ADDISON UNITED NIGERIA LIMITED v. LION OF AFRICA INSURANCE LIMITED
(2010)LCN/3933(CA)
In The Court of Appeal of Nigeria
On Wednesday, the 7th day of July, 2010
CA/L/12/2007
RATIO
REJECTED EXHIBIT: EFFECT OF A REJECTED EXHIBIT
The effect of a rejected exhibit is that it has no probative value, once a document has been rejected in evidence it cannot have any probative value for the determination of the Issues. See Terab v. Lawvin (1992) 3 N.W.L.R. (pt.231) CA 569. It is therefore trite law that a document once rejected cannot be made use of and thus has no value. See Agbaje v. Adigun (1993) 1 N.W.LR. (pt.269) 261 at 263, ATP and Jas Nigeria Limited v. Drake and Skull (Nigeria) Ltd. (2000) 3 N.W.L.R. (pt.649) 484 at 491, Jimoh Adebakin v. Sabitiyu Odujebe (1973) 1 N.M.L.R. 148. PER REGINA OBIAGELI NWODO, J.C.A.
GROUND OF APPEAL: CONTENT OF A GROUND OF APPEAL
A Ground of Appeal is consisted of the error of law or fact alleged by an Appellant as the defect in a judgment appealed against and relied upon to set aside the judgment. Metal Const. (W.A.) Ltd. v. Migliore (1990) 1 N.W.L.R. (pt.126) 299 SC. PER REGINA OBIAGELI NWODO, J.C.A.
GROUND OF APPEAL: CIRCUMSTANCE UNDER WHICH AN APPELLANT WILL BE ALLOWED TO RAISE ISSUES THAT WAS NOT RAISED, TRIED AND CONSIDERED IN THE COURT BELOW
A Ground of Appeal must be couched in such a way as to attack the judgment of a court on the issue decided by it. An Appellant will not be allowed to raise on appeal a question which was not raised, tried and considered in the court below unless the question involves substantial points of law and it is clear no further evidence can be adduced which will affect the decision on them in which case leave of court will be sought. See Owie v. Ighiwi (2005) 5 N.W.L.R. (pt.917) 184 SC, Bankole v. Pelu (1991) 8 N.W.L.R. (pt.211) 523 SC, Koya v. U. B. A. Ltd. (1997) 1 N.W.L.R. (pt.481) 251 SC. PER REGINA OBIAGELI NWODO, J.C.A.
CONTRACT OF INSURANCE: WHEN IS A CONTRACT OF INSURANCE CREATED
A contract of insurance is created where there has been an unqualified acceptance by one party of an offer made by the other party. Consequently, if the parties are still negotiating, there can be no contract. See Leadway Ass. Co. Ltd. v. J. U. C. Ltd. (2005) 5 N.W.LR. (pt.919) 539 CA. PER REGINA OBIAGELI NWODO, J.C.A.
CONTENT OF CONTRACT OF INSURANCE: CONTENT OF A CONTRACT OF INSURANCE AND WHAT A PLAINTIFF MUST DO FOR HIM TO SUCCEED IN AN ACTION UNDER SUCH A CONTRACT
The contract of insurance contains the terms and conditions of the contract including the rights and liabilities of the parties thereto. For a Plaintiff to succeed in an action under such a contract he must bring himself within the term and conditions of the policy or contract. See Yadis Nigeria Ltd. v. G.N.I.C. Ltd. (2007) All F.W.L.R. (pt.370) 1348 SC. PER REGINA OBIAGELI NWODO, J.C.A.
JUSTICES
MONICA BOLNA’AN DONGBAN-MENSEM Justice of The Court of Appeal of Nigeria
PAUL ADAMU GALINJE Justice of The Court of Appeal of Nigeria
REGINA OBIAGELI NWODO Justice of The Court of Appeal of Nigeria
Between
ADDISON UNITED NIGERIA LIMITED Appellant(s)
AND
LION OF AFRICA INSURANCE LIMITED Respondent(s)
REGINA OBIAGELI NWODO, J.C.A. (Delivering the Leading Judgment) The Appellant as Claimant in the High Court of Lagos State commenced an action against the Defendant now the Respondent by writ of summons filed on 28/6/02 wherein he claimed the sum of N23,207,250.00 (twenty three million, two hundred and seven thousand, two hundred and fifty naira) from the Defendant being the value of the goods damaged by fire which goods were insured with the Defendant under Fire and Special Perils Insurance Policy No. 59/4/424061/J and interest on the said sum at the rate of 21% per annum from 13th April 2001 till payment. The parties filed and exchanged pleadings. Each party called one witness at the end of which written submission were filed and adopted. In a considered judgment the learned Trial judge in the three Issues formulated for determination found under Issue 1 & 2 that the Claimant had insurable interest in the sunflower oil insured with the Defendant vide Exhibit ‘P1’ and that the contention on whether Claimant paid custom duty was an allegation of a criminal offence which must be proved beyond reasonable doubt and that the onus was on the Defendant to put credible and precise evidence of the commissions of that offence before the court which he failed to prove the criminal offence. On the Third Issue the learned Trial judge held:
“the Claimant failed to prove in any manner how many cartons of the sunflower oil insured in Exhibit P1 was destroyed by the inferno of 13 April 2001. It failed to prove its claim and I so hold in all therefore the Claimant’s claim fails in its entirety and is accordingly hereby dismissed”.
The Claimant dissatisfied with the decision of the learned Trial judge filed a Notice of Appeal on 22/05/06 containing 5 Grounds of Appeal.
In compliance with the Rules and Practice of the Court of Appeal learned counsels filed and exchanged Briefs of Argument after the Appeal was entered. At the hearing of the Appeal on the 26-4-10 the learned counsel for the Appellant Mr. M. N. O. Olopade adopted the Appellant’s Brief deemed filed and served with leave of court on 24/2/09.
The Respondent’s counsel Mr. Opeyemi Usiola adopted the Respondent’s Brief deemed filed and served with leave of court on 01-07-09.
Learned counsel for the Appellant in his Brief formulated the following Four Issues for determination:
“1. Whether the trial court was right to have based its decision on Exhibit P2 REJECTED which was a document tendered but rejected.
2. Whether the lower court was right to have held that failure of the appellant to keep stock card was a breach of fundamental term of the insurance contract and that breach alone was enough to repudiate the contract in view of the provisions of the Insurance Decree of 1997 which was the governing law when the contract was entered into by the parties.
3. Whether upon the totality of the evidence before the lower court, the plaintiff had failed to prove its case for liquidated demand.
4. Whether the lower court was right to have held that reasons given by the respondent for termination of the contract of insurance were wrong but nevertheless found that the appellant was not entitled to judgment”.
The learned counsel for the Respondent Mr. Opeyemi Usiola in the Respondent’s Brief distilled Four Issues which reads as follows:
“1. Whether it could be said that the trial judge premised his decision on exhibit P2 marked “rejected” because of his passing remarks on the said exhibits.
2. Whether the failure of the Appellant to maintain and keep store card/book in accordance with the policy, constituted a fundamental breach which on its own, entitled the Respondent to repudiate the contract.
3. Whether upon the totality of the evidence before the lower court, the Appellant had failed to prove its claims for liquidated demand.
4. Whether it could be said from the judgment that the court actually found that all the three issues raised by the Respondent failed and nevertheless dismissed the Claimant’s claim”.
The Four Issues raised in the Respondent’s Brief are similar except for the use of phrase and introduction of the Insurance Act by the Appellant in Issue 2. However, I will adopt the Issues formulated by the Appellant under Issue 1, 3, & 4 and adopt Issue 2 as formulated by Respondent counsel in the determination of this appeal and comment on the Issue of the “Act”. I will briefly state the facts that lead to the present case. The Appellant in consideration of the premiums paid by them to the Respondent to insure ideal vegetable oil worth N255,750,000.00 (two hundred and fifty five million, seven hundred and fifty thousand naira) was issued with a Fire and Special Perils Policy of insurance with No. 59/4/424061/J dated 28 of Sept., 2000. The quantities of the ideal vegetable oil were packed in a warehouse under the Appellant’s control. On Friday the 13th April, 2001, the stored ‘oil’ were destroyed by fire which gutted the warehouse. The Appellant notified the Defendant of the loss and damage. The Respondent on notification engaged the services of an assessors/investigators, Messrs Kek Nigeria Limited, the company investigators who in the cause of investigation demanded from the Appellant’s Sales Manager the storage records, or a register or invoice which could show the actual balance of the cartons of the goods which existed in the warehouse as at April 12th, 2001 before the fire incident of April 13, 2001. The sales manager could not supply the documents requested by the investigators. The Respondent based on the general report of the company Kek Nigeria Limited and other reasons wrote to the Appellant declining liability to pay for the loss of the goods by fire.
The Appellant then proceeded to the High Court and filed the present case.
Under Issue One raised in the Appellant’s Brief, whether the trial court was right to have based its decision on exhibit 12 which was a document tendered but rejected, it is the submission of learned counsel to the Appellant Mr. M.N.O. Olopade that the learned Trial judge relied heavily on the rejected document before holding that the Appellant was in breach of exhibit P1 and thereby occasioned a substantial miscarriage of Justice because without the said reliance the court would have found for the Appellant.
It is the further submission of the learned counsel that the law is that the court should not act on a rejected document in evidence. He cited Terab v. Lawani (1992) 3 N.W.LR. (pt.231) at 569 to 597, U.B.N. v. Ozigi (1994) 3 N.W.LR. (pt.333) pg.385.
Learned counsel for the Respondent Mr. Opeyemi Usiola contends that the trial court only made a passing remark on exhibit P2 marked rejected by examining the content and gave his opinion and that the opinion does not embody the resolution of the court as it is a mere obiter dicta. He referred to the cases of U.T.C. Nig. Ltd. v. Pamotic (1989) 2 N.W.L.R. (pt.103) 244 at 293, Afro Continental Nig. Ltd. v. Ayantuyi (1995) 9 N.W.L.R. (pt.420) 411 at 435.
He submits that the opinion of the learned Trial judge does not represent the ratio decidendi of the judgment appealed against. He referred to Bamgboye v. University of Ilorin (1991) 8 N.W.L.R. (pt.207) pg. 1, Rossek v. A.C.B. Ltd. (1993) 8 N.W.LR. (pt.312) pg.382.
Learned counsel submitted that the Honourable judge did not reach any decision on “exhibit P2 rejected” contrary to the submission of the Appellant in its Brief of Argument. It is his submission that the complaint of the Appellant as shown in grounds 1 is against an obiter dictum of the lower court which is merely incidental to the determination of the Issues before the court.
Basically, Issue One is founded on the complaint that the learned Trial Judge based its final decision on exhibit P2 which was marked rejected during trial. The Appellant sought to tender in Evidence the stock cards of their stock. The Respondent’s counsel objected to the admissibility of the stock cards. The learned Trial Judge ruled at page 41 of the Record:
“By paragraph 14 of the Reply dated 15/09/03 the Plaintiff had pleaded that these documents had been destroyed. It cannot now supply evidence contrary to its pleading.
Accordingly, the file of stock cards is inadmissible. It is rejected and marked REJECTED”.
This decision was not appealed against. I must further observe that there is nowhere in the record of proceeding from pages 40 to 44 of the Record where the learned Trial Judge recorded the rejected document as exh. P2 as the rejected document. The learned Trial Judge did not mark the Rejected document Exhibit P2. 1 observe the Registrar marked on the Document Exh. P2. In U.B.N. v. Ozigi (1994) 3 N.W.L.R. (pt.333) SC 385, the Supreme Court held that the document once rejected should be marked as rejected and not as an exhibit and such document is irrelevant and the contents cannot be used for the determination of any issue in the case.
The learned Trial judge having merely marked the document ‘rejected’ the marking should be the guiding description. The effect of a rejected exhibit is that it has no probative value, once a document has been rejected in evidence it cannot have any probative value for the determination of the Issues. See Terab v. Lawvin (1992) 3 N.W.L.R. (pt.231) CA 569. It is therefore trite law that a document once rejected cannot be made use of and thus has no value. See Agbaje v. Adigun (1993) 1 N.W.LR. (pt.269) 261 at 263, ATP and Jas Nigeria Limited v. Drake and Skull (Nigeria) Ltd. (2000) 3 N.W.L.R. (pt.649) 484 at 491, Jimoh Adebakin v. Sabitiyu Odujebe (1973) 1 N.M.L.R. 148.
In the light of the settled law the learned Trial judge cannot rely on any document marked rejected as rightly submitted by the learned counsel for the Appellant. The question arising therefrom is whether the learned Trial judge relied on the rejected document and dismissed the Appellant claim on the basis of the file of stock cards marked ‘REJECTED’.
The learned Trial judge in his judgment on page 178 of the record had this to say on the document rejected:
“Yet, under his evidence in chief; PW1 proceeded to tender such “stock records”, which was rejected and marked Exhibit – P2 REJECTED for obvious reasons of being evidence contrary to the pleadings.
For whatever it is worth (and although I am quite conversant with the position of the law that a rejected document stands as if it was never mentioned in the proceedings) let me digress a little to expose the untruthfulness of the Claimant’s contention in this case as regards this issue of Mandatory Documentary Evidence.
Even Exhibit – P2 REJECTED is not a document of the Claimant. It is a twenty-one paged document.
Not a single sheet of it is in the name of the Claimant. All but one of the twenty-one sheets are in the name of AFROCONTINENTAL NIGERIA LIMITED, the remaining one in the name of APROFIM ENGINEERING AND CONSTRUCTION NIGERIA LIMITED.
In one breadth, the document was not its document, in another breadth, it said the documents had all been destroyed in the inferno of 13th April, 2001 and yet sought to tender a “reincarnated” one at trial.
No wonder the Defendant contended that it did not have any goods in the warehouse at the date of the inferno. Enough for my digression.”
From the above statement of the learned Trial judge it is indisputable that the learned Trial judge is aware of the legal position on rejected document but decided to proceed and express his views on the document already rejected by the court. This procedure was unwarranted and most unnecessary. The court cannot review the document rejected by looking at its contents and expressing a view on a document of no probative value. It was a complete waste of time. The word digression used by the learned Trial judge is clear on its meaning and import. The word “Digress” in the Oxford Advanced Learners Dictionary 6th Edition is defined as “to start to talk about something that is not connected with the main point of what you are saying…” The learned Trial Judge used the phrase “digress”. By the ordinary meaning of the said word his statements on the rejected document had no effect on him in determining the question of whether the Claimant proved its case. There was no other document tendered relating to shock sheet/records.
The learned Trial Judge found:
“Suffice it however to say, that the Claimant failed to prove that it kept the required documenting stock sheet/records provided for in exhibit – P1 and also failed to prove that it kept same if any, in a fire-proof safe as also then stipulated”.
The above portion of the Judgment is clear. This is binding part of the decision of the learned Trial Judge. It is the ratio decidendi. The pronouncement of the learned Trial Judge on stocks was not one of the Issues raised. The digression by the learned Trial Judge is an orbiter dicta as rightly submitted by the learned counsel for the Respondent. The statement made by the learned Trial Judge when he digressed merely constituted an orbita dicta which was not necessary as it did not influence the decision of the court. See Afro-Cont (Nig.) Ltd. v. Ayantuyi (1995) 9 N.W.L.R. (pt.420) SC 411, Saude v. Abdulahi (1989) 4 N.W.L.R. (pt.116) 387, Bamgboye v. University of Ilorin (1991) 8 N.W.L.R. (pt.2O7) 1 at pg. 24 etc.
The ratio decidendi contained in a Judgment of the trial court constitutes the authority for which the case stands while the orbiter dicta are other expressions contained in the judgment and they only have a persuasive effect in other occasions. See Abacha v. Fawehinmi (2000) 4 SC (pt.11)1, Awoniyi v. Registered Trustees of the Rosicrucians Order, AMORC (Nigeria) (2000) 6 SC (pt.1) 103. The learned Trial judge did not rely on the rejected document to arrive at its decision to have occasioned a substantial miscarriage of justice, I have gone through the entirety of the Judgment and cannot hold that the learned Trial Judge’s digression amounted to a miscarriage of justice. The digression did not form the basis of the final decision. See Bamgboye v. University of Ilorin (1991) 8 N.W.L.R. (pt.207) 1 C.A. I resolve Issue One against the Appellant.
Under Issue 2, whether the failure of the Appellant to maintain and keep store card/book in accordance with the policy, constituted a fundamental breach which on its own, entitled the Respondent to repudiate the contract.
Mr. Olapade’s submission is that the lower court failed to consider whether the Respondent had proved to the lower court that the breach was material and relevant to the risk or loss insured against before coming to the conclusion that the breach was a fundamental term of the contract. It is his submission that the breach was not material and the Respondent failed to prove it was material. It is his further submission that even if the breach is material it must also be relevant to risk insured against. The Defendant failed to prove to the lower court that the breach was the proximate cause of the loss and the lower court also failed to consider this before arriving at its decision. He referred to S. 59(2) of the Insurance Decree 1997 submitting there is no prove by the Respondent that the material breach was relevant to the loss and that the breach was fraudulent or that it was a fundamental breach. He also contended there was no evidence that the Claimant was fraudulent in not providing or keeping the stock card. He urged the court to hold that in view of the provision of Insurance Decree of 1997 that breach of material term by the Plaintiff alone will not suffice to repudiate the insurance contract by the Defendant. The breach must be relevant to the risk or loss insured and that the breach was fraudulent on the part of the Claimant which the lower court failed to consider before arriving at its decision.
Mr. Usiola in the Respondent’s Brief submitted that failure of the Appellant to maintain and keep score card/book in accordance with the Policy Exhibit ‘P1’ constituted a fundamental breach upon which the Respondent was entitled to repudiate the contract.
Referring to Exh. ‘P1’ and the attachment to exhibit ‘P1’ it is his submission that the warranty on page 2 of the attachment to Exh. P1 is that the Appellant shall keep stock sheet or stock books as documentary evidence of the value of the stocks held immediately prior to the incident of 13th April 2007. That the word “shall” connote it is mandatory. He cited the case of Onochie v. Odogwu (2006) 2 SC (pt.11) pg.153.
Learned counsel further contended that the requirement that Appellant furnish stock books or stock sheets is a condition precedent to any claim for indemnity. It is his submission that Appellant’s inability to produce the mandatory stock books or stock sheets is tantamount to a breach of the warranty in exhibit ‘P1’ and he cannot be heard to claim indemnity from the Respondent under the policy exhibit ‘P1 for the damage to the insured goods. He cited the case of Matter v. Norwich Union Fire Insurance & APO (1965) NSCC (vol.4) 119 pgs. 121-122.
Learned counsel submits further that parties are bound by the conditions contained in the policy. He cited Northern Assurance Co. Ltd. v. Wuraola (1969) N.S.C.C. pg.22. Finally he submitted that the Appellant misconceived S.59(1) of the Insurance Decree 1997 and that the production of stock book/sheet by the Appellant is a term material and relevant to risk insured against in this action.
It is imperative at this stage to emphasis the purposes of Grounds of Appeal from which Issues are distilled. A Ground of Appeal is consisted of the error of law or fact alleged by an Appellant as the defect in a judgment appealed against and relied upon to set aside the judgment. Metal Const. (W.A.) Ltd. v. Migliore (1990) 1 N.W.L.R. (pt.126) 299 SC. A Ground of Appeal must be couched in such a way as to attack the judgment of a court on the issue decided by it. An Appellant will not be allowed to raise on appeal a question which was not raised, tried and considered in the court below unless the question involves substantial points of law and it is clear no further evidence can be adduced which will affect the decision on them in which case leave of court will be sought. See Owie v. Ighiwi (2005) 5 N.W.L.R. (pt.917) 184 SC, Bankole v. Pelu (1991) 8 N.W.L.R. (pt.211) 523 SC, Koya v. U. B. A. Ltd. (1997) 1 N.W.L.R. (pt.481) 251 SC.
I have gone through the record of appeal with particular reference to the written submission of the learned counsels and the Judgment of the court below, the learned Trial Judge made no pronouncement on the provision of the section of the Insurance Act of 1997 stated under Particulars in Ground 2, yet the Appellant without leave of court raised that point as complaint under paragraph C of the Particulars of Error in Ground 2. However, particulars a, b, d & e are related and founded on the Ground 2 and Issue 2.
I will proceed to consider Issue 2 as distilled from Ground 2 by the Respondent’s counsel.
Both parties agree there was a contract of insurance vide exhibit ‘P1’ titled Fire and Special Perils Policy (material damage). A contract of insurance is created where there has been an unqualified acceptance by one party of an offer made by the other party. Consequently, if the parties are still negotiating, there can be no contract. See Leadway Ass. Co. Ltd. v. J. U. C. Ltd. (2005) 5 N.W.LR. (pt.919) 539 CA.
The contract of insurance contains the terms and conditions of the contract including the rights and liabilities of the parties thereto. For a Plaintiff to succeed in an action under such a contract he must bring himself within the term and conditions of the policy or contract. See Yadis Nigeria
Ltd. v. G.N.I.C. Ltd. (2007) All F.W.L.R. (pt.370) 1348 SC.
The learned Trial judge in his judgment on page 179 of the record of appeal held:
“The terms of this Mandatory Documentary Evidence Warranty Clause – Exhibit – P1 are very simply worded, unambiguous and very clear.
From the evidence before me and this agreement of the parties I find no hesitation or inhibition howsoever in coming to the conclusion that that clause was a fundamental term of the contract of Insurance Exhibit – P1 between the parties.
It has prescribed a mode of keeping those vital records. It stated that that SHALL be complied with.
For the avoidance of doubt other provisions of Exhibit – P1 clearly stated that breach of that provision among others shall constitute a fundamental breach and entitle the Defendant to decline liability thereunder.
For it is very logical, how does the Defendant know what to pay, if there’s no record of the quantity of goods left at the warehouse when the fire gutted the place”.
The learned Trial judge based its decision on the contents of the contract policy Exhibit ‘P1’ and the warranty. In effect the court interpreted the terms and conditions of the contract. The Appellant’s contention is that the learned Trial judge failed to consider whether the Respondent had proved to the lower court that the breach of not keeping a stock card was material and relevant to the risk or loss insured against before coming to a conclusion and that even if the breach is material. It must be relevant to the risk insured against which Defendant failed to prove to the lower court.
The contents of Exh. ‘P1’ are clear and unambiguous. The general rule is to adopt a liberal approach in the interpretation of document. The main memo in Issue in the present case in Exh. ‘P1’ is Memo 5 titled Documentary Evidence Warranty which reads as follows for emphasis:
(a) That in the event of a claim for loss arising under item(s) of this policy, it is warranted by the insured that he/she/they will produce Documentary Evidence in English of the amount of value of the items or stocks held immediately prior to the happening of the loss.
(b) that the insured keeps and during the whole of the currency of the policy shall keep a complete set of Books. Accounts and Stock Sheets or Stock Books showing a true and accurate record of all business transactions and stock in hand and that such Books shall be locked in a fire-proof safe or removed to another building at night, and at all times when the premises are not actually open for business.
This Memo 5 is part of the contract of insurance. A literary interpretation of the words therein shows first that the insured that is the Appellant in the event of a claim for loss will produce Documentary Evidence of the items or stocks held prior to the happening of the loss. The insured- the Appellant shall keep a complete set of books, accounts and stock sheets or stock books showing a true and accurate record of the transactions, the stock in hand and the books shall be locked in a fire proof safe or removed to another building at night and all times the premises are not open for business.
The terms of the policy the learned Trial Judge rightly interpreted as mandatory. The Appellant by virtue of Memo 5 is the party to produce documentary evidence of the stocks held prior to the loss in the event of a claim under the policy. The onus of establishing the existence and production of stock books rest on the Appellant not the Respondent. The Appellant cannot ignore the terms of the policy which he voluntarily conceded too, it is binding on him. Furthermore, under the paragraph claims condition in Exh. ‘P1’ the Appellant shall produce, procure and give to the Respondent all particulars, books, vouchers, invoices, duplicates or copies in respect to the claim. Therefore, the Appellant by the terms of the policy must produce documentary evidence on the stocks at time of loss. This term was not observed. The onus was on the Respondent to raise as a defence the non-compliance to the terms of the contract. It then shifts to the Appellant to show and produce the documentary stock sheet and records in line with the policy terms. The risk insured was the loss of the vegetable oil packed in the warehouse by fire. Fire insurance is a contract by which the insurer undertakes in consideration of the premium to indemnify the insured against all losses in his house, building or merchandise. Therefore, to ascertain what should be paid the quantity of the goods destroyed must be clear and specific.
This can be deduced from the oral evidence or documents ie.; daily sales, stock sheets. In the instance case, the parties agreed to Mandatory Documentary Evidence as pre-condition to any liability.
The learned Trial Judge rightly found that the clause was a fundamental term of the contract of insurance between the parties. The ascertainment of the quantum of loss no doubt is fundamental the production of documentary evidence is a term in the warranty. The question is whether the production of documentary evidence is a condition precedent as to make it obligatory on the part of the assured to fulfill such a condition before he can take advantage of the insurance cover.
Like I earlier stated in this judgment a liberal construction of the warrant shows clearly that compliance by the Appellant with the term as to documentary evidence is a condition precedent, it is not a mere warranty for which breach can only give rise to an action in damage. The production of the documentary evidence is tied to liability.
Learned counsel for the Appellant contended that the onus is on the Respondent the insurer to prove the breach. The Supreme Court in the case of Northern Assurance Co. Ltd. v. Wuraola (1969) N.S.C.C. pg.22 decided that:
“The breach of a condition precedent is a matter which as in all cases of contract must be proved by the party who will stand to benefit from the occurrence of that breach and normally in a policy of insurance, this is the insurer. See Bond Air Services Ltd. v. Hill (1955) 2 Q.B. 47 (especially per lord Goddard, C.J. at p.426)”.
The failure of the Appellant to present admissible documentary evidence of the available stocks in the warehouse at the time of the fire incident was a breach of a fundamental term of the insurance contract. The terms in the warranty are not discretionary as regards documentary evidence. It is mandatory. The law on fulfillment of terms and conditions of the policy and endorsement therein is succinctly stated in Halsbury’s Laws of England, 3rd Edition Vol.22 pg.226 in the following words:
“If a condition is framed in general terms, performance is adequate if it covers the substance of the matter; but, if the condition goes into details, performance must be strictly in accordance with the detail required, and, however burdensome or immaterial they may appear to be, they cannot be disregarded. It is, however, sufficient in such a case if the precise letter of the condition is performed in the most literal sense; the insurers cannot require the assured to go beyond the precise terms of the condition, or complain that a literal performance does not protect them adequately”.
The Supreme Court in Mattar v. N.U.F.I. Society Ltd. & Anor. (1965) N.S.C.C. pg.119 held that the Plaintiff had undertaken to keep a stock sheet showing the goods he had in hand, his failure to do so was a breach of a warranty in the policy containing a precise condition of detail and that breach was fatal to his claim.
The learned Trial Judge in the instance case was right to hold that the Appellant is in breach of a fundamental term of the insurance contract when he failed to present admissible stock cards. Issue 2 fails as it is resolved against the Appellant.
Under Issue 3 and Issue 4, whether upon the totality of the evidence before the lower court the claimant had failed to prove its case for liquidated demand and whether the lower court was right to have held that reasons given by the Respondent for termination of the contract of insurance was wrong but nevertheless found that the Appellant was not entitled to Judgment.
It is the contention of the Appellant’s counsel that the lower court found that the Claimant’s evidence on the quantity of ideal oil gutted by fire was not controverted by the Defendant, yet it still held contrary to the evidence before the court that the Claimant did not prove its case. It is his submission relying on S.76 and S.77 of Evidence Act that the issue of stock card can still be proved by direct oral evidence. It is his contention that the oral evidence of PW1 is enough to establish the claim of the Claimant in particular when they were uncontroverted. It is his submission that the lower court having found the quantity of the “ideal oil” was relevant and the evidence of PW1 on same, the court should have found for the Applicant.
He referred to Exhibit D5 contending that failure of the Respondent to deny the quantum of the vegetable oil in Exhibit D5 is tantamount to supporting the claim of the Claimant for which the lower court should have regarded exhibit D5 as an exception to the law that Plaintiff must rely on the strength of his own case to succeed and not on the weakness of the Defendant. He cited Ogbuokwelu v. Umeanafunkwa (1994) 4 N.W.L.R. (pt.341) at 676 pg.680, he urged court to hold Plaintiff prove its case.
The learned counsel for the Respondent contention is that Exhibit ‘P1’ provides for conditions precedent to any liability of the Respondent and that the Appellant failed to produce its stock sheets when requested by Kek Nigeria Limited and that in the absence of stock cards, the Respondent will not be bound to accept liability. It is his submission that the Respondent can lawfully repudiate the contract on the Claimant’s failure to produce stock sheet/report as envisaged by the insurance contract notwithstanding that it is not a ground contained in Exhibit D5. It is his submission that the failure of the Appellant to produce stock records on demand is a breach of warranty that entitled the Respondent to repudiate the contract without giving notice.
The Appellant’s claim in the lower court is for the sum of N23,207,250.00 (twenty three million, two hundred and seven thousand, two hundred and fifty naira) against the Defendant being the value of goods damaged by fire which were insured by the Defendant under an Insurance Policy No. 59/4/424061/J. The claim therefore is based on the Insurance Policy. A construction of the terms and conditions of that policy is the determinant factor on whether the Respondent as the insurer should pay for the damaged goods.
Exhibit D5 is a letter written by the Respondent to the Appellant rejecting liability on the claim for 3 reasons: none disclosure of material fact to the underwrites at inception of policy, no evidence of custom duties paid and need for the Appellant to show sufficient legal interest. The Respondent in that letter did not raise the issue of breach of the term as to production of stocks document. The Respondent gave reasons for refusing to respond positively to the claim. The Respondent in his Statement of Defence raised these 3 reasons and in paragraph 18 of the Statement of Defence raised the issue of the existence of the goods in the warehouse and the failure of the Appellant to furnish documents to substantiate the quantity of goods damaged. Having raised the issue of non-production of stock documents the Respondent introduced a defence to why he is not liable to the claim. The onus is on the insurer to show why he should not be liable for the goods insured. See Onuh v. United Nigeria Insurance Co. Ltd. (1975) N.C.L.R. 413 at 424. It does not lie on the insured to prove compliance of the condition. Once there is evidence of non-compliance prove is not necessary.
Parties are bound by their pleadings. The Appellant in the Reply to the Statement of Defence also pleaded that the stocks were destroyed. The question of whether stocks of goods insured should be documented and kept in a fire proof safe place is part of the terms of the insurance contract between the parties. The learned Trial Judge was right to consider the issue of the terms of the policy as regards production of stock sheets. The court rightly did not limit itself to exhibit D5, Exh. D5 was written before the Appellant instituted an action. The reasons offered for denial of claim in exh. D5 did not foreclose the Defendant from giving other reasons as long as it is related and relevant to the contract of insurance. It is not a question of an after acquired knowledge. It is a fundamental issue of parties having voluntarily entered into a contract to be bound by the terms and conditions of that contract. The obligations and liabilities contained therein the parties cannot derogate from. The reason of failure to produce store card is a defence raised by the Respondent. It is fundamental term in the contract as relates liability. Common sense dictates that when parties have agreed in paper on definite manner of proving a claim they are bound by same.
Documentary evidence as to the stock sheet showing quantity of ‘oil’ in the warehouse prior to fire incident will determine the extent of liability of the Respondent. The Respondent raised the issue of stock sheet in their Statement of Defence challenging the quantum. The Appellant replied to the Defence and is bound by the content of his reply wherein he pleaded that the stock sheet was destroyed. The function of a Reply to Statement of Defence is to raise, an answer to averments in the Statement of Defence, facts which raises issues of fact not arising out of defence. See Iwuoha v. NIPOST Ltd. (2003) 3 N.W.L.R. (pt.822) pg.308 SC. The warranty required the Appellant to store such documents in a different place. Obviously this was not done. There was no evidence lead that the stock sheet/records were kept in a fire proof safe as stipulated in exhibit ‘P1″. The value of the subject matter and the basis for arriving at it must be proved by the Appellant oral evidence in the light of the nature of policy entered is not sufficient. The provision in the Evidence Act on prove is acknowledged, however, when parties in a contract specifically stipulate documentary evidence they are bound by same.
A breach of a contract means the party has acted contrary to the terms of the contract either by non-performance of a term or performing it not in accordance with its terms. Pan Bisbilder (Nigeria) Ltd. v. First Bank of Nigeria Limited (2000) 1 SC 71 at 86/87. Learned counsel for the Appellant counsel in the Brief contended that the lower court ought not to have voided the contract of insurance on other grounds not stated by the Respondent. He argued that the Respondent did not make the availability of stock an issue in its pleadings and the issue of breach of fundamental term of the contract was not raised. It is settled principle of pleadings that parties do not plead argument. The Respondent in their Statement of Defence pleaded issue of stock sheets as stated in the policy. The learned Trial Judge on page 1 76 of the Record of Appeal held the conclusion:
“The inescaple conclusion to reach in the face of all these pieces of evidence is that the Defendant failed woefully to prove that the Claimant committed any offence – precisely – that it – failed to pay Custom duties on the insured consignment of Sunflower Oil herein.
Accordingly therefore Exhibit – P1, the Policy of Insurance was not thereby tainted with any illegality and I so hold.
I also consequentially hold too that the Defendant was therefore not entitled for that reason (as it did not exist) to repudiate the contract of insurance or escape liability under it.”
From the above finding and conclusion the learned Trial Judge limited the point on repudiation of contract or liability on the basis of the issue on custom duties and legality of the insurance policy. The court having found exhibit ‘P1’ was not illegal proceeded to construe the relevant portion of the contract on production of documenting evidence. The learned Trial judge under those Issues determined the validity of the policy Exh. P1. The allegation of misrepresentation touches on denial of existence of contract. The present appeal is founded on the terms and conditions in the policy. The purpose of specific condition precedent is to exclude the liability of the insurer and once a condition is expressed the court will construe it liberally.
The failure to comply constituted a breach. The breach affects the claim but not the validity of the policy.
It is trite law that the Appellate court will only interfere with the decision of the court below when it is perverse or based on evidence not presented in court or occasioned a miscarriage of Justice. On the totality of the evidence and documents tendered before the learned Trial Judge, the court’s decision dismissing Claimant’s claim cannot be faulted. Parties are bound by the terms of their agreement in the absence of fraud, Issues 3 and 4, I resolve against the Appellant. When the Plaintiff fails to establish his claim the proper order to make is one of dismissal.
In the circumstance of the forgoing, I hold this appeal is devoid of merit. Appeal is dismissed. I affirm the decision of the court below delivered on 22 February, 2006. I award cost of N30,000.00 in favour of the Respondent.
MONICA BOLNA’AN DONGBAN-MENSEM J.C.A, JP+.: I agree with the lead judgment prepared by my learned brother Nwodo JCA. I adopt same as mine with the other as to cost.
PAUL ADAMU GALINJE, J.C.A.: I have read the judgment just delivered by my learned brother, Nwodo, JCA and I agree with the reasoning contained therein and the conclusion arrived thereat.
For the reasons ably set out in the lead judgment which I adopt as mine, I too agree that the appeal is unmeritorious and should be dismissed. It is accordingly dismissed. I subscribed to the order of cost made therein.
Appearances
Mr. M. N. O. Olopade, with Mrs. Chika MadubuikeFor Appellant
AND
Mr. Opeyemi UsiolaFor Respondent
