Wema Bank PLC. & Anor V. Alaran Frozen Foods Agency Nigeria Limited & Anor (2015)

LawGlobal-Hub Lead Judgment Report – COURT OF APPEAL

CHINWE EUGENIA IYIZOBA, J.C.A. (Delivering the Leading Judgment)

This appeal is against the judgment of the High Court of Lagos State in suit No. ID/1591/2000 delivered on 6/7/06?by Akande J. in which judgment was entered in favour of the Claimants now Respondents.

This suit arose from a banker/customer relationship over an account originally maintained personally by the 2nd Respondent with the 1st Appellant. The account was later restructured and taken over by 1st Respondent upon its incorporation as a limited liability company. An import finance facility was granted to the 1st Respondent in the sum of 50 Million Naira in 1998 for the importation of frozen fish with a 10 Million Naira overdraft facility.

The facility was supposedly granted on the personal guarantee of the 2nd Respondent and a mortgage on two of her landed properties. The guarantee was undated and the mortgage was in place long before the incorporation of the 1st Respondent for the loans granted to the 2nd Respondent when she was operating as a sole proprietor. By the terms of the facility, the 1st Appellant was to insure the imported frozen fish to cover the total value of the amount of

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1facility of the expense of the 1st Respondent. The 1st Appellant initially engaged Great Nigerian Insurance Company Limited its customary insurers to insure the imported fish but later changed to Oasis Insurance Company Limited. It regularly debited the account of the 1st Respondent for the insurance premium. The frozen fish on arrival and delivery were stored at Jobitex and Beststore cold rooms. A loss amounting to Thirty-Five Million Naira allegedly arose from fish spoilage due to deterioration caused by break down of refrigerating equipment in the cold stores. The 2nd Respondent claimed she discussed the problem with the officials of the 1st Appellant who were coming once or twice a week to monitor the sales of the imported fish. When it dawned on the Respondents that the officials of the 1st Appellant did not as promised make a report of the spoilage to their headquarters, the 2nd Respondent took the initiative by personally reporting the situation to the headquarters of the 1st Appellant. When the 1st Appellant submitted a claim under the insurance policy to OASIS, the claim was rejected by the insurers on the ground that the location covered by the

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2 policy was Tokelat coldroom and not Jobitex or Beststores; that the insurers were not promptly informed of the spoilage before disposal and that the insurance was for “gradual deterioration”. The Respondents claimed that it was not a term of the facility agreement that Tokelat cold room or any particular cold room was to be used to store the imported frozen fish on arrival and that the officials of both the 1st Appellant and 1st Respondent jointly took the decision to store the imported frozen fish at Jobitex cold room and Beststore cold room. At the trial, it emerged that the 1st Appellant did not take out the insurance in the name of the 1st Respondent. Contrary to the impression given the Respondents and in clear breach of the agreement, what 1st Appellant purportedly insured was the 2nd Respondent in person. The 1st Appellant by auction purportedly sold the properties of the 2nd Respondent to the 2nd Appellant during the pendency of the suit. By an amended writ of summons and statement of claim dated 16/4/01, the Respondents as claimants claimed against the appellants as Defendants as follows:

“(1) A DECLARATION that the 2nd plaintiff, now to be referred to as

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3 the 2nd claimant is the owner of the landed properties at 13, Oremeji Street, Alimosho, Agege, Lagos by virtue of a Certificate of Occupancy dated 25th January, 1983 registered as No. 26 at page 26 in Vol. 19821 of the Lagos State Land Registry Office at Ikeja, despite the existing legal mortgage which is still subsisting thereon in favour of the 1st Defendant.

(2) DECLARATION that the Defendants are not entitled to foreclose and redeem the mortgage on the aforesaid properties until the conditions for the exercise of such powers are met.

(3) DECLARATION that the Defendants are not entitled to assign, sell, lease or alienate in any way the aforesaid properties and other collaterals pledged for loan and facilities granted by the 1st Defendant to the 1st plaintiff in 1998 prior to its restructuring in July 1999 and or thereafter.(4) A DECLARATION that no insurance policy and or no valid and or enforceable insurance policy was taken out in favour of or for the protection of the 1st Plaintiff against the peril of fish spoilage as contracted or undertaken by the 1st Defendant to so do for the period of July 1998 to June 1999 as a term of the facilities enjoyed by

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