➥ CASE SUMMARY OF:
National Insurance Corporation of Nigeria (NICON) V. Power & Industrial Engineering Company Ltd. (3 January 1986, SC.194/1984)
by Branham Chima (LL.B.)
➥ SUBJECT MATTER(S)
Insurance policy;
Marine insurance policy.
➥ CASE FACT/HISTORY
This appeal deals with a claim brought under a marine insurance contract between the appellant and the respondent and raises the important question of what constitutes a ‘Policy’ of marine insurance within the terms of the Marine Insurance Act, 1961.
The respondent in pursuance of its desire to contribute its quota to the ‘Feed the Nation Campaign’ or campaign again hunger in 1977 ordered 86,612 new double jute bags of rice from Bangkok in the Far East. The consignment which had an insured value of ₦1,231,459.00 was loaded onto the vessel “Eastern Saturn” for transportation by sea from Bangkok to Port Harcourt and or Lagos on the 30th day of December, 1977 (see Exhibit L7) and the ship set sail on the 3rd day of January, 1978 (see Exhibits ‘L’, ‘L1’ and ‘L2’). This information was conveyed to the respondent by Exhibit L and Exhibit VVI Bill Note dated 26/1/78. By Exhibit 52, Exhibit VVI the respondent was advised by the United Bank for Africa that the Bank had received for the account of the respondent documents for goods sent per “M.V. Eastern Saturn” including B/L No. option – 1 dated 30/12/77 by Continental Enterprises (Bermuda) Ltd. covering 86,612 bags Thai Parboiled Rice. The respondent was requested to collect the documents. Following the advice the respondent collected the documents and on receipt of Exhibits L, L1 to L7 and discovering that the consignment had no insurance cover, the respondent approached the appellant for an insurance cover. The appellant agreed to issue a marine insurance open cover policy and on the 15th day of February, 1978, the appellant did issue the Marine Open Cover No. MA/MAT/78/MOC/0021 – Exhibit J. This Marine Open Cover, Exhibit J was forwarded by letter No.GCGU/CAG/000/264/OAA/ABA dated 14th February, 1978 Exhibit M. Subsequently, Certificate of Insurance No.16533 issued under the open contract No.MA/MAT/78/MOC/0021 Exhibit J was issued and forwarded by letter Exhibit N dated 23rd February, 1978. By letter Exhibit H dated April 13, 1978, the shippers, “Continental Enterprises (Bermuda) Ltd.” informed the respondent that the vessel M/V Eastern Saturn” had sunk without any trace and gone down to the bottom of the sea with all the consignments on board. But before then, AMC International Limited by letter dated 13th March, 1978 Exhibit C copied for the respondent’s information, the letter dated 3rd March, 1978 received on 11/3/78 from Polinia and Company Ltd. of Hong Kong reporting that the vessel Eastern Saturn had sunk. The respondent, on this information, by letter dated 6th April, 1978 Exhibit D conveyed the information to the appellant and also forwarded to it photocopies of the report from the shippers sent to the shipping agents. The respondent then requested from the appellant advice on the processing of the necessary claims. The appellant reacted sharply and sent a letter Exhibit E dated 11th April, 1978disclaiming liability and complaining that as no premium had been paid there was no contract of insurance in existence between the respondent and themselves. The respondent then wrote Exhibit P dated 21/4/78 drawing attention to the receipt Exhibit A for payment. However, by letter Exhibit F dated 27th April, 1978, the appellant confirmed that the premium had been paid but disclaimed liability on their own interpretation of the Open Cover contending particularly that they were not liable for any shipments made prior to 1st February, 1978. By letter Exhibit VI dated 9th May, 1978, the respondent formally claimed the insured value of ₦1,231,359 and requested early settlement. This was followed by a visit and letter Exhibit V2 dated 10th May, 1978 asking for action to be taken on Exhibit v. This was also followed by letter Exhibit V3 dated 26th May, 1978 sent by the respondent forwarding copies of the Master’s Statement of protest with respect to the sinking of the vessel. In reply, the appellant by letter Exhibit ‘w’ claimed that “no risk ever attached to them under the Open Cover” because although the declaration was made after the 1st February, 1978, the actual date of sending was prior to the inception of the Cover, the vessel having sailed from Bangkok, the port of shipment on the 3rd day of January, 1978.
This sounded the bell for the litigation over the matter which was commenced in the Federal High Court, Lagos. From the Federal High Court, it went on appeal to the Court of Appeal from whence it has come to this Court on appeal. By their amended particulars of claim filed in the Federal High Court by the respondent.
Pleadings on the order of the Federal High Court were settled, amended, filed and exchanged by the parties and the issues joined went to trial before Belgore, J. At the hearing, only two witnesses testified. They were T. Ifeanyi Nzegwu, a Director of the respondent company and Sule Bamidele Balogun, the Manager of the respondent company. The appellant called no evidence and rested its case on the evidence adduced by the respondent’s witnesses. After the conclusion of evidence and the addresses of counsel, the learned trial judge, Belgore J. delivered a well considered judgment in which he awarded the respondent as special damages ₦1,231,359.00 with interest at 10% from 23/5/78 and ₦2,000.00 costs. The appellant was naturally not satisfied with the judgment and so appealed to the Court of Appeal. After hearing submissions of counsel for both sides, the Court of appeal (Ademola, Mohammed and Kutigi, JJCA.) in a unanimously considered judgment dismissed the appeal. Ademola, JJCA, concluding his lead judgment (with Mohammed and Kutigi, JJCA. concurring), commented: “All insurance contracts involve the taking of risk and therefore the occurrence of the event insured against cannot frustrate the contract. It is ludicrous to say the least, to tell the respondent that the loss of goods on the MN Saturn has put an end to the contract he concluded with the appellant, for that was the very thing that brought them together in the first instance” The appellant was still not satisfied with the decision of the Court of Appeal and so appealed to this Court.
➥ ISSUE(S)
I. Whether Exhibits ‘B’ and ‘J’ together constitute policy of marine Insurance?
II. Whether there was a concluded contract?
III. Whether the loss of the 86,612 bags of rice when M/V Eastern Saturn sank on the 10th February, 1978 before the premium was calculated, demanded and was paid removed the liability of the appellant under the Marine Open Cover Exhibit ‘J’ and the certificate of insurance Exhibit ‘B’ issued under it?
➥ RESOLUTION(S) OF ISSUES
[APPEAL DISMISSED]
↪️ ISSUE 1: IN RESPONDENT’S FAVOUR.
[EXHIBIT J IS A MARINE POLICY
‘It is also quite clear and I hold that under our law the Marine Insurance Act 1961, a contract of marine insurance is inadmissible in evidence unless it is embodied in a marine policy. In view of the importance of this question, I called for Exhibit ‘J’ in its original form. I have now examined Exhibit ‘J’ in its original form as admitted in evidence. My findings are most revealing. I am sure that counsel for the appellant is unaware of the clear indication at the back of the document and in the document that it is a marine policy. The footnote at the back reads: “This policy should be read carefully and its terms notes.” Above that are printed: “Policy No …. Name …. Due Date ….” There can therefore be no question about Exhibit ‘J’ not being a policy and I hereby reject the submission of Mr. Molajo, SAN., learned counsel for the appellant that Exhibit ‘J’ is not a policy. I hold that it is a policy within the meaning of marine policy under the Marine Insurance Act 1961 section 2(1), section 245(1) and section 25.’
‘The failure of the High Court, Belgore, J. and the Court of Appeal to address themselves to these two questions gave the impression that they did not consider Exhibit ‘J’ a policy of marine insurance and has led counsel for the appellant to so contend forcefully before us. I am at a loss to understand how this simple fact which appears in bold letter on Exhibit ‘J’ escaped the notice of both counsel throughout the course of argument in all the courts.’
‘Since the open cover Exhibit ‘J’ is a policy embodying the contract, the question of counter-offer does not arise. Exhibit ‘B’ conclusively shows that the parboiled rice in 86,612 new double jute bags valued ₦1,231,459.00 on board the ‘M. v. Eastern Saturn’ in transit from Bangkok to Port Harcourt and/or Lagos were insured as per Marine Open Cover No.MA/MAT/789/MOC/0021. The complaint in ground 5 is based on the erroneous assumption that the subject matter of the contract, i.e. 86,612 bags parboiled rice had ceased to exist before the contract was concluded. There is no basis for such assumption in view of the evidence on record. It is undoubtedly the law that if the subject matter of the contract of insurance had ceased to exist before the contract of insurance is concluded, even though unknown to both parties, the contract is void.’
‘Exhibit ‘J’ is not a proposal as erroneously submitted by counsel for the appellant. It contains all the terms of the contract of marine insurance. The contention of learned counsel for the appellant that if Exhibit ‘J’ is an insurance of every shipment that it is a void contract of insurance, is untenable in the face of the express provision of the Marine Insurance Act section 24(1), 29, 30 and 31 which allow of Floating Policy and Unvalued Policy, Exhibit ‘J’ ex facie shows that the perils or risks insured against attaches from 1st February, 1978 whereas Exhibits ‘C’, ‘G and J’ show that the ship went down with the subject matter and was lost on 10th February, 1978. Learned counsel for the appellant has by his arguments called on us to reverse the concurrent findings of fact. Having examined the submissions of counsel for the appellant, carefully, I find no basis on which this Court can disturb the findings of fact made by the Federal High Court, Belgore, J. and the Court of Appeal that Exhibit ‘1’ and Exhibit ‘B’ were issued by the appellant in respect of shipment made on board ‘M.V. Eastern Saturn’ (covered by Bill of Lading Exhibit L7) which sailed from Bangkok to Port Harcourt and or Lagos on 3rd January, 1978. One disturbing feature in this appeal is the failure of the Federal High Court and the Court of Appeal and indeed counsel for the parties to observe that Exhibit ‘J’ is a marine policy as declared on the face of it. It was pleaded along with Exhibit ‘B’ and on them the action of the plaintiff/respondent was founded.’]
.
.
↪️ ISSUE 2: IN RESPONDENT’S FAVOUR.
[THERE WAS A CONTRACT BETWEEN BOTH PARTIES
‘Sections 23 and 24 of the Marine Insurance Act No. 54 of 1961. The marginal heading of Section 23 is “when contract deemed to be concluded”. That Section stipulates:- “S. 23 A contract of marine insurance shall be deemed to be concluded when the proposal of the assured is accepted by the insurer whether the policy is then issued or not, and, for the purpose of showing when the proposal was accepted, reference may be made to the slip or cover-note or other customary memorandum of the contract.”’
‘The existence of Exhibit ‘B’ and Exhibit ‘J’ enables me to answer the question unequivocally in the affirmative. The law is settled and stipulates that the policy may be executed and issued either at the time the contract is concluded or afterwards [section 24(1) of the Marine Insurance Act 1961].’
‘At the High Court, the learned trial Judge, Belgore, J. dealing with this question in his judgment said: “From the moment the proposal was made, accepted and demanded premium paid, a valid contract was subsisting between the plaintiff and the defendant.” Earlier, the learned trial Judge said: “I do accept the plaintiff’s evidence that he went to the defendant to insure his cargo being carried by “M.V. Eastern Saturn” in January, 1978 and that it was on that basis that the plaintiff was given a Marine Open Cover [Note] No.MA/MAT/78/MOC/0021 as alleged in paragraph 8 of the statement of claim.” The Court of Appeal (Ademola, Mohammed and Kutigi, JJCA.) answered the question in the affirmative as well, for Ademola, JCA. in his lead judgment said: “In my view, the answer to the argument is simple. The learned trial judge has rightly found on the uncontradicted evidence before him that the respondent ordered 4,000 metric tons of rice; that the ship carrying the rice left Bangkok by 3rd January, 1978 and the respondent agreed to insure the goods on it” that there was insurance effected in January, 1978 between the parties and cover note Exhibit ‘J’ issued thereby satisfying section 23 of the Marine Insurance Act 1961.”’]
.
.
↪️ ISSUE 3: IN RESPONDENT’S FAVOUR.
[THE APPELLANT WAS NOT REMOVED FROM ANY LIABILITY IN RESPECT TO THE INSURANCE
‘In the instant appeal, the contract involved merely a promise to pay the premium when ascertained and demanded. When it was calculated, ascertained and demanded. it was paid. The appellant is therefore bound to indemnify the respondent in respect of the loss of the 86.612 bags of parboiled rice. The appellant having agreed on terms as to payment of the premium C with the respondent, there is no substance in the submission that the premium paid when it was demanded was late and avoided the contract of insurance. The evidence adduced by the witnesses called by the respondent stands uncontradicted and the court is entitled to give it the full weight and value. See Nwaboku v. Ottih (1961) 1 All NLR 487 at 490, Odulaja v. Haddad (1973) 11 SC. 3457, Nigeria Maritime Services Ltd. v. Alhaji Bello Afolabi (1978) 2 S.C. 79. Unless there is a statutory prohibition against the admission of such evidence, evidence admitted without objection can be made use of by the court in arriving at its decision. I find no basis for the contention of the appellant’s counsel that the loss of the subject matter on the 10th of February 1978 entitles the appellant company to avoid liability under Exhibit ‘J’ Exhibit ‘B’. The payment of the premium on the 24th day of February, 1978 was in compliance with the terms of the agreement between the parties.’]
.
.
.
✓ DECISION:
‘In conclusion, I find that the learned trial Judge. Belgore. J. was perfectly justified in giving judgment against the appellant in the sum of ₦1,231.359.00 with costs. Likewise, the Court of Appeal properly dismissed the appellant’s appeal as being without substance. All the grounds of appeal fail. I too would and I hereby dismiss the appellant’s appeal to this Court and affirm the decision of the Court of Appeal and the Federal High Court. The appellant shall pay costs in this appeal assessed at ₦300.00 to the respondent.’
➥ FURTHER DICTA:
⦿ MARINE INSURANCE CONTRACT NOT EMBEDDED IN A MARINE POLICY IS INADMISSIBLE
A contract of marine insurance may be perfectly valid but because it is not embodied in a marine policy it remains inadmissible by virtue of section 24(1) of the Marine Insurance Act 1961. Being inadmissible, the court cannot take cognizance of its existence. Alade v. Olukade (1974) 6 SC. 183 — Obaseki JSC.
⦿ COURTS OF LAW DO NOT DEAL WITH ACADEMIC QUESTIONS
Ground 5 raises a hypothetical and an academic question. It must be restated with emphasis that courts of law in this country are not established to deal with hypothetical and academic questions. They are established to deal with matters in difference between parties and consequently, their functions involve dealing with all relevant questions arising therefrom to enable them reach a decision on the matter. See section 6(6)(b) Constitution of the Federal Republic of Nigeria 1979 as amended. Ground 5 therefore fails. — Obaseki JSC.
⦿ THE INSURER CANNOT FIX AN ARBITRARY DATE WHEN HIS RESPONSIBILITY TO THE ASSURED WILL START
It strikes one as naive that the Appellant should argue that on 23rd February 1978 – the date inserted by the Appellant on the Insurance Certificate – the goods insured had already been destroyed and, therefore, non-existent, with, therefore, no insurable interest existing as a basis for the insurance. In the first place, in mid-January 1978 when the parties agreed and the contract came into being, the goods were safe and intact on board MV “Eastern Saturn”. In the second place, the insurance both parties were talking about and agreed upon in January 1978, was in respect of the goods on MV “Eastern Saturn”. Thirdly, the insurer is not entitled to fix an arbitrary date for himself on which his responsibility to the assured will attach. To be allowed to do that will be to be allowed to escape liability in all cases which the insurer chooses, since the insurer, in order to escape liability, may simply fix a date outside the period for which he should be liable to the assured. That will strike against the whole principle of insurance which is based on indemnity, destroying the utmost good faith which also is the legal basis on which insurance is built. Anything to the contrary is unworthy of a reputable insurance company. — Aniagolu JSC.
⦿ WHAT IS A POLICY OF MARINE INSURANCE
The question then is: what is a policy of marine insurance? Section 2 of the Marine Insurance Act, 1961 vaguely defines “policy” as “a marine policy”, and section 3 of the Act defines a marine insurance as follows: “A contract of marine insurance is 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 losses incident to marine adventure.” — Uwais, JSC.
⦿ THE LAW WILL BE APPLIED EVEN IF IT WILL CAUSE HARDSHIP
All arguments on hardships of a case either on one side or the other, must be rejected, when we are pronouncing what the law is; for such arguments are only quick-sands in the law, and, if indulged will soon swallow up every principle of it – Yates v. Hall (1785) 1 T.R.80. If Section 24 of the Marine Insurance Act 1961 is thought to be oppressive or inconvenient, application to correct or amend it or repeal it must be made elsewhere and not to judges who are bound to interpret and uphold the law as it is and not as it ought to be:- Bishop of London v. Ffyteche (1800) 1 East 495. In this appeal the appellant will lose if and only if there was a policy tendered as proof of the marine insurance as required by section 24 of Act No. 54 of 1961. — Oputa JSC.
➥ LEAD JUDGEMENT DELIVERED BY:
Obaseki, J.S.C.
➥ APPEARANCES
⦿ FOR THE APPELLANT(S)
Mr. Molajo, SAN.
⦿ FOR THE RESPONDENT(S)
Mr. Sofola, SAN.
➥ MISCELLANEOUS POINTS
➥ REFERENCED (LEGISLATION)
➥ REFERENCED (CASE)
➥ REFERENCED (OTHERS)
