Abusomwan v. Mercantile Bank Ltd. (1987)

Abusomwan v. Mercantile Bank (Nig.) Ltd. (No.2)
27 July 1987

CHIEF PATRICK A. ABUSOMWAN

V.

MERCANTILE BANK OF NIGERIA LTD.

SUPREME COURT OF NIGERIA

SC.71/1986

KAYODE ESO, J.S.C. (Presided)

ANTHONY NNAEMEZIE ANIAGOLU, J.S.C.

BOONYAMIN OLADIRAN KAZEEM, J.S.C.

ADOLPHUS GODWIN KARIBI-WHYTE, J.S.C. (Read the Lead Judgment)

SALIHU MODIBBO ALFA BELGORE, J.S.C.

FRIDAY, 19TH JUNE, 1987

APPEALS – Findings of fact – Incorrect findings by trial court – When appellate court can make its findings.

APPEALS – Findings of fact – Duty of trial court.

CONTRACT- Agency – Disclosed principal – Right of principal to sue or be sued.

CONTRACT – Privity of contract – Relevance in banking; international maritime and commercial transactions.

NEGLIGENCE – When action arises – Whether founded on contract.

NEGLIGENCE – Whether privity of contract a requirement.

NEGLIGENCE – The proximity or neighbour’s test.

NEGLIGENCE – Questions for consideration.

Issue:

Whether exhibit 9, the guarantee by the New Nigerian Bank created or imposed in law a duty of care on the respondent so as to make it liable in negligence to the appellant.

[1987] 3 .
                                 Abusomwan v. Mercantile Bank (Nig.) Ltd. (No.2)
                                   197

Facts:

The plaintiff/appellant sued the defendant/respondent for the sum of N127,273 (One hundred and twenty seven thousand, two hundred and seventy three naira) being loss of profits as a result of the defendant’s negligence arising from a guarantee dated 30th January 1918 for the importation of cement.

Plaintiff a businessman entered into an agreement for the importation of cement from Lime International Corporation New York through one Mr. Bassey and Mr. E.R. Tucker. The agreement was tendered as exhibit 7. By the terms of the agreement i.e. exhibit 7, plaintiff/appellant was to obtain a guarantee from his bankers for the payment referred to in the agreement.

Plaintiff obtained a guarantee dated 30th January, 1978 from his bankers, the New Nigerian Bank Ltd. Mission Road Benin-City. The guarantee was tendered as exhibit 9. Based on the guarantee and the pro forma invoice, the defendant/respondent opened a letter of credit in favour of Lime International Corporation of New York. The proforma invoice was tendered as exhibit 12.

Of great importance was a clause in the guarantee which provided that all documents, drafts, bills of lading and invoices consequent upon the letter of credit should be drawn in favour of P.A. Abusomwan and should be endorsed to New Nigeria Bank Limited Head Office Mission Road Benin City.

However in opening the letter of credit the defendant/respondent bank directed that the documents be drawn in favour of Heilit Nigeria Ltd. and endorsed to the bank.

Consequent upon this misperformance, the defendant/respondent informed Heilit Nigeria Ltd of the arrival of the cement consignment. The Managing Director of Heilit Ltd Mr. Tucker took delivery of the cement consignment and sold 45,200 bags out of the total consignment of 84,000 bags shipped to the plaintiff/appellant.

The learned trial Judge, Gbemudu, J. at the conclusion of the hearing and addresses of parties found the defendant/respondent liable for negligence as sued. The defendant/respondent thereafter appealed to the Court of Appeal which allowed the appeal on the ground that the defendant/respondent was not a party to the contract of guarantee exhibit 9.

Consequently not being a party the respondent bank owed no duty of care to the plaintiff/appellant. The plaintiff/appellant then appealed to the Supreme Court.

Held(Unanimously allowing the appeal):

1.
It is settled law that where there is ample evidence and the trial Judge failed to evaluate it and make correct findings, the Court of Appeal is at liberty to evaluate such evidence and make proper findings unless, the findings rest on the credibility of witnesses.

2.
Findings of fact are matters peculiarly within the province of and reserved for the trial court.

3.
Per Karibi-Whyte, J.S.C.at page 208

“Since the 1920s the trend has developed of discarding the 19th century view that a tort cannot arise from the breach of contract.

.
                      27 July 1987

It is now the law that an action in tort for negligence can arise dehors contract of the parties.”

4.
Where a person is injured from a transaction arising from the contract of two persons, the third party is not precluded from bringing an action on the grounds that he was not a party to the contract the misperformance or non-performance of which has resulted in the damage.

5.
The truth in principle (4) above is that even though not so expressed, the obligations towards the contracting party extended to all such persons who were likely to be injured by the acts or omissions of the defendant; these are the neighbours in contemplation or who ought to he contemplated by the defendant.

6.
In order to establish that a duty of care arises in a particular situation, it is[1985] 1 .
Abudu v. State
55

ZEKERI ABUDU ….. APPELLANT

V.

THE STATE ……RESPONDENT

SUPREME COURT OF NIGERIA

SC. 35/1984

AYO GABRIEL IRIKEFE, J.S.C. (Presided)

ANDREWS OTUTU OBASEKI, J.S.C.

BOONYAMIN OLADIRAN KAZEEM, J.S.C.

DAHUNSI OLUGBEMI COKER, J.S.C. (Delivered lead Judgment)

SAIDU KAWU, J.S.C.

FRIDAY, 18TH JANUARY, 1985

CRIMINAL LAW – Onus of Proof – Identification by. Single Witness – Need for Caution – Earliest Opportunity – Charge against Two Accused – Interwoven Evidence – Acquittal of One – Impropriety of Conviction of the Other.

Issues:

1.
Whether the Appellant was properly identified as one of the robbers that attacked and robbed a woman of her money at 5.30 a.m. on the 30th of January, 1981, near Ukpilla Cement Factory in Bendel State.

2.
Whether the defence of Alibi put forward by the Appellant has been disproved by the prosecution.

Facts:

There was a robbery. It took place on the 30th January, 1981, at 5.30 a.m. near Ukpilla Cement Factory in Bendel State. It involved a van travelling to Minna. A lady lost N640.00 in the robbery. Two persons were charged with the robbery. The Appellant was the first accused. Four persons were said to have taken part in it. The two accused persons were identified by the lady as two of the four robbers. She omitted to mention at the earliest opportunity the names of the two accused persons as participants in the robbery. She knew the two very well before the robbery. The driver of the van did not identify them. No one else did except the lady.

The two accused denied being present. They set up an Alibi. The police failed to investigate the Alibi. They proved their Alibi. Witnesses supported it. The trial Court rejected the Alibi of the Appellant but accepted that of the other accused. It was a joint trial. The Appellant was convicted by the High Court of Bendel State sitting at Auchi presided over by Hon. Justice Amissah. The Court of Appeal, Benin Division (Omo-Eboh, J.C.A. dis-

56
.
1 Oct. 1985

senting) dismissed his appeal.

Held: (Unanimously allowing the appeal)

1.
The evidence identifying the Appellant as a robber was too suspicious to be acceptable (applying the warning of Lord Widgary C.J. in R. v. Turnbull (1976) 3 W.L.R. 445 at page 447).

2.
Whenever the case against an accused depends wholly or substantially on the correctness of the identification of the accused which the defence alleges to be mistaken, the judge should warn the jury of the special regard for caution before convicting the accused in reliance on the correctness of the identification.

3.
Where an eye witness omits to mention at the earliest opportunity the name or names of the person or persons seen committing an offence, a court must be careful in accepting his evidence given later, and implicating the person or persons charged, unless a satisfactory explanation is given. This is because such delay makes the evidence of identity suspicious and reduces the truth content of the evidence below acceptable and probative level;

4.
In order to establish the defence of Alibi, all that the accused needs do is merely to put forward evidence accordingly; the onus is not on him to prove such defence but on the prosecution to disprove it.

5.
When the sole defence is an Alibi, great care must be taken in relying on identification by a single witness and the facts of such identification must be carefully dealt with in the summing up.

6.
Where appellant was jointly tried with the 2nd accused and the former’s case was closely interwoven with and inseparable from that against the 2nd accused, the conviction of the Appellant could not stand where the 2nd Accused was acquitted. (Anthony Okobi v. The State: SC.85/1983 followed).

7.
Having regard to the doubtful credibility of the evidence of the star witness, the trial judge should, with the same yard stick with which he weighed her evidence against the other accused, have found her evidence against the Appellant equally unreliable and unsafe. (Layiwola v. Queen: (1959) WRNLR. 194 followed).

Nigerian Cases Referred to in the Judgment: –

C.O.P. v. Tijani Alao & Ors. (1959) WRNLR. 39

Ikono v. State (1973) 5 SC. 231

Layiwola & Ors. v. Queen (1959) WNRLR. 194

Nwosisi v. State (1976) 6 SC. 109

Okobi v. State SC.85/1983 delivered on 5th July, 1984

Yanor & Anor. v. State (1965) NMLR. 337

Foreign Cases Referred to in the Judgment:

R. v. Anthony H. Johnson (1962) 46 C. A.R. 45

R. v. Turnbull (1976) W.L.R. 445

Nigerian Statute Referred to in the Judgment:

Robbery and Fire Arms (Special Provisions) Decree No. 47 (1970) Section l (2)(a)

[1985] 1 .
Abudu v. State
(Coker J.S.C.)
57

A

B

C

D

E

F

G

H

Appeal:

This was an appeal from the decision of the Court of Appeal -Benin Division (Ikwechegh, J.C.A., Okagbue,J.C.A., Omo-Eboh, J.C.A. dissenting), upholding the decision of Hon. Justice Amissah sitting at Auchi High Court convicting the appellant of armed robbery punishable under Section l(2)(a) of the Robbery and Fire Arms (Special Provision) Decree No. 47 of 1970.

The Supreme Court allowed the appeal and quashed the conviction and sentence. He was found not guilty and was discharged accordingly and acquitted.

History of the Case:

Supreme Court:

Appeal No: S.C. 15/1984

Date of Judgment: 18th day of January, 1985

Names of Justices in the Appeal: Irikefe, J.S.C., Obaseki, J.S.C., Kazeem, J.S.C., Coker, J.S.C., (Read the lead judgment); Kawu, J.S.C.,

Court of Appeal:

Division of the Court of Appeal from which the appeal was brought – Court, of Appeal, Benin City.

Names of Justices in the Appeal:- Hon. Justice Ikwechegh, J.C.A. (Read the lead judgment), Hon. Justice Okagbue, J.C.A., Hon. Justice Omo Eboh, J.C.A.(Dissenting).

Date of judgment: 7th day of February, 1984.

Appeal No: FCA/B/18/83.

High Court:

Name of the High Court: High Court Auchi – Bendel State Name of Judge: Hon. Justice Amissah Date of Decision 24th day of May, 1982

Charge No: HAU/13C/81

Counsel:

Mr. Shola Rhodes, (with him F.O. Inneh) for the Appellant.

Mr. D. E. Hayble, Deputy Solicitor-General, Bendel State – for the

Respondent.

COKER, J.S.C. (Delivering the Lead Judgment): On the 25th day of October 1984, the appeal of Zekeri Abudu, was allowed and I promised to give my reasons today, I now do so.
The appellant, as the 1st accused, was charged along with one Aliyu Sumaila before the High Court of Bendel State, sitting at Auchi, with the offence of armed robbery, punishable under section 1(2)(a) of the Robbery and Firearms (Special Provisions) Decree No. 47 of 1970. At the end of the trial during which the two accused persons gave evidence and called witnesses the appellant alone was found guilty of the offence, while the other co-

58
.
1 Oct. 1985
(Coker J.S.C.)

A

B

C

D

E

F

G

H

accused person, was discharged and acquitted. His appeal to the Court of Appeal, was dismissed by a majority decision delivered by Ikwechegh, J.C.A. (Okagbue, J.C.A. agreeing), while Omo Eboh, J.C.A. dissented.

He has further appealed to this court. The substance of the appeal lies on the issue of his identification by the star witness, 1st P.W. Cecilia Aighasubho, who testified that she identified both the appellant and Aliyu Sumaila on the 30th January, 1981, as two of a gang of four armed robbers, who waylaid the vehicle conveying her to Minna, after assaulting her robbed her of the sum of N640.00. The incident according to her testimony, took place near the Ukpilla Cement Factory at about 5.30 a.m. on the 30th of January, 1981. She was able to identify the two accused through the aid of the bright electric light from the nearby Cement Factory and the head light of the van conveying her. Before the date, she knew both accused persons. The appellant was a motor driver, who conveyed her on about six occasions in the same Peugeot pick-up van, bearing the registration No. BD 6326 C, which was conveying her to Minna on that day. Apart from her evidence, there was no other witness who identified any of them. The driver of the van, D.W. 3 testified that he did not know, nor could he identify, any of the robbers, although he knew appellant before that day. In their statements to the police during the investigation, each of them denied the charge, and gave a detailed account of their movements on that morning. Each of them also called witnesses to substantiate his defence. During the trial, and before the commencement of case for the defence, the trial court suo moto, called one Phillip Okhumale, a transporter and distributor of beer and soft drinks, as a witness of the court. He testified that on 30/1/81, the 2nd accused person was in his employment as a motor driver, and between 5.30 and 6.00 a.m., drove his tipper lorry to Warri. He testified the police did not contact him during the course of investigation of the case even though in his statement to the police, the 2nd accused mentioned the name of Phillip Okhumale as his employer and that he got to his (master’s) place after 5.00 a.m. before driving his employer’s tipper to Warri. He testified that he employed the appellant to drive his personal vehicle BD 4371 G, and that before going to work that morning, he went to appellant’s house to give him money to effect repairs on the vehicle. His evidence was not challenged or contradicted by the prosecution. The trial judge summed up the issue for determination as follows:-

“(a) Whether the identity of the accused persons have been established beyond doubt as persons who participated in the robbery:

(b)
Whether the defence of alibi has been successfully rebutted or disproved by the prosecution.

(c)
Whether as a matter of law the eye witness account of the incident as stated by P.W. 1 requires corroboration from D.W. 3 Sedi Kadiri, the driver who was in at the time of the robber.”

He then proceeded to state the principle of law applicable. It reads:- “It is pertinent at this stage to examine the law as it applies to (a) and (b) above. With regards to (a), it is settled law that where an eye witness (and in the instant case P.W. 1) omits to mention at the earliest opportunity the name or names of the person or persons

[1985] 1 .
Abudu v. State
(Coker J.S.C.)
59

A

B

C

D

E

F

G

H

whom she saw committing the offence, a court must be careful in accepting her evidence given later and implicating the persons charged, unless a satisfactory explanation is given. See Commissioner of Police v. Tijani Alao & Others (1959) WRNLR 39.

I agree with this statement of the law. He also stated the law as regards alibi, citing amongst other cases. Yanor & Anor. v. The State (1965) NMLR. 337, and Christian Nwosisi v. The State (1976) 6 SC. 109, Akpan v. The State (1973) 5 SC. 231. He concluded by stating: page. 55

“From the foregoing, it is clear that the person who puts forward an alibi as his answer to a charge does not undertake upon himself any burden of proving that answer, and it is a mis-statement of the law or in fact a misdirection to refer to any burden of proof resting on an accused in such a case. See R. v. Anthony Hugh Johnson (1962) 46 C.A.R. 45.”

I also agree that that is correct statement of the law.

He further proceeded to consider, in my view irrelevant, the issue of corroboration of the testimony of P.W. 1, but again quite rightly, and came to the conclusion that what is required is for the court to evaluate the evidence of P.W. 1, and to decide whether or not to believe her eye witness account of the incident. In the result, however, he found only the appellant guilty of offence, by accepting the evidence of P.W. 1 against him, while holding her evidence identifying 2nd accused unreliable and doubtful. The relevant part of her evidence reads:

“The 2nd accused and one other came to me and stood by either side of me. 2nd accused asked me to produce all the money I had with me. I replied that I had no money on me. 1st accused who was inside the blue Peugeot car replied that I had money with me because I was going to the market. It was at this juncture that 2nd accused pointed a gun at me and insisted that I should bring all my money. As 2nd accused engaged me in a struggle to look for the money on me, I loosed my wrapper. He then got hold of the money I had tied round my waist. It was N600. 2nd accused then put the money inside their vehicle. 1st accused at that stage further stated that I still had more money on me. It was then that 2nd accused came back to me and asked for more money. I then brought out the N40 I had in my brassier and gave same to the 2nd accused. 2nd accused then hit me on the back with the butt of his gun and I fell down”

Further in her evidence, she testified:

“Although I did not in my statement say that it was 2nd accused that stole my money I did say it was a yellow man who drives vehicle for Bawak. I made a statement to the police in connection with this case in Ishan language. My husband was the interpreter.”

Later, she said:-

“I do not know Alhaja Afisietu Musa. I do not know if she is the owner of vehicle No. BD 6326 C.”

If her evidence connecting the 2nd accused the principal character, was doubtful and unreliable, how could the same judge say in another breath,

60
.
1 Oct. 1985
(Coker J.S.C.)

A

B

C

D

E

F

G

H

her evidence against a minor character of the same incident was reliable and certain?

It will be shown that the evidence of this witness, was materially contradicted by the evidence of P.W. 2, Isa Dania, Police Sergeant who conducted the investigation, and further, the alibi put forward by the two accused persons was not investigated much less rebutted by the prosecution. Further still, Sedi Kadiri, D.W. 3. the person who drove the vehicle conveying her to Minna, knew the appellant before the day, yet did not identify him at the identification parade as one of those persons who attacked them.

The trial judge relied heavily on her evidence in arriving at his decision to convict the appellant. He said:

“In the case in hand there is evidence from P.W. 1 that 1st accused was among the robbers. She was sure of his identity because he had conveyed her to Minna in a pick-up van on previous occasions. She infact gave his name “Zekeri” in her statement. In other words, the name of 1st accused was mentioned by P.W. 1 at the earliest opportunity after the robbery. This was not the case with 2nd accused who was referred to simply as a “Yellow man” in Exhibit “E”. Part of Exhibit ‘E’ reads:- “One was pointing his gun to my chest, one pointing to my back while the third was searching me until he recovered the money I tied to my waist and the one I put under my brassier. As they left me and went back to their vehicle with the first money they took from me, this Zekeri told them again that I have more money. It was then they came back and when they searched me again, they removed the remaining N40 I was having.”

The judgment continued:

“In his testimony before me, 1st accused in cross examination admitted that P.W.l could, with ease, identify him. This is what he said:

“It was Alhaja Afiesetu Musa who took me to the house of P.W. 1 for the first time. I have taken P.W. 1 thrice to Minna. I also know that each time she travelled to Minna she carried money for the purchase of yams. I am certain that P. W. 1 can easily recognise me having travelled thrice with me”.

“There is evidence before me that SEDI KADIRI (D.W. 3) who was with P.W. 1 at the time of the robbery was ordered by the robbers to run into the bush thereby leaving P.W. 1 in the pick-up van where she remained throughout during the operation. It follows therefore that she had the singular opportunity of watching the robbers at a close range. I therefore believe her when she said she was able to recognise 1st accused among the robbers. Considering how he was manhandled and subsequently made to run into the bush, I am of the view that D. W. 3 (SEDI KADIRI) could not, in the circumstance, have been able to identify, with certainty, those who attacked them. If D.W. 3 was unable to identify the robbers, that per se does not destroy the probative value of the evidence of P.W. 1 that she saw 1st accused and the 2nd accused whom she could only describe as “yellow man”.

With due respect to the trial judge. D.W. 3 did not say he was unable to identify the appellant because he had not sufficient time to recognise him.

[1985] 1 .
Abudu v. State
(Coker J.S.C.)
61

A

B

C

D

E

F

G

H

His evidence was that three of the robbers attacked and manhandled him before he was asked to run into the bush after which they demanded the key of his car. He said:

“I am unable to recognise any of the robbers in the parade. I had known the 1st accused (the appellant) before as a driver.”

He said clearly under cross-examination:

“I never knew any of the robbers that attacked us.”

If P.W. 1 was able to recognise the appellant, when, according to her,

“The head lights of my pick-up van was on at the time …………………… there was also some bright light from-the Cement Factory near the area. With this, I was able to see clearly the faces of the accused persons.”

The point here is not that of corroboration of P.W. l’s evidence regarding identification of the appellant, but evidence of D.W. 3, the only other eye witness, contradicting her evidence, identifying appellant as one of the robbers. Corroboration and contradiction are not synonymous, but antitheses. The trial judge was considering whether the evidence of P.W. 1 identifying appellant required corroboration of any other witness while the important point in this case was that the evidence of the other eye witness, D.W. 3, contradicted her evidence that appellant, whom he (D.W. 3) knew before the date of the attack and could recognise was not one of the robbers.

The Court of Appeal, in its lead judgment, (Ikwechegh, J.C.A.) stated the facts not quite correctly, as follows:

“The D.W. 3, that was the driver with P.W. 1 in the van at the time of the robbery, confirmed the robbery of the morning of 30/ 1/81 at about the Ukpilla Cement Factory area along the Benin Okene Road. He too, said the robbers were four men who came to the scene in a car. He said it was about 5.30 a.m. at the time of robbery. He, however, did not identify any of the four robbers, and this is not to be marvelled at; he was attending to the tarpaulin of the van when the men arrived; three of them beat him up and damaged the door of his van, and made him run into a bush. He did not identify any of the robbers at any time. He said he had heard P.W. 1 shouting at the scene that the man had taken N640 from her.” (Italics mine)

The error lies in the fact that it is not correct the driver, D.W. 2 was attending to the tarpaulin of the van when the men arrived. P.W. 1 said “My driver was in the vehicle” when the three men came. The important point is that D.W. 3 knew the appellant before that day, and had the opportunity to identify him for, besides the head light of their Vehicle, there was also the bright light from the Ukpilla Cement Factory.

Another important point of misdirection is that there was no evidence that P.W. 1, called the name of the appellant when she first saw him. It was in her statement later to the police that she first mentioned his name. P.W. 1 said appellant was the first person who came out of the blue car. One would have expected that P.W. 1 or D.W. 3 will call his name and speak to him before the other three persons emerged from the vehicle.

As the case against the appellant was based principally on the usual

62
.
1 Oct. 1985
(Coker J.S.C.)

A

B

C

D

E

F

G

H

identification by the P.W. 1, her evidence should have been very closely examined and received with caution and weighed against that of D.W. 3. In this regard, I recall the warning given by Lord Widgery, C.J. in R. v. Turnbull (1976) 3 W.L.R. 445 at page 447, where he said:

“Each of these appeals raises problems relating to evidence of visual identification in criminal cases. Such evidence can bring about miscarriages of justice and has done so in a few cases in recent years. The number of such cases, although small compared with the number in which evidence of visual identification is known to be satisfactory, necessitates steps being taken by the courts, including this court, to reduce that number as far as is possible. In our judgment the danger of miscarriages of justice occurring can be much reduced if trial judges sum up to juries in the way indicated in this judgment.

First, whenever the case against an accused depends wholly or substantially on the correctness of one or more identifications of the accused which the defence alleges to be mistaken, the judge should warn the jury of the special need for caution before convicting the accused in reliance on the correctness of the identification or identifications ”

“Recognition may be more reliable than identification of a stranger; but even when the witness is purporting to recognise someone whom he knows, the jury should be reminded that mistakes in recognition of close relatives and friends are sometimes made. All these matters go to the quality of the identification evidence. If the quality is good and remains good at the close of the accused’s case, the danger of a mistaken identification is lessened; but the poorer the quality, the greater the danger.”

In this case, the evidence of P.W. 1 ought to have been more critically examined than the trial court appeared to have done. For instance, the trial judge said P.W. 1 mentioned the name of the appellant at the earliest opportunity after the robbery, whereas she did not. The first time she mentioned his name was in her statement to the police. In her evidence, she denied knowing Alhaja Afisetu Musa whereas, investigation revealed that both of them were friends. P.W. 1 also lied in her testimony when she said her statement to the police was made in Ishan through her husband, as interpreter; 2nd P.W., testified that P.W. 1 made her statement in English. On the first day of her evidence in court, she spoke in pidgin English, but later said she preferred to speak in Etsako language and still later, she was critical of the interpretation of her evidence. It seemed the trial judge had reservation about her veracity, for he did not wholly accept her evidence, hence, he, suo motu, called 3rd P.W. Philip Okhumale. He testified that on 30/1/81, he (the 2nd accused) went to Warri with a tipper between 5.30 and 6.00 a.m. Bearing in mind that in her evidence, she said, it was the 2nd accused that actually assaulted and robbed her. The alibi of the Appellant was never disproved by the prosecution, he even called witnesses at the trial to establish that he could not have been present at the scene of robbery at the time.

These are some of the many reasons why her evidence identifying the appellant should be viewed with suspicion. Besides, the case against the

[1985] 1 .
Abudu v. State
(Coker J.S.C.)
63

A

B

C

D

E

F

G

H

Appellant was closely interwoven with and inseparable from that against the 2nd accused person. The case was that they jointly committed the offence.

A similar situation arose in SC.85/1983 Anthony Okobi v. The State delivered on 6th July, 1984 unreported. Obaseki, J.S.C. asked the question.

“Having regard to the fact that the conviction of the Appellant for the offence of robbery was founded on the use of threat of violence on P.W.l, P.W.4 and others by Levy Nwosu, the 1st accused, can his conviction for robbery still stand when that of the 1st accused was quashed by the Federal Court of Appeal and a verdict of acquittal entered in his favour?”

The evidence in this case was that the 2nd accused was the person who asked P.W.l to produce all the money she possessed, it was 2nd accused who pointed the gun at her, it was 2nd accused who struggled with her, it was to him that she surrendered first N600.00 and later N40.

The trial judge found her evidence of doubtful credibility, at least against 2nd accused. This was what he said:

“I will now consider the case of the 2nd accused. It was during the evidence in chief of P.W. 1 that he was mentioned as one of those who robbed her. In her statement to the Police on 30/1/81 (Exhibit ‘E’) P.W.l did say that out of the four men that took part in the robbery, she recognised two. She gave the name of the one she was very familiar with as ZEKERI. The second man was simply described by her in Exhibit ‘E’ as “yellow man” and no more. She testified in court that the 1st accused was ZEKERI. According to her testimony, it was someone who gave her the name of the 2nd accused as ‘ALIYU’. Looking at Exhibit ‘E’ it is difficult to say that mere description of a man as “Yellow man” equivocally (sic) referred to the 2nd accused. P.W.l did not in her statement to the police (Exhibit ‘E’) describe 2nd accused with clarity so as to leave nobody in doubt that she was referring to 2nd accused. And neither in the said statement did she give the address of residence or place of work of the 2nd accused. It was in her testimony before me that she said that the “Yellow man” she was referring to drives vehicles for BAWAK MOTORS and that she had been seeing him there. Had this formed part of her statement then, the Police would have got some data to work on during the investigations. It is clear from the evidence of Sergeant ISA DANIA that it was after P.W. 1 had made Exhibit ‘E’ that she furnished the name and address of the 2nd accused. The questions are who gave P.W. 1 the name and address of 2nd accused? If she previously knew the name and address of 2nd accused as well as his place of work, why did she omit them in her statement to the police (Exhibit ‘E’)? Neither her testimony nor the testimony of Sergeant Isa Dania (P.W.2) has put forward an answer to the two questions. Part of the evidence of Sergeant Isa Dania reads as follows:-

“It was on 1st February, 1981 that the 1st P.W. gave me the name and address of 2nd accused. It was also on that day that she told me that 2nd accused was among the persons who robbed

64
.
1 Oct. 1985
(Coker J.S.C.)

A

B

C

D

E

F

G

H

her on 30/1/81. On 2nd February, 1981, I arrested the 2nd accused in his house.” (Italics supplied)

The defence of 2nd accused is an alibi and complete denial. According to him he could not and was not at the vicinity of the robbery because he travelled to Warri early on the day of the robbery to discharge some gravel.

The vague description of the 2nd accused by P.W.l as well as the testimony of Chief Philip Okhumale (witness called at court’s instance) have raised some doubt with regards the identity as well as the complicity of the 2nd accused in robbery. That being the position I am satisfied that the subsequent identification parade is not completely free from doubt. What is required here is proof beyond reasonable doubt that the 2nd accused committed the offence charged in the information and not the likelihood of his having committed it.”

There is no doubt that the prosecution’s case against the 2nd accused was stronger than that against the Appellant. For P.W.l had possible motive for lying against him. For why should she deny knowing his former employer Alhaji Afisatu Musa, who was proved to be her friend? she testified that the Appellant had driven her about six times to Minna in the pick-up van No.BD.6326C, owned by her said friend. The question might be asked, was there any evidence that Appellant had foreknowledge that 1st P. W. was proceeding to Minna that morning? With the knowledge that P.W.l knew him so well and could identify him, would he proceed to the scene, undisguised to rob her? The evidence of alibi, led by the Appellant was not rebutted by the prosecution, 2nd accused testified that he went to the house of the Appellant at about 5.00 a.m. and gave him money to repair his water pick up van and that he left his house about 5.40 a.m.; D.W.l Shaibu Aruna, a bricklayer, testified that at about 5.00 a.m. he went to the house of Appellant and requested him to supply him with water. Appellant told him his pick-up was faulty and needed repairing, that after effecting necessary repairs, he would make the supply, and in fact delivered water to his house that morning. His evidence was corroborated by that of the bricklayer’s mate, Suberu Abudu, D.W.2, who said that Appellant “first went to a mechanic’s place to repair the pick-up van thereafter, went and fetched the water”. The trial judge did not reject the evidence of these witnesses.

There is no doubt that his decision was unduly influenced by the fact that Appellant knew it was usual for P.W.l to carry large sum of money whenever she went to Minna to buy yam. But equally, there was no sugges- tion that Appellant knew that the P.W.l was travelling that morning to Minna. More important still, there was no evidence that the Appellant was at my time seen with or near any blue Peugeot car before, at or after or anywhere or anytime outside his house between 5.30 a.m. to 7.00 a.m. The evidence of D.W.3 Sedi Kadiri was that he knew Appellant before that day; he knew there were four persons in the blue Peugeot car and that he never knew any of the robbers that attacked them. His evidence was not only that he could not identify the robbers, but also that he never knew any of them. The witness D.W.3 never said, as the trial judge seemed to have thought, that he could not identify them because he was manhandled and subsequently made to run into the bush. In my view, the trial judge was not entitled to hazard

[1985] 1 .
Abudu v. State
(Kazeem J.S.C.)
65

A

B

C

D

E

F

G

H

reason for D.W.S’s failure to identify the Appellant as a member of the gang.

Having regard to the totality of the evidence and particularly the doubtful credibility of the evidence of the star witness, P.W.l, the trial judge should, with the same yard stick with which he weighed her evidence against the 2nd accused, have found her evidence against the appellant equally unreliable and unsafe. See Shittu Layiwola & Ors. v. The Queen (1959) W.R.N.L.R. 194, p.195. I agree with the dissenting judgment of Omo- Eboh, J.C.A., that the case against him was not proved beyond-all reasonable doubt, and therefore is entitled to that benefit. For these reasons, I allowed the appeal, quashed the conviction and sentence, and substituted a verdict of not guilty, discharged and acquitted.

IR1KEFE, J.S.C. (Presiding): We delivered a summary judgment and. made consequential orders in this matter on 25th October, 1984, it being one touching upon the liberty of a subject, and indicated then that we would give fuller reasons for the said judgment today.

I now adopt as my own the lead reasons just read by my learned brother COKER, J.S.C. a preview of which I had had before today.

OBASEKI, J.S.C.: On the 25th day of October, 1984, 1 allowed the appeal of the appellant, quashed his conviction and sentence and reserved my reasons till today. I now proceed to give my reasons.
The main question for determination in this appeal is whether the evidence of Cicilia Aigbusobho (p.w.l) on which the conviction of the appellant rested was credible in view of the fact that the appellant whom she knows very well and who had driven her in the car she was travelling in on six different previous occasions was not identified by her at the 1st and earliest opportunity as being one of the robbers who robbed her. The law on the issue is well settled and it is that such delay makes the evidence below acceptable and probative level.

The question has been admirably dealt with in the reasons for judgment of my learned brother, Coker, JSC. delivered a short while ago, the draft of which I had the pleasure of reading in advance. I agree with it and I adopt the opinions contained therein as my own. It was for the reasons so ably stated therein that I allowed the appeal, quashed the conviction and sentence, entered a verdict of acquittal and discharge of the appellant.

KAZEEM, J.S.C.: On 25th October, 1984 when this appeal came up for hearing, it was discovered from the evidence tendered at the trial of the appellant that serious doubt was raised about his involvement with the charge of armed robbery of one Cecilia Aigbasabho brought against him.

His appeal was therefore allowed; and his conviction and sentence were quashed.

At the trial of the appellant with another person who was later discharged and acquitted (hereinafter referred to as the “2nd accused”) two main issues came up for determination, namely:-

66
.
1 Oct. 1985
(Kazeem J.S.C.)

A

B

C

D

E

F

G

H

(a)
whether the appellant was properly identified as one of the robbers that attacked and robbed Cecilia of her money; and

(b)
whether the defence of alibi put forward by the appellant was destroyed by the prosecution witnesses.

The learned trial judge at the conclusion of the trial duly considered those two issues and he not only found that the appellant was properly and clearly identified by Cecilia (P.W. 1) the victim of the robbery, but he also said that the alibi raised by the appellant as a defence was an after-thought and a ruse. He therefore rejected the alibi and consequently he convicted and sentenced the appellant to death. On an appeal to the Court of Appeal in Benin, the appeal was dismissed by a majority of two Justices while the third Justice dissented. The appellant has again appealed to this Court against his conviction and sentence; and those two issues have again been raised here.

I have had the privilege of reading in draft the reasons for judgment just delivered by my learned brother Coker, JSC. wherein he had exhaustively considered those two issues; and I agree with his conclusions and the reasons therefore. I only wish to add that the identification of the appellant by P.W. 1 cannot be satisfactory and completely free from doubt for the following reasons:-

(i)
P.W: 1 had previously known the appellant very well as the driver who had driven her on many occasions on her journeys from Auchi to Minna in a car belonging to one Alhaja Afusetu Musa; and yet on the day of the robbery she did not see much of the appellant, because she said that as soon as the appellant came out of the car that brought the robbers and saw her, he immediately returned to the car;

(ii)
Even though P.W. 1 duly identified, at an identification parade, the appellant and the 2nd accused as two of the robbers, it was successfully proved at the trial that the 2nd accused was elsewhere at the time P.W. 1 said that he attacked her and robbed her of N600.00.

(iii)
It was proved that the appellant had previously driven P.W. 1 in the Peugeot pick-up van belonging to Alhaja Afusetu Musa and that the same van was used on the day of the robbery, yet P.W. 1 denied being friendly with the Alhaja and knowing her as the owner of the vehicle.

(iv)
It might well be that P.W. 1 denied knowing Alhaja Afusetu Musa as the owner of the car because it was proved that Alhaja Afusetu had sacked the appellant as the driver of her Peugeot pick-up van probably at the instigation of P.W. 1 and because the appellant’s father had shot one Dirisu, an armed robber who was a relation of Alhaja Afusetu’s Husband.

(v)
Sedi Kadiri – D.W 3 the driver who drove P.W. 1 in Alhaja Afusetu’s pick-up van on the day of the robbery and who was present and attacked by the robbers could not identify both the appellant and 2nd accused at an identification parade as two of

[1985] 1 .
Abudu v. State
(Kazeem J.S.C.)
67

A

B

C

D

E

F

G

H

the robbers.

(vi)
What really put the credibility of the P. W. 1 in doubt and nullified her identification of the appellant as one of the robbers, was the appellant’s defence of alibi. He had testified that at the material time he was in his house where the 2nd accused came and gave him a sum of N10.00 with which to repair the 2nd accused vehicle which he was driving at that time; and that he later drove the 2nd accused to the house of his master Chief Okhumale at about 5 – 5.30 a.m. The 2nd accused also corroborated that testimony in his own evidence and he said further that he left for Warri thereafter at about 5.35 a.m.

(vii)
The learned trial judge accepted the alibi of the 2nd accused who was equally identified by P.W. 1 at an identification parade as one of the robbers and found that his identification was not completely free from doubt.

If the learned trial judge could so hold, I am of the view that by the same token he should have held that the identification of the appellant too by P.W. 1 was not also free from doubt because it was proved that at the time when the alleged robbery was taking place at about 5.30 a.m. the appellant and the 2nd accused were together at Chief Okhumale’s house.

KAWU, J.S.C.: Having had the privilege of reading in draft the reasons for judgment just delivered by my learned brother, Coker, J.S.C. I am in complete agreement with them and respectfully adopt them as my reasons for allowing the appellant’s appeal and quashing his conviction and setting aside the sentence imposed. It was for the same reasons that I entered a verdict of acquittal and discharge.

Appeal Allowed.

Conviction and Sentence quashed

Verdict of not guilty entered.

Discharged and Acquitted

not necessary to bring the facts of that situation within those of previous situations in which a duty of care exist.

7.
In order to establish negligence, two pertinent questions arise for consideration (a) whether as between the alleged wrong doer and the person who has suffered damage, there is a sufficient relationship of proximity or neighbourhood such that in the reasonable contemplation of the former, carelessness on his part may be likely to cause damage to the latter, (b) If the answer to the first question is in the affirmative, whether there are any considerations which ought to negative or to reduce or limit the scope of the duty or the class of persons to whom it is owed or the damages to which a breach of it may give rise.

8.
The doctrine of proximity as the foundation of duty of care in tort is now firmly established, and it has replaced the old doctrine of ‘privity of contract’ as the basis of an action in negligence.

9.
On the facts of this case, the respondent bank owed a duty to the New Nigerian Bank to carry out the instructions on the guarantee.

10.
A disclosed principal may sue or be sued on any contract made on his behalf while the agent was acting within the scope of his authority.

11.
Per Belgore, J.S.C. at page 212

“While in few remaining cases, privity is still good law, the banking law and transactions are so vital to international maritime and commercial businesses that to apply principles of privity of contract would destroy initiative and sometimes make transactions impossible.”

12.
The principle of privity of contract has been so watered down over the years by remoteness principle and practices of banking and international commerce that our courts must hesitate before applying them.

[1987] 3 .
Abusomwan v. Mercantile Bank (Nig.) Ltd. (No.2)
                                     199

Nigerian Cases Referred to in the Judgment:

Ebba v. Ogodo (1984) 1 SCNLR 372

Imana v.Robinson (1979) 3 &4SC9

Military Governor Western State v. Laniba (1974) 1 All NLR (Pt.2) 179

Shell BP Development Co. of Nigeria v. Cole (1978) 3 SC 183

Woluchem v. Gudi (1981) 5 SC 291

Foreign Cases Referred to in the Judgment:

Ann v. Merton London Borough Council (1978) AC 728

Candler v Crane Christmas& Co. (1951) 2 KB 164

Clay v. A.J. Crump & Sons Ltd. (1964) 1 QB 533

Donoghue v. Stephenson (1932) AC 562

Dorset Yatch Co. Ltd. v. Home Office (1970) AC 1004

Gold Coast and Ashanti Electric Power Development Corporation Ltd. v. A.G. of the Gold Coast (1937) 3 WACA 215

Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. (1964) AC 465

Langton v. Waite (1868) LR 6 Eq. 165.

Winterbottom v. Wright (1842) 10 M & W 109

Appeal

This was an appeal against the decision of the Court of Appeal (Benin Judicial Division) which reverted the decision of the High Court of Bendel State holden at Benin City delivered by Gbemudu, J.

The Supreme Court allowed the appeal and restored the judgment of High Court which found the respondent bank liable for negligence. The decision of the Court of Appeal now set aside had earlier been reported in (1986) 2 . (Pt. 22) Page 270.

History of the Case:

Supreme Court:

Names of Justices that sat on the Appeal: Kayode Eso, J.S.C. (Presided): Anthony Nnaemezie Aniagolu, J.S.C.; Boonyamin Oladiran Kazeem, J.S.C.; Adolphus Godwin Karibi-Whyte, J.S.C.; (Read the Lead Judgment); Salihu Modibbo Alfa Belgore, J.S.C.: Appeal No.: SC. 71 /1986

Date of Judgment: Friday, 19th June, 1987

Counsel: Mr.T. J. O. Okpoko, SAN (with him, Miss Rabi Saidu) -for the Appellant

Dr. N.H. C. Ineneji – for the Respondent

          Court of Appeal:

Division of the Court of Appeal from which the Appeal was brought: Court of Appeal, Benin City

Names of Justices that sat on the Appeal: Omoigberai Eboh, J.C.A.; Abai Ikwechegh, J.C.A. (Read the lead judgment); Reider Joe Jacks,J.C.A.

200
.
27 July 1987
     (Karibi-Whyte, J.S.C.)

A

B

C

D

E

F

G

H

Appeal No.: CA/B/156/84

Date of Judgment: Tuesday, 21st January 1986

Counsel: Dr. N. B. C. Ineneji – for the Appellant

Mr. T. J. O. Okpoko – for the Respondent

High Court:

Name of High Court: High Court of Benin City

Suit No.: B/125/80

Date of Judgment: Friday, 10th April, 1981

Counsel: Mr. T. J.O. Okpoko, SAN (with him, Miss Rabi Saidu) – for the Appellants

Dr. N. B. C. Ineneji – for the Respondents

Counsel:

Mr. T. J. O. Okpoko, SAN (with him, Miss Rabi Saidu) – for the Appellant

Dr. N. B. C. Ineneji – for the Respondent.

KARIBI-WHYTE, J.S.C. (Delivering the Lead Judgment): This appeal is by plaintiff against the judgment of the Court of Appeal Division, Benin City. On the 21st January, 1986, the Court of Appeal in a unanimous judgment set aside the judgment of the High Court, Benin City, granting plaintiffs claim against the defendant for N127.273 (one hundred and twenty seven thousand, two hundred and seventy-three naira) being loss of profits as a result of the defendant’s negligence arising from a guarantee dated 30th January, 1978 for the importation of cement. The facts of the case are fairly simple.

Plaintiff is a businessman who deals on the importation of cement. In the ordinary course of his business he entered into an arrangement for the importation of cement from Lime International Corporation New York through one Mr. Bassey and Mr. E. R. Tucker. The arrangement was that cement was to be imported on a regular basis on the terms and conditions specified in the agreement dated 22nd December, 1977. This agreement was tendered in evidence as exhibit 7. The arrangement was that the cement was to be shipped to plaintiff by Lime International Corporation of New York. It was a term of the agreement that the appellant was to obtain a guarantee from his bankers for the payment referred to in the memorandum. Plaintiff duly obtained the required guarantee dated 30th January, 1978 from his bankers, the New Nigeria Bank Ltd. of Mission Road Benin City in favour of Mr. Bassey at the defendant’s bank. This is exhibit 9 in these proceedings. On the strength of the guarantee exhibit 9, and a pro forma invoice, defendant opened a letter of credit in favour of Lime International Corporation of New York. The pro forma Invoice No. LT. 2472 was dated 4th January, 1978 and is exhibit 12 in these proceedings. It was clearly stated in exhibit 9 i.e. the bank guarantee provided by the New Nigeria Bank Ltd, on behalf of the plaintiff, but in favour of Mr. Bassey, that all documents, drafts, bills of lading and invoices consequent upon the letter of credit shall be drawn in favour of P. A.Abusomwan, i.e. plaintiff and shall be endorsed to New Nigeria Bank Limited, Head Office, Mission Road, Benin City. But in opening the letter of credit, which is exhibit 4 in these proceedings, the defendant bank directed that

[1987] 3 .
Abusomwan v. Mercantile Bank (Nig.) Ltd. (No.2)
(Karibi-Whyte, J.S.C.)
                                     201

A

B

C

D

E

F

G

H

the documents be drawn in favour of Heilit (Nigeria) Ltd. and endorsed to itself. The disregard of the instructions in the bankers guarantee, exhibit 9 resulted in the defendant notifying the arrival of the consignment to Heilit (Nigeria) Ltd. and the endorsement to itself. As a consequence neither plaintiff nor his bankers were informed of the arrival of the cement. Before plaintiff became aware of the arrival of the cement, which was endorsed in the proforma invoice to have been shipped to him, Mr. E. R. Tucker, Managing Director of Heilit (Nigeria) Ltd had taken delivery. It is important to observe that the importation of the cement was financed by plaintiff’s banker’s guarantee, exhibit 9. Before plaintiff could do anything Mr. Tucker had sold 2,260 metric tons (45,200 bags) of the 4,200 metric tons of cement (84,000 bags) shipped to the plaintiff. Plaintiff’s intervention in time only resulted in 38,800 bags of the cement from not being sold by Mr. Tucker.

Plaintiff therefore brought an action claiming from the respondent, the loss suffered as a result of the negligence of defendants in their failure to adhere to the instructions in the banker’s guarantee, exhibit 9. Defendants denied liability. They contended in their statement of defence, that appellant had no account with the defendant’s bank and that the banker’s guarantee relied upon by the plaintiff was issued in favour of Mr. Bassey E. Ekpo Bassey who had no account with the defendant branch in Lagos, the guarantee was not binding on the defendant. The defendant’s defence was that it did not know the plaintiff at all times material to this action and that the said letter of credit was opened by Heilit (Nigeria) Ltd. of which Mr. E.R. Tucker is the Chairman and Managing Director and that the defendant recovered from Heilit (Nigeria) Ltd. and Mr. E. R. Tucker jointly and severally the sum of N163,806.55 in suit No. FRC/L/49/78 being the value of the letter of credit plus Bank charges and costs ….” Although defendant denied in their pleading that they were negligent, they admitted that the letter of credit was opened by them in favour of Heilit (Nigeria) Ltd. They also contended that since Heilit (Nigeria) Ltd was named in the pro forma invoice LT. 2472 of 4th January, 1978 as having been sold the consignment, and that there was no mention of plaintiff in the original invoice and bill of lading, they were not in any way negligent to have advised Heilit (Nigeria) Ltd. by letter dated 27th April, 1978 to collect from them the shipping documents in respect of the said consignment. In other words, the contention of the defendant at the trial was that although they opened a letter of credit on the authority of a banker’s guarantee provided by appellant’s bank, the letter of credit was opened on behalf of Heilit (Nigeria) Ltd, who was its customer; there was no relationship of banker and customer between plaintiff and itself because neither plaintiff nor Bassey E. Ekpo Bassey was its customer. Secondly since the proforma invoice indicated Heilit (Nigeria) Ltd. as the person to whom the cement was to be sold and there was no mention of the name of the plaintiff, they (defendants) did not owe him any duty of care with respect to the consignment, and were within their legal rights to deal with Mr. Tucker who at all material times was the Managing Director of Heilit (Nigeria) Ltd. Plaintiff was a total stranger to the transaction. Plaintiff gave oral testimony and called one witness. Exhibits 1-11 were tendered making a total of 19. Defendant tendered two exhibits 20, 21. Defendants did not give any oral testimony and rested on the case of the plaintiff. The learned trial Judge held defendants liable on the claim before him and entered judgment for

202
.
27 July 1987
     (Karibi-Whyte, J.S.C.)

A

B

C

D

E

F

G

H

the sum of N124,729.40 and costs of the action assessed at N500. The learned trial Judge found that “… defendant accepted exhibit 9 as per memorandum in exhibit 2 and acted on it as per exhibit 4 but failed to comply with the condition that all documents, drafts, bills of lading and invoices shall be drawn in favour of Mr. P. A. Abusomwan and shall be endorsed to New Nigeria Bank Limited, Head Office, Mission Road, Benin City.” The learned Judge held that on the requirement of the observance of the conditions in exhibit 9 defendants owed a duty of care to the plaintiff and were negligent in failing to observe those conditions. The learned trial Judge rejected the defence of res judicata pleaded by the defendants. Defendants appealed to the Court of Appeal. Defendants and plaintiffs shall hereafter be referred to as respondents and appellants respectively.

The Court of Appeal set aside the judgment of the learned trial Judge on the ground that respondents owed no duty to the appellant and had not acted negligently towards him. Appellant has accordingly filed seven grounds of appeal against that judgment. The pounds of appeal excluding the particulars are as follows –

‘1.
The learned Justices of the Court of Appeal misdirected themselves in law when they held:

“I am of the firm view that the respondent cannot sue on account of any failure to observe any stipulation in this exhibit 9.”

2.
The learned Justices of the Court of Appeal misdirected themselves in law when they held:

“There is therefore no basis for holding the appellant liable on a charge of negligence in its dealing with exhibit 9.”

3.
The learned Justices of the Court of Appeal misdirected themselves in law when they held:

“To hold that the appellant was negligent far he owed a duty of care to the plaintiff in respect of the observation (sic) of the above conditions in exhibit 9 is to make the Appellant a party to this said exhibit 9 which is a document that binds only the donor New Nigeria Bank Limited and the donee Basil E. Ekpo Bassey and no one else.”

4.
The learned Justices of the Court of Appeal misdirected themselves in law when they held:

“The appellant accepted the bank guarantee for the benefit of Bassey and/or Tucker, and used it to get the cement into Nigeria as purchased by Heilit Nigeria Limited, and Tucker would seem to have access to any goods obtained by Heilit Nigeria Limited. And he would have been in a position to satisfy the agreement with the respondent, but his greed overcame him, and he went to sell some of the cement clandestinely. That does not mean that Merchantile Bank of Nigeria Limited was negligent in dealing with the shipping documents in relation to this importation of cement for one thing, the evidence shows that Tucker took delivery of the cement in the ship while the appellant bank had custody of the documents. Tucker used none of the shipping

[1987] 3 .
Abusomwan v. Mercantile Bank (Nig.) Ltd. (No.2)
(Karibi-Whyte, J.S.C.)
                                    203

A

B

C

D

E

F

G

H

documents to get bold of the cement and sell part of it. If he had reached and used those documents, then a case of being negligent in her keeping of these bills and invoices would have been established against the bank, and she would have been said to have made it possible by such negligence for Tucker to have taken delivery of the cement.”

                  5.    The learned Justices of the Court of Appeal misdirected themselves in law                             when they held:

“This exhibit 9 is only an undertaking to help the respondent satisfy the terms he had accepted under the exhibit 7.

It was no contract between either the respondent or the New Nigeria Bank Limited and the appellant, the Merchantile Bank of Nigeria Limited, Lagos. That the appellant is mentioned in the exhibit 9 is immaterial, as it is only a side issue, the main concern being that Mr. Bassey E. Ekpo Bassey is to be paid. Mr. Bassey E. Ekpo Bassey appeared to have an account with the appellant bank. The appellant dealt with Mr. Bassey and not with the respondent or the New Nigeria Bank which might make conditions for the respondent but not for Mr. Bassey.”

                 6.     The learned Justices of the Court of Appeal erred in law in placing so much                          premium on exhibit 7 when the case made by the appellant on the pleading                            was on exhibit 9 and exhibit 4.

                  7.      The judgment of the Court of Appeal is against the weight of evidence.

Counsel have differently formulated the issues for determination. Appellant counsel’s formulation is prolix requiring eight issues to be determined. I prefer the more compact formulation of the issues by counsel to the respondent, which limits the issues to be determined to the ratio of the Court of Appeal. In the lead judgment of Ikwechegh, JCA to which Eboh, and Jacks JJCA concurred, the reason for the judgment was stated as follows:

“In my view this appeal succeeds on the ground that it was faulty deduction from the evidence before the court, to wit the documents in evidence at the trial, to hold appellant liable in damages for negligence. The proper evaluation of these documents would lead to the conclusion that the appellant was a total stranger to the respondent, owed him no duty, and did not act negligently.”

The issues to be determined in this appeal which covers all the grounds of appeal therefore are limited to the question of the negligence vel non of the respondent towards, the appellant. They are as follows:

1.
Whether exhibit 9, the guarantee by the New Nigeria Bank can create or impose in law a duty of care on the respondent so as to make it liable in negligence to the appellant.

2.
Whether appellant established by evidence before the court any special relationship or nexus in law between him and the respondent such that could create a duty of care as required to sustain an action under the law of negligence?

204
.
27 July 1987
    (Karibi-Whyte, J.S.C.)

A

B

C

D

E

F

G

H

3.
Was the Court of Appeal right, to hold that appellant whose banker’s guarantee (exhibit 9) accepted and utilised by the respondent in financing the importation of cement, resulting in the loss to him, was such a total stranger to the respondent that no duty of care was and could be owed to him in respect of respondent’s non-compliancc with the instructions in the banker’s guarantee.

4.
Was the Court of Appeal right in importing into the case facts not in evidence and deciding the appeal on the basis of such facts.

Concisely stated, all that these issues attempt to say is that appellant’s action being in negligence, the Court of Appeal ought not set it aside by importing into the case facts not in evidence before the trial court.

It is common ground and not disputed that the action is founded on negligence. This is clear on the writ of summons and the statement of claim. The particulars of negligence alleged are clearly set out in the statement of claim. Counsel to the appellant in his brief stressed this fact, and referred to paragraphs 8, 11 in the statement of claim, where it was pleaded as follows –

”8.     The defendant in opening the letter of credit acted contrary to the instructions referred to in the preceding paragraph and or negligently carried out the instructions in that:

(a)
The defendant failed and neglected to direct all documents, drafts, bills of lading and invoices to be drawn in favour of P. A. Abusomwan and be endorsed to the New Nigeria Bank Limited as provided in the banker’s guarantee.

(b)
directed all such documents and other bills of lading to be drawn in favour of and to be endorsed to Heilit Nigeria Limited a third party which did not provide the banker’s guarantee on which basis the letter of credit was opened.

         11.          “…. out of gross negligence, the defendant failed, refused and or neglected to                   notify the plaintiff or the New Nigeria Bank Limited of the receipt of the                        shipping documents in respect of the consignment of cement to the plaintiff                           on board the Vessel M/V “Fast Bird.”

Counsel referred to the testimony of the appellant in proof of negligence at the trial which was uncontradicted, and that respondent did not give evidence. He referred to the endorsement in exhibit 9 directing respondent bank that all documents, bill of lading and invoices shall be drawn in favour of the appellant and endorsed to the New Nigeria Bank Limited, Head Office, Mission Road, Benin City. Counsel also referred to the finding of fact of the trial Judge that respondent bank was negligent since they owed a duty to Appellant to observe the conditions in Exhibit 9.

In his reply Dr. Ineneji for the respondent submitted that although the action appears to be founded on the tort of negligence, not contract, all the arguments in support of the brief of argument filed by the appellant and the particulars of the grounds of appeal suggest a contractual relationship. Appellant has failed to prove such a relationship with the respondent. Counsel referred to the particulars

[1987] 3 .
Abusomwan v. Mercantile Bank (Nig.) Ltd. (No.2)
(Karibi-Whyte, J.S.C.)
                                     205

A

B

C

D

E

F

G

H

of the grounds of appeal in 1, 2, 3, 4. Counsel submitted in his brief that on the evidence as a whole there was no contractual relationship between appellant and the respondent bank and that the trial Judge also so found. Counsel submitted that the finding in the Court of Appeal that no contractual relationship existed between appellant and respondent amounts to a concurrent finding of fact on the issue.

It seems to me the issue stressed by Dr. Ineneji is not material to the determination of this appeal. This is because the Court of Appeal did not consider it an important issue having observed as follows –

“Now, the question that is all important is how did the appellant bank help Tucker to cheat the respondent? How did such negligence it there was any, enable Tucker to take possession of what cement was meant for the respondent’? These questions are the very foundation and back bone of this appeal.”

Thus the all important question to the Court of Appeal in this case was whether the respondent was negligent towards the appellant, and whether appellant’s loss arose from such negligence. As the Court of Appeal correctly pointed out, to appreciate the evidence upon which the trial Judge gave judgment one has to refer to exhibits 2, 4, 8, 9, 12 to find evidence of duty on the part of the respondent towards the appellant. It is in these documents that one can discover the relationship, if any between appellant and the respondents.

In his consideration of these documents, the learned trial Judge arrived at the conclusion that exhibit 7 created no contractual relationship between the plaintiff and the defendant bank. He however, went on to hold that Exhibit 9, the guarantee worth N100,000 by the New Nigeria Bank Ltd on behalf of the plaintiff to the defendants and accepted by them for Mr. Bassey created a fiduciary relationship between the parties thus subjecting the defendant bank to a duty of care to the plaintiff in respect thereof. The trial Judge particularly relied on the endorsement in exhibit 9 to the effect that:

“All documents, drafts, bills of lading and invoices shall be drawn in favour of Mr. P. A. Abusomwan and shall be endorsed to New Nigeria Bank Ltd, Head Office, Mission Road, Benin City.”

He also came to the conclusion, which has not been disputed before us that the irrevocable Letter of Credit, exhibit 4 was raised on the strength of exhibit 9 and exhibit 12, the proforma invoice. He also concluded that although plaintiff kept no account with the defendant bank, the fact that exhibit 9 with specific instructions endorsed was deposited with the defendant bank, on behalf of the plaintiff and in favour of Mr. Bassey and accepted by the defendant bank, the plaintiff therefore became a customer of the defendant bank. In determining the question of negligence, the trial Judge found as a fact that the defendant bank raised the letter of credit exhibit 4, on the basis of exhibit 9, but in favour of Heilit (Nigeria) Ltd. instead of Mr. P. A. Abusomwan who provided the bank guarantee, and to whom the consignment of cement was being sent. He held that it was this negligence that enabled the consignment of cement to fall into the hands of Mr. Tucker, Chairman of Heilit (Nigeria) Ltd. The learned Judge concluded as follows – at p. 31 lines 8-19

“I find that the defendant accepted exhibit 9 as per memorandum in exhibit 12 and acted on it as per exhibit 4 but failed to comply

206
.
27 July 1987
     (Karibi-Whyte, J.S.C.)

A

B

C

D

E

F

G

H

with the condition “all documents, drafts, bills of lading and invoices shall be drawn in favour of Mr. P. A. Abusomwan and shall be endorsed to New Nigeria Bank Ltd, Head Office, Mission Road, Benin City.” I hold that the defendant was negligent for he owed a duty of care to the plaintiff in respect of the observation of the above conditions in exhibit 9. The defendant is liable to the plaintiff for the loss he suffered as a result of this negligence.”

In setting aside the judgment of the High Court, the Court of Appeal proceeded on the basis that there was no contractual relationship between plaintiff and the defendant bank, and that exhibits 7 and 9 created no contractual relationship between them. In their consideration of exhibits 2, 4, 7, 8, 9, 12, the Court of Appeal said:

“The operative agreement is the exhibit 7 which is between Bassey/Tucker and the respondent. Neither the New Nigeria Bank Limited Benin City, nor Merchantile Bank Limited, Lagos was a party to this agreement. Neither of these banks could take any benefit directly from this exhibit 7, and neither could in law qualify, modify or alter this agreement. The exhibit 9 could therefore, in my view, not modify or alter the exhibit 7. The exhibit 9 was not an agreement entered into between the respondent and the appellant. It was the New Nigeria Bank Limited, Benin City that issued the exhibit 9, and if any liability arose from it, only the said bank could sue on the strength of this exhibit 9, and if but certainly not the respondent for the respondent did not give this guarantee. It was given for his benefit, in his favour. It was given to Mr. Bassey or Mr. Tucker, Bassey and/or Tucker received it for their use and accepting it for payment. They became liable to supply the cement to the respondent ….”

The Court of Appeal completely relied on the view that the relationship of the parties was entirely contractual and nothing else, and no rights could arise between the parties except under such relationship. The court said:

“The only agreement, contract or arrangement the breach of which would give the parties right to sue or be sued is the agreement in exhibit 7 the parties thereto being Bassey, Tucker and the respondent. In so far as exhibit 9 created rights or duties, or obligations its force lay with the New Nigeria Bank Limited, Mission Road, Benin City and Mr. Bassey E. Ekpo Bassey. The appellant is not concerned in it and cannot be held to be answerable for anything done amiss in regard to it. The only person who could be sued on this exhibit 9 – even then only by the New Nigerian Bank Limited, Mission Road, Benin City – is Mr. Bassey E. Ekpo Bassey who accepted it for payment for the cement he undertook to supply to the respondent, and that only in the event of his failure to so supply the cement. I am of the firm view that the respondent cannot sue on account of any failure to observe any stipulation in this exhibit 9.”

Finally on this the Court of Appeal held:

[1987] 3 .
Abusomwan v. Mercantile Bank (Nig.) Ltd. (No.2)
(Karibi-Whyte, J.S.C.)
                                      207

A

B

C

D

E

F

G

H

“To hold that the appellant “was negligent for he owed a duty of care to the plaintiff in respect of the observation (sic) of the above conditions in exhibit 9″ is to make the appellant a party to the said exhibit 9 which is a document that binds only the donor, the New Nigeria Bank Limited, and the donee Mr. Bassey E. Ekpo Bassey, and nobody else.”

The Court went on to hold that:

“… Exhibit 9 could not alter exhibit 7, and the New Nigeria Bank Limited, not being a party to exhibit 7 could not alter it in any manner and so widen its scope of operation so as to give the respondent the right to sue non-parties under his agreement. There is therefore no basis for holding the appellant liable on a charge of negligence in its dealings with the exhibit 9. Mr. Bassey probably may sue the appellant on the strength of exhibit 9 for a proper cause; and so also could the New Nigeria Bank Limited sue Mr. Bassey if the latter failed to supply the cement after getting exhibit 9. The respondent could only sue Bassey/Tucker on the strength of the agreement, exhibit 7, but not on the strength of this exhibit 9 which would be only the evidence of his payment for the cement.”

Still relying on the privity of contract fallacy which has long disappeared, the Court of Appeal concluded as follows:

“The proper evaluation of these documents would lead to the conclusion that the appellant was a total stranger to the respondent, owed him no duty, and did not act negligently.”

It seems to me pertinent and necessary to observe that there appears to be a crucial misunderstanding of the issue before the court. The claim before the court is clearly one for an action for damages for negligence. The statement of claim in support of the writ of summons distinctly at paragraphs 6, 7, 8, 11, 12, pleaded the particulars of alleged negligence. The defendants at paragraphs 9, 10, 13 denied the allegations of negligence. It was therefore unarguable that the question of negligence was an issue between the parties to be resolved at the trial. At the trial plaintiff led evidence in support of his pleading. The defendant relied on the case of the plaintiff and did not lead any evidence. The trial Judge accordingly on the evidence before him found the allegations of negligence established. The trial Judge was right as to his findings of fact of negligence. In J.O.O. Imana v. Madam Jarin Robinson (1979) 3 & 4 S.C. at pp. 9-10, Aniagolu J.S.C., stated the position:

“It is clear to us that once pleadings have been settled, and issues joined, the duty of the court is to proceed to the trial of the issues – see The Gold Coast and Ashanti Electric Power Development Corporation Ltd. v. The Attorney- General of the Gold Coast (1937) 3 W.A.C.A. 215 and if one party fails or refuses to submit the issues he has raised in his pleadings for trial by giving or calling evidence in their support, the trial Judge must, unless there are other legal reasons dictating to the contrary, resolve the case against the defaulting party.”

208
.
27 July 1987
     (Karibi-Whyte, J.S.C.)

A

B

C

D

E

F

G

H

The Court of Appeal proceeded to reverse the finding of fact of learned trial Judge that the respondent bank by failing to adhere to the instructions in exhibit 9 with respect to opening of letters of credit was negligent in the discharge of its duties and was therefore liable to the plaintiff in damages.

It is important to appreciate the fact that the question whether the defendant bank observed the instructions endorsed on exhibit 9 is a question of fact the finding of which was made by the trial Judge. Findings of fact are matters peculiarly within the province and reserved for the trial court. See Military Governor, Western State v. Afolabi Laniba & anor (1974) 1 All NLR (Pt.2) 179. See Ebba v. Ogodo (1984) 4 SC 84; (1984) 1 SCNLR 372; Woluchem v. Gudi (1981) 5 SC 291. The presumption is that such findings of facts are correct. In this case the findings of fact were not challenged. It was only contended that there is no contractual relationship between the parties. The Court of Appeal appears to be relying on the evaluation of the documents, involved in the transaction. It was the view of the Court of Appeal that on the evaluation of the documents as a whole the plaintiff was a total stranger to the respondent, and to whom no duty was owed, and accordingly did not act negligently. The Court of Appeal appears to be of the view that no action for negligence can arise in a contract on behalf of a person not a party to the contract.

It is our law that where there is ample evidence and the trial Judge failed to evaluate it and make correct findings, the Court of Appeal is at liberty to evaluate such evidence and make proper findings, unless the findings rest on the credibility of witnesses – See Shell BP Development Co. of Nigeria Ltd. v. His Highness Pere Cole & Ors. (1978) 3 SC 183.

The question now is whether, if it is conceded that there is no contractual relationship between the appellant and the respondent that is the end of the matter, quaesitio cadit. The matter does not end there. Since the 1920s the trend has developed of discarding the 19th Century view that a tort cannot arise from the breach of contract. It is now the law that an action in tort for negligence can arise de hors contract of the parties. The former view was that if a person undertook a contractual obligation towards another, and his mis-performance or non-performance resulted in damage to a third party, the third party so injured could not sue unless he can show that the obligation of the contracting parties extended to him. For instance in Winterbottom v. Wright (1842) 10 M & W. 109, 114 Lord Arbinger said:

“Unless we confine the operation of such contracts as this to the parties who entered into them, the most absurd and outrageous consequences, to which I can see no limit would ensue.”

The fog over remedies arising from breach of contractual obligations introduced into the law by what was conveniently regarded as the “privity of contract fallacy” was cleared by the brightness brought in the lucidity of the arguments of Lord Atkin in Donoghue v. Stevenson (1932) AC 562. The effect of Donoghue v. Stevenson (supra) is that where a person is injured from a transaction arising from the contract of two persons, the third party is not precluded from bringing action on the grounds that he was not a party to the contract the mis-performance or non-performance of which has resulted in the damage. The duty imposed here is not because there was a contract but because the defendant had impliedly undertaken not to injure the plaintiff. The rationale in truth is that, even though not

[1987] 3 .
Abusomwan v. Mercantile Bank (Nig.) Ltd. (No.2)
(Karibi-Whyte, J.S.C.)
                                      209

A

B

C

D

E

F

G

H

so expressed, the obligations towards the contracting party extended to all such persons who were likely to be injured by the acts or omissions of the defendant. They are the neighbours in contemplation or ought to be in contemplation of the defendant.

The recent decision of the English House of Lords has summed up the law admirably in Ann v. Merton London Borough Council(1978) AC 728, where Lord Wilberforce stated as follows –

“Through the trilogy of cases in this House – Donoghue v. Stevenson (1932) AC 562, Hedley Byren & Co. Ltd. v. Helter & Partners Ltd. (1964) A.C. 465; Dorset Yacht Co. Ltd. v. Home Office (1970) AC 1004, the position has now been reached that in order to establish that a duty of care arises in a particular situation, it is not necessary to bring the facts of that situation within those of previous situations in which a duty of care has been held to exist. First one has to ask as between the alleged wrong doer and the person who has suffered damage there is a sufficient relationship of proximity or neighbourhood such that, in the reasonable contemplation of the former; carelessness on his part may be likely to cause damage to the latter – in which case a prima facie duty of care arises. Secondly, if the first question is answered affirmatively, it is necessary to consider whether there are any considerations which ought to negative, or to reduce or limit the scope of the duty or the class of person to whom it is owed or the damages to which a breach of it may give rise.”

Surely, duty arising from proximity in law or fact, and not contract is a condition precedent for liability in negligence. This was emphasised by the cases decided since after Donoghue v. Stevenson (supra). See Clay v. A. J. Crump & Sons Ltd. (1984) 1 QB 533; Candler v. Crane, Christmas & Co. (1951) 2 KB 164. I think the doctrine of proximity as the foundation of duty of care in tort, is now firmly established. It has replaced the erstwhile “privity of contract” fallacy.

I now turn to the facts of the case before us and apply the principles enunciated above. The facts are that exhibits 9, the guarantee, was made by the New Nigeria Bank Ltd. on behalf of the appellant with the respondent bank in favour of Mr. Bassey. The endorsement on exhibit 9 clearly provided that:

“All documents, bill of lading and invoices shall be drawn in favour of Mr. P. A. Abusomwan and shall be endorsed to New Nigerian Bank Limited, Head Office, Mission Road, Benin City.”

However, when the respondent bank issued exhibit 4, the Letter of Credit relying on exhibits 9 and 12, it was raised in favour of Heilit (Nigeria) Ltd. instead of Mr. P. A. Abusomwan, on whose behalf exhibit 9 was made. This was despite the fact that exhibit 12 clearly indicated appellant as the shipper of the consignment. Respondent bank owed a duty to the New Nigeria Bank Limited to carry out the instructions on exhibit 9. Appellant is such a person whose relationship with exhibit 9 is so proximate that there is a duty to ensure that he was not injured by any acts of mis-performance or non-performance. The failure on the part of the respondent to adhere to the instructions in exhibit 9 is a mis-performance and is a breach of the duty to take care not to injure the appellant. Appellant was injured by this negligence.

210
.
27 July 1987
                       (Eso, J.S.C)

A

B

C

D

E

F

G

H

The error in the view adopted by the Court of Appeal was that it relied on the privity of contract fallacy to hold that appellant not being a party to the contract could not sue. Appellant was the person on whose behalf exhibit 9 was made and the specific instructions endorsed therein was intended to protect the interest of the appellant. Since respondent bank ignored the instructions in exhibit 9, and this resulted in the loss claimed by the appellant, it was the breach of the duty of care owed to the appellant and which is an actionable wrong. It is interesting to observe that even proceeding on the privity of contract principle, and having accepted that exhibit 9, the guarantee was made by the New Nigeria Bank Limited, Mission Road, Benin City, with the respondent bank, on behalf of the plaintiff in favour of Mr. Bassey, it should have been clear to the court below that the New Nigeria Bank Limited was agent of the plaintiff, who was disclosed in exhibit 9. A disclosed principal may sue or be sued on any contract made on his behalf by agent acting within the scope of his authority. See Langton v. Waite (1868) L. R 6 Eq. 165. Since plaintiff did not bring his action in contract, but in tort, the above consideration does not arise. The Court of Appeal was clearly wrong in their evaluation of the documents. They were clearly also wrong in setting aside the findings of fact of the trial Judge without showing that it was perverse. All the grounds of appeal argued succeed. The appeal is accordingly allowed. The judgment of the Court of Appeal and costs awarded are hereby set aside. Judgment of the High Court and costs are restored. Respondent shall pay to appellants costs assessed at N300 in this court and N150 in the court below.

ESO, J.S.C.: I had the privilege of a preview in draft of the judgment of my learned brother, Karibi-Whyte, J.S.C. I am in complete agreement that the appeal should be allowed.

There are two important exhibits in this case. The first being the pro forma invoice which indicated ex facie that the shipment of the cement was to the appellant Abusomwan. That was exhibit 12. Ex. 9 provided inter alia that –

“All documents, drafts, bills of lading and invoices shall be drawn in favour of Mr. R A. Abusomwan arid shall be endorsed to New Nigeria Bank Ltd., Head Office, Mission Road, Benin City.”

Now in pursuance of these clear statements in the exhibits what did the respondent do? For that is the question, the answer to which would determine the proprietary or otherwise of the defendant, respondent.

From the facts so well stated in the judgment of my learned brother, Karibi-Whyte, it is obvious that the defendant failed to observe these conditions. There was the name of Mr. Tucker that pervaded the scene. Mr. Tucker was the principal of a company known as Heilit (Nig.) Ltd. Mr. Tucker was mentioned in dispatches as being connected with Lima International Corporation. This company prepared Ex. 12 – the proforma invoice. Mr. Tucker took delivery of the consignment of the cement. So, it does not take much imagination to visualise what happened. A colossal fraud was hatched and executed by Tucker. The respondents who could have prevented this fraud by following the terms of Ex. 9 failed in their duty of care. A simple case of negligence has arisen and the Appellant has brought the cement action in court. The trial court was right in the detailed examination of

[1987] 3 .
 Abusomwan v. Mercantile Bank (Nig.) Ltd. (No.2)
                  (Aniagolu, J.S.C)
                                    211

A

B

C

D

E

F

G

H

law and fact. The Court of Appeal was wrong in upsetting the judgment of the High Court.

This appeal succeeds and it is hereby allowed. I abide by all the orders contained in the judgment of my learned brother, Karibi-Whyte, J.S.C.

ANIAGOLU, J.S.C.: The judgment just read by my learned brother, Karibi-Whyte, J.S.C., was made available to me in draft. I agree that this appeal should be allowed; the judgment of the Court of Appeal set aside, and the judgment of the High Court (Gbemudu, J.) restored.

I agree that the crux of this appeal hinges upon whether the respondent having accepted exhibit 9 was bound to comply with its terms or, in default, bear the consequences of non-compliance The learned trial Judge was entirely right when he held:

“I find that the defendant accepted exhibit 9 as per memorandum in exhibit 2 and acted on it as per exhibit 4 but failed to comply with the condition that “all documents, drafts, bills of lading and invoices shall be drawn in favour of Mr. P. D A. Abusomwan and shall be endorsed to New Nigeria Bank Limited, Head Office, Mission Road, Benin City.” I hold that the defendant was negligent for he owed a duty of care to the plaintiff in respect of the observation of the above conditions in exhibit 9. The defendant is liable to the plaintiff for the loss he suffered as a result of this negligence.”

The appellant cannot approbate and reprobate at the same time. Having accepted the banker’s guarantee (exhibit 9) and having utilized it in financing the importation of the cement as a banker and deriving all the banker’s benefits (a notorious fact) accruing to the respondent/bank such as commissions and other handling charges, the respondent cannot be heard to reprobate the document by ignoring the conditions requiring it to draw up “all documents, drafts, bills of lading and invoices in favour of Mr. P. A. Abusomwan” and to endorse them to New Nigeria Bank Limited.

Having ignored the document, resulting in damage or loss to Mr. Abusomwan (the appellant), the respondent must be held to have been in breach of the duty of care it owed to Mr. Abusomwan, by its negligence in drawing up the documents etc. in favour of Heilit (Nigeria) Limited enabling the Chairman of the said Heilit (Nigeria) Limited, Mr. Tucker, instead of Mr. Abusomwan, to collect the goods.

The claim of the appellant was made in negligence – a specie of tort – and not in contract. And so, for the Court of Appeal to drag in the principle of privity of contract was to becloud the issue at stake. It could neither be argued that the loss to Mr. Abusomwan was too remote as not to be cognisable by law, nor could it be successfully contended that the respondent/bank did not owe a duty of care to Mr. Abusomwan to conduct the transaction in question in such a way as not to occasion him a loss.

I abide by the order for costs made in the lead judgment of my brother, Karibi-Whyte, J.S.C.

212
.
27 July 1987   
                 (Kazeem, J.S.C)

A

B

C

D

E

F

G

H

KAZEEM, J.S.C.: I have had the privilege of reading in draft the judgment just delivered by my learned brother, Karibi-Whyte, J.S.C. It has set out very clearly the facts of this appeal as well as the submissions made before us. I am completely in agreement with the reasons and the conclusions arrived at therein. It is only by way of emphasis that I am making these few points.

It was never disputed throughout (and that was confirmed by the proforma invoice Exh. 12) that the consignment of cement was to be shipped to the appellant. It was not also disputed that the bank guarantee – Exh. 9 – provided by the New Nigeria Bank on behalf of the appellant for the transaction clearly contained an endorsement that:

“All documents, bill of lading and invoices shall be drawn in favour of Mr. P. A. Abusomwan and shall be endorsed to New Nigeria Bank Limited, Head Office, Mission Road, Benin City.”

If the direction contained in that endorsement had been strictly observed, there would therefore have been no cause for this action for negligence. But that was not so. Contrary to that direction and the contents of the pro forma invoice – Exh. 12 – the irrevocable letter of credit – Exh. 4- which was prepared by the respondent bank for financing the consignment, was issued in favour of Heilit (Nig) Ltd., a company owned and controlled by Mr. Tucker. It is to be noted that Exh. 12, the proforma invoice was prepared by Lime International Corporation of New York, a company which, on the evidence adduced at the trial, Mr. Tucker was said to be connected with; and it was the same Mr. Tucker who eventually fraudulently took delivery of the bulk of the consignment to the detriment of the appellant. Moreover, the bill of lading – Exh.8 – prepared by Lime International Corporation of New York, and which was based on the irrevocable letter of credit (exh. 4), made Heilit (Nig.) Ltd. (Mr. Tucker’s company) the consignee of the consignment. That, in my view, aided and abetted Mr. Tucker to perpetrate his fraud. How then could the respondent bank be heard to say that it was not liable to the appellant in an action for negligence? In my view, the respondent bank owed the appellant a duty of care to see that the direction contained in the endorsement on the banker’s guarantee – Exh. 9, was strictly carried out; and failure to do so made it possible for Mr. Tucker to fraudulently take delivery of the consignment of cement. Consequently, in my view the respondent bank was liable to the appellant in an action for negligence. See: Donoghue v. Stevenson (1932) AC 563; Dorset Yatch Co. Ltd. v. Home Office (1970) AC 1004; Ann v. Merton London Borough (1978) AC 728 per Lord Wilberforce at page 757.

In the circumstances, I will also allow the appeal, set aside the decision of the Court of Appeal and restore the judgment of the High Court with costs. I also agree with the costs awarded against the respondent in the lead judgment.

BELGORE, J.S.C.: The learned Justices of the Court of Appeal were in error in construing into this special banking transaction the principle of privity of contract. While in few remaining cases privity is still good law, the banking law and transactions are so vital to international maritime and commercial businesses that to apply principles of privity of contract would destroy initiative and sometimes make transactions impossible. The special endorsement on the guarantee – Exhibit 9, is so clear that any banker receiving it and using it must

[1987] 3 .
Abusomwan v. Mercantile Bank (Nig.) Ltd. (No.2)
(Belgore, J.S.C.)
                                     213

A

B

C

D

E

F

G

H

make sure that the terms and conditions so endorsed are fully complied with. To do the contrary renders the bank open to an action for negligence and such a bank will be liable for the direct loss arising from such non-compliance. It is to be noted that without the guarantee the letter of credit would not have been opened by the respondent bank and the fact that the appellant has no account with them is immaterial because the appellant has committed himself to a bank in obtaining the guarantee. The principle of privity of contract has been so watered down over the years by remoteness principle and practices of banking and international commerce, that our courts must hesitate before applying them.

I agree with the lead judgment that the decisions in Ann v. Merton London Borough Council (1978) AC 728 which assessed the situation in privity cases as a result of decisions in Donoghue v. Stevenson (1932) AC 562; Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. (1964); Doset Yatch Co. Ltd. v. Home Office (1970) AC 1004, ought to guide the courts.

I agree with the judgment of my learned brother, Karibi-Whyte, J.S.C, that this appeal ought to be allowed. I hereby allow the appeal, set aside the decision of the court with the costs. I also award N300.00 as costs in this court and N500.00 as costs in the court below against the respondent.

Appeal allowed.

Leave a Reply

Your email address will not be published. Required fields are marked *