Union Bank Of Nigeria Plc V. E. D. Emole (2001)

LAWGLOBAL HUB Lead Judgment Report

M.E. OGUNDARE, JSC.

The Plaintiff/respondent was at all times relevant to this appeal a customer of the Defendant/Appellant Bank. He maintained a current account at the Factory Road, Aba branch of the Defendant Bank. Sometime in November, 1984, he requested the Bank to open some letters of credit in favour of his overseas suppliers of goods. One of such letters was LC No. 72/84 for ‘a392,391.78 (Ninety-Two Thousand, Three Hundred and Ninety-One Pounds, Seventy’97Eight Pence). At the request of the Bank Plaintiff deposited a sum of N99, 793.15 (Ninety-Nine Thousand, Seven Hundred and Ninety-Three Naira Fifteen Kobo) as the full cover for the said letter of credit, based on the exchanged rate prevalent on 6th November, 1984. The letter of credit was opened by the Bank. In April 1985 Plaintiff went to the Aba branch office of the defendant Bank to collect the shipping documents relating to the letter of credit. There he was told that due to foreign exchange fluctuations at the time the defendant Bank’s correspondent bank cabled instructions that the supplier had been paid he had to pay an extra amount of N16,224. 29 (Sixteen Thousand Two Hundred and Twenty’97Four Naira Twenty’97Nine kobo) before he could collect the shipping documents. Plaintiff paid the said sum, cleared the goods and sold them in 1985. That could have been the end of the matter. But it was not. On 11/12/86, 31/12/86 and 21/7/88, the Defendant Bank debited Plaintiff’91s account with the sums of N77,578.18; N25,727. 19 and N42,138.98 respectively which the Defendant claimed were foreign exchange fluctuations arising from the letter of credit transaction in respect of the LC No. 72/84. The Plaintiff protested to the Defendant against these debits.

Sometime in 1985 the Defendant Bank granted the Plaintiff an overdraft facility of N140,000.00 in addition to a further sum of N200,000.00 facility granted to cover documentary credits. The Plaintiff executed a deed of morgage in favour of the Defendant Bank over his property situate at 15C Chief Paul Nkoro Avenue, Aba, as security for the facilities granted him.

It was Plaintiff’s complaint that the Defendant Bank took advantage of the mortgage to inundate his account with arbitrary debits resulting in the account being paralysed. As it was the only business account he had with any bank, his business suffered. In consequence, Plaintiff on 15/3/89 instituted the action leading to this appeal claiming, as per paragraph 17 of his statement of claim-

“(a) A declaration that the Plaintiff had in 1984 fully and effectually settled all his obligations to the defendant arising under letter of credit 72/84 for ‘a392,391.78 pounds

(b) A declaration that the sums of N77,578. 18, N25, 727. 19 debited to the Plaintiff’s account by the Defendant on the 11th and 31st day of December, 1986, and all other such sums of money also debited to the Plaintiff’s account by the Defendant were wrongly debited.

(c) an order of the Honourable Court compelling the Defendant to pay back to the Plaintiffs’ account all such sums of money irregularly debited to it including the interest earned by the Defendant on the sums irregularly debited to the Plaintiff’s account.

(d) A declaration of the Honourable Court that whatever indebtedness, if any, existing after allowance is completely made of the several sums irregularly and unlawfully debited to the Plaintiff’s account with the Defendant, was not the type of indebtedness contemplated by the parties which the Plaintiff entered into a Deed of mortgage in respect of his property known as No. 15C Chief Paul Nkoro Avenue, Aba with the Defendant, which property was registered as No. 79 at page 79 in Volume 155 of the Lands Registry, in the Office at Owerri.

(e) An order of injunction restraining the Defendant by itself or through its servants and/or agents from taking steps, including advertisement, to sell or otherwise or dispose of the said property.

(f) An order of the Honourable Court compelling the Defendant to return the title deeds respecting the property to the Plaintiff.

(g) the Plaintiff claims against the Defendant the sum of N500,000.00 (Five Hundred Thousand Naira) as general damages for the Defendant’s negligence.”

In its Statement of defence, the Defendant Bank pleaded, inter alia as follows:

“3. The defendant denies the averment in paragraph 5 of the Statement of Claim.; The defendant states that the plaintiff paid the sum of N99, 783. 15 (Ninety-Nine Thousand Seven Hundred and Eighty Three Naira Fifteen Kobo) which amount includes deposit and the Bank charges for the establishment of letters of credit. The defendant denies that the said amount covered the full amount payable by the plaintiff for the transaction.

4. In further answer to the said paragraph of the statement of claim the defendant states that owing to the fluctuation in exchange rates it is not possible for the defendant to determine before hand the exact amount to be paid by the plaintiff for the establishment of the letters of credit until the transaction comes to an end, that is to say, until the goods for which the letters of credit were opened had arrived and the plaintiff had taken delivery and the Central Bank of Nigeria paid the suppliers of the goods.
5. The defendant admits paragraph 6 of the Statement of Claim to the extent that at the time the plaintiff collected the shipping documents from the defendant to clear his goods from the Port he paid a total sum of N116, 017.44 including the initial deposit paid by the Plaintiff at the time the letters of credit were being opened.
6. the said sum of N116,017. 44 was not all that the defendant was to pay to bring the transaction to a close. The practice in the establishment of letters of credit for a customer is that after a customer had collected or taken delivery of the goods he forwards the customs exchange control documents to the Bank which documents the Bank in turn forwards to the Central Bank of Nigeria. Armed with the exchange control documents the Central Bank makes available the foreign currency value of the goods to the suppliers overseas, while the Bank pays to the Central Bank of Nigeria the equivalent in local currency. Until the Central Bank releases the foreign currency to the overseas suppliers it cannot be determined before hand the amount in local currency a customer is entitled to pay for the establishment of letters of credit. This was the case in the transaction that gave rise to this action.

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