Breach Of Contract: Court Orders Sterling Bank To Pay Comfort Stevens N75m

Justice Olumuyiwa Martins of the Lagos High Court has ordered Sterling Bank Nigeria PLC to pay Comfort Stevens Limited N75million as damages and costs for breach of their non-disclosure and non-circumvention agreement.

Comfort Stevens Limited, an international footwear and shoe component manufacturing company with operations in the United States, Brazil, China and Nigeria, had through its President/CEO Dr. John Ugochukwu Nwankwo filed a N20Billion lawsuit against Sterling Bank for a breach of contract.

However, Justice Martins in her ruling on July 2, 2024, awarded Comfort Stevens N75 Million only, comprising N50 million for damages, and N25million as the cost of the action by the claimants.

The Court held that the defendant’s conduct 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, was wrongful and unlawful, resulting in a material violation of the agreement’s terms and conditions.

She declared: “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 claimants had sought to embark on a N10.5 billion automated footwear and shoe component project in Aba Abia State Nigeria which the Bank indicated interest in financing if the Claimants agreed to reduce the amount to N4.5 billion or N4 billion.

The Claimants consented, reduced the project amount to N4.5 billion and thereafter executed a non-disclosure and non-circumvention agreement with the bank to protect their trade secret from being shared with third parties.

However, Sterling Bank breached the agreement and entered into discussions on a similar shoe manufacturing project with Dr. Okezie Ikpeazu-led government in Abia State and that of Kano State governments respectively without the claimant’s knowledge.     

Unhappy with the development on discovering it, the claimants initiated a N20 Billion 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.

They argued 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 in Kano through the State 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. In fact, the first defence witness, DW1 (eventually the only witness for Sterling Bank) she noted, also admitted that the defendants’ 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 the Non-Disclosure and Non-Circumvention agreements marked as Exhibits P1 and P2 respectively.”

According to Justice Martins, “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 surrounding 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 before she awarded the damages against Sterling Bank.

Recall that this same Comfort Stevens Limited recently trended online when their Partners from Nigeria, USA, Brazil, Hong Kong and China led by her global President/CEO Dr. John Nwankwo paid a courtesy visit to the Governor of Abia State Dr. Alex Chioma Otti, OFR.

During the visit in early June 2024, Dr. Nwankwo unveiled the Company’s plans and readiness to commission a world-class automated 15,000-a-day capacity shoe manufacturing facility in Owerrinta near Aba that would finally launch Abia State into a global quality shoe manufacturing hub.

Governor Otti in his remarks had expressed his government’s excitement and willingness to support the Comfort Stevens footwear and shoe component manufacturing project in Abia State.

The Governor’s public support of the Comfort Stevens project like that of Geometric Electric drew local, national and international commendations.