The Story

Appeal No. CA/L/1196/2016 – Keystone Bank Limited v. Office Devices Limited & Anor. 

The Respondents, Office Devices Ltd. & Mr Boni Obieze, owed the Appellant, Keystone Bank Ltd., the sum of about N18, 600, 000. 00 (Eighteen Million Six Hundred Thousand Naira). While the debt remained unpaid, the Bank erroneously credited the Respondents’ account with the sum of N20,000,000.00 (Twenty Million Naira).

The Respondents, seeing the N20M as some form of miracle, immediately put same into use until they drew the last kobo of it. This happened while the Bank awaited a directive to reverse the credit. All efforts to get the Respondents to return the funds proved abortive. The Respondents offered the Bank equity in their company instead of repaying the money. 

Frustrated, the Bank wrote a petition to the Economic and Financial Crimes Commission (EFCC) and also filed a negative Credit Risks Management System (CRMS) report against the Respondents to the Central Bank of Nigeria (CBN).

The Respondents sued the Bank at the High Court of Lagos State claiming that the contents of the petition to the EFCC and the CRMS report defamed them. Their contention was that they did not divert the funds but rather invested same into business ventures that could bring quick returns.

The trial Court held the Bank liable for the tort of defamation and awarded damages.

Aggrieved, the Bank appealed to the Court of Appeal which held that the trial Court failed to properly evaluate the evidence/or glossed over the same. After a thorough evaluation of the facts, the Court had no difficulty demystifying the Respondents’ intrigues. Hon. Justice Abimbola Osarugue Obaseki-Adejumo, JCA reasoned:

Therefore, it cannot amount to a defamation, especially as it is not in dispute that there was an existing debt to be paid before the erroneous payment of N20,000,000.00 (Twenty Million Naira) and the Respondents, despite notification, drew down the account and proved evasive to rectify the amount converted to his business funds, these funds belong to depositors’ fund and is not free money hence the letter to the EFCC… Therefore, the Respondents converted the N20,000,000.00 (Twenty Million Naira) in [their] account deliberately after being told and [their] consent to reverse the act was refused. This, to my mind, amounts to criminal conversion; an economic crime to be handled by the EFCC.

Throwing more light on the issue, her Ladyship was of the position that the Respondents’ act was reprehensible and further clarified:

There is evidence that he was notified timeously, the officer who committed the error was sacked yet the beneficiary shouts defamation!! Knowing that the law does not allow the bank tamper with money in a customer’s account… The Respondents disregarded all efforts to recover the said N20,000,000.00 (Twenty Million Naira), it is a case of criminal conversion fit only for the EFCC to handle, I am of the view that the conduct of the Respondents is reprehensible and ought to be condemned, it’s a case of using the vehicle of the court to legalize a seemingly case of fraud and conversion being perpetuated by the Respondents against the Bank, which no court in our nation should allow. There is no free money in the banks, all funds are depositors’ funds which would, if dealt with freely or carelessly, affect the economy of the country and these ripple effects lead to the bank’s failure which in turn eventually affects the common man on the street.

The erroneous N20m was a loan and “not a free lunch”

In its wisdom, the Court of Appeal held that the N20M mistakenly credited to the Respondents and which the Respondents utilized must be treated as a loan. Obaseki-Adejumo, JCA explained:

I disagree with the submissions of Respondents’ Counsel at paragraph 5.08 page 23 of the Brief that the erroneous deposit of N20,000,000.00 (Twenty Million Naira) wiped away the credit. It stands clear that after it was utilized it became a facility amounting to an overdraft, whether solicited or unsolicited, it’s not a free lunch, it has been used to the benefit of the Respondents. I, therefore agree that the N20,000,000.00 (Twenty Million Naira) drawn down by the Claimant amounts to an overdraft/facility money owed to the Bank and having utilized same for a profit yielding venture and held on to it till date, must attract interest together with any existing loan and other legal charges due to the Bank. The Respondents would not be allowed to benefit from [their] wrongful acts.

Oftentimes, we have seen bad debtors move to double-cross the banks. Conducts such as the one in the instant case has inspired the CBN to come up with a recent policy (although unpopular) that will ensure that any funds standing to the credit of a debtor in any bank can be applied towards repaying existing loan obligations, using the Bank Verification Number (BVN) of the customer.

Judgments like the one in the instant case restore public confidence in the courts. Sadly, this is an example of a case that ought to be dismissed at the trial Court without much ado. 

Stephen Azubuike
Author: Stephen Azubuike
Stephen is a lawyer with expertise in Commercial Dispute Resolution and Technology Law practice. He is a Partner at Infusion Lawyers. He has successfully argued cases from the High Courts of various jurisdictions to the Appellate Courts on behalf of financial institutions, other corporate bodies and multinationals. He has worked with a number of startup tech companies. He tweets @siazubuike.
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