Recently, there have been a lot of outcries from commercial banks that they have been wrongly brought to court by many judgment creditors who have commenced garnishee proceedings against them without first ascertaining whether or not the judgment debtor maintains an account with their banks, thereby, causing them to unjustly expend their resources to respond to garnishee proceedings which are filed against them when the judgment debtor does not maintain an account with them.
This, especially, has led to calls for a review of the procedure for initiating garnishee proceedings in Nigeria to put an end to the current practice where judgment creditors go on a fishing expedition by bringing all the banks in Nigeria before the court to sieve out those banks where the judgment debtor maintains account(s).
The purpose of this article is to examine the present trend in garnishee proceedings in Nigeria and make recommendations for a possible review of the laws for a more just system of enforcement of money judgments through garnishee proceedings.
The Nature of Garnishee Proceedings
Garnishee proceedings are essentially provided for in Section 83 (1) of the Sheriffs and Civil Process Act (“SCPA”), which provides as follows:
“The Court may, upon the ex parte application of any person who is entitled to the benefit of a judgment for the recovery or payment of money, either before or after any oral examination of the debtor liable under such judgment and upon affidavit by the applicant or his legal practitioner that judgment has been recovered and that it is still unsatisfied and to what amount and that any other person is indebted to such debtor and is within the State, order that debts owing from such third person, hereinafter called the garnishee, to such debtor shall be attached to satisfy the judgment or order, together with the costs of the garnishee proceedings and by the same or any subsequent order it may be ordered that the garnishee shall appear before the Court to show cause why he should not pay to the person who has obtained such judgment or order the debt due from him to such debtor or so much thereof as may be sufficient to satisfy the judgment or order together with costs aforesaid.”
By the wording of Section 83 (1) of the SCPA, garnishee proceedings would necessarily require the judgment creditor to first ascertain that a third party or the garnishee banks are indebted to the judgment creditor, before approaching the court to commence proceedings. However, a lot of times judgment creditors do not have information as to who is indebted to the judgment debtor, or which banks the judgment debtor maintains an account to enable them commence garnishee proceedings against such specific person or banks. The judgment creditor’s situation is also not helped by the fact that data privacy laws do not permit banks to disclose their customer’s personal details to third parties without their customer’s consent or an order of court.
To overcome these limitations judgment creditors have developed the practice of joining practically all the commercial banks in the country as garnishees in the proceedings and compel the banks by a garnishee order nisi to come to court to disclose how much money, if any, they owe to the judgment debtor. The banks are then ordered to make the necessary disclosures by an affidavit to show cause. Where the judgment debtor maintains an account with the garnishee banks and the account contains sufficient funds to defray the whole or part of the judgment debt, the garnishee order nisi would be made absolute and the garnishee banks would be ordered to pay the money over to the judgment creditor before they are discharged. But where the judgment debtor does not maintain any account with the garnishee banks, they would be discharged from the proceedings forthwith, almost always without being indemnified in cost for the expenses and inconvenience which they were wrongly put to by the judgment creditor who initiated proceedings against them without reasonable grounds to suspect that they were holding funds on behalf of the judgment debtor.
This issue has caused tremendous concerns for banks and other financial institutions, who have complained about their huge financial exposure as a result of garnishee proceedings filed by judgment creditors who do not care to conduct proper due diligence before commencing the proceedings. This, the banks argue, is unfair to them as they have no means of recouping the expenses that they are compelled to make since the judgment debtor does not maintain an account with them and the courts would not compensate them with cost, and such cost even where made are often not sufficient to defray their expenses.
Judgment creditors on the other hand have argued that there is no way for them to get the banks to disclose whether they hold funds on behalf of judgment debtors without breaching data privacy laws, except by an order of court, which they can secure through the garnishee order nisi.
This practice was frowned upon by the court in FBN v. Afrimpex Enterprises Ltd & Anor, where the Court of Appeal, after deprecating the practice of commencing garnishee proceedings against all the banks in Nigeria, and causing majority of them to make unnecessary expenses, held as follows:
“Garnishee proceedings should not be commenced against a third party that has not been ascertained to be in possession of money belonging to the judgment debtor, and where this is done, the judgment creditor should be damnified in punitive costs in favour of the third party. It is time that the trial Courts take meaningful steps to curb this abuse of the garnishee proceedings procedure.”
The question then is, in light of the apparent injustice that is meted on commercial banks who are unjustly brought to court by judgment creditors and the clear difficulty which judgment creditors face in identifying the bank accounts held by unscrupulous judgment debtors, what could be done to make the garnishee proceedings fairer to both the judgment creditor and the garnishee?
Various options have been suggested by which judgment creditors may extricate themselves from the dilemma they face in enforcing judgments against unscrupulous judgments debtors. These include:
- Employment of private investigators to carry out discreet investigations to identify the banks at which the judgment debtors maintain accounts. This is a good suggestion, but the use of private investigators is not very popular in Nigeria and is thus not widely available. Even where it is available, it may not be cost effective and thus not advisable where the judgment debt is rather small.
- Conducting a search at the Corporate Affairs Commission (CAC). This will be useful where the judgment debtor is a company and has filed its banking details as part of the disclosures it is required to make at the companies’ registry. Even this may not be without some obstacles as the CAC is sometimes reluctant to issue information and or documents to individuals who are not members of the company in question, especially if the company is not up to date in their annual returns filings.
- Reference to information in previous transaction documents, where the judgment debtor had been involved in one business dealing or the other with the judgment creditor which involved the payment of money to the judgment debtor.
The above methods are veritable self-help means that could be employed within the current legal framework to avoid bringing garnishees, who are not indebted to the judgment debtor to the court. But these will not change the law or bar judgment creditors from going on a fishing expedition by bringing all the banks in the country before the court to identify the ones that are indebted to the judgment debtors. To stop this practice and make it possible for the judgment creditor to easily identify persons who have custody of funds that belong to the judgment debtor, a change to the law on garnishee proceedings in Nigeria is required.
Recommendations for Reforms
Given the challenges outlined above, it is recommended that the SCPA should be amended to permit garnishee banks, where the judgment debtor does not maintain an account to disclose such fact to the judgment creditor and verify the fact by a statement of truth instead of having to file an affidavit to show cause.
A statement of truth is a statement that confirms that the facts stated in a document are true. Under the rules of court in the United Kingdom (“the UK”), certain documents must include a statement of truth to verify an honest belief in the accuracy of the content. This is now widely used in the UK in place of a sworn affidavit, which may only be used if specifically required by law or the court. A statement of truth confirms that the party believes that the facts stated in the document are true and accurate, without need for a formal oath. It must be signed by the party, their litigation friend or legal representative. Proceedings for contempt of court may be brought against a person who makes or causes to be made a false statement in a document, prepared in anticipation of or during proceedings and verified by a statement of truth, without an honest belief in its truth.
For the purpose of garnishee proceedings, a caution in support of a sample statement of truth would read thus:
“I understand that proceedings for contempt of court may be brought against a person who makes, or causes to be made, a false statement in a document verified by a statement of truth without an honest belief in its truth.
I believe that the facts stated in this document are true.”
The proposed amendment should make the garnishee order nisi operate somewhat like a bank certificate as used in the administration of estates process in Nigeria. The garnishee order nisi should require that upon being served with the order, the garnishees should endorse on a copy of the garnishee order nisi and verify by a statement of truth (instead of a sworn affidavit) whether the judgment debtor maintains an account with their banks, or they otherwise hold funds which belong to the judgment debtor and the amount that they so hold. The endorsement or disclosure need not be filed in court at this stage.
Contact at this stage should be strictly between the judgment creditor and the garnishee. Where the garnishee discloses that the judgment debtor does not have an account with it or it does not hold funds that belong to the judgment debtor, that should mark the end of the involvement of the garnishee in the proceedings without need for a formal order of court, unless otherwise directed by the court. Where the garnishee requires further particulars, that should be sorted out between the garnishee and the judgment creditor.
The amendment should of course provide that the consequence of making or causing to be made a false statement in a document verified by a statement of truth would be committal to prison for contempt of court.
Where the garnishee discloses that the judgment debtor maintains an account with it or the garnishee otherwise holds funds which belong to the judgment debtor, the garnishee would then be required to file an affidavit to show cause why such funds should not be attached to satisfy the judgment debt which the judgment debtor owes to the judgment creditor.
If these amendments are introduced into the procedure for garnishee proceedings, the garnishee banks would be saved the expense of filing an affidavit to show cause or appearing in court where the judgment debtor does not maintain an account with them, or they do not otherwise hold funds which belong to the judgment debtor. In that case, the question whether or not to attend court would be determined by whether the garnishee holds the judgment debtor’s funds or not.
This procedure is significant because it maintains the peculiar attraction of the garnishee process, which is that once a garnishee is served with a garnishee order nisi, all funds in his custody standing to the credit of the judgment debtor are attached pending a further order of court. At the same time, it ensures that any garnishee which does not hold funds belonging to the judgment debtor would be summarily discharged from the proceedings without being put through the process of having to file an affidavit to show cause and appearing in court just to disclose that it does not hold funds that stand to the credit of the judgment debtor.
It is suggested that the law in Nigeria should be amended to permit the use of statements of truth as opposed to sworn affidavits to verify initial disclosures by garnishees of whether they hold funds on behalf of a judgment debtor. This would go a long way to reducing the costs occasioned upon those garnishees with whom the judgment debtor does not maintain bank accounts. This way, the biggest attraction of the garnishee proceedings that immediately a garnishee is served with the court’s garnishee order nisi, any funds standing to the account of the judgment debtor in the custody of the garnishee is attached by the order of court and stands frozen till a further order by the court is maintained, whilst the innocent garnishees are saved unnecessary expenses. This may just result in a win-win situation for both the judgment creditor and the garnishee.
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 Emmanuel Abasiubong Bassey, Senior Associate in the Dispute Resolution Department of S.P.A. Ajibade & Co., Lagos, Nigeria.
 CAP S6 LFN 2004.
 (2021) LPELR-56178(CA) (pp. 31 – 33 paras A – B).
 See, https://www.aluko-oyebode.com/wp-content/uploads/2021/06/GARNISHEE-PROCEEDINGS-IN-NIGERIA-THE-NEED-FOR-REFORM-f1.pdf (accessed on 22 June 2023).
 See CPR 22.4.
 See, CPR 32.15.
 See CPR 32.14.