Gurara Securities and Finance Ltd. V. T.I.C. Ltd. (1998)
LawGlobal-Hub Lead Judgment Report
ONALAJA, J.CA.
The plaintiff is a company incorporated in Nigeria among its businesses is sale and supply of steel billets. In the course of supply of the steel billets, it was awarded a contract to supply steel billets to Katsina Steel Rolling Company Limited in Katsina, Katsina State or Nigeria. The contract dated 15th April 1992 was written with reference of contract No. KSRC/SEC/TIC/92/2. The contract price was N39.990.000.00 (thirty-nine million nine hundred and ninety thousand naira). The written contract was tendered and admitted in evidence as Exhibit P1.
Owing to the volume of the supply, Plaintiff was to source the supply through other suppliers which amongst others was Cargill Ventures Limited. This company demanded a bank guarantee for the contract sum of N39.990,000.00 from a reputable bank as a condition precedent before it would supply the billets. To meet the condition precedent plaintiff approached the defendant a company incorporated in Nigeria as a limited liability finance security company which carries on the business in financing contract by way of providing guarantees, and to secure the relevant guarantee.
The defendant agreed to procure guarantee provided plaintiff paid in advance a sum of N1million naira for services to be rendered by the defendant. The financial arrangement between the parties was reduced into writing and was marked as Exhibit P3 which was also the same document marked Exhibit D2.
In compliance with Exhibit P3 defendant issued a letter of guarantee to Cargill Ventures Ltd. the supplier of 5000 metric tons of billets, the subject matter of the contract Exhibit P1. Defendant in addition to its letter of guarantee though not required by its contract to convince Cargill Ventures Ltd. of its financial stability procured a credit reference from its bank which was admitted and marked Exhibit D13. It also provided a bond which is also treated in business world as a guarantee. The personal guarantee of the defendant was rejected by Cargill Ventures Ltd. as a result of which the plaintiff after lodging the sum of N1 million for the financial arrangement to procure the sum of N39.990.000.00 the contract price lost the contract to supply billets worth N40 million naira. Cargill Ventures Ltd. rejected the letter of guarantee issued by the defendant instead of a bank guarantee from a reputable bank.
Consequently as a result of the loss of the contract to supply billets to Katsina Steel Rolling Co. Ltd. plaintiff issued a writ against the defendant. After service Of the writ on the defendant pleadings were filed exchanged and delivered between the parties.
The case proceeded to trial on the statement of claim, amended statement of defence wherein defendant counter-claimed in accordance with the High Court (Civil Procedure) Rules. The plaintiff filed a reply to the statement of defence and a defence to the counter-claim.
As it is trite law that a statement of claim supercedes the particulars of claim in the writ of summons, the plaintiff’s claims are as averred in paragraph 23 of the statement of claim as under
“23. whereupon the plaintiff claims general and special damages as follows:-
Special damages
Interest on N1m (one million naira) at the rate or 13.5% per month N135.000.00
Interest from June – December – N10.000.00
Interest on N328,000.00 at the rate of 13.5% per month – N44,000.00
Interest from January to March – N132,040.00
Total interest payable and – N1,122,128,00
interest on the said sum of N328.000.00 at the rate of 13.5% until judgment is given in this suit.
(2) The sum of N10m (ten million naira) as general damages against the defendant’s finance company for failure to perform its obligations under the contact between it and the plaintiff company.
(3) The sum of N50m (fifty million naira) being general damages for the loss suffered and/or frustration of the contract between the plaintiff of the company and the Katsina Steel Rolling Company Ltd. under contract No. KRSC/SEC/22C/92/2 which said contract has been revoked by a letter dated 15th of April, 1992 for the sum of N39.990,000.00.”
As stated above the defendant set up a counter-claim pleaded as under:-
“Counter-claim
(27) The defendant shall rely on all the paragraphs and documents mentioned in paragraphs 1-26 of these pleading to establish a counter-claim against the plaintiff.
(28) The defendant stales that when the plaintiff approached it to obtain (sic obtain) a guarantee of N26,000,000.00 it assented to the defendant’s condition stated in clause 7 of the letter dated 26/4/92 which is the acceptance letter to the effect that the plaintiff was going to pay an application fee of N100.00k management fee of 2.5% of N26,000,000.00 which is N650.000.00k and 3% of N26.000.000.00 which is N780, 000.00k. The said letter is hereby pleaded.
(29) The defendant had discharged his own part of the contents of the letter by providing the letter or guarantee dated 29/5/92. The plaintiff shall rely on the letter.
(30) The plaintiff has failed refused/neglected to pay the cumulative sum of N1,430100.00 (one million four hundred and thirty thousand and one hundred naira only).
(31) Whereof the defendant counter-claim for the sum of N1,430,100.00 being form management and legal fees due to the defendant from the plaintiff under a contract entered into between the plaintiff and the defendant to provide the defendants guarantee to the plaintiff to guarantee the purchase of 5000 metric tons of billets maximum value USA 1,32500 from Cargill Ventures Ltd. Lagos.
The defendant has refused to pay the said sum despite repealed demands.”
To substantiate its claims the plaintiff called its chairman and managing director as the only witness. The defendant also called a witness to cover its defence and counter-claim. In the course of their testimonies and cross-examinations pleaded documents were admitted and marked as Exhibits P1-P13. D1-D13 through the two witnesses.
At page 18 of the record of appeal I extract the under-mentioned from the evidence-in-chief of 1st plaintiff witness:-
“The defendant did not supply me with bank guarantee.
Instead it supplied with bank reference. The defendant supplied us with its own Gurara bond with a bank reference from their Banker – Afribank. Cargill Ventures Ltd. did not accept them.
This is the bond with bank reference supplied us by the defendant. Bond with reference tendered, no objection and received in evidence as Exhibit P13.
The other contract involving Group Merchant Bank has been performed. Up till now the plaintiff has not been able to perform this contract the subject matter of this suit. After waiting for about ten months the contract was revoked. The revocation affected us badly. First the interest on the loan from Bankroll is still on. We suffered loss of reputation, credibility and loss or several business opportunities.
If the contract had been performed the plaintiff’s profit would be N11.50 million.
I demanded the refund of N1 million from the defendant. But the defendant did not pay. We did not go to the defendant for an investment scheme. It is not true that when the plaintiff could not perform the defendant refunded N600.000.00 to the plaintiff. I want to recover my losses and I am claiming as per our writ of summons.
Cross-examination:- I approached the defendant and asked for guarantee. I put in an application. Application for financial assistance tendered no objection and marked Exhibit D1. I asked for bank guarantee … I asked for guarantee or N28 million. I received Exhibit P3 and accepted it. This is Exhibit P3 is for Cargill and Cargill rejected it, it is the same as Exhibit P3. I signed it marked as Exhibit D2. Confirmation of indebtedness dated 15th January, 1993 marked Exhibit D7.
Further cross-examination:-
I executed a counter-guaranteed in favour of defendant, counter-guarantee received in evidence as Exhibit D9.”
(The italics is mine)
Part of the evidence of 1st defence and only witness are produced under:-
Early in April, 1992 the plaintiff approached us to guarantee payment for the supply of the steel billets from Cargill Ventures Ltd … We issued our guarantee. The sum guaranteed by us is N26 million. After filing the Exhibit D1 we gave him our conditions.
The letter of offer is Exhibit Pl and Exhibit D2. The plaintiff accepted Exhibit P3 or D2 and executed an agreement Exhibit D10 with us. He executed a counter-guarantee Exhibit D9 that if we fail to perform under the guarantee Exhibit D9 he will be liable personally. Another condition which he fulfilled was place of 1 million naira investment account at the rate of 30% per annum that is in Exhibit D4, it could be used to obtain short term loan from us.
The plaintiff applied for our guarantee and we issued it. He accepted it. The defendant has power to issue guarantee. Up till today the plaintiff has not told us that our guarantee is rejected. We did not invite any bank into this transaction. We are not agent for any bank. Exhibit D2 had been used as guarantee, for the short term at 10% per month. When this transaction broke down the 1st PW asked for his balance from his own investment … We sent to the plaintiff statement of account i.e. the attachment to Exhibit D12. 1st PW collected the balance of his investment on the 8th February, 1993.
The defendant has a counter-claim against the plaintiff. It is made up as follows:-
N100.00 costs of our application form. 2 1/2 of the total amount guaranteed which is N26 million – as management fee 3% of the total amount guaranteed as legal fee. The total is N1,430.100.00. I have demanded the sum. The plaintiff never executed those contract he mentioned. Cross-examination:-
As per Exhibit P3. I agree we shall provide a guarantee in favour of the plaintiff. We provided a guarantee by letter of guarantee. By Exhibit P 13 we provided a bond and a reference from Afribank to Cargill whether Cargill supplied and billets or not is not our concern… We have returned the balance of the N1 million to the plaintiff. The guarantee had abated by 31st December, 1992 and we wrote Exhibit D12. We also inform Katsina Rolling Mills and Bankroll. We are not aware that the contract was aborted. We provided what the plaintiff wanted us to prepare.”
After the conclusion of 1st DW’s testimony, the learned counsel for defendant and learned Senior Advocate of Nigeria addressed the court after which the learned trial Judge in a very terse judgment of pages 94 to 98 of the record of appeal the learned trial Judge found as follows:-
“At the outset I should state that there is a valid contract between the parties. I do not agree that the agreement between the parties is Exhibit D I. It is not Exhibit D1 as the heading shows is an ‘application for financial assistance’. The contract of the parties is Exhibit P3. I am satisfied that what the plaintiff wanted from the defendant was a bank guarantee not a bond of the defendant with a bank reference. It is my finding that as a result of the failure of the defendant to provide this bank guarantee the contract between the plaintiff and Katsina Rolling Mills Limited was revoked. In my humble view that there is a breach of the contract emanating from the defendant. The plaintiff claims both general and special damages.
It is trite law that special damages require strict proof. This means that sufficient evidence must be led to establish such particular loss averred in the pleading under special damages. In general evidence of special damages will be accepted as sufficient if it satisfactorily qualities (sic qualities) the loss or damage with reasonable degree of certainty and accuracy. See the case of NITEL Ltd & Ors v. Ogunbiyi (1992) 7 NWLR (pt.255) at 543.There is uncontradicted evidence here from 1st PW that if the contract had been performed the plaintiff should have earned a profit of N11.50 million. I accept this piece of evidence and I award that sum to the plaintiff. See the following cases Incar v. Adebayo (1985) 2 NWLR (pt.8) page 453. Boshali v. Allied Commercial Exporters Ltd. (1961) 2 SCNLR 322.
(The italics is mine)
It seems to me untidy that the defendant is treating this sum as an investment and started to debit interest … I am satisfied that the plaintiff is entitled to the sum of N1,122,128 claimed and I award that sum to the plaintiff. In the case of General Superintendent Co. Ltd v. NPA (1990) 1 NWLR (Pt. 129) page 741. It was held that where a case had been brought on commercial matter and where in ordinary commercial practice money would on the facts, have been paid sometime ago it ought to carry interest. The basis of an award or interest is that the defendant has kept the plaintiff out of his money and the defendant had had the use of it to himself for which he ought to compensate the plaintiff accordingly. In addition to this there is no contrary evidence to the rate of interest as claimed.
I now come to the counter-claim … There is no evidence before the court that the defendant had told the plaintiff and the plaintiff had agreed to purchase the form. The claim is refused. The claim of N1,435,000.00. I my view this claim cannot stand for the simple reason that the defendant had defaulted in performing its own side of the contract which led to his litigation. This claim in my judgment is another by the defendant. In the circumstances the counter-claim fails and it is hereby dismissed … that judgment is hereby entered in favour of the plaintiff against the defendant for the total sum of N12.622,120,00 being special damages suffered by the plaintiff as a result of the breach of contract.”
Obviously being dissatisfied with the judgment, the defendant now referred to, henceforth, in this judgment as the appellant, lodged an appeal to this court wherein it raised to grounds of appeal it furnished the particulars to the grounds of appeal in accordance with provision of the Court of Appeal Rules. Consequently, appellant filed its brief or argument on 17th March, 1907.
The plaintiff now referred to hereafter in this judgment as respondent filed its respondent’s brief of argument on 30th April, 1997 within lime in this court. After the exchange of briefs appellant filed a reply brief to respondent’s brief of argument on 30th April 1997. This was the position of exchange of briefs when the appeal came up for argument.
Upon the appeal coming up for argument each party relied and adopted the appellant’s brief of argument and the reply to respondent’s brier of argument.
Respondent relied on its brief of argument.
At page 4 paragraph III of appellant’s brief of argument it raised the undermentioned as the issues for determination:-
“III Issues for determination
3.01 From the nine grounds of appeal set out at pages 99-103 of the record it is submitted that the following issues arise for determination in this appeal:-
(a) Whether the High Court was right in holding that the appellant was liable for breach of the contract between the parties by not providing for a bank guarantee for the benefit of the respondent.
(b) Whether the oral evidence of the respondent to the erred that what it contracted for was a bank guarantee can in the circumstances of the case override the express documentary evidence pointing to the contrary.
(c) Whether the lower court was right in awarding N11.5 million as general damages when the respondent never claimed as such and never proved this item of damages as required by law.
(d) Whether the lower court was right in awarding the sum of N 1.122.128 as damages when same was not strictly proved as required by law and
(e) Whether having regard to the pleadings and evidence led there on the lower court was right in dismissing the counter-claim or appellant.”
On its own showing respondent formulated the undermentioned as issues for determination:-
“Issues for determination
Issues (A) and (B)
The respondent submits that the issue arising from grounds 1, 2, 3, 4 and 9 of the notice of appeal is:-
‘Whether the appellant was in breach of the contract for the appellant lo provide a guarantee to ensure that the contract Exhibit P1 was executed by the respondent.’
Issues C and D
Award of damages
Issues E Dismissal or counter-claim:
With respect to the way the issues were framed by the respondent needs much to be desired and to make this court refer to the observation bid down as guide and principle on brief writing in the Supreme Court and this court in Engineering Enterprise v. A.G. Kaduna State (1987) 2 NWLR (Pt.57) 381 at 397; Abisi v. Ekwealor (1993) 6 NWLR (pt.302) 643 at 663, 664 SC; Edward Ukaegbu Nwokoro & anor (for themselves and as representing Agbue family in Umualaukocha Amaediba Nkpa) (1994) 4 NWLR (pt.337) 172 at 184 CA; Incar Nigeria Plc v. Bolex Enterprises Nigeria Ltd (1996) 6 NWLR (pt.454) 318 at 318 CA.
“The fact that a brief of argument is poorly written would not discharge an appellate court from its duty of doing substantial justice to the parties appearing before it and satisfying the principle of fair hearing. A bad, faulty or inelegant brief will surely attract some adverse comments from the courts but it will be stretching the matter too far to regard such brief as no brief. The court cannot close its eyes to the fact of the existence of such brief (Obiorah v. Osele (1989) 1 NWLR (Pt. 97) 279 referred to and applied.)”
As a result of the above authorities reliance shall be put in appellant’s brief which was properly got up and well written, concise and up to the point. Though respondent’s brief especially as the issues are inelegantly raised shall not preclude this court in giving potency to the arguments used in respondent’s brief.
After a careful consideration of the grounds of appeal and the issues raised especially by the appellant supra the issues are further encompassed by this court as follows:-
“Whether the learned trial Judge was right in holding that there was a breach of contract for failure of the appellant to obtain a bank guarantee and applied the right principle of law in the award or special damages rejection and dismissal of the counter-claim.”
In holding that there was a breach of contract the determinant factor by the learned trial Judge was Exhibit P3 and same as exhibit which is D2 hereby reproduced:-
“The Chairman.
TIC Limited.
83A Road, 401,
Thomas Okoya,
Victoria Island,
Lagos.
Dear Sir,
Re Guarantee
We refer to your application dated 11th of April, 1992 and are pleased to inform you that the company has approved your request to provide a guarantee of N26.000.000.00 (twenty-six million naira only) on the following terms and conditions:-
(1) Facility: – Guarantee in favour of Cargill Ventures Limited, 130A Oba Ladejobi Road. GRA P.O. Box 6974, Ikeja Lagos.
(2) Amount:- N26.000.000.00 (twenty-six million naira).
(3) Purpose:- To execute contract fur the supply of billets to Katsina Steel Rolling Company vide contract No. KRSC/TIC/92/2 of 15th April, 1990.
(b) Tenor- The guarantee is only for a period of six months with effect from date.
(6) Security(i) Personal guarantee of the Chairman/Managing Director of the company, Alhaji Abuulrauf.
(ii) Domiciliation of the proceeds of the Katsina Steel Rolling Company Contract No. KSRCSE/TIC/92/2 to Gurara Securities & Finance Company Ltd.
(iii) The bill of lading shall be made in favour or Gurara Securities & Finance Co. Ltd. And addressed to Gurara Securities & Finance Co. Ltd. Gurara Suite (2nd Floor) Reinsurance Plaza. 6A Ahmadu Bello Way P.O. Box 5216. Kaduna.
(7) Fee – Application fee of N100.00 management fee or 2.5%. Legal documentation fee of 3%.
on Expenses – You shall bear the cost of legal and other reasonable out of pocket expenses connected to recovering or attempting to recover any amount due to the supplier on the facility granted.
To the Chairman.
TIC Limited.
83A Road, 401,
Victoria Island,
Thomas Okoya,
Lagos.
Kindly signify your acceptance of the above terms and conditions by signing and returning the attached copy of this letter.
This offer is open for acceptance not later than one week from the date thereof, after which it lapses. Yours faithfully,
Gurara Securities & Finance Co. Ltd.
(Sgd.) Williams Illah (Sgd.) Tajudeen
Manager Corporate Finance & Toyin-Oke
Investment Managing Director
Encl.
Accepted for and on behalf of TIC Limited.
Name:- Alhaji Abdulrauf A. Tijani
Signature: Abdulrauf Designation Chairman
Date 28/4/92.”
In compliance with the requirements set out above on 29th May, 1992 the respondent wrote a letter of guarantee to Cargill Ventures Ltd, which for ease of reference the content is as follows:
“Cargill Ventures Ltd ..
130A Oba Ladejobi Street,
P.O. Box 6974.
Lagos.
Dear Sir.
Letter of Guarantee
In the event of our client Messrs. Tundokun Investment Company Ltd. of 83A Molade Okoya Road, Victoria Island, Lagos Nigeria not honouring your proforma invoice dated 10th April, 1992 60 days from bill of lading date covering the purchase of 5000 metric tons of billets maximum value US$1,325.000.00 (One million three hundred and twenty-five thousand United States dollars only) we undertake to reimburse you for the same amount on your first demand.
This guarantee is unconditional divisible, irrevocable and freely transferable and remains in force in favour of the present or the creditor until the debt is extinguished.
This document will be governed by and construed in accordance with Nigerian law.
Yours faithfully.
Gurara Securities &
Finance Co. Ltd.
(Sgd) Tajudeen Toyin-Oke
Authorised Signatory.
(Sgd) Abayomi Falodun
Authorised Signatory.”
In addition to the above guarantee Gurara also executed a bond admitted as Exhibit P13 in favour of Cargill Ventures Limited. The guarantee and the bond were unacceptable to Cargill Ventures Limited. Respondent in the testimony of 1st PW testified that having paid the sum of N1 million naira towards procuring the fund his understanding was that the guarantee was to be given by a reputable bank what he bargained for was a bank guarantee from a reputable bank and not appellant’s personal guarantee. This piece of evidence was reflected above in the excerpt of 1st PW’s evidence because of its importance it is hereby repeated thus:-
“The defendant did not supply me with bank guarantee.
Instead it supplied with bank reference. The defendant supplied with bank reference. The defendant supplied us with its own Gurara bond with a bank reference from their banker – Afribank.
Cargill did not accept them.
Cross-examination:- I asked for bank guarantee.”
In his judgment the learned trial Judge held:-
“The contract of the parties is Exhibit 3. I am satisfied that what the plaintiff wanted from the defendant was a bank guarantee and not a bond of the defendant with a hank reference. It is my finding that as a result of the failure of the defendant to provide this bank guarantee the contract between the plaintiff and Katsina Rolling Mills Limited was revoked. In my humble view that there
is a breach of the contract emanating from the defendant.”
Appellant submitted that as it was common ground that Exhibit P3 and D2 are the same and the basis of the contract to obtain a guarantee the document stated a guarantee and not a hank guarantee, it was improper and invidious on the pan of the learned trial Judge to have accepted the oral testimony of 1st PW contrary to Exhibit P3 and D2 supra that the agreement between the parties was for the appellant to obtain a bank guarantee and not its personal guarantee. The parties having reduced their agreement into writing no extrinsic evidence was permissible.
by so holding the learned trial Judge was in gross error to find against appellant thereby engendered miscarriage of justice. This court should uphold the contention as meritorious.
Respondent agreed that the issue of guarantee was covered by Exhibits P3 and D2. Respondent contends that was the form of guarantee purportedly provided by the appellant the sort of guarantee envisaged at the time the contract Exhibit 3 was entered into between the parties. The appellant held itself out as a corporate body carrying the business of providing finance for individuals or corporate bodies to execute contracts or projects in consideration of a 3rd for which the respondent fulfilled the condition precedent of payment of N1million naira. This court should reject the issue that there was no privity or contract between appellant and Cargill. Both parties intended the guarantee to reassure a 3rd party as it was worded “guarantee in favour of Cargill Ventures Limited”. There was an anticipated contract between the appellant and the 3rd party who would accept guarantee. As the 3rd party did not accept the personal guarantee and bond of the appellant so also its bank reference, appellant failed to secure the transaction as required after obtaining consideration of N1million naira. For its failure the appellant was in breach of obtaining a guarantee for the respondent. The learned trial Judge was right as respondent lost the contract covered by Exhibit P1 which was to be covered by the guarantee Exhibits P3 and or D2. Appellant’s contention lacks merit and substance leading to dismissal of the appeal on this ground. The issue in controversy and for resolution is whether the appellant was to obtain a bank guarantee or not. Exhibits P3 and or D2 supra is the contract of guarantee between appellant and respondent. It was to guarantee the sum of N26 million to cover performance of Exhibit P1. The parties are sui juris and reduced the terms and conditions of the guarantee as stated in Exhibits P3 and D2 already reproduced above in this judgment. Under the terms and conditions the facility provides for “Guarantee in favour of Cargill Ventures Limited.”
My understanding is that the terms and conditions on facility is unambiguous and having been reduced into writing it is to be given its ordinary, natural, and grammatical meaning. It is silent as to the type of guarantee. By the learned trial Judge holding that it was a bank guarantee that was required he ignored the provision of Exhibit P3 or D2 which stipulates a guarantee and silent as to the type of guarantee.
With respect to the learned trial Judge by holding that the onus on the appellant was to obtain a bank guarantee is an alteration of Exhibits P3 and D2 which stipulates guarantee. On page 102 of Rowlatt on Principal and Surety 3rd Edition it stated the principle as set out thus:-
“A guarantee will only extend to a liability precisely answering the description contained in the guarantee. And the onus is upon the creditor to show that the surety consented to any alteration, But the surety can afterwards ratify his liability, though the principal contract has been varied or only partly performed, It must always be recollected, said Lord Westbury in Blest v. Brown in what manner a surety becomes bound. You bind him to the letter of his engagement. Beyond the proper interpretation of that engagement you have no hold upon him. He receives no benefit and no consideration. He is bound, therefore merely according to the proper meaning and effect of the written engagement he altered in a single line, no matter whether it be altered for his benefit, no whether it be innocently made, he has a right to say, the conduct is no longer that for which I engaged to he a surety, you have put an end to the contract that I guaranteed and my obligation is at an end.”
Be that as it may, section 132(1) Evidence Act Cap. ] 12 Laws of the Federation of Nigeria 1990 provides as follows:-
“132(1) When any judgment of any court or any other judicial or official proceedings or any contract or any grant or other disposition of property has been reduced to the form of a document or series of documents, no evidence may he given of such judgment or proceedings, or of the terms of such contract, grant or disposition of property except the document itself, or secondary evidence of its contents in cases in which secondary evidence is admissible under the provisions hereinbefore contained; nor may the contents of any such document be contradicted, altered, added to or varied Provided that any of the following matters may be proved.
(a) fraud, intimidation, illegality want of due execution.
(b) the existence of any separate oral agreement as to any matter on which a document is silent, and which is not inconsistent with its terms, if from the circumstances of the case the court infers that the parties did nor intend the document to be a complete and final statement of the whole of the transaction between him:
(c) the existence of any separate oral agreement, constituting a condition precedent to the attaching of any obligation under any such contract, grant or disposition of property; the existence of any distinct subsequent oral agreement to rescind or modify any such contract, grant or disposition of property”.
The said section was recently interpreted by the Supreme Court in Union Bank of Nigeria Ltd v. Professor Albert ojo Ozigi (1994) 3 NWLR (Pt. 333) 385 SC wherein it was held as follows:-
“Held
The general rule is that where the parties have embodied the terms of their contract in a written document, extrinsic evidence is not admissible to add to, vary, subtract from or contradict the terms of the written instrument. This is also provided for in section 131 (1) of the Evidence Act. (Olaloye v. Balogun (1990) 5 NWLR (pt.148) 24, Eke v. Odolofin (1961) 1 All NLR (Pt.2) 404; Macaulay v. NAL Merchant bank Ltd. (1990) 4 NWLR (pt.144) 283. Colonial Development Board v. Kamson (1955) 21 NLR 75, Molade v. Molade (1958) SCNLR 206 referred to.)
(2) The operation of parol evidence rule is not limited to oral evidence. It extends to extrinsic evidence in writing such as drafts of agreement, preliminary arrangements and letters relating to previous negotiations.
(3) General evidence is not admissible as to what passed between the parties before the execution of a written agreement or during its preparations. In this case, Exhibit “I” was in admissible he cause it constitutes an extrinsic evidence intended to be used to contradict the mortgage deeds.
(4) Where a document is clear, the operative words in it should be given their simple and ordinary grammatical meaning.
Followed in Jessica Trading Co. Ltd v. Bendel Ins. Co. Ltd (1996) 10 NWLR (Pt.476) 1 SC, Layade v. Panalpina World trans (Nig) Ltd (1996) 6 NWLR (pt.456) 544 SC, Okonkwo v. CCB Nig. Plc & Two Ors (1997) 6 NWLR (Pt.507) 48 CA, Opigo v. Yukwe (1997) 6 NWLR (pt.509) 428 CA.From the foregoing the learned trial Judge made a new contract for the parties which he was not entitled to do as the courts respect the sanctity of contracts made by the parties, as the court favours the fundamental rights of freedom of formation of contracts. By holding that the contract of guarantee was a bank guarantee the learned trial Judge varied the contract of Exhibit P3 or D2 which was for provision of guarantee without stating it to be a bank guarantee the learned trial Judge was in error to have insisted by oral evidence that the guarantee must be a bank guarantee contrary to section 132 Evidence Act supra. The provision of the said section do not apply in the instant case, For this reason the learned trial Judge was in error that for non-provision of a bank guarantee the appellant was in breach of contract of guarantee. He thereby engendered substantial miscarriage of justice.
The contention of the appellant on this issue of breach of contract is vital and meritorious.
Having held that the appellant was in breach of the contract the learned trial Judge proceeded to award the sum of N11.5 million as special damages. Appellant has vehemently attacked this award as there was no legal basis or justification as respondent did not lead convincing and satisfactory evidence even based on the ordinary establishment in civil case by preponderance evidence of probability unlike establishment of special damage which must be pleaded and strictly proved: Warner & Warner International v. Federal Housing Authority (1993) 6 NWLR (pt. 298) 148 SC, Oshinjirin and Others v. Alhaji Elias & Others (1970) 1 All NLR 153 Sc, Odumosi v. ACB (1976) 11 SC 55. The strict proof of special damages was classically put by Aniagolu JSC in Imana v. Jarin Robinson (1979) ‘be SC 1 at 23 adopted and applied in Shell Petroleum Dev. Co. V. Tiebo VII (1996) 4 NWLR (Pt.445) 657 CA, Paul S. Ebe v. Albert Nnamani & Anor (1997) 7 NWLR (pt.513) 479 CA that:-
“A claim in special damages must to succeed, be proved strictly and the court is not entitled to make its estimate on such an issue.
What this rule requires in effect is that anyone making a claim in special damages must prove strictly that he did suffer such special damages claimed. This, however, does not mean the law requires an extraordinary measure or evidence of the law lays down or requires a special category of evidence to establish entitlement to special damages. It does not mean cither that an award in special damages cannot be made unless such damages are established beyond reasonable doubt as is the position in criminal cases. All that the rule requires is that the person making a claim in special damages should establish his entitlement to the type or class of damages by credible evidence of such character as would satisfy the court that he is indeed entitled to an award under that head otherwise the general law of evidence to proof on the balance of probabilities or weight of evidence which ordinarily applies in civil cases operates.”
As the issue before the court was for damages for breach of contract the principle to guide such award is well settled in the celebrated case of Hadley v. Baxendale 1854 9 Exch. 341 adopted in universal Vulcanizing Nig. Ltd v. IUTTC (1992) 9 NWLR (pt.266) 388 at 412 SC, Ijebu Ode Local Government v. Adedeji Balogun & Co. Ltd (1991) 1 NWLR (pt.166) 136 at 158 SC:
“The object of award of damages for breach of contract is to put the injured party so far as money can do it in the same position as if the contract had been performed than the loss which he had suffered.
The principle of assessment of damages for breach of contract is restitution in intergrum, that is that in so far as the damages are not too remote, the plaintiff shall be restored, as far as money can do it, into the position in which he would have been if the breach had not occurred. The principle is not restitutio in opulentium the assessment of damages is calculated on the loss sustained by the injured party which loss is either in the contemplation of the parties or in an unavoidable consequence of the breach.”In the instant appeal being damages for loss of profit for non-performance of Exhibit P1, in J.K. Odumosu v. ACB (1976) 11 SC 38 Idigbe JSC observed:-
damages arising by way of general loss of business following an injury. In regard to this category, evidence will not be allowed to be given by a plaintiff of a loss of a particular transaction or customer (following the injury) which falls in the realm of special damages.” (The italics is mine).
adopted in A.G. Oyo state v. Fairlakes Hotels No.2 (1989) 5 NWLR (Pt. 121) 255 at 272.
Applying the above to the facts of this case which was about anticipated loss.
respondent in my judgment did not lead satisfactory, credible evidence to justify the evidence it was hypothetical and not strictly proved as required by the principle of law to establish special damage.
For the above reasons the learned trial Judge’s awards of N11.5 million naira and interest of N1,122,120.00 without giving reason how this amount was arrived at was based on wrong principle of law. Uwa Printers Ltd v. Investment Trust Ltd. (1988) 5 NWLR (pt.92) 110.
The attitude of the appellant court towards award of damages by the lower court is well settled. It is stated in Olatunde Thompson and anor v. S.O. Adefope 91969) 1 All NLR 322 SC that:-
“An appellate court would only disturb the award of damages by a lower court if it was discovered that the lower court came to its award by proceeding upon some wrong principle of law or that the award was an entirely erroneous estimate,”As stated above the learned trial Judge based the award of N11.5 million naira as special damages and interest for the sum of N1,122,120,00 on wrong principles of law this court is therefore empowered to disturb the said awards, they are therefore set aside for the reasons adumbrated above. The attacks by the appellant on the said awards are amply justifiable and meritorious thereby allowing the appeal on the awards of damages in favour of the respondent as unsustainable at law and in fact.
The other attack by the appellant on the judgment appealed against was the dismissal of the counter-claim for no legal justification or basis as the facts upon which the counter-claim was erroneously decided.
It is trite law that a counter-claim is a distinct cause of action and it is to save multiplicity of actions, that allows a defendant under the rules of High Court Civil Procedure Rules to set up a counter-claim. In pronouncing on the counter-claim as it has the tapestry of a cause or action with the issues based on the pleadings of the parties, the learned trial Judge must base its judgment on the pleadings as any other ordinary action.By agreement between the parties dated 24th June 1992 the parties executed this agreement with the concluding clause as follows:-
“Inconsideration of your giving us financing accommodation and facilities we agree that in addition to any general lien or similar right to which you as financiers may be entitled by law you may at any time and without notice to us combine or consolidate all or any of our accounts with and liabilities to you, and set off or transfer any sum or slims standing to the credit of any or more of such accounts in any other respect whether such liabilities be actual or contingent primary or collateral and several or joint.”
By virtue of the above agreement the Chairman and Chief Executive of the respondent for and on behalf of the respondent requested for loans from the appellant for the business of the sale of billets steel to Katsina Steel Rolling Mills and to discount same from the sum of N1,000,000,00 deposited towards sourcing of the sum of N26.000.000.00 for supply of billets steel. A detailed account of the indebtedness of the Chairman and Chief Executive of respondent was furnished accordingly on 15th January, 1993 which was endorsed as being correct by the Chairman and Chief Executive of respondent was marked as Exhibit D7 at the trial.
As the indebtedness was not settled a detailed account of respondent with the appellant was worked up and the sum of N675,801.99 was due as credit balance in favour of respondent leaving the balance as total indebtedness by the respondent as at 4th February, 1993. The account was attached to Exhibit D12. This was the basis of the counter-claim for the sum of N1,430.000.00 which was rejected by the trial Judge on the erroneous finding that the appellant was in breach of contract. As the judgment of this court is to the effect that appellant was not in breach, the lower court based its rejection of the counter-claim on a wrong principle of law therefore as appellate court it can interfere with the said finding based on wrong principle of law.
Applying all the principles of law as to proof of special damages from the printed records and the exhibits appellant proved strictly the counter-claim.
Accordingly judgment is entered for the appellant as claimed in the counter-claim and state without equivocation that the appeal against the dismissal of the counter claim by the learned trial Judge succeeds and judgment is entered for the appellant as claimed in its counter-claim for the sum of N1,430.100.00 (one million, four hundred and thirty thousand and one hundred naira only) against the respondent for the reasons given above in this judgment.
As the appeal succeeds the appellant is entitled to the cost of this appeal which is fixed at N5.000.00 (five thousand naira) against the respondent for this appeal.
The cost awarded against the appellant in the lower court is hereby set aside.
Should the cost have been paid to the respondent a refund shall be made to the appellant. The cost in the lower court is fixed for N2,500.00 in favour or appellant against the respondent.
Other Citations: (1998)LCN/0378(CA)