WEMA BANK v. STOCKPICKS CONSULTING LTD
(2021)LCN/15878(CA)
In The Court Of Appeal
(LAGOS JUDICIAL DIVISION)
On Thursday, September 23, 2021
CA/L/1064/2016
Before Our Lordships:
Obande Festus Ogbuinya Justice of the Court of Appeal
Fatima Omoro Akinbami Justice of the Court of Appeal
Frederick Oziakpono Oho Justice of the Court of Appeal
Between
WEMA BANK PLC APPELANT(S)
And
STOCKPICKS CONSULTING LIMITED RESPONDENT(S)
RATIO
THE BANKS DUTY OF CARE TO ITS CUSTOMERS
The settled position of the law, however, is that the bank at all times owes a duty of care to its customers and the banker’s neighbours in its line of duty and once it can be established that a bank’s supposed duty of care to the banks customer’s neighbour has been breached, the bank will be held liable for negligence. See the case of AGI vs. ACCESS BANK PLC (2014) 9 NWLR 121, where this Court held thus:
“the rationale for the duty of care on a banker is that a banker’s customer falls within the ambit of the banker’s neighbour. That is, a person who is so closely and directly affected by the act of the banker that the banker ought reasonably to have the customer in contemplation as being likely to be affected when the banker is considering the acts or omissions which are called in question…”
The settled position here, is that the authority of the case of AGI vs. ACCESS BANK PLC (Supra) extended the definition of a customer of a bank to now accommodate anyone, bodies and parties who are likely to be affected by the Bank’s act or omissions and this makes a bank capable of being sued for negligence by a party/person who is not a customer of the bank. This rationale of the authority of the case ofAGI vs. ACCESS BANK PLC (Supra) puts the Respondent on record, on the same position as a customer of the Appellant, who by virtue of the Respondent’s relationship with AIMS ACHIEVERS CONSULTING LIMITED (who is a customer of the Appellant) entitles the Respondent to damages in negligence against the Appellant. PER OHO, J.C.A.
THE POWERS OF THE STATE HIGH COURT TO ENTERTAIN CASES ON TORTS INVOLVING BANKS
See the case of TRADE BANK PLC vs. BENILUX (NIG) LTD (Supra) where the apex Court rightly examined the powers of the State High Court to entertain cases on torts involving Banks per MOHAMMED, JSC held: thus:
“I have no doubt that the Respondent in the case in hand can sue the Appellant in conversion for the proceeds of the cheque which the Appellant paid to a stranger who is not the payee of the cheque. The Plaintiff/Respondent’s case is simply a tort of conversion and the action filed by the Plaintiff/Respondent against the Appellant can be entertained by any State High Court. See 7UP BOTTLING COMPANY LIMITED vs. ABIOLA AND SONS BOTTLING COMPANY LTD (2001) FWLR (PT. 70) P. 1650 “per TOBI, JSC: (p. 1682, paras E-G) for the purpose of determining the exclusive jurisdiction of the Federal High Court in respect of Section 230 (1)(b), the Court must carefully examine the facts of the case to see whether they justify the application of the Subsection. In the instant appeal, although the Appellant was mandated to pay the cheque valued at N1,000,000 to the Respondent, it paid it to a third party who is entirely a stranger to the transaction. That does not qualify as a bank transaction in which Section 230(1)(d) applies. It is clearly a tort of conversion which has nothing to do with the exclusive jurisdiction of the Federal High Court.
Conversion is a tort which is actionable in the State High Court. That is exactly what the Plaintiff/Respondent did. I cannot fault the commencement of the action in that Court”. See also the case of TRADE BANK PLC vs. BENILUX (supra) at (pp.1883-1884. Paras F-A) where the apex Court per EDOZIE, JSC had this to say on the subject; “It is not disputed that there was no relationship of banker and customer between the Appellant bank and the Respondent company to bring the matter under the proviso of Section 230(1)(d) of decree no. 107 of 1993 so as to confer jurisdiction to a State High Court; see NIGERIAN DEPOSIT INSURANCE CORPORATION vs. FEDERAL MORTGAGE BANK OF NIGERIA (1997) 2 NWLR (at 490) p.735. Be that as it may for the exclusive jurisdiction of the Federal High Court to be sustained under the aforesaid Section, the civil cause or matter must arise from “banking, banks, other financial institutions”. PER OHO, J.C.A.
THE POSITION OF LAW ON DAMAGES
Now in the case of CENTRAL BANK OF NIGERIA vs. BECKITI CONSTRUCTION LTD (2012) ALL FWLR (PT. 620) 1266 at 1296 at para. G-H cited by learned Respondent’s Counsel, this Court held that; “the term damages connotes an amount of money claimed by or ordered to be paid to a person as a compensation for loss or injury … and that …Damages are the sum of money which a person wronged is entitled to receive from the wrongdoer as compensation for the wrong done.” In defining what General Damages means, the apex Court in the case of YALAJU-AMAYE vs. ASS. REG. ENGR. CONT LTD & ORS (1990) 2 NSCC page 462 at page 480 at Para 25-30 held thus:
“It is well settled law that general damages are the kind of damage which the law presumes to flow from the wrong complained of. They are such as the Court will award in the circumstances of a case…by presuming the ordinary expectations of a reasonable man”.
Against the backdrop of the foregoing, it is important to note that in the award of General Damages, as was done by the Court below in the instant case, wide spread power is given to the Court comparable to the exercise of discretion of the Court. The power is usually enormous and therefore far-reaching and contrary to the contention held by the Appellant herein, who holds the view that it is excessive. The measure of general damages is awarded to assuage such a loss, which flows naturally from the defendant’s act. It needs not be specifically pleaded. It suffices if it is generally averred. They are presumed to be the direct and probable consequence of that complained of. It is not special damages, and therefore, incapable of exact calculation. See the cases of FEDERAL MORTGAGE FINANCE LTD vs. HOPE EFFIONG EKPO (2004) 2 NWLR (PT. 865) 100 AT 132; DUMEZ vs. OGBOLI (1972), 2 SC 196. This issue is also resolved against the Appellant and in favour of the Respondent. PER OHO, J.C.A.
FREDERICK OZIAKPONO OHO, J.C.A. (Delivering the Leading Judgment): This appeal is against the judgment of the High Court of Lagos State (hereinafter referred to as “the Court below”) delivered on 21st June, 2016 Coram: O. A. OGALA, J., wherein the Court below delivered its judgment against the Appellant and in favour of the Respondent who was the Claimant at the Court below. The Respondent, dissatisfied with the judgment of the lower Court has appealed to this Court asking this Court to set aside the judgment on the grounds set out in the Notice of Appeal.
The Respondent is a private Company duly incorporated under the Laws of the Federal Republic of Nigeria having its office at No. 3/7 Kakawa Street, Marina, Lagos. The Respondent engages in the business of Equity Consultancy, Investment, Research, Education, Training and Management. The Appellant is a Commercial Bank and has its Head Office at Wema Towers 54, Marina, Lagos.
It is the case of the Respondent at the lower Court, that in February, 2008, one Mr. Opeolu Olumide, (CEO of Aims Achievers Consultancy Ltd, who was also the third party, in the proceedings at the lower Court) approached and informed the Respondent that CHAMS Nigeria Plc Shares had been put up for sale via private placement. He also informed the Respondent that his Company (Aims Achievers Consultancy Ltd) had a joint working arrangement with Diamond Securities Ltd, one of the Stock Broking Firms to the said private placement of Chams Nigeria Plc. Based on the information above, the Respondent, for the sole purpose of purchasing the shares of Chams Nigeria Plc on behalf of its Clients, issued the following cheques in the name of Chams Private Placement, to wit:
1. FIRST BANK CHEQUE NO HC 58405811 in the sum of N13,825,000.00 (Thirteen million eight hundred and twenty-five thousand naira).
2. ZENITH BANK CHEQUE NO 30682846 in the sum of N3,600,000.0 (Three million six hundred thousand Naira).
3. ZENITH BANK CHEQUE NO 30682850 in the sum of N23,665,000.00 (Twenty-three million six hundred and sixty-five thousand Naira) Total N41,090,000.00 (Forty-one million, ninety thousand Naira).
It is also the case of the Respondent that two of its clients Olukemi Aminat and Mr. Arifalo Vincent also issued a Sterling Bank Cheque of N25,000,000.00 (Twenty-Five Million Naira) and a GT Bank Cheque of N10,000,000.00 (Ten Million Naira) in favour of Chams Private Placement respectively. All the cheques were issued in the name of Chams Private Placement and Chams Nigeria Plc as sole beneficiary of the instruments. The total value of Cheques issued by the Respondent and its clients amounted to N76,090,000.00 (Seventy-Six Million, Ninety Thousand Naira). The Respondent tendered these cheques in evidence during the trial at the lower Court and same was admitted as Exhibit CW1 A-E. The Respondent handed over these cheques to Mr. Opeolu Olumide the CEO of Aims Achievers for onward transmission to Chams Plc, for the purpose of buying shares under the private placement.
The Respondent thereafter received its Statement of account from its bankers; Zenith Bank Plc showing that the cheques drawn from Zenith Bank for the purchase of the shares were paid to Chams Private Placement. When the Claimant received the statement of account from the Zenith Bank, it was confident that the transaction was complete and waited expectantly for the issuance of share certificates by Chams Plc to its clients.
The Respondent was however surprised, when in July, 2008 Aim Achievers Ltd returned the sum of N27,693,200 (Twenty-Seven Million, Six Hundred and Ninety-Three Thousand Two Hundred Naira) to the Respondent out of the total sum of N76,090,000.00 (Seventy-Six Million, Ninety Thousand Naira) earlier paid for the shares, claiming that the money returned was for un-allotted shares. The Respondent became suspicious because it had issued the Cheques for the purchase of shares in favour of Chams Private Placement and had attached forms duly completed by its clients to the said Cheques but the cheques for the returned money were cheques in the name of Aim Achievers and by standard practice, if Chams Nigeria Plc had been unable to allot shares paid for, the refund ought to have been made by Chams Nigeria Plc not Aims Achievers Ltd.
The Respondent’s suspicion was confirmed when Chams Nigeria Plc began to issue share certificates to those who had been allotted shares during the private placement but none of the Respondent’s clients were issued with any share certificate. The Respondent upon making enquiries at Chams Nig Plc as to the reason why share certificates were not issued to its clients discovered that Chams Nigeria Plc had never received any payments or cheques from the Respondent and its clients towards the purchase of Chams’ shares.
The Respondent immediately wrote to the Drawee Banks i.e. First Bank and Zenith Bank inquiring as to the details of the recipients of the Cheques issued by the Respondent. On 2nd June, 2009 First Bank Plc on its part, replied the Respondent’s letter and informed the Respondent that the Cheque (N0791119561) issued by the Respondent was cleared through Wema Bank Plc, Ikoyi branch on 11th February, 2008. Also, by a letter dated June, 25th 2009, Zenith Bank Plc replied the Respondent’s letter of 17th June, 2009 and informed the Respondent that the two Zenith Bank Cheques No.00046 and 00050 issued to Chams Private Placement were cleared through Wema Bank Plc and advised Respondent to liaise with Wema Bank Plc for details of payment. The Respondent tendered all its correspondences with First Bank Plc and Zenith Bank Plc and same were admitted in evidence as Exhibit CW 1F, CW 1G and CW 1H.
Upon receipt of the First Bank letter dated 2nd June, 2009 (Exhibit CW1 G) and Zenith Bank letter dated June, 25th 2009 (Exhibit CW1 H), Respondent went to the Appellant’s branch in Ikoyi and there it discovered that all the cheques issued by the Respondent to Chams Private Placement were paid into an account with AC1N0.1211 10653012. The Respondent made enquiries and discovered that the said account, into which the cheques had been paid, did not belong to Chams Private Placement or Chams Plc but to Aims Achievers Consulting Ltd, a company in which Mr. Opeolu Olumide (the third party) was the MD & CEO. It is the Respondent’s case that the Appellant was negligent in the performance of its duty, in paying the cheques into the account of Aims Achievers Limited when the name of the beneficiary on the instrument was Chams Plc. The Appellant as a clearing house owed the Respondent a duty of care to protect the Respondent’s money by paying the cheques into the account of the beneficiary whose name appeared on the instrument but the Appellant failed to exercise such duty of care.
Aggrieved by the negligent act of the Appellant, the Respondent took out a writ of summons against the Appellant at the High Court of Lagos State. By an Amended Statement of Claim dated 13th day of October, 2014 the Respondent claimed against the Appellant as follows:
1. A declaration that the Defendant acted negligently when it paid cheques issued by the Claimant in favour of Chams Private Placement into the Account of Aims Achievers Ltd without the authority or instruction of the Claimant.
2. N183,180,000.00 (One Hundred and Eighty-Three Million, One Hundred and Eighty Thousand Naira) as special damages.
3. The sum of N50,000,000 (Fifty Million Naira) as general damages.
4. 21% interest on the judgment sum from the date of judgment until the total judgment sum is fully paid.
5. N500,000 (Five Hundred Thousand Naira) as cost of this action.
Upon service of the originating processes on the Appellant, the Appellant entered appearance and filed a defence to this action. The Honourable Court pursuant to the application of the Appellant also joined Aim Achievers Limited as a Third Party to this suit. After exchange of pleadings and Pre-trial Conference, the matter was referred to the Lagos Multi-Door Court-house for possible amicable settlement amongst parties. This achieved no fruitful result and the case file was returned to the trial Court for hearing.
At the trial of this suit, the Respondent called one witness, Mr. Oladapo Dixon, the Chief Operating Officer of the Respondent. The CW1 tendered several documents which were admitted in evidence as follows:
1. First Bank Cheque dated 8/2/2008 – Exhibit CW1 A,
2. Zenith Bank Cheque dated 15/2/2008- Exhibit CW1 B
3. Zenith Bank Cheque dated 8/02/2008 – Exhibit CW1 C
4. Sterling Bank Cheque dated 7/2/2008 – Exhibit CW1 D
5. Guaranty Trust Bank dated 6/2/2008 -Exhibit CW1 E.
6. Claimant’s letter to First Bank dated 17th June, 2009 Exhibit CW1F
7. Claimant’s letter to Zenith Bank PLC dated 17th June, 2009- Exhibit CW1 G
8. Letter of First Bank to the Claimant dated 23/6/2009- CW1 H,
9. Letter of Zenith Bank dated 25/6/2009 Exhibit CW1 I,
10. Cheques issued by Aims Achievers for un-allotted Shares Exhibit CW1JI-J 5.
11. Cheques issued by Stock picks to Aim Achievers as Commission Exhibit CW1K 1-5.
12. CTC of a judgment in Suit No. LD/1853/2009 Exhibit CW1 L
13. Writ of Summons in Ramon; Abiodun vs. Stockpicks Exhibit CW1 M.
14. Statement of Account of Claimant with Zenith Bank -Exhibit CW1 O.
The Appellant led evidence in its defence and called one witness, DW1; Mr. Agbomire Philips Idogho who tendered a Deed of Indemnity dated 7th day of August, 2007 which was admitted as Exhibit DW1A. DW1 also tendered two copies of Caution Notices and these were admitted as Exhibits DW1B and DWIC. Appellant also subpoenaed Zenith Bank Plc and one Mr. Onibulam Fortune Dabiri-Chukwu, the DW2. DW2 tendered Original Cheques valued N3,784,800.00 and admitted it as exhibit DW2A, DW2B, DW2C. Zenith Bank also produced the originals of the Caution Notices which was admitted as exhibit DW2D.
After parties closed their respective cases, the matter was adjourned for address and thereafter judgment. The lower Court in a well-considered judgment delivered on the 21st day of June, 2016 entered judgment in favour of the 1st Respondent (the Claimant at the lower Court) against the Appellant (Defendant at the lower Court). The lower Court awarded the sum of N48,396,800 (Forty-Eight Million, Three Hundred and Ninety Six Thousand Eight Hundred Naira) as special damages and the total sum of N10,500,000 (Ten Million five Hundred Thousand Naira) as general damages and cost against the Appellant. The Appellant, dissatisfied with the judgment of the lower Court has appealed to this Court asking the Court to set aside the judgment on the grounds set out in the Notice of Appeal.
ISSUES FOR DETERMINATION:
The Appellant has distilled the following issues for determination:
1. Whether the lower Court had jurisdiction to entertain the 1st Respondent’s claim having regard to Section 251 (1) (d) of the Constitution of the Federal Republic of Nigeria 1999 (as amended) (CFRN) (Ground 1)
2. Whether the lower Court was right when it held that the appellant is liable to the respondent in negligence for failing to exercise the due care expected of it when it wrongfully cleared cheques presented to it by the 2nd Respondent without first seeking the authority of the 1st Respondent (Ground 2 and 4).
3. Whether the lower Court was right in granting the Respondent the sum of N48,396,800 (Forty-Eight Million, Three Hundred and Ninety Six Thousand Eight Hundred Naira) when the Respondent made it clear that the sums belonged to it and some other persons who did not participate in the suit and never gave evidence with regard to their claims (Ground 3).
4. Whether the lower Court was right in awarding general damages and cost in favour of the Respondent (Ground 5).
5. Whether the existence of an agency relationship between the Respondent as principal and the 2nd Respondent as agent for the purpose of acquiring shares of Chams Private Placement could be seen as a concession by the 1st Respondent that it was aware that the cheques totaling N76,090,000.00 (Seventy-Six Million and Ninety Thousand Naira) were meant to be paid into the 2nd Respondent’s third party account for the said acquisition (Ground 6).
On the part of the Respondent, five (5) issues were also nominated for the determination of this appeal, thus:
1. Whether the lower Court had jurisdiction to entertain the 1st Respondent’s claim. (Ground 1).
2. Whether the Appellant was not negligent when it paid the cheques drawn in favour of Chams Private Placement into a third party’s account. (Grounds 2 and 4)
3. Whether the damages and cost of N10,500,000 (Ten Million, Five Hundred Thousand Naira) awarded in favour of the Respondent as against the Appellant is excessive. (Ground 2)
4. Whether the lower Court was right in granting the Respondent the sum of N48,396,800 (Forty-Eight Million, Three Hundred and Ninety-Six Thousand Eight Hundred Naira) when the Respondent made it clear that the sums belonged to it and some other persons who did not participate in the suit and never gave evidence with regards to their claims (Ground 3).
5. Whether the existence of an agency relationship between the 1st Respondent as Principal and the 2nd Respondent as Agent for the purpose of acquiring shares of Chams Private Placement could be seen as a concession by the 1st Respondent that it was aware that the cheques totaling N76,090,000.00 (Seventy-Six Million and Ninety Thousand Naira) were meant to be paid into the 2nd Respondent’s third party account for the said acquisition (Ground 6).
Preliminary Point:
Learned Appellant’s Counsel made some submissions on a preliminary point. Counsel drew attention to the fact that the question of jurisdiction is being raised for the first time in this Court. He disclosed that the question of jurisdiction was not raised at all at the lower Court whether in the pleadings or in evidence or in the final addresses. Counsel however submitted that the issue of jurisdiction can be raised in this Court for the first time.
According to the learned Counsel, the general rule is that where a point of law is being raised on appeal for the first time, leave of the appellate Court must be first sought and obtained. However, that where the issue relates to jurisdiction, the leave of Court will not be required. This is because the issue of jurisdiction being foundational to the competence of the Court can be taken at any stage of the proceedings without leave and even on appeal. Where a Court lacks jurisdiction, Counsel enthused, the Court is deprived of its judicial powers to hear and determine any matter. This is what is meant when it is said that the issue of jurisdiction is a threshold issue. SEE: MANAGEMENT ENTERPRISES LTD vs. OTUSANYA (1987) 1 NSCC, AT 583; SOFEKUN vs. AKINYEMI & ORS. (1980) 5-7 SC 1 AT PP 86-87. Counsel therefore, submitted that ground one of the notice of appeal being founded on jurisdiction can be raised in this Court without leave.
The issue of jurisdiction being a threshold issue can be raised at anytime, even for the first time at the Supreme Court. There are several decided cases in support of this position. See the case of WAZIRI UMARU FED. POLYTECHNIC BIRNIN KEBBI & ORS vs. BALA (2017) LPELR-42505 CA, where this Court per F. OHO, JCA had this to say on the subject:
“The settled position of the law is that the issue of jurisdiction is so fundamental to an action that parties to a case cannot by acquiescence or any form of agreement confer jurisdiction on a Court, which does not have it. See ADESOLA vs. ABIDOYE (1999) 14 NWLR (PT. 637) 28 AT 52; OKOROMA vs. UBA (1999) 1 NWLR (PT. 587) 359 AT 378. It is therefore, immaterial whether the Appellants at the Court below had consented to or had refused to object on the question of jurisdiction or not. Perhaps, the metaphor on jurisdiction employed by this Court in the case of UNIVERSITY OF ILORIN AND ORS vs. OLUWADARE (2009) ALL FWLR (PT. 452) 1175, 1204; per NWEZE, JCA, (as he then was) provides an apt description of the subject when he said: “Jurisdiction is to a Court, what a gate or door is to a house. That is why the question of a Court’s jurisdiction is called a threshold issue. It is at the threshold (that is, at the gate) of the temple of justice (the Court). To be able to gain access to the temple (that is, the Court), a prospective litigant must satisfy the gate keeper that it has a genuine cause to be allowed ingress. Where he fails to convince the gate keeper, he will be denied access to the inns of the temple. The gate keeper, as vigilant as he is always, will readily intercept and query all persons who intrude into his domain. To be able to ventilate a grievance, a prospective litigant has to ensure that he addresses his complaint to the competent Court. That is so for an incompetent Court will have no jurisdiction to attend to his entreaty…”
A careful study of the issues nominated across board by the parties to this appeal is clearly identical except for reasons of semantics. However this appeal shall be resolved by this Court based on the issues raised by the learned Appellant. The issues raised therein are far reaching enough, mostly encompassing the issues raised by the Respondent. The Appellant’s brief was settled by BIOLA OLUSOLA ESQ., while the Respondent’s brief of Argument was settled by ODUNAYO OLOWOOKERE ESQ.,. On the 24-6-2021 at the hearing of this appeal, learned Counsel adopted the briefs of argument of the parties; with Counsel urging this Court to resolve the appeal in favour of their sides.
SUBMISSIONS OF COUNSEL FOR THE PARTIES:
APPELLANT:
ISSUE ONE:
Whether the lower Court had jurisdiction to entertain the 1st Respondent’s claim having regard to Section 251 (1) (d) of the Constitution of the Federal Republic of Nigeria 1999 (as amended)?
In arguing this issue, Counsel contended that the High Court of Lagos State lacked jurisdiction to entertain the reliefs sought by the 1st Respondent since the reliefs relate solely to a banking matter that is covered by the exclusive jurisdiction of the Federal High Court under Section 251(1)(d) of the Constitution of Nigeria, 1999, as amended.
The argument of Counsel is that the import of Section 251(1) (d) of the CFRN is that the Federal High Court has exclusive jurisdiction on ALL matters pertaining to banking, banks and other financial institutions in whatever form it may arise. He said that the only instance where the Federal High Court would not exercise exclusive jurisdiction is that provided for in the proviso to the said Section, where the matter involves a dispute arising from a transaction between a bank and its individual customer. According to Counsel in such a case, the Federal High Court and the State High Court would have concurrent jurisdiction. Counsel cited the case of the Supreme Court in NDIC vs. OKEM ENT LTD (2004) 10 NWLR (PT. 880) 112 on the issue.
It was further argued that the issue being a Constitutional jurisdiction matter, the effect is that once the cause of action is found to be connected with and pertains to banking, that action must be filed at the Federal High Court. Learned Counsel also contended that the matter having been found to be a matter relating to a Banking transaction, and same not being one involving a transaction between an individual customer and his bank, then it is not one falling within the concurrent jurisdiction of the Federal High Court and the State High Court.
Learned Counsel also contended that the transaction forming the basis of this appeal is connected with or pertains to banking and that the Appellant is involved in the business of receiving deposits payable on demand in the ordinary course of its business. He argued that such deposits may be in cash or by way of cheques or in form of bills of exchange. Counsel also disclosed that in the instant case, the claim of the 1st Respondent before the lower Court as contained in the second amended statement of claim includes: “a declaration that the Defendant acted negligently when it paid cheques issued by the Claimant in favour of Chams Private Placement into the Account of Aims Achievers Ltd”. (See page 286 of the record of appeal).
In addition, Counsel contended that the 1st Respondent’s case especially as can be gleaned from paragraphs 5, 6, 7, 8, 9, 10, 11, 15-26, 32 as well as the (particulars of negligence contained in the Respondent’s second amended statement of claim (See page 280-286 of the record of appeal) and the reliefs sought in the said statement of claim, all has to do strictly with the performance of the Appellant of its functions as collecting bank for cheques and the clearance of same into its customer’s account, the 2nd Defendant’s account. In summary, Counsel submitted that the 1st Respondent’s claim is that the Appellant wrongly assisted its customer when it negligently cleared cheques that were meant for Chams Private Placement and that this clearly relates to a bill of exchange and the receipt of deposit as decided in the NDIC case.
For this reason, Counsel submitted that the 1st Respondent’s claims at the lower Court pertains to and are connected with banking because they have to do with what the Appellant did in the performance of its function as a collecting bank for its customer. Counsel also contended that the word banking as used in Section 251(1)(d) of the CFRN is wide enough to include every transaction which comes within the legitimate business of a banker and is sufficient to answer.
In further arguing that the transaction between the parties was not one of an ordinary banker/Customer relationship, he said that the grouse of the 1st Respondent is that the Appellant negligently, paid cheques into another account in the face of where the 1st Respondent is not a customer to the Appellant. Counsel further contended that it was as a matter of fact, never in dispute that there was no relationship between the Appellant and the 1st Respondent. He said that the Appellant was a collecting bank through which the Appellant’s customer, the 2nd Respondent paid the cheques given to him by the 1st Respondent (page 439 of the record). Counsel also relied on the definition of who a Customer is in the case of NDIC vs. OKEM ENT LTD (Supra).
All said and done, learned Counsel also contended that in this appeal, the 1st Respondent is not a customer to the Appellant with regard to the banking transactions that took place. Again, that the 1st Respondent does not maintain an account with the Appellant, which was the res in the case at the lower Court. Not only this, Counsel contended that the Appellant has no agreement to collect items or deposits on their behalf and the 1st Respondent is not a bank, which the Appellant maintains an account with. Rather, the 1st Respondent only issued cheques, which were drawn on their own banks where they had their accounts (First Bank, Zenith Bank Sterling Bank and Guaranty Trust Bank) (See Exhibits CW1 A-E respectively) and with Chams Private Placement as the payee.
These cheques, Counsel further contended, were then given to the Appellant’s customer, the 2nd Respondent who paid them into its account with the Appellant. The submission of Counsel here is that the only individual in this transaction that can be said to have a banker-customer relationship with the Appellant is the 2nd Respondent who is not claiming against the Appellant.
The further argument of Counsel is that this issue, being a Constitutional stipulation, does not matter if the cause of action bordered on negligence or if the said cause of action originated from a banking transaction and related to banking in the context of Section 251(1)(d) of the CFRN. Counsel contended that this was the position of the Supreme Court in the case of SOCIETE BANCAIRE (NIGERIA) LIMITED vs. MARGARIDA SALVADO DE LLUCH (2004) 18 NWLR (PT. 905) 341. The facts of this case are that the Respondent entered a contract with a customer of the Appellant and was induced by the said customer to part with large sums of money, which was deposited into the Appellant’s bank by its customer. Thus, the Respondent instituted an action against the Appellant at the High Court of Lagos State for negligence in opening an account for its customer and paying the money received by the customer from the Respondent into the customer’s account. As far as Counsel is concerned, the Respondent in this case (just like the 1st Respondent in the instant appeal) did not own an account or have any banking relationship with the Appellant and was thus, not a customer.
Counsel however, urged this Court to hold that the High Court of Lagos State lacked the jurisdiction to hear and determine this suit because the subject matter of the action is connected with and pertains to banking and the 1st Respondent who was the claimant at the lower Court is not a customer to the Appellant.
ISSUE TWO:
Whether the lower Court was right when it held that the Appellant is liable to the Respondent in negligence for failing to exercise the due care expected of it when it wrongfully cleared cheques presented to it by the 2nd Respondent without first seeking the authority of the 1st Respondent?
In arguing this issue, learned Counsel first began by presenting a conceptual clarification on the different parties and their roles in a transaction involving payment of crossed cheques or third-party instruments. As far as Counsel is concerned, a role a party plays in the clearing of these instruments ought to dictate that party’s liability for claims based on those instruments.
Counsel said that in a typical transaction whereby payment is to be made by a crossed cheque there is a drawer who writes/issues the cheque (The 1st Respondent in the instant appeal). The cheque is written in favour of a payee (Chams Private Placement) and the drawee (the Respondent’s bankers) is given express instructions to ensure that payment is made to the payee.
Counsel argued that in the instant case, the instrument was a crossed-cheque, which could not be paid in cash but could only be paid into another account. Aims Achievers Limited who was the holder of the cheque, paid same into his account with the Appellant as the collecting bank who as opposed to the drawee, drawer or payee, plays an ancillary role in the transaction. This position, Counsel opined was clear in the case of BANK OF THE NORTH vs. YAU (2001) 10 NWLR (PT. 721) 408 where the Supreme Court per AYOOLA, JSC at 438.
Against the backdrop of the foregoing, Counsel submitted that the liability of each party to the above transaction cannot exceed the roles of the party in question. In other words, he said that a drawee cannot incur the liability of a drawer and vice versa. Similarly, a collecting bank cannot incur the liability of a drawer or drawee as the roles of each party to the transaction are clearly defined in order to delimit the excessive liability that they can incur. Counsel urged this Court to so hold.
The further argument of Counsel on the issue is that even if the Appellant as the collecting bank were to be found liable to the 1st Respondent, such liability would further be subject to the provisions on the standard of care of a collecting bank, which is contained in Section 77 (2) of the Bills of Exchange Act.
Counsel argued that the intendment of Section 77(2) provides protection when the bank is able to establish that it has:
a. acted for its customer,
b. received payment either for that customer or, if it has credited the customer’s account forthwith,
c. acted in good faith and,
d. acted without negligence.
Counsel further argued that although a comprehensive statutory definition of the term: “customer” is not present in the Bills of Exchange Act, he disclosed that the adoption of the definition of a customer as set out by the Supreme Court in the NDIC case, (Supra), which is to the effect that a person would become a customer when he has entered into a contract with the bank by way of opening some sort of account. Counsel reiterated that it is not in dispute that the Appellant received payment on behalf of the 2nd Respondent as its customer and that for this reason, items (a) and (b) are present in the instant case.
It is contended that what constitutes good faith has been described in Section 92 of the Bills of Exchange Act, as anything done honestly, whether it is done negligently or not. In other words, he said, that a denial of actual knowledge and of any suspicion of the existence of a defect in the customer’s title would suffice. Against this position, Counsel also contended that from the evidence led in the instant case as contained in paragraphs 5-22 of the additional witness statement on oath for Mr. Idogho Agbomire (DW1), it is clear that the whole transaction as it relates to the Appellant from the collection of the cheque, to crediting the account of the 2nd Respondent was done in good faith (page 305-307, of the record of appeal). Thus item (c) is present in the instant case.
Learned Counsel further contended that in establishing the negligence of the Appellant in this case, it will be dependent on the standard of care adopted in the usual banking practice of a collecting bank. He argued that since these standards are not usually codified, he urged this Court to refer on the Appellants’ evidence of the usual process for collecting payments for third-party instruments and rely on same in establishing the standard of care in this particular case as present in paragraphs 5-22 of the amended witness statement on oath for DW1 (page 305-307 of the record of appeal).
Counsel also drew attention to the evidence of the Appellant, which shows that the following steps were taken by the Appellant prior to collecting payment on the cheques presented to it by the 2nd Respondent:
1. The appellant issued caution notices to the paying banks after being presented with the cheques for collection as present in paragraph 11 of DW1’s witness statement on oath (page 306 of the record of appeal) and Exhibits DW1B, DW1C and DW2D (1-3).
2. After issuing the caution notices to the paying banks, the appellant waited for the confirmation of the said cheques from the respondent before collecting them as confirmed by CW1 under cross-examination (paragraphs 2-4 of page 452 of the record of appeal).
3. It was only after the confirmation of the cheques by the paying banks that the appellant received payment of the cheques as present in paragraph 18 of DW1’s additional witness statement on oath (page 306 of the record).
Against the backdrop of the foregoing, Counsel contended that it is clear that the Appellant neither acted negligently nor did it act in bad faith when it collected the cheques and received payment therefrom. He therefore queried what basis was for the lower Court to find the Appellant liable to the Respondent for negligence when the lower Court held thus (page 482 of the record of Appeal), thus:
“A perusal of the notices (Exhibit DW2D) shows that the attention of the Claimant’s bank was only drawn to the amount of the money on the cheque and not as regards as the other options on the caution notice …
‘The question is where is it evident on the face of the cheques in issue that the payee name is Chams Private Placement and same were being paid into the account of Aims Achievers Consulting Limited; should the defendant not have indicated this on the caution notices sent to the claimant’s bankers to put them on notice? This Court believes that they should have, and not doing so falls below the reasonable standard expected of a prudent bank and is negligent.”
Learned Counsel submitted that in arriving at the above finding, the Court relied on the case of UBA PLC vs. EKENE DILI CHUKWU (NIGERIA) LIMITED ORS (1999) LPELR-CA/E/176/97; (1999) 12 NWLR (PT. 629) 128. Arising from the foregoing, Counsel submitted that to the extent of ascertaining the liability of the Appellant, the authority of UBA PLC vs. EKENE DILI CHUKWU (Supra) is not applicable to the instant case for the following reasons:
1. In the EKENE DILI CHUKWU’s case, the cheques and bills in question were marked “not-negotiable” and “account payee only” whereby only the account named on the said cheque could receive value for the said cheque while the cheques in the instant case were not so marked.
2. The Appellant’s bank in the EKENE DILI CHUKWU’s case opened a new account into which the cheques and bills were fraudulently paid while in the instant suit, the account was not a newly opened one without a prior history of similar transactions and payments.
In the EKENE DILI CHUKWU’s case, no caution notices were issued to the drawer banks while in the instant suit, caution notices were issued to the 1st Respondent’s bankers.
Counsel also reiterated that the finding of the Court that the attention of the 1st Respondent’s bank was only drawn to the amount of the money on the cheque and that the Appellant ought to have indicated the name on the account into which the cheques were being paid was different from the names on the said cheques is unfounded as it is only the 1st Respondent’s banks that can determine that when their attention was drawn to the caution notices.
It was also argued that neither the lower Court nor the 1st Respondent can determine what conclusion the 1st Respondent’s bankers arrived at after receiving the caution notices. He said that all that the Appellant was expected to do and was responsible for in its role as a collecting bank was to issue caution notices to the 1st Respondent’s banks. Counsel urged this Court to so hold. Counsel added that the Appellant being aware of the above responsibility reached out to the 1st Respondent through their bankers. And that by doing this, the Appellant had acted in accordance with the ordinary practice of due and reasonable care expected bankers and had discharged the onus of showing that it acted without negligence and could thereby rely on the standard prescribed by Section 77(2) of the Bills of Exchange Act to exonerate itself from liability. Counsel added that the additional burden placed on the Appellant to specifically indicate the irregularity is an artificial burden that is unknown to law; more so, evidence was given at the lower Court by DW1 under cross-examination that:
1. Caution notices (Exhibit DW2A-DW2B) were issued to the 1st Respondent’s bankers.
2. That he (DW1) could not tell if the banks were aware that they were third-party cheques or not.
3. That drawing banks have the responsibility to communicate with the Appellant not to pay as a result of any irregularity which they have discovered from the caution notices. (See page 452 of the record of appeal).
As far as Counsel is concerned, the only conclusion from the foregoing is that it is only the 1st Respondent’s bankers (First Bank, Zenith Bank, Sterling Bank and Guaranty Trust Bank) that can interpret the content of the said caution notices and inform the lower Court of the extent of their awareness of whatever irregularity was present on them. Counsel, however, quickly added that these bankers were not parties to this case in the lower Court and neither was any such evidence given in the lower Court of the understanding gleaned from the caution notices sent by the Appellant bank. Moreover, he said that there was evidence before the lower Court that the 1st Respondent expected a notification from their bankers before the value was attached to the said instruments and payment was made. Counsel added that this was clear when CW1 under cross-examination stated (at page 440 of the record of appeal):
“No, we did not confirm the cheques for the 3rd party. Despite this our bank paid to persons not confirmed by us.”
Based on this position, Counsel submitted that without information or evidence from the 1st Respondent’s bankers as to their interpretation or understanding of the content of the caution notices, the lower Court could not arrive at the finding that the 1st Respondent banker’s attention was only drawn to a particular information on the said notices or that Appellant ought to specifically indicate the said discrepancies and was thus bound to hold the Appellant to a standard of care expected of a banker in the ordinary course of its banking operations. Counsel urged this Court to so hold.
Without deviating from the foregoing, learned Counsel further submitted that the cheques in the instant case were not marked: “not-negotiable” and “account payee only” and that it would have been a different issue if there was evidence before the lower Court to the effect that the 1st Respondent’s bankers did not in fact know into what account the cheques issued by the 1st Respondent were being paid. He submitted again that there was no such evidence before the lower Court and neither was this specifically pleaded at the lower Court. In other words, Counsel argued that if there was in fact a diversion of the proceeds of the cheques, as claimed by the 1st Respondent, the said diversion could only occur if there was evidence by the 1st Respondent’s bankers that there was indeed a bank account known as Chams Private Placement and the said cheques were not paid into this account but into the 2nd Respondent’s account with the Appellant. Counsel urged this Court to so hold.
Learned Counsel further urged the Court to rather adopt the position of the law in the case of MARFANI vs. MIDLAND BANK LIMITED (1967) 3 ALL E.R. He argued that by holding that the Appellant is liable to the 1st Respondent, the lower Court erroneously broadened the standard of care expected of the Appellant in a manner that will stifle the Appellant’s ordinary banking operations. He further argued that in the light of this, item (d) is also present in the instant case and urged this Court to so hold.
It was further argued by Counsel that while the lower Court did not exhaustively determine the issue of the standard of care or otherwise that the Appellant was to be held to, before holding that it was liable, it is clear from the pleadings and the 1st Respondent’s claims that the cause of action at the lower Court was based on negligence.
Counsel therefore submitted that “acting without negligence” as indicated in Section 77(2) of the Bills of Exchange Act, does not connote a direct duty of care owed by the bank to the true owner of the cheque (the 1st Respondent in this case). Instead, Counsel contended that it prescribes a standard of care which, the Appellant has to comply with in order to be able to invoke the defence provided under Section 77(2) of the Bills of Exchange Act. He added that a standard, which is based on the evidence and pleadings at the lower Court, the Appellant had complied with. Thus, Counsel submitted that the 1st Respondent did not discharge the onus placed upon it by law in establishing negligence in the action instituted in the lower Court. Counsel urged this Court to so hold.
ISSUE THREE:
Whether the lower Court was right in granting the Respondent the sum of N48,396,800 (Forty-Eight Million, Three Hundred and Ninety Six Thousand Eight Hundred) Naira when the Respondent made it clear that the sums belonged to it and some other persons who did not participate in the suit and never gave evidence with regards to their claims?<br< p=”” style=”box-sizing: inherit; margin: 0px; padding: 0px;”></br<>
The contention of Counsel in the instant case, is that the 1st Respondent’s claim at the lower Court was for the total sum of N76,090,00.00 (Seventy-Six Million and Ninety Thousand) Naira only payable by the Appellant. Counsel contended that the 1st Respondent pleaded in paragraph 5 of its amended statement of claim that it issued three (3) cheques totaling N41,090,000 (Forty-One Million and Ninety Thousand) Naira (See page 280 of the record of appeal) to the 2nd Respondent. According to Counsel, the 1st Respondent further averred in paragraph 6 of its amended statement of claim that cheques amounting to the total sum of N35,000,000 (Thirty-Five Million) Naira comprising of N25,000,000 (Twenty-Five Million Naira) and N10,000,000 (Ten Million Naira) were issued by Olukemi Aminat and Mr Arifalo Vincent respectively for the purchase of Chams Private Placement shares (See page 281 of the record of appeal).
However, in paragraph 13 of the 1st Respondent’s second amended statement of claim, Counsel contended that the Respondent averred that the sum of N27,693,200 (Twenty-Seven Million, Six Hundred and Ninety-Three Thousand, Two Hundred) Naira was returned to it by the 2nd Respondent (See page 281 of the record of appeal). The argument of Counsel is that the effect of this is that after deducting the sum of N27,693,200 (Twenty-Seven Million, Six Hundred and Ninety-Three Thousand, Two Hundred) Naira, the 1st Respondent’s claim had reduced from N76,090,000.00 (Seventy-Six Million and Ninety Thousand) Naira to N48,396,800 (Forty-Eight Million, Three Hundred and Ninety Six Thousand Eight Hundred) Naira, which reduction was captured in the judgment of the lower Court (See page 486 of the record of appeal).
In addition to the foregoing, Counsel further contended that there was un-contradicted evidence before the lower Court that some of the cheques in question were not issued by the 1st Respondent and that this was revealed by CW1 under cross-examination when he stated that (See page 440 of the record):
“Yes, some of the cheques were not issued by the claimant company. They are not our own instruments. They are their agents; some of our clients issued cheques, these cheques were part of the ones Mr. Ofumide cleared.”
Learned Counsel explained that the said instruments are the cheques issued by Olukemi Aminat and Mr. Arifalo Vincent, which jointly amounted to the sum of N35,000,000 (Thirty Five Million) Naira. We submit that this sum ought to also have been deducted from the remainder of the 1st Respondent’s claims at the lower Court thereby arriving at the sum of N13,396,800 (Thirteen Million, Three Hundred and Ninety-Six Thousand, Eight Hundred) Naira.
For this reason, Counsel submitted that before the entire relief in the sum of N48,396,800 (Forty-Eight Million, Three Hundred and Ninety Six Thousand Eight Hundred) Naira was granted by the lower Court, to the 1st Respondent as ‘agent’ to Olukemi Aminat and Mr. Arifalo Vincent, ought to have sued in the names of the duo and on their behalf. Counsel cited the case of VULCAN GASES LIMITED vs. G.F. IND. A.G. (2001) 9 NWLR (PT.719) 610 to buttress this argument.
Based on the foregoing, Counsel contended that in the instant case, the 1st Respondent did not claim on behalf of the other issuers of the cheques and that the 1st Respondent also never filed an application to amend its processes to reflect any such changes. He submitted that if the 1st Respondent, such a change would have been apparent from the record of the proceedings in the lower Court. Counsel urged this Court to so hold. The argument of Counsel that followed here is that at best, all that the 1st Respondent could have been entitled to if the counter-claim had been rightly determined in their favour is the sum of N13,396,800 (Thirteen Million, Three Hundred and Ninety-Six Thousand, Eight Hundred) Naira being a deduction of the of N27,693,200.00 (Twenty-Seven Million, Six Hundred and Ninety-Three Thousand, Two Hundred) Naira, which was returned by the 2nd Respondent from the total value of the cheques valued at N41,090,000 (Forty-One Million and Ninety Thousand) Naira issued by the 1st Respondent alone as pleaded in paragraph 5 of its 2nd amended statement of claim to wit: First Bank cheque No: HC 58405811, Zenith Bank cheque No: 30682846 and Zenith Bank cheque No: 30682850 (page 280 of the record). Counsel urged this Court to so hold.
ISSUE FOUR:
Whether the lower Court was right in awarding general damages and cost in favour of the Respondent?
In arguing this issue, Counsel submitted that the lower Court erred in law when it awarded general damages in the sum of N10,000,000 (Ten Million) Naira in addition to cost of N500,000 (Five Hundred Thousand) Naira Only. Counsel argued that the law is settled that where the quantum of loss is certain, an award of general damages is improper.
Counsel further argued that in determining the amount to be awarded as general damages, the lower Court ought to make an assessment of the quantum of such damage in the light of the evidence before it. He contended that from the pleadings and evidence led in the lower Court, the highest claim that the Respondent could establish, if any at all, is the sum of N13,396,800 (Thirteen Million, Three Hundred and Ninety-Six Thousand, Eight Hundred) Naira only. Counsel contended that having established that the 1st Respondent did not discharge the onus placed upon it by law in establishing negligence, the claim for damages becomes baseless and of no moment. This, he said is because negligence and actual damage must co-exist to sustain a claim for general damages. SEE:INTERNATIONAL MESSENGERS vs. ENGINEER DAVID NWACHUKWU (2004) ALL FWLR (PT. 220) 1216.
Alternatively, Counsel submitted that the award of general damages of N10,000,000 (Ten-Million) Naira and cost of N500,000.00 (Five Hundred Thousand) Naira amounts to double compensation. This, he contended that is because the head of special damages ought to cater for the 1st Respondent’s grievance if it was entitled to same. Counsel further contended that under the law, when a Plaintiff has been fully compensated under one head of damages for a particular injury, it is improper to award him damages for the same injury under another head of damages. Counsel cited the case of INYANG vs. EBONG (2002) 2 NWLR (PT. 751) 284. It was further argued that under the rule of double compensation, since the Respondent could recover in full under special damages, it ought not to be entitled to recover under general damages. SEE JOSEPH vs. ABUBAKAR (2002) 5 NWLR (PT. 759) 185.
Counsel submitted that in the instant case, since the 1st Respondent had been awarded the sum of N48,396,800 (Forty-Eight Million, Three Hundred and Ninety Six Thousand Eight Hundred) Naira under the special damages head of claim it was not entitled to general damages. Counsel urged this Court to so hold.
ISSUE FIVE:
Whether the existence of an agency relationship between the 1st Respondent as Principal and the 2nd Respondent as Agent for the purpose of acquiring shares of Chams Private Placement could be seen as a concession by the 1st Respondent that it was aware that the cheques totaling N76,090,000.00 (Seventy-Six Million and Ninety Thousand) Naira were meant to be paid into the 2nd Respondent’s third-party account for the said acquisition?
Learned Counsel contended that from the facts of this appeal, the 2nd Respondent was given the task of procuring shares of Chams Nigeria PLC by the 1st Respondent and that this task was to be done for a consideration of N12,212,800.00 (Twelve Million Two Hundred and Twelve Thousand and Eight Hundred) Naira, which according the paragraph 31 of the second amended statement of claim of the 1st Respondent (page 283 of the record of appeal) the 1st Respondent paid to the 2nd Respondent.
Now, for the purposes of acquiring the said shares, Counsel further contended that the 1st Respondent as well as some other investors issued cheques to the 2nd Respondent to purchase the said shares on their behalf (See page 283 of the record of appeal). It was also contended that the 2nd Respondent accepted this responsibility and collected the cheques issued to him and personally received payment for the above cheques by depositing same in a third-party account in the Appellant.
As far as Counsel is concerned, these facts were not in dispute and issues were not joined on same. Regardless, he argued that evidence was led by the 1st Respondent on them while the 2nd Respondent neither led any evidence in its defence nor filed any pleadings in this regard. Regardless, Counsel further argued that the settled position of the law is that evidence even if uncontroverted and unchallenged, still has to be evaluated by the Court to see if it is credible enough to sustain the claim. Counsel cited the case of OGUNDIPE vs. AG-KWARA (1993) 2 NWLR (PT. 313) 558. He added that this is so because, the unchallenged evidence of a claimant may still not sustain the claim before the Court. See HARUNA vs. SALAU (1998) 7 NWLR (PT. 559) 653 at 659. Counsel therefore contended that it is necessary to evaluate the evidence adduced as well as the pleadings in the proceedings at the lower Court in relation to the claims of the 1st Respondent against the Appellant. Counsel urged this Court to so hold.
Against the backdrop of this position, Counsel submitted that had the pleadings and the evidence led at the lower Court had been reviewed, the lower Court would have discovered that there was an agency relationship in existence between the 1st Respondent as Principal and the 2nd Respondent as agent. According to Counsel, this relationship was such that the 1st Respondent would not have been shocked, disturbed or claimed ignorance when it discovered that the 2nd Respondent paid the cheques into the third-party’s account in the Appellant’s bank if the said payment was necessary for the acquisition of the shares of Chams private placement. Counsel also submitted that as a matter of fact, the Appellant based on the foregoing, does not relent in contending that the 1st Respondent must have anticipated that the 2nd Respondent was very likely to pay the cheques into the third-party’s account in the Appellant.
Counsel also contended that the 1st Respondent might argue that this agency relationship was not pleaded, but he submitted against this development that the law is that a party to a civil action is only required to plead material facts and not the legal result of the said facts SEE: FADARE vs. ATTORNEY-GENERAL, OYO (1982) 1-2 S.C. 1 and submitted in addition that the issue of the agency relationship in existence between the parties need not have been raised at the lower Court before being raised in this Court for the following reasons:
1. The existence of the agency relationship between the 1st and 2nd Respondent is not one of those matters, which must be specifically pleaded. This is because where a party pleads facts on which a legal result can be implied or inferred there from.
2. The essence of pleadings is to give a right of fair hearing to prevent any party from being taken by surprise. However, if a claimant pleads a specific set of facts, which can be used against him by the defendant, the said claimant cannot then claim to have been taken by surprise if the defendant uses the said averments against him. This was the position in the case of SKETCH vs. AJAGBEMOKEFIRI (1989) 1 WNLR (PT. 100) 678. From the foregoing, Counsel urged this Court to hold that the agency relationship between the 1st and 2nd Respondents, which, could be inferred from the amended statement of claim of the 1st Respondent can be raised in this Court.
Having established that the agency relationship can be raised at the first time in this Court, Counsel then went about describing the nature of this agency relationship. Counsel contended that the authority to act as an agent could be either express or implied. He cited the case of BAYERO vs. MAINASARA & SONS (2006) 8 NWLR (PT. 982) 391 AT 431-432 PARR H-B on the creation of an Agency relationship. In the instant case, Counsel argued that hints of this authority can be observed in the second amended statement of claim of the 1st Respondent in Paragraphs 3 and 4 of the amended statement of claim of the 1st Respondent (page 280 of the record of appeal) where the 1st Respondent avers that:
3. In February 2008, the claimant was approached by one Mr Opeolu Olumide, (CEO of Aims Achievers Consultancy Ltd) who informed the claimant that Chams Nigeria PLC Shares had been put up for sale via private placement.
4. The Claimant avers that Mr. Opeolu Olumide also informed it that his company (Aims Achievers Consultancy Ltd) had a joint working arrangement with Diamond Securities Ltd, one of the Stock Broking Firms to the said private placement of Chams Nigeria Plc shares.
In putting the foregoing in context, Counsel argued that the joint working arrangement that the 2nd Respondent had with the stock broking firm above made it necessary for the 1st Respondent to engage the 2nd Respondent as an intermediary who could acquire the shares that it could not acquire on its own. (See page 440 of the record of appeal) With this intention at the forefront, it becomes easy to deduce that the instruction given to the 2nd Respondent was to do what was beyond the ability of the 1st Respondent but within the ability and skill of the 2nd Respondent, which was to purchase shares of Chams Nigeria PLC, for which the 2nd Respondent was compensated.
Counsel further argued that from the foregoing, it is clear that if anything at all, the uncontroverted and unchallenged evidence and the pleadings of the 1st Respondent shows a contract of agency with a consideration of N12,212,800.00 (Twelve Million Two Hundred and Twelve Thousand and Eight Hundred) Naira paid by the 1st Respondent as Principal to the 2nd Respondent as agent. Counsel urged this Court to so hold.
As far as Counsel is concerned, in determining the implication of this agency relationship, it is necessary to look at the degree of freedom that the 2nd Respondent enjoyed in executing the instructions of his Principal (the 1st Respondent). He contended that this degree of freedom is determined by the Principal either expressly or by his conduct. Counsel said that it is clear that the only concern of the 1st Respondent was the acquisition of the shares and nothing more as this was apparent in paragraphs 5 and 6 of the second amended statement of claim of the 1st Respondent, where it averred that it’s suspicion was only confirmed when it was not allotted shares or given share certificates during the private placement (page 281 of the record of appeal).
Against the backdrop of this position, Counsel submitted that according to these same paragraphs, the first concern of the 1st Respondent was not regarding the manner the cheques were cleared, but that they were not allotted shares or issued any share certificates. Counsel therefore urged this Court to so hold and that by the implied agency relationship in existence between the 1st and 2nd Respondents, the 1st Respondent clearly conducted itself in a manner that allowed the 2nd Respondent to appropriate the funds from the cheques for himself for the purpose of ensuring that he personally used those funds to acquire shares on behalf of the 1st Respondent. Counsel urged this Court to once again hold.
1st RESPONDENT:
ISSUE ONE:
Whether the lower Court had Jurisdiction to entertain the 1st Respondent’s claim?
In arguing this issue, learned 1st Respondent’s Counsel submitted that the State High Court has jurisdiction as enshrined in the 1999 Constitution by virtue of Section 272(1), which empowers the Court to hear and determine civil proceedings (such as the claims of the 1st Respondent) in which the existence or extent of a legal right is in issue. Counsel further submitted that the claims of the 1st Respondent at the trial Court on negligence falls within the ambience and exclusive jurisdiction of the State High Court, thus the trial Court was right to have determined the claims of the 1st Respondent on the tort of Negligence and damages against the Appellant and Counsel urged this Court to so hold.
It was contended by Counsel that contrary to the arguments of the Appellant in the brief of argument dated the 6th day of February 2019, the relationship between the Appellant and the 1st Respondent does not have to fall within the general definition of banker-customer relationship, before the Bank can be held liable for negligence, as a bank does not only owe its customers the duty of care, but rather owes his customers’ neighbours the same duty of care and a breach of which makes the bank liable in negligence.
In other words, Counsel argued that the bank at all times owes a duty of care to its customers and the banker’s neighbours in its line of duty, and once it can be established that a bank’s supposed duty of care to the bank’s customer’s neighbour has been breached, the bank will be held liable for negligence. Counsel cited the case of AGI vs. ACCESS BANK PLC (2014) 9 NWLR 121, on this issue.
Learned Counsel further submitted that although the 1st Respondent does not fall within the general definition of the Appellant’s customer, the authority cited in the case of AGI vs. ACCESS BANK PLC (Supra) extended the definition of a customer of a bank to now accommodate anyone, bodies and parties who are likely to be affected by the Bank’s act or omissions, thus; a bank can be sued for negligence by a party/person who is not a customer of the bank. Counsel further submitted that by the above cited authority of AGI vs. ACCESS BANK PLC (Supra) the 1st Respondent can be seen as a customer of the Appellant, who by virtue of the 1st Respondent’s relationship with the 2nd Respondent (who is a customer of the Appellant) entitles the 1st Respondent to damages in negligence against the Appellant.
The arguments of Counsel is that the acts of the Appellant, in simple terms (which also summarized the claims of the 1st Respondent against the Appellant at the trial Court) is such that the Appellant paid cheques issued by the 1st Respondent (on behalf of 1st Respondent’s clients) into another person’s account without the consent or approval of the 1st Respondent. Counsel further argued that the evidence of the 1st Respondent’s witness at the trial Court (which was not controverted) was that the Appellant was negligent, as the Appellant who is a clearing house has a duty to ensure that the cheques were paid into the endorsed beneficiary but the Appellant recklessly paid cheques issued in favour of Chams Private Placement into the account of Aims Achievers Consulting account who diverted same to its personal use. (4th Paragraph of page 466 of the records of appeal)
Counsel also submitted that the case of the 1st Respondent at the trial Court has nothing to do with bank, banking or dispute in a financial transaction (which would have conferred jurisdiction on the Federal High Court as the Court of competent jurisdiction to determine the claims of the 1st Respondent); rather the case of the 1st Respondent against the Appellant at the trial Court is based solely on Negligence, which the State High Court has competent jurisdiction to determine (as provided under Section 272 Subsections 1 and 2 of the Constitution of the Federal Republic of Nigeria (amended) 1999. Counsel further submitted that the instant appeal is misconceived by the Appellant and same is liable to be dismissed with substantial cost. Counsel urged the Court to uphold the judgement of the trial Court and duly dismiss the Appellants’ appeal accordingly.
Learned Counsel referred to the arguments of the Appellant at paragraph 5.10 of the Appellant’s brief of argument, that the 1st Respondent did not own an account or have any banking relationship with the Appellant and that the 1st Respondent was not a customer of the Appellant and cited the Supreme Court case of SOCIETE BANCAIRE (NIGERIA) LIMITED vs. MARGARIDA SALVADO DE LLUCH (2004) 18 NWLR (PT. 905) 341, whose facts Counsel said are totally different from the facts of this appeal before the Court, as the said cheques wrongly paid into another person’s account were not issued on the 2nd Respondents’ name. But Counsel in response, contended that it is not for the Appellant to decide what judicial precedence or authority suits the arguments of Counsel in brief of arguments. Counsel therefore urged this Court to discountenance and dismiss the argument of the Appellant, particularly at paragraph 5.15-5.18 and commended the case of TRADE BANK PLC vs. BENILUX (NIG) LTD [2003] FWLR (PT. 162), 1871 AT 1882, PARAS. E-G.
Counsel also submitted that the position of the Appellant as stated in its argument is generally misleading and that same is liable to be dismissed. Counsel reiterated its position and stated that the case of the 1st Respondent at the trial Court borders solely on the issue of torts of Negligence and damages and that the relationship between the Appellant and the 2nd Respondent (which is purely a banking relationship) has nothing to do with the case of tort of negligence the 1st Respondent sued the Appellant for. Counsel emphasized that the case of the 1st Respondent at the trial Court was based solely on the tort of negligence, which the State High Court has jurisdiction to entertain. Counsel cited the case of TRADE BANK PLC vs. BENILUX (NIG) LTD (Supra) in support of his arguments. See also the case of TRADE BANK PLC vs. BENILUX (supra) at (pp.1883-1884. Paras F-A).
Based on the foregoing, Counsel submitted that the cause of action of the 1st Respondent’s case at the trial Court arose when the Appellant recklessly paid cheques issued in favour of Chams Private Placement into the account of Aims Achievers Consulting account who diverted same to its personal use without the consent or approval of the 1st Respondent (who issued the said cheques on behalf of its clients to Chams Private Placement) thus empowering the State High Court to competently adjudicate on the claims of the 1st Respondent. Counsel urged this Court to affirm the judgment of the trial Court dated the 21st day of June, 2016 and dismiss the appeal of the Appellant, same being vexatious, complete after thought and a waste of time.
ISSUE TWO:
Whether the lower Court was right when it held that the appellant is liable to the respondent in negligence for failing to exercise the due care expected of it when it wrongfully cleared cheques presented to it by the 2nd Respondent without first seeking the authority of the 1st Respondent?
The Respondent in proof of its case called a sole witness who testified on its behalf. According to the testimony of the Respondent’s Witness (CW1) Mr. Dixon Oladapo, the Respondent was approached by one Mr. Opeolu Olumide, (CEO of Aims Achievers Consultancy Ltd, and the third party at the lower Court) who informed the Respondent that Chams Nigeria Plc Shares had been put up for sale via private placement. It is also the testimony of CW1 that Mr. Opeolu Olumide, informed the Respondent that his Company (Aims Achievers Consultancy Ltd) had a joint working arrangement with Diamond Securities Ltd, one of the Stock Broking Firms to the said private placement of Chams Nigeria Plc shares. On the strength of this, the Respondent for the sole purpose of purchasing the shares of Chams Nigeria Plc on behalf of its Clients handed over Exhibit CWIA, CWIB, CWIC, CWID and CWIE to Opeolu Olumide for onward transmission to Chams Nigeria Plc.
Learned Counsel further contended that Exhibits CWIA-CWIE are documentary evidence, which and speaks for themselves. He added that a look at Exhibits CWIA-CWIE reveals that the instruments were issued in the name of Chams Private Placement and Chams Nigeria Plc as the sole beneficiary of the instruments, despite the clear instructions on the instrument as to the beneficiary of the cheques, while the Appellant went ahead and paid the cheques into the account of their own customer; Aims Achievers Limited, the third party, who is clearly not a beneficiary of the instrument. Counsel cited the case of LLOYDS BANK LTD vs. CHARTERED BANK OF INDIA, AUSTRALIA AND CHINA, (1920) C.A. 694 AT PAGE 689 in support of his arguments.
Counsel also submitted that the law requires the Appellant to exercise due diligence before clearing the cheques into the account of the third party. He added that once a cheque is issued and presented at the bank for payment, a duty of care is created between the true owner of the cheque and the bank to which the cheque is presented to for payment and that, that a duty of care was created between the 1st Respondent and the Appellant when the 1st Respondent’s cheques were presented for payment/clearing in the Appellant’s branch in Ikoyi by the third party. The contention of Counsel is that paying the cheques (Exhibit CWIA-E) into the account of Aims Achievers Consultancy Ltd; (Appellant’s customer) is contrary to the clear instruction of the owner of the cheques and same amounts to negligence on the part of Appellant.
Counsel drew attention of this Court to the Learned Author, E. O. AKANKI in his book Commercial Law in Nigeria at page 597 where he stated, thus:
“The burden of proof however rests with the bank to prove that it had discharged the duty owed the true owner in its handling and collection of cheque to the credit of his customers. This is not an easy burden. Whilst the bank is not expected to offend its customers by a manifest suspicion of fraud, a neglect to make inquiry carries the risk of liability”.
Counsel cited the case of U.M.B. LTD, EKPAN vs. ADJAKA (2016) ALL FWLR (PT. 816) Page 570 at Page 595 at Paragraph B where the Court held, thus:
“A person must take reasonable care to avoid acts or omissions that he ought reasonably to foresee would be likely to injure persons who are so closely and directly affected by his acts or omissions that he ought reasonably to have them in contemplation”.
As far as Counsel is concerned, by the evidence made available to the lower Court, the trial Judge was right to have found the Appellant liable in the tort of negligence in handling the cheques of the Respondent; while at the trial Court, the Appellant did not deny the transaction but rather brought third party proceedings against Aims Achievers.
Counsel submitted that the third party proceeding is an admission of liability on the part of the Appellant and that the Learned Trial Judge found this accordingly at page 480 of the Records of Appeal. Counsel referred to the case of NIGER MILLS CO. PLC vs. AGUBE (2008) ALL FWLR (PT 427) page 86 at page 113 Para E – G, on the most fundamental or chief ingredients of the tort of negligence. It was also contended that the 1st Respondent at Paragraph 44 of its Amended Statement of Claim pleaded the particulars of negligence of the Appellant and led oral evidence on the Appellant’s negligence in establishing the negligence of the Appellant.
Against the backdrop of the foregoing, Counsel argued that having led evidence on the particulars of Appellant’s negligence without such evidence being challenged, and/or controverted by the Appellant, the Respondent succeeded in establishing the existence of a legal duty of care owed the Respondent by the Appellant, which said duty the Appellant has breached. Counsel submitted that the Appellant failed to take diligent care and skill in the handling of the Respondent’s cheques with the resultant effect that Respondent suffered multiple damages and urged this Court to so hold.
On the tendered Exhibits DWIB and DWIC, which are caution notices, tendered by the Appellant, Counsel argued that these exhibits being documentary evidence, speaks for itself and that the Learned trial Judge in his judgment at page 482 of the Records of Appeal evaluates the caution notice and held as follows:
“The caution notice indicated as follows: Please exercise the usual caution for the reason stated below…the ticked option of the 4 listed reasons which are; accounts newly opened, amounts involved, unusual lodgment and others. The defendant ticked “the amount involved”. The question is where it is (sic) evident on the face of the cheques in issue that the payee name is Chams Private Placement and same were being paid into the account of Aims Achievers Consulting Limited should the Defendant not have indicated this on the caution notices sent to the Claimant’s bankers to put them on notice? This Court believes that they should have, and not doing so falls below the reasonable standard expected of a prudent bank and is negligent”.
On the citing of Section 77(2) of the Bills of Exchange Act Cap B8 LFN, 2004 by the Appellant and which he relied upon in same contending that the Sections have shielded the Appellant from any liability, Counsel submitted that the argument and submission of the learned Counsel to the Appellant is a misconception of the law. Counsel relied on E. O. AKANKI (Supra) at page 596 of the book, where the learned Author stated that for Section 77 to avail a bank, the whole transaction from the collection of the cheque, to the receipt and disposition of the money, must be in good faith and without negligence.
According to Counsel, this view of the Learned Author was corroborated by Section 77(2) of the Bills of Exchange Act, which states; “where a banker, in good faith and without negligence- a) receives payment for a customer of a prescribed instrument to which the customer has no title or a defective title;” Counsel cited the case of STANDARD BANK OF NIGERIA LTD vs. BANK OF AMERICA LTD, (1976) 7 CCHCJ and submitted that the Appellant was negligent and did not act in good faith; that the Appellant acted negligently throughout the entire transaction; from the presentation of the cheques, to the issuance of the caution notice and the payment of the money of the cheques into a third party account, contrary to the account indicated thereon. It was further submitted that on the whole, that the Appellant was negligent and that neither Section 77(2) or Section 92 of the Bills of Exchange Act Cap B8 LFN, 2004 will avail the Appellant (or absorb) from being liable to damages in negligence as the Appellant did not act in good faith in respect to the cheques paid into the 3rd party herein (i.e. the 2nd Respondent) and urged this Court to so hold and to affirm the decision of the lower Court herein and hold that the Appellant is liable to the 1st Respondent in negligence for failing to exercise the due care expected of it when it wrongfully cleared cheques presented to it by the 2nd Respondent without first seeking the authority of the 1st Respondent.
ISSUE THREE:
Whether the damages and cost of N10,500,000.00 (Ten Million, Five Hundred Thousand) Naira awarded in favour of the Respondent as against the Appellant is excessive?
Learned Counsel relied on the Latin maxim: “Ubi jus Ibi remedium” meaning where there is a wrong there must be a remedy in opening arguments on this issue. He contended that the Court of Appeal in the case of BETA GLASS PLC vs. EPACO HOLDINGS LTD (2011) ALL FWLR (PT. 579) 1173 at 1194 expatiated on the purpose of an award of damages, which is to compensate the plaintiff for damage, injury or loss suffered and that the guiding principle is “restitutio in integrum”, a situation where a Court is called upon to assess that a party which has been damnified by the act which is in issue must be put in the position in which he would have been if he had not suffered the damage for which he is being compensated.
Counsel also cited the case of CENTRAL BANK OF NIGERIA vs. BECKITI CONSTRUCTION LTD (2012) ALL FWLR (PT. 620) 1266 at 1296 at para. G-H where this Court held that; “the term damages connote an amount of money claimed by or ordered to be paid to a person as a compensation for loss or injury … and that … Damages are the sum of money which a person wronged is entitled to receive from the wrongdoer as compensation for the wrong” done. See also the case of YALAJU-AMAYE vs. ASS. REG. ENGR. CONT LTD & ORS (1990) 2 NSCC page 462 at page 480 at Para 25-30 on the definition of the expression: “General Damages”.
Similarly, Counsel argued that in OZIGBU ENGINEERING COMPANY LIMITED vs. IWUAMADI (2011) ALL FWLR (PT. 553) 1975 at page 1994 at Para G this Court held that: “the manner in which general damages is quantified by the Court, which is empowered to assess same is by relying on what would be the opinion and judgment of a reasonable person taking into account the peculiar facts and circumstances of the case”.
On the arguments made by the Appellant at its issue five of its brief of argument that there was a principal/agent relationship between the 2nd Respondent and the 1st Respondent, and that the: “…relationship was such that the 1st Respondent would not have been shocked, disturbed nor claimed ignorance when it discovered that the 2nd Respondent paid the cheques into the third-party’s account in the Appellant’s bank if the said payment was necessary for the acquisition of the shares of Chams Private Placement. As a matter of fact, we do not relent to submit that the 1st Respondent must have anticipated that the 2nd Respondent was very likely to pay the cheques into the third-party account in the Appellant”. In response, learned 1st Respondent’s Counsel submitted that the said quoted argument of the Appellant is bereft of sound logic and a mere attempt to sway the judgment of the trial Court in ambushment. Counsel contended that the 2nd Respondent did not lead any evidence on this baseless assertion of the Appellant, neither was there any proof of same before the trial Court. Counsel urged this Court to dismiss the appeal of the Appellant with substantial cost and affirm the judgment of the trial Court.
ISSUE FOUR:
Whether the lower Court was NOT right in granting the 1st Respondent the sum of N48,396,800.00 (Forty-Eight Million, Three Hundred and Ninety-Six Thousand Eight Hundred) Naira being the sum handed over by the 1st Respondent herein to the Appellant (via cheques) for onward transmission to Charms Plc for shares to be issued in the names of the beneficiaries (1st Respondent’s clients) but which the Appellant wrongfully paid into the accounts of the 2nd Respondent?
Contrary to the arguments of the Appellant at paragraph 7.0 of the Appellant’s brief of argument, learned Counsel argued that the claims of the 1st Respondent as captured in the amended Statement of Claim dated 3rd day of May, 2012 (page 215 of the records of appeal), are straight forward and that the argument of the Appellant is misconceived and same is liable to be dismissed with substantial cost. Counsel enthused that the judgment of the trial Court is crystal clear on the fact that the trial Court’s judgment was for the recovery of the sum of N48,396,800.00 (Forty-Eight Million, Three Hundred and Ninety-Six Thousand, Eight Hundred) Naira from Aims Achievers Limited (See page 212 of the records of appeal) and award of general damages.
Learned Counsel also argued that the sequential break-down of the 1st Respondent’s claim to arrive at the claim of N48,396,800 (Forty-Eight Million, Three Hundred and Ninety-Six Thousand, Eight Hundred Naira) is clear enough without any air of ambiguity, even as the 1st Respondent led evidence on the fact that out of the initial sum of N76,090,000.00 (Seventy Six Million, Ninety Thousand) Naira the Appellant wrongfully paid into the account of the 2nd Respondent, the 1st Respondent was only able to recover the sum of N27,693,200.00 (Twenty Seven Million, Six Hundred and Ninety Three Thousand, Two Hundred) Naira leaving the 1st Respondent yet to recover the outstanding sum of N48,396,800 (Forty-Eight Million, Three Hundred and Ninety-Six Thousand, Eight Hundred Naira). Counsel finally referred this Court to paragraphs 22 to paragraph 31 of the 1st Respondent’s amended statement of claim at page 211-212 of the records of appeal. He urged this Court to affirm the judgment of the trial Court and dismiss this appeal in the interest of justice with substantial cost.
RESOLUTION OF APPEAL
The first issue nominated for the determination of this appeal has to do with the vexed question of whether the lower Court had jurisdiction to entertain the Respondent’s claim. The contention of learned Appellant’s Counsel was that the High Court of Lagos State lacked the required jurisdiction to entertain the reliefs sought by the Respondent, since the reliefs relate solely to a banking matter that is covered by the exclusive jurisdiction of the Federal High Court under Section 251(1)(d) of the Constitution of Nigeria, 1999, as amended.
On the side of the Respondent, however, its Counsel contended that the Court below had the required jurisdiction to entertain the matter in so far as the matter was brought against the Appellant not as a Banker/Customer related matter but purely under the tort of negligence; more so, when the Respondent on record was not a customer of the Appellant. Having said this, thus far the appropriate place to begin the analysis of this Court in this appeal is, perhaps to first define the relationship that existed between the parties shortly before things went sour between them. Upon a calm and careful examination of the records, the established facts clearly that the dispute arose out of purely financial transactions relating to banks and banking in which the Respondent was not a customer to the Appellant Bank. In other words, the relationship between the Appellant and the Respondent on record does not fall within the general definition of banker/customer relationship.
The settled position of the law, however, is that the bank at all times owes a duty of care to its customers and the banker’s neighbours in its line of duty and once it can be established that a bank’s supposed duty of care to the banks customer’s neighbour has been breached, the bank will be held liable for negligence. See the case of AGI vs. ACCESS BANK PLC (2014) 9 NWLR 121, where this Court held thus:
“the rationale for the duty of care on a banker is that a banker’s customer falls within the ambit of the banker’s neighbour. That is, a person who is so closely and directly affected by the act of the banker that the banker ought reasonably to have the customer in contemplation as being likely to be affected when the banker is considering the acts or omissions which are called in question…”
The settled position here, is that the authority of the case of AGI vs. ACCESS BANK PLC (Supra) extended the definition of a customer of a bank to now accommodate anyone, bodies and parties who are likely to be affected by the Bank’s act or omissions and this makes a bank capable of being sued for negligence by a party/person who is not a customer of the bank. This rationale of the authority of the case ofAGI vs. ACCESS BANK PLC (Supra) puts the Respondent on record, on the same position as a customer of the Appellant, who by virtue of the Respondent’s relationship with AIMS ACHIEVERS CONSULTING LIMITED (who is a customer of the Appellant) entitles the Respondent to damages in negligence against the Appellant.
Perhaps, the gravity of the liability of the Appellant in the handling of the sordid events which culminated in the humongous losses to the Respondent is that the Appellant that the Appellant paid cheques issued by the Respondent (on behalf of Respondent’s clients) into another person’s account without the consent or approval of the Respondent. At the trial, the evidence of the Respondent’s witness (which was not challenged) was that the Appellant was negligent, as the Appellant who is a clearing house has a duty to ensure that the cheques were paid into the endorsed beneficiary, but the Appellant recklessly and negligently paid cheques issued in favour of CHAMS PRIVATE PLACEMENT into the account of AIMS ACHIEVERS CONSULTING account who diverted same to its personal use. (4th Paragraph of page 466 of the records of appeal).
It is therefore important to clarify here that the case of the Respondent at the trial Court, was one which absolutely has nothing to do with bank, banking or dispute in a financial transaction (which would have conferred jurisdiction on the Federal High Court as the Court of competent jurisdiction to determine the claims of the Respondent); rather the case of the Respondent against the Appellant is based solely on negligence, which the State High Court has competent jurisdiction to determine (as provided under Section 272 Subsections 1 and 2 of the Constitution of the Federal Republic of Nigeria (amended) 1999).
This Constitutional provision clearly empowers the Court to hear and determine civil proceedings (such as the claims of the Respondent) in which the existence or extent of a legal right is in issue.
It will be recalled that the claims of the Respondent at the trial Court on negligence falls within the ambience and exclusive jurisdiction of the State High Court, thus the trial Court was therefore right to have determined the claims of the Respondent on the tort of negligence and damages against the Appellant; this Court finds and so holds. See the case of TRADE BANK PLC vs. BENILUX (NIG) LTD (Supra) where the apex Court rightly examined the powers of the State High Court to entertain cases on torts involving Banks per MOHAMMED, JSC held: thus:
“I have no doubt that the Respondent in the case in hand can sue the Appellant in conversion for the proceeds of the cheque which the Appellant paid to a stranger who is not the payee of the cheque. The Plaintiff/Respondent’s case is simply a tort of conversion and the action filed by the Plaintiff/Respondent against the Appellant can be entertained by any State High Court. See 7UP BOTTLING COMPANY LIMITED vs. ABIOLA AND SONS BOTTLING COMPANY LTD (2001) FWLR (PT. 70) P. 1650 “per TOBI, JSC: (p. 1682, paras E-G) for the purpose of determining the exclusive jurisdiction of the Federal High Court in respect of Section 230 (1)(b), the Court must carefully examine the facts of the case to see whether they justify the application of the Subsection. In the instant appeal, although the Appellant was mandated to pay the cheque valued at N1,000,000 to the Respondent, it paid it to a third party who is entirely a stranger to the transaction. That does not qualify as a bank transaction in which Section 230(1)(d) applies. It is clearly a tort of conversion which has nothing to do with the exclusive jurisdiction of the Federal High Court.
Conversion is a tort which is actionable in the State High Court. That is exactly what the Plaintiff/Respondent did. I cannot fault the commencement of the action in that Court”. See also the case of TRADE BANK PLC vs. BENILUX (supra) at (pp.1883-1884. Paras F-A) where the apex Court per EDOZIE, JSC had this to say on the subject; “It is not disputed that there was no relationship of banker and customer between the Appellant bank and the Respondent company to bring the matter under the proviso of Section 230(1)(d) of decree no. 107 of 1993 so as to confer jurisdiction to a State High Court; see NIGERIAN DEPOSIT INSURANCE CORPORATION vs. FEDERAL MORTGAGE BANK OF NIGERIA (1997) 2 NWLR (at 490) p.735. Be that as it may for the exclusive jurisdiction of the Federal High Court to be sustained under the aforesaid Section, the civil cause or matter must arise from “banking, banks, other financial institutions”.
Based on the foregoing, issue one is resolved in favour of Respondent on record and against the Appellant to the effect that the State High Court is competent to adjudicate on the claims of the Respondent.
On the issue of whether the lower Court was right when it held that the Appellant is liable to the Respondent in negligence for failing to exercise the due care expected of it when it wrongfully cleared cheques presented to it by AIMS ACHIEVERS CONSULTING LIMITED without first seeking the authority of the Respondent on record, it is most appropriate here to resort once again to the records of Court. It will be recalled that the Respondent in proof of its case called a sole witness who testified on its behalf. According to the testimony of the Respondent’s Witness (CW1) Mr. Dixon Oladapo, the Respondent was approached by one Mr. Opeolu Olumide, (CEO of AIMS ACHIEVERS CONSULTANCY LIMITED, and the third party at the lower Court) who informed the Respondent that CHAMS NIGERIA PLC shares had been put up for sale via private placement. It is also the testimony of CW1 that Mr. Opeolu Olumide, informed the Respondent that his Company (AIMS ACHIEVERS CONSULTANCY LTD) had a joint working arrangement with Diamond Securities Ltd, one of the Stock Broking Firms to the said private placement of CHAMS NIGERIA PLC shares.
On the strength of this, the Respondent for the sole purpose of purchasing the shares of CHAMS NIGERIA PLC on behalf of its clients handed over Exhibit CWIA, CWIB, CWIC, CWID and CWIE to Opeolu Olumide for onward transmission to CHAMS NIGERIA PLC. It may be germane to state here that the said Exhibits CWIA-CWIE is documentary evidence, which no doubt speaks for them. A critical look at the said Exhibits CWIA-CWIE reveals that the instruments were issued in the name of CHAMS PRIVATE PLACEMENT and CHAMS NIGERIA PLC as the sole beneficiaries of the instruments, despite the clear instructions on the instrument as to the beneficiaries of the cheques, while the Appellant went ahead and paid the cheques into the account of their own customer; AIMS ACHIEVERS LIMITED, the third party who is clearly not a beneficiary of the instruments. If this is not a clear case of gross negligence, then one wonders what else would qualify as such. See the case of LLOYDS BANK LTD vs. CHARTERED BANK OF INDIA, AUSTRALIA AND CHINA, (1920) C.A. 694 AT 689, cited by learned Respondent’s Counsel, where SANKEY, L J held thus;
“The banker must exercise the same care and forethought in the interest of the true owner, with regard to cheques paid in by the customer, as a reasonable businessman would bring to bear on similar business of his own”.
The law requires the Appellant to exercise due diligence before clearing the cheques into the account of the Third Party. In agreement with learned Counsel for the Respondent, once a cheque is issued and presented at the bank for payment, a duty of care is created between the true owner of the cheque and the bank to which the cheque is presented to for payment and that a duty of care was created between the Respondent and the Appellant when the Respondent’s cheques were presented for payment/clearing in the Appellant’s branch in Ikoyi by the third party. The paying of the cheques (Exhibit CWIA-E) into the account of AIMS ACHIEVERS CONSULTANCY LTD; (Appellant’s customer) is contrary to the clear instruction of the owner of the cheques and same amounts to negligence on the part of Appellant; no more, no less.
Based on the piece of evidence made available to the Court below, the learned trial Judge was no doubt right to have found the Appellant liable in the tort of negligence in the handling of the cheques of the Respondent. It is instructive to note that trial the Appellant did not deny the transaction but rather, brought third party proceedings against AIMS ACHIEVERS LIMITED. The implication of a third party proceeding, in agreement with learned Counsel for the Respondent is clearly an admission of liability on the part of the Appellant and that the Learned Trial Judge found at page 480 of the Records of Appeal that:
“there appears to be no dispute between parties as to the fact that indeed the claimant did issue the cheques in issue in the name of Chams Private Placement and that the said Mr. Opeolu Olumide maintains a third party account with the Defendant. This is also evidence on the face of Exhibit CW1 (a)-(e). It is also evident on the face of Exhibit CW1 (h) (1-2) and CW1 (i) (1-3) that the cheques were paid into the Defendant Bank. The Claimant’s evidence, which is not denied and therefore requires no further proof is that the cheques were paid into the account of Aims Achievers Consulting Limited with the Defendant Bank and not on the account of the named payee on the cheques and thus the Defendant was negligent.”
Arising from the foregoing, issue two is resolved once again in favour of the Respondent. Consequently, this Court finds it unable to fault the Court below for holding that the Appellant is liable to the Respondent in negligence due to reasons of its failures to exercise the due care expected of it when it wrongfully cleared cheques presented to it by AIMS ACHIEVERS CONSULTING LIMITED without first seeking the authority of the Respondent on record.
It will be recalled that the Appellant referred to Section 77 (2) of the Bills of Exchange Act Cap B8 LFN, 2004 and sought thereby to seek refuge under its provisions in shielding the Appellant from liability occasioned by its own negligence.
Learned Counsel for the Respondent, in a counter submission referred this Court to the learned Author, E. O. AKANKI, in his Book: Commercial Law in Nigeria at page 596 was of the view that Section 77 to avail a bank, the whole transaction from the collection of the Cheque, to the receipt and disposition of the money, must be in good faith and without negligence. It was further argued by Respondent’s Counsel, which this Court agrees with that the Author’s view was corroborated by the said Section 77 (2) of the Act, which prescribes that; a banker, must act in good faith and without negligence, where it receives payment for a customer of a prescribed instrument to which the customer has no title or a defective title.
It is rather glaring from the evidence adduced at the Court below, that the Appellant was not only negligent, but also did not act in good faith; that the Appellant acted negligently throughout the entire transaction; from the presentation of the cheques, to the issuance of the caution notice and the payment of the money of the cheques into a third party account, contrary to the account indicated thereon.
In respect of issue four (4) dealing with the issues of whether the damages and cost of N10,500,000.00 (Ten Million, Five Hundred Thousand) Naira awarded in favour of the Respondent as against the Appellant is excessive, it is rather practicable to suggest that the purpose of an award of damage is to compensate the wronged party as a result of the damage or injuries or loss he has suffered at the instance of an opponent. This principle is usually encapsulated in the Latin Maxim: restitutio in integrum, which explains the restoration of an injured person to the situation which have prevailed had no injury been sustained; restoration to the original or pre-contractual position. See the case of LAGOS CITY COUNCIL CARETAKER COMMITTEE vs. BENJAMIN O. UNACHUKWU (1978) 3 S.C. 199 AT 202 where BELLO, JSC (as he then was) stated the position of the law, thus:-
“The measure of damages in an action for negligence is founded on the principle of restitutio integrum. The principle was re-echoed by Lord Wright in Liesbosch Dredger v. SS Edison (1933) A.C. 449 at 459, wherein he said the substantial issue is what in such a case as the present one is the true measure of damage. It is not questioned that when a vessel is lost by collision due to the sole negligence of the wrong-doing vessel the owners of the former vessel are entitled to what is called restitutio in integrum, which means that they should recover such a sum as will replace them, so far as can be done by compensation in money, in the same position as if the loss had not been inflicted on them, subject to the rules of law as to remoteness of damage.”
Now in the case of CENTRAL BANK OF NIGERIA vs. BECKITI CONSTRUCTION LTD (2012) ALL FWLR (PT. 620) 1266 at 1296 at para. G-H cited by learned Respondent’s Counsel, this Court held that; “the term damages connotes an amount of money claimed by or ordered to be paid to a person as a compensation for loss or injury … and that …Damages are the sum of money which a person wronged is entitled to receive from the wrongdoer as compensation for the wrong done.” In defining what General Damages means, the apex Court in the case of YALAJU-AMAYE vs. ASS. REG. ENGR. CONT LTD & ORS (1990) 2 NSCC page 462 at page 480 at Para 25-30 held thus:
“It is well settled law that general damages are the kind of damage which the law presumes to flow from the wrong complained of. They are such as the Court will award in the circumstances of a case…by presuming the ordinary expectations of a reasonable man”.
Against the backdrop of the foregoing, it is important to note that in the award of General Damages, as was done by the Court below in the instant case, wide spread power is given to the Court comparable to the exercise of discretion of the Court. The power is usually enormous and therefore far-reaching and contrary to the contention held by the Appellant herein, who holds the view that it is excessive. The measure of general damages is awarded to assuage such a loss, which flows naturally from the defendant’s act. It needs not be specifically pleaded. It suffices if it is generally averred. They are presumed to be the direct and probable consequence of that complained of. It is not special damages, and therefore, incapable of exact calculation. See the cases of FEDERAL MORTGAGE FINANCE LTD vs. HOPE EFFIONG EKPO (2004) 2 NWLR (PT. 865) 100 AT 132; DUMEZ vs. OGBOLI (1972), 2 SC 196. This issue is also resolved against the Appellant and in favour of the Respondent.
On the question of whether the lower Court was NOT right in granting the Respondent the sum of N48,396,800.00 (Forty-Eight Million, Three Hundred and Ninety-Six Thousand Eight Hundred) Naira being the sum handed over by the Respondent herein to the Appellant (via cheques) for onward transmission to Charms Plc for shares to be issued in the names of the beneficiaries (Respondent’s clients) but which the Appellant wrongfully paid into the accounts of another, there is no gain saying the fact that the claims of the Respondent as captured in the amended Statement of Claim dated 3rd day of May, 2012 (page 215 of the records of appeal), are straight forward.
A careful perusal of the judgment of the Court below is clear on the fact that the trial Court’s judgment was for the recovery of the sum of N48,396,800.00 (Forty-Eight Million, Three Hundred and Ninety-Six Thousand, Eight Hundred) Naira from AIMS ACHIEVERS LIMITED (See page 212 of the records of appeal) and for the award of general damages.
It is instructive to also note that the sequential break-down of the Respondent’s claim to arrive at the claim of N48,396,800 (Forty-Eight Million, Three Hundred and Ninety-Six Thousand, Eight Hundred Naira) is clear enough without any air of ambiguity, even as the Respondent led evidence on the fact that out of the initial sum of N76,090,000.00 (Seventy Six Million, Ninety Thousand) Naira, the Appellant wrongfully paid into the account of the AIMS ACHIEVERS LIMITED, the Respondent was only able to recover the sum of N27,693,200.00 (Twenty Seven Million, Six Hundred and Ninety Three Thousand, Two Hundred) Naira leaving the Respondent yet to recover the outstanding sum of N48,396,800 (Forty-Eight Million, Three Hundred and Ninety-Six Thousand, Eight Hundred Naira). See paragraphs 22 to paragraph 31 of the Respondent’s amended Statement of Claim at page 211-212 of the records of appeal. All said and done this Court finds no merit in the arguments of the Appellant on this issue and therefore finds no difficulties in affirming the judgment of the Court below on this issue.
In the final analysis, this appeal fails and it is accordingly dismissed. Consequently, the judgment of the High Court of Lagos State delivered on 21st June, 2016 Coram: O. A. OGALA, J in Suit Number LD/1824/2009 is HEREBY Affirmed. There shall be cost of N300,000.00 against the Appellant.
OBANDE FESTUS OGBUINYA, J.C.A.: I had the singular privilege to peruse, in draft, the erudite leading judgment delivered by my learned brother, Frederick O. Oho, JCA. I endorse, in toto, the reasoning and conclusion in it. I, too, visit a deserved dismissal on the appeal. I abide by the consequential orders decreed in it.
FATIMA OMORO AKINBAMI, J.C.A.: I have had a review of the judgment of my learned brother, Frederick Oziakpono Oho, JCA, and I am in agreement that this appeal lacks merit. The trial Court has painstakingly evaluated the evidence before it, before coming to its conclusion.
It is a settled principle or law that that where a trial Court has carried its assignment satisfactorily, an appeal Court shall be left with no option but to affirm such a decision. See Ali v. State (2015) 10 NWLR Part 1466 Page 1 at 31 Para D-H per Ogunbiyi, JSC; Sule Anyegwu v. Onuche (2009) 3 NWLR Part 1129 Page 659 at 674 Para F-G per I.T. Muhammad, JSC.
I also dismiss this appeal and affirm the decision (judgment) of the lower Court delivered on 21st June, 2016 by O. O. Ogala J. in Suit No: LD/1824/2009. I abide by the costs in the lead judgment.
Appearances:
V. C. NWOKAFOR, ESQ. For Appellant(s)
O. OGUNJIMI, ESQ. For Respondent(s)
