Who can maintain an action for damage or unlawful arrest of a ship?

At the Supreme Court of Nigeria Holden in Abuja on Friday, February 18, 2022

Before Their Lordships

Marie Ukaego Peter-Odili

Ejembi Eko

Mohamed Lawal Garba

Ibrahim Mohammed Musa Saulawa

Tijjani Abubakar

Judges, Supreme Court

SC./310/2015

Between

Bronwen Energy Trading Ltd Appellant

And

1. OAN Overseas Agency Nigeria. ltd

2. The MT ship “Ocean Success”

3. Captain of the MT “Ocean Success” Respondents

(Lead Judgment rendered by Honorable Mary Ukaego Peter-Odili, JSC)

Facts

The Appellant brought an action against the Respondents under the Admiralty Jurisdiction Act 1991. The Appellant claimed the sum of $1,986,939.97 as an unpaid debt against the 1st Respondent for the rights port and freight charges, vessel charges, agency charges and interest on said debt at the time. to bring the action before the Federal High Court. The Appellant also filed an ex parte motion seeking an order for the arrest/detention of the vessel MT “Ocean Success”. (“vessel”) and Cargo of 15,300 MT from Premium Motor Spirit (“Cargo”) on board the vessel, pending provision of a bank guarantee from a reputable bank in Nigeria to secure the appellant’s claim in the Magistrate’s Court. The request was granted by the court.

The 1st respondent subsequently provided the bank guarantee to secure the appellant’s claim before the court of first instance and filed a request for the release of the vessel and the cargo. The request was granted by the court of first instance. At the end of the trial, the court rendered a judgment in favor of the Appellant. The decision was appealed by the 1st defendant, who felt unhappy with the judgment of the trial court. The appeal was successful; the Court of Appeal reversed the decision of the trial court. The Appellant appealed to the Supreme Court against the judgment of the Court of Appeal.

Questions to be determined

The following three issues were considered and decided by the court:

1. “Was the Court of Appeal correct in awarding the sum of USD 400,000.00 in favor of the 1st defendant as daily charter costs, whereas, according to the evidence on file and as admitted by the 1st defendant, he is neither charterer nor owner of the vessel MT “Ocean Success” and when proof by evidence, as required by law, that such a colossal sum has been committed by the 1st defendant as a daily charter cost was not presented to the court.

2. Was the Court of Appeal correct in awarding the sum of USD 9,500.00 in favor of the 1st defendant, representing the cost of issuing the bank guarantee and interest of 18% corresponding to the official rate of the Central Bank of Nigeria on the sum of the bank guarantee? the evidence required by law in support of the claims was not presented in court.

3. Was the Court of Appeal correct in awarding “post-judgment interest at the rate of 5% from the date of judgment until the total sum is fully liquidated”, whereas no such claim was made by the 1st defendant in court.

arguments

Supporting the first question, counsel for the Appellant argued that the Court of Appeal erred in awarding the sum of USD 400,000.00 in favor of the 1st defendant, when it had been established that the 1st defendant was not the owner of the object arrested. ship. The law states that only owners of a vessel or charterers can sue and be sued, for loss or damage resulting from the use of the vessel or for wrongful arrest/detention of the vessel – EASTWIND TRANSPORT (NIG) LTD v COMET MERCHANT BANK LTD 1995-1997 VOL. 4NSCC 85. The lawyer argued that even if damages had been suffered, the plaintiff should have specifically pleaded for them and provided credible and admissible evidence in support of the damages suffered, in order for the award to be made. He posited that the allowance awarded to the 1st defendant as a daily cost should be set aside, as no evidence had been presented in support of the award. In response, counsel for the respondents argued that the boarding and detention of the vessel was unlawful and totally without basis in law, since the appellant who failed to establish ownership of the vessel by the 1st defendant to justify the boarding and detention of the vessel, became liable for the costs incurred in releasing the vessel. Contrary to the appellant’s position, counsel argued that others, except the shipowner, can sue for damages for the loss suffered for the action of a third party on the ship – REBOLD INDUSTRIES LIMITED & ANOR (2015) LPELR-246 12(SC).

On the second issue, counsel argued on behalf of the appellant that where a party takes steps to mitigate its loss, it cannot recover damages for that loss even if the steps taken to avoid the loss are characterized as more than was reasonably necessary. He argued that other than simply obtaining a bank guarantee, no other evidence was presented to the court to show that indeed the cost of $9,500.00 was incurred to obtain the guarantee. banking. Counsel argued that the claim that falls within the scope of special damages must not only be argued, but must also be specifically proven by credible and admissible evidence and no such evidence was presented. before the Court of Appeal. He also argued that the alleged interest at 18% per annum being the official rate of the Central Bank of Nigeria (CBN) cannot stand as it has not been pleaded or substantiated. Reacting to arguments on this issue, counsel for the defendants argued that the law is that even where a defendant fails to present evidence in support of its counterclaim, the court may properly grant such claims. – BALOGUN v UBA LTD (1992) 6 NWLR (Pt. 247) 336.

As to the third question, learned counsel for the Appellant argued that a court cannot award a party what it has not claimed, as is the case here. In response, 1st Defendant argued that in obtaining judgment in a lawsuit, the courts are empowered to make discretionary orders so as to preserve the benefit of the judgment until it is complied with. In other words, post-judgment interest does not need to be claimed specifically – AIB LTD v IDS LTD (2012) 17 NWLR (Pt. 1328) 50.

Judgment and justification of the Court

In deciding the first question, the Supreme Court held that the Court of Appeal erred in awarding the sum of US$400,000.00 in favor of the 1st defendant, when it was found that the 1st defendant was not the owner of the seized vessel. The law is that only a ship’s owners or charterers can sue and be sued for loss or damage resulting from the use of the ship, or for wrongful arrest/detention of the ship. EASTWIND TRANSPORT (NIG) LTD v COMET MERCHANT BANK LIMITED (above). Therefore, any alleged damage or loss suffered by the Respondent was willful and self-induced, and did not merit redress from the court. Assuming the 1st defendant is the owner or charterer of the vessel seized and suffered damages in the circumstances, the law still requires proof by proof of the claim. The Court of Appeal should have investigated how the 1st defendant arrived at the total of 400,000 USD for five days, before handing down the award. The heads of costs were grouped together and not specifically pleaded, as required by law. No evidence of any kind whatsoever was produced before the court of first instance, and none was provided to the court of appeal in support of the various heads of claim. It follows that the allocation of the sum of US$400,000.00 was made in error. The only reason that could be inferred for the Court of Appeal’s erroneous attribution is the erroneous finding that the arrest was unreasonable, relying on section 13 of the Admiralty Jurisdiction Act. However, for the section to apply, certain parameters must be established, such as: that the arrest was made unreasonably and without cause. In this case, there was no fact from which the Court of Appeal could infer that the arrest of the vessel and the cargo on board was unreasonable and without cause.

Deciding on the second question, the Supreme Court held that under Ordinance 7, Rule 1(ii) of the Admiralty Jurisdiction Rules of Procedure, 2011, a party to proceedings brought as an action in rem may, by motion ex-parte, seek a warrant arrest against the vessel or other property against which proceedings have been instituted, since the purpose of the arrest is to secure the claims of the party making the arrest. The Appellant’s argument that the lower court should not have awarded the sum of US$9,500 in favor of the 1st Respondent is without merit in view of the legal position that even in cases where a defendant fails to produce evidence in support of its counterclaim, courts may properly grant such claims – BALOGUN v UBA LTD (1992) 6 NWLR (Pt. 247) 336. In addition, the provision of section 13 of the Admiralty Jurisdiction Act allows the court to deal summarily with questions of damages. Defendant 1, in its response to Plaintiff’s defense to the counterclaim in the trial court, stated that Plaintiff’s claims and subsequent arrest of the vessel were vexatious and without merit. The assertion was neither contested by the Appellant nor denied; it is deemed to be admitted in law. To this end, the lower court rightly held that the Appellant was liable for the costs of obtaining bank guarantees at a cost of 9,500 US dollars. The Appellant’s assertion that the award of 18% interest was made by the lower court without any evidence in court in the absence of any document from the CBN, is a baseless assertion. . The documents before the court were sufficient to guide the lower court in its conclusion. with respect to the rate of interest he granted in favor of the 1st defendant.

On the third question, the Supreme Court held that after obtaining a court judgment in a lawsuit, payment may be delayed by the judgment debtor. For this reason, the courts are empowered to make discretionary orders, so as to preserve the benefit of the judgment until it is executed. Post-judgment interest compensates the prevailing party for the delay in receiving the judgment due. The law is that postjudgment interest need not be specifically claimed, the award is at the discretion of the court and it is governed by the rules and operating law AIB LTD v IDS LTD (supra).

Appeal allowed in part.

Representation

Sylva Ogwemoh, SAN with Mudi Ishaka Dikko, MM Zakari, Wahab Dako and Dr Solomon Lenlaye for the Appellant.

NK Oragwu with G. Ogwu and A. Liman for respondents.

Reported by Optimum Publishers Limited, Publishers of Nigerian Monthly Legal Reports (NMLR)(A subsidiary of Babalakin & Co.)