Mt “Delmar” & Anor V. Mt “Ane (Ex Mt Leste”) & Ors (2016)

LawGlobal-Hub Lead Judgment Report – COURT OF APPEAL

CHINWE EUGENIA IYIZOBA, J.C.A. (Delivering the Leading Judgment)

This appeal raises a rather novel and interesting question as regards arrest of vessels, caveats and securities for the release of vessels in admiralty matters. The question to be decided is whether under any circumstances a Court has jurisdiction to order that security for release of a vessel be provided when (1) the applicant is not a party in the pending suit (2) the application is in respect of another suit in which the respondent is not a party (3) there is no pending action in rem.

The facts of the case as gathered from the Record of Appeal are as follows: By a Statement of Claim doted 29/10/07, the 1st & 2nd Respondents herein as Plaintiffs commenced an admiralty action “in rem” at the Federal High Court. Lagos against the Appellants herein, claiming the sum of US$7,500,000.00 (Seven Million Five Hundred Thousand United States Dollars), being damages for alleged collision damage done by the 1st Appellant vessel to the 1st Respondent vessel during manoeuvring operations at the Commodore Pool, Lagos on 25/10/07. At the time of the alleged collision, the 1st

Respondent vessel was under the custody of the Admiralty Marshal of the Federal High Court pursuant to an Order for her arrest dated 22/11/06. The Writ of Summons and Statement of Claim are at pages 1-5 of the Record of Appeal. Simultaneously with the issuance of the writ, the 1st & 2nd Respondents applied for and obtained an ex-parte order arresting and detaining the 1st Appellant vessel to secure their claim. The 2nd Appellant, although not admitting liability but desirous of having its vessel the 1st Appellant released furnished security by way of a Bank Guarantee to secure the 1st and 2nd Respondents’ claim.

The 3rd Respondent had much earlier instituted Suit No FHC/L/CS/245/2006 against the 1st and 2nd Respondents: Zenon Petroleum and Gas Limited V. M/T Leste and Owners of M/T Leste at the Federal High Court, Lagos Judicial Division. She had obtained an Order of arrest of the 1st Respondent vessel in the suit. The Court had ordered the 1st and 2nd Respondents to provide a Bank guarantee for the release of the 1st Respondent but they were unable to provide the Bank guarantee. The 3rd Respondent claimed that the 1st Respondent vessel thus became the

only pre-judgment security available to her, the 1st and 2nd Respondents being foreigners who did not have assets within the jurisdiction of the Court. While the 1st Respondent was still under arrest at the behest of the 3rd Respondent, the 1st Appellant vessel collided with the 1st Respondent vessel and allegedly caused her extensive damage which the 3rd Respondent claimed further deteriorated her value to the extent that the proceeds from her sale would be insufficient to satisfy her claim in Suit No: FHC/L/CS/245/2006.

Following the said collision the 1st and 2nd Respondent as stated earlier above instituted the present Suit FHC/L/CS/994/2007 and obtained an Order for the arrest of the 1st Appellant. The 3rd Respondent then filed a caveat before the Admiralty Marshal of the Court who had the custody of the 1st Appellant against its release. The caveat was not however served on the Appellants and the 1st and 2nd Respondents.

Being unaware of the caveat, the Appellants filed an application at the Court below for the release of the 1st Appellant from arrest without notifying the 3rd Respondent and the 1st Appellant was duly released on provision of a Bank

guarantee by the Appellants. The 3rd Respondent on becoming aware of the release filed a Motion on Notice for an Order directing the 1st and 2nd Appellants to provide security for its claims in Suit No. FHC/L/CS/245/2006 – Zenon Petroleum and Gas Limited V. M/T Leste and Owners of M/T Leste or in the alternative, an Order setting aside or varying the order of the release of the 1st Appellant so that any security provided by the 1st and 2nd Appellants for the release of the 1st Appellant from arrest be also applied in securing the claims of the 3rd Respondent against the 1st and 2nd Respondents in suit no FHC/L/CS/245/2006.

The said application is at pages 28-36 of the Record of Appeal. The Appellants in opposition to the said application filed a Counter-Affidavit which is at pages 41-42 of the Record. Arguments were taken and concluded on 12/11/08 before the learned trial Judge. The record of proceedings of the said date is at pages 70-74 of the record, and in a considered ruling delivered on 02/02/09, the learned trial Judge granted the said application, varying the order of release of the 1st Defendant/ 1st Appellant from judicial arrest by the

Plaintiffs/1st & 2nd Respondents herein, holding that the security provided by the Defendants/Appellants be also applied in and towards securing the claims of the 3rd Respondent against the Plaintiffs/1st & 2nd Respondents in Suit No: FHC/L/CS/245/2006: ZENON PETROLEUM & GAS LTD V. MT LESTE & OWNERS OF MT LESTSE. A copy of the Ruling of the Court is at pages 77- 84 of the Record of Appeal. Dissatisfied with the Ruling, the Appellant filed a Notice of Appeal on 10/02/09 with five (5) grounds of Appeal. The grounds of Appeal without their particulars read as follows:

1. The learned trial Judge erred in law and acted without jurisdiction when notwithstanding that the caveator/Respondent was not a Party to the proceedings before him, his lordship nevertheless granted an Order in their favour.
2. The learned trial judge erred in law and acted without jurisdiction when he granted an Order in favour of a party who has no locus standi to request for any relief before him.

?3. The learned trial judge erred in law when he held that the caveat against arrest filed by the Caveator was filed, service paid for and served on the Admiralty Marshall of the lower

Court, and therefore the Caveator ought to have been put on notice of the application for the release of the MV “DELMAR” in the present proceedings when his lordship had no evidence before him that the caveat against release was ever served on the Appellant herein.

4. The learned trial judge erred in law when he held that the Caveator/Respondent was entitled to be a beneficiary of the security provided by the Appellant for the release of their vessel, the 1st Appellant herein when the caveator/Respondent had or made no claim known to Admiralty or at all against the Appellants.
5. The learned trial judge erred in law when he ordered retrospectively that the security provided by the Appellants for the release of their vessel, the 1st Appellant herein from judicial arrest should also be applied in securing the claims of the Applicants against the Plaintiffs in the pending Suit No. FHC/L/CS/245/2005 between Zenon PETROLEUM & GAS LTD v. MT LESTE & OWNERS OF MT LESTSE & ANOR., when the caveator/Respondent was not a party to the proceedings before him.

?The parties filed and exchanged briefs of argument. The Appellants’ brief was settled by Ayo