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Effect of failure of a debtor to query debt stated in a demand letter from a creditor


CITATION: (2019) LPELR-48965(CA)

In the Court of Appeal
In the Ado-Ekiti Judicial Division
Holden at Ado-Ekiti

On Wednesday, 4th December 2019
Suit No: CA/EK/36/2016

Before Their Lordships:







The fact of the case was that the Demrowl International Company Ltd (Claimant/Appellant), a customer of the GTBank (Defendant/Respondent), was granted secured draft facilities totaling N60 million between January 2007 and May 2008. The loan was for him to beef up his working capital to perform a contract with the Federal Government for gully control in Ilupeju Ekiti.

Demrowl International Company Ltd (Claimant/Appellant) claimed that at all material times the GTBank (Defendant/Respondent) was put on notice that the secured facility was for the execution of the contract. Also that the GTBank was aware that the loan would be repaid from the payments received from the Federal Government.

However, the repayment to the GTBank was not forth coming as expected because of a variation issue between the Demrowl International Company Ltd and the Ecological Fund Office. The GTBank maintained that they were not privy to Demrowl International Company Ltd’s issues with the Ecological Fund. GTBank recalled the loan facility as Demrowl International Company Ltd failed to pay the loan facility. Demrowl International Company Ltd also claimed that GTBank was threatening to sell their property used as collateral.

GTBank filed his Statement of Defence on 20th day of June, 2012. Pleadings were therefore exchanged and parties gave evidence.
At the end of the trial, the learned trial Judge of the High Court of Ekiti State delivered his considered judgment dismissing the claim of the Appellant. The Appellant was dissatisfied with this judgment and appealed to the Court of Appeal.


The appellant formulated the following issues for determination by the court:
1. Whether the demand notices via Exhibits ‘J1 and J2’ by the Respondent for the payment of the loan facility granted to the Appellant by the Respondent did not violate the terms of the loan agreement between the Appellant and the Respondent.
2. Whether the holding by the learned trial Court that the Appellant’s suit is an abuse of Court process does not amount or tantamount to speculation when enough materials were not placed before it in the first instance.
3. Whether the failure of the learned trial judge to award special and or general damages plus an order of injunction had not occasioned a miscarriage of justice.

On issue one, the Appellant submitted that the Respondent via Exhibit J1 & Exhibit J2 demanded the loan facility granted to the Appellant before the 365 days terminating on 18th May. That Exhibit J1 & Exhibit J2 were premature, inchoate and hasty since the loan facility was not ripe for recalling. That the terms and conditions of the facilities between the Appellant and the Respondent ought to have been respected or honoured and failure is fatal. He relied on JADESIMI VS EGBE (2003) 10 NWLR Pt. 827 Pg. 1, amongst others.

On issue two, the Appellant submitted that the trial Judge relied on that Exhibit G a letter dated 12th day of May, 2009 from liberty Law Associate in arriving at a conclusion that the present suit is an abuse of court process. That Exhibit G relied by the trial court was insufficient and inadequate for the learned trial Judge to conclude that the Appellant’s suit is an abuse of Court process. He relied on EHE VS EDOHO (2009) 8 NWLR Pt. 1144 Pg. 601.


Furthermore, he submitted that Suit No. HAD/30/2009 and HAD/63/2009 are very different. That although the parties are the same but the subject matter is different. Whereas HAD/30/2009 is about the indebtedness, HAD/63/2009 is on the issue of harassment and was therefore wrong for the learned trial Judge to hold that HAD/63/09 was an abuse of Court process.On issue three, Appellant submitted that the learned trial judge neglected or refused to award special damages or general damages to the Appellant.

That as a result of the harassment suffered by the Appellant from the agents of the Respondent on 29th day of May, 2009 when they came to the property which was used as collateral to harass the occupants, the Respondent ought to pay special and general damages to the Appellant for the breach of contract orchestrated by the Respondent.

On issue one, the Respondent’s submitted that Exhibits J1 and J2 are mere letters of demand for the repayment by the Appellants. That by Paragraph 4 and 5 of the Exhibits J1 and J2, the effective date of the recall is 19th day of May 2009 as the facility expires on 18th day of May 2009.

It was submitted that the intention of Exhibit J1 and J2 was to commence recovery action against the Appellant in an event of its failure to repay the said overdraft facility on 19th day of May 2009. Reliance was placed on STANDARD MANUFACTURING COMPANY LTD VS STERLING BANK PLC (2015) LPELR 2474 1 and submitted that the respondent only utilized the implied term in Exhibit C demanding the outstanding sum.

On issue two, the Respondent’s submitted that the Appellant’s claim in Paragraph 33 (c) and (d) of the Amendment Statement of Claim Pg. 214 Record of Appeal does not arise from the alleged breach of contract. That for a claim in Special Damages, the Appellant must not only plead it but must prove it strictly. The burden of proof therefore lies on the Appellant as held in ANAMBRA STATE ENVIRONMENTAL SANITATION AUTHORITY VS RAYMOND EKWENEM (2009) LPELR 482.


On issue three, the Respondent’s submitted that there was enough material for the trial Judge to reach his decision as to whether the second case was an abuse of Court process. It was further submitted that there was enough material placed before the court to show that Suit No: HAD/30/2009 was instituted by the Appellant. That the Appellant’s evidence both oral and documentary showed that HAD/30/2009 was an abuse of Court process as the Appellant referred to the indebtedness to the respondent. See EHINLANWO VS CHIEF OKE (2008) LPELR. 1054

The Respondent’s submitted that after the court’s complaint of insufficiency of materials, the Appellant’s counsel has still not placed sufficient materials before this court to show that the Suit No: HAD/30/2009 was not an abuse of court process and urged the court to dismiss this appeal.

In resolving the appeal, the court noted that the crux of the appeal is Exhibit J1 & J2, which are demand letters written to the Appellant and the other to the Managing Director whose house was deposited as collateral for the facilities extended to the Appellant. That Exhibit J1 & J2 are the usual demand notice of the Respondent Bank in consonance with banking regulations which is usually given some days before the due date. It normally acts as a reminder to the debtor that the due date is at hand.


According to the Court, the law is explicit that the bank ought to issue a demand notice to notify the debtor of the due date and the amount due. The Appellant in its wisdom did not challenge the debt rather challenged Exhibit J1 & J2 claiming that the debt was not due.

The Court relied on JOE IGA VS CHIEF AMAKIRI (1976) II SC PG. 1 where the Supreme Court held that “where a creditor writes a demand letter which the supposed debtor fails to react to, the silence of the later leads to the presumption of admission by conduct.” Thus, the excuses of the Appellant that the Ecological fund had not paid him to the knowledge of the Respondent is of no essence as whether they pay the Appellant or not the Appellant is still owing the Respondent. This is because the contract is not a tripartite contract that included the Ecological fund. Therefore, the non performance of the Appellant would not be left at the doorsteps of the Ecological fund. The Appellant was therefore liable to pay the debt due as stated in Exhibit J1 & J2. This issue was resolved in favour of the Respondent.

On issue two, the Court resolved that the Appellant instituted two lawsuits premised on the same subject matter and the same parties. That the second lawsuit cannot be denied as that was the purport of Exhibit G tendered by PW1. That apart from the loan facility offered by the Respondent to the Appellant, the parties had no other relationship. That is to say, the two suits were as a result of the loan facility. It can be clearly seen that this second suit was clearly to harass and annoy the Respondent. Therefore, it can definitely be said to be an abuse of Court process as it was meant to interfere with the administration of justice. Reliance was placed on SARAKI VS KOTOYE (1992) 9 NWLR Pt. 264 Pg. 156; amongst others.


According to the Court, the trial Court does not need any other material since in Exhibit G the Appellant warned the Respondent that it had filed another suit against it in suit no HAD/30/09. That the learned trial judge was therefore right when it held that this second suit was an abuse of Court process, since it was an abuse of Court process. Reliance was placed on ARUBO VS AIYELERU (1993) 3 NWLR Pt. 280 Pg. 125.

On the third issue, the Court held that for the purposes of calculating the award, damages are divided into two kinds. Special damages and general damages and that special damages are quantifiable pecuniary loses up to the date of trial. The Court relied on OKUNAYE VS LAGOS CITY COUNCIL (1973) 2 CCHCJ Pg. 38. where it was held that there is a distinction between general and special damages. That while general damages are such that the law will presume to be the direct natural or probable consequence of the act complained of, special damages on the other hand, are such as the law will not infer from the nature of the act. They do not follow in ordinary course. They are exceptional in their character and therefore, they must be claimed specifically and proved strictly. See also SOSAN VS H. F. P. ENG. NIG. LTD (2004) 3 NWLR Pt. 861 Pg. 546. This issue was resolved in favour of the Respondent.

In conclusion, the Court dismissed the appeal for lacking merit.
T. Ogunmoroti, Esq. with him, A. Adeleke, Esq. -For Appellant(s)
F. Sarumi, Esq. -For Respondent(s)
Compiled by LawPavilion


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