Validly Passed Directors’ Resolution Changes Corporate Account Mandates, Court Finds | The Guardian Nigeria News
The Abuja Court of Appeal has ruled that changes of tenure for corporate account holders can only be effected through a resolution validly passed by the directors of that client (account).
The court made this statement in a landmark judgment it rendered in favor of Zenith Bank Plc (Zenith Bank) in Appeal No: CA/ABJ/CV/1131/2020 between it and The Daily Times of Nigeria Plc .
Judge Okon Abang of the Federal High Court in Abuja previously delivered judgment on December 9, 2020, finding that Zenith Bank breached its duty of care to the Daily Times, when it honored its checks and ordered the bank to repay the sum of more than N1.696,189,449.03 representing the sum of the judgment and accrued interest for the benefit of the firm.
Dissatisfied with the decision, the bank appealed to the Abuja Court of Appeal, through its lead lawyer, Prof. Fabian Ajogwu (SAN).
The appeal essentially sought to set aside the entire judgment of the Federal High Court on the grounds that the Appellant had acted in accordance with his contractual obligations pursuant to his client’s retainer with respect to the 1st Defendant’s account (Daily Times).
The Daily Times, through its attorney, Kalu Onuoha, in its response to the appeal, filed a Respondents’ Memorandum of Argument, arguing that the bank breached its duty of care. to the Daily Times, which caused damage to the company through financial loss.
Rendering its judgment on July 26, 2022, the Court of Appeal endorsed the Appellant’s conclusions and overturned the judgment of the Federal High Court on the grounds that the bank could not be held liable for an act performed prior to any directive of a Council resolution.
The court held that the bank was only required to change the existing mandate through a valid resolution of the board of directors and that letters from a client’s attorney cannot replace the need for a resolution for any modification of a client’s account mandate.
The court therefore concluded that the trial court erred in law in holding that the appellant was liable for negligence and breach of duty of care towards the Daily Times as a customer.