United Bank For Africa Plc V. Comrade Cycle Ltd & Anor (2013)

LawGlobal-Hub Lead Judgment Report – COURT OF APPEAL

HABEEB ADEWALE OLUMUYIWA ABIRU, J.C.A (Delivering the Leading Judgment)

This is an appeal against the judgment of the High Court of Kaduna State in Suit No KDH/Z/45/98 delivered by Honorable Justice Dogara Mallam on the 28th of September, 2010. The claim of the Respondents, as plaintiff, against the Appellant, as defendant, was for the sum of N10 Million as compensation for the loss of their property. The Respondents filed an amended statement of claim dated the 19th of January, 2006 (pages 42 to 44 of the records).

The Appellant responded by filing a better and further amended statement of defence and counter-claim dated the 18th of May, 2009 (pages 100 to 102 of the records). By the counter-claim, the Appellant prayed for:

i. The sum of N2, 900,000.00 (Two Million Nine Hundred Thousand Naira only) being the outstanding indebtedness of the plaintiffs to the Defendant of principal and interest standing unpaid as a result of the plaintiffs breach of legal mortgage agreement dated the 13th of August, 1990 registered as No KDR 84 at page 84 in Volume 69 (Miscellaneous) of Kaduna State Land Registry at Kaduna.

ii. Interest on the N2, 900,000.00 at the current bank rate.

iii. The cost of this counter-claim.

The Respondents filed an amended reply to the statement of defence and it was dated the 15th of February, 2007 (pages 59 to 60 of the records).

The case of the Respondents was that the first Respondent was a customer of the Appellant and that it applied for and was granted an overdraft facility of N260,000.00 in 1991 on terms and conditions embodied in a deed of legal mortgage registered on the 17th of January, 1991 and the mortgage was created over a property lying and being at Zaria and covered by certificate of occupancy No 18056, It was their case that the first Respondent was subsequently granted an enhancement in the overdraft facility and for which the Appellant demanded for an additional property as further security and the second Respondent deposited the certificate of occupancy No NC17772 of his house situate at the end of Manchester Road, GRA, Zaria. It was the case of the Respondents that this said property was gutted by fire before it was embodied as additional security in the deed of legal mortgage.

It was the case of the Respondents that the said property was valued at N10 Million at the time it was deposited with the Appellant as additional security and that by the terms of the original deed of legal mortgage, clauses 3(c) and 3(d) thereof, the property was to be comprehensively insured under an all risk insurance cover by themselves or the Appellant for its true value of N10 Million at the time of the insurance. It was their case that the Appellant opted to insure the property for its full value and assumed full responsibility for paying the premiums and it paid the premiums by debiting the account of the first Respondent whenever the premium fell due.

It was their case that in November of 1994, during the life of the insurance policy, the property was gutted by fire and destroyed beyond economic repairs and that they thereby became entitled to the payment of compensation under the insurance policy. It was their case that since the fire incident they have made several demands from the Appellant for the payment of the insurance compensation and all they received were barren promises from the Appellant to request for payment of the compensation.

The Appellant, in response, admitted that it extended an overdraft facility to the first Respondent and that the loan facility was secured by the second Respondent’s property situate at No 3, Hanwa Road, Zaria. It was its case that the Respondents stopped operating their account in 1991 after the facility was granted and that the valuation of the property was not N10 Million as at the time the loan was granted. It was its case that it was a condition for the grant of the loan that the Respondents must insure the property sought to be mortgaged and that it did not enter into or sign any insurance policy on behalf of the Respondents and that it was the Respondents that entered into an insurance policy before the disbursement of the loan sum and it only took over the payment of the premiums to ensure effective and prompt payments thereafter.

It was the case of the Appellant that after the property was gutted by fire; the Respondents brought to it an alleged cost of repairs claiming that the property was under insured when it was the second Respondent that actually insured the property. It was its case that it empathized with the Respondents and it held discussions with the second Respondent to seek ways of assisting them and that there were pending actions, including the present action, between the parties at the time. It was its case that as its way of assisting the Respondents, it reached an agreement with the Respondents that the Respondents pay the sum of N1.7 Million in full and final settlement of their N4.6 Million indebtedness to it and in return for which all pending suits, including this present one, will be withdrawn by the Respondents.

It was its case that the second Respondent paid the agreed sum N1.7 Million in full and final settlement of its indebtedness and which the Appellant accepted but surprisingly turned around to continue this case against it and that its offer was not based an admission of liability to the Respondents on the insurance claim, rather it was to save its corporate image from unnecessary litigation. It was its case that the insurance company offered the sum of N193, 000.00 and that several claim forms were sent to the second Respondent for his signature to enable the processing of the sum from the insurance company but that the second Respondent refused to sign the forms.

In their reply to the counter-claim, the Respondents admitted that the Appellant made an offer to them to pay the sum of N1.7 Million in full and final settlement of an indebtedness of N4.6 Million and it was their case that it was to settle the case in Suit No KDH/Z/39/94 – Comrade Cycle Co. (Nig) Ltd V. UBA Plc & Anor.