Connect with us
nairametrics

Companies

Hajj gone wrong; How a London Court awarded $22 million damages against Azzman

A London High Court earlier this month (5th of June) awarded damages worth $22 million against Azman air services limited over a breach of contract with Tripple Seven Limited.

Published

on

Airplane Wing. Photo by Ross Parmly on Unsplash

A London High Court earlier this month (5th of June) awarded damages worth $22 million against Azman air services limited over a breach of contract with Tripple Seven Limited.

Azman Air is one of the fastest growing privately owned Nigerian airline and was founded in 2010 by business mogul Abdulmunaf Yunusa Sarina. The airline company began its operations in 2014 with its first flight from Kano to Abuja and currently operates return flights domestically in the country.

The hearing on the case between the two parties took place at the London Court of Justice, business and property court of England and Wales.

Background of the story

Tripple Seven is the registered owners of two Boeing 777-200 ER aircraft (MSN 27251 and MSN 27252) and Oon 20th June 2016, they entered into a five-year lease agreement on the two aircraft to Azman Air services.

Azzman on its part intended to use the two aircraft to transport passengers from West Africa to the Kingdom of Saudi Arabia to for the Hajj and Umrah pilgrimages. In Nigeria, Hajj pilgrimages are thought to be very lucrative for local airlines.

GTBank 728 x 90

Earlier on May 11, 2016, the National Hajj Commission of Nigeria NAHCON had confirmed that Azman was approved to participate in the airlift of pilgrims to and from Saudi Arabia for the 2016 Hajj.

Meanwhile, this was not the only approval which was required in order to participate in the 2016 Hajj airlift; the approval of the Saudi authorities was also required. NAHCON on the 15th June 2016, sent a letter to Azman informing it that the General Authority of Civil Aviation of Saudi Arabia GACA had excluded it from participation in the 2016 Hajj airlift due to its inability to meet Saudi economic, security and safety requirements.

Azman did not receive this letter until some hours after it had signed the lease agreements with Tripple Seven on 20th June 2016. The airline company, however, sought to persuade GACA to rescind its decision and to approve Azman to participate in the airlift for the 2016 pilgrimage, but these attempts were not successful.

Deal book 300 x 250
GTBank 728 x 90

Tripple Seven, however, tendered the two aircraft for delivery to Azman on 28th June 2016 and 4th July 2016 respectively. Azman, however, informed Tripple Seven that it was not in a position to take delivery of the two aircraft, because it was no longer able to participate in the 2016 Hajj airlift, which was the major reason or for Azman’s entry into the lease agreements.

Triple seven reportedly terminated the lease agreements in accordance with the provisions of the lease agreements because y reason of Azman’s failure to accept delivery of the aircraft and to pay the first installment of the rent due under the lease agreements.

Tripple Seven then approached a court seeking damages for breach of the lease agreement.

Azman’s Defence

The only substantive defence advanced by Azman to Tripple Seven’s claim was that the Claimants are not entitled to damages because the lease agreements were void at common law for common mistake.

The mistake in Azman’s view is that both parties had executed the lease agreements because they had expected an approval to airlift for Hajj. were expected an approval to participate in the Hajj airlift on the basis of the

Jaiz bank ads

The mistake being that it was believed or understood by both parties that Azman was expected to or would be approved to participate in the 2016 Hajj airlift, which was the or a major purpose of the lease agreements, but in fact at the time of the execution of the lease agreements, such approval had been withheld by GACA.

Fidelity ads

It also claimed that the lease agreements were signed on 20th June 2016 at 10.00 am (Dubai time) (7.00 am Nigeria time) whereas he was informed of GACA’s decision to exclude from the 2016 Hajj airlift by email at 11.17am (Nigeria time) (3.17 pm Dubai time), after the lease agreements were signed.

The court decision

In an interesting judgment, the court ruled that the shared mistaken assumptions were not sufficiently fundamental and did not render the lease agreements essentially and radically different from the parties’ original understanding, nor did they render the agreements impossible to perform.

The judge cited a number of factors in support of this conclusion, including:

  • The 2016 Hajj airlift represented a relatively short proportion of the overall term of the leases.
  • Azman would have still earned a substantial profit during the remainder of the term of the leases if it was successful in obtaining approvals for the subsequent Hajj airlifts.
  • The revenue for the 2016 Hajj airlift was important, but not sufficiently important so as to be fundamental to the performance of the agreements as a whole.
  • There was no evidence that Azman’s failure to obtain GACA’s approval for the 2016 Hajj airlift meant that such approval was likely to be denied in the remaining years of the lease agreements.

“For the reasons explained above, the lease agreements are not void for a common mistake and the Claimants are entitled to damages in the following sums: (1) US$16,246,020.00, (2) US$5,612,958.92, and (3) US$148,910.06. The total sum recoverable by the Claimants is US$22,007,888.98. In addition, the Claimants are entitled to interest on these sums calculated in accordance with clause 8.2 of the lease agreements.”

The court also noted that the fact that both parties were induced to enter into the contracts by their shared mistaken assumption was a necessary, but not sufficient condition to render those contracts void for common mistake.

On the facts, the court found that the parties had entered into the leases on the assumptions that:

  • The Nigerian regulatory authority had approved Azman’s participation in the 2016 Hajj airlift,
  • GACA might or might not provide its approval.
  • Azman expected to obtain GACA’s approval
  • GACA’s decision had not yet been made.

Meanwhile, at the time the leases were concluded, GACA had already decided not to allow Azman to participate in the 2016 Hajj airlift, although Azman did not discover this until later.

Coronation ads

The court ruled that the third and fourth listed assumptions were therefore invalid at the time the contracts were made. The court accordingly found that there was a common mistake as to an existing state of affairs at the time of formation of the contracts.

The court considered the leading cases on the pre-requisites for a contract to be held void on the grounds of common mistake, and distilled the following six principles:

app
  • At the time the contract was made, the parties must have substantially shared an assumption as to the existence of a certain state of affairs.
  • That shared assumption must have been fundamental to the contract.
  • That shared assumption must have been wrong at the time the contract was made.
  • By reason of the assumption being wrong, the contract or its performance would be essentially and radically different from what the parties believed to be the case, or impossible to perform, having regard to the shared assumption. In other words, there must be a fundamental difference between the assumed and actual states of affairs.
  • The parties, or at least the party relying on the common mistake, would not have entered into the contract had the parties been aware that the shared assumption was wrong.
  • The contract must not have made provision in the event that the common assumption was mistaken.

The court held that the shared mistaken assumptions were not sufficiently fundamental and did not render the lease agreements essentially and radically different from the parties’ original understanding, nor did they render the agreements impossible to perform. The judge cited a number of factors in support of this conclusion, including:

  • The 2016 Hajj airlift represented a relatively short proportion of the overall term of the leases.
  • Azman would have still earned a substantial profit during the remainder of the term of the leases if it was successful in obtaining approvals for the subsequent Hajj airlifts.
  • The revenue for the 2016 Hajj airlift was important, but not sufficiently important so as to be fundamental to the performance of the agreements as a whole.
  • There was no evidence that Azman’s failure to obtain GACA’s approval for the 2016 Hajj airlift meant that such approval was likely to be denied in the remaining years of the lease agreements.

“For the reasons explained above, the lease agreements are not void for a common mistake and the Claimants are entitled to damages in the following sums: (1) US$16,246,020.00, (2) US$5,612,958.92, and (3) US$148,910.06. The total sum recoverable by the Claimants is US$22,007,888.98. In addition, the Claimants are entitled to interest on these sums calculated in accordance with clause 8.2 of the lease agreements.”

The court also noted that the fact that both parties were induced to enter into the contracts by their shared mistaken assumption was a necessary, but not sufficient condition to render those contracts void for common mistake.

Read the full court judgment here.

Fikayo has a degree in computer science with economics from Obafemi Awolowo University. ITIL v3 in IT service management. An alumnus of Daystar Leadership Academy. Prior to joining Nairametrics had stinct in Project management, Telecommunications among others. Also training in Consulting and Investment banking from Edubridge Academy. He has very keen interest in Politics, Agri-business, private equity and global economics. He loves travelling and watching football. You can contact him via [email protected]

1 Comment

1 Comment

  1. Ibrahim

    June 29, 2018 at 10:32 am

    One of the few airlines in Nigeria to have shown stability; it is unfortunate that this is happening to them.

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Companies

MTN shareholders have made approximately N1 trillion since April 2020

Shareholders of MTN Nigeria gained close to a trillion naira in less than 7 months.

Published

on

MTN Nigeria, MTN Nigeria Communications Plc. begins N100 billion commercial paper issuance today

MTN Nigeria shareholders have gained N986.58 billion since the first trading session in April 2020.

This was uncovered by calculating the difference in the telecommunication giant’s market capitalization of ₦1.832 trillion at the open of trade, for the first trading session in the month of April 2020, and the market capitalization of ₦2.646 trillion at the close of trade in the first trading session in the month of October.

READ: Shell to cut 9,000 jobs globally due to oil price crash as it shifts to clean energy

This gives a whopping N814 billion increase in market capitalization, and this with the dividend the company has paid to shareholders on two occasions between this time period, brings the total gains both realized and unrealized to approximately N1 trillion.

READ: FUGAZ; Nigerian banks considered too big to fail

GTBank 728 x 90

Hence, the N814 billion increase in market capitalization translates to the joint gains MTN investors have made from the increase in the shares of the company, as the share price of the company has increased by 44.44% or ₦40.00 between April 1, 2020, and October 2, 2020, with the share price of increasing from ₦90.00 to ₦130.00.

However, the gains MTN NG investors have made from their investments in the telecommunication company, is not limited to the gains driven by the increase in the price of the shares.

READ: World Bank says Nigerian banks are at risk of being destabilised by COVID-19

Deal book 300 x 250
GTBank 728 x 90

Recall that the company declared payment of dividends to its shareholders on two occasions, as investors/shareholders of the company, whose names appear in the Register of Members, as of the close of business on April 17, 2020 and August 14, 2020 were paid a cumulative dividend per share of ₦8.47, for all the outstanding shares of 20,354,513,050 held by the shareholders, and this translates to a total dividend payout of N171 billion by the company to its shareholders.

It is noteworthy that the realized and unrealized gains MTN investors have made from holding the shares over this period stands at N986.58 billion.

Continue Reading

Companies

LASACO Assurance Plc Chairman, Aderinola Disu resigns from the Board of Directors

Aderinola Disu resigned her position as a Director on the Board of LASACO Assurance.

Published

on

Lasaco Assurance

Lasaco Assurance Plc has announced the resignation of its former Chairman, Mrs. Aderinola Disu, as a Director on the Board. The resignation took effect from the 8th of September, 2020.

The following information is contained in a press release made available to the public, signed by the company Secretary, Gertrude Olutekunbi, and verified by Nairametrics.

The notification also revealed that, the aforementioned firm has received a provisional approval from the National Insurance Commission (NAICOM) to appoint two other directors.

READ: 3 bank directors resign from NESG in protest to CBN immunity letter

The two newly appointed directors are; Dr (Mrs.) Maria Olateju Phillips, and Prince Jamiu Adio Saka, both appointed to a Non-Executive Director role.

GTBank 728 x 90

Profile of the two newly appointed Directors

Chief (Mrs.) Teju Phillips, is a successful Chartered Accountant, who holds an ACCA from England and Wales. She is multilingual and has extensive experience in Management/Consultancy services, that spans across many years in both the public and private sectors. She has served as a Director in Keystone Bank; Director, Lagos State Lottery Board; Honorable Commissioner for Special Duties & Inter-Governmental Relations in Lagos State; Managing Director of Alma Beach Estate Ltd (a subsidiary of Rims Merchant Bank Ltd); Managing Director, Maridot Ventures Ltd. among others.

READ: FIRS retires coordinating directors, appoints new ones

Deal book 300 x 250
GTBank 728 x 90

Prince Jamiu Adio Saka, is an accomplished Insurance professional, having practiced in Canada and Nigeria. He brings to the board over 30 years of experience as a Broker.

Lasaco Assurance Plc, is a listed Nigerian firm that provides life and general insurance services, which includes motor, bond, contractors-all-risk, fire, burglary, aviation, marine, general accident, life, pension schemes, engineering, and oil and gas. The company has a market capitalization of about N2.05 billion and it share price currently trades at N0.28 kobo.

Continue Reading

Companies

MTN: Data subscriptions triggered surge in Q2 2020 Revenues

Data revenues jumped from N56.7 billion to N79.9 billion in the period under review.

Published

on

MTN Nigeria, MTN Nigeria Communications Plc. begins N100 billion commercial paper issuance today

Analysis of the MTN’s results shows that revenues surged, due to increased data usage, aided by the COVID-19 pandemic lockdown.

MTN Nigeria Communications Plc (MTN), reported revenues of N638.1 billion in H1 2020, relative to N566.9 billion recorded in the same period in 2019 – a 12.5% increase.

MTN Plc is Nigeria’s premier provider of connectivity, communication, and collaboration solutions. From the very first phone call, made at Maritime House Apapa, Lagos, Nigeria on May 16th, 2001, MTN Plc has been facilitating connections in Nigeria.

READ: COVID-19 boosts Fidson Healthcare Plc’s Q2 2020 performance

The COVID-19 related lockdown affected businesses worldwide, including businesses in Nigeria. This resulted in most business activities being conducted virtually, in a bid to salvage businesses from collapsing. With social distancing rule, came an increased utilization of online mediums for meetings, weddings, social interactions, and everything that couldn’t be done physically. Consequently, people consumed more data compared with the pre-COVID-19 periods.

GTBank 728 x 90

According to the latest data available on the NCC website, MTN Plc’s market share of internet subscribers is 42.54%. Its revenue-generating segments include Voice, Data, SMS, Interconnect and Roaming, Handset and Accessories, Digital, Value Added Service, and Other revenues. Aside from SMS, revenues from the other seven segments increased in H1 2020 compared with the previous period last year.

READ: How Apple lost over $500 billion in 12 trading days

Data revenues jumped from N56.7 billion to N79.9 billion in the period under review. The number of port-out subscribers almost doubles port-in subscribers in the period under consideration, so this does not confound the analysis conducted, which revealed that COVID-19 lockdown boosted data revenues.

Deal book 300 x 250
GTBank 728 x 90

The Earnings Per Share (EPS) of the company declined by 4.70% in H1 2020 from N4.89 to N4.66 compared with the same period last year. A 4.68% decline in distributable profit to N94.88 billion in H1 2020, relative to N99.54 billion contributed to this decline in H1 2019.

READ: Finding Balance: GTB’s impeccable gains versus its notable losses

MTN Plc’s shares were listed on the floor of the NSE on 16th May 2019. The shares currently trade at N129 per unit. The highest price for a unit of share in 52 weeks was N132 and the lowest N90. A total of 51,885,740 units was sold in the last seven days trades. Shares outstanding is 20,354,513,050 units and its market capitalization is N2.63 trillion.

Airtel Africa Plc operates in the same sub-sector as MTN Nigeria Plc – Telecommunications Services. Airtel Africa Plc’s share price is N380. The highest price for a unit of share in 52 weeks was N380 and the lowest N298.90. A total of 15,972 units was sold in the last seven days trades. Shares outstanding is 3,758,151,504 units and its market capitalization is N1,428,097.57 trillion.

READ: Floods disrupt operations in Flour Mills’ Sugar Estate

Jaiz bank ads

On the 30th of September 2020, Telecompaper reported that MTN has added MusicTime playlists to its Ayoba app. MTN’s Ayoba platform and MusicTime announced a partnership deal to bring free music to Ayoba app users. MusicTime in Ayoba is now live in Nigeria and some other African countries, including South Africa and Ghana. The app offers users free access to ten playlists with twenty songs each.

Fidelity ads

Ayoba is an instant messaging app powered by MTN. With Ayoba, it is possible to chat with anyone, regardless of whether they have the Ayoba app or not. Users who do not have the app, but receive an SMS from an Ayoba user, will be able to respond via SMS, and it will display within the Ayoba user’s chat in the app. Ayoba is available on Android devices (iOS to come later).

Continue Reading
Advertisement
Advertisement
Advertisement
ikeja electric
Advertisement
Advertisement
Patricia
Advertisement
FCMB ads
Advertisement
IZIKJON
Advertisement
Fidelity ads
Advertisement
first bank
Advertisement
bitad
Advertisement
Stallion ads
Advertisement
financial calculator
Advertisement
deals book
Advertisement
app
Advertisement