HOW FGN’S SHREWD MOVE TO AVOID A COMPROMISED N9.7B JUDGMENT DEBT WAS BLOCKED BY THE SUPREME COURT

Many a time, the Federal Government of Nigeria (FGN), through some of its agencies, enter into several kinds of contracts. However, through what sometimes appear to be floppy policies, politics, negligence, corrupt practices or mere mischief, the FGN gets involved in unnecessary and avoidable contract breaches. Consequently, the Government is held liable in damages. The case of Minaj Holdings Ltd v. Comptroller-General, Nigerian Custom Service & Ors [2021] 8 NWLR (Pt. 1777) 118 presents us with a classic example.

The Story

By a letter dated 11 June 2008, Minaj Holdings Ltd (“The Appellant” or “Minaj”) was given Presidential approval to import 500,000 metric tonnes of bagged cement into Nigeria. Based on the letter of approval, the Appellant applied for and obtained letters of credit from some banks running into billions of Naira.

About 80,000 tonnes of bagged cement arrived in Nigeria in four shipments. Three of the ships were allowed to berth. Others were being expected. Suddenly, the Federal Minister of Finance (“3rd Respondent) issued instructions to the Comptroller-General, Nigerian Custom Service (“1st Respondent”) to stop the importation of cement into Nigeria. Of course, this could not have happened without some water going under the bridge. The directive of the Federal Minister of Finance also prevented other ships with the remaining bagged cement from berthing.

Entreaties to the Finance Minister to lift the embargo fell on deaf ears. Even the appeal by the Attorney General of the Federation (“2nd Respondent”) to the Finance Minister was turned down.

Minaj heads to court

Frustrated, the Appellant filed an action at the Federal High Court against the Respondents (including the Federal Minister of Commerce and Industry, 4th Respondent) and obtained an order directing the Respondents to allow the ships with the bagged cement to berth and their cargo discharged.

Curiously, the Respondents did not obey the court order, notwithstanding a directive from the Acting President at the time, Dr. Goodluck Jonathan in March 2010.

The cargo was badly damaged and became toxic products. As a result of the actions of the Respondents, the Appellant became heavily indebted to its banks. To recoup its losses, the company claimed damages.

The Court was sympathetic to the cause of the Appellant, and finding no defence whatsoever to the actions of the Respondents, the Court awarded damages in favour of the Appellant to the tune of over N7.6 Billion and $9.2 Million and also injunctive reliefs. This was on 8 January 2013.

Appeal to the Court of Appeal and the Compromise Agreement

The Respondents appealed to the Court of Appeal. The appeal was fixed for hearing. Before the date of the hearing, the FGN decided to pursue an amicable settlement. The Federal Government led a high-powered delegation consisting of representatives from the Ministeries involved. Series of meetings were held. Eventually, the parties arrived at an agreement which effectively compromised or varied the Judgment of the trial Court being appealed against. The Parties agreed that the Appellant would be paid about N9.7 Billion (i.e. about N6.131 Billion and $8.746 Million) in full and final settlement. The Federal Ministry of Finance by letters dated 23 June 2015 and 6 July 2015 communicated the approval to the Appellant. Unfortunately, the Respondents still failed to pay.

Few months to the date slated for the hearing of the appeal, the 2nd Respondent paid the Appellant N15 Million as part-payment of the compromised judgment sum. The Appellant filed an Affidavit in this regarding acknowledging and attesting to the receipt of the part-payment.

From the blues, a Director in the Federal Ministry of Finance deposed to a counter-affidavit on behalf of all the Respondents contesting that the N15 Million part-payment was made in error and that the Appellant had concealed the pendency of the appeal at the Court of Appeal from the Respondents. This is despite the fact that it was the Respondents who appealed to the Court of Appeal.

At the hearing of the appeal, the Appellant informed the Court of the compromise agreement. The Court of Appeal still went ahead to hear the appeal and set aside the judgment of the trial Court. In the Judgment delivered on 16 June 2017, the Court of Appeal was of the position that the Appellant could have filed a preliminary objection to the hearing of the appeal.

Appeal to the Supreme Court

Dissatisfied, Minaj appealed to the Supreme Court. The issue turned on whether the Court of Appeal had jurisdiction to determine the appeal in the face of the agreement which effectively compromised or varied the judgment of the trial Court.

On 15 January 2021, the Supreme Court unanimously held that the Court of Appeal was wrong to discountenance the compromise agreement because the Appellant did not file a preliminary objection against the hearing of the appeal.

Rhodes-Vivour, JSC (now retired) did not disappoint. In delivering the leading opinion, the learned Jurist held (at page 144 of the report):

The Court of Appeal fell into grave error when it was informed that the parties had agreed to compromise the judgment of the trial Court, and still went ahead to hear the appeal, despite affidavit evidence and exhibits which showed that a compromise agreement had in fact been entered by the parties. It must be made abundantly clear that once the parties compromised the judgment, the right to appeal is extinguished. With the compromise agreement, the Court of Appeal no longer had jurisdiction to entertain the appeal. The compromise agreement as agreed by the parties as full and final settlement of their dispute must be enforced.

Conclusion

The Supreme Court is highly commended for rising to the occasion. A few disturbing lessons are there. First, the Respondents (especially the 3rd Respondent) being agencies of the FGN appeared to have believed that they were above the law. They did not only flout an order of Court, they also refused to comply with the directive of the then Acting President of Nigeria. The Federal Minister of Finance at the time had lots of question to answer. 

Second, it is also baffling that after letters communicating the approval of the compromise agreement were signed and issued to the Appellant, a Director from the same Federal Ministry of Finance would have the temerity to swear to a counter-affidavit challenging the agreement and the N15 Million paid. The so called Director claimed that the Appellant did not reveal the existence of the pending appeal at the Court of Appeal. Meanwhile, that was an appeal filed by the Respondents. The absurdity in the argument is that the Appellant was being accused of concealing an appeal it did not file. At the Court of Appeal, the Appellant was the Respondent, while the FGN agencies involved were the Appellants. There appear to have been either clear lack of proper coordination in the management of the entire affair or pure mischief. Who instructed the Director to swear to the affidavit? There ought to be consequences. 

Thankfully, the Supreme Court refused to tolerate the excesses of the Respondents.

Finally, the principle has been further established that once a subsequent agreement is reached which varies or compromises a judgment, no appeal should be entertained on that judgment. There must be an end to litigation. Such compromise agreement should reasonably signal that end.



Stephen Azubuike
Author: Stephen Azubuike
Stephen is a lawyer with expertise in Commercial Dispute Resolution and Technology Law practice. He is a Partner at Infusion Lawyers. He has successfully argued cases from the High Courts of various jurisdictions to the Appellate Courts on behalf of financial institutions, other corporate bodies and multinationals. He has worked with a number of startup tech companies. He tweets @siazubuike.
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