NIMASA Appeals Judgment Sum

An appeal court sitting in Lagos, southwest Nigeria, has adjourned till 16 January next year, an appeal filed by Nigerian Maritime Administration and Safety Agency (NIMASA), against a judgment sum of N146,343,977.61 obtained by an insurance firm, Mutual Benefit Assurance, against the agency.

What led to the appeal started in 1999, when the insurance company was appointed as the main insurer of NIMASA by the then Minister of Transport, a contract which covered all risks associated with the agency’s operations.

The company then entered the agency’s vessels for protection and indemnity cover, with P and I club, HSBC Insurance Brokers Limited and Skuld Assurance in Norway, who were the foreign insurance companies appointed by NIMASA.

The defendant paid a premium for 1999 to the plaintiff who provided all the required services.

The plaintiff further averred that in preparing for 2000 roll over of the insurance services, it had various preliminary discussions with the relevant officials of NIMASA, which culminated in the insurance company forwarding a renewal register containing all the necessary attachments and endorsements in order to avoid any lapse in government agency’s policies.

The overseas insurers were, however, also instructed to continue to cover the defendant’s risk throughout the year 2000, while the plaintiff continued its role as the sole and current insurer to the agency since the contract had not been terminated.

Based on the 1999 valuation of the agency’s assets, the premiums payable to the plaintiff was a total sum of N104,863,977.61 and $258,000 which obligation the defendant has failed, refused and neglected to honour as it claimed that Mutual Benefit Assurance was not the main insurers and not on an indefinite term, while it was subjected at all times to the payment of premium as a new minister might decide to use another insurance company.

The insurance company called its Managing Director, Mr. Akin Ogunbiyi, as sole witness in the case.

However, the defendant denied that the plaintiff entered the agency’s vessel for protection and indemnity cover abroad and therefore, the premium paid in 1999 was further to the contract of insurance between the defendant and the plaintiff for 1999 only.

The defendant further alleged that the preparation for the 2000 roll over was done without the consent of the defendant despite the discussion with relevant officials and as such, any activity done was not pursuant to any subsisting contract of insurance between the parties as no contract was entered with the plaintiff for 2000. It was also alleged that to the knowledge of the plaintiff, another insurance company handled all the insurance matters for the defendant, who called one of its staff as sole witness.

Justice Charles Archibong, after considering the submissions of counsels of the two parties, said “I find that there was no formal termination of the insurance contract at the end of 1999 and that the plaintiff continued to provide services in 2000 following and particularly, I find as fact, that insurance companies take risk up to their retention capacity as direct insurers and any extra above that capacity goes by way of premium to a re-insurer who insures the direct insurer.”

Justice Archibong further said that in this case, the plaintiff had exposure without any premium for much of the service year which effectively terminated only in September 2000, when a new insurer was appointed by the agency.

“This is to say the least is not good business practice, inequitable and against what should be public policy. If indeed the premium due from NIMASA to the Mutual Benefit Assurance for 2000 was the same as what was paid in 1999, the year before, that is N104,863,977 and $258,000,” he added.

Consequently, judgment was entered in that amount and an interest at the rate of 21 per cent per annum till the judgment day, while henceforth at the rate of 7 per cent per annum till the stated sums are settled.

Meanwhile, NIMASA, being dissatisfied, filed an appeal against the judgment.