Download PDF
JUDGMENT 1. The claimant filed this action on 12th November 2014 vide a Writ of Complaint accompanied by the statement of facts, list of witnesses, witness written statement on oath, list of documents and copies of the documents. By the statement of facts, the claimant is claiming against the defendant for the following reliefs – (i) Damages in the sum of N250,000,000.00 (Two Hundred and Fifty Million Naira) against the 1st defendant for the breach of contract of nondisclosure and non-competition, being part of the contract of employment between the claimant and 1st defendant. (ii) Damages in the sum of N500,000,000.00 (Five Hundred Million) against the 2nd defendant as an accessory to the breach of the contract of employment between the claimant and the 1st defendant. (iii) The cost of this suit. 2. Despite that the defendants had a counsel who appeared for them in Court, even during trial, the defendants did not file any memorandum of appearance, nor did they file any defense process. Effectively then, this suit is undefended. In Attorney General Osun State v. NLC & ors [2013] 34 NLLR (Pt. 99) 278 NIC, this Court held as follows: The defendants at first did not enter any memorandum of appearance, or show up, or were represented by counsel, or file any defence process in this matter; and this was despite the service of the respective hearing notices on them. Order 9 of the National Industrial Court Rules 2007 enjoins a party served with a complaint and the accompanying originating processes and who intends to defend the action to file defence processes as provided therein. Order 9, therefore, recognizes the right of a defendant not to defend an action filed against him/her. And by Order 19 Rule 2, where the defendant is absent at the trial and no good cause is shown for the absence, the claimant may prove the claim in so far as the burden of proof lies upon him or her. This Rule, of course, accords with the minimal evidential requirement, which is to the effect that a plaintiff cannot assume that he is entitled to automatic judgment just because the other party did not adduce evidence before the trial court as held in Mr. Lawrence Azenabor v. Bayero University, Kano [2011] 25 NLLR (Pt. 70) 45 CA at 69 and Ogunyade v. Oshunkeye [2007] 4 NWLR (Pt. 1057) 218 SC at 247. It was as a result of all of this that the Court then permitted the claimant to argue its case even in the absence of the defendants. This position is similar in effect to the current Order 9 Rule 5(1) and Order 15 Rule 2(8) of the National Industrial Court of Nigeria (Civil Procedure) Rules 2016 dealing with failure of the defendant to file a memorandum of appearance and defense processes. A similar scenario presented itself in MRS Holdings Ltd v. Ibrahim Akar unreported Suit No. NICN/LA/225/2014 the judgment of which was delivered on 21st June 2016, in which the claim was inter alia for damages in the sum of USD500,000 against the defendant for engaging in a personal business through the use of his company to do business with the claimant thus beaching the non-competition clauses of his contract of employment with the claimant. The defendant did not enter any appearance or file any defence to the action; and this Court allowed the claimant to prove its case. 3. The Court accordingly permitted the claimant to prove its case. The claimant called one witness, Akinlolu Oyemakinde, the Administrative Manager of the claimant, who testified as CW for the claimant and was cross-examined as such by the defendants’ counsel. Thereafter, the Court ordered parties to file and serve their respective written addresses. The claimant’s written address is dated and filed on 17th November 2016. The defendants did not, within time, file any written address. 4. The case of the claimant is that the 1st defendant (an Indian citizen) was employed in February 2011 as Chief Operating Officer and he entered into a contract (Exhibit C2) of nondisclosure of information (clause 5 of Exhibit C2) and non-competition with the claimant (clause 6). That a fundamental term of his contract of employment (clause 6 of Exhibit C2) is that within two years after the determination of his employment, the 1st defendant would not directly or indirectly carry on any business of the claimant, whether on his own account or in partnership with any other person(s). That whilst in the employment of the claimant, the 1st defendant diverted a potential business of the claimant for his personal benefit (Exhibit C11). That he also made attempts to divert the claimant’s fees from a client. Further, that after the 1st defendant’s employment was determined on 18th September 2013 vide Exhibit C3 and in breach of the contract with the claimant, the 1st defendant was employed by the 2nd defendant within 6 months of the termination of his employment. It is the allegation of the claimant that since the 1st defendant left its employment, he had been diverting its goodwill and businesses to and in favour of the 2nd defendant and by that reason, the business of the claimant suffered unquantifiable losses. That the claimant brought the notice of the breaches to the defendants and called for immediate remedy (Exhibits C4, C6, C8 and C9) but both defendants declined (Exhibit C10). That the 2nd defendant, upon request (Exhibit C7), was furnished (Exhibit C8) with the contractual documents between the claimant and the 1st defendant, showing the nondisclosure and non-competition clauses. That despite the ample evidence of the breaches furnished to the 2nd defendant, it chose to retain the 1st defendant in its employment in continued breach of the 1st dependent's contract with the claimant (Exhibit C10). The claimant accordingly brought this action seeking the reliefs it prays for. 5. The claimant formulated three issues for the determination of the Court, namely: (a) Whether the claimant is not entitled to damages against the 1st defendant for breach of the contract of nondisclosure and non-competition, being part of the contract of employment he voluntarily entered into with the claimant. (b) Whether the 2nd defendant, despite having been informed and aware of the breach of contract of his employment by the 1st defendant and having decided to retain him in their employment, has not thereby become an accessory to beach of contract and thereby liable in damages to the claimant. (c) Whether the claimant is not entitled to the reliefs prayed for in its writ of summons and statement of claim. 6. In arguing issue (a), the claimant submitted that in compliance with section 7(1) of the Labour Act Cap 198 LFN 2004, the claimant and the 1st defendant entered into a written contract of employment, which is contained in two documents - the letter of employment dated 27th February 2011 (Exhibit C1) and the Employment Agreement dated 1st March 2011 (Exhibit C2). On 18th September 2013, the employment of the 1st defendant was determined vide Exhibit C3. Referring to paragraphs 11 to 17 of the statement of facts and paragraphs 6 to 17 of the written statement on oath of CW, the claimant submitted that within 6 months of the termination of the 1st defendant’s employment, he was employed or engaged by the 2nd defendant in breach of especially clauses 5 and 6 of Exhibit C2. That by Exhibit C7, the 2nd defendant confirmed that the 1st defendant is its employee. To the claimant, taking the exhibits it tendered in this case especially Exhibit C11, the 1st defendant breached the contract of nondisclosure and non-competition he has with the claimant; and diverted the businesses and goodwill of the claimant to the 2nd defendant. That the defendants were confronted with these facts in this suit and they failed and/or ignored to contest same. They must, therefore, be deemed to have accepted the position put forward before the Court, referring to Akinwunmi O. Alade v. Alic (Nig) Ltd & anor [2010] 19 NWLR (Pt. 1226) 111 at 127. That the exhibits in this suit as well as the testimony of CW, which was not controverted, sufficiently prove the 1st defendant’s breach of his employment contract with the claimant. The claimant then referred to the Latin maxim, ubi jus, ubi meridium and submitted that once there is a breach for which it has suffered loss, there must in law be a remedy; and that the damages to be awarded for the breach of contract are those for the ordinary consequences which follow in the usual course of things from the beach, citing Saidu H. Ahmed & ors v. CBN [2013] 2 NWLR (Pt. 1339) 524. 7. The claimant went on that the contract breached in this suit is in the class referred to as contract in restraint of trade, a contract in which a party covenants to restrict his future liberty to exercise his trade, business or profession in such a manner and with such persons as he chooses. That though contracts in restraint of trade are prima facie void, if reasonable they may be justifiable in the circumstance and so valid and binding, citing Dr Shirish Tanksale v. Rubee Medical Centre Ltd [2013] 12 NWLR (Pt. 1369) 548 at 572. That in the instant case, given that the 1st defendant is a foreign national who came into this country on the claimant’s expatriates’ quota (work permit), the benefit of which was transferred to the 2nd defendant (an international agency) in the same trade or business of market research as the claimant (a local, indigenous agency), and the fact that the restrictive covenant is only for two years, Exhibit C2 is reasonable and so justifiable and valid. That the annual emolument of the 1st defendant under Exhibit C1 was $120,000; and since the 1st defendant came into this country on the claimant’s expatriate quota, the goodwill of the claimant swayed to the 2nd defendant is far above the sum of N250 Million presently claimed as relief (i). The claimant concluded by urging the Court to resolve issue (a) in its favour. 8. As for issue (b) i.e. whether the 2nd defendant is an accessory to the breach of contract and so liable in damages to the claimant, the claimant submitted that accessory to breach of contract is same as interference with or inducement of breach of contract by a third party, which is a tort in which the defendant becomes liable as an accessory to the beach of the contract of another. Referring to Leasing Corp. v. Geltman, 406 Mass. 811, 812, 551 N.E 2nd n.6 (Mass. 1990), the claimant submitted that four elements constitute the tort of accessory to breach of contract, namely: (1) the existence of a valid contract; (2) the defendant’s knowledge of the contract allegedly breached’ (3) the intentional or improper act of the defendant in procuring the inducement for breach; and (4) that the claimant has been injured by the defendant’s action(s). 9. The claimant proceeded and cited Nissan (Nig.) Ltd v. Mr S. Yoganathan & anor [2010] 4 NWLR (Pt. 1183) 135, which held that where a third party knowingly and without justification facilitates or intentional indices the breach of a contract between contracting parties, he will be liable for inducing or procuring breach of contract. To the claimant, its contention is that there was a valid contract of nondisclosure and non-competition between it and the 1st defendant. That Exhibit C3, the termination letter, shows the 1st defendant to be in league with some third party rivals/competitors, unknown to the claimant; and Exhibit C11, the email, shows that the 1st defendant was using the claimant’s official email address assigned to him whilst in the claimant’s employment for the furtherance of the business interests of the 2nd defendant. Also that the series of letters between the claimant and the 2nd defendant i.e. Exhibits C6, C8 and C9 clearly show that the 2nd defendant was aware of the contract between the claimant and the 1st defendant, but improperly and intentionally retained the 1st defendant in its employment thereby inducing and perpetuating the inducement of the breach of contract with the claimant to the detriment of the claimant. The argument of the claimant is that the 2nd defendant did not only have sufficient knowledge of the breach but has improperly and intentionally sustained the breach’ and further maliciously ignored the claimant’s complaints about its wrongdoing as alleged by the claimant and was unperturbed by the allegation of the unquantifiable economic loss which the claimant has suffered thereby. That the claim of N500 Million brought against the 2nd defendant has not been denied or challenged in any manner and the only reasonable conclusion is that the 2nd defendant’s benefits from its proven wrongdoing far outweighs the claimant for N500 Million against it. The claimant then referred to Nissan (Nig.) Ltd v. Mr S. Yoganathan & anor (supra), where, according to the claimant, it was held that an action will lie against one who continues to employ the servant of another after notice of the prior contract of service, which is still enforceable though it is not necessary that the employer and employee should stand in the strict relation of master and servant. Also cited is Akinwunmi O. Alade v. Alic (Nig) Ltd & anor (supra) which held that a person who is not a party to a contract cannot be held liable on it except where he instigated the breach. That in the instant suit, the 2nd defendant did not deny that it instigated and sustained the flagrant beach of the contract of nondisclosure and non-competition between the claimant and the 1st defendant; thus it should be held to have admitted liability in that regard, citing Kayode Emmanuel Oluyede v. Access Bank Plc [2015] 17 NWLR (Pt. 1489) 596 at 606. 10. Regard issue (c) i.e. whether the claimant is entitled to the reliefs it claims, the claimant answered in the affirmative on the goring that it has shown by cogent evidence (oral and documentary) the breach of the contract with the 1st defendant, induced and sustained by the 2nd defendant. Accordingly, that the claimant is entitled to damages to assuage its loss which flows naturally from the acts of the defendants, citing Mainstreet Bank Registrars Ltd v. Anukem Anselem [2015] 16 NWLR (Pt. 1486) 443 at 451. In conclusion, the claimant urged the Court to grant all the reliefs its seeks. COURT’S DECISION 11. I heard learned counsel and considered all the processes and submissions made in this matter. I indicated earlier that this suit is effectively undefended. This by no means signifies that the claimant has been absolved of the duty to prove its case. Under the minimal evidential rule, the claimant cannot assume that it is entitled to automatic judgment just because the defendants did not adduce evidence before the Court. Three issues present themselves for resolution in the instant suit. The first is whether the 1st defendant is liable to the claimant for breach of contract (contract law). The second is whether the 2nd defendant is liable to the claimant for the tort of inducing breach of contract/unlawful interference with contractual relations (tort law). The third is the quantum of damages the claimant is entitled to if it proves its case. 12. Regarding the issue whether the 1st defendant is liable to the claimant for breach of contract, Exhibit C1 dated 27th February 2011 is the offer of appointment as Chief Operating Officer by the claimant to the 1st defendant. The 1st defendant accepted this offer given its endorsement at the third page of Exhibit C1. Thereafter, on 1st March 2011, the claimant and the 1st defendant entered into another Employment Agreement (Exhibit C2). Of note are clauses 5 and 6 of Exhibit C2. They provide as follows: 5. The Employee shall not except so far as necessary or proper in the ordinary course of his employment disclose to any person any information relating to the said business of the employer. 6. The Employee shall not during his employment under this agreement or within (2) years after determination thereof either directly or indirectly carry on his own account, or in partnership with any other person or persons any business related to the nature of the business of the Employer. Exhibit C2 is what the claimant described as a contract of nondisclosure of information and non-competition with the claimant. Clause 5 makes provision for nondisclosure of information about the claimant by the 1st defendant, while clause 6 makes provision against competition with the claimant by the 1st defendant. The case of the claimant is that the 1st defendant breached clause 5 and 6 of Exhibit C2 and so it is entitled to the recompense it claims. The claimant concedes that Exhibit C2 is a contract in restraint of trade, which is prima facie void; but that in the present circumstance, the contract is reasonable and valid and binding. The reason for arriving at this conclusion is that the 1st defendant is a foreign national who came into this country on the claimant’s expatriates’ quota (work permit), the benefit of which was transferred to the 2nd defendant (an international agency), a company in the same trade or business of market research as the claimant (a local, indigenous agency), and the fact that the restrictive covenant is only for two years. 13. The evidence before the Court is as follows. Under cross-examination, CW testified that there is nothing in the Court’s file to authenticate the fact that the 1st defendant, an Indian, came to Nigeria on the claimant’s expatriate’s quota. The submission of the claimant that the fact that the 1st defendant came into this country on the claimant’s quota (work permit) is a justifying reason for asserting that Exhibit C2 is reasonable is, therefore, premised on an unsubstantiated premise. I so find and hold. Furthermore, CW under cross-examination testified that the 2nd defendant is in the same business with the claimant; indicating that the evidence for this conclusion is Exhibit C11. CW went on to testify that he is not aware that the 2nd defendant has a business relationship with the client referred to in Exhibit C11. Also CW testified that other than Exhibit C11, there is no other document showing that the 1st defendant diverted the claimant’s business to the 2nd defendant. CW continued in evidence that the evidence of the 1st defendant diverting a potential business of the claimant for his personal benefit is the letter of termination (Exhibit C3) and that there is no other proof before the Court on the issue. CW concluded under cross-examination by testifying that he is not aware that the 1st defendant worked for other market research companies both in Nigeria and abroad before he was engaged by the claimant; nor is he aware that this is why the claimant employed the 1st defendant, although he noted that often the CV of an employee talks a great deal of him in the quest to employ him. 14. Exhibit C3 dated 18th September 2013 is the letter of termination. It states in the first two paragraphs as follows: After due consideration of your mail exchange with the Group Managing Director (GMD) on the issue of Project you discussed via email with Naftali Nwaburi without disclosure to management; the Board decided to terminate your appointment with immediate effect. Noting that your position is one that requires absolute trust and mutual fidelity, it is the view of the Board that the situation has created sufficient doubts that make your retention as Chief Operating Officer (COO) untenable especially in view of recent strategic refocusing plans the GMD discussed with you and other management staff. Exhibit C3 does not, however, expand on “the issue of Project” the 1st defendant discussed with Naftali Nwaburi, nor is it indicated what actually created the doubts the claimant had on the 1st defendant as to warrant the termination of his employment and the content of the strategic refocusing plans the GMD discussed with the 1st defendant and other management staff. So, beyond what these two paragraphs state, there is nothing else indicating that the 1st defendant diverted a potential business of the claimant for his personal benefit. As couched, therefore, Exhibit C3 cannot be evidence of the 1st defendant diverting a potential business of the claimant for his benefit. I so find and hold. The only evidence in that regard is paragraph 8 of CW’s deposition, which simply states that while in the employment of the claimant, the 1st defendant breached the terms of the agreement and was found to have diverted a potential business of the claimant for his personal benefit and was also found to have made attempts to divert the claimant’s fees from a client. What is this potential business and what is the sum of the claimant’s fees? The Court was not told. So it cannot be that the assertion of the claimant that the 1st defendant diverted potential business of the claimant for his personal benefit can be held to have been proved. It has not been so proved; and I so hold. 15. After asserting as such in paragraph 13 of CW’s deposition, Exhibit C11 is the document relied upon by the claimant to prove that the 1st defendant diverted the claimant’s clients/business to the 2nd defendant. Exhibit C11 is a series of emails from 16th July 2014 to 23rd July 2014, the subject matter of which is “Work Brief 16/07/2014)”. The employment of the 1st defendant was terminated on 18th September 2013 with immediate effect. This means that Exhibit C11 came about after the 1st defendant was terminated by the claimant. The argument of the claimant is that the 1st defendant diverted the claimant’s business to the 2nd defendant. What is the claimant’s business? And what is the 2nd defendant’s business? In paragraph 2 of the statement of facts, the claimant pleaded that it is engaged amongst other things in the business of consultancy in the market research industry; and in paragraph 4 of the statement of facts, the claimant pleaded that the 2nd defendant is in competition with the claimant in the same market research industry in Nigeria. The evidence for all of this is paragraph 4 of CW’s deposition which is to the effect that the 2nd defendant is in competition with the claimant in the same market research industry in Nigeria. Beyond this, there is no other evidence before the Court showing the details of the business of both the claimant and the 2nd defendant. How then is Exhibit C11 proof of the 1st defendant diverting the business of the claimant to the 2nd defendant when there is nothing before the Court to show the details of the business of both the claimant and the 2nd defendant? Here, the claimant assumed that the Court ought to know. This is conjecture, which cannot take the place of evidence. By Agip (Nig) Ltd v. Agip Petroleum International & ors [2010] LPELR-250(SC), referring to Orhue v. NEPA [1998] 5 NWLR (Pt. 557) 187, Oguonze v. State [1998] 7 NWLR (Pt. 551) 521 and Anyashaun v. UCH [1996] 10 NWLR (Pt. 476) 65, “…a court should not decide a case on mere conjecture or speculation, Courts of laws are courts of facts and laws. They decide issues on facts established before them and on laws. They must avoid speculation”. In any event, the claimant talked of diversion of its clients by the 1st defendant to the 2nd defendant but did not tell the Court who these clients are and how they became the claimant’s clients. I do not accordingly think that the claimant has proved its assertion that the 1st defendant diverted the claimant’s business/clients to the 2nd defendant. I so find and hold. This position is distinguishable from MRS Holdings Ltd v. Ibrahim Akar unreported Suit No. NICN/LA/225/2014 the judgment of which was delivered on 21st June 2016, where this Court held the defendant to be in breach of the non-competition clause of his contract with the claimant, which prohibits the defendant from being concerned or interested in any business “which is a supplier or customer of the Company or any of its subsidiaries in relation to its goods or services”, the claimant having proved same. Even at this, this Court, relying on Harka Air Services (Nig.) Limited v. Keazor Esq [2011] LPELR-1353(SC), still refused the claim for damages since breach of a legal duty needs to result in proved injury before damages can be awarded, and the claimant did not prove the actual injury it suffered to warrant the claim for USD500,000. In the instant suit, the claimant did not show to the Court how it came by N250 Million as the damages it suffered from the breach of contract, assuming (that is) there is a breach of contract on the part of the 1st defendant (note that I held otherwise). 16. Having thus held that the claimant did not prove that the 1st defendant diverted the claimant’s business/clients for his benefit and to the 2nd defendant, can it be said that the 1st defendant breached Exhibit C2? I do not think so. It is my holding, therefore, that the claimant has not proved to the satisfaction of the Court that the 1st defendant breached Exhibit C2 as to be liable as claimed in this suit. Relief (i) accordingly fails and is hereby dismissed. 17. The second issue is whether the 2nd defendant is liable for the tort of inducing breach of contract. The claimant had submitted in paragraph 5.2.1 of its written address “that accessory to breach of contract is same as interference with or inducement of breach of contract by a third party”. Here, the claimant assumed that the tort of inducing breach of contract is same with the tort of unlawful interference with contractual relations, an assumption that is arguably incorrect as there are distinguishing qualities between the two torts. For present purposes, in the tort of inducing breach of contract, a new employer must have persuaded an employee to breach his contract with his old employer i.e. the new employer must have intended to and actually procured a breach of the employee’s contract with an old employer; but for the tort of intentional interference with contractual relations, the new employer must have intended to injure the old employer. In OBG Limited v. Allan [2008] 1 AC 1 Lord Hoffman stated: “To be liable for inducing breach of contract, you must know that you are inducing a breach of contract. It is not enough that you know that you are procuring an act which, as a matter of law or construction of the contract, is a breach. You must actually realize that it will have this effect. Nor does it matter that you ought reasonably to have done so;” and that if the breach of contract is not an end in itself nor a means to an end, but merely a foreseeable consequence of actions undertaken, then it cannot be said that the breach of contract was intended. On the other hand, Sparkling Breweries Ltd & ors v. UBN Ltd [2001] LPELR-3109(SC); [2001] All NLR 575; [2001] 7 SC (Pt. II) 146 held that the tort of unlawful interference with the business of another consists in one person using unlawful means with the aim and effect of causing damage to another; and that to constitute the tort the means used must be unlawful otherwise the tort is not established. 18. The case of the claimant against the 2nd defendant strictly speaking is accordingly one for the tort of inducing breach of contract. In support, the claimant cited Nissan (Nig.) Ltd v. Mr S. Yoganathan & anor (supra) as holding that “an action will lie against one who continues to employ the servant of another after notice of the prior contract of service, which is still enforceable and that in order to maintain such an action, it is not necessary that the employer and employee should stand in the strict relation of master and servant”. This was the holding of De Francesco v. Barnum 63 LTP. 514, an 1889 English case, cited (though endorsed as persuasive) by the Court of Appeal in Yoganathan. The claimant made it look like it was the holding of the Court of Appeal itself in Yoganathan. The Court of Appeal in Yoganathan, however, proceeded to specifically hold at pages 153 - 154 that “a restraint merely to prevent competition will not be enforced by the courts”; and that “where the 3rd party knowingly and without justification facilitated or intentionally induced the breach of the contract between the contracting parties, he is liable of inducing or procuring breach of contract”. By Paul Goulding QC (ed.) - Employee Competition: Covenants, Confidentiality, and garden Leave (Oxford University Press), 2007 at paragraph 2.234 at pages 63 - 64, a fundamental requirement for a finding of liability for the tort of inducing breach of contract is that there must be breach of contract; and if a covenant is unenforceable for being in unreasonable restraint of trade, it will not be tortious to induce breach of it - the same being true if the contract is voidable. In this sense, procuring a breach of contract creates “accessory liability”, dependent upon the primary wrongful act of the contracting party, the 1st defendant in the instant suit. Once there is no primary liability for the 1st defendant, there can be no accessory liability for the 2nd defendant. See OBG Limited v. Allan (supra). I held earlier that the claimant did not prove that the 1st defendant breached Exhibit C2. This being the case, since there is no primary liability of the 1st defendant, there cannot be an accessory liability for the 2nd defendant. I so find and hold. The claimant accordingly has not shown to the satisfaction of the Court the liability of the 2nd defendant for the tort of inducing breach of contract. I so hold. Relief (ii) accordingly fails and is hereby dismissed. 19. Since reliefs (i) and (ii) as claimed by the claimant failed, relief (iii) for cost cannot succeed. It fails and so is equally dismissed. 20. On the whole, and for the avoidance of doubt, the claimant’s case fails and is hereby dismissed in its totality. 21. Judgment is entered accordingly. I make no order as to cost. …………………………………… Hon. Justice B. B. Kanyip, PhD