The measure of damages in an action for breach of contract

FOXGLOVE NIGERIA LIMITED v. MTN NIGERIA COMMUNICATIONS LIMITED

COURT OF APPEAL LAGOS DIVISION

(SANKEY; OTISI; EKANEM, JJ.CA)

In 2002, the appellant entered into a distribution agreement with the respondent. The agreement stated that the respondent was to distribute and sell the respondent’s products which included starter packs, handsets, recharge vouchers and accessories. By the agreement, the appellant was entitled to be paid a commission known as On-going Revenue Service Commission (ORSC) upon meeting its monthly performance target. Furthermore, the contract between the parties provided that on a monthly basis, the respondent shall calculate and pay a discount of 5% as ORSC on post-paid starter packs which were activated within the month and the discount credited to the appellant’s account at the end of every quarter. It was also included in the contract agreement that the respondent shall pay to the appellant a credit to the value of 1% which was referred to as back end commission, of the total invoiced amount of purchases of the physical and logical recharge vouchers and virtual airtime for every month, which shall be credited into the appellant’s account at the end of each year.

The business relationship between the parties continued until June 16th, 2008 when the respondent informed the appellant that Guaranty Trust Bank Plc had terminated its bank guarantee and there was need for a replacement before June 30th, 2008. The appellant complied with the respondent’s request by delivering another bank guarantee. However, on the same date, the respondent relying on certain clauses of the agreement, sent another letter in which it terminated the distribution agreement with the respondent. The respondent was alleged to have violated the procedure agreed upon by the parties before a termination could be effected. By the said clause, a 14 days’ notice was required to be given by the respondent indicating the nature of the breach where it occurs for the first time and a termination if the breach reoccurred within the preceding 12 months after the initial notice had been given to the appellant. Yet, the respondent in spite of the termination which took effect on July 1, 2008, continued its business relationship with the appellant until mid-July 2008 and accumulated a total sum of N29,000,000.00 (Twenty Nine Million Naira) but refused to pay the agreed ORSC including the back-end commission for the period.

The appellant was aggrieved and filed a claim against the respondent at the High Court of Lagos State claiming among several reliefs, a declaration that the contract termination by the respondent was unlawful having not complied with the procedures laid down in the agreement. However, the appellant also sought damages which were general and special in nature. At the end of trial, the court gave judgment in parts in favour of the appellant and dismissed the reliefs of the appellant which bordered on special damages which, according to the court were not pleaded and proved. The appellant was dissatisfied with the court’s judgment and consequently filed a notice of appeal at the Court of Appeal, Lagos Division.

One of the issues raised for determination was whether the trial court properly evaluated the evidence before dismissing the appellant’s claim for damages.

Arguing the issue, counsel for the appellant submitted that the damages sought but not granted by the lower court were within the contemplation of the parties and that even though what was claimed by the appellant was less than the correct amount, the court ought to have granted it. Counsel posited that the lower court was in error and he urged the court to resolve the issue in favour of the appellant.

Responding to the argument of the appellant, learned counsel for the respondent noted that the items claimed by the appellant are at best special damages which do not arise from any particular or specific loss suffered by the appellant as a result of the breach by the respondent. Counsel further argued that losses which do not directly flow from the breach cannot be pleaded as special damages. He urged the court to discountenance the argument of the appellant and resolve the issue in favour of the respondent.

Resolving the issue, the court held thus:

The position of the law however is that in an action for damages for breach of contract, the terms general and special damages are inappropriate. The dichotomy between special and general damages in an action for contract, unlike in tort, has been described as one without a difference; G.F.K. Investment Nigeria Ltd v. Nigeria Telecommunications Plc (2009) LPELR-1294 (SC). The Supreme Court has made definite pronouncements on the nature of damages that may be considered and granted by a court in an action for breach of contract. Musdapher JSC (as he then was) in G. Chitex Industries Ltd v. Oceanic Bank International (Nig) Ltd (2005) 7 S.C. (Pt. 11) 50; (2005) LPELR-1293 (SC):

“I shall now consider the measure of damages in a case of a breach of contract. Now, generally the amount of damages to be paid to a person for breach of contract is the amount it will entail to put the person in the position he would have been if there had not been any breach of contract… In cases of breach of contract a plaintiff is only entitled to damages naturally flowing or resulting from the breach… The measure of damages, in such cases of breach of contract, is in the terms of the loss which is reasonably within the contemplation of the parties at the time of the contract.”

The Supreme Court therein relied on its earlier decision in Wahabi v. Omonuwa (1976) 4 SC 37 at 41, per Idigbe, JSC thus:

“… In cases of breach of contract the aggrieved party is only entitled to recover such part of the loss actually resulting as was at the time of the contract reasonably foreseeable as liable to result from the breach. What was at that time reasonably so foreseeable depends on the knowledge then possessed by the parties or, at all events, by the party who later commits breach…”

Issue resolved in favour of the respondent.

Olusegun Olaiya, Esq., for the Appellant
Afolabi Kuti, Esq. for the Respondent

This summary is fully reported at (2017) 6 CLRN

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The Court of Appeal is the final arbiter in employment, trade and labour related matters adjudicated upon by the NIC – Supreme Court

The Director General of Consumers Protection Council (CPC) Mr. Babatunde Irukera has secured a N17 million judgment against Coca-Cola International Company at the Supreme Court for wrongfully terminating the employment of a Nigerian, Mrs. Titilayo Akisanya. In the judgment delivered on June 30, 2017, the Supreme Court affirmed the decision of the Court of Appeal to the effect that the Court of Appeal is the final arbiter in employment, trade and labour related matters adjudicated upon by the National Industrial Court (NIC). Again, the Supreme Court, in interpreting Section 254(C)(1) of the Third Alteration Act to the 1999 Constitution (as amended) also held that the jurisdiction of the National Industrial Court extends to all employment-related disputes including private employment contracts.

Mr. Irukera took up the case of Mrs. Akisanya on February 10, 2012 when he filed a civil action before the National Industrial Court, Lagos therein challenging her wrongful dismissal by Coca-Cola Nigeria Ltd. Mr. Irukera was then a Partner in SimmonsCoopers Partners, a reputable law firm in Nigeria that had the incumbent Acting President, Pro. Yemi Osinbajo (SAN) as its Principal Partner.

SimmonCoopers Partners is renowned for representing individuals, corporations and government in public interest litigation. The law firm successfully challenged Pfizer, an international pharmaceutical company over its testing of an antibiotic drug (Trovan) in Kano State, Nigeria, a situation that led to over 100 children developing meningitis. The firm also successfully represented about one million investors in a significant securities litigation arising from the First Bank of Nigeria Hybrid Offer of 2007.

Mrs. Akisanya was employed by the respondents as Human Resources Manager on December 11, 2001. In May 2007, she was promoted as the Human Resources Director, Commercial Product Supply (CPS) Pan Africa, while she still doubled as the Human Resources Manager at its Ota, Ogun State Plant.

In the claim she filed before the National Industrial Court, she claimed that she received several awards and commendations for her industry and significant contributions to the growth of the company in the course of her duties.

Things however turned sour when, in the course of her duties, she incurred some travel costs and expenses which she submitted for reimbursement. The travel expenses were however not paid to her despite repeated demands. Rather than paying her, Mrs. Akisanya was directed to forward the original copies of the expenses to the corporate auditors of the company. She complied. She was later invited to a meeting with the internal auditors of Coca Cola.

At the meeting, she answered the questions posed to her by the auditors and even promised to send a detailed report to them. She promptly submitted her written report to the audit panel. The panel advised her to wait for their report which they would send to the ethics and compliance (ECC). She did not get a response from the ECC, neither was she shown the final report of the audit panel.

The next move she got from the company was a letter dismissing her from the employment of the company. The later was dated December 6, 2010. The letter was signed by Mr. Sheriff Tobala on behalf of the company. She was accused of violating the company’s code of business conduct by submitting non-business related expenses for reimbursement and disclosing company’s confidential information to a third party.

Dissatisfied with her wrongful dismissal, Mrs. Akisanya commenced a legal action against the company before the National Industrial Court (NIC) on February 10, 2012. In the suit filed before Hon. Justice B.B Kanyip, Mrs. Adesanya sought for declarative and injunctive reliefs nullifying her dismissal. She also claimed forN100million general damages, and N50million as exemplary damages. Sued as Defendants in the suit are the local company- Coca-Cola Nigeria Ltd, the Coca-Cola Company (the foreign company) and Mr. Tobala who signed the letter of dismissal.

Coca-Cola through its lawyer, Mr. A. Candide-Johnson SAN however objected to the claimant’s suit by arguing that the suit is a private employment contract, or at most an executive management contract and therefore the National Industrial Court lacks jurisdiction to entertain private employment contracts. The Learned Silk argued that no issue of labour relations, trade union relation, or industrial relations has arisen from the Claimant’s suit to confer jurisdiction on the National Industrial Court (NIC). The Learned Silk for Coca Cola argued that Section 254(c)(1) of the 1999 constitution as amended by the Third Alteration Act ousts the jurisdiction of the National Industrial Court in relation to private employment contracts.

Essentially, the Learned Silk invites the National Industrial Court (NIC) to determine whether its jurisdiction, as contained in section 254(c)(1) of the Constitution of the Federal Republic of Nigeria, 1999 (Third Alteration) Act No 3 of 2010 extends to all cases of private individual contractual employment or is limited to disputes arising from collective agreements, labour, trade and industrial relations.

On April 7, 2016, Hon. Justice Kanyip dismissed the defendants’ preliminary objection on the basis that the question formulated by the defendants did not raise any substantial question of law to warrant the case stated. The trial judge held that the jurisdiction of the NIC extends to all employment contracts including private employment contracts. Dissatisfied with the ruling of the trial judge dismissing the preliminary objection, the Defendants appealed to the Court of Appeal, Lagos. Whilst the Appellants’ appeal was pending at the Court of Appeal, the trial judge proceeded to determine the case on the merit. In his judgment, the trial judge granted about N17.4 million as damages/compensation to Mrs. Akisanya (the claimant) for wrongful termination of her employment contract by the Defendants. The damages/compensation was to be paid by the defendants within 30 days of judgment delivery failing which the sum shall attract interest at 10 per cent (10%), per annum until fully paid.

Interestingly, whilst trial was ongoing at the NIC, the Court of Appeal had determined the Defendants’ interlocutory appeal challenging the ruling of the trial court on the preliminary objection. On July 4, 2013, the Court of Appeal unanimously affirmed the decision of the trial judge to the effect that the National Industrial Court has jurisdiction over all employment contracts including private employment contracts.

Again, dissatisfied with the decision of the Court of Appeal, the defendants proceeded to the Supreme Court even while trial was on-going before Hon. Justice Kanyip at the National Industrial Court. The Defendants also articulated the same issues and arguments presented before the Court of Appeal to the Supreme Court.

The Claimant (now Respondent before the Supreme Court) filed a preliminary objection contending that “having regard to Section 243(4) of the constitution of the Federal Republic of Nigeria, 1999 (Third Alteration) Act No 3, 2010, which expressly limits the finality of any appeal arising from any civil jurisdiction of the National Industrial Court to the Court of Appeal, whether the Supreme Court has jurisdiction to entertain the appeal”. In his argument before the Supreme Court, Mr. Irukera contended that whenever the jurisdiction of a court is challenged, the relevant statute establishing the court will be examined in the light of the relief been sought, since the question of jurisdiction must be confined to the enabling statute. In the instant case, he argued, the Court of Appeal as a creation of the constitution has its jurisdiction delineated and circumscribed by the 1999 constitution (as amended). He argued that the appellate jurisdiction of the Court of Appeal cannot be inferred, interpreted, and applied outside its enabling statute and if done otherwise, the exercise will be a nullity. Section 243(4) of the constitution is emphatic that in respect of any appeal arising from any decision in exercise of the civil jurisdiction of the NIC, the decision of the Court of Appeal is final. He therefore urged the apex court to dismiss the appeal preliminarily.

With respect to the substantive appeal, Mr. Irukera argued that a literal interpretation of the Section 245(c) of the Constitution does not, in any way, oust the jurisdiction of the National Industrial Court with respect to private employment contracts. In fact, citing relevant provision of the Trade Disputes Act, LFN, 2004 and the Employees’ Compensation Act, 2010, Mr. Irukera argued that the jurisdiction conferred on the National Industrial Court applies to all employment disputes.

The Learned Silk for the Appellants, Mr. Candide-Johnson, in response to Mr. Irukera’s position, argued that the jurisdiction of the apex court is not ousted in this particular suit. He argued that the issue in this appeal falls within Section 233(2) of the constitution and the sui generis nature of the constitutional responsibility of this court must be taken into consideration. The Learned Silk argued that the court has a duty to step-in in this particular case to interpret Section 254(c) of the 1999 Constitution as the suit has raised a very serious and novel question. He argued that Section 243 of the 1999 Constitution should not be invoked to deny the Supreme Court of its role and responsibility in constitutional interpretation.

On June 30, 2017, a full panel of the Supreme Court, comprising of Hon. Justice Ejembi Eko JSC; Hon. Justices Mary Ukaego Peter-Odili JSC; Hon. Justice Musa Dattijo Muhammad JSC; Hon. Justice Clara Bata-Ogunbiyi JSC; Hon. Justice Kumai Bayang Aka’ahs JSC; Hon. Justice Kudirat Motonmori Olatokunbo Kekere-Ekun JSC and Hon. Justice Chima Centus Nwezeh JSC, delivered judgment in the appeal. In the Lead Judgment read by Hon. Justice Ejembi Eko, the apex Court upheld the Claimant/Respondent’s preliminary objection and accordingly dismissed the appeal preliminarily.

Hon. Justice Eko said: “In this instant case, the question to ask and answer is whether the enactment of Section 243(4) of the 1999 Constitution by the National Assembly, in its power of amendment, through Section 5 of the Act No 3, 2010 is valid. In other words, how far has the National Assembly, in the enactment of Section 243(4) of the Constitution through the Third Alteration in 2010, eroded the basic structure of the 1999 Constitution?”

The apex Court traced the history of Section 243(4) of the Constitution and concluded that the intendment of the drafters of the constitution is to make the Court of Appeal a final appellate court over matters that relate to labour and employment matters. He Justice held that: “It is clear from their unambiguous language that the legislature intends that the matters of elections to the National Assembly, and States Houses of Assembly, like the matters the National Industrial Court has been specially vested jurisdiction over should, as a matter of public policy, be expeditiously disposed of and therefore should not be matters of further appeal to the Supreme Court. The presumption is that the parliament knows the state of affairs existing at the time of legislation and that the parliamentary policy or attention is directed towards that state of affairs”.

Justice Eko further held that: “The judex neither make laws nor does it possess any power to amend any statute”, he held, adding that “it is not the function of the court, in its interpretative jurisdiction, to interpret a particular provision of the statute or constitution by addition or importation thereto words not contained therein”. Since the parliament, in its power of amendment, knows the state of the law existing before and at the time it is amending the law; I want to believe that in enacting Section 243(4) of the constitution the law makers, in their wisdom knew very well, and indeed legislated, not to bother the Supreme Court with issues over master and servant relationships.”

The Supreme Court sustained Mrs. Akisanya’s preliminary objection and accordingly dismissed the Appeal filed by the Appellants (i.e. Coca-Cola Nigeria Ltd. and 2 others).

Interestingly, the Supreme Court also seized the opportunity to consider the substance of the appeal, that is, whether the jurisdiction of the National Industrial Court extends to private employment contracts. Hon. Justice Eko held that:

The law, as it stands by virtue of Section 254(C)(1) of the Constitution does not demarcate between public and private employment status. . Section 254(1) of the Constitution has, of course, expanded the jurisdiction of the National Industrial Court to cover all employment related matters including those arising from private contracts of employment”.

Continuing he said: “Section 254(1) of the Constitution does not mince words that the scope of the jurisdiction it has vested in the National Industrial Court extends to the exclusion of any other court in civil cases and matters relating to or connected to any labour, employment,- the conditions service- of labour, employee, worker and matters incidental thereto or connected therewith… The preliminary objection succeeds. The appeal being incompetent is hereby struck out. The Orders made by the lower court remain extant and inviolate. Costs at N500,000.00 shall be paid to the Respondent by the Appellants”.

Source: The Nigeria Lawyer

 

Fundamental Breach is a Valid Ground for Repudiating a Contract

IBEON ENERGY NIGERIA LIMITED v. WILBROS (OFFSHORE) NIGERIA LIMITED
 
COURT OF APPEAL LAGOS DIVISION

(GARBA; OTISI; EKANEM, JJ.CA)

The appellant is in the business of providing various categories of skilled and unskilled labour to service companies. The respondent entered into a Service Agreement with the appellant to provide workers for the respondent’s facility along East-West Road, Isiolu in Rivers State.

The agreement made provisions for termination with ninety days’ notice which must be given by parties before termination can be effective. The agreement also provided for cases of strike action by the workers and stated inter alia that the appellant shall take all measures to prevent a strike, provide adequate warning to the respondent and that the appellant shall take immediate steps to bring about resumption of normal work.

The workers at the respondent’s facility embarked on a strike, and without complying with the termination provision of the agreement, the respondent immediately terminated the contract on the ground that the appellant had committed a fundamental breach by not complying with its obligations to the respondent with respect to the provision dealing with strike.

The appellant was aggrieved and filed an action against the respondent at the Lagos State High Court. After trial, the court gave judgment in favour of the respondent. The appellant appealed to the Court of Appeal, Lagos Division. One of the issues raised for determination was whether from the facts of the case and evidence admitted and a proper construction of the service agreement, the contract can be terminated outside the contemplation of the relevant provisions.

In his argument in support of the issue, learned counsel for the appellant referred to clause 8(iii) of the service agreement and posited that under the provision of the clause the parties had agreed that under no circumstance shall a party to the agreement rescind or terminate the contract without giving the other party a 90 days’ notice or payment in lieu of notice. Learned counsel further contended that the termination of the agreement by the respondent is not valid having violated the clause. Learned counsel submitted that the trial court was wrong to have held that the termination of the contract by the appellant was valid by virtue of other clauses of the contract. He cited and relied on Union Bank Nigeria Limited v. Ozigi to submit that parties are bound by the terms of their contract and therefore urged the court to resolve the issue in favour of the appellant.

Responding to the argument of the appellant on the issue, learned counsel for the respondent referred to and quoted several clauses of the service agreement indicating that the appellant was under a duty to notify it and do everything possible in its powers to prevent any strike action by the workers and to notify the respondent within a reasonable time of any impending strike. Counsel posited that failure of the appellant to do all in its power to prevent the strike and its failure to notify the respondent of the impending strike is a fundamental breach of the contract giving the respondent the choice to terminate the contract. Furthermore, learned counsel for the respondent cited and relied on the cases of Coker v. Ajewole and Balogun v. Alli-Owe to submit that if a party who is entitled to put an end to a contract by reason of a fundamental breach does not exercise that right on becoming aware of the breach, he loses the right and cannot afterwards exercise that right without giving notice of his intention to do so. The respondent acted timeously by rescinding the contract in order to mitigate its losses. He posited that the respondent had the option of either suing for damages for breach of contract or rescinding the contract and that the respondent cannot be liable in damages by reason of not giving the required notice. He urged the court to resolve the issue in favour of the respondent.

In resolving the issue, the court held thus:

The effect of a fundamental breach of a contract by a party thereto has been the subject of pronouncements by courts over the years. In Dantata v. Mohammed (2000) 7 NWLR (Pt. 664) 176,198-199 Ayoola, JSC, stated as follows:

“Where one party has committed a serious breach of contract the innocent party has a right to rescind the contract. It has been said that the contract is in such circumstances rescinded de futuro (See Halsbury’s laws of England, (4th edn.) Vol 9(1) Par. 989 … When there is a serious breach of contract, one of the consequences is that the innocent party who has elected to rescind de futuro the contract is released from further obligations under the contract. The law is put succinctly thus in Halsbury’s (op. cit) par. 1003 as follows:

“If the innocent party (B) can and does elect to rescind the contract de futuro following a breach by the other party (A), all the primary obligations of the parties under the contract which have not yet been performed are terminated.

… Thus the innocent party is released from further liability to perform …”

In Bekederemo v. Colgate -Palmolive (Nig) Ltd (1976) 6-12 SC 24, 27 Sowemimo, JSC, as he then was, put it this way;

“… the learned trial judge was justified in refusing the appellant’s claim on the ground that he had committed a breach of an essential condition, which had the effect of putting the contract itself at an end”.

See also Rank Xerox (Nig) Ltd v. Centrex (Nig) Ltd (1995) 1 NWLR (Pt 374) 703, and Savannah Bank Plc v. Ibrahim (2000) 6 NWLR (Pt 662) 585.

Issue is resolved in favour of the respondent.

O.J. Ajakpovi, Esq. with Messrs O. A. Adenaike and O.B. Oduntan for the appellant.
Respondent’s counsel absent.

This summary is fully reported at (2017) 5 CLRN

Oral notice to terminate a written employment contract …

termination

Notice is notice whether in writing or oral provided both parties are not misled as to what is meant. It does not matter, in terminating an employee’s appointment, whether he is given notice in writing or orally or not. What is important is whether the employer has demonstrated clearly by action that the services of the employee are no longer required by the employer” – per Mohammed, JSC in Ifeta v. S.P.D.C (Nig.) Ltd (2006) 8 NWLR (Pt. 983) 585.

In the instant case, the employee was informed at a meeting that he is fired, though he was not issued a letter of termination. One of the issues for determination before the court was whether the oral notice was effective since the subject matter employment contract provided that either party could terminate only by “notice in writing”. The SC held in the affirmative.

  1. There is a great deal of flexibility that courts tend to apply in the interpretation of employment contracts (and nearly always in favour of employees) – the courts will mostly look to the intent of the parties rather than the form of the contract. Otherwise, the law is trite that when parties have reduced their agreement into a document, the Court will not look outside the document in deciding the rights and obligations of the parties.
  2. Similarly, an oral notice to quit issued by an employee would equally be effective against the employer.
  3. Oral notice to terminate is likely to present some practical difficulties as it could be open to different interpretations. This is not likely where the notice is in writing as the document would speak for itself.
  4. It is best to put into writing your notice/intention to terminate/dismiss. Where the notice is oral, it should be reduced into writing shortly after and re-issued. It is needless to get entangled into legal haggles about something as basic as your intention to get out of an employment contract.

 

Ikoyi Billions: At the Cross Roads of Financial Crimes and National Security

By Bolaji Adebiyi in Abuja

Vice-President Yemi Osinbajo’s committee set up to investigate the N13.3 billion recovered from a flat in Osborne Towers, Ikoyi, Lagos got cracking on Monday, reviewing replies to questionnaires it sent out at the weekend to principal characters in the inquiry that intelligence quarters warn could expose the underbelly of the nation’s foremost spy organisation, the National Intelligence Agency (NIA).

The committee, which also includes the Attorney-General of the Federation (AGF) and Minister of Justice, Mr. Abubakar Malami (SAN), and the National Security Adviser (NSA), Maj.-Gen. Babagana Monguno (rtd), was constituted by President Muhammadu Buhari last week to investigate how and by whose authority the money claimed by the NIA was made available to it, and to establish whether or not there had been a breach of the law or security procedures in obtaining its custody and use.

The committee is also to investigate allegations of violations of the law and due process made against the Secretary to the Government of the Federation (SGF), Mr. Babachir Lawal, in the award of contracts under the Presidential Initiative on the North East (PINE), running into millions of naira.
The Director-General of the NIA, Ambassador Ayo Oke, and Lawal were suspended last week pending the outcome of the investigation which report is expected within 14 days.

While Lawal’s troubles began in December last year when the Senate indicted him for allegedly awarding PINE contracts to his company, Rholavision, Oke’s began on April 12, 2017 when the Economic and Financial Crimes Commission (EFCC) raided the Osborne apartment, hauling in N13.3 billion. It is the biggest cash found in a single operation since the whistle blowing policy of the federal government started yielding fruit.

Although the EFCC, which had presumably leaked the find to the media, left the public in doubt about the ownership of the billions, the doubt was cleared when THISDAY reported that the funds belonged to the NIA, which claimed that the flat was a safe house in which it kept some of its money for covert operations.

The agency was later to explain that the money was part of the $289 million intervention fund approved for its covert operations and infrastructure development by President Goodluck Jonathan in 2014. Some of the operations and projects in Abuja, according to the agency, had been completed, while others are still ongoing. It said the Ikoyi money was warehoused for some of the operations in Lagos.

Questions that immediately arose from this claim were whether the president, to whom the agency’s DG accounts to directly, and the NSA, who coordinates the nation’s intelligence agencies, knew about the money? Why was the money not kept in the agency’s headquarters that was more secure? Why was it that the wife of the agency’s DG ferried the money to the safe house? And whether it is usual for the agency to keep such a large amount of money in cash?

These are obviously questions that the Osinbajo committee would have to unravel.
But intelligence experts that spoke to THISDAY on Monday warned that except the investigation is handled with extreme care, the nation’s intelligence community might be undermined with dire implications for national security. They contended that because of the security implications of the operations of intelligence agencies, they operate largely under cover, making their modus operandi unusual, clumsy and, in fact, sometimes illegal.

“The unusual operational practices of intelligence agencies are a worldwide phenomenon,” a source said on Monday, adding: “When Nigeria needs to intervene in the politics of another country, say, Liberia, to install a president that will support its policies, how do you think it does it? It is the NIA that is used.

Where in its books would you find such operational funds?” Another typical example was the $400 million cash flown by the United States government to Iran after a deal was struck to end Iran’s nuclear programme.
Asked if such unusual operational mode is not subject to abuse, the source admitted it could, but argued that there were standards and rules, guiding intelligence operations, explaining that in terms of financial accounting, the agencies are usually responsible directly to the president.

“So there can be no such thing as money laundering as far as intelligence is concerned because the agency’s operatives would always be in possession of money for covert operations,” he said.
Basically, what the source was pointing out was that because the world of intelligence and espionage is almost always murky and clandestine, it is likely that its business is not usually done through bank transfers and cheques, and almost always done by cash. “It’s like asking the CIA to pay informants through transfers,” he quipped.

Actually, by the provisions of Paragraph 12(1) & (2) of the National Intelligence Agency Instrument No.1, a subsidiary legislation to National Security Agencies Act, 1986, the NIA accounts directly to the president and its accounts are prohibited from external auditing.

Obviously aimed at protecting intelligence operations, the instrument derives from an October 21, 1960 memo from Prime Minister Abubakar Tafawa Balewa to the Director, Directorate of Research, Ministry of External Affairs, Alhaji Aminu Sanusi, directing the latter to account directly to him.

“You will be responsible, through the Secretary to the Prime Minister, to me personally for the proper expenditure and accounting of all funds from the secret vote. Those funds will not be subject to detailed audits, but you will be required to render a certificate to the Secretary to the Prime Minister on 1 January to 1 July of each year, showing the total sum expended during the period and a breakdown of the main headings under which such expenditure has been made,” the prime minster said in the memo to the director, who is the precursor of the DG, NIA.

Did the DG, NIA comply with this law? Insiders told THISDAY that Oke did. In his April 2015 general brief to the president on the state of affairs of the agency, he itemised the $289 million intervention fund approved and released to the agency by the Jonathan administration in November 2014. In another memo to the NSA in January 2016, he gave more details of the funds, including projects being undertaken, the amount expended, balance in the bank and cash at hand.

Based on his report, the NSA set up a verification team, which inspected the projects and submitted its report in February 2016. The NSA wrote back to the DG, NIA on 17 May 2016, stating that the detailed report of NIA’s projects and exercises had been presented to the president who was pleased with the agency’s foresight in developing the critical infrastructure outlined in the report.
If Oke filed his report with the appropriate authorities, why then is he in trouble? Insiders suggest that his bosses might not have read the reports and secondly that the inter-agency rivalry might have been at the root of his woes. Both might be at work.

While the president might not have been able to read the report because of his busy schedule that was compounded by his health issues, Monguno is said to loath reading. The reports, THISDAY gathered, are however, part of the annexures to the reply to the questionnaire sent to him by the Osinbajo committee.

There has been a running battle between the EFCC and NIA since April last year over the financial operations of the spy agency. The EFCC had instituted a secret investigation into the Central Bank of Nigeria (CBN) account of the NIA. The intelligence agency only became aware of the investigation when the account of Julius Berger PLC, one of the contractors handling its projects, was blocked.

Enraged by what it believed to be a breach of the law and security protocol, the NIA protested to the NSA who in an April 19, 2016 memo to the EFCC asked it to “refrain from the external audit of NIA and other intelligence agencies” as it contravened Paragraph 12(1) & (2) of NIA Instrument No 1 issued under the NSA Act, 1986.

The EFCC was apparently not happy with the NSA’s restraining order, insisting that it had the powers to investigate suspected financial crimes. The NIA opposed this claim on the grounds that intelligence service involves national security, which cannot be enquired into by a non-intelligence body like the EFCC. This conceptual disagreement perhaps explains why on April 12, 2017 when the NIA requested the EFCC to call off its raid on its Osborne flat, the anti-graft agency refused.
This is one big issue that the Osinbajo committee would have to crack: Can the warehousing of the billions claimed to be operational funds of the NIA in the Ikoyi flat be classified as a financial crime (money laundering) that the EFCC is empowered to investigate and prosecute, or is it a national security issue that the anti-graft agency is precluded from enquiring into?

Other questions that must be addressed would have to focus on the operations of the EFCC, which in several instances has been known to put the cart before the horse. Did the EFCC obtain a search warrant to break into the Ikoyi apartment? If it did and proceeded to the court to obtain a temporary forfeiture order, did it do a search at the Lagos Lands Registry to ascertain the owner of the flat? Did it extend its search to the Corporate Affairs Commission (CAC) to verify the shareholders/directors of the company said to have bought the flat? Why did the EFCC ignore the NIA DG and the agency’s operatives when they owned up to the billions discovered in the flat? With the lid blown open on what was obviously a covert operation, who takes responsibility for the glaring breach of security protocol?

Most importantly, the Osinbajo committee has to ensure that in trying to establish probity and accountability, his committee will also attempt to ensure that what security and intelligence agencies do in the “dead of the night” to keep us safe, is not compromised.

Source: This Day

Legal Treatment of Occupational Safety and Health in Nigeria

courses-postgraduate-public_health-occupational_health_safety_environmental_managementOccupational Safety and Health (OSH) is commonly defined as the promotion and maintenance of the highest degree of physical, mental and social well-being of workers in all occupation. It means the totality of all activities and programmes that are engaged upon, aiming to attain and maintain the highest level of health and safety for all people who are engaged in any type of work. It involves the protection of workers’ health from any hazard to which they may be exposed in the work environment.

The human, social and economic costs of occupational accidents, injuries and diseases and major industrial disasters have long been a cause for concern at all levels from the individual workplace to the national and international levels. Globally, it is estimated that every 15 seconds, 153 workers have a work-related accident, which results in at least one death. In sub-Saharan Africa, the fatality rate per 100,000 workers is 21 and the accident rate is 16,000. This means that each year 54,000 workers die and 42 million work-related accidents take place that cause at least three days’ absence from work. Recent studies put the annual work-related death rate of Nigeria at about 24 fatalities per 100,000 employees, which is one of the highest in the world.

OSH is concerned with protecting the safety, health and welfare of people engaged in work or employment. The enjoyment of these standards at the highest levels is a basic human right that should be accessible by each and every worker. Regardless of the nature of their work, workers should be able to carry out their responsibilities in a safe and secure working environment, free from hazards.

These rights are usually set out in appropriate laws to ensure that both employers and employees are clear about the obligations and the consequences for neglecting them. OSH in Nigeria is largely based on the Factories Act, enacted in 1987 and a few other complementary legal provisions in the Labour Act 1974 and the Employees Compensation Act 2010. These legal provisions, put together, are clearly inadequate in terms of coverage and currency. The Factories Act, for instance, does not include the construction industry in the definition of premises, and hence construction firms frequently have to rely on OSH regulations from other jurisdictions, which are not necessarily enforceable in Nigeria.  The severity of penalties for violation under the extant OSH laws is also inadequate to sufficiently deter offenders.

It is surprising that Nigeria is yet to enact a comprehensive law on OSH even with its high occurrences of occupational accidents. However, with the sheer size and documentation of accident/disaster experiences across factories and other workplaces, there is no basis whatsoever for a developing country like Nigeria to be reactionary to accidents.

The Factories Act empowers the Inspectorate Department of the Federal Ministry of Labour and Productivity to enforce the minimum standard requirements on OSH. The enforcement processes require issuing of warning or notices to offenders, after which the lower level of enforcement, which includes the sealing of a defaulting factory, takes place. Correspondingly, the Nigerian Social Insurance Trust Fund Management Board implements the Employee’s Compensation Act of 2010, which makes provisions for compensation for any death, injuries, and diseases or disabilities due to employment. The provisions of the Labour Act that touch on OSH relate to the employment of women and young persons in agricultural and industrial undertakings. There is little or no reference to OSH for other categories of workers.

The ideal that there should be daily inspection of workplaces by factory inspectors and monthly reports sent to the Federal Ministry of Labour and Productivity is not achievable, as the Ministry is said to have less than 150 factory inspectors for the entire country. Lack of skilled manpower is one of the major reasons for poor enforcement of OSH regulations and is also the reason why regulatory enforcement is reactive rather than proactive. The LSHW Bill adopts a proactive and collective participatory approach of enforcement in accordance with international best practice. It requires the participation of the Nigerian Institute of Safety Professionals, National Council for Occupational Safety and Health, OSH committees, safety and health representatives, employers, research institutes, principal contractors and the education sector. It places due responsibilities on OSH committees and the safety and health representatives at the grass-roots level, by having them monitor, regulate and maintain the safety of employees in the workplace. The logic here is that OSH is the responsibility of all and should be taken as such.

 In practice, citation contests and disputes between OSH regulatory authorities and the duty holders are not completely avoidable; hence, an efficient system must be put in place to address those issues. Section 254C (1) of the 1999 Constitution (as amended) grants exclusive jurisdiction to the National Industrial Court over matters relating to OSH. This is also the position of the LSHW Bill. Directing OSH related cases to a single specialised court has its pros and cons. Used carefully, the approach could significantly reduce the usual litigation delays seen in regular courts, which is good for the OSH regulatory purposes. However, left with no commensurate capability in terms of staffing, funding or otherwise, it could stand as one of the weakest links in the OSH regulation process with huge negative consequence on the entire regulatory regime.

Success of OSH regulatory and enforcement framework is commonly measured in terms of its ability to reduce human vulnerability (fatalities, injuries and loss time injuries), environmental damage and commercial losses to a tolerable level and without entailing disproportionate costs. An effective OSH legal framework should be designed to ensure that healthy and safe workplaces, and a compensation and rehabilitation system, which ensures that no worker is disadvantaged should they be injured at work. An effective OSH legal framework should spell out commensurate penalties to defaulters and grant the inspectors adequate, but controlled, powers to enforce its provisions. To avoid jurisdictional conflicts among related agencies, the law should also clearly define the scope of the OSH management authority.

Government in Nigeria has demonstrated a shocking lack of commitment towards effective OSH regulation. It is more than four years since the National Assembly passed the LSHW Bill, yet it still awaits presidential assent. Every moment that the construction industry or other workplaces remain unrecognised by unenforceable OSH regulations, or the penalties for violation remain insignificant, more injuries, fatalities and accidents occur.

However, the responsibility rests on the government to improve the state of OSH in Nigeria, along with active participation of the trade unions, professional bodies, educational institutions and the employees and employers. Above all, the proactive and collective participatory approach to enforcement of OSH regulations should be practiced at an optimum level, requiring much more than enactment of laws and regulations.

 

 

 

Capital Market Disputes – The Appropriate Resolution Channel

capita-marketA Federal High Court in Lagos has struck out a N1.86bn suit filed against the founder of the Living Faith Church, a.k.a. Winners’ Chapel, Bishop David Oyedepo, by a stock brokerage firm, Valueline Securities and Investment Limited.

Justice Jude Dagat, in a ruling on Friday, described the plaintiffs’ suit as incompetent and dismissed it for want of jurisdiction.

Valueline Securities and Investment Limited and its Managing Director, Samuel Enyinnaya, had in February 2015 sued Oyedepo and his family for an alleged breach of contract in a N9bn stock market deal. Joined as the 10th defendant in the suit was the Security and Exchange Commission.

The plaintiffs, through their lawyer, Mr. Rickey Tarfa (SAN), sued for the enforcement of their fundamental rights and were claiming a total of N1.86bn from the defendants jointly and severally as professional fees and damages.

The plaintiffs, in their statement of claim, averred that Oyedepo, his family and organisations entered into an Investment Portfolio Management Agreement with them and appointed them as the portfolio managers to oversee and to ensure the profitability of the said investment worth about N9bn in the Nigerian Stock Exchange.

According to the plaintiffs, it was agreed that 2.25 per cent of the net asset value of the portfolio and an annual incentive fee of 10 per cent of the returns on the investment would be paid to the plaintiffs.

The plaintiffs said that in order to enhance the profitability of the investment, they obtained some margin loans from some Nigerian banks, which, they claimed,  turned out to be a great boost to the investment.

They however said trouble started “when Oyedepo wanted to buy his first private jet and the World Mission Agency Inc ordered the sale of majority of the securities in the investment portfolio, and that despite the professional advice to the contrary, the plaintiffs were made to sell the securities to raise the N3bn needed to buy the jet, a development which brought about huge losses to the investment.”

According to the plaintiffs, following the said sale of the shares coupled with the global economic meltdown which caused stock market across the globe to crash at the time, the N9bn investment recorded losses.

The plaintiffs, however, alleged that in a bid to avoid their financial obligations to the plaintiffs, Oyedepo and his organisations accused them of fraud and mismanagement and wrote a petition against them to the Economic and Financial Crimes Commission.

They however claimed that the EFCC found them innocent after six years of investigation after which Oyedepo further dragged them before the Nigerian Stock Exchange.

The plaintiffs alleged that the NSE unlawfully froze their business accounts and did not give them fair hearing. They had urged the court to order the NSE to immediately unfreeze their accounts.

They also sought the payment of N1.86bn as their professional fee and damages. But the Oyedepos, through their lawyer,  Mr. Chioma Okwuanyi, filed a preliminary objection and asked the court to dismiss the suit for lack of jurisdiction.

Contrary to the plaintiffs’ claim, Okwuanyi maintained that the losses recorded on the N9bn investment were due to the plaintiffs’ recklessness, adding that the margin loan they took was without the consent of the Oyedepos and that the loan was not channeled into his clients’ investment.

In the three-ground preliminary objection, Okwuanyi contended that by the provisions of Section 34 of the Investment and Securities Act, only the Investment and Securities Tribunal had the vested authority to entertain a dispute between a capital market operator and his client and not a Federal High Court, to which the plaintiff had brought the matter.

The lawyer further argued that the plaintiffs’ suit, as constituted before the Federal High Court, was premature, as the plaintiff had yet to explore all the internal dispute resolution mechanism within the NSE before heading for the court.

In its own objection, the NSE, through its counsel, Mr. M.O. Liadi, also contended that the plaintiffs ought to have approached the NSE council to ventilate their grievances rather than rush to the Federal High Court.

“Given the complaints of the plaintiffs against the decision of the applicant, the plaintiffs ought to have approached the applicant’s council and if still unsatisfied, the plaintiff is obliged to proceed to the Securities and Exchange Commission.

“If still unsatisfied, by the provisions of sections 284 and 289 of the Investment and Securities Act, the plaintiffs are permitted to proceed to the tribunal. We submit that the plaintiffs have failed to do this,” Liadi contended. In his ruling on Friday, Justice Dagat upheld the defendants’ preliminary objections and dismissed the plaintiffs’ suit.

The judge agreed with the defendants that  the plaintiffs ought to have taken their case before the Security and Investment Tribunal rather than the Federal High Court.

The judge also held that the plaintiffs failed to exhaust the internal dispute resolution mechanism provided in the Security and Exchange Commission before resorting to a legal action.

The judge held, “On the whole, I hold as follows: This suit is based on a simple contract between the plaintiffs and the 1st to 10th defendants, which the Federal High Court has no jurisdiction to entertain.

“The plaintiffs have not complied with the pre-action requirements of the 11th defendant under its rules and the Investment and Securities Act 2007. Even after satisfying both requirements, the appropriate venue to institute this action is the Investment and Securities Tribunal.

“The preliminary objection filed by the 1st to 10th defendants/applicants and that filed by the 1th defendant/applicant have merit. This court declines jurisdiction to entertain this suit. The court cannot further transfer the suit to the Investment and Securities Tribunal because even the pre-action requirements have not been satisfied. The suit is hereby struck out” the Court said.

Source: Punch