General Tyres W.a. Ltd & Ors V. Spring Bank Plc. (2010)

LawGlobal-Hub Lead Judgment Report – COURT OF APPEAL

R.C. AGBO, J.C.A. (Delivering the Leading Judgment)

This is an appeal against the judgment of the High Court of Lagos State in Suit No. LD/439/2003, a judgment obtained under the summary judgment procedure of the High Court of Lagos State. The claimant in its writ of summons had claimed of the appellants as follows:

“1. The plaintiff claims against the defendants jointly and severally the sum of N73,534,488.00 (Seventy Three Million, Five Hundred and Thirty Four Thousand, Four Hundred and Eighty-Eight Naira) being the indebtedness of the 1st defendant guaranteed by the 2nd and 3rd defendants as at 21st January, 2003 on the Back to Back Letter of Credit and Warehousing finance facility per its offer letter of 20th February, 2001.

2. The plaintiff claims interest on the above amount at the rate of 21% per annum until the total debt is fully liquidated.”

This was the claim as at 28th February, 2003 when the suit was filed. On 17th March, 2003 the plaintiff filed a summons for judgment before the trial court in the following terms:-

“(1) Leave to enter final judgment for plaintiff/applicant against the defendants/respondents jointly and severally for the sum of N65,058,142.06k (Sixty Five Million, Fifty Eight Thousand, One Hundred and Forty-Two Naira Six Kobo) being indebtedness of 1st defendant guaranteed by 2nd and 3rd defendants as at 7th March, 2003 on the Back to Back Letters of Credit and Warehousing facility granted by the plaintiff/applicant to the 1st defendant as per letter of offer dated 20th February, 2001.

(2) Interest on the debt of N65,058,142.06 at 21% per annum from 7th March, 2003 until the date of judgment and thereafter at 7.5% until debt is fully liquidated.”

This application was supported by a 37 paragraph affidavit which is reproduced hereunder-

“I, AJIBOLA ODU, Male, Nigerian citizen, Christian, Legal Officer of Omega Bank Plc of PCI, Engineering Close, Victoria Island, Lagos do hereby make oath and say as follows:

1. That I am the Legal Officer at the plaintiff/applicant’s Apapa Branch where the 1st defendant operates Account No. 0021004122717.
2. That by virtue of my position, I am conversant with the facts of this case and I have the consent and authority of the applicant to depose to this affidavit.
3. That the 2nd and 3rd defendants are Directors and Guarantors of the credit facility granted to the 1st defendant by the plaintiff/applicant.
4. That the 1st defendant deals with importation and exportation of tyres.
5. That sometimes in the year 2001, the 1st defendant applied to the plaintiff for credit facility to import tyres from overseas.
6. That the plaintiff by its offer letter dated 20th February, 2001 granted to the 1st defendant Back to Back Letter of Credit for the sum of N100 Million and Warehousing facility for N50 Million. Copy of the offer letter is attached as Exhibit DM1.
7. That the facility was to be used for opening Letters of Credit in favour of the 1st defendant’s overseas suppliers.
8. That the facility was to enable the 1st defendant import tyres.
9. That the 1st defendant accepted the terms and conditions of the plaintiff’s offer letter.
10. That one of the conditions of the offer is execution of personal guarantee in favour of the plaintiff by the 2nd and 3rd defendants.
11. That the 2nd and 3rd defendants executed personal guarantee to the tune of N150 Million for the facility granted to the 1st defendant by the plaintiff. Copies of personal guarantee marked exhibit DM2A and DM2B.
12. That the plaintiff by its letter of 13th March, 2001 reduced the C.O.T. and percentage (%) of commission payable on the Letters of Credit opened on behalf of the 1st defendant with its overseas suppliers. Copy of the letter marked Exhibit DM3.
13. That the facility granted to the 1st defendant and guaranteed by the 2nd and 3rd defendant was to expire by 28th February, 2002.
14. That the plaintiff established the following Letters of Credit in favour of Continental Tyres S.A. Limited on behalf of the 1st defendant.

LC NO. USD VALUE NAIRA EQUIVALENT

1. 145/01 45,138.00 5,064,483.00
2. 146/01 31,800.00 3,567,960.00
3. 149/01 24,399.50 2,737,623.90
4. 153/01 83,065.00 9,319,893.00
5. 154/01 85,200.00 9,559,440.00
6. 155/01 24,900.00 2,793,780.00
7. 156/01 40,194.00 4,509,766.80
8. 157/01 22,022.00 2,470,868.40
9. 158/01 98,070.00 11,003,454.00
10. 159/01 31,800.00 3,567,960.00
11. 129/01 32,886.75 3,693,182.03
12. That the plaintiff established LC No. 152/01 for the 1st defendant in favour of VPS for the sum of USD 29,916.25 Naira equivalent being N3,356,603.25k.
13. That the plaintiff established LC Nos. 160/01 and 168/01 for the 1st defendant in favour of Continental A.G. and Watico CC for the sum of USD 251,635.00 and USD 11,550.00 naira equivalent being N28,233,477.00 and N1,294,755.00 respectively.
14. That the total value of LCs opened on behalf of the 1st defendant is USD 812,576.00 and naira equivalent being N91,173,246.38.
15. That other LCs were established for the 1st defendant which were cancelled due to expiration total value of which was N51,481,831.80k.
16. That the cancelled LCs were repurchased from Central Bank of Nigeria at a value of N51,481,831.80k which sum was credited into the 1st defendant’s account. Copy of the advice from the Central Bank of Nigeria is marked Exhibit DM4.
17. That the 1st defendant failed to contribute its 20% equity contribution contained in the offer letter.
18. That the plaintiff paid import duty and other clearing charges on behalf of the 1st defendant.
19. That all payments made on behalf of the 1st defendant are reflected in the 1st defendant’s statement of account. Copy of the 1st defendant’s statement prepared in the normal course of banking transaction is attached as Exhibit DM5 in the computer printout.
20. That the 1st defendant also withdrew sum in excess of N4,400,000.00 from an account meant for opening Letters of Credit. This is reflected on the bank statement attached.
21. That the plaintiff paid N.P.A. dues, Nafdac levies and Warehousing charges on behalf of the 1st defendant.
22. That tripartite warehousing agreement was executed between 1st defendant, plaintiff and Alliaz Maritime for purpose of warehousing the imported goods.
23. That the plaintiff paid the warehousing charges.
24. That the debt owed the plaintiff by the 1st defendant has become due and payable.
25. That the plaintiff has demanded for repayment from all the defendants. Copies of letters of demand marked Exhibits DM5A – DM5C.
26. That the defendants have failed to repay the debt despite demand by the plaintiff.
27. That the debt owed the plaintiff by the defendants is a liquidated amount.
28. That the defendants have entered appearance to the action. Copy of memorandum of appearance marked exhibit DM6.
29. That defendants have no defence to this action and claims therein.
30. That the plaintiffs claim is for the sum of N65,058,142.06k (Sixty Five Million, Fifty Eight Thousand, One Hundred and Forty-Two Naira, Six Kobo) being outstanding indebtedness of the 1st defendant guaranteed by the 2nd and 3rd defendants on the Back to Back Letter of Credit facility of N100 Million and Warehousing facility of N50 Million as per offer letter of 20th February, 2001.
31. That the outstanding debt includes cost of amendment of LCs, cash withdrawals by 1st defendant, interest on the facility, C.O.T, VAT on COT, F.G.N import duty, Nafdac levy, warehousing charges and other charges as shown in the bank statement.
32. That the plaintiff’s claim against the defendants jointly and severally in the sum of N65,058,142.06k as at 7th March, 2003 interest at 21% from 7th March, 2003 to date of judgment and thereafter at 7.5% until debt is fully liquidated.
33. That it is in the interest of justice to enter final judgment for the plaintiff against the defendants.
34. That the contents of this affidavit are true and correct and I swear to this affidavit bonafide.”

In answer to this application, the appellants filed an affidavit to show cause located at pages 86 to 96 of the record of appeal and reproduced hereunder-

“I, MR. OLA OLALERE, Male, Clerk, Nigerian citizens of No. 45, Igbosere Road, Lagos do hereby make oath and say as follows:

1. That I am a Litigation Clerk in the chambers of R.O. Dawodu & Co. counsel to the defendants in this matter and by nature of my duties and assignments I am familiar with the facts of this case.
2. That I depose to this affidavit to show cause against summons for judgment with the consent and authority of the defendants and my employer, R.O. Dawodu Esq. of counsel.
3. That I am informed by (i) General Tyres W.A. Ltd (ii) Alhaji Bode Abdullahi and (iii) Chief R.O. Jinadu, the defendants herein and I verily believe them as follows:

(i) That the 1st defendant was granted a total credit facility of N150 Million Naira by the plaintiff, whereby the 2nd and 3rd defendants who are the Directors of the Company guaranteed same by executing personal guarantees.

(ii) That the amount utilized by the defendants for the issuance of letters of credit by the plaintiff was N89,692,000.10 as itemized hereunder.

S/NO L/C NO USD VALUE RATE NAIRA EQUIVALENT