⦿ CASE SUMMARY OF:
Fortune International Bank Plc v. Pegasus Trading Office (GMBH) (2004) – SC
by PipAr Chima
⦿ COURT:
Supreme Court
⦿ NOTABLE DICTA
* ORAL EVIDENCE CANNOT CONTRADICT DOCUMENTARY EVIDENCE
Having regard to the provisions of section 132(1) of the Evidence Act, oral evidence cannot be admitted to contradict, alter, add to or vary a contract or document unless such evidence falls within any of the matters that may be proved by such oral evidence by virtue of the provisos thereto. The provisos only permit evidence which will not be inconsistent with the terms of the relevant contract or document. – Uwaifo JSC. Fortune v. Pegasus (2004)
* NATURE OF A PROVISO
It should be realised that a proviso of necessity serves to cut down or qualify the general provisions in the body of a section. But it would be contrary to the ordinary operation of a proviso to give it an effect which would cut down those provisions beyond what compliance with the proviso renders necessary. A proviso does not therefore set out to do other than create exceptions or relax limitations or throw light on any ambiguous aspect of an enactment. It certainly does not aim at completely neutralising the general provisions it has created exceptions to. – Uwaifo JSC. Fortune v. Pegasus (2004)
⦿ PARTIES
APPELLANT
Fortune International Bank Plc
v.
RESPONDENT
Pegasus Trading Office (GMBH)
⦿ LEAD JUDGEMENT DELIVERED BY:
Uwaifo, JSC
⦿ APPEARANCES
* FOR THE APPELLANT
* FOR THE RESPONDENT
⦿ CASE HISTORY
The plaintiffs (two German companies) sued the defendants for breach of contract arising from two letters of credit (LCs) opened by the 1st defendant bank at the instance of the 2nd defendant in favour of the plaintiffs for the importation of dairy product known as “Royal Evaporated Milk.” The LCs were confirmed irrevocable up to 35% of their value. This meant that the amount involved was to be paid at sight. As to that, there is no dispute; the 35% cost of the goods was accordingly paid. The difficulty was with the 65% of the LCs which by description was unconfirmed irrevocable. The amount involved was to be paid by the 1st defendant/bank 90 days after presentation of documents to it. That amount was not paid hence the plaintiffs (the sellers of the goods) sued the 1st defendant/bank (the issuing bank) and the 2nd defendant (the buyer) claiming: cost and value of goods supplied – DM540,000; Legal action in Germany – DM11,663; Transportation from Germany to Nigeria and total expenses for seven trips DM25,000.
On 12 October, 1998, the learned trial judge dismissed the action against the 1st defendant/bank but found against the 2nd defendant.
The plaintiffs appealed the judgment. On 16th February, 2001, the Court of Appeal, Abuja Division allowed the appeal, set aside the judgment and entered judgment in favour of the plaintiffs against both defendants jointly and severally for the sum of DM540,000 and costs of N2,000.
The 1st defendant/bank and the plaintiffs have appealed from that judgment to this court: the 1st defendant/bank being the appellant while the plaintiffs are the cross-appellants.
⦿ ISSUE(S) & RESOLUTION
[APPEAL: DISMISSED, with N10,000 against the Appellant]
1. Whether the Court of Appeal was right in setting aside the judgment of the trial Court and holding the Appellant liable to the 1st & 2nd Respondents for Breach of Contract under the two (2) Letters of Credit?
RULING:
i. In the present case oral evidence is inadmissible to neutralise the commitment of the appellant as recorded in exhibit P13. Therefore d.w.l’s evidence to the effect that the commitment was subject to funds to be provided by the defendant is in contradiction of the plain agreement. I think the proper view of the evidence which d.w.1 tried to introduce to explain why the appellant executed exhibit P13 is to discountenance it; or at best regard the appellant’s reliance on the 2nd defendant’s ability to provide financial backing for the post-dated cheques given to the appellant as nothing more than the result of the private arrangement between both of them. That has nothing to do with the appellant’s obligation and liability towards the cross-appellants on exhibit P13. Exhibit P13 binds the appellant. It was a document made by the appellant as an agreement by way of settlement of the dispute that arose between it and the cross-appellants, and the cross-appellants are entitled in law to found their cause of action on it.
ii. In matters of guarantee of this nature, there is sometimes the need to recognise the three parties, namely, the creditor, the principal debtor and the secondary debtor or guarantor. Either of two situations could thus arise. One is that the guarantor may not primarily undertake to discharge the liability but only if the principal debtor failed in his obligation. There is the other situation where a person by his undertaking makes himself the real debtor: see Birkmyr V. Darnell (1704) 1 Salkeld 27; (1704) 91 ER 27. In the first case, the principal debtor has to default before the liability of the guarantor would arise. In the second case, the principal debtor simply drops out so that the guarantor becomes solely liable. Exhibit P13 unequivocally represents this scenario. The tendency is that the law appears to have moved to the centre to make the right of the creditor less conditional. The creditor is now entitled to proceed against the guarantor without or independent of the incident of the default of the principal debtor. This view is expressed in Andrew & Millet, Law of Guarantees, 1 edition, pages 162-163 thus: “The fact that the obligations of the guarantor arise only when the principal has defaulted in his obligations to the creditor does not mean that the creditor has to demand payment from the principal or from the surety, or give notice to the surety, before the creditor can proceed against the surety. Nor does he have to commence proceedings against the principal, whether criminal or civil, unless there is an express term in the contract requiring him to do so.”
[CROSS-APPEAL: ALLOWED]
1. Whether the Court of Appeal was right to dismiss the claims for the transport expenses and the 11.5% per annum interest on the principal sum of DM 540,000 claimed from 1/5/92 up to date of judgment on the outstanding sum of DM 540,000?
RULING:
i. It is clear on the undenied averment in the statement of claim that interest of 11.5% was pleaded and claimed. It would simply have been a matter of course for the court below to accept 11.5% which is the rate admitted on the pleadings. That is what conforms with justice and not a total rejection of interest rate just because the court below found difficulty, when really there was none, with the interest rate in the circumstances. There was never any dispute that the cross-appellants were entitled to interest. This was clearly admitted in the evidence of d.w.1 and stated in exhibit P13. I therefore hold that the cross-appellants are entitled to interest of 11.5% per annum which was admitted upon the rules of pleadings and this is to be calculated on DM540,000 as claimed in paragraph 13 of the further amended statement of claim up to the day judgment ought to have been given to the cross-appellants (as plaintiffs) in the trial court i.e. from May 1, 1992 to 12 October, 1998. They are also entitled to interest of 10% per annum on the total judgment debt until it is settled.
⦿ ENDING NOTE BY LEAD JUSTICE – Per
⦿ REFERENCED (STATUTE)
S. 132 Evidence Act;
⦿ REFERENCED (CASE)
⦿ REFERENCED (OTHERS)
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