Breach of contract: 2 companies slam N7b suit on FCMB


By Akin Kuponiyi

Two  limited liability companies, Sunlek Investment Limited and Sunsteel Industries Limited  have slammed a N7billion suit on First City Monument Bank (FCMB) Plc over alleged breach of contract.

 In a 126 -paragraph of statement of claim accompanied by 27 paragraphs of a witness’ sworn oath and  filed before a Federal high court sitting in Lagos south west Nigeria by a Lagos lawyer, Mr. John Olusegun Odubela SAN ,the two companies alleged that they operated loan accounts with First City Monument Bank. It was from there disbursement was made for all letters of credit /loan facility granted to  them by the bank for the importation of raw materials.

However since 23rd May, 2013 when the bank entered into an agreement to grant them loan, and open a loan facility account for them till date, they have not been given the particulars of the loan facility account neither has any statement of account of this loan account been made available to them.

The companies alleged further that by a commitment letter dated 23rd May,2013 and the term sheet for facility duly signed /executed by the two parties, FCMB committed and undertook to fund on fully-underwriten basis the debt finance (importation of goods) of $1.5 million and N422.5 million .Thereafter other loans facilities were granted to the companies by the bank.

The total amount of the letters of credit opened by the bank in favour of the companies is $8 million out of which sum the companies  contributed  10% based on the terms of the grant of the various offers for facility utilized to open letters of credit from 22nd ,March 2013 to September, 2017. The loans facilities were well secured.

The companies contended that from the available records available to  them,it was  reflected that they have fully repaid their indebtedness to the Bank

However the companies were bewildered when they received the bank’s  letter that their indebtedness  to the bank as at 14th of March,2019 was in the sum of N1.1 billion that the debt should be liquidated within 14 days,despite the fact that they had fully repaid the loan they took from the bank.

Consequently, they engaged the services of an accounting firm to  audit their account,the plaintiff by their letter and their solicitor’s letter requested for statements of accounts of the loan accounts from the bank, but the bank deliberately failed to make available the said statement of account.

However from the forensic analysis of their accounts, the plaintiffs contended that they are not in any way indebted to the bank. 

From the forensic audit report it was discovered that there were two transactions carried out on letter of credit, wherein substantial volume of the product were damaged. The value of items purchased by the letters of credit was in the sum of $2million for the importation of cold rolled steel strips, galvanized steel strips and Zinc wire from Chemetals(HK) limited Unit 1105H/F Lippo Center 89,Queens Way Hong Kong.

FCMB is solely and unilaterally liable to undertake all the risk Insurance policy Clause A for the consignment/raw material to be  imported by virtue of the letter of credit.

The bank solely negotiated insurance policy obtained for the products purchased and appointed Mansard Insurance Plc to provide insurance cover Clause C for the importation of the consignment.

Upon taking delivery of the consignment after payment of custom duties and port charges, it was discovered that large volumes of the said consignments were in various forms of damaged conditions.

The companies  informed the bank about the  damaged consignment and the need to pursue insurance claim for the damage,the bank requested for documents which were presented to them to pursue the claim.

However, the agent of the bank sent a report to the companies to inform them that from the nature of damages to some of the products, the insurance policy, being a Clause C policy as undertaken by the bank is not sufficient to cover the nature of loss from the said damages to the products. The total value of the consignment damaged is in the sum of $628,386.23 and N336.1 million. 

The bank ought to have undertaken an all risk insurance policy cover with the insurance company. As a result of the damages to the consignment,they were not fit for use and could not be refined in  the plaintiffs machine and remained in the factory as junk or waste material.

The companies averred that they had suffered financial loss as a result of the breach of contract in the sum of N884.9 million which has negatively  affected their business operation since 2014 till date. They averred that they are entitled to claim damages for breach of contract against the bank that had by its various acts of breaches of the various letters of offer for facility caused great loss to their business.

Consequently the companies’ claim against FCMB jointly and severally are as follows :

General damages in the sum of N5billion.

A declaration that the plaintiffs are not indebted to the bank in any sum premised on the fact that they  had settled all their indebtedness on the facilities granted to them by the bank.

A declaration that the bank breached the terms of letter of credit  and is liable for the loss of the letters of offer on importation, in the sum of $2million.

A declaration that the bank is liable to refund to the plaintiffs N884.9 million,being the losses uncured on the damaged consignment purchased through letters of credits,and failure and refusal of the bank to obtain an all risk insurance policy for the shipment of the said consignment.

An order for the payment of N826.9 million being the total sum wrongly debited on the companies’ account by the bank.

An order of the court restraining FCMB from appointing and or registering any instrument of appointment of an official receiver or any instrument whatsoever made for the purpose of enforcing the security for the payment of alleged indebtedness in the sum of N1.1 billion being allegedly claimed against the plaintiffs by the bank .

Cost of litigation assessed at N250million.