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Societe Bancaire (Nigeria) Limited V. Margarida Salvado Delluch (2004) LLJR-SC

Societe Bancaire (Nigeria) Limited V. Margarida Salvado Delluch (2004)

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The respondent (the plaintiff) entered into a business relationship with one Francis Philips whereby the latter promised to secure a contract for the respondent worth $55m for the construction of the Central Bank of Nigeria between, 1992/94. The plaintiff/respondent claimed that she was induced to part with the total sum of $500,000.00 which was later paid into the appellant’s bank.

The respondent heard nothing else from the said Francis Philips and to her greatest chagrin and shock she realized too late that she had been made to part with her money under false pretences as it turned out.

The money was paid into the joint account of Anthony Jiwueze and Francis Philips in the appellant’s bank. The respondent averred that the appellants were negligent in opening an account for Mr. Philips and Jiwueze without keeping to or observing the laid down standard of care and procedure in the opening and operation of an account, and that the bank did not behave in a manner expected to be followed by a prudent bank by so readily allowing Mr. Philips and Jiwueze to open an account.

At the High Court the appellant raised a preliminary objection to the fact that the State High Court has no jurisdiction stating that the subject matter of the action is a banking matter but not being one of bank and customer relationship. The High Court per Akinsanya, J. after listening to the arguments of both counsel, dismissed the suit for lack of jurisdiction, whereupon the appellant appealed to the Court of Appeal. The appellate court found merit in the appeal and allowed it and set aside the ruling of Akinsanya, J. holding that the State High Court is competent to adjudicate on the claims on this matter.

The defendant as the appellant in this case appealed to this court and framed two issues which are as follows:

  1. Is it correct, as held by the Court of Appeal, that “the High Court of Lagos State still has jurisdiction” under section251(1)(d) of the 1999 Constitution “to entertain any claims connected with bank and banking except such claims were connected with fiscal measures or revenue of the Federal Government of Nigeria” .(italics ours)
  2. Does this appeal fall within the sole proviso in section 251(1)(d) of the 1999 Constitution, in which circumstance the Lagos State High Court would be seized of jurisdiction

The respondent on the other hand argued that the case being one of negligence simpliciter and having nothing to do with banking matters in stricto sensu ought not to come within the provision of section 251 (1)(d) of the 1999 Constitution being no more than a simple case of tort, and therefore as she contended, is within the jurisdiction of the State High Court. The respondent company formulated only one issue which is:

Whether the Court of Appeal was right in holding that the High Court of Lagos State has jurisdiction over this action being an action which raises an issue of negligence in the ordinary course of banking practice and business only and not relating to any matter of fiscal measure or revenue of the Federal Government.

To my mind the issues framed by the appellant collapse into one issue as set out by the respondent.

The appellant’s counsel has written a 31 page brief on this very simple matter in which he exhaustibly discussed Fiscal measures and policies and revenue of the Federal Government in relation to the history of vesting of powers in the Federal High Court. He further discussed very much at length such case as Jammal Steel Structures Ltd. v. African Continental Bank Ltd. (1973) NSCC 619 and also Bronik Motors Ltd. v. Wema Bank Ltd. (1983) 1SCNLR 296; (1983) NSCC 226.

Obviously when this brief was written the judgment of this court on NDIC v. Okem Ent. Ltd. (2004) 10 NWLR (pt. 880) 107, had not been given, otherwise the appellant’s brief which is in a form of treatise and which is very verbose, would not have been so written. It is instructive that the Supreme Court exhaustively discussed the two cases of Jammal Steel Structures and Bronik Motors cases in NDIC v. Okem Ent. Ltd. (supra). Now the issue then is this, should the action be commenced in the High Court in this sort of case. For us to understand the nuances of the matter in controversy, let me go back to section 251 (1)(d) of the Constitution which states as follows:

“Notwithstanding anything to the contrary contained in this Constitution and in addition to such other jurisdiction as may be conferred upon it by an Act or the National Assembly, the Federal High Court shall have and exercise jurisdiction to the exclusion of any other court in civil causes and matters connected with or pertaining to banking, banks, other financial institutions, including any action between one bank and another, any action by or against the Central Bank of Nigeria arising from banking, foreign exchange, coinage, legal tender, bills of exchange, letters or credit promissory notes and other fiscal measures: Provided that this paragraph shall not apply to any dispute between an individual customer and his bank in respect of transactions between the individual customer and the bank”

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It is agreed by both sides that the respondent was not a customer of the appellant. If that is so what then was the respondent in relation to the bank. The appellant argued that the lodging of the money falsely or fraudulently removed from the respondent and paid into the account of the alleged fraudsters in the appellant’s bank, could only be a civil cause or matter connected with or pertaining to banking. The respondent replicando argued with gusto and unction that there is no way the criminal lodgment of the money in the appellant’s bank could be described as something connected with or pertaining to banking. I believe that the expression “connected with or pertaining to” involves or imports the state of affair where the matter in issue involves a transaction which is peculiar to a banking operation and can only be carried on by the bank or a financial institution. It equally connotes the operational duties of a bank in respect of or in relation to its functions within the limits of its licence. The appellant’s case can be said to be that the lodgment of the money by Philips and Jiwueze in the account in the appellant’s bank has situated the bank in relation to the respondent a state of responsibility of now holding and being a repository of the respondent’s money. The respondent argued otherwise that the complaint of the respondent is nothing more than a simple case of negligence.

From the analysis of the respondent’s argument in her brief as she strives to make out an issue of negligence it is to be implied that the appellant owes a duty of care or to be assumed to owe a duty of care to the respondent. When does a duty of care arise Actually a duty of care has its origin on the concept of forseability. This principle was first enunciated in Heaven v. Pender (1883) 11 QBD 503 at 509, where Brett M. R. said:

“Whenever one person is by circumstances placed in such a position with regard to another that everyone of ordinary sense who did think would at once recognize that if he did not use ordinary care and skill in his own conduct with regard to those circumstances he would cause danger of injury to the person or property of the other, a duty arises to use ordinary care and skill to avoid such danger.”

In Donoghue v. Stevenson (1932) AC 562 at 581 in approving the judgment of the court in Heaven v. Pender (supra) and Le Lievre v. Gould (1893) 1 QB 491 at 497. Lord Atkin said:

“The rule that you are to love your neighbour becomes in law, you must not injure your neighbour; and the lawyer’s question, who is my neighbour receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law is my neighbour The answer seems to be – persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question.”

What are those precautionary measures the respondent said the appellant ought to have taken that he did not take. I suppose that would feature in the main trial of the case.

Indeed aside from such cases as Dorset Yatch Co. Ltd. v. Home Office (1970) AC 1004 at 1052 where Lord Pearson said that it would be unhelpful to consider the question as to the existence of a duty of care in isolation from the various elements and variables that circumscribe the duty of care, and perhaps the other earlier case of Grant v. Australian Knitting (1936) AC 85 at 103, it is important to fully appreciate and understand the nuances that shall be considered in our understanding of the duty of care. In Dorset Yatch Co. Ltd. (supra) case Lord Wright said:

“All that is necessary as a step to establish the tort of actionable negligence is to define the precise relationship from which the duty to take care is deduced. It is however essential in English Law that the duty of care should be established: The mere fact that a man is injured by another’s act gives itself no cause of action; if the act is deliberate, the party injured will have no claim in law even though the injury is intentional, so long as the other party is merely exercising a legal right. If the act involves lack of due care, again no case of actionable negligence will arise unless the duty to be careful exists.”

I do not intend to discuss the issue of negligence at this stage as that would be agitated later in the High Court presumably.

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Section 251 (1)(d) in its tenor and intendment embraces all possible conceivable matters touching on banking whether on issue of tort or contract but not being a point on bank and customer relationship. I have decided to make a small forage as much as reasonably, possible in quest to understand the case made out by the respondent that her action was based purely on negligence and that being the case, it would be wrong to pigeonhole the case within the framework of section 251(1)(d) of the Constitution. I shall pause here and would not proceed further in my analysis of the point in negligence.

It is hardly worth repeating that a matter which involves some elements of banking as expounded and expatiated above by way of decided cases is wide in its con that any attempt to remove it from the orbit of banking operations would be indulging in legal semantics or even polemics. Among the facts averred by the respondent in her statement of claim are that the appellant failed in their duty to inquire into the background of Philips and Jiwueze who lodged the money in his bank. Which is why her case was built on negligence. The respondent drew the attention of the court to the case of Trade Bank Plc. v. Benilux Ltd. (2003) 9 NWLR (Pt. 825) 416. I shall now make a comparative critical examination of this case and the case on appeal.

In Benilux (Nig.) Ltd. case, this company had a transaction with the firm of Messrs Accountable Finance and Investment Co. as a result of which the latter issued a cheque in favour of the respondent marked “not negotiable” and to be drawn at the appellants which is a bank. The appellant, trade bank, paid the money to a stranger instead of the right person, whereupon the respondent issued a writ. The only issue formulated in that case was whether the High Court of Lagos State is vested with the jurisdiction to hear and determine the case. The leading judgment in that case in the Supreme Court did not touch on the issue as to which court ought to be vested with jurisdiction of the case. The court merely said:

“I have no doubt that the respondent in the case in hand can sue the appellant in conversion for the proceeds of the cheque which the appellant paid to a stranger who is not the payee of the cheque. The respondent’s case is simply a tort of conversion and action … can lie by the plaintiff at any State High Court.”

There was no exhaustive discussion on the import of the expression “connected with or pertaining to banking” as obviously that point was not assiduously canvassed before the court. In the first place, in Trade Bank Plc. v. Benilux Ltd. (supra) case the payee of the cheque was the respondent so, there was obviously a duty of care. In the present case under consideration the fraudsters paid the loot into the appellant’s bank but in their names. They became customers to the bank. How then shall we describe the relationship between the respondent whose “stolen money” was lodged in the appellants. Could such state of affair arising out of the spurious transaction between the two scoundrels and the respondent and tangentially affecting the appellant give rise to an act on the part of the appellant that can be described as “connecting with and pertaining to the bank”. The expression “connecting with or pertaining to banking” when examined synthetically imports transaction on matters that are related to or show affinity or intertwine or have semblance or have interrelationship with banking. What then is banking

Black’s Law Dictionary defines the word banking as follows:

“The business of banking, as defined by law and custom, consist in the issue of notes payable on demand intended to circulate as money when the banks are banks of issue; in receiving deposits payable on demand; in discounting commercial paper; making loans of money on collateral security; buying and selling bills of exchange; negotiating loans, and dealing in negotiable securities issued by the Government, State and National, and municipal and other corporations”.

At common law there does not appear to be any definition of banking although Diplock L. J. had held in the case of Dominion Trust Ltd. v. Kirkwood (1966) 1 All ER 968 at 986 – 7 as follows:

“I am inclined to agree with the Master of the Rolls and the author of the current edition of Paget on Banking (6th edn. 1961) p.8, that to constitute the business of banking today the banker must also undertake to pay cheques drawn upon himself (the Banker) by his customers in favour of third parties up to the amount standing to their credit in their “current accounts” and to collect cheques for his customers and credit the proceeds to their current account.”

In the same case Lord Denning M. R. had said at 979.

“….. It must be remembered that a recital of usual characteristics is not equivalent to a definition. The usual characteristics are not the sole characteristics. There are other characteristics which go to make a banker. In particular, stability, soundness and probity … Like many other beings, a banker is easier to recognize than to define. In case of doubt it is, I think, permissible to look at the reputation of the firm amongst ordinary intelligent commercial men”.

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What the learned jurist was saying is that you cannot easily compartmentalize the term banking. In other words, it defies positive and readily identifiable definition.

On the other hand the term banking business has been defined in section 61 of Banks and other Financial Institutions Decree No. 25 of 1991 as follows:

“Banking Business” means the business of receiving deposits on current account, savings account or other similar account, paying or collecting cheques, drawn by or paid in by customers; provision of finance or such other business as the Governor may, by order published in the Gazette, designate as banking business.”

If an action is brought against any person on negligence it presupposes that the action is brought on the ground that the defendant has breached a duty of care he owes to the proponent. Even if a duty of care arises due to some form of affinity in banking matters between the combatants as being espoused by the respondent in this case would that oust the jurisdiction of an appropriate court so statutory designated. As the respondent based her action on the tort of negligence, which imports there was a duty of care and the respondent has said that she is not a customer which indeed she is not, I find it highly irresistible not to express the view that the nature of the relationship subsisting between the parties touches inferentially or circumstantially on a matter relating to and therefore connected to and pertaining to banking. I say this because it is a fact not denied that the fraudsters lodged the money in the appellant’s bank thereby making the appellant in exercise of its banking operations the holder of the respondent’s money though without her consent but nevertheless in possession of it. The money is in the bank’s possession in its capacity as a bank in the con of its being a repository of money normally lodged or paid in there, and in this case, the money said to belong to the respondent who is not a customer. It is in the exercise of their duties as a bank that they became repository of the respondent’s money.

The respondent had lampooned the appellant for not exercising an accepted high standard in opening account for the two men. Holding therefore as I do that the matter to my mind touches on the issue of banking generally but certainly not a bank customer relationship, it is difficult not to conclude that this case ought to have been brought squarely before the Federal High Court as it is obvious it falls within the intendment of the Primary Law as reflected in section 251 (1)(d) of the Constitution but not including the portion with the proviso. That being the case, it is my view that this matter should be or ought to be brought squarely before the Federal High Court, which ought to exercise jurisdiction on this case. The appeal therefore succeeds.

I cannot however fail to comment at the manner the respondent in this matter readily parted with the sum of money being claimed. Would she do the same thing in Germany where she hails from The consideration for parting with the money is tainted with dirt, corruption and blatant dishonesty. I can’t help saying that she had hoped to reap an unconscionable unimaginable profit, id est, reaping where she did not sow. It is the likes of her that watered and manured the revolting and nauseating advance fee fraud which now thrives in the mentality and culture of our society. It is a hideous culture hitherto unknown which having been introduced and allowed to flower in the minds of louts inebrietated with making fast money by dishonest means has become a malignant cancer that has given this country a bad name and for which the society is fighting hard to destroy and obliterate. It would seem that the respondent and the fraudsters had all the disease of greed and cupidity in their body mechanism,

In the final analysis, the appeal succeeds and it is allowed. I set aside the judgment of the court below and affirm the ruling of the High Court. I strike out the main suit erroneously filed in the State High Court. I shall make no order as to costs having regard to the nature of this case.

SC. 286/2002

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