A domiciliary account (“Dorm Account”) is a type of bank account (usually current account) which is used to transact business in foreign currencies only, as the account is not funded with local currency. In Nigeria for instance, opening a Dorm Account allows you to receive and transfer monies in currencies other than Naira, such as Pounds Sterling, Dollars, Euros, etc.

The process of opening a Dorm Account involves the filling of the relevant application forms and supplying necessary documents as may be required by the bank. Some banks in Nigeria like Guaranty Trust Bank Plc (GTBANK) may proceed to open a Dorm Account for you at the same time a current account is being opened, based on your application.

The application form usually contains a detailed Terms and Conditions which are scarcely read and understood by many. Afterall, who wants to bother with “long stories” when all you need is an account to be opened. Thus, just like software agreements, you immediately scroll to the end of it and scribble your name and signatures, accepting the entire terms. The Terms and Conditions are usually in the nature of standard form contracts – drafted and presented by the bank on the basis of “take it or leave it” – There is absolutely no room for customer input.

Subsequent to the opening of the Dorm Account, the procedure for withdrawing money from the account is the same as in the case of a normal account. This is by filling the foreign currencies withdrawal slip provided by the bank. The expectation is that once the withdrawal slip is filled and the account is well funded, the bank is obligated to honour the request for withdrawal by paying the customer the amount stated in the slip in foreign currency.

The Problem

Reasonably foreseeable problem is that a particular branch of the bank may not have foreign currency available in the branch to pay a particular customer at a given time. Then what happens? A bank with decent customer relationship may immediately notify the customer and refer the customer to the nearest branch(es) that has foreign currency to pay.

That said, banks are aware of the possibility of not having the foreign currency to pay. As a result, they include some clauses in the account opening application form to the effect that payment in foreign currency from a Dorm Account is subject to the availability of foreign currency in the bank.

Unfortunately, to achieve the above aim, banks like GTBANK, had an inelegantly drafted clause in the account opening application form which worked against them in an interesting case we shall discuss below.

G.T.B. v. Ogboji

In G.T.B. v. Ogboji [2019] 13 NWLR (Pt. 1688) 67, a bank customer (“the Respondent”) approached GTBANK (“the Appellant”) in company of some of his clients to withdraw $3,500 from his Dorm Account. He filled the required withdrawal slip for this purpose. However, the withdrawal slip was dishonoured and returned with the words, “Inflow” inscribed on it and he was not paid. The Respondent claimed that this caused him serious embarrassment, humiliation, trauma and colossal disgrace.

Naturally, as the situation was not effectively managed through a proactive dispute resolution mechanism, the parties preferred to flex muscles in Court. The Respondent filed an action against the Appellant for breach of contract, claiming damages and other claims. The trial Court granted his claims. Aggrieved, the Appellant appealed to the Court of Appeal which dismissed the appeal.

The contention of GTBANK was hinged on some clauses in the account opening form which the Court was called upon to interpret. That is Clauses 1 and 23D which provides thus:

Clause 1:

“Cash withdrawals from my/our account shall be subject to availability.”

Clause 23D:

“That all funds standing to my/our credit are payable on demand only on such local currency as may be in circulation.”

The argument of GTBANK was that Clause 23D when read together with Clause 1 above meant that the customer can only receive cash in Dollars when same is available in the Bank. But if the customer wants to access the funds standing in his credit in that account, he can receive same in local currency.

The Court of Appeal disagreed. Firstly, the Court upheld the finding of the trial Court that Clause 23D actually applies to account opened in local currency and that Clause 1 (and clauses 2-4) were the only clauses applicable to the Dorm Account in question. Secondly, the Court was inclined to interpret the said Clause 1 strictly against the maker in line with established principles of legal interpretation. Yahaya, JCA, in delivering the opinion of the Court of Appeal, acknowledged that Clause 1 “is nebulous and open to a number of interpretations.” His Lordship explained:

“…What comes to my mind is that an account holder can only withdraw funds when said funds are to his credit in his bank account. The Clause does not say cash withdrawals from my/our account shall be subject to availability of Dollars at the bank. This would have brought the argument of the Appellant home; but that is not the case. This ambiguity shall however not be considered in vacuo…”

That is not the end of the matter. His Lordship gave indications that it is even generally unacceptable for a bank to say payment cannot be made in Dollars from a Dollar Account at any time. Hear him:

“Why should a bank customer be unable to withdraw his money on demand? If banks argue that they cannot make payments on demand, then why do they accept payments of deposits from customers in cash or by whatever means? If withdrawals are subject to availability of Dollars, why then do the banks accept only Dollars as payments in Dollars only into the Dollar account? Whatever is good for the goose is good for the gander.”

Communication problem

The Appellant also supplied an argument that the inscription, “Inflow”, on the withdrawal slip does not particularly indicate unavailability of Dollars as the Bank paid some other customers earlier in the day when the Respondent visited. According to the Bank, “Inflow” meant that the said funds was paid into the Respondent’s account by online transfer and not by cash deposit of Dollar bills.

The Court did not find the explanation satisfactory as it did not answer the question as to why the Bank failed to pay the Respondent in Dollars from his Dollar account which was well credited. Yahaya, JCA concluded:

“The most important thing is that the account of the account holder is credited and that he has the said credit in his name, in the account at the bank. The failure to honour the withdrawal form of the Respondent constituted a breach of contract.”

The point must be made here that banks should learn to communicate better with their customers. Making an inscription of “Inflow” and returning the withdrawal form without taking actual step to explain to the customer the real situation of things is not the best. Bank staff, especially cashiers, must be mindful that there are legal consequences for any careless or casual treatment of bank transactions.

Withdrawal Form and Cheque rank the same

The Bank also made an interesting submission against the judgment of the trial Court to the effect that what the Respondent used in accessing the funds in his Dorm Account was a withdrawal form and not a cheque. Therefore, the cases relied upon by the trial Court all dealt with dishonouring of cheques and not Domiciliary Account Withdrawal Form being used for self-withdrawal.

Yahaya, JCA dismissed the contention as if with a wave of the hand when his Lordship stated:

“As such, it is my opinion that any instrument for payment by whatever nomenclature referred to, which serves the same purpose a cheque does, will fall into the same category as cheques and be treated as such by our courts, and will be covered by the nature and definition of cheques as contemplated by the court in Abeke v. State (supra). This means that all relevant authorities relating to dishonoured cheques will apply here.”

The point being made by the Court must be understood in the context of the present case. Cheques and withdrawal forms clearly have their differences. For instance, you cannot issue a withdrawal form to a third party in the same manner a cheque is issued. Nevertheless, it is normal to draw principles from related concepts and apply them properly (as in this case) to reach a valid conclusion.

The basis for relying on the distinction by the Bank was to cement the argument that no damage was done to the Respondent’s credit and reputation so as to entitle him to damages on that head, since no cheque was issued to any third party that was dishonoured. Fine submission. However, Yahaya, JCA still found reason to disagree. His Lordship was of the opinion that it is even worse to deny a customer payment having personally approached the bank. The Court was persuaded by the fact that the Respondent had visited the Bank in company of his clients in whose presence the withdrawal form was dishonoured, and payment denied. The Court held that no proof of damage is required in such cases as the bank customer stands the risk of losing clients who may not be willing to do business with him/her.

Commendably, although the Court upheld the award of damages, it reduced same from N1.5 Million to N750,000.