First City Monument Bank PLC V. Cp-tech Construction Company Limited (2015)

LawGlobal-Hub Lead Judgment Report – COURT OF APPEAL

BOLOUKUROMO MOSES UGO, J.C.A. (Delivering the Leading Judgment)

This appeal is against the judgment of the High Court of Ekiti State, Ado-Ekiti Judicial Division, delivered on 4th March, 2014 by A.L. Ogunmoye J. It concerns a banking transaction between the respondent and his bank, the appellant, and monies deposited by the respondent with the appellant towards the purchase of a ship by the respondent from a Liberian based company.

That transaction went awry and cost the respondent its said funds amounting to US$142,500.00 which the appellant transferred to the ship sellers as deposit when the respondent could not raise additional funds to acquire the ship because the appellant’s board eventually declined to approve the credit facility its Ado-Ekiti Branch Managers had in writing approved in principle and assured the respondent it would offer it.

The $142,500.00 deposit became irretrievable because the agreement between the ship sellers and the respondent stipulated that any sum deposited by the respondent towards the acquisition of the ship shall become non-refundable if it eventually failed to buy it.

That is a summary of the facts of the case which are in any case not too disputed, except that the few ones disputed, which the Lower Court resolved in the way it appreciated them, form the hub of the arguments in this appeal.

Now, the fuller facts of case as presented by the claimant in its Further Amended Statement of Claim is that it operated a current account and a domiciliary account with the Ado-Ekiti branch of the defunct FinBank Plc, a commercial bank which presently goes by the name of the appellant having been subsequently acquired by and merged with the business and undertakings of the appellant. In the ordinary course of business, it approached the appellant for a loan in the total sum of N190 Million to enable it purchase a ship, the MV Katie. Both in its pleadings and the written deposition of its Managing Director/CEO, it identified the appellant’s Ado-Ekiti Branch Manager, Mr. Adubuola Olagoke and the Relationship Manager, Mr. Eladiya Thompson Temitope as the officers of the Appellant with whom its MD/CEO (CW4) had dealings, interaction and negotiations with in respect of the credit facility sought.

At the prompting, advice and direction of these two persons, it averred, it prepared a feasibility report (Exhibit 14) and submitted the same along with a copy of the Memorandum of Agreement (Exhibit 17) signed between it and the ship’s owner and letter of application for loan (Exhibit 15) dated 27th December, 2007 to the appellant, which the appellant swiftly granted same day and issued it with a letter of offer (Exhibit 16) in principle.The Memorandum of Agreement (Exhibit 17) earlier referred to includes a clause which required the claimant to make a non-refundable deposit of US$142,500.00 (One Hundred and Forty Two Thousand, Five Hundred United States Dollars) in favour of the ship owners through one Gloriosa Co. within five (5) days from the date of signing the said agreement.

The attention of the Appellant was drawn to this requirement and the time frame thereof, it said. Based on the assurance of the appellant’s aforementioned Ekiti Branch Manager and Relationship Managers that the appellant would release the loan fund contemporaneously to enable the transaction to be completed, it funded its domiciliary account with cash of US$142,500.00 (One Hundred and Forty Two Thousand, Five Hundred United State Dollars) for ease of facilitation of the foreign exchange transfer including, when appropriate, the aforesaid deposit.

It claimed that since its Managing Director/CEO (CW4) resided in Ijebu-Ode, Ogun State -a considerable distance from Ado-Ekiti, Ekiti State- it was advised by the appellant’s same Ado-Ekiti Branch Manager and Relationship Manager to sign and leave with them, on trust, blank undated Transfer Instruction forms to facilitate a seamless and timely remittance of the price to the ship sellers in foreign exchange as soon as the Banker’s part was ready – and that is the main cause or point of dispute between the parties, at least in their arguments in court.

The respondent claimed its MD/CEO (CW4) accepted the said advice in good faith and did sign, in blank and without dating, several Transfer instruction forms which he left with the Appellant’s Ado-Ekiti Branch Manager upon trust as advised. When time was running out without the transaction being consummated, it averred, its Managing Director (CW4) began to voice his displeasure at the slow pace the appellant was handling the transaction especially since time was of the essence to the contract of ship purchase. It was at this juncture, during one of his visits to the bank, it says, and it is not disputed, that the aforementioned Ado-Ekiti Branch Manager of appellant informed him that the Branch was encountering difficulties in obtaining the approval of its Board of Directors for the credit facility.

The respondent averred its MD/CEO was to discover later that the appellant’s Ado-Ekiti Branch Manager had no power at all to originate, negotiate and/or undertake this type of credit transaction but the Branch and Relationship Managers concealed that fact from him.

Ultimately, the appellant’s Board of Directors, it is again common ground, refused its approval for the credit transaction, in consequence of which the respondent was unable to purchase the ship. When respondent subsequently sought to utilize the US$142,500.00 in its domiciliary account, it said it was presented with a printout from the appellant purporting to show that between 11th and 29th January, 2008 the entire amount had been paid out by the appellant in fifteen installments to Gloriosa Co., the ship’s owner. It said the appellant claimed to have acted on the signed blank and undated Transfer Instruction forms earlier referred to.

Faced with that horrible turn of events, the respondent had to institute this suit where it claimed against the appellant:

a. Refund of the sum of US$142,500 (One hundred and forty-two Thousand, five hundred United States Dollars) to the claimant’s domiciliary account with the defendant.