Accord Ventures Limited & Ors. V. Nigeria Deposit Insurance Corporation (2005)

LawGlobal-Hub Lead Judgment Report

NWALI SYLVESTER NGWUTA, J.C.A.

In a petition dated 19th June, 1997 and filed before the zone 4 of the defunct failed Banks Tribunal the respondent sought to recover from the appellants the sum of N451,821.16 being the outstanding balance of the overdraft facilities granted to the 1st appellant, interest and Bank charges due from the 1st appellant to the 1st appellant’s Account No:111012422 with the commercial Bank of Africa, Ikeja, Lagos and interest at the rate of 21% per annum from November, 1994 through trial period to judgment and until the debt is fully paid. Though the appellants were served and they respondended to the processes served on them neither of them nor their counsel appeared at the trial which was taken over and concluded by the Federal High Court, Benin Division, at the dissolution of the failed Bank Tribunal.

The court below entered judgment for the respondent and ordered the appellants to pay to the respondent the accrued sum N1,451,827.16 plus the outstanding part of the agreed interest rate of 21% per annum over the loan until the sum is fully paid back. Aggrieved, the appellants appealed to the court on two grounds which shorn of their particulars, are hereunder reproduced:

“1. The Federal High Court Benin Division lacks Jurisdiction to entertain the suit thereby rending (sic) its decision null and void and of no effect whatsoever.

2. The learned trial Judge erred in law when he held that the respondents are ordered to pay to the applicant the accrued sum of N1,451,827.16 plus the outstanding part of the agreed interest rate of 21% per annum over the loan until the sum is fully paid.”

Consistent with the rules of the court the parties, by their counsel, filed and exchanged briefs of argument.

At the hearing of the appeal, learned counsel for the appellants adopted the appellants’ brief dated, and filed on, 18/2/03, relied on the argument therein contained and urged the court to allow the appeal.

On his part, learned counsel for the respondent adopted the respondent’s brief dated and filed on, 31/03/03 and relying on the argument therein he urged the court to dismiss the appeal.

The appellants amended their notice and grounds of appeal by abandoning the issue of jurisdiction in ground one, retaining only the second ground on the award of interest.

In his brief, learned counsel for the appellant, in defiance of the accepted practice, distilled two issues for determination from a single ground of appeal. I shall revisit this issue later in the judgment. The two issues are hereunder reproduced:

“1. Whether the respondent is allowed in Law to charge post closure interest or any interest at all on behalf of a failed Bank?.

2. Whether the Lower Court can in Law award interest in favour of a failed Bank?.”

In his own brief of argument, learned counsel for the respondent stated that “the counsel for the appellants initially formulated two issues but ultimately abandoned one, leaving only one issue for determination. The issue left for determination has two arms, but both arms were argued together in the appellants brief of argument…” This is not correct. The appellant abandoned one ground of appeal, retained one from which he formulated two separate issues for determination. The issues argued together in the appellants, brief are two distinct issues, not two arms of one issue as stated by learned counsel for the respondents in his brief. Without formally adopting the issues formulated by the appellants learned counsel for the respondent argued the two issues together. By so doing, he is deemed to have adopted them.

Arguing the two issues together in his brief, learned counsel for the appellants referred to Nigeria Deposit Insurance Corporation Act Cap 301. Laws of the Federation of Nigeria 1990, S.1 (3) of which he said enables the respondent to sue and be sued in the pursuit of its functions. He said that section 4(1) of the Act empowers the respondent to assume the Management of a failed Bank. Pursuant to the said section the respondent took over the affairs of Commercial bank of Africa Limited, a failed Bank. Learned counsel referred also to failed Bank Recovery of Debts) and Financial Malpractices in Bank Decree 1994 and said by virtue of S. 9 in part 11 thereof the respondent could recover any debt owed to a Failed Bank but argued that the said section empowers the respondent to recover only the debt owed a Failed Bank at the date of closure and not interest as well. Learned counsel submitted that by the provision of S. 9 of the 1994 Decree the respondent has no power to demand post closure interest from customers of a failed Bank. He argued that the court below was in error by acting in excess of its jurisdiction to award further interest on the judgment sum. He relied on OYEFOLU VS. DUROSINMI (2001) FWLR (Pt.69) 1422 at 1428 paragraph H and VULCAN GASES LTD VS. GFIG (2001) FWLR (Pt.53) 1 at 60 paragraphs C-D. and urged the court to set aside the award of 21% interest per annum on the judgment sum as the award was made in error and in excess of the jurisdiction of the trial court.

In his own argument of the two issues presented by the appellant learned counsel for the respondent, in his brief, contended that section 9 of the Failed Banks (Recovery of Debts) and financial malpractices in Banks Decree No:18 of 1994 did not forbid the charging of interest in respect of debts owed a Failed Bank. He referred to page 29 of the Record of Appeal and said that the 21% interest charged on the loan facilities and overdraft was in accordance with the agreement pursuant to which the loan was granted. He stated that the Commercial Bank of Africa which was a failed Bank has been resuscitated under the new name of Fortune International Bank Plc, Victoria Island, Lagos. As a general rule, counsel said, interest may be awarded in two distinct circumstances; namely (a) As of right and (b) Where there is a power conferred by statute to do so or in exercise of the court’s discretion. He cited N.B.N. LTD. VS. S.C.D. LTD (1998) 5 NWLR (Pt.548) 148 and stated that interest may be claimed as of right where, as in this case, it is contemplated in the agreement between the parties or under mercantile custom or under a principle of equity such as breach of a fiduciary relationship. He argued that a bank can charge interest on loans or overdraft facilities even when there is no express agreement on the rate of interest to be charged. The customer is deemed to have consented to interest on the sum by which his account is overdrawn. He relied on U.B.A LTD VS. AYOOLA (1998) 11 NWLR (Pt.573) 339 and BORDAYS BANK OF NIG. LTD. VS. ABUBAKAR (1977) 1 All NLR, 278 at 344 paragraph G. He argued that the basis for award of interest is that the Bank has been kept out of its money for the period of deposit with the customer who had the use of it and has to pay some compensation. He relied on: KANO TEXTILE PRINTERS PLC. VS. TUKUR (1999) 2 NWLR (Pt.589) 78; EKWUNIFE VS. WAYNE (W/A) LTD (1989) 5 NWLR (Pt.122) 428; ABDULLAHI VS. WAJE COMMUNITY BANK (2000) 7 NWLR (Pt.663) 9; OWENA BANK (NIG.) PLC. VS. ADEDEJI (2000) 7 NWLR (Pt.666) 609 Ratio 11 at pages 622-623, para G-B; HIMMA MERCHANTS LTD. VS. ALIYU (1994) 5 NWLR (Pt.347) P.667 at 699; HENKEL CHEMICALS LTD. VS. V. A.G. JERRERO AND CO. (2003) 4 NWLR

(Pt.810) 306 at pp 310 and 311.

He argued that post judgment interest is at the discretion of the court and cited EKWUNIFE VS. WAUME (W/A) LTD (Supra) in contending that the trial court was right to have awarded the interest on the judgment debt. He relied also on HAUSA VS. F.B.N. PLC. (2000) 9 NWLR (Pt.671) 64. He referred to Ord. 42 Rule 7 of the Federal High Court (Civil Procedure) Rules 2000 which he said empowered the court to award interest on the judgment debt, provided the interest does not exceed 10% per annum but the interest of 21% per annum is in accordance with the claim based on the agreement between the parties. He cited OGOLEMA VS. INT. TECH. AND SAFETY CO. LTD. (1993) 2 NWLR (Pt.275) 359. Citing the case of IDAKULA VS. RICHARD (2001) 1 NWLR (Pt.693) 111. He said the rules confer the right to award post judgment interest on the court. He urged the court to dismiss the appeal for want of merit.

Before proceeding further I will dispose of a matter I alluded to earlier in this judgment, that is the prolixity of issues for determination. Appellant appealed on the grounds, amended his notice and grounds of appeal by deleting one ground and retaining only one ground. He formulated two issues from the one grounds of appeal. It is not good practice. While the formulation of an issue from a ground of appeal is tolerated the better and usual practice is to distil an issue from a number of grounds of appeal. The number of issues should not exceed the number of grounds of appeal from which they are formulated.

In JOSEPH MANGTUP DIN. VS. AFRICAN NEWSPAPER OF NIGERIA LTD. (1990) 5 SCNJ 209 at 210 the Supreme Court frowned at the formulation of secondary issues and continued that proliferation should be avoided. In the case of proliferation of issues, the court cannot pick and choose what issues to relate to what grounds of appeal. However, the authorities fall short of recommending the correct approach to a situation where the issues exceed the grounds of appeal from which they are distilled. This creates room for some creativity by the court and I find the dictum of KARIBI-WHYTE JSC most helpful. His Lordship admonished, inter alia:

“…A Judge should therefore not sit unconcerned watching where the ignorance, inadvertence or forgetfulness of counsel is likely to result in injustice. He is under obligation to correct the error leading to such injustice if this will not result in injustice to the opponent.” AKPAN VS. THE STATE (1992) 6 NWLR (Pt.248) 451 at 466. In the same case, at pp. 471-472 NNKEMEKA AGU JSC quoting THEISGER L. J. in COLLINS VS. VESTRY of PADDINGTON (1880) 5 QBD 308 at 381 in A.Y. OJIKUTU VS. FRANCIS E. ODEH (1954) 14 WACA 640 at 641 warned that “blunders must take place from time to time and it is unjust to hold that because a blunder…has been committed the party blundering is to incur the penalty of not having the dispute between him and his adversary determined upon the merits…” In view of the above a court faced with a prolixity issues of has a duty to strive to treat the issues in a manner to save the appeal and have it determined upon the merits.

In the case at hand, the two issues raised from one ground of appeal are:

(1) Whether the respondent is allowed in law to charge post closure interest or any interest of all on behalf of a failed Bank?.

(2) Whether the Lower Court can in Law award interest in favour of a failed Bank?.

Though distinct and separate issues in appearance in substance the two merge to form one issue. This is so because the answer to the issue 1 constitutes an answer to issue 2. If the respondent is allowed in law to charge post closure interest or any interest at all on behalf of a Failed Bank it would logically follow that the lower court can award the interest the respondent is entitled to charge on behalf of a Failed Bank and vice-versa. In the end, the blunder in framing two issues where only one is appropriate is rectified by treating the 2nd issue as subsumed in issue one.

There appears to be a divergence between the arguments of learned counsel for the adverse parties. I understand the thrust of the appellants’ argument to be that the respondent cannot legally charge interest on the sum it can recovers from a customer of a Failed Bank on behalf of the Bank after the closure of the Bank or at all. On the other hand the main force of the respondent’s argument is directed at justifying interest on judgment debt “or post judgment interest” simpliciter, which is not the issue between the parties.

In his argument, learned counsel for the appellants referred to Nigeria Deposit Insurance Corporation Act Cap 301 Laws of the Federation of Nigeria 1990 as the enabling law empowering the respondent to recover debts owed a failed Bank. By section 1(3) of the Act the respondent can sue and be sued in the pursuit of recovery of debts owed a failed Bank and by S.4(1) the respondent took over the management of the affairs of Commercial Bank of Africa Limited, a failed Bank.

Both parties agree that the specific provision in S. 9 (part 11) of the Failed Bank (Recovery of Debts) and Financial Malpractices in Banks Decree (now Act) 1994 vests in the Failed Bank Tribunal exclusive jurisdiction in matters of recovery of debts outstanding at the date of closure of a Failed Bank. The section provides “Notwithstanding anything to the contrary in any law, deed, agreement or memorandum of understanding, the Tribunal shall have exclusive jurisdiction to hear and determine all matters brought before it, concerning the recovery from any person of any debt owed to a Failed Bank, which remains outstanding as at the date of closure of the business of the Failed Bank.” It is the appellants’ case that by the above provision the only debt recoverable on behalf of a failed Bank is the amount owed as at the date of closure of its business and that the section did not grant the power to charge interest on the sum recoverable. The respondent retorted by saying that “There is nothing in the above provision which says a failed Bank cannot charge interest on loan or overdraft facilities granted to its customers.” With due respect to learned counsel a failed Bank cannot grant loan and/or overdraft to anyone.

By the fact of being a failed Bank its business is closed. It is out of business. Since it is incapable, by its failure status, to grant loan or overdraft it is a contradiction in terms to say that a failed Bank can charge interest on loan or overdraft facilities granted to its customers.

The issue is whether or not the respondent, having taken over the management of the failed Bank, including recovery of debts owed to it, is entitled to charge interest on the sum owed to the bank at its closure or at all. The issue is not whether a Failed Bank can charge interest on loan and overdraft facilities granted to its customers as postulated by learned counsel for the respondent. What would have been the position if the Commercial Bank of Africa was not a Failed Bank but was acting on its own with regards to the recovery of its debts?

The relationship between a bank and its customer is founded in simple contract and this relationship, in the absence of an express agreement between the parties to the contrary, is implied from the course of business between them: See BRITISH AND FRENCH BANK LTD. VS. OPULEYE (1962) 1 All NLR 128 ALLIED BANK (NIG.) LTD. VS. AKABUEZE (1997) 51 LRCN 1648 at 1686 UNION BANK OF NIGERIA LTD. VS. NWOYIE (1990) 2 NWLR (Pt.130) 69.

The learned trial Judge found as an established fact that the respondents applied for the loan that gave rise to this appeal. The application was granted subject to interest at the rate of 21% per annum and this the respondents accepted is writing. Now if the bank was not distressed the issue of whether or not it could recover the loan as well as the agreed 21% interest per annum could not have become an issue. Now the bank became distressed and the respondent was saddled with the responsibility of recovering any debt owed to it “which remains outstanding as at the date of closure of the business of the failed Bank.” See S.9 (Supra). What is the debt owed by the appellants to the failed Bank outstanding as at the date of closure of its business? In my view it is the sum of N1,451,827.16 plus the agreed interest at the rate of 21% per annum on the said sum. S.9 of the Act does not mention interest on the sum recoverable but in my view it was not necessary to specifically include interest in so many words. It will be perverse to divorce the agreed 21% interest per annum from the principal sum loaned in the computation of what is owed and remained outstanding to the credits of the bank at the date of closure of its business. What is owed to the bank and recoverable by the respondent at the date of closure of the bank’s business is the totality of the principal sums given as loan or overdraft and the agreed interest thereof. The respondent is entitled to recover as debts from its customers what the bank could have recovered if its was not declared a Failed Bank.

In any case in so far as lack of fund is involved the appellants, by not paying their debts as and when due contributed in no small measure to the Failed Bank status of the Commercial Bank of Africa. May be the appellants now demand to retain the agreed 21% interest per annum as compensation for helping ruin the bank.

In conclusion, I resolve the loan issue in the appeal against the appellants. The appeal is totally bereft of merit and accordingly it is hereby dismissed. Appellants shall pay costs fixed at N3,5000.00 to the respondents. Appeal dismissed.

Other Citations: (2005)LCN/1684(CA)