Bureau Of Public Enterprises V. Assurance Bank Plc & Ors. (2009)
LawGlobal-Hub Lead Judgment Report
ABDU ABOKI, J.C.A.
This Appeal is against the decision of the Federal High Court, Abuja presided over by Honourable Justice S.J. Adah delivered on the 2nd day of March, 2006.
The Brief fact of the case is as follows:
On the 14th day of June, 2004, the National Council on Privatization conducted financial Bids opening for Aluminum Smelter Company of Nigeria (ALSCON). BFI Group Corporation (2nd Respondent) emerged as the winner with a bid price of $410 Million and was subsequently issued a letter on 17th June, 2004 conveying the approval of their bid price and their appointment as the preferred bidder.
The 2nd Respondent in fulfillment of its obligations under the letter of offer as the preferred bidder for ALSCON caused a Bid Bond to be issued by the 1st Respondent in favour of the Appellant which provided that in the event that BFI Group Corporation (2nd Respondent) failed to meet any of the obligations as contained in the letter of offer (of which the mandatory 10% of the Sales Purchase Agreement is inclusive) the Bond would immediately become due and payable.
The Bid Bond with reference No. ABNLIBB/04/0300 dated 26th May, 2004 for the sum of $1 Million (one Million Dollars) issued by the 1st Respondent who undertook to pay the Appellant the full value of the Bid Bond upon receipt of a written demand without the Appellant having to substantiate the demand. The Bid Bond was to remain effective for one hundred and eighty days from the date set out in the Bid Bond.
By 8th July, 2004, the 2nd Respondent defaulted in making the 10% deposit payment and on 19th July, 2004, the Appellant wrote a demand letter to the 1st Respondent to realize the Bid Bond. The 1st Respondent refused to pay the value of the Bid Bond thereby compelling the Appellant to institute an action before the lower Court for an Order compelling the 1st Respondent to honour its obligation under the Bond.
The 1st Respondent and 2nd Respondent thereafter filed an Application before the lower Court contending that the Suit did not disclose any cause of action and could not be maintained on the Bid Bond as it expired before the Suit was instituted.
The trial Court in its ruling held that the Plaintiff/Appellant had no cause of action as the Bid Bond had expired. It is against that decision that the Appellant has filed its Notice and Grounds of Appeal dated and filed on 3rd August, 2006 after obtaining the leave of this Honourable Court.
Parties have exchanged their Briefs. The Appellant’s Brief of Argument was filed on 17th April, 2007 whilst the 1st and 3rd Respondents’ Joint Brief of Argument dated 15th January, 2008 was filed on 16th January, 2008.
From the Lone Ground of Appeal contained in the Notice of Appeal, two issues are distilled on behalf of the Appellant for the determination of this appeal.
They are as follows:
“1. Was the trial Court right in holding that the expiration of the Bid Bond deprived the Appellant of a cause of action?
- Did the trial Court give effect to the intention of the parties in relation to the terms of the Bid Bond?”
On behalf of the 1st and 3rd Respondents, one issue is raised for the determination of this Appeal as follows:
“Whether the trial Court was right in holding that the expiration of the Bid Bond deprived the Appellant of a cause of action. ”
I have carefully perused the Record of Appeal, the Appellant’s Brief of Argument as well as the 1st and 3rd Respondents’ joint Brief of Argument and I am of the opinion that the Lone issue as distilled by the 1st and 3rd Respondents shall effectively determine this Appeal.
“Whether the trial Court was right in holding that the expiration of the Bid Bond deprived the Appellant of a cause of action. ”
Counsel for the Appellant, Buetna’an M. Bassi submitted that issue before this Honourable Court is primarily whether the Appellant had any cause of action.
Learned Counsel referred the Court to the case of Ejimofor v. NITEL (2007) 1 NWLR Pt. 1014 Page 193 on the meaning of cause of action and how a cause of action is determined.
Buetna’an M. Bassi also referred the Court to the case of Onadeko v. UBN Plc (2005) 17 NWLR Pt. 916 Page 440 on when a cause of action accrues.
Learned Counsel submitted that the cause of action accrued to the Appellant on 8th July, 2004 as that was when the 2nd Respondent defaulted in paying 10% of the negotiated bid price in accordance with the terms of the sale.
Buetna’an M. Bassi maintained that as at the day of the execution of the Bid Bond, no cause of action had arisen. Learned Counsel argued that the cause of action only arose after the last day for payment of the 10% of the negotiated bid price by the 2nd Respondent which was on 8th July, 2004.
Learned Counsel further submitted that at the time of default, computation ceases to be relevant as far as the life span of the bid is concerned because the anticipated event had occurred and all that was required of the Appellant had been done.
Counsel for the Appellant maintained that the Bid Bond in question was a demand Bond and money was due from the date of demand. He submitted that the trial Court ought to have concerned itself with the only relevant consideration which was payment of the Bid Bond.
Learned Counsel pointed out that the only condition was a written demand which was validly made long before the expiration of the Bid Bond.
He maintained that the 1st Respondent received the written demand and instead of meeting its obligation to the Appellant, employed delay tactics in the malicious hope that failure to pay would deny the Appellant of the proceeds of the Bond as 180 days would have elapsed. Learned Counsel submitted that it would be manifestly unlawful to allow the Respondents abdicate their obligation under the terms of the Bond.
Learned Counsel submitted that the Appellant would have had no cause of action if it had made a written demand after the expiration of 180 days. He maintained that the written demand was made on the 19th day of July, 2004.
Counsel for the Appellant further submitted that the written demand was clearly within time and long before the expiration of the Bid Bond. He argued that it was the action of the Respondents that led to the effluxion of time.
Learned Counsel urged that the Appellant should not be made to suffer for this and neither should the Respondents be allowed to take benefit from their wrong doing. He referred the Court to the case of Inyang v. Ebong (2002) 2 NWLR Pt. 751 Page 284 at Pages 333-334.
Buetna’an M. Bassi maintained that the trial Court proceeded on the assumption that the parties had timed their agreement to the effect that all acts (not the demand) under the Bond would have to be initiated and concluded before the expiration of 180 days and it depended solely on the life span of the Bid Bond. He submitted with due respect that this wrong approach led the trial Court to hold that the Appellant had no cause of action at the expiration of the Bid Bond.
Learned Counsel submitted that the trial Court should not have held that the expiration of the Bid Bond denied the Appellant a cause of action.
Counsel for the Appellant maintained that from a cursory look at the Bid Bond on the face of it, all that was required to be done before the expiration of the Bid Bond was a written demand. He submitted that there was no provision restricting the commencement of action on the Bond to the lifespan of the Bond.
Learned Counsel contended that the cause of action was not restricted to the 180 days. He further submitted that a failure to make a written demand in the event of a default within 180 days would have been fatal to the action and anything short of that is outside the intention of the parties. He maintained that the intention of the parties was what the trial Court ought to have given effect to and referred the Court to the case of:
Emuwa v. Consolidated Discounts Ltd. (2001) 2 NWLR Pt. 697 page 424.
Furthermore, Counsel for the Appellant pointed out that the written demand was made on 19th July, 2004, about 50 days after the Bond was issued and well within the 180 days before its expiration.
Learned Counsel argued that the Appellant made a demand and that was all it was required to do under the terms of the Bid Bond. Learned Counsel maintained that the written demand was done timely and it was the subsequent failure of the Respondents to meet up their obligation under the Bid Bond that necessitated the action in the lower Court.
Learned Counsel respectfully urged the Court to allow the Appeal on the sole Ground of Appeal, set aside the Judgment of the lower Court and remit the case to the lower Court to be tried on the merits.
Counsel for the 1st and 3rd Respondents, Jude Onwuegbuzie submitted that the question that necessarily follows from the issue for determination is “what is a cause of action”? On the definition of a cause of action, he referred the Court to the cases of:
Ibrahim v. Osim (1988) 3 NWLR Pt. 82 Page 257 at 267; Akibu v. Oduntan (2000) 13 NWLR Pt. 485 Page 446 at 465.
Learned Counsel maintained that the next issue is how will this Honourable Court determine whether this Suit discloses a reasonable cause of action? He submitted that for the purpose of determining whether or not a cause of action exists, the Honourable Court must examine the Statement of Claim filed by the Appellant and referred the Court to the case of Ibrahim v. Osim (supra) at Page 270.
Learned Counsel pointed out that in paragraph 5 of the Statement of Claim, the Appellant specifically pleaded the Bid Bond with Ref. No. ABNL/BB/04/0300 for the sum of $1,000,000.00 (One Million Dollar) which was furnished in favour of the Appellant by the 2″‘ Respondent and annexed it as “Annexure A” in paragraph 6.
He maintained that in the Bid Bond annexed to the Statement of Claim as “Annexure A” in paragraph 6, it was specifically provided in the Bid Bond, which is dated the 26th day of May, 2004 that “This Bid Security Bond will remain effective for one hundred and eighty days from the date hereunder and shall become void at the expiration of the tenure stated”.
Counsel for the 1st and 3rd Respondents submitted that the agreement of the parties as reflected on the Bid Bond dated the 26th day of May, 2004 is that the Bond has a lifespan of 180 days from the 26th day of May, 2004.
He further submitted that the Bid Bond became void by effluxion of the specified time of 180 days from the 26th day of May, 2004.
Learned Counsel maintained that the Bid Bond became null and void at the expiration of 180 days since the agreement between the Appellant and the Respondents was that the Bid Bond begins to run from the 26th day of May, 2004 and it shall run for 180 days. He referred the Court to the cases of: JP v. Emeruwa (2004) 35 WRN PAGES 23, 36-38; Aremo II v. Adekanye (2004) 42 WRN 19-21; P.N. Udoh Trading Co. Ltd. v. Abere (2001) 24 WRN Pages 1,17-19.
Jude Onwuegbuzie submitted that it is settled law that parties are bound by the content of any written argument duly executed by them and referred the Court to the cases of: Koki v. Magnusson (1999) 8 NWLR Pt. 615 Page 492 at 514; Omega Bank v. O.B.C. 21 NSCQR 771; Anyaegbunam v. Osaka 1 SCNQR 403; Afrotech v. Mia & Sons Ltd. (2000) 12 SC Pt. 11 Page 1 at 15; Baba v. Nigeria Civil Aviation Training Centre (1991) 5 NWLR Pt. 192 Page 388.
Learned Counsel further submitted that the Appellant’s Suit does not disclose any reasonable cause of action since the Bid Bond referred to in paragraph 5 of the Statement of Claim and annexed to the Statement of Claim had expired before the matter was instituted in view of the agreement of the parties that the Bid Bond has a life span of 180 days from the 26th day of May, 2004.
Counsel for the 1st and 3rd Respondents humbly urged this Honourable Court to disregard the Appellant’s argument and dismiss this Appeal since the Statement of Claim does not disclose a cause of action because Suit FHC/ABJ/CS/680/2004 is predicated on Bid Bond No. ABNL/BB/04/0300 which has a life span of 180 days from the 26th day of May, 2004.
Learned Counsel maintained that it is a principle of law that where a Statement of Claim does not disclose a reasonable cause of action, the Suit should be dismissed. He referred the Court to the cases of: Akintola v. Solano (1986) 2 NWLR Pt. 24 Page 598 at 601; Ambode v. MM of Foreign Affairs (2004) 14 NWLR Pt. 894 Page 506 at 524- 525. Adetona v. Edet (2004) 16 NWLR Pt. 899 Page 338 at 364.
The learned trial Judge in its ruling delivered on the 2nd day of March, 2006 had held that the Appellant had no cause of action as the Bid Bond had expired and consequently struck out the case.
It is trite that the cause of action in a case is usually determined by looking at the circumstances in the given case. It differs from case to case and is deduced from the facts of the case creating or giving rise to a right of action which entitle the person claiming the right to judicial relief. See
Ibrahim v. Osim (1988) 3 NWLR Pt. 82 page 257 at 267; Onadeko v. UBN Plc (2005) 17 NWLR Pt. 916 page 440.The crux of this Appeal is Bid Bond No. ABNLIBB/04/0300 dated the 26th day of May, 2004 and attached as Arnexure ‘A’ to the Statement of Claim. For ease of reference, it is reproduced verbatim as follows:
“Assurance Bank
Plot 634, Adeyemo Alakija Street
Victoria Island, Lagos.
P.M.B. 12807, Marina, Lagos.
Reference No. ABNL/BB/04/0300
To: BUREAU OF PUBLIC ENTERPRISES ABUJA
BID SECURITY FOR US$1,000,000.00
ORDER: BFIGROUP CORPORATION
WHEREAS, BFIGROUP CORPORATION having its registered office at Figueroa Towers, 660 South Figueroa Street, 11th Floor, Suite 1110, Los Angeles, California 90017, USA (hereinafter called “The Bidder”) has submitted its bid (hereinafter called “The Bid”) to PURCHASE 77.5% equity interest in Aluminium Smelter Company of Nigeria, Ikot-Abasi (hereinafter called “ALSCON”).
WE ASSURANCE BANK NIGERIA LIMITED, having our registered office at Plot 634, Adeyemo Alakija Street, Victoria Island, Lagos (hereinafter called “The Bank”) is bound unto the BUREAU OF PUBLIC ENTERPRISES (hereinafter referred to as “BPE”) ON BEHALF OF the Bidder, a maximum sum of US$1,000,000.00 (One Million US Dollars only) which payment well and truly shall be made to the said BPE on the following conditions:
- If the Bidder withdraws its bid during the period of bid validity specified by the Bidder on its Bid form, or
- If the Bidder, having been notified of the acceptance of its Bid by the BPE during the period of the Bid validity:
a. fails or refuses to execute the Share Sales/Purchase Agreement, as and when required, or
b. fails or refuses to pay the negotiated Bid price in accordance with the terms of sale.
We the Bank undertake to pay BPE the full amount of the Bid Security Bond upon receipt of the written demand, without BPE having to substantiate its demand, provided that in its demand BPE will note that the amount claimed by it is due to it owing to the occurrence of one or both of the two conditions, specifying the occurred condition or conditions and in respect of which we bind ourselves, successors and assigns by these presents.
This Bid Security Bond will remain effective for one hundred and eighty days from the date hereunder and shall become void at the expiration of the tenure stated.
This Bid Security Bond is personal to the BPE and is not assignable.
DATED THIS 26th DAY OF MAY, 2004
It is glaring from Annexure ‘A’ reproduced above that the 1st Respondent agreed to be liable to pay the Appellant the full amount of the Bid Security Bond upon the Appellant satisfying the following conditions:
“1. Presentation of a written demand to the 1st Respondent and
- A notification that the amount claimed is due to it owing to the occurrence of one or both of the conditions specified in the Bid Bond. ”
I am of the firm opinion that the conditions spelt out above must occur within the life span of the Bid Security Bond which is 180 days from the date of its commencement. Annexure A merely requires that the Appellant make a demand within 180 days to the 1st Respondent for the fulfillment of its obligation under the Bond and nothing more.
Once the demand is made and the 1st Respondent refuses or fails or neglects to satisfy its part of the agreement, it shall remain liable even after the expiration of the Bond.
Also attached to the Statement of Claim is Annexure ‘B’, a letter of demand dated 19th July, 2004 by the Appellant to the 1st Respondent. It is reproduced hereunder:
“Bureau of Public Enterprises
1 Osun Crescent, Off Ibrahim Babangida Way
Maitama District, P.M.B. 442, Garki – Abuja, Nigeria
19th July 2004
The managing Director
Assurance Bank
Plot 634, Adeyemo Alakija Street
Victoria Island
Lagos
Dear Sir,
BFI Group Corporation: Bid Bond No. ABNL/BB/04/0300
It would be recalled that the National Council on Privatisation on 14th July, 2004 conducted the financial bids opening at ALSCON. At the bids opening BFI Group Corporation emerged as the winner with a bid price of $410 million. Consequently, upon approval by the NCP BFIGroup was issued a letter as a preferred bidder and advised to pay the mandatory 10% of the winning bid on or before 8th July, 2004.
Furthermore, it would also be recalled that your bank had on 26th May, 2004, issued a bid bond in our favour in the event that BFIGroup Corporation, as the preferred bidder, fails to meet any of the obligations of which the mandatory 10% is inclusive.
Following the failure of BFIGroup Corporation to pay the bid price of $410 Million and to execute the contract of sale in respect of the privatisation of ALSCON and in accordance with the terms of the bid bond ABNL/BB/04/0300 issued by your bank in favour of Bureau of Public Enterprises (BPE) we write to demand from you the sum of $1,000,000.00 (One Million United States Dollars only). This amount represents your obligations to us under the bid bond in the event of failure by BFIGroup Corporation to meet the conditions of the obligations. In view of the above, we hereby demand that your banker’s draft in the sum of $1,000,000 be delivered to BPE on or before Friday 30th July, 2004.
Yours faithfully,
for: Bureau of Public Enterprises
(sgd)
Director-General”
Annexure B shows that the written demand was made on the 19th day of July, 2004. This was about 50 days after the Bond was issued and well within the 180 days before the Bond expired. I had earlier said that all that was required for the Appellant to do under the terms of the Bond was a written demand and this was made timely. It was the subsequent failure of the 1st Respondent to meet up their obligation under the Bond that necessitated the action in the lower Court after the expiration of the Bond.
Thus, the learned trial Judge was in grave error when he held that the Appellant had no cause of action because the Bid Bond had expired at the time the action was commenced. The Bid Bond did not provide for the commencement of action only within 180 days in the event of failure to pay upon demand. The lower Court failed to give effect to the intention of the parties under the Bid Security Bond.
It is trite law that where the language of any instrument are plain and unambiguous, the Court as well as the parties in the case should give it its plain and ordinary meaning and no person will be allowed to introduce extraneous words or meanings in the construction of such document. See Borishade v. N.B.N. Ltd. (2007) 1 NWLR Pt. 1015 page 229; Excel Plastics Industries Ltd. v. FBN (2005) 11 NWLR Pt. 935 page 59 at 84; UBN V. Ozigi (1994) 3 NWLR Pt. 333 page 388.
The trial Court was also in error when it held thus:
“since the parties by their agreement have set 180 days for the lifespan of the bid bond, it is not subject to the time specified generally for contracts under the statute of limitation. ”
No time frame was provided for commencing an action on the Bond but only for demand to be made. However, the only relevant Law that would apply is the Statute of Limitation which allows 12 years for an instrument under seal and 5 years for a simple contract. Therefore the issue of effluxion of time is misplaced.
It is my firm view that in the instant case, a cause of action arose when the Appellant wrote a letter of demand to the 1st Respondent for the fulfillment of its part of the Bond. Therefore, the trial Court was wrong to hold that the expiration of the Bid Bond deprived the Appellant of a cause of action.
It is noteworthy to point out that parties cannot by their own agreement oust the jurisdiction of the Court, save in cases of presence of arbitration clause in the contract agreement or other alternative dispute resolution mechanism.
It is trite that a party, who enters into an agreement of which time is of the essence and refuses to satisfy its own part or drags its feet waiting for time to elapse, cannot hide under the shed of effluxion of time as a justification for not executing its part of the bargain.
This Court in Inyang v. Ebong (2002) NWLR Pt. 751 page 284 at 333-334 per Edozie JCA held as follows:
“It is morally despicable for a person who has benefited from an Agreement to turn around and state that the agreement is null and void. This is in pursuance of the principle of law that should serve public interest and in that regard the Courts have evolved the technique of construction by ‘bonam Partem’. One of the principles used for such construction is that no party should be allowed to benefit from his own wrong. ”
Also, in E. A. Ltd. Industries v. NERFUND (2009) 8 NWLR Pt.1144 page 532 at 592, it was held that:
“It is the duty of every responsible citizen to honour the obligation in an agreement he has voluntarily entered into. Public policy in Nigeria supports the fact that parties should be made to honour obligations entered into voluntarily between themselves”
Consequently, pursuant to Section 15 of the Court of Appeal Act, 2004, I order that the 1st Respondent should fulfill its own part of the agreement under the Bond which is the payment of the sum of $1,000,000 (One Million United States Dollars), the value of the Bid Security Bond to the Appellant.
This Appeal succeeds; there shall be no award as to costs.
Other Citations: (2009)LCN/3393(CA)
