First City Monument Bank Plc v Zumax Nigeria Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Newey,Lord Justice Males,Lord Justice Lewison |
| Judgment Date | 01 March 2019 |
| Neutral Citation | [2019] EWCA Civ 294 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2018/0488 |
| Date | 01 March 2019 |
[2019] EWCA Civ 294
Lord Justice Lewison
Lord Justice Newey
and
Lord Justice Males
Case No: A3/2018/0488
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
BUSINESS LIST (ChD)
Mr Justice Barling
Royal Courts of Justice
Strand, London, WC2A 2LL
Miss Poonam Melwani QC and Mr Paul Henton (instructed by Clyde & Co) for the Appellant
Mr Francis Collaço Moraes (instructed by Mordi & Co) for the Respondent
Hearing dates: 12–14 February 2019
Approved Judgment
This is an appeal from a decision of Barling J granting the claimant, Zumax Nigeria Limited (“Zumax”), summary judgment.
Zumax is a Nigerian company which formerly provided engineering and other services to oil companies. It is based in Warri, Nigeria.
The defendant, First City Monument Bank plc (“FCMB”), is a Nigerian bank. As a result of a merger with Finbank plc, which had itself come into being as a result of a merger involving, among others, IMB International Bank plc (“IMB”), FCMB has inherited the rights and obligations of IMB.
The proceedings relate to some bank transfers dating from 2000 to 2002. At that time, Zumax's main banker was IMB, with which it held a Naira-denominated account in Lagos. Zumax also had Naira-denominated accounts with Warri branches of Citibank Nigeria, Standard Trust Bank and Equitorial Trust Bank.
IMB, too, had a Naira-denominated account in Nigeria with Standard Trust Bank, as well as ones with Guaranteed Trust Bank and Citizens Bank. It also held two US dollar-denominated accounts, numbered 160122964015 and 160122964010, at the London branch of Commerzbank. A third US dollar-denominated account with Commerzbank (“the IMB Morgan Account”) was held by an entity associated with IMB, IMB Morgan plc (“IMB Morgan”, formerly known as “IMB Securities plc”), and for the purposes of this appeal FCMB accepts that no distinction is to be drawn between IMB and IMB Morgan. All three Commerzbank accounts were “correspondent” accounts.
At least in part, the oil companies for which Zumax undertook work would be invoiced in US dollars and asked to pay the money into an account that Redsear Limited (“Redsear), a company incorporated in the Isle of Man, held with Chase Manhattan International (“Chase”) in London. Barling J described Redsear as a nominee of Zumax, and it was common ground before us that Redsear held the funds that it received from Zumax's customers on trust for Zumax. Money in the account (“the Redsear Account”) would be used to meet Zumax's US dollar business needs, with any surplus funds being transferred to Nigeria.
The accounts that IMB and IMB Morgan held with Commerzbank had a central role in these arrangements. Where money was to go to Nigeria, either to Zumax itself or (say) to one of the company's suppliers, it would in the first instance be transferred from the Redsear Account to one or other of the Commerzbank accounts. In the case of money destined for Zumax, the plan, according to Zumax, was that it should be credited with Naira to a corresponding value on its account with IMB in Lagos. FCMB, in contrast, maintains that Zumax would often prefer to use an informal “parallel” market which offered a more attractive exchange rate than the official rate. Mr Toyin Owolabi, who was IMB's treasurer and head of treasury/business development between 2000 and 2004, has said in a witness statement that in such circumstances:
“IMB would pay through its local NGN [i.e. Naira] account with Citizens Bank, by issuing a cheque to the customer or paying into one of the customer's local current accounts with another bank in Nigeria or direct to a third party (such as a supplier) as the customer wishes”.
The present proceedings concern ten transfers from the Redsear Account to the Commerzbank accounts that were made between May 2000 and April 2002. The transfers were as follows:
| Number | Date of receipt | Amount |
| 1 | 10 May 2000 | $205,000 (less $15 charge) |
| 2 | 11 May 2000 | $105,000 (less $15 charge) |
| 3 | 12 May 2000 | $205,000 (less $15 charge) |
| 4 | 24 July 2000 | $505,000 (less $15 charge) |
| 5 | 8 January 2001 | $355,000 & $250,000 (less $15 charge on each transfer) |
| 6 | 10 August 2001 | $901,000 (less $15 charge) |
| 7 | 23 October 2001 | $410,000 |
| 8 | 24 December 2001 | $155,000 (less $15 charge) |
| 9 | 27 February 2002 | $251,000 (less $15 charge) |
| 10 | 23 April 2002 | $410,000 (less $15 charge) |
Five of the transfers were into the IMB Morgan Account and the remainder into one or other of IMB's own accounts. In each instance, save in respect of the third transfer, Chase received manuscript instructions from Mr Edwin Chinye, who was a director of Redsear and the signatory on its account with Chase. Mr Chinye was also the managing director of IMB (and a director of Zumax), but it is common ground that he was not acting on behalf of IMB in signing the Redsear instructions (see paragraph 66(vii) of the judgment). To a substantial extent, Mr Chinye's instructions were then reflected in the relevant entries in the statements that Commerzbank produced for the three accounts.
In the case of, for example, the first transfer, the manuscript instructions asked Chase to transfer $205,000 to one of IMB's accounts with Commerzbank, stating:
“Beneficiary: International Merchant Bank IMB
for further credit to
Zumax Nigeria Limited
Ref: By order of Redsear Ltd UK”.
The Commerzbank statement then recorded in respect of the credit entry (for $204,985, after deduction of a $15 charge):
“FOR FURTHER CREDIT TO ZUMA[X] NIGERIA LIMITED BEING USD 205000 LESS OUR CHG REDSEAR LTD”.
Similar wording was to be found in the manuscript instructions relating to the other eight transfers to which this appeal relates (the third transfer not being the subject of the appeal). All the instructions included either “for further credit to Zumax” or “for final credit to Zumax”. In the majority of cases, that language was reflected in the entries in the Commerzbank statements (though “for further credit” was abbreviated to “FFC” on two occasions). With the seventh and eighth transfers, however, there was no reference to Zumax in the bank statements. The entry for the eighth transfer, for example, stated:
“RFB [i.e. reference for beneficiary] /BY ORDER/REDSEAR LIMITED//ATTENTION FARRAH UDIN
REDSEAR LIMITED 24 RIDGEWAY STREET DOUGLAS ISLE OF MAN”.
The present proceedings were issued on 3 October 2013. By them, Zumax claims a declaration that FCMB is liable to account “as trustee” for the total of the ten transfers (viz. $3,752,000), an order for FCMB to pay the sum found due on the taking of such account, and interest. The amended particulars of claim allege:
“Upon receipt of the said funds IMB, its agent/nominee and its successors (including FCMB) held the said fund on resulting or constructive trust for Zumax which retained an equitable proprietary interest in the said funds. Further, or in the alternative, as bankers IMB and its successors (including FCMB) owed Zumax a fiduciary duty to ensure that the said funds were transferred to Zumax.”
Zumax goes on to allege that Zumax never received any of the money and that FCMB therefore “holds the said funds on trust or on constructive trust for Zumax”. As regards interest, this is said:
“The sum total of the interest amounts claimed by Zumax … is U.S.$211,894,783 (equivalent to £169,823,310 at the closing exchange rate on 21 November 2016 …). Zumax further claims such interest amount as accrues from 21 November 2016 until judgment at the compound rate of 30% per year or such other rate as the court thinks fit.”
On 5 March 2014, Zumax applied for summary judgment. The application was stayed to await the outcome of a dispute as to jurisdiction (which was resolved in Zumax's favour: see [2016] EWCA Civ 567), but eventually came before Barling J in 2017. As the judge explained, Mr Francis Collaço Moraes, who appeared for Zumax (as he also did before us), made clear at the outset of his submissions that the claim was a proprietary one and that the application was made “solely on the basis that a trust in favour of Zumax exists” (paragraph 55 of the judgment). FCMB both denied that there was any trust and advanced a number of other defences. The judge, however, did not consider that there was anything of substance in FCMB's arguments against the existence of a trust (paragraph 83) and concluded (in paragraph 82):
“In the light of the evidential material shown to me, I consider that all the criteria are satisfied for the transfers in question to be impressed with a trust in favour of Zumax at the stage when the funds arrived in the relevant Commerzbank accounts. In my view the trust constitutes an express trust, but failing that it is a Quistclose trust.”
The judge further rejected a suggestion from FCMB that it would be Redsear rather than Zumax that would have the right to enforce any trust, saying (in paragraph 80):
“I consider that such a submission is unsustainable. First, I consider that the settlor was clearly Zumax, acting through its agent/nominee Redsear. But even if the settlor was Redsear, I can see no principled reason why, in the present circumstances, Zumax, as the sole and express beneficiary, is not entitled to enforce the trust. I am fortified in that view by the decision of Mr Michael Crystal QC, sitting as a Deputy High Court Judge, in Re Magaretta Limited [2005] BCC 506 at paragraphs 15–30. See also Carreras Rothmans v Freeman Matthews Treasure Limited [1985] Ch 207 at 222F–223G per Peter Gibson J, and General Communications Limited v Development Finance Corporation of New Zealand Limited [1992] LRC (Comm) 247 at 257–260.”
...
To continue reading
Request your trial
-
Zumax Nigeria Ltd v First City Monument Bank Plc
...by setting out the background to the 2013 Claim and, as did Miles J, gratefully adopt the summary of Newey LJ in the Court of Appeal ( [2019] EWCA Civ 294) when overturning the summary judgment orders of Barling J: “[2] Zumax is a Nigerian company which formerly provided engineering and ot......
-
Huseyin Ali v Ismet Dinc
...suggesting such trusts cannot be generalised to apply to any form of property: see First City Monument Bank Plc v Zumax Nigeria Ltd [2019] EWCA Civ 294, at [19] (Newey LJ). Here C's claim is that D1 holds the Properties on a Quistclose 235 The relevant law is as set out by Lord Millett in ......
-
ZI Wang v Graham Darby
...Hence the focus, if not strict requirement, on circumstances such as payment into a segregated bank account: see First City Monument Bank Plc v. Zumax Nigeria Limited [2019] EWCA Civ 294 at 60 A constructive trust of the kind said to be relevant in the present case can arise when a specifi......
-
Amarjeet Singh Dhir v Flutter Entertainment Plc
...authorities on the Quistclose trust conveniently summarised by the Court of Appeal in First City Monument Bank plc v Zumax Nigeria Ltd [2019] EWCA Civ 294 at paras 179 This is a case to which the dictum of Lord Millett in Twinsectra Ltd v Yardley [2002] 2 AC 164 at para 73 is particularly ......
-
Court Of Appeal Confirms That Correspondent Banking Obligations Are Personal, Not Proprietary
...City Monument Bank plc v. Zumax Nigeria Limited [2019] EWCA Civ 294 The England and Wales Court of Appeal has handed down a judgment which clarifies the circumstances in which a Quistclose trust, or any trust, may (or may not) arise, in the context of a series of correspondent banking trans......
-
Failures for Consideration: Re‐Analysing Jurisdiction in Unjust Enrichment Claims
...467.73 Foskett vMcKeown [2001] 1 AC 102, 128 per Lord Millett and recently restated in First CityMonument Bank Plc vZumax Nigeria Ltd [2019] EWCA Civ 294 at [27] per Newey LJ, [76]-[82]per Lewison LJ. See generally H. Beale (ed), Chitty on Contracts (London: Sweet and Maxwell,33rd ed, 2019)......