A.g. Ferrero & Company Ltd. V. Henkel Chemicals Nigeria Ltd (2011)
LAWGLOBAL HUB Lead Judgment Report
F. TABAI, J.S.C.
The Plaintiff was the Respondent at the Court below and the Appellant herein. The Defendant was the Appellant at the Court below and the Respondent herein. They would, in this judgment be simply referred to as the Appellant and the Respondent respectively.
Sometime in the year 1987, the parties entered into a contract under which the Appellant was to construct for the Respondent a Soap and Detergent factory as well as office Building at the Kudenda Industrial Layout, Kaduna at the contract sum of N3,854,938.10 (Three Million, Eight Hundred and Fifty Four Thousand Nine Hundred and Thirty Eight Naira, Ten Kobo). It was part of the agreement that the Respondent would pay to the Appellant such part of the contract sum raised in a certificate of payment issued by Architects appointed by the Respondent. It was also part of the agreement that the sum stated in any certificate of payment fell due and payable within 21 days of the issuance of the certificate. The sum which became due for payment under the Respondent’s Architects Certificate No. 18 dated 07/12/1989 was N449,474.45. The Respondent however failed to pay the aforesaid sum as agreed despite demands by the Appellant.
In reaction, the Appellant took out a summons, claiming in paragraph 13 of its Amended Statement of Claim the following relief:
(a) The Plaintiff claims against the Defendant the sum of N449,474.45 (Four Hundred and Forty Nine Thousand, Four Hundred and Seventy Four Naira, Forty Five Kobo) only being the sum outstanding against the Defendant in favour of the Plaintiff on evaluation Certificate No. 18 issued by the Defendant’s Architects on the 7th December, 1989;
(b) Interest on the outstanding sum herein above at the minimum rate of 25% per annum from the date of the default by the Defendant to effect payment according to contract i.e. from 29th day of December, 1989 till judgment in this suit;
(c) Interest at the rate of 10% per annum on the date of judgment until the judgment debt from the date of judgment until the judgment is fully and finally settled by the Defendant.
The Respondent as Defendant filed its Statement of Defence and Counter-Claim. Only one witness testified for the plaintiff’s case. There was no evidence for the defence. In part of the judgment, the learned trial Judge at page 149 of the record spoke of consequential damages as follows:
“The 4th consideration is as it relates to consequential damages. It is my considered opinion that the non-payment of the amounts due since 1989 has resulted in the loss of savings and profits that might have flowed therefrom. This fact I believe is reason enough for the Plaintiff to seek for interest on the said debt in default as consequential damages.”
In the concluding paragraphs of the said judgment, the learned trial Judge granted three reliefs the first two of which run as follows:
“(i) The Defendant Henkel Chemicals Limited shall pay the Plaintiff A. G. Ferrero & Co. Limited the sum of N449,474.45k (Four Hundred and Forty Nine Thousand, Four Hundred and Seventy Four Naira, Forty Five Kobo) only being the sum outstanding against the Defendant in favour of the plaintiff on valuation Certificate No. 18 issued by the Defendant’s Architects on 7th December, 1999.
“2 Interest is awarded the Plaintiff against the Defendant on the outstanding sum here above at the rate of 25% per annum from December 29th, 1989 to today 16/06/2000.”
The Respondent was aggrieved by the said judgment and thus preceded an appeal to the Court below. In its judgment on the 20th of June, 2002, the appeal was allowed. The Court at page 255 of the record concluded:
“The appeal therefore succeeds and it is allowed. The award of pre-judgment interest of 25% on the judgment debt of N449,474.45 from 29th December, 1989 to the date of judgment which is 16th June, 2000 is without merit and is set aside.”
The Appellant was aggrieved by the decision and has thus come on appeal to this court through its Notice of Appeal filed on the 15th of August, 2002. And the parties have, through their counsel, filed and exchanged their briefs of argument. The Appellant’s brief dated the 10th of May, 2010 was prepared by Ademola Adeniji. It was filed on the was of May 2010, but deemed properly file on the 2nd of June, 2010. The brief of the Respondent was prepared by P. Y. Garuba and was file on the 27th of July, 2010.
In the Appellant’s brief Mr. Ademola Adeniji formulated two issues which he couched as follows:
“1. Whether considering the pleadings and the evidence before the trial court, particularly the unchallenged and uncontroverted testimony of the PW1 the court below could and should have extended the scope of the doctrine of the equity beyond instances where there exist fiduciary relationship between the parties and thus sustain or reduce the pre-judgment interest awarded by the trial court.
- Whether the Court of Appeal was not in error which has occasioned a miscarriage of justice when it suo motu raised and decided the issue of non-payment of filing fees for the claim and awarded pre-judgment interest without calling on the parties before it, to address it on same.”
In the Respondent’s brief, however, P. Y. Garuba formulated a single issue which is:-
“Whether the Court of Appeal was right in setting aside the trial court’s judgment awarding a pre-judgment interest rate of 25% per annum on the outstanding judgment sum of N449, 474.45 from December 29th, 1999 to June 16, 2000.”
First of all, I want to say, with respect, that the Appellant’s issue one is hardly comprehensible. In my view the single issue formulated by learned counsel for the Respondent adequately determines the appeal and I should therefore adopt it in its entirely.
On this single issue the substance of the argument of learned counsel for the Appellant is as follows:- It was counsel’s submission that although there is no provision for pre-judgment interest of 25% in the agreement Exhibit 1 and notwithstanding, the absence of any statutory provision, trade usage or custom or the existence of any Fiduciary relationship between the parties, the court below ought to have invoked the doctrine of equity to sustain the trial court’s award of 25% pre-judgment interest on the authorities of ADEYEMI Vs LAN & BAKER (NIG) LTD (2000) 7 NWLR (part 663) 33, NIGERIA GENERAL SUPERITENDENCE CO. LTD Vs THE, NIGERIAN PORTS AUTHORITY (1990) 1 NWLR (part 129) 741 and EKWUNIFE Vs WAYNE (WEST AFRICA) LTD (1989) 5 NWLR (part 122) 422.
Learned counsel referred to paragraph 13 (b) of the Amended Statement of Claim wherein the 25% interest is pleaded, the evidence of the PW1 at page 124 of the record and the fact that no evidence was led by the Respondent in support of its Statement of Defence and submitted that the trial court rightly acted on the unchallenged evidence of the Appellant on the interest claimed and awarded same. He relied once more on EKWUMIFE’s case (supra). Learned referred to the chequered history of the case i.e. the fact that this action was instituted nearly two years after the payment under certificate No.18 fell due and the fact that the action lasted about 9 years at the High Court before judgment and submitted that the award of the pre-judgment interest ought to be sustained. Learned counsel further relied on A. B. KEMP LIMITED Vs TOLLAND (1956) 2 Lloyd’s List Law Report 681; HARBUTT’S PLASTICINE LIMITED Vs WAYNE TANK AND PUMP CORPORATION LIMITED (1970) 1 Q B. 447 at 468. Learned counsel urged finally that the appeal be allowed either by sustaining the 25% prejudgment interest or in the alternative reduces the percentage to what this Court considers appropriate.
On his Part, P. Y. Garuba, learned counsel for the Respondent, proffered the following arguments in the Respondent’s brief. He referred to the contract agreement Exhibit 1 which, he argued, is the plank upon which the trial Court based its judgment and award of the 25% prejudgment interest. There is no provision therein for the payment of a retroactive monetary penalty by the Respondent in the event of a delayed payment. Learned counsel argued. It was counsel’s further submission that the Appellant claimed only for the outstanding balance of N449,474.45 and that, he contended, was in tandem not only with the contract agreement but also with Order 39 Rule 7 of the Kaduna State High Court (Civil Procedure) Rules.
Learned counsel further pointed out that the claim for 25% interest per annum was only introduced in the Amended Statement of Claim and argued that the amended claim was in contradiction of the terms, language and spirit of Exhibit 1 by which terms alone the parties were bound. On the principles of interpretation of documents such as Exhibit 1, counsel referred to FORTUME INTERNATIONAL BANK PLC VS. PEGASUS TRADING OFFICE (GMBH) & 2 OTHERS (2004) 1 SCNJ 292 at 303 and Section 132 (1) of the Evidence Act. It was further submitted that the claim of the 25% interest is not traceable to any custom cum mercantile usage and/or statute and was therefore merely speculate. Reliance was placed on HIMMA MERCHANTS LTD Vs ALHAJI INUWA ALIYU (1994) 6 SCNJ (part 1) 87 at 94, UNION BANK OF NIGERIA LTD Vs PROF. A. O. OZIGI (1994) 3 SCNJ 42 at 56. It was counsel’s further submission that cases are decided on proof by admissible and credible evidence and that evidence though not challenged or controverted can still be disregarded for lack of substance. For this submission, learned counsel relied on FRANCIS ADESEGUN KATTO Vs CENTRAL BANK OF NIGERIA (1991) 12 SCNJ I at 15; NEKA BBB MANUFACTURING CO. LTD Vs A.C.B. LTD (2004) 1 SCNJ 193 at 212. Counsel further argued that a claim not proved by evidence but awarded by a trial court should be set aside by an appellate court. Counsel relied on XTOUDUS SERVICES NIGERIA LTD & ANOR Vs. TAISEI (WA) LTD & ANOR (2006) 6 SCNJ 300 at 316. It was further submitted that the cases of GATA Vs PAULOSA (NIG) LTD (1998) 3 NWLR (part 543) 574 at 582 and IVEGHOR Vs BAZUAYE (1979) 6 SCNJ 235 at 240 relied upon by the trial court to award the 25% pre-judgment interest are totally at reliance with the instant case. He submitted further that interest claimed must be proved as one arising from the contract equity or mercantile custom. He relied on TEXACO OVERSEAS LTD Vs PEDMAR (NIG) LTD (2002) 7 SCNJ 358 at 373. The duty of a court, he argued, is to protect the contractual right of the parties in the agreed contract. He relied on IREME THOMAS Vs. TIMOTHY OMOTAYO OLUFOSOYE (1986) 1 NWLR (part 19) 669. In conclusion, learned counsel urged that the appeal be dismissed.
The facts of this case are not in dispute. The parties entered into a contract agreement some of which terms have already paraphrased above. It was part of the agreement that the sum contained in any certificate of payment issued by the Defendant/Respondent to the Plaintiff/Appellant fell due for payment within 21 days of the issuance of such certificate. It was however not a term in the agreement that in event of default of payment by the Respondent as stipulated it would be liable to pay, in addition 25% of the sum contained in the certificate issued by Architects appointed by it. The sum which fell due for payment as contained in the Respondent’s Architects Certificate No. 18 was N449,474.45. The Respondent defaulted in paying the said sum as agreed. The Appellant was now sued in this action claiming, in addition 25% of the above stated sum in certificate No. 18. The trial court granted the claim including the 25% which it described as consequential damages. I have earlier in this judgment reproduced part of its reasoning and conclusion.
The Court below however, reversed the decision of the trial court on this issue of pre-judgment interest and set same aside. In its judgment, the court partly reasoned and concluded as follows:
“There is equally no material before the court to infer that compensatory award of interest on the claim outstanding beyond 21 days of receipt of valuation Certificate was within the contemplation of the parties. In the absence to the effect that in the event of a breach or default on the payment of valuation certificate, the defaulting party would be liable to interest on the outstanding sum, in any respectful view, the claim is not mode out. As a party cannot unilaterally impose a term, of contract on the other, the parties to the agreement must be ad idem on a term and condition of the contract before it becomes enforceable. The right to interest is equally not established without reference to a fiduciary relation, trade practice or custom or mercantile usage or statute providing for such interest. There is therefore no justification for the award of interest on the judgment debt from 29th December, 1989 to the date of judgment on 16th June, 2000…” (See pages 252 -253 of the record).
On this same issue of pre-judgment interest, the court below concluded thus:-
“In the circumstances of this appeal, learned trial Judge wrongly awarded pre-judgment interest. I am encouraged in this view by the Supreme Court decision in the case of REUBEN N. A. EKWUNIFE Vs WAYNE (WEST AFRICA) LTD (1989) 5 NWLR (part 122) 422, 445 cited in the Respondent’s brief that:-
“Interest may be claimed as of right where it was contemplated by the agreement between the parties, or under a mercantile custom or under a principle of equity such as breach of Judiciary relationship”
The Court below referred to a number of other authorities. On this sole issue of pre-judgment interest, learned counsel for the parties cited a number of authorities including EKWUNIFE’s case. I have read the authorities and there is no doubt that NIGERIAN GENERAL SUPERINTENDENCE CO. LTD Vs NIGERIA PORTS AUTHORITY (supra) and ADEYEMI Vs LAN & BAKER (NIG) LTD (supra) cited by the Appellant were decided on the principle that in purely commercial transactions, a party who holds on to the money of another for a long time without any justification and thus deprives that other of the use of such funds for the period should be liable to pay compensation by way of interests. NIGERIA GENERAL SUPERINTENDENCE CO. LTD Vs. NIGERIA PORTS AUTHORITY (supra) went a step further to decide that even where interest is not claimed in the writ, the court can, in appropriate cases, award interest in the form of consequential order.
The question now is whether the principle in these cases adequately applies to the facts and circumstances of this case. The principle in the two cases pertains to normal commercial transactions without reference to any particular agreement, oral or documentary, in contradistinction to the instant case wherein the parties agreed to and are bound by a written contractual agreement. Can any of the parties be at liberty to read into such a written contract a term which is not embodied in it I am inclined to answer that question in the negative. There is no provision, express or implied, in Exhibit 1, the contract agreement, leading to the inference that in the event of the Respondent’s default in paying the sum contained in a certificate of payment within the stipulated time, it would be liable to pay interest on the sum.
As the court below rightly pointed out at page 249 of the record, if the parties wished the payment of interest in the event of a default in making any payment a term of the contract, they would very easily have inserted such a provision in the contract. In the absence of any specific provision for the payment of interest in the contract agreement, the court cannot award interest. In the circumstances of this case awarding interest, as the trial court did, was an unwarranted interference with the sanctity of the contract and cannot therefore be allowed. The parties are bound by the clear provisions of the contract and the court is bound to give effect to same. On sanctity of contract and the bindingness on the parties thereto see CHUKWUMAH Vs SHELE PETROLEUM DEV. CO. (1993) 4 NWLR (part 289) 512; UNION BANK OF NIGERIA Vs. PROF. ALBERT OJO OZIGI (1994) 3 NWLR (part 333) 385; ALLIED TRADING CO. LTD Vs G. B. N. LINE (1985) 2 NWLR (part 5) 74.
On the whole, it is my view and I hold that the payment of interest, let alone 25% interest was not within the contemplation of the parties and it was therefore wrong for the trial court to grant same. In the circumstances, the court below was right to set same aside. The result is that, this appeal fails and it is accordingly dismissed. The judgment of the court below be and is hereby affirmed.
I make no orders as to costs.
SC.160/2003
