First Bank of Nigeria Limited V. Pan Bisbilder (Nigeria) Limited (1989)

LawGlobal-Hub Lead Judgment Report

SALAMI, J.C.A.

The plaintiff sued the defendant in the sum of N429, 860.00 as special and general damages for a breach of contract or agreement for loan granted under the Agricultural Credit Guarantee Scheme and guaranteed by the Central Bank under the said Scheme. In the alternative the plaintiff claimed for breach of duty or default by the defendant under the Loan Agreement.

Pleadings were ordered and exchanged at a statement of claim and an amended statement of defence. At the hearing both parties led evidence and addressed the court through their respective counsel. The plaintiff called four witnesses as against one called by the defendant. The learned trial Judge, Oni-Okpaku, J., in a reserved and well considered judgment found for the plaintiff in the sum of N57, 429.00 with costs assessed at N600.00.

The parties are dissatisfied with the judgment and have appealed to this court. The defendant is contesting its liability as well as quantum of damages while the plaintiff is contesting the measure of damages awarded to it. The fact of the case is not seriously disputed. The plaintiff obtained loan of N116,500.00 from the defendant (hereinafter referred to as the appellant) under the Agricultural Guarantee Credit Scheme Fund Act 1977 whereby the appellant granted loan to the plaintiff (hereinafter referred to as the respondent) which loan was guaranteed by the Central Bank of Nigeria. The loan was advanced in two instalments of N60,000.00 and N56,500.00. The first segment of the loan was disbursed fully while the remaining portion was only partially disbursed. The appellant withheld N30,000.00 of the N56,500.00 in satisfaction of a previous overdraft granted to the respondent. The appellant contended that the withholding of the sum of N30,000.00 is not without the respondent’s consent, a fact which the latter denied. The learned trial Judge rejected the respondent’s denial nevertheless it found the agreement to divert the N30,000.00 to a purpose other than that of Agricultural Guarantee Credit Scheme illegal.

It is apt at this stage to consider the appellant’s complaint against the trial court finding it liable to the respondent. To this end it filed three grounds of appeal, two of law and the other the omnibus. The grounds of appeal read:-

“(1) Having held that “The defendant and plaintiff made separate arrangement to divert the N30,000.00 (Thirty thousand naira)” the learned judge of the High Court erred in law when she proceeded to enter judgment in favour of the plaintiff in this suit.

PARTICULARS OF ERROR

(a) The said “separate arrangement was a collateral agreement which was binding on both parties and therefore a good defence for the defendant’s failure to disburse the N30,000.00 to the plaintiff for the Agricultural Loan.

(b) The learned judge of the High Court failed to take cognizance of the fact that “the separate arrangement to divert the N30,000.00 was a waiver of the plaintiffs right to insist that the said amount should be disbursed to the plaintiff under the agreement. Having regard to the above the learned Judge of the High Court ought to have dismissed the plaintiff’s claim since the plaintiff was not in law entitled to approbate and reprobate to the detriment of the defendant.

2. The judgment is against the weight of evidence.”
3. The learned trial Judge erred in law in holding that the variation of the contract is in breach of an essential condition of the loan the variation having not been disclosed to the Central Bank.

PARTICULARS OF ERROR

(a) Failure to disclose the variation to the Central Bank cannot vitiate the variation vis-‘E0-vis the parties in this suit as the Central Bank is not a party in the instant suit.

(b) The said variation is binding on and enforceable by the parties to the suit irrespective of the fact that the Central Bank was not a party to the variation.

(c) The vitiation of the guarantee does not amount to a breach of the original contract as this could only affect the right of the appellant to make any recovery from the Central Bank.”

In this connection, the following issues were formulated in the appellant’s brief:-