Associated Discount House Ltd V. Amalgamated Trustees Ltd (2006)

LAWGLOBAL HUB Lead Judgment Report

PATS-ACHOLONU, J.S.C.

This appeal arose from an action filed by the appellant against the respondent. The parties had entered into an agreement whereby the appellant advanced by way of a commercial paper facility the sum of N120m to the respondent’s company for 90 days only subject to an interest payable on the commercial paper. The facility was completely drawn. The security for the facility was a house, property of the respondent situate at 24A Campbell Street, Lagos, and the parties covenanted that the documents shall be deposited with the appellant. At the expiration of 90 days, the money so invested was not paid back and worse still, the respondent caused the sum to be rolled over without the express consent or permission of the appellant. When the appellant made several demands for the repayment of the facility and the interest due, and the respondent refused or failed to pay, the appellant was forced to institute an action in the Federal High Court. The respondent raised a preliminary objection on the ground that the Federal High Court has no jurisdiction to entertain the case. The objection succeeded and the Federal High Court transferred the case to the Lagos High Court pursuant to section 22(2) of the Federal High Court Act which now became seized of the case. When the Lagos State High Court now seized of the matter proceeded with the case the respondent once again raised a preliminary objection on the ground that the Lagos High Court cannot entertain the action as it lacks the requisite jurisdiction. This objection was refused, and dismissed. Piqued by the ruling of the High Court, the respondent filed a notice of appeal. The Court of Appeal allowed the appeal and held that the Lagos High Court lacked the jurisdiction to adjudicate on the matter. The appellant as a losing party in the Court of Appeal appealed to this court and framed three issues for determination which are as follows:

1. Did the Court of Appeal have jurisdiction to overrule the decision of the Lagos High Court dated 12/1/01, and consequently hold that it is the Federal High Court that is vested with exclusive jurisdiction to entertain the appellant’s claim in this action against the respondent, whereas the second or latter of the two reasons or ratio which the Lagos High Court relied upon in support of its said decision was not appealed against by the respondent, and the Court of Appeal too did not consider, reverse or overturn the second reason or ratio relied upon in the overturned decision of the Lagos High Court
2. Does the appellant qualify to be described as a bank within the meaning of section 251(1)(d) of the 1999 Constitution in the manner that would vest the Lagos High Court with jurisdiction to entertain the appellant’s claim against the respondent in this action as was held by the Lagos High Court decision of 12/1/01
3. Is it right in law, as was held in the judgment of the Court of Appeal delivered on 16/9/02, that the Lagos State High Court does not have the power, under section 22(3) of the Federal High Court Act, to transfer a matter in which the Lagos State High Court lacks jurisdiction to the Federal High Court for hearing and determination

The respondent contrariwise formulated only 2 issues which are follows:

(i) Whether the Court of Appeal was correct when it held that the High Court of Lagos State does not have jurisdiction to entertain the suit of the appellant.

(ii) Whether the Court of Appeal was correct when it held that the High Court of Lagos State does not have the power to transfer a matter in respect of which it lacks jurisdiction to the Federal High Court.

Now the Court of Appeal in resolving the matter before it which resulted in allowing the appeal and striking out the action, held as follows:

“The main plank of the respondent’s resistance to the appeal brought before us by the appellant was that it did banking business and that in line with the decision in FMBN v. NDIC (supra), it should be acknowledged as a bank. With respect to respondent’s Counsel, I think his contention is unsustainable. All that the respondent needed to show pursuant to section 2 of BOFID was the licence given it to operate as a bank. It would be wrong to assume that because the respondent did banking business, it was a bank even if it was not so registered under BOFID. The argument of respondent’s Counsel overlooks the fact that whereas in FMBN v. NDIC (supra), the law setting up Federal Mortgage Bank and the functions assigned to it makes it abundantly clear that it was set up to operate as a bank, the respondent in this case can be seen as no more than a financial institution under section 57 of BOFID. This conclusion flows from the fact that the respondent itself pleaded in paragraph 1 of its statement of claim that it was duly licensed to carry on business as a discount house.”

The lower court concluded the judgment which it delivered this way,

“Once it is determined that the respondent is not a bank within the meaning of section 251(1)(d) of the 1999 Constitution the question whether or not the appellant was an individual customer of the respondent within the meaning of section 251(1)(d) becomes a moot point and therefore inconsequential.”

What was behind the decision of the Court of Appeal to take a contrary view to that of the lower court is the definition or rather the interpretation the court of first instance ascribed to the status of the appellant. The learned trial Judge had held as follows:

“The Supreme Court described a bank in Federal Mortgage Bank v. NDIC (1999) 2 NWLR (Pt. 591) 333 as follows, “The word “bank” is not defined in the Constitution as in the Interpretation Act. However in the ordinary grammatical meaning, it means an organization that provides financial services”. Surprisingly the syllogism drawn by the High Court from this is “It is not in dispute that a discount house is an organization that provides financial service. It is not in dispute that a discount house is an organization or place that renders financial services. Accordingly, can it then be subsumed as well to that extent that a discount house is a bank of some sort I think it is logical and reasonable to do so. A perusal of relevant legislation will also lend credence to my view that a discount house being a financial institution can safely be called a bank”. The deduction drawn by the court of first instance is not only strange but traduced all norms known in the financial world as we are by this conclusion being told to ascribe to Companies dealing as brokers or stock and shares and other securities as banks. Such description would be offensive in the financial world and do violence to what a bank or a financial institution is in our law. A financial institution can never be a bank.

To me this is a case of a simple loan facility granted to a ‘person’ which as described in the statement of claim is a mere Company and is neither a bank nor a financial institution. The appellant which is a discount house granted a facility to the corporate body that is the respondent intending that after the expiration of 90 days, it would get its principal and accrued interest from the respondent. Unfortunately, nothing of that happened as the parties in the court seemed mired in the miasma of insidious and patently unnecessary polemics of jurisdiction of the court leaving aside all the issues in respect of the simple agreement they both entered. The transaction that gave rise to the dispute was a simple contract which the parties readily understood what it was all about. There is something seemingly obscene and unethical in this case. It is instructive that the respondent before it filed the preliminary objection in the two courts seized of the matter at one time or the other, did not file any pleadings. The respondent did not provide the High Court with the opportunity to see or read its pleadings so as to have a proper bird’s eye view of the real issues in controversy. Therefore this court has not been enabled to know what in the financial world or in law the respondent can be described as. It therefore boils down to the case of a mere customer which is a financial institution and a body that accepts loans from individuals to do business. The respondent more or less strove to convert the court to a vaudeville of legal playhouse by using or relying and embarking on all sorts of subtleties and merry-go round proceedings to circumvent the real issue before the High Court which is as to whether or not the appellant’s money is locked up in the respondent’s Company. The legal gymnastics employed by the respondent to have a roller coaster ride and its seeking to use the processes of the court to put the appellant in the woods though ingenious it may appear, is to my mind both unethical, inconsiderate as it failed to respond to the appellant’s case or attend to the matter in issue. If the appellant cannot sue in the Federal High Court and at the same time cannot equally sue in the Lagos High Court, which court would the action be then commenced. It is a case of “such welcome and unwelcome news at once. It is too hard to reconcile” (Shakespeare (in Macbeth).

There comes a time in the difficult but challenging art or science of adjudication and administration of justice when a court is faced with consideration of pure justice, and of course abstract law that seeks to shroud itself in concepts, dreariness and the theory of law.

It is then that a court should dig deep into its reservoir of knowledge of its forensic arsenal borne out of experience and mete out justice that can easily be understood and appreciated by the common man in the street and the litigants. The courts are the products of the society. They are established to solve and give remedies to people who complain of having been shortchanged or wronged somehow. Therefore, it should not allow undue technicalities likely to wreak havoc in the other party’s case to be introduced in an otherwise situation that does not admit of cloudiness or woolliness.