A Lagos State High Court sitting in Ikeja has awarded £1 million in damages against Union Bank of Nigeria Plc in favour of NICON Investment Ltd, following the bank’s breach of fiduciary duties and negligence in managing the claimant’s fixed deposit account.
In the landmark judgment delivered by Justice Olubunmi Abike-Fadipe on Wednesday, the court also ordered Union Bank to pay ₦50 million to NICON Investment as damages for unlawful deductions and illegal penalties imposed on its account.
The case, marked LD/1074/2010, had NICON Investment as the claimant, while Union Bank stood as both defendant and counterclaimant. The counterclaim also listed Global Fleet Oil and Gas Ltd and Jimoh Ibrahim as co-defendants.
Justice Abike-Fadipe condemned Union Bank’s unauthorized conversion of NICON Investment’s fixed deposit account from British Pounds to US Dollars and subsequently to Naira, as well as the unilateral withdrawal of £130,720,557.06 to offset the alleged indebtedness of Global Fleet Oil and Gas Ltd. She ruled that the act was unlawful, null, and void.
According to the judge, any debt owed by Global Fleet Ltd was not to be liquidated from the funds standing in NICON Investment’s account unless with express authorisation from the account signatories.
The court further directed Union Bank to provide a complete statement of account of NICON’s fixed deposit portfolio, including a comprehensive reconciliation of all transactions and accrued interest from inception to date.
An additional ₦1.18 billion, which the bank had previously deducted as penalties and charges (as disclosed in a letter dated April 28, 2010), was also deemed improper by the court.
The judge granted the declaratory reliefs sought by NICON, which included:
A declaration affirming that its fixed deposit stood at £130,720,557.06 as of April 30, 2010.
A declaration that NICON was not indebted to Union Bank in the sum of ₦30.36 billion or any other amount.
A declaration that all charges made without consent were arbitrary, illegal, and against the terms of the loan agreement.
The court also dismissed Union Bank’s counterclaim in its entirety, awarding ₦10 million in costs to both the claimant and third defendant (Jimoh Ibrahim), respectively.
The judge only partially upheld relief eight concerning collateral issues and dismissed claims related to shareholding in First City Monument Bank and Oceanic Bank due to lack of proof.
The dispute arose after NICON Investment claimed it had maintained a fixed deposit account with Union Bank, initially serving as security for loan facilities of ₦10 billion and ₦16 billion. The bank, through letters dated February 4, 2009, acknowledged fixed deposits of £45 million and £80 million at an interest rate of 5% per annum, subject to rollover terms.
Union Bank later attempted to offset debts allegedly owed by Global Fleet Ltd by drawing from this fixed deposit—an action the court has now ruled as illegal.
Reacting to the judgment, Mrs Olufunmilola Aluko, Chief Brand and Marketing Officer of Union Bank, expressed strong disagreement with the ruling. She stated that the bank has instructed its legal team to appeal immediately, asserting that the judgment contradicts established legal principles on indebtedness consolidation, third-party liability, and locus standi.
Aluko emphasized that Union Bank had transferred the relevant debt obligations to the Asset Management Corporation of Nigeria (AMCON) and that all its actions were within the bounds of applicable banking laws and practices.
“We are confident in our legal position and intend to vigorously pursue all lawful avenues to ensure justice is served,” she said.
