UNION BANK OF NIGERIA PLC V. UKE-FAYANJU (2018)

Background

This appeal arose from a dispute concerning a loan facility granted by Union Bank of Nigeria Plc to Trust Akol Ventures Ltd during the 1997/1998 cocoa season. The facility, stated to be N15,000,000, was allegedly guaranteed by late Isaiah William Uke and secured by mortgages over two properties belonging to him at No. 100 Oyemekun Road and No. 25 Adinlewa Street, Akure, Ondo State. After the borrowing company defaulted, the bank demanded repayment from the deceased, claiming that the outstanding debt had increased to over N21,000,000.

Mr. Bukola Uke-Fayanju, representing the estate of the deceased, denied that his father had guaranteed the facility, signed the relevant mortgage documents, or consented to the use of his properties as security. He commenced an action at the High Court of Ondo State seeking declarations that no debtor-creditor relationship existed between the deceased and the bank, an injunction restraining the sale of the properties, declarations invalidating the mortgage instruments on grounds of fraud, and N50,000,000 in general damages for trespass and emotional distress.

The bank denied the allegations and filed a counterclaim. It sought declarations confirming the third-party mortgage transaction and the deceased’s guarantee, an order directing repayment of N28,379,218.70 allegedly owed by Trust Akol Ventures Ltd, and an order for the sale of the mortgaged properties. Following a full trial involving oral and documentary evidence, the High Court granted the respondent’s claims and dismissed the bank’s counterclaim. The bank appealed to the Court of Appeal.

Issues

1. Whether the respondent’s original statement of claim, reply to the defence and defence to counterclaim, which had been signed in the name of a law firm, could validly be amended.
2. Whether the award of N10,000,000 as general damages was excessive or otherwise justified an appellate intervention.
3. Whether the trial court was right to dismiss the bank’s counterclaim.

The respondent also challenged the competence of several grounds and issues in the appeal. The Court therefore considered the relationship between grounds of appeal and issues for determination, as well as the effect of defective processes.

Ratio Decidendi

The Court of Appeal held that a ground of appeal must clearly state the complaint against the decision appealed from and cannot simultaneously allege both error in law and misdirection as though they were identical complaints. An issue for determination must flow from a competent ground of appeal. Where an issue is founded on both competent and incompetent grounds, it is generally contaminated and incompetent. However, the court recognised an exception where the issue concerns jurisdiction, because jurisdiction is fundamental and must be determined before the merits.

Under sections 2(1) and 24 of the Legal Practitioners Act 2004, a law firm is not itself a legal practitioner entitled to practise law. Consequently, a process signed in the name of a law firm is procedurally defective. Nevertheless, the Court distinguished between an originating process and an ordinary pleading. An irregularity affecting an originating process is fundamental, whereas a defect in a statement of claim or other non-originating process may be waived or remedied. Since the writ of summons had been signed by a qualified legal practitioner, the defective signatures on earlier pleadings did not destroy the action. The bank had also participated fully in the proceedings without objecting and had therefore waived its right to complain about the defect.

Court Findings

The court struck out grounds 1 and 2 of the amended notice of appeal because they improperly combined error in law with misdirection. Ground 3 was considered competent, but the issue formulated from grounds 1, 2 and 3 was allowed to survive only to the extent that it raised the jurisdictional question. The preliminary objection therefore succeeded in part.

On the validity of the amended pleadings, the court held that the further amended statement of claim and amended reply were valid. The original writ of summons had been properly signed by a legal practitioner, and the bank’s failure to object at the appropriate time amounted to waiver. The trial court consequently had jurisdiction to proceed on the amended processes.

On damages, the court reaffirmed that trespass is an interference, however slight, with a person’s possession of land and is actionable per se, without proof of actual damage. General damages are those which the law presumes to flow from the wrong complained of; they need not be specifically proved in the same manner as special damages. Although an appellate court may interfere with an award where the trial court applied a wrong legal principle, misunderstood the facts, considered irrelevant matters, ignored relevant matters, acted unjustly, or awarded an amount that is ridiculously high or low, none of those circumstances was established. The evidence showed that the bank had purported to mortgage the deceased’s properties without his consent over a period of approximately seventeen years. The N10,000,000 award was therefore not shown to be excessive or perverse.

Regarding the counterclaim, the court emphasised that a counterclaim is an independent action, although tried together with the claimant’s action for convenience. The counterclaimant bears the burden of proving it by credible and conclusive evidence. The documentary evidence, including the alleged guarantee and mortgage instruments, was found to be unreliable. The trial court had carefully compared the signatures and was entitled to prefer the respondent’s evidence. Since the bank failed to establish that the deceased executed the guarantee or mortgage, its counterclaim for repayment and sale of the properties could not succeed.

Conclusion

The Court of Appeal unanimously dismissed the appeal and affirmed the judgment of the High Court of Ondo State delivered on 2014-02-07. The parties were ordered to bear their respective costs.

Significance

The decision is significant for Nigerian civil procedure and banking litigation. It clarifies that not every defective court process is incurably void: the effect depends on whether the process is originating and whether the opposing party has waived the objection by participating in the proceedings. It also reinforces the rule that jurisdictional questions may be considered despite defects in grounds or issues of appeal. Further, the judgment confirms that a counterclaimant must independently prove the counterclaim and cannot rely merely on the fact that it was pleaded alongside the main action. Finally, it restates the limited circumstances in which an appellate court may interfere with a trial court’s discretionary award of general damages.