THE SHELL PETROLEUM DEVELOPMENT COMPANY OF NIGERIA LTD. V. EJEBU (2010)

Background

The respondents, representing the Inesei Community of Gbaratorou, commenced Suit No. YHC/54/98 at the High Court of Bayelsa State, Yenagoa, claiming N100,000,000 in general and special damages against The Shell Petroleum Development Company of Nigeria Ltd. The claim arose from the appellant’s construction in 1991 of the Gbaram Deep Field Access Road across Akanafa Lake. The respondents alleged that the appellant’s partial sand-filling of the lake blocked navigation, altered the surrounding wetlands and ponds, caused flooding on one side, deprived the community of access on the other, and adversely affected fishing, farming and timber activities.

The appellant admitted constructing the road in 1991 but denied negligence. It also pleaded that the claim was statute barred because the cause of action accrued in 1991, whereas the writ was issued on 27 July 1998. The limitation defence was separately set down for determination. In opposition, the respondents relied on correspondence, particularly a letter dated 25 May 1998, in which the appellant described N100,000 as its final offer in relation to the claim. The trial court considered the letter an admission of liability during negotiations and held that it prevented the limitation defence from succeeding. The appellant appealed.

Issues

1. Whether the action was statute barred under section 16 of the Rivers State Limitation Law 1988, applicable in Bayelsa State.
2. Whether the trial court was correct to treat the appellant’s letter and negotiations as an admission of liability sufficient to preserve or revive the respondents’ claim.
3. Whether the suit was initiated by a valid writ of summons and whether the High Court possessed jurisdiction to entertain it.

Ratio Decidendi

The Court of Appeal held that jurisdiction is fundamental and that any objection concerning the competence of a suit must be resolved before the merits are considered. A jurisdictional point may be raised for the first time on appeal, with leave where necessary, because a judgment or order made without jurisdiction is a nullity. A court is competent only where the proceedings are initiated by due process and all conditions precedent to jurisdiction have been satisfied.

The court further held that the writ of summons issued by the Bayelsa State High Court for service in Port Harcourt, Rivers State, did not comply with section 99 of the Sheriffs and Civil Process Act. Where a writ is issued for service outside the state in which it was issued, the statutory requirements concerning the period between service and the date for appearance must be observed. The defective writ was therefore a nullity, and all proceedings founded upon it were likewise void.

On limitation, the court accepted the unchallenged finding of the trial judge that the cause of action arose in 1991. Since section 16 of the Rivers State Limitation Law prescribed five years for actions founded on contract or tort, the claim became statute barred in 1996. Negotiations between the parties did not suspend, interrupt or extend the statutory period. Parties cannot, by their conduct or consent, alter the period fixed by legislation.

The letter relied upon by the respondents was held to be no more than an unaccepted offer. It did not clearly admit negligence or establish a concluded agreement. The respondents’ subsequent claim for a sum substantially exceeding the amount offered was evidence that the offer had not been accepted. Even where a clear acknowledgement or promise to pay a statute-barred liability creates a fresh contractual relationship, it does not revive or enlarge the limitation period applicable to the original cause of action unless the fresh agreement itself is being enforced.

Court Findings

The appellate court found that the trial judge had correctly identified 1991 as the date on which time began to run, but erred in treating Exhibit A as an admission that prevented the claim from becoming statute barred. The court distinguished a binding settlement or fresh agreement from an incomplete offer made during negotiations. It also held that the respondents were bound by the unappealed factual finding concerning the date on which their cause of action accrued.

Conclusion

The appeal was allowed. The Court of Appeal declared the writ and the proceedings founded upon it a nullity for non-compliance with section 99 of the Sheriffs and Civil Process Act. Independently, the court held that the action was statute barred by 1996 and that Exhibit A neither extended the limitation period nor revived the original claim. Suit No. YHC/54/98 was consequently dismissed. Each party was ordered to bear its own costs.

Significance

The decision reinforces the strict and threshold character of jurisdiction in Nigerian civil procedure. It also clarifies that limitation statutes cannot ordinarily be defeated by continuing negotiations or by an equivocal settlement offer. A party seeking to rely on an acknowledgement after limitation has expired must establish a clear and enforceable fresh promise or agreement and must sue upon that new contractual obligation, rather than attempt to revive the extinguished original cause of action.