GTB v. JOSHUA (2021)

GTB v. JOSHUA

(2021)LCN/15007(CA)

In The Court Of Appeal

(LAGOS JUDICIAL DIVISION)

On Friday, February 26, 2021

CA/L/205/2020

RATIO

LEGISLATION: EXTENT OF THE POWER OF THE EFCC TO FREEZE AN ACCOUNT

Section 34 of the Economic and Financial Crimes Commission (Establishment) Act 2004 provides as follows:

34(1) Notwithstanding anything contained in any other enactment or law, the Chairman of the Commission or any officer authorized by him may, if satisfied that the money in the account of a person is made through the commission of an offence under this Act and or any of the enactments specified under Section 7 (2) – (a) – (f) of this Act, apply to the Court ex-prate for power to issue or instruct a bank examiner or such other appropriate regulatory authority to issue an order as specified in Form B of the Schedule to this Act, addressed to the manager of the bank or any person in control of the financial institution where the account is or believed by him to be or the head office of the bank, or other financial institution to freeze the account.
(2) The Chairman of the Commission, or any officer authorised by him may by an order issued under Subsection (1) of this Section, direct the bank, other financial institution or designated non-financial institution to supply any information and produce books and documents relating to the account and to stop all outward payments, operations or transactions (including any bill of exchange) in respect of the account of the person.
(3) The manager or any other person in control of the financial institution shall take necessary steps to comply with the requirements of the order made pursuant to Subsection (2) of this section. PER JAMES SHEHU ABIRIYI, J.C.A.
INTERPRETATION: INTERPRETATION OF SECTION 34 OF THE EFCC ACT 2004

In determining the context in which the provisions of a statute are used, a Court will not explain the meaning of the statute in a manner which will defeat the intention and purpose of the law makers. The Court should instead adopt a holistic approach and interpret the provisions dealing with a subject matter together so as to give the true intention of the law makers. See Gana v. SDP & Ors. (2019) LPELR – 47153 SC at 43. In G.T.B. PLC v. Adedamola (2019) 5 NWLR (pt. 1664) 30 at 43 this Court stated as follows:
Before freezing customer’s account or placing any form of restrain on any bank account, the bank must be satisfied that there is an order of Court. By the provisions of Section 34(1) of the Economic and Financial Crimes Commission Act 2004, the Economic and Financial Crimes Commission has no power to give direct instructions to banks to freeze the account of a customer without an order of Court, so doing constitutes a flagrant disregard and violation of the rights of a customer. I must add that, the judiciary has the onerous duty of preserving and protecting the rule of law, the principles of rule of law are that, both the governor and the governed are subject to rule of law, no one is above the law. Whenever there is brazen violation of the rights of a citizen the Courts in the discharge of their responsibility to the society must rise to the occasion speak, frown, and condemn arrogant display of power by an arm of government. It is in the interest of both government and citizens that laws are respected, as respect for the rule of law promotes order, peace and decency in all societies, we are not an exception. Our financial institutions must not be complacent, reticent and toothless in the face of brazen and reckless violence to the rights of their customers. Whenever there is a specific provision regulating the procedure of doing a particular act, that procedure must be followed.
In Sofekun v. Akinyemi & 4 Ors. (1980) LPELR – 3091 SC, Aniagolu JSC had expressed a similar opinion; that it is essential in a democracy as we have in this country that the rights of citizens be protected in order to check arbitrary use of power by the Executive or its Agencies. PER JAMES SHEHU ABIRIYI, J.C.A.
EVIDENCE: EFFECT OF AN AVERMENT IN PLEADINGS NOT TRAVERSED

It is trite law that an averment in a party’s pleadings is deemed admitted if it is not specially denied or traversed. See decisions of this Court in Otto v. Mabamije (2004) 17 NWLR (pt. 903) 489 and British Airways v. Makanjuola (1993) 8 NWLR (pt. 311) 276. PER JAMES SHEHU ABIRIYI, J.C.A.

Before Our Lordships:

Oyebisi Folayemi Omoleye Justice of the Court of Appeal

James Shehu Abiriyi Justice of the Court of Appeal

Frederick Oziakpono Oho Justice of the Court of Appeal

Between

GUARANTY TRUST BANK PLC APPELANT(S)

And

ODEYEMI OLUYINKA JOSHUA RESPONDENT(S)

JAMES SHEHU ABIRIYI, J.C.A. (Delivering the Leading Judgment): This appeal is against the judgment delivered on 23rd January, 2020 in the High Court of Lagos State sitting at Court No. 41. In the High Court (the Court below), the Respondent was the plaintiff while the Appellant was the defendant.

The claim of the Respondent in the Court below was for a declaration that the freezing of his account without an order of Court was illegal, an order directing the Appellant to defreeze the account, general damages, an order of perpetual injunction restraining the Appellant from further freezing the account and costs of the action.

Both parties agreed that the matter be determined by the special case procedure under Order 31 of the High Court of Lagos State (Civil Procedure) Rules 2019 without the calling of witnesses although counsel for both parties filed and exchanged written addresses.

The case of the Respondent in summary on the pleadings was that his account with the Appellant was frozen without his knowledge or consent and all efforts by him to get the Appellant defreeze the account yielded no fruit. That the freezing of the

account was done by the Appellant without any valid Court order.

In defence, the Appellant averred that it placed the Respondent’s account under caution and deactivated his ATM card pursuant to a letter dated 13th February, 2017 from the Economic and Financial Crimes Commission (EFCC). That the Appellant had a statutory obligation to comply with the directive of the EFCC. That the Appellant had no legal obligation to obtain any Court order before complying with the EFCC’s directive and also had no obligation to enquire whether the EFCC fulfilled the conditions necessary for the validity of its directive.

After considering the cases of the parties as contained in the pleadings and written addresses of learned counsel, the Court below entered judgment in favour of the Respondent and granted the reliefs sought in the statement of claim.

The Appellant immediately proceeded to this Court by – two notices of appeal. One of the notices was filed on 23rd January, 2020 and the other on 6th February, 2020. When the appeal came up for hearing on 6th December, 2020, the first notice of appeal filed on 23rd January, 2020 was withdrawn and

struck out. The notice of appeal filed on 6th February, 2020 relied upon by the Appellant contains five grounds of appeal. From the five grounds of appeal the Appellant in its brief of argument dated and filed on 11th June, 2020 but deemed duly filed and served on 7th December, 2020 presented the following four issues for determination:
i. Whether Sections 34 (2 & 3) and 38 of the Economic and Financial Crimes Commission (Establishment) Act 2004, impose any other obligation on the Respondent beyond strictly complying unconditionally with the order/directives of the Economic and Financial Crimes Commission (EFCC) served on it in respect of a Customer’s account? (Distilled from Grounds 1 and 2 of the Notice of Appeal No. 2).
ii. Whether the doctrine of privity of contract was among the issues submitted to the Court below in the Special Case, and if not, whether the Court below was right in raising the issue, and relying on the doctrine in finding the Appellant liable to the Respondent, without calling on the Appellant to address the Court on same, (Distilled from Ground 3 of the Notice of Appeal No. 2).
iii. Whether the matter

determined under the Special Case Procedure where trial was not conducted, the Court below is entitled to presume and/or speculate on the existence of an UNPLEADED fact (that EFCC did not obtain a Court Order before issuing the Appellant a directive to freeze the Respondent’s account), and to rely on such unpleaded fact in giving judgment to the Respondent. (Distilled from Ground 4 of the Notice of Appeal No. 2).
iv. Whether the Court below should set aside the award of damages made by the Court below in favour of the Respondent in view of the errors in law made by the Court below in arriving at its findings.

The Respondent adopted the issues formulated by the Appellant in the Respondent’s brief of argument dated and filed on 11th September, 2020 but deemed duly filed and served on 7th December, 2020.

The Appellant filed an Appellant’s reply brief on 18th November, 2020. It was deemed duly filed and served on 7th December, 2020.

On issue 1, learned counsel for the Appellant submitted that the Court below did not interpret Section 34 (3) of the EFCC Act in arriving at the conclusion that the Appellant was wrong in freezing

the Respondent’s account without an order of Court. That the Court below did not even make reference to Section 34 (3) of the EFCC Act in the entire judgment even though it was the specific section submitted to it for consideration under the Special Case Procedure and the Appellant’s counsel dedicated several paragraphs of the written address to that sub-section.

The Court was called upon to interpret Section 34 (3) of the EFCC Act with a view to marking out the scope of the duty of any bank served with a directive from EFCC. It was submitted that the wordings of Section 34 (3) of the EFCC Act expressly mandate the Appellant to comply with the directives of the EFCC without having to verify whether EFCC complied with the Act before issuing the directive. It was submitted that the Section does not require the bank to investigate EFCC’s compliance with the Act before complying with the EFCC’s directive. The section, it was submitted, ought not be interpreted to impose that obligation on the bank. This, it was submitted, would amount to an interpolation or amendment of the law which the Court must not do.

It was submitted that Section 34 (3) does not impose any other obligation on the bank beyond simply complying with the EFCC directive.

The Court was referred to the decision of this Court in GTB v. Adedamola (2019) 5 NWLR (pt. 1664) 30 at 43 where the Court held that ‘the bank must be satisfied that the EFCC obtained an Order of Court’ before complying with the directive but argued that the parties in that case did not invite the Court to interpret Section 34 (3) of the EFCC Act.

Learned counsel for the Appellant submitted that it is desirable that banks be satisfied that the EFCC has complied with the Act on the issuance of any directive before proceeding to obey the directives. But that there is a lacuna in the Law relating to whether the banks must ascertain the validity of the directive issued. That it is also apparent that the Act does not provide the bank with the statutory prerogative of flouting the directives of the EFCC for any reason whatsoever making the duty of compliance unconditional. Consequently, the banks have no power to look for proof that the EFCC has complied with the law before obeying the directive.

It was submitted that it is not the province of the Courts to fill any lacuna in the law as that would amount to judicial legislation. The Court was referred to A. G. Federation v. Abubakar (2007) 10 NWLR (pt. 1041) 92D and 123 F – G.

It was submitted that any interpretation by the Courts that banks have a duty to verify the validity of the directive served on them would tantamount to filling the lacuna in the EFCC Act as that statutory duty was clearly omitted by the draftsmen in the EFCC Act.

The Court was urged to hold that Section 34 of the EFCC Act does not impose any obligation on the defendant beyond strictly complying with the EFCC directives and that the Appellant cannot consequently be held liable for obeying the directives unconditionally as mandated by the Act.

On issue 2, learned counsel for the Appellant submitted that the Court below relied on the doctrine of privity of contract which is not related to the EFCC Act in holding the Appellant liable to the Respondent.

It was the contention of learned counsel for the Appellant that the issue of privity of contract came up for the first time in the judgment and none of the parties raised it in the pleadings

and addresses. That the Court below did not invite the parties to address it on the issue of privity of contract before relying on the doctrine to enter judgment in favour of the Respondent.

The Court was urged to hold that the Court below erred when it went outside the issues raised by the parties without affording them the opportunity of addressing the Court on the new issue of privity of contract raised.

On issue 3, learned counsel for the Appellant submitted that a Court of law can only draw inference from existing facts in the pleadings as parties are bound by the pleadings. The Court was referred to Akaninwo v. Nsirim (2008) 9 NWLR (pt. 1093) 439. It was submitted that none of the parties pleaded that EFCC obtained or did not obtain a Court order.

It was submitted that a feature of the Special Case Procedure is that facts in the pleadings are taken as true and admitted by the parties thus making trial unnecessary. The principle, it was submitted, does not extend to unpleaded facts. Therefore the Court below, it was submitted, erred when it held that a Court order was not obtained before the Respondent’s account was frozen.

On issue 4, learned counsel for the Appellant adopted his arguments in issues 1, 2 and 3 and submitted that where liability is not established, the Court cannot award damages.

Appellant in this case, it was contended, is being punished for the directive issued by the EFCC and the EFCC Act did not give the Respondent the option of disobeying the EFCC directive.

The learned counsel for the Respondent contended on issue 1 that the Appellant breached the contract agreement and fiduciary relationship between it and the Respondent by freezing the Respondent’s account without following the due process of the law thereby denying the Respondent his legitimate and hard-earned funds.

The EFCC Act, it was submitted, provides for a procedure that must be followed by EFCC in directing a bank to freeze a customer’s account where there is suspicion of crime against a customer. It was submitted that when the law provides through an Act, a procedure to be followed in carrying out any duty anything done in respect to that which negates the provisions of the law by so doing runs foul of the law and therefore an illegality. Therefore, the Appellant’s

action of freezing the Respondent’s account without recourse to the guideline provided by the law in Section 34 (1) of the EFCC Act is illegal, it was submitted. The Court was referred to Dangabar v. F.R.N. (2014) 12 NWLR (pt. 1422) 575 at 587 – 588 and Guaranty Trust Bank v. Adedamola & Ors. (2019) 5 NWLR (pt. 1664) 30.

It was submitted that there is nothing that preludes a bank from verifying from EFCC whether a Court order was obtained. The Appellant, it was submitted, froze the account of the Respondent without a Court order.

Learned counsel for the Respondent submitted that Section 34 (3) of the EFCC Act only applies where Section 34(1) and (2) of the Act has been complied with.

It was submitted that the Appellant had an obligation to investigate if EFCC complied with the Act as it had a duty of care to the Respondent. It was submitted that the requirement of the Appellant to comply with Section 34 of the EFCC Act is not an interpolation or an amendment. It was submitted that Section 34 (3) of the Act presupposes that Section 34 (1) and (2) had been complied with by obtaining an order of Court.

That Section 34 (3) of the EFCC Act refers to the duty of a manager of a bank in obeying the directive of the EFCC when such directive was made pursuant to the ex parte order. It was submitted that when a statute provides for a particular way of doing something, it should be done in that manner and nothing more.

On issue 2, learned counsel for the Respondent pointed out that the Court below held that it was the Appellant who had the duty by virtue of its privity of contract between it and the Respondent and was therefore liable.

It was submitted that the Court below did not raise a new issue of whether there was privity of contract but instead used the doctrine of privity of contract in the determination of who should bear liability in the event of a breach of Section 34 of the EFCC Act. That there was therefore no need to call the parties to address any new issue as it was not in contention that the Respondent was a customer to the Appellant.

The Court was urged to reject the contention that the Court below had gone outside the purview of the issues raised by the parties herein.

On issue 3, learned counsel for the Respondent referred the Court to paragraph 13 of the

statement of claim and paragraph 21 of the statement of defence. He submitted that there was nothing to show that there was in fact a Court order.

On issue 4, learned counsel for the Respondent submitted that the Respondent was entitled to damages against the Appellant for the hardship brought to him by the Appellant as a result of the wrongful act of freezing the Respondent’s account without following the guideline stipulated under Section 34 (1) of the EFCC Act. The Respondent, it was submitted, had no case with the EFCC but with the Appellant’s bank. It was submitted, that the Appellant was liable in damages to the Respondent for not ensuring that the provisions of the law as stipulated under Section 34 (1) of the EFCC Act was followed before freezing the Respondent’s account.

The Appellant, it was argued, did not exercise caution in its dealing with the EFCC and this affected its customer the Respondent. It was further contended that there is no law which empowers the Appellant to obey EFCC whether its directive to the bank complies with the EFCC Act or not. It was further argued that if the Appellant obeys EFCC in breach of the

law, it is the Appellant and not the EFCC that the Respondent would hold accountable.

In the Appellant’s reply to the Respondent’s brief, it was contended that the Appellant’s act of freezing the Respondent’s account was done pursuant to Section 34 (3) of the EFCC Act which mandated the Appellant to comply upon receipt of the directive from the commission.

It was submitted that a combined reading of Section 34 of the EFCC Act shows that it is the responsibility of the commission to apply to Court for the power to issue a directive to the bank.

It was submitted that Section 34 (3) of the EFCC Act did not intend that the bank should take further steps beyond compliance. If there was any such intention, the Act would have expressly stated so, it was argued.

The case of GTB v. Adedamola (supra), it was submitted, is not similar to the instant case in that the trial Court and this Court were not invited to interpret Section 34 (3) of the EFCC Act.

I will determine the appeal on the four issues submitted by the Appellant and adopted by the Respondent.

Section 34 of the Economic and Financial Crimes Commission (Establishment) Act 2004 provides as follows:

transactions (including any bill of exchange) in respect of the account of the person.
(3) The manager or any other person in control of the financial institution shall take necessary steps to comply with the requirements of the order made pursuant to Subsection (2) of this section.
In determining the context in which the provisions of a statute are used, a Court will not explain the meaning of the statute in a manner which will defeat the intention and purpose of the law makers. The Court should instead adopt a holistic approach and interpret the provisions dealing with a subject matter together so as to give the true intention of the law makers. See Gana v. SDP & Ors. (2019) LPELR – 47153 SC at 43. In G.T.B. PLC v. Adedamola (2019) 5 NWLR (pt. 1664) 30 at 43 this Court stated as follows:
Before freezing customer’s account or placing any form of restrain on any bank account, the bank must be satisfied that there is an order of Court. By the provisions of Section 34(1) of the Economic and Financial Crimes Commission Act 2004, the Economic and Financial Crimes Commission has no power to give direct instructions to banks to freeze

the account of a customer without an order of Court, so doing constitutes a flagrant disregard and violation of the rights of a customer. I must add that, the judiciary has the onerous duty of preserving and protecting the rule of law, the principles of rule of law are that, both the governor and the governed are subject to rule of law, no one is above the law. Whenever there is brazen violation of the rights of a citizen the Courts in the discharge of their responsibility to the society must rise to the occasion speak, frown, and condemn arrogant display of power by an arm of government. It is in the interest of both government and citizens that laws are respected, as respect for the rule of law promotes order, peace and decency in all societies, we are not an exception. Our financial institutions must not be complacent, reticent and toothless in the face of brazen and reckless violence to the rights of their customers. Whenever there is a specific provision regulating the procedure of doing a particular act, that procedure must be followed.
In Sofekun v. Akinyemi & 4 Ors. (1980) LPELR – 3091 SC, Aniagolu JSC had expressed a similar opinion;

that it is essential in a democracy as we have in this country that the rights of citizens be protected in order to check arbitrary use of power by the Executive or its Agencies.
Learned counsel for the Appellant argued strenuously that Section 34(3) of the EFCC Act reproduced above should have been interpreted separately. He even invited this Court to do so. With respect to the learned counsel for the Appellant that is unacceptable. That type of interpretation will defeat the intention and purpose of the law. Section 34 of the EFCC Act which deals with freezing of accounts of customers in banks and other financial institutions must be read together in order to get the true intention of the law makers. It is clear from a reading of the entire Section 34 of the EFCC Act that the Commission if satisfied that money in the account of any person is made through the commission of an offence may apply to the Court ex-parte for the power to freeze the account. The EFCC may by an order issued by the Court direct the freezing of the account. The bank shall then take necessary steps to comply with the requirements of the order. “Order” rings a loud bell

in both Subsections (2) and (3) of the said Section 34 of the EFCC Act. This is not surprising because the freezing of the account of a person will be done if the money is reasonably subjected by the Court to have been made through the commission of an offence. It is then that the Court makes the order sought by the EFCC. Without that order the EFCC cannot direct the freezing of the account of any person. Without the order the bank or any financial institution cannot freeze the account of any person. The order of the Court is the basis for any other action under the section as allegation that money is made through the commission of an offence is a serious allegation. It is for this reason that the bank must ensure that there is an order of Court before it proceeds to freeze the account of any person. That is what Section 34(3) means by the bank taking necessary steps to comply with the order. In my view, a bank fails to enquire whether or not EFCC had obtained an order of Court at its peril.
I agree with learned counsel for the Respondent that the procedure set out in Section 34 of the EFCC Act must be followed by the EFCC and the bank or other financial institution.

Issue 1 is therefore resolved against the Appellant and in favour of the Respondent.

In paragraphs 1 and 2 of the statement of claim, the Respondent averred that he was a customer of the Appellant with account number 0048640829. The Appellant in paragraph 1 of the statement of defence admitted paragraphs 1 and 2 of the statement of claim. The Court below found the Appellant liable by virtue of that relationship. The finding was not based on any new issue raised suo motu by the Court below as learned counsel for the Appellant forcefully contended. There was therefore no need to call parties to further address the Court.

Issue 2 is also resolved against the Appellant and in favour of the Respondent.

In paragraph 13 of the statement of claim, the Respondent averred thus:
“The claimant further stated (sic) that the wrongful, unlawful and illegal freezing of his account was done by Defendant without any valid Court order.”

In response to the above averment, the Appellant pleaded in paragraph 12 of the statement of defence thus:
“In further response to paragraph 13 of the claim, the Defendant avers and

shall content at trial that the Defendant has no legal obligation to obtain any Court order before complying with the EFCC’s directives, nor the obligation to scavenge for proof that the EFCC has fulfilled the statutory conditions for the validity of its directives.”

Inspite of the above averments, learned counsel for the Appellant submitted that none of the parties pleaded that EFCC did or did not obtain a Court order. I do not agree. It is clear from paragraph 13 of the statement of claim that the Respondent pleaded the freezing of the account without any valid order of the Court. It is common ground between the parties that the responsibility to obtain the Court order was on the EFCC. See Section 34(1) of the EFCC Act reproduced above. That is why the Appellant in paragraph 12 of the statement of defence averred that it shall contend at trial that it had no legal obligation to obtain any Court order. The Appellant nowhere averred that a Court order was obtained by the EFCC in fulfillment of “the statutory conditions for the validity of its directives.”
It is clear from paragraph 13 of the statement of claim and paragraph

12 of the statement of defence that the parties pleaded the fact of EFCC obtaining or not obtaining an order of Court. As I pointed out above, the Appellant did not controvert the Respondent’s averment that the Court order was not obtained before the Respondent’s account was frozen. It is trite law that an averment in a party’s pleadings is deemed admitted if it is not specially denied or traversed. See decisions of this Court in Otto v. Mabamije (2004) 17 NWLR (pt. 903) 489 and British Airways v. Makanjuola (1993) 8 NWLR (pt. 311) 276. The Court below rightly held that the burden was on the Appellant to prove that EFCC obtained the order of the Court. This it failed to show in the pleadings. The Court below did not therefore err when it held that the order of the Court was not obtained before the account of the Respondent with the Appellant was frozen without any notice to him by the Appellant.

Issue 3 is resolved against the Appellant and in favour of the Respondent.

I do not agree with learned counsel for the Appellant that the Appellant was being punished for the sin of EFCC and that the Act did not give the Appellant the option

of disobeying EFCC. With respect to learned counsel for the Appellant, the Appellant had no business obeying an unlawful directive of the EFCC. The Appellant is only expected to comply with a lawful directive of the EFCC otherwise the rights of customers to their money in the bank would be arbitrarily interfered with. This would be contrary to the safeguards provided for under Section 34 of the EFCC Act. Section 34 of the EFCC Act is intended to prevent the EFCC from interfering arbitrarily with the rights of customers of the banks or other financial institutions to their funds. That purpose will not be achieved if the banks aid the EFCC as in this matter to illegally get their customers’ accounts frozen through the back door.
I agree entirely with learned counsel for the Respondent that the Respondent was entitled to damages for failure of the Appellant to ensure that the provisions of the EFCC Act were complied with before freezing the Respondent’s account. I agree with learned counsel for the Respondent that if the Appellant kept the EFCC company in its breach of the law, the Appellant cannot escape liability for the illegal freezing of the account of the Respondent.

Issue 4 is also resolved against the Appellant and in favour of the Respondent.

All four issues having been resolved against the Appellant and in favour of the Respondent, the appeal should be dismissed. The appeal is dismissed by me. The judgment of the Court below is affirmed by me.
Respondent is awarded N300,000.00 costs which shall be paid by the Appellant.

OYEBISI FOLAYEMI OMOLEYE, J.C.A.: I had the privilege of reading the draft of the leading judgment, in this appeal, just rendered by my learned Brother, J.S. ABIRIYI, JCA.

I am at one with His Lordship’s line of reasoning and conclusion that the appeal is devoid of merits. The appeal is equally dismissed by me and I abide by the consequential orders made in the said leading judgment, including that for costs.

FREDERICK OZIAKPONO OHO, J.C.A.: I had the opportunity of reading the draft of the judgment just delivered by my learned Brother, JAMES S. ABIRIYI, JCA and I am in agreement with the reasoning and conclusions in dismissing this Appeal as lacking in merit. I subscribe to the consequential orders made in the lead judgment.

Appearances:

MUHAMMED SANI UMAR, with him, ANITA PEREMOBOERE TUESDAY For Appellant(s)

OKEY BARRAH, with him, EMEKA EKWEOZOR For Respondent(s)