RAHMAN BROTHERS LIMITED V. NIGERIAN PORTS AUTHORITY (2019)

Background

Rahman Brothers Limited stored teak logs at a facility within the New Warri Port under an arrangement with the Nigerian Ports Authority (NPA). The relationship was governed by tenancy and licensing documents, including an indemnity provision relating to losses arising from fire. A fire started approximately one kilometre from the storage facility, reportedly as a result of bush burning by persons engaged in rat hunting. During the harmattan season, the fire spread to the facility and destroyed the appellant's teak logs.

Rahman Brothers alleged that NPA's officials were negligent because they failed to extinguish or control the fire before it reached the storage area. It commenced proceedings at the Federal High Court, Benin Division, claiming N242,530,899.50 as damages for the loss of the logs. NPA denied owing the appellant a duty to extinguish a fire which began outside the demised premises. It also relied on the contractual indemnity clause and counterclaimed N12,500,000 under the relevant indemnity obligation and N1,317,123 as outstanding rent.

The Federal High Court found in favour of the appellant on negligence and also granted the counterclaim for rent. On appeal, the Court of Appeal affirmed the finding of negligence but reduced the damages from N242,530,889.50 to N20,000,000, treating the claim as one for special damages that had not been strictly proved. It also upheld the award of arrears of rent. Rahman Brothers appealed to the Supreme Court, while NPA filed a cross-appeal challenging the jurisdiction of the Federal High Court.

Issues

1. Whether the Federal High Court had jurisdiction to entertain a claim founded on negligence and a landlord-and-tenant relationship merely because one of the parties, NPA, was a Federal Government agency.
2. Whether the Court of Appeal was correct to uphold the appellant's entitlement to general damages for negligence.
3. Whether the contractual indemnity clause excluded or limited NPA's liability for the fire incident.
4. Whether the damages awarded by the trial court were specially pleaded and strictly proved.
5. Whether NPA was entitled to judgment for arrears of rent under its counterclaim.

Ratio Decidendi

The Supreme Court held that jurisdiction is fundamental and must be determined before the merits of an appeal. A decision reached by a court lacking jurisdiction is a nullity, regardless of how carefully the proceedings were conducted. The jurisdiction of the Federal High Court is conferred principally by the Constitution and relevant statutes, not by the rules of court.

Section 251(1) of the Constitution of the Federal Republic of Nigeria, 1999, confers exclusive jurisdiction on the Federal High Court over specified subject matters, including admiralty, Federal Government revenue, banking, bankruptcy, aviation, mines and minerals, and matters concerning the administration, management and control of the Federal Government or its agencies. However, the mere fact that a defendant is a Federal Government agency does not give the Federal High Court jurisdiction over every claim against that agency. The subject matter of the action must also fall within one of the constitutionally specified heads of jurisdiction.

The Court characterised the appellant's claim as one arising from ordinary negligence and a contractual landlord-and-tenant relationship. The pleadings did not allege breach of a statutory duty imposed on NPA, nor did they challenge an executive or administrative decision. The claim was therefore not transformed into a Federal High Court matter by NPA's status as a Federal Government agency. Claims founded on simple contract, or negligence arising from such a contractual relationship, ordinarily fall within the jurisdiction of a State High Court.

Court Findings

The Supreme Court, in the lead judgment delivered by Onnoghen CJN, rejected the Court of Appeal's reliance on Nigeria Ports Authority Plc v. Lotus Plastics Ltd and NEPA v. Edegbero. Those authorities were distinguishable because the causes of action and legal relationships involved in them were materially different. In particular, the present dispute did not involve the type of statutory-duty or subject-matter considerations necessary to bring it within section 251(1) of the Constitution.

The Court accepted that NPA was a Federal Government agency, but stressed that jurisdiction must exist both over the parties and over the subject matter. Since the claim was essentially for negligence and breach of obligations connected with a tenancy, the Federal High Court could not competently determine either the main claim or NPA's counterclaim. The absence of jurisdiction prevented the Supreme Court from deciding the issues concerning proof of damages, the indemnity clause, the alleged duty of care, or the arrears of rent on their merits.

Conclusion

The appeal by Rahman Brothers Limited was dismissed. NPA's cross-appeal was allowed. The Supreme Court held that the Federal High Court lacked jurisdiction over the suit as constituted and ordered that both the claim and counterclaim in Suit No. FHC/B/CS/II/1998 be struck out for want of jurisdiction. The parties were ordered to bear their own costs.

Significance

The decision reaffirms the subject-matter limits of the Federal High Court's jurisdiction in Nigeria. It is not enough for a claimant to sue a Federal Government agency, or for such an agency to be a party, to invoke the Federal High Court's exclusive jurisdiction. The court must examine the substance of the pleadings and the true nature of the cause of action. Where the dispute concerns ordinary negligence, simple contract, tenancy, or a contractual incident between private parties and a Federal agency, and does not fall within section 251(1), the proper forum is generally the State High Court. The case also illustrates why jurisdictional objections must be resolved at the outset: once jurisdiction fails, all substantive findings and orders made in the proceedings cannot stand.