African Continental Bank Plc. V. Catapult Limited & Anor. (2008)
LawGlobal-Hub Lead Judgment Report
SOTONYE DENTON-WEST, J.C.A.
This is an appeal brought by the Appellant against the judgment of the lower court sitting in Enugu in suit No. E/303/92. Appellant is the first defendant in the lower court whilst the 2nd defendant is the Merchant bank for African Ltd now liquidated. Both defendants were bankers. The Respondents were the plaintiffs in the court below.
The Respondents in the Court below claimed against the two defendant’s damages for breach of contract, injunction and an order to reverse and release to them some irregular and wrong debits and charges made against them. The parties exchanged pleadings and later parties not being satisfied with the original pleadings both filed amended statement claim and an amended statement of defence, which were lengthy and marathon as same could be gleaned from the records. During the course of the judgment, I shall when necessary refer to salient portions of the pleadings.
However, in paragraph 20 of the amended statement of claim the plaintiffs asserted that they have incurred damages as a result of the breach of contract by the defendants, resulting in the closure of the plaintiffs factory since 1989 and damages to the reputation of the plaintiffs. Thus Plaintiffs in paragraph twenty of the Amended Statement of Claim demanded from the defendants as follows:-
a) The sum of one Hundred Million Naira (N100m) damages for breach of contract.
b) An injunction restraining the defendants, their agents and or servants from selling off the mortgage property; to wit, the Maize Flour Milling Industry at Amodu, Awkunanaw, or the 2nd Plaintiffs property at No.6 William Onyeabor Street, Awkunanaw, Enugu, property not mortgaged, to the defendants.
c) An order on the 1st defendant to reverse and release to the Plaintiffs the irregular and wrong debits and charges made against the 1st Plaintiffs account amounting to over N400,000.00 (Four hundred thousand Naira)
d) An order on the 2nd defendant to pay the sum of N5m (five million naira) to the 1st Plaintiff representing damages for dishonouring the 1st Plaintiffs instruction to pay N45,000.00, to its creditor.
DATED AT ENUGU this 20th day of November, 1995.”
In response to this claim, the defendants also vehemently denied the assertions of the plaintiffs and averred inter alia, particularly from paragraph 25 – 30 of the Statement of Defence where they specifically denied the plaintiffs averments in paragraph 20 of their statement of claim
“25. The defendant vehemently denies paragraph 20 of the Statement of Claim. The defendant also denied liability for any or all the reliefs claimed thereon. The defendant did not breach any contract with the plaintiffs arising from the aforesaid loan transaction or at all. The defendants on the other hand did more than were required of it under the aforesaid agreement. The defendant contends that the plaintiff did not suffer any damage flowing from its relationship with the 1st Plaintiff under the loan agreement or at all. Also the defendant is not instrumental to the 1st plaintiff’s alleged inability to operate its said factory.
- Further to the above answer, the defendant denies specifically all the reliefs itemized under paragraph 20 of the statement of claim. The plaintiffs are not entitled to the said reliefs because the defendant did not breach its obligation under the Loan Agreement, nor did it make any irregular and wrong debits and charges i.e. N400,000.00, against the 1st plaintiff or at all.
- In addition to the answers in the two proceedings paragraphs, the defendants contends in the alternative that if the plaintiffs suffered any damage in the aforesaid relationship, which the defendant however denies, the same originated from the plaintiffs ineptitude in their not properly husbanding the funds which the defendants promptly made available to them under the Loan Agreement. The defendants also contends that all moneys which the 1st plaintiff is entitled under the said Agreement, including any other reversals of charges, interests, and Commission are property reflected in the 1st plaintiffs current account as evidenced in the statement of account herein pleaded.
- Further to the foregoing answers, the defendant contends that if any charge or interest was wrongfully debited against the 1st plaintiffs accounts, which is however denied, the same was done by genuine mistake, which did not embarrass or prejudice the 1st plaintiff, as the same is of no consequence.
- In addition to the defences herein contained, the defendant contends that the present action of the plaintiffs is not bona fide as it is a ploy to delay the defendant’s rights of foreclosure as provided in the Loan Agreement, and the Mortgage Debenture Trust Deed respectively and thereby unnecessarily tie down the defendant’s shareholders’ funds.
- The defendant will rely on the relevant equitable and legal defences that may be open to it at the trial, among others, in praying the honourable court to dismiss the plaintiffs’ claims completely for reasons of their being frivolous, capricious, and an abuse of the court’s process. Dated the 10th February, 1996.”
At the hearing of the Appeal, Chris Aghanwa Esq. of counsel to the Appellants adopted his Appellant’s amended Brief of argument dated 23rd April, 2007 and deemed filed on 27/6/2007 by order of court. He adopted and relied on the brief. He raised three issues for determination, which were distilled from twelve grounds. He urged this court to set a side the judgment.
Mr. P.M.B. Onyia of Counsel to the Respondent also, adopted his Respondent’s Amended brief of argument dated 18th June 2007 and deemed properly filed on 27th July 2007. He raised three issues for determination. He prayed the Court to dismiss the appeal and affirm the judgment.
The three issues raised for determination by the appellant are as follows:
(i) Whether the defendant observed moratorium period in the loan transaction as agreed in Exhibit U.
(ii) Whether the Plaintiffs made out a case that would entitle them to damages for a ‘breach of contract; if so, were the general damages of N5.0 awarded to the plaintiffs not excessive in the circumstances of this case.
(iii) Whether the plaintiffs waived their rights in Exhibit U when they mutually agreed with the defendant that the loan facility should be paid into the plaintiff’s current Account No. 2166; if so, was the defendant right in channeling all credits, debits, and/or charges arising in the loan transaction into the said current account.
I shall also reproduce the Respondent’s issues for determination and may proceed to adopt the most appropriate issues for the determination of this appeal. The issues formulated by the Respondents for determination are as follows:
“(1) Whether the defendants/appellant were in breach of the one year moratorium for charging of interest on the loan, as provided in the loan agreement exhibit “U”‘.
(2) Whether the trial court’s findings and conclusion that the defendants were in breach of the loan agreement and the consequential award of N5,000,000.00 (Five Million Naira) as general damages were proper and Justifiable in the circumstance.
(3) Whether from the state of pleadings or credible evidence before the court, the plaintiffs/respondents could be said to have waived the defendant/appellant breaches in question.”
In the circumstances of this Appeal, I prefer to adopt the issues raised by the Respondent as same is succinct and adequately responsive to the facts and the law herein contemplated, thus taking into cognizance the certified record of appeal dated 14/6/04, and the amended Notice of appeal dated 6th date of April, 2005 also the supplementary record of appeal dated 30/11/2004 and the case law relied upon.
Before embarking on the determination of the issues I shall briefly touch in a nutshell the immediate background facts that led to this appeal.
The Respondents had cause to approach the appellants for a loan of N6 million to complete their maize flourmill factory in which they had already expended the sum of N10 million.
The Respondents are the plaintiffs in the lower court who are claiming damages for breach of contract and for injunction to restrain the defendants from selling the Plaintiffs/Respondents landed properties. The defendants are African Continental Bank (ACB Plc) and Merchant of Africa Ltd, who jointly syndicated the loan of N6 Million Naira earlier on referred to. However the Merchant Bank of Africa Ltd is not a party to this appeal as it now moribund and indeed abandoned its defence in the lower court. However in the loan syndication the two banks agreed to provide the sum of N6 million to the 1st Plaintiff/Respondent as loan N3.4 million of the loan was to be made available by ACB Plc who actually co-opted Merchant Bank of Africa Nigeria Ltd. to co-syndicate the loan for a total of six million Naira.
Consequently from henceforth, the sole Appellant in this appeal shall be African Continental Bank Plc and the 1st Respondent shall be Catapult Limited, 2nd Respondent shall be Chief William E. O. Onyeabor. The terms of the loan were reduced into writing and are contained in documents admitted as exhibit especially, Exhibit “U” which is very pivotal, in the judgment of the lower court which inter alia: entered judgment in favour of the respondents and awarded N5 Million Naira as general damages against Appellant. At the end of the day, it is only the 1st Defendant/Appellant being dissatisfied against the judgment actually appealed.
ISSUE 1
Whether the Defendants/Appellants were in breach of the one-year moratorium for charging of interests on the loan, as provided in the loan agreement.
This issue is similar and on all fours with issue 1 of the Appellants. To wit is whether the defendant observed moratorium period in the loan transaction as agreed in Exhibit U. In his submission in respect of issue 1, counsel to the appellant, Chris Aghanwa contends that the lower court was wrong when it concluded at page 135 line 19-24 on the issue of moratorium clause when it proclaimed as follows:
“I am therefore satisfied upon the pleadings and credible evidence advanced thereon and upon the contention of counsel for the plaintiffs that the failure of the defendants to observe the Moratorium Clause under Exhibit U affected the express purpose of the transaction adversely”,
Then on the contrary, the respondent submitted that the Appellant was clearly in breach of the Moratorium Clause in Exhibit U when the Appellant started charging interest on the loan the very month they paid the sum of N4.5 million to the Respondent pre-existing current Account No, 2166 at Kenyetta Branch of the Appellant Bank, The Appellant insists that the lower court lost sight of the fact that the loan facility as contained in Exhibit U was in two parts: (1) Term Loan of N4.0 Million (Facility B), and Current Line facility of N2.0 million (Facility B), Appellant further argues that the term loan was to commence twelve months after the date of the first drawn down: Sec Clause 9 of Exhibit U whilst by virtue of clause 7(1) quarterly interest shall accrue and same debited against the 1st Respondent in arrears, The Appellants have submitted a, fifteen-paged appellant’s amended brief of argument containing 5.01 paragraphs with a list of fifteen cases cited in support thereof However, paragraphs 4,14, 4,15, 4.19, 4.20, 4.21 and 4.22 have saliently captured the essence of the appellant’s argument. The thrust of the Appellant’s submission could be found in paragraph 4.20 – 4.22 wherein Chris Aghanwa Esq. submitted inter alia thus:
“4.20 It is settled law that where a trial court in assessing general damages, as in the present case, proceeds upon wrong principle or on no principle of law and makes an award which is manifestly unwarranted, excessive, extravagant, unreasonable and unconscionable in comparison with greatest loss that would possibly flow from a breach of contract and without stating whether the amount awarded is for loss of business or loss of profit or would not be allowed to stand. Refer: ACME BUILDERS V. KWSB, (1999) 2 NWLR. (Part 590) 305 4.21 Appellant contends that the lower court did not take cognizance of the above legal principle and did not therefore:
(a) say whether the general damages, awarded were for loss of profit and/or business; nor
(b) set out the principle of law which it applied in assessing the general damages awarded.
It is strenuously argued that in an action for damages for a breach of contract, damages are not at large, and a plaintiff must always plead and prove his actual loss; otherwise he may be entitled to nominal damages. Appellant contends that no loss was pleaded by the respondents nor proved in this case. In any case, it is trite law that in a case where the trial court must award damages, it must not allow its mind to be affected by the high sounding figure of money claimed as in this case. This is moreso, in this case where the respondents admitted in paragraphs 7 and 8 of their amended statement of claim and In evidence (p.237) that the defendants advanced to the 1st respondent the sum of N4.5 Million out of N6.0 Million in the loan transaction. Appellant submits therefore in the unlikely event that this court finds the defendants, particularly the appellant, is at fault in the transaction, the awardable damages which the court may condemn can only be cost which the respondent may reasonably incur in raising the undisbursed balance of N1.5 million, not the punitive damages of N5.0 Million awarded by the lower court Ref. NBCI Integrated Gas Nig. Ltd, (2005) All FWLR (Pt. 50) 1, 31.
4.22 It is humbly submitted therefore that by virtue of the powers conferred on this Court of Section 16 of the Court of Appeal Act, this is an appropriate case whereby the honourable court should intervene; in the excessive general damages awarded by the lower court and thereby set it aside; or in the alternative, to award nominal damage where necessary: Refer: Sabru Motors Nig. Ltd. v. Rajab Entr. Nig. Ltd., (2002) FWLR (Part 116) 841, 852 – 3; Access Bank Plc v,. Maryland Finance Co., (2005) All FWLR (251), 305; 321; Offorboche v. Ogoja Local Government, (2001) FWLR 68) 1051, 1072.”
Appellant’s counsel relied on the following cases in support of the above submissions: Chindo World Wide Ltd v. Total Nigeria Ltd; (2002) FWLR (Part.115) 750; Akpana & Others v. Obui Nzeka & Others (1983) 7 SC 1; Alfred Usiobaifo & Anor. v. Christopher Usiobaifo & Anor. All FWLR (Part 250) 131; Salawu Ajide v. Kadiri Kani (1985) NWLR (Part 12 248; John Eze v. Okechukwu & Ors; (2003) FWLR (Part 140) 170.
The Respondent counsel P.M.B. Onyia did not hesitate to submit that moratorium clause in the Joan agreement (Exhibit U), when the appellant started charging interest on the loan the very month they paid the sum of N4.5 million to the Respondents’ brief (Amended) of 17 pages with a list of nine authorities. However, the thrust of his argument can be found on pages 10-15 of the Respondents Amended Brief of argument. However on pages 11 – 12, the salient submission of Respondent’s counsel Onyia is quite evident on page 15, where in conclusion he submitted thus: “In conclusion, we submit that evidence (Oral & documentary) were galore as to the several terms of the loan agreement the appellant was in breach of. The trial Court properly evaluated the evidence given at the trial, came to a proper conclusion that the defendants/appellant were liable in damages in respect thereof. We further submit that the trial court did not apply any wrong principles in awarding the sum of N5 million naira as damages and that the figure cannot be said to be outrageous having regard to the colossal losses the appellant’s breaches, occasioned, to the respondent i.e. complete frustration of a multi-million naira factory. There is no proper occasion for the interference by the Court of Appeal of the findings of fact and conclusion reached by the trial court or for interference with the amount awarded as general damages.”
In support of his submissions the Respondents Counsel referred the court to the following authorities:
Joseph Onwu & Ors v. Ezekiel Nka & Ors 1996 7 SCNJ 204; Allied Bank Nig. Ltd. v. Ajibueze 1995 4 NWLR Pt. 390 493; British French Bank Ltd. v. Opaleye (1962) 1 AV NLR 26; Adejuwon v. Co-op. Bank Ltd. 1992 NWLR Part 228 at 251; UBA v. Union Bank of Nig. PLC 1995 NWLR PT. 405 70 Omonuwa v. Wahabi 1974 4 SC 37; Odulaga v. Haddad (1973) II SC 3 7; Wilson v. United Counties Bank Ltd. 1920 AC 102 at 112
From the oral evidence and the series of documentary evidence before the court, I am satisfied that the Respondents pleaded copiously and also tendered sufficient oral evidence to show that they are entitled to the order for injunction and further that they are not in anyway satisfied with the way the appellant bank imposed all sons of interest and charges, expenses and out of pocket costs on their accounts. See Godwin v. The Christ Apostolic Church (1998) 12 KLR page 2465 at page 2477. In the above case. Ogwuegbu JSC, who delivered the lead judgment wherein Belgore (JSC) as he then was, Wali, (JSC), Ogundare JSC and Onu, JSC all concurred said:
“It is the duty of every agent to keep the money and property of his principal separate from his own and from that of any other person. The right of the principal to have such an account rests upon the fiduciary relationship existing between him and his agent which term includes any person who acts for another in the capacity of deputy, steward, rent collector or any other agent or trustee See Clarke v. Tipping (1884) 50 ER 352 and Makepeace v. Rogers (1865) 46 E.R. 1850. It is the first duty of an accounting party to be constantly ready with his accounts. The defendant has not shown any willingness to do so and I am satisfied that he neglected to do so.”
The action of the Appellant in crediting the overburdened account 2166 at Appellant’s Kenyetta Street, Enugu Branch with the loan sum instead of the New Account established for the purpose of the loan transaction indeed had a direct tragic and unpalatable consequences on the relationship of the appellant and the respondents, for the appellant as bankers have failed to be consistent in their approach to the respondents in the handling of the loan agreement that is Exhibit “U”, Therefore since the basis of their relationship exhibit “U” has been breached by the appellant for their failure to establish a direct link to the respondents’ via the loan account instead of engaging them in settling existing balance of debit on the account 2166 plus interest already accrued and now due with immediate effect for payment whilst on the stipulated new account that should have been established in relation to the loan agreement is subject to be suspended to interest payments for a period of twelve months and more.
Thus the stage was set for a disruption of harmonious relationship that could have existed between the parties if the payment was not in the first instance, made into the Kenyatta Branch Account No, 2166 of the 1st Respondent, which is domiciled with the appellant in its Kenyetta Street, Enugu Branch which Account was debited to the tune of N952,817,88 with alleged illegal debits, which the Respondents claimed led to their closure of their industry due to lack of working capital. However, the appellant on realizing the alleged illegal debits and its debilitating effects on the respondents did not hesitate to reverse same but only to the tune of N500,000.00. This did not adequately serve the interest of the respondent who have heavily invested about 10 million Naira in this project before approaching the bank for assistance in the sum of six million Naira, Having expended so much, the respondents must without much ado be looking forward to reap the fruits of their investments instead it seems there is nothing but a clog in the wheel of progress and the investment failed to take off because of a breach in their loan syndication, There is no doubt that in answer to Issue 1, the Appellants were in breach of the one year moratorium for charging interest on the loan. See Nneji v. Zakhem Con. Nigeria Ltd. (2006) 12 NWLR (Pt. 994 page 297 at 319 per Tobi .JSC when he said in paragraphs E to G thus:
“……………Where a contract specifically provides for liability in ease of breach, the court will not to outside the contract in search of more palatable terms for one of the parties to the detriment of the other party. The Court is bound to interpret the liability clause or clauses strictly as provided in the contract.”
The core issue is, are the Respondents entitled to be compensated and if so is the compensation awarded by the learned trial , Judge excessive as claimed by the appellant’) In my humble view and against the backdrop of the facts, evidence, oral and documentary, and with particular reference to Exhibit U before the court, the legal submissions of counsel, the directing judicial pronouncements, I believe the trial court presided over by the Hon. Justice I.A. Umezulike, J. as he then was on 7th October, 1998, and now Chief Judge of Enugu State, did justice to the case and delivered a judgment that adequately addressed all the issues.
One of the issues strongly contended by the parties, is the award of damages made in the sum of N5 million by the Court of trial to the Respondent for breach of the loan agreement. See Adetoun Oladeji (Nig) Ltd v. N.B Plc, (2007) 5 NWLR, (Pt. 1027) P.415 at 443; Akintan JSC observed with approval the law relating to damages as expressed in Hadley v. Baxendale (1854) 9 Ex 341, the principles of law relating to remoteness of damages in breach of contracts enunciated in the case have been cited with approval and followed by the Apex Court in its numerous decisions as in the case of Imana v. Robinson (1979) 3 – 4 S.C. (Reprint) 1; Niger Insurance Co. Ltd v. Abed Brothers Ltd. (1976) 7 S.C (Reprint) 20; Omonuwa v. Wahabi (1976) 4 S.C (Reprint) 62; Maiden Electronic Works Ltd. v. Attorney-General of Federation (1974) 1 S. C (Reprint) 37; S.P.D.C v. Jammal Eng. (Nig) Ltd. (1974) 4 SC (Reprint) 25 and held that the principle has ceased to be foreign in Nigeria and that the law as regards award of damages however remote enunciated in Hadley v. Baxendale case is now made part and parcel of our Nigeria case law of contract and that being the case, I refer to Adetoun case and a plethora of the Apex Court’s decisions and I am of the humble view that the award of damages by the trial Judge in this case of the sum of N5 million as damages flows from the breach of the loan agreement between the appellant and the Respondent, and in fact from evidence and now arguments in their respective briefs, the Respondents in their brief is even contending that the said N5 million damages awarded is not adequate in view of the fact that they have expended over N 16 million in the project which have now failed because of staccato way of the release of the funds by the Appellant to the Respondents and also by the suffocating interests charged when not due and contrary to the provisions of loan agreement especially Exhibit U. I would have done what the Supreme Court did per Tobi (JSC) in Adetoun Oladeji (Nig) Ltd. v. N.B. Plc. Supra as regards the varying of the award of damages by the Court of Appeal vis-a-vis the trial court’s award, See C.D.C. (Nig) Ltd. v. S.CO.A. (Nig) Ltd. (2007) 6 NWLR 303 at 365 paras C.- D where it was held inter alia that the normal measure of damages is the market value of goods and that may be an addition for consequential loss if not remote, See Ezeani v. Ejidike (1964) 1 ANLR 402. The compensation awarded is in no way excessive. It is compensation made within reason and ordinarily flowed from the transactions.
I would not do so and I dare not as same is not in issue. Nevertheless I am obliged once again to resolve this issue in favour of the Respondents.
I have carefully perused and painstakingly considered the records of proceedings in this Appeal with particular reference to the judgment of the C.J. the Hon. Justice I.A. Umezulike of Enugu State Judiciary and hereby resolve that all the issues herein raised in this appeal had been adequately treated in the judgment and I therefore uphold the judgment and dismiss the appeal as lacking in merit. Costs of N30,000.00 is hereby awarded to the Respondents.
Other Citations: (2008)LCN/2725(CA)
