A Lagos State High Court in Ikeja has awarded the sum of £1m as damages against the Union Bank of Nigeria in favour of NICON Investment, for the bank’s breach of its fiduciary duties to NICON and negligence.
Justice Olubunmi Abike-Fadipe, who delivered the judgment on Wednesday, also awarded the sum of N50m in favour of NICON Investment against Union Bank as damages for unlawful deduction and illegal penalties and charges made on the account of the claimant by the defendant.
The claimant in the suit marked LD1074/2010 is NICON Investment while Union Bank of Nigeria Plc is the defendant.
The counterclaimant is Union Bank Nigeria Plc, while NICON Investment Ltd, Global Fleet Oil and Gas Ltd and Jimoh Ibrahim are the defendants to the counterclaim.
The judge also directed Union Bank to avail the claimant (NICON Investment) of the statement of account of its fixed deposit account as well as reconciliation of same from inception till date.
“The defendant is directed to render an account of all the transactions on the claimant’s pound sterling fixed deposit account together with all accrued interests thereron.
“An order setting aside all acts of the defendant pertaining to and/or connected with and affecting the claimant’s pounds sterling fixed deposit account vis-a viz its conversion to S dollars, Naira, and unilateral liquidation of the indebtedness of Global Fleet Ltd and NICON Investment from the said account,” the court held.
According to the judge, the removal of the sum of £130,720,557.06 by Union Bank from the fixed deposit of the NICON Investment account with the bank, without due authorisation was wrongful and null and void.
Justice Abike-Fadipe held that the defendant’s bank’s unilateral act of converting the fixed deposit of the claimant from British pounds sterling to US dollars and dollars to Naira is unauthorised and null and void.
The court held that the indebtedness of Global Fleet to the defendant, if any, is neither payable from £130,720,557.06, the fixed deposit of the claimant nor any amount deductible therefrom in respect of Global Fleet Ltd indebtedness.
The judge stated that Union Bank could not unilaterally deal with or make any deduction from the fixed deposit account of the claimant without the authorization, mandate, or consent of the signatories to the fixed deposit account as on the mandate card.
She held that the defendant cannot unilaterally transfer money from the claimant’s account to liquidate Global Fleet indebtedness to it, without the due authorisation and or/ consent of the claimant.
The judge also held that the sum of N1,180,420,589.05, mentioned in the defendant’s letter dated April 28, 2010, as penalties and charges were deducted from the claimant’s account with the accruable interest at the prevailing banking rate.
She, therefore, awarded the sum of N50m to the claimant against the defendant as damages for unlawful deduction and illegal penalties and charges made on the account of the claimant by the defendant.
She also awarded the sum of £1m as damages for the defendant’s breach of its fiduciary duties to the claimant and negligence.
She dismissed Union Bank’s counterclaim in its entirety with costs awarded to the claimant and the third defendant to the first counterclaim severally in the sum of N10m, respectively and severally.
“For the second defendant to the first counterclaim against the defendant, reliefs one to seven is dismissed, judgment is entered in part on relief eight, as the second defendant to the first counterclaim did not prove that the First City Monument Bank and Oceanic Bank shares were part of the collateral to secure the facility granted vide exhibit D2,” she held.
The claimant commenced the action by writ of summons filed on May 28, 2010, accompanied by a statement of claim filed the same day and frontloaded processes.
The claimant amended its processes and filed an amended writ of summons dated October 16, 2020, and an amended statement of claim dated October 13, 2020.
The claimant asked for a declaration that it’s a duly registered and incorporated limited liability company operating a fixed deposit account domiciled with Union Bank, payable with demand interest.
“A declaration that the amount standing in the claimant’s fixed deposit is £130,720,557.06 as of April 30, 2010.
“A declaration that the claimant is not indebted to the defendant to the tune of N30,360,417,056.41, or in any sum or whatsoever, as falsely claimed by the defendant in its letter dated April 28, 2010.
“A declaration that all charges whether the penalty or otherwise unilaterally made by the defendant bank on the claimant’s account are against the terms and conditions of the offer of loan if any and its therefore arbitrary, illegal, null and void.”
The claimant had applied for and was granted a loan facility from Union Bank.
The claimant alleged that although the offer letter indicated that the deposit of the pounds sterling from Global Oil and Gas would serve as collateral for the borrowed amount.
The agreement was modified and it was the claimant who provided the security, this was confirmed by the defendant in two letters dated February 4, 2009, wherein the defendant acknowledged the claimant’s deposit of £45m and £80m.
The claimant contended that this deposit was fixed for 90 days, at an interest rate of 5 per cent per annum, subject to the rollover unless advised otherwise.
Additionally the defendant, through the two letters dated February 4, 2009, confirmed playing a lien on the fixed deposit pounds sterling for the facility of N10bn, N16bn, extended to the claimant, with the lien remaining until the full payment of the facilities.
The defendant confirmed the fixed deposit balance as of April 30, 2010, through a letter dated May 5, 2010, and May 12, 2010, stating the balance as £130,720,557.06.
However, on May 18, 2010, the claimant received notification from the defendant dated May 12, 2010, indicating a unilateral reduction of the fixed deposit to £130,682,918.93.
Dissatisfied with the judgment, Union Bank’s Chief Brand and Marketing Officer, Mrs Olufunmilola Aluko, said the bank strongly disagreed with the judgment delivered and that the bank had instructed their lawyer to immediately appeal the judgment.
She said the court’s findings, including its position on the consolidation of indebtedness, locus standi, and third-party liability, were at variance with established legal principles and the bank’s understanding of the facts.
“We are confident in our legal position and intend to vigorously pursue all lawful avenues to ensure that justice is served.
“Union Bank had previously transferred the relevant debt obligations to the Asset Management Corporation of Nigeria (AMCON), and we maintain that all actions taken in this regard were in line with applicable laws and banking practice.
“We reiterate our unwavering commitment to acting in good faith, protecting stakeholder interests, and preserving the integrity that has defined our institution for over a century.
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