B. E. O. O. Industries (Nigeria) Ltd V. Mrs. S. B. Maduakoh & Anor (1975)
LawGlobal-Hub Lead Judgment Report
When this case came up for trial in the lower court (i.e. the High Court of Lagos) there were stored away in a store 10,242 special satchels, designed for use by the Census Board during the last census exercise in the country in 1973; they had been manufactured by the respondents at the request of the appellants but had not been collected and paid for by them in accordance with the terms of a contract concluded between the parties during the month of May, 1973.
The evidence which the learned trial Judge accepted in the lower court was that pursuant to negotiations between the appellants and the respondents, the latter at the request of the former agreed to manufacture a total of 150,000 special satchels. It happened in this way: In May, 1973 the 1st appellant who, together with the 2nd appellant, was trading under the style of “Plumstead Commercial and Company” approached the Managing Director of the respondents, B.E.O.O. Industries Ltd., a trading company incorporated in Nigeria, and they discussed about the manufacture of special census satchels; these satchels were required by the National Census Board which in turn had asked he appellants to make available for its use, at an agreed fee, a total of 150,000 of the said satchels.
The negotiations culminated in an agreement between the parties as evidenced by exchange of letters and, in particular, the first appellant’s letter of 15th May, 1973 (Exhibit E). There was a statement given in evidence (although not appearing in the pleadings) that the satchels were to bear and did bear the coat-of-arms of the Federal Government of Nigeria. At first it was agreed that a total of 150,000 satchels were to be manufactured for the appellants at a coat price of N1.30 per satchel. Subsequent to the agreement and after some of these satchels had been manufactured by the respondents, they (respondents) were obliged to complain to the appellant about the rise in the price of raw materials used in the production of these satchels.
Consequent upon this complaint, it was agreed verbally, according to the respondents, that the unit cost of each satchel should be increased by 50k (i.e. from N1.30 to N1.80). It should be mentioned here, at once, that the learned trial Judge did not accept this evidence of oral variation of the terms of the contract culminating in the increase of the unit price of each satchel.
However, in pursuance of the contract the respondents manufactured 150,000 special census satchels but the appellants took delivery of, and paid for, only 139,758 of them inspite of persistent and pressing demands of the respondents that they (the appellants) should collect and pay for the balance (10,242 special census satchels). Following the appellants’ refusal to collect and pay for the balance of the said satchels the respondents were compelled to initiate the present proceedings and claimed by their writ of summons as follows:-
“N100,000.00 being special and general damages for breach of contract of manufacture of 150,000 units of census satchels”
and in the final paragraph of their statement of claim, the respondents claimed:-
“….special and general damages of N100,000.00 and interest at the rate of 10% per annum.
PARTICULARS OF DAMAGE
(1) Balance due on contract sum N88,314.60
(2) Cost of storage of 10,242
satchels and general damages N11,685.40
Apart from a document Exhibit M. (Certificate of Incorporation, under the Registration of Business Names Act, of the trading concern known as Plumstead Commercial & Company) which was put in evidence by the appellants during the cross-examination of one of the witnesses for the respondents, the appellants relied on their pleadings and did not call any witness in support of their case. It was clear from the Statement of Defence of the appellants that they were not disputing the existence of the contract; they however, denied (a) that there was any oral variation of the same culminating in an increased unit price of 50k for each manufactured satchel and (b) that the respondents produced 150,000 special satchels “of good quality.” According to the appellants, “the respondents delivered only 139.758 satchels of good quality which was 10,242 short of the number bargained for”, and they (respondents) “were duly paid what was due for the amount so delivered which was N181,685.04”. Appellants further averred in their defence that “in consequence of the failure of the plaintiffs to supply the satchels” they were obliged to make alternative arrangement for the supply of the remaining 10,242 satchels. It should, however, be mentioned that the 2nd appellant denied that he was a member of trading partner of Plumstead Commercial & Company which is a business of which the first appellant claimed to be the sole proprietress; and it was in their effort to establish this aspect of their defence that Exhibit M was put in evidence by the appellants. At the trial, however, three witnesses one of whom (a Mr. Butler Ogiale) was the managing director of the respondents/company testified in support of the case for the respondents; and in the concluding stages of his evidence, Mr. Ogiala told the court that because the appellants refused to collect the remaining 10,242 satchels (the balance of their order) the respondents/company were compelled to hire a warehouse in which to store the same. As is evident from their claim, part of it is in respect of the cost of hire of the said store.
The learned trial Judge having reviewed the evidence before him made the following observations:
“…………… I am of the opinion that the refusal by the defendants to take delivery of 10,242 satchels was a wrongful act which constituted a breach of their contract with the plaintiffs. And by section 50(1) of the Sale of Goods Law Cap 115, the plaintiffs are entitled to maintain an action against the defendants for non-acceptance of these satchels. The measure of damages is the estimated loss directly and naturally resulting, in the ordinary course of event, from the defendants’ breach of contract………….. In a situation such as in this case where damages is claimed for non-acceptance of satchels for which there is no available market, the measure of damages is not only loss of profit, but includes the loss of the cost of the satchels that cannot be disposed of by the plaintiffs…”
The learned trial judge after considering the several submissions on the issue of damages which were made before him continued his observations:
“…It only remains for me to calculate the loss to the plaintiffs in respect of the 10,242 satchels at the unit price of N1.30 and to consider the claim for general damages and storage. On the latter, I do not consider the claim for general damages to be well founded as it does not represent any loss to the plaintiffs on the breach of contract, nor is there any evidence as to the actual amount incurred on storage of the 10,242 satchels. Accordingly, the claim for N11,685.40 representing storage and general damages fails and it is dismissed. With respect to the loss to the plaintiffs on the breach of contract by the defendants, the amount would be calculated on the agreed unit price of N1.30 for each of the 10,242 satchels; which gives a total loss of N13,314.60…”
The learned trial Judge thereupon entered judgment for the plaintiffs for the sum of N13,314.60 and costs assessed at N250. This appeal is from the said judgment.
The respondents, in purported compliance with Rule 13(1) of Order 7 of the Supreme Court Rules filed a “notice of contention for variation” of the said judgment, part of which reads:
“And take notice that the grounds on which respondents intend to rely are as follows:-
(1) The learned trial Judge erred in law in failing to hold:-
(a) that there has been a variation of the agreement for the contract price of the satchels manufactured by the respondents;
(b) that the parties to the action mutually agreed that the increase on each satchel manufactured and delivered by the respondents would be credited to the respondents when obtained by the appellants from the National Census Board;
(c) that the additional sum representing the increase in price of each satchel now amounts to N88,314.60; when there is uncontradicted and uncontroverted evidence to prove (a) – (c) above.
(2) The learned trial Judge erred in law and on the fact in failing to direct his mind to the fact that the respondents have been induced, by the promise made to them by the appellants that they would be credited with the additional sum representing the increase on each satchel, to alter their position and to produce the satchels at very high costs, and thereby suffered a loss of N11,685.40…”
A notice of intention to rely upon a preliminary objection to respondents’ notice of contention to vary the judgment of the lower court was duly filed by learned counsel for the appellants and this was considered before the appeal was heard. After hearing both counsel for appellants and the respondents we sustained the preliminary objection, struck out the notice filed by the respondents, and said that the reasons for our decision will be given in the course of the judgment on the appeal and, we now do so.
The sum of the argument in support of the objection of Chief Williams, learned counsel for the appellants, to the respondents’ notice of contention for variation of the judgment of the lower court (hereinafter referred to as “The notice for variation”) is that the grounds for the application in the notice for variation, without doubt, are, indeed, grounds of appeal from the said judgment which not only contend for, and urge upon this court, a reversal of most of the findings made against the respondents but also ask for substitution of findings in their favour in several material aspects of the issues already settled by the said judgment. Learned counsel for the appellants then submitted that it was not open to the respondents (who should, in the circumstances, come by way of cross-appeal) to pursue the above contentions by way of a notice for variation under Order 7 Rule 13 of the Supreme Court Rules. A cursory perusal of the grounds in support of the notice for variation (already set out above) makes it abundantly clear that the respondents are not merely asking for a variation of certain aspects of the judgment; they are in fact very dissatisfied with it and are, in effect, asking for a replacement of the judgment of the lower court with another in the terms set out in the several grounds in support of their notice for variation. The scope of Rule 13 Order 7 of the Supreme Court Rules (SCR) was examined in detail by this court in Lagos City Council v. Ajayi (1970) All NLR 292 at 293-297 and we do not see the need for going over the same grounds again, except that we think that it ought to be emphasised that the procedure under Rule 13 of Order 7 SCR is available to a party only where although as a respondent he intends to retain the judgment appealed from by the opposite party, at the same time he wants the judgment varied or affirmed on other grounds. In the case in hand, the respondents’ notice for variation clearly seeks a reversal of the judgment of the lower court and they can only do so by way of an appeal (or, in the con of the present proceedings, a cross-appeal) (See also Oyekan v. B.P. Nigeria Ltd. (1972) 1 All NLR 45 at 47-48).
The principal question which arises from the arguments of learned counsel for the appellants is whether on the face of the respondents’ claim as formulated in both their writ of summons and statement of claim, the learned judge erred in law in awarding to the respondents the sum of N13,314.60 “as loss to plaintiff on the breach of contract by the defendants…. calculated on the agreed unit price of N1.30 for each of the 10,242 satchels” The submission which has been urged upon us is that this award is, in the circumstances of the case in hand, in error of law. Before examining the various arguments in support of this submission we consider it pertinent, at this stage, to examine the law relating to the rights of a seller in an action for damages for non-acceptance by the buyer following a breach of a contract of sale of goods.
The rights of the seller under a contract for the sale of goods vary according as the property in the goods sold has, or had not, passed to the buyer. Where under the contract (i.e. a contract of sale) the property in the goods has passed to the buyer then if the buyer wrongfully refuses to pay for the goods in accordance with the terms of the contract the seller may maintain an action against the buyer for the price. – (See Section 49(1) of the Sale of Goods Law Cap 115 (1959) Laws of Western Region, applicable to Lagos State at the time of the trial of the case in hand, but now Section 49(1) Cap. 125 (1973 edition) Laws of the Lagos State). Where under a contract of sale, although the property has not passed but the price is payable on a certain day irrespective of delivery, and the buyer wrongfully refuses to pay the price, the seller may maintain an action for the price (See Section 49(2) of the Sale of Goods Law Cap. 125 (1973 edition) Laws of the Lagos State). Where, however, under a contract for sale of goods the seller has not transferred the property in the goods to the buyer (as where the contract is for sale of goods not in a deliverale state, as in the case in hand) the breach of such a contract (e.g. by refusal of the buyer to accept and pay for the goods) can only attract an action for damages because it can only affect the seller by way of damages, since the goods are still in the hands of the seller. The seller’s only action against the buyer (save in the case where there may be a right to a claim for specific performance), is an action for damages for non-acceptance. An action against the buyer of goods for the price is not an action for damages and in an action by the seller for damages, the seller is expected to recover the damage that he has sustained and not (necessarily) the full price of the goods. Hence a claim by the seller for damages for non-acceptance does always amount to an election by the seller to treat the buyer’s refusal to accept and pay for the goods as a repudiation of the contract. Unfortunately both the writ of summons and the Statement of Claim in the case in hand, do not appear to advert to the foregoing statements of the law; and both in their Statement of Claim and evidence in court, the respondents appear to waver, if not confused on the difference between a claim for damages for non-acceptance by the buyer following a breach of a contract for sale of goods and one for breach of contract under the general law.
The claim on the respondents’ writ of summons, without doubt, is one for special and general damages for a breach of contract. The cumulative effort, however, of several paragraphs of the statement of claim filed by them suggest that they claim damages for non-acceptance by the appellants of goods manufactured on their order pursuant to a contract for sale of goods. For instance, paragraph 10 of the statement of claim reads:-
“(10) The defendants took delivery of 139,758 satchels and although the plaintiffs have before the due date for delivery manufactured 150,000 satchels, the defendant have refused to collect the balance of 10, 242 satchels.
(11) The defendants have only paid to the plaintiffs the sum of N181,685.40 leaving a balance of N88,314.60 (i.e. the contract price of 10,242 satchels)” . (Brackets supplied)
However, because the claim in their writ of summons is one for a breach of contract and for special and general damages therefor, the respondents felt compelled to set out particulars of damage. Even here, they manifested a further state of confusion first, by claiming in the first item of particulars of damage the contract price of the goods under the sale contract and secondly, in the second item of particulars of damage, the cost of storage of these goods as well as “general damages.” Learned counsel for the appellants has urged upon us that the first item claimed in the particulars of damage set out in the pleadings of the respondents ought not to be entertained in the present claim and we think there is considerable merit in the submission.
Now, even if the said item of claim should be regarded as one made under a claim for “damages for non-acceptance” available to the seller under the law relating to sale of goods they (the respondents) cannot properly pursue such a claim (i.e. a claim for the price of unclaimed-goods) because the facts given by them in evidence did not suggest that the property in these goods (unclaimed) had already passed to the buyers (the appellants). Section 49 of the Sale of Goods Law Cap 125 was, therefore, inapplicable and cannot avail the respondents. And if that item of claim be regarded as an item of damages (be it special or general) particularised in an action for breach of contract under the general law, it must be considered improper and ought not to be maintained by the respondents if their stance was one which seeks to affirm the contract of sale; but as it is obvious from their pleadings, to which reference had earlier been made, it appears that they were also attempting a claim for “damages for non-acceptance” arising from a contract of sale which was breached. As stated earlier on, however, such an action (i.e. by a seller under a contract of sale wherein the property in the goods has not, as yet, passed to the buyer) presupposes an election on the part of the seller to treat the buyer’s refusal to accept and pay for the goods as a repudiation of the contract, and in such cases the law takes the view that the property in the goods revests in the seller. In any event, if a claim for the contract price could properly, have been maintained by the seller, it should be brought under a separate head of claim, and not as an item of damages, in a claim for breach of contract (See Boutros Abdallah v. Michael Said Achou 1969) 1 All NLR 442).
A far more serious objection was taken by learned counsel for the appellants in respect of the final award made in favour of the respondents. According to learned counsel the sum awarded was in fact ‘the balance due on contract sum” (or price) but based on a calculation that arrived at a figure (i.e. total amount) lower than that set out in the particulars of claim. Learned counsel for the appellants has, therefore, argued that the award was improper since indirectly it seeks to maintain a claim which was not, in the circumstances of this case, available, in law, to the respondents. He argued that since the learned trial Judge had rejected and dismissed the second item – a claim for storage of the satchels and for general damages – set out in the particulars of damage given in the statement of claim, there was left for consideration only the first item which, as indicated earlier on, can neither properly be maintained by the respondents on their present claim as expressed in the their writ of summons (being one for damages for breach of contract under the general law) – see Abdallah v. Achou (supra); nor under section 50 of the Sale of Goods Law for the reasons given earlier on in this judgment. This award, learned counsel for the appellants further submitted, overlooks the basic rule of practice that a party to a case ought not to be allowed to set up a case different from that set down in his pleadings; and, again, we think there is considerable merit in the submission. Before dealing further with this aspect of the argument of learned counsel, we think it is necessary to consider another important aspect of the right of the seller (of goods) in an action for “damages for non-acceptance” in so far as it relates to the measure of damages that can be awarded, by a court, in his favour. The best pronouncement, of the common law on the subject (now codified in section 50 of the Sale of Goods Act 1893 – UK, which is in identical form with Section 50 of the Sales of Goods Law, Cap 125 aforesaid) was made by Tindal, CJ., in Barrow v. Arnaud (1846) 8 QB 604 at 609-10 and it reads:-
“Where a contract to deliver goods at a certain price is broken, the proper measure of damages is in general the difference between the contract price and the market price of such goods at the time when the contract is broken because the purchaser having the money in his hand, may go into the market and buy. So if a contract to accept and pay for the goods is broken, the same rule may be properly applied for the seller may take his goods into the market and obtain the current price for them…”
(See also Sections 50(1), (2) and (3) of the Sale of Goods Law Cap 125). We refer particularly to sub-section (3) of section 50 which makes the above rule applicable where there is “available market” for the goods. Where, however, there is no available market different considerations apply in assessing damages and it could happen in these circumstances that the end result may produce an award equal to the contract price ( and not the difference between the contract and market price); but in all cases where the seller’s claim for damages arises from “non-availability” of market we think this ought to be reflected in his pleadings.
We will now deal with the appellants’ complaint that the final award was not in consonance with the case which the respondents had put forward in their pleadings. This is an action in which the respondents are claiming special and general damages and by rules of pleadings they (the respondents) must plead special damages and give particulars thereof before they can lead any evidence thereon.
“Special damages consists in all items of loss which must be specified by (the plaintiff) before they may be proved and recovery granted. The basic test of whether damage is general or special is whether particularity is necessary and useful to warn the defendant of the type of claim and evidence, or of the specific amount of claim, which he will be confronted with at the trial…” (The underlining and brackets supplied) – See Mayne and McGregor on Damages 12th Ed (1961) P. 813, para
When the case came up for trial it was clear from the first item in the particulars that the special damages claimed were in respect of a balance of contract sum (i.e. in effect the price of the balance of 10,242 satchels which was fixed at N88,314.60). That was clearly a claim for debt. It was improper to bring such an action in the circumstances of this case (See Abdallah v. Achou (Supra) and the learned trial Judge should have dismissed the claim. Rather, the learned Judge considered that item as a claim for special damages under an action for damages for non-acceptance; and in doing so he first dealt with the claim as one in which the seller was entitled to damages as a result of “non-availability” of market for the satchels, and (2) he arrived at the figures of N13,314.60 far much lower than the figures of N88,314.60 given in the respondents’ particulars of damage aforesaid. The only evidence, at the trial, of non-availability of a market was a cursory remark by Mr. Ogiale in the course of his evidence that the unclaimed satchels bore the emblem (coat-of-arms) of the Federal Government, a matter to which no reference was made in the pleadings; and neither in the evidence of the respondent nor in their pleadings was any reference made on any attempt on the part of the respondent, even if unsuccessful, to sell these satchels to the Federal Government who required them for the national census exercise, or to any one else.
We have already pointed out that it was wrong for the learned Judge in view of the form of the claim before him, which was not amended by the respondents, to deal with it as one for damages for non-acceptances of goods, and no useful purpose will be served in going over the reason therefore. However, we think it should be pointed out that although there is today a tendency to allow claims for special damages to be proved although particulars thereof have not been meticulously set out in the pleadings, there is need however to give sufficient warning in the pleadings, to the opposite party of the claim for special damages he had to meet in court.
Accordingly, if a plaintiff has suffered damage of a kind which is not the necessary and immediate consequence of the wrongful act, he must warn the defendant in the pleadings that the compensation claimed will extend to this damage, thus showing the defendant the case he has to meet and assisting him to compute a payment into court…………………..”(Underlined supplied) (See Perestrello E. Companhia Limitada v. United Paint Co. Ltd. (1969) 1 WLR 570 at 579 per Lord Donovan) and dealing with the same subject and particularly in relation to a situation, such as the case in hand, in which an award of far less an amount than that claimed by way of special damages, was made Devlin J. made the following observation:-
“There exists an impression that, when pleading special damage, one can plead a certain figure, arrived at in some way, and one can then set up any lower figure in court and seek to justify it. In my view, that is not the proper way to plead special damage, and, if it were persisted on to its logical conclusion, it would reduce to a farce the pleading of special damage, of which particulars have to be given. It would never be necessary to do more than to plead that the goods were valueless and then say in court ‘They may not have been valueless, but they were only worth seventy-five per cent, or some other percentage of their true value’.
Such a practice would not only reduce the giving of particulars of special damage to a farce, but would prevent what is one of the objects of the giving of those particulars, viz., to enable the defendant to know what is really being claimed so that he may, if he so desires, make a payment into court … No one expects minute accuracy, but, in my view, the special damage which is pleaded should make quite clear to the other side what measure of damage is being relied upon…” (See Anglo-Cyprian Trade Agencies, Ltd. v. Paphos Wine Industries Ltd. (1951) 1 AER 873 at 875).
In the case in hand the learned trial Judge having dismissed the claim under the second item given in the particulars of damage – a claim for cost and of storage of the satchels and general damages – was left only with the item dealing with special damages; and as the claim by its very nature was not maintainable as an item of special damage under the claim for breach of contract (See Abdallah v.Achou) (Supra), nor – unless there was an amendment thereof – under the claim formulated in this suit, it being a claim which could possibly be made only under an action for damages for non-acceptance, we are of the view that the award of N13,314.60 cannot be sustained in the circumstances of this case.
We have considered what the proper order in this suit should be. Learned counsel for the appellants has asked for a dismissal of the suit. We are of the view that the respondents have a genuine cause of action against the appellants; their present action is, undoubtedly, misconceived and in the circumstances of this case we think that the proper order should be for a non-suit. Accordingly, we set aside the judgment of Agoro, J., awarding the respondents N13,314,60 together with N250 costs and enter a non-suit in this action. The appellants are entitled to their costs of this appeal which we assess as N208.00 and to their costs in the High Court which we assess at N100.00
Other Citation: (1975) LCN/1997(SC)