PULSELINE SERVICES LTD V. EQUITORIAL TRUST BANK LTD
(2010)LCN/3815(CA)
In The Court of Appeal of Nigeria
On Thursday, the 25th day of March, 2010
CA/A/213/2008
RATIO
CONTRACT: EFFECT AND NATURE OF FRUSTRATION
It is now settled through the various decisions of this court and the Supreme Court that, frustration of contract is the premature determination of an agreement between parties lawfully entered into and in course of operation at the time of its premature determination, owing to the occurrence of an intervening event or change of circumstances so fundamental as to be regarded by law both as striking at the root of the agreement, and as entirely beyond what was completed by the parties when they entered into the agreement. See MAZIM ENGR LTD VS TOWER ALUMINIUM (NIG) LTD (1993) 5 NWLR (PT.295) 526, UBN PLC VS OMNI PRODUCTS (NIG) LTD (2006) 15 NWLR (PT.1003) 660. NBCI VS STANDARD (NIG) ENGR. CO LTD (2002) 8 NWLR (PT.768) 104.
Therefore, for frustration of contract to occur, there must be in existence a lawful contract between the parties, and its premature determination, due to occurrence of an intervening event or change of circumstances that is so fundamental as striking at the root of the contract beyond the contemplation of the parties at the time they entered into the contract. In other words, frustration of a contract may be discharged if after its formation event occur making its performance impossible or illegal and in certain analogous situations. Thus, supervening impossibility of performance is the most obvious ground of frustration. PER UWANI MUSA ABBA AJI, J.C.A.
COURT: JURISDICTION; NATURE OF JURISDICTION
I say so because the issue of jurisdiction is regarded as threshold issue and a life line for continuing any proceedings. Objection to jurisdiction ought to be taken at the earliest opportunity if there are special materials before the court to consider it and a decision reached on it before any other step in the proceedings is taken because if there is no jurisdiction, the entire proceedings are a nullity no matter how well conducted. See BAKARE VS A.G. FEDERATION (1990) 5 NWLR (PT.152) 516, ODOFIN VS AGU (1992) 3 NWLR (PT.229) 350, AJAYI VS MIL, ADMIN. ONDO STATE (1997) 5 NWLR
(PT.504) 237 JERIC (NIG) LTD VS UBN PLC (2000) 15 NWLR (PT.691) 449, NDIC VS CBN (2002) 7 NWLR (PT.766) 272.
Once it is apparent to any party that the court may not have jurisdiction it can be raised even viva voce. Therefore objection to jurisdiction can be taken at any time depending on what materials are available. It could be taken in any of the following situations, namely:-
a) On the basis of the Statement of Claim; or
b) On the basis of the Evidence received; or
c) By a motion supported by an affidavit giving the full facts upon which reliance is placed; or
d) On the face of the Writ of Summons, where appropriate, as to the capacity in which action was being brought or against who action is brought. See A.G. KWARA STATE VS OLAWALE (1993) 1 NWLR (P.T272) 545, KASIKWU FARMS LTD VS A.G. BENDEL STATE (1986) 1 NWLR (PT.19) 695, NDIC VS CBN (2002) 7 NWLR (PT.766) 272. PER UWANI MUSA ABBA AJI, J.C.A.
DISTINCTION BETWEEN JURISDICTION AND FRUSTRATION OF CONTRACT
There is therefore, a distinction between jurisdiction and frustration of contract. Frustration of contract is a special defence which must be specifically pleaded by a defendant. While in itself is an issue of law but it is not an issue of jurisdiction. It is a special defence available to a defendant at the time of an action which must be specifically pleaded. PER UWANI MUSA ABBA AJI, J.C.A.
CONTRACT: CIRCUMSTANCES WHERE FURTHER PERFORMANCE IS EXCUSED WHERE A CONTRACT IS FRUSTRATED
The law is now settled, that where whole or part performance of an agreement becomes impossible by reason of some act which occurs after the formation of the agreement, as in this case, the supervening impossibility will in most cases automatically bring the contract to an end as regards both parties and discharge parties of all obligations thereunder. In other words, where a contract has been frustrated, the question of breach will not arise, as none of the parties can be held responsible for what has happened.
In effect, where a contract is frustrated, further performance is excused only if:-
a) The frustration occurs before the breach of contract;
b) The frustration is without the fault of either party; and
c) The frustration is due to a fundamental change of the circumstances beyond the control and original contemplation of the parties. See NBCI VS STANDARD (NIG) ENGR. CO LTD (2002) 8 NWLR (PT.768) 104, MAZIM ENGR LTD VS TOWER ALUMINIUM (NIG). PER UWANI MUSA ABBA AJI, J.C.A.
JUSTICE
RABIU TANLAMI MUHAMMADJustice of The Court of Appeal of Nigeria
UWANI MUSA ABBA AJIJustice of The Court of Appeal of Nigeria
JIMI OLUKAYODE BADAJustice of The Court of Appeal of Nigeria
Between
PULSELINE SERVICES LTDAppellant(s)
AND
EQUITORIAL TRUST BANK LTDRespondent(s)
UWANI MUSA ABBA AJI, J.C.A. (Delivering the Leading Ruling): This is an appeal against the Ruling of Hon. Justice L.H. Gummi; Hon. Chief Judge of the Federal Capital Territory Abuja delivered on the 27th February, 2007 upon a point of law raised suo motu by his lordship during the cause of trial at the court below.
By a Writ of Summons dated the 1st day of August, 2001, the Appellant as the Plaintiff at the court below instituted this suit against the Respondent who was also the Defendant at the trial court and claimed as per paragraph 40 of its Amended Statement of Claim as follows:-
Whereof the Plaintiff claim against the Defendant, the sum of N200,000,000.00 (Two Hundred Million Naira) being special damages and general damages as particularized below:-
PARTICULARS OF SPECIAL DAMAGES
a. Printing of Scholarship Tickets N750,000.00
b. Printing of Crown Posters N2,000,000.00
c. Printing of Brochures N2,865,000.00
d. Printing of Pulseline News N2,600,000.00
e. Printing of invitations N6,000.00
f. Printing of banners for outlets N80,000.00
g. Production of desk signs N35,000.00
h. Radio commercials on 14 stations N468,966.48
i. TV commercials on 15 stations N862,811.88
j. Production of radio
& TV commercials N538,000.00
k. Press campaign N757,900.00
PROMOTION/PUBLICITY AWARENESS DRIVE IN LAGOS
l. Car hire for 4 days N28,000.00
m. T-shirts 50pcs N50,000.00
n. Honorarium for 4 days N60,000.00
o. Logistics N100,000.00
p. Salaries N1,366,900.00
q. Telephone bills N359,752.68
r. Company’s car maintenance N550,000.00
s. Chief Executive’s accommodation N600,000.00
t. Office accommodation N880,000.00
u. General Expenses
(Office & staff maintenance) N1,645,927.00
v. Commissioning expenses N1,146,300.00
w. P.R. for the programme N1,998,050.00
x. Settlement of Lottery winners N 2600.000.00
Total N22, 258,608.04
General Damages N177, 741,391.96
The Appellant’s case as stated in its Amended statement of Claim contained at pages 29 to 35 of the Records of Appeal is that the Appellant entered into a contract with the Respondent to use the various outlets of the Respondent throughout the country to sell lottery raffle tickets in furtherance of a certain students’ scholarship lottery programme, in return for a five percent commission to the Respondent. That in furtherance of this agreement, the Appellant went ahead to launch the programme at great expense and even opened an account with the Respondent for the purpose of running the programme. The Respondent in turn, made available its various outlets including its main branch in Marina, Lagos for the execution of the contract. That the Respondent even went ahead and begun to deduct its five percent commission on the sale of some tickets. That all of a sudden, the Respondent stopped the sale of tickets and threw the Appellant’s sale representatives out of its banking halls. A week or so after, the Respondent wrote to the Appellant that the reason for the breach of the contract was that the Central Bank of Nigeria was averse to its participation in the Students’ Scholarship Lottery Programme. Consequently, the Respondent returned to the Appellant all the tickets unsold in its possession. The Appellant as a result suffered loss.
The Respondent denied the allegation of contract between it and the Appellant and that the Central Bank of Nigeria expressed reservations about the peculiar services being sought to be rendered to the Appellant without its consent or approval and the Respondent communicated to the Appellant its resolve to withdraw the facility temporarily extended to the Plaintiff.
After pleadings were exchanged, the case went to trial. In the course of trial, the court below, suo motu, raised the issue of frustration of contract and asked counsel to address the court on the point.
After the address of counsel, which Appellant’s counsel failed or declined to participate, the Court in a considered ruling contained at pages 52-57 of the Records of Appeal held that the contract was frustrated and dismissed the whole action.
Dissatisfied, the Appellant filed a Notice of Appeal on the 25th of May, 2007 containing three (3) grounds of appeal. The grounds of appeal with their particulars are hereby reproduced:
Ground One
The Court erred in law when it suo-motu raised the issue of frustration of the contract when from the record of the court there was no pleading bordering on frustration.
Particulars of Errors
1. There was no pleading either by the Plaintiff or the Defendant on frustration of contract.
2. The trial Court wrongly pre-empted Plaintiff evidence without allowing Plaintiff to place all evidence before the court.
In the premise the trial court ought not to have raised the issue of frustration of contract at that stage of the proceeding to the disadvantage of the Plaintiff/Appellant.
Ground Two
The ruling is against the weight of evidence.
Particulars of Errors
1. The Court failed to appreciate the import and the evidential value of exhibit D1 in its conclusions and findings.
2. The Court failed to observe that it was the failure and or default of the defendant respondents to take the necessary step of obtaining clearance from the Apex Bank that led to the frustrating circumstance of the contract.
Ground Three
The Court erred in law when it held:
“I am of the humble view that such frustrations in the circumstance of the contract that led to this suit was unforeseeable and occurred due to no fault of either party and I so hold”
Particulars of Error
1. The Court failed to note that it was due to the failure of the defendant to obtain clearance that lead to the frustrating circumstance.
2. There was no evidence anywhere that the CBN Act 24, 1991 was unforeseen at the time of the contract
3. There was no evidence and legal ground justifying the conclusion of the court.
As is the practice in this Court, parties filed and exchanged briefs of argument. In the Appellant’s brief settled by Festus Keyamo, Esq., two issues were formulated for the determination of the appeal to wit:
1) Whether the Court below was right to have raised the issue of frustration of contract suo-motu and determined it in limine.
2.) Whether from the pleadings and available evidence, there can be said to be frustration of contract in this case.
The Respondent in its brief of argument settled by Abimbola Kayode, Esq., adopted the two issues for determination formulated by the Appellant in its brief of argument.
At the hearing of the appeal on the 8th February, 2010, learned counsel for the Appellant, Festus Keyamo, Esq., adopted and relied on the Appellant’s brief of argument dated and filed on the 7th of July, 2008 as its argument in support of the appeal and urged the court to allow the appeal. He emphasized the point that the issue of frustration of contract raised by the learned trial chief Judge is not the case of the Respondent and under issue 1; the point made was that, the issue of frustration of contract cannot be determined in limine and not a question of fair hearing.
Learned Counsel for the Respondent J.O. Adesina (Mrs.), adopted the Respondents brief of argument filed on 27th November, 2008 but deemed properly filed on the 27th July, 2009 as its argument in respect of the appeal and urged the court to dismiss the appeal. The issues as formulated by the Appellant will therefore form the basis for the determination of this appeal,
issue 1
Whether the court below was right to have raised the issue of frustration of contract suo-motu and determined it in limine.
In arguing this issue, learned counsel for the Appellant, Keyamo, Esq., referred to the proceedings of 7th November, 2002 during the examination of PW1 at page 48 of the Records of Appeal wherein the court made the following observation: “At this stage, it appears to me that the Defendant cannot be heard to say that the launching of the event had not taken place. The only issue remaining is the one raised in the Statement of Defence to the effect that the contract was frustrated by law. That being so, I direct the parties and counsel should appear on 2/12/02 for determination of that issue.”
Learned Counsel referred to Order 24 Rules 1 and 2 of the Rules of Federal Capital Territory High Court, 1989, being the applicable Rules at the time and posed the question, whether the Respondent raised the issue of frustration of contract in his statement of Defence and whether the issue of frustration of contract is a point of law that can be determined in limine without proven facts.
It is submitted that in the whole of the pleadings of the Defendant (Respondent), the issue of frustration of contract was not raised at all and that the cumulative effect of the Respondent’s pleadings is that there was no binding contract at all between the Appellant and the Respondent. Learned Counsel referred to paragraph 13 of the Respondent’s Statement of Defence and submitted that by raising the issue of frustration of contract, the Court below was making a case for the Respondent which it did not make for itself, citing in support the case of YUKUBU VS M.W.T. ADAMAWA STATE (2006) 10 NWLR (PT.989) 513. It is his view that frustration of contract cannot be inferred by the court from the totality of the pleadings of the Respondent and the only way to raise it as a defence is to specifically plead such a special defence citing the case of UBA VS BTL IND. LTD (2006) 19 NWLR (PT.1013) 61 at 106. It is also his view that by raising the issue of frustration of contract as it did in the middle of the trial, the Court thereby wrongly prevented the Appellant from placing all the evidence before the Court.
It is further submitted that frustration of contract cannot be a point of law to be raised in limine without admitted and proved facts. It is thus his view that frustration of contract can only be a point of law to be determined by facts and evidence fully adduced before the court after conclusion of trial and that raising the issue as it did was clearly prejudicial to the case of the Appellant and the court was urged to so hold and to resolve this issue in favour of the Appellant.
Issue 2
Whether from the pleadings and available evidence, there can be said to be frustration of contract in this case.
In arguing this issue, learned counsel for the Appellant, submitted that the cumulative effect of the Respondent’s pleadings do not reveal the issue of frustration of contract. Learned Counsel made reference to the law relating to frustration of contract and the cases of MAZIN ENG VS TOWER ALUMINIUM (1993) 5 NWLR (PT.295) 526, N.B.C.I. VS STANDARD (NIG) ENG. CO. LTD (2002) 8 NWLR (PT.768) 104, and UBN PLC VS OMNI PRODUCTS (NIG) LTD (2006) 15 NWLR (PT.1003) 660 and submitted that the Respondent is fully aware that the Central Bank of Nigeria is its regulatory body and should have contemplated that the Central Bank of Nigeria would examine its operations and as such the Respondent would have contemplated an examination of this contract by the Central Bank of Nigeria. It is the view of the learned Counsel that this should have guided the Respondent to get clearance from the Central Bank of Nigeria as whatever law or Policy the Central Bank of Nigeria applied was in existence at the time of the contract and as such it was not an unforeseen occurrence or supervening occurrence. It is further submitted that by paragraph 9 of the Respondent’s Statement of Defence, the Central bank of Nigeria was said to have expressed reservations and that there was no averment specifically instructing the Respondent to stop the implementation of the contract. He therefore submitted that the pleadings of the Respondent did not reveal a situation of frustration of contract and the court was urged to so hold and to resolve this issue 2 in favour of the Appellant.
In his response to Issue 1, learned Counsel for the Respondent submitted that frustration is a jurisdictional issue and that the issue of jurisdiction or competence of a court of law to entertain an action can be raised suo motu by either of the parties or the court as rightly done by the learned trial chief Judge in this suit. He submitted that where the court raise the issue of jurisdiction suo motu, the two sides must be afforded the opportunity of addressing the court on the issue so raised, citing in support the following cases; OGUNSAKIN VS AJIDARA (2008) 6 NWLR (PT.1082) 1. GTB PLC VS FADCO INDUSTRY LTD (2002) 7 NWLR (PT.1033) 307, ONYEKWELI VS INEC (2008) 4 NWLR (PT.1107) 317, EHIRIM VS I.S.I.E.C (2008) 15 NWLR (PT.1111) 443. It is also submitted that a court will not compel a party to give evidence in a dispute before a court if the party is notified of the courts proceedings, citing the case of OBIAMI BRICKS & STONE INDUSTRIES NIG LTD VS A.C.B. (1992) 3 SCNJ 1 at 38. It is thus submitted that, the Appellant counsel was given ample opportunity before the court on the adjourned date to address the court on the issue of frustration of contract raised by the learned chief judge suo-motu but choose to stay away from the proceedings.
Dwelling on the issue whether Respondent raised the issue of frustration of contract in its Statement of Defence and whether it is an issue that could be determined in limine by the court, it is submitted that the facts relevant to the issue of frustration of contract were pleaded in paragraphs 9, 10 and 11 of the Statement of Defence. It is his view that assuming the Respondent did not raise the issue of frustration of contract in its defence, though not conceded, that the court has the inherent powers to raise the issue suo motu. He cited the cases of ANUKAM VS ANUKAM (2008) 27 WRN 10 at 23, JEMIDE VS NWANNE (2008) 28 WRN 150 at 167-168. It is also the View of learned Counsel that Order 24 Rules 1 and 2 of the High Court of the FCT Rules does not preclude the learned trial judge from raising jurisdictional issue of frustration of contract and submitted that the contention of the Appellant is not whether the Respondent raised the issue of frustration of contract in its defence but whether the Court afforded the Appellant the opportunity to make representation or address the court on the issue of frustration of contract raised suo motu by the learned trail judge. He submitted that there is nothing on the records of appeal to show that the Appellant was denied opportunity to address the court on the issue. It is his view that the failure of the Appellant to address the Court cannot be blamed on the Court and no miscarriage of justice was occasioned by the Appellant’s refusal to address the Court. The case of OBIAMI BRICKS & STONE INDUSTRIES NIG LTD VS A.C.B. (1992) 3 SCNJ 1 at 38 was
referred to and submitted that the Appellant was afforded fair hearing on the issue raised suo motu as guaranteed under Section 36 of the 1999 Constitution. The case of IKENTA BEST NIG LTD VS A.G. RIVERS STATE (2008) 6 NWLR (PT.1084) 602 at 642 was referred to. He urged the Court to hold that the lower court was right in raising the issue of frustration of contract suo motu and determining the issue in limine. That the case of YUKUBU VS M.W.T. ADAMAWA STATE (2006) 10 NWLR (PT.989) 513 referred to by the learned counsel for the Appellant is not applicable to the present circumstances of this case, so also the cases of UBA VS BTL INDUSTIRES LTD (2008) 19 NWLR (PT.1013) 61 at 106,OKOYE VS C.P.M.B. LTD (2008) 15 NWLR (PT.1110) 335 AT 359, and F.C.E. OYO VS AKINYEMI (2008) 15 NWLR (PT.1109) 21 AT 49 that the court was clothed with the jurisdiction to raise the issue suo-motu as it was apparent that the court lacks jurisdiction to entertain the matter. The Court was urged to so hold and resolve the issue in favour of the Respondent.
In his response to issue 2, Kayode, Esq., for the Respondent submitted, on the contention of the Appellant that the facts pleaded by the Respondent did not reveal any issue of frustration and the authorities cited there under, that the cases of MAZIN VS TOWER ALUMINIUM (supra) and NBCI VS STANDARD (NIG) ENG. CO. LTD (supra) does not assist the Appellant in the circumstances of this case. It is his view that in the case MAZIN VS TOWER ALUMINIUM, the Supreme Court found that the contract was prematurely determined owing to the occurrence of an intervening event which was not caused by any parties and therefore found the contract frustrated, while the case of NBCI VS STANDARD (NIG) ENG, CO. LTD (supra) talks of effect where the court found the contract frustrated, and in the case UBN Plc. VS OMNI PRODUCTS (NIG) LTD (supra), one of the issues bordered on frustration of contract but the court held inter alia that there is no frustration of contract in that transaction.
Learned Counsel referred to paragraphs 9, 10 and 11 of the Respondent’s Statement of Defence and submitted that the paragraphs reveal that the issue of frustration of contract exist. Learned Counsel submitted that the Respondent entered into an agreement with the Appellant to make available the use of its banking hall as a retail outlet for the sale of raffle tickets by the Appellant, the Respondent had reason to believe that it had the capacity to contract. Learned counsel submitted that when the Central Bank of Nigeria issued the directive contain in its letter of 8th April, 1999, which was communicated to the Appellant, the Respondent had no further choice in the matter. Learned Counsel submitted that the said letter amounts to frustration of the Defendant’s obligation under the contract as the directives of the Central Bank of Nigeria as contained in the said letter cannot be disregarded. He referred to Section 15 BOFID of 1991 and Sections 39(1) (c) and 39(7) of the CBN Act No.24 of 1991. It is submitted that the said letter made it impossible for the Respondent to perform its obligation under the said contract and the contract was therefore frustrated.
Dwelling on the issue of frustration of the contract, the Respondent submitted that assuming that it did not plead any facts relating to frustration of contract in its pleading, it does not mean that the court cannot raise the issue of frustration of contract if the court is of the view that the prevailing circumstances does reveal elements of frustration of contract and that the court invited both parties to address it on the issue. Learned Counsel referred to definition of frustration of contract according to Black’s Law Dictionary, 6th Edition at page 670 and submitted that, the definition presupposes a situation of commercial impracticability and or impossibility; where parties could not reasonably protect themselves by terms of a contract against happening of subsequent events. He cited the case of NBCI VS STANDARD (NIG) ENG. CO. LTD (2002) 8 NWLR (PT.768) 104 at 124. It is his view also that in the circumstances of this case, it is inconceivable for the Respondent to have known that the Central Bank of Nigeria will kick against the actualization of the contract between the Appellant and the Respondent and that the Respondent on its part does all that was expected of her as regards the actualization of the contract before the letter which is an intervening factor that frustrated the contract. It is also his view on the contention of the Appellant that the frustration was due to the fault of the Respondent that, the Appellant is duly bound to prove such fault. He referred to the case of WESTERN NIGERIA FINANCE VS WEST COAST BUILDERS LTD (1971) 1 UILR 93. The Court was urged to so hold and resolve this issue in favour of the Respondent.
These two issues will be considered together and I have in this regard carefully considered the submissions of learned counsel for the Appellant, the authorities cited in support thereof, and the Respondent’s response thereto and I am of the view that the Respondent missed the Appellant’s Issue 1 for determination. Issue 1 for determination raised the question whether the learned trial Judge was right to have raised the issue of frustration of contract suo motu and determined same in limine, the Respondent understood the issue on a different angle altogether, and argued the issue on the principle of fair hearing. That is not what issue 1 is talking about. The Appellant has not contended the issue of fair hearing under this issue. They have not complained that they have been denied fair hearing when the learned trial Judge raised the issue of frustration of the contract suo motu.
The contention of the learned counsel for the Appellant under this issue is that, the Respondent having not raised the issue of frustration of contract in its Statement of Defence, whether the said issue of frustration of contract is a point of law that can be raised suo motu by the learned trial Judge and determined in limine without proven facts? Now the question that may be asked is, what is frustration of contract? And whether it is a point of law that can be raised suo motu by the parties and or the court and determined in limine?
It is now settled through the various decisions of this court and the Supreme Court that, frustration of contract is the premature determination of an agreement between parties lawfully entered into and in course of operation at the time of its premature determination, owing to the occurrence of an intervening event or change of circumstances so fundamental as to be regarded by law both as striking at the root of the agreement, and as entirely beyond what was completed by the parties when they entered into the agreement. See MAZIM ENGR LTD VS TOWER ALUMINIUM (NIG) LTD (1993) 5 NWLR (PT.295) 526, UBN PLC VS OMNI PRODUCTS (NIG) LTD (2006) 15 NWLR (PT.1003) 660. NBCI VS STANDARD (NIG) ENGR. CO LTD (2002) 8 NWLR (PT.768) 104.
Therefore, for frustration of contract to occur, there must be in existence a lawful contract between the parties, and its premature determination, due to occurrence of an intervening event or change of circumstances that is so fundamental as striking at the root of the contract beyond the contemplation of the parties at the time they entered into the contract. In other words, frustration of a contract may be discharged if after its formation event occur making its performance impossible or illegal and in certain analogous situations. Thus, supervening impossibility of performance is the most obvious ground of frustration.
It is contended by the learned Counsel for the Appellant that issue of frustration of contract cannot be a point of law to be raised in limine without admitted and proved facts. That it can only be a point of law to be determined by facts and evidence fully adduced before the court after the conclusion of trial. However, the Respondents’ contended that frustration is a jurisdictional issue and that it is trite that the issue of jurisdiction or competence of a court of law to entertain an action can be raised suo motu by either of the parties or by the court.
Having considered judicial authorities on the subject, it is my view that, frustration of contract cannot strictly speaking be said to be jurisdictional issue. I say so because the issue of jurisdiction is regarded as threshold issue and a life line for continuing any proceedings. Objection to jurisdiction ought to be taken at the earliest opportunity if there are special materials before the court to consider it and a decision reached on it before any other step in the proceedings is taken because if there is no jurisdiction, the entire proceedings are a nullity no matter how well conducted. See BAKARE VS A.G. FEDERATION (1990) 5 NWLR (PT.152) 516, ODOFIN VS AGU (1992) 3 NWLR (PT.229) 350, AJAYI VS MIL, ADMIN. ONDO STATE (1997) 5 NWLR
(PT.504) 237 JERIC (NIG) LTD VS UBN PLC (2000) 15 NWLR (PT.691) 449, NDIC VS CBN (2002) 7 NWLR (PT.766) 272.
Once it is apparent to any party that the court may not have jurisdiction it can be raised even viva voce. Therefore objection to jurisdiction can be taken at any time depending on what materials are available. It could be taken in any of the following situations, namely:-
a) On the basis of the Statement of Claim; or
b) On the basis of the Evidence received; or
c) By a motion supported by an affidavit giving the full facts upon which reliance is placed; or
d) On the face of the Writ of Summons, where appropriate, as to the capacity in which action was being brought or against who action is brought. See A.G. KWARA STATE VS OLAWALE (1993) 1 NWLR (P.T272) 545, KASIKWU FARMS LTD VS A.G. BENDEL STATE (1986) 1 NWLR (PT.19) 695, NDIC VS CBN (2002) 7 NWLR (PT.766) 272.
There is therefore, a distinction between jurisdiction and frustration of contract. Frustration of contract is a special defence which must be specifically pleaded by a defendant. While in itself is an issue of law but it is not an issue of jurisdiction. It is a special defence available to a defendant at the time of an action which must be specifically pleaded.
In the instant case, the defence that the contract was frustrated was a special defence which ought to have been specifically pleaded at the trial Court by the Respondent. See AKINTOLA VS BALOGUN (2000) 1 NWLR (PT. 624) 532, ATTA VS EZEANAH (2000) 11 NWLR (PT.678) 353, IMNL VS PEGOFOR IND. LTD (2005) 15 NWLR (PT. 947) 1, A.I.C. LTD VS NNPC (2005) 11 NWLR (PT. 937) 563, UBA PLC VS BTL IND. LTD (2006) 19 NWLR (PT. 1013). In the instant case therefore, was the issue of frustration of contract raised by the Respondents in their Statement of Defence? The Respondents averred in their paragraphs 9, 10 and 11 of their Statement of Defence as follows:-
9. The Defendant denies paragraphs 19 and 20 of the Statement of Claim and states that vide a letter dated 8/4/99 the Central Bank of Nigeria expressed reservations about the peculiar services being sought to be extended to the Plaintiff by the Defendant. The Defendant here pleads and will at the trial rely on CBN letter dated 8/4/99. The Central Bank of Nigeria took specific objection to Advertisement made by the Plaintiff in some dailies using the Defendant’s name albeit without its consent or approval.
10. In further reply to paragraph 20, the defendant vide a letter dated 14/4/99, it replied the Central Banks letter and clearly stated its position white promising to correct the erroneous impression deliberately created by the Plaintiff’s Company. The Defendant shall at the trial rely on its letter dated 14/4/99.
11. The Defendant denies paragraphs 21, 22 and 23 of the Statement of Claim and states that the Defendant representatives met with Mr. Sunil Manbubani, a director of the Plaintiff on 16/4/99 where the Defendant communicated to the plaintiff its resolve to withdraw all the facilities temporarily extended to the Plaintiff. The outcome of the meeting is contained in a call memorandum of the Defendant bank dated 16th April, 1999, which be relied upon at the hearing of this suit. The Defendants denies that the sudden change of mind (if any) was responsible for any losses Plaintiff incurred by the Plaintiff (if any).
Now the question is, can the above paragraphs of the Statement of Defence be construed as having specifically raised special defence of frustration of contract in the circumstances of this case? While it is true that the defence of frustration of contract was not specifically pleaded by the Respondent, but a combined reading of paragraphs 9, 10 and 11 of the Statement of Defence as reproduced above, revealed that the Central Bank of Nigeria’s intervention in the matter by taking specific objection to some advertisement made by the Appellants in some dailies using the Respondents’ name without its permission frustrated the contract between the Appellant and the Respondent. It is my humble view that, that is what prompted the learned trial Judge to raise the issue suo motu. Having appreciated the facts of the case from the respective pleadings of the parties, the learned trial Judge in the circumstances is right to have invited the parties to address it on the issue of frustration of contract. Questions of law can be raised at anytime, but it is not a free for all procedure. The Court can raise a matter of Law and Constitution at any time, but in doing so, the two sides must be afforded the opportunity of addressing on it. See CTB PLC VS FADCO INDUSTRY LTD (2002) 7 NWLR (PT.1033) 307. This, the learned trial Judge has complied with the above principle of law in relation to raising new issues of law and Constitution.
In most cases, frustration depends on the true construction of the terms of the contract read in the light of the relevant circumstances when the contract was entered into. In the instant case, it is abundantly clear from the pleadings of the parties and the materials placed before the court that the issue of frustration of contract is well placed in the Statement of Claim and the Statement of Defence, it can therefore be raised in limine without the necessity of going to trial.
It is clear at the time the Respondent entered into agreement with the Appellant to make available the use of its banking hall as retail outlet for the sale of Raffle Tickets by the Appellant, the Respondent had reason to be believe that it had the capacity to contract. It was the letter from, the Central Bank of Nigeria that made it impossible for the Respondent to perform its obligation under the contract and the contract thus became frustrated.
This has led me to a determination of the 2nd issue which is whether from the pleadings and available evidence, there can be said to be frustration of contraction.
Frustration of contract occurs whenever the law recognizes that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would make it a thing radically different from what was undertaken by the contract. However, frustration of contract does not occur where:-
a. The intervening circumstance is one which the law would not regard as so fundamental as to destroy the basis of the agreement;
b. The terms of the agreement show that the parties contemplated the possibility of such an intervening circumstance arising;
c. One of the parties had deliberately brought about the supervening event by his own choice. Learned Counsel for the Appellant contended that the Respondent was fully aware that the Central Bank of Nigeria is its regulatory body and should have contemplated an examination of this contract by the Central Bank of Nigeria and that should have guided it to get clearance from the Central Bank of Nigeria and that there was no averment specifically instructing the Respondent to stop the implementation of the contract.
In the circumstances of this case, I agree with the submission of learned counsel for the Respondent that the directive contained in the Central Bank of Nigeria letter of 8th April, 1999 which was effectively copied to the Appellant, the Respondent had no choice in the matter and that the said letter amounts to frustration of contract. The directives of the Central Bank of Nigeria, the regulatory body of the Respondent contained in its letter of 8th April, 1999 cannot be disregarded by the Respondent so as not to attract penal sanctions by the CBN in line with the provisions of Section 15 BOFID of 1991 and Section 39(1)(c) and Section 39(7) of the Central Bank of Nigeria Act No.24 of 1991. I also agree with the Respondent counsel that, it is the said letter that made it impossible for the Respondent to perform its obligations under the contract and the contract was therefore frustrated.
In the instant case, it is inconceivable for the Respondent to have known that the Central Bank of Nigeria will kick against the actualization of the contract between the Appellant and the Respondent. There is also a corresponding duty on the part of the Appellant to see that relevant laws pertaining to this type of contract particularly as it affects the Respondent and its relationship with the Central Bank of Nigeria are fully complied with. In the instant case therefore, the frustration of the agreement between the parties cannot be said to be a thing contemplated, induced and or self inflicted by the Respondent.
Even though it is contended by the Appellant that the frustration was due to the fault of the Respondent, where such allegation is made, the Appellant is under a duty to prove such allegation of fault.
The law is now settled, that where whole or part performance of an agreement becomes impossible by reason of some act which occurs after the formation of the agreement, as in this case, the supervening impossibility will in most cases automatically bring the contract to an end as regards both parties and discharge parties of all obligations thereunder. In other words, where a contract has been frustrated, the question of breach will not arise, as none of the parties can be held responsible for what has happened.
In effect, where a contract is frustrated, further performance is excused only if:-
a) The frustration occurs before the breach of contract;
b) The frustration is without the fault of either party; and
c) The frustration is due to a fundamental change of the circumstances beyond the control and original contemplation of the parties. See NBCI VS STANDARD (NIG) ENGR. CO LTD (2002) 8 NWLR (PT.768) 104, MAZIM ENGR LTD VS TOWER ALUMINIUM (NIG).
From the facts and circumstances prevalent in this case, it can be implied that the supervening impossibility, being the letter from the Central bank of Nigeria, automatically brought the contract to an end as regards both parties and where frustration of contract arises, it operates to bring the agreement to an end as regards both parties forthwith and quite apart from their violation.
Based on the foregoing, the two issues in the appeal are hereby resolved in favour of the Respondent against the Appellant.
Consequently, this appeal lacks merit and same shall be and it is hereby dismissed. The judgment of the trial Court delivered on the 25th of February, 2007 is hereby affirmed.
There shall be no order as to costs.
RABIU DANLAMI MUHAMMAD, J.C.A.: I agree.
JIMI OLUKAYODE BADA, J.C.A.: I have had the advantage of reading in draft a copy of the Judgment of My Learned brother, UWANI MUSA ABBA AJI, J.C.A. My Lord has exhaustively dealt with the issues in this Appeal and I entirely agree with the reasons given therein and the conclusion reached. The appeal is also dismissed by me, and I endorse the consequential orders made in the said lead Judgment.
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Appearances
Festus Keyamo, Esq.,
A.T. Yusuf, Esq.,For Appellant
AND
J.O. Adesina (Mrs.);
Gloria I. Banye (Mrs.)For Respondent
