The first appellant took a loan of N1,000.000. 00 from the respondent to finance a contract to supply 1000 metric tones of low pour fuel oil to two of the boats of Nigerian National Shipping Lines, M.V. River Andoni and M.V. River Ikpan. The loan was repayable within one month. The Nigerian National Shipping Lines Company Ltd. defaulted and there was a protracted negotiation which resulted in an action in court being instituted. The principal loan of N1, 000,000.00 was eventually repaid, but owing to protracted negotiation and delay on the part of the shipping lines which was eventually scrapped, a huge sum of money accrued as interest. It is the accrual of interest that is the basis of the present proceedings. There appears not to be much difference between the parties. The parties are agreed that there is no outstanding capital sum and also that interest is payable on the principal sum but are unable to agree on the rate of interest applicable. While the appellants contend that the rate of interest applicable is 10% the respondent maintained in the suit that it was 13.5%. This difference remains the only issue in the instant appeal.

The loan was granted August, 1992 and was repaid in January, 1994. The sum of N2, 278,250.00 was accrued interest at 30th September, 1995.

The respondent subsequently filed an action at the High Court of Kaduna State against the appellants under the undefended list procedure pursuant to Order 22 Rule 1 of the High Court of Kaduna State (Civil Procedure) Rules. The respondent claimed the sum of N2, 278,280 being the outstanding interest payable on the loan which was granted in August, 1992 and was repaid in January, 1994. The sum claimed accrued as interest as at 30th September 1995. The respondent also claimed 10% interest per annum from 1st October 1995 till the final liquidation of the debt.

The trial court found that there was no triable issue shown in the various notices of intention to defend and entered judgment in favour of the respondent.

Appellants appealed to the Court of Appeal.