COURT OF APPEAL, (LAGOS DIVISION)
SUIT NO. CA/I/77/85.
MONDAY, 19TH MAY, 1986
 4 NWLR (Pt. 33) 72.
ADENEKAN ADEMOLA, J.C.A. (Presided and Dissented)
PHILIP NNAEMEKA-AGU, J.C.A. (Read the Lead Judgment)
IDRIS LEGBO KUTIGI J.C.A.
Otunba J. O. Awopeju – for Appellants
Mr. Adedoyin – for Respondents
INSURANCE AND REINSURANCE:- Marine Insurance Policy – What constitutes under Section 24 of the Marine Insurance Act – Whether rights of parties are determined by the policy of marine insurance between the parties, certificate issued under the policy or both
INSURANCE AND REINSURANCE:- Marine Insurance Policy – Construction of – Whether requires special rule of construction different from the rules of construction applicable to other commercial contracts
INSURANCE AND REINSURANCE LAW:- Marine Insurance Act of 1961 and contractual freedom – Whether Act prohibits parties from agreeing to any term they like
INSURANCE AND REINSURANCE:- Claim brought to recover sum due under a Certificate of Valued Policy of marine insurance covering cargo lost in a sunk ship– Insurer’s denial of liability based on alleged policy holder’s breach of conditions (usage, custom, and practice) applicable to marine insurance policies generally and conditions precedent to liability or claim as stated in the policy of insurance – part to Excess Clause – Whether inconsistent
INSURANCE AND REINSURANCE:- Valued policy of insurance – Meaning of – “One in which the value of the thing insured, and also the amount to be paid thereon in the event of loss, is settled by arrangement between the parties and inserted in the policy” – Legal effect
INSURANCE AND REINSURANCE:- Floating Marine Insurance Policy – Meaning and components of – Whether needs to be read and construed together with the terms in the Certificate of Marine Insurance which covers the specific transaction the covered risk of which is the subject of this litigation
INSURANCE AND REINSURANCE:- Relationship between a Valued Policy and Excess Clause – Whether the idea of excess clause is inconsistent with the object and purpose of a valued policy qor insurance generally
INSURANCE AND REINSURANCE:- Excess clause in Marine Insurance Policy which is not expressly written into the Certificate of Insurance pursuant thereto – Whether endorsement on certificate which made reference to terms and conditions in the policy suffices
INSURANCE AND REINSURANCE:- Exemption clause – Rule that it is not open to a court to strike down an exemption clause merely on the ground that it is unreasonable – Exemptions thereto – situations expressly provided for in the Unfair Contract Terms Act 1977 – Effect
COMMERCIAL LAW – CONTRACT:- Terms of a contract – Terms and conditions deemed incorporated by reference or endorsement on an already pleaded document – Effect – Whether needs to be pleaded separately
COMMERCIAL LAW – CONTRACT:- Freedom of contract and Exclusion clauses – Right of parties to put into an agreement clauses which sometimes relieve one of the parties of liability in the case of the occurrence of an event or where parties have even decided how a risk inherent in the performance of various kinds of contract can be most economically borne – Attitude of court thereto
COMMERCIAL LAW – CONTRACT:- Terms of a contract – Distinction between a condition and a condition precedent – Legal effects – Which needs to be specifically pleaded and which is deemed inherently implied
COMMERCIAL LAW – CONTRACT:- Document – Commercial disputes based thereon – Whether merely referring to the document and asserting it will be relied upon suffices – Need for specificity – Implications for bulky contracts with fine prints
COMMERCIAL LAW – CONTRACT:- Contract of Marine Insurance – Whether is sui generis of other contracts of insurance – Whether amenable to ordinary rules of construction of commercial contracts
DEBTOR AND CREDITOR:- Defendant seeking reduction of liability by way of set-off – Failure to bring a cross-claim or counter-claim – Failure to plead the set-off specifically – Legal effect
TRANSPORTATION – ADMIRALTY AND SHIPPING/MARITIME LAW:- Cargo shipping of perishable goods – Sinking of ship leading to destruction of entire cargo – Valued policy of maritime insurance taken out thereto – How trreated
FOOD AND AGRICULTURE LAW:- Importation of food product – Fish – Sinking of ship leading to loss of entire cargo – Suit to recover under marine insurance policy covering cargo – How treated
INTERNATIONAL TRADE:- Maritime insurance and international transportation of goods – Claim to recover for loss of cargo due to sinking of ship – Relevant considerations
PRACTICE AND PROCEDURE – PLEADINGS – AVERMENTS:- Where a party pleads a document by merely referring to it and, without stating the effects or the purport for which it is referred to – Whether enough to assert document will be relied upon –Need to plead effect of the document as a fact so that the document will then be tendered as some evidence of that fact or to state the precise purport for which the document is being relied upon – When the precise words used should be stated in full in the pleading.
PRACTICE AND PROCEDURE – PLEADINGS:- Rule that a court does not give a litigant what he did not claim – Where a defendant fails to bring a cross-claim or counter-claim – Whether assert a lien or a set-off based on the pleadings of the plaintiff
PRACTICE AND PROCEDURE – PLEADINGS:- General principles of – Rule that pleadings control the evidence – What can and cannot be pleaded – Order XXXI rules 5 and 13 of the Federal High Court Rules 1976
PRACTICE AND PROCEDURE – PLEADINGS:- Insurance- Excess Clause in valued policy – Whether must be pleaded.
PRACTICE AND PROCEDURE – PLEADINGS:- Document to be relied upon in trial – Proper way of pleading same – When effect of pleading a document would be to plead evidence which is contrary to the rule of pleadings
INTERPRETATION OF STATUTES:- Sections 29 and 68 of the Insurance Act No. 54 of 1961 – When read together – Whether have the same effect
WORD AND PHRASES:- “Valued Policy” – “Condition” and “Condition precedent” – Meaning
In an action commenced by a Writ of Summons the Plaintiff’s claim against the Defendants is for the sum of N217,892.05 being the amount payable on the valued policy of marine insurance No. M/9001460/L over plaintiffs cargo of 20,000 cartons “Plaza” mackerel shipped on board MN “JAL SEA CONDOR” from Yokohama, Japan to Apapa, Nigeria, which ship, however, sank on the 3rd July, 1978 off Namibian Coast with the entire plaintiff’s cargo aboard.
The plaintiff claimed 5% interest from the date of the writ until the judgment in the suit is fully satisfied. There is no counter-claim before the court.
Now in paragraphs 5 and 6 of the statement of claim the plaintiff pleaded as follows:
In paragraphs 2,5,6,8 and 9 of the statement of defence the defendant pleaded as follows:
At no place did the defendant plead expressly entitlement to compulsory excess of N800.00 or any other sum. What are pleaded are inter alia conditions applicable to marine insurance policies generally and conditions precedent to liability or claim as stated in the policy. Those conditions were not spelt out. Apart from tendering the policy and the certificate of insurance there is no evidence of such conditions or condition precedent, still less of the usage, custom, and practice, relating to marine market as averred in paragraph 9 of the statement of claim. The marine Insurance Policy No. MAR(9001460/L dated 9th December, 1977 was tendered as Exh.D1. It contains an endorsement in the following words:
Insurance to cover “FPA” as per the institute cargo clause attached. This policy does not cover loss or damages directly or indirectly caused by or contributed to by or arising from heat rats delay moth vermin inherent vices or nature of the subject matter insured loss of colour and/or scratches. Subject to excess of N800.00 or 10% of each and every claim whichever is greater.”
Subsequently a certificate of marine insurance, Exh.D2 dated 4th day of April, 1978, was issued to the plaintiff. In it the above quoted condition was not repeated. But part of it states:
“Conditions of Insurance – Insurance to cover “F.P.A.” as per institute cargo clause. Subject to open policy conditions.”
At the trial witnesses called by the defence admitted that Exh.D1 is a valued policy and that the value which the defendant was supposed to pay in case of a total loss was N217,892.05. Surprisingly at no place in their oral testimonies did any of the two witnesses called for the defence state that they were entitled to any compulsory excess. It was first raised during the final address of their counsel. After trial and addresses of counsel, the learned Judge in a considered judgment, entered judgment for the plaintiff. He held that Exh. D2 shows that the contract between the parties was for a valued policy and awarded to the plaintiff the sum of N217,892.05 as per the agreed value. He also rejected the defendant’s claim for compulsory excess on the grounds that it was not pleaded; that the idea of such an excess is alien to a valued policy; and that if it was intended to apply it should have expressly been stated in Exh.D2.
The defendant (herein-after called the appellant) has appealed. In point of fact the grounds of appeal and the arguments both in the briefs and orally are on the refusal of the learned Judge to allow for the compulsory excess. The Plaintiff shall be referred to as the respondent.
From the briefs and arguments before us the issues for determination in this appeal are as follows:
(i) Whether the learned Judge was wrong in holding that the issue of excess was not pleaded or given in evidence;
(ii) Whether the idea of excess is at variance with a valued policy, and whether there was any pleading or evidence that an excess clause is a common feature of marine insurance;
(iii) Whether the appellant is entitled to a discount of N21,789.20 being 10% of the valued insurance policy.
As 1 see it, the most paramount question in this appeal is the pleading: whether the appellants pleaded the compulsory excess clause on which they now rely in this appeal, and, if they did not, whether its consideration does arise at all. For this reason, I regret, with respects, that 1 am unable to agree that it was pleaded of that it does arise.
It is now perfectly settled that pleadings control the evidence. The sum total of all the decided cases on the point is that evidence on a fact not pleaded goes to no issue at the trial and ought to be disregarded. See on this:for examples: Aniemeka Emogokwue v. James Okadigbo (1973) 4 S.C. 113, p.117. African Continental Seaways Ltd. v. Nigerian Dredging Roads & General Works Ltd. (1977) 5 S.C. 235, 243,247-50; Akpapuna v. Obi Nzeka H (1983) 7 S.C. 1, pp.24 and 62; Ferdinand George v. The United Bank for Africa (1972) 1 All N.L.R. (Pt.2) 347 at p.353. So. I hold the view that if upon a careful consideration of the pleadings before the court the appellant’s entitlement to compulsory excess was not pleaded or put in issue in the proceedings, it does not arise. Therefore, the court needed not consider Exhs. D1 and D2 upon which the claim thereto was based. I do not agree that the converse is the case: i.e. that as Exh.D1 and D2 were tendered the question of pleading the compulsory excess does not arise.
The trend of the arguments in this appeal dictates that I should reexamine certain elementary rules of pleadings. In Phillips v. Phillips (1878) 4 Q. B. D. 133 these basic rules were stated to be what the pleader must plead:
(i) material facts, not law;
(ii) material facts, not evidence;
(iii) material facts only;
(iv) all material facts; and
(v) all facts in a summary form.
The second and fourth of the above rules are material in this case. These basic rules have found their way into most of our Rules of Court. It is sufficient for our present purpose to refer to Order XXXI rules 5 and 13 of the Federal High Court Rules 1976, which provide:
On the above principles it is my view that if the appellant’s contention is that the amount to which the respondent was entitled would be reduced by the amount of the compulsory excess, he had to plead that fact as well as entitlement to the compulsory excess.
While not seriously disputing their duty to plead the fact, the learned counsel for the appellant contended that reference to the Insurance Policy (Exh.D1) and Certificate of Insurance (Exh.D2) and stating that they were issued to the plaintiff “subject to terms, warranties stipulations and conditions applicable to marine insurance policies” as avered in paragraphs 2, 5, 6, 8 and 9 above was sufficient pleading of that fact. In my view, it is not. What the appellants should have pleaded is either such effect of the documents as are relevant to their case in relation to the compulsory excess (for this see Bristow v. Wright (1781) 2 Dong. 665); or the simple fact that they are entitled to the compulsory excess and that the agreed value of the policy should be reduced thereby. (Order 31 rule 13 supra). If they had pleaded either way, the documents would have been part of the evidence they could have relied upon in proof of their averment. In my view, to plead the documents alone without more, instead of their effect is to plead evidence. This would be contrary to the rule of pleadings. Moreover, there appears from the above pleading by the plaintiff, to be a confusion in thought between the terms “condition” and “condition precedent. For the avoidance of doubt, a condition is a material term of the contract, whereas a condition precedent (See para. 8 of the statement of defence) is a condition precedent to the plaintiffs right of action: it is a thing that must happen or be performed to vest the plaintiff with the right to sue. Whereas neither party needs to allege a condition precedent, as it is implied, any condition which the plaintiff alleges to be a material term of the contract must be clearly pleaded.
I would like to seize this opportunity to state that, in my opinion, a party does not plead a document by merely referring to it and, without stating the effects or the purport for which it is referred to, just saying that it will be relied upon. To hold that it is sufficient will, in a case like this in which Exh.D1 runs into eight pages, some of them in very tiny print, lead to obvious injustice. The adverse party is entitled to know the purport for which the document is being relied upon. Therefore a party pleads a document either by pleading its effect as a fact so that the document will then be tendered as some evidence of that fact or the precise purport for which the document is being relied upon will be stated. It is only when the precise words used are material that those words should be stated in full in the pleading. See Bristow v. Wright (1781) 2 Doug. 665. The learned authors of Supreme Court Practice 1982 stated part of the relevant rule in paragraph 18/717 where they said:
“If a document is referred to in a pleading, but neither its effect stated nor its precise words set out, it cannot be read, without consent, on a summons or motion for judgment or a motion to strike out a statement of claim as not disclosing any reasonable cause of action (Howard v. Hill (1887) W.N. 193; and see Williamson v. London & North Western Ry. (1879) 12 Ch.D.787; and Smith v. Buchan, 36 W.R. 631.”
The learned authors of Bullen & Leake: Precedents of Pleading (12th Edn.) had this to say at p.44.
“Where any document or conversation is referred to in any pleading, the precise words of the document or conversation should not be stated, but only the effect of the document or the purport of the conversation should be briefly stated; but if the precise words of a document or conversation are themselves material, they must be set out in full in the pleading. Thus, it is not ordinarily necessary to set out verbatim the entire terms of a written contract, but only to state briefly the effect thereof and to specify the particular terms in respect of which any breach is alleged. So it is not ordinarily necessary to set out the precise words used by the parties when making a contract or taking part in any conversation relied on. If the party alleges that a document has a particular effect, he should set out so much of the document as is necessary to show that it has the effect alleged.” See also Davis v. James (1884) 26 Ch. D. 778.
In the instant case it was at least necessary for the appellant to have alleged that they were entitled to compulsory excess by reason of the conditions stipulated in Exh.D1. The blanket averment that the appellants would rely on terms, conditions, warranties and stipulations in the policy does not give any or sufficient notice to the respondents as to what purpose any or all of them would be relied upon.
There is also another aspect of the pleading in this case. As the learned counsel for the appellant stated in his brief and reply brief, their case is that the insurer appellant is entitled to recover the sum of N21,789.20, and, so the respondent should be paid the sum of N217,892.05 less that sum under the compulsory excess clause. The appellant has no cross claim or counterclaim before the Court. Obviously the Court is without power to award to the appellant what it did not claim: Etim Ekpenyong & 3 Ors. v. Inyang Effiong & 6 Ors. (1975) 2 S. C. 71, at p.80; Adeghenro v. Attorney-General of the Federation (1962) 2 All N.L.R. 431. So what the appellant is seeking for can only be a defence by way of a set-off to part of the amount due to the respondent. By Order XXXI rule 14 of the Federal High Court Rules, 1976, I set out above they were obliged to plead the set-off specifically in their statement of defence. Without a counter-claim or pleading the sum as a set-off, I, cannot see how they could be entitled to deduct that sum from the amount adjudged due on the valued policy. It is not open to the appellant to rely on a defence which it should have pleaded at the trial, but did not: see Idahosa & Anor. v. D. N. Oronsaye (1959) 4 F.S.C. 166. 1 therefore agree that reliance could be placed on the opinion of Ademola C.J.N. where he said in the case of Ogiamen v. Ogiamen (1967) 1 All N.L.R. 191, at p.196.
“This Court has pointed out on several occasions that it is wrong for a Judge to give a decision on a point on which opportunity was not afforded counsel to argue, at the hearing, particularly a point which throughout the hearing was not raised.”
I dare say it would have been worse in this case if the learned Judge had given a decision on a fact which ought to have been pleaded but was not, and was not referred to in oral evidence – because a party was relying on a single line in a voluminous document which was tucked into evidence without even being read. One of the objects of pleading is to avoid surprise. Nowadays, the game of litigation is played with cards face upwards. This is because the rule audi alteram partem cannot be obeyed if one is expected to prepare for the unknown. In the instant case, it is of material significance that the first mention of excess in the proceedings was during defence counsel’s final address. In my opinion this will not do. I therefore agree with the learned trial Judge that the issue of appellant’s entitlement to compulsory excess was not pleaded; so he could not take advantage of it. If I am right in this opinion, it becomes unnecessary to consider the other issues in this appeal. In case I am wrong, I shall deal with other issues rather briefly.
The next question is whether an excess clause is alien to a valued policy of insurance, as the learned Judge has held. I am of the view that the statement of the learned Judge that the question of excess clause is hardly relevant to a valued policy is perhaps an over statement. It can certainly not be said that in every valued policy the provision for compulsory excess in case of a loss is a sine qua non. For one thing a valued policy is one in which the quantum of indemnity in case of a loss is agreed by the contracting parties in advance. See Woodside v. Globe Marine Insurance Co. Ltd. (1896) 1 Q.B. 105, p.107. See also Section 29(1) of the Marine Insurance Act of 1961. On
On the other hand compulsory excess entails a deduction from the agreed sum. I must point out however that there is nothing in the Marine Insurance Act of 1961 to prevent any parties from agreeing to any term they like. In that state of the law and considering the freedom of parties to make their own contract it would be an overstatement to say categorically that an excess clause is necessarily irrelevant to a valued policy. But where excess is one of the terms of a valued policy it must be clearly averred in the pleading and proved by legal evidence. But as I have said it was not pleaded in this case; so any evidence on that goes to no issue. If I am right, this should be the end of this appeal.
Because of the view I have held of the state of the pleadings the relationship between the Marine Open Cover, Exh. D, and the Certificate of Insurance, Exh. D2, becomes less important for purposes of this appeal. If I should, however, give the expression “Subject to open policy conditions” in Exh.D2 an interpretation most favourable to the appellant and hold that it incorporates the “Conditions” in Exh.D1 by reference, it will still not avail the appellant in so far as the relevant condition in Exh.D1 was not pleaded. I must, however, observe that, as Obaseki, J.S.C. carefully explained in National Insurance Corporation of Nigeria vs. Power & Industrial Engineering Co. Ltd. (1986) 1 N.W.L.R. 1, Exh.DI is only a floating Marine Insurance Policy. It provides the guide-lines for the transaction such as types of packing to be employed, mode of transport, and limit per bottom (stated therein to be N3,000,000.00). It will have to be read and construed together with the terms in the Certificate of Marine Insurance, Exh.D2, which covers the specific transaction the covered risk of which is the subject of this litigation. But, for what I have stated, I need not go into the matter here.
In the result, this appeal fails and is dismissed. I hereby affirm the judgment of Belgore, J., in this case in the Federal High Court.
The respondents shall have the costs of this appeal which I assess at N350.00.
ADEMOLA, J.C.A. (Presiding and Dissenting):
Two questions fall to be determined in this appeal.
The first is whether a particular condition in the General Open Policy in the Marine Insurance should be construed so as to affect a valued policy issued under the General Open Policy in the contract of Marine Insurance.
The second question is whether the defendant in any action wherein the plaintiff relies on a policy of insurance need to plead or give evidence about a condition relating to excess in the policy in the statement of defence.
In this case, respondent in the court below claimed from the appellant as follows:
“By the Writ of Summons the Plaintiffs claim against the Defendants is for the sum of N217,892.05 being the amount payable on the Valued Policy of Marine Insurance No. M/9001460/L over Plaintiffs cargo of 20,000 cartons “Plaza” Mackerel shipped on board M/V “JAL SEA CONDOR” from Yokohama, Japan to Apapa Nigeria which ship, however, sank on the 3rd July, 1978 off Namibian Coast with the entire Plaintiff’s cargo aboard.”
Both sides filed pleadings and relied on the policy of marine insurance executed between the parties. The facts are hardly in dispute. Respondent was issued with a certificate under the General Open Marine Insurance Policy executed between the parties. The Certificate of Insurance which is a valued policy – Exhibit D.2 was for the sum of N217,892.05k being the value of a cargo of 20,000 cartons of “Plaza” Mackerel shipped on board M/V “JAL SEA CONDOR” FROM Yokohama, Japan to Apapa, Nigeria which ship sank on the 3rd day of July 1978 off the Namibian Coast with the entire cargo belonging to the respondent lost.
The learned trial Judge in the court below held that the plaintiff had proved all he needed to do in the circumstances of this case and found the appellant liable. He then went on to state correctly that what is at issue here is the amount of money the respondent is entitled to recover under the policy. The Learned Judge decided that the respondent is entitled as per Exh.D2 the Valued Policy the whole amount insured while the appellant in this appeal contended that the Valued Policy must be read subject to the term in the Open Policy – Exhibit DI which allows for an excess of N800.00 or 10% of the amount insured or whichever is to be deducted from the sum of N217,892.05k. The question now before me is who is right?
Both sides have filed briefs of argument in this appeal and it is left to me to consider the contentions in the briefs filed.
In the briefs filed on behalf of the appellants covering the grounds of appeal in the notice of appeal, Otunba Awopeju argued that the basis of the contract upon which both sides agreed turned on Exhibit D1 and D2 which are Open Policy and Certificate of Insurance respectively relating to the order of the 20,000 cartons of mackerel fish. Both Exhibits D 1 and D2 are in evidence and the pleadings were founded on them. Exhibits D 1 and D2 were made subject to conditions therein stated and particularly the Certificate of Marine Insurance – Exhibit D2 was made subject to Open Policy conditions which are contained in Exhibit Dl. The pleadings filed on behalf of the defendant did say that both the policy and the certificate were issued subject to conditions, exceptions, etc. It was therefore submitted that the Judge was in error not to have applied the conditions about the excess contained in the policy to the claim before it. It is not the duty of the court, learned counsel contended to impose its own terms into the contracts arrived at by parties freely.
In the brief, it was also contended that there was nothing unusual or unreasonable in excess clause contained in Exhibit Dl and D2 as this is recognized practice in all well known insurance companies. Reliance is placed upon a statement in Chitty on Contract 25th Edition volume II page 844, Article 3724 wherein it is stated:
Often (and especially in motor insurance) the insurer stipulates that the assured must bear the amount of any loss up to a specified figure, the insurer only being liable for the excess (if any) over that figure.”
Also the following cases were relied upon in support of the point:
The brief contended that a condition or clause or warranty in a contract which is not unreasonable will be upheld by the court. It was submitted that the condition or clause relating to excess in policy of insurance cannot be regarded as unreasonable. The brief relied upon the statement of the law in Chitty on Contract Volume 125th Edition article 958 page 511 thus: “Unreasonable provision. It has been stated on a number of occasions that a clause which excluded or restricts liability should not be given effect if it is unreasonable, or if it would be unreasonable to apply it in the circumstances of the case, at least in contracts in standard form where there is inequality of bargaining power. But the better view would seem to be that, except in those situations expressly provided for in the Unfair Contract Terms Act 1977, it is not open to a court to strike down an exemption clause merely on the ground that it is unreasonable. “
And the following cases are illustrative of the legal principle in this passage:
(a) Grand Trunk Railway of Canada v. Robinson (1915) A.C. 740, 747;
(b) Luddiu v. Ginger Coote Airways Ltd. (1947)A.C.233,241,242.
(c) Photo Production Ltd. v. Securicor Transport Ltd. (1980) A.C. 827,848.
The brief also directed attention to the error contained in part of the judgment of the learned Judge which read thus:
It is contended in the brief that the learned Judge was in error regarding the construction of the Marine Insurance Policy since the construction of Marine Insurance Policy is the same as all commercial instruments. Reliance is placed upon a statement of the law in Halsbury Laws of England Volume 25 4th Edition page 36 Article 43 and 44 which read thus:
“B. Construction of Marine Policies
“43. General principles. A contract of marine insurance is to be construed, like all other commercial instruments, so as to give effect to the parties’ intention as expressed in the written contract.”
Finally, the brief contended that the learned Judge was in error when he said that the excess clause was not pleaded nor was it given in evidence be cause exhibits containing the Excess Clause – Exhibit 131 and D2 were pleaded and tendered in evidence and everything containing them must be part of that oral evidence led or given in court in pursuance of Order 40 Rule 10 of the Federal High Court (Civil Procedure) Rules 1076 which states as follows:
“Documentary evidence must be put in and read, or taken as read by consent.”
In the respondent brief and in oral argument by counsel, Mr. Adedoyin, the main contention is that Exhibit D2 being a valued policy is not subject to the Excess Clause in Exhibit Dl. The idea of excess it was submitted is at variance with the law and principle of valued policy. The respondent argued that the basis of the contract between the parties were Exhibit Dl & D2. The valued policy is defined by Section 29(1) of the Marine Insurance Act 1961 as “policy which specified the agreed value of a subject matter insured.” This, it was submitted presupposes that in the event of loss of the goods insured, the assured will be entitled to the full value of the subject matter insured. It is contended that this proposition is supported by Section 29(ii) of Marine Insurance Act 1961 which states thus:
“Subject to the provisions of this Act and in the absence of fraud the value fixed by the policy, is between the insurer and the assured, conclusive of the insurable value of the subject intended to be insured whether the loss is total or partial.”
It was contended that the interpretation given to the relationship between the valued policy – Exhibit D2 and the Excess Clause in Exhibit Dl is in consonance with laid down principle in construction of marine policies and is respectively submitted that the idea of excess clause is inconsistent with the object and purpose of a valued policy.
In respect of this proposition, reliance was placed in the brief of Halsbury Laws of England Volume 25 4th Edition Article 44 at page 37 lines 3 and 4 where it is stated thus:
“No effect should be given to a printed clause in a policy where it is inconsistent with the object and purpose of insurance.”
It is therefore submitted that it was quite in order that the excess clause in Exhibit Dl is inconsistent with the object and purpose of the insurance in Exhibit D2. It was submitted that the learned Judge was right in law in saying that:
“A condition so important if it were to relate to Exhibit D2 to abrogate a legal right has to be categorical and unambiguous neither of which’ the condition in Exhibit Dl can be claimed to be.”
The brief relied upon decisions in:
The brief supported the extract from the judgment of the learned Judge quoted above in respect of Ground 2 of the appellants complaint relating to the non-pleading of the Excess Clause in Exhibit DI. Reliance was placed on Order 31 Rule 51 of the Federal High Court (Civil Procedure) Rules which provides as follows:
“Every pleading shall contain a statement of all the material facts which the pleading relies.”
It was submitted that going by the decisions in Phillips v. Phillips 1878) 4 Q.B.D. page 127 at 129 a statement of defence must also disclose material facts which it relies on for the success of the defence and that the issue of excess clause is material and fundamental to the defence of the appellant and it should have been pleaded. Not only must it be pleaded, there must also be evidence on it which is not so in this case, reliance was placed on the case of Ogiamen v. Ogiamen (1967) N.M.L.R. page 247 where Ademola, C.J.N. (as he then was) said:
“this court has pointed out on several occasions that it is wrong for a Judge to give a decision on a point on which opportunity was not afforded Counsel to argue at the hearing, and particularly a point which throughout the hearing was not raised.”
It was submitted in the brief that in as much as the issue of excess claim was not canvassed at the hearing of this action, it cannot be said that Counsel for the Respondent was afforded opportunity to argue thereon and as such, it will be wrong for the learned trial Judge to allow it to influence his judgment.
The case of Adegbenro v. The Attorney-General of the Federation (1962) 2 All N. L. R. 431 and also Ekpeyong and Others. v. Inyang and others (1975) 2 S.C. 71, 80 were also cited to the effect that a party will not be heard on issues not pleaded.
It was therefore submitted that the full value of N217,892.05k is the liability of the appellant to the respondent being the amount insured for under the policy particularly Exhibit D2. The appellant filed a Reply brief which tried to answer the contentions and submission in the Respondents brief.
Before I consider the contentions and the submissions made by learned counsel in this appeal, it is important to clear some legal misconceptions implicit in the argument of learned counsel for the Respondent which unfortunately found expression in the thinking of the learned Judge.
The first misconception is to regard Exhibit D2 as a Marine Insurance Policy. It is not. Section 24 of the Marine Insurance Act defines what constitutes a policy. In this case, the policy of marine insurance between the parties is Exhibit D2. Exhibit D2 is a certificate issued under the policy. See National Insurance Corporation of Nigeria v. Power and Industrial Engineering Co. Ltd. (1986) 1 N. W. L. R. page 1 at pages 18-20 per Obaseki, J.S.C. The rights of the parties are determined by Exhibit D1 and not by Exhibit D2.
The second is that there is no special rule of construction in respect of Marine Insurance Policy different from the rules of construction applicable to other commercial contracts. Contract of Marine Insurance is not sui generis of other contract of insurance. The statement of the law is correctly stated in Halsbury Laws of England Vol.25 4th Edition page 36 Article 43 as noted in the Appellant’s brief earlier in this judgment.
I have reproduced above an extract from the judgment of the learned Judge and have indicated with figures 1, 2, 3 and the underlining done to areas in the judgment which I think there are errors which will now merit my comment.
Area 1: The Judge agreed with respondent’s submission that the idea of excess is at variance with the law and principle of valued policy. Regrettably no authority is cited in support of this statement. The paragraph 754 from Vo1.25 of Halsbury Laws of England 4th Edition page 382 only explained the “excess” and “no claim bonus” and does not support the proposition of law laid down by the Judge.
Area 2: There was the rejection by the Judge that the “excess” clause in Exhibit D1 does not affect Exhibit D2 because such clause is not written into Exhibit D2. This view is erroneous. The endorsement on Exhibit D2 under conditions of insurance clearly made reference to terms and conditions in the policy. Exhibit D1 therefore in law had incorporated terms and condition in the policy to Exhibit D2 by such endorsement on the face of Exhibit D2. This is trite law and does not need any citation of authorities to justify this statement.
Area 3: Failure to plead the “excess” clause in the statement of defence. On the view that the learned Judge held that Exhibit D1 does not govern Exhibit D2, this ground for the rejection of appellant defence does not arise. I say it does not arise because following the Judge’s reasoning, the excess clause is not part of Exhibit D2.
But in my opinion, the better view is that Exhibit D2 is subject to the terms of conditions in Exhibit D1. Since Respondent has relied on Exhibit D1, he must be taken as relying on all the terms, conditions and exceptions contained therein. If the appellant does similarly rely on Exhibit D1 as has been done on the pleadings, there is no obligation on him to set out in his pleadings any other material facts different from those conditions, terms and exceptions as contained in the Exhibit Dl. In my view the matter becomes a matter of law for success or failure for either party. If I am wrong in this view, I am firmly of the opinion that paragraphs 2 and 5 of the statement of defence is sufficient pleading of terms, conditions in the insurance policy issued to the Respondent. It was up to the Respondent to tie down the appellant to particular terms, conditions in the policy for which he relies upon for his defence.
I do not agree with Respondent Counsel that the question of the ‘excess’ clause came as a surprise. It was raised in the address in the court below and ruled upon by the learned Judge. In fact the acceptance or non-acceptance of it is the crux of this appeal.
The respondent counsel has contended in his brief that the idea of excess clause is inconsistent with the object and purpose of valued policy the effect of which is to render such excess clause ineffective. He relied as indicated earlier on a passage from Halsbury Volume 25 Article 44 at page 37 lines 3 to 4. While I agree that this is a correct statement of the law, the question that now arises is whether the excess clause in the policy – Exhibit D1 is inconsistent with the object and purpose of the insurance. I reproduce the excess clause as it occurred in Exhibit D1:
Insurance to cover “FPA” as per the institute cargo clause attached. This policy does not cover loss or damage directly or indirectly caused by or contributed to by or arising from heat rats delay moth vermin inherent vices or nature of the subject matter insured loss of colour and/or scratches. Subject to excess of N800.00 or 10 per cent of each and every claim which ever is greater. “
If the clause were to be framed that the insurance company will accept no liability whatsoever then it stands to reason that the object and purpose of the insurance would have been defeated by such a clause. Here the clause is not disclaiming any liability whatsoever in the case of any liability arising under the policy; what it attempts to do in my view is to apportion, the quantum of damages to be paid by both the insurer and assured in the case of the risk occurring. If that view-is correct and I think it is, the question of any excess clause in any insurance policy and in this marine insurance policy being inconsistent with the object and purpose of insurance does not arise. I am fortified in this view by the attitude of the court in decided cases where parties have been held to have the freedom to put into an agreement clauses which sometimes relieve one of the parties of liability in the case of the occurrence of an event or where parties have even decided how a risk inherent in the performance of various kinds of contract can be most economically borne. See Photo Production v. Securicor Limited (1980) A. C. 827 at pages 850-851 per Lord Diplock:
That being the view that I have taken in this matter , I am of the view that the excess clause applies to Exhibit D2 and the N800.00 mentioned or 10% of the value whichever is less should apply to diminish the liability of the appellant on the occurrence of the risk insured; See Beacon Insurance Company Limited v. Langdale (1939) 4 All E.R. page 204.
This appeal therefore succeeds and accordingly exception clause in Exhibit D 1 applies to the amount of the valued insurance as stated in Exhibit D2. The appellant is to have the cost of this appeal.
It is doubtless that the basis of the contract of marine insurance between the parties herein is the Open Policy (Exh. D1) and the Certificate of Insurance (Exh. D2). Both sides pleaded and relied on the policy and the certificate. Exh. D2 is clearly made subject to the conditions contained in Exh.D1.
The only serious issue for determination in this appeal is whether or not Exh.D2 which both parties agreed is a valued policy is subject to the “Excess Clause,” one out of many conditions contained in the open policy (Exh.D1) without actually pleading that clause or its effect. The conditions read thus:
Insurance to cover ‘PPA” as per institute cargo clause attached. This policy does not cover loss or damage directly or indirectly caused or contributed to by or arising from heat rats delay moth vermin inherent vices or nature of the subject matter insured loss of colour and or scratches. Subject to excess of N800 or 10% of each and every claim whichever is greater. “ The relevant excess clause is the portion italicized by me above. And as could be seen quite clearly above the “clause” comes at the tail end of the various conditions stated therein. No where in the pleadings did the appellants expressly plead that they are entitled to claim excess of N800.00 or 10% of the claim or any amount at all. What, for example, stops the appellants from denying liability under the conditions by saying that the loss was directly or indirectly caused or contributed to by heat, moth or vermin? In fact that would be consistent with their plea which is a complete denial of liability as para. 11 of the Statement of Defence shows:
“11. The defendants deny the said sum of N217,897.05 as claimed in the plaintiff Writ of Summons or for a lesser amount or any amount whatsoever.”
What the appellants actually pleaded was “terms,” warranties stipulations and conditions applicable to marine insurance policies.” (See for example paras. 2 & 5 of the statement of defence.) And even then no where were these spelt out. One would have expected the appellants to have at least set out the relevant term, warranty or condition they intend to rely upon, so as to give the respondent notice of it. I have no difficulty in agreeing with my learned brother Nnaemeka-Agu J.C.A. that in a situation like this the appellants should have either pleaded the effect of the relevant condition or clause they intend to rely upon; or to simply state the fact that they are entitled to excess of so much. This they failed to do. And so the learned trial Judge rightly in my view held that `excess’ was not an issue in the pleading before him.
I will now like to consider whether an ‘excess clause’ is really alien to a valued policy of insurance as found by the learned trial Judge. I do not share that view’. I do not also think that the idea of excess clause is inconsistent with the object and purpose of a valued policy as submitted by learned counsel for the respondent. What is a valued policy in the first place? Black’s Law Dictionary, Fifth Edition, defines it thus:
“Valued Policy: One in which the value of the thing insured, and also the amount to be paid thereon in the event of loss, is settled by arrangement between the parties and inserted in the policy.”
I must state here that Sections 29 and 68 of the Insurance Act No. 54 of 1961 have the same effect when read together.
So that once a given policy satisfies the two conditions in this definition i.e. states the value of the thing insured and also states the amount payable in the event of loss, a court of law, short of illegality or fraud, would have no alternative other than to enforce the terms of the contract. Definitely insurance policies are to be construed according to the principles of construction applicable to commercial contracts generally and I am not aware of peculiar rules of construction applicable to the terms and conditions in a policy which are not equally applicable to the terms and conditions of other commercial contracts. I find support for this view from the provisions relating to the measure of Indemnity set out in Sections 69, 70, 71, 72, 74, 75, & 78 of the-Insurance Act, 1961 itself. All these sections start or have embedded in them the words “subject to any express provision in the policy …”This goes to show that proper express provisions or conditions in the policy are to be given effect in considering liability or otherwise. So that in the case before us I have no doubt in my mind at all that the appellants would have been entitled to excess claim if they had pleaded it and made it an issue at the trial. This as I have said, they failed to do. I think the clause,
“subject to excess of N800 or 10% of each and every claim whichever is greater”
is as good as putting down in advance N196,102.85 as the amount payable (in the event of loss), where the value of the thing insured is known and stated to be N217,892.05 and the 10% being easily calculable as N21,789.20. It is only a question of simple arithmetic.
Subject to what I have said above, I agree with the lead judgment of my learned brother Nnaemeka-Agu, J.C.A. I will also dismiss the appeal and affirm the decision of Belgore J., I will also award costs of N350 to the respondent.