Union Bank of Nig. Plc. V. Eskol Paints Nig. Ltd. & Anor (1997)

LawGlobal-Hub Lead Judgment Report

AKPABIO, J.C.A.

This is an appeal and Cross-appeal against a judgment of ERUAGA, J., of Edo State High Court. holden at Benin City in suit No. B/83/90 delivered on 19th May, 1995 wherein he entered judgment in favour of plaintiffs against the defendants in the sum of N12,455,235.00 being the Naini equivalent of $566,250.00 (US Dollars) negligently transmitted overseas from the account of the plaintiff to a 3rd Party in Ireland without valid guarantee and or without effectively contesting the validity of the said guarantee with interest at the rate of 10% per annum on the judgment debt from date of judgment until payment. But the plaintiffs claim of N10,093,625.74 as accrued interest up to 19/5/94 was dismissed. Cost of the action was assessed at N1,000.00 in favour of plaintiff.

The claim of the plaintiff, as finally perfected under paragraph 19 of their 7th Amended Statement of claim was as follows:-

“Whereof the plaintiffs claim against the defendants as follows;

1. Declaration that the defendants were negligent and or in breach of duty in handling, operating and managing of plaintiffs; foreign exchange transaction, business affairs and accounts with the defendants.
2. An order directing and compelling the defendants to pay the plaintiffs the initial deposit of $566,250 (USD) and the accrued interest of N10,093,625.74 up to 19/5/94 the defendants having negligently paid out the initial deposit from the account of the plaintiff without valid guarantee and or without effectively contesting the validity of the said guarantee.”

The evidence in support of plaintiff’s claim was that sometime in January 1982, the plaintiff instructed the defendants to remit the sum of $566,250 (US Dollars) to a company known as Kingscourt Construction Group Export Limited, at Kingscourt Cavan, Republic of Ireland pursuant to an agreement between the plaintiffs and the said Irish Company.

As a condition precedent for approving the foreign exchange transaction involved in the matter, the Central Bank of Nigeria insisted that the defendants as Bankers of the plaintiffs must obtain a written guarantee on behalf of the plaintiffs from a reputable Bank in Ireland. The defendants duly obtained the Guarantee but kept it under their lock and key, without showing it to the plaintiffs, or even giving them a copy.

In due course the contract between plaintiffs and the Irish Company, which was for the supply of building materials failed to go through, and it became necessary for the Irish Company to refund the sum of $566,250 (USD) already paid to them. For a reason that was not clear the Irish Company did not refund the money. It then became necessary for the defendants to obtain the refund from the Bank of Ireland who had guaranteed the refund of the money. But surprisingly, the Bank of Ireland also refused to pay the money, pointing out for the first time that the Guarantee had expired on 31/12/81 before the defendants sent the money to Ireland. In spite of pressure mounted by the plaintiff on defendants for the money to be refunded to them, the Irish bank still maintained that they had no liability under the guarantee.

In spite of assurances given to the plaintiffs by the defendants that the matter was being “vigorously pursued”, and that the plaintiffs could rest assured that the refund would be pursued to its logical conclusion, no matter how long it took the defendants turned round and wrote a letter dated 19th January, 1990 to the plaintiffs informing them that they have now closed their file on the issue of refund.

It was on the receipt of this letter that the plaintiffs instituted this action against the defendants as already set out above.

In their defence the defendants admitted being paid the sum of $566,250 (US Dollars) by the plaintiffs for transmission to their Contractor Kingscourt Construction Group Exports Limited and they duly did so satisfactorily. They were not therefore aware of whatever caused the failure of the said contract. In any case they contended that the plaintiff had not exhausted the remedies available to them under the contract, before proceeding against the Guarantor. They contended by way of preliminary objection that a guarantor cannot be held for the guarantee until the principal party has been held liable. In any case, they the defendants were merely agents of the plaintiffs in transmitting money to their beneficiaries.

On the question of guarantying the money transmitted above, the defendants averred that the plaintiffs were aware of the requirements of the Central Bank of Nigeria, and that the Bank of Ireland provided a guarantee in compliance with the Central Bank of Nigeria’s requirement. The defendants averred further that they did all that was possible as Bankers to make the Bank of Ireland, short of legal action, to make the guarantor refund the money to no avail. The defendants contended further that the guarantee had not expired as at the time the plaintiff instructed the defendants to remit the money. The defendants stoutly denied liability for negligence alleged against them, and argued that it was rather the plaintiffs who have negligently failed to pursue their rights under the contract between them and their contractor.

There was also an averment that the claims of plaintiffs were statute barred in that they took action on the 8th of February, 1990, a period exceeding six years by virtue of S. 4 (1)(a) of the Limitation Laws of Bendel State, Cap. 89. In conclusion the court was urged to dismiss the plaintiffs’ claim in its entirety as it was an abuse of court process, vexatious and speculative.

In response to the above, the plaintiffs filed a reply statement of defence in which they averred that their right of action herein was concealed by the fraud and or mistake of the servants of the defendants and the plaintiffs did not discover and could not with reasonable diligence have discovered the said fraud and mistake or the true facts giving rise to plaintiffs’ rights of action herein until on or about 12th September, 1989 when the defendants’ wrote to the plaintiffs and enclosed defendant’s letter of 12th July, 1989 addressed to the Bank of Ireland. In the premises it was contended that by sections 22, 23, 24 and 25 of the Limitation Law, Cap. 89, Laws of Bendel State paragraph 12 of the statement of defence afforded no defence to this action.

At the completion of pleadings an application was brought by Chief Debo Akande (S.A.N.) learned Senior Advocate on behalf of the defendants, for the Bank of Ireland, Dublin; and Kings court Construction Group (Export) Limited, Ireland to be joined as Third Parties in this case, so that the defendants could claim indemnity from them if they were ultimately unsuccessful. and they were duly joined as Third Parties. The Writ of Summons, statement of claim and statement of defence and other relevant processes were ordered to be amended to reflect such joinder. The 3rd parties were to enter appearance within 30 days of the date of service of the 3rd Party Notice on them. The 3rd parties entered appearance but did not file any pleading nor defend the action. In due course the trial commenced with the plaintiffs calling two witnesses to testify, while only one witness testified for the Defendants’ while numerous documentary exhibits were tendered on both sides.