Chitex Industries Ltd. V. Oceanic Bank International (Nig.) Ltd. (2005) LLJR-SC
Chitex Industries Ltd. V. Oceanic Bank International (Nig.) Ltd. (2005)
LAWGLOBAL HUB Lead Judgment Report
MUSDAPHER, J.S.C.
In the High Court of Justice of Anambra State of Nigeria, in the Onitsha Judicial Division and in suit No. O/234/93 the plaintiff as per paragraph 16 of the statement of claim claimed against the defendant as follows:-
“Whereof the plaintiff claims against the defendant as follows:-
(1) Damages for loss occasioned by depreciation of Naira
(N456,000.00 – N360,000.00)
… N66,000.00.
(2) Damages for the loss of credit facilities, goodwill, profits and future prospects estimated
at … N3,500,000.00
Total: N3,566,000.00.”
At the hearing of the matter on the pleadings filed by the parties, two witnesses testified for the plaintiff while an officer of the defendant testified on its behalf. In this judgment delivered on the 5th day of March, 1998, the learned trial Judge held that the defendant was liable for breach of contract and awarded the damages recited above in toto. The defendant felt aggrieved and appealed to the Court of Appeal. The Court of Appeal in its judgment delivered on the 6th day of March, 2000, allowed the appeal in part.
The judgment of Fabiyi, JCA concurred to by Ubaezonu and Mohammad, JJCA at page 127 of the record contains the following:”
… The claim of the respondent in respect of the alleged loss of credit facilities and the like, to say the least, appears gold-digging and speculative. The award of N3.5 million appears, in the same view, is capricious and arbitrary. ‘Gold diggers’ should keep off from courts of law as well as that of equity. And the courts should always be wary of “gold diggers” and not allow the institution to be used unwittingly as instrument for attaining their nefarious and mundane desires …. ”
The plaintiff felt unhappy with the turn of events and has now appealed to this court. The notice of appeal contains the following grounds of appeal:-
“(A) Error in Law
(i) The learned Justices of the Court of Appeal erred in law when, after holding that the respondent was liable in breach of a fundamental term of contract, proceeded to disallow the award in general damages made by the trial court.
(ii)The court below erred in law by accepting the evidence of the respondent and wrongly rejecting the appellant’s evidence regarding exhibit “H” on oral testimony not based on expert evidence of NITEL thereby wrongly shifting burden of proof on the appellant as to
the probative value of exhibit “H”.
(iii) The court below erred in law by not considering the provisions of sections 412(1) and (2) and 423(4), Contract Law, Cap. 30, Laws of Anambra State in relation to the award of general damages, as distinct from special damages under the said Contract Law.”
(B) Misdirection in Law
(i) The Justices of the court below misdirected themselves when they held that the trial court failed to make finding on the probative value of exhibit “H”, when indeed, it made the said finding by preferring in entirety the evidence of PW1 to that of DW 1 wherever they differed.
(ii)The court below misdirected itself when in relation to exhibit “H” it considered actual loss rather than general loss of opportunity and enhanced reputation in the appellant’s business and trade flowing from the respondent’s breach of fundamental terms as set out in exhibit “J”.
(iii)The court below misdirected itself when it totally set aside the entire award in general damages refusing to exercise its jurisdiction judiciously and judicially in respect of quantum of general damages awarded by the trial court, after resolving issues 2.01 and 2.02 in the brief, as formulated at the court below, in favour of the appellant.”
In compliance with the provisions of the rules of this court, briefs of argument were filed and exchanged and at the hearing of the appeal, learned counsel adopted their respective written briefs. Before the consideration of the issues submitted to this court for the determination of the appeal, it is appropriate at this stage to state the background facts of the dispute between the parties.
On the 3rd of June, 1993, the plaintiff paid into the defendant’s bank the sum of N390,000.00 and in consideration of a remitting fee of N2,000.00, the defendant agreed to remit the United States equivalent to the plaintiff’s business associates – Messrs Chin Jung Industry Co. Ltd. in Taiwan. At the material time, rate of exchange was N32.50 to one United States Dollar. The equivalent in dollar was 12,000 United States Dollars. Fund transfer form exhibit was completed by PW1 on behalf of the plaintiff and the money was to be transferred by what was described as the faster method of transfer, “Telegraphic Transfer.” PW1 said the defendant’s manager informed him that the transfer would take four days as the defendant’s headquarters was in Lagos and this transaction took place at Onitsha. When there was delay in the transfer and when PW1 did not receive confirmation of the transfer from the aforesaid beneficiary in Taiwan, he went to the defendant to find out the reason for the delay. The defendant’s manager told PW1 that the telegraphic transfer could not be effected because the defendant’s bank head office did not have the dollar equivalent to transfer.
The plaintiff then briefed counsel who wrote exhibit C on the 16/6/1993 complaining against the breach of contract to transfer the money as agreed. The defendant later returned the money deposited with it to the plaintiff. The plaintiff purchased the said sum of 12,000 United States Dollars from open market and this was at the rate of N38.00 to the Dollar. The plaintiff was obliged to pay N456,000.00 thus encountering and extra payment of N66,000.000.
The plaintiff further claimed that he had been doing business with his Taiwanese associates on credit basis for the past 12 years and as per exhibit F, the plaintiff owed them the sum of 54,186 United State Dollars. The plaintiff also alleged that because of the failure to transfer the 12,000 Dollars aforesaid, the business associates not only withheld all the credit facilities hitherto enjoyed by the plaintiff, the plaintiff was also branded a liar and a cheat in a telex message exhibit “H”. The plaintiff also claimed that his turnover at the relevant time in his business with the Taiwanese associate was in the region of 300,000 United States Dollars about N8.7 million. And since this incident he had been in trouble with his business associates and they no longer shipped goods to the plaintiff on credit. The plaintiff in addition to the N66,000.00 he was forced to pay for the purchase of the dollars in the market mentioned above, he also claimed “damages for the loss of credit facilities, goodwill, profits, and future prospects estimated at” N3.5 million.
The defendant on the other hand claimed that it agreed to remit the money at the rate on the condition contained in exhibit J the funds transfer form. The words contained in the form ”for my account and risk” showed that the transfer was subject to the availability of foreign exchange. It was also a condition that if there was any fluctuation in the foreign exchange rate before the transfer, the plaintiff shall bear the extra cost. And that the defendant was not liable to the plaintiff for the breach of contract.
As mentioned above, the trial court found the defendant liable for the breach of the contract and the court awarded against it, the entire claims of the plaintiff. On appeal, the Court of Appeal set aside the award for “loss of credit facilities etc.” hence the appeal by the plaintiff (hereinafter referred to as the appellant and the defendant as the respondent).
Now in his brief for the appellant, the learned counsel has identified, formulated and submitted to this court the following issues arising for the determination of the appeal:-
“1. Whether the Justices of the Court of Appeal were right in setting aside the award by the trial court in general damages, rejecting exhibit “H” for being “a farce and a ruse” when fraud was neither specifically pleaded and particularised nor made ground and issue in the appeal.
- Whether putting aside exhibit “H” in considering appellant’s case for award in general damages, the court below could be right in requiring proof of actual as against imputed damages was flowing from the appellant’s case whereby its reputation in trade and goodwill were impeached through the conduct of the respondent.
- Whether after affirming the trial court’s decision on breach of fundamental and mandatory term of the contract as in exhibit “J”, the court below was right setting aside in its entirety the trial court’s award of general damages saying that the appellant was engaged in “gold digging”.
- Whether setting aside the trial court’s award in general damages, the learned Justices of the court below were right in exercising the court jurisdiction or review of quantum of damages.”
For his own part, the learned counsel for the respondent has formulated and submitted the following issues arising for the determination of the appeal:-
‘” 1. Whether the Court of Appeal was not right in dismissing the claim of the appellant in respect of the alleged loss of credit facilities as “gold digging” and “speculative” and accordingly set aside the N3.5m damages awarded thereto by the learned trial Judge as no credible evidence was led in proof of the same.
- Whether the lower court was not right in assuming the role of the trial court in making a finding of fact and evaluation of evidence of witnesses with regards to exhibit “H” when the trial court failed to do so and whether the finding of fact by the lower court was perverse which entitles the Supreme Court to interfere.”
It has been stated on a number of occasions by this court that it is not the number of issues for determination formulated that guarantees the success of an appeal but the contents and quality. It is undesirable to formulate an issue for each of the grounds of appeal. See Oyekan v. Akinrinwa (1996) 7 NWLR (Pt. 459) 128. Any unnecessary prolixity will be discountenanced. An issue for determination in a brief is a point which is so crucial that if it is decided one way or the other it affects the fate of the appeal, it is a point which is so critical that if it is decided in favour of a party, he is entitled to win the appeal. See Onifade v. Olayiwola (1990) 7 NWLR (Pt. 161) 130; Okoye v. Nigerian Construction & Furniture Co. Ltd. (1991) 6 NWLR (Pt. 199) 501.
The essence of formulating issues for determination in an appeal is to condense the grounds of appeal into a compact issue or issues which are critical for the determination of the appeal. The appellant in the instant case has submitted four issues for the determination of the appeal, in my view they are prolix and repetitive. The fundamental, crucial and critical issue is, what is the measure of damages, in an action for a breach of contract, and whether there is the need to prove damages in such an action and if so whether the appellant had satisfactorily proved the damages he claimed. In my view the issues formulated by the respondent are also not in line with the rules of court. I shall in this appeal consider the issue as formulated by me above which covers all the relevant and critical points raised in this appeal.
Argument on the Issue
It is submitted by the learned counsel for the appellant that exhibit “H” was wrongly rejected by the Court of Appeal and that the evidence of DW1 upon which the court relied, to reject exhibit “H” was neither credible nor probative. The respondent should have called NITEL to give expert evidence on the matters DW 1 testified. Thus the court below was in error to have inferred fraud by holding that exhibit “H” is a farce and a ruse.” The issue of fraud was not specifically pleaded nor was it particularised. Thus the evidence of DW1 in relation to “exhibit H” ought to be discountenanced and in that case, the evidence in exhibit “H” remains unchallenged and learned trial Judge was therefore right to have used the evidence to find damages proved. It is also submitted by section 412(1) and (2) and section 423(4) of the Contract Law of Anambra State, Cap. 30, the Court of Appeal was in error to have required the appellant to prove actual loss accruing from the breach of contract in terms of exhibit “J” see Kusfa v. United Bawo Construction Ltd. (1994) WLR 55. The appellant’s presumed loss to its reputation and goodwill in its trade required no proof. Section 423(4) Contract Law (supra).
It is again argued that the Court of Appeal was in error after finding the respondent liable for breach of contract of a fundamental term to turn round and to term the claim for damages as “gold digging” and “speculative”. It was evident that the appellant was a serious minded business company and has even led evidence in proof of its losses.
It is finally submitted that the Court of Appeal was in error to have set aside the claim for damages as awarded by the learned trial Judge when the claim was not excessive. The Court of Appeal was in error in not applying the dictum jus res jus remedium in its consideration of the award of general damages. The court below was also in error to have contrasted “general” and “special” damages as the distinction is inappropriate in actions for breach of contract. But is only relevant in a claim in tort see Hadley v.Baxendale (1854).
For the respondent, it is submitted that the appellant failed to prove by credible and sufficient evidence its claim to purported “loss of credit facilities, goodwill, profits and future prospects.” The appellant in attempting to prove such loss merely tendered “exhibit H” the telex. The telex had no number, no date nor country of origin. The respondent argued that the Court of Appeal was right to have held that the telex in exhibit “H” was “a farce and a ruse and a make believe …” No credible evidence was adduced in proving the head of claim. It is again submitted that by its pleadings, the respondent made it clear in the statement of defence paragraphs 15, 16 and 17 that exhibit “H” and other documents relied upon by the appellant were made up for the purposes of the case. The respondent gave evidence that exhibit “H” was from Nigeria and not from overseas and the appellant did not deem it fit to dislodge the evidence adduced by DW1 on this issue. It is argued further that exhibit F which the trial court wrongly used was a statement of account dated 26/4/1993 made before the transaction between the parties. Exhibit G, the sales agreement was also made in 1991. Exhibits F and G were therefore irrelevant. It is submitted that only exhibit “H” could be said to be relevant to the claim and it was clear that exhibit “H” was not properly evaluated by the trial court and the Court of Appeal was justified in critically examining it and rejecting it as proof of the purported loss or damages.
It is again submitted that the facts of this case are different from the facts in Kusfa’s case supra. But it is urged that this court should adopt the principle of law enunciated in that case in that having been awarded the sum of N66,000.00 as damages, the appellant was adequately compensated and that any further award would amount to double compensation. It is again argued that the issue of fraud as raised and argued by the appellant is of no moment, the appellant introduced fraud when it was not raised by the Court of Appeal. It is finally submitted that the provisions of section 412(1) and (2) and section 423 of the Contract Law Cap. 30, Laws of Anambra State, did not dispense with proof of the appellant’s case and therefore are not applicable.
Now, in the case at hand, the respondent had defaulted and breached the contract to transfer money to the business associates of the appellant in Taiwan. The amount to be transferred was 12,000 US Dollars. The appellant was put into an extra expense of N66,000.00 by securing the 12,000 US Dollars from elsewhere. He was awarded damages in the said sum of N66,000.00 for the breach of contract, the question is – is the appellant entitled to a further sum of N3.5 million naira as “damages for the loss of credit facilities, goodwill, profits and future prospects” I shall now consider the measure of damages in a case of a breach of contract. Now, generally the amount of damages to be paid to a person for breach of contract is the amount it will entail to put the person in the position he would have been if there had not been any breach of contract see Idahosa v. Oronsaye (1959) SCNLR 407, (1959) 4 FSC 166. In the case Omonuwa v. Wahabi (1976) 4 SC 37 at 41 this court per Idigbe, JSC said:
“It is settled that the governing purposes of damages is to put the party whose rights have been violated in the same position, so far as money can do, as if the rights have been observed … In cases of breach of contract the aggrieved party is only entitled to recover such part of the loss actually resulting as was at the time of the contract reasonably foreseeable as liable to result from the breach. What was at that time reasonably so foreseeable depends on the knowledge then possessed by the parties or, at all events, by the party who later commits breach …. ”
In cases of breach of contract a plaintiff is only entitled to damages naturally flowing or resulting from the breach. See Swiss Nigerian Wood Industries Ltd. v. Bogo (1971) 1 UILR 337; Agbaje v. National Motors (1971) 1 UILR 119. The measure of damages, in such cases of breach of contract, is in the terms of the loss which is reasonably within the contemplation of the parties at the time of contract. See Jammal Engineering v. Wrought Iron (1970) NCLR 295; Alraine v. Eshiett (1977) 1 SC 89. When considering damages arising from a breach of a 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. See P.z. v. Ogedengbe (1972) 3 SC 98. The appellant’s claim for N3.5 million naira for “loss of credit facilities, goodwill, profits and future prospects” was clearly not specifically spelt out at the time of the contract of only transferring N12,000 US Dollars to the business associates of the appellants. The claim is sentimental and speculative. The respondent did not specifically undertake any obligation to indemnify the appellant for the conduct of the third party in relation to their business with the appellant as there was no provision of such a claim in the contract. There was no mention of any loss of credit facility, goodwill, profits or future prospects at the time of contract. The loss if any, was not within the contemplation. In my view, the only damages recoverable within the contemplation of the parties was the difference in the rate of exchange the appellant was obliged to pay i.e. the sum N66,000.00 which was the presumed and normal consequence of the respondent’s breach see Kusfa’s case supra. To ask the respondent to pay for any further sum would amount to double compensation. Although the terms “special” and “general” damages are not appropriate in an action for breach of contract, but there are special circumstances where the parties do make contracts and bind themselves knowingly that a breach of contract under the special circumstances would also attract damages which the parties agreed to at the time of the contract. See Agbaje v. National Motors (supra).
The claim of N3.5 million in this circumstances even if it was within the contemplation of the parties “as a special case” which it was not, was not satisfactorily proved. The appellant pleaded under paragraph 14 of the statement of claim thus:-
“The plaintiff’s Taiwan suppliers were furious when the money the plaintiff paid the defendant failed to arrive and immediately issued sanctions on the plaintiff and rejected as incredible the reason that a bank paid to transfer money failed to do so. They stopped all credit sales to the plaintiff and demanded payment of all outstanding debts and that no further sales would be made to the plaintiff without payment in advance. Telex from the Taiwans to the plaintiff to this effect dated 18/6/1993 is hereby pleaded and shall be founded at the hearing.”
There is no doubt that on its face “exhibit H” which was pleaded as proof of the above pleading, does not show any connection with the transaction nor does it show who sent it. It is elementary law that who asserts must prove. The appellant was duty bound to prove that it was the breach that caused the losses. There was no evidence whatever adduced to do so. In such a circumstance where the plaintiff failed to prove the special claim, the plaintiff will not be entitled to such damages. See Agbaje v. National Motors (supra); Shell B. P. v. Jammal (supra); A.-G., Anambra State v. Onuselogu Ent. Ltd. (1987) 4 NWLR (Pt. 66) 547, (1987) All NLR 579 “exhibit H” which was offered as proof of the loss N3.5 million is not an authentic document to entitle the appellant to claim such damages. Where a document is challenged and impugned as unauthentic, the maker of the document should be called to support the document, otherwise no weight should be attached to it. Where such damages are suffered and claimed in an action for breach of contract, there must be convincing evidence to prove the damages.
It is clear that exhibit J is the bedrock of the agreement between the parties and showed that the obligation was only the transfer by Telex 12,000 US Dollars to Hua Nan Commercial Bank in favour of Chin Jung Ind. Co. Ltd. The purpose of which had not been spelt out. The consequences of the non-transfer though not stated, but can be presumed. In my view, the Court of Appeal is right to have held that the liability of the respondent under the circumstances was only to pay the difference in the exchange rate, when the respondent failed to transfer the money agreed in exhibit J.
It is for these reasons that I find the appeal unmeritorious and is dismissed by me. The respondent is entitled to costs assessed at N10,000.00.
SC.192/2000