TSKJ NIGERIA LIMITED V. OTOCHEM NIGERIA LIMITED (2018)

Background

Otochem Nigeria Limited, a company involved in marine construction and equipment leasing, entered into an arrangement with TSKJ Nigeria Limited for the supply and hire of a houseboat, identified in the proceedings as “Prince III” or “Prince II”. The houseboat was required as temporary accommodation for the appellant’s staff. The agreed arrangement was evidenced principally by a Local Purchase Order issued by TSKJ. The respondent alleged that the appellant was required to pay an advance sum of N6,288,000, representing two months’ rental and the cost of transporting the houseboat from Warri to Bonny, at a daily rental of N100,000.

After delivery of the houseboat on 26 March 1997, the appellant requested further modifications to bring it to a European executive standard. Otochem carried out the additional work, allegedly at a cost of N12,000,000. The respondent contended that the appellant used or retained possession of the houseboat for 148 days but failed to pay the agreed rentals and other sums. After repeated demands, Otochem retook possession of the houseboat on 20 August 1997 and commenced proceedings at the High Court of Rivers State, Port Harcourt, claiming hire rentals, special damages and general damages for breach of contract.

The trial court entered judgment for Otochem in the total sum of N32,088,000, including N12,000,000 special damages, N6,288,000 as the advance payment due, and N8,800,000 for additional hire. The Court of Appeal allowed the appeal in part and set aside the award of special damages, but affirmed the material findings that a valid contract existed, that the houseboat was delivered, and that TSKJ breached the agreement. TSKJ appealed to the Supreme Court.

Issues

1. Whether the High Court of Rivers State had jurisdiction to entertain the action, or whether the claim fell exclusively within the admiralty jurisdiction of the Federal High Court under section 251(1)(g) of the 1999 Constitution.
2. Whether the Court of Appeal properly reviewed the evidence and was right to affirm the finding that there was a valid and enforceable contract between the parties.
3. Whether the respondent was entitled to N6,288,000, being the amount allegedly payable in advance before or upon delivery of the houseboat.

Ratio Decidendi

The Supreme Court held that jurisdiction is determined principally by the plaintiff’s claim as disclosed in the writ of summons and statement of claim, not by the defendant’s defence or by a description of the property involved in the transaction. The two relevant considerations are the constitutional or statutory source of the court’s jurisdiction and the nature of the claims placed before it.

Section 272 of the 1999 Constitution gives a State High Court broad civil jurisdiction, subject to limitations imposed by section 251 and other constitutional provisions. Section 251(1)(g) gives the Federal High Court exclusive jurisdiction over admiralty matters, including shipping, navigation, Federal ports and carriage by sea. However, the claim in this case was for unpaid hire rentals and damages for breach of a contract. It was therefore a simple contractual debt-recovery action, not an admiralty claim.

The fact that the subject matter was a houseboat, or that it was transported by water from Warri to Bonny, did not automatically transform the contract into an admiralty transaction. The definition of “ship” under the Admiralty Jurisdiction Act could not displace the true character of the pleaded claim. A ship may be involved in a transaction without every dispute arising from that transaction becoming an admiralty matter.

Court Findings

The Court affirmed the concurrent findings of the High Court and Court of Appeal that the Local Purchase Order constituted the original agreement and that the respondent subsequently delivered the houseboat. The evidence did not establish that refurbishment or delivery by a particular date was a condition precedent that prevented formation of the contract. In particular, the alleged delivery date was not clearly stipulated in the relevant document, and there was no sufficient contractual basis for treating time as of the essence.

The Court also rejected the appellant’s argument that its acceptance of the houseboat was qualified or conditional. The evidence showed a definite offer and acceptance, followed by performance by the respondent. The further modification request did not nullify the original contract; rather, the evidence supported the conclusion that the respondent performed its obligations and that the appellant failed to make the agreed payments.

Although evaluation of evidence and the assignment of probative value are primarily functions of a trial court, an appellate court may review the record to determine whether the trial court properly performed that function. In this case, the Court of Appeal correctly reviewed the evidence and found no basis for disturbing the trial court’s conclusions. The Supreme Court found no exceptional circumstance warranting interference with the concurrent factual findings.

The jurisdictional objection was competent even though it was raised for the first time before the Supreme Court because jurisdiction is a fundamental and threshold issue. Nevertheless, the objection failed on its merits. The third issue, concerning the alleged absence of a binding contract, was considered repetitive and unnecessary because it had already been resolved under the other issues.

Conclusion

The Supreme Court unanimously dismissed the appeal. It upheld the jurisdiction of the High Court of Rivers State and affirmed the material decisions of the lower courts, including the award of N6,288,000 to the respondent. The earlier setting aside of the N12,000,000 special-damages award by the Court of Appeal remained undisturbed. Costs of N500,000 were awarded against TSKJ Nigeria Limited in favour of Otochem Nigeria Limited.

Significance

The decision confirms that the subject matter or physical nature of goods does not determine jurisdiction in isolation. Nigerian courts must examine the substance of the plaintiff’s pleaded claim. A contractual dispute concerning the hire, supply or use of a vessel will remain within the jurisdiction of a State High Court where the claim is simply for payment and damages for breach, unless the pleadings disclose a genuine admiralty or maritime cause falling within section 251(1)(g). The case also reinforces the limits on appellate interference with concurrent findings of fact and illustrates that jurisdiction may be raised at any stage, including for the first time on appeal.