Facts:

The appellant is a commercial bank while the respondent is its customer. In August, 2008 the respondent applied to the appellant for a Letter of Credit (LC) in favour of Dr. Paul Lumann GmbH of Germany covering a total amount of N27,243,150.00 (Twenty Seven Million, Two Hundred and Forty Three Thousand, One Hundred and Fifty Naira) at the exchange rate of N140 to $1.00. The security for the transaction were two Platinum Certificate Deposits (PCD); one had N24,518,835.00 (Twenty Four Million, Five Hundred and Eighteen Thousand, Eight Hundred and Thirty Five Naira) in balance while the other had N2,724,315 (Two Million, Seven Hundred and Twenty Four Thousand, Three hundred and Fifteen Naira) with a combined accrued interest of 12% valued at over N4,000,000.00 (Four Million Naira). Both PCDs were investment portfolios of the respondent domiciled with the appellant and were both mature for payment at the time the respondent applied for the LC. Part of the terms of the LC was that the PCDs should be used as the guarantee for the transaction and that where the funds in them were insufficient to satisfy the LC, recourse should be made to the respondent’s current account for the balance.

The appellant carried out the instructions of the respondent by using the money in the PCDs to settle the LC and also proceeded to deduct the sum of N5,000,000.00 (Five Million Naira) from the current account of the respondent on the ground that the funds in the PCDs were insufficient to satisfy the LC. The respondent became aware of the situation when its cheques were returned unpaid by the appellant
because there were no funds in its current account after the appellant made the deduction. The respondent objected to the deduction on the ground that the combined amounts in the PCDs and the accrued interest were sufficient to discharge the LC and that it was entitled to a balance after all deductions and that there was no reason for the appellant to have resorted to funds in the respondent’s current account thereby dishonouring its cheque as a result. After some correspondence between the parties, the respondent filed a suit against the appellant at the High Court of Lagos State seeking among others, an order of the court to compel the appellant to refund the sum of N5,000,000.00 (Five Million Naira) allegedly deducted illegally from the respondent’s account. The respondent also sought damages for
the wrongful dishonour of its cheques on the ground that had the appellant not illegally made the deductions, it would have found enough funds in its account to honour the cheques.

After hearing the parties on the suit, the trial court gave judgment in favour of the respondent holding that the N5,000,000.00 (Five Million Naira) deducted by the appellant was wrongful and that same be paid back with accrued interest. The court however, did not grant damages in favour of the respondent with respect to the alleged wrongful dishonour of the respondent’s cheques. The appellant was
dissatisfied with the decision of the trial judge and consequently filed a notice of appeal at the Court of Appeal, Lagos Division challenging the holding of the trial court. The parties filed their briefs of argument and the respondent filed a preliminary objection to the appeal on the ground that some of the issues raised by the appellant do not flow from the grounds of appeal and not derived from the judgment of the trial court. The respondent also filed a cross-appeal to challenge the omission of the court in granting damages for the alleged wrongful dishonour of its cheques.