Letter Of Demand Is A Condition Precedent To Setting The Law In Motion For Recovery Of Debt

PRACTICE AREA: DEBT RECOVERY

INTRODUCTION

Generally, money borrowed or loaned becomes repayable when the time slated for repayment has fallen due. However, does effluxion of time automatically translate to setting the law in motion for the recovery of the debt? Does the right of action arise immediately after the repayment of debt has fallen due?

GARBA, J.C.A. in this appeal said “… to recover the alleged debt from the Respondent, the law requires and imposes a legal duty on the Appellant to make a formal demand for the payment of the debt by the Respondent which was to activate the right of enforcement of the cause of action, through the judicial processes of a Court of law.”

He went further to say “[T]he letter of demand was to have been written by the Appellant before the legal action by way of the counter claim was filed”

In clarifying the issue the Court of Appeal, per GARBA, J.C.A. explained that although the cause of action will naturally arise when the loan become repayable, same will not be enforceable by way of judicial process of a Court of law unless a letter of demand for the payment of the debt is served on the debtor. In his words “Although the cause of action arose in 1999, the accrual of the right to enforce it by way of judicial process of a Court of law was to have arisen or been activated when and by the letter of demand for the payment of the debt from the Appellant.”

He reinforced this position by saying that “it is the letter of demand from a Bank to its customer for the payment of a debt owed in his account that gives rise to the accrual of the right of action for the purpose the recovery of the debt by means of the judicial process of a Court of law.” And that “until such letter of demand was issued, no right of action would arise and accrue to the bank to enable it commence a legal action in a Court of law for the recovery of the debt in question.”

BRIEF FACTS

The facts of the case as can be gathered from this judgment is that the Appellant herein was the Defendant/Counter Claimant in a suit instituted by the Respondent at the trial Court. The counter claim was for recovery of debt. However, there was no letter of demand for the sum counter claimed.

On the 5th day of June, 2008, the High Court delivered judgment in which inter alia, the Appellant’s counter claim was dismissed on the grounds that it was statute barred and that there was no letter of demand for the sum counter-claimed from the Appellant.

Not satisfied with the dismissal of its counter claim, the Appellant brought this appeal

ISSUE(S) FOR DETERMINATION

Three issues were set out for the determination of this appeal viz:

1. Whether the counter claim filed in 2002 when the cause of action arose in 1999 as evidenced in the writ of summons and Statement of Claim of the Respondent is statute barred.
2. Whether the failure of the Police to charge the Respondent to Court upon the discovery of fraud in the Respondent’s Account by the Appellant foreclosed the Appellant’s counter-claim.
3. Whether the trial Court rightly held that the failure of the Appellant to write a demand letter to the Respondent vitiated the Counter-claim of the Appellant.

HELD

The appeal was dismissed and there was no order as to costs.

RATIO DECIDENDI

• ACTION – ACTION FOR RECOVERY OF DEBT: Condition precedent for the exercise of right of action to recover debt

“From the date of the reconstruction and reconciliation of the Respondent’s account by the Appellant resulting in the preparation and issuance of Exhibit D8, the fact or a combination of the facts, which if proved, would entitle the Appellant to a judicial remedy from a Court of law, was/were complete to give rise to its cause of action against the Respondent in respect of the alleged debit balance or debt shown on Exhibit D8. However, as a condition precedent for the exercise of the right of action in respect of that cause of action to recover the alleged debt from the Respondent, the law requires and imposes a legal duty on the Appellant to make a formal demand for the payment of the debt by the Respondent which was to activate the right of enforcement of the cause of action, through the judicial processes of a Court of law. So even though the cause of action arose in 1999 with Exhibit D8, the activation of the right for it to accrue to the Appellant to enforce the cause of an action depended on a letter of demand for the payment of the debt from the Appellant and refusal or failure by the Respondent to pay. The letter of demand was to have been written by the Appellant before the legal action by way of the counter claim was filed and within the time prescribed by the limitation law of Lagos State. This is because the accrual of the right to enforce the cause of action by use of judicial process of a Court of law was/is not in perpetuity to be exercised at the whims or pleasure of the Appellant. Although the cause of action arose in 1999, the accrual of the right to enforce it by way of judicial process of a Court of law was to have arisen or been activated when and by the letter of demand for the payment of the debt from the Appellant.” Per GARBA, J.C.A. (Pp. 12-14, Paras. D-A)

• ACTION – ACTION FOR RECOVERY OF DEBT: When is a cause of action deemed to accrue in an action for recovery of debt

“In the case of Kolo v. F.B.N. (2002) LPELR-7106 (CA) @ 21, (2003) 3 NWLR (Pt. 806) 216, it was held that:- “It is trite law that in an action for the recovery of a debt the cause of action accrues upon demand for the payment of the debt. lf no demand is made, a cause of action does not arise and no action can be commenced. See Ishola v. S.G. Bank (1997) 2 SCNJ, 1 @ 19, also reported in (1997) 2 NWLR (Pt. 488) 405 @ 422. In the case of Ishola (supra), the Supreme Court held (c) that it is an implied term of the relationship between a banker and his customer that there should be no right of action until there has been a demand or notice given. See also Angyu v. Malami (1992) 9 NWLR (Pt. 264) 242 @ 252.” In the premises of the law as stated in the above authorities, it is the letter of demand from a Bank to its customer for the payment of a debt owed in his account that gives rise to the accrual of the right of action for the purpose the recovery of the debt by means of the judicial process of a Court of law. As stated in the authorities, until such letter of demand was issued, no right of action would arise and accrue to the bank to enable it commence a legal action in a Court of law for the recovery of the debt in question. As a result, since the Appellant did not write and issue a letter of demand to the Respondent for the recovery of the debt allegedly owed by her as per Exhibit ‘D8’, which debt was also claimed in the counter-claim, the right of action in respect of the said debt did not accrue at the time the Appellant filed the counter-claim for the debt. It may be recalled that the law is that for the purpose of the application of a limitation law, time would start to run from the date/time a cause and right of action arises and accrues to a party. Sanda v. Kukawa L.G. (supra); Amusan v. Obideyi (2005) 6 SC (Pt. 1) 147, (2005) 14 NWLR (Pt. 945) 322; Ogunko v. Shelle (2004) 6 NWLR (Pt. 868) 17; Odubeko v. Fowler (1993) 7 NWLR (Pt. 308) 637; Sosan v. Ademuyiwa (1986) 3 NWLR (Pt. 27) 241; W.A.P.C. Plc v. Adeyeri (2003) 12 NWLR (Pt. 835) 517. In the Appellant’s case, because the debt did not arise from a usual or normal banker and customer relationship service of the grant of loan, overdraft or other credit facilities by the Appellant to its customer, but arose out of alleged fraud which was discovered by the Appellant in 1999, but disputed by the Respondent, it had the duty to have formally demanded for the payment of the disputed debt from the Respondent within the time prescribed by the limitation law if it intended to use the judicial processes of a Court to recover the debt. The duty of the Appellant to comply with the provisions of the limitation law in making the demand for the payment of the debt allegedly owed by the Respondent was not left at its whims and pleasure since it is a Judicial condition precedent for the exercise of the right to claim the payment by use of the judicial process of a Court of law. Exhibit ‘D8’ the statement of the Respondent’s account after the reconstruction and reconciliation by the Appellant showing the indebtedness of the Respondent to the Appellant which was disputed, did not translate or constitute a demand, as required by the law, for the repayment or payment of the debt indicated thereon. If the Respondent had acknowledged the said debt when she received Exhibit ‘D8’, then the acknowledgement would have activated and given rise to the right of the Appellant to claim payment by the Respondent without the need to have written a formal demand by the Appellant for her to do so. A-G Adamawa State v. A-G Federation (2014) LPELR-2322 (SC); Okonta v. Egbuna (2013) LPELR-21253 (CA). However, since the entries in Exhibit ‘D8’, were disputed by the Respondent, for a valid and competent legal action to be initiated and maintained by the Appellant before a Court of law for the recovery of the debt indicated on the Exhibit, a formal demand for the payment of the debt from the Appellant to the Respondent had to be made within the period of time stipulated by the limitation law of Lagos State for actions to recover such debts between the Appellant and its customer; the Respondent. Limitation Statutes or Laws being substantive and not merely procedural and technical have to be complied with in the action by the Appellant to recover the alleged debt from the Respondent. Cross River University of Tech. (CRUTECH) v. Obeten (2011) LPELR-4007 (CA).

In the case of Hung v. E.C. Invest. Co. Nig. Ltd (2016) LPELR-42125 (CA) it was held, that:- “In a claim for recovery of a debt, the cause of action accrues when a demand is made and the debtor refuses to pay.” The cases of Victor v. UBA Plc (2007) LPELR-90413 (CA) and Okonta v. Egbuna (2013) LPELR-21253 (CA) were referred to for the position. See also Mersk Nig. Ltd. v. Uma Invest. Co. Ltd. (2013) LPELR-21247 (CA), Onokomma v. Union Bank of Nigeria, Plc (2017) LPELR-42748 (CA); Omosowan v. Chiedozie (1998) 9 NWLR (Pt. 566) 477.”Per GARBA, J.C.A. (Pp. 17-22, Paras. E-A)

• ACTION – ACTION FOR RECOVERY OF DEBT: Effect of failure to make a formal demand for a debt within the time stipulated by the limitation law

“…In the above premises, the High Court was right that since the Appellant did not formally demand for the payment of the alleged debt owed by the Respondent and refusal or failure to pay back the  debt, it was premature for the Appellant to have made a counter-claim for the recovery of the debt and the failure to make the formal demand within the time limited by Section 8(1) of the Limitation Law of Lagos State from the date Exhibit ‘D8’ was prepared, the right to seek to recover the said debt by way of a legal action was lost by the effluxion of time, as it was rendered stature barred. In the final result, the High Court was right that the Appellant’s counter-claim was statute barred in the absence of a formal demand to recover the debt therein by it to the Respondent within the time prescribed in Section 8(1) of the above named limitation law.” Per GARBA, J.C.A. (Pp. 23-24, Paras. BA)

• ACTION – ACTION FOR RECOVERY OF DEBT: Effect of failure to make a formal demand for a debt within the time stipulated by the limitation law

“Having calmly looked at the counter claim of the Appellant, which the Court below rightly in my view found to be a simple action for the recovery of debt and which cause of action can arise in law only upon a demand for payment by the creditor and a refusal by the debtor to pay, I find that the counter claim of Appellant at the time it was filed against the Respondent suffered a ‘still birth’ and had become stale and thus incapable of any enforcement by an action in a Court of law. See Hung v. E.C. Investment Co. Nig. Ltd. (2016) LPELR-42125 (CA). See also Onokomma v. Union Bank of Nigeria Plc (2017) LPELR-42748 (CA).” Per GEORGEWILL, J.C.A. (P. 28, Paras. B-E)

OTHER JUDGMENTS FROM THE COURT

DASUKI v. FRN & ORS (2018) LPELR-43897(SC)

• APPEAL – UNAPPEALED FINDING(S)/DECISION(S): Effect of unappealed finding(s)/decision(s) of court

“There is a settled presumption that a specific finding of fact neither challenged nor rebutted is correct: REGISTERED TRUSTEES, APOSTOLIC FAITH MISSION v. JAMES (1987) 3 NWLR (Pt.6) 566; BAKARE v. THE STATE (1987); NWLR (PT.52) 579. This Court in DARIYE v. FRN (2015) 61 NSCQR 1457 at 1496 – 1497, re-stating its earlier stance in ONIBUDO v. AKIBU (1982) 2 SC 60 at 63, held that the appellant who does not appeal a specific finding of fact is deemed to have accepted and conceded it. Facts not disputed are always taken as established.”Per EKO, J.S.C. (P. 12, Paras. A-D)

• APPEAL – INTERFERENCE WITH CONCURRENT FINDING(S) OF FACT(S): Instances where the Supreme Court will interfere with concurrent findings of fact(s) by Lower Courts

“The appellant has not been able to show that the concurrent findings of fact by the trial Court and the Court of Appeal that the trial Court made no order that the appellant shall not subsequent to the order made on 18th December, 2015, admitting him to bail, be arrested or further arrested, investigated and prosecuted for any other offence, is perverse. The concurrent findings, also, that the order made on 18th December, 2015 admitting the appellant to bail was complied with on 29th December, 2015, and not flouted, upon the appellant fulfilling the bail terms, are similarly not perverse. This Court, as a policy, remains hesitant to interfere with concurrent findings of fact made by the trial and intermediate Courts. It only intervenes and interferes with such concurrent findings of fact if and only when they are shown to be perverse: ABEGUNDE v. ONDO STATE HOUSE OF ASSEMBLY (2015) 61 NSCQR 1857; ATOLAGBE v. SHORUN (1985) LPELR – 592 (SC).”Per EKO, J.S.C. (Pp. 17-18, Paras. C-B)

• CONSTITUTIONAL LAW – RIGHT TO FAIR HEARING: Essential elements of fair hearing

“It is clear from GARBA V. UNIVERSITY OF MAIDUGURI (1986) 2 SC 128; (1986) 1 NWLR (Pt.18) 550, that the right entrenched in Section 36(1) of the Constitution has three major components; namely:

a. Fair hearing or trial (which includes audi alteram partem – i.e hear the other party and the right agqinst bias-nemo judex in causa sua),

b. the determination of the civil rights or obligation within a reasonable time; and

c. by a Court or tribunal established by law.”Per EKO, J.S.C. (P. 19, Paras. A-C)

• EVIDENCE – BURDEN OF PROOF/ONUS OF PROOF: Whether he who asserts must prove

“The law is settled: he who asserts must prove. That is the essence of Section 131(1) of the Evidence Act, 2011. The burden of proof in every suit or proceeding lies on the party who will fail if no evidence at all were given on either side: Section 132 of the Evidence Act.”Per EKO, J.S.C. (P. 13, Paras. D-F)

• JUDGMENT AND ORDER – CONTENT OF JUDGMENT: Whether the content of a judgment can be altered or varied

“I agree with the 1st respondent, on the authority of KALU v. FRN (2014) 1 NWLR (Pt.1389) 379 at 544 and ONWUKA v. EDIALA (1989) 1 NWLR (Pt.96) 182, that a party is not permitted to read into an order of Court what the order does not, in fact, contain.”Per EKO, J.S.C. (Pp. 12-13, Paras. F-A)

FORBY ENGR. CO. LTD & ANOR v. AMCON (2018) LPELR-43861(CA)

• ACTION – CLAIM(S)/RELIEF(S): Whether a party can abandon or withdraw any of the reliefs claimed in the originating process by oral application

“The Appellants’ Counsel has not referred to any rule of the trial Court, (because none exists) which says that a party cannot at any stage of the proceedings of a case, abandon or withdraw any of the reliefs sought on the originating processes, orally, irrespective of the nature of such reliefs; declaratory or executory. No judicial authority was also cited in support of the argument that a party has to file a formal application to enable him withdraw or abandon any reliefs; of whatever nature, he claims in his action, before the Court would allow him to do so. It is absurd to say that a party cannot at any time in the course of the proceedings of his case, orally notify or inform the Court of his withdrawal or abandonment of any of the reliefs he sought from the Court against the Defendant(s) in the originating processes merely because the reliefs are declaratory. As the owner or one who seeks or prays for the grant of the reliefs sought in an action, a party requires no permission or leave of Court to withdraw or abandon any of the reliefs and the Court cannot stop the party from so doing, but for record purposes, has the duty to duly notify or inform the Court of the withdrawal or abandonment to enable it know the extant reliefs sought in the action so as to avoid granting reliefs not sought, for being abandoned or withdrawn. The oral notification of the withdrawal of some of reliefs sought by the Respondent in the writ and statement of claim did not, under any Rule of the trial Court or principle of law, call for or warrant a formal amendment of the said writ and statement of claim before it could be granted and taking effect.”Per GARBA, J.C.A. (Pp. 56-57, Paras. A-D)

• COURT – DISCRETION OF COURT: How a court should exercise its discretion in granting reliefs of parties

“By a way of a general restatement of the law, an application for enlargement or extension of

time to take a procedural step in a case, by a party who defaulted in compliance with the

time prescribed by the Rules of a Court, is one which calls for the exercise of discretion of the Court concerned. It is a known requirement of the principles of law that any or all judicial discretion must be exercised judicially and judiciously by a Court of law, at all times. Oladele v. Aromolaran II (1991) 3 NWLR (181); Ogolo v. Ogolo (2006) ALL FWLR (313) 1; Sanni v. Agara (2010) 2 NWLR (1978) 371; Ebe v. COP (2008) 4 MJSC, 201. To act judicially, simply means to consider the interests of both parties to an application and weigh them in order to arrive at a fair or just decision. To act judiciously, is to exhibit or show wisdom, good sense and sound reasoning in the assessment of the parties’ interests and arriving at a decision on the peculiar facts and in the circumstances of a case. ACB Ltd. v. Nnamani (1991) 4 NWLR (186) 486; Eronini v. Iheuko (1989) 2 NWLR (101) 46; IGP v. Onagoruwa (1991) 5 NWLR (193) 593.” Per GARBA, J.C.A. (Pp. 32-33, Paras. C-B)

• EVIDENCE – ADDRESS OF COUNSEL: Whether address/argument of counsel can take the place of evidence

“Apart from the arguments of Counsel under the issue, which in law is no evidence on which a decision could be predicated by a Court of law, see UBA Plc v. Akparabong Commercial Bank Limited (2006) ALL FWLR (320) 1099, Chabasaya v. Anuasi (2010) 10 NWLR (1201) 163, there is no evidence by way of a counter affidavit to challenge, let alone controvert, the affidavit of service by the bailiff of the trial in order to rebut the presumption of proper service on the Appellants. Per GARBA, J.C.A. (P. 25, Paras. C-F)

• JUDGMENT AND ORDER – FINAL/INTERLOCUTORY JUDGMENT: Test for determining whether a judgment/order is final or interlocutory

“The Ruling by the trial Court on the objection to its jurisdiction as a matter of procedural law by the Appellants dismissing the objection and assuming jurisdiction, was an interlocutory decision by that Court. That decision would have been a final decision if the trial Court had declined jurisdiction as it would have ended the matter completely and finally before it and no issue would have remained between the parties in the case for it to decide. However, by assuming jurisdiction, the decision became interlocutory for the Court to continue with the determination of the claims made in the case. See Akinsanya v. UBA Limited (1986) 4 NWLR (35) 273, Gomez v. C & S.S. (2009) 10 NWLR (1149) 223 @ 248.”Per GARBA, J.C.A. (Pp. 15-16, Paras. E-B )

GLENCORE ENERGY UK LTD v. FRN (2018) LPELR-43860(CA)

COURT – DUTY OF COURT: Duty of an appellate Court to consider and make pronouncements on all issues formulated by parties “The resolution the two issues would ordinarily have disposed of the appeal completely thereby subsuming the issue 3 raised by the Appellant but since the decision of the Court on the issues is subject to a further appeal at which it may be faulted, it would be prudent to consider and make a pronouncement on the issue 3. John v. State (2011) 18 NWLR (1278) 353, Akpan v. FRN (2012) 1 NWLR (1281) 403. Edet v. State (2008) 14 NWLR (1106) 52.”Per GARBA, J.C.A. (P. 27, Paras. C-E)

• EVIDENCE – PROOF BEYOND REASONABLE DOUBT: The requirement of the law as regard proof beyond reasonable doubt

“Proof beyond reasonable doubt required by the law and as defined in the cases cited earlier, is not attained by complete absence of any evidence to link an accused person with the commission of the offences he was alleged or accused to have committed on a charge sheet, but by credible, admissible, cogent and sufficient evidence which even after the crucible scrutiny of cross examination, leaves only a remote possibility in favour of the accused person which can be dismissed with sentence:- “of course it is possible but not in the least probable.”Per GARBA, J.C.A. (P. 33, Paras. C-E)

Culled From LawPavilion