Application For Summary Judgment Granted After Nine-Day Hearing

Zumax Nigeria Limited v. First City Monument Bank Plc [2017] EWHC 2804 (Ch)

At first glance, it may seem something of a contradiction to hold a summary judgment hearing over nine days. In this case the court held that it would have been wrong to shy away from looking carefully into whether there was merit to the defences and other complaints raised by the defendant bank. The court decided that, save in relation to one issue, none of the defences had a real prospect of being established and a trial over many months and at substantial cost would have been wholly unwarranted.

The relevant background to this claim, brought by Zumax Nigeria Limited (Zumax) against First City Monument Bank Plc (FCMB), the successor in title to Zumax's main banker, IMB International Bank Plc (IMB), is: (i) in 2002, IMB had appointed receivers to Zumax over a dispute concerning a debenture, which was settled in 2005 and formalised in a consent order; and (ii) Zumax had brought Nigerian proceedings in 2009 against IMB's former managing director, who had also been a director of Zumax at the relevant time and who the parties agreed was a fraudster.

Zumax's claim against FCMB was that 10 money transfers, totalling approximately US$3.7 million, had been made from an account in the name of an Isle of Man-registered nominee entity to accounts at a third party bank that were in the name of IMB or entities under its control, but that those moneys were fraudulently diverted or retained by IMB.

In its defence, FCMB stated that (i) it had repaid the moneys by way of bankers' drafts; (ii) the claim was covered by the 2005 consent order; (iii) the claim had been assigned to IMB and charged to it under the terms of the debenture; (iv) the claim was time-barred; and (v) the claim was an abuse of process in that it should have been raised in the Nigerian proceedings. FCMB also brought a counterclaim for damages on the basis that Zumax had assisted the former director to breach his fiduciary duties to IMB by concealing the conflict of interest arising as a result of his dual role as managing director of IMB and director of Zumax.

The court held that FCMB's argument that the moneys had been repaid by bankers' drafts had no substance whatsoever. The limitation defence failed on the basis that the instructions for the transfers and the surrounding circumstances clearly gave rise to an express trust in Zumax's favour, therefore section 21(1) of the Limitation Act 1980 applied. On the...