‘Fraudulent’ Transaction: Court fines Union Bank N112m for ‘grossly’ undervaluing, selling Lagos property

*Justice I. O. Harrison of a Lagos High Court slams N112,050,000 on Union Bank of Nigeria Plc, for wrongly selling a prime property located at Ikoyi, in Lagos State of Nigeria, at a grossly undervalued price of N60 million

Isola Moses | ConsumerConnect

Against the backdrop of market research surveys related to similar properties or locations in the state, a Lagos High Court has slammed N112,050,000 on Union Bank of Nigeria Plc, for wrongly selling a property located at No. 6, Moore Road, Ikoyi, Lagos State, at grossly undervalued N60 million.

It was gathered Justice I. O. Harrison delivered the judgment in a suit filed by Mrs. Olubunmi Ogunde, Yewande Ogunde, and others, with Union Bank, one of the commercial banks in the country, listed as the sixth defendant in the suit marked LD/2624/1999.

The suit, in respect of a loan and mortgage issues had commenced 1999, but the claimants made amendments to it 2017.

In the court’s judgment on the lawsuit, dated May 31, 2024, Yewande Ogunde had stated that her deceased husband September 18, 2018, obtained N4 million loan from the commercial bank.

According to the claimants, the late hubby had used the loan to develop a property consisting of eight four-bedroom flats, a penthouse, a ten-bedroom family house, and a three-story building with three-bedroom flats on a 2.2-acre plot, at 6, Moore Road, Ikoyi, Lagos.

Yewande also noted because a disagreement between the beneficiaries and the executors of the deceased’s estate at the time, the family could not service the bank loan as and when due.

She, however, argued that in regard to the contract, Union Bank surprisingly sold the family property for N60 million, which was considered to be far below market value.

O.V. Ekundayo, counsel for the claimants in the suit, therefore, urged the court to declare that Union Bank’s sale of the property located at No. 6, Moore Road, Ikoyi, Lagos, was conducted in bad faith, and at a grossly undervalued rate, and to award the financial institution damages.

Union Bank followed ‘due process’ for debt recovery, says staff

In its defence during the trial, Priscilla Esede, a staff of Union Bank, stated that the financial institution followed due process for debt recovery by entrusting the sale of the disputed property to the law firm of Shade Ogundare & Co, the court stated.

Esede also explained that the Estate Department of the bank lawfully valued the property at N60,000,000, and it was eventually sold to Mr. Cletus Ibeto and others at that price.

She also said: “When the estate of the deceased failed to liquidate the loan despite numerous demands, the bank, as the legal mortgagee, exercised its right to sell the mortgaged property by private treaty at the request of the executors instead of by public auction.”

Selling a property at a grossly low price is ‘evidence of fraud’, court rules

Delivering the judgment dated May 31, 2024, having considered and reviewed the exhibits presented to the court, Justice Harrison found that both the sale of Plot 6A, and the sale of Plots 6B, 6C, and 6D were grossly undervalued, based on market research surveys related to similar properties or locations at the time.

The Judge also stated: “Exhibit C3 states clearly that properties of such a nature should have been sold for N112,050,000 (One Hundred and Twelve Million Fifty Thousand Naira) and not N60,000,000 (Sixty Million Naira) as per exhibits C3 and C4.”

The court held that selling a property at a price that is so low is also evidence of fraud.

Justice Harrison equally concurred to the plaintiffs’ case, declaring that Union Bank’s sale of their property located in Ikoyi, Lagos, was conducted in bad faith and at a gross undervalue.

The Judged ruled: “The claimants are entitled to an award of general damages for the wrongful sale of Plots 6B, 6C, and 6D at No. 6, Moore Road, Ikoyi, Lagos, and the sale of Plot 6A of the same premises at a grossly undervalued price.

“The court awards the sum of N112,050,000.00, excluding the N60,000,000.00 (Sixty Million Naira) already paid, being the difference in what should have been realised from the sale of the property known as No. 6 Moore Road, Ikoyi, Lagos, and interest on the said balance from 1998 until today (the date of judgment) at the prevailing CBN rate, and thereafter from the date of judgment until the judgment debt is fully liquidated at the rate of 10% per annum.”