Nigeria Merchant Bank Plc V. Aiyedun Investment Limited (1997)

LawGlobal-Hub Lead Judgment Report

AYOOLA, J.C.A.

This is an appeal from the decision of the Lagos High Court (Alabi, J.) giving judgment for the plaintiff in the sum of N4,426,075.00, being as to N1,000,000 refund of money deposited with the defendant by the plaintiff and, as to the balance, interest on the said sum.

The defendant who is the appellant in this appeal is referred to as the ‘defendant’, while the respondent who was the plaintiff at the trial is referred to as the ‘plaintiff in this judgment. This appeal is limited to the award of the sum of N3,426,075 as special damages. The main complaints of the defendant on this appeal are that there were no averments in the pleadings in support of the claim for interest as special damages; and that in any event the plaintiff did not establish its claim for special damages as required by law nor had it established a claim for interest and the quantum of such claim.

The background facts as found by the learned trial judge, were as follows. The plaintiff and one Alfredo Enterprises Limited entered into a joint venture agreement pursuant to which the plaintiff deposited the sum of one million naira into a deposit account with the defendant. The plaintiff and Alfredo Enterprises Ltd (‘Alfredo’) entered into an agreement whereby it was agreed between them that the defendant should ‘hold a lien and exercise the right of set off on our deposit account with Nigeria Merchant Bank … for as long as the company remains indebted to the Bank ….’ The defendant claimed to have exercised the right to set off One Million Naira plus the interest accruing thereon up to 23rd April 1992 on the plaintiff’s deposit account to the loan account of Alfredo. The learned judge found that there was no basis or justification for the defendant to exercise the right of set-off over the deposit of One Million Naira which the plaintiff kept with it, and that the plaintiff was entitled to a refund of that sum. Against that finding there bas been no appeal. As earlier said, this appeal concerns the award of interest.

On the question of interest, the judge was of the opinion that: ‘The fact that the plaintiff is entitled to interest is not in doubt.’ He buttressed this opinion by reference to paragraph 16 of the statement of defence wherein the defendant averred that it transferred the principal sum plus interest up to 23rd April 1992 from the plaintiff s deposit account to the loan account of Alfredo. The obvious inference from that averment is that the plaintiff’ deposit had been attracting interest. The judge relied on the uncontroverted evidence of the plaintiff’s expert witness to fix the rate and quantum of interest.

At the forefront of the argument of counsel for the plaintiff on this appeal is the pleading question. Plaintiff’s counsel submitted that the evidence which was adduced to establish the claim for special damages or interest related to facts which were not pleaded and therefore went to no issue. The plaintiff pleaded in regard to the deposit account which was the basis of his case thus in paragraph 9 of the statement of claim:

“The plaintiff on or about the 29th day of November 1986 deposited a sum of N1, 000,000 (One million Naira) in its name with the defendant, this deposit account in the plaintiff’s name being intended to establish the good faith of the plaintiff.”

Part of the plaintiff’s case on this appeal is that the plaintiff’s pleadings did not justify the admission of evidence of the defendant’s liability to pay interest on the deposit account. It was submitted that the plaintiff should have pleaded the agreement of the parties as regards interest and the terms of such agreement. It has not been denied that there was ample evidence from which it could reasonably be inferred that the deposit account did attract interest.

The letter (Exh. P5) dated 13th October, 1989 written by the defendant to the plaintiff concerning interest on the deposit is one such piece of evidence. However, the defendant now says that that and other pieces of evidence going to liability to pay interest on the deposit and quantum of such go to no issue. The question is: was the defendant right in that contention? Part of the answer, I believe, is to be found in general banking law, If the averment that a deposit account implied a liability to pay interest thereon, the fact that the pleadings did not go further expressly to plead an agreement as to interest would not matter. Where there was a particular agreement as to interest, the party who relies on that agreement should plead it. I do not think that was the position in the present case. I think the point had been well made by this court (Kaduna Division) in the case of Angyu v. Malami (1992) 9 N.W.L.R. (Part 264) 242 at pages 254-255 as follows per Uthman Mohammed, J.C.A. (as he then was) as follows:

“I believe that it has gained notoriety which requires no proof that the advantage that a customer gains by opening a deposit account is that the banker pays interest on sums paid into such account See Chitty on Contracts. Specific Contract, 24th Edition, para. 2586, at page 246. I do not agree that the existence of a deposit account does not per se, involve payment of interest. It is plain without saying so that it does.”

In my view, the averment that the defendant did open a deposit account in the name of the plaintiff implies an obligation to pay the plaintiff interest on the sums in the account. That implication is confirmed by the conduct of the defendant in writing the letter which had been referred to as exhibit P.5 informing the plaintiff of the rates of interest operating from time to time, and in transferring not only the principal sum of N1, 000,000 but also the interests accruing thereon to offset the alleged indebtedness on the account of Alfredo, as pleaded in para. 16 of the statement of defence. I think it is really too late in the day for the defendant now to contend that the evidence as to liability of the defendant to pay interest on the deposit account went to no issue. This is because, the plaintiff is having averred that the account was a deposit account went on to claim interest thereon. If the defendant had wanted to contest the question of its liability to pay interest, it would have denied that liability by its pleadings. I may well observe, in passing, that were it to do so, it would have been had put to explain paragraph 16 of its statement of defence and the letter Exh. P.5. It must be said that the rule that evidence of facts not pleaded goes to no issue is not a technical rule but one that is founded on justice and the principles of fair hearing. Where, therefore, on the totality of the pleadings, the court can come to the conclusion that the defendant knew what the plaintiff was claiming and the facts on which he based his claim, it cannot be said that the demands of fair hearing had not been met merely because the plaintiff had failed to couch his pleadings in a particular manner. The averment in this case that there was a deposit account followed by a claim for interest thereon is sufficient to put the question of liability to pay such interest in issue. I come to the conclusion that the evidence in regard to the question of interest was in conformity with the pleadings.

However, the liability to pay interest would not imply that accrued interest could be claimed as special damages, nor would the averment, whether express or implied, as to the defendant’s liability to pay interest determine the circumstances in which interest could be claimed as damages. In so far as the liability to pay interest is founded on contract, any interest accruing on the deposit account up to the date of the breach by the bank to pay the money due on the deposit account when demanded or due according to the agreement of the parties, should strictly be claimed not as damages but as money due on the contract. The question of damages would arise as a result of any loss, suffered by the customer by reason of the breach.

The failure of the Bank to pay the money due on the deposit account on demand by the plaintiff was a breach of contract: (See President of India v. La Pintada Campania Navigacion S.A. (1985) A.C. 104, 127.) Such breach would justify a claim for compensation. It would not really matter if the compensation claimed is described as interest or as damages, as long as the compensatory nature of the award for loss suffered as a result of withholding money to which the plaintiff is entitled is borne in mind.

In the House of Lords case of Riches v. Westminster Bank Limited (1947) A.C. 390 at p. 400 Lord Wright said: