Acme Builders Limited V. Kaduna State Water Board & Anor. (1999)

LAWGLOBAL HUB Lead Judgment Report

U. ONU, J.S.C.

The appellant as plaintiff had instituted the action giving rise to the appeal herein against the 1st defendant/respondent for breach of contract in the High Court of Justice, Kaduna State holden in Kaduna. The contract was for the investigation and drilling of productive boreholes in Kachia and Jema’a Local Governments both of Kaduna State. The 2nd defendant/respondent was sued as a nominal party thereto.

The facts of the case may be briefly summarised as follows:-

The respondents awarded a contract for the construction of 320 productive boreholes in the Kachia and Jema’a Local Government Areas of Kaduna State to the appellant. The contract price was nine million, four hundred and two thousand, two hundred and forty-one naira only (N9,402,241.00) and was signed by both parties on the 21st October 1981.

The contract which consisted of some conditions which regulated the obligations of the contracting parties contained one requiring that the 1st respondent would pay the appellant 10% of the total value of the contract price as mobilization fees, to assist the appellant financially, upon the production of a bank guarantee. The appellant on its part was to repay the mobilisation fee from the first ten invoices submitted by it to the 1st respondent for payments.

The contractual period was agreed by the parties and fixed for completion within 24 months from the date of commencement of work. The appellant was to commence work upon directives to do so by the 1st respondent. It was also agreed that 6 rigs were to he used for the execution of the contract.

By a letter dated 10th November, 1981, the appellant was directed by the 1st respondent to commence work as agreed. The appellant was not paid part of the mobilisation fee until March, 1982 because, instead of producing a bank guarantee as agreed by the parties the appellant produced an insurance bond which the 1st respondent rightly rejected. The work was not completed within the scheduled period of 24 months. Due to a number of factors, the parties exchanged correspondences and also held meetings over the way and manner the contract was being executed. Consequently by letters dated 23rd July and 7th August, 1985, the 1st respondent terminated the contract. After the receipt of the letters terminating the contract, the appellant commenced the suit culminating in this appeal.

Pleadings were ordered, filed, subsequently amended and duly exchanged. The reliefs sought in appellant’s amended statement of claim were as follows:-

“(a) declaration that the termination of the aforesaid contract by the 1st defendant vide its letters of 23rd July, 1985 and 7th August, 1985 is wrongful and constitutes a breach of contract.

(b) The sum of N274,390.00 being the value of certified but unpaid works due to the plaintiff from the 1st defendant.

(c) The sum of N108,216.00 being retention fees on paid certificates.

(d) Interest at the rate of 8% per annum on the said sum of N274,390.00 from 15th November, 1982 until the date of judgment.

(e) The sum of N1,664,000.00 being general damages/loss of profit in respect of the uncompleted part of the contract occasioned by wrongful termination of the said contract by the 1st defendant.

Particulars of special damages