First Fuels Limited V. The Vessel ‘leona Ii’ & Anor (2002)

LAWGLOBAL HUB Lead Judgment Report

O. AYOOLA, J.S.C.

On Tuesday, 13th March, 2001, Belgore, CJ., sitting in the Federal High Court, holden at Lagos, made the following orders:

That the Bill of Sale relating to the Vessel M/T Leona II be rectified to bring out the order of the Court by deleting the expression USD300.000 only paid to us’ where the words occur in the agreement and substituting therefor the expression – US D. 300.00 and further sums to be paid to us in accordance with the terms of agreement dated 19th October, 1998, a copy of which was annexed to the affidavit of one Captain Ihenacho deposed to on 2nd October, 1998, (sic) and filed in Court on the same date bringing the total sale price of Vessel Leona II to US D. 1,300,000.00.’

2. That the vessel M/T Leona II should be re-arrested and detained by the Admiralty Marshall as security for the payment of the sum of $400.00 owed in respect of instalments of the purchase price of the aforesaid Vessel by it pursuant to the order of the Court.
3. That the Vessel Leona II be sold by the Admiralty Marshall in the event of the Respondent failing to pay the sum of $400,000 at once and further instalments due until the final balance of the total $1,300,000 being the sale price of the vessel is liquidated. (Emphasis mine)

Integrated Oil and Gas Ltd., (the buyers), which had purchased the Vessel Leona II, (the vessel), being dissatisfied with the order appealed to the Court of Appeal. The Court on 16th July, 2001, set aside the orders made by the learned Chief Judge and ordered that the vessel be released to the buyers. The Vessel Leona II and Owners of the Vessel Leona II (the defendants) have appealed to this court from the judgment of the Court of Appeal. The respondents to the appeal are First Fuels Ltd., (the plaintiff), and the buyers.

In July 1997, judgment was given in favour of the plaintiff. In execution of the judgment, the Federal High Court on 7th August, 1997, ordered that the vessel which had earlier been arrested and detained be sold by the Admiralty Marshall who was the Chief Registrar of the Federal High Court. Thereafter followed negotiations and orders for the sale of the vessel. There was indeed a lot of going to and fro, somewhat difficult to put together. The course of events seems to have been as follows:

(1) On 26th January, 1998, counsel for the plaintiff told the court that the plaintiff and the defendants have found a buyer who offered $600,000 for the vessel. The defendants regarded the offer too small and claimed to have found a new buyer for $1.5 million on certain conditions which the plaintiff rejected. Counsel for the plaintiff reported that the parties have agreed that the Admiralty Marshall be ordered to sell the ship in a normal way’ on condition that both parties agree to the price before sale and whichever parties disagrees (sic) must provide a buyer with a higher price with a specific time of two weeks for refusal. The defendants confirmed the agreement with a request only that four weeks should be allowed instead of two weeks within which to get a buyer. The trial court made an order in the following terms:

……..that the Admiralty Marshall of the court will look for a buyer within two weeks from today’s date and get the views of the two parties within two weeks of his finding a buyer with a price whichever of a party does not agree with the price must provide a new buyer with a higher price within one month from today’s date.

(2) On 2nd March, 1998, a report was made to the court that no buyer was found.

(3) The matter came before the trial court on 16th March, 1998, when Mr. Williams, counsel for the defendants, reported to that court that we are at the advance stage of negotiation; and, on 7th July, 1998, when the court noted that: The Admiralty Marshall had not filed anything in the court’s file or reported anything to the court.

(4) Then followed the proceedings on 13th July, 1998, when the Chief Judge said: I accept the offer of $250,000 found by the Admiralty Marshall of the court as the price of the Vessel Leona. He ordered that: The Admiralty Marshall should pay the money to the court or directly to the plaintiff and accept a receipt from the plaintiff for the said amount. The case was then adjourned to 19th October, 1998, for mention.

(5) On 19th October, 1998, the learned Chief Judge announced that there was before the court a report of Admiralty Marshall dated 14th October, 1998, reporting that the original buyer for $250,000 could not be found but someone had offered $350,000. The Chief Judge then made another order that: …… the vessel should be sold to whoever pays to the Admiralty Marshall of the court or to the plaintiff a sum of N350,000 or above within 12 days of this order, that is, on or before 30th October, 1998.

(6) Apparently, on 2nd November, 1998, there were a Further and Better Affidavit and a Second Further Affidavit, respectively sworn by one Laitan Adesanya, who described himself as the duly appointed representatives of the owners of the Vessel Leona II, and one Captain Ihenacho, who described himself as the duly appointed Attorney of Integrated Oil and Gas Ltd. and filed by the defendants.

(7) On 2nd November, 1998, the date to which the matter had been adjourned, counsel for the plaintiff, Mr. Razaq, SAN, announced to the court that: On 21st October, a buyer paid $500,000. The learned Chief Judge retorted, rightly, I think, that: The Admiralty Marshall is not aware of this and he is being put in an impossible position if he had accepted an earlier offer. To counter Mr. Razaq’s announcement, Mr. T.E. Williams told the court that : We have put an offer of $11.5m (sic: $1.5) and have paid $505,000 to the Admiralty Marshall and the $1m will be paid over the period of 15 months. Mr. Razaq not having got the new terms the case was adjourned to 9th November, 1998, to enable the plaintiff to study the new proposal and make his reaction known.

(8) Apparently, on being apprised of the new terms which, apparently, were contained in the affidavits referred to in (6) above and the attachment thereto, the plaintiff filed an affidavit sworn by one Abdullahi Akanbi, litigation assistant in the Chambers of Alhaji Abdul Razaq & Co., on the authority of the plaintiff, which, in substance, was a rejection by the plaintiff of the new terms put forward by the defendants for the sale of the vessel.