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In The Supreme Court of Nigeria On Friday, the 2nd day of March 2007
SC. 277/2002
Before Their Lordships
Between
And
Judgement of the Court Delivered by Aloysius Iyorgyer Katsina-Alu, J.S.C.
On 28th February 1991, a Consortium of Management Operation Lease Agreement was executed for the management of Cocoa Products Industries (Nig.) Ltd. Situate at Ede, Osun State. The Deed was between Cocoa Products Industries Nigeria Limited, on the one hand, as lessor, and World Wide Industrial Venture Ltd (50%); Phoenix Produce Nigeria Limited (25%); Dalami Nigeria Ltd (15%) and Oyo State Government (10%) as Lessees. The lease period was for a term of 6 years. The substance of the Leasehold was that World Wide Industrial Venture Ltd was to produce the Managing Director, Plant, Service, and Shift Managers, Phoenix Produce Nigeria Ltd to produce the Accountant and Marketing Manager, Dalami to produce the Purchasing, Administration Managers and Company Secretary, whereas Oyo State Government was to produce Chairman of the Board of Directors, Financial Controller and Internal Auditors as management lessees.
The government of Osun State in 1991 August became the successor of Oyo State Government, as the Principal shareholder of Cocoa Products Industries (Nig.) Ltd, Ede, consequent upon assets sharing. The Government of Osun State on 2nd November, 1992 caused the leasehold to be terminated following the resolution of the House of Assembly of Osun State vide a letter from the Commissioner for Finance and Commerce. The 15% leaseholder, Dalami Nigeria Limited, on July 5 1993 took out Writ of Summons against the Appellant and the Government of Oyo State.
By its paras. 24 and 26 of the Further Amended Statement of Claim the Plaintiff as Respondent claimed against the Appellants as follows:
"(i) A Declaration that the purported termination by the defendants of the Management Lease Agreement subsisting between the Plaintiff and the Defendants inter alia in relation to the management of Cocoa Product Industry Limited vide a letter dated the 27th of November 1992 is wrongful irregular in bad faith in breach of the terms of the Management Lease Agreement,
(ii) An order nullifying and setting aside the purported termination as conveyed by a letter dated the 27th November, 1992.
(iii) An Order of specific performance directing the Defendants to give effect to the terms of the Management Lease Agreement as it relates to the management of Cocoa Product Industry Limited.
Alternatively
(iv) An order directing the Defendants to pay to the Plaintiff the sum of $11.23 Million or its Naira equivalent as damages for the wrong termination of the Management Lease Agreement as follows:-
(a) Loss of 15% of the anticipated profit on Cocoa Butter and Cocoa Production realizable by the Company from 1992- 1997-US $3.65 Million.
(b) Loss of 15% of the anticipated pro fit from processing fee realizable by the company from 1992-1997-$3.07 Million.
(c)
The sum of
The learned trial Judge found for the Respondent. He made the following awards:
"(i) Loss of 15% anticipated profit from Sales of cocoa Butter and cake (1992-1997) US$3.65 Million.
(ii)
Loss of 15% anticipated profit from processing fees (1992-1997)-US $3.07
Million. Total US $6.72 Million, as special damages, and
On
appeal by the Appellant to the Court of Appeal that court dismissed the
appeal in respect of the award of special damages, allowed the appeal on the
award of general damages of
This appeal is from the decision of the Court of Appeal. Based upon the grounds of appeal, the appellant has submitted two issues for the determination of the appeal. These are:
(I) Jurisdiction
Whether the High Court of Justice of Oyo State was competent and possessed the jurisdiction to exercise judicial powers over the claims of the Respondent and whether the Court of Appeal properly considered the issue of jurisdiction in determination of the Appeal.
(ii) Damages
Whether the Court of Appeal properly considered and determined the damages awarded against the Appellant.
For its part, the Respondent raised three issues for determination which read as follows:-
Jurisdiction
Whether the High Court of Justice of Oyo State was not competent and possessed the jurisdiction to exercise judicial powers over the claims of the Respondent under Section 2 of the Public Officers (Protection) Act, Cap. 168 Laws of the Federation of Nigeria, 1990.
(1) Whether or not the High Court of Oyo State possessed Power and jurisdiction to entertain the claims of the Respondent in view of the provisions of Section 7 of the Federal High " Court Act Cap. 134 Laws of the Federation of Nigeria, 1990. Damages
(ii) Whether the Court of Appeal properly considered and determined the damages awarded against the Appellant on uncontroverted oral testimony.
The issues of the parties are identical. Respondent's issues 1 and 2 can be argued together in response to Appellant's issue No. 1.The Appellant has argued ground No. 1 into two parts. Both parts are on the jurisdiction of the trial High Court. The first part is on section 2 of the Public Officers Protection Act, Cap.168 Laws of the Federation of Nigeria 1990. The second part is on section 7 of the Federal High Court Act.
Public Officers Protection Act.
It was submitted for the Appellant that the suit of the Respondent instituted on 5th June 1993, seven (7) months after the termination of the leasehold is caught by the provisions of section 2 of the Public Officers Protection Act. It was said that the Act provides for a period of three (3) months within which an action may be instituted after the act, neglect or default complained of. The Appellant gave three reasons why the limitation law is applicable to the present case. These are:
1. The termination of the leasehold agreement carried out by a Commissioner of the Osun State Government in pursuance of his public duty.
2. The action was commenced against the Osun State Government on the basis of the Commissioner's act.
3. The action was commenced seven (7) months after the public act complained of.
In the circumstances, it was submitted by learned Counsel for the Appellant that the Respondent's action was statute-barred. Learned Counsel relied on the following cases: Egbe v. Adefarasin (1985) 1 NWLR (Pt.3)549 Fadare v. A. G. Oyo State (1982)4 SC; Ibrahim v. JSC(1998)14 NWLR (Pt.584)l at 31-32.
Federal High Court Act
It was submitted for the Appellant that this action arose from the operation of the Companies and Allied Matters Act or any other enactment regulating the operation of companies incorporated under the Companies and Allied Matters Act. It was therefore contended that it is only the Federal High Court that has jurisdiction to hear and determine causes and matters arising from the operations and activities of incorporated companies. Reliance was placed on the cases of Skem Consult Ltd. K Seondy Ukey (1981)1SC6, Omisade & Ors v. Harry Akande (1987)2 NWLR (Pt.55)158 at 171. '' '
It was further submitted that the claim for damages on the facts of the case is merely an ancillary relief section 7 of the Federal High Court Act, Cap. 134 Laws of the Federation 1990 gives the Court with exclusive jurisdiction in civil causes and matters arising from the operation of the Companies and Allied Matters. Act regulating the companies incorporated under the Act. It was pointed out that the court which has the power to determine ancillary issue must decline jurisdiction for the court which has the power to determine the principal. Learned counsel placed reliance on the following cases - Adeyemi v, Opeyori (1976) 9-10 SC 3; Tukur v. Government of Gongola State (1989)4 NWLR (Part 117) 517; Egbuonu v. BRTC (1997)12 NWLR (Part 531)29 at 43.
Issue 1.
The Respondent on issue 1 submitted that section 2 of the Public Officers (Protection) Act Cap. 379 Laws of the Federation of Nigeria 1990 is not applicable to this case because the cause of action is based on contract which was breached. It was pointed out that the claims of the Respondent were based on a tripartite Management Lease Agreement, Exhibit G which terminated the contract Agreement as it related to the Respondent.
The Respondent drew attention to its writ of summons whereby it claimed as follows:
"1. A declaration that the purported termination by the Defendants of the Management Agreement subsisting between the Plaintiff and the Defendants inter alia in relation to the Management of Cocoa Products Industry Limited vide letter dated 27th of November, 1992 is wrongful, irregular in bad faith in breach of the terms of the Management Lease Agreement.
2. An order nullifying and setting aside the purported termination as conveyed by a letter
3. An order of specific performance directing the Defendants to give effect to the terms of the Management Lease Agreement as it' relates to the Management of Cocoa Products Industry Limited."
In the circumstances, it was submitted that an action for a breach of contract does not fall within the contemplation of section 2(a) of the Public Officers (Protection) Law. Learned counsel relied for this submission, on the case of Ibrahim v. Judicial Service Committee, Kaduna State (1998)14 NWLR (Part 584)1 at page 67.
Issue No 2.
On the second issue it was submitted that the fundamental complaint of the Respondent is not on the operation, good management or bad management or management at all of the Cocoa Products Nigeria Limited by whoever was operating or managing the company. The complaint of the Respondent, it was pointed out was in respect of the breach of the contract between the Appellant and the Respondent in 1991. It was further said that the claim of the Respondent in this case was a claim in damages for breach of contract. It was contended that the issue of assessment for damages was ancillary Learned counsel relied on the case of Tukur v. Government of Gongola State (1989)4 NWLR (Pt. 117)517 at 567.
It was submitted in the alternative that under the 1979 Constitution of the Federal Republic of Nigeria, both the Federal High Court and the State High Court had concurrent jurisdiction in respect of the provisions of section 7 of the Federal High Court Act. Reliance was placed on the following cases Savannah Bank of Nigeria. Ltd. V. Pan Atlantic Shipping. & Transport Agencies Ltd. (1987)1 NWLR (Pt.49)212, Omisade v. Akande (1987) 2 NWLR (Pt.55)158 at 775, Adisa v. Oyinwola (2000) 10 NWLR (Pt.674)116.
It was pointed out that the present action was instituted at the Oyo State High Court in 1993 when the 1979 Constitution was applicable. It was therefore submitted that the law applicable to a cause of action is the law in operation when the cause of action arose. For this submission, learned counsel relies on the cases of Attorney-General of the Federation v. Sode (1990) 1NWLR (Pt. 128) 530 at 534, Kotoye v. Saraki (1994)7 NWLR (Pt. 357)414 at 448-449 It was therefore the submission of the Respondent that both the Oyo State High Court and the Federal High Court had concurrent jurisdiction in the present suit.
Section 2(a) of the Public Officers (Protection) Act Cap. 168 Laws of the Federation of Nigeria 1990 provides as follows: "
"2. Where any action, prosecution or other provision is commenced against any person for an act done in pursuance or execution or intended execution of any Act or Law or of any public duty or authority, or in respect of any alleged neglect or default in the execution of any such Act, Law, duty or authority, the following Provisions shall have effect -
(a) the action, prosecution, or proceeding shall not lie or be instituted unless it is commenced within three months next after the act, neglect or default complained of, or in case of a continuance of damage or injury, within three months next after the ceasing thereof:
This is a limitation law. It removes the right of action, the right of enforcement and the right to judicial relief in a plaintiff if his cause of action arose more than three months preceding the institution of his action.
The general principle of law is that where a statute provides for the institution of an action within a prescribed period, proceedings shall not be brought after the time prescribed by such statute. Any action that is commenced after the prescribed period is said to be statute barred. See Ibrahim v. J. S. C. (1998) 14 NWLR(Pt. 584)1
While the Appellant maintains that this action is caught by section 2(a) of the Public Officers (Protection) Act, the Respondent argues that the Act is inapplicable. It was contended that the section 2 of the Public Officers Protection Act does not apply in cases of breach of contract. The Respondent pointed out that its action was for breach of contract.
In order to ascertain the nature of the present action, it is pertinent to read some paragraphs of the statement of claim. In this connection paragraph 26 of the Further Amended Statement of Claim is pertinent. It reads as follows:
"26. Whereof the Plaintiff claim against the Defendant as follows:-
(i) A declaration that the purported termination by the Defendants of the Management Lease Agreement subsisting between the Plaintiff and the Defendants inter alia in relation to the Management of Cocoa Products Industry, Limited vide a letter dated the 27th of November, 1992 is wrongful, irregular in bad faith in breach of the Terms of the Management Lease Agreement.
(ii) An order nullifying and setting aside the purported termination as conveyed by a letter dated the 27th November, 1992.
(iii) An order of specific performance directing the defendants to give effect to the terms of the Management Lease Agreement as it relates to the Management of Cocoa Products Industry Limited.
Alternatively
(iv) An order directing the Defendants to pay to the Plaintiff the sum of $ 11.23 Million or its Naira equivalent as damages for the wrong termination of the Management Lease Agreement as follows
(a) Loss of 15% of the anticipated profit on Cocoa Butter and Cocoa Cake production realizable by the Company from 1992 - 1997 US$3.65 Million
(b) Loss of 15% of the anticipated profit from processing fee realizable by the company from 1992 - 1997.
(c)
The sum of
I think it is without dispute that this is an action for breach of contract. It is now settled law that section 2 of the Public Officers (Protection) Act does not apply to cases of contract. See Nigerian Ports Authority v. Construzioni General Farsura Cogefar Spa & Anor. (1974)1 ALL N.L.R. 463. This court, at pp 476 to 477 held as follows:
"We shall now deal with the other point which to our mind, does not seem to be well-settled, namely whether the kind of statutory privilege which we have been considering is applicable to an action founded upon a contract. In other words, whether S.97 of the Ports Act applies to cases of contract. We think that the answer to this question must be in the negative. We agree that the section applies to everything done or omitted or neglected to be done under the powers granted by the Act. But we are not prepared to give to the section the stress which it does not possess. We take the view that the section does not apply to cases of contract. The learned Chief Justice, in deciding this point, made reference to the case of Salako v. L.E.D.B. and Anor 20 N.L.R. 169 where de Commarmond S.P J. as he then was, construed the provision of S.2 of the Public Officers Protection Ordinance which is almost identical with S.97 of the Ports Act, and thereafter stated the law as follows:-
'I am of opinion that section 2 of the Public Officers Protection Ordinance does not apply in cases of recovery of land, breaches of contract, claims for work and labour done, etc.' We too are of the opinion that de Commarmond S.P.J., has quite rightly stated the law in the passage of his judgment cited above. It seems to us that an enactment of this kind i.e. S.97 of the Ports Act is not intended by the Legislature to apply to specific contracts."
The contention of the Respondent was therefore well taken. Section 2 of the Public Officers Protection Act does not apply to this case.
The second arm of this submission is that under section 7 of the Federal High Court Act, the Federal High Court has exclusive jurisdiction to hear and determine this claim. The relevant provision under section 7 of the Federal High Court Act, Cap. 134 Laws of the Federation of Nigeria 1990 is as follows:
"7.(i) The court shall have and exercise jurisdiction in civil causes and matters -
(a) ...................................
(b) ...................................
(c) arising from —
(ii) The operation of the Companies and Allied Matters Act or any other enactment regulating the operation of Companies incorporated under the Companies and Allied Matters Act.
The guide in the determination of jurisdiction of a court is the subject matter of the claim as endorsed in the writ of summons. It is a fundamental principle of law that it is the claim of the plaintiff that determines the jurisdiction of the court, which entertains the claim: See Adeyemi v. Opeyori (1976)1 FNLR 149; Bronik Motors v. Wema Bank Ltd. (1983)6 SC 158.
I have already shown that the action is for a breach of contract. This claim has nothing to do with the management of the company. The issue of assessment for damages is merely ancillary: See Tukur v. Government of Gongola State (1989)4NWLR (Pt. 117)517. In the result the Federal High Court has no jurisdiction to hear and determine this claim.
I turn now to the complaint that relates to the award of special and general damages. In resolving this issue the learned trial Judge held thus:
"All parties in this suit (and I have equally held that that is the position) the lease agreement Exhibit F is the binding contract between them. In clause 15(ii) of Exhibit F it has been spelt out the circumstances under which the management agreement Exhibit F can be terminated. The reason given in Exh. G is 'recent developments on the company' have not been spelt out to examine whether or not the so-called 'developments' are within the contemplation of parties in clause (15) (ii) of Exhibit F. Some copious attempts were made in the Amended Statement of Defence of the 2nd Defendant but there was no evidence coming in proof of any. I therefore come to the decision that the termination of the management lease agreement as between the Plaintiff and defendants is wrongful, null and void and of no effect being in breach of Exhibit F”
The view quoted above is faulty. I will explain.
The
learned trial Judge was right when he held that the Lease Agreement Exhibit
F, was the binding contract. But the complaint of
the plaintiff was not that the preconditions in clause 15 of Exhibit F were
not complied with before the lease agreement was terminated. I have
carefully read the Statement of Claim and I find nothing therein that
remotely refers to the failure of the respondents to comply with clause 15
of Exhibit F before the termination of the agreement. But it was on this
faulty foundation that the trial Judge proceeded to hold that the
termination was wrongful, null and void and of no effect. He also proceeded
on this wrong premise to award special and general damages of
US$6.72 million and
On
appeal to the Court of Appeal, that court affirmed the award of special
damages. On the: award of general damages, however, the
Court of Appeal held that since the trial Judge did not give sufficient
reasons for the award of
The lease agreement Exhibit F is the binding contract between the parties. Clause 16 thereof provides as follows:
"16(i) Penalty.
In the event of any termination or disruption of this agreement by the CPI or anybody or persons on account of action traceable to any shareholder or the CPI shall pay to the Lessees an amount equal to two times the fees payable to the CPI in the year of such disruption or termination as specified in column 4 of the Schedule V in the Agreement
(ii) The lessees shall be entitled to remain in possession of and in operation of the CPI until any sum of money that may be due under paragraph 16(1) is paid to the lessees by the CPI"
I see from clause 16 quoted above that the parties did contemplate that the issue of termination might happen. So they provided the penalty clause which I think is sufficiently exhaustive. It is settled law that the parties are bound by their agreement freely entered into. No party would therefore be permitted to go outside it for remedy. In my judgment, the Respondents are entitled to an amount equal to two times the fees payable to the CPI in the year of such termination. I so order.
The Plaintiffs first witness was Mr. Afolabi Igbaroola a chartered accountant. He testified as to the damages suffered by the plaintiff. He tendered Exhibit A.
It was the basis of the plaintiffs loss as a result of the premature termination of its contract. Clause D of Exhibit A reads:.
"D Revenue Due to CPI from Processing fees:
(i) Cocoa Beans Processed per annum 18,000 tonnes of cocoa Beans
(ii)
Processing fees per tonne of cocoa beans
(iii)
Revenue from processing fees per annum - 18,000 x 5,000.00 =
(iv)
15% in respect of Dalami's share from processing
fees
It
will be seen clearly from Clause D (iii) above that the amount due to CPI
per annum as given in evidence was
In the result, I allow this appeal and set aside the judgments of the two lower courts. I make no order as to costs.
Judgment delivered byUmaru Atu Kalgo, J.S.C
I have had the opportunity of reading in draft the judgment of my learned brother Katsina-Alu, JSC just delivered. I am in agreement with him that there is merit in the appeal and it ought to be allowed in part. I adopt the reasoning and conclusions reached in the said judgment, and allow the appeal in part. I also endorse the consequential orders made therein including the order as to costs.
Judgment delivered byGeorge Adesola Oguntade, J.S.C
The respondent was the plaintiff at the Ibadan High Court of Oyo State and the Appellant the defendant. In its further and further amended Statement of Claim, the plaintiff claimed against the defendant the following reliefs:
"(i) A declaration that the purported termination by the Defendants of the Management Lease Agreement subsisting between the plaintiff and the Defendants inter alia in relation to the Management of Cocoa Products Industry, Limited vide a letter dated the 27th of November, 1992 is wrongful, irregular in bad faith in breach of the Terms of the Management Lessee Agreement.
(ii) An order nullifying and setting aside the purported termination as conveyed by a letter dated the 27 November, 1992.
(iii) An order of specific performance directing the defendants to give effect to the terms of the Management Lease Agreement as it relates to the Management of Cocoa Products Industry Limited.
Alternatively
(iv) An Order directing the Defendants to pay to the Plaintiff the sum of $ 11.23 Million or its Naira equivalent as damages for the wrong termination of the Management Lease Agreement as follows
(a) Loss of 15% of the anticipated profit on Cocoa Butter and Cocoa Cake production realizable by the company from 1992-1997 = US$3.65 Million
(b) Loss of 15% of the anticipated profit from processing fee realizable by the Company from 1992-1997.
(c
) The sum of
The parties filed and exchanged pleadings. The suit was heard by Adeniran J. On 28/7/99. the trial Judge in his judgment concluded thus:
"I have considered the mode of payment of any award in this judgment. I have considered the pros and cons of same. I think in the prevailing circumstances of the ailing economy of this country whereby the Naira sinks daily I should make the award in Naira equivalent. Going therefore by the contradicted calculations as evidenced in Exhibit 4 page 2 paragraph F I grant the following: -
as
special damages and
The
second defendant before the trial court i.e. Osun
State Government was dissatisfied with the judgment of the trial court. It
brought an appeal before the Court of Appeal, Ibadan (hereinafter referred
to as 'the court below'). On 12/7/2002, the court below set aside the award
of
(i) Jurisdiction
Whether the High Court of Justice of Oyo State was competent and possessed the jurisdiction to exercise judicial powers over the claims of the Respondent and whether the Court of Appeal considered the issue of jurisdiction in determination of the appeal.
(ii) Damages
Whether the Court of Appeal properly considered and determined the damages awarded against the appellant."
The respondent raised a preliminary objection to the 2nd ground of appeal filed by the appellant out of which the first issue for determination was distilled. Alternatively however, the respondent adopted and argued the two issues formulated by the appellant.
Let me dispose first of the preliminary objection. It was the respondent's contention that the 2nd ground of appeal, out of which a part of the 1st issue for determination in the appeal was distilled, was improperly raised, in that the appellant had neither sought nor obtained the leave of this Court to raise on appeal a new issue on the Limitation Law which had not been previously raised or considered by the court below. The said second ground of appeal reads:
"2. The learned Justices of the Court of Appeal erred in law when they failed to strike out the suit of the plaintiff/respondent when it was clear on the record that the High Court of Justice of Oyo State had no jurisdiction and competence to entertain the claims in the suit on grounds that there was no live cause of action at the time when the suit was filed.
Particulars of absence of jurisdiction and competence
(i) The act of the defendant complained about was an exercise of public duty, executed in official capacity, which occurred on November 27th 1992.
(ii) The action was commenced in 5th July 1993 well after the statutory period prescribed by Section 2 of the Public Officer Protection Act.
(iii) The High Court of Oyo State lacked the competence to exercise judicial power over a non-justiciable cause."
It is apparent from the 2nd ground of appeal reproduced above that the appellant's contention was that, at the time the plaintiff/respondent commenced its action on 5/7/93, the same had become statute-barred by reason of Section 2 of the Public Officers Protection Act since the cause of action accrued on 27-11-92. Now Section 2(a) of the Public Officers (Protection) Act, Cap. 168, Laws of the Federation, 1990 provides:
"2. Where any action, prosecution, or other proceeding is commenced against any person for an act done in pursuance or execution or intended execution of any Act or Law or of any public duty or authority, or in respect of any alleged neglect or default in the execution of any such Act, Law, duty or authority, the following provisions shall have effect:-
(a) the action, prosecution, or proceeding shall not lie or be instituted unless it is commenced within three months next after the act, neglect or default complained of, or in case of a continuance or damage or injury, within three months next after the ceasing thereof."
Now, before the court below, the appellant which had raised the issue of jurisdiction, did not raise any argument on Limitation Law. The consequence is that the court below did not consider whether or not the respondent's suit was statute-barred. The appellant in its appellant's brief has now raised the issue of Limitation Law; and this it did without seeking or obtaining the leave of this Court to raise such new matter on appeal. The law is now well settled that an appellant wishing to raise a new or fresh matter on appeal must first seek and obtain the leave of the appellate court concerned. See Uor v. Loko [1988] 2NWLR (Pt. 77)430; Abinabina v.Enyimadu 12 WACA 171 at 173 and Akpani v. Barclays Bank of Nigeria 1977 1SC.47
I am therefore unable to consider the first limb of the first issue for determination wherein it was contended that the appellant's suit was statute-barred.
Under the second limb of the first issue for determination, the appellant has raised before us as it did before the court below, the argument that that by reason of Section 7 of the Federal High Court Act, it is only the Federal High Court that possesses the jurisdiction to adjudicate in this suit since it was premised upon a cause of action arising from a management operation agreement of an incorporated company. I do not see any merit in the argument by the appellant' counsel that the Oyo State High Court had no jurisdiction to entertain the suit out of which this appeal arose. Section 7(1 )(k) of the Federal High Court provides:
"7(1) the court shall have an exercise jurisdiction in civil causes and matters -
(a) -
(b) -
(c) Arising from -
(i) the operation of the Companies and Allied Matters Act or any other enactment regulating the operation of Companies incorporated under the companies and Allied Matters Act.
(ii) Any enactment relating to copyright, patents, designs, trade marks and merchandise marks;
(d) of Admiralty jurisdiction."
It seems to me that appellants counsel did not pay due regard to the meaning to be ascribed to Section 7(1 )(c )(i) above. The provision only applies where a dispute involves the practical application or operation of the provisions of the Companies and Allied Matters Act or any other Law regulating the operation of incorporated companies. In this case, the dispute was between one incorporated company i.e. the plaintiff and the two defendants before the High Court (the Oyo State Government and the Osun State Government). The suit raised the issue whether or not there was a breach of the contract between the parties to the suit. The suit did not centre around the meaning or application or operation of the provisions of the Companies and Allied Matters Act or any other enactment. It was simply a case of breach of contract as the claims so clearly conveyed. It is therefore too much far-fetched to argue that it was only the Federal High Court which could have jurisdiction over the matter.
I now consider the 2nd issue dealing with the quantum of damages awardable. The parties had in their written agreement Exhibit 'F' made provision for the damages payable in the event one of them prematurely, terminating the agreement. Under the agreement, the plaintiff along with other companies was to manage the defendants' Cocoa Processing Factory at Ede in the old Oyo State.
Paragraphs 3-5 of Exhibit 'F' the agreement between the parties spelt out the nature of the relationship. The paragraphs read thus:
"3. After considering series of applications from and interviewing interested investors/companies the Lessor decided to lease the said Lessor's factory to the following investors/companies in the ratio of investment indicated against each investor/company.
(i)
Worldwide Industrial Ventures Ltd
- 50% (
(ii)
Phoenix Produce Nigeria Limited
- 25% (
(iii)
Dalami Nigeria Limited
- 15% (
(iv) Oyo State Government - 10% -
4. The day-to-day management, administration and operation of the said factory by the Lessor including disbursement of funds shall be vested in the Managing Director who shall be appointed by the Worldwide Industrial ventures Limited.
5. The co-investors/companies shall be at liberty to take part in the management and when the Managing Director prepares his organogram and/or management chart, each co-investor/company will be accommodated so that all of them will be able to see the running of the factory and contribute to the viability of their investment."
The agreement was to come into effect on 28th February and run for a term of three years. But on 27/11/1992, the defendants vide exhibit 'G' terminates the agreement. Exhibit 'G' reads:
"Hon. Commissioner for Finance, Commerce and Industry P.M.B 4419 Oshogbo, Osun State of Nigeria
27th November, 1992
Our Ref. No. MFC&I/C/7/52
Dalami - Nigeria - Limited c/o Prince Y. Lawal Obelawo, Obelawo Estate New Ikirun Road P. M. B.389 Oshogbo.
Dear Sir,
Termination of the Management Lease Agreement of cocoa products industry, Ede
I wish to recall that a management Lease Agreement on cocoa Products Industry, Ede was contracted between the Owner State Governments (Oyo and Osun States) and World-Wide Ventures; Messrs Dalami and Phoenix Nigeria Limited.
In the light of the recent developments on the Company, the Owner States have reviewed the situation and a decision has been taken to terminate the Management Lease Agreement with immediate effect. To that extent, all rights and privileges of the agreement have ceased to be in operation.
Please acknowledge receipt.
Yours truly,
(Sgd.)
(H. A. Ajani), Honourable Commissioner"
The parties had in exhibit,'F' made provision for the damages payable in the event one of them prematurely brought the agreement to an end. Clause 16 of Exhibit F provides:
"Penalty
(i) In the event of any termination or disruption of this agreement by the CPI or anybody or person on account of reasons traceable to any shareholder/s of the CPI, the CPI shall pay to the Lessees an amount equal to two times the fee payable to the CPI in the year of such disruption or termination as specified in column 4 of Schedule V to this agreement.
(ii) The Lessees shall be entitled to remain in possession of and in operation of the CPI until any sum of money that may be due under paragraph 16(i) is paid to the Lessees by the CPI."
It seems to me that in the light of Clause 16 of Exhibit 'F', all that the trial court needed to do in the assessment of damages was to determine the amount "equal to two times the fee payable to the CPI in the year of such disruption or termination ...."
Parties are bound by the contract to which they subscribed. See Aouad v. Kessrawani [1956] 1 F.S.C. 35. Further, it was necessary for the court to determine whether clause 16 of Exhibit 'F' on penalty was from the nature of the contract conclusive of the liquidated damages claimable by the Plaintiff. In Koumoutis v. Leventis [1973] 11 SC. 157 this Court per Udoma J.S.C. reviewed the law on the point. See Dunlop Pneumatic Company Ltd. v. New Garage Company ltd. [1915] A. C. 79.
At the trial, the plaintiff called as its first witness Mr. Afolabi Igbaroola a chartered accountant who testified as to the damages suffered by the plaintiff. He tendered as Exhibit 'A' the basis of the computation of plaintiffs loss as a result of the premature termination of its contract. The relevant part of Exhibit A for the purpose of assessing the damages due to the plaintiff as stated in Clause 16 of Exhibit 'F' is Clause D at page 1 of Exhibit 'A' which reads:
“D Revenue Due to CPI From Processing fees:
(i) Cocoa Beans Processed per annum 18, 000 tonnes of cocoa Beans
(ii)
Processing fees per tonne of cocoa beans =
(iii) Revenue from processing fees per annum = 18.000 x 5,000.00
(iv)
15% in respect of Dalami's share from the
processing fees =
(v)
Amount due to Dalami (Nig.) Ltd. for lease
period = 5 x
= 67.5million = US$3. 07m."
It is
seen from Clause D(iii) above in exhibit 'A' that
the amount due to CPI per annum as given in evidence by
P.W.I was
I am with respect unable to agree with the judgment of the court below which affirmed the award of US$6.72 million dollars as special damages in favour of the plaintiff. The award in my view overlooks the fact that parties had themselves pre-fixed the limit of damages awardable in the event one of them prematurely terminated the contract which is what ultimately happened.
In the
final result, this appeal succeeds. It is allowed. I agree with the lead
judgment of my learned brother Katsina-Alu,
J.S.C. The judgment of the court below is set aside. In its place I award in
favour of the plaintiff respondent the sum of
Judgment delivered byMahmud Mohammed, J.S.C
This
is an appeal from the decision of the Court of Appeal Ibadan Division which
in its judgment delivered on 15th April, 2002, affirmed the
judgment of the trial Oyo State High Court of Justice, awarding special
damages of 15% profit which came to $6.72 million in favour of the Plaintiff
now Respondent in this Court. The Court below however, in the same judgment
allowed the Defendant's now Appellant's appeal against the award of
On further appeal to this Court by the Plaintiff now Respondent, only two issues were raised in the Appellant's brief of argument and the Respondent's brief respectively. The two issues which were virtually the same in the two briefs are whether or not the trial Court has jurisdiction to entertain the claim of the Plaintiff/Respondent and whether or not the Court below properly considered and determined the damages awarded against the Appellant.
I have read the judgment of my learned brother Katsina-Alu, JSC which has just been delivered in this appeal. I completely agree with the manner he considered and resolved the two issues arising for determination in allowing this appeal with no order as "to costs. I have nothing to add.
Judgment delivered byWalter Samuel Nkanu Onnoghen, J.S.C
This is an appeal against the judgment of the Court of Appeal holden at Ibadan in appeal No. CA/I/91/2000 delivered on 12th July, 2002.
On the 28lh day of February 1991, a Consortium of Management Operation Lease Agreement was executed for the management of Cocoa products industries (Nig) Ltd situate at Ede in Osun State between Cocoa Products Industries Nigeria Ltd on the one hand as lessor, and World Wide Industrial Venture Ltd with 50% interest; Phoenix Produce Nig. Ltd with 25%; Dalarm Nig. Ltd with 15% and Oyo State Government with 10% as lessors, for a term of six years. The terms of the lease include the fact that World Wide Industrial Venture Ltd was to produce the Managing Director, Plant, Service, and Shift Managers; Phoenix Produce Nig. Ltd to produce the Accountant and Marketing Manager; Dalami, the present respondent was to produce the Purchasing, Administration Managers and Company Secretary while the Oyo State Government was to produce the Chairman of the Board of Directors, Financial Controller and Internal Auditors as Management lessees. The Government of Osun State in 1991 became the successor of Oyo State Government as the Principal Shareholder of Cocoa Products Industries (Nig) Ltd, Ede following assets sharing and caused the lease to be terminated on 27th November, 1992 as a result of which the respondent who owned 15% of the leasehold, instituted an action on the 5th day of July, 1993 in the Oyo State High Court holden at Ibadan in suit No. 1/593/93 claiming the following the reliefs:
"(a) A declaration that the purported termination by the defendants of the Management Lease agreement subsisting between the plaintiff and the defendants inter alia in relation to the Management of Cocoa Products Industries Ltd vide a letter dated 27th November 1992, is wrongful, irregular, in bad faith and in breach of the terms of the Management Lease Agreement.
(b) An order nullifying and setting aside the purported termination conveyed, by a letter dated the 27th of November, 1992
(c) An order of specific performance directing the defendants to give effect to the terms of the Management Lease Agreement as it relates to the management of Cocoa Products Industry Limited.
(d) Alternatively
An
order directing the defendants to pay to the plaintiff the sum of
(i) Loss of 15% of the anticipated profit on cocoa butter and cocoa cake production realizable by the company from 1992 to 1997-US $3.65 million
(ii) Loss of 15% of the anticipated profit from processing fee realizable by the company from 1992 -1997 -US$3.07 million
(iii)
The sum of
See the Further Amended Statement of Claim at pages 102 - 108 of the record.
At the Conclusion of the trial, the trial court entered judgment in favour of the plaintiff/respondent and awarded the following damages
(a) Loss of 15% anticipated profit from sale of cocoa butter and cake (1992 - 1997) US $3.65 million.
(b) Loss of 15% anticipated profit from processing fees (1992 - 1997) US $3.07 million as special damages, and
(c)
The
present appellant was dissatisfied with that judgment and consequently
appealed to the Court of Appeal holden at Ibadan
which court affirmed the award of special damages of US $6.72 million but
allowed the appeal on general damages on condition that the award of
"(i) Jurisdiction
Whether the High Court of Justice of Oyo State was competent and possessed the jurisdiction to exercise judicial powers over the claims of the respondent and whether the Court of Appeal properly considered the issue of jurisdiction in determination of the Appeal.
(ii) Damages
Whether the Court of Appeal properly considered and determined the damages awarded against the Appellant."
In arguing the appeal, learned Senior Advocate of Nigeria submitted that the Court of Appeal erred in failing to hold that the trial court had no jurisdiction over the plaintiff's claims by reason of the provisions of the Public Officers Protection Act. Learned counsel further submitted that the court below was in error when it failed to treat, consider and pronounce on the objection to jurisdiction of the Oyo State High Court consequent upon the exclusive jurisdiction conferred on the Federal High Court.
It is also the argument of Learned Senior Advocate that the Court below was in error when it failed to set aside the special damages awarded in favour of the respondent on the grounds that the said award was based on fiction rather than the leasehold agreement which binds the parties in the management of cocoa Products Industries Nig. Ltd in case of termination or disruption; that the evidence on which the special damages was awarded and affirmed by the court below were inadmissible in law and consequently void; that the award of general damages was not in accordance with laid down principles of law and consequently wrongful and that the decision of the Court of Appeal throwing the issue of general damages to the trial court for retrial was unsustainable in law and the perculiar facts of the case and consequently wrongful. Learned Counsel urged the court to resolve the issues in favour of the appellant and allow the appeal.
On the other hand, learned counsel for the respondent Chief Olayowola Afolabi in the respondent's brief of argument filed on 28/5/03 submitted that the Oyo State High Court has the jurisdiction to entertain the action in that section 2(a) of the Public Officers (Protection) Act does not apply to this case because the cause of action is on contract and not tort; that the said Oyo State High Court has concurrent jurisdiction with the Federal High Court to entertain the action under section 236 of the Constitution of the Federal Republic of Nigeria 1979 (hereinafter referred to as the 1979 Constitution) and that there was a breach of the Management Lease Agreement by the appellant for which appellant is liable in damages. Learned counsel therefore urged the court to resolve the issues against the appellant and dismiss the appeal.
There is no dispute that the cause of action in the instant case is the letter of the Osun State Commissioner for Finance and Economic Planning dated 27th November, 1992 which terminated the Management Leasehold Agreement between the parties to this action. The cause of action is therefore the termination of the agreement in breach of the said Management Leasehold Agreement. The above position is strengthened by the reliefs claimed by the respondent in the trial court and earlier reproduced in this judgment. The first sub-issue to be determined under the general issue of jurisdiction of the trial court is therefore whether having regards to the undisputed facts of this case particularly as it relates to the cause of action it can be said that section 2(a) of the Public Officers (Protection) Act is applicable so as to render the action by the respondent statute barred.
Section 2 (a) of the Public Officers (Protection) Act, Cap. 168 Laws of the Federation of Nigeria, 1990 provides as follows:-
2. "Where any action, prosecution, or other proceeding is commenced against any person for an act done in pursuance or execution or intended execution of any Act or Law or of any public duly or authority, or in respect of any alleged neglect or default in the execution of any such Act, Law, duty or authority, the following provisions shall have effect:-
(a) the action, prosecution, or proceeding shall not lie or be instituted unless it is Commenced within three months next after the act, neglect or default complained of, or in case of a continuance or damage, or injury, within three months next after the ceasing thereof,"
It is the argument of learned Senior Advocate that since the termination of the leasehold agreement was carried out by a Commissioner in Osun State Government in pursuance of this official duty and authority as public officer, and the action was commenced against the Osun State Government as a result of the said act of the Commissioner and the said action, was so commenced seven months after the cause of action arose the action is statute barred and ought to have been struck out.
It is settled law that Public Officers (Protection) Act is a statute of limitation which removes the right of action, the right of enforcement and the right to judicial relief in a plaintiff and leaves him with a bare and lifeless cause of action, which cannot be enforced having been instituted after the three months prescribed by the said Law.
It is the argument of the learned counsel for the respondent that the provisions of section 2(a) of the Public Officers (Protection) Act do not apply to the facts of this case which action is grounded on breach of contract. Learned Counsel cited and relied on Ibrahim vs Judicial Service Committee, Kaduna State (1998) 14 NWLR (pt. 584) 1 at 57. I agree with the submission of learned counsel for the respondent that the provisions of section 2 (a) of the Public Officers (Protection) Act relied upon by learned Senior Advocate do not apply to the facts of this case. It is settled law that section 2(a) does not apply to cases of contract. In the case of Salako vs L.E.D.B (1953) 20 NLR 169, Commarmond S.P.J. held thus:
"I am of opinion that section 2 of the Public Officers Protection ordinance does not apply in cases of recovery of land, breaches of contract, claims for the work and labour done etc."
See also the decision of this Court in N.P.A. vs Construzion General F.C.S. (1974) 9 NSSC 622; Bankole vs NBL (1969) NCLR 385 at 390.
The other or sub issue of jurisdiction has to do with the argument of learned Senior Advocate to the effect that by virtue of the provisions of section 7 of the Federal High Court Act it is the Federal High Court that has exclusive jurisdiction to entertain matters connected with arising from and pertaining to management of a company incorporated under the Companies and Allied Matters Act, and that since the action was commenced in the Oyo State High Court, that court lacks the jurisdiction to entertain same. Learned Senior Advocate also complained that the lower court failed to determine this aspect of the submission of learned Senior Advocate in its judgment and that the said failure resulted in a miscarriage of justice.
It is important to note that though the leasehold agreement, the breach of which gave rise to this action was on the management of a company formed under the Companies and Allied Matters Act, the cause of action in the instant case is simply damages recoverable for the breach of that contract. It has nothing to do with the management and control of the company concerned. I therefore do not agree with the submission of learned Senior Advocate that the claim for damages for breach of contract is an ancilliary relief; in my considered view, it is the main relief since the action is founded on breach of contract and the damages recoverable in the circumstances flow naturally from the said breach. I therefore hold that the failure of the court below to pronounce on the objection on jurisdiction in the instant case has not resulted in any miscarriage of justice the objection having been demonstrated to be without substance.
On the second and final issue for consideration, clause 16 of Exhibit F, which is the agreement binding the parties to this action, provides as follows:-
"16(I) Penalty
In the event of any termination or disruption of this agreement by the CP1 or anybody or person on account of action peaceable to any shareholder or the CP1, the CP1 shall pay to the lessees an amount equal to two times the fees payable to the CP1 in the year of such disruption or termination as specified in column 4 of the schedule v in the agreement."
Emphasis supplied.
It is not in doubt that the letter of termination of the agreement, exhibit G was written by the Commissioner for Finance Commerce and Industry of Osun State on behalf of Osun State which is a shareholder and consequently the letter is an "action traceable to shareholder of the CP1." It is very clear that the parties forsaw the possibility of termination of the agreement by either party and duly provided for same.
Since it is trite law that parties are bound by the terms and conditions of the agreement they freely entered into, it means that the rights of the aggrieved lessee and the quantum of damages recoverable for termination of the agreement is strictly limited to what is provided for in the agreement between the parties and nothing more.
For these and the more detailed reasons assigned in the lead judgment of my learned brother Katsina-Alu, JSC, I agree that the appeal be allowed in part and therefore order accordingly. I abide by the consequential orders contained in the said lead judgment including the order as to costs.
Appeal allowed in part.
Counsel
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