The Lagos State High Court has declared the sale of a property used as collateral by the late Otunba Adedoyin Olayide Ogunde, a Union Bank customer, as fraudulent. Justice I.O. Harrison delivered the judgment in a case filed by the beneficiaries of Ogunde’s estate against Union Bank on May 31.
Ogunde, who owned a valuable property in Ikoyi, Lagos, had taken a loan of N7 million from Union Bank on May 23, 1995, using the property as collateral. The property, located at 6 Moore Road, Ikoyi, comprised eight units of four-bedroom flats, a penthouse, a 10-bedroom family house, and a three-storeyed building. Despite the property’s value, the bank sold it for a fraction of its worth after Ogunde’s death in 1997, as he had not repaid the loan.
The court found that Union Bank sold the property through a private treaty, bypassing the legal procedures required by mortgage laws. Although the property was mortgaged as a single entity, the bank divided it into separate plots and sold them to different buyers without the consent of Ogunde’s personal representatives, who had been assured by the bank that the property would not be partitioned.
The property was divided into four plots: Plot 6A was sold to Cletus Ibeto, chairman of Ibeto Group, for N30 million; Plot 6B was sold to Ogundayo Osundayo; Plot 6C was sold to a buyer named Wright; and Plot 6D was sold to Unigate Investments. The total sale price for these plots was N30 million, far below the property’s estimated value of N142 million.
The court ruled that the bank’s actions were fraudulent and not in good faith. Justice Harrison stated that while Ogunde’s default on the loan repayment did not justify the bank’s decision to sell the property at such a low price, it also failed to act responsibly by withholding crucial documents, including Ogunde’s statement of account, from the court.
Although the court did not annul the transactions due to a lack of evidence of collusion between the bank and the buyers, it ordered Union Bank to pay the family N112,050,000 as compensation for the undervaluation of the property. The court also imposed an annual interest of 10% on the amount from 1998 until the judgment was delivered and until the full payment is made.
