Who Can Maintain an Action for Damage or Unlawful Arrest of a Vessel

 In the Supreme Court of Nigeria Holden at Abuja On Friday, the 18th day of February, 2022

Before Their Lordships

Mary Ukaego Peter-Odili

Ejembi Eko

Mohammed Lawal Garba

Ibrahim Mohammed Musa Saulawa

Tijjani Abubakar

Justices, Supreme Court

SC./310/2015

Between

Bronwen Energy Trading Ltd     Appellant

  And

 1. OAN Overseas Agency Nig. Ltd

2. The Vessel MT “Ocean Success”

3. Master of the Vessel MT “Ocean Success” Respondents

 (Lead Judgement delivered by Honourable Mary Ukaego Peter-Odili, JSC)

Facts

The Appellant commenced an action against the Respondents, under the Admiralty Jurisdiction Act 1991. The Appellant claimed the sum of $1,986,939.97 as outstanding debt against the 1st Respondent for port and cargo dues, ship charges, agency fees and interest on the said debt at the time of commencing the action at the Federal High Court. The Appellant also filed a motion ex-parte requesting an order of arrest/detention of the vessel MT “Ocean Success” (“the vessel”) and Cargo of 15,300 MT of Premium Motor Spirit (“Cargo”) on board the vessel, pending the provision of a Bank Guarantee from a reputable Bank in Nigeria to secure the claim of the Appellant at the trial court. The application was granted by the court. 

The 1st Respondent subsequently provided the Bank Guarantee to secure the claim of the Appellant at the trial court, and filed an application for the release of the vessel and the cargo. The application was granted by the trial court. At the end of the trial, the court gave judgement in favour of the Appellant. The decision was appealed by the 1st Respondent, who felt dissatisfied with the judgement of the trial court. The appeal was successful; the Court of Appeal upturned the decision of the trial court. The Appellant has now appealed to the Supreme Court, against the judgement of the Court of Appeal. 

Issues for Determination 

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

1. “Whether the Court of Appeal was right in awarding the sum of US$400,000.00 in favour of the 1st Respondent as daily charter cost, when on the evidence on record and as admitted by the 1st Respondent, it is neither charterer nor owner of the vessel MT “Ocean Success” and when proof by evidence as required by law of such a colossal sum having been incurred by the 1st Respondent as daily charter cost was not before the court.

2. Whether the Court of Appeal was right in awarding the sum of US$9,500.00 in favour of the 1st Respondent, being cost of issuing Bank Guarantee and interest of 18% being Central Bank of Nigeria official rate on the sum of the Bank Guarantee, when the evidence required under the law in support the claims was not before the court.

3. Whether the Court of Appeal was right when it awarded “post judgement interest at the rate of 5% from date of judgement until total sum is fully liquidated”, when no such claim was made by the 1st Respondent before the court.

Arguments

Submitting on issue one, counsel for the Appellant contended that the Court of Appeal fell into error in awarding the sum of US$400,000.00 in favour of the 1st Respondent, when it was found as a fact that the 1st Respondent was not the owner of the arrested vessel. The law is that only owners of a ship or demise charterers can sue and be sued, for loss or damages arising from the use of the ship or for wrongful arrest/or detention of the ship – EASTWIND TRANSPORT (NIG) LTD v COMET MERCHANT BANK LTD 1995-1997 VOL. 4 NSCC 85. Counsel argued that even if damage was sustained, the Claimant ought to have specifically pleaded same and provided credible and admissible evidence in proof of the damage sustained, for the award to be made. He posited that the award made in favour of the 1st Respondent as daily cost ought to be set aside, since no evidence was proffered in support of the award. Responding, counsel for the Respondents submitted that the arrest and detention of the vessel was wrongful and utterly baseless in law, as the Appellant who failed to establish ownership of the vessel by the 1st Respondent to justify the arrest and detention of the vessel, became liable for the costs incurred on the release of the vessel. Contrary to the position of the Appellant, counsel contended that other persons, aside the ship owner, can sue for damages in respect of loss incurred for action of a third party on the ship – REBOLD INDUSTRIES LIMITED & ANOR (2015) LPELR-246 12(SC).

On issue two, counsel contended on behalf of the Appellant that where a party takes steps to mitigate his loss, he cannot recover damages in respect of that loss even if the steps he took to avoid the loss are characterised as being more than what was reasonably necessary. He argued that apart from the mere procurement of a Bank Guarantee, no other evidence was brought before the court to show that indeed, the cost of US$9,500.00 was incurred in obtaining the Bank Guarantee. Counsel submitted that the claim which is within the ambit of special damages needed not only to be pleaded, but also to be specifically proved by credible and admissible evidence and no such evidence was made available before the Court of Appeal. It was also his case that the alleged interest at 18% per annum being the Central Bank of Nigeria (CBN) official rate cannot stand, as same was neither pleaded nor evidence led in its support. Reacting to arguments on this issue, counsel for the Respondents submitted the law is that even in cases where a Defendant fails to lead evidence in proof of its counter-claim, the court can rightly grant such claims – BALOGUN v UBA LTD (1992) 6 NWLR (Pt. 247) 336.

Regarding issue three, learned counsel for the Appellant submitted that a court cannot award to a party that which he had not claimed, as is the case in the matter at hand. Responding, the 1st Respondent contended that obtaining judgement in a suit, the courts are empowered to make such discretionary orders as to preserve the benefit of the judgement until such time as it is complied with. In other words, post-judgement interest needs not be specifically claimed – A.I.B. LTD v I.D.S LTD (2012) 17 NWLR (Pt. 1328) 50.

Court’s Judgement and Rationale

In resolving the first issue, the Supreme Court held that the Court of Appeal fell into error in awarding the sum of US$400,000.00 in favour of the 1st Respondent, when it was found as a fact that the 1st Respondent was not the owner of the arrested vessel. The law is that, it is only owners of a ship or demise charterers that can sue and be sued for loss or damage arising from the use of the ship, or for wrongful arrest/or detention of the ship – EASTWIND TRANSPORT (NIG) LTD v COMET MERCHANT BANK LIMITED (supra). Therefore, any purported damage or loss suffered by the Respondent was voluntary and self-induced, and undeserving of relief from the court. Assuming the 1st Respondent is the owner or charterer of the arrested vessel and it has suffered damage in the circumstance, the law still requires proof by evidence of the claim. The Court of Appeal ought to have made an enquiry into how the 1st Respondent arrived at the total of US$400,000 for five days, before making the award. The heads of costs were lumped together and not specifically pleaded, as required by law. No evidence whatsoever was led before the trial court, and none was made available at the Court of Appeal in support of the various heads of claims. It follows that the award of the sum of US$400,000.00, was erroneously made. The only reason that could be deduced for the erroneous award by the Court of Appeal is the wrong conclusion arrived at, that the arrest was wrongful, 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 good cause. In this instance, there were no facts upon which the Court of Appeal could infer unreasonableness and without good cause for the arrest of both the vessel and cargo on board. 

Deciding issue two, the Supreme Court held that under Order 7 Rule 1(ii) of the Admiralty Jurisdiction Procedure Rules, 2011, a party to a proceeding commenced as an action in rem may, by Motion Ex-parte, apply for an arrest warrant in respect of the ship or other property against which the proceeding was commenced, as the purpose of the arrest is to secure the claims of the arresting party. The argument of the Appellant that the lower court ought not to have awarded the sum of US$9,500 in favour of the 1st Respondent, is baseless in the light of the position of law that even in cases where a Defendant fails to lead evidence in proof of its counter-claim, the courts can rightly grant such claims – BALOGUN v UBA LTD (1992) 6 NWLR (Pt. 247) 336. Also, the provision of Section 13 of the Admiralty Jurisdiction Act enables the court to deal with the issues of damages summarily. The 1st Respondent in its Reply to Plaintiff’s Defence to the Counter-claim at the trial court, averred that the Plaintiff’s claims and the subsequent arrest of the vessel is vexatious and without merit. The averment was neither controverted by the Appellant nor denied; it is deemed admitted in law. For this purpose, the court below rightly found that the Appellant was liable for the cost of obtaining the bank guarantees at the cost of US$9,500. The Appellant’s contention that the award of interest rate of 18% was done by the lower court without any evidence before the court in the absence of document from the CBN, is an assertion that had no basis. The documents before the court were sufficient to guide the lower court in arriving at the finding it reached. with regard to interest rate it awarded in favour of the 1st Respondent. 

On issue three, the Supreme Court held that after obtaining judgement of court in a suit, payment may be delayed by the judgement debtor. For this reason, the courts are empowered to make such discretionary orders, as to preserve the benefit of the judgement until such time as it is complied with. Post-judgement interest compensates the successful party, for the delay in receiving the judgement owed. The law is that post-judgement interest need not be specifically claimed, the award is at the discretion of the court and it is regulated by the rules and operating statute – A.I.B LTD v I.D.S. LTD (supra). 

Appeal Allowed in Part.

Representation

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

N.K. Oragwu with G. Ogwu and A. Liman for the Respondents.

Reported by Optimum Publishers Limited, Publishers of the Nigerian Monthly Law Reports (NMLR)(An affiliate of Babalakin & Co.)