Facts:

Sometimes in 1993, the 1st Appellant imported, inter alia, one large 12RK Ruston Diesel Power Engine No. IH1001B from the United Kingdom to Port Harcourt Sea Port. The Diesel Engine was carried by Sea to the Sea Port at Port Harcourt. In March 1993, the 1st Appellant entered into Contract with the Respondent, under which the Respondent agreed to carry out Customs Clearance of the Generator and other Goods at the Port Harcourt Sea Port and transport same by Road to its Project Site at EPZ Calabar, Cross River State.

In furtherance of this Contract, the 1st Appellant delivered the Shipping Documents for the said Goods to the Respondent to enable it do the said Custom Clearance and paid the Respondent the Costs of the Customs Clearance and transporting the Goods from Port Harcourt Sea Port to Calabar carefully, safely and securely. In Breach of this Contract, the Respondent subcontracted the Carriage of the said Goods from the Port Harcourt Sea Port to Calabar to a Third Party, namely, Messrs Tyland Nigeria Ltd of No. 1 Nafcom Road, Port Harcourt, an independent Haulage Company.

In Breach of the Respondent’s Contractual Duty to carry the Goods carefully, safely and securely, the Engine was carried negligently and delivered badly damaged to the 1st Appellant’s Project Site at EPZ Calabar with the knowledge of the Respondent. The 1st Appellant flew in the Manufacturer’s Engineers from the UK to examine and assess the Damage of the Generator. Following the joint Examination and Assessment of the Damage by the Manufacturer’s Engineers and the 1st Appellant’s Engineers, a Report of the Damage was made and submitted to the 1st Appellants.

In Settlement of the Claims for the Damage to the said Ruston Engine, the 2nd Plaintiff, as Insurers, employed the services of UK Firm Mclarens, chartered Loss Adjusters as its Agent in accordance with standard Insurance Practice, who together with their Nigeria Associates, Grand Metropolitan Associates, adjusted both the Oversea and Local Claims relating to the said Damage to the Ruston Engine. The 2nd Plaintiff, as Insurer, has paid to the 1st Plaintiff in full and final Settlement of the Claim in respect of the said Damage to Ruston Engine the total Sum of £95,027.28. McLarens issued Receipts for Payment by 1st Appellant’s Agents in London, Glenyork Ltd. Furthermore, the 2nd Appellant paid to Mclarens the Sum of £3734.50 being Professional Fees and Expenses for Local and Offshore Adjustments.

The Respondent denied that the Damage to the said Ruston Engine was due to their Default or Negligence because it alleged that, according to Police Report, the Accident which resulted in the Damage to the said Ruston Engine was caused by the Driver of the Trailer being pursued by the People suspected to be Thieves. The Respondent denied Liability and refused to pay and indemnify the Appellants for the Loss or Damage to the said Ruston Engine or any part thereof.

The trial Court ruled in favor of the Appellants. Dissatisfied, the Respondent appealed to the Court of Appeal. In its Judgment, the Court of Appeal held that the Contract was for an Arrangement to transport or deliver the Goods to the Consignee at Calabar; and that the Appellants’ Showing and the Conclusion of the trial Court on the Facts squarely brought the Action within the contemplation of the Admiralty Jurisdiction Act. It allowed the Appeal and set aside the Decision of the Trial Court.

Aggrieved, the Appellants appealed to the Supreme Court.