Nigeria Deposit Insurance Corporation V. Union Bank Of Nigeria PLC. & Anor (2015)

LawGlobal-Hub Lead Judgment Report – COURT OF APPEAL

AMINA ADAMU AUGIE, J.C.A. (Delivering the Leading Judgment)

This Appeal turns on a very narrow issue – the abuse of Court process, and it is hinged on a dispute over the property known as Fortune Towers situated at No. 27/29 Adeyemo Alakija Street, Victoria Island, Lagos, which originally belonged to Fortune International Bank Plc. [FIB Plc], before it became the subject of a number of litigations in various Courts.

The said FIB Plc., a licensed commercial bank, maintained a banking relationship with Union Bank Plc., the 1st Respondent in this Appeal, and in the course of their relationship, the 1st Respondent granted overdraft facilities to FIB, which were later secured with a Deed of Legal Mortgage; the said Fortune Towers was pledged as collateral in the legal Mortgage.

On 16/1/2006, the Central Bank of Nigeria revoked the License of FIB Plc. for failing to meet up with the minimum capital requirement of N25 Billion for commercial banks. An Interim Management Committee [IMC] was appointed to pilot its affairs. The Appellant later commenced a winding-up proceedings against FIB at the Federal High Court, Lagos.

On 19/1/2006, by an order of A.R. Mohammed, J., the Appellant was appointed Provisional Liquidator to manage and control its affairs. Meanwhile, when the IMC took over the affairs of FIB, it discovered that there were disputes between the 1st Respondent and FIB, which led to suits filed at the Federal High Court and at the Lagos State High Court.

In Suit No.FHC/L/CS/1321/2005 filed at the Federal High Court, FIB was Plaintiff and the 1st Respondent [Union Bank] was Defendant, and FIB claimed as follows in the Writ of Summons dated 16/12/2005 –

1. A Declaration that the unilateral deduction of the sum of N82,700.00 as legal charges for the perfection of legal mortgage over the Plaintiffs property with Land Certificate number 14/14/75 situate, lying being and known as 27/29 Adeyemo Alakija Street, Victoria Island, Lagos is wrongful; illegal, null and void.
2. A Declaration that the refusal of the Defendant to set off the Plaintiffs N250,000,000.00 Treasury Bill deposited with the Defendant as clearing collateral in order to reduce the current account outstanding balance and the consequent interest burden on the resultant overdrawn balance is illegal, null and void.
3. A Declaration that the plaintiff does not owe the Defendant the sum of N2,700,000,000.00.
4. A Declaration that the charging of illegal and arbitrary interest on the overdrawn balance of the Plaintiff with the Defendant over and above the CBN’s approved interest rate is null and void.
5. A Declaration that the Mortgage held by the Respondent over the Plaintiffs property with Land Certificate number 14/14/75 situate, lying being and known as 27/29 Adeyemo Alakija Street, Victoria Island, Lagos cannot be foreclosed by the Defendant in the circumstances of this case.
6. An order setting aside the said sum of N82,700,000.00 debited by the Defendant from the Plaintiffs account as legal charges for perfection of legal mortgage over the plaintiffs property and the interest thereon.
7. An order setting aside the said arbitrary interest and charges on the Plaintiffs property and the interest thereon.
8. An order of injunction restraining the Defendant by itself privies, agent, officer or assigns from selling, assigning, appointing receiver or otherwise foreclosing the Plaintiff’s right over the mortgaged property with Certificate number 14/14/75 situate, lying, being and known as 27/29 Adeyemo Alakija Street, Victoria Island, Lagos.”

FIB also filed an Application dated 29/12/2005 praying for the following –

(1) An Order of Interlocutory Injunction restraining the Defendant by itself or through its agents, privies, officers and or assigns from seeking to appoint or appointing a receiver under the Mortgage Deed or selling or attempting to sell the Plaintiff/Applicant’s property with land Certificate No.14/14/75 and situate at No.27/29 Adeyemo Alakija Street, Victoria Island, Lagos or taking benefit of the Mortgage Deed pending the hearing and determination of the Substantive suit.

(2) An Order of the Court appointing an external auditor to audit the accounts of the Plaintiff with the Defendant which is the subject matter of this suit”

In his Ruling delivered on 27/3/2007, Olomojobi. J., held as follows –

“I have gone through the processes filed in this suit – – In the Applicant’s letter dated 18/8/2004 to the Respondent bank, the Applicant authorized the Respondent to debit its account in respect of the perfection of Deed of legal Mortgage. The letter is better reproduced hereunder – – – As provided in the Mortgage Deed the Mortgagee i.e. the Respondent became the beneficial owner of the property until all moneys which are the subject of the security are paid. Clause 6 empowers the Respondent Bank to exercise its statutory power of sale on default of payment of the moneys due from the Applicant after it had demanded for same. Also, Clause 7 provides that the statutory power to appoint a Receiver may be exercised at any time after payment of the moneys secured has been demanded and the applicant had defaulted in paying its debt. Clauses 6 and 7 are reproduced hereunder – –

From the Respondent’s letter dated 22/7/2004, and the Applicant’s letter dated 18/8/2004, read with clauses 6 and 7 of exhibit D- the Deed of legal Mortgage, I am of the humble view that the Applicant has no legal right in the property situate at Number 27/29, Adeyemo Alakija Street, Victoria Island Lagos- the subject matter of this action and I so hold”.

Dissatisfied with the Ruling of Olomojobi, J., of the Federal High Court, FIB appealed to this Court with a Notice of Appeal dated 28/3/2007.

While Suit No. FHC/L/CS/1321/2005 at the Federal High Court was still pending, Fortune Towers was invaded by thugs and hoodlums, which prompted FIB to file Suit No: ID/1098/2007 at the Ikeja High Court of Lagos State, against UBN Property Co. Ltd. and the 1st Respondent herein [Union Bank], as the 1st and 2nd Defendants; it claimed as follows-