Nigerian Bank For Commerce And Industry V. Integrated Gas (Nigeria) Limited & Anor (2005)

LAWGLOBAL HUB Lead Judgment Report

EDOZIE, J.S.C.

At the instance of the respondents, a company and its managing director respectively who were plaintiffs at the trial trial court, the appellant bank, therein defendant, in 1983, offered to grant the former a term loan of N500,000 (five hundred thousand Naira) for the purpose of establishing a Liquefied Petroleum Gas Bottling Plant at Ikot-Ekpene, Akwa-Ibom State. The loan, though denominated in local currency was to cover the foreign currency component to be used for the importation of the machinery and accessories from the manufacturers, Kosan Crisplant in Denmark. The offer of the loan was conveyed to the plaintiffs in the defendant’s “letter of intent” dated 25th March, 1986 (exh. F) which stipulated several conditions, to be fulfilled by the plaintiffs before the actual disbursement of the loan. It was stipulated that the disbursement of the loan would be made from the head office of the defendant after the parties had executed a formal agreement, to wit, the investment and mortgage agreement (exh. V) and the disbursement was to be in the form of the defendant bank opening a letter of credit in favour of the overseas suppliers and the manufacturers of the required machinery.

By a letter of acceptance dated 14th April, 1986 (exh. G), the plaintiffs wrote to the defendant accepting the offer transmitting to it several documents made in compliance with the terms of the offer. It is the plaintiffs’ case that despite the fact that they had complied with the conditions stipulated in exhibit F and have executed on 4th September, 1986, the investment and mortgage agreement exhibit V, the defendant neglected to open the letter of credit for the importation of the machinery. As evidence that they had fulfilled the conditions precedent for the disbursement of the loan, the plaintiffs tendered several documentary exhibits and in particular exhs. “T” and “U” which were internal memoranda of the defendant in which its officials were alleged to have admitted that the plaintiffs had satisfied the conditions for the opening of the letters of credit on their behalf. At the time the plaintiffs accepted the defendant’s offer, the cost of the machinery to be imported from Denmark was 951,310 DM as per proforma invoice dated 26th June, 1985 (exh. M).

But by 26th June, 1986, the price had escalated to 1,045,247 DM vide the proforma invoice exh. N. With the introduction of the Second Tier Foreign Exchange Market Scheme (SFEM) on 29th September, 1986, resulting in the devaluation of the naira, the cost of importing the machinery, according to the plaintiffs had risen to over N4 million. It is the plaintiff’s contention that due to the defendants’ delay in opening the ‘letters of credit’ timeously, it was responsible for excessive cost in the importation of the machinery.

Upon the foregoing scenario, the plaintiffs by a writ of summons in suit No. LD/48/87 filed in the Lagos High Court, on 12th January, 1987 commenced action against the defendant. In paragraph 30 of their amended statement of claim, their reliefs were formulated thus:-

“30. Whereof the plaintiffs’ claim against the defendant as follows:-

(1) The sum of N4,081,361.00 being the increase in the cost of the L.P.G. project machinery and equipment to be imported by the plaintiffs under the finance of the defendant which increase was

occasioned by the defendant’s delay in opening the relevant letter of credit for the imp0l1ation of the said machinery and equipment.

Or in the alternative

N:K

1(a) Fee for import licence not valid for foreign exchange 100.00

(b) Front end fee paid to the defendant 7,500

(c) Legal fees for the agreement 7,830

(d) Stamp duty and registration fees for agreement 4,445.75