Jessica Trading Co. Ltd. V. Bendel Insurance Co. Ltd. (1996)

LAWGLOBAL HUB Lead Judgment Report

ADIO, J.S.C.

The appellant (the insured) took out a marine cover (Exhibits “D” to “D8”) from the respondent (the insurer) in relation to his cargo (white sugar) which was being shipped from somewhere in Europe to the port in Warri, Nigeria. The open cover was to “remain open and to attach to all sending made after 7th July, 1977 to 6th July, 1978”.

It was one of the terms of the policy that the cover was to terminate immediately after completion of discharge overside of the goods insured from the Oversea carrying vessel at the Nigeria Port. Upon paying the premium, the appellant was issued a marine certificate of insurance (Exhibit “F”) on the 13th July, 1978. An endorsement” as per open cover No. MAR. 3195/8/77″, was made on Exhibit “F”, and it was subject to the condition that Exhibit “F” was to terminate immediately after completion of discharge overside of the goods insured from the Oversea carrying vessel at the final port of discharge. Exhibit “D” to “D8” was otherwise known as open cover No. MAR. 3195/8/77.

The ship, M.V. Vori, which carried the consignment of sugar, got burnt off Abidjan. Some of the sugar consignment was salvaged. The parties held a meeting in relation to the matter. They agreed on certain terms which were set out in a letter, Exhibit “T”, otherwise referred to as “compromise agreement”, it was alleged that the appellant complied with the terms of the compromise agreement, Exhibit “T”, but the respondent did not observe and/or perform its own part. It was for that reason that the appellant instituted the present action in which it’s claim was as follows:-

“1(a) N146,138.18 being cost of 13, 371 bags of lost sugar.

(b) N29,375 being money paid to Messrs Blaesberg which towed the crippled M.V. Vori with its remaining cargo to Warri port.

(c) N2,000 being expenditure on overtime services authorised by the defendant.

(d) N142,371 being loss suffered by the plaintiff as interest on bank overdraft in that the defendant kept the plaintiff out of plaintiff’s money.

2. Alternatively payment of the sum of N319,984.19 as indemnification of the plaintiff by the defendant for loss of the plaintiff’s cargo insured by the defendant, for plaintiff’s portion of cargo interest contribution in getting the remains of the vessel carrying the cargo to Warri, for discharge expenses, and interest on the money lost which was not paid in time.”

The learned trial Judge in a considered judgment entered judgment for the appellant with costs assessed at N3,000.00. Dissatisfied with the judgment, the respondent lodged an appeal to the Court of Appeal. Ogundere, J.C.A., who read the leading judgment pointed out that section 24(1) of the Marine Insurance Act, 1961 constituted an absolute bar to the admissibility of evidence of the existence of marine insurance contract in civil proceedings unless embodied in a policy of marine insurance. He also pointed out that the principal documents on which the marine insurance contract in this case revolved were: (a) marine open cover (Exhibit “D” to “D8”), (b) marine certificate of insurance (Exhibit “F”), (c) Bill of lading (Exhibit “G”) and (d) compromise agreement (Exhibit “T”). After setting out the provisions of section 24 (1) of the Marine Insurance Act, 1961, he held that one of the aforesaid four documents was a marine insurance policy.

The learned Justice of the court below also held that having regard to the dates inserted in Exhibits “D” to “D8” and “F”, the policy was a time policy. In his view, the dates inserted in Exhibits “D” to “D8”, Exhibit “F” and Exhibit “T” showed clearly that the Marine Insurance Certificate (Exhibit “F”) and the alleged Compromise Agreement (Exhibit “T”) could not be properly said to be based on Exhibit “D” to “D8”, the open cover policy, which had expired before the issuance of the Marine Insurance Certificate and the making of the Compromise Agreement. He, therefore, concluded that the appellant’s goods were not covered by any policy of insurance issued by the respondent at the time of the accident.

There was a cross-appeal on the question whether the damages awarded could be reviewed upwards; interest on the amount awarded; the replacement cost of the export commodity, and devaluation of the naira. The Court below held that particular loss was exempted from the policy and in any case, the policy had expired before the accident in question occurred. What constituted depreciation of the naira was neither pleaded nor proved.

In accordance with the rules of this court, the parties filed and exchanged briefs. It is, however, necessary to deal with certain preliminary matters before giving consideration to the issues identified for determination in the briefs filed by the parties. Altogether, six issues for determination were set out in the appellant’s brief while six issues were set down for determination in the respondent’s brief. I think that by now the issues involved or necessary to be resolved for the determination of this case have been narrowed. The crucial issue is whether under the provisions of the open cover policy (Exhibit “D” to “D8”), the Marine Insurance Certificate (Exhibit “F”) or the Compromise Agreement (Exhibit “T”) either alone or in combination with one another it could rightly or legally be said that the respondent was liable to indemnify the appellant for the loss or damage, if any, suffered by the appellant as a result of the accident involving the ship, M.V. Vori at Abidjan (West Africa) on the 4th September, 1978. Having regard to the issues set down by each party in its brief and the circumstances mentioned above, I am of the view that the following issues set out hereunder are reasonably sufficient for the determination of this appeal;

1. Whether any of the documents (Exhibits “D” to “D8”, “F” and “T”) on which the appellant relied in this case was a marine insurance policy and, if so, the nature of the policy.
2. If the answer to the first part of issue (1) is in the affirmative, whether it could legally be said that, under the provisions of the marine insurance policy or policies, the respondent was liable to indemnify the appellant for the loss or damage, if any, suffered by the appellant as a result of the accident involving the vessel, M.V. Vori at Abidjan (West Africa) on the 4th September, 1978.
3. If the answer to the question raised under issue (2) is in the affirmative, what was the nature and extent of the indemnity, if any
4. Whether the court below was right in dismissing the cross-appeal of the appellant in its entirety.”

For the avoidance of doubt, one of the preliminary matters that must be noted is that the law that is applicable to a matter was the law that was in force when the incident in question occurred. See Fatola v. Mustapha, (1985) 2 NWLR (Pt.7) 438. For that reason, the legislation that was applicable in this case was the Marine Insurance Act, 1961. Therefore, the words, “the Act” wherever they occur in this judgment, except where it is otherwise stated, mean the Marine Insurance Act, 1961. A contract of insurance is, according to section 3 of the Act, a contract – whereby the insurer undertakes to indemnify the assured, in manner and to the extent thereby agreed, against marine losses, that is to say, the loss incident to marine adventure. The word “policy” under section 2 of the Act means a marine policy. Its ordinary meaning is that, in form, it is a unilateral undertaking by the insurers to pay the sum insured on the happening of the specified event and, unless and until rectified, is the exclusive record of the contract. See Halsbury’s Laws of England, 4th Ed.Vol,25 para. 406. The exclusive nature of a policy of insurance, as evidence of the contract of marine insurance, was affirmed by section 24 (1) of the Act which provided, inter alia, as follows:-

“24.(1) Subject to the provisions of any statute, a contract of marine insurance shall not be admissible in evidence unless it is embodied in a marine policy in accordance with the form in the first Schedule to this Act or to the like effect.

In view of the fundamental importance of a policy of marine insurance contract one would appreciate the necessity for determination of the question raised under issue (1) above which was whether any of the documents on which the appellant relied on the alleged respondent’s liability was a marine insurance policy and, if so, the nature of the Policy. The court below identified four principal documents on which the marine insurance contract, in this case, revolved.

They were:

(a) Exhibit “D” – “D8”: Marine Open Cover effective from 7th July, 1977 to 6th July, 1978;

(b) Exhibit “F”: Marine Certificate of Insurance effective from 13th July, 1978;

(c) Exhibit “G” Bill of Lading of 21st July, 1978 endorsed to plaintiff/respondent;

(d) Exhibit “T”: Compromise Agreement B/C/MAR/98/78 of 3rd April, 1979″

After due consideration of the aforesaid principal documents, the court below came to the conclusion that Exhibit “D” to “D8” was a marine insurance policy. It was common ground that Exhibit “D” to “D8” was a marine open cover. A maritime open cover issued under a contract of marine insurance is a floating policy of marine insurance and it was the main contract. See National Insurance Corporation of Nigeria v. Power and Industrial Engineering Co. Ltd., (1986) 1 NWLR (Pt.14) 1 at Pp. 18 & 19. Different consideration applied to the document called Marine Certificate of Insurance, Exhibit “F”. Ogundere, J.C.A. expressed the view that the certificate, Exhibit “F”, was not a policy and it did not contain all the terms of the policy. The other Justices (Achike and Ejiwunmi), JJ.C.A. agreed with him.

The submission made for the appellant was that Exhibit “F” itself was insurance policy. The respondent’s contention was that the document was not a marine insurance policy.

Apart from other things, it has to be pointed out that endorsements made on, the rubber stamp impressions affixed to, and that statements in Exhibit “F” have implications and or their own meanings. The declaration in Exhibit “F” was that art insurance had been effected with the respondent for the appellant. For the conditions of the insurance, a person, on the basis of the endorsement on Exhibit “F”, should refer to the conditions set out in Exhibit “D” to “D8”. Indeed, it was clear from the contents of Exhibit “F” that the document was not a policy and that it never purported to be one. The opening statement immediately below the heading of Exhibit “F” was as follows:-

“This is to certify that BENDEL INSURANCE COMPANY LIMITED have undertaken to issue policy/policies of insurance on the standard form of the companies combined policy in which will be embodied the insurance declared hereunder to have been effected.”

There was no evidence whether the respondent ever issued any insurance policy to the appellant pursuant to the undertaking given and set out above.

Further, it could not be properly or legally said that Exhibit “F” was based on Exhibit “D” to “D8” or that it was the authority for the making of Exhibit “F” because Exhibit “D-D8” was no longer in operation at the time that Exhibit “F” was being issued to the appellant on the 13th July, 1978. The court below was, therefore, right in holding that Exhibit “F” was not a marine insurance policy. The statement certifying, in Exhibit “F”, that the respondent would issue a policy/policies in the standard form to the appellant is clear and not ambiguous. Where a statement in a document is clear and not ambiguous it should be given its literal meaning. See Solicitor General, Western Nigeria v. Adebonojo (1971) All NLR 178 cited with approval in Union Bank of Nigeria v. Ozigi, (1994) 3 NWLR (Pt. 333) 385. The appellant did not produce any marine policy issued by the respondent to the appellant pursuant to the aforesaid statement in Exhibit “F”. The answer to the question raised under the first part of issue (1) is that the only principal document upon which the appellant relied which was a marine insurance policy was Exhibit “D” to “D8”.

It is now necessary to deal with the second part of the question raised under issue (1) that is, to find out the nature of the marine insurance cover policy, Exhibit “D” to “D8”. I have found it more convenient to deal with the question raised under the second part of issue (1) and the question raised under issue (2) together. The learned counsel for the appellant submitted that it was a voyage policy while the contention for the respondent was that it was a time policy. There was a misconception which seemed to have led to the confusion or complication in this case. A contract for voyage policy and a contract for time policy are not mutually exclusive. Both of them may be included in the same policy.

Where the contract is to insure the subject matter “at and from”, or from one place to another or others, the policy is called a voyage policy and where the contract is to insure the subject matter for a definite period of time the policy is called a time policy. A contract for both voyage and time may be included in the same policy. See section 27 of the Act.

The conclusion arrived at by the court below was that Exhibit “D” to “D8” was a time policy because its period and date of attachment specified therein was “on or after 7th July, 1977 to 6th July, 1978.” The respondent and the court below were partially right in their contention or view. The appellant too was partially right in its own view that the policy was a voyage policy. Afterall, the following was inter alia, a statement in the marine policy, Exhibit “D” to “D8”:-

“This OPEN COVER is effected to insure for the voyage and in the conditions named therein, the interest specified herein shipped within the limited period mentioned herein whether by or for the account of the ASSURED during the attachment of this insurance”

(Italics mine).

The voyage was from the European port (that is, in Europe) to Warri in Nigeria and the period and date of attachment, which was one of the conditions of the policy, was 7th July, 1977 to 6th July, 1978. In the circumstance, a contract for both voyage and a contract for time were included in the same policy, Exhibit “D” to “D8”. There was nothing strange, wrong or irregular in the said marine insurance policy (Exhibit “D” to “D8”) except that certain precautions must be taken to ensure maximum and effective protection of the insured, in this case, the appellant. One of the precautions to be taken was for the appellant to ensure that all the vessels carrying its goods from Europe to Warri did so and discharged the goods within the limited period (7th July, 1977 to 6th July, 1978) specified in the policy. Further, if a vessel that left the European Port loaded with appellant’s goods within the limited period would not be able to reach Warri and discharge the appellant’s goods within the limited period, as a result of which the policy would expire, the appellant had to renew the policy so as to cover the appellant’s goods for the time that the vessel would require to get to Warri (its destination) and discharge the appellant’s goods. This is because where the loss which occurred was as a result of damage to the vessel or goods in an accident which happened after the expiry of the policy and before its renewal, the insurer will not be liable to indemnify the insured for such a loss. See Lockyer v. Offley (1786), I Term Rep, 252. Another method of taking precaution is for the insured to ensure that the policy contains what is generally referred to in insurance business as “continuation clause” which automatically continues the insurance after the expiration of the insured period until the ship arrives at her port of destination. See Charlesworth v. Faber (1900) 5 Com. Cas 400.

Even if Exhibit “F” was regarded as a policy, the endorsement “as per open cover No. MAR. 3195/8/77 immediately below “MARINE CERTIFICATE OF INSURANCE” and “CONDITIONS OF INSURANCE” therein was intended or calculated to incorporate or link Exhibit “F” with “D” to “D8” (otherwise known as Open Cover No. MAR.3195/8/77), at any rate, so as to adopt or incorporate the conditions in Exhibit “D” to “D8” into Exhibit “F”. If that was so, all that I have said above concerning Exhibit “D” to “D8” containing a time (7th July, 1977 to 6th July, 1978) and voyage contract in the same policy; the contracts of time and voyage being in the same policy not being irregular; some of the precautions which must be taken to ensure maximum and effective protection of the appellant; the consequence of failure to take the precautions; the expiration of the time contract in the policy at a time that the vessel had not reached its destination (Warri); failure to renew time contract before vessel was involved in an accident causing damage to vessel and goods; and the question that the insurer would not be liable to indemnify the insured for the loss thereby caused to the insured, are applicable with equal force to the situation under Exhibit “F”.

The appellant could not properly contend that Exhibit “D” to “D8” or Exhibit “F” that adopted and incorporated in itself the conditions contained in Exhibit “D” to “D8”, did not expire on the 6th July, 1978, at a time when the vessel in question in this case had not completed the voyage from Europe to Warri and discharged the appellants’ goods. Under the heading: “THE FACTS” at page 4 of the appellants’ Brief it was stated as follows:-

“By Exhibit D-D8, made on 7.7.77, effective for 12 months and with 6.7.78 as expiry date the parties established between themselves a contract of marine insurance, evidenced by a Marine Open Cover Policy, Exhibit D-D8 in the proceedings”

The foregoing was not all. In paragraph 4.02 under the heading: “ARGUMENT” there was the following statement:-

“4.02 In the entire proceedings there are three instruments establishing contractual relationships (sic) between the plaintiff and the defendant: they are Exhibits D-D8, F and T. The first document, to wit Exhibit D-D8 took effect on 7th July, 1977 and has a life span of 12 months, with 6th July, 1976 (sic) as its terminal (i.e. expiring) date. Thus after close of day on 6th July, 1978. Exhibit “D” -“D8″ is functus officio: shipped, even on 6th July, 1978, the SENDING is covered; risk attaches. But shipped even only 1 day later on 7th July 1978 risk does not attach: Exhibit D – D8 has automatically become stale and useless”.

If Exhibit “D” to “D8”, as stated or contended in the appellant’s brief, expired, became stale, and functus officio on 6th July, 1978, when the journey of the vessel carrying appellant’s goods to Warri had not been completed, the responsibility was on the appellant to renew the time policy to cover the period between the time of the expiration of the policy up to the time the vessel would be able to complete the voyage and discharge the appellant’s goods. As the appellant did not do so, the respondent was not liable to the appellant for the loss caused by the involvement of the vessel in an accident at the time that it happened.

I now come to Exhibit “T” which, according to the submission made for the appellant, was a document which could support a claim for indemnity by the appellant against the respondent in relation to the loss which occurred as a result of the accident in which the vessel, M.V. Vori, was involved on the way to Warri. The position of the respondent was that Exhibit “T” could not have that effect in law, as it had no legal basis. The view of the court below was that the terms of Exhibit “T” were agreed upon by the appellant and the respondent at a time when Exhibit “D” to “D8”, which they believed constituted the legal basis for the said compromise agreement, had expired. Exhibit “T” was, therefore, meaningless and worthless. The legal position in relation to Exhibit “D” to “D8” , Exhibit “F” and Exhibit “T” was summarised by the court below as follows:-

“Thus when the respondent was later informed that all was not lost the respondent company approached their insurer, the appellant and agreed Exhibit “T” which was predicated on Exhibit “D” to “D8” which in fact had expired.

In view of the above, the main insurance contract herein, the marine insurance open cover lasting from 7th July, 1977 to 6th July 1978, Exhibit “D” to “D8” cannot be said to incorporate Exhibit “F” the marine certificate of insurance of 13th July, 1978, issued some 7 days after the expiry of Exhibit “D” – “D8” which was not renewed after its expiry. Afortiori Exhibit “D” – “D8” cannot cover the loss of cargo on the motor vessel “Vori” burnt at sea on the 4th September, 1978.

In an effort to gum some paper over that difficulty, Exhibit “T” BIC/MAR/98/78 of 3rd April, 1979, the so-called compromise agreement was concluded and acknowledged by the appellant insurance company. The effort also hit a stone wall and disintegrated because it was not backed by any consideration nor was it under seal. It also offends section 24 (1) of the Marine Insurance Act, 1961; which cannot be waved. (sic)”

I entirely agree with the view expressed above by the court below on the extent, if at all, of the legal effect, if any, of Exhibit “D” to “D8”, Exhibit “F” or Exhibit “T”. The answer to the question raised under issue (2) is negative. The respondent was not liable to indemnify the appellant under the provisions of Exhibit “D” to “D8”, Exhibit “F” or Exhibit “T” for the loss suffered by the appellant in connection with the destruction of its goods in the M.V. Vori when it was involved in an accident at Abidjan on its voyage towards Warri.

The next question to be examined is the controversy which arose in connection with the date, “21st July, 1978” which was dealt with in the brief filed by the parties. The complaint of the appellant was that the date “21st June, 1978” which appeared on the face of the bill of lading (Exhibit “G”) showed that the cargo of the appellant was delivered or sent on that date. For that reason, Exhibit “D” to “D8” covered it. According to, the appellant, the date “21st July, 1978,” held by the court below to be the date that the cargo was sent with Exhibit “G” was completely irrelevant. The appellant stated inter alia, as follows in its brief:

“As already stated above, the date 21st July, 1978, is foreign to the entire preceedings and without more, places Exhibit “G” outside the ambit and coverage of Exhibit “D” to “D8″. The date, without more, determines the entire matter brought before the Court of Appeal.”

It is sufficient, in relation to this aspect of the matter, to state that the respondent in its brief pointed out, and I agree with it, that the evidence of the 2nd P.W. (witness for the appellant) was that the bill of lading was endorsed to him by the end of July 1978. The aforesaid endorsement is at the back of Exhibit “G” signed and dated “31/7/78” by whoever endorsed it to the appellant. Certainly, the date “21st June, 1978” on Exhibit “0” was the date that Exhibit “G” was issued but that might not necessarily be the same date as the date on which it was endorsed to the appellant.

In any case, the issue now appears academic and not decisive as the inability of the appellant to obtain indemnity from the respondent was due to the fact that the policy covering the appellant’s goods had expired and not renewed at the time that M.V. Vori was involved in an accident. That was a finding which could be legitimately made and which was, in fact, made on the basis of the evidence on record. It is not every slip of a Judge in his judgment that will result in his judgment being upset. For a mistake to have that result it must be substantial in the sense that it affects the decision appealed against. See Ezeoke v. Nwagbo, (1988) 1 NWLR (Pt.72) 616; and Mora v. Nwalusi (1992) 2 SCNLR 73; (1962) All NLR 681 at P. 689.

In view of the answer to the question raised under issue (2) it is not necessary to consider and/or determine the question raised under issue (3) or issue (4). The appeal has no merit. The judgment of the Court of Appeal on the appeal and the cross-appeal before it is affirmed. This appeal is dismissed with N1,000.00 cost.

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SC.136/1990