AFRICAN DEVELOPMENT INSURANCE COMPANY LIMITED v. ZUMAX NIGERIA LIMITED

…………………….A…………………….

HAMMA AKAWU BARKA, J.C.A. (Delivering the Leading Judgment): The facts originating this appeal appear to me straight forward. From the records it is evident that the instant quarrel between the parties arose from an insurance deal between two friendly establishments that unfortunately turned sour. The facts as narrated by the appellants are that the appellant, A.D.I.C Ltd an Insurance company, engage in Marine, Hull and Car Insurance business, while the respondent on the other hand (Zumax Nigeria Ltd) owns vessels and barges, and in the course of its business, offers his vessels to oil companies for their field and engineering services. The two parties to this appeal, entered into a business relationship in the year 1991, and in the course of that relationship, appellant provided insurance cover for the respondent’s motor vehicles and vessels, two of which are the MV Ruth and MV Stella. It is further stated that the respondent adopted the practice of paying the premiums on all items insured with the appellant, in a fleet or group account kept with the appellant.
The plaintiff continue to say that on the 5th of March, 1993 Respondents paid the sum of two million naira to the defendant as premium in respect of its vessel M.V Ruth (which is in contention), and a receipt issued in respect of the payment made. Plaintiff subsequently paid another two million naira on the 14th of July, 1993, and thereafter another one million naira on the 16th July, 1998.
Sadly however on the 7th of July, 1993, the vessel M.V. Ruth was involved in an accident and this accident by the M.V Ruth was reported to the appellants. On being notified of the accident, and presumably, the respondents having approached the appellants to settle their liability, Appellants contended that as at the time of the accident, the plaintiff had not fully paid the premium on the vessel M.V. Ruth, and therefore the contract void, and respondent not liable to be indemnified. This turn of events remained unsettled and led the respondents to approach the lower Court, vide a writ of summons filed on the 21st of September, 1994. In the further amended statement of claim dated the 19th of May, 2010, the respondent claimed against the Appellant, the following reliefs:
1. Costs of Spare Parts for Repairs to Plaintiff’s work Boat “MV RUTH … US$451,451.41
2. Actual Cost of Local Repairs to Plaintiff’s Nos. 94027/02 and 94055/02 of 30/4/94 and 25/5/94 respectively from Globestar Engineering Service Nigeria Limited ….N1,806,055.64
3. Interest on the sum of US$ 451,451.41 and on the sum of N1,806,055.64 at the rate of 15% from 1/1/94 until payment.
4. Loss occasioned by loss of contract due to defendant’s default at US$49,500 per day from 1st of January 1994 , US$41,719,500.00
5. Cost of repairs and replacement of leg pad MV Stella…N200,000.00
Total US$42,170,951.41 ,N3,806,055.64
6. Interest on the judgment sum at the rate of 10% per annum from the date of judgment until the judgment sum is fully liquidated.
It was the Plaintiff’s case before the lower Court, that the defendant (now appellant) issued marine, hull and cargo Insurance policy on M.V Stella and M.V. Ruth. The policies, particularly in respect of the MV Ruth, covered the period the 9th of September, 1992 to the 8th of September, 1993, and valued at 44 million naira. The defendant as earlier stated contended that as at the time the MV Ruth had the unfortunate accident, the Respondent had not paid the premium on the insurance of this vessel.
Issues having been joined and at the end of evidence taking, both oral and documentary, the Court found that the respondent had a valid contract of insurance agreement with the appellant, in respect of M.V. Ruth, and proceeded to award the respondents claim in the sum of $451,451.41 dollars for spares, and the cost of repairs.
Dissatisfied with the judgment of the lower Court, the defendant (now appellant) caused a Notice of Appeal, predicated on four grounds to issue against the said judgment, praying that the decision of Abutu J. of the Federal High Court Lagos decided on the 17th of February, 2011 be set aside.
In the Appellants brief of argument settled by Olumide Aju and from the grounds of Appeal raised, four issues were distilled. The issues which can be located at page 4 of the brief are as follows:
1.Whether there was evidence before the trial Court upon which the learned trial judge could validly reached his decision that the premium on the MV Ruth was paid by the Respondent.
2. Whether there is a valid contract of insurance in respect of the MV Ruth upon which

…………………….B…………………….

the Respondent can enforce its claims on the vessel in this matter.
3. Whether the trial Courts decision that the Appellant was liable to the sum of US$451,451 and the naira award based on the sum as proper.
4. Whether the contract of insurance in respect of the MV Ruth ought not to have been voided for misrepresentation and non disclosure of material facts.
With respect to the appellant’s first issue, whether there was evidence upon which the learned trial judge could validly reach his decision, that the premium on the M.V. Ruth was paid by the Respondent, learned counsel submitted that the decision of the learned trial judge which found the appellant liable to the respondent in respect of the contract of insurance on the MV. Ruth is based on a wrongful evaluation of evidence. He contended that a proper evaluation of the evidence would reveal that as at the time the vessel MV. Ruth had the accident; the premium on the vessel had not been paid. He alluded to the assessment of evidence by the trial judge at pages 460 to 462, contending that the assessment was wrongful, because DW1 never testified to the effect that plaintiff paid the premium to the tune of N5 Million Naira at the time of the accident, and consequently the finding that;
“there be no evidence as to order the eight policies were issued having regard to the evidence of DW1 that about Five Million Naira had been paid by the plaintiff before the accident and the insurance of the policy which having regard to the evidence of DW1 and DW2 could not have taken place before the payment of premium, I found that the premium in respect of MV Ruth was part of the sum of Five Million paid in respect of the eight policies before the accident.
was wrongful. He remarked that the payment of the sum of Five Million Naira is reflected in three exhibits i.e. exhibits 4, 4a and 4b, and the trial Court which considered the exhibits in its judgment failed to ascertain the exact dates the payments were made before reaching its decision. It was his further contention that had the trial judge carefully examined exhibits 4, 4a and 4b, the total sums evidenced therein would have shown that only exhibit 4 was paid before the accident, and exhibits 4a and 4b made within nine days after the accident in an effort to settle the premium obligation on M.V Ruth and other policies.
Learned counsel still on the issue, argued that the trial Judge failed to properly examine the evidence before him in the order in which the various certificates were issued to, and when the premiums on the issue were redeemed, contrary to his findings.
He referred to the independent evidence of the auditor contained in exhibit 24 showing the various insurance policies with regards to the date of entry debit/credit note number, period covered and the amount involved as shown by appendix 1 of exhibit 24, wherein it was stated by DW2 in evidence, that the plaintiff was owing the defendant over three million naira which sums were hurriedly covered by exhibits 4a and 4b, nine days after the incident. He maintains that had the trial Judge properly evaluated the evidence before it, it would have arrived at the conclusion that the respondent had not paid the premium on MV Ruth when the accident occurred. He submits in line with the authority of Akpan vs U.B.A. Plc (2003) 6 NWLR (pt 816) p. 27 at 298 that improper evaluation of evidence by a trial Court would give an appellate Court the power to review the judgment given.
On his second issue, whether there was a valid contract of insurance in respect of M.V Ruth upon which the respondent can enforce its claims on the vessel in this matter, learned counsel submitted that there was no valid contract of insurance between the appellant and the respondent in respect of the vessel MV Ruth as at the time of the accident to entitle the respondent to judgment in respect of the claims made with respect to that vessel.
He submitted that the Court misconceived the requirement of the law to the effect that an advance payment of premium is a condition precedent to a valid contract of insurance stated in Section 50 of the Insurance Act 1997, and referred to the case of Ajaokuta Steel Co Ltd vs. Corporation Insurance Ltd (2004) 16 NWLR (pt 599) 369; and Leadway Assurance Co Ltd vs J.U.C Ltd (2005) 5 NWLR (Pt. 919) 539. He submitted that the holding of the trial judge at page 461 of the records was totally in error, and therefore urged this Court to hold that there was no valid enforceable contract of insurance in respect of the vessel MV Ruth between the parties.

…………………….C…………………….

On the third issue, whether the trial Court’s decision that Appellant was liable to the sum of US $451,451 and the Naira award based on the sum was proper, it was submitted for the Appellant that the trial Judge was in error in converting the dollar claim to Naira at the exchange rate of N150 to one dollar, when there was no evidence as to the rate of exchange, and when the claim of the respondent was a dollar claim. He referred to the case of Pascutto vs. Adecentro Nig. Ltd.1997 11 NWLR (Pt. 529) 467 at 486, arguing that the parties never contemplated any claim in dollars, the premium having been calculated in Naira. He urged the Court to set aside the award made, being a relief set up by the Court and awarded without evidence or submissions from the parties.
On the last issue, whether the contract of insurance in respect of the MV. Ruth ought not to have been voided for misrepresentation and non-disclosure of material facts; the learned counsel submitted that the Respondent failed to disclose the fact that the vessel MV Ruth was once involved in an accident as pleaded in Paragraph 17(II) of the Amended Statement of defense, and argued that the fact of the repair of the vessel was admitted in evidence, submitting the respondent by law is obligated to make a full and frank disclosure of all material and relevant facts to the risk to be insured, failing which the contract is rendered void. The cases ofCater vs. Boetnn 1776 3 Burr, 1905 per Lord Mansfield, and Nigeria Insurance Corporation of Nigeria vs. Power & Industrial Engineering Co, Ltd. (1986) 1 NWLR (Pt. 14) 1 were cited in support of the contention. He finally urged the Court to allow the appeal and to set aside the judgment of the lower Court.
And in the Respondents brief of argument settled by Chief M.A. Agbamuche, three issues were distilled for the determination of this appeal. The issues located at page 3 of the brief, reads as follows:
1. Whether there was a valid contract of insurance between the Plaintiff/Respondent and the Defendant/Appellant in respect of the vessel MV RUTH insurance premium having been duly paid (Ground 1 and 2 of the grounds of Appeal).
2. Whether the trial Court’s decision that the Appellant was liable in the sum of US$ 451,457.45 and the naira award based on this sum was proper and justiciable in law? (Ground 3)
3. Whether the contract of insurance in respect of the MV Ruth ought to have been voided for misrepresentation and non-disclosure of material fact? (Ground 4).
On the first issue, learned counsel submitted that based on the evidence adduced before the lower Court, which the Court believed, Eight (8) vessels were insured with the defendant, and all the policies of the plaintiff in respect of the vessels dealt together in the same account. That a relationship existed between the parties, that all payments of premium were to be paid in one account. He posits that a perusal of the receipts issued for the payment of premium demonstrated that the payments were for Marine Insurance Policy with no one single vessel singled out as beneficiary of one payment. He continued to say that the premium for MV Ruth was calculated at N 1, 334.861.20, whereas the money paid as premium into the joint account as at March 1993 was N2 Million naira.
He submits that since there existed an agreement that the payments be made as a group, the payment of N2,000,000.00 premium into the group account means that the premium for MV Ruth had been paid. With regard to Exhibit 24, counsel submits that not only did the trial Court find no merit in the contention that payment of premium were applied in the order in which the policies were issued, but that the exhibit written when parties, were locked in litigation was in admissible. He submits that there being a definite finding of fact by the trial Court based on the evidence before him, that the premium in respect of MV Ruth having been paid before the accident, it cannot be denied that there was a valid contract of insurance between the parties before the occurrence of the accident. He posits on the authority of Abisi vs. Ekwealor (1993) 6 NWLR (Pt. 302) 643 that the evaluation of evidence is primarily that of the Court of trial, which is not lightly interfered with, and urged the Court to resolve the issue in its favor.
On the 2nd issue, learned counsel submits that the basis for the award of the insured sum of forty four million naira is his acceptance of the evidence of DW1 and exhibits 6, 7 and 8, and further submits that the lower Court applied the correct principles of the law in the assessment of the damages awarded.

…………………….D…………………….

He referred to the case of Saeby Dernstoberi A/S vs. Olaogun Enterprises Ltd. NWLR (Pt.637) 128 at 145-146 to the effect that the Nigerian Court can assume jurisdiction to determine cases where foreign currencies are involved which can be converted for the purpose of enforcement, positing that a Court can take judicial notice of the prevailing value of the naira and does not need an official of the Central Bank to establish it.
On the third issue, it was the contention of learned counsel, referring to the judgment of the lower Court at page 463 of the records, that it was not the case for the defendant that the vessel had a problem with its legs. He states that the lower Court made a finding of fact with respect to the issue, and therefore the duty of the appellant to prove non-disclosure. In conclusion, the learned counsel submits that the learned trial judge having thoroughly examined the facts and evidence placed before him during trial, and made findings of fact, the appellate Court would be slow to disturb such findings and conclusions. He prayed that the appeal ought to be dismissed and the judgment of the Court affirmed.
I have in the circumstance studied the records of proceedings and the submissions of the learned counsel on both sides with regards to the issues conversed, and my humble opinion is that the submissions by the respondent is directly in response to the issues agitated upon by the appellant. Against that background therefore, I find it expedient approaching the resolution of the appeal from the issues formulated by the appellant.
RESOLUTION
I understand the substance of the appellants complaint with regards to this issue as being the lower Court’s decision which found the appellant liable in respect of the contract of insurance with regards to the vessel MV Ruth. The arid question which must be answered is whether the premium on the vessel MV Ruth was paid before the occurrence of the accident. The divergent positions of the parties appears clearly to be that while appellants are contending that as at the time of the accident of the MV Ruth, the premium was not paid, respondents insist that same was actually paid as found by the lower Court. In resolving the issue, the lower Court at page 460 of the records reasoned that:
“The DW1 gave evidence on the procedure for entering into a contract of insurance. He concluded that if there is no payment of premium there is no cover. The evidence of DW2 tallies with the evidence of DW1. The evidence on both sides is that on the whole Plaintiff insured eight of its vessels with the defendant. The plaintiff had a fleet account with the defendant in respect of eight vessels. At the time of the accident according to the DW1 the plaintiff had paid premium in respect of the vessels to the tune of five million Naira. The evidence of the DW2 is that the premiums paid into the fleet account were applied in the order the policies were issued. There is before me in this case neither any averments in the pleadings nor any iota of evidence in respect of the order the policies were issued. The insurance policy No. MH.04/92/L was issued on the 20th of October, 1992 to cover the period between 9th September, 1992 and 8th September 1993 in respect of the vessel MV Ruth. The agreed premium was N1,334,861.20. there being no evidence as to the order the eight policies were issued, having regard to the evidence of DW1 that about N5 million had been paid by the plaintiff before the accident and the insurance of the policy, which having regard to the evidence of DW. 1 and DW. 2 could not have taken place before the payment of the premium, I find that the premium in respect of MV Ruth was part of the N5 million paid in respect of the eight policies before the accident.
What is discernible from the above reasoning is that the policy of the vessel, MV Ruth having been issued on the 20th of October, 1992 covering the period 9th September, 1992 to the 8th of September, 1993, and flowing from that, it is common ground that the vessel MV Ruth was involved in the accident on the 7th day of July, 1993, which is the period covered by the insurance policy No. MH.O4/92/L issued on the 20th of October, 1992. Appellants now harp on the decision of the lower Court where it stated that the premium in respect of the vessel MV Ruth having been shown to have been paid as shown by exhibits 4, 4a and 4b before the occurrence of the accident, there was a valid contract of insurance; pointing out that exhibits 4a and 4b were actually paid after the accident.

…………………….E…………………….

Now Section 50 (1) of the Insurance Act, stipulates that:
1. The receipt of an insurance premium shall be a condition precedent to a valid contract of insurance and there shall be no cover in respect of an insurance risk, unless the premium is paid in advance.
2. An insurance premium collected by an insurance broker in respect of an insurance business transacted through the insurance broker shall be deemed to be premium paid to the insurer involved in the transaction.
I subscribe to the view expressed in the case of Unitrust Insurance Co. Ltd vs. Ambico Sendirian Nigeria Ltd (2012) LPELR 15417 (CA) per Pemu JCA, that by the stipulations of Section 50 (1) of the Insurance Act, the payment of premium is not only a condition precedent, but that there shall be no cover in respect of an insurance risk unless the premium is paid in advance. See also Shoreline Liftboats Nigeria Ltd & Ors vs. Premium Insurers Brokers Ltd & Ors (2012) LPELR 9795-(CA) per Agbo JCA; Industrial and General Insurance Company Ltd vs. Kechinyere Adogu (Mrs) (2009) LPELR- 15093 (CA) per Aji JCA.
The presumption that flows from this state of the law, is that where a policy cover has been issued to the insured, in our case the vessel MV Ruth, it is presumed that the premium has been fully paid and in advance. In other words, although evidence points to the fact that exhibit 4 was paid before the accident, and exhibits 4a and 4b paid after the accident, and the payment of exhibit 4 sufficient to settle the premium of the MV Ruth, and policy cover duly issued, the lower Court was right to draw from the normal course of doing things, and of course the terse provisions of Section 50 (1) of the Act, that the contract of insurance with regards to the vessel MV Ruth followed due process. In this regard, the examination of exhibits 4,4a and 4b, as well as exhibit 24 cannot dislodge that position. Indeed a Court of trial has the onerous duty of evaluation of the evidence laid before him, which duty he must perform with utmost care and attention. See Okpala vs. Nepa (2003) 14 NWLR (pt.840) 383 at 410. In the instant case, it is vivid that a policy cover having been issued to cover the vessel MV Ruth, the only conclusion that can be drawn there from is that Section 50 (1) of the Insurance Act, as to the payment of premium was complied with in full and in advance.
This issue is determined against the appellant.
From the resolution of issue one, it follows that the second issue, which is whether there was a valid contract of insurance between the appellant and the respondent with regards to the vessel MV Ruth, cannot be otherwise, the simple reason being that, the receipt of an insurance premium conclusively determines the validity of the contract between the parties.
Having resolved that premium was paid on the MV Ruth, a binding contract was established between the parties, making the appellant liable as found. This issue is also determined in favor of the respondent.
The appellant’s third complaint is premised upon the lower Courts judgment awarding the sums of USD 451,451 and the Naira equivalent. Alluding to the trial Court’s holding in the judgment, where he stated:
“The sum of USD 451, 451.41 when converted to the naira currency at the current rate of exchange of N150 to 1 USD is N67, 717, 650 which is in excess of the insured amount of N44 million. As stated earlier in this judgment, the plaintiff cannot recover more than the sum assured. The plaintiff total entitlement under the policy number MH.04/92/L is limited to the insured sum of N44 Million. In the result, the sum of N44 Million is hereby awarded to the plaintiff being damages for cost of spare parts and repair of the vessel MV Ruth.
The argument raised by the appellant is with regards to the conversion of the dollar amount to its naira equivalent without regard to pleadings and the evidence, which was not before it. He relied on the authority of Pascutto vs. Adecentro Nigeria Limited (supra), contending that there was no basis for the acceptance of any evidence in dollars which was not anticipated nor contemplated in the contract of insurance.
It has long been settled that a Nigerian Court has the ability and the power in its discretion to award damages or costs in foreign currency. See the cases of Salzgitter Stahl GMBH vs. Tunji Dosunmu Industries Ltd (2010) 11 NWLR (pt. 1206) 589; Afribank Nig. Plc vs. Akwara (2006) 5 NWLR (pt. 974) 619; Harka Air Services (Nig) Ltd vs. Keazor (2006) 1 NWLR (pt. 960) 160; Teju Investmant and Property Company Limited vs. Alhaja Moji Subair (2016) LPELR 40087 (CA) and Saeby Jernstoberi M.F.A/S vs. Olaogun Ent. Ltd (1999) 14 NWLR (pt. 637) 128 @ 146amongst many others.

…………………….F…………………….

At page 203 of the records and in the respondent’s amended statement of claim, it is evident that plaintiff claimed amongst others:
1. Cost for spare parts for repairs to plaintiffs work boat MV Ruth……. USD 451, 451.41
2. Actual cost of local repairs to the boat as per invoice Nos. 94027/02 and 94055/02 of 30/4/94 and 25/5/94.
Respectively from Globestar Engineering Service Nigeria Limited. …..N1,806,055.64.
And at page 467 of the records, the lower Court proceeded to hold that:
“I accept the evidence of PW I and Exhibits 6, 7, 8 and 8A and on the basis thereof I find that the case has been proved on a balance of probability as required by the law. The sum of USD 451, 451.41 when converted to the Naira currency at the current exchange of N150 to USD 1 is N67, 717, 650.00 which is in excess of the insured amount of N44 Million Naira.
The learned counsel for the appellant is clearly not truthful in stating that the claim and evidence failed to assert the fact that the claim was in foreign currency. I equally sympathize with the respondent’s argument that the trial Court, though ought to have based his calculation on the exchange rate on evidence which ought to have been adduced, but having based his calculation on facts judicially known to him is not enough to avoid the finding and decision on same. I also determine this issue for the respondent.
Lastly is the contract of insurance in respect of the MV Ruth voidable on the reason of misrepresentation and non disclosure of material facts? Iguh JSC in Afegbai vs. AG Edo State (2001) ALL NLR 19, stated and I quote extensively, that:
A fraudulent misrepresentation, whereby the representator has induced the representee to alter his position by entering into a contract or transaction with the representor confers the right to the representee to either maintain an action in damages or repudiate the contract or transaction. In such a case the representee may institute proceedings for the recission of the contract or transaction. He may also set out the fraudulent misrepresentation as a defense to any action instituted for the direct or indirect enforcement of the contract or transaction.
Thus the appellant by paragraph 17 (ii) of the amended statement of defense, raised the issue that the plaintiff did not disclose a material fact relating to the repairs carried out on the vessel MV Ruth, when it was initially damaged, while the vehicle was being imported in to the country. In other words, counsel is alleging that as at the time of the entering of the contract of insurance between the parties, the vessel MV Ruth had defects, which were not divulged to the appellants. Obviously the lower Court considered the appellants allegation in its judgment from pages 463 to 464, to the conclusion that the allegations were not proved. Indeed as stated by the erudite jurist, Oputa JSC, in the case of NICON vs. Power and Industrial Engineering Co. Ltd (1986) 1 NWLR (pt. 14) 1 @ 34, the onus was on the appellant to adduce evidence to prove the alleged non disclosure. These appellants failed to do. Moreover the contract was entered into by the appellants with their eyes wide open aided by their professional surveyors and investigators, they cannot in the circumstance complain just because a risk which they had undertaken to assuage had in fact taken place. This issue is also determined against the appellant.
Hence having determined all the issues against the appellant, this appeal fails and it is hereby dismissed. The judgment of Abutu CJ, in Suit No FHC/L/CS/934/94, delivered on the 7th of February, 2011, is hereby affirmed. Costs of N50, 000.00 are hereby awarded to the respondents.
MOJEED ADEKUNLE OWOADE, J.C.A.: I read in advance the Judgment delivered by my learned brother AKAWU BARKA HAMMA, JCA.
I agree with the reasoning and conclusion and I also dismiss the Appeal. I abide with the Order as to costs.
BOLOUKUROMO MOSES UGO, J.C.A.: I read in advance the judgment of my learned brother HAMMA AKAWU BARKA J.C.A. and I agree with his reasoning and conclusion that this appeal lacks merit. In the event, I also dismiss it with costs as ordered by my brother BARKA J.C.A. in the lead judgment.