Corporate Ideal Insurance Limited V. Ajaokuta Steel Company Limited & Ors (2014)
LAWGLOBAL HUB Lead Judgment Report
JOHN INYANG OKORO, J.S.C.
The Appellant herein, as Plaintiff at the Federal High Court, sitting at Abuja, by a writ of summons and statement of claim dated 18th December, 2000, claimed against the Respondents as follows:
“i. A Declaration that the Plaintiff is legally entitled to the sum of N226,000,000.00 specifically appropriated, set aside and earmarked for payment to the Plaintiff as arrears of insurance premium in accordance with the provisions of the Appropriation Act, 2000.
ii. An Order of perpetual injunction restraining the Defendants whether by themselves, their agents, servants, and or privies howsoever from transferring, spending for any other purpose, virement of, misapplying, misusing, diverting, wasting, diminishing, lapsing, retiring or causing to lapse the sum of N226,000,000.00 as the said sum has been specifically appropriated in the APPROPRIATION ACT 2000 for payment of arrears of insurance premium owed the Plaintiff by the Defendants.
iii. The sum of N226,000,000.00 to the Plaintiff with interest at the approved prevailing prime bank lending rate being the arrears of insurance premium owed the Plaintiff by the 4th Defendant from the 1st day of December, 2000 until final compliance.
iv. AN order awarding the sum of N50,000,000.00 as special and General Damages against the Defendants jointly and severally in favour of the Plaintiff…”
At the trial court, the Respondents were the 4th, 2nd and 56 Defendants respectively. The 1st and 2nd Respondents filed their respective statements of Defence, while the 3rd Respondent entered a conditional appearance/ filed a Notice of Preliminary Objection and Motion for Extension of Time within which to file its defence. While the said motions were still pending, the Appellant filed a motion for Judgment against the 1st Respondent upon an admission of its claims by the 1st Respondent in its Statement of Defence.
Judgment was entered against the 1st Respondent accordingly by the Learned Trial judge who thereafter adjourned the other motions for “whatever it is worth”.
Dissatisfied with the said judgment, the 1st Respondent as 4th Defendant, filed Notice of Appeal against it to the lower court upon obtaining the requisite leave to do so. Having filed the appeal, the 1st Respondent (as Appellant at the court below) sought for and was granted leave to argue fresh issues relating to the illegality of the insurance contract which were not raised at the trial court.
In its judgment, the Court of Appeal held as follows:-
“In the event, I find that the contracts of insurance between the parties the subject of the Respondent’s Claim before the Lower Court were in breach of Section 50 and 93 of the Insurance Decree No. 2 of 1997 and accordingly illegal. I therefore resolve issue I in favour of the Appellants. This court is duty bound now to refuse to enforce it. Accordingly, I refuse to enforce it…….. Having found the agreement between the parties illegal and void, I hereby set aside the judgment of the Federal High Court, Abuja in Suit No.FHC/ABJ/CS/425/2000 delivered on 14th February, 2001. In its stead dismiss the claim of the plaintiff.”
Aggrieved by the decision of the lower court, the Appellant has now appealed to this court. That is a brief history of the case.
A synopsis of the facts will suffice. On 17th January, 1996, the 1st Respondent requested the Appellant to provide insurance cover for their equipment for the insurance period of 1996 to 2000. It was understood between the parties that the insurance premium would not be paid immediately by the 1st Respondent to the Appellant. In other words, parties agreed that the “no premium, no cover” provision in the Insurance Act would not apply to the contract. It was their agreement that the Insurance Contract would be binding on the parties as if the insurance premium had been fully paid. That the total indebtedness by the 1st Respondent to the Appellant was N226 Million being arrears of Insurance Premium for the provision of Insurance cover from 1996 to the year 2000 to cover a total risk borne by the Appellant for the 1st Respondent in the total sum of N39.85 Billion. That the 1st Respondent was able to cause to be appropriated the sum of N226 Million in the year 2000 Budget of the Government of Nigeria which was enacted into law as Appropriation Act 2000 for the payment of the insurance premium owed by the 1st Respondent to the Appellant.
The Statement of Claim of the Appellant further reveals that when the said sum was released pursuant to the Appropriation Act, the 1st Respondent refused, neglected or failed to pay the said sum despite several demands and reminders. The Appellant took out a Writ of Summons against the Respondents making claims as earlier set out in this judgment.
The 1st Respondent’s Statement of Defence was essentially an admission of all the claims of the plaintiff but denied that the said sum of N226m was released to it. The Appellant whereupon the admission, moved the court for judgment on the pleadings. The Learned Trial Judge thereupon entered judgment for the Appellant against the 1st Respondent based on the admissions in its statement of defence. This is the judgment which was set aside by the Court of Appeal.
Notice of appeal against the judgment of the lower court was filed on 29th June, 2004 against the judgment which was delivered on 29th April, 2004. Four grounds of appeal are contained in the said Notice of Appeal out of which the Appellant has distilled two issues for the determination of this appeal. I shall reproduce the two issues which are contained in the Appellant’s brief of argument filed on 28th April, 2006 and adopted by Learned Counsel for the Appellant on 19th November, 2013 when the appeal was heard. The two issues are:
- Was the Court of Appeal right in granting the Respondent leave to raise and argue for the first time on appeal alleged breach of Sections 50 and 93 of the Insurance Act and in considering that defence
- Did the purported violation of Section 50 and 93 of the Insurance Act No. 2 of 1997 by the Insurance Contract between the parties render the said Insurance Contract unlawful, illegal null and void
In their respective briefs also adopted at the hearing of this appeal, the 1st, 2nd and 3rd Respondents adopted the two issues formulated by the Appellant verbatim. I shall therefore determine this appeal based on the said two issues.
I now commence the treatment of this appeal with issue one in the Appellant’s brief of argument. In proffering argument under this issue, the learned counsel for the Appellant submitted that by Order 26 Rule 6 of the Federal High Court (Civil Procedure) Rules 2000, a party shall plead specifically any fact showing illegality which if not specifically pleaded might take the opposite party by surprise. That a Defendant, in case where illegality is a defence, must raise the illegality in his Statement of Defence alleging facts which made up the illegality itself and citing the relevant statutory provisions. He relies on the case of George V. Dominion Flour Mills (1963) 3 NSCC, 54 at 59 and also the case of Ibrahim V. Ozim (1988) 1 NSCC 1184. He opined that the Respondents failed to plead the fact of illegality in their statement of defence and that it was fatal to their case, relying on the case of Alao V. ACB (1998) 3 NWLR (Pt.542) p.339.
Learned counsel further submitted that the lower court proceeded with the assumption that the insurance contract in this case was on “the face of it illegal or void.” He contended that the contract was not ex facie illegal. That it was purely a contract of insurance or at worst, an agreement for a contract of insurance. It was his contention that the lower court should not have granted the Respondents leave to raise the defence of illegality at this point without the relevant or necessary pleading to back it up. That in view of Order 6 Rule 1 of the Federal High Court (Civil Procedure) Rules 2000, the Court of Appeal erred and thereby came to a wrong decision. Learned Counsel however conceded that where a contract is ex facie illegal, the illegality need not be pleaded in view of the decision of this Court in Sodipo V. Lemninkainen OY (1986) 1 NWLR (Pt.15) 220 at 232 paragraphs F – G. He faulted Lower Court’s decision that Insurance contract was ex facie illegal and its reliance on the case of Scott v. Brown & Ors (1992) 2 KB 384.
Finally on this issue, the Learned Counsel for the Appellant submitted that any payment of premium without cover would have been illegal as it would have amounted to an offence under the ICPC Act. He also urged this Court to take judicial notice of the general practice in respect of business of government in Nigeria that government does not pay in advance due to the official procedures of budget appropriation, award of contract, completion, certification and payments in that order. He also urged this court to resolve this issue in favour of the Appellant.
In response, the Learned Counsel for the 1st Respondent submitted that the Respondent was entitled to raise new issues not raised at the trial court on appeal having obtained the requisite leave of court. He submitted further that fresh issue may be raised on appeal even without leave if it is on the question of jurisdiction and that an appellate court can also raise suo motu issue involving a point of law which the court considers to be fundamental to the entire proceedings. He places reliance on these cases: Djukpan V. Orovuyorbe (1967) 1. ALL NLR 14; Apene V. Barclays Bank of Nigeria (1977) 1 SC. 47; Din V. Attorney-General of the Federation (1988) 4 NWLR (Pt.87) 147; Oforlete V. State (2002) 12 NWLR (Pt.681) 415.
It was a further contention of Counsel that it is too late in the day for the Appellant who did not oppose the application for leave to now do so, referring to the case of Etowa Enan & Ors. V. Fidelis Ikor Adu (1981) 11 – 12 SC 25. Also, that whether leave was sought and obtained or not, it is the duty of this Court to give effect to the provisions of a statute. He cited the case of Attorney General of Adamawa State V. Ware (2006) 4 NWLR (pt.970) 399 at 411 para. F -H & 412 paras A – B.
Also relying on the case of Alao V. ACB Ltd (supra), he submitted that a contract forbidden by statute, is ex facie illegal and that a party seeking to rely on it as a defence need not plead same. Also cited by him is the English case of Snell V. Unity Finance Co. Ltd. (1963) QB 203. It was his final submission that it is contradictory for the Appellant to contend that the parties opted to act in breach of the provisions of the Insurance Act just to comply with the ICPC Act. He urged this court to resolve this issue in favour of the Respondents.
The 2nd and 3rd Respondents through their counsel also made submissions on the 1st Issue which submissions are in tandem with those espoused by the 1st Respondent. I do not intend to summarize them as doing so would amount to repetition of the exercise.
By Order 13 Rule 6 (1) of the Federal High Court (Civil Procedure) Rules 2009, (which is in pari materia with Order 26 Rule 6 of the 2000 version) “a party shall plead specifically any matter (for example, performance, release, any relevant statute of limitation” fraud or any fact showing illegality) which if not specifically pleaded might take the opposite party by surprise.” In our adjudicatory process, the law, rules of court and even the court itself abhor elements of surprise on any party. That is why issues to be contested by parties before a court must be settled by pleadings so as to put all parties on notice of the case they are to meet in court so as to enable them prepare adequately for it. Thus by the above Rule of the Federal High Court (supra) and in a long line of decisions by this court, where the defendant relies upon the defence of illegality, he should specifically and succinctly raise that defence by his pleadings and should state the facts or refer to facts already stated in the Statement of Claim so as to show clearly what constitutes the illegality. See Onwuchekwa V. NDIC (2002) 5 NWLR (pt.760) 371; George V. Dominion Flour Mills (1963) 3 NSCC 54 at 59. It has to be noted that the consequence of not pleading it in the Statement of Defence would prevent the defendant from raising or canvassing it at the trial.
It is now well settled that this court will not allow a party on appeal to raise a question or an issue which was not raised or tried at the court below without the leave of court. This was clearly set out by this court in the case of SALATI V. SHEHU (1985) 1 NWLR (Pt.15) 198. In other words, a Respondent is however entitled to raise new issues not raised at the trial court or at the lower court only with the requisite leave of court. In the instant appeal, leave was duly sought and obtained at the court below to raise the issues which are being ventilated on appeal before this court.
I need to emphasize that this court would readily grant leave to a party to raise and argue new grounds or issues not canvassed at the court of trial or at the lower court where the new grounds involve substantial points of law substantive or procedural which need to be allowed to prevent an obvious miscarriage of justice.
It will also be granted if further evidence is not required. Thus, a party who seeks to file and argue fresh issue not canvassed in the lower court, whether the issue pertains to law or procedure, must seek and obtain the leave of court first, else, such issue must be struck out. See OBIAKOR & ANOR. V. THE STATE (2002) 10 NWLR (Pt.776) 10; APENE v. BARCLAYS BANK OF NIGERIA LTD. (supra).
From what I have said above, as a general rule, a defendant seeking to rely on illegality as a defence, must plead same, else he will not be allowed to rely on it. However, there is an exception to this general rule. Where a contract is ex-facie illegal, whether illegality has been pleaded or not, the court would not close its eyes against that illegality. The rational is that the court has a duty to refuse to enforce such a transaction even where illegality has not been pleaded. It was held by this court in SODIPO V. LEMNINKAMEN OY (supra) that illegality, once brought to the attention of the court, over-rides all questions of pleadings and that it is the duty of the court when asked to give judgment which is contrary to a statute to take the point, although the litigants may not have raised it. See: ATTORNEY GENERAL OF ADAMAWA STATE V. WARE (Supra); ROYAL EXCHANGE ASSURANCE CORPORATION v. S. A. VEGA (1902) 2 KB 384.
In the instant case both the Appellant and Respondents’ counsel are in agreement that where a contract is ex-facie illegal, that the illegality need not be pleaded. Whereas the Appellant contends that the contract of Insurance between it and the 1st Respondent was not illegal, the Respondents hold otherwise. The question may thus be asked. How does one identify or recognize an illegal contract or transaction This question has since been answered by this court in a plethora of authorities. In ALAO v. ACB LTD (1998) 3 NWLR (Pt.542) 339 at 370 paragraphs C – F, per Igu, JSC, this Court held as follows:-
“It is trite that a transaction or contract the making or performance of which is expressly or impliedly prohibited by statute is illegal and unenforceable. Where a contract made by the parties is expressly forbidden by statute, its illegality is undoubted and no court ought to enforce it or allow itself to be used for the enforcement of alleged obligations arising thereunder if the illegality is duly brought to the notice of the court…”
It is crystal clear that any contract or transaction entered into by parties, which contract or transaction is either expressly or impliedly prohibited by statute, is illegal and unenforceable. It is my view therefore that any contract or transaction which seeks to circumvent the provisions of a statute is ex-facie illegal and no party can take benefit from it. For me, the contract of insurance between the parties herein which was made in clear contravention of Section 50(1) of the Insurance Act 1997, is ex-facie illegal and unenforceable. Accordingly, it is my well considered opinion that the court below was right to have granted leave for the issue to be placed on the front burner. Issue one, as I see it, does not avail the Appellant at all. It is resolved in favour of the Respondents.
The second issue which both parties have adopted is whether the “purported” violation of Section 50 and 93 of the Insurance Act No. 2 of 1997 by the Insurance contract between the parties render the said insurance contract unlawful, illegal, null and void. Section 50 (1) of the Insurance Act states:
“The receipt of an Insurance premium shall be a condition precedent to a valid contract of insurance and there shall be no cover in respect of an insurance risk unless the premium is paid in advance.”
According to the Appellant the above provision is intended to protect the insurer and relates to the contractual validity of the insurance cover. He submitted that the section is not concerned with illegality of insurance contract but the issue of its validity, so that where the condition precedent to “a valid contract of insurance” is not met, then the insurance contract will be invalid and not illegal. Learned Counsel for the Appellant contended that although the parties agreed on non-applicability of the “no premium no cover” principle, there is nothing illegal about the insurance contract.
The Appellant, having submitted that the said provision i.e. Section 50(1) of the Insurance Act inures in favour of the Insurer, contended that this statutory protection may be waived by the insurance company in whose favour it is made. He relies on the case of Ariori V. Elemo (1983) ALL NLR 1 at 12. It is his view that the Appellant validly waived its right under section 50(1) thereof and that the lower court cannot be right to invalidate that waiver.
Submitting further, Learned Counsel opined that the contract of Insurance is only invalid and merely voidable and not illegal or void. On the meaning of voidable contracts, he referred to Chitty on Contract 27th Edition page 20 paragraph 2024 and on what amounts to an illegal contract, he cited the case of Panbisbilder Nigeria Ltd V. FBN (2001) 1 NWLR (Pt.642) 684 at 693 paragraph D.
Relying on the case of Ngilari v. NICON (1998) 8 NWLR (Pt.560) 1 at 15 paragraphs A – C, he submitted that there is no rule of insurance law that there can be no binding contract of insurance until the premium has been actually paid or the policy has been issued. According to him, Section 50(1) (supra) does not exclude an agreement to enter into an Insurance contract and does not invalidate it.
As regards Section 93(1) of the Act, Learned Counsel submitted that if the Respondents sought to avoid the contract on the ground of lack of consent of the Head of State, they have the onus to plead and prove this contention referring to Section 135 of the Evidence Act. That the 1st Respondent has the duty to comply with Section 93(2) by obtaining the necessary waiver and not the Appellant. Learned Counsel then referred to Section 151 of the Evidence Act Cap. 112 LFN 1990 and also the case of WAEC V. Akinwunmi (2002) 7 NWLR (Pt.766) 327 at 343 -344 on estoppel. He then urged this court to resolve this issue in favour of the Appellant.
In his response on this issue, the Learned Counsel for the 1st Respondent submitted that the Appellant wrongly stated the legal consequences that flow from an invalid contract and has narrowly defined what constitutes an illegal contract. According to him, an illegal contract is where its formation or performance is expressly forbidden by a civil or criminal statute or where penalty is imposed for doing the act agreed upon, referring to Black’s Law Dictionary. He opined that a contract can still be illegal even where there is no sanction imposed. He relies on the case of Adesanoye V. Adewole (2006) 14 NWLR (Pt.1000) 242, Alao v. ACB Ltd (supra).
Learned Counsel submitted further that Section 50(1) of the Insurance Act has specifically forbidden entering into any insurance contract without the premium having first been paid and the non-compliance renders the contract between the parties illegal and unenforceable. He also relies on the case of Eimskip v. Exquisite (2003) 4 NWLR (Pt.809) 88 at 118 – 119 paragraphs H – A. That although trial courts are enjoined to enforce contracts voluntarily entered into by parties, such should not be the case if the agreement is illegal or contrary to public policy, calling in support the case of Onyeneyin V. Akinkugbe (2001) 1 NWLR (Pt.693) 40.
As regards the cases of Ngilari V. NICON (supra) and Irukwu V. Trinity Mills Insurance Brokers and Ors (supra) which were relied upon by the Appellant, the Learned Counsel for the 1st Respondent submitted that they do not apply in this case. Also submitted was that, had the legislature intended the insurer to waive any of its rights under the Act, it would have said so but that there is none in this case. That the use of the word “shall” in Section 50(1) of the Act shows that the provision is mandatory and cannot be waived, citing the case of Odua Investments Ltd v. Talabi (1994) 10 NWLR (pt.523) 1.
On Section 93(1) & (2) of the Insurance Act, Learned Counsel contended that all the 1st Respondent needed to do in the circumstance was to make the allegation of lack of consent, which fact would stand automatically proved if no consent was produced or evidence led in rebuttal. That the burden of proof then shifted to the Appellant to rebut the same failing which judgment on that issue would be given against it. The case of Odukwe V. Ogunbiyi (1998) 8 NWLR (Pt.561) 339 was cited in support. That contrary to the position taken by the Appellant, all parties to the contract are duty bound to ensure that Section 93 (1) is complied with before entering into the contract. Also that the Appellant was under a duty to diligently ensure compliance with the Section as ignorance or mistake of the law or fault does not give a party the right to enforce an illegal contract. He relies on the case of Nash V. Stevenson Transport Ltd (1936) 2 KB 128. He then urged this court to resolve the issue in favour of the Respondents.
In his contribution to the position of the 1st Respondent on this issue, the Learned Counsel for the 2nd Respondent submitted that the lower court rightly distinguished the present appeal from what happened in the case of Ngilari (supra) and Irukwu (supra). That there was no reference in the two cases to Section 50(1) of the Insurance Act, 1997 which is clearly opposed to the quoted dictum in Ngilari’s case. Also that a statutory provision cannot be waived where the interest of the public is at stake. His other submissions are in tune with that of the 1st Respondent. The 3rd Respondent’s Counsel has also made submission which accord with that of the other Respondents already summarized. I shall now proceed to resolve the issue.
A proper resolution of this issue turns on the construction or interpretation of Sections 50(1) and 93(1) and (2) of the Insurance Act, 1997. The Appellant had contended that non-compliance with Section 50(1) of the Act renders the contract of insurance invalid and not illegal whereas the Respondents think otherwise.
For ease of reference, let me bring to the fore, the said provision. Section 50(1) of the Insurance Act provides:
“The receipt of an insurance premium shall be a condition precedent to a valid contract of insurance and there shall be no cover in respect of an insurance risk, unless the premium is paid in advance.”
Clearly, the above provision means no other thing than what it says. There shall not be any valid contract of insurance until and unless the premium is paid in advance. In other words, payment of premium is a condition precedent to a valid contract of insurance. It is trite that a cardinal rule of interpretation of statute is that where the words of a statute are clear and unambiguous, the courts are to give them their plain and ordinary meaning. It does not require any special or cannon of interpretation. This has been the position of this court in several decided cases. See Egbe v. Yusuf (1992) NWLR (Pt.245) 1, Olarenwaju V. Governor of Oyo State (1992) 11/12 SCNJ 92.
The use of the word “shall” in section 50(1) (supra) is instructive here. It is now well settled that where the provisions of a statute is garbed with the word “shall” as in the instant provision, it connotes that it is imperative for the provision to be obeyed. The word “shall” makes the provision mandatory, imposes a duty and is a word of command. See ONOCHIE v. ODOGWU (2006) 6 NWLR (Pt.975) 65; OMOKEODO V. IGP (1999) 5 SCNJ 71 at 81. What this means is that both the Appellant and Respondents were bound to obey the clear provisions of S.50 (1) of the Insurance Act 1997 without any discretion from any party. In other words, that section is concluded in mandatory terms and must be applied strictly.
There is therefore no doubt that section 50(1) of the Insurance Act 1997, specifically forbids entering into any insurance contract without the premium having first been paid “in advance.” Any non-compliance with the express provision of that section as in this case renders the contract of Insurance between the parties illegal and unenforceable. It is the view of this court that where a statute clearly provides for a particular act to be done or performed in a particular way, failure to perform the act as provided will not only be interpreted as a delinquent conduct but will be interpreted as not complying with the statutory provision. It was held by this court in ADESANOYE v. ADEWOLA (2006) 14 NWLR (Pt.1000) 242 that in such a situation, the consequences of non-compliance follow, notwithstanding that the statute does not specifically provide for sanction. This knocks the bottom off the submission of the Learned Counsel for the Appellant in this case that because Section 50(1) of the Act does not provide for sanction, the contract cannot be said to be illegal.
A contract which violently violates the provisions of a statute as in this case, with the sole aim of circumventing the intendment of the law maker is, to all intents and purpose, illegal, null and void and unenforceable. Such a contract or agreement is against public policy and makes nonsense of legislative efforts to streamline the ways and means of business relations. This court, and any other court for that matter would not be allowed to be used to enforce any obligations arising therefrom. The summary of all I have endeavoured to say above is that parties cannot be allowed to enter into a contract or transaction to circumvent the clear and unambiguous provisions of a statute. It has been the view of this court and I reiterate it here that a transaction or contract, the making or performance of which is expressly impliedly prohibited by statute is illegal and unenforceable or impliedly prohibited by statute is illegal and unenforceable. See ALAO V. ACB Ltd (supra); EIMSKIP LTD v. EXQUISITE INDUSTRIES NIGERIA LTD (2003) 4 NWLR (Pt.809) 88 at 118 – 199 paras H – A.
Although it is the duty of a trial court to enforce agreements between parties and not to speculate or question the reasons for their entering into any such agreement, where such agreement is illegal or contrary to public policy, such agreement or contract should not be enforced by the court. See OYENEYIN V. AKINKUGBE (supra).
One more thing before I move to another aspect of this issue. The Learned Counsel for the Appellant had relied heavily on the case of Ngilari v. NICON (1998) 8 NWLR (pt 550) page 1, a case decided by this court on 5th June, 1998. Learned Counsel quoted from page 21 of the law report where Onu JSC, in his concurring judgment quoted from a book titled Mc Gillivray and Parkingston on Insurance Law 6th Edition page 86 as follows:-
“There is no rule of insurance law that there can be no binding contract of insurance until the premium has been actually paid or the policy has been issued. Once the terms of the insurance have been agreed upon by the parties, there is prima facie binding contract of insurance and the assured is obliged to pay a premium as agreed while the insurer for their part must deliver a policy containing the agreed terms.”
Relying on the above quotation, the Learned Counsel for the Appellant submitted on page 12 of his brief as follows:-
“This is, with all respect, the clearest statement on this point. To this extent therefore, Section 50 of the Insurance Act cannot avail the 1st Respondent. It is also my submission that a contract of Insurance is still a contract, the Insurance Act notwithstanding. The legislature did not intend to change the law of contract so fundamentally from the position so eloquently stated by the Supreme Court in the case of Ngilari V. NICON (supra).”
I must quickly point out here that the facts of the case of Ngilari is quite different from the one in the instant appeal. In Ngilari’s case, the Plaintiff therein, as administrator of the Estate of Jesse James Ngilari issued his personal cheque on the instruction of the deceased to the agent of the Insurance Company as premium for the insurance cover. In other words, premium was actually paid but in the instant case, no premium was paid. In fact there was agreement between the parties herein that the “no premium no cover” principle should not apply to their contract. In Ngilari’s Case, this Court held that since premium was paid though through an agent of the insurance company, there was a valid insurance contract. The Learned Counsel for the Appellant failed to read the concurring judgment of Onu, JSC to the end, else he would have seen where His Lordship held on pp.21G – H and 22 para A as follows:-
“On the principle laid down in National Insurance Corporation of Nigeria V. Power and Industrial Engineering Co. Ltd (supra) this Court quoting with approval from the decision of the trial judge said:
“At the High Court, the learned trial judge Belgore, J, dealing with this question in his judgment said
“from the moment the proposal was made, accepted and the demanded premium paid, a valid contract was subsisting between the Plaintiff and the Defendant.”
The principle laid down above albeit coming as it does from the High Court, is in my view, as solid as a rock which I uphold as applicable to the instant case.”
In the circumstance, I hold that although the quotation by this court from Mc Gillivray & Parkington in Ngilari’s case tends to suggest that an insurance contract can be legally made without payment of premium, their Lordships in that case held that payment of premium cemented the contract of Insurance. As at the time the case of Ngilari was decided in 1998, Section 50(1) of the Insurance Act 1997 was already operational. The case of Ngilari (supra) was decided on its peculiar facts and the facts therein are not the same here. Therefore, it is highly distinguishable. I so hold.
The argument of the Appellant that Section 50(1) of the Act inures to the Appellant and as such it can waive it does not appeal to me at all. Had the Legislature intended to confer a special right of waiver on the insurer, it would have said so. Moreso, and as already stated, the word “shall” used in the provisions of S.50 (1) of the Insurance Act clearly imposed a mandatory condition precedent to the making of a valid insurance contract on all the parties thereto, and does not seek by any stretch of interpretation to confer any right of waiver of same on the insurer or any other party at all.
The other and final aspect of this issue has to do with Section 93 (1) & (2) of the Insurance Act. The section states:
“S.93(1) – The responsibility for insuring all properties of government as defined in the National Insurance Corporation Act is vested in the National Insurance Corporation of Nigeria.”
“S.93(2) – Notwithstanding the provisions of subsection (1) of this Section and Sub-Section (2) of Section 4 of the National Insurance Corporation Act, any such properties of Government may, with the approval in writing of the Head of State, Commander-in-Chief of the Armed Forces be insured with any insurer.”
By virtue of the above provision the responsibility for insuring all properties of Government as defined in the National Insurance Corporation Act is vested in the National Insurance Corporation of Nigeria. However, notwithstanding this provision any such property of Government may, with the approval in writing of the Head of State be insured with any insurer. The lower court held on this issue that contrary to the provisions of Section 93 of the Act, the approval of the Head of State was not obtained before the Appellant was contracted for insurance of Government property since the Appellant was not NICON the approved insurer under the Act. I agree with this view of the court below. The argument of Counsel for the Appellant that it was the duty of the 1st Respondent only to obtain the consent of the Head of State is unimpressive. As was rightly pointed out by the learned counsel for the 3rd Respondent, the provisions of the Insurance Act are meant for the regulation of the Insurance business, and all parties involved in insurance contracts are expected to abide by those provisions. It does not therefore lie in the mouth of the Appellant in this case to say that it is the prerogative of the 1st Respondent to ensure the observance of any particular requirement of that Act except where it is so expressly stated. Due diligence in business requires that all parties must ensure the existence of the necessary prerequisites for the contract they intend to enter into.
Again since the section states that approval of the Head of State must be in writing it is not something to be presumed. As to who had the burden of proof as to existence of consent, it is my view that it lies on the party against whom judgment would be given if no more evidence were adduced successfully until all the facts in the pleadings have been dealt with. See FELIX OSAWORA v. SIMON EZEIRUKA (1978) 5 & 7 SC 135 at 145; ODUKWU v. OGUNBIYI (1998) 8 NWLR (Pt.551) 339 at 353. The 1st Respondent in this matter had pleaded that there was no consent which fact would stand proved if no consent was produced or evidence led in rebuttal. The burden of proof thereafter shifted to the Appellant to rebut the same failing which judgment on that issue would be given against it. That is the truth and position of the law.
The tragedy of this issue is that the Appellant has failed to put up a strong argument for it to be resolved in its favour. It is accordingly resolved against the Appellant.
On the whole, the non compliance of the parties herein with the provisions of Sections 50(1) and 93 (2) of the Insurance Act 1997 rendered their contract of Insurance illegal and unenforceable by either party. The Court cannot close its eyes to illegality as it is the duty of every court to refuse to enforce such a transaction or contract.
The sum total of all I have said in this judgment is that this appeal lacks merit in its totality and is hereby dismissed. The judgment of the Court of Appeal is accordingly upheld. Parties are to bear their respective costs.