Accord Ventures Limited & Ors. V. Nigeria Deposit Insurance Corporation (2005)

LawGlobal-Hub Lead Judgment Report

NWALI SYLVESTER NGWUTA, J.C.A.

In a petition dated 19th June, 1997 and filed before the zone 4 of the defunct failed Banks Tribunal the respondent sought to recover from the appellants the sum of N451,821.16 being the outstanding balance of the overdraft facilities granted to the 1st appellant, interest and Bank charges due from the 1st appellant to the 1st appellant’s Account No:111012422 with the commercial Bank of Africa, Ikeja, Lagos and interest at the rate of 21% per annum from November, 1994 through trial period to judgment and until the debt is fully paid. Though the appellants were served and they respondended to the processes served on them neither of them nor their counsel appeared at the trial which was taken over and concluded by the Federal High Court, Benin Division, at the dissolution of the failed Bank Tribunal.

The court below entered judgment for the respondent and ordered the appellants to pay to the respondent the accrued sum N1,451,827.16 plus the outstanding part of the agreed interest rate of 21% per annum over the loan until the sum is fully paid back. Aggrieved, the appellants appealed to the court on two grounds which shorn of their particulars, are hereunder reproduced:

“1. The Federal High Court Benin Division lacks Jurisdiction to entertain the suit thereby rending (sic) its decision null and void and of no effect whatsoever.

2. The learned trial Judge erred in law when he held that the respondents are ordered to pay to the applicant the accrued sum of N1,451,827.16 plus the outstanding part of the agreed interest rate of 21% per annum over the loan until the sum is fully paid.”

Consistent with the rules of the court the parties, by their counsel, filed and exchanged briefs of argument.

At the hearing of the appeal, learned counsel for the appellants adopted the appellants’ brief dated, and filed on, 18/2/03, relied on the argument therein contained and urged the court to allow the appeal.

On his part, learned counsel for the respondent adopted the respondent’s brief dated and filed on, 31/03/03 and relying on the argument therein he urged the court to dismiss the appeal.

The appellants amended their notice and grounds of appeal by abandoning the issue of jurisdiction in ground one, retaining only the second ground on the award of interest.

In his brief, learned counsel for the appellant, in defiance of the accepted practice, distilled two issues for determination from a single ground of appeal. I shall revisit this issue later in the judgment. The two issues are hereunder reproduced:

“1. Whether the respondent is allowed in Law to charge post closure interest or any interest at all on behalf of a failed Bank?.

2. Whether the Lower Court can in Law award interest in favour of a failed Bank?.”

In his own brief of argument, learned counsel for the respondent stated that “the counsel for the appellants initially formulated two issues but ultimately abandoned one, leaving only one issue for determination. The issue left for determination has two arms, but both arms were argued together in the appellants brief of argument…” This is not correct. The appellant abandoned one ground of appeal, retained one from which he formulated two separate issues for determination. The issues argued together in the appellants, brief are two distinct issues, not two arms of one issue as stated by learned counsel for the respondents in his brief. Without formally adopting the issues formulated by the appellants learned counsel for the respondent argued the two issues together. By so doing, he is deemed to have adopted them.

Arguing the two issues together in his brief, learned counsel for the appellants referred to Nigeria Deposit Insurance Corporation Act Cap 301. Laws of the Federation of Nigeria 1990, S.1 (3) of which he said enables the respondent to sue and be sued in the pursuit of its functions. He said that section 4(1) of the Act empowers the respondent to assume the Management of a failed Bank. Pursuant to the said section the respondent took over the affairs of Commercial bank of Africa Limited, a failed Bank. Learned counsel referred also to failed Bank Recovery of Debts) and Financial Malpractices in Bank Decree 1994 and said by virtue of S. 9 in part 11 thereof the respondent could recover any debt owed to a Failed Bank but argued that the said section empowers the respondent to recover only the debt owed a Failed Bank at the date of closure and not interest as well. Learned counsel submitted that by the provision of S. 9 of the 1994 Decree the respondent has no power to demand post closure interest from customers of a failed Bank. He argued that the court below was in error by acting in excess of its jurisdiction to award further interest on the judgment sum. He relied on OYEFOLU VS. DUROSINMI (2001) FWLR (Pt.69) 1422 at 1428 paragraph H and VULCAN GASES LTD VS. GFIG (2001) FWLR (Pt.53) 1 at 60 paragraphs C-D. and urged the court to set aside the award of 21% interest per annum on the judgment sum as the award was made in error and in excess of the jurisdiction of the trial court.

In his own argument of the two issues presented by the appellant learned counsel for the respondent, in his brief, contended that section 9 of the Failed Banks (Recovery of Debts) and financial malpractices in Banks Decree No:18 of 1994 did not forbid the charging of interest in respect of debts owed a Failed Bank. He referred to page 29 of the Record of Appeal and said that the 21% interest charged on the loan facilities and overdraft was in accordance with the agreement pursuant to which the loan was granted. He stated that the Commercial Bank of Africa which was a failed Bank has been resuscitated under the new name of Fortune International Bank Plc, Victoria Island, Lagos. As a general rule, counsel said, interest may be awarded in two distinct circumstances; namely (a) As of right and (b) Where there is a power conferred by statute to do so or in exercise of the court’s discretion. He cited N.B.N. LTD. VS. S.C.D. LTD (1998) 5 NWLR (Pt.548) 148 and stated that interest may be claimed as of right where, as in this case, it is contemplated in the agreement between the parties or under mercantile custom or under a principle of equity such as breach of a fiduciary relationship. He argued that a bank can charge interest on loans or overdraft facilities even when there is no express agreement on the rate of interest to be charged. The customer is deemed to have consented to interest on the sum by which his account is overdrawn. He relied on U.B.A LTD VS. AYOOLA (1998) 11 NWLR (Pt.573) 339 and BORDAYS BANK OF NIG. LTD. VS. ABUBAKAR (1977) 1 All NLR, 278 at 344 paragraph G. He argued that the basis for award of interest is that the Bank has been kept out of its money for the period of deposit with the customer who had the use of it and has to pay some compensation. He relied on: KANO TEXTILE PRINTERS PLC. VS. TUKUR (1999) 2 NWLR (Pt.589) 78; EKWUNIFE VS. WAYNE (W/A) LTD (1989) 5 NWLR (Pt.122) 428; ABDULLAHI VS. WAJE COMMUNITY BANK (2000) 7 NWLR (Pt.663) 9; OWENA BANK (NIG.) PLC. VS. ADEDEJI (2000) 7 NWLR (Pt.666) 609 Ratio 11 at pages 622-623, para G-B; HIMMA MERCHANTS LTD. VS. ALIYU (1994) 5 NWLR (Pt.347) P.667 at 699; HENKEL CHEMICALS LTD. VS. V. A.G. JERRERO AND CO. (2003) 4 NWLR

(Pt.810) 306 at pp 310 and 311.