IDEH v. ZENITH BANK & ANOR
(2020)LCN/14586(CA)
In The Court Of Appeal
(ASABA JUDICIAL DIVISION)
On Wednesday, September 02, 2020
CA/AS/217/2017
RATIO
PLEADINGS: FUNDAMENTAL TERMS OF CONTRACT.
It is a fundamental term of the contract agreement that upon the payment of the sum of N60,684,000 naira by the Appellant to the 1st Respondent, the said Respondent shall contribute, the sum of N141,596,000 being the balance of 70% of the contract or investment sum to be advanced by 1st Respondent as loan for the purchase of shares in Blue Chip shares for the Appellant through its subsidiary the 2nd Respondent herein. It was also agreed that this purchase shall be made subject to the availability of funds and subject to the Rules governing Banking Business as enunciated by the Central Bank of Nigeria; that the Companies and Allied Matters Act also applies to Banks and the 2nd Respondent as a corporate body.
It is clear from the pleadings and evidence of the claimant and DW1 and DW2 that the money as paid in by the Appellant was as agreed between the parties.
The 1st Defendant asserted in its pleadings and in evidence that it compiled with the agreement by advancing the loan of N141,596,000 as the balance to make up the total sum used in purchasing the shares for the Appellant by the 2nd Respondent who had a lien over same upon the deposit of the Zenith Bank share certificate with it as proof of the purchase and compliance with the agreement.
As submitted by the Appellant’s Learned Counsel the 1st Respondent was by law, i.e the Section 159 (3) of the Companies and Allied Matters Act 2004 prohibited from giving out, lending out money for the purpose of its use to buy its own shares. That was exactly what the 1st Respondent did when it agreed that its own shares were bought and its certificate of shares proudly used as the evidence of purchase of shares from Blue Chips Companies as agreed upon.
The evidence of DW1 and DW2 to that effect confirms the Appellant’s stance that a fundamental term of the contract had been breached.
The 1st Respondent had not performed the said contract in accordance with its terms at all.
The contract stood discharged or repudiated and the Appellant claiming the refund of his Deposit or counterpart contribution was in a way repudiating same and necessarily asking for consequential reliefs. See Ahmed Vs. CBN (2013) ALL FWLR, (pt 660) 1228 per Adekeye, JSC.
The Appellant’s act of repudiation was on a strong footing, as there was a fundamental breach of the terms of the contract. It was common sensical that an agreement with the 1st Respondent to advance money for the purchase of Blue Chip shares by its subsidiary, i.e the 2nd Respondent will clearly mean a purchase from companies other than from the company advancing the loan.
This is why the Section 159 (4) of the Companies and Allied Matters Act exempts the advancement of loan perse from the prohibition of loan or gift for the purpose of buying interest or shares in the company. The 1st Defendant/1st Respondent is not prohibited from advancing loans as it is its business to carry on Banking Business in the ordinary course of its Banking Business; howbeit it cannot lend or borrow, or advance monies for the purpose of acquiring interest or shares from itself. This will amount to insider trading and dissipation of Bank’s capital without the consent or authority of its shareholders.
There was a complete violation/breach of the terms of Exhibits B1 and C1 and the Companies and Allied Matters Act 2004. There was also, in this case the violation of the Rules and Regulations governing Banking law in Nigeria; this was stipulated as part of the contract and was to be complied with. Indeed I should say that, whether or not it was agreed that the contract shall be governed by the laws relating to Banking law and practice and Companies law, it should be understood that it shall be an implied term of the contract that nothing shall be done that violates the laws of the land. Any such malfeasance renders the contract null and void. It will be unenforceable. Good enough, the contract was not an illegal contract. Contrary wise, the respondents executed their part of the bargain illegally and therefore cannot enforce same. MOHAMMED AMBI-USI DANJUMA, J.C.A.
Before Our Lordships:
Ayobode Olujimi Lokulo-Sodipe Justice of the Court of Appeal
Mohammed Ambi-Usi Danjuma Justice of the Court of Appeal
Abimbola Osarugue Obaseki-Adejumo Justice of the Court of Appeal
Between
ADOGBEJI ERNEST IDEH APPELANT(S)
And
ZENITH BANK PLC ZENITH SECURITIES LIMITED RESPONDENT(S)
MOHAMMED AMBI-USI DANJUMA, J.C.A. (Delivering the Leading Judgment): This appeal is a reaction to the decision of the High Court of Justice of Delta State sitting at Warri in the Warri Judicial Division whereat the Learned Judge dismissed the claims of the Plaintiff/Appellant in its entirety as lacking in merit and dismissed the suit and all the 3 reliefs sought.
The Appellant herein as Plaintiff at the trial Court had by an Amended Statement of claim claimed jointly and severally against the Defendant/ Respondent as follows:
1. Refund of the sum of N60,684,000 (sixty million six hundred and eighty four thousand Naira) only being money had and received for no consideration since February, 2008.
2. 20% (twenty) percent interest per annum on the said sum from 1st February, 2018 until Judgment is entered in this suit.
3. 10% (ten) percent interest on the Judgment sum until same is paid.
THE FACTS
The facts leading to this appeal are better captured from the plaintiff’s statement of claim at the trial Court, relevantly thus:
“On the 21st January 2008, the 1st Defendant made an offer of credit
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facity to the plaintiff to finance the purchase of shares in blue chips companies in the name of the plaintiff through the 2nd Defendant, now 2nd Respondent.
The Plaintiff accepted the offer subject to the conditions stipulated in the offer letter.
The total fund under the contract is N202,280,000 (two hundred and two million, two hundred and eighty thousand naira), the funding ratio being seventy (70) percent from the 1st Defendant, whilst the plaintiff is to provide thirty (30) percent.
The plaintiff asserted that he provided his counter part funding whilst the Defendant had reneged in the provision of its counter part funding of N141,596,000 (One hundred and forty one million, five hundred and ninety six thousand naira).
That the 1st Defendant had not provided or shown evidence of release of its contribution to the tune of N141,596,000 and has not since the agreement was entered into in February 2008, sent photocopies of share certificates in respect of shares bought for Appellant despite oral and written demand.
That the Defendants had failed to open and/or send trading account statement to plaintiff especially from the 2nd
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Defendant showing when the 2nd Defendant started buying shares on behalf of the plaintiff, the number of shares bought and the names of the companies from which the shares were bought.
That the Defendant failed to open a Central Security Clearing System in the name of the plaintiff.
That ever since the plaintiff gave money to Defendant he had not received any evidence of the fulfillment of the Defendant’s contractual obligations under the agreement and that a solicitor’s letter for a refund yielded no response, hence the suit that culminated into this appeal.
Dissatisfied with the dismissal of the plaintiff’s claim this appeal was lodged and upon an Amended Notice of Appeal deemed on 27-2-2018 upon 4 Grounds. Appellant’s Brief of Argument filed on 12-11-2018 raised 2 Issues for determination and a sole alternative issue for determination. The Issues are as follows:
i) Whether the learned trial Judge was right in law in holding that the respondents did not breach the fundamental terms of the contract between the appellant and the 1st respondent as contained in Exhibits “B1” and”C1”
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(distilled from Ground one)
ii) Whether the learned trial judge did not in law wrongly rely on Exhibit ‘C4’ the Zenith Bank’s Statement of Account, to reach the conclusion that the Appellant’s assertion that the 1st Respondent failed to pay its counter counterpart funding of N141,596,000 in accordance with the terms of the contract in Exhibit ‘B1’ or ‘C1’ was unfounded. (distilled from Ground two) In the alterative
iii) Whether in view of Exhibit ‘C3’ the Respondents did not perform the otherwise legal contract contained in Exhibit ’C1’ in an illegal manner without the express knowledge of the Appellant (distilled from ground three)
ISSUE ONE
On this Issue, it was pointed out that the 1st Respondent was to grant a loan facility of N141,596,000 (One hundred and forty one million, five hundred and ninety six thousand naira upon the Appellant’s contribution of N60,684,000 which had been done; that the 1st respondent would pay over this aggregate of N202,280,000 to the 2nd Respondent its subsidiary to finance the purchase of shares of Blue Chip Companies for
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the Appellant.
The Learned Counsel for the Appellant argued that it was the common ground of all parties that the intention of the parties under the loan contract Exhibit ‘C1’ was the purchase of shares from Blue Chip Companies and the performance was made subject to availability of funds and the Rules and regulations governing banking business as enunciated by the Central Bank of Nigeria from time to time.
The Learned Counsel submitted that apart from the Rules and Regulations of the Central Bank regulating Banking business, the 1st Respondent’s business as Bankers is also regulated by the Companies and Allied Matters Act and the Banks and other Financial Institutions Act governing qualifications for licence to operate as a Bank.
On the Exhibit ‘C1’, it is argued that, there was an implied term that the 2nd Respondent would not purchase the shares of the 1st Respondent.
That this was an implied term of the contract, the Learned Counsel relies on UBA Plc Vs Awmar Properties Ltd (2018) 10 NWLR (pt 1626) page 64 at 91-92 per Rhodes Vivour, JSC on implied terms: thus:
It needs be said that
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the appellant cannot escape from responsibility merely because in the agreement, the terms implying the physical handover of the property were not engraved in stone. The clear covenant by the parties was evident from the exhibits showing what the parties had intended to be in the agreement between them and there is no running away from that. In other word, without the physical possession handed over to the respondent upon that payment of the purchase price the transaction cannot be explained in any other way as there is nothing else to explain what the money parted from one to the other was meant for and the appellant has not proffered another explanation to cover the payment by the respondent and the receipt thereby for the N300,000,000.00. I take solace in the case of: Multichoice (Nig) Ltd v. Azeez (2010) 15 NWLR (Pt. 1215) 40 at 51 paras. A-D the Court of Appeal, relying on the decisions of Lord Denning Mr. and Lord Machinnon L.J. in Shell UK v. Lostock Garages (1977) 1 All E.R. 481 and Shirlaw v. Southern Foundries (1926) Ltd. (1939) 2 KB 206 at 227 respectively restated what an implied term in a contract is as follows:
In implying terms in facts
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the exercise involved is that of ascertaining the presumed intention of the parties collected from the words of the agreement and the surrounding circumstances…….. It must have been a term that went without saying, term necessary to give business efficacy to the contract, a term which though tacit IS part of the contract the parties made for themselves. (emphasis supplied)
That the presumed intention of the parties can be gleaned from Exhibit ‘C1’ – the basis of the loan facility, which is that the respondent would use the monies for the purchase of shares from Blue Chip Companies other than from the 1st Respondent, itself by the 2nd Respondent.
That the evidence of the DW1 at pages 128-131 of the record that the 2nd Respondent purchased the 1st Respondent’s shares being blue chip company rated Triple A was an afterthought as it constituted a breach of an implied fundamental term by both respondents. That the Appellant should rightly be discharged from the contract by this breach on the part of the Respondents.
Referring to Ahmed & Ors Vs. C.B.N (2013) ALL FWLR (pt 660) 1228 at p. 1249 paragraph ‘A’
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where Adekeye, JSC stated thus:
“A contract will be discharged when the party in breach had acted contrary to the terms of the contract either: (1)By non performance or (2) By performing, the contract not in accordance with its terms or (3) By wrongful repudiation of the contract.”
That the purchase of the 1st Respondent’s shares purportedly in pursuance to the said contract was such a breach of a fundamental term that the contract could be repudiated and the payment in refund sought and sued for by the Appellant could be rightly claimed.
Counsel referred to Niger Insurance Co. Ltd V. Abed Brothers (1976) 7 SC page 20 at 30-31 paragraph 30-40 where the respondent was in breach of a fundamental term of an Insurance policy to repair a damaged Trailer within a reasonable time since it had chosen to repair as against cash compensation. The repair completed after 38 months was held to be a breach of a fundamental implied term of the policy of Insurance.
It was therefore argued that the stipulation of purchase shares of blue chip companies and not Zenith Bank shares was a necessarily implied fundamental term by the very nature of
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the contract under the general law of incorporated company in Nigeria as it relates to 1st Respondent. That the contract could be repudiated and damages sued for.
In response, the Respondents by their Amended Respondents Brief of Argument dated 11th March 2020 and filed on 12-3-2020 and deemed filed and served on 16-3-2020 had argued that the Respondents did not breach any of the provision of Exhibit ‘B1’ or ‘C’ to entitle the Appellant to damages as claimed or refund of the sum of N60,684,000 being the counterpart funding.
It was argued that nowhere in the contract is the 1st Respondent obligated to open a Central Security Clearing System (CSCS) for the Appellant and to provide the Appellant with photocopies of the share certificates. Which were said not to have been issued to the Appellant since 2008.
That there was no obligation to send trading Account Statements or to inform when the 2nd Respondent started buying shares on Appellant’s behalf, the number of shares and the names of the companies from which shares were bought.
That respondents were not obliged to sell the shares and communicate to
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Appellant the number of shares sold even if the price of shares fell; that all that was provided for by Exhibits B1 and ‘C’ was for the Respondents to purchase the shares as agreed and use the loan facility to purchase the 1st respondent’s shares as agreed.
That Exhibit ‘B’ or ’C’ did not require or make it mandatory for a Central Security Clearing System (CSCS) to be opened in the name of the Appellant.
It was submitted that the Appellant having stated in cross-examination on the 25-11-2013 (page 223 of Record) that “in the agreement with the Bank (1st respondent there is no clause in Exhibit B1 or ‘C’ where the Bank must open an account for me ….” That such evidence elicited from cross-examination have evidential weight and value and provide a “compelling consideration” by the Court. Tyonex Nig. Ltd V. Pfizer Ltd (2011) ALL FWLR Pt 564, page 175 at 185 par C. E. on the place of evidence elicited in cross-examination was relied upon.
That the Appellant cannot add or vary what is contained in Exhibits ‘B1’ and ‘C’
That a contract
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must be construed in its ordinary meaning and terms contained in written contracts cannot be varied by extrinsic evidence to add, vary or contradict the terms and such evidence is in admissible. Lewis Vs. UBA Plc (2016) ALL FWLR pt 833 page 1860 at page 1878-1879 pars H-A per Kekere Ekun JSC relied upon.
That the trial Court was right when it held that the terms of Exhibit ‘B’ and ‘C’ did not contain the assertions made and can, therefore, not be varied or altered to contain the Appellant’s claims.
The cases of Best (Nigeria) Ltd Vs. Blackwood Hodge (Nig) Ltd (2011) ALL FWLR pt 573, pg 1955 at 1978 par CA; Njikonye Vs. MTN (Nig) Comm. Ltd (2008) ALL FWLR pt 413 page 1343 at 1346 par B-D relied upon.
That the Appellant’s claim for a refund of N60,684,000 must fail; and that it was rightly dismissed. That the Respondents had purchased the shares as agreed as shown by the Exhibit ‘C2’ i.e the certificate in the name of Appellant for 5,200,000 shares of 4-4-2006 with No. 1668617 in Appellant’s name, in line with Application form signed by Appellant shown as Exhibit C4 that the exhibits
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C1 – C8 clearly showed that the shares were purchased for the Appellant as agreed and upon the Appellant’s instruction in Exhibit C4.
It was also contended that the right of “calling in the shares” where the value fell, was reserved for the 1st Respondent, per the contract, and that what is more there was after all no evidence of a fall in price of the shares and when it fell if any and at what rate.
That Respondent could sell or not at its discretion. That the Court could not speculate on same. That the 1st Respondent was not in breach of the contract at all, and therefore, Issues 1 and 2 as framed, should be resolved in favour of the Respondents and against the Appellant.
ISSUE TWO
On this issue, the Appellant, submits that by Exhibit ‘C1’ the foundation of the contractual relationship, the 1st Respondent was to provide a counter part funding of N141,596,000 in accordance with the terms of the loan facility towards the purchase of shares of Blue chip companies by the 2nd Respondent on behalf of the Appellant.
The Appellant averred that the said loan agreement was not honoured as the 1st
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Respondent did not provide the counterpart funding of 70% he had undertaken to provide, though he claimed to have done so. That Issues having been joined on this and the trial Judge’s reliance on the Exhibit CA – i.e Statement of Account of the Appellant from 01/01/2008 to 05/02/2008 in respect of Account No. 100011334359 with 1st Respondent was not a legal proof of the payment as held by the Court. That being a computer generated evidence (Document) it was not properly tendered and admitted in evidence and was indeed an inadmissible document that was erroneously relied upon in deciding in favour of the 1st Respondent. Citing Section 84 of the Evidence Act, 2011, which provides as follows: Section 84
“84. (1) In any proceeding a statement contained in a document produced by a computer shall be admissible as evidence of any fact stated in it of which direct oral evidence would be admissible, if it is shown that the conditions in subsection (2) of this section are satisfied in relation to the statement and computer in question.
(2) The conditions referred to in subsection (1) of this section are:
a) that the document containing
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the statement was produced by the computer during a period over which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over that period, whether for profit or not, by anybody, whether corporate or not, or by any individual;
b) that over that period there was regularly supplied to the computer in the ordinary course of those activities information of the kind contained in the statement or of the kind from which the information so contained is derived;
c) that throughout the material part of that period the computer was operating properly or, if not, that in any respect in which it was not operating properly or was out of operation during that part of that period was not such as to affect the production of the document or the accuracy of its contents; and
d) that the information contained in the statement reproduces or is derived from information supplied to the computer in the ordinary course of those activities.”
It was submitted that a person who desires to tender in evidence a computer generated (evidence) Document needs to do more than merely
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tendering it from the Bar.
That evidence in relation to the use of the computer must be called to establish the conditions set out under Section 84 (2) of the Evidence Act, 2011; and that those preconditions were not satisfied, the Exhibits ‘D’ and ’L’ were in admissible as computer generated evidence/documents relying on Kubor & Amu V. Dickson & Ors (2013) 4 NWLR (pt 1345) 345, 577-578; Seriake Dickson Vs. Timipre Marlin Sylva & Ors NWLR (pt 1567) 1167; it was urged that these or non of the conditions was established and therefore on the authority of the case of Dagaci of Deri Vs. Dagaci of Ebwa (2006) ALL FWLR (pt 306) 786 at 822 par E-F the statement of Account should be expunged from the record as it was unlawfully received in evidence at the trial Court.
That the Court has inherent power to exclude and discountenance such a document, even though it was not objected to by counsel at the time when it was sought to be tendered.
That it should be so expunged.
The case of Ogboja Vs. Access Bank (Plc) (2016) 2 NWLR (pt 1496) p. 291 at 323 – 325 par F-D was relied upon to submit that there was no
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evidence led to prove the electronic evidence (Record) relied upon and therefore, there was no proof of that fact to warrant reliance thereon to constitute a basis for liability.
That it was a situation of non-performance of the fundamental term of the contract by the 1st Respondent; and that this had entitled the Appellant to repudiate the contract and to sue for damages on account of the fundamental breach of the term of the contract.
RESPONDENTS
Respondent in response, to this issue has addressed in his response to Issues 1 and 2 of the Appellant and argued that there was no breach on the part of the 1st Respondent.
ISSUE THREE
Whether in view of Exhibit ‘C3′ the Respondents, did not perform the otherwise legal contract contained in Exhibit ‘C1’ in an illegal manner without the express knowledge of the Appellant (distilled from Ground three).
Arguing the above Issue in the alternative to Issues 1 and 2, this Appellant submitted that the 1st Respondent performed the said other wise legal contract for the purchase of shares of Blue chip companies in an illegal manner by purportedly purchasing the
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shares of the 1st Respondent with the facility said to have been advanced in flagrant disregard of Section 159 of the Companies and Allied Matter Act, 2004.
That the Exhibit ‘C3’ tendered by the 3rd Respondent was in respect of purchase of the 1st Respondents shares without the knowledge of the Appellant.
That the 1st Respondent worked out a scheme by which it rail loaded the Appellant into. That the cajoling by his Account’s officer from the 1st Respondent and the offer and signing of a blank form for the assignment of the shares as security for the loan for the purchase of the share in Blue Chip Companies by the 1st Respondents Agent and subsidiary, the 2nd Respondent were all in violation of Section 159 of the Companies and Allied Matters Act which prohibits any financial assistance to be given by a company or any of its subsidiaries directly or indirectly for the purpose of the acquisition of its shares, whether before or at the same time as the acquisition takes place.
The Learned Counsel contends that since Sub-section 4 of the Section 159 of the Companies and Allied Matters Act, 2004 imposes a penalty of a fine
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on any company for the contravention of the section, the loan facility contract Exhibit ‘C1’ was tainted with illegality; that it was not merely, void but illegal. Relying on Pan Bisbilder (Nig) Ltd V. F. B. N Ltd (2000) 1 NWLR (pt 642) 684 at 693 and Alowonle Vs Bello (1972) 1 SC 20 and Onyiuke III Vs Okeke (1976) 3 SC, it was submitted that such a contract was unenforceable. That where ex-facie illegal, the party needs not plead illegality before such a contract is refused any enforcement.
Sodipo V. Lemninkaine O. Y & Anor (No. 2) (1986) 1 NWLR (pt 15) 220 SC
Learned Counsel elaborating further, submitted that in the situation where the contract was illegal as formed, none of the parties can benefit under it, but where it was illegal only as to the mode of performance, it is the party at fault without the other party’s knowledge or consent that will not take any benefit under it. Referred to Dunalin Inv. Ltd Vs. BGC Plc (2016) 18 NWLR 262 at 317 and submitted that the mode of performance of the contract was illegal, though the contract itself was lawful.
The Learned Counsel, drawing from the presumption of law enacted
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in Section 167(c) of the Evidence Act, 2011, that the Court may presume the existence of any fact which it deems likely to have happened, regard shall be had to the common course of natural events, human conduct and public and private business in their relationship to the facts of the particular case and in particular the Court may presume that:
a) …
b) …
c) The common course of business has been followed in particular case;
That the Court should presume that in the common course of business, the 2nd Respondent in the absence of contrary intention in Exhibit “C1” will not use the facility provided by the 1st Respondent to buy the 1st Respondent’s shares, being the lender of the loan facility.
That the Appellant had rightly performed its own side the loan transaction.
Counsel said the Appellant was not part of the Respondent’s ‘sin’ and wondered how he could deny himself the enforcement of the contract and choose to enrich the 1st Respondent to the tune of N60,684,000 without the expectation of the guaranteed high return to investment that the 1st Respondent had promised him.
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It was argued that the Appellant was a victim of his own Banker, the 1st Respondent’s avarice who unfortunately turned a swindler of his Deposits.
That he was entitled to all the rights and remedies under the contract including the right to recover his N60,684,000 (sixty million, six hundred and eighty four thousand naira only) paid to the Respondent pursuant to the contract.
It was ultimately urged that this Court should resolve that:
i) The respondents jointly and severally were in breach of the fundamental terms of the contract of the loan facility in Exhibit “C” to purchase the shares of Blue Companies instead of the shares of the 1st Respondent.
ii) The 1st respondent was also in breach of the fundamental term to contribute N141,596,000 (One hundred and forty one million, five hundred and ninety six thousand naira) as its counter part fund.
Alternatively,
iii) The 1st respondent wilfully and knowingly performed the other wise legal contract in Exhibit ‘C1’ in the illegal manner to the detriment of the Appellant, the Innocent party and that in either (i) (ii) or (iii) above, the
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Appellant was entitled to
(a) the refund of N60,684,000 paid to the 1st Respondent in pursuance of the contract
(b) 20% (twenty percent) interest per annum on the N60,684,000 from 1st February 2008 until Judgment is enforced in the suit.
(c) 10% (ten percent) interest per annum on the Judgment sum until same is paid.
Respondent on the Issue 3: the Respondents by their own Issue 3, submitted that the said issue was not raised nor decided upon at the trial Court and that it was therefore a fresh Issue that can not be raised at the Appellate stage without leave of Court first sought and granted or obtained. That in the absence of leave granted, this Court should discountenance the said Issue Number 3 (three) of the Appellant.
Adake V. Akun (2003) FWLR pt. 176, page 265 at 631 par – GB per Ogundare referred to. Also Akingbola V. FRN (2015) ALL FWLR pt 789 page 1152 @ page 1194, paragraph D and Gambo Vs. Ike Chukwu (2004) ALL FWLR (pt 204) page 178 at 188 – 189 on the law that fresh or new Issues can only be raised with the leave of the Appellate Court relied upon. That the Issue 3 and Ground 3 of the Notice of Appeal
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should be struck out.
In the event that the objection is not acceded to by this Court, argued the Learned Counsel, that this Court should hold that the instruction per Exhibit C4 was the instruction of the Appellant to purchase the shares of the 1st Respondent in a public offer, and that to act contrary would have amounted to a breach of the contract.
That the Appellant cannot feign ignorance of the law and contend that he did not know what he was signing. That Exhibit C4 was an Application form for zenith Bank shares in public offer and that Exhibit ‘C6’ indicating that the Registrars should release original copies of Zenith Bank Plc share certificate to Zenith Bank (Plc) (1st Respondent) was a clear indication that parties were at ad idem on which shares to buy.
That having instructed that the certificate be lodged with the 1st Respondent, “there was no way he would have been obliged with the certificate ie Exhibit ‘C2’.”
It was also argued that even if the Appellant could be said not to be aware of the intended purchase of the shares from Zenith Bank Plc, that Section 159 (3) of the Companies and Allied Matters’ Act
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does not prohibit the lending of money in the ordinary course of business. That the 1st Respondent being in the business of lending money is not prohibited from giving financial assistance directly or indirectly for the purpose of acquiring its shares.
That since the 1st Respondent is a Bank, that in its ordinary course of business lends money, it is not caught up by Section 159 (2) of CAMA.
That this Court should take judicial Notice of the 1st Respondent as a Bank that gives or grants loans to members of the public.
That if Section 159 subsection 3 is appreciated in the light of the above submission the said sub-section (4) will not be applicable to the Respondents. That the Respondents did not perform the contract illegally and that the case law authorities cited were in applicable and that the Issue 3 be resolved in favour of the Respondents.
Veering backwards to reargue the Issue Number 2, that the Learned Counsel had already argued jointly with his Issue Number 1 (see page 5 of the Respondent’s Brief of Argument wherein at paragraph 3.0– is set out)
“Issues 1 and 2 will be argued
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together”.
Be that as it may, even if it is intended to restrengthen the submissions in respect of Issue 2 for its worth, it was submitted that by the case of Zenith Bank Plc Vs NACoil International Ltd CA/L/593/05 unreported, which date of judgment is not given, that the document must be produced by a computer as interpreted therein.
That it has not been shown that the Bank Statement or Account in this case was computer generated and that there was no need to comply with Section 84 of the Evidence Act.
That even if Exhibit C3 (the Statement of Account was expunged, the Exhibit C2 and C4 are proof of the fact that the Respondents performed the contract as stipulated in Exhibit B1 and/or ‘C’. That the trial Court did not rely solely on Exhibit ‘C1’ for its decision but on ‘Exhibit C1 – C8′. That that was why the trial Judge held that;
“The claimant’s documents C1-C8, revealed the existence of shares purchased by defendants to the total sum of N202,280,000 and so cannot turn around to be asking for a refund of his own contribution of N60,684,000.”
That even if Exhibit C1 was
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in-admissible, the decision of the trial Court that Appellant failed to prove his case was still correct. It was argued that the fact of Issuing a certificate for shares in a person or company’s name shows that the shares therein has been paid for. Refers to Hon. Dr. J. Olakunle Orojo, Vol. 1, 2006 Edition on the Effect of certificate of shares in His Book “Company Law and Practice.” That it was clear that the Respondents paid and purchased the shares in line with Exhibit “B1” and “C” for and on behalf of the Appellant and the appeal should be dismissed and as lacking in merit and the Judgment of the trial Court be upheld.
Replying, the Appellant by his Appellant’s Reply to the Respondents Amended Brief of Argument dwelt on the 2nd Respondent’s obligation to comply with the Rules of Central Security and Clearing System (CSCS), being a dealer in shares; he submits that the 2nd respondent had obligations to comply with the Rules of Central Securities and Clearing System as a dealer in shares, failing which amounted to a fundamental breach of the term of Exhibit “C”.
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In elucidation it was argued that the 2nd Respondent, a subsidiary of the 1st Respondent, as a dealer in securities and registered by the Securities and Exchange Commission (SEC), whose business it is to trade in shares is bound by the Rules of the Central Security and Clearing System (CSCS).
That by Article 24 of the CSCS Rules, the 2nd Respondent as a dealer in securities was bound to open a security client Account for the Appellant, among others namely:
a) House Account, on which CSCS will run securities positions in the name and for the account of stockbroking firms and other authorized participants.
b) Client account, on which CSCS will run securities positions
c) Registry Account……………
d) Fiduciary (Custodian Bank) account……………….
That CSCS would allocate to each participant a unique identification code for each account.
That unless the client Account was opened for the Appellant, the shares allegedly bought could not be traded on. That by the provision of Articles 15, 16 and 17 of the CSCS Rules, the 2nd Respondent was bound and they were part of the terms and conditions of the securities transaction or contract it entered into.
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That Exhibit ‘C’ providing for the repayment of the loan from income derived inter alia from trading in the shares bought as Exhibit ‘C’ provides
“Income from employment and investment in Blue Chip Companies …”
That the Respondent’s DW1 at page 225 lines 12 to 15 of the record had reinforced this obligation and purport of the Exhibit ‘C’ when he said “you cannot hold the original certificate and trade it in a capital market”.
That this was an implicit admission that opening of security Accounts was a condition precedent for trading in the Appellant’s shares.
Referred to the evidence of DW2 at page 228 lines 26 to 29 of the record in cross-examination when he said “I have heard of CSCS. It is the only avenue by which you can buy or sell shares today … as at today the shares is not dematerialized.”
In sum, it was argued that DW1’s evidence was consistent with the clearing and settlement process of CSCS. That the process was meant to protect the buyer of shares by depositing the shares in the CSCS depository prior to the
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trade for verification before trading on them. That duly verified shares are passed to the CSCS, from where they are forwarded to the Registrars for records of share transactions and certificate dematerialization. That the obligation to sell the shares by the 2nd Respondent when the prize falls below 30% attest to the obligation to open a CSCS Account.
Referred to Exhibit ‘C’ and the evidence per the adopted statement on oath at page 62 of the Record, it was submitted that 1st Respondent was bound to sell the shares having fallen even by 30%; indeed it fell by 52.34%.
That it was Mandatory to sell the shares pursuant to paragraph 4 (ii) of Exhibit ‘C’ and that the argument of the Respondent relying on the words “Respondent reserves” the right to …. Was not correct. That there was no discretion.
That there was unchallenged evidence of this fall of share prize above 50% as seen on page 62 of the record where Appellant said the prize fell from N38.00k to about N18.00k.
That this unchallenged evidence was deemed admitted by the adverse party and did not need any further proof.
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Conoil Plc Vs Ogbonna Nwake (2017) 4 NWLR (pt 1555) page 294 at 315 pars B-C. Referred again to DWI on Exhibit C1 where he stated
“As per Exhibit C, the bank is expected to make claimant know if the prize of shares fall. The bank has obligation to sell shares for the claimant. I cannot say if the bank has sold the shares or not… you cannot hold the original certificate and trade in it in capital market. The original of the share certificate is in our head office.” (Page 225 lines 3-15 of Record).
That if the Respondents really intended to sell the shares as contemplated by Exhibit C, the 1st Respondent would have deposited same in CSCS depositories in line with the rules of CSCS.
Counsel address on implied terms for Business efficacy and emphasized that it was the subterfuge of the 1st Respondent’s marketing staff (Account officer) that the loan were to be used in buying shares to be repaid from proceeds from the sale of the shares.
Finally the Learned Counsel re-addressed on the S.159(3) of the Companies and Allied Matters Act and the Section 84 of the Evidence Act. Urged that Zenith Bank Plc V. NACoil International Ltd
29
be departed from as it was not decided on the basis of Section 84 of the Evidence Act that was enacted later in time.
It was finally argued that the possession of a share certificate was only proof of the shareholding and not conclusive proof that the respondents duly paid and purchased the shares in line with Exhibit ‘C’.
On the whole, the Appellant submitted that the Respondents having breached the terms of Exhibit ‘C’ as shown, and by the unchallenged evidence, the Appellant was entitled to demand a refund of his contribution to the tune of N60,684,000 together with interest as claimed.
RESOLUTION
ISSUE ONE
Whether the trial Judge was right in holding that the Respondents did not breach the fundamental terms of the contract between the Appellant and the 1st respondent as contained in Exhibits B1 and C1.
It is a fundamental term of the contract agreement that upon the payment of the sum of N60,684,000 naira by the Appellant to the 1st Respondent, the said Respondent shall contribute, the sum of N141,596,000 being the balance of 70% of the contract or investment sum to be advanced by 1st
30
Respondent as loan for the purchase of shares in Blue Chip shares for the Appellant through its subsidiary the 2nd Respondent herein. It was also agreed that this purchase shall be made subject to the availability of funds and subject to the Rules governing Banking Business as enunciated by the Central Bank of Nigeria; that the Companies and Allied Matters Act also applies to Banks and the 2nd Respondent as a corporate body.
It is clear from the pleadings and evidence of the claimant and DW1 and DW2 that the money as paid in by the Appellant was as agreed between the parties.
The 1st Defendant asserted in its pleadings and in evidence that it compiled with the agreement by advancing the loan of N141,596,000 as the balance to make up the total sum used in purchasing the shares for the Appellant by the 2nd Respondent who had a lien over same upon the deposit of the Zenith Bank share certificate with it as proof of the purchase and compliance with the agreement.
As submitted by the Appellant’s Learned Counsel the 1st Respondent was by law, i.e the Section 159 (3) of the Companies and Allied Matters Act 2004 prohibited from giving out,
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lending out money for the purpose of its use to buy its own shares. That was exactly what the 1st Respondent did when it agreed that its own shares were bought and its certificate of shares proudly used as the evidence of purchase of shares from Blue Chips Companies as agreed upon.
The evidence of DW1 and DW2 to that effect confirms the Appellant’s stance that a fundamental term of the contract had been breached.
The 1st Respondent had not performed the said contract in accordance with its terms at all.
The contract stood discharged or repudiated and the Appellant claiming the refund of his Deposit or counterpart contribution was in a way repudiating same and necessarily asking for consequential reliefs. See Ahmed Vs. CBN (2013) ALL FWLR, (pt 660) 1228 per Adekeye, JSC.
The Appellant’s act of repudiation was on a strong footing, as there was a fundamental breach of the terms of the contract.
It was common sensical that an agreement with the 1st Respondent to advance money for the purchase of Blue Chip shares by its subsidiary, i.e the 2nd Respondent will clearly mean a purchase from companies other than from the company
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advancing the loan.
This is why the Section 159 (4) of the Companies and Allied Matters Act exempts the advancement of loan perse from the prohibition of loan or gift for the purpose of buying interest or shares in the company. The 1st Defendant/1st Respondent is not prohibited from advancing loans as it is its business to carry on Banking Business in the ordinary course of its Banking Business; howbeit it cannot lend or borrow, or advance monies for the purpose of acquiring interest or shares from itself. This will amount to insider trading and dissipation of Bank’s capital without the consent or authority of its shareholders.
There was a complete violation/breach of the terms of Exhibits B1 and C1 and the Companies and Allied Matters Act 2004. There was also, in this case the violation of the Rules and Regulations governing Banking law in Nigeria; this was stipulated as part of the contract and was to be complied with. Indeed I should say that, whether or not it was agreed that the contract shall be governed by the laws relating to Banking law and practice and Companies law, it should be understood that it shall be an implied term of the
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contract that nothing shall be done that violates the laws of the land. Any such malfeasance renders the contract null and void. It will be unenforceable. Good enough, the contract was not an illegal contract. Contrary wise, the respondents executed their part of the bargain illegally and therefore cannot enforce same.
The Innocent party was entitled to repudiate and sue for money had and received in equity; he, not being in pari delicto.
Indeed, in the so called purchase of shares, the Respondents did not reckon with the fundamental terms of the contract that provided for the sale of the shares as the proceeds of the sale is indicated as one of the means of paying up for the loan to be advanced. This means that trading in the shares of the Blue Chip shares was clearly agreed upon. That is the more reason why, the non opening of CSCS Accounts and all the processes relating thereto, not being done was a fundamental breach of the implied terms of the contract.
To argue that there was a stipulation for the lien of the 1st and 2nd Respondents on the share certificate/shares to be domiciled in the Respondent and that no agreement was made for the
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photocopies of the share certificates to be handed over to the Appellant was a mere chasing of the horse that had borted from the stable. The making of photocopies of share certificates, as I understand it, is simply that as CSCS, Account for trading in the shares was obligated, evidence of transactions was to be made in respect of the purchases and sales, interests, dividends; it must be shown as in normal corporate Banking and shareholding transactions in corporate law.
It is obvious that the terms of the contract were not as simplistic as the respondents sought to argue and in urging this Court to hold that parties are bound by their contracts and that the contract was performed in accordance to its terms.
It is not so. It was the Respondents that had taken undue advantage of the Appellant by a subtle scheme that was intended and indeed resulted in inducing him into a contractual relationship that was intended to be beneficial only to the Respondent i.e. to sell its own shares and harness funds and reap the benefit of same to the financial detriment of the investor.
In the circumstance, equity, which does not suffer a wrong to be without a
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remedy, under the restitution principle of prohibition of unjust enrichment has provided by the remedy for money had and received for the benefit of the innocent Appellant. It is a restitution in the fact of failure of consideration, as the innocent Appellant is entitled to the rights and remedies under it in equity; although he cannot enforce the performance of the specific contract.
In this instance case, where it was only illegally performed, only the respondents cannot take the benefit thereunder; but the Appellant was entitled to the rights and remedies under the contract. See Dunalin Inv. Ltd V. BGC Plc (2016) 18 NWLR page 262 at 317. The Courts will not enforce such a contract as in the nature of argument by the Respondents who claimed that it was validly entered into and binding in the manner they alleged was done. For that will be to accede to illegality.
It should be stressed that even if the Appellant had signed the documents in the contract with his eye wide open and not misled; And had signed the contract for purchase of shares by public auction of the 1st Respondent’s shares and had agreed to assign the 1st Respondent’s
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share certificate to the 2nd Respondent as a lien, all these would not have legalized the transaction when the 1st Respondent purportedly agreed to lend its own money for the purpose of buying its shares.
That was prohibited on the pain of the penalty of fine and/or terms of imprisonment. See Section 159 of the Companies and Allied Matters Act 2004. (now 2015). Exhibit C1 simply “authorized”. The 2nd Respondent to purchase shares of Blue Chip companies on his behalf.
The Exhibits 5 which is an authority to place a lien on the shares purchased as collateral for the loan sum, had not specified that it should be on Zenith Bank Plc, shares. It must, therefore, be referable to blue chip shares of companies that the 2nd Respondent will buy from, as in the contract Exhibit C agreed. I think that the involvement of the 1st Respondent by providing that all the purchases of shares shall be with its consent is to afford it a measure of control or over sight, it being the Bank that was to lend the bulk of the sum needed as loan to finance the share purchase business from the Blue Chip Companies.
That the 1st Respondent only worked out a
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scheme to defraud or boost its liquidity or capital through the Appellant and as a financial vampire would do is, as testified to by the Appellant, otherwise, how come that Exhibits C6 and Exhibit C7 – being “Authorities to Release Original copy of Zenith Bank Plc share certificate for …. Units directly to Zenith Bank plc” and “to sell … units of Zenith Bank shares have the spaces for the units left black?
They are blank as testified to by the Appellant and are both undated. They are of no evidential value in the slightest.
Arguments relating to their probative value and reliance on them as confirming any authorization to buy Zenith Bank shares are, as puerile as the said documents themselves are; being of no probative value in the slightest.
The trial Judge ought not to have placed any reliance on the said documents at all. In the same token, there was no pledge to Zenith Bank Plc of any specified unit of shares and the undertaking vide Exhibit C8 was of no contractual value. The contract Exhibit “C” was not proved to have been executed by the Respondent.
There was a total failure of
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consideration.
The Exhibit C1 states and is reproduced verbatim thus:
Ideh Adogbeji Ernest (Dr.)
11 Sedco Road Enerhen – Effurun Delta State.
The Head
Zenith Securities Limited Victoria Island, Lagos.
Dear Sir
AUTHORITY TO PURCHASE SHARES OF BLUE CHIP COMPANIES
I, Ideh Adogbeji Ernest (Dr.) hereby authorize Zenith Securities Limited to purchase shares of blue – chip companies on my behalf.
Thank you,
Yours faithfully,
Ideh Adogbeji Ernest (Dr.)
The purported purchase of shares was not only illegal but was also in breach of the express agreement of the parties; Exhibit C1 being incorporated in the contract and relating the Exhibit C4 – Application. The Exhibit C2 (share certificate) of Zenith Bank is non-existent in law.
The Exhibit C3, computer generated, has not been proved pursuant to Section 84 of the Evidence Act nor demonstrated in evidence. See Ogboja Vs. Access Bank (2016) 2 NWLR (pt 1496) page 291 at 323-2,25 FJ per Danjuma JCA.
On the need to demonstrate Bank Statement or Documents tendered in Court, otherwise they cease to have any evidential value.
In the circumstances, both
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Issues 1 and 2 are resolved in favour of the Appellant and against the Respondents.
Having so resolved as above, there is really no need to consider the alternative Issue, that is Issue 3. It is otiose, therefore; however in the event that I am wrong in my resolution of the Issues 1 and 2 (supra) as made, I would briefly state that the Issue 3 must be resolved in favour of the Appellant too, as there was no legal proof of the advancement of the counterpart funding of the loan facility by the 1st Respondent to the tune of N141,596,000 or any part of the monies as claimed by her.
The Exhibits tendered as the so called proof of the loan transaction contribution by the Respondent was denied by the Appellant.
The tender of the Statement of Account Exhibit was not legal proof thereof. The Exhibits C3 and C9, being Bank Account Statement was a computer generated piece of evidence and by Section 84 of the Evidence Act, must have the conditions stipulated therein relating to (i) the fact of being from a computer in a good working condition and (ii) in a state that it could be and had been so used and (iii) its outcome is such that it can be vouched for.
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Its usage in the ordinary course of business must be attested to or a certificate under the hand of the maker, certifying the production of the document by so attesting to that fact.
See Director of Public Prosecutions V. Mckeown (1997) 1 NWLR 295 where the House of Lords held “All that Section 69 of the Police and Criminal Evidence Act, 1984 requires as a condition for the admissibility of computer generated statement is positive evidence that the computer has properly processed, stored and reproduced whatever information it received. It is concerned with the way in which the computer has dealt with the information to generate the statement which is being tendered as evidence of a fact which it states.”
This persuasive authority (supra) is on all fours with the trite position of the law in this regard in Nigeria.
Indeed a close study of Zenith Bank Plc Vs. NAcoil International Ltd (unreported) sought to be relied upon to argue that the Statement of Account must first be shown to be computer generated does not defeat the Appellant’s case.
Indeed, any document as in the Statement of Account in Exhibit C3/C9 is computer
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generated as it is by way of a machine or device.
At least it was not shown not to be by a mechanical process but by hand writing. I have seen it. It was not handwritten.
Indeed the Zenith Bank Plc V. NAcoil International Ltd case (supra) does not put such a burden, rather it merely in its own style of expression reiterated the conditions provided for in Section 84 of the Evidence Act.
Grammar and mode of expression is a question of style, just as drafting skills varies from Judges to Judges.
That Appellant’s Learned Counsel is correct to have submitted that it does not need a diviner to engage in crystal gazing to decipher that Exhibit ‘C’ is computer generated, and I agree; more so that proof shall not be required of facts the knowledge of which is not reasonably open to question.
The additional reason sought to justify the view that the contract had been performed on the part of the Respondent by the fact of the share certificate, I agree with the Appellant that the possession or fact of the share certificate was merely a prima facie evidence that a person was a shareholder in a company. It is not a conclusive
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proof of that fact. See Fidelity Bank Plc Vs. SEC & Chief (Dr) Godwin Emeka Ene (2013) 7 NISLR Page 50 at 67.
On the whole, there was no admissible evidence of the payment or advancement allegedly made by the 1st Respondent, as the Exhibit C3/C9 in that regard was inadmissible in law.
It ought to have been expunged since it was admitted wrongly in evidence. I so expunge same and hold that the 1st Respondent did not, in law prove that he paid in or advanced the sum of N141,596,000 as part of the loan sought.
There was no proof of this contrary averments by the Respondents in any way.
In Malhotra Vs. Bank of Singapore Banking & Final Law Reports (2014) 2 BFLR 21 at 42, this Court held thus: “it is trite that a party must make out his case by the best available evidence. Therefore, where averments are just made without proof, then they must be discountenanced for lack of proof…” that is the fate of the respondents’ assertions.
The Appellant shall have the glowing benefit of Issue 3 also resolved in his favour. It is so resolved.
Having resolved the 1st and 2nd Issues and indeed the Alterative Issue 3
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in favour of the Appellant, the appeal per force succeeds.
Consequently, I set aside the decision of the trial High Court of Delta State sitting at the Warri Judicial Division and delivered on 13th December 2016 in Suit Number EHC/NO/W/202/2009 Per P. O. Onajite Kuejubola, J. wherein the learned Judge had held that “the claim fails in its entirety and same is dismissed.”
In its place, I substitute a finding that the plaintiff’s/Appellant’s claims at the trial Court succeeds wholly, and pursuant to Section 15 of the court of Appeal Act, I so hold and declare as follows:
1. That the plaintiff now Appellant is entitled to the refund of the sum of N60,684,000 (Sixty Million, Six-Hundred and Eighty-Four Thousand Naira) only being money had and received for no consideration or upon failed consideration since, 2008
2. 20% (twenty percent) interest per annum on the said sum from 1st February 2008 until Judgment i.e. today
3. 10% (ten percent) interest on the Judgment sum until same is paid
A cost of N1,000,000 only in favour of the Appellant.
AYOBODE OLUJIMI LOKULO-SODIPE, J.C.A.: I had the privilege of
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reading in draft the leading judgment prepared by my learned brother, MOHAMMED A. DANJUMA, JCA; in the instant appeal.
This is to state that I am in total agreement with the reasoning and conclusions of his lordship in respect of the issues for determination of the appeal.
Consequently, I too, set aside the decision of the lower Court appealed against and abide by the consequential orders made in the leading judgment; including the order in relation to costs.
ABIMBOLA OSARUGUE OBASEKI-ADEJUMO, J.C.A.: I have read the lead Judgment of my learned brother, MOHAMMED AMBI – USI DANJUMA, JCA before now and I find that he has covered the field and dealt with the salient issues at stake. I therefore, agree with the reasoning and conclusion reached therein and I have nothing to add.
The appeal is meritorious and it is hereby allowed. I abide by all consequential orders in the lead judgment.
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Appearances:
Prof. A. A. Utuama SAN, Ph.D, with him, E. F. Avbenagha Esq., John Smart Esq., U. U. Ekakitie (Mrs), E. A. Wekpe (Miss), E. F. Onoshoho-Obodo (Mrs) and E. O. Elijah (Mrs) For Appellant(s)
O. K. Ebowe, Esq. For Respondent(s)
