The Court of Appeal, Lagos Division has nullified the sale of Intercontinental Hotels, Lagos, by Polaris Bank and the Asset Management Corporation of Nigeria (AMCON) and ordered a return of the facility to the original owner, the Milan Industries Ltd.
In a unanimous judgment in appeal No CA/LAG/CV/476/2021, the appellate court held that Milan Industries Ltd had fully paid the bank the N2 billion mortgage facility it secured from Polaris Bank before the hotel was taken over and sold by AMCON and the bank.
The three-man panel presided over by Justices Jimi Olukayode Bada, held that although the respondents claimed that the N2 billion which the appellant claimed to have paid had not been liquidated, with the deposition of the Respondent in paragraph 16 of the Counter Affidavit on page 115 of the Record of Appeal which stated that the alleged sum paid as at 5/12/2016 was from the repayment source of the loan and not upon the activation of the Deed of Legal Mortgage, was an admission of the facts that the N2 billion has been liquidated.
Other members of the panel were Justice Muhammad Ibrahim Sirajo and Peter Oyinkenimiemi Affen.In his lead judgement, Justice Bada held that the issue before the trial court was not whether the appellant had repaid all the facilities availed and standing at N15 billion, the issue in dispute was whether the appellant had repaid the N2 billion secured.
Justice Bada further held: “In this case, the maximum amount secured was N2 billion and the 1st respondent cannot use the property charged to liquidate any amount in excess of the maximum amount secured and where the maximum amount secured is paid the security is discharged.
“The excess amount not secured is an unsecured debt which can only be recovered through a debt action and not by enforcement of the charge.“In this matter the maximum amount secured in the sum of N2 billion has been repaid to discharge the security. As I said earlier the respondent cannot enforce the charge for any amount in excess of the N2 billion registered against the charge.
“The issue before the trial court was not whether the appellant had repaid all the facilities availed and standing at N15 billion, the issue in dispute was whether the appellant had repaid the N2 billion secured.“For reason best known to the 1st Respondent it registered the charge under consideration for N2 billion when it could have registered it for the maximum amount availed, including the accrue interest.”
The bank, which was then known as Skye Bank had put the management of the five-star hotel under the receivership of Mr. Kunle Ogunba, an arrangement that was nullified by a Federal High Court in Lagos.
Despite this, the bank went ahead and sold the hotel to another company, 11 Plc, a move that was challenged at the Appeal Court by the lawyers to Milan Industries Ltd, Messrs Ahmed Raji and Tunde Kasunmu of Prof. A.B Kasunmu Chambers.
Milan Industries Ltd had taken a facility from Skye Bank to part-finance the five-star hotel located in Victoria Island, Lagos and managed by IHG.The Milan Group had up till 2021 to pay back the facility but in a curious move, the bank obtained an interim order to take over the management of the hotel, an order that was vacated when the suit was struck out by the court on March 20th 2018.
According to the Certified True Copy of the judgment signed and released on Wednesday by the Senior Registrar of the court, A. G. Balogun, the appellate court held that the two issues Milan Industries as Appellant/Cross Respondent was contesting were resolved in its favour.
According to the lead judgment by Justice Jimi Bada, “With the resolution of Issues No. 1 and 2 in favour of the Cross Respondent and against the Cross Appellants (Polaris Bank, AMCON and 11 PLC), it is my view that this cross appeal lacks merit and it is hereby dismissed.”
While agreeing with the lead judgment, another member of the appeal court panel, Justice Ibrahim Sirajo stated that, “the appellant insisted that it had paid over N2 billion in liquidating the facility and that as at the time the 1st respondent (Polaris Bank) entered into agreement to sell the appellant’s secured asset to the 2nd respondent (AMCON), there was no collaterised and secured asset to sell to the 2nd respondent.
“It was also the case of the appellant that at the time the 2nd respondent sold the appellant’s Intercontinental Hotel to the 3rd respondent, the appellant had discharged its obligation under the legal mortgage by paying the amount secured by the property.”
To buttress his position, Justice Sirajo ruled that “I adopt his lordship’s reasoning and conclusion in the leading judgment as mine in also allowing the appeal. I abide by all the orders made in the leading judgment including that of the costs.”
While also concurring with the lead judgment by Justice Bada, the third member of the appeal panel, Justice Peter Affen said “the judicial reasoning and conclusions reached on the issues raised accord with mine, and I hereby affirm my agreement with the leading judgment which allowed the main appeal and dismissed the cross appeal. I equally abide by the orders on the costs.”