Ecobank loses appeal against Honeywell in alleged ₦3.5bn debt

The Supreme Court has ruled that the Federal High Court in Lagos was right to assume jurisdiction on a suit filed by Honeywell Flour Mills Plc and its two sister companies against Ecobank Nigeria Limited.

The apex court affirmed that the lower court’s decision to dismiss the preliminary objection filed by Ecobank, challenging the jurisdiction of the Federal High Court to hear the suit.

Honeywell Flour Mills Plc; Anchorage Leisures Limited and Siloam Global Limited had, in the suit, urged the court to declare that they were no longer indebted to Ecobank, having paid an agreed sum of ₦3.5 billion as the full and final payment of their debt to the bank.

The firms urged the Federal High Court to order the bank to release to them, all the securities and collateral they used to secure the loan from the bank.

They also urged the Federal High Court to mandate Ecobank to update the status of their accounts on the Central Bank of Nigeria’s CRMS portal for all non-performing loan accounts.

Besides, they prayed the court to perpetually restrain Ecobank and its assignees from making any representation in any form to imply that they were still indebted to the bank in any way.

But in response to the suit, Ecobank filed a preliminary objection, challenging the jurisdiction of the Federal High Court to entertain the suit.

The bank contended that the dispute giving rise to the suit did not stem from a banker-customer relationship that the Federal High Court had jurisdiction to entertain.

However, in a November 11, 2015 ruling, Justice Mohammed Idris, then of the Federal High Court, dismissed Ecobank’s objection, holding that he had jurisdiction to hear the suit.

But displeased with the judge’s decision, Ecobank went on appeal.

However, the Court of Appeal agreed with Justice Idris, holding that the Federal High Court had jurisdiction to hear Honeywell’s suit.

Contrary to Ecobank’s contention that the suit did not stem from a banker-customer relationship, the Court of Appeal, in its lead judgment, held that “I have carefully perused the said (Honeywell’s) statement of claim, with particular reference to paragraphs 6 and 24, as well as the relief sought in paragraph 45, and the only rational conclusion I can draw therefrom is that there is a banker/customer relationship between the respondents and the appellant.”

Again, not pleased, Ecobank appealed to the Supreme Court.

But in a July 13, 2018 lead judgment by Justice Mary Peter-Odili, the Supreme Court upheld the decisions of both the Federal High Court and the Court of Appeal, dismissing Ecobank’s preliminary objection.

Other Justices of the Supreme Court on the panel that decided the appeal were Justices Olabode Rhode-Vivour, John Okoro, Chima Nweze and Amiru Sanusi.

Agreeing with the two lower courts, Justice Peter-Odili held, “Evidently clear from what has been showcased is that what is available as the relationship between the parties is that of banker-customer, a situation of interaction emanating from a banking transaction where both parties assumed the roles of creditor and debtor, however, the colouring the presentation may seem to be.”

Justice Peter-Odili said it was clear that the suit bordered on banker-customer relationship judging from a July 22, 2013 meeting, where Ecobank agreed to grant Honeywell and its sister companies a concession of ₦2 billion to bring their total debt of ₦5.5 billion down to ₦3.5 billion.

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