African International Bank Ltd. V. Integrated Dimensional System Ltd & Ors. (2012) – SC


African International Bank Ltd. V. Integrated Dimensional System Ltd & Ors. (2012) – SC

by “PipAr” B.C. Chima

Supreme Court – SC.278/2002

Friday, the 11th day of May, 2012

Interest payable on default;

Ordinarily, any issue formulated from an incompetent ground of appeal is itself incompetent and must be struck out. Issues are the important questions formulated for determination by the court and could be distilled from more than one ground of appeal. See; Sunday Madagwa V. The State (1988) 12 SC (Pt. 1) 68 at 76 … Generally, issues are not meant to be formulated on each ground of appeal but raised or distilled out of a combination of the essential complaints of the appellant in the grounds of appeal. Therefore, issues must necessarily relate to facts or law decided by the court whose decision is appealed against. In other words, it is ideal to distill or formulate an issue from more than one ground of appeal but where this is not done or it is impossible, just only one issue may be raised from one ground of appeal. Therefore, a valid Notice of Appeal with one ground of appeal and a single issue for determination is sufficient to sustain an appeal … There is no doubt that it is now an established practice that an appeal is decided upon the issues raised or formulated for determination of the court. In effect, when issues for determination are formulated, the grounds of appeal upon which they are based or from which the issues are formulated become extinguished or expired. The argument of the appeal is then based on the issues so formulated but not on the grounds. — O. Ariwoola, JSC.

Generally, it is the duty of an appellate court to consider all issues placed before it for determination. But where the court is of the view that a consideration of one of the issues is enough to dispose of the appeal, it is not under any obligation to consider all the other issues posed for determination. See Onochie V. Odoewu (2006) 2 SCM 95, (2006) 2 SCNJ 1. — O. Ariwoola, JSC.

What then is “an issue”? An issue is a point in dispute between two or more parties. In an appeal, it may take the form of a separate and discrete question of law or fact or a combination of both. In other words, an issue is a point that has arisen in the pleadings of the parties which forms the basis of the dispute or litigation which requires resolution by a trial court. See Black’s Law Dictionary. Ninth (9) Edition, page 907, Metal Construction (WA) Ltd. V. Milgliore & Ors (Vice Versa) (1990) 1 NWLR (pt.126) 299; (1990) 2 SCNJ 20; Egbe V. Alhaji & 2 ors (1990) 1 NWLR (Pt.128) 546 (1990) 3 SCNJ 41, Ishola V. Ajiboye (1998) NWLR (Pt.532) 91. However, where a court finds that there is proliferation of issues or the issues formulated or posed for determination are clumsy or not clear, a court is empowered to reformulate issues in an appeal. This is to give the issue or issues distilled by a party or the parties precision and clarity. See; Okoro V. The State (1988) 12 SC 191, (1988) 12 SCNJ 1911 Latinde & Anor V. Bella Lajunfin (1989) 5 SC 59, (1989) 5 SCNJ 59, Awojugbagbe Light Industries Ltd. V. P. N. Chinukwe & Anor (1995) 4 NWLR (pt.390) 379, (1995) 4 SCNJ 162, Lebile V. The Registered Trustees of Cherubim & Seraphin Church of Zion of Nigeria, Ugola & 3 Ors (2003) 2 SCM 39, (2003) 1 SCNJ 463. — O. Ariwoola, JSC.

If there had been no such agreement as to payment on demand, it has been said that, “the fact that the obligation of the guarantor arise only when the principal has defaulted in his obligation to the Creditor does not mean that the creditor has to demand payment from the principal or from the surety, or give notice to the surety, before the creditor can proceed against the surety.” See; Andrew & Millet. Law of Guarantee. 1st Edition page 162. African Insurance Development Corporation V. Nigeria Liquefied Natural Gas Ltd. (2000) 4 NWLR (Pt. 653) 494 at 505. Fortune International Bank Plc. V. Pegasus Trading Office (Gmbtt) & Ors (2004) 1 SCM 21 at 31 (2002) All NWLR (Pt. 199) 1312 at 1325. — O. Ariwoola, JSC.

There is no doubt, that, generally, the court below ought to have considered all issues placed before it for determination not being the final court on the matter. But a litigant can only be heard to complain if the issue not so considered is material and substantial in the particular circumstance. See Onifade V. Olayiwola (1990) 7 NWLR (Pt.161) 130 at 159 and if the appellant had suffered any miscarriage of justice. See; State V. Ajie (2000) FWLR (Pt.15) 2831 at 2842. — O. Ariwoola, JSC.

There is no doubt, and as earlier stated, the rights of a Mortgagee as the Appellant herein against the Mortgagor, the 3rd Respondents, is cumulative in the sense that it may decide either way, whether to enforce the security against the property or sue upon the personal covenant to the Mortgagor, for payment or go for both. Yet, it must be clearly stated in the pleadings which form the creditor has chosen, to recover its money. See Megany’s Manual of the Law of Real Property, 67th Edition page 484. — O. Ariwoola, JSC.

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Ordinarily, interest is not payable on ordinary debt in purely commercial transaction, in the absence of a term to that effect expressly or impliedly in the contract or mercantile usage or custom of the parties or as may be contained in a statute. It may also be in place through fiduciary relationship between the parties. See; RNA Ekwunife V. Wayne (West Africa) Ltd. (1989) 5 NWLR (Pt.122) 422 at 455. — O. Ariwoola, JSC.

Even though costs follow events,there shall be no order on costs. — O. Ariwoola, JSC.

Olu Ariwoola, J.S.C.

Dr. Adewale Olawoyin.

A. Onadele, Esq.

The Appellant and 1st Respondent were into Banker/Customer relationship. The Appellant’s claim in this case arose from the banking facilities granted by the Appellant to the 1st Respondent between 1984 and 1987. The 2nd Respondent is the Chief Executive Chairman of the 1st Respondent as well as a guarantor of the facilities granted the 1st Respondent by the Appellant. The 3rd Respondent was a third party, mortgagor who charged his property in Oyo town to the appellant as security for the loans granted to the 1st Respondent.

This is an appeal against the judgment of the Court of Appeal, Ibadan division, delivered on the 5th December, 2001. The present Appellant/Cross Respondent was the plaintiff before the trial court while the instant Respondents/Cross Appellants were the Defendants. The Plaintiff had claimed before the lower court as per its paragraph 24 of the further Amended Statement of Claim as follows:- “Wherefore the Plaintiff claims from the defendants jointly and severally the sum of one million, seven hundred and eighty two thousand two hundred and twenty two Naira seventy eight kobo (N1, 782,222.78) being the balance of banking facilities and interest thereon granted to the 1st Defendant by the plaintiff at its Ilora Branch Oyo State in 1985 and 1987 and jointly and severally guaranteed by the 2nd and 3rd defendants which sum was outstanding at the close of business on 11th August, 1993. The defendant defaulted in the payment of the said sum as agreed whereupon the plaintiff demanded its repayment from each and everyone of them who have notwithstanding such demand neglected, omitted and or refused to pay same. 2. The Plaintiff claims interest on the said sum of N1, 782,222.78 at the rate of 39% per annum from the 12th August 1993 until judgment is given and thereafter at the rate of 10% per annum until final liquidation of the judgment debt.”

The parties filed and exchanged pleadings and the case proceeded to hearing.

The trial Judge gave judgment to the appellant based on the sum lent to the 1st Respondent at the inception with interest at the rate agreed at the inception up till date of judgment and thereafter at 10% per annum until the judgment debt is fully liquidated. Both parties were dissatisfied and so they filed their respective appeal and cross appeal to the court below.
The court below in its unanimous decision allowed the defendants/appellants’ appeal to some extent and rejected the cross appeal.


I. Whether the Court of Appeal did not err when it held that the three issues formulated by the Appellant herein on the main appeal were a mere elaboration of the two issues formulated by the Respondents and thus failed to consider and make a finding on the issues thus raised?

A. The court below had in its judgment opined as follows: “The respondent formulated three issues as arising for determination in the appeal. The three issues are, in my view, mere elaboration of the two issues formulated by the appellants which are already set out above. I therefore consider it unnecessary to reproduce them in this judgment since I consider the two issues formulated in the appellant’s brief as adequate for the purpose of resolving the issues raised in the appeal.”
In the instant case, the court below did not even reformulate or reframe the issues posed by the Respondent before it. When compared with the issue formulated by the appellants on the same point, the issues formulated by the Respondent were said to be a mere elaboration of the issues formulated by the Appellants. As shown above, in my view, a consideration of the issue formulated by the appellants on the same point raised more elaborately by the Respondent in its own issue, by the court below did not occasion any miscarriage of justice.  The court is not bound to prefer the style of the Respondent to that of appellants in the formulation of issues for determination.

B. With the preference by the court below of the style of the appellants, in the formulation of the issues for determination, the appellant herein has failed to show what injustice has been caused to its case. In the circumstance, issue No.1 is misconceived, to say the least, and it is hereby resolved against the appellant.
II. Whether the Court of Appeal did not completely misunderstand and misapply the law and principles governing the appropriate rates, mode of calculation and period of calculation of interest applicable to the 1st Respondent’s indebtedness to the Appellant?

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A. “I agree with the appellant that there was no express agreement between the parties as to what would happen if the 1st Respondent defaulted or failed to repay its indebtedness at the review or expiry dates of the facilities granted to it. But I am unable to agree that the court below erred in excluding the application of the general rules of banking practice and the mercantile custom of bankers. This was neither pleaded nor made the appellant’s case at the trial nor was it proved or established. In other words, it may mean that it was never intended to guide the transaction between the parties. At best the agreed interest rate could have continued to operate until the matter went to court when it would stop and the court’s rate comes into operation. There is no doubt, the variation in the interest rates and turnover charged was as a result of the compound interest being charged on the facilities by the appellant. This variation on the interest rates, the trial court held was not proved and the court below also agreed that the variation was not proved hence it was not entitled to charge compound interest. Indeed, the issue of compound interest charged before the expiry date of the facilities was not properly before the court below. The court was therefore not competent to deal with it as it did. The court erred in this regard. But I agreed with the Respondents that the appellant, not having shown that the issue was ever its case, failed to show that a miscarriage of justice thereby occurred. In effect, the appellant failed to show that the court below misunderstood and misapplied the law and principles of calculation and period of interest applicable to the transaction between the Appellant and the 1st Respondent.”
III. Whether the Court of Appeal did not err when it held that the 3rd Respondent herein was sued as a surety and thus came to the erroneous conclusion that the action against him was premature and incompetent, he not having been served with a demand notice?

A. “There is no doubt that Exhibit E was created to secure the facilities granted to the 1st Respondent by the Appellant. The 3rd Respondent therefore became a Mortgagor to the Appellant after he agreed to secure the loan and overdraft granted to the 1st Respondent, with his personal property. As shown on Exhibit E, the 1st Respondent was the principal debtor while the 3rd Respondent was the Surety. Where both were sued jointly they remained principal and Surety, to be liable solely or jointly with any other persons, firms or companies. But where they are sued severally, for the indebtedness of the 1st Respondent each of the 1st and 3rd Respondents stand as principal debtor to be liable to pay, in which case each party shall be entitled to a formal demand for payment before any action could commence to enforce payment of the indebtedness.”

B. “It is clear from the pleadings and Exhibits that the 3rd Respondent was both a surety to the 1st Respondent’s indebtedness as well as a Mortgagor on the security of the facilities, in relation to the Appellant. The 3rd Respondent became liable to repay or be held responsible for the indebtedness of the 1st Respondent sequel to being a Mortgagor of the security for the loan and overdraft granted to the 1st Respondent. He is therefore entitled to a formal demand from the Appellant since demand for repayment was part of the terms of the contract. In the result, the court below was right to have held that the 3rd Respondent was sued as a surety, hence the action against him was premature and incompetent not having been served with a demand notice.”
IV. Whether the Court of Appeal did not err when it refused to enter judgment for the Appellant in accordance with the terms of its claims before the trial court, giving due allowance for the learned trial Judge’s disallowance of the charges for commission on Turnover charged on the first Respondent’s account?

A. “There is no doubt that whether or not the Appellant had right to vary interests chargeable on the accounts of the 1st Respondent was not decided upon by the trial court, hence the point was not made an issue before the court below. Before the trial court and in the pleading of the appellant there was no averment on either Exhibit E or mercantile custom of bankers for the purpose of charging interest. The trial court found that variation was not proved. The court below on this point agreed with the trial court that the appellant failed to prove by credible evidence the variation in the interest rates, hence failed to prove its entitlement to its claim as contained in its pleading.”
V. Whether the court of Appeal did not err when it failed to make finding on the second issue formulated for determination on the cross appeal as to whether the liability of the 3rd Respondent was limited to N150,000 or N250,000.00 in any event?

A. “In the instant case, I am satisfied that no miscarriage of justice has occurred, the reason being that although the appellant has the right to exercise its power as a creditor under Exhibit E cumulatively, but in the instant action, Exhibit E, as an Indenture was only pleaded and used as regards 3rd Respondent’s property offered, as security for the 1st Respondent’s facilities granted by the appellant. The appellant failed to show in clear terms in its claim that it intended to proceed against the 3rd Respondent on his personal covenant to get him pay the debt as in the case of the 2nd Respondent. No wonder formal demand was not served on him by the Applicant.”

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B. “In the instant case, the reliefs stood jointly and severally against all the defendants and there is no averment in the pleadings to show that the 3rd Respondent was being pursued on his personal covenant on the 1st Respondent’s indebtedness.”


VI. Whether having held that what the plaintiff/appellant was entitled to after the expiry date of the contract was damages for breach of contract, the lower court was right in awarding simple interest at the court rate of 10% per annum from the date cause of action arose up to date of judgment when no claim for damages or compensation for delayed payment was pleaded or proved?

A. “In the instant case, it is clear that Cross Respondent merely claimed the pre-judgment interest upon expiry of the contract and the facility was due for repayment, yet it failed to plead specifically and adduce credible evidence to establish such claim. In my view, the Plaintiff/Cross Respondent was therefore not entitled to any prejudgment interest as awarded by the court below. Exhibits T1, T2 and W does not envisage or contemplate that the same interest being paid on the facilities will continue after the expiry dates, until judgment.  Parties are bound by the contract they voluntarily entered into and cannot act outside the terms and conditions contained in the said contract. In the same vein, neither of the parties to a contract can alter nor read into a written agreement a term which is not embodied in it.  The cross Respondent failed to prove its entitlement to the prejudgment interest claimed hence it was not entitled to it as awarded. The court below was therefore in error in awarding the simple interest on the facilities from the date cause of action arose. All that the Cross Respondent was entitled to was the post-judgment interest, which was guided by the appropriate trial court (Civil Procedure) Rules. The Cross Respondent did not plead any damages as a result of breach of contract. In the circumstance, the cross appeal succeeds and it is hereby allowed.”
“In the final analysis, all the issues formulated, and argued are resolved against the appellant. The appeal therefore fails for lacking in merit and is accordingly dismissed.”



✓ In Unity Bank & Anor V. Edward Bonari (2008) 2 SCM 193 at 240, this court had opined thus: “It is now firmly settled that the purpose of reframing issue or issues is to lead to a more judicious and proper determination of an appeal. In other words, the purpose is to narrow the issue or issues in controversy in the interest of accuracy, clarity and brevity.” See also, Musa Sha (Jnr.) & Anor V. Da Ray Kwan & 4 ors (2000) 5 SCNJ 101 (2000) 8 NWLR (Pt 670) 685.

✓ In Sha V. Kwan (supra) at 705 this court has stated thus: “So long as it will not lead to injustice to the opposite side, appellate courts possess the power and in the interest of justice, to reject, modify or reframe any or all issues formulated by the parties…”

In Himma Merchants Ltd. V. Alhaji Inuwa Aliyu, (1994) 6 SCNJ (Pt.1) 87 (1994) 5 NWLR (Pt. 347) 657, this court in a similar situation held as follows per Onu, JSC: “…..Where therefore there is no evidence whatsoever, as in the instant case, that the claim of interest is founded upon any rationale e.g. mercantile custom or trade usage known to the parties the claim of interest for 20% per month from July, 1988, which anti-dates the judgment passed on 27th October, 1989 by the trial court is without foundation and ought to have been disallowed by the court below.” See also; Union Bank of Nigeria Ltd. Vs Prof. A. O. Ozigi (1994) 3 NWLR (Pt.333) 385 (1994) 3 SCNJ 42 at 56.

It has been held in effect “that in purely commercial transactions a party who holds on to the money of another and keeps it for a long time without any justification and thus deprives that other of the use of funds for the period should be liable to pay compensation by way of interests.” See; Nigerian General Superintendence Co. Ltd. Vs Nigeria Ports Authority (1990) 1 NWLR (Pt.129) 71, Adeyemi V. Lan & Baker (Nig.) Ltd (2000) 7 NWLR (Pt.653) 33. However even where interest is not claimed in the Writ of Summons, the Court is entitled, in appropriate cases, to award interest in the form of consequential order. See; N.G.S.O. Ltd V. N.P.A. (supra) Ferrero & Co. Ltd. V. Henkel (Nig) Ltd. (2011) 8 SCM1 at 11.


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