The Shell Petroleum Development Company Ltd. V. Anthony Nwabueze (2013)

LawGlobal-Hub Lead Judgment Report – COURT OF APPEAL

UCHECHUKWU ONYEMENAM, J.C.A. (Delivering the Leading Judgment)

This an appeal against the judgment delivered by the High Court of Rivers State sitting at Port Harcourt on 4th June, 2004 wherein the judgment was entered in favour of the Respondent who was the plaintiff at the lower court.

The Respondent at the lower court had claimed as follows:

a. A declaration that the plaintiff having supplied the items in milestones 3 & 4 in accordance with the specification in contract No E-03917 is therefore entitled to the payment thereof and payment of the resulting demurrage.

b. An Order of specific performance compelling the defendant to pay to the plaintiff the following:

i. The sum of N2,208,000.00 being the total value of the items supplied in milestones 3 & 4 of the contract between the plaintiff and the defendant.

ii. The sum of N1,196,000.00 being the total cost of demurrage incurred by the plaintiff as a result of change in the destination of supply and the resultant delay arising therefrom.

iii . The sum of N2 million (Two Million Naira) only as general damages arising from the interest charges by the Bankers/sponsors of the contract and loss of business good-will with the Bankers as a result of delay in payment.

Total claim is the sum of N5,404,000.00 (Five Million Four Hundred and Four Thousand Naira) only.

The Respondent was a registered contractor with the Appellant who was the defendant at the lower court. On 20th March, 1997 the Appellant awarded the Respondent a contract for the procurement and delivery of construction (building) materials for the construction of a Town Hall at KURUMA COMMUNITY. The contract No: E-03917 whose terms and conditions are contained in a document tendered as Exhibit D at the lower court was originally valued at N3.4 million and segmented into four numbers of milestones for convenience of performance.

The contract was later mutually reviewed upwards by an additional sum of N2.8 million thus bringing the total value of the contract to N6.2 million. The Respondent performed the contract in two different segments. The items in milestones 1 & 2 were supplied at the first instance and were duty paid for by the appellant.

The Respondent contends that on the due day to supply items in milestones 3 and 4, there was youth unrest in the community. The Respondent informed the Appellant of the development but the Appellants took weeks to arrange for the storage of the materials at their Kidney Island Stores. This made the Respondent to incur demurrage on the barge and lorries which conveyed the materials to and from the project site at Kuruma to Kidney Island Store. The Respondent averred that in order to palliate the transporters, he withdrew the electrical materials in the items supplied, resold same to pay. The Respondent thereafter informed the Appellant to deduct the value of the electrical materials from the sum due him in milestones 3 and 4.

Eventually when the Respondent was shown the designated place to store the items, the Appellant’s project Engineer Mr. Victor Tikili inspected them and confirmed them satisfactory. The Appellant deducted the sum of N460,000.00 for the electrical materials from the value of milestones 3 and 4. The Respondent wrote to the Appellant on the cost of demurrage incurred as a result of the change in destination for the supply of the materials and the resultant delay caused by the Appellant in taking delivery. He then submitted the bill/invoice for the items supplied in milestones 3 and 4 and the accrued demurrage to the Appellant. The Appellant did not complain of any default nor defect in the quantity and quality of the items in milestones 3 and 4. When the Respondent approached them for the issuance of completion forms and/or certificates the Appellant was not forthcoming, so he petitioned to one of the Defendant’s senior staff Mr. Udum complaining of the payment.

It was then that the Appellant wrote a reply stating that the items in milestones 1 and 2 were not completely supplied and that the money paid for milestones 1 and 2 was meant to be an advance payment of which no further payment would be made. The Respondent in response protested stating that all the items for milestones 1 and 2 were complete in terms of quantity and quality having been so adjudged after inspection and subsequent issuance of certificate of completion by the Appellant’s officers. He noted that it was about thirteen months after payment had been made for milestones 1 and 2 that the Appellant brought about allegation of non-completion of the supply. He claimed the value of milestones 3 and 4 (items supplied) at N2,208,000.00 (Two Million Two Hundred and Eight Thousand Naira) and N1,196,000.00 (One Million One Hundred and Ninety Six Thousand Naira) only the total demurrage incurred. The Respondent claimed that the delay caused by the Appellant in the non-payment of the money created a problem between him and his bank (FBN) Merchant Bankers who sponsored the contract. He averred that he had used all the subtle means to effect amicable settlement but the Appellant refused, failed and/or neglected to concede