Skymit Motors Ltd V. Uba Plc (2020)

LAWGLOBAL HUB Lead Judgment Report

AMINA ADAMU AUGIE, J.S.C.

The Appellant, who was a customer of the Respondent at its Ikeja Branch, was granted several facilities at the interest rate of between 21% and 36%, from 11/2/1998 to 13/10/1999. When it discovered that the Bank imposed arbitrary and uncontracted interest rate charges on the said Facilities, without its knowledge, consent and/or approval, the Appellant engaged the services of Financial Consultants, Corimol Nigeria Ltd., to reconcile its accounts with the Respondent Bank. The Financial Consultants did the reconciliation and presented a Report that revealed a number of excess interest charges, excess and illegally charged Commission on Turnover, and unlawful interest charges on excess charges on its two Accounts.

The Appellant wrote letters of complaints to the Respondent and in its letter to the Appellant dated 18/3/2002, the Bank admitted as follows:

Following the series of correspondence and meetings held between both establishments coupled with further review of the account, please note the sum of N7,209,906.55 being funds considered for refund [The breakdown is]: Interest on Overdrafts N4,216,058.00

Excess COT and VAT N132,745.91

Excess Interest on Reversed Charges N38,250.11

Interest calculated on excess Charges N1,448,926.05

Excess interest on Loan Facilities N1,373,926.48

N7,209,906.55

Fired up by the above admission, the Appellant wrote several letters to the Respondent demanding payment and/or refund of all monies illegally appropriated from its accounts by the Bank. But the Respondent failed or refused to comply, which pushed the Appellant to file a Suit against the Respondent at the Lagos State High Court, wherein it sought a number of declaratory reliefs, orders, damages, and Relief 8, in particular, was for:

Interest at the rate of 21% on Reliefs 5, 6, 7, 8 and/or 9, 10, 11, 12, 13, 14 and 15 from the dates stated herein to when final Judgment is delivered and thereafter 21% until Judgment sum is finally liquidated.

The Respondent filed a 52-paragraph Statement of Defence wherein it denied the Appellant’s claim and also averred in paragraphs 50 and 51 that:

50. [It] is not liable to the Claimant [Appellant herein] in the sums stated in the Writ of Summons or any other sum at all. ​

The Claimant [Appellant]’s Suit an afterthought, mischievous, vexatious, a gold-digging litigation, an abuse of the process of this Hon. Court and should be dismissed with substantial cost

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But during a pre-trial Conference on 7/12/2006, the Respondent’s counsel admitted that “there are excess charges in the sum of N7,209,906.55” and the pre-trial Conference Judge, Oyebanji, J., entered Judgment for the Appellant in the sum of N7,290,966.55, admitted by the Respondent.

However, no interest was awarded to the Appellant on that day and on 28/4/2008, the Appellant filed a Motion on Notice praying the Court for:

An order awarding interest to the Claimant at the rate of 21% per annum from 18/6/2003 up till and including the current date and until the said interest is finally liquidated by the Defendant in respect of the Judgment of the Court delivered on 7/12/2006 in the sum of N7,209,906.55.

In his Ruling delivered on 25/5/2009, the learned trial Judge held that –

The Judgment entered on 7/12/2006 was Judgment on admission made in open Court during Pre-Trial Conference – Learned Counsel for the Claimant did not apply that interest be awarded on the said sum and none was granted – The Court does not grant to a Party an award unsolicited. It seems clear to me that no omission was made by the Court in this case and that there is nothing to rectify. More importantly, pre-judgment interest though pleaded had not been proved and post-judgment interest, which commences from the date of Judgment until liquidation of the Judgment sum has been overtaken by events, there being uncontroverted affidavit evidence – that the Judgment sum has been satisfied by the Defendant and applied by the Claimant – This Application is considered unmeritorious and accordingly dismissed.

The Appellant appealed, and in its Judgment of 30/4/2012, the Court below referred to the above Ruling of the trial Court, and observed as follows:

The Ruling of the learned pre-trial Conference Judge clearly show – that Order 35 Rule 4 of the Lagos State High Court (Civil Procedure) Rules 2004, was either not taken into consideration at all or was misunderstood – – The above Rule empowers the trial Judge to award interest on the Judgment sum at the time of entering the Judgment or at any time afterwards. The fact that post-Judgment interest is provided for in the Rules of Court, it was wrong for the Court below to hold that the Appellant did not ask the Court to award interest at the time the Judgment was entered and that the Court does not give what was not asked for. This is much more so when the Appellant as Claimant had clearly asked for both pre and post Judgment interest in its Statement of Claim – – – It must be noted that the Claim of the Appellant was premised on improper deductions from the accounts of the Appellant on a facility, which was granted to [it] by the Respondent at interest rates between 21% and 30% per annum with interest calculated monthly. If the Respondent charged exorbitant interest on the facility it granted the Appellant, would it not be equitable that the Respondent also pays interest on the money of the Appellant it unlawfully deducted on which Judgment was entered?

The Court of Appeal, however, held as follows on pre-judgment interest:

Although the Court is at liberty to award post-Judgment interest on the Judgment sum without much ado, a Plaintiff seeking pre-judgment interest must plead and lead evidence to prove same – – in view of the decision of the Supreme Court in Berliet Nig. Ltd V. Kachalla (supra) that pre-judgment interest needs to be pleaded and proved by evidence, I resolve Issue 2 against the Appellant.

At the end of the day, the Court of Appeal concluded in its Judgment that:

This Appeal has merit and it is hereby allowed in part. The Ruling of the learned Pre-Trial Conference Judgment (sic) made on 25/5/2009 is hereby set aside. In line with Order 35 Rule 4 of the High Court of Lagos State (Civil Procedure Rules, 2004 and as empowered by Section 15 of the Court of Appeal Act, 2004, I hereby order that the Respondent shall pay post-judgment interest on the Judgment sum on N7,209, 906.55 at the rate of 10% per annum with effect from 25/5/2009 when the Judgment sum was entered.

Dissatisfied, the Appellant filed a Notice of Appeal in this Court containing two Grounds of Appeal, and it formulated one Issue for Determination i.e.

Whether the Appellant is entitled to be awarded pre-Judgment interest on the admitted sum of N7,209, 906.55.

The Respondent adopted the issue formulated by the Appellant in its Brief, and I will do same in dealing with this Appeal.

Pre-judgment is simply a Judgment reached before evidence is available. If the claim is for money, the Claimant may claim interest up until the date the Judgment is given, and that is pre-Judgment interest. As this Court observed in Berliet (Nig.) Ltd. V. Kachalla (1995) 9 NWLR (Pt. 420) 478, relied on by Court of Appeal, there is a clear difference between an award of interest pre-Judgment, where a Plaintiff must specifically claim such and prove it, and award of interest on a Judgment-debt, which is purely statutory, and can only be awarded if there are provisions to that effect in the law or Rules of Court. See also Ekwunife V. Wayne (W/A) Ltd. (1989) 5 NWLR (Pt. 122) 422 SC.

In this case, the Appellant contends that it is entitled to be awarded pre-judgment interest since it claimed interest in its Statement of Claim, and also gave reasons for claiming interest in paragraph 6 of its Affidavit; beside the fact that it is a trading company and the relationship between the two parties that gave rise to this Suit is purely commercial. He cited the following authorities, foreign and Nigerian, on pre-Judgment interest:

– President of India V. La Pintada Compania Navigacion S.A. (1984) 3 W.L.R 10 at 17;

– Nigerian General Superintendence Co. Ltd. V. NPA (1990) 1 NWLR (Pt. 129) 741/748;

– DPMS Ltd V. Larmie (2000) 5 NWLR (Pt. 655) 138 at 156;

-Paget’s Law of Banking 12th Edition [paragraphs 13, 19 at page 199];

– Wadsworth v. Lydall (1981) 2 All ER 401; and

– A.G. Ferrero & Co. Ltd V. Henkel Chemicals Nig. Ltd. (2011) 13 NWLR (Pt. 1265) 592 at 606, wherein Tabai, J.S.C., gave approval to the dicta in these cases, as follows:

“In purely commercial transactions, a Party who holds on to the money of another for a long time without any justification and thus deprives that other of the use of such funds for the period should be liable to pay compensation by way of interests (Nigerian General Superintendence Co. Ltd Vs. Nigerian Ports Authority (1990) 1 NWLR (Pt. 129) 741; Adeyemi Vs. Lan & Baker Ltd. (2000) 7 NWLR (Pt. 663) 33 referred to).”

It argued that in so far as it pleaded interest at the rate of 21% per annum, and also averred in paragraph 6 of its Affidavit that Respondent claimed interest at the rate of 21% and 36% per annum on the said facilities; and the Respondent admitted that it over deducted its account to the tune of N7209,906.55, the Court of Appeal ought to have exercised its discretion to award pre-Judgment interest to it on the authority of the above cases.

It cited Igolo V. Igolo (2006) (Pt.972) 163 Agbakoba V. INEC (2008) 18 NWLR (Pt. 1/9) 489, and urged this Court to invoke its powers under Section 22 of the Supreme Court Act to set aside the decision of the Court below and enter an Order awarding pre-Judgment interest to it.

The Respondent, however, argued to the contrary that the Appellant is not entitled to pre-Judgment interest because in its Writ of Summons and Statement of Claim, “there was no specific claim of N7,209,906.55 as interest over change in any of the sub-head of claims upon which the award of pre-judgment interest could have been made” and that there is no evidence establishing, which of the various claims of pre-Judgment interest that the admitted sum of N7,209,90.55 is based upon, and what the rate of pre-judgment interest should be, and the basis for that rate.

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It submitted that it is only at the conclusion of trial and upon proof by way of evidence that Judgment in respect of a claim for pre-judgment interest could be awarded where it is established and the Court of Appeal could not have so ordered in the absence of evidence in the Record; and that merely positing the claim for pre-judgment interest as stated in its pleading without proof does not entitle the Appellant to such an award.

Furthermore, that pleaded facts do not amount to evidence in proof of facts so pleaded, as the Appellant is enjoined to lead evidence in proof of the facts pleaded in respect of the various claims of pre-judgment interest on the overcharge, as made out in its Statement of Claim, citing Berliet Nig. Ltd. V. Kachalla (1995) 9 N(PWLR t. 420) 478 at 500, and that contrary to the Appellant’s submission, pleadings are mere averments, and it requires evidence on the Plaintiff’s part to prove the facts pleaded, citing Sani Abacha Foundation for Peace and Unity & Ors V. UBA Plc (2010) 17 NWLR (Pt. 1221) 192 at 207 A.G. Ferrero & co. Ltd V. H.C. Nig. Ltd. (supra). It urged the Court to resolve this issue in its favour and dismiss the Appeal.

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But the Appellant countered in its Reply Brief that the Respondent, in arguing that the Court below was right because there was no evidence to establish its entitlement to pre-Judgment interest, as claimed, did not take into consideration the findings of the Court of Appeal when it stated:

The Appellant not only claimed interest in its Statement of Claim but also averred in paragraph 6 of its Affidavit in Support of its Motion on Notice of 20/4/08 that the Respondent claimed at the rate of between 21% and 36% per annum on the facility made available to it. Therefore, when the Respondent admitted it over deducted Appellant’s account to the tune of N7,209,906.65, I think it was in the interest of justice to order interest on the Judgment sum.

It argued that there is no paragraph in the Respondent’s Counter-Affidavit that controverted its deposition in paragraph 6 of its supporting Affidavit, which Court of Appeal took into consideration in making its finding, citing Uzodinma V. Izunaso (No 2) (2011) 17 NWLR (Pt. 1275) 30; and that the said findings is not subject of any appeal or cross Appeal, and this Court held in CPC V INEC (2011) 18 NWLR (Pt. 1279) 493 that “a finding of a Court that is not appealed against is deemed to have been accepted by the Parties.”

The primary consideration in this Appeal, which must be kept on the front burner, is that the Judgment in question is a Judgment on admission entered during a Pre-Trial Conference, and not a Judgment entered after a trial in which Witnesses testified and issues joined were thrashed out.

By Order 19 Rule 4 of the High Court of Lagos State (Civil Procedure) Rules, 2004, a Judge may, at a pre-trial Conference or at any stage where admissions of fact have been made, on pleadings or otherwise, “give such judgment as upon such admissions a Party may be entitled to without waiting for the determination of any other question between the Parties”.

By this provision, the Court does not have to wait to call witnesses before a decision is taken on a claim or counter claim where there is an application to do so – see Mosheshe General Merchant Ltd. V. Nig. Steel Products Ltd. (1987) 1 NSCC (Vol. 18) 502, wherein Aniagolu, J.S.C., observed

Where the claim is for a definite sum alleged owed by the Defendant, and the Defendant admits owing part of this sum, no difficulty will, or should, arise in the Court entering judgment for the sum admitted leaving the balance to be contested. In such a case, the Judgment could be entered upon an oral application to the Court provided that the Court, in its own discretion, may, having regard to the circumstances of the case, grant the application and enter Judgment there and then or order the Applicant to formally move the Court. Yet, the admission in such a case is a solemn declaration of indebtedness of the Defendant to the Plaintiff, in the sum admitted, for the purpose of the remainder of the trial of that action.

In this case, the Appellant pleaded as follows in paragraphs 11(A), 11(B) and 11(C) of its Statement of Claim under the heading DETINUE that –

A. When it discovered the fraudulent charges, surcharges, interest upon interest, excess charges, and/or unilateral and usurious rate of interest and charges imposed thereon, [it] wrote letters to the Defendant complaining about the said fraudulent act of the Defendant.

B. The Defendant by its letter dated 18/3/2002 admitted unlawfully and illegally overcharging the Plaintiff to the tune of N7,290,966.58 only.

[It] further and/or in addition demanded payment and/or refund of all the monies illegally and unlawfully appropriated from (sic) the Defendant.

It was further averred as follows in Paragraphs 15-17 of its Pleadings that:

15. As a result of the arbitrary interest rate variation and/or excess charges and/or imposition of usury and unlawful charges, which excess charges were Ignorantly paid to the Defendant, [it] suffered financial depreciation in [its] business, which position adversely affected [its] business.
16. The number of vehicles and/or vehicle accessories imported and/or being imported for sales declined pursuant to which the rate of profit generated and/or being and/or to be generated declined and has continued to decline.
17. [It] shall at the trial of the Suit lead evidence to establish that the overdraft facility and/or loan facility granted by the Defendant to [it] was for the sole purpose of importing vehicles and vehicle accessories for sale and at profit and same was to the knowledge of the Defendant.

The case had not yet gone to trial and was still at the pre-trial Conference stage when the trial Court entered judgment for the Appellant in the sum of N7,09,966.55, admitted by the Respondent, in its letter of 18/3/2002.

During the said Pre-trial Conference on 7/12/2006, the Appellant did not mention or apply for interest to be awarded on the said admitted sum, and the trial Court dismissed its application for interest dated 28/4/2008 for reasons that the Court of Appeal found unsustainable in its Judgment.

The Court of Appeal found that the Appellant “clearly asked for both pre and post Judgment interest in its Statement of Claim”, and although it set aside the trial Court’s decision and ordered that the Respondent pay post-Judgment interest on the Judgment sum, it held that the Appellant was not entitled to pre-Judgment interest because it did not prove same.

The question now is whether the Court of Appeal’s decision that the Appellant did not establish that it is entitled to pre-Judgment interest is sustainable in the peculiar circumstances of this case. It is settled that a claim for pre-Judgment interest may be made by a Plaintiff as of right, where it is expressly provided for in or is contemplated by the agreement between the Parties or under a mercantile custom or under a principle of equity such as the breach of a fiduciary relationship – see A.G. Ferrero & Co. Ltd. V. H.C. (Nig.) Ltd. (supra), and Berende V. Usman (2005) 14 NWLR (944) 1 at 24 wherein Onnoghen, J.C.A. (as he then was) stated as follows:

The general rule is that interest is not recoverable at common law on ordinary debt unless there are contractual obligations, expressed or implied, business usage or statutory provision. The Appellant bought the cows on credit and trades with them for profit. Meanwhile, he refused to pay the debts to enable his creditor restock and carry on his business at a profit.

It was only in 1958 that the English Court applied the fiduciary principle to the relationship between a bank and its customer in Woods v. Martins Bank Ltd [1958] 3 All ER 166; and in Fiduciaries in Context: An Overview in PRIVACY AND LOYALTY (Peter Birks, 1997) David Hayton commented that:

A fiduciary relationship cannot exist if a Bank has no reason to believe that the customer is placing trust and confidence in it and relying on it to put the customer’s interests above all else.

In this case, the parties do not only have a banker-customer relationship, which is contractual in nature, imposing rights and duties on both of them; there is also a fiduciary relationship between them, which thereby elicits a duty of care by the Respondent to the Appellant – see Agbanelo V. UBN (2000) 7 NWLR (Pt. 666) 534 wherein Ayoola, J.S.C., aptly stated as follows:

The Defendant’s duty to exercise reasonable care and skill in regard to its customer’s affairs is undoubted. The law is stated thus:

“A Bank has a duty under its contract with its customer to exercise reasonable care and skill in carrying out its part with regard to operations within its contracts with its customers. The duty to exercise care and skill extends over the whole range of banking business within the contract with the customer. Thus, the duty applies to interpreting, ascertaining and acting in accordance with the instructions of the customer.”

From the facts, it is clear that the Defendant was in breach of the duty of reasonable care and skill it owed to the Plaintiff. It is surprising that the Defendant, which was itself embarrassed by its own defaults, nevertheless, continued to deny that it had failed to show sufficient care and skill, as would reasonably be expected of it. The trial Court should have so found. The Court below was in error in affirming the decision of the trial Court.

In this case, the Appellant sells motorcars and vehicle accessories, and Respondent did not deny the Appellant’s assertion in paragraph 17 of its Pleadings that it knew that facilities granted to the Appellant was for the “purpose of importing vehicle and vehicle accessories for sale at profit”.

The Respondent did not also controvert or challenge the averment in paragraph 6 of the Appellant’s Affidavit in support of Motion for Award on Interest on Judgment Debt, referred to by the Court below; that is that:

The facility in respect of which the Defendant made these improper deductions from the Claimant’s account was offered to the Claimant at interest rates between 21% and 36% per annum with the interest calculated monthly, thereby giving a compound yield. Since before the filing of the Claimant’s action and since thereafter, commercial interest on unsecured (ending and facilities had stood above 21%.

As the Appellant rightly submitted, the law is clear that depositions in an affidavit that remain uncontroverted are accepted as true – see Uzodinma V. Izunaso (No 2) (supra), wherein Rhodes-Vivour, J.S.C., explained that:

Depositions in an Affidavit are the factual positions of the Deponent as verily believed by him and where such facts are not controverted with a Counter Affidavit the material facts are taken as unchallenged and undisputed and the Court is bound to act on them except, they are obviously false.

Obviously, the depositions in the Appellant’s Affidavit cannot be regarded as false because the Respondent admitted that it had over deducted or overcharged the Appellant’s accounts with it to the tune of N7,290,966.55.

But the Respondent argued that it is only at the conclusion of trial and upon proof by way of evidence that judgment in respect of a claim for pre-judgment interest could be awarded; and that the Court of Appeal could not have ordered otherwise in the absence of evidence on Record.

Clearly, the Respondent’s argument is misconceived. As this Court held in Mosheshe Gen. Merchant Ltd. V. Nig. Steel Products Ltd. (supra), where the claim is for a definite sum and a Defendant admits owing part of the sum claimed, the Court may enter Judgment in the sum admitted, there and then, and leave the unadmitted balance to be contested at trial.

At any rate, the issue is not whether the Court can or cannot award pre-Judgment interest because the Court of Appeal clearly stated that –

The Appellant not only claimed interest in its Statement of Claim but also averred in paragraph 6 of its Affidavit in support of its Motion on Notice of 20/4/08 that the Respondent claimed at the rate of between 21% and 36% per annum on the facility made available to it. Therefore, when the Respondent admitted it over deducted Appellant’s account to the tune of N7,209,906.55, I think it was in the interest of justice to order interest on the Judgment sum.

It also said “the Appellant did the right thing” when it filed its Application for interest “on the Judgment so admitted by the Respondent”; and asked:

if the Respondent charged exorbitant interest on the facility it granted to the Appellant, would it not be equitable that the Respondent also pays interest on the money it unlawfully deducted on which Judgment was entered?

The issue is whether the Court of Appeal was right that the Appellant did not prove that it was entitled to pre-Judgment interest that it prayed for.

The law says that what is admitted needs no further proof, and the Court of Appeal did accept the fact that the Respondent “admitted that it over deducted the Appellant’s account to the tune of N7,209,906.55”, and that, in my view, is sufficient to sway its decision in the Appellant’s favour.

A banker-customer relationship is one that is founded on contract, with particular reference to commercial transactions. Thus, where a bank presents itself as being professionally competent and skilled to execute certain obligations inherent in a commercial transaction, but eventually shirks that responsibility, this constitutes a prima facie act of negligence having failed in the duty of care that it primarily owed to its customer – see Agbonmagbe Bank Ltd. V. CFAO (1966) NSCC (Vol. 4) 144 and Linton Industrial Trading Co. (Nig.) Ltd. V. Central Bank (2013) LPELR-22036 (CA)

Obviously, if the Court of Appeal had addressed its mind to the fact that the Respondent failed in its duty to handle the Appellant’s Accounts with the competence and skill expected of a Bank, it would have arrived at a different conclusion. The Respondent indicted itself when it admitted that it over deducted or overcharged the Appellant’s accounts to the tune of N7,209,906.55, which is money that the Appellant could have used to import vehicles and vehicle accessories for sale, and to generate profit.

Thus, in the peculiar circumstances of this case, the Appellant was entitled to an award of pre-Judgment interest because the Respondent, by over deducting the admitted sum of N7,209,906.55 from its Accounts, breached its contract with the Appellant, and failed in its duty to protect the money and interests of the Appellant, with reasonable care and skill.

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This Appeal is allowed. I set aside the decision of the Court of Appeal on pre-Judgment interest and enter an Order that the Respondent shall pay the Appellant Pre-Judgment interest claimed on the Judgment sum, N7,209,906.55, at the rate of 21% per annum from 18/3/2002 till 7/12/2006, when the Judgment sum was entered. The Appellant is also awarded the sum of One Million Naira as costs to be paid by the Respondent Bank.

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SC.328/2012