The Federal High Court sitting in Lagos has ordered Ecobank Nigeria Limited to pay Honeywell Flour Mills Plc. N72.2 billion in damages, ending the legal tussle that began in 2015 between the two entities.
The ruling was delivered on Tuesday by Justice Mohammed Liman, who held that Ecobank erred by obtaining an ex parte order to freeze Honeywell’s bank accounts and assets.
The ex parte order was issued to wind up the company and resolve its liabilities to the bank. In return for the ex parte order, Ecobank agreed to compensate Honeywell for any losses.
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As a consequence, Honeywell Flour Mills faced significant disruptions in its operations as they were unable to fulfill commitments to stakeholders. The company encountered difficulties in processing letters, paying distributors, and suppliers, putting the livelihoods of over 2,000 employees at risk and severely impacting their reputation and business operations.
Struggling for weeks to run their business without access to their bank accounts, Honeywell Flour Mills eventually applied for the discharge of the orders. The court granted limited access to its accounts by varying the asset freezing ex-parte orders.
In March 2016, the Court of Appeal overturned the ex-parte orders, restoring Honeywell Flour Mills’ right to operate its accounts without restrictions. The Court of Appeal stated that Ecobank’s application to freeze the assets should not have been allowed to stand.
However, Ecobank was dissatisfied with the Court of Appeal’s ruling and took the matter to the Supreme Court. In July 2018, the Supreme Court upheld the judgment of the Court of Appeal.
Following the confirmation of the Court of Appeal’s decision by the Supreme Court, Honeywell Flour Mills demanded that Ecobank fulfill its promise to compensate for the loss incurred due to the illegitimate ex-parte decree. To recover damages, the corporation sued Ecobank for over N72 billion.
“The plaintiff was denied the use of funds in his account based on the ex parte order granted in favor of the defendant. It is therefore my firm view that the plaintiff (Honeywell) is entitled to the amount claimed… The argument of the defendant in his written address is therefore not acceptable as the contents of the document are the best evidence and they speak for themselves,” he said.
“The provisions of the winding up rules are very clear and unambiguous. The defendant cannot claim ignorance of this provision as ignorance of the law is no excuse and it is even more inexcusable if it is committed by a lawyer. The ex parte application was therefore made ultra vires.”
Justice Liman firmly concluded that the court was undeniably convinced that Ecobank had violated the law and caused substantial harm to Honeywell Flour Mills through the asset freeze. Despite Ecobank’s efforts to challenge the legality and technical aspects of the restrictions and seek the dismissal of the lawsuit, the court held its ground in favor of Honeywell Flour Mills.
The court found the defendant’s arguments to be unconvincing and granted all four reliefs requested by the plaintiff, resulting in a total award of N72.2 billion.
“The plaintiff was denied the use of funds in his account based on the ex parte order granted in favor of the defendant. It is therefore my firm view that the plaintiff (Honeywell),” the court ruled.
The legal dispute, which stemmed from a series of allegations and counterclaims between Honeywell Flour Mills and Ecobank, ended just in time for a spinoff dispute between the two entities.
Earlier this month, Ecobank had written First Bank Nigeria Holdings, seeking to stop an N87.8 billion share acquisition deal initiated by Honeywell. Ecobank claimed it’s being owed up to N13,507,052,417.99 by Honeywell Group and its owner Otudeko, and by purchasing the FNBH shares, the company is diverting funds that ought to be used for the repayment of the debt.
In its response, Honeywell described the letter as false. The flour mill through its lawyers said “No order of the court has awarded any judgments sum (as debt owed) at all in favor of Ecobank as a liability from our clients or any of the Honeywell companies.”
Ecobank said it would appeal the High Court’s ruling, which it described as “perverse and cannot stand the test of time.’