First African Trust Bank Ltd V Partnership Investment Company Limited (2003)

LAWGLOBAL HUB Lead Judgment Report

A. O. EJIWUNMI, J.S.C. 

The claim that eventually led to this appeal was commenced by the plaintiff/respondent before the High Court of Lagos State in suit No. LD/1395/95. In that suit, the plaintiff/respondent’s claim was for the sum of N7,100,000.00 (Seven Million, One Hundred Thousand Naira) being the value of a bank draft issued by the appellant in favour of the respondent on the 8th of February, 1995 as per First African Trust Bank cheque No. 40622-062150011 and which cheque was returned unpaid despite repeated demands. The respondent also claimed interest at the rate of 21% per annum from 8th February, 1995 to the date of judgment and 10% per annum thereafter until judgment debt is finally paid.

The writ of summons in respect of this claim was followed by a statement of claim. Thereafter, the respondent by a motion on notice applied to the trial court for leave to enter judgment against the appellant. That move was resisted by the appellant who eventually got the leave of the trial court to file its statement of defence in order to defend the action. The case was then heard on the pleadings filed by the parties. For the respondent one witness gave evidence while appellant proffered evidence in support of its own case by calling two witnesses.

In view of the comments that will be made later in this judgment, the pleadings of the parties would be set out in this judgment. For the plaintiff/respondent, the statement of claim filed on its behalf by its learned counsel reads thus:-

“1. The plaintiff is a registered company with its office at 37 Ademola Street, S.W. Ikoyi, Lagos and carrying on the business of financial consultants and suppliers.

2. The defendant is a registered company carrying on banking services at Afribank Street, Victoria Island, Lagos.
3. On the 8th of February, 1995 the defendant issued a bank draft No. 40622-062150011 for N7,100,000.00 in favour of the plaintiff for services rendered.
4. That on presentation the cheque was first returned and marked “represent” “value not received”.
5. That when the cheque was again represented it was returned and marked “payment stopped.”
6. That payment could not be stopped because it was the bank itself that issue (sic) the cheque.
7. That the plaintiff had already given value on receipt of the bank draft.”

And for the appellant, its statement of defence reads thus:-

“SAVE AND EXCEPT as hereinafter expressly admitted the defendant denies each and every allegation contained in the statement of claim as if the same were specifically set out and traversed seriatum:

1. That the defendant admits paragraphs 1 and 2 of the statement of claim.
2. The defendant denies paragraphs 3, 4, 5, 6 and 7 of the statement of claim.
3. The defendant in particular response to paragraphs 3 and 7 of the statement of claim denies ever receiving value or consideration for the banker’s cheque; the subject-matter of this suit, and avers that it stopped payment of the same to prevent fraud on itself.
4. Further to the immediately preceding paragraph the defendant states that sometime in February, 1995, while in the course of trading, a man called Alhaji Tijani Ladan offered to sell US$500,000.00 to the defendant in the presence of one Alhaji Abubakar of Damco bureau de change and another.
5. The defendant further states that part of the conditions precedent to concluding and transferring the money was that part payment must be made in draft as evidence of the defendant’s ability to pay before the transfer can be effected.
6. The defendant states that based on the aforesaid agreement in paragraph it issued two cheques for N15 million Naira as follows:

(a) Nigeria Universal Bank – 7,900,000.00

(b) Partnership Investment – 7,100,000.00

TOTAL = N15,000,000.00

7. Contrary to the said agreement the bankers cheque – subject-matter of this suit – came in through clearing. The defendant immediately threatened to stop payment, were prevailed upon by the aforesaid persons to return the cheque marked ‘represent’ to enable the defendant receive value for the foreign exchange purchased.
8. However, the said cheque was represented without receipt of the foreign exchange and at this stage the defendant stopped payment to prevent loss of the naira sum of N7,100,000.00.
9. The defendant states that the said attempted fraud was reported to the police authorities, and some of the said persons involved were arrested.
10. The defendant avers that neither the said Alhaji Tijani Ladan nor the plaintiff has an account with it and denies receiving any value for the said banker’s cheque from them or anyone else.
11. The defendant denies that the plaintiff gave it any value for the said cheque nor has the plaintiff suffered any loss at all.

ALTERNATIVELY, if the plaintiff suffered any loss at all (which is denied) the same is not attributable to the fault of the defendant

12. The defendant further states that only the outcome of police investigations can reveal what role (if any) the plaintiff played in the entire transactions; as the plaintiff’s name was given to the defendant as beneficiary of the said cheque.
13. That even with the endorsement on the cheque (i.e. ‘represent’ value not received) the plaintiff did not contact the defendant for confirmation of the cheque until after same had been stopped. 14. The defendant further states that had it not stopped payment of the said cheque; it would have suffered a complete loss of the value of the cheque.
14. Whereupon the defendant states that the plaintiff’s claim is speculative and unfounded and should be dismissed with costs to the defendant.”

At the trial, the case for the respondent as given by the only witness called appears to be that one Alhaji Abubakar brought a bank draft of N7.1 Million which was part-payment of an amount owed by him to the respondent. Following the presentation of the cheque for payment to the appellant, claimed by the respondent to be its bankers, the bank draft No. 013922 dated 8-2-1995 was returned and that it should be re-presented. The respondent duly re-represented the bank draft exhibit P1 at a future date. When it was so re-presented to the appellant, it was returned unpaid with this remark: “value not received”. As since the bank draft has remained unpaid, the respondent commenced this action. Under cross-examination, the witness said about Alhaji Abubakar who gave the bank draft to the respondent as follows, and I quote:-

“Alhaji Abubakar was interested in investing in the plaintiff’s company by purchase of share on the company. The plaintiff company made some payments to Alhaji Abubakar in terms of facilities granted to him. He was given credit facilities by the plaintiff company. He was given credit facilities up to Twenty-Six Million Naira N26,000,000.00. The credit facilities was given to Alhaji in January, 1995. The draft was given to the plaintiff by Alhaji Abubakar in part settlement of the credit facilities granted to him. When the draft was dishonoured we made contract (sic) with Alhaji Abubakar about it, he did not make any effort to repay the returned draft even after several meetings…”

For the appellant, evidence was given by its first witness inter alia, that the respondent is not a customer of the appellant. That apart from the bank draft exhibit P1, the appellant had no relationship whatsoever with the respondent. He said that around 8th February, 1995, one Alhaji Tijani Ladan came with Alhaji Abubakar of Damco bureau de change to the appellant where they had a meeting with the officials of the appellant. During that meeting the visitors offered to sell on the autonomous market a sum of $500,000.00. As the representatives of the appellant became interested in the offer, it was agreed with the off errors that the said sum would be bought by the appellant for the sum of N15,000,000.00 (Fifteen Million naira). At the request of Alhaji Tijani, the appellant also agreed that it would issue two cheques (bank drafts) for the sum of N15,000,000.00 as follows: