A few months ago, Heritage Bank Ltd grabbed the headlines when it employed a novel debt recovery stratagem against Senator Andy Uba. Placard-wielding employees of the bank “picketed” the residence of Senator Uba, demanding the payment of an alleged N5billion debt. In a swift response, Senator Uba alleged that the bank’s action was politically-motivated. He threatened the bank with a libel suit, and demanded an apology in five national dailies and (interestingly) N5billion in damages.
Over the years, the Central Bank of Nigeria (CBN) and deposit money banks have employed diverse measures to tackle the perennial problem of non-performing loans. Notably, in 2015 the CBN directed banks to commence publication of details of “delinquent debtors” in at least three national dallies every quarter. Expectedly, the implementation of this directive resulted in a barrage of libel suits, some of which are still pending. This discourse examines circumstances in which imputations of insolvency or indebtedness may be libellous. It is by no means an exhaustive examination of this subject matter.
The tort of libel
“Good name in man and woman, dear my lord, is the immediate jewel of their souls; who steals my purse steals trash … but he that fliches from me my good name robs me of that which not enriches him, and makes me poor indeed”. This excerpt from Shakespeare’s Othello succinctly captures the essence of the law relating to libel. An act may be libellous if it wrongfully injures another person’s good name and reputation.
A party alleging libel must show that a statement: (i) was defamatory, (ii) referred to him, and (iii) was published in a permanent form to a third party. Generally, a statement may be libellous if it does any of the following: (i) lowers a person in the estimation of right-thinking members of the society; (ii) exposes a person to hatred, contempt or ridicule; (iii) causes other persons to avoid a person; (iv) discredits a person in his office, trade, profession, or (v) injures the financial credit of a person: Sule v Orisajimi  10 NWLR (Pt 1681) 513 at 526H-A.
Justification, absolute privilege, qualified privilege and fair comment are notable defences to a libel suit. An extensive analysis of these defences is beyond the scope of this discourse. Where a libellous statement is true, this would constitute a complete defence to a libel action. Statements made in judicial proceedings are protected by the defence of absolute privilege. For example, a petitioner who files a winding-up petition on the ground of insolvency and advertises same (upon a court’s order), will not be liable for libel even where the court subsequently dismisses the petition for lacking merit. A defamatory newspaper report may be protected by the defence of qualified privilege where, in the absence of malice, the maker had a legal or moral duty to publish the report to a person who had a corresponding interest or duty to receive it.
Allegation of insolvency
The learned authors of Clerk & Lindsell on Torts have expressed the view that “there is nothing defamatory per se in an imputation of insolvency, for a person may lose his money by pure misfortune”. This statement should be viewed with caution. Instructively, in some developed countries, insolvency/bankruptcy is perceived as a phase in life or business which many may journey through.
In contrast, in Nigeria, stigma is a pervasive feature of insolvency/bankruptcy irrespective of the cause of the insolvency/bankruptcy. Consequently, mere imputation of insolvency may convey a defamatory interpretation. In Agi v FCMB Plc (2013) LPELR-20708 at 53B-54D, Tur JCA quoted the proposition of the learned authors of Gatley on Libel and Slander to the effect that: “it is defamatory to say that any person (whether or not he is a trader or in business and including a corporation) is insolvent…”
Insolvency may be cash flow (inability to pay debts as they fall due) or balance sheet (the total value of assets being less than the total liabilities). Solvency and financial soundness are undeniably qualities which are crucial to proper conduct of business. An imputation of insolvency may carry the defamatory meaning that the alleged insolvent is one unworthy of credit, financially reckless or incapable of prudently managing his/its resources. Typically, such allegation may discourage third parties from dealing with the alleged insolvent for obvious reasons. The foregoing may adversely affect the trade or business operations of the alleged insolvent with consequent damage to his/its financial credit.
Allegation of indebtedness
An allegation of indebtedness may not be defamatory merely because it is untrue. Put differently, not all false imputations are defamatory. It has been stated that it is not defamatory to merely input that one owes money because that “is to say what is true of every house holder…on most days of the month”: Wolfenden v Giles (1892) 2 Br. Col. R at 284. Similarly, in Winstanley v Hampton  1 KB 319 at 321, Caldecote CJ stated that “a mere statement that the plaintiff was indebted to the defendant could not be held to be defamatory, apart from some special circumstances”. Again, these statements should be viewed with caution. The circumstances in which the imputations are made may make the imputations to convey defamatory interpretations.
In Wema Bank v Karunwi  1 SC 5, Karunwi commenced a libel suit against the bank following the latter’s allegation of indebtedness against Karunwi. Although Karunwi had been indebted to the bank in the past, he had fully paid his debt long before the date of the allegation. The trial judge held that libel had been established and awarded damages. Unfortunately the case report does not provide full details of the proceedings at the trial court — especially the basis of the trial court’s decision.
Allegation of delay or refusal in payment of debt
An untrue allegation of delay in paying, or refusal to pay, a debt may be libellous. While a delay in paying a debt may either be intentional or unintentional, refusal to pay a debt connotes an intentional act. Delay in paying, or refusal to pay, a debt could be due to innumerable reasons. Hence, it would be overly presumptuous to conclude that every imputation of delay in paying, or refusal to pay, a debt is libellous. Accordingly, in Stubbs Ltd v Mazure  66 at 82, Lord Wrenbury (in his dissenting judgment) stated that: “a man may refuse or delay to make payment of his debts for a variety of reasons perfectly consistent with solvency and honest intention, as for instance that he disputes the debt, or that he overlooked it, or that he is absent from the country, or that he is overwhelmed with engagements say of a political nature”.
On the other hand, the circumstance in which an allegation of delay in paying, or refusal to pay, a debt is made may portray the alleged debtor as being recalcitrant and not worthy of being given credit: Stubbs Ltd v Mazure [supra]. Such imputation may discourage members of the public from transacting with the debtor. It may also attract the ire, contempt or ridicule of the general public, especially those associated with the creditor such as employees, shareholders and depositors.
The rationale for publication of names of “delinquent debtors” in national dailies by deposit money banks (on the instruction of the CBN) has been explained as being to “name and shame” recalcitrant debtors. It is arguable that such publication is bound to stigmatise the alleged debtors and also expose them to public opprobrium, contempt and ridicule given the perennial problem of non-performing loans in Nigeria’s banking sector. This notwithstanding, it appears that even where an alleged debtor has been wrongly listed, banks and newspapers may escape liability on the basis of qualified privilege: Agi v FCMB Plc (supra) at pp. 57E-58A.
In Mainstreet Bank Ltd v Binna (2016) LPELR-48351(SC) the bank wrote to the respondent’s employer to seek for assistance in recovering a debt owed by the respondent. In fact, the respondent had fully repaid the debt at the relevant time. The respondent claimed that he was queried by his employer and his promotions were suspended on account of the bank’s letter. The Supreme Court upheld the bank’s defence of qualified privilege. The Supreme Court held that, although the bank’s allegation of indebtedness was false: (i) the bank had an official duty to inform the respondent’s employer of the current position of the loan, (ii) the respondent’s employer, having guaranteed the loan, had a corresponding interest to receive the information, and (ii) the bank honestly believed that the respondent had not fully repaid the loan at the time of writing the letter.
Indirect allegation of insolvency or indebtedness
Indirect imputation of insolvency, indebtedness or refusal to pay debts may be libellous. For instance, it may be defamatory to allege that a dismissal of an insolvency or a debt recovery suit constituted a miscarriage of justice. In Lewis v Daily Telegraph  AC 234, an English Court reached the foregoing conclusion in relation to an acquittal for murder. It may be libellous to impute that one has relied on limitations law to avoid paying a just debt.
It may also be libellous to allege that a party has absconded without paying its debts. In Stubbs Ltd v Mazure [supra], a newspaper publication erroneously listed Mr. M. as being one against whom a decree in absence had been obtained in a small debt court. The House of Lords held that, by way of innuendo, the publication falsely represented that Mr. M. had begun to refuse or delay to make payment of his debts and was not a person to whom credit should be given.
Dealing with a perceived recalcitrant debtor can often be extremely galling. Nevertheless, a creditor has to tread cautiously to avoid defaming the alleged debtor and creating a scenario where the hunter becomes the hunted.