Thomas Aplin & Co. Ltd V. Northern Nigeria Development Corporation (1972)

LawGlobal-Hub Lead Judgment Report

ELIAS, C.J.N.

In the Lagos High Court, two Suits No. LD/237/67 and No. LD/344/67 were consolidated into one. In Suit No. LD/237/67, the plaintiff’s claim from the defendants the sum of 316,134 pounds, being balance of fees due to and payable in respect of services performed by the plaintiffs as managing agents of defendants’ company K. Maroun (Pork Products) Ltd. Under an agreement contained in letters dated 22nd February, 1964, 13th April, 1964 and 28th July, 1964. In Suit No. LD/344/67, the plaintiffs who are the defendants in Suit No. LD/237/67, claim for “an account of all moneys received by the defendants for and on behalf of K. Maroun (Pork Products) Limited at all material times when the defendants acted as managing agents for K. Maroun (Pork Products) Limited a subsidiary of Northern Nigeria Development Corporation and payment over to the plaintiffs of any outstanding moneys not duly accounted for.”

Pleadings were ordered and filed. In due course, both parties asked for and were granted leave to amend their pleadings. The relevant paragraphs of the amended statement of claim in Suit No. LD/237/67 are as follows:-

“1. The plaintiffs are a limited liability company incorporated in Nigeria whilst the defendants are a corporation incorporated under the Development Corporation Law 1955 having power thereunder to appoint agents.

7. By letters dated the 13th April, 1964 and the 28th July, 1964, the defendants appointed the plaintiffs as their managing agents for the said business of K. Maroun (Pork Products) Limited at Apapa on a more permanent basis and at an annual remuneration of 10,300 pounds per annum and upon the other terms set out in exhibits A and B to the affidavit deposed by Leonard David Lucas in support of the particulars of claim herein.
8. The plaintiffs acted as managing agents as aforesaid under the preliminary agreement from the 22nd February, 1964 to the 13th April, 1964 and under the agreement referred to in the preceding paragraph hereof from the 13th April, 1964 until the 22nd August, 1966 during which period a total of 26,084:13:4 pounds became due and payable to them as remuneration from the plaintiffs.”

On the other hand, the relevant paragraphs of the amended statement of defence are as follows:-

1. The defendants admit paragraphs 1, 2, and 7.
2. The defendants will contend at the hearing that the plaintiffs utilised the facilities of K. Maroun (Pork Products) Ltd. in promoting their own business.
3. The defendants will contend that the plaintiffs were in breach of their undertaking.
4. The defendants will contend that the action is not maintainable and should be dismissed.”

The relavant paragraphs of the amended statement of claim in Suit No. LD/344/67 are as follows:-

“3. The defendants failed and neglected to render any or proper accounts of all monies paid and received on behalf of the plaintiffs during the managing period.

4. The plaintiffs will contend at the trial of this action that the defendants during the period aforementioned made use of the properties of Messrs. K. Maroun (Pork Products) Ltd. to run their own business.
5. The plaintiffs will also contend at the trial that apart from making use of the personnel of K. Maroun Ltd. to run their own business, the defendants failed to operate a separate account for the business of the plaintiff’s company.
6. The plaintiffs aver that without any approval from the plaintiffs or its subsidiary i.e. K. Maroun (Pork Products) Ltd. the defendants through their agent i.e. Mr. Elks procured a pharmaceutical shop for K. Maroun (Pork Products) Ltd. at a total cost of 2,557pounds-10s-0d to enable it to engage in the sale of drugs which K. Maroun (Pork Products) Ltd. had no licence to operate.
7. The defendants through their agents bought a generator for 10,160pounds without prior authorisation by or intimation with K. Maroun (P.P.) Ltd. or the plaintiffs when it was not needed and the said generator had to be sold for 6,000 pounds thus incurring a loss of over 4,000 pounds for K. Maroun (P.P.) Ltd.
8. At all material times the manager i.e. Mr. Elks provided for K.

Maroun (P.P.) Ltd. by the defendants was operating several other business concerns for the defendants and using the secretariat facilities of K. Maroun (P.P.) Ltd. without corresponding adjustment for charges incurred.

9. An accountant by the name of Mr. Agwuh provided by the defendants was paid a total of over 1,000 pounds by K. Maroun (P.P.) Ltd. contrary to the terms of the management agency.
10. Mr. Elks the manager used the secretariat of K. Maroun (P.P.) Ltd. for the SAAB agency and stocked SAAB cars for sale on the premises of K. Maroun (P.P.) Ltd., without any corresponding charges credited to the account of K. Maroun (P.P.) Ltd.
11. The plaintiffs will further rely on the provisional agreement dated 20th February, 1964 which spells out in detail the scope of the management agency.
12. The plaintiffs will contend that on the face of the preceding averments in paragraphs 4-10 there had been a partial failure of consideration which should be taken into account in computing what fees should be payable to the defendants.”

For their part, the defendants adopt their amended statement of defence and say as follows:-

“1. That the plaintiffs i.e. Thomas Aplin & Co. Ltd., were in breach of their agency agreement in the manner set out in the particulars already filed.

2. That the accountant provided was an employee of the defendants and not an employee of the plaintiffs, which is a breach of the agency agreement.
3. That the said accountant did not work for the whole period material to the plaintiff’s claim.
4. That the general manager provided by the said plaintiffs was thoroughly incompetent with no knowledge whatsoever of pork and pig production and administration contrary to the import of the agency agreement.
5. That due to the incompetence of the said general manager, K.

Maroun (P.P.) Ltd. i.e. the subsidiary of the said defendant incurred substantial losses and the general manager engaged in extraneous and wasteful ventures at K. Maroun (P.P.) Ltd.’s expense to the detriment of K. Maroun (P.P.) Ltd.

6. The said extraneous wasteful ventures relate to:-

(1) the procurement of a pharmaceutical shop at a total cost of 2,557 pounds:10/- for sale of drugs for which K. Maroun (P.P.) Ltd. had no licence to operate.

(2) the purchase by the said general manager at K. Maroun’s expense of a generator for 10,160 pounds which was later sold for 6,000 pounds thus incurring a loss of 4,160 pounds for the said K. Maroun (P.P.) Ltd.

7. That the said general manager was at all material times operating

other business concerns on the K. Maroun’s premises, e.g. SAAB cars agency and agency for Northern Assurance Co. Ltd., and using the secretariat facilities of K. Maroun.

8. The defendant will rely on the report of the working party set up in 1966 to inquire into the operations and financial position of K. Maroun (P.P.) Ltd.

And the defendant counter-claims that the said sum of 9,950 pounds which the said plaintiff has paid itself as part payment of its fees should be refunded to the defendant for the plaintiff has only partially performed the services contemplated under the agency agreement.”

The admitted facts may, therefore, be summarised as follows: By a contract between the plaintiffs and the defendants, the basis of which is contained in exhibits A and B, the defendants employed the plaintiffs as managing agents under a preliminary agreement from 22nd February, 1964 to 13th April, 1964, and later under a permanent agreement from 13th April, 1964 to 30th September, 1966, during which period a total of 26,084pounds:13:4d was alleged by the plaintiffs to be due to them as remuneration from the defendants at the agreed rate of 10,300 pounds per annum. It is convenient to set out here the relevant portion of the letter of 13th April, 1964 from Thomas Aplin & Co. Ltd. to the Northern Nigeria Development Corporation as follows:

“We wish to refer to the conversation of Messrs. Gibba/Davies/Elks in connection with fees payable to Messrs. Thomas Aplin & Co. Ltd. on their assuming the responsibility of managing agents for the K. Maroun (P.P.) Ltd. Lagos organisation.

We would like to advise that it is the intention of T. Aplin & Co.

Ltd. to provide for the organisation, a general manager and an accountant, and at the same time, extend the operational field of K. Maroun (P.P.) Ltd.

In consideration of these services, our fees will be as follows:-

1. Managerial duties as above mentioned 10,300 pounds per annum. Free furnished accommodation and car allowance for one person
2. Travelling expenses outside Lagos will be charged direct to K. Maroun (P.P.) Ltd. as and when the occasion arises.
3. T. Aplin & Co. Ltd. will assume their duties as from 13th April, 1964, and for ease of accounting it is suggested the fees are payable quarterly.”

The offer was accepted by the defendants in their letter dated 28th July, 1964. On 30th June, 1966, the plaintiffs gave a three months’ notice to the defendants terminating the management agency agreement for Messrs. K. Maroun (Pork Products) Ltd. The evidence of Mr. Lucas, the Director of Thomas Aplin & Co. Ltd., was that, at 30th September, 1966, the sum of 16,134pounds.13.4d was still owing to his company by the defendants who had paid only 9,950 pounds out of the estimated total of 26,084 pounds.13.4d due for the entire period. There was an exchange of correspondence in which the figures were set out. When the defendants failed to pay, the plaintiffs brought an action. It was part of the plaintiff’s case that, in accordance with the management agency agreement, one Mr. Elks and one Mr. Toole were transferred as full time general manager and accountant respectively to Messrs. K. Maroun (Pork Products) Ltd., and that, when Mr. Toole left the country, he was replaced by one Mr. Agwuh. For the purpose of extending the operational field of K. Maroun (Pork Products) Ltd., a butcher’s shop was opened in Lagos with an extension to the retail and the wholesale sides of the business. Whereas Mr. Toole was paid his salary direct by Messrs. Thomas Aplin & Co. Ltd. Mr. Agwuh was first paid by K. Maroun (Pork Products) Ltd. and a refund allegedly made later by Thomas Aplin & Co. Ltd., as per exhibits M and MI. The plaintiffs further submitted that, throughout Mr. Elks’s employment as general manager of K. Maroun, there is no evidence that he was at any time accused of incompetence in the discharge of his duties, and that Thomas Aplin received no money on behalf of K. Maroun during the period covered by their claim for which they did not account. The plaintiffs, therefore, submitted that the counter-claim of the defendants was not maintainable, but that their own claim should be upheld.

The case for the defence is that during the contract period, Messrs. Thomas Aplin & Co. Ltd. utilised the facilities of K. Maroun (Pork Products) Ltd. in promoting their own business, that one of Thomas Aplin’s companies and K. Maroun shared secretariat services, that Messrs.Thomas Aplin & Co. Ltd. embarked on “extraneous and wasteful ventures” consisting in the purchase of pharmaceutical goods and a generator, that certain payments recorded in the statement of account in exhibits G, Gl, and J were made by Messrs. K. Maroun to Thomas Aplin which should refund to the defendants, that the defendants would tender the report of a working party alleged to have been set up by the then Northern Nigerian Government to inquire into the operations and financial position of K. Maroun (Pork Products) Ltd., to substantiate the allegation that Mr. Elks engaged himself in activities outside the scope of his employment and that he made Jadmissions to this effect to the working party. The learned trial judge held that the report of the working party was inadmissible and that the defendants might have proceeded by way of notice to admit any specific fact or facts or, if such notice were ignored, to administer interrogatories. The learned trial judge, after reviewing the evidence, came to the following conclusion:-

“I have given due consideration to the submissions of learned counsel for the parties and I am satisfied that in Suit No. LD/237/67 the plaintiffs Messrs. Thomas Aplin & Co. Ltd. have established their undoubted right to be paid the balance of 16,134 pounds:13:4d in respect of services performed by them for the defendant as managing agents of Messrs. K. Maroun (Pork Products) Ltd. The counter-claim and the, action for accounts in Suit No. LD/344/67 are not proved and they are accordingly dismissed.”

Against this decision, the present appeal had been brought on the following grounds which we permitted to be substituted for the two original grounds which were accordingly struck out:-

“1. The learned trial judge misdirected himself on the facts and erred in law in upholding the plaintiffs/respondents’ claim for balance of fees when it was contended by the defendants that the terms of the management agency being whole and indivisible partial performance of the management agency is fatal to the plaintiffs/respondents’ claim for entitlement to payment of fees.

Particulars of error of law

The plaintiffs failed to (i) expand the operational field of K. Maroun ” (Pork Products) Limited, and (ii) to provide an accountant for the company as provided for under the terms of the management agency agreement i.e. exhibits D and E.

2. The learned trial judge misdirected himself on the facts and erred in law in dismissing the appellants’ counter-claim when (i) there was no positive evidence justifying or explaining away the withdrawals of 28,301 pounds (unjust enrichment) by the plaintiffs/respondents from the accounts of K. Maroun (Pork Products) Limited during the material period of the management agency and (ii) the plaintiffs/respondents did not fully perform their entire obligations under the management agency.

Particulars of error in law

The plaintiffs/respondents did not expand the operational field of K.Maroun (Pork Products) Limited at the material time during which they paid themselves the sum of 9,950 pounds as fees in the first year as provided for under the terms of the management agency.

3. The judgment is against the weight of evidence.”

Chief Sowemimo, learned counself for the appellants, in arguing ground 1, submitted that according to exhibit D (the letter of 13th April, 1964 from Thomas Aplin), three co-ordinate obligations were assumed by the respondents: (a) to provide a general manager, (b) to provide an accountant, and (c) to expand the operational field of K. Maroun (Pork Products) Ltd.; and that a lump sum of 10,300 pounds per annum was agreed to be paid quarterly for a complete rendering of all the three services together. He contended, therefore, that the three services under the management agency contract are indivisible and constitute an entire contract, citing in support the following passage from “Chitty on Contracts”, 23rd Edn., page 1148, paragraphs 1147 (and 1148):

“Entire and divisible contracts. In an entire contract, complete performance by one party is a condition precedent to the liability of the other; in such a contract the consideration is usually a lump sum which is payable only upon complete performance by the other party. The opposite of an entire contract is a divisible contract, which is separable into parts, so that different parts of the consideration may be assigned to severable parts of the performance, e.g. an agreement for paymant pro rata. It is a question of construction of the contract whether it is entire or divisible, but in the reported cases (none of which is of recent date) the courts have tended to the view that in every lump sum contract there is an implied term that no part of the price is to be recovered without complete performance. In most modern contracts of any size, however, payments by instalments are specified, so that the law on entire contracts is not often relevant to contracts nowadays.” (Para. 1148 deals with Partial Performance of entire contract).

It is clear law that part performance of an entire contract does not entitle the performer to any payment. Learned counsel submitted that, as the respondents had not extended the operational field of K. Maroun and had also failed to provide an accountant for the period covered by the agreement since the departure of Mr. Toole, the respondents were not entitled to any payment. He referred to the evidence of Mr. Lucas (defence witness 1), who, under cross-examination, deposed that the extension contemplated in the management agency contract meant the opening of branches outside Lagos, and pointed out that defence witness 1 stated that he did not know whether such branches were ever opened throughout the contract period. Similarly, Mr. Houman (defence witness 2) gave evidence that, far from the operational field being extended, the existing branches in Lagos and Ibadan were in fact closed down. We note that, on this point, there was neither a re-examination of (defence witness 2) nor was he contradicted in evidence by the plaintiffs. Learned counsel submitted that the learned trial judge took a restrictive view of the phrase “extending the operational field of K. Maroun” when he said:-

“The alleged wasteful ventures consisted of efforts made by the general manager, Mr. Elks, at extending the operational fields of K. Maroun (Pork Products) for which he was given a free hand. He had, in this respect, purchased pharmaceutical goods and a generator. In doing this, he would appear to be exercising the wide discretion which the terms of his employment conferred on him.”

Learned counsel pointed out that, by buying pharmaceutical goods and a generator, the plaintiffs were engaging in business of their own and that this constituted “wasteful-ventures” not related to what they were employed to do; also that the opening of a butcher’s shop in Lagos could not amount to extending the operational field since Mr. Lucas himself had stated in evidence that such an extension must be outside Lagos, and that he should be held to it. Indeed, the plaintiffs did not extend by opening branches either in Lagos or outside it. According to Mr. Lucas, the plaintiffs sold pork products and ran super-markets. If this were so, learned counsel submitted, buying pharmaceutical products and a generator would appear to have nothing to do with extending the operational field, and that there was no evidence that the shop dealt with pork and pork products only. Therefore, the learned trial judge’s view that the management contract gave the general manager wide discretion should surely have been confined to saying that the latter must exercise his discretion only within the terms of the contract.

During the two year contract period, K. Maroun, under Mr. Elks’s management, was stated in Mr. Lucas’ evidence to have sustained losses amounting to more than 200,000 pounds, apart from the purchase of a generator at 10,610 pounds. Chief Sowemimo also submitted that the obligation to provide an accountant during the contract period was broken by Thomas Aplin when the latter was nominated and paid by the respondents; indeed, there was uncontradicted evidence that Mr. Agwuh was in fact an employee of K. Maroun and continued as a book keeper in the latter’s service after the termination of the agency agreement. Learned counsel accordingly submitted that the plaintiffs, having failed both to extend the operational field of the business in question and to provide the services of a competent accountant during the contract period, had broken two of the three conditions of the management agency contract and are, therefore, not entitled to any salary.

With regard to ground 2, which related to the appellants counterclaim for 28,301 taken from the account of K. Maroun and paid to Thomas Aplin, vide exhibits S-S37 (cheques), Chief Sowemimo submitted that three cheques S30 for 100 pounds, S36 for 200 pounds and S37 for 174 pounds:17:9d were issued in favour of Mr. Elks, the General Manager and that the total of 474:17:9 pounds, had to be deducted from the 28,301 pounds, leaving a balance of 327,82643. The remaining cheques in the series S-S37 were issued in favour of Thomas Aplin and paid into their account. Thomas Aplin, submitted learned counsel, is not, therefore, entitled to keep the balance of 27,826 pounds:14:3. It is his contention that the learned trial judge was in error when he dismissed the counter-claim and the action for account without giving any reason for so doing: Lloyd v. Harper (1880) 16 Ch.D. 290, at page 321. We observed to him, however, that exhibit J was tendered in the court below to prove how these amounts covered by S-S37 were expended and, when learned counsel attempted to dismiss exhibit J as a mere copy, we stopped him since he did not object to its admission in the court below.

Under the omnibus ground, learned counsel for the appellants submitted that the learned trial judge was wrong “The auditors were not called as witnesses to support the extravagant assertions he made during the hearing. A loquacious and flamboyant witness who could not disguise his blind hatred for the managing agents, Mr. Houman was, in my view, successfully cross-examined as to bias; his evidence turned out in the main to be [a] tissue of unnecessary lies.”

Learned counsel pointed out that there was no evidence that Mr. Houman (defence witness 2) was ever shaken under cross-examination; and he referred to this passage from Ayinla v. Sapara [1968] 2 All N.L.R. 130, at page 133:-

“I am of the view that this appeal must succeed on the ground of appeal which complains that the learned President erred in law in failing to consider the evidence adequately, particularly the documentary exhibits. Nowhere in his judgment did the learned President advert his mind to the statement of the plaintiff/respondent to the effect that 40 pounds was paid only once. If it was paid once, (and he put forward exhibit B dated 3rd October, 1961 as the receipt for that once, how can that statement be reconciled with his evidence in exhibit C, wherein he admitted that the 40 pounds had been paid in 1957. If the lower court had realised the full effect of this contradiction, the court would have been compelled to treat the veracity of the plaintiff with greatest doubt. A careful consideration of the evidence belies the plaintiff’s case and lends full weight to the defendant’s version. The lower court’s reasons for rejecting the defence are not cogent.

In Onassis and Anor. v. Vergottis, Times Law Report of 23rd January, 1968 Lord Denning, Master of the Rolls, delivering his opinion in the Court of Appeal had this to say about the approach to evidence:-

‘The judge was in the best position to decide on the parties’ demeanour, but demeanour was not the touchstone, for a man might look shifty and spiteful, and yet be telling the truth, and his spitefulness might come from anger and not from lies. Demeanour of the witness had to be tested by the documents and by the probabilities in the case … There was no evidence, and there was also the feeling that the judge relied too much on the demeanour of the witnesses before him without taking sufficiently into account contemporaneous documents.’

In the case now before me on appeal, the lower court had, in my mind, failed to balance the evidence properly against the documents and thereby failed to reach a correct verdict. The evidence preponderated in the defendant/appellant’s favour, and the appeal will therefore be allowed on that ground.”

Learned counsel further submitted that all the exhibits J, G, G1, H, and M1 which were tendered in the court below were not supported by vouchers, receipts, invoices or any documents whatsoever and there was no evidence as to the sources of the information proferred by Mr. Lucas and Mr. Okulaja, respondents’ witnesses. It was his submission that, in so far as the judge’s mind was affected by these documents, he was wrong to have placed any reliance on them.

Mr. Coker, learned counsel for the respondents, submitted that learned counsel for the appellants should not have raised the issue of documents not being supported by vouchers on this appeal, and that he should have raised the point in the court below. We think that Chief Sowemimo’s argument in this respect was merely to attack the weight to be attached to the evidence based on these documents without supporting vouchers, and that he was not concerned with the issue of their admissibility. Mr. Coker’s main contention in this appeal would appear to be that the management agency contract is a divisible one because, according to him, the management agreement does not stipulate the period during which the agreement should run.

He submitted that a contract is indivisible only where (a) either the consideration is one and entire, or (b) it is so stated in the document forming the basis of the contract, or (c) it can be gathered by necessary inference that no consideration is to pass from one party to the other until the whole of the obligation of the other party has been discharged. But, where no such intention can be gathered, and the contract resolves itself into a number of considerations for a number of services which do not form one complete whole, the contract is divisible. From this clear statement of principle, learned counsel then proceeded to refer to Taylor v. Laird (I, H & N) p. 256 as an illustration of a case where an engagement of a captain of a ship exploring the River Niger for an uncertain period at a stated payment per month was held divisible into a number of monthly contracts. On the basis of this, he submitted that the mangement agency contract in the present case is a quarterly contract since it was to be paid for quarterly, and that the respondents are entitled to be paid for at least the part of the obligation proved to have been carried out by them.

We are of the view that this submission is untenable because we think that the three obligations stipulated in exhibit D are solidary and not divisible obligations, and that payment should be made only if they were all fulfilled together. Learned counsel also contended that there is clear evidence admitted by the trial judge that Thomas Aplin did expand the operational field of K. Maroun (Pork Products) Ltd., by instancing the opening of a butcher’s shop and the purchase of pharmaceuticals and the generator. He also contended that the appellants’ questioning of the qualifications and the employment of Mr. Agwuh as an accountant had been raised in the court below only after the plaintiffs had closed their case. He, however, conceded that, even at that later stage, the plaintiffs should have sought leave of the court to prove that Mr. Agwuh was not a qualified accountant, especially as there was also a counter-claim in the suit. Mr. Coker further submitted that Thomas Aplin did render an account in respect of the payments made by K. Maroun (Pork Products) Ltd. (for which see exhibits G, H, J, and K), and that this is not a case of an unjustified enrichment on the part of the plaintiffs. We are unable to agree with learned counsel’s contention that the nature of an action for an account is one for an amount had and received on behalf of the person seeking the account and that there must be a formal demand before an action will lie. For this, he cited Freeman v. Jeffries (1869) W.N. 123. We think that this case deals with a claim in quasi-contract, not one under a contract, such as it is in the present one.

We are of the view that there is merit in this appeal from the judgment of the High Court of Lagos State delivered on 19th January, 1970. We will allow the appeal, set aside the judgment for the sum of 16,134 pounds-13s-4d against the Northern Nigeria Development Corporation, including the order as to costs and out of pocket expenses. In its place, we enter judgment for the Northern Nigeria Development Corporation for the sum of 27,825 pounds-14s-3d, being the balance of the amount drawn from the account of Messrs. K. Maroun (Pork Products) Ltd. and paid to the respondents, plus 9,950 pounds being the refund of the part payment of the fees which the respondents had already received from Messrs. K. Maroun (Pork Products) Ltd. during the contract period. We award to the appellants the sum of 150 pounds as costs in this appeal.

---

SC.205/1970