Osun State Government V Dalami Nigeria Limited (2007)
LAWGLOBAL HUB Lead Judgment Report
I. KATSINA-ALU, J.S.C
On 28th February, 1991 a Consortium of Management Operation Lease Agreement was executed for the management of Cocoa Products Industries (Nig.) Ltd. situate at Ede, Osun State. The Deed was between Cocoa Products Industries Nigeria Limited, on the one hand, as lesson, and World Wide Industrial Venture Ltd. (50%); Phoenix Produce Nigeria Limited (25%); Dalami Nigeria Ltd. (15%) and Oyo State Government (10%) as lessees. The lease period was for a term of 6 years. The substance of the leasehold was that World Wide Industrial Venture Ltd was to produce the Managing Director, Plant, Service and Shift Managers, Phoenix Produce Nigeria Ltd to produce the accountant and Marketing Manager, Dalami to produce the Purchasing, Administration Managers and Company Secretary, whereas Oyo State Government was to produce Chairman of the Board of Directors, Financial Controller and Internal Auditors as
management lessees. The Government of Osun State in 1991 August became the successor of Oyo State Government, as the principal shareholder of Cocoa Products Industries (Nig.) Ltd., Ede, consequent upon assets sharing.
The Government of Osun State on 2nd November; 1992 caused the leasehold to be terminated following the resolution of the House of Assembly of Osun State vide a letter from the Commissioner for Finance and Commerce. The 15% leaseholder, Dalami Nigeria Limited, on July 5, 1993 took out writ of summons against the appellant and the Government of Oyo State.
By its paras. 24 and 26 of the further amended statement of claim the plaintiff as respondent claimed against the appellants as follows:
“(i) A declaration that the purported termination by the defendants of the Management Lease Agreement subsisting between the plaintiff and the defendant inter alia in relation to the Management of Cocoa Product Industry Limited vide a letter dated the 27th of November, 1992 is wrongful irregular in bad faith in breach of the terms of the Management Lease Agreement. An order nullifying and setting aside the purported termination as conveyed by a letter dated the 27th November, 1992. An order of specific performance directing the defendants to give effect to the terms of the Management Lease Agreement as it relates to the Management of Cocoa Product Industry Limited.
Alternatively
An order directing the defendants to pay to the plaintiff the sum of $11.23 million or its Naira equivalent as damages for the wrong termination of the Management Lease Agreement as follows:-
(a) Loss of 15% of the anticipated profit on cocoa butter and cocoa production realizable by the company from 1992 -1997 – US $3.65 million.
(a) Loss of 15% of the anticipated profit from processing fee realizable by the company from 1992 – 1997 – $3.07 million.
(c) The sum of N100 million as general damages for the wrongful termination of the Management Lease Agreement.”
The learned trial Judge found for the respondent. He made the following awards:
“(i) Loss of 15% anticipated profit from sales of cocoa butter and cake (1992 – 1997) US $3.65 million.
(ii) Loss of 15% anticipated profit from processing fees (1992 – 1997) – US $3.07 million. Total US $6.72 million, as special damages, and N85, million as general damages. All these awards should be calculated up to date on the basis of evidence uncontradicted of the PW3 showing the CBN exchange rates from 1992 – January – December 1998 both periods inclusive i.e. the Naira equivalent of $6.72 million US Dollars the calculation of which should be in accordance with CBN foreign exchange rate as in exhibits H – H6.”
On appeal by the appellant to the Court of Appeal that court dismissed the appeal in respect of the award of special damages,allowed the appeal on the award of general damages of N85 million but remitted it to the trial court for retrial.
This appeal is from the decision of the court of Appeal. Based upon the grounds of appeal, the appellant has submitted two issues for the determination of the appeal. These are:
(i) Jurisdiction
Whether the High Court of Justice of Oyo State was competent and possessed the jurisdiction to exercise judicial powers over the claims of the respondent and whether the Court of Appeal properly considered the issue of jurisdiction in determination of the appeal.
(ii) Damages
Whether the Court of Appeal properly considered and determine the damages awarded against the appellant. For its part, the respondent raised three issues for determination which read as follows:-
Jurisdiction
Whether the High Court of Justice of Oyo State was not competent and possessed the jurisdiction to exercise judicial powers over the claims of the respondent under section 2 of the Public Officers (Protection) Act, Cap. 379, Laws of the Federation of Nigeria, 1990.
(i) Whether or not the High Court of Oyo State possessed power and jurisdiction to entertain the claims of the respondent in view of the provisions of section 7 of the Federal High Court
Act, Cap. 134, Laws of the Federation of Nigeria, 1990.
Damages
(ii) Whether the Court of Appeal properly considered the determined the damages awarded against the appellant on uncontroversial oral testimony.
The issues of the parties are identical. Respondent’s issues 1 and 2 can be argued together in response to appellant’s issue No.1. The appellant has argued ground No. 1 into two parts. Both parts are on the jurisdiction of the trial High Court. The first part is on section 2 of the Public Officers Protection Act, Cap. 379, Laws of the Federation of Nigeria, 1990. The second part is on section 7 of the Federal High court Act.
Public Officers Protection Act
It was submitted for the appellant that the suit of the respondent instituted on 5th June, 1993, seven (7) months after the termination of the leasehold is caught by the provisions of section 2 of the Public Officers Protection Act. It was said that the Act provides for a period of three (3) months within which an action may be instituted after the act, neglect or default complained of. The appellant gave three reasons why the Limitation Law is applicable to the present case.
These are:
- The termination of the leasehold agreement was carried out by a Commissioner of the Osun State Government in pursuance of his public duty.
- The action was commenced against the Osun State Government on the basis of the Commissioner’s Act.
- The action was commenced seven (7) months after the Public Act complained of.
In the circumstances, it was submitted by learned counsel for the appellant that the respondent’s action was statute-barred. Learned counsel relied on the following cases: Egbe v. Adefarasin (1985) 1 NWLR (Pt. 3) 549; Fadare v. A.-G., Oyo State (1982) 4 SC 1; Ibrahim v. JSC, Kaduna State (1998) 14 NWLR (Pt. 584) I at 31-32. Federal High Court Act
It was submitted for the appellant that this action arose from the operation of the Companies and Allied Matters Act or any other enactment regulating the operation of companies incorporated under the Companies and Allied Matters Act. It was therefore contended that it is only the Federal High Court that has jurisdiction to hear and determine causes and matters arising from the operations and activities of incorporated companies. Reliance was placed on the cases of SkenConsult Ltd. v. Sekondy Ukey (1981) 1 SC 6; Omisade & Ors. v. Harry Akande (1987) 2 NWLR (Pt. 55) 158 at 171.
It was further submitted that the claim for damages on the facts of the case is merely an ancillary relief .Section 7 of the Federal High court Act, Cap. 134, Laws of the Federation, 1990 gives the court exclusive jurisdiction in civil causes and matters arising from the operation of the Companies and Allied Matters Act regulating the companies incorporated under the Act. It was pointed out that the court which has the power to determine ancillary issue must decline jurisdiction for the court which has the power to determine the principal. Learned counsel placed reliance on the following cases – Adeyemi v. Opeyori (1976) 9-10 SC 31; Tukur v. Government of Gongola State (1989) 4 NWLR (Pt. 117) 517; Egbuonu v.BRTC (1997) 12 NWLR (Pt. 531) 29 at43.
Issue 1 The respondent on issue 1 submitted that section 2 of the Public Officers (Protection) Act Cap. 379 Laws of the Federation of Nigeria 1990 is not applicable to this case because the cause of actions based on contract which was breached. It was pointed out that the claims of the respondent were based on a tripartite Management Lease Agreement, exhibit G which terminated the contract agreement as it related to the respondent.
The respondent drew attention to its writ of summons whereby it claimed as follows:
“1. A declaration that the purported termination by the defendants of the Management Agreement subsisting between the plaintiff and the defendant inter alia in relation to the Management of Cocoa Products Industry Limited vide letter dated 27th of November, 1992 is wrongful, irregular in bad faith in breach of the term of the Management Lease Agreement.
- An order nullifying and setting aside the purported termination as conveyed by a letter dated the 27th of November, 1992.
(3) An order of specific performance directing the defendants to give effect to the terms of the Management
Lease Agreement as it relates to the Management of Cocoa Products Industry Limited.”
In the circumstances, it was submitted that an action for a breach of contract does not fall within the contemplation of section 2(a) of the Public Officers (Protection) Law. Learned counsel relied for this submission, on the case of Ibrahim v. Judicial Service Committee, Kaduna State (1998) 14 NWLR (Pt. 589) 1 at page 67.
Issue No 2. On the second issue it was submitted that the fundamental complaint of the respondent is not on the operation, good management or bad management or management at all of the Cocoa Products Nigeria Limited by whoever was operating or managing the company. The complaint of the respondent, it was pointed out was in respect of the breach of the contract between the appellant and the respondent in 1991. It was further said that the claim of the respondent in this case was a claim in damages for breach of contract. It was contended that the issue of assessment for damages was ancillary.
Learned counsel relied on the case of Tukur v. Government of Gongola State (1989) 4 NWLR (Pt. 117) 517 at 56 It was submitted in the alternative that under the 1979 Constitution of the Federal Republic of Nigeria, both the Federal High Court and the State High court had concurrent jurisdiction in respect of the provisions of section 7 of the Federal High Court Act.
Reliance was placed on the following cases – Savannah Bank of Nigeria Ltd. v. Pan Atlantic Shipping & Transport Agencies Ltd. (1987) 1 NWLR (Pt. 49) 212, Omisade v. Akande (1987) 2 NWLR (Pt. 55) 158 at 175, Adisa v. Oyinwola (2000) 10 NWLR (Pt. 674) 116.
It was pointed out that the present action was instituted at the Oyo State High Court in 1993 when the 1979 Constitution was applicable. It was therefore submitted that the law applicable to a cause of action is the law in operation when the cause of action arose. For this submission, learned counsel relies on the cases of Attorney-General of the Federation v. Sode (1990) 1 NWLR (Pt. 128) 500 at 534, Kotoye v. Saraki (1994) 7 NWLR (Pt. 357) 414 at 448-449. It was therefore the submission of the respondent that both the Oyo State High court and the Federal High Court had concurrent jurisdiction in the present suit.
Section 2(a) of the Public Officers (Protection) Act, Cap. 379 Laws of the Federation of Nigeria, 1990 provides as follows:
“2. Where any action, prosecution or other proceeding is commenced against any person for any act done in pursuance or execution or intended execution of any Act or Law or of any public duty or authority. or in respect of any alleged neglect or default in the execution of any such Act, Law, duty or authority, the following provisions shall have effect –
(a) the action, prosecution, or proceeding shall not lie or be instituted unless it is commenced within three months next after the act, neglect or default complained of. or in case of a continuance of damage or injury, within three months next after the ceasing thereof:”
This is a limitation law. It removes the right of action, the right of enforcement and the right to judicial relief in a plaintiff if his cause of action arose more than three months preceding the institution of his action.
The general principle of law is that where a statute provides for the institution of an action within a prescribed period, proceedings shall not be brought after the time prescribed by such statute. Any action that is commenced after the prescribed period is said to be statute-banned. See lbrahim v. J.S.C. (1998) 14 NWLR (Pt. 584) 1.
While the appellant maintains that this action is caught by section 2(a) of the Public Officers (Protection) Act, the respondent argues that the Act is inapplicable. It was contended that the section 2 of the Public Officers Protection Act does not apply in cases of breach of contract. The respondent pointed out that its action was for breach of contract.
In order to ascertain the nature of the present action, it is pertinent to read some paragraphs of the statement of claim. In this connection paragraph 26 of the further amended statement of claim
is pertinent. It reads as follows:
“26. Whereof the plaintiff claim against the defendant as follows:-
(i) A declaration that the purported termination by the defendants of the Management Lease
Agreement subsisting between the plaintiff and the defendants inter alia in relation to the Management of Cocoa Products Industry, Limited vide a letter dated the 27th of November, 1992 is wrongful, irregular in bad faith in breach of the terms of the Management Lease Agreement.
(ii) An order nullifying and setting aside the purported termination as conveyed by a letter dated the 27th November, 1992.
(iii) An order of specific performance directing the defendants to give effect to the terms of the Management Lease Agreement as it relates to the Management of Cocoa Products Industry
Limited.
Alternatively
(iv) An order directing the defendants to pay to the plaintiff the sum of $11.23 million or its Naira equivalent as damages for the wrong termination of the Management Lease Agreement as follows:-
(a) Loss of 15% of the anticipated profit on cocoa butter and cocoa cake production realizable by the company from 1992 1997 US$3.65 million.
(b) Loss of 15% of the anticipated profit from processing fee realizable by the company from 1992 – 1997.
(c) The sum of N100 million as general damages for the wrongful termination of the Management Lease Agreement.”
I think it is without dispute that this is an action for breach of contract. It is now settled law that section 2 of the Public Officers (Protection) Act does not apply to cases of contract. See Nigerian Ports Authority v. Construzioni General: Farsura Cogefar Spa & Anor: (1974) 1 All NLR (Pt. 2) 463. This court, at pp. 476 to 477 held as follows:
“We shall now deal with the other point which to our mind, does not seem to be well-settled, namely whether the kind of statutory privilege which we have been considering is applicable to an action founded upon a contract. In other words, whether S. 97 of the Ports Act applies to cases of contract. We think that the answer to this question must be in the negative. We agree that the section applies to everything done or omitted or neglected to be done under the powers granted by the Act. But we are not prepared to give to the section the stress which it does not possess. We take the view that the section does not apply to cases of contract. The learned Chief Justice, in deciding this point, made reference to the case of Salako v. L.E.D.B. and Anor: (1953) 20 N.L.R. 169 where de Commarmond S.P.J. as he then was, construed the provision of S. 2 of the Public Officers Protection Ordinance which is almost identical with S. 97 of the Ports Act, and thereafter stated the law as follows:-
‘I am of opinion that section 2 of the Public Officers Protection Ordinance does not apply in cases of recovery of land, breaches of contract, claims for work and labour done, etc.’
We too are of the opinion that de Commarmond S.P.J.,has quite rightly stated the law in the passage of his judgment cited above. It seems to us that an enactment of this kind i.e. S. 97 of the Ports Act is not intended by the Legislature to apply to specific contracts. ”
(Italics for emphasis)
The contention of the respondent was therefore well taken.
Section 2 of the Public Officers Protection Act does not apply to this case. The second arm of this submission is that under section 7 of the Federal High Court Act, the Federal High Court has exclusive jurisdiction to hear and determine this claim. The relevant provision under section 7 of the Federal High Court Act, Cap. 134, Laws of the Federation of Nigeria, 1990 is as follows:
“7(i) The court shall have and exercise jurisdiction in civil causes and matters –
(a) ……………
(b) ……………
(c)arising from
(ii) The operation of the Companies and Allied Matters Act or any other enactment regulating the operation of companies incorporated under the Companies and Allied Matters Act, … ”
The guide in the determination of jurisdiction of a court is the subject matter of the claim as endorsed in the writ of summons. It is a fundamental principle of law that it is the claim of the plaintiff that determines the jurisdiction of the court which entertains the claim: See Adeyemi v. Opeyori (1976) 1 FNLR 149, (976) 9 – 10 SC 31; Bronik Motors v. Wema Bank Ltd. (1983) 6 SC 158, (1983) 1 SCNLR
I have already shown that the action is for a breach of contract.
This claim has nothing to do with the management of the company.
The issue of assessment for damages is merely ancillary: See Tukur v. Government of Gongola State (1989) 4 NWLR (Pt. 117) 517. In the result the Federal High Court has no jurisdiction to hear and determine this claim.
I turn now to the complaint that relates to the award of special and general damages. In resolving this issue the learned trial Judge held thus:
“All parties in this suit (and I have equally held that that is the position) the lease agreement exhibit F is the binding contract between them. In clause 15(ii) of exhibit F it has been spelt out – the circumstances under which the management agreement exhibit F can be terminated. The reason given in exhibit. G is ‘recent developments on the company’ have not been spelt out to examine whether or not the so-called ‘developments’ are within the contemplation of parties in clause (15)(ii)of exhibit F Some copious attempts were made in the amended statement of defence of the 2nd defendant but there was no evidence coming in proof of any. I therefore come to the decision that the termination of the management lease agreement as between the plaintiff and defendants is wrongful, null and void and of no effect being in breach of exhibit F”
The view quoted above is faulty. I will explain. The learned trial Judge was right when he held that the Lease Agreement – exhibit F, was the binding contract. But the complaint of the plaintiff was not that the preconditions in clause 15 of exhibit F were not complied with before the lease agreement was terminated. I have carefully read the statement of claim and I find nothing therein that remotely refers to the failure of the respondents to comply with clause 15 of exhibit F before the termination of the agreement. But it was on this faulty foundation that the trial Judge proceeded to hold that the termination was wrongful, null and void and of no effect. He also
proceeded on this wrong premise to award special and general damages of US$6.72 million and N85 million respectively. I wish to note here that the claim in damages was in the alternative.
On appeal to the Court of Appeal, that court affirmed the award of special damages. On the award of general damages, however, the court of Appeal held that since the trial Judge did not give sufficient reasons for the award of N85 million, it remitted the said award to the High Court to be properly determined.
The lease agreement exhibit F is the binding contract between the patties. Clause 16 thereof provides as follows:
(i) Penalty
In the event of any termination or disruption of this agreement by the CPI or anybody or persons on account of action traceable to any shareholder or the CPI shall pay to the lessees an amount equal to two times the fees payable to the CPI in the year of such disruption or termination as specified in column 4 of the Schedule V in the agreement.
(ii) The lessees shall be entitled to remain in possession of and in operation of the CPI until any sum of money that may be due under paragraph 16(1) is paid to the lessees by the CPI. ”
I see from clause 16 quoted above that the parties did contemplate that the issue of termination might happen. So they provided the penalty clause which I think is sufficiently exhaustive. It is settled law that the parties are bound by their agreement freely entered into. No party would therefore be permitted to go outside it for remedy. In my judgment, the respondents are entitled to an amount equal to two times the fees payable to the CPI in the year of such termination. I so order.
The plaintiff’s first witness was Mr. Afolabi Igbaroola a chattered accountant. He testified as to the damages suffered by the plaintiff. He tendered exhibit A. It was the basis of the plaintiff’s loss as a result of the premature termination of its contract. Clause D of exhibit A reads:
“D. Revenue due to CPI from processing fees:
(i) Cocoa beans processed per annum = 18,000 tonnes of cocoa beans
(ii) Processing fees per tonne of cocoa beans = N5,000.00
(iii) Revenue from processing fees per annum =18,000 x 5,000.00 = N90 million = U5$4.091 million
(iv) 15% in respect of Dalami’s share from processing fees = N67.5 million = US $3.07m.”
It will be seen clearly from clause D(iii) above that the amount due to CPI per annum as given in evidence was N90m. Under the penalty provision in clause 16 of exhibit ‘F’ the plaintiff would be entitled to twice the sum of N90m as damages. This amounts to N180m Naira and nothing more. The result is that the plaintiff is only entitled to N180 million Naira and nothing more.
In the result, I allow this appeal and set aside the judgments of the two lower courts. I make no order as to costs.
SC.277/2002