UNION BANK OF NIGERIA PLC & ANOR.V.IFEOLUWA NIGERIA ENTERPRISES LTD.(2006) LPELR-7 7 4 1 (CA)Suit No: CA/L/415/2004

INTRODUCTION

Award of interest, banker-customer relationship, bank policy documents, and legislation are issues raised.

 

There are two circumstances in which thecourts award interest. Where the interest isas of right; where it is contemplated bythe parties by agreement express or impliedor under mercantile custom or under aprinciple of equity as a breach of a fiduciaryrelationship, and Where power is conferred by statute; where interest is claimed as of right, it ought to ordinarily, likeany other primary prayer, be set out in thewrit of summons. Where however it is not setout in the writ but pleaded in the statementof claim, the plea would be competent as thestatement of claim supercedes the writ. Thefacts so pleaded must disclose the entitlementto the interest, the rate of interest and thedate of accrual

 

The relationship between a banker and itscustomer is that of an agent and principal aswell as that of a debtor and its creditor. When a customer deposits an amount of money inits current account with the bank, the bankbecomes a debtor to the customer in that sum- see Badaru v. S.C.B. (Nig.) Ltd. (2003) 10NWLR (Pt. 827) 91 at 101; Yesufu v. ACB Ltd.(1981) 1 SC 74. A bank is not a charitableorganization. It is a trading company, and thecommodity it trades on is money.” Per AGBO,J.C.A.

 

Whether policy documents referred to asCentral Bank Guidelines can be said to be subsidiary legislations and within the class ofdocuments the courts must take judicial notice of.

 

The Central Bank of Nigeria from time totime prepares a list of charges, guidelines andpolicy pursuant to powers vested on it by S.15of the Banking Act. These policy documentsare commonly referred to in the bankingcommunity as Central Bank Guidelines. Theyare not subsidiary legislations and do not fallinto the class of documents the courts must take judicial notice of any Central Bankguideline relied upon, must therefore be proved in evidence by producing same in court- see H.N.B. Ltd. v. Gifts Unique (Nig.) Ltd.(2004) 15 NWLR (Pt. 896) 408 at 428.” PerAGBO, J.C.A.

 

Whetherschedule is very much part of an act or law”A Schedule to an Act or Law is very muchpart of that Act or Law – see Oputeh v. Ishida(1993) 3 NWLR (Pt. 279) 34.” Per AGBO, J.C.A.

 

JUDGMENT

 

RAPHAEL CHIKWE AGBO, J.C.A. (Delivering the Leading Judgment): The respondent is acustomer of the 1st appellant. On 26th February, 1996, the respondent sent one of its employees to Isolo, Lagos branch of the 1st appellant to pay some money into its account with the appellant.Some armed bandits broke into the bank and snatched some of the money already handed over to the 2nd appellant, a servant of the 1st appellant. On the refusal of the 1st appellant to credit the account of the respondent with the amountequivalent to the said snatched sum, therespondent proceeded at the Lagos State HighCourt against the appellants in suit No. ID/1593/96praying the court as follows:

 

  1. The plaintiff’s claim against the defendants is inthe sum of N925,000.00 (Nine hundred and twenty five thousand Naira) only beingthe amount ofmoney within the defendants’ premises owing tothe negligence of the defendants on Monday the25th day of February, 1996 at about 11.00 hoursat the Isolo branch of the defendant bank.

 

  1. The Plaintiff further claims interest at the rate of21% per annum or as this Honourable Court maydetermine having regard to the prevailing CentralBank of Nigeria regulations thereon from the 26thday of February, 1996 until the whole sum claimedbe paid.

 

Pleadings were exchanged, evidence led, and in aconsidered judgment, the court below adjudged asfollows:

 

“After considering of all these, I prefer and believethe evidence of the PW1 that the amount on ExhibitA! is what he took to the defendant’s bank on26/2/96 out of which the sum of N735, 000.00 wastaken by armed robbers leaving the sum ofN190, 000.00 which was later credited to theaccount of the plaintiff’s company in No.721857573 and I hold that the defendant bank isliable to pay the sum of N735, 000.00 to theaccount of the plaintiff.

The defendant is further ordered to pay 21%interest per annum on the said amount from26/2/96 until when the amount is credited.”

 

Being dissatisfied only with the interest adjudged,the appellants have filed this appeal. The groundsof appeal are set out hereunder: Grounds of Appeal:

 

  1. The learned trial Judge erred in law in awardinginterest to the plaintiff when there was no evidenceconversed at the trial in support of this leg of theplaintiff’s claim.

Particulars of Error

  1. The learned trial Judge failed and or omitted toapply the fundamental principle of law that he whoasserts must prove that those facts exist.

(i) The plaintiff claimed interest but refused toestablish this claim by way of admissible oral ordocumentary evidence.

  1. The learned trial Judge erred in law in awardingthe plaintiff interest at the rate of 21% on thejudgment debt.

Particulars of Evidence

(i) The plaintiff in its statement of claim, claimedinterest having regard to the prevailing CentralBank of Nigeria regulations.

(ii) The plaintiff gave no iota of evidence on theinterest prevailing based on the Central Bank ofNigeria regulation and tendered no document toestablish what the rate was.

  1. The learned trial Judge erred in law when heawarded interest to the plaintiff on an amountmeant for the plaintiff’s current account. There wasno evidence that the plaintiff had been receivinginterest on its interest account with the 1stdefendant in the past and no relevant fact waspleaded by the plaintiff.

Particulars of Error

(i) The claim of the plaintiff from the pleading didnot state if the claim for interest was under acontract, under mercantile usage or under equity.

(ii) The plaintiff through its witness tenderedexhibits A and A1 at page 61 of the record asEvidence of the amount and the nature of theaccount that is a current account.

(iii) The learned trial judge without any oral ordocumentary evidence awarded interest on the summeant for a current account contrary to thebanking practice and which claim was not supportedby the pleadings.

  1. The learned trial Judge erred in law in awardinginterest in favour of the plaintiff at the rate of 21%per annum.

Particulars of Error

(i) The plaintiff’s claim interest was at the rate of21% per annum based on prevailing central Bankof Nigeria Regulations at pages 2 and 53 of therecords.

(ii) Evidence of the plaintiff witness at page 62 ofthe records did not state what the Central BankRegulation on interest was in 1996.

(iii) There was no evidence of the approved interestrate structure under section 15 (1) and (2) of theBanking Act, Cap. 28, Laws of the Federation ofNigeria, 1990.

(iv)The learned trial Judge acted beyond hisstatutory powers under Order 38 Rules 7 of the HighCourt of Lagos State (Civil Procedure) Rules, 1994.  From these grounds of appeal, the appellantshavedistilledthefollowingissuesfordetermination:

Issues arising for determination

(i) Whether on the pleadings and evidence beforethe court, the respondent discharged the onus ofproof on its claim for interest at 21% per annum.

(ii) Whether on the pleadings and evidence theRespondent proved its claim for interest under theenabling laws.

(iii) Whether on the evidence called at the trial therespondent was able to establish the proper rate ofinterest and the date from which it should begin torun whether from the accrual of the cause of actionor otherwise and whether an interest accountattracts interest or otherwise.The respondent on the other hand formulated only one issue for determination to wit:

 

Issue arising for determination:

Whether withregard to the circumstances of thecase, and the position of the law on interest rate atthe material time, including the fluctuating natureof the Nigerian currency, the Honourable Courtexercised its undoubted discretion judiciously andjudicially?

 

It is clear that the appellants’ issues fordetermination more comprehensively dealt with theissues raised by the grounds of appeal. This appealwill therefore be determined based on the issuesdistilled by the appellants. In arguing the appeal, the appellant’s counselhad argued that it was incumbent on a partyclaiming interest to specifically set out his claim either in contract, statute or mercantile custom andfacts grounding such claim. The party is tothereafter lead evidence to establish the facts sopleaded. He argued that the respondent found itsprayer for interest on “the prevailing Central Bankof Nigeria Regulations”. He argued that CentralBank Regulations are founded on S. 15 of theBanking Act. The section is reproduced below.

 

“15(1) The rate of interest charged on advances, loans or credit facilities or paid on deposits by anylicensed bank shall be linked to the minimumrediscount rate of the Central Bank subject to thestated minimum and maximum rates of interest,and the minimum and maximum rates of interestwhen so approved shall be the same for all licensedbanks; provided that differential rates may beapproved for the various categories of banks to which this Act applies.

 

15(2) the interest rate structure of each licensedbank shall be subject to the approval of the CentralBank.”

 

Pursuant to the provisions of the above sectionthe respondent ought to have led evidence toestablish (a) the rate of interest allowed by theCentral Bank (b) The minimum discount rate of theCentral Bank and (c) the differential rate if any,approved for the respondent.

He argued that the respondent neither pleadednor proved any contract nor custom entitling it tothe interest claimed. Counsel admits that Order 38Rule 7 of the High Court of Lagos State (CivilProcedure) Rules, 1994 provides for statutoryInterest on judgment debt. Order 38 Rule 7 isreproduced hereunder.

 

Order 38 rule 7

 

“The Court at the time of making any judgment ororder, or at any time afterwards, may direct thetime within which the payment or other act is to bemade or done, reckoned from the date of judgment or order, or from some other point in time, as the Court thinks fit, and may order interest at a ratenot exceeding seven and a half per centum perannum to be paid upon any judgment, commencingfrom the date thereof or afterwards.”

 

He denies that the said Order 38 Rule 7 isapplicable but that even if it was, there was (1) no

Jurisdiction on the court to award more than 10%and (2) its date of accrual could not have beenearlier than the date of judgment. Counselconcluded that the respondent did not make out aclaim for interest in its pleadings nor did it placebefore the court enough evidence to justify theinterest awarded.

 

The respondent’s counsel in his argumentconceded that the respondent led no evidence onthe applicable rate of interest as there was no priorcontract in that regard between the parties. Hehowever posited that the interest awarded wasinterest on “judgment debt” awarded pursuant tothe provisions of the Judgments Act. 1838 (U.K.),an Act which he claims is a statute of generalapplication applicable in Lagos State pursuant to S.2 of the Law (Miscellaneous Provisions) Law ofLagos State. He argued that the restrictiveprovisions of Order 38 Rule 7 of the High Court ofLagos State (Civil Procedure) Rules, 1994 to theextent of its inconsistency with the provisions ofthe Judgment Act, 1838 is ultra vires the said Actand therefore inapplicable. He argued that thiscourt lacked the competence to challenge theabsolute discretion of a trial court in awardinginterest on a judgment which interest is within theupper limit allowed by statute. He however acceptsthat the accrual date for such interest is the date ofjudgment.

 

To appreciate what is at issue here, it must beremembered that the relationship between the 1stappellant and the respondent is that of a bankerand its customer. The relationship between abanker and its customer is that of an agent andprincipal as well as that of a debtor and its creditor.When a customer deposits an amount of money inits current account with the bank, the bankbecomes a debtor to the customer in that sum – seeBadaru v. S.C.B. (Nig.) Ltd. (2003) 10 NWLR (Pt.827) 91 at 101; Yesufu v. ACB Ltd. (1981) 1 SC74. A bank is not a charitable organization. It is atrading company, and the commodity it trades on ismoney. When therefore a bank advances credit or aloan to its customer, the court takes judicial noticeof the fact that it is entitled to interest. Thismutatis mutandis applies when the bank takescredit by way of deposit from its customers. It isthis interest accruing to either the bank or itscustomer that the Central Bank of Nigeria by theprovision of S. 15 of the Central Bank Act attemptsto control.

 

The respondent on 26th February, 1996 deposited an amount of money equivalent to thejudgment sum with the 1st appellant. It ought tohave been entered in the respondent’s account withthe 1st appellant on that date, and from that date,interest ought to have accrued on that sum infavour of the respondent. But the 1st appellantneither entered the sum in respondent’s account nor did it pay interest. If therefore the respondentpleads and proves the interest rate, it would beentitled to the interest claimed.

 

There are two circumstances in which the courts award interest. There are (a) as of right –this arises where it is contemplated by the parties by agreement express or implied or under mercantile custom or under a principle of equity as a breach ofa fiduciary relationship – see Texaco Overseas(Nig.) Unltd. v. Pedmar (Nig.) Ltd. (2002) 13 NWLR(Pt. 785) 526. And (b) where the power is conferred by statute.

 

Where interest is claimed as of right, it ought toordinarily, like any other primary prayer, be set outon the writ of summons. Where however it is not set out on the writ but pleaded in the statement of claim, the plea would be competent as the statement of claim supersedes the writ. The facts sopleaded must disclose the entitlement to theinterest, the rate of interest and the date of accrual- see Texaco Overseas (Nig.) Unltd. v. Pedmarsupra; Ekwnife v. Wayne West Africa Ltd. (1989) 5NWLR (Pt. 122) 422; Udechukwu v. Okwuka (1956)SCNLR 189. The claimant shall thereafter leadevidence to establish the pleaded facts. Once thesefacts are proved, the court shall award the interestso claimed. In the instant case the respondent hadestablished its entitlement to interest and theaccrual date. It however had difficulties inestablishing the rate of interest. It pleaded as the rate of interest 21% or suchinterest as may be determined by Central Bankguidelines from time to time. In evidence PW1testified that 21% was the going rate as at 1996.The particular rate for the 1st appellant was neitherpleaded nor proved. The Central Bank Guidelineswas not placed before the court.

 

The Central Bank of Nigeria from time to time prepares a list of charges, guidelines and policypursuant to powers vested on it by S.15 of the Banking Act. These policy documents are commonlyreferred to in the banking community as CentralBank Guidelines. They are not subsidiarylegislations and do not fall into the class ofdocuments the courts must take judicial notice of any Central Bank guideline relied upon, it musttherefore be proved in evidence by producing samein court – see H.N.B. Ltd. v. Gifts Unique (Nig.) Ltd.(2004) 15 NWLR (Pt. 896) 408 at 428.This unfortunately the respondent did not do in this case. I therefore hold that in the instant case, the interest rate pleaded was not proved.

 

The respondents counsel had argued that theinterest claimed and awarded was a post judgmentinterest and that Order 38 Rule 7 of the High Courtof Lagos State (Civil Procedure) Rules, 1994 wasultra vires the provisions of the Judgments Act,1838 (U.K.) to the extent that it tries to limitinterest payable on judgment sum to seven andhalf percent per annum. In the first place, therespondent never asked for interest on thejudgment sum. It merely claimed for interest at therate of 21% from 26th February, 1996 until thewhole sum claimed be paid. Interests on judgmentsums are not claimed from the accrual of the causeof action but from the date of judgment. Theinterest claimed was certainly not interest on thejudgment sum.

 

Therefore, neither Order 38 Rule 7 of the HighCourt of Lagos State (Civil Procedure) Rules, 1994nor the Judgment Act, 1838 (U.K.) is applicable inthe instant case. I must further state that theprovisions of the Judgment Act, 1838 (U.K.) areinapplicable in Lagos State, whether or not itqualifies as a statute of general application. This isbecause a careful look at the High Court of LagosState (Civil procedure) Rules, 1994 will show thatthat piece of legislation is not a subsidiarylegislation. It is rather a schedule to the High Court of Lagos State (Civil Procedure) Law, Cap. 61, Lawsof Lagos State, 1994. A Schedule to an Act or Lawis very much part of that Act or Law – see Oputehv. Ishida (1993) 3 NWLR (Pt. 279) 34. The HighCourt of Lagos State (Civil Procedure) Rules Lawsupersedes the Judgment Act, 1838 (U.K.).

 

There is merit in this appeal, it succeeds. Theinterest awarded by the court below is hereby setaside. The prayer for interest is hereby dismissed. There shall be N10, 000.00 costs to the appellants.

 

ISA AYO SALAMI, J.C.A.: I read in draft thejudgment just delivered by my learned brother Agbo, JCA with which I entirely agree. I agree withthe reasoning contained therein and the conclusionarrived thereat.I also endorse all the consequential ordersincluding the order as to costs proposed in the leadjudgment of my learned brother, Agbo, JCA.

 

PAUL ADAMU GALINJE, J.C.A.: I agree entirelywith the reasoning and conclusion contained in thejudgment just delivered by my learned brotherAgbo, JCA. My learned brother has exhaustivelytreated all the issues raised in this appeal. I havenothing useful to add. I therefore endorse all theconsequential orders contained in the leadjudgment including the order as to costs madetherein.

Appeal allowed.

COMMENTARY

This judgement state in very clear terms that Central Bank of Nigeria guidelines are not subsidiary legislations and do not fall into the class of documents the courts must take judicial notice of. It is important to note that CBN guidelines include Exchange Control Manual.

Consequently any Central Bank of Nigeria guideline sought to be relied upon must be pleaded in evidence.