Chief S. I. Agu V General Oil Limited (2015)
LAWGLOBAL HUB Lead Judgment Report
JOHN INYANG OKORO, J.S.C.
This is an appeal against the judgment of the Court of Appeal sitting in Benin delivered on 27th May, 2004 wherein the lower court allowed in part the appeal of the respondent herein against the judgment of the High Court of Delta State. A brief facts leading to this appeal will suffice.
The appellant herein subleased his piece of land situate along Effurum/Patani Expressway for a period of ten years subject to renewal to the respondent. Clause 4B of the lease agreement stipulated that the respondent shall not sublet, assign or part with possession of the property without the consent of the appellant. In apparent violation of the said clause 4B, the respondent mortgaged the property to First Bank of Nigeria Plc. As a result of the mortgage between the respondent and First Bank, the appellant was unable to rent, lease or use his landed property for two years. Consequently, the appellant brought an action at the High Court of Delta State against the respondent seeking the following reliefs:-
“(i) A declaration that the Deed of Mortgage dated 17/10/1990 created by the 1st Defendant in favour of the 2nd Defendant and registered as No. 33 at page 33 in Volume 783 at the Lands Registry Office Asaba is null and void and of no effect.
(ii) Special Damage of N240,000.00 per annum being receivable rent in respect of the premises effecting from 12:11:93 and to 02:06:95.
(iii) General damages of N10,000,000.00 for the said breach.”
Pleadings were filed and exchanged. At the trial, the appellant testified on his own behalf and called no other witness. One witness also testified for the respondent. After address of counsel, the learned trial judge in a reserved judgment, dismissed the appellant’s first claim and granted the other two reliefs. In respect of the appellant’s claim for special damages (as plaintiff) the learned trial judge held as follows:
“Thus in the instant case, going by Exhibit “G” and plaintiffs evidence, plaintiff is entitled to special damages as the same is specifically claimed and strictly proved, being rents due to and receivable by plaintiff from 2/11/83 up to 12/11/93 when first defendant refused to renew the sublease after the 1st ten year period. The total receivable rent due and payable to the 1st defendant to the plaintiff is N300,000.00.
Accordingly, I hold that special damages in the sum of N300,000.00 which is pleaded specifically and strictly proved by reference to Exhibit G is hereby awarded plaintiff against the 1st defendant.”
With regards to the claim for general damages, the learned trial judge stated that “damages are the natural or probable consequences of such breach being within the contemplation of parties to a contract.” He then concluded:
“In the light of the above, and having regard to the available evidence, I hold that 1st defendant is in breach of contract; and that plaintiff suffered damages.
Accordingly, I hereby award the sum of N7.5 Million (Seven Million, Five Hundred Thousand Naira) as general damages in favour of the plaintiff against 1st defendant for breach of contract.”
Dissatisfied with the above judgment, the respondent herein appealed to the Court of Appeal. After hearing argument from both sides, the lower court allowed the appeal in part in the following words:
“In the result, this appeal succeeds in part. The judgment of Narebo, J, delivered on 1st April, 1999 awarding to the respondent the sum of N7.5 Million as general damages is hereby set aside. The award of N300,000.00 as special damages is hereby affirmed.”
Pigued by the setting aside by the court below of the N7.5M general damages awarded the appellant by the trial court, the appellant has appealed to this court via a notice of appeal filed on 7th July, 2004. The said notice contains only one ground of appeal for which a sole issue has been distilled for the determination of this appeal.
In the brief of argument settled by Inam Wilson Esq. counsel for the appellant, the sole issue formulated states thus:
“Whether the Court of Appeal was wrong in setting aside the general damages of N7.5 Million awarded to the appellant by the trial court.”
G. E. Enyia, Esq., learned counsel for the respondent adopts the only issue for determination as nominated by the appellant. I shall in the circumstance determine this appeal on the said agreed issue.
Arguing the appeal, the learned counsel for the appellant submitted that where damages have been awarded by a trial court, an alteration of the award will be made by an appellate court only if it is shown to be either manifestly too low or awarded on wrong principles, citing the cases of U.B.A. v. Achoru (1990) 6 NWLR (Pt. 156) 254, Ijebu-Ode Local Government v. Adedeji Balogun & Co., (1991) 1 NWLR (Pt. 166) 136; Onaga & Ors v. Micho & Co. (1961) 2 NSCC 189 at 192.
Learned counsel noted that the decision of the Court of Appeal was based on the premise that having been awarded special damages for the respondent’s breach of the terms of the Deed of sublease dated 4th August, 1985, the appellant could no longer claim general damages as this would amount to double compensation which the law frowns at.
Learned counsel concedes that in a claim for breach of contract, it is not necessary or desirable to distinguish between the amount claimed as special and general damages. That all that the court is concerned with is the assessment of the damages which the court regards as the natural or probable consequence of the breach complained of irrespective of whether such damages are described as special or general, relying on Abraham Akinfosile v. Mobil Oil Nigeria Ltd (1969) 6 NSCC 376 at 381.
It is counsel’s contention that no situation of double compensation has occurred in the instant case as the N300,000.00 awarded by the trial judge as special damages and the N7.5 Million awarded as general damages were not awarded for the same breach/injury. According to him, this was the fundamental fact which the Justices of the lower court did not avert their minds to and which ought to sway this court to allow this appeal.
Learned counsel urged this court to upturn the decision of the Court of Appeal and in its stead an order should be made restoring the award of N7.5M as general damages for the loss of the petrol station which the appellant would have benefited has the contract been performed.
In response, the learned counsel for the respondent submitted that the essence of damages in breach of contract cases is based on restitutio in integrum, which means that the award is to restore the plaintiff to a position as if the contract has been performed. See UBA Plc v. BTL Industries Ltd (2006) 28 NSCQR 381 at 387. According to him, in an action for breach of contract, the measure of damages is the loss flowing naturally from the breach and is incurred in direct consequence of the breach, relying on Gonzbee Nig. Ltd v. NERDC (2005) 22 NSCQR 735 at 738.
Learned counsel further submitted that the only damages suffered by the appellant as a result of the breach of clause 4B of the sublease agreement is special damages claimed by the appellant as a loss incurred in direct consequence of the said breach i.e. inability to utilize the land for two years as a result of the mortgage to First Bank Plc. Referring to the case of Ijebu-Ode Local Government v. Adedeji Balogun, (1991) 1, NWLR (Pt. 166) 136, he submitted that a plaintiff under a breach of contract can only claim special damages because general damages is known to the law of tort. He opined that having quantified his loss and adequately represented in his claim under special damages, the appellant can no longer claim under general damages; otherwise it would amount to double compensation which the law frowns against in awards of damages under breach of contract.
It is his further submission that the sublease agreement which was tendered and marked exhibit G at the trial court did not contemplate speculative and/or sentimental damages because the said sublease did not contain any term relating to building a petrol station on the land by the respondent. He argues that this presupposes that a loss resulting from failure to build a petrol station was not within the contemplation of the appellant and the respondent at the time the contract was entered into. It is his submission that the lower court was right to have set aside the award of general damages awarded by the trial court because the only loss which the appellant suffered as a result of the alleged breach was special damages for appellant’s inability to rent out the land for two years.
Learned counsel pointed out that the evidence at the trial court was emphatic that in 1991 when the appellant realized that the respondent had not built a petrol station on the land he filed an action at the Lagos State High Court against the respondent for failure to develop the land and that the action was settled out of court with the respondent paying the sum of N37,464.00 to the appellant as full and final settlement in respect of same. It is his submission therefore, that having taken the respondent to court in Lagos in 1991 for failure to build a petrol station on the land and the matter settled out of court with payment of compensation to the appellant, the appellant is estopped from further claiming reversion due to him if the petrol station was built on the land. He urged the court to resolve this issue against the appellant.
On page 166 of the record of appeal, the court below made the following conclusions which have given birth to the issue under consideration. It states:
“It could be seen that it is settled law that in an action founded on contract, it is wrong to claim both special and general damages. General damages cannot be awarded in an action for breach of contract because general damages properly belong to the realm of tort. To award general damages in action founded on contract is tantamount to double compensation. Indeed the award of general damages is improper where the quantum of loss is ascertainable.
In our present case, since the action is founded on contract, the learned trial judge erred by awarding the sum of N7.5 Million to the respondent as general damages. This award amounts to double compensation which this court will not allow to stand especially that the learned trial judge had awarded special damages to the respondent.”
The above decision of the lower court is the reason for this appeal. The learned trial judge, after awarding the sum of N300,000.00 to the appellant being the rent payable on the appellant’s land for the two years which the land could not be used by him due to the mortgage arrangement the respondent made with First Bank of Nigeria Plc, thereafter proceeded to award the sum of N7.5M to the appellant as general damages. This award of N7.5M was what the court below set aside. I think the law is not recondite in this area of jurisprudence and I shall examine it hereunder.
It is now well settled that in a claim for damages for breach of contract, as in the instant case, the court is concerned only with damages which are natural and probable consequences of the breach or damages within the contemplation of the parties at the time of the contract. See Mobil Oil Nig. Ltd v. Akinfosile (1969) 1 NMLR 227, Arisons Trading & Engineering Company Ltd v. The Military Governor of Ogun State (2009) 15 NWLR (Pt. 1163) 26. The essence of damages in breach of contract cases is based on what is called restitutio in integrum i.e. the award of damages in a case of breach of contract is to restore the plaintiff to a position as if the contract has been performed. See United Bank for Africa Plc v. BTL Industries Ltd (2006) 28 NSCQR 381. It has been held by this court that in an action for breach of contract, the measure of damages is the loss flowing naturally from the breach and is incurred in direct consequence of the breach. See Gonzbee Nig. Ltd v. NERDC (2005) 22 NSCQR 735.
As was rightly submitted by the learned counsel for the respondent, a court, when considering damages arising from a breach of contract, there is no room for damages which are merely speculative or sentimental unless these are specifically provided for by the express terms of the contract. Also, in awarding damages in such a claim, the court must be careful not to compensate a party twice for the same wrong. By the law against double compensation, a party who has been fully compensated under one head of damages for a particular breach or injury cannot be awarded damages in respect of the same breach or injury under another head. See Chitex Industries Ltd v. Oceanic Bank (2005) 23 NSCQR 148, Onago v. Micho & Co. (1961) ANLR 324 at 328, Nigerian Arab Bank Ltd v. Shuaibu (1991) 4 NWLR (Pt. 186) 450 at 456, Tsokwa Motors Nig. Ltd v. UBA Plc (2008) 2 NWLR (Pt. 1071) 347.
This court has, in quite a number of pronouncements, sustained this principle against double compensation. In Alhaji Mustapha Aliyu Kusfa v. United Bawo Construction Co. Ltd. (1994) 4 NWLR (Pt. 336) 1, it was held that in cases of breach of contract, the damages that would be awarded are the pecuniary loss that may fairly and reasonably be considered as either arising naturally from the breach itself or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as a probable result of the breach. It also frowned against double compensation. This is the position of the law.
In the instant case, the appellant’s complaint at the trial court as I can glean from the writ of summons and the amended statement of claim is for breach of clause 4B of the sublease agreement between him and the respondent. The said clause 4B prohibits the respondent from subletting, assigning or parting with possession of the land without the consent of the appellant. Thus, when the respondent mortgaged the said land by parting with title documents to First Bank Plc, the appellant instituted this case for breach of the said clause 4B of the sublease agreement. For two years, the respondent could not retrieve the title documents from First Bank Plc. What the appellant lost was rent for the two years which the learned trial judge rightly awarded the sum of N300,000.00 which was pleaded and strictly proved. This was accepted by the Court of Appeal.
However, the Court of Appeal set aside a further award of N7.5M general damages. The learned counsel for the appellant submitted in paragraph 4.17 on page 13 of their brief as follows:
“It is clear from the above that the case argued by the appellant which was not duly considered by the Court of Appeal was that his claim for general damages was for loss of the petrol station and dealership of the petrol station which he would have gained had the contract been performed or not been breached. This is clearly different from the appellant’s claim for special damages in respect of the receivable rents due and payable by the respondent.”
In addition to the above submission on page 28 of the record, the learned trial judge, in summing up evidence stated thus:
“Plaintiff testified that the general damages is for the reversion due to him and to which he is entitled if there was no breach of the contract and the petrol station was built with him as the dealer. Plaintiff testified further that if built, the whole petrol station would have inured to him. Plaintiff said he lost that due to the breach.”
The above summation influenced the learned trial judge to award the sum of N7.5 M to the appellant as general damages. As was clearly found by the court below this was not the case of the appellant at the trial court. It then set aside the N7.5 Million award. The lower court premised its decision on the record placed before it and it is very clear from the said record that both the writ of summons and the amended statement of claim did not aver that the respondent breached a term of the contract to build a petrol station on the land and neither did the appellant rest his claim of general damages on the failure of the respondent to build a petrol station on the land. I have also painstakingly read the amended statement of claim and even Exhibit G, the sublease agreement but I have not seen any averment and/or agreement for respondent to build a petrol station and make the appellant the dealer.
It is trite that parties are bound by their pleadings. And evidence led on facts not pleaded goes to no issue. See American Cyanamid Company v. Vitality Pharmaceuticals Ltd (1991) 2 NWLR (Pt. 171) 15, Osho & Anor. v. Foreign Finance Corporation & Anor. (1991) 4 NWLR (Pt. 184) 157, Buraimoh v. Esa (1990) 4 SC 1.
It is my well considered decision in this matter that both the pleadings of the appellant and the sublease agreement did not disclose that the respondent was under any obligation to build a petrol station and make him a dealer. Any award of general damages based on unsubstantiated allegation as in this case in addition to special damages already awarded to the appellant amounts to double compensation which this court does not tolerate. The court below was right to have set aside the award of N7.5 Million general damages to the appellant. The N300,000.00 awarded him for breach of clause 4B of the sublease agreement, was, in my view sufficient for the two years which he was unable to rent out the property. This, he pleaded and proved. Accordingly, I resolve the sole issue in this appeal against the appellant.
In the circumstance, I hold that this appeal is devoid of merit and is hereby dismissed. I affirm the judgment of the Court of Appeal which set aside the N7.5 Million award for general damages. I make no order as to costs.
SC.62/2005