M. O. Kanu, Sons & Company Limited V. First Bank Of Nigeria Plc (2006)

LAWGLOBAL HUB Lead Judgment Report

OGUNTADE, J.S.C.

This appeal revolves around Bank/customer relationship that went sour. The appellant company was the customer and the respondent, the bank. The dispute arose following a loan granted to the appellant to enable it import for resale in Nigeria, a quantity of stockfish. The loan was to be repaid on 30/12/89. The appellant did not pay on due date. Rather, the appellant claimed that the respondent negligently handled on 30/12/89. The appellant did not pay on due date. Rather, the appellant claimed that respondent negligently handled the shipment process. It then brought a suit following:

“(a) An order of this Honourable Court compelling the defendant to waive or absolve or write off the sum of N10,805,000.00 (Ten Million, Eight Hundred and Five Thousand Naira) being the cost of 2,900 bales of stockfish destroyed by the Health Authorities as a result of the defendant’s negligence; or

Alternatively

(b) N30,000,000.00 (Thirty Million Naira) as special and general damages for negligence.”

The plaintiff filed a Statement of Claim and in reaction, the defendant filed an Amended Statement of Defence to which was subjoined a counter-claim which reads:

“(i) The said total sum of N19,954,138.80 due on the plaintiff’s account Nos. 004/02/01765/5 and 001 020 17655.

(ii) An order directing the plaintiff to liquidate the said outstanding total sums within 3 (three months from the date of judgment or as the Honourable Court may deem fit.

(iii) Interest on the said total capital sum or any balance thereon at the rate of N10.00 (Ten Naira) per centum per annum commencing from the date of judgment.”

The suit was heard by Ogbaugu, J. (as he then was). The plaintiff called three witnesses and the defendant two. In a judgment spanning 92 foolscap pages, the trail Judge on 8-7-97 dismissed the plaintiff’s suit. He granted the first head of the counter-claim followed by an order that the plaintiff liquidate the judgment debt within twelve months with effect from 1-9-97. The claim for interest was refused.

The plaintiff was dissatisfied and brought an appeal before the Port-Harcourt Division of the Court of Appeal (i.e. ‘the court below’). On 21-6-2001, the court below in a unanimous judgment, dismissed plaintiff’s appeal. The plaintiff has come before this court on a final appeal. In the appellant’s brief filed for the plaintiff, the issues for determination in the appeal were stated to be these:

“1. Whether the respondent’s charging of 361/2% on the loan given to the appellant as against C.B.N’s approved lending rate was proper in the circumstances.

2. Whether the contract of loan entered into by the parties was not illegal considering the fact that the same was not within C.B.N’s lending rate.
3. Whether considering Exhibit ‘V’ the respondent could not be deemed to have waived the initial contract agreement between the parties.
4. Whether the respondent was not negligent in the way and manner he handled the appellant’s shipment process.”

It is a useful starting point to a consideration of the issues for determination in the appeal to examine the respective pleadings filed by the parties. In the Statement of Claim, it was pleaded that the plaintiff, a majority importer of stockfish, maintained a current account with the defendant. In 1989, the plaintiff applied for an overdraft facility on its account to enable it import stockfish. The defendant granted the plaintiff a loan of Seven Million Naira on some conditions which included that the loan be repaid on or before 31/12/89. The plaintiff sent the documents needed for the importation to the defendant on 30/10/89. It was pleaded that the defendant was negligent in the opening of Letters of Credit to cover the importation and that in consequence, the stockfish arrived Nigeria late such that he plaintiff could not take advantage of the expected brisk sale of stockfish in December, 1989. The price of stockfish in the market had fallen. The plaintiff, in writing, complained to the defendant about its (the defendant’s) negligence, which led to that situation. The defendant accepted being negligent. The defendant agreed to waive a portion of the interest due, leaving outstanding, the sum of N11,996,533.00. The plaintiff, because of the glut in the stockfish market, called upon the defendant to exercise its right of lien given under the loan contract over the stockfish. The defendant at first agreed to do so. However, it was discovered that some of the stockfish had deteriorated in quality. About 2,900 bales of them valued at N10,805,000.00 were later condemned as unfit for consumption. The defendant then refused to exercise its right of lien. The 2,900 bales were destroyed by Health Authorities. The plaintiff, in the circumstances sued claiming as earlier stated in the judgment.

The defendant in its Amended Statement of Defence and counter-claim pleaded that at plaintiff’s request, it granted an overdraft of N8.5 million to the plaintiff, which was to expire on 30/11/89, and a further loan of N7million, which was to expire on 31/12/89. The loan was granted on the conditions, which both parties agreed. The plaintiff later submitted the documents to enable defendant issue Letter of Credit. The documents were submitted on 27/10/89. The defendant forwarded them to Standard Chartered Bank, London on 31/10/89. It followed up with a telex message on the same day. The plaintiff, the defendant pleaded, had signed documents wherein it represented that the stockfish would leave the port of shipment on 30/12/89. The stockfish, in fact left the port on 22/11/89. It was averred that, although the stockfish arrived Nigeria on 12/1/90, the decision to stockfish till April, 1991, in the hope that the importation of stockfish would banned, was entirely the plaintiff’s and this was against the advice and wish of the defendant. The defendant pleaded that it agreed to waive interest in the ordinary course of business and not because it admitted any negligence. The defendant denied that it agreed to exercise a right of lien over the stockfish reduction of plaintiff’s indebtedness from N16,724,961.47 to N11,996,553.00 by the promise made by the plaintiff that it would immediately pay the latter amount. The defendant then raised its counter-claim for N19,954,138.00 being the amount due on plaintiff’s accounts.