Monday, 11th December 2023

What novation of contract entails

Arguing the issue, the appellants submitted that the jurisdiction of a court to entertain a matter is ascertained by recourse to the originating process showing the reliefs claimed.

CITATION: (2020) LPELR- 49783 (CA) 

In the Court of Appeal
Lagos Judicial Division
Holden at Lagos

On Tuesday June 2, 2020
Suit No: CA/L/189/2016

Before Their Lordships:

2. THE VESSEL M/T DEEPWATER                                Appellant(s)


FAICECK PETROLEUM LIMITED                                   Respondent

Lead judgment delivered by Ugochukwu Anthony Ogakwu, J.C.A.

The respondent instituted proceedings against the appellants before the Federal High Court, Lagos on the undefended list, claiming the following reliefs:
1.      The sum of N180, 051,00,0 (One hundred and eighty million and fifty one thousand Naira) as at May 30, 2013 being the outstanding balance of the value of the plaintiff’s products that was stored in the first defendant’s tank farm, which the second defendant moved out of the jurisdiction of this court to be sold outside offshore without the plaintiff’s consent.

2.     Interest on the said sum mentioned in (I) above at the rate of 21% per annum from the June1, 2013 until judgment and thereafter at 10% per annum until the judgment sum is totally liquidated.

The respondent subsequently applied for and obtained certain ex-parte orders against the appellants, inter alia, in respect of the funds of the appellants with the debt management office. The appellants by an application filed on December 12, 2014 prayed the Federal High Court to discharge/set aside the said ex-parte orders, which were made on December 2, 2014. The respondent opposed the application and after a contested hearing, the Federal High Court in its ruling dismissed the application.

The appellants were dissatisfied with the decision and thus appealed against same to the Court of Appeal.
Issue for determination

The court determined the appeal on the issue of whether the Federal High Court has the jurisdiction to entertain matters of simple contract.

Appellant’s submission
Arguing the issue, the appellants submitted that the jurisdiction of a court to entertain a matter is ascertained by recourse to the originating process showing the reliefs claimed. The appellants referred to the reliefs claimed and the facts deposed to in the affidavit in support of the writ of summons and argued that the action was clearly founded on simple contract for alleged breach of contract for supply of dual-purpose kerosene (DPK). The Federal High Court, it was contended, was wrong in holding that it was an action in rem within the admiralty jurisdiction of the court. The subject matter of the suit, the enforcement of a simple contract, it was argued, was not within the jurisdiction of the Federal High Court vide ONUORAH vs. KRPC LTD (supra) at 405, SPDC vs. SIRPI-ALUSTEEL CONSTRUCTION LTD (2007) 1 NWLR (PT. 1067) 128 at 152, CHEVRON (NIG) vs. L. D. NIG LTD(2007) 16 NWLR (PT. 1059) 168, TEXACO OVERSEAS (NIG) UNLTD vs. PEDMAR (NIG) LTD(2002) 13 NWLR (PT 785) 526 at 543.

It was argued that the respondent cloned the action as an admiralty action by joining the second appellant as a party when the claim does not pertain to the ownership or possession of the second appellant or services rendered to the 2nd appellant or damages done by the second appellant as required by Section 2 of the Admiralty Jurisdiction Act. It was opined that the respondent’s deposition that the second appellant was used to lift the respondent’s petroleum products out of Lagos does not make it an admiralty action. The action, it was maintained, was not an admiralty matter because, on the admission of the respondent, the products had been discharged from the vessel and sold. Furthermore, that no claim was made against the second appellant to warrant her being a necessary party to the action as there is no nexus between the respondent and the second appellant and that the second appellant is not privy to the contract that was allegedly breached. The action, it was opined, could be successfully adjudicated without the second appellant being made a party since there was no need for it to be bound by the outcome of the proceedings. The cases of OLAWOYE vs. JIMOH (2013) LPELR-20344 (SC), GREEN vs. GREEN (1987) 7 SCNJ 269, PEENOK INVESTMENT LTD vs. HOTEL PRESIDENTIAL LTD (1982) 12 SC (Reprint) 1 at 11, UKU vs. OKUMAGBA (1974) 3 SC (Reprint) 24 were cited.

Respondent’s Submission
Arguing the issue, the respondent referred to Section 1 (2) of the Admiralty Jurisdiction Act and submitted that the Federal High Court has a very wide range in its admiralty jurisdiction. In determining whether or not it has jurisdiction, the court examines the statement of claim. The respondent’s case, it was argued, is hinged on its products (PMS) stored in the first appellant’s tank farm which the first appellant caused and used the second appellant to lift and move away by sea and sell without the consent and authority of the respondent. Section 2 (3) of the Admiralty Jurisdiction Act and the case of TOUTON S. A. vs. G. C. D. N. Z. SPA (2011) 4 NWLR (PT. 1236) 20 were cited in support. The respondent asserted that its claim did not originate from the contract it executed with the 1st appellant as the contract only came after the appellants had done damage to the respondent, which gave rise to the action before the Federal High Court. The respondent further argued that where a vessel is the instrument of a wrongful act, the admiralty jurisdiction of the Federal High Court can be invoked vide RHEIN MASS UND SEE vs. RIVWAY LINES LTD (1998) 5 NWLR (PT 549) 265 and MAERSK NIGERIA LTD vs. UMA INVESTMENT COMPANY LTD (2013) LPELR – 212447 (CA).

In concluding arguments on the issue, the respondent argued that the appellants’ application to set aside the ex-parte order, which necessitated the instant appeal was an abuse of court process and amounted to forum shopping because the same prayers sought in the application were the subject of the appeal filed by the appellants against the ex-parte order. The cases of SALVADOR vs. INEC (2012) 7 NWLR (PT 1300) 47 at 449-450 [sic] and R-BENKAY NIG LTD vs. CADBURY NIG LTD (2012) LPELR-7820 (SC) were relied upon.

Resolution of the issues
The court began its resolution on the issue of the appellant’s application being an abuse of court process. On that issue, the court noted that the Federal High Court declined to pronounce on the application because it held it was subject to the notice of appeal already filed at the Court of Appeal and not because the prayers sought in the application and the notice of appeal were the same. In this light, the court held that the application was not an abuse of court process and since there was no appeal against the finding of the Federal High Court, the finding stands. See COMMERCE ASSURANCE LTD vs. ALLI (1992) 3 NWLR (PT 232) 710, YESUFU vs. KUPPER INTERNATIONAL (1996) 5 NWLR (PT 446) 17, P. N. UDOH TRADING CO. LTD vs. ABERE (2001) 11 NWLR (PT 723) 114 at 146, OLUKOGA vs. FATUNDE (1996) LPELR (2623) 1 at 8 and FBN PLC vs. OZOKWERE (2013) LPELR (21897) 1 at 20.In addition, the court held that there was no complaint in the grounds of appeal against any decision of the Federal High Court that the application to set aside the ex-parte order is an abuse of court process. The court stated the trite position of law that arguments on appeal are predicated on the issues distilled from the grounds of appeal and specifically submitted for determination by the court. In the circumstances, the court held that the respondent cannot argue that the appellants’ application to set aside the ex-parte order is an abuse of court process since such argument does not arise from the grounds of appeal. See MADUMERE vs. OKAFOR (1996) 4 NWLR (PT 445) 637, DIMASA PROPERTY LTD vs. YUSUF (2009) LPELR (8144) 1 at 35-36, HON. MINISTER, FCT vs. MONONIA HOTEL NIGERIA LTD (2010) LPELR (4257) 1 at 18-20 and F. G. ONYENWE MOTORS LTD vs. FBN (MERCHANT BANKERS) LTD (2013) LPELR (21878) 1 at 18-19.

Going to the main issue, the court stated the trite principle of law that the jurisdiction of a court to entertain a matter is determined by the claim endorsed on the writ of summons. See IZENKWE vs. NNADOZIE (1953) 14 WACA 361 at 363, ADEYEMI vs. OPEYORI (1976) 9-10 SC 31, TUKUR vs. GOVT OF GONGOLA STATE (1989) 4 NWLR (PT. 117) 517 and JAMES vs. INEC (2015) ALL FWLR (PT 787) 652 at 704and ONUORAH vs. KRPC LTD (2005) LPLR (2707) 1 at 15.

Applying the above principle to the instant case, the court examined the reliefs claimed on the writ and came to the conclusion that the argument of the respondent that its cause of action is founded on the wrong done to it before the contract was entered into holds no water. This is because upon the non-delivery of the PMS to it by the appellants, the parties in a bid to amicably settle the matter entered into another contract (Exhibit A) for the supply of Dual Purpose Kerosene (DPK). This new contract, the court held, was a novation of the previous contract between the parties for the delivery of PMS, the effect of which was that the prior obligation of the parties was extinguished and replaced with Exhibit A. The question to be resolved now, according to the court, is whether the action predicated on the new contract is within the jurisdiction of the Federal High Court. The court answered the foregoing question in the negative, holding that the fact that the product involved in the contract was petroleum product, or the fact that the second appellant was used to lift the product and same was sold outside the shores of Lagos did not make it an admiralty matter. The contract between the parties was a simple contract based on novation for the supply of Dual Purpose Kerosene (DPK) in place of Premium Motor Spirit (PMS). Such a contract does not come within the jurisdiction of the Federal High Court. See ONUORAH vs. KRPC LTD (2005) 6 NWLR (PT 921) 393, SOCIO-POLITICAL RESEARCH DEVELOPMENT vs. MINISTER, FCT (2018) LPELR (45708) 1 at 24-31, SPDC (NIG) LTD vs. NWAWKA (2003) LPELR (3206) 1 at 11 and ROE LTD vs. UNN (2018) LPELR (43855) 1 at 17-18 and B. B. APUGO & SONS LTD vs. OHMB (2016) LPELR (40598) 1 at 35-39.

Concluding on the issue, the court held that since the Federal High Court did not have the jurisdiction to entertain the matter, it did not have the jurisdictional competence to make the ex-parte orders against the appellants and the entire proceeding before it were a nullity. See See ROSSEK vs. A. C. B. (1993) 8 NWLR (PT 312) 382 at 437 and 487, MADUKOLU vs. NKEMDILIM (2001) 46 WRN 1 at 13, FHA vs. OLAYEMI (2017) LPELR (43376) 1 at 35 and 56 and OLOBA vs. AKEREJA (1988) 3 NWLR (PT 84) 508 at 520.

The court held that the appeal was meritorious and allowed same. The decision of the Federal High Court was set aside and the suit was struck out for lack of jurisdiction.

Chukwudi Enebeli, Esq. with him, Ms. Similoluwa Akintoye
for Appellant(s)
Temilolu Adamolekun, Esq. with him,
Gbenga Akinde-Peters, Esq. & P. Akin-Ogunbiyi, Esq.
for respondent(s)

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