IDAKULA V. RICHARDS & SAVANNAH BANK LTD. (2000)

Background

This consolidated appeal arose from three decisions of the Plateau State High Court in suit No. PLD/J/334/89. The original appellant, Amos Bez Idakula, had died in a road traffic accident in November 1997 while the appeal was pending. On application, his wife, Mrs. Rhoda Idakula, was substituted as appellant and the Court of Appeal directed that the court processes should reflect her status as administratrix of the deceased’s estate.

In April 1987, Dorcas Richards obtained a contract from the Directorate for Rural Development to supply ten India Mark II hand pumps at a total contract price of N65,000. When she encountered difficulty sourcing the specified pumps, she obtained permission to supply Nigerian hand pumps at the same price. After delivery, a government voucher was prepared for N58,200, representing the contract price less tax. Richards instructed that the cheque be delivered to Idakula for onward transmission to her. Instead, Idakula paid the cheque into his personal account at Savannah Bank and withdrew or applied portions of the money.

Richards sued Idakula for recovery of N58,200 and later amended her claim to N208,200. The additional N150,000 was claimed as damages against Savannah Bank for alleged negligence or collusion in permitting the cheque, which was not endorsed to Idakula personally, to be paid into his account. Idakula admitted receiving the cheque but claimed that Richards had authorised him to deduct a commission of approximately N11,000, invest N30,000 in Idakula Mining Company, and pay the balance to Richards through a named recipient. Savannah Bank denied fraud, negligence and collusion.

On 22 April 1991, counsel for Idakula informed the High Court that he was liable for N30,000. The trial judge entered judgment for that admitted sum, but added interest at 15% per annum from July 1987 until payment. The balance of N28,200 and the claim against the bank were to proceed to trial. On 16 May 1991, when the balance was due to be considered, the record stated that Idakula pleaded liability for the N28,200 and sought permission to pay by quarterly instalments. Judgment was accordingly entered for the balance, again with 15% interest from July 1987. A third appeal challenged an order permitting execution against Idakula’s immovable property, but no brief was filed in support of that appeal.

Issues

1. Whether the High Court was entitled to award pre-judgment interest at 15% per annum from July 1987 on the admitted sums.
2. Whether the judgment for the balance of N28,200 entered on 16 May 1991 was justified in the absence of evidence, or whether the record showed an admission of liability.
3. What was the effect of the appellant’s death and substitution by his wife during the appeal.
4. What was the effect of failing to file a brief in support of the third notice of appeal.

Ratio Decidendi

The Court of Appeal held that pre-judgment interest, sometimes described as interest as of right, must ordinarily be specifically claimed in the pleadings and established by evidence. Its award generally depends on an agreement between the parties or on a recognised mercantile or trade custom. Although a commercial bank may ordinarily establish interest by reference to the terms of a loan or overdraft and banking practice, a private claimant cannot obtain pre-judgment interest merely by inserting a rate in the claim without proving its contractual or legal basis. In this case, there was no evidence that the parties agreed to interest or to the rate of 15%, and neither party was a licensed commercial bank in a transaction to which a banking custom could apply. The 15% pre-judgment interest was therefore wrongly awarded.

The court distinguished pre-judgment interest from post-judgment interest. Post-judgment interest is discretionary and may be awarded under the applicable rules of court, but it must not exceed the statutory or regulatory ceiling. Order 40 rule 7 of the Plateau State High Court (Civil Procedure) Rules 1987 permitted interest of not more than 10% per annum. The Court of Appeal, exercising its broad powers under section 16 of the Court of Appeal Act 1976, could make the order which the High Court ought to have made. It therefore substituted 10% post-judgment interest from the date of each judgment until final liquidation.

The court further held that facts admitted by a party require no proof under section 75 of the Evidence Act 1990. The record of proceedings is presumed correct and accurate unless challenged by appropriate evidence, ordinarily by affidavit or by steps taken to have the record corrected. Idakula’s counsel could not simply assert for the first time on appeal that no admission had been made when the record expressly recorded liability for the N28,200 balance. The judgment for that balance was consequently upheld.

Court Findings

The Court held that the appeal against the judgment of 22 April 1991 succeeded only to the extent that the 15% pre-judgment interest was set aside. In its place, 10% post-judgment interest was awarded on N30,000 from 22 April 1991 until payment. The appeal against the judgment of 16 May 1991 also succeeded in part: the principal judgment for N28,200 was affirmed because it was supported by the recorded admission, while the retrospective 15% interest was removed and replaced with 10% interest from 16 May 1991 until final liquidation.

The third appeal, concerning the order for execution against the appellant’s immovable property, was struck out. No brief of argument had been filed in support of the notice of appeal, and a ground of appeal for which no argument is offered is deemed abandoned. The court also noted that the question whether a personal cause of action survived the death of the original appellant should ideally have been considered when substitution was sought. Since substitution had already been granted by the court, the panel declined to reopen that decision and proceeded on the assumption that the appeal could continue.

Conclusion

The consolidated appeals were unanimously allowed in part. The principal sums of N30,000 and N28,200 remained payable. The awards of 15% pre-judgment interest from July 1987 were set aside because they lacked evidential and contractual foundation. Post-judgment interest was fixed at 10% per annum from the respective judgment dates until payment. The abandoned third appeal was struck out, and costs of N3,000 were awarded to the appellant.

Significance

The decision is important for Nigerian civil procedure and judgment enforcement. It confirms that an admission can dispose of a monetary claim without further proof, but also shows that the court must distinguish carefully between the principal debt, pre-judgment interest and post-judgment interest. A claimant must prove the basis and rate of pre-judgment interest; the court cannot treat the requested rate as part of an admission of the debt. The case also emphasises the reliability of the official record of proceedings, the responsibility of a party seeking to challenge that record, the statutory limits governing post-judgment interest, and the procedural consequence of failing to file an appellate brief.