Intercontinental Bank v Akingbola & Ors

The Bank sued its former Managing Director for large losses said to have arisen from three categories of payments: two payments to Fuglers (London solicitors) and a series of payments to four related Tropics companies. The Claimant sought summary judgment under CPR Part 24 in respect of those payments.

The Court summarised the parties' cases against the background that the Defendant owed statutory and common law duties as a director (ss.279–283 CAMA and, on the Claimant's case, BOFIA obligations). The issues concentrated on (i) whether the Tropics payments of c.£68m (N18.6bn) were misappropriations or lawful reimbursements for share purchases; and (ii) whether the Fuglers payments had been effectively repaid or otherwise justified.

The judge held that the defence to the Tropics payments was shadowy and unlikely to be supported by documents, but, because the case involved potentially material documents not yet obtained and serious factual issues, the court would not finally determine liability on a Part 24 application. Instead the court granted conditional leave to defend the Tropics claim subject to payment into court of a sum to be agreed or ordered; if that condition is not met, judgment for the Claimant will follow for the £68m (or N18.6bn) plus interest. The first Fuglers payment was stood over in the expectation of a proposed repayment route via Regal/ICML; leave to defend was granted in respect of the second Fuglers payment. The court applied the principles for conditional leave derived from M.V. Yorke Motors v Edwards and considered relevant statutory provisions of CAMA (notably ss.159 and 160) when analysing whether payments could amount to unlawful financial assistance.

Background and nature of the application. The Claimant bank brought multiple claims against its former Managing Director following his dismissal. This Part 24 summary judgment application addressed three discrete elements: the first Fuglers payment (£8,540,134.58), the Tropics payments (c.£68m / N18.6bn) to four inter-related companies, and the second Fuglers payment (£1.3m). A freezing order against the Defendant remained in force.

Relief sought. Summary judgment that the Defendant repay the stated sums and interest.

Key issues framed. (i) Whether the Tropics payments were unauthorised siphoning of the Bank's funds or legitimate reimbursements to brokers for share acquisitions made on the Bank's mandate; (ii) whether such payments, if made to assist acquisition of the Bank's own shares, constituted unlawful "financial assistance" under CAMA s.159 (and whether s.160 applied); (iii) whether any repayment/replacement of funds (notably in relation to the second Fuglers payment) could be relied on as a set-off or defence; and (iv) whether the defendant should be granted conditional leave to defend.

Evidence and argument. The Claimant relied on internal bank audit evidence and the Inspection Group's findings that there was no supporting documentation for the Tropics payments, that the payments were made rapidly and irregularly from accounts not ordinarily used for customer transactions, and that later reconstructions were fictitious. The Defendant relied principally on his own evidence and statements from Tropics' general manager and the Bank's Financial Controller claiming the payments reimbursed share purchases, and asserted that relevant documents could be available (some allegedly in Tropics' offices sealed by the EFCC).

Court's reasoning and decision. The judge analysed three alternate bases put forward by the Claimant for summary judgment (no explanation, unlawful acquisition of the company's own shares under s.160 CAMA, and unlawful financial assistance under s.159 CAMA). On s.159 the court considered persuasive English and Commonwealth authorities (notably Steen v Law and Fowlie v Slater) on when lending can be "in the ordinary course of business" and concluded that the question whether the Bank's lending fell within the statutory proviso required detailed factual inquiry and could not be resolved as a matter of law on a Part 24 application. On the factual issue, the judge found the Defendant's explanation for the Tropics payments to be slender and improbable but recognised that documents possibly outside the Defendant's control (and investigations by EFCC) meant it would be inappropriate to decide the claim finally without trial or an appropriate conditional regime. Applying the established principles for conditional leave, the court granted conditional leave to defend the Tropics claim subject to payment into court of an agreed or ordered amount, with default judgment if the condition was not met. The first Fuglers payment was stood over because of a possible repayment route via Regal/ICML; the second Fuglers payment gave rise to an arguable defence and leave to defend was granted.

Wider context. The judgment notes the scarcity of Nigerian case law on such company law questions and the reliance on English authorities; it also records the court's caution about making summary findings that would amount to concluding dishonesty without a full trial and adequate documentary disclosure.

First instance: The court did not grant the Claimant summary judgment for the Tropics payments but granted conditional leave to defend those claims subject to payment into court of a sum to be agreed or ordered, failing which judgment for the Claimant for £68m (or N18.6bn) plus interest would follow. The first Fuglers payment was stood over in the hope of a repayment route via Regal/ICML; the second Fuglers payment attracted leave to defend. The judge reached these outcomes because the Defendant's account was slender and improbable but material factual issues and potentially relevant documents (including some not yet obtained) prevented final disposal on a Part 24 application.