Chemical and Allied Products Plc V. Vital Investments Limited (2006)

LawGlobal-Hub Lead Judgment Report

OGUNBIYI, J.C.A.

This is an appeal against the judgment of the High Court of Lagos State. Coram: Silva, J., delivered on the 28th day of September, 1999 in suit No. LD/2206/96. The respondent was the plaintiff at the lower court and claimed against the appellant as the defendant a total sum of N15,923,250.00 (fifteen million, nine hundred and twenty-three thousand, two hundred and fifty Naira) with interest at the rate of 6% per annum from the date of judgment until the final sum is fully repaid.

Briefly, the facts of this case are as follows:- The appellant and respondent are limited liability companies incorporated in Nigeria, carrying on business respectively at No. 24 Commercial Road, Apapa and 92 Ikorodu Road, both in the Lagos State of Nigeria.

The case for the respondent at the court below was that on the 14th and 15th July, 1995, it supplied some chemicals worth N21.9 million (twenty one million, nine hundred thousand Naira) to the appellant at the appellant’s request under two local purchase orders (L.P.G.) Nos. 5258 of 10th July, 1995 and 5255 of 7th July, 1995, (exhibits 1 and 2). The respondent contended that the LPG’s were revalidated replacements for the ones earlier issued to it, vis LPG’s No. 4745, 4750 and 4754 marked exhibits 3, 3A and 3B respectively.

The respondent contended further that under the terms of the contract, the appellant was to pay the full value of the goods to the respondent within 30 days of delivery, but contrary to the payment terms, the appellant did not complete payment until 12th April, 1996, a period of eight months beyond the due date. The respondent averred in the circumstance that it sourced the funds for the execution of the contract from a financial company, one Summit Finance Company Limited to the knowledge of the appellant, and that under the terms of the finance facility, it was liable to pay a penalty charge of N1,135,750.00 (one million, one hundred and thirty-five thousand, seven hundred and fifty Naira) per month in the event of delay in repayment of the facility. The respondent alleged that it could not repay the loan due to the default of the appellant to pay within thirty (30) days of delivery. Consequently, the respondent therefore claimed against the appellant for the penalty charges it was surcharged by the said Summit Financial Company Limited. By its further amended statement of claim dated 29th March, 1999, evidenced at pages 12-17 of the record, the respondent therefore claimed in these terms at paragraph 24 here under:

“24. Whereof the plaintiff claims against the defendant as follows:

(a) (i) Penalty charges incurred on borrowed funds N11,243,250.00

(ii) Loss of profit on contract N 1,710,000.00

(iii) Loss of Goodwill, reputation, custom etc. N3,00,000.00

Total N15,953,250.00

(b) Interest on the total sum due at the rate of 21% per annum from August 15th, 1995 until judgment and subsequently at the rate of 6% until the entire sum is liquidated.”

In its further amended statement of defence at pages 18 – 20 of the record, the appellant denied the claims of the respondent in its entirety. In other words, it denied that exhibits 1 and 2 were revalidated replacement for exhibits 3, 3A and 3B. It further denied that it was an express condition of the contract that payment would be made within any specified time frame. It was the appellant’s contention that the parties agreed subsequently on a repayment plan by which the price of the said goods was to be paid in nine installments between 15th November, 1995 and 15th April, 1996.

The appellant also denied knowledge of any sourcing of funds from Summit Finance Company Limited or any Finance Company at all by the respondent for purpose of execution of the contract and asserted that if there was any such contract, the appellant was neither a party nor privy thereto and therefore cannot be bound by its terms which was unknown to it. It was the appellants’ contention that the respondent supplied the goods in question from its stock and averred further that the respondent did not have to import the goods purposely for the execution of the contract between the parties as alleged.

At the trial of the case, two witnesses testified on behalf of the respondent in proof of their claims, in the persons of Tochukwu Chukwuneta Orajiaku, Managing Director of the respondent and Raymond Chukwugozie Obieri, Managing Director of Summit Finance Company Limited. One Olajuwon Akinlaja, Purchasing Manager testified for the appellant, as its sole witness. These are evidenced at pages 24 – 39 of the record of appeal. There were a total of ten exhibits tendered and admitted in evidence at the trial and same which were all reproduced at pages 42 -63 of the said record.