Zenith Plastics Industry Ltd. V. Samotech Limited (2007)

LawGlobal-Hub Lead Judgment Report

RHODES-VIVOUR, J.C.A.

In the High Court of Rivers State holden at Port Harcourt in suit No. PHC/4/97 the plaintiff, now the respondent claimed as per his paragraph 30 of the statement of claim against the defendant, the appellant herein as follows:-

“30. Wherefore the plaintiff claims against the defendant as follows:-

(a) N502,400 being balance outstanding against the defendant in respect of electrical work carried out on its behalf by the plaintiff in September 1995 and July 1996.

(b) N1.9 million being damages and losses plaintiff suffered by reason of the defendant’s failure to pay the contract price as and when due.

(c) N20 million general damages for breach of contract and libel of the plaintiff by the defendant.

(d) 25% interest per annum on the total sum of N22,402,400 from December 1996 until judgment is delivered in the matter and thereafter 25% interest per annum thereon until full payment thereof is made.”

The Facts

The plaintiff and the defendant entered into a contract for the plaintiff to construct an 11 KVA electric power line. The cost of the contract was N1,405,500 (one million, four hundred and five thousand five hundred naira).

The plaintiff completed the construction of the 11 KVA electric power line in September 1995 and demanded payment. The defendant did not pay the debt.

In July 1996, the defendant and its neighbour, Belhope Plastics Ltd. gave the plaintiff a contract jointly. The contract sum was N193,000 (one hundred and ninety three thousand naira). On completion of the contract Belhope Plastics Ltd. paid its own share of N96,500, while the defendant did not pay its own share of N96,500 despite demands for payment by the plaintiff.

The defendant’s indebtedness to the plaintiff stood at N1,502,400 (One million five hundred and two thousand four hundred naira) made up of N1,405,500 on the 11 KVA contract and N96,500 on the contract shared with Belhope Plastics Ltd. Union Bank Plc (the plaintiff bankers) stopped all credit facilities to the plaintiff, and this affected the execution of plaintiff’s Shell contract which Shell terminated and which the plaintiff says caused him a loss of N1.9m.

Due to mounting pressure on the plaintiff from its bankers Union Bank Plc to pay up the loans advanced to it to perform the contracts, the plaintiff authorized the defendant to pay its debt directly to Union Bank Plc. The authorization was an irrevocable authority. See exhibit B. On receipt of exhibit B, Union Bank Plc wrote to the defendant to make confidential inquiry about the plaintiff and to confirm the authenticity of exhibit B. The defendant replied Union Bank Plc. See exhibit C. It reads in part.

” … we wish to emphasize that this company has no business relationship whatsoever with Samo Tech Ltd. Therefore Samo Tech. Ltd. irrevocable authority letter dated 19/7/96 should be regarded null and void, we disassociate ourselves from any transaction/s that may exist between your bank and Samo Tech Ltd.”