Julius Berger Nigeria Plc & Anor V Toki Rainbow Community Bank Limited (2019)

LAWGLOBAL HUB Lead Judgment Report

AMINA ADAMU AUGIE, J.S.C. 

The Respondent had financed two Local Purchase Orders issued by the first Appellant to “Pit-a-Pat International Nigeria Limited”, and in the initial Writ of Summons and Statement of Claim it filed on 1/6/1999 at the Rivers State High Court, Respondent as Plaintiff claimed four Reliefs against the following five Defendants it sued:

1. MR. PETER MORKAH

[The Managing Director of the second Defendant]

2. PIT-A-PAT INTERNATIONAL (NIG.) LTD.
3. MR. PETER NWACHUKWU

[The Contract Manager of the first Appellant Company]

4. MR. A. LOSSMAN

[The Commercial Manager of the first Appellant Company]

5. Julius Berger Nigeria Plc. (The first Appellant herein]

When Mr. A. Lossman left the Country. the Respondent applied to have his name struck out, which was granted, and first Appellant became the fourth Defendant. The Respondent later amended its Writ of Summons and Statement of Claim wherein it claimed eight reliefs set out in paragraph 19 of the Amended Statement of Claim:

(1) The sum of N1, 900, 800, 00 due and payable to the

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Plaintiff by the 4th Defendant on 9/14/1997 following the assignment by the 2nd Defendant of the benefit of the contract between the 2nd Defendant and the 4th Defendant to the Plaintiff [the Respondent herein].

(2) Interest at the rate of 21% per annum for two months, that is to say, 26/3/1997 on the sum of N960, 000.00 drawn by the 2nd Defendant from the said loan, and at the rate of 10% per month from 27/5/1997 until Judgment.

(3) Interest on the Judgment debt at the rate of 10% per annum from Judgment until payment.

(4) N2,335, 000.00 due to the Plaintiff by reason of the assignment by 2nd Defendant to the Plaintiff of the benefit of its contract with 4th Defendant as per Local Purchase Order No. 48303 dated 2/5/1997,

(5) Interest on the said sum at the rate of 10% per month from 30/6/1997 until Judgment.

(6) Interest on the Judgment debt at the rate of 10% per annum from the date of Judgment until payment.

(7) In the alternative, against the 1st and 3rd Defendants the said sum of N2, 335, 000.00 with interest thereon as above being damage suffered by Plaintiff as a result of fraudulent misrepresentation by the 1st and

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3rd Defendants to the Plaintiff which was intended to be acted upon by the Plaintiff and was in fact acted upon by the Plaintiff to its detriment.

(8) N5,000,000.00 against the Defendants for compensation for damage suffered by the Plaintiff for legal expenses in pursuing the recovery of the said debts.

Upon being served with the relevant Court processes, the first and second Defendant entered appearance through counsel but did not appear to defend the case. First and second Appellants, who were the third and fourth Defendants, entered appearance.

They filed a Joint Statement of Defence that was amended a number of times, and the relevant Statement of Defence is the 3rd & 4th Defendants Further Amended Statement of Defence No. 2, wherein it was averred as follows in paragraphs 29 & 30 thereof –

29. 3rd and 4th Defendants shall at or before the trial raise a preliminary objection to the Court to dismiss the case on the following grounds.

(i) Against the 3rd and 4th Defendants on the ground that there is no privity of contract between the Plaintiff and the 3rd and 4th Defendants, and

(ii) Against the Defendant on the ground

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that he is an agent of a known and disclosed principal.

(iii) The Statement of Claim/Suit discloses no reasonable or any cause of action.

30. WHEREOF the 3rd and 4th Defendants state that the Plaintiff is not entitled to claim as per paragraph 19 of the Amended Statement of Claim and will at the trial contend that the claim is speculative, frivolous, vexatious, an abuse of the process of the Court, discloses no reasonable cause of action, and should be dismissed with substantial costs.

At the trial, the Respondent called one Witness, a Bank Manager, Waidi Aderemi Kolapo, who testified as PW1, and he tendered a number of Exhibits, including Exhibits D and G. Exhibit D. which is undated, is from second Defendant to the Commercial Manager of first Appellant and for the attention of second Appellant, it reads:

RE: SUPPLY OF GRADE B PLASTIC JUTE BAGS AS PER QUOTATION 0015/97 – REF YOUR ORDER NO B. 0004747 DATED 10/3/97 FOR N1,900, 800,00 (NET VALUE OF ORDER)

We hereby give an irrevocable mandate that payment cheque for the supply of the above should not be released to Pit-A-Pat Int. (Nig.) Ltd., without prior

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knowledge of the Manager – Mr. W A. Kolapo of Toki Rainbow Community Bank Ltd , 68 Nkpogu Road, Trans Amadi Ind. Layout, Port Harcourt. The LPO in respect of the above was financed by the same bank – Toki Rainbow Community Bank Ltd.

Exhibit G, dated 28/5/97, is from second Defendant to the same Commercial Manager for the attention of Mr. A. Lossman, it reads:

RE: HAULAGE OF 2000 TONS OF 5/15MM AGGREGATE FROM ISHIAGU QUARRY TO PORT HARCOURT WITH SIDED TRAILERS

We hereby give an irrevocable mandate that payment cheque for payment of the above should be issued to Toki Rainbow Community Bank Ltd, 68 Nkpogu Road Trans Amadi Industrial Layout, Port Harcourt. Your LPO No. 48303 dated 2/5/1997 in respect of the above was financed by the same bank, Toki Rainbow Community Bank Ltd.

The second Appellant, Okechukwu Peter Nwachukwu, testified for the defence as DW1, and he also tendered a number of Exhibits, including Exhibits N and O. Exhibit N is the first Appellant’s reply to the second Defendant’s undated letter, Exhibit D, and it reads –

RE: SUPPLY OF GRADE PLASTIC JUTE BAGS, OUR LPO NO. 4747 DATED 10.03.1997

Your undated letter on the above-mentioned matter

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refers. We herewith like to inform you that we pay only to the company mentioned in the LPO. We have no contractual obligation to anyone else. In case you are unable to perform, please return the LPO.

Exhibit O, dated 4/6/1997 is its response to Exhibit G, and it reads:

Ref- Your Letter dated 28/5/97 Request for Domiciliation of Account to Toki Rainbow Bank, Our LPO No. 48303 dated 02.05.97

We herewith like to inform you that we are unable to pay to any other person and/or company’s (sic) not mentioned in the LPO. We kindly ask (sic) to inform your Bank accordingly.

The learned trial Judge, Agumagu, J., delivered his Judgment on 2/12/2005. He “dismissed and/or struck out’ the Objection raised, and entered Judgment against the first and second Defendants as per Plaintiff’s claim in paragraph 19(1)-(6)”, and also against –

The 3rd and 4th Defendants [the Appellants herein] as per Plaintiff’s claim against them, as stated in paragraph 19(1)-(7) of Plaintiff’s Amended Statement of Claim of 17/3/2000.

Dissatisfied, the Appellants appealed to the Court of Appeal and one of the Issues [Issue 3] canvassed at the Court of Appeal was:

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Having regard to the evidence before the lower Court whether the Respondent established that there was an assignment of the proceeds of the contract to it and whether the condition for domiciliation was not a mere security for the loans and the instructions of the 2nd Defendant a mere mandate or authority to pay.

It is the Court of Appeal’s answer to the question posed above that led to the Appeal and Cross-Appeal filed in this Court because in a Judgment delivered on 25/6/2009, the Court of Appeal set aside the decision of the trial Court on the first Local Purchase Order – LPO No. 4747 and affirmed its decision on the LPO No. 48303. So, the Court of Appeal allowed the Appeal in part. It concluded that:

1. There was no legal or equitable assignment of benefits of the 1st contract of LPO No. B0004747 by the Company to the Respondent.
2. The High Court was wrong in law to have entered Judgment in favour of the Respondent in respect of both the main and the alternative Claims at the same time.

The decisions of the High Court in respect of the above Issues are hereby set aside. For the avoidance of doubt, it is ordered as follows:

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The award by the High Court of the Claim in paragraph 19(1) of the Respondents’ Amended Statement of Claim, dated 17/3/2000 in favour of the Respondent is hereby set aside.

2. The award by the High Court of the Claim in paragraph 79(7) of the said Statement of Claim in favour of the Respondent is set aside.
3. The award by the High Court of the Claims in paragraph 19(4)- (6) of the Statement of Claim in favour of the Respondent is hereby affirmed.Dissatisfied with that part of the Judgment “affirming the award made by the High Court in respect of the Claims in paragraphs 19(4)-(6) of the Statement of Claim: Appellants appealed to this Court with a Notice of Appeal, which was subsequently amended.The part of the Court of Appeal’s Judgment complained of in the Amended Notice of Appeal is that part of its Judgment, which:

(a) Affirmed the decision of the High Court, Port Harcourt, Rivers State dismissing the objection of the Appellants;

(b) Which also affirmed the award made by the High Court in respect of the Claims in paragraphs 19(4)-(6) of the Amended Statement of Claim: and

(c) Which struck out Issue 4 of the Appellant’s

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Brief of Argument as being incompetent.

The Amended Notice of Appeal has seven Grounds of Appeal and Appellants distilled five Issues for Determination in their Brief –

1. Having regard to the pleadings and evidence before the Court, whether the Court of Appeal was right to hold that there was an assignment of the proceeds of the contract in respect of LPO No. 48303.
2. Whether having regard to the pleadings and evidence the Court of Appeal was right to hold that the objection of the Appellants based on privity of contract was untenable.
3. Whether the Court of Appeal was right to refuse to strike out the 2nd Appellant, who was an employee of the 1st Appellant as a Party in the case.
4. Whether the Court of Appeal was right to hold that the action disclosed a reasonable cause of action.
5. Having regard to the fact that the Respondent’s claim for interest against the Appellants was calculated from the date of the validity/expiration of the loan agreement between the Respondent and the 2nd Defendant and at the same rate of interest specified therein, all of which were granted by the trial Court against the Appellants, whether the trial

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Court did not thereby pass the burden and costs of the loan to the Appellants and accordingly, whether the Court of Appeal was right to hold that the High Court did not find the Appellants liable to pay for the costs of the loan.

The Respondent, who cross-appealed against the decision of the Court of Appeal on the LPO No. 4747, filed a Notice of Preliminary Objection against Issue 5 and Ground 6 of the Grounds of Appeal.

The Respondent contends that (i) “the arguments in support of the said Issue 5 formulated by the Appellants did not arise from any argument at the trial Court or Judgment of the trial Court or canvassed at the trial Court by them and no leave of Court was obtained to argue same even at the Court of Appeal or this Court”; (ii) “the Particulars of Ground 6 – – do not flow from the Grounds”.

The Objection raised by the Respondent to the said Issue 5 is well taken, however, it is clear from the questions raised therein that this Court has no jurisdiction to look into the first question –

Having regard to the fact that the Respondent’s claim for interest — was calculated from the date of the

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validity/expiration of the loan agreement between the Respondent and 2nd Defendant and at the same rate of interest specified therein, all of which were granted by the trial Court against the Appellants, whether the trial Court did not thereby pass the burden and costs of the loan to the Appellants.

Clearly, this question subsumed in issue 5 is completely off base, because it is well settled that there is no nexus between this Court and the trial Court, and any appeal that comes to this Court must first of all pass through the Court of Appeal. This Court would only entertain an appeal against the decision of the Court of Appeal and not directly against that of the High Court – Akibu V. Oduntan (2000) 13 NWLR (Pt 685)446 SC. In effect, the Objection raised to Issue 5 can only be considered with regard to the other question:

“whether the Court of Appeal was to hold that the High Court did not find the Appellants liable to pay for the costs loan.”

But then again, the Objection is directed at the arguments in support of the said Issue 5 in the Appellants’ Brief. The Appellants submitted in their Reply Brief that the issue boils down to whether “the Court unwittingly passed

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the costs of servicing the loan unto the Appellants when the Appellants did not stand as Guarantors or Sureties to the said loan”. And the way I see it, if the arguments in support of the said Issue 5 is the problem, then it is premature at this stage to look into any arguments on the “costs of the loan”, when there are more critical issues that must be addressed first. Issue 5 must stay on the queue behind others, and await its turn.

Besides, despite its Preliminary Objection, the Respondent formulated four Issues for Determination in its Brief, as follows –

i. Whether the Court of Appeal was not right to have held that there was an assignment of the proceeds of the contract in respect of LPO 48303.

ii Whether the Court of Appeal was not right to have held that the objection of the Appellants based an privity of contract was untenable.

iii. Whether the Court of Appeal was not right to have refused the striking out of the 2nd Appellant’s name from the suit, who was an employee of the 1st Appellant, as a Party in the case.

iv. Whether the Court of Appeal was not right to have held that Respondent’s action disclosed a reasonable cause of action.

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From all indications, the Parties’ Issue 1 raise a critical question, whether there was an assignment of the proceeds of the contract. The said Issue 1 is on my Priority List because if the answer is Yes, Respondent wins the day, but if the answer is No, then that would be the end of the matter: the Appeal succeeds and Appellants win.

The trial Court found that there was an assignment and, in its Judgment, the Court of Appeal reproduced Exhibit G and held that:

The message is that an irrevocable mandate was given to the 1st Appellant to pay the benefits due to the Company from the contract to the Respondent. This letter, as can clearly be seen on its face, was written on 28/5/97 and copied to the Respondent – – The plain purport of the letter was to transfer to the Respondent, the money due to the Company from the contract in question. In other words, the apparent intention and directive of the letter was give or transfer the benefits, interest or title due to the Company from the contract with the 1st Appellant to the Respondent. l am of the view that the instructions in the letter undoubtedly have the following effect: –

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(a) That the Company was the owner or entitled to the benefits of the contract In question;

(b) That the Company had unconditionally, entirely and absolutely (by irrevocable mandate) given or transferred the benefits and title thereto to the Respondent and

(c) That the 1st Appellant was notified in, writing of the transfer of the benefit to the Respondent.

In the circumstances, the letter appears to have met all the three (3) essential requirements of a valid assignment – In this regard, I agree – – that Exhibit G constitutes, in the circumstances of the Appeal, a valid assignment, which confers the Respondent with title to the benefits of the contract in question and the right to claim and sue the 1st Appellant to recover same. It may be recalled that no particular Form is required for an assignment as long as the intention that the contractual benefits shall become the property of the Assignee is clear from the notice of assignment. In Cheshire, Fifoot and Furmston’s Law of Contract, 14th Ed., at page 563, it was stated that:

“A legal chose in action is a right that can be enforced by an action at law, as for example, a debt due under a contract’:

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The only condition for the enforcement of the right by an Assignee is for him to join the Assignor in the claim against the Debtor. The Respondent in this Appeal had satisfied that condition by joining the Company as a Defendant along with the Appellant at the High Court – – – The aggregate plenitude of the pleadings and evidence is that the 1st Appellant did not pay the benefits of the 2nd contract to the Respondent as directed in Exhibit G.

The Appellants’ contention is that the said contract between the second Defendant and Respondent was domiciliation of payment and not assignment. They submitted that in banking transactions domiciliation is not the same thing as an assignment: that Banks do not use it to create an assignment but as a way of reducing its risks and to be assured that its customer is not paid directly, citing Peter Tiwell (Nig.) Ltd v Inland Bank (1997) 3 NWLR (Pt. 494) 409: that the question of assignment is not borne out of the contract agreement between the Respondent and second Defendant: and that Parties are bound by the terms of their contract and are not expected to read into it what is not in

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the said contract or add to it, citing Kaydee Ventures V. Mi.. F.C.T (2010) 7 NWLR (Pt. 1092) 177.

They also argued that it was during the pendency of the case at the trial Court that the Respondent introduced the concept of assignment into the matter in its Amended Statement of Claim: that the interpretation placed on Exhibit G stretched the meaning of assignment too far, as Exhibit G simply stated that the payment should be issued in line with the said domiciliation arrangement.

Furthermore, that this is evident from averments in the first Statement of Claim, which the Court can look at, as the fact of its amendment does not mean it has been expunged or struck out; so an amended process does not became otiose, it still forms part of the record, citing Nwanji V. Coastal Services (Nig.) Ltd. (1999) 11 NWLR (Pt. 620) 641, Balonwu V. Obi (2007) 5 NWLR (Pt. 1028) 488.

As expected, the Respondent argued to the contrary that the Court of Appeal is right that there was a valid legal or equitable assignment of the benefits of the said contract in LPO No. 48303.

Citing Tokington v. Magee [1902] 2 K.B. 427, William Brandt’s Sons Q Co. v. Dunlop Rubber Co. Ltd. (1905) A.

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C 462, Cheshire, Fifoot and Furmston’s Law of Contract 14th Ed., Equity (Second Edition) G.W. Keeton and L.A. Sheridan, and Nigerian Law of Contract by Professor I. E. Sagay, it submitted that the conditions for a valid assignment are present herein as the assignment is absolute, in writing and Appellants had notice of the assignment. It further submitted as follows at page 10 of its Brief of Argument:

The learned Appellants’ counsel – – tried strenuously to dispute the obvious fact of an assignment of the financial proceeds of the LPO as manifest in contents of Exhibit G and referred to it as “domicil/at/on” in a bid to obfuscate matters and extricate [them] from liability riding on wings of undue technicalities and fail to understand that Exhibit G was not prepared by a legal practitioner but a Banker and the Court cannot deny giving effect of the intention of the maker of Exhibit G merely because he did not use the legal word of ‘Assignment’.

Furthermore, that the main object of interpretation of documents is to discover the intention of the Parties, which is deducible from the language used, citing Unilife Dev. Co.

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Ltd. V. Adeshigbin (2001) FWLR (Pt. 42)114, Ogbunyiya V. Okudo (2001) FWLR (Pt. 72)1987 that Exhibit G, which represents the true intention of the Parties, is the document on which the entire transaction between second Defendant and the Respondent was predicated; and that no other document expresses the contrary of what is stated in Exhibit G.

It further argued that “the Parties to the transactions are all laymen or represented by laymen and not legal practitioners’: that Appellants cannot invite this Court to read different meaning into the contents of Exhibit G as to construe from it the intention it never conveyed by reference to other Exhibits that were used in the course of trial in that Exhibit G was an irrevocable mandate, which first Appellant understood very well but refused to comply; that the Appellants’ counsel has not shown that he is authorized by law to import the language used in other documents to seek to alter the true meaning, intention and effect of another document; and that the Language used in Exhibit G is clear and the intention of Parties is deducible from it, citing Unilife V. Adeshigbin (supra).

It also submitted that Appellants’ case at both lower

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Courts was that consent of the first Appellant was necessary for there to be a valid assignment but in this Court they have somersaulted to argue there was none; that “an appellate Court will not encourage or allow a Party make a case at the trial Court and then make a somersault on Appeal as that will be tantamount to blowing hot and cold with the same breath, conduct, which, equity with its hands of fairness and fair play will not allow”, citing FBN Plc. V. ACB Ltd. (2006) 1 NWLR (Pt. 962) 438, Anagwu V. INEC (2012) All FWLR (Pt, 652)1689. It urged the Court to discountenance this line of argument, having not been raised at the two lower Courts, and “the issue of domiciliation is only invented to mislead this Court’.

Apparently, Parties are pointing fingers at each other as to, who wants to “obfuscate matters” in this Appeal.. The Appellants say the concept of assignment was an afterthought introduced by the Respondent during the pendency of this case at the trial Court.

The Respondent, on the other hand, says the Appellants only invented the issue of domiciliation to mislead this Court; and so, the question now is, which one is right, and

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which one is wrong Naturally, the first step to take would be to understand what those concepts – “domiciliation arrangement’ and “assignment” mean.

There is a dearth of case law on domiciliation arrangements, but Oguntade, .ACA (as he then was), in Peter Tiwell (Nig.) Ltd. V. Inland Bank (supra), while expounding on the difference between ‘domiciliation arrangement’ and “contract of guarantee” stated:

A bank, who insists and accepts a domiciliation arrangement, only thereby reduces its risk and has an assurance that the third party, who has agreed to domicile the payment due to a customer with the customer’s bank will not pay the money directly to the customer. A domiciliation arrangement does not specify when the payment will be made and the arrangement does not release the debtor/customer from its primary obligation to pay back the loan to the bank at the agreed time. It does not make the person agreeing to domicile the payment with the borrowers bank a party to the loan agreement such that the bank can sue him on the agreement, as he would under a contract of guarantee. It was, therefore, not a defence to the Plaintiff’s suit for the Defendants

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to depose as they did that, they were owed an amount by the Bauchi State Government, since Plaintiff could not sue the Bauchi State Government directly for payment due under the contract, which the 1st Defendant had with the Bauchi State Government.

So, a domiciliation payment is an arrangement between the bank and a borrower to domicile a payment due to the borrower from a third-party, with the bank. This arrangement does not release the borrower from his primary obligation to pay back the loan to the bank as at when due: and it does not make the third-party, a party to the loan agreement, such that the bank can sue the third-party on the loan agreement, when things do not work out as planned.

“Assignment’, a legal term used in the con of the law of contract and of property, is the right to transfer “choses in action”, and a chose in action is essentially the right to sue: it is defined as “all personal rights of property, which can only be claimed or enforced by action, and not by taking physical possession” – see Torkington v Magee[1902] 2 K.B. 431 Thus, it is a proprietary right in property, which has no tangible or physical existence, and is,

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therefore, not capable of being possessed physically. Examples of choses in action include a contractual right, such as a debt, shares in a company, insurance policies, negotiable instruments, bills of lading, patents rights, copyrights, trademarks, rights of action arising from a contract e.g. right to damages for its breach.

There are three parties in an assignment of a chose in action, the Assignor, the party liable to the Assignor, and the Assignee. The Assignor, is a person, company or entity, who transfers rights they hold to the Assignee. The Assignee is a person, company or entity, to which a transfer of property, rights or interest is made.

Choses in action were not originally assignable at Common Law to enable the Assignee sue in his own name because debts or chases in action were regarded as personal – see Lampets Case (1613) 10 Co-rep 46b, 48. Any attempted assignment was viewed as an intrusion by a third party into a dispute between two parties.

However, choses in action, which may be legal or equitable, were assignable in equity. If the choses in action were legal, the Assignee could only sue in the name of the Assignor; if

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equitable, he could sue in his name. By Section 25 of the Judicature Act, 1873, legal choses in action were made assignable by law; and with the Law of Property Act of 1925, the usual way of assigning the benefit of a debt or other legal chose in action is as set out in Section 136.

Under Section 136 of the said Law of Property Act, the basic requirements for an effective legal assignment are as follows-

– Only the benefit of an agreement may be assigned:

– The assignment must be absolute;

– The rights to be assigned must be wholly ascertainable and must not relate to part only of a debt:

– The Assignment must be in writing and signed under hand by the Assignor debtor (no particular form of wording is necessary); and

– Notice of the Assignment must be received by the other party or parties for the assignment to take effect.

An assignment that fails to comply with these formalities may still be effective as an equitable assignment. Thus, the effect of a legal or an equitable assignment is to put the Assignee in the same position as the Assignor, in respect of the benefits (not burdens) arising from the original transaction with the debtor.

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The Appellants are right that there is a difference between a domiciliation arrangement and an assignment, and it boils down to the right to sue. A domiciliation arrangement is between the bank and the borrower. If the borrower fails to pay back the loan, the bank has no right to sue or take action against the third-party. With a legal assignment, the story is completely different as the Bank would have the right to sue the third-party, in its own name.

In this case, the Court of Appeal noted that the only condition for the enforcement of a right by an Assignee, is for him to join the Assignor in the claim against the debtor, and it concluded that –

The Respondent – had satisfied this condition by joining the Company as a Defendant aIong with the Appellants at the trial Court.

The Appellants’ case is that there was ‘no tri-partite agreement’ between the Respondent, second Defendant, and itself, therefore Respondent cannot elevate a domiciliary arrangement between it (the bank] and second Defendant to the status of an assignment.

I must say that I fully agree with the Appellants. To start

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with, they are right that the said Exhibit G, cannot be read in isolation, but must be read together with other Exhibits, which formed the agreement between the Respondent and the second Defendant.

It is settled that in the consideration of an agreement where there are series of correspondences between the Parties, it is the duty of the Court to consider all the correspondences in order to decipher what they are saying with regards to the arrangement – see Udeagu V. Benue Cement Co. Plc. (2006) 2 NWLR (Pt. 965) 600.

As the Appellants in this case submitted, rightly so, Exhibit G ‘did not just fall from the sky. Something led to it.’ It is necessary, therefore, to go back to the beginning, to ascertain what led to it. The starting point is second Defendant’s application for a loan of N1, 560, 000.00 from the Respondent to finance the LPO No. 48303, which is Exhibit E, dated 28/5/97; the second paragraph reads –

We are applying for finance assistance of N1,560,000.00 to enable us urgently execute the job. The payment will be made endorsed domiciled to your account by Julius Berger (Nig) Plc. whom we know to be a reputable name in the construction industry.

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In Exhibit F, a letter dated 30/5/1997, the Respondent conveyed its approval of the loan to second Defendant, and it reads as follows:

With reference to your letter dated 28/05/27 – – we wish to convey Management approval to place at your disposal the facility subject to the following terms and conditions.-

FACILITY: LOAN

AMOUNT: N1,560, 000.00

PURPOSE: Working Capital Financing

TENURE: Two Months

EFFECTIVE DATE: 30/05/97

VALIDITY: 30/07/97

REPAYMENT. On Demand

INTEREST: 21% Per Annum

SECURITY: Domiciliation from contract proceeds from JULIUS BERGER (NIG.) PLC.

There it is in Black and White: The Security for the Loan applied for and approved by the Respondent to finance the LPO No. 48303 is:

Domiciliation from contract proceeds from Julius Berger (Nig.) Plc. It was in Exhibit G, dated 28/5/97, that

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the second Defendant gave the first Appellant “an irrevocable mandate that payment cheque” in respect of LPO No. 48303, should be issued to the Respondent.

After a meeting held between PW1 and second Appellant on 7/10/1997 regarding the contract payment, the Respondent wrote Exhibit J, dated 5/11/1997 to first Appellant, and it reads as follows:

We write to inform you that the above LPO was financed by our Bank because of your promise to domicile the payment to us; copy of the LPO and Domiciliation Letter stamped and signed on behalf of Julius Berger by your Commercial Manager are attached. Your Contractor – Pit-a-Pat International Nig. Ltd., obtained loan from us to execute the above contract since May 1997. The loan was due for payment since 30/7/1997. The customer has approached us that the delay in payment of the loan was because Julius Berger Nig. Ltd has not paid him. As a result of delay in this payment, our customer – – has written the second time for the extension of repayment date of the loan – – We appeal to you to pay this customer in order to prevent further escalating interest being charged on the existing loan.

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Exhibit K, is a Demand Letter to first Appellant, dated 14/4/1999, wherein the Respondent’s Solicitors, clearly stated as follows –

It is our brief that in an application for loan brought by Mr. Peter Morkah, the Managing Director of [second Defendant] vide a letter dated 28/5/1997, which was engendered by the issuance of your LPO. No. 48303, dated 2/5/1997, the Bank promptly approved the loan as witnessed by its letter dated 30/5/1997 and this is predicated upon the understanding that the contract proceeds from yourselves be domiciled to the Bank – – – The Bank’s readiness to finance the LPO was engendered by the hitch-free experience it had in respect of the financing of a previous LPO 80004747 – – wherein the domiciliation procedure as stated above was adopted leading to the payment of the domiciled sum to the Bank. The bank is, therefore, utterly dismayed that without rhyme or reason through the active collaboration of your contract Manager Mr. Peter Nwachukwu and in spite of the irrevocable domiciliation made in the Bank’s favour, did purportedly pay the domiciled sum to Mr. Peter Morkah, who also accepted same in flagrant breach of

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the clear terms of his letter of domiciliation. Mr. Peter Morkah’s dishonest intention is made manifest by his failure, refusal and/or neglect to surrender the Bank’s due to it and your outfit has acted as if it is not under any shred of obligation to protect the Bank’s interest in view of the irrevocable letter of domiciliation.

While being cross-examined at the trial, PW1 identified Exhibit L. a copy of a Counter-Affidavit he deposed to, wherein he averred

6. That – – the Bank was more favourably disposed towards the grant of the loan principally upon condition of domiciliation of contract proceeds from 5th Defendant to it, a condition that was wholly accepted by 1st set of Defendants with approval from the [second set].
7. That the Plaintiff- – also sought to confirm and actually confirmed from the 3rd, 4th and 5th Defendants that the domiciliation understanding is within their knowledge and with their approval.
8. That the 3rd, 4th and 5th Defendants in giving further assurance requested for the Plaintiffs copy of the letter of domiciliation wherein 1st set of Defendants gave an ‘irrevocable mandate’ that the contract proceeds be

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paid to the Bank stamped received, signed and dated, Copy of the letter of domiciliation is herein attached as Exhibit C.

9. That the3rd and 4th Defendants made various verbal representations to the Plaintiff Bank’s Chairperson and myself, encouraging and enjoining the grant of the loan facility as domiciliation understanding received their favourable approval and the Plaintiff granted the loan.
10. That the Defendants being fully aware of this domiciliation arrangement went and purportedly paid the 1st set of Defendants by issuing payment cheque to them directly and thereby making the Plaintiff lost its only security for the sum entirely disbursed to [them].
11. That outside the domiciliation arrangement and the 3rd, 4th and 5th Defendants’ positive assurances and representations, the Plaintiff could not have been disposed to grant the loan facility as the Bank has a strong policy against unsecured loans. Photocopy of the Bank’s further correspondence to the 3rd, 4th and 5th Defendants reminding them of the domiciliation understanding is attached as Exhibit E.
12. The Bank prior to the transaction involving the subject LPO No. 48303 – – previously financed LPO

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No, 4747 – – wherein the domiciliation procedure adopted in respect of the subject LPO was followed leading to the issuance of payment cheques in the Banks ‘s favour.

13. The Defendants have no lawful justification whatsoever to issue the payment cheque directly to 1st set of Defendants in defiance of their irrevocable mandate domiciling the contracts proceed to Plaintiff.
14. That the 1st set of Defendants upon being paid the contract proceeds, which they purportedly accepted in defiance of the irrevocable mandate domiciling the contract proceeds to the Bank, refused, neglected and/or failed to pay the Bank’s due assessed at N5, 303, 000.00 (principal and accrued interest) as at May 1999.

Obviously, the Exhibits speak for themselves, and what they say clearly in Exhibit after Exhibit is that the directive in Exhibit G is in respect of a domiciliation arrangement between the Respondent and the second Defendant, Pit-a-Pat International Nig. Ltd., only, and to confirm that the Appellants understood that to be the case, Exhibit G, first Appellant’s letter to second Defendant, is headed:

Ref: Your letter dated 28/5/97 request for Domiciliation

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of Account to Toki-Rainbow Bank. Our LPO No. 48303 dated 02.05.57.

The Appellants also urged this Court to look at averments in the first Statement of Claim, which strengthens its case that what the Parties initially conceived, was domiciliation and not assignment.

Again, the Appellants are spot-on that this Court can look at the Respondent’s original pleadings because it is settled law that a statement of claim or defence, which has been duly amended, does not cease to exist: it still forms part of the proceedings and a Court cannot close its eyes to it -see Salami V. Oke (1987) 4 NWLR (Pt. 63)150, Agbaisi V. Ebikorefe (1997) 4 NWLR (Pt. 502) 630 SC, A.S.E.S.A. V. Ekwenem (2009)13 NWLR (Pt. 1158) 370 at 436 SC.

But this does not mean that the original pleadings can be the basis of a Party’s case nor may a Court rely on it for its Judgment. It is just that the original pleadings that was amended “no longer determines or defines the live issues to be tried before the Court; not that it no longer exists” — see Agbahomovo V. Eduyegbe (1999)3 NWLR (Pt. 594)170 SC. Thus, such original pleadings cannot be deemed to have been expunged or struck out. It certainly exists.

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In this case, the Respondent filed the Statement of Claim that was later amended on 1/6/1999, and it averred as follows therein:

5. The Plaintiff’s principal consideration for the approval of the loan facility is predicated mostly upon 1st set of Defendants’ acceptance of the domiciliation of the contract proceeds from 2nd set of Defendants to it and upon being seized with the 1st set of Defendants’ letter of domiciliation dated 28/5/97 directed to 2nd set of Defendants giving “irrevocable mandate” that payment cheque due to them for the execution of 5th Defendant’s Order be issued to Plaintiff Bank, it not only approved the loan, it also promptly disbursed the loan facility by issuing cheques to the tune of N1,560, 000.00 to 1st set of Defendants. The Plaintiff pleads and it shall place reliance on the said letter of domiciliation dated 28/5/97 copied on it by the 1st set of Defendants.
6. The Plaintiff avers that prior to approval of the loan facility (and the) subsequent disbursement, it also took appropriate steps to confirm that this domiciliation understanding between 1st set of Defendants and it

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received the favourable approval of the set of Defendants and their approval was signalized by their stamping and signing of the Plaintiff’s copy of the letter of domiciliation.

8. Sequel to the 2nd set of Defendant’s failures to honour the obligation of payment to 1st set of Defendants within the 30 days period stated in its LPO and in pursuance of the letter applying for extension of time pleaded in paragraph 7 hereinabove, Plaintiff through its Manager, Mr. W A. Kolapo, variously visited the office of 2nd set of Defendants enjoining payment to 1st set of Defendants through the modality of the domiciliation understanding entered with the 1st set of Defendants.
9. The Plaintiff avers herein that:

I) The 2nd Set of Defendants have no justification whatsoever to issue the payment cheque in favour of the 1st set of Defendants in flagrant breach of the clear terms of the irrevocable domiciliation made in its favour by the 1st set of Defendants.

II) The 4th Defendant purportedly issued the payment cheque in favour of 1st set of Defendants with active collaboration of 3rd Defendant and with the full co-operation of the rest Defendants in full

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knowledge of the terms of the letter of domiciliation – –

iv) It has been cheated by the Defendants and 1st set of Defendants acted in absolute bad faith to have purportedly accepted payment from the 2nd set of Defendants after domiciling same to the Plaintiff

12. The Plaintiff also avers – – that prior to the transaction involving the LPO No. 48303 dated 2/5/97, the Plaintiff had previously financed LPO No. B0004747 dated 10/3/97 to 1st set of Defendants, wherein the domiciliation procedure adopted in respect of the subject LPO was adopted leading to issuance of payment cheque in Plaintiff’s favour.
13. The 2nd set of Defendants have conducted themselves with utmost indifference and they have acted as if they never owed the Plaintiff a duty of care on the point of the irrevocable letter of domiciliation issued in the Plaintiff’s favour.

The Respondent made copious reference to “domiciliation” and not assignment’ in the original Statement of Claim, filed in 1999. However, in the Amended Statement of Claim dated 17/3/2000, the Respondent dropped “domiciliation” and picked “assignment’. It averred as follows in paragraph 13 of its Amended Pleadings:

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The 1st Defendant deposited a cheque for N1,165, 100.00 and also undertook that the 2nd Defendant will assign the benefit of the said contract, which was for a total sum of N2,335, 000.00 to the Plaintiff.

And it sought the following reliefs in the said Amended Pleadings:

(1) The sum of N1, 900, 800 due and payable to the Plaintiff by the 4th Defendant on 9/4/1997 following the assignment by the 2nd Defendant of the benefit of the contract between the 2nd Defendant and 4th Defendant to the Plaintiff.

(4) N2, 335, 000 due to the Plaintiff by reason of the assignment by the 2nd Defendant to the Plaintiff of the benefit of its contract with the 4th Defendant as per LPO. No. 48303.

What can I say As I see it, if the Respondent had to climb a ladder from the day it requested for the loan until it got to the trial Court, every rung it steps on would carry a sign that says “domiciliation”. Yet, after it got to the Court, the Respondent jumped off the ladder because, in its view, it was “assignment’ that got him to the Court. Obviously, without the ladder to stand on, it will fall to the ground.

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In urging this Court to dismiss the Appeal, the Respondent argued that Exhibit G was not prepared by a lawyer but a banker, and that the Parties were ‘all laymen or represented by laymen’. But this line of argument is incongruous in a Brief of Argument – what has the fact that the said Exhibit G was prepared by a banker, got to do with anything It is settled that Parties to an agreement “retain the commercial freedom to determine their own terms” – see Nika Fishing Ltd. V. Lavina Corp, (2008) 16 NWLR (Pt. 1114) 509, wherein this Court per Tobi, JSC, eloquently explained as follows:

In (construing) documents, the question is not what the Parties to the documents may have intended to do by entering into that document, but what is the meaning of the word used in the document. While a contract must be strictly construed in accordance with well-known rules of construction, such strict construction cannot be a ground- for departing from terms – – agreed by both Parties to the contract. It is the law that Parties to an agreement retain the commercial freedom to determine their own terms. No other person. Not even the Court can determine the terms of contract between

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the Parties thereto. The duty of the Court is to strictly interpret the terms of the agreement on its clear wordings. It is not the function of a Court of law either to make agreements for Parties or change their agreements as made.

So, where there is a contract regulating an arrangement between the Parties, the main duty of the Court is to interpret that contract and give effect to the wishes of the Parties, as expressed therein. Where more than one document is involved, no single document should be considered in isolation or be the sole determinant, therefore, any interpretation done must take in all the documents. In this case, the Respondent focused on Exhibit G, but considered along with the other Exhibits, Exhibit G is nothing but a footnote.

The truth of the matter is that the Court of Appeal narrowed its vision to Exhibit G only, and thereby failed to see the big picture, which is that the Parties never intended to create an assignment. What the second Defendant and Respondent clearly agreed upon is domiciliation of the payment to be made by the first Appellant, and not assignment of the benefit of the proceeds of the contract. This Issue is,

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therefore, resolved in favour of the Appellants.

Having so resolved, the remaining Issues, including Issue 5, waiting on the queue must fall like dominoes, one after the other, because the answer NO to the question posed in Issue 1, says it all.

As to the Cross-Appeal, Court of Appeal held that Exhibit D, wherein second Defendant gave an irrevocable mandate that the payment cheque in respect of the said LPO should not be released to it without prior knowledge of the Manager of the Respondent:

Did not intend nor attempted to transfer the benefits of the contract from the Company to Respondent in such a manner as to effectively assign the title or interest in the contract to enable Respondent claim or sue and maintain an action against 1st Appellant for the recovery of the benefits – – The instruction in the letter did not contain or convey an absolute transfer of the benefits of the contract from the Company to Respondent. The letter has thus fallen short of meeting the 1st essential element of a valid assignment, which is that the assignment must be absolute and not by way of a charge only. For that reason, the letter did not amount to a valid assignment of the benefits of

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the contract to Respondent capable of conveying any right to title nor claim thereto against or from 1st Appellant – – The simple intention of the letter was that the payment cheque should not be given or issued – – without the knowledge of the Respondent’s Manager. So, the issue of the transfer of the interest, benefits or title to the contract from the Company to the Respondent was not even contemplated and did not arise from the contents of the letter.

The Issue in the Cross-Appeal is whether the Court of Appeal was right to hold that there was no assignment. It goes without saying that the Court of Appeal’s decision on this LPO cannot be faulted.

The second Defendant did not even mention “domiciliation” in Exhibit D, not to talk of “assignment” of benefits of the contract. The second Defendant merely instructed the first Appellant not to release the cheque, “without prior knowledge of the Manager of the Respondent; and as the Court of Appeal very aptly observed:

The letter has expressly stated what the mandate is and no other thing or word outside it ought to be imported in ascertaining what the intention of the

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company was. The indisputable intention and instruction or mandate was that the cheque should not be paid to it by the 1st Appellant without the prior knowledge of the Respondent’s Manager. It cannot seriously be argued that the letter conveyed an irrevocable mandate, instruction or order to the 1st Appellant to pay the payment cheque to either the Respondent or its Manager.

There is nothing I can say or add; it hit the nail squarely on the head and there is no question that Court of Appeal is totally in the right. The said instructions in Exhibit D did not convey any transfer of the benefits of the contract from second Defendant to Respondent.

In the final analysis, the main Appeal succeeds; it is allowed, and I set aside the Court of Appeal’s decision on LPO No. 48303.

However, the Cross-Appeal lacks merit; it is dismissed and I hereby affirm the Court of Appeal’s decision on the LPO No.4747. The Parties are to bear their own costs.

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SC.332/2009