Monday, 3 June 2019

Ecobank vs Honeywell: Court Rules on Settlement Agreement

...We will appeal judgment, Says bank

The Honeywell Group yesterday emerged victorious in its protracted legal dispute against Ecobank with the judgement delivered by the Federal High Court, Lagos in which the court held that Honeywell’s payment of N3.5 Billion between 2013 and 2014 constitutes the full and final settlement of its indebtedness to Ecobank Nigeria Limited.

According to the judgement delivered by Justice Olayinka Faji, a valid agreement was reached at various meetings between representatives of Honeywell and Ecobank on the 22nd of July, 2013 and in line with this agreement, Honeywell made payments to the Bank in order to settle its indebtedness. However same could not be said of Ecobank who rather than keep to the terms of the Agreement, sought to introduce new terms.

The court further held that all through the course of the instalmental payments being made by Honeywell, Ecobank did not at any time raise any objections to the payments. The amount now being claimed by the bank was not at any time mentioned in the meetings or series of correspondence with Honeywell.

It will be recalled that Anchorage Leisures Ltd, Honeywell Flour Mills Plc. and Siloam Global Limited (all members of the Honeywell Group), in August 2015, instituted a suit before the Federal High Court, Lagos seeking the determination of whether or not the companies are truly indebted to the bank following the payment of the sum of N3.5 billion as full and final settlement of their obligations to Ecobank, based on a mutual agreement between Honeywell and Ecobank.

Testifying in court during the trial, Honeywell Group’s Head of Treasury and Finance, Oluwakemi Owasanoye told the court that by an agreement reached at a meeting held on July 22, 2013, the bank agreed to merge the collective indebtedness of Honeywell’s three subsidiaries, which amounted to N3.5billion.

Owasanoye added that part of the agreement reached with the bank was that N500million must be paid immediately, while the balance of N3billion would be paid before the exit of the Central Bank of Nigeria (CBN) examiners from the bank. According to her testimony, Honeywell complied with the terms of the agreement, and thereafter wrote to inform the bank of its compliance and the need for the bank to formally discharge the company of any further obligation. She stated that the bank in its reply to the letter did not raise any objections. Honeywell, she said, was however surprised when the bank proceeded to demand for further payments in respect of the debt which had been fully liquidated for over a year.

She further stated in her testimony that when the dispute arose, the Company referred the matter to the Bankers' Committee which resolved the matter in favour of Honeywell.

Meanwhile, the ETI Specialized Resolution Company Ltd (ESRC), a vehicle of the Ecobank group which took over the disputed Honeywell loans, is set to appeal the judgement delivered by Justice Ayokunle Faji of the Lagos Federal High Court, on the protracted N5.5 billion legal suit between Honeywell and Ecobank. 

ETI Specialized Resolution Company Ltd (ESRC), said it will fully prosecute the appeal as it strongly disagrees with the decision of the court.

The main purpose of ESRC is to pursue and recover all outstanding loan obligations of customers whose loans were sold to the company.  It has indeed made appreciable progress in this regard.

The suit, which was filed by Honeywell Flour Mills Plc, and its sister companies; Anchorage Leisures Ltd and Siloam Global Limited, against Ecobank urged the court to hold that they are not indebted to Ecobank, having paid N3.5 billion based on a concession purportedly given by the Bank.

Justice Faji in his judgement delivered on Friday May 31st, 2019, ruled that since Honeywell paid in line with the agreement reached at the meeting of December 2013, it is no longer indebted to Ecobank. 

ESRC said it will appeal the judgement as same did not take into consideration salient facts put before the court.  In the view of ESRC, a debtor should be made to pay its full debt having failed to pay as and when agreed.

A spokesperson for ESRC said that the company will pursue recovery of the debts owed by the Honeywell companies to the logical conclusion through the courts, as return of depositors’ funds is key to ensuring the sanctity of agreements and viability of continued support and growth of local businesses by Banks.

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