OLAM (NIGERIA) LIMITED v. INTERCONTINENTAL BANK LIMITED
(2019)LCN/13625(CA)
In The Court of Appeal of Nigeria
On Monday, the 6th day of July, 2009
CA/L/497/03
RATIO
WITNESS: WHO IS AN EXPERT WITNESS
The class of witnesses described as expert witnesses is well settled. It is imperative to state that every piece of evidence that has been admitted in the course of proceedings is subject to be tested for credibility, weight or cogency by the trial court before it becomes acceptable. In effect it is not merely acceptable because the witness is described as an expert and his evidence not challenged. The primary duty of the trial court is to evaluate the evidence before it is accepted whether given by an expert or not. See AG. OYO STATE V. FAIRLAKES HOTELS (No.2) 1989 5 NWLR (Pt.121) SC 255, HASKE V. MAGAJI 2009 All FWLR Pt. 461 C.A. 887. PER HON. JUSTICE REGINA OBIAGELI NWODO, J.C.A.
CONVERSION: WHAT IS CONVERSION
In CLERK AND LINDSELL ON TORTS 14 EDITITION PAGE 671 ARTICLE 1077. Conversion is defined thus:
“Conversion is an act of deliberate dealing with a chattel in a manner inconsistent with another right whereby that other is deprived of the use and possession of it.”
In OWENA BANK (NIG) LTD. V. N.S.C.C. Ltd. 1993 4 NWLR (Pt.290) CA 698. on what amounts to conversion. The court held
“Conversion is an injury to the plaintiffs possessing right on interest in the chattel converted”
The Supreme Court in BONIFACE ANYIKA & CO. (NIG) LTD. V. UZOR 2006 15 NWLR PT 1003 SC 560 per Tobi JSC said lawful justification with any chattel in a manner unconsistent with the right of another, whereby that other is deprived of the use and possession of that chattel.”
The definition ascribed to conversion in Clark and Lindsell on Torts 14 Edition page 671 article 1077 is also instructive.
To sustain a claim for conversion there should be in existence an injury to the plaintiff’s possessory right or interest in the chattel converted. In the instance case the 16 cheques issued in the name of Pacer Escrow Account was for a special purpose and the beneficiary is the Appellant. PER HON. JUSTICE REGINA OBIAGELI NWODO, J.C.A.
CAUSE OF ACTION IN CONVERSION
A cause of action in conversion therefore is based on an unequivocal act of ownership by a defendant of goods of the plaintiff without any authority. See OJINI V. OGO OLUWA MOTORS NIG. LTD 19981 NWLR (Pt. 534)
A plaintiff must prove ownership and Demand in an action on conversion and this was established by the Appellant. PER HON. JUSTICE REGINA OBIAGELI NWODO, J.C.A.
ACTION FOR MONEY HAD AND RECEIVED
An action for money had and received is a common law action and has always been used in circumstances whenever conversion lies and money have been received on behalf of the plaintiff by the Defendant. The claim is to compel the Defendant to restore such money to its true owner. See AEROFLOT V. U.B.A. supra or where the Defendant. The claim is obliged by the ties of natural justice and equity to refund the money. In the old English case of BROOKS WHARF & BULL WHARF LTD. V. GOODMAN BROTHERS. 1937 1 K.B. 534. Lord Wright M.R. on what sustains an action for money had and received stated:
“The obligation (to repay) is imposed by the court simply under the circumstances of the case and on what the court decides is just and reasonable having regard to the relationship of the parties. It is a debt or obligation constituted by the act of the law apart from any consent or intention of the parties or privity of contract”
See also ODUWOBI V. BARCLAYS BANK 1962 1 All NLR S.C. 141. PER HON. JUSTICE REGINA OBIAGELI NWODO, J.C.A.
BANKER CUSTOMER RELATIONSHIP: WHEN A BANKER COLLECTS A CHEQUE FOR A CUSTOMER HE ACTS MERELY AS AN AGENT
It is trite that when a Banker collects a cheque for a customer the banker acts basically as a mere agent for his customer, he receives payments and holds the proceeds at the disposal of his customer. This relationship in my firm view extends to a Beneficiary of the proceeds of cheque. PER HON. JUSTICE REGINA OBIAGELI NWODO, J.C.A.
JUSTICES
RAPHAEL CHIKWE AGBO Justice of The Court of Appeal of Nigeria
REGINA OBIAGELI NWODO Justice of The Court of Appeal of Nigeria
ADAMU JAURO Justice of The Court of Appeal of Nigeria
Between
OLAM (NIGERIA) LIMITED Appellant(s)
AND
INTERCONTINENTAL BANK LIMITED Respondent(s)
HON. JUSTICE REGINA OBIAGELI NWODO, J.C.A. (Delivering the Leading Judgment): The Plaintiff now Appellant commenced an action by writ of summons in the High Court of Lagos State against the Defendant now Respondent. In the further Amended Statement of Claim the plaintiff’s claim against the Defendant reads as follows:
WHEREOF the Plaintiff claims against the Defendant as follows:
(A) The total sum of N151,204,522.50 (One Hundred and Fifty-One Million, Two Hundred and Four Thousand, Five Hundred and Twenty-Two Naira, Fifty Kobo) being the damages suffered by the Plaintiff as a result of the Defendant’s wrongful/negligent collection of cheques marked “none negotiable” and “account payee only” totaling the sum of N151,204,522.50 (One Hundred and Fifty-One Million, Two Hundred and Four Thousand, Five Hundred and Twenty-Two Naira, and Four Thousand, Five Hundred and Twenty-Two Naira, Fifty Kobo) issued by Nigerian Bottling Company Plc for the account of PACERS’s escrow account”
Or in the alternative.
(B) The total sum of N151,204,522.50 (One Hundred and Fifty-One Million, Two Hundred and Four Thousand, Five Hundred and Twenty-Two Naira, Fifty Kobo) being the damages suffered by the Plaintiff as a result of the Defendant’s wrongful conversion of cheques marked “non-negotiable” and “account payee only” totaling the sum of N151,204,522.50 (One Hundred and Fifty-One Million, Two Hundred and Four Thousand, Five Hundred and Twenty-Two Naira, Fifty Kobo) issued by Nigerian Bottling Company Plc for the account of “PACER’s account”, by the collection and lodgment of the said cheques into the current account of Pacers Multy-Dynamics Limited.
Or still in the alternative,
(C) The total sum of N151,204,522.50 (One Hundred and Fifty-One Million, Two Hundred and Four Thousand, Five Hundred and Twenty-Two Naira, Fifty Kobo) being money had and received by the Defendants for the Plaintiffs use.
AND
(D) Interest in the sum of N140,637,592.41 on the principal sum of N 151 ,204,522.50 (One Hundred and Fifty-One Million, Two Hundred and Four Thousand, Five Hundred and Twenty-Two Naira, Fifty Kobo) from the 12th day of August, 1998 to the 30th day of June, 2001 at the averate prevailing rate for borrowing at all material times of 23% per annum and thereafter at the rate of 23% per annum thereon until judgment is delivered, and thereafter at the rate of 6% per annum until the entire judgment debt is fully liquidated.
In Brief the facts of the case are as follows:
The Appellant Olam (Nigeria) Limited entered into an agreement with Pacers Multi-Dynamics Limited (herein after described as Pacer) whereby the Appellant is to supply 80,000 bags of sugar to the Nigerian Bottling Company PLC (hereinafter referred to as NBC) on behalf of Pacers Multi-Dynamics Limited. Pursuant to the Agreement the Pacers Board of Directors passed a resolution in which they resolved that an escrow account be opened specifically for the trading relationship between the appellant and “Pacer” and that all payments by Nigerian Bottling Company be paid into that escrow account and same will be for repatriation to Olam International only. This Resolution was sent to the Defendant now Respondent, Intercontinental Bank Plc, the bankers to Pacers and the Bank wherein Pacer maintains a current account with the Respondent. Pacers then caused Nigerian Bottling Company (NBC) to issue to the Respondent a letter of domiciliation dated 11th May, 1998 confirming that 80,000 bags of sugar is to be supplied and the cheques issued in payment will be credited into Pacers escrow account with the respondent. The letter further directed the Respondent to pick up the cheques from Nigerian Bottling Company (MBA). The Respondent responded to Pacers request promptly by a letter dated 21 May, 1998 wherein they declined the request to open escrow account and informed Pacers expressly that any cheque issued by Nigeria Bottling Company and forwarded to Respondent would be paid into Pacers Current Account with the Respondent. The Appellant delivered the bags of sugar. The Respondent collected and cleared all the 16 cheques issued by Nigerian Bottling Company in favour of Pacers issued in the name of Pacer Escrow Account and paid the sixteen cheques of the value of N151.2 Million into Pacers Current Account and applied that amount to partially liquidate the N500 million, the alleged debt owed to the Respondent by Pacers. The Appellant then wrote to the Respondent to pay him the total value of the cheques collected. The Respondent refused. The Appellant then proceeded to the High Court, Seeking reliefs set out in the further Amended Statement of Claim. Parties filed and exchanged pleadings. One witness testified for the Appellant (plaintiff) and 10 witnesses testified for the Respondent.
Written submissions were equally filled. The trial Judge in a considered Judgment held:
“Negligence is a question of fact and not law. From the above definition, it seems the. Defendant acted within the business of practice of a bank, in ensuring that it is not a Father Christmas dashing, out deposits of its investors. Where does a customer expect the bank to get funds to satisfy depositors who have invested their money in the bank for saving purposes. That being the situation, issue of negligence does not arise as it is acting of its right.”
The plaintiffs dissatisfied with that decision filed a Notice of Appeal on 7/2/03 containing two grounds of Appeal. The Notice of Appeal was amended on 17/1/07 pursuant to an order of the court. The Appellant then filed Amended Notice of Appeal on 22/1/07 containing 7 grounds of Appeal.
In accordance with the rules of this court their respective Briefs of Argument were filed and exchanged. At the hearing of the Appeal on 7/4/09. Learned Senior counsel E.O. Sofunde adopted his Brief filed on 22/1/07 pursuant to Order of court made on 17/1/07. He also adopted his Reply Brief filed on 24/9/08 which was deemed filed on 13/10/08 by order of court. Learned Senior Counsel Chief F. O. Fagbohungbe adopted the Respondents Brief dated 30 July, 2007 filed on 31/7/07 and deemed properly filed by the court on 12/03/08. He relied also on his Respondents Notice of Intention to contend that Judgment should be affirmed on grounds other than those relied upon by the court below.
The Respondents Notice was Filed on 26/2/07 pursuant to an application for extension of time filed on 1/3/07. The Respondents notice was deemed filed and served on 24/4/07.
Me. E. O. Sofunde SAN in the Appellants Brief distilled 3 issues for determination which reads as follows:
1. whether the learned trial Judge was correct in not considering claims of the appellant based on conversion and money had and received as well as the claims for interest?
2. whether having regard to the nature of Pacers’ account held in its own right and the escrow account directed to be opened as well as the respondent’s response thereto, exhibit M2, the two accounts were held in the same right such that the respondent was entitled to convert the proceeds of exhibits A to H, the cheques made out to Pacers Escrow account, to its use for the purpose of extinguishing the debt of Pacers?
3. if the answer to 2 is in the negative, whether the appellant was
entitled to judgment as per its claim?
Whilst the Learned Senior Counsel Chief F. O. Fagbohungbe in the Respondent’s Brief formulated 4 issues for determination which reads as follows:
1. whether In the peculiar circumstances of this action, it was proper for Respondent Bank to apply the N151.2 Million proceeds of the sixteen cheques involved in this action to partially offset the undisputed N500 Million debt owed to Respondent by Pacers Multi-Dynamics Limited (in whose name all the cheques were issued), and not treat the proceeds of the cheques as funds held in trust for Appellant?
2. Does exhibit M2 contain or disclose an unequivocal and enforceable guarantee by Respondent Bank it would transfer the N151.2 Million proceeds of the sixteen cheques involved in this action to Appellant?
3. Are there other grounds based upon which this Honourable Court could affirm the judgement of the lower court other that the ground(s) relied upon in the judgment of the lower court?
4. Is Appellant entitled to judgment for its alternative claims for conversion and money had and received as well as the additional claim for interest in the circumstances of this action?
I must observe looking at the three Issues formulated by the Appellant’s Senior counsel that, Issues 2 and 3 are distilled from the same ground 2.
This is contrary to the Rules on formulation of issues, whereas one issue can be distilled from several grounds of appeal. It is inappropriate to distill more than one issue from one ground of appeal. I take it therefore that issue one is related to grounds 2, 4, 5 and 6 and issue 3 covers grounds 3 and 7 of the Notice of Appeal. Furthermore issue 2 distilled by the Appellant is similar to issue one formulated by the Respondent whilst issue 4 formulated by Respondent is similar to issue 3 by the Appellants. These issues are inter related and I will encapsulate the Respondent’s issues in the course of consideration of the Appellants three issues.
Under issue one whether the learned trial Judge was correct in not considering claims of the appellant based on conversion and money had and received as well as the claims for interest. The learned senior counsel Mr. E. O. Sofunde’s contention is that their claim for the principal sum of N151, 204,522.50 was based on negligence, or conversion and/or money had and received. In effect that their statement of claim contained 3 causes of action and 3 alternate claim but the learned trial Judge considered only one cause of action relating to Negligence. He submitted that a trial court is duty bound to consider all issues raised. He cited AFOLAYAN V. OGUNRINDE 1990 1 NWLR (Pt. 127) 369 at 383, ONIFADE V. OLAYIWOLA 1990 7 NWLR (Pt. 161 130 at 177 and OGOLO V. OGOLO & ORS. 2003 18 NWLR (Pt. 852) 494. He submitted that the trial Judge having failed to consider the evidence of P.W. 9, this court should consider same and apply the said evidence in line with the decision of the Supreme Court. In OLUJINLE V. ADEAGBO (1988) 2 AMERICAN CYNAMID V. VITALITY PHARMACEUTICALS LTD. (1991) 2 NWLR (Pt. 171) 15 at 28 per Olatawura J.S.C.
It is his submission that the learned trial Judge having failed to pronounce on the claim for conversion this court can determine the claim on facts lead in evidence which are consistent, uncontradicted, credible based on documentary evidence and admissions as shown under paragraphs 4. 1.1, 4. 14, 4. 22, 4. 25, 4.26, 4.29, 4.2.10, 4.42, 4.51 and 4. 8.2 of the Brief.
In respect of the claim for money had and received. Learned senior counsel submits that on the basis of the Respondent being a trustee of the funds meant for the escrow account the appellant is entitled to sue for money had and received. He cited NATIONAL BANK OF NIGERIA LIMITED V. MOBIL OIL NIGERIA LIMITED (1994) 2 NWLR (Pt.328) 534.
The main point arising from issue one formulated in the Appellant’s Brief is whether the trial Judge considered the two issues raised and argued by Appellant’s counsel in support of the claim for conversion and money had and received. If the lower court did not, then whether the court was right not to consider the issues raised under the alternative claims of conversion money and had and received. It is trite that issues raised by parties ought to be considered and determined.
The trial Judge considered the issue of Negligence and held there was no negligence and dismissed the action, the lower court having dismissing the first claim he must proceed to consider the alternative claim, the main claim having been refused. I have carefully scrutinized the Judgment of the lower court on pages 162 to 178 of the record of Appeal and the submissions of the learned counsels. The learned counsel representing the Appellant in the lower court under Issue of conversion submitted that, the nature of the account meant to be opened being a trust account, the defendant was a trustee holding the sums meant for the escrow account in trust for the plaintiff.
That by diverting the sums and using them to offset part of the debt of Pacers, the defendant was liable in conversion actionable by the plaintiff. The learned trial Judge on pages 172 – 174 considered the nature and issue of escrow account, and then held.
“The point must be made that no one who has a debt hanging over him to a bank and who has a deposit account or credit in its current account in a bank can afford to lull himself into fools paradise on the misguided belief that while the indebtedness which he guaranteed continue to exist. The bank cannot transfer an account from the fixed or deposit or current account to off-set the loan guaranteed. As long as there is a debt outstanding of which the General Manager was well aware he could not like Ostrich hide his head and believe erroneously that the bank will not have same form of lies on his account and use same to settle the indebtedness”
It is indisputable from the contents of the reproduced portion of the lower courts Judgment that the learned trial Judge did consider the learned counsels submission on issue of conversion. The court did not properly appraise the evidence and was not specific in findings of fact but did address the constituents of conversion in the judgment and held that the Respondent can use any money coming into Pacers Account to offset the debt of Pacer outstanding. In other words that the money was not converted. This point is evidenced in the Amended Notice of Appeal under Grounds 4 of (see page 100). The Appellant’s submission in the lower court under money had and received is that by the nature of the account meant to be opened and the relationship between the defendant and plaintiff, the Defendant, being a trustee of the funds meant for escrow account for the benefit of the plaintiff the later is entitled to sue for money had and received. The trial Judge on pages 171 – 172 considered the provision of section 290 of Companies and Allied Matters Act 1990 on liability of companies and the case of GERNETT V. MIKEWON 1872 LR 18 Ex. 10 on the Banks entitlement to utilize credit in another account to offset debt in a debit Account and the court held on page 175 of the record as follows:
“A money deposited with a bank is a loan and a chose in action assignable like any other debt.”
It is my view that the lower court considered the claim on conversion and money had and received. The facts constituting the three main causes of action are interrelated. The learned trial Judge from his own style of writing lumped together the issues but the basics were considered. To consider is one point to consider well is another.
The claim on interest is dependent on the success of the main claim and the determination of the Issue of interest is founded on the main claim from which it is rooted. Since the trial Judge held there was no Negligence any decision on interest will be mere academic exercise, worthless and of no probative value.
Issue one fails
The question arising under Issue two is whether having regard to the nature of Pacers account held in its own right and the escrow account directed to be opened as well as the Respondents’ response thereto, in exhibit M2 the two accounts were held in the same right, such that the Respondent was entitled to convert the proceeds of exhibits A to H, the cheques made out to Pacers Escrow account, to its use for the purpose of extinguishing the debt of Pacers? This issue is related to the issue formulated by the Respondent which is whether in the peculiar circumstances of this action, it was proper for Respondent Bank to apply, the N151.2 million proceeds of the sixteen cheques involved to partially offset debt owned to Respondent by Pacers and not treat the proceeds of the cheques as funds held in trust for Appellant. Issue 3 is on whether the Appellant was entitled to judgment. I will consider this issues 2 and 3 together inclusive of issues formulated from the Respondent Notice of Contention. Learned Senior Counsel Mr. Sofunde in his Brief extensively addressed the value of the evidence of the witnesses analyzing them under issues of facts. It is settled law that the appraisal of facts is the duty of the trial Judge and the Appellant court will only intervene when the finding is perverse or wrongly made. I will refer to this analysis when the need arises in the consideration of the issues raised. The learned senior counsels submission is that this court should apply the evidence of the P.W. 9 on the existence of a Trading Relationship between the Appellant and pacers in respect of which all sums earned by the Appellant were to be placed in an Escrow Account with the Respondent.
It is his submission that the documentary evidence exhibit K, L, L1, M, M1 and M2 should be a barometer for evaluating P.W. 9’s oral testimony and the court should lean towards accepting as proved what the documents tends to establish. He cited OLUJINLE V. ADEAGBO 1988 2 NWLR (Pt. 75) 238 AT 254. He urged the court to give exhibit M2 during interpretation its ordinary grammatical meaning as there is nothing unambiguous about exhibit M2. He contended that exhibit M2 should have been construed in the light of the contention of the Appellant that there was unqualified guarantee to transfer the money to Appellant, as the words “we guarantee any transfers to Olam Account”, should be given their natural and ordinary meaning not in the light of the contention of the Respondent that it would not transfer the funds at all as it had no such obligation which meant that the word “guarantee” must be ignored completely.
Learned Senior Counsel Chief F. O. Fagbohungbe. Submits that exhibit M2 does not contain any enforceable guarantee on the part of Respondent to pay the proceeds of the sixteen cheques to the Appellant.
It is his contention firstly that assuming without conceding, that exhibit M2 contained a guarantee at all, it was at best, a guarantee to pay the proceeds of the sixteen cheques into “Olam Account”. It was not a guarantee to pay the proceeds of the sixteen NBC cheques into “Pacers Escrow Account”. He contended that the applicant did not plead nor testify that any account named “Olam Account” was opened with Respondent Bank for the purpose of NBC cheques. Secondly he contended the word “subsequent” shows that what Respondent guaranteed if at all, was any future request for transfer that may be made by Pacers. Thirdly, that the use of the word “all” shows that the NBC cheques without exemption were going to be paid into Pacers current account. Mr. Sofunde SAN, further submitted that the Respondent having accepted the cheques and cleared them, the Respondent was obliged to either open the escrow account or at the worst live up to it guarantee in exhibit M2. He further argued that the escrow account directed to be created is different from Pacer’s Current account and must be kept separately. He contended that the funds directed to be placed in an escrow account were for the benefit of the appellant. He submits that on the authority of BARCLAYS BANK LTD. V. QUISTCLOSE INVESTMENTS LTD. 1968 3 All E.R. 651 and E.R. 651 and NATIONAL BANK OF NIGERIA LTS. V. SAVOL WEST AFRICAN LIMITED 1994 3 NWLR (Pt.333) the moneys were trust funds and the respondent was a trustee. Learned senior counsel Sofunde then submits that being trust funds they could not legitimately be used to offset the indebtedness of Pacers. See BRITISH AND FRENCH BANK LTD. V. OPALEYE 1962 All N.L.R. 26 ALLIED BANK OF NIGERIA LTS. V. AKABUEZE 19976 NWLR (Pt.509) 374.
It is his further submission that the Respondent was aware the funds were trust fund and is liable. He referred to UNDERHILL & HEYTON LAW OF TRUST AND TRUSTEES 14 Edition of page 361 under the Caption “Position of bankers”. It is his contention therefore that the Respondents alleged ratification in exhibit S to the effect that the 152 Million paid into Pacers Current account be used to offset its debt would amount to a fraudulent use of Pacers account to the knowledge of the Respondent. The facts that are not indispute in this case at the expense of repetition is that the Appellant entered into an agreement with Pacers to supply 80,000 bags of sugar to the NBC. That agreement was tendered in evidence as Exhibit L. The unchallenged exhibit L contains a term in the agreement that Pacers shall open a letter of Domiciliation for the Purchase Price with the Respondent which sum shall be for the Credit of Pacers Escrow Account to be used specifically for the trading relationship between the Appellant and Pacers. It is also part of the agreement that all payments into the account shall be for repatriation to Olam International Limited only. Consequent, on this terms, Pacers Board of Directors passed a Board Resolution exhibit ‘L1’ that Pacers Escrow Account be opened specifically for trading relationship between appellant and Pacer and that all payments therefrom be paid into an escrow account for repatrition to the Appellant Pacers wrote to the NBC to domicile the value of the 80,000 bags of sugar to Pacers Multi Dynamics Limited Escrow Account with the Respondent (Nigerian Intercontinental Merchant Bank). NBC wrote a letter of Domiciliation to the Respondent instructing that payment on the domiciliation will be directly into Pacers Escrow Account with the Respondent and directing, that their representative pick the respective cheques from NBC. The Respondent on 21 May, 1998 replied Pacer declining their request to open an Escrow Account, Exhibit M2 on that same date as reflected in exhibit M1 Pacer wrote expressing surprise at that decision when they had actually discussed the objective in establishing the escrow account before they instructed NBC Plc to domicile payment into that account. The Appellant supplied the quantity of sugar agreed and the Respondent collected the 16 cheques issued in the name of Pacers Escrow Account” and paid all into pacers Current Account. The value of 152 Million was used to off set part of Pacers debt with the Respondent. These facts were not disputed in evidence and were supported by documentary evidence. The area of contest lies basically on the following: firstly, on the construction of exhibit M2, vis a vis whether the contents created an enforceable guarantee. Secondly whether the Respondent was holding the value of the cheques collected from NBC in trust as trust fund for the Appellant. Thirdly whether the Respondent was under an obligation to open an account known as “Pacers Escrow Account”. Fourthly whether the Respondent was right to pay the cheques into Pacers current account and credit the value into Pacers debt. Fifthly whether it is the duty of Respondent to inform the Appellant of his refusal to open the escrow Account. Exhibit M2 calls for interpretation and I will reproduce the contents of exhibit M2 for purpose of emphasis.
“May 21, 1998
The Managing Director
Pacers Multi-Dynamics Limited
Plot 2, Lateef Jakande Road
Agidingbi – Ikeja
Lagos.
Attention: Muyiwa Fagbemi
Dear Sir ,
ESCROW ACCOUNT
The above subject matter refers.
Our Executive Management has declined your request to open the above mentioned account. It was also decided that all cheques from NBC should be lodged into your current account. We guarantee any subsequent request for transfer to Olam Account. We thank you for your usual co-operation.
Yours faithfully
NIGERIAN INTERCONTINENTAL MERCHANT BANK LIMITED
STAN EHIRIMÂ Â Â Â Â Â Â Â Â Â Â Â Â Â EMEKA ODO
CORPORATE ACCOUNTS GROUP MANAGER
CORPORATED ACCOUNTS GROUP”
The learned trial Judge in the interpretation of the contents of exhibit M2 held:
“My understanding of Exhibit “M2″ is that when Pacers has liquidated its debt of 500 million, them it would be in a position to meet transfer of any other payment to Olam Account.”
A critical construction of exhibit M2 shows clearly that, three messages are communicated through the contents. First is that the Executive Management has declined the request by Pacer to open an Escrow Account, second is the further decision of the Respondent to lodge all cheques from NBC into Pacers Current Account and third message which has generated different interpretation is whether the guarantee is enforceable and whether the word “subsequent” refers to future request or immediate transfers to Olam Account. The word “guarantee” should be construed in its ordinary, grammatical meaning as used in the context of the letter. This is because the important features of a legal guarantee is lacking is exhibit M2. The legal nature of a guarantee requires that there be a valid contract of guarantee between the surety and guarantee.
It is a contract whereby the guarantor promises the actual or potential creditor of their promise to be responsible to him in addition to the principal debtor for the due performance by the principal debtor of his existing or future obligations to the creditor, if the principal debtor fails to perform those obligations. See R.M. Good commercial law (1982) ch. 33, Chitty on Contracts (26 edition, 1989) vol.11 Ch.12. The legal guarantee requires the surety to provide a secondary obligation to the creditor.
The described features do not apply in the present circumstance. In Blacks Law Dictionary Eight Edition the word Guarantee is defined as follows:
“a promise to answer for the payment of some debt or the performance of some duty, in case of the failure of another who is liable in the first instance” Thus, it is an undertaking to do some thing. It is my view that Exhibit M2 should be interpreted in line with the ordinary meaning ascribed to the word guarantee in the dictionary. The Respondents statement on guarantee is in respect of any future request Pacer will make for them to transfer the value of the cheques to Olam Account. The letter exh.M2 must be read as a whole in order to effectively reflect the import of the third paragraph, on guarantee to transfer to Olam Account. The phrase subsequent request, for transfer cannot be isolated from the phrase “All cheques from NBC” used in the second paragraph of the letter. I agree with the fervent contention of Learned Senior Counsel that the guarantee in exhibit M2 is in respect of payment into Olam’s account, upon subsequent request, this is in line with the due construction of Exhibit M2. In effect the writer of Exhibit M2 assured Pacer that they will pay the value of the cheques into Pacers Current Account and that any future request for transfers to Olam Account will be honoured having refused to open the Escrow Account.
A distinction must be made between lodgments of cheques and “transfers” The guarantee was to transfer from the current Account into Olam Account not lodgment of cheques into Olam Account. I must add that the Current Account is the Account referred to. The reference to Olam Account is significant in that it further reflects the actual notice on the part of the Respondent that the cheques described as all cheques from NBC has nexus to the Appellants, by reference to “Olam Account”.
The learned trial Judge’s interpretation that transfer will be made when Pacer has liquidated its debt is contrary to the contents of the letter exhibit M2. That letter did not talk about debt nor liquidation. In the construction of the contents of a document a court is bound to look at the words used therein and not import facts not stated in the document except where reference is made to another document. I therefore find no legal guarantee in exhibit M2 but assurance to transfer to Olam Account on future request from the proceeds of the cheques cited in the letter, having refused to open the escrow account. The payment cannot be on basis of future cheques as contended but the cheques described in the same letter as “all cheques”. The next question is whether the Respondent was right to pay all the fifteen cheques into Pacer Current Account when the cheques are addressed to Pacer Escrow, Account and whether there was a relationship of trust in existence and whether it was proper for the Respondent to offset the debt of Pacer from the value of the cheques.
P.W.1 Mr. Oparah, a Senior Manager in Union Bank of Nigeria in his testimony stated that exhibit A-A2 are crossed, not negotiable account Payee cheque and that in Bank practice the remarks means the cheques must be made payable into the account of the payee. Under cross examination he said the name of the plaintiff appears on the cheque. Contrary to that evidence the name on exhibit “A and exhibit A1” is “NIMBL AIC PACERS ESCROW” not Olam the Plaintiff. PW2 a manager in F.S. B. International tendered exhibit “B”, told the court the cheque is addressed to NINBL Account Pacers Escrow, that it is for the Account of Pacers Escrow. Under cross examination he said the cheque should go to Pacers Account with NINBL. PW3 a Deputy Manager Zenith International Bank tendered Exhibit C stating the cheque should be paid into Pacer Escrow Account and if no Account should be returned. P.W.4 a legal officer Africa Nig. Plc. also tendered exhibit D, D1 and D2. He had no knowledge of any arrangement to pay other than by Escrow Account.
P.W.5 a Deputy Manager, Eco Bank Nig. Plc, he tendered exhibit E and F and said that the Payees are NINPL Account Pacers Escrow.
Under cross examination he said the beneficiary is Pacers Escrow Account.
P.W.6 tendered exhibit G stating the Beneficiary is Pacers Escrow Account.
P.W.7, tendered exhibit H stating again the beneficiary of the Crossed Cheque is Pacers Multi Dynamic Ltd. Escrow.
P.W. 8 – signatory to the cheques tendered same and marked exhibit AK. All these witnesses identified and tendered the cheques drawn on their Bank as Pacers Escrow Account. The contradiction by P.W.1 that the name on exhibit A-A1 is the Appellant name is not in consonance with the two documents he tendered. Both exhibits A-A1 are issued in the name of Pacers Escrow Account. The Documentary evidence lends weight to oral testimony. It serves as an action from which oral testimony is weighed. for good measure. See BURAIMOH V. ESA 1990 2 NWLR (Pt. 133) 406, KIMDEY V. MILITARY GOVERNOR GONGOLA STATE 1988 2 NWLR (Pt. 77) 445.
PW1’s evidence on exhibit A – A2 drawn in the name of Appellant is wrong. However the conflict is not strong to hold his evidence is of no value when the documentary evidence speaks for itself.It is trite the best evidence to challenge documentary evidence is same Documentary evidence. I will not disregard his evidence. Nevertheless all the cheques tendered are clearly written “A/c Pacers Escrow” and are crossed.
The instruction is that it should be paid into Pacers Escrow Account. It is an instruction on the collecting and paying Bank. It is pertinent to at this stage first look at the nature of this relationship. The nature of a Banker and customer relationship was set out by lord Atkin in JOACHIMSON V. SWISS BANK CORPORATION (1921) 3 KB 110 COURT OF APPEAL where he held:
“The bank undertakes to receive money and to collect bills for its customer’s account. The proceeds so received are not to be held in trust for the customer, but the bank borrows the proceeds and undertakes to repay them. The promise to repay is to repay at the branch of the bank where the account is kept, and during banking hours. It includes a promise to repay any part of the amount due against the written order of the customer addressed to the bank at the branch, and as such written orders may be outstanding in the ordinary course of business for two or three days, it is a term of the contract that the bank will not cease to do business with the customer except upon reasonable notice. The customer on his part undertakes to exercise reasonable care in executing his written orders so as not to mislead the bank or to facilitate forgery. I think it is necessarily a term of such contract that the bank is not liable to pay the customer the full amount of his balance until he demands payment from the bank at the branch at which the current account is kept.”
Clearly in the ordinary case of banker and customer, their relationship depend either entirely or mainly upon an implied contract but governed by obligations. Bankers accept money from and collect cheques for their customers and place them to their credit, they also honour cheques or orders drawn on them by their customers when presented for payment and debit. A Bank is not under an obligation to open any special account that is not part of the initial agreement that created the relationship of Banker – Customer. In the instance case Pacers instruction to the Respondent to open an Escrow account amounts to an offer to the Bank which they had the right to accept or refuse. There is no evidence that the offer was accepted. The Respondent refused. He was under no obligation to open the Escrow Account. The nature of an Escrow Account is different from the Current Account which Pacer already enjoys with the Respondent. An Escrow Account is defined in Blacks Law Dictionary as follows:
“A Bank Account generally held in the name of the Depositor and an escrow agent which is returnable to depositor or paid to third person on the fulfillment of escrow condition”
See N.B.N. LTD. V. SAVOL W.A. LTD (1994) 3 NWLR (Pt 332) C.A.435.
When the Respondent declined to open this account the relationship and obligation that would have arisen from this special account failed. The nature of Current Account and Escrow Account are distinct and separate. See BRITISH & FRENCH BANK LTD. V. OPALEYE 1962 ANLR pg.26.Therefore since the cheques were issued to Pacers Escrow Account the Respondent had no express or implied right to pay the cheques into a Current Account contrary to the instruction on the cheques. It must be paid into Pacers Escrow Account, the payee. The Accounts are distinct. The inexistence of the Escrow Account placed an obligation on him to return the cheques. In BRITISH & FRENCH BANK LTD. V. OPALEYE supra Mr. Opaleye the customer of the Bank had two accounts at the Bank, one in his name and the other in the name of the firm and he was the sole account holder. The firm account was overdrawn to the extent of ?500 and when a cheques of ?350 was paid into the private account the Bank decided to utilize the money from the private account in order to reduce the overdraft in the firms account. The Bank utilized the money from the private account to reduce the overdraft in the firms account. Opaleye told the Bank that ?350 less his commission belonged to the stranger whose properly he had sold, the Supreme Court held:
“I think it can be said with justice that very strongly implied an agreement to keep them separate and distinct, without any right on the part of the Bank to combine them or to transfer assets from one account to the other, at any rate not without reasonable notice of the intention so to do”
The learned senior counsel for the Respondent cited the cases of FIRST BANK OF NIGERIA LTD. V. OSUNSEDO 1997 11 NWLR Pt 527 132 and FISRT BANK OF NIGERIA LTD. V. AFRICAN PETROLEUM LIMITED 1996 4 NWLR (Pt. 443) 238 to support his submission that the Bank was proper and lawful to have used the N151.2 Million proceeds of the sixteen cheques that were all issued in the name of Pacers and paid into Pacers Current Account with Respondent bank to offset part of the N500 Million debt alleged, owed to the Bank. In First Bank of Nigeria case earlier cited. Ayoola JCA held
“Barring arrangement whereby the Bank has granted a loan to the customer on terms as to repayment the Bank when it had placed to the credit of the customer moneys to which the customer is liable to reimburse the bank is entitled to debit the account of the customer without instruction from the customer”.
The Question, that arose in that case was whether when a Banker has placed the value of a cheque to the credit of the customer and the cheques is afterwards dishonoured, it needs an express authorization before it debits the account of the customer with the amount of the returned cheque. This court held that the customer is liable to reimburse the bank.
In Osunsedo case the court of Appeal held that a Bank can use money of a customer in a deposit account to set off a debt owed to it, the deposit money being the unmentioned security. This is not the scenario in the instance case. The 16 cheques were to be drawn on the name of Pacers Escrow Account. This account was not opened. It was paid into a Current Account against the instruction. What is wrong from the foundation remains wrong there cannot be any justification. The principles of law set in First Bank case and Osunsedo are not apposite to the present facts. In those two cases both accounts were owned solely by the customer. In the instance case cheque was issued in the name of a non-existence account. The learned trial Judge rightly defined an escrow account but went wrong when he stated in the light of evidence presented before him that plaintiff has failed to prove that the accounts are not held in the same right. It is indisputable that Escrow Account is not the same as a normal current account enjoyed “by Pacer” with the Respondent. The Rights arising therefrom and the beneficiers are not the same. Exhibit M written to the Respondent contained specific facts on the purpose of the request for escrow account which is founded on an agreement between Pacers Respondent’s customers and Appellant the third party. The agreement to supply the sugar was executed and exhibit K the letter of Domiciliation written by NBC to the Respondent is further notice of the domiciliation of the Account, the purpose for the payment and the instruction to pick the respective cheques from the NBC. The Respondent was clearly on notice. What then is the legal position? In other words did the Respondent hold the value of the 16 cheques totaling N152 Million in trust and was the said sum Trust fund. Learned counsel to the Respondent submitted that the requirements for creation of a trust are the certainty of words, certainty of subject matter and certainty of objects or person all collectively referred to as the three certainties and must all exist in any given circumstance in which a trust exist. It is his contention that the Respondent was not a party to exhibit L the agreement to tender for supply of sugar and to open Escrow Account and that he informed Pacers he will pay the cheques into Pacers Current Account, but Pacers still directed NBC to hand over the sixteen cheques to him. He submits that the uncontradicted evidence contained in exhibit M1 and M2 show that there was no certainty of words or intention to create a trust in respect of the proceeds of 16 cheques and Respondent received the cheques free of trust. I do agree the test for express trust is the existence of the three certainties set out by Chief Fagbohungbe, that is when a trust is created intentionally by the act of the settlor. There is also implied trust. This is where the legal title to property is in one person and the equitable right based on the beneficial enjoyment of the same property in another, a court of equity will from those circumstances infer an implied trust. Therefore an implied trust is a trust founded upon the unexpected, but presumed intention of the settlor.
Under certainty of intention the words used must be examined to see whether the intention was to impose a trust upon the donee. The intention must also be genuine and not a stain as to where the settler did not intend the trust to be acted upon but entered into it for same ulterior motive such as deceiving creditors. In the instance case D.W.1 in evidence on page 123 of the record stated: “Exhibit L is the Board Resolution the Defendant did not request for the Board Resolution before it was sent to the Defendant”
This evidence reflects the fact that the Respondent though not a party to the Resolution of the Board was on notice as to its contents when he received exhibit L containing the agreement and the reason for the request by Pacer to open an account. D.W1 further in evidence stated that they did not respond to exhibit K the letter written on 11/5/90 by NBC on documentation and gave two reasons on the basis that NBC was not their customer and they did not request for the letter. The same Respondent still proceeded to collect the said cheques. Exhibit K was explicit on payment of the cheques directly into Pacers Escrow Account.
The specific request by Pacer and the cheques issued in the name of Pacers Escrow Account showed clearly an intention to open a special account for Trade purpose, that is to create a trust of the value of the cheque otherwise Pacers that already had a Current Account with the Respondent need not have requested for the opening of a special account. The subject matter was also specified with reasonable certainty that is, as to the value of the cheques totaling N152 Million as contained in exhibit M, the letter to the Respondent and exhibit K.
Under certainty of objects, the trust must be for ascertainable beneficiaries. See per Lord Denning in Re VONDERVELL’S TRUST (No.2.) (1974) Ch. 269 at 319. The cheques issued in the name of “Pacers escrow” was for the benefit of the Appellant. Exhibits L, L1 exhibit M2 is distinct disclosure that the Beneficiary of the value of the cheques is the Appellant. Exhibit M2 is an assurance by the Respondent that he will transfer the value of the cheques to Olam Account. That statement is confirmation they were aware that the Appellant is the Beneficiary of the cheques. Therefore the Respondent having collected the 16 cheques intended and expressed for a specific purpose the result is that a status of purpose trust evolved. There was sufficient intention to create a trust in respect of N152 Million in favour of the Appellant. The value of the cheques collected was within the ambit of a trust class. Furthermore the Bank acted as Pacers agent when they collected the cheques and owes the usual fiduciary duties of an agent to its principal. The customer, Pacers is not a party to this appeal nor in the lower court but the beneficiary is the Appellant and the instruction for Respondent to collect the cheques and pay into a specific account was flouted. The nature of the Banks general duty to exercise, reasonable, “care and skill” will arise in certain circumstances when the services provided are outside a contractive relationship of Banker and Customer. The Respondent had actual knowledge of the beneficiary and willfully shut his eyes, collected the cheques after declining to open the Escrow Account and recklessly paid them into a current account against the intention of his customer and owner of the cheques. The payee of the cheques is Pacers Escrow Account but Pacer has no escrow Account and Pacer by his request for a special account was certain he did not want the current account to be the Trading Account for the trade between himself and the Appellant. Rather than not collect the cheques Respondent paid into a different account. The cases of QUISTCLOSE INVESTMENTS LTD V. NATIONAL BANK OF NIGERIA LTD supra set out the general principle on the concept of trust. Both senior counsel addressed the court extensively on these two cases. I do agree with Chief Fagbohungbe that in Quistclose case the bank on request opened a special account unlike in the instance case where the Respondent declined to open the escrow account. Notwithstanding this distinction the principle on the concept of trust applies in the present situation. The purpose of the cheques collected by the Respondent was known to them, the fact that they collected the cheque placed a trust on them and the value of this cheques were paid into an account not designated as the payee obviously with the intention to offset the debt in an account that is in debit. The Appellant was trustee of the proceeds of the cheques. From the entirety of the facts in this case I am in doubt there was irrevocable intention that the appellant be the Beneficiary, having supplied the quantity of sugar to NBC on behalf of Pacer. Equally relevant to this Circumstance is the decision in RE: KAYFOLD LTD (In liquidation) 1975 1 All E.R. In that case the Managing Director of the company concerned about protecting customers who had send in money was advised to open a special account called a “customers Trust Deposit Account” into which such customers money will be deposed. The manager rather than open the account, the “Managing director agreed with his Banker to use an existing formal deposit account. After the customers funds had been deposited in the said account for the agreed purpose only, the Bank sought to apply those funds to other purposes. The court held that a trust had been created in favour of the customers of the company as the three certainties were present to create a trust. The same principle will apply in this case notwithstanding, the facts are not the same. The Refusal of the Respondent to open an escrow Account will not divest them of the trust created in respect of the proceeds of the 16 cheques collected by them from NBC. There is no evidence they complained on collection of the cheques, at different times as reflected on the dates in the cheques that Pacers “does not have “Pacer” escrow Account. Learned senior counsel for the Respondent submitted that they did not owe any duty to notify Appellant of the refusal of the Bank to open an escrow Account. It is his contention that the Respondent is only under a duty to Pacer and since NBC wrote to them they were not under any obligation to inform them of their refusal to open Pacer escrow Account. The Respondent received the letter from NBC and was under a duty to reply informing them there is no escrow Account. That is a reasonable thing to do.
Mr. Sofunde SAN submits that the Respondent having collected and cleared the cheques marked Account Payee only and not Negotiable, was on notice that the proceeds of the cheques were for the benefit of the Appellant, the Respondent breached its duty of care thereby causing damage to the appellant by failure to open Pacers escrow account and lodgment of the proceeds into Pacers Current account. The Appellant further stated it suffered injury when the proceeds meant for him were used to offset Pacers indebtedness, thereby depriving him of his right to the payment for supply of 80,000 bags of sugar. It is his further contention that the payment of the proceeds of Exhibits A to L1 other than in accordance with the mandate amounted to negligence.
Chief Fagbohungbe submitted that the payment into Pacers Current Account was done with Pacers advance knowledge and approval and that Pacer is the proper party liable for Appellants alleged loss and not Respondent. With the greatest respect to the learned senior counsel Pacer is not a party in this action for this court to hold he is the proper party liable for Appellants loss without hearing his own version. D.W1 in evidence stated that the crediting of the account was done with Pacers knowledge. This is insufficient for me to hold that Pacer was on notice. From the foregoing I hold there is merit under Grounds 2, 4, 5 and 6 and consequently those grounds succeed and I find issue 2 in favour of Appellant. Issue land 2 of the Respondent’s notice fails.
Under Issue 3 of Appellants Brief on whether Appellant was entitled to Judgment and issue 3 of Respondents Brief distilled from Respondents Notice on whether there are other grounds upon which this court can affirm the judgment of the lower court other than the grounds relied upon in the judgment.
The senior counsel to the Respondent raised 4 inter-twined sub issues first it is his contention that appellant is liable for its alleged losses due to its failure to stop Pacers or NBC from forwarding the sixteen cheques to Respondent. It is his submission that Appellant from the evidence of PW9 knew that the specimen signature before the escrow account could be opened and since they knew the signature cards had not been sent in, any reasonable person would know that the escrow account had not been opened. It is his further submission that Appellant displayed extreme culpable negligence by deeming it unnecessary to check whether an account with large amount was to be paid in and was to be controlled by him had it been opened. It is his contention that Appellant prior knowledge of the non-opening of the escrow account requested by Pacer made him liable or responsible for the losses or damages that were allegedly occasioned to him by his own failure to do anything to stop the issuance or payment of the cheques.
It is the Respondents contention that there is no duty owned to the Appellant and that appellant displayed culpable negligence. The Appellants contention is that the non existence of a Banker/Customer relation cannot disentitle him from succeeding in an action in negligence because the Respondent owes him a duty of care on the following grounds:
1. The cheques were marked “Account Payee only” and “not Negotiable”
2. The cheques were for Pacers escrow account and the proceeds of the cheques were to the knowledge of the Respondent for the benefit of the Appellant and
3. The Respondent collected and cleared the cheques.
The learned trial Judge on issue of Negligence rightly stated that Negligence is a question of fact and not law. Therefore each case must be decided in the light of its own facts. See NGILARI V. MOTHERCAT 1999 13 NWLR (Pt. 636). In general the three main ingredients of Negligence are as follows:
a) The Defendant owed the plaintiff a duty to exercise due care.
b) That the Defendant failed to exercise due care.
c) The Defendants failure was the cause of the injury suffered by the plaintiff.
See UMUDJE V. SHELL B. P. PETROLEUM CO. (NIG) LTD. KOVA V. UBA LTD. 1997 1 NWLR (Pt. 481)
d) OSIGWE V. UNIPETROL 2005 5 NWLR (Pt. 918) C.A. 261.
In AGBONMAGBE BANK LTD. V. C.F.A.O 1966 ANLR S.C. 130, the Supreme Court on what a plaintiff suing for Negligence must establish held that plaintiff must show that the Defendant owed him a duty of care and that he suffered damage in consequence of the Defendant’s failure to take care. In the instance case one would ask what is that duty of care owed to the Appellant by the Respondent bearing in mind that Appellant was not the Respondent’s customer.
The categories of duty of care is not restricted it depends on the circumstances which gives rise to the duty to take care. It must relate to the standards of the reasonable man in order to determine if any particular relationship gives rise to a duty to take care as between those who stand in that relation. This is why the English Court in the locus classicus case of DONOGHUE V. STEVENSON 1932 AC 562 held that notwithstanding there was no privity of contract between the plaintiff and the manufacturer he had a duty to take care towards potential customers because
“The Customers are persons whom the manufacturer ought reasonably to have in contemplation as closely and directly affected by his acts or omissions”
(Underling mine)
See HEDLEY BYRNER CO. LTD. V. HELTER & PARTNERS LTD 1964 A.C. 465 which case shows that Bankers owe a duty of care to persons whose Bank is making enquiry on their behalf. The facts of the instance case are peculiar. The Respondent was put on notice of Pacers resolution to open Pacers escrow account. The Board Resolution Exhibition L under paragraph 5 contains the following instruction:
“That this account is to be used specifically for the trading relationship between Pacers and Olam and all payments into the account shall be for repatriation to Olam International Ltd only.”
The cheques were then issued in the name of “Pacers Escrow” as payee only and not negotiable looking at the contents of Exhibit L. The Respondent had actual knowledge that the proceeds of the cheque, were for the benefit of the appellant, the Respondent collected and cleared the cheques; he was clearly under a duty to ensure that the beneficiary of the proceeds gets the value of the cheque. The Respondent as a Bank had the duty to exercise reasonable care and skill to the Appellant notwithstanding the absence of a contractual relationship. The Respondent had actual knowledge that the Appellant was to supply sugar to NBC and that was the main reason for the Escrow Account. The Pacer Escrow Account is a purpose Account obviously to secure the interest of the Appellant, who had given consideration by using his finances to supply sugar on the light of the agreement which included a clause that an Account “Pacer Escrow” wherein the value of the sugar supplied will be paid in. However since he had notice of the purpose of the special account and he was put on notice of the beneficiary of the value of the cheques addressed to Pacer Escrow Account, when he collected the sixteen cheques and had not opened an account as requested, was under obligation to conduct himself in a manner that will not affect the value of the cheques contrary to the intention of the Beneficiary, in effect the value on trust for the Appellant as the Beneficiary and became under a duty to exercise care for the benefit of the Appellant. The Appellant stood in a position that the Respondent ought reasonably to have had him in contemplation as person closely and directly affected by his act of collecting the proceeds of the cheques when they paid same into current account. That is the crux of the duty of care owed to the Appellant. The Respondent breached that duty when he lodged the proceeds of the cheques in Pacers Current account and applied them to offset Pacers alleged indebtedness without prior notification to the appellant. The Appellant is not liable for any culpable negligence; the instruction on the payment was made by Pacer to NBC.
  Furthermore the contents of Exhibit M2 wherein the Respondent guaranteed subsequent request for transfer to Appellant account is reassurance that Appellant money was safe in the hands of the Respondent and will be transferred on request. The cheques were marked “Account Payee only and “not Negotiable” The Respondent a Bank by its nature is in a privileged position to appreciate the legal effect of those terms but he still proceeded to pay cheques clearly marked “Pacers Escrow” into Pacers current account. Both are distinct and cannot be combined. The Respondent act was wrong and raises the question of the standard of the paying or collecting Bank and how it was cleared when the escrow account was not in existence. I do agree with the senior counsel for the Appellant that the injury suffered by the Appellant is that he lost the opportunity and ability to receive payment for 80,000 bags of sugar he supplied to NBC. Appellant did establish a claim for negligence. The learned trial Judge erred in his finding and decision that issue of negligence does not arise.
Chief Fagbojungbe contended that the PW2, PW3 and PW5 do not qualify as witnesses nor as expert witness.
The class of witnesses described as expert witnesses is well settled. It is imperative to state that every piece of evidence that has been admitted in the course of proceedings is subject to be tested for credibility, weight or cogency by the trial court before it becomes acceptable. In effect it is not merely acceptable because the witness is described as an expert and his evidence not challenged. The primary duty of the trial court is to evaluate the evidence before it is accepted whether given by an expert or not. See AG. OYO STATE V. FAIRLAKES HOTELS (No.2) 1989 5 NWLR (Pt.121) SC 255, HASKE V. MAGAJI 2009 All FWLR Pt. 461 C.A. 887.
The PW2, 3 and 5 responded to the subpoena. They tendered documents. The Respondent did not object. The Court allowed them to offer explanation in respect of the Documents. The documentary evidence is sufficient to determine the related issues connected with the contents of the documents which were not challenged. I have no good reason to reject the evidence of PW2, PW3, and PW5. The Appellants claim falls into 3 alternative parts, in effect 3 causes of Action. The first is Negligence, then conversion and money had and received. Having considered issue of Negligence I will still go further to look at the claim under conversion, as the causes are interrelated.
In respect of the claim for conversion it is the submission of Mr. Sofunde SAN that the nature of the account meant to be opened being a trust account, the respondent was a trustee holding the same meant for the escrow account in trust for the appellant. Accordingly by diverting the said sums and using them to offset part of the debt of Pacers the Respondent was liable in conversion actionable by the appellant. Many writers of law text books have given different definition to conversion. In CLERK AND LINDSELL ON TORTS 14 EDITITION PAGE 671 ARTICLE 1077. Conversion is defined thus:
“Conversion is an act of deliberate dealing with a chattel in a manner inconsistent with another right whereby that other is deprived of the use and possession of it.”
In OWENA BANK (NIG) LTD. V. N.S.C.C. Ltd. 1993 4 NWLR (Pt.290) CA 698. on what amounts to conversion. The court held
“Conversion is an injury to the plaintiffs possessing right on interest in the chattel converted”
The Supreme Court in BONIFACE ANYIKA & CO. (NIG) LTD. V. UZOR 2006 15 NWLR PT 1003 SC 560 per Tobi JSC said lawful justification with any chattel in a manner unconsistent with the right of another, whereby that other is deprived of the use and possession of that chattel.”
The definition ascribed to conversion in Clark and Lindsell on Torts 14 Edition page 671 article 1077 is also instructive.
To sustain a claim for conversion there should be in existence an injury to the plaintiff’s possessory right or interest in the chattel converted. In the instance case the 16 cheques issued in the name of Pacer Escrow Account was for a special purpose and the beneficiary is the Appellant.
The Appellant then has an interest in the cheques which value has been used to offset part of the debt owed to the Respondent by Pacer. The conduct of the Respondent in using the value of the cheques to clear some part of the debt owed by “Pacer” was inconsistent with Appellants right and amounted to deprivation of the 152 Million money due to the Appellant. The facts lead in evidence by the Plaintiff witnesses and the documentary exhibits on the existence of the agreement to supply NBC sugar between appellant and Pacer are not in dispute. Equally is the instruction by NBC that domiciliation is in respect of Pacer Escrow Account. The purpose of Escrow Account was duly clear in the letters and Resolution to the Respondent. The Respondent was in actual Notice but dealt with the cheques in a manner not authorized. The value was for a specific purpose known to him but using his privileged position collected the cheques after refusing to open the Escrow Account stated on the cheques and paid same into another Account. The Appellant demanded for the return of N152 Million but respondent refused.
NIGERIA SWEETS AND CONFECTIONARY CO. LTD. & ANOTHER 1993 4 NWLR (PT. 290) CA 698,. The Appellant established the claim on conversion.
There was an irrevocable intention to benefit the Appellant from the value of the cheques when he had supplied the quantity of sugar agreed. See also N.B.N. LTD. V. SAVOL W.A. LTD. 1994 3 NWLR (Pt. 333) C.A.435.
The Supreme Court in BONIFACE ANYIKA & CO. (NIG) LTD. V. UZOR 2006 15 NWLR PT. 1003 SC 560 per Tobi JSC said lawful justification with any chattel in a manner unconsistent wth the right of another, whereby that other is deprived of the use and possession of that chattel.”
A cause of action in conversion therefore is based on an unequivocal act of ownership by a defendant of goods of the plaintiff without any authority. See OJINI V. OGO OLUWA MOTORS NIG. LTD 19981 NWLR (Pt. 534)
A plaintiff must prove ownership and Demand in an action on conversion and this was established by the Appellant.
I will now look at the alternative claim for money had and received. Mr. Sofunde SAN submitted that the relationship between the Respondent and the Appellant is that of a trustee for the funds meant for the escrow account for which Appellant is the Beneficiary, that he is entitled to sue for money had and received. He cited AEROFLOT SOVIET AIRLINES V. UNITED BANK FOR AFRICA LIMITED 1986 3 NWLR (Pt.27) 188 at 198 and ODUWOBI V. BARCLAYS BANK D.C.O. 1962 All N.L.R 143.
An action for money had and received is a common law action and has always been used in circumstances whenever conversion lies and money have been received on behalf of the plaintiff by the Defendant. The claim is to compel the Defendant to restore such money to its true owner. See AEROFLOT V. U.B.A. supra or where the Defendant. The claim is obliged by the ties of natural justice and equity to refund the money. In the old English case of BROOKS WHARF & BULL WHARF LTD. V. GOODMAN BROTHERS. 1937 1 K.B. 534. Lord Wright M.R. on what sustains an action for money had and received stated:
“The obligation (to repay) is imposed by the court simply under the circumstances of the case and on what the court decides is just and reasonable having regard to the relationship of the parties. It is a debt or obligation constituted by the act of the law apart from any consent or intention of the parties or privity of contract”
See also ODUWOBI V. BARCLAYS BANK 1962 1 All NLR S.C. 141.
It is trite that when a Banker collects a cheque for a customer the banker acts basically as a mere agent for his customer, he receives payments and holds the proceeds at the disposal of his customer. This relationship in my firm view extends to a Beneficiary of the proceeds of cheque.
The Respondent had actual knowledge of the purpose of the cheques, he wrote exhibit M2 wherein he guaranteed the transfer on payment of the cheques, the Respondent breached his assurance when he used the proceeds to offset Pacers alleged indebtedness depriving the Appellant of the proceeds. The Appellants demanded for the proceeds and the Respondent wrote Exhibit a refusing to transfer on the basis that Pacer is owing the Bank. This clearly is a case of the Respondent using their position to unjustly offset the debts. They took advantage of their position to pay the cheques into the Current Account and offset the private arrangement of alleged loan between them and Pacer leaving the Appellant without his money.
The Appellant can sustain a claim under money had and received from the totality of the evidence and documentary evidence, it is my firm view that the claim of the Appellant succeeds on the three alternative prayers i.e. Negligence, as well as wrongful conversion of the proceeds of the cheque and the claim for money had and received. Though these three causes of action are independent, but the similar facts and evidence before the court established them respectively. I find Issues 2, 3 and 4 of the Respondent notice in favour of the Appellant.
In respect of the claim for interest Chief Sofunde submitted that the claim was pleaded and referred to the evidence of PW10 on pages 120 to 121 of the record. He submits that looking at the computation in exhibit R, the basis of the quantification of the amount of interest is clear that it starts from the 11th of August, 1998 to 30th of June, 2001. The computation was from the date the cheques which should have been lodged into the escrow Account would have been transferred to the appellants account, based on exhibit N. It is his contention that the period from 12/8/98 to 30/6/01 is the basis of the first part of the claim for N140,637,592.41 interest whilst the second part of the claim is for interest at rate of 23% per annum, Until judgment is delivered. He further stated, and contends that under common law, in situations where a person’s funds are wrongfully withheld the person may claim damages at the rate of interest on borrowing. He cited TATE & LYLE INDUSTRIES LTD. V. GREATER LONDON COUNCIL 1981 3 All E.R. 716 at Pg. 722.
The Appellant’s claim for interest falls into two parts: pre judgment and post judgment debt. A judgment debt is a debt or damage or other monetary award which has been pronounced upon by a court of competent jurisdiction. It begins when the court has pronounced its judgment in favour of the plaintiff. Therefore such interest are interest after adjudication and starts to run from date of judgment. It cannot be from the date of accrual of action. The Supreme Court in EKWUNIFE V. WAYNE W/A/ LTD. 1989 5 NWLR (Pt. 122) 422 held per Nnaemeka-Agu JSC:
“The power to award interest on a judgment debt rests on a different principle. It is at the discretion of the court to award it or not on pronouncing the judgment and with effect from that date.
In the instance case, the main sum of interest in the sum of N140,637,592.41 is based on calculation from 12 of August, 1998 till June 2001. This is clearly before the judgment pronounced. The question is whether the Appellant is entitled to his claim in interest: pre judgment and post judgment and at what rate. The power to award interest before judgment is based on statute or a right based on the common law or some equitable principle or contract. The nature of this interest makes it mandatory that before an award can be claimed, the facts in support must be pleaded and evidence lead to support the claim. The rate of interest and date to calculate from should be lead in evidence and clear. In EKWUNIFE V. WAYNE (WEST AFRICA) LTD. 1989 5 NWLR t.122 422. The Supreme Court held:
“Interest may be claimed as a right where it is contemplated by the agreement between the parties, or under a mercantile custom, or under a principle of equity such as breach of a judiciary relationship”
In effect award of interest before judgment is delivered is not granted merely for asking.
The guiding principle in respect of percentage of interest is the prevailing rate of bank interest. This calls for evidence establishing the rate. See EKWUNIFE V. WAYNE supra.
In TATE & LYLE FOOD AND DISTRIBUTION LTD. V. GREATER LONDON CONOI AND ANOTHER. 1981 3 All E.R.
716 Forbes J on how to arrive at the rate of interest in Commercial cases held that one must not look at the profit which the Defendant wrongfully made out of the money he withheld but at the cost to the plaintiff of being deprived of the money which he should have had.
In my view interest in commercial cases of this nature is not awarded against the Defendant as a punitive measure for having kept the plaintiff out of his money but as an attempt to achieve restitution in intergrum.
The Appellant claimed a fixed amount of 140,637.592.41 as interest for the period 12 of August, 1998 to 30 June, 2001. P.W.10 the head of Corporate Finance in evidence tendered exhibit R. He told the lower court he was approached by the plaintiff to compute the rate of interest for them. The period was from August 1998 to the date he gave evidence which from the record of Appeal is 20 of June, 2001. Exhibit R is a document containing the interest rate of lending between the 12/8/98 – 30/6/00. This is the period evidenced in exhibit R. PW10 stated that Exhibit R was based on the lending rate both from Commercial and Merchant Banks. This evidence was not challenged nor contradicted.
The plaintiff succeeded through PW10 to establish his claim on interest at the rate of 23% before judgment for the period 12/8/98 – 30/6/00. That is the period he is entitled to at the rate of 23%. Thus the lending rate of 23% of the value of the 16 cheques from 12 August, 1998 to 30 June, 2000 will give the total interest that is due to the Appellant as accrued before judgment.
Consequently this appeal succeeds in part and allowed. I invoke the powers conferred on this court under section 15 of the Court of Appeal Act and enter judgment in favour of the Appellant for the total sum of N151,204,522.50 being damages suffered by Appellants as claimed in the main relief under the further further further Amended Statement of Claim. I order interest at the rate of 23% on the said judgment sum for the period before Judgment covering 12 of August 1998 to 30th day of June, 2001 and interest post judgment at the rate of 6% on the principal sum of N151,204,522.50. I assess and award the Cost of N30,000 in favour of the Appellant against the Respondent.
WHEREOF the Plaintiff claims against the Defendant as follows:
(A) The total sum of N151,204,522.50 (One Hundred and Fifty-One Million, Two Hundred and Four Thousand, Five Hundred and Twenty-Two Naira, Fifty Kobo) being the damages suffered by the Plaintiff as a result of the Defendant’s wrongful/negligent collection of cheques marked “none negotiable” and “account payee only” totaling the sum of N151,204,522.50 (One Hundred and Fifty-One Million, Two Hundred and Four Thousand, Five Hundred and Twenty-Two Naira, and Four Thousand, Five Hundred and Twenty-Two Naira, Fifty Kobo) issued by Nigerian Bottling Company Plc for the account of PACERS’s escrow account”
Or in the alternative.
(B) The total sum of N151,204,522.50 (One Hundred and Fifty-One Million, Two Hundred and Four Thousand, Five Hundred and Twenty-Two Naira, Fifty Kobo) being the damages suffered by the Plaintiff as a result of the Defendant’s wrongful conversion of cheques marked “non-negotiable” and “account payee only” totaling the sum of N151,204,522.50 (One Hundred and Fifty-One Million, Two Hundred and Four Thousand, Five Hundred and Twenty-Two Naira, Fifty Kobo) issued by Nigerian Bottling Company Plc for the account of “PACER’s account”, by the collection and lodgment of the said cheques into the current account of Pacers Multy-Dynamics Limited.
Or still in the alternative,
(C) The total sum of N151,204,522.50 (One Hundred and Fifty-One Million, Two Hundred and Four Thousand, Five Hundred and Twenty-Two Naira, Fifty Kobo) being money had and received by the Defendants for the Plaintiffs use.
AND
(D) Interest in the sum of N140,637,592.41 on the principal sum of N 151 ,204,522.50 (One Hundred and Fifty-One Million, Two Hundred and Four Thousand, Five Hundred and Twenty-Two Naira, Fifty Kobo) from the 12th day of August, 1998 to the 30th day of June, 2001 at the averate prevailing rate for borrowing at all material times of 23% per annum and thereafter at the rate of 23% per annum thereon until judgment is delivered, and thereafter at the rate of 6% per annum until the entire judgment debt is fully liquidated.
In Brief the facts of the case are as follows:
The Appellant Olam (Nigeria) Limited entered into an agreement with Pacers Multi-Dynamics Limited (herein after described as Pacer) whereby the Appellant is to supply 80,000 bags of sugar to the Nigerian Bottling Company PLC (hereinafter referred to as NBC) on behalf of Pacers Multi-Dynamics Limited. Pursuant to the Agreement the Pacers Board of Directors passed a resolution in which they resolved that an escrow account be opened specifically for the trading relationship between the appellant and “Pacer” and that all payments by Nigerian Bottling Company be paid into that escrow account and same will be for repatriation to Olam International only. This Resolution was sent to the Defendant now Respondent, Intercontinental Bank Plc, the bankers to Pacers and the Bank wherein Pacer maintains a current account with the Respondent. Pacers then caused Nigerian Bottling Company (NBC) to issue to the Respondent a letter of domiciliation dated 11th May, 1998 confirming that 80,000 bags of sugar is to be supplied and the cheques issued in payment will be credited into Pacers escrow account with the respondent. The letter further directed the Respondent to pick up the cheques from Nigerian Bottling Company (MBA). The Respondent responded to Pacers request promptly by a letter dated 21 May, 1998 wherein they declined the request to open escrow account and informed Pacers expressly that any cheque issued by Nigeria Bottling Company and forwarded to Respondent would be paid into Pacers Current Account with the Respondent. The Appellant delivered the bags of sugar. The Respondent collected and cleared all the 16 cheques issued by Nigerian Bottling Company in favour of Pacers issued in the name of Pacer Escrow Account and paid the sixteen cheques of the value of N151.2 Million into Pacers Current Account and applied that amount to partially liquidate the N500 million, the alleged debt owed to the Respondent by Pacers. The Appellant then wrote to the Respondent to pay him the total value of the cheques collected. The Respondent refused. The Appellant then proceeded to the High Court, Seeking reliefs set out in the further Amended Statement of Claim. Parties filed and exchanged pleadings. One witness testified for the Appellant (plaintiff) and 10 witnesses testified for the Respondent.
Written submissions were equally filled. The trial Judge in a considered Judgment held:
“Negligence is a question of fact and not law. From the above definition, it seems the. Defendant acted within the business of practice of a bank, in ensuring that it is not a Father Christmas dashing, out deposits of its investors. Where does a customer expect the bank to get funds to satisfy depositors who have invested their money in the bank for saving purposes. That being the situation, issue of negligence does not arise as it is acting of its right.”
The plaintiffs dissatisfied with that decision filed a Notice of Appeal on 7/2/03 containing two grounds of Appeal. The Notice of Appeal was amended on 17/1/07 pursuant to an order of the court. The Appellant then filed Amended Notice of Appeal on 22/1/07 containing 7 grounds of Appeal.
In accordance with the rules of this court their respective Briefs of Argument were filed and exchanged. At the hearing of the Appeal on 7/4/09. Learned Senior counsel E.O. Sofunde adopted his Brief filed on 22/1/07 pursuant to Order of court made on 17/1/07. He also adopted his Reply Brief filed on 24/9/08 which was deemed filed on 13/10/08 by order of court. Learned Senior Counsel Chief F. O. Fagbohungbe adopted the Respondents Brief dated 30 July, 2007 filed on 31/7/07 and deemed properly filed by the court on 12/03/08. He relied also on his Respondents Notice of Intention to contend that Judgment should be affirmed on grounds other than those relied upon by the court below.
The Respondents Notice was Filed on 26/2/07 pursuant to an application for extension of time filed on 1/3/07. The Respondents notice was deemed filed and served on 24/4/07.
Me. E. O. Sofunde SAN in the Appellants Brief distilled 3 issues for determination which reads as follows:
1. whether the learned trial Judge was correct in not considering claims of the appellant based on conversion and money had and received as well as the claims for interest?
2. whether having regard to the nature of Pacers’ account held in its own right and the escrow account directed to be opened as well as the respondent’s response thereto, exhibit M2, the two accounts were held in the same right such that the respondent was entitled to convert the proceeds of exhibits A to H, the cheques made out to Pacers Escrow account, to its use for the purpose of extinguishing the debt of Pacers?
3. if the answer to 2 is in the negative, whether the appellant was
entitled to judgment as per its claim?
Whilst the Learned Senior Counsel Chief F. O. Fagbohungbe in the Respondent’s Brief formulated 4 issues for determination which reads as follows:
1. whether In the peculiar circumstances of this action, it was proper for Respondent Bank to apply the N151.2 Million proceeds of the sixteen cheques involved in this action to partially offset the undisputed N500 Million debt owed to Respondent by Pacers Multi-Dynamics Limited (in whose name all the cheques were issued), and not treat the proceeds of the cheques as funds held in trust for Appellant?
2. Does exhibit M2 contain or disclose an unequivocal and enforceable guarantee by Respondent Bank it would transfer the N151.2 Million proceeds of the sixteen cheques involved in this action to Appellant?
3. Are there other grounds based upon which this Honourable Court could affirm the judgement of the lower court other that the ground(s) relied upon in the judgment of the lower court?
4. Is Appellant entitled to judgment for its alternative claims for conversion and money had and received as well as the additional claim for interest in the circumstances of this action?
I must observe looking at the three Issues formulated by the Appellant’s Senior counsel that, Issues 2 and 3 are distilled from the same ground 2.
This is contrary to the Rules on formulation of issues, whereas one issue can be distilled from several grounds of appeal. It is inappropriate to distill more than one issue from one ground of appeal. I take it therefore that issue one is related to grounds 2, 4, 5 and 6 and issue 3 covers grounds 3 and 7 of the Notice of Appeal. Furthermore issue 2 distilled by the Appellant is similar to issue one formulated by the Respondent whilst issue 4 formulated by Respondent is similar to issue 3 by the Appellants. These issues are inter related and I will encapsulate the Respondent’s issues in the course of consideration of the Appellants three issues.
Under issue one whether the learned trial Judge was correct in not considering claims of the appellant based on conversion and money had and received as well as the claims for interest. The learned senior counsel Mr. E. O. Sofunde’s contention is that their claim for the principal sum of N151, 204,522.50 was based on negligence, or conversion and/or money had and received. In effect that their statement of claim contained 3 causes of action and 3 alternate claim but the learned trial Judge considered only one cause of action relating to Negligence. He submitted that a trial court is duty bound to consider all issues raised. He cited AFOLAYAN V. OGUNRINDE 1990 1 NWLR (Pt. 127) 369 at 383, ONIFADE V. OLAYIWOLA 1990 7 NWLR (Pt. 161 130 at 177 and OGOLO V. OGOLO & ORS. 2003 18 NWLR (Pt. 852) 494. He submitted that the trial Judge having failed to consider the evidence of P.W. 9, this court should consider same and apply the said evidence in line with the decision of the Supreme Court. In OLUJINLE V. ADEAGBO (1988) 2 AMERICAN CYNAMID V. VITALITY PHARMACEUTICALS LTD. (1991) 2 NWLR (Pt. 171) 15 at 28 per Olatawura J.S.C.
It is his submission that the learned trial Judge having failed to pronounce on the claim for conversion this court can determine the claim on facts lead in evidence which are consistent, uncontradicted, credible based on documentary evidence and admissions as shown under paragraphs 4. 1.1, 4. 14, 4. 22, 4. 25, 4.26, 4.29, 4.2.10, 4.42, 4.51 and 4. 8.2 of the Brief.
In respect of the claim for money had and received. Learned senior counsel submits that on the basis of the Respondent being a trustee of the funds meant for the escrow account the appellant is entitled to sue for money had and received. He cited NATIONAL BANK OF NIGERIA LIMITED V. MOBIL OIL NIGERIA LIMITED (1994) 2 NWLR (Pt.328) 534.
The main point arising from issue one formulated in the Appellant’s Brief is whether the trial Judge considered the two issues raised and argued by Appellant’s counsel in support of the claim for conversion and money had and received. If the lower court did not, then whether the court was right not to consider the issues raised under the alternative claims of conversion money and had and received. It is trite that issues raised by parties ought to be considered and determined.
The trial Judge considered the issue of Negligence and held there was no negligence and dismissed the action, the lower court having dismissing the first claim he must proceed to consider the alternative claim, the main claim having been refused. I have carefully scrutinized the Judgment of the lower court on pages 162 to 178 of the record of Appeal and the submissions of the learned counsels. The learned counsel representing the Appellant in the lower court under Issue of conversion submitted that, the nature of the account meant to be opened being a trust account, the defendant was a trustee holding the sums meant for the escrow account in trust for the plaintiff.
That by diverting the sums and using them to offset part of the debt of Pacers, the defendant was liable in conversion actionable by the plaintiff. The learned trial Judge on pages 172 – 174 considered the nature and issue of escrow account, and then held.
“The point must be made that no one who has a debt hanging over him to a bank and who has a deposit account or credit in its current account in a bank can afford to lull himself into fools paradise on the misguided belief that while the indebtedness which he guaranteed continue to exist. The bank cannot transfer an account from the fixed or deposit or current account to off-set the loan guaranteed. As long as there is a debt outstanding of which the General Manager was well aware he could not like Ostrich hide his head and believe erroneously that the bank will not have same form of lies on his account and use same to settle the indebtedness”
It is indisputable from the contents of the reproduced portion of the lower courts Judgment that the learned trial Judge did consider the learned counsels submission on issue of conversion. The court did not properly appraise the evidence and was not specific in findings of fact but did address the constituents of conversion in the judgment and held that the Respondent can use any money coming into Pacers Account to offset the debt of Pacer outstanding. In other words that the money was not converted. This point is evidenced in the Amended Notice of Appeal under Grounds 4 of (see page 100). The Appellant’s submission in the lower court under money had and received is that by the nature of the account meant to be opened and the relationship between the defendant and plaintiff, the Defendant, being a trustee of the funds meant for escrow account for the benefit of the plaintiff the later is entitled to sue for money had and received. The trial Judge on pages 171 – 172 considered the provision of section 290 of Companies and Allied Matters Act 1990 on liability of companies and the case of GERNETT V. MIKEWON 1872 LR 18 Ex. 10 on the Banks entitlement to utilize credit in another account to offset debt in a debit Account and the court held on page 175 of the record as follows:
“A money deposited with a bank is a loan and a chose in action assignable like any other debt.”
It is my view that the lower court considered the claim on conversion and money had and received. The facts constituting the three main causes of action are interrelated. The learned trial Judge from his own style of writing lumped together the issues but the basics were considered. To consider is one point to consider well is another.
The claim on interest is dependent on the success of the main claim and the determination of the Issue of interest is founded on the main claim from which it is rooted. Since the trial Judge held there was no Negligence any decision on interest will be mere academic exercise, worthless and of no probative value.
Issue one fails
The question arising under Issue two is whether having regard to the nature of Pacers account held in its own right and the escrow account directed to be opened as well as the Respondents’ response thereto, in exhibit M2 the two accounts were held in the same right, such that the Respondent was entitled to convert the proceeds of exhibits A to H, the cheques made out to Pacers Escrow account, to its use for the purpose of extinguishing the debt of Pacers? This issue is related to the issue formulated by the Respondent which is whether in the peculiar circumstances of this action, it was proper for Respondent Bank to apply, the N151.2 million proceeds of the sixteen cheques involved to partially offset debt owned to Respondent by Pacers and not treat the proceeds of the cheques as funds held in trust for Appellant. Issue 3 is on whether the Appellant was entitled to judgment. I will consider this issues 2 and 3 together inclusive of issues formulated from the Respondent Notice of Contention. Learned Senior Counsel Mr. Sofunde in his Brief extensively addressed the value of the evidence of the witnesses analyzing them under issues of facts. It is settled law that the appraisal of facts is the duty of the trial Judge and the Appellant court will only intervene when the finding is perverse or wrongly made. I will refer to this analysis when the need arises in the consideration of the issues raised. The learned senior counsels submission is that this court should apply the evidence of the P.W. 9 on the existence of a Trading Relationship between the Appellant and pacers in respect of which all sums earned by the Appellant were to be placed in an Escrow Account with the Respondent.
It is his submission that the documentary evidence exhibit K, L, L1, M, M1 and M2 should be a barometer for evaluating P.W. 9’s oral testimony and the court should lean towards accepting as proved what the documents tends to establish. He cited OLUJINLE V. ADEAGBO 1988 2 NWLR (Pt. 75) 238 AT 254. He urged the court to give exhibit M2 during interpretation its ordinary grammatical meaning as there is nothing unambiguous about exhibit M2. He contended that exhibit M2 should have been construed in the light of the contention of the Appellant that there was unqualified guarantee to transfer the money to Appellant, as the words “we guarantee any transfers to Olam Account”, should be given their natural and ordinary meaning not in the light of the contention of the Respondent that it would not transfer the funds at all as it had no such obligation which meant that the word “guarantee” must be ignored completely.
Learned Senior Counsel Chief F. O. Fagbohungbe. Submits that exhibit M2 does not contain any enforceable guarantee on the part of Respondent to pay the proceeds of the sixteen cheques to the Appellant.
It is his contention firstly that assuming without conceding, that exhibit M2 contained a guarantee at all, it was at best, a guarantee to pay the proceeds of the sixteen cheques into “Olam Account”. It was not a guarantee to pay the proceeds of the sixteen NBC cheques into “Pacers Escrow Account”. He contended that the applicant did not plead nor testify that any account named “Olam Account” was opened with Respondent Bank for the purpose of NBC cheques. Secondly he contended the word “subsequent” shows that what Respondent guaranteed if at all, was any future request for transfer that may be made by Pacers. Thirdly, that the use of the word “all” shows that the NBC cheques without exemption were going to be paid into Pacers current account. Mr. Sofunde SAN, further submitted that the Respondent having accepted the cheques and cleared them, the Respondent was obliged to either open the escrow account or at the worst live up to it guarantee in exhibit M2. He further argued that the escrow account directed to be created is different from Pacer’s Current account and must be kept separately. He contended that the funds directed to be placed in an escrow account were for the benefit of the appellant. He submits that on the authority of BARCLAYS BANK LTD. V. QUISTCLOSE INVESTMENTS LTD. 1968 3 All E.R. 651 and E.R. 651 and NATIONAL BANK OF NIGERIA LTS. V. SAVOL WEST AFRICAN LIMITED 1994 3 NWLR (Pt.333) the moneys were trust funds and the respondent was a trustee. Learned senior counsel Sofunde then submits that being trust funds they could not legitimately be used to offset the indebtedness of Pacers. See BRITISH AND FRENCH BANK LTD. V. OPALEYE 1962 All N.L.R. 26 ALLIED BANK OF NIGERIA LTS. V. AKABUEZE 19976 NWLR (Pt.509) 374.
It is his further submission that the Respondent was aware the funds were trust fund and is liable. He referred to UNDERHILL & HEYTON LAW OF TRUST AND TRUSTEES 14 Edition of page 361 under the Caption “Position of bankers”. It is his contention therefore that the Respondents alleged ratification in exhibit S to the effect that the 152 Million paid into Pacers Current account be used to offset its debt would amount to a fraudulent use of Pacers account to the knowledge of the Respondent. The facts that are not indispute in this case at the expense of repetition is that the Appellant entered into an agreement with Pacers to supply 80,000 bags of sugar to the NBC. That agreement was tendered in evidence as Exhibit L. The unchallenged exhibit L contains a term in the agreement that Pacers shall open a letter of Domiciliation for the Purchase Price with the Respondent which sum shall be for the Credit of Pacers Escrow Account to be used specifically for the trading relationship between the Appellant and Pacers. It is also part of the agreement that all payments into the account shall be for repatriation to Olam International Limited only. Consequent, on this terms, Pacers Board of Directors passed a Board Resolution exhibit ‘L1’ that Pacers Escrow Account be opened specifically for trading relationship between appellant and Pacer and that all payments therefrom be paid into an escrow account for repatrition to the Appellant Pacers wrote to the NBC to domicile the value of the 80,000 bags of sugar to Pacers Multi Dynamics Limited Escrow Account with the Respondent (Nigerian Intercontinental Merchant Bank). NBC wrote a letter of Domiciliation to the Respondent instructing that payment on the domiciliation will be directly into Pacers Escrow Account with the Respondent and directing, that their representative pick the respective cheques from NBC. The Respondent on 21 May, 1998 replied Pacer declining their request to open an Escrow Account, Exhibit M2 on that same date as reflected in exhibit M1 Pacer wrote expressing surprise at that decision when they had actually discussed the objective in establishing the escrow account before they instructed NBC Plc to domicile payment into that account. The Appellant supplied the quantity of sugar agreed and the Respondent collected the 16 cheques issued in the name of Pacers Escrow Account” and paid all into pacers Current Account. The value of 152 Million was used to off set part of Pacers debt with the Respondent. These facts were not disputed in evidence and were supported by documentary evidence. The area of contest lies basically on the following: firstly, on the construction of exhibit M2, vis a vis whether the contents created an enforceable guarantee. Secondly whether the Respondent was holding the value of the cheques collected from NBC in trust as trust fund for the Appellant. Thirdly whether the Respondent was under an obligation to open an account known as “Pacers Escrow Account”. Fourthly whether the Respondent was right to pay the cheques into Pacers current account and credit the value into Pacers debt. Fifthly whether it is the duty of Respondent to inform the Appellant of his refusal to open the escrow Account. Exhibit M2 calls for interpretation and I will reproduce the contents of exhibit M2 for purpose of emphasis.
“May 21, 1998
The Managing Director
Pacers Multi-Dynamics Limited
Plot 2, Lateef Jakande Road
Agidingbi – Ikeja
Lagos.
Attention: Muyiwa Fagbemi
Dear Sir ,
ESCROW ACCOUNT
The above subject matter refers.
Our Executive Management has declined your request to open the above mentioned account. It was also decided that all cheques from NBC should be lodged into your current account. We guarantee any subsequent request for transfer to Olam Account. We thank you for your usual co-operation.
Yours faithfully
NIGERIAN INTERCONTINENTAL MERCHANT BANK LIMITED
STAN EHIRIMÂ Â Â Â Â Â Â Â Â Â Â Â Â Â EMEKA ODO
CORPORATE ACCOUNTS GROUP MANAGER
CORPORATED ACCOUNTS GROUP”
The learned trial Judge in the interpretation of the contents of exhibit M2 held:
“My understanding of Exhibit “M2″ is that when Pacers has liquidated its debt of 500 million, them it would be in a position to meet transfer of any other payment to Olam Account.”
A critical construction of exhibit M2 shows clearly that, three messages are communicated through the contents. First is that the Executive Management has declined the request by Pacer to open an Escrow Account, second is the further decision of the Respondent to lodge all cheques from NBC into Pacers Current Account and third message which has generated different interpretation is whether the guarantee is enforceable and whether the word “subsequent” refers to future request or immediate transfers to Olam Account. The word “guarantee” should be construed in its ordinary, grammatical meaning as used in the context of the letter. This is because the important features of a legal guarantee is lacking is exhibit M2. The legal nature of a guarantee requires that there be a valid contract of guarantee between the surety and guarantee.
It is a contract whereby the guarantor promises the actual or potential creditor of their promise to be responsible to him in addition to the principal debtor for the due performance by the principal debtor of his existing or future obligations to the creditor, if the principal debtor fails to perform those obligations. See R.M. Good commercial law (1982) ch. 33, Chitty on Contracts (26 edition, 1989) vol.11 Ch.12. The legal guarantee requires the surety to provide a secondary obligation to the creditor.
The described features do not apply in the present circumstance. In Blacks Law Dictionary Eight Edition the word Guarantee is defined as follows:
“a promise to answer for the payment of some debt or the performance of some duty, in case of the failure of another who is liable in the first instance” Thus, it is an undertaking to do some thing. It is my view that Exhibit M2 should be interpreted in line with the ordinary meaning ascribed to the word guarantee in the dictionary. The Respondents statement on guarantee is in respect of any future request Pacer will make for them to transfer the value of the cheques to Olam Account. The letter exh.M2 must be read as a whole in order to effectively reflect the import of the third paragraph, on guarantee to transfer to Olam Account. The phrase subsequent request, for transfer cannot be isolated from the phrase “All cheques from NBC” used in the second paragraph of the letter. I agree with the fervent contention of Learned Senior Counsel that the guarantee in exhibit M2 is in respect of payment into Olam’s account, upon subsequent request, this is in line with the due construction of Exhibit M2. In effect the writer of Exhibit M2 assured Pacer that they will pay the value of the cheques into Pacers Current Account and that any future request for transfers to Olam Account will be honoured having refused to open the Escrow Account.
A distinction must be made between lodgments of cheques and “transfers” The guarantee was to transfer from the current Account into Olam Account not lodgment of cheques into Olam Account. I must add that the Current Account is the Account referred to. The reference to Olam Account is significant in that it further reflects the actual notice on the part of the Respondent that the cheques described as all cheques from NBC has nexus to the Appellants, by reference to “Olam Account”.
The learned trial Judge’s interpretation that transfer will be made when Pacer has liquidated its debt is contrary to the contents of the letter exhibit M2. That letter did not talk about debt nor liquidation. In the construction of the contents of a document a court is bound to look at the words used therein and not import facts not stated in the document except where reference is made to another document. I therefore find no legal guarantee in exhibit M2 but assurance to transfer to Olam Account on future request from the proceeds of the cheques cited in the letter, having refused to open the escrow account. The payment cannot be on basis of future cheques as contended but the cheques described in the same letter as “all cheques”. The next question is whether the Respondent was right to pay all the fifteen cheques into Pacer Current Account when the cheques are addressed to Pacer Escrow, Account and whether there was a relationship of trust in existence and whether it was proper for the Respondent to offset the debt of Pacer from the value of the cheques.
P.W.1 Mr. Oparah, a Senior Manager in Union Bank of Nigeria in his testimony stated that exhibit A-A2 are crossed, not negotiable account Payee cheque and that in Bank practice the remarks means the cheques must be made payable into the account of the payee. Under cross examination he said the name of the plaintiff appears on the cheque. Contrary to that evidence the name on exhibit “A and exhibit A1” is “NIMBL AIC PACERS ESCROW” not Olam the Plaintiff. PW2 a manager in F.S. B. International tendered exhibit “B”, told the court the cheque is addressed to NINBL Account Pacers Escrow, that it is for the Account of Pacers Escrow. Under cross examination he said the cheque should go to Pacers Account with NINBL. PW3 a Deputy Manager Zenith International Bank tendered Exhibit C stating the cheque should be paid into Pacer Escrow Account and if no Account should be returned. P.W.4 a legal officer Africa Nig. Plc. also tendered exhibit D, D1 and D2. He had no knowledge of any arrangement to pay other than by Escrow Account.
P.W.5 a Deputy Manager, Eco Bank Nig. Plc, he tendered exhibit E and F and said that the Payees are NINPL Account Pacers Escrow.
Under cross examination he said the beneficiary is Pacers Escrow Account.
P.W.6 tendered exhibit G stating the Beneficiary is Pacers Escrow Account.
P.W.7, tendered exhibit H stating again the beneficiary of the Crossed Cheque is Pacers Multi Dynamic Ltd. Escrow.
P.W. 8 – signatory to the cheques tendered same and marked exhibit AK. All these witnesses identified and tendered the cheques drawn on their Bank as Pacers Escrow Account. The contradiction by P.W.1 that the name on exhibit A-A1 is the Appellant name is not in consonance with the two documents he tendered. Both exhibits A-A1 are issued in the name of Pacers Escrow Account. The Documentary evidence lends weight to oral testimony. It serves as an action from which oral testimony is weighed. for good measure. See BURAIMOH V. ESA 1990 2 NWLR (Pt. 133) 406, KIMDEY V. MILITARY GOVERNOR GONGOLA STATE 1988 2 NWLR (Pt. 77) 445.
PW1’s evidence on exhibit A – A2 drawn in the name of Appellant is wrong. However the conflict is not strong to hold his evidence is of no value when the documentary evidence speaks for itself.It is trite the best evidence to challenge documentary evidence is same Documentary evidence. I will not disregard his evidence. Nevertheless all the cheques tendered are clearly written “A/c Pacers Escrow” and are crossed.
The instruction is that it should be paid into Pacers Escrow Account. It is an instruction on the collecting and paying Bank. It is pertinent to at this stage first look at the nature of this relationship. The nature of a Banker and customer relationship was set out by lord Atkin in JOACHIMSON V. SWISS BANK CORPORATION (1921) 3 KB 110 COURT OF APPEAL where he held:
“The bank undertakes to receive money and to collect bills for its customer’s account. The proceeds so received are not to be held in trust for the customer, but the bank borrows the proceeds and undertakes to repay them. The promise to repay is to repay at the branch of the bank where the account is kept, and during banking hours. It includes a promise to repay any part of the amount due against the written order of the customer addressed to the bank at the branch, and as such written orders may be outstanding in the ordinary course of business for two or three days, it is a term of the contract that the bank will not cease to do business with the customer except upon reasonable notice. The customer on his part undertakes to exercise reasonable care in executing his written orders so as not to mislead the bank or to facilitate forgery. I think it is necessarily a term of such contract that the bank is not liable to pay the customer the full amount of his balance until he demands payment from the bank at the branch at which the current account is kept.”
Clearly in the ordinary case of banker and customer, their relationship depend either entirely or mainly upon an implied contract but governed by obligations. Bankers accept money from and collect cheques for their customers and place them to their credit, they also honour cheques or orders drawn on them by their customers when presented for payment and debit. A Bank is not under an obligation to open any special account that is not part of the initial agreement that created the relationship of Banker – Customer. In the instance case Pacers instruction to the Respondent to open an Escrow account amounts to an offer to the Bank which they had the right to accept or refuse. There is no evidence that the offer was accepted. The Respondent refused. He was under no obligation to open the Escrow Account. The nature of an Escrow Account is different from the Current Account which Pacer already enjoys with the Respondent. An Escrow Account is defined in Blacks Law Dictionary as follows:
“A Bank Account generally held in the name of the Depositor and an escrow agent which is returnable to depositor or paid to third person on the fulfillment of escrow condition”
See N.B.N. LTD. V. SAVOL W.A. LTD (1994) 3 NWLR (Pt 332) C.A.435.
When the Respondent declined to open this account the relationship and obligation that would have arisen from this special account failed. The nature of Current Account and Escrow Account are distinct and separate. See BRITISH & FRENCH BANK LTD. V. OPALEYE 1962 ANLR pg.26.Therefore since the cheques were issued to Pacers Escrow Account the Respondent had no express or implied right to pay the cheques into a Current Account contrary to the instruction on the cheques. It must be paid into Pacers Escrow Account, the payee. The Accounts are distinct. The inexistence of the Escrow Account placed an obligation on him to return the cheques. In BRITISH & FRENCH BANK LTD. V. OPALEYE supra Mr. Opaleye the customer of the Bank had two accounts at the Bank, one in his name and the other in the name of the firm and he was the sole account holder. The firm account was overdrawn to the extent of ?500 and when a cheques of ?350 was paid into the private account the Bank decided to utilize the money from the private account in order to reduce the overdraft in the firms account. The Bank utilized the money from the private account to reduce the overdraft in the firms account. Opaleye told the Bank that ?350 less his commission belonged to the stranger whose properly he had sold, the Supreme Court held:
“I think it can be said with justice that very strongly implied an agreement to keep them separate and distinct, without any right on the part of the Bank to combine them or to transfer assets from one account to the other, at any rate not without reasonable notice of the intention so to do”
The learned senior counsel for the Respondent cited the cases of FIRST BANK OF NIGERIA LTD. V. OSUNSEDO 1997 11 NWLR Pt 527 132 and FISRT BANK OF NIGERIA LTD. V. AFRICAN PETROLEUM LIMITED 1996 4 NWLR (Pt. 443) 238 to support his submission that the Bank was proper and lawful to have used the N151.2 Million proceeds of the sixteen cheques that were all issued in the name of Pacers and paid into Pacers Current Account with Respondent bank to offset part of the N500 Million debt alleged, owed to the Bank. In First Bank of Nigeria case earlier cited. Ayoola JCA held
“Barring arrangement whereby the Bank has granted a loan to the customer on terms as to repayment the Bank when it had placed to the credit of the customer moneys to which the customer is liable to reimburse the bank is entitled to debit the account of the customer without instruction from the customer”.
The Question, that arose in that case was whether when a Banker has placed the value of a cheque to the credit of the customer and the cheques is afterwards dishonoured, it needs an express authorization before it debits the account of the customer with the amount of the returned cheque. This court held that the customer is liable to reimburse the bank.
In Osunsedo case the court of Appeal held that a Bank can use money of a customer in a deposit account to set off a debt owed to it, the deposit money being the unmentioned security. This is not the scenario in the instance case. The 16 cheques were to be drawn on the name of Pacers Escrow Account. This account was not opened. It was paid into a Current Account against the instruction. What is wrong from the foundation remains wrong there cannot be any justification. The principles of law set in First Bank case and Osunsedo are not apposite to the present facts. In those two cases both accounts were owned solely by the customer. In the instance case cheque was issued in the name of a non-existence account. The learned trial Judge rightly defined an escrow account but went wrong when he stated in the light of evidence presented before him that plaintiff has failed to prove that the accounts are not held in the same right. It is indisputable that Escrow Account is not the same as a normal current account enjoyed “by Pacer” with the Respondent. The Rights arising therefrom and the beneficiers are not the same. Exhibit M written to the Respondent contained specific facts on the purpose of the request for escrow account which is founded on an agreement between Pacers Respondent’s customers and Appellant the third party. The agreement to supply the sugar was executed and exhibit K the letter of Domiciliation written by NBC to the Respondent is further notice of the domiciliation of the Account, the purpose for the payment and the instruction to pick the respective cheques from the NBC. The Respondent was clearly on notice. What then is the legal position? In other words did the Respondent hold the value of the 16 cheques totaling N152 Million in trust and was the said sum Trust fund. Learned counsel to the Respondent submitted that the requirements for creation of a trust are the certainty of words, certainty of subject matter and certainty of objects or person all collectively referred to as the three certainties and must all exist in any given circumstance in which a trust exist. It is his contention that the Respondent was not a party to exhibit L the agreement to tender for supply of sugar and to open Escrow Account and that he informed Pacers he will pay the cheques into Pacers Current Account, but Pacers still directed NBC to hand over the sixteen cheques to him. He submits that the uncontradicted evidence contained in exhibit M1 and M2 show that there was no certainty of words or intention to create a trust in respect of the proceeds of 16 cheques and Respondent received the cheques free of trust. I do agree the test for express trust is the existence of the three certainties set out by Chief Fagbohungbe, that is when a trust is created intentionally by the act of the settlor. There is also implied trust. This is where the legal title to property is in one person and the equitable right based on the beneficial enjoyment of the same property in another, a court of equity will from those circumstances infer an implied trust. Therefore an implied trust is a trust founded upon the unexpected, but presumed intention of the settlor.
Under certainty of intention the words used must be examined to see whether the intention was to impose a trust upon the donee. The intention must also be genuine and not a stain as to where the settler did not intend the trust to be acted upon but entered into it for same ulterior motive such as deceiving creditors. In the instance case D.W.1 in evidence on page 123 of the record stated: “Exhibit L is the Board Resolution the Defendant did not request for the Board Resolution before it was sent to the Defendant”
This evidence reflects the fact that the Respondent though not a party to the Resolution of the Board was on notice as to its contents when he received exhibit L containing the agreement and the reason for the request by Pacer to open an account. D.W1 further in evidence stated that they did not respond to exhibit K the letter written on 11/5/90 by NBC on documentation and gave two reasons on the basis that NBC was not their customer and they did not request for the letter. The same Respondent still proceeded to collect the said cheques. Exhibit K was explicit on payment of the cheques directly into Pacers Escrow Account.
The specific request by Pacer and the cheques issued in the name of Pacers Escrow Account showed clearly an intention to open a special account for Trade purpose, that is to create a trust of the value of the cheque otherwise Pacers that already had a Current Account with the Respondent need not have requested for the opening of a special account. The subject matter was also specified with reasonable certainty that is, as to the value of the cheques totaling N152 Million as contained in exhibit M, the letter to the Respondent and exhibit K.
Under certainty of objects, the trust must be for ascertainable beneficiaries. See per Lord Denning in Re VONDERVELL’S TRUST (No.2.) (1974) Ch. 269 at 319. The cheques issued in the name of “Pacers escrow” was for the benefit of the Appellant. Exhibits L, L1 exhibit M2 is distinct disclosure that the Beneficiary of the value of the cheques is the Appellant. Exhibit M2 is an assurance by the Respondent that he will transfer the value of the cheques to Olam Account. That statement is confirmation they were aware that the Appellant is the Beneficiary of the cheques. Therefore the Respondent having collected the 16 cheques intended and expressed for a specific purpose the result is that a status of purpose trust evolved. There was sufficient intention to create a trust in respect of N152 Million in favour of the Appellant. The value of the cheques collected was within the ambit of a trust class. Furthermore the Bank acted as Pacers agent when they collected the cheques and owes the usual fiduciary duties of an agent to its principal. The customer, Pacers is not a party to this appeal nor in the lower court but the beneficiary is the Appellant and the instruction for Respondent to collect the cheques and pay into a specific account was flouted. The nature of the Banks general duty to exercise, reasonable, “care and skill” will arise in certain circumstances when the services provided are outside a contractive relationship of Banker and Customer. The Respondent had actual knowledge of the beneficiary and willfully shut his eyes, collected the cheques after declining to open the Escrow Account and recklessly paid them into a current account against the intention of his customer and owner of the cheques. The payee of the cheques is Pacers Escrow Account but Pacer has no escrow Account and Pacer by his request for a special account was certain he did not want the current account to be the Trading Account for the trade between himself and the Appellant. Rather than not collect the cheques Respondent paid into a different account. The cases of QUISTCLOSE INVESTMENTS LTD V. NATIONAL BANK OF NIGERIA LTD supra set out the general principle on the concept of trust. Both senior counsel addressed the court extensively on these two cases. I do agree with Chief Fagbohungbe that in Quistclose case the bank on request opened a special account unlike in the instance case where the Respondent declined to open the escrow account. Notwithstanding this distinction the principle on the concept of trust applies in the present situation. The purpose of the cheques collected by the Respondent was known to them, the fact that they collected the cheque placed a trust on them and the value of this cheques were paid into an account not designated as the payee obviously with the intention to offset the debt in an account that is in debit. The Appellant was trustee of the proceeds of the cheques. From the entirety of the facts in this case I am in doubt there was irrevocable intention that the appellant be the Beneficiary, having supplied the quantity of sugar to NBC on behalf of Pacer. Equally relevant to this Circumstance is the decision in RE: KAYFOLD LTD (In liquidation) 1975 1 All E.R. In that case the Managing Director of the company concerned about protecting customers who had send in money was advised to open a special account called a “customers Trust Deposit Account” into which such customers money will be deposed. The manager rather than open the account, the “Managing director agreed with his Banker to use an existing formal deposit account. After the customers funds had been deposited in the said account for the agreed purpose only, the Bank sought to apply those funds to other purposes. The court held that a trust had been created in favour of the customers of the company as the three certainties were present to create a trust. The same principle will apply in this case notwithstanding, the facts are not the same. The Refusal of the Respondent to open an escrow Account will not divest them of the trust created in respect of the proceeds of the 16 cheques collected by them from NBC. There is no evidence they complained on collection of the cheques, at different times as reflected on the dates in the cheques that Pacers “does not have “Pacer” escrow Account. Learned senior counsel for the Respondent submitted that they did not owe any duty to notify Appellant of the refusal of the Bank to open an escrow Account. It is his contention that the Respondent is only under a duty to Pacer and since NBC wrote to them they were not under any obligation to inform them of their refusal to open Pacer escrow Account. The Respondent received the letter from NBC and was under a duty to reply informing them there is no escrow Account. That is a reasonable thing to do.
Mr. Sofunde SAN submits that the Respondent having collected and cleared the cheques marked Account Payee only and not Negotiable, was on notice that the proceeds of the cheques were for the benefit of the Appellant, the Respondent breached its duty of care thereby causing damage to the appellant by failure to open Pacers escrow account and lodgment of the proceeds into Pacers Current account. The Appellant further stated it suffered injury when the proceeds meant for him were used to offset Pacers indebtedness, thereby depriving him of his right to the payment for supply of 80,000 bags of sugar. It is his further contention that the payment of the proceeds of Exhibits A to L1 other than in accordance with the mandate amounted to negligence.
Chief Fagbohungbe submitted that the payment into Pacers Current Account was done with Pacers advance knowledge and approval and that Pacer is the proper party liable for Appellants alleged loss and not Respondent. With the greatest respect to the learned senior counsel Pacer is not a party in this action for this court to hold he is the proper party liable for Appellants loss without hearing his own version. D.W1 in evidence stated that the crediting of the account was done with Pacers knowledge. This is insufficient for me to hold that Pacer was on notice. From the foregoing I hold there is merit under Grounds 2, 4, 5 and 6 and consequently those grounds succeed and I find issue 2 in favour of Appellant. Issue land 2 of the Respondent’s notice fails.
Under Issue 3 of Appellants Brief on whether Appellant was entitled to Judgment and issue 3 of Respondents Brief distilled from Respondents Notice on whether there are other grounds upon which this court can affirm the judgment of the lower court other than the grounds relied upon in the judgment.
The senior counsel to the Respondent raised 4 inter-twined sub issues first it is his contention that appellant is liable for its alleged losses due to its failure to stop Pacers or NBC from forwarding the sixteen cheques to Respondent. It is his submission that Appellant from the evidence of PW9 knew that the specimen signature before the escrow account could be opened and since they knew the signature cards had not been sent in, any reasonable person would know that the escrow account had not been opened. It is his further submission that Appellant displayed extreme culpable negligence by deeming it unnecessary to check whether an account with large amount was to be paid in and was to be controlled by him had it been opened. It is his contention that Appellant prior knowledge of the non-opening of the escrow account requested by Pacer made him liable or responsible for the losses or damages that were allegedly occasioned to him by his own failure to do anything to stop the issuance or payment of the cheques.
It is the Respondents contention that there is no duty owned to the Appellant and that appellant displayed culpable negligence. The Appellants contention is that the non existence of a Banker/Customer relation cannot disentitle him from succeeding in an action in negligence because the Respondent owes him a duty of care on the following grounds:
1. The cheques were marked “Account Payee only” and “not Negotiable”
2. The cheques were for Pacers escrow account and the proceeds of the cheques were to the knowledge of the Respondent for the benefit of the Appellant and
3. The Respondent collected and cleared the cheques.
The learned trial Judge on issue of Negligence rightly stated that Negligence is a question of fact and not law. Therefore each case must be decided in the light of its own facts. See NGILARI V. MOTHERCAT 1999 13 NWLR (Pt. 636). In general the three main ingredients of Negligence are as follows:
a) The Defendant owed the plaintiff a duty to exercise due care.
b) That the Defendant failed to exercise due care.
c) The Defendants failure was the cause of the injury suffered by the plaintiff.
See UMUDJE V. SHELL B. P. PETROLEUM CO. (NIG) LTD. KOVA V. UBA LTD. 1997 1 NWLR (Pt. 481)
d) OSIGWE V. UNIPETROL 2005 5 NWLR (Pt. 918) C.A. 261.
In AGBONMAGBE BANK LTD. V. C.F.A.O 1966 ANLR S.C. 130, the Supreme Court on what a plaintiff suing for Negligence must establish held that plaintiff must show that the Defendant owed him a duty of care and that he suffered damage in consequence of the Defendant’s failure to take care. In the instance case one would ask what is that duty of care owed to the Appellant by the Respondent bearing in mind that Appellant was not the Respondent’s customer.
The categories of duty of care is not restricted it depends on the circumstances which gives rise to the duty to take care. It must relate to the standards of the reasonable man in order to determine if any particular relationship gives rise to a duty to take care as between those who stand in that relation. This is why the English Court in the locus classicus case of DONOGHUE V. STEVENSON 1932 AC 562 held that notwithstanding there was no privity of contract between the plaintiff and the manufacturer he had a duty to take care towards potential customers because
“The Customers are persons whom the manufacturer ought reasonably to have in contemplation as closely and directly affected by his acts or omissions”
(Underling mine)
See HEDLEY BYRNER CO. LTD. V. HELTER & PARTNERS LTD 1964 A.C. 465 which case shows that Bankers owe a duty of care to persons whose Bank is making enquiry on their behalf. The facts of the instance case are peculiar. The Respondent was put on notice of Pacers resolution to open Pacers escrow account. The Board Resolution Exhibition L under paragraph 5 contains the following instruction:
“That this account is to be used specifically for the trading relationship between Pacers and Olam and all payments into the account shall be for repatriation to Olam International Ltd only.”
The cheques were then issued in the name of “Pacers Escrow” as payee only and not negotiable looking at the contents of Exhibit L. The Respondent had actual knowledge that the proceeds of the cheque, were for the benefit of the appellant, the Respondent collected and cleared the cheques; he was clearly under a duty to ensure that the beneficiary of the proceeds gets the value of the cheque. The Respondent as a Bank had the duty to exercise reasonable care and skill to the Appellant notwithstanding the absence of a contractual relationship. The Respondent had actual knowledge that the Appellant was to supply sugar to NBC and that was the main reason for the Escrow Account. The Pacer Escrow Account is a purpose Account obviously to secure the interest of the Appellant, who had given consideration by using his finances to supply sugar on the light of the agreement which included a clause that an Account “Pacer Escrow” wherein the value of the sugar supplied will be paid in. However since he had notice of the purpose of the special account and he was put on notice of the beneficiary of the value of the cheques addressed to Pacer Escrow Account, when he collected the sixteen cheques and had not opened an account as requested, was under obligation to conduct himself in a manner that will not affect the value of the cheques contrary to the intention of the Beneficiary, in effect the value on trust for the Appellant as the Beneficiary and became under a duty to exercise care for the benefit of the Appellant. The Appellant stood in a position that the Respondent ought reasonably to have had him in contemplation as person closely and directly affected by his act of collecting the proceeds of the cheques when they paid same into current account. That is the crux of the duty of care owed to the Appellant. The Respondent breached that duty when he lodged the proceeds of the cheques in Pacers Current account and applied them to offset Pacers alleged indebtedness without prior notification to the appellant. The Appellant is not liable for any culpable negligence; the instruction on the payment was made by Pacer to NBC.
  Furthermore the contents of Exhibit M2 wherein the Respondent guaranteed subsequent request for transfer to Appellant account is reassurance that Appellant money was safe in the hands of the Respondent and will be transferred on request. The cheques were marked “Account Payee only and “not Negotiable” The Respondent a Bank by its nature is in a privileged position to appreciate the legal effect of those terms but he still proceeded to pay cheques clearly marked “Pacers Escrow” into Pacers current account. Both are distinct and cannot be combined. The Respondent act was wrong and raises the question of the standard of the paying or collecting Bank and how it was cleared when the escrow account was not in existence. I do agree with the senior counsel for the Appellant that the injury suffered by the Appellant is that he lost the opportunity and ability to receive payment for 80,000 bags of sugar he supplied to NBC. Appellant did establish a claim for negligence. The learned trial Judge erred in his finding and decision that issue of negligence does not arise.
Chief Fagbojungbe contended that the PW2, PW3 and PW5 do not qualify as witnesses nor as expert witness.
The class of witnesses described as expert witnesses is well settled. It is imperative to state that every piece of evidence that has been admitted in the course of proceedings is subject to be tested for credibility, weight or cogency by the trial court before it becomes acceptable. In effect it is not merely acceptable because the witness is described as an expert and his evidence not challenged. The primary duty of the trial court is to evaluate the evidence before it is accepted whether given by an expert or not. See AG. OYO STATE V. FAIRLAKES HOTELS (No.2) 1989 5 NWLR (Pt.121) SC 255, HASKE V. MAGAJI 2009 All FWLR Pt. 461 C.A. 887.
The PW2, 3 and 5 responded to the subpoena. They tendered documents. The Respondent did not object. The Court allowed them to offer explanation in respect of the Documents. The documentary evidence is sufficient to determine the related issues connected with the contents of the documents which were not challenged. I have no good reason to reject the evidence of PW2, PW3, and PW5. The Appellants claim falls into 3 alternative parts, in effect 3 causes of Action. The first is Negligence, then conversion and money had and received. Having considered issue of Negligence I will still go further to look at the claim under conversion, as the causes are interrelated.
In respect of the claim for conversion it is the submission of Mr. Sofunde SAN that the nature of the account meant to be opened being a trust account, the respondent was a trustee holding the same meant for the escrow account in trust for the appellant. Accordingly by diverting the said sums and using them to offset part of the debt of Pacers the Respondent was liable in conversion actionable by the appellant. Many writers of law text books have given different definition to conversion. In CLERK AND LINDSELL ON TORTS 14 EDITITION PAGE 671 ARTICLE 1077. Conversion is defined thus:
“Conversion is an act of deliberate dealing with a chattel in a manner inconsistent with another right whereby that other is deprived of the use and possession of it.”
In OWENA BANK (NIG) LTD. V. N.S.C.C. Ltd. 1993 4 NWLR (Pt.290) CA 698. on what amounts to conversion. The court held
“Conversion is an injury to the plaintiffs possessing right on interest in the chattel converted”
The Supreme Court in BONIFACE ANYIKA & CO. (NIG) LTD. V. UZOR 2006 15 NWLR PT 1003 SC 560 per Tobi JSC said lawful justification with any chattel in a manner unconsistent with the right of another, whereby that other is deprived of the use and possession of that chattel.”
The definition ascribed to conversion in Clark and Lindsell on Torts 14 Edition page 671 article 1077 is also instructive.
To sustain a claim for conversion there should be in existence an injury to the plaintiff’s possessory right or interest in the chattel converted. In the instance case the 16 cheques issued in the name of Pacer Escrow Account was for a special purpose and the beneficiary is the Appellant.
The Appellant then has an interest in the cheques which value has been used to offset part of the debt owed to the Respondent by Pacer. The conduct of the Respondent in using the value of the cheques to clear some part of the debt owed by “Pacer” was inconsistent with Appellants right and amounted to deprivation of the 152 Million money due to the Appellant. The facts lead in evidence by the Plaintiff witnesses and the documentary exhibits on the existence of the agreement to supply NBC sugar between appellant and Pacer are not in dispute. Equally is the instruction by NBC that domiciliation is in respect of Pacer Escrow Account. The purpose of Escrow Account was duly clear in the letters and Resolution to the Respondent. The Respondent was in actual Notice but dealt with the cheques in a manner not authorized. The value was for a specific purpose known to him but using his privileged position collected the cheques after refusing to open the Escrow Account stated on the cheques and paid same into another Account. The Appellant demanded for the return of N152 Million but respondent refused.
NIGERIA SWEETS AND CONFECTIONARY CO. LTD. & ANOTHER 1993 4 NWLR (PT. 290) CA 698,. The Appellant established the claim on conversion.
There was an irrevocable intention to benefit the Appellant from the value of the cheques when he had supplied the quantity of sugar agreed. See also N.B.N. LTD. V. SAVOL W.A. LTD. 1994 3 NWLR (Pt. 333) C.A.435.
The Supreme Court in BONIFACE ANYIKA & CO. (NIG) LTD. V. UZOR 2006 15 NWLR PT. 1003 SC 560 per Tobi JSC said lawful justification with any chattel in a manner unconsistent wth the right of another, whereby that other is deprived of the use and possession of that chattel.”
A cause of action in conversion therefore is based on an unequivocal act of ownership by a defendant of goods of the plaintiff without any authority. See OJINI V. OGO OLUWA MOTORS NIG. LTD 19981 NWLR (Pt. 534)
A plaintiff must prove ownership and Demand in an action on conversion and this was established by the Appellant.
I will now look at the alternative claim for money had and received. Mr. Sofunde SAN submitted that the relationship between the Respondent and the Appellant is that of a trustee for the funds meant for the escrow account for which Appellant is the Beneficiary, that he is entitled to sue for money had and received. He cited AEROFLOT SOVIET AIRLINES V. UNITED BANK FOR AFRICA LIMITED 1986 3 NWLR (Pt.27) 188 at 198 and ODUWOBI V. BARCLAYS BANK D.C.O. 1962 All N.L.R 143.
An action for money had and received is a common law action and has always been used in circumstances whenever conversion lies and money have been received on behalf of the plaintiff by the Defendant. The claim is to compel the Defendant to restore such money to its true owner. See AEROFLOT V. U.B.A. supra or where the Defendant. The claim is obliged by the ties of natural justice and equity to refund the money. In the old English case of BROOKS WHARF & BULL WHARF LTD. V. GOODMAN BROTHERS. 1937 1 K.B. 534. Lord Wright M.R. on what sustains an action for money had and received stated:
“The obligation (to repay) is imposed by the court simply under the circumstances of the case and on what the court decides is just and reasonable having regard to the relationship of the parties. It is a debt or obligation constituted by the act of the law apart from any consent or intention of the parties or privity of contract”
See also ODUWOBI V. BARCLAYS BANK 1962 1 All NLR S.C. 141.
It is trite that when a Banker collects a cheque for a customer the banker acts basically as a mere agent for his customer, he receives payments and holds the proceeds at the disposal of his customer. This relationship in my firm view extends to a Beneficiary of the proceeds of cheque.
The Respondent had actual knowledge of the purpose of the cheques, he wrote exhibit M2 wherein he guaranteed the transfer on payment of the cheques, the Respondent breached his assurance when he used the proceeds to offset Pacers alleged indebtedness depriving the Appellant of the proceeds. The Appellants demanded for the proceeds and the Respondent wrote Exhibit a refusing to transfer on the basis that Pacer is owing the Bank. This clearly is a case of the Respondent using their position to unjustly offset the debts. They took advantage of their position to pay the cheques into the Current Account and offset the private arrangement of alleged loan between them and Pacer leaving the Appellant without his money.
The Appellant can sustain a claim under money had and received from the totality of the evidence and documentary evidence, it is my firm view that the claim of the Appellant succeeds on the three alternative prayers i.e. Negligence, as well as wrongful conversion of the proceeds of the cheque and the claim for money had and received. Though these three causes of action are independent, but the similar facts and evidence before the court established them respectively. I find Issues 2, 3 and 4 of the Respondent notice in favour of the Appellant.
In respect of the claim for interest Chief Sofunde submitted that the claim was pleaded and referred to the evidence of PW10 on pages 120 to 121 of the record. He submits that looking at the computation in exhibit R, the basis of the quantification of the amount of interest is clear that it starts from the 11th of August, 1998 to 30th of June, 2001. The computation was from the date the cheques which should have been lodged into the escrow Account would have been transferred to the appellants account, based on exhibit N. It is his contention that the period from 12/8/98 to 30/6/01 is the basis of the first part of the claim for N140,637,592.41 interest whilst the second part of the claim is for interest at rate of 23% per annum, Until judgment is delivered. He further stated, and contends that under common law, in situations where a person’s funds are wrongfully withheld the person may claim damages at the rate of interest on borrowing. He cited TATE & LYLE INDUSTRIES LTD. V. GREATER LONDON COUNCIL 1981 3 All E.R. 716 at Pg. 722.
The Appellant’s claim for interest falls into two parts: pre judgment and post judgment debt. A judgment debt is a debt or damage or other monetary award which has been pronounced upon by a court of competent jurisdiction. It begins when the court has pronounced its judgment in favour of the plaintiff. Therefore such interest are interest after adjudication and starts to run from date of judgment. It cannot be from the date of accrual of action. The Supreme Court in EKWUNIFE V. WAYNE W/A/ LTD. 1989 5 NWLR (Pt. 122) 422 held per Nnaemeka-Agu JSC:
“The power to award interest on a judgment debt rests on a different principle. It is at the discretion of the court to award it or not on pronouncing the judgment and with effect from that date.
In the instance case, the main sum of interest in the sum of N140,637,592.41 is based on calculation from 12 of August, 1998 till June 2001. This is clearly before the judgment pronounced. The question is whether the Appellant is entitled to his claim in interest: pre judgment and post judgment and at what rate. The power to award interest before judgment is based on statute or a right based on the common law or some equitable principle or contract. The nature of this interest makes it mandatory that before an award can be claimed, the facts in support must be pleaded and evidence lead to support the claim. The rate of interest and date to calculate from should be lead in evidence and clear. In EKWUNIFE V. WAYNE (WEST AFRICA) LTD. 1989 5 NWLR t.122 422. The Supreme Court held:
“Interest may be claimed as a right where it is contemplated by the agreement between the parties, or under a mercantile custom, or under a principle of equity such as breach of a judiciary relationship”
In effect award of interest before judgment is delivered is not granted merely for asking.
The guiding principle in respect of percentage of interest is the prevailing rate of bank interest. This calls for evidence establishing the rate. See EKWUNIFE V. WAYNE supra.
In TATE & LYLE FOOD AND DISTRIBUTION LTD. V. GREATER LONDON CONOI AND ANOTHER. 1981 3 All E.R.
716 Forbes J on how to arrive at the rate of interest in Commercial cases held that one must not look at the profit which the Defendant wrongfully made out of the money he withheld but at the cost to the plaintiff of being deprived of the money which he should have had.
In my view interest in commercial cases of this nature is not awarded against the Defendant as a punitive measure for having kept the plaintiff out of his money but as an attempt to achieve restitution in intergrum.
The Appellant claimed a fixed amount of 140,637.592.41 as interest for the period 12 of August, 1998 to 30 June, 2001. P.W.10 the head of Corporate Finance in evidence tendered exhibit R. He told the lower court he was approached by the plaintiff to compute the rate of interest for them. The period was from August 1998 to the date he gave evidence which from the record of Appeal is 20 of June, 2001. Exhibit R is a document containing the interest rate of lending between the 12/8/98 – 30/6/00. This is the period evidenced in exhibit R. PW10 stated that Exhibit R was based on the lending rate both from Commercial and Merchant Banks. This evidence was not challenged nor contradicted.
The plaintiff succeeded through PW10 to establish his claim on interest at the rate of 23% before judgment for the period 12/8/98 – 30/6/00. That is the period he is entitled to at the rate of 23%. Thus the lending rate of 23% of the value of the 16 cheques from 12 August, 1998 to 30 June, 2000 will give the total interest that is due to the Appellant as accrued before judgment.
Consequently this appeal succeeds in part and allowed. I invoke the powers conferred on this court under section 15 of the Court of Appeal Act and enter judgment in favour of the Appellant for the total sum of N151,204,522.50 being damages suffered by Appellants as claimed in the main relief under the further further further Amended Statement of Claim. I order interest at the rate of 23% on the said judgment sum for the period before Judgment covering 12 of August 1998 to 30th day of June, 2001 and interest post judgment at the rate of 6% on the principal sum of N151,204,522.50. I assess and award the Cost of N30,000 in favour of the Appellant against the Respondent.
RAPHAEL CHIKWE AGBO, J.C.A.: I have had the opportunity to read in advance the very detailed lead judgment written by NWODO, JCA. I agree completely with both the reasoning and conclusions and have nothing useful to add. I abide by all consequential orders made therein.
ADAMU JAURO, J.C.A.: I have had the advantage of reading in advance the judgment of my learned brother Nwodo JCA, just delivered. I am in complete agreement with the reasonings and conclusions arrived thereat. The appeal has merit and ought to be allowed.
The 16 cheques collected by the respondent from Nigeria Bottling Company were issued in favour of “Pacers Escrow Account”. The respondent had not opened the Pacers escrow account, but yet collected cheques in favour of the escrow account and paid into Pacers current account. There was indeed no authority, express or implied on the respondent to pay the cheques into the Pacers current account. In the absence of any authority it was wrong for the respondent to have paid the cheques into the current account, which was already over stretched by an outstanding loan.
For the above and the fuller reasons contained in the lead judgment, I also allow the appeal as meritorious. I abide by the consequential orders made in the judgment, including order as to costs.
Appearances
E. O. Sofunde (SAN), Mr. A. Salau L. A., Owolabi and A.O. Sofunde (Miss) For Appellant
AND
Chief F.O. Fagbohungbe SAN with, Oluwafunmilola Ale-Daniel Mrs. and M. Akapo Miss For Respondent
