AKINSANYA V. U.B.A. LTD
| Pages | 968-1028 |
968
NIGERIAN SUPREME COURT CASES
[1986] 2 N.S.C.C.
AKINSANYA V. U.B.A. LTD.
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A.M.O. AKINSANYA
APPELLANT
(Alias M.O. AKINS)
[Trading under the name
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and style of Rocky
Merchants Company]
V
UNITED BANK FOR AFRICA LIMITED
RESPONDENT
SUIT NO. SC 95/1985
15
SUPREME COURT OF NIGERIA
BELLO,
J.S.C.
ESO,
J.S.C.
UWAIS,
J.S.C.
COKER,
J.S.C.
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KARIBI-WHYTE,
J.S.C.
KAWU,
J.S.C.
OPUTA,
J.S.C.
10th July, 1986
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Practice and Procedure - Appeals - Prescription - Time within which to file
notice of,• or seek leave to appeal - Section 31(2)(a), Supreme Court Act -
Interpretation - "Decision" - Interlocutory or final order/judgment, meaning of
-
Court of first instance - Court of Appeal - Tests applicable.
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Jurisdiction - Section 7(1)(e) Federal High Court Act - Federal High Court -
Admiralty matters - Carriage of goods by sea - Or State High Court -
Commercial Law - Bankers Comniercial Credit - Letters of Credit transaction
-
Administration of Justice Act 1956 S.1(i)(h ) - Application of.
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Commercial Law - Commercial Credit transactions - Subsidiary contracts based on
-
Status, rights and liabilities of parties thereto - Article 12(a), (b) and (c)
Uniform Customs and Practice for Documentary Credit (1974) General Provisions
(c) Credit bound by - Foreign laws and usages - Applicability of - Whether
applicant bound by - Whether carte blanche for flagrant mistakes to Banks
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-
Exclusion Clause.
ISSUES:
1. When is an order/ruling; for the purposes of time within which to file a notice
of appeal or make an application for leave to appeal, interlocutory or final in -
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(a)
A court of first instance;
(b)
The Court of Appeal.
2. What is the test applicable in determining when an order/ruling for the purposes
of time within which to file a notice of appeal or make an application for leave
to appeal is interlocutory or final?
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3. Whether the "nature of the order" and "nature of the application" tests are
mutually and exclusively applicable in a cause where the issue is the
determination whether an order is final or interlocutory.
4.
AKINSANYA V. U.B.A. LTD.
969
Whether a transaction for the opening of a letter of credit in which there is a
collateral agreement of carriage of goods by sea is an admiralty matter.
5.
Can a court in a subsequent case depart from its decision in a previous case?
6.
What is the nature of a commercial credit contract?
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7. What is the effect of an Exclusion Clause in a commercial credit transaction?
Can it relieve an issuing bank and its agent from liability to the buyer?
FACTS:
The appellant trading under the name and style of Rocky Merchants entered
into a contract for the supply of 10,000 metric tons of cement from a Swiss Corn-
10 pany, ASDECAMO. He approached and contracted with the respondent bank to
open a letter of credit for the transaction in favour of ASDECAMO. The letter of
credit, for the sum of $570,000, was to be irrevocable and confirmed, and was to
be made available to a Swiss bank (the respondent's correspondent in Switzer-
land) which was to pay ASDECAMO, once the letter of credit was accompanied
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by some specified documents including a full set of 'clean on board' Bill of Lad-
ing. There was an indemnity/exclusionary clause in the appellant's application for
the letter of credit, to absolve the respondent's bank and their corresponding bank
in Switzerland from any liability or "responsibility as to the documents, beyond
seeing that they purport to be in order." The bill of lading, however, was not signed
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by ASDECAMO but by another party. On presentation of the bill of lading and the
other specified documents, ASDECAMO was paid $570,000.
The appellant however did not receive any cement as no cement was shipped.
There was no vessel by the name inserted in the bill of lading or the ship that car-
ried the cement. In fact, the whole transaction was a fraud on the appellant. Des-
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pite this, the appellants collected the shipping documents from the respondent
bank and instructed them to debit their account. The appellant thereafter com-
menced this action for breach of contract by the respondent and its Swiss bank
correspondent for,
inter alia,
wrongful payment on a letter of credit made by them
(i.e. appellants) contrary to the terms and conditions of the said letter of credit.
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The learned trial Judge dismissed the appellant's claim and the appellant thus ap-
pealed to the Court of Appeal, who also dismissed the appeal, but held by a ma-
jority judgment that the High Court had no jurisdiction to try the matter as it was an
admiralty matter. The appellant thereupon further appealed to the Supreme Court.
Counsel for the respondent applied for an enlargement of time within which to
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file notice of appeal against the Court of Appeal's ruling on jurisdiction. A prob-
lem however arose here as to whether the decision of the Court of Appeal was a
final order or an interlocutory order, as this would affect the issue whether the re-
spondent's notice of appeal was filed within time or not. If the majority decision
was a final decision within the meaning of that expression in S.31(2) of the Su-
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preme Court Act 1960 then the notice filed by the counsel for the respondent (with-
in the three months period) would have been within time, but would have been filed
out of time if the decision were interlocutory (as it was filed more than 14 days after
the decision).
HELD:
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1.
There are two tests which may be applied in deciding whether an order made
by a court is interlocutory or final. The first is the
Blay v. Solomon cum
Bozson
v. Altrincham
test, also known as the nature of the order made" test. This test
emphasizes that an order or judgment is final only when it finally disposes of
the rights of the parties i.e. makes an order which would not bring the matter
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further back to itself. The second is the
Salaman v. Warner
test, also known as
the "nature of the application or proceedings test" and it states that an order is
not a final order unless it is one made on such an application or proceeding
that, for whichever side the decision is given, it will, if it stands, finally determine
the matter in litigation.
970
NIGERIAN SUPREME COURT CASES
[19861 2 N.S.C.C.
2.
The courts in this country have however adopted the test that looks at the order
made as against the test (hat looks at the nature of the proceedings. Thus the
Bozson v. Altrincham
test is applicable to both trial court and the Court of Appeal
in deciding whether an order is interlocutory or final. Thus the decision of the
Court of Appeal that the trial court had no jurisdiction was a final decision, as
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after the decision there was nothing further to determine in regard to the rights
of the parties, there was therefore no need for the respondents to apply for an
enlargement of time within which to file their appeal. as the statutory time limit
(three months) for appealing against a final decision provided for in section
31(2) of the Supreme Court Act, had not yet expired.
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3.
The "nature of the order'' test and the "nature of the application" test are mutually
exclusive and cannot be applied together in one case.
4.
A matter concerning the opening of letter of credit, in which there is a collateral
agreement of carriage of goods by sea is not an admiralty matter and a State
High Court has jurisdiction to try it. The decision of the Court of Appeal that
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admiralty jurisdiction applied because the dispute between the parties related
to carriage of goods by ship was misconceived. The dispute in the case was
between the buyer and the issuing bank and had nothing directly to do with the
shipping of goods. The only occasion when, perhaps, admiralty jurisdiction
may be involved in a letter of credit transaction is when there is a dispute
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between the seller and the buyer relating to the carriage of the goods sold by
ship. All parties to a documentary credit transaction deal in documents only,
what happened in the instant case arises from a breach of agreement relating
to the conformity or non-conformity of the documents produced by the seller
(ASDECAMO) to the Swiss bank, acting as agent of the issuing bank, the
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respondent.
5.
A commercial credit contract is a dealing in document
per se,
and not in the
goods they represent. There are four parties to a transaction concerned with
the issue of a letter of credit. This gives rise to four contracts in the transaction.
First between the buyer and the seller. Secondly, between the buyer and the
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issuing bank. Thirdly, between the issuing bank and the confirming or
correspondent bank. And fourthly, between the confirming or correspondent
bank and the seller. It is only the contract between the buyer and the seller that
involves a carriage of goods transaction. Where the bill of lading is required
in the contract between the issuing bank and the confirming bank or the contract
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between the confirming bank and the overseas supplier - seller, they are merely
evidence necessary and requisite for effecting payment. The very and essential
nature of a Letter of Credit transaction is that parties deal only in documents
and not in goods.
6.
The Respondents submitted that the exemption clauses in the application for
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the letter of credit excluded them from liability. The general rule concerning
exclusion clauses is that a party to a contract may be precluded from relying
on the provisions of an exemption clause contained in such contract if he is
guilty of the breach of a fundamental term or breach of the contract. According
to this rule, a fundamental term of the contract or breach of contract cannot be
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excluded by any clauses however favourably formulated. However, the
doctrine of fundamental breach has been overruled and it has been held that
the applicability of exclusion clauses is in all cases not a rule of law but one of
construction. Whether an exemption clause protects a party to a contract in the
event of a breach, or what would have been a breach, depends upon the proper
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construction of the exemption clause of the contract. In construing the contract
between the two parties, it is clear that the parties intended to relieve the
Respondents of liability once the respondents saw that the documents purport
to be in order. Since the respondents did this and performed all of their other
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