The Class Action that finally buried Bankers’ Order debacle in Nigeria
By Olumide Babalola
When in 2017, some of my clients’ bank accounts were severally frozen by their banks, via bankers’ orders obtained by the Nigerian Police from the Magistrates Court in Lagos pursuant to a spurious petition written by a commercial bank, our Law Firm approached the High Court of Lagos State on their behalf, challenging the constitutionality of bankers’ orders on several grounds.
In a class action with Suit No. LD/1961GCM/2017 between C. E. Osemene & 5 others (representing themselves and other bank account-holders whose accounts have been frozen by irregular and invalid bankers order in Nigeria) against Guaranty Trust Bank and 6 others, the Claimants took out an originating summons praying for:
1. A DECLARATION that a banker’s order/order freezing bank accounts cannot be validly issued pursuant to a non-existent/repealed Banker’s Order Act 1847 and/or any other irrelevant foreign law.
2. A DECLARATION that section 89 of the Evidence Act 2011 does not empower a Magistrate to issue a Banker’s order and/or order of freezing bank accounts.
3. A DECLARATION that a Magistrate lacks the powers to make banker’s order and/or order of freezing bank accounts pursuant to non-existent/repealed section 7 of the Banker’s Order Act 1847 (42 VICO11).
4. A DECLARATION that a Banker’s order and/or order of freezing bank accounts cannot be validly issued without a proceeding in court.
5. A DECLARATION that a Banker’s order and/or order of freezing bank accounts cannot be validly issued without a court proceeding with suit number and record of proceedings.
6. A DECLARATION that a Banker’s order and/or order of freezing bank accounts cannot be validly granted Ex parte to last indefinitely.
7. A DECLARATION that a Banker’s order cannot be validly granted in the absence of a formal application supported by an affidavit.
8. A PERPETUAL INJUNCTIONrestraining the 7th Defendant, his officers, agents and/or legal representatives from further approaching the Magistrates’ court and/or any other court for a Banker’s order without filing a Motion supported by an affidavit and suit number.
9. A PERPETUAL INJUNCTIONrestraining the 1st to 6thDefendants from further giving effect to a Banker’s order without first conducting an official search and obtaining a certified true copy at the registry of the court that issued the order.
10.Such other consequential Order (s) that this honourable court may deem fit to grant in the circumstance.
The matter was initially assigned to Hon. Justice W. Animahun who granted the class-action certification order but was later re-assigned to Hon. Justice K. Alogba (now Acting Chief Judge) for hearing. We served, well over, 4 hearing notices on the office of Inspector General of Police (7th Defendant) but they, unsurprisingly, did not show up throughout the matter. However, the banks responded and upon which process, the matter was eventually decided on the 24th day of May 2019 when the momentous judgment was delivered thus:
On non-existence of Bakers Order Act 1847pursuant to which bankers’ orders are usually granted (especially by Magistrates Courts), Alogba, J. (as he then was) held thus:
“Claimants strongly contended that the Bankers’ Order Act 1847 pursuant to which the order of the Magistrates Court was made was non-existent. That may as well be correct but the proper and/or correct law is the BANKERS’ BOOKS EVIDENCE ACT 1879 CHAPTER 11. To begin with, extensive research revealed that there is no law known as Banker’s Order Act 1847. Rather, what is in the statute books is- BANKERS BOOKS EVIDENCE ACT, 1879.
On nullity of Bankers Orders:
“So that, to begin with, the bankers’ order in issue in this case was patently issued pursuant to a non-existent law and afortiori, null and void ab initio and of no effect whatsoever. The contrary matter is the case with the so called “Bankers Order” in issue herein proceeding from a non-existent law and under a non-existent legal proceeding and ordering beyond the limits of inspecting and or taking copies of entries in the banker’s book and also not for the purpose of any existing or pending legal proceeding. It is an order which can only exist in the imaginary world of the dreamland certainly not in any existing, valid, pending “legal proceedings” stricto sensu as clearly defined in section 10 of the law (supra). For short, it is a Nullity ab-initio.”
On whether the Police can freeze accounts without legal proceedings:
“Section 4 of the Police Act does not expressly grant such power or prerogative to the police. In the course of their investigations, if the police must have recourse to and take copies of bankers’ books, they must strictly comply with section 7 of the Bankers Books Evidence Act (supra). They must institute a legal proceeding and there’s no difficulty or hindrance in so doing, for the law itself grants liberty that the order may be obtained ex parte the bank or party to be affected, the only and inescapable condition precedent is that, a legal proceeding must be instituted first and it is only under or in such existing/pending/action/application, that such an order can ensue, legally and validly so.”
On whether the courts are empowered to order freezing of bank accounts and/or arrests under the Bankers Books Evidence Act:
I must not fail to mention and indeed, emphasize the point that, in so far as bankers books are concerned and if the application be under the Bankers Books Evidence Act (supra), the court is limited to making an order for inspection and taking copies of such entries only. The law does not empower the court to order a freezing of any party’s account in whatever name called and worse still an arrest of any operator of such account by the bank (as the orders usually say on their faces) and I am sure banks will not dare do so – for it is clearly not their portion- legally speaking. Properly speaking, a court (Magistrates court in particular) ought not grant an order of arrest under the guise of section 7 of the Bankers Books Evidence Act (supra).
On the whole, the court concluded thus:
“This action succeeds in its entirety and I declare as follows:
(1) That the Bankers Order Act 1847 is a non-existent law.
(2) A bankers order cannot be granted by any court pursuant to a non-existent law to freeze or otherwise impede the running of any person’s bank account without a pending legal proceeding properly initiated by appropriate originating process and in accordance with or pursuant to a substantive legislation on the subject matter.
(3) Section 89(1) of the Evidence Act 2011 does not, on its own, empower any court to make any order to freeze bank accounts.”
The judgment of Hon. Justice Alogba, (Ag. CJ) couldn’t have come at a better time than these perilous times where several people and legal entities have fallen victims of the shenanigans of the police as well as the indifferent complicity of banks at perpetually and brazenly freezing bank accounts on the strength of demonic and repressive bankers’ orders usually granted pursuant non-existent laws.
Coming from the acting chief judge’s bosom, the judgment ushers in, a new dawn as it marks a watershed in our justice-system, while kicking out the era of employing bankers’ orders, especially without a court proceeding, and confining same to the abyss of regrettable judicial history. It is hoped that all courts take judicial notice of this oven-hot decision which ought to form the basis for a new practice direction for all Magistrates in Lagos state as far as bankers orders (if there is anything like that) are concerned.
You can read the full judgment hereOsemene-v-GTB-Scanned-Doc