African Continental Bank Limited V. S.o. Adebesin & Company Limited & Anor (1998)
LawGlobal-Hub Lead Judgment Report
IGNATIUS CHUKWUDI PATS-ACHOLONU, JCA.
The Plaintiffs/Respondent claimed from the Defendant Appellant as follows in their pleadings
(a) A declaration that the defendant’s refusal to release the charge on plaintiffs’ property at plot 4, Block LXVI, Ilupeju scheme Layout Ikeja which was mortgaged to the defendant under a deed of mortgage dated 29th December, 1971 and registered as No. 50 at page 50 in Volume 1381 of the Lands Registry in Lagos and to release the title deed thereof from December, 1973 to 6th August, 1981 is wrongful.
(b) A declaration that the defendant’s refusal to release to the plaintiff title deeds covering properties at 38 Ikorodu Road, Igbobi, 18 Alli Balogun Avenue, Industrial Estate, Ikeja, 35 Breadfruit Street, Lagos and life insurance policies Nos. 62366 and 683174 from 1973 to 6th August, 1981 is wrongful.
(c)N25,000,000.00 (Twenty-five Million Naira) and 10% interest on the value of the promissory note dated 6/6/83 from the date of maturity till the date the amount is paid off, being special and general damages for the defendant’s wrongful refusal to release the plaintiffs’ title deeds and documents from 1973 to 6th August, 1981 and for the defendant’s negligence in the operation of the first plaintiff’s accounts Nos. 10110, and 11184.
The sum of N25 million claimed is cumulative total of the special and general damages said to have been suffered as a result of the negligent act of the defendant.
The 1st plaintiffs/Respondents story was that it operated 3 accounts in the appellant Bank and sometime in December 1971 was issued a guarantee by the Defendant at the request of the 1st Plaintiff to Messrs Koka Tovarwazravil Pharmaceutical and Chemical Works Titova Yugoslavia. The guarantee was secured by a legal mortgage of the 2nd Plaintiffs property known as Plot 4 Block LXVI Ilupeju Scheme Layout Lagos. In addition to the Legal Mortgage the 2nd Respondent also deposited with Defendant/Respondent his Niger Insurance Company Life Insurance Policies were both valued of N2000.00 each at that time. The 1st Respondent lodged with the Defendant for safe keeping certain other documents. These are documents relating to property at No. 38 Ikorodu Road, Igbobi, No. 10 Alli-Balogun Industrial Estate, Ikeja, and No. 35 Broadfruit, Lagos. On the 5th of May 1973, the 2nd Plaintiff was given 14 days to liquidate the outstanding sum of N55983.21. It is his story that by June 1973 all outstanding money had been made to Messrs Koka Pharmaceutical and Chemical Works Titova of Yugoslavia thus relieving the defendant/appellant of further obligation under the contract. Not withstanding persistent demands for the return of all the documents lodged with the appellant, it refused to release any of them. The defendant/appellant even refused to make available to the 1st Respondent of the nature account he has with the Bank and went on to credit one of his live accounts with the ones he was owing. To alleviate his problems he went to Barclay’s Bank who promised to take over his matter and grant him facilities on condition that he collected the documents hither to lodged the appellant with which he would use to secure new facilities. As a result of the refusal, to release the documents the Plaintiff/Respondents could not obtain any facility to continue this businesses he had secured and by the refusal incurred financial losses of immense magnitude. The documents were only released after he had paid again for a debt he was not owing and when the court ordered the appellant to release the documents.
The appellant disputed the claim and argued it rightly held on to the title because the title deeds i.e. all of them were security for the debt owed. It further stated that all the title deeds said to have deposited for safe keeping were indeed further collaterals to secure the facility provided by the Bank. In this judgment the court below held this after listening to argument of counsel said.
“No evidence was produced to show that the plaintiff did receive a notice informing him about his overdraft and the intention of the bank to sell his securities Exhibits TT-TT1 and Exhibits H-Hs & H3 in order to recover the debt. What readily comes to mind in this instance is that the defendant bank at the material time did not know or keep a proper account in order to decide which property is tied to a particular transaction and the account.”
“I therefore found as of fact the Defendant has wrongfully retained the properties and the Insurance Policies Exhibit TT-TT1 and Exhibit H, H2 and H3. I agree with the learned counsel for the Plaintiffs that the Defendant Bank was negligent. The duty of care hereon this case is quite different from the duty of care envisage in criminal negligence.
It is a breach of implied agreement. However, I agree with the submission as per the Judgment of Bairamain J. in B & F Bank v. Opaleye 1962 1 ANLR page 26 where it was held that where by agreement express or implied, a customers accounts with a banker are to be kept distinct and separate the banker has no right to combine them or to transfer assets or liabilities from one account to another without reasonable notice of the intention to do so without the assent of the customer”.
This is exactly what the defendant bank has done as shown directly or indirectly in Exhibits CC and PP by justifying their action in accordance to Clause 10 of Exhibit X the deed of mortgage.”
The Court awarded a sum in excess of N2 Million to the Respondent. Dissatisfied with the judgment of the court below the Defendant now appellant filed 4 grounds of Appeal from which it distilled 3 questions for determination. The Respondent equally cross appealed.
The questions for determination framed by the appellants are as follows:
(i) Whether the debts secured by legal mortgage Ex. X are limited to debts arising from the instrument of Guarantee Exh. CC or whether they include other debts owed by the Plaintiffs to the Defendant.
(ii) Whether the Plaintiffs established by credible evidence that they deposited any title deeds with the defendant Bank for safe keeping.
(iii) Whether the award of damages in favour of the plaintiff was justification.
The Respondents formulated 4 issues. In award of damages the court below recorded as follows:
“Thus on the special damages I proceed to award the following:
- Judgment and cost obtained against the first Plaintiff by May and Baker (Nig) Ltd. in Suit No. LD/1317/78 N504,694.79 2. First Plaintiff’s Indebtedness to Associated Pharmaceutical Products Ltd. 22,456.67
- Claim against the Plaintiff by his American Partners as contained in the Promissory Note dated 6th June, 1983 and tendered as an Exhibit 3,750,000.00
- Interest on the value of the said Promissory note from the date of maturity till the amount is paid is assessed at 12 1/2% of N3,750.000.00 375,000.00”
The whole case of the Respondents is built around the refusal of the appellant Bank to release his documents and for which he incurred considerable losses and for which some claims are being made against them. In his evidence in chief the 1st Respondent listed the name of the companies for which he became indebted to as a result of failure to release the documents which he asserted were necessary to get facilities from Union Bank to help him hither in his business dealings.
Chief Williams contended that (a) There was no proof that the 2nd Respondent or indeed both Respondents were not in debted to the appellant and (b) The damages claimed, could not have by any reasonable  imagination be successfully claimed, as they were remote. Chief Williams appeared miffed by to constricted interpretation given to clause 10 of the mortgage agreement which was the pivot of the case of the parties. The clause 10 of the Deed Legal Mortgage reads as follows:
“Where the borrower maintains move than one account with the Bank whether in the same branch of the Bank or not the Bank shall in its absolute discretion and without any previous consent of the borrower (not) debt in one account or accounts against credit in other account or accounts whether such accounts or account are kept in the same branch of the Bank or not. All accounts maintained by the borrower in anyone or more of the Banks branches shall be regarded as one and the same account. “Account” in this clause includes deposit account fixed deposit account, current account, saving account and receipts held on trust for the borrower.”
It seems to me that “not” appearing after the words ‘borrower’ and before the word ‘debt’ in line 5 should be omitted in interpreting the purport of the clause other wise it would render the whole clause meaningless and would do violence to the proper intention of the parties. It is, with greatest respect of the view expressed by the learned trial judge, not an overstatement to say that the clause would so tie the hand of the 2nd appellant as to make difficult a for close on the security or redeem the security. It has as Chief Williams rightly pointed out nothing whatsoever to do with the doctrine of equity of redemption. When parties agree to a term, in particular a Bank and a customer, that all the accounts of the customer in a Bank, shall be treated as one account for the purpose of expected amortisation facility such a term on clause cannot be construed to be inequitable and that it hamstrings redemption.
In my view the clause was in order and the Bank was right in treating the whole accounts in the name of the 2nd defendant as one account.
In his Judgment the learned trial Judge stated thus” Upon the further Amended statement of claim filed it is clear that this action is based or founded on tort of negligence which is not actionable per. SC also based on detinue. Damages were awarded to the Respondents but from the evidence adduced, it is clear as crystal that the main debtor is the, 2nd Respondent. The learned counsel for the appellant submitted verily that the awards are untenable in law in so far as the learned Judge purported to wake them in favour of both parties and impugned the raison de-tre of the award stressing that no where on the Pleading was it alleged, by the list plaintiff that the act or omission of the defendant or its servants or agents caused the indebtedness of the defendant to the 1st plaintiff in any of the three items mentioned: In his testimony in court the 1st plaintiff testified that the omission to release the documents or failure to hand them back when no more money was owed to the defendant/Respondent was responsible for the economic loss he incurred. Let me take a look at the Respondent pleadings.
Para. 15 The plaintiffs suffered great financial strains and setbacks in their business between 1973 and August, 1981 (when the title deeds and documents were released) as it became impossible for the first plaintiff to raise founds for the running of their business.
Para. 16
Several requests by the plaintiffs for a statement of accounts of the first plaintiff with the defendant were unacknowledged by the defendant. The plaintiffs will rely on letters to the defendant dated 8th February, 1974, 21st February, 1974, 17th April, 1974, 10th June, 1975, 4th September, 1975 and 9th June, 1977.
Para. 27 As a result of the defendant’s refusal to release the plaintiffs’ documents and title deeds, it became impossible for the plaintiffs to secure loans in any bank in Nigeria for its numerous businesses between 1973 and 6th August, 1981 and the Union Bank of Nigeria Limited refused to grant the plaintiffs facilities to execute a 600 room motel project at Abeokuta in Ogun State. The plaintiffs will rely at the trial on the letters dated 10th October, 1977, 10 February, 1980 and 9th December, 1980 written by the Union Bank to the plaintiffs.
Para. 28 By reason of the fact stated in paragraph 27 above, the plaintiffs were deprived of the opportunity of owning an hotel and all the elaborate preparations and contracts entered into with overseas suppliers and technical partners were frustrated.
Although the 2nd Respondent said that by 1973 he had liquided, all debts but he did acknowledge that in 1975 he was owing some money in respect of another account. What be objected most seriously was the switching of accounts by the Bank which be found offensive and contrary to Banking practice. The learned, counsel for the Respondents had, referred to Bucking ham and Co v. Loudon and Midland Bank Ltd. (1895) 12 TLR 70.
In that case the customer had 2 accounts, one a loan accounts the other current account. The Bank thought that the security was inadequate and transferred the loan account to the current account with the result that the cheques given in the current account was not honoured. It was held that the transfer was wrongful and damages were awarded to the plaintiffs. That case differs harkedly from this one. Clause 10 specifically authorised the parties to treat all accounts in the Defendant Band as if they are all one account. The cases referred by the Respondent’s counsel, do not apply in the least. As long as there was a debt owed by the Respondent, by the spirit of clause 10 the Bank due was right to treat the accounts as one.” The appellant has been conferred right to switch accounts.
Chief Williams had, argued, that the claim made was too remote to be recoverable. In his evidence the 2nd Plaintiff/Respondent states:
“One of the companies we are owing May and Baker had got judgment against us for the sum of N504,000.00. Pfizer Nig. Ltd. Associated Industrial got another judgment against us for N23000. Caffery Sundars and Co. withdrew their facilities because of lack of funds. The whole of our operation is grounded. Through the action of the defendant company our business was frustrated partly by the repayment to the Defendant Bank what we did not owe. My complaint against the Defendant company (1) Failure to prepare a Bank statement (sic) on my accounts.
(2) Refusal to release my documents to me”.
The Respondents were asked to pay a sum of N3,750000.00 as a sum the American Company claimed for default in not performing their own side of obligation in the contract to put up a motel structure. Are these damages awarded directly traceable to the failure of the Bank to return the documents. In other words could they have been reasonably for seen as likely or pobable loss espected by a reasonable man as would flow from the act of the Bank. This is a contract matter. In this issue of detention of documents because of alleged, indebtedness of the 1st Plaintiff/Respondent, from the pleading of the appellant account 10110 was overdrawn while the others are in tact.
From the tenor of clause 10 it is my view that as long as any money is owed in any account it was as if the 1st Plaintiff/Respondent was owing in all the accounts to be looked at as one account; so much for that. Are the damages recoverable? Let us make comparative analysis of case laws. Before deliving into that, I must state that bedrock of the appellants case is that the damages are too remote to be awarded. I am aware that in Kitman v. Chellaram (1960) 5 FSC P.29 of 34 Ademola CJ. said “…What has to be ascertained is the pecuniary loss the plaintiff has sustained by the wrongful acts done to him by the defendants” Equally in Leeds Company Ltd. v. Delghton Patent Flere Company 25 R.P.C. 209 at P.250 the court hold that “In considering the question of the amount of damages it must be borne in mind that the measure of damages is the loss which the Plaintiffs have actually sustained as the nature and, direct consequence of the defendants acts. Consequently the damages will be the estimated loss of Profit incurred by the Plaintiff” Would it have been contemplated by the appellant they its refusal or negligent act to release the documents on a belief that it was owed money would result in a probable loss in a dealing with a third party of which he was not aware. Do the damages flow directly from the act. What is the test of foreseeability in this sort of case. In Hadley v. Baxendale (1854) 9 Ex. 341 Alderson B put the matter succintly thus.
“We think the proper rule in such a case as the present is this: Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e. according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it. Now, if the special circumstances under which the contract was actually made were communication by the plaintiffs to the defendants and thus known to both parties, the damages resulting from the breach of such a contract, which they would reasonably contemplate, would be the amount of injury which would ordinarily follow from a breach of contract under these special circumstances so known and communicated. But, on the other hand, if these special circumstances were wholly unknown to the party breaking the contract, he, at the most, could only be supposed to have had in his contemplation the amount of injury which would arise generally, and in great multitude of cases not affected by any special circumstances, from such a breach of contract. For, had the special circumstances been known, the parties might have specially provided for the breach of contract by special terms as to the damages in that case; and in this advantage it would be very unjust to deprive them. Now the above principles are those by which we think the jury ought to be guided in estimating the damages arising out of any breach of contract.”
It is important to refer to the case of Victoria Laundry v. Newman (1949) 2 KB. 528 CA. In that case the defendants delayed in delivery a boiler to the Plaintiff being fully aware of the nature of the business it runs damages were granted but Asquith look the opportunity to state the law property.The court held:
“Although it has been pointed out in Grant v. Australian Knitting Mills Ltd. (1936) A.C. 85, 107 that no one is answerable indefinitely for the consequences of his action but that at the same time he may well be saddled with responsibility for greater injury that he expects.”
In the Wagon Mound case i.e Overseas Tankship (UK) Ltd v. Morts Docks. and Engineering Co. Ltd. (1961) A.C. 388 the defendants negligent allowed oil from the ship spill on the sea and came to lie beneath the Plaintiffs Wharf. The Plaintiffs were assured that there was no danger of the oil catching five and they resumed their welding. However no one could tell what exactly happened but some cotton waste which had fallen into the oil come in contact with molten metal from the welding. It ignited the oil and the wharf was destroyed.
It was held that the damage to the wharf is reasonable as a result of the spillage by way of only fouling the slip ways but that the fire was unforseable because scientic opinion of the time was that there would be conflagration. Therefore the extent of the damage needs to be foreseeable. Could the defendant Appellant have foreseen that failure to return the documents and without any knowledge that the Respondents had used them to notionally have a deal involving the erection of an hotel and pharmaceutical industry as security and be liable for the loss of profits anticipated from the deals, and the claims made against the respondents by those in the whom they dealt with. The contract between the American Company and the Respondent was not an pre-existing business in which the appellant knew anything about. Even then it was not pleaded that such transactions was going on to the knowledge of the appellant and it sat by oblivious of the likely problem. In love v. Port of London Authority (1959) 2 Lloyds Rep. 451. The Plaintiff sustained injury on the head due to injury sustained at the hand of the defendant. Prior to that accident he had heart. neurosis and the accident accelerated the neurosis. The court held “…one has to remember of course that the defendants must take the Plaintiff as they find him, that is to say with the already vulnerable person ability ……if what we may call the 70 percent heart neurosis would not have prevented the Plaintiff from working but the addition of the 30 percent neurosis produced total in capacity, the defendants have to recompense the Plaintiff for all special damages arising from the 100 percent neurosis which developed from these two causes.”
Contrast this with the Position in this case.
It seems to me that the cirenitous manner the whole course went from deposit of documents whether for the security and for safe keeping or not, and the alleged failure to release and further entering into contract on the strength of those documents and finally incurring what he termed economic loss for non release is unforseeable by the appellant to attract that type of damage. If a person A is owing another B a sum of money which the latter could not pay but B had gone to make arrangement and relied on the money to buy a truck on credit and made all other expenses as hiring a drive and conductor. Would he turn round to say that he incurred economic loss on the money he did not realise from the vehicle arrangements he made which is unknown to the borrower. I doubt it. Viewing the matter objectively and realistically it seems to me that the loss is not forseeable. Therefore the damage paid is not sustainable.
Besides there is no evidence that he was not owing the appellant as at that time. To my mind the Respondents cross appellant did not satisfactorily prove that they owe no money to the appellant. The award of damages is to my mind indefensible law. It cannot be sustained having regard to the fact that if the Respondents are owing the appellant they would hold on to the documents rightly. The court below did make a finding that it was not satisfied that the respondents were not indebted to the appellant.
On the cross appeal, I agree with the finding of the learned trial judge that if there is a branch it was that of a customer Banker relationship and having regards to their express words of clause gives the appellant the power to juggle accounts as it sees it, I am not convinced that the cross appellants in particular the 2nd appellant was not owing in any of the accounts. The cross appeal fails and is hereby dismissed.
In the final result the main appeal succeeds and the judgment of the Lower Court is set aside. The Respondents shall pay costs assessed at N3000.00.
Other Citations: (1998)LCN/0425(CA)
