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[CONSOLIDATED CASES]
AFRICAN CONTINENTAL BANK LIMITED
V.
T. O. OLADAPO
THE WEST AFRICAN COURT OF APPEAL, HOLDEN AT LAGOS, NIGERIA
23RD DAY OF NOVEMBER, 1951
2PLR/1951/19 (WACA)
OTHER CITATION(S)
2PLR/1951/19 (WACA)
(1951) XIII WACA PP. 285 – 289
LEX (1951) – XIII WACA 285 – 289
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BEFORE THEIR LORDSHIPS:
VERITY, C.J., NIGERIA
LEWEY, J.A.
JIBOWU, J.
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BETWEEN:
AFRICAN CONTINENTAL BANK LIMITED – Defendants-Appellants
AND
T. O. OLADAPO – Plaintiff-Respondent
AND
T. O. OLADAPO – Defendant- Appellant
AND
AFRICAN CONTINENTAL BANK LIMITED – Plaintiff-Respondent
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ORIGINATING COURT(S)
Appeal from the Supreme Court, W.A.C.A. CIV.APP.3384
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REPRESENTATION
F. R. A. Williams — for the Plaintiffs
T.O. S. Benson — for the Defendants
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ISSUE(S) FROM THE CAUSE(S) OF ACTION
TRANSPORTATION AND LAW – MOTOR VEHICLE:- Motor vehicle used for transportation business which acquisition financed by banking credit – Wrongful sale of by bank in satisfaction of debt – Calculation of depreciation in determining damages payable – Relevant considerations
TORT AND PERSONAL INJURY LAW:- Documents purporting to be a Bill of Sale but deemed invalid and void -Wrongful detention of lorry under such Bill of Sale – Measure of damages – Lender has right to sue for money lent and reasonable interest thereon independently of Bill of Sale
DEBTOR AND CREDITOR:- Debt used to finance acquisition of asset by debtor and secured by way of Bill of Sale deemed void and unenforceable by court – Recovery of principal sum and interest – Basis of – Wrongful sale of asset acquired with credit by creditor – Proper calculation of damages
BANKING AND FINANCE LAW:– Banking operations – Recovery of debt guaranteed by way of a purported Bill of Sale deemed void and unenforceable – How properly treated
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CASE SUMMARY
These were appeals in cross-actions. The respondent in the first action is hereinafter referred to as the plaintiff and the appellant in that action is herein after referred to as the defendant.
The plaintiff sued the defendants for damages for wrongful detention of a lorry which had been seized under a document purporting to be a Bill of Sale, and was awarded damages for the wrongful seizure and detention.
The defendants in the second action sued the plaintiff for moneys due on the plaintiff’s banking account with the defendants. The trial Judge held that the defendants were not entitled to recover moneys advanced to the plaintiff to purchase the lorry on the strength of a Bill of Sale which he held to be void in toto.
On the appeal the trial Judge’s assessment of damages was questioned, and it was argued for the defendants that, although the Bill of Sale was void, there was an implied agreement to repay the money lent, with interest at a reasonable rate, independently of the Bill of Sale.
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DECISION(S) OF THE WEST AFRICAN COURT OF APPEAL
Held (varying judgements in both suits) that:
1. The damages had been awarded on wrong principles and the award of damages was amended. The Bill of Sale was void and the seizure illegal, and the grantor’s covenant for payment of interest was unenforceable.
2. The circumstances were different from those relating to an illegal contract in which the parties have purported to do what the law prohibits.
3. There was nothing illegal in the loan transaction but only that the security was void. Independently of the Bill of Sale there remained an obligation to repay the money borrowed with interest at a reasonable rate.
Cases referred to:
(1) Davies v. Rees (1886), 17 Q.B.D. 408.
(2) Smith v. Whiteman (1909), 2 K.B. 437.
(3) Bradford Advance Co. Ltd. v. Avers (1924), W.N. 152.
(4) Wilkins v. New Saville Securities Ltd. & Another, 39 T.L.R. 85.
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MAIN JUDGMENT
The following Judgement was delivered:
VERITY, Ag. P.
These are appeals in cross actions which were consolidated for hearing in the Court below. The plaintiff in the first action (to whom I shall hereinafter refer as the plaintiff) sued the defendant banking company (to whom I shall refer to as the defendants) for the return of a lorry or recovery of its value, for general and special damages for its wrongful detention and for the return of certain luggage or its value, which last claim he subsequently abandoned. The defendants sued for a sum due and owing by the plaintiff on his banking account with the defendants.
It appeared that the plaintiff secured an overdraft upon his banking account for the purpose of buying a lorry. By way of security for the overdraft, he signed a document which purported to confer upon the defendants a power of sale of the securities, properties and effects covered thereby. The plaintiff neglected to repay the moneys advanced by way of overdraft and the defendants seized and sold the lorry, crediting the plaintiff’s account with the proceeds, this credit with others reducing the amount of the overdraft to that claimed. The case was dealt with in the course of argument both here and in the Court below as though the document referred to was a Bill of Sale or deemed to be such. It was on this basis that the learned Judge dealt with the matter and it is on the same basis that I would proceed to consider his Lordship’s judgment.
The learned Judge held, and I think rightly, that the document signed by the plaintiff considered as a Bill of Sale was void in toto for non-compliance with the Bill of Sales Acts, and it followed that the defendants had no right of seizure and sale.
He assessed the value of the lorry at £500 and awarded the plaintiff £50 also as special and general damages.
In the action brought by the defendants the learned Judge held that the defendants were not entitled to recover money advanced to the plaintiff to purchase the lorry on the strength of the agreement which is void and that in examining the plaintiff’s banking account to ascertain his liability to the defendants thereon “any amount due to the bank from the plaintiff before the date of the agreement … should be excluded “. In the result he gave judgment for the defendants in their action for £185 only.
The plaintiff has appealed against the amount awarded as the value of the lorry and against the amount awarded as damages. The evidence showed that £820 was paid for the chassis of the lorry and £25 for the body, a total of £845, and the plaintiff by his statement of claim as amended claimed £820. The lorry was seized some seven months later after having travelled 18,000 miles. The learned Judge, after allowing for depreciation, assessed its value at £500, the amount originally claimed by the plaintiff. The plaintiff further claimed £400 for wrongful detention and assessed his loss at £12 10s in a day. The learned Judge assessed special damages at the rate of 30s. 0d. a day and awarded £25 damages, that is to say, for approximately 17 days. I am unable to determine the basis for the assessment for that period. The lorry was seized on 16th July, 1949, and was sold on 6th August, 1949. It was, therefore, in the defendant’s possession for twenty-one days. On the other hand, the plaintiff was out of possession of the lorry up to (and beyond) the date of suit, 9th August, or twenty four days. It would appear, therefore, that on the Court’s assessment of daily profit the amount should have been £36 or at least £3110s. 0d.
It is also to be observed that while the learned Judge assessed the depreciation in the value of the lorry at £345 in seven months he arrived at the net rate of profit 30s. 0d. a day after deducting “wear and tear”, which I take to be depreciation. It would appear, therefore, that depreciation has been taken into account twice and this should not have been done. Assuming that the learned Judge’s assessment of total depreciation is right this rate of depreciation from the date of purchase till the date action brought is to be calculated for a period of 213 days from, in so far as the evidence is clear upon this point, 8th January to 9th of August, 1949. This would be approximately 23s. 0d. per day It is contended, however, that the amount assessed by the Court below for depreciation is excessive. The plaintiff gave no evidence on this point, nor did the defendants, but as it is common knowledge that motor vehicles deteriorate with use and that their value depreciates accordingly, it would be for the jury or the Judge when there is no jury to assess the measure of this depreciation to the best of their or his judgment. Unless such assessment is obviously excessive I do not think that an appellate Court should interfere. It would, I think, be not unreasonable to assume that a lorry in this country in use upon the roads to the extent of some 2,600 miles a month deteriorates rapidly, and I am not of the opinion that the Judge’s assessment is patently excessive or unreasonable.
If, as I think, it should be allowed to stand, then it should not be deducted twice and the daily rate of profit should be increased by 23s. 0d.
It is further contended that the daily rate assessed by the learned Judge is, in itself, too low, but here again I would not interfere. The rate given by the plaintiff in his evidence is, in my view, a gross overestimate, and I would therefore not disturb the Judge’s finding, which is not unreasonable. By the addition of 23s 0d per day, however and awarding special damages for loss of use from the date of seizure to the date of the writ, I would vary the judgement by substituting the sum of £63 12s. 0d. for £25 as the amount of special damages.
Turning now to the defendants’ claim it is to be observed that it is for moneys due on the plaintiff’s banking account with the defendants, including not only amounts overdrawn but also interest thereon at a rate which, in the absence of evidence to the contrary, l would assume to be the normal rate charged upon overdrafts. The total amount of the overdraft as shown by the account (Exhibit X) is contested by the plaintiff, but the accuracy of the accounts was accepted by the learned Judge save as to the absence of a credit of £15. I would accept the total debit balance on the plaintiff’s account at the date of the action as £780 11s. 6d.
This does not appear now to be seriously contested, but it has been argued that the learned Judge rightly decided that the document of security being invalid as a Bill of Sale, no sum secured thereby is recoverable in this suit.
A number of cases were cited as authority for the proposition that where a Bill of Sale is void in toto no agreement contained in it can be enforced. On behalf of the defendants it was sought to show that the Bill in the present case was not void altogether, under section 9 of the Act of 1878, but only in respect of the personal chattels comprised therein under section 8.
It appears to me that the latter question is, in the present action, immaterial, for although in my view the document if a Bill of Sale at all is altogether void, lacking both statutory form and registration, this does not put an end to the defendants’ claim. In Davies v. Rees (1), which was relied upon by the plaintiff and referred to by the learned Judge as approved by Lord Alverston in Smith v. Whiteman (2), it is to be observed that Lord Esher, while holding that the whole of the instrument sought to be relied upon was void, nevertheless added that “there was an implied agreement to repay the money lent, independently of the Bill of Sale. It was not intended by the Act that the borrower should be able to keep the money which he had borrowed in his pocket because the Bill of Sale was made void”. In Davies v Rees the question was, as was said by Lord Justice Fry, “whether section 9 avoids only assignment of chattels contained in a Bill of Sale which is not made in accordance with the scheduled form, or whether it also avoids the covenant for payment of interest which is contained in the same piece of paper”. Similarly in Smith v Whiteman it was held that the Bill of Sale being void by reason of the inclusion therein of terms not in accordance with the statutory form, the grantor’s covenant for payment of interest was not enforceable by the grantee.
In each case what was sought to be enforced was a covenant in the Bill of Sale, a covenant clearly unenforceable if the instrument was void.
In Bradford Advance Co. Ltd v. Avers (3) the question raised by Lord Esher’s dictum in Davies v. Rees came under consideration, as indeed it had in an earlier case, Wilkins v. New Saville Securities Ltd. & Another (4), although the dictum itself was not referred to in either case. In the latter case, Darling, J., had held that whereas a seizure under a void Bill of Sale constituted a trespass, nevertheless, when after oral negotiations a Bill of Sale is granted to secure a loan of money with an agreed sum for interest and the Bill is found to be bad, the lender could recover the principal money lent, and his Lordship could see no reason why the agreed interest should not be paid also. In the former case this decision was not followed in so far as the interest is concerned. The Bill in this case secured a loan of £100 and contained a covenant to pay interest at the rate of 60 per cent per annum. Bailhache, J., in the course of a judgment in the King’s Bench on appeal from a County Court Judge who had followed the decision in Wilkins’s case, said:
“The question is, what is the extent of the husband’s liability to the plaintiff? At first sight it would seem that the bill of sale being void and the covenant to pay interest being therefore void, that the liability to repay the principal had also gone. But that is not so. An action would lie for money had and received and that action would lie apart from contract or negotiation on the facts of the case, namely, that the plaintiff had lent the defendant £100, and in these circumstances an obligation to repay the loan arises; and that obligation carries with it an obligation to pay interest at a reasonable rate.”
In this opinion Acton, J., concurred. It is, if I may say so, with the utmost respect, the only view of the law consistent with both justice and common sense.
The circumstances are very different from those relating to an illegal contract in which the parties have purported to do that which the law prohibits, and in relation to which therefore neither party can have recourse to the Court, save where he can bring himself within certain well recognised exceptions. In such cases as the present there is nothing illegal about the loan transaction. The plaintiff has had and received from the defendants the amount of money at which his account stands in debit. It is true that he “gave or purported to give; as security therefor, an instrument which if a Bill of Sale is void and the terms of which are therefore unenforceable but there still remains the obligation to repay that which he has had from the defendants and to repay it with interests at a reasonable rate. I should indeed view with distaste any view of the law which would enable the borrower, in Lord Esher’s words, “to keep the money which he had borrowed in his pocket because the Bill of Sale was made void”. It is, however, a view which no authority and from which the decided cases tum.
As I have said, the case proceeded both here and in the Court below upon the assumption that the document involved either was a Bill of Sale or is deemed to be such, and I have therefore dealt with it upon a similar assumption. That such is its true nature I have some doubt. I do not think, however, that the precise nature of the document, whatever it may be, affects the rights of the party to this suit. In regard to the plaintiff’s claim, the document conferred no power upon the defendants to seize and sell the lorry for the power of sale is conferred thereby only in regard to “securities, properties and effects” deposited with the defendants by the plaintiff, and the learned Judge found upon the evidence that no such deposit had ever, in fact, been made. The seizure was, therefore, in any event, wrongful and the plaintiff entitled to damages. In regard to the defendants’ claim there can be no doubt that whatever the nature of the document they are entitled to recover the amount of the overdraft with interest thereon.
It follows from what I have said that the plaintiff is entitled to recover the sum of £588 12s. 0d. by way of damages, £500 being the value of the lorry, £63 12s. 0d. as special and £25 as general damages, less the sum of £380, the sum for which the lorry was sold, and with which his account has been credited, that is to say, judgment should be entered for the plaintiff on his claim for £208 12s. 0d. The defendants are entitled to recover the amount debited to the plaintiff in his banking account, £795 11s. 6d less the sum of £15 with which the account should have been credited and less £380 with which the defendants have recouped themselves by sale of the lorry, that is to say, judgment should be entered for the defendants on their claim for £400 11s. 6d. In the Court below the learned Judge awarded costs to each approximately proportionate to the sum awarded. Although upon the judgment I would enter the position is reversed, the defendants having recovered the greater sum, bearing in mind that it was the wrongful act of the defendants which involved the parties in the complicated and expensive litigation in the Court below I would make no order as to costs therein. As regards the appeal, however, the defendants have substantially succeeded not only in recovering more than twice the sum awarded them in the Court below, but also reducing to less than one-half the sum awarded against them. They are, in my view, therefore, entitled to their costs in both appeals, which I would fix at £47.
The judgements should be set off, and in the Court below execution should issue in favour of the defendants for £238 19s. 6d including costs.
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LEWEY, J.A.
I concur.
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JIBOWU, J.
I concur.
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Judgements in both suits varied.
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