Zumax Nigeria Ltd v First City Monument Bank Plc
| Jurisdiction | England & Wales |
| Judge | Mr Justice Barling |
| Judgment Date | 10 November 2017 |
| Neutral Citation | [2017] EWHC 2804 (Ch) |
| Docket Number | Case No: HC-2013-000590 |
| Court | Chancery Division |
| Date | 10 November 2017 |
[2017] EWHC 2804 (Ch)
The Honourable Mr Justice Barling
Case No: HC-2013-000590
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Francis Moraes (instructed by Mordi & Co) for the Claimant
Dr Fidelis Oditah QC and Mr Phillip Aliker (instructed by Alan Taylor & Co) for the Defendant
Hearing dates: 24–26 January and 6–10 & 13 March 2017
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Index
| Paragraph | Heading or sub-heading |
| Page 4 | Glossary of defined terms |
| [1] | Introduction |
| [12] | Background |
| The present application for summary judgment | |
| [40] | The relevant principles |
| [48] | The defences and counterclaim pleaded |
| [51] | The transfers in question |
| [54] | The issues |
| (a) Was there a trust? | |
| [55] | The parties' submissions |
| [70] | Discussion of trust issue |
| [77] | Do the funds belong to Redsear? |
| [81] | Does the Debenture preclude a trust? |
| [82] | Conclusion on trust issue |
| [84] | The 3 rd transfer — 12 May 2000 for $205,000 |
| [91] | (b) Did IMB control the IMB Morgan Commerzbank Account? |
| [104] | (c) The payment defence: Were the funds in question repaid to Zumax by bankers' drafts? |
| [132] | The 10 th transfer: $410,000 |
| [138] | Conclusion: the payment defence |
| [142] | (d) Does the 2005 Agreement or the Consent Order bar these proceedings? |
| [146] | Effect of the ruling of Nicol-Clay J on 24 June 2010? |
| [147] | There was no consideration for the 2005 Agreement? |
| [157] | Were the 2005 Agreement/Consent Order induced by fraudulent misrepresentations? |
| [160] | Representation as to Zumax's indebtedness |
| [162] | Representation as to the extent of recoveries in receivership |
| [172] | No reliance/inducement? |
| [181] | Conclusion: Whether the 2005 Agreement/the Consent Order were induced by fraudulent misrepresentations |
| [183] | The 2005 Agreement/Consent Order is subject to unsatisfied preconditions? |
| [192] | (e) Is this claim an abuse of the process of the court, or otherwise precluded, because of the 784 Proceedings? |
| [201] | (f) Does the Debenture deprive Zumax of title to sue for the funds? |
| [209] | Discussion and conclusions on the Debenture issue |
| [220] | (g) Is this claim time-barred by statute or laches? |
| [224] | Accrual of cause of action in absence of a trust |
| [226] | Concealment – section 32 of the 1980 Act |
| [235] | Laches |
| [244] | (h) Does the counterclaim have a real prospect of success? |
| [255] | Conclusion on Zumax's application for summary judgment |
| [257] | Next steps |
| Page 60 | Annex 1 |
| Page 62 | Annex 2 |
Glossary of Defined Terms
| Term | Paragraph where first defined | Definition |
| Bliss | 13 | Bliss International Limited, a shareholder in Zumax |
| CBN | 14 | the Central Bank of Nigeria |
| Chase | 7 | JP Morgan Bank, formerly Chase Manhattan International Limited |
| FCMB | 3 | First City Monument Bank plc successor to IMB & Finbank |
| Finbank | 3 | Finbank plc |
| IMB | 3 | IMB International Bank plc |
| IMB Morgan | 3 | IMB Morgan plc, formerly IMB Securities plc |
| Redsear | 7 | Redsear Ltd, a company incorporated in the Isle of Man |
| the 115 Proceedings | 25 | A claim by IMB in the Lagos High Court (LD/115/05) against Zumax for Naira 309 million, in which the Consent Order was made |
| the 1668 Proceedings | 33 | Proceedings brought in the Lagos High Court (LD/1668/2009) by Zumax against Finbank, seeking to set aside the Consent Order |
| the 2004 Agreement | 24 | A settlement agreement between IMB and Zumax, which was aborted by the parties before it came into effect |
| the 2005 Agreement | 24 | An agreement between IMB and Zumax dated 23 May 2005, the terms of which were later incorporated into the Consent Order |
| the 784 Proceedings | 34 | Proceedings brought in Nigeria by Zumax against Mr Chinye and Finbank |
| the Biu Proceedings | 24 | Proceedings brought against IMB in Nigeria by one of the receivers of Zumax contending that the 2004 Agreement represented a fraud on Zumax as its debt to IMB had been discharged during the receivership |
| the Consent Order | 29 | A consent order dated 15 July 2005 in the 115 Proceedings, incorporating the terms of the 2005 Agreement |
| the Court of Appeal Judgment | 9 | A judgment of the Court of Appeal on FCMB's appeal against the decision of Mr Charles Hollander QC in FCMB's challenge to the jurisdiction of the English court in the present claim, handed down 23 June 2016 |
| the Debenture | 16 | A debenture dated 17 December 1998 to secure an overdraft by Zumax from IMB through Zumax's Naira Account |
| the Hollander Judgment | 9 | The Judgment of Mr Charles Hollander QC of 1 July 2014 in FCMB's challenge to the jurisdiction of the English court in the present claim |
| the IMB Commerzbank Accounts | 4 | Bank accounts nos. 160122964010 & 160122964015 held in the name of IMB at the London branch of Commerzbank AG |
| the IMB Morgan Commerzbank Account | 4 | Bank account no 160210002200 held in the name of IMB Morgan at the London branch of Commerzbank AG |
| the Interpleader Proceedings | 76(v) | Proceedings brought by Commerzbank against IMB Morgan, in which the judgment of Lawrence Collins J is at [2004] EWHC 2771 (Ch) |
| the Redsear Account | 7 | A US dollar bank account held by Redsear at the London branch of Chase |
| the SimmonsCooper Letter | 36 | A letter from FCMB's solicitors dated 24 June 2013 in response to Zumax's letter before action in the present claim |
| the Summary Report | 18 | Report of Zumax's auditor, Chief Edoja, dated 30 July 2003 |
| the Warri Schedule | 110 | Schedule entitled "Naira Disbursements to Warri: December 2000–July 2002" produced by Mr Chinye |
| Zumax | 1 | Zumax Nigeria Limited, the Claimant |
| Zumax's Naira Account | 5 | Bank Account no 0101020000026 held in the name of Zumax at the Lagos branch of IMB |
Introduction
This is an application by the Claimant, Zumax Nigeria Limited ("Zumax"), for summary judgment on the claim and counterclaim.
Zumax is a Nigerian company previously engaged in the supply of engineering and other services to various multi-national oil companies in Nigeria. Zumax's premises are located in Warri, said to be the oil capital of Nigeria.
The Defendant, First City Monument Bank plc ("FCMB"), is a Nigerian registered bank. It is the result of a series of mergers with other Nigerian banks, including IMB International Bank plc ("IMB") and Finbank plc ("Finbank"). FCMB assumed all the liabilities and obligations of those banks. IMB Morgan plc ("IMB Morgan") was a subsidiary of IMB. IMB Morgan was formerly called IMB Securities plc. In this judgment I refer to "FCMB" or "IMB" or "Finbank" without distinction.
At all material times, IMB held two U.S. dollar denominated correspondent bank accounts (no.160122964010 and 160122964015), at the London branch of Commerzbank AG ("the IMB Commerzbank Accounts"). At the same branch there was also a U.S. dollar denominated correspondent bank account (no.160210002200) in the name of IMB Morgan ("the IMB Morgan Commerzbank Account").
IMB were Zumax's main bankers, and at all material times Zumax held with IMB in Lagos an account denominated in Naira numbered 0101020000026 ("Zumax's Naira Account").
The managing director of IMB was a Mr Edwin Chinye. He also became a director of Zumax in circumstances to which I will refer in due course.
Zumax invoiced its oil company clients, at least in part, in US dollars. Redsear Limited ("Redsear"), a nominee of Zumax incorporated in the Isle of Man, received dollar payments in a US dollar account held in its name at the London branch of Chase Manhattan International Limited, which subsequently became JP Morgan Bank, ("Chase"). The dollar funds in this account ("the Redsear Account") were used by Zumax for the needs of its business, for example to purchase equipment, with any surplus funds being transferred to Nigeria for use in its business there.
The claim, brought on 3 October 2013, is for US$3,752,000 plus interest. It is Zumax's contention that between May 2000 and April 2002 funds totalling US$3,752,000 belonging to Zumax were remitted by ten transfers for the benefit of Zumax to IMB/IMB Morgan at their London accounts with Commerzbank. The claim is a proprietary one for the recovery of what Zumax submits to be trust property. It is made against FCMB as successor in title to IMB and on the basis that IMB Morgan was IMB's agent/nominee and under its control. At at least one stage in these proceedings FCMB appeared to accept that IMB Morgan was controlled by IMB. 1
The claim was served out of the jurisdiction on FCMB on 8 October 2013, pursuant to an Order by Deputy Master Nurse dated 20 September 2013. In December 2013
FCMB applied to challenge jurisdiction. That and other applications were heard in May 2014 and dismissed by Mr Charles Hollander QC, sitting as a Deputy Judge of the High Court, in a reserved judgment on 1 July 2014 ("the Hollander Judgment"). FCMB's appeal was heard in May 2016 and dismissed in a reserved judgment handed down on 23 June 2016 ("the Court of Appeal Judgment")On 5 March 2014 Zumax issued the present application for summary judgment, which was stayed pending the outcome of FCMB's jurisdiction challenge. Following the Court of Appeal Judgment, FCMB filed a defence and counterclaim on 19 July 2016. Further information...
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