Jombo United Company Limited V. Leadway Assurance Company Limited (2016)
LAWGLOBAL HUB Lead Judgment Report
AMIRU SANUSI, J.S.C
At the Federal High Court Port-Harcourt Division (Trial court), the plaintiff now appellant sued the respondent as defendant at the trial court for the under listed reliefs as adumbrated in paragraph 19(5) of its statement of claim. The reliefs sought are as follows:
The plaintiff has suffered loss and damages as a result of the defendant’s breach of contract as well as the profits it would have earned from the availability of funds due to it on other business transaction.
PARTICULARS OF DAMAGES SUFFERED
- Loss of 121 bales of Icelandic stockfish =US$S3B8O
- Loss of 7907 bags of Assorted Icelandic fish.
Heads – US9122,048
TOTAL = US$756,02s
US$156,029 equivalent in Naira at the rate of N80 to US$1 = N72,482,240.00
Total Damages claimed = N20,000,000
(Twenty Million Naira Only) being damages against the defendants jointly and severally.
The facts of the case as could be gathered from the record are briefly summarised below. The appellant herein, entered into an agreement with the respondent on 7th of March 1997 for the insurance of 121 bales of Icelandic stockfish valued at 33,880US$ dollars and 1907 bags of assorted Iceland fish valued at 122,048.00US dollars for duration of the voyage which commenced in Iceland to Port Harcourt. The contract agreement was backed or supported by two insurance policies which were marked as Exhibits A and B. Prior to the execution of the contract agreement, the appellant presented relevant shipping documents to the respondent at the latters request vide his letters marked Exhibit C, D and D1 which were the invoices, as well as Exhibits D2 and D3 which were the bills of lading, all these documents were submitted to the respondent under a covering letter dated 8th April 1997 which was also exhibited at the trial and marked Exhibit D4.
The appellant, has pursuant to the contract agreement, claimed that he paid the premium as agreed upon and sequel to that, the respondent issued the appellant with “Insurance Policies” also exhibited at the trial and marked as Exhibits A and B. Part of the Insurance Policies i.e. Exhibits A and B read as bellow:-
“We the Assurances Leadway Assurance Company Limited, hereby agree in consideration of the payment of a premium, to be agreed, to insure against loss, damages liability or expenses in the manner hereinafter provided”
On the 18th March 1997, the appellant received fax message from the shippers that the ship carrying the consignment got lost in the sea. The fax message was tendered in evidence at the trial, admitted and marked as Exhibit F1 and the appellant immediately communicated this development to the respondent through a letter. Thereafter, the respondent wrote exhibit C requesting for shipping documents i.e. exhibits D, D1, D2 and D3. He subsequently made a claim of 156,088US dollars being the value of the insured goods. The respondent thereupon declined liability on the ground that the subject matter of the insurance had already been destroyed as at the date of insurance through Exhibit F2. It therefore refused to honour its obligation under the agreement despite repeated demands. As a last resort, appellant instituted an action against the respondent.
Before the commencement of hearing in the suit, the respondent filed a motion on notice seeking the dismissal of the suit/action on the following grounds:-
(i) That by virtue of Section 50 of Insurance Decree of 1997, there can be no valid contract of marine insurance without payment of premium.
(ii) That the goods were not in existence as at the time the contract were entered into
The trial court heard the motion and later dismissed same after it duly considered the applicable laws and finally entered judgment in favour of the appellant in the sum of N12,482,240.00 being the value of the consignment. Thus, the trial court in its judgment found in favour of the appellant at page 196 as below:
“The defendant undertook to indemnify the plaintiff in the event of any loss, incident to marine adventure the afore mentioned amount to my mind was what was in contemplation of the parties at the time they made the contract as the probable breach of it, anything outside that amount was not in my humble opinion, contemplated by the parties. The judgment is therefore hereby entered in favour of the plaintiff against the defendant in the sum of only N12,482,240.00
Obviously dissatisfied by the judgment of the trial court, the respondent successfully appealed to the Court of Appeal [the court below) which set aside the judgment of the trial court after allowing the appeal.
In its finding while allowing the appeal, the court below held thus:-
“In the event, I rule that no liability attaches to the appellant on the transaction and the contract of marine insurance between the appellant and respondent is void and unenforceable as no premium was paid before this coverage. The appeal succeeds, it is allowed. The judgment of the court below delivered on 1st November 2001 is set aside. I make no order as to costs”
Appellant herein, became dissatisfied with the judgment of the court below hence it appealed to this court by filing a notice of appeal dated 19th November 2004 containing three grounds of appeal. Briefs were later filed and exchanged in view of the practice and rules on this court.
In the brief of argument filed on 17/3/2005 by the appellant, two issues for determination were encapsulated from the grounds of appeal by the appellant which said issues are set out below:-
(1) Whether the Court of Appeal was correct in holding that Section 50 of the Insurance Decree 1997 had impliedly repealed Section 23 of the Marine Insurance Act 1961, thereby voiding the contract of marine insurance between the parties.
(2) Whether the Court of Appeal was correct in voiding the contract between the parties at the instance of the Defendant/Respondent.
Upon being served with the appellant’s brief of argument, the respondent also filed its brief of argument on 17/3/2005 and therein a sole issue for determination of the appeal was raised and the issue reads as follows:-
“Whether in law, a valid contract of insurance could exist before 6th March 1997 or at all, when the cargo was lost when no premium was paid before 10th and 12th March 1997”
Looking at the two sets of issues raised by the learned counsel for the parties, it is my view that it is apt to treat this appeal based on the two issues raised in the appellant’s brief of argument. I shall therefore be guided by them in determining this appeal, as they subsumed the lone issue raised in the respondent’s brief and I will consider them together.
In arguing the first issue, the learned counsel for the appellant submitted that the court below was wrong in its findings because the Marine Insurance Act of 1961 is a special legislation which can derogate from Insurance decree of 1997. He stated that the trial court gave reason for its decision that the provision of Section 50 of the Insurance Decree 1997 would not apply to a contract of Marine Insurance (See page 5 of the appellant’s brief. He also quoted a portion of the trial court’s judgment at pages 5 to 6 of his brief of argument and submitted that the trial court referred to the decision in the cases of Governor of Kaduna vs.
Lawal Kagoma ANLR 160 at 172 and BAMIGBOYE vs ADMINISTRATOR-GENERAL 14 WACA 616 at 619. He argued that neither the respondent nor the Court of Appeal, showed that the trial court was wrong in its application of the maxim of “specialia generalibus derogant” before coming to its conclusion. In further submission, learned counsel argued that the court below was wrong in its application of the above maxim as there was no ground of appeal or argument by the respondent at the court below requesting the specific and fundamental basis of the trial court’s decision and consequently, he argued that there was no basis for setting aside the judgment of the trial court. He referred to GREGORY’S case (1596) 6 Cox Rep 195.
In a further submission, the learned counsel for the appellant argued that the Marine Insurance Act 1961 is a special provision/legislation dealing with insurance generally. He submitted that the Marine Insurance Act 1997 is a general provision Section 50 of the Marine Insurance Decree of could not rip up Section 23 of the Marine Insurance Act of 1961 which the law makers made specially and exclusively for contract of marine insurance. He said the decision of the Court of Appeal was silent on the complaint of the appellant that had the law makers intended to repeal any provision of the Marine Insurance Act it would have done so the same way it did in Section 95 of the Insurance Decree of 1997 where it was expressly stated that in case of conflict between the provisions of the Decree and the provisions of the Act, the provisions of the Decree will prevail. Based on these submissions he urged this court to set aside the decision of the court below.
On the second issue for determination regarding the question whether the court below was right in voiding the contract between the parties at the instance of the defendant/respondent, the learned counsel for the appellant submitted that the court below was wrong in law to have voided the contract between the parties at the defendant’s/respondent’s instance because the respondent cannot turn round to seek the nullification of the contract on the basis of non-payment of premium at the time of the contract.
He said the party cannot waive statutory provision designed for his own protection. He cited and referred to the cases of AP vs OWODUNNI (1991) 1 NWLR (Pt.210) 391 at 415/416 and ARIORI v ELEMO. He also argued that the issuing of Exhibits A and B without insisting on prior payment of premium, the defendant/respondent is estopped from relying on her own conscious act to void the contract she benefited from. He urged this court to reverse the decision of the court below and allow the appeal.
In reacting to the above submissions by the appellant’s learned counsel, the learned counsel for the respondent, especially on the core issue of none payment of premium, referred to Section 24(1) of Marine Insurance Act of 1961 which makes it mandatory that a contract of Marine Insurance be embodied in a policy. He said a contract which was not so embodied is inadmissible as was held in the case of NATIONAL INSURANCE CORPORATION OF NIGERIA VS POWER INDUSTRIAL ENGINEERING Co. LTD (1986) 1 NWLR (Pt.14) 1 where it was held that a court cannot take cognizance of a marine insurance contract not embodied in a policy, even if it was admitted without objection.
Learned counsel contended that under the 1997 Decree, it is clear that until premium is paid, there cannot be a valid and enforceable insurance contract as the insurance contract is void and unenforceable. He again argued that, even if the parties had agreed in a contract of marine insurance prior to the sinking of the ship and a binding contract is formed, such contract remains incomplete without the payment of aforementioned premium and the party cannot benefit from the purported contract. In a further submission, the respondent’s counsel cited Section 1 of the Insurance Decree 1997 which stipulates that the Decree shall apply to all insurance business and insurers other than the business carried on or by insurer listed and described under the said provision. He added that the use of the word shall, in the said provisions is mandatory and that it applies to marine insurance contract.
By way of further expatiation, learned counsel for respondent stated that Section 2(1) of the Decree had classified insurance business into two, namely:- (a) General Insurance business and (b) Life Insurance business. He said the first category i.e. General Insurance, was further sub divided into 14 classes. He added that Section 2(3)(f) of the Decree had also mentioned Marine and Aviation Business as the type of insurance business which is covered by Section 1 of the Decree, while Section 2 of the Decree listed goods in transit, insurance by road, water and sea. According to the learned counsel, the law is intended to apply to marine insurance and impliedly repealed that aspects of the 1961 law. With regard to the implied repeal enactment the learned counsel argued that laws can be repealed either expressly or impliedly because provisions of a later enactment are aimed at amending the earlier provisions in the repealed, or earlier or previous law, especially where there exists provisions inconsistent with the earlier or previous raw. See the case of GOVERNOR OF KADUNA STATE VS KAGOMA (1982) 6 SC 8.
With regard to loss of cargo before the contract became complete, the respondents counsel referred to the decided authority of POWER AND ENGINEERING case (supra) where it was held that a court cannot take cognizance of a Marine Insurance contract not embedded in a policy even if it was admitted without objection.
As regards the construction of insurance policy, the respondent’s counsel contended that mandatory provisions of a statute cannot be waived by a party. In his opinion, a court will not enforce a contract based on illegality and also will not permit a contract founded on illegality to be effective. See SODIPO VS LEMMINKAINEN & ANOR (1986) 1 NWLR (Pt.14) 220. He then concluded his submission by arguing that the Marine Insurance Decree of 1997 bears a mandatory provision which in its very nature and language may not be waived by a party to an insurance contract including contract for insurance of marine nature. He finally urge this court to affirm the decision of the court below.
I will consider the second issue for determination proposed by the appellant which queries whether the court below was correct in voiding the contract between the parties at the respondent’s instance. In dealing with this issue I deem it apt to reproduce and consider the two provisions on which the arguments of the parties in this appeal revolve or hinged their respective arguments on. Section 23 of the Marine Insurance Act 1961 reads thus:-
“A contract of marine insurance shall be deemed to be concluded when proposal of the insured is accepted by the insurer whether his policy is the issue or not and for the purpose of showing when the proposal was accepted reference may be made to ship, a covering note or other customary memorandum of the contract.”
On the other hand Section 50(1) of the Insurance Decree 1997 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 said in advance “(underlines supplies by me).
The facts of the case are not in dispute that the agreement for the conveyance of the goods between the appellant and the respondent was entered into on 6th March 1997 hence that was the date for the commencement of the contract as clearly shown in the two insurance policies namely Exhibits A and B. It can be recalled that the relevant shipping documents were presented by the appellant to the respondent. The appellant did not, however pay the agreed premium to the respondent during the period. Then on 18th
March 1997 it was informed by the shippers vide a fax message, that the ship carrying the appellant’s goods got lost in the sea, even though the two marine policies were issued on 10th and 12th March 1997 respectively. Evidence however abounds that the ship left Iceland on 6th March 1997. I must stress here, that a contract of insurance is created only in a situation where there exists an unqualified acceptance by one party of an offer made by the other party. Consequently, if the parties are still in the process of negotiation, then it can be said that there is no valid and enforceable contract.
It is my considered view, that a contract of insurance should always contain the terms and conditions of such contract including the right and liabilities of the parties to the said contract. The important thing to consider in an action on a contract itself and for a plaintiff to succeed in an action under such a contract, it/he must tie himself within the terms and conditions of the policy or contract. See YADIS NIGERIA LTD VS NIC LTD (2007) ALL (Pt.3700) 1348. Consequently, the fundamental purpose of an insurance contract is to give cover for an insurance risk. In other words, where a law states that there is no insurance cover unless premium is prepaid, than in effect it means that the contract is void if no premium is actually pre-paid. See AJAOKUTA STEEL CO LTD VS. CORPLUS LTD (2004) 16 NWLR (Pt.899) 369.
Thus, from the contents of the provisions of Section 50(1) of the Insurance Act No.29, 1997 set out above, the premium is a condition precedent to a valid contract of insurance and there cannot be cover in respect of insurance risk UMLESS or EXCEPT the premium therefore is paid in advance. See AJAOKUTA STEEL CO LTD vs CORPLUS LTD (supra), CHARLES CHIME VS UNITED NIGERIA
CO LTD (1972) 2 ECSLR 808; IRUKWU vs T M I B (1997) 12 NWLR (Pt.531) 113. In the instant case, appellant did not pay any premium to the respondent which is the amount of money to be paid for the insurance policy before the risk of loss of the ship occurred, as such the contract of insurance, is ab initio void as rightly held by the court below. As I stated earlier, marine insurance contract must be covered by a policy and if not so covered or embodied, it is not even admissible in evidence.
With regard to Section 23 of the Marine Insurance Act 1961, it is clear from the provision of Section 50(1) of the Insurance Decree 1997 the latter provisions was meant to repeal or replace the provision of the former Act by providing that premium must be prepaid before a marine insurance contract could be valid and enforceable. Once such premium was not paid in advance, the contract becomes void and unenforceable. The Lower Court is therefore correct in so holding. Moreso, the latter Act or provision is later in time. I therefore hereby resolve this second issue against the appellant.
The first issue for determination whether the court below was correct in holding that Section 50 of the Insurance Decree of 1997 had impliedly repealed Section 23 of the Marine insurance Act of 1961. I have partially dealt with this issue when treating the second issue supra. For purpose of clarity, it can be said that Section 23 of the Marine Insurance Act a marine insurance can be covered and valued upon oral transaction and also permits payment of premium to be made subsequently. Conversely, Section 50(1) of the Insurance Decree of 1997 which is later in time of promulgation, makes a contract of marine insurance valid and enforceable ONLY upon condition precedent to the effect that premium MUST be paid in advance, once such condition precedent of prepayment of premium is not met, the contract becomes void and unenforceable. To my mind, the provisions of the later Decree of 1997, which provides a condition contrary to the one in the provisions of Section 23 of the 1961 Act, one can say without any fear of contradiction, that the position provided in Section 23 of the 1961 Act is no longer tenable or applicable by reason that the legislature provides a contrary provisions which can be said to mean that the condition or position provided by Section 23 is no longer valid and no longer subsists. See CROWNSTAR & CO LTD vs M V VALI (2000) 1 NWLR (Pt.639) 37. The intention of the legislature by promulgating Section 50 of the Marine Insurance Decree of 1997 to contradict or conflict with Section 23 of the 1961 Act one can say that the legislature intended to impliedly repeal Section 23 of the Act which it has power so to do expressly or impliedly. It is even trite, that where two acts make conflicting or contrary provisions, the implication that the earlier statute is repealed is irresistible as in the present case. See GOVERNOR OF KADUNA STATE vs. KAGOMA (supra). My view on this, is that the Lower Courts finding that Section 23 of Insurance Act of 1961 had been impliedly repealed by Section 50 of the Marine Insurance Decree of 1997 cannot be faulted or flawed. I therefore also resolve this first issue against the appellant.
Apropos of the above, having resolved the two issues raised by appellant against him, I hold the view, that this appeal is without any merit. It deserves to be dismissed and I accordingly do same. I affirm the decision of the court below which upturned and set aside the judgment of the trial court. Appeal is therefore hereby dismissed with N100,000.00 costs in favour of the respondent herein.