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CaseLaw

SBN Ltd v Pan Atl. Shipping V. Trans (1987) CLR 1(d) (SC)

Judgement delivered on January 30th, 1987

Brief

  • Admiralty
  • Bill of lading
  • Carriage of goods by sea Act
  • Letter of credit
  • Limitation of action
  • Ratio decidendi

Facts

The Appellant, a commercial banker, initiated that action leading to this appeal in the Lagos State High Court. The sum claimed as loss is in respect of an amount paid to overseas seller of a consignment of rice covered by an irrevocable commercial letter of credit issued by the plaintiff for and on behalf of its customer, the 2nd defendant.

The entire consignment of rice was shipped by the seller on a vessel called ARETI and landed safely in Lagos Port. In compliance with the terms of the credit all the original negotiable bill of lading and other documents of title were transmitted to the plaintiff Bank as security for the amount paid to the seller. The particular facts stated in the bill of lading material to this appeal are as follows and is headed:

  • 1
    The Carrier: OCEANS International Corporation.
  • 2
    Shipper/Exporter: Senrenella Enterprises Inc.
  • 3
    Consignee: ‘Order of the Shipper”
  • 4
    Notify Party: Nicannar Food Company Limited
  • 5
    Also Notify: Domestic Routing/Expert Institution

    • SAVANNAH BANK OF NIGERIA LTD. LAGOS NIGERIA.

  • 6
    Exporting Carrier/Vessel ARETI
  • 7
    Per Credit No. L – 8729
  • 8
    No. of Pkgs. 57,900
  • 9
    Description of Goods Bags (2895) Metric
  • Tons U. S. Long-Grain
  • Parboiled Rice
  • <
    As per Proforma Invoice
  • dated 23rd May, 1978.
  • 10
    Stamped at the bottom in bold character are the following:-“NOT TO BE RELEASED UNLESS ENDORSED BY SAVANNAH BANK OF NIGERIA LIMITED LAGOS BRANCH”
  • 11
    Printed above the signature of the Master of the ship are the following words:

    • “IN ACCEPTING THIS BILL OF LADING, any local customs or privileges to the contrary notwithstanding, the shipper, consignee and owner of the goods agree to be bound by all of its stipulations, exceptions, and conditions, whether written, printed or stamped on the front or back hereof, as fully as if they were all signed by said shipper, consignee and owner of the goods, such stipulations, exceptions and conditions to apply in every contingency, wheresoever and whensoever occurring, and also in the event of deviation, or unsea-worthyness of the ship at the time of loading or inception of their voyage of subsequently.”

  • 12
    Dated at HOUSTON TEXAS OCTOBER 20, 1978
  • Sgd.

For the MASTER

BY OCEAN International Corp.

There are printed at the back Terms and Conditions of which clauses 28 and 29 are relevant. The importance of these facts will appear later in this judgement. The 1st defendant without sighting the bill of lading delivered the goods to the 2nd defendant, 2nd defendant did not pay the plaintiff for the credit before and after taking delivery, and was never an endorsee of the bill of lading.

The bank therefore issued a writ of summons in the Lagos State High Court against the 1st defendant who released the goods to the buyer, the 2nd defendant claiming the sum of N1,285,313.00 being the value of the rice as appointed clearing agent of the shipper and also by their usage and calling as agent of the bank. The bank claimed that they had suffered loss of the said sum as a result of the unauthorised release of the consignment to the 2nd defendants, and claimed the said sum with interest from both the 1st and 2nd defendants who had failed or refused to pay the money despite repeated demands. The bank claimed in the alternative against the 1st defendant damages in the same sum for negligence in parting with the rice between November 1979 and March 1980 without first being presented with the original shipping documents by the 2nd defendants.

In their defence, the 1st defendants pleaded that they were agents of the carrier and as such they were under no liability to notify the consignee or any other party of the arrival of the rice, but that inspite of this they had in fact issued cargo arrival advice notes on two occasions to both the bank and the 2nd defendant and that it was in response to this that the 2nd defendant came for delivery; they also averred that contrary to the bank’s pleadings, the ship carrying the rice berthed on 9th January, 1979 and the rice was delivered to the 2nd defendant between the 11th and 27th of January, 1979, and that the writ of summons having been issued on 3rd December, 1980, about 2 years after delivery the 1st defendant by virtue of Article III, Rule of the Hague Rules contained in the Schedule to the Carriage of Goods by Sea Act, Cap. 29, Laws of the Federation of Nigeria, 1958, was under no liability to the bank.

The plaintiffs filed a reply in which it joined issue on these averments; the reply also pleaded that the claim against the 1st defendant was in tort thereby implying that the 1st defendant was not protected under the Hague Rules as aforesaid.

At the trial, the 2nd defendant, the buyer who took delivery of the consignment of rice without paying the plaintiff did not defend the action. Judgement was entered against it in default. It did not appeal.

The learned judge heard evidence the transcript of which is not included in the record of appeal before the Court below and this court. It would appear in the court below that the parties agreed that the appeal should be argued on a bundle of papers filed in court. This appeal will therefore be considered on the basis that all the relevant evidence which the parties considered necessary for the determination of the appeal are before the court. At the conclusion of the case the learned judge found in favour of the plaintiff.

The learned judge in his judgement referred to the evidence of the defence witness and particularly that portion reads:

  • “The cargo was in N.P.A. custody when the 2nd defendant collected. It is not possible for 2nd defendant to collect goods without first coming to us. We must satisfy ourselves that the 2nd defendant has title to the goods by the production of the original bills of lading Exhibits 2 – 2B are the original bills of lading which are supposed to be shown as.”

    • All the consignment of rice were delivered to the 2nd defendant. There was no physical loss or damage to the cargo. The judge found that the bank financed the purchase of the goods on arrangement with the 2nd defendant, and that the latter had not repaid the bank. He found that plaintiff suffered loss arising from neglect of the 1st defendant in releasing the goods without first seeing the documents of title and as such found the 1st defendant liable.

    He considered but rejected the defence that the action as statute barred by virtue of the third paragraph of Article II Rule 6 in the Carriage of Goods by Sea Act, Cap. 29 Laws of the Federation of Nigeria 1958 and that the Rule was inapplicable, in the absence of any physical loss or damage to the cargo. And finally entered judgement in favour of the plaintiff for N1,285,313.00 with interest at 13% from 11th November 1979 until judgement debts and costs are fully liquidated.

    The court below in a majority decision allowed the appeal of the 1st defendant, set aside the judgement of the trial court, and held that the Lagos High Court had no jurisdiction.

    The plaintiff/bank appealed to the Supreme Court relying in the main on the dissenting judgement of the Court of Appeal.

Issues

  • 1
    What nature or cause of action does a State High Court have...

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