3 Fatal Errors: Supreme Court awards N25 Million Judgment against MTN – Lessons

Summary of Facts

MTN (Nig.) Communications Ltd. v. Corporate Communications Inv. Ltd. [2019] 9 NWLR (Pt. 1678) 427; (2019) LPELR-47042(SC).

MTN (“the Appellant”) entered into a Trade Agreement (Exhibit A) with Corporate Communications Inv. Ltd. (“the Respondent”) who is one of MTN’s trade partners. The Agreement was drafted by MTN and sent to the Respondent for its signatures. The Respondent signed but MTN did not, and kept it. Parties however transacted on the basis of the contract. MTN thereafter terminated the Agreement without giving the required notice, relying on the relevant clause in the Agreement. The Respondent (through its Counsel) challenged the contract termination and requested for amicable resolution. MTN was unmoved. It gave effect to the termination by rejecting subsequent orders placed by the Respondent for MTN’s products on account of the termination letter (Exhibit B). It further withdrew 27 SIM registration kits assigned to the Respondent. Aggrieved, the Respondent sued MTN claiming damages for breach of contract. The Respondent pleaded that in compliance with the Agreements between the parties, it had incurred expenses in procuring facilities and equipment which were of no more use to it, in view of the purported termination of the contract. The Respondent pleaded that the abrupt cancellation of orders without a formal and valid termination of their Agreement has caused it huge financial loss. The trial Court found for the Respondent and awarded N25 Million as damages and costs of N20,000. MTN’s appeal up to the Supreme Court was roundly dismissed.

The Errors

Improperly signed Statement of Defence

The Court agreed that the Statement of Defence signed by Counsel to MTN was defective because it did not disclose the name of the legal practitioner who signed it “For: G. Akitoye, Esq.” The trial Court found this defective as costly, in line with established principles on the point and held the Statement of Defence to be incompetent. The Court also held that the evidence led in support of it was of no moment. The Court of Appeal and the Supreme Court held this finding.

Interestingly, the learned trial Judge, after acknowledging the incompetence of the Statement of Defence, held that: “Whether this case is considered with or without the Statement of Defence and evidence of DW1 [MTN’s Witness], I am of the view that the Defendant [MTN] has breached the terms of Exhibit A [the Trade Agreement] and the Claimant suffered loss as a result of the breach.”

Stephen Legal advises that lawyers must take the issue of proper execution of processes more seriously.

Unlawful contract termination

From the facts accepted by the Court, MTN terminated the contract without complying with the terms of the contract, i.e., Clause 16.2, which required it to give the Respondent 60 days written notice before terminating the Agreement.

The Respondent also contended that the letter of termination was not addressed to it (as it was rather addressed to “Corporate Communications Ltd” instead of “Corporate Communications Investment Ltd.”). The Court however did not make much out of this.

Stephen Legal advises that parties to a contract must be careful in triggering the termination clause of an agreement and ensure strict compliance. Since MTN was bent on terminating, why not give the required notice? Usually, this is common conduct by companies transacting from a stronger footing – they hand you standard form contracts (containing “take it or leave it” terms), get you to sign (and sometimes will not sign it themselves as in the instant case) and thereafter proceed as they please. This must be discouraged. 

Admission against interest

Admission against interest means, as the phrase suggests, an admission made by persons against their own interest, be it pecuniary, proprietary, or penal. It is similar to shooting one’s own foot or scoring an own-goal in a football match. Admission against interest is one of the things a smart lawyer seeks to achieve when cross-examining the witness of an opposing party, in addition to seeking to discredit his/her testimony. Kekere-Ekun explained how MTN fell by this in the following words:

“In paragraph 19 of the Statement of Claim, it is averred that “the Defendant is indebted to the Claimant to the tune of N100,000,000.00” for the SIM Kit activation exercise and other repaid activation bonuses. The Appellant’s witness, under cross-examination admitted that the Respondent was entitled to N100,000,000.00 for the exercise. It is an admission against interest. In paragraph 21 (c) of the Statement of Claim, the Respondent claimed the sum of N500,000,000.00 as general damages for the unwarranted and abrupt cancellation of its orders. Under cross-examination, DW1 admitted that a trade partner could make a commission of up to N500 Million depending on the volume of the order placed by the trade partner or its sales. These are not extraneous matters. They are facts pleaded by the Claimant. It was entitled to rely on the evidence elicited from DW1, which supported its pleadings.”

As stated above, MTN’s admission against interest is like an own-goal which the Respondent is allowed by law to add to its scores.

While MTN’s Witness, DW1, is commended for being truthful under oath in Court, it must be said that his presentation of the truth was carelessly executed, thereby crumbling the walls of any valid defence the Company might have built against the claims of the Respondent.

Further vital lessons

Agreement not signed by a party can still be binding

In the course of writing the Judgment, the learned trial Judge (Amadi, J.) observed that the Agreement (Exhibit A) was not signed by the Appellant, MTN. The Judge raised the issue suo motu (by himself), and invited the parties to address the Court on the weight to be attached to the Agreement. Brilliant Judge!

MTN saw this as an opportunity to escape liability. It argued that the Agreement was worthless. This was notwithstanding the fact it was the one who prepared it; and parties conducted their trade transactions on the basis of the Agreement. In fact, MTN relied on a Clause in the Agreement to terminate the contract. The Supreme Court upheld the position that the argument of MTN was absolutely baseless, holding that it will not allow the Company to escape justice by its “ingenious booby trap” set for the Respondent. Kekere-Ekun, JSC relied on established principles in handing down the following fantastic reasoning:

“Though not mutually executed, Exhibit A [Trade Agreement] was regarded by the parties as their binding contract. Equity acts in personam and therefore takes as done that which ought to be done, if from the conduct of the parties such inference can be drawn. In the instant case, such facts abound on which the two Courts below concurrently found that the parties intended to be bound by Exhibit A and that Exhibit A would be the basis of their mutual transaction, whether or not the document was formally executed. Again, Equity acting in personam would look at the intent of the parties and the substance and not at the form. In the instant case, insistence on compliance with all formalities of executing a written agreement will be oppressive to the Respondent. The Appellant, in the Court of Justice, will not be allowed to take advantage of the Respondent on his own iniquity by his ingenious booby trap by which he deliberately withheld his signature while at the same time it made the Respondent go with the impression that the relationship is governed or regulated by Exhibit A. Section 169 of the Evidence Act, 2011, which codified the principle of estoppel by conduct, will not countenance the present posture of the Appellant and allow it resile out of Exhibit A.”

His Lordship further stated:

“As observed earlier, the Appellant did not deny the fact that it continued trading and carrying on business with the Respondent in accordance with Exhibit A. I agree entirely with the two lower Courts, that the Appellant could not be allowed, by deliberately withholding its signature, to take advantage of its wrongdoing and use it as a weapon against the Respondent. See: Adedeji Vs N.B.N Ltd. (1989) 1 NWLR (Pt. 96) 212 @ 226-227 E-A, where it was held, inter alia that it is morally despicable for a person who has benefited from an agreement to turn around and say that the agreement is null and void, or unenforceable, as contended in this case.”

The above position is also in keeping with the settled principle that an agreement can exist between parties by their conduct.

Stephen Legal advises that parties must ensure that contracts are duly executed by all parties involved. Every page must be executed or initialed and copies obtained and kept. This is to prevent any party from throwing up the kind of argument MTN presented in this case. It is conceded that businessmen and women are always eager to proceed with contracts, leaving loose ends like contract execution unattended to. This is risky. In unfortunate situations, relying on the instant case might be unhelpful. The courts are always ready to distinguish the facts of cases in reaching a decision.

Relevancy of evidence elicited under cross-examination

Counsel to MTN made a brilliant and technical submission regarding the admission of the evidence of MTN’s Witness, DW1. According to him, the evidence of DW1 elicited under cross-examination was based on MTN’s Statement of Defence which was declared incompetent. Thus, such evidence ought to be discountenanced. The Supreme Court was up for it. Kekere-Ekun, JSC relied on the reasoning of Onnoghen, JSC (as he then was) in Adeosun v. Governor, Ekiti State [2012] 4 NWLR (Pt. 1289) 581 at 602, A-B, where the learned Jurist stated:

“It is settled law that evidence elicited from the cross-examination of a defence witness, which is in line with the facts pleaded by the plaintiff, forms part of the evidence produced by the plaintiff in support of facts pleaded in the Statement of Claim and can be relied upon in proof of the facts in dispute between the parties.”

His Lordship also relied on the position as stated by Tobi, JSC (of blessed memory) in Gaji v. Paye [2003] 8 NWLR (Pt. 823) 583 at 611 A-B:

“Evidence procured from cross examination is as valid and authentic as evidence procured from examination-in-chief. Both have the potency of relevancy and relevancy is the heart of admission in the law of Evidence. Where evidence is relevant, it is admissible and admitted whether it is procured from examination-in-chief or cross-examination.”

The implication of the above sound reasoning is that it would lead to injustice if the evidence of DW1 is discountenanced in the circumstances.

Cross-examination tip

His Lordship further advised lawyers on cross-examination as follows:

“For this reason, lawyers are often advised to be wary of questions they put to witnesses under cross-examination, particularly when they do not know the answer the witness would give. This is because the response to a question put to a witness under cross-examination may turn out to sound the death knell for his opponent’s case.”

Amadi, J. commended by the Supreme Court

The learned trial Judge, Amadi, J., after holding that the Statement of Defence filed by MTN was incompetent, proceeded to consider same and ultimately concluded that with or without the Statement of Defence, MTN was liable for beach of contract. Supreme Court commended his Lordship’s approach thus:

“He [Amadi, J.] was being cautious, since his was not the final Court, by considering the pleadings and evidence led by the Appellant in the event that he was overruled on the incompetence of the Statement of Defence. This approach is in keeping with the advice often given by this Court that where a Court is not the final Court on the subject matter, it should endeavour to proffer an opinion on all the issues submitted to it so that the appellate Court would have the benefit of the Court’s reasoning in the event that it does not agree with the position of the Court on the issue of competence, jurisdiction, locus standi, etc.”

Trial courts are encouraged to adopt this approach always, in deserving cases, when confronted with preliminary issues that is capable of dismissing a case in limine (“at the start”). It saves the time of any unnecessary case retrial.



Stephen Azubuike
Author: Stephen Azubuike
Stephen is a Legal Practitioner, Consultant, Mediator and Social Entrepreneur. He is the Managing Attorney at Splendour Legal Consultants. He has successfully argued cases from the High Courts of various jurisdictions to the Appellate Courts. Desirous of implementing new legal solutions, he founded Stephen Legal, a firm in the business of providing innovative legal insights and easy solution in this information age. Stephen also serves as a volunteer at Prof. Pat. Utomi’s Centre for Values in Leadership in Lagos, given his passion for capacity building and leadership development.

4 Comments

Leave a Reply

Yes No