Alex O. Onwuchekwa V. Nigeria Deposit Insurance Corporation (2002)

LAWGLOBAL HUB Lead Judgment Report

O. AYOOLA, J.S.C.

The appellant, Alex O. Onwuchekwa, has appealed to this court from the decision of the Court of Appeal (Tobi and Ubaezonu, JJCA, Akpabio, JCA, dissenting) whereby the appeal of the Nigeria Deposit Insurance Corporation (Liquidator of Cooperative & Commerce Bank (Nigeria) Ltd.) (now “the respondent”) was allowed and judgment was entered dismissing the appellant’s claim.

In the High Court of Enugu State the appellant claimed against the Co-operative and Commerce Bank (Nigeria) Ltd (“the bank”) the “sum of ‘332,500 (Thirty two Thousand, Five Hundred Pounds Sterling) being an indemnity or recompense for the value of the money which the defendant negligently failed to remit to London on the plaintiff’s instruction” and damages for negligence and/or breach of contract on the part of the defendant.

The appellant who was a businessman and the bank’s customer sometime in 1983 received a contract from the Federal Electoral Commission to supply certain goods pursuant to which the Commission requested the Central Bank and the respondent to make available foreign exchange to the appellant. The appellant duly requested the respondent to undertake the submission, processing and obtaining from the Central Bank and to request approval for the remittance to the appellant’s overseas suppliers (Tellscar Ltd of London) the sum of ‘332,500 being the FOB value of the goods to be imported into Nigeria. The appellant gave the respondent necessary documents and paid the equivalent sum of money (including bank commission) demanded by the respondent for the processing and remittance of the price of the said goods through the normal banking procedure. The appellant duly took delivery of the goods which were air freighted to Nigeria by his suppliers. However, the respondent failed to remit the purchase price of the goods to the overseas suppliers and neglected to complete fully the form transmitted to the Central Bank. The respondent continued to default by non-remittance of the price of the said goods until a takeover of government ushered in a new military administration which introduced a Trade Debt Refinancing Scheme affecting uncompleted transactions, such as the appellant’s, and requiring defaulting banks, such as the respondent, to resubmit necessary applications for remittance. The appellant alleged that the respondent in responding to the Central Bank’s circular for the Scheme “did not exercise due care and diligence in filling the requisite forms”.

The respondent’s “negligence, wrong figures, careless filling of forms and utter disregard to the care required in processing the application caused the non remittance of the sums involved in the suit”. In consequence of non remittance of the sums the appellant’s suppliers refused to entertain fresh orders from the appellant. According to the appellant, in the circumstances he had to secure from another source foreign exchange with which he paid directly to Tellscar Ltd. He suffered loss and damage. Hence, his claim. The substance of the respondent’s defence was that it “did all that was necessary, and proper in banking practice and operations and relying at all times material on information supplied by the plaintiff “. The rest of the defence was an expatiation of this main defence.

The trial Judge after considering the evidence came to the conclusion that the respondent was negligent. Since nothing turns in this appeal on whether he was right or not in coming to that conclusion his grounds for so concluding are immaterial. Suffice it to say that he entered judgment for the appellant in the sum of ‘332,500.48p “to enable him repay relatives and friends overseas who dipped hand into their pockets and paid the debt which the defendant defaulted (sic) him from paying” and N100,000 damages.

On the respondent’s appeal to the Court of Appeal from that decision the issue considered to be dominant by Ubaezonu, JCA, who delivered the leading judgment, was whether the act of the appellant in making arrangement for the payment of his overseas customers and in paying them offended the Exchange Control (Anti-Sabotage) Act (Cap 114: Laws of Nigeria, 1990). Holding that the issue of illegality was raised in the statement of defence by the bare averment that the appellant “illegally paid his suppliers,” Ubaezonu, JCA, proceeded to consider “whether what the respondent did as disclosed by the evidence amounted to an illegality.” The evidence in question had consisted of the evidence of the appellant who in examination-in-chief had said:

“I made an arrangement with my friends and relations in Europe to settle the bills in foreign currencies. I did settle them. The overseas suppliers wrote me that he was paid while defendant (sic) still battling with remitting the money”;

and, under cross-examination, he said:

“I discussed with my relations when they visited home so that when they went back to London they credited my account in London and I issued cheques to my foreign customers who acknowledged receipt for payment.”

From this evidence he held that the appellant in making payment to Tellscar Limited in London had made payment to or for the credit of any person resident outside Nigeria and had placed a sum to the credit of a person resident outside Nigeria in contravention, respectively, of section 1(1)(a)(i) and section 1 (1)(a) (iv) of the Exchange Control (Anti-Sabotage) Act. He also said that the appellant borrowed foreign currency outside Nigeria contrary to section 1 (1)(e) of the Act.

The relevant subsections of section 1 of the Act are in the following terms:

“1 (1) Any person who, whether or not before the commencement of this Act but not earlier than October, 1979 does any of the following things, that is to say-

(a) without the permission of the appropriate authority –