Federal Secretariat: Tribunal awards N54bn damages against FG
The federal government has been ordered to pay N54bn to Resort International Limited in a decision handed down by an Arbitration Tribunal late last year, according to documents seen by Daily Trust.
Resort International Limited, a company owned by Dr. Wale Babalakin, was granted a lease in 2006 to develop the disused Federal Secretariat Complex, Ikoyi, Lagos into residential property but the state government refused to approve land use conversion request, thereby stalling the project.
Lagos State government had stopped works on the site in September 2007.
Resort International Ltd on 3rd December, 2015 won its case against government at the tribunal.
The tribunal chaired by Fred Adeniyi Coker supported by Mr. Yusuf Alli (SAN) and former Attorney General of the Federation, Alhaji Abdullahi Ibrahim (SAN) declared that the federal government had failed in its obligations to Resort International Limited under the Development Lease Agreement (DLA) entered into by both parties.
The DLA dated 10th October, 2006, granted Resort International Limited a 99-year lease to redevelop the Federal Secretarial Complex into 480 luxury apartments.
Works had started on site when the Lagos State government stopped them.
Resort International Limited claimed at the arbitration tribunal that it had suffered damages totalling N88bn as a result of the breach of a clause of the DLA by the federal government.
The state government refused to grant the No-Objection Approval required under Clause IV of the DLA and federal government’s inability to secure the approval stalled the project.
The tribunal heard that the fundamental terms of the DLA were that the federal government had Good Title to the property and full power and legal authority to enter into the agreement.
The company claimed that the federal government’s failure to fulfil its obligation to assert ownership, to deliver vacant possession and to facilitate the obtaining of a No-Objection Approval from Lagos State government adversely affected the company and put it in a precarious position owing to financial obligations to lenders that it was unable to fulfil.
The company therefore claimed direct expenses, loss of profit and damages against the federal government to the tune of N88bn.
The federal government said in its defence that the undertaking to facilitate a No-Objection Approval amounted to no more than an obligation to produce documents in support of the company’s application to the Lagos State government.
The federal government also argued that the subsequent promulgation of the Lagos State Model City Development Authority Law was in effect a frustration of contract.
The arbitration panel concluded that “The Respondent in this case has clearly failed to carry out the obligations it undertook under the DLA.”
The tribunal awarded damages as: N12bn as direct expenditure with interest at 17.26 percent from September 2008; N9bn as loss of expected income with interest at 17.26 percent from September 2008; and N5bn as special damages.
The totality of the awards means that as at January 2016, the Federal Government owed Resort International Limited the sum of N54bn which continues to accumulate interest at 17.26 percent per annum.
