Breach Of Contract: Appeal Court Awards 10m Damages Against Unity Bank, Heritage Bank

The Court of Appeal, Lagos Division has affirmed the judgement
of Justice Oyindamola Ogala of the Lagos high court, which ordered
Unity Bank Plc and Heritage Bank Plc to pay a firm, Shield
Petroleum Nigeria Limited the sum of N10 million as damages.

Justice Ogala had in her jdgement delivered on January 19, 2018,
in a suit filed by Shield Petroleum Nigeria Limited against Unity
Bank and Heritage bank ordered the two banks to pay the claimants
N10 million as general damages for breach of contract.

Dissatisfied, Unity bank lodged an appeal no-CA/L/855/2018 and
urged the court to determine whether the court has jurisdiction to
entertain the suit and whether there was a valid and enforceable
contract.

However, the Appellate Court in its lead judgement delivered by
Justice E. O William-Dawodu dismissed the appeal and affirmed the
judgement of the lower court in its entirety.
Other members of the panel, namely Justice Haruna Simon Tsammani
and Justice Mahmoud Bayero consented to the judgement.

Justice William-Dawodu held that the lower court had
jurisdiction to entertain the suit in Lagos even though the subject
in dispute is located in Oghara, Delta state.
On whether there is a valid and enforceable contract between Shield
Petroleum Nigeria Limited and the appellants (Unity Bank and
Heritage Bank), the court held that there was a valid contract and
that failure to keep to the agreed term was a breach.

“Therefore, there is a valid and enforceable contract between
the first respondent and the appellant acting for the appellant and
the third respondent. Having found that there was indeed a valid
contract between the said parties, the pertinent question is
whether or not there was a breach of it. Failure to keep to the
agreed terms of a contract is a breach, where the party in breach
acted contrary to the terms agreed without lawful excuse, either by
the non-performance or wrongful repudiation of the contract’’.

The gist of what culminated into the appeal as stated in the
Notice of Appeal is that, Unity Bank and Heritage bank granted
loans to Bitumen Marketing Company Limited (BMC) in respect of its
bitumen Tank Farm in Oghara, Delta State.

However, Shield Petroleum Nigeria Limited made an offer of N200
million initially to them for the sale of the tank farm which was
increased to N220 million and the appellant (Unity Bank) and the
Heritage Bank accepted it by their letter dated August 21,
2007.

Through a letter dated November 6, 2007, the Unity Bank for
itself as well as the 3rd Respondent (Heritage bank) requested
payment of the agreed sum from Shield Petroleum Nigeria Limited
(1st Respondent).

By January 29, 2008, the originals of the bank drafts were sent
and received by one Mr. Abiodun Shode, of the Commercial Department
of the Appellant.

The Appellant and the 3rd Respondent went ahead to collect the
sum of N230, 000,000.00 from the 4th Respondent (Ontario Storage
Terminals Limited) in February 2008 as payment for the Tank Farm in
spite of the payment made by the 1st and 2nd Respondents.

They claim they were unable to conclude the contract with the
first and second Respondents due to the latter’s late payment of
the purchase price and therefore, there was frustration of the
contract.

In spite of repeated demands by Shield Petroleum Nigeria Limited
for the possession of the tank farm and title thereto, the
Appellant and 3rd Respondent refused but maintained that they had
sold the tank farm to the 4th Respondent and had made efforts to
return the bank drafts to the 1st and 2nd Respondents.

The Court of Appeal, Lagos Division has affirmed the judgement
of Justice Oyindamola Ogala of the Lagos high court, which ordered
Unity Bank Plc and Heritage Bank Plc to pay a firm, Shield
Petroleum Nigeria Limited the sum of N10 million as damages.

Justice Ogala had in her jdgement delivered on January 19, 2018,
in a suit filed by Shield Petroleum Nigeria Limited against Unity
Bank and Heritage bank ordered the two banks to pay the claimants
N10 million as general damages for breach of contract.

Dissatisfied, Unity bank lodged an appeal no-CA/L/855/2018 and
urged the court to determine whether the court has jurisdiction to
entertain the suit and whether there was a valid and enforceable
contract.

However, the Appellate Court in its lead judgement delivered by
Justice E. O William-Dawodu dismissed the appeal and affirmed the
judgement of the lower court in its entirety.
Other members of the panel, namely Justice Haruna Simon Tsammani
and Justice Mahmoud Bayero consented to the judgement.

Justice William-Dawodu held that the lower court had
jurisdiction to entertain the suit in Lagos even though the subject
in dispute is located in Oghara, Delta state.
On whether there is a valid and enforceable contract between Shield
Petroleum Nigeria Limited and the appellants (Unity Bank and
Heritage Bank), the court held that there was a valid contract and
that failure to keep to the agreed term was a breach.

“Therefore, there is a valid and enforceable contract between
the first respondent and the appellant acting for the appellant and
the third respondent. Having found that there was indeed a valid
contract between the said parties, the pertinent question is
whether or not there was a breach of it. Failure to keep to the
agreed terms of a contract is a breach, where the party in breach
acted contrary to the terms agreed without lawful excuse, either by
the non-performance or wrongful repudiation of the contract’’.

The gist of what culminated into the appeal as stated in the
Notice of Appeal is that, Unity Bank and Heritage bank granted
loans to Bitumen Marketing Company Limited (BMC) in respect of its
bitumen Tank Farm in Oghara, Delta State.

However, Shield Petroleum Nigeria Limited made an offer of N200
million initially to them for the sale of the tank farm which was
increased to N220 million and the appellant (Unity Bank) and the
Heritage Bank accepted it by their letter dated August 21,
2007.

Through a letter dated November 6, 2007, the Unity Bank for
itself as well as the 3rd Respondent (Heritage bank) requested
payment of the agreed sum from Shield Petroleum Nigeria Limited
(1st Respondent).

By January 29, 2008, the originals of the bank drafts were sent
and received by one Mr. Abiodun Shode, of the Commercial Department
of the Appellant.

The Appellant and the 3rd Respondent went ahead to collect the
sum of N230, 000,000.00 from the 4th Respondent (Ontario Storage
Terminals Limited) in February 2008 as payment for the Tank Farm in
spite of the payment made by the 1st and 2nd Respondents.

They claim they were unable to conclude the contract with the
first and second Respondents due to the latter’s late payment of
the purchase price and therefore, there was frustration of the
contract.

In spite of repeated demands by Shield Petroleum Nigeria Limited
for the possession of the tank farm and title thereto, the
Appellant and 3rd Respondent refused but maintained that they had
sold the tank farm to the 4th Respondent and had made efforts to
return the bank drafts to the 1st and 2nd Respondents.