Appeal Court Sets Aside N1.7bn Judgment against Zenith Bank

The Court of Appeal sitting in Abuja has set aside the judgment of the Federal High Court in Abuja which found Zenith Bank Plc guilty of alleged breach of Duty of Care to one of its customers, Daily Times of Nigeria Plc, and subsequently entered judgment against the bank.

A three-man panel of the appellate court voided the judgment on the grounds that the lower court erred in law when it arrived at the decision that the bank failed in its Duty of Care to The Daily Times.

The Court of Appeal in the judgment delivered on Tuesday, held that banks’ mandate changes for corporate account holders can only be done by means of a validly passed resolution of the directors of that customer.

Justice Okon Abang of the Federal High Court in Abuja, had on December 9, 2020, held that Zenith Bank breached its duty of care to Daily Times Nigeria Plc (Daily Times) when it honoured Daily Times’ cheques and therefore directed Zenith Bank to refund the sum of over N1,696,189,449.03 representing the judgment sum and accruing interest thereon.

Dissatisfied, the bank in Appeal No: CA/ABJ/CV/1131/2020, urged the appellate court to set aside the decision of the lower court for wrongly reaching the conclusion that it failed in its Duty of Care to the plaintiff/respondent.

Zenith Bank through its legal team, comprising Professor Fabian Ajogwu (SAN), Mr. Solomon Umoh (SAN) and colleagues from both law firms, argued that Zenith Bank acted in compliance with its contractual obligations in line with its customer’s mandate with respect to the 1st respondent’s (Daily Times) account.

Responding, Daily Times, through its counsel, Kalu Onuoha, argued that Zenith Bank allegedly breached the duty of care it owed Daily Times which resulted in damage to the company by way of financial loss.

However, delivering its judgment on July 26, 2022, the Court of Appeal agreed with the submissions of the appellant, Zenith Bank, by allowing the appeal and setting aside the judgment of the lower court marked: FHC/ABJ/45/2019, on the grounds that the bank cannot be held liable for an act done prior to any directive by a resolution to it by Daily Times.

Essentially, the court held that Zenith 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 held the appellant (Zenith Bank Plc) liable for negligence and breach of duty of care to Daily Times as a customer of the bank.