Breach of Trust: Court Awards N75m against Sterling Bank
The Lagos High Court has awarded N75 million damages against Sterling Bank over breach of the non-disclosure and noncircumvention agreement it had with Comfort Stevens Nigeria Limited and its Chief Executive Officer, Dr John Nwankwo.
Justice Olumuyiwa Martins, in her judgment, said N50 million is for damages, while N25 million serves as the cost of the action by the claimants.
The claimants are Comfort Stevens Nigeria Limited and Dr Nwankwo.
The court held that the defendant’s conduct in circumventing the confidentiality deed dated September 16, 2019, and the non-disclosure and noncircumvention agreement dated October 3, 2019, by engaging in the same project it had with the claimants with a third party without the consent and full disclosure to the claimants, is wrongful and unlawful, resulting in a material violation of the agreement’s terms and conditions.
The court stated, “The breach of the Confidentiality Deed dated September 16, 2019, and the Non-Disclosure and Non-Circumvention agreement dated October 3, 2019, is deemed unlawful and unjustifiable.
“An order of perpetual injunction is granted in favour of the claimants to prevent the defendant, its personnel, and agents from directly or indirectly committing or engaging in any act prohibited by the terms and Conditions of the Non-Disclosure and Non-Circumvention agreement dated October 3, 2019.
“The sum of N50 million is awarded as damages for breach of the Non-Disclosure and NonCircumvention Agreement dated October 3, 2019, in favour of the claimants. The sum of N25 million is awarded as the costs of this action in favour of the claimants. This is the judgment of the court.”
The claimants had sought to embark on a N10.5 billion footwear and shoe component technology and automated project in Aba, which the Bank indicated interest in financing if the firm agrees to reduce the amount to N4.5 billion or N4 billion.
The claimants consented, reduced the project amount to N4.5 billion and executed a non-disclosure and noncircumvention agreement with the bank to protect their trade secret from being shared with third parties.
However, the bank breached the agreement and entered into discussions on shoe deals with Abia (before Governor Alex Otti) and Kano governments without the claimant’s knowledge.
Unhappy with the development on discovering it, the claimants in 2020 initiated the suit marked LD/ ADR/3317/2020, contending that the defendant’s decision to initiate negotiations with a third party to manufacture footwear and tanneries without full disclosure to the claimants, constitutes a breach of the agreements.
After disclosing their trade secrets, they argued that the defendant acted in bad faith by taking advantage of the information received and negotiating and agreeing with a third party on the same product with Abia and tanneries with the Kano government.
After listening to the parties, Justice Martins, on July 2, 2024, while delivering her judgment, noted that the defendant did not deny executing the agreement.
“Considering the overwhelming evidence of the claimants, the court finds that DW1 is economical with the truth of the circumstances surrounding the transaction. The court finds her to be a witness of untruth, her evidence to be unconvincing, and a mere afterthought. Therefore, this issue is resolved in the claimants’ favour,” Justice Martins declared before she awarded the damages against the bank.