Thor Limited V. First City Merchant Bank Ltd (2002)

LAWGLOBAL HUB Lead Judgment Report

U. ONU, J.S.C.

In the High Court of Lagos State holden at Lagos, summary judgment was entered on 9th December, 1994 against the appellant who was a defendant (per A. Ade Alabi, J.)for N12,303,145.19 plus interest and costs under Order 10 (now Order 11) of the High Court (Civil Procedure) Rules, 1972. Briefly put, the respondent (hereinafter referred to as the plaintiff) claimed-against the appellant (in the rest of this judgment referred to as defendant) the following reliefs:

“(a) The sum of N12,303,145.19 (Twelve Million, Three Hundred and Three Thousand, one hundred and forty Five Naira Nineteen kobo), being outstanding debit balance on the defendant’s Account No. 50494001820 with the plaintiff as at 3151 of December, 1993, in respect of various credit facilities (banker’s acceptance, revolving credit and overdraft granted by the plaintiff to the defendant between December, 1987 and February, 1989.

(b) Interest on the said sum at the rate of 21% per annum from the 1st of January, 1994 until the whole amount outstanding is fully liquidated. The defendant can pay the amount claimed, the interest thereon and costs.”

The defendant on its part filed a statement of defence and counterclaim and by paragraphs 2 – 4 of the latter, the defendant claimed against the plaintiff as follows:

“2 The defendant counter-claims against the plaintiff the sum of N1,943,000.00 being overpayments made by the defendant to the plaintiff over the material time.

(v) The sum of US $150,000.00 deposited by Decacia International Limited as Red Letter portion of letters of credit issued in favour of the defendant.

(vi) The sum of N2,000.00 as damages for breach of contract to wit the unlawful and unilateral

suspension.

By summons for judgment brought pursuant to Order 10 rules 1 and 2 of the High Court of Lagos State (Civil Procedure) Rules 1972, the plaintiff sought an order of the lower court in the terms set out herein before and attached thereto an affidavit of 38 paragraphs against the defendant filed on 4th May 1994 with no exhibits attached termed “Affidavit of Merits” salient among which are:-

“1. That I am the Chief Executive Officer of the defendant company and that I make this oath with all authority from facts in my personal knowledge.

2. That at all material times I did deal with the plaintiff herein in respect of the transactions that are the subject of this action.
3. That I do not know Mr. Ademola Bakare, do not believe that he is or was an employee or other officer of the plaintiff and he is certainly unable to swear positively to the facts related in his affidavit dated 8th April, 1994
4. That I verify the facts averred in the defence filed for the defendant on 8th April, 1994.
5. That the alleged indebtedness of the defendant arises from a series of credit arrangements each with distinct and different terms as to interest rate, repayment date, repayment source and method and all were fully collateralised by security in excess of the repayments due which security was easily realisable and at all times within the full control of the plaintiff.
6. That the facility of N1.2 Million granted on 31/12/94 was a temporary cash advance against the defendants domiciliary account balance of Pound Sterling, 169,600 then valued at N1,272,000.00
7. This facility was to be repaid latest by 15th March, 1988 and effected by the recovery of the said foreign exchange to which the plaintiff demanded and obtained a letter of set off dated 1st January, 1988.
8. That the plaintiff did in fact realise this balance at its own convenience and in any event interest on this facility ceased to accrue on the said 15th March, 1988 despite any default by the plan to realise it.
9. That the said credit was augmented under the terms of a letter of offer dated 12th February, 1988 by N4 Million secured against security provided to the plaintiff as is requested by Decacia International Limited its long standing customer and trading partner.
10. That this facility was to be repaid from disposal of export proceeds receivable and received by the plaintiff and disposed of by them accordingly from time to time
11. That accordingly, it was a condition of the facility that a sizeable portion of the defendants business with Decacia Limited would be channelled through the plaintiff bank and this was a consideration accruing to the plaintiff.
12. That all times the business of Decacia International was crucial to the relations with the defendant and the defendant was treated accordingly as an agent of Decacia International at least to the extent that any facility of credit required the approval and support of Decacia International Limited.
13. That this credit was available for 12 months and was never expressly or otherwise renewed.
14. That at the end of twelve months the facility was due and recoverable by the plaintiff at which point interest and other charges due thereunder and calculated up to the due date.
15. That at the expiry thereof by the latest, the plaintiff recovered the said collateral which was at all times in its possession and control.

19 That any sum outstanding due apart from the above sums was secured as indicated by the offshore primary obligations of Decacia International Limited.

21. That all offers of alternative security in excess of any outstanding were refused by the plaintiff who meanwhile withdrew unilaterally from the defendant the right to utilise such facilities.
22. This action was unreasonable and unfair and was in breach of the contracts under which the facilities were granted.
23. That the plaintiff refused to call in the guarantee of Decacia International and continued to negotiate with it, the credits of the defendant without consulting the defendant and accordingly continued to rely on the illegal offshore guarantee to sustain its continuing debits to the defendant on the frozen accounts.
24. That under secret arrangements made with Decacia International whose business it did not wish to lose, the plaintiff extended the maturity of the defendants letters of credit and reached with Decacia binding agreements for the full and final settlement of certain credits including the letter of credit No.890284 upon which the plaintiff continued to debit charges and account.
25. That in respect of interest, the plaintiff continued to debit and capitalise interest on the defendant’s account while the account was frozen.
26. The plaintiff also capitalised interest in respect of facilities that had been paid or recovered.
27. That the plaintiff capitalised interest monthly before the expiry offacilities over a period when interest was not overdue.
28. That interest was calculated uniformly on the entire purported debit balance and the capitalisation was illegal and contrary to banking practice or the agreement inter partes.
29. That several debits on the defendant’s account were purely unauthorised and were deliberate manipulations created to deceive the Central Bank of Nigeria.
30. That the defendant relied on plaintiffs advice in its response to the new guidelines from the Central Bank of Nigeria by offering new security yet the plaintiff received proposals and did not act on them while debited the defendant nearly N400,000.00 which it alleged was a penalty imposed upon it by the Central Bank upon the plaintiff’s own failure.
31. That the bankers acceptances debited to the defendant were further manipulations not authorised by the defendant whereby the plaintiff funded its own credit were further manipulations not authorized by the defendant for these without authority.
32. That the plaintiff debited the defendant for losses due to fluctuations of the value of either or both the Naira and foreign exchange which were incurred by default of the plaintiff to exercise its right of set off.
33. The plaintiff charged the defendant several duplicated and imaginary sums in order to regularise its account with the Central Bank of Nigeria.
34. That the plaintiff without knowledge or consent of defendant manipulated or debited the defendant’s account against transaction to which it knew nothing about.
35. That it was later discovered by the defendant that plaintiff was fronting with the defendant’s account in order to regularise its own account situation with the Central Bank of Nigeria.
36. That the defendant has a valid defence to this action and a counter claim based on breaches by the plaintiff of the credit contracts, which it is ready and willing to prosecute. ”

The italics above is mine and it is to underscore how formidable and unassailable the plaintiffs case was vis-a-vis the defendant’s defence and counterclaim. Thus, by his earlier ruling delivered on 9th of December, 1994 the learned trial Judge refused leave to defend and entered judgment for the plaintiff by stating as follows:

“Accordingly, an order is hereby made empowering the plaintiff to enter judgment in the sum of N12,303,145.19. The plaintiff also claimed interest at the rate of 21% per annum from the 1st of January, 1994 until the final liquidation on the whole debt with cost. It is obvious to me that the plaintiff in this case is being kept out of money, which ought to have been paid to her. On the strength of the principle established in the case of N.G.S.C. Limited v. NP.A. (1990) 1 NWLR (Part 129) page 741 at 748, I hold that the plaintiff is entitled to interest at the rate of 10% per annum until judgment debt is finally liquidated. Costs assessed at N2,000.00 is awarded in favour of the plaintiff.”