N5.5bn Debt: Supreme Court Affirms Judgment against Honeywell, Others over Debt to Ecobank

Alex Enumah in Abuja

The Supreme Court has upheld an earlier judgment of the Court of Appeal given against Honeywell Flour Mills Plc and two other firms in a dispute with Ecobank over unsettled debt.

Honeywell and its sister firms – Anchorage Leisures Limited and Siloam Global Limited – have been in dispute with their bank, Ecobank over disagreement about the settlement of a N5.5 billion debt.

Although the three companies claimed to have paid N3.5 billion in final settlement of their indebtedness to the bank, Ecobank has insisted that they were still in debt.

In a judgment on Friday, a five-member panel of the apex court upheld the arguments by Ecobank’s lawyer, Kunle Ogunba (SAN) and affirmed an earlier judgment of the Appeal Court, Lagos, which set aside the May 21, 2019 decision of the Federal High Court in Lagos.

In the lead judgment, Emmanuel Agim resolved two out of the three issues identified for determination in favour of the appellants and one in favour of the respondent.

Justice Agim faulted the Court of Appeal for holding that the appellants lacked locus standi to have instituted the suit at the Federal High Court in Lagos.

He also held that the Court of Appeal was wrong to have held that the trial court lacked jurisdiction to have heard Honeywell’s case.

Justice Agim said: “This appeal succeeds in part in respect of issues numbers one and two, and failed in respect of issue number three. Accordingly, I hold that the appellants have the locus standi to sue and that the trial court has the jurisdiction to determine the suit.

“I affirm the judgment of the Court of Appeal, setting aside the decision of the Federal High Court, granting the reliefs claimed for by the appellants. I hold that the appellants’ claim at the trial court fails and it is hereby dismissed.

“The appellants shall pay the cost of N1million to the respondent. The cross appeal, was subsumed in the argument of the main appeal. It is no longer relevant,” Justice Agim said.

Honeywell, Anchorage and Siloam had on August 6, 2015, sued Ecobank at the Federal High Court in Lagos over repayment of the N5.5 billion debt.

The companies urged the trial court to declare that “having paid the sum of N3.5 billion in cumulative settlement of their total outstanding indebtedness” (of N5.5 billion) to Ecobank, “they owned no further debt obligation” to Ecobank “arising from their banker-customer relationships.”

They also urged the court to hold that Ecobank “was obligated to issue letters of discharge, release collaterals by which the prior indebtedness was secured.”

The three firms prayed the court to compel Ecobank to “update” their status on the “Credit Risk Management System Portal of the Central Bank of Nigeria.”

Responding, Ecobank argued that an agreement was reached between it and the three firms on 22 July, 2013, “for a definite settlement of N3.5billion to be paid in terms of N500million immediately and the balance of N3billion before the exit of the CBN examiners from” Ecobank’s offices.

Ecobank argued that the repayment agreement period was for six months as it rejected Honeywell and its sister companies’ request to “pay the balance over a one-and-a-half-year period in three equal half-yearly installments.”

The bank contended among others, that the debt repayment agreement “lapsed in August 2013.”

In the judgment, Justice Ayokunle Faji of the Federal High Court, Lagos held in favour of the firms and granted all their reliefs.

Ecobank appeal the decision at the Court of Appeal in Lagos, which in its decision, voided the judgment of the Federal High Court.

This made Ogunba to, on behalf of Ecobank, proceed to the Supreme Court.