Khaled Barakat Chami V. U.B.A. Plc (2010)

LAWGLOBAL HUB Lead Judgment Report

W.S. ONNOGHEN, J.S.C

This is an appeal against the judgment of the court of Appeal, Holden at Kaduna in appeal No. CA/K/93/2001 delivered on the 14th day of April, 2003 in which the court allowed the appeal of the present respondent against the judgment of the High Court of Kano State in suit No, K/849/99 delivered on the 19th day of July, 2000 dismissing the case of the plaintiff/respondent herein.

The suit started by way of an Undefended List procedure in which the original plaintiff, TRADE BANK PLC claimed the sum of one hundred and seventy-one million, four hundred and fifty-two thousand, six hundred and forty-nine Naira and fifty-two kobo (N171,452,649.52) being the debt owed by Rasha Enterprises Ltd to it and guaranteed by the appellant. Following the filing of the necessary processes, the suit was, by order of court, transferred from the Undefended List to the General Cause List to be dealt with accordingly. Pleadings were consequently filed and exchanged. The case of the plaintiff was that Rasha Enterprises Ltd was its customer at its Kano Branch and that credit facilities were extended to the company upon its application; that the said company provided collateral security by way of Bill of Sales Agreement and a personal guarantee executed by the appellant in favour of the plaintiff sometime in 1996; that as at the 25th day of October, 1999 the account of the said company had a debit balance of N171,452,649.52; that inspite of repeated demands made on the said company, the debt remained unpaid, hence the action; that when the principal debtor failed to pay, plaintiff made a demand on the appellant being the guarantor but he refused to respond as a result of which the action was instituted to enforce the guarantee.

On his part, appellant totally denied the transaction; that he never executed any guarantee in favour of the plaintiff on behalf of the company in question; that the plaintiff and Rasha Enterprises Ltd were not duly incorporated and that the credit facility extended to Rasha Enterprises Ltd was not secured by any collateral.

At the conclusion of the trial, the learned trial judge entered judgment against the plaintiff resulting in an appeal by the present respondent which was allowed and judgment entered in favour of the respondent as per their statement of claim. The instant appeal is against that judgment.

The case of the parties as pleaded in their pleadings is as follows:

In the Statement of Claim, paragraphs:

“8. The defendant agreed to stand as guarantor for all the sums to be overdrawn by Rasha Enterprises in the latter’s account with the plaintiff: the said defendant executed a guarantee

agreement in favour of the plaintiff in January 1996.

9. Subsequently Rasha Enterprises Limited was allowed to overdraw its account with the plaintiff based on the guarantee executed by the defendant.
10. Rasha Enterprises Limited failed to repay the sums it overdraw in the account with the plaintiff.
11. By 25th October, 1999, Rasha Enterprises Limited had overdrawn its account to the tune of N171,452,649.52k.

The statement of account of Rasha Enterprises Limited with the plaintiff is pleaded.

12. All demands by the plaintiff to Rasha Enterprises to defray its indebtedness to the plaintiff was to no avail.
13. On 20/7/99 the. Plaintiff’s solicitor wrote to the defendant asking him to honour his pledge under the guarantee agreement by paying the outstanding balance in the account of Rasha Enterprises Limited. The said letter is pleaded.
14. The defendant has since then refused or neglected to honour his pledge under the guarantee agreement.

What is the appellant’s answer to the case of the respondent as pleaded supra in the statement of claim. The answer can be found in paragraphs 8 – 10 of the Statement of Defence as follows:-

“(8) The defendant denies paragraph 9 of the Statement of Claim and states specifically that he never executed any Guarantee Agreement to pay the plaintiff on account to Rasha Enterprises Limited.

(9) The Defendant denies all the allegation contained in paragraphs 10, 11, and 12 of the Statement of Claim and thereby puts the plaintiff to the strictest proof of all the allegations.

(10) The Defendant denies ever receiving any letter from the plaintiff’s solicitors and thereby puts the plaintiff to the strictest proof of its allegation in paragraph 13 of the Statement of Claim.”