Breach Of Agreement: Court Awards N75m Damages Against Sterling Bank

The High Court of Lagos State, presided over by Justice Olumuyiwa Martins, has awarded a damage sum to the tune of N75 million against Sterling Bank over a breach of the non-disclosure and non-circumvention agreement it had with a firm and its Chief Executive Officer, CEO.

Specifically, the court held that 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 its CEO, Dr John Nwankwo.

The judge declared that the conduct of the defendant in circumventing the Confidentiality Deed dated September 16, 2019, and the Non-Disclosure and Non-Circumvention 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.

Justice Martins said: “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 non-circumvention 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.”

It would be recalled that 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 an interest in financing if the firm agrees to reduce the amount to N4.5 billion or N4 billion.

The bank’s request prompted the claimants to reduce the project amount to N4.5 billion and execute a non-disclosure and non-circumvention agreement with the bank to protect their trade secrets from being shared with third parties.

However, the bank breached the agreement and entered into discussions on shoe deals with the Abia and Kano State governments without the knowledge of the claimants.

However, not pleased with the development upon discovering it, the claimants instituted the suit designated 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.

The claimants contended that after disclosing their trade secrets, 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 State Government and tanneries with Kano State Government.

In passing judgment, Justice Martins, who held that the defendant did not deny executing the agreement, added that the first defence witness also admitted that the claimants’ discussion with the Abia State government was about making shoes.

“The defendant contends that based on the pleadings and evidence presented, there is no evidence of a breach of contract.

“It also claimed that the mere fact that the defendant met with the Abia State Government on how to facilitate business collaborations between Kano leather tanneries and Aba leather products producers does not amount to a breach or circumvention of Exhibits P1 and P2 because the defendant did not disclose any confidential or proprietary information to a third party.

“The importance of Exhibit P2 is that it is recognised in law as a legally binding and enforceable agreement that prevents the unauthorised sharing or disclosure of sensitive information during a commercial relationship.

“Considering the overwhelming evidence of the claimants, the court finds that DW1 is economical with the truth of the circumstances of the transaction.

“The court finds her to be a witness of untruth, her evidence to be unconvincing, and a mere afterthought.

“In the instant case, there is sufficient credible evidence before the court, both oral and documentary, establishing and proving the claim of the breach of the terms in Exhibit P2, and the defendant failed to discredit this evidence during the cross-examination of PW1 and PW2.

“Therefore, this issue is resolved in the claimants’ favour,” Justice Martins declared.