Zumax Nigeria Ltd v First City Monument Bank Plc

For summary judgment, the court must ask whether the defence has a realistic, rather than fanciful, prospect of success and whether any other compelling reason requires a trial. A trust may arise where objectively construed payment instructions identify a specified beneficiary and show that funds are to be held for that beneficiary rather than freely used by the recipient. The absence of a conventional banker–customer relationship does not prevent a trust. A consent settlement induced by fraudulent misrepresentations, lacking consideration, or subject to unfulfilled conditions cannot bar proceedings. A floating charge does not crystallise merely because the chargee gives notice. Deliberate concealment postpones limitation, and laches will not bar recovery where delay was materially caused by the defendant’s conduct.

Zumax sought summary judgment on a proprietary claim for ten dollar transfers made from an account operated through Redsear into correspondent accounts held by IMB or IMB Morgan at Commerzbank. First City Monument Bank, as successor to IMB and Finbank, disputed liability and relied on payment, a Nigerian consent order and settlement, a debenture, limitation, abuse of process and a counterclaim alleging dishonest assistance.

The court also considered whether IMB controlled the IMB Morgan account, whether the transfers were held on trust, whether they had been repaid, and whether the 2005 Agreement and Consent Order were enforceable. The central question was whether FCMB had any defence or counterclaim with a real prospect of success, or whether there was another compelling reason for a trial.

1. Summary judgment. Under CPR 24.2, the claimant had to show that the defence and counterclaim had no real prospect of success and that there was no other compelling reason for trial. The court could reject factual assertions contradicted by documents where they had no real substance, without conducting a mini-trial.
2. Trust. The payment instructions, objectively construed, required the funds to be held for Zumax. The expressions directing payment for further or final credit to Zumax identified both purpose and beneficiary. The funds were recorded and treated as segregated and belonging to Zumax. The absence of a conventional deposit relationship with FCMB did not engage the ordinary banker–customer rule in Foley v Hill, and a debtor–creditor relationship would not itself exclude a trust. The transfers were impressed with an express trust, alternatively a Quistclose trust.
3. Control and payment. The evidence overwhelmingly established that IMB or FCMB controlled the IMB Morgan account, or that IMB Morgan acted as its nominee or agent. FCMB’s bankers’ draft defence was unsupported by records. The Warri Schedule recorded debits to Zumax’s Naira account, not repayment of the dollar transfers. The defence was hopeless for nine transfers. The position concerning the third transfer remained outstanding because further evidence might show that it had been re-credited to FCMB.
4. Settlement and Consent Order. FCMB’s claim to a debt of Naira 309 million was knowingly false. The 2005 Agreement was therefore unsupported by consideration and induced by fraudulent misrepresentations concerning both indebtedness and receivership recoveries. The Consent Order could not enforce an invalid agreement contrary to public policy. In any event, clause 17 made release conditional on fulfilment of all obligations, which had not occurred.
5. Other defences. The claim was not an abuse of process. The Nigerian proceedings concerned different funds and were substantively against Mr Chinye. The debenture was a floating charge and did not automatically assign the claim or crystallise merely upon notice. The limitation defence failed because section 21 of the Limitation Act 1980 applied to the trust, and deliberate concealment would in any event engage section 32. Laches was unavailable on the facts.
6. Counterclaim and order. FCMB’s counterclaim had no real prospect of success because IMB’s board knew of Mr Chinye’s directorship and conflict, and FCMB could not establish causation or loss. Summary judgment was granted for Zumax concerning the first, second, fourth to tenth transfers, subject to the outstanding third-transfer issue. Interest and consequential orders were reserved.

The judgment records that the jurisdiction challenge was dismissed by the Hollander Judgment and that FCMB’s appeal was dismissed by the Court of Appeal on 23 June 2016. The present judgment determined the substantive summary judgment application.