Fraudulent Transaction: Union Bank To Pay Deceased Customer’s Family Billions Of Naira – Court Orders

A High Court of Lagos State, has ordered Union Bank of Nigeria Plc to pay billions of naira to the beneficiaries of late Otunba Adedoyin Olayide Ogunde’s estate.

Delivering judgement in a case that has witnessed 25 years of legal tussle, Justice Ibironke Harrison held that the sale of late Ogunde’s property situated at old Ikoyi, Lagos, by the Union Bank to offset a loan facility it granted the deceased was conducted in bad faith and at a significantly and ridiculously undervalued price.

The late Ogunde, was the owner of the buildings, died in 1997 but, was yet to liquidate a N7 million loan obtained from Union Bank on May 23, 1995 and for which he had mortgaged his property situated at 6 Moore road, off Bourdillion road, Ikoyi, Lagos State.

The trial judge therefore ordered the bank to pay N112 million to the children of the deceased and an interest payment on the money from 1998 up till the judgment date at the prevailing Central Bank of Nigeria rate, and 10 per cent per annum from the judgment date until full payment is made.

Cumulatively, going by the court’s order. Union Bank is liable to pay N10.5 billion as at 2024 for failing to act in good faith in discharging its duties as a trustee for the late Ogunde’s estate by conducting the sale of the property privately as against public auction as directed by the court.

Justice Harrison specifically said that the property, comprising nine luxurious flats and additional plots which were sold for N30 million by Union Bank has fully covered the late Ogunde’s outstanding debt of over N14 million.

The judge noted that the buildings were grossly undervalued in the light of available market research surveys carried out in relation to similar properties at the time.

The court did not however set aside the transactions as there was no evidence that there was a collusion between Union Bank and the purchasers and therefore ordered the bank to pay the family N112,050,000 being the difference in what could have been realised had the property not been undervalued by the bank.

In the words of Justice Harrison; “The mere fact that Ogunde defaulted in repaying the loan was no valid excuse for the bank to fling his property at ridiculous rates simply for the purpose of realising the debt owed; and doing so at a price that is so low is evidence of fraud.

“The bank has a lawful duty to deal with the property in good faith. The only obligation incumbent on a mortgagee under a power of sale of his mortgage is that he should act in good faith.

“The court will always be on the lookout that the mortgagee acts bona fide and observes reasonable precautions to obtain not the best price, but a proper price.

“By the sale of Plot 6A, the bank had fully realised its money and had some balance to remit to the family. Without remitting the balance, it went ahead to sell the rest of the buildings.

“By going against what it had told Ogunde’s personal representatives on the partition of the property, was an argument that does not hold water. It smacks of fraud, collusion and definitely does not show good faith.

“The court cannot comprehend why the 6th Defendant (Union Bank) went ahead after the sale of Plot 6A for N30,000,000.00 (Thirty Million Naira) (wherein it had realized its debt, interest and costs and there was still a balance ensuing to the deceased’s estate), to sell Plot 6B, 6C and 6D. Obviously, the intention was not to realize any outstanding indebtedness as none existent at that point. The court cannot help but find that the 6th Defendant acted recklessly and in bad faith.

“Union Bank further failed accountability principles when it withheld vital documents, including the deceased’s statement of account, from the court, showing that those documents, if produced, could have impacted negatively on the bank.

“Further sales of additional plots for N30 million each were also undervalued. There was also lack of transparency regarding the balance utilization after settling the debt, suggesting fraud and collusion.

“While the sales could not be overturned due to insufficient direct evidence of collusion by buyers, the claimants were entitled to damages,” the Court held.

Accordingly, the Court pointedly faulted Union Bank’s failure to provide bank statements to support the sale of the property as the bank had claimed that it was unable to find the bank statements which reflect the sale, adding that its system had been upgraded thus, cannot locate its ledger since it was an old account that was involved.

The claimants in the suit marked LD/2624/1999 are the children of the deceased, while Olushola Ogunde, Olubunmi Ashiru, Kehinde Ogunde, Olayinka Madden being the Executor of Ogunde’s estate, the Probate Registrar of the Lagos High Court, and Union Bank of Nigeria were joined as co-defendants 1st to 6th in the suit.

However, the claimants settled with the first to fifth defendants in January 2016, but continued their case against Union Bank which opposed an amendment to the claimants’ statement, stressing that it was statute-barred.

But, in May 2017, Justice Morenike Obadina dismissed the objection and permitted the amendment in the suit in which the claimants sought among others, a declaration that granting of Probate by the 5th defendant of the last Will and Testament of Otunba Adedoyin Olayide Ogunde (deceased) dated 2nd August, 1995 on the 17th of November, 1997 to the 1st to 4th defendants as executors was wrongful, null and void and inconsistent with the provisions and intendment of the Will as made by the Testator.

The claimant also sought an order of injunction restraining the 6th defendant, its servants, agents, privies, assigns or any other person acting for it from disbursing, dissipating or otherwise part with the possession of the balance due to the Estate of Otunba Adedoyin Olayide Ogunde (deceased) on the sale of 6, Moore Road, Ikoyi, Lagos, pursuant to the legal mortgage in that respect to any person until the final determination of this suit.

While alive, the late Ogunde had prepared a final will and appointed some individuals as personal representatives and executors of the will and mortgaged the property as a single entity.

Curiously, Union Bank divided the mortgaged property into pieces and sold them to different buyers as different entities while it told the deceased’s personal representatives that it was not going to partition the property before sale because it was mortgaged as a single entity.

With the knowledge of the personal representatives, Union Bank sold the mini estate while Ogunde’s children were still infants and when they were of age, they asked the court to declare the sale of their father’s property by Union Bank illegal.

A certified true copy of the judgement showed that several years after the case, number LD/2624/1999, was filed, the trial commenced on September 18, 2018 in which the Ogunde family contended that the sale and processes relied upon by Union Bank to dispose of their benefactor’s property was characterised by fraud and collusion.

Counsel to the family, O.V. Ekundayo Esq., told the court that the assets were of a higher value than what the bank placed on it, stressing that there was a collusion between the bank and the purchasers.

Built on 2.2 acres of land, the bank partitioned the property into Plots 6A, 6B, 6C and 6D. Plot A had nine flats and eight-roomed boys-quarters which was sold to Cletus Ibeto, the chairman of Ibeto Group, a local company involved in cement production and other products, at an undervalued price of N30 million.

In the same vein, Union Bank sold Plot B, with four units of four-bedroom flats and two-bedroom boys-quarters thereon, to Ogundayo Osundayo while the third plot, consisting four units of four-bedroom flats and two-bedroom boys-quarters, was sold to Wright just as the last portion, Plot D, consisting three units of two-bedroom flats and an unstated number of boys-quarters, was sold to Unigate Investments.

The Court noted that all the properties were undervalued and sold for N30 million.