STANDARD MANUFACTURING COMPANY LIMITED & ANOR v. STERLING BANK PLC
(2015)LCN/7883(CA)
In The Court of Appeal of Nigeria
On Tuesday, the 2nd day of June, 2015
CA/L/733/2011
RATIO
APPEAL: ISSUES FOR DETERMINATION; THE IMPLICATION OF ISSUES FORMULATED IN BRIEF OF ARGUMENT THAT DIFFER FROM THE GROUNDS OF APPEAL FILED
The law is settled that where issues formulated in brief of argument differ from the grounds of appeal filed, the court will strike it out and all arguments presented in its support will be discountenanced. See KALA v. POTISKUM [1998] 3 NWLR (PT. 540) 1; ONIAH v. ONYIA [1989] 1 NWLR (PT. 99) 514; UGO v. OBIEKWE [1989] 1 NWLR (PT. 99) 566; AJA v. OKORO [1991] 7 NWLR (PT. 203) 260; OFONDU v. NIWEIGHA [1993] 2 NWLR (PT. 275) 253. per. ABIMBOLA OSARUGUE OBASEKI-ADEJUMO, J.C.A.
APPEAL: GROUND OF APPEAL; WHETHER JUDGMENT CAN BE DETERMINED BY READING THE GROUND AND ITS PARTICULARS AS A WHOLE
In examining a ground of appeal, the ground alone should not be read in isolation of the particulars. It is only by reading the ground and its particulars as a whole that what the Appellants are complaining about in the judgment can be determined. See ORAKOSIM v. MENKITI [2001] 87 LRCN 1536; IKEM v. EZIANYA [2002] 4 NWLR (PT. 757) 245; ATOLAGBE v. SHORUN [1985] 1 NWLR (PT. 2) 360; A.G. KWARA STATE v. OLAWALE [1993] 1 SCNJ 209; PDP v. LAWAL [2012] LPELR-7972. per. ABIMBOLA OSARUGUE OBASEKI-ADEJUMO, J.C.A.
BANKING LAW: WHEN WILL A RIGHT OF ACTION FOR REPAYMENT OF AN OVERDRAFT WILL ACCRUE IN A BANKER AND CUSTOMER RELATIONSHIP
Ordinarily, a debt is payable either on demand or on notice given or upon any other condition agreed upon by the parties. It is the law that no right of action for repayment of an overdraft will accrue in a banker and customer relationship until there has been a demand or notice given. See ISHOLA v. S.G.B. (NIG.) LTD. [1997] 2 NWLR (PT. 488) 405; B.O.N. v. AKOREDE [1995] 1 NWLR (PT. 378) 736; NDIC v. ORANU [2001] 18 NWLR (PT. 744) 183; WEMA BANK PLC. v. OSILARU [2007] LPELR-8960. per. ABIMBOLA OSARUGUE OBASEKI-ADEJUMO, J.C.A.
JUSTICES
SIDI DAUDA BAGE Justice of The Court of Appeal of Nigeria
JOSEPH SHAGBAOR IKYEGH Justice of The Court of Appeal of Nigeria
ABIMBOLA OSARUGUE OBASEKI-ADEJUMO Justice of The Court of Appeal of Nigeria
Between
1. STANDARD MANUFACTURING CO. LIMITED
2. MR. BONIFACE ISIGUZORO Appellant(s)
AND
STERLING BANK PLC Respondent(s)
ABIMBOLA OSARUGUE OBASEKI-ADEJUMO, J.C.A. (Delivering the Leading Judgment): This Appeal stems from the judgment delivered by Honourable Justice S.A. Onigbanjo of the High Court of Lagos State on the 20th of April, 2011 in Suit No. ID/436/2007, wherein he dismissed the Appellants’ Counter Claim in its entirety and entered judgment in favour of the Respondent in the sum of N12,955,003.02 with interest at the rate of 19% per annum until the final liquidation of the judgment debt. The learned Judge in the alternative, ordered the sale of the 2nd Appellant’s property at No. 6, Ogo Oluwa Avenue, Ajuwon, Iju, Agege, Lagos covered by Lagos State Certificate of Occupancy registered as No. 5 at Page 5 in Volume 1955 of the Lagos State Land Registry Office, Alausa, Ikeja.
The Respondent by its Amended Statement of Claim dated 22nd October, 2008 sought the following reliefs:-
(a) The sum of N12,955,003.02 being the debit balance standing against the 1st Defendant’s account with the Claimant as at 7th of November 2006 in respect of credit facilities granted by the Claimant to the 1st Defendant at its request as well as bank charges and interest thereon which the 2nd Defendant guaranteed in writing to repay.
(b) Interest on the said sum of N12,955,003.02 at the rate of 19% per annum from the 8th of November 2006 until the judgment is given and thereafter at the same rate until the whole amount is fully liquidated.
AND OR:
(c) AN ORDER of sale of the 2nd Defendant’s property situate at No. 6, Ogo Oluwa Avenue, Ajuwon, Iju, Lagos and covered by a Certificate of Occupancy registered as No. 5 of Page 5, in Volume 1995 at the Lagos State Land Registry office Alausa, Ikeja which the 2nd Defendant deposited with the Claimant as security for the credit facilities granted by the Claimant to the 1st Defendant in order to liquidate the debit balance standing against the 1st Defendant’s account with the Claimant which the 2nd Defendant guaranteed to repay.
The brief statement of facts of this appeal flows from the Banker-Customer relationship between the Appellants and the Respondent herein. The Respondent granted the 1st Appellant an overdraft facility in the sum of N5,000,000.00 vide a request in a letter dated 12th August, 2003, to finance the 1st Appellant’s business subject to terms and conditions of the said letter. As security for the overdraft, the 2nd Appellant deposited with the Respondent, the original copy of his Certificate of Occupancy over his property situate at No. 6, Ogo Oluwa Avenue, Iju, Ajuwon, Agege, Lagos State and registered as No. 5 in Volume 1955 at the Lagos State Land Registry Office Alausa, Ikeja, as well as undertake to guarantee the overdraft.
When the overdraft fell due and remained unpaid, it was restructured at the request of the Appellants to a term loan of N8,500,000.00 with an agreement that the term loan will be liquidated in ten monthly installments of N925,755.14, which the Appellants still failed to repay despite repeated demands by the Respondent and her solicitor. To this extent, the Respondent sued the Appellants at the Lower Court as per the reliefs earlier stated.
Dissatisfied with the decision of the court, the Appellants through the Notice of Appeal, dated the 4th day of May, 2011 appealed against the said judgment of S.A. Onigbanjo, J.
The Appellants’ Brief of Argument is dated and filed on 20th of June, 2014, but deemed properly filed on 22nd October, 2014; same was settled by Johnson Fabilola, Esq. of Ayodele Olugbenga & Co. The Respondent’s Brief of Argument is dated and filed on 5th of February, 2015, deemed properly filed on 11th May, 2015 and settled by Ayodele Akintunde FCIArb. of Ayodele Akintunde & Co. The Appellants’ Reply Brief is dated and filed on 25th March, 2015 but deemed on 11th May, 2015.
The Appellants distilled three issues for determination thus: –
“1. Whether the non-denial of the facility by the Appellants has relieved the Respondent from proving the indebtedness of the Appellants.
2. Whether the property situate at No. 6, Ogo Oluwa Avenue, Iju, Ajuwon, Lagos was charged as security for the facility granted to the 1st Appellant.
3. Whether the Appellants have proved their counter claim against the Respondent.”
In like manner, the Respondent also distilled three issues for determination in its brief as follows:
“1. Whether the learned trial Judge was right when he entered judgment in favour of the Respondent for the sum of N12,955,003.02 at the rate of 19% per annum on the ground that the Respondent has proved the Appellants indebtedness.
2. Whether the learned trial judge was right when he granted an order of sale of the 2nd Appellant’s property at No. 6, Ogo Oluwa Avenue, Iju, Ajuwon, Agege, Lagos State which the 2nd Appellant deposited as security for the facilities granted to the 1st Appellant; and
3. Whether the learned trial judge was right when he dismissed the Appellants’ counter claim.”
In the determination of this appeal, the preliminary objection contained in the Respondent’s brief would be considered first.
The Preliminary Objection contained in the Respondent’s brief of argument is premised on the fact that Appellants’ issue one does not relate to ground one of their Notice of Appeal. On this, Respondent argued it is trite that issues for determination in an appeal must arise from and relate to the grounds of appeal filed; learned counsel stated that Appellants’ issue one differs from the grounds of appeal in their brief. He relied on OBIALOR v. UCHENDU [2014] 11 NWLR (1419) at pages 444 – 445 paras F-H; GENERAL OIL LTD. v. CHIEF OGUNYADE [1997] 4 NWLR (PT. 501) 613; CHINWUBA v. ALADE [1997] 6 NWLR (PT. 507) 85; OGBUANYINYA & 5 ORS. v. OBI AKUDO & 2 ORS. [1990] 4 NWLR (PT. 146) 551; EMESPO J. CONT. LTD. v. CORONA S. & CO. [2006] 11 NWLR (PT. 991) to contend that where an issue formulated by a party in an appeal does not arise out of the grounds of appeal, such issue is irrelevant, must be discountenanced, liable to be struck out.
Respondent’s counsel submitted and urged this court to discountenance the Appellants’ issue one and its allied argument; strike it out for not relating to grounds of appeal in the Notice of Appeal.
The Appellants’ counsel in his reply brief was silent on the arguments raised by the Respondent’s preliminary objection. However, Appellants’ counsel in his address to the court on 11/5/2015 informed the court that he reacted to the preliminary objection in his reply brief but urged this court to allow the appeal. A critical appraisal of the Appellants’ reply brief shows that Appellants did not react to the argument contained in the Respondent’s brief regarding the preliminary objection, he only argued the issues formulated by the Respondent in his brief.
Learned counsel to the Respondent raised as an objection in his brief that Issue One of the Appellants’ issues for determination is alien to the grounds of appeal contained in the Notice of Appeal.
In the determination of the objection, the grounds of appeal would be compared with issue one formulated by the Appellants. The grounds of appeal of the notice of appeal filed by the Appellants are hereunder reproduced:
“Grounds of appeal
1. The learned trial judge erred in law when he entered judgment in favour of the Respondent for the sum of N12,955,003.02 at the rate of 19% per annum on the ground that the Respondent has proved the Appellants’ indebtedness to the Respondent.
PARTICULARS OF ERROR
(i) The learned trial judge held that the Respondent has proved its case without considering the 1st Appellant’s evidence of arbitrary charges imposed on the accounts by the Claimant.
(ii) The learned trial Judge did not consider the evidence given by the Respondent of its request for reconciliation of the accounts to ascertain the indebtedness of the 1st Appellant.
(iii) There was no evidence before the Court that the Claimant acceded to the 1st Appellant’s request for reconciliation of the account to ascertain the indebtedness of the Appellants.
2. The learned trial Judge erred in law in granting the Claimant’s relief for an Order of sale of the 2nd Defendant’s property situate at No. 6, Ogo Oluwa Avenue, Ajuwon, Lagos.
PARTICULARS OF ERROR
(i) The learned trial Judge erred in law when he held that the 2nd Appellant created an equitable mortgage in favour of the Claimant when there is no evidence before the Court to support that finding.
(ii) The 2nd Appellant gave evidence before the Court that he merely deposited the Certificate of Occupancy with the Claimant as part of his Statement of Net worth and the Claimant wrongfully retained it.
(iii) The evidence given by the 2nd Appellant has not been denied or challenged by the Claimant.
(iv) The letter dated 5th August, 2003 which the Court heavily relied upon as creating an equitable Mortgage in favour of the Claimant relate to a different transaction entirely.
(v) There was no evidence before the court that the 2nd Appellant pledged his property as a security for the facility granted to the 1st Appellant.
3. The learned trial Judge misdirected himself when he held that the Appellants have failed to prove their Counter-claim.
PARTICULARS OF MISDIRECTION
(i) The learned trial Judge did not consider the Appellant’s evidence in respect of arbitrary charges, non-periodic Statement of Accounts and request for reconciliation.
(ii) The learned trial Judge did not take due cognizance of the circumstances and evidence surrounding the “deposit” of the title document with the Respondent.
4. The entire judgment is against the weight of evidence led at the trial.
PARTICULARS OF MISDIRECTION
The entire judgment is not supported by the evidence adduced at the trial and the evidence led was not properly evaluated.”
Issue one as formulated by the Appellants shall be reproduced again for clarity:
“Whether the non-denial of the facility by the Appellants has relieved the Respondent from proving the indebtedness of the Appellants?”
The law is settled that where issues formulated in brief of argument differ from the grounds of appeal filed, the court will strike it out and all arguments presented in its support will be discountenanced. See KALA v. POTISKUM [1998] 3 NWLR (PT. 540) 1; ONIAH v. ONYIA [1989] 1 NWLR (PT. 99) 514; UGO v. OBIEKWE [1989] 1 NWLR (PT. 99) 566; AJA v. OKORO [1991] 7 NWLR (PT. 203) 260; OFONDU v. NIWEIGHA [1993] 2 NWLR (PT. 275) 253. From issue one of the Appellants’ issues for determination, the choice of words and approach of the Appellants in framing up the issue was (in my view) what created a clog in the flow of thought of the Respondent; the way it is construed by the Respondent clearly does not represent the correct intent of ground one of the notice of appeal.
The Supreme Court in SHITTA-BEY v. A.G. FEDERATION & ANOR. [1998] 10 NWLR (PT. 570) 393, held that in formulating issues for determination, the procedure is to argue issues (not grounds) and show how they relate to the grounds of appeal.
This court takes cognizance of the fact that grounds of appeal are the taproots of cases on appeal; they lay the foundation upon which cases grow; therefore issues so formulated must be backed by grounds of appeal. See DAGACI OF DERE v. DAGACI OF EBWA [2006] 1 S.C. (PT. 1) 57; OGUNBIYI v. ISHOLA [1996] 6 NWLR (PT. 452) 12.
I have carefully examined issue one so formulated by the Appellants in his brief. It appears that Appellants’ counsel chose dictions suitable to him in framing the issue. A critic of it shows he formulated the issue in “answer format” of the non-denial of the facility granted by the Respondent which is apparent from the particulars of errors in ground one. In examining a ground of appeal, the ground alone should not be read in isolation of the particulars. It is only by reading the ground and its particulars as a whole that what the Appellants are complaining about in the judgment can be determined. See ORAKOSIM v. MENKITI [2001] 87 LRCN 1536; IKEM v. EZIANYA [2002] 4 NWLR (PT. 757) 245; ATOLAGBE v. SHORUN [1985] 1 NWLR (PT. 2) 360; A.G. KWARA STATE v. OLAWALE [1993] 1 SCNJ 209; PDP v. LAWAL [2012] LPELR-7972.
On the whole, I am satisfied that the objection to the issue does not hold water. It is not enough to attack the issues formulated but Respondent’s counsel ought to have adduced cogent and convincing reasons to drive home his point. I think the objection in this instance is an attempt to stymie the process of adjudication. Issue one relates to ground one of the Notice of Appeal which attacks the ratio decidendi of the judgment of the Lower Court complained of in this appeal. In the light of this, the Respondent’s objection against issue one formulated by the Appellants is not valid, same is struck out; issue one is upheld together with its argument related thereto.
Having determined the preliminary objection of the Respondent, I shall adopt the three issues formulated by the Appellants in doing justice to this appeal. The issues are analogous to that of the Respondent.
ISSUE ONE:
Learned counsel to the Appellants cited Sections 131 – 133 of the Evidence Act to submit that the burden of proof lies on the person who asserts. He submitted the Respondent failed to discharge the burden of proof placed on him to establish the Appellants’ indebtedness to the Respondent in this case. To the Appellants, the non-denial of the facilities granted by the Respondent does not relieve Respondent from fulfilling his part of the law to discharge the burden of proof. He contended the learned trial Judge did not consider the evidence adduced by the Appellants in paragraphs 4, 5 and 19(a)-(d) of the 2nd Appellant’s Written Statement on Oath dated 14th June, 2007. He stated the Claimant’s statutory letters of demand for the payment of the facilities were inchoate, ill-timed and premature at the time they were issued. He stated further that the restructured overdraft facility evidenced in offer letter dated 20th December, 2004 (Exhibits I and G) was for a period of 10 months and repayment would be by 10 monthly equal installments from 20th December, 2004 – 20th October, 2005. Counsel contended that parties are bound by the offer letter of 20th December, 2004 and stated in addition that Respondent’s witness – Mrs. Aderenle Adebayo under cross examination testified contrary to the offer letter that the tenor of the facility was for 30 days. He commended the case of ADELEKE v. IYANDA [2001] 28 WRN 1 (Ratio 3) to the court that the above witness testimony is at variance with the pleadings of the Respondent and should be discarded.
Learned Respondent’s counsel submitted that Respondent’s letters for demand dated 26th July, 2005; 8th August, 2005 and 9th September, 2005 (Exhibits 2, 3 and K) are not valid in view of the fact that the tenor of the restructured loan facility had not expired when the demand was made. He stated that cause of action against the Appellants has not arisen in view of the ill-timed and premature demand made by the Respondent. He relied on ANGYU v. MALAMI [1992] 9 NWLR (PT. 204) at 252; ISHOLA v. S.G.N. [1997] 2 NWLR (PT. 488), on the principle that it is implied between a banker and its customer to make formal demand before commencing an action for debt recovery.
Counsel further argued that the issuance of the Writ of Summons demanding for payment of the outstanding balance cannot take the place of a formal demand required by law; therefore, the cause of action has not accrued. He submitted that the learned trial Judge misconstrued the evidence adduced by the Appellants when he discountenanced and rejected the evidence on the ground that defendant conceded that the facility expired on 20th October, 2005.
Counsel to the Appellants in his contention stated that in view of 1st Appellant’s protest of the arbitrary charges imposed on the account by the Respondent, Respondent has not proved the indebtedness of the 1st Appellant and the account calls for reconciliation to ascertain the indebtedness. He argued that Respondent’s witness confirmed under cross examination that the Respondent received the Appellants’ request for reconciliation of the account vide Exhibit C (Appellants’ letter dated 10th August, 2005). Counsel cited ADEJUMO v. AYANTEGBE [1989] 3 NWLR (PT. 110) 417 Ratio 19; KOSILE v. FOLARIN [1989] 3 NWLR (PT. 107) Ratio 13 and contended that the evidence of the Appellants in respect of the reconciliation of the account and arbitrary charges imposed on the account has been challenged or impeached; therefore the court should have acted on it.
Appellants’ counsel reiterated that unless there is reconciliation of the account, the indebtedness cannot be ascertained. He stated that Respondent has not furnished the Appellants with statement of account of the 1st Appellant to enable Appellants ascertain the debt outstanding to them. Learned counsel finally submitted that Respondent deliberately failed to send the statement of account to the Appellants regularly in order to conceal the arbitrary charges, errors and irregularities on the 1st Appellant’s account. He cited NLEWEDIM v. UDUNNA [1995] 6 NWLR (PT. 402) 383 that Respondent has not adduced evidence or tender any document to show that the Appellants received the 1st Appellant’s statement of account. He urged this court to rule in favour of the Appellants.
In his brief of argument, the Respondent counsel affirmed that he granted the Appellants an overdraft facility of N5,000,000.00 and later a term loan of N8,500,000.00 vide Exhibits F and G respectively subject to the terms and conditions of the offer letter. Counsel for the Respondent also stated that it is not in dispute that the facility granted by the Respondent to the Appellants was secured by an equitable mortgage over the 2nd Appellant’s property lying and situate at No. 6, Ogo Oluwa Avenue, Ajuwon, Iju, Lagos covered by a Certificate of Occupancy registered as No. 5 of page 5 in Volume 1995 at the Lagos State Land Registry Office, Alausa, Ikeja. Citing Section 131(1) of Evidence Act, 2011; AYANRU v. MANDILAS LTD. [2007] 10 NWLR (PT. 1043) 462 at 485 paras B-C, he argued that Respondent has proved its case that Appellant sought for credit facilities, was granted and utilized. Counsel submitted that the non-denial of the facilities granted by the Appellants relieves the Respondent of the onus of proving the facts. He further submitted while citing N.S.I.T.F.M.B. v. KLIFCO NIG. LTD. [2010] ALL FWLR (PT. 534) 73; OWNERS OF M/V GONGOLA HOPE v. SMURFIT CASES LTD. [2007] ALL FWLR (PT. 388) 1005 that when a piece of evidence which affects a matter in controversy is not discredited, it should be relied upon by a court. He argued that the failure of the Appellants to prove that they have fully repaid the facilities by tendering payment vouchers renders the Appellants defenceless. Counsel relied on OKOLI v. MORECAB FINANCE LTD. [2007] 4-5 SC page 116; MACAULAY v. NAL MERCHANT BANK LTD. [1990] 2 NSCC page 433; HOOKMAN v. NAYLOR [1905] 22 T.L.R 241.
Respondent’s counsel argued the Appellants’ contention that the letters of demand were inchoate and ill-timed contradicts the terms of the agreement, but that it was agreed that repayment shall be in ten(10) installments of N925,755.14 and that in the event of a default by the 1st Appellant, Respondent shall have the right to demand repayment of the whole outstanding debt and same shall become due and payable. He referred this court to the clause titled “Events of Default” on the penultimate page of Exhibit G; he relied on Section 128(1) of the Evidence Act, 2011. Counsel submitted that Appellants defaulted in their performance and observance of the terms and conditions of the facility and urged the court to hold that the letters of demand (Exhibits H, I, J, K and L) are not premature. He cited ISHOLA v. S.G.N (supra); ANGYU v. MALAMI (supra) and argued that these cases are different from facts and circumstances of this appeal.
Learned Respondent counsel further contended that the Appellants failed to prove that there were any questionable entries in the 1st Appellant’s account and the Appellants never protested the entries in the account. He stated the statements of account produced are facts presumed correct in the absence of cogent evidence to the contrary vide SALEH v. MONGUNO & ORS. [2006] 7 S.C. (PT. 2) 97; EZEMBA v. IBENEME [2004] 14 NWLR (PT. 894) 617. Counsel finally submitted and urged the court to hold that the decision of the Lower Court was right.
Appellants in their reply brief argued that the non-denial of the facility is subject to defendants’ request for reconciliation of the account which the Respondent failed to accede. He urged the court to discountenance the submissions of Respondent in its brief. Counsel submitted that the refusal of the Respondent to reconcile the account renders the indebtedness yet ascertainable. Citing AMASON FARMS v. NAL MERCHANT BANK [1994] 3 NWLR (PT. 331) 282 counsel submitted that a court cannot rely on an admission in a document or pleading, except it is full, clear, unambiguous and freely made. He further argued that there was no statutory letter of demand written to the Appellants and that statutory letters of demand are conditions precedent for recovery of debt. In his final submission; Appellants’ counsel urged this court to discountenance the submissions of the Respondent in its brief and hold that the demands are premature and ill-timed.
From the foregoing analysis, I found without any reservation that a banker and customer relationship exist between the parties to this appeal. Moreso, the main contention of the parties in this issue is whether there was valid notice of demand to the Appellants to repay the indebtedness of the facility granted. In relationship of this nature which is predicated on simple contract, some terms and conditions are required to be met. Ordinarily, a debt is payable either on demand or on notice given or upon any other condition agreed upon by the parties. It is the law that no right of action for repayment of an overdraft will accrue in a banker and customer relationship until there has been a demand or notice given. See ISHOLA v. S.G.B. (NIG.) LTD. [1997] 2 NWLR (PT. 488) 405; B.O.N. v. AKOREDE [1995] 1 NWLR (PT. 378) 736; NDIC v. ORANU [2001] 18 NWLR (PT. 744) 183; WEMA BANK PLC. v. OSILARU [2007] LPELR-8960.
By the Respondent’s Statement of Claim dated and filed 24/04/07, the Respondent’s averred thus:
“…
6. Pursuant to a request by the 1st Defendant, the Claimant by a letter dated the 12th of August 2003 granted the 1st Defendant an overdraft facility in the sum of N5,000,000.00…subject to the terms and conditions of the said letter which the 1st Defendant accepted by signing and returning an attached copy of the letter.
7. It was an express term of the agreement that the overdraft facility would be for the duration of 90 days and amongst other things, the facility would be secure by an equitable mortgage over the 2nd Defendant’s property lying and situate at 6, Ogo Oluwa Avenue, Iju, Ajuwon, Agege area of Lagos State and registered as No. 5, Page 5, in Volume 1995 at the Lagos State Land Registry office Alausa, Ikeja and the personal guarantee of its Directors including the 2nd Defendant.
8. ….
9. As security for the said facility, the 2nd Defendant also deposited with the Claimant the original Certificate of Occupancy over the property lying and situate at 6, Ogo Oluwa Avenue, Iju, Ajuwon, Agege area of Lagos State and registered as No. 5, Page 5, in Volume 1995 at the Lagos State Land Registry office Alausa, Ikeja.
10. …
11. At the expiration of the facility, Standard Manufacturing failed to liquidate same and at the request of Standard Manufacturing, the Claimant by a letter dated the 20th of December, 2004 renewed and/or restructured the overdraft facility to a Term Loan of N8,500,000.00 subject to the terms and conditions of the said letter. Standard Manufacturing accepted the offer by executing the Memorandum of Acceptance on the last page of Offer Letter. The 2nd Defendant signed as Director of Standard Manufacturing.
12. It was an express term of the restructuring of the facility that it was for a tenor of 10 months and same would be secured by a Legal mortgage over the Defendant’s property, a Fixed and Floating debenture over the assets of Standard Manufacturing and a lien on domiciled receivables on the account of Standard Manufacturing with the Claimant. At the expiration of facility, Standard Manufacturing did not repay same.
13. …
14. …
15. By a letter dated the 26th of July 2005, from the Claimant to the 1st Defendant, the Claimant demanded the repayment of the facility and interest thereon but the 1st Defendant failed and/or refused to repay the said debt.
16. When all efforts to get the 1st Defendant to liquidate its indebtedness to the Claimant failed, the Claimant instructed its solicitors Messrs Laniyan, Akintunde & Ibrahim who by a letter dated the 8th of August, 2005 demanded from the 1st Defendant a repayment of the said debt but the 1st Defendant failed to repay the said debt or any part thereof.
17. By another letter also dated 8th of August, 2005, from the said solicitors to the 2nd Defendant, the solicitors called on the 2nd Defendant to honor his obligations under the said Deed of Guarantee but the 2nd Defendant failed, refused and/or neglected to do so.
18. By a letter dated the 10th of August 2005, from the 1st Defendant to the Claimant’s erstwhile solicitors, which was signed by the 2nd Defendant, the Defendants admitted their indebtedness to the Claimant and amongst other things requested for a LPO financing facility from the Claimant to enable it use the proceeds therefrom to liquidate their indebtedness to the Claimant to which the Claimant’s solicitors by a letter dated the 23rd of August, 2005 responded and the Claimant also by a statutory letter of demand dated the 9th of September, 2005 demanded payment of the said debt from the 1st Defendant.
19. That when no effort was made by the Defendants to liquidate the debt, the Claimant’s solicitors, Ayodele Akintunde & Co., made a final call on the 2nd Defendant by its letter dated the 21st of December 2005, to liquidate the said debt but the 2nd Defendant failed to do so.
20. At the close of business on the 7th of November, 2006 the debt balance standing against the 1st Defendant’s account with the Claimant in respect of the said facility together with accrued interest plus bank charges stood at N12,955,003.02 and interest continues to accrue thereon…”
From the foregoing, there is no scintilla of dispute on the facility granted and Appellants in their pleadings did not deny the facility was granted to them by the Respondent and repeated demands made save that they were only grieved by the purported arbitrary charges imposed on the account and the failure of the Respondent to accede to their request for reconciliation. However, it is apparent from the face of Exhibit G, the letter granting the facility that the restructured facility would be due for payment on 20th October, 2005.
A perusal of paragraphs 15, 16, 17, 18 and 19 of the Respondent’s statement of claim shows the letters of demand were written and served before the due date. A cause of action for the recovery of simple debt accrues only if demands for the repayment have been made and the debtor refuses to pay or upon any other condition agreed upon by the parties, however the due date must have elapsed except there is infraction of performance by the debtor. See ANGYU v. MALAMI [1992] 9 NWLR (PT. 264) 242; ISHOLA v. S.G.B. [1997] 2 SCNJ 1; VICTOR v. UBA [2007] LPELR-9043; EGBE v. ADEFARASIN [1987] 1 NWLR (PT. 47) 1 at 20; L.U.T.H & M.B. v. ADEWALE [1998] 5 NWLR (PT. 550) 406; ALAO v. N.I.D.B. [1999] 9 NWLR (PT. 617) 103; YUSUF v. COOPERATIVE BANK LTD. [1994] 7 NWLR (PT. 359) 676; HUMBE v. A.G. BENUE STATE [2000] 3 NWLR (PT. 649) 419.
The only premeditated circumstance that can warrant the Respondent to demand for the repayment earlier than the due date is conditions precedent contained in the terms and conditions of the offer of the facility vis-a-vis default of performance of obligations incumbent on the Appellants. In paragraph 5.11 of the Respondent brief of argument, Respondent’s counsel contended that Appellants defaulted in their performance and observance of the terms and conditions of the grant of the facility, which gave rise to the letter of demand. It is an uncontroverted principle of law that onus of proof lies on he who assert as denoted in the Latin maxim affirmanti non neganti incumbit probatio places a huge task on the Respondent to prove the act of the Appellants which constitute default of their performance. See ASSOCIATED BUSINESS COMPANY LTD. v. NWACHINEMELU [2014] LPELR-24393; ADEGOKE v. ADIBI [1992] 5 NWLR (PT. 242) 410; HILARY FARMS LTD. v. M.V. MAHTRA [2007] 14 NWLR (PT. 1054) 210; ARE v. ADISA [1967] NMLR 304; NIGERIA MARITIME SERVICES LTD. v. ALHAJI AFOLABI [1978] 2 SC and Section 131 of Evidence Act, 2011.
The task of proving as seen from evidence adduced by the Respondent at the trial and the circumstances which warranted the issuance of letters of demand before the due date has been met; the condition precedent agreed to by the parties in the offer letter which relates to the phrase “event of default” as alleged by the Respondent remain uncontroverted by the Appellants. In respect of this, Respondent has alleged that Appellants defaulted in their monthly payment and this gave rise to the various letters written to the Appellants. This in turn, shifted the evidential burden of proof to the Appellants to disprove the allegation of default of the Respondent. See OKOYE v. NWANKWO [2014] LPELR-23172; ODOM v. PDP [2015] LPELR-24351; IMANA v. ROBINSON [1979] 3 – 4 SC 1.
On the part of the Appellants, they contended that there were arbitrary charges on the account that required reconciliation to ascertain the due indebtedness. The request for reconciliation is seen in the combined reading of Appellants’ letter to Respondent dated 10th August 2005; paragraph 19 of the Appellants’ Statement of Defence and Counter Claim as well as paragraphs 4, 5 and 19(a) – (d) of the 2nd Appellant’s Written Statement on Oath dated 14th June, 2007. I am convinced that from the evidence before the trial court, the Appellants have not proved the alleged arbitrary.
The Appellants ought to have adduced evidence of regular payment on a monthly basis by tendering payment voucher or receipt of payment as well as led evidence of a protest on arbitrary charges. The protest of Appellants about the arbitrary charges and the purported refusal by the Respondent of Appellants’ request for reconciliation are mere allegations by the Appellants that have remained unproven. The reason for the Respondent’s purported premature and ill-timed letters of demand has been proved by the Respondent in their various letters of demand and evidence adduced at trial to be default in monthly payment. See AIB LTD. v. INTEGRATED DIMENSIONAL SYSTEMS LTD. [2012] LPELR-9710; AFRICAN INSURANCE DEVELOPMENT CORPORATION v. NLNG LTD. [2000] 4 NWLR (PT. 653); FORTUNE INTERNATIONAL BANK PLC. v. PEGASUS TRADING OFFICE (Gmbtt) [2004] 1 SCM 21; AIB LTD. v. LEE & TEE INDUSTRIAL LTD. [2003] 7 NWLR (PT. 819) 366; EKA-ETEH v. N.H.D.S. LTD. [1973] 1 ALL NLR 646; BON LTD. v. MURI [1998] 2 NWLR (PT. 536) 153.
From the above, the onus is on the Respondent to prove the allegation of arbitrary charges levied by the Appellants, this the Respondent has done by the frontloaded statement of account. Section 136 of Evidence Act, 2011 provides as follows:
“Burden of proof as to particular fact.
1. The burden of proof as to any particular fact lies on that person who wishes the court to believe in its existence unless it is provided by any law that the proof of that fact shall lie on any particular person, but the burden may in the course of a case be shifted from one side to the other.
2. In considering the amount of evidence necessary to shift the burden of proof regard shall be had by the court to the opportunity of knowledge with respect to the fact to be proved which may be possessed by the parties respectively.” (Underlining mine).
Section 140 states:
“When a fact is especially within the knowledge of any person, the burden of proving that fact is upon him.”
The combined reading of the provisions above entitles the Respondent to prove its case; being the banker in possession of the statement of account, which requirement was met by the Respondent. On the other hand, when the evidential burden shifted to the Appellants, they fail to refute the infraction as to repayment alleged by the Respondent and allegations of irregularities in the statement of account.
On the whole of this analysis, I resolve issue one against the Appellants and in favour of the Respondent.
ISSUE TWO:
Learned counsel to the Appellants contended they never created legal or equitable mortgage over the 2nd Appellant’s property situate at No. 6, Ogo Oluwa Avenue, Iju-Ajuwon, Lagos. He submitted that the learned trial Judge’s decision is totally against the weight of evidence adduced at trial. 2nd Appellant’s contention is that he only gave his Certificate of Occupancy as part and proof of his net worth and no more. He denied ever writing a letter dated 5th August, 2003 (Exhibit P) wherein he pledged the said property as security for the restructured loan of N8.5million. Learned counsel argued further that there was no evidence before the court to show that a legal or equitable mortgage was created. He relied on OGUNDIANI v. ARABA [2001] 38 WRN 177; JACOBSON ENG. LTD. v. UBA LTD. [1993] 3 NWLR (PT. 283) 586; Black’s Law Dictionary, 5th Ed., page 483. Appellants stated vide Section 22 of Land Use Act, 1978 and KADIRI v. OLUSOGA [1956] SCNLR 150; BARCLAYS BANK D.C.O. v. OLOFINTUYI [1961] WNLR 252 that no property, legal or equitable can pass to the Respondent without the Governor’s consent. He argued that the letter dated 20th December, 2004 makes provision for creation of legal mortgage and not equitable mortgage. Appellants contended the transaction between the Respondent and Appellants is evinced in the letters of 12th August, 2003 and 20th December, 2004. He argued the letter of 5th August, 2003 relates to another transaction and that the letter of 5th of August, 2003 was written before the offer letter of 20th December, 2004. In his submission, he stated the Lower Court should have desisted from ordering the sale of the 2nd Appellant’s property. He finally urged the court to hold that the 2nd Appellant did not create an equitable mortgage in favour of the Respondent.
Respondent in his brief of argument contended it was established at the Lower Court vide express term of the grant of credit facilities granted to 1st Appellant Exhibit F (pages 15 to 18 of the record) that the overdraft facility would be secured inter alia by an equitable mortgage over 2nd Appellant’s property described above in this issue. Furthermore, by Exhibit G (pages 41 to 43 of the record), 2nd Appellant agreed to create a legal mortgage over the same property which was never done anyway. Learned counsel argued that the deposit of the C of O is not in dispute. Even by Exhibit N, the 2nd Appellant had shown an intention to pledge his said property as security for the facility prior the making of Exhibit F. He relied on YARO v. AREWA CONSTRUCTION LTD. [2007] 16 NWLR (PT. 1063) 333; F.M.B.N. v. ADESOKAN [2000] 11 NWLR (PT. 677) 108. Respondent’s counsel finally submitted urging this court to hold that the deposit of the 2nd Appellant’s C of O of the property constitutes a creation of legal mortgage and a security for the overdraft facility and that the trial Judge rightly granted the order of sale of the same.
In Reply, Appellants’ counsel argued that the certificate of occupancy deposited by the 2nd Appellant as proof of his net worth was not accompanied by memorandum of deposit or any written statement showing intention to create an equitable mortgage. He argued that the Respondent by paragraph 5.22 of its brief admitted there was no equitable mortgage created by the 2nd Appellant, pursuant to Exhibits F (offer letter dated 12th August, 2003) and G (letter dated 20th December, 2004). Counsel submitted that cases cited by the Respondent do not apply to this case in view of non creation of equitable mortgage by the 2nd Appellant and that Respondent has failed to prove the creation of equitable mortgage. He urged this court to overturn the decision of the Lower Court.
Due to the nature of the issue at stake, it will be appropriate to examine the mode of creating an equitable mortgage under the law. In the Supreme Court’s decision of YARO v. AREWA CONSTRUCTION LTD. (supra), Per Chukwuma-Eneh, J.S.C. at page 39 paras. B-E held thus:
“It is settled that the deposit of title deeds with a bank as security for a loan, creates an equitable mortgage as against legal mortgage which is created by deed transferring the legal estate to the mortgage. See: Ogundiani v. Araba & Anor [1978] 6-7 (Reprint) 42. An important feature of mortgages both legal or equitable is that once a mortgage always a mortgage and nothing but a mortgage.” (Underlining mine).
See also OGUNDIANI v. ARABA (supra); ADJEI v. DABANKA [1930] 1 WACA 63 at 67; KADIRI v. OLUSOGA (supra); FSC & BANK OF NEW SOUTH WALES v. O’CONNOR [1889] 14 AC 273.
Appellants’ counsel in his argument contended that the 2nd Appellant only deposited his Certificate of Occupancy to prove his net worth and nothing more. Paragraph 9 of the Respondent’s Statement of Claim contained averment that 2nd Appellant deposited his original copy of the said Certificate of Occupancy as security. The mere deposit of the C of O to the Respondent (a Bank) suffices to show that it was the intention of the parties that the property which it covers is to be used as security for the facility granted. See USENFOWOKAN v. IDOWU & ANOR. [1975] 4 S.C. (REPRINT) 136.
Appellants know the value, power inherent and implication in the nature of a title document like C of O when it is in question in respect of a transaction between a banker and customer or any transaction whatsoever. Even, the offer letter of 12th August, 2003 clearly stated the property in question as security for the facility granted. Item tagged “Security” on page 16 of the record is as follows:
“Security:
a) Equitable mortgage of property at No. 6, Ogo Oluwa Avenue Iju-Ajuwon, Lagos.
b) …
c) Personal Guarantee of Mr. Boniface Isiguzoro
d) …”
From another document titled “Deed of Guarantee”, binding on both parties to this appeal, it is apparent in paragraphs 14 and 15 thereof that the property under reference is charged as security and nothing more. Paragraphs 14 and 15 states:
“14. Any security now or hereafter held by or for any Guarantor from the Principal in respect of the liability of any Guarantor hereunder shall be held in trust for the Bank and as security for the liability of the Guarantor or Guarantors hereunder and shall forthwith be deposited by the Guarantor or Guarantors concerned with the Bank for that purpose.
15. The Bank shall so long as any monies or liabilities due or incurred by or from the Principal to the Bank remain unpaid or undischarged have a lien or a right of set-off therefore on all money now or hereafter standing to the credit of or assets now or hereafter lodged with or under the control of the Bank by each every Guarantor with the Bank whether on any current or other account.” (Underlining mine).
The combine effect of the above is that there is an agreement by both parties to the transaction in dispute in this appeal, the offer letter provided for Appellants to acknowledge his acceptance or otherwise of the facility, which the Appellants accepted having gone through the terms and conditions contained in the letter, deed of guarantee and other documents. 2nd Appellant read paragraphs above and consented to it. He endorsed his consent by acceding to the condition therein by depositing the C of O. In cases where there is agreement to a contract of this nature, memorandum of deposit is not a mandatory requirement in respect of the deposit. The deposit of the title document itself is incorporated in the terms of the offer. It is trite that parties are bound by their agreement. See JFS INVESTMENT LTD. v. BRAWAL LINE LTD [2010] 18 NWLR (PT. 1225) 495; SABA v. NIGERIAN CIVIL AVIATION TRAINING CENTRE [1991] 5 NWLR (PT. 192) 388; KOIKI v. MAGNUSSON [1999] 8 NWLR (PT. 615) 492.
It is trite that oral evidence cannot be admitted to contradict or alter to or vary a written contract or document unless such evidence falls within any matter that may be proved by such oral evidence by virtue of the provisos thereto. See FORTUNE INTERNATIONAL BANK PLC. v. PEGASUS TRADING OFFICE (GmBh) [2004] 11 WRN 93; ALLI v. IKUSEBIALA [1985] 1 NWLR (PT. 4) 630 at 641; KWUNIFE v. WAYNE (W.A.) LTD. [1989] 5 NWLR (PT. 122) 422; MACAULAY v. NAL MERCHANT BANK LTD. [1990] 4 NWLR (PT. 144) 283; SAVANNAH BANK OF NIGERIA LTD. v. SALAMI [1996] 8 NWLR (PT. 465) 131.
Appellants had ample opportunity to digest the terms and conditions contained in the offer letter, Deed of Guarantee and other documents forming part of the contract for the overdraft facility. The nature of the agreement between the parties herein does not require a mandatory memorandum of deposit of the C of O to be filed separately. Equity looks at the intent rather than at the form. The intention of parties regarding the transaction in dispute clearly indicated the use of the “C of O” of the 2nd Appellant’s property as security for the overdraft facility granted. See FBN v. SONGONUGA [2007] 3 NWLR (PT. 1021) 230; B.O.N. v. AKINTOYE [1999] 12 NWLR (PT. 631) 392.
In USENFOWOKAN v. IDOWU [1975] 4 S.C. (REPRINT) 136, the Supreme Court per Sowemimo, J.S.C. held:
“It is a well established rule of equity that a deposit of a document of title without either writing or word of mouth will create in equity a charge upon the property to which the document relates to the extent of the interest of the person who makes the deposit. In the absence of consent that charge can only be displaced by actual payment of the amount secured.” (Underlining mine).
In this appeal, there is no grain of doubt that the act of which the 2nd Appellant deposited his “C of O” was a clear consent to the contract papers and a step pointing in the creation of an equitable mortgage.
In the light of the above, I resolve issue two in favour of the Respondent.
ISSUE THREE:
Learned Appellants’ counsel contended that the issue of the reconciliation of Appellants’ account with the Respondent is fundamental in view of the fact that the Appellants had raised the issue of arbitrary and wrongful entries in the account. He stated the trial court ought to have acted on the issue of reconciliation and ordered same. He argued that unless there is a reconciliation, the amount outstanding on the facility cannot be determined. Counsel argued that there were evidence before the court that the Respondent did not furnish periodic statement of account. He submitted that in view of the arbitrary charges and absence of reconciliation, Appellants are not indebted to the tune of N12,955,003.02. In Respondent’s further submission, he stated the trial court ought to have granted the Appellants counter claim for a declaration that 2nd Appellant’s property described above was neither charged nor made security for the facility granted to the 1st Appellant. Learned counsel to the Appellant finally urged this court to grant Appellants’ counter claim and concluded that the decision of the Lower Court cannot be allowed to stand for reasons stated in his issues 1-3. Counsel prayed this court for the following reliefs: (a) an Order overturning the entire Judgment given by the trial court in favour of the Respondent; (b) an Order granting the Appellants counter claim.
Respondent in his brief of argument responded on this issue and submitted that the Appellants failed to prove that there were any questionable entries or arbitrary charges in the 1st Appellant’s account and the Appellants never protested the entries in the Appellant’s statement of account. Counsel relied on Sections 131(1) and 133(2) of the Evidence Act, 2011 that no single instance of questionable entry in the said statement of account was cited by the Appellants which could justify their counter claim at the trial in the Lower Court. Learned counsel prayed this court to hold that Appellants request for reconciliation of the 1st Appellant’s account and the allegation of questionable entries without more are afterthought designed to deny and frustrate the Respondent from the recovery of the Appellants’ outstanding debt.
In the reply brief of the Appellants, counsel submitted that the trial judge was not right when he dismissed the Appellants’ counter claim on the ground of Appellants’ request for reconciliation of the account which contained arbitrary charges. He also submitted that the Lower Court should have ordered that the 2nd Appellant’s property was never charged as security for the facility.
The arguments of counsel canvassed under this issue have earlier been considered in the earlier issues resolved before now; therefore this court will not embark on voyage of academic discovery on this again. Appellants’ counter claim contained in paragraph 19 of their Statement of Defence is as follows:
“19. That we rely on the averments in paragraphs 1-18 of this deposition in respect of our counter claim and counter claim against the Claimant as follows:
(a) That by virtue of the offer letter dated 20 December, 2004, the existing overdraft credit facility was restructured to a term loan facility of N8,500,000.00 for a tenor of 10 months i.e. 20th December, 2004 – 20th October, 2005.
(b) That by a letter dated 10th August, 2005, the 1st Defendant disputed the indebtedness of the 1st Defendant and requested for a reconciliation of the account of the 1st Defendant so as to ascertain the true outstanding sum in order to facilitate repayment but the Claimant failed to reconcile the account of the Claimant.
(c) That unless the 1st Defendant’s account is reconciled, the amount outstanding, if any, cannot be determined.
(d) That the Claimant’s letters of demand for payment of the facility were inchoate, ill-timed and speculative.
(e) That the 1st Defendant is not indebted to the Claimant in the said sum of N12,955,003.00 and that the figure is a product of the arbitrary charges imposed on the account by the Claimant.
(f) That the Claimant did not send periodical statement of account to the 1st Defendant in accordance with normal banking practice.
(g) That my property at No. 7 (sic) Ogo Oluwa Avenue, Iju was neither charged or made a security for the facility. Further, the facility was neither secured by a legal mortgage over my property nor did the 1st Defendant create a fixed and floating debenture over its assets in favour of the Claimant.
(h) That there was never any intention or agreement to charge the property as security for the facility and states that the documents were surreptitiously obtained from me by the Claimant.
21. …
22. That we counter claim against the Claimant as follows:
1. An Order compelling the Claimant to reconcile the 1st Defendant’s account with the Claimant.
2. A Declaration that the 2nd Defendant’s property situate at No. 7 (sic) Ogo Oluwa Avenue, Iju, Ajuwon, Lagos was neither charged nor made security for the facility granted the 1st Defendant by the Claimant.
23. …”
I adopt my resolution under issues one and two in the determination of this issue and to hold that Appellants have failed to prove its case in respect of the counter claims in paragraphs 19(a) – (h) of the Appellants’ counter claim; the counter claim is vague, begging for proof.
In respect of paragraph 21(1) of the counter claim, I find that Respondent having produced the statement of account of the 2nd Appellant as one of the documents relied upon at trial has adduced reasons for the justification of the account and amount outstanding to the Appellants as indebtedness of the facility granted to them to wit the failure of the Appellants to prove and object to same when tendered by the Respondent or point out areas of differences at trial. Respondent has shown that the statement of account emanated from its normal cause of business. The admission of this statement of account was never objected by the Appellants and its content was not discredited.
Appellants in relation to their counter claim under paragraph 22(2) of the counter claim in addition failed to prove or tender any document showing that the “C of O” was a mere deposit to prove net worth of the 2nd Appellant as against the contents of the agreement between them and the Respondent. What the Appellants counter claimed here is a declaratory relief that 2nd Appellant’s property described above was never charged as security. It is trite that a declaratory relief will not be granted automatically without adducing convincing evidence; it cannot be determined on admission summarily, the grant of which the court in my view exercised judicially with caution. See ABAYE v. OFILI [1986] 1 S.C. 231; SIJUADE v. OYEWOLE [2012] 11 NWLR (PT. 1311) 310; MOTUNWASE v. SORUGBE [1988] 5 NWLR (PT. 92) 90; AYANRU v. MANDILAS LTS. [2007] 10 NWLR (PT. 1043) 462; OZOWALA v. EZEIHESHIE [1991] 1 NWLR (PT.170) 699.
From the foregoing, I find the totality of the trial Judge’s decision has taken care of the main claims of the Respondent and counter claim of the Appellants.
I resolve issue three against the Appellants and in favour of the Respondent.
On the totality of the analysis herein, I find no merit in this appeal filed by the Appellants; the judgment of Onigbanjo, J. of High Court of Lagos State delivered on 29th April, 2011 is hereby upheld. The appeal is hereby dismissed. I award the cost of N50,000.00.
JOSEPH SHAGBAOR IKYEGH, J.C.A.: I read in advance the judgment prepared by my learned brother, Abimbola Osarugue Obaseki-Adejumo, J.C.A., with which I agree with nothing extra to add.
SIDI DAUDA BAGE, J.C.A.: I have read, before now, the detailed judgment in draft just delivered by my learned brother, ABIMBOLA OSARUGUE OBASEKI-ADEJUMO, JCA. I have equally perused the briefs of argument of the learned counsel to the respective parties vis-a-vis the record of appeal, as a whole.
Hence, having adopted the reasoning and conclusion ably reached in the said judgment, I have no hesitation of whatsoever in coming to the inevitable conclusion, that the instant appeal is grossly unmeritorious, and same is hereby dismissed by me. The judgment of Onigbanjo, J. of the High Court of Lagos State delivered on 29th April, 2011 is hereby upheld.
I award the cost of N50,000.00.
Appearances
F. Fabilola with S. Owotomo (Miss)For Appellant
AND
Ayodele Akintunde with A. Alebiosu Esq, H. Karibor (Miss) and W. Olajide (Miss)For Respondent
