Phenix Associates Limited & Anor V. Hercules Maritime Limited (2009)
LawGlobal-Hub Lead Judgment Report
HELEN MORONKEJI OGUNWUMIJU, J.C.A.
This is an appeal against the judgment of the Federal High Court sitting at Benin city delivered on 12/7/2005 by Honourable Justice I.N. Auta (as he then was).
The facts that lead to this appeal are as follows:
The Respondent as claimant at trial in paragraph 23 of its statement of claim prayed for the following reliefs:
Wherefore, the Plaintiffs claim against the 1st Defendant jointly and severally as follows:
i. N750,000.00 being outstanding balance of invoice No. 1143 due and payable to the Plaintiff in respect of the use of its offshore boat for the tow of 2nd Defendants barge Rio 1 from Port-Harcourt to APG 1 Location, Offshore Ghana;
ii. N2,220,000.00 being outstanding balance of Invoice No. 1141 due and payable to the Plaintiff in respect of demurrage incurred by the 1st Defendant on the MV Hercules Service as per contract;
iii. N609,840.00 being outstanding balance of Invoice No. 1142 due and payable to the Plaintiff in respect of supplies made to the Defendants agent;
1
iv. Interest at bank rate for the total outstanding balance of N3,579,840.00 from the month of January, 2001 until payment;
v. N1,500,000.00 being general damages arising from the Defendants breach of the contract including cost of pursuing payment.
The Appellants as Defendants filed their statement of defence and counter-claim with leave of Court. The counter claim was in the following terms:
Whereupon the Defendants counter claims against the Plaintiff as follows:
i. The sum of N3,675,532.35 being the cost of repairs to the barge RIO 1 (VAT inclusive).
ii. The sum of $945,000 for loss of crude oil production for five (5) days.
iii. $62,500 being the costs associated with the shut-down and subsequent reactivation of the well.
iv. N10 million damages for breach of contract.
Other pleadings were filed and the case was tried and decided wherein judgment was entered in favour of the Respondent as per the statement of claim. Hence this appeal.
Notice of appeal was filed on 22/7/05 while the Appellants rely on the amended notice filed on 31/1/2011 deemed filed on 30/3/11. The
2
Appellants brief was filed on 21/5/14 and deemed filed on 22/5/14. The Respondents brief was filed on 10/12/14.
In the Appellants brief settled by Margaret I. Mozia Mrs, learned counsel identified five issues for determination stated as follows:
1. Was the lower Court right in allowing the claim of the Respondents in whole when there was no evidence in support thereof? (Distilled from Ground 2)
2. Was the lower Court right in granting the Respondent general damages in a claim founded on breach of contract? (Distilled from Ground 3)
3. Was the lower Court right in dismissing the counter claim of the Appellants whereas there were sufficient evidence of fundamental breaches of the provisions of the contract Exhibit A by the Respondent? (Distilled from Ground 1)
4. Was the lower Court right in granting reliefs 23(i), (ii) and (iii) of the statement of claim despite ample proof of fundamental breaches of the terms of contract Exhibits A by the Respondent? (Distilled from Ground 4)
5. Was the lower Court right in awarding reliefs 23(i), & (ii) of the statement of claim to the Respondent without
3
specific pleading and proof of same? (Distilled from Ground 5)
In the Respondents brief settled by O.F Asemokhai Esq, the learned Respondent Counsel identified three issues for determination stated as follows:
1. Whether the Respondent led enough evidence to warrant the trial Court entering judgment in her favour and thereby granting her claim for general damages.
2. Whether the Appellants led any cogent and compelling evidence sufficient enough in proof of fundamental breaches of the provisions of Exhibit A (The contract entered into by them) to warrant the grant of Appellants counter-claim.
3. Whether the reliefs claimed by the Respondent was not covered by the Respondents pleadings and proved by her.
I have read the record and considered the briefs of counsel, I am of the humble view that the determination of the sole issue as couched by my humble self would answer the complaints of the Appellants in this appeal.
Whether the learned trial judge was right to have granted all the Respondents claims and dismissed the counter claims of the Appellants in its entirety.
4
SOLE ISSUE
Whether the learned trial judge was right to have granted all the Respondents claims and dismissed the counter claims of the Appellants in its entirety.
Learned Appellants Counsel argued that the Respondent was in breach of the Charter Party Agreement between the parties. Counsel argued that the reliefs claimed in paragraph 23(i)-(iii) of the statement of claim were wrongly granted as the Respondent, being liable for serial breaches of the contract was not entitled to be compensated for such infractions.
Counsel further reasoned that the Respondents unilaterally changed the vessel after unlawfully diverting to Forcados and spending an additional five days at the said location before proceeding with the tow. Having inspected the vessel and as expressly undertaken in Clause 3 of Part II, the charter party at page 10 of the records, the Respondent was under an obligation to utilize the agreed vessel for the execution of the contract.
Counsel argued that the breach of contract in unilaterally using a substitute vessel instead of Hercules Service to tow the Barge Rio 1 was sufficient to vitiate the contract. Counsel argued that the
5
third established breach was that the Appellants barge had to be taken off the substitute vessel on the sea rather than being delivered at the agreed destination.
Counsel argued that having not performed the terms of the contract as agreed, the Respondent did not deserve to be compensated with the award of the claims set out in paragraph 23(i)-(iii) of the statement of claim. Counsel argued that there was no basis for the award of demurrage in paragraph 23(ii) as the number of days and manner of its computation was not indicated since the respondent was not entitled to be paid for the unauthorized deviation to and for time spent in Forcados since the stay cannot be attributed to default on the part of the Appellants.
In respect of relief 23(iii), the Appellants argued that the award for supplies allegedly made to the Appellants agent in the sum N609,840 was also not established. No agreement was established in respect of the said goods or their value since the Appellants did not hold anybody out to the Respondent as their agent for the purpose of receipt of the goods.
Counsel further argued that reliefs 23(iv) and (v) above were wrongly
6
granted by the lower Court as the Respondent was not entitled to them.
Counsel argued that for relief 23(iv) above to succeed, the Claimant must show that there was an express agreement between the parties to that effect. The only other situation in which interest could be awarded arises from the custom or usage of the particular trade or business. Where it is alleged in the pleading that it arises from the custom or usage of the particular trade, business and the custom involved in relation to it. Thus, making the payment of interest mandatory. Counsel citedNigeria Dynamic Ltd v. Ibrahim (2002) 8 NWLR (Pt. 768) P. 63 at Pg. 96, Para. C-D, F-G 101, Para. G-H; KSTA v. Ofodile (1999) 10 NWLR (Pt. 622) 259.
Learned Appellants Counsel argued that the Respondent had claimed interest at bank rate, but there was no pleading or evidence disclosing what the said rate was either before or during the pendency of the suit and/or what it was anticipated to be after judgment. Erroneously, the Court granted interest to the Respondent at an undisclosed bank rate on the sum of N579,840.00 from the month of January, 2001, until payment. Counsel cited
7
Nigerian Dynamic Ltd v. Ibrahim (Supra).
Counsel also argued that another wrongful award made by the lower Court was that of the relief in paragraph 23(v) of the statement of claim, as it is wrong in a claim for breach of contract to categorize damages into special and general as was done by the Respondent in relief 23(v) of her claim.
Counsel argued that there was no pleading or evidence to show what the cost of pursuing payment was and the justification for the further sum claimed as general damages.
Counsel argued that damages for breach of contract cannot be claimed and used as an avenue to seek undue profit not contemplated by the contract.
On the counter-claim, learned Appellants Counsel argued that the Respondents unilateral substitution of the vessel agreed to by both parties for the tow which was MV Hercules Services with MV Hercules Marina and the subsequent refusal of the learned trial judge to hold that the Appellants never consented to the swap of vehicles had led to a miscarriage of justice since Exhibit L was not properly interpreted by the trial Court.
Counsel also argued that a fundamental breach of Exhibit
8
A, the Charter Agreement occurred with the unilateral decision of the Respondent to divert both the vessel and the barge to Forcados which is a destination or route not contemplated by Exhibit A.
The position urged by the Appellants is that in Exhibit A, Clause 17, the area of operation of the tow was clearly stated to be Warri/Port-Harcourt (Nigeria) & Ghana offshore/Warri. There was no provision for Forcados as either a route or a stopping point at any stage of the tow transaction. The tow crew diverted to Forcados and detained the barge there for four-five (4-5) days. There was evidence that as a result of this unlawful detention at Forcados, the Appellants sustained great losses both with respect to the production of oil which the barge was meant to lift (as production consequently slowed) and on the barge itself which was so severely damaged that it later sank. Finally, the Appellant claimed breach of Exhibit A because the Respondent did not deliver the barge to the designated location in line with its provisions.
Counsel argued that the counter claim flows naturally and is a direct consequence from the breach of contract
9
occasioned by the actions of the Respondents.
In reply, learned Respondents Counsel argued that the Respondent led clear, cogent and compelling evidence in proof of her claim. In doing this, the Respondent called one witness who testified for her. The Respondents sole witness, Mr. Kadiri Sonny Enegbuma led evidence in line with the statement of claim by tendering Exhibits A-S.
Counsel also argued that the Respondent led evidence in line with her claim as enumerated in paragraphs 23(i)-(v) of her statement of claim. Counsel argued that the Appellants did not discredit the Respondent by way of evidence as no evidence was led in rebuttal of the Respondents claim. This is because it is trite law that a party who challenges the claim of the other must lead evidence in rebuttal of that claim.
Counsel argued that the Respondent also led evidence showing that she delivered the barge called Rio 1 at the designated location as requested by the Appellants.
Counsel argued that the Respondent led cogent evidence on the accrual of demurrage and tendered Exhibits in support and proof of it. Counsel argued that the
10
Appellants had the opportunity to challenge or controvert the evidence but they did not. Rather, they admitted paying part of the demurrage cost and what is admitted need no further proof.
On the issue of the claim in paragraph 23 (iii) of the statement of claim as granted by the learned trial judge, the Respondents Counsel argued that the Appellants did not deny the fact that enough evidence was led for the claim covering materials given to the Appellants. And since the Appellants did not dispute this, a minimal proof is required from the Respondents. Counsel cited Emmanuel Agbanelo v. Union Bank of Nigeria Ltd (2000) 2 SCNQR Pt. 440 at 440 Para. C-D.
Counsel argued that the Respondent sent invoice through email to the Appellants for the materials supplied to the Appellants, receipt of which was acknowledged.
Counsel insists that the evidence of the Respondent was never rebutted by the Appellants and the learned trial judge was obliged to believe same. Counsel cited Patrick Okoye v. Peter Nwulu & Ors (2007) 11 NWLR (Pt. 724) 362 at 367; Micheal A. Omom v. Judicial Service Commission & 2 Ors (2000) 3 NSCQR 28 at paragraph D-E.<br< p=””>
</br<>
11
Counsel argued that any defect in the actual categorization of damages in the pleadings is not fatal even if inelegant since categorizing damages into special and general damages in a case for breach of contract does not in effect defeat the claim of the Respondent.
On the counter claim of the Appellants, learned Respondents counsel argued that the Appellants did not lead any cogent and compelling evidence sufficient enough in proof of fundamental breaches of the provisions of Exhibit A to warrant the Court granting their counter claim.
Counsel argued that a counter claim is the claim of the Defendant against the Plaintiff in a suit filed by the Plaintiff. It is a claim of its own requiring proof of the averments therein contained. And for the counter claim to succeed, it is the duty of the Appellant to lead cogent and compelling evidence to sustain it. Counsel cited Alfred Yahaya v. Felix Chukwura (2002) 3 NWLR (Pt. 753) 20 at H-A; Munzali Ahmadu Dantata v. Abdulkadir Sanusi Dantata (2002) 4 NWCR (Pt. 756) 144 at 167 Para. G-H; Ishola Olusegun Lawson v. Afani Continental Co. Nig. Ltd & Anor (2002) 2 NWLR (Pt. 752) 585 at 623, Para. A
12
On the substitution of the tow boat at Forcados, Counsel argued that despite substituting the Hercules service with Hercules Mariner, the Respondent did not go outside the charter party agreement.
Counsel argued that the Respondent did not deviate from the charter party agreement as it towed the barge Rio 1 from Warri to offshore Ghana as agreed. Thus, stopping over at Forcados to refuel is not a fundamental breach of the agreement as Forcados is on its route to Ghana. Counsel argued that the agreement did not state every town or place the Respondent must pass through to deliver the barge at offshore Ghana.
Counsel argued that the issue raised that the barge Rio 1 was severely damaged is merely a ploy by the Appellants to avoid settling the Respondents bill.
Counsel argued that it was the duty of the Appellants to state in the pleadings the specific dates the loss of oil production occurred. And having failed to do so, the onus of proof placed on the Appellants had not been discharged.
Counsel further argued that the Respondent duly complied with the terms of the charter party agreement when she delivered the barge
13
Rio 1 at Salt Pond off shore Ghana.
Counsel insisted that Exhibits M, M1, N and P clearly show that the Respondent delivered the barge at the designated location.
Counsel argued that in any case, it is not in dispute that the parties entered into a lump sum charter party agreement of N3 million. Also, it is not in dispute that the Appellants made a payment of N2.4 million out of the N3 million. Leaving a balance of N600,000.00.
Counsel further argued that in as much as the findings of the trial Court are not perverse and did not lead to any miscarriage of justice, this Court should allow them to stand. Counsel cited Adebiyi Layinka & anor v. Adeola Makinde & ors (2002) 10 NWLR, Pt. 775 358 at 370, Para. A-E.
OPINION
The essence of the complaints raised by the Appellants is the challenge to the findings of fact made by the learned trial judge which we are here asked to set aside as perverse. The contention between the parties is the breach of the Charter Party Agreement dated 9/11/2000 between the parties which is evidenced by Exhibit A.
The common law principle of contract states that no one can unilaterally change or
14
resile from an agreement between the parties. From Exhibit A, the transport vessel which was to move by tow Barge Rio 1 was MV Hercules Service. It was to start from Port-Harcourt and end at Ghana offshore. According to item 18 on Exhibit A, Barge Rio 1 was to be towed from Abuloma Jetty in Port-Harcourt to Salt Pond Offshore Ghana. Both parties are accusing each other of breach of the contract.
From the undisputed evidence at the trial Court, Hercules Service got to Port-Harcourt on 23/11/2000. The tow started on 7/12/2000 but stopped for 5 days at Forcados. It was however another vessel owned by the Respondent, Hercules Mariner that towed the Barge Rio 1 to Ghana where it arrived on 15/12/2000.
Let us take the claims seriatim. The first claim is for N750,000 outstanding balance for towing the vessel as agreed. Both parties agreed that the sum of N2,400,000 (Two Million, Four Hundred Thousand Naira) was paid by the Appellants upfront to the Respondent leaving a balance of N600,000 to be paid after completion of the contract which is being disputed. To answer the question whether the Respondent towed the Appellants barge to the agreed
15
destination, let us look at Exhibit N written by Tom Logan on 7/11/2000 to Victor N.C. Nwosu detailing the destination of the Barge in terms of precise coordinates including call sign and radio frequency etc. however, exhibit M is the email sent by one sonny to Tom S.Logan on 15/12/2000 at 6:14pm to effect that the Hercules Rio 1 was 10 nautical miles away from the agreed location when the captain was instructed by radio contact to proceed to Sekondi which said instruction was refused. The Appellants were then advised that the vessel cannot proceed to Sekondi or anywhere outside the original designated location on security and logistic grounds. The Appellants were advised that about 18:30 GMT that day, 15/12/2000, the tow boat would drop her anchor at the agreed location and deliver the said barge and that the Appellant should be prepared to receive same.
In exhibit A, there was no agreement that the point of delivery would be changed by either party. It is my humble opinion that from the copious documentary evidence tendered at trial, the Respondent was entitled to the balance of N600,000 due on the successful completion of their own part
16
of the contract. I dont know from which magicians hat the sum of N750,000 was pulled from since there is no evidence of how the balance of N600,000 became N750,000.00, I hereby find for the Respondent on the first head of claim in the sum of N600,000.00 being the balance yet to be paid by the Appellants of the total contracted sum between the parties.
The second head of the claim is one for N2,220,000.00 (Two Million, Two Hundred and Twenty Thousand Naira) being outstanding balance demanded by the Respondent as demurrage fees incurred by the Appellants. The Appellants claimed that it was the unauthorized deviation to Forcados by the Respondent that caused the delay and they would not pay for demurrage when the fault could not be attributed to them. The Respondent claimed that all the complaints it made regarding its entitlement to demurrage fees were never controverted by the Appellants.
The tow vessel Hercules Service was undoubtedly in Port-Harcourt from 23/11/2000 to 7/12/2000 when the tow started. The story was that the tow could not start because of the activities of militants in that area. The point is that the towing vehicle arrived at
17
Port-Harcourt at the time it was supposed to arrive. Clause 19 of Exhibit A provides that delay by the Charter Party i.e. the Appellants will attract demurrage of N200,000 daily pro rate except for a moratorium of the first 2 days. The Respondent wrote letters on 24/11/2000, 27/11/2000 and 29/11/2000 which were admitted as Exhibits C, D and E respectively to the effect that its vehicle had been delayed for 14 days at Port-Harcourt. The Appellant was supposed to pay for 12 days demurrage at N200,000 per day. This amounts to N2,400,000. At a point, the Appellant paid part of the accrued demurrage to the tune of N300,000.00. Exhibit J was tendered by the Respondent wherein the said Respondent acknowledged payment of the said N300,000.00 by the Appellant. I do not think that at this point, the Appellants can resile from that portion of Exhibit A which provides for liability in demurrage for delay caused by the charter party. The Appellants having paid N300,000.00 in part, the Respondent was entitled to judgement in the sum of N2,100,000.00 and not N2,200,000.00 as claimed as outstanding balance with regard to the 2nd head of the claim.
18
On the third head of the claim which is N609,840.00 being outstanding balance payable to the Respondent for goods supplied by the Respondent to the Appellants, there is evidence that the barge received from Hercules Mariner some items which ought to be paid for by the Appellants. In Exhibit R, the Respondent had demanded for the payment of the received items viz cables
1. One two line of N100 feet
2. 4 pieces cables of 40 feet
3. pieces sackles of 35 tonns
The Respondent had also tendered Exhibit Q showing that the Appellants representative received the items and an invoice tagged No. 1142 was issued to the Appellants. In this instance, the Appellants are not disputing the receipt of the goods nor the amount claimed but are insisting that none of their agents were authorized to receive the goods since there was in any case no formal contract to supply the materials between the parties. I read Exhibit A, it is not unusual that in the course of the charter contract, ad hoc issues may arise that needs financial commitments extraneous to the specifics already itemized by the contract. There is a general clause-37 in Pt. 2 of exhibit A to that effect. In my humble
19
view, if the sale of these items were essential for the effective execution of the contract between the parties, then I cannot see how the party who has benefitted from their use can now turn around to refuse to pay for them. I am of the humble view that the 3rd head of claim had been proved by the Respondent and that the learned trial judge was right to grant the claim.
On the 4th head of the claim made at trial by the Respondent for interest at bank rate for the total outstanding balance which was unilaterally calculated at N3,579,840.00 from Jan 2001 until payment. I have to agree with learned counsel for the Appellants that the issue of interest in a commercial transaction is not automatic. It must be based on express agreement between the parties or is borne out of the custom of that business or trade. It is my humble view that no proof was adduced by the Respondent in that regard before the trial Court. In spite of the copious documentary evidence tendered by the Respondent at trial, because of the nebulous (No particular rate of interest claimed) way that particular claim was couched, it could not be proved and the trial Court should not have
20
entered judgment on that claim.
In respect of the 5th head of the claim, the breach of contract is implied from the failure of the Appellants to hold their own end of the bargain by paying all monies due to the Respondent after the Respondent had performed the contract. It is my humble but strong view that where a party to a transaction has to resort to lengthy and costly litigation to recover money due, it is essential that the defaulting party be damnified in damages for making the claimant pursue it in Court to recover payment. I am of the view that the respondent was entitled to be amply compensated in damages for the breach of contract.
The main complaint of the Appellant in the counter claim and in this Court has been that it was the Respondent that had been in breach of contract because the respondent unilaterally substituted the Hercules Service for the Hercules Mariner whereas the Respondent was obliged to use the agreed vessel to tow the Barge. Clause 18 of Exhibit A provides as follows:
The owners shall be entitled at any time whether before delivery or at any other time during the charter period to provide or substitute
21
vessel, subject to the charterer prior approval. Which shall not be unreasonably withheld.
When the Appellants were informed of the need for change, the Appellant wrote to the respondents-Exhibit L and directed that:
You must now deliver by whatever means as per your charter Agreement.
Exhibit L was signed by Thomas S. Logan. In essence, the Appellants at the critical stage agreed that the vessel should be switched to enhance the quick performance of the contract. I cannot find any merit in the counter claim of the Appellant which was rightly dismissed by the trial judge.
For the avoidance of doubt, the following orders are hereby made:
1. On the first head of claim in paragraph 23(i) of the statement of claim, the Respondent is entitled to the sum of N600,000.OO (Six Hundred Thousand Naira Only).
2. On the 2nd head of the claim in paragraph 23(u) of the statement of claim, the Respondent is entitled to N2,100,000.00 (Two Million, One Hundred Thousand Naira Only).
3. On the 3 head of the claim in Paragraph 23(iii) of the statement of claim, the Respondent is entitled to N609,840.00.
22
4. The 4th head of claim is hereby dismissed as unfounded.
5. On the fifth head of claim in Paragraph 23(v) of the statement of claim, I award the sum of N500,000.00 to the Respondent as damages for breach of contract perpetrated by the Appellants
I award the sum of N200,000.00 to the Respondent against the Appellants as cost of this Litigation.
Appeal allowed in part.
Other Citations: (2009)LCN/3249(CA)
