- It was malicious to join Jimoh Ibrahim, says judge•Bank to pay £1m damages
The Lagos State High Court in Ikeja yesterday slammed Union Bank for converting Nicon Investment Limited’s £130.7million fixed deposit.
The bank, in its counterclaim, said it deducted the money over a loan owed by the claimant’s sister company, Global Fleet Oil & Gas Limited.
But, the court set aside all acts of the bank on the claimant’s pound sterling fixed deposit account.
It awarded £1million as damages for the bank’s breach of its fiduciary duties to the claimant and negligence.
The court also held that it was “malicious” for the bank to join Jimoh Ibrahim as a defendant in its counterclaim.
Justice O.O. Abike-Fadipe delivered the judgment in suit LD/1074/2010 by Nicon Investment against Union Bank.
The claimant stated that it maintained a banker/customer relationship with the defendant and operated a British pound sterling fixed deposit account with the bank.
Nicon Investment said it applied for and was granted a loan facility.
Although the offer letter indicated that the deposit of pounds sterling from Global Oil & Gas Ltd would serve as collateral for the borrowed amount, the agreement was modified, with the claimant providing the security.
The bank confirmed the claimant’s deposits of £45,000,000.00 and £80,000,000.00, which were fixed for 90 days at an interest rate of five per annum, subject to rollover.
The bank also confirmed placing a lien on the fixed pound sterling deposits for the facilities of N10billion and N16billion extended to the claimant, with the lien remaining until full repayment of the facilities.
The defendant confirmed the fixed deposit balance of £130,720,557.06 as of April 30, 2010.
However, the claimant said on May 18, 2010, it received notification from the bank indicating a unilateral reduction of the fixed deposit to £130,682,918.93.
The reduction, Nicon Investment said, purportedly resulted from a joint reconciliation and mutual agreement to liquidate non-performing loans to Global Fleet using proceeds from the claimant’s fixed deposit account.
The claimant denied any reconciliation or agreement regarding its fixed deposit account with the bank.
The claimant alleged that the bank converted the sum of £130,720 557.06 to U.S. dollars and subsequently to naira without its knowledge, mandate or authorisation.
According to NICON Investment, the bank unilaterally managed the account and transferred N19,360,623,788.43 to settle the alleged indebtedness of Global Fleet’s account, while applying the remaining N9,437,097,276.57 to partially settle the claimant’s supposed debt.
The claimant told the court that no meeting, correspondence, or agreement existed between the parties to liquidate any loan.
“All actions on the pound sterling fixed deposit account by the defendant were unauthorised and contrary to the facility terms granted to the claimant,” Nicon Investment said.
The claimant accused Union Bank of maligning Ibrahim in the media and alleging indebtedness while omitting that the debt was secured by deposits.
Nicon Investment said it suffered significant damages due to the bank’s actions, including other illegal charges and wrongful penalties, which deprived it of the opportunity to utilise the funds for property business and expansion.
But the bank contended that both the claimant (Nicon Investment) and its sister company (Global Fleet), as customers, operated various accounts and utilised loan facilities from the bank.
“Both companies’ accounts were treated as related accounts with the knowledge and consent of both companies,” Union Bank stated.
The defendant contended that it was unfair for the claimant, having benefited from the waiver of penalty charges, to claim that the bank could not apply the funds to settle the claimant and Global Fleet’s indebtedness after giving prior approval.
Justice Abike-Fadipe entered judgment for the claimant against the bank in reliefs one to nine and 12 to 17.
The judge held that the amount standing to the credit of the claimant in its fixed deposit account was to the tune of £130,720,557.06 as of April 30, 2010.
“The defendant bank’s unilateral act of converting the sum…from the claimant’s fixed deposit account to US Dollars without the due authorisation and/or mandate of the claimant is wrongful, null and void,” the judge held.
The judge added: “The defendant bank’s act of converting the fixed deposit of the claimant from British Pounds Sterling to US Dollars and Dollars to Naira is unauthorised and is null and void.
“The pounds sterling fixed deposit account of the claimant is not tied to the indebtedness of Global Fleet Ltd and/or meant in any way or manner whatsoever to provide security for the said debt.
“The defendant bank’s unilateral use of part of the claimant’s £130,720,557.06 to liquidate Global Fleet’s debt without the mandate and/or due authorisation of the claimant is wrongful, null and void.”
The judge granted “an order setting aside all acts of the bank pertaining to the claimant’s pound sterling fixed deposit account”.
The court awarded “£1million as damages for the bank’s breach of its fiduciary duties to the claimant and negligence”.
Justice Abike-Fadipe dismissed the bank’s counterclaim in its entirety with N10 million costs.
The judge added: “The third defendant to the counterclaim was not a necessary party to this suit and was wrongly joined…The joinder of the third defendant to the counterclaim in this suit was malicious.
“Union Bank Plc ceases to have the power to pursue the alleged indebtedness upon the sale of the said alleged indebtedness to Asset Management Corporation of Nigeria.”
Union Bank: we’ll appeal
Union Bank, in a statement by its Chief Brand and Marketing Officer, Mrs. Olufunmilola Aluko, said it would appeal the judgment.
The statement reads: “Union Bank of Nigeria acknowledges the recent judgment of Justice Abike Fadipe of the Ikeja High Court in the matter involving Senator Jimoh Ibrahim, NICON Investment Limited, Global Fleet, and the Bank.
“We wish to assure our customers, partners, and the public that Union Bank operates with the highest levels of professionalism, ethical conduct, and legal compliance in all our dealings.
“While we respect the authority of the court, we strongly disagree with the judgment delivered and have instructed our lawyers to file an appeal against it immediately.
“The court’s findings, including its position on the consolidation of indebtedness, locus standi, and third-party liability, are 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 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.
“The Bank remains resilient and focused on continuing to deliver excellent service and value to its customers.
“We appreciate the continued trust and support of all stakeholders as we navigate this legal process.”
