Bureau Of Public Enterprises V. Assurance Bank Plc & Ors. (2009)

LawGlobal-Hub Lead Judgment Report

ABDU ABOKI, J.C.A.

This Appeal is against the decision of the Federal High Court, Abuja presided over by Honourable Justice S.J. Adah delivered on the 2nd day of March, 2006.

The Brief fact of the case is as follows:

On the 14th day of June, 2004, the National Council on Privatization conducted financial Bids opening for Aluminum Smelter Company of Nigeria (ALSCON). BFI Group Corporation (2nd Respondent) emerged as the winner with a bid price of $410 Million and was subsequently issued a letter on 17th June, 2004 conveying the approval of their bid price and their appointment as the preferred bidder.

The 2nd Respondent in fulfillment of its obligations under the letter of offer as the preferred bidder for ALSCON caused a Bid Bond to be issued by the 1st Respondent in favour of the Appellant which provided that in the event that BFI Group Corporation (2nd Respondent) failed to meet any of the obligations as contained in the letter of offer (of which the mandatory 10% of the Sales Purchase Agreement is inclusive) the Bond would immediately become due and payable.

The Bid Bond with reference No. ABNLIBB/04/0300 dated 26th May, 2004 for the sum of $1 Million (one Million Dollars) issued by the 1st Respondent who undertook to pay the Appellant the full value of the Bid Bond upon receipt of a written demand without the Appellant having to substantiate the demand. The Bid Bond was to remain effective for one hundred and eighty days from the date set out in the Bid Bond.

By 8th July, 2004, the 2nd Respondent defaulted in making the 10% deposit payment and on 19th July, 2004, the Appellant wrote a demand letter to the 1st Respondent to realize the Bid Bond. The 1st Respondent refused to pay the value of the Bid Bond thereby compelling the Appellant to institute an action before the lower Court for an Order compelling the 1st Respondent to honour its obligation under the Bond.

The 1st Respondent and 2nd Respondent thereafter filed an Application before the lower Court contending that the Suit did not disclose any cause of action and could not be maintained on the Bid Bond as it expired before the Suit was instituted.

The trial Court in its ruling held that the Plaintiff/Appellant had no cause of action as the Bid Bond had expired. It is against that decision that the Appellant has filed its Notice and Grounds of Appeal dated and filed on 3rd August, 2006 after obtaining the leave of this Honourable Court.

Parties have exchanged their Briefs. The Appellant’s Brief of Argument was filed on 17th April, 2007 whilst the 1st and 3rd Respondents’ Joint Brief of Argument dated 15th January, 2008 was filed on 16th January, 2008.

From the Lone Ground of Appeal contained in the Notice of Appeal, two issues are distilled on behalf of the Appellant for the determination of this appeal.

They are as follows:

“1. Was the trial Court right in holding that the expiration of the Bid Bond deprived the Appellant of a cause of action?

2. Did the trial Court give effect to the intention of the parties in relation to the terms of the Bid Bond?”

On behalf of the 1st and 3rd Respondents, one issue is raised for the determination of this Appeal as follows: