Legal Updates
Ecobank Ordered To Pay Honeywell N72bn.
Ecobank Nigeria has been ordered to pay Honeywell Flour Mills N72.2bn in damages.
The order was given by a Federal High Court sitting in Lagos.
The ruling, delivered on Tuesday by Justice Mohammed Liman, brought to an end an aspect of the longstanding legal battle between the flour milling company and the bank.
The legal dispute stemmed from allegations and counterclaims between Honeywell Flour Mills and Ecobank.
The protracted legal battle kicked off in November 2015 when Ecobank obtained ex-parte orders from the Federal High Court to freeze Honeywell Flour Mills’ assets, including all its bank accounts.
This almost halted Honeywell Flour Mills’ business as they could not fulfil their stakeholder obligations.
They could not pay suppliers, process Letters of Credit, and collect payment from distributors, thus endangering the livelihood of over 2,000 employees and causing significant reputational and operational damage.
After weeks of struggling to run a business without access to their bank accounts, Honeywell Flour Mills applied for discharge of the orders, with the court varying the asset freezing ex-parte orders and allowing the company limited access to its accounts.
In March 2016, a Court of Appeal overruled the ex-parte orders to restore Honeywell Flour Mills’ right to operate its accounts without any restrictions, stating that Ecobank’s application to freeze the assets should not have been allowed to stand.
In an appeal against the judgment, Ecobank asked the Supreme Court to overturn the Court of Appeal decision.
Ecobank Ordered To Pay Honeywell N72bn.
The highest judicial authority, however, was established in July 2018 and upheld the appellate court’s decision that an ex-parte injunction was not permitted to be filed in a winding-up petition.
After the Supreme Court upheld the Court of Appeal’s judgment, Honeywell Flour Mills demanded Ecobank fulfil its undertaking to compensate the company for the loss suffered due to the baseless ex-parte order. The company sought damages over N72bn against Ecobank.
In his arguments, Honeywell Flour Mills’ lead counsel, Bode Olanipekun, argued that the Supreme Court determined that the ex parte orders obtained by the bank against the plaintiff were improper and once a court makes a finding is made that an application is wrong, then that application is frivolous.
Ecobank’s representative, Kunle Ogunba, argued that in its undertaking, it gave a condition that if HFMP suffers any damage, it should notify the registrar of the court, who will then inform the bank.
According to the bank, that condition was not carried out, so HFMP is not entitled to damages.
After careful examination of the evidence and deliberation, the court decided, ultimately favouring Honeywell Flour Mills and granting all four reliefs sought, totalling N72.2bn.
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