CORAM
Helen Moronkeji Ogunwumiju Justice Supreme Court of Nigeria
Emmanuel Akomaye Agim Justice Supreme Court of Nigeria
Haruna Simon Tsammani Justice Supreme Court of Nigeria
Obande Festus Ogbuinya Justice of the Supreme Court of Nigeria
Mohammed Baba Idris Justice of the Supreme Court of Nigeria
PARTIES
HERITAGE BANK LMITED
APPELLANTS
MEENS NIGERIA LTD
RESPONDENTS
AREA(S) OF LAW
BANKING LAW, EVIDENCE, COMMERCIAL LAW, PRACTICE AND PROCEDURE, FIDUCIARY RELATIONSHIP, DOCUMENTARY EVIDENCE, EVALUATION OF EVIDENCE, ADMISSION, INTEREST RATES
SUMMARY OF FACTS
The case revolves around a banking relationship between Heritage Bank Limited (the appellant) and Meens Nigeria Ltd (the respondent). The respondent was a customer of the appellant bank, operating account number 3040008044 at the appellant’s Akure branch in Ondo State. In 2003, the appellant requested confirmation of the respondent’s credit facility balance. In response, the respondent requested that the appellant supply relevant documents, debit vouchers, and credit advice on all transactions to enable proper reconciliation of the account and ascertain the credit facility balance. The appellant did not provide these requested documents.
In 2007, the respondent engaged a firm of chartered accountants, Messrs Okunoye, Adeniyi & Co., to audit its account with the appellant. The audit firm requested documents from the appellant to carry out the exercise. The appellant demanded confirmation of the firm’s appointment, which was provided, but still refused to furnish the necessary documents for audit and reconciliation. Consequently, the firm conducted the audit based solely on documents supplied by the respondent.
The audit firm prepared a final report and an addendum report indicating that the appellant was indebted to the respondent in the total sum of N311,503,947.51, arising from uncredited forex inflows, unexplained debit and credit entries, inconsistent bank balances, and unauthorized withdrawals. The respondent requested payment of this sum, but the appellant did not respond to the audit reports. This led the respondent to seek redress in the High Court of Ondo State.
HELD
1. The appeal was dismissed.
2. The Supreme Court affirmed the decision of the Court of Appeal, which had affirmed the judgment of the High Court of Ondo State that granted most of the respondent’s claims.
3. The Court held that exhibits P11 and P15 (audit reports) signed by a firm of chartered accountants were valid and proper evidence that could be relied upon by the courts.
4. The Court found that the appellant’s failure to reply to the audit reports and correspondence amounted to an implied admission of the respondent’s claims.
5. The Court determined that both the trial Court and Court of Appeal properly evaluated the evidence of DW1 (appellant’s witness).
6. The Court upheld the award of pre-judgment interest at the rate of 36% per annum, which was the same rate the appellant had charged the respondent on its account.
7. The Court emphasized that banker-customer relationships require utmost good faith, and banks must avoid usurious practices.
8. Parties were ordered to bear their respective costs.
ISSUES
1. Whether any weight ought to be attached to exhibits P11 and P15 having regard to the fact that they were signed by a firm of chartered accountants, Messrs Okunoye, Adeniyi & Co., not recognized by law as an auditor or an accountant?
2. Whether the appellant admitted liability of the respondent’s claim having regard to specific defense in response to the averments in the respondent’s statement of claim and evidence led by the appellant to refute the respondent’s claims?
3. Whether the Supreme Court ought to interfere with the findings of facts made by the trial Court having regard to the fact that the evidence of DW1 was not properly evaluated?
4. Whether the lower Court was right to affirm the decision of the trial Court awarding pre-judgment interest to the respondent having regard to the fact that evidence was not led on same by the respondent?
RATIONES DECIDENDI
BANKER-CUSTOMER RELATIONSHIP – NATURE OF FIDUCIARY DUTY OWED BY BANKS TO CUSTOMERS
“My noble Lords, the action, which transfigured into the appeal, teaches valuable lessons to financial institutions. A banker-customer relationship is one which is a similitude of a contract uberrimae fidei – utmost good faith – with the expected exhibition of honesty attendant thereto. A customer reposes mountainous confidence in a bank and expects it, as a matter of legal duty, to husband his funds in its vault. The fiduciary relationship is debased and eroded when a bank, a trusted custodian of the funds, patronises dolus malus and embraces usury vis-a-vis the funds it is bound to conserve. Such untoward mala fide conduct will not augur well for the bank and its customers, especially during this embryo stage of beneficent digital banking.” – Per OBANDE FESTUS OGBUINYA, J.S.C.
SIGNATURE ON DOCUMENTS – DIFFERENCE BETWEEN LEGAL PRACTITIONERS ACT AND INSTITUTE OF CHARTERED ACCOUNTANTS OF NIGERIA ACT
“It is decipherable from the clear phraseology and tenor of the provisions of Sections 8(1) and 19 of the ICANA and 2(1) and 24 of the LPA, displayed above, that they are not coextensive in their lexical context, structure and configuration. The provision of Section 8(1) of the ICANA, which centres on the registration of accountants, calibrates the prerequisites/conditions-precedent for a person to be qualified to be enrolled as a chartered accountant. Per contra, the provision of Section 2(1) of the LPA, which deals with entitlement to practice, is not concerned with the pre-conditions that must be satisfied before a person becomes a legal practitioner.” – Per OBANDE FESTUS OGBUINYA, J.S.C.
VALIDITY OF AUDIT REPORTS – DISTINCTION BETWEEN COURT PROCESSES AND PRIVATE AUDIT REPORTS
“The facts of that case, Okafor v. Nweke (supra), which has birthed a legion of legal authorities, are wholly disharmonious with those of the respondent’s case which midwifed the appeal. In legal parlance, the facts of the duo cases are distinguishable… In so far as the material facts of the two cases, Okafor v. Nweke (supra) and this appeal, remain incompatible and distinguishable, the doctrine of stare decisis is disabled and impotent to grant this Court the needed licence to kowtow to its decision in that case.” – Per OBANDE FESTUS OGBUINYA, J.S.C.
FORMAL AND INFORMAL ADMISSIONS – CATEGORIZATION AND LEGAL EFFECT
“Admissions are either formal or informal. Formal admissions are admissions made by a party to a civil proceeding so as to relieve the other party of the necessity of proving the matters admitted. They are usually contained in a pleading as facts admitted in a pleading need not be proved any longer but are taken as established. Formal admissions may also take the form of clear admissions filed or made by a party to a civil proceeding or by his counsel in the course of the trial of a civil suit… Informal admisions, on the other hand, do not necessarily or strictly speaking bind their maker and may therefore be explained or contradicted.” – Per OBANDE FESTUS OGBUINYA, J.S.C. (quoting Iguh, JSC in Nwankwo v. Nwankwo)
IMPLIED ADMISSIONS – EFFECT OF FAILURE TO RESPOND TO BUSINESS CORRESPONDENCE
“The fate of the conduct of the appellant, failure to reply/respond to the business letters written to it, has received the blessing of the case law… The appellant, in its infinite wisdom, did not reply to them. Indisputably, they are business letters which necessitated prompt responses from the appellant, Alas, the appellant neglected to do so. In law, silence means consent, see Iga v. Amakiri (supra). On the other hand, consent signifies an agreement or concurrence, see Ohiaeri v Yusuf (2009) 6 NWLR (Pt. 1137) 207.” – Per OBANDE FESTUS OGBUINYA, J.S.C.
EVALUATION OF EVIDENCE – ROLE OF TRIAL COURT AND APPELLATE COURT
“In the first place, evaluation of evidence connotes the appraisal/assessment of evidence, both viva voce and documentary before a Court, and the ascription of probative value to them which results in finding of fact. This primary evidentiary duty falls squarely within the exclusive preserve of a trial Court. It enjoys this prerogative in that it has the singular advantage, which cannot be recaptured by an appellate Court, to watch the witnesses, form impression on their demeanour and assess the credibility or otherwise of their evidence.” – Per OBANDE FESTUS OGBUINYA, J.S.C.
EVALUATION OF DOCUMENTARY EVIDENCE – POWER OF APPELLATE COURTS
“Admirably, the law, in order to banish injustice from its undeserved throne in the temple of justice, donates concurrent jurisdiction to this Court and the lower Court in evaluation of documentary evidence, see Gonzee (Nig.) Ltd. v. NERDC (2005) 13 NWLR (Pt. 943) 634; Olagunju v. Adesoye (2009) 9 NWLR (Pt. 1146) 225; Ayuya v. Yonrin (2011) 10 NWLR (Pt.1254) 135.” – Per OBANDE FESTUS OGBUINYA, J.S.C.
BURDEN OF PROOF – STANDARD OF PROOF IN CIVIL CASES
“The trial Court found, rightly in my view, that the evidence of the respondent, based on their qualitative nature, preponderated over those of the appellant. Thus, the respondent proved its claim on the balance of probability as decreed by law. Contrariwise, evidence galore that the appellant failed woefully to puncture the impregnable evidence presented by the respondent. Proof, in law, is a process by which the existence of facts is established to the satisfaction of the Court, see Section 121 of the Evidence Act, 2011.” – Per OBANDE FESTUS OGBUINYA, J.S.C.
PRE-JUDGMENT INTEREST – DEFINITION AND REQUIREMENTS FOR AWARD
“In the financial province, a Court may award interest under two distinct circumstances, videlicet: (a) As of right and (b) Where there is power bestowed by statute to do so in the exercise of Court’s discretion. The first species relates to pre-judgment interest – one that has accrued to a party from the date of loss/complaint to date of final judgment of Court. It, also, bears the appellation of moratory interest.” – Per OBANDE FESTUS OGBUINYA, J.S.C.
INTEREST RATE – PROOF AND APPLICATION
“Indubitably, the law makes it incumbent on a party claiming interest to prove even the interest rate as the Court is disrobed of the jurisdiction to take judicial notice of it… Here, exhibit P11 passim, the final audit report, comes in handy. It houses the interest rate, 36% per annum, which was the rate the appellant charged the respondent on its account with it. The auditors utilised the same interest against the appellant in the satisfaction of the respondent’s action that was founded on usury- excessive interest charge – which is cognisable in law.” – Per OBANDE FESTUS OGBUINYA, J.S.C.
CONCURRENT FINDINGS – WHEN SUPREME COURT WILL NOT INTERFERE
“This Court is loath to set aside concurrent findings of facts by the lower Courts where they have not occasioned miscarriage of justice. See JIME v. HEMBE & ORS (2023) LPELR-60334 (SC), OKOLI v. MORECAB FINANCE (NIG) LTD (2007) 14 NWLR Pt.1053 Pg. 37, DUROSAR0 v. AYORINDE (2005) 8 NWLR (PT.927) PG. 407, AYENI v. ADESINA (2007) 7 NWLR (PT. 1033)233.” – Per HELEN MORONKEJI OGUNWUMIJU, J.S.C.
EVIDENCE VERSUS PROOF – DEFINITION AND DISTINCTION
“Proof, in law, is a process by which the existence of facts is established to the satisfaction of the Court, see Section 121 of the Evidence Act, 2011; Olufosoye v. Fakorede (1993) 1 NWLR (Pt. 272) 747; Awuse v. Odili (2005) 16 NWLR (Pt. 952) 416; Salau v. State (2019) 16 NWLR (Pt. 1699) 399. (Pt. 1372) 474; APC v. Karfi (2018) 6 NWLR (Pt. 1616) 479; Ojobo v Moro (2019) 17 NWLR (Pt. 1700) 166.” – Per OBANDE FESTUS OGBUINYA, J.S.C.
DOCUMENTARY EVIDENCE – SUPERIORITY OVER ORAL TESTIMONY
“Indeed, there is no better evidence of such a proof. It is a documentary evidence. A documentary evidence is permanent, indelible and incorruptible in contradistinction to parol evidence which oozes out from the vocal cord of man and is susceptible to denials and distortions by its author.” – Per OBANDE FESTUS OGBUINYA, J.S.C.
CASES CITED
STATUTES REFERRED TO
• Institute of Chartered Accountants of Nigeria Act (ACANA), Cap. III, Laws of the Federation of Nigeria, 2004
• Legal Practitioners Act, (LPA) Cap. L11, Laws of the Federation of Nigeria, 2004
• Companies and Allied Matters Act (CAMA)