FIDELITY BANK PLC v. MR. FRANCIS OKWUOWULU & ANOR (2012)

FIDELITY BANK PLC v. MR. FRANCIS OKWUOWULU & ANOR

(2012)LCN/5321(CA)

In The Court of Appeal of Nigeria

On Thursday, the 26th day of April, 2012

RATIO

PROCEEDING: MEANING OF A GARNISHEE PROCEEDING

It is my view that there is no doubt that a garnishee proceedings is a means of collecting a monetary judgment against a judgment debtor by ordering a third party (the garnishee) to pay money, otherwise owed to the judgment debtor, directly to the judgment creditor. In UBN PLC. V. BONEY MARCUS INDUSTRIES LTD. & ORS. (2005) ALL FWLR (Pt.278) 1037 at 1046 – 7 S.C, garnishee proceeding was defined as a process of enforcing a money judgment by the seizure or attachment of the debts due or accruing to the judgment debtor which form part of his property available in execution. It is in the hands of a third party whereby, the court order is required to direct the third party to pay directly to the judgment creditor. See Words and Phrases Legally Defined 3rd Ed. Vol.2 at Pg. 313 – 4. PER MORONKEJI OGUNWUMIJU, J.C.A.

PROCEDURE: ESSENCE OF A GARNISHEE PROCEEDING

In other words, a Garnishee proceeding is a process of enforcing money judgment by the seizure or attachment of the debt due and accruing to the judgment debtor, which forms part of his property in the hands of a third party for attachment. By this process, the court is competent to order a third party in whose hands the property of the judgment debtor is, to pay directly to the judgment creditor the debt due or accruing from him to the judgment debtor or as much as it as may be sufficient to satisfy the judgment and the costs of the proceedings. See Citizens Int’l Bank v. SCOA (Nig) Ltd (2006) 18 NWLR Pt.1011 at Pg 334. PER MORONKEJI OGUNWUMIJU, J.C.A.

PROCEDURE: SUI GENERIS NATURE OF A GARNISHEE PROCEEDING

Thus, a garnishee proceeding is a process leading to the attachment of debt owed to a judgment debtor by a third party who is indebted to the judgment debtor. It is sui generis and is unlike other proceedings for enforcement of judgment. PER MORONKEJI OGUNWUMIJU, J.C.A.

PROCEDURE: STAGES OF A GARNISHEE PROCEEDING

A garnishee proceeding can be described in two stages; the first stage is the process of getting an order nisi. The order nisi directs the garnishee to appear in court on a specified date to show cause why an order should not be made upon him for payment to the judgment creditor the amount of the debt owned to the judgment debtor. This is usually done ex parte and limited to the judgment creditor and the Court.

The second stage is where on the return date the garnishee does not attend, or does not dispute the debt claimed to be due from him to the judgment debtor, the court may subject to certain restrictions, make the garnishee order absolute under which the garnishee is ordered to pay to the judgment creditor the amount of debt due from him to the judgment debtor, or so much of it as is sufficient to satisfy the judgment debt together with the cost of the proceedings and cost of garnishee. This later proceeding is tripartite between the judgment debtor, judgment creditor and the Garnishee. This is because on the return date all parties must have been served and given an opportunity to dispute liability or pray that the order nisi be discharged for one cause or the other. PER MORONKEJI OGUNWUMIJU, J.C.A.

RULES: PURPOSE OF THE JUDGMENT ENFORCEMENT RULES

MORONKEJI OGUNWUMIJU, J.C.A. (Delivering the Leading Judgment): This is an appeal against the judgment of Honourable Justice L. A. OKUNNU sitting at the High Court of Lagos State, delivered on 12th October 2006. The facts that led to this appeal are as follows:

The first respondent who was the claimant at the lower court filed a writ of summons and statement of claim for the following reliefs against the 2nd Respondents:

“a. A declaration that the claimant is the allotee subject only to the expiration of the leasehold of the defendants, of all the shop known as zone B, Block 3A, shop 68.

b. An order of perpetual injunction, subject only to the expiration of the leasehold of the Defendants, restraining the Defendants by themselves, agents, servants or otherwise interfering with the possession of the claimant over all that shop known as Zone B, Bloc 3A, Shop 68,”

On the 16th of March 2006 when the case came up at the lower court for a pre trial conference (P.T.C.); the 2nd Respondent was not present in court to participate in the said pre trial conference. The 1st Respondent’s counsel pursuant to order 25 Rule 6 of the High Court of Lagos State Civil Procedure Rules 2004 moved the court to enter judgment against the 2nd Respondent for failure to participate in the said pre trial conference. The lower court on the said 16th day of March 2006 entered judgment against the 2nd Respondent for failure to participate in the pre trial conference.

Thereafter, the 1st Respondent prayed the lower court for the following orders:

“1. An order nisi of Garnishee attaching debts and/or monies from the Garnishee to the judgment debtor for satisfaction of the judgment debt in this case.

2. An order directing the Garnishee to appear before this Honourable Court to show cause why they should not pay over to the judgment creditor the monies in the accounts of the judgment debtor for the purpose of satisfying the judgment.

3. And for such further order as this Honourable Court may deem fit to grant in the circumstances.

After hearing the 1st Respondent’s counsel, the lower court made the following orders:

“1. A Garnishee order nisi is made to the effect that sums of money which stands to the credit of the judgment debtor in its account with the garnishee be and are hereby attached to satisfy the judgment debt herein as well as the costs of these garnishee proceedings.

2. The garnishee is to appear before this court on the 4th day of September 2006 to show cause why an order should not be made upon it for payment to the judgment creditor of the amount of the judgment debt owed by the judgment debtor.

3. A copy of this order shall be served on the judgment debtor.

4. The suit is made returnable on the aforesaid 4th day of September 2006 on which day further hearing of the garnishee proceedings will proceed.”

The Appellant (Fidelity Bank) filed an affidavit showing cause dated 20th September 2007 and further affidavit showing cause dated 26th September 2007 with Exhibits. The 1st Respondent through his counsel also filed a counter affidavit on 21st September 2006 with Exhibits at the lower court.

The matter came up for argument on the 29th of September 2006, after which it was adjourned to 12th October 2006 for Ruling. On the adjourned date, the lower court delivered its ruling wherein the order nisi was made absolute and the Appellant (Garnishee Bank) was ordered to pay over to the 1st Respondent herein judgment creditor), the amount of the judgment debt (the sum of N1 million) as well as the costs of the proceedings from the 2nd Respondent’s (judgment debtor) Account No. 1910849235 maintained by the latter at the Garnishee Bank.

Dissatisfied with the Ruling delivered on 12th October 2006, the Appellant as Garnishee has brought this appeal against the said Ruling by filling a notice of appeal dated 16th October 2006.

The Appellant’s brief was dated and filed on the 6th of December 2007. The Respondent’s brief was filed on the 23rd of January 2008. The Appellant’s counsel formulated two issues set out as follows:

“1. Whether the lower court was right to have made the order nisi dated 26th day of June 2006 absolute when the Appellant disputed its liability.

2. Whether the Appellant (Garnishee) can exercise a right of set off of what is due to it from the 2nd Respondent’s (judgment debtor) two Accounts with the Garnishee irrespective of the fact that the Accounts were not merged.”

Counsel to the 1st Respondent raised only one issue for determination:

“Whether the lower court ought to have discharged the order of Garnishee nisi when the judgment debtor still had full rights to withdraw from the account in credit?”

The issues raised by the Appellant’s counsel are concise. I will however adopt the first issue as couched by Appellants counsel and have rephrased the second issue to accommodate all the points in controversy. The issues I will use in determining this appeal are as follows:-

1. Whether the lower court was right to have made the order nisi dated 26th of June 2006 absolute when the Appellant disputed its liability.

ISSUE ONE

The Appellant who was the Garnishee at the lower court, had deposed to a further affidavit showing cause and also stating that the inability to discover account number 1910849235 was as a result of system failure to recognise the criteria used in respect of the earlier search and that in the circumstances, they restate their earlier belief that the Garnishee is not indebted to the judgment debtor rather the judgment debtor is still indebted to the Garnishee.

The Appellant’s counsel then argued that looking at Exhibit KFA at page 17 of the Record attached to the further affidavit showing cause, the balance on the 2nd Respondent’s judgment debtor’s Account No.1910849235 was the sum of N1,366,490.79 credit. Looking at Exhibit KFA 2 at page 18 of the Record attached to the further affidavit showing cause, the balance on the 2nd Respondent’s (judgment debtor) Account No.1910849219 was the sum of N1,845,760.60 in debt. The net account position of the 2nd Respondent with the Appellant (Garnishee) as at the time the order absolute was made on 12th October 2006 was N119,269.81 in debit after a set off.

The learned Appellant’s counsel then submitted that the lower court ought not to have made the order dated 26th June 2006 absolute on 12th October 2007 for in obedience to the order nisi made, the Appellant appeared in court and disputed its liability by filling two affidavits to show that it was not indebted to the 2nd Respondent (judgment debtor). However, the lower court in spite of the dispute by the Appellant (Garnishee) as to its liability, went ahead and made an order absolute on 12th October 2006, pursuant to section 86 of the Sheriff and Civil Process Act CAP 407 LFN 1990 to the effect that the Appellant shall accordingly pay over to the 1st Respondent’s judgment creditor) the amount of the judgment debt (the sum of 1 million) as well as the costs of these proceeding from the 2nd Respondent judgment debtor) Account No.1910849235 maintained by the latter at the Appellant Bank.

The Appellant’s counsel further submitted that since the Appellant (Garnishee) appeared and disputed its liability, the lower court instead of making an order absolute for execution ought to have ordered that issues or questions necessary for determining the disputed liability by the Appellant (Garnishee) be tried or determined in any manner in which any issue or question in any proceedings may be tried or determined or even refer the matter to a referee. Learned counsel relied on S.87 of the Sheriff and Civil Process Act Cap 407 LFN 1990 and urged that the order absolute be set aside.

He further argued that the two affidavits to show cause filled by the Appellant ought to have created some doubt in the mind of the learned trial judge as to whether or not there was money standing to the credit of the 2nd Respondent judgment debtor). He further submitted that an enquiry as to the ownership of the debt attached should have been directed. He cited Barclays Bank D. C. O. v. Baderinwa Re. L.E.D.B. (1962) A.N.L.R. 731.

The learned Respondent’s counsel Emeka Odikbo argued the appeal and replied in his argument that immediately the Appellant disputed their liability, the learned trial Judge on the 29th of September, 2006 ordered the parties to address the court in order to resolve the factual issues involved, based on the argument of parties, the 1st Respondent’s counsel contended that this is the procedure as envisaged by section 87 of the Sheriff and Civil Process Act. He further stated that the Appellant did not at any time dispute the procedure, rather they urged the court to “believe the facts in their affidavit” showing cause and not to make the order nisi, absolute.

He further submitted that there is no reason why the court should not make the order nisi to become absolute for the court in its ruling held that the Appellant had not shown good cause since the Respondent judgment debtor) could still properly make withdrawals from account No. 1910849235.

The learned Respondent’s counsel replied this argument by stating that the learned trial judge actually tried the issues raised by the Appellant in the manner stipulated by law. He added that this new complaint is not covered by any of the grounds of appeal and therefore goes to no issue. He cited Global Transport Co. CA v. Free Enterprises Nigeria Ltd (2001) 12 W.R.N. 136.

He therefore urged this Honourable Court to discountenance this new complaint. It is my view that there is no doubt that a garnishee proceedings is a means of collecting a monetary judgment against a judgment debtor by ordering a third party (the garnishee) to pay money, otherwise owed to the judgment debtor, directly to the judgment creditor. In UBN PLC. V. BONEY MARCUS INDUSTRIES LTD. & ORS. (2005) ALL FWLR (Pt.278) 1037 at 1046 – 7 S.C, garnishee proceeding was defined as a process of enforcing a money judgment by the seizure or attachment of the debts due or accruing to the judgment debtor which form part of his property available in execution. It is in the hands of a third party whereby, the court order is required to direct the third party to pay directly to the judgment creditor. See Words and Phrases Legally Defined 3rd Ed. Vol.2 at Pg. 313 – 4.

By the customer banker relationship money of a customer is in contract, money in the hands of the bank is borrowed from the customer, as such until it has been demanded for by the customer, it remains in the custody and control of the bank for use. By the Judgment Enforcement Rules, where such bank is within jurisdiction of the court that has decided a debt as due to the judgment creditor against a judgment debtor to whom the bank is borrower of his proceeds or monies, default in payment by such customer judgment debtor can be utilized in realisation or settlement of the judgment debt albeit, where such proceeds are in the hands of the bank and not yet payable to the customer judgment debtor; but could be enforced as immediately payable by such court to the judgment debtor/customer.

The garnishee may dispute his liability to pay the debt; as in this case. He will appear in court on the return date and dispute his liability by denying indebtedness to the judgment debtor. He must make out a prima facie case in favour of an order for an issue to be tried.

The position of the law as stipulated in section 87 Sheriffs and Civil Process Act, CAP 407 LFN 1990 is that:

“Where a garnishee disputes liability, the court may then order that any issue or question necessary for determining his liability be determined or tried in any manner in which any issue or question in any proceedings may be tried or determined and may refer the matter to a referee.”

This position was also applied by this Honourable Court in the case of Nigeria Hotels Ltd v. Nzekwe (1990) 5 NWLR Pt.149 Pg.187 at 197 where Adio JCA (as he then was) held that:

“In view of the matters deposed to in the said affidavit filed on behalf of the Appellant which was before the learned trial judge on the 24th July 1987, when he heard and granted the application and which contain a denial of liability. What section 87 of Sheriffs and Civil Process Act, CAP 123 of the Laws of Northern Nigeria requires a court to do, when liability is denied and which the learned trial judge should have done instead of making a order that execution shall issue, was either to order that the issue or question necessary for determining liability be tried or determined in any manner in which any issue or question in any proceedings might be tried or determined or to refer the matter to a referee.”

The Judgment Enforcement Rules (JER) were made pursuant to the Sheriffs and Civil Process Act. The JER is the body of adjectival rules made to aid in the enforcement of substantive legislation. Order 8 Rule 8 (2) of the JER sets out how the court session is to proceed to determine the issue of liability of the Garnishee who disputes the claim. The proper procedure is for the Court to stand down the proceedings in respect of the issue of whether to make the order absolute and order that the Court would now proceed to try the liability of the Garnishee.

If the court makes such an order, it directs which of the three parties to the proceedings and any other person claiming interest or lien on the debt shall be plaintiff and which shall be defendant in the proceedings for the trial or determination of the issues.

The ruling of the lower court making the order nisi to become absolute on the 12th of October 2006 which was also the return date which the garnishee disputed his liability was quite premature in my humble view in the circumstances. The fact that the garnishee disputed liability implied that section 87 of Sheriff and Civil Processes Act be applied as stipulated by law. Order Rule 8 (2) of the JER envisages that the court should move into another proceeding mode with the court assigning roles to each party. The garnishee may become the Plaintiff while the judgment creditor may become the Defendant. The issue of the liability of the garnishee must then be tried separately. That procedure was not followed in this case. This issue is resolved in favour of the Appellant.

As to the complaint by the 1st Respondent that there is no complaint on this point in the grounds of appeal, I have read the grounds of appeal and I am of the view that ground 2 of the grounds of appeal adequately covers this complaint.

ISSUE TWO

The Appellant’s counsel argued that in making the order nisi to become absolute on 12th October 2006, the lower court came to the conclusion that there was no evidence before the court to show that the two accounts of the 2nd Respondent judgment debtor) namely Account No. 1910849235 with N1,485,750.60 in credit and Account No.1910849219 in debt both of which were in the custody of the Appellant (Garnishee) had been merged.

The learned counsel argued that the Appellant deposed in its affidavit to show cause that the order nisi dated 26th June 2006 was received by the bank on 11th September 2006. This deposition was not challenged or contradicted by the 1st Respondent judgment creditor) in his counter affidavit to affidavit showing cause filed at the lower court. Counsel further stated that the lower court failed to act on this unchallenged and un contradicted piece of evidence and further submitted that a Garnishee may set off what is due to him from the judgment before the issue of order nisi. He cited Tapp v. Jones (1875) LR 10QB 591.

He further submitted that the 2nd Respondent (judgment debtor) by a set off was indebted to the Appellant (Garnishee) in the sum of N9,269.81 debit when the order nisi was received by the Appellant (Garnishee). He cited OAU v. Olanihun (1996) 8 NWLR Pt. 464 Pg.123 at 129.

Appellant’s counsel further submitted that the Appellant (Garnishee) has an inherent right of set off even where the claim as basis of the set off arises from a different transaction or different account as in the instant case. The Appellant’s counsel then urged this Honourable Court to allow this appeal and set aside the Ruling of the lower court dated 12th October 2006.

Learned Respondent’s counsel argued that the Appellant has completely misconceived the reason for the ruling of the lower court. The clear factual reason is that the Appellant did not merge the two accounts. The Appellant’s affidavit did not contain a single deposition that the two accounts were merged. Therefore insofar as the judgment debtor still had the full rights to withdraw from the account in credit, there is no reason why the court should be impeded. He further argued that the two authorities cited by the Appellant to wit Tapp v. Jones (1875) LR 10 QB 591 and OAU v. Olanihun (1996) 8 NWLR Pt. 464 Pg.123 did not decide that accounts can be merged by oral address of counsel. The merger of the two accounts, and/or exercise of right of set off are matters of fact and must be deposed to effectively by an officer of the bank. He stated that the Appellant is in truth actually mocking this Honourable Court by willfully creating an overdraft after one month and 24 days of receiving service of order nisi containing an order attaching all accounts of the judgment debtor and then proceeding to argue in open court that their act of contempt of court should impede the Honourable court from exercising its powers.

The Respondent’s counsel concluded by urging this Honourable Court to dismiss the appeal because the Appellant as a bank ought to at every point in time assist the court to ensure that Garnishee proceedings are successful but the Appellant attempted to protect the judgment debtor by deposing to clearly ‘mendacious’ affidavits and resorting to legal technicalities to protect a judgment debtor. He further summarised his reasons for urging the court to dismiss the appeal as follows:

(a) The judgment debtor still had full legal rights to withdraw the funds attached by the Honourable Court and therefore this court cannot allow its processes and order to be rendered nugatory.

(b) The Appellant is utilising its contempt of court as a weapon to shield its customer.

The authorities are of the view that a garnishee is entitled to set off any debt due to him from the judgment debtor at the date when the order nisi was served upon him and the garnishee is equally entitled to a counter claim against the judgment debtor, at any rate where it arises out of the same transaction as the debt sought to be attached. See Tapp v. Jones (1975) LR 10 QB 591 at 593 see also Hale v. Victoria Plumbing Co. Ltd (1966) 2 QB 746.

However, the garnishee cannot set off debts accruing after service of the garnishee order nisi, nor can he set off a debt due to him from the judgment creditor. See the case of Sampson v. Seaton RLY Corp. (1874) LR QB 28, See also the case of O.A.U. v. Olanihun.

In OAU v. Olanihun (1996) 8 NWLR Pt. 464 Pg.123 at 129, this court held inter alia per Okunola JCA:

“What is more the decision of Lord Hobhouse in Newfoundland Government v. Newfoundland Rly Co, (1888) 73 App. Cas 199p. 272 quoted with approval by Sellers L. J in Hanak v. Green (1958) 2 ALL E.R, 747 Pg. 754 had clarified the position of set off with respect to liquidated or unliquidated money demand to the effect that “Unliquidated damages may now be set off as between the original parties and also an assignee…” This principle had been extended to allow set off in respect of claim for damages and even where the claim, basis of the set off arises from a different transaction, See Bankers v. Jarvis (1903) 1 KB 549 which also cited with approval in Hanak v, Green (supra),”

What the authorities on this point are saying is that the Garnishee has a right of set off in respect of a liquidated sum in its custody. It may exercise this right in respect of a different transaction in which it is a party or in respect of any assignment to another party of the garnisheed sum by the judgment debtor. The main issue raised by the learned Respondent’s counsel is whether the lower court ought to have discharged the order of Garnishee nisi when the judgment debtor still had full rights to withdraw from the account in credit? This Court held in the case of Citizens Int’l Bank v. SCOA Nig. Ltd (2006) 18 NWLR Pt. 1011 Pg.332 at Pg.348.

“The onus placed on a garnishee would only be discharged if it successfully establishes that the account referred to in the decree nisi does not exist in its system or, if it exists, it is heavily in debt and not in credit or that the number stated on the order nisi had since change to another version.

In the instant case, the Appellant did not place any material before the trial court that the 2nd Respondent had only one account with the Appellant. By positing another account against the one in issue, Appellant had not discharged the onus on it. The Appellant’s affidavit therefore failed to preponderate, the trial court was right to discountenance it.”

The learned Appellant’s counsel had deposed to an affidavit stating that the account of the judgment debtor was in debit by way of set off when the order nisi was received. He cited the case of O.A.U. v. Olanihun (1996) 8 NWLR Pt. 464 Pg.123 at Pg. 129. The additional records filed in this Court by the Appellant on 18/10/10 shows clearly that the order NISI was made on 26/06/06. In the Appellants Affidavit showing cause filed at the trial Court on 20/07/06, paragraphs 8, 9, and 10 state as follows:

8. “That I was informed by the said Mr. Sam Obijiaku on Wednesday 13th September, 2006 at about 10.O0am at No.2, Kofo Abayomi Street, Victoria Island, Lagos and I verily believe him that upon a thorough search of the Bank’s systems, the Judgment Debtor has an account number 1910849219 with our APSAMDA Branch and that the Judgment Debtor was indebted to the Garnishee to the tune of N1,485,750.60 as at the commencement of business on the 11th day of September, 2006.

9. That I was also informed by Mr. Sam Obijiaku on the same date, place and time and I verily believe him that as at the 5th day of July 2006, the Judgment debtor was indebted to the Garnishee in the sum of N214,833.30 being the outstanding debit balance on the account as at that date.

10. That I was also informed by the said Mr. Sam Obijiaku on the same date, place and time and I verily believe him that the Garnishee is not in any way indebted to the Judgment Debtor by any other means.”

In the further affidavit showing cause filed on 26/09/06, paragraph 5 thereof states as follows: That Mr. Sam Obijiaku also informed me and I verily believe him as follows:

5. a. That upon further inquiry, it was shown that the account balance on Account No. 1910849235 was the sum of N1,366,490.79 credit. Now shown to me and marked exhibit KFA 1 is a Certified True Copy of the Statement of Accounts in respect of Account Number 1910849235.

b. That his inability to discover account number 1910849235 was a result of the systems failure to recognize the search criteria used in respect of the earlier search, which recognition was then enabled by the account number, but not out of any disrespect to this Honourable Court.

c. That the Judgment Debtor is still indebted to the Garnishee in respect of Account Number 191084219. Now shown to me and marked Exhibit KFA 2 is a Certified True Copy of the Statement of Account in respect of Account Number 1910849219 showing that the Judgment Debtor is indebted to the Garnishee in the sum of N1,485,760.60.

d. That the net account position of the Judgment Debtor with the Garnishee is N119,269.81 debit.

Nowhere in the later affidavit did the Appellant indicate that the two accounts had been merged or that the Bank had exercised any existing right of set off in respect of the two accounts. Thus, the account in credit was still accessible to the judgment debtor. However, In Joe Golday v. Co-operative Bank, (2003) 2 SCNJ 1 – UWAIFO JSC reading the lead judgment of the Supreme Court held at Pg. 21 that a banker may consolidate the accounts owned by agreement in his own right, unless precluded by agreement, express or implied from the course of business from doing so, in order to ascertain and treat as the balance, the amount standing to the credit of the customer. The Supreme Court held that it is a prudent way open to the banker to assess the financial worth with it of that customer. The exception to the right of set off may be where a banker opens two accounts for a customer, one in the customer’s business name or incorporated body/company and the customer’s personal name. Both accounts cannot be merged by the bank as of right. See also BRITISH & FRENCH BANK LTD. V. OPALEYE (1952), ALL NLR 26; (1962) 1 SCNLR 60.

It is my humble view that in the circumstances of this case, the very nature of garnishee proceedings entitles the garnishee to set off the indebtedness of the judgment debtor. This is because, the order NISI presupposes that the Garnishee is indebted to the judgment debtor as at the time the order was made. If according to the records of the garnishee which is largely undisputed, there was an indebtedness on the part of the judgment debtor, then I do not see how the Court can in equity and law force a Bank in essence to pay its own money to satisfy a judgment debt incurred by a customer. After all an order Nisi only creates an equitable charge over the funds in favour of the judgment creditor. This is notwithstanding the fact that as at the time the order NISI was made there had been no formal set off by the Garnishee of the judgment debtor’s accounts.

It is my view that the right of set off can be exercised after receipt of the order NISI so long as the Garnishee’s records show that as at the date of the order NISI, there were two accounts that could be consolidated belonging to the judgment debtor one with credit balance and another with debit balance. Thus sums in different accounts owned by a customer may be considered as the same for the purpose of settling liability due from the customer to the banker and vise versa, In my humble view that is the only resolution which meets the justice of such a situation. In the circumstances, I have to hold that as at the date the ORDER NISI was made, the 2nd Respondent was indebted to the garnishee and therefore the garnishee could not have rendered up any assets of the debtor. Therefore the order absolute was erroneously made.

The second issue is also resolved in favour of the Appellant.

In the circumstances, this appeal is allowed. I make no order as to costs.

I. M. M. SAULAWA, J.C.A.: I was privileged to have read the judgment delivered by the Hon. Justice H. M. Ogunwunmiju, JCA. Having equally gone through the briefs of argument of the respective learned counsel vis-a-vis the records of appeal. I concur with the reasoning and conclusion thereby reached in the judgment, to the effect that the appeal is meritorious.

Instructively, the instant case has to do with garnishee proceedings. It is trite, that the term garnishment denotes a judicial proceeding wherein a creditor (or potential creditor) prays the court to order a third party to turn over to the creditor any of the debtor’s property (e.g. wages or bank accounts) held by the third party (usually a Bank). A garnishment proceeding is usually resorted as a means of either prejudgment seizure or post judgment collection. see BLACK’S LAW DICTIONARY 9th edition 2009 at 750 thus:

Garnishment is a [n]… inquisitorial proceedings, affording a harsh and extraordinary remedy. It is an anomaly, a statutory invention sui generis, with no affinity to any action known to common raw . . . It is a method of seizure; but it is not a levy in the usual acceptation of that term. It is a proceeding by which a diligent creditor may legally obtain preference over other creditors; and it is in the nature of a creditor’s bill, or a sequestration of the effects of a debtor in the hand of his debtor. 38 CJN. Garnishment 53 at 244 – 50 (2003)

See also CITIZEN INTERNATIONAL BANK VS. SCOA (NIG) LTD (2006) 18 NWLR (PT.1011) 334.

In the instant case, it’s rather obvious that the court below failed to properly avail itself of the guidelines duly set out under the provisions of section 87 of the sheriff and civil process Act. Laws of the Federal Republic of Nigeria, 2004 as amended and order 8 Rule 8(2) of the Judgment Enforcement Rules made pursuant thereto. Undoubtedly, the provisions of the law and rule in question are rather mandatory. Thus, having failed to be properly guided by the provisions of the law, inquisition, the decision embarked upon by the court below is liable to be set even on the ground that it’s a nullity.

Hence, having satisfied myself that the instant appeal is meritorious, hereby without any further hesitation allow same.

There shall be no order as to costs.

MOHAMMED AMBI-USI DANJUMA, J.C.A.: I have had the benefit of reading before now the lead Judgment of my Lord Moronkeji Ogunwumiju, JCA just delivered. I agree completely that this appeal has merit and should succeed. The first issue for determination as formulated and argued by the Appellant has answered completely the gravamen of this appeal; and that is that since the Appellant’ the Garnishee herein, challenges and contests the fact of the Judgment debtor having an account in the credit other than on a debit with it that there were no sums of money standing to the credit of the Judgment Debtor in the Account maintained in the Garnishee/Appellant Bank to warrant its attachment let alone to make the order or Decree Nisi absolute as made. I am certain that the point is well taken pursuant to section 87 of the Sheriffs and civil process Act, Cap. 407 Laws of the Federation of Nigeria 2004.

The fact that Garnishee proceedings may be embarked upon in the circumstances that a third party, such as the Garnishee/Appellant herein’ who may be in possession of funds belonging to a Judgment debtor is not in doubt. However, the right of the Judgment creditor is circumscribed and put on hold by the objection of the 3rd party (Garnishee) that the liability to pay over or have the property attached by an order absolute has not arisen. Failure to determine this objection, makes the order absolute irregular, unlawful and void, as it is a violation of the Appellant’s right of fair hearing and possible wrongful acquisition of property in funds.

This takes me to the second issue of the Appellant which in my view simply asks in essence whether the two accounts of the Judgment Debtor with the Garnishee had not been merged ab initio for the purpose of settling accounts between a customer and his Bankers, thus surbodinating the garnishee order nisi to the prior interest in that merged fund created by operation of law and equity. In respect of this issue, I also agree that where a Bank is entitled in law to consider the sums or money of a customer in its vault as a loan to it to be dealt with, subject to its been paid over on call or in accordance with the Banking Regulations and contract that may have been entered into between the parties, such sums, in different accounts of the same holder, may be considered as one same Account for the purpose of settling liability due from the customer in favour of the Banker. In this case, therefore, the Bank was perfectly right even as a garnishee to have protected its right (which enjoyed priority in creation, and equity) to the sums in the Account that was said to be on credit. This is necessarily so, because an order nisi only created an equitable charge over the funds in favour of the Judgment creditor. See the old provisions of Order 45 Rule 2 of the Rules of the Supreme Court 1983. Being an equitable charge, it necessarily means that in competition with the Banker’s equity, the first in time must prevail. The word “Nisi” means, “unless”‘ Hence a garnishee order “Nisi” accordingly takes effect at a stated date and time unless something happens to prove that the court order should not be enforced. In the absence of evidence to stop the proceedings, the order will be made absolute and the second step is thereby completed. At this level, payments may be made. However, as stated by Deolu Oluyinka, ACIB in his book entitled Practice of Banking, Vol. 1 (2004) at page 123. ..If the Garnishee (the Bank) has the money available due to the debtor, he will be compelled to pay it over to the court for the benefit of the garnishor. (The Judgment creditor)” in other words if the money is not there, it cannot be paid. Indeed since the service of a garnishee order determines the banker’s right to pay cheques, it also entitled the Bank to set off credit balances of the customer against any of his actual (not contingent) indebtedness to the Bank, to determine the net balance, if any, accruing, due and owing by the Bank to the customer and thereby attached by the garnishee order. See Deolu Oluyinka, ACIB, Practice of Banking supra at page 134. Indeed the Account that was in debit as a result of over draft facility granted by the Garnishee to the Debtor automatically must be related and tied back to the affluent Account in protection of the Banker/Garnishee. That being, the case, I hold that there were no funds belonging to the Debtor in existence to be attached by an order absolute for the benefit of the Judgment Creditor herein. The trial Judge was, therefore, wrong in granting an order of Decree Absolute in the circumstances. The Argument by the Respondent’s learned counsel that the overdraft was granted in contempt of an existing Decree Nisi with a view to frustrating and rendering nugatory the order Absolute would have held sway if none of the Accounts was in credit when the facility was granted and after full knowledge or service of the Decree Nisi as in the circumstance, such a garnishee could, arguably be taken to have condoned or waived any right of insistence on priority of his right of relief before a third party/garnishor.

The 2nd Respondent had argued in his lone issue that the Judgment Debtor still had a right of withdrawal from his account and that it could not be said to have been merged, In respect of this, I think, that it is now trite that once, a customer is indebted to his Bankers, the Banker’s right to dishonor and refuse to obey any order to withdraw on the account is obvious. In that state of affairs, therefore, the customer cannot be said to still be seized of the right to withdraw from the account as contended. Whether the accounts were merged or not merged, the customer/Debtor has no unlimited right to withdraw or deal with the account as such “real” owner any longer’

For the above and the detailed and apt reasons given in the lead Judgment which I adopt as min’80, I too agree that this appeal be allowed but with no order as to costs.

Appearances

Johnson OdionuFor Appellant

AND

Emeka OdigboFor Respondent