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Nasr V. B. Beirut-riyad Nig. Bank Ltd.diab Nasr V Iberini (Beirut-riyad) (Nig.) Bank Limited. (1968) LLJR-SC

Nasr V. B. Beirut-riyad Nig. Bank Ltd.diab Nasr V Iberini (Beirut-riyad) (Nig.) Bank Limited. (1968)

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The appellant was the plaintiff and the respondents the defendants in Lagos High Court Suit No. LD/571/66. The plaintiff had sued the defendants and his writ of summons was endorsed as follows-

“The plaintiff claims from the defendant the delivery of the original deed of lease dated the 16th May, 1962 and registered as MO. 2778 for Plots Nos XRL 3042 and 3043 situate at Apapa, Lagos. The plaintiff has made several demands for the return of the said deed of lease but the defendant has refused to deliver and still detains the same.”

Pleadings were ordered and filed and the defendants asked for and obtained the leave of court to file a counter-claim against the plaintiff. The pleadings filed include a statement of claim by the plaintiff, a statement of defence and counter-claim by the defendants and a reply to the statement of defence and defence to the counter-claim (with an amendment) by the plaintiff. The defendants’ counter-claim reads as follows:-

“he defendants’ counter-claim from the plaintiff is for the sum of £40,720.19s.4d whereof:-

(a) £32,616.5s.3d is total amount (Plus accrued interest) paid to one Joseph Naaman by the defendants at the instance of the plaintiff between 15th March 1965 and 28th September 1966 for the purpose of erecting six flats on the plaintiff’s land at Apapa with interest at 9 percent per annum till the date of judgment; and

(b) £8,094.14s.1d. is total of amounts (Plus accrued interest) paid by the defend-ants in respect of purchase price, premium and rents for the said land with interest at 9 percent per annum till date of judgment”.

Three witnesses apart from the plaintiff gave evidence in support of the plain-tiff’s case, but learned counsel for the defendants stated at the close of the plaintiff’s case that he would not call any evidence on behalf of the defendants. The evidence was therefore only given on the plaintiff’s side and the main issues on which the claims and counterclaims depended were extensively discussed in the addresses of counsel on both sides. In a reserved judgment Kazeem, Ag. J. (as he then was) dismissed the claim of the plaintiff and gave judgment with costs against him in favour of the defendants on the counter-claim, stating at the end of his judgment as follows:-

“In the circumstances, I find that the defendants are entitled to restitution in the sum of £28,916.18s.3d advanced in respect of the building and fittings, and in the sum of £6,377.16s.1d. advanced in respect of purchase of land, premium and rent plus interest at the rate of 9 percent per annum up to the date hereof and judgment is hereby given to them accordingly”.

The plaintiff has appealed to this court against both the dismissal of his claim and the awards to the defendants on the counter-claim. Several grounds of appeal were filed and argued on his behalf. After some argument before us, however, timed counsel for the plaintiff conceded that the plaintiff was not entitled to the return of the document he sought when he commenced the action and therefore gave up the appeal against the dismissal of the claim. The circumstances under which the defendants came to be in possession of the deed of lease on which the claim was founded, as well as the conditions of its redeemability, are all clear issues of fact and of law and we do not conceive that the judge’s findings of fact and his application of the law in that connection can be seriously impugned. It is little surprising therefore that counsel abandoned this part of his appeal. We will formally dismiss the plaintiff’s appeal in that respect with costs which we will deal with in our final order on the appeal.

The legal controversy on appeal centred on the counter-claim. In his statement of claim the plaintiff had pleaded, in paragraphs 4 and 6 as follows:-

“4. The plaintiff is the owner of two plots of leasehold land Nos XRL 3042 and 3043 situate at Apapa, Lagos and registered on the 16th Of May 1962 as Title No. MO 2778 at the Federal Land Registry, Lagos.


6. On the .21st June 1965 the plaintiff, as usual, entrusted his original deed of title No. MO 2778 in respect of his Plots Nos. 3042 and 3043 situate and lying at Apapa and registered in the Land Registry, Lagos on the 16th May, 1962 to the defendant to be kept in safe custody. The defendant acknowledged receipt of same in writing bearing the date 21st June, 1965”.

The defendants had pleaded, inter alia as follows:-

“4. With further reference to paragraph 4 of the statement of claim the defendants aver that the plaintiff authorised the then manager of the defendant Bank to cause the Bank to finance the building of a block of six flats on the plots in question as per detailed agreement signed between him (the said Plaintiff) and one Joseph Naaman, a building contractor, and to charge all payments made to the contractor to the account of one Emile Nasr.

5. The defendants aver that the account standing in the name of the said Emile Nasr was in fact operated by or at the discretion of the plaintiff and fictitiously opened for the purpose of circumventing the provisions of the Banking Act.”

Particulars of Paragraph 5

(a) The plaintiff is the uncle of the aforesaid Emile Nasr who at all material times was resident outside Nigeria.

(b) The plaintiff acting in concert with the former manager of the defendant Bank established the account in the name of Emile Nasr who does not carry on any business in Nigeria.

(c) When the plaintiff wanted an advance for the erection of a building on the plots in question he was perfectly aware that it was a contravention of the Banking Act to obtain the said advances or the benefit thereof without security.

(d) The plaintiff, acting in concert with the former manager of the defendant Bank, procured the said manager to make the said advances as If they were advances to the aforesaid Emile Nasr thereby concealing the contravention of the Banking Act.

(e) The plaintiff was, at the time of the transaction relating to the said advances, a director and deputy chairman of the defendant Bank and thus had a fiduciary duty towards the defendant.

6. (1) The defendant Bank in fact made the payments to Joseph Naaman, the building contractor, In sums totalling E28,916.18s.3d. in respect of the building on the plots in question as well as in respect in increase in prices of materials and fittings for the said building.

The payments were made between 15th March 1965 and 28th September 1966 and debited to the account of Emile Nasr.

(2) Between November 8, 1961 and the date of this action payments were made In respect of deposit for purchase, premium and rents due in respect of the plots in question. These payments amount to £6,377.15s.1d. as at 31st December 1966 and were debited to the account of Emile Nasr.

(3) As at 31st December 1966, the interest on the payments referred to in sub-paragraph (1) of this paragraph amount to a total of £3,699.7s. and the Interest on those referred to in sub-paragraph (2) amount to a total of £1,716.19s.

(4) The total amounts thus debited to the account of Emile Nasr plus interest thereon at the usual bank rate of 9 percent per annum is £40,710.19s.4d. as at 31st December 1966 made up as follows:-

Amount advanced In respect of

building, fittings, etc    £28,916.18s.3d.

Interest thereon as at 31/12/66    3,699 7s.0d.

Amount advanced in respect of

purchase premium, rent, etc.    6,377.15s.1d.

Interest thereon    1.716.9s.0d.

Total    £40.7104 9:44

10. With reference to paragraph 6 of the statement of claim the defendants deny that the plaintiff entrusted the title deed relating to the property in question merely to be kept in safe custody and aver that the deed was delivered to the bank primarily as security for the advances to the plaintiff which were debited to the account of the aforesaid Emile Nasr.

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13. The defendants aver that:-

(i) Both the plaintiff and the former manager of the defendant bank were aware that the defendant bank was required by law and banking practice to have security for advances made to the plaintiff whether directly or through an agent;

(ii) Neither the plaintiff nor the defendant bank had the permission of the Minister of Finance to grant credit facilities to or place any sum of money to the credit of the aforesaid Emile Nasr, a person resident outside Nigeria and accordingly the direction of the plaintiff to the effect that the advances for the building of the flats be charged to the account of Emile Nasr is illegal, void and ineffective;

(iii) In the alternative, both the plaintiff and the former manager of the defendant bank were fully aware that they or either of them had no authority to advance sums of money of the order debited to the account of Emile Nasr without any security and without interest.

14. By acting illegally and beyond their authority, both the plaintiff and the then manager of the defendant bank have caused the defendant to lose the amount of £40,710.19s.4d. as claimed In the counter-claim to this action.

15. In the alternative, the defendants aver that the plaintiff acted in breach of his fiduciary duty to the defendant company directing the former manager of the defendant bank to advance moneys chargeable to the account of his nephew who was resident outside Nigeria for the purpose of erecting the six flats on the plaintiff’s property on terms that the title deed to such property shall be returned to the plaintiff and without any written agreement between the parties or the approval of the alleged transaction by the Board of directors.

16. In the premises, the defendants aver that the plaintiff has been unjustly enriched at the expense of the defendants and as the result of the breach by the plaintiff of his fiduciary duty.


The plaintiff fled a reply to that pleading and the principal averments in his reply are as follows:-

“1. With regard to paragraph 4 of the statement of defence and counter claim the plaintiff says that the purported authorisation was given to the manager pursuant to the tacit arrangement made by the bank to provide accommodation for its staff. The plaintiff at all material times acted on behalf of the bank and in an effort to protect the bank from the consequences of an alleged contravention of the Banking Act. The land at Apapa was purchased in 1961, and the building contract was not executed until March, 1965 after which the erection of the building commenced.

2. With further reference to paragraph 4 the plaintiff avers that only plot No. 3042 was purchased for £6,000 but the plaintiff later got plot No. 3043 in addition to accommodate a Block of 6 Flats. The plaintiff has been paying the rent of the land to the L.E.D.B. since 1966.

3. The plaintiff denies paragraph 5 of the statement of defence and counter claim and states that EmileNasr’s account was used as a cover for the bank because at that time the bank already owned 2 plots of land in Lagos for purposes other than those allowed by the Banking Act and it is arranged that plaintiff should buy and the Bank should finance the construction of the building take occupation after completion and set-off the cost with rents payable for 5 years. It is on the direction of the Chairman that the account was established.

5. With regard to paragraph 6(1) to (4) of the statement of defence and counter claim the plaintiff contends that on the terms of the tacit agreement there was no question of the defendants charging interest on the advances. They were to finance the erection and take up possession at an agreed rental for a period of 5 years after which a fresh agreement is to be entered into for continued tenancy by the staff. The new Deputy Chairman, M. Suleiman Makarem and the new manager, M. Izzat Jureidini ordered and paid for the additional cost of £2,916.18s.3d. to the contractor Mr. Naaman without reference to the plaintiff because they acknowledged and accepted the terms of the tacit arrangement. Otherwise they would have refused to pay without the plaintiff’s authority.

6. With reference to paragraphs 7 and 8 of the statement of defence and counterclaim the plaintiff states that the Chairman of the bank was at all material times in possession of major facts concerning the transactions and this is especially evidence by letters and returns dated 6th April, 1965, 21st April, 1965, 29th May, 1965, statement of account for the year ended 30th September, 1962 by the bank’s auditors, and Monthly Returns to Beirut under No. 435′ no conditions applied” List.

11. The plaintiff. contends that he and the manager of the defendant/bank were acting at all material times in the sole interest of the bank and the results of their management are made manifest in the profits realised by the bank during their tenure of office. The transactions were approved and adopted in the minutes of the meetings of the Board of the bank.

12. The plaintiff says that there was no collusion with the manager or breach of fiduciary duty on his part in the whole transaction….


15. The plaintiff will rely on the Banking Act, the Statute of Frauds and all equitable defences at the trial and will contend that on the facts the counter-claim is unmaintainable…..

16. With further reference to the plea of estoppel in paragraph 15 above the defendant bank is estopped from denying that there was a tacit arrangement that the defendant agreed to finance the erection of the building on the understanding that it will be used for accommodating the senior bank officials for a specified period and that no Interest would be charged on the monies advanced for the erection of the building and that the Chairman of the bank was aware of the major facts about the transaction”.

As stated before, all the oral evidence there was given to the plaintiff and his willingness. Of these Joseph Nahman, the contractor who built the block of flats at Apapa said nothing directly touching on the main issues to be resolved in this case. The manager of the bank during the tenure of office of the plaintiff, i.e. Mr. Cassis, gave evidence for the plaintiff.

He testified in effect that the dealings which are featured in this case were duly authorised by the authorities of the defendants (hereinafter also referred to as the bank) and regularly executed by him and other officials concerned in accordance with directions from or by the Chairman of the Bank. Emile Nasr, another witness for the plaintiff, testified that he was resident In and carrying on business in Nigeria during 1960 and 1961 and that he was, during that period, approached by Mr. Cassis and requested by him to allow the bank to use his name as the owner of a fictitious account which the defendants pro-posed to open and operate in order to deceive the Central Bank. He said, inter alia, as follows:-

“Cassis told me that they wanted to operate the account for the erection of a building at Apapa for accommodation of bank staff. I first refused, but when he told me that he had instructions from the bank’s Chairman to that effect, I then agreed. I then told Cassis that I would not accept any responsibility for the account and he agreed and said that no interest would be charged. I then signed a white paper to open the account. In 1963, I left Nigeria for Togoland. I heard nothing further about the account until in October 1966 when I received a letter from the defendant bank demanding the repayment of a loan of over £35,000. I then sent a reply dated 29th October, 1966. I have no cheque book from Berini Bank. I never put a penny in Berini Bank”.

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The plaintiff himself gave evidence that he was a director and Deputy Chairman of the bank from May 1961 and that he ceased to be its Deputy Chairman in October, 1965. He had a power of attorney from the Chairman of the bank, a Mr. Pierre Edde, who admittedly resided in the Lebanon, the headquarters of the defendant company. He claimed to be the owner of the block of flats erected at Apapa as well as the lessee of the land on which the building stands; he had a “tacit arrangement” with the bank as to the payment for the building which was financed by the bank. He disclaimed any immediate liability to the bank either in the sum claimed or at all and in any case to the payment of interest at whatsoever rate it was charged.

The learned trial judge had ruled that the deposit of the deed of lease with the bank was made by the plaintiff as a security for the loan which he had authorised in favour of himself and which if allowed to remain unsecured would have constituted an infraction by the bank of section 7(i)(c) of the Banking Act. He had rejected the contention put forward for the plaintiff that the deposit of the document was made in order to cover up a breach of section 7 (1) (g) of that Act. Section 7 of the Banking Act, insofar as it is material on this point reads as follows:-

“7. (1) A licensed bank shall not in Nigeria-

(c) grant or permit to be outstanding unsecured advances or unsecured credit facilities of an aggregate amount in excess of five hundred pounds-

(i) to any one of its directors whether such advances or facilities are obtained by its directors jointly or severally;

(ii) to any firm, partnership or private company in which it or any one or more of its directors is Interested as director, partner, manager or agent, or to any individual, firm, partnership or private company of whom or of which any one or more of its directors is a guarantor. For the purpose of this paragraph, a private company means a private company as defined In section 128 of the Companies Ordinance;

iii) to any public company in which it or any one or more of its directors jointly or severally maintains a controlling interest

(g) purchase, acquire or lease real estate except as may be necessary for the purpose of conducting its business, including provisions for future expansion or other exceptional circumstances where the agreement of the Central Bank is obtained, or housing its staff:

Provided that:-

(i) in respect of any real estate held or leased by a bank at the coming into operation of this Act for purposes other than those referred to herein, that bank shall be allowed a period of three years in which to comply with this paragraph; and,

(ii) a bank may secure a debt on any real or other property and in default of repayment may acquire such property for resale by the bank as soon as possible thereafter”.

The clear provisions of this section do not admit of any argument. The lease of the land at Apapa was and is in the name of the plaintiff and the claim itself in this case presupposes that.

To hold that the deposit of the title deeds with the bank is in compliance with section 7(1)(g) of the Banking Act as against section 7(1) (c) would have been Incontrovertibly perverse and in our view the judge rightly rejected that contention. The demerits of the claim are obvious; but it is nevertheless the spring-board from which it was sought to defend or defeat the counter-claim.

The argument In favour of the plaintiff before us postulates that the bank was the owner of the building at Apapa. A number of letters brought to our attention by Mr. Cole (and these were admitted in evidence at the trial) admittedly referred to the building at Apapa as the property of the defendants but the argument must be considered specious for the only operative document which confers title in the land remains In the name of the plaintiff. This is the original deed of lease covering the land – exhibit 15. This submission, albeit, was the basis of the arguments for the plaintiff and the following principal submissions were made on his behalf:

(i) that the bank account 1961 was faced with a breach of the Banking Act by virtue of its owning some landed properties and it therefore decided to transfer those properties into a fictitious account in the name of one of its customers, Emile Nasr;

(ii) that the plaintiff acted in good faith in depositing the title deed of his Apapa property with the defendants in order to cover up the illegality already committed by the bank;

(iii) (a) that the plaintiff was entitled to contract as he did with the bank and that the authorities of the bank were fully aware of all the dealings of the plaintiff;

(b) that the judge was wrong to come to the conclusion that the plaintiff had unjustly enriched himself and that he was therefore liable to pay to the defendants the sum counterclaimed or any part of it;

(iv) (a) that if there was any illegality attaching to the action of the plaintiff, the defendants themselves were in pari delicto as they had treated the building as property and had Indeed taken actual possession of some section of the building; and

(b) that in those circumstances, the counter-claim should have been, like the claim, dismissed;

(v) that under no circumstances should the plaintiff be held liable to pay the defendants any money immediately or any interest thereon.

The several submissions are not mutually exclusive of each other and a discussion of one must necessarily Impinge upon the areas of another or of others.

With respect to the first submission in favour of the plaintiff, there is very little evidence about the properties stated to have been owned illegally by the bank. Section 7(1)(g) of the MI quoted above certainly gives a bank a period of three years within which to deal with real assets which it was holding at the date of the Act. The evidence in this case is confusing and in any case it was the plaintiff who alleged an illegality and it was for him to prove it.

On the other hand, the relevant exhibits showed, as the judge rightly found, that there was no breach of section 7(1) (g) of the Banking Act shown to have been committed by the Bank. In his pleadings the plaintiff averred that one of the two plots of land that are contained in the land Certificate, exhibit 15, was purchased for £6,000 in 1961 and that later he, i.e. the plaintiff “got” (he did not say how or for how much) a lease of the other plot. Although an amount of over £6,000 has been shown in the account of Emile Nasr as having been paid out by the Bank, and debited to that account, yet Emile Nasr had not put a penny in this bank and indeed he owned no cheque book. The document, exhibit 15, shows the plaintiff as the real lessee of both plots of land and we think the inference was rightly that no breach of section 7(1) (g) by the bank had been established.

It was again contended in favour of the plaintiff that he acted in good faith in depositing the title deed of the Apapa property with the bank. We have already stated that we think the judge was right in concluding that apart from initially failing to comply with the provisions of section 7(1) (c) of the Banking Act, there was no illegality committed by the Bank and that the plaintiff did what he ought to have done in any case, assuming that he had the authority to authorise a loan to finance the building on his land. There was no oral evidence before the court nor was there any document to show that the plaintiff was a debtor to the Bank. Ail the debits went into the fictitious account which was being run in the name of Emile Nasr and at no time or stage was it shown to the court that the plaintiff accepted responsibility for the debits shown in the account of Emile Nasr.

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The third submission on behalf of the plaintiff opens up a large area of argument with which it is necessary to deal In some detail. The plaintiff was at all meterial times a director of the bank and its Deputy Chairman. He was in possession of a power of attorney from the Chairman of the Bank authorising him to do in effect everything that the Chairman could do. The powers of the Chairman of the Bank, as contained in the Articles of Association, exhibit 25, are very wide and it is not disputed that by virtue of the power of attorney which he possessed the powers of the plaintiff in the conduct of the affairs of the bank are extensive. Mr. Cole in submitting that the appellant was entitled to contract with the bank referred us to Article 3 of the Articles of Association of the Company, exhibit 25, which reads as follows:-

“Articles Nos. 2, 5, 20, 35 to 43, inclusive, 45, 51, 68, 70, 73, 77* 78, 79, 87, 88 and 108 of the aforesaid Table A shall not apply to the Company.

*May not profit by means of contracting with the company”.

The purpose of the reference is to Impress on us that Article 77 in Table A to the Companies Act, which prohibits some dealings by directors of a company with the company has been specifically excluded by the Articles of Association of the Bank. We note that the figure 77 in Article 3 of exhibit 25 is astericised and under the asterisk the following words appear:-

“May not profit by means of contradicting with the company”.

There Is a conflict of opinion between counsel as to the import and meaning of the words within the asterisk. We are in no doubt that whatever else might have been the intention of the framers of exhibit 25 it was clearly contemplated that a director might not, even if he could, contract with the company, negotiate such a contract as would put him in a position to profit at the expense of the company. In this case it is clearly the duty of the plaintiff to satisfy the court that he was en-titled to enter Into the particular contract with the bank and we do not think that on the evidence he had done so. Assuming that the “tacit arrangement” could be regarded as a contract (which we do not think it was) even if he was entitled to contract with the Bank there are a number of reasons why we think the judge was right to come to the conclusion which he did that the plaintiff might not enforce such a contract. First of all, there are the clear provisions of the Banking Act to which reference had been made. Secondly the circumstances of the present advances are such that:-

(i) they did not comply with the provisions of the Companies Act or indeed of any other law and

(ii) the advances in the circumstances in which they are made are apparently Irrecoverable. In the course of his judgment the learned trial judge observed on this point as follows:-

“It is a fundamental principle of company law that a director is precluded from dealing on behalf of the company with himself and from entering into engagements in which he has a personal interest conflicting or which possibly may conflict with the Interest of those whom he is bound by fiduciary duty to protect and this rule is as applicable to the case of one of several directors as to a managing or sole director. Any such dealing or engagement may, however, be affirmed or adopted by the company, provided such affirmation or adoption is not brought about by unfair or Improper means: see North-Western Transportation Co. v. Beatty (1887) 12 App. Cap. 589 at pages 593 to 594 and Transvaal Lands AND Co. v. New Belgium Co. [1914] 2 Ch. 488 at pages 494 to 496”

Although the pleadings of the plaintiff aver that his dealings were with the full knowledge of the authorities of the bank, no evidence was led to show that any record of this particular transaction appeared in the official minutes book of the company, which were produced in evidence as exhibits 10 and 10A. Section 73 of the Companies Act, cap 38, provides as follows:-

“73. (1) Every company shall cause minutes of all proceedings of general meetings and (where there are directors or managers) of its directors or managers to be entered in books kept for that purpose.

(2) Any such minute if purporting to be signed by the chairman of the meeting at which the proceedings were had or by the chairman of the next succeeding meeting, shall, be evidence of the proceedings.

(3) Until the contrary is proved, every general meeting of the company or meeting of directors or managers in respect of the proceedings whereof minutes have been so made shall be deemed to have been duly held and convened, and all proceedings had thereat to have been duly had, and all appointments of directors, managers or liquidators, shall be deemed to be valid”.

It is not contended by the plaintiff that there had been a compliance with this section and in those circumstances one cannot appreciate how the plaintiff can seek to enforce against the defendants any contract which was not so recorded. See Flanagan v. Great Western Railway Co. (1868) L.R. 7 Eq. Cap. 116 – see per Gifford V.C. at p. 123. In In re Liverpool Household Stores Association (1890) 62 L.T. 873, it was held that where directors chose not to record in the official minutes or records of their company, the transaction into which they had entered, they could not be heard to complain that a court of law had drawn inferences on their conduct which were adverse to themselves.

It is clear that the conduct of the plaintiff in contracting with the bank did not comply with the provisions of the Companies Act. It has not been argued that it complied with any other law. The business of financing the building at Apapa commenced with a directive issued by the plaintiff (exhibit 8) to the manager of the bank, Mr. Cassis, instructing him to finance:-

“the building of a block of six flats as per the detailed agreement signed with Mr. Joseph Nahman contractor”,

and directing that “all payments effected by you are to be charged to Mr. Emile Nasr’s account for which land and building are hypothecated to your bank in security to the said debt.” There was no evidence that exhibit 8 was authorised by any other official or executive of the bank except the plaintiff himself.

Mr. Cassis in his evidence testified that the fictitious account in the name of Emile Nasr was opened in 1961 on the instruction or direction of the Chairman of the bank and had suggested that the transaction in exhibit 8 was known to or by the Chairman of the Bank. The documents exhibits 11 and 12 which are in effect reports by Mr. Cassis to the Chairman on the activities of the Bank do not support his oral evidence and considering this and other conflicts in his evidence one must at least be left in some serious doubt as to the veracity of his testimony.

It was argued that the accounts of the bank, exhibit 7, showing the advances made for financing th

Other Citation: (1968) LCN/1601(SC)

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