Niger Delta Development Commission V. Nigeria Liquified Natural Gas Limited (2010)

LawGlobal-Hub Lead Judgment Report – COURT OF APPEAL

MOJEED ADEKUNLE OWOADE, J.C.A. (Delivering the Leading Judgment)

This is an appeal against the judgment of the Federal High Court (Port Harcourt Division) delivered by Hon. Justice R. O. Nwodo on 11th July, 2007.

By a statement of claim dated and filed on 9/3/2005 the appellant/cross-respondent as plaintiff before the lower court claims against the defendant/cross-appellant for the following reliefs:

“(i) A declaration that defendant is a gas processing company operating in the Delta Area of Nigeria within the meaning and intendment of S. 14 (b) of the Niger Delta Development Commission (Establishment, etc) Act, 2000.

(ii) A declaration that the plaintiff is entitled to receive from the defendant as part of its statutory funds, 3% of the total annual budget of the defendant for the years, 2000, 2001, 2002, 2003 and 2004 and in every year thereafter.

(iii) An Order directing the defendant to pay over to the plaintiff forthwith the accrued sums amounting to 3% of its respective annual budgets for the years 2000, 2001, 2002, 2003 and 2004 and every year thereafter in compliance with S. 14 (b) of the Niger Delta Development commission (Establishment, etc) Act 2000 and as part of its contribution to the statutory funds of the plaintiff together with the interests on the said accrued sums at the prevailing Central Bank of Nigeria rate from the respective dates of accrual up till the date it judgment and thereafter at the rate of 10% per annum until liquidation of same.”

Pleadings were filed and exchanged by the parties. The pleadings that guided the trial court in arriving at its decision were as follows: 1. Statement of claim dated and filed on 9/3/2005.

2. Amended statement of Defence dated and filed on 21/6/2006
3. Amended Reply to the Defendant’s Amended Statement of Defence dated 23/6/2006 and filed on 26/6/2006.

The appellant’s case is that it is a statutory corporation (commission) established pursuant to the Niger Delta Development Commission (Establishment, etc) Act 2000. That under S. 14 (2) (b) of its establishing statute its finances are directed to be generated inter alia by a contribution of 3% of the total annual budget of any oil producing company operating on-share and off-share in the Niger Delta Area, including gas processing companies. That the respondent with its expansive gas processing plant, export terminal in bonny Island, Rivers State and Gas transmission lines is one such company liable to contribute 3% of its annual budget to the appellants’ statutory fund. The appellant made several demands on the respondent.

In declining liability, the respondent contends variously that it has an operational budget but not an annual budget as known in the oil industry, that it is not a gas processing company but a gas transporting company and that it is not liable to pay any such taxes being exempt by virtue of the guarantees and assurances as contained in paragraph 3 of the second schedule of the Nigeria LNG (Fiscal Incentives, Guarantees and Assurances) Amendment Act of 1993. At the trial, the parties called two witnesses each and submitted written addresses for the consideration of the trial court. At the end of the trial, the learned trial Judge R. O. Nwodo J. held that the plaintiff case succeeds in part. He entered Judgment for the appellant in terms of Relief 1, but dismissed the appellant’s reliefs 2 and 3.

In coming to this conclusion, the learned trial judge held inter alia at pages 399 – 400 of the record that:

“…. Furthermore, there is no relief sought by the plaintiff from this court to declare the second schedule paragraph 3 of the Nigeria LNG Act unconstitutional in which case the effect will be obvious. In as much as I hold the strong view it is in conflict with the NDDC Act as regard S. 14 (2) (b) and the provision excluding new laws under that paragraph is wrong. I cannot grant a relief not sought. In the circumstance the defence under paragraph 3 of schedule 11, I find in favour of the, defendant. It therefore becomes unnecessary to consider Issue No. 3 on whether the plaintiff had proven their case. Conclusion: I have found that the defendant is a gas processing company. I have found that the Nigeria LNG Act as amended is a special Act likewise the NDDC Act. The provision in 9, 14 (2) (b) and that in second schedule paragraph 3 are in conflict. However, because they are both private special Act giving rise to conflicting right, of special interest and not the principle of earlier law to be implied cannot repeal later law. Furthermore the English authorities cited supports non-application of law excluding tax in a contract to general application. This will not apply in the instant case. Therefore, Paragraph 3 of schedule 11 applied, I hold by that provision which subsist the defendant is excluded from the provision in S.14 (2) (b) of NDDC Act…”

Both the plaintiff and the defendant at the trial court were dissatisfied with this judgment. The plaintiff (now appellant) was dissatisfied with the part of the judgment of the court dismissing reliefs 2 and 3 of the its claim as contained in the statement of claim.

The defendant (now cross-appellant) on the other hand was dissatisfied with (a) that part of the decision where the learned trial Judge held that “paragraph 3 of Schedule 11 of NLNG Act is unconstitutional” and (b) that part of the decision where the Honourable Court held that “the defendant is a gas processing company operating in the Niger Delta Area of Nigeria within the meaning and intendment of S. 14 (b) of the Niger Delta Development Commission (Establishment, etc) Act, 2000 and thereby granted Relief No. 1 on the plaintiff/appellant’s statement of claim.

The appellant filed Notice of Appeal containing only one ground of appeal on 8/10/07 and by an order of this Honourable Court filed an Amended Notice of Appeal on 12/10/2010. The defendant/cross-appellant filed a Notice of Cross-Appeal on 22/10/07. The relevant briefs of arguments for this appeal and the cross appeals are as follows: