Agbonmabge Bank Ltd V C.F.A.O (1966)

LawGlobal-Hub Lead Judgment Report

BAIRAMIAN, J.S.C.

In this appeal the Agbonmagbe Bank Ltd. complains of the judgement given by Adedipe J., in the Lagos High Court Suit No. LD/344/1963 on 6th July, 1964 in favour of the C.F.A.O. for £9,865-4s-4d.

The C.F.A.O. had a customer by the name of Esther Abiola Amushan, who gave the company a number of cheques on the Agbonmagbe Banks Branch at Shagamu between the 7th August, 1957 and the 5th October, 1957 amounting to £10,197 -8s-4d; the company handed the cheques to the Bank of West Africa Ltd., for collection, and this Bank sent them to the headquarters of the Agbonmagbe Bank at Ebute Meta, which returned the cheques dishonoured on the 10th October, 1957 in a bunch. The C.F.A.O. wrote to the Agbonmagbe Bank headquarters to complain that the delay of their Shagamu Branch in returning the cheques caused them loss for which the company held the Bank responsible, but received no reply. The C.F.A.O. sued Mrs. Amushan and obtained judgement against her for what she owed the company-£ 13,829-0s-1Od, which included the amount of the cheques; the company managed to collect £250 from her and could collect no more; so they sued the Agbonmagbe Bank for the amount of the cheques in question. The companys manager testified as follows:

‘When the cheques were not returned within reasonable time, my company assumed that they must have been paid. If the cheques had been returned within a week or so we would have stopped delivering further goods to Mrs. Amushan and our loss would have been minimised. We lost the value of the cheques as a result of the delay occasioned by the defendant.’

The C.F.A.O. manager agreed in cross-examination that the Agbonmagbe Bank were not his companys bankers; but there was no cross-examination on the companys assumption that as the cheques were not returned within a reasonable time they must have been paid. That there was undue delay on the part of the Agbonmagbe Bank was proved by a manager of the Bank of West Africa who testified on bank practice; he was not cross-examined. The Agbonmagbe Bank offered no evidence in defence.

The learned trial judge was of opinion that cheques sent from Lagos to Shagamu should, if not paid, have been returned within a week, and in his opinion the Agbonmagbe Bank had failed to fulfil its duty of returning them in the ordinary course of business to the Bank of West Africa within a reasonable time with an intimation that they would not be paid. The learned judge recognised that there was no privity of contract between the C.F.A.O. and the Agbonmagbe Bank; he relied on Donoghue v. Stevenson [1932] A.C. 562, for his view that the Bank was liable for negligence.

In that case Lord Atkin gave his view of negligence in tort (at p. 580) as follows:

‘At present I content myself with pointing out that in English law there must be, and is, some general conception of relations giving rise to a duty of care, of which the particular cases found in the books are but instances …. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law is my neighbour? The answer seems to be-persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing- my mind to the acts or omissions which are called in question.’

Adedipe J., states in his judgement that it was clear on the cheques that the Bank of West Africa was the agent of the C.F.A.O. for the purpose of collection, and that the Agbonmagbe Bank had a duty of care in dealing with the cheques which were sent to it for collection, but it was negligent and the C.F.A.O. suffered damages owing to its negligence. Hence the judgement in favour of the C.F.A.O., from which the Agbonmagbe Bank has appealed.

The objections to the judgement made on the Banks behalf are two

(1) that the judgement against Mrs. Amushan was a bar to a suit against the Bank;

(2) that the Bank had no duty of care to the C.F.A.O.

The court approaches an appeal on the principle that the appellant must show that the decision was wrong.

The Court is not persuaded that the judgement was wrong in the first respect, having regard to the fact that the claim against Mrs. Amushan was based on contract but that on the Bank was based on tort. There were two separate causes of action against two distinct persons, and the judgement against Mrs. Amushan did not extinguish the right of the C.F.A.O. to sue the Bank, even though it was in respect of the same cheques. What was important was that the C.F.A.O. should not recover the money on those cheques twice. They tried to recover it from Mrs Amushan and only sued the Bank when they could not recover it.