OLAM (NIGERIA) Limited v. Intercontinental Bank Limited (2009) – CA

⦿ CASE SUMMARY OF:

OLAM (NIGERIA) Limited v. Intercontinental Bank Limited (2009) – CA

by PipAr Chima

⦿ COURT:

Court of Appeal

⦿ AREA(S) OF LAW

Trust.
Certainty of objects.
Escrow account.
Bank interest.
Conversion.
Bank Negligence.

⦿ NOTABLE DICTA

* NOT MORE THAN ONE ISSUE FROM A GROUND OF APPEAL
It is inappropriate to distill more than one issue from one ground of appeal. – Nwodo, JCA. OLAM v. Intercontinental Bank (2009)

* PARTIES ISSUES ARE TO BE CONSIDERED
It is trite that issues raised by parties ought to be considered and determined. – Nwodo, JCA. OLAM v. Intercontinental Bank (2009)

* APPRAISAL OF FACT
It is settled law that the appraisal of facts is the duty of the trial Judge and the Appellant court will only intervene when the finding is perverse or wrongly made. – Nwodo, JCA. OLAM v. Intercontinental Bank (2009)

* NATURE OF A LEGAL GUARANTEE
The legal nature of a guarantee requires that there be a valid contract of guarantee between the surety and guarantee. It is a contract whereby the guarantor promises the actual or potential creditor of their promise to be responsible to him in addition to the principal debtor for the due performance by the principal debtor of his existing or future obligations to the creditor, if the principal debtor fails to perform those obligations. – Nwodo, JCA. OLAM v. Intercontinental Bank (2009)

* FACTS SHOULD NOT BE IMPORTED TO A DOCUMENT
In the construction of the contents of a document a court is bound to look at the words used therein and not import facts not stated in the document except where reference is made to another document. – Nwodo, JCA. OLAM v. Intercontinental Bank (2009)

* DOCUMENTARY EVIDENCE WEIGHS ORAL TESTIMONY
The Documentary evidence lends weight to oral testimony. It serves as an action from which oral testimony is weighed for good measure. – Nwodo, JCA. OLAM v. Intercontinental Bank (2009)

* ONLY DOCUMENTARY EVIDENCE CAN CONTRADICT DOCUMENTARY EVIDENCE
However the conflict is not strong to hold his evidence is of no value when the documentary evidence speaks for itself. It is trite the best evidence to challenge documentary evidence is same Documentary evidence. – Nwodo, JCA. OLAM v. Intercontinental Bank (2009)

* CERTAINTIES IN A TRUST
I do agree the test for express trust is the existence of the three certainties set out by Chief Fagbohungbe, that is when a trust is created intentionally by the act of the settlor. There is also implied trust. This is where the legal title to property is in one person and the equitable right based on the beneficial enjoyment of the same property in another, a court of equity will from those circumstances infer an implied trust. Therefore an implied trust is a trust founded upon the unexpected, but presumed intention of the settlor. Under certainty of intention the words used must be examined to see whether the intention was to impose a trust upon the donee. The intention must also be genuine and not a stain as to where the settler did not intend the trust to be acted upon but entered into it for same ulterior motive such as deceiving creditors. Under certainty of objects, the trust must be for ascertainable beneficiaries. – Nwodo, JCA. OLAM v. Intercontinental Bank (2009)

* NEGLIGENCE IS A QUESTION OF FACT
The learned trial Judge on issue of Negligence rightly stated that Negligence is a question of fact and not law. Therefore each case must be decided in the light of its own facts. – Nwodo, JCA. OLAM v. Intercontinental Bank (2009)

* EVIDENCE ADMITTED IS SUBJECT TO BE TESTED AND EVALUATED
The class of witnesses described as expert witnesses is well settled. It is imperative to state that every piece of evidence that has been admitted in the course of proceedings is subject to be tested for credibility, weight or cogency by the trial court before it becomes acceptable. In effect it is not merely acceptable because the witness is described as an expert and his evidence not challenged. The primary duty of the trial court is to evaluate the evidence before it is accepted whether given by an expert or not. – Nwodo, JCA. OLAM v. Intercontinental Bank (2009)

* ACTION IN CONVERSION
A cause of action in conversion therefore is based on an unequivocal act of ownership by a defendant of goods of the plaintiff without any authority. – Nwodo, JCA. OLAM v. Intercontinental Bank (2009)

* ACTION FOR MONEY HAD AND RECEIVED
An action for money had and received is a common law action and has always been used in circumstances whenever conversion lies and money have been received on behalf of the plaintiff by the Defendant. The claim is to compel the Defendant to restore such money to its true owner. See AEROFLOT V. U.B.A. supra or where the Defendant. The claim is obliged by the ties of natural justice and equity to refund the money. – Nwodo, JCA. OLAM v. Intercontinental Bank (2009)

* NATURE OF A JUDGEMENT DEBT
The Appellant’s claim for interest falls into two parts: pre judgment and post judgment debt. A judgment debt is a debt or damage or other monetary award which has been pronounced upon by a court of competent jurisdiction. It begins when the court has pronounced its judgment in favour of the plaintiff. Therefore such interest are interest after adjudication and starts to run from date of judgment. It cannot be from the date of accrual of action. – Nwodo, JCA. OLAM v. Intercontinental Bank (2009)

* AWARDING INTEREST BEFORE JUDGEMENT
The power to award interest before judgment is based on statute or a right based on the common law or some equitable principle or contract. The nature of this interest makes it mandatory that before an award can be claimed, the facts in support must be pleaded and evidence lead to support the claim. The rate of interest and date to calculate from should be lead in evidence and clear. – Nwodo, JCA. OLAM v. Intercontinental Bank (2009)

⦿ PARTIES

APPELLANT
OLAM (NIGERIA) Limited

v.

RESPONDENT
Intercontinental Bank Limited

⦿ LEAD JUDGEMENT DELIVERED BY:

Hon. Justice Regina Obiageli Nwodo, J.C.A

⦿ APPEARANCES

* FOR THE APPELLANT

– E.O. Sofunde.

* FOR THE RESPONDENT

– Chief F. O. Fagbohungbe.

⦿ CASE HISTORY

The Appellant Olam (Nigeria) Limited entered into an agreement with Pacers Multi-Dynamics Limited (herein after described as Pacer) whereby the Appellant is to supply 80,000 bags of sugar to the Nigerian Bottling Company PLC (hereinafter referred to as NBC) on behalf of Pacers Multi-Dynamics Limited.

Pursuant to the Agreement the Pacers Board of Directors passed a resolution in which they resolved that an escrow account be opened specifically for the trading relationship between the appellant and “Pacer” and that all payments by Nigerian Bottling Company be paid into that escrow account and same will be for repatriation to Olam International only. This Resolution was sent to the Defendant now Respondent, Intercontinental Bank Plc, the bankers to Pacers and the Bank wherein Pacer maintains a current account with the Respondent.

Pacers then caused Nigerian Bottling Company (NBC) to issue to the Respondent a letter of domiciliation dated 11th May, 1998 confirming that 80,000 bags of sugar is to be supplied and the cheques issued in payment will be credited into Pacers escrow account with the respondent. The letter further directed the Respondent to pick up the cheques from Nigerian Bottling Company (MBA). The Respondent responded to Pacers request promptly by a letter dated 21 May, 1998 wherein they declined the request to open escrow account and informed Pacers expressly that any cheque issued by Nigeria Bottling Company and forwarded to Respondent would be paid into Pacers Current Account with the Respondent.

The Appellant delivered the bags of sugar. The Respondent collected and cleared all the 16 cheques issued by Nigerian Bottling Company in favour of Pacers issued in the name of Pacer Escrow Account and paid the sixteen cheques of the value of N151.2 Million into Pacers Current Account and applied that amount to partially liquidate the N500 million, the alleged debt owed to the Respondent by Pacers. The Appellant then wrote to the Respondent to pay him the total value of the cheques collected. The Respondent refused.

The Appellant then proceeded to the High Court, seeking reliefs set out in the further amended Statement of Claim.

The trial Judge in a considered Judgment held: “Negligence is a question of fact and not law. From the above definition, it seems the Defendant acted within the business of practice of a bank, in ensuring that it is not a Father Christmas dashing out deposits of its investors. Where does a customer expect the bank to get funds to satisfy depositors who have invested their money in the bank for saving purposes. That being the situation, issue of negligence does not arise as it is acting of its right.”

The plaintiffs dissatisfied with that decision filed a Notice of Appeal on 7/2/03 containing two grounds of Appeal.

Exhibit M2 calls for interpretation and I will reproduce the contents of exhibit M2 for purpose of emphasis:

“May 21, 1998
The Managing Director
Pacers Multi-Dynamics Limited
Plot 2, Lateef Jakande Road Agidingbi – Ikeja Lagos.

Attention: Muyiwa Fagbemi

Dear Sir,

ESCROW ACCOUNT
The above subject matter refers. Our Executive Management has declined your request to open the above mentioned account. It was also decided that all cheques from NBC should be lodged into your current account. We guarantee any subsequent request for transfer to Olam Account.
We thank you for your usual co-operation.
Yours faithfully

NIGERIAN INTERCONTINENTAL MERCHANT BANK LIMITED
STAN EHIRIM EMEKA ODO
CORPORATE ACCOUNTS GROUP MANAGER
CORPORATED ACCOUNTS GROUP”


⦿ ISSUE(S) & RESOLUTION

[APPEAL: ALLOWED, IN PART]

1. WHETHER THE LEARNED TRIAL Judge was correct in not considering claims of the appellant based on conversion and money had and received as well as the claims for interest?

RULING: IN FAVOUR OF RESPONDENT.
I. The trial Judge considered the issue of Negligence and held there was no negligence and dismissed the action, the lower court having dismissing the first claim he must proceed to consider the alternative claim, the main claim having been refused.
II. It is my view that the lower court considered the claim on conversion and money had and received. The facts constituting the three main causes of action are interrelated. The learned trial Judge from his own style of writing lumped together the issues but the basics were considered. To consider is one point to consider well is another. The claim on interest is dependent on the success of the main claim and the determination of the Issue of interest is founded on the main claim from which it is rooted. Since the trial Judge held there was no Negligence any decision on interest will be mere academic exercise, worthless and of no probative value.



2. WHETHER IN THE PECULIAR circumstances of this action, it was proper for Respondent Bank to apply, the N151.2 million proceeds of the sixteen cheques involved to partially offset debt owned to Respondent by Pacers and not treat the proceeds of the cheques as funds held in trust for Appellant.

RULING: IN FAVOUR OF APPELLANT.
I. It is my view that Exhibit M2 should be interpreted in line with the ordinary meaning ascribed to the word guarantee in the dictionary. The Respondents statement on guarantee is in respect of any future request Pacer will make for them to transfer the value of the cheques to Olam Account. The letter exh.M2 must be read as a whole in order to effectively reflect the import of the third paragraph, on guarantee to transfer to Olam Account. The phrase subsequent request, for transfer cannot be isolated from the phrase “All cheques from NBC” used in the second paragraph of the letter. I agree with the fervent contention of Learned Senior Counsel that the guarantee in exhibit M2 is in respect of payment into Olam’s account, upon subsequent request, this is in line with the due construction of Exhibit M2. In effect the writer of Exhibit M2 assured Pacer that they will pay the value of the cheques into Pacers Current Account and that any future request for transfers to Olam Account will be honoured having refused to open the Escrow Account.

II. The learned trial Judge’s interpretation that transfer will be made when Pacer has liquidated its debt is contrary to the contents of the letter exhibit M2. That letter did not talk about debt nor liquidation. I therefore find no legal guarantee in exhibit M2 but assurance to transfer to Olam Account on future request from the proceeds of the cheques cited in the letter, having refused to open the escrow account. The payment cannot be on basis of future cheques as contended but the cheques described in the same letter as “all cheques”.

III. Clearly in the ordinary case of banker and customer, their relationship depend either entirely or mainly upon an implied contract but governed by obligations. Bankers accept money from and collect cheques for their customers and place them to their credit, they also honour cheques or orders drawn on them by their customers when presented for payment and debit. A Bank is not under an obligation to open any special account that is not part of the initial agreement that created the relationship of Banker – Customer. In the instance case Pacers instruction to the Respondent to open an Escrow account amounts to an offer to the Bank which they had the right to accept or refuse. There is no evidence that the offer was accepted. The Respondent refused. He was under no obligation to open the Escrow Account. The nature of an Escrow Account is different from the Current Account which Pacer already enjoys with the Respondent. When the Respondent declined to open this account the relationship and obligation that would have arisen from this special account failed. The nature of Current Account and Escrow Account are distinct and separate.

IV. Therefore since the cheques were issued to Pacers Escrow Account the Respondent had no express or implied right to pay the cheques into a Current Account contrary to the instruction on the cheques. It must be paid into Pacers Escrow Account, the payee. The Accounts are distinct. The inexistence of the Escrow Account placed an obligation on him to return the cheques.

V. The principles of law set in First Bank case and Osunsedo are not apposite to the present facts. In those two cases both accounts were owned solely by the customer. In the instance case cheque was issued in the name of a non-existence account. The learned trial Judge rightly defined an escrow account but went wrong when he stated in the light of evidence presented before him that plaintiff has failed to prove that the accounts are not held in the same right. It is indisputable that Escrow Account is not the same as a normal current account enjoyed “by Pacer” with the Respondent. The Rights arising therefrom and the beneficiers are not the same. Exhibit M written to the Respondent contained specific facts on the purpose of the request for escrow account which is founded on an agreement between Pacers Respondent’s customers and Appellant the third party. The agreement to supply the sugar was executed and exhibit K the letter of Domiciliation written by NBC to the Respondent is further notice of the domiciliation of the Account, the purpose for the payment and the instruction to pick the respective cheques from the NBC. The Respondent was clearly on notice.

VI. Under certainty of objects, the trust must be for ascertainable beneficiaries. See per Lord Denning in Re VONDERVELL’S TRUST (No.2.) (1974) Ch. 269 at 319. The cheques issued in the name of “Pacers escrow” was for the benefit of the Appellant. Exhibits L, L1 exhibit M2 is distinct disclosure that the Beneficiary of the value of the cheques is the Appellant. Exhibit M2 is an assurance by the Respondent that he will transfer the value of the cheques to Olam Account. That statement is confirmation they were aware that the Appellant is the Beneficiary of the cheques. Therefore the Respondent having collected the 16 cheques intended and expressed for a specific purpose the result is that a status of purpose trust evolved. There was sufficient intention to create a trust in respect of N152 Million in favour of the Appellant. The value of the cheques collected was within the ambit of a trust class. Furthermore the Bank acted as Pacers agent when they collected the cheques and owes the usual fiduciary duties of an agent to its principal. The customer, Pacers is not a party to this appeal nor in the lower court but the beneficiary is the Appellant and the instruction for Respondent to collect the cheques and pay into a specific account was flouted. The nature of the Banks general duty to exercise, reasonable, “care and skill” will arise in certain circumstances when the services provided are outside a contractive relationship of Banker and Customer. The Respondent had actual knowledge of the beneficiary and willfully shut his eyes, collected the cheques after declining to open the Escrow Account and recklessly paid them into a current account against the intention of his customer and owner of the cheques. The payee of the cheques is Pacers Escrow Account but Pacer has no escrow Account and Pacer by his request for a special account was certain he did not want the current account to be the Trading Account for the trade between himself and the Appellant. Rather than not collect the cheques Respondent paid into a different account … The purpose of the cheques collected by the Respondent was known to them, the fact that they collected the cheque placed a trust on them and the value of this cheques were paid into an account not designated as the payee obviously with the intention to offset the debt in an account that is in debit. The Appellant was trustee of the proceeds of the cheques.



3. WHETHER THE BANK WAS negligent to the Appellant?

RULING: IN APPELLANT’S FAVOUR.
I. The Respondent as a Bank had the duty to exercise reasonable care and skill to the Appellant notwithstanding the absence of a contractual relationship. The Respondent had actual knowledge that the Appellant was to supply sugar to NBC and that was the main reason for the Escrow Account. The Pacer Escrow Account is a purpose Account obviously to secure the interest of the Appellant, who had given consideration by using his finances to supply sugar on the light of the agreement which included a clause that an Account “Pacer Escrow” wherein the value of the sugar supplied will be paid in. However since he had notice of the purpose of the special account and he was put on notice of the beneficiary of the value of the cheques addressed to Pacer Escrow Account, when he collected the sixteen cheques and had not opened an account as requested, was under obligation to conduct himself in a manner that will not affect the value of the cheques contrary to the intention of the Beneficiary, in effect the value on trust for the Appellant as the Beneficiary and became under a duty to exercise care for the benefit of the Appellant. The Appellant stood in a position that the Respondent ought reasonably to have had him in contemplation as person closely and directly affected by his act of collecting the proceeds of the cheques when they paid same into current account. That is the crux of the duty of care owed to the Appellant. The Respondent breached that duty when he lodged the proceeds of the cheques in Pacers Current account and applied them to offset Pacers alleged indebtedness without prior notification to the appellant. The Appellant is not liable for any culpable negligence; the instruction on the payment was made by Pacer to NBC. Furthermore the contents of Exhibit M2 wherein the Respondent guaranteed subsequent request for transfer to Appellant account is reassurance that Appellant money was safe in the hands of the Respondent and will be transferred on request. The cheques were marked “Account Payee only and “not Negotiable” The Respondent a Bank by its nature is in a privileged position to appreciate the legal effect of those terms but he still proceeded to pay cheques clearly marked “Pacers Escrow” into Pacers current account. Both are distinct and cannot be combined. The Respondent act was wrong and raises the question of the standard of the paying or collecting Bank and how it was cleared when the escrow account was not in existence. I do agree with the senior counsel for the Appellant that the injury suffered by the Appellant is that he lost the opportunity and ability to receive payment for 80,000 bags of sugar he supplied to NBC. Appellant did establish a claim for negligence. The learned trial Judge erred in his finding and decision that issue of negligence does not arise.



4. WHETHER THE RESPONDENT is liable to the Appellant in conversion?

RULING: IN APPELLANT’S FAVOUR.
I. To sustain a claim for conversion there should be in existence an injury to the plaintiff’s possessory right or interest in the chattel converted. In the instance case the 16 cheques issued in the name of Pacer Escrow Account was for a special purpose and the beneficiary is the Appellant. The Appellant then has an interest in the cheques which value has been used to offset part of the debt owed to the Respondent by Pacer. The conduct of the Respondent in using the value of the cheques to clear some part of the debt owed by “Pacer” was inconsistent with Appellants right and amounted to deprivation of the 152 Million money due to the Appellant. The facts lead in evidence by the Plaintiff witnesses and the documentary exhibits on the existence of the agreement to supply NBC sugar between appellant and Pacer are not in dispute. Equally is the instruction by NBC that domiciliation is in respect of Pacer Escrow Account. The purpose of Escrow Account was duly clear in the letters and Resolution to the Respondent. The Respondent was in actual Notice but dealt with the cheques in a manner not authorized. The value was for a specific purpose known to him but using his privileged position collected the cheques after refusing to open the Escrow Account stated on the cheques and paid same into another Account. The Appellant demanded for the return of N152 Million but respondent refused.


⦿ ENDING NOTE BY LEAD JUSTICE – Per Nwodo JCA

The Appellant can sustain a claim under money had and received from the totality of the evidence and documentary evidence, it is my firm view that the claim of the Appellant succeeds on the three alternative prayers i.e. Negligence, as well as wrongful conversion of the proceeds of the cheque and the claim for money had and received. Though these three causes of action are independent, but the similar facts and evidence before the court established them respectively.

The plaintiff succeeded through PW10 to establish his claim on interest at the rate of 23% before judgment for the period 12/8/98 – 30/6/00. That is the period he is entitled to at the rate of 23%. Thus the lending rate of 23% of the value of the 16 cheques from 12 August, 1998 to 30 June, 2000 will give the total interest that is due to the Appellant as accrued before judgment. Consequently this appeal succeeds in part and allowed. I invoke the powers conferred on this court under section 15 of the Court of Appeal Act and enter judgment in favour of the Appellant for the total sum of N151,204,522.50 being damages suffered by Appellants as claimed in the main relief under the further further further Amended Statement of Claim. I order interest at the rate of 23% on the said judgment sum for the period before Judgment covering 12 of August 1998 to 30th day of June, 2001 and interest post judgment at the rate of 6% on the principal sum of N151,204,522.50. I assess and award the Cost of N30,000 in favour of the Appellant against the Respondent.

⦿ REFERENCED (STATUTE)

⦿ REFERENCED (CASE)

* NATURE OF A BANK AND BANK’S CUSTOMER
per Lord Atkin in JOACHIMSON v. SWISS BANK CORPORATION (1921) 3 KB 110 COURT OF APPEAL where he held: “The bank undertakes to receive money and to collect bills for its customer’s account. The proceeds so received are not to be held in trust for the customer, but the bank borrows the proceeds and undertakes to repay them. The promise to repay is to repay at the branch of the bank where the account is kept, and during banking hours. It includes a promise to repay any part of the amount due against the written order of the customer addressed to the bank at the branch, and as such written orders may be outstanding in the ordinary course of business for two or three days, it is a term of the contract that the bank will not cease to do business with the customer except upon reasonable notice. The customer on his part undertakes to exercise reasonable care in executing his written orders so as not to mislead the bank or to facilitate forgery. I think it is necessarily a term of such contract that the bank is not liable to pay the customer the full amount of his balance until he demands payment from the bank at the branch at which the current account is kept.”

* BANK TO INFORM CUSTOMER BEFORE MOVING MONEY FROM ONE ACCOUNT TO ANOTHER
In BRITISH and FRENCH BANK LTD. v. OPALEYE (supra) Mr. Opaleye the customer of the Bank had two accounts at the Bank, one in his name and the other in the name of the firm and he was the sole account holder. The firm account was overdrawn to the extent of ?500 and when a cheques of ?350 was paid into the private account the Bank decided to utilize the money from the private account in order to reduce the overdraft in the firm’s account. The Bank utilized the money from the private account to reduce the overdraft in the firm’s account. Opaleye told the Bank that ?350 less his commission belonged to the stranger whose property he had sold, the Supreme Court held: “I think it can be said with justice that very strongly implied an agreement to keep them separate and distinct, without any right on the part of the Bank to combine them or to transfer assets from one account to the other, at any rate not without reasonable notice of the intention so to do.”

* IMPLIED TRUST
RE: KAYFOLD LTD (In liquidation) 1975 1 All E.R. In that case the Managing Director of the company concerned about protecting customers who had send in money was advised to open a special account called a “customers Trust Deposit Account” into which such customers money will be deposed. The manager rather than open the account, the “Managing director agreed with his Banker to use an existing formal deposit account. After the customers funds had been deposited in the said account for the agreed purpose only, the Bank sought to apply those funds to other purposes. The court held that a trust had been created in favour of the customers of the company as the three certainties were present to create a trust.

* NEGLIGENCE INGREDIENT
In AGBONMAGBE BANK LTD. v. C.F.A.O 1966 ANLR S.C. 130, the Supreme Court on what a plaintiff suing for Negligence must establish held that plaintiff must show that the Defendant owed him a duty of care and that he suffered damage in consequence of the Defendant’s failure to take care.

* WHAT AMOUNTS TO CONVERSION
In OWENA BANK (NIG) LTD. V. N.S.C.C. Ltd. 1993 4 NWLR (Pt.290) CA 698 on what amounts to conversion. The court held “Conversion is an injury to the plaintiffs possessing right on interest in the chattel converted.”

* HOW TO ARRIVE AT RATE OF INTEREST IN COMMERCIAL CASES
In TATE and LYLE FOOD AND DISTRIBUTION LTD. V. GREATER LONDON CONOI AND ANOTHER. 1981 3 All E.R. 716 Forbes J on how to arrive at the rate of interest in Commercial cases held that one must not look at the profit which the Defendant wrongfully made out of the money he withheld but at the cost to the plaintiff of being deprived of the money which he should have had. In my view interest in commercial cases of this nature is not awarded against the Defendant as a punitive measure for having kept the plaintiff out of his money but as an attempt to achieve restitution in intergrum.

⦿ REFERENCED (OTHERS)

An ESCROW ACCOUNT is defined in Blacks Law Dictionary as follows: “A Bank Account generally held in the name of the Depositor and an escrow agent which is returnable to depositor or paid to third person on the fulfillment of escrow condition.”

CLERK AND LINDSELL ON TORTS 14 EDITITION PAGE 671 ARTICLE 1077. Conversion is defined thus: “Conversion is an act of deliberate dealing with a chattel in a manner inconsistent with another right whereby that other is deprived of the use and possession of it.”