N5.5 billion Debt: Supreme Court affirms Honeywell’s indebtedness to Ecobank

The Supreme Court, on Friday, dismissed Honeywell Flour Mills Limited’s appeal challenging the judgement of the Court of Appeal in a debt dispute with Ecobank Nigeria Limited.

Honeywell and its sister firms, Anchorage Leisures Ltd and Siloam Global Ltd, have been locked in a N5.5 billion debt dispute with Ecobank.

While Honeywell, Anchorage and Siloam claimed to have paid N3.5 billion as final payment for the debt, Ecobank insisted the firms were still indebted to it.

The sensational legal battle has gone on for years with a fallout of the case also playing out in disciplinary hearings on the sideline.

In January 2018, the Legal Practitioners’ Disciplinary Committee (LPDC), acting on a petition by Honeywell, withdrew the Senior Advocate of Nigeria (SAN) rank of Ecobank’s lawyer, Kunle Ogunba. The lawyer only regained his rank after a review of his case by the committee nine months after.

Honeywell, one of Nigeria’s largest manufacturers and marketers of wheat-based products, including flour, semolina, wheat meal, brown flour, pasta and noodles, had petitioned the LDPC, accusing Mr Ogunba of acts of misconduct.

The company accused Mr Ogunba of instituting a multiplicity of suits before different judges of the Federal High Court on the same subject with the deliberate aim of abusing the process of court and derailing the course of justice.

Acting on the petition, LPDC withdrew Mr Ogunba’s SAN rank in January 2018, after finding it to be meritorious. Mr Ogunga, in reaction, wrote the LPDC in September 2018.

On reviewing Mr Ogunba’s case, the committee restored his SAN rank on 20 September 2018.

Supreme Court decisionDelivering its judgement on the substantive issues in the case on Friday, a five-member panel of the Supreme Court led by Tijjani Abubakar, said Honeywell, Anchorage, and Siloam were indebted to Ecobank.

But the court held that the firms’ appeal succeeded in part, declaring that they were right to commence their suit at the Federal High Court in Lagos.

In the lead judgement delivered by Emmanuel Agim, the Supreme Court also held that the Court of Appeal was wrong to have held that the trial court lacked jurisdiction to have heard Honeywell’s case.

“This appeal succeeds in part in respect of issues numbers one and two… Accordingly, I hold that the appellants have the locus standi to sue and that the trial court has the jurisdiction to determine the suit,” Mr Agim said.

However, the Supreme Court affirmed the verdict of the Court of Appeal, which said Honeywell and its sister companies are still indebted to Ecobank.

“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 (Honeywell).

“I hold that the appellants’ claim at the trial court fails and it is hereby dismissed.

“The appellants shall pay the cost of N1 million to the respondent (Ecobank),” Mr Agim said.

Background

On 6 August 2015, Honeywell and its sister firms, Anchorage Leisures Ltd and Siloam Global Ltd, sued Ecobank before the Federal High Court in Lagos over repayments of a N5.5 billion debt.

In the suit, the companies urged the Federal High Court in Lagos 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.”

As a result, they also asked the court to hold that Ecobank “was obligated to issue letters of discharge, release collaterals by which the prior indebtedness was secured.”

In addition, Honeywell and its sister companies begged the court to compel Ecobank to “update” their status on the “Credit Risk Management System Portal of the Central Bank of Nigeria.”

But in its defence, Ecobank argued that an agreement was reached between it, Honeywell, Anchorage and Siloam on 22 July 2013, “for a definite settlement of N3.5 billion to be paid in terms of N500 million immediately and the balance of N3 billion before the exit of the CBN examiners from” Ecobank’s offices.

Ecobank had contended 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-half-year period in three equal half-yearly instalments.”

The bank informed the court that the debt repayment agreement “lapsed in August 2013.”

But in its judgement, the judge, Ayokunle Faji of the Federal High Court, upheld the arguments of the Honeywell Group and granted their prayers.

Dissatisfied with the verdict, Ecobank in 2015, approached the Court of Appeal.

In its decision, the appellate court overturned the judgement of the Federal High Court, setting the stage for the Supreme Court’s appeal.