The Law Crest LLP(“TLC”) has successfully defended Access Bank PLC (the “Bank”) in the case of Emmanuel Okechukwu Tagbo v. Access Bank PLC before the High Court of Lagos State.
The Claimant had entered into a distribution agreement with PZ Cussons Nig. PLC (“PZ”) to receive products on credit, with a requirement to provide a bank guarantee from a reputable financial institution. The Bank issued this guarantee after entering into a Facility Agreement with the Claimant (the “Facility Agreement”). The Facility Agreement required regular payments into a Revenue Reserve Account and stipulated a 90-day pre-action notice before any legal action could be filed against the Bank. The facility was also secured by a legal mortgage on the claimant’s property.
After PZ demanded payment under the guarantee due to the Claimant’s default, the Bank fulfilled its obligation under the guarantee and recovered part of the debt from the Claimant’s Revenue Reserve Account. The Claimant disputed the Bank’s actions, alleging that PZ Cussons was, in fact, indebted to him. He subsequently filed a suit against the Bank, seeking to prevent further recovery actions, halt the sale of his mortgaged property, and claim damages.
The Court upheld TLC’s arguments, leading to a dismissal of the Claimant’s claims and a judgment in favour of the Bank’s counterclaim. This judgment underscored several important legal principles argued by TLC on behalf of the Bank.
The Court agreed that the suit was not properly constituted because PZ, a necessary party to the dispute over alleged indebtedness, was not joined in the suit. This principle reffirms that all relevant parties must be present in a case to enable the Court to make binding pronouncements on any issues affecting them.
Additionally, TLC argued that under the doctrine of privity of contract, Access Bank was not required to investigate or consider the alleged debt between the Claimant and PZ. The Bank’s duty was strictly to honour the terms of the guarantee upon PZ’s formal demand. The Court’s agreement with this position confirms that third-party banks are not liable to question independent contractual matters outside their express contractual obligations.
Furthermore, the Court dismissed the evidentiary value of the expert reports tendered by the Claimant to support his assertion of non-indebtedness to PZ. Although these reports were admitted into evidence, the experts who prepared them were not presented in court for cross-examination. The Court’s decision highlights a critical principle: while expert reports may be admissible, their persuasive and probative value remains limited unless the experts are available for examination in court. This ensures that such opinions can be scrutinised through cross-examination, enabling the Court to assess the credibility and reliability of the conclusions reached in those reports.
The Court further determined that the Claimant had failed to comply with the mandatory 90-day pre-action notice requirement stipulated in the Facility Agreement. This decision re-emphasises the critical role of procedural requirements, particularly where they serve as a condition precedent to initiating legal action. By disregarding this notice provision, the Claimant undermined a foundational aspect of the agreement, which allows parties an opportunity to address issues before litigation ensues. The Court’s decision reinforces that adherence to such pre-action protocols is essential, both to uphold contractual obligations and to facilitate orderly and fair proceedings.
Finally, the Court upheld the Bank’s right of set-off, which allowed it to recover part of the debt from the Claimant’s account. This affirms the enforceability of set-off provisions in commercial banking agreements and affirms a bank’s right to reduce its risk when a guarantee is triggered.
Access Bank PLC, a prominent commercial bank in Nigeria, was represented by TLC’s litigation team, led by Partner Olatunji Muritala, with Associates Chidiebere Okorafor and Damilola Akande.