Union Bank of Nigeria Limited V. Madam Hawawu Salami (1998)
LawGlobal-Hub Lead Judgment Report
MUHAMMAD, J.C.A,
The appellant as plaintiff at the High Court of Justice, Ilorin Kwara State, is a Banking Institution duly incorporated under the Laws of the Federation. The respondent as defendant was a customer to the bank. Sometimes in 1981, the respondent applied for a short term loan and overdraft in the sum of N9,000.00 from the Ilorin Branch of the appellant. The loan was approved and granted to the respondent. The loan was to be repaid within a short term. There was failure from the respondent to effect repayment within the period agreed despite repeated demands by the appellants.
The appellant took a specially indorsed writ wherein it makes the following claims:-
“The plaintiffs claim is for the sum of N33,085.33k (Thirty three thousand eighty-five naira and thirty three kobo) being the amount outstanding as debit in the defendant’s account with the plaintiff as at close of business on 11/2/91 arising from loan and overdraft facilities extended to the defendant in 1981 at the Ilorin Branch office and which said amount the defendant has acknowledged as at May, 1991 but refused to complete full payment despite repeated demands.
The plaintiff’s claims (sic) interest on the said sum of 25% up till December, 1990 and thereafter 21% from January, 1991 till May, 1991 and again 10% from the date of filing this action till the final liquidation.”
The writ was filed under the undefended list procedure. It was however later transferred to the ‘General Cause List’. After taking evidence from both parties, the learned trial Judge dismissed the appellant’s claim except in respect of the sum of N7, 750.00 which he found to be the balance outstanding.
The appellant was aggrieved with the decision and it appealed to this court by filing a notice of appeal containing three grounds of appeal.
In compliance with the requirement of Order 6 rule 2(2) of the Court of Appeal Rules, 1984 (as amended) the parties filed and exchanged briefs of argument. The appellant formulated the following issue for determination:
“whether the Honourable trial Judge was right when he refused to award interest on the over-draft received by the respondent.”
The respondent adopted the issue formulated by the appellant.
On the hearing date, learned counsel for the appellant adopted and relied on his brief of argument. He had nothing new to add. He urged the court to allow the appeal. Learned counsel for the respondent adopted his brief and urged the court to dismiss the appeal.
It is the argument of the learned counsel for the appellant that it was certain that the respondent had borrowed money from the appellant and that she overdrew her account to the tune of N5,206.86k as at the 1st day of September, 1982. He submitted that banks in Nigeria have right to charge interest on loans or overdrafts they advanced to their customers without the consent of the customers. In this regard, learned counsel submitted that the decision of the learned trial Judge was faulty. On interest from date of writ to the date of judgment, learned counsel submitted that a court giving judgment for any debt or damages has power to include interest from the date of the writ to the date of judgment. He submitted further that the trial Judge ought to have awarded interest on the Judgment sum as provided by Order 40 rule 7 of the Kwara State High Court Civil Procedure Rules, 1989. Learned counsel urged this court to hold that the judgment debtor is liable to pay the rates of various interest specified and claimed in both the writ of summons and the statement of claim. He also urged us to allow the appeal.
In his argument learned counsel for the respondent submitted that there was no dispute that the respondent overdrew her account with the appellant and that Exhibit 8 was admitted in evidence without objection. He contended however, that mere admission of Exhibit 8 was not sufficient to prove the appellant’s case.
Further, the appellants’ witness had failed to explain any of the various entries or figures contained in Exhibit 8. He supported this argument by citing Aromolaran v. Kupoluyi (1994) 2 NWLR (Pt. 325) 221 at 227.
Learned counsel submitted that of the N33.085.33K claimed by the appellant it was only the amount of the overdraft of N9, 000.00 that was specific and was admitted by the respondent. Further, at no time did the appellant’s witness state how much interest was charged by the appellant at any particular period between 1982 to 1991. It is the contention of learned counsel for the respondent that the appellant was not entitled to the 25% interest per annum claimed from February, 1991 and thereafter at 21% from June, 1991 until judgment and 15% court rate claimed from the date of judgment to final liquidation.
The above rates claimed, he argued further, had no backing in law. He cited Order 40 rule 7 of the Kwara State High Court Rules. He urged this court to dismiss the appeal as it lacks merit.
In this appeal, there is only one issue for consideration. The issue revolves around “Bank Interest”. “Bank Interest” as is known within the circle of banking institution is the money payable by a banker to a customer for money deposited or it is money payable by a customer for money deposited or it is money payable by a customer to the bank for money had and received from the bank whether by way of loan, overdraft, advance or in any related business. Commercial banks generally are by necessity interest oriented.
On Cross-examination, PW1, an official of the appellant stated that at the time of giving the facility there was a provision that the defendant would be bound by the directives from CBN. If there was any variation that would be dispatched to the customers. He stated in his evidence in chief among others that:
“There are specific interest rates in accordance with guidelines from Central Bank of Nigeria (CBN). The guidelines are to be applied by all commercial banks. It is yearly guidelines on credit policy. The defendants account comes under this policy. The defendant was aware of this. Through periodic statement of account sent to her as done to all customers.”
While testifying in her own behalf the defendant/respondent stated as follows:-
“I was not hold that the bank would charge interest when the money was given. I was only told that I would pay back and I thank (siz) the plaintiff for it.”
Based on the above and the remaining pieces of evidence before him, the learned trial Judge held, inter alia:-
“It is my considered view that it is not proper for the plaintiff to charge interest rates unilaterally on the overdraft facility.”
I think the law on bank’s power to charge interest on loans, overdrafts, advances etc., has for sometime become a matter of law vested in the Central Bank of Nigeria rather than a matter of mutual consultation between a bank and its customer. Section 14 of the Banking Act, 1969 (now contained in Section 15 of Cap 28 of the Laws of the Federation of Nigeria, (1990) provides:-
“15(1) The rate of interest charged on advances, loans, or credit facilities or paid on deposits by any licensed bank shall be linked to the minimum re-discount rate of the Central Bank subject to stated minimum and maximum rates of interest, and the minimum and maximum rates of interest when so approved shall be the same for all licensed banks: Provided that differential rates may be approved for the various categories of banks to which this Act applies.
(2) The interest structure of each licensed bank shall be subject to the approval of the Central Bank”. (Italics supplied).
In the case of Union Bank v. Ozigi (1994) 3 NWLR (Pt.333) 385 (1994) 3 NACR 1 at page 14 the Supreme Court, per Adio, J.S.C. (of blessed memory) has reiterated the above provisions of the Banking Act in the following words:
“There can be no question of fixing arbitrary rates of interest contrary to the CBN’s guidelines. The necessary guidelines on the rates of interest on loans are given by the Central Bank from time to time generally and not to a particular bank or in relation to a particular loan transaction.”Now even prior to the above authorities on interest which appear recent, earlier Supreme Court pronouncements were in favour of banks charging compound interest on loans or other advances granted to a customer even where there was no express agreement on the rate of interest to be charged. This was simply because the customer must have been taken to impliedly consent to an interest to be charged to his account. See: Barclays Bank of Nig. Ltd. v. Abubakar (1977) All NLR 278280; Barclays Bank D.C.O. v. Memunatu Hassan (1961) All NLR 836 at 837; Harilal Shah (T/A Harilal & Coy. and Champaben Shah v. Standard Bank Ltd. (1987) 1 ALR Comm 209-234.In view of the above therefore, I fail to see the basis of the learned trial Judge’s holding as above.
Learned counsel for the respondent argued that the rates of interest charged by the appellant were not proved. I am quick to add here that the mere admission of the contents of Exhibit 8 in evidence by the trial court without objection by the respondent is potent enough to entitle the appellant to the interest indicated therein. Further, by her own statement vide Exhibits 6 and 7 the respondent had admitted being indebted to the appellant in the sum of N33,085.33k – the sum claimed in the indorsed writ and paragraph 14(a) of the statement of claim. Exhibits 6 and 7 were letters written by the respondent to Messrs D.A. Akintoye & Co. of 26 Sulu Gambari Road, Ilorin in response to the demand letter written to the respondent by D.A. Akintoye, counsel to the appellant. The Ilorin Manager of the appellant was copied both exhibits. The contents of both letters except the dates are almost the same. The latest of the two Exhibits was a letter dated 30th May, 1991 which reads as follows:-
“Dear Sir,
RE-INDEBTEDNESS TO UNION BANK LIMITED ILORIN – N33, 085.33K
Pursuant to my calls by virtue of your letters in respect of the above, and my promise to liquidate the indebtedness. I have herein enclosed the sum of N250 as pan payment of the money.
I promise to pay a further N250 per month as from June, 1991 pursuant to liquidating the entire amount.
Thanks for your patience.
Yours faithfully,
Sgd: Hawawu Omeneke
Salami
I think it will work injustice on the judgment creditor if interest shall be refused on his judgment debt which is the fruit of his judgment particularly, with the appellant as a Banking Institution. There is no gain saying that in the present modern banking system where interest seems to be the only revenue yielding mechanism relied upon by the banks, if same will be obliterated, or where customers refuse, neglect or circumvent in a way, to pay same as agreed between them and the bank, I am afraid, the banking system is bound to collapse. It is both illegal and immoral in the system for a customer to enjoy the facilities granted him by the bank, repayment of which, in addition to all interests and other charges, he has undertaken to effect, should refuse or neglect to fulfill.
Accordingly, I consider this appeal meritorious and is hereby allowed. I hereby set aside the judgment of the lower court. In its place, I declare that the appellant is entitled to payment from the respondent of:-
(1) the sum of N33, 085.33k being amount outstanding as debit in the respondent’s account plus interest, commission and or other bank charges as at February, 1991.
(2) Interest on the said sum at 25% per annum from February, 1991 and thereafter 21% per annum from January, 1991 till final judgment (25/9/95).
(3) 10% interest per annum on the judgment sum from the date of judgment until final liquidation.
Cc: The Manager,
Union Bank of Nigeria Limited
Ilorin.”
In my view there is no ambiguity on the rate or quantum of the interests charged. Exhibits 6, 7 and 8 are self-explanatory. The law is very certain that what is admitted need no proof. See Section 75 of the Evidence Act, Laws of the Federation, 1990, Cap. 112.
On the issue of 25% interest per annum on the sum claimed 33,085.33k which ought to have been the judgment sum and thereafter at 21% per annum. The Supreme Court has settled the matter that a court giving judgment for any debt or damages has power to include interest from the date of the writ to the date of judgment. See: Enahoro and Co. Ltd. & Anor V. Bank of West Africa Ltd. (1971) 1 NCLR p. 180 at 182. It is the right of the judgment creditor to earn interest on the judgment debt even where the judgment debt is to be paid forthwith. See: Sabbagh &. Sabbagh v. Bank of West Africa Ltd. (1966) All NLR 234. Rules of Court are not silent on this matter either. Order 40, rule 7 of the Kwara State High Court (Civil Procedure) Rules, 1989 provides:
“7. The court at the time of making any judgment or order or at any time afterwards, may direct the time within which the payment or other act is to be made or done, reckoned from the date of the judgment or order, or from some other point of time as the court thinks fit, and may order interest at a rate not exceeding ten naira per centum per annum to be paid upon any judgment, commencing from the date thereof or afterwards, as the case may be.”
Parties are to bear own costs.
Other Citations: (1998)LCN/0393(CA)
