GENERAL HOUSING & PRODUCTS LTD & ANOR v. ACCESS BANK
(2022)LCN/16726(CA)
In The Court Of Appeal
(ABUJA JUDICIAL DIVISION)
On Thursday, October 27, 2022
CA/A/341/2017
Before Our Lordships:
Theresa Ngolika Orji-Abadua Justice of the Court of Appeal
Gabriel Omoniyi Kolawole Justice of the Court of Appeal
Bature Isah Gafai Justice of the Court of Appeal
Between
1. GENERAL HOUSING & PRODUCTS LIMITED 2. MR. EMEBA OBIANOZIE APPELANT(S)
And
ACCESS BANK PLC. RESPONDENT(S)
RATIO
WHETHER OR NOT THE ONUS ON THE RESPONDENT TO DISPROVE ANY FACT ON A CLAIM CAN ARISE IN THE ABSENCE OF EVIDENCE BY THE APPELLANTS IN PROOF OF SAME
It is argued in sequence that the onus on the Respondent to disprove any fact(s) on this claim cannot arise in the absence of evidence by the Appellants in proof of same; relying on the provisions of Sections 131 to 133 of the Evidence Act 2011 and the decision of the Apex Court in Nigerian Ports Plc vs. Beecham Pharmaceutical PTE Ltd (2012) 12 SCNJ (Pt. 2), 456; ACN vs. Lamido (2012) 2 SCNJ (Pt. 2), 374, 399 – 400; Onuchukwu vs. A. G. Rivers State (2012) 2 SCNJ, 58 at 88 among others. PER GAFAI, J.C.A.
THE MEANING OF THE TERM “DRAWDOWN”
As a word, drawdown simply means reduction or depletion. As a banking term, it refers to the act of drawing an available loan facility granted by a bank to the borrower. See UTB (Nig) Ltd vs. Ajagbule (2006) 2 NWLR (Pt. 965), 447 at 485 – 486. PER GAFAI, J.C.A.
BATURE ISAH GAFAI, J.C.A. (Delivering the Leading Judgment): This appeal emanated from the judgment of the High Court of the Federal Capital Territory Abuja delivered on the 25th of January 2017 in Suit No. FCT/HC/CV/535/12 in which the claim of the Appellants then as Plaintiffs against the Respondent for excess loan repayment deductions to the tune of One Billion, Four Hundred and Seventy-One Million, Eight Hundred and Twenty Four Thousand, Nine Hundred and Fifteen Naira, Seventy Four Kobo (N1,471,824,915.74k) was dismissed.
By way of recap, deducible from the Record of Proceedings, the gist of the Appellants’ suit at the lower Court is that by a loan agreement with the Respondent sometime in 2007, the Respondent granted the Appellants a Credit Facility of Four Hundred and Fifty Million Naira (N450,000,000.00) to trade in share market. Although, the loan agreement was later mutually amended in terms of its tenure and the Respondent’s prerogative on the shares purchased by the Appellants, the core terms of the agreement remained the same. As is the usual unending complaint in this class of agreement, the Appellants’ main complaint before the lower Court conformed to type; being, as the Appellants claimed, the Respondent wrongly deducted excess amount of N1,471,824,915.75K from their bank account as loan repayments, notwithstanding the Respondent’s deduction of huge interests and penalties on the loan.
The Appellants thus approached the lower Court seeking in their 2nd Amended Statement of Claim for:
“1. A declaration that by the extant terms and provisions of the Defendant’s letter of offer of credit facility to the 1st Plaintiff dated 16th July, 2007, the Defendant is contractually obliged to the Plaintiffs for the proper management of the credit facility of Four Hundred and Fifty Million Naira (N450,000,000.00) therein granted to the 1st Plaintiff fey the Defendant.
2. A declaration that by failing to perform her extant obligations under her letter of offer of credit facility to the 1st Plaintiff for the mismanagement of the credit facility of Four Hundred and Fifty Million Naira (N450,000,000.00) therein granted to the 1st Plaintiff by the Defendant.
3. A declaration that the Defendant cannot validly transfer the credit facility of Four Hundred and Fifty Million Naira (N450,000,000.00) it granted to the 1st Plaintiff 2007 to the Asset Management Corporation of Nigeria or anyone else at a time the issue of her mismanagement of the facility was still pending, before the Securities and Exchange Commission and when the question of who between the 1st Plaintiff and the Defendant was yet to be determined.
4. An Order restraining the Defendant, either by herself or through their agent, privies and assigns, from enforcing against the Plaintiffs the payment of any sum and/or purported indebtedness arising from the credit facility of Four Hundred and Fifty Million Naira (N450,000,000.00) granted to the 1st Plaintiff by the Defendant by virtue of the letter of offer of credit facility dated 16th July, 2007.
5. An order directing the Defendant to pay to the 1st Plaintiff the sum of One Billion, Four Hundred and Seventy-One Million, Eight Hundred and Twenty Four Thousand, Nine Hundred and Fifteen Naira, Seventy Four Kobo (N1,471,824,915.74K) being the difference between the facility granted 1st Plaintiff by the Defendant and the total deductions fey the Defendant from the 1st Plaintiff’s account as loan repayments.
6. An order directing the Defendant to pay to the 1st Plaintiff the sum of One Hundred and Fifty Million Naira only (N150,000,000.00) which the Defendant illegally deducted from the 1st Plaintiff’s fixed deposit account with the defendant.
7. An order directing the Defendant to refund to the Plaintiff, the sum of Forty-Five Million, Three Hundred and Forty-Four Thousand, Nine Hundred and Twenty Naira only (N45,344,920.00) being the sum illegally deducted by the Defendant from the 1st Plaintiff’s Current Account No. 0412290000019 (0009044187) and the sum of N193,549,270,22 also deducted from the account by the Defendant as debit interest capitalised between October, 2008 and June, 2010.
8. An order directing the Defendant to pay the Plaintiff the sum of Two Hundred Million Naira only (N200,000,000.00) as general damages for breach of their contract with the Plaintiffs to properly manage the N450,000,000.00 credit facility granted by the Defendant to the 1st Plaintiff and the shares purchased therewith.
9. An order directing the Defendant to refund to the 1st Plaintiff the sum of Thirteen Million, Nine Hundred and Eighty Thousand Naira only (N13,980,000.00) being, the amount the Plaintiff paid to the Defendant as management, extension, commitment, processing and legal fees in respect of the credit facility of N450,000,000.00.
10. The sum of Four Million, Five Hundred Thousand Naira only (N4,500,000.00) being the professional fees paid by the Plaintiffs to Ivory Chambers for the prosecution, of this suit.
11. Interest at the rate of 30% of the amount awarded in favour of the Plaintiff from until the date of judgment and thereafter interest at the rate of 25% of the total sum awarded or any part thereof until the final liquidation of the judgment sum.”
Expectedly, the Respondent joined issues with the Appellants contending in equal vehemence that it was duly entitled to all the deductions it effected on the Appellants’ bank account.
The lower Court heard the suit mainly on the evidence of the 2nd Appellant and the sole witness for the Respondent as well as the documents relied on and tendered in evidence by both sides. At the end of it all, the lower Court in its judgment found no merit whatsoever in the Appellants’ claims and accordingly dismissed same.
Peeved by the decision, the Appellants approached this Court vide their Notice of Appeal filed on the 20th of February 2017 which was however, by leave of this Court, later amended and filed on the 14th of January 2022; complaining against the lower Court’s decision on eight Grounds thus:
“GROUND ONE Error in Law
The Learned trial Judge erred in law when he declined to grant the Plaintiffs/Appellants’ claim for excess loan repayment deductions amounting to One Billion, Four Hundred and Seventy One Million, Eight Hundred and Twenty Four Thousand, Nine Hundred and Fifteen Naira Seventy Four Kobo (N1,471,824,915.74) notwithstanding the overwhelming evidence of the excess deductions before the trial Court.
GROUND TWO Error in Law
The learned trial Judge erred in law when he held that the Plaintiffs/Appellants were not entitled to the excess loan repayment sum of One Billion, Four Hundred and Seventy One Million, Eight Hundred and Twenty Four Thousand, Nine Hundred and Fifteen Naira Seventy Four Kobo (N1,471,824,915.74K) deducted from their Account No: 0412290000019 by the respondent on the purported ground that the amount of money credited to the Appellants’ account as loan drawdown was in excess of the sum of the Four Hundred and Fifty Million Naira (N450,000,000.00) facility granted the Appellants by the Respondent.
GROUND THREE Error in Law
The learned trial Judge erred in law when he held that the Appellants’ claim for excess loan repayment deduction of One Billion, Four Hundred and Seventy One Million, Eight Hundred and Twenty Four Thousand, Nine Hundred and Fifteen Naira Seventy Four Kobo (N1,471,824,915.74k) is “faulty and unsustainable for the simple reason that in arriving at this sum the plaintiffs totally overlooked the defendants’ legitimate entitlement to charge interest on the facility as agreed by the loan contract”.
GROUND FOUR Error in Law
The learned trial Judge erred in law when he held that the loan repayment deductions of One Billion, Nine Hundred and Twenty-One Million Eight Hundred and Twenty Four Thousand, Nine Hundred and Fifteen Naira Seventy Four Kobo (N1,921,824,915.74k) effected on the Appellants’ account with the respondent was not exclusively tied to the Four Hundred and Fifty Million (N450,000,000.00) loan contract between the parties.
GROUND FIVE Error in Law
The learned trial Judge erred in law when he refused to grant the Appellants’ claim for excess loan repayment deduction of One Billion, Four Hundred and Seventy One Million, Eight Hundred and Twenty Four Thousand, Nine Hundred and Fifteen Naira Seventy Four Kobo (N1,471,824,915.74k) on the ground that Appellants did not first complain to the respondent before instituting this action.
GROUND SIX Error in Law
The learned trial Judge erred in law when he refused to grant the Appellants’ claim for a refund of the sum of One Hundred and Fifty Million Naira (N150,000,000.00) deducted by the respondents from the Appellant’s account as cash collateral purporting that the deduction did not breach the loan agreement between the parties.
GROUND SEVEN Error in Law
The learned trial Judge erred in law when he held that the Respondent bank had no contractual obligation under the facility contract to manage the Four Hundred and fifty Million Naira (N450,000,000.00) facility the Respondent granted the Appellant and the shares purchased therewith.
GROUND EIGHT Error in Law
The learned trial Judge erred in law when he held that the respondent was not liable for breach of contract, negligence and mismanagement of the loan facility of Four Hundred and Fifty Million Naira (N450,000,000.00) it granted Appellant in 2007.”
The particulars enumerated under these Grounds are noted. See pages 1 to 8 of the Appellants’ Amended Notice of Appeal.
This appeal was heard on the 14th of September 2022, upon the Record of Proceedings transmitted to this Court on the 19th of May 2017, the Appellants’ Amended Notice of Appeal, the Appellants’ Amended Brief of Argument settled by their learned counsel Chris Ezugwu, Esq., and filed on the 11th of February, 2022 but deemed properly filed on the 14th of September, 2022 and the Respondent’s Amended Brief of Argument settled by its learned counsel Dr. John M. Omughele, Esq., filed on the 18th of February 2022 but deemed properly filed also on the 14th of September 2022.
In the Appellants’ Brief of Argument, three Issues for determination are formulated; on:
“ISSUE NO.1
Whether having regard to the parties’ pleadings and the materials placed before the Court by the parties, the trial Court was right to have dismissed the Appellants’ claim for One Billion, Four Hundred and Seventy One Million, Eight Hundred and Twenty Four Thousand, Nine Hundred and Fifteen Naira, Seventy Four Kobo (N1,471,824,915.74k) being the excess loan repayment deductions effected on the Appellants’ account domiciled with the Respondent? (Distilled from Grounds 1, 2, 3, 4 & 5 of the Notice of Appeal).
ISSUE NO.2
Whether in the light of the issues joined by the parties the totality of the materials placed before the Court and the entire circumstances of the case the trial Court was right to have refused the Appellants’ claim for One Hundred and Fifty Million Naira (N150,000,000.00) being the amount deducted from the Appellants’ account no.0412290000019 as cash collateral for the Four Hundred and Fifty Million Naira (N450,000,000.00) facility granted the Appellants by the Respondent? (Ground 6 of the Notice of Appeal).
ISSUE NO.3
Whether in view of the essential materials before the Court and the entire facts and circumstances of the case, the trial Court was right to hold that the Respondent had no obligation to manage the Four Hundred and Fifty Million Naira (N450,000,000.00) facility it granted the Appellants? (Distilled from Grounds 7 & 8 of the Notice of Appeal).”
In the Respondent’s view however, the Issues for determination as posed by its learned counsel are:
“i) Was there an obligation under the agreement for a loan of N450,000,000.00 between Diamond Bank, and the Appellants that Diamond Bank as lender shall manage the shares purchased by the Appellants with the said loan which obligation Diamond Bank breached? (Grounds 7 and 8)
ii) Should the Court below have held that Diamond Bank could not under the agreement of the parties have realised the sum of N150,000,000 as security for the loan without first selling the shares purchased by the Appellant with the loan in issue? (Ground 6)
iii) Did the Appellants’ pleadings and evidence support their claim of excess loan repayment deduction of N1,471,824,915.74 as to fault the refusal of the Court below to enter judgment for them in that sum? Grounds 1, 2, 3, 4 and 5)”
After reading the entire Briefs of the parties, I am convinced that the Respondent’s Issues can be conveniently resolved along with the Appellants’, using the Appellants’ as the baseline without forsaking the worth of the Respondent’s. Accordingly, the Issues shall so be resolved.
As distilled, the Appellants’ first Issue (supra) proceeds head-on into the main purpose of this appeal which is on whether from the totality of the evidence in the trial, the lower Court was right when it dismissed their claim against the Respondent for excess loan repayment to the tune of N1,471,824,915.74k. Understandably, this Issue is distilled from as many as five Grounds of the Amended Notice of Appeal; namely Grounds 1 to 5. Accordingly, in equal prominence, the Respondent too has made it its third Issue (supra) specifically.
Presented in highlights here, the arguments for the Appellants under this Issue are in the main that by the pleadings and evidence of the parties before it, the lower Court erred fundamentally when it held in its judgment that:
“…it is apparent on the face of the statement of account that the amount credited as loan drawdown to the 1st plaintiff’s account at the material period far exceeded the N450,000,000.00 in context. The plaintiffs have not led evidence to establish that all the items of transactions of loan repayments identified in Exhibit P2 were exclusively related to or in respect of the loan facility in issue, since both parties were in agreement that the account was utilised for other transactions between the parties …”
See page 6 of the Appellants’ Amended Brief and pages 336 to 337 of the Record. It is argued here that the Court was wrong to have raised and determined the issue of loan drawback when it was neither in the pleadings of the parties nor the parties given opportunity to address it on same. It is also the same line of argument canvassed for the Appellants against the Court’s finding that their bank account was utilized for other transactions as well. As argued, both findings in effect amount to the lower Court making a case for the Respondent. Learned counsel for the Appellants called in aid of this submission three decisions of the Apex Court but more particularly in Shitta-Bey vs. The Federal Public Service Commission (1981)1, SC 16 at 37 which he quoted thus:
’’This Court has on a number of occasions warned against decisions of Courts being founded on any ground in respect of which it has neither received arguments from or on behalf of the litigants before them nor even raised by or for the parties or either of them”
Indeed, I find the entire arguments for the Appellants on this point aptly condensed at page 8 of their Brief which, owing to its commendable clarity, is reproduced in verbatim here thus:
“2.01 My lords, we are at a loss to understand where and how the learned trial Judge came about a loan drawdown by the 1st Appellant in excess of the agreed loan facility sum of N450,000,000.00, particularly as Respondent did not anywhere in her pleadings or during trial raise any such issue. Assuming but without conceding that in the course of examining the statement of account which was admitted as Exhibit P2 during trial, the learned trial Judge found what he perceived to be a loan drawdown beyond the facility sum of N450,000,000.00 as mutually canvassed by the parties in their pleadings and during trial, it is our humble submission that the learned trial Judge was not permitted under our extant laws to embark on a secret inquiry into such a fundamental issue and subsequently make far reaching findings on such an issue that was never pleaded nor canvassed by the parties.”
An allied argument for the Appellants under the Issue is that notwithstanding their pleadings complaining that although in the course of the tenure of the loan, the Respondent had unfailingly deducted accrued interests, charges and penalties as per the loan agreement which fact the Respondent did not deny, it still yet again deducted the whopping sum of N1,921,821,915.74K from the Appellants’ bank account. Surprisingly, as argued, the lower Court ignored these facts and in a seeming bid to make a case for the Respondent held in its Judgment that:
“Again, I note that the plaintiffs deducted the sum of N450,000,000.00 being the principal loan facility granted to the 1st plaintiff from the total loan repayment deductions of N1,921,824,915.74k allegedly made by the defendant from her account and therefore claimed the balance sum of N1,471,824,915.74k. This claim is obviously faulty and unsustainable for the simple reason that in arriving at this sum, the plaintiffs totally overlooked the Defendant’s legitimate entitlement to charge interest on the facility as agreed by the loan contract”
See pages 10 of the Appellants’ Amended Brief and 341 to 342 of the Record.
Although the arguments for the Appellants on this point are lengthy and generally repetitive, I find same neatly represented in their following portion:
“2.08 My lords the Respondent in objecting to the appellants’ claim for refund of excess “loan repayment” sum of N1,471,824,915.74k, did not anywhere in her pleadings or during trial canvass that in arriving at the sum, the Appellants overlooked Respondent’s entitlement to charge interest. Respondent did not also anywhere canvass that the deductions in the Statement of Account (Exhibit P2) variously titled “loan repayment” and which amounted to N1,921,821,915.74k was inclusive of interest on the facility. With all due respect, it was not the business of the trial Court to canvass such a defence for the Respondent and make findings on them without asking the parties to address the Court on it.
2.09. It is trite law that the Court is only called upon to consider an issue and make a determination on it where such an issue has been properly joined and duly canvassed by the parties. In Edjekpo & 2 Ors v. Osia & 3 Ors (2007)3 S.C (Pt 1) P.1 at P.36, the Supreme Court held that;
“it is settled law that in a case tried on the pleadings, issues are joined by the parties in their pleadings and that an issue for trial arises when a material averment by a party is positively denied by the other party.”
See pages 11 – 12 of the Appellants’ Amended Brief.
In the same vein, it is argued that the lower Court’s reasoning in apportioning the excess deductions to other different transactions of the Appellants with the Respondent cannot be justified in the absence of proof of any such other transaction(s). Learned counsel referred us to pages 337 to 338 of the Record containing the relevant disputed decision by the lower Court on this point. Learned counsel relied on the provisions of Section 133 (1) of the Evidence Act 2011 and the decisions of the Apex Court in BUA vs Dauda (2003) 6 SC (Pt. II), 120 at 125; Oyovbiare vs. Omamurhomu (1999) 7 SC (Pt. 1) 21 at 31 among others to buttress his submission that the onus of establishing such different other transactions rested on the Respondent which, as argued, it had failed to establish thereby making the attempt by the lower Court to shift the burden of proof of this assertion on the Appellants unsupportable and its consequent decision that the loan deductions applied also to other transactions totally unfounded.
The foregoing is not the only but the main argument for the Appellants under this Issue. Other supplementary arguments are however noted.
As hinted earlier, the Respondent argued this Issue as its third Issue (supra). The central theme deducible through the Respondent’s argument is that the Appellants merely indulged in exhortation and sentiments on their unproven claims; more particularly by their failure to establish any infraction of the loan agreement by the Respondent or to show how from the Statement of Account it tendered in the trial the Respondent made any deductions from their bank account that are contrary to the terms of the loan agreement. It is argued that to contend without more as the Appellants did that the Respondent deducted the whopping sum in dispute as loan repayment without going further to explain or show same distinctly from the content of the Statement of account they tendered has remained within the realm of claim; not evidence.
It is argued in sequence that the onus on the Respondent to disprove any fact(s) on this claim cannot arise in the absence of evidence by the Appellants in proof of same; relying on the provisions of Sections 131 to 133 of the Evidence Act 2011 and the decision of the Apex Court in Nigerian Ports Plc vs. Beecham Pharmaceutical PTE Ltd (2012) 12 SCNJ (Pt. 2), 456; ACN vs. Lamido (2012) 2 SCNJ (Pt. 2), 374, 399 – 400; Onuchukwu vs. A. G. Rivers State (2012) 2 SCNJ, 58 at 88 among others.
Learned counsel for the Respondent argued also that the reasonings of the lower Court in its judgment the relevant portion of which are found at pages 333 to 346 of the Record where it held in effect that the Appellants’ Statement of Account was not used exclusively for the loan in issue and that the deductions were not shown to be contrary to the loan agreement cannot be faulted because not only did the Appellants fail to provide any evidence to the contrary, there was ample evidence before the lower Court through the admission of the 2nd Appellant under cross-examination as PW when he informed the Court that the Appellants’ bank account was not exclusively used for the loan in issue but also for other transactions. It is thus argued that the lower Court cannot fairly be accused of raising this issue suo motu; moreso when the Appellants themselves in paragraph 13 of their 2nd Further Amended Statement of Claim found at page 144 of the Record averred:
“that [Diamond Bank] stated that in order to ensure the smooth operation and management of the credit facility, the 1st [Appellant’s current account 041 229 000 0019 would double as the account facility. [Appellants] shall rely on the statement of 1st [appellant’s] current account\no 041 229 000 0019 with the (respondent).”
I find as terse, pointed and very clear, requiring no further elucidation here, the Respondent’s counsel’s argument on this point as canvassed at pages 19 – 20 of the Respondent’s Amended Brief inter alia thus:
“Thus, this Court can infer as the Court below did that the pre-existent current account of the Appellants was used for the loan of N450 million. It was a concurrent use for the Appellants’ usual banking business and for the specific loan and the accountings were done into it. Before 27/7/07 when entries on the N450 million loan began to feature and after there were other transactions, not only the N450 million loan. In other words, there were debts and credits in the statement of account which were not on the loan. These would affect the net balances on the account.
What the Appellants did was to point at certain entries without showing how those deductions contradicted the contract as to interest applicable, charges, etc. They assumed that if the principal sum is deducted from the deductions, then any sum above that is illegal. Simply, the Appellants claimed that they made loan repayments and that Diamond Bank deducted monies as loan repayments. Although, they alleged loan repayments, Appellants did not show how the deductions made by Diamond Bank differed theirs.”
Learned counsel submitted that the Appellants’ contention that any deductions other than the principal sum from the Appellants’ account were wrongful is incorrect having regard to the contract, the nature of the loan transaction and the agreed pleadings of the parties that the Appellant bank account was used contemporaneously by the Appellants in their other isolated transactions that were unconnected to the specific loan in issue.
It should be noted here too that while these are not the only but the main arguments canvassed for the Respondent under this Issue, their entirety is however noted.
As summarised herein, the main arguments by the Appellants basically revolve around their claim of denial of fair hearing by the lower Court on the ground that they were not accorded an opportunity to address the Court on issues it raised and determined suo motu in the judgment more particularly on its finding that the amount credited and shown as loan drawdown on the Appellants’ Statement of Account exceeded the N450,000,000.00 in issue; that the lower Court ignored the issues joined by the parties and embarked on findings on issues outside their pleadings and proceeding to make findings on same, more particularly on the issue of interest on the loan facility, without asking the parties to address the Court on same and thirdly, that the lower Court failed to act on the unchallenged evidence of the Appellants on their claim of excess deduction by the Respondent. As I explained earlier, other salient, allied arguments are fully noted and will be examined or inferred in the determinations herein.
The Appellants’ arguments against the lower Court’s finding that the amount credited as loan drawdown by far exceeded the sum of the loan facility in issue asserts itself in the front seat; because by its ramifications, this point permeates all other key arguments under the Issue as well as others under all the remaining Issues of the parties. It is therefore worthwhile to recall the pleadings of the parties on it and more importantly the evidence on same before arriving at the anxious answer on whether or not the lower Court’s findings was correct.
At pages 152 – 166 of the Record, is the Appellants’ 2nd Further Amended Statement of Claim of 49 paragraphs; representing their pleading in the trial. In case it is forgotten, the main grouse of the Appellants here is that the lower Court raised the issue of drawdown suo motu without inviting them to address it as same.
Then where did the lower Court find the issue of drawdown, if at all, in the first place? As a word, drawdown simply means reduction or depletion. As a banking term, it refers to the act of drawing an available loan facility granted by a bank to the borrower. See UTB (Nig) Ltd vs. Ajagbule (2006) 2 NWLR (Pt. 965), 447 at 485 – 486.
Surprisingly, it is the Appellants themselves who first introduced the issue of drawdown in their pleadings at paragraph 9 of their 2nd Amended Statement of Claim when they averred that:
“9. As part of the conditions precedent to the drawdown of the facility, the 1st plaintiff, as required by the offer letter executed and handed over to the defendant a letter authorizing the defendant to place a lien on the shares purchased with the facility, a letter transferring the shares purchased with the facility to the defendant, an undated letter of authority in favour of the defendant to sell commensurate number of shares to maintain collateral cover in case of default or decreased in value of portfolio by 20% and other sundry documents to enable defendant assume full control of the management of the facility and the shares purchased therewith. Plaintiffs give the defendant notice to produce the letters of authority and transfer during trial.”
The keyword in this pleading is “drawdown”. Construed in the context of the entire pleadings of the Appellants, it refers to the facility funds inclusive of the interests, fees and allied charges on the Appellants’ bank account; which is why the Appellants copiously pleaded also their Statement of Account, for example at paragraphs 13, 22, 29, 32, 38, 38A, 38B, 43A and 44 to prove inter alia their claim on the issue of drawdown. In their final written address in the trial, the Appellants’ learned counsel argued inter alia thus:
“4.02. It is common ground between the parties that pursuant to clause 3 of the “conditions precedent to drawdown” contained in Exhibit P4 which is the principal contract between the parties, the defendant not only placed a lien on the shares purchased with the facility but also had the entire shares bought with the facility transferred to her and further had executed, by the 1st plaintiff in her favour, a letter of authority to sell commensurate number of shares to maintain collateral cover in the event of a decrease in the value of portfolio by 20%. This much was admitted by the defendant in paragraph 6 of the sworn statement on oath of Dennis Ajibade as well as during his cross-examination on 10th March 2016.
4.03. It is important to note that the provisions of clause 3 of the conditions precedent to draw down contained in Exhibit 4 were duly adopted in the amended offer of credit facility Exhibit 5 and also in the contract i extension of the credit facility-Exhibit P6.
4.04. In addition, and very importantly, both (Exhibits P4 and P6 provided for the payment of management fee by the plaintiffs to the defendant, the receipt of which the defendant admitted in paragraph 10 of the sworn testimony of Dennis Ajibade. See also the transaction of 27/07/2007 at page 5 of Exhibit P2, wherein defendant deducted from 1st plaintiff’s account the sum of N3,375,000.00 as management fee and the sum of N4,500,000.00 as monitoring fee. And see also the transaction of 29/08/2008 at page 29 of Exhibit P2 wherein the defendant also deducted the sums of N330,000.00 and N120,000.00 respectively as management fees.”
See pages 261 – 262 of the Record.
Furthermore, having raised the issue of drawdown themselves, the Appellants cannot seek to tie the hands of the Court in its examination of the entire evidence on it; more particularly in the Appellants’ main evidence on it as presented through their Statement of Account tendered also by them in evidence, by arguing, as they now do, that the findings of the lower Court on same did not recognize their purpose for tendering same in evidence. The bottom line here is that having been pleaded, the issue of drawdown cannot therefore be said to be outside the Court’s competence to examine and determine. In so doing and as its detailed reasoning on same demonstrated, the lower Court was neither making a case for the Respondent nor on a hunting expedition as argued for the Appellants. As rightly submitted for the Appellants, however, which I agree with, issues are tried as raised in the pleadings. See Wiri & Ors v. Wuche & Ors (1980) LPELR – 3498 (SC); Ibanga & Ors vs. Usanga & Ors (1982) LPELR – 1382 (SC); Adimora vs. Ajufo & Ors (1988) LPELR — 182 (SC).
Furthermore, the Appellants’ allied argument that the Respondent did not join issues with them on the issue of drawdown, thereby making the lower Court’s findings on it as making a case for the Respondent seems, with respects, to have lost sight of both the underlying thrust and the express pleadings in the Respondent’s case. In my view, not pleading the drawdown by its specific word as pleaded by the Appellants does not mean that the Respondent did not plead the issue of drawdown if, as it did, it supplied sufficient facts on it; after all, drawdown is not a name but simply a word. The Respondent’s pleadings at paragraphs 13 – 27 of its Further Amended Statement of defence found at pages 139 – 144 of the Record are crystal clear on its strong dispute against the Appellant’s pleadings on drawdown. It was up to the Appellants to prove their claim on the issue of drawdown and where they failed to do so distinctly as found by the lower Court, they cannot now turn around to argue that the Court wrongly shifted the proof of the claims on the drawdown on them. See Sections 131 to 132 of the Evidence Act, 2011; Okoye vs. Nwankwo (2014) LPELR — 23172 (SC); Civil Design Construction (Nig) Ltd vs. SCOA (Nig) Ltd (2007) LPELR – 870 (SC); Organ & Ors vs. Nig Liquefied Natural Gas Ltd & Anor (2013) LPELR – 20942 (SC).
The more I read the judgment of the lower Court viz-a- viz the arguments of both learned counsel under this Issue, the more I am inclined to agree with the Respondent’s counsel that the lower Court examined and evaluated the evidence on this Issue meticulously and properly and reached a correct finding on same. Its evaluation on both the contract documents i.e. Exhibits P4 to P6 and the Appellant’s Statement of Account i.e. Exhibit P2 as well as the oral evidence of the parties is faultless. See pages 22 to 36 of the judgment found at pages 320 to 333 of the Record. In effect, this Issue is resolved against the Appellants.
As may be recalled, the Appellants’ second Issue (supra) is one that questions the lower Court’s evaluation of the evidence on their claim for one hundred and fifty million naira.
It is argued for the Appellants that although in the credit facility agreement between the parties i.e. Exhibit P4, it was agreed that the principal source of realizing the facility was to be from the sales of the Appellants’ shares, the Respondent wrongly proceeded to deduct from the Appellants’ account the sum of N150,000,000.00 which they deposited as collateral for the loan facility. The Appellants point to paragraphs 14, 20 and 30 of their 2nd Further Amended Statement of Claim, the credit facility agreement and the evidence of the Respondent’s DW under cross-examination which, as argued, supports these contentions by the Appellants. Reliance was placed on the decisions of the Supreme Court in Kanu Sons & Co. Ltd vs. FBN Plc (2006) 5 SC, (Pt. III), 80 at 91 and Zabhem Co. (Nig) Ltd vs. Nneji (2006) 5 SC (Pt. II), 78 at 99 in submitting that parties are bound by the terms and conditions of the contract they signed. It was further argued that the Respondent effected the deduction of the said sum notwithstanding the terms of the agreement by which the Respondent took possession of the Appellants’ shares as well as a letter of authority to sell off the shares but which the Respondent took no steps to sell. The Appellants further point to Exhibits P4 and P5 to buttress their argument that the Respondent was bound to dispose off the shares before resorting to the Appellants’ said cash collateral on the credit facility. The learned counsel for the Appellants therefore wondered how in spite of these pieces of evidence, the lower Court still held as found at page 340 of the Record that:
“even though the DW1 admitted under cross-examination that the Defendant realized the cash collateral of N135,000,000.00 from the 1st Plaintiff’s account, there is however nothing to show that the said deduction breached the loan agreement and the terms only…”
Learned counsel thus urged us to resolve this Issue in favour of the Appellants and also to invoke the powers of this Court under Section 15 of the Court of Appeal Act to grant the Appellants’ claim to their said sum of N150,000,000.00 deducted from the 1st Appellant’s account by the Respondent.
For the Respondent however, it is argued that the Appellants’ argument misconstrued both the contract document holistically i.e. Exhibit P4 and the intention of the parties on it by their erroneous reliance only on its few selected portions. Learned counsel for the Respondent argued that the Appellants failed to realize the right of the Respondent as a mortgagee to pursue any of the legally recognized methods of recovering unpaid debt and in its so doing cannot be limited to what the Appellants claim to be the Respondent’s first option under the contract. It is further argued that the Respondent’s first option as claimed by the Appellants for the sale of the Appellants’ shares as a first step under the contract is nowhere made a mandatory condition on the Respondent in the pursuit of the debt recovery. Learned counsel referred to the prepayment clause in the contract which provides that:
“you may on giving 7 working days notice to the Bank repay the facility or any part thereof before the expiration of the tenor of the facility: and argued that this shows that the same of the shares to recover the debt. Counsel placed reliance on the decision in Dantsoho vs. Muhammad (2003) FWLR (Pt. 150) 1717 to buttress the argument that in interpreting a contractual document, a Court shall consider its entirety. He also referred to portions from the book Fisher, and Lightwood’s Law of Mortgages to buttress his argument on the rights of a mortgagee. He submitted that the lower Court was right in holding that the deduction of the sum complained here by the Appellants was proper and in accordance with contract between the parties.”
In my humble view, the fairest way to understand the context of the Appellants’ arguments under this Issue is by first understanding the entire reasoning of the lower Court on same; not a few selected excerpts of it as done by the Appellants’ learned counsel. Understandably, the lower Court examined this issue in great detail as found at pages 338 to 341 of the Record from which altogether however the following portions appear to highlight its entirety thus:
“Again, the Plaintiffs alleged that at the height of the stock market crisis in 2009, when the Defendant found out that the value of the shares purchased with the facility had so diminished, that collateral cover could no longer be maintained, that the Defendant illegally deducted the sum of N150,000,000.00 from the 1st Plaintiff’s fixed deposit on the pretext that it was part of the collateral for the facility; and thus prayed that the money be refunded.
Now, it is pertinent to state here that the Plaintiffs gave no concrete evidence of any crisis in the stock market in 2009.”
“As such, there is no evidential basis to hold that the value of the shares purchased with the facility diminished at any time, end invariably, the contention that the Defendant illegally deducted N150,000,000.00 from the 1st Plaintiff’s fixed deposit cannot be sustained in the circumstances.
Even though the DW1 admitted under cross-examination that the Defendant realised the cash collateral of N135,000,000.00, from the 1st Plaintiff’s account, there is however nothing to show that the said deduction breached the loan agreement between the parties. I so hold.
I also find it rather curious that the Plaintiffs, having discovered that the Defendant made those allegedly wrongful huge deductions as loan repayments from the 1st Plaintiff’s account between July 2007 and July 2009, as stated, and yet still indebted to the bank to the tune of N508,261,453.09 at the same time; there is no evidence that they lodged any formal complaint to the Defendant or drew her attention to such alleged wrongful deductions. The Plaintiffs merely mentioned in passing in their letter to the Defendant, Exhibit P8, that the Defendant unilaterally increased interest on the loan to 26% without recourse to them; but then they seemed to have tacitly accepted this position since they failed to demand for a reversal of this purported increased interest charges in the same letter or in any other communication with the Defendant.
My view is that if these alleged wrongful deductions were valid or inordinate, the expectation is that the 2nd Plaintiff, who claimed to be a businessman, would have demanded for a reconciliation of the 1st Plaintiff’s account with the bank, rather than waiting till almost three (3) years later before approaching the Court for redress.”
As explained earlier, while the Appellants’ main argument here is that the Respondent tampered with their collateral deposit of N150,000,000.00 without first falling back on their shares placed under its control purposely for that eventuality as provided in their agreement, the Respondent’s main argument is that by the nature and terms of the agreement, the Respondent’s right to pursue and recover the debt is not limited to the sale of the Appellants’ shares only but extends to every available remedy of a mortgagee under the law. It is thus clear that both sides pitched their respective arguments under this Issue on the contractual documents which governed the agreement between them on this issue, more particularly Exhibits P4 and P5 i.e. Facility Credit agreement and the Amended Credit Facility agreement respectively.
It seems to me that the lower Court captured this particular angle of the dispute elaborately when it held in another portion of its Judgment as follows:
“As such; in order to determine whether parties intended for the Defendant to be directly involved in the purchase and management of the shares on the basis of which the loan was granted, the first port of call is the contract documents, Exhibits P4, P5 and P6 respectively.
I have critically examined the three documents. Apart from the clause contained in Exhibit P4, as part of the conditions precedent to drawdown, which stipulates that the 1st Plaintiff shall deposit executed documents pertaining to placement of lien on the shares to be purchased, which includes an undated letter authority to sell commensurate number of shares to maintain collateral cover in case of default or decrease in value of the portfolio by 20%; there is no other clause whatsoever categorically stated that the Defendant shall manage the loan and/or the shares with which the loan shall be purchased.
A further examination of the letter of amendment, Exhibit P5, reveals that the purpose of the amendment, as stated in the face of the letter, is “To purchase shares from blue chip companies as might be determined by the client and Diamond Bank Securities as against the purchase of N10m units of FBN shares at N35/unit.”
The purpose clause of Exhibit P5 therefore clearly establishes that the decision as to what shares to purchase was squarely between the 1st Plaintiff and Diamond Bank Securities Limited, without the direct involvement of the Defendant.
Now, in one breath, the Plaintiffs had contended that the Defendant was directly in charge of the management of the shares purchased; and then in another breath, the 2nd Plaintiff again, stated in paragraph 12 of his Statement on Oath that the Defendant insisted that a certain Diamond Securities Limited, which was a subsidiary of the Defendant, would be appointed to source for the shares and also manage the shares when purchased.
Even then, the DW1 threw more light on the involvement of Diamond Securities Limited in the share purchase transactions, in paragraphs 3 and 9 of his Statement on Oath, where he testified as follows:
“3. Diamond Securities Limited (DSEC) is a limited liability company with objects different from those of the Defendant, the focus of DSEC was the capital market while the Defendant, a banking organization.
9. The Plaintiff already had a relationship with DSEC before the facility as OSEC had the Plaintiffs’ shares purchased by them independent of the N450,000,000.00 facility.
12. …When the Plaintiffs however came forward with that proposal, the Defendant at the instance of the Plaintiffs agreed to amend and amended the purpose clause in the accepted offer of 16/7 /07 by that in the accepted offer letter of Z718/O7 which left the determination of the shares to be purchased as a matter between DSEC with whom the Plaintiffs have a share brokerage relationship, and the Plaintiffs.”
It is significant to note that the Plaintiffs did not deny that they had an existing relationship with the said Diamond Securities Limited prior to the grant of the facility in issue. The DW1 was also not cross-examined on this point at the trial.”
It should be noted here that the dimension of the Respondent’s arguments on its rights as a mortgagee were not issues submitted before the lower Court and were therefore, rightly in my view, not addressed by the lower Court. It is the specific arguments of the Appellants that represent the dispute before the lower Court.
I have carefully examined the pleadings of the parties on this issue as well as more significantly their respective evidence on same. I have gauged the lower Court’s findings on the evidence in the trial and counsel arguments on same under this Issue. In my considered view, the lower Court’s evaluation of the evidence, more particularly on Exhibits P5 and P6 (supra) focused on the Respondent’s right to recover the loan facility from available funds of the Appellants including more particularly the Appellants’ collateral deposit in issue. I have studied Exhibits P4 to P6 carefully in the specific context of whether or not the Respondent is entitled to access and utilize the Appellants’ collateral deposit towards defraying their debt on the loan facility without first having recourse to their shares pledged as a security for the loan.
Firstly, it is not in dispute that the said deposit is only a part of the Appellants’ guarantees on the repayment of the loan facility. It is not in dispute that the sum constitutes the Appellants’ cash collateral for the loan facility. It is the Appellants’ money, unencumbered by any other third party’ claims. As a collateral, Appellants could not by law or under the terms in Exhibits P4 to P6 utilize same for any purpose other than the repayment of the loan facility nor can the Respondent be restrained from drawing therefrom for that purpose. That is the core essence of the Appellants’ cash collateral. The nature of the loan facility, the terms and intention of the parties on their agreements on it i.e. Exhibits P4 – P6 and common sense would not admit of any proposition to the contrary, more particularly the Appellants’ contention that the Respondent has no right to utilize their cash collateral in the manner or at the time it did; an argument that I find to be bereft of any business sense or legal justification. As a creditor, the Respondent reserves the right to use the Appellants’ cash collateral as pledged funds to set off or liquidate the principal amount and accrued interest in the event of default of the availed amount because by the very essence of cash collateral, the borrower pledges same for no other reason than as security for the loan and cannot therefore pick an unfounded quarrel with the creditor on grounds that aim to negate the settled legal character of a collateral. See African International Bank Ltd vs. Integrated Dimensional System Ltd & Ors (2012) LPELR – 9710 (SC).
Equally important here too is the lower Court’s finding that the contract documents between the parties do not in any way tie the hands of the Respondent to resort first and foremost to the sale of the Appellants’ shares; which finding the Appellants have expressed disagreement with very strongly in this appeal. Upon a careful perusal of the entire terms of the contract documents i.e. Exhibits P4 – P6, I am more inclined to agree with the learned counsel for the Respondent that there is no specific, express term in the agreement which mandates the Respondent to first resort to the Appellants’ shares before pursuing other available equally pledged funds of the Appellant; regardless of whose duty it is under the contract to initiate and administer the sale of the shares in the event of the Appellants’ default on the loan facility. The lower Court was correct when it held that there were no such restrictive covenants in Exhibits P4 to P6.
In effect, the Appellants’ second Issue (supra) is also resolved in favour of the Respondent.
The Appellants’ third Issue (supra) as reproduced earlier herein seeks an answer on whether the Respondent had no obligation to manage the facility loan it granted to them. This question once again calls for a closer examination of the contract documents between the parties. It is argued for the Appellants that the Respondent having placed a lien on the Appellants’ shares and executed a letter of authority authorizing it to sell off the shares in order to maintain collateral cover, it is implicit from the nature of the agreement and also deducible from the terms of the agreement that the Respondent assumed the responsibility of managing the shares; placing reliance once again on Exhibits P4 to P6. Notwithstanding this evidence, the lower Court proceeded to the charging of the Appellants to hold in its judgment as found at pages 327 of the Record that:
’’There is no express provision in Exhibits P4 and P6 that the Defendant shall manage the loan facility granted to the 1st plaintiff. I am unable to make an inference from the contract documents and indeed the totality of the circumstances of the case that parties intended such obligation for the Defendant, since in my view there is no apparent basis for such an inference as urged by the plaintiffs’ learned counsel.”
It is further argued for the Appellants that the Respondent having deducted huge sums of money from the Appellants’ account as management fees must be held to have assumed full responsibility for the management of the shares. As argued also, the Respondent having failed to exercise its power to sell off the shares, it was in breach of the contract agreement on the loan facility and must thus be held accountable; placing reliance on the decisions in Okechukwu vs. Onuorah (2000) 12 SC (Pt. II), 104 at 109 and Fakoya vs. St. Paul’s Church (1966) NSCC, 60 at 62.
The Respondent’s arguments on this Issue are what formed its own first Issue as well; which altogether are encapsulated in the following excerpt:
“The Court below found against the Appellants on this. See page to 333 of the record for the reasoning of the learned trial Judge based on i) construction of the contract; ii) involvement of an independent body, Diamond Securities, which dealt in the capital market as against Diamond Bank which was in the money market; iii) the clear assertions of the Appellants that Diamond Securities had responsibilities for the shares; iv) the evidence of DW1; and v) Exhibit P8. The Respondent maintains here as Diamond Bank did below that only the first construction would be correct and that the allegation that Diamond Bank was to manage the shares to be purchased for the Appellants is an interpolation not contained in the contract.”
In the course of the resolution of the Appellants’ second Issue (supra), I reproduced the copious relevant portion of the lower Court’s judgment containing its detailed reasoning for the finding at page 327 of the Record as referred and questioned by the Appellants exclusively (supra).
From my study of Exhibits P4 to P6, I am unable to disagree with the finding of the lower Court that the Respondent has no obligation under the facility agreement to manage the Appellants’ shares bearing more particularly that it was the Appellants themselves who appointed a separate entity called Diamond Securities Ltd to manage their shares; an entity with whom the Appellants had business relationship long before the commencement of their loan facility relationship with the Respondent. What is more, I have not found any aspect of the lower Court’s reasoning on this point perverse. The lower Court’s reasoning is well founded on evidence and established legal principles. This Court has no reason to disturb same. See Nguma vs. Attorney General Imo State (2014) LPELR — 22252 (SC); CPC & Anor vs. Ombugadu & Anor (2013) LPELR – 21007 (SC); Bassil & Anor vs. Fajebe & Anor (2001) LPELR 757 (SC).
On the whole therefore, the Appellants’ three Issues have all been resolved in favour of the Respondent. In consequence, this appeal fails as one without merit and is accordingly dismissed. The Judgment of the lower Court is affirmed.
Parties shall bear their respective costs on this Appeal.
THERESA NGOLIKA ORJI-ABADUA, J.C.A.: I had read in advance, the leading judgment of this Court just delivered by my learned brother, Gafai, J.C.A., and must say I am in complete agreement with the reasoning and conclusion expressed therein.
I abide by the orders made therein.
GABRIEL OMONIYI KOLAWOLE, J.C.A.: I agree with the decision contained in the lead judgment of my Lord, the Hon. Justice I. B. Gafai, which has just been delivered and in which he resolved all three issues raised by the Appellants in favour of the Respondent, and consequently adjudged the appeal as lacking in merit, dismissed same and upheld the judgment of the High Court of the Federal Capital Territory Abuja delivered on the 25th of January 2017 in Suit No. FCT/HC/CV/535/12.
I really do not have any further additions to make to the well considered judgment which allies with my own opinion.
I too dismiss the appeal and I affirm the said judgment.
Appearances:
EMEKA OMEJE For Appellant(s)
OMUGHELE JOHN MUDIAGA For Respondent(s)