A. Obikoya V. Wema Bank Limited (1989)

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CRAIG, J.S.C. 

This appeal is an offshoot of a previous case which came before the Supreme Court sitting as a full Court. That case SC.110/82 – Wema Bank Ltd. v. Bronik Motors Ltd. and A. O. Obikoya, was later to become the leading authority on the limits of the jurisdiction of the Federal High Court.

The appeal herein arises from an interlocutory application brought after judgment in the principal case referred to above and relates to the proper construction to be placed on a portion of the judgment of this Court as it affects the liability of the appellant who was the 2nd Defendant in the original suit.

The relevant facts as they relate to this appeal are as follows and the parties will hereafter be referred to simply as plaintiffs and defendants.

On the 25th of March, 1980, the plaintiff, Wema Bank Limited took out a Writ of Summons against the defendants in the High Court of Lagos for:

“1. Specific performance of an agreement between the parties and evidenced in letters dated 10/1/76, 28/1/76 and 2/2/76 whereby the defendants promised to execute legal mortgage of the defendant’s properties lying and situate at (a) 400 Herbert Macaulay Street, Yaba (Lagos) (b) Adekunle Fajuyi Street, Ibadan (c) Ijebu-Bye Pass, Oke-Ado, Ibadan (d) 21 Barracks Road, Calabar and (e) Mile 3 Aba/Port-Harcourt Road, Aba; in favour of the plaintiffs to secure various overdrafts amounting to over N2,000,000.00 made to the defendants in Lagos between 1976 and 1979.

2. The sum of N2,135,092.57k (Two Million One Hundred and Thirty-Five Thousand Ninety-Two Naira and Fifty-Seven Kobo) being balance due to the plaintiffs for overdrafts granted by the plaintiffs to the 1st defendants at the plaintiff’s Mushin and Ebute-Metta Branches, in the normal course of their business as Bankers to the 1st defendants at their request and for Bank charges incidental expenses upon money due from the defendants to the plaintiffs which money the defendants have refused and or neglected to pay inspite of repeated demands.

Plaintiffs also claim interest on the said sum of N2,135,092.57k at the rate of 8% per annum from 1st October, 1979 until judgment and 5% per annum thereafter until final liquidation of the whole debt or part thereof.”

It would appear that the 2nd Defendant was sued as a guarantor of the 1st Defendant for in the following paragraphs of the amended Statement of Claim (amongst others), the plaintiff pleaded that:

“7. By letter dated 2/2/76, the plaintiffs approved overdraft facility of N500.000.00 for the use of Bronik Motors unincorporated upon terms stated therein, including legal mortgage of (a) 400 Herbert Macaulay Street, Yaba (b) Adekunle Fajuyi Street, lbadan (c) Ijebu-Bye Pass, Oke-Ado, Ibadan (d) 21 Barracks Road, Calabar (e) Mile 2 Aba/Port-Harcourt Road, Aba and (f) 8 acres of land at Ikorodu Road, Lagos.

8. By an endorsement on the copy of letter dated 2/2/76, referred to in paragraph 7 above, Bronik Motors unincorporated and the 2nd Defendant signified acceptance of all the terms and conditions stipulated therein.
9. By Deed of Guarantee dated 21/6/76, the 2nd Defendant guaranteed payment to the plaintiffs of all monies and liabilities owing or incurred to the plaintiffs by Bronik Motors unincorporated and the 1st Defendants up to the limit of N500,000.00.”

The case proceeded to trial and in his judgment, the learned trial Judge, Onalaja, J. found inter-alia, as follows:

“The liability of the 2nd Defendant arises when the principal debtor has made a default in the payment to the plaintiff, which was demanded by Exhibits 8, 10, 16 and 18.

The liability of the 2nd Defendant cannot be unduly extended beyond the strict provisions of Exhibit 2. The liability of the 2nd Defendant is limited to the loan of half a million Naira chargeable with interest only that Exhibit2 is silent as to the rate of interest.

Section 75 of the Evidence Act says that all facts except the contents of documents, may be proved by oral evidence. Since Exhibit 2 is silent as to the rate of interest, I accept the oral evidence and the documentary evidence before me that by mutual agreement, the rate of interest was reduced to 8% from 9%. I hold that the rate of interest chargeable on both the loan guaranteed by the 2nd Defendant and all transactions in this case is chargeable with 8% interest.

I therefore enter judgment for the plaintiff on the personal liability of the 2nd Defendant as a guarantor of the 1st Defendant to the tune of ‘half a million Naira (N500,000.00) chargeable with interest at the rate of 8% per annum.”