Mv “nozomi” & Anor V. Seabridge Bunkering Pte Limited (2016)

LawGlobal-Hub Lead Judgment Report

UZO I. NDUKWE-ANYANWU, J.C.A.

 This is an appeal against the decision of the Federal High Court sitting at Lagos Division delivered on the 25th September, 2014 by Hon. Justice O.E. Abang.
The facts briefly stated are as follows:
By a writ of summons together with a statement of claim filed on 28th August, 2014, the 1st respondent as Plaintiff claimed against the Appellants as follows:
“(a) The sum of US$208,098.26 being the sum owed the Plaintiff by the Defendants arising from the supply of marine fuel oil and marine gas oil to the MV Nozomi for its operation and maintenance.
?(b) The sum of US$41,758.38 being the accrued interests as at August 21, 2014 for the late payment of the principal Sum arising from the supply of marine fuel oil and marine gas oil to the MV Nozomi for its operation and maintenance.
(c) The sum of US$1,000,000 as general damages.
(d) Interest on (a) thereon at the rate of 2 per cent per month from the date of filing this action until judgment is delivered and 10% from the date of judgment until the judgment sum is entirely liquidated; and
(e) The costs of this

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action.”

The 1st respondent simultaneously with the issuance of the writ applied for and obtained an order ex-parte dated 28th August, 2014 arresting the 1st Appellant’s vessel to secure their claim, which was subsequently served on the Appellants.

Parties began negotiations about the appropriate security for the release of the 1st Appellant’s vessel but were unable to agree as to the form and quantum of security for the vessel’s release. It is the case of the Appellants that the 1st respondent insisted that it will only consent to the release of the vessel by a cash settlement of the claim despite the provision of a letter of Undertaking by the Appellants’ Protection and Indemnity Club as security for the claim.

The Appellants filed an application for the vessel’s release upon provision of the North of England Protection and Indemnity Club’s Letter of Undertaking in the sum of US$249, 854,64 (Two Hundred and Forty-Nine Thousand, Eight Hundred and Fifty-Four United States Dollars, Sixty-Four Cents only), inclusive of interest and costs.
?
In opposition to the Appellants’ application, the 1st Respondent filed a Counter-affidavit to the

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application on 11th September, 2014.
The trial judge in a considered Ruling granted the Appellants’ application in part, rejected the Letter of Undertaking provided by the Appellants and ordered that the vessel be released upon the provision of a bank guarantee on the grounds that the said Letter of Undertaking did not protect the interests of the 1st Respondent even after agreeing that the North of England protection and Indemnity Club Letter of Undertaking is good security universally recognized.

The Appellants being dissatisfied with the ruling filed a Notice of Appeal dated 3rd October, 2014 consisting of five (5) grounds. The appeal was heard on the Appellants’ brief alone filed on 14th October, 2015 but deemed properly filed on 15th October, 2015 by order of this Court, due to the failure of the Respondents to file any brief within the specified time.

The Appellants in their brief formulated three issues for determination of this Court viz:
?1. Whether the learned trial Judge was right or wrong to have rejected the North of England P & I (No E) Letter of Undertaking (LoU) admitted to be an acceptable form of security by the

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learned trial Judge under the Admiralty jurisdiction Procedure Rules, which was offered for the release of the 1st Appellant vessel simply because the Plaintiff/1st Respondent rejected same on the ground that the proposed security contained the wordings “final unappealable judgment of a competent Court” and was to be governed by Nigeria law?” (Grounds 1, 2 & 4)
2. Whether the lower Court was right to have unilaterally imposed the sum of additional US$40,000 by way of accruing interest to the Plaintiffs claim for the purpose of the Appellant providing security for the claim when no figure was suggested to him by the Respondent at the hearing, and particularly when it was not requested for by the Plaintiff/Respondent? (Ground 3).
3. Whether the lower Court was right when, in constraining the terms of the NoELoU, it held that the LoU was inadequate to cover the Plaintiffs claim after holding that it was sufficient and acceptable form of scarcity?
(Ground 5)”

ISSUE 1
It is the contention of learned counsel for the Appellant that there are three forms of security generally acceptable for the release of a vessel. This includes a bank

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guarantee, a Letter of Undertaking or an Insurance Bond from a reputable Insurance Company. He referred to the Arrest Convention of 1956 which Nigeria acceded to in 1966 and the Admiralty Jurisdiction Procedure, Rules of 1993 and 2011. He also submitted that it is trite that the main purpose for an arrest of a maritime “res” such as a ship is to obtain a pre-judgment security which ought not to be used oppressively by an arrestor, so long as the form of security offered is one recognized by the law. He further contended that the North of England Letter of Undertaking from the Protection & Indemnity Club having been universally recognized as a good security both by the Statute and judicial precedents and even the learned trial judge. Thus the trial judge ought to have accepted same. He relied on Order 8 Rule 2(2)(a) of the Admiralty Jurisdiction Procedure, Rules 2011 and the cases of Lonestar Drilling (Nig) Ltd v. Trivent Engineering & Ind (Unreported) Suit No FHC/B/228/97, ruling of E.O Sanyaolu J. of 22nd August 1997; Sunshine Oil & Chemical development Co. Ltd v. The Owners/Masters of the MV “Condor” & 2 Ors (unreported) Suit No.

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FHC/L/CS/697/02, ruling of Hon, Justice R.O. Nwodo (of blessed Memory, as she then was) of 23rd August 2002; Prime Marketing associates Ltd, & Anor. V. The MV “Sea Pioneer” & 2 Ors (unreported) Suit No. FHC/L/CS/792/02, ruling of Hon. Justice R.O Nwodo (as she then was) of 10th September, 2002.

In order to prove the reliability of the Letter of Undertaking, counsel referred to his affidavit wherein it was deposed that North of England Protection& Indemnity club is a member of the International Group of Protection & Indemnity Associations are still going concerns. He also exhibited proof of their membership of the International Group (IG) as well as their latest audited accounts, etc.

It is his own contention that the 2 ground upon which the Respondent rejected the Letter of Undertaking which rejection was relied upon by the lower Court was not justifiable.

As to the 1st ground that the Letter of Undertaking contained the wording “final and unappealable judgment of a competent Court”, it is the contention of counsel that the purpose of inserting such a clause in a security such as Letter of Undertaking is to give room for either

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party to exercise its constitutional right of appeal in the matter, which means that the life span of the security will extend up to the Supreme Court. Holding otherwise will infringe on either party’s constitutional right of appeal. He relied on the cases of HOUGHTMANGRAHT V. ODUBA (2004) 4 NWLR (PT 863) 279; AG FEDERATION V. BI-COURTNEY LTD (2014) LPELR 22968; E.F.P. CO LTD V. N.D.I.C, (2007) 9 NWLR (PT 1089) 216; SECTION 246(1)(8), 241(1), 244(1), 233(3), 236 & 245(1) of the 1999 Constitution.

As to the 2nd ground, that the Letter of Undertaking was to be governed by Nigerian law, it is the contention of counsel that it is the claim of the Plaintiff that determines the jurisdiction of the Court and once the Court assumes jurisdiction, the Court has power over every aspect of the case. In this case it is for the Nigerian Court to determine the suitability or otherwise of the Letter of Undertaking. He further submitted that the stipulation in the Letter of Undertaking in vesting the Nigerian Court with its jurisdiction over its interpretation and application is in line with the Admiralty Jurisdiction Procedure Rules 2011. He referred to the cases of

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ANYA v. IYAYI (1993) 7 NWLR (PT. 305) 209; ANIGBORO v. SEA TRUCKS (NIG) Ltd (1995) 6 NWLR (Pt 339) 35; TUKUR V. GOVERNMENT GONGOLA STATE (1989) 4 NWLR (PT 117) 517. He thus urged this Court to hold that the lower Court was wrong to have rejected the Letter of Undertaking on the ground that it was to be governed by Nigerian law and to resolve this issue in the Appellants’ favour.

ISSUE 2
In arguing this issue, learned counsel for the Appellant submitted that it is trite that a Court cannot give a party what it did not ask for or something different from what the party asked. He referred to the cases of JAMB V. NKEIRUKA (NO 7) (2007) ALL FWLR (PT 387) 1763; EGONU V. EGONU (1978) 11-12 SC 111; AJAYI V. TEXACO NIG LTD (1978) 9-10 SC 1. According to counsel, there is no place in the record of proceedings where the Plaintiff/Respondents requested for an additional US$40,000 (Forty Thousand US Dollar). Thus the trial judge was wrong to have unilaterally imposed an additional US$40,000 (Forty Thousand US Dollar) by way of accruing interest to the Plaintiffs claim for the purpose of the Appellants providing security for the claim. He thus urged

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this Court to resolve this issue in favour of the Appellant.

ISSUE 3
Learned counsel for the Appellant adopted his earlier argument on issue 1. He further contended that although a plaintiff is entitled to security to cover his claim, in fixing the amount of security to be furnished for the release of vessel in detention, the principle to be followed is that the Plaintiff is entitled to sufficient security to cover that amount of his claim on the basis of his reasonably arguable best case, and to determine the Plaintiffs best arguable case, the detail of his claim/particulars of claim must be provided. He relied on the case of THE MOSCHANTHY (1971) 1 LREP, 37; THE TRIBELS (1985) 1 LREP 128; THE S. ARAZ (1996) 6 NWLR (PT 457) 720. According to counsel, in the instant case there are no sufficient particulars given by the Plaintiff/Respondent to support the heads of claim except the principal claim which was put at $249,854.64, which is the amount for which the security (Letter of Undertaking) has been provided. Therefore the learned trial judge was wrong to have construed the terms of the Letter of Undertaking the way he did and rejected same as

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being insufficient. He referred to the Respondent’s Statement of Claim. He thus urged this Court to so hold and to allow the appeal.

The Respondent did not file any brief in this appeal. Therefore this appeal is to be determined on the Appellant’s brief only.

RESOLUTION
The Appellants’ counsel agreed that there are three forms of security generally accepted for the release of a vessel. They are:
1. Provision of Letter of Undertaking from a Protection and Indemnity Club
2. Bank guarantee
3. Insurance Bond from a reputable Insurance company.
Any of the above may be acceptable subject to the circumstances of each case. The idea being that the arrestor would be able to get adequate security for its claims without let or hindrance. This invariably means that the arrestor and the Court have an input as to which one of the three options is suitable for the arrestor.

The learned trial Judge in the suit in the lower Court agreed in principle and held inter alia:
“It is my view that though North of England Protection & Indemnity’s Club Letter of Undertaking is a good security universally recognized but the said security is

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not adequate to protect the Plaintiffs claim”.

I don’t think the learned trial Judge has any issues with the security provider. The issues the Court had and the fear envisaged by the arrestor is on the amount of security provided by the Letter of Undertaking from North of England Protection and Indemnity Club. Understandably the North of England is a very reputable Protection & Indemnity Club recognized by the whole shipping world.

The question before the Court is that of the discretionary powers of the Court to decide whether the security provided by the North of England is adequate to cover the claims of the arrestor.
It is normal that the security to be covered would include the following:
1) The principal claim;
2) Interest on the principal claim;
3) Cost of action.
The Letter of Undertaking provided, by the Protection& Indemnity Club only covered, the principal claim and the interest. There was no security on cost. The learned silk for the Appellants argued that, the Respondent did not claim for cost and as such, the learned trial Judge was wrong in adding the cost of $40, 000.00 to the claim.
I will

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recapitulate the claims of the Respondent as Plaintiff in the lower Court:
?A) the sum of US$208, 098.26 being the sum owed the Plaintiff by the Defendants arising from the supply of marine fuel oil and marine gas oil to the MV Nozoni for its operation and maintenance;
B) the sum of US$41, 758.38 being the accrued interest as at August 21, 2014 for the late payment of the Principal Sum arising from the supply of marine fuel oil and marine gas oil to the MV Nozomi for its operation and maintenance.
C) the sum of US$1,000,000 as general damages,
D) interest on (a) and (b) above at the rate of 2 per cent per month from the date of filing this action until judgment is delivered and 10% from the date of judgment until the judgment entirely liquidated; and
E) the costs of this action”.

The sum of US$208,098.26 is the sum owed the Plaintiff by the Defendants arising from the supply of marine fuel oil and marine gas oil to the MV Nozomi for its operation and maintenance.
‘E’ talks about cost, which the Plaintiffs/Respondent cannot determine at this stage. It is the Court that may determine and award cost. This subhead falls

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under the discretionary powers of the Court and regulated by the rules of Court.
The learned silk has not argued that the cost was prohibitive rather that it was not asked for by the Respondent as Plaintiff.
From the claim of the Respondent already recapped above, it is obvious that the Respondent claimed for the cost of this action.

The trial judge in his discretionary powers found as a fact that even though he recognized that North of England is a Protection & Indemnity Club universally acknowledged to be credible, he did not reject their Letter of Undertaking however he held that the security provided did not make any provision for the cost of the action. See Finunion Ltd. V. M.V. Briz (1997) 10 NWLR page 141. Where it was held:
“In considering the security to be fixed for the release of an arrested vessel, the Court should have regard to the entitlement of the Plaintiff to sufficient security to cover the amount of his claim with interest and costs on the basis of its reasonably arguable best case. In other words, in the absence of a strong contrary evidence, the amount of bail or guarantee should be sufficient to cover the

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Plaintiffs claim together with interest thereon and the costs of the action. Da Quin Sham vs. Pan Asiatic Commodities Plc. Ltd. (1991) 8 NWLR Pt. 209 page 354”
The Court went ahead to state the principles guiding fixing of security for the release of an arrested ship.
“In deciding the amount to be fixed as security for the release of an arrested vessel, the burden is on the Defendant, to convince the Court upon substantiated facts that a lesser amount of bail would be adequate. The reason is that the Plaintiff must be deemed to have made a prima facie case of liability in the quantum claimed when it convinced the Court initially to issue the order of arrest and detention of the vessel”
See also M.V. Araz v. L.P.G. Shipping S.A. (1966) 6 NWLR Pt. 457 page 720.
The Respondent as arrestor has to be secured against his principal claims, interest on the principal claim and cost. The North of England did not secure cost of action as well: In the natural parlance the Court has to protect the interest of the arrestor. The Respondent as Plaintiff also claimed for damages and interest on damages. The trial Court just declined to consider those

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aspects of the Respondent’s claims. The trial Judge only considered cost that will help in the mitigation of the cost of the action. It would also be appreciated that, the money is not due to the Respondent yet. It is only kept as a security for cost and it might not be certain whether it would be awarded at the end of the action.

I don’t think the request of $40,000.00 as security on cost is unreasonable. This cost does not need any provision of any material to justify this amount. It was fixed at the discretion of the trial Judge. The only rider in a Judge’s discretionary powers is that, it be exercised judiciously and judicially. I have not seen any reason to hold otherwise that the trial Judge did not exercise its discretion judiciously and judicially.

The arrestor was skeptical about the phrase “final unappealable judgment of a competent Court”. To my mind there is no reason to worry about this. The phrase did acknowledge the possibility of parties litigating up to the Supreme Court. This phrase in fact protects both parties in this suit. There is no time frame for the security provided. The security is there until final unappealable judgment of

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a competent Court.

The Respondent was also not too happy that the Letter of Undertaking did not include amongst other things whether, the claim was going to be a subject of arbitration or otherwise, the venue and who had jurisdiction, to adjudicate.

The question of jurisdiction is determined by the claim before the Court. That is, jurisdiction has to be determined on the Plaintiffs pleading, which is his statement of claim and not on the Defendants’ statement of defence. Onuorah v. DRPC (2005) 6 NWLR Pt. 92, page 393, A.G. Kwara State v. Olawale (1993) 1 NWLR Pt. 272, page 645, Izenkwe v. Nnadozie 1953 14 WACA, page 36.

The learned trial Judge also aligned himself with, the fears of the Respondent that nothing was said whether the claim would be subjected to arbitration or the normal Court process. This fear is neither here nor there. Where there is no arbitration clause, the claimant is at liberty to choose which ever form he so desires. However, it would have been desirable to have discussed all these issues prior to the motions, and the production of the Letter of Undertaking from the Protection and Indemnity club. The Appellants would have

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had a round table discussion before the Letter of Undertaking was taken out to secure the claim of the Respondent.

Be that as it may, an appellate Court does not usually interfere with the exercise of the discretionary powers of a trial Court except where it was used arbitrary. The learned Appellants’ counsel has not shown that the learned trial Judge did not exercise his discretion judiciously and judicially. Where the exercise by the lower Court of its discretion is perverse, oppressive or arbitrary an appeal Court is entitled and has the duty to interfere with the exercise of that discretion. Ushare v. C.O.P. (2005) 11 NWLR Pt. 937, page 499, MFA v. Inongha, Francis v. Osunkwo (2001) 7 NWLR Pt. 666, page 564.

A ship is arrested so as to obtain a pre-judgment security for a claim so that a judgment given in favour of an arrest may be secured by means of some guarantee acceptable to both the Court and the arrestor in place of the vessel. See MV Da Qing Shan v. Pan Asiatic Commodities (1991) 8 NWLR Pt 209.
This invariably shows that the security must be acceptable to the Court and the Arrestor. In this case, the security was not acceptable to

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both the Court and the arrestor. The Court cannot be faulted on this issue. The Appellant did not provide enough security to cover the claim, interest and cost of the Respondent. The trial Judge held as such and ordered that the $40, 000.00 be secured by a Bank guarantee to cover cost.

I therefore hold that the Court and the Respondent did not act arbitrarily. The security provided by the North of England did not cover adequately the claim of the Respondent, arrestor. This appeal is therefore unmeritorious. It is dismissed.
No order as to cost.

Other Citations: (2016)LCN/8842(CA)