A Lagos High Court has ruled that Union Bank’s sale of a deceased customer’s luxury property in Ikoyi, Lagos, over a N4 million loan was marred by “fraud, collusion, and lack of good faith.”
In the judgment delivered by Justice I.O. Harrison, the court found that Union Bank “acted recklessly” in selling Adedoyin Ogunde’s multi-building property after he died in 1997 before he could complete the N4 million loan repayment.
The case dates back to 1995 when the deceased, a former KPMG partner, secured a loan from Union Bank, using his property—a sprawling 2.2-acre estate with four massive buildings at 6A Moore Road, Ikoyi (now 6 Gbolahan Mudashiru Road)—as collateral.
After Ogunde passed away in 1997, and with the loan left unserviced for several months, the bank seized his property. The deceased’s family requested that the bank give them time to pay up the loan, which had ballooned to N7 million due to accumulated interest, however, Union Bank insisted on selling the property to recover its money.
Despite appeals from the family to sell only part of the estate, the bank opted for a private sale. In 1999, Union Bank employed the law firm Shade Ogundare & Co. to handle the transaction. However, the family accused the firm of failing to perform due diligence in valuing the property before selling it.
The family argued that selling just one building from the estate would have been sufficient to recover the loan, given the property’s vastness and the presence of several luxury units, including eight four-bedroom flats, a five-bedroom penthouse, and a large boys’ quarters.
Union Bank rejected the request, claiming the property had a single title and must be sold as a whole. However, the court ruled that this claim “does not hold water,” as the bank fraudulently partitioned the property into four plots—6A, 6B, 6C, and 6D—before selling them separately.
“The fact that the property was mortgaged as a single entity and should have been sold as such to recover the debt does not hold water. It sparks fraud, collusion, and does not show good faith,” Justice Harrison stated in the May 31 judgment.
Plot 6A, the largest section of the property, was sold to businessman Cletus Ibeto for N30 million. This plot contained nine luxury units, including eight four-bedroom flats, a five-bedroom penthouse, and eight rooms in the boys’ quarters. The family claimed another buyer, Minaj Group, had offered N50 million for the same plot, but the bank rejected the higher bid in favor of Mr. Ibeto’s lower offer.
Despite recovering the N7 million loan and interest from the sale of Plot 6A, Union Bank proceeded to sell the remaining plots: 6B to Segun Wright for N7 million, 6C to Mr. Osundina for N13 million, and 6D to Unigate Investments for N10 million. The court noted that this action contradicted the bank’s earlier claim that the property could only be sold as a whole.
The court also found that the buyers paid for the properties in installments, further raising concerns about the bank’s handling of the sale.
“The Court cannot comprehend why Union Bank went ahead to sell the other plots after recovering its debt from the sale of Plot 6A, where there was already a balance accruing to the deceased’s estate. This suggests the bank acted recklessly and in bad faith,” Justice Harrison stated.
The family accused Union Bank of collusion, which the bank denied. However, Union Bank failed to provide evidence to refute the claim or comply with two court orders to produce bank statements related to the estate’s account. The court concluded that the bank deliberately withheld the statements to conceal the true nature of the property sales.
After reviewing the market value of similar properties, the court determined that the estate had been sold at a gross undervalue. Consequently, the court awarded N112 million in damages against Union Bank, along with interest from 1998 to the date of judgment, calculated at the prevailing Central Bank of Nigeria (CBN) rate.
“The court awards N112,050,000.00, excluding the N60,000,000.00 already paid, being the difference in the sale value of the property at No. 6 Moore Road, Ikoyi. Interest on the balance will accrue from 1998 until today (the date of judgment) at the prevailing CBN rate, and thereafter, at 10% per annum until the judgment debt is fully paid,” Justice Harrison ruled.
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