Assurance Foreningen Skuld (Gjensidig) V. Mv. Sealion (Ex “antibes”) & Anor. (2006)
LawGlobal-Hub Lead Judgment Report
NWALI SYLVESTER NGWUTA, J.C.A.
Indorsed on the writ of summons issued on 18th October, 2002 is the appellant’s (the plaintiff’s) claim for the following reliefs against the Respondents (then defendants):
“(a) The sum of USD$134,935.25 representing the amount of outstanding insurance calls or premium due to the plaintiff plus interest and cost which the Defendant is jointly and severally liable for under the terms of the fleet over granted to the Defendant by the Plaintiff.
(b) A declaration that the purported change and/or transfer in ownership and/or sale of the vessel the Sealion, Alboran 1, Antibes, Corcica, Portofino. Rallegat, Sete, Skayerrak, Elba, Fos, Santa Margherita are a sham and that no effective transfer of ownership has been made.
(c) A declaration that the Beneficial Ownership of the Sealion, Alboran 1, Antibes, Corsica, Portofino, Kallegat, Sete, Skayerrak, Elba, Fos, Santa Margherita have remained unchanged.”
On the same day (18th Oct. 2002) the appellant filed along with the statement of claim a motion Ex parte pursuant to Order 7 Rules 1 & 2 of the Admiralty Jurisdiction procedure Rules 1993, Section 2 (3) (6) of the Admiralty Jurisdiction Decree 1991, asking for “an order arresting and/or detaining the MV Sealion (ex “Antibes”) presently lying at the Warri Refinery Jetty, Benet Island and Escravos Fairway Warri or any where else within the Jurisdiction of this Honourable Court, pending the provision of a satisfactory bank guarantee from UBA Plc, Union Bank of Nigeria Plc or First Bank of Nigeria Plc in the sum of USD$134,935.25 or its naira equivalent to secure the plaintiff’s claim plus interest and cost for such further and/or other orders as this Honourable Court may deem fit to make in the circumstances.” The application was supported by a paragraph affidavit and an affidavit of urgency in which it was averred, inter alia in paragraphs 4 & 5 as follows:
“4. That unless the Defendant is immediately arrested it will slip out of Jurisdiction and the Plaintiff will have no means of securing its claims.
- That the Defendant is the only known asset available to the plaintiff in this jurisdiction.”
The application was granted on the 22nd October, 2002. The trial court also ordered the appellant to give an undertaking as to damages and to deposit the sum of N100,000.00 weekly with the Admiralty Marshal “for serving the arrested vessel” (see page 17 of the Records.) A warrant of arrest was subsequently issued.
On 25th October 2002 the Respondents, as Defendants/Applicant, brought a Motion on Notice pursuant to Order IX Rule 2(1) of the Admiralty Jurisdiction Procedure Rules 1993 praying for the following reliefs:
“(1) An Order releasing from arrest the vessel MV “SEALION’. Sued as 1st Defendant in this suit and discharging unconditionally the warrant of arrest issued by this Honourable Court in that regards;
(2) An Order that the Plaintiffs furnish security for cost in the sum of USD 100,000.00 within five (5) working days;
(3 And for such further order or other orders as this Honourable Court may deem fit in the circumstances.”
The motion was predicated on the claim that the claim discloses no admiralty action in rem against the 1st Defendant, that the action is incompetent as against the current owners/managers of the vessel and that the action is an abuse of process of Court and should be dismissed. The motion was supported by a five paragraph affidavit. Also filed is a five-paragraph affidavit of urgency. The appellant filed a 19 paragraph Counter Affidavit.
In a considered ruling dated 8/11/2002 the Lower Court found no sufficient reason to release the arrested ship unconditionally and ordered the Respondents to give a bank guarantee in the sum of $139,935.35 or its Naira equivalent from UBA Plc or Union Bank before the vessel will be released.
In addition to the above, the Court below ordered as follows:
“On the other hand to stop the filing of frivolous cases and to make sure that the case is diligently prosecuted, the plaintiff is to give security as to cost for $50,000 from U.B.A. or any Bank or else the ship will be released before the next hearing date.”
Dissatisfied with the order reproduced above the appellant appealed to the Court on three grounds. Consistent with the rules of the Court, the parties, by their respective Counsel, filed and exchanged briefs of argument. In the appellant’s brief, settled by Babajide Koku Esq. the appellant framed the following single issue from determination by the Court:
“Whether the decision of the lower court contained in page 7 of the ruling dated the 8th November, 2002 wherein the Court stated that “on the other hand to stop the filing of frivolous cases and to make sure that the case is diligently prosecuted the plaintiff is to give security as to cost for $50,000 from UBA or any Bank or else the ship will be released before the next hearing date.” Was Justifiable in the circumstances.”
In the Respondents’ brief settled by Nnamonso Ekanem Esq. the Respondents also presented one issue for the Court to determine. The issue is
“Whether the Learned Trial Judge rightly exercised his discretion in ordering the plaintiff to give security for costs in the sum of USD $50,000.00.”
At the hearing of the appeal learned counsel for the appellant referred to the appellant’s brief dated, and filed on 23/3/2005. Counsel said the one issue he formulated arose from grounds 1 and 2 in his Notice of Appeal. He abandoned ground 3 which was accordingly struck out. Learned Counsel adopted and relied on the argument contained in the said brief and urged the Court to allow the appeal.
On his part Learned Counsel from the Respondents referred to the Respondents’ brief dated 15/6/05 and filed on 24/6/05. He adopted the brief and relied on same, urging the Court to dismiss the appeal.
I have considered the issue raised by each party. The issue in the Respondents’ brief is limited to the making of the order simpliciter where as the appellant’s issue goes further than the mere making of the order complained. It includes the reasons the lower court gave for the order in question. It also subsumes the issue framed by the Respondent. I intend, therefore, to determine the appeal on the appellant’s issue.
Arguing the lone issue in his brief learned counsel for the appellant referred the Court to the Respondents’ Notice of Motion of 25/10/2002 and the grounds on which the motion was predicated. He referred to the ruling complained of and Order 10 rule 1(a) and (b) of the Admiralty Jurisdiction Procedure Rules 1993 and argued that security from costs is not granted as a matter of course. He further submitted that the application for security for costs and the supporting affidavit did not make out a case for security from costs. Counsel contended that the Respondent did not satisfy the Lower Court that the claim is in excess of N1.m or that the Plaintiff has no assets in Nigeria. He relied on M.V “S. Araz” Vs. L PG Shipping S.A. (1966) 6 NWLR (Pt. 457) 720, Houtmangrach Vs. Oduba (1995) 1 NWLR (Pt. 371) 295.
Europario S.A and Anor V. Depi limited and Anor. (1996) Federal High Court of Nigeria Law Reports 279 at 282 ratio 13. Counsel referred once more to the ruling appealed against and argued that there was no reason for the Lower Court to base its ruling on the need to prevent frivolity and to encourage the diligent prosecution of the plaintiff’s case when these issues were not canvassed before the Court. He referred to U.B.A Vs. Stahlban GMBH & 10. KG (1989) 3 NWLR (pt 110) 374 at 378 and contended that the Lower Court exercised its discretion on wrong considerations. He urged the Court to allow the appeal.
In his own argument in his brief, Learned Counsel for the Respondents submitted that the issue of security for costs is regulated by Order 10 rules 1 and 2 of the Admiralty Jurisdiction Act 1991. Counsel submitted that the U.S $134, 935.25 claimed is clearly in excess of N1.m and it was not necessary to show that the appellant has no assets in Nigeria. He referred to Order 1(b) of 1991 Act and said that the Court has no discretion on the issue of security for costs. He referred to MV Araz Vs. LPG Shipping (1996) 6 NWLR (Pt. 437) 720 Adewumi Vs. A-G Ekiti State (2002) 2 NWLR (Pt. 751) 483 ratio 9 on statutory construction. He urged the Court to dismiss the appeal.
The portion of the ruling against which the appeal is lodged is hereunder reproduced. “On the other hand to stop the filing of frivolous cases and to make sure that it is diligently prosecuted, the plaintiff is to give security as to cost for $50,00.00 from U.B.A or any Bank or else the ship will be released before the next hearing date.” (See page 40 of the Records 2nd paragraph). The Lower Court predicated its order on (1) the need to stop filing of frivolous cases and (2) To ensure the diligent prosecution of the appellant’s case. It would appear that the Court below proceeded on the assumption that the appellant’s case was frivolous. However, in a ruling on the Respondents’ application to release the vessel, based inter alia, on the fact that the appellant’s case “is an abuse of the Court processes and should be dismissed, the Court was of the view that “in this case there is the need to hear both sides to determine the case on its merit.” See pages 22 and 39 of the records. A decision that the case is frivolous would conflict with the Court’s earlier decision that the case deserves to be heard and determined in its merit. The second implication of the order is that the appellant is tardy in the prosecution of the case, but this has no basis in the records of the Court below. I share the views of the learned Counsel for the appellant that the need to discourage frivolity and/or to encourage diligent prosecution of the appellant’s case are issues which were not in evidence nor were they canvassed before the Lower Court.
Learned Counsel for the Respondents sought to justify the order by reliance on Order 10 rule 1 (b) of the Admiralty Jurisdiction Procedure Rules 1993 which provides: “where the plaintiff’s claim is in excess of one million naira or its foreign currency equivalent or where the plaintiff has no assets in Nigeria, and the Court is so satisfied, security for costs shall be ordered by the Court-.” Under this rule once the Court is satisfied either that the claim exceeds one million naira or its foreign currency equivalent or that the plaintiff has no assets in Nigeria, it is mandatory that security for costs be ordered. This is the Court of Appeal’s interpretation of Order rule 1 supra in M.V. Araz G. Vs. LPG Shipping ( 1996) 6 NWLR (Pt. 457) 720 cited and relied on by the Lower Court.
However, the case will be applicable only if either of the two conditions in Order 10 rule 1 (b) is satisfied. On the 1st condition there is no evidence, apart from the ipse dixit of Learned Counsel for the Respondents that the claims is in excess of N1.m. The Court below had only the USD 134.935.25 claimed by the appellant. Without reference to the exchange rate for the period material to the proceedings there can be no basis for saying that the sum claimed is in excess of N1.m or its foreign currency equivalent. It follows that the Court below could not have satisfied itself that the sum claimed exceeded N1.m and since the order for security for costs was not based on the fact that the appellant had no assets in Nigeria the order ought not to have been made under Order 10 r 1 (b) of the Procedure Rules 1993.
The lone issue in the appeal is resolved in favour of the appellant, consequently I allow the appeal and order as follows:
- That the ruling and orders of the Court below dated 8/11/02 be and are hereby set aside.
(2) That the case be, and is hereby, remitted to the Federal High Court, Benin Division to be tried de novo by a Judge of that Court other than Hon. Justice,. Auta who presided over the proceedings leading to this appeal”.
Respondents to pay to the appellant costs assessed at N7,500.00 .
Other Citations: (2006)LCN/1889(CA)
