Pan Bisbilder (Nigeria) Limited V First Bank Of Nigeria Limited (2000)

LAWGLOBAL HUB Lead Judgment Report

ACHIKE, J.S.C.

The appellant, as plaintiff, sued the respondent, as defendant, for breach of contract claiming a total of N429.869.00 comprising special and general damages; the said breach of contract had arisen from defendant’s failure to honour its loan agreement of N116,500.00 entered into with the plaintiff. The said loan of N116,500.00 was subsumed under the Agricultural Guarantee Credit Scheme Fund Act 1977 whereby the defendant was to grant the said loan to the plaintiff and which was to be guaranteed by the Central Bank of Nigeria. The loan was to be advanced in two instalments of N60,000.00 and N56,500.00. The first instalment had been fully disbursed while the second was only partially disbursed. The defendant withheld N30,000.00 of the N56,000.00 to off-set the previous overdraft granted to the plaintiff. Despite the plaintiffs denial of the arrangement between the parties whereby the defendant was to off-set the previous overdraft of N30,000.00 from the second instalment of the loan, the learned trial Judge, Oni-Okpaku, J. rejected the defendants’ denial and found that the parties agreed to divert part of the loan agreement to settle the plaintiff’s previous outstanding overdraft.

After due trial, the trial court found and upheld the breach of contract and awarded to the plaintiff a total sum of N58,429.00 special damages with N600.00 costs.

The defendant filed an appeal against the said judgment while the plaintiff cross-appealed at the Court of Appeal, holden at Benin. In its unanimous judgment, the lower court found that by the illegality of contravening the Agricultural Guarantee Credit Scheme Fund Act 1977 of which both parties were wrongdoers, the plaintiff’s claim must fail. According to the lower court by the provisions of section 13(1) of the aforesaid Act, the loan agreement was vitiated. In the leading Judgment rendered by Salami, J.C.A. to which Uche Omo and Ejiwunmi, JJ.C.A. (as they were then) concurred, his Lordships stressed, inter alia, as follows:

”The implication of the voidance is that neither party can seek the benefit of the guarantee provided by Central Bank of Nigeria under Act 20 of 1977 because the illegality of either party estoppel it from enforcing the guarantee agreement… It is the guarantee agreement which is void and unenforceable because of the deceit of the two principal debtor and creditor which has resulted in an illegal contract”.

Accordingly, the lower court allowed the appeal and set aside the decision of the trial court including the order as to costs without giving any consideration whatsoever to the merits or demerits of the issue of quantum of damages. Finally, the lower court also dismissed the cross-appeal, with total costs of N500.00.

It is against this decision that the appellant has filed an appeal to this Court predicated on seven grounds of appeal, praying the court to restore the judgment of the trial court.

Learned counsel for the appellant, Dr. S.S.G. Enemeri formulated the following five issues for determination, namely:

“(1) Whether the Court of Appeal was right in giving effect to the bilateral agreement to divert funds under the loan for a purpose outside its ostensible object which by the finding of the learned trial Judge which the Court of Appeal did not disturb was illegal under statute’

(2) Whether the Court of Appeal was right as to the effect of the resultant illegality or in relation to the agreement of loan’

(3) Whether the appellant was precluded from seeking to enforce the agreement of loan in its original tenor by reason of the collateral illegality or of his being privy to it

(4) Whether the Court of Appeal was right to have upset the alternative ground of liability for which the learned trial Judge also found when there was no appeal or complaint against it

(5) Whether the Court of Appeal was right to have dismissed the appellant’s Cross-Appeal in the Court below on all the heads of complaint as a matter of course’”

Y. Itua, Esq. learned counsel for the respondents also postulated live issues for determination: