Alhaji Taofik Alao V. African Continental Bank Ltd. (1998)

LAWGLOBAL HUB Lead Judgment Report

KUTIGI, J.S.C.

The plaintiff is and was at all material times a business-man and a citizen of the Republic of Benin living in the town of Port Novo in that Republic. He has and had Nigerian customers and business associates going to that country to purchase goods from him. During the period of 1980-1981, some of his Nigerian business associates approached him in Benin Republic and Europe to help them settle the bills of children and wards in various educational institutions in Europe and America by providing funds abroad to these children through his country’s local currency the CFA Francs, freely convertible currency in the world market. He said the request was made in order to obviate the hardship and inconveniences caused to many Nigerian students abroad due to long delay in obtaining approval of the Central Bank of Nigeria (hereinafter called the CBN) For foreign Exchange applications, thus making timely remittance of funds difficult. He first granted seven requests of his Nigerian customers by providing the needed funds for their children and wards in England in CFA Francs from his own account. When the Nigerians eventually obtained Foreign Exchange approvals from the CBN, Bank drafts covering the amount in Pound Sterling were issued and handed over to them by the defendant bank at its headquarters here in Nigeria to be drawn on its branch in London. These drafts were in turn passed to the plaintiff in settlement and reimbursement of the sums earlier advanced by him. Thereafter the plaintiff paid them in through his own bank in Benin Republic to the defendant’s London branch which honoured the drafts and accordingly had the plaintiff repaid.

Following the success of the first transaction, the plaintiff granted further and similar requests to his other 45 (forty five) Nigerian business associates under the same arrangement. He provided funds abroad to their children and wards through his country’s local currency – the CFA Franc. When the Nigerians eventually obtained approvals from the CBN, the drafts issued by the defendant bank to the Nigerians in relation to the school fees and maintenance allowances for their children, were passed to the plaintiff in settlement and reimbursement of the sums earlier advanced by him. The plaintiff received altogether 45 draft from the Nigerians, the total value of which was E212,310.00. (Two hundred and twelve thousand, three hundred and ten pounds sterling). The drafts were admitted in evidence as Exhibits A to A44.

The plaintiff paid in all the 45 drafts through his Bankers in Benin Republic to the defendant’s London Branch. But this time the defendant’s London Branch office dishonoured the drafts on the first and second presentations. The plaintiff then made enquiries from the Manager of the defendant’s London Branch through his solicitor and got an explanation that as the total amount covered by the drafts was very large, the Manager wanted confirmation from the defendant’s Head Office in Lagos that the drafts were actually issued by them and because additionally the drafts were each marked thus, “Endorsement requires drawer’s confirmation”.

Accordingly the drafts were sent by the London Manager to the Lagos Head Office for confirmation.

After fruitless efforts to get the defendant bank to honour the drafts, the plaintiff sued the defendant bank in the Lagos High Court claiming as follows:-

“1. A declaration that the 45 drafts amounting to E212,310 (Two hundred and twelve thousand three hundred and ten pounds sterling) drawn by the defendant in Lagos on its London Branch Office and presented to the said London Branch Office by the plaintiff through his various bankers arc valid, properly and regularly negotiated drafts.

2. A declaration that the said drafts’ have not expired and are still negotiable.
3. A declaration that the plaintiff is entitled to have the drafts honoured by the London branch of the defendant.
4. An order of the court compelling the defendant to direct its London branch to honour the draft.”

Pleadings were filed and exchanged. The case then proceeded to trial. At the trial the plaintiff testified on his own behalf and called one other witness. Four witnesses testified on behalf of the defendant bank. In a reserved judgment, the learned trial Judge granted all the four reliefs claimed by the plaintiff above. He said:

“The evidence shows clearly that the plaintiff and the said citizens of this country discussed the transaction in Cotonou, Republic of Benin and came to the terms whereby the bank drafts were handed over to the plaintiff in that country. The offer was, presumably, made without dissimulation, in a quixotic attempt to help business associates in need, The plaintiff in my opinion has an enforceable right against the defendants who issued the draft’ to their London branch asking that branch to pay the amounts stated therein. This action therefore succeeds. There will therefore be judgment against the defendants…”

He thereafter granted all the four reliefs claimed as I said before.

Dissatisfied with the judgment of the trial High Court, the defendant bank appealed to the Court of Appeal, Lagos Judicial Division. In the Court of Appeal, four issues were submitted for resolution by the defendant. Those issues were conveniently and quite properly too in my view reduced into two by the Court of Appeal thus:-

“(a) Whether there was apparent or proved illegality affecting the plaintiff s cause of action; and

(b) Whether apart from illegality, the evidence justified the plaintiff’s claim to the proceeds of the 45 bank drafts.”

The Court of Appeal in a considered judgment allowed the appeal and set aside the judgment of the High Court together with the order for costs.