Whether Unchallenged Debt Amount in Bank Correspondence Equate to an Admission of Liability

CASE TITLE: UNITY BANK PLC v. MEDLEEK INT’L CO. LTD. & ANOR (2023) LPELR-60761(CA)

JUDGMENT DATE: WEDNESDAY, 31ST MAY, 2023

JUSTICES: CHIDI NWAOMA UWA, JCA
MOHAMMED BABA IDRIS, JCA
MUSLIM SULE HASSAN, JCA

DIVISION: KADUNA

PRACTICE AREA: BANKING        

FACTS:

This is an appeal against the decision of the High Court of Justice in Kaduna in a case where the Appellant sought the recovery of N72,038,377.97 from the 1st Respondent, alleging non-payment of a banking facility. The Appellant claimed that the 1st Respondent, a businessman, secured a contract and obtained a banking facility, failing to repay it.

The 1st Respondent, in defense, argued that the Appellant breached terms and conditions, engaged in fraudulent manipulations of the account, and failed to adhere to money market conditions. They also claimed that the contract was ongoing and they were yet to receive proceeds.

The trial Court held that the Appellant failed to prove the interest and other charges, awarding only N20,000,000. The Appellant appealed, seeking the awarded interest and miscellaneous claims.

ISSUES FOR DETERMINATION:

The appeal was determined on the issue, viz:

“Whether the Appellant proved its entitlement before the lower Court to the claim for the sum of N72, 038,377.97 as of September 30, 2013″

COUNSEL SUBMISSIONS:

The Appellant’s counsel contended that the appeal aims to overturn a judgment awarding only N20,000,000, emphasizing that an admission obviates the need for further proof. While citing relevant authorities and asserting that the Respondents implicitly admitted liability through their actions and responses to letters of demand, they argued that the claim, rooted in a Deed of Legal Mortgage (Exhibit 21), is supported by the bank’s inherent power to charge interest. The Appellant’s exhibits purportedly provided unequivocal answers to defense issues. The Court was urged to set aside the judgment of the trial Court and to hold that the Appellant is entitled to the sum claimed in its Writ of Summons.

In response, the Respondents’ counsel argued that there was no admission to the total claimed amount.

They contested the reliance on Exhibit 19, asserting the 2nd Respondent’s refusal of amounts exceeding N20,000,000. They criticized Exhibit 31’s entries as unsubstantiated and upheld the trial Court’s decision not to award a sum higher than N20,000,000, deeming it speculative. The Respondents accused the Appellant of inflating the account under the guise of Central Bank regulations, emphasizing the lack of evidence on the facility’s growth to N72,038,377.97. While acknowledging the right to charge interest, the quantum, method, and reasonableness were deemed vital for banking business, and the Court was urged to reject the appeal and uphold the trial Court’s judgment.

DECISION/HELD:

On the whole, the appeal was dismissed.

RATIO:

EVIDENCE – ADMISSION/ADMITTED FACT(S): Whether failure to query an amount of debt in a letter written by a bank amounts to admission; factors that must be satisfied before the implied admission can be said to be made

“It is the Appellant’s argument that the Respondents have never denied owing them more than the facility sum of N20,000,000, as they have impliedly agreed to the amount they are claiming for. Indeed, the Appellant has argued that where there is an admission, there will be no need for further proof and then referred to the case of I. O. M. NWOYE & SONS COMPANY LTD v. CO-PERATIVE AND COMMERCE BANK (NIG) PLC (1993) 8 NWLR (PT. 310) 210 PAGE 221 @ PARA H, A-E. I have gone ahead to look up the said case and it was held by the Court of Appeal that where a bank makes a demand for the settlement of debt by letter and the amount of the debt is contained in the letter and the debtor does not query the respective figure written in the letter as the overall debt due but rather writes a letter explaining the reasons for non-payment of the debt, the debtor will be deemed to have impliedly admitted the quoted figure as the amount of the debt due. See also the case of KARIMAT GLOBAL TRADE LINKS LTD & ANOR v. UNITY BANK PLC (2014) LPELR 23986 (CA) (PP. 30–31 PARA. C). In the case of BAGOBIRI v. UNITY BANK PLC (2016) LPELR 41161 (CA) (PP. 22–23 PARA. F), this Court held per Abiru, JCA that:

“The Courts have held that where a bank makes a demand for settlement of a debt by a letter and the amount of the debt is contained in the letter and the debtor does not query the figure written in the letter as the overall debt due but rather writes a letter explaining the reasons for non-payment of the debt, the debtor will be deemed to have impliedly admitted the quoted figure as the amount of debt due. The Appellant here is claiming that it has sent out letters of demand stating the amount of money accrued and owed by the Respondents and that the Respondents have never questioned the said amounts and that it amounts to an implied admission, thus making them liable to pay the amount claimed. I will enumerate the factors that must be satisfied before this implied admission can be said to be made. Firstly, the Appellant must have written letters of demand stating the amount accrued and owed by the Respondents. Secondly, the Respondents must have responded to such a letter or letters, not querying the amount stated therein and lastly, the Respondents must have, instead of querying the amount, offered some form of explanation as to why there is a delay in payment.” Per IDRIS, J.C.A.

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