DUE DILIGENCE THRESHOLD IN GARNISHEE PROCEEDINGS: NAVIGATING THE JUDICIAL INNOVATION INTRODUCED IN THE SUPREME COURT’S DECISION IN CENTRAL BANK OF NIGERIA V OCHIFE & 3 ORS

INTRODUCTION

Garnishee proceedings have long been a principal means of enforcing monetary judgments in Nigeria, where a judgment creditor may attach funds belonging to a judgment debtor in the hands of a third party, usually a bank (otherwise known as the garnishee). Historically, this mechanism has been straightforward: once judgment is obtained, the creditor identifies the debtor’s bank and applies ex parte for a garnishee order nisi, compelling the garnishee to show cause why the funds should not be paid over. However, recent judicial development appears to have modified this long-settled enforcement procedure.

The Supreme Court has now introduced a layer of procedural responsibility on the judgment creditor, holding that before initiating garnishee proceedings, the creditor must conduct due diligence to ascertain that funds actually stand to the credit of the judgment debtor with the named garnishee. This judicial innovation has generated considerable debate and as the legal community grapples with this evolving standard, the contours of what constitutes sufficient due diligence, procedure for garnishee proceedings and how it can be lawfully achieved have become central to the discourse on the future of garnishee proceedings in Nigeria.

EXPANDING DUTY OF THE JUDGMENT CREDITOR AND GARNISHEE

Under the provisions of the Sheriffs and Civil Process Act[1], a judgment creditor who has obtained an unsatisfied monetary judgment may, by ex parte application supported by affidavit, request the court to attach debts owed by a third party (the garnishee) to the judgment debtor. The right of the Judgment creditor under this extant provision is on the reasonable believe that the funds of the Judgment debtor is in custody of the garnishee and that the same should be used or will be sufficient for the satisfaction of the adjudged sum.  The court may then order such attachment and direct the garnishee to appear and show cause why the attached funds should not be used to satisfy the judgment debt and the costs of the proceedings[2]. Due to the near impossibility in ascertaining the persons in custody of the Judgment Debtor’s funds, Judgment creditors resort to speculative approach of proceeding against persons and institutions perceived to likely be in custody of the Judgment Debtor’s funds.

However, the Supreme Court’s recent decision in the case of C.B.N v Ochife & 3 Ors[3] delivered on 24^th day of January 2025, has recalibrated this dynamic by requiring the judgement creditor to present specific and credible particulars demonstrating that funds actually exist in the garnishee’s custody. In this case, the Apex Court held thus:

“The practice of counsel filing garnishee proceedings against numerous banks in a hit or miss endeavour to get hold of the judgment debt from whosoever must be deprecated. Judgment creditors must do their due diligence before they commence garnishee proceedings to ensure that they file proceedings against persons actually holding money belonging to the judgment debtor.”[4] 

This development elevates the Judgment creditor’s burden from a mere procedural step to a substantive obligation. It compels the Judgment creditor to conduct a form of pre-litigation investigation and due diligence, to substantiate the claim that the garnishee holds funds belonging to the debtor. Judgment creditor can no longer engage in a mere act of “net-casting,” hoping to chance, upon the judgment debtor’s funds in the hands of third parties in order to secure or satisfy the judgment debt. Worthy to note that while the judgment of the apex court under review placed the obligation on the Judgment creditor, it did not provide clear direction or guidance on what form such due diligence should take or how it should be evidenced before the court.

Correspondingly, the decision heightens the obligations of garnishees under Section 83 of the Sheriffs and Civil Process Act (SCPA). It is no longer sufficient for a garnishee to file a generic affidavit to show cause that merely denies liability or makes vague assertions of uncertainty regarding the debtor’s funds. The court now expects a substantive and fact-specific response, directly addressing the material particulars raised by the Judgment creditor.[5] Failure to provide these particulars may result in the court treating the garnishee’s affidavit as non-compliant and may proceed to enter a garnishee order absolute against the garnishee. This evidently compels garnishees to be more diligent, transparent, and responsive when confronted with garnishee proceedings. In essence, the courts are asserting that the era of perfunctory compliance is over; garnishees must now demonstrate concrete facts if they seek to avoid liability under an order absolute.

WHAT CONSTITUTES DUE DILIGENCE AND THE REQUIRED THRESHOLD IN GARNISHEE PROCEEDINGS?

The Supreme Court in the case of Subaya Metalware Nigeria Limited. v. Toyota M. Corporation.[6] explained due diligence to mean the care and attention that is ordinarily exercised by a reasonable and prudent person under the circumstances. Determining what constitutes “due diligence” before commencing garnishee proceedings is perhaps the most complex aspect of the emerging judicial position. With due respect to the erudition of the law lords, the judgment, while imposing this new standard, offers no clear yardstick for compliance, leaving the boundaries of due diligence to be developed through practice and subsequent judicial interpretation. In principle, due diligence should involve reasonable efforts by the Judgment creditor to verify that the judgment debtor maintains an identifiable and active financial relationship with the proposed garnishee. This may include obtaining credible information from prior business transactions, correspondence, or court exhibits that disclose account relationships or outstanding obligations.

However, in practice, this requirement presents serious obstacles. In this circumstance, Nigerian banks and financial institutions are bound by the duty of confidentiality under the banker–customer relationship[7]. The right to privacy, including confidentiality of communications, is protected under Section 37 of the Constitution[8]. Additionally, the Evidence Act stipulates that a banker or bank officer cannot be compelled to produce bank records or testify about a customer’s transactions in legal proceedings, unless by order of the court made by special cause[9]. Thus, a Judgment creditor’s attempt to verify the existence of funds before filing a garnishee application may be constrained by privacy laws. The question then becomes: how can a Judgment creditor in the circumstance, meet with this burden without crossing legal boundaries? Does the performance of due diligence fall under special causes that may require an order of the court before filing of garnishee proceedings? This underscores the need for clearer judicial or regulatory guidance, perhaps through practice directions or amendments to the Sheriffs and Civil Process Act, to balance the objectives of due diligence with the realities of confidentiality and access to financial information.

STRIKING A BALANCE BETWEEN ENFORCEMENT EFFICIENCY AND CONFIDENTIALITY

The challenge now lies in striking a delicate balance between the court’s intention to curb frivolous or speculative garnishee applications and the long-standing duty of confidentiality owed by banks to their customers. While the judiciary seeks to promote efficiency and fairness in enforcement, imposing a due diligence requirement without providing access mechanisms, risks undermining the very enforcement process it aims to strengthen. On one hand, a Judgment creditor must demonstrate credible grounds before dragging banks into proceedings; on the other, banks are legally and ethically bound not to divulge customer information without proper authorization or a valid court order. Achieving this balance may therefore require procedural reforms, such as allowing limited pre-garnishee disclosures under judicial supervision to ensure that confidentiality obligations are preserved while the enforcement of judgments remains practical and effective.

To achieve this balance, courts and policymakers might consider:

1.    Defining the minimum threshold of due diligence through Rules of Court or Practice Directions;

2.    Allowing limited judicial orders for pre-commencement disclosure where reasonable suspicion exists; and

3.    Reinforcing banks’ obligation to assist in enforcement without compromising lawful confidentiality.

CONCLUSION AND RECOMMENDATIONS

The Supreme Court’s stance in C.B.N v. Ochife & 3 Ors (supra) no doubt, marks a significant judicial shift in the landscape of garnishee proceedings in Nigeria, transforming what was once considered a simple enforcement process into a more evidence-driven exercise. While this innovation seeks to prevent abuse of court processes and protect financial institutions from speculative or indiscriminate attachments, it also raises practical and procedural dilemmas for Judgment creditors. The absence of defined parameters for what constitute “due diligence” leaves Judgment creditors in a precarious position, tasked with verifying the existence of funds that are, by law, cloaked in banker–customer confidentiality. Unless properly guided, this new standard, in our view, could inadvertently frustrate judgment enforcement rather than streamline it.

To reconcile these competing interests, there is an urgent need for judicial and legislative clarity. Courts, through practice directions, should articulate what constitutes the minimum threshold or sufficiency of due diligence, perhaps by setting a reasonable evidentiary threshold, such as prior transactional correspondence or admissions by the debtor. Additionally, the Sheriffs and Civil Process Act could be amended to provide a framework for limited pre-garnishee disclosure orders, allowing Judgment creditors to verify relevant information under judicial supervision without breaching confidentiality obligations.

Please note that the foregoing does not in any way constitute legal advice. Kindly contact the Authors for any legal advice on the subject matter