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Home » Nigerian Cases » Supreme Court » International Messengers (Nig.) Ltd. V. Pegofor Industries Limited (2005) LLJR-SC

International Messengers (Nig.) Ltd. V. Pegofor Industries Limited (2005) LLJR-SC

International Messengers (Nig.) Ltd. V. Pegofor Industries Limited (2005)

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The respondent and appellant were respectively plaintiff and defendant before the Onitsha High Court in suit No. 0/31/92. The plaintiff, a company engaged in the manufacture of industrial gas had a chemical plant in Onitsha which was installed by an Italian company (Siad Machine Impianti Company of Bergano, Italy). A vital component, the machinery consisting of piston and rod assembly was faulty and needed to be transmitted urgently by air to the said Italian company in Italy for necessary repairs.

On 8th November, 1991, the plaintiff, through its Managing Director handed over a package of the faulty component to the defendant, an air courier company, at its office in Onitsha for transmission to the Italian company for repairs and return by 15th November, 1991 so that the machinery could resume production the next day. In consideration of the transportation, the plaintiff paid the sum of N2, 110.00 to the defendant and was issued with a receipt thereof and an Airway bill by the defendant’s employee who received the package. The Airway bill which was signed by the plaintiff contained an exemption or limitation clause which limited the liability of the defendant to the sum of N500 in the event of loss or damage of the good. The package eventually got lost and the defendant by its letter of 5th December, 1991 notified the plaintiff to that effect. To minimise its loss, the plaintiff, by telex, placed an order for a complete new component which was delivered on 21/12/91 at a cost of US N28, 000.00 dollars. Thereupon, it commenced an action against the defendant for breach of contract of bailment claiming a total sum of N1,500,000.00 (one million, five hundred thousand naira) particularised in paragraph 16 of its statement of claim as follows:

“(i) Value of the complete piston and rod assembly at

current rate of exchange $25,000.00 or N417, 500.00

(ii) Charge paid for carriage N2, 110.00

(iii) Loss of earning from 16/11/91 to 20/12/91 (35 days)at N15, 000 per day N525, 000.00

Total special damage N944, 610.00

General damages N555.390.00

Total N1.500.000.00.”

The defendant admitted responsibility for the loss of the package but relying on the exemption clause contained in the Airway bill contended that as the Airway bill formed the contractual relationship between the parties, its liability to the plaintiff was limited to N500.

After the exchange of pleadings but before trial, counsel for both parties jointly filed in court, a document titled “Settlement of Issues” admitted in evidence as exhibit ‘A’ wherein they set out facts agreed upon as relevant to the case and also relevant documents admitted by consent including the receipt for N2,110.00 and the Airway bill subsequently admitted in evidence as exhibits B and C respectively. In the said “Settlement of Issues” exhibit ‘A’, the parties stated that the only issue the court should determine was whether, having regard to the Airway bill, exhibit ‘C’, the defendant’s liability was limited to N500, and they further agreed that if the court

determined the issue negatively, the plaintiff should proceed to prove its loss.

At the trial, each party called one witness and after taking the addresses of counsel, the learned trial Judge, Ononiba, J., held that the defendant was liable to indemnify the plaintiff to the full extent of its loss. Adverting to the quantum of damages upon which evidence had been led, the learned trial Judge referred to section 920(a) of the Anambra State Contract Law, Cap. 30, Laws of Anambra State, and held that the plaintiff was entitled to the full value of the lost component which he assessed at N417, 500.00. He also adjudged the plaintiff entitled to the refund of the sum of N2,110.00 paid as freight. In all, he awarded the plaintiff a total sum of N419, 610 with N2,000 costs. The claim for consequential damages and general damages were disallowed.

The defendant’s appeal against that judgment to the Court of Appeal, Enugu Division was unsuccessful hence the further appeal to this court.

In the briefs filed, exchanged and adopted by the parties at the 8 hearing of the appeal, the defendant identified three issues as arising for determination.

These issues which were also adopted by the plaintiff are:-

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“(i) Whether the lower courts determined the only issue for determination presented to it (sic) by the parties in exhibit ‘A’ settlement of issues

(ii) Whether on a proper determination of the issue for determination in exhibit ‘A’, the defendant is liable to indemnify the plaintiff to the full extent of its loss having regard to the terms of the contract between the parties

(iii) Whether the plaintiff proved the value of the lost packages”

Issues (i) and (ii) are closely related and are conveniently treated together. They deal with the construction of the exemption clause in the Airway bill, exhibit ‘C’. The contention of the defendant’s counsel in his brief is that the courts below did not decide the issue presented by the parties for determination as reflected in the “Settlement of Issue”, exhibit A, in that, instead of confining themselves to the interpretation of the terms in the Airway bill, exhibit C, they took into consideration evidence extraneous to exhibit C by referring to the evidence of the plaintiff’s Managing Director on how he impressed upon the defendant’s employee the urgency of the repairs of the defective component. Learned counsel cited the case of Maximum Insurance Company Ltd. v. Owoniyi (1994) 3 NWLR (Pt. 331) 178, 194 to submit that when parties settle issues for determination, the pleadings before the settlement is no longer material and no longer defines the issues.

Referring to section 132 of the Evidence Act, Cap. 112, Laws of Nigeria, 1990 which deals with the exclusion of oral evidence by documentary evidence, it was submitted that since both parties agreed that all the terms of the contract are embodied in the Airway bill exhibit ‘C’, it was wrong for the courts below to admit oral evidence of witnesses in the interpretation of exhibit C the terms of which are very clear and unambiguous and ought to have been given their ordinary meaning in line with the decision of this court in Union Bank v. Ozigi (1994) 3 NWLR (Pt. 333) 385.

As noted earlier on, parties by their counsel filed a document titled “Settlement of Issues” admitted in evidence as exhibit A in which they prayed the trial court to determine the following issue, to wit,-

“Whether, having regard to the terms of the Airway bill No. 220031 signed by the plaintiff, the defendant’s liability is restricted to only N500 or is it liable to indemnify the plaintiff to the full extent of its loss.”

The learned trial Judge, after reviewing relevant case law on exemption clauses decided the issue in his judgment at p. 32 of the record where he said:

“My answer, therefore, to the issue for determination is that having regard to the terms of the Airway bill No. 220031 signed by the plaintiff, the defendant is liable to indemnify the plaintiff to the full extent of its loss.”

In affirming that decision, the court below per the lead judgment of Olagunju, J.C.A. at p. 96 of the record stated:

“On the combined authority of the decisions in Akinsanya v. UBA Ltd. and Narwnal and Sons (Nig.) Ltd. v. Niger Benue Transport Co. Ltd. (supra) and the test of reasonableness posited in DHL International Nigeria Ltd. v. Chidi (supra) it cannot reasonably be maintained that it was the intention of the parties that in the circumstances in which the fundamental term of the contract between the parties was breached by the appellant, the exclusion clause in the Airway bill, exhibit ‘C’ that limits the liability under the contract to N500 can still be operative.”

It is, therefore, a misconception by learned counsel for the defendant to contend, as he did, that the only issue presented to the court for determination was not resolved. Equally baseless, is the contention that inadmissible evidence was admitted in the interpretation of exhibit C. It is a well established principle of law that where parties have reduced their agreement into a written document, subject to some exceptions, oral evidence will not be allowed to contradict or alter the contents of the document: Colonial Development Board v. Kamson (1955) 21 NLR 75. In the instant appeal, no evidence was led to contradict exhibit ‘C’. In my view, I think that what is crucial for determination is whether exhibit ‘C’ was correctly interpreted. The relevant clause in exhibit ‘C’ reads thus:

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“IMNL Air courier’s liability for loss or damage is limited to N500 per delivery subject to the condition of carriage on the reverse side. IMNL are not liable for any consequential loss.”

The interpretation of the above clause involves the consideration of the effect of an exemption clause in the event of a fundamental breach of contract. Discussing this topic in the case of Narumal & Soils Ltd. v. N.B.T.C. Ltd. (1989) 2 NWLR (Pt.106) 730, this court per Nnamani, JSC at 750 said:

“The law as regards these implied and express warranties, the effect of fundamental breach of them and exclusion clauses has grown from the earlier cases in the 19th century.”

After reviewing several authorities on the subject, he held at p. 783 thus:

“The result of the authorities appears to me to be that while in the earlier cases a fundamental breach of an express or implied warranty would have led to an exclusion of an exception clause, the latter cases appear to hold that such an intention must be deduced from the construction of the terms of the contract between the parties. In other words, having regard to the terms circumstances of the contract, was it the intention of the parties that even if a fundamental term of the contract (in this case an express or implied warranty) had been breached, the exclusion or exemption clause would nevertheless apply”

From the above, the present position of the common law would appear to be that the consequence or effect of an exemption clause on a fundamental breach of contract or breach of a fundamental term is not a rule of law but, in each case, the question is one of interpretation of the contract to determine whether the exemption clause was intended to give exemption from the consequences of a fundamental breach. This rule of common law has been modified by section 190 of the Contract Law, Cap. 32, Revised Laws of Anambra State, 1991 which enacts:

“Nothing in the foregoing shall be construed as to enable a party guilty of fundamental breach of a contract, or a breach of a fundamental term to rely upon an exemption clause so as to escape liability.”

The expression “fundamental breach” is used to denote a performance totally different from that which the contract contemplated or a breach of contract more serious than one which would entitle the other party merely to damages and which at least would entitle him to refuse further performance of the contract: Suisse Atlantique case (1967) 1 AC 361 at 392, 399.Since in the instant case, the defendant did not only fail to freight the plaintiffs package as contracted, but lost same, the defendant was guilty of a fundamental breach of contract and therefore not entitled to be protected by the exemption clause in exhibit ‘C’.

Learned counsel for the defendant filed a reply brief in which he tried to distinguish an exemption clause from a limitation clause the former exempting a party from liability whilst the latter merely limits the damages payable in the event of liability. He, therefore, submitted that exhibit ‘C’ did not come within the purview of section 190 of the Anambra State Contract Law. As attractive as this argument, may be, it is by no means sound. A limitation clause which limits liability to a ridiculous amount is as good as a clause exempting from liability. In my view, a limitation clause, is a specie of which an exemption clause is a genus. A reference to exemption clause in section 190 of the Anambra State Contract Law includes limitation clause.

Reference was also made to Carriage by Air (Colonies Protectorates and Trust Territories) Order, 1953, Volume XI, Laws of the Federal Republic of Nigeria, 1958 (1953 Order for short) which learned counsel submitted governs the carriage of goods by air. It was pointed out that a chapter thereof deals with the liability of the carrier for, among other things, destruction or loss or damage to goods. Citing the case of Mohammed v. Commissioner of Police (1987) 4 NWLR (Pt. 65) 420 learned counsel argued that a state law cannot override a subsisting Federal Legislation.

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It is pertinent to observe that the question about the applicability of the 1953 Order supra, was not raised at all in the two lower courts nor was it properly raised in this court through a ground of appeal.

A party who relies on the provisions of a statute as a defence should plead in his statement of defence facts relied upon for bringing a particular transaction within the ambit of that statute: Katsina Local Authority v. Alhaji Bermo Makudawa (1971) NMLR 100. In the case in hand, the defendant pleaded and relied for its defence exhibit C, and no reference whatsoever was made to the 1953 Order. A party is not permitted on appeal to change the case he had made at the trial court since an appeal is simply the continuation of the case put forward in the court of first instance: Oredoyin v. Arowolo (1989) 4 NWLR (Pt. 114) 172; Edebiri v. Edebiri (1997) 4 NWLR (Pt. 498) 165 at 174. It is not also permissible for a party to make a case contrary to his pleadings or evidence: Cardoso v. Executors of the Estate of Doherty (1938) 4 WACA 78; George I. Dominion Flour Mills Ltd. (1963) 1 SCNLR 117; Orizu v. Anyaegbunam (1978) 5 SC 21. In any case, it does not appear to me that the 1953 Order is applicable in this case. It governs the relationship between the airline carriers and those with whom they entered into a contract of carriage of goods by air. The plaintiff did not make any contract with any Airline 1nd, therefore, is not bound by the 1953 Order. I, therefore, resolve the issues under consideration against the defendant.

With respect to the last issue for determination relating to proof of the value of the defective component, it is contended by learned counsel for the defendant, that no credible evidence was led to that effect as the evidence adduced by the plaintiff in that regard was hearsay evidence which is inadmissible in evidence. From the evidence on record, it is inferable that the piston rod and its assembly cannot be procured locally. It is amazing that the defendant company having negligently lost the component and thereby made it impossible for an expert to put a value on it should turn round to challenge the plaintiffs evidence on the value of the faulty piston. I am however, of the view that there is credible evidence on record to sustain the finding of the trial court to the effect that the value of the faulty component was US$ 25,000 equivalent to N417,500.00 at the relevant time. The plaintiff’s witness testified that he bought the new replacement of the lost component for $28,000.00 and that the defective accessory was bought along with the installed plant in 1990, that is, about four years before 1994 when the plaintiffs witness testified. Making allowance for reasonable wear and tear and the defective condition of the accessory, I am of the view that the sum of US$ 25,000,00 is a reasonable estimate of the value of the lost piston.

There is a concurrent finding of the two lower courts in that respect and there is nothing to show that the findings are perverse:

see Okoya v. Santilli (1994) 4 NWLR (Pt. 338) 256; Kale v. Coker (1982) 12 SC 252. It is not the practice of this court to interfere with the award of damages by the trial court unless such award is shown to be manifestly too high or too low or made on wrong principle: See Onaga & Ors. v. Micho & 2 Ors. (1961) 2 SCNLR 101; Elf (Nig.) Ltd. v. Sillo (1994) 6 NWLR (Pt. 350) 258 at 274.

The award of the trial court is in order. Consequently, I resolve this issue in favour of the plaintiff.

In sum, the appeal is devoid of any merit and is accordingly dismissed with N10,000.00 costs to the plaintiff.


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