Fidelity Bank Plc V. Kates Associated Industries Ltd. (2012)

LawGlobal-Hub Lead Judgment Report – COURT OF APPEAL

SAMUEL CHUKWUDUMEBI OSEJI, J.C.A (Delivering the Leading Judgment)

This appeal is against the judgment of the High Court of Anambra State holden at the Onitsha Judicial Division (Coram: Hon. Justice V.N. Umeh) delivered on the 21st day of June 2010, wherein the said court granted reliefs in favour of the plaintiff.

The appellant herein (Fidelity Bank Plc) was the defendant in the trial court while the Respondent (Kates Associated Industries Ltd) was the plaintiff.

The Respondent which was a customer of the appellant applied for and was granted a N10 million credit facility which was approved as follows, Vide an offer letter dated 28/11/1996.

(i) N5, 000,000 Import Finance Facility

(ii) N5, 000,000 Overdraft facility

Other term stipulated therein is that the tenor of the Facility would be for one year on revolving interest basis at 21% interest per annum.

The following were agreed as collaterals for the said facility:-

(i) Original shipping documents to be consigned to the appellant.

(ii) Comprehensive insurance cover on the Goods to be undertaken by a reputable insurance out fit.

(iii) 30% minimum equity contribution.

(iv) Legal Mortgage over the Respondent’s property in Onitsha Subsequently, by a letter dated 14/2/98, the Respondent requested the appellant to endorse and release the Shipping documents to it. In the same letter, the Respondent also pledged the title documents of a property located in Port Harcourt and belonging to one Dr. T.C. Osanakpo as additional collateral for the facility, by which time the sum of N4, 319,036,40 was still outstanding as per the Import Finance Facility. The appellant did accept the additional collateral and released the shipping documents to the Respondent.

After series of pleas to the Appellant (vide letters) over failures to meet up with her payment obligations, the Respondent eventually made various payments, to clear the sum of N4, 319,036.40. Thereafter, the Respondent wrote a number of letters to the appellant demanding for the release to it, of the title documents for the property belonging to Dr. T.C. Osanakpo situated at Port Harcourt.

The appellant did not accede to the request and in its eventual response through a letter informed the Respondent that it will not release the said title documents until all out standings under the Import finance facility and the Overdraft facility have been liquidated.