African Continental Bank Ltd V Attorney-general Of Northern Nigeria (1967)

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BRETT, J.S.C.

In this case the Attorney-General of Northern Nigeria sued on behalf of the Government of Northern Nigeria. The particulars attached to the writ of summons read-

‘The plaintiffs claim against the defendant is for the sum of £9,702-13s-8d (nine thousand and seven hundred and two pounds and thirteen shillings and eight pence only) being the damage suffered by the Government of Northern Nigeria due to the negligence of the defendant.

The defendant Bank by its negligence enabled one Johnson Ogu to draw the amount aforesaid dishonestly from the Government of Northern Nigeria by operating an account with the defendant Bank in the fictitious name of P. N. Oku during the period June 1959 to January 1961’.

The claim was thus unequivocally based on negligence, which meant that the plaintiff undertook to show that the Bank had committed a breach of a duty of care owed to the Government of Northern Nigeria and that the Government had suffered loss as a result of that breach of duty.

The evidence showed that between the 19th June, 1959, and the l8th January, 1961, the Government, through the Sub-Treasury, Jos, was induced by the fraud of a clerk in the Sub-Treasury named Johnson Ogu, and any confederates he may have had, to issue eight cheques to a total value of £9,722-13s-8d, of which £9,702-13s-8d was intended as payment for work purporting to have been done by a contractor named P. N. Oku, and to send these cheques to the defendant Bank. No work had in fact been done by a contractor named P. N. Oku, but Johnson Ogu had opened an account in that name with the defendant Bank and the proceeds of the cheques were ultimately credited to that account. It is common ground that the defendant Bank was in no way privy to the fraud. In six of the cheques the payee was ‘African Continental Bank’ (or ‘A.C.B.’) ‘A/C for P. N. Oku’ (or ‘Mr P. N. Oku’); in one it was ‘A.C.B.A/C for sundry persons’; in one it was ‘Manager A.C.B. Ltd., Jos’. The usual practice when sending a cheque to a payee Bank was to send also a ‘bank Certificate’ showing the account to be credited. The signatures on the vouchers confirming that the sums for which the cheques were drawn were due and that the cheques might properly be issued had been forged, but the cheques themselves were signed by duly authorised officers of the Government; they were valid orders for the payment of the money and a holder in due course could have enforced payment. In each case the defendant Bank presented the cheque, received payment of it and credited the account of P. N. Oku. There were constant drawings on the account and by the 23rd February, 1961, the credit balance was only £30-3s.

In his opening and closing addresses counsel for the plaintiff referred to s.82 of the Bills of Exchange Act, and the English decisions he cited turned on the right of a Bank to claim the protection of s.82 of the English Bills of Exchange Act, 1882, of which the wording is identical. Counsel for the defendant based his defence mainly on the section, and the judge treated his decision as turning on whether the Bank had shown such negligence as not to be entitled to the protection of the section. The section has since been repealed and replaced with variations. At the material time it read-

(1) Where a banker in good faith and without negligence receives payment for a customer of a cheque crossed generally or especially to himself, and the customer has no title or a defective title thereto, the banker shall not incur any liability to the true owner of the cheque by reason only of having received such payment.

(2) A banker receives payment of a cheque for a customer notwithstanding that he credits his customers account with the amount of the cheque before receiving payment thereof

As counsel on both sides had invited the judge to treat the section as governing the issues he had to decide it was natural that he should have done so, but with respect, it led him to lose sight of what the plaintiff has to prove on a claim for damages for negligence and to assume that the Bank must be held liable unless it could prove that it had acted in good faith and without negligence. We do not consider that the section has any application to the claim pleaded.

The section does not create a ground of liability; it protects a banker who would otherwise be liable to the true owner of a cheque on a claim either for money had and received or for damages for conversion. On such a claim it is ordinarily immaterial whether the defendant acted negligently or not, but where the claim is brought by the true owner of a cheque against a banker the section creates a special exception to the normal rule that negligence is immaterial, and in relation to certain cheques it protects a banker who can show that he received payment in good faith and without negligence. However, negligence in receiving payment would not be a ground of action in itself and the plaintiff has to prove that he has some other ground of action before section 82, as matter of defence. becomes material at all.

In the present case the trial judge held that since ‘P. N. Okus’ title to the cheques was defective the Government was the true owner, and treated the case as if the claim had been brought for damages for conversion. The issues arising on a claim for conversion had not been fully argued before him, and were not argued at all in this Court, since we held that on the writ of summons and the pleadings the claim was founded on negligence and not on conversion.

The difference vitally affects the burden of proof and we regard it as one of substance and not merely of words. If conversion had been properly pleaded the defendant would have had the opportunity of considering any defenses that might have been open to him in addition to that afforded by section 82 of the Bills of Exchange Ac,. on which the burden of proof lay on him. We find no circumstances to justify a departure from the rule that a plaintiff must be held to the case put forward in his writ of summons and pleadings.

We come therefore to the true issue in the case, that is, whether the plaintiff has established his claim in negligence. The negligence pleaded consisted in allowing Johnson Ogu to open an account in the name of P. N. Oku, knowing this to be a fictitious name. the trial judge did not find it proved that the bank knew the name to be fictitious, but he held that if the bank had made effective inquiries it would have found this out and, following such English decisions as Savory v. Lloyds Bank Ltd.[ l932] 2 K.B. 122, that as it had asked for no references and made no effective inquiries it was not protected by section 82 of the Bills of Exchange Act.

We have already pointed out that negligence for the purpose of section 82 differs from negligence as a separate ground of action, and we express no opinion on the extent of the inquiries which a banker in Nigeria must make before opening an account for a new customer if he is to bring himself within section 82. We also find it unnecessary to decide whether, in view of his pleadings, the plaintiff could not rely on the lack of inquiries or the omission to ask for references as constituting actionable negligence, since in any event it has not been shown that the plaintiffs loss resulted from the opening of the account in the name of ‘P. N. Oku.’

Mallam Belgore submitted that a contractor who had a bank account was more ‘respectable’ than one who had not, but there was no evidence to suggest that the fact that payment to a bank was asked for played any part in deceiving the officers who accepted the forged vouchers as genuine and signed the cheques.

Even if it did, we should not be prepared to hold that that of itself was enough to make the Bank liable in negligence In Agbonmagbe Bank Limited v. C.F.A.O. S.C. 576/1964 (judgement delivered 25th May, 1966) this court followed the views expressed in the House of Lords in Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [1964] A.C. 465, by treating liability in negligence as no longer confined to physical damage to person or property and as extending to pecuniary damage from a negligent misrepresentation provided a duty of care existed, but if the present claim succeeded it would impose a far heavier duty of care on a banker than Hedley Byrnes case or the Agbonmagbe Banks case did, and one which we are not willing to recognize.

The respondents submission in this court amounts to saying that if a banker allows an account to be opened in any particular name, and persons with whom the holder of the account has dealings learn through him of the existence of the account, the banker may be treated as having made some implied representation to those persons as to the holders integrity or true identity. We unhesitatingly reject that submission.

On the 2nd February, 1967, the appeal was allowed with costs, and these are the reasons for our decision.

Other Citation: (1967) LCN/1526(SC)