Appeal Court Overturns $2m Loan Dispute Ruling in Favour of Union Bank

Wale Igbintade

The Court of Appeal, Lagos Division has upheld the appeal filed by Union Bank of Nigeria Plc against the judgement of the Federal High Court sitting in Lagos in connection with a dispute over a $2 million facility granted to Origin Oil and Gas Limited.

The Appellate Court in its unanimous decision allowed the appeal and set aside the judgement of the lower court.

Justice Paul Ahmed Bassi (presided) delivered the lead judgement, while other members of the panel, Justice Ngozika Uwazurunonye Okaisabor, aligned with the decision.

At the lower court, plaintiffs were Origin Oil & Gas Limited and its directors; Abiodun Ponnle and Adetoye Adegbite, Commic Holdings Limited, Miccon Cables and Wire Ltd, Registrar of Titles Federal Ministry of Lands Housing and Urban Development and Registrar of Titles, Lagos.

The respondents had initiated an action against the appellant (Union Bank) vide a writ of summons and statement of claim dated October 26, 2016 disputing the $2 million facility.

Following the appellant’s demand for repayment of the facilities, a dispute arose between the parties bordering on allegations of unlawful and/or excessive Bank charges and also as to some alleged undue debits, charges and interests charged on the 1st respondent’s bank accounts domiciled with the appellant.

The 1st Respondent also raised alleged non-compliance with CBN regulations with respect to already negotiated and agreed interests and charges on loan facilities granted to the 1st Respondent.

At trial, the appellant brought an Application to appoint the Central Bank of Nigeria (CBN) as Referee/Auditor to investigate and audit the account of the 1st respondent in respect of the allegation of unlawful, excessive debits and interest charged on the accounts of the 1st Respondent as well as the alleged non-compliance with CBN regulations with respect to already negotiated and agreed interests and charges on loan facilities and thereafter make a report to the court.

This application was unopposed and consequently granted. However, despite fully participating in the aforementioned CBN audit review, the 1st respondent elected to engage the services of its forensic accountant for a fee to generate its independent audit reports.

This appointment of the forensic accountant was made without recourse to either the court or the appellant.

The lower court in its judgement upheld the 1st – 5th respondents’ reliefs against the appellant and dismissed the appellant’s counter-claim.

Aggrieved by the decision, the Appellant, through its counsel, Mr. Kunle Ogunba (SAN) challenged same vide a Notice of Appeal dated July 5, 2024, and prayed the court to set the judgement aside

In his lead judgement, Justice Justice Paul Bassi stated that the issue was whether the lower court was correct in accepting the status of the PW2 as an expert witness and the consequent reliance on his report, who had been engaged

in those professional capacities to undertake the review and reconciliation of the 1st respondent’s accounts with the appellant bank.

The PW2 had in his statements on oath stated that he was not only a Chartered Accountant but a fellow of the Institute of Chartered Accountants of Nigeria who had been engaged in those professional capacities to undertake the review and reconciliation of the 1st respondent’s accounts with the appellant bank interests of judicial economy.

The court held that experts are qualified according to a number of factors, including but not limited to the number of years they have practiced in their respective field, works, certifications, licencing training, education, awards, and peer recognition.

Justice Bassi held that the application for appointment of the CBN as the Referee in his opinion, made sense and there was nothing on the face of the record to show the bad inherent in the resort to the CBN that necessitated the reliance on PW2’s testimony as the fulcrum of the 1st -5th Respondents’ case.

“It is my considered opinion’ here that the PW2 may be knowledgeable as an chartered accountant and in forensics, there are insufficient grounds to accord him the title of an “Expert witness” where his experience, qualifications, works, certifications, licensing training, education, awards and peer recognition have not been established.

The court further held, “I cannot subscribe to the conclusion that the PW2 is a better expert witness as compared to the DW2. An important distinction must be made between the 2 witnesses here.

“PW2 was acting on his own accord and based on his expertise. DW2 on the other hand was subpoenaed to tender the report of an impartial, court-appointed Arbiter who, as far as the Records show, had no interest, pecuniary or otherwise in the determination of the Suit one way or the other.

“The CBN Report’s veracity on the aforementioned Grounds are unimpeachable. Whether or not the DW2 spoke to the contents of the Record she tendered, the fact that it emanated from a Public Office, in the proper admissible format and in compliance with the Order of Court renders it admissible with the appropriate probative value attached to it.

“It is therefore my conclusion that the lower Court was in error to have placed reliance on a suspect Report from a witness whose status the

Lower Court itself ought to have questioned.”

The court held that so long as the appellant had shown evidence of the offer of the $2 million facility to the 1st respondent and the disbursement, the burden then moved to the 1st respondent to show it had repaid the facility.