Global Bank Ltd V. Standard Alliance Insurance (2010)

LawGlobal-Hub Lead Judgment Report – COURT OF APPEAL

HUSSEIN MUKHTAR, J.C.A.(Delivering the Leading Judgment)

This appeal is brought against the decision of the High Court of Lagos State delivered by S. O. Ojikutu-Oshode, J. on 1st February, 2002 entering judgment under the undefended list procedure against the appellant herein.

Hostilities between the parties originated from a credit facility granted by the appellant to one of its customers known as Interglobal Services limited. The respondent issued a performance guarantee bond in the sum of Seventy Million Naira (N70,000,000) in favour of the appellant guaranteeing repayment of the facility .

When Interglobal Services Ltd defaulted in repayment of the facility, the appellant sued both the company and the respondent in another suit, which is not the subject of this appeal. Subsequently the respondent, who is also a customer to the appellant, sought to withdraw the sum of Two Million, Two Hundred and Sixty Thousand, Three Hundred and Fourteen Naira, Fifty Three Kobo (N2,260,314.53) from its fixed deposit account with the appellant. The appellant refused to allow that withdrawal claiming right of lien/set-off on account of the N70,000,000:00 guaranteed by the respondent, which has not been redeemed.

The respondent filed a suit against the appellant under the undefended list to recover its money in the fixed deposit account being withheld by the appellant. The appellant filed a notice of intention to defend supported by an affidavit of Twenty one paragraphs. The depositions in paragraphs 5-19 thereof state as follows:

“5 That sometimes in 1987, the plaintiff opened a fixed deposit account with the defendant.

6. That the defendant denies ever advising the plaintiff on the 6th June, 1999 that the plaintiff’s deposit stood at N1,727,946.89 or any sum whatsoever at maturity date on the 20th of June, 1999. The defendant puts the plaintiff to the strictest proof thereof.
7. That the defendant contends that on 12th August, 1998, the defendant granted an overdraft facility of N50 Million to one Interglobal Services Ltd to finance the importation of various products such as cements, rice and sugar. Attached as exhibit ‘A’ is a copy of the facility letter.
8. That the said facility was repayable in 90 days from the proceed of the sale of the said goods at an interest rate of 26% per annum but subject to variations in statutory regulations and money market.
9. That on the 2nd of March, 1999 Interglobal Services Ltd approached the defendant and claimed to have secured a local purchase order for the supply of N120,000 bags from one Standard Construction Company Ltd at Abuja.
10. That the defendant refused to release the said 120,000 bags of cement unless Interglobal Services obtain a Performance Guarantee Bond from a reputable company.

11.That the Interglobal Ltd sought for and obtained from the plaintiff a Performance Guarantee Bond issued in favour of the defendant.

12. That by and under the said Performance Guarantee Bond the plaintiff undertook to indemnify the defendant to the tune of N70,000,000 (Seventy Million Naira) in the event of default of payment by Interglobal Services Ltd.

13.That consequent upon and relying on the assurance and guarantee provided for by the plaintiff in the said Performance Guarantee Bond the defendant permitted Interglobal Services Ltd to remove from the defendant’s warehouse the 120,000 bags of cement out of the said 300,000 bags for the purpose of supplying same to Standard Construction Company Ltd.

14.That while the defendant was waiting to receive payment from Interglobal Service Ltd the defendant later discovered on enquiries made, that Interglobal Services Ltd did not in fact supply the 120,000 bags of cement to Standard Construction Company.

15.That up till date, Standard Construction Company denied ever taking delivery of the 120,000 bags of cement and Interglobal Services Ltd has refused, failed and neglected to pay the amount due from the proceed of sale of the 120,000 bags of cement.

16.That in spite of repeated demand made to the plaintiff to fulfill its obligation to the defendant as contained in the Performance Guarantee Bond, the plaintiff has also failed, refused and/or neglected to pay to the defendant the sum of N70 Million due to the defendant.

17.That upon the refusal of the plaintiff to fulfill its obligation to the defendant on the Performance Guarantee Bond, the defendant exercised its right of lien over the remaining amount in the plaintiff account.

18.That the above facts the subject matter of suit No. LD/287/2000 – Global Bank Ltd v Standard Alliance Insurance Ltd and ORS.

19.That it is in the interest of justice that the defendant be allowed to defend this suit as it has a good defence”.