Intercontinental Bank v Akingbola & Ors

On a summary judgment application, a defence supported by apparently credible evidence should be rejected only where it has no real prospect of success. The court should be cautious about resolving disputed facts summarily, particularly where further documents may become available before trial.

A statutory prohibition on financial assistance may depend on whether lending occurred in the ordinary course of the company’s lending business. That issue may require a factual assessment and cannot necessarily be resolved as a pure question of law. Where a defence is very weak but dishonesty and other issues remain for trial, the court may grant conditional leave to defend. A quantified legal set-off may also provide an arguable defence to a restitutionary claim.

The claimant Nigerian bank sought summary judgment against its former managing director concerning three categories of payments: the first Fuglers payment, the Tropics payments totalling approximately £68 million, and the second Fuglers payment.

The defendant argued that the Tropics payments reimbursed stockbrokers for share acquisitions made on the bank’s mandate, or alternatively represented lending to customers for the acquisition of shares. The claimant alleged misappropriation and breach of duty. The application also raised the effect of the Nigerian statutory prohibitions on financial assistance and a possible set-off concerning the second Fuglers payment.

1. Summary judgment and Option C. The court treated the meaning and application of section 159 of the Companies and Allied Matters Act C20 Laws of the Federation of Nigeria 2004 as a question of Nigerian law, assessed as a question of fact with assistance from expert evidence. The reasoning in Steen v Law and Fowlie v Slater showed that lending for the direct purpose of financing purchases of the company’s own shares would ordinarily fall within the prohibition. However, section 159(3)(a) left open whether lending by a bank in the ordinary course of its lending business was protected. Whether the payments fell within that exception depended on the facts and could not be resolved summarily.
2. Option A. The defendant’s explanation for the Tropics payments was very weak. The absence of supporting documentation, the payment process, the contrast with the documented treatment of another broker’s claim, and the unexplained reconstruction strongly supported the claimant’s case. Nevertheless, summary judgment would involve a finding of dishonesty against the defendant and two witnesses, while other issues remained for trial. The court therefore granted conditional leave to defend.
3. Conditional order. Following M.V. Yorke Motors v Edwards, the condition had to be capable of fulfilment. The defendant’s assertion that he had no assets was insufficient by itself. The amount and terms were left for argument and settlement of the order.
4. Second Fuglers payment. The defendant had an arguable case that the payment from the Tropics companies constituted a quantified legal set-off. The court considered that Guinness plc v Saunders could arguably be distinguished because the cross-claim in that case was unquantified and required an equitable set-off. Leave to defend was therefore granted on this issue.
5. The first Fuglers payment was stood over because the defendant undertook to use his best endeavours to secure payment to the claimant’s subsidiary. The Tropics claims were subject to conditional leave to defend, with judgment for approximately £68 million or N18.6 billion, plus interest, if the condition was not satisfied.

First-instance summary judgment decision. No prior appellate decision is stated in the judgment.