3PLR – A.C.B. V. EAGLE SUPER PACK (NIG) LTD
POLICY, PRACTICE AND PUBLISHING, 3PLR, LAW REPORTS
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A.C.B.
V.
EAGLE SUPER PACK (NIG) LTD
COURT OF APPEAL
2 NWLR Part 379
3PLR/1995/2 (CA)
OTHER CITATIONS
BEFORE THEIR LORDSHIPS:
ONALAJA JCA
ROWLAND JCA
KATSINA-ALA JCA
REPRESENTATION
C.O. Akphangbo SAN (with him, Nnamdi Otukwu ESQ.) – for appellant
Eyo O. Ekpo – for respondent
MAIN ISSUES
COMMERCIAL LAW:– COMMERCIAL TRANSACTIONS:– Import and export – Distinction between custom and usage – Liability of an issuing banker pursuant to a Letter of Credit – How determined
NONPROFIT LAW:- International convention championed and developed by a non-profit – When applicable in Nigeria – Customs and usage – Meaning of – Implication for justice administration in Nigeria
INTERNATIONAL LAW – INTERNATIONAL TRADE:- Letters of Credit – Applicable customs and usages – Distinction between a treaty between nations and an international trade custom or convention – Uniform Custom Practices – Nature of – Applicability in Nigeria
BANKING AND FINANCE LAW:- Banking practices – Letters of Credit – Role of Bank thereto – Uniform Customs and Practice for Documentary Credit – Applicability in Nigeria – Applicability to specific transactions – How determined
PRACTICE AND PROCEDURE – COURT:- Precedent – Rule of stare decisis – Meaning and justification of
PRACTICE AND PROCEDURE – JUDGMENT AND ORDER: – Retrial Order – When proper – When can be made alongside with the making of another order settling a part of the suit
PRACTICE AND PROCEDURE – PLEADINGS:- Writ of summons – Legal implication
MAIN JUDGEMENT
ONALAJA JCA DELIVERING LEADING JUDGEMENT
The World Bank and International Monetary Fund (IMF) made economic survey of Nigeria Economy some few years back and came out with the finding in its report that a set back of the economy was that Nigeria is under banked, that is, there are insufficiency of banking operations in the system of the economy. As a result there was a relaxation of the strict procedure under the Banking Act of 1969 in granting licences for banking operations. The outcome of the liberalisation was to open up a floodgate of issuance of licences for operation of commercial merchant Bank and finance houses. The banking explosion has been quite phenomenal in a developing economy.
The extension to bring banking custom and facilities to the grassroot and rural areas resulted in the formation of community banks which are now dotted in the nooks, corners, and villages all over Nigeria.
The profligacy of the said banks within the few years of operations led to many of them designated and described as distress banks. The situation gave rise to the imposition of more stringent measures to tighten the operation of the banking industry by the apex and controller of banking, the Central Bank of Nigeria.
The expansion of the Banking industry opened up international trade and commerce, it is from this angle one is to conceptualise the relevance and importance of this case on appeal to our Banking Industry as it is connected with international trade, and commerce.
The plaintiff an incorporated company, registered under the Companies Act is hereinafter referred to as the respondent in this judgment has its registered head office at Okporo in Orlu Local Government Area of Imo State and carries on business as importer, exporter and manufacturer. As manufacturer, it imports part of its raw materials from overseas into the country.
As the importation of the raw materials involved international trade it operates through its banker.
Its banker is the defendant in this action and is henceforth referred to as the appellant in this judgment. The appellant is a Commercial Bank incorporated under the Banking Act 1969 with branches throughout Nigeria including its Orlu branch, wherein the respondent operates and maintained a current account No. 00674.
On or about the month of December, 1986 the respondent and the appellant agreed orally at the later’s Orlu branch, that for the consideration of paying the appellant the usual bank charges and commission, the appellant was to transmit to the respondent’s customer Musashi Trading Company Kobe, Japan the sum of US (American Dollars) $16,180 for the importation of raw materials by the respondent.
The parties also agreed that the appellant would open a confirmed letter of credit in favour of the overseas supplier of the respondent to wit Musashi Trading Company Kobe, Japan.
At the material time it is pertinent to note that in trying to cope with its battered economy to satisfy part of the conditionalities imposed by IMF to assist its economy Nigeria established Structural Adjustment Programme with the attendant procedure of the Second Tier Foreign Exchange Market. To raise the US Dollars of $16,180.00 the respondent funded the purchase of the said amount through the appellant at Week 11 of the Second Tier Foreign Exchange Market (SFEM) for the sum of N55,699.95 kobo.
On 12th December, 1986 Appellant issued a Documentary Credit No. ORL.4/86 to which documents pleaded in paragraph 8 of the statement of claimant page 5 of the record of proceeding listed (i) to (x) were attached. The documents are:
(i) Summary of application to open Irrevocable/Confirmed I/C No ORL.4/86 of 12/12/86.
(ii) Exchange Control Risk Indemnity of 12th December, 1986
(iii) Form No. LC/BILL-10-dated 12th December, 1986.
(iv) Foreign Exchange Requisition Form
(v) Invoice No. P. – 108/86E of November 5th 1986 from Musashi Trading Co. Kobe, Japan.
(vi) Bank Draft No. 906356 dated 16/12/86 for N5,569.96
(vii) Form C 188A Advance Import Duty payment
(viii) Application to purchase Foreign Currency Form M.
(ix) The Universal Insurance Company Ltd, Receipt for N612.69 kobo being payment for Marine Insurance proposal.
(x) Certificate of Marine Insurance No.05800 of 11/12/86″.
All the said documents were admitted in evidence without objection through the 1st Pw the Managing Director of the respondent and were marked Exhibits A to A9.
The confirmed letter of credit was to remain valid till 13/1/87. As appellant failed to deliver the confirmed letter of credit to its overseas suppliers, Musashi Trading Company Kobe Japan, on 4th 8th and 11th May, 1987 respondent wrote letters to the appellant wherein it complained repeatedly the non payment of the letter of credit to the said overseas suppliers. The letters were later admitted through 1st P.W without objection and marked Exhibits B-B2.
On 19th May, 1987 appellant by letter requested the respondent to grant it an extension of the life span of the letter of credit to 15th July, 1987 the letter was admitted without objection and marked Exhibit C. Reluctantly, respondent granted the request for extension of the life span of the letter of credit by letter dated 17th June, 1987 admitted without objection and marked Exhibit D. As appellant still failed to send the letter of credit to Japan the respondent instructed its Solicitor to write letter of complaint to the appellant which was admitted as Exhibit E.
The overseas suppliers of the respondent hereinafter referred to in this judgment as Musashi wrote three letters dated 11th 28th May, 1987 and 2nd September, 1987 wherein they expressed non receipt of the letter of credit were later admitted without objection and marked Exhibits F-F2. Respondent was served with photocopies of Exhibits F-F2.
Notwithstanding its inactivity about the non-delivery of the letter of credit documents relative to the Bank charges were admitted in evidence and marked Exhibits G-G8.
As appellant was not forthcoming, respondent issued with of summons at the Orlu High Court on 6th October, 1987 against the appellant. Whether by coincidence or design on that very day 6th October, 1987 appellant requested the respondent for consent to further extend the life span of the letter of credit which was admitted as Exhibit H, obviously respondent rejected the idea of further extension of the life span of the letter of credit.
The appellant was later served with the writ of summons after which pleadings were served and exchanged. The appellant sought and was granted leave to amend its statement of defence simply referred to as statement of defence in this judgment.
As it is trite law that a statement of claim supercedes the writ of summons the claim of the respondent are set out in paragraph 20 of the statement of claim which is reproduced under:-
“(2) Wherefor the plaintiff claims against the defendant the sum of N2,000,000.00 (Two Million Naira) being special and general damages for negligence in that the defendant negligently handed the plaintiff’s letter of credit transaction of 12th December, 1986.
or in the alternative
N2,000,000.00 (Two million Naira) being special and general damages for breach of contract.
Particulars of special damages
(i) Refund of money spent in purchasing
US $16,180.00 N55,699.65
(ii) Refund of advance Import Duty N 5,569.96
(iii) Refund of payment for Marine Insurance proposal N 612.69
(iv) Refund of commissions charges etc. as specified in para 14 above N 1,685.47
N63,567.77
==========
General damages N1,936,432.23
It is trite law that both the court and the parties are bound by the pleadings, I reproduce part of the pleadings of the parties which shall be commented upon later in this judgment:
“STATEMENT OF CLAIM
(16) The plaintiff should have made a profit of over N750,000.00 if the defendant had not acted negligently in handing the plaintiff’s letter of credit. The plaintiff shall contend that the defendant shall bear the costs of losses incurred in the said letter of credit transactions. The plaintiff hereby pleads the Business Concord of October 9, 1987.
(17) The defendant had similarly in 1984 negligently handled the plaintiff’s orders as a result of which the plaintiff incurred a loss of over N600,000.00.
(19) The plaintiff shall contend that the defendant was negligent and failed woefully to exercise the skill, care and competence expected of a bank in the handing of such transaction as letter of credit. In the alternative the plaintiff shall contend that the act of the defendant constituted a breach of its contract with the plaintiff in respect of the Letter of Credit transaction of 12th December, 1986. The plaintiff has suffered damages in consequence thereof”.
The appellant averred in the undermentioned paragraphs of its statement of Defence at pages 36,37, 38-41 of the record of proceedings:-
“3. For paragraphs 6 and 7 of the statement of claim, the defendants states that the bidding was successful and $16,180.00 was approved for the purposes of the importation. The defendant bought one American Dollar for N34.25 kobo. The defendants concede that the Exchange rate is not static and that fact did not make time an essence of the contract and that all about the importation of the said Iron materials was the business of the plaintiffs. The defendants state that as between the plaintiffs and the defendants, the defendants were acting as the agents of the plaintiffs to see to it that the sellers are paid.
(5) On 9/1/87 by instantaneous communication (Telex) defendants instructed their correspondence Bank namely: National West-Minister Bank, New York USA to advice and confirm on the letters of credit and therefore pay over to the exporters the sum of $16,180.00 upon the presentation of documents listed on the said Telex. The defendants plead this Telex dated 9th January, 1987.
(b) By Telex the correspondence bank informed the defendants that way back on 14/1/87 they asked the beneficiary’s bank, Bank of Tokyo Kobe, Japan to advice on the letters credit. The defendants plead this Telex message.
(c)
(d)
(e) By yet another Telex dated 13/8/87 the defendants informed the Bank of Tokyo, Kobe Japan, the fact that their correspondence bank i.e. National West Minister Bank New York had informed the defendants that they had asked the (Bank of Tokyo) to advice and confirm on the letters of credit in favour of the sellers. The defendants plead this Telex. The defendants have done all that is necessary for them to do according to International documentary Credit to see to it that the imported goods are exported and that the beneficiaries are paid and plead Articles 18 and 20 of the Uniform Customs and Practice for Documentary Credit applicable to Nigeria and upon which the relationship between the plaintiffs and the defendants is pegged”.
The pleaded Uniform Customs and Practice for Documentary Credits was admitted through the Defence and marked Exhibit S. Respondent filed no reply to the statement of defence.
To substantiate their claims respondents as earlier referred to in this judgment called as 1st P.W its Managing Director the salient points of his testimony derived from the averments in the statement of claim have already been reflected above in this judgment. To confirm that on the issue of the loss of N750,000.00 profit he was not challenged under cross-examination so also was the similar fact of the previous loss of N600,000.00 when appellants after opening letter of credit for it failed to effectually deliver as in the instant case the letter of credit. He was cross examined on other issues by learned counsel for appellant.
The 2nd Pw was subpoenaed as the Librarian of Imo State Library Board just to tender Business Concord of 9th October 1987 it was admitted without objection and marked Exhibit J.
Appellant called its only witness working in International Banking Operation Division and confirmed in material details the evidence of 1st Pw as to the opening of the letter of credit in favour of respondent suppliers and that Exhibits A-A9 were the relevant and material documents necessary for the opening of the letter of credit.
In truth and in fact respondent paid all the necessary amount with the bank charges and commission for bidding at SFEM for purchase of the sum of $16,180.00 American US Dollars at Week…of the operation of SFEM the bidding was successful. On 9th January, 1987 by operative telex they instructed the correspondent’s Bank in American National Westminster Bank of New York to advise and confirm to the beneficiaries the Irrevocable Letters of Credit and to pay the sum of $16,180.00 on presentation of shipping documents. The telex was admitted without objection and marked Exhibit L. Other telexes connected with the letter of credit were admitted without objections as Exhibits M,N,O,P,Q,R. Notwithstanding all their efforts the beneficiary and Bank of Tokyo did not forward shipping documents to their correspondent bank in New York. He denied any liability and relied on the provisions of Exhibit S, Uniform Custom and Practice for Documentary Credit hereafter referred to in this judgment as UCP.
He was cross examined and stated he did not know whether the Bank of Tokyo informed the beneficiaries that irrevocable letters of credit had been created in their favour though the correspondent Bank in America advised them. He could not say much about the transaction between their New York correspondent bank and the Bank of Tokyo.
He concluded his testimony by denying any negligence on the part of the appellant.
Learned counsel for the appellant addressed the court the main thrust of his submission being that Exhibit S (UCP) is applicable in Nigeria. Appellant charged its commission legitimately by Exhibits G-G8.
With the telexes Exhibits L,M,N,O,P,Q and by opening the letter of credit through its correspondence bank the National Westminster bank, Bank of New York for the beneficiary through the Bank of Tokyo it has fulfilled and performed its obligation under the documentary credit thereby it was neither in breach of contract nor liable in negligence, reliance was placed as pleaded in Articles 18 and 20 of Exhibit S. Reliance was put on the case of Nasaralai v Arab Bank (1986) 4 NWLR (pt.36) pages 409-427. Exhibits A and L made references to Exhibit S. It is therefore applicable.
The letter of credit could only be released to the beneficiary only when the Bank of Tokyo released the shipping document to the correspondent Bank in New York. When the Bank of Tokyo was reticent, it made appellant to contact it directly by telexes already admitted.
As parties dealt in documents not goods court to reject the testimony of 1st DW that the goods were shipped as there was no supportive evidence. See Seismograph service Ltd v Chief Eyuae (1976) 6 ECSLR 406 (1976) 9-10 S.C 135.
He concluded they could repay the $16,180 dollars or get the goods for the plaintiff. He concluded court to dismiss the action.
Learned counsel for the respondent at page 56 of the record of proceedings formulated five issues to be decided namely whether there was agreement and breach of it, was the appellant negligent in the performance of their duty to the plaintiff. Is Exhibit S applicable in Nigeria and in the matter. Did plaintiff suffer damages.
From the totality of the evidence respondent sustained all the issue posed by preponderance of evidence of fact. In law respondent proved negligence. The act of the sub-agent of the appellant was the act of appellant. As the sub-agent failed to open the letter of credit in favour of the beneficiary, it could not ship the goods as it did not receive nor was it advised about the irrevocable letter of credit.
Exhibit S (UCP) did not apply to the particular contract as there was no evidence Nigeria has by any evidence subscribed to the convention. Nasaralia case supra did not decide that the convention operates in Nigeria it only decided that parties dealing in letter of Credit dealth with document and not with actual goods. To be operative it must have been incorporated in the agreement to make it binding on the parties, as the parties could expressly exclude Exhibit S. see the Law of Bankers Council Credit 6th edition by Gutteridges and Megran page 7.
NO EVIDENCE RESPONDENT ACCEPTED THE CONVENTION.
Assuming without conceding that it applied a party in breach of contract cannot avail itself of exemption clauses as in the instant case where appellant caused breach of a fundamental term of the agreement. See Gibaud v Great Eastern railway (1921) 2 kb 426-435; Suisse Atlantique the Arment Meritime SA v Rotter damsche Kolen Centrale (1967) 1 AC 361 – 421; Doyin Investments Nigeria Ltd v 1st Bank of Nigeria Ltd Suit LD/1240/87 delivered on 21/4/88 unreported, Chitty on Contract 25th Edition paragraph 879 page 471 and 898 page 485 (1989) NWLR (pt 99) 634.
Finally, respondent proved it suffered damages. Respondent is entitled to a refund of the purchase money of the US Dollars, more especially as the value of the dollar fluctuates in foreign exchange market. The appellant was liable as confirmed in Exhibit J.
In conclusion court to enter judgment for respondent.
In a considered judgment delivered on 26th January, 1989 A.A. Ononuju J. at pages 72 to 92 of the record of proceedings entered judgment in favour of the respondent. He rejected the contention of the appellant that Exhibit S (UCP) is applicable in Nigeria as by virtue of Article 1 of UCP the parties could exclude its application.
The correspondence bank in New York was the subject of the appellant and for which act it would be liable. It was common ground that there was no delivery of the letter of credit to the beneficiary of the respondent in Kobe Japan.
That the appellants was in breach of its contract as no letter of credit was established by the appellant which is a fundamental term by its failure to establish the letter of credit within three months. As a result of the fundamental breach the exemption clause did not avail the appellant. In so holding that learned trial Judge relied on the cases cited and referred to him by the learned counsel for the respondent.
With regard to consideration for special and general damages, in a rather terse manner in the last paragraph of page 91 of the record of proceedings concluded that respondent proved special damage and that if the money had been invested in the bank it would have yielded interest so entered judgment for the respondent for the sum of N63,567.77 as special damages subject to deduction of the sum of N6,662.92 being the balance of the purchase money after purchasing $16,180.00. Secondly, he awarded N1,000,000.00 as general damages to the respondent without stating how he came to award the said sum.
Being dissatisfied with the said judgment the appellant filed its notice of appeal at pages 94 and 95 of the record of proceedings. It filed in paragraph 3 its grounds of appeal reproduced as follows:-
“3. Grounds of appeal
(1) The judgment of the court below is against the weight of evidence”.
Appellant sought and was granted leave by this court to file and incorporate in its brief of argument additional grounds of appeal which are reproduced from page 5 of the appellants brief of argument as under:-
“Additional Grounds of Appeal
(1) The learned trial Judge erred in law when he said:-
“This case (Nasaralia Ent. Ltd v Arab Bank (Nig) (1986) 4 NWLR PT 36) 409-427) did not decide that exhibit S applies to this particular contract. Exhibit S is uniform customs and practice for documentary credits and from the evidence before me it does not apply in this case. I hold the view that it can operate in a country that subscribes to it and there is nothing to show that Nigeria has done so. Even where it operates, it must be incorporated in the agreement to be binding on the parties. This is not the case here”.
Particulars of Error
(i) The case of Nasaralia Enterprises Ltd v Arab Bank Nigeria Ltd (986) 4 NWLR (pt 36) 409, at 438,433,441,446 clearly established that the Uniform Customs and Practice for Documentary Credits applies in Nigeria.
(ii) It is not open to the High Court – a lower court to Supreme court – to question the rationale of a Supreme court decision. Once the Supreme court has accepted a rule of practice as applicable in Nigeria, it is not for the lower court to inquire whether it had been shown that that rule of practice operates in Nigeria.
(iii) The case of Akinsanya v United Bank for Africa Ltd (1986) 4 NWLR (pt 35) 273 at 300 G-H puts it beyond any argument whatsoever that the Uniform Customs and Practice for Documentary Credits applies in Nigeria.
- ERROR IN LAW
The learned trial Judge erred in law when he said thus: From the evidence before me it is clear that all the time the defendants were deducting the plaintiff’s money for commissions and other bank charges but still failed to establish the letter of credit which they undertook to establish”a finding contrary to the evidence led and the law.
Particulars of Error
(i) Exhibit L which was all that the defendant had to do in accordance with Article 12(c) of the Uniform Customs and Practice for Documentary Credits was tele-transmitted to the defendants, correspondent or confirming Bank in New York on 9/1/87 and the confirmation was tele-transmitted to the Bank of Tokyo on 14/1/87 vide Exhibit N.
(ii) This was in conformity with the practice worldwide in all banking transactions respecting international trade.
(iii) There was no other means of transmitting to Tokyo, Japan, the money paid by the plaintiff to the defendant for the beneficiaries or sellers of the goods in Tokyo.
(iv) The learned trial Judge was therefore grossly in error when he surmised that the defendant had failed to establish a letter of credit.
(v) The DW1 testified that we used the documents that the plaintiff brought “to establish letter of credit which was on 9/1/87 under operative telex, to our correspondents Bank in America – National Westminster Bank New York USA to advise and confirm to the beneficiaries the irrevocable letters of credit and to pay the sum of $16,180.00 on presentation of shipping documents”.
(3) ERROR INLAW
The learned trial Judge erred in law by stating thus:-
“However there was no privity of contract between the plaintiff and the defendant’s sub-agents. There was no time the defendant made plaintiff aware of the said sub-agent in New York or tried to link them up. If breach or negligence was committed by the sub-agent, it was the affairs and lookout of the defendant. The defendant would be held liable”.
PARTICULARS OF ERROR
(I) The learned trial Judge completely disregarded the provisions of Article 20(a) and (b) of the Uniform Customs and practice for Documentary Credits which clearly applies in Nigeria.
(ii) The plaintiff was not unaware of the banking practice world-wide for they clearly testified that “It is the practice that the defendant would go through their foreign correspondence Bank to get this money correct to the sellers in Japan”.
(i) It is incorrect that the telexes sent to or received from the correspondent Bank in New York had nothing to do with the plaintiff. The defendant was acting as agent for the plaintiff and the said telexes were transmitted or received for the purpose of giving effect to the instruction of the plaintiff.
(ii) There was Exhibit M which was a telex from the defendant’s correspondent Bank in New York confirming the transmission of the letter of credit to Tokyo, Japan
(iii) The plaintiff was fully aware that the application for transmission of foreign currency ought to be processed by the Central Bank of Nigeria. In Instruction No. 9 in the “Instructions to Importers into Nigeria “at the back of Exhibit A7 signed by the plaintiff it was clearly stated that “A processed Form “M” will be valid for importation within six (6) months of date of processing”.
(iv) The letter of credit opened for the plaintiff went to court. all that the plaintiff could have done was to have given instructions for the extension of the date of expiry of the letter of credit.
(5) ERROR IN LAW
The learned trial Judge erred in law when he said:-
“How could the beneficiaries or suppliers send the shipping documents if they were not advised that letter of credit had been created for them. The defendant has no defence to the allegation of breach of contract and I so find”.
A finding contrary to the evidence and has led to a miscarriage of justice.
PARTICULARS OF ERROR
(i) The defendant took every possible step to get the beneficiaries in Tokyo advised according to the banking practice world-wide.
(ii) In particular, the defendant notified its correspondent Bank in New York as per Exhibit L of the opening of the letter of credit. The defendant followed this up by sending Exhibits N and O to its correspondent Bank in New York extending the validity date of the letter of credit to 15/7/87 with further instruction to advise the beneficiaries accordingly.
(iii) Under Article 20(B) of the Uniform Customs and Practice for Documentary Credits “Banks assume no liability or responsibility should the instructions they transmit not be carried out, even if they have themselves taken the initiative in the choice of such other bank(s).
ERROR IN LAW
The learned trial Judge erred in law when he said in the judgment “I agree with the submission that the failure of defendant to find why the money had not been transmitted to Japan by their correspondent Bank in New York was an act of negligence” a finding contrary to law.
PARTICULARS OF ERROR
(i) The plaintiff gave no particulars whatsoever of the act of negligence it was complaining about in the defendant’s conduct. No such particulars of acts of negligence was pleaded in the plaintiff’s statement of claim.
(ii) The learned trial Judge said that the defendant did not exercise the care and competence expected of a commercial bank in this type of transaction and yet there was no evidence whatsoever by an expert to show what degree of care the defendant should have exercised.
(iii) Exhibits N,O,P and Q show clearly what actions the defendant took to find out why the money had not got to the beneficiaries in Tokyo, Japan.
(7) The learned trial Judge erred in law in awarding punitive and arbitrary amount as damages against the defendant by way of special and general damages.
PARTICULARS OF ERROR
(i) The defendant has never refused to refund to the plaintiff the sum of N55,699.65 (less the sum of N6,662.92 which had already been credited to the plaintiff’s account) – being the amount plaintiff paid to the defendant for the opening of the letter of credit.
(ii) There was no evidence whatsoever neither was it averred (sic) in their pleadings that the plaintiff was at any time traders or that the raw materials for industrial use” placed on order by the plaintiff from Japan was for sale, or resale and in respect of the latter the estimated profit.
(iii) There was therefore no justification for the statement “on general damages the evidence of profit to be made by the plaintiff was not controverted or challenged”.
(iv) Special damages must be strictly pleaded and strictly proved which was not the case in the instant case.
(v) The letter of credit has not yet been cancelled, and all the plaintiff needs do is to extend its expiry date”.
In paragraph 10 page 12 of appellants brief of argument the following questions were placed for determination:-
- Questions for determination
Consistent with the original and the additional grounds of appeal the appellant will urge the court to determine the following questions:
(i) Whether the learned trial Judge was right in holding the view that it was not shown that Nigeria had subscribed to the Uniform Customs and practice for Documentary Credits and that it was not shown that it operates in Nigeria?.
(ii) If the Customs and Practice for Documentary Credits operates in Nigeria whether the learned trial Judge was right when he said that it did not apply to this transaction?.
(iii) If the Uniform Customs and Practice for Documentary Credits was applicable to this transaction whether the judgment of the learned trial Judge in favour of the plaintiff could still stand?.
(iv) Whether the finding in favour of the plaintiff in negligence was right in view of the fact that the plaintiff did not state in their pleadings any particulars of acts of negligence on the part of the defendant nor was there any evidence from any banker to show the degree of care and diligence expected of a commercial bank in this type of transaction?.
(v) Whether the evidence led by plaintiff sufficiently established negligence or breach of contract on the part of the defendant?.
(vi) Whether there is any justification in law for the quantum of damages awarded against the defendant?
On its own part respondent sets down at page 3 paragraph 2 the issues for determination now reproduced.
(2) ISSUES FOR DETERMINATION
2.01. The respondent humbly submits that from the grounds of appeal original and additional the following issues arise for the determination of this Honourable Court:
(i) Whether the learned trial Judge was right in holding that the defendant/appellant has not established that the Uniform Customs and Practice for documentary credits (hereinafter called UCP) operates in Nigeria.
(ii) Assuming that Issue I is answered in the affirmative whether the learned trial Judge was right in holding that the defendant/appellant had not established that the UCP applied to the present transaction the subject matter of these proceedings having regard to the provisions of Article I of the said UCP.
(iii) Whether the judgment of the learned trial Judge could still stand if UCP applied to the present transaction.
(iv) Assuming that UCP applied to the present transaction whether the appellant can take the benefit of the exclusion clause in the UCP to exclude its liability for a breach of a fundamental term of the contract between it and the respondent.
(v) Whether the total failure of the appellant to open the confirmed irrevocable letters of credit amounted to a breach of the contract between the appellant and the respondent.
(vi) Whether the learned trial Judge was right in holding that the appellant discharged its obligations to the respondent negligently.
(vii) Whether the damages awarded by the learned trial Judge to the respondent were reasonable having regard to the huge financial loss occasioned by the appellant’s default”.
From the foregoing the issues posed for determination arising from the ground and additional grounds of appeal are similar and centered precisely or succinctly whether UCP applies in Nigeria contrary to the decision as contended by the appellant that the UCP did not apply.
On the contrary the respondent contended that looking at the statement of the learned trial Judge critically after referring to Article 1 of Exhibit S (the UCP) that in the instant transaction there was no sufficient evidence that Exhibit S is applicable.
The other vital issue raised was that as contended that Exhibit S is applicable in Nigeria the learned trial Judge holding to the contrary the judgment has been vitiated owing to fundamental error.
That as Exhibit S (UCP) was applicable in Nigeria by Articles 19 and 20 of Exhibit S (UCP) the appellant was not liable in negligence by so finding the judgment was wrong and perverse resulting in substantial miscarriage of justice. Assuming the contention is rejected that appellant was liable in negligence the basis for the award of damages was erroneous in law and ought to be set aside.
With regard to the issue of breach of contract that having regard to Exhibit S the appellant did all that was reasonably required of it and therefore was not in breach of contract and that learned trial Judge was in error to have awarded the general damages for breach of contract.
That is the summary of the issues raised in this appeal leading the court now to consider the contention of the parties on the issues.
As stated above both the court and the parties are bound by the pleadings this principle of law can now be regarded as elementary but is fundamental as a case succeeds or fails based upon the pleadings in our adversarial system of jurisprudence as the rule of pleading is deep rooted in our system leading to the rule that facts not pleaded to go no issue. Where such fact has been wrongly relied upon by the trial court an appellate court has jurisdiction to expunge such an unpleaded fact. To resolve pleaded fact by the trial Judge it must have been based on fact on which issue has been joined by the parties, in the pleadings. What is then an issue?.
For guidance I refer to Chief Mrs. Faderera Akintola AND Anor v Mrs. C.F.A.O. Solano (For herself and on behalf of other children of Canon T.O. Dedeke) (1986) 2 NWLR (Pt 24) page 589 at 599 and by Oputa, J.S.C.
“Held; (2) When as a result of exchange of pleadings by parties to a case a material fact is affirmed by one of the parties but denied by the other, the question thus raised between the parties is an issue of fact.
(3) To raise such issue there must be a proper traverse
(4) A proper traverse must be a specific denial or a specific non admission.
(27) Oputa, J.S.C.
“It is high time our trial courts (and counsel for the plaintiff especially) begin looking critically at the pleading where appropriate giving judgment on the pleadings if no triable issue of fact has been raised……A mere dispute about fact may in loose form of speech be called an issue but no court settles a case on the facts alone divorced from their legal consequence. That too is an issue, call it an issue of law to distinguish it from issue of fact settled at the close of pleadings. Fidelitas Shipping Co Ltd v V/O Export Chleb (1965) 2 ALL ER 9 at page 10”.
As stated above pleadings were filed exchanged and amended being a statement of claim and as amended statement of defence. Let me reiterate that respondent did not file a reply to the amended statement of defence.
Appellant averred in paragraph 5e page 38 of the record of proceedings (supra) and for emphasis a portion of the said averment is reproduced below:-
“The defendant have done all that is necessary for them to do according to International Documentary Credit to see to it that the imported goods are exported and that the beneficiaries are paid and plead Articles 18 and 20 of the Uniform Customs and Practice for Documentary Credits applicable to Nigeria and upon which the relationship between the plaintiffs and the defendants is pegged”.
Under the High Court Civil Procedure Rules of the former Eastern State applicable in Imo State Order 33 to file or not to file a Reply to a statement of defence by a plaintiff is discretionary and unnecessary where the intention is to deny any allegations that the defendant may have made in his statement of defence. However, a reply may be filed to show fact which will make the defence untenable for example where the defence has pleaded any statute of limitation, the reply may contain facts negating the application the exception is that plaintiff cannot raise a new issue which was not raised originally in his statement of claim see: Williamson v London. N. W. Railway (1879) 12 CHD 789 at 789.
In the instant appeal appellant averred that UCP is applicable in Nigeria and that the case of the parties were predicated on it by not filing a reply to deny that it is not applicable in Nigeria respondent is deemed to have not joined issues or traversed that UCP did not apply to Nigeria. Respondent has been caught in the web of pleading and if it was its case that UCP was not applicable it should have traversed it in its reply to the statement of defence, in my judgment to really join issue with the appellant of the applicability or non applicability of UCP in Nigeria is by a traverse through filing a reply the issue raised is akin to raising an issue of law or limitation.
Be that as it may, it is the contention of the appellants on issues (i) (ii) and (iii) for determination at pages 13-33 that having regard to the cases of Nasaralai Enterprises Ltd v Arab Bank Nigeria ltd (1986) 4 NWLR (pt 36) 409-427 or (1986) 2 NSCC 1039, wherein Bello, J.S.C, (as he then was) observed at page 424 A-C as follows:-
“The basic tenor of the law and practice relating to commercial letters of credit is that parties deal in documents and not in goods or ships.
Article 8(a) of the Uniform Customs and Practice for Documentary Credit (1974) which apply to the letter of credit (Exh C) in this appeal provides:-
“In documentary credit operations all parties deal in documents and not in goods”. The only thing “Bank is required to do is to examine documents and to treat them on their face value. There is a plethora of authorities on the matter”.
Uwais, J.S.C. at page 438 made similar observation and dictum. Whilst Eso, J.S.C. in A.M.O. Akinsanya v United Bank for Africa Ltd (1986) 4 NWLR (pt 35) 273 at 300 traced the historical aspect of global and universal standardisation of letters of credit in international trade and commerce thus:-
“Historically once the notion of commercial credits was accepted as a potent factor in international trade, attempts were then made from time to time for the standardisation of conditions on which Bankers would be prepared to issue and act on commercial credits. The year 1933 saw the commencement of such standardisation. The international Chamber of Commerce formulated a Uniform Customs and Practice for Commercial, Documentary Credits, hereinafter also referred to as Uniform Customs. The British Banks had some objections to the rules at the time, and it was not until about thirty years later, that is, in 1962 when the 1962 Revision was completed that the British and the Dominion Bank saw fit to join the operation of the Rules. In 1974 the Uniform Customs were revised and it is this revised edition that affects the instant case. Though it was again revised in 1983, the revision of 1983 is not material to this case, thus action taken having been commenced in August, 1979, the incident itself having happened in 1978”.
The history was also traced and could be found in “The Law of Bankers’Commercial Credits “by H.C. Gutteridge and Maurice Negrah 6th Edition page 7.
Learned Senior Counsel for the appellant also in his brief in arguing that Exhibit S (UCP) is applicable in Nigeria referred to the case of A-G Bendel State AND 2 Ors v United Bank for African Ltd (1986) 4 NWLR (pt 37) (sic 37) 547 at 556 and 563. The Supreme court once more considered certain provisions of some articles in the Uniform Customs and Practice for Documentary Credits (1974). It was not suggested that Nigeria had not subscribed to UCP. The supreme court in the said case considered the defence of the defendant in the said case based upon Articles 8,9,12,30,35 of the 1962 Edition of the Uniform Custom and Practice for Documentary Credits.
From the foregoing applying the doctrine of stare decisis as defined in Earl Jowit Dictionary of English Law at page 1672 thus:-
“to keep the scale of justice even and steady and not liable to waiver with every judge’s opinion, as also because, the law in that case being solemnly declared and determined what before was uncertain and perhaps indifferent, is now a permanent rule which it is not in the breast of any subsequent judge to alter or swerve from according to his private sentiments”.
He referred to Blacks Law Dictionary 4th Edition (revised) at page 1577 that the doctrine of stare decisis is said to mean “To stand by precedent and not to disturb settled point”.
He contended further that as Ogundare, J.C.A. (as he then was) pointed out at 275 that the doctrine of stare decisis is well settled principle of judicial policy which is strictly to be adhered to by all lower courts. While a lower court may depart from its own decisions reached per incuriam a lower court cannot refuse to be bound by decisions of higher courts even if those decision were reached per incuriam in support in reiterating the doctrine of stare decisis he cited Eso J.S.C. in Okonjo v Odje AND Ors (1985) 10. S.C. 267.
“In the hierarchy of the courts in this country, as in all other free common law countries one thing is clear, however learned a lower court considers itself to be and however contemptuous of the higher court that lower court is the lower court is still bound by the decisions of the higher court. I hope it will never happen again whereby the court of Appeal in this country or any lower court for that matter, would deliberately go against the decisions of this court, and in this case even to the extent of not considering the decisions when those of this court were brought to the notice of that court. This is the discipline of the law. This is what makes the law certain and prevents it from being an ass.”
He contended that in view of the reference of the Supreme court judgment to the learned trial Judge applying the rule of stare decisis he was grossly in error to have held that Exhibits S was inapplicable in Nigeria. Applying Giwa Abiodun v Erinmilokun (1961) All NLR 294 (1961) 1 SCNLR 377 wherein supreme court stated that a court should take judicial notice of customs that have such notorious and have been so frequently followed by the courts.
As learned trial Judge held that UCP can operate in a country that subscribes to it and there is nothing to show Nigeria has done so, failed to take notice of Exhibit L which was the tele transmission of the operative credit to the appellant’s correspondent Bank in New York.
For the above reasons the appeal be allowed
For the respondent in its Brief of Argument it assumed that the UCP apply to Nigeria but the vital issue in the appeal is whether it applies to this transaction.
He contended that applying Nasaralai v Arab Bank (1986) 4 NWLR (pt 36) page 409 at 424 wherein Bello, J.S.C (as he then was) quoted with approval the passage in Lord Diplock’s judgment in United City Investments Ltd v Royal Bank of Canada (1983) A.C. 168 at page 182 that there are four autonomous though inter connected contractual relationship involved in a commercial letter of credit that
“It is trite law that there are four autonomous though inter connected relationship involved:
(i) The underlying contract for the sale of goods to which the only parties are the buyer and seller.
(ii) The contract between the buyer and the issuing Bank under which the latter agrees to issue the credit and either itself or through a confirming bank to notify the credit to the seller and to make payments to or the order to the seller…against presentation of stipulated documents and the buyer agrees to reimburse the issuing bank for payments made under the credit.
(iii) If payment is to be made through a confirming bank the contract between the issuing bank and the confirming bank authorising and requiring the latter to make such payments and to remit the stipulated documents to the issuing bank when they are received.
(iv) The contract between the confirming bank and the seller under which the confirming bank undertakes to pay to the seller….up to the amount of the credit against presentation of the stipulated documents”.
It is the respondents contention that it is contract (ii) supra that is to say the contract between the appellant (issuing bank) and the respondent (buyer and the applicant for opening of letter of credit is the crux in this appeal.
In paragraph 2.04 page 5 of the respondent’s brief letter of credit was defined by lifting page 290 Article 13.10/02 of the Law AND practice of International Banking, Banking Law volume 2 by Pen, Shea AND Arora 1987. Thus urging court to reject appellant’s contentions.
An institution called the International chambers of Commerce with headquarters in Paris, is a non-governmental institution played the role in the attempt to standardise the conditions in which Bankers would issue and act on commercial credits and referred to Eso, J.S.C. in A.M.O. Akinsanya v U.B.A. (1986) 4 NWLR (pt 35) page 273 at 300 already referred to and reproduced supra.
Respondent contended further in paragraph 2.06 page 6 of its brief that UCP are not obligatory and require express incorporation into a particular documentary credit to make them applicable. Article 1 of Exhibit S is clear on the issue it provides that:-
“These articles apply to all documentary credits, including to the extent to which they may be applicable standby letters of credit and are binding on all parties unless otherwise expressly agreed. They shall be incorporated into each documentary credit by wording the credit indicating that such credit is issued subject to Uniform customs and practice for Documentary credits (1983) revision ICCP publication No.400.
That for UCP to apply it must be incorporated in express words in the basic document namely the application for the issue of a commercial letter of credit.
Respondent submitted that in the instant case on appeal the UCP were not incorporated as borne out in paragraph 4 of the amended statement of defence thus:-
(4) For paragraph 8 of the statement of claim the defendants state that as the agents of the plaintiffs the defendants demanded from the plaintiffs items listed in paragraph 8 of the statement of claim inclusive of LC/Bills forms 14 and 43 and on 19/12/86 the Orlu Branch of the defendants Head Office in Lagos to enable the defendants and the correspondence bank establish letters of credit in favour of the sellers on the basis of documents forwarded to it by the defendants. The defendants plead the above mentioned documents. The defendants plead the above mentioned documents. The letters of credit was to remain valid up to 13/1/87”.
It should be noted, contended respondent that in page 8 of its brief that neither in the Application Form LC/Bill 10 (item iii) or Summary of Application to open irrevocable confirmed LC No. ORL 4/86 (Item 1) the UCP were not incorporated so respondent submitted that the trial Judges was right when he held that the UCP did not apply in the instant case thereby the rights and obligations of the respondent as applicant and the appellant as issuing Bank are to be determined by common law reliance was on the authors of Penn. Shea and Arora at page 339 paragraph 13.73 of the book Ibid as follows:-
“The Uniform Customs and Practices on Banker’s Commercial Credits codify the duties of an issuing Bank toward an applicant for a credit and impose a lighter duty on the banks than that imposed by the common law”.
From the foregoing the crux of this appeal garnered from the issues is whether UCP is applicable in Nigeria and in particular to the transaction which led to the dispute.
The International Chambers of Commerce based in Paris which has been the champion sponsor originator and founding father of UCP is not shown to be an agency of the United Nations Organisaion but an International body that had since 1933 took initiative in having a universal standardisation of letter of credit with its current rule to be the one made in 1983 admitted as Exhibit S.
It is not a treaty between nations but an international trade custom or convention. So one may describe Exhibit S (UCP) as international customary practice and usage. Having been so accepted it can be so labelled as international trade customary usage in commercial trade of letters of credit. Can it then be treated as a “CUSTOM”.
The importance of letters of credit also called documentary credits are the most frequent method of payment for goods in the export trade that made Donaldson LJ with the concurrence of Ackner LJ said in In Intraco Ltd v Notis Shipping Corporation of Liberia the Bhoja Trader (1981) 2 Lloyds Rep. 256:
“Irrevocable letters of credit and bank guarantees given in circumstances such that they are equivalent to an irrevocable letter of credit have been said to be the life blood of commerce. Thrombosis will occur if unless fraud is involved the courts intervene and thereby disturb the mercantile practice of treating rights thereunder as being equivalent to cash in hand”.
See Chapter 24 page 336 Schmithoff Export Trade. The Law and Practice of International Trade Eighth Edition.
Custom is described at page 385 Blacks Law Dictionary 6th Edition as:
“Custom – Term generally implies habitual practice or course of action that characteristically is repeated in like circumstances. “Custom and Usage – A usage or practice of the people which by common adoption and acquiescence and by long and unvarying habit has become compulsory and has acquired the force of a law with respect to the place or subject matter to which it relates. It results from a long series of actions constantly repeated, which have by such repetition and by uninterrupted acquiescence acquired the force of a tacit and common consent. An habitual or customary practice. More or less widespread. Which prevails within a geographical or sociological area usage is a course of conduct based on a series of actual occurrences” Customs are general, local or particular.
General customs are such as prevail throughout a country and become the law of that country and their existence is determined by the court. Or as applied to usage of trade and business a general custom is one that is followed in all cases by all persons in the same business in the same territory and which has been so long established that persons sought to be charged thereby and all others living in the vicinity may be presumed to have known it and to have acted upon it as they had occasion.
Usage is a repetition of acts and differs from custom in that the latter is the law or general rule which arises from such repetition while there may be usage without custom there cannot be a custom without a usage accompanying or preceding it”.
Section 2 Evidence Act Cap 112 Laws of the Federation 1990 defines “Custom” is a rule which in a particular district has from long usage obtained the force of law” whilst Section 14 Evidence Act provides:
“14(1)A custom may be adopted as part of the law governing a particular set of circumstances if it can be notice judicially or can be proved to exist by evidence the burden of proving a custom shall lie upon the person alleging its existence.
(2) A custom may be judicially noticed by the court if it has been acted upon by a court of superior or co-ordinate jurisdiction in the same area to an extent which justifies the court asked to apply it in assuming that the persons or the class of person concerned in that area look upon the same as binding in relation to circumstances similar to those under consideration.
(3) Where a custom cannot be established as one judicially noticed it may be established and adopted as part of the law governing particular circumstances by calling evidence to show that persons or the class of persons concerned in the particular area regard the alleged custom as binding upon them:
Provided that in case of any custom relied upon in any judicial proceeding it shall not be enforced as law if it is contrary to public policy, and is not in accordance with natural justice equity and good conscience.
(15) Every fact is deemed to be relevant which tends to show how in particular instances a matter alleged to be a custom was understood and acted upon by persons then interested”
See further C.K. Allen, “Law in the Making” 7th Ed. Chapters 1-2 Dias Jurisprudence Chapter 8 at page 255-256.
In the instant appeal the cases of Nasaralai Enterprises Ltd v Arab Bank Nig Ltd (1986) 4 NWLR (Pt.37) page 547, Coker, J.S.C. applied their previous applicability of UCP in Nigeria was not raised so it could not have been considered.
But in my unreported judgment in Suit LD/424/77 between Vaswani MBH v Best Stores Ltd delivered on 13th October, 1981 (against which judgment the parties did not appeal) turned out on the applicability of UCP in Nigeria. The defendant Best Stores Ltd, a company incorporated in Nigeria employed the plaintiff, in Germany as its confirming house for placement of imports from the Far East in Hong Kong and Singapore based upon invoices for purchases of goods in US Dollars, and for the plaintiff to open letters of credits on the invoices. The practice of the plaintiff was to convert the quotations from the far East especially Singapore was to convert the US dollars quotation to Deutschmarks and charge the defendant for the Naira equivalent based o the conversion to Deutschmarks thereby causing the Nigeria company to pay more Naira to meet the Letters of Credits which was less than paying in US Dollars and that the system adopted by the plaintiff was contrary to UCP which frowns at conversion or switching to a different currency from the currency of the letter of credit.
As the issue of UCP was averred in the statement of defence the High Court of Lagos State Civil Procedure Rules 1972 joined issue in the Reply that UCP was not applicable in Nigeria.
To establish and prove the issue defendant called an expert from the Central Bank of Nigeria under Section 56 of the then Evidence Act and that UCP was the custom of Bankers in their banking trade of letters of credit.
It was held that UCP was applicable in Nigeria and having regard to the transactions plaintiff was mistaken to have switched the quotations in the letters of credit to Deutchmarks instead of dealing in US Dollars being the currency of the letters of credit contrary to UCP provision of not switching the currency of the letter of credit. The plaintiff’s claim was dismissed whiles the defendant’s claims in the counter-claim succeeded being the over payment of the switching of the currency from the original currency in the letters of credit which were quoted in US Dollars.
The result is that UCP is an international custom of trading by Banks in international trade of payment by letter of credit.
To sustain it having regard to Section 14 (2) 296 by Taylor FJ and the Supreme court cases in the briefs of argument and my unreported judgment in Suit LD/424/77 between Vaswani GMBH v Best Stores Ltd decided on 31st October, 1981 the court in Nigeria can take judicial notice that UCP is applicable in Nigeria. To sustain it like custom being treated as a fact must be pleaded and evidence led to establish it.
With regard to the complaint of violation of the rule of stare decisis it is common ground that adherence to judicial precedent is one of the strongest principles of judicial policy in our jurisprudence put by the Romans in the maxim (Stare decisis et on quita rovere). The principle applicable in our hierarchical system are to be found in the following cases.
(i) Jibowu Ag. FCJ in Jalo Tsamiya v Bauchi N.A (1956) SCNLR 220, (1957) NRNLR 78 that:
A High Court can rightfully decide not to follow its own previous decisions, if it feels that the decisions had been reached per incuriam, but there is no precedent for their refusing to follow its previous decision of the West African Court of Appeal or higher courts on the subject matter of inquiry because they considered that that decision had been reached per incuriam. It is not for an inferior Court to say that a decision of a higher court was reached per incuriam, that is a privilege of the higher court if after reconsidering its former decision, it is satisfied that the previous decision ad been reached per incuriam.
When a High Court is faced with a previous decision of a higher court by which, according to the comity of courts it is bound, the proper course is for the High Court to reverse questions of law under Section 20 of the Federal Supreme Court (Appeals) Ordinance for consideration of the Federal Supreme Court in order to give that court the opportunity of reconsidering previous decisions in the light of the questions reserved with a view to giving a considered ruling on the question of law raised on the issue involved”.
(ii) Lord Hailsham in Cassell AND Co Ltd v Broome AND Anor (1972) 2 WLR 645 at 653 that:
“The fact is, and I hope it will never be necessary to say so again, that in the hierarchical system of courts which existed in this country, it is necessary for such lower tier including the Court of Appeal to accept loyally the decisions of the higher tiers. Where decisions manifestly conflict the decision in Young v Bristol Aeroplane Co Ltd (1944) KB 718 offers guidance to each tier in matter affecting its own decisions. It does not entitle it to question considered decisions in the upper tiers with the same freedom”.
(iii) Idigbe AG CJ (as he then was) in Chime AND Ors v Elikwu AND Ors (1965) NMLR 72 at 78:-
“Where authorities of equal standing are irreconcilably in conflict, a lower court has the same freedom to pick and choose between them as the Schizophrenic Court Itself”.
In the instant appeal learned Senior Counsel for appellant contended that the learned trial Judge was in breach of following judicial precedent and principle of stare decicis. Looking critically at the judgment of the lower court it did not challenge or state that A.M.O. Akinsanya v United Bank for African Ltd (supra) Nasaralai Enterprises Ltd v Arab Bank (Nig) Ltd (supra) were given per incuriam. What the learned trial Judge stated was that applying Article in UCP to the transaction in dispute UCP was excluded and inapplicable and that has been the main plank of the respondent in its brief that having regard to the present transaction UCP was not applicable.
What the learned trial Judge did was to distinguish the cases from the present case. He was right to distinguish cases given by a higher court.
Applying the above authorities the UCP can safely be regarded as held above by me that UCP is applicable in Nigeria but whether it has been excluded or applicable in a particular transaction shall depend on the facts and circumstances of each case.
The searchlight will now be focused whether in the instant appeal the application of the UCP in the transaction in the dispute leading to this action on appeal has been excluded or saved.
In paragraph 8 of the statement of claim at page 5 of the record of proceedings already referred to above showed that the documents so attacked up to issuance of the Documentary credit No. ORL 4/86 of 12th December, 1986 were admitted as Exhibits A to A9.
In Exhibits A to A9 no reference was made to UCP and the said Exhibits were the documents which the appellant used at opening the LC reference ORL 4/86 on 12th December, 1986. In Exhibit A document was described as “Documentary Credit No. ORL 4/86. A3 referred to Documentary Credit.
Exhibit B to B2 were letters written by the respondent to the appellant on 4th May, 8th May, 1987 and 11th May, 1987 wherein respondent complained about the failure of the appellant to issue the letter of credit of 12th December, 1986 in favour of their supplier Mushashi.
On 19th May, 1987 per letter admitted as Exhibit C appellant apologised for the undue delay and prayed for ratification of their decision by extending the life span of the L/C to 15th July, 1987. The respondent gave a covering approval for the extension of the life span of the L/C to 15th July, 1987 by its letter dated 17th June, 1987 admitted as Exhibit D. This was with the reminder of the loss of over N600,000.00 sustained by respondent when in 1984-85 appellant failed to issue Letter of Credit in favour of respondent after witholding the sum of N400,000.00 paid to appellant after a period of six months with the excuse of non-availability of Foreign Exchange.
Due to failure of the appellant to issue the Letter of Credit in favour of its suppliers after the extended period of the life span of the letter of Credit to 15th July 1987 respondent instructed its solicitor who wrote letter dated 24th July, 1987 admitted as Exhibit E.
On 11th May, 1987 Mushashi complained about non advice from any source about the Letter of Credit, a telex message was attached, the letter was marked Exhibit F. By letters dated 28th May, 1987 and 2nd September, 1987 Musashi maintained non receipt of L/C the letters were admitted and marked Exhibits F1 and F2.
Exhibits G to G8 covered bank charges and commission debited against respondent by the appellant.
It is better to reproduce letter of appellant to respondent dated 6th October, 1987,
“Dear Sir,
Your letter of Credit No Orlu 4/86 SFEM No, 133/87 for $16,180.00.
We enclose photocopy of a telex message from our correspondent Bank – bordering on the above and which speak for itself.
In view of the above and with respect to the fact that the life of the Elcee has expired, we would want to have your option of either (sic) extending the Elcee or canceling it.
Please treat as urgent.
Yours faithfully
(SGD) P.I. AKUAZAOKU
for Manager
Received on 7th October, 1987
See ACB Despatch Note
Chief E.E. Ezekwe for
Eagle Super Pack
7/10/87”.
2nd PW testified through a civil subpoena served on her and tendered the Business Concord of Friday October, 1987 admitted as Exhibit J. the civil subpoena was admitted Exhibit K.
During the testimony of the evidence-in-Chief of the only appellants witness telexes admitted and marked Exhibit L.M.N.O,P,Q,R were tendered and marked accordingly. They were between the appellant, the correspondent Bank National Westminster Bank New York and Bank of Tokyo.
At the bottom of Exhibit L which was telex by appellant to Natwest New York the following is recorded:-
“This Credit is subject to UCP for documentary credits (1983) revision ICC publication No. 400 stop we confirm that this credit conforms to the prevailing central bank of Nigeria regulations on Imports stop Our Ref. Lc/AGCFB/CBA/R – 2/JCO.
Learned Senior Counsel for appellant submitted that by virtue of the provision of Article 2(2) of UCP Article 12, 12B, 12C of UCP, the cases of Nasalarai Enterprises Ltd v Arab Bank Nig Ltd (1986) 4 NWLR (pt 36) 409 at 438B-D A.M.O. Akinsanya v UBA (1986) 4 NWLR (pt 35) page 273 at 303 C-D made the transaction by virtue of the concluding part of Exhibit L with the endorsement supra to falling into category of a documentary credit as defined by Exhibit S thereby the learned trial Judge was in error to have concluded that Exhibit S was excluded. Thereby came to a wrong decision which engendered miscarriage of justice.
For the respondent learned counsel contended that as Exhibit A and A3 which were the forms supplied to the respondent at the time of the formation of the opening of the letter of Credit and excluded the application of Exhibit S (UCP) the learned trial Judge was right applying the second category of the relationship between the appellant and respondent in the dictum of Lord Diplock in United City Merchants (Investment) Ltd v Royal Bank of Canada (supra) and given approval and followed by ESO,J.S.C. in A.M.O. Akinsanya v United Bank for Africa Ltd. (1986) 4 NWLR (pt 35) page 273 at 303 C-D wherein he said as follows:-
“In an application for a documentary credit under discussion, there is a form of application. The form usually incorporates the Uniform Customs and the Buyer is required to fill the document where the terms of the contract are set out in detail. In the instant appeal such application is Exhibit B. Exhibit B is the form provided by the Issuing Bank, the respondents (Appellant in the instant appeal) in this case and though the Uniform Customs are not specified in Exhibit B (as in Exhibits A and A3 in the instant appeal) Exhibit C (which is Exhibit L in the instant appeal) which the respondent (appellant in this appeal) issued to the paying or confirming Bank that is the Swiss Bank (being National Westminster Bank New York in the instant appeal) the following is contained:
“Except as otherwise stated this credit is subject to the Uniform Customs and Practice for Documentary Credits (1974) revision, International Chamber of Commerce Brochure No 290” (substitute statement at the bottom of Exhibit L already stated above and UCP 1983 for 1974 and ICC Broachure No 400 Exhibits S in the instant appeal) the above was followed and given approval in Nasaralai Enterprises Ltd v Arab Bank Nigeria Ltd (1986) 4 NWLR (pt 36) page 409 Bello, J.S.C. Oputa, J.S.C. page 415; Attorney-General Bendel State AND 2 Ors v United Bank for Africa Ltd (1986) 4 NWLR (pt 37) page 547 per Coker, J.S.C.
The facts in A.M.O. Akinsanya v UBA (supra) are on all fours with the present appeal as interpolated in the judgment of Eso, J.S.C. by me supra what further evidence is required than that all the above judgments are binding on me and I am to obey them loyally as stated by Lord Hailsham in Cassell AND Co Ltd v Broome AND Anor (supra).
The result is that the complaint that the learned trial Judge erred in law in holding that Exhibit S was inapplicable in this case is well founded and sustainable.
In Ezebilo Abisi AND 4 Ors (for themselvs and on behalf of Abube Ikenga Nando v (1) Vincent Ekwealor AND Anor (For themselves and on behalf of Umuawo Ikenga Nando) 1993) 6 NWLR (pt 302) page 643 at 673 Ogundare, J.S.C restated the attitude of appellate court to judgment attacked on the ground of being against the weight of evidence thus:-
“When an appellant complains that a judgment is against the weight of evidence, all he means is that when the evidence adduced by him is balanced against that adduced by the respondent, the judgment given in favour of the respondents is against the weight which should have been given to the totality of the evidence before him (Mogaji v Odofin (1978) 4 S.C 91 93-95 followed).”
An appellate court in its primary role in considering a judgment on appeal in a civil case in which the finding or non finding of facts is questioned will seek to know:-
(a) the evidence before the trial court
(b) Whether it accepted or rejected any evidence upon the correct perception.
(c) Whether it correctly approached the assessment of the evidence before it and placed the right probative value on it
(d) Whether it used the imaginary scale of justice to weigh the evidence on either side
(e) Whether it appreciated upon the preponderance of evidence which side the scale is weighed having regard to the burden of proof.
Agbanifo v Aiwereoba (1988) 1 NWLR (Pt 70) page 325 at 339; MISR Nig Ltd v Ibrahim (1975) 5 S.C. 55 at 62; Egonu v Egonu (1978) 11 – 12 S.C. 111 at 629 followed”.
Whilst Ogundare, J.S.C. stated further in the above case as to when an appeal court may interfere in matters relating to evaluation of evidence by trial court thus:-
“Evaluation of evidence is primarily the function of the trial Judge. It is only where and when he fails to evaluate such evidence at all or properly that a court of appeal can intervene and itself evaluate (re-evaluate) such evidence. Otherwise where the court of trial has satisfactorily performed its primary function of evaluating evidence and correctly ascribing probative value to it, the court of Appeal has no business interfering with its finding on such evidence” (Atolagbe v Shorun (`1985) 1 NWLR (pt. 2) page 360 S.C.; Obodo v Ogba (1987) 2 NWLR (pt 54) page 1 referred to.
As a general rule when the question of the evaluation of evidence does not involve the credibility of witnesses but the complaint is against the non evaluation or improper evaluation of the evidence tendered before the trial court, an appellant court is in as good a position as the trial court to do its own evaluation. Narumal AND Sons Nigeria Limited v Niger Benue Transport Company Limited (1989) 2 NWLR (pt 106) 730 at 742 followed”.
Applied and followed by this court of Appeal in Edward Ukaegbu Nwokoro AND Anor v Ezekiel Nwosu AND 5 Ors (21994) 2 NACCR 13-13-25; (1994) 4 NWLR (pt 337) 172.
Having so found that the learned trial Judge made a wrong finding of fact that Exhibit S was inapplicable not knowing what decision the learned trial Judge would have reached calls in aid the powers of this court under Section 16, Court of Appeal Act judicially interpreted by Ogundare, J.S.C. in Abisi v Ekwealor (supra) at page 677 thus:-
“The power conferred on the court of Appeal by Section 16 of the Court of Appeal Act do not give it a blank cheque or avant garde powers. It’s jurisdiction is limited only to issues raised before it by way of grounds of appeal or to issues raised suo motu by it but it cannot base its decision on such issues without giving the parties an opportunity of addressing it on them”.
From the foregoing above this appeal succeeds and disposes of the other issues for determination but the case after due consideration is sent back to the High Court Orlu for a retrial before another Judge.
Exercising the inherent powers of this court under Section 6(6) of 1979 Constitution and Section 16 court of Appeal Act Cap 75 Laws of the Federation of Nigeria 1990 which is to sustain substantial justice by playing down on technicalities. In this vein to mitigate any loss the respondent might have it, is common ground as averred in the amended Statement of defence paragraph 13 that the appellant is ready and willing to make a refund to the respondent.
Notwithstanding that the case has been sent back to Orlu High Court of Imo State for retrial with the primary aim of deciding the rights and obligations of the parties it is common ground that the currency of the letter of credit was $16,180.00 US American Dollars purchased through Second Tier Foreign Exchange Market.
Having held that Exhibit S (UCP) is applicable to this transaction it is the law that under the provision of UCP and as decided in my unreported judgment Suit LD/424/77 between Vaswani GMBH v Best Stores Ltd delivered on 13th October, 1981 that in the application of UCP parties cannot switch the currency of the letter of credit to another currency to wit there cannot be a shift of the currency of the letter of credit in the instant appeal which is American US Dollars $16,180.00 to any other currency this court therefore orders to mitigate the position of the respondent that the appellant refunds to the respondent its fund $16,180.00 on or before 30 days from today.
In making this order the refund does not affect the liability or non liability of the appellant as it is crystal clear that the said sum of $16,180.00 Dollars since 12th December, 1986 has not been utilised or paid over to the beneficiary Musashi Trading Co.
As the appeal turns out to be Pyrrhic victory with an order of a retrial of the case qualified with the order of refund, each party should bear its costs.
Rowland JCA and Katsina-Ala JCA both agreed with lead Judgement
Cases referred to in the judgment:
Abisi v Ekwealor (1993) 6 NWLR (pt 302) 643
Akinsanya v UBA Ltd (1986) 4 NWLR (pt 35) 273
Akintola v Solano (1986) 2 NWLR (pt 24) 589
Giwa v Erinmilokun (1961) 1 SCNLR 337
Nasaralai Ent. Ltd v Arab Bank (1986) 4 NWLR (pt 36) 409
Nwokoro v Nwosu (1994) 4 Nwlr (pt 337) 172
Isamiya v Bauchi Native Authority (1956) SCNLR 220
Vaswani GMBH v Best stores Ltd unreported Suit No. LD/424/77 of 13th Oct, 1981.
