SHORELINE LIFTBOATS NIGERIA LTD. & ORS V. PREMIUM INSURANCE BROKERS LTD. & ANOR
(2012)LCN/5453(CA)
In The Court of Appeal of Nigeria
On Monday, the 11th day of June, 2012
CA/B/248/2010
RATIO
“In insurance contracts, both the insurer and the insured owe each other the duty of full disclosure otherwise referred to as uberrima fides.” Per AGBO, J.C.A
“Where the parties contract through an agent, in this case a broker, the incidences of the contract between the insured and the broker and between the broker and the insurer are distinct from that between the insurer and the insured. This is because once the insured pays his premium to the broker he has met his obligation to the insurer and the insurer cannot resile from the contract whether or not the broker remits the sum paid to the insurer. It was therefore not the business of the appellants whether or not the 1st appellant remitted the premium paid to the insurer.” Per AGBO, J.C.A
“S. 50 of the Insurance Act provides as follows – “The receipt of an insurance premium shall be a condition precedent to a valid contract of insurance and there shall be no cover in respect of an insurance risk unless the premium is paid in advance.” This provision is clear and unambiguous. No premium, no risk. It is accepted by all the parties that the appellant only made part payment of the premium for the risk cover. The appellant’s later cheque were not cleared. There was therefore no valid contract enforceable by any of the parties to the insurance contract or the broker who in effect has agency contract with both parties. A condition precedent not having been met, there can be no basis for the enforcement of any of the terms of the contract.” Per AGBO, J.C.A
JUSTICES
RAPHAEL CHIKWE AGBO Justice of The Court of Appeal of Nigeria
GEORGE OLADEINDE SHOREMI Justice of The Court of Appeal of Nigeria
CHIOMA EGONDU NWOSU-IHEME Justice of The Court of Appeal of Nigeria
Between
1. SHORELINE LIFTBOATS (NIG) LTD.
2. JINANSO MARINE (NIG) LTD.
3. DR. J.K. OGANWU Appellant(s)
AND
1. PREMIUM INSURANCE BROKERS LTD.
2. CHIEF EMEKA C.R. OKERE Respondent(s)
RAPHAEL CHIKWE AGBO, J.C.A (Delivering the Leading Judgment): The appellants were defendants in Suit No. FHC/ASB/CS/69/2009 at the Federal High Court sitting at Asaba. The respondents were the plaintiffs. The 1st respondent is an Insurance brokerage company while the 2nd respondent is its chief executive. 1st and 2nd appellants are operators in the maritime industry while the 3rd appellant is their chief executive. Sometime in 1997 the appellants approached the 1st respondent to procure for them insurance cover for their three boats from Insurance companies. This the respondent did from a brace of Insurance companies. The total premium for the three policies was in the sum of N3, 115,000.00 out of which the appellants paid only N100, 000.00. The respondent mounted pressure on the appellants who issued cheques to the appellants in the sum of N380, 250.00. These cheques on presentation to the bank bounced. The attempt at the recovery of the premium owing having failed, the respondents took out a writ of summons at the Federal High Court against the appellants claiming as follows:-
“(a) As against the 1st and 3rd defendants, the sum of N1, 9670250.00 (One million, Nine hundred and Sixty-seven thousand, Two hundred and fifty Naira) being the balance sum/premium payable on the two (2) policies viz (i) PMH/DB390/005/96/WR and (ii) MH/87/3/433904/D renewed/taken out by them through the services of the plaintiffs whom they engaged as their brokers;
(b) As against the 2nd and 3rd defendants, the sum of N73, 750.00 (seventy three thousand, seven hundred and fifty Naira) being the total premium payable on policy No. MH/87/3/422914/X taken out by them through the services of the plaintiffs whom they engaged as their brokers.
(c) Interest at the rate of 21% per annum from 1/11/97 for the 1st policy, from 30/6/99 for the 2nd policy and from 31/5/99 for the 3rd policy, to when judgment is given and thereafter at a rate of 10% until the judgment sum is liquidated.”?
The parties exchanged pleadings. The case was heard on the pleadings and in a considered judgment the trial court adjudged as follows:
“The plaintiffs’ action succeeds and the reliefs pleaded in paragraph 21(a), (b) and (c) of the statement of claim dated 22/11/2000 and filed on 27/11/2000 are granted as prayed.”
Dissatisfied with this judgment the appellant filed their appeal. The notice of appeal contains seven grounds of appeal to wit:
“3. (i) ERROR OF LAW:
The learned trial Judge erred in law in granting all the reliefs sought by the plaintiffs.
(ii) ERROR OF LAW:
The learned trial erred in law when he held that there was no privity of contract between the defendants and the Insurance companies.
(iii) ERROR OF LAW:
The learned trial Judge erred in law in holding that there was a valid insurance contract between the defendants and the plaintiffs in the midst of overwhelmed evidence that no dime was paid by the plaintiffs to the insurance companies inspite of both oral and written demands in that regards.
(iv) ERROR OF LAW:
The learned trial Judge erred in law when he granted the reliefs sought by the plaintiffs thereby giving legality to the plaintiffs illegality.
(v) ERROR OF LAW:
The learned trial Judge erred in law when he held that the principle of good faith (uberrima fides) does not avail the defendants.
(vi) MISDIRECTION OF FACT:
The learned trial Judge misdirected himself on the facts and law when he held that the defendants are liable to pay the balance premium to the plaintiffs because in his words “The defendants cannot therefore argue as they had sought to do that the defendants three (3) vessels were not “actually” insured. Insurance services are largely in my view, intangible in nature. They are not really visual”.
(vii) MISDIRECTION OF FACT
The learned trial Judge misdirected himself on the facts and law when he wrongly dismissed defendants counter claim inspite the overwhelming evidence led by the defendants to the effect that they are entitled to the refund of monies paid to the plaintiffs which they failed to remit to the Insurance companies who allegedly bore the risk.”
The parties exchanged briefs of argument. From these grounds of appeal the appellants distilled two issues for determination to wit:-
“(i) Whether on the pleadings and evidence led, the learned trial Judge was correct in law when he held that plaintiffs/respondents were entitled to judgment (Grounds 1 and 3 of the Notice of Appeal).
(ii) Whether the learned trial Judge was right when he held that there was no privity of contract between the appellants and the Insurance companies and in as such the principle of Uberrima fide does not avail the appellants (Grounds 2 and 5).”
The appellants distilled these issues from only grounds 1, 2, 3 and 5 of the grounds of appeal, effectively abandoning grounds 4, 6 and 7 of the grounds of appeal. These grounds of appeal so abandoned are hereby struck out.
The respondents on the other hand distilled 3 issues for determination to wit:-
“1. Whether having regard to the state of pleadings and evidence before the lower court was the respondents entitled to their judgment in court. (Grounds 1 and 3)
2. Whether from the circumstances of the case was there privity of contract between the appellants and the insurance companies. (Ground 2)
3. Whether from the pleadings, evidence before court and the law, do the respondents owe the appellants any statutory duty of utmost good faith for which the respondents defaulted.” (Ground 5)
On the appellants and respondents issue No. (1), it is clear from the pleadings and evidence placed before the court that the appellant employed the services of the 1st respondent as a special agent i.e. to say a broker to obtain from consortium of Insurance companies insurance cover for their vessels. The 1st respondent on behalf of the appellants negotiated and obtained for the appellants agreeable premium and terms of payment of the premium instalmentally. This agreement was breached by the appellants who failed to pay the instalments on the due dates. This suit was filed to recover the unpaid premium. However, the question to be asked is, when the premium is unpaid, is there really a subsisting enforceable contract? The answer is NO. See Industrial and General Insurance Co. Ltd. vs. Kechinyere Adogu (Mrs) (2010) 1 NWLR (Pt. 1175) 337. S. 50 of the Insurance Act provides as follows –
“The receipt of an insurance premium shall be a condition precedent to a valid contract of insurance and there shall be no cover in respect of an insurance risk unless the premium is paid in advance.”
This provision is clear and unambiguous. No premium, no risk. It is accepted by all the parties that the appellant only made part payment of the premium for the risk cover. The appellant’s later cheque were not cleared. There was therefore no valid contract enforceable by any of the parties to the insurance contract or the broker who in effect has agency contract with both parties. A condition precedent not having been met, there can be no basis for the enforcement of any of the terms of the contract. Issue 1 is resolved in favour of the appellant.
Appellant’s issue (ii) is –
“whether the learned trial Judges was right when he held that there was no privity of contract between the appellants and the Insurance companies and in as such the principles of uberrima fide does not avail the appellants.”
The trial court never arrived at the above conclusion. On the issue of “good faith” the trial court dealing with it as issue 3 at pages 235 to 236 of the record of appeal had this to say –
“With regard to issue No. 3 in the defendants’ address, I have expressed the view that that issue, in my view and upon my assessment and evaluation of the testimony of the witnesses called never arose for consideration. But even if it were, I am not persuaded by the evidence led and the documentary exhibits tendered that the plaintiffs have breached any duty of good faith otherwise expressed in Latin as “uberrima fidei” to the defendants. I seem to share and agree with the submission of the plaintiffs’ counsel that it is the defendants, applying this principle of law of insurance, who owe the 1st plaintiff as a broker, the duty to disclose all facts which would inform the insurers’ decision in covering what risk they bear an to be able to fix a well informed commensurate premium. It cannot be the other way round.”?
The appellant completely mis-appreciated this part of the judgment. The judgment effectively said it was the appellants that owed the 1st defendant the duty of uberrima fidei. In insurance contracts, both the insurer and the insured owe each other the duty of full disclosure otherwise referred to as uberrima fides.
Where the parties contract through an agent, in this case a broker, the incidences of the contract between the insured and the broker and between the broker and the insurer are distinct from that between the insurer and the insured. This is because once the insured pays his premium to the broker he has met his obligation to the insurer and the insurer cannot resile from the contract whether or not the broker remits the sum paid to the insurer. It was therefore not the business of the appellants whether or not the 1st appellant remitted the premium paid to the insurer. Issue 2 is resolved in favour of the respondents.
This appeal succeeds. The judgment of the trial court is hereby avoided and in its place is entered a judgment of dismissal of the suit.
N30, 000.00 costs in favour of the appellants.
GEORGE OLADEINDE SHOREMI, J.C.A: I had the privilege of reading the judgment just read by my learned brother Agbo JCA. I adopt same as mine.
The appeal is meritorious it therefore succeeds. I also dismiss the suit and award N30,000 in favour of the Appellant.
CHIOMA EGONDU NWOSU-IHEME (Ph. D), J.C.A: I have read before now the lead Judgment of my learned brother, R.C. AGBO JCA and agree with his reasons and conclusion for allowing the appeal, which I wholly adopt and hereby allow the appeal in the same terms including order as to costs.
Appearances
Patrick Oganwu with him A.O. OnosivweFor Appellant
AND
O.A. OkpakporFor Respondent
