National Insurance Corporation Of Nigeria V. Power & Industrial Engineering Company Ltd. (1986)

LawGlobal-Hub Lead Judgment Report

OBASEKI, J.S.C.

This appeal deals with a claim brought under a marine insurance contract between the appellant and the respondent and raises the important question of what constitutes a ‘Policy’ of marine insurance within the terms of the Marine Insurance Act, 1961.

The respondent in pursuance of its desire to contribute its quota to the ‘Feed the Nation Campaign’ or campaign again hunger in 1977 ordered 86,612 new double jute bags of rice from Bangkok in the Far East. The consignment which had an insured value of N1,231,459.00 was loaded onto the vessel “Eastern Saturn” for transportation by sea from Bangkok to Port Harcourt and or Lagos on the 30th day of December, 1977 (see Exhibit L7) and the ship set sail on the 3rd day of January, 1978 (see Exhibits ‘L’, ‘L1’ and ‘L2’).

This information was conveyed to the respondent by Exhibit L and Exhibit VVI Bill Note dated 26/1/78. By Exhibit 52, Exhibit VVI the respondent was advised by the United Bank for Africa that the Bank had received for the account of the respondent documents for goods sent per “M.V. Eastern Saturn” including B/L No. option – 1 dated 30/12/77 by Continental Enterprises (Bermuda) Ltd. covering 86,612 bags Thai Parboiled Rice.

The respondent was requested to collect the documents. Following the advice the respondent collected the documents and on receipt of Exhibits L, L1 to L7 and discovering that the consignment had no insurance cover, the respondent approached the appellant for an insurance cover.

The appellant agreed to issue a marine insurance open cover policy and on the 15th day of February, 1978, the appellant did issue the Marine Open Cover No. MA/MAT/78/MOC/0021 – Exhibit J. This Marine Open Cover, Exhibit J was forwarded by letter No.GCGU/CAG/000/264/OAA/ABA dated 14th February, 1978 Exhibit M. Subsequently, Certificate of Insurance No.16533 issued under the open contract No.MA/MAT/78/MOC/0021 Exhibit J was issued and forwarded by letter Exhibit N dated 23rd February, 1978. By letter Exhibit H dated April 13, 1978, the shippers, “Continental Enterprises (Bermuda) Ltd.” informed the respondent that the vessel M/V Eastern Saturn” had sunk without any trace and gone down to the bottom of the sea with all the consignments on board.

But before then, AMC International Limited by letter dated 13th March, 1978 Exhibit C copied for the respondent’s information, the letter dated 3rd March, 1978 received on 11/3/78 from Polinia & Company Ltd. of Hong Kong reporting that the vessel Eastern Saturn had sunk. The respondent, on this information, by letter dated 6th April, 1978 Exhibit D conveyed the information to the appellant and also forwarded to it photocopies of the report from the shippers sent to the shipping agents. The respondent then requested from the appellant advice on the processing of the necessary claims. The appellant reacted sharply and sent a letter Exhibit E dated 11th April, 1978disclaiming liability and complaining that as no premium had been paid there was no contract of insurance in existence between the respondent and themselves.

The respondent then wrote Exhibit P dated 21/4/78 drawing attention to the receipt Exhibit A for payment. However, by letter Exhibit F dated 27th April, 1978, the appellant confirmed that the premium had been paid but disclaimed liability on their own interpretation of the Open Cover contending particularly that they were not liable for any shipments made prior to 1st February, 1978. By letter Exhibit VI dated 9th May, 1978, the respondent formally claimed the insured value of N1,231,359 and requested early settlement. This was followed by a visit and letter Exhibit V2 dated 10th may, 1978asking for action to be taken on Exhibit V. This was also followed by letter Exhibit V3 dated 26th May, 1978 sent by the respondent forwarding copies of the Master’s Statement of protest with respect to the sinking of the vessel.

In reply, the appellant by letter Exhibit ‘w’ claimed that “no risk ever attached to them under the Open Cover” because although the declaration was made after the 1st February, 1978, the actual date of sending was prior to the inception of the Cover, the vessel having sailed from Bangkok, the port of shipment on the 3rd day of January, 1978.

This sounded the bell for the litigation over the matter which was commenced in the Federal High Court, Lagos. From the Federal High Court, it went on appeal to the Court of Appeal from whence it has come to this Court on appeal. By their amended particulars of claim filed in the Federal High Court by the respondent,

“The plaintiffs claim against the defendant is for the sum of N2,231,359.00 (two million, two hundred and fifty nine Naira) being special and general damages for breach of contract whereof the sum of N1,231,539.00 represent special damage and N1,000,000.00 represent’ general damages”.

Pleadings on the order of the Federal High Court were settled, amended, filed and exchanged by the parties and the issues joined went to trial before Belgore, J. At the hearing, only two witnesses testified. They were T. Ifeanyi Nzegwu, a Director of the respondent company and Sule Bamidele Balogun, the Manager of the respondent company. The appellant called no evidence and rested its case on the evidence adduced by the respondent’s witnesses. After the conclusion of evidence and the addresses of counsel, the learned trial judge, Belgore J. delivered a well considered judgment in which he awarded the respondent as special damages N1,231,359.00 with interest at 10% from 23/5/78 and N2,000.00 costs.

The appellant was naturally not satisfied with the judgment and so appealed to the Court of Appeal. After hearing submissions of counsel for both sides, the Court of appeal (Ademola, Mohammed and Kutigi, JJCA.) in a unanimously considered judgment dismissed the appeal. Ademola, JJCA, concluding his lead judgment (with Mohammed and Kutigi, JJCA. concurring), commented:

“All insurance contracts involve the taking of risk and therefore the occurrence of the event insured against cannot frustrate the contract. It is ludicrous to say the least, to tell the respondent that the loss of goods on the MN Saturn has put an end to the contract he concluded with the appellant, for that was the very thing that brought them together in the first instance”