By Oliver Omoredia
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INTRODUCTION
Generally, the enforcement of judgement by garnishee proceedings in Nigeria is often tedious, leaving judgement creditors “fishing” for garnishees having funds to satisfy the judgement debt – a cumbersome process costly for stakeholders, and sometimes inefficient. However, with the innovation of the BVN by the Central Bank of Nigeria in 2014, the cloud of uncertainty around banking information of any individual or entity should well and truly have become a thing of the past. Unfortunately, whilst state agencies and criminal prosecutorial authorities have taken advantage of the opportunity presented by the BVN system in tracking and tracing accounts, the system has proven difficult for individuals with civil claims to explore – leaving a huge gap requiring urgent reform.
This write-up makes a case for the use of BVN, especially through the Nigerian Inter Bank Settlement System (NIBSS), to simplify judgement creditors’ journey in garnishee proceedings and argues for judicial and legislative reforms in the process of discovery of accounts of judgement debtors under the garnishee process.
GARNISHEE PROCEEDINGS GENERALLY
Upon obtaining a favorable monetary judgement in Nigeria, one of the most potent legal vehicles for enforcement of the judgment is via garnishee proceedings – a process in which the money judgement is settled by directly collecting the fund from a third party who holds monies of the judgement debtor (usually a Bank). The concept of garnishee is premised on the principle of law that a banker-customer relationship makes the bank a debtor to its customer in respect of the funds held by the bank on the customer’s behalf. In The Bankers’ Liability, Revised Edition, 2014, Nkiru-Nzegwu Danjuma wrote that: “As regards money deposited by the customer in an account with the banker, the nature of the banker and customer relationship is that of contract of debtor and creditor”. See. Foley vs. Hill (1843-60) All E.R. Rep. 16 and MTN v. CHINEDU (2018) LPELR-44621(CA).
Typically, garnishee proceedings involve applying and obtaining a court order directing the third party to pay the money it holds on to behalf of the judgment debtor to the judgment creditor and the primary legal framework for garnishee proceedings in Nigeria is the Sheriff and Civil Process Act 2004 (SCPA), particularly its Sections 83 to 91 and the accompanying Rules of Court.
Applications in garnishee proceedings are made to the Court by the judgment creditor and the orders of the Court usually come in two phases. The first is a garnishee order nisi. “Nisi” is a Norman-French word, and it means “Unless”. It is therefore an order made that the sum covered by the application be paid into Court or to the judgment creditor within a stated time unless there is some sufficient reason why the party on whom the order is directed should not be made to pay the amount to the judgement creditor. If no sufficient reason appears, the garnishee order is then made “absolute” against the garnishee third party and the judgement debt becomes it’s own debt to pay – and that ends the matter. The Court thereafter becomes functus officio as far as that matter is concerned. See UBN v. BONEY MARCUS IND. LTD & ORS (2005) LPELR-3394(SC) and Choice Investments Ltd. v. Jeromnimon (Midland Bank Ltd. Garnishee) (1981) 1 All ER 225 at 328.
The statement of procedure for commencing garnishee proceedings is define under Section 83(1) of the SCPA, and is as follows:
- The judgement creditor will by ex-parte application apply to the Court that:
- The judgement creditor has a judgement for recovery or payment of money against the judgement debtor which is still unsatisfied (wholly or partly);
- A third party (the garnishee) is indebted to the judgement debtor and is within the state.
- The debts owed to the judgement debtor by the third-party (Garnishee) should be attached to satisfy the judgment.
While Section 83(1) of the SCPA proceeds on the presumption that the judgement creditor knows the exact garnishee having fund of the judgement debtor, the prevailing practice in garnishee proceedings in Nigeria is for the judgment creditor to proceed against banks (as garnishees) without verifying the indebtedness of the bank to the judgment debtor. In doing this, the judgement creditor would typically include in its Affidavit that “to the best of his knowledge the garnishee is indebted to the judgement debtor” then proceed to list all the banks as garnishees.
On one hand, the above procedure is clearly fishing for garnishees who may actually hold accounts of the judgement debtor, but it is plausible to argue that there could be reasonable belief that the judgement debtor has an account in at least one of the listed banks. This argument could be supported by the contention that without a court order, banks are bound by a duty of confidentiality to their customers, and disclosing information without proper authorization could violate that duty. The only way to therefore get any order of court to compel disclosure by the bank would be the inclusion of the omnibus presumption that the banks have funds of the judgement debtor, and therefore shift the burden to disprove same assertions to the banks – an inelegant and costly approach.
CHALLENGES OF THE CURRENT GARNISHEE PROCEDURE
Despite the utility of the current practice of garnishee proceedings in Nigeria, it faces several significant challenges, posing as obstacles to effective enforcement. Some of these challenges are:
- Banks’ confidentiality and the risks of collusion
As already noted above, banks in Nigeria have a duty of confidentiality to their customers, which often complicates garnishee proceedings. It is indeed a cumbersome process to obtain information on a judgment debtor from his Bank without a court order. Where a bank volunteers such information without a court order, it is at risk of breaching confidentiality and could incur damages. See. First Bank of Nigeria Plc v. T.S.A. Industries Ltd & Anor (2016) LPELR-40951(CA). On another hand, banks also sometimes get involved in shielding the accounts of the judgement debtor from being garnisheed either by deliberate collusion or mere disregard of court orders served upon them.
- Cost, Delays and Procedural Bottlenecks
The current practice of garnishee proceedings in Nigeria is often lengthy and expensive for all stakeholders. To the judgement creditor who has to file and serve processes on several banks, to the banks that have to expend millions to engage legal practitioners across the nation to appear in matters in which they have to file Affidavits despite not having accounts of the judgement debtor, and on the Court that has to engage in lengthy hearings of garnishee proceedings involving several banks at every garnishee hearing. As a result, there tends to be the common issue of the delay in the garnishee hearing process and in obtaining enforcement orders.
- Abuse of Garnishee Proceedings
Judgment creditors often abuse garnishee proceedings by naming multiple banks without any form of investigation to discover banks used by the judgement debtor resulting in unnecessary costs and disruptions for banking institutions. Banks on the other hand incur significant costs when named in garnishee proceedings, especially when they are not the correct party to hold the debtor’s funds. This challenge was underscored in Guaranty Trust Bank Plc v. Olabode (2017) LPELR-42395(CA), where the bank incurred costs due to garnishee orders despite not holding any accounts for the judgment debtor.
Summarizing the worrying trend of the challenges above, the Court of Appeal in FBN v. AFRIMPEX ENTERPRISES LTD & ANOR (2021) LPELR-56178(CA) Per HABEEB ADEWALE OLUMUYIWA ABIRU, JCA held as follows:
“Before concluding this judgment, this Court considers it pertinent to comment on a growing trend in garnishee proceedings. It is common these days to see judgment creditors commencing garnishee proceedings against all the banks in the country as Garnishees and then making generic depositions in their affidavits that the judgment debtor maintains accounts with all the banks, without giving any specifics on the accounts. The banks with which such a judgment debtor has no account are compelled by the Garnishee Order Nisi to incur cost to file affidavit to show cause and some to engage Counsel to appear for them in Court on the return date of the garnishee proceedings. The banks are then perfunctorily discharged from the proceedings without the judgment creditor being ordered to reimburse the unnecessary costs they were put. This has turned garnishee proceedings into fishing expeditions; a ‘try your luck’ type of proceedings? …before commencing garnishee proceedings, a judgment creditor must have conducted a diligent search to ascertain the third parties in possession of funds belonging to the judgment debtor. Garnishee proceedings should not be commenced against a third party that has not been ascertained to be in possession of money belonging to the judgment debtor, and where this is done, the judgment creditor should be damnified in punitive costs in favour of the third party. It is time that the trial Courts take meaningful steps to curb this abuse of the garnishee proceedings procedure.”
The above suggestion of his Lordship that Judgement creditors should be made to pay punitive costs if they wrongly involve garnishees having no funds of the judgement debtor is, most respectfully considered to be an extreme suggestion, considering that judgement creditors are literally blinded by the confidentiality obligation of the banks and have no facilities to “diligently conduct search.” So, at least under our current practice atmosphere, the recommendation in STERLING BANK PLC v. INC. TRUSTEES OF EL-SHADDAI COVENANT MINISTRIES & ANOR (2022) LPELR-58888(CA) portends to be a fairer approach as the appellate Court held:
“I agree that, in proper compliance with the provisions of Section 83(1), depositions of this nature should have more specific details, and not simply be a general belief that may, if interrogated closely, be largely speculative. The judgment creditor ought to provide more comprehensive details that ground his belief that the garnishee is in custody of assets or funds of the judgment debtor. However, it must be pointed out that, it is not for the judgment creditor at this stage to state with any precision or certainty the account number or numbers, or the amount of funds due to the judgment debtor that are in the hands or custody of the garnishee. That would be imputing an onerous burden on the judgment creditor, which may entail speculations in its discharge. This is because the precise assets or funds due or accruing from a third person, such as a garnishee, to the judgment debtor can only be accurately stated as is known to both of them. It is not knowledge that can be open to and disclosed, with certainty, by a stranger to that relationship, such as a judgment creditor, who is not privy to the information.”
If the decisions above are anything to go by, they reveal that the Nigerian Courts realize the challenges of the current system of joining multiple banks as garnishees and intend to create an obligation on judgement creditors to first diligently conduct search, but the latter decision admits the near impossibility of the execution of that duty in the absence of access to information – a dilemma which discovery via BVN could address.
SIDE-STEPPING THE CHALLENGES: BVN AS AN OPTION FOR DISCOVERY OF ACCOUNTS.
The Bank Verification Number (BVN) is a biometric identification system introduced by the Central Bank of Nigeria (CBN) in 2014 to curb financial fraud and enhance banking system security. It requires bank customers to register unique biometric data, resulting in a unique identification number that links all their bank accounts. With BVN, banks can now more easily verify the identity of their customers, reducing the risk of identity fraud and providing a unified view of a customer’s banking activity across multiple institutions.
MANY CHALLENGES TO BE SOLVED WITH BVN
As already stated before, banks in Nigeria are bound by a duty of confidentiality to their customers, often leading to reluctance in disclosing customer information without explicit court orders. The BVN system can bridge this gap by allowing banks provide accurate information without breaching confidentiality. For instance, a court may direct a bank to search for accounts using a debtor’s BVN, ensuring that disclosure is based on only correct and verified information in relation only to that BVN. Therefore, delays in garnishee proceedings which often occur due to uncertainty about the debtor’s accounts can be streamlined, by enabling quicker identification of relevant bank accounts.
However, the above utility of BVN highlighted above can only effectively enable searches where BVN of the judgement debtor is known to the judgement creditor in the first place. The Nigerian courts have already made suggestions around the use of the BVN innovation to simplify searches but admit that it is only when BVN is known that it becomes a useful tool for the judgement creditor in garnishee proceedings. For instance, the Court noted in GTB v. TAFIDA & ANOR (2021) LPELR-56131(CA) that:
“Since every account holder has or is expected to have a BVN, it stands to reason that it is if, and only if, the BVN of a particular customer is made available to the bank that his identity can be traced with the aid of that BVN. But where no BVN is supplied as in the instant case, and all the customers of the bank with similar names equally have BVNs, then cadit quaestio! How can BVN settle the issue of identity of any of the customers with similar names?”
Thus, the Court of Appeal whilst acknowledging that presence of BVN clarifies identity of a judgement debtor raised another concern: how does the judgement creditor discover the BVN of a judgement debtor in other to aid finding his banking information and the appropriate bank to garnishee?
OPTIONS FOR DISCOVERING THE BVN OF THE JUDGEMENT DEBTOR IN GARNISHEE PROCEEDINGS.
Despite the compelling case to be made of the utility of BVN in garnishee proceedings, a significant challenge is posed to individuals seeking to obtain a bank customers’ BVN for garnishee purposes. The current 2021 CBN REGULATORY FRAMEWORK FOR BANK VERIFICATION NUMBER (BVN) OPERATIONS AND WATCH-LIST FOR THE NIGERIAN BANKING INDUSTRY provides on the issue of request for BVN information that:
Without prejudice to the extant laws of Nigeria, the following entities***
may be granted BVN information upon presentation of valid Federal High
Court orders:
- Law Enforcement Agencies.
- National Pension Commission.
iii. Pension Fund Administrators; and
- Other entities as may be approved.
***Individuals are not eligible to access BVN information, other than their
own.
By the above framework, individuals cannot access BVN information, other than their own. Thus, it is difficult to reconcile the CBN’s position with the posture of Nigerian Court’s around expecting the judgement creditor to provide the BVN of judgement debtors to enable clear detection of accounts. That is information the judgement creditor cannot access. Furthermore, by the above framework, it is doubtful that any bank would release the BVN of any customer of a Bank to private individuals even with a Court order – as private individuals are clearly excluded from having such access. In other words, private individuals cannot by court order access BVN information that is not their own.
What is however likely under the framework is for a judgement creditor, intending to find the BVN of a judgement debtor, to apply for a court order through a Nigerian law enforcement agency which is an entity that is approved to request for BVN information with an order of court. The immediate issue with this method is apparent – if the judgment debt is treated as debt owed by the judgement debtor, does the use of law enforcement agencies not amount to enforcing collection of debt through law enforcement agencies and therefore against established case laws on the point? See. ADEWOYE v. N.P.F. & ORS (2018) LPELR-50016(CA) and a plethora of other cases.
Therefore, despite the possible utility of BVN to ease enforcement of judgement under the garnishee process, the current CBN framework on BVN largely takes away the use of BVN in such manner.
BVN: USING THE NIGERIA INTER-BANK SETTLEMENT SYSTEM PLC (NIBSS) TO TRACE ACCOUNTS OF JUDGEMENT DEBTORS WITHOUT REQUESTING BVN
Considering the above challenges by the CBN framework on BVN, an arguable way forward now recommended by this Writer is – tracing accounts of judgement debtors through the Nigeria Inter-Bank Settlement System Plc. (NIBSS) without making specific request for the disclosure of the judgement debtor’s BVN.
The Nigeria Inter-Bank Settlement System was incorporated in 1993 and is owned by all licensed banks in Nigeria, including the Central Bank of Nigeria (CBN). It commenced operations in June 1994 with its primary aim being to provide an efficient and secure electronic payment infrastructure to support the Nigerian financial system. Since its inception, NIBSS has played a critical role in modernizing Nigeria’s banking sector, driving the transition from paper-based to electronic transactions. It has put in place modern world-class infrastructures for handling inter-bank payments in order to remove potential bottlenecks associated with inter-bank funds transfer and settlement.
Notably, under the CBN BVN framework NIBSS has the duty of ensuring seamless operations of the BVN system; maintain the BVN database; managing access to the BVN information by the approved users, ensuring recourse to the CBN on any request for BVN information by any party etc.
Hence, in substantial ways, the NIBSS is the most appropriate entity to give any information about accounts linked to any BVN in Nigeria. In this sense, the NIBSS can, upon court order, provide all accounts related to the BVN of any person whose information they have. The advantage of using this route is that the NIBSS does not have custody of the customer’s funds thus its responsibility in proceedings will be limited only to assisting the Court in tracing the account of the judgement debtor – without more. The BVN information of the judgement debtor will not need to be disclosed as only all accounts linked to his BVN will be given. The judgement creditor may then use that information to garnishee only proper banks having accounts of the judgement debtor.
A NEW OPTION WITH NEW CHALLENGES
The mere consideration of the idea of obtaining a court order for disclosure of account information against the NIBSS poses some practical problems, for instance:
- NIBSS has no banker-customer relationship with the judgement debtor. It does not hold the judgement debtor’s funds and can therefore not be garnisheed. However, NIBSS being owned by Nigerian banks and acting as their agent, can be compelled by injunction of court to disclose the information to aid the garnishee process, especially since the NIBSS can give the most accurate information of all accounts linked to a particular BVN. Therefore, its compellation may be a proper pre-garnishee process to give effect to the judgement of a court.
- The likelihood of mistaken identity: Indeed, were persons share similar names and surnames, the NIBSS would have a challenge in determining which person’s BVN should be traced. However, this issue can be addressed by NIBSS requesting further information to enable it to streamline whose BVN information should be traced from its database.
- Corporate legal personality and judgement enforcement: Another major challenge that would be encountered would be seen in the cases were corporate entities are the judgement debtors. Which of the director’s BVN should be traced by NIBSS? Here again, information such as the list of directors held with the Corporate Affairs Commission can be supplied to NIBSS on demand to enable a streamlined search of its database.
- Liability for attachment of wrong BVN: One relevant question would be – what if the NIBSS gives wrong information or the wrong account? Well, this can be easily addressed by having a checklist of necessary simple information that a judgement creditor can provide such as address, phone number, email or photograph of the judgement debtor. This information can be used to streamline the BVN to be searched before disclosing of banks linked thereto.
CONCLUSION: A CALL FOR LEGAL AND JUDICIAL REFORM
The enforcement of judgments in Nigeria is cumbersome, with garnishee proceedings requiring judgment creditors to locate debtor funds across multiple banks. The Bank Verification Number (BVN), introduced by the Central Bank of Nigeria in 2014, could streamline this process by linking all accounts to a unique identifier. However, current legal and procedural barriers prevent individuals from accessing BVN information. Reforms are needed to allow the Nigeria Inter-Bank Settlement System (NIBSS) to trace debtor accounts using BVN without breaching confidentiality, thus simplifying the garnishee process and reducing costs and delays.
At present the above suggestion of the utility of the NIBSS and its access to the BVN database of Nigerians as a way to simplify the garnishee process will be most effective if there is an immediate amendment of the current CBN framework to incorporate access by NIBSS for the purpose of aiding judgement enforcement. In the absence of such amendment however, Nigerian courts may set precedent in making orders directly implementable by the NIBSS for the limited purpose of searching BVN of judgment debtors and disclosing to the court only the banks linked to the BVN without disclosing the BVN information. In this way, the BVN of the judgement debtor is not disclosed but all banks linked to the judgement debtor are known to the court beyond peradventure – thus easing the enforcement process, in the interest of all stake holders. In this way the introduction of the BVN may find true utility in the enforcement process within the Nigerian judicial system.
Oliver Omoredia Esq.,oliveromoredia@gmail.com
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