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| Okumagba |
A Federal High Court in
Lagos has ordered BGL Plc to pay First Bank of Nigeria Limited the sum of
N1.407 billion.
Justice Mohammed Idris
while delivering judgment in a suit filed by BGL against First Bank, held that
on the balance of probabilities, the bank was entitled to judgment for the
credit facilities it advanced to the said BGL.
BGL Plc, BGL Securities
Limited and Albert Okumagba had jointly dragged the bank before the court
seeking the award of N167. 097 million against the bank for alleged breach of
contract in respect of a N2 billion margin loan.
The plaintiffs had specifically
alleged that the bank failed to carry out its contractual obligation and duty
of care to settle the facility and sell the shares when there is drop in value.
However, the bank, through its lawyer, Dr Joseph Nwobike (SAN), had filed a
statement of defence as well as counter-claim to the suit.
The plaintiffs had recalled
in their claim before the court that by a virtue of an offer letter dated
August 30, 2007, the bank granted them a stock trading margin facility of N2
billion.
The terms of the loan,
according to the plaintiffs, were that initial 30 percent margin/equity
contribution of stock by BGL Securities Limited would be paid, and that the
stocks purchased with the facility shall be kept in the bank’s possession.
Corporate guarantee of BGL Limited
and that of Okumagba were also required as part of terms of the loan.
Numerous other conditions
were also agreed according to the plaintiffs.
However, the plaintiff
alleged that by virtue of the contract of the loan, First Bank had a
contractual obligation to sell the shares that had been pledged as security for
the facility in the event that the value of the shares fell below the
percentage cover of 130 percent.
While delivering judgment,
Justice Idris referred to a letter written to the plaintiffs by the bank on the
need for the plaintiffs to provide additional funds to correct the shortfall of
20.335 when the margin facility fell from 130 percent to 109.67 percent.
The judge added that by the
letter, the bank had clearly exhibited its willingness to make the plaintiffs
shore up the value of the facility, and that the failure of the plaintiffs to
heed the advice could not be visited on the bank.
The judge added: “In this
case, and arising from this decisions, the burden to prove repayment of the
loans is full tests squarely on the defendants to the counter-claim (the
plaintiffs).
“From the evidence before
this court, it is clear that, whilst the defendants to the counter-claim
admitted taking the facilities, they did not lead any shred of evidence of
repayment of same. Thus, the defendants to the counter-claim’s evidence fell
gravely short of the requirements of the lay on repayment of loan as stated in
the cases cited.”
In the final analysis,
Justice Idris dismissed the claims of the plaintiffs for failing to discharge
the burden of law, and subsequently upheld the counter-claim filed by the bank.
Specifically, Justice Idris
ordered the plaintiffs to pay the bank a total of N1,407,904,748. 16, being the
outstanding indebtedness of the plaintiffs to the bank arising from the stock
trading facility granted by the bank.
The judge also ordered the
plaintiffs to pay interest on the judgment sum at the revised rate of 18 per
cent per annum from November 1, 2013, and thereafter at 10 percent per annum
until final liquidation of the indebtedness.
The judge also awarded N10,
000 cost in favour of the bank.
This Day
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