In The Supreme Court of Nigeria
On Friday, the 3rd day of January 1986
Before Their Lordships
Judgement of the Court
Andrews Otutu Obaseki. J.S.C
This appeal deals with a claim brought under a marine insurance contract between 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 against 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
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,
claim against the defendant is for the sum of
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
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
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, J.J.C.A.) in a unanimously considered judgment dismissed the appeal. Ademola, J.C.A. concluding his lead judgment (with Mohammed and Kutigi, J.J.C.A. 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 M/V 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. The questions raised before the Court of Appeal by the appellant who did not receive answers favourable to the appellant re-echoed in the grounds of appeal filed with the notice of appeal to this court by the appellant. The grounds of appeal in their final amended form read:
"1. The learned Justices of the Court of Appeal erred in law when they held that Exhibits B and J do not bind the respondent.
Particulars of Error
(1) The respondent founded its cause of action on Exhibits B and J and specifically pleaded them;
(2) The respondent tendered in evidence Exhibits B and J;
(3) The respondent gave evidence that Exhibit J contains all the terms of the contract of insurance in question;
(4) Exhibit J is in view of the evidence of the plaintiff that it contains all the terms of the contract a counter-offer;
(5) After receiving Exhibit J, the plaintiff accepted the counteroffer by paying premium evidenced by Exhibit B on the terms contained in the said Exhibit J.
(6) Exhibit B incorporates all the terms set out in Exhibit J.
2. The learned Justices of the Court of Appeal erred in law in holding that because the issue of the necessity for a policy was not raised on the pleadings, the appellant cannot rely on the legal result of its non-production.
Particulars of Error
(1) Only facts relied upon need be pleaded but not the legal results of acts or omission of the plaintiff.
(2) Paragraph 11 of the statement of defence is plea of the provisions of Marine Insurance Act 1961.
(3) It was pleaded that the contract was unenforceable.
(4) The plaintiff's claim did not ask for any particulars of any averment in the appellant's statement of defence.
3. The learned Justices of the Court of Appeal erred in law when they acted upon parole evidence of the contract when the contract had been reduced into writing to wit, the open cover, Exhibit J which was specifically incorporated into Exhibit B the certificate of insurance:
Particulars of Error
(1) Exhibit Ll to Exhibit L7 were not part of Exhibit J and they contradict Exhibit J.
(2) Oral evidence which contradict Exhibit J are (sic) inadmissible,
4. The learned Justices of the Court of Appeal erred in law when they held that failure of the respondent to produce a policy of marine insurance did not affect its enforceability.
Particulars of Error
(1) In the absence of the policy, all other evidence is by section 24 of Marine Insurance Act, 1961, made inadmissible.
5. The learned Justices of the Court of Appeal erred in law when they held that 'the doctrine of avoidance of contract because of common mistake has no place in insurance'.
Particulars of Error
(1) If before the conclusion of the contract of insurance, the goods or the subject matter of the contract of insurance has ceased to exist either by destruction of the same or by death (although unknown to both parties), the contract will be void because the insured will then have no insurable interest.
6. The learned Justices of the Court of Appeal misdirected themselves on the facts and in law when they held that there was a valid contract subsisting between the plaintiff and the defendant in January, 1978.
Particulars of Errors
(1) By section 23 of Marine Insurance Act, 1961, a contract of marine insurance shall be deemed to be concluded when the proposal of the assured is accepted, 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 covering note or other customary memorandum of the contract.
(2) Plaintiff's witness testified that the premium was paid on 23/2/78 and certificate or cover/ note was issued in respect thereof on 23/2/79 (see page 44 lines 30 and31, of the record)
(3) The plaintiff's witness agreed that the open cover is not a policy or a certificate of insurance and that declarations of shipments must be made and premium paid on individual shipment (see page 22 lines 22 and 24-25).
(4) Exhibit K, a letter written by the plaintiffs admits that the contract of marine insurance was concluded by the acceptance of premium.
(5) The plaintiff's managing director gave evidence that he accepts that an open cover does not cover a particular shipment until premium is paid on individual goods."
7. The learned Justices of the Court of Appeal misdirected themselves on the facts and came to a decision which is erroneous in law when they held that the defendant was liable for the loss of goods which did not come within the period it agreed to insure the plaintiff's goods.
Particulars of Misdirection
(1) Defendant agreed to insure goods shipped on or after 1st February, 1978;
(2) The plaintiff accepted the defendant's counter-offer and paid premium on the 23rd February, 1978;
(3) The goods which are the subject matter of this action were shipped in January, 1978.
8. The decision is against the weight of evidence."
The main questions for determination in this appeal therefore are:
Whether there was a contract of marine insurance in existence between the
appellant and the respondent in respect of 86,612 bags of parboiled rice
(2) Whether Exhibits B and J together constitute policy of marine insurance?
(3) Whether Exhibit J alone is a policy of marine insurance.
(4) 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.
It is desirable to consider the second and third questions for determination raised in this appeal before proceeding to deal with the other questions raised. Having given a short narration of the facts above, I shall turn to the Marine Insurance Act 1961 No 54 for a definition of a policy of marine insurance that approximates to marine open cover. I find the provisions of section 31 of the Marine Insurance Act apposite. The section deals with floating policy and reads:
"(1) A floating policy is a policy which describes the insurance in general terms, and leaves the name of the ship or ships and other particulars to be defined by subsequent declaration ;
(2) The subsequent declaration or declarations may be made by endorsement on the policy or in other customary manner;
(3) Unless the policy otherwise provides, the declarations shall be made in the order of dispatch or shipment. In the case of goods they shall comprise all consignments within the terms of the policy, and the value of the goods or other property shall be honestly stated; but any omission or declaration may be rectified even or arrival provided the omission or declaration was made in good faith;
(4) Unless the policy otherwise provides, where a declaration of value is not made until after notice of loss or arrival, the policy shall be treated as an unvalued policy as regards the subject matter of that declaration."
The basis of all insurance transactions is utmost good faith.
Most certainly. Exhibit J which shall receive more detailed treatment in the course of this judgment, in my opinion, falls within the definition of floating marine insurance policy. Exhibit J is titled "Marine open Cover No MA/MAT. 78/MOC/0021" and Exhibit B is titled "Certificate of Insurance No 16533 issued under open contract No MA/MAT/78/MOC/0021." Exhibit B therefore is not a certificate of insurance standing on its own. It is an endorsement on Exhibit J and declares the name of the ship, the port of loading and the port of discharge, the interest insured and the insured value. These were particulars omitted from Exhibit J, The conditions therein stated were as per marine open cover No MA/MAT/78/MOC/0021 Exhibit J and Exhibit B comes within the intendment of subsections (1) and (2) of section 31 of the Marine Insurance Act 1961 No 54.
The declarations contained in Exhibit B are those envisaged under subsections (1) and (2) of section 31. Subsection (4) of section 31 provides for a situation such as has not arisen in this case where the declarations were not made till after the loss. This case is slightly more fortuitous in that the declarations were made before the loss and before information about the loss of the subject matter was received by the respondent and communicated to the appellant.
The pleadings were not deficient in any material particular save that the words "marine insurance policy" were not used to describe the document pleaded. For a better appreciation of the facts pleaded, I will proceed to set out fully paragraphs 3,4,6,7,8,9,10,12,18,19 and 21 of the amended statement of claim which I consider
very material for purposes of this judgment.
“3. The plaintiff ordered 4,000 metric tons (86,612 bags) of rice from the Continental Enterprises (Bermuda) Limited in or about November/ December, 1977.
4. The said goods were shipped per M.V. "Eastern Saturn" which sailed from Bangkok on 3rd January, 1978.
6. The plaintiff was sent the necessary shipping documents as per letter dated 9th January, 1978 addressed to the said plaintiff by Messrs Tai Sae Company Limited;
7. In consequence of the matters pleaded in paragraph 5 and 6 of this further amended statement of claim, the plaintiff on receipt of the said shipping documents in or about mid-January, 1978 approached the defendant to arrange for the goods to be insured after showing the defendant the said shipping and other documents and the defendant agreed to do so and promised to confirm this and to advise the plaintiff the premium payable after calculation.
8. The defendant confirmed the said agreement referred to in paragraph 7 above by the issue of a marine open cover note No MA/MAT/78/MOC/0021 under its covering letter dated 14th February, 1978.
After the defendant had properly
calculated the amount of the premium payable, it
issued the necessary debit note No MA 6845 dated 23rd
February, 1978 on which the amount of
10. On the payment of the amounts of premium payable as demanded by the defendant, the plaintiff was issued with a comprehensive receipt No 002907 of 24th February, 1978.
12. The said goods and all of them became a total loss by the perils insured against by the said defendant.
Formal demands for settlement of its claims were made by the plaintiff by
letters dated 9th May, 1978, 10th May, 1978 and 26th
May, 1978 for the total value of the said goods amounting to
The defendant wrongfully maintained its stand in its letter dated 22nd
June, 1978 and offered to refund and did refund the premium of
21. The plaintiff suffered loss and damage as a result of the defendant's breach of contract as well as the profits it would have earned from the availability of the funds due to it on other business transactions."
Equally, paragraphs 2, 3, 4, 5, 6, 7, 8, 9, 10, 11 and 12 of the further amended statement of defence are relevant, pertinent and material:
'2. The defendant denies paragraphs 1, 3, 5, 6, 7, 8, 11, 12, 13, 15, 17, 21 and 22 of the statement of claim and puts the plaintiff to the strictest proof thereof.
3. The defendant admits paragraphs 2, 4, 9, 10, 14 and 16 of the statement of claim.
4. With reference to paragraph 15 of the statement of claim the defendant avers that the plaintiff's claim was repudiated for many reasons among which are the following, namely:
(a) non-disclosure of material facts contrary to section 20 of the Marine Insurance Act No 54 of 1961, e.g.
(i) that the boat carrying the goods had left the port of shipment on 3rd January, 1978, a date outside the date stipulated by the open cover;
(ii) that the boat had been abandoned by the crew on the 10th February, 1978 and had been declared lost when he on the 23rd February, 1978 made his declaration under the open cover and paid premium thereon.
5. With reference to paragraph 19 of the statement of claim, the defendant admits that the plaintiff has no right to the refund of the premium paid on the ground of fraudulent non-disclosure of material facts.
Failure to disclose that the ship had sailed long before 1st day of February, 1978; Failure to disclose that the ship had been abandoned by its crew on the 10th February, 1978 and had been reported lost on the 15th February, 1978.
6. With reference to paragraph 20 of the statement of claim the defendant avers that it has dealt with the plaintiff on the basis of absolute good faith and whether there was any incident or not it felt bound in good faith to reject all declarations for shipments before 1st February, 1978 which are outside the open cover.
7. The defendant avers that by the open cover issued by the defendant only shipments or sendings on and after the 1st day of February, 1978, were covered whereas the subject matter of the ship's claim was shipped on, or before the 3rd day of January, 1978 from Bangkok.
8. The defendant will contend at the trial that the open cover was entered or obtained by the plaintiff after the boat Eastern Saturn carrying the parboiled rice had been abandoned by its crew and master at 10.00 hours G.M.T. on the 10th February, 1978 and ' before any certificate of insurance or any contract of insurance covering or concerning the goods in question was issued or entered into.
9. The defendant will contend at the trial that on the 23rd day of February, 1978, when the plaintiff obtained a certificate of insurance in respect of the goods a broadcast had gone out to all ships of the loss of the ship 'Eastern Saturn';
10. The defendant avers that the goods which form the subject matter of the plaintiff's claim were not shipped within the time expressly limited by the open cover and the certificate of insurance issued as a result of the declaration purported to be made under the said open cover is void and the defendant cannot be made liable there under.
11. The defendant will at the trial rely on the provisions of the Marine Insurance Act 1961 Laws of Nigeria and contend that the contract of marine insurance is not enforceable.
12. The defendant will at the trial rely on the open cover dated the 15th day of February, 1978, the certificate of insurance No 16533 dated the 23rd day of February, 1978, plaintiff's letters dated 6th April, 21st April, 1978; 9th May, 1978 10th May, 1978 and 26th June, 1978."
At the trial the plaintiff/respondent called evidence in support of its claim. As mentioned earlier above, the defendant called no evidence to prove and establish the facts pleaded in paragraphs 4, 5 to 8, 9 and 10 of the statement of defence. The plaintiff called two witnesses, T. Ifeanyi Nzegwu (P.W.1) director of plaintiff/ respondent company and Sule Bamidele Balogun (P.W.2) the manager of the plaintiff/respondent company to testify. They testified and tendered in evidence the documents pleaded. These included:
(1) Exhibit J, marine open cover No MA/MAT/ 78/MOC/0021 dated 15th February, 1978 issued by the appellant;
(2) Exhibit B, certificate of insurance No 16533 dated 23rd February, 1978 issued under open contract No MA/MAT/ 78/MOC/0021;
Exhibit A - receipt for
(4) Exhibit L, letter dated 9/1/78 forwarding shipping documents from Tai Sae Company Limited to the appellant to wit Exhibit Ll, freight list. Exhibit L2, manifest dated 3/1/78, Exhibit L3 bills of lading dated 31/12/77;
Exhibit L4, invoice dated 6/1/78;
Exhibit L5, invoice dated 6/1/78;
Exhibit L6, certificate of origin dated 30/12/77
Exhibit L7, bill of lading dated 30/12/77
Mr. Nzegwu, P.W.1 in his testimony categorically asserted that Exhibit B is a certificate of insurance and that Exhibit J contains all the letters (sic) /terms/ of the contract. He also asserted that his transaction with the appellant did not start with Exhibit B and that he had an open cover Exhibit J issued earlier by the appellant. It was on the advice of the manager of the appellant company against taking individual policy that he opted for an open cover. He then made the proposals which were accepted by the appellant in January, 1978.
Exhibit J, the marine open cover was later issued and forwarded.
On the issue of the existence or non-existence of a policy of marine insurance, Belgore, J. in his judgment said:
"The last point raised by the defendant was that section 24 of the Marine Insurance Act made other evidence on marine policy inadmissible except the policy itself. The defendant did not make this point any issue in his pleadings; references were made in the statement of defence of the marine policy not to be enforceable because of one reason or another, but the issue of non-existence of the policy was never mentioned. Though I agreed with learned counsel for the defendant that legal points should not be pleaded, but the existence or non-existence of marine policy was an issue of fact known to the defendant because they were to prepare the document, which must be pleaded.
Furthermore, the marine insurance policy document was still with the defendant, they did not release it and now they were accusing the plaintiff of not producing it. The principle laid down in section 148 Id) of Evidence Act should apply to the action of the defendant ......... In fact, the practice had been for a defendant in such a case to produce the document. In Chitty on Contracts, Vol. 2, Specific Contracts, 24th Edition footnote 46 to paragraph 3938, it is stated:
‘However, underwriters will as a matter of course issue a policy in order to enable the assured to bring an action, even if they deny liability’.
The issue of the existence or non-existence of a policy was again raised in the Court of Appeal. Dealing with-this question, Ademola JCA. (with whom Mohammed and Kutigi, JJCA. concurred) observed:
"There was a submission to the effect that respondent cannot in any event succeed since the policy of insurance has not been pleaded and other documents Exhibits A, B and J tendered showing the existence of contract could not take its place. I think that the learned judge has dealt very well with it in his judgment by pointing out that this issue was not raised on the pleadings and that the practice of underwriters such as the appellant in this appeal is to supply a stamped policy to respondent to maintain action as noted in Chitty on Contract Vol. 2 Specific Contracts 24th Edition paragraph 3938 footnote 46. I cannot improve on that."
The answer to this question is not far to seek and I think that both the learned trial judge and the learned justices of the Court of Appeal evaded the question and unfairly castigated the appellant. Undoubtedly, the statutory provisions as contained in section 24(1) of the Marine Insurance Act 1961 constitute an absolute bar on the admissibility of evidence of marine insurance contracts in civil proceedings unless embodied in a policy of marine insurance and unless any statute otherwise provides. More particularly, the section reads:
"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. The policy may be executed and issued either at the time when the contract is concluded, or afterwards; and subject to the provisions of this Act and unless the context of the policy otherwise requires, the terms and expressions mentioned in the said First Schedule shall be construed as having the scope and meaning in that schedule assigned to them."
On what the policy must specify section 25 of the Marine Insurance Act stipulates that:
"A marine policy shall specify the name of the insured or of some person who effects the insurance on his behalf."
A policy may be either valued or unvalued section 29(1) of the Marine Insurance Act. An unvalued policy is a policy which does not specify the value of the subject-matter insured, but, subject to the limit of the sum insured, leaves the insurable value to be subsequently ascertained in the manner specified in section 18 see section 30 of the Marine Insurance Act 1961.
Mr. Molajo, SAN. learned counsel for the appellant, rightly, in my view, submitted that the necessity for evidence of a policy of marine insurance to prove a contract of marine insurance cannot be waived. I agree with him completely as the provisions of section 24(1) of the Marine Insurance Act are couched in mandatory terms. See Abolade Agboola Alade v 5alawu Jagun Olukade (1976) 2 S.C. 183 at 189. While not disagreeing with that submission, Mr. Sofola SAN. learned counsel for the respondent countered by submitting that Exhibit J and Exhibit B constitute the policy, in particular, he drew the court's attention to certain clauses in Exhibit J where the document was described as a policy of marine insurance.
Mr. Molajo disagreed with the submission that Exhibit B and Exhibit J constitute a policy for the purpose of proving the contract of marine insurance. He submitted that Exhibit B being a certificate of insurance is inadmissible and cited Diamond Alkali Export corporation v Bourgeois (1921) All E.R. Rep. 283 at 289-291; Scott v Barclays Bank Limited 14 Lloyd L. Rep. 142 at pages 114 & 115; English Insurance Co. v National Benefit Insurance Company Limited (1928) All E.R. Rep. 441 at pp. 443-444; (1929) AC.114 at 119 & 121.
An examination of Exhibit J shows that it contains all the details required of a policy under sections 24 and 25 of the Marine Insurance Act 1961 and the First Schedule to the Act. Its contents (in part) read:
"It is hereby agreed to hold covered Messrs Power & Industrial Engineering Company Limited hereinafter called the Assured, subject to the terms and conditions hereunder for an open amount not exceeding 3 million (three million Naira) per any one vessel or conveyance or in any one location.
Estimated Annual Turnover 30 Million Terms and Conditions referred to: As per attached clause
Open Cover always open for the full amount irrespective of declaration made for all shipments and/or sendings on and after 1st February, 1978 but subject to cancellation by either Assured or the Assurers giving notice in writing as hereinafter provided."
"Interest; .......... Rice in jute bags
Cancellation: This open cover is subject to cancellation by either the Assured or the Assurers giving thirty days notice in writing in respect of marine risks, seven days notice in respect of war and strikes risks, and forty eight hours notice for strike in respect of shipments to and from Canada or the United States of America."
The detailed provisions set out in Exhibit J are even more than those set out in the Form in the First Schedule.
The opening words of the Institute War Clauses which read:
"1. This Policy covers ............."
cannot but lead to the conclusion that Exhibit J is a policy. It therefore fully satisfies the description in section 24(1) of the Marine insurance Act 1961 and can be termed a policy to the like effect as the form of policy in the First Schedule. Exhibit B being a document issued under Exhibit J has no independent existence. It is not a policy. It is a certificate of insurance showing that the policy Exhibit J exists in the hands of the appellant in favour of the respondent.
The case of Diamond Alkali Corporation v Bourgeois (supra) relied on by counsel for the appellant in support of his contention that Exhibit B and Exhibit J are inadmissible can be distinguished on the facts. In that case, only the certificate of insurance was tendered and sued upon unlike this case where both Exhibit J the marine open cover which I have classified as a floating policy and Exhibit B the certificate of insurance issued under Exhibit J are in evidence.
MC Cardie, J. brought this out clearly when at page 209 he observed and commented:
"In the Wilson Holgate Case (19) Bailhache, J. said (/1920/ 2 KB at p. 7):
'It must be borne in mind that in dealing with certificates of insurance, I am not referring to American certificates of insurance which stand on a different footing and are equivalent to policies, being accepted in this country as policies'
It will be observed that Bailhache, J. used the word 'accepted1 and not the words 'bound to accept'. The sellers here rely on that passage and also on the notes to Scrutton and Mackinnon on Charterparties (10th Edition) p. 185 where it is said:
‘A certificate of insurance issued by an insurance company under a floating policy upon which document the company can be sued would suffice in any case’
“The buyer strongly challenges that view and his counsel require me to express an independent opinion on the point. I do so with the greatest diffidence and reluctance in view of the weight carried by even the dicta of such experienced and distinguished judges as Scrutton, LJ. and Bailhache, J. I feel bound to express my view, not upon the strict law of the matter. I assume that this document (which is not stamped) was given under a floating policy issued by the insurance company to D. A. Horan. Now the certificate is not a policy. It does not purport to be a policy. This is conceded by counsel in his able argument for the sellers. It is a certificate that a policy was issued to D. A. Horan and it incorporates the terms of that policy. Those terms I do not know nor is there anything before me to indicate that the buyers knew them. The certificate does not show whether that policy was in the recognised or usual form or not. The certificate therefore does not contain all the terms of the insurance. Those terms have to be sought for in two documents - namely, the original policy and the certificate .......
If he sued simply on the certificate, he could put in a part only of the contract for the other terms of the contract namely, the conditions of the actual policy would be contained in a document not in his control and to the possession of which he is not entitled.”
In the case of English Insurance Co. Ltd, v Official Receiver of National Benefit Assurance Co. Ltd. 1928 All E.R. Rep. 441, there was no dispute about the facts and the parties agreed that no insurance policies were ever issued to the appellant company by the National Company in respect of risks accepted by the latter under the terms of the agreement. The only question to be decided was whether the English Insurance Company Limited was disentitled from proving in the liquidation of the National Assurance Company Limited by reason of the fact that no stamped policies of marine insurance were issued by the English Company to the National Company as regards any matters coming within the agreement in participation agreement. The House of Lords (Lord Hailsham, LC., Viscount Sumner and Lord Atkin) held that the agreement was a "contract for sea-insurance" within section 93(1) of the Stamp Act 1891 and a "contract of marine insurance" within -section 22 of the Marine Insurance Act 1906 and the transactions under it riot having been embodied in any marine policy was invalid and inadmissible,, in evidence, so that the claim failed.
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 noted."
Above that are printed:
There can therefore be no question about Exhibit J 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 24(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 letters on Exhibit J escaped the notice of both counsel throughout the course of argument in all the courts.
This disposes of grounds 2 and 4 of the grounds of appeal and questions 2 and 3 of the questions for determination.
Turning to question 1 whether there was a concluded 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 (sic) 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".
Exhibit J was erroneously referred to in the judgment as a cover note. It is marine open cover, a floating policy of marine insurance.
The appellant's complaints in ground 1 of the grounds of appeal that the learned Justices of the Court of Appeal erred in law when they held that Exhibits B and J do not bind the respondent is well founded. But the erroneous opinion has made no difference to the fortunes of the appellant in this appeal- The context in which the statement was made is innocuous. The whole statement reads:
"It is necessary to state that both Exhibits B and J are not documents inter parties by the appellant and the respondent. Both documents are the acts of the appellant alone and are in no way binding on the respondent. The rule of exclusion under section 131(1) of Evidence Act or oral evidence to contradict, alter, add to or vary the content of Exhibits B and J does not apply. See section 133 of Evidence Act. Therefore the case of Osikoya v Salvador Hurtado Solaz 4 WACA 91 relied on by counsel for the appellant has1 no relevance."
The Court of Appeal was considering the argument that parol evidence has been given by the respondent's witnesses to vary the contents of Exhibits B and J. The contents of Exhibits B and J reflect the agreement between the appellant and the respondent and having founded its claim on Exhibit B and Exhibit J and pleaded them it cannot, in my opinion, be contended without contradictory evidence that the respondent is not bound by them. There are conditions and warranties express and implied which bind the assured. See sections 34 to 50 Marine Insurance Act 1961.
A careful study of the pleadings filed and the cases presented to court shows that the appellant abandoned the vital areas of the defence set up in its pleadings.
Parties are bound by their pleadings and are not allowed to set up a case different from that set out in their pleadings. The main defences set up and contained in paragraphs 4, 5 , 6, 7, 8, 9 and 10 are:
(1) non-disclosure of material facts;
(2) fraudulent non-disclosure;
(3) rejection of shipments before 1st February, 1978;
(4) that the contract of insurance was concluded after the boat M.V. Eastern Saturn with the goods had been lost at sea;
(5) that the certificate of insurance issued as a result of the declaration purported to be made under the marine open cover is void;
(6) that the contract of marine insurance is not enforceable under the Marine Insurance Act 1961.
Whereas the respondent's witnesses gave evidence totally destroying the above defences, the appellant failed to adduce any iota of evidence in support of any of the above defences and as such none of the defences was made out. The evidence adduced by the respondent through its witnesses does not support the defences.
Further, the allegation that 'the contract of marine insurance is not enforceable' does not, in ray view, amount to a pleading that ‘the contract of marine insurance is inadmissible’. A contract can be admissible and yet be unenforceable. This arises where facts making the contract void or voidable are clearly pleaded and proved by evidence. Fraudulent non-disclosure of material facts easily comes to mind as a ground which, when established, entitles an insurer to avoid the contract. 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 S.C. 183.
It is therefore in the interest of parties to note that pleadings must be strictly adhered to in the conduct of their cases. See African Continental Seaways Limited v Nigerian Dredging, Roads and General Works Limited (1977) 5 S.C. 235, 243, 247-250;
Emegokwe v Okadigbo (1973) 4 S.C. 113 at 117; Akpapuna v Obi Ezeka II (1983) 7 S.C. 1 at 24 and 62; Ferdinand George v The United Bank for Africa (1972) 8-9 S.C. 264 at 273-274 (1972) 1All NLR (Part II) 347 at 353; Metalmpex v A.G Leventis &Co. (Nig) Ltd. (1972) 1 All NLR. (Part 1) 207; George & ors. v Dominion Flour Mills Ltd. (1963) 1 All NLR. 71 at 77.
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 1979 as amended. Ground 5 therefore fails.
With regard to the contention of learned counsel for the appellant in ground 6, the content of Exhibit B is revealing. It states, inter alia.
"Certificate of Insurance No 16533 Issued under Open Contract No MA/MAT/78/ MOC/0021
This is to certify that the corporation has insured the under-mentioned goods for the voyage(s) and value(s) stated on behalf of Power & Industrial Engineering Company Limited.
The certificate of
insurance is therefore by its express terms an affirmation that there was in
existence an open contract embodied in Exhibit J under which it was issued
and certified that the insurance was in respect of the voyage per M.V.
Eastern Saturn from Bangkok to Port Harcourt and/ or Lagos in respect of
86,612 new double jute bags of parboiled rice valued
The question may then be asked whether this insurance was not referable to:
(1) the boat;
(2) the rice; and
(3) the voyage.
mentioned in Exhibits L, L1 to L7 which, according to the evidence, were shown to the appellant to indicate the goods, the boat and voyage in respect of which insurance was sought. The answer is undoubtedly in the affirmative and this lays the defence of non-.disclosure of facts and fraudulent non-disclosure finally to rest.
In Marine Insurance Co. Limited v Grimmer (1944) 2 All ER.197 Scott, LJ. said at 199:
"Even if the policy sued on had been an original insurance effected by the shippers of the sugar, it is indisputable that on its true interpretation, it would have operated retrospectively to the loading of the insured goods on the carrying ship. That is inherent in every voyage policy in the old Lloyd's Form (now Scheduled to the Act)".
There is here sufficient uncontradicted oral and documentary evidence to establish that the insurable interest or subject matter was to the knowledge of the appellant, being conveyed by M.V. Eastern Saturn which sailed from Bangkok on 3rd January, 1978. The acknowledgment of this fact in Exhibit B constitutes a necessary variation. With much elaboration, the respondent, by pleading the documents Exhibits B and J and tendering them in evidence, is simply saying that their contents represent the agreement entered into between the appellant and itself, the respondent. A contract of marine insurance is a contract of indemnity and hence the policy and or insurance certificate bears the signature of the insurer only. The proposals bear the signature of the respondent so that the respondent cannot properly disclaim its obligations under the contract and there are many.
Ground 3 complains of the Court of Appeal acting on the parol evidence of the contract when the contract had been reduced into writing. Exhibit J and Exhibit B. Learned counsel for the appellant complained that Exhibits Ll to L7 were not part of Exhibit J and that they contradict Exhibit J. He then submitted that oral evidence which contradict Exhibit J were inadmissible. The question may be asked whether Exhibits Ll to L7 contradict Exhibit J. I do not think so.
The appellant has been unable to show that the rules of evidence preclude the respondent from adducing evidence to show that Exhibit J and Exhibit B were issued by the appellant in respect of the bags of rice covered by the documents including bills of lading Exhibits Ll to L7. The fact that Exhibit J limited the time the risks insured against attaches to shipments and sendings after 1st February, 1978 which is a reflection of appellant's choice cannot constitute a barrier when Exhibit B which was issued after declarations were made lifted the insured interest from Exhibit L7. I find no substance in this ground. It is to be observed that the insured interest on the evidence led was very much in existence on board "M.V. Eastern Saturn" at sea on 1st February, 1978.
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
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.
1. Pritchard v Merchant and Tradesmen's Mutual Life Assurance Society 140 ER 885 at 892
2. Couturier v Hastie (1843-60) All E.R. Rep 280 at 284
3. Oceanic Steamship Co. v Faber (1907) 23 TLR. 673.
4. Scott v Coulson (1903) 2 Ch. 249
5. Joseph Constantine Steamship Line Ltd, v Imperial Smelting Corp. Ltd (1941) 2 All E.R. 165 at 170.
The evidence established that the boat M/V Eastern Saturn sank on the 10th day of February, 1978, that the risks or perils insured against by Exhibit J attached from the 1st day of February, 1978 and more importantly, that the contract was concluded in late January, 1978.
In Exhibit J, the Institute Cargo Clauses (All Risks) in clause 1 stipulates that:
"This insurance attaches from the time the goods leave the warehouse or place of storage at a place named in the policy for the commencement of the transit, continues during the ordinary course of transit and terminates either on delivery
(a) to the consignee or ...... . . ......
(b) to any other warehouse ...........
(c) on the expiry of 15 days after completion of discharge overside of the goods hereby insured from the oversea vessel at the final port of discharge whichever first occurs."
and in Clause 5
"This insurance is against all risks of loss of or damage to the subject matter insured ................."
Exhibit M - the letter dated 14th February, 1978 under whose cover Exhibit J was forwarded makes it reasonable to presume even without evidence that the contract of marine insurance was concluded before that date. The letter reads:
Power & Industrial Engineering Company,
P. O. Box 3869,
We forward herewith in duplicate our Marine Open Cover No MA/MAT/78/MOC/0021 which we trust you will find in order.
Marine & Aviation manager
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 H 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 J 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. If this fact had been appreciated, the reasons for the judgments of the two courts below would have borne a different orientation.
With regard to the 4th question raised which' has been impliedly answered above, I would, in particular, draw attention to the agreement under the head: "Basis of Valuation" in Exhibit J. It has been set out above but a repetition here for the agreement will forcibly bring out and emphasise the extent of liability undertaken by the appellant. It reads:
"In the event of loss, accident or arrival prior to declaration, it is hereby agreed that the basis of valuation shall be C & F (invoice value) plus percentage to be declared by the clients"
The voyages covered are from any port in the world to Apapa/Lagos/Port Harcourt from the 1st of February, 1978.
Payment of Premium:
Learned counsel for the appellant contended that as the premium was not paid till the 24th day of February, 1978, the contract of insurance was void. I am unable to accept this submission in view of clause 4 of the Institute cargo clauses (all risks) in Exhibit
That clause reads:-
"Held covered at a premium to be arranged in case of change of voyage or of any omission or error in the description of the interest, vessel or voyage."
And when Exhibit B was issued, it was accompanied by debit note Exhibit 0 dated 23rd February, 1978 which demanded payment in these terms;
"Unless otherwise stated, this account must be settled within 14 days."
The respondent, on the 24th day of February, 1978 did pay the premium and obtained receipt Exhibit A. Section 53 of the Marine Insurance Act 1961 No 54 dealing with the time when premium is payable states:
"Unless otherwise agreed, the duty of the assured or his agent to pay the premium and the duty of the insurer to issue the policy to the assured or his agent are concurrent conditions, and the insurer shall not be bound to issue the policy until payment or tender of the premium."
The words 'Premium to be arranged' have been held to mean premium to be agreed. Libercan Insurance Agency Inc. v Mosse (1977) 2 Lloyds Rep 560 QBD. at p. 568. The clause does not contemplate any alteration in the terms of the insurance other than in respect of premium.
A contract of insurance may involve merely a promise to pay the premium. It is not the law that there must be implied in a contract of insurance a provision that the right of indemnity by the assured is conditional on his previous payment of the premiums. In support of and to emphasise this point, I need only refer to the case of Wooding v Monmouthshire and South Wales Mutual Indemnity Society Ltd. (1939) 4 All ER. 570 at 581 where Viscount Maughan said:
"My Lords, I am not sure that I understand the view of Grier and Mackinnon L.JJ. as to the facts in regard to the payment of premiums by the company. The former states that the company had failed to pay the premium in respect of Wooding and James and were in default in regard to it. I think Mackinnor, LJ. takes the same view. Both the Lords Justices appear to think that this being so, the Society was released from the risks-"in respect of the men. With the greatest respect, I am unable for reasons above stated, to agree that the company is shown to have committed any default whatsoever. They never were separate premiums payable after the five year period in respect of the men. There was a final call to be paid on February 28, 1930 which was assumed to cover all the 1923 cases. There is nothing to show that it was not paid either in cash or in account, and not long afterwards - namely, after completing the accounts up to the end of 1933 - we find that the Society is paying a large sum to the company. Even if the call or some other call was not paid, however, I do not know why the majority of the Court of Appeal should assume that the Society was1of£ the risk1. There is, I think, no principle of law that there must be implied in a contract of insurance a provision that the right to indemnity by the assured is conditional on his previous payment of the premiums. As a matter of commercial good sense, there is a great deal to be said for the terse phrase enunciated by counsel for the Society -'no premium no cover'. It is doubtless for that reason that insurance companies usually require that the consideration for which they undertake to indemnify the assured must be paid before the risk attaches. There is however no doubt that a contract of insurance may involve merely a promise by the assured orchis broker to pay the premium, and this" is implicitly acknowledged in such marine insurance cases as Roberts Security Co. (1897) 1 QB 111; 66 L.J. QB. 119; 75 L.T. 531 Universe Insurance Co. v Merchants Marine Insurance Co. (1897) 2 QB. 93, 66 LJ. QB 564 76 LT 748 and Bhugwan'dass v Netherlands India Sea & Fire Insurance Co. of Batavla (1888) 14 App Cas 83."
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 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 S.C. 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 and 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.
The anger which the non-issuance of a policy by the appellant could have generated was dispersed by the discovery that Exhibit J was a policy and Exhibit B was issued under it. However, the absence of a cover note or slip to indicate the time the contract of insurance was concluded which was sometime before the issuance of the policy Exhibit J is a matter for concern and highly deprecated. Nevertheless, the speed with which Exhibit J was issued is highly commendable.
conclusion, I find that the learned trial judge,
Belgore, J, was perfectly justified in giving judgment against the
appellant in the sum of
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
Judgment delivered by
Anthony Nnaemeka Aniagolu JSC.
The background facts of this appeal have been so fully dealt with in the judgment of my learned brother, Obaseki, J.S.C. which I have had the privilege of reading in draft and with which I am in agreement, that no useful purpose will be served in recapitulating them here, except portions of them as are necessary for an understanding of points being made in this judgment.
After wallowing through a welter of legal authorities and listening to a gamut of forceful and incisive arguments on either side, the answers to two questions which arise from the facts of this appeal will determine the appeal and the side on which the scale of justice must fall. The questions are:
(1) Was there a contract of insurance between the parties, having regard to section 23 of the Marine Insurance Act, 1961, No 54 of 1961?
(2) If the answer is in the affirmative, then when did the contract begin?
The facts of the case have been made easy by fact that the defendant did not give Evidence, having the evidence of the plaintiff contradicted and unchallenged. From this evidence, which was accepted by the trial judge, merges the fact that the plaintiff went to the defendant in mid-January 1978 and they agreed on the contract of insurance. The contract, by section 23 of the Act, simply means the acceptance by the insurer of the insurance proposal of the assured,
"whether the policy is then issued or not. "
On the accepted evidence, therefore, the contract - as a valid and binding contract came into being in mid-January 1978.
The appellant has argued that although negotiations might have started in January 1978, formal contract was not concluded until February 1978 – 23rd February 1978 to be precise - being the date the appellant inserted on the certificate of insurance No 16533 in mid-January 1978 when the assured (plaintiff) proposed to the insurer (the defendant) both parties knew that the goods in question were on board the ship which sailed from Bangkok on 3rd January 1978. They knew that the goods both were talking about were already on board a ship in the high seas.
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, were 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 M/V "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 M/V "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.
Exhibits B and J, having regard to sections 24, 25 and 26 of the Marine Insurance Act, 1961, together constitute the insurance policy with all the terms of the contract clearly set out. Section 24(1) of the Act requires, in drawing up the contract, either for the form in the first schedule to be used or some other form
"to the like effect"
But whatever form one uses, the essential thing is that the contract must contain those essential ingredients specified in the Marine Insurance Act, 1961, sections 25 and 26.
Attention must be
drawn to Exhibits Q, R, S and T which were
tendered by the respondent and which showed similar transactions between the
appellant and the respondent. Of special importance is Exhibit T which
is dated 23rd February 1978 and is a certificate of insurance
issued under open contract for 5000 bags of parboiled rice from Thailand to
Lagos valued at
Equity as we all know inclines itself to conscience, reason, and good faith and implies a system of law disposed to a just regulation of mutual rights and duties of men, in a civilized society. It does not envisage sharp practice and undue advantage of a situation and a refusal to honour reciprocal liability arising there from; it will demand that a person will enter into a deal as a package - enjoying the benefits thereof and enduring, at the same time, the liabilities therein.
Because equity frowns at the unconscionable use of a person's rights at common law, it generally acts in conscience. Hence it is stated in Earl of Oxford’s case (1615) 1 Rep. Ch. 1 that
"When a judgment is obtained by oppression, wrong, and a hard conscience, the Chancellor will frustrate and set it aside, not for any error or defect in the judgment but for the hard conscience of the party"
It is upon this basis that equity looks at the intent rather than the form and will impute an intention to fulfill an obligation. (See: Ross v Army and Navy Hotel Co. (1886) 34 Ch. D 43. Queens land Amp Coal Co. Davis v Martin (1894) 3 Ch. 181; Re FireProof Doors Ltd. Umney v Fireproof Doors Ltd. (1916)2 Ch. 142; Cox v Dublin City Distillery (No 2)1 IR 345. Clearly the instant case on appeal, equity will impute an intention that the appellant, far from scuttling away from its valid obligation to the respondent, will fully honour its agreement, entered into in January 1978, to indemnify the respondent, upon its loss, on the voyage of M/V "EASTERN SATURN". It runs against all accepted notions of justice that the appellant should pocket the premium and turn round to jettison the liability.
There is no doubt that when P.W.1, on behalf of the respondent, went to the appellant with his shipping papers in Mid-January 1978 and the appellant verbally agreed to insure the goods, the appellant knew that the goods were already on board the vessel, which had already set sail, on 3rd January 1978, and was already on the high seas. The real issue was whether, by the verbal agreement in mid-January 1978, the contract had attached. As already stated, by our section 23 of the Marine Insurance Act, 1961, it had.
A like situation arose in S.S. Ardennes (Cargo Owners) v S.S. Ardennes (Owners) (1951) 1 K.B.D. 55, where mandarin oranges were shipped by exporters from Cartegena in Spain and the ship owners agreed verbally to travel straight to London. They instead first travelled to Antwerp and before they eventually reached London, import duty had been increased and the price of mandarin oranges had fallen. On a claim for damages, the ship owners relied on a bill of lading made subsequent to the oral agreement. It was held that the oral agreement prevailed and that the exporters were entitled to give evidence showing that the oral agreement differed from the contents of the bill of lading.
Entering judgment for the plaintiffs. Lord Goddard emphasized the oral agreement being the binding factor saying:
"It is, I think, well settled that a bill of lading is not in itself the contract between the shipowner and the shipper of goods, though it has been said to be excellent evidence of its terms: Sewell v Burdick, per Lord Bramwell (10) and Crooks v Allan (11).
The contract has come into existence before the bill of lading is signed; the latter is signed by one party only, and handed by him to the shipper usually after the goods have been put on board. No doubt if the shipper finds that the bill contains terms with which he is not content, or does not contain the term for which he has stipulated, he might, if there were time, demand his goods back; but he is not, in my opinion, for that reason, prevented from giving evidence that there was in fact a contract entered into before the bill of lading was signed different from that which is found in the bill of lading or containing some additional term. He is no party to the preparation of the bill of lading; nor does he sign it. It is unnecessary to cite
(10) (1884) 10 App. Cas. 74, 105
(11) 5 Q.B.D. 38
authority further than the two cases already mentioned for the proposition that the bill of lading is not itself the contract; therefore in my opinion evidence as to the true contract is admissible-"
The same principle was applied in a case of reinsurance in Marine Insurance Co. v Grimmer (1944) 2 All E.R. 197 where Scott, L.J. at page 119 described as an "insurance fallacy" the notion that the reinsurance attached from the date (June 3rd ) of an amendment slip, holding that
"It is indisputable that on its true interpretation it would have operated retrospectively to the loading of the insured goods upon the carrying ship. "
(Underlines are mine)
It is on the same footing that in the instant case on appeal, the verbal agreement of mid-January 1978 operated retrospectively to 3rd January 1978 being the date of the loading o£ the parboiled rice.
One other matter needs to be mentioned as adding to the justification for the dismissal of this appeal, namely, that there are concurrent findings of facts of the two courts below in favour of the respondent. The practice of this court still remains not to disturb such concurrent findings of facts, or even allow them to be re-opened, unless those findings are clearly wrong and are unmistakably so (Lamai v Chief Orbih (1980) 5-7 S.C. 28; Ukpe Igbodo v Enarofia & Others (1980) 5-7 S.C. 42 at 55)
Nothing has been said by the appellant either in their oral argument or in their brief to warrant a disturbance, by this court, of the findings of facts of either of the two courts below in this appeal.
In the result, for
the above reasons and the additional reasons which have been elaborately
detailed by my learned brother, Obaseki,
J.S.C., in his lead Judgment, this appeal must
be, and is hereby dismissed with costs to the respondent hereby fixed at
Judgment delivered by
Muhammadu Lawal Uwais J.S.C.
I have had a preview in draft of the judgment read by my learned brother Obaseki, J.S.C. I entirely agree with the reasoning and conclusion therein.
The point that I found irksome in this appeal, and which the lower courts failed to determine, is whether or not the certificate of insurance (Exhibit B) and the marine open cover (Exhibit J) together or separately constitute marine insurance policy. These documents were issued to the respondent by the appellant.
By the provisions of section 23 of the Marine Insurance Act, 1961 the issuance of a policy is not necessary before the existence of a contract of marine insurance can be established. The section reads:
"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 covering note or other customary memorandum of the contract."
It is not in dispute, as both the trial court and the Court of Appeal had concurrently found, that a contract of marine insurance existed between the parties. To prove the terms of the contract, it is necessary, as provided by section 24 of the Marine Insurance Act, 1961, to put in evidence the 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."
By sections 25 and 26 of the Act, it is mandatory that a marine insurance policy should specify the name of the insured or of some person who effects the insurance on his behalf. It should also be signed by the insurer or by someone on his behalf. If the insurer is a corporation, it is sufficient to append the seal of the corporation.
Now a close examination of the marine open cover (Exhibit J) and the certificate of insurance (Exhibit B) will show that both documents satisfy the definition in section 3 and contain the requisites given by sections 25 and 26.
The question that follows is: does either of the documents (Exhibits B and J) qualify as a policy of marine insurance or do they together constitute a policy? Exhibit B does not on the face of it purport to be a policy. It is simply a certificate of insurance which is issued in consequence of Exhibit j. The following words appear in italics at the bottom of page 1 of the exhibit - "This Company (i.e. appellant) undertakes to issue a policy covering the goods described (sic) herein if necessary." It follows, therefore, that Exhibit B is meant to indicate that the goods described on the face of it that is "86,612 parboiled rice in new double jute bags" are covered by a policy.
This accords with the present day practice of marine insurance. See Arnoulds Law of Marine Insurance and Average 16th Edition, paragraph 166 at p. 108. Furthermore, in form, Exhibit B does not correspond, even in a modified manner, with the form of marine insurance policy prescribed by the Marine Insurance, Act, 1961.
In contrast Exhibit J is described on its last page as a policy. The sentence in which it is so described reads - "This policy should be read carefully and its terms noted." Attached to Exhibit J are slips containing clauses in respect of the following subjects:-
1. institute Cargo Clauses (All Risks)
2. Institute War, Strikes, Riots and civil Commotion Clauses.
3. Institute Classification Clause.
4. Institute Replacement Clause.
These clauses constitute, among others, the conditions of the insurance.
Now section 24 subsection (1) of the Marine Insurance Act, 1961 provides:
“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 ................”
It needs to be mentioned that we are not here concerned with the admissibility of Exhibit J. As a matter of fact, Exhibit J is already in evidence. The point in issue is: is Exhibit J a marine policy in the form prescribed by the Marine Insurance Act, 1961? It is very clear, even from a cursory examination of the First Schedule to the Act, that Exhibit J is not in the form prescribed by the Act. However, Exhibit J need not conform with the prescribed form because the statute provides that it is sufficient if it is "to the like effect". The words "to the like effect" simply, mean similar or resembling the prescribed form - see R v Harwick 22 L.J.Q.B 216 and R v General Medical Council (1897) 2 Q.B. 203 at pp 207 and 208. So that the prescribed form can be modified to suit a purpose.
Let us now see if the essentials of the ^prescribed form have been met by Exhibit J. the form prescribed by the Marine Insurance Act, 1961 is the same in every respect as the form marine policy prescribed by English Marine Insurance Act, 1906. The requisites of the English form, which are therefore the same as those of our prescribed form, are examined on pages 27 to 34 of Arnould's Law of Marine Insurance and Average 16th Edition paragraphs 29 to 46. Briefly, these are:
1. The name of some party either real or nominally insured.
2. A description of the voyage or risk insured.
3. The subject insured.
4. The perils insured against
5. The name of the ship (except where the insurance is on ship or ships or on cargo to be carried by ships unknown).
6. The premium or consideration for the risk.
7. The sums insured.
8. The subscription of the underwriter.
There is no doubt that all the foregoing particulars are contained in Exhibit J.
Finally, apart from the fact that section 24 subsection (1) of the Marine Insurance Act, 1961 has made allowance for deviation from the prescribed form. Exhibit J would still have been valid as a policy of marine insurance in view of the provisions of section 22 of the Interpretation Act, 1964 which states:
"Where a form is prescribed by an enactment,, a form which differs from the prescribed form shall not be invalid for the purposes of the enactment by reason only of the difference if the difference is not in a material particular and is not calculated to mislead"
See also the decision of this court in BucKnor-Maclean v Inlaks Limited (1980) 8-9 S.C. 1 at pp 17-23 and 31-38. In my opinion, therefore/ Exhibit J qualifies as a policy of marine insurance and I hold it to be so.
It is for these and
the fuller reasons contained in the judgment of my learned brother
Obaseki, J.S.C. that
I too would dismiss this appeal with
Judgment delivered by
Boonyamin Oladiran Kazeem J.S.C.
I have had an opportunity of reading the draft of the judgment just read by my learned brother Obaseki J.S.C. It has succintly dealt with all the issues raised in this appeal; and I entirely agree with, and endorse all the reasons and conclusions arrived at therein. However, I wish to add the following few points.
In both his brief and oral submissions before us, Mr. Molajo, S.A.N., learned counsel for the appellant stressed the point that both Exhibits B and J, the certificate of insurance and the marine open cover respectively, could not operate as a marine policy and that they were therefore, inadmissible by virtue of section 24 of the Marine Insurance Act, 1961. The point was also made that when Exhibit J was issued, it was not meant to be a policy, but it was a counter-offer, offering to issue a policy if the goods were shipped "on or after 1st February 1978" and on payment of the consideration (i.e. premium), The question therefore is: Could Exhibit j have been a counter-offer? The answer obviously is that it could not.
Firstly, the appellants' case in their pleadings and at the trial was not based on that assertion. See paragraphs 7 and 8 of the amended statement of defence, which did not raise such an issue.
Secondly, no evidence was led by the appellant in support of the exhibit being a counter-offer; and, the issue was never raised in the Court of Appeal. It is therefore doubtful whether it can be raised in this court for the first time. What then is Exhibit-J. The answer to this question has been provided in the lead judgment that it was for all intents and purposes "a marine open cover, a floating policy of marine insurance;" and when taken along with Exhibit B, they constitute the contract of marine insurance in this case.
It is to be noted that Exhibit L7, the bill of lading contains all the relevant particulars from which those shown on Exhibit B, the certificate of insurance were obtained, There was also uncontradicted evidence that it was one of the documents Exhibits L-L7-which the respondents handed over to the appellants at the time when the contract was being effected in January, 1978. (See the evidence of P.W. 1 at pages 37, 38 and 46 of the record). If that was the case, then the appellants must have been aware of the fact that the ship carrying the consignment of parboiled rice, which formed the basis of the contract of marine insurance, had left Bangkok since the 3rd of January, 1978. It is therefore strange, to say the least, that when Exhibit J was eventually issued by the appellants on 15th February, 1978 it bore the expression "for all shipments and or sendings on or after 1st February, 1978." Even assuming without agreeing, that it is true that Exhibi J was issued in respect of shipments made "on or after 1st February, 1978;" and the appellants had no documents on or before 15th February, 1978, when Exhibit J was issued, to indicate that the consignment of parboiled rice had already been shipped since 3rd January 1978, at what point in time did they receive Exhibits L-L7? When also the appellants became aware of ; the fact of shipment from 3rd January 1978, after receiving Exhj.bits L-L 7, why did they not repudiate the contract of marine insurance on the bases that
(i) there was a breach of condition that the goods should be shipped "on or after 1st February, 1978;" or
(ii) there was non-disclosure of the material fact that the ship had already set sail by 3rd January,1978 instead of the time shown on Exhibit J ?
Rather than do those things, the appellants proceeded to demand the premium payable on the policy by their letter Exhibit N dated 23rd February, 1978, and that premium was duly paid on 24th February, 1978 as per the receipt of that date - exhibit A. It is therefore untenable in my view for the appellants to submit that at the time Exhibit J was issued on 15th February, 1978, there was no longer any insurable interest since the ship had sunk with everything on board on 10th February, 1978.
Moreover, it is equally inconceivable for the appellants to contend that since the premium was not paid at the time the contract was concluded, there was no consideration and as such there was no valid contract of marine insurance, for it is within the intendment of sections 23 and 32(1) of the Marine Insurance Act, 1961 that a policy of marine insurance can necessarily be concluded before the payment of
premium; and that view was supported by the fact that Exhibit B, the certificate of insurance, which says that the appellant has insured the respondent for the risk, was issued on 23rd February, 1978 whereas the premium was not paid until a day after, on 24th February, 1978.
circumstances, I will also dismiss the appeal with costs assessed at
Judgment delivered by
Chukwudifu Akunne Oputa J.S.C
I have had the privilege of a preview of the lead judgment just delivered by my learned brother, and presiding justice, Obaseki, J.S.C. After reading that judgment, I heaved a great sigh of relief that at last justice has come out victorious. After listening to Mr Molajo's carefully reasoned and almost unanswerable arguments about section 24 of the Marine Insurance Act No 54 of 1961, I became apprehensive that this appeal might well be, yet, another fine example of what Lord Penzance in Combe v Edwards (1878) L.R.3 P.D. 142 aptly described as “the picture of law triumphant and justice prostrate,” It is correct that this court must look hardships in the face rather than break down the rules of law or fail to give effect to any statutory provision (here section 24 of Act No 54 of 1961): see Lord Eldon, C. in the Berkeley Peerage Case (1811) 4 Camp 419. Insurance companies have far too often managed to get away with it on mere legal technicalities. But here we are not dealing with a mere technicality. We are dealing with the express provision of a statute. And in such a case, all arguments on the hardship of the case on the assured (here the respondent) must be rejected when we are pronouncing on what section 24 of the Marine Insurance Act 1961 really means and what effect the compliance with I or otherwise of that section will have on an assured who sets out as the plaintiff to sue an insurance company as a defendant.
After reading the lead judgment, I felt that I can hardly add anything to its lucid statement of the facts; its careful handling of the pleadings, its correct identification of the real issues in controversy, its accurate and exhaustive exposition of the law presented with remarkable precision and succintness, its incissive analysis of the authorities cited after all these, I cannot but agree with my learned brother that this appeal ought to be dismissed and for the reasons so ably advanced in the lead judgment.
For the sake of further emphasis however, I will like to comment on 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 first live issue in the case on appeal was. Was there any contract of marine insurance inter parties? in other words, did the parties negotiate and did they come to an agreement that the defendant/appellant should insure 86,612 new double jute bags of rice weighing 4,000 metric tons, which the plaintiff/respondent ordered from Continental Enterprises (Bermuda) Limited which said rice was shipped per "M-V. Eastern Saturn" which sailed from Bangkok on 3rd January 1978? If the answer to the above question is yes - then a subsidiary question will' arise - When was that contract concluded? From the pleadings of the parties and the available evidence, the learned trial judge on this issue found as follows at p.71 of the record of proceedings:-
“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 the plaintiff was given a marine open cover note No MA/MAT/78/MOC/0021 … The defendant admitted that after proper calculation, they demanded a necessary premium to cover the insurance of the cargo and they admitted further that the plaintiff paid this demanded premium and he was issued a receipt. From the moment the proposal was made, accepted and demanded premium paid, a valid contract was subsisting between the plaintiff and the defendant. This view is supported by section 23 of Marine Insurance Act 1961.”
The court of first instance definitely found that there was a contract of marine insurance between the parties in accordance with the terms and tenor of section 23 of the Marine Insurance Act of 1961.
What of the Court of Appeal, did it, also, so find? At p.172 of the record of proceedings, Ademola, J.C.A. in his lead judgment commented:-
"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 (sic) 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........ These findings have not been faulted by Mr Molajo by his submission"
It is here significant to note that both courts -the trial court and the Court of Appeal have made concurrent findings in favour of the respondent that there was a marine insurance between the parties to this appeal. Consequentially, the present appellant is confronted with the rather uphill task of upsetting the concurrent findings of these two courts. On solid authority, this court does not normally disturb such concurrent findings unless there is some miscarriage of justice or some violation of some principle of law or procedure. Enang v Adu (1981) 11-12 S.C, 25 at p.42; Okagbue v Romaine (1982) 5 S.C. 133 at pp.170/ 171; Lokoyi v Olojo (1983) S.C. 61 at pp 68-73; Ojomu v Ajao (1983) 9 S.C. 22 at p.63.
Was there here any miscarriage of justice or violation of some principle of law or procedure? The answer will definitely be yes if in the two courts below there had been a wrong interpretation or a wrong and mistaken application of the provisions of section 24 of the Marine Insurance Act 1961 on which Mr. Molajo relied. This is where section 24 of the Marine Insurance Act 1961 comes in for closer scrutiny. But before discussing that section, I might as well dispose of paragraph 4 of the defendant's (now appellant's) statement of defence. In that paragraph, the defendant pleaded:-
"4 With reference to paragraph 15 of the statement of claim, the defendant avers that the plaintiff's claim was repudiated for many reasons among which are the following, namely:-
(a) Non-disclosure of material facts contrary to section 20 of the Marine Insurance Act No, 54 of 1961 e.g.
(i) that the boat carrying the goods had left port of shipment on 3rd January, 1978, a date outside the date stipulated by the open cover;
(ii) that the boat had been abandoned by the crew on the 10th February, 1978, and had been declared lost when he on the 23rd February, 1978 made his declaration under the open cover and paid the premium thereon,"
Contracts of insurance are contracts uberrimae fidei. They are voidable on a number of special grounds. One of such special grounds is failure to disclose a fact materiel to the risk. Such non-disclosure renders the contract voidable. If a contract is voidable as opposed to void ab initio, then it is still a contract until it has been successfully avoided. In this case, it was not sufficient merely to plead non-disclosure - No - the onus was on the defendant to adduce evidence to prove the alleged non-disclosure. This the defendant failed to do. What is more, on the evidence of the plaintiff and the exhibits he tendered, both the trial court and the Court of Appeal held that the defendant knew exactly the risk it was called upon to insure and that the plaintiff was not guilty of any material nondisclosure. This would in normal circumstances (if there were no section 24) have been then end of this appeal. But then our Marine insurance Act No 54 of 1961 has a section 24.
That section stipulates:-
"S.24(l) Subject to the provision 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. The policy may be executed and issued either at the time when the contract is concluded, or afterwards; and subject to the provisions of this Act and unless the context of the policy otherwise requires, the terms and expressions mentioned in the said first schedule shall be construed as having the scope and meaning in that schedule assigned to them."
Apparently then, it looks as though what has in given with one hand by section 23 has been taken away with the other hand by section 24. This is what led the two courts below to take a mistaken view of Mr. Molajo's valid submissions. For example, the learned trial judge M. B. Belgore, J. at pages 77/78 of the record of proceedings commented as follows:-
"The last point raised by the defendant was that section 24 of the Marine Insurance Act made other evidence on marine policy inadmissible except the policy itself. The defendant did not make this point any issue in the pleading …… the issue of non-existence of the policy was never mentioned …………….
Furthermore, the marine policy document was still with the defendant, they did not release it and now they are accusing the plaintiff of not producing it. The principle laid down, in section 148 (a) Evidence Act should apply to the action of the defendant."
With the greatest respect, the learned trial judge got it all wrong. Section 23 merely dealt with a specific issue, namely – when a contract of marine insurance shall be deemed to have been concluded, section 24 dealt with another distinct and specific issue, namely, how a contract of_ marine insurance is to be proved and in express terms, it specifies the policy as the only authentic method of proof allowed. There is therefore a statutory obligation on anyone suing on a marine insurance to rely solely on the policy as evidence in proof of such contract as any other evidence "shall not be admissible". Mr. Molajo was here on a very strong wicket.
It is not a question of pleadings (and I must hasten to add that one does not plead law); it is not an issue of presumption so that section 148 of Evidence Law becomes inapplicable. It is a simple issue of complying with the clear and unambiguous words of a statute. Section 24 can in an appropriate case and with an unscrupulous insurance company create problems for an assured if the insurance company withholds the policy thus making it impossible for the assured to prove the contract of marine insurance, But that is no reason why the courts should refuse to enforce the clear provisions of that section. 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 interprets 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 if there was a policy tendered as proof of the marine insurance as required by section 24 No 54 of 1961.
Was there such a policy? Fortunately for respondent the answer is yes. Exhibit J as copied in pp. 93-97 of the record of proceedings cast some doubt as to whether or not it was a policy. But in its original form in the case it is apparent and beyond doubt that libit J is a policy as defined by section 24 the Marine Insurance Act of 1961. What is their surprising is that this fact seemed to have eluded learned counsel on both sides and he trial court and the court below. With Exhibit J satisfying the requirement of section 24, the main thrust of Mr. Molajo's spirited attack has been effectively and completely neutralised and demolished. The appeal based solely on that section is thus doomed to fail.
In the final
result, for the reasons given above, and for the fuller and more
comprehensive reasons given in the lead judgrnent
my learned brother Obaseki,
J.S.C., which I now adopt as mine, I too will
dismiss the appeal with