Diamond Bank In $45mn Breach Of Contract Mess

Posted on September 13, 2017
MICHAEL AKINOLA

Diamond Bank Plc has been dragged before a Federal High Court in Lagos, Nigeria in a $45 million breach of contract suit by an indigenous aviation Firm, Topbrass Aviation Limited.

P.M.EXPRESS gathered that the aviation firm is seeking an order of the court for special damages of the sum of $19, 250,000, against the bank, being the revenue or income it lost from December 2014 to the date of filing the suit, due to the bank’s unethical practices.

The company is also seeking an order of the court to compel Diamond Bank Plc to pay it the sum of $25 million and $875,000, as special and exemplary damages respectively, for several outrageous and reprehensible breach of its banker’s duties to it, and for loss of income which would have accrued to it from the commercial use of its aircraft.

In an amended statement of claim filed before the court by its lawyer, Barrister Fidelis Albert, Topbrass Aviation limited stated that it has a banker/customer relationship with Diamond Bank and such relationship is still subsisting.

The company maintains three-dollar and two-naira denominated accounts with the bank.

Sometime in 2010, the company bidded for and was awarded a multi-million dollar contract by Chevron Nigeria Limited (CNL), to provide aircraft charter and auxiliary aviation support services for Chevron, and that by the terms of the contract, it had the obligation to deploy two Bombardier Dash-8Q300 aircraft for the exclusive use and Service of Chevron Nigeria Limited on an initial two-year charter.

The purchase price for the aircraft was $9.5 million, however, the cost of undertaking a comprehensive back-to-service maintenance on the aircraft before it could introduce the aircraft to its fleet for routine flights, was over $1 million, and on account of prohibitive cost, it was constrained to approach Diamond Bank, as its banker, for a loan to finance the purchase, maintenance and importation of the aircraft.

The aviation firm stated further that in obtaining the credit facility, it entered into series of negotiations with Diamond Bank, and after its proposal including the risk, cash flow projections, income stream on existing contract, potential incomes and commercial viability has been fastidiously assessed by the bank, and upon the conclusion of the negotiations, it was granted credit facility of $10.5 million.

The plaintiff also stated that by the term of the offer letter of the facility, it was require to make and indeed made, an equity contribution to the loan portfolio to the tune of 10 per cent of the value of the credit facility, which amounted to the sum of $1.050 million.

The plaintiff further stated that sometime in 2010, it entered into an Aircraft Maintanance and Service Provider Agreement (AMSP Agreement) with an aircraft maintenance facility in South Africa known as Execujet Maintenance (Pty) Limited.

Pursuant to the AMSP Agreement, it began servicing and/or maintaining it’s aircraft fleets with Execujet.

The first aircraft, similarly a Bombardier DHC-8-Q315 marked 5N-TBC and MSN 614, was delivered to Execujet for ‘C’ check sometimes in March 2013, for which Execujet completed the scheduled maintenance within a ten-week period at a total cost of about $650,000.

The plaintiff, averred further that quite unknown to it, and while it was labouring to resolve payment issue with Execujet, Diamond Bank had sometime in January 2015, surreptitiously circumvent it, and commence clandestine discussion with the Execujet with a view to retaining the services of Execujet as its agent for sale of the aircraft.

With this, the plaintiff said Diamond Bank and Execujet concluded an agreement dated May 14, 2015, the agreement it termed intended to overreach and extinguish its proprietary and ownership right of its aircraft.

The plaintiff alleged further that Diamond Bank’s interference with its contract with Execujet, through deceit, fraudulent misrepresentation and breaches of banker’s fiduciary duties to it, gave Execujet the impetus to boldly defraud it and foster the chains of fraud and breach of contract.

The company further alleged in its particulars of damage, that Diamond Bank breached its banker’s duties of confidentiality, care, good faith and honoring mandate to it,without cause, by:

a. Divulging its credit standing and private financial information to Execujet in a false, misleading and inaccurate manner.

b.Maliciously misrepresenting its credit standing to Execujet without authority.

c. Refusing to honor its payment mandate to vendors in respect of the Aircraft thereby injuring it’s credit and reputation.

d. Unilaterally accessing and making payments without and against the mandate of the company.

e. Covertly and maliciously interfering with or circumventing it’s contractual relationship with Execujet, or unjustly inducing Execujet to breach its Aircraft Maintenance Agreement with the company, including countermanding the company’s instructions and directives to Execujet in respect of maintenance of the Aircraft and incidental matters.

The plaintiff averred that Execujet concluded maintenance of the Aircraft in 25th October, 2016, however following the action of Diamond bank, Execujet was in dilemma of who to hand over the aircraft to, in view of competing claims of the company and Diamond Bank, adding that with the steps taken by the Diamond Bank, consequently Execujet continues to unlawfully retain the possession of the Aircraft in South Africa at Diamond bank’s behest and pleasure, while the actions taken so far has put Topbrass Aviation company in a state of perpetual indebtedness to the bank.

Consequently, Topbrass Aviation Limited is urging the court to grant all it’s above stated reliefs against Diamond Bank.

The court has adjourned till next month for hearing when Diamond Bank must have filed its amendment statement of defence.

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