IN THE HIGH COURT OF LAGOS STATE
ON THURSDAY, THE 15TH DAY OF JANUARY 1970
E.B.O. EFFIWATT (FOR HIMSELF AND AS SOLE ADMINISTRATOR OF THE ESTATE OF OTU EFIOM OTU EKONG II OF THE FAMILY OF ETUBOM EFIOM OTU EKONG I) .................................................................... PLAINTIFF
BARCLAYS BANK D.C.O. (NIG.) LIMITED CENTRAL BANK OF NIGERIA ........................................................... DEFENDANTS
BEFORE: Taylor, C.J.
The plaintiff sued the defendants claiming exemplary damages for wrongful and malicious conversion of the plaintiff's £1,012.13s.4d.
The plaintiff made a demand for the sum of £300 from the 1st defendant on the 8th October, 1968. The 1st defendant wrote to the plaintiff stating that the demand could not be granted owing to the closure of the banks because of the instructions given by the 2nd defendant bank. The demand having been made and the refusal given the only point for consideration was whether the refusal was justified. To be justified it had to be shown that the 2nd defendant bank were empowered to "freeze" such accounts.
Counsel for the plaintiff contended that the powers of freezing accounts purported to be exercised by the Central Bank under the Currency Conversion (South-Eastern and Other States) Regulations, 1968, was not a power coming within Decree No 49 of 1968. The Currency Conversion (South-Eastern and Other States) (Amendment) Decree 1968. The former purported to have been made in exercise of the powers conferred by section 1A of the latter which provided that: "The Federal Commissioner for Finance after consultation with the Central Bank may, if he thinks fit, make regulations generally for the purpose of this Decree."
He then went on to argue that because section 2 provided that: "without limiting the generality of the power hereby conferred, regulations may provide the closing of banks without thereby incurring liability to customers as others using the bank where the closure is for the purposes of giving effect to currency conversion...."
The Central Bank can have no power to "freeze" accounts, only to close banks.
(1) There can only be conversion where the defendants assert a title adverse to that of the true owner, either in himself or a third party, or where, while not expressly doing this, he detains the goods from the rightful owner for an unreasonable time thereby impliedly doing so. If the depositor himself applies, any delay is unreasonable, and refusal is a negation of his title.
In this case the delay was one between 15th November, 1968 and 3rd April, 1969. Having regard to the particular circumstances of this case there was not a shred of evidence from which an inference could be drawn that this delay was unreasonable or unjustiable in law.
(2) It is most absurd to say that the 2nd defendant bank was empowered to close banks with the inevitable result that no account can be operated during that time, but it is not given the lesser power to permit banks to open with the limitation that only such and such limited transaction must be conducted. The plaintiff's claim for conversion was really based on a misconceived idea that the lesser is not included in the greater power contained under section 1A of Decree No. 49 of 1968.
Plaintiff's action dismissed
Case referred to:
Joachimson v. Swiss Bank 1921 A.E.R. 92
Decree referred to:
Currency Conversion (South Eastern State and Other States) Decree 1968
Noibi for Lardner, for the Plaintiff
Kushimo, for the 1st Defendant
Okorodudu, for the 2nd Defendant
Taylor, C. J.:-The plaintiff originally sued the defendant claiming:-
(1) A declaration that the defendants had no power to "freeze" the plaintiff's account in the 1st defendant's bank at Calabar;
(2) The sum of £1,012.13s.4d. with 10% interest from 15th September, 1968, being the sum standing to plaintiff's account in the said bank:- and
(3) £5,000 as exemplary damages for wrongful and malicious conversion of the plaintiff's said £1,012; 13s.4d despite repeated demands.
Because the cause was heard, and on the 14th April, 1969, the plaintiff Mr E.B.O. Effiwatt, a member of the Bar, withdrew the first and second parts of his claim which were accordingly struck out leaving only the claim for "exemplary damages for wrongful and malicious conversion." Pleadings were ordered and have been filed. The plaintiff has set out the particulars of damage claimed out of which the sume of £280.11s.0d. represents special damages and £4719.9s.0d. general damages.
The defendants do not deny that the account of the aforesaid estate of Out Efiom Out Ekong II was frozen and that the 1st defendant bank was acting on the instructions of the 2nd defendant who plead that this was done as a result of "currency exchange exercise" in the South Eastern State of Nigeria.
It is a fact common to all the parties in the suit and is relied on by the plaintiff in paragraph 3 sub-paragraphs V and VI of the particulars supplied in his amended Statement of Claim that the 1st defendant bank was closed as were all banks in that area from the 15th September to the 15th November, 1968, as a result of a bank holiday declaration. The plaintiff in his evidence, therefore, limited his claim on this head from mid-November, 1968 to March, 1969, when his account was declared operative. Evidence was led by the plaintiff that his demand for funds from the bank was made during this period when the bank holiday was declared and that, in his own words:-
"I did not make any further written request after that."
The first point, therefore, for decision is whether there was a "wrongful and malicious conversion" of the plaintiff's funds in the 1st defendant's bank in the absence of oral written evidence as to a specific demand. Learned Counsel for the plaintiff drew my attention to the case of Joachimson v. Swiss Bank 1921 A.E.R. 92 and contended that the writ was evidence of the demand, i.e., the writ issued on the 10th February, 1969.
It is common ground that, on the 8th October, 1968, the plaintiff wrote a letter to the 1st defendant. A copy of this letter is not in evidence but the reply of the 1st defendant is exhibit "D" and it reads, inter alia, as follows:-
"Re Estate of Otu Ekong II A/C
We refer to your letter of 8th October concerning your request for us to transfer the sum of £300 from the above account in our books to your account at our 40 Marina Lagos branch, and advise that following the closure of the banks in Calabar on 15th September during the Currency Exchange exercise, the banks have reopened for business transaction on 15th November, 1968. Consequent upon this the Central Bank in Lagos has ordered the freezing of every credit balance of an account in the bank books permitting payment of only £20 on every account until further notice.
In the circumstances we are unable to remit the £300 as instructed...."
The reply of the 1st defendant bank makes it abundantly clear that a demand for the sum of £300 was made by the plaintiff on the 8th October which request could not be granted owing to the closure of the banks that even after the banks were re-opened on the 15th November, 1968, the 1st defendant bank realised that this demand was still operative but they could not comply with it on the 19th November, 1968, the date on which exhibit "D" was written, because of the instructions given by the 2nd defendant bank.
The demand having been made and a refusal given the only point for consideration is whether the refusal was justified. To be justified it has to be shown that the 2nd defendant bank were empowered to "freeze" such accounts.
On this point exhibit S dated the 2nd September, 1968, was tendered and is a letter written by the 2nd defendant bank to the 1st defendant bank. Inasmuch as this letter deals with the period during which the bank holiday was declared the letter is not of much assistance on the point in view of the plaintiff's evidence limiting his claim to the period after the re-opening of the 1st defendant bank subsequent to the said holiday.
On the 7th November, 1968, exhibit T was written by the 2nd defendant bank to the 1st defendant bank on the same subject matter as exhibit "S", i.e., "Exchange of old Nigerian currency notes in the South Eastern State."
This letter shows that in that exercise of exchange of the old Nigerian currency notes the 1st defendant bank is or was supplied with new notes only to the tune of £20 on their liability on the 6157 deposit accounts under which the present plaintiff's account was classed. The letter ends with this paragraph:-
"Your appointment as an "Exchange Authority" for the purpose of declaring a bank holiday, as communicated to you in our letter of 19th September, 1968, is now revoked and it is expected that your branch in Calabar will re-open for business in New Nigerian Currency Notes with immediate effect. Except for repayments of not more than £20 per depositor as indicated above, all deposit accounts as at 14th September, 1968, should remain blocked and should be segregated from new accounts."
Finally, on the 3rd April, 1969, the 1st defendant bank wrote to the plaintiff informing him that the account was now "unfrozen". The net result was that as between the 15th November and the 3rd April, 1969, the plaintiff's account was not completely "frozen" but he was at liberty to withdraw the sum of £20 oput of the previous request for £300. This case is really a novel one and I am unable to find and indeed no case has been cited where a banker does not deny that the customer has the sum demanded by the latter in his bank; where the banker still holds such money to the credit of the customer and is prepared to pay part of such sume to the customer on the instructions of a higher authority (if I may use such phrase) and nevertheless, the banker is sued for conversion.
A conversion is defined in "Paget's Law of Banking" 5th Edition at Page 229 as:-
"...a wrongful interference with goods, as by taking, using or destroying them, inconsistent with the owner's right of possession. To constitute this injury, there must be some act of the defendant repudiating the owner's right or some exercise of dominion inconsistent with it."
In the examples given on the same page as to when an action is maintainable there is not instance of a similar nature to the present one. There is not one single case where the banker has never denied the fact that the customer still has the sum claimed in his establishment and to his credit but where the limitation is on the amount that the customer is allowed to withdraw.
The learned author of "Paget's Law of Banking" at page 86 states that:-
"Reading these citations dispassionately, the true conclusion seemed to be that there can only be conversion where the defendant asserts a title adverse to that of the true owner, either in himself or a third party, or where, while not expressly doing this, he detains the goods from the rightful owner for an unreasonable time, thereby impliedly doing so. If the depositor himself applies, any delay is unreasonable, and refusal is a negation of his title."
In this particular case the delay was one between the 15th November, 1968, and the 3rd April, 1969. I must ask myself whether it has been shown that this delay was unreasonable or unjustified in law. I must take judicial notice of the existence of the civil war in Nigeria and of the important fact that the South Eastern State by which that part of Nigeria is now known was occupied by forces rebellious to the Federal Military Government of Nigeria. I must also take judicial notice of the traffic-king in old Nigerian Currency that has resulted from such occupation of those parts of Nigeria, by rebel forces, where the old currency was in use when the new currency was made the only legal tender in other areas of Nigeria under the Federal Military Government.
The plaintiff who is an indigene of the South Eastern State was well aware of this exercise. In fact he wrote exhibit E to the Chairman, Currency Conversion Investigating Panel, Central Bank, in which he put forward his case to the Panel and received in reply exhibit F which states, inter alia, that:-
"The question of currency exchange is being actively investigated by my Panel and it is hoped that work will be completed in as short a time as possible in order that your deposits could, where appropriate, be released to you. When this position is reached, a public announcement will be made; but meanwhile, if you have any information which would enable the Panel conclude its work speedily and effectively, please send such information, in confidence, to the undersigned..."
There is no evidence that the plaintiff availed himself of this request. In fact his evidence is to the contrary. Two months after this the plaintiff's account was unfrozen. There is not a shred of evidence direct or from which an inference can be drawn that this delay was unreasonable.
On the alternative point as to whether the delay was justifiable, the objects of the Central Bank of Nigeria are contained in the Central Bank of Nigeria Ordinance as amended from time to time. Of particular importance is its relation with other bank as contained in section 39 and the amended section 40 of the Act. The latter begins with these words:-
"The bank may from time to time issue directions which shall subsequently be published in the Gazette requiring each bank licensed under the Banking Act to do the following..."
The plaintiff's real cause of complaint lies in the first part of his claim which has been abandoned for if he were able to show that the 2nd defendant bank had no power to "freeze" his assets, then both the 2nd defendant bank and the bank acting under its instructions, i.e., the 1st defendant bank, would be liable for their actions in relation thereto.
Mr Lardner, despite the abandonment of the first and second parts of his claim addressed me on this point. Objection was raised by Chief Okorodudu for the 2nd defendant bank. I intimated that I would give a ruling on this point in my judgment.
Let me first of all state Mr Lardner's contention. It is this, that the powers of freezing accounts purported to be exercised by the Central Bank under the Currency Conversion (South-Eastern and Other States) Regulations, 1968, is not a power coming within Decree No. 49 of 1968. The Currency Conversion (South Eastern and other States) (Amendment) Decree, 1968. The former purports to have been made in exercise of the power conferred by section 1A of the latter which provides that:-
"The Federal Commissioner for Finance after consultation with the Central Bank may, if he thinks fit, make regulations generally for the purposes of this Decree."
Learned Counsel then goes on to argue, but I think with little or no conviction, that because section 2 provides that:-
"Without limiting the generality of the power hereby conferred, regulations may provide for the closing of banks without thereby incurring liability to customers as others using the bank where the closure is for the purpose of giving effect to currency conversion..."
the Central Bank can have not power to "freeze" accounts only to close banks. What learned Counsel has not taken into account is that L.N. 85/68 was made in exercise of the general powers contained in section 1A and not section 2. But even in section 2 the pregnant words are "without limiting the generality of the power hereby conferred."
Quite apart from this it seems most absurd to me to say that the 2nd defendant bank is empowered to close banks with the inevitable result that not account can be operated during that time, but it is not given the lesser power to permit banks to open with the limitation that only such and such limited transaction must be conducted.
I have given consideration to this point in spite of the objection of Chief Okorodudu, because the plaintiffs' claim for conversion by the defendants is really based on a misconceived idea that the lesser is not included in the greater power contained under section 1A of Decree No. 49 of 1968. He is entitled to be heard pro tanto.
For the reasons given there is no substance in this action and it is dismissed. I shall hear the parties on costs.
Court: I suggest that parties bear their costs.
Mr Kushimo: We have made seven appearances in this case. I would suggest 50 guineas.
Chief Okorodudu: We should have some costs.
Court: I order that costs be borne equally by both sides. No order as to costs in view of the particular circumstances of this case.
Plaintiff's Action dismissed.