys, not that she was their owner. So that, when the defendant tried to deal with this point in its statement of defence in paragraphs 5 and 6, it is unnecessary for the defendant spe-cifically to deny that the plaintiff was owner, even when the defendant must be taken to have impliedly admitted, in ac-cordance with the rules of pleading, that the several pay-ments were made to it by the plaintiff. It is, therefore, abso-lutely unnecessary for the defendant to make a specific de-nial in respect of ownership of moneys, which was never averred by the plaintiff in her statement of Claim. What the defendant admitted was the fact of payment, not any implied



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suggestion that plaintiff was owner, a point nowhere made by the plaintiff herself in her pleadings. Only in the course of her Counsel’s address did the plaintiff make the claim of ownership for the first time and, as there was nothing in the pleading on this point, such an assertion goes to no issue; this is all the more so because the plaintiff did not give any evidence at all.

We are, accordingly, of the opinion that the defendant has admitted having received the several payments averred in paragraph 3 of the statement of claim, but that the defendant has not admitted, either expressly or by necessary implica-tion, that the plaintiff was the owner of any of the payments. We are also of the view that, in the absence of authority from the eight persons she alleged to have handed for the several moneys which she later paid to the defendant, the defendant was right to have refused to return any part of the £16,350 to the plaintiff. It is clear that the payer of money into a bank is not necessarily the owner. A person in posses-sion of money such as currency notes may be either its owner or a bailee of it. Where, as in this case, he or she is a bailee of it, although she has the legal right to possess it, she has only the right to protect such possession as against third parties but is not the true owner. The true owners is the bailor of the currency notes, who has parted with them only for the limited purpose of exchange through the defendant’s bank. Even if it is granted that, as in the present case, the plaintiff pays into the bank several old currency notes, the money in the hands of the defendant is impressed with an implied trust in favour of the eight persons on whose behalf the plaintiff alleged she had paid them in; and nothing short of clear authority from these several persons should entitle the defendant to repay not only the old currency notes handed in but also the currency notes for which they were intended for the purpose of exchange. It may be of some im-portance to note that what the plaintiff was really reclaiming was not the old currency notes in specie, but new currency notes the property of the Central Bank of Nigeria which


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should be given absolute discretion in deciding whether or not and to whom a repayment should be made. It seems to us that the transaction is not a simple, straightforward case of paying money and attempting to reclaim it in whole or in part without any exchange element.

We would also like to point out that paragraph 12 of the statement of defence makes it abundantly clear that the de-fendant at no time intended to accept the plaintiff as owner of the several currency notes paid to it, and that there has never been any implied admission on the part of the defen-dant that the plaintiff was entitled to reclaim the money.

It does not seem to us right to omit to mention a matter of some importance in this case. There can be no doubt that the pleadings of the defendant were inexpertly drafted, thus leaving room for reasonable doubt as to whether or not there has been a specific denial of important averments in the statement of claim, especially in respect of the question whether or not ownership in the money was also admitted along with the fact of payment by the plaintiff. We think that, even though the statement of claim does not contain any specific averment as to ownership of the moneys paid to the defendants so that the latter should have been hard put to it to make equally specific denial, the drafting of para-graphs 5, 6, 10 and 12 could have been clearer and more ex-actly worded so as to bring out the principal issue in contro-versy, namely, the ownership of the old Nigerian currency notes paid into the bank in exchange for new Nigerian cur-rency notes. It was only because the plaintiff could not es-tablish his personal ownership of the money that the defen-dant, rightly in our view, refused to pay her unless and until she produced the authority of the eight persons on whose behalf she said she had paid in the several moneys. It is our view that such an important point should have been made specifically part of the statement of defence. Such an omis-sion, however, is, as we hold, not fatal to the defendant’s case, though it would certainly have strengthened it.

Another point of even less importance, however, is that, instead of making a great play with the fact that there was a



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definite regulation limiting acceptable deposits into the bank to £5,000 per person, Counsel for the defendant only made a passing reference to it in the course of his final address be-fore the trial court. It is little wonder that the learned trial Judge made only an equally casual reference to this point in his judgment. To counter the argument that was canvassed at one stage during the proceedings that the plaintiff was at least entitled to an aliquot part of the eleven instalments which might be deemed to belong to her personally, a sub-mission on the part of Counsel for the defence that such an aliquot part would in any case have been greater in amount that the maximum of £5,000 allowed to each person would have served as an effective answer to defeat any claim by the plaintiff on that score.

We have, however, held that there was no specific aver-ment as to the ownership of the moneys in question in the statement of claim, to which the statement of defence is re-quired to make a specific denial in accordance with the rules of pleading. In the result, for the various reasons we have given, we uphold the judgment of Dosunmu J in Suit No. L.D. 679/70 delivered at the Ikeja High Court on 27th Sep-tember, 1971, including the order as to costs. We award to the appellant costs assessed at N72 in this Court.

Appeal dismissed.


Olekanma v. Njoku 533

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Olekanma v. Njoku

HIGH COURT OF EAST-CENTRAL STATE

ANIAGOLU J

Date of Judgment: 29 APRIL 1974 Suit No.: HU/2A/73

Banking – Pledge – Borrowing money in currency not legal tender as declared by law – Whether the pledgee could re-tain the property pledged

Facts

The plaintiff claimed from the defendant general damages for trespass to a piece of land. The plaintiff had borrowed some money from the defendant and pledged a piece of land. The money was paid in Biafran currency. The plaintiff thereafter attempted to refund the money borrowed by pay-ing the defendant in Biafran currency. The defendant refused and contended that the Biafran currency was not a legal ten-der. The plaintiff contended that having rejected the money the defendant has waived his right to possession of the land and the land reverted to the plaintiff. The trial Magistrate dismissed the plaintiff’s action, plaintiff appeal to the High Court.

Held –

1. In the context of Nigeria, the possession of the Biafran currency is illegal. It follows that the defendant gave the plaintiff worthless pieces of paper. The plaintiff had therefore granted possession of his land to the defendant upon a purported pledge which was without considera-tion.

Appeal allowed.


Nigerian

Ebiassah v. Ababio (1946) 12 W.A.C.A. 106



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Independence Brewery Ltd (Golden Guinea Breveries Ltd) v. Uttah S.C. 61/73 Jones v. Chapman (1847) 2 Exch. 803 Lows v. Telford and Another [1876] 1 A.C. 414 Nwankwo v. Okoronkwo (1972) 2 E.C.S.L.R. 96 Okpiri v. Jonah (1961) 1 All N.L.R. 102

Foreign Ebiassah v. Ababio (1946) 12 W.A.C.A. 106 Lows v. Telford [1876] 1 A.C. 414

Counsel

For the appellant: Igwe

For the defendant: Chianakwalam

Judgment ANIAGOLU J: This appeal raises an intriguing legal point but it may not be necessary any more to go into the com-plexities of the law on the point having regard to the latest decisions of the Supreme Court in respect of the defunct re-gime of Biafra. But before going into those decisions and their bearing upon this case, let us set out the facts placed before the Acting Chief Magistrate, R. Difu-Nzeribe, Esq., as disclosed on the record.

The plaintiff claimed from the defendant a sum of £50 general damages for trespass to a piece and parcel of land known as “Uzo Umuihi” situate at Ogbodiukwu Umuopara in the Umuahia Magisterial District. The evidence of the plaintiff, which was uncontradicted (since the defendant did not give evidence) was to the effect that in 1969, he bor-rowed £40 in Biafran currency from the defendant and pledged the land in dispute to him. He was the owner, and was making use of the land in dispute before he pledged it. After the pledge the defendant went into possession. The plaintiff did not attempt to redeem the land until 20th Febru-ary, 1970, when he took £40 in Biafran currency to the de-fendant seeking to redeem the land. The defendant refused to accept the money insisting that he should be paid £40 in


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Nigerian currency. The plaintiff warned the defendant not to enter the land any more since he had refused to accept the £40 in Biafran currency. The defendant, in spite of the warn-ing, entered the land and farmed it in 1970. He again farmed it in 1971. The defendant continued possessing and making use of the land, whereupon the plaintiff in February, 1971, took out the writ in this case against him. The plaintiff swore that in February, 1970, people were still buying and selling with the Biafran currency in Umuahia area and that it was only in April, 1970, that information came around that Bia-fran currency was no longer a legal tender and that people should surrender any of the currency in their possession. In February, 1970, he used Biafran money for his purchases.

The plaintiff tendered a receipt which he gave to the de-fendant for the £40 Biafran currency given to him by the de-fendant. An objection was raised under section 57 of the Stamp Duties Act on the ground that it was not properly stamped. The objection was upheld by the trial magistrate and the receipt rejected. There was however no dispute be-tween the parties that the plaintiff in fact borrowed the £40 from the defendant and pledged the land in dispute to him.

At the close of the case for the plaintiff, Counsel for the defendant, Mr Chianakwalam, made a submission of no case and elected to give evidence if overruled. He contended that the defendant was legally in possession of the land in dis-pute since it was lawfully pledged to him by the plaintiff and that being in possession, the plaintiff could not sue him in trespass until he (the plaintiff) re-entered. He submitted, and asked the court to take judicial notice of the fact, that Biafra ceased to exist on January 15, 1970, and that by February, 1970, when the plaintiff tendered the £40 Biafran notes to the defendant the said notes were not legal tender. He there-fore asked the court to dismiss the action. In reply, Mr On-yekwelu, who appeared for the plaintiff, asked the court to take judicial notice that Biafran money was in use in Febru-ary 1970; that as soon as the defendant refused to accept the

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF EAST-CENTRAL STATE) Aniagolu J


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redemption money tendered to him, “he waived his posses-sion of the land and the land reverted to the plaintiff.”

The acting Chief Magistrate gave his ruling and dismissed the plaintiff’s case with five guineas costs (or N10.50) to the defendant. The ruling is a short one and is as follows:–

“Finding – In answer to the first question put to him under cross-examination the plaintiff said and here I quote: ‘I agree that up till now I have not succeeded in redeeming the land from the de-fendant.’ This knocks the bottom off the plaintiff’s case.

Having not redeemed the land from the defendant he has not re-entered the land. There is no doubt that he has tried to redeem the land but there is an argument as to the proper currency payable at the time. This argument has not been resolved.

I will not subscribe to the view that where there is a genuine ar-gument as to the proper currency payable as in this case, the plaintiff can take a unilateral action and offer to pay in Biafran currency and when the defendant refuses to accept Biafran cur-rency the plaintiff deems himself in possession.

I agree with Counsel for the defendant that the defendant being still in possession of this land the plaintiff has no cause of action in trespass.

Action is dismissed with five guineas (or N10.50) cost.

Sgd. R. C. Nzeribe

Acting Chief Magistrate

February 15, 1972.”

The Chief Magistrate failed to rule on the essential issues whether the Biafran currency was a genuine legal currency at the time the plaintiff tendered it to the defendant. A ruling on this was necessary in order to determine whether the plaintiff had tendered the redemption fee to the defendant by the tender of the £40 Biafran notes, for, if it was found that he had properly and legally tendered the redemption fee and that it was refused by the defendant, the defendant’s refusal would have the effect of terminating his possession of the land by operation of law, rendering his continued possession a trespass. As has been stated in paragraph 1331 of the 13ed of Clerk and Lindsell on Torts:–

“The legal effect of entry by a person entitled is not in any way affected


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by the fact that another who, without title, was previously in pos-session persisted in remaining upon the land concurrently with the true owner.”

This calls to mind the passage in the judgment of Maule J in Jones v. Chapman (1847) 2 Exch. At pages 803 and 821, approved by Lord Selborne in Lows v. Telford and Another [1876] 1 A.C. at pages 414 and 426, which reads:–

“As soon as a person is entitled to possession and enters in the as-sertion of that possession . . . the law immediately vests the actual possession in the person who has so entered. If there are two per-sons in a field, each asserting that the field is his, and each doing some act in the assertion of the right of possession, and if the question is which of those two is in actual possession, I answer, the person who has the title is in actual possession and the other person is a trespasser.”

If, on the other hand, the Chief Magistrate ruled that the de-fendant was legally entitled to reject the £40 in Biafran cur-rency as being no legal tender, then his continued possession of the land would be lawful, in which case the plaintiff would not be entitled to maintain an action in trespass against him. The acting Chief Magistrate did not make this essential ruling. He simply held that he would not subscribe to the view that where there was a genuine argument as to the proper currency payable, the plaintiff could not take a unilateral action and offer to pay in Biafran currency and when the defendant refused to accept, the plaintiff consid-ered himself in possession.

The trial Chief Magistrate appeared to attach much impor-tance to an answer given by the plaintiff under cross-examination. The plaintiff had said:–

“I agree that up till now I have not succeeded in redeeming the land from the defendant.”

The Chief Magistrate held this answer to have knocked the bottom off the plaintiff’s case. The plaintiff, not having re-deemed the land from the defendant, he said, had not re-entered.



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Having not decided the issue whether the plaintiff was, or was not, in the position of a person who had redeemed the land by his tender of £40 Biafran notes, a decision which would have led him into deciding the legal status of the Bia-fran notes, the acting Chief Magistrate had dismissed the plaintiff’s case without deciding an essential issue between the parties. It goes without saying that where a court has ar-rived at its decision without considering an essential issue between the parties the decision cannot be allowed to stand: Okpiri v. Jonah (1961) 1 All N.L.R. 102.

The normal and natural thing to follow in this case would be for this Court to send the case back for rehearing before another Magistrate. I have given careful thought to this. Since, however, there is no dispute on the record that the plaintiff borrowed £40 Biafran notes from the defendant during the period of the civil war in the then Biafra and pledged the land in dispute to him; since it is not disputed that the plaintiff tendered to the defendant £40 Biafran notes in his attempt to redeem the land in February, 1970, after the collapse of Biafra in January, 1970; and since, again, it is not disputed that the defendant refused to accept the money insisting on being paid by the plaintiff with £40 in Nigerian notes, the only issue being as to the legitimacy of the tender by the plaintiff to the defendant, this legal issue would better be resolved in this Court. Accordingly, I shall proceed to de-termine that issue.

The discussion of the subject must start with the Central Bank (Currency Conversion) Decree, No. 48 of 1968 which came into effect on December 30, 1967. By subsec-tion (2)(a) and (b) of the said decree:–

“(2) It shall likewise be an offence for any person without lawful excuse:

(a) to have in his possession or under his apparent control in Nigeria, or

(b) to bring into any part of Nigeria from any other part of Nigeria, notes issued by or on behalf of a bank called or known as the Bank of Biafra, and indicating an apparent


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face value; and upon conviction the offender shall be subject to the like penalties and forfeitures as are pre-scribed in the case of offences under subsection (1) above.”

The trend of recent decisions by the Supreme Court is an af-firmation of the illegality of the Biafran regime and all its acts. I am bound by the judgments. In HU/43/66 Independ-ence Brewery Ltd (Golden Guinea Breweries Ltd) v. Uttah which came on appeal before the Supreme Court in SC 61/73, the Supreme Court set aside the judgment of the High Court because part of the proceeding was the order of the High Court of Biafra for a referee to go into the account be-tween the parties and also the Accountant/Referee’s findings which formed part of the evidence upon which the judgment of the court was arrived at. Again, in HU/53/ 66 Nwankwo v. Okoronkwo (1972) 2 E.C.S.L.R. 96 the Supreme Court or-dered a retrial because part of the record included pleadings ordered by a High Court of Biafra.

In the context of Nigeria, therefore, the possession of the £40 Biafran notes by both the plaintiff and the defendant in 1969 was illegal. The £40 in Biafran currency was not in 1966 a legal tender. Indeed, its possessions was a criminal offence. The defendant had, therefore, not given the plaintiff any money in 1969. In the context of the Nigerian law, it logically follows that the defendant gave the plaintiff worth-less pieces of paper. The plaintiff had, therefore, granted pos-session of his land to the defendant upon a purported pledge which was without consideration. The defendant was, there-fore, in possession of the land at the will of the plaintiff. In February, 1970, when the plaintiff demanded his land back, the defendant had no right to demand a payment to him of £40 in Nigerian currency and had no right to retain possession of the land when the plaintiff refused to pay him the £40 in Nigerian currency. By remaining in possession after the permission of the plaintiff had been withdrawn, the defen-dant had automatically become a trespasser, the plaintiff from then on being, in the notion of the law, in constructive



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possession of the land the possession of which had reverted to him on the withdrawal of his permission. The defendant was in the position of a person who was in possession of land with the leave and licence of the owner who could ter-minate his possession at any time. This is argument strictis-simi juris.

If, on the other hand, one was to look at the matter from the standpoint of principles of ethics, the defendant lent a sum of £40 in Biafran notes to the plaintiff who made valu-able use of the money in Biafra. The plaintiff, in February, 1970, tendered £40 in the same Biafran notes to the defen-dant. The evidence was that Biafran currency notes were still being used to make valuable purchases in the Umuahia area in February, 1970. Having received £40 in Biafran notes from the defendant and returned £40 in Biafran notes to him at a time when the money was still practically in use, the plaintiff had discharged to the defendant any moral obli-gations which he might have owed him in respect of the transaction. This of course, is not a legal argument but merely a practical approach to the problem.

Under any view of the case – whether from legal or practi-cal standpoint the defendant was not entitled to continue his possession of the land in dispute in May, 1970 when, ac-cording to the writ of summons, he was alleged to have bro-ken and entered the land in dispute with his servants and agents and cleared it, cultivating thereon his crops. The plaintiff, as the undisputed owner of the land was in con-structive possession of the land in May, 1970 by the cesser, before that date, of the defendant’s right to possession. The principle recognised in Ebiassah v. Ababio (1946) 12 W.A.C.A. 106 that under native law and custom a mort-gagee in possession was legally liable to be ejected as soon as the mortgage debt had been paid, would apply equally to a pledgee in possession to whom the pledged debt had been tendered. In Ebiassah’s case, the land mortgaged by the re-spondents’ ancestors to the appellants’ ancestors had been in


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the appellants’ possession for sixty years. The Court, never-theless, held that the respondents’ rights over the land mort-gaged subsisted in spite of the length of time and that the re-spondents were entitled to recover the land as soon as they paid the mortgage debt. The English law principle of fore-closure appears not to have any room in native customary law mortgage transaction except insofar as a mortgagor could sell his interest in the mortgaged land to the mort-gagee thus foreclosing the mortgage. The rule is: once a mortgage or a pledge, always a mortgage or a pledge in na-tive customary law.

By reason of the foregoing, this appeal deserves to succeed and succeeds. The judgment of the acting Chief Magistrate, including the costs awarded, is hereby set aside. Having re-gard to the view taken by the court of the position of the law the plaintiff must succeed in his action for damages for tres-pass. Since damages are always in issue, however, each side is entitled to lead evidence on the issue of damages. Accord-ingly, it is hereby ordered that this case be sent back to the Chief Magistrates’ Court, Umuahia with this order:–

“(i) That judgment be entered for the plaintiff on the trespass action.

(ii) That the Chief Magistrate should hear evidence from the parties, if they adduce evidence, on the issue of damages with a view to his assessing and awarding damages to the plaintiff; and

(iii) That he should award, in his discretion, costs to the plain-tiff.”

The plaintiff/appellant is entitled to the cost of this appeal which having regard to the seven naira cost of record, four naira seventy kobo cost of filing notice and grounds of ap-peal (total eleven naira seventy kobo) and the appearance of Counsel, I assess at 21 naira.

Appeal allowed.

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Imarsel Chemical Company Limited v. National Bank of

Nigeria Limited

HIGH COURT OF EAST-CENTRAL STATE

OKAGBUE J

Date of Judgment: 1 MAY 1974

Banking – Negligent misstatement of bank manager – Li-ability of bank therefore – Scope and extent of liability

Facts

The defendant was a bank and one of its customers was a company known as Downtown Pharmaceuticals and Labora-tories (hereinafter referred to as “Downtown”) carrying on business at Enugu. Sometime in June, 1970 Downtown ap-plied to the plaintiff for credit facilities and when they ap-plied they agreed to settle all outstanding accounts within 28 days failing which they would pay interest at 10% per month until the debt was paid either as a judgment debt or other-wise.

On the plaintiff’s insistence on a reference from their bankers, Downtown produced a letter from the manager of the defendant’s branch at Enugu which stated that Down-town was one of its good customers at the branch and that the company was credit-worthy to the amount of £1,500.

It was proved to the court that the statements of the man-ager of the defendant’s Enugu Branch were untrue and that at the material time Downtown could not be said to be a good customer of the defendant bank.

Held –

1. A person exercising a profession or calling is liable for failing to exercise due care and skill, despite the absence of contractual relationship, if the person to whom the careless advice or information is given is relying on him


Imarsel Chemical Company Ltd v. National Bank of Nigeria Ltd 543

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to take the care required in the circumstances, such reli-ance being reasonable, and he knows or ought to know that he is being relied on. In the instant case there was no doubt that the defendant’s branch manager knew that the plaintiff would place reliance on his statement and that the statement was negligent.

2. In the instant case, the Enugu branch manager as the rep-resentative of the defendant in Enugu acted within his actual, usual or ostensible authority, therefore the defen-dant was vicariously liable for his negligent acts.



Foreign

Hedley Byrne and Co Ltd v. Heller and Partners Ltd [1964] A.C. 465 Lloyd v. Grace, Smith and Co [1912] A.C. 716

Appearances not stated.

Judgment

OKAGBUE J: In this suit the plaintiff, Imarsel Chemical Co Limited, is suing the defendant, the National Bank of Nigeria Limited, for the sum of £1,469.2s.3d being special damages for loss caused by negligent misstatement of the defendant, its servants or agents and for interest on the aforesaid sum.

The facts of the case are not in dispute. The defendant is a bank and had as one of its customers a company known as Downtown Pharmaceuticals and Laboratories (hereinafter referred to as “Downtown”) carrying on business at Enugu.

Sometime in June, 1970 Downtown applied to the plaintiff for credit facilities and when they applied they agreed to set-tle all outstanding accounts within 28 days failing which they would pay interest at 10% per month until the debt was paid either as a judgment debt or otherwise.

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On the plaintiff’s insistence on a reference from their bankers, Downtown produced a letter from the manager of the defendant’s branch at Enugu which stated that Down-town was one of its good customers at the branch and that the company was credit worthy to the amount of £1,500.

It was proved to the court that the statements of the man-ager of the defendant’s Enugu branch were untrue and that at the material time Downtown could not be said to be a good customer of the defendant.

Two questions are immediately posed. In the first place can the defendant be made liable for the negligent misstate-ments of the manager of its Enugu branch? I do not think there can be any doubt about that.

The Enugu branch manager was the representative of the defendant in Enugu and while he was acting within his ac-tual, usual or ostensible authority the defendant was vicari-ously liable for his negligent acts: see Lloyd v. Grace, Smith and Co (2).

The next question that arises, and that in my view is the crux of this action, can be formulated as follows: Did the de-fendant’s manager know or ought he to have known that the plaintiff would place reliance on his negligent statements and if so is the defendant liable?

To answer this question we must take a close look at the catalogue of torts commonly associated with the notion of negligence. In general the courts have insisted that a duty of care reasonably well defined must exist. It is however diffi-cult to escape the view that the circumstances in which such a duty arises are infinitely various.

The history of the law of tort being part of the common law, is peculiarly associated with the forms of action at common law and involves the question of their inelasticity together with the extent to which they continue to govern liability. Novelty is not a common defence because usually the facts complained of fall within an existing form of liability


Okagbue J

Imarsel Chemical Company Ltd v. National Bank of Nigeria Ltd 545

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and there is a tendency to frame a cause of action within well recognised limits. Quite often however the problem does arise and it then presents singular difficulty.

In Hedley Byrne and Co Ltd v. Heller and Partners Ltd (1), bankers honestly gave a satisfactory reference regarding A Co to B Co to which A Co owed money. The reference was negligently given and as a result B Co gave A Co fur-ther credit and suffered damage when A Co did not pay. The bankers were financing A Co when they gave the reference and it was given through B Co’s bank. The Court of Appeal, in affirming the decision of McNair, J, held that in the ab-sence of a special relationship between a bank and a person to whom a reference is given, the bank owes no duty of care in giving a reference regarding its customers. The plaintiffs took the case to the House of Lords where it was held that a person exercising a profession or calling is liable for failing to exercise due care and skill, despite the absence of contrac-tual relationship, if the person to whom the careless advice or information is given is relying on him to take the care re-quired in the circumstances, such reliance being reasonable, and he knows or ought to know that he is being relied on.

In the instant case there can be no doubt that the defen-dant’s branch manager knew that the plaintiff would place reliance on his statement. I find as a fact that he did, and that the statements were negligent. On the authority of Hedley Byrne and Co Ltd v. Heller and Partners Ltd (1) I hold that the plaintiff’s claim succeeds.

I shall therefore enter judgment in favour of the plaintiff in terms of its writ.




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African Continental Bank Limited v Kembi and another


ADEFARASIN CJ


Banking – Security for banker’s advances – Guarantee of – Where banker obtains judgment against customer – Judg-ment not executed before his death – Whether guarantor can be sued on the same debt

Guaranteeship – Contract of guarantee – Enforcement of – Whether judgment creditor required to make demand on the personal representatives of deceased debtor before suing the guarantor

Facts

The plaintiff claimed from the defendants the sum of N1,000 with interest at the rate of 10% per annum upon the guarantee of the defendants dated 19th May, 1972 to the limit of N1,000. The plaintiff stated that the principal debtor, the late TB Ogunbiyi failed to pay the debit balance on his account and that judgment was against him for £834.9s.7d on 13th November, 1972. However, the judgment debt was not paid before his death. The plaintiff later informed the defendants of the default of the deceased judgment debtor and requested the defendants to liquidate the debt in accordance with the Deed of Guarantee executed by them. In the contract of guar-antee, the defendants unconditionally undertook to pay the plaintiff on demand the debt owed by the deceased debtor. When the defendants refused to pay the debt, the plaintiff in-stituted the present action against them to recover the amount guaranteed. However, the defendants contended that since the plaintiff had obtained judgment against the deceased debtor, it was barred from instituting another action against them on the same debt. They also requested the personal representatives


African Continental Bank Limited v. Kembi and another 547

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of the deceased judgment debtor to pay the judgment debt. The court rejected the contentions of the defendants.

Held –

1. That there is no basis for the defendants’ contention that the judgment obtained against the deceased debtor barred the plaintiff from instituting the present action against the defendants because, the defendants became liable when the deceased failed to pay the debt.

2. There is no need for the plaintiff to have first demanded payment of the indebtedness from the personal represen-tatives of the deceased debtor in view of the fact that immediately the principal debtor defaulted, the liability of the surety arose.



Foreign

Barber v. Mackrell (1892), 68 L.T. 29; 41 W.R. 341 Belford Union Guardians v. Pattison (1856) II Exch. 623, 156 E.R. 980 Carter v. White (1883), 25 Ch.D 666; [1881 – 1885] All E.R. Rep 291 In re: Young and Harston’s Contract (1885) 31 Ch.D. 168; 53 L.T. 837

Counsel

For the plaintiff: Odibe

For the defendants: Osunkoya

Judgment

ADEFARASIN CJ: This is a bank’s claim for N1,000 with interest at the rate of 10% per annum upon the guarantee of the defendants dated May 19th, 1972 to the limit of N1,000.

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF LAGOS STATE) Adefarasin CJ


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In its statement of claim the bank pleaded that the principal debtor, the late T.B. Ogunbiyi, failed to pay the debit bal-ance on his account and that judgment was obtained against him for £834.9s.7d on November 13th, 1972 in Suit No. L.D. 1077/72, together with interest at the rate of 10% per annum from August 1st, 1972 to November 13th, 1972 and thereafter at the rate of 5% until the judgment debt and 60 guineas costs were paid; that the principal judgment debtor died after the judgment in question; that by letter dated May 26th, 1972 the plaintiff had warned the defendants of the de-fault of the late principal debtor and that a demand would be made on them; that the plaintiff demanded from the defen-dants payment of the indebtedness by letter dated October 24th, 1973; and that despite repeated demands the defen-dants have neglected to pay. In their statement of defence the defendants pleaded that by the judgment in Suit No. L.D. 1077/72 the plaintiff is barred from instituting another action on the same debt. They also pleaded that the plaintiff had not at any time demanded from the administrators or execu-tors or relatives of the deceased the amount now claimed and they would at the trial move for the case to be struck out.

At the trial Mr Oshunkoya, learned Counsel for the defen-dants, admitted all the facts pleaded in the statement of claim and stated that he had instructions to say that the de-fendants had signed the deed of guarantee and that he was prepared to argue the legal issues involved. For his part Mr Odibe for the plaintiff admitted the pleading in paragraph 4 of the statement of defence by which the defendants averred that no demand was made upon the personal representatives of the deceased.

The issue for decision is a very simple one; it is whether the defendants are bound by the terms of their guarantee which is annexed to the statement of claim notwithstanding that no demand was made by the plaintiff upon the personal representatives of the deceased principal party. The deed of


Adefarasin CJ

African Continental Bank Limited v. Kembi and another 549

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guarantee was executed by both defendants in terms in which the defences which they now raise cannot stand. They agreed:–

“to pay and satisfy to the bank on demand all and every sum and sums of money which are now or shall at any time be owing to the bank anywhere on any account whatsoever whether from the Principal solely or from the Principal jointly with any other per-son or persons or from any firm in which the Principal may be a partner including the amount of notes or bills discounted or paid and other loans, credits or advances made to or for the accommo-dation or at the request either of the Principal solely or jointly or of any such firm aforesaid or for any moneys for which the Prin-cipal may be liable as surety or in any other way whatsoever to-gether with in all the cases aforesaid all interest discount and other bankers’ charges including legal charges occasioned by or incident to this or any other security held by or offered to the bank for the same indebtedness or by or to the enforcement of any such security.”

They also agreed that the guarantee:–

“shall be in addition to and shall not be in any way prejudiced or affected by any collateral or other security now or hereafter held by the bank for all or any part of the moneys hereby guaranteed nor shall such collateral or other security or any lien to which the bank may be otherwise entitled or the liability of any person or persons not parties hereto for all or any part of the moneys hereby secured be in any wise prejudiced or affected by this present se-curity. And the bank shall have full power at its discretion to give time for payment to or make any other arrangement with any such other person or persons without prejudice to this present guarantee or the liability of us or any of us hereunder. And all moneys received by the bank from me, us or any of us, or the Principal or any person or persons liable to pay the same may be applied by the bank to any account or item of account or to any transaction to which the same may be applicable.”

At paragraph 2 of page 2 of the deed, the defendants stipu-lated as follows:–

“Any admission or acknowledgment in writing by the Principal or any person on behalf of the Principal of the amount of the indebted-ness of the Principal or otherwise in relation to the subject-matter

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF LAGOS STATE) Adefarasin CJ


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of this guarantee or any judgment or award obtained by the bank against the Principal or proof by the bank in bankruptcy or com-panies winding-up which is admitted or entries in the books of the bank or any statement of account furnished by the bank and signed by any officer of the bank shall be binding and conclusive on the undersigned and my our respective estate(s) and effects in all courts of justice and elsewhere.”

On the face of this guarantee I do not see how the defen-dants can deny liability to the plaintiff. When, as in this case, the principal debtor had made the default, the liability of the surety arose. Therefore the defendants became liable when the deceased failed to pay the debt even after judg-ment had been obtained against him: see Belford Union Guardians v. Pattison (2); see also Barber v. Mackrell (1), (per Lindley L.J., 68 L.T. at 31; 41 W.R. at 343), and In re: Young and Harston’s Contract (4). Notice of the principal debtors’ default need not be given to the guarantor and he is liable without being requested to pay: see Carter v. White (3).

I do not see the need for the plaintiff to have demanded payment of the indebtedness from the personal representa-tives of the deceased principal party. The law as to survival of causes of action by or against the representatives of de-ceased person remains substantially unaltered in actions upon a guarantee. The fact that the personal representatives of the deceased were not called upon to pay does not bar the right of the plaintiff to claim against the defendants as guar-antors. There is no basis for the defendant’s contention that the judgment obtained against the deceased principal party barred the plaintiff from instituting the present action against the defendants.

There is no defence to the action, and I enter judgment for the plaintiff against the defendants jointly and severally for N1,000 with interest at the rate of 10% per annum from Oc-tober 24th, 1974 until this date. I award costs of N100 against the defendants.


[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF KADUNA STATE)

Alabi v. Standard Bank of Nigeria Limited 551

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Alabi v. Standard Bank of Nigeria Limited

HIGH COURT OF KADUNA STATE

WHEELER ACTING SPJ

Date of Judgment: 14 NOVEMBER 1974 N.C.H.: /40/74

Banking – Banker’s lien – Banker exercising lien on cus-tomer’s bank balance

Banking – Endorsement of “effect uncleared” – Whether li-bellous

Contract – Breach of contract – Customer’s account shows enough credit to meet cheque presented – Banker exercising lien on customer’s money not reflected in the account – Whether refusal to honour cheque amounts to breach of con-tract

Tort – Negligence – Remoteness of damage

Facts

The plaintiff’s cheque for N45 issued to a pools agents for stakes in betting pools was endorsed by the bank “effect un-cleared” and dishonoured. At the time of the endorsement, the plaintiff had N58 to his credit in his account and also N100 cheque lodged in this current account though not cleared. However, the bank contended that the plaintiff had N104 which the bank did not reflect in the plaintiff’s ac-count. The plaintiff contended that if the cheque had been honoured, he would have won a large amount of money, and lost as a result of defendant’s negligence, he was entitled to the money he could have won in the pools if the cheque had been honoured. He also complained that the bank negli-gently debited his account with N20 which the bank admit-ted, but contended that this was immaterial to the claim of the plaintiff.



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Held –

1. That a banker is entitled to retain a credit balance in a customer’s account against a debt due to the banker from the customer, that is, the bank is justified in dishonour-ing the cheque.

2. Since the defendant bank did not know and cannot be imputed to be aware of the purpose for which the cheque was issued, they could not be liable for loss, which did not flow naturally from the contract and which was not reasonably within the contemplation of the parties.

3. Except in cases where the customer of the bank is a trader to the knowledge of the banker, in which case loss will be presumed, the plaintiff will be entitled to nominal damages for wrongful refusal to honour a cheque unless actual injury to credit was proved. In the instant case the plaintiff did not prove that he was a trading customer neither did he prove a real or special injury to his credit, hence he could only be entitled to damages if at all.

4. That the words “effects uncleared” were not reasonably capable of defamatory means.

Claim dismissed.


Nigeria

Swiss-Nigerian Wooden Industries Ltd v. Bogo (1970) A.L.R. 423

Foreign

Flach v. London and SW Bank Ltd (1915) 1 T.L.R. 334 Gibbons v. Westminster Bank Ltd (1939) 2 K.B. 882 Hadley v. Baxendale (1854) 9 Ex. 341 Konfas v. C Czarnikow Ltd (1969) A.C. 350 Matthew v. Osborne 13 C.B. 919 E.R. 138/1965 Misa v. Currie and others [1876] 1 A.C. 554 Pluncett and others v. Barclays Bank Ltd (1936) 2 K.B. 107



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Pyke v. Hiberian Bank Ltd (1950) 1.R. 193 (Volume 32 English and Empire Digest page 88)

Rolsburghs v. Cox (1881) 17 Ch.D. 520 Stirling v. Barclays Bank Ltd (1930) Times July 18

Counsel

For the plaintiff: Aderomi

For the defendants: Aluko-Olokun

Judgment

WHEELER ACTING SPJ: On October 26, 1973 a football pools agent by the name of Prince Akeem presented a cheque for N45 in his favour drawn by Ibrahim Alabi, the plaintiff on his account at the Yakubu Gowon Way, Kaduna branch of the Standard Bank of Nigeria Limited (“the bank”). The cheque issued, according to the plaintiff to cover the cost of the plaintiff’s intended stake in betting pools on football matches to be played the following week-end was endorsed “effects uncleared” and not paid.

The plaintiff says if his entries had been submitted by Prince Akeem, which they were not, he would have won N57,926 on the pools. In this action he claims that sum from the bank together with N20,000 as damages for libel.

The plaintiff’s case on his pleadings falls under three heads. First, he pleads that the bank were in breach of con-tract and so cost him this substantial loss in not paying the cheque as he had sufficient funds in his account to meet it when it was presented. Secondly, and in the alternative to that case, he pleads that the bank on October 12, 1973 had negligently debited his account with a cheque drawn by a M. Abdulmumuni and, notwithstanding that the plaintiff had pointed this out to them, had negligently failed to adjust it as a result of which he had lost the pool winnings in question. Finally and quite separately, he pleads that the endorsement on the cheque “effects uncleared” libelled him as portraying him as having no money in any account, as a rogue and trickster fond of obtaining credit by fraud and as a person unworthy of transacting business with.

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF KADUNA STATE) Wheeler Acting SPJ


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The bank, in their statement of defence, do not deny that the cheque in question was endorsed “effects uncleared” and returned unpaid on October 26, 1973, but they deny they had any knowledge of the purpose for which the cheque had been issued or of the person to whom it was issued other than it was a Prince Akeem. They deny that there were funds in the account to cover the cheque at the time as there was an Ilesha cheque uncleared against which the plaintiff was not entitled to draw and there was also a debt of N100 due by the plaintiff to the bank by way of costs awarded the de-fendants in another action in the High Court. They deny, too, that the admittedly wrong debit of the cheque was material or that it was brought to the notice of the bank. And they deny that the endorsement “effects uncleared” were defama-tory or capable of the meanings attributed to them by the plaintiff. Finally, they plead that the claims cannot be main-tained as being against public policy and as constituting claims for sums which the plaintiff could not in any event have recovered from the pool betting firms concerned as their arrangements were binding in honour only.

It is at once apparent that a very important issue arising on the pleadings is the true state of the plaintiff’s account on October 26, 1973. According to the evidence of the plaintiff, his account had ample funds to cover the cheque, it was N58 in credit, a sum which he was aware at the time did not take account of the lodgment of a cheque for N100 on October 16, 1973 which had not been cleared by October 26. But it did include a sum of N20 which he had pointed out to an of-ficer of the bank on October 16 had been wrongly debited to his account. The plaintiff said he was not told before Octo-ber 26 that costs of N100 awarded against him in the bank’s favour in certain legal proceedings had been debited to his account and that that had never been shown in his statement of account. The evidence of Samuel Familusi, the officer of the bank who had instructed that the cheque should not be paid and had endorsed it “effects uncleared,” and the only


Wheeler Acting SPJ


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witness for the bank was that while the plaintiff’s account appeared to be N58.50 in credit on October 26, 1973, it was “not in funds” taking into account the fact that the bank had been awarded costs of N104 against the plaintiff in legal proceedings, and he had consequently refused to pay the cheque and endorsed it “effects uncleared” bearing in mind the lodgment of the cheque of N100 which had not been cleared by the date in question.

What really emerges therefore is that the facts with regard to the plaintiff’s funds with the bank are not really in dis-pute; what is in dispute is the legal effect of these facts, and in particular, whether the bank was entitled in the circum-stances to refuse payment of the cheque. If they were, the plaintiff’s case substantially collapses and it is the defen-dant’s main defence that they were. Mr Ariori’s submission on their behalf is that the defendants had a banker’s lien or right of setoff with regard to the legal costs which operated without any notice to the customer and the effect of which was there were inadequate funds to meet the cheque. The answer of Mr Adewumi for the plaintiff is that although the defendants may have had a lien or right of set-off as regards those costs, that right was never exercised; and it is a fact that the plaintiff’s evidence that the costs of N104 were at no stage actually debited to his account is supported not only by the statement of account, exhibit 8 but by the evidence of the bank’s accountant that this was not done.

I think the law with regard to bankers’ liens is correctly stated as follows in Halsbury’s Laws of England (4ed) Vol-ume 3 at paragraph 78:–

“The general lien of brokers is part of the law merchant as judi-cially recognised; it connotes the right of a banker to retain the subject matter of the lien until an indebtedness of the customer is paid or discharged. It attaches to all securities deposited with a banker as a banker by a customer, or by a third party on a cus-tomer’s account, to instruments paid in for collection, and to money held to the account of a customer, unless there is an ex-press or implied contract between the banker and the customer



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which is inconsistent with the lien. In the case of money, the banker’s right is often a right of set-off; it arises only in relation to the customer’s money and does not apply to money paid in un-der a mistake of fact.”

Whether properly described as an aspect of lien or as a right of setoff, the law is well established by such cases as Rox-burghs v. Cox (1881) 17 Ch.D. 520 and Misa v. Currie and others [1876] 1 A.C. 554 that a banker is entitled to retain a credit balance in a customer’s account against a debt due to the banker from the customer; see Paget’s Law of Banking (8ed) at page 504. In other words, a banker’s lien entitles a banker to treat funds in a customer’s account as not avail-able to meet drawings. In the present case, the evidence of the bank’s accountant was that one of the reasons he refused payment of the cheque was because of the costs of N104 awarded in the bank’s favour against the plaintiff in legal proceedings then current, and I have no reason not to accept his evidence that that sum was at the material time due as costs to the bank by plaintiff (indeed that has not seriously been disputed) and that was a reason he refused payment of the cheque.

I think this was a valid reason. The position in law being that a banker is entitled to retain a credit balance in a cus-tomer’s account against a debt due to the banker I do not ac-cept, as Mr Adewumi has asked me to accept, that it was necessary for the bank to physically debit the plaintiffs ac-count with the amount of the costs, although it would have been reasonable and prudent for the bank to have done so and to also have first informed the plaintiff that they were about to do so.

Certainly therefore the bank in this case took a risk for it appears they left the plaintiff in the position of never having been given to understand, or even to suspect, that he had N104 less than he thought in the bank available for drawing against. In the circumstances it seems to me that a case could have been advanced on the plaintiff’s behalf in this


Wheeler Acting SPJ


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trial that the bank were estopped from denying that funds which were apparently available for drawing against in his current account were not in fact so available. Such a case, however, has not been advanced and has not been pleaded by the plaintiff, and estoppel must always be pleaded: Mat-thew v. Osborne 13 C.B. 919 E.R 1965. Consequently I say no more about it.

Upon the basis that the plaintiff’s account reflected a credit balance of N58.50 on October 26, 1973 when his cheque for N45 was presented by Prince Akeem, and it is important to note that that is the evidence of both the plaintiff and the bank’s accountant, it follows that taking into consideration the right of the bank to retain that credit balance against the plaintiff’s indebtedness to them in respect of the costs of N104, the bank were entitled to refuse payment of the cheque presented by Prince Akeem.

In the circumstances that it is common ground that the plaintiff’s account showed a credit balance of N58.50 on October 26, 1973, it is not of course strictly relevant to con-sider if the Ilesha cheque for N100 lodged by the plaintiff on October 16, 1973 altered the position.

The evidence of the accountant of the bank is that this cheque had not been cleared by October 26, 1973 and that accordingly the bank were entitled in accordance with nor-mal banking practice and the note on the face of the cover-ing lodgment slip, exhibit 16 to that effect, not to regard the funds represented by the cheque as available for drawing against on October 26, 1973. The plaintiff, as I have said, does not dispute that, and I have no reason not to accept that the bank were perfectly in order in so treating this cheque.

There remains the matter of the cheque for N20 drawn by a Mr Abdulmumuni which the plaintiff complains and the bank accepts, was wrongly debited to the plaintiff’s account on the October 12, 1973 but the fact remains as the bank pleads that this debit was quite immaterial and inconsequen-tial because even if this had not occurred, the circumstances



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being as they were the bank would still have refused pay-ment of the cheque presented by Prince Akeem.

In the result I hold that the bank dishonoured the plaintiff’s cheque with just cause and not in breach of contract and that the plaintiff’s claim for damages for breach of contract fails.

In case this action should go any further and a different view taken to that which I have just expressed, it is proper that I should briefly deal with the issue of damages on the assumption that I had found for the plaintiff on this aspect of his claim.

In the first place, the plaintiff’s claim for general and spe-cial damages for breach of contract is misconceived. In the leading Nigerian case of Swiss-Nigerian Wooden Industries Ltd v. Bogo (1970) A.L.R. 423, in the course of which the Supreme Court confirmed that the celebrated case of Hadley v. Baxendale (1854) 9 Ex. 341 is good law in Nigeria today, Coker, JSC. said at page 431 “the terms general and special damages are normally inept in the categorisation of damages for the purposes of awards in cases of breach of contract.” Secondly, I am satisfied on the evidence that the bank did not know the purpose for which the cheque was issued. The fact alone that it is endorsed on the reverse “Prince Akeem Pools” is not in my view enough to impute knowledge to the bank that the cheque was to cover stakes in football betting pools. Banks deal with a vast number of their customers’ cheques in the course of each working day, and the circum-stances must indeed be rare that a bank would be taken to know the special circumstances or indeed any circum-stances, behind the issue of any given cheque. Thirdly, it fol-lows from the fact that nothing exceptional was known to the bank regarding the cheque, that the bank would only have been liable for loss which flowed naturally from the breach of contract and was therefore presumed to have been within the contemplation of the parties, and in my opinion it would be entirely unreasonable to hold that the loss of N57,926 which the plaintiff claims he would have won with


Wheeler Acting SPJ


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his entries in three distinct football betting pools was a natu-ral and usual loss to be expected from the bank’s failure to cash the cheque. On the contrary in the language, remarka-bly relevant to this case, of Lord Upjohn in the leading mod-ern case in England dealing with damages for breach of con-tract, Konfas v. C Czarnikow Ltd [1969] 1 A.C. 350, it was “a most improbable and unlikely event, such as winning a prize on a premium bond on any given drawing” (page 425). Without hesitation, I hold that it could not have been in the reasonable contemplation of both parties that such a loss as the plaintiff claims here could have resulted from the bank’s failure to cash this cheque.

What loss therefore did the plaintiff suffer if the bank had been in breach of contract in dishonouring the cheque? The nature of this type of contract is such that a breach normally results in a loss of reputation rather than a definite pecuniary loss, and as a result the law is now established that unless the customer is a trader no loss is presumed and only nomi-nal damages are awarded unless actual injury to credit is proved: Gibbons v. Westminster Bank Ltd (1939) 2 K.B. 882.

The plaintiff here claims to have been a trading customer; he says he was originally a photographer in government ser-vice but that he has been in business since 1967 as a trader in photographic materials and, more recently, as a hotel op-erator as well.

On the other hand, the evidence of the bank’s accountant is that the plaintiff’s account was a private account and that he and the bank only knew him as a government photographer and not as a trading customer. This evidence of the account-ant is not only supported by the plaintiff’s a signature card with the bank, exhibit 12, which describes the plaintiff as an “official photographer” but by an examination of the plain-tiff’s statement of account, exhibit T, which is headed M. Ibrahim Lawal Alabi, 3 Ogbomosho Road, Kaduna. Al-though I do not overlook the fact that the offending cheque, exhibit 5, is endorsed on the back, “Issued by I. L. Alabi,



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Managing Director, A.U.P.,” this is not consistent with the documentary evidence I have mentioned and could con-ceivably have been written, after the cheque had been re-turned unpaid, in contemplation of this action. The position is therefore, that I accept and prefer the evidence of the ac-countant on this point, and I hold that the plaintiff was not a trading customer as such.

I find too upon the evidence that the plaintiff has not proved any real injury to his credit.

For the reasons I have given, if I had found the bank were in breach of contract in dishonouring this cheque, I would have awarded the plaintiff nominal damages of N20.

Another label under which the plaintiff claims is negli-gence. His case in this regard on the pleadings, and he is of course bound by that case, is that the bank was negligent in wrongly debiting his account with M Abdulmumuni’s cheque for N20 and indeed the accountant of the bank frankly admitted this in evidence. But the bank pleaded, and I have already given my reasons for holding, that in the cir-cumstances of this case this was wholly immaterial because even if it had not happened the bank would still have de-clined, and properly declined, to pay this cheque. In other words this seems to me a case of injuria sine damno as this negligent act of the bank caused no form of harm to the plaintiff.

In my judgment, therefore, the bank’s defence to the action in negligence succeeds upon the facts as I have found them, not because the bank was not in breach of the duty of care they owed the plaintiff as their customer, but because the breach of that duty did not result in any damage to the plain-tiff.

There remains the plaintiff’s claim for damages for libel on the basis that the words “effects uncleared,” endorsed by the bank on the cheque in question when they refused payment, defamed him.


Wheeler Acting SPJ


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The first thing that strikes me about this aspect of the case is that the bank have not pleaded justification, that is to say that the statement was true. Their defence is that the words “effects uncleared” are not defamatory or capable of having the meaning which the plaintiff would attribute to them, and it is in light of that defence that this part of the case falls for consideration.

The next thing I note is that no case has been cited to me in which a court has had to construe the words in question en-dorsed by a bank on the cheque of their customer when re-fusing payment, and I can find none in the books.

It seems to me that the legend “effects uncleared” in their ordinary connotation denote that at the time the cheque was presented there were not sufficient funds available for draw-ing against in the customer’s accounts merely because a cheque or cheques credited to the account had not at that moment in time been cleared. My own view is that it is not reasonably possible to regard those words as reflecting upon the solvency or upon the integrity of the customer or as oth-erwise tending to lower him in the minds of right-thinking people generally.

The plaintiff has chosen to put his case extremely high as a glance at the innuendoes which he has pleaded, show. I can say at once, however, that in my opinion the words “effects uncleared” are not reasonably capable of being construed as meaning that the drawer of the cheque had “no money in any account” with his bankers, that he “always issues fake cheques, that he was a rogue and trickster, fond of obtaining credit by fraud,” or, finally, that he was “a person not wor-thy of transacting any business with.”

I am strengthened in the view which I have formed with regard to the interpretation of the words “effects uncleared” by the fact that judicial opinion in England and Ireland is just about evenly divided on the question whether the words “Refer to Drawer, are capable of a libelous meaning or not, Flach v. London and SW Bank Ltd (1915) 31 T.L.R.334;



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Stirling v. Barclays Bank Ltd (1930) Times July, 18; Plunkett and another v. Barclays Bank Ltd (1936) E.B.107 and Pyke v. Hibernian Bank Ltd (195 0) I.R. 195 and it seems to me that the words “effects uncleared” are consid-erably less equivocal and objectionable.

Accordingly, I hold that this part of the plaintiff’s case also fails. In the result the action fails in toto and is dismissed with costs.



National Bank of Nigeria Limited v. Olatunji 563

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National Bank of Nigeria Limited v Olatunji


AGORO J

Date of Judgment: 6 DECEMBER 1974 L.D.: 1017/74

Banking – Bills of Exchange – Discharge of – “Payment in due course” – Meaning of

Banking – Bills of Exchange – How discharged – Failure of bank to produce bill discharged – Effect – Options available to the banker – Whether precluded from giving secondary evidence thereof

Banking – Bills of Exchange and cheque – Production of paid cheque by banker – Presumption raised thereby

Banking – Where banker honours cheque in excess of cus-tomers credit balance – Implication of

Banking – Where drawer draws cheque for sum in excess of his credit balance – Implication of – Whether a request for loan/overdraft

Bills of exchange – How discharged – Failure of bank to produce bill discharged – Effect

Words and phrases – “Payment in due course” – Meaning of

Facts

At the Lagos High Court the plaintiff claimed against the defendant the sum of N1,485.79 being balance of overdraft facilities granted to the defendant by the plaintiff at the de-fendant’s request. The plaintiff also claimed bank charges and interest on the said sum at the rate of 10% per annum from 1st July, 1974 until final liquidation of the entire debt or any part thereof. The defendant denied the plaintiff’s claim of his indebtedness. He admitted operating an account



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with the plaintiff but contended that the statement of account attached to the statement of claim as exhibit A was not a true copy of his account with the plaintiff. The plaintiff testified that the defendant opened the account on 6th May, 1970 and subsequently approached its Lewis Street branch manager on 3rd February, 1972 for an overdraft. On the following day the defendant drew a cheque of £600 (N1,200) and the bank effected payment which threw the defendant’s account into debit. Also, that monthly statements were usually sent to the defendant reflecting the position for which the defen-dant never complained.

The defendant in his evidence denied ever approaching the plaintiff for any overdraft or that the plaintiff granted him any loan at any time. He denied presenting cheque number 5979 for the sum of £600 (N1,200) but confirmed with-drawal of £120 (N240) on 28th February, 1972 by cheque number 5980.

Held –

1. By virtue of section 59(1) of the Bills of Exchange Act, a bill is discharged by payment in due course by or on behalf of the drawee or acceptor. In the instant case it was clear from the evidence before the court that on 4th February, 1972 cheque number 5979 for £600 drawn on the Lewis Street Branch of the plaintiff bank was paid in due course by or on behalf of the bank. The statement of account, (exhibit A) contains a debit entry in the defen-dants account. With respect to cheque number 5979 the drawee was the banker on whom it was drawn, and there was normally no acceptance. The cheque was payable on demand, and under section 2 of the Bills of Exchange Act, the holder would be the payee who was in posses-sion of the cheque or the bearer thereof. Moreover, the defendant has not given any evidence that would put the plaintiff bank outside the ambit of section 59(1) of the Bills of Exchange Act. Therefore, the plaintiff bank is entitled to protection under section 59(1) of the Bills of Exchange Act.



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2. ”Payment in due course” means payment made at or af-ter the maturity of the bill to the holder thereof in good faith and without notice that his title to the bill is defec-tive. In the instant case the plaintiff bank paid cheque number 5979 for £600 in due course for which they were protected by the Bills of Exchange Act. It was therefore proper for the plaintiff bank to debit the account of the defendant with the amount of £600 or N1,200 .

3. Where a bank fails or neglects to produce cheque paid it is still open to the bank to give secondary evidence relat-ing to the cheque under section 96(1) of the Evidence Act, Cap 62.

4. The production of a paid cheque is prima facie not evi-dence of a loan by the banker to the drawer but prima facie evidence of repayment.

5. The law is that where a cheque is drawn for a sum in ex-cess of the amount standing to the credit of the drawers current account, it is in effect a request for a loan or overdraft. In the instant case on 4th February, 1972 when cheque number 5979 for £600 was presented for payment there was a credit balance of £121.18.9d in the defendants current account at the Lewis Street, Branch of the plaintiff bank. It was clear, therefore, that on that eventful day the defendant did not have sufficient funds in his account to meet the payment of cheque number 5979; and since the plaintiff bank honoured the cheque the defendant had borrowed money or obtained overdraft from the plaintiff bank.



Foreign

Barnewell and Alderson; Pott v. Clegg (1847) 16 M. and W. 321 Cuthbert v. Roberts, Lubbock and Co (1909) 2 Ch.D. 226



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Joachimson v. Swiss Bank Corporation (1921) 3 K.B. 110 (C.A.) Kelly v. Williams (1822) 5 Ex. Ald. 815


Bill of Exchange Act, Cap 21, sections 2, 59(1), 60(1) Bill of Exchange Act, 1964, section 1 Evidence Act, Cap 62, section 96(1)

Counsel

For the plaintiff: Ayanbadejo

For the defendant: Oluyinka George

Judgment

AGORO J: The plaintiff’s claim against the defendant is for the sum of N1,485.79 being the balance of overdraft facili-ties granted to the defendant by the plaintiff at the defen-dant’s request at the National Bank of Nigeria Limited, Lewis Street Branch, Lagos. The plaintiff also claims Bank charges and Interest on the said sum of N1,485.79 at the rate of 10% per annum from 1st July, 1974 until final liquidation of the whole debt or any part thereof.

The plaintiff as banker carries on business at its Branch at No. 106/110 Lewis Street, Lagos. The defendant as cus-tomer of the plaintiff maintained a current account at the Lewis Street Branch and, the defendant had overdrawn his account with the plaintiff by the sum of N1,485.79 which is the subject matter of this claim. In the statement of defence filed on 10th September 1974, the defendant has averred that he does not owe the plaintiff the sum of N1,485.79 or any sum of money and, that the statement of account attached to the statement of claim as exhibit A was not a true copy of his account with the plaintiff bank.

At the trial of this action, oral testimony was given by a rep-resentative of the plaintiff bank, and the defendant gave evi-dence in his own behalf. Mr Frederic Olusola Akinola, an Ac-countant attached to the Lewis Street Branch of the plaintiff


Agoro J


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bank confirmed that the defendant opened a current account with the Lewis Street Branch on 6th May, 1970, and he was operating the account very well for the first two years. Ac-cording to the records the defendant approached the then manager of Lewis Street, Branch on 3rd February, 1972 for an overdraft. On the following day the defendant drew a cheque for £600 or N1,200 and the bank effected the pay-ment. The defendant’s account thereby indicated a debit bal-ance. The witness also explained that the daily operations of the defendant’s account were recorded in ledger cards kept by the bank. At the end of each month the bank would send a statement of account to each customer. The photocopies of the bank Ledger as they concern the defendant were ten-dered and admitted as exhibit A. Under cross-examination, Mr Akinola confirmed that in 1972 a branch manager could approve up to An amount of N2,000 without security. He also maintained that the defendant did not complain about the accuracy of the statements of account sent to him.

The defendant in his evidence before the court admitted that he maintained a current account with the Lewis Street Branch of the plaintiff bank and that he carried on business as Importer and Exporter. He however, denied that he ap-proached the plaintiff bank for any overdraft or that the plaintiff granted him any loan at any time. As regards the entry of £600 or N1,200 in his statement of account, the de-fendant said that he asked the branch manager, Mr Agiri to produce the cheque and he promised to call the defendant sometime. The defendant further explained that he waited for some time and then reported the matter at the Head Of-fice of the plaintiff bank. In consequence of defendant’s re-port the Chief Credit Controller sent the letter, exhibit B, to the Lewis Street branch manager with a request to sort out the matter but he did not call on the branch manager as re-quested in that letter. Under cross-examination, the defen-dant denied that he presented cheque number 5979 dated 4th February, 1972 for £600 or N1,200; but he confirmed with-drawing £120 or N240 on 28th February, 1972 by cheque number 5980.

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF LAGOS STATE) Agoro J


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Although the defendant has denied that he presented cheque number 5979 to the plaintiff bank for the payment of £600 or N1,200; it was not part of his case as stated in the statement of defence. The defendant merely averred in para-graph 6 that he was not owing the plaintiff the sum of N1,485.79 or any sum of money at any time. Be that as it may, it is clear from the evidence before the court that on 4th February, 1972 cheque number 5979 for £600 drawn on the Lewis Street Branch of the plaintiff bank was paid in due course by or on behalf of the bank. The statement of ac-count, exhibit A, which Mr Akinola confirmed that he had compared with the entries in the bank Ledgers and found correct, contains a debit entry in the defendant’s account. The plaintiff bank is thereby entitled to protection under sec-tion 59(1) of the Bills of Exchange Act, Cap 21, which reads:–

“A bill is discharged by payment in due course by or on behalf of the drawee or acceptor.

‘Payment in due course’ means payment made at or after the ma-turity of the bill to the holder in good faith and without notice that his title to the bill is defective.”

In the case of cheque No. 5979 the drawee was the banker on whom it was drawn, and there was normally no accep-tance. The cheque was payable on demand, and as defined in section 2 of the Act, Cap 21, the holder would be the payee who was in possession of the cheque or the bearer thereof. The defendant has not given any evidence that would put the plaintiff bank outside the ambit of section 59(1) of the Act. But learned Counsel for the defendant has contended that failure of the plaintiff bank to produce cheque number 5979 upon notice to produce it was fatal to their case. It seems to me that when the plaintiff bank failed or neglected to pro-duce cheque number 5979 it was open to the bank to give secondary evidence relating to the cheque as permitted un-der section 96(1)(a) of the Evidence Act, Cap 62. In any event the production of a paid cheque is prime facie not evi-dence of a loan by the banker to the drawer but prima facie


Agoro J


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evidence of a payment: Kelly v. Williams (1822) 5 Ex. Ald. 815; Barnewell and Alderson; Pott v. Clegg (1847) 16 M. and W. 321; Heison and Welsby. I have already indicated that the plaintiff bank paid cheque number 5979 for £600 in due course for which they are protected by the Bills of Ex-change Act Cap 21. Accordingly, it was proper for the plain-tiff bank to debit the account of the defendant with the amount of £600 or N1,200. See section 60(1) of the Bills of Exchange Act, Cap 21; and section 1 of the Bills of Ex-change Act, 1964.

Now, on 4th February, 1972 when the cheque number 5979 for £600 was presented for payment, there was a credit balance of £121.18.9d in the defendant’s current ac-count at the Lewis Street Branch of the plaintiff bank. It was clear, therefore, that on that eventual day the defendant did not have sufficient funds in his account to meet the payment of cheque number 5979. See Joachimson v. Swiss Bank Corporation (1921) 3 K.B. 110 (C.A.). It seems to me there-fore that when cheque number 5979 was drawn for a sum in excess of the amount standing to the credit of the defen-dant’s current account, it was in effect a request for a loan or overdraft, and since the plaintiff bank honoured the cheque the defendant had borrowed money or obtained overdraft from the plaintiff bank. See Cuthbert v. Roberts, Lubbock and Co (1909) 2 Ch.D. 226. The defendant has admitted in evidence before the court that on 28th February, 1972 he withdrew the sum of £120 or N240 on cheque number 5980 from the Lewis Street Branch of the plaintiff bank. An entry to that effect was shown as a debit to the defendant’s current account as indicated in exhibit A. And Mr Akinola has ex-plained that it was normal practice for the plaintiff bank to charge interest at the rate of 10% per annum on loans or overdrafts. He also confirmed that as at the date of the Writ of Summons the defendant had a debit balance of N1,485.79 in his current account with the Lewis Street Branch of the plaintiff bank.

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF LAGOS STATE) Agoro J


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In view of the findings already made in this judgment and having regard to the evidence of Mr Akinola which I accept in its entirety, the plaintiff is entitled to recover from the de-fendant the debit balance in his current account with the Lewis Street Branch of the plaintiff bank together with in-terest as per the Writ of Summons. I will therefore enter judgment in favour of the plaintiff and against the defendant in the sum of N1,485.79 with interest at 10% per annum from 1st July, 1974 to 6th December, 1974 and thereafter interest at 5% per annum until final liquidation of the whole debt or any part thereof. The defendant will pay the costs of these proceedings which I will now asses.

Ayanbadejo: Out-of-pocket expenses are N64.98 and we ask for N250 costs.

George: I leave the question of costs to the court.

Court: Costs to the plaintiff is assessed at N120 .


[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF NORTH-CENTRAL STATE)

Visinoni Limited & others v. National Bank of Nigeria Limited 571

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Visinoni Limited and others v National Bank of Nigeria Limited

HIGH COURT OF NORTH-CENTRAL STATE

BELLO SPJ


Banking – Overdraft – Ultra vires lending by bank manager – Effect – Dishonour of cheque justifiable by insufficient funds in an account – Mortgagee’s power of sale – Form of notice required – Mortgages – Balance of proceed of sale – Entitlement of surety thereto

Facts

The plaintiff’s company had a current account with the de-fendant bank at its Branch in Kaduna. By an agreement, the first plaintiff was permitted an overdraft of a maximum of N20,000. The said agreement was secured by a mortgage of properties belonging to the second plaintiff. On March 20th 1972 the overdraft was increased by N10,000 allowing the plaintiff to overdraw up to a maximum of N30,000. The plaintiff contended that the defendant breached the overdraft agreement by dishonouring several cheques issued by the first plaintiff. The plaintiffs claimed the sum of N273,000. The defendant admitted permitting the first overdraft facilities al-lowing the plaintiffs to overdraw up to N20,000 but denied the further increase up to N30,000 . The defendant contended that the act of its branch manager increasing the overdraft fa-cilities ultra vires its power, and that the defendant was not bound by it. The defendant further contended that the dishon-our of the plaintiff’s cheque was lawful as there was insuffi-cient funds in the accounts of the plaintiff to meet the cheques issued.

The second plaintiff on the other hand contended that as a surety of the mortgaged property that he is entitled to the re-covery of the balance of the proceed of sale of the mortgaged property and accordingly claims the sum of N55,856.70k.



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Held –

1. The general principle of the common law is that a master is liable on a contract entered into on his behalf by his servant, if the servant has the express, apparent or im-plied authority of the master to enter into such a contract. Where the servant has no authority and the contracting party is aware of that, then the contract is not binding on the master.

2. The second plaintiff had throughout the transaction known that the branch manager had no authority to grant the overdraft and had no authority to exceed the limit authorised by the head office. The second plaintiff’s knowledge is binding on the first plaintiff, since he is the managing director of the first plaintiff.

3. The defendant is justified in dishonouring the cheques of the plaintiffs when there was not a kobo in the account of the first plaintiff to meet the cheques presented ac-cordingly, the defendant is not liable for breach of the overdraft agreement.

4. It is not necessary to describe the property to be sold if the mortgagor fails to pay the principal money and inter-est before the expiry of the notice. It is sufficient to inti-mate to mortgagor that the mortgagee “shall sell the property comprised in the said mortgage or some part thereof.”

5. From the terms of the mortgage agreement the defendant knew that the second plaintiff was a surety and the owner of the property sold. It must have known that any balance of the proceeds of the sale was the entitlement of the second plaintiff. The defendant is bound in law to surrender the balance to the second plaintiff or to keep it in his account on his behalf and to deliver it to him on demand. Therefore, the defendant is liable to the second plaintiff in the sum of N55,856.70k, being the balance of the proceeds of sale of the mortgaged property.


Visinoni Limited & others v. National Bank of Nigeria Limited 573

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Claim of the first plaintiff dismissed while the second plain-tiff claim for the balance of the proceed of sale succeeds.


Foreign

AG for Ceylon v. AD Silva (1953) A.C. 462; (1953) 1 Lloyd’s Rep 563


Chitty on Contracts (23ed), paragraph 149 Encyclopaedia of Forms and Precedents (4ed) Volume 14,

pages 863-864 Halsbury’s Laws of England (3ed) Volume 27, paragraph

364 at 301

Counsel

For the plaintiffs: Vigo

For the defendant: Adewunmi

Judgment

BELLO SPJ: The plaintiffs’ claim against the defendant is for an account and for the sum of N273,000 as damages for breach of contract.

The first plaintiff is a limited liability company carrying on the business of engineering contractors while the second plaintiff is its managing director and main shareholder. The defendant is the banker to the plaintiffs.

The case for the first plaintiff is that the company has a current account with the defendant at its branch in Kaduna under an agreement permitting the first plaintiff to overdraw upon a maximum of N20,000. The overdraft agreement was secured by a mortgage of properties belonging to the second plaintiff. On March 20th, 1972, the defendant agreed to in-crease the overdraft up to a maximum of N30,000.

The first plaintiff further pleaded that on or about November 30th, 1973 the defendant without lawful cause committed

[1967 – 1975] 2 N.B.L.R. (HIGH COURT OF NORTH-CENTRAL STATE) Bello SPJ


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a breach of overdraft agreement by wrongful dishonour of several cheques issued by the first plaintiff and thereby in-flicted severe damage to the business of the first plaintiff. Paragraph 10 of the statement of claim sets out the specific losses totalling N250,193. The first plaintiff asks for this sum as specific damages.

In their answer to this claim the defendant admits permit-ting the first plaintiff to overdraw up to N20,000 under the mortgage agreement but denies having increased the over-draft to N30,000. The defendant concedes that between Au-gust and October, 1972 the defendant’s manager allowed the first plaintiff to exceed the allowed limit of N20,000 by N10,000, but contends that the act of the manager was ultra vires and the defendant was not bound by it. The defendant further pleads that the first plaintiff had always known the overdraft limit to be N20,000 and first plaintiff is estopped from denying that fact.

The defendant further denies having dishonoured the cheques of the first plaintiff and then pleads that if there was any dishonour of the said cheques it was not wrongful as the first plaintiff had exceeded the overdraft facilities and there was no sufficient fund in the account to meet the cheques. The defendant denies having caused the losses as alleged and avers that the damage, if any, is too remote.

The issues raised by this part of the claim are:

1. Was the permitted overdraft of N20,000 increased to N30,000 by the defendant or by its manager acting within the scope of his authority?

2. Upon the overwhelming evidence that the cheques of the first plaintiff were dishonoured by the defendant, were the dishonours justified in that there was no sufficient fund to meet all or any of the cheques?

3. Is the defendant liable for breach of contract, and if so, what is the measure of damages?

The case for the second plaintiff is that on January 26th, 1974,


Bello SPJ

Visinoni Ltd & others v. National Bank of Nigeria Ltd 575

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the defendant unlawfully sold the mortgage property. He claims the sum of N59,380 being the balance due to him from the proceeds of the sale, the sum of N3,600 being loss of profits and general damages.

In its defence, the defendant denies the sale to be wrongful and avers that its solicitor had made a formal demand on the plaintiffs to pay the sum and interest secured by the mort-gage and as the plaintiffs failed to comply with the demand it sold the mortgaged property in accordance with the provi-sions of the law.

Finally the plaintiffs aver that since March, 1973 the de-fendant has refused to furnish any statements of account to the plaintiffs despite repeated demands. The defendant sim-ply denies the allegation.

The issue regarding the granting of the initial overdraft is not in dispute. The terms are contained in the mortgage agreement of May 12th, 1971, exhibit 1. Under it the defen-dant granted to the first plaintiff “overdraft facilities not ex-ceeding the sum of £10,000 such that at any given time the total outstanding as overdraft . . . shall not exceed the sum of £10,000.” In November, 1971 the first plaintiff applied to the defendant for the increase of the overdraft to £20,000. It is common ground that only the head office of the defen-dant, which is situated in Lagos, has the authority to approve such an overdraft.

The evidence shows that the head office did not reply to the first plaintiff’s application for the increase, despite sev-eral reminders, until that of December 13th, 1972, exhibit 1, in which they rejected the application. The evidence relating to the conduct of the business in the overdraft account of the first plaintiff with the defendant shows that the branch man-ager of the defendant at Kaduna, where the first plaintiff has been operating the overdraft account, had been permitting the first plaintiff to exceed the overdraft limit of £10,000 from January, 1972 to November, 1972.



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It is pertinent to set out the state of the account during the aforementioned period. The closing balance for January, 1972 was £13,000 debit which exceeded the limit by £3,000; for February, 1972 it was £14,116.11s.4d exceeding the limit by £4,116.11s.4d; for April, 1972 it was £21,389.5s.8d debit ex-ceeding the limit by £11,389.5s.8d; for May, 1972 it was £21,389.5s.8d; for June, 1972 it was £21,543.9s.8d exceeding the limit by £11,543.9s.8d. The cards for April, July and Oc-tober, 1972 exhibits 4(22), 4(2) and 4(21), respectively show by their endorsements that the first plaintiff was allowed an excess of £5,000 overdraft pending the approval of head of-fice. These facts were furnished by the evidence of the first witness for the plaintiffs and the first witness for the defen-dant and supported by the ledger cards exhibits 4(1-23).

The November, 1972 account is a continuation of the Oc-tober, 1972 account. It is on the back of exhibit 4(21). Being the continuation of the October, 1972 account, the Novem-ber, 1972 account must be presumed to carry the endorse-ment for October, 1972 that the first plaintiff was allowed by the branch manager to overdraw an excess of £5,000 over the limit. There is no evidence to rebut this presumption. The defendant has not produced the December, 1972 ac-count. In his evidence the second plaintiff says the account of the first plaintiff was overdrawn by £12,000 in December, 1972 when the cheques of the first plaintiff were dishon-oured. This exceeded the permitted limit by £2,000.

It is clear from the evidence that from January, 1972 to De-cember, 1972, although the limit of the overdraft approved by the head office of the defendant was £10,000, the branch manager of the defendant at Kaduna has been consistently exceeding that limit by allowing the first plaintiff to overdraw in excess of £10,000. I accept the case for the first plaintiff that the branch manager granted to the first plaintiff an excess of £5,000 overdraft thereby upgrading the overdraft limit to £15,000 at the material time, ie, December 11th, 1972 when the first cheque of the plaintiff was dishonoured.


Bello SPJ


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The salient question now is: Is the defendant bound by the act of their manager? Mr Vigo for the plaintiff contends that the branch manager had discretion to give overdrafts to the defendant’s customers, and that there is no evidence that the plaintiffs knew the branch manager had no authority to per-mit the excess, and that the ultra vires act of the manager acting within the scope of his employment is binding upon the defendant. The case for the defence is that the manager acted outside the scope of his authority and that the plaintiff knew that and consequently the defendant is not liable. Mr Adewumi for the defendant relies on Attorney–General for Ceylon v. AD Silva (1) to support his contention.

The general principle of the common law is that a master is liable on a contract entered into on his behalf by his servant if the servant has the express, apparent or implied authority of the master to enter into such a contract. Where the servant has no authority and the other contracting party is aware of that, then the contract is not binding on the master: see Chitty on Contracts (23ed), paragraph 149 et seq, and Attor-ney–General for Ceylon v. AD Silva.

There appears to have been evidence that prior to August, 1972 branch managers of the defendant had discretionary powers to grant overdrafts and were in the habit of exceed-ing the limits of overdrafts imposed by the head office of the defendant. Since the issue of a circular of August 14th, 1972, exhibit 25, the powers of branch managers were taken away thus:–

“The board has directed that with immediate effect and on receipt of this circular, all discretionary powers to approve banking fa-cilities given to District and branch managers are withdrawn. On no account and under no circumstances should any further facility be granted to any customer without the written authority of the Head Office as advised by the general manager or the Chief Credit Officer.”

The circular of August 24th, 1972, exhibit 26, further di-rected all branch managers to refrain from exceeding the



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limits of overdrafts imposed by the head office and to take active and vigorous steps to recover all excess lending and outstanding facilities. The circular of September first, 1972, exhibit 27, permitted branch managers:–

“to grant loan and overdraft facilities to civil servants and respect-able salary earners not exceeding half of the net income credited or paid monthly into their accounts, provided such customer’s ac-counts are in credit by the end of the month on the receipts of the respective salaries in the bank.”

It is clear from the foregoing that the branch manager of the defendant had no authority to exceed the limit of the over-draft permitted to the first plaintiff under the mortgage agreement, exhibit 1. I find that from August, 1972 to De-cember, 1972 the manager acted outside his authority by granting the excess of £5,000 to the first plaintiff.

The evidence of the second plaintiff, who applied for the overdraft initially on behalf of the first plaintiff, shows that the first plaintiff knew that only the head office of the de-fendant had authority to grant the overdraft. The second plaintiff testified that the branch manager had shown him the letter, exhibit 3, conveying the approval of the £10,000 overdraft by the head office. He further testified that when he applied for the increase of £10,000 the manager wrote to Lagos and when there was no reply the manager gave him the introductory letter of March 20th, 1972, exhibit 2, in which the manager recommended to the head office to ap-prove the increase and the second plaintiff delivered the let-ter personally to the head office. The witness went on to say that there was no reply from Lagos until March, 1972, when in his presence the branch manager spoke to Lagos over the telephone and Lagos gave a temporary approval of £5,000 increase, and the first plaintiff then started to overdraw £15,000 up to the beginning of December, 1972.

I find that the second plaintiff had throughout the transac-tion known that the branch manager had no authority to grant the overdraft and had no authority to exceed the limit


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authorised by the head office. Since he is the managing di-rector of the first plaintiff, the second plaintiff’s knowledge is binding on the plaintiff. I find that the first plaintiff knew that the manager had no authority to allow the excess.

Applying the general rule that a third party cannot sue a master on a contract which he in fact knew the servant had no authority to make, I hold that the excess overdraft of £5,000 granted by the manager to the first plaintiff without the authority of the head office is not binding on the defen-dant.

I therefore accept the case for the defence that the limit of the overdraft for the first plaintiff was £10,000 when the cheques of the first plaintiff were dishonoured.

The next question is: were there sufficient funds in the ac-count of the first plaintiff to meet the cheques? The defen-dant has not produced the December, 1972 ledger account. The second plaintiff, however, testified that the account of the first plaintiff was overdrawn by £12,000 when the first cheque, for £200 of December 11th, 1972, was dishonoured on that date. He conceded that he had exceeded that £10,000 limit granted by the head office by £2,000. As the first plain-tiff had exceeded the limit, I hold that the defendant was jus-tified in dishonouring the first cheque, as there was no money to honour it.

There is no evidence that the first plaintiff made any pay-ment into the bank between December 11th and 12th, 1972. The limit of the overdraft facility and the sum overdrawn by the first plaintiff must be presumed to be £10,000 and £12,000 respectively on December 12th, 1972, when the other cheques, for £716.1s.10d, £300, £1,285, £400, £800, £500, £100 and £700, all of December 12th, 1972 were dis-honoured. I find that the first plaintiff exceeded its limit when all these cheques were presented to the bank for pay-ment and there was not a penny in the account of the first plaintiff to meet any of the cheques. I hold that the defen-dant has justified the dishonour of all the cheques.



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I find the defendant not liable for breach of the overdraft agreement. The claim of the first plaintiff in this respect will be dismissed.

I shall proceed to consider the case for the second plaintiff. His case falls into two parts. First, that the sale of his prop-erty was wrongful and secondly, a claim of N59,380 for money had and received by the defendant to his use.

The only point taken by Mr Vigo with regard to the sale of mortgaged property is that the notice given to the plaintiff as contained in exhibit 14 indicated that the defendant intended to sell number 8A and 8B Bida Road, but they sold the property situated at Kachiya Road. He contends that the no-tice was not valid for the property sold. He concedes that the public notice for the sale included the property sold but the contends that was not enough as the Conveyancing Act, 1881 provided that the notice shall be served on the mortga-gor.

Mr Vigo’s complaints relates to the form of the notice, ex-hibit 14. The form of notice to be given by the mortgagee to the mortgagor before the former exercises his power of sale is indicated in 27 Halsbury’s Laws of England, (3ed) para-graph 564 at 301 and 14; Encyclopaedia of Forms and Precedents, 4ed, at 863-864. It is not necessary to describe the property to be sold if the mortgagee fails to pay the prin-cipal money and interest before the expiry of the notice. It is sufficient to intimate to the mortgagor that the mortgage “shall sell the property comprised in the said mortgage or some part thereof.” (Encyclopaedia of Forms and Prece-dents at 864).

Exhibit 14 intimated to the mortgagors that if they failed to pay the principal and interest within the period specified in the notice, the defendant “shall proceed to exercise the right of sale under the said mortgage.” The right of sale under the mortgage, exhibit 1, included the property at Kaduna road described in Schedule A therein. In so far as the matter re-lates to the only point taken by Mr Vigo, I find that it has no


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substance. The plaintiff has failed to show the foreclosure and sale of the mortgaged property to be wrongful or unlaw-ful. This part of the claim must also fail.

The second part of the second plaintiff’s claim relates to the recovery of the balance of the proceeds of sale of the mortgaged property. The evidence shows that the property was sold for N85,000. The defendant’s principal money and interest stood at N27,443.30 at the time of the sale and the expenses for the sale were N1,700. The defendant was there-fore entitled to deduct the total sum of N29,143.30 from the proceeds thereby leaving a balance of N55,856.70.

From the terms of the mortgage agreement, exhibit 1, the defendant knew that the second plaintiff was a surety and the owner of the property sold by the defendant. It must have known that any balance of the proceeds of the sale was the entitlement of the second plaintiff. It is bound in law to surrender the balance to the second plaintiff or to keep it in his account on his behalf and to deliver it to him on demand. The evidence shows that balance in the account of the first plaintiff and a large portion of that account to wit, the sum of N49,393.96, garnisheed upon the applications of other creditors of the first plaintiff.

The defence to this claim is that the second plaintiff knew or should be presumed to know that the proceeds of the sale were paid into the account of the first plaintiff and that he acquiesced to the payment there into.

Mr Adewumi contented that the second plaintiff knew from the statements of accounts, exhibit 9(1-11), that the proceeds were credited to the account of the first plaintiff but learned Counsel conceded that the statements were supplied to the plaintiff upon the order of this Court after this suit had been filed. These statements are not therefore helpful to the de-fence.

Mr Adewumi further contends that the second plaintiff should know that the proceeds were credited to the account



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of the first plaintiff from the endorsement on the cheque dated November 18th, 1974, exhibit 8, “account garnish-eed.” The cheque was drawn by the first plaintiff on a cheque sheet 671. The evidence shows the personal account of the second plaintiff was number 671. As the cheque was signed on behalf of the first plaintiff, I find that the en-dorsement showing that the account of the first plaintiff, the drawer, was garnisheed did not sufficiently bring any knowledge to the second plaintiff that the balance of his money was credited to the account of the first plaintiff. Moreover this cheque, exhibit 8, is irrelevant to the issue since it was issued on November 18th, 1974 after this suit had been filed.

Mr Adewumi further contends that the second plaintiff should have contested the garnishee proceedings but learned Counsel concedes that the second plaintiff was not put on notice of the proceedings. As the second plaintiff was not put on notice of the garnishee proceedings and there is no evidence to show that he knew his moneys were the subject of the garnishee proceedings, it would be absurd to hold that his absence in the court to challenge the garnishee proceed-ings is tantamount to acquiescence in the crediting of his money to the account of the plaintiff.

The defendant has failed to prove that the second plaintiff acquiesced in the crediting of the proceeds of the sale to the account of the first plaintiff and has failed to prove circum-stances from which such acquiescence could be inferred.

I find the defendant liable to the second plaintiff in the sum of N55,856.70 being the balance of the proceeds of sale of the mortgage property. 1. The claim of the first plaintiff for the sum of

N250,193.20 is dismissed. 2. The claim of the second plaintiff for breach of

the mortgage agreement and N3,600 loss of mesne profits is also dismissed.

3. The claim of the second plaintiff for the bal-ance of


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the proceeds of sale succeeds and judgment shall be entered for him in the sum of N55,856.70.

It is relevant to indicate that by virtue of the letter of Sep-tember 18th, 1974, exhibit 6, the Commissioner of Revenue, North Central State appointed the defendant as the agent of the first and second plaintiffs for the purposes of the Income Tax Management Act, 1961 and informed the defendant that there is an outstanding tax liability in the Sum of N6,204.70 plus N582.26 interest. The letter did not state specifically whether this tax liability is on the first plaintiff or the second plaintiff. The defendant should therefore make enquiry to ascertain whether the tax has been paid, and if it has not been paid, to ascertain whether it is the liability of the first plaintiff or the second plaintiff, ie. Mr B. Visinoni. The de-fendant may retain sufficient money by virtue of sec-tion 29(1) of the Act out of this judgment debt to satisfy the tax liability.

Order accordingly.

[1967 – 1975] 2 N.B.L.R. (COURT OF APPEAL WESTERN STATE)


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Ashiru v. Barclays Bank of Nigeria Limited and others

COURT OF APPEAL WESTERN STATE

ESO, AKINKUGBE JJCA, FAKAYODE AGJCA

Date of Judgment: 21 MAY 1975 Appeal No: C.A.W.: 50/74

Banking – Banker/customer relationship – Security for banker’s advances – Enforcement of – Refusal by mortgagor to execute deed – Banker applying under nugatory law to have same executed – Consequence of

Jurisdiction – Immovable property outside the jurisdiction of the court – Court has jurisdiction to grant declaratory relief in respect of mortgage relating to same executed by parties resident within its jurisdiction

Practice and Procedure – Rules of court (Judgment Enforce-ment Rules) inconsistent with High Court Law – Effect of

Facts

The plaintiff/appellant was a customer of the first respon-dent bank. He enjoyed overdraft facilities with the bank, pursuant to which he deposited with the bank securities. Fur-ther, the appellant signed memoranda of deposit of deed in respect of each of the properties, undertaking at his own cost and other necessary parties to make and execute a valid legal mortgage or charge on demand in favour of the respondent or his nominees. In an earlier sit which had gone on appeal at the Supreme Court, the Supreme Court had earlier, revers-ing the decision of the High Court, ordered a specific per-formance of the above undertaking by the appellant. The above facts were not in controversy.

In addition to the above facts, the learned trial Judge found that the appellant refused to fulfil his undertaking on de-mand by the respondents after the decision and order of the


Ashiru v. Barclays Bank of Nigeria Ltd & others 585

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Supreme Court. The respondents purportedly pursuant to the provisions of rule 11 Order 10 of the High Court Rules (Cap 116) Laws of Western Nigeria sent the documents for the execution of a legal mortgage between the appellant and itself to be signed on behalf of the appellant by the Registrar and returned by registered post. The Registrar executed the legal Mortgage purportedly acting under order 10 rule 11 of the Sheriffs and Civil Process Rules. This rule in substance provides that where the within-stated circumstance arise, the Registrar is to execute a legal mortgage in the form pre-scribed in rule 13 Order VI of the same rules. This provision seems to coincide with the provision of section 22 of the High Court Law (Cap 44) Laws of Western Nigeria. The dif-ference is that the High Court Law gives the power to the court to nominate who executes such instruments in question whereas Judgment Enforcement rules specially vest the power in the Registrar. The question before the trial court was whether the Registrar had been chosen and ordered by the court in exercise of its power under section 22 High Court Law to execute the documents (exhibit D and E) he executed before he did so. The learned trial Judge held that the presumption of regularity applied to exhibit D and E and dismissed the plaintiff’s claim.

He appealed to the Court of Appeal.

Held –

1. That the mortgages (exhibits D and E) were invalid for the reason that they were executed by the Registrar of the High Court, Ijebu Ode without any order of the court directing him to do so, this was in contravention of sec-tion 22 of the High Court Law in relation to which the provision of Order 10, rule XI of the judgment (En-forcements) rules are nugatory.

2. That Order 10, rule 11 of the Judgments (Enforcements) rules is repugnant to the provision of the High Court Law as it ties down the court to appointing the Registrar and so is nugatory.



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3. That the act of the Registrar executing the mortgage pur-suant to an application under the rules of court and not the High Court Law was done under a nugatory provi-sion and so the act itself is nugatory.

4. That the declaratory relief sought by the parties resident in the jurisdiction in respect of the mortgage executed by them were actions in personam and so the High Court, Western State can adjudicate over it.

Appeal allowed with order that claim 5 of the plaintiff’s claim be dismissed.


Nigerian

Nigerian Ports Authority v. Panalpina world Transport (Ni-geria) Ltd and others (1973) 5 S.C. page 77 at 96

Foreign Cases

Baker v. Cates 2 Q.B.D. 171 Craven v. Smith (1969) L.R. Exch. 146 Deschamps v. Miller (1908) 1 Ch.D. 856 Kruse v. Johnson (1898) 2 Q.B. 91 Powell v. Mary (1946) K.B.D. 330 Strickland v. Hayes (1896) 1 Q.B.D. 290 Thomas v. Sutters (1900) 1 C.H.D. 10


Evidence Act, section 141 High Court Law, Cap 44 (Laws of Western Nigerian), sec-

tions 22, 37, 49(1), 52(2), 58 Judgment (Enforcement) Rules, Order 1, rule 12, Order 10,

rule 11, Order 6, rule 13 Sheriffs and Civil Process Act Cap, 116, section 2

Foreign statute referred to in the judgment

Judicature Act (England) of 1925, section 47



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Counsel For the appellant: Chief Williams For the first respondent: Chukura For the second respondent: Oresanya For the 3rd respondent: Somoye

Judgment

ESO JCA: (Delivering the judgment of the court) It would be necessary to state the facts which are not in controversy and the findings of the court on those in controversy to ap-preciate the background to this appeal which is essentially based on grounds of law.

It was common ground between both parties to the suit in the High Court, Ijebu Ode (Ayoola, J) that:

1. The plaintiff, Alhaji Adam Badejoko Ashiru, who is the appellant in this Court was a customer of the first re-spondent bank, Messrs. Barclays Bank of Nigeria Lim-ited and he enjoyed overdraft facilities with that bank.

2. In pursuance of these facilities, the appellant deposited with the bank two title deeds relating to two of his prop-erties as bank securities and further the appellant signed memoranda of deposit of deed in respect of each of these properties. These memoranda were admitted in evidence as exhibits H and P. Clause 2 of each stating as follows:– “I hereby undertake that I and all other necessary parties (if

any) will on demand at my own cost make and execute to you (ie to the first respondent) or your nominees a valid legal mortgage or registered Charge of or on the said hereditaments and property or any part thereof in such form and with such provisions and powers of such leasing and appointing a Re-ceiver as you may require.”

3. In an earlier suit, that is Suit No. J/18/1963, the respon-dent bank had instituted an action for specific perform-ance of the clause quoted above in the Ijebu Ode High Court. That court while ruling that the clause was valid, refused to grant the order for specific performance but awarded damages in lieu thereof.

[1967 – 1975] 2 N.B.L.R. (COURT OF APPEAL WESTERN STATE) Eso JCA


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4. On appeal by the bank to the Supreme Court, that court reversed the decision of the High Court and ordered spe-cific performance by the appellant of Clause 2 of the memoranda quoted above.

Apart from these facts which are not in controversy, the learned trial Judge found:

1. That the respondent bank made a demand on the appel-lant, after the judgment of the Supreme Court (referred to above), to execute a legal mortgage of the properties in issue as undertaken by him in Clause 2 of the memo-randum but that the appellant refused to do this.

2. The respondent/bank after this, wrote a letter to the Reg-istrar, High Court, Ijebu Ode, as follows:–

“We enclose for execution by you in accordance with the provi-sions of rule 11 of Order 10 of the High Court Rules (Cap 116) a legal mortgage with its memorial made between Adam Badejo Ashiru as Mortgagor of the one part AND Barclays Bank of Ni-geria Limited (formerly known as Barclays Bank DCO) as Mortgagee of the other part which Mr A.B. Ashiru has refused to sign.

We also enclose for signature by you on behalf of the Mortga-gor three copies of Lands Forms 1A. Please return the enclo-sures to us duly signed by registered post.

Yours faithfully,

Adedeji Okubadejo.”

3. The Registrar executed the legal mortgages (exhibits E and D) and wrote the following letter to the respondent bank:–

“I return herewith a legal mortgage with its memorial made be-tween Barclays Bank of Nigeria Limited and Mr A.B. Ashiru, together with three (3) copies of lands Forms IA all duly signed by me as requested please. Your registered letter dated 23rd January, 1970 and the subsequent reminder of 10th March, 1970 refer.

(Sgd.) I.S. Baker

Higher Registrar.”


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4. The Registrar in executing the legal, mortgages purport-edly acted under Order 10, rule 11 of the Sheriffs and Civil Process Rules which provides:–

“Where a judgment directs any deed to be executed Or any nego-tiable instrument to be endorsed, and the party ordered to exe-cute or endorse such deed or negotiable instrument shall neglect or refuse so to do, any party interested in having the same exe-cuted or endorsed may prepare a deed of endorsement of the in-strument in accordance with the terms of the judgment and ten-der the same to the court for execution, upon the proper stamp (if any is required by law) and the execution thereof by the Reg-istrar in the form pre scribed by rule 13 of Order VI shall have the same effect as the execution of endorsement thereof by the party ordered to execute.”

5. This rule cannot derogate from the provisions of sec-tion 22 of the High Court Law which provides:–

“Where any person neglects or refuses to comply with a judg-ment or order directing him to execute any conveyance, contract or other document, or to endorse any negotiable instrument, the court may, on such terms and conditions, if any, as maybe just, order that the conveyance, contract or other document shall be executed or that the negotiable instrument shall be endorsed by such person as the court may nominate for that purpose, and a conveyance, contract, document or instrument so executed or endorsed shall operate and be for all purposes as valid as if it had been executed or endorsed by the person originally directed to execute or endorse it.”

and the rule must be read in light of section 22 of the High Court law.

6. That the proper procedure to follow in this case is as fol-lows:

(1) When the party directed by the court to execute the instrument had refused, the person interested in the execution, may prepare a deed in terms of the judg-ment and tender it to the court.

(2) When the court has the deed before it (ie the court en banc (see Baker v. Cates 2 Q.B.D. 171)) it “may on such terms and conditions if any as may be just order



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that the Conveyance shall be endorsed by such per-son as the court may nominate for that purpose.” (section 22 of the High Court Law refers.)

(3) If it is the Registrar that the court so directs to exe-cute it, then he shall do so in the form prescribed in rule 13 of Order VI of the Sheriffs and Civil Process Rules. (Second limit of Order10, rule 11 refers.)

7. That the correct question was whether the Registrar had been chosen and ordered by the court in exercise of its power under section 22 of the High Court Law to exe-cute exhibits D and E before the Registrar did so.

8. That the presumption of regularity applies to exhibits D and E and it must be presumed that all essential condi-tions precedent have been fulfilled before exhibits D and E were executed.

The learned trial Judge then dismissed the plaintiffs claim.

Chief FRA Williams, learned Counsel for the appellant in this case, abandoned the original grounds of appeal which were filed and relied on the following grounds which he got leave to substitute for the original grounds:–

“1. The learned trial Judge erred in law in assuming that Or-der 10, rule 11 of the Judgments (Enforcement) rules is ca-pable of being read in light of section 20(22) of the High Court Law when:–

(a) the two provisions are clearly inconsistent in the sense that they purport to lay down somewhat different rules for the same object;

(b) Order 10, rule 11 aforesaid is accordingly null and void and of no effect.

2. The learned trial Judge misdirected himself in law and on the facts holding as follows (page 39 lines 30 et seq.):–

‘The crucial question therefore in this case is whether the Registrar had been chosen and ordered by the court in exer-cise of its power under sec-tion 20 of the High Court Law to execute exhibits D and E before he did so.’

Particulars of Misdirection (a) The first defendant did not allege in his statement of


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defence that it applied to the court. The only averment in paragraph 8 of the Defence was that he ‘applied to the Higher Registrar of the High Court of Justice Ijebu Ode Judicial Division who executed the Deed of Mort-gage.’

(b) The first defendant did not purport to have pursued any remedy under section 20(22) of the High Court Law but rather under Order 10, rule 11 of the Judgments (Enforcement) Rules.

(c) Part of the argument put forward by the learned Coun-sel for the first defendant (at page 29 lines 1 et seq.) was that ‘Order 10, rule 11 contemplates an adminis-trative action and not a judicial hearing.’

3. (1) The learned trial Judge erred in law and on the facts in failing to observe that the decree for specific perform-ance ordered by the Supreme Court in S.C. 366/62 is not in terms a judgment directing any deed, conveyance or other document to be executed.

(2) The learned trial Judge erred in law and on the facts in failing to observe that there being no judgment directing the plaintiff to execute any deed, conveyance or other document neither section 22 of the High Court Law nor (if it is valid) Order 10, rule 11 of the Judgments (En-forcement) Rules are applicable to the facts of this case.

4. The learned trial Judge misdirected himself in law in hold-ing that the presumption of regularity applies to exhibit D and E and it must be presumed that all essential conditions precedent have been fulfilled before exhibit D and E were executed and registered.

Particulars of Misdirection

(a) The question whether or not the Registrar was ap-pointed by order of court to execute exhibit D or E is a matter which is especially within the knowledge of the first defendant and accordingly the burden of proof is on the said defendant in accordance with section 141 of the Evidence Act.

(b) It is obvious that if the appellant’s reasons for declin-ing to execute exhibit D and E had been brought to the attention of the court, no order directing the Registrar to execute the documents aforesaid could have been



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made. Accordingly there is no basis for the presump-tion that the court made the order as alleged.

5. There being clear evidence before the court that one reason why the plaintiff refused or declined to sign exhibits D and E was because he had divested himself of ownership of the property at 46 Apata Street, Shomolu as per exhibit R – a fact known to the first defendant – it follows that any pur-ported execution of the deed of mortgage by the Registrar is null and void and of no effect.

6. Judgment is against the weight of evidence.”

Now, the submissions of learned Counsel on these grounds are that section 22 of the High Court Law and Order 10, rule 11 of the Sheriffs and Civil Process Rules deal with the same subject matter. If what a rule enacts is precisely what is contained in an Act, that rule is nugatory. Counsel relied, for his contention, on:

Strickland v. Hayes (1896) 1 Q.B.D. 290; Thomas v. Sutters (1900) 1 C.H.D. page 10; and Powell v. May (1946) K.B.D. page 330.

Olisa Chukura of Counsel for the first respondent Bank, for his part contended that Order 10, rule 11 of the Judgments (Enforcements) Rules is complementary to section 22 of the High Court Law. The rules, submitted learned Counsel, are not ultra vires the law. While section 22 of the High Court Law is enabling, the Sheriff rule is procedural. It is suffi-cient therefore, if the law is substantially fulfilled.

In our view, what section 22 of the High Court Law has done is to have given jurisdiction to the High Court:–

(a) to determine whether a person has neglected or re-fused to comply with a judgment or order directing him to execute conveyance, contract or other docu-ment or to endorse a negotiable instrument;

(b) in such default, to nominate in its discretion, a person to execute the conveyance, contract or other docu-ment or endorse the negotiable instrument.

So, the High Court, relying on the High Court Law, is not


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limited to appointing the Registrar of the court for the exer-cise. The discretion is not circumscribed. The Judgments (Enforcements) Rules, on the contrary, vests the power for the execution in the Registrar. Any party interested in hav-ing such document executed, following section 22 of the High Court Law, would prepare a deed in accordance with the terms of the judgment and tender the same to the court for execution. But the rule goes on and states specifically that the execution thereof shall be by the Registrar in the form prescribed by rule 13 of Order VI, and shall have the same effect as the execution or endorsement thereof by the party ordered to execute. The form in Order VI, rule 13 re-ferred to in Order X, rule 11 also mentions execution by the Registrar.

What Order X, rule 11 of the Judgments (Enforcements) rules purported to do, in our view, is to provide precisely for what section 22 of the High Court Law provides for. The Judgments (Enforcements) rules is only invoked when: (a) there is a judgment directing that a deed be executed

or negotiable instrument be endorsed; and (b) the person ordered to execute or endorse the same

neglects or refuses to comply with the order.

Section 22 of the High Court Law is also invoked when:– (a) there is a judgment or order directing a person to exe-

cute a conveyance, contract or other document or en-dorse a negotiable instrument; and

(b) the person so ordered neglects or refuses to comply with the order.

The rule does no more than to reiterate the provision of the Act. Lindley, LJ in Strickland v. Hayes (1896) 1 Q.B.D. paragraph 290 at 292 was of the view that such a rule was nugatory. In Thomas v. Sutters (1900) 1 Ch.D. page 10, the learned judge explained the view he held in Strickland v. Hayes (supra) and said that such rule (By-law) was hope-lessly bad because it dealt precisely with a matter with which Parliament had already dealt with. Goddard CJ in



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Powell v. Mary (1946) K.B.D. page 330 at 335 considered this to be a “most useful and helpful test for deciding whether a law is invalid on the ground of repugnancy.”

In this case, the Judgments (Enforcements) rules not only seeks to reiterate the provision of the Act, but does it badly by circumscribing the jurisdiction given to the court by sec-tion 22 of the High Court Law. It gives the court no discre-tion in nominating any person. The court is tied down to ap-pointing the Registrar.

We have no doubt that Order X, rule 11 is repugnant to the provision of section 22 of the High Court Law and so is nu-gatory.

Now, the respondent bank acted under Order X, rule 11 which we have declared repugnant. The letter of Adedeji Okubadejo, solicitor to the Bank, to the Registrar is clear on this point. He asked for execution by the Registrar “in ac-cordance with the provision of rule 11 of Order 10 of the High Court Rules (Cap 116).” By the words “High Court Rules (Cap 116)” he no doubt meant Judgments (Enforce-ments) Rules (Cap 116)” as the High Court Civil Procedure Rules are under Cap 44. The respondent bank never acted nor requested the Registrar to act under section 22 of the High Court Law. What the Registrar did was in pursuance of a nugatory provision and the act by itself is nugatory.

However, the learned trial Judge has introduced section 22 of the High Court Law into the matter and having done so made a finding that the crucial question in the case was whether the Registrar had been chosen and ordered by the court. It is in this regard that grounds 2 to 6 of the appeal are relevant.

Chief Williams submitted on those grounds that what the plaintiff had to prove in the trial court was paragraph 17 of his statement of claim which reads:–

“The first defendant, without notice to the plaintiff, procured the Registrar of the High Court, Ijebu Ode to execute legal mortgage of the said buildings in its favour.”


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The bank, learned Counsel submitted, applied to the Regis-trar. The bank never said it applied to the court and obtained the order of the court. Every one proceeded under the judg-ments (Enforcements) Rules which made the Registrar per-sona designata.

Counsel finally submitted that as the judgment of the Su-preme Court was declaratory, it must be followed by a summons.

Mr Olisa Chukura submitted on these grounds that the de-cree of specific performance ordered by the Supreme Court decreed that the defendant, should execute the deeds. The onus is on the appellant to prove that he obtained the docu-ment without due process of law. The judge, Counsel said, had applied the presumption of regularity.

Mr Olisa Chukura then raises the issue of jurisdiction in regard to the 3rd and 4th claims of the plaintiff which read:–

“(3) A declaratory judgment that the Deed of Mortgage regis-tered as No. 12 at page 12 in Volume 1321 in the lands Registry Lagos in respect of the property situate at 46 Apata Street, Shomolu, purported to be executed by the plaintiff at Ijebu-Ode in favour of the first defendant sometime in 1970 or thereabout is irregular, null and void and of no effect, on the grounds of (a) non est factum and or (b) that conditions precedent to the purported execution thereof were not com-plied with in law and in fact.

(4) A declaratory judgment that any sale or disposition or alienation of the property described in the said Deed of Mortgage referred to in Claim 3 above made by the first de-fendant to the third defendant on or about 6th March, 1971 is null and void and of no effect.”

The claims deal with the property at Shomolu covered by exhibit E. Learned Counsel said that the property is outside the jurisdiction of this Court and the High Court. It is not every judgment relating to land that is a judgment in rem, learned Counsel concluded.

Mr Oresanya, learned Counsel for the second respondent



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and Mr Somoye, learned Counsel for the third respondent, associated themselves with the submission of Mr Chukura.

Chief Williams on the issue of jurisdiction referred us to the decision of the Supreme Court in Nigerian Ports Author-ity v. Panalpina World Transport (Nigeria) Ltd and others (1973) 5 S.C. page 77 at 96. He submitted that title is not in issue in this case but the execution by the Registrar. Counsel then said that this issue was raised by the third respondent in the court below. He was overruled and there has been no ap-peal against the decision of the court. A High Court judg-ment is voidable not void on jurisdiction.

We will deal with the issue of jurisdiction first.

It is without doubt that the issue of jurisdiction could be raised at any stage. The complaint here is that the property, subject matter of the 3rd and 4th claims, is situated in Sho-molu, a place outside the Western State and the jurisdiction of the courts in that state.

In the case of Nigerian Ports Authority v. Panalpina World Transport (Nigeria) Ltd and others (1973) 3 S.C. page 77 to which Chief Williams has directed our attention, the Su-preme Court had the opportunity of an exhaustive examina-tion of the conflictual rule of jurisdiction of the High Court of Lagos which is the same as the jurisdiction of the High Court of Western Nigeria and the Panalpina case is equally applicable to this case.

Where the question relates to title to or the right to the pos-session of immovable property out of the jurisdiction, the High Court will have no jurisdiction: see Deschamps v. Miller (1908) 1 Ch.D. 856. This, as the Supreme Court ob-served, is based on the provisions of rule 18 in Dicey’s Con-flict of Laws. Where, however, the action is in personam, though it affects property outside the jurisdiction, the court has jurisdiction. The Supreme Court in the Panalpina case dealt exhaustively on the meaning of an action in personam. Generally, the court said “all actions which are aimed at the


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person requiring him to do or not to do or to take or not to take an action or course of conduct must be and are actions in personam.” As regards declaratory actions, the Supreme Court held:–

“The reference . . . to a declaration of title to land as being an ac-tion in personam is apt but cannot form the basis of a general theory or concept of declaratory judgments. It all depends on the type of declaration sought and the intrinsic meaning or nature of the declaration claimed may of itself determine whether the rele-vant action is one in personam or in rem.”

In the case the claims are declaration of rights in respect of a deed of mortgage and not declaration of title to land. The claims read, and we quote again:–

“(3) A declaratory judgment that the Deed of Mortgage regis-tered as No. 12 at page 12 in Volume 1321 in the Lands Registry Lagos in respect of the property situate at 46 Apata Street, Shomolu, purported to be executed by the plaintiff or on behalf of the plaintiff at Ijebu Ode in favour of the first defendants sometime in 1970 or thereabout is irregular, null and void and of no effect, on the grounds of (a) non est fac-tum and/or (b) that conditions precedent to the purported execution thereof were not complied with in law and in fact.

(4) A declaratory judgment that any sale or disposition or alienation of the property, described in the said Deed of Mortgage referred to in Claim 3 above made by the first de-fendant to the third defendant on or about 6th March, 1971 is null and void and of no effect.”

The learned author of Halsbury’s Laws of England in his 3ed, Volume 27 at paragraph 237 (page 155) describes a mortgage as implying:–

“a debt and a personal obligation by the mortgagor to pay it. If there is a covenant or bond for its payment it is a specialty debt; if not, it is a simple contract debt.”

So, the third claim is for an order in regard to a deed of mortgage executed within the jurisdiction of the court by parties who reside within that jurisdiction. The fourth claim flows from the third.

We have no doubt that the claims are not only in personam



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but such as the High Court, Western State, could adjudicate upon.

As regards the other submissions by learned Counsel, we agree with the learned trial Judge that the onus is on the plain-tiff to prove his case. But what is the plaintiffs case here?

The plaintiff has complained that it was the Registrar of the High Court that the defendant bank addressed its request to. The Registrar, as a result of that request, executed the documents in question. This, according to the plaintiff, is not proper as the law requires that the application should be made to the court and the court should nominate a person who might not necessarily be the Registrar, to execute the document. Paragraph 17 of the statement of claim reads:–

“17. The first defendant, without notice to the plaintiff procured the Registrar of the High Court, Ijebu Ode to execute legal mortgage of the said buildings in its favour.”

In proof of this paragraph, exhibits A, B and C were ten-dered. Exhibit A, addressed to the Registrar states:–

“We enclose for execution by you in accordance with the provi-sions of rule 11 of Order 10 . . . (Cap 116) a legal mortgage . . .”

This letter specifically requested the execution by the Regis-trar. The rule, relied upon in the letter, specifically refers to the Registrar as the persona designata.

Exhibit B, a reminder to exhibit A, addressed to the Regis-trar reads:–

“We refer to our letter . . . (exhibit A) enclosing original legal mortgage for signature by you . . .”

Clearly this is not a letter asking the court to nominate any person at its discretion. It is a clear request to the Registrar asking for his signature on the document. And so by ex-hibit C the Registrar complied with the request in these let-ters, signed the documents and returned them to the first de-fendant bank saying:–

“I return herewith a legal mortgage . . . duly signed by me as re-quested . . .”


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With respect, we cannot agree with the learned trial Judge when, after having section 22 of the High Court Law in mind, he said:–

“. . . it must be presumed that all essential conditions precedent have been fulfilled.”

Here the learned trial Judge meant the essential conditions required by section 22 of the High Court Law. But that Law was not even in the contemplation of the defendant bank or its Solicitor who asked that the Registrar should sign the documents, nor was it in the contemplation of the Registrar who said he signed as requested.

To our mind, the question of presumption does not arise at all. This is a case of a person asking a particular individual to execute a document thinking that the individual was the person authorised so to do. And it is a case where that indi-vidual executes the documents just as the person requesting its execution has requested.

It is for all these reasons that we hold that exhibits D and E are invalid and we hereby declare them to be so. They were executed by the Registrar of the High Court, Ijebu Ode without any order of the court directing the Registrar to do so, clearly in contravention of the provisions of section 22 of the High Court Law, in relation to which the provisions of Order 10, rule XI of the Judgments (Enforcements) rules are nugatory. Claims 1 to 4 of the plaintiff should therefore suc-ceed. The appellant has indicated he is not appealing against the decision in regard to claim 5 which the learned trial Judge dismissed.

The appeal therefore succeeds and it is hereby allowed. The judgment and the order by Ayoola J in Suit No. H.C.J. 16/71 dated 1st June, 1972 including his order as to costs but excluding his order in regard to claim 5 are hereby set aside. In its place the following order is made.

There will be judgment for the plaintiff as per his first 4 claims in the endorsement to his writ. Claim 5 is dismissed.



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The plaintiff is entitled to his costs in this Court assessed at N 160 against the three defendants/respondents jointly. He is also entitled to his costs in the High Court assessed at N160 against the three defendants/respondents jointly.

AKINKUGBE JCA: (Delivering the dissenting judgment) Af-ter much anxious consideration of the factual and legal is-sues involved in this appeal, I have come to the conclusion that I must have to dissent from the able majority judgment just delivered by my learned brother, Eso JCA.

The background to this appeal may be briefly stated thus: The first respondent who will in this judgment be referred to as the bank has branches in many parts of Nigeria including Ijebu-Ode. The plaintiff/appellant for many years past was a customer of the bank and was allowed overdraft facilities. In consideration of that indulgence, he deposited with the bank the title deeds of his two properties in Lagos and Ijebu-Ode as equitable mortgages in respect of the overdraft facilities he enjoyed. Two memoranda of deposits, exhibits H and P, were prepared in respect of the two properties and each con-tains Clause 2 which reads:–

“I hereby undertake that I and all other necessary parties (if any) will on demand of at my own cost make and execute to you (ie to the bank or your nominee) a valid legal mortgage or registered charge of or on the same hereditaments and property or any part thereof in such form and with such provisions and powers of sale leasing and appointing a Receiver as you may require.”

When the plaintiff later became indebted to the bank and he was unable to settle his liability on demand, the bank re-quested him to execute legal mortgages as earlier undertaken in Clause 2 of exhibits H and P in its favour but the plaintiff was unwilling to do so. The bank then instituted an action in Ijebu-Ode High Court for damages and specific perform-ance. That court in its judgment refused the claim for spe-cific performance but awarded damages. The judgment of the Ijebu-Ode High Court led to an appeal and cross-appeal at the instance of the plaintiff and the bank respectively to


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the Supreme Court. The Supreme Court dismissed the ap-peal and allowed the cross-appeal.

At the tail end of the judgment, the Supreme Court said:–

“In the event, the appeal will be dismissed and it is hereby ordered accordingly. The cross-appeal however succeeds and the follow-ing orders are hereby made:

(1) The award to the plaintiff/respondent of £2,474.5s.10d by the Ijebu-Ode High Court in Suit No. J/18/68 on the 4th February, 1965 is hereby set aside.

(2) The plaintiff/respondent is hereby granted a decree, for spe-cific performance as sought in the second head of claim.

(8) The defendant/appellant will pay to the plaintiff/respondent costs of this appeal fixed at 48 guineas.”

Pursuant to the Supreme Court judgment the bank made a demand on the plaintiff but he did not pay. He was requested to honour his pledge as contained in Clause 2 of his memo-randa of deposit of his title deeds exhibits H and P by exe-cuting legal mortgages in favour of the bank yet the plaintiff did nothing. The bank’s solicitor then proceeded by Order 10, rule 11 of the Judgments (Enforcement) Rules, Cap 116 (Laws of Western State of Nigeria) with a view to securing legal mortgages of the properties in respect of which the plaintiff had deposited his title deeds.

After some correspondence between the Registrar of the High Court and the bank’s solicitor, two legal mortgages, exhibits D and E, were executed by the Registrar of the High Court in favour of the bank by virtue of Order 10, rule 11 of Judgments (Enforcements) rules, Cap 116 which the plain-tiff later got to know of. The properties were then sold to the second and third defendants.

The plaintiff who was not satisfied with what had taken place commenced a second action at the Ijebu Ode Court be-fore Ayoola J in which his claims are as stated below:–

“1. A declaratory judgment that the Deed of Mortgage, regis-tered as No. 3 at page 3 in Volume 1171 in the Lands Reg-istry Ibadan in respect of the property situate at No. 30

[1967 – 1975] 2 N.B.L.R. (COURT OF APPEAL WESTERN STATE) Akinkugbe JCA


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Ishoku Street, Ijebu Ode, purported to be executed by the plaintiff or on behalf of the plaintiff at Ijebu Ode in favour of the first defendant sometime in 1970 or thereabout is ir-regular null and void and of no effect on the grounds of (a) non est factum and or (b) that the conditions thereof were not complied with in law and in fact.

2. A declaratory judgment that any sale or disposition or alienation of the property described in the said deed or mortgage referred to in claim (1) above made by the first defendant to the second defendant on or about 30th January, 1971 is null and void and of no effect.

3. A declaratory judgment that the Deed of Mortgage regis-tered as No. 12 at page 12 in Volume 1321 in the Lands Registry, Lagos in respect of the property situate at 46 Apata Street, Somolu, purported to be executed by the plaintiff or on behalf of the plaintiff at Ijebu Ode in favour of the first defendant sometime in 1970 or thereabout is ir-regular, null and void and of no effect, on the grounds of (a) Non est factum and or (b) that conditions precedent to the purported execution thereof were not complied with in Law and in fact.

4. A declaratory judgment that any sale or disposition or alienation of the property described in the said Deed of Mortgage referred to in Claim 3 above made by the first de-fendant to the 3rd defendant on or about 6th March, 1971 is null and void and of no effect.

5. A declaration that the judgment of the Supreme Court of Nigeria in Appeal S.C. 362/66 dated 19th December, 1968 in effect determined the relationship of customer and bank-ers as between the plaintiff and the first defendant respec-tively whereby the first defendant is not entitled to charge or claim any further interests on the account of the plaintiff as it stood on the date of the said judgment.”

The learned trial Judge in a reserved and considered judg-ment dismissed plaintiff’s claims. Against the dismissal the plaintiff has appealed to this Court on five grounds. I will first of all deal with grounds 1, 2 and 4 together. They are as stated below:–

“1. The learned trial Judge erred in law in assuming that Order 10, rule 11 of the Judgments (Enforcement) Rules is capable


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of being read ‘in light of section 20(22) of the High Court Law when’:

(a) the provisions are clearly inconsistent in the sense that they purport to lay down somewhat different rules for the same object;

(b) Order 10, rule 11 aforesaid is accordingly null and void and of no effect.

2. The learned trial Judge misdirected himself in law and on the facts in holding as follows (page 39 lines 30 et seq):

‘The crucial question therefore in this case is whether the Registrar had been chosen and ordered by the court in exer-cise of its power under section 20(22) of the High Court Law to execute exhibits D and E before he did so.


(a) The first defendant did not allege in his statement of defence that it applied to the court. The only averment in paragraph 8 of the Defence was that he ‘applied to the Higher Registrar of the High Court of Justice Ijebu Ode Judicial Division who executed the Deed of Mort-gage and signed Lands Form 1A in accordance with the terms of the judgment.’

(b) The first defendant did not purport to have pursued any remedy under section 20(22) of the High Court law but rather under Order 10, rule 11 of the Judgments (En-forcement) Rules.

(c) Part of the arguments put forward by the learned Coun-sel for the first defendant (at page 29 lines 1 et seq.) was that ‘Order 10, rule 11 contemplates an administra-tive action and not a judicial hearing.’

4. The learned trial Judge misdirected himself in law in hold-ing that the presumption of regularity applies to exhibits D and E and it must be presumed that all essential conditions precedent have been fulfilled before exhibits D and E were executed and registered.


(a) The question whether or not the Registrar was appointed by order of court to execute exhibit D or E is a matter which is especially within the knowledge of the first de-fendant and accordingly the burden or proof is on the



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said defendant in accordance with section 141 of the Evidence Act.

(b) It is obvious that if the appellant’s reasons for declining to execute exhibits D and E had been brought to the at-tention of the court, no order directing the Registrar to execute the documents aforesaid could have been made. Accordingly there is no basis for the presumption that the court made the order as alleged.”

It is pertinent at this stage to quote Order 10, rule 11 of the Judgments (Enforcement) rules earlier referred to in this judgment. It says:–

“Where a judgment directs any deed to be executed or any nego-tiable instruments to be endorsed, and the party ordered to exe-cute or endorse such deed or negotiable instrument shall neglect or refuse so to do, any party interested in having the same exe-cuted or endorsed, may prepare a deed or endorsement of the in-strument in accordance with the terms of the judgment and tender the same to the court for execution, upon the proper stamp (if any is required by law), and the execution thereof by the Registrar in the form prescribed by rule 13 of Order VI shall have the same effect as the execution or endorsement thereof by the party or-dered to execute.”

The relevant part of Order VI, rule 13 referred to in the above Order 10, rule 11 for our consideration states:–

“The endorsement or execution shall be in the following form, or to the like effect: ‘A.B. by C.D. Registrar of the High /Magistrate’s Court of the . . . Judicial Division/Magisterial Dis-trict; in a suit by E. F. Versus A. B., . . . and any endorsement made, or document executed, or receipt signed as aforesaid, shall be as valid and effectual for all purposes as if the same had been made or executed or signed by the party himself.”

The learned Judge had said in his judgment that Order 10, rule 11 alone is not sufficient for the execution of legal mort-gages since by so doing it derogates from section 22 of the High Court Law which is the substantive law for such an ex-ercise. But he said that the rule is to be read along with sec-tion 22 of the Law. Section 22 of the High Court Law says:–

“Where any person neglects or refuses to comply with a judgment


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or order directing him to execute any conveyance, contract or other document, or to endorse any negotiable instrument, the court may, on such terms and conditions, if any, as may be just, order that the conveyance, contract or other document shall be executed or that the negotiable instrument shall be endorsed by such person as the court may nominate for that purpose, and a conveyance, contract, document or instrument so executed or en-dorsed shall operate and be for all purposes as valid as if it had been executed or endorsed by the person originally directed to execute or endorse it.”

The following is the relevant part of the judgment of the learned Judge and it reads:–

“In my view, Order 10, rule 11 cannot derogate from the provi-sions of section 20 of the High Court Law. If there is any conflict between the provision of a rule and an Act of the Legislature, it is the latter that must prevail. And in fact, the rule must be read down so that it can be reconciled with the Act. In my view, Order 10, rule 11 must be read in light of section 20 of the High Court Law. Reading it in that way, the proper proce-dure to enforce an order of specific performance which involves the execution of an instrument is as follows:

1. When the party directed by the court to execute the Instru-ment had refused, the person interested in the execution, may prepare a deed in terms of the judgment and tender it to the court (first limit of Order 10, rule 11).

2. When the court has the deed before it (ie the court en banc, (see Baker v. Cates 2 Q.B.D. 171) it ‘may on such terms and conditions if any as may be just order that the Convey-ance shall be endorsed by such person as the court may nominate for that purpose.’ (Section 20 of the High Court Law refers)

3. If it is the Registrar that the court so directs to execute it, then he shall do so in the form prescribed in rule 13 of Or-der VI of the Sheriffs and Civil Process Rules. (Second limit of Order 10, rule 11 refers)

It must be emphasised that reading section 22 of the High Court Law, it is clear that the court is free to nominate any person, not necessarily the Registrar to execute the documents, and it would be preposterous to imagine that the administrative provisions of Order 10, rule 11 can derogate from the judicial power reposed in section 22 of the High Court Law.



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The crucial question therefore in this case is whether the Regis-trar had been chosen and ordered by the court in exercise of power under section 22 of the High Court Law to execute exhib-its D and E before he did so. Exhibits D and E bear the signature of the Registrar on their faces. They also bear the official rubber stamp.

There is no evidence from the parties either way whether or not there was a court order under section 22 of the High Court Law authorising the Registrar to execute exhibits D and E. In Hals-bury’s Laws of England (3ed), Volume 15, at page 335 the fol-lowing passage occurs however under judicial notices:

‘The court is entitled to look at its own records and proceedings in any matter and take notice of their contents although they may not be formally brought before the court by the parties.’

The case of Craven v. Smith (1869) L.R. 4 Exch. 146 is cited in support. I had thought that I could use this passage to fill the la-cuna in plaintiff’s case but on deeper reflection, I consider that it would however be unexpected of the court to take up the onus of bringing evidence on a very material issue when the parties have failed to do so.

Whilst the court can take judicial notice of the contents of its re-cords, it cannot take upon itself the burden of investigating whether or not a particular event occurred, and then bring evi-dence of its finding before itself. That would amount to its de-scending into the arena and conducting the case of the parties for them.

In the absence of any evidence on this crucial point either way, the presumption of regularity applies to exhibits D and E and it must be presumed that all essential conditions precedent have been fulfilled before exhibits D and E were executed and regis-tered.”

Chief Williams in his submission on Order 10, rule 11 of Cap 116 – Judgments (Enforcement) Rules and section 22 of the High Court Law said that section 22 of Cap 44 is the substantive law and the rule is a subsidiary legislation. That if a rule enacts precisely what is contained in an act that rule is nugatory, or that it is void for repugnancy. Learned Coun-sel submitted that by Order 10, rule 11 of Cap 116 the court has no discretion as to whether or not the legal mortgage


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was to be executed, that everything was left to the Registrar without reference to the court, which is ultra vires section 22 of the High Court Law.

On the question of presumption of regularity, learned Counsel submitted that it was the case for the bank that let-ters were addressed to the Registrar for execution of the le-gal mortgages and not to the court. That it was wrong of the learned trial Judge to hold that it must be presumed as it were that when the Registrar got the letter of the bank’s So-licitor and the prepared documents for execution, he, the Registrar, would have referred the matter to the judge before the latter asked him to execute the legal mortgages.

To support his contention that Order 10, rule 11 of the Judgments (Enforcement) rules is void, learned Counsel re-ferred us to the following cases: 1. Strickland v. Hayes (1896) 1 Q.B.D. 290; 2. Thomas v. Sutter (1900) 1 Ch.D. 10; 3. Powell v. May (1946) K.B.D. 330.

Mr Olisa Chukura for the bank in reply, submitted that Or-der 10, rule 11 of the Judgments (Enforcement) Rules is complementary to section 22 of the High Court Law. Coun-sel submitted that the rule was not ultra vires section 22 of the High Court Law, it was procedural. That it was sufficient if the intention of section 22 of Cap 44 was carried out.

I will like at this stage to examine the decided cases cited by Chief Williams in support of his contention that Order 10, rule 11 of Cap 116 is nugatory on the ground that it is incon-sistent or enacts precisely what is in section 22 of the High Court Law.

In Strickland v. Hayes (supra), a County Council made a by-law under section 16 of the Local Government Act, 1888 in the following terms:

“No person shall in any street or public place, or on land adjacent thereto, sing or recite any profane or obscene song or ballad, or use any profane or obscene language.”



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Held, that the by-law was invalid. Lindley L J in his judg-ment at page 292 of the report referred to the Town Police Clauses Act, 1847 which provides, that the offence must be committed to “the annoyance of the residents or passen-gers.” His Lordship then said:–

“Looking at that section, I cannot find that it was intended to give power to make by-laws creating any new criminal offence. Of course, by-laws must do more than merely reiterate the provi-sions of Acts of Parliament, otherwise, they would be nugatory; but it is important to see that they are strictly within the authority under which they were made. I have no hesitation in saying that this by-law goes too far.”

Strickland’s case was not decided purely because the by-law enacted precisely what was contained in the Town Police Causes Act of 1847. Rather, the by-law was set aside be-cause it went farther than what was contained in the Police Clauses Act. Although a broad general principle is stated in it namely that a by-law is void if it enacts precisely what is contained in an Act of Parliament.

In Thomas v. Sutters, section 28 of Metropolitan Street, Act, 1867 provides:–

“Any three or more persons assembled together in any part of a street within the metropolis for the purpose of betting shall be deemed to be obstructing the street ‘are liable to penalty’.”

By section 23(2) of the Municipal Corporations Act, 1892 “The Council” that is, a borough, may from time to time make such by-laws as to them seem meet for the good rule and government of the borough and for the suppression and prevention of nuisances.

It was held that a by-law that provides that:–

“. . . no person shall frequent and use any street or other public place, on behalf either of himself or any other person, for the purpose of book making or betting or wagering or agreeing or settling bets is not bad as it is within the power conferred by sec-tion 28 of the Municipal Corporations Act.”


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In his judgment at the Court of Appeal Sir FH Jeune said in-ter alia at page 16 of the report:–

“As the Master of the Rolls has pointed out, the Act of 1867 deals with traffic regulations, and it provides that three or more persons assembled together in a street for betting shall be deemed to be obstructing the street. The provision was intended solely for the purpose of keeping the streets clear. It may be that the present by-law goes beyond that, but I cannot see any objection to it, even if it does go somewhat beyond that Act. An Act of Parliament speaking for the whole country renders certain things illegal. It does not at all follow that a by-law speaking for a particular lo-cality may not make some more stringent regulations with the same object. That, as it seems to me, is perfectly within the com-petency of the local authority. When an Act of Parliament has forbidden certain things to be done in certain places, it seems to me perfectly consistent with that municipality, with regard to their particular locality, should go somewhat beyond the Act, not contravening its spirit, but carrying it out, and making regulations somewhat wider than those to be found in the Act. That is really what has been done in this case. The Act has forbidden the as-sembling together of people in the streets for the purposes of bet-ting; the municipality, acting in the same spirit, but no doubt go-ing somewhat further, have provided that no person shall frequent and use any street for purposes of betting or matters connected therewith.”

It will be seen in the second case cited that the Court of Ap-peal in England held the by-law in question valid although it goes beyond the Act since it does not contravene the spirit of the Act which is “for the good rule and government of the Council.”

In Powell v. Mary (1946) 1 K.B. 880, Goddard, CJ at page 335 said:–

“There is no question but that a by-law which is repugnant to the general law is invalid, but it is not so easy to determine, what is covered by the word ‘repugnant,’ and under what circumstances a by-law is to be held invalid on that ground. Obviously, it cannot permit that which a statute expressly forbids nor forbid that which a statute expressly permits.”

The above three cases cited by Counsel for the appellant are,



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to my mind, liberal in their views in consideration of the va-lidity or otherwise of the by-laws of Councils in England. For instance, Thomas v. Sutters (supra) held that the by-law in question is not invalid although it goes beyond the Act. They also show that each individual case must be considered on its merits.

Section 22 of the High Court Law under consideration is exactly like section 47 of the Judicature Act (England) of 1925. At page 889 paragraph 3386 Practice Notes in Vol-ume 11 of 1970 Annual Practice, it is shown that where an interested person claiming under section 47 of the Judicature Act ie wanting, as in this case, his documents to be exe-cuted, could apply by summons to a judge in chambers.

By section 37 of our High Court Law (Cap 44) it is pro-vided as under:–

“A judge may, subject to rules of court, exercise in court or in chambers all or any part of the jurisdiction vested in the High Court in all such causes and matters and in all such proceedings in any causes or matters as may be heard in court or in chambers respectively by a single Judge of Her Majesty’s High Court of Justice in England.”

The combined effect of section 47 of the Judicature Act of 1925 of England, sections 22 and 37 of the High Court Law, Cap 44 is that a Judge of the High Court of Western State can exercise in his chambers the function that a judge of the High Court in England exercises in his chambers. The ena-bling law for the enactment of Order 10, rule 11 seems to me to be.

Section 49(1)(1) of the High Court Law which says:– “49 (1) The Chief Justice with the approval of the Governor-

in-Council may make rules of court for carrying this Law into effect, and in particular for all or any of the following matters.

(1) for prescribing what part of the business which may be transacted and of the jurisdiction which may be exercised by judges of the High Court in Chambers maybe transacted or exercised by Registrars or other officers of the High


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Court, and for providing that any interlocutory application to be made in connection with or for the purpose of any special or proposed appeal to be heard by a divisional court shall be heard and disposed of before a single judge.”

The above section 49(1) quoted above enables the Honour-able Chief Justice to make Order 10, rule 11 of the Judgments (Enforcements) rules so that Registrars may perform some of the functions or some of the businesses transacted by a Judge in chambers including functions under section 22 of the High Court Law.

The above view of mine is reinforced by section 52(2) of the High Court Law which says:–

“The Governor may from time to time appoint Registrars, Deputy Registrars and such other officers as may be deemed necessary, who shall perform all such duties with respect to business before the court as may be directed by rules of Court or any order of the Chief Justice.”

It is clear from sections 49(1) and 52(2) of the High Court Law that by those enabling sections of the High Court Law, the Chief Justice has the right to make Order 10, rule 11 of the Judgments (Enforcements) Rules so as to carry into effect the provisions of section 22 of the High Court Law.

The mere fact that Order 10, rule 11 is inserted under the Judgments (Enforcements) Rules is immaterial since such mistaken arrangement is not a strange phenomenon in the ar-rangements of our legislations. For instance Order 1, rule 12 of the Judgments (Enforcements) Rules should have been placed under the High Court (Civil Procedure) Rules. Order 1, rule 12 reads:–

“12. Without prejudice to any other means of enforcement author-ised by the Law or these rules, an interlocutory order may be enforced according to the following provisions

(a) If a plaintiff in a suit makes default or fails in fulfilling any interlocutory order, the court may, if it thinks fit, stay further proceedings in the suit until the order is ful-filled, or may give a judgment or non suit against such plaintiff, with or without liberty of bringing any other



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suit on the same grounds of action, or may make such other order on such terms as to the court shall seem just;

(b) if a defendant in any suit makes such default or failure the court may give judgment by default against such de-fendant, or make such other order as to the court may seem just; but any such judgment by default may beset aside by the court upon such terms as to costs or other-wise as the court may think fit.”

It is clear from this rule 12, Order 1 that it has more in com-mon with trial of cases before judgment than enforcement of judgments and the fact that it is misplaced under the wrong law does not detract from its applicability when considering rules of Court under the High Court (Civil Procedure) Rules as if it were made by virtue of section 49(1) of the High Court Law.

What does the word “Court” mean under Order 10, rule 11 of the Judgments (Enforcement) Rules? Part of the 6th line of the rule reads:–

“and tender the same to court for execution.”

The word “Court” there cannot mean “Judge” of the High Court. “Court” under section 2 of the Sheriffs and Civil Process Law Cap 116 is defined thus:–

“‘Court’ includes the High Court and a magistrate’s court.”

It seems to me that apart from High Court and a magistrates’ court, it includes other things and therefore my view of “court” in rule 11 can only mean the Court Registry. Whenever it is variously said that writs are filed in court or money paid into court, the word “court” cannot mean in the context in which it is used a Judge’ of the High Court. It could only mean the Reg-istry and part of rule 11 quoted above is followed by:–

“ . . . upon the proper stamp (if any is required by law) and the execution thereof by the Registrar.”

From the above it is my view that the Registrar was within his power when he executed the legal mortgages exhibits D and E in question by virtue of Order 10, rule 11 of the Judgments (Enforcements) Rules.


Akinkugbe JCA


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In fact if the Registrar had failed to execute the legal mort-gages he might be liable under section 58 of the High Court Law which says:–

“If an officer of the court, employed to execute an order, wilfully or by neglect or omission loses the opportunity of executing it, then on complaint of the person aggrieved, and proof of the fact alleged, the court may, if it thinks fit, order the officer to pay the damages sustained by the persons complaining, or part thereof, and the order shall be enforced as an order directing payment of money.”

The purpose for which Order 10, rule 11 of the Judgments (Enforcement) Rules is made is to relieve judges of the High Court from minor matters such as execution of deeds so that they can concentrate more on more important matters like deciding cases that are brought before them. Successive Chief Justices have thought it fit to take advantage of the powers conferred on them to make the rules which were later submitted to the Governor in Council and approved un-doubtedly on the advice of the Attorney–General from the Ministry of Justice.

I will hesitate to equate by-laws of councils in England with the rules of court made by the Honourable the Chief Justice of the Western State for the time being with the ap-proval of the Governor in Council and as I have said on the advice undoubtedly of the Attorney–General. I think if the rule is to be set aside it should be very clear that it is unrea-sonable, and that it is ultra vires section 22 of the High Court Law and that it enacts precisely what is contained in section 22 of the High Court Law.

The rule cannot be said to be unreasonable and neither can it be said to be ultra vires section 22 of the High Court Law nor can it be said to have enacted precisely what is in sec-tion 22 of the High Court Law. Section 22 of the High Court Law is to the effect that the High Court judge is the person to whom the documents shall be delivered and he may thereafter appoint anybody he considers fit to execute them.



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It could rightly be said that the Honourable the Chief Jus-tice by virtue of sections 49(1) and 52(2) of the High Court Law had appointed the Registrar of the High Court to carry out the duties which a High Court judge mayperform in chambers amongst which are those covered by section 22 of the High Court Law. The Registrar of course acting under Order 10, rule 11 of the Judgments (Enforcements) Rules executed the legal mortgages in question.

In Kruse v. Johnson (1898) 2 Q.B. 91(99) Lord Rusell of Killowen said:–

“But when the court is called upon to consider the by-laws of pub-lic representative bodies clothed, with the ample authority which I have described, and exercising that authority accompanied by the checks and safeguards which have been mentioned, I think the consideration of such by-laws ought to be approached from a different standpoint. They ought to be supported if possible. They ought to be, as has been said, ‘benevolently’ interpreted, and credit ought to be given to those who have to administer them that they will be reasonably administered. This involves the in-troduction of no new cannon of construction. But further, looking to the character of the body legislating under the delegated au-thority of Parliament, to the subject matter of such legislation, and to the nature and extent of the authority given to deal with matters which concern them, and in the manner which to them shall seem meet, I think courts of justice ought to be slow to con-demn as invalid any by-law, so made under such conditions.”

As I have said I will hesitate to set aside the rule which had in the past been re-enacted from time to time by different and eminent Chief Justices of Nigeria whenever the laws of the country are revised. I do not think ordinary ground of appeal is sufficient to declare the rule in question nugatory. If the exercise is to be undertaken at all it may not be out of place to seek for the representation of the Ministry of Justice as Amicus Curiae to give its opinion particularly since the same Ministry had in the past advised the Governor in Council to approve the rule.


Akinkugbe JCA


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I shall now consider ground 3 of the grounds of appeal. It reads:–

“3 (1) The learned trial Judge erred in law and on the facts in failing to observe that the decree for specific performance ordered by the Supreme Court in SC.366/62 is not in terms of judgment directing any deed, conveyance or other document to be executed.

(2) The learned trial Judge erred in law and on the facts in failing to observe that there being no judgment directing the plaintiff to execute any deed, conveyance of other document neither section 22 of the High Court Law nor (if it is valid) Order 10, rule 11 of the Judgments (Enforce-ment) Rules are applicable to the facts of this case.”

What the judgment of the Supreme Court says is that the plaintiff/respondent ie the bank in this case “is hereby granted a decree for specific performance as sought in the second head of claim.” The second head of claim reads:–

“An order for specific performance by the defendant of the said contract.”

The relevant parts of the contract are Clause 2 of exhibits H and P where the plaintiff engaged to execute legal mortgages in favour of the bank whenever he the plaintiff was called upon to do so. In view of the above it is difficult to appreci-ate the purport of ground 3. Although the Supreme Court might not have ordered any particular deed to be executed, yet the order of specific performance of the contract between the bank and the plaintiff must inevitably lead to the execu-tion of deeds of legal mortgages of properties in respect of which title deeds had earlier been deposited. Ground 3 must therefore fail.

I do not think it is necessary for me to consider ground 4 in view of my finding under grounds 1 and 2. Claim 5 had been abandoned by Chief Williams.

Assuming that I am wrong in my overall consideration of the appeal as argued, I think Declaratory Action being dis-cretionary, and considering the circumstances of the whole case, the plaintiff ought not to be granted the relief he asked



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for. The plaintiff has not pointed to any injustice he had suf-fered apart from the fact that had the matter been brought before a judge of the High Court and the latter was aware of the fact that he had disposed of one of the properties the judge would not have ordered the execution of the legal mortgages. Although this is a Court of Appeal, the appel-lant’s complaint is a matter on which this Court is as compe-tent as the court of first instance to make its own comment. I would be surprised that the hands of any court could be tied simply because the plaintiff had disposed of his property which in effect would amount to flouting the order of the highest court in the land.

It is to be noted that the information about the sale of the property came up after the Supreme Court judgment. It could only mean that the property was disposed of after the Supreme Court had given its judgment. Should any court yield to such a plea it would only amount to condoning dis-obedience to courts’ orders thus in the end making nonsense of the courts.

If the plaintiff’s action succeeds the remedy of the bank will be to start all over again by going through a judge of the High Court in order to have the legal mortgages executed. As I have pointed out it is difficult to imagine how any court could have then refused the bank’s application to have the legal mortgages executed. It would have been a different matter if the plaintiff had earlier agreed with the bank after the Supreme Court judgment to pay his debt instead of the specific performance of his contract and he did pay; but the bank without the knowledge of the plaintiff fraudulently had the legal mortgages executed by the Registrar. That is not the position in this case. What could remotely be described as injustice to the plaintiff is pure legal technicality that is that the bank did not apply through a Judge of the High Court before the Registrar executed the legal mortgages. As I have said that alone is not sufficient to grant a declaratory judgment which is discretionary in favour of the plaintiff.


Akinkugbe JCA


a Having regard to what I have said, I will dismiss this ap-peal. The first defendant/respondent bank is entitled to its costs which I assess at N100 .



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Aderibigbe v. Inspector–General of Police Nigeria and others


BAKARE J

Date of Judgment: 25 AUGUST 1975 Suit No. L.D.:1073/73

Banking – Freezing of account of customer under Banking Amendment decree 1966 – Banker protected by section 3 of the Banking Amendment decree 1966

Facts

The plaintiff seeks against the defendants jointly and sever-ally a declaration to the effect that the embargo placed upon the running of his printing business and the operation of his account with the National Bank Limited by the said defen-dants or either of them is unconstitutional, ultra vires and void. He also claims against the second and third defendants jointly and severally the sum of N20,000 as general damages for their unlawful interference with the operation of his bank account and printing business.

Some time in 1972 a case of embezzlement involving a large sum of N140,000 at the Central Bank, Kano was re-ported to the police. One of the persons suspected by the po-lice in connection with the crime was Peter Adeniran, a rela-tion of the plaintiff who was at the material time the Senior Supervisor of the said bank.

The suspect was detained by the police. The plaintiff went to the police to arrange bail for the suspect but his request was refused.

Later, the police searched the house of the plaintiff and took away some documents. During investigation, the police suspected that part of the missing money had found its way into the plaintiff’s accounts with the third defendants, the National Bank of Nigerian Limited and that the plaintiff had


Aderibigbe v. Inspector-General of Police Nigeria & others 619

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used part of this money in purchasing new machines for his printing business at Ilorin.

Acting under the provisions of the Banking Amendment decree 1966, the first defendant ordered that the account of the plaintiff with the third defendants be frozen and an em-bargo was also placed on the new machines.

At the trial, it was disclosed that the accounts of the plain-tiff with the third defendants had been de-frozen and that the embargo on his property at Ilorin had also been removed, following the discharge of Peter Adeniran in the criminal charge preferred against him. The plaintiff denied being in any way connected with the embezzlement of the money with which Peter Adeniran was charged.

Section 1(1) of the Banking Amendment Decree, 1966 provides as follows:–

“Where the Head of the Federal Military Government has reason-able cause to suspect that transactions, whether before or after the commencement of this decree, in the accounts of persons (herein-after referred to as ‘the accounts’) with any bank are such as may involve the offences of bribery, corruption, extortion or abuse of office, he may direct the issue of orders addressed to the manager of the bank where the accounts are, or are believed by him to be, or in the alternative addressed to the head office of a bank requir-ing the bank to prepare or cause to be prepared a record of trans-actions in the accounts of the persons named in the orders over the period, not exceeding six years, stated therein; and the man-ager shall prepare and certify the record for delivery as required on or before a prescribed date.”

Section 3 of the Banking Amendment Decree, 1966, which provides as follows:–

“Where the manager complies with an order made under this decree, or with any direction or requirement thereafter of a bank examiner, the bank and all person complying with the order and, as the case may be, any direction or requirement of a bank examiner, shall be indem-nified from liability to the extent of compliance therewith, and accord-ingly no action, claim, suit or demand by or on behalf of any person whose account is investigated pursuant to any such order, shall lie against the bank or any person so complying with the order.”



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By the Banking (Delegation of Powers) Order, 1969 the power of the Head of Federal Military Government to direct the issue of Orders under section 1(1) was delegated to the Inspector–General of Police.

Held –

By the provision of sections 3 and 4(2) of the Banking Amendment decree, 1966 the defendants could not be liable in damages.

Plaintiff’s case dismissed.


Foreign

Liversidge v. Anderson and another (1942) A.C. 206 R v. Halliday (1917) A.C. 260 at 269 The Zamora (1916) 2 A.C. 77 at 107

Counsel

For the plaintiff: Adigun

For the first defendant: Esan

For the second defendant: Awopetu

For the third defendant: Babalola

Judgment

BAKARE J: The plaintiff’s writ, which was filed on the 10th October 1973, is endorsed as follows:–

“The plaintiff seeks against the defendants jointly and severally a declaration to the effect that the embargo placed upon the running of his printing business and the operation of his account with the National Bank Limited by the said defendants or either of them since August, 1972 is unconstitutional, ultra vires and void.

The plaintiff claims against the second and third defendants jointly and severally the sum of N20,000 (£10,000) as general damages for their unlawful interference with operation of his said bank account and printing business during the said period.

The plaintiff also seeks an order of court abrogating the aforesaid embargo and also an injunction restraining the said defendants or


Bakare J


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either of them from further interference with the plaintiff’s free-dom to operate his said business and or bank account.

The plaintiff further seeks an order to recover from the first de-fendant the keys to his printing workshop, the documents relating to his cutting machine, share certificates, business registration certificate and other properties taken away by the police between August and December, 1972 and are still detained by them de-spite repeated demands.”

The facts as revealed by the pleadings and which are not in dispute are that sometime in 1972 a case of embezzlement involving a large sum of N140,000 at the Central Bank, Kano was reported to the police.

One of the persons suspected by the police in connection with the crime was Peter Adeniran, a relation of the plaintiff who was at the material time the Senior Supervisor of the said bank. Peter Adeniran was arrested and detained at the CID Headquarters Alagbon, Ikoyi.

The plaintiff went to the police to arrange bail for the sus-pect, but his request was refused.

On 12th August, 1972, the house of the plaintiff was searched by the police and some documents were taken away. In the course of the investigation, the police suspected that part of the missing money had found its way into the plaintiff’s accounts with the third defendants, the National Bank of Nigeria Limited and that the plaintiff had used part of the money in purchasing new machines for his printing press at Ilorin.

Acting under the provisions of the Banking Amendment Decree, 1968, the first defendant ordered that the account of the plaintiff with the third defendant be frozen and an em-bargo was also placed on the new machine.

Before pleadings were delivered, an application filed on behalf of the plaintiff “for interim injunction (i) restraining the first defendant from debarring him from the operation of his printing business and (ii) restraining all the defendants from debarring him from the operation of his account with



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the third defendant,” was refused by Dosumu J on 28th Janu-ary, 1974.

Thereafter, on his application for relief under the said de-cree, approval was granted to the plaintiff to withdraw a maximum of N100 per week from the frozen account with effect from the 24th April, 1974. Exhibit J refers.

It is pertinent to record that at the close of business on the 22nd March, 1974 (while embargo was still in force) the plaintiff had with the third defendant a fixed deposit balance of N23,524.40 and a current account credit balance of N660,550.

At the trial, it was disclosed that the accounts of the plain-tiff with the third defendant had been de-frozen and that the embargo on his property at Ilorin had also been removed.

In his testimony, the plaintiff disclosed that his account was de-frozen following the discharge of Peter Adeniran in the criminal charge proferred against him. The plaintiff de-nied being in any way connected with the embezzlement of the money with which Peter Adeniran was charged.

The plaintiff stated that he borrowed the money from two friends whose name he supplied to the police. Under cross-examination, the plaintiff admitted that the cost of the new machine for the press he purchased was a little over N8,000 and that his fixed deposit of well over N22,000 was made in one day. The freezing of his accounts was done in the course of police enquiry into the Central Bank’s missing money. The plaintiff stated that he borrowed N29,000 from two friends between 1971 and 1972 out of which he transferred N22,000 into the Fixed Deposit account from his current ac-count.

Section 1(1) of the Banking Amendment decree 1966 pro-vides as follows:–

“Where the head of the Federal Military Government has reason-able cause to suspect that the transactions, whether before or after the commencement of this decree, in the accounts of persons


Bakare J


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(hereinafter referred to as “the accounts”) with any bank are such that may involve the offences of bribery, corruption, extortion or abuse of office, he may direct the issue of orders addressed to the manager of the bank where the accounts are, or are believed by him to be, or in the alternative addressed to the head office of a bank to prepare or cause to be prepared a record of transactions in the accounts of the persons named in the orders over the period, not exceeding six years, stated therein; and the manager shall prepare and certify the record for delivery as required on or be-fore a prescribed date.”

By the Banking (Delegation of Powers) Order, 1969 the power of the Head of the Federal Military Government to direct the issue of orders under section 1(1) was delegated to the first defendant.

The pertinent question to ask is, was there any reasonable cause to order investigation of the plaintiff’s accounts?

In the course of police investigation into the alleged em-bezzlement, the house of the plaintiff was searched. Docu-ments were found which showed that he had substantial amount in the bank. One Prince Sijuade from whom the plaintiff said he borrowed N18,000 admitted loaning this huge amount to the plaintiff although he was not a financier and could not produce document in respect of the said loan. During the material period, the plaintiff also purchased new printing machine worth N8,000.

Can any one say in the circumstances that the suspicion of the police that the part of the money alleged embezzled found its way into the plaintiff’s account was not reasonable?

I am satisfied that there was overwhelming evidence to justify the suspicion and therefore reasonable cause for the action of the first defendant.

In Liversidge v. Anderson and Another (1942) A.C. 206 (a case of detention under regulation 18B of the Defence (Gen-eral) Regulations, 1939, Lord Macmillan stated at pages 253-254 as follows:–

“I turn now to the nature of the topics as to which the Secretary of



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State is under the regulation to have reasonable cause of belief. They fall into two categories. The Secretary of State has to decide (1) whether the person proposed to be detained is a person of hos-tile origin or associations or has been recently concerned in cer-tain activities, but he has also to make up his mind, (2) whether by reason thereof it is necessary to exercise control over him. The first of these requirements relates to matters of facts, and it may be that a court of law, if it could have before it all – the Secretary of State’s information – an important if – might be able to say whether such information would to an ordinary reasonable man constitute a reasonable cause of belief. But how could a court of law deal with the question whether there was reasonable cause to believe that it was necessary to exercise control over the person proposed to be detained, which is a matter of opinion and policy, not of fact? A decision of this question can manifestly be taken only by one who has both knowledge and responsibility which no court can share. As Lord Parker said in The Zamora (1916) 2 A.C. 77 at page 107:

‘Those who are responsible for the national security must be the sole judges of what the national security requires.’

It would be obviously desirable that such matters should be made the subject of evidence in a court of law or otherwise discussed in public.”

I may also quote the words of Lord Finlay LC in R v. Halli-day (1917) A.C. 260 at page 269:–

“it seems obvious that no tribunal for investigating the question whether circumstances of suspicion exists warranting some re-straint can be imagined less appropriate than a court of law.

The question is one of preventive detention justified by reason-able probability, not of criminal conviction which can only be justified by legal evidence.”

With respect, I adopt the reasoning in the above case for the view I hold, quite apart from the evidence, of the reasonable cause to suspect which led to the freezing of the plaintiff’s account by the first defendant.

Although it could be said that police investigation into the case of the alleged embezzlement was tardy, it would not be justifi-able to say that there was no reasonable cause for suspicion


Bakare J


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which led to the freezing of the plaintiff’s accounts and the embargo placed upon the running of his printing business.

In the face of the evidence that the plaintiff’s accounts had been defrozen and the embargo on his printing press re-moved, his claims No. 3 and 4 can no longer stand.

There is yet the claim for damages against the second and third defendants. Rightly, the two defendants offered no evi-dence.

The third defendant is protected by section 3 of the Bank-ing Amendment decree, 1966 which provides as follows:–

“where the manager complies with an order made under this de-cree, or with any direction or requirement thereafter of a bank ex-aminer, the bank and all persons complying with the order and, as the case may be, any direction or requirement of a bank exam-iner, shall be indemnified from liability to the extent of the com-pliance therewith, and accordingly no action, claim, suit or de-mand by or on behalf of any person whose account is investigated pursuant to any such order, shall lie against the bank or any per-son so complying with the order.”

Section 4(2) of the said decree also protects the bank exam-iner.

It follows therefore that the plaintiff is not entitled to the declaration and injunction sought against the three defen-dants and his claim for damages against the three defendants and his claim for damages against the second and third de-fendants also fails.

The plaintiff’s claims against the defendants are accord-ingly dismissed with costs.