Co-operative Development Bank Plc V. Joe Golday Company Ltd. & Ors. (2000)

LawGlobal-Hub Lead Judgment Report

EKPE, J.C.A.

This is an appeal against the judgment of Hon. Justice G.G. Ezekwe delivered at the Federal High Court, Calabar on the 9th day of December, 1997 in favour of the plaintiffs.

By a writ of summons filed in the Federal High Court, Calabar the plaintiffs claimed against the defendant six reliefs, but in the statement of claim which superceded the writ of summons the plaintiffs claimed seven reliefs as set out hereunder:

A declaration that the consolidation of the accounts of the 1st and 3rd plaintiffs by the defendant without the prior or any lawful authorisation in that behalf is null and void.

2. A declaration that the defendant was not entitled to debit the accounts of the 1st and 2nd plaintiffs save as authorised by the said plaintiffs or in the normal and ordinary course of Banking and an order directing the defendant to reverse all such false, fraudulent or excessive debits.
3. An order directing the defendant to restore all the shares of the 1st and 5th plaintiffs surrendered to the defendant as a result of the false representation made by the defendant to the 6th plaintiff as to the real state of the accounts of the 1st and 2nd plaintiffs and payment to the 1st and 5th plaintiffs of all the dividend, bonus, shares and all other benefits attaching to the said shares from the time of their purported surrender.
4. Payment over to the 1st and 5th plaintiffs of the sum of N7,162,264.90 and interest being the dividends due to the 1st and 5th plaintiffs for the year 1995, which amount the defendant withheld in purported part settlement of the debts allegedly owed by the 1st and 3rd plaintiffs.
5. Payment over to the 6th plaintiff of the sum of N5 million and interest being value of the house at Ikoyi sold and retained by the defendant in purported part settlement of the debt allegedly owed by the 1st and 3rd plaintiffs.
6. Damages in the sum of N50 million for fraudulent tampering with the accounts of the 1st and 2nd plaintiffs and for the distress and embarrassment caused to the Directors of the 1st and 2nd plaintiffs as a result of the threat and false representation as made by the defendant as to the true state of the plaintiffs accounts.
7. An order restoring the 6th plaintiff to the Board of the defendant with effect from the date of his purported resignation”.

The parties filed and exchanged pleadings. In the statement of defence, the defendant denied the plaintiffs claims and counter-claim against the plaintiffs jointly and severally as follows:

“(i) Judgment for the outstanding sum of N18,249,848.88 with interest at the rate of 21% per annum from 31/12/96 until entire liquidation of amount.

(ii) An order that by deposit of their Title Deeds the plaintiffs have created equitable mortgage in favour of the defendant and same to be sold by the defendant.

(iii) A declaration that the resignation of the 6th plaintiff from the Board of the defendant (by their letter dated 26/10/95) is proper.”

The plaintiffs in turn filed a reply to the statement of defence and counter-claim and also denied the counter-claim.

The facts of the plaintiffs’ case as set out in their statement of claim which spans across 33 paragraphs can be summarised thus:

The defendant is a commercial bank. The 1st, 2nd, 3rd and 4th plaintiffs are companies incorporated in Nigeria and also customers of the defendant maintaining separate accounts with the defendant at some of the various branches of the defendant Bank. The 5th plaintiff is the wife of the 6th plaintiff and also a Director of the 1st and 2nd plaintiffs. The 6th plaintiff is the Chairman/Chief Executive of the 1st to 4th plaintiffs. Until the events giving rise to this action, the 1st and the 5th plaintiffs held 4,468,318 shares and 3,489,743 shares respectively in the defendant Bank which holding came to about 16% of the total share capital of the defendant. By virtue of this holding the 6th plaintiff became a member of the Board of Directors of the defendant and Chairman of its Finance Committee. The 1st and 2nd plaintiffs maintained separate accounts with the defendant at the Broad Street, Lagos Branch of the defendant, while the 3rd and 4th plaintiffs maintain separate accounts with the defendant at the Idumota Street, Lagos Branch of the defendant.

Prior to the events leading to this action, the 1st plaintiff had on the 4th day of April, 1991 by a Deed of Legal Mortgage obtained an over-draft of N2.5 million from the defendant, and by various variations of the Deed of Legal Mortgage the overdraft facility was increased to N5 million. There had been cordial business relationship between the plaintiffs and the defendant until the 21st day of September, 1995 when the Chairman, Board of Directors and the Managing Director of the defendant invited the 6th plaintiff to Lagos and thereat informed him that the accounts of the 1st and 3rd plaintiffs were over-drawn without giving any details of the amount involved. Subsequently, a meeting was held on the 7th of October, 1995 whereat the Chairman, some Directors of the defendant and the 6th plaintiff discussed the issue of the total unauthorised indebtedness of the 1st, 3rd and 4th plaintiffs to the defendant amounting to N64,043,389.88. The 6th plaintiff was pressurised and threatened to make proposals for the repayment of the debt, otherwise he would be reported to the regulatory authorities to take appropriate action to recover the indebtedness including prosecution under Decree No. 18 of 1994. The 6th plaintiff was also pressurised to resign his membership of the Board of Directors of the defendant Bank which he did. Believing that the defendant’s claim of indebtedness was correctly justified the 6th plaintiff authorised the defendant to sell his personal property situate at No. 82 Norman William Street, Ikoyi, Lagos. He also delivered to the defendant the documents of his Title to the said property in order to facilitate the sale of the property by the defendant. Also, the shares of the 1st and 5th plaintiffs in the defendant Bank were surrendered to the defendant for sale and the defendant sold the shares to other Directors of the defendant Bank at N3.50 per share which was lower than the real value of the shares.

In the interim, the 6th plaintiff engaged the services of a firm of auditors led by one Elder Udo-Mbang to reconcile the accounts of the 1st to 4th plaintiffs with the defendant Bank. The auditors after close scrutiny of the accounts found instances of manipulation of the accounts of the 1st to 4th plaintiffs by the defendant, consolidation of the 1st and 3rd plaintiffs accounts without due authorisation, false and fraudulent debits or charges in the accounts of the 1st and 2nd plaintiffs with huge sums of money by the defendant without any authorization thus creating huge over-draft with attendant excessive commissions and interest. Consequent upon these findings of the auditors and after the parties were unable to reconcile their accounts, the plaintiffs brought this action at the Federal High Court, Calabar claiming the reliefs already set out in the statement of claim.

At the hearing of the action, the plaintiffs called three witnesses whilst the defendant called two witnesses. After the close of the case of the parties, the learned counsel on both sides submitted written addresses to the trial court.