Chevron Nigeria Limited Vs Lonestar Drilling Nigeria Limited (2007)

LAWGLOBAL HUB Lead Judgment Report

A. OGUNTADE, J.S.C

The respondent, (hereinafter referred to as the plaintiff) at the Warri High Court of Delta State brought a suit against the appellant (hereinafter referred to as the defendant) for special and general damages arising out of an alleged breach of contract for ten million United State dollars. The parties filed and exchanged pleadings.

The defendant, after the exchange of pleadings, brought an application praying for the following orders:-

“(1) An order of this Honourable Court setting down for hearing and determination the points of law raised in the defendant’s statement of defence particularly paragraphs 15-22.

(2) Based on prayer one above, an order dismissing the plaintiff’s action for disclosing no reasonable cause of action and for being incompetent, frivolous and vexation in the circumstances.

(3) An order striking out this suit for lack of jurisdiction of this Honourable Court to entertain same.” The grounds relied upon for bringing the application were stated to be these:

“( a) That the matter being an admiralty matter is outside the jurisdiction and competence of this court to entertain same.

(b) That by virtue of S. 230(g) and (o) of Decree No. 107 of 1993 and Decree No. 59 of 1991 the matter is within the exclusive jurisdiction of the Federal High Court.”

The trial Judge in his ruling on the defendant’s application which was delivered on 3/12/99 reasoned that the plaintiff’s suit disclosed a reasonable cause of action and that the writ of summons and statement of claim showed that the plaintiff’s claim was for a breach of contract and not founded in admiralty. The defendant was dissatisfied with the ruling. It brought an appeal before the Court of Appeal, Benin (hereinafter referred to as the court below). The court below on 4-4-01 dismissed the appeal. Still dissatisfied, the defendant has come on a final appeal before this court. The defendant has in its appellant’s brief formulated two issues for determination. The issues are:

“1. Whether or not the Court of Appeal was right in holding that the plaintiff’s action discloses a reasonable cause of action against the defendant/appellant.

2. Whether the Court of Appeal was right in holding that the plaintiff’s claim is contract and not admiralty thereby vesting the Delta State High Court with jurisdiction as against the Federal High Court.

The plaintiff in its respondent’s brief formulated two issues which in substance are the same with the defendant/appellant’s issues. I intend to take the two issues serially.

On issue 1, the appellant’s contention was that plaintiff’s writ of summons when read along with the statement of claim did not disclose a reasonable cause of action. This issue brings into the fore a consideration of ‘a cause of action’. I can do no more on the meaning of a ’cause of action’ than call to mind the observation made by this court per Karibi-Whyte, JSC in Bello v. Attorney General of Oyo State (1986) 5 NWLR (Pt. 45) 828 at 876 thus:

“I think a cause of action is constituted by the bundle or aggregate of facts which the law will recognize as giving the plaintiff a substantive right to make the claim against the relief or remedy being sought. Thus the factual situation on which the plaintiff relies to support his claim must be recognized by the law as giving rise to a substantive right capable of being claimed or enforced against the defendant. In other words, the factual situation relied upon must constitute the essential ingredients of an enforceable right or claim – see Trower & Sons Ltd. v. Ripstein (1944) AC 254 at p. 263; Read v. Brown 22 Q.B.D. 128; Cooke v. Gill (1873) L.R. 8 C.A. 107, Sugden v. Sugden (1957) All ER 300; Jackson v. Spittal (1870) L.R. 5C. P. 547). Concisely stated, any act on the part of the defendant which gives to the plaintiff his cause of complaint is a cause of action.” See also Akilu v. Fawehinmi (No.2) (1989) 2 NWLR (Pt. 102) 122 at 169. In Ibrahim v. Osim (1988) 1 N.S.C.C. 1184 at 1194; (1988) 3 NWLR (Pt. 82) 257, this court per Uwais, J.S.C. (as he then was) discussed the proper meaning of the expression ‘reasonable cause of action’ thus; “The question therefore is what is a ‘reasonable cause of action’ The words ’cause of action’ without the adjective ‘reasonable’ had been defined by this court in Savages & Ors. v. Uwaechia (1972) 1 All N.L.R. (Pt. 1) 251 at p. 257: (1972) 3 S.c. 214 at p. 221, where Fatai-Williams, J.S.C. (as he then was) said: ‘A cause of action is defined in Stroud’s Judicial Dictionary as the entire set of circumstances giving rise to an enforceable claim. To our mind, it is, in effect, the fact or combination of facts, which give rise to a right to sue and it consists of two elements the wrongful act of, the defendant which gives the plaintiff ‘his cause of, complaint and the consequent damage. As Lord Esher said in Cooke v. Gill (1873) L.R. 8 C.P. 107 and later in Read v. Brown (1888) 22 Q.B.D. 128 (C.A). it is every fact that it could be necessary for the plaintiff ‘to prove, if , traversed in order to support his right to the judgment of the court. (See Kusada v. Sokoto Native Authority (1968) 1 All N.L.R. 377 where the definition in Read v. Brown (supra) was referred to with approval. ‘ By the two elements in the foregoing definition of ’cause of action’ there can be no doubt that as far as the respondent was concerned and as indicated in his statement of claim, the wrongful act of the appellant was that the appellant imported sardine with the import license issued to the respondent, made profit and refused to share the profit as agreed with the respondent. By this, if proved, the respondent would be entitled to damages for breach of contract. However the definition of the words ’cause of action’ is, for the purposes of the present case, incomplete without the meaning of the word or adjective ‘reasonable ascertained. In Black’s Law Dictionary, Special deluxe, 5th Edition, the word has been defined to mean, ‘fair, proper, just, moderate, suitable under the circumstances. But the phrase ‘reasonable cause of action’ which is used in Order 18 rule 19 of the English rules of the Supreme Court (See Volume 1 of the Supreme Court Practice, 1979) had been defined in Drummond-Jackson v. British Medical Association & Ors. (1970) 1 W.L.R. 688 at p. 696 by Lord Pearson who observed –

‘First there is in paragraph (1)(a) of the rule the expression ‘reasonable cause of action’, to which Lindley, M. R. called attention in Hubbuck & Sons Ltd. v. Wilkinson, Heywood & Clark Limited (1899) 1 Q.B. 86 pp. 90-91. No exact paraphrase can be given, but I think ‘reasonable cause of action’ means a cause of action with some chance of success, when (as required by paragraph (2) of the rule) only the allegations in the pleadings are considered. If when those allegations are examined it is found that the alleged cause of action is certain to fail, the statement of claim should be struck-out.’ This definition was approved by this court of Chief ( Dr.) Irene Thomas & Ors. v. The Most Reverend Timothy Omotayo Olufosoye (1986) 1 NWLR (Pt. 18) 669 at P. 682 (Per Obaseki JSC)”

The question that follows is: Looking at the facts pleaded by the plaintiff in support of its claim, can it be said that the case at all events has no reasonable chance of success It needs be said here that the proposition that a plaintiff has no reasonable cause of action can be made upon an examination of the facts pleaded in the statement of claim. It has nothing to do with the nature of the defence which the defendant may have to the plaintiff’s claim. The court must therefore confine itself only to the averments in the statement of claim in the assessment of whether or not the plaintiff has a reasonable cause of action: Shell B.P. Petroleum Development Co. of Nigeria Ltd & Ors. v. Onasanya (1976) 6 SC. 89, 94.

I should now examine the facts pleaded by the plaintiff/respondent in its statement of claim. The relevant facts pleaded by the plaintiff of pages 5 – 9 of the record read:

“5. By a letter dated 17th September, 1996, the defendant solicited bid from the plaintiff for the supply of a Compact Mobile Land Drilling Unit of a particular rating and specification in respect of the defendant’s proposed OML 53 Land Rig Campaign. The said bid was to be in two parts, viz: (1) Technical information and (2) Commercial. The said letter is hereby pleaded and shall be tendered during trial.

6. The plaintiff then informed the defendant that it did not have that particular type of land drilling rig and the parties agreed that the plaintiff should purchase the said Rig from India.
7. The plaintiff forwarded its bid to the defendant in two parts-(1) Technical information and (2) Commercial.
8. That on the 6th December, 1996, the defendant wrote a letter to the plaintiff stating inter alia that it was aware that the plaintiff was in the process of purchasing the rig. In the said letter, the defendant stated that the plaintiff’s bid will be considered only if the plaintiff suppliers the defendant sufficient information on the said drilling rig it was proposing to buy. The said letter is hereby pleaded and shall be tendered during trial…

9 …..

10. The defendant was fully aware that the plaintiff was to source loans from banks in Nigeria in order to purchase the said rig from India.
11. That the plaintiff obtained a loan of three hundred million Naira (N300,000,000.00) from the Afribank Nigeria Plc to purchase the said Rig from Triveni Engineering And Industries Limited, New Delhi, India.That all relevant documents in respect of the loan are hereby pleaded and shall be tendered during trial.
12. …
13. That the defendant requested the plaintiff to keep it fully informed of the stage-by-stage arrangements or steps it took in the procurement of the rig, including financing, purchasing, shipment and final arrival of the rig in Nigeria.

14….

15. That on the 20th December, 1996, the defendant wrote a letter to the plaintiff demanding an assurance from the plaintiff that it had purchased the rig. It also demanded proof of ownership of the rig. The said letter is hereby pleaded and shall be tendered during trial.
16. That by a letter dated 15th January, 1997, the plaintiff furnished the defendant evidence of purchase,ownership and date of arrival in Nigeria of the rig it purchased from Triveni Engineering and Industries Limited, New Delhi, India. The said letter is hereby pleaded and shall be tendered during trial.
17. That plaintiff avers that by the said letter of 20th December, 1996, the defendant stated that if the plaintiff could furnish it by the 16th January, 1997, with proof of ownership of the rig, the defendant would consider plaintiff’s bid stated in paragraph 5 above.
18. That the plaintiff furnished the defendant with proof of ownership of the land drilling rig on the 15th January, 1997, that is, one day before the 16th deadline stipulated by the defendant in their letter referred to in paragraph 17 above. The plaintiff’s said letter is hereby pleaded and shall be tendered during trial.
19. That the plaintiff forwarded along with its letter of 15th January, 1997. to the defendant. a letter from Triveni Engineering and Industries Limited of India who sold the said Land Drilling Rig to plaintiff. In the said letter, Triveni Engineering and Industries Ltd. Enclosed another letter confirming that ownership of the Land Drilling Rig had passed from them to the plaintiff. The two letters are hereby pleaded and shall be tendered during trial.
20. That on the 17th January, 1997, the defendant wrote a letter to the plaintiff requesting it to make available for the defendant’s sighting by 4 p.m. (1600 hours) on Monday, 20th January, 1997, the originals of the following documents:-

(i) the contract of sale of the Triveni Rig VI to the plaintiff.

(ii) the title documents of the rig. The letter is hereby pleaded and shall be tendered during trial.

21. The plaintiff avers that it duly provided the defendant the necessary information requested under paragraph 20 above.
22. That the defendant was monitoring the purchasing transaction of the said Land Drilling Rig from India

and its eventual shipment to Nigeria.

23. That the defendant was to send a representative to India to inspect the rig which the plaintiff had purchased from Triveni Engineering and Industries Ltd. but later cancelled the arrangement on the ground that it would cost it 35,000 United States Dollars, which they did not want to expend.
24. That consequent upon the defendant’s cancellation of the trip to India to inspect the said rig, there was delay in the shipment of the said rig to Nigeria.
25. …
26. That Mallard Bay Drilling Nigeria Limited is wholly foreign-owned company.
27. The plaintiff is the only indigenous company in Nigeria that performs oil drilling of similar capacity and magnitude as Mallard Bay Drilling Nigeria Limited.
28. That on the 19th December, 1996, the defendant wrote a letter to National Petroleum Investment Management Services (NAPIMS), a body under the Nigerian National Petroleum Corporation, in which the defendant stated inter alia that they did not believe that plaintiff could purchase the rig outfit to meet its bid requirements, clear the rig through India Customs, transport it to Nigeria, and clear it through the Nigerian Customs by April, 1997. The defendant then concluded that the plaintiff was not a qualified bidder.
29. Further to paragraph 28 above, the defendant also stated in the said letter that if the plaintiff could provide proof of ownership of the rig by the 16th January, 1996, it would open the commercial portion of the plaintiff’s bids. The said letter of the defendant is hereby pleaded and shall be tendered during trial.
30. That the plaintiff paid to Triveni Engineering and Industries Limited India the sum of three million and fifty thousand United States Dollars ($3,050,000 U.S.D) as cost of the said rig.
31. The proforma invoice and other relevant documents are hereby pleaded and shall be tendered during trial.
32. That when the rig arrived in Nigeria plaintiff informed the defendant.
33. That the plaintiff spent the sum of three hundred and fifty thousand United States Dollars $350,000 U.S.D) on freight charges of the said rig. The proforma invoice and other relevant documents in this regard are hereby pleaded and shall be tendered during trial.
34. That the defendant caused the plaintiff to expend the above stated amounts to purchase and ship the rig to Nigeria solely for the purpose and at the request of the defendant in consideration of the defendant opening the plaintiff’s bids, (both (1) Technical Information and (2) Commercial) and for considering the bids.
35. That the defendant only opened the Technical Information of the plaintiff’s bid, but kept foot-dragging with regard to the commercial portion of the bid, despite the fact that the plaintiff had completely met its own obligation to provide the Land Drilling rig in consideration of the defendant’s opening of the two sections of the bid.
36. That on the 20th March, 1997, the plaintiff wrote to the National Petroleum Investment Management Services (NAPIMS), (a body established by the Nigerian National Petroleum Corporation) complaining of the behaviors of the defendant in its refusal to inspect the rig in India as well as open the Commercial portion of plaintiff’s bid during trial.
37. That on the 26th March, 1997, the defendant wrote a letter to the Nigerian National Petroleum Corporation(NAPIMS) intimating them of their plan to continue with the bidding process by opening the commercial section of the Mallard Bay Drilling Nigeria Limited proposal and to return the technical and commercial sections of the plaintiff’s bid. The defendant gave NAPIMS up to the 20th April, 1997, to respond to their plan, failing which the defendant would assume that NAPIMS had concurred with the proposal. The said letter is hereby pleaded and shall be tendered during trial.
38. …
39. Further to paragraph 38 above, the Nigerian National Petroleum Corporation (NAPIMS) then advised the defendant not to return the technical and commercial bid package to the plaintiff, and to also exercise restraint till the end of April, 1997, when plaintiff’s rig arrived Nigeria from India.
40. That the plaintiff and Mallard Bay Drilling Nigeria Limited were the only two companies that qualified f or the technical bid.
41. That on the 15th September, 1997, the defendant wrote to the plaintiff stating that, due to fiscal constraint of the Federal Government’s 1997 budget it was rejecting all bids it received for the proposed 1997 OML 53 Land rig campaign. The defendant then returned only the commercial portion of the plaintiff’s bid unopened; but assuring it of an intention to resubmit the bids when fiscal situation improves. The said letter is hereby pleaded and shall be tendered during trial.
42. On or about the 6th of May, 1998, the defendant sent out bid documents to Mallard Bay Drilling Nigeria Limited and other drilling companies but refused to send to the plaintiff.
43. That the defendant by its numerous correspondences with the plaintiff contracted with the plaintiff to purchase the said Triveni Rig VI from Trivenii Engineering and Industries Limited on the consideration that the defendant will open and consider the plaintiff’s technical and commercial bids.
44. That in spite of the breach of contract, the action of the defendant in opening and considering the commercial bid of Mallard Bay Drilling Nigeria Limited and refusing to open and consider the plaintiff’s bid is highly tainted with discrimination.
45. That the defendant caused the plaintiff to procure the said Land Drilling Rig but subsequently failed to open the commercial bid.”

The above averments from the statement of claim clearly made the point that the defendant led the plaintiff to believe that its (the plaintiff’s) commercial bid would be accepted and considered. The plaintiff placed reliance on that representation and incurred an expenditure of millions of dollars to import a drilling rig into Nigeria. The defendant later failed and or neglected to allow the plaintiff to submit a bid for the said rig. It seems to me that on those facts pleaded, the plaintiff had shown that, its contract with the defendant had been unlawfully breached. It was quite another matter whether those facts when set against the averments in defendant’s statement of defence would succeed. But those facts in my humble view clearly entitled the plaintiff to a hearing on the merit of its case. The trial High Court was of the view that the facts disclosed by the plaintiff entitled it to a hearing determine the merit of its case. In the same manner the court below ( per Tobi. JCA (as he then was) in its lead judgment observed:

“I have thoroughly examined the action filed by the respondent (i.e. the plaintiff) and I do not agree with learned counsel for the appellant that there is no valid cause of action. There is. The action may succeed. It may fail. The court is not yet there. The court will decide at the end of the proceedings. For now there is a valid cause of action.”

I am satisfied that the court below was right. The defendant, it would seem, was in too much a hurry to have the plaintiff’s case terminated; and the plaintiff in the process driven away from the judgment seat before airing its case. That, it must be said, is not the way the court operates. A party ought not to be precluded from putting across his case in a full hearing except on the clearest indication that the action is denuded of all merits even on the supposition that the averments in the statement of claim are deemed as admitted by a defendant. Issue I, therefore, fails.

Appellant’s issue No.2 raises the contention that the plaintiff’s claim was an action in admiralty and that therefore, a State High Court has no jurisdiction to entertain same. The defendant would rather have the case heard by the Federal High Court. I reproduced above a substantial part of the averments in plaintiff’s statement of claim. These show that in its true essence, the claim was for a breach of contract. It has nothing to do with the admiralty jurisdiction of the Federal High Court. The court below decided the matter in these words:”I have carefully examined the claim and I am of the view that it is a claim in contract and has nothing to do with admiralty. It is clearly stated in the claim that it is for the sum of $10,000,000.00 (Ten million U.S. Dollar) as special and general damages. It is not an admiralty action. Whether the transaction is an invitation to treat or a contract will be decided by the Judge at the trial.”

I agree with the view of the court below. This appeal has no merits. It is dismissed with N10,000.00 costs in favour of the plaintiff/respondent.

SC.170/2002