Union Bank Of Nigeria Plc V. Clement Nwankwo & Anor (2019)

LAWGLOBAL HUB Lead Judgment Report

PAUL ADAMU GALUMJE, J.S.C.

The 1st Respondent herein, who was the plaintiff at the Benue State High Court holden in Gboko, is a customer of the Appellant and operates a current account no. 203146817 at the Appellant’s Gboko Branch. He carries on the business of sale, stock and purchase of frozen fish in Gboko.

On the 10th March, 1999, the Appellant granted an overdraft facility of Two Million Naira (N2,000,000.00) in favour of the 1st Respondent to assist him in his business. This overdraft facility was to expire on the 7th of March, 2000. The first defendant serviced the account satisfactorily as a result, he was granted another facility of N500,000,00 known as “Temporary Excess” on the 14th October, 1999 and this was to expire within six weeks. This facility was credited into the 1st Respondent’s account.

On 22nd of October, 1999 the 1st Respondent drew a cheque of N150,262.50 on his current account with an endorsement at the back directing the manager of the Appellant to prepare a draft of N15,000.00 payable to Niyi Idowu Comm. Ent. The draft was an advance payment for the supply of 30kg or 4,000

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cartons of skumbia fish which the 1st Respondent had negotiated with Niyi Idowu Comm. Ent., a company based in Lagos. According to the 1st Respondent, he was to buy the 4,000 cartons of fish at N1,850 per carton and sell at N2,700.00 per carton, thus making a gain of N850 per carton. He estimated his overall gain to be N3,400,000. The Appellant refused to honour the cheque which it endorsed on its face, “Drawers attention required”. The 1st Respondent could not raise money elsewhere to meet his contractual obligation with Niyi Idowu Comm. Ent. as such the supply of the skumbia fish was frustrated. On the 22nd October, 1999 when the draft was dishonoured, the overdraft facilities had not expired, and the 1st Respondent had in his account the sum of N319,713.33 an amount sufficient enough to satisfy the cheque of N150,000. 1st Respondent felt aggrieved with the appellant’s action, and therefore took out a writ of summon dated 27th October, 1999 and a statement of claim dated 26th of October, 1999, in which he claimed from the Appellant, the following relief: –

(a) A declaration that the refusal of the Defendant to honour the plaintiffs cheque as at 22-10-99

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amount to a breach of contract between the plaintiff and the defendant.

(b) An order stopping the calculation and deduction or the debiting of the plaintiffs account of all the interests and other bank charges payable under the two facilities granted the plaintiff by the defendant as from 22 – 10 – 99.

(c) An order terminating the legal mortgage between the plaintiff and the defendant and a further order directing the defendant to return to the plaintiff forthwith his certificate of occupancy NO. 00808 used as security for the facilities.

(d) The sum of Three Million, Four Hundred Thousand Naira (N3,400,000.00) as special damages.

The Appellant filed a statement of defence on 11th November, 1999 in which it set out the following counter claim:-

(a) The sum of N2,381,633.65 debit balance as at 29th October, 1999 and the accrued amount at the time of judgment and payment in terms as to the contracts bonding the parties under the various facilities.

(b) An accrued interest charged thereon at an accrued interest rate of 25% per annum and turn over commission of N5.00 per N1000.00 till payment is made.

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(c) An order of Court granting the bank right of foreclosure under the terms of a 3rd party legal mortgage of the property in the deed in the event of non-payment.

(d) General damage of N500,000.00.

Issues having been joined, the matter was set down for hearing. The 1st Respondent testified in chief and called two additional witnesses, while the Appellant called two witnesses. Learned counsel for the respective parties addressed the Court. In a reserved and well considered judgment, delivered on the 26th February, 2001, Ikyegh J. (as he then was) found the Appellant liable for breach of contract when it dishonoured the 1st Respondent’s cheque and went on to award N200,000 general damages against the Appellant and in favour of the 1st Respondent. The learned trial Judge found all the other claims not proved and accordingly dismissed them. The counter claims were found to be premature, as the facilities had not expired at the time the counter claims were instituted. The 2nd Respondent who also counter claimed the certificate of occupancy which was used as collateral for the facilities, had his counter claim dismissed as well.

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The 1st and 2nd Respondents were dissatisfied with the decision of the High Court with respect to: –

1. Refusal to award special damages.
2. Refusal to terminate the legal mortgage.
3. Refusal to award substantial general damages to the Respondents herein.

Being aggrieved, they appealed to the Court of Appeal, Jos Division and submitted five issues for the resolution of their appeal; while the Appellant as Respondent at the lower Court submitted two issues for determination of the appeal. The lower Court heard the appeal, and in a reserved and not so well considered judgment delivered on the 17th July, 2006, allowed the appeal in part, in the following words:-

“Based on the foregoing, it is my respected view that the appeal succeeds in part. The judgment of the lower Court delivered on the 26th day of February, 2001, entering judgment for the Appellants in the sum of N200,000.00 is hereby affirmed. In addition, I enter judgment for the 1st Appellant in the sum of N3.4 Million being lost (sic, loss) of profit from the wrongful dishonor of his cheque Exhibit E. There shall be N5,000.00k costs in favour of the Appellant against the Respondent.”

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The Appellant is unhappy with the decision of the lower Court. Being aggrieved, it has brought this appeal. its notice of appeal at pages 177 to 180 of the printed record of this appeal dated 4th October, 2006 contains three grounds of appeal.

Parties filed and exchanged briefs of argument. At page 6 of the Appellant’s brief of argument filed on the 26th March 2007, Mr. Aliyu Umar, learned counsel for the Appellant formulated for the determination of this appeal, the following issues: –

1. Whether in the circumstances of this case, the sum of N3.5 Million claimed by the Respondents as special damages and awarded by the lower Court was not too remote and was within the contemplation of the parties to the contract as at the point of entering into the contract.
2. Whether the sum of N200,000.00 only awarded to the Respondent as general damages was not a fair and just compensation to the Respondents in the circumstances of this case.
3. Whether the lower Court was right in awarding special damages based on speculation, projection and anticipatory profit.

Mr. S. O Simon, learned counsel for the Respondents, at page 7 of the joint respondents’ brief of

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argument filed on the 27th of July 2007 formulated one issue for determination of this appeal as follows: –

“Whether the sum of N3.4 Million claimed, proved 1st and awarded was too remote having regard to the fact that, that was the loss incurred by the 1st Respondent (who was a trader) as a result of wrongful dishonor of his (1st Respondent’s) cheque by the Appellant.”

Learned counsel for the Appellant has clearly indicated in his argument in support of the second issue for determination of this appeal that the appellant has no quarrel with the award of N200,000.00 by the trial Court, and award which was confirmed by the lower Court. Learned counsel for the Respondents refused to join issues with the learned counsel for the Appellant on this issue. That which is settled needs not be flogged. The 2nd issue is according resolved in favour of the Appellant.

The first issue formulated by the learned counsel for the Appellant and the sole issue formulated by the learned counsel for the Respondents are similar. Also the third issue formulated by learned counsel for the Appellant can be conveniently considered along with the Appellant’s 1st

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issue and the sole issue formulated by the learned counsel for the Respondents. I will treat them together.

In arguing the first issue, learned counsel for the Appellant submitted that the special damages claimed by the Respondent and awarded by the lower Court was too remote as a consequence of the act of the Appellant and that it could not have been foreseen by the parties, since it was not within their contemplation as at the time the Appellant refused to honour the cheque. In a further argument, learned counsel submitted that the loss allegedly claimed by the 1st Respondent is not only speculative, but based on futuristic event which is a contemplated profit accruable from his business. Learned counsel urged this Court to hold that the special damages claimed by the 1st Respondent was not established, as such the lower Court was wrong in granting same to the Respondents.

For the Respondents, it is forcefully argued that the amount of N3.4 Million naira awarded was not too remote as to deny the 1st Respondent his award after he successfully proved his claim. According to the learned counsel for the Respondents, the entire credit facilities were

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granted to the 1st Respondent to assist him in his business and to enable him stock goods for the festive season. Learned counsel therefore contended that the Appellant knew the purpose for which the cheque was presented when it dishonoured it in the circumstances which resulted in the loss to the 1st Respondent. It is learned counsel’s view that the Appellant should bear the consequences of the loss to the 1st Respondent. In aid, learned counsel cited Ashubiojo vs African Continental Bank (1966) ALL NLR 452, Koufus vs Czarnikon (1969) 1 AC 530. Finally learned counsel submitted that the transaction between the Appellant and the 1st Respondent is not just a simple contract, but a contract founded on banker/customer relationship wherein the customer has been proved or established to be a trader. In aid the authorities in Balogun vs National Bank of Nigeria (1978) 3 SC 155 and UBN vs Nwoye (1996) 3 LRCN, 232 were cited. In conclusion, learned counsel urged this Court to dismiss the appeal and affirm the judgment of the Court of Appeal in its entirety with costs.

I have reproduced the 1st Respondent’s claim at the trial Court elsewhere in this judgment.

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The 1st Respondent’s claim for N3.400,000.00 as endorsed at paragraph 25(d) of the Statement of Claim is for special damages. The law is settled that where a party claims special damages, the burden is on him to prove the special damages to the last kobo. He has to do this by leading credible evidence most of the time by documents which show the actual loss he has suffered. See Arisons Trading & Engineering Co. Ltd (2009) LPELR 554 (SC). Unchallenged ipse dixit evidence is not an automatic proof of special damages.

The 1st Respondent in his evidence admitted under cross examination at page 48 of the record as follows:

“The N150,000 was for the supply of 4000 cartons of skumbia fish at N1,850 per carton. The retail price per carton in Gboko at the material time was N2, 700. If I had got the consignment, I would have realized N3,400,000.00. I did not give any other money for the supply of the fish as my only hope was hinged on the overdraft facility.”

There was no invoice from Niyi Idowu Commercial Enterprises stating the actual price of the fish and there was no corroborative evidence that the retail price per carton of the fish in Gboko at the

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material time was N2,700. The profit margin alluded to by the 1st Respondent in speculative and based on future transactions. How sure was the 1st Respondent that the market forces were going to remain static throughout the transaction and that the transportation of the fish from Lagos to Gboko would remain incidence free In Young vs Chevron (Nig) Ltd 2013 LPELR 22126, the plaintiff set out the particulars of the crops that were destroyed in his farm and the expected earnings from those crops which he pleaded and gave evidence that the employees, agents, contractors and servants of the defendant had destroyed by setting fire to his farm. The learned trial Judge found that the plaintiff had not proved the items of special damages, as the pleadings and depositions merely contain speculations as to the number of plants and the expected income. On appeal, the Court of Appeal held: –

“A Court is not expected to believe and act on evidence that is manifestly incredible or unreliable, merely because the plaintiff said so; the evidence itself must be credible evidence, before it can be acted on by a Court of law. What if the Appellant had claimed that the farm

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produce he lost was worth a Billion Naira, with nothing whatsoever to substantiate his claim, will a reasonable man expect the lower Court to hand it to him just like that No, he would have to show some proof that he is entitled to such an amount, and that is what was required of him – some evidence to back up his claims.”

With this comment, the Court of Appeal dismissed the Appellant’s appeal on the issue of special damages. I agree and feel persuaded by the position of the Court of Appeal that mere ipse dixit where a claim is required to be proved by documentary evidence is not enough to prove special damages. I also agree that special damages must be the actual damages incurred and not damages to future or speculative income.

As I have said elsewhere in this judgment, special damages are such claims as the law will infer from the nature of the act complained of. In other words, special damages must flow from the act complained of in the ordinary course of events. They are exceptional in character and therefore must be specifically and specially claimed and proved strictly.

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Examples of such claims are out of pocket expenses or loss of earnings incurred as a result of deliberate failure to honour agreement and are therefore capable of exact mathematical calculations. See Odulaja vs Haddad (1973) 11 SC (Reprint) 218; Obasuyi vs Business Ventures Ltd (2004) 2 NWLR (Pt. 858) 521.

The Appellant was not a party to the negotiation to buy fish from Niyi Idowu Commercial Enterprises. Even though the Appellant knew that the 1st Respondent was carrying out the business of sale and stocking of fish, there is no evidence that this particular transaction was brought to its knowledge at the time the cheque was presented by the 1st Respondent with instruction to prepare a draft in favour of Niyi Idowu Commercial Enterprises. Even if the Appellant knew, there was no way it could have been held liable for a contract in which it was not a party. This is where I agree entirely with the learned counsel for the Appellant that the special damages claimed by the Respondents and awarded by the lower Court was too remote as a consequence of the act of the Appellant and that it could not have been foreseen at the time the 1st Respondent’s cheque was dishonoured.

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The Appellant was not a party to the negotiation for sale of fish, even though there was a contractual agreement between it and the 1st Respondent. As between them, the lower Court adjudged that there was a breach of contract, which breach was merely incidental to whatever might have happened between the 1st Respondent and Niyi Idowu Commercial Enterprises. Parties are satisfied with the award of general damages and that is the end of the matter. The award of special damages by the lower Court is clearly wrongful and so I hold. Special damages cannot and must not be awarded on incomplete or inconclusive facts given from memory which have not been documented elsewhere. See Adim vs NBC Ltd (2010) 9 NWLR (Pt. 1200) 543; Agbaje vs James (1967) NMLR 49; Agunwa vs Onukwue (1962) 2 SC NLR 275.

Although an appellate Court ought not to upset an award of damages, in absence of special circumstances, I am of the firm view that the lower Court wrongly exercised its discretion in award of special damages to the 1st Respondent in the sum of N3,400,000.00. On the authorities of Ezekwe vs Oromewo (1958) SCNLR 132; African Newspapers Ltd vs Ciroma (1996) 1 NWLR (Pt. 423) 156; James vs Mid-Motors (Nig) Ltd

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(1978) 11 -12 SC 31; Onaga vs Micho (1961) 2 SCNLR 101, I am in a position to upset the award made by the lower Court on the basis of the reasons I have set out hereinabove. The 1st issue distilled by the Appellant as well as the sole issue distilled by the Respondent and the Appellant’s 3rd issue for determination of this appeal are hereby resolved against the Respondents and in favour of the Appellant. This being so, this appeal shall be and it is hereby allowed. The judgment of the lower Court is hereby set aside. In its place, the judgment of the trial Court is hereby restored. Parties shall bear their respective costs.

WALTER SAMUEL NKANU ONNOGHEN, C.J.N.: This is an appeal against the Judgment of the Court of Appeal Holden in Jos on appeal No.CA/J/3/2002, delivered on 17/7/2006 in which the Court allowed the appeal of the present respondents in part against the decision of the High Court of Benue State Holden in Gboko delivered on 26/2.2001 in suit No GHC/227/1999.

The facts relevant to the determination of this appeal have been stated in detail in the lead Judgment of my learned brother GALUMJE JSC just delivered making it

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unnecessary for me to repeat them herein except as may be needed in emphasis of the point being made/considered.

I agree with the reasoning and conclusion of my learned brother, GALUMJE J.S.C. just delivered that the appeal has merit and should be allowed. However I wish to make one or two comments on the appeal.

The pivot of the decision of the lower Court is to be found at page…. of the record where the Court held thus: –

“Based on the foregoing, it is my respected view that the appeal succeeds in part. The Judgment of the lower Court delivered on the 28th day of February, 2001, entering Judgment for the Appellants in the sum of N200,000.00 is hereby affirmed. In addition, I enter Judgment for the 1st Appellant in the sum of N3.4 Million being cost (sic) of profit for the wrongful dishonour of his cheque Exhibit ‘E’. There shall be N5,000.00k costs in favour of the 1st Appellant against the Respondent.”

It should be noted that the trial Court awarded N200,000 as general damages against the present appellant for the wrongful dishonor of the cheque issued by 1st respondent on its account with appellant but refused to grant other

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claims/reliefs relating to special damage etc and the counter claims. This appeal is not against the award of N200,000 made by the trial Judge nor its application by the lower Court as shown supra but against the additional award of the sum of N3.4 Million by the lower Court for loss of profit allegedly arising from the wrongful dishonor of the cheque of 1st respondent issued for a commercial transaction.

I agree with the submission of learned counsel for appellant and my learned brother GALUMJE J.S.C. in the lead Judgment that the special damages claimed by 1st respondent and awarded by the lower Court in its said Judgment was too remote as a consequence of the act of the appellant in dishonouring the cheque in issue as same could not, from the facts on record, have been foreseen by the parties to the transaction, it was not within the contemplation of the parties at the time appellant refused/neglected to honour the said cheque.

Secondly, it is also clear from the facts that the loss allegedly suffered and claimed by 1st respondent as resulting from the dishonor of the cheque is not only speculative but grounded on futuristic occurrence of an event a contemplated profit arising from his business.

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Thirdly, the said special damages was in the facts and circumstances of the case not strictly proved as required by law.

Special damages are of exceptional character and must be specifically and specially claimed and strictly proved. For example claims for out of pocket expenses or loss of earnings resulting from the deliberate refusal to honour agreement and must be capable of exact mathematical calculations as decided by this Court in a plethora of cases including ODULAJA Vs HADDAD (1973) 11 S.C. (Reprint) 218; OBASUYI VS. BUSINESS VENTURES LTD. (2004) 2 NWLR (Pt. 858) 521 etc.

There is no evidence on record that appellant know of or was party to the negotiation to buy frozen fish from Niyi Idowu Commercial Enterprises at the time the dishonoured cheque was presented to it by 1st respondent for a draft in favour of the said Niyi Idowu Commercial Enterprises.

It is for the above and more detailed reasons assigned in the said lead Judgment of my learned brother GALUMJE J.S.C. that I too find merit in the appeal and accordingly allow same.

I abide by the consequential orders contained in the said lead Judgment including the order as to costs.

Appeal allowed.

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SC.287/2006