The Federal High Court sitting in Lagos has ordered Ecobank Nigeria to pay Honeywell Flour Mills N72.2bn in damages. The ruling, delivered on Tuesday by Justice Mohammed Liman, brought an end to a longstanding legal battle between the flour milling company and the bank.
The legal dispute stemmed from a series of allegations and counterclaims between Honeywell Flour Mills and Ecobank. The protracted legal battle began in November 2015 when Ecobank obtained ex-parte orders from the Federal High Court to freeze Honeywell Flour Mills’ assets, including all its bank accounts.
This almost halted Honeywell Flour Mills’ business, as they were unable to fulfill their obligations to stakeholders. They couldn’t pay suppliers, process Letters of Credit, or collect payment from distributors, endangering the livelihood of over 2,000 employees and causing significant reputational and operational damage.
After weeks of struggling to run a business without access to their bank accounts, Honeywell Flour Mills applied for the discharge of the orders. The court eventually varied the asset freezing ex-parte orders, allowing the company limited access to its accounts.
In March 2016, a Court of Appeal overruled 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.
Ecobank appealed against the judgment, asking the Supreme Court to overturn the Court of Appeal decision. However, the highest judicial authority upheld the appellate court’s decision in July 2018, ruling that an ex-parte injunction was not permitted to be filed in a winding-up petition.
Following the Supreme Court’s decision, Honeywell Flour Mills demanded that Ecobank fulfill its undertaking to compensate the company for the loss suffered due to the ex-parte order being baseless. The company sought damages in excess of N72bn against Ecobank.
In their arguments, Honeywell Flour Mills’ lead counsel, Bode Olanipekun, contended that the Supreme Court’s determination that the ex parte orders obtained by the bank against the plaintiff were improper rendered the bank’s application frivolous.
Ecobank’s representative, Kunle Ogunba, argued that in its undertaking, it required HFMP to notify the registrar of the court if they suffered any damage. According to the bank, this condition was not carried out, and therefore, HFMP is not entitled to damages.
After careful examination of the evidence and deliberation, the court ruled in favor of Honeywell Flour Mills, granting all four reliefs sought, totaling N72.2bn.”
