By Emem Ekpenyong
Take a chill pill. I know those cases you want to cite to counter this. Read first and react later.
KUDA MICROFINANCE BANK LTD v. BLESSING (2024) LPELR-80643(CA)
You see, I gave full citation for ease of reference. After reading the case from the law report, feel free to object to any misleading content in this post. Kindly avoid arguing from an uninformed position. I will roll my eyes and ignore.
Blessing, the plaintiff/respondent was a customer in the microfinance bank. One day, her Access bank account was credited with N5,000,000 (five million naira). She immediately transferred the money to her account with the microfinance bank and withdrew a substantial amount from it before the microfinance bank got a mayday signal from Access bank that N5,000,000 was erroneously credited to Blessing’s account. The microfinance bank, the defendant/appellant placed restriction on Blessing’s account. At the time of the restriction, the money in Blessing’s account was N2,114,450.00 (Two Million, One Hundred and Fourteen Thousand, Four Hundred and Fifty Naira). The Appellant, (hereinafter referred to as MFB) activated its terms and conditions and CBN Regulation. It placed restriction on the account of the Respondent and informed the Respondent to contact Access Bank Plc. The Respondent admitted in her affidavit in support of her originating processes that indeed she was informed and she also wrote to Access Bank Plc.
Blessing approached the court, contending that the MFB had no power to freeze her account without a court’s order. She alleged that the denial of access to the funds domiciled in her account amounted to a violation of her right to property. She prayed for a number of reliefs including the unfreezing of her account and damages for the unlawful restriction. The trial court found for Blessing. The MFB aggrieved by the judgement, approached the Court of Appeal. It made reference to the Exhibit it tendered at the trial court. The terms and conditions regulating the bank-customer relationship were captured on page 5 of said Exhibit (Exhibit K1). The MFB being an online bank had unique terms. The terms and conditions empowered the MFB and gave it the right to close, suspend, freeze or limit access to an account if:
(1) The information obtained from a customer did not comply with regulatory requirements.
(2) A customer did not meet, or is in breach of the terms and conditions
(3) A customer creates risk or possible legal exposure to the bank.
(4)Where the bank is required by law to do so
(5)If there is a report of, or the bank’s investigations reveals that a customer had engaged in fraudulent or suspicious activity with his or her Kuda Account.
Let’s pause for a bit. N5,000,000 was received in a particular account, transferred almost immediately to another account, and more than half of the transferred funds withdrawn within split seconds. Does this not raise suspicion?
Back to the case.
The MFB had activated its terms and conditions and restricted Blessing’s account upon being notified by Access bank of suspicious movement of funds from Blessing’s account. It contended that its terms and conditions have been upheld by the courts to be valid and binding between it, and its customers. It equally contended that the trial court failed to take judicial notice of some of the policies and guidelines issued by the CBN which regulated the MFB’s operations. Regulations BPS/DIR/GEN/CIR/02/004 of June 11, 2015 and BPS/DIR/GEN/CZR/05/011 were specifically referenced. The appellant contended that by virtue of BPS/DIR/GEN/CIR/02/004 of June 11, 2015, it possessed the power to block and or place no debit restrictions on accounts upon receipt of fraud complaint. It submitted that CBN’s directives, rules, and regulations has been held by the C of Appeal and Supreme Court to be valid, binding subsidiary legislation. The MFB contended that if the trial court had taken judicial notice of CBN ‘s regulations, it could have dismissed Blessing’s action. The MFB was also aggrieved that Access bank who raised the alarm of erroneous inflow to the respondent’s account was not joined as a party.
ON WHETHER A BANK CAN FREEZE A CUSTOMER’S ACCOUNT WITHOUT A COURT’S ORDER
The CA held that the cases relied upon by the trial court (Savannah Chemical Industries V. EFCC & Ors (2020) LPELR- 51398 and GTB V. Adedamola & Ors (2019) LPELR – 47310) were not applicable to Blessing’s case. In the aforementioned cases, the decisions of the court were that an individual’s account cannot be placed on restriction without a valid Court’s Order. Section 34 of the EFCC Act was the main legislation under consideration in the two cases and the Act had no bearing with Blessing’s case. Secondly, the trial Court did not consider the terms and conditions executed by parties (Blessing and MFB), and the CBN Regulations to banks. The court reiterated the trite principle of law that a case is only an authority on what it decides, and by the doctrine of stare decisis it is only an authority in another matter when the facts are on all fours. The CA frowned at the trial court for importing the condition provided in Section 34 of the EFCC Act to a case in which EFCC was not a party.
It cited the holding of Muhammad, JSC in UGWUANYI V. NICON INSURANCE PLC (2013) LPELR – 20092 (SC)
“Cases remain authorities only for what they decided. Thus an earlier decision of this Court will only bind the Court and subordinate Courts in a subsequent case if the facts and the law which form the earlier decision are the same or similar to those in the subsequent case, Where, therefore, the facts and/or legislation which are to inform the decision in the subsequent case differ from those which informed the Court’s earlier decision, the earlier decision cannot serve as a precedent to the subsequent one”.
ON THE LEGALITY OF CBN’S GUIDELINES AND REGULATIONS
The court held that the Guidelines and Regulations made by CBN pursuant to the provisions of CBN Act and Banks and other Financial Institutions Act, 2020 are considered binding laws for observance by banks, and are applicable in any contract entered between a bank and its customers. It cited the holding of the SC in Access Bank Plc V. Ogboja (2022) 1 NWLR (Pt. 1812) 547 @ 575 – 576, wherein the SC held inter alia
“The Central Bank of Nigeria has the statutory clout to make rules, regulations and guidelines with regard to monetary policy and control of the banking industry. Such rules, regulations and guidelines, constitute or can be classified as a subsidiary legislation.”
The CA held that Guidelines and Regulations made by CBN being subsidiary legislations, all financial institutions must comply with same. It held that by virtue of the terms and conditions entered by the parties, the guidelines and regulations issued to banks and financial institutions by the CBN, it goes without saying that a bank has the power to place a restriction on an account when fraud or suspicious activity is reported on that account, and unlike in the cases relied upon by the trial Court, there is no need for a Court’s Order before the restriction is placed.
ON THE ISSUE OF TERMS AND CONDITIONS AGREED UPON BY THE PARTIES (MFB AND BLESSING),
The court held that the instruments empowering the appellant to place restriction on its customer’s account did not make the act subject to obtaining a Court’s Order. It reiterates the timeless principle of law that the relationship between a bank and its customer is contractual in nature. It follows therefore, that parties are bound by the terms of the contract and none of the parties is permitted to deviate from the terms.
It referenced the holding of Nweze, JSC (of blessed memory) in Obanye V. UBN Plc (2018) LPELR – 44702 (SC) which held inter alia
“Parties are bound by the terms of their contract. Therefore, if the conditions for the formation of a contract are fulfilled by the parties thereto, they will be bound unless it is established in evidence that a party was fraudulently led into an agreement, parties are bound by the written and express terms of their agreement. In other words, in the absence of fraud, duress and undue influence or misrepresentation, parties are bound by their contract”.
The court held that Blessing having agreed to the MFB’s terms and conditions, both parties were bound by same, and accordingly the appellant was empowered to close, suspend, freeze or limit access to a customer’s account on the happening or occurrence of certain events. Both parties were declared bound and none of the parties was allowed to unilaterally alter the terms. The Court also is forbade from adding, altering, subtracting or reading into the terms which the parties did not agree upon. Where the terms are clear, the Court is enjoined to interpret them as such, without recourse to any outside help.
ON ACCESS BANK NOT BEING JOINED AS A PARTY
Access Bank threw the first stone, hid its hands while MFB and Blessing bleed in the battle Access bank began. Access Bank lit the match and retreated to base to enjoy the drama. Lol. The court re-echoed the trite principle of law no one can force a claimant to proceed against a person he has no interest in. If the MFB desperately wanted Access Bank, ‘the instigator’ to explain itself in court, it ought to have issued and served a third party notice on Access Bank.
Before you threaten legal fireworks, have you read the terms and conditions of that agreement? Always read the fine prints of an agreement before alleging violation of right. E get why.
