CORAM

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OBANDE FESTUS OGBUINYA, JUSTICE COURT OF APPEAL

FATIMA OMORO AKINBAMI, JUSTICE COURT OF APPEAL

FREDERICK OZIAKPONO OHO, JUSTICE COURT OF APPEAL

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PARTIES

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WEMA BANK PLC

APPELLANTS 

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STOCKPICKS CONSULTING LIMITED

RESPONDENTS 

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AREA(S) OF LAW

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ACTION, APPEAL, COURT, BANKING LAW, CLAIM, PRACTICE AND PROCEDURE, JURISDICTION, STATUTE

 

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SUMMARY OF FACTS

This Appeal is against the judgment of the High Court of Lagos State, wherein the Court below delivered its judgment against the Appellant and in favour of the Respondent who was the Claimant at the Court below. The Appellant, dissatisfied with the judgment of the lower Court has appealed to this Court asking this Court to set aside the judgment on the grounds set out in the Notice of Appeal. The case between the parties was that sometime in February, 2018 the Respondent was informed by one Mr. Opeolu Olumide (third party) that CHAM Nigeria Plc shares had been put up for sale via private placement. Based on the information, the Respondent, for the sole purpose of purchasing the shares of Chams Nigeria Plc on behalf of its Clients, issued three (3) cheques in the name of Chams Private Placement to the Appellant. Subsequently, upon inquiry and further investigation, it was discovered that the Cheques issued by the Respondent was cleared through Wema Bank Plc, Ikoyi and further that the cheques issued by the Respondent to Chams Private Placement were paid into an account with AC1N0.1211 10653012 which did not belong to Chams Private Placement or Chams Plc. but to Aims Achievers Consulting Ltd, a company in which one Mr. Opeolu Olumide (third party) was the MD & CEO. It is the Respondent’s case that the Appellant was negligent in the performance of its duty, in paying the cheques into the account of Aims Achievers Limited when the name of the beneficiary on the instrument was Chams Plc. Aggrieved by the negligent act of the Appellant, the Respondent took out a writ of summons against the Appellant at the High Court of Lagos State seeking a declaration that the Appellant acted negligently, and award of special and general damages for the Negligent act of the Appellant. In a considered judgment delivered on 21st June, 2016, the Court entered judgment in favour of the Respondent (the Claimant at the lower Court) against the Appellant (Defendant at the lower Court), and awarded the sum of N48,396,800 (Forty-Eight Million, Three Hundred and Ninety-Six Thousand Eight Hundred Naira) as special damages and the total sum of N10,500,000 (Ten Million Five Hundred Thousand Naira) as general damages and cost against the Appellant. The Appellant, dissatisfied with the judgment of the lower Court has appealed to this Court seeking to set aside the judgment.

 

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HELD

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Appeal dismissed

 

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ISSUES

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1. Whether the lower Court had Jurisdiction to entertain the 1st Respondent’s claim having regard to Section 251 (1) (d) of the Constitution of the Federal Republic of Nigeria 1999 (as amended).

2. Whether the lower Court was right when it held that the Appellant is liable to the Respondent in negligence for failing to exercise the due care expected of it when it wrongfully cleared cheques presented to it by the 2nd Respondent without first seeking the authority of the 1st Respondent.

3. Whether the lower Court was right in granting the Respondent the sum of N48,396,800 (Forty-Eight Million, Three Hundred and Ninety-Six Thousand Eight Hundred Naira) when the Respondent made it clear that the sums belonged to it and some other persons who did not participate in the suit and never gave evidence with regards to their claims (Ground 3).

4. Whether the lower Court was right in awarding general damages and cost in favour of the Respondent?

5. Whether the existence of an agency relationship between the 1st Respondent as Principal and the 2nd Respondent as Agent for the purpose of acquiring shares of Chams Private Placement could be seen as a concession by the 1st Respondent that it was aware that the cheques totalling N76,090,000.00 (Seventy-Six Million and Ninety Thousand Naira) were meant to be paid into the 2nd Respondent’s third party account for the said acquisition (Ground 6).

 

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RATIONES DECIDENDI

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JURISDICTION – WHETHER CAN BE RAISED FOR THE FIRST TIME ON APPEAL

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“The issue of Jurisdiction being a threshold issue can be raised at anytime, even for the first time at the Supreme Court. There are several decided cases in support of this position. See the case of WAZIRI UMARU FED. POLYTECHNIC BIRNIN KEBBI & ORS vs. BALA (2017) LPELR- 42505 CA, where this Court per F. OHO, JCA had this to say on the subject:

“The settled position of the law is that the issue of jurisdiction is so fundamental to an action that parties to a case cannot by acquiescence or any form of agreement confer jurisdiction on a Court, which does not have it. See ADESOLA vs. ABIDOYE (1999) 14 NWLR (PT. 637) 28 AT 52; OKOROMA vs. UBA (1999) 1 NWLR (PT. 587) 359 AT 378. It is therefore, immaterial whether the Appellants at the Court below had consented to or had refused to object on the question of jurisdiction or not. Perhaps, the metaphor on jurisdiction employed by this Court in the case of UNIVERSITY OF ILORIN AND ORS vs. OLUWADARE (2009) ALL FWLR (PT. 452) 1175, 1204; per NWEZE, JCA, (as he then was) provides an apt description of the subject when he said: “Jurisdiction is to a Court, what a gate or door is to a house. That is why the question of a Court’s jurisdiction is called a threshold issue. It is at the threshold (that is, at the gate) of the temple of justice (the Court). To be able to gain access to the temple (that is, the Court), a prospective litigant must satisfy the gate keeper that it has a genuine cause to be allowed ingress. Where he fails to convince the gate keeper, he will be denied access to the inns of the temple. The gate keeper, as vigilant as he is always, will readily intercept and query all persons who intrude into his domain. To be able to ventilate a grievance, a prospective litigant has to ensure that he addresses his complaint to the competent Court. That is so for an incompetent Court will have no jurisdiction to attend to his entreaty…”

Per OHO, JCA

 

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TORT OF NEGLIGENCE – WHETHER BANKS OWE A DUTY OF CARE TO NON-CUSTOMERS

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Upon a calm and careful examination of the records, the established facts clearly that the dispute arose out of purely financial transactions relating to banks and banking in which the Respondent was not a customer to the Appellant Bank. In other words, the relationship between the Appellant and the Respondent on record does not fall within the general definition of banker/customer relationship.

The settled position of the law, however, is that the bank at all times owes a duty of care to its customers and the banker’s neighbours in its line of duty and once it can be established that a bank’s supposed duty of care to the banks customer’s neighbour has been breached, the bank will be held liable for negligence. See the case of AGI vs. ACCESS BANK PLC (2014) 9 NWLR 121, where this Court held thus:

“the rationale for the duty of care on a banker is that a banker’s customer falls within the ambit of the banker’s neighbour. That is, a person who is so closely and directly affected by the act of the banker that the banker ought reasonably to have the customer in contemplation as being likely to be affected when the banker is considering the acts or omissions which are called in question…”

The settled position here, is that the authority of the case of AGI vs. ACCESS BANK PLC (Supra) extended the definition of a customer of a bank to now accommodate anyone, bodies and parties who are likely to be affected by the Bank’s act or omissions and this makes a bank capable of being sued for negligence by a party/person who is not a customer of the bank. This rationale of the authority of the case of AGI vs. ACCESS BANK PLC (Supra) puts the Respondent on record, on the same position as a customer of the Appellant, who by virtue of the Respondent’s relationship with AIMS ACHIEVERS CONSULTING LIMITED (who is a customer of the Appellant) entitles the Respondent to damages in negligence against the Appellant.

Perhaps, the gravity of the liability of the Appellant in the handling of the sordid events which culminated in the humongous losses to the Respondent is that the Appellant that the Appellant paid cheques issued by the Respondent (on behalf of Respondent’s clients) into another person’s account without the consent or approval of the Respondent. At the trial, the evidence of the Respondent’s witness (which was not challenged) was that the Appellant was negligent, as the Appellant who is a clearing house has a duty to ensure that the cheques were paid into the endorsed beneficiary, but the Appellant recklessly and negligently paid cheques issued in favour of CHAMS PRIVATE PLACEMENT into the account of AIMS ACHIEVERS CONSULTING account who diverted same to its personal use. …” – Per OHO, JCA.

 

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TORT OF NEGLIGENCE- COURT- CLAIM OF NEGLIGENCE

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“On the issue of whether the lower Court was right when it held that the Appellant is liable to the Respondent in negligence for failing to exercise the due care expected of it when it wrongfully cleared cheques presented to it by AIMS ACHIEVERS CONSULTING LIMITED without first seeking the authority of the Respondent on record, it is most appropriate here to resort once again to the records of Court. It will be recalled that the Respondent in proof of its case called a sole witness who testified on its behalf. According to the testimony of the Respondent’s Witness (CW1) Mr. Dixon Oladapo, the Respondent was approached by one Mr. Opeolu Olumide, (CEO of AIMS ACHIEVERS CONSULTANCY LIMITED, and the third party at the lower Court) who informed the Respondent that CHAMS NIGERIA PLC shares had been put up for sale via private placement. It is also the testimony of CW1 that Mr. Opeolu Olumide, informed the Respondent that his Company (AIMS ACHIEVERS CONSULTANCY LTD) had a joint working arrangement with Diamond Securities Ltd, one of the Stock Broking Firms to the said private placement of CHAMS NIGERIA PLC shares.

On the strength of this, the Respondent for the sole purpose of purchasing the shares of CHAMS NIGERIA PLC on behalf of its Clients handed over Exhibit CWIA, CWIB, CWIC, CWID and CWIE to Opeolu Olumide for onward transmission to CHAMS NIGERIA PLC. It may be germane to state here that the said Exhibits CWIA-CWIE is documentary evidence, which no doubt speaks for them. A critical look at the said Exhibits CWIA – CWIE reveals that the instruments were issued in the name of CHAMS PRIVATE PLACEMENT and CHAMS NIGERIA PLC as the sole beneficiaries of the instruments, despite the clear instructions on the instrument as to the beneficiaries of the cheques, while the Appellant went ahead and paid the cheques into the account of their own customer; AIMS ACHIEVERS LIMITED, the third party who is clearly not a beneficiary of the instruments. If this is not a clear case of gross negligence, then one wonders what else would qualify as such. See the case of LLOYDS BANK LTD vs. CHARTERED BANK OF INDIA, AUSTRALIA AND CHINA, (1920) C.A. 694 AT 689, cited by learned Respondent’s Counsel, where SANKEY, L J held thus;

“The banker must exercise the same care and forethought in the interest of the true owner, with regard to cheques paid in by the customer, as a reasonable businessman would bring to bear on similar business of his own”.

The law requires the Appellant to exercise due diligence before clearing the cheques into the account of the Third Party. In agreement with learned Counsel for the Respondent, once a Cheque is issued and presented at the bank for payment, a duty of care is created between the true owner of the cheque and the bank to which the cheque is presented to for payment and that a duty of care was created between the Respondent and the Appellant when the Respondent’s cheques were presented for payment/clearing in the Appellant’s branch in Ikoyi by the third party. The paying of the cheques (Exhibit CWIA-E) into the account of AIMS ACHIEVERS CONSULTANCY LTD; (Appellant’s customer) is contrary to the clear instruction of the owner of the cheques and same amounts to negligence on the part of Appellant; no more, no less.

Based on the piece of evidence made available to the Court below, the learned trail judge was no doubt right to have found the Appellant liable in the tort of negligence in the handling of the cheques of the Respondent. … Consequently, this Court finds it unable to fault the Court below for holding that the Appellant is liable to the Respondent in negligence due to reasons of its failures to exercise the due care expected of it when it wrongfully cleared cheques presented to it by AIMS ACHIEVERS CONSULTING LIMITED without first seeking the authority of the Respondent on record.” – Per OHO, JCA

 

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JURISDICTION – TORT OF NEGLIGENCE – ON WHETHER THE STATE HIGH COURT HAS JURISDICTION TO DETERMINE A CLAIM FOR NEGLIGENCE

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“It is therefore important to clarify here that the case of the Respondent at the trial Court, was one which absolutely has nothing to do with bank, banking or dispute in a financial transaction (which would have conferred jurisdiction on the Federal High Court as the Court of competent jurisdiction to determine the claims of the Respondent); rather the case of the  Respondent against the Appellant is based solely on Negligence, which the State High Court has competent Jurisdiction to determine (as provided under Section 272 subsections 1 and 2 of the Constitution of the Federal Republic of Nigeria (amended) 1999. This Constitutional provision clearly empowers the Court to hear and determine civil proceedings (such as the claims of the Respondent) in which the existence or extent of a legal right is in issue.

It will be recalled that the claims of the Respondent at the trial Court on Negligence falls within the ambience and exclusive jurisdiction of the State High Court, thus the trial Court was therefore right to have determined the claims of the Respondent on the tort of Negligence and damages against the Appellant; this Court finds and so holds. See the case of TRADE BANK PLC vs. BENILUX (NIG) LTD (Supra) where the apex Court rightly examined the powers of the State High Court to entertain cases on torts involving Banks per MOHAMMED, JSC held: thus:

“I have no doubt that the Respondent in the case in hand can sue the Appellant in conversion (or the proceeds of the cheque which the Appellant paid to a stranger who is not the payee of the cheque. The Plaintiff/Respondent’s case is simply a Tort of conversion and the action filed by the Plaintiff/Respondent against the Appellant can be entertained by any state High Court. See 7UP BOTTLING COMPANY LIMITED vs. ABIOLA AND SONS BOTTLING COMPANY LTD (2001) FWLR (PT. 70) P. 1650 “per TOBI, JSC: (p. 1682, paras E-G) ‘for the purpose of determining the exclusive jurisdiction of the Federal High Court in respect of section 230 (1)(b), the Court must carefully examine the facts of the case to see whether they justify the application of the subsection. In the instant appeal, although the Appellant was mandated to pay the cheque valued at N1,000,000 to the Respondent, it paid it to a third party who is entirely a stranger to the transaction. That does not qualify as a bank transaction in which section 230(1)(d) applies. It is clearly a tort of conversion which has nothing to do with the exclusive jurisdiction of the Federal High Court.

Conversion is a tort which is actionable in the State High Court. That is exactly what the Plaintiff/Respondent did. I cannot fault the commencement of the action in that Court”.

See also the case of TRADE BANK PLC vs. BENILUX (supra) at (pp.1883-1884. Paras F – A) where the apex Court per EDOZIE, JSC had this to say on the subject;

“It is not disputed that there was no relationship of banker and customer between the Appellant bank and the Respondent company to bring the matter under the proviso of section 230(1)(d) of decree no. 107 of 1993 so as to confer jurisdiction to a State High Court; see NIGERIAN DEPOSIT INSURANCE CORPORATION vs. FEDERAL MORTGAGE BANK OF NIGERIA (1997) 2 NWLR (at 490) p.735. Be that as it may for the exclusive jurisdiction of the Federal High Court to be sustained under the aforesaid section, the civil cause or matter must arise from “banking, banks, other financial institutions”.

Based on the foregoing, issue one is resolved in favour of Respondent on record and against the Appellant to the effect that the State High Court is competent to adjudicate on the claims of the Respondent.” – Per OHO, JCA

 

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THIRD PARTY PROCEEDINGS – EFFECT THEREOF IN AN ACTION FOR NEGLIGENCE

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“It is instructive to note that trial the Appellant did not deny the transaction but rather, brought third party proceedings against AIMS ACHIEVERS LIMITED. The implication of a third party proceeding, in agreement with learned Counsel for the Respondent is clearly an admission of liability on the part of the Appellant” – Per OHO, JCA

 

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BILLS OF EXCHANGE ACT – SECTION 77 – WHEN CAN AVAIL A BANK

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“It will be recalled that the Appellant referred to Section 77 (2) of the Bills of Exchange Act Cap B8 LFN, 2004 and sought thereby to seek refuge under its provisions in shielding the Appellant from liability occasioned by its own negligence.

Learned Counsel for the Respondent, in a counter submission referred this Court to the learned Author, E. O. AKANKI, in his Book: Commercial Law in Nigeria at page 596 was of the view that Section 77 to avail a bank, the whole transaction from the collection of the Cheque, to the receipt and disposition of the money, must be in good faith and without negligence. It was further argued by Respondent’s Counsel, which this Court agrees with that the Author’s view was corroborated by the said Section 77 (2) of the Act, which prescribes that; a banker, must act in good faith and without negligence, where it receives payment for a customer of a prescribed instrument to which the customer has no title or a defective title.

It is rather glaring from the evidence adduced at the Court below, that the Appellant was not only negligent, but also did not act in good faith; that the Appellant acted negligently throughout the entire transaction; from the presentation of the cheques, to the issuance of the caution notice and the payment of the money of the cheques into a third party account, contrary to the account indicated thereon.” – Per OHO, JCA 

 

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DAMAGES – MEANING OF DAMAGES

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Now in the case of CENTRAL BANK OF NIGERIA vs. BECKITI CONSTRUCTION LTD (2012) ALL FWLR (PT. 620) 1266 at 1296 at para. G-H cited by learned Respondent’s Counsel, this Court held that; “the term damages connotes an amount of money claimed by or ordered to be paid to a person as a compensation for loss or injury … and that … Damages are the sum of money which a person wronged is entitled to receive from the wrongdoer as compensation for the wrong done.”

 

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CLAIM – DAMAGES – PURPOSE FOR AWARD OF DAMAGES

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“… it is rather practicable to suggest that the purpose of an award of damage is to compensate the wronged party as a result of the damage or injuries or loss he has suffered at the instance of an opponent. This principle is usually encapsulated in the Latin Maxim: restitutio in integrum, which explains the restoration of an injured person to the situation which have prevailed had no injury been sustained; restoration to the original or pre-contractual position. See the case of LAGOS CITY COUNCIL CARETAKER COMMITTEE vs. BENJAMIN O. UNACHUKWU (1978) 3 S.C. 199 AT 202 where BELLO, JSC (as he then was) stated the position of the law, thus: –

“The measure of damages in an action for negligence is founded on the principle of restitutio integrum. The principle was re-echoed by Lord Wright in Liesbosch Dredger v. SS Edison (1933) A.C. 449 at 459, wherein he said the substantial issue is what in such a case as the present one is the true measure of damage. It is not questioned that when a vessel is lost by collision due to the sole negligence of the wrong-doing vessel the owners of the former vessel are entitled to what is called restitutio in integrum, which means that they should recover such a sum as will replace them, so far as can be done by compensation in money, in the same position as if the loss had not been inflicted on them, subject to the rules of law as to remoteness of damage.”

– Per OHO, JCA

 

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CLAIM – GENERAL DAMAGES – MEANING OF, POWER OF COURT IN AWARDING GENERAL DAMAGES

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“In the defining what General Damages means, the apex Court in the case of YALUJA-AMAYE vs. ASS. REG. ENGR. CONT LTD & ORS (1990) 2 NSCC page 462 at page 480 at Para 25-30 held thus:

“It is well settled law that general damages are the kind of damage which the law presumes to flow from the wrong complained of. They are such as the Court will award in the circumstances of a case…by presuming the ordinary expectations of a reasonable man”.

Against the backdrop of the foregoing, it is important to note that the in the award of General Damages, as was done by the Court below in the instant case, wide spread power is given to the Court comparable to the exercise of discretion of the Court. The power is usually enormous and therefore far-reaching and contrary to the contention held by the Appellant herein, who holds the view that it is excessive. The measure of general damages is awarded to assuage such a loss, which flows naturally from the defendant’s act. It needs not be specifically pleaded. It suffices if it is generally averred. They are presumed to be the direct and probable consequence of that complained of. It is not special damages, and therefore, incapable of exact calculation. See the cases of FEDERAL MORTGAGE FINANCE LTD vs. HOPE EFFIONG EKPO (2004) 2 NWLR (PT. 865) 100 AT 132; DUMEZ vs. OGBOLI (1972), 2 SC 196.” – Per OHO, JCA

 

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APPEAL – TRIAL COURT – ON WHEN DECISION OF TRIAL COURT WILL BE AFFIRMED

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“It is settled principle of law that where a trial court has carried out its assignment satisfactorily, an appeal court shall be left with no option but to affirm such a decision. See Ali v. State (2015) 10 NWLR part 1466 Page 1 at 33 Para D-H per Ogunbiyi, JSC; Sule Anyegwu v. Onuche (2009) 3 NWLR part 1129 page 659 at 674 para F-G per I. T. Muhammad JSC.” – Per AKINBAMI, JCA

 

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CASES CITED

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Not Available

 

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STATUTES REFERRED TO

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1. Constitution of the Federal Republic of Nigeria, 1999 (as amended)

2. Bill of Exchange Act Cap B8 LFN 2004

 

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