Bank Of The North Ltd. V Bala Yau (2001) LLJR-SC
Bank Of The North Ltd. V Bala Yau (2001)
LAWGLOBAL HUB Lead Judgment Report
O. ACHIKE, JSC.
The plaintiff/appellant, a banker claimed against the defendant/respondent in Maiduguri High Court the sum of N494,593.39 being the debit balance as at 28/2/87 in the respondent’s account with the appellant bank plus 13% per annum compound interest on same from 28/2/87 to date of judgment and 10% simple interest per annum from the date of judgment until the whole judgment debt is fully paid. The appellant also claimed a declaration that moneys secured by deed of legal mortgage dated 1st day of May, 1979 over property covered by the certificate of occupancy No. BO/2167, created by the respondent to secure his borrowings from the appellants have fallen due for payment the appellant as unpaid mortgage was entitled to exercise its right of sale under the said deed of legal mortgage.
The main controversy between the parties arose from the appellant’s debiting the account of the defendant with the sum of N185,650.00 being the total value of the five cheques issued in favour of the respondent, which he paid into his overdraft account in Maiduguri and were despatched in normal banking business by the appellant for payment by the drawee bank, i.e. Kano-City branch of the Bank of the North Limited, Kano. The said cheques were alleged by the appellant to have been dishonoured and lost in transit but the respondent took benefit of the value of the said five cheques when neither the drawee bank in Kano paid the value of the said cheque nor was respondent’s account at Maiduguri credited with the value of the said five cheques. After due trial, the learned trial Judge held that the respondent’s account was properly debited with the said sum in question, i.e. the value of the five cheques.
Dissatisfied, the respondent appealed to the Court of Appeal, which by its judgment dated 16/6/93, allowed the appeal. It set aside the judgment of trial court, and held as follows:
‘(a) The respondent has failed to establish before the court below that the five cheques paid in by the appellant were in fact dishonoured.
(b) Having regard to the facts and circumstances relating to the said five cheques, it was right and proper for the respondent to have debited the account of the appellant with the total of the said cheque.
(c) The respondent has failed to discharge the onus on it of proving if anything was owing to it by the appellant out of the overdraft of N50,000.00 granted to the said appellant.
(d) The mortgage was executed as security for the aforementioned overdraft of the said N50,000.00.
(e) In the premises, the decision that the appellant shall pay the sum of N494,593.39 to the respondent with interest and the declaration that the respondent is entitled to the mortgaged property is set aside.’
It may be observed that the word ‘not’ is missing in (b) above between the words ‘was’ and ‘right’. There is inherent power in this court to correct its judgment or that of the lower court on appeal in order to avert any mischief that would otherwise arise in reading such judgment without the necessary correction. Therefore, suo motu, I effect this amendment to the judgment of the lower court as may be found at p.125 of the record in the manner hereinbefore stated.
The appellant’s learned counsel, Fatima Kwaku, Esq. postulated three issues for determination, namely,
‘i. Whether the issue of the ‘dishonour and subsequent loss’ of the five cheques has been specifically pleaded.
ii. Whether by his conduct both passive and active the respondent has not waived his rights under sections 47, 48 and 49 of the Bills of Exchange Act Cap. 15 of the Laws of the Federation 1990 and whether the respondent is estopped from denying such waiver.
iii. Whether the learned Court of Appeal Justices ought not to have come to the same conclusion as the learned trial Judge that the respondent is in law estopped from denying liability in the sum claimed having regard to the several unequivocal written admissions of liability made by the respondent himself and his counsel.’
Learned respondent’s counsel, T.E. Williams, Esq., in turn, postulated tile following two issues for determination, to wit,
‘(i) Whether, having regard to all the facts and circumstances relating to the aforementioned five cheques, it was right and proper for the plaintiff to have debited the account of the defendant with the value of the said cheques.
(ii) In the light of the answers to the foregoing questions what final order should the court below have made on the various reliefs claimed by the plaintiff bank.’
I shall adopt the appellant’s issues for the purpose of determination of this appeal.
At the oral hearing, while appellant’s learned counsel simply adopted her brief of argument, learned counsel for the respondent also adopted respondent’s brief and submitted briefly that the admission in exhibit C would not bind the respondent because the document contained no jurat. This was the decision of the trial Judge who in turn discountenanced exh. C in the course of preparing his judgment. Counsel further submitted that there was no appeal against this finding.
Issue I
The first issue raises the question whether the issue of the ‘dishonour and subsequent loss’ of the five cheques was specifically pleaded.
It may be recalled that one of the five main reasons given by the lower court for setting aside the judgment of the trial court was that the appellant herein failed to establish that the five cheques paid in by the respondent herein were in fact dishonoured. This is manifest from the lower court’s pronouncement when it said, through the leading judgment of Okezie, JCA., as follows:
‘I am in agreement with the submission of the learned counsel for the appellant which has not been faulted by counsel for the respondent in his brief and oral argument before us that there is no averment that the cheques were presented to the drawer Bank – Kano City branch for payment and dishonour and all of the cheques. Nor is there an allegation that the cheques lost in transit. Such issues were not before the trial court.’
To stress the seriousness of this point, the learned Justice continued:
‘I hold the view that the matter of the dishonour of cheques and the alleged loss are material facts which ought to have been pleaded. As these facts are not put in issue in the pleadings, they do not arise for any finding by the learned trial Chief Judge.’
Referring to paragraphs 9, 13 and 14 of the statement of claim, as well as paragraphs 9 and 14 of the defendant’s counter-claim, and also paragraph 5 of the plaintiff’s reply to the defendant’s counter-claim, counsel submitted that these clearly showed that the parties overwhelmingly pleaded the dishonour and loss of the five cheques, contrary to what the lower court had said. Respondent did not make any input in respect of this issue in his brief of argument.
On this issue, the question is whether the lower court was justified in holding that the appellant failed to establish at the court of trial that the five cheques paid in by the respondent were in fact dishonoured. This is another way of enquiring whether the issue of the ‘dishonour and subsequent loss’ of the aforesaid cheques had been specifically pleaded in order to justify the finding in respect thereof made by the trial Judge. In this regard, appellant’s counsel refers to paragraphs 9, 13 and 14 of the statement of claim. For ease of reference I reproduce them below:
‘9. The defendant in or about December, 1978/June 1979 paid the said 5 cheques into his account with the plaintiff at Maiduguri and the plaintiff in the course of its normal banking duties despatched the cheques for payment by the drawee bank – i.e. Kano City branch of Bank of the North Limited, Kano.’
- The aforesaid 5 cheques, the total value of which amounted to N185,650 were in effect never paid by the drawee bank and the defendant’s account at Maiduguri was never credited with the said sum.
- Having already taken the benefit of the total value of the 5 cheques valued at N185,650.00 and as the value of the said cheques were never received from the drawee bank the defendant’s enjoyment of direct credit of the said sum of N185,650.00 amounted to the granting of unauthorised facility by the plaintiff to the defendant.’
In turn, the respondent answered the above paragraphs of the statement of claim in some paragraphs of his statement of defence. Perhaps, it will be enough in this regard to reproduce only paragraph 13 of the statement of defence:
’13. The defendant denies paragraph 13 of the statement of claim and puts plaintiff to the strictest proof of the fact that the N185,650.00 cheques were presented but not paid by the drawee bank. The plaintiff admits that his account No.4 A00219 was not credited with the said sum as the plaintiff had claimed that the cheques got lost in transit and he defendant had been informed of this fact only after about a year of paying in the first cheque No.027510 of N30,000.00 on 8/12/78. The defendant shall rely on the said 5 cheques and hereby pleads same.’
It may be useful to refer also to paragraph 14 of the statement of defence although I need not reproduce it. Again, it is pertinent to reproduce paragraphs 9 and 14 of the counter-claim:
‘9. It was only after about a whole year of the payment of the said cheques into the defendant’s account and only after the defendant had made use of the amount of the cheques by withdrawals of some from the plaintiff’s branch in Maiduguri that the defendant for the first time became aware of the fact that the said cheques had all got lost in transit while in possession and control of the plaintiff.’ (Italics mine.)
’14. The defendant avers that having been informed of the lost (sic) of the cheques in transit he could not be issued with new cheques to cover the said sum of N185,650.00 as the people who had paid him by those cheques did not believe that the cheques got lost in transit and so even if defendant can pay to the plaintiff the total sum of N185,650.00 then he the defendant cannot recover his money from the people who had issued him the cheques.’
Finally, it is pertinent to reproduce paragraph 5 of the plaintiffs reply to the defendants counter-claim which runs as follows:
‘5. With reference to paragraph 9 of the counter-claim the plaintiff while admitting that the defendant had made use of the said cheques amounting to N 185,650.00 denies that the said cheques got lost in transit while in the possession and control of plaintiff and further denies that the defendant was only notified of the dishonour of the cheques after about one year of the payment of same into the defendant’s account. The plaintiff avers that the said cheques were on several occasions presented for payment to the paying bank but same were not honoured and the plaintiff advised the defendant accordingly within reasonable time……’ (Italics mine)
The above reproduced paragraphs of the parties’ pleadings eloquently attest to the fact that the parties substantially joined issues on the vexed question of the dishonour and subsequent loss of the aforesaid cheques in their pleadings. Thus it is undoubted that the parties fully reacted on the dishonouring and loss of the controversial cheques lodged by the respondent in his account. What is however more interesting is that the learned trial Judge made a finding in relation to the status of these cheques in terms of the parties pleadings and evidence led at the trial. This is how the trial Judge summarised the issue, and permit me for purposes of clarity, to reproduce the relevant excerpt of the judgment in extenso:
‘There is ample evidence clearly showing that the five cheque in question were dishonoured and consequently his account was being debited with the sum of N185,650 as the proceed of the cheques were already paid to him. I believe the evidence of Yahaya Mahmud that on discovering that the cheques were dishonoured he invited the defendant and told him in an unequivocal terms that the cheques he paid in and collected the proceeds before they were cleared had been dishonoured and that unless he made good the amount involved by issuing a replacement cheque his account would be debited with the amount in question. Whether he took Yahaya Mamud seriously or not is another matter but it is certain that he was put on notice that his account would be debited and in fact true to Yahaya Mahmud’s threat the account was debited.’
One is obviously in no doubt that both parties as well as the trial court fully addressed the issue of the ‘dishonour and subsequent loss of the five cheques’ respectively in the parties’ pleadings and in the judgment of the trial court. Okezie, JCA was therefore in grave error to have reached the decision, inter alia, to set aside the judgment of the trial Judge on the premises that the appellant at the trial court failed to establish in its pleadings and by evidence that the five cheques paid in by the respondent were in fact dishonoured. His decision based on these erroneous premises is a matter that goes to the root of the controversy between the parties and an appellate court cannot allow it to stand.
Issue No.2
‘i. Whether the issue of the ‘dishonour and subsequent loss’ of the five cheques has been specifically pleaded.
ii. Whether by his conduct both passive and active the respondent has not waived his rights under Sections 47, 48 and 49 of the Bills of Exchange Act Cap. 15 of the Laws of the Federation 1990 and whether the respondent is estopped from denying such waiver.
iii. Whether the learned Court of Appeal Justices ought not to have come to the same conclusion as the learned trial Judge that the respondent is in law estopped from denying liability in the sum claimed having regard to the several unequivocal written admissions of liability made by the respondent himself and his counsel.’
It is common ground that both the respondent and the drawers of the vexed five cheques were not put on notice in good time with regard to the dishonoured cheques. Consequently, the respondent places reliance on sections 47, 48 and 50 of the Bills of Exchange Act which outline rules that govern giving of notice of dishonoured bills and the effect of not giving such notice. Appellant’s counsel however submits that the respondent is by his conduct deemed to have waived whatever rights or remedies that have accrued to him by reason of the provisions of section 50(2)(b) of the said Act. Counsel further submits that the net effect of exhibits C, F, G, J and K is that the respondent must be estopped from denying waiver of his rights under the provisions of sections 47, 48 and 49 of the Act. Counsel finally submits that it was failure of the lower court to advert its mind to the legal implications of the doctrines of waiver and estoppel that led to the erroneous conclusion reached by the lower court that it was improper for the appellant to have debited the respondent’s account with the total value of those cheques.
For the respondent, it is submitted that on the facts of this case the five cheques were accepted by the appellant as absolute (as opposed to conditional) payment of cash to the bank. First, the cheques were drawn by a third party on another branch of the appellant bank and the respondent was not a party to the instrument. Secondly, there was an understanding, as attested to by one of the appellant’s witnesses, that the respondent was allowed to take the value of the cheques without waiting for the usual period for the clearance of the cheque as the respondent had convinced the branch manager of appellant bank that all the five cheques would be honoured promptly.
Arguing in the alternative, i.e if the court does not accept the submission that the plaintiff bank accepted the cheques as absolute payments, the only other optional finding is that the cheques were accepted on condition that when presented, they will be honoured. In that situation, the defendant adopts the opinion of the law as stated in Chitty on Contract, vol.1 para. 155, p.982. Put briefly, where the creditor, such as the plaintiff herein accepts a negotiable instrument upon which the debtor, such as the respondent herein, is not primarily liable, the creditor must present the instrument, the cheque herein within a reasonable time. If he fails to do so, and the debtor is prejudiced, the creditor is deemed to be guilty of laches and therefore makes the cheque his own, and it amounts to payment of the debt. Again, the creditor must give due notice of dishonour and thereby preserve his remedies against other parties secondarily liable. Such notice is not necessary to be given to the debtor unless he is a party to making of the negotiable instrument. Finally on this issue, counsel submits that under cross-examination of PW2, that witness admitted that a delay of a period of one year in informing a customer that his cheque were not paid was unreasonable.
It is pertinent to preface the discussion under this issue by observing that both the trial court and the Court of Appeal were of the same opinion first, that the respondent lodged five cheques and took value for them at a time when he had no money in his account before the effects were cleared. Second, that the respondent knew that he had no money in his account when he lodged the said cheques. Thirdly, because his account was in red when he was asking for a further overdraft. However, as earlier noted, respondent’s counsel then submitted that since the respondent was not put on notice of the dishonour of the cheques within a reasonable time, the respondent was no longer liable, relying on the cumulative effect of sections 47, 48 and 49 of the Act.
I have perused sections 47, 48 and 49 of the Act. The summary of the provisions of the three sections of the Act, as they are relevant to the parties’ case, may now be noted. Section 47 makes it clear that a bill is dishonoured by non-payment of the value of money stipulated thereon. Section 48 states that notice of dishonour must be given to the drawer and each indorser of the bill and failure to do so, the right of a holder in due course subsequent to the omission shall not be prejudiced by the omission. These two sections, in my view, are not relevant to the situation under consideration in this appeal. But section 49(1) stipulates that notice of dishonour of the bill must be given within a reasonable time thereafter. Undoubtedly, time is of the utmost importance in relation to giving notice of dishonour. There is no hard and fast rule in this matter save that it is common ground that what constitutes a reasonable time is a question of fact dependent upon the circumstances of the case. A delay in giving notice extending for a period of nearly one year, without any satisfactory explanation, as earlier observed, cannot be but unreasonable; see Lombard Banking Ltd. v. Central Garage and Engineering Co. Ltd. (1963) 1QB:220.
In other words, if the matter rested there I would have had no compunction to hold that the delay discharge the respondent from further liability under the five cheques. Indeed, my conclusion in this regard will be supportable from the angle that the five cheques were accepted by the appellant bank on condition that when presented, they would be honoured. This, in effect, will tantamount to accepting the view of the law on bill of exchange, ably and lucidly enunciated in Chitty on Contracts. vol. 1, para. 1551, at pg. 982. Such inevitable consequence of dilatory treatment of a bill of exchange was endorsed by Willes, J. in Peacock v. Purssell (1863) 32 LJCP 266 at 267:
‘The plaintiffs here (such as appellant herein) took the bill at first conditionally but having dealt with it in such a manner as to render it useless to the defendant, (as the respondent herein) they must now be considered as having taken it absolutely.’ (Italics mine).
However, appellant’s counsel disagreeing with this conclusion has, relying on the provisions of section 50(2) of the Act, submitted that even if there were laches in giving notice to the respondent within the provisions of section 49 of the Act, the court should infer waiver from the conduct of the respondent. Counsel further submits that the subsequent actions and steps taken by the respondent to repay the value of the five cheques serve as an estoppel against any denial by him of waiver of his rights under the Act. So, also, by virtue of actions taken by the respondent in exhibits C, F, G, J and K, where he admitted his indebtedness and made proposals for repayment.
I shall start by first looking at the statutory provisions for excuse for delay or failure to give notice arising from waiver. The Act by its section 50(2) provides:
‘(2) Notice of dishonour is dispensed with –
(a) xxxxxx
(b) by waiver express or implied; and notice of dishonour may be waived before the time of giving notice has arrived, or after the omission to give due notice.
(c) x x x x
I shall first call attention to exhibit C which the appellant heavily relies on as evidence of waiver of conduct on the part of respondent. I am not prepared to look at exhibit C. Suffice it to say that this was the document wherein the respondent agreed to provide replacement cheques covering the value of those lost in transit. Although this document was admitted in evidence, it was suo motu discountenanced by the learned trial judge on the rather flimsy ground that the agreement (otherwise referred to as exhibit C), and which was duly signed by the respondent, but to which no jurat was subjoined; the trial court presumed that the respondent was illiterate. Against this decision, there is no appeal in respect thereof, as submitted by respondent’s counsel. I entirely agree with this submission, it is well-founded. Exhibit C having been discountenanced by the trial judge, it cannot now be directly or surreptitiously looked at by the appellate court.
Next is exhibit F. It is a letter written and signed by the respondent, dated 22/12/81. In it, respondent acknowledged his indebtedness to the appellant and made proposal for immediate down payment of N20,000.00 in January 1982 and ‘a monthly instalmental payment of N3,000.00 commencing from the 31st day of February 1982.’ (sic) Exhibit G was an agreement between the parties wherein the respondent made new proposals and agreed to settle his indebtedness to the appellant. On the other hand, exhibit J, was a letter dated 6th February 1985 written by respondent’s solicitor and along which he forwarded a cash payment of N21,000 and the request to be apprised of the respondent’s balance of indebtedness to the appellant. Finally, exhibit K is a letter by respondent’s solicitor, dated 13/3/85 wherein the appellant was requested to treat the respondent’s indebted to the appellant. Finally, exhibit K is a letter by respondent’s solicitor, dated 13/3/85 wherein the appellant was requested to treat the respondent’s indebtedness as a loan which was to be re-scheduled for payment, allowing a moritorium of six months and with an additional security to be provided by the respondent.
In this case, it is certainly clear that the conglomeration of events borne out by the contents of exhibits F, G, J and K (which have been summarised in the immediate proceeding paragraph) provides ample and unquestionable evidence of conduct sought to infer waiver and made before action brought. As I had already held in this judgment, it cannot be doubted that there was failure on the part of the appellant to give due or reasonable notice of dishonour, nevertheless facts relevant to that delay were within the knowledge of the respondent as particularly set out in the aforesaid exhibits F, G , J and K. It is unthinkable that if the respondent had not inferentially waived the requirement of due notice he would not have taken it earlier. This is because waiver may be implied from conduct that is inconsistent with the continuance of the right. Furthermore, authorities are awash that the courts have readily inferred waiver from very minimum or slight evidence; see Lombard Banking Ltd. v. Central Garage & Engineering Co. Ltd. (1963) 1KB 220. I have therefore reached the firm view without any hesitation whatsoever that even though appellant did not give due notice of dishonour of the five cheques, the respondent had, before action brought, waived the requirement of due notice.
The lower court was clearly in error by its failure to advert to the consequence of waiver under section 50(2)(b) of the Act which was undoubtedly relevant in the resolution of the controversy between the parties. From all the above, issue no.2 is accordingly resolved in favour of the appellant.
Issue no.3
‘Whether the learned Court of Appeal Justices ought not to have come to the same conclusion as the learned trial judge that the respondent is in law estopped from denying liability in the sum claimed having regard to the several written admissions of liability made by the respondent himself and his counsel.’
We had earlier in this judgment recaptured and reproduced the grounds of the decision of the Court of Appeal for setting aside the judgment of the trial court and in turn dismissing the appellant’s claim. Issue 3 seeks the determination of whether the respondent was rightly and properly saddled with the financial liability now claimed by the appellant. The relevant grounds of decision which are pertinent for the consideration of the issue under reference are (b), (c), (d) and (e). In summary, (b) states that it was wrong to fix the respondent with liability of the value of the five dishonoured cheques of which the appellant failed to give due notice to the respondent as required by law, while the cumulative effect of (c),(d) and (e) is that the liability of the respondent was limited to his overdraft of N50,000.00 granted him by the appellant wherein the mortgage of respondent’s property served as security for that overdraft and there was therefore, no basis for the declaration made in respect of the mortgaged property.
The narrow question left in this appeal is whether from all the circumstances of this case the liability of the respondent is restricted only to the original overdraft of N50,000.00 including the relevant interest accruing thereto or it is the larger amount comprising the overdraft with interest and the value of the five dishonoured cheques? It is common ground that the respondent by reason of the arrangement between the parties, took sole benefit of the value of the said five dishonoured cheques which amounted to N185,650.00, even before the cheques were cleared. Again, the two lower courts were consensus ad idem that the account of the respondent before the five cheques were credited to him prematurely was in red. Below are some excerpts of the judgment of the trial judge that I consider apposite for consideration in this regard:
‘There is ample evidence clearly showing that the five cheques in question were dishonoured and consequently his account was being debited with the sum of N185,650 as the proceed (sic) of the cheques were already paid to him.’
Further down in the judgment, he continued:
‘His conduct after he was served with demand letter does not give support or credence to the defendant’s contention that he was not aware that the amount with which his account had been debited attracted interest. He had made proposals for rescheduling the huge debits brought to his notice but his proposals were rejected. He then decided to pay in the N21,000 to appease his creditors. All these go to show that the defendant was aware of his indebtedness to the plaintiff.’
Finally, the learned trial judge had this to say with regard to the stepping up of the value of the property in the light of further financial commitment made in favour of the respondents:
‘The defendant also seems to make capital out of the fact that initially he mortgaged his landed property for the loan of N50,000 and it was stamped N55,000.00. But Yahaya Mamud explained and I believe him that it is banking practice to up-stamp the property if there are other commitments and hence his creditors up-stamped mortgaged property.’
Additional to the above excerpts of the judgment of learned trial judge, the respondent’s various admissions of liability to the appellant featured vividly in exhibits F, G, J and K. One should not lose sight of respondent’s bank statement of account, exhibits P1-19 and Q1-4 that were regularly sent to him. At the trial, and under cross-examination, respondent’s attention was specifically drawn to paragraph 2 of exhibit K which was a letter written by Ismail Gadzama & Co., of counsel to the respondent pleading with the appellant for a re-schedule of respondent’s indebtedness that then stood at N374,530.56. Respondent said at that juncture:
‘I have seen paragraph 2 of exhibit K. I wanted the bank to re-schedule the money they claim I was owing them because I know the Bank had added to my account because unless I do that they would persist in threatening to sell my house.’
All the above, including the exhibits, the testimony of the respondent, particularly under cross-examination and the letters of admission of indebtedness made by respondent’s counsel on his behalf are glaring admissions and awareness on the part of the respondent of the fact of his financial liability to the appellant. I am clearly of the view that the various statements made on behalf of the respondent by his counsel through his correspondence with the appellant are admissions within the purview of sections 19 and 20(1) of the Evidence Act. It will be perfidious to allow the respondent to get away with such financial accommodation he obtained from the appellant bank. This is more disturbing for, when it suited the respondent, he evoked the technical rule of absence of jurat meant to protect illiterates to defeat the admissibility and coerciveness of certain document, e.g. exhibit C would have unquestionably pinned him down to his liability. Paradoxically, respondent did not deny nor challenged the content or admissibility of exhibit F which was a letter dated 22nd March, 1981 signed by him, and visibly, this document was not accompanied by any jurat.
Certainly, it will be inequitable for anyone, such as the respondent herein to enjoy the liberty of making statements by himself or through his accredited agents or representatives, which having been acted upon by another to his detriment in the belief that the statements were true, is thereafter allowed to renege from such statements. The law has accorded reasonable protection to unsuspecting members of society who are misled by such statements because the maker thereof is absolutely stopped to contradict or deny the truth of such statements. Thus section 151 of the Evidence Act provides:
‘When one person has by his declaration, act or omission, intentionally caused or permitted another person to believe anything to be true and to act upon such belief, neither he nor his representative in interest shall be allowed, in any proceedings between himself and such person or such persons representing in interest, to deny the truth of that thing.’
SC. 250/93