Introduction
Debt recovery is one of the most litigated issues in Nigerian courts. Creditors often wonder: Must I tender the debtor’s statement of account? Is an admission of debt compulsory? What about a demand letter? Fortunately, Nigerian appellate courts have clarified these issues over time.
Below are the principles established by the Court of Appeal on what is legally required to succeed in a debt recovery action.
1. Must a Creditor Tender the Debtor’s Statement of Account?
The law does not impose an absolute requirement to tender a debtor’s statement of account. As held in the case of:
Okpu v. Trust Bond Mortgage Bank Plc (2021) LPELR-54554(CA)
Per Biobele Abraham Georgewill, JCA at pp. 31–33, paras. E–B:
“Thus, it cannot be the law… that… the debtor’s Statement of Account must be tendered and that failure to do so would be fatal… once a creditor leads sufficient credible evidence in proof of the indebtedness… he will succeed notwithstanding whether he tendered the debtor’s Statement of Account in evidence or not or whether the debtor admitted his indebtedness or not.”
2. Utilization of the Loan Funds is Irrelevant
The Court emphasized that once funds are credited under agreed terms, whether or not the debtor uses the money is immaterial.
Okpu v. Trust Bond Mortgage Bank Plc (2021) LPELR-54554(CA)
Per Biobele Abraham Georgewill, JCA at p. 37, paras. A–E:
“Whether the debtor decides to utilize the loan sum or not… is neither here nor there… The loan is not credited into the debtor’s account by the creditor for safekeeping and return upon its due repayment date.”
3. Is a Demand Letter Mandatory Before Filing a Suit?
Generally, yes. A demand notice is a condition precedent where the debt is not due automatically. In such cases, the cause of action only accrues when a formal demand is made and the debtor fails or refuses to pay.
Wema Bank Plc v. Owosho (2018) LPELR-43857(CA)
Per Mohammed Lawal Garba, JCA at pp. 12–14, paras. D–A:
“…the law requires and imposes a legal duty on the Appellant to make a formal demand… which was to activate the right of enforcement of the cause of action… The letter of demand was to have been written by the Appellant before the legal action was filed…”
4. Demand Letter is Required Even for Guarantors (With Exceptions)
Where the loan has a fixed expiry date, the creditor may not need to send a demand letter before suing the principal debtor. However, where the guarantor’s liability arises “on demand”, then a demand must be served before the creditor can sue.
Ojemeni v. Sterling Bank Plc (2014) LPELR-24442(CA)
Per Tinuade Akomolafe-Wilson, JCA at pp. 19–20, paras. B–A:
“…if the surety undertakes to pay on demand, the creditor’s cause of action against him accrues only when a demand is made and not complied with… the cause of action accrued only when demand notice was served on the appellant…”
5. Demand May Be Dispensed With in Some Circumstances
Not all debt recovery claims require prior demand notice. Where the debt is inherently due and the contract allows automatic enforcement, a demand may not be required.
Bashir Mohd. LD (Nig) Ltd & Anor v. Gidalle & Ors (2023) LPELR-61561(CA)
Per Ita George Mbaba, JCA at pp. 25–28, paras. F–D:
“The requirement of prior formal demand Notice for recovery of the debt was not required in this case… the debt was due, and the legal action was not premature.”
6. When Does a Cause of Action Accrue?
The Court has consistently held that in debt matters, cause of action accrues from the date of demand and refusal to pay.
The National Assembly & Ors v. Stanton Ltd (2025) LPELR-80391(CA)
Per Joseph Olubunmi Kayode Oyewole, JCA at p. 9, paras. A–C:
“In actions for recovery of debt, the cause of action accrues from the demand of the debt… See Goodwill Co. Ltd v. Calabar Cement Co. Ltd (2009) LPELR-8351(CA); Ishola v. Societe Generale Bank (Nig.) Ltd (1997) LPELR-1547(SC).”
7. Limitations Act and Demand Letter Timing
Failure to make the demand within the statutory time frame can render the action statute-barred.
Wema Bank Plc v. Owosho (2018) LPELR-43857(CA)
Per Mohammed Lawal Garba, JCA at p. 23, paras. B–G:
“…it was premature… and the failure to make the formal demand within the time limited by Section 8(1) of the Limitation Law… the right… was lost by effluxion of time…”
8. AMCON and Ex-Parte Orders
Sections 49 and 50 of the AMCON Act allow ex-parte applications for possession or freezing orders. However, the substantive action must be commenced within 14 days of the ex-parte order.
Josco AG Global Resources Ltd & Anor v. AMCON (2018) LPELR-45637(CA)
Per Habeeb Abiru, JCA at pp. 45–49, paras. F–D:
“…the failure of the Respondent to commence the substantive action within fourteen days… did not render the substantive action incompetent… the penalty is that the interim order lapses.”
9. What if the Action Lasts More Than Three Months?
Paragraph 5:3 of the Practice Directionsencourages conclusion of AMCON debt actions within 3 months, but this does not affect jurisdiction if not met.
Josco AG Global Resources Ltd & Anor v. AMCON (2018) LPELR-45637(CA)
Per Habeeb Abiru, JCA at pp. 49–51, paras. E–A:
“…non-completion of an action within three months did not take away, dent or affect the jurisdiction of the trial Court… The submission of counsel… does not represent the law.”
Conclusion
To sum up:
A statement of account or express admission is not mandatory for success in debt recovery. A demand notice is generally required unless the debt is due upon expiry or by contract. Creditors must act within limitation periods or risk being statute-barred. AMCON can rely on ex-parte orders but must commence substantive proceedings timely.
The courts have interpreted these principles liberally in favour of creditors where credible evidence exists, while also requiring procedural compliance.
Disclaimer:
This blog post is for general informational purposes only and does not constitute legal advice. Readers are advised to consult a qualified legal practitioner for professional guidance based on specific facts and circumstances.
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