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Appeal court awards damages against EFCC, bank over illegal account freezing

By Joseph Onyekwere and Omolabake Ohu
22 December 2020   |   4:13 am
The court of appeal, Lagos has awarded N3.6million damages and cost against the Economic and Financial Crimes Commission (EFCC) and the Guaranty Trust Bank (GTB) for illegally freezing the account of a trading firm, Savannah & Chemical Industries Limited.

The court of appeal, Lagos has awarded N3.6million damages and cost against the Economic and Financial Crimes Commission (EFCC) and the Guaranty Trust Bank (GTB) for illegally freezing the account of a trading firm, Savannah & Chemical Industries Limited.
The EFCC had in exercise of its statutory functions issued an order/direction to the bank, to place the trading account of the claimant/Appellant under caution, to which they complied and prevented the appellant from carrying out transactions on its account.
Consequently, the appellant filed an action at the high court against the EFCC and the bank, challenging the power of the anti-graft agency to issue such directive on its account without a valid court order.
Apart from asking for an order setting aside the freezing directive, the appellant also prayed for N500million damages for the continuing breaches of its fiduciary contract with the bank as well as for the damage such has occasioned on its trading ventures.

In her decision, Hon. Justice C.M.A. Olatoregun of Federal High Court, Lagos held that the respondents acted ultra vires by not obtaining court order before freezing the account of the applicant, but did not hold the respondents liable for their actions.
Consequently, the firm filed five grounds of appeal at the court of appeal Lagos, arguing that the trial court erred in law and occasioned total miscarriage of justice against it, when it held that the words “caution” and “freeze” are not the same.
It further argued that the entire judgment of the lower court rendered in the proceeding was contradictory and perverse. 
Agreeing with the appellant, the court of appeal in a lead judgment delivered by Justice Ebiowei Tobi dismissed the preliminary objection of the respondents, challenging the locus of the appellant.
The court also held that although the words “caution” and “freeze” have different meanings in English, it served the same purpose when the first respondent (EFCC) used “caution” to direct the 2nd respondent (GTB) to restrict transaction on the appellants account and even arrest anyone who tried to transact on the account.

Justice Tobi also held that the powers of the first respondent as provided in Section 34 of its enabling Act do not give it unilateral powers to direct banks to freeze any account without strict compliance with the law.
He said: “The Section under reference does not give the unilateral power to the 1st respondent to give an order to the 2nd respondent to freeze or place caution on the account of the appellant. It is not in doubt that the 1st respondent has powers conferred on it to pass such an instruction to the 2nd respondent. There is however a caveat placed on the 1strespondent, which it must comply with to make such instruction to be valid and legal.
“To this end, I make bold to say that the action of the 1st respondent in directing the 2nd respondent to place the appellant’s account on caution was not in compliance with the law and it is therefore unilateral and should be condemned in very strong terms. A governmental agency should not be the one that violates the law at any rate. It is sad and very sad indeed when government agencies see themselves as untouchable and decides to act outside the clear provision of the law.

“A message must be sent and voice heard loud and clear that the midwife of the rule of law in any society is the court. If the other arms of government and particularly the executive and its agencies act without due regard to the rule of law, there will be a miscarriage in the delivery of the dividend of democracy.
“Nobody is above the law and when any person goes against the law, a court should not pat the back of such a person but frown at such a situation. An agency fighting corruption must be above board in all respect. Corruption is wider than monetary gains as anything done outside due process is corruption. I will not say more than this.”

He held that the 2nd respondent was not diligent enough in carrying out its duty of care and as such rendered itself liable to the appellant. This finding, he insisted, goes without saying that the banks are obligated to comply with the directives of the Commission, but such must be done after due satisfaction that the Commission has complied with the law.
“The law which sets up EFCC has made that provision for an ex parte order and therefore it is within the power of the bank to ask for the order and not to slavishly obey a baseless instruction that has no legal backing.
“On a whole it goes to say that this appeal succeeds entirely except on the damage which is assessed in the sum ofN3, 000,000 severally and jointly against the respondents.  The judgment of Hon. Justice C.M.A. Olatoregun of the Lagos Division of the Federal High Court in Suit No. FHC/L/CS/1304/2010 – Savannah & Chemical Industries Limited vs. Economic and Financial Crimes Commission (EFCC) & Anor is hereby set aside. Cost is awarded in favour of the appellant in the sum of N300, 000 against each of the respondents severally and jointly,” Justice Tobi pronounced. 


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