Gonzee Nigeria Ltd V. Nigerian Educational Research And Development Council. & Ors. (2005)

LAWGLOBAL HUB Lead Judgment Report

D.O. EDOZIE, J.S.C. 

The plaintiff, herein appellant, is a contracting firm having its registered office in Onitsha. By a writ of summons filed at the Onitsha High Court on 20th June 1991, the plaintiff commenced legal proceedings against the Nigerian Educational Research and Development Council, a Council established under the Nigerian Educational Research and Development Council Act, Laws of the Federation of Nigeria 1990 (Cap 302). The Council was sued as 1st defendant and joined in the suit, as 2nd and 3rd defendants, were respectively Chairman and the Secretary of the Council.

The background facts giving rise to the action are not contentious. The dispute arose from the contract awarded by the council to the plaintiff for the construction of the council’s administrative complex at Shede village, Lokoja Road, in the Federal Capital Territory, Abuja, at a contract sum of N4.9 million. Payment was instalmental, based on the certificate of the council’s consultant architect, for the construction of the complex and payment was made accordingly up till certificate No. 11 issued by the consultant architect on 19th October, 1990 in respect of which the council issued to the plaintiff a cheque for the sum of N97,234.79 in payment for the work evidenced by the certificate. The cheque was drawn on the council’s account with the Central Bank of Nigeria (CBN). The plaintiff paid the cheque into its account with the Co-operative and Commerce Bank (CCB) Onitsha branch, for clearance with the CBN. But when the cheque was presented at the CBN, it was returned and marked “self confirmation required”. The plaintiff re-presented the cheque to the CBN on two subsequent occasions, but on each occasion the cheque was dishonoured. The reason for the dishonour of the cheque was not that the council had no funds in the sum of the value of the cheque but because the council had not adopted the proper procedure laid down by CBN in issuing the cheque. Apparently in compliance with the procedure, the council issued to the plaintiff another cheque for the same value as the dishonoured cheque and this was honoured on presentation.

Aggrieved by the circumstances surrounding the dishonour of the cheque in question, the plaintiff alleged that it was due to the negligence of the council in not adopting the proper procedure prescribed for account holders with CBN; that the negligence of the council has led to the breach of the contract it entered into with it and that, the plaintiff has as a result suffered losses. Paragraphs 6, 7, 8,9, 10, 17 and 21 of the amended statement of claim spell out the details of its losses. The paragraphs are reproduced hereunder:-

“6. The plaintiff shall call evidence that it had a trade or business practice with its said bankers whereby it would negotiate for (and sometimes obtain) facilities from the bank supra with which to purchase equipment for its business or to execute its contract jobs on the understanding that when cheques or monies issued or paid to the plaintiff arrive same would be lodged into the plaintiff’s account with its bankers in partial or full repayment or amornisation of the facilities so granted.

7. The plaintiff says that at all times material to this action, it had an exceptional offer from a friendly company – S & C Plants of B18 Nkpor – Enugu Expressway for the ( purchase of some heavy duty machines and vehicles at a concessional total cost of N10,400,000.00
8. The offer hereinbefore pleaded was open for 90 days only after which it would lapse. It was also a condition for any valid acceptance of the said offer that the plaintiff made a down payment of the sum of N2,000.000.00 within 30 days of the said offer.
9. The plaintiff needed the said machines/vehicles for its business and not having ready cash with which to purchase same, applied for a loan of N2,000,000.00 from its aforesaid bankers with which to make the down payment above-mentioned.
10. The plaintiff was then expecting the defendant’s cheque (pleaded in paragraph 4 supra), and, in accordance with the practice deposed to in paragraph 6 (supra) used same as an instrument with which to convince the bank that the repayment of the facilities which was being applied for would start almost immediately thereafter. On that score, the bank expressed willingness to grant the plaintiff the said facility.
11. By reason of the foregoing, the plaintiff had suffered loss and damage.

Particulars

(i) The plaintiff’s offer to purchase the machines/ vehicles pleaded above, lapsed and the machines/vehicles were purchased by another company.

(ii) The plaintiff thus lost forever the chance of ever acquiring the aforesaid machines/vehicles at the concessional price offered or at all.

(iii) The plaintiff continued on account of the events pleaded in (i) and (ii) supra, to hire machines and vehicles to execute its contract jobs when, (if it had bought the ones offered) it would not only have been using them for its jobs but would also let them on hire at handsome fees.

(iv) The plaintiff’s business suffered a permanent set back.

(v) The plaintiff’s rare understanding with its bankers pleaded supra was upset as the bank withdrew from same.

(vi) The plaintiff’s application for N2m facility from the bank also failed.

(vii) The plaintiff lost credibility and its business image was greatly tarnished in the eyes of its bankers and the general public.

(viii) The plaintiff suffered incalculable business embarrassment.