Is a Customer Whose Cheque has Been Dishonored Entitled to Seek Legal Redress or Claim Damages in Court?

CASE TITLE: UBA PLC v. ARHDMOR (NIG.) LTD (2024) LPELR-62703(CA)

JUDGMENT DATE: 5TH JUNE, 2024

JUSTICES: RIDWAN MAIWADA ABDULLAHI
JOSEPH EYO EKANEM
OLASUMBO OLANREWAJU GOODLUCK

DIVISION: ENUGU

PRACTICE AREA: BANKING LAW

FACTS:

This appeal borders on the award of damages and cost.

This appeal is against the judgment of the Enugu State High Court.

The Appellant is United Bank of Africa Plc, where the Respondent maintains a bank account.

The Respondent issued two cheques, one for N200,000 (Two Hundred Thousand Naira) on the 29th of November 2010 and another for N155,870.00 on the 2nd of December 2010. Both cheques were returned unpaid with the endorsement “DAR” on them. The Respondent maintained that its account was adequately funded for the cheques to be honored. The Respondent thereafter instituted an action at the Enugu State High Court wherein it claimed the sum of N50,302,288.97 (Fifty Million, Three Hundred and Two Thousand, Two Hundred and Eighty-Eight Naira, Ninety-Seven Kobo) for special and general damages against the Appellant.

In a considered judgment, the trial Judge gave judgment in favour of the respondent by ordering the Appellant to pay the sum of N10,000,000 (Ten Million Naira) as well as costs in the sum of N1,000,000 (One Million Naira) against the Appellant.

Aggrieved by the judgment, the Appellant appealed.

ISSUES FOR DETERMINATION:

The Court adopted the issues formulated by the appellant viz:

1. Whether the award of N10,000,000 (Ten Million Naira) as damages by the trial Court in favour of the Respondent was not manifestly excessive in the circumstances of the case given that the Respondent neither pleaded nor led sufficient evidence to justify the same.

2. Legality or otherwise of the Court granting a relief not sought by a party.

COUNSEL SUBMISSIONS:

​Appellant Counsel urged the Court to hold that the general damages awarded were excessive and unjustifiable, bearing in mind that the Respondent’s account was inadequately funded. While not conceding that the Respondent’s account was underfunded, learned counsel argued that assuming the funds are sufficient, the trial Court’s award of N10,000,000 (Ten Million Naira) for the two dishonoured cheques valued at N355,870 (Three Hundred and Fifty-Five Hundred, Eight Hundred and Seventy Naira) is excessive and unjustified.

In reaction to the first issue for determination, counsel for the Respondent submitted that in a plethora of decided cases, it has been consistently held that special damages must be specifically pleaded and proved while general damages are at large and it is dependant on the circumstances of the case. Counsel recounted that the circumstances in the instant case are threefold: firstly, it is an action that borders on negligence leading to the failure to credit the Respondent’s in-house cheque which was paid into the Respondent’s account. Secondly and thirdly, for the wrongful dishonour of the Respondent’s two cheques which were respectively dishonoured. This Court was commended for the decision in Benjamin v. Kalio (2018) ALL FWLR PT. 920 PG. 1 AT PAGE 26.

Counsel submitted that the Appellant failed to plead facts or law that would have justified their position that the award of general damages by the Court was excessive mere restatement of the principles of law on an award of damages per se without applying the same to the facts of the case, counsel contended, cannot alter the decision of the lower Court on damages on appeal.

Counsel relied heavily on the decision in BALOGUN VS. NATIONAL BANK OF NIGERIA LTD (1978) NLR 63 AT PG. 70 by submitting that the learned trial Judge relied on the principles enunciated in the case.

Again, counsel referred to the BALOGUN VS. NATIONAL BANK OF NIGERIA LTD case where Idigbe JSC ordered that the cost ordered by the lower Court be reviewed upward from N10 ordered by the trial Court, the Apex Court ordered costs in the sum of N1,000 Naira. Respondent’s counsel submitted that the Balogun case supra was also predicated on a dishonoured cheque issued in a May 1975 suit. He recounted that the total cost awarded by the High Court in the suit was N375, which he contends is 30% of the damages awarded. Comparing the Balogun case supra with the instant appeal, counsel posits that N1,000,000 is only 10% of the N10,000,000 damages awarded at the Court’s discretion in 2022.

In sum, the Respondent’s counsel urged this Court to resolve the issue in favor of the Respondent by affirming the trial Court’s award on damages.

DECISION/HELD:

In conclusion, the Court allowed the appeal in part to the extent that the damages was reviewed from N10,000,000 to N2,000,000.

RATIO:

 BANKING LAW – CHEQUE:   Whether a customer whose cheque is dishonoured can seek redress in Court or is entitled to damages

“I have also considered the submissions of both counsel, particularly the strength of the decision in BALOGUN v. NATIONAL BANK OF NIGERIA LTD., supra. The Supreme Court was of the view, that the Respondent, a legal practitioner who issued a cheque in the sum of N40 (Forty Naira) to her client from her client’s account is entitled to damages at large for the Bank’s dishonor of her cheque. In ordering damages in the sum of N1,000 (One Thousand Naira) Idigbe JSC in the leading judgment held, inter alia. I have read at length the decision in BALOGUN VS. NATIONAL BANK OF NIGERIA supra, wherein the Supreme Court held the view that the Respondent, a legal practitioner, who issued a cheque in the sum of N40 to her client from her client’s amount was entitled to an award of damages at large; hence, she was awarded N1,000, considering that she, ‘a solicitor in practice, is in business,” but that is not to say that she is a ‘trader’.

Idigbe JSC in the lead judgment espoused, inter alia, that:

“The imputation in these circumstances from the very act of the wrongful dishonor of the cheque, or, the endorsement “RIO” thereon is, indeed, clear, and it is that the customer is dishonest and untrustworthy. Can anything affect her credit or reputation, as a ‘person on business’, and/or a solicitor in practice more seriously?

… can it be seriously contended that in such cases damage should not be presumed to follow as a natural and necessary consequence of the act of wrongful dishonor per se? We are satisfied that there is no need for the Appellant to plead and prove actual damage in order to be entitled to substantial damage.” Per GOODLUCK, J.C.A.

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