News: Court awards damages against bank over title documents

Justice Morenike Obadina of a Lagos High Court has ordered Sterling Bank Plc to pay N1 million to Ajelenje Nigeria Limited and its Managing Director, Mr. Onyebuchi Uzor, as general damages for unlawful detention of the title documents of their property.


In her judgment, Justice Obadina declared that the continued detention from November 12, 2004 to date by Sterling Bank of all the original title documents of the claimant’s property known as Plot 1609 (House 2) “E” Close, 4th Avenue, Festac Town Lagos belonging to the claimants is wrongful.

“I make an order compelling the defendants to release and return to the claimants all the original documents of Plot 1609 (House 2) “E” Close, 4th Avenue, Festac Town Lagos which was deposited with Creek Road Apapa Lagos branch of former NBM Bank Ltd as security,” the judge ordered.

Defendants in the suit were Nardex Int. Ltd (2nd Defendant) and Mr. Leaonard Ebenye (3rd defendant), said to have both entered into a business arrangement with the 1st Claimant under which he would deposit the title documents of his property as security for an intended overdraft by Sterling Bank to  Nardex Int. Ltd.

It was gathered that the defendants and the claimant had agreed that upon deposit of the said title documents, the Uzor, would be made a shareholder of the Nardex Int. Ltd  and the Particulars of Directors amended accordingly.

Also, it was agreed that from the date of deposit, any withdrawal from Nardex Int. Ltd account and or overdraft by the 1st defendant must have the joint consent of the 3rd defendant and himself.

This agreement was communicated to the manager of the bank at the point of deposit. The court also held that the insistence on this condition was to guard against reckless withdrawal from 2nd defendant’s account and to protect his property from needless exposure and liability.

According to the claimant, sometime in October 2004, eight months after the delivery and deposit of the title documents, he was alerted that the bank had breached the express condition for the deposit advanced over N700,000 to the 2nd defendant without reference to him.   On the 12th of November 2004, he served a formal notice of repudiation of the contract of guarantee on the bank and demanded the release of his title documents but the bank refused to return same till date.

Reviewing the case the judge disagreed that the deposit of the title deeds was not conditional. She said the bank did not deny that it received the resolution or that it allowed the 2nd defendant to operate the overdraft account without recourse to the 2nd claimant such that the 2nd and 3rd defendants became heavily indebted to the bank.

Justice Obadina held that the contention of the bank that because the claimants and the 2nd and 3rd defendants are in the same office complex, the claimants cannot claim to be unaware of the state of the account is speculative and she discountenanced the argument.

The court came to the conclusion that the claimants’ counsel submission that the bank failed to justify its release of funds to the 2nd defendant, stressing that “Detinue is a wrongful retention of the possession of goods and the wrong arises upon the detention of the chattel after demand for its return by the person entitled to its immediate possession has been made. The claimant established their entitlement to judgment on a preponderance of evidence.  I give judgment to the claimants.”