John Oreike Anyakwo V. African Continental Bank Ltd (1976) LLJR-SC

John Oreike Anyakwo V. African Continental Bank Ltd (1976)

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The plaintiffs, now respondents, are a commercial bank with their registered office in Lagos. The defendant, now appellant, is a customer of the plaintiffs and maintains a current account at the Martins Street Branch of the plaintiffs.  

In the proceedings which they commenced in the High Court of Lagos State, the plaintiffs, as bankers, claimed against the defendant the sum of £67,883.5.3d being money lent by them to the defendant at interest at the defendant’s request.

The said sum represented the amount outstanding in the defendant’s current account as debit balance. The plaintiffs also claimed interest at the rate of 9% from the date of the issue of the writ until judgment or until payment is made.  The claim was originally filed as “undefended” but the defendant, within the time prescribed in Order 3 rule 11 of the old Supreme Court (Civil Procedure) Rules, gave due notice of his intention to defend the action. Pursuant to this, pleadings were ordered and duly delivered.    Paragraphs 4, 5, 6, 7, 8 and 9 of the plaintiffs’ Statement of Claim read:

– “4. That at the defendant’s request various letters of credit were opened between 1971-1972 by the plaintiff for the defendant’s benefit for the purpose of cement trade in these stages to wit, viz: – (a) 1st Letter of Credit – 210,00 U.S.A. dollars equivalent to 71,428.11.5d (b) 2nd Letter of Credit revolving four times to U.S.A. dollars amounting to U.S.A. dollars 105,000 equivalent to £357,142.17.10d.

5. That these Letters of Credit were valid for the operational use of the defendant for the said cement trade and expired on 31st day of March, 1972.

6. That the actual amount utilised by the defendant from the said letter of credit is 224,700.00 U.S.A. dollars which is equivalent to £76,428.11.5d before the said Letters of Credit came to an end on the said 31st day of March, 1972. 7. That on the arrival of the cement, custom duties, handling charges, bank charges and storage charges made the defendant’s account come up to £143,313.13.0d (One Hundred and Forty Three Thousand Three Hundred and Thirteen Pounds Thirteen Shillings only).

8. That after the sale of the cement the whole amount derived from the sale in favour of the defendant and which amount was credited to the said defendant was £75,717.19.0d (Seventy Five Thousand Seven Hundred and Seventeen Pounds Nineteen Shillings) thus leaving a debit balance of £67,883.5.3d (Sixty Seven Thousand Eight Hundred and Eighty Three Pounds Five Shillings and Three Pence only) against the defendant.

9. That the defendant’s debit account balance after the completion of the said transaction now stands at 67,883.5.3d (Sixty Seven Thousand Eight Hundred and Eighty Three Pounds Five Shillings and Three Pence only) and for which sum of money the defendant is still indebted to the plaintiff and has not repaid the said plaintiff despite several demands to do so.”

The defendant denied all the above averments in paragraph 3 of his Amended Statement of Defence and put the plaintiffs to the strict proof of the various allegations contained therein. He averred further in paragraph 4 theroef as follows: –

“4. As to paragraphs 3, 4, 5 and 6 of the Statement of Claim, the defendant avers that only one Irrevocable Letter of Credit No. LA. 72/71/HQ167.71 for 50,000 Metric tons of cement was opened by the plaintiff in favour of the defendant. The said Irrevocable Letter of Credit was to revolve four times which is for shipment of cement.”

In addition, the defendant sought to set-off against the plaintiffs’ claim the following amounts: –

(a) £39,245.7.5d not credited into the defendant’s account; and

(b) £40,000 being the loss incurred by the plaintiffs in defraud of the defendant because the plaintiffs did not only sell the cement below market price but also did not conduct the sale in a business-like manner.

He also claimed against the plaintiffs by way of a counter-claim the sum of £100,000 as special and general damages for breach of contract.

At the hearing, the plaintiffs called only one witness, one Arua Rahi Eke who worked in the Advances Section of the branch of the plaintiffs’ bank at Martins Street, Lagos, where the defendant had an account. He testified that between January and March, 1972, the defendant had a transaction concerning an order for cement with the plaintiffs and that it was in pursuance of this transaction that Irrevocable Letters of Credit were opened by the plaintiffs in favour of the defendant’s suppliers. One of the Letters of Credit was produced and tendered as Exhibit “A”. When one of the consignments of the cement arrived, the defendant had no money to pay for the cement. The plaintiffs thereupon paid for the cement and also paid the customs duty and the Ports Authority charges. They later sold the cement to recover the sum advanced in respect of the consignment. The witness then tendered the defendant’s statement of account with the bank (Exhibit. C) in respect of which he testified as follows: –

“The defendant’s balance on Exhibit C is what the defendant now owes. Demands have been made from the defendant company to pay the money. It has not been paid. We are claiming as per writ. We did not execute other contracts on defendant’s behalf because there was no funds.”

It is pertinent at this stage to point out that the Statement of Account (Exhibit C) contained three signatures of officers of the plaintiffs. One signed as having prepared the statement, another as having checked it, and the third as having examined it. It is significant that none of the three testified for the plaintiffs. When the 1st P1/W was cross-examined about the transaction which the plaintiffs had with the defendant and also about the statement of account (Ex. C) on which the claim was based, he replied as follows:   “I have been over 10 years in the account department.

I know about this transaction. I knew it from the records, I was not in the branch of the bank at the time of the transaction. I came to my present branch in 1972. The letter of Credit Exhibit A is to revolve four times. The first consignment in Exhibit A arrived about January, 1972. It was for 10,700 metric tons. Exhibit A is to cover a total of 50,000 metric tons.

There was no further arrival of any consignment after the first. I don’t know that the Letter of Credit has been revoked. This is a debit note against the defendant. (Tendered no objection admitted marked Exhibit D). The bank arranged for clearance. Sale of the cement. Mr. Atuora took part in the sale on behalf of the bank. Mr. Akinola also assisted. The clearance was done for the bank by Mr. Shasanya. I do not know the number of tons of cement sold altogether. The whole consignment of 10,700 tonnes was cleared by Mr. Shasanya.    

I don’t know how much per bag or per ton the cement was sold. I do not know the procedure adopted for the sale of the cement. The cement was sold both in bulk at the wharf and at the store. I don’t know the total amount realized by the bank in the sale of the cement. I don’t know when the sale started, the ship arrived around January, 1972. I don’t know how long the sale took. Exhibit C is a correct account. We issued some cheques to cover the debit side.

My name is not in Exhibit C.”   When pressed for more details about the transaction, the witness testified further as follows: – “I don’t remember how much was spent on custom duties, storage or landing charges. I don’t know the cement was stored. The consignment arrived with a bill of lading. The bill of lading is in our file. I know that the bank asked the defendant to look for customers for the cement. There was a letter to this effect.”

The witness then tendered the letter as Exhibit F. Another letter, shown to him by learned counsel for the defendant, was also tendered and admitted as Exhibit G. The contents of the letter Exhibit F dated 17th February, 1972, read – “The Manager, African Continental Bank Ltd., Apapa.   Dear Sir, 10,700 tons of Portland Cement per SS MINOUTSI – SUPPLIERS TRADING COMPANY – MANAGING DIRECTOR –MR. ANYAKWO    The Managing Director of Suppliers Trading Company, Mr. Anyakwo, to whom the above consignment was shipped would be introducing buyers for the cement and you may give them Delivery Notes to collect from Mr. Shasanya, West Coast Merchants, who are clearing on our behalf after you have received the payment indicating clearly the quantity paid for and the price – 10/6d per bag ex-wharf, and 11/9d-12/- ex-store.

The proceeds should be transferred to our Martins Street Branch for credit to a special account which has been opened for that purpose.   Yours faithfully,   African Continental Bank Ltd. (Sgd.) C. E. Anosike for: Chief Accountant.   cc: Manager, Martins Street Branch.”   The second letter (Exhibit G) dated 30th May, 1972, and written by the defendant to the plaintiffs protesting about the sale of the cement, also reads-  

PAGE| 6   “The Asst. General Manager, A.C.B. (Nig.) Ltd., Headquarters, 148, Yakubu Gowon Street, Lagos. (Attention: Mr. Ofili)   Dear Sir, Proceeds of Cement Sold – EX. SS MINOUTSI   We are constrained to bring to your notice the discrepancies and irregularities discovered in accounting for

Other Citation: (1976) LCN/2321(SC)

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