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Africa Housing News > Blog > Nigeria Housing News > Validly Passed Resolution Of Directors Changes Corporate Account Mandates, Court Says
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Nigeria Housing News

Validly Passed Resolution Of Directors Changes Corporate Account Mandates, Court Says

By Author
Last updated: 2022/08/09 at 7:48 PM
By Author Published August 9, 2022
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Validly Passed Resolution Of Directors Changes Corporate Account Mandates, Court Says
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The Court of Appeal, Abuja, has held that changes in mandate for corporate account holders can only be done by means of a validly passed resolution of the directors of that customer (account).

The court made the declaration in a landmark judgment it delivered in favour of Zenith Bank Plc (Zenith Bank) in Appeal No: CA/ABJ/CV/1131/2020 between it and The Daily Times of Nigeria Plc.

Justice Okon Abang of the Federal High Court, Abuja, had earlier delivered a judgment on December 9, 2020, holding that Zenith Bank breached its duty of care to Daily Times, when it honoured its cheques and directed the bank to refund the sum of over N1, 696,189,449.03 representing the judgment sum and accruing interest thereon to the firm. 

Dissatisfied with the decision, the bank appealed to the Court of Appeal, Abuja, through its lead counsel, Prof. Fabian Ajogwu (SAN).

The Appeal, essentially, sought to set aside the entire judgment of the Federal High Court on the ground that appellant acted in compliance with its contractual obligations in line with its customer’s mandate with respect to the 1st respondent’s (Daily Times) account.

Daily Times, through its counsel, Kalu Onuoha, in its response to the appeal, filed a respondents’ brief of argument, arguing that the bank allegedly breached the duty of care it owed the Daily Times, which resulted in damage to the company by way of financial loss.   

Delivering its judgment on July 26, 2022, the Court of Appeal agreed with the submissions of the appellant and set aside the judgment of the Federal High Court on the ground that the bank cannot be held liable for an act done prior to any directive by a board resolution.

The court held that the bank was only bound to alter the existing mandate through a valid board resolution and that letters by a customer’s solicitor cannot substitute the need for resolution for any change in the account mandate of a customer. 

The court, accordingly, held that the trial court erred in law to have said that the appellant was liable for negligence and breach of duty of care to Daily Times as a customer.

Daily Times, through its counsel, Kalu Onuoha, in its response to the appeal, filed a respondents’ brief of argument, arguing that the bank allegedly breached the duty of care it owed the Daily Times, which resulted in damage to the company by way of financial loss.   

Delivering its judgment on July 26, 2022, the Court of Appeal agreed with the submissions of the appellant and set aside the judgment of the Federal High Court on the ground that the bank cannot be held liable for an act done prior to any directive by a board resolution.

The court held that the bank was only bound to alter the existing mandate through a valid board resolution and that letters by a customer’s solicitor cannot substitute the need for resolution for any change in the account mandate of a customer. 

The court, accordingly, held that the trial court erred in law to have said that the appellant was liable for negligence and breach of duty of care to Daily Times as a customer.

Guardian

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By Author August 9, 2022 August 9, 2022
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