Olalomi Industries Ltd. V. Nigeria Industrial Development Bank (2001)

LawGlobal-Hub Lead Judgment Report

OKUNOLA, J.C.A.

This is an appeal against part of the judgment of A. O. Belgore, J., of the High Court of Kwara State sitting at Ilorin dated 31st day of May, 2000 wherein the court dismissed the plaintiff (now appellant’s) claim in its entirety.

The facts of this case briefly put were as follows:

The appellant herein, is a limited liability company who promoted carpet manufacturing factory with Headquarters in Offa. The respondent is also an Industrial Bank incorporated as a private company by the Federal Government of Nigeria. The appellant needed money to complete importation of its factory machines and equipment and approached the respondent for loans (see page 70 lines 13-14 of the records). Two loans were granted to the appellant by the respondent. The first was a Term Loan and the other a Working Capital Loan. The Term Loan was secured by a Deed of Loan and Mortgage Agreement (Exhibit 1) (see page 70 lines 7 -10 of the records), the second loan was secured by a Deed of debenture (Exhibit 30); see page 75 lines 8-12 of the record (hereinafter referred to with or without the record).

The appellant applied to the Governor of Kwara State for approval of the Mortgage Transaction in exhibit 1 in line with the Land Use Act, 1978. Approval was granted to the appellant to Mortgage the property on which its factory at Offa is situate to the respondent. The approval document was identified by the PW as the last page of exhibit 1. Original copy of exhibit 1 which he tendered was shown to him under cross-examination and he identified it (see page 70 lines 10 – 13 of the record).

The terms and conditions of the two loan transactions are expressly stated in the two Deeds; exhibits 10 and 30. In addition, the respondent tendered the letter of offer (Exhibit 28) containing the terms and conditions for the second loan, that is working capital loan. The terms and conditions were accepted by the appellant, hence it proceeded further to execute exhibit 30 in favour of the appellant. (See page 70 at the last lines).

The appellant failed to comply with the terms and conditions of the two loans as to repayment. The respondent felt uncomfortable and called for meetings to resolve the production problems of the appellant. The result of this was a decision to second a staff of the respondent to the appellant as Project Manager, in April, 1989 (See page 71, 2nd and 3rd paragraphs). This was in line with one of the terms of offer contained in exhibit 28 whereby the respondent was empowered to second any of its staff if it deemed it necessary to the appellant as General Manager. The appellant initially resisted the Project Manager. The respondent eventually recalled the Project Manager. However, the Project Manager later commenced production and carpets were rolled out. Before the Project Manager could commence production, the appellant sought for further loan from the respondent to procure raw materials and take care of some essentials like outstanding staff salary, outstanding NEPA bills and water rate. A sum of N200,000.00 was made available to the appellant in two installments of N100,000.00 each for those purposes. Meanwhile all the loans advanced by the respondent to the appellant and interest thereon remained outstanding. The Project Manager was recalled in September, 1990 and the factory was handed over to the appellant in full in October, 1990. The Project Manager prepared a handing over note. This was tendered by the appellant and it was admitted and marked exhibit 8 at the trial. (See page 60 line 15 of the record). Shortly after the Project Manager’s recall, the appellant made its first and only repayment to the respondent in the sum of N150,000.00. This was from the proceed of sales left in the appellant’s account by the Project Manager. Thus, the whole set of loans remain outstanding together with interest, save and except the N150,000.00 paid.

This was the position when the appellant took out the writ of summons in an earlier action which was struck out for incompetence. The appellant thereafter filed this action still against the respondent which metamorphosed into the appellant’s claim encapsulate in paragraph 10 of the further amended statement of claim (see page 55 of the record). The appellant made series of allegations of mismanagement against the Project Manager all of which were denied by the respondent. The appellant then claimed for estimated loss of profit and the respondent joined issues with the appellant on all material allegations in its pleadings.

The respondent further counter-claimed for the outstanding loans and interest thereon on the account of the appellant. (See pages 39-40 of the record). The appellant’s further amended statement of claim is contained on page 55 while the respondent’s amended statement of defence and counter-claim is at pages 36-40, the appellant’s amended reply to statement of defence and counter-claim is at pages 41-44 of the record. The action proceeded to trial after a series of interlocutory applications. Oral evidence of the only PW is contained at pages 59-74 and on recall at pages 100-101; while that of the only DW is contained at pages 74-83 and on recall at pages 101-102. At the close of evidence, learned counsel to both parties addressed the lower court extensively on all issues germane to the dispute between them. At the close of addresses by both parties the trial lower court delivered the judgment in the instant case. The court held that the plaintiff’s claim for N521,413,740.00 being an estimated profit fails and the same accordingly dismissed. The counter-claim being filed on 25/6/97 succeeds to the extent of the admission from that date. The court further held that the defendant shall have judgment for the sum of N1,500,000.00 and N510,000.00 plus interest at 10% per annum in respect of the N1,500,000.00 and 14% in respect of the N510,000.00. The interest in both cases shall run from 25/6/97 until the judgment debt is fully liquidated. The declaration sought by the defendant is dismissed in view of the pronouncements regarding exhibits 1 & 30.

Dissatisfied with this judgment each party appealed in respect of different parts of the above judgment. Appellants appealed on four(4) grounds while the respondent also appealed on eight (8) grounds of appeal. We are here concerned with the plaintiff/appellant’s appeal. From the 4 grounds of appeal, the plaintiff/appellant has formulated the following issues for determination in this appeal, viz:

Whether from the evidence before the court the plaintiff has not proved that the plaintiff’s factory could produce as stated by the expert in exhibit 24 grounds 1 and 2. Whether the shortfall in production by the Project Manager is not a loss to the plaintiff ground 3. Whether or not the plaintiff asked for other reliefs other than for loss of profit ground 4.

The learned counsel to the respondent also formulated the following two issues:-

1. Whether the appellant proved that it is entitled to any award for alleged estimated loss of profit.
2. Whether the lower court could grant any other relief to the appellant other than in relation to estimated loss of profit claimed but which failed.

Before dealing with the issues raised in this appeal by the appellant and the respondent, I need to observe that the respondent in the respondent’s brief at paragraph 3.01 raised notice of preliminary objection to the hearing of this appeal, I shall deal first with the notice of preliminary objection before proceeding with the main appeal. The grounds of the preliminary objection are summarised at paragraph 3.01 on page 4 of the records as follows:

i. That the appeal is not supported by any record of appeal.