Union Bank Of Nigeria Ltd. V. Professor Albert Ojo Ozigi (1994)

LawGlobal-Hub Lead Judgment Report

ADIO, J.S.C.

The respondent, a customer of the appellant, in 1982, obtained a loan of N250,000.00 from the appellant to enable the respondent complete a restaurant in Ilorin. The terms under or subject to which the loan was granted were set out in two deeds of mortagage, Exhibits 5 and 6. He was making payment to the appellant until 1988 when there was a disagreement between the appellant and the respondent on the question of the rate of the interest chargeable on the loan.

The respondent was of the view that the rate was 11% throughout the period of repayment and, for that reason, the balance of the loan-outstanding was N116,076,10. The appellant maintained that the rate of the interest chargeable was not fixed. It was empowered by the mortgage agreements to stipulate the rate of interest from time to time and pursuant to the exercise of that power, the appellant had from time to time, after the granting of the loan, stipulated rates of interest higher than 11% as a result of credit guidelines issued by the Central Bank of Nigeria to commercial banks. Consequently, the balance outstanding on the loan granted to the respondent was N353,632.09. The disagreement could not be resolved. So, the respondent instituted an action against the appellant in the High Court, Kwara State, Okene Judicial Division, in which he claimed the following reliefs:-

“(1) A declaration that the defendants are only entitled to charge on any loan overdraft or banking facilities granted to the plaintiffs banking interest prevailing as at the time the plaintiff was granted the said loan, overdraft and/or banking facilities.

(2) A declaration that the defendants cannot unilaterally and arbitrarily increase the banking interest payable on the loan, overdraft or banking facilities granted to the plaintiff without the knowledge and consent of the plaintiff.

(3) A declaration that the plaintiff having paid over a sum of N229,000.00 out of a total loan of N250,000.00 granted to him by the defendants sometime in 1982 cannot be owing the defendants a staggering amount of N353,632,09 or anything in the neighbourhood of that amount.

(4) A declaration that the plaintiff having paid a total sum of N261,632.50 as at 15:11:88 to the defendant on the principal loan/overdraft of N250,000.00 based on the agreed 11% interest rate, he (the plaintiff) is only indebted to the defendant in the sum of N116,076.10 as at the said 15th November, 1988.

(5) Pursuant to sub-paragraph (4) Supra, an order permitting the plaintiff to settle the said outstanding indebtedness of a sum of N116,076.10 to the defendant by monthly instalment of a sum of N3,500.00.

(6) An order of injunction restraining the defendants either by themselves, agents, servants, privies or through any person however (sic) from selling, alienating or advertising for sale the plaintiff’s landed property ……unless and until the plaintiff’s indebtedness to the defendant is determined and thereafter unless and until the plaintiff defaults in meeting the monthly instalmental payment as prayed for.”

The parties duly filed and exchanged pleadings. The evidence led by the respondent was that before he was granted the loan, he had a discussion or negotiated with Assistant General Manager, Operations, Union Bank in Lagos and the rate of interest they agreed was 11%. The aforesaid Assistant General Manager gave him (respondent) a memorandum containing the terms agreed upon during the discussion or negotiation and he gave the said memorandum to the appellant as requested. An extra copy of the memorandum was given to the respondent for his own use. The position of the appellant was that the terms regulating the rate of interest were in clause 3 of each of the two mortgage deeds (Exhibits ‘5’ and ‘6’) and not in the memorandum, Exhibit ‘1’. Evidence, was led to show that the prime Drate of interest was not fixed. It ranged from 13 1/2% in 1984, 13% in 1986, 15% in 1987, 21% in February, 1988, 18 1/4% from March, 1988 to 19 3/4% from September, 1988 to January, 1989.

After consideration of the evidence before him and the submissions of the learned counsel for the parties, the learned trial Judge granted the first four reliefs claimed by the respondent. He rejected the memorandum, Exhibit ‘1’, because it was inadmissible on the ground that it could not vary or contradict the provisions of the mortgage deeds, Exhibits ‘5’ and ‘6’, executed by the appellant and the respondent in relation to the transaction between them.

The learned trial Judge however, accepted the oral evidence of the respondent as to what he negotiated with the Assistant Manager of the appellant’s bank in Lagos, which allegedly fixed the rate of interest at 11% per annum. Dissatisfied with the Judgment of the learned trial Judge, the appellant appealed to the Court of Appeal which dismissed the appeal of the appellant. The Court of Appeal held that the mortgage deeds (Exhibits ‘5’ and ‘6’) did not contain terms specifying the rate of interest chargeable on the loan. It upheld the finding of the learned trial Judge based on the oral evidence of the respondent that the rate agreed upon during the negotiation between him and the Assistant General Manager of the Union Bank in Lagos was 11% per annum throughout the period of the repayment of the loan.

The court was of the view that the appellant could not unilaterally increase the interest rate, thus affirming the view of the learned trial Judge that the appellant could not increase the rate of interest without the consent of or notice to the respondent. In the view of the court of Appeal, the memorandum (Exhibit ‘1’) which allegedly contained, inter alia, the particulars of the negotiation between the respondent and the Assistant Manager, Operations Lagos, on the loan, subsequently granted to the respondent and which was rejected by the learned trial Judge as inadmissible, was not only relevant but also admissible. The court was also of the view that as the respondent had discharged the burden of adducing evidence in support of his case, the burden shifted to the appellant. As the evidence led by the appellant was unsatisfactory the learned trial Judge was right in granting the reliefs claimed by the respondents in items 1 to 4 of his claim.

Dissatisfied with the judgment of the Court of Appeal, the appellant has further appealed to this court. In accordance with the rules of this court, the parties duly filed and exchanged briefs. The appellant, in its brief of argument, identified two issues for determination while the respondent, in his own brief, also identified two issues. The issues identified in the appellant’s brief, which were based on the grounds of appeal, are more comprehensive and are sufficient for the determination of this appeal. They are as follows:-