OLORO JAY JAY v. SKYE BANK PLC
(2016)LCN/8368(CA)
In The Court of Appeal of Nigeria
On Tuesday, the 22nd day of March, 2016
CA/AK/145/2013
RATIO
CONTRACT OF GUARANTEE: DEFINITION OF GRANRANTEE
According to the Black’s Law Dictionary, Eight Edition, a Guarantee means the following:
“1. To assume a suretyship obligations; to agree to answer for a debt or default.
2. To promise that a contract or legal act will be duly carried out.
3. To give security to.”
Further definition of Guarantee was given by the Apex Court in the case of Chami vs. U.B.A. Plc (2013) 4 BFLR 85 SC (page 20 – 25) where it was defined:
“As a written undertaking made by one person to another to be responsible to that other if a third person fails to perform a certain duty e.g. payment of debt. Thus, where a borrower (i.e. the third party) fails to pay an outstanding debt, the guarantor (as surety as he is sometimes called) becomes liable for the said debt.” PER. SOTONYE DENTON-WEST, J.C.A.
CONTRACT OF GUARANTEE: CONTRACT OF GUARANTEE DISTINGUISHED FROM PRINCIPAL’S DEBTOR’S CONTRACT
Secondly, as earlier stated, in the case of Chami vs. U.B.A. Plc (Supra), a contract of guarantee is a distinct and separate contract from the principal’s debtor’s contract and therefore the contract of Guarantee so created can be enforced against the guarantor directly or independently without the necessity of joining the principal debtor in the proceedings to enforce same. Therefore, the disposition by the Appellant that the release of the APG after the expiration date stated in the Letter of Guarantee automatically discharges the Respondent of any liability/obligations to the Employer and leaves behind the Employer and the Guaranteed is definitely a flawed argument, like a bird with a broken wings, it definitely can’t fly in this circumstance. See also Olujitan vs. Oshatoba (1992) 5 NWLR (Pt.241) 326 @ 329; Esso Pet. C. Ltd. vs. Alastonbridge Properties (1975) WCR 1474. PER. SOTONYE DENTON-WEST, J.C.A.
CONTRACT OF GUARANTEE: WHETHER A POST DENIAL OR LACK OF UNDERSTANDING OF AN EXECUTED CONTRACT CAN VITIATE THE CONTRACT
Firstly, it is settled law that the parties are bound by contents of any written agreement duly executed by them, therefore, a post denial of an already executed agreement or lack of understanding of the content of wordings of Exhibit D, especially in this circumstance would not excuse the Appellant, to do so, would be rewriting a very fundamental principle of contract. See Alhaji Jimoh Ajagbe vs. Layiwola Idowu (2011) LPELR -279 (SC), J. E. Oshevire Ltd. vs. Tripoli Motors (1997) 5 NWLR (Pt. 503) 1, Benjamin Ukelere vs. First Bank of Nig. (2011) LPELR – 3869 (CA). PER. SOTONYE DENTON-WEST, J.C.A.
THE DOCTRINE OF ESTOPPEL BY CONDUCT: IN WHAT CIRCUMSTANCE IS THE DOCTRINE OF ESTOPPEL BY CONDUCT ABSORBED INTO THE COURT’S JURISPRUDENCE
In the case of Attorney-General Rivers State vs. Attorney-General, Akwa Ibom State & Anor (2011) 8 NWLR 31, the Court held that the doctrine of estoppel by conduct has been absorbed into our jurisprudence that if a person has, by his declaration, act of omission, intentionally caused or permitted another person to believe a thing to be true and to act upon such belief, neither he nor his representative in interest shall be allowed in any proceedings between himself and such person’s representative in interest, to deny the truth of that thing. In other words, a person cannot approbate and reprobate at the same time.
See Ude vs. Nwara (1993) 2 NWLR (pt. 278) 638, Yusuff vs. Dada (1990) NWLR (pt. 146) 657. PER. SOTONYE DENTON-WEST, J.C.A.
JUSTICES
SOTONYE DENTON-WEST Justice of The Court of Appeal of Nigeria
MOHAMMED AMBI-USI DANJUMA Justice of The Court of Appeal of Nigeria
JAMES SHEHU ABIRIYI Justice of The Court of Appeal of Nigeria
Between
OLORO JAY JAY Appellant(s)
AND
SKYE BANK PLC Respondent(s)
SOTONYE DENTON-WEST, J.C.A. (Delivering the Leading Judgment): This is an appeal against the judgment of the Honourable Justice I. A. Adegbenro of the Ondo State High Court of Justice, Akure Division delivered on the 9th day of May, 2013, dismissing the entire claim of the Appellant.
BACKGROUND FACTS OF THE CASE
The Appellant, Oloro Jay Jay ‘aka God’, the summary communications was awarded a contract supply and installation of mass communication studio equipment by Rufus Giwa Polytechnic, Owo. The amount to be paid as mobilization fee for execution of the contract was 40% of the total contract sum, which amounted to N4,930,560.00 (less other charges). While the remaining 60% would only be paid when the contract was fully completed. One of the condition for the payment of the 40% mobilization sum was the presentation of an Advance Payment Guarantee (APG) from a Bank, therefore in order to meet the demand the Appellant approached the Respondent bank, culminating into the issuance of the APG to Rufus Giwa Polytechnic, Owo, guaranteeing the 40% of the total amount sum, the delivery of same at the Polytechnic led to the issuance of a
crossed cheque which the Appellant paid into his account with the Respondent on the 23rd of November, 2009, after the period stipulated by the AGP, 16-10-2009 – 15/11/2009.
When the Appellant applied for the release of the money from the Respondent, he was asked to apply for it as a loan which the Appellant refused on the ground that the APG having expired by the time he deposited the cheque into his account on 23/11/2009 which matured on the 26/11/2009 and with the provision of the Counter Indemnity (Exhibit C), he ought to have been allowed access to the funds. It is based on these facts that the Appellant sued the Respondent for breach of banker/customer duties and responsibilities.
The trial Judge after the hearing of both parties entered judgment in favour of the Respondent. The dissatisfaction of the Appellant brought about this appeal.
At the hearing on the 25/1/16, F. OMOTOSHO (Esq.), Counsel for the Appellant moved their application dated and filed 20th October 2015 praying for an enlargement of time to file and serve Appellants’ Reply Brief and to deem same. Appearance with the counsel were V. ADEGOKE (Esq.), J. R. OJO (Esq.) L
D. HASSAN (Esq.) and A. ADEBIYI (Esq.).
GENEVIEVE OKOYE (Esq.), counsel for the Respondent did not oppose the application and therefore the Court granted the application therefore deeming the Appellant’s Reply Brief as being properly filed and served that day, 25th January, 2016.
Thereafter, F. OMOTOSHO (Esq.), counsel for the Appellant adopted the Appellant’s Brief dated 12/12/2013 and filed 18/12/2013 and same deemed properly filed and served on 28th May 2015. In addition to this adoption was the Appellant’s Reply Brief dated 20/10/2015 and deemed properly filed and served on 25/01/16. This honourable Court was hereby urged to allow the appeal and set aside the judgment of the lower Court.
In opposition, G. OKOYE (Esq.), counsel for the Respondent adopted the Respondent’s Brief of Argument dated and filed on 1/06/2015 and urged this honourable Court to uphold the trial Court’s decision and dismiss the appeal with substantial costs.
The Appellant, as contained in the Brief of Argument formulated two (2) issues for the determination of this appeal:
(1) Whether the lower Court was right in holding that Respondent was right in refusing
the Appellant access to the mobilization fee of N4,930,560.00 after the expiration of the Advance Payment Guarantee and consequently returning same to Rufus Giwa Polytechnic.
(2) Whether it was necessary for the Respondent to obtain the mandate of the Appellant before moving out of the Appellant’s account the mobilization fee.
On the part of the Respondent:
(1) Whether the lower Court was not right in holding that the Respondent was right in refusing the Appellant access to the mobilization fee of N4,930,560.00 pursuant to the terms of agreement between the parties.
(2) Whether given the circumstances of this case the Respondent was not right in transferring the mobilization fee into a separate account.
The two issues as donated by the Appellant would in the view of this Court adequately determine the issues arising in this appeal.
ISSUE ONE (1)
Whether the lower Court was right in holding that the Respondent was right in refusing the Appellant access to the mobilization fee of N4,930,560.00 after the expiration of the Advance Payment Guarantee and consequently returning same to Rufus Giwa Polytechnic.
Counsel for the
Appellant submitted that the finding by the lower Court at page 81 of the record justifying the return of the mobilization money to the Polytechnic as a result of the failure of the contractor to perform was a faulty position held by the lower Court. Counsel argued that from the totality of adduced evidence, it was not in dispute that the payment and release of the cheque for mobilization by Rufus Giwa Polytechnic was made after the expiration of the Advance Payment Guarantee and if indeed the Polytechnic did not want to go further on the execution of the contract, it would have withheld the cheque for the mobilization fee given to the Appellant or in the alternative insisted that the expiry period be extended before it would release the cheque.
Counsel submitted that the non-release of the cheque or blocking of access to funds deposited into the account of the Respondent on 23/11/09 constitutes a breach of Banker/Customer relationship.
Learned counsel for the Appellant submitted that the trial Court’s further justification of refusal of the Respondent to allow the Appellant access to the mobilization fee by relying on the proviso as contained in
paragraph 2 of the APG (Exhibit D) was erroneous. Paragraph 2 of the APG (Exhibit d) provides thus:
“We Skye Bank Plc (hereinafter referred to as the Guarantor”) hereby give our irrevocable guarantee to pay to Employee (sic) the amount of N4,430,560.00 (four million, four hundred and thirty thousand, five hundred and sixty Naira Only) being the amount of advance payment representing 40% of the total contract price or any part thereof on its first demand on us at this office in writing, stating that the contractor has failed to utilize the advance payment for the purpose of the contract.”
Counsel argued that?the Respondent detoured from earlier agreement, relying on the case of Niger Dams vs. Lajide (1973) 5 SC 207@ 222 where the Supreme Court held that though contract must be strictly construed in accordance with the well known rules of construction, however such construction cannot be a ground for departing from the terms which had been earlier agreed by both parties to the contract.
?Learned counsel for the Appellant in reference to the earlier referred to paragraph 2 of Exhibit D (APG) submitted that learned trial Judge had placed heavy reliance
on the portion “to utilize the advance payment for the purpose of the contract” and neglected the other portion “where it is impossible to perform or execute the contract”. Counsel argued how the Appellant who was denied access to the fund would have been able to utilize the mobilization sum for the purpose of the contract and therefore denounced the lower Court’s reliance on the earlier cited paragraph 2 of the APG.
On the part of the Respondent on this issue, counsel for the Respondent submitted that the learned counsel’s submission?were misconceived. Counsel stated that the trial Court’s decision is to the effect that the Respondent was justified to refuse the Appellant access to the mobilization fee, for having failed/refused to comply with the terms in Exhibit K as agreed by parties.
Counsel further submitted that the lower Court had also held that the Respondent was equally justified and obligated to return the mobilization fee to the Polytechnic upon demand of same for failure of the Appellant to perform the contract. Therefore, the counsel for the Respondent, faulted the submission of the Appellant’s counsel that the situation had not
arisen for failure of performance of the contract by the Appellant to justify the refusal by the Respondent Bank to release the mobilization fee is alien and not the basis for the trial Court’s decision.
?Counsel for the Respondent in clarifying this position, reproduced the relevant parts (Exhibit K) which contained the conditions precedent and other condition for the issuance of the APG and for the utilization of the APG sum after it had been received by the Respondent. Counsel submitted that, assuming for the sake of argument that the Appellant satisfied the conditions precedent for the issuance of the APG and on the strength of that issued the APG, conversely it cannot be said that the Appellant satisfied the conditions for the utilization of the APG sum. Arguing further, counsel submitted that the question is whether the Appellant actually applied for separate credit facility in its bid to utilize the APG sum and whether the Respondent refused such application? And from the pleading and Appellants Statement on Oath during his examination-in-chief and cross-examination; he did not apply which was a deviation from their earlier agreement (Exhibit K), to
apply for the APG sum as a separate credit facility. Counsel contended that parties are bound by the written agreement executed by them and in the event of disagreement; recourse can only be made to the said written agreement that exists between them” He referred to Living Faith Church, Otukpo-Otukpo vs. Adole (2005) ALL FWLR (Pt.276) 784 @ 798, Union Bank of Nigeria Plc vs. Ajabule (2012) ALL FWLR (Pt. 611) 1413 @ 1438.
In response to the Appellant’s argument in paragraphs 4.1 to 4.6 of his brief that the Polytechnic still wanted the contract executed and that necessitated the Polytechnic to release the mobilization fee even after the purported expiration of the APG. Counsel for the Respondent implored this Honourable Court to note that it was that mobilization fee that the Respondent undertook via Exhibit D to refund to the Polytechnic in the event that the Appellant failed to utilize the advance payment for the purpose of the contract.
Counsel urged this Court to note that the Appellant after collecting the cheque from the Polytechnic and payment of same into his account with Respondent had transferred an obligation of outstanding responsibility
to comply with the guaranty the Respondent had given to the Polytechnic. Counsel queried that if the Appellant had known the money was his; as claimed; why did he not ask for an open cheque from the Polytechnic? Why did he not take the cheque to another bank in the alternative? Counsel queried! Counsel therefore contended that there was no basis for the Appellant to so claim that the APG had expired and therefore the APG sum had crystallised into his personal money for which he was not liable to comply with the terms in Exhibit K.
Counsel remarked that the only plausible deduction to be made in the circumstance was that the Polytechnic issued the Appellant a cross-cheque in order to secure the money and ensure its payment into the Respondent bank and the Appellant was compelled to follow suit by paying the money into his bank account with the Respondent in full recognition and knowledge of the existing contractual and legal obligation that was still subsisting.
Relying on the case of Agbareh vs. Mimra (2008) FWLR (Pt. 409) 559 Para B-D, counsel for the Respondent maintained that an agreement was only binding on the parties thereto and not on third
parties and therefore should any dispute arise from such agreement on any particular point, recourse should be given to the written agreement executed by the parties and since the Appellant was not privy to the agreement he thereof cannot enforce on it. Also referred to was the cases of Basinco Motors Ltd. vs. Woermann-Line (2009) FWLR (Pt.485) 1634 @ 1656 para B-D; W.D.N. Ltd. vs. Oyibo (1992) 5 NWLR (Pt.239) 77 @ 100 – 101 CA.
The Appellant’s response to the Respondent’s brief as contained in the Appellant’s Reply Brief was that the Respondent was being diversionary by tactically trying to sway the Court’s attention from the fact that the Employer (the Polytechnic) had smothered the contract ab initio when the advance sum was paid to the Appellant after the expiration of the APG thereby extinguishing any obligation whatsoever on the Respondent. Counsel therefore faulted the Respondent’s placing so much weather on the Appellant’s refusal to apply for a separate loan facility which in the counsel’s language would draw the Appellant into “a contrived contractual contraption which the Appellant is not in any way bound to honour as doing so would amount to
breathing life to a contract which the employer itself has smothered from the onset.
Counsel for the Appellant further submitted that contrary to the earlier submission of the Respondent, a contract of Guarantee involved at least 3 parties and according to Black’s Law Dictionary, 7th Edition there are “A Promisor, a Creditor and a Debtor”.
Counsel cited the case of Lingo Nig. Ltd. vs. Nwodo (2004) ALL FWLR (pt.209) 1094 @ 1106 G – D where the Court of Appeal defined a bank guarantee as:
“a security or undertaking given a bank in respect of a transaction in which the bank shall be bound to fulfill its undertaking on demand. ”
Also
“It is a promise by the bank to answer for the payment of some debts, or the performance of a duty in case of the failure of another who is liable in the first instance.”
Counsel for the Appellant thereby submitted that from the foregoing, the Appellant was privy to the contract of Guarantee and could thereby sue on the APG having been well covered and protected by the Counter Guarantee Bond (Exhibit C) procured in consideration of the premium paid by the Appellant in the event of any default by the
Appellant.
RESOLUTION OF ISSUE 1
Whether the lower Court was right in holding that the (sic) Respondent was right in refusing the Appellant access to the mobilization fee of N4,930,560.00 after the expiration of the Advance Payment Guarantee and consequently returning same to Rufus Giwa Polytechnic.
It was the Appellant’s contention that by the time he (Appellant) had deposited the cheque into his account on 23/11/2009 which matured on 26/11/2009 and with the provision of the Counter Indemnity (Exhibit C), he ought to have been allowed access to the funds since according to him, the APG had expired. However, the lower Court was totally not in tandem with the reasoning of the Appellant, the lower Court held in its reasoning that the fact of the 30 days guarantee had expired did not change nor extinguish the nature of the Advanced Payment Guarantee into an ordinary loan to be retained by the Appellant for his own use as he pleases. In furtherance of the lower Court’s reasoning, it stated further that where it is not possible to perform as in the instant case, the guarantee automatically ceases to have effect after 30 days from the date of its
execution and the whole amount of N4,930,560.00 shall be returned to its owner (the Polytechnic) and there was no provision or clause or even condition precedent that allow the Claimant to retain the money in his account as his own (see page 73 of record).
May I expressly say here that the lower Court’s resolution accords closely my own reasoning.
It would have amounted to a breach of the contract of guarantee between the guarantor (the Respondent Bank) and the Creditor (The Polytechnic) which may give rise to liability of the Guarantor in the event that the principal debtor (Appellant) fails to repay the loan and from the reasoning of the Appellant, whom glaringly views the money as his.
According to the Black’s Law Dictionary, Eight Edition, a Guarantee means the following:
“1. To assume a suretyship obligations; to agree to answer for a debt or default.
2. To promise that a contract or legal act will be duly carried out.
3. To give security to.”
Further definition of Guarantee was given by the Apex Court in the case of Chami vs. U.B.A. Plc (2013) 4 BFLR 85 SC (page 20 – 25) where it was defined:
“As a written
undertaking made by one person to another to be responsible to that other if a third person fails to perform a certain duty e.g. payment of debt. Thus, where a borrower (i.e. the third party) fails to pay an outstanding debt, the guarantor (as surety as he is sometimes called) becomes liable for the said debt.”
In the instant case, the Respondent proved by Exhibit D the existence of the contract of guarantee executed by the Appellant to secure the debt of the Appellant and the execution of the contract between the Appellant and the Polytechnic.
It should be noted that by the coming into existence of Exhibit d, a distinct and separate contract from the principal debtor (Appellant) is created by the guarantor and the creditor. See Olujitian vs. Oshatoba (1992) 5 NWLR (pt.24) 326 @ 329; Ekerebe vs. Efeizorma II (1993) 7 NWLR (pt. 588 @ 601.
The import of this newly created distinct and separate contract is that the contract of guarantee can be enforced against the guarantor (Respondent) directly or independently without the necessity of joining the principal debtor (the Appellant) in the proceedings to enforce same. See Chitty on Contract, 24 Ed.
Vil. 2 paragraph 4831, where the law is stated thus:
“…Prima facie the surety may be proceeded against without demand against him and without first proceeding against the principal debtor.”
See also Moschi vs. Lep Air Services Ltd. (1973) A.C. 331 @ 348; Esso Pet. C. Ltd. vs Alaston Bridge properties (1975) NWLR 1474.
The Appellant has made so much hue and cry that the obligation of the guarantor extinguishes at the default of the employer (Polytechnic) who issued the cheque to the Appellant after the expiration of the contract and therefore was not obliged to have returned the 40% sum of the Advance Payment Guarantee. Nothing could be further from the truth, in my honest estimation of this whole event, the existence of Exhibit K, i.e. the CONDITION PRECEDENT and a prelude to the existence of Exhibit D, is to the effect that the obligor (the Appellant) amongst so many other obligations was to draw out a loan from the Bank (Respondent) in order to be granted access to the Advance Payment Guarantee after the grant by the employer. It is noteworthy to point out that this Exhibit K was admitted in evidence without no objection whatsoever, see
page 26 of records. For the benefit of justice, may I quickly reproduce the relevant part of Exhibit ‘K’ as follows:
“CONDITIONS PRECEDENT
1. Obligor to execute counter indemnity and tripartite domiciliation of payment in favour of Skye Bank Plc in respect of the Advance Payment Guarantee.
2. Execution of facility offer letter and submission of company’s Board Resolution accepting the terms and conditions of the offer.
3. Execution of Skye Bank Guarantee Issuance Agreement.
4. The Advance Payment Guarantees shall become effective only on receipt of the advance payment in the obligors account.
5. Execution of cash collateralised/hypothecation agreement in respect of the proceeds of the advance payment.”
“OTHER CONDITIONS
“1. The advance payment on receipt by the Bank shall provide for the Advance Payment Guarantee and shall therefore not be available for drawing.
2. In the event that the company required financing from the Bank to execute the contract, this shall be by means of a separate credit facility which shall be secured by a collateral agreement to the Bank”
“EXPENSES
“All legal statutory and regulatory
expenses that may arise in the execution of this facility or in enforcing the terms and conditions in respect of same shall be for account of the obligor.”
Now while the Appellant is not disputing the consensus ad idem on this Exhibit K, after all the Appellant neither objected to its admissibility nor disproved that Exhibit K led to the birthing of Exhibit L (Personal Guarantee), Exhibit L1 (Cash Collateral Agreement) and Exhibit L2 (Board Resolutions of the Appellant’s Board Resolutions) accepting the offer, terms and conditions as contained in Exhibit K, the Appellant is vainly attempting to shrug off the relevance of these material facts either by claiming not to be literate enough to have understood the contents of the agreements seemingly to have been mutually reached by the existence of Exhibits D, K, L, L1 and L2 (see pages 23 of record), all being executed by the Appellant or the unpersuasive argument that the Respondent’s obligation as contained in Exhibit d, paragraph 6 had been extinguished by the release of the cheque (APG) after the expiration of the Letter of Guarantee (duration was from 16/10/09 – 15/10/09) i.e. three days after, by
the Employer (the Polytechnic), an act, which in the estimation of the Appellant, ought to discharge the Respondent from the tripartite liability and leave behind the Appellant and the Employer (the Polytechnic), and of course makes the money his!
The above is literally the sour litany of the Appellant’s posit and to which I dare say leaves unsavory taste in the bud!
Firstly, it is settled law that the parties are bound by contents of any written agreement duly executed by them, therefore, a post denial of an already executed agreement or lack of understanding of the content of wordings of Exhibit D, especially in this circumstance would not excuse the Appellant, to do so, would be rewriting a very fundamental principle of contract. See Alhaji Jimoh Ajagbe vs. Layiwola Idowu (2011) LPELR -279 (SC), J. E. Oshevire Ltd. vs. Tripoli Motors (1997) 5 NWLR (Pt. 503) 1, Benjamin Ukelere vs. First Bank of Nig. (2011) LPELR – 3869 (CA).
Secondly, as earlier stated, in the case of Chami vs. U.B.A. Plc (Supra), a contract of guarantee is a distinct and separate contract from the principal’s debtor’s contract and therefore the contract of Guarantee so
created can be enforced against the guarantor directly or independently without the necessity of joining the principal debtor in the proceedings to enforce same. Therefore, the disposition by the Appellant that the release of the APG after the expiration date stated in the Letter of Guarantee automatically discharges the Respondent of any liability/obligations to the Employer and leaves behind the Employer and the Guaranteed is definitely a flawed argument, like a bird with a broken wings, it definitely can’t fly in this circumstance. See also Olujitan vs. Oshatoba (1992) 5 NWLR (Pt.241) 326 @ 329; Esso Pet. C. Ltd. vs. Alastonbridge Properties (1975) WCR 1474.
In essence, contrary to the presentation of the Appellant, the right of an action against a guarantor arises on a default by the principal debtor and not on a finding of liability against such a debtor. The mere fact that the obligations of the guarantor arises as soon as the principal has defaulted in its obligations to the creditor does not mean that the creditor has to demand the payment from the principal or from the surety, or give notice to the surety, before the creditor can proceed against
the surety. That was the reason why the Employer (Polytechnic) issued a crossed cheque into the Respondent’s bank and also the reason why the Employer (Rufus Giwa Polytechnic, Owo) demanded for the refund of the APG directly from the Respondent as evidenced by Exhibit N.
See also African Insurance Development Corporation vs. Nigeria LNG Limited (2012) 1 BFLR 339 SC.
?It was therefore clearly in order for the bank (Respondent) to have demanded that the Appellant fulfill his own part of his obligation by acting in consonance with the already executed agreed terms and conditions for accessing the said fund. How could such sum of money be considered ‘free money’ i.e. the Appellant’s money in view of the expiration of the one month stated Guarantee? Even if it be assumed that the duration of the APG has been extinguished, it only would have extinguished the guarantee period but it could not have extinguished the liability and obligations on it as this had become activated by the deposit/payment of the crossed cheque into the Respondent’s bank. And if indeed, the Employer desired to extinguish the contract of Guaranty that existed between the two parties
(Polytechnic and the Bank) it would not have issued but the same said sum of the APG by way of a crossed cheque; a crossed cheque being a cheque that has been marked to specify an instruction about the way it is to be redeemed and the most significant of such instructions is the specification that it must be deposited directly into an account with a bank (in this case the Respondent’s Bank) and not immediately cashed by a bank over the counter. See UBA Plc. Vs. Ekene Dili Chukwu (Nig.) Ltd. (1999) 12 NWLR (pt 629).
All these goes to show that the money was not the Appellant’s, and was never meant to be for him to do as he pleased as he had claimed and would have been in the normal sense of a Banker/Customer relationship where the banker would have been under an obligation to honour the request for withdrawal. I dare say it is a laughable miscalculation by the Appellant to have quickly assumed the money was his and this assumed cesspool of self-deceit utterly led to the self defeat of the main goal – the contract itself.
On this issue, I am most inclined to agree with the holding of the lower Court’s reasoning that it was right for the Respondent to
have refused the Appellant access to the Advance Payment Guarantee sum notwithstanding the said expiration of the duration of the APG, after all, it was the initial contract of Guarantee (Exhibit D) and (Exhibit K) that kicked started the release of the Advance Payment Guarantee sum in the first place. I therefore resolve this Issue 1 in favour of the Respondent and against the Appellant.
ISSUE 2
Whether it was necessary for the Respondent to obtain the mandate of the Appellant before moving out, in and out (sic) of the Appellant account the mobilization fee.
It was the submission of the counsel for the Appellant that the lower Court’s decision that the Respondent had the right to transfer the mobilization fees deposited to the Appellant’s account was reached by the heavy reliance placed on the terms and conditions on Exhibit K alone without considering other documents such as Exhibit D. Counsel argued that where a contract involves many documents, all documents in a contract must be read together, rather than consider any particular letter in isolation. He referred to the case of Constain W. A. Plc vs. Savol W. A. Ltd. (2003) ALL FWLR (pt.
251) 323 @ 337C. It was the counsel’s submission that a consideration of Exhibit D along with other exhibits would have readily shown that the life span of the APG which is the fundamental term of the contract had expired, the case of BNCI vs. Integrated Gas (Nig.) Ltd. (2005) 4 NWLR (pt. 916) 617 @ 622. Counsel argued that time was the essence of the contract of APG and by the time the mobilization fee was paid, the 30 days period of the APG for the duration date of the execution had expired and a cursory look at Exhibits P – P1 (Statement of Account) shows that on 23/11/2009; the mobilization fee paid in by the Appellant was credited (sic) with certain deductions on 3/12/2009 and 8/12/2009 and it later credited and debited on same date leaving only the amount of N4,293,570.95. He submitted that all these activities on the said money happened way after the expiry of the APG and yet the Respondent refused the Appellant access to the use of the mobilization fee thereby denying the performance of contract by failure of consideration. Citing the case of Okupe vs. Laja (1961) 1 ALL N.L.P. 18 @ 82 where the Supreme Court held that where there has been total failure
of consideration, the Plaintiff is entitled to a refund of his money from the Defendant, it was the counsel’s contention that the condition governing the management of the mobilization fee will only be applicable within the currency of the 30 days duration period of the APG and not after, therefore the Appellant ought to be entitled to a refund of the deducted sum of N21,141.75.
On the part of the counsel for the Respondent, they sought for their argument as contained under Issue 1(one) to be mainly adopted under this issue.
Also in addition, learned counsel for the Respondent while in agreement with the submission of the Appellant’s counsel on the need to obtain the mandate of the Appellant before transferring from the Appellant’s account from the mobilization fee, counsel contended that the said consent and mandate of the Appellant had already been obtained by the execution of Exhibit K in which one of the terms and conditions in the said Exhibit K (hypothecated) was that the APG sum would be transferred into a separate account. This Court was urged to note that the Appellant is not contesting the right of the Respondent to move money and charge
fees as agreed in Exhibit K but are rather contesting that since Exhibit K had expired, the right that initially gave authority in favour of the Respondent had also expired with it. The counsel for the Respondent submitted that the Appellant’s submissions under Issue 2 that the APG had expired is entirely baseless since a party cannot approbate and reprobate at the same time, the Appellant could not be seeking to rely on a document (Exhibit D) which he had earlier sought to totally discountenance earlier. Learned counsel for the Respondent argued that the Appellant having suo motu paid in the crossed cheque after the purported expiry of the APG raises the presumption by conduct that he viewed the APG as subsisting since it was what prompted the Polytechnic to release the money and therefore Exhibit K remained a subsisting contract between the Appellant and the Respondent. Counsel for the Respondent remarked that the Appellant as a claimant had conveyed to the lower Court his compliance with the conditions precedent to accessing the mobilization fee and therefore should be estopped from claiming that the APG had expired. He referred to the cases of Ude vs.
Osuji (1998) 10 SCNJ 75 P.82 and Chukwuma vs. Ifeloye (2009) ALL FWLR (pt. 460) 629 @ 652.
Counsel submitted that parties are bound by the terms of their agreement and that since the issue of charges and transfer of the APG into a separate account was provided for in Exhibit K, the Respondent was right to have transferred the money as it did and therefore he urged this Court to answer the issue in the affirmative.
In the Appellant’s Reply, it was submitted that the crux of the matter was not a question of waiver of the 30 days period of the APG but the entire APG and whatever clause contained therein in Exhibit D or Exhibit K and thereby contended that Estoppel by conduct was not applicable in this case, nor the case of Ude vs. Osuji (1998) 10 SCJ 75 @ 82 referred to in the Respondent’s Brief of Argument.
?Counsel for the Appellant further reiterated that the Respondent had no authority to move funds from the Appellant’s account without authorization from the Appellant, he submitted that the APG agreement (Exhibit D) clearly stated that upon the happening of any failure or default on the part of the employer (i.e. Polytechnic); the bank’s
guarantee is completely discharged and that the employer’s failure to provide the funds after the expiration of the APG agreement (Exhibit D) meant that the terms and conditions of Exhibit D and K was permanently extinguished.
RESOLUTTON OF ISSUE TWO (2)
The Appellant had indeed made so much weather that the lower Court had relied solely on Exhibit K to the exclusion of Exhibit D in arriving at its decision. It was the contention of the Appellant that if Exhibit D had been taken into account, it would have effectively shown that the life span of the APG had expired and there was no longer the need to apply for bank loan again since the money had become his.
?Nothing could be far from the truth, this is because the Appellant had in his testimony acknowledged that Exhibit K was a condition precedent to the release of the Advanced Payment Guaranty by the Polytechnic and the Terms and Conditions governed both the pre-APG and post APG release stages of the Contract of Guarantee (Exhibit D) to which the Appellant consented to (see pages 23 – 24 of the record). According to the Appellant’s testimony on page 24 of the record reproduced thus;
“… All I did was to direct the Defendant address (sic) the APG to Rufus Giwa Polytechnic, Owo, but I personally collected the APG from the defendant and dispatched it to Rufus Giwa Polytechnic, Owo. The money covered by the APG belonged to Rufus Giwa polytechnic, Owo. The money was to be paid into the company account with the Defendant bank, and not any other bank at all. All this particular cheque was a crossed cheque.
On the expiry of the APG on the 15th day of November 2009, there is no longer remained (sic) any reason(s) for me to apply for bank loan again. So I did not apply for any loan again.”
From the above reproduced, it could be gleaned that the Appellant had fully complied with the executed agreements encapsulated in Exhibit D and Exhibit K and all parties were working in unison to the set goals mutually consented and clearly understood by all but not until the duration of the APG expired that the Appellant perhaps ignorantly began to assume that the belated default in payment by the Employer even after release of the said mobilization fee translated into the death of the liability and obligations of the Respondent and thereby the contract of
Guarantee, in a nutshell the money was not his to so do as he pleases and therefore he reneged on the initial agreement as contained in Exhibit D and Exhibit K.
Could it then be fair for the Appellant to turn around and accuse the Respondent bank of having denied the Appellant the performance of the said contract? I answer in the negative. It is instructive to note that paragraph 2 of Exhibit K goes thus:
“In the event that the company requires financing from the bank to execute the contract, this shall be by means of a separate credit facility which shall be secured by a collateral agreement acceptable to the bank.”
The Respondent bank was therefore reasonably acting in consonance with the clearly stated and agreed terms in Exhibit K by the refusal of the bank to allow free access to the mobilization fee which undisputable was made possible by the role played by the Respondent by entering into a contract of Guarantee on behalf of the Appellant with the Employer (Rufus Giwa Polytechnic, Owo).
?Therefore, it was only reasonable enough that after the Respondent bank had secured the Appellant, it had to invoke paragraph 2 of Exhibit K to
secure itself as soon as Exhibit D was activated by the conduct of the Appellant via payment of the crossed cheque into the Appellant’s account of the Respondent bank. This was why the counsel for the Respondent argued in his Brief of Argument on page 11 that the Appellant having executed and complied with the conditions precedent as contained in Exhibit K, he was thereby estopped from claiming that he was to be exempted from full compliance merely on the assumption that the APG had expired, when he had by his conduct implied the opposite.
In the case of Attorney-General Rivers State vs. Attorney-General, Akwa Ibom State & Anor (2011) 8 NWLR 31, the Court held that the doctrine of estoppel by conduct has been absorbed into our jurisprudence that if a person has, by his declaration, act of omission, intentionally caused or permitted another person to believe a thing to be true and to act upon such belief, neither he nor his representative in interest shall be allowed in any proceedings between himself and such person’s representative in interest, to deny the truth of that thing. In other words, a person cannot approbate and reprobate at the same time.
See Ude vs. Nwara (1993) 2 NWLR (pt. 278) 638, Yusuff vs. Dada (1990) NWLR (pt. 146) 657.
The Appellant had significantly declared by Exhibit K and Exhibit D that there was mutually acceptable Terms of Agreement between them, and by conduct (the payment of the crossed cheque (APG sum) into the Respondent’s bank that the contract of Guarantee was still subsisting, thereby for reneging to draw out a loan agreement as earlier agreed, the Respondent bank could not be held to have breached in anyway. See also Afribank Nigeria Plc. Vs. Barrister Sunny A. Anuegbunwa (2011) LPELR-3635 (CA), Bureau of Public Enterprises vs. Reinsurance Acquisition Group Ltd. & Ors. (2008) LPELR – 8560 (CA), S. A. Akinola & Anor vs. Wema Bank Plc. (2014) 24132 (CA).
Accordingly, Issue 2 is resolved in favour of the Respondent and against the Appellant.
I am satisfied that the Respondent bank had acted in good faith in its dealings with the Appellant, it is instructive to note that the Respondent bank returned the said APG money on demand from the creditor (Rufus Giwa Polytechnic, Owo). Whatever deductions that were made were necessary and traditional charges
which forms part of the Terms of Agreements mutually consented to and evidenced by Exhibit K and Exhibit D.
May I quickly add, that if indeed the Appellant as he claims did not fully understand the contents of the agreement he executed then he may have unwittingly inflicted an injury to himself but if indeed the truth be told, would it have been equitable, just, fair and in good conscience for the Appellant to at the eleventh hour renege from the agreement earlier consented to, go away with the proceeds (the APG sum) of the agreement and expose its benefactor to unnecessary liabilities? To this varied question comes a resounding NO!
?I therefore without any hesitation whatsoever hold that the judgment of Hon. Justice I. A. Adegbenro of the Ondo State High Court of Justice, Akure Division delivered on 9th of May, 2013 dismissing the entire claim of the Appellant is right and it is hereby affirmed. There is no order as to costs.
MOHAMMED AMBI-USI DANJUMA, J.C.A.: I agree.
JAMES SHEHU ABIRIYI, J.C.A.: I read in advance in draft the judgment just delivered by my learned brother Sotonye Denton West,
JCA. For the reasons contained in the lead judgment, the appeal should be dismissed.
The money did not belong to the Appellant and was rightly returned by the Respondent to Rufus Giwa Polytechnic, Owo.
The appeal is dismissed and the judgment of the lower Court is affirmed.
I abide by the order as to costs.
Appearances
F. Omotosho Esq. with him,
V. Adegoke Esq.
P.P. Ojo,
I.D. Hassan Esq. and
A. AdebiyiFor Appellant
AND
Genevieve Okoye Esq. with him, Ifediora Chijioke Esq.For Respondent
