General Securities and Finance Company Limited. V. Lawrence C. Obiekezie (1997)
LawGlobal-Hub Lead Judgment Report
UBAEZONU, J.C.A.
By a claim dated 22nd May 1995 the plaintiff (hereinafter referred to as “the respondent”) filed a suit on the Undefended List against the defendant (hereinafter referred to as “the appellant”) claiming as follows:
“(a) The sum of one thousand, five hundred U.S. Dollars ($1,500.00) or its naira equivalent being the sum the defendant had and received from the plaintiff on 18/5/92 for exchange to naira which said transaction the defendant failed, refused and/or neglected to perfect despite repeated and several demands.
(d) INTEREST on the said sum at the rate of 21% per annum with monthly rates from 1st June, 1992 until judgment and thereafter at the rate of 5% per annum until final liquidation of the judgment debt and costs.”
The claim was accompanied by an affidavit.
The appellant in accordance with the Rules of the Anambra State High Court applicable to Enugu State filed a Notice of Intention to defend together with an affidavit setting out its defence. The matter came up for hearing on the 26th day of June 1995 before Elechi J. of the Enugu High Court. Having read the affidavit in support of the claim and the affidavit in support of the Notice of Intention to defend and having taken addresses from counsel on both sides the learned trial Judge in a reserved ruling on the 31st day of July 1995 dismissed the notice of intention to defend and thereupon gave judgment for the respondent on his claim. Dissatisfied with the said ruling and judgment, the appellant has appealed to this court on four grounds of appeal and has formulated three issues for determination as follows:-
“1. Whether the learned trial Judge was not in error in holding that the defendant had not disclosed a good triable issue to warrant its being let in to defend the suit pursuant to Order 24 Rule 9 (2) of the High Court Rules, 1988 of Anambra State (applicable to Enugu State).
- Whether the learned trial Judge was not in error to have entered judgment for the plaintiff as claimed in the Writ of Summons and the claim attached thereto.
- Whether the ruling and the subsequent judgment of the trial Judge were not against the weight of evidence disclosed by the affidavit in support of the appellant’s Notice of Intention to defend the suit.”
Arguing the issue No.1 learned counsel for the appellant submits that the learned trial Judge was wrong to hold that the appellant’s Notice of Intention to defend did not disclose a defence on the merits when sufficient materials to underscore the triable issues were clearly placed before him by the uncontradicted and unchallenged affidavit setting out the grounds of the appellant’s defence. Counsel refers to paragraphs 6, 7 and 8 of the affidavit in support of the appellant’s Notice of Intention to defend and submits that they are explanatory enough as to the nature of the transaction between the parties. He contends that value can only be given when the said cheque has been paid by the paying banker. There is no evidence, counsel submits, that the said cheque has been presented to the paying banker and value given thereon. He refers to Lewis Peat v. Akhimien (1976) 7 SC 157 at 164.
It is submitted for the appellant that the said cheque was accepted by the appellant purely for collection. It was sent out the same day to the correspondent Bank. The respondent, counsel submits, was duly informed that the cheque got lost in transit on its way back to Nigeria because of a change in the policy of the paying bank of the appellant. The respondent was informed and advised to write to the drawers of the cheque to countermand same. In addition, the appellant took upon itself to write the issuers of the cheque to alert them of the loss of the cheque. Counsel refers to Sheldon’s Practice & Law of Banking by C.B. Drover and R.W. Bossy 10th edition, page 12.
On lost instruments, Counsel refers to S. 69 of the Bills of Exchanges Act Cap 35 Laws of the Federation or Nigeria 1990. He refers also to the Law & Practice of Banking by J. Milner Holden, vol. 1. From all the above, counsel argues, it is clear that a cheque per se is not money but only converted to money when presented and paid. He submits that the learned trial Judge failed to exercise his discretion judicially and judiciously given the facts deposed to in the appellant’s affidavit in support of the Notice of Intention to defend. The relevant paragraphs not having been denied are deemed to have been admitted.
It is submitted that the reliefs sought by the respondent are misconceived since there is no evidence that there was any loss of money suffered by the respondent or the drawer of the cheque. In accordance with the Nigerian Bills of Exchange Act the appellant stated in its affidavit in support of the Notice of Intention of defend that it will indemnify the respondent if the cheque has gone into wrong hands and value given thereon. See S.70 Bills of Exchange Act Cap. 35 Laws of the Federation of Nigeria 1990. It is conceded that an appellate court will not ordinarily interfere with the exercise of discretion by a lower court simply because faced with a similar application it would have exercised its discretion differently. It is however argued that the situation is different in this case. The finding of the learned trial Judge that there is no merit in the defenee, it is submitted, is without regard to the unchallenged affidavit of the appellant in support of its Notice of Intention to defend. There must be good reason for an exercise of discretion one way or another- refers to Wayne (West Africa) Ltd. v. Ekwunife (1989) 5 NWLR (Pt. 122) 422; (1989) 12 SCNJ 99 at 128. Counsel submits that the trial Judge was under a misconception as to the true import of the expression “cheque for collection” as well as when a cheque becomes money.
Counsel refers to the following cases:
“(1) Re Owen Deed; Owen v. Inland Revenue Commissioner (1949) All E.R.901.
(2) Re Hone (A Bankrupt) Ex Parte the Trustee v. Kesington Borough (1951) Ch 85 at 88 – 89.”
It is further submitted that the issue of negligence does not arise in this case as far as the channel used by the appellant for clearing the cheque is concerned. Counsel refers to Sheldon’s Practice & Law of Banking page 45 – 54.
It is finally submitted on this issue that based on the authority of Shitta v. Osabanjo (1988) 7 SCNJ 37 the decision in this case in the lower court is a proper case for the intervention of the appellate court on the wrongful exercise (judicial) discretion by the lower court by dismissing the appellant’s application to defend when triable issues have been made out.
Learned Counsel’s argument on issues Nos 2 and 3 are substantially the same as the argument on issue No.1. It is however further submitted that payment of a debt by cheque is not made until the value of the cheque is paid. In Union Bank of Nigeria Ltd. v. Ifeatu Augustine Nwoye (1996) 3 NWLR (Pt.435) 135; (1996) 2 SCNJ 222 the Supreme Court held that a cheque is not deemed cash until after it is cleared even if the cheque is a bank draft. There is therefore no basis, counsel submits, for the learned trial Judge to enter judgment for the respondent for $1,500.00 when there is no evidence that the cheque has been presented and the value paid to any person. What is more, counsel argues, the cheque is to be paid to the respondent at the rate of N18.20 per dollar as per Exhibit B. The judgment therefore does not support the claim. Moreover, the cheque was already a stale cheque by effluxion of time at the time action was commenced, not having been presented within 6 months from the date of issue. A court has no jurisdiction to compel a party to give value for a stale cheque. It is further submitted that there is no basis for payment of interest as the transaction between the parties is not a loan transaction.
On being served with the appellant’s brief, the respondent filed his brief in which he formulated three issues as follows:-
“(a) Whether the grounds of defence set out in the affidavit by the defendant raised any triable issue requiring the suit to be entered in the general list for pleadings to be filed.
(b) Whether the lower court was right in dismissing the application for notice of intention to defend the suit by the defendant after considering and hearing the affidavit evidence before it and arguments by both counsel.
(c) Whether the lower court having held that the ground of defence by the defendant lacked merit rightfully entered judgment for the plaintiff including interests against the defendant as per the plaintiff’s claim.”
Arguing his first issue, learned counsel for respondent submits that the Rule governing proceedings in matters placed in the undefended list is contained in Order 24 Rule 9 of the Anambra State High Court Rule 1988. A defendant in such a proceeding is required to file a Notice of Intention to defend and an affidavit which must disclose a triable issue. Counsel submits that the claim is for $1,500 or its equivalent being the value of the bank draft the respondent had and received from the appellant for exchange to naira and interest thereon. The relevant paragraphs in the respondent’s affidavit, counsel submits, are paragraphs 2 – 4. The appellant’s reaction to the said paragraphs, Counsel argues, is contained in paragraphs 5, 6, 9 and 26 of the affidavit in support of the Notice of Intention to defend. It is contended that these averments in the appellant’s affidavit, instead of raising a triable issue to the respondent’s claim, support the claim and are no answer to the respondent’s case. The averments in the other paragraphs are irrelevant.
It is further submitted that one Ezugo Dan Nwandu as shown in Exbs GSFC 2 -GSFC 5 is a stranger to the transaction between the appellant and the respondent. There is therefore no privity of contract between the respondent and the said Ezugo Dan Nwandu. Learned Counsel contends that the moment the appellant had and received the Bank Draft for exchange, the respondent lost the opportunity of exercising any control over the cheque, and the issue of bailment thereby exists which also covers the custody of the Bank Draft. He refers to Hill Station v. Adeya (1966) NAC 125; Adesina v. Kola (1993) 6 NWLR (Pt. 298) 182. Counsel therefore submits that on demand the appellant should return the chattel (cheque) to the bailor (respondent).- Furthermore, counsel argues, a bailee has the duty to recover the goods if stolen even though the theft occurred without the default of the bailee. A bailee owes a duty of care to the bailor and is therefore liable in negligence by himself or by his servant or agent. The liability of a bailee who is guilty of a breach of the terms or the bailment is to restore the party damnified in such sum of money as would put him in as good a position as if the goods have not been lost or damaged – refers to Ike v. Mangrove (1986) 5 NWLR (Pt. 41) 350 at 351 – 352; WAEC v. Kotoye (1977) 2 SC. 45 at 50 – 51. Failure by the appellant to pay the respondent or return the draft for whatever reason, according to counsel, is prima facie a breach of contract and evidence of negligence. To rebut the presumption of negligence the bailee shall show to the satisfaction of the court that the loss occurred not through his fault, carelessness or recklessness but inspite of all responsible precaution taken by him in order to ensure the safety of the goods in question – refers Panalpina World Transport (Nig) Ltd v. Wariboko (1975) 2 SC 29. Counsel finally submits on this issue that the appellant having allowed the cheque to sneak into 1 private account or a third party – Ezugo Dan Nwandu – over which the appellant has no control, the appellants is not only negligent but reckless and careless to the extreme and therefore liable. The appellant’s defence therefore lacks merit.
On issues (b) and (c), like the argument in the appellant’s brief, the argument on these issues is substantially the same as the argument already proferred on issue (a). Counsel argues here that it is after the Judge has heard arguments for or against transfer to the general list that the court will give its ruling. He submits that fanciful defence should not be allowed to delay the hearing of the suit on the undefended list. Counsel refers to Jipreze v. Okonkwo (1987) 3 NWLR (Pt. 62) 737; NAL Merchant Bank v. Macaulay (1986) 5 NWLR (Pt. 40) 216; N.B.N. v. Savol W.A. Ltd. (1994) 3 NWLR (Pt. 333) 435. Counsel submits that where a defendant gives notice of his intention to defend but his affidavit does not show reasonable grounds of defence, the ease should be heard under the undefended list- See UTC (Nig) Ltd. v. Pamotei (1989) 2 NWLR (Pt. 103) 244 at 252; ENDC v. Durunna (1966-7) 10 ENLR 210.
On the issue of award or interest, Counsel submits that the trial court was right in awarding interest under mercantile custom. He refers to Ekwunife v. Wayne (W.A.) Ltd. (1989) 5 NWLR (Pt. 122) 422 at 428 -430; London Chattam & Dover Railway v. S.E. Railway (1893) A.C. 429 at 434.
In court counsel for both parties adopted their respective briefs. Counsel for the appellant urges the court to allow the appeal while counsel for the respondent urges the court to dismiss the appeal.
Before I go into the merits of this appeal let me touch briefly on a point that would seem to have eluded both parties to the appeal. On the 31st July 1995, Elechi J. of the Enugu High Court delivered a ruling in which he held that the affidavit in support or the Notice of Intention to defend the suit filed by the appellant did not disclose a triable issue or a defence on the merits. He accordingly dismissed the Notice of Intention to defend. Consequent on the dismissal, he gave judgment in terms of the claim on the same day – See page 19 of the record of appeal. Thus, there were two decisions of the court in the same suit on the 31st July 1995 – one is a ruling on whether the appellant’s affidavit disclosed a triable issue, the other, a judgment for the respondent on the claim. The Notice of appeal reads:
“TAKE NOTICE that the defendant/appellant being dissatisfied with the decision of the High Court Enugu can wined in the Ruling/Judgment or Hon. Justice P.O. Elechi delivered on 31st July 1995… ” (Italics mine for emphasis)
It is a moot point whether one notice of appeal can be filed for the two decisions. I concede that the 2nd decision, that is, the judgment is consequent on or a necessary follow-up to the ruling. Since, however, neither party has made in an issue in this appeal I shall not raise it suo motu. However, as will be seen later in this judgment, the important decision for consideration at this stage is the ruling. For, if the Ruling is set aside, the judgment crumbles with it. If on the other hand the ruling is affirmed, the judgment will be in accordance with the claim since the claim is on the undefended list.
I shall go into the merits of the appeal. I shall deal with the appellant’s first issue together with the respondent’s first and second issues together. I will thereafter deal with the appellant’s 2nd and 3rd issues together with the respondent’s 3rd issue.
The question is whether under Order 24 Rule 9 of the High Court Rules of Anambra State 1988 applicable in Enugu State, the affidavit of the appellant in support of its Notice of Intention to defend raises a triable issue to the respondent’s claim. I emphasize the words “triable Issue”. In view of the importance of Order 24 Rule 9 (2) to this appeal I shall set it out here verbatim et literatem. It provides:
“(2) If the party served with the writ of summons and affidavit delivers to the registrar, not less than five days before the day fixed for hearing, a notice in writing that he intends to defend the suit, together with an affidavit setting out the grounds of his defence, and the court is satisfied that there is a triable issue, then and in such case the suit shall be entered in the general list and pleadings shall be filed.”
Thus, where the party served, that is, the defendant has satisfied the requirements of the Rules as in the instant appeal, if the court is satisfied that there is a triable issue then the suit shall be entered in the general list and pleadings shall be filed. The question now is – how would the court be satisfied that there is a triable issue? The answer is contained in the self same rule, Firstly, there has to be a notice that he intends to defend. Secondly, there has to be an affidavit setting out the grounds of his defence. It is this affidavit that the court has to consider in conjunction with the plaintiff’s affidavit in support of his claim in order to determine or be “satisfied” that there is a triable issue. I must here and now emphasize that the mere fact that there is a triable issue does not necessarily mean that the defendant will succeed in the contest. No. It only means that the plaintiff will now be required to call witnesses to prove his case formally – see sub-rule 4 of Rule 9. I may add, the defendant will also be at liberty to call witnesses to establish his defence. The appellant has in his brief dwelt, to a great extent, on the discretion of the trial Judge as to whether a triable issue has been made out or not. He referred to a number of decided cases on the exercise of discretion by the lower court. With respect to counsel I do not think that the decision as to whether a triable issue has been made out depends so much on the discretion of the Judge as to the evaluation of the affidavit evidence before him to determine whether or not a triable issue has been made out. It may be that this is a distinction without much difference as the exercise of discretion by a Judge must be based on evaluated evidence.
Now, what are the facts or this case? The respondent’s claim is for a sum of $1,500 (One thousand and five hundred dollars) or its naira equivalent and interest thereon. Paragraphs 2, 3 and 4 of the respondent’s affidavit in support of his claim are relevant. They are:-
“(2) That on 18/5/92 I delivered to the defendant for exchange to naira a Bank Draft or Bank Cheque for one thousand, five hundred U.S. Dollars (S1,500.00) a photocopy of the Draft is hereto annexed and marked Exhibit ‘A’.
(3) That the defendant issued and/or caused to be issued a receipt dated 18/8/92 acknowledging the receipt of the said sum.
(4) A photocopy of the receipt is hereto annexed and marked Exh. B. That the defendant has refused, failed and/or neglected to carry out the exchange and pay the plaintiff or to make the necessary refund despite several and repeated demands to do so including the plaintiff’s Solicitor’s demand letter which is hereto annexed and marked Exhibit ‘C’.”
In answer to the claim and affidavit, the appellant filed a 27 paragraph affidavit in an effort to disclose a triable issue as required by thee rules. Paragraphs 5, 6, 7, 8 and 26 are very pertinent. They are:-
“(5) That on the 18th day of May, 1992, Mr. Lawrence C. Obiekezie and one Mr. Asogwa Robert Chikwendu came with two cheques of Banque Internationale Pour Le Commerce ct Le Industries du Senegal, Dakar, Nos. 4633 and 4630 for $1,500.00 (One thousand five hundred Dollars) each, drawn in favour of the two gentlemen respectively.
(6) That the defendant accepted the two cheques for COLLECTION and issued receipt to each of the two gentlemen accordingly. A photocopy of the receipt issued to the plaintiff on record is annexed hereto and marked “Exhibit GSFC 1″.
(7) That the two cheques including that of the plaintiff on record were to be paid on collection, that is to say the receipt of the proceeds from the paying banker, at the rate of N18.20 per dollar.
(8) That the full import of paragraph 7 above is that each cheque becomes payable on confirmation of the clearance and payment of the value of same into the defendant’s nominated account at the CHASE MANHATTAN BANK N.A” NEW YORK, U.S.A.
(26) That the defendant shall indemnify the plaintiff if the cheque is confirmed to have gone into wrong hands and value given thereto.”
It is clear from the fact in this case that what was delivered by the respondent to the appellant on 18/5/92 was a Bank cheque or a Bank Draft. This fact is not in dispute. Was the Draft or cheque delivered to the appellant for exchange to naira on the face of it or for collection after which the naira equivalent will be paid to the respondent? Exh. B talks about “for collection at the rate of N18.20.” Paragraph 6 of the appellant’s affidavit set out above says that the cheques were accepted “for collection”. Paragraph 7 of the appellant’s affidavit also set out above says that the cheque, including that of another, was to be paid “on collection.” There is no affidavit or evidence denying or traversing these depositions in the appellant’s affidavit. Is there any evidence to the effect that the value of the cheque has been paid or collected? None. If there were evidence that the cheque has been paid and yet the appellant withholds the proceeds without paying to the respondent at the agreed rate of N18.20 per dollar then the learned trial Judge would be right to enter judgment on the Undefended List without further evidence. This is more so where the appellant has deposed in paragraph 26 of its affidavit that it would idemnify the plaintiff (respondent) even if it is confirmed that the cheques has gone into wrong hands provided that value has been given thereto.
It is the affidavit evidence before the court that the court should evaluate to determine whether or not a triable issue has been made out by the defence. A court of appeal will not ordinarily interfere with a finding of fact by a lower court but where the finding of fact is not properly made or not based on the evidence before the court an appeal court will rightly interfere. Where the evidence before the lower court is not properly evaluated and as a result the court came to wrong decision an appellate court will interfere. In Nwokedi v. Orakposim (1992) 4 NWLR (Pt. 233) 120 the Court of Appeal held that where the trial court improperly evaluated the evidence before it, the appeal court would interfere and set aside the judgment. In Gbadamosi Adegoke v. Chief Nathaniel Adibi (1992) 5 NWLR (Pt.242) 410 the Supreme Court emphasized that where the trial court failed to properly evaluate the evidence before it as a result of which is reached a decision which is perverse or wrong, the Court of Appeal has a duty to evaluate the evidence which had been adduced as if it were the trial court. See also Union Bank of Nigeria Ltd. v. Ifeatu Augustine Nwoye (1996) 3 NWLR (Pt.435) 135 where the Supreme Court restated the law that when the findings of fact are unsupported by evidence, such findings are perverse and will be set aside. In the case in this appeal, the findings and conclusion of the trial Judge in the face of uncontradicted and controverted depositions of the appellant are perverse. There is a long line of decided cases on wrongful or improper evaluation of evidence. The learned trial Judge in this case did not seem to have adverted his mind to pertinent depositions in the affidavit of the appellant which raise a triable issue in the case. Among these are paragraphs 6, 7 and 8 of the affidavit in support of the Notice of Intention to defend. If those depositions are correct- they have not been denied or controverted – then there is an issue for trial.
In his ruling, the learned trial Judge after stating that counsel for the defendant (appellant) admitted that the case was clearly one of a banking transaction for which the defendant (appellant) accepted the plaintiff’s (respondent’s) cheque for $1500 for collection per se went on to rule that he did not see any thing to defend in the case nor the line of defence the appellant was towing. With respect to the learned trial Judge, I see the line of defence. Is there any evidence that the value of the cheque sent for collection has been paid or collected? There does not seem to be any such evidence. It seems to me that a triable issue is raised by the appellant’s affidavit in support of the Notice of Intention to defend. The learned trial Judge ought not to have dismissed the Notice of Intention to defend.
The appellant’s 2nd and 3rd issues as well as the respondent’s 3rd issue deal with the judgment which was entered immediately after the ruling that there was not a triable issue raised by the appellant’s affidavit. I am reluctant to go into this in detail as it may have the effect of pre-judging a case which is yet to go to trial. Suffice it to say at this stage that the claim before the court was for money whereas what the respondent delivered to the appellant was a cheque. A cheque is not money until it is presented to a bank and paid. A cheque is a bill of exchange drawn on a banker and payable on demand – See S.73 of the Bills of Exchange Act. Cap 35 Laws of the Federation of Nigeria 1990. J. Milnes Holden in his Law and Practice of Banking defines a cheque as:-
“an unconditional order in writing addressed by one person to another, who must be a banker signed by the person giving it, H requiring the banker to pay on demand a sum certain in money to or to the order of a specified person or to bearer”.
Thus, there has to be evidence whether the value of the cheque has been paid on demand. If the cheque is lost as the appellant alleges in this affidavit the parties may have to proceed under S.69 of the Bill of Exchange Act Cap. 35 Laws of the Federation 1990. All these are matters to be gone into at the trial. It is my respectful view that the judgment entered in this suit in the lower court was rather hasty and did not take into consideration the facts deposed to by the appellant in its affidavit in support of the Notice of Intention to defend the suit.
For all the above, I am of the firm view that this appeal should succeed. The appeal is hereby allowed. The ruling/judgment of the lower court delivered on the 31st day of July 1995 in this suit is hereby set aside. In the exercise of my powers under S. 16 of the Court or Appeal Act, I hereby order that the case be entered in the general list and pleadings shall be ordered. The case is hereby remitted to the lower court to be heard by another Judge or the High Court of Enugu State. The appellant shall have the costs of this appeal which I fix at N1,000.00.
Other Citations: (1997)LCN/0266(CA)
