Mr. Francis Obi Iroegbu V. Mv Calabar Carrier & Ors. (2007)

LawGlobal-Hub Lead Judgment Report

DONGBAN-MENSEM, J.C.A.

This is an interlocutory appeal against the ruling of the Hon. Justice A. Mustapha of the Federal High Court holden in Lagos, delivered on the 3rd June, 2004.

Resume of the facts which led to this appeal is necessary as a foundation. The appellant invoked the admiralty jurisdiction of the Federal High Court, when on the 19th January, 2004; he filed an action in rem against the five respondents.

Upon a motion exparte, the appellant caused the 1st – 4th respondents to be arrested and detained pending the production by the respondents, of a first class bank guarantee from a reputable bank in Nigeria. Having failed to comply with the said condition the 1st – 4th respondents remained under detention.

The respondents eventually filed a motion on notice upon which the trial court pronounced a ruling on the 3rd June, 2004, releasing unconditionally, the 1st – 4th respondents.

The reason for the release as stated in the detailed ruling is that the appellant’s claims are “… not maritime claims which can be commenced by an action in rem”.

Accordingly, the ex-parte order of the court made on the 20th January, 2004 was discharged. The 1st – 4th respondents were ordered to be “released immediately unconditionally from the arrest and detention ordered by…” the court.

The appellant is flustered by the said ruling and has come to this court upon four grounds of appeal.

Four (4) issues were distilled from the four grounds of appeal.

The issues formulated by the appellant are:-

“1. Whether by virtue of S. 3(2) (a) of the Partnership Law, Cap. PI, Laws of Lagos State, 2003 a partnership can in law exist between members of a company incorporated under the Companies and Allied Matters Act, 1990 so as to be embodied in a partnership agreement.

2. Whether the agreement between the appellant and the 5th respondent (i.e. exhibit W) on proper interpretation relates to the use or hire of the 1st – 4th respondents in Nigeria or can otherwise found a maritime claim.
3. Whether from the facts and circumstances of this case the learned trial Judge denied the appellant his right to fair hearing.
4. Whether from the facts and circumstances of this case the learned trial Judge was right in ordering the unconditional release of the 1st – 4th respondents.

The respondents formulated two issues for determination and these are:-

“1. Whether the learned trial Judge was right in holding that the Memorandum of Understanding between the appellant and the 8th respondents dated 8th January, 2002 was not an agreement for the use or hire of a ship within the meaning of section 2(3) (f) of the Admiralty Jurisdiction Act, 1991, Chapter A5, Laws of the Federation of Nigeria, 2004, and as such cannot found a maritime claim.

2. Whether the learned trial Judge was right in ordering the unconditional release of the 1st to 4th respondents.”

It is necessary to bear constantly in mind that this is an interlocutory appeal. The scope must be kept constricted as it where to the interlocutory issues raised so that one does not go into the main appeal at this interlocutory stage.

The claim of the appellant before the trial court is as follows:

“(a) The sum of U$26S, 100.00 (two hundred and sixty-five thousand one hundred United States Dollars) being the sum due and owing the plaintiff from the operations of the 1st to 4th defendants as per the agreement between the plaintiff and the 5th defendant, the beneficial owner of the 1st to 4th defendants.

(b) The sum of N1, 531.800 (one million, five hundred and thirty-one thousand, eight hundred naira) being the plaintiffs reimbursable expenses under paragraphs 13 and 14 above…

(c) A mandatory order of injunction that the 5th defendant directs and ensures that the 1st to 4th defendants are operated in Nigeria using Alpha Marine Services Limited only as the operating company.

(d) An order of injunction restraining the 1st to 4th defendants from operating in Nigeria through any operating company other than Alpha Marine Services Limited.”

Also filed in support of the claim is a document referred to as memorandum of understanding (MOU for short) which was annexed as exh. W in the motion before the trial court.

I find the issues formulated by the respondent as more concise and appropriate for the determination of the interlocutory matters raised in this appeal. Accordingly, this appeal shall be determined on the issues formulated by the respondent, which issues are reflective of those of the appellant. However due to its distinctive nature, issue three of the appellant’s issues will also be addressed.

Issue One:

The appellant addressed the question of the nature of the relationship between the parties in its issue No. 1. Issue two is however, more relevant at this interlocutory appeal. Is there an agreement between the patties relating to the “use” or “hire” of ship, specifically, the “use” or “hire” of the 1st – 4th respondents? The appellant answers this question in the affirmative. It is the argument of the appellant that his suit arose out of an agreement relating to the use or hire of the 1st – 4th respondents. Citing Exh. W, the MOU, as the instrument of association between the parties, the learned counsel for the appellant quotes intensively from the said document which terms counsel maintains, make the 1st – 4th respondents the soul of the relationship, the raison d’etre, insists counsel, of the relationship between the parties. Three paragraphs stand out, among the several cited by the learned counsel from the “MOU.” These are:-

“1. Chief Edison Chouest Jr. and Francis Obi Iroegbu shall continue to use Alpha Marine Services exclusively as an operating company for the operation of said four (4) vessels described above… “Also”

The parties hereto agree that the compensation payments made to Mr. Francis Obi Iroegbu shall be for the four (4) vessels described above…”

3. This agreement shall be valid for the period of lime that the four (4) vessels described above are employed by Alpha Marine Services in Nigeria. Should the vessels cease employment and charter hire in Nigeria, then this agreement shall be terminated.” “(Refer generally).”

Upon these paragraphs, the learned counsel maintains that the relationship between the parties was maritime based and therefore an action in rem is maintainable. The learned counsel cited the following cases in support of his contention:-

1. Ming Ren Shipping and Trading Co. Ltd. v. Amatemeso Shipping Agencies Ltd. (1979) 1 N.S.C. 462 (hereinafter referred to as the “Ming Ren case)
2. The Jade (1976) 1 All E.R. 441.

(See: The Jade (1976) 1 All E.R. 920).

3. St. Elefterio (1957) p. 179 at pg. 183.
4. AIICO v. Ceekay Traders Limited (1981) 5 SC 81, (1981) 12 NSCC page 132.

These cases are each clearly distinguishable from the instant appeal. The focal differing point between the said cases and the instant one is that the activities in these cases had a direct linkage with an operation on the high seas. A few examples amplify the point:-

“In the Jade case, the agreement was that of the salvage tug Rotesand had been contracted to tow the damaged vessel Erkowit to safety.

In the St. Elefterio case, it was an agreement relating to the carriage of goods in a ship.

The agreement in the American International Insurance Company v. Ceekay Traders Ltd. (1979-81) 12 NSCC p. 134 (1981) 5 SC 81 (AIICO v. Ceekay for short) was the insurance of goods carried by ship on the high seas. As earlier highlighted in this judgment, the linkage between the appellant’s suit and the 1st-4th respondents is the MOU which states inter alia that the sum of ($15,000.00) will be paid to the appellant in these terms:’

‘The parties hereto agree that Francis Obi Iroegbu shall be paid the sum of fifteen thousand Dollars $15,000.00) per month for services which he may render to Alpha Marine Services … (page 187 of the records, emphasis mine).

The nature of the “services which he may render”…are no where stated in the MOU. Further, the said “services” are to be rendered to “Alpha Marine Services … ” Further, although the learned counsel to the appellant has repeated for the uptenth time that the relationship between the parties relates to the use and hire of ship, nowhere it is stated exactly what the 1st – 4th respondents were “used” for nor “hired” to do. Nor is the route traversed stated. Also not stated is the nature of the services rendered to the 1st – 4th respondents on the high seas by the appellant.

The learned counsel has argued vehemently that 1st – 4th respondents constitute the “soul”, of the “raison d’ etre” of the agreement in that once the said four vessels cease operation, the agreement will also terminate.

There could be some force in this argument. However, why must the breach of the agreement be actionable in rem, why not in the ordinary nature of a breach of a contractual agreement?

To successfully bring the suit of the appellant within the provisions of section 2(3) (f) of the Admiralty Jurisdiction Act, the appellant must state clearly the nature of “usage” he put the vessels to. Equally, the injury caused to him by the vessels must be clearly spelt out. Short of these, the admiralty jurisdiction of the Federal High Court cannot be invoked. (Refer per Oguegbu, JSC in Rhein Mass v. Rivway Lines Ltd. (1998) 5 NWLR (Pt. 549) page 265).

The curious submission of the learned counsel to the appellant that the term “otherwise” used in section 2(3)(f) of the Admiralty Jurisdiction Act, 1991 should be interpreted to incorporate any and every agreement “at all as long as it is an agreement” is simply preposterous. To adopt this interpretation would mean even an agreement between the cleaner in the respondents’ house, should be brought within the purview of the AJA in case of any dispute.

As rightly submitted to by the learned counsel to the respondent, this is stretching the provision to a ridiculous extreme. The learned counsel to the respondents maintains that the provision of section 2(3)(f) of the AJA (supra) is clear and totally unambiguous. The provision makes a claim arising out of an agreement for the use or hires of a ship a maritime claim. The MOU, argues the learned counsel, is not the operation agreement between the owners of the 1st – 4th respondents and the AMSL. The MOU is equally neither a charter party nor it is of the same kind as a charter party, therefore, contends counsel, not even the ejusdem generis rule of the construction of statutes can transmute the MOU into the provisions of section 2(3)(f) of the AJA. The word “otherwise” can be interpreted only in terms of a subject relating to the use or hire of a ship. The said agreement could be in the form of a ship management, ship operation or of letters setting out the terms for the use or hire of a vessel but not the use of a company operating a ship which the MOU essentially is.

“Otherwise” as used should be interpreted in the con in which it is used, giving the word its ordinary meaning. The principal term in that provision is a claim “arising out of an agreement relating to the carriage of goods or persons by a ship or to use or hire of a ship …” Ordinarily for such an agreement to come into force, there must be (a) ship/ships (b) carriage and necessarily (c) “water”, the high seas, since ship do not operate on dry land.

The MOU which the appellant relies so much on was thoroughly analyzed by the trial Court. Being a document, this court can also analyze the same. Part of the MOU states as follows:-

Mr. Iroegbu shall perform the following services for the benefit of Alpha Marine Services, to wit:”

“A. Develop Business;

B. Oversee and approve all public relation matters;

C. Oversee all shipping matters;

D. Attend all local and international conferences and workshops in which he is required to attend;

E. Any other duty assigned to him as a Director and owner of Alpha Marine Service;

F. Control operational expenditures and prepare annual budgets.”

Now which of these services is to be classified as relating to the carriage of goods/persons or hire/use of ship? The learned counsel for the appellant has cited the AIICO v. Ceekay case (supra) as an authority for his proposition to convert all agreements into admiralty matters. In the American International Insurance Company v. Ceekay Traders Ltd. (1979-81) 12 NSCC page 134; (1981) 5 Sc. 81(AIICO v. Ceekay for short) the agreement between the parties was purely and exclusively marine based. It was an insurance policy taken out to cover the carriage of goods by sea. The statement of claim in that B case is eminently distinguishable from the one under consideration.

The statement of claim – is as follows:-

“1. The plaintiff is a duly incorporated company with its registered office at 126/128, Nnamdi Azikwe Str., Lagos.

2. The defendant is a duly licensed insurance company with its main office at 200 Broad Street, Lagos.
3. The plaintiff is a trader in, inter alia, commodities and on or about the 21st day of June, 1977 took out with defendant at Marine Open Cover Policy No. MOC 900014 for all shipments of goods and/or merchandise and/or commodities and/or frozen food of every description from ports and/or places anywhere in the world to final warehouse in Nigeria. (The plaintiff will at the trial of this suit rely on the said Marine Open Cover Policy No. MOC.900014 for its full terms and effect.)
4. Acting under the said Marine Open Cover Policy, the plaintiff on the 19th day of 1978 insured certain shipments of rice from Bangkok on the vessel JAL SEA CONDOR with the defendants and duly paid the due premium.
5. The defendant’s Certificates of Insurance Nos. 0425 to 0439 inclusive and No. 0451 were duly issued to cover the said shipments of rice with a total value of N2, 742.318 (Two million seven hundred and forty-two thousand three hundred and eighteen Naira). The plaintiff will at the trial of this suit rely on the said Certificates of Insurance Nos. 0425 to 0439 inclusive and No. 0451 for their full terms and effect.
6. On or about the 6th day of July, 1978 the said vessel JAL SEA CONDOR sank off the Coast of South West Africa with the plaintiff’s shipments of rice abroad.
7. Whereupon the plaintiff made a claim on the defendant for the insured value of the lost shipments of rice but the defendant has refused or failed to pay.
8. The plaintiff will at the trial of this suit rely on all correspondence and documents appertaining to this matter.
9. Whereupon the plaintiff claims as per the writ of summons.” (All emphases are mine).

Not one paragraph of the statement of claim of the appellant “relates to something which happens at sea, to perils of the sea…” (See per Nnamani, JSC at page 145 of AIICO v. Ceekay (supra).

Even the Ming Ren Shipping and Trading Co. Ltd. Case (supra) provide no respite to the appellant. In that case, there was a direct link between the 10 ships and the claimant. The learned counsel cites paragraphs 13, 14 and 278 of the statement of claim as bringing the suit of the appellant within the sphere of the Ming case. Nothing could be farther away from that analogy.

From the averments in the statement of claim, I am inclined to agree with the learned trial Judge that the relationship between the appellant and the 5th respondent culminated into a partnership as was captured in the MOU. It appears more like a contract of service with the understanding that payment for some special services rendered by the appellant shall be made from the proceeds of the 1st – 4th respondents. The nature of the said services have not however been shown to fall within the class of services rendered on “the high seas, to the perils of the seas.” Has the appellant employed the services of the vessels? No. Have the vessels employed to services of the appellant? No. Has the 5th respondent, the owner of the vessels employed the services of the appellant? No. The learned counsel to the respondent describes the MOU as an agreement for the internal running of the AMSL and not an agreement within the contemplation of section 2(3)(f) of the AJA. I agree. J. accorde.

The statement of claim sets out the Alpha Marine Services as the employer of the services of the Appellant. It has not been shown that the Alpha Marine Company is a ship nor has it been shown that Alpha Marine has entered into any agreement with the appellant relating to the “hire”, “use” or carriage of goods or persons by ship.”

It would be pre-mature and pre-emptive of the main suit to delve into the nature of the relationship between the parties as it relates to the Alpha Marine Company. It would also take this appeal out of its narrow and interlocutory stage. I am however of the humble opinion that the answer to the appellant’s claims lies embedded in the Articles of Association of the Alpha Marine Company not in the MOU.

The Article of Association was not placed before the trial court, only the MOU was.

The learned trial Judge perused the MOU and found therein that the parties agreed to some kind of partnership, which did not fall within the admiralty jurisdiction of the court. The Judge was right to restrain itself within the terms of the MOU, which was relied upon by both parties. I think it is a case of misplaced aggression. No doubt it is a complex situation, it is not however a marine case to be managed under the AJA.

In the circumstances, an action in rem does not lie to the appellant against the respondents.

Issue Two

In his determination to pin the appellant’s claims on the respondents, the learned counsel has also called in aid the principle of statutory lien under the provisions of section 5(4) of the Admiralty Jurisdiction Act (supra).

The learned counsel relies on the opinion of the learned author Louis Mbanefo in his book Nigerian Shipping Practice and Procedure (the year and particulars of publication are not stated) at page 73 to wit that:-

“The statutory liens arise in connection with the claims enumerated in section 2(3) of the Decree but a number of pre-conditions are applicable:-

‘(i) The claim must arise in connection with a ship;

(ii) The person liable on the claim when the cause of action arose must be either:-

(a) The owner of all the shares in the ship;

(b) The charterer of or person in control of the ship under a demise charter (or bareboat charter);

(iii) A sister ship belonging to the same owner may be proceeded against provided that the owner owned the offending ship as regards all the shares all the shares therein.”

These preconditions exist in the appellant’s case, says the learned counsel, the 1st – 4th respondents are the offending vessels and the 5th respondent who has also broken faith with his contractual agreement with the appellant is the owner of the 1st – 4th respondents. The 1st – 4th respondents are therefore liable to be arrested and detained until the grouse of the appellant is made good.

The learned counsel to the respondents maintains that by paragraph 7 of the appellant’s statement of claim, the appellant makes a money claim allegedly due to him for services rendered to Alpha Marine Services Limited. Also the reimbursable expenses claimed were for expenses allegedly incurred in the course of rendering such services.

The learned counsel submits that to qualify as maritime claims under section 2(3)(k) and (p) of the AJA, the services must be rendered to the ship while the expenses must be incurred in the course of rendering services to the ship. That way, an action in rem lies under the provisions of section 5 of the AJA Act. Consequently, argued counsel a vessel can then be arrested under the provisions of Order vii rule 1(1) of the Admiralty Jurisdiction Procedure Rules of 1993. The learned counsel refers to the case of Messrs N. V Scheep v. M. V S. Araz (2000) 12 SC (Pt. 1) 164 (2000) 15 NWLR (Pt.691) 622 to buttress his submission. I agree entirely with the submission of the learned counsel.

Maritime liens are a revered and restricted class of admiralty rights which are enforceable in rem following the traditional practice of the sea merchants. These principles are developed for the convenience of resolving disputes which arise on the high seas and in relation to maritime related transactions and injuries suffered there from. Nations of the world are necessarily involved since no one nation has control over the high seas.

Several nations set up special courts to administer maritime related cases otherwise known as admiralty jurisdiction. In Nigeria, the Federal High Court is conferred with this special jurisdiction under the Admiralty Jurisdiction Act of 1991. (AJA) section 5(3) of the AJA provides for maritime lien/statutory liens, which the learned counsel for the appellant refers to.

Section 5(3) of the AJA defines maritime lien as: a lien for:-

“(a) Salvage or

(b) Damage done by a ship or

(c) Wages of the master of a member of the crew of a ship or

(d) Masters disbursements.’

Sections 2 and 18 of the AJA have respectively, enlarged the scope of maritime liens – in the enactment of statutory right in rem under which ships and vessels can be saddled with the liabilities of their owners, charterers or operators and these liabilities “travel” with the vessels until made good, or they become statute-barred by the effluxion of time. Section 18(1)(b) of the AJA allows a maximum period of three years. Only maritime cases enjoy the liens.

The learned counsel for the appellant has failed to show how the alleged sins of the Alpha Marine Services Company in failing to pay up his claims can be imputed to the 1st – 4th respondents.

Issue Three

In other to fulfill all righteousness, I will now consider issue two of the appellant’s brief which raises the question of fair hearing. The learned counsel for the appellant has alleged that the learned trial Judge denied the appellant his constitutional right of fair hearing as provided under the provisions of section 36(1) of the 1999 Constitution. Two reasons are articulated in support of this issue, (1) the learned trial Judge ignored the submission of learned counsel for the appellant in his ruling. (2) Affidavit evidence in an interlocutory application is a veritable tool in adjudication which assists the court to address the real issues at stake between the parties. The learned trial Judge therefore failed in its duty to the appellant. Cited in fortress of this submission are the following cases:-

1. Long John v. Blakk (1998) 6 NWLR (Pt. 555) page 524.
2. Ayoola v. Baruwa (1999) 11 NWLR (Pt. 628) page 595 ratios 13.
3. Bayol v. Ahemba (1999) 10 NWLR (Pt. 623) pg. 381 ratio 4 Bayol v. Ahemba (supra).
4. Brawal Shipping Limited v. F. I. Onwadike Co. Limited (2000) 11 NWLR (Pt. 678) page 387)

It has been stated time without number that the address of counsel is no more than a handmaid in adjudication and cannot take the place of the hard facts required to constitute credible evidence. No amount of brilliance to a final address can make up for the lack of evidence to prove and establish or to disprove and demolish points in issue. (Refer per Edozie, JCA as he then was, in Michika L. G. v. National Population Commission (1998) 11 NWLR (Pt. 573) page 201 at 212, Bwanle Tapshang v. Daluk Lekret (2000) 13 NWLR (Pt. 684) page 381 at 388).

In this appeal, one could say that the volume of the submission of the learned counsel could not transform an ordinary contractual agreement into a maritime agreement actionable in rem under the admiralty jurisdiction of the Federal High Court.

Like the proverbial lizard which fell from the Iroko tree, the learned counsel for the appellant is irked that inspite of his brilliant arguments and submissions on the numerous averments in the affidavit in support, the learned trial Judge shut his eyes to them. The learned counsel charges that the said averments were uncontroverted.

In answer to this point, the learned counsel to the respondent submitted that the dispositions allegedly ignored by the learned trial Judge were a contravention of the provisions of section 87 of the Evidence Act, Cap. E14, Laws of the Federation of Nigeria, 2004. They were thus rightly discountenanced. The said paragraphs are paragraphs 28-30 on page 192 of the records. These are hereby reproduced for the ease of reference:-

“(a) That the plaintiff’s claims in this suit arose out of an agreement relating to the use or hire of the 1st – 4th defendants which are ships or vessels.

(b) That all the plaintiff’s claims in this suit are all general maritime claims and as such could be commenced as action in rem.

(c) That the 1st-4th defendant was properly and lawfully arrested”.

Clearly, these are conclusions of law, a preserve of the Bench and most certainly not competent averments in an affidavit which should state facts and no more.

What a trial Judge is bound to fully consider are the issues placed before it within the facts proffered and the law. Once the learned trial Judge has adequately addressed the issues, it is in consequential that he did not state in the judgment that he has considered this particular averment or not in arriving at the said decision.

No volume of words in the address of learned counsel can enlarge the scope of an issue for determination placed before a court. In this appeal, the two issues placed before the trial court sought to establish whether the suit of the appellant is a maritime case. The address of the learned counsel cannot add to the value of the case of his client.

The instrument placed before the trial court was the MOU. The learned trial Judge considered the MOU within the relevant law and the facts placed before it and drew its own conclusion which did not favour the appellant. The averments in an affidavit in support of an application are facts or should be facts to which the court is bound to apply the relevant law. The learned trial Judge and indeed, every Judge, at whatever level, is entitled to take a wrong decision provided, no mischief is intended, apparent nor provable. God almighty alone is the infallible Judge. No miscarriage of justice has occurred in the circumstances of this appeal. No right and least of all that of fair hearing have been undermined.

By pointing to the 5th respondent, it appears the appellant seeks to lift the veil of incorporation. Should that be the case, he is a share holder and one of the directors in the Alpha Marine Company, why has he decided to close his eyes to the Alpha Marine Company and gone rather, after the 5th respondent via the instrumentality of the 1st – 4th respondents? No doubt, the principle of the separate legal personality of a registered company has since Salomon v. Salomon (1897) AC 22 become a known legal principle in Nigerian Courts. (Refer Marina Nominees Ltd. v. F.B.I.R. (1986) 2 NWLR (Pt. 20) 48 at 55).

Viewed in this prospective, it is difficult to haul into the admiralty jurisdiction, the suit of the appellant which seeks damages for the breach of a contract between himself and Alpha Marine Company solely owned by him and the 5th respondent. The appellant has not established that he either hired the services of the 1st – 4th respondents nor had they hired his services.

He has also not identified any service he rendered directly to the 1st – 4th respondents for which either them or their owner should be held responsible. The appellant has misdirected his claims; he seeks remedy where no liability lies to him. The trial court was right in discharging the 1st – 4th respondents unconditionally. In the 1st – 4th respondents, what the appellant seeks is to enjoy lien he is not entitled to….

I find no good cause to upset the decision of the trial court which is hereby affirmed. This appeal is without merit and is accordingly dismissed.

A cost of N10, 000.00 is awarded to the respondents.

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Other Citations: (2007)LCN/2293(CA)