SKYMIT MOTORS LTD. V. U.B.A. PLC: On whether interest can be claimed on ordinary debt. An insight into the decision of the Supreme Court therein. Citation: (2021) 5 NWLR PT. 1768 AT 123. Courtesy: Moruff O. Balogun Esq.

Summary of Fact:

The appellant was a customer of the respondent at its Ikeja branch. The appellant was granted several facilities at interest rates of between 21% and 36%, from 11/2/1998 to 13/10/1999. Upon discovering that the Bank imposed arbitrary and uncontracted interest rate charges on the facilities without its knowledge, consent and/or approval, the appellant engaged the services of a financial consultant, Corimol Nigeria Ltd., to reconcile its accounts with the respondent. After the reconciliation, the report of the consultant revealed a number of excess interest charges, excess and illegally charged commissions on turnovers, and unlawful interest charges on excess charges on its two accounts.

The appellant wrote letters of complaints to the respondent and in its letter to the appellant dated 18/3/2002, the respondent admitted that following the series of correspondence and meetings held between the parties, coupled with further review of the account, the sum of N7, 209, 906.55 was considered for refund to the appellant, a breakdown of which is as follows.

lnterest on overdrafts N4,216, 058.00
Excess COT and VAT N132, 745.91
Excess interest on reversed charges N38, 250.11
lnterest calculated on excess charges NI,448,926.05
Excess interest on loan facilities NI 373. 926.48
N7, 209, 906.55

Thereafter, the appellant wrote several letters to the respondent demanding payment and/or refund of all monies illegally appropriated from its accounts, but the respondent failed or refused to comply, which compelled the appellant to file a suit against the respondent at the High Court of Lagos State.
The appellant claimed a number of declaratory reliefs, orders and damages. The respondent filed a statement of defence and refuted the appellant’s claims.

However, during the pre-trial conference on 7/12/2006, the respondent’s counsel admitted that “there are excess charges in the sum of N7, 209, 906.55″ and the pre-trial conference Judge entered judgment for the appellant in the sum of N7, 209,906.55 admitted by the respondent. However, no interest was awarded to the appellant on that day.

The appellant subsequently filed a motion praying the court for:
“An order awarding interest to the claimant at the rate of 21% per annum from 18/6/2003 up till and including the current date and until the said interest is finally liquidated by the defendant in respect of the judgment of the court delivered on 7/12/2006 in the sum of N7,209,906.55”

The trial court in its ruling on 25/5/2009 dismissed the application.
Dissatisfied, the appellant appealed to the Court of Appeal. The Court of Appeal allowed the appeal, and granted the appellant post-judgment interest, but declined the claim for pre- judgment interest on the ground that the appellant failed to plead and lead evidence in proof of same.

Dissatisfied, the appellant appealed to the Supreme Court.
At Supreme Court, the appeal turned on whether the appellant was entitled be awarded pre-judgment interest on the admitted sum of N7,209,906.55.
Held: Unanimously allowing the appeal.
The judgment of the Court of Appeal as regards the pre-interest judgment is hereby set aside. The appellant is awarded pre-judgment interest at the rate of 21% per annum on the judgment sum of N7,209,906.55 from 18/3/2002 until 7/12/2006 when judgment was entered by the trial court. Costs of N1 Million are awarded against the respondent in favor of the appellant.
The following issues were raised and determined by the Supreme Court.

On Whether interest can be claimed on ordinary debt-
The general rule is that interest is not recoverable at common law on ordinary debt unless there are contractual obligations, expressed or implied, business usage or statutory provision.

On Distinction between pre-judgment interest and post judgment interest –
Pre-judgment is simply a judgment reached before evidence is available. If the claim is for money, the claimant may claim interest up until the date the judgment is given, and that is pre-judgment interest. There is a clear difference between an award of interest pre-judgment, where a plaintiff must specifically claim such and prove it, and award of interest on a judgment-debt, which is purely statutory, and can only be awarded if there are provisions to that effect in the law or rules of court.

On Principles guiding award of pre-judgment interest-
A claim of pre-judgment interest may be made by a plaintiff as of right where it is expressly provided for, or is contemplated by the agreement between the parties or under a mercantile custom or under a principle of equity such as the breach of a fiduciary relationship. In the instant case, the parties did not only have a banker/customer relationship, which was contractual in nature, imposing rights and duties on both of them, there was also a fiduciary relationship between them, which thereby elicited a duty of care by the respondent to the appellant.

Per KEKERE-EKUN, J.S.C.:
“The law as regards the awards of pre-judgment interest, is that it must be specifically pleaded and the claimant must prove the basis for his entitlement thereto by showing that the claim is supported by statute, by contractual agreement between the parties or that it is based on mercantile custom or under a principle of equity, such as breach of a fiduciary relationship.
See: N.P.A v Aminu lbrahim & Co. & Anor (2018) 12 NWLR (Pt. 1632) 62; Berliet
(Nig.) Ltd. v Kachalla (1995) 9 NWLR (Pt.420) 478; Ekwunife v. Wayne (W.A.) Ltd. (1989) 5 NWLR (Pt. 122) 422. There is no doubt that the appellant claimed pre-judgment interest in its pleadings. It is also not disputed that there was a banker/customer relationship between the parties and that the wrongful deductions from the appellant’s account by the respondent constitutes a breach of the fiduciary duty owed it by the respondent. The respondent having admitted the claim to the tune of N7,209,906.55, it follows that all the facts and material necessary for the award of pre-judgment interest were before the court”.

On nature of banker/customer relationship –
A banker-customer relationship is one that is founded on contract, with particular reference to commercial transactions. Thus, where a bank presents itself as being professionally competent and skilled to execute certain obligations inherent in a commercial transaction, but eventually shirks that responsibility, It constitutes a prima facie act of negligence; having failed in the duty of care that it primarily owes to its customer.

On onus on party claiming pre-judgment interest-
Pre-judgment interest is successfully claimed by a plaintiff who pleads it, and supports it with facts which show that he is entitled to it, either by statute, contract between the parties, or breach of fiduciary relationship. Furthermore, the plaintiff is expected to lead evidence at the trial in proof of the facts pleaded. This is mandatory, since the position of the law is that where there is no evidence in proof of the facts, the pleadings are considered abandoned. In the instant case, the pleaded facts on pre-judgment interest were not abandoned.

On effect where monetary claim is admitted –
Facts admitted require no further proof. Where a monetary claim is admitted, the court is entitled to enter judgment in the admitted sum, while leaving the balance to be contested. In the instant case, the respondent admitted that it wrongly deducted the amount claimed from the appellant’s account.

On effect where monetary claim is admitted-
By virtue of Order 19 rule 4 of the High Court of Lagos State (Civil Procedure) Rules, 2004, a Judge may, at a pre-trial conference or at any stage where admissions of fact have been made, on pleadings or otherwise, give such judgment as upon such admissions a party may be entitled to without waiting for the determination of any other question between the parties.
By that provision, the court does not have to wait for parties to call witnesses before a decision is taken on a claim or counter claim where there is an application to do so. Thus, where the claim is for a definite sum allegedly owed by the defendant, and the defendant admits owing part of the sum, no difficulty will, or should, arise in the court entering judgment for the sum admitted leaving the balance to be contested. In such a case, the judgment could be entered upon an oral application to the court provided that the court, in its own discretion, may, having regard to the circumstances of the case, grant the application and enter judgment there and then or order the applicant to formally move the court. Yet, the admission in such a case is a solemn declaration of indebtedness of the defendant to the plaintiff, in the sum admitted, for the purpose of the remainder of the trial of that action.

On treatment of uncontroverted deposition in affidavit –
Depositions in an affidavit that remain uncontroverted are accepted as true. They are the factual positions of the deponent as verily believed by him and where such facts are not controverted with a counter-affidavit, the material facts are taken as unchallenged and undisputed and the court is bound to act on them, except they are obviously false. In the instant case, the depositions in the appellant’s affidavit could not be regarded as false because the respondent admitted that it had over deducted or overcharged the appellant’s accounts with it to the tune of N7,290,966.55

Courtesy:
Moruff O. Balogun Esq.
Ijebu Ode, Ogun State.
08052871414