Mr Raphael Jegede V. Mayor Engineering Company Limited (2013)

LawGlobal-Hub Lead Judgment Report – COURT OF APPEAL

AMINA ADAMU AUGIE, J.C.A. (Delivering the Leading Judgment)

The Respondent is based in Ikorodu, Lagos State, where it manufactures iron products; however, it is a Member of the Man Long Lee Group of Companies, based in Kano. Sometime in 1993, the Appellant was an Assistant Director of Labour in the Kano Office of the Federal Ministry of Labour and Productivity, and he assisted the Group of Companies in solving their industrial problems.

By an application dated 30/3/1993, approved by the Chairman of the Group, he was appointed a distributor of another member of the Group of Companies – Nigerian Spanish Engineering Co. Ltd. He executed the “unwritten contract” from 1993 to 1994, and was duly paid the agreed commission by the Company.

After he moved from Kano in 1994, his application for transfer was approved, and he was appointed a distributor for the Respondent. He also executed the “unwritten contract” in 1994, but was paid half the sum due as commission. He was denied commission for the larges sales he made from 1996 to 1998.

The situation continued up till 2004, and by January 2005, the Appellant instructed his Solicitors, Messrs. J. Odion Esezoobo & Co. to write two demand letters to the Respondent. The first letter dated 31/1/2005, reads as follows –

“- – Sometime in May 1993, your group appointed our client a distributor of one of your group, Nigeria Spanish Engineering Company Ltd, in Kano upon our clients’ application. The terms of the Agreement were that our client would canvass for, market and sell the iron products of the Company for a commission of N1,000.00 – – per ton. Further to the agreement, our client went all out between 1993 and 1994 canvassing for patronage, marketing and selling the products. He was duly paid his agreed commission from time to time during this period. Following his movement from Kano later in 1994, our client applied for and was duly appointed your distributor in Lagos by way of transfer of the existing relationship in Kano. The agreement made in Kano was accordingly modified as such to apply to and cover Mayor Engineering Company Ltd, Ikorodu Lagos. Our client who thus become a distributor of your iron products on the agreed commission executed the contract for the new company i.e. your good self religiously with a sale record of N61,273,114.50 – – for the period January to December 1999. This means 2,139.68 tons making the sum of N2,139,680 due and payable to our client. From January to December 2000, our client made for you a sale of N141,612,859.10 which translates to 3,904.88 tons entitling him to the sum of N3, 904.880.00 as at December 2000. Yet from the period 2001 to 2003, our client made various sales in pursuance of the agreement with you in the following particulars N115,313,375.70 (for the year 2001), N227,709,610.50 (for the year 2002) and N247,358,277.00 (for the year 2003) all amounting on the aggregate to N793,301,236.20. The total tonnage at the sum made for the period stood at N17, 647.72 by which the sum of N17,647.72 became due and payable to our client by you. In the year 2004, our client made for you a sale of N38,328,152.00 at a tonnage of 422.16 with the sum of N422,160.00 becoming due and payable by you to our client. On the whole, the total sum of money which accrued to you from our client’s activities of canvassing for, distributing, marketing and sale of your products for the period 1999 to 2004 based on your agreement was N831,589,388.90 – – which translates to 18,069.88 tons. In terms of monetary claim, this places our client’s total entitlement at N18,069.880.00 – – Details of all the transactions as listed above are in your office. Our client has made several demands on you for the above sum through letters, telephone calls and personal visits all to no avail. You have offered no explanation for the failure to pay. By your failure to pay the debt, you are in breach of contact. It is our client’s instructions that we take necessary legal steps to recover the sum from you. On a close view of the facts, we are of the opinion that you can look into our client’s claim with a view to settling it without having to go it by litigation. We believe that parties came together with the aim of furthering business interests. Therefore, if any disagreement arises, it is advisable to consider amicable settlement as first option. Further to the foregoing, we request that, if it would please you, arrange for us to have your audience on the matter with a view to resolving it amicably without the necessity of litigation- -”

The second demand letter from his Solicitor is dated 17/2/ 05; and it reads –

Refer to our letter of 31/1/2005 – – In the letter under reference, we made a year to year presentation of our client’s dealing with you with regard to the distribution, marketing and sale of your products wherein you became indebted to our client to the tune of N18,069,880.00 – – We requested for your kind audience in the hope that we might be able to discuss and settle the matter without resorting to litigation. All constraints considered, we feel a period or two weeks is reasonable for o response to our request. However you have failed to accord the courtesy of any even if by way of condescension. Our failure to have your audience has denied us the opportunity of seeing to amicable resolution of the matter even in the age of alternative Dispute Resolution. We are not proud of this. In the circumstance, we are left with no option than to conclude that you do not share our vision of a possible peaceful settlement of the matter. Accordingly, pursuant to our client’s instructions, we hereby write to formally demand from you payment of the sum of N18,069,880.00 – – arising from our clients’ contractual relationship with you with regard to the sale of your products. TAKE NOTICE that if within 14 days from hence we do not receive your cheque we shall compelled to take out a Writ of Summons against you in a Court of law for appropriate remedy without further reference to you”.

In a reply dated 21/3/05, the Respondent’s Solicitor, C. A. Adolor & Co., said –

“The content of your letter are highly surprising to our client for the following reasons:

1. Our client never established any business relationship with your client as alleged in your letter.
2. Our client never appointed your client directly or indirectly as a distributor of its product at any time.

Having no knowledge and records of your client’s claim, our client vehemently denies any indebtedness in any amount to your client. Our client did not enter into any contract with your client and it is, therefore, completely out of place to allege breach of a non-existent contract. Your call requesting our client to look into your client’s claim is unacceptable to our client. We do hope you will advise your client not to reap where he did not sow, please”.

Upon the Respondent’s failure or refusal to pay the said sum, the Appellant instituted an action at the Lagos State High Court, Ikeja, wherein he claimed –

(1) The sum of N18,069,880.00 being sum due from and payable by the [Respondent] to [him] from a contract to distribute, canvass for market and sell [Respondent]’s iron rods for a commission of N1000.00 per ton.

(2) Interest on the sum at the rate of 21% per annum from February 1, 2005 until final payment of the sum and cost.