National Bank Of Nigeria Limited V. Guthrie (Nig.) Limited & Anor (1993)

LawGlobal-Hub Lead Judgment Report

UWAIS, J.S.C.

An action was commenced in the High Court of Lagos State by a Writ of Summons taken out by the appellant as plaintiff, against the respondents as 1st and 2nd defendants respectively. In the Statement of Claim filed by the plaintiff paragraph 14 thereof reads thus:-

“14. Whereof the plaintiff claims against the 1st and 2nd defendants jointly and severally as follows:-

(1) Declaration that the 2nd defendant is liable as the guarantor of the 1st defendant to pay the balance of overdraft in the sum of N512,584.75 and interest thereon.

(2) Judgment for N512,574.75 being balance of the overdraft payable by the defendants as at the 31st day of August, 1984 and interest thereon at the rate of 13% (thirteen per centum) per annum with effect from the 1st day of September, 1984 until the whole debt with interest is settled.

(3) Any further judgment or other orders as this Honourable Court may consider necessary to give in favour of the plaintiff in the interest of justice.”

Subsequently, the plaintiff brought a motion under Order 28 Rule 6 and Order 35 Rule 1 of the High Court of Lagos State (Civil Procedure) Rules, Cap. 52 of the Laws of Lagos State, 1973 in which he asked for the following orders:-

“1. An order for declaration that the 2nd defendant is liable as the guarantor of the 1st defendant to pay the balance of overdraft in the sum of N512,534.75 and interest thereon.

2. An order entering judgment against the 1st and 2nd defendants jointly and severally in the sum of N512, 534.75 being balance of the overdraft payable by the defendants as at the 31st day of August, 1984 and interest thereon at the rate of 13% (thirteen per centum) per annum with effect from the 1st day of September, 1984 until the whole debt with interest is settled.
3. Any further order or other orders as this Honourable Court may consider necessary to give in favour of the plaintiff/applicant in the interest of justice.”

The affidavit in support of the application states in paragraphs 4 to 13 as follows:-

4. That the 1st defendant was a customer of the plaintiff at the plaintiff’s branch at No. 123, Itire Road, Lawanson, Surulere, Lagos:
5. That the 1st defendant made an application dated the 30th day of January, 1984 for an overdraft of N1, 000.000.00 (one million naira) for working capital and also another overdraft of N500,000.00 for Letter of Credit.
6. That the 2nd defendant executed a written guarantee dated the 1st day of March, 1984 as the guarantor of the 1st defendant in the sum of N500,000.00 (Five hundred thousand naira) in order to settle any balance or part of the balance of overdraft that might be granted by the plaintiff to the 1st defendant within a period of six months from the 1st day of March, 1984 to the 30th day of August, 1984. (A copy of the written Guarantee is attached hereto and marked Exhibit ‘A’).
7. That the plaintiff, by a letter dated 7th March, 1984, granted the overdraft of N1,000.000.00 (one million naira) for working capital and N500,000.00 (five hundred thousand naira) for Letter of Credit to the 1st defendant, as requested, and for a period of three months expiring on the 31st day of May, 1984 with interest thereon at the rate of 13% per annum.
8. That the 1st defendant wrote to the plaintiff a letter dated the 30th day of May, 1984 asking for extension of the credit facilities for another period of nine months from June, 1984 to February, 1985 or in the alternative asking the plaintiff to offset part of the N1,000,000.00 (one million naira) overdraft with the sum of N52,000,00 which the 1st defendant had kept with the plaintiff as a fixed deposit with interest. (A copy of the 1st defendant’s letter dated 30th May, 1984 is attached hereto and marked Exhibit ‘B’).
9. That the 1st defendant’s fixed deposit with interest with the plaintiff was N527,770.00 as at the 1st day of August, 1984 which said deposit of N527,770.00 was credited to the overdraft account of the 1st defendant as requested by the 1st defendant.
10. That the balance of overdraft payable by the 1st and 2nd defendants to the plaintiff in respect of the N1,000.000.00 overdraft granted to the 1st defendant was N512,534.75 as at the 31st day of August, 1984.
11. That the plaintiff wrote two letters dated 10th August, 1984 and 21st August, 1984 respectively to the 2nd defendant to demand payment of the sum of N500,000.00 towards settlement of part of the overdraft of N 1,000,000.00 granted to the 1st defendant.
12. That the plaintiff also wrote another letter dated 29th August, 1984 to the 2nd defendant demanding the sum of N510,657.75 in settlement of balance of overdraft payable by the 1st defendant with the 2nd defendant as its guarantor as at the 30th day of August, 1984. (A copy of the letter is attached hereto and marked Exhibit ‘C’).
13. That none of the defendants has a valid defence to the plaintiff’s claim.

A counter-affidavit and a further counter-affidavit were filed by the 1st defendant. The following allegations were made in the further counter-affidavit:-

“1. That we have not received the Writ of Summons and the Statement of Claim in respect of the above mentioned suit.

2. That there is no record in our client’s file to indicate that they were served with the Writ of Summons and the Statement of Claim.
3. That no reference of the Writ of Summons and the Statement of Claim is made in the plaintiff/applicant’s motion and affidavit.
4. That the 1st defendant was only served with a motion and affidavit in November, 1984.
5. That we received a copy of the motion and affidavit on 7/12/84 and that same day we entered appearance on behalf of the 1st defendant.
6. That our client has not filed his defence owing to the fact that he has not received the plaintiff/applicant’s Statement of Claim.
7. That the defendant has a defence to the plaintiff’s claim.”

The 2nd defendant who had filed a statement of defence substantially denying the averments in the plaintiff’s statement of claim also filed a counter affidavit to the plaintiff’s application. The statements in paragraph 3 to 14 of the counter-affidavit read thus:-

“3. That a statement of defence by the 2nd defendant was filed on the 6th November, 1984 and served upon the plaintiff’s solicitor on the 21st November, 1984. Copy of the said statement of defence is attached and marked Exh. ‘SD’.

4. That the issues raised in the statement of defence are vital and legitimate.
5. That the 2nd defendant’s letters to the plaintiff dated 1st March and 8th March, 1984 gave the pre-conditions for the guarantee. Copies of the said letters are attached and marked Exhs. ‘A’ and ‘B’.
6. That it is a fact that the guarantee entered into by the 2nd defendant was only supplementary to the fixed deposit of the 1st defendant and the domiciliation of the proceeds of the said contracts payable to the 1st defendant, and this stand was maintained by the 2nd defendant in Exhs. ‘A’ and ‘B’.
7. That it is a fact that the plaintiff has failed to apply the domiciliation of the proceeds of the contracts but instead recalled the overdraft within three (3) months.
8. That the plaintiff in its letter dated 29th February, 1984 to the 2nd defendant stated that the overdraft was to be available for a period of six (5) (sic) months and the facts contained in paragraph 7 of the plaintiff’s affidavit show that the plaintiff did not comply with the arrangement as conveyed in its said letter dated 29th February, 1984, copy of which is attached and marked Exh. ‘C’.
9. That part of the plaintiff’s letter to the 2nd defendant dated 2nd March, 1984 (copy of which is attached and marked Exh. ‘D’ which are conditions 1-3, confirms the intentions of the 2nd defendant in issuing the guarantee.
10. It is a fact that whereas the 2nd defendant regarded the guarantee as supplementary or collateral to the fixed deposit and the domiciliation of the 1st defendant contract money, the plaintiff in its condition (a) of Exh. ‘B’ maintained the contrary.
11. That the plaintiff in seeking summary judgment, is wrongfully relying upon the guarantee simplicator (sic) without reference to the pre-conditions as contained in Exhs. ‘A’, ‘B’, ‘C’, and ‘D’.
12. That the plaintiff has failed to obtain an assignment of the proceeds contracts amounting to about N1.2 million which is due to the 1st defendant, in breach of a condition of the guarantee.
13. That the plaintiff having applied the fixed deposit of the 1st defendant amounting to N500,000.00 ought not fall back on the guarantee for the same amount.
14. That the plaintiff’s application for judgment is in bad faith.”

The plaintiff’s application came before Fafiade, J, In her ruling, rejecting the application, the learned Judge remarked as follows –