The Position of Law on Section 23 of the Marine Insurance Act and Section 50(1) of Insurance Act

  1. JUMBO UNITED CO. LIMITED

                                         V

1.      LEADWAY ASSURANCE CO. LIMITED

Facts:

The appellant imports stockfish into Nigeria from Iceland. On 7thn March, 1997, the appellant entered into an agreement with the respondent for the insurance of 121 bales of Icelandic stockfish valued at USD$33,880.00 and 1907 bags of assorted Iceland fish valued at US$122,040.00 for the duration of a voyage which commenced in Iceland to Port Harcourt, Nigeria. The respondent issued two insurance policies to the appellant on the 10th and 12th March, 1997. Prior to the execution of the contract agreement, the appellant presented relevant documents to the respondent at the respondent’s request. Later, the appellant paid agreed premium to the respondent, although it was not paid during the period.

 A ship with the appellant’s consignment of fish set sail from a port in Iceland but it disappeared on the high seas without any trace. The appellant informed the respondent about its loss and subsequently made a claim of USD$156,000.00 being the value of the insured goods. The respondent declined liability on the ground that the consignment of fish, the subject matter of the insurance, had already been destroyed as at the date of insurance.

In determining the appeal, the Supreme court considered the provision of section 23 of the Marine Insurance Act, 1961 and Section 50 of the Insurance Act 1997 which provides:

Section 23 (1) of the Marine Insurance Act:

A contract of marine insurance shall be deemed to be concluded when the proposal of the assured is accepted by the insurer, whether the policy is then issued or not; and, for the purpose of showing when the proposal was accepted, reference may be made to the slip or covering note or other customary memorandum of the contract.

Section 50 (1) of the Insurance Act:

The receipt of an insurance premium shall be a condition precedent to a valid contract of insurance and there shall be no cover in respect of an insurance risk, unless the premium is paid in advance”.

Judgment

1.     A marine insurance or contract of marine insurance is an agreement to indemnify against damage to a ship, a cargo or profits involved in a journey by sea. In this case, a contract of Marine insurance was negotiated by the parties for the respondent to indemnify the appellant against damage or loss of his consignment of fish in the voyage from Iceland to Nigeria.

2.     A marine insurance policy must be covered by a policy and if not so covered or embodied, it is not admissible in evidence.

3.     By virtue of section 23 of the Marine Insurance Act, 1961, a contract of marine insurance shall be deemed to be concluded when the proposal of the insured is accepted by the insurer whether his policy is the issue or not and for the purpose of showing when the proposal was accepted, reference may be made to slip, a covering note or the customary memorandum of insurance. Thus, under section 23 of the Marine Insurance Act 1961, a marine insurance can be covered and valued upon oral transaction. The section also permits payments of premium to be made subsequently. Conversely, section 50(1) of the Insurance Act, 1997, which is later in time of enactment, makes a contract of marine insurance valid and enforceable only upon a condition precedent to the effect that premium must be paid in advance. Once such condition precedent of pre-payment of premium is not met, the contract becomes void and unenforceable. So, the position provided in section 23 of the Marine Insurance Act, 1961 is no longer tenable or applicable or valid. In other words, the intention of the legislature by promulgating section 50 of the Insurance Act, 1997 to contradict or conflict with section 23 of the Marine Insurance Act, 1961 is to impliedly repeal section 23 of the Marine Insurance Act, 1961.

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