Zenith Bank Slapped with ₦85m Fine Over Illegal Account Freeze: Court Warns Banks on Duty of Care
In a landmark judgment that reinforces the sanctity of banker–customer trust, the High Court of the Federal Capital Territory has ordered Zenith Bank Plc to pay ₦85 million in damages for unlawfully freezing a customer’s account based on an invalid court order from a magistrate with no jurisdiction over banking disputes.
Delivering judgment on July 16 (CTC released Thursday), Justice S.U. Bature also ordered the immediate unfreezing of the account — domiciled at Zenith Bank’s prestigious Transcorp Hilton branch — and directed the bank to issue a public apology in two national newspapers and on its official website.
The ruling stemmed from a suit filed by Paulyn O. Abhulimen, SAN, trading as Abhulimen & Co, who accused Zenith Bank and the Nigeria Police Force (NPF) of freezing her firm’s account without notice, causing severe financial and reputational damage.
The Jurisdiction Blunder That Cost Zenith Bank ₦85m
Justice Bature was unequivocal: Magistrate Courts lack the constitutional and statutory authority to order the freezing of bank accounts. Banking disputes, he held, fall squarely under the exclusive jurisdiction of the Federal High Court or, in certain matters, shared jurisdiction with State and FCT High Courts — but never magistrates.
Citing Section 251 of the 1999 Constitution (as amended), the judge noted that the NPF had inexplicably sought an order from a Mararaba Gurku Magistrate Court in Nasarawa State — a court with neither territorial nor subject-matter jurisdiction over a Maitama-based account holder or transactions between an Abuja branch and its customer.
“The legal department of the first defendant (Zenith Bank), being lawyers, should have known better. They ought not to have obeyed an order from a court that clearly lacked jurisdiction,” Justice Bature said.
Breach of Duty of Care: No Notice, No Excuse
The court found Zenith Bank negligent for failing to inform the claimant that a Post-No-Debit (PND) restriction had been placed on her account. This omission, Justice Bature ruled, was a clear breach of the banker’s duty of care, leaving the customer to discover the freeze only after being unable to transact.
“The failure of the 1st defendant to inform the claimant amounts to negligence… and a breach of duty of care and due diligence,” the court held.
Damages and Costs
The judgment imposed:
- ₦60 million in general damages for embarrassment, psychological trauma, financial distress, emotional stress, and grave inconvenience;
- ₦25 million in costs;
- A mandatory public apology in national dailies and on Zenith Bank’s website.
The court also declared that ex-parte account freezing orders cannot be validly granted to last indefinitely — a significant pronouncement for both the banking industry and litigants.
Business & Legal Implications
This case has far-reaching consequences for Nigerian banking practice:
- Banks’ Compliance Units on Alert – Legal departments must now meticulously verify the jurisdiction and validity of court orders before taking disruptive actions against customer accounts.
- Customer Rights Enforcement – The ruling empowers customers to challenge wrongful account freezes, especially those obtained without due process or jurisdiction.
- Police Investigative Overreach Curtailed – The judgment serves as a warning to law enforcement against bypassing proper judicial channels in financial investigations.
- Reputational Risk for Banks – Beyond financial penalties, public apologies mandated by courts could damage brand equity in a competitive retail banking market.
BRANDECONOMY Verdict
Zenith Bank’s ₦85m liability is not merely a legal loss — it’s a reputational cautionary tale for Nigeria’s financial institutions. The decision underscores the judiciary’s readiness to uphold the integrity of banking law, even against corporate heavyweights.
In an era where consumer trust is fragile and banking competition is fierce, legal due diligence is no longer optional — it’s a survival imperative.
