Ali Pinder Kwajafa & Ors V Bank Of The North Ltd (2004)

LAWGLOBAL HUB Lead Judgment Report

MUSDAPHER, J.S.C.

This is an appeal against the judgment of the Court of Appeal sitting in Jos, Plateau State delivered on the 9th of December, 1998, wherein the appeal of the appellants herein was dismissed, thus affirming the decision of the trial High Court of Borno State. The claim of the appellants, herein, as the plaintiffs, before the trial court as per paragraph 24 of the further amended statement of claim/and reply to counter-claim was in these terms:-

“1. Declaration that the purported deed of legal mortgage dated 13th October, 1982 between the parties to this case is void, ineffective and of no effect whatsoever.

2. That there is no legal mortgage existing between Ali Pindar Kwajaffa, Hussaini M. Aliyu and Ali Pindar Kwajaffa Garage Ltd. and the Bank of the North relating to the properties covered by certificates of occupancy Nos. BO/1621 and NE/1367 purportedly mortgaged to the defendant by the plaintiffs.
3. Declaration that the second plaintiff is a minor and could not legally and validly enter into any agreement with the defendant at all times material to this case.
4. Declaration that the plaintiffs did not guarantee any person be it natural or corporate in this purported deed of mortgage.
5. Declaration that the defendant cannot sell by public auction any of the properties covered by certificates of occupancy Nos. BO/1621 and NE/1367 properties of the plaintiffs.
6. Declaration that the second plaintiff never consented to any matter relating to the transfer of his property covered by certificate of occupancy No. BO/1621.
7. Declaration that the plaintiffs are not indebted to the defendant to warrant the sale of the plaintiffs properties by the defendant under a purported deed of a legal mortgage.
8. A perpetual injunction restraining the defendant, its servants, or privies from trespassing into the plaintiffs’ properties, nor conducting any purported sale of the plaintiffs’ said properties covered by certificates of occupancy Nos. BO/1621 and NE/1367 or any of the plaintiffs’ properties.
9. Declaration that the plaintiffs had paid whatever loan taken from the defendant sometimes ago.
10. An order commanding the defendant to release the certificates of occupancy of the plaintiffs’ illegally being held by the defendant as a result of the purported deed of mortgage.
11. The plaintiff’s claim costs of his suit.”

The defendant, the respondent herein, denied the appellants’ claims and in paragraph 2 of the counter-claim subjoined to its further amended statement of defence, the respondent counter-claimed against the appellants for the following reliefs:-

“(a) A declaration that there is 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 said outstanding amount 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.”

The facts as found by the learned trial Judge and succinctly summarised by the Court of Appeal as per the judgment of Edozie, J.C.A. (as he then was) were put as follows:-

“From the pleadings filed, oral evidence of witnesses called by the parties 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 bank. The account number is 400127. Initially the 3rd appellant was granted an overdraft facility for the sum of N80,000.00. by the year 1982, the outstanding amount of the overdraft stood at N487,375.50. At the instance of the appellant the respondent bank converted the overdraft amount into a loan account and the account number was variously referred to as 400127/62586,44014/62586/400127 pursuant to the conversion, the appellants mortgaged to the respondent bank properties covered by certificates B0/1621 and NE/1367 belonging respectively to the 2nd and 1st appellants. A deed of legal mortgage dated 13/10/1982 registered as No. 347 at page 347 Vol. 7 (Misc) of Land Registry in the office at Maiduguri (exh. C) was executed by the parties with the 1st and 2nd appellants as mortgagors and sureties, 3rd appellant as the borrower and respondent as the mortgagee. It is the appellant’s case that in November, 1982 when the respondent drew their attention to the outstanding amount, the 1st appellant and the respondent 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 had paid to the respondent bank the sum of N1,189,963.26k; that the 1st appellant again paid under duress the sum of N300,000.00 and finally that the Nigeria Bank of Commerce and Industry (NBCI) paid on their behalf the sum of N82,257.74 on 19/7/84. By reason of these payments, the appellants contend that they have fully liquidated their indebtedness to the respondent bank. They relied on the 3rd appellant’s account which was admitted in evidence as exhibit “B”. On its part, the respondent denied reaching agreement with the 1st appellant on the interest rate maintaining that the interest rates are charged in accordance with the Central Bank guidelines. The respondent admitted that the 1st appellant paid the sum of N300,000.00 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 0 No. NE/154 held by the respondent as security for another overdraft of N40,000.00 it granted to the 3rd appellant which had risen to N82,297.14. 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 19/3/1984 exhibit J4, the respondent bank reminded the 3rd appellant of its default in the repayment of the loan and in response the 1st appellant by letter dated 29/3/1984 exhibit J pleaded for time to repay the loan. As the appellants were unable to liquidate the loan, the respondent in accordance with terms of the legal mortgage served them notice of its intention to exercise its power of sale.”

It should also be mentioned that the 2nd appellant was said to be a minor and could not legally be a party to the deed of the legal mortgage. That deed of legal mortgage, as far as his property was concerned, was null and void and of no effect, since as a minor, he could not transfer his property by means of a legal mortgage.

After the hearing of evidence the learned trial Judge dismissed in their entirety the plaintiff’s claims and entered judgment in favour of the defendant in its counter-claim. The plaintiffs appealed to the Court of Appeal and in the Court of Appeal, the plaintiff submitted five issues for the determination of the appeal. In summary the issues were (1) whether the defendant could transfer, money funds or liabilities from one account to another without the consent of the plaintiffs. (2) whether having regards to exhibits J, J4 and J5, the defendant could be said to have been put on notice on the existence of the loan account. (3) whether having regards to exhibits J, J1 to J5, the defendants had discharged the burden of proof as required in a declaratory judgment. (4) whether the defendant had proved its counter-claim, when the plaintiff failed to put a defence in respect of paragraph 1 of the counter-claim and (5) whether in proper evaluation of the exhibits E, Band H12, the defendant could legally charge interest on the loan account.

The Court of Appeal discussed these issues and in its judgment dismissed the appeal and affirmed the decision of the trial court with respect to the counter-claim. This is now a further appeal to this court.

The notice of appeal contains six grounds of appeal and they read as follows:-

“Grounds of appeal