Ali Pindar Kwajaffa & Ors V. Bank of the North Limited (1998)
LawGlobal-Hub Lead Judgment Report
EDOZIE, J.C.A.
The three appellants were the plaintiffs before Borno State High court sitting in Maiduguri in suit No. M/135/93. The 1st appellant is the father of the 2nd appellant and the Managing Director of the 3rd appellant a limited liability company carrying on the business of metal fabrication in Maiduguri. The latter, that is, the 3rd appellant is a customer of the respondent bank at its main branch office in Maiduguri.
In paragraph 24 of their further amended statement of claim (claim for short) the appellants as plaintiffs sought against the respondent bank reliefs summarised thus;
(a) A declaration that the deed of legal mortgage dated 13 the October 1982 executed by certificate of occupancy No.s Bo/1621 and NE/1367 is void ineffective and of no effect.
(b) A declaration that the 2nd appellant being a minor could not have consented to any matter relating to the transfer of his property covered by Certificate of Occupancy No. Bo/1621.
(c) A declaration that the appellants had liquidated their indebtedness to the respondent.
(d) An order directing the respondent to release to the appellants certificates of occupancy Nos. BO/1621 and NE/1347 being held by it.
(e) A perpetual injunction restraining the respondent its servants or privies from selling or trespassing into their aforesaid properties.
The respondent denied the appellants’ claims and in paragraph 2 of a counter-claim subjoined to its further amended statement of defence (defence for short) the respondent counter-claimed against the appellants for the following releifs:
“(a) A declaration that there is a subsisting legal mortgage between the plaintiffs and the defendant.
(b) A declaration that the defendant is entitled to N1,858,622.15 as at 28th July 1993 with interest on the loan facility and 30% interest on the said outstanding (sic) from the 28th July 1993 to 1st January 1994 and 21% on the outstanding sum from the 1st January 1994 until liquidation of the outstanding sum.”
From the pleadings filed, oral evidence of witnesses called by the panics and the numerous documentary evidence tendered. The facts of the case leading to this appeal may be summarised as follows; as far back as the year 1980, the 3rd appellant had an account with the respondent hank. The account number is 400127. Initially the 3rd appellant was granted an overdraft facility for the sum of N80.000. By the year 1982, the outstanding amount of the overdraft stood at N487.375.50. At the instance of the 3rd appellant the respondent hank convened the overdraft account into a loan account and the account number was variously referred to as 400127/62586, 44014/62586/400127. Pursuant to the conversion, the appellant mortgaged to the respondent bank properties covered by Certificates of Occupancy Nos. Bo/1621 and NE/1367 belonging respectively to the 2nd and 1st appellants. A deed of legal mortgage dated 13/10/82 registered as No.347 at page 347 vol.7 (Misc.) of the Lands Registry in the office at Maiduguri (Exh.E) was executed by the parties with 1st and 2nd appellants as mortgages/sureties, 3rd appellant as borrower and respondent as mortgages. It is the appellants’ case that in November 19R2 when the respondent drew their attention to the outstanding amount, the 1st appellant and the respondent bank agreed that the amount should attract interest at the rate of 13% but rather than adhere to this agreement, the respondent inflated the interest rate. The appellants further claimed that they paid to the respondent bank the sum of N1.189,963.26k; that the 1st appellant again paid under duress the sum of N300,000 and finally that the Nigerian Bank for Commerce and Industry (NBCI) paid on their behalf the sum of N82,257.74 on 19/7/84. By reason of all these payments, the appellants contend that they have fully liquidated their indebtedness to the respondent bank. They relied on the 3rd appellant’s statement of account with the respondent which was admitted in evidence as Exh. “B”.
On its part, the respondent denied reaching agreement with the 1st appellant on the interest rate maintaining that interest rates are charged in accordance with the Central Bank guidelines. The respondent admitted that the 1st appellant paid the sum of N300,000 but denied it was paid under compulsion. It is the respondent’s case that the appellants are still indebted to it to the tune of N1,858,622.15 as at 28th July 1993. Regarding the sum of N82.297.74 paid by the NBCI the respondent explained that the NBCI paid the amount for the release of another C of O No NE/154 held by the respondent as security for another overdraft of N40,000 it granted to the 3rd respondent which had risen to N82,297.74. The NBCI took that step so as to use the C of O No NE/154 as security for its own loan to the 3rd appellant. By a letter dated 19/3/84 Exh, J4 the respondent bank reminded the 3rd appellant or its default in repayment of the loan and in response the 1st appellant by a letter dated 29/3/84 Exh J pleaded for time to repay the loan. As the appellants were, unable to liquidate the loan, the respondent in accordance with the terms of the legal mortgage served them notice of its intention to exercise its power of sale.
Upon the foregoing conflicting assertions of the parties Mshelia J on 31/5/96 dismissed the appellants’ claims in their entirety and entered judgment for the respondent in terms of its counter-claim. Against that judgment, the appellants have lodged the instant appeal predicated on three original and two additional grounds of appeal on the strength of which the appellants’ counsel in his brief of argument raised five issues for determination which were adopted in the respondent’s brief of argument. The five issues raised read as follows:
“3.1 Whether the respondent as bankers or the 1st and 3rd appellants could transfer any money, funds or liabilities from account No 400127 to account No 62586 and 440147 without obtaining the prior consent of the appellants.
3.2. Whether having regard to Exh. ‘J’, ‘J4’ and ‘J5’, the appellants could be said to have been put on notice of the existence of the loan account and therefore liable to pay the outstanding debt.
3.3 Whether having regard to Exh. ‘J’ ‘ J1’ to ‘J5’ the respondent had discharged the burden of proof on them as required by law in a declaratory judgment.
3.4 Whether the respondent had succeeded in proving its counterclaim, the appellants having railed to file a defence in respect of paragraph 1 of the counter-claim.
3.5 Whether on a proper evaluation of Ex hi hits ‘E’, and ‘B ‘and ‘H12′ the respondent could legally charge interest on a loan which was only anticipated having regard to the evidence adduced at the trial.”
In regard to issue 3.1 it was submitted in the appellants’ brier of argument that the respondent could not in the absence of any express consent by the appellant legally open any account which was not contemplated by the parties to this case.
In support of the submission learned counsel referred to the following cases: Adejuwon v. Co-operative Bank Ltd (1992) NWLR (Pt.228) 251 at 256, I.O.M. Nwonye & Sons Limited v. C.C.B. (Nig) Plc (1993) 8 NWLR (Pt.310) 210 at 220 Ogundeji v. I.B.W.A. Ltd (1993) 2 NWLR (Pt.278) 690 at 691 and British and French Bank Ltd v. Opaleye (1962) 1 SC NLR 60. It was argued that account No 4401417 was a new account opened by the respondent without the knowledge of the appellant and therefore was opened in contravention of the law relating to banking. It was further argued that although the legal mortgage Exh. E was executed for the purpose of securing a loan on account No. 62586/440307/400127 there was no evidence that any amount had been disbursed to any of the appellants. The case of Faagol Instrument Ltd v. national bank of Nigeria Ltd. (1993) 1 NWLR (Pt.271) 586 at 596 was alluded to.
With respect to issue No 3.2, it was contended that it is the July of the respondent to inform the appellant of the existence of the relevant account which they opened but that the respondent failed to do so.
Dealing with issues 3.3 and 3.4 together, it was submitted that having regard to the averments in the counter-claim which show that the reliefs sought are purely declaratory in nature it was incumbent on the respondent to establish same by evidence before the discretionary power of the court could be exercised in its favour. Counsel craved in aid the following cases: Chief Emmanuel Ogbonna v. A. G. of Imo State & 3 Ors (1992) 1 NWLR (Pt.220) 647 at 689, Obmaimi Brick & Stone (Nig) Limited v. A.C.B. Ltd (1992) 3 NWLR (pt.229) 260 at 299 and expressed the view that the respondent had failed to establish that the appellants were indebted to it to the tune of N1,858.622.15 as at 28th July, 1993. Furthermore counsel argued that there is no evidence that any loan or overdraft was granted to any or the appellants when the deed of mortgage Exh. E was executed. Referring to the statement or account Exh. “B” as at 1989 it is contended that the appellants were not indebted to the respondent. Counsel referred to the cases of Weide & Co Nigeria v. Weide & Co Hamburg (1992) 6 NWLR (Pt 249) 627 at 640 to submit that the respondent having failed to prove that the appellants were indebted to it was not entitled to judgment. It was also contended that the mortgage deed Exh “E” did not indicate that the loan secured thereby was to attract interest charges and that since the respondent did not prove that the loan was to attract interest charges and at what rate, the respondent’s counter-claim ought to have been dismissed. He cited the case or Enahoro v. I.B.W.A. Ltd (1971) 1 H.C.L.E. 180.
Finally, with respect to issue No.3.5 learned counsel contended that as there was no loan granted to the appellants as per ‘Exh. E’ the appellants were not liable to pay interest as this is the consideration for a loan. Counsel cited the case of Faagol Instrument Ltd v. National Bank of Nigeria Ltd (supra).
Learned counsel referred to the legal mortgage Exh. E and submitted that it was not properly registered in that the C of O Exh. G bears the name of the 2nd appellant while Exh G1 which is the consent obtained in order to mortgage the property bear the name of the 1st appellant.
Responding to the above submissions, with respect to issues No3.1 counsel for the respondent pointed out that the question as to whether there was express consent of the appellants before account numbers 400127 and 440147 were opened was not an issue raised on the pleadings and therefore it should not be countenanced vide the case of Buraimoh v. Bamgbose 91989) 3 NWLR (pt.108) 252 at 368. He referred to the case of Spasco Vehicle and Plant Hire Ltd v. Alraine (Nig) Ltd 1996 NCLR 250 at 262 to submit that parties should confine themselves to the issues joined on the pleadings. Dealing with issue 3.2, on the question as to whether the appellants were aware of the existence of loan account No 440147, it was submitted that it was not an issue raised in the pleadings. Regarding issues No.3.3 and 3.4. it was submitted that the respondent led evidence to discharge the burden of proof as required by law to entitle the respondent to judgment on the counter-claim, it was further submitted that the respondent obtained all the necessary consent as required by law before Exh. E was registered. On the last issue dealing with evaluation of evidence, it was contended that the issue of want of consideration before Exh E was executed and that of registration were not issues before the court below. Finally, counsel submitted that the trial court properly evaluated the evidence before it and came to the right conclusion.
The main questions before the trial court were firstly, whether or not the appellants were indebted to the respondent and if so indebted the amount of the indebtedness and secondly whether the legal mortgage Exh. ‘E’ executed by the panics was valid. While the appellants claimed that they were not indebted and that Exh. E was not validly made the respondent stated the opposite and counter-claimed to that effect.
A counter-claim is a claim by the defendant against the plaintiff in the same proceedings; it is regarded as an independent action in which the defendant counter-claimant is in the position of the plaintiff and therefore has the burden or proving the counter-claim to be entitled to judgment thereon. In entering judgment for the respondent bank on its counter-claim, the court below on page 72 lines 4 to 43, page 73 line 1 to 7 reasoned as follows:
“Learned counsel had submitted as part or his address that the defendants’ counter-claim paragraph 1 was never replied to which he contended is an omission on the part of the plaintiffs and as such there was no need to call separate evidence as no issue was raised thereto. He relied on the case of Olale v. Ekwelendu (1988) 4 NWLR (Pt.115) 326 at 360. It is true the allegations stated in paragraphs 2 to 16 of the counter-claim were not replied to by the plaintiffs. A general denial was made in respect of paragraphs 2(a) and (b) of the counter-claim. Going by the rules of pleadings the plaintiffs in the main suit by not replying paragraphs 2 to 16 of the counter-claim amounts to admission of the facts averred by the defendant now plaintiff. In order to raise an issue of fact that will then go to trial, there must be a proper traverse and that traverse must be made either expressly or by necessary implication. A refusal to admit or deny does not raise an issue: Messrs Lewis & Peat (N.R.P) Ltd v. Akhimien (1976) 1 All N.L.R. (pt.1) 460. Where no issue of fact arose in the pleadings then there is no need to go to trial… By paragraph 9 of the counter-claim defendants have admitted their indebtedness to the plaintiff. I will accordingly hold that the plaintiff in the cross-action. Bank of the North Ltd had proved its claim against the defendant as per the reliefs sought in the counter-claim.
I hereby enter judgment for the plaintiff in the cross-action and grant the following reliefs:
(a) A declaration that then: is a subsisting legal mortgage between the plaintiff and the defendant.
A declaration that the defendant is entitled to N1, 859,622.15 as at 28th July 1993 with interest on the loan and 30% interest on the said outstanding (sic) from 28th July 1993 to 1st January 1994 and 21% interest on the outstanding sum from the 1st January 1994 until liquidation of the outstanding sum … ”
It is evident from the above passage that the reliefs granted by the court below to the respondent are declaratory in nature and that the reason for granting them was because the appellants admitted them by reason of their not joining issues in their defence on the subject-matter of the counter-claim.
With respect I do not think the learned trial Judge was correct. It is true that it is invariably necessary for a plaintiff to file and serve a defence to a counterclaim.
If he fails to do so or filed one without traversing the material averment in the counter-claim, then there will be no issues joined between him and the defendant on the subject-matter of the counter-claim and the allegation contained in the counter-claim regarded as admitted. See Nigerian Housing Development Society Ltd v. Yaya Mumuni (1977) 2 S.C. 57, 85- 86.
It is equally the law that the court does not grant declarations of right either in default of defence or indeed on admission without hearing evidence and being satisfied by such evidence: see Bello v. Eweka 91981) 1 S.C. P.01; Motunwase v. Sorungbe (1988) 5 NWLR (pt.92) 90 Ogunjumo v. Ademolu (1995) 4 NWLR (pt.389) 254 at 265. In the case of Ogbonna v. A.G. Imo State (1992) 1 NWLR 647 at 698 Supreme Court per Akpata J.S.C. opined as follows:
“Failure of a plaintiff to file a defence to a counter-claim may not he disastrous if he succeeds in his claim. His success may render useless the counter-claim depending on the nature of the counterclaim.
However where he fails in his claim, as in this case, and had filed no defence to the counter-claim the defendant’s claim in his counter-claim remains uncontroverted. If however the claim in the counter-claim is for a declaratory right the defendant will still have to satisfy the curt that he is entitled to the declaration sought regardless of the failure of the plaintiff to put a defence” (Italics supplied) It is my judgment that the court below was in error to have entered judgment in favour of the respondent based on the failure of the appellants to deny the material averments in the respondent’s counter-claim without evaluating the evidence led to see if it was sufficient to sustain the claim.
Generally, when evaluation of evidence does not involve the credibility of witnesses but the complaint is against the non-evaluation or improper evaluation of the evidence by the trial court an appellate court is in as good a position as the trial court to do its own evaluation: See Narumal & Sons Nig Ltd v. Niger Benue Transport co. Ltd (1989) 2 NWLR (pt.106) 739 at 742. Abisi v. Ekwealor (1992) 6 NWLR (Pt.302) 643. It is trite law that where evidence has been led in the lower court which establishes a fact, an appellate court will make the necessary findings which the lower court failed to make: See Alhaji Akibu v. Opaleye & 1 or (1974) 1 (1986) 2 NWLR (pt.24) 626 at 634 the Supreme Court held:
“The court has in numerous cases reiterated the rule that the court of Appeal will not ordinarily interfere with the findings of fact by the trial court but where there is ample evidence and the trial Judge failed to evaluate it and make correct findings on the issue the court of appeal is in as much a good position as the trial court to deal with the fact and to make proper finding.”
See Shall B.P petroleum Co of Nig. Ltd v. His Highness Pere-Cole & Ors (1978) 3 S.C. 183 at 174.A great deal of the pieces of evidence led in this case is purely documentary and not evidence based on the credibility or witnesses. It will be necessary to examine these piece of evidence to see to what extent they support the relief is a declaration that there is a subsisting legal mortgage between the parties, the appellants, through P.E. I tendered the said mortgage deed dated 13/10/82 which was admitted in evidence as Exh. ‘E’. This deed was made pursuant to the request of the appellants for their overdraft to be converted into it loan account. The respondent requested for security and the appellants had to provide the properties covered by certificate of occupancy No. BO/1621 and NE/1367 which were mortgaged to the respondent. Having done so, it does not lie in their mouth to turn round lo impugn the validity of Exh. E on the ground that the consents for the transfer of the properties in question were irregular. It is my view that from the available evidence on record the respondent was entitled to the 1st relief granted on the counter-claim.
Turning to the 2nd relief dealing: with a declaration that the respondent is entitled to N1.858,622.15 as at 28th July 1993 etc, it is observed that the appellants tendered the overdraft statement of account No 400127 Exh. ‘B’ to show that they are not indebted to the respondent. The latter conceded that no debt is owed to it on Exh. ‘B’ but maintained that the appellants’ indebtedness to it is on the loan account No.400127/2586 which was tendered by its sole witness D.W.1 as Exh “J3”. The last entry on Exh “J3” was on 28/7/93 reflecting a debt balance of N1,858,622.15 which is the disputed debt for which the respondent is seeking a declaration that the appellants owe it.
Reading through the entire paragraphs of the appellants’ further amended statement of claim, it does not appear to me that they dispute the fact that at sometime they were indebted to the respondent. The gravamen of their case was that the respondent charged high interest rate on the loan account. In paragraphs 8 and 9 of their further amended statement of claim it was averred as follows:
8 “The plaintiff aver that inspite of the agreement that interest chargeable on the alleged outstanding sum against first plaintiff would be 13% per annum, defendant went ahead without any notice to plaintiffs to charge over and above agreed rate of interest per annum.
- The plaintiffs aver that as a result of the exorbitant rate of interest charged by the defendant contrary to the agreed one and without notice to plaintiffs the defendant by their singular act raised the alleged outstanding sum against first plaintiff allegedly high which plaintiffs deny and reject.”
See also paragraphs 15. 17. 21 and 22 of the aforesaid claim.
It is plain from the above paragraphs that what the appellants are quarrelling about is the high interest rate charged on the loan account. And in paragraph 10 of their claim they pleaded:
“10 The plaintiffs with serious efforts paid a total sum of N1,189,963.26 to the defendant while the defendant is illegally still pen claiming outstanding sum of N1.858.622.15.”
There is no evidence by way or bank tellers or any other document to support the payment. By a letter dated 29/3/94 addressed to the respondent by the 1st appellant (Exh.”J”) the appellants acknowledged a debt of N573.999.52 on the loan account and pleaded for more time to repay it. The letter ‘Exh. ‘J’. reads:
“Ali Pindar Kwajarra Garage Ltd
29th March, 1984
The Manager,
Bank or the North Ltd
Lake Chad Road.
P.O. Box 220.
Maiduguri.
Dear Sir.
LOAN ACCOUNT NO 62586
BALANCE N573.999.53 IN YOUR FAVOUR
We refer to your letter MAG/BWB/DIA/499/84 of 19th March 1984 about the above amount outstanding against us in your books.
It is very much regretted that we have not been able to pay in any money lo reduce the loan as we had promised. This is due to the fact that the Government has failed to fulfill their part of the agreement reached by not paying us fur the value of the jobs already done and certified as such. The situation was not helped by the rapid changes in governments finally ending up with the military administration. As you are aware the present administration is not very keen in paying contractors yet and from the look of things. it might take some time before a decision on this direction is reached.
so we have not kept you in the dark of our plans. Your Area and Manager and Branch Manager Maiduguri have been to the factory to assess the progress we have so far made and we are certain they were very pleased with what they saw. We are therefore appealing to you to exercise more patience for steps shall be taken to reduce the loan as soon as we get paid for jobs we have already done. We are very anxious to reduce the amount of interest charged on this loan and this can only be done when the loan is either completely extinguished or substantially reduced.
Yours faithfully.
for: Ali Pinder Kwajarra
Garage Ltd
(SGD)
Ali Pinder Kwajaffa
Chairman/Managing Director”.
The statement of account Exh. ‘J3’ shows that between the date of writing that letter Exh. ‘J’ and 11/9/87 the appellants paid some amount the largest being the sum of N300,000 paid by cheque on 23/5/96. As noted earlier, the statement of account Exh. ‘J3′ by the last entry therein reflects an outstanding debit balance of N1,858,622.15 as at 8/7/93. The account has not been falsified by the appellants, I am therefore of the firm viewÂthat Exh.J3 together with the appellants’ admission as per Exh ‘J’ is supportive of the 2nd relief sought by the respondent in its counter-claim.
Although I had earlier held that the court below was in error to have entered judgment for the respondent on the counter-claim based on the admission of the appellants on the pleadings in respects to the subject-matter of the counter-claim that judgment as had been demonstrated above is right. In dealing with the judgment of court of trial, what an appeal court has to decide is whether the decision is right and not whether its reasons were se: see Ukejianya v. Uchendu (1950) 13 WACA 45 at 46 Emmanuel Ayeni & Ors v. Williams Sowemimo (1982) 5 S.C. 60 at pp73-75. Odukwe v. Oganbiyi (1998) 8 NWLR (Pt.561) 339 at 350. It is therefore my judgment that notwithstanding the wrong reason given by the learned trial judge in entering judgment for the respondent on the counter-claim that decision is impeccable and I decline to reverse it.
Learned counsel for the appellants has raised several issues in his briefs of argument in an effort to impugn the decision of the court below. He talked about transferring of funds from one account to the other which he says is not in keeping with banking practice. He also raised the question as to whether the appellant had due notice of the existence of the loan account. With dues respect to counsel these questions had not been raised on the pleadings. In the case of Buraimoh v. Bamgbose (1989) 3 NWLR (pt.109) 352 at 365, the Supreme Court per Nnaemeka-Agu J.S.C. said:
“In my judgment, an issue of fact cannot rightly be raised in counsel’s final address. In a trial where pleadings are filed, it can only be properly raised on the pleadings.”
I am of the view that the issues under consideration not having been raised on the pleadings, they cannot be entertained on appeal. Even if I should entertain them, it seems to me that they lack substance. Admittedly, the weight of authorities has crystallized in the principle that the bank has no right to transfer money be it assets or liabilities from one account to the other without prior notice and absent of the customer since the very basis of its agreement with the customer is that the two accounts should be kept separate. Greenhalgh & sons v. union bank of Manchester Ltd (1924) 2 K.B. 253; Ogundaje v. I.B.W.A. Ltd supra. A close examination of Exh. ‘J3’ shows that some funds were transferred from the overdraft account No.400127 Exh.B to the loan account No.62586 Exh ‘J3’. But the appellants have not shown that they had thereby been damnified. Indeed the transfer had the effect of substantially reducing their indebtedness. As to whether the appellants had due notice of the existence of the loan account, by Exh.’J1′, they are precluded from denying knowledge of its existence.
I have already dealt with the question raised under issues 33 and 34 regarding the proof of the respondent’s counter-claim by admission, it remains to consider issue No.3.5 which is whether on a proper evaluation of Exh. ‘E’, ‘B’ and ‘H12’ the respondent could legally charge interest on a loan which was only anticipated. Again, I must confess this was not an issue before the court below. The issue was the rate of interest on the loan account and not on whether or not interest could be charge on a loan that was only anticipated. As already stated, the appellants pleaded in paragraphs 4 and 8 of their further amended statement of claim that they reached agreement with the respondent bank that the loan account should attract interest at the rate of 13&. In paragraphs 4 and 7 of the further amended statement of defence the respondent denied the allegation and averred that “interest charge on the loan was to be done for (sic) time to time as directed by the Central Bank from time to time and need contact the 3rd plaintiff” Both parties led evidence as pleaded.
The court below found rightly, in my view that the mortgage deed Exh. ‘E’ did not stipulate any rate of interest on the loan account and that the statement by the appellants that 13% interest rate per annum was agreed by the parties was not established. By section 15 of banking Act Cap 28 of the laws of the Federation of Nigeria 1990, the rate of interest charged on advances, loans or credit facilities or paid on deposits by any licensed bank is to be linked to the minimum rediscount rate of the Central bank subject to stated minimum and maximum rates of interest and the minimum and minimum rates of interest when sop approved are to be the same for all licensed banks. The interest structure of each licensed bank is subject to the approval of the Central Bank: U.B.A. Ltd v. Sax Nig. Ltd. (1994) 8 NWLR (pt.361) 150 at 165. The sole witness for the respondent (DW) testified that the interest charged on the loan account varied from time to time in accordance with the Central bank guidelines. It is not even the case of the appellants that the interest rate charged on the loan account was not in tune with the C.B.N guidelines rather their case is that they agreed with the respondent on a fixed interest rate of 13% per annum an assertion which they failed to establish and which in any case could have been in contravention of the Banking Act supra.
On the whole this appeal fails and is accordingly dismissed with N1,000.00 in favour of the respondent.
Other Citations: (1998)LCN/0364(CA)
