Court Orders Seplat Energy to Pay N1.4bn Debt

Justice Owolabi Dabiri of the Lagos State High Court has ordered one of the foremost oil and gas exploration company in Nigeria, Seplat Energy Plc to pay its outstanding indebtedness of  $2,112,500.00 (N1,499,875,000 .00)  to an oil servicing company, ABM Global Resources Limited.

Justice Dabiri gave the order while delivering judgement in a debt recovery suit instituted by ABM Resources Limited against Seplat in suit number LD/2457GCMW/2016.

ABM Resources Limited  in a bid to recover the debt owed by Seplat for materials supplied to the  oil prospecting company,  had in 2016 through its lawyer, Mr. Ade Oyebanji, SAN,  instituted a debt recovery suit at the Lagos State High Court  Ikeja.

In the amended statement of claim dated 23rd November, 2020 and filed by Ade Oyebanji , SAN, on behalf of ABM Resources Limited, the claimant  said that sometimes between 2012 and 2014, SEPLAT Petroleum Development Company Plc secured her services to supply 9-5/8 N80 VAM Top Casing Pipes  and 2-7/8 N80 HCS Tubing within the space of 3years.

ABM added  that it supplied the Defendant (SEPLAT) with all  the numbers of 2-7/8 N80 HCS Tubing Pipes which were received by the defendant.

Plaintiff further averred that in fulfilment of the terms of contract for the  supply of the materials  and in adherence to the purchase order of the defendant , it made several supplies.

In fulfilling  part of it’s  obligations in  accordance  with the contract term , plaintiff said  Seplat made an upfront payment of $3,640,000.00 being 80 per cent of the total cost of the 50,000 feet of 9-5/8 N80 VAM Top Casing Pipes  supplied leaving a balance sum of $910,000.00 and $227,500.00 as Value Added Tax  totaling $1,137,500.00.

The oil servicing company said it supplied the products requested by the defendant satisfactorily through it PO number 013537 and the defendant issued Work Completion Certificate for the job.

Plaintiff stated that  it issued invoice number ABM /MD/ SEPLAT/14/Vol. 4/892 dated November 17,2014 to the defendant in respect of the balance sum of $1,137,500.00 due on the supply,  but the defendant has refused to settle  the outstanding  invoice.

It was further contended by the claimant that the defendant also requested for the supply of 120,000 feet of 2-7/8 N80 HCS pipes, and made an upfront payment of $3,120,000.00 being 80 per cent of the total cost of the 120,000 feet of 2-7/8 N80 HCS Pipe in accordance with the terms of contract,  leaving a balance sum of $780,000.00 and $195,000.00. ( Value Added Tax) , totaling $975,000.

The  plaintiff said  all  the goods were said  supplied, with Seplat issuing a Work Completion Certificate, but that the defendant has  refused to settle  the outstanding debt despite repeated demands, hence the resort to  litigation.

Consequently, the plaintiff is claiming from the defendant  the sum of $1,137,500.00 and another $ 975,000.00 being cost of the unpaid materials supplied to the defendant.

During trial, both parties called one witness each and tendered documentary evidence in support of their case.

While the claimant call its only witness, Chioma Kelechukwu , a Business Development Officer in the claimant company, who came to identified her statement on Oath and was later cross-examined by the defence counsel.

The defendants also  call its lone witness Igbi  Oghenerume, the Lead Inventory Manager in the defendants’ company who also identify his statement on Oath and was cross-examined by the plaintiff counsel, Mr. Ade Oyebanji, SAN .

In his judgement, Justice Dabiri, while evaluating the documentary evidence  before the court  and counsel submissions, held that by the defence own documents and oral testimony  there was no disputes that the defendant issued Work Completion Certificate to the claimant after delivery of materials, which pre- supposes the satisfactory completion of certain job or activities.

The trial judge added that the sanctity of contract or agreement is to ensure that a party who voluntarily entered into a contract is bound by it, no matter how unfavourable it may turn out to be as long as he entered into the contract fully conscious of what he was doing, and had willingly  signed same and the subject matter of the contract is lawful.

On the issue of shortfall of 17,842.02 feet of pipes as alleged by the defendant, Justice  Dabiri held that the defendant conducted an in-house reconciliation exercise and came up with a shortfall in the specifications of the items supplied to it by the claimant in 2012 .

The court held that the claimant rightly rejected the reconciliation exercise, stating that a reconciliation exercise conducted without the active participation of the other party in dispute is one sided.

The judge added that to say the least, there was no sufficient materials placed before the court  to prove that there was any shortfall in the supply.

Justice Dabiri in the judgement held “The court was not furnished with any official report detailing the shortage , rather an internal memo was tendered before the court, a communication between departments within the same  organisation.

“The defendant could have been more circumspect and more discerning to invite the claimant for the verification and both parties to acknowledge, consent or reject, but this is a one man show considering the colossal amount involved.

“I have listened to the submissions of counsel on both sides, and having perused the array of processes  and documents before me, the court hereby make the following orders and this is the judgement of the court”.

That the claimant is entitle to the unpaid and outstanding balance  sum of $1, 137,500.00  for the supply of 9-5/8 N80 VAM Top Casing Pipes and 9-5/8 HCS Tubing Pipes

hat the sum of $1,137,500.00 is the sum due to the claimant from the outstanding balance of the defendant for the supply of 9-5 N80 VAM Top Casing Pipe and 9-5N80 HCS Tubing Pipe.

The payment of  interest on the said sum of $1,137,500.00 from the 18th of February, 2014 at the rate of  six per cent  per annum until judgement is delivered and thereafter at the rate of six per cent per annum until full liquidation.

That the claimant is entitled to the unpaid outstanding balance of $975,000.00 due for the supply of 2-7/8 N80 HCS Pipe.

The  sum of $975,000 .00  only is  the sum due to the claimant for the supply of 2-7/8 N80 HCS Pipe and payment of interest on the said sum of $975, 000.00 from the 18th of February , 2914 at the rate of 10 per cent per annum until judgement is delivered and thereafter at the rate of 6% per annum until full liquidation.

Justice Dabiri also awarded N500,000 in favour of the claimant.

Concluding, Justice Dabiri  said:   “It is unfortunate that in a country where the business environment is already harsh, unfriendly and riddles with stings of bottlenecks primed to make  business owners fail, companies and individuals also constitute hindrances  to the smooth running of business by refusing/neglecting to make remittance for services rendered .Such attitude should be condemned in it’s entirety . Truly this is a simple case of contract, a business gone awry.”

Meanwhile, Seplat has appealed the judgement. In its Notice of Appeal dated 13th December, 2021, the appellant in the raised ten grounds of appeal for adjudication.

However, no date has been fixed for hearing of the appeal.