Fidelity Bank Plc. V. Petroleum (Special) Trust Fund & Ors. (2012)

LawGlobal-Hub Lead Judgment Report – COURT OF APPEAL

SIDI DAUDA BAGE, J.C.A. (Delivering the Leading Judgment)

This is an appeal against the Ruling of the High Court of Lagos State, delivered by Hon. Justice K.O. Alogba, of the Commercial Division, in Suit No. LD/2124/2001, of the 7th of November 2003. The ruling was in favour of the 1st Respondent, (as Plaintiff in that court). By a summons for judgment dated the 22nd day of January 2002, the Plaintiff (1st Respondent) prayed for leave to enter judgment for Plaintiff against the 1st Defendant/Respondent for the sum of N35,053,542.19k with interest at 21% per annum from 2nd July 2001 until judgment and payment.

In support is a verifying affidavit dated 22nd January, 2002 to which documents marked Exhibits 11 to 17 were annexed, as well as a further verifying affidavit dated 23rd April 2002 to which document marked Exhibit JP was annexed.

The Appellant on the 11th of January 2002, then as the sole Defendant, applied by motion on notice dated and filed on 11th January, 2002 made an application to the court seeking to join the following persons as defendant, in the action:

(a) A Micheletti Limited

(b) Francis Bruce Limited

(c) Mr. Francis M. Bruce

By the order of the court, made on the 15th January, 2002. A Micheletti Nig. Ltd, and Francis Bruce Ltd were joined as 2nd and 3rd Defendants respectively and the Plaintiff/1st Respondent amended its writ of summons and statement of claim accordingly to reflect the new parties.

Also the Appellant (1st Defendant) by another motion on notice dated 11th of January 2002 and filed on the same day, applied for a third party notice to be issued on United Bank for Africa Plc, the said application was also granted by the court on the 15th January 2002 and the writ of summons amended accordingly.

The background facts are that, about the 4th of May 1998 Francis Bruce Ltd (hereinafter referred to as “the Contractor”) was awarded a Water Project Contract under the National Rural Water Supply Programmed by the 1st Respondent/Plaintiff. A term of the contract was for the contractor to submit the Advance Payment Guarantee from a bank approved by the 1st Respondent/Plaintiff before funds could be given to it to mobilize to site and commence the contract. The contractor approached the Appellant and obtained the Advance Payment Guarantee dated 10th day of June 1998 as requested by the 1st Respondent. The said contract between the 1st Respondent and the contractor also provided that the contractor shall sub-contract the job to the 1st Respondent appointed sub-contractor pursuant to which terms the 1st Respondent appointed Messrs A Micheletti Nig. Ltd the 2nd Respondent to undertake the rural water contract.

Upon the appointment of the 2nd Respondent, the 1st Respondent directed the Appellant to pay N28,842,833.75 to the 2nd Respondent’s banker, United Bank for Africa Plc (the 3’d Respondent/third party). The 3rd Respondent thereafter executed a back to back Advance Payment Guarantee dated 6th of August 1998 in the said sum in favour of the Appellant for the benefit of the 1st Respondent.

A term of the Advance Payment Guarantee executed by the Appellant was that “the amount covered by the guarantee shall however be progressively decreased by the sums re-imbursed by the contractor to the PTF in terms of value of works/goods satisfactorily executed/supplied under the contract upon presentation by the contractor to the bank of certifying documents approved and authenticated by the P.T.F. or any of the Authorized representatives of PTF.”

The above term was also replicated in the Advance payment Guarantee executed by the 3rd Respondent on behalf of the 2nd Respondent for the funds advanced to it as the appointed subcontractor for the benefit of the 1st Respondent.

At the time of instituting this action at the lower court, the 1st Respondent was aware that the parties in this action were embroiled in Suit No. PHC/323/2001 pending at the High Court of Rivers State Port Harcourt Division, where the 2nd Respondent as Plaintiff in that case sued the Appellant, the contractor and the 3rd Respondent amongst other Defendants.