Union Bank of Nigeria Plc & Anor. V. Ifeoluwa Nigeria Enterprises Ltd. (2006)
LawGlobal-Hub Lead Judgment Report
RAPHAEL CHIKWE AGBO, J.C.A.
The respondent is a customer of the 1st appellant. On 26th February, 1996, the respondent sent one of its employees to the Isolo, Lagos branch of the 1st appellant to pay in some money into its account with the appellant. Some armed bandits broke into the bank and snatched some of the money already handed over to the 2nd appellant, a servant of the 1st appellant. On the refusal of the 1st appellant to credit the account of the respondent with the amount equivalent to the said snatched sum, the respondent proceeded at the Lagos State High Court against the appellants in suit No. ID/1593/96 praying the court as follows:
“1. The plaintiff’s claim against the defendants is in the sum of N925,000.00 (Nine hundred and twenty five thousand Naira) only being the amount of money within the defendants’ premises owing to the negligence of the defendants on Monday the 25th day of February, 1996 at about 11.00 hours at the Isolo branch of the defendant bank.
2. Plaintiff further claims interest at the rate of 21% per annum or as this Honourable Court may determine having regard to the prevailing Central Bank of Nigeria regulations thereon from the 26th day of February, 1996 until the whole sum claimed be paid.”
Pleadings were exchanged, evidence led, and in a considered judgment, the court below adjudged as follows:
“After considering of all these, I prefer and believe the evidence of the PW1 that the amount on exhibit A! is what he took to the defendant’s bank on 26/2/96 out of which the sum of N735,000.00 was taken by armed robbers leaving the sum of N190,000.00 which was later credited to the account of the plaintiff’s company in No. 721857573 and I hold that the defendant bank is liable to pay the sum of N735,000.00 to the account of the plaintiff.
The defendant is further ordered to pay 21% interest per annum on the said amount from 26/2/96 until when the amount is credited.”
Being dissatisfied only with the interest adjudged, the appellants have filed this appeal. The grounds of appeal are set out hereunder:
Grounds of Appeal
1. The learned trial Judge erred in law in awarding interest to the plaintiff when there was no evidence conversed at the trial in support of this leg of the plaintiff’s claim.
Particulars of error
2. The learned trial Judge failed and or omitted to apply the fundamental principle of law that he who asserts must prove that those facts exist.
(i) The plaintiff claimed interest but refused to establish this claim by way of admissible oral or documentary evidence.
2. The learned trial Judge erred in law in awarding the plaintiff interest at the rate of 21% on the judgment debt.
Particulars of Error
(i) The plaintiff in its statement of claim, claimed interest having regard to the prevailing Central Bank of Nigeria regulations.
(ii) The plaintiff gave no iota of evidence on the interest prevailing based on the Central Bank of Nigeria regulation and tendered no document to establish what the rate was.
3. The learned trial Judge erred in law when he awarded interest to the plaintiff on an amount meant for the plaintiff’s current account. There was no evidence that the plaintiff had been receiving interest on its interest account with the 1st defendant in the past and no relevant fact was pleaded by the plaintiff.
Particulars of Error
(i) The claim of the plaintiff from the pleading did not state if the claim for interest was under a contract, under mercantile usage or under equity.
(ii) The plaintiff through its witness tendered exhibits A and A1 at page 61 of the record as evidence of the amount and the nature of the account that is a current account.
(iii) The learned trial judge without any oral or documentary evidence awarded interest on the sum meant for a current account contrary to the banking practice and which claim was not supported by the pleadings.
4. The learned trial Judge erred in law in awarding interest in favour of the plaintiff at the rate of 21% per annum.
Particulars of Error
(i) The plaintiff’s claim interest was at the rate of 21% per annum based on prevailing central Bank of Nigeria Regulations at pages 2 and 53 of the records.
(ii) Evidence of the plaintiff witness at page 62 of the records did not state what the Central Bank Regulation on interest was in 1996.
(iii) There was no evidence of the approved interest rate structure under section 15 (1) and (2) of the banking Act, Cap. 28, Laws of the federation of Nigeria, 1990.
(iv) The learned trial Judge acted beyond his statutory powers under order 38 rule 7 of the High Court of Lagos State (Civil Procedure) Rules, 1994.
From these grounds of appeal, the appellants have distilled the following issues for determination:
Issues arising for determination
(i) Whether on the pleadings and evidence before the court, the respondent discharged the onus of proof on its claim for interest at 21% per annum.
(ii) Whether on the pleadings and evidence the respondent proved its claim for interest under the enabling laws.
(iii) Whether on the evidence called at the trial the respondent was able to establish the proper rate of interest and the date from which it should begin to run whether from the accrual of the cause of action or otherwise and whether an interest account attracts interest or otherwise.
The respondent on the other hand formulated only one issue for determination to wit:
Issue arising for determination:
Whether having regard to the circumstances of the case, and the position of the law on interest rate at the material time, including the fluctuating nature of the Nigerian currency, the Honourable court exercised its undoubted discretion judiciously and judicially?
It is clear that the appellants’ issues for determination more comprehensively dealt with the issues raised by the grounds of appeal. This appeal will therefore be determined based on the issues distilled by the appellants.
In arguing the appeal, the appellant’s counsel had argued that it was incumbent on a party claiming interest to specifically set out his claim either in contract, statute or mercantile custom and facts grounding such claim. The party is to thereafter lead evidence to establish the facts so pleaded. He argued that the respondent found its prayer for interest on “the prevailing Central Bank of Nigeria Regulations”. He argued that Central Bank Regulations are founded on S. 15 of the Banking Act. The section is reproduced below.
“15(1) The rate of interest charged on advances, loans or credit facilities or paid on deposits by any licensed bank shall be linked to the minimum rediscount rate of the Central Bank subject to the stated minimum and maximum rates of interest, and the minimum and maximum rates of interest when so approved shall be the same for all licensed banks; provided that differential rates may be approved for the various categories of banks to which this Act applies.
15(2) The interest rate structure of each licensed bank shall be subject to the approval of the Central Bank.”
Pursuant to the provisions of the above section the respondent ought to have led evidence to establish (a) the rate of interest allowed by the Central Bank (b) The minimum discount rate of the Central Bank and (c) the differential rate if any, approved for the respondent.
He argued that the respondent neither pleaded nor proved any contract nor custom entitling it to the interest claimed. Counsel admits that Order 38 rule 7 of the High Court of Lagos State (Civil Procedure) Rules, 1994 provides for statutory interest on judgment debt. Order 38 rule 7 is reproduced hereunder.
Order 38 rule 7
“The court at the time of making any judgment or order, or at any time afterwards, may direct the time within which the payment or other act is to be made or done, reckoned from the date of judgment or order, or from some other point in time, as the court thinks fit, and may order interest at a rate not exceeding seven and a half per centum per annum to be paid upon any judgment, commencing from the date thereof or afterwards.”
He denies that the said Order 38 rule 7 is applicable but that even if it was, there was (1) no jurisdiction on the court to award more than 10% and (2) its date of accrual could not have been earlier than the date of judgment. Counsel concluded that the respondent did not make out a claim for interest in its pleadings nor did it place before the court enough evidence to justify the interest awarded.
The respondent’s counsel in his argument conceded that the respondent led no evidence on the applicable rate of interest as there was no prior contract in that regard between the parties. He however posited that the interest awarded was interest on “judgment debt” awarded pursuant to the provisions of the Judgments Act. 1838 (U.K.), an Act which he claims is a statute of general application applicable in Lagos State pursuant to S. 2 of the Law (Miscellaneous Provisions) Law of Lagos State. He argued that the restrictive provisions of Order 38 rule 7 of the High Court of Lagos State (Civil Procedure) Rules, 1994 to the extent of its inconsistency with the provisions of the Judgment Act, 1838 is ultra vires the said Act and therefore inapplicable. He argued that this court lacked the competence to challenge the absolute discretion of a trial court in awarding interest on a judgment which interest is within the upper limit allowed by statute. He however accepts that the accrual date for such interest is the date of judgment.
To appreciate what is at issue here, it must be remembered that the relationship between the 1st appellant and the respondent is that of a banker and its customer. The relationship between a banker and its customer is that of an agent and principal as well as that of a debtor and its creditor. When a customer deposits an amount of money in its current account with the bank, the bank becomes a debtor to the customer in that sum – see Badaru v. S.C.B. (Nig.) Ltd. (2003) 10 NWLR (Pt. 827) 91 at 101; Yesufu v. ACB Ltd. (1981) 1 SC 74. A bank is not a charitable organization. It is a trading company, and the commodity it trades on is money. When therefore a bank advances credit or a loan to its customer, the court takes judicial notice of the fact that it is entitled to interest. This mutatis mutandis applies when the bank takes credit by way of deposit from its customers. It is this interest accruing to either the bank or its customer that the Central Bank of Nigeria by the provision of S. 15 of the Central Bank Act attempts to control. The respondent on 26th February, 1996 deposited an amount of money equivalent to the judgment sum with the 1st appellant. It ought to have been entered in the respondent’s account with the 1st appellant on that date, and from that date, interest ought to have accrued on that sum in favour of the respondent. But the 1st appellant neither entered the sum in respondent’s account nor did it pay interest. If therefore the respondent pleads and proves the interest rate, it would be entitled to the interest claimed.
There are two circumstances in which the courts award interest. There are (a) as of right – this arises where it is contemplated by the parties by agreement express or implied or under mercantile custom or under a principle of equity as a breach of a fiduciary relationship – see Texaco Overseas (Nig.) Unltd. v. Pedmar (Nig.) Ltd. (2002) 13 NWLR (Pt. 785) 526. and (b) where the power is conferred by statute.
Where interest is claimed as of right, it ought ordinarily, like any other primary prayer, be set out on the writ of summons. Where however it is not set out on the writ but pleaded in the statement of claim, the plea would be competent as the statement of claim supercedes the writ. The facts so pleaded must disclose the entitlement to the interest, the rate of interest and the date of accrual – see Texaco Overseas (Nig.) Unltd. v. Pedmar supra; Ekwnife v. Wayne West Africa Ltd. (1989) 5 NWLR (Pt. 122) 422; Udechukwu v. Okwuka (1956) SCNLR 189. The claimant shall thereafter lead evidence to establish the pleaded facts. Once these facts are proved, the court shall award the interest so claimed. In the instant case the respondent had established its entitlement to interest and the accrual date. It however had difficulties in establishing the rate of interest.
It pleaded as the rate of interest 21% or such interest as may be determined by Central Bank guidelines from time to time. In evidence PW1 testified that 21% was the going rate as at 1996. The particular rate for the 1st appellant was neither pleaded nor proved. The Central Bank Guidelines was not placed before the court.
The Central Bank of Nigeria from time to time prepares a list of charges, guidelines and policy pursuant to powers vested on it by S.15 of the Banking Act. These policy documents are commonly referred to in the banking community as Central Bank Guidelines. They are not subsidiary legislations and do not fall into the class of documents the courts must take judicial notice of any Central Bank guideline relied upon, must therefore be proved in evidence by producing same in court – see H.N.B. Ltd. v. Gifts Unique (Nig.) Ltd. (2004) 15 NWLR (Pt. 896) 408 at 428. This unfortunately the respondent did not do in this case. I therefore hold that in the instant case, the interest rate pleaded was not proved.
The respondents counsel had argued that the interest claimed and awarded was a post judgment interest and that Order 38 rule 7 of the High Court of Lagos State (Civil Procedure) Rules, 1994 was ultra vires the provisions of the Judgments Act, 1838 (U.K.) to the extent that it tries to limit interest payable on judgment sum to seven and half per centum per annum. In the first place, the respondent never asked for interest on the judgment sum. It merely claimed for interest at the rate of 21% from 26th February, 1996 until the whole sum claimed be paid. Interests on judgment sums are not claimed from the accrual of the cause of action but from the date of judgment. The interest claimed was certainly not interest on the judgment sum.
Therefore, neither Order 38 rule 7 of the High Court of Lagos State (Civil Procedure) Rules, 1994 nor the Judgment Act, 1838 (U.K.) is applicable in the instant case. I must further state that the provisions of the Judgment Act, 1838 (U.K.) are inapplicable in Lagos State, whether or not it qualifies as a statute of general application. This is because a careful look at the High Court of Lagos State (Civil procedure) Rules, 1994 will show that that piece of legislation is not a subsidiary legislation. It is rather a schedule to the High Court of Lagos State (Civil Procedure) Law, Cap. 61, Laws of Lagos State, 1994. A Schedule to an Act or Law is very much part of that Act or Law – see Oputeh v. Ishida (1993) 3 NWLR (Pt. 279) 34. The High Court of Lagos State (Civil Procedure) Rules Law supercedes the Judgment Act, 1838 (U.K.).
There is merit in this appeal, it succeeds. The interest awarded by the court below is hereby set aside. The prayer for interest is hereby dismissed.
There shall be N10,000.00 costs to the appellants.
Other Citations: (2006)LCN/2055(CA)
