The Supreme Court of Nigeria has ordered Fidelity Bank Plc to pay ₦225.3 billion in damages to Sagecom Concept Ltd, an Ibadan-based firm. This judgment concludes a protracted legal dispute spanning over two decades, rooted in a series of transactions involving the now-defunct FSB International Bank, G. Cappa Plc, and the sale of mortgaged properties.
Origin of the Dispute
The origin of this complex legal saga trace back to the early 2000s when G. Cappa Plc, a prominent engineering and construction company, secured two high-interest loans from FSB International Bank a $3 million facility and a ₦100 million facility. These loans were secured by mortgages on properties located in Ikoyi, Lagos, and Ibadan.
In 2005, amid Nigeria’s banking sector consolidation, Fidelity Bank acquired FSB International Bank and, with it, inherited its assets and liabilities, including the loans extended to G. Cappa Plc. When G. Cappa defaulted on the loans, Fidelity Bank moved to enforce the mortgages and took possession of the collateral properties.
Controversial Sale of Mortgaged Properties
Despite a Federal High Court injunction in September 2005 restraining Fidelity Bank from disposing of the mortgaged properties, the bank proceeded to sell some of these assets. Notably, in November 2005, Fidelity sold a property in Ibadan to Sagecom Concept Ltd for ₦350 million, fully aware of the existing court order prohibiting such a sale.
Sagecom, having purchased the property in good faith, faced challenges in taking possession due to G. Cappa’s continued occupation and collection of rents from the property. This situation prompted Sagecom to initiate legal action against both Fidelity Bank and G. Cappa Plc, seeking possession and damages for breach of contract.
The legal battle traversed multiple courts over the years. In 2011, the Federal High Court ruled that Fidelity Bank had the right to sell the property but declined jurisdiction over Sagecom’s counterclaim, transferring it to the Lagos State High Court. In 2018, the Lagos High Court awarded judgment in favor of Sagecom, holding both Fidelity Bank and G. Cappa Plc jointly and severally liable for damages.
Fidelity Bank appealed the decision, but both the Court of Appeal and the Supreme Court upheld the lower court’s judgment. In a unanimous decision delivered on April 11, 2025, the Supreme Court condemned Fidelity Bank’s actions, stating that allowing the bank to escape liability would be tantamount to permitting it to benefit from its own wrongdoing.
Justice Adamu Jauro, delivering the lead judgment, emphasized that Fidelity Bank’s deliberate disregard for court orders and the rights of Sagecom warranted the substantial damages awarded. The court ordered Fidelity Bank to pay \$138.8 million, with compound interest of 19.5% per annum from 2011 until the date of payment, bringing the total liability to approximately ₦225.3 billion at current exchange rates.
Dispute Over Exchange Rate and Actual Liability
Fidelity Bank has contested the computation of the judgment debt, arguing that the liability is significantly lower than the amount stated by the Supreme Court. The bank maintains that, based on the exchange rate prevailing in 2005 when the cause of action arose, its liability should be approximately ₦14 billion. Even if the 2018 exchange rate is applied, the bank contends that the total judgment debt would be under ₦30.7 billion, with G. Cappa Plc bearing the majority of the liability due to its prolonged occupation of the property.
In light of these discrepancies, Fidelity Bank has applied to the court for clarification and an inquiry into the proper interpretation of the judgment and the accurate computation of the financial liability. The bank has also sought a stay of execution pending the determination of these motions.
The Supreme Court’s judgment has raised concerns about Fidelity Bank’s financial stability. Reports suggesting that the bank faces bankruptcy have circulated, prompting the bank to issue a statement refuting such claims. Fidelity Bank emphasized that it remains a strong and profitable financial institution, among the most capitalized banks in Nigeria, and is committed to complying with the Supreme Court’s decision.
Despite these assurances, the bank’s management has acknowledged the gravity of the situation. An anonymous top official described the judgment as the most significant crisis the bank has ever faced, noting that the obligation is substantial and could impact the bank’s operations if not managed carefully.
Regulatory Oversight and Future Outlook
The Central Bank of Nigeria (CBN) has weighed in on the matter, reassuring the public and stakeholders of the resilience and soundness of the Nigerian banking sector. The CBN’s intervention aims to prevent panic and maintain confidence in the financial system amid the controversy surrounding Fidelity Bank.
As Fidelity Bank navigates this challenging period, the outcome of its application for judicial clarification on the judgment’s interpretation and the computation of its financial liability will be crucial. The bank’s ability to manage the situation effectively will determine its financial health and reputation in the long term.
