In The Court of Appeal
(Benin Judicial Division)
On Monday, the 10th day of December, 2007
Suit No: CA/B/178/2004
Before Their Lordships
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SAKA ADEYEMI IBIYEYE |
....... Justice, Court of Appeal |
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STANLEY SHENKO ALAGOA |
....... Justice, Court of Appeal |
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ALI ABUBAKAR BABANDI GUMEL |
....... Justice, Court of Appeal |
Between
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UNITED BANK FOR AFRICA PLC |
Appellants |
And
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ALIMS NIGERIA LIMITED |
Respondents |
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RATIO DECIDENDI |
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EVIDENCE - ADMISSIBILITY OF STATEMENT MADE INTERESTED PARTY: Whether statement made by a person interested at a time when proceedings were pending or anticipated will be admissible in the subsequent trial |
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"Thus, the two exhibits G and J were compiled on the 12th November, 1996 and the 29th May, 1998 after the instant case had been instituted in 1995.Section 91(3) of the Evidence Act 1990 is of moment in this regard. It reads: "Nothing in this Section shall render admissible as evidence any statement made by a person interested at a time when proceedings were pending or anticipated involving a dispute as to any fact which the statement might tend to establish." The respondent in this case is a person interested because he caused the author of exhibits G and J, a firm of chartered accountants to make the reports on its behalf. It is also important to note that the statements in the two exhibits relate to the issue of 3% interest rate which is a fact in dispute in the instant case. Since the said two exhibits were made during the pendency of the instant case, they are an affront to Section 91(3) of the Evidence Act (supra). They are therefore inadmissible in law and liable to be expunged and/or discountenanced. See ALIMI V. OBAWOLE (supra) at page 607 and IKANNA V. BOSAH (supra) at pages 452 and 453." Per IBIYEYE, J.C.A. (Pp. 30-31, paras. E-C) |
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BANKING LAW - DUTY OF A BANK: Whether it is the duty of a bank to give a customer notice that his or its accounts will be merged |
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"The law is settled that the bank ought to give a customer notice that his or its accounts will be merged and failing such notice, the bank will be in breach of the fiduciary relationship with its customers. Such unilateral attitude also smacks of negligence for which the bank is liable in damages. See LLOYDS BANK LTD. V. BUNDY (supra) and BUCKINGHAM & CO. V. LONDON AND MIDLAND BANK LTD. (supra)" Per IBIYEYE, J.C.A. (P. 18, paras. C-E) |
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BANKING LAW - DUTY OF A BANKER: Whether a banker is entitled to merge current accounts kept by a customer in his own right even though at different branches of the same bank |
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"The general principle is that unless precluded by agreement, express or implied from the course of a subsisting business, the banker is entitled to merge current accounts kept by a customer in his own right even though at different branches of the same bank and to treat the balance, if any, as the only account standing to his credit. If, it however, a banker agrees with his customer to open two or more accounts, the banker without the consent of the customer has no right to move the assets and/or liabilities from one account to the other as the very basis of his agreement with his customer is that the two accounts shall be distinct and separate. I shall at the risk of repetition, albeit by way of expatiation, state that where a bank opens two accounts, as in the instant case, with a name, one in the customer's own name and the other in a business name, there is, in the absence of any express agreement to the contrary, an implied agreement that the accounts are to be kept distinct and separate. This leads to the issue of rights of the banker to deal with these two separate accounts. Where by agreement express or implied, a customer's several accounts with a banker are to be kept distinct and separate, the banker has no right to combine them or to transfer assets or liabilities from one account to the other without reasonable notice of the intention so to do or without the assent of the customer. The right of the banker to combine accounts does not exist where the accounts are not held in the same right as one is a trust account and the other is a personal account. It is settled that a customer having two accounts "in the same right" for the purpose of consolidation means that he has both accounts in his name or in the same name, character or capacity and that neither account is a trust account as where an account is a trust account and the other is a personal account. See BRITISH AND FRENCH BANK LTD. V. OPALEYE (1962) NSCC 2; ALLIED BANK OF NIGERIA LTD. V. JONAS AKUBUEZE (supra) pages 133 to 135 where the Court considered and applied the decisions, inter alia, in GARNETT V. MCKEWAN (1872) L.R. 8 EXCH. 10, BUCKINGHAM & CO. V. LONDON AND MIDLAND BANK (1895) 12 TLR 70 and GREENHALGH AND SONS V. UNION BANK OF MANCHESTER (1924) 2 KB 153; BANK OF NEW SOUTH WARES V. GOULBURN VALLEY BUTTER CO. PROPERTY LTD. (1902) A.C. 543 P.C." Per IBIYEYE, J.C.A. (Pp. 18-20, paras. F-B) |
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BANKING LAW - INTEREST RATES: Whether the court is allowed to judicially notice that interest rates are dependent on the policy of the Central Bank of Nigeria |
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"..the Court is allowed to judicially notice that interest rates are dependent on the policy of the Central Bank of Nigeria. No interest rate is static. It is instead dynamic. It is not immutable. It varies depending on the nature of government policy which follows the state of the economy. See KWAJAFFA & ORS. V. BANK OF THE NORTH LTD. (supra) at page 186" Per IBIYEYE, J.C.A. (P. 29, paras. A-C) |
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APPEAL - INTERFERENCE WITH FINDINGS OF FACT: Whether an appellate court is allowed to interfere with findings of fact made by the trial court |
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"It is settled law that an appellate Court will ordinarily not interfere with findings of fact made by the trial Court except in certain circumstances where it is clear or established that such findings are perverse or that the trial Court has taken erroneous view of the evidence adduced before it. See IFEANYI CHUKWU OSUNDU CO. LTD. V. AKHIGBE (1991) 11 NWLR (PT. 625) 1 at 18; OKI V. OKI (supra) at pages 103/104, N. UDE II & ORS. . V. N. CHIMBO & 3 ORS. (1998) 10 SCNJ 23 at 40" Per IBIYEYE, J.C.A. (Pp. 31-32, paras. G-B) |
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JURISDICTION - JURISDICTION OF COURT OF APPEAL: Whether the court of appeal can exercise jurisdiction bestowed on it by section 16 of the Court of Appeal Act, if the court below had no jurisdiction in the matter |
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"It is also settled that the Court of Appeal can exercise the jurisdiction bestowed on it by Section 16 of the Court of Appeal Act only if the Court below had jurisdiction in the matter. Jurisdiction of the Court below is a precondition for the invocation of the said section (supra). See OLUTOLA V. UNIVERSITY OF ILORIN (2005) 3 WRN 22 at 66 S.C., FALEYE V. OTAPO (1995) 3 NWLR (PT. 381) 31" Per IBIYEYE, J.C.A. (Pp. 32-33, paras. G-A) |
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CONTRACT - SIGNATORY TO A DOCUMENT: Whether a person who signs a document is bound by the terms therein |
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"It is trite to state that the person who signs a document is bound by the terms therein unless he alleges non est factum, mistake, misrepresentation or the like in contention. See EZEUGO V. OHANYERE (supra) at page 184." Per IBIYEYE, J.C.A. (P. 22, paras. E-F) |
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SAKA ADEYEMI IBIYEYE, J.C.A. (Delivering the Leading Judgment): In the High Court of Justice of Edo State sitting in the Auchi Judicial Division presided over by Okunega, J., in Suit No. HAU/72/95 the plaintiff who is at present the respondent in this appeal in paragraph 18 of its Statement of Claim sought the following reliefs:
"1. A declaration that the Deed of Floating Debenture executed between the plaintiff and the defendant dated 27th day of March, 1987 and Legal Mortgage dated the 25th day of November, 1986 and registered as Instrument No, 25 at page 25 in Volume 714 of the Lands Registry in the office at Benin City do not allow the defendant to unilaterally alter the status of the debt from loan to overdraft thus attracting higher interest.
2, A declaration that the defendant's computation of interest on the facilities granted to the plaintiff is arbitrary and without any legal basis.
3. Injunction restraining the defendant, its servants and/or agents from carrying out its threat to enforce its rights in the deed of floating debenture and legal mortgage."
The defendant who is now the appellant filed a Statement of Defence and Counter Claim to the claims of the plaintiff/respondent. Paragraphs 10, 11, 20 and 21 of the defendant's pleadings appear to be salient to the plaintiffs pleadings. They read thus:
"10. In answer to paragraphs 14, 15 and 16 of the Statement of Claim, the defendant avers as follows:
(a) The plaintiff knows what it actually owes to the defendant and the negotiations referred to were aimed at assisting the plaintiff to pay off its indebtedness to the defendant by a generous reduction of the debt through waiver of part of the accrued interest.
(b) The sum of N,650,000.00 paid to the defendant was part payment of the debt the plaintiff owes.
(c) The plaintiff abandoned its accounts long before it entered into negotiations with the defendant.
(d) In accordance with the banking practice, the accounts were classified resulting in the merging of the overdraft and loan accounts.
(e) The alleged interest of 7.5%on the loan was a typographical error which was corrected in a letter dated 19/12/96 to the plaintiff.
(f) The plaintiff knows the interest rates; statements of account sent to the plaintiff by the defendant from time to time disclosed this fact and the plaintiff had never protested... (not legible).
11. The defendant will contend at the trial of this action that the plaintiff s claims are frivolous, vexatious, an abuse of Court process and the same ought to be dismissed with substantial costs.
COUNTERCLAIM:
12. The defendant claims from the plaintiff by way of counterclaim as follows:
(a) The sum of N13,370,187.75 (Thirteen million, three hundred and seventy thousand, one hundred and eighty seven Naira seventy five kobo) being the sum of money owing by the plaintiff to the defendant over a period of years as at 31/7/98 as a result of loan and overdraft facilities extended to the plaintiff by the defendant over a period of years in Benin City within the jurisdiction of this Honourable Court.
(b) Interest at the rate of 21% per annum on the said amount of N13,370,187.75 from the date of this action until its final determination and thereafter interest at 10% per annum until the judgment is liquidated.
20. As at 31/7/98, the plaintiffs account shows a debit balance of NI3,370,187.75.
21. The defendant claims from the plaintiff as stipulated in paragraph 12(a),(b) of this Statement of Defence and Counterclaim."
In strict compliance with the rules of pleadings, the plaintiff filed a five paragraph reply to the Statement of Defence and Counterclaim. Thus:
REPLY TO STATEMENT OF CLAIM AND COUNTER CLAIM
"1. In specific answer to some of the matters set out in paragraph 6 of the Statement of Defence, the plaintiff avers as follows:
(a) There was no time the plaintiff was informed that the 3% stated in the letter of 8/10/90 was a typographical error and that the rate of interest was subject to review from time to time.
(b) That there is nothing in the five years cash projected flow sent by the plaintiff to the defendant to show that 3% interest per annum was in error.
2. In specific answer to the Statement of Counterclaim, the plaintiff denies paragraphs 12(a) and (b), 14, 15, 16, 17, 18, 20 and 21 of the Statement of Counterclaim.
3. In specific answer to paragraph 12(a) and 12(b) of Counterclaim, the plaintiff avers that firstly it does not owe the amount set out in (a) and secondly the plaintiff did not agree the interest set out in (b) (sic).
Strict proof of the averment in paragraph 12 would be required at the hearing of this suit.
4. In specific answer to paragraphs 14, 15, 17, 18, 20 and 21 the plaintiff avers (inter alia) as follows:
(a) There was nothing in the defendant's letter of 8/10/90 to the effect the interest of 30% per annum would not be adhered to by the defendant and that the stated interest was meant to deceive (sic).
(c) The plaintiff avers that the amount it owes the defendant has almost been cleared and plaintiff does not owe the amounts referred to in paragraphs 20 and 21 in the Statement of Counter claim.
5. The plaintiff would urge on the Court to dismiss the Statement of Counterclaim at the hearing of this suit."
Pleadings having been exchanged by parties, the case proceeded to trial during which a witness testified for each of them.
At the close of the cases for the parties, their learned counsel extensively addressed the trial Court. The learned trial Judge in a considered judgment granted all the reliefs sought by the plaintiff and dismissed the defendant's counter claim.
The defendant, now the appellant, was utterly dissatisfied with the judgment of trial Court delivered on the 24th November, 2000 and appealed to this Court on six grounds. Subsequently on the 30th June, 2005 with the leave of this Court, the appellant filed four additional grounds of appeal on the judgment making a sum total of ten grounds of appeal. The appellant was also granted extension of time to appeal against the interlocutory ruling delivered on the 4th May, 1998. It is pertinent to state that the plaintiff is the respondent in this appeal.
The learned counsel for the appellant and the respondent in strict compliance with the rules of this Court filed and exchanged their respective briefs of argument.
Distilled from the ten grounds of appeal by the learned senior counsel for the appellant for the detern1ination are the following four issues:
"1. Whether in the circumstances of this case the appellant was right when it merged the two accounts owned, operated and maintained with the appellant by the respondent.
2. Whether having regard to exhibits D, N1-N12 and all other exhibits before the trial Court, the interest rate chargeable on the loan facilities was 3% only.
3. Whether the learned trial Judge was right in holding that the appellant failed to prove the Counter claim on balance of probability.
4. Whether it was right for the learned trial Judge to admit an inadmissible evidence."
The learned counsel for the respondent on behalf of the respondent raised the following three issues in the brief of argument dated 1st March, 2007 and filed on 6th March, 2007 but deemed properly filed on 23rd April, 2007:
"(i) Whether the appellant was right when it unilaterally merged the loan and overdraft accounts of the respondent.
(ii) Whether the interest rates charged by the Appellant in the circumstances was arbitrary (sic).
(iii) Whether the appellant proved its counterclaim against the respondent."
A close study of the two sets of issues raised by the learned counsel for the appellant and the respondent showed that there is striking similarity in the manner of couching them but for some slant therein. I shall, in view of the comprehensiveness of the issues identified in the appellant's brief of argument consider those issues for the determination of this appeal.
At the hearing of this appeal on the 26th September, 2007, Chief A.O. Eghobamien, the learned Senior Advocate for the appellant referred to, adopted and relied on the appellant's brief of argument dated 30th June, 2005 and filed on the 4th July, 2005 but not without amplifying Issues 1 and 2 by urging the Court to incisively consider Clause 21 of exhibit A and exhibits D, H, L to L12, M to M3 and a on the rate of interest charged on the indebtedness incurred by the respondent in its transaction with the appellant as well as the issue of estoppel. He urged the Court to allow the appeal and set aside the judgment of the trial Court.
Chief Charles Adogah, the learned counsel for the respondent, equally referred to, adopted and relied on the respondent's brief of argument dated the 1st day of March, 2007 and filed on the 6th day of March, 2007 but deemed properly filed on the 23rd April, 2007 without any oral elaboration. He instead urged the Court to disallow the appeal.
On Issue 1, the learned senior advocate for the appellant submitted that it is a serious error in law and fact when the learned trial Judge held at page 213 lines 11 to 17 that there was abundant evidence before him that the appellant unilaterally combined the respondent's loan and overdraft accounts as account No. 60 1052298 without prior reasonable notice to the respondent. He further opined that in the circumstances the appellant having agreed with the respondent to open the two accounts, the appellant had no right to combine, merge and/or move the assets and liabilities of one account to the other without the express or implied assent of the respondent. Learned counsel for the appellant further stated that the basis of the agreement between the parties is to keep the two accounts distinct and separate and concluded that facts in the instant appeal are not dissimilar from those in ALLIED BANK OF NIGERIA LTD. V. JONAS AKUBUEZE (1997) 6 NWLR (PT. 509) 594. The learned senior advocate argued that the law is very well settled that cases are decided on the basis of their peculiar facts and circumstances and he cited in support of this argument the case of SGB (NIG) LTD. V. D.G.F. (1995) 3 NWLR (PT. 384) 497 at 508 and MARTINS V. NICANNER FOOD CO. LTD. (1988) 2 NWLR (PT. 74) 75. He therefore urged the Court to hold that the facts and circumstances of the instant case are dissimilar to those in the ALLIED BANK OF NIGERIA LTD. V. JONAS AKUBUEZE's CASE (supra) on which the learned trial Judge placed considerable premium in deciding the case before him.
The learned senior advocate for the appellant, by way of expatiation, submitted that as regards the instant case there was no such evidence before the learned trial Judge that the two accounts were not owned and operated by the respondent in the same right. He backed up this submission by referring to page 198 of the record of proceedings where the P.W.1 being the only witness for the plaintiff said, inter alia, that-
"When I say that our account was classified, I mean that the defendant merged the loan account, the overdraft and the stock replacement credit (SRC). The learned senior advocate argued that the P.W.1
did not say that the accounts were not kept in the same name contrary to the analysis given by the learned Justices of Supreme Court in the case heavily relied upon (supra) by the learned trial Judge. He
instead submitted that the accounts in point were kept in the same right. He cited in support, page 399 paragraphs D to E of ALLIED BANK (NIG) LTD. V. AKUBUEZE (supra) that where the customer of a bank operates two or more accounts, the bank is entitled to combine the two or more accounts kept by the customer in his own right even though at different branches of the same bank."
The learned senior advocate further submitted that a person who signs a document is bound by its terms unless he alleged non est factum, mistake, misrepresentation or the like in connection therewith and cited in support the cases of EZEUGO V. OHANYERE (1978) 6-7 SC 171 at 184 and ALLIED BANK (NIG) LTD. V. AKUBUEZE (supra) at pages 403 and 404. He exemplified this principle by the evidence of the P.W.1 at page 191 of the record of proceedings where he identified exhibit A (the legal mortgage) as the deed entered into by the appellant and the respondent. He expatiated that the validity and the contents of exhibit A were not in contention nor did the respondent meet the plea of non est factum. He added that the learned trial Judge in his judgment at page 264 stated that it is common ground that apart from exhibit A that there are other agreements as between the parties in exhibits C and S which respectively relate to the floating debenture and the agreement dated 8/10/90 increasing the bank facilities granted to the respondent by the appellant. The learned senior advocate specifically referred to Clause 21 of exhibit A where it was agreed by both parties that the appellant has the right to combine all accounts operated by the respondent in one account. Based on the contents of Clause 21 of exhibit A, the learned senior advocate for the appellant submitted that the respondent cannot vary its contents as by doing that will be an affront to the spirit and intendment of section 132 of the Evidence Act 1990. He went on to argue that the conclusion arrived at by the learned trial Judge by holding that the appellant had no right to combine the two accounts did not arise and that the conclusion is perverse. He stated the settled law that where the conclusion of the learned trial Court on an issue is perverse, the appellate can reverse it and relied on the case of OKI V. OKI (2002) 13 NWLR (PT. 783) 89 at pages 103 and 104. He urged that Issue 1 be resolved in favour of the appellant.
In response to the submissions of the learned senior counsel for the appellant, the learned counsel for the respondent argued that it is on record that the consent of the respondent was not sought when the merger of the respondent's accounts in the appellant's bank was effected. The learned counsel for the respondent posited whether the arbitrary merger of the accounts of the respondent in the instant case accords with the usual practice of banking. He proffered an answer by saying that the usual banking practice is that the appellant, a bank, is not allowed to merge the account of the customer in the instant case and he cited in support the case of NATIONAL WESTMINSTER BANK LTD. V. HALESOWEN PRESS WORK ASSEMBLIES LTD. (1972) AC 785 where the Court expressed the view that notice ought to be given to a customer if his accounts with the bank must be combined for whatever purpose. He submitted that the failure of the appellant to give the required notice to the respondent constituted a breach of the fiduciary duty it owed to the respondent and relied on the case of LLOYDS BANK LTD. V. BUNDY (1975) Q.B. 326. On the issue of notice, the learned counsel also relied on the case of BUCKINGHAM & co. V. LONDON AND MIDLAND BANK LTD. (1895) 12 T.L.R. 70 where the Court held that failure to give the desired notice before the combination of a customer's accounts amounts to negligence for which the
bank is liable in damages. He urged the Court to resolve this issue in favour of the respondent.
The fulcrum of Issue 1 rests on the propriety of the merger of the two accounts of the respondent in the appellant's bank by the appellant. It is common ground that the appellant actually merged the respondent's two accounts in its bank. The two accounts were in respect of the respondent's loan account and the respondent's overdraft account and gave them account No. 601052298. I agree with the counsel's exposition of the law on merger of customer's accounts by a bank. The law is settled that the bank ought to give a customer notice that his or its accounts will be merged and failing such notice, the bank will be in breach of the fiduciary relationship with its customers. Such unilateral attitude also smacks of negligence for which the bank is liable in damages. See LLOYDS BANK LTD. V. BUNDY (supra) and BUCKINGHAM & CO. V. LONDON AND MIDLAND BANK LTD. (supra).
I shall now consider the issue of combination of accounts or merger of accounts of a customer by the banker. The general principle is that unless precluded by agreement, express or implied from the course of a subsisting business, the banker is entitled to merge current accounts kept by a customer in his own right even though at different branches of the same bank and to treat the balance, if any, as the only account standing to his credit. If, it however, a banker agrees with his customer to open two or more accounts, the banker without the consent of the customer has no right to move the assets and/or liabilities from one account to the other as the very basis of his agreement with his customer is that the two accounts shall be distinct and separate. I shall at the risk of repetition, albeit by way of expatiation, state that where a bank opens two accounts, as in the instant case, with a name, one in the customer's own name and the other in a business name, there is, in the absence of any express agreement to the contrary, an implied agreement that the accounts are to be kept distinct and separate. This leads to the issue of rights of the banker to deal with these two separate accounts. Where by agreement express or implied, a customer's several accounts with a banker are to be kept distinct and separate, the banker has no right to combine them or to transfer assets or liabilities from one account to the other without reasonable notice of the intention so to do or without the assent of the customer. The right of the banker to combine accounts does not exist where the accounts are not held in the same right as one is a trust account and the other is a personal account. It is settled that a customer having two accounts "in the same right" for the purpose of consolidation means that he has both accounts in his name or in the same name, character or capacity and that neither account is a trust account as where an account is a trust account and the other is a personal account. See BRITISH AND FRENCH BANK LTD. V. OPALEYE (1962) NSCC 2; ALLIED BANK OF NIGERIA LTD. V. JONAS AKUBUEZE (supra) pages 133 to 135 where the Court considered and applied the decisions, inter alia, in GARNETT V. MCKEWAN (1872) L.R. 8 EXCH. 10, BUCKINGHAM & CO. V. LONDON AND MIDLAND BANK (1895) 12 TLR 70 and GREENHALGH AND SONS V. UNION BANK OF MANCHESTER (1924) 2 KB 153; BANK OF NEW SOUTH WARES V. GOULBURN
VALLEY BUTTER CO. PROPERTY LTD. (1902) A.C. 543 P.C.
From the record of proceedings, it is not in doubt that the appellant combined the two controversial accounts in its bank. It is, however, pertinent to know the status of those accounts particularly whether they are in the same right or not. A careful study of the record of proceedings showed that at page 198 lines 22 to 24 the only witness of the respondent said, inter alia, as follows under cross examination:
"When I say that our account was classified I mean that the defendants merged the loan account, the overdraft account and the stock replacement account.
The signal sent by classifying an account is the taking over of the bank... "(Sic)
(Underlining for emphases)
From the foregoing, the two accounts operated by the respondent in the appellant's bank are those specifically testified upon. The use of the words "our account" connotes that the loans and overdraft accounts are held in the respondent's name, character and capacity and no more. In effect, there was no evidence before the learned trial Judge that the said accounts were not owned and operated by the respondent in the same name and capacity. It was therefore, with due regard, gross evaluation of facts based on accepted principle (supra) for the learned trial Judge to hold that there was abundant evidence before him and that the appellant unilaterally combined the loan account and the overdraft account. Thus, the following conclusion of the learned trial Judge at page 262 lines 18 and 19 of the record of proceedings that:
"The facts of the instant case and those of the AKUBUEZE'S CASE are not dissimilar."
is not a true appreciation of the available facts. I will instead hold that based on the state of the record of proceedings that there is glaring dissimilarity in the AKUBUEZE'S CASE and the instant case. As such, the heavy reliance placed on the AKUBUEZE'S CASE in arriving at the conclusion that the merger of the two respondent's accounts effected by the appellant is not only irregular but also a misapplication of the law on merger of accounts to the available facts.