Firm drags Diamond Bank to court for breach of contract worth $45m

Diamond Bank Plc has been dragged before the Federal High Court in Lagos by a local aviation firm, Topbrass Aviation Limited, for allegedly breaching a contract worth $45 million.

The firm in the suit prayed an order of the court mandating the bank to pay special damages of $19,250 million. It claimed the amount was what it lost in revenue from December 2014 to the date of filing the suit owing to alleged unethical practices of the bank.

The firm argud that Diamond Bank breached its banker’s duties of confidentiality, care, good faith and honoring mandate to it, without cause.

The firm therefore asked the court to mandate Diamond Bank Plc to pay it the sum of another $25 million and $875, 000, as special and exemplary damages respectively, for myriads of outrageous and liable breach the bank allegedly committed against it, and for loss of income which would have accrued to it from the commercial use of its aircraft.

The company however stated in an amended statement of claim filed before the court by its lawyer, Barrister Fidelis Albert, that its banker/customer relationship with Diamond Bank still exists as the company maintains three-dollar and two-naira denominated accounts with the bank.

The company is said to have sometime in 2010, bid for and was awarded a multi-million dollar contract by Chevron Nigeria Limited (CNL), to provide aircraft charter and auxiliary aviation support services.

By the terms of the contract, the company is said to have 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 USD. But, the cost of undertaking an all-inclusive back-to-service maintenance on the aircraft before it could launch the aircraft to its fleet for routine flights was over $1 million, and on account of prohibitive cost, it was forced 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 had entered into series of negotiations with Diamond Bank to obtain the credit facility and after its proposal including the risk, cash flow projections, income stream on existing contract, potential incomes and commercial viability were assessed by the bank, and that upon the conclusion of the negotiations, the firm 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 required 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.

Read also: Days of ‘America’ll know’ over, Fashola says as he demands probe of Egbin Power’s American boss

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 sometime 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 circumvented it, and commenced clandestine discussion with 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.

It was sequel to this that the firm dragged Diamond Bank to court on the argument that Diamond Bank breached its banker’s duties of confidentiality, care, good faith and honoring mandate to it, without cause. Topbrass Aviation Limited has therefore urged the court to grant all its reliefs against Diamond Bank.

The court adjourned till next month for hearing when Diamond Bank is expected to have filed its amendment statement of defence.

 

RipplesNigeria… without borders, without fears

Click here to join the Ripples Nigeria WhatsApp group for latest updates.

 

Join the conversation

Opinions

Support Ripples Nigeria, hold up solutions journalism

Balanced, fearless journalism driven by data comes at huge financial costs.

As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.

If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.

Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.

Donate Now