OMNI PRODUCTS (NIG.) LTD. & ANOR. v. UNION BANK OF NIGERIA (SUPREME COURT)
(PETER-ODILI; MUHAMMAD; KEKERE-EKUN; NWEZE; EKO, JJ.SC)
FACTS
Omni Products (Nig.) Ltd and Amechi Christopher E’Chukwu (“the Appellants”) sometime in 1982, approached Union Bank of Africa (“the Respondent”) with a request to purchase the Pounds Sterling equivalent of ₦25,000.00 for the purpose of remittance to Bakaert International Trade, Belgium. In pursuit of this transaction, the Appellants complied with all regulatory and banking requirements. They duly obtained the approval of the Honourable Minister of Finance and paid the requisite bank charges to the Respondent. Payment for the foreign exchange was made in two instalments of ₦15,000.00 and ₦10,000.00, respectively. Whilst the Respondent successfully remitted the Pounds Sterling equivalent of the second instalment of ₦10,000.00, it failed to remit the equivalent of the first instalment of ₦15,000.00. The said sum was neither transferred to Bakaert International Trade nor refunded it to the Appellants.
The case of the Appellants was that they suffered financial losses for which they claimed damages as a result of the Respondent’s negligence and breach of duty. The Respondent, however, denied liability. Its case was that it merely acted as a conduit pipe in the transaction and that, at the material time, all foreign exchange dealings were vested exclusively in the Central Bank of Nigeria. The Respondent maintained that it had discharged all obligations incumbent upon it by completing the necessary documentation and forwarding same to the Central Bank. It asserted that it was the Central Bank that failed to release the sum of £13,603.50, being the foreign currency equivalent of the ₦15,000.00 paid by the Appellants.
Upon conclusion of trial, the trial Court in its judgment non-suited the plaintiffs in respect of their claims, except for the relief on the loss of the sole agency, for which it awarded ₦500,000.00. The Respondent being dissatisfied with the decision of the trial Court, except the order striking out the 2nd plaintiff, filed an appeal at the Court of Appeal (lower Court). The Appellants were also dissatisfied with the part of the judgment non-suiting them and consequently filed a notice of cross-appeal. In a considered judgment, the lower Court dismissed the appeal and allowed the cross-appeal. The Appellants’ award of ₦500,000.00 was set aside, while the other claims of the Appellants succeeded. Further dissatisfied by the decision of the lower Court, the Appellants appealed before the Supreme Court.
One of the issues for determination was: Whether the appellants should be entitled to be paid accumulated interest on the amount deposited from1983 to 1995, plus interest at 21% from 1995 until the date of judgment by the trial court. (Grounds 1, 3, and 4).
ARGUMENTS
Learned Counsel for the Appellants submitted that the Appellants were entitled to their claim for compound interest on the sum of £13,603.50 (Thirteen Thousand, Six Hundred and Three Pounds, Fifty Pence). Counsel argued that the nature of the Appellants’ action was one for money had and received, which inherently carries with it an obligation not only to refund the principal sum but also to account for the interest that had accrued thereon over the period the money was wrongfully withheld. It was further contended that the reliefs sought by the Appellants in their pleadings were distinct, separate and legally sustainable heads of claim. Counsel maintained that the claim for refund of the foreign currency paid, together with the accrued interest thereon, was fundamentally different from the claim for damages arising from the Respondent’s negligence and breach of duty. On that footing, it was submitted that the court below fell into grave error when it held that granting the said reliefs would amount to double compensation. Learned Counsel emphasised that the law recognises that a claimant may recover both the principal sum wrongfully withheld and damages for the consequential loss occasioned by that wrongful act, provided that such claims are properly pleaded and proved.
Counsel submitted that the award of ₦500,000.00 (Five Hundred Thousand Naira) damages made by the trial court was justified in the circumstances of the case and ought not to have been disturbed. He argued that the damages were not awarded as interest on the principal sum but as general damages flowing from the Respondent’s failure to remit the funds as instructed. Accordingly, the award did not constitute a duplication of the claim for interest but rather compensated for a separate head of injury. Counsel also argued that the applicable interest rate on the judgment sum in Pounds Sterling ought to be the prevailing commercial or bank rate operative within the relevant period. He submitted that where funds meant for an international commercial transaction are wrongfully withheld by a banking institution, the court is entitled to apply a realistic and commercially reflective rate of interest to place the injured party, as far as possible, in the position they would have occupied had the breach not occurred.
In response, Learned Counsel for the Respondent submitted that in the absence of any express agreement between the parties providing for the payment of interest on the deposited sum, the Appellants were not entitled to claim accumulated or compound interest thereon. Counsel argued that a claim for interest must be founded on either contractual stipulation, mercantile custom, statutory provision, or an equitable principle such as breach of fiduciary duty. In his submission, none of these bases had been established by the Appellants. He contended that the Appellants neither pleaded material facts nor led credible evidence to demonstrate any entitlement to interest in the funds lodged with the Respondent. It was further argued that the foreign exchange transactions in question did not, by their nature, contemplate the accrual of interest pending remittance, and that it was never part of the parties’ agreement that the deposited sum would yield interest for the period it remained unremitted.
Counsel also urged the court to distinguish between the rights of a bank and those of its customer in matters relating to interest founded on mercantile usage. He submitted that whilst a bank may, in appropriate circumstances, claim interest from customers based on established banking customs, a customer cannot be allowed to claim interest on the same grounds. According to him, a customer seeking to rely on mercantile customs must specifically plead and strictly prove the existence, scope and applicability of such custom.
DECISION OF THE COURT
In resolving the issue, the Supreme Court held that:
A customer of a bank is entitled, as of right, to claim interest when the bank takes and holds the customer’s money without carrying out the customer’s instructions or refunding it.
This amounts to a breach of the banker’s fiduciary duty, and the rationale for awarding interest is that the bank has kept the customer out of his money and benefited from its use, for which the customer should be compensated.
The Supreme Court further clarified that, even where there is no express agreement, a bank is entitled to charge compound interest on the basis of established custom or on the ground that the customer impliedly consented, particularly where, without protest, he allows his account to be debited. It is therefore reasonable, by that same custom, for the respondent bank, in equity, to be made to pay interest on money it “had and received” for a purpose not carried out.
In the instant case, the Court held that the claim for interest on the money had and received by the Respondent was made as of right, arising from the Respondent’s negligence which resulted in the Appellant’s loss of the sole agency of the overseas principal. Once the customer fulfils the necessary conditions by pleading his entitlement in the Writ of Summons and Statement of Claim, he is entitled to such interest, and this does not amount to double compensation.
Issue resolved in favour of the Appellant.
I. Akaraiwe, Esq., with B. E. Uwaokhonye, Esq., C. Osagie Ogedengbe, Esq. and T. E. Iyoha-Osagie, Esq. for the Appellant.
Dr. A.J.C. Mogbana, Esq., with P. O. Nnamani, Esq., for the Respondent.
This summary is fully reported at (2022) 10 CLRN in association with ALP NG & Co.
