Abcos v. Kango Wolf (1987)

894
Abcos (Nig.) Ltd. v. K.W.P.T. Ltd.
28 December 1987

        ABCOS (NIG.) LTD.


           V.


          KANGO WOLF POWER TOOLS LTD.


                        COURT OF APPEAL

                        (LAGOS DIVISION)

CA/L/89/85

PHILIP NNAEMEKA-AGU, J.C.A.( Presided and Delivering the Lead Judgment)

IDRIS LEGBO KUTIGI, J.C.A.

OWOLABI KOLAWOLE, J.C.A.

MONDAY, 13TH APRIL 1987

APPEALS – Court of Appeal – Power to hear appeal – Basis for hearing.

APPEALS – Civil appeal – Introducing documents not tendered at the court of trial – Effect of – When such documents allowed.

BILLS OF EXCHANGE – Acceptance – Effect – Liability of acceptor.

BILLS OF EXCHANGE – Acceptance coupled with taking delivery of goods – Refusal to honour bills – Effect.

BILLS OF EXCHANGE – Nature – Promise therein to pay debt – Whether conditional.

BILLS OF EXCHANGE – Payment for value thereof at maturity in Nigerian Bank – Remittance of money abroad – Distinction between them.

BILLS OF EXCHANGE – Failure to obtain permission before requiring payment on bills drawn – Sections 7(a) and 28(1), Exchange Control Act, 1962 – Whether constituting a defence to liability under a bill of exchange transaction.

BILLS OF EXCHANGE – Exchange Control Act, 1962 – Effect of on Bills of Exchange Act.

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CONTRACT – Objection to agreement on ground of illegality – Duty to plead such fact specifically.

CONTRACT – Agreement to do act prohibited by statute – Effect on contract – Effect on parties thereto.

COURTS – Duty – Where illegality disclosed ex facie on agreement or document before it.

EVIDENCE – Laws and Enactments-Judicial Notice – Section 73(1)(a), Evidence Act, 1945.

FOREIGN EXCHANGE – Second-Tier Foreign Exchange Market Decree No. 23 of I9S6 – Section 12 thereof- Scope of- Effect of

INTERNATIONAL COMMERCIAL TRANSACTIONS – Exchange control Act, 1962 – Purpose of in relation to International Commercial Transactions.

INTERNATIONAL COMMERCIAL TRANSACTIONS – Documentary Credits – Categories of.

INTERNATIONAL COMMERCIAL TRANSACTIONS – Buyer – Issuing Bank – Non-existence of direct foreign exchange element between – Obligation of buyer – Nature of.

INTERPRETATION OF STATUTES – Exchange Control Act – Sections 7(a) and 28(1) thereof- Paragraph 4(1), Third Schedule thereto – Effect of.

JUDGMENTS AND ORDERS – Where illegality disclosed thereon – Effect.

JUDGMENTS AND ORDERS – Consent judgment – Whether illegal – Exchange Control Act, 1962 – Sections 7(a) and 28(J) thereof- Relevance thereto.

PRACTICE AND PROCEDURE – Consent judgment – Setting aside of on ground of illegality – Principles applicable.

PRACTICE AND PROCEDURE – Pleadings – Where illegality in agreement alleged – Duty to plead specifically.

Issue:

Whether, in a Bill of Exchange transaction, where two bills of exchange drawn in London had been accepted by the drawee in Lagos, the acceptor taking delivery of the goods covered by the Bills, the consent of the Minister of Finance pursuant to sections 7(a) and 28(1) of the Exchange Control Act, 1962 is required as a condition precedent to a valid payment for the goods so delivered and admittedly received by the resident-acceptor to the non-resident- drawer of the said bills.

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28 December 1987

Facts:

The respondent (plaintiff at the court of trial), on 28th May, 1982, caused a writ of summons to be issued against the appellant (defendant at the Court of trial) for the sum of £24,537.35, the equivalent of N31,257.77 in the Nigerian Currency.

The respondent had drawn two bills of exchange in London upon the appellant in Lagos for the said sum which the appellant duly accepted. One of the bills was made payable to the order of the respondent sixty days after sight. The appellant failed or refused to honour the said bills upon maturity despite repeated demands by the respondent. The appellant took delivery of the goods covered by the bills upon arrival in Nigeria.

Upon the writ of summons being issued, the appellant entered appearance, but filed no defence. Consequently, the respondent applied for final judgment. The application was brought under Order 10 rules 1 and 2 of the High Court of Lagos (Civil Procedure) Rules 1972. The appellant, instead of filing a defence, drew up terms of settlement with the respondent’s counsel for the sum of N36,050.62 upon which a consent judgment was based and entered by the trial judge. The appeljant issued a cheque for the sum of N9,050.67 in the respondent’s favour but was dishonoured on presentation.

Subsequently, the appellant by a motion sought an order to set aside the consent judgment on the ground that the trial judge had no jurisdiction to enter it and further that the consent judgment was illegal, null and void in the light of the provisions of sections 7(a) and 28(1) of the Exchange Control Act, 1962 as well as the Exchange Control (Anti Sabotage) Decree, 1977.

The trial Judge dismissed the application. He then held that the Exchange Control Act, 1962 does not provide an excuse for the debtor to postpone indefinitely the payment of his honest debt and furthermore the person who was to remit the money outside Nigeria had the responsibility to apply to the Minister or the Central Bank of Nigeria for appropriate authorisations. The appellant, being dissatisfied, appealed.

The fulcrum of the appellant’s appeal can be stated as follows: That the Exchange Control Act, 1962 prohibits persons in Nigeria from making any payment to, or to the credit of, any person resident outside save with the permission of the Minister of Finance; that the combined effect of the provisions of sections 7(a) and 28(1), Exchange Control Act, 1962 means that debtors in Nigeria are forbidden to pay debts owed to persons outside Nigeria except after obtaining the relevant consent; that the trial judge was wrong in holding that a foreign creditor is entitled to sue for the recovery of such debt in the absence of the necessary permission; that no action can lie at the instance of the creditor for recovery of such debt until the condition precedent has been fulfilled by the panting of permit by the Minister of Finance; that the promise to pay the debt is only a conditional promise which is analogous to a conditional obligation, and, finally, that the appellant had no obligation to pay until the consent has been obtained.

The central focus of the respondent’s reply in its brief rested on the following submissions. First, that the bills of exchange in respect of which it had obtained judgment was an independent contract within the wider contract and were analogous to cash payment. Second, that the acceptance of the two bills

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of exchange guaranteed payment in Nigerian Currency at the maturity of these bills. Third, that the appellant’s excuse for not paying was in bad faith as it ought to have paid having collected the relevant shipping documents. Fourth, that a distinction should be made between the payment of the two bills of exchange at their maturity to the Nigerian Bank – Union Bank of Nigeria – and the remittance of the sum paid into the respondent’s account abroad after necessary application by the Nigerian Bank to the Central Bank for Foreign Currency.

The appellant, during the appeal, sought to rely on certain pre-shipment inspection documents which were neither introduced nor used at the trial in the court below.

Held (Unanimously dismissing the appeal):

1.
The Court of Appeal has power to hear an appeal only on the record and documents before the lower court or documents properly introduced before it as additional evidence.

2.
Per NNAEMEKA-AGU, J.C.A. at Page 905-906: (Introduction of documents on appeal)

“The appellant neither filed a statement of defence nor gave evidence; and on the materials placed before the court upon which the consent judgment and subsequent ruling were delivered, no question of pre-shipment inspection arose. It was only in the affidavit before this court that form “M” and other documents relating to pre-shipment inspection were introduced. As I understand it, the function of this court is to see whether, on the materials placed before the learned Judge, he was right in his ruling. I cannot see how I can take those documents which were not before the court of trial either in the judgment or in the Ruling into account. If the appellants felt convinced that they needed additional evidence in this appeal they should have taken the proper steps to seek leave to introduce it.”

3.
Per NNAEMEKA-AGU, J.C.A. at Page 906:

“I would take this opportunity to state that allowing parties to an appeal to argue an appeal on a bundle of documents prepared by parties themselves is a great indulgence deliberately granted by this court in order to quicken the wheel of justice in the midst of numerous constraints militating against prompt preparation of records by the court below. It is hoped that parties should not use this as an opportunity to introduce any documents which could not by any stretch have properly formed a part of the record, if it was prepared by the court below.”

4.
It is the duty of a court when asked to give a judgment which is contrary to a statute to take the point although the litigants may or may not have taken it.

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28 December 1987

5.
Illegality is capable of nullifying and rendering void a judgment already entered and it is also a good ground for setting aside such judgment.

6.
A contract to do something expressly prohibited by statute is analogous to doing something illegal in its inception and neither party to such contract can say that he did not intend to break the law. On the ground of public policy, no right can arise from such a contract.

7.
The court will itself take notice of the illegality of a contract if it so appears ex facie or from the pleading or evidence brought before it by either party although the defendant has not pleaded the fact of such illegality. But where an agreement is objected to as illegal, unless illegality has been specifically pleaded, the court can only pronounce the agreement as void on the ground of illegality only if the illegality and its setting are fully before the court. [Sodipo v. Lemninkainen OY (No.2) (1986) 1 . (Pt. 15) 220 followed. ]

8.
In the instant case, the respondent’s action as filed is not one rendered illegal by statute and it is right for it to have issued a writ and obtained judgment.

9.
Under the relevant provisions of the Exchange Control Act, 1962, the fact that permission has not been obtained is not a defence to the action. The Act is not to be used to enable the appellant to retain the money in his pocket, but to control it reaching its destination – the respondent in this case.

10.
Section 3 of the Exchange Control Act, 1962 deals with buying or borrowing foreign currency or gold and has no application in a case such as this which is based on accepted bills for goods sold and delivered.

11.
Per NNAEMEKA-AGU, J.C.A. at Page 910:

“I do not think that the Ad (the Exchange Control Act) was designed for the purpose which the appellant wants to see created in this case, whereby the appellant would enter into an international commercial transaction, issue bills which are accepted according to their tenor and receive goods on account thereof and then turn round to use the provisions of the Act as a defence against a claim based on the bills. Incidentally, the only Nigerian case we were referred to on the point or which I could find myself Is the decision of Anyaegbunam, C.J. in the Federal High Court Suit No. FHC/L/M84/79: Lonrho Export Ltd, v. Motorways (Nigeria) Ltd. of 22nd January, 1981 (unreported). The learned Chief Judge, rightly in my view, came to the same conclusion.”

12.
Per KOLAWOLE, J.C.A. at Page 913:

“How then can a person legitimately buy goods, issue a cheque for the goods, agree that he owed the debt and submit to judgment therefor and then later turn round

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to refuse to pay by stopping the cheque, to refuse to return the goods and to put up an objection which he says forbids his payment of the debt. I do not believe that the laws of this country will ever offer protection in international trade to such commercial transaction. If you cannot pay for goods legally purchased you are in honour bound to return the goods to the owner in good a condition as when you collected them.”

13.
International commercial transactions for documentary credit consists usually of four distinct categories, to wit:

(a)

Between the buyer and the seller.

(b)

Between the buyer and the issuing bank.

(c)

Between the issuing bank and the confirming bank.

(d)

Between the seller and the confirming bank. Akinsanya v. U.BA. Ltd, (1986) 4 . (Pt. 35) 273,302-306 per Eso, J.S.C. refers).

As between the buyer and the issuing bank there is strictly no direct foreign exchange element involved and the obligation of the buyer is usually to pay to the issuing bank the necessary sum involved in Naira. In the Instant case, it is for the Issuing bank, the Union Bank of Nigeria to apply to the Central Bank for the foreign exchange cover.

14.
Per KUTIGI, J.C.A. at Page 911:

“There is clearly a distinction between payment in Naira for the value of the two bills of exchange at their maturity to the Nigerian i.e. the Union Bank of Nigeria, and remittance of the money abroad. It is only in the case of remittance abroad that the permission or approval of the Federal Minister of Finance is a necessity vide section 7(a) of the Exchange Control Act, 1962. There is in my view nothing in that Act which forbids a foreign creditor from instituting legal proceedings for the recovery of his debts in our courts. There are also no prior conditions to be fulfilled before instituting such an action in court. Nigerians as members of the international community must pay their honest debts to their foreign creditors if and when due. They have not got eternity to make the payment. If they have, the consequences will be rave as no one will be prepared to give them credit any more.”

15.
The acceptance of a bill of exchange by the acceptor is the signification by the drawee of his assent to the order of his drawer. The party primarily liable on a bill of exchange is the acceptor being the person to whom the order to pay is addressed and remains the party primarily liable on the bill whatever may happen to the other parties.

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16.
Per KOLAWOLE, J.C.A. at Page 914:

“The promise to pay the debt on the face of the Bill of Exchange is not conditional. It is payment at sight on the due date and the remittance is a different matter. A bill of exchange is like a currency and the appellants are bound to honour their undertaking by paying upon its maturity in accordance with the tenor of the acceptance.”

17.
The Exchange Control Act, 1962 does not make provisions of the Bills of Exchange Act, 1958 null and void. It does not make a judgment obtained under the Bilk of Exchange Act illegal or ultra vires.

18.
Section 28(2) and paragraph 4(1) of the Third Schedule to the Exchange Control Act, 1962 preserve the efficacy of a bill of exchange, in that a claim for recovery of a debt arising under a Bill of Exchange under the provisions of the sections of the Act is not to be defeated by the fact that, permission of Ministry of Finance to pay it has not been given.

19.
It is not the intention of the legislature that sections 7 and 28 of the Exchange Control Act, 1962 should be employed as a vehicle of fraud in international trade and commerce.

20.
Although, counsel for both sides did not make any reference to the Second-Tier Foreign Exchange Market Decree No.23 of 1986 either in their briefs or oral arguments, the court is nevertheless bound to take judicial notice of all laws or enactments having the force of law in any part of Nigeria by virtue of section 13(l)(a) of the Evidence Act, 1945.

21.
Since the introduction of the Second-Tier Foreign Exchange Market, foreign exchange may be purchased from the market and repatriated from Nigeria without prior approval of the Minister of Finance or the Central Bank or any other Exchange Control requirement Vide section 12 of the Second- Tier Decree.

Nigerian Cases Referred to in the Judgment:

Akinsanya v. U.BA. Ltd. (1986) 4 . (Pt. 35) 273

Greenways Export Ltd. v. Emaco Nig. Ltd. LD/807/75 of 12/1/79 (Unreported)

Henley’s Medical Supplies Ltd. v. Aden Medical and Scientific Stores CCHCJ/4/74 p.505

Lonrho Export Ltd. v. Motorways Nigeria Ltd. Suit No. FHC/L/M/84/79 of 22/1/81

Sodipo v. Lenminkainen OY (No. 2) (1986) 1 . (Pt. 15) 220

Sonnar (Nig.) Ltd. v. Pedro Trading Co. Ltd. CCHCJ/4174 p.501

Timitimi v. Amebebe (1953) 14 WACA 374

Foreign Cases Referred to in the Judgment:

Anisminic Ltd. v. Foreign Compensation Commission (1969) 1 All ER 208

Arab Bank Ltd. v. Ross (1952) Q.B. 216; (1952) 1 All ER 709

Belvoir Finance Co. Ltd. v. Harold G. Cole & Co. (1969) 2 All ER 904

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Boissevain v. Wed (1950) 1 All ER 725

Chettiar v. Chettair (1962) AC 294

Contract and Trading Co. (Southern) Ltd. v. Bar bey (1960) AC 244

Cummings v. London Bullion Co. Ltd. (1952) 1 KB 327

Forfie v. Seifah (1958) AC 59

Gedge v. Royal Exchange Assurance (1900) 2 QB 214

Philips v. Copping (1935) 1 KB 15

James Lamont Ltd. v. Hyland Ltd. (1951) 1 KB 585

Lloyds Bank Ltd. v. Cooke (1907) 1 KB 794

Macfoy v. U.A.C. Ltd. (1963) 3 WLR 1405

Martorana v Morley (1958) 108 LJ 204

Mohammed & Ispahani, Re (1921) 2 KB 716

North Western Salt Co. Ltd. v Electrolytic Alkali Co. Ltd. (1914-1915) All E.R. 752

Nova (Gersey) Kammgann (1977) 1 Lloyd Rep. 463

Royal Exchange Association v. Vega (1902) 2 KB 384

Sadler v. Moore (1937) 1 All ER 637

Shaw v. Shaw (1965) 1 All ER 638

Suntherland, Re (1963) AC 235

United City Merchants (Investments) Ltd. v. Royal Bank of Canada (1983) A.C. 168 H.L.

Windhill Local Board v. Vint (1890) 45 Ch. D. 357

Nigerian Statutes Referred to in the Judgment:

Bill of Exchange Act, Cap. 21 Laws of the Federation 1958, S. 54(a)

Evidence Act, Cap. 62, Ss. 1-2 and 73(1)(q)

Exchange Control (Anti-Sabotage) Act, 1977

Exchange Control Act, 1962, Ss. 3, 7,7(a), 28, 28(1)(2)(3)

Exchange Control Act, 1982, S. 28(1)

Pre-Shipment Inspection Imports Act, 1978, Ss. 2 and 37

Second-Tier Foreign Exchange Market Decree No. 23 of 1986

Foreign Statutes Referred to in the Judgment:

Exchange Control Act of 1947 of the United Kingdom, Ss. 1(1), 5(a) and 33(1)

Sale of Goods Act 1893, Ss. 28,44 and 50

Nigerian Rules of Court Referred to in the Judgment:

High Court (Civil Procedure) Rules of Lagos State, 1972, O. 3 r. 4 and 10 r. 1 & 2

Book Referred to in the Judgment:

Halsbury’s Laws of England, 4th Ed., Vol. 4, para. 357

Appeal:

    This was an appeal from the decision of the Lagos High Court which found in favour of the respondent. The Court of Appeal however dismissed the appeal.

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28 December 1987
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History of the Case:

Court of Appeal:

Division of the Court of Appeal to which the Appeal was brought: Court of Appeal, Lagos.

Names of Justices that sat on the Appeal: Philip Nnaemeka-Agu, J.C.A. (Presided and Read the lead Judgment); Idris Legbo Kutigi, J.C.A., Owolabi Kolawole, J.C.A.

Appeal No.: CA/L/89/85

Date of Judgment: Monday, I5th April, 1987

High Court:

Name of High Court: High Court of Justice, Lagos

Name of Judge: E. A. Oshodi, J.

NNAEMEKA-AGU, J.C.A. (Delivering the Lead Judgment): The plaintiff commenced this action in a Lagos High Court against the defendant claiming as follows:

“The sum of £24,537.35 which is equivalent to N31,257.77 in Nigerian currency. The defendants are the acceptors of the two bills of exchange drawn by the plaintiff in London upon the defendants at Lagos (Nigeria) for the total sum of £24,537.35 (N31,257.77) in Nigerian currency. The defendants duly accepted the said two bills of exchange but failed and/or neglected to honour same by payment upon maturity despite repeated demands. Or in the alternative for the like sum of £24,537.35 (N31,257.77) in Nigerian currency for goods sold and delivered to the Defendants by the plaintiffs (and at the defendants’ request) at Lagos. And interest at the rate of 10% per annum from 31/12/80 till actual payment. And the costs of this action.”

The writ of summons was accompanied with a statement of claim part of which averred as follows:

“(4) The plaintiffs at their said London offices drew two bills of exchange (the particulars of which said two bills of exchange are given here under for the total sum of £24,537.35 which is equivalent to N31,257.77 in Nigerian currency.

                                                Particulars of the Two accepted

                                                        Bills of Exchange

Bill No. Amount in £ Amount in N Due Date

  1. BC302774328 22,550.75 28,727.07 Dec.1980
  2. BC302824392 1,986.60 2,530.70 Dec. 1980

Total £24,537.35 N32,257.77

(5)

The defendants at Lagos (Nigeria) duly accepted the said bills of exchange but failed and/or neglected to honour same by non payment upon maturity despite repeated demands.

(6)

Or in the alternative for the like sum of £24,537.35 which is equivalent to N31,257.77 in Nigerian currency for goods sold and

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delivered to the defendants by the plaintiffs (and at the defendant’s request) at Lagos.

(7)
The plaintiffs in support of its alternative claim rely on the copies of all enabling relevant and related shipping documents with which the defendants affected the delivery of the goods in question at the trial of this matter.”

The defendants through their solicitors entered appearance to the writ but filed no defence to the action. By a motion dated 13th August, 1982, the plaintiffs applied for final judgment as per their writ of summons. This application under Order 10 rules 1 and 2 of the High Court of Lagos (Civil Procedure) Rules, 1972, was accompanied with an affidavit, verifying the cause of action and deposing to the plaintiffs’ belief that the defendants had no defence to the action. Rather than showing that they had any defence, the defendants through their counsel drew up “terms of settlement” with plaintiffs’ counsel whereby they agreed that a consent judgment be entered against the defendants and in favour of the plaintiffs in the total sum of N36,050.62. The manner of settlement of the said sum was also agreed. As a result, a consent judgment was entered accordingly on the 18th of October, 1982. Subsequently, the defendants through their solicitors forwarded their Union Bank of Nigeria Ltd. Cheque No. 364560/48 – 3059 for the sum of N9,050.67; but the cheque was dishonoured on presentation.

   On the 1st of February, 1983, the defendants through another counsel filed a motion pursuant to the inherent jurisdiction of the court, for an order setting aside the consent judgment on the grounds that (1) the High Court had no jurisdiction to enter the said consent judgment and (2) that the consent judgment was illegal, ultra vires, null and void as being in contravention of the Exchange Control Act of 1962 and the Exchange Control (Anti Sabotage) Act of 1977, In a reserved ruling handed down on the 4th of September, 1984, the learned Judge, E.A. Oshodi, J., dismissed the application. In the ruling he conceded it that on the authority of the case of Kofi Forfie v. Seifah (1958) A.C. 59, the court had jurisdiction to review a judgment given without jurisdiction but that in his opinion the court had jurisdiction to enter the said judgment. He further held that the Exchange Control Act of 1962 does not provide an excuse for a debtor to postpone indefinitely the payment of his honest debt and that it is for the person who is to remit the money outside Nigeria to apply to the Minister or the Central Bank of Nigeria for the necessary approval. He relied on the cases of Cummings v. London Bullion Co. Ltd. (1952) 1 K.B. 327, at page 334 and case of Lonrho Export Ltd. v Motorways Nigeria Ltd:, Suit No. FHC/L/M84/79 of the 22nd of January, 1981.

    The defendants (hereinafter called the appellants) have appealed against the ruling. In their two grounds of appeal, they are challenging the opinion of the learned judge that he had jurisdiction and that the consent judgment was not illegal, null and void. They also contend that the learned Judge misconstrued the provision of Section 28(1) of the Exchange Control Act, 1982. In their brief, they framed the question for determination in these words:

“The appellant respectfully submits that the primary question for determination in this appeal is the effect of sections 7 and 28 of the Exchange Control Act, 1962 and sections 2 and 37 of the Pre- Shipment Inspection of Imports Act, 1978 upon the liability of

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a person resident in Nigeria to pay money to a person resident outside Nigeria, for goods purchased or to be purchased by the resident person from the non-resident person. It is submitted that the Court’s determination of this question will show whether or not the consent judgment sought to be set aside was indeed ultra vires the High Court and illegal.”

Learned counsel for the appellants submitted that the Exchange Control Act of 1962 prohibits persons in Nigeria from making any payment to, or to the credit of any person, resident outside Nigeria save with the permission of the Federal Ministry of Finance. He interpreted this provision to mean that debtors in Nigeria are forbidden to pay debts owed to persons resident outside Nigeria, except after obtaining the necessary permission. He pointed out that the learned Judge, relying upon the cases of Lonrho Export Ltd. (supra) and Cummings (supra) as well as the decision of the House of Lords in Contract and Contracting Company (Southern) Ltd. v. Barbey & Ors. (1960) A.C. 244 came to the conclusion that a foreign creditor is entitled to sue for the recovery of such a debt in the absence of the permission of the Ministry of Finance. He, however, submitted that the answer should have been to the contrary and that the above decision should not have been followed. He examined the provisions of Section 7 and 28(1) of the Act and paragraph 4(1) of the Third Schedule and submitted that the permission of the Ministry of Finance is a condition precedent to the liability of the debtor to pay the debt. Therefore, he submitted, no action can lie at the instance of the creditor for the recovery of such a debt unless and until that condition precedent has been fulfilled by the granting of the Ministry of Finance permit. He submitted that the promise to pay the debt is only a conditional promise which is analogous to a conditional obligation in Scottish law. In support he cited the case in Re: Sutherland (1963) AC 235. He went further to suggest that in order to arrive at the true intendment of the provisions of the Act it would be useful to consider such positions as though paragraph 4( 1) of the Third Schedule were absent and submitted that if that is done one would come to that inevitable conclusion that the action is bound to fail unless and until the Ministry of Finance approval has been obtained. He conceded it that the goods had already arrived in Nigeria and that appellant had taken delivery of such goods. He further contended that by virtue of section 7 read together with section 28(1) of the Act that there is an implied condition in the terms of the contract between the parties that payment shall not be made for the goods except in so far as the permission of the Ministry of Finance has been granted. He submitted that the respondent’s action for recovery would be defeated because there is no obligation on the part of the appellant to pay the debt until the necessary permission has been obtained. Finally, he submitted that the Act was designed to prevent an outflow of currency from Nigeria and to preserve the country’s foreign currency holdings by strict regulation of its export. He urged the court to allow the appeal and set aside the consent judgment entered on the 18th of October, 1982.

In his reply, the learned counsel for the respondent pointed out that the respondent had judgment on the two bills of exchange; that the bills of exchange form an independent contract within the wider contract and are analogous to cash payment. He submitted that as a bill of exchange is like a currency, the appellants were bound to honour their undertaking by paying upon their

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maturity, in accordance with their tenor. He cited Arab Bank Ltd. v. Ross (1952) 2 Q.B. 216 in support; also section 54(a) of the Bill of Exchange Act, Cap. 21, Laws of the Federation, 1958. He also cited the case of James Lamont Ltd v. Hyland Ltd. (1951) 1 K.B. 585 at page 591. He pointed out that the acceptance by the appellant of the two bills of exchange guaranteed payment in Nigerian currency at the maturity of the bills. He also pointed out that proceedings were in accordance with Order 3 rule 4 of the High Court of Lagos (Civil Procedure) Rules, 1972. The assumption was that unless the defendants showed a defence on the merits to the averments contained in the writ and the statement of claim, the summary judgment would be entered against them in accordance with Order 9 or 10 of the Rules.

The appellants neither filed a statement of defence nor pleaded fraud misrepresentation or any other vitiating factor. In the circumstances, the respondents were entitled to judgment on the authority of the decided cases. He relied on the following cases in support. Henley’s Medical Supplies Ltd v. Aden Medical & Scientific Stores CCHCJ/4/74 p.505; Sonnar (Nig.) Ltd. v. Pedro Trading Co. Ltd. CCHCJ/4174 p.501; LD/807/75; Greenways Exports Ltd. v. Emaco (Nig.) Ltd. (unreported) High Court of Lagos, judgment of Bada J. of 12/1/79; James Lamont & Co. Ltd v. Hyland Ltd. (1951) 1 K.H. 585; Arab Bank Ltd. v. Ross (1952) 2 Q.B. 216; Nova (Gersey) Kammgann (1977) Vol. l Lloyds Report 463. Further, he submitted that the appellant’s excuse for not paying was in bad faith otherwise they would have paid the value of the bills in Nigerian currency, since they had collected the relevant shipping documents. He also pointed out that the application for remittance of the money abroad could only have been made after the appellants had honoured the two bills of exchange by paying their value upon maturity into their Nigerian Bank in Nigerian currency.

The learned counsel submitted that distinction should be made between the payment of the value of the two bills of exchange at their maturity to the appellant’s Nigerian Bank, i.e. Union Bank of Nigeria Ltd., and remittance of the sum paid into the respondents’ account abroad after necessary application by the Nigerian Bank to the Central Bank for foreign currency. The first leg of the two tier transaction involves merely paying the value of the goods in Nigerian currency into the Nigerian Bank, in other words under the Sale of Goods Act, 1893: – sections 28, 44, and 50. It is only at the second stage of the two-tier transaction that the need for Ministry of Finance’s approval for permission arises. This is a necessary import if international transactions could be continued. Learned counsel further conceded it that unless the provisions of the Exchange Control Act are complied with the foreign seller could not be paid in foreign currency. He contended that the cases of Cummings (supra) and Lonrho Export (supra) were rightly decided. Finally he relied on the provision of paragraph 4(i) of the Third Schedule to the Exchange Control Act, 1962 and urged the court to dismiss the appeal.

I must pause here to make an observation on the introduction of the Pre-Shipment Inspection of Imports Act, 1978, into the case. As I said above, the appellant neither filed a statement of defence nor gave evidence; and, on the materials placed before the court upon which the consent judgment and the subsequent ruling were delivered, no question of pre-shipment inspection arose. It was only in an affidavit before this court that Form “M” and other documents

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relating to preshipment inspection were introduced. As I understand it, the function of this court is to see whether, on the materials placed before the learned Judge, he was right in his ruling. I do not see how I can take those documents which were not before the court of trial either in the judgment or in the ruling into account. If the appellants felt convinced that they needed additional evidence in this appeal they should have taken the proper steps to seek for leave to introduce it, if they could. Similarly, I shall ignore the aspect of the appellants’ brief and reply brief which goes to suggest that the appellant had applied for the necessary approval to remit the money but failed to get approval. I believe that this matter goes to the jurisdiction of this court which has power to hear an appeal only on the record and documents before the lower court or properly introduced in this court as additional evidence. I would take this opportunity to state that allowing parties to an appeal to argue an appeal on a bundle of documents prepared by parties themselves is a great indulgence deliberately granted by this court in order to quicken the wheel of justice in the midst of numerous constraints militating against prompt preparation of records by the court below. It is hoped that parties should not use this as an opportunity to introduce any documents which could not by any stretch have properly formed a part of the record, if it was prepared by the court below. So I shall decide this appeal on that part of the bundle of documents (record) which I consider relevant to the appeal against the learned Judge’s ruling.

Another important point I must have to note is that, unlike all the cases before us in which the question of illegality arose either on the pleadings and was taken in limine or during the trial, it is being raised in this case long after the consent judgment had been entered. No case was cited to us in which the issue of illegality was raised long after judgment. The case of Kofi Forfie v. Seifah (1958) A.C. 59 was a case of determination without jurisdiction. Does illegality necessarily mean absence of jurisdiction. In Shaw v. Shaw (1965) 1 All E.R. 638 the question of illegality was taken on the statement of claim upon the contention that it disclosed the illegality. On the principle that no court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act, it was struck out: for this see Berg Sadler v. Moore (1937) 1 All E.R. 637; also Chettiar v. Chettiar (1962) A.C. 294. In Boissevain v. Weil (1950) 1 All E.R. 725 the point relied upon to sustain the plea of illegality arose on the pleadings and evidence and was taken up during the trial. I do not derive much assistance from Martorana v. Morley (1958) 108 LJ 204 – a County Court case – which was really on whether a subsequent treasury approval could validate a transaction caught by section 1(1) of the U.K. Exchange Control Act of 1947. It is not in point on the issue that arise for determination in this appeal.

An important question in this case is this: assuming that the appellants’ contention that illegality was a Jack disclosed on the endorsement of the writ and the statement of claim is correct, should I now treat the judgment already entered and obviously enrolled as a nullity by reason of the illegality? If, of course, it was a nullity I should find no difficulty in holding that no right can be founded upon it: Macfoy v. United Africa Co Ltd. (1963) 3 W.L.R. 1405, at 1409: Anisminic Ltd. v. The Foreign Compensation Commission (1969) 1 All E.R. 208, p. 223. Indeed in S.M. Timitimi & Ors. v. Chief Amabebe & Anor. (1953) 14 W.A.C.A. 374, the West African Court of Appeal had to declare the judgment of a native

[1987] 4 .
Abcos (Nig.) Ltd. v. K.W.P.T. Ltd.
(Nnaemeka-Agu, J.C.A.)
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tribunal tendered as an exhibit in the case as one entered without jurisdiction and therefore a nullity. It proceeded to disregard it as evidence in the appeal. But then this was on the question of the jurisdiction of the Court. Although the application to set aside the judgment in the instant case averred that it was one entered without jurisdiction, the entire address before us was on the issue of illegality. Has illegality the same consequence as want of jurisdiction? I have not been shown a direct case in which an enrolled judgment has been declared a nullity and set aside on grounds of illegality: but there are decisions and dicta which suggest that that could be the case. In Royal Exchange Association v. Vega (1902) 2 K.B. 384, it was held that where a statute makes a particular contract or class of contracts invalid, the court may refuse to entertain the action even though neither party has raised the objection. Also in Philips v. Copping (1935) 1 K.B. 15, Scrutton, L.J., said at p.21:

“It is the duty of a court when asked to give a judgment which is contrary to a statute to take the point, although the litigants may not take it.”

Also in Belvoir Finance Co Ltd. v. Harold G. Cole & Co. (1969) 2 All ER 904, Donaldson, J. (as he then was) said at p.908:

 "Illegality, once brought to the attention of the court, over-rides all questions of pleadings."

The learned Judge also stated that illegality was capable of neutrifying any consents of a party to the proceedings. In view of these views of the effect and consequences of illegality it appears to me that illegality is capable of nullifying and rendering void a judgment already entered; at least it is a good ground for its being set aside. This is because the law takes the view that a contract to do something expressly prohibited by statute is analogous to doing something illegal in its inception. See Re: Mohammed & Ispahani (1921) 2 K.B. 716. Neither party can say that he did not intend to break the law and the maxim ignorantia juris non excusat is applicable. I believe that on grounds of public policy at least no right can arise from such a contract. I must, however, quickly add that although the court will itself take notice of the illegality of a contract if it so appears ex facie or from the pleading or evidence brought before it by either party, although the defendant has not pleaded the illegality. (See Windhill Local Board v. Vint (1890) 45 Ch.D. 357; Gedge Royal Exchange Assurance (1900) 2 Q.B. 214): yet, where an agreement is objected to as illegal, unless illegality has been specifically pleaded, the court can only pronounce the agreement as void on ground of illegality only if the illegality and its setting are fully before the court; that is: all the necessary facts to found it are before it. (North-Western Salt Co. Ltd. v. Electrolytic Alkali Co. Ltd.) (1914-1915) All E.R. Rep. 752. Those principles were approved by the Supreme Court in Chief Harold Sodipo v. Lemninkainen OY & Anor. (1986) 1 N.W.L.R. 220 per Eso J.S.C.

Before I go further to decide whether illegality has been clearly disclosed, on the above principles, I wish to consider especially Chief Harold Sodipo’s case (supra) which was cited and relied upon by the learned counsel for the appellants. In that case the Supreme Court held that a claim based on a loan by the respondents to the appellant of a sum of US $1,169,817.41 and £17,000.00 or their equivalent of N760,556.91 without the consent of the Federal Ministry of Finance was ex-facie illegal as being contrary to section 3 of the Exchange

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Control Act, 1962. After examining the facts of the case in the light of the above principles, their Lordships came to the conclusion that the loan transaction was ex-facie illegal. If this case were on all fours with the present case, that would have been the end of my inquiry, as I am absolutely bound by the decision. But in my view there are two important distinguishing factors. First: Chief Sodipo’s case (supra) was on money lent to the defendant whereas the present case is on goods sold and delivered on accepted bills of exchange. Section 3 of the Act upon which Chief Sodipo’s case (supra) was decided provides as follows:

“3(1) Except with the permission of the Minister, no person other than an authorised dealer, shall, in Nigeria, and no person resident in Nigeria other than an authorised dealer, shall outside Nigeria, buy or borrow any gold or foreign currency from or sell or lend any gold or foreign currency to any person other than an authorised dealer.

(2)
Where a person buys or borrows any gold or foreign currency in Nigeria, or, being a person resident in Nigeria, buys or borrows gold or foreign currency outside Nigeria, he shall comply with such conditions as to the use which it may be put or the period for which it may be retained as may be notified by the Minister before, or at the time of, such purchase or borrowing, or at any time thereafter.”

This section clearly deals with buying or borrowing foreign currency or gold. It appears clear to me that it has no application, in a case such as this, which is based on accepted bills for goods sold and delivered. Secondly, the court was not given the opportunity to construe sections 7 and 28 of the Act as well as paragraph 4(1) of the Third Schedule which fall to be construed in this appeal. This appeal in fact turns on the interpretation and application of these provisions. I am therefore of the view that Sodipo’s case (supra) is not in point.

Now the learned counsel for the appellants referred to sections 7(a) and 28(1) of the Exchange Control Act of 1962, and submitted that there is an implied condition under the provisions of the Act that a debtor is not required to pay the foreign debt except the permission or approval of the Ministry of Finance was given. Section 7(a) provides as follows:

“7. Except with the permission of the Minister no person shall do any of the following things in Nigeria, that is to say –

 (a) make any payment to or for the credit of a person resident outside Nigeria;"

Part of section 28(1) relied upon reads as follows:

“It shall be an implied condition in any contract that where by virtue of this Act the permission or consent of the Minister is at the time of the contract required for the performance of any term thereof, that term shall not be performed except in so far as the permission or consent is given or is not required.”

I should also set out sub-sections (2) and (3) which provide:

“(2) Notwithstanding anything in the Bills of Exchange Act, neither the provision of this Act nor any condition whether express or to be implied having regard to those provisions, that any payment shall not be made without the permission of the Minister under

[1987] 4 .
Abcos (Nig.) Ltd. v. K.W.P.T. Ltd.
(Nnaemeka-Agu, J.C.A.)
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this Act, shall be deemed to prevent any instrument being a bill of exchange or promissory note.

(3)
The provisions of the Third Schedule to this Act shall have effect with respect to legal proceedings, arbitrations, the administration of the estates of deceased persons, the winding up of companies, and proceedings under deeds of arrangement or trust deeds for behoof of creditors.”

Relying on the minority opinion of Lard Keith of Avenholm, in Contract Trailing Company case (supra) the learned counsel for the appellants submitted that in a case like this, where the creditor was resident outside Nigeria at the time of the making of the contract and there at the time of performance, then section 28(1) of the Act implies a condition that the debtor is not required to pay the debt except the Ministry of Finance permission is given. The permission is a condition precedent to liability of the debtor to pay the debt and no action can lie at the instance of the creditor for the recovery of the debt unless and until the permission is obtained, he submitted. The learned counsel for the respondents commended to the court the opinion of the majority in the case and submitted that the interpretation which the appellants want to place on the statute is contrary to the intendment of the statute and to the practice in international commercial transactions.

I should mention that section 7(a) of our Exchange Control Act of 1962 is in pari materia with section 5(a) of the United Kingdom Exchange Control Act of 1947; and section 28(1) of our own Act is in pari materia with section 33(1) of the United Kingdom Act. Their Lordships in the House of Lords by a majority of four to one concluded –

“(i) that Section 33(1) of the U.K. Act (i.e. section 28(1) of our own Act) shows upon its face that the contractual obligation of payment created by a bill of exchange is a term for the performance of which treasury permission is required.” (Parenthesis supplied by me)

(ii)
That sub-sections (2) and (3) of the Act set out above show a manifest intention not to deprive creditors of their rights, for the only reason that they live outside the scheduled territories, without making any countervailing provision for their protection.

(iii)
They referred specifically to paragraph 4(1) of the Fourth Schedule of the U.K. Act (which is similarly worded as para. 4(1) of the Third Schedule to our own Act which runs thus:

“4(1) In any proceedings in a prescribed court and in any arbitration proceedings, a claim for the recovery of any debt shall not be defeated by reason only of the debt not being payable without the permission of the Minister and of that permission not having been given or having been revoked.”

After examining other provisions of their own Act which are variously similar to the provisions of our own, Viscount Simmons concluded:

“There is a debt, but it must not be paid without permission. It does not for that reason cease to be a debt. It may be said, perhaps, that it is a debt unlike any other debt, in that it is not payable until some condition is satisfied. Hut that is what the statute provides and by the very language of paragraph 4 recognizes.

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I conclude therefore, without difficulty, that a debt arising under a bill of exchange is a debt to which paragraph 4 applies, and that a claim for its recovery is not to be defeated by the fact that treasury permission to pay it has not been given.”

Finally his Lordship cited with approval the previous interpretation of that part of the Act by Somervell, L.J., in the Court of Appeal in Cummings v. London Bullion Co. Ltd. (1952) 1 K.B 237, at p.334 where he said:

“The person entitled to the payment issues a writ. The fact that permission has not been obtained is not a defence to the action. On the one hand, the plaintiff can obtain judgment, the money due under the judgment being subject to Part II of the Act and the rules to which I have referred. The defendant, assuming that he is admitting liability, apart from the provisions of the Act, can make a payment into court. The Act is not to be used to enable the defendant to retain the money in his pocket, but to control its reaching its destination, namely, the plaintiff.”

I am entirely in agreement with this interpretation of the provisions of the Act. I do not think that the Act was designed for the purpose which the appellant wants to see created in this case, whereby the appellant would enter into an international commercial transaction, issue bills which are accepted according to their tenor and receive goods on account thereof and then turn round to use the provisions of the Act as a defence against a claim based on the bills. Incidentally the only Nigerian case we were referred to on the point or which I could find myself is the decision of Anyaegbunam C.J.. in the Federal High Court Suit No. FHC/L/M84/79: Lonrho Export Ltd. v. Motorways Nigeria Ltd. of the 22nd of January, 1981 (unreported). The learned Chief Judge, rightly in my view, came to the same conclusion.

I agree with the learned counsel for the respondents that the above view of the law accedes more with international commercial practice. In the recent decision of the Supreme Court, per Eso, J.S.C. in A.M.O. Akinsanva v. U.BA. Limited (1986) 4 N.W.L.R. 273 at p. 302-306 it was pointed out that international commercial transactions for documentary credit consists usually of four distinct contracts, namely:

(i)
between the buyer and the seller;

(ii)
between the buyer and the issuing bank;

(iii)
between the issuing bank and the confirming bank; and

(iv)
between the seller and the confirming bank.

See also United City Merchants (Investments) Ltd. v. Royal Bank of Canada (1983) A.C. 168, H.L. As between the buyer and the issuing bank there is strictly no direct foreign exchange element involved. The obligation of the buyer is usually to pay to the issuing bank the necessary sum involved in Naira. It is for the issuing Bank, in this case the Union Bank of Nigeria, to apply to the Central Bank for foreign exchange cover. If the interpretation which the appellant has urged on us were to be correct, it will mean that even this payment by the buyer to his local issuing bank cannot be enforced. But that would be outside the intendment of the statute.

The conclusion I have reached is that the action as filed is not one rendered illegal by statute. In accordance with the decision in Cumming’s case (supra),

[1987] 4 .
Abcos (Nig.) Ltd. v. K.W.P.T. Ltd.
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and other cases referred to, with which I agree, the respondents were right to have issued a writ and obtained judgment. It is for the next stage, that is to have the money remitted to the respondents, that the permission of the Ministry of Finance or the Central Bank is required. The single question raised by the appeal must therefore be resolved against the appellants.

    The appeal fails and is dismissed with costs assessed at N400.00 against the appellants and in favour of the respondents.

KUTIGI, J.C.A.: I read in draft the judgment of my brother, Nnaemeka-Agu, J.C.A. just delivered. I agree with his reasoning and conclusions. There is clearly a distinction between payment in Naira for the value of the two bills of exchange at their maturity to the Nigerian Bank i.e. the Union Bank of Nigeria, and remittance of the money abroad. It is only in the case of remittance abroad that the permission or approval of the Federal Minister of Finance is a necessity vide section 7(a) of the Exchange Control Act, 1962. There is in my view nothing in that Act which forbids a foreign creditor from instituting legal proceedings for the recovery of his debts in our courts. There are also no prior conditions to be fulfilled before instituting such an action in court. Nigerians as members of the international community must pay their honest debts to their foreign creditors if and when due. They have not got eternity to make the payment. If they have, the consequences will be grave as no one will be prepared to give them credit any more.

  I am therefore clearly of the view that the consent judgment entered against the appellant on 18/10/1982 was valid and proper and not in contravention of any of the provisions of the Exchange Control Act, 1962. The appeal therefore lacks merit and should be dismissed.

    I however wish to make one or two observations on the Second-Tier Foreign Exchange Market Decree No. 23 of 1986 (hereinafter called the Second-Tier Decree) which came into force on 23rd September 1986. Counsel on both sides did not make any reference to this Decree either in their briefs or oral arguments before us. The court is however bound to take judicial notice of all laws or enactments having the force of law in any part of the country (see section 73(l)(q) of the Evidence Act). I cannot therefore shut my eyes simply because counsel did not take the point, (see Philips v. Copping (1935) 1 K.B. 15 at 21 per Serutton, L.J. see also Royal Ekeh. Association v. Veba (1902) 2 K.B. 384. It is my view that if the point had been taken it would probably have shortened the life of this appeal because the point is equally decisive. In the first place since the introduction of the Second-Tier Foreign Exchange Market, foreign Exchange may be purchased from the market and repatriated from Nigeria without prior approval of the Federal Minister of Finance or the Central Bank or any other Exchange control requirement vide section 12 of the Second-Tier Decree which provides thus:

“12. Any foreign exchange purchased from the Market may be repatriated dated from Nigeria and shall not be subject to any further approval by the Minister or the Central Bank or any other exchange control requirement.”

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Secondly sections 7(a) & 28(1) of the 1962 Act heavily relied upon by the appellant for the requirement of Minister’s approval would appear to have been nullified by section 1 sub-section (3) of the Second-Tier Decree which provides as follows:

“1(3) If the provisions of any other enactment are inconsistent with the provisions of this Decree, the provisions of this Decree shall prevail and that other law shall to the extent of the inconsistency, be void.”

It should be noted that section 12 of the Second-Tier Decree referred to above requires nobody’s approval before repatriating foreign exchange abroad.

Thirdly, section 21 of the Second-Tier Decree also makes it abundantly clear that the Exchange Control Act, 1962 amongst others, “shall be read with such modifications as to bring them into conformity with the provisions of this Decree.” All these clearly show that the 1962 Act is now subordinate to the Decree.

The appeal fails and it is hereby dismissed. I endorse the order for costs made in the lead judgment.

KOLAWOLE, J.C.A.: I have had the privilege of reading in draft the judgment of my learned brother, Nnaemeka-Agu JCA just delivered. I agree that the appeal fails. I have given very anxious consideration to the submission of learned counsel for the appellants, its effect on Nigeria’s International trade and commerce reputation and the good faith of the Nigerian business community outside Nigerian shores when they conclude binding legal commercial contracts.

The writ in this action was issued on 28th May, 1982 for the sum of £24,537.35 which is equivalent to N31,257.77 in Nigerian Currency. The defendants were the acceptors of the two bills of exchange drawn by the plaintiff in LONDON. The defendants duly accepted the two bills of exchange but failed to honour the same by payment upon maturity. The goods for which the defendants accepted the bills of exchange arrived in Nigeria and the appellants, ABCOS (NIGERIA) LIMITED, took delivery of the goods. The appellants were served with the writ, entered an appearance but filed no defence. A consent judgment was then entered in favour of the respondent upon the terms of settlement executed by counsel for the appellants and the respondent. One of the Bills of Exchange issued in London on 1/10/80 reads as follows:

“At sixty days after sight of the bill of Exchange pay to the order of Wolf Electric Tools Ltd., (which is the present respondent) the sum of Twenty-two thousand five hundred and fifty pounds

75.

Abcos (Nigeria) Ltd.

15 Western Avenue

Iponri, Ebute-Metta value

P.O. Box 6091 Lagos, Nigeria received

Payable at the Collecting For and on behalf of

Bank’s Selling Rate of Wolf Electric Tools Ltd

Exchange on day of payment

for sight drafts of London Sgd. 1 ……….

                                                                                                                            2………"

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          The rest of the story is as told in the lead judgment as contained in the brief of argument of the appellants. How then can a person legitimately buy goods, collect the goods, issue a cheque for the goods, agree that he owed the debt and submit to judgment therefor and then later turn round to refuse to pay by stopping the cheque, to refuse to return the goods and to put up an objection which he says forbids his payment of the debt. I do not believe that the laws of this country will ever offer protection in international trade to such a commercial transaction. If you cannot pay for goods legally purchased you are in honour bound to return the goods to the owner in as good a condition as when you collected them.

Is there an illegality in the contract entered into via the Bills of Exchange in this case’ Was the judgment obtained by consent on an agreed terms of settlement ultra vires, being in contravention of the Exchange Control Act, 1962′

The acceptance of the bill of exchange by the acceptor is the signification by the drawee of his assent to the order of the drawer. There is judicial support for the view that the party primarily liable on a bill of exchange is the acceptor, the appellant in this case. The acceptor is the person to whom the order to pay is addressed. In Lloyds Bank Ltd. v. Cooke (1907) 1 K.B. 794, it was held that whenever a bill is accepted the acceptor, in this case the appellants, remains the party primarily liable on the bill whatever may happen to the other parties. (See also Halsbury’s Laws of England, 4th Edn.,Vol. 4. para 357).

The answer to the contention of learned counsel for the appellants, Mr. Ogundipe that the judgment is illegal, ultra vires null and void as being in contravention of the Exchange Control Act, is to be found in the dictum of Viscount Simmonds where he said:

“There is a debt, but it must not be paid without permission. IT DOES NOT FOR THAT REASON CEASE TO BE A DEBT ….

I conclude, therefore, without difficulty, that a debt arising under a bill of exchange is debt to which paragraph 4 applies, and that a claim for its recovery is not to be defeated by the fact that the Treasury (like our Ministry of Finance) permission to pay it has not been given.”

(See Contract & Trading Co. (Southern) Ltd. v. Bcirhey (1960) A.C. 244, at page 252; (1960) 2 WLR 15).

That is the answer. The Exchange Control Act, 1962 does not, in any way, make the provisions of the Bills of Exchange Act null and void. It does not make a judgment obtained under the Bills of Exchange Act illegal or ultra vires. Section 28 sub-section (2) preserves the efficacy of a bill of exchange as well as para. 4(1) of the Third Schedule to the Act. Sommervell, L.J. provided the answer where the good faith of the appellants is not in doubt. His Lordship said:

         "The fact that permission has not been obtained is not a defence to the action ....The defendant, assuming that he is admitting liability, apart from the provisions of the Act, can make a payment into court. The Act is not to be used to enable the defendant to retain the money in his pocket (and in this case the goods), but to control its reaching its destination, namely the plaintiff."

(See Cummings v. London Bullion Co. Ltd. (1952) 1 K.B. 327).

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Furthermore why was the Nigerian equivalent of N31,257.77 not paid into the Union Bank of Nigeria Ltd. as agreed pending the permission of the Ministry of Finance. Again the good faith of the appellants is in great doubt.

In my judgment it is not the intention of the legislature that sections 7 and 28 of the Exchange Control Act, 1962 should be employed as a vehicle of fraud in international trade and commerce. The effect will be disastrous for the economic well being of Nigeria as a Corporate entity.

The promise to pay the debt on the face of the Bill of Exchange is not conditional. It is payment at sight on the due date and the remittance is a different matter. A bill of exchange is like a currency and the appellants are bound to honour their undertaking by paying upon its maturity in accordance with their tenor of acceptance. (See James Lamont & Co. Ltd. v. Hyland Ltd. (1915) 585 at page 591); Arab Ltd. v. Ross (1952) 2 QB 216; (1952) 1 All E.R. 709.)

In other words in good faith in commercial contracts the appellants were bound to pay cash in the sum of N31,257.77 to the respondent at maturity in December 1980 by paying the same into the Bank at which the enabling shipping documents were collected against the acceptance of the two bills of exchange.

My learned brother, Kutigi, JCAhas also made available tome his views on the Second-Tier Foreign Exchange Market Decree No. 23 of 1986 which came into operation on 23 Sept., 1986. Much as I am tempted to say something about the Decree, I wish, on the side of caution, to refrain from saying something on the Decree as it relates to this case for two reasons:

(1)
We did not have the benefit of full address on its implications upon contract which were entered into as long ago as 1980 before the coming into operation of the Decree; and

(2)
Because of an SOS report of inspection which was a condition precedent to payment.

In any event the single issue for determination in the appeal must be resolved in favour of the respondent. The appeal is dismissed. I affirm the judgment of E. A. Oshodi, J. (as he then was) with costs as assessed by my learned brother.

Appeal Dismissed.

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